The ACIT, Circle-2,, Bhavnagar v. Vidhata Associates, Bhavnagar

ITA 2916/AHD/2009 | 2006-2007
Pronouncement Date: 29-07-2011 | Result: Dismissed

Appeal Details

RSA Number 291620514 RSA 2009
Bench Ahmedabad
Appeal Number ITA 2916/AHD/2009
Duration Of Justice 1 year(s) 9 month(s) 6 day(s)
Appellant The ACIT, Circle-2,, Bhavnagar
Respondent Vidhata Associates, Bhavnagar
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-07-2011
Date Of Final Hearing 26-07-2011
Next Hearing Date 26-07-2011
Assessment Year 2006-2007
Appeal Filed On 23-10-2009
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI D.K. TYAGI JM AND A. K. GARODIA A. M. ASSTT. CIT CIR-2 BHAVNAGAR. M/S VIDHATA ASSOCIATES KUBER PATEL STREET KANBIWAD BHAVNAGAR. APPELLANT VS. RESPONDENT APPELLANT BY :- SHRI SAMIR TEKRIWAL SR.DR RESPONDENT BY:- NONE O R D E R PER D.K. TYAGI JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 27.07.2009. THE REVENUE HAS TAKEN UP F OLLOWING GROUNDS:- 1. THE LD. CIT(A)-XX AHMEDABAD HAS ERRED IN LAW AND O N FACTS IN RESTRICTING THE ADDITION MADE BY THE AO ON ACCOU NT OF INCOME FROM CONTRACT WORK TO RS.1 LAC ONLY. WITHOUT PROPER LY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE AO. 1.2 IN DOING SO THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT IN VIEW OF THE DETAILED REASON GI VEN IN THE ASSESSMENT ORDER THE AO WAS JUSTIFIED IN REJECTING THE BOOK RESULT SHOWN BY THE ASSESSEE AND IN ESTIMATING THE INCOME FROM CONTRACT WORK AT 5% OF THE GROSS RECEIPTS. 1.3 WHILE RESTRICTING THE SAID ADDITION TO RS.1 LAC ONL Y THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECI ATING THAT ITA NO.2916/AHD/2009 ASST. YEAR 2006-07 ITA NO.2916/AHD/2009 ASST. YEAR 2006-07 2 CASH PAYMENTS TOTALING TO RS.1 64 23 000/- HAD BEEN MADE BY THE ASSESSEE FOR THE VARIOUS EXPENSES WHICH WERE NO T VERIFIABLE AND WERE NOT EVEN SUPPORTED BY PROPER VOUCHERS AND THEREFORE THE ADDITION SUSTAINED OF RS.1 LAC ONLY IS TOO MEAG ER IN COMPARISON TO THE SUBSTANTIAL CLAIM OF EXPENSES MAD E BY THE ASSESSEE WHICH WERE NOT OPEN FOR VERIFICATION. 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F THE ASSESSEE DESPITE THAT NOTICE WAS SERVED UPON THE ASSESSEE TH ROUGH THE LD. DR FOR TO-DAYS HEARING. SO WE PROCEEDED TO DECIDE THE APP EAL AFTER HEARING THE LD. DR. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT ASSESSEE HAS SHOWN NET PROFIT OF RS.49.23.578/- ON THE TURNOVER OF RS.14 24 46 826/- WHICH WAS ONLY 3.46% WHEREAS IN THE PRECEDING YEAR THE ASSESSEE HA D SHOWN NET PROFIT OF RS.37 57 916/- ON THE TOTAL TURN OVER OF RS.10 61 04 355/- WHICH WAS AT 3.50%. THERE WAS INCREASE IN THE TURNOVER BUT THE P ROFIT HAS BEEN SHOWN AT THE LOWER SIDE BY THE ASSESSEE. THE CASH BOOK OF THE ASSESSEE WAS ALSO EXAMINED BY THE AO AND IT WAS FOUND THAT THE ASSESS EE HAD WITHDRAWN CASH FROM THE BANK OF RS.1 64 23 000/- OUT OF THE T OTAL CONTRACT RECEIPTS OF RS.14.20 CRORES. IN THE SITE EXPENSES THE ASSESSEE HAD MADE EXPENSES AT RS.13 87 974/- BY CASH AND RS.43 000/- BY CHEQUE. U NDER THE HEAD DIESEL PLANT AND MACHINERY THE TOTAL CASH EXPENSE S WERE AT RS.5 61 601/-. UNDER CARTING EXPENSES OF RS.3 33 545/- CHEQUE PAYMENT OF RS.20 000/- WAS SHOWN BY THE ASSESSEE. UNDER THE HEAD EXPENSES ITA NO.2916/AHD/2009 ASST. YEAR 2006-07 3 LIMBOGE CARTING CASH AS WELL AS CHEQUE PAYMENTS HAV E BEEN MADE. IN ALL OTHER PAYMENTS THE BREAK UP OF CASH PAYMENT AS WELL AS CHEQUE PAYMENT WERE AS UNDER :- SL.NO. NAME OF THE LABOURER CASH PAYMENT CHEQUE PAY MENT 1 BEHATBHAI B. KATARA 9 16 945/- 4 29 845/- 2 MUGADHLAL P. DOSHI 1 90 950/- 12 06 818/- 3 RAMLALIT K. MISTRY 9 000/- 7 92 270/- 4 LAXMANBHAI V. CHAUHAN 3 09 044/- 25 75 347/- 5 DILIPSINGH K. CHOUHAN 12 54 605/- 18 73 544/- THE AO FURTHER STATED THAT SIMILAR WAS THE POSITION IN RESPECT OF LABOUR CONTRACTOR ALSO. IN ALL THE CASES THERE WERE CASH P AYMENTS AS WELL AS CHEQUE PAYMENTS TO THE LABOUR CONTRACTORS. FROM THE CASH IT WAS CLEAR THAT TOTAL CASH PAYMENTS HAVE BEEN MADE OF RS.1 64 23 00 0/- FOR ALL EXPENSES. PAYMENTS TO LABOUR WERE MADE IN CASH AND CHEQUES IN TWO PARTS. THE AO ALSO POINTED OUT THAT ALL THE CASH VOUCHERS WERE SE LF MADE WITHOUT VOUCHER NUMBERS AND SITE DETAILS. THEREFORE THE PA YMENTS TO THE LABOURERS WERE NOT VERIFIABLE AND WORK ACTUALLY DON E BY THEM ALSO REMAINED UNVERIFIED. THE VOUCHERS WERE NOT MAINTAIN ED IN CHRONOLOGICAL ORDER AND WERE NOT SERIALLY NUMBERED WHICH WERE THE GLARING MISTAKE AND HENCE THE BOOK RESULTS WERE REJECTED AND THE TOTAL INCOME OF THE ASSESSEE WAS ESTIMATED AT 5% OF THE TOTAL CONTRACT RECEIPTS OF RS.1426.36 LACS THEREBY THE AO DETERMINED THE INCOME AT RS.71.35 LA CS AS AGAINST NET INCOME OF RS.49.31 LACS SHOWN BY THE ASSESSEE. ITA NO.2916/AHD/2009 ASST. YEAR 2006-07 4 4. AGGRIEVED BY THIS ORDER OF THE AO ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A). THE SUBMISSIONS MADE BY THE ASSESSE E BEFORE LD. CIT(A) HAVE BEEN MENTIONED BY LD. CIT(A) IN HIS ORDER AS U NDER :- 2.2 DURING THE COURSE OF APPELLATE PROCEEDINGS THE LEARNED COUNSEL FOR THE APPELLANT HAS STATED THAT DURING THE COURSE OF ASSESSMENT PROCEEDING WE SUBMITTED THE DETAILS IN RESPECT OF VARIOUS SMAL L CASH PAYMENTS TOWARDS SITE EXPENSES DIESEL EXPENSES AND CARTING EXPENSES. WE ALSO PRODUCED THE VOUCHERS OF SAID EXPENSES AND EXPLAINE D THE REASON FOR CASH PAYMENTS. THE RELEVANT COPY OF ACCOUNT AND SOM E COPY OF VOUCHERS ENCLOSED HEREWITH. NORMALLY IN THIS LINE OF BUSINES S VOUCHERS/RECEIPTS (PAYMENT PAVATI) FOR CASH PAYMENTS FOR EXPENSES ARE SELF MADE NO ANY RECIPIENT OF MONEY WOULD BRING THE VOUCHERS/PAVTI. IT IS ALSO COMMON THAT SUCH PAYMENTS EVIDENCES ARE TO BE PRESERVED FOR FI NALIZATION OF ACCOUNT BY THE PAYER AND HENCE IT WOULD BE THE EVIDENCE FO R SUCH PAYMENT IN CONNECTION WITH THE SERVICES RENDERED OR MATERIALS SUPPLIED ETC. BY THE RECIPIENT AS PER THE COMMON COMMERCIAL PRACTICE PRE VAILING ALL OVER. ACCORDINGLY THE APPELLANT HAS PREPARED CASH PAYMEN T RECEIPT/PAVATI IN CONNECTION WITH THE PAYMENTS OF BILLS RAISED BY LAB OR CONTRACTORS/SUPPLIER OF MATERIALS. THE LD. COUNSEL HAS FURTHER STATED TH AT IT IS NOTE WORTHY THAT THE BILL RAISED FOR THE LABOUR WORKS CARRIED OUT HA D NOT BEEN DOUBTED BUT THE AO MERELY TOOK THE VIEW THAT THE WORK DONE BY T HE LABOUR CONTRACTORS CANNOT BE VERIFIED WHICH IS AN SURMISES AND CONJECT URE. ACTUALLY THE WORK CARRIED OUT BY THE LABOUR CONTRACTORS HAS BEEN SUPE RVISED BY THE APPELLANT AS WELL AS THE GOVERNMENT ENGINEER ALL TH E TIME SO THE SAME CANNOT BE DOUBTED IN PERFUNCTORY MANNER. FURTHER TH E AO HIMSELF HAS ACCEPTED SUCH COMMON PRACTICE IN PRECEDING YEARS AL SO. FURTHER THE APPELLANT HAS ENTRUSTED MAJORITY WORKS LIKE RCC CEN TERING AND PLASTERING WORK TO EXPERIENCED LABOUR CONTRACTOR FOR ITS SIX D IFFERENT SITES. THE LABOUR CONTRACTOR EMPLOYES THE SUPERVISOR AND SKILL ED PERSON WITH THE ROUTINE LABOURERS FOR CARRYING OUT THE WORK EFFECTI VELY. THE LABOURERS BELONG TO DIFFERENT STATES AND HENCE THE APPELLANT PROVIDES THE SHELTER AND FOOD TO THEM AT SITE AS PER THE PRACTICE PREVAI LING IN SUCH LINE OF BUSINESS. THE APPELLANT MAKES THE PAYMENT OF GROCER Y VEGETABLES MILK ETC ON BEHALF OF SUCH LABOURERS/LABOUR CONTRACTORS WHIC H ARE ADJUSTED AGAINST THEIR LABOUR BILLS AS CAN BE SEEN FROM THE COPY OF ACCOUNT OF ALL LABOUR CONTRACTORS. THIS IS VERY COMMON PRACTICE IN CIVIL CONSTRUCTION BUSINESS. IT IS ALSO NOTE WORTHY THAT THE AO HAS AC CEPTED SUCH TRANSACTIONS IN PRECEDING YEARS. THE CASH PAYMENTS TO LABOURERS HAVE BEEN INEVITABLE CONSIDERING THE PECULIAR CIRCUMSTAN CES. THE RELEVANT ITA NO.2916/AHD/2009 ASST. YEAR 2006-07 5 COPIES OF ACCOUNTS OF LABOUR CONTRACTORS AND PAYMEN T RECEIPTS HAVE BEEN FURNISHED BY THE LEARNED COUNSEL BEFORE ME. THE OBS ERVATION OF THE AO IA ALSO INCORRECT IN RESPECT OF RECIPIENTS AND SITE NO T MENTIONED ON SUCH VOUCHERS. IN NUTSHELL THE AO HAS ACCEPTED THE LABOU R CHARGES BUT DOUBTED IN REGARD TO CERTAIN CASH PAYMENTS AND THEREBY REJE CTED THE BOOKS RESULTS WHICH IS CONTRARY TO COMMON PRACTICE AND EVIDENCES ON RECORD. FURTHER IN PRECEDING YEAR THE AO HAS SUMMONED THE LABOUR CO NTRACTORS AND HAS VERIFIED THE BANK PASS BOOK ABSTRACT SHEETS OF WOR K DONE COPY OF ACCOUNT AND THEIR RETURN OF INCOME. THE ADDITIONS M ADE ON ACCOUNT OF LABOUR EXPENSES HAD BEEN DELETED BY THE HONBLE ITA T. IN THE YEAR UNDER CONSIDERATION THE AO HAS ACCEPTED THE LABOUR CHARGE S BUT TOOK THE VIEW THAT CASH PAYMENTS TO LABOURERS ON SELF MADE RECEIP TS ARE NOT RELIABLE. THE CASH PAYMENTS TO LABOUR CONTRACTORS IN PECULIAR CIRCUMSTANCES HAVE BEEN BELOW THE LIMIT UNDER THE PROVISION OF SECTION 40A(3) WOULD NOT TENTAMOUNT TO UNRELIABLE PAYMENTS. NOW IN REGARD TO THE RATIO OF SURESH RATILAL SHETH S CASE IT IS SUBMITTED THAT THE SAID DECISION HAS NOT BEEN CONFRONTED TO A PPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HENCE THE SAM E WOULD NOT APPLICABLE TO THE INSTANT CASE. CONSIDERING THE FAC TS AND CIRCUMSTANCES THE APPELLANT RELIES ON THE RATIO OF MOOLCHAND MAHE SHCHAND (1978) 176 ITR 1 (ALL). AGAIN IN THE COURSE OF HEARING THE A/C OF THE APPELLANT SUBMITTED AS UNDER IN RESPECT OF COMPARABLE CASE S URESH RATILAL SHETH. SUB: CLARIFICATION COMPARISON WITH SURESH RATILAL CASE WITH REFERENCE TO CAPTIONED SUBJECT WE WOULD LIKE TO SUBMIT FOLLOWING DETAILS :- SURESH RATILAL VIDHATA ASSOCIATES 1. TURNOVER RS.519.36 LACS RS.1424.47 LACS 2. NET PROFIT RS.15.90 LACS RS.49.23 LACS + RS.19.96 LACS SAL.+ INT 40(B) RATIO 3.06% 4.85% 3. LABOUR CHARGES RS.91.36 LACS RS.95.46 LACS PAID BY CHEQUES RS.38.05 LACS RS.68.76 LACS PAID BY CASH RS.53.31 LACS RS.26.68 LACS RATIO OF CASH PAID 58% 28% ITA NO.2916/AHD/2009 ASST. YEAR 2006-07 6 FROM THE ABOVE IT IS CRYSTAL CLEAR THE CASH PAYMEN T RATIO HAS BEEN FOR LESSER THAN THE SAID CASE. A PHOTO COPY OF SAID APP ELLATE ORDER ENCLOSED HEREWITH. IN THE SAID CASE THERE WERE FOLLOWING DE FECTS POINTED OUT BY THE LD. AO WHICH HE REPRODUCED ON PAGE -3 OF THE APPELL ATE ORDER. 1. NONE OF THE VOUCHERS WERE BEARING VOUCHER NUMBER 2. MANY VOUCHERS DO NOT REFLECT THE NAME OF SITE 3. MOST OF THE VOUCHERS DO NOT AUTHENTICATED BY THE CH ECKING AUTHORITY 4. SOME OF THE VOUCHERS DO NOT BEAR THE SIGNATURE OF R ECIPIENT 5. SOME OF THE VOUCHERS DO NOT REFLECT THE DETAILS OF PAYMENTS 6. SOME OF THE VOUCHERS DO NOT BEAR REVENUE STAMP. WHEREAS IN THE INSTANT CASE THERE HAD BEEN NO SUCH GRAVE DEFECTS FOUND. THERE HAD BEEN ONE DEFECT IN THE RESPECT OF CASH PA YMENT VOUCHER/RECEIPTS WERE NOT BEARING VOUCHER NUMBER BU T THE SAME INDICATES THE DATE OF PAYMENT ON DIFFERENT SITES. I T IS PRACTICALLY DIFFICULT TO MENTION A SERIAL NUMBER OF PAYMENT VOUCHERS ON DIFF ERENT SITES ON THE SAME DAY. FURTHER FROM THE CONFIRMATION SUBMITTED BY THE LABO UR CONTRACTORS CLEARLY INDICATES THE PAYMENTS WERE MADE TO LABOUR CONTRACTORS MAINLY PERTAINS TO SMALL AMOUNT FOR THE GROCERY AND OTHER NEEDS OF LABOURERS AT THE SITE WHICH WERE MADE AS PER THE COMMON PRACTICE IN CIVIL CONSTRUCTION BUSINESS. THE PHOTO COPY OF CASH PAYME NT VOUCHERS ENCLOSED IN PAPER BOOK VIDE PAGE NOS.67 TO 82. IN OUR CASE THE BOOK PROFIT HAS BEEN 4.85% CONSIDE RING THE NET PROFIT OF RS.49.23 LACS AND SALARY AND INTEREST OF RS.19.96 L ACS PAID U/S 40(B) OF THE ACT WHEREAS THE SAME HAD BEEN 3.06% IN THE COMP ARABLE CASE (PROPRIETOR/INDL.) THUS THE ESTIMATION OF 5% HAS NO T BEEN IN TRUE PERSPECTIVE. IT IS ALSO NOTE WORTHY THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS SOME OF THE LABOUR CONTRACTORS STATEMENTS WERE RECO RDED AND THEY STATED THAT THE CASH RECEIVED WERE PAID TO THE LABOURERS S TAYING AT THE SITES. THE CASH PAYMENT RATIO HAS BEEN ALSO VERY LESSER SITE ( I.E. @ 28%) IN OUR CASE WHEREAS THE SAME WAS 58% IN THE COMPARABLE CASE AS STATED SUPRA. SUCH CASH PAYMENTS TO LABOURERS HAVE BEEN FOLLOWED REGUL ARLY AND ACCEPTED IN SCRUTINY ASSESSMENT CONSISTELY FOR LAST SEVEN YEARS . THUS THE CASH PAYMENT IN OUR CASE IS JUSTIFIABLE FROM THE ANGLE O F ABOVE MENTIONED FACTS OF OUR CASE. ITA NO.2916/AHD/2009 ASST. YEAR 2006-07 7 IN VIEW OF ABOVE THE REJECTION OF BOOKS OF ACCOUNT HAS BEEN TOTALLY INCORRECT AND CONTRARY TO THE SETTLED JUDICIAL PRON OUNCEMENT IN THIS REGARD. THUS THE ADDITION MADE ON THE BASIS OF COMP ARABLE CASE AND BY ESTIMATING THE SAME @ 5% HAS BEEN UNTRUE PERSPECTIV E. THE SAME MAY BE DELETED. 5. AFTER TAKING INTO CONSIDERATION THESE SUBMISSION S OF THE ASSESSEE THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO IN RE JECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. HOWEVER HE RESTRICTED THE ADDITION TO RS.1 00 000/- FOR UNVERIFIABLE DISCREPANCIES. 6. AGGRIEVED BY THIS ORDER OF THE LD. CIT(A) NOW TH E REVENUE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING LD. DR VEHEMENTLY SUPPORT ED THE ORDER OF THE AO AND FURTHER SUBMITTED THAT LD. CIT(A) WHILE RESTRICTING THE ADDITION TO RS. 1 LAC HAS NOT APPRECIATED THAT CASH PAYMENTS TOTALING TO RS.1 64 23 000/- HAVE BEEN MADE BY THE ASSESSEE FOR VARIOUS EXPENSES WHICH WAS NOT VERIFIABLE AND NOT EVEN SUPPORTED BY PROPER VOUCHERS THEREFORE SUSTAINING ADDITION OF RS.1 LAC ONLY WAS TOO MEAGER IN COMPARISON TO THE CLAIM OF SUBSTANTIAL EXPENSES MAD E BY THE ASSESSEE WHICH WERE NOT OPEN FOR VERIFICATION. HE THEREFORE PRAYED THAT THE ORDER PASSED BY THE LD. CIT(A) BE SET ASIDE AND THAT OF A O BE RESTORED. ITA NO.2916/AHD/2009 ASST. YEAR 2006-07 8 8. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND REITERATED THE SAME SUBMISSIONS AS MADE BEFORE LD. CIT(A) WHICH WE HAVE ALREADY REPRODUCED IN PARA 4 ABOVE AND ALSO PLACED RELIANCE ON THE ORDER OF LD. CIT(A). 9. HEARD BOTH THE PARTIES PERUSED THE RECORD AND W E FIND THAT ASSESSEE IS A CIVIL CONTRACTOR. THE ADDITION HAS BEEN MADE B Y THE AO AFTER MAKING COMPARISON WITH ANOTHER CASE OF CIVIL CONTRACTOR I. E. SHRI SURESH RATILAL SHETH OF BHAVNAGAR. THE ADDITION HAS BEEN MADE BY T HE AO AFTER POINTING OUT CERTAIN DEFECTS IN THE MAINTENANCE OF BOOKS OF ACCOUNT AND REJECTING THE BOOKS OF ACCOUNT AFTER HOLDING THAT P ROFIT SHOWN BY THE ASSESSEE WAS ON LOWER SIDE IN COMPARISON TO THE EAR LIER YEARS. THE LD. CIT(A) HOWEVER WAS OF THE VIEW THAT THE AO HAS NO T PROPERLY CONSIDERED THE PROFIT RATIO BY TAKING INTO ACCOUNT THE FULL FACTS OF THE ASSESSEES CASE AND THE FACTS OF SHRI SURESH RATILA L SHETH. THE ASSESSEE IS A PARTNERSHIP FIRM WHILE SHRI SURESH RATILAL SHETH IS AN INDIVIDUAL RUNNING HIS INDIVIDUAL PROPRIETORY CONCERN. THE AO HAS ESTIMATED THE NET PROFIT AT THE FLAT RATE OF 5% AS HAS BEEN DONE BY H IM IN THE CASE OF SHRI SURESH RATILAL SHETH WHICH HAS BEEN CONFIRMED AT TH E FIRST APPELLATE AUTHORITY BUT THE AO HAS NOT CONSIDERED THE ENTIRET Y OF THE FACTS. THE LD. CIT(A) WAS OF THE VIEW THAT IN THE CASE OF SHRI SUR ESH RATILAL SHETH THE NET PROFIT RATIO SHOWN WAS 3.06% WHILE IN THE CASE OF THE ASSESSEE BEING ITA NO.2916/AHD/2009 ASST. YEAR 2006-07 9 PARTNERSHIP IF THE SALARY AND INTEREST PAID TO THE PARTNERS AT RS.49.23 LACS AND RS.19.96 LACS WAS CONSIDERED THE NET PROFIT RAT IO COMES TO 4.85%. THIS VITAL DIFFERENCE ON FACTS WHILE MAKING THE COM PARISON HAS NOT BEEN TAKEN INTO CONSIDERATION BY THE AO. HOWEVER AS REG ARDS THE REJECTION OF BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND EST IMATION OF PROFIT WAS CONCERNED THE LD. CIT(A) FOUND THAT AOS OBSERVATIO NS WERE CORRECT TO SOME EXTENT AND THE BOOKS MAINTAINED BY THE ASSESSE E COULD NOT BE TOTALLY RELIED. THE AO HAS GENERALLY POINTED OUT THAT DURIN G THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS PAID 28% OF LABOUR C HARGES IN CASH. ALSO THE PAYMENTS HAVE BEEN MADE IN CASH FOR CARTING AND THE SITE EXPENSES. THE CASH VOUCHERS WERE SELF MADE WITHOUT VOUCHER NU MBERS AND FULL SITE. THE RATES OF LABOUR CHARGES WERE NOT VERIFIABLE WIT H SPECIFIC TYPES OF WORK DONE BY THE LABOURERS. THE VOUCHERS WERE NOT M AINTAINED IN THE CHRONOLOGICAL ORDERS. IN VIEW OF THESE DEFECTS THE LD. CIT(A) UPHELD THE ACTION OF THE AO IN REJECTING THE BOOKS OF ACCOUNT. HOWEVER AS REGARDS VOLUME OF CASH PAYMENTS AND DEFECTS IN COMPARISON O F THE CASE OF SHRI SURESH RATILAL SHETH THE LD. CIT(A) WAS OF THE VIEW THAT THE FACTS OF THE ASSESSEES CASE WERE ON BETTER FOOTING. ON BOTH THE SE POINTS ASSESSEE HAS BEEN ABLE TO CLARIFY THE POSITION SO FAR AS THE COM PARISON MADE BY THE AO IS CONCERNED. IF SALARY AND INTEREST PAID TO THE PA RTNERS ARE INCLUDED THE NET PROFIT IN THE CASE OF THE ASSESSEE WORKS OUT TO 4.85% AS AGAINST 5% APPLIED BY THE AO ON THE ESTIMATE BASIS EVEN WHEN T HE TURNOVER IN THE ITA NO.2916/AHD/2009 ASST. YEAR 2006-07 10 CASE OF THE ASSESSEE WAS RS.1424.47 LACS WHEREAS IN THE CASE OF SHRI SURESH RATILAL SHETH IT WAS ONLY 519.36 LACS. THERE FORE IN OUR CONSIDERED OPINION THE AO WAS NOT JUSTIFIED IN APPLYING FLAT R ATE OF 5% IN THE CASE OF THE ASSESSEE WITHOUT BRINGING ANY ADVERSE FINDING B Y WAY OF SCRUTINY OR ANY INQUIRY AS REGARDS TO THE GENUINENESS OF LABOUR PAYMENTS MADE TO THE CONTRACTORS AND TO THE LABOURERS. IN VIEW OF THIS WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) WHEREIN HE HAS RESTRICTED T HE ADDITION TO RS.1 LAC FOR UNVERIFIABLE DISCREPANCIES IN THIS CASE. THE OR DER PASSED BY HIM IS HEREBY UPHELD. 10. IN THE RESULT THE REVENUES APPEAL IS DISMISSE D. ORDER WAS PRONOUNCED IN OPEN COURT ON 29/7/11. SD/- SD/- (A. K. GARODIA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED : 29/7/11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD ITA NO.2916/AHD/2009 ASST. YEAR 2006-07 11 1.DATE OF DICTATION 28/7/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 28/7/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..