Shri Hamid Khan, JODHPUR v. ITO, UDAIPUR

ITA 388/JODH/2012 | 2009-2010
Pronouncement Date: 07-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 38823314 RSA 2012
Assessee PAN ACJPK6953J
Bench Jodhpur
Appeal Number ITA 388/JODH/2012
Duration Of Justice 11 month(s) 9 day(s)
Appellant Shri Hamid Khan, JODHPUR
Respondent ITO, UDAIPUR
Appeal Type Income Tax Appeal
Pronouncement Date 07-10-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 07-10-2013
Date Of Final Hearing 03-10-2013
Next Hearing Date 03-10-2013
Assessment Year 2009-2010
Appeal Filed On 29-10-2012
Judgment Text
IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.K. SAINI ACCOUNTANT MEMBER. ITA NO.388/JODH/2012 (A.Y. 2009-10) SHRI HAMID KHAN VS. ITO WARD 1(2) C/O SHRI U.C. JAIN ADVOCATE UDAIPUR. SHATRUNJAY HARI SINGH NAGAR PALI ROAD JODHPUR. PAN NO. ACJPK 6953 J ASSESSEE BY : SHRI U.C. JAIN & SHRI RAJENDRA JAIN DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 03/10/2013. DATE OF PRONOUNCEMENT : 07/10/2013. O R D E R PER N.K.SAINI A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 29/08/2012 OF LD. CIT (A) UDAIPUR. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1] THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT(A) GROSSLY ERRED IN:- 2 A) SUSTAINING AN ADDITION OF RS. 22 29 386/- IN RESPEC T OF GROSS RECEIPTS OF THE WORK WHICH WAS SUBJECT MATTER OF SU BLETTING TO SHRI ABHISHEK SHARMA ON THE BASIS OF AGREEMENT EXEC UTED BETWEEN THE PARTIES. B) UPHOLDING THE APPLICATION OF SECTION 40A(3) EVEN WH EN THE AO REJECTED THE BOOKS OF ACCOUNTS THEREBY SUSTAINING A N ADDITION OF RS. 97 360/-. C) ENHANCING THE INCOME BY INCREASING DISALLOWANCE U/S 40A(3) BY A SUM OF RS. 3 89 440/- AND THAT TOO WITHOUT ANY NO TICE AS REQUIRED BY SUB-SECTION (2) OF SECTION 251. 2] WITHOUT PREJUDICED TO THE ABOVE AND IN THE ALTERNA TIVE:- A) THAT AT THE MOST THE LD CIT(A) COULD HAVE APPLI ED A NET PROFIT RATE ON THE GROSS CONTRACT RECEIPTS OF RS. 22 29 38 6/- WHICH WAS SUBJECT MATTER OF SUBLETTING RATHER SUSTAINING THE ADDITION OF ENTIRE GROSS RECEIPTS. B) THAT ON THE FACTS THE PROVISIONS OF SECTION 40A (3) ARE NOT APPLICABLE SO AS TO WARRANT ANY DISALLOWANCES UNDER THE SAID SECTION. 3] THAT THE PETITIONER MAY KINDLY BE PERMITTED TO RAI SE ANY ADDITIONAL OR ALTERNATIVE GROUND AT OR BEFORE THE TIME OF HEARING . 4] THE PETITIONER PRAYS FOR JUSTICE & RELIEF. 2 VIDE GROUNDS NO.1(A) & 2(B) THE GRIEVANCE OF THE ASSESSEE RELATES TO THE CONFIRMATION OF ADDITION OF RS. 22 29 386/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF GROSS CONTRACT RECEIPTS. 3. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT ASSESSEE WAS ENGAGED IN THE BUSINESS OF SUPPLY OF LABOUR FOR CIV IL AND TECHNICAL JOB WORKS ASSIGNED BY M/S. BINANI CEMENT WORKS LTD. PI NDWARA. THE ASSESSEE FILED HIS RETURN OF INCOME ON 29/09/2009 D ECLARING AN INCOME OF 3 RS. 6 31 114/-. LATER ON CASE WAS SELECTED FOR SC RUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER NOTICED THAT THE ASSESSEE HAD DECLARED TOTAL CONTRACT RECEIPTS OF RS . 1 27 89 759/- AND NET PROFIT OF RS.7 01 140/- GIVING NP RATE OF 5.48% . HE ALSO OBSERVED THAT IN THE EARLIER YEARS AS THE TURNOVER WAS BELOW THE LIMITS OF SECTION 44AB OF THE I.T. ACT 1961 (HEREINAFTER REFERRED TO AS ACT FOR SHORT) THE INCOME HAD BEEN DECLARED UNDER SECTION 44AD OF THE ACT. THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD SHOWN RECEIPTS OF RS. 1 27 89 759/- AND TDS OF RS. 2 89 809/- WHEREAS AS PER FORM NO. 26AS SUBMITTED BY THE CONTRACTEE-COMPANY THE TOTAL CONTRACT PAYMENT TO T HE ASSESSEE WERE SHOWN AT RS. 1 51 89 921/- WITH TDS OF RS. 3 44 403 /-. HE WAS OF THE VIEW THAT THE RECEIPTS OF RS.24 09 162/- WERE NOT S HOWN BY THE ASSESSEE. THE EXPLANATION OF THE ASSESSEE WAS THAT THE SAID A MOUNT MUST REPRESENT THE BOOK ADJUSTMENT ENTRIES MADE BY THE COMPANY (CO NTRACTEE) WHICH IN FACT HAD NOT BEEN RECEIVED BY THE ASSESSEE. THE AS SESSING OFFICER HAD GIVEN THE DETAILS OF RECEIPTS SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS AT RS. 1 27 89 759/- ALONG WITH TDS OF RS. 2 89 809/- AND ALSO THE DETAILS OF RECEIPTS NOT SHOWN BY THE ASSESSEE A T PAGES 4 & 5 (NOT NUMBERED) OF THE ASSESSMENT ORDER DATED 28/11/2011. THE ASSESSING OFFICER POINTED OUT THAT THE ASSESSEE HAD NOT SHOWN THE RECEIPTS OF RS. 4 22 29 386/- RECEIVED FROM M/S. BINANI CEMENT WORKS LTD. SIKAR AND RS. 1 79 776/- RECEIVED FROM FLSMDTH PVT. LTD. HE ALSO NOTED THAT IN THE BANK ACCOUNT THE ASSESSEE HAD SHOWN DEPOSIT OF RS. 96 07 478/- INCLUDING CERTAIN CASH DEPOSITS AS AGAINST THE CONT RACT RECEIPTS SHOWN OF RS. 1 27 89 759/-. IT WAS POINTED OUT BY THE ASSES SING OFFICER THAT THE ASSESSEE PARTLY SHOWN THE RECEIPTS FROM M/S. BINANI CEMENT WORKS LTD. SIKAR UNIT AND FLSMDTH PVT. LTD. AND NO EVIDENCE OF ANY ADJUSTMENT ENTRY BY CONTRACTEE SO CLAIMED BY THE ASSESSEE HAD BEEN SUBMITTED. THE EXPLANATION OF THE ASSESSEE BEFORE THE ASSESSING OF FICER WAS THAT HE HAD GIVEN ITS SUB-CONTRACT FOR THE WORK AT BINANI CEMEN T WORKS LTD. NEEM KA THANA IN LIEU OF CONSIDERATION OF RS. 1 50 000/-. HOWEVER DUE TO DISPUTE IN BETWEEN THE ASSESSEE AND THE SUB-CONTRACTOR THE SUB-CONTRACT WAS TERMINATED IN MIDDLE OF THE DECEMBER 2008 AND THER EAFTER THE ASSESSEE HIMSELF DID THE CONTRACT JOB AND THE RECEIPT OF RS. 3 99 416/- REPRESENTED THE WORK BY HIM AT SIKAR IN BETWEEN THE PERIOD OF DECEMBER 2008 TO MARCH 2009. THE ASSESSEE ALSO ADMITTED HA VING OPENED A BANK ACCOUNT AT NEEM KA THANA AND THIS BANK ACCOUNT HAD NOT BEEN DISCLOSED TO THE DEPARTMENT. THE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTION BY HOLDING THAT THE ASSESSEE HAD GIVEN C ONTRADICTORY EXPLANATION AT DIFFERENT STAGES TO ESCAPE THE TAX L IABILITY. AS REGARDS THE 5 RECEIPT OF RS.1 79 776/- IT WAS EXPLAINED BY THE A SSESSEE THAT THE SAID WORK DONE PERTAINED TO LAST FINANCIAL YEAR AND THE BILL WAS TENDERED IN MARCH 2008 HOWEVER TDS WAS DEDUCTED IN APRIL 20 08. THE ASSESSEE ALSO STATED THAT THE REGISTER AND OTHER BANK ACCOUN TS WERE LOST IN THE TRANSIT AND THEREFORE COULD NOT BE PRODUCED. THE ASSESSING OFFICER DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE A ND MADE THE ADDITION OF RS. 24 09 162/- (RS.22 29 386/- + RS. 1 79 776/- ) BY OBSERVING THAT THE ASSESSEE HAD NOT DISCLOSED THE SAID RECEIPTS. NO S EPARATE ADDITION WAS SUGGESTED FOR OTHER DEFECTS BY OBSERVING THAT THE A DDITION ON ACCOUNT OF SUPPRESSED RECEIPTS WOULD COVER THE ADDITIONS AND D ISALLOWANCE TO BE MADE EXCEPT THAT SPECIFIC ADDITION FOR CONTRAVENTI ON OF PROVISIONS OF SECTION 40A(3) OF THE ACT. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER T O THE LEARNED CIT(A) AND MADE THE FOLLOWING SUBMISSIONS:- '2. THE ASSESSEE IS A LABOR SUPPLY CONTRACTOR AND H AS DECLARED NET PROFIT RATE OF 5.48% ON TOTAL CONTRACT RECEIPTS OF RS. 1 2 7 89 759/-. THE ACCOUNTS OF THE ASSESSEE WERE AUDITED U/S 44AB. 3. REGARDING THE ALLEGED SUPPRESSED CONTRACT RECEIP TS OF RS. 24 09 162/- THE ASSESSEE HAS SUBMITTED BEFORE THE LEARNED A.O. THAT THIS RECEIPTS RELATES TO NEEMA KA THANA UNIT OF BINANI CEMENT AND WORK THERE AT WAS SUB-CONTRACTED IN LIEU OF NET CONSIDERATION OF RS. 1 50 000/- AS WELL SOME WORK AT SIKAR DURING DECEMBER TO MARCH 2008-09. SUB SEQUENTLY THERE WAS A DISPUTE ALSO. REGARDING RS. 1 79 776/- THE PAYMEN T WAS RECEIVED BEFORE APRIL 2008 AND IT DOES NOT FALL IN THE ASSESSMENT Y EAR 2009-10. 6 4. THE LEARNED A.O. TERMED THE WHOLE SUBMISSION AS A STORY. THE LEARNED A.O. ASKED TO PRODUCE VARIOUS DETAILS AND DOCUMENTS . SINCE THESE WERE LOST IN TRANSIT WHICH WAS FURTHER SUBSTANTIATED BY LODG ING A F.I.R. OF LOSS BY THE ASSESSEE. 5. WITHOUT PRE-JUDICIOUS TO ABOVE THE NEXUS OF THE POINT AND GROUND OF THE APPEAL IS ALLEGED ADDITION OF SUPPRESSED CONTRACT R ECEIPTS OF RS. 24 09 162/- WAS ADDED AS INCOME IN THE HANDS OF THE ASSESSEE. T HIS FACT IS FURTHER IMPORTANT THAT FORM NO. 26AS IS AUTHENTIC PUBLIC DO CUMENT BUT ILLITERATE ASSESSEES MOST OF THE TIME FAILS TO ACCESS FORM NO. 26AS ONLINE AND DUE TO THIS REASON ALSO THIS FACT THE RECEIPTS REMAINED UN -ACCOUNTED. THE ASSESSEE AS WELL DID NOT CLAIM TDS AND ALSO THE EXPENSES. TH E LEARNED A.O. HAS NOWHERE IN HIS ASSESSMENT ORDER DISPUTED THE CIRCUM STANCES IN THE JUSTICE OF LAW AND ON THE BASIS OF VARIOUS CASE LAWS. EVEN IN THE CASE OF SEARCH AND SEIZURE ASSESSMENT THE TOTAL SUPPRESSED SUM HAS BE EN HELD UN-JUSTIFIED AS ADDITION IN ASSESSED INCOME. INSTEAD ONLY INCOME AT THE RATE OF NET PROFIT OF GROSS PROFIT RATE ON SUCH RECEIPTS HAS BEEN SUSTAIN ED AS ADDITION. IN SUPPORT OF THIS WE SUBMIT FOLLOWING CITATIONS FOR YOUR KIND PERUSAL:- (I) 263 ITR 610 M.P. (II) 257 ITR 668 P & H AND (III) 120 TAXMAN 181 RAJASTHAN. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES WE PRAY Y OUR HONOUR TO RESTRICT THE ADDITION @ 5.48% OF TOTAL ALLEGED SUPPRESSED CO NTRACT RECEIPT OF RS. 24 09 162/-. 5. THE ASSESSEE FURTHER SUBMITTED TO THE LEARNED CIT( A) AS UNDER:- 1. AS SUBMITTED EARLIER THAT WORK RELATED TO SIKAR WAS GIVEN ON PETTY CONTRACT TO MR. ABHISHEK SHARMA A NET PROFIT OF RS. 1 50 000.00. THIS SUB- CONTRACTOR DID NOT CARRIED ALL THIS CONTRACT WORK T ILL DECEMBER 2008. THE COPY OF SUB-CONTRACT AGREEMENT IS ENCLOSED HEREWITH . FROM THIS AGREEMENT IT IS PERTINENT THAT ALL EXPENSES TO COMPLETE THIS WORK WAS ON ACCOUNT OF SUB-CONTRACTOR NO EXPENSES HAS BEEN DEBITED IN THE BOOKS OF ACCOUNTS OF SUB-CONTRACTOR IN LIEU OF NET PROFIT OF RS. 1 50 00 0.00. AS A DISPUTE ARISED WITH SUB-CONTRACTOR EVEN THIS SUM OF RS. 1 50 000.00 BEING NET PROFIT ALSO NOT RECEIVED. 7 THE ONLY ERROR ON THE PART OF THE ASSESSEE IS THE R ECEIPT OF RS. 24 09 162.00 BE APPLIED OR AT THE MOST A NET PROFIT RECOVERABLE FROM PETTY CONTRACTOR OF RS. 1 50 000.000 MUST BE ADDED IN THE INCOME OF THE ASSESSEE BY LEARNED A.O. INSTEAD OF TOTAL RECEIPTS OF RS.24 09 162.00. 2. REGARDING RS. 1 79 776.00 WE ARE ENCLOSING HEREW ITH A PAYMENT VOUCHERS OF FLSMIDTH IN WHICH BILL DATED 16.03.2008 WHICH RELATES TO ASSESSMENT YEAR 2008-09 NOT COVERED UNDER THE ASSES SMENT YEAR. THIS CONTROVERSY MUST HAVE AROSE IN THE MIND OF THE A.O. BECAUSE THIS AMOUNT WAS DEPOSITED IN APRIL 2008. ''ASSESSEE HAS NOT DEBITED ANY EXPENSE RELATING TO CONTRACT RECEIPT OF RS. 24 09 162.00. THE FINDINGS GIVEN BY THE LEARNED A. O. IN HIS ORDER AT PARA (A) OF CONCLUSION 'THE ENTIRE EXPENSES MUST HAVE BEEN A CCOUNTED FOR BY THE ASSESSEE. ......'. THIS CONCLUSION IS BASED ON PRESUMPTION OF LEARNED A.O. HAD THE ASSESSEE DEBITED EXPENSES RELATING TO RS. 24 09 162.00 (MINU S 5.48% NET PROFIT = 24 09 162.00 X 5.48% = 1 30 220.00 EQUAL TO EXPENSE S 22 78 942.00 TOWARDS EXPENSES MORE DEBITED WOULD HAVE GIVEN THE RESULT OF RS. 6 37 714.00 PROFIT AS PER RETURN FILED MINUS 22 78 942.00 = A RETURN LOSS OF RS. 16 47 828.00)? ALTERNATIVELY IN RETURN NET PROF IT OF RS. 6 31 114.00 AFORESAID CONTRACT RECEIPT OF RS. 24 09 762.00 ADDE D = 30 40 276.00 GIVES A NET PROFIT RATE OF 23.77% WHICH IS IMPOSSIBLE AND I MPRACTICAL. THIS WOULD HAVE GIVEN A UNBELIEVABLE RESULT. HENCE THIS PRESUM PTION OF THE LEARNED A.O. IS NEITHER TRUE AND CORRECT ON THE BASIS OF FA CTS AS WELL NOT IN LAW. IT IS VERY IMPORTANT TO NOTE THAT THE LEARNED A.O. IN HIS CONCLUDING PARA (I) HAS STATED THAT NORMALLY EXPECTED RATE MUST OF NET PROFIT MUST BE 8.00% IN CASE OF ASSESSEE. THUS THE LEARNED A.O. HAS CONTRA DICTED HIS OWN PRESUMPTION. 6. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE INITIALLY TRIED TO EXPLA IN THAT THE RECEIPT OF RS. 22 29 386/- PAID BY M/S. BINANI CEMENT WORKS LTD. R EPRESENTED THE BOOK ADJUSTMENT ENTRY LATER-ON CHANGED THIS VERSION AND CLAIMED THAT THE 8 WORK AT NEEM KA THANA UNIT WAS SUB-CONTRACTED TO OT HER PERSON FOR NET CONSIDERATION OF RS. 1 50 000/- HOWEVER THE ASSES SEE HAD NOT SHOWN ANY AMOUNT FROM THE SUB-CONTRACTOR OF RS. 1 50 000/-. LEARNED CIT(A) ALSO OBSERVED THAT THE ASSESSEE HAD NOT SHOWN BY WAY OF ANY EVIDENCE THAT THE EXPENSES OF RELEVANT PERIOD AT NEEM KA THANA UN IT WERE INCURRED BY THE SUB-CONTRACTOR AND ALSO NOT DEDUCTED TDS FROM T HE PAYMENTS IF ANY MADE TO THE SUB-CONTRACTOR NOR ASSESSEE HAD PUT ON RECORD ANY TDS CERTIFICATE ISSUED TO THE SUB-CONTRACTOR FOR ANY WO RK CARRIED OUT BY HIM. HE FURTHER OBSERVED THAT THE ASSESSEE HAD SUBMITTED TAX AUDIT REPORT UNDER SECTION 44AB OF THE ACT THEREFORE ALL THE E XPENSES INCURRED MUST HAD BEEN ENTERED IN AUDITED BOOKS AND IT COULD NOT BE SAID THAT EXPENSES WERE NOT DEBITED. AS REGARDS TO THE ASSESSEES CLA IM THAT ONLY NP RATE ON THE SUPPRESSED CONTRACT RECEIPTS OF RS. 24 09 162/- @ 5.84% COULD BE APPLIED LEARNED CIT(A) WAS OF THE VIEW THAT IT WAS NOT ACCEPTABLE AS THE ASSESSEE HAD SUBMITTED TAX AUDIT REPORT WHICH COUL D BE PREPARED ONLY AFTER THE AUDIT OF THE BOOKS OF THE ASSESSEE AND IT WAS SUPPOSED TO TAKE INTO CONSIDERATION ALL THE RECEIPTS AND EXPENSES. L EARNED CIT(A) ALSO OBSERVED THAT THE CASE-LAWS RELIED UPON BY THE ASSE SSEE WERE DISTINGUISHABLE AS THESE WERE REGARDING APPLICATION OF NP RATE ON THE SUPPRESSED SALES WHEREAS IN ASSESSEES CASE IT WAS THE RECEIPTS WHICH 9 HAD NOT BEEN SHOWN WHILE EXPENSES HAD BEEN CLAIMED. LEARNED CIT(A) CONFIRMED THE ADDITION OF RS. 22 29 386/-. AS REGA RDS ADDITION OF RS. 1 79 776/- CLAIMED TO HAVE BEEN RELATED TO LAST FIN ANCIAL YEAR LEARNED CIT(A) OBSERVED THAT THE ASSESSEE HAD SUBMITTED COP Y OF PAYMENT VOUCHER OF FLSMDTH PVT. LTD. AS PER WHICH THE BILL WAS SUBMITTED ON 16/03/2008 WHICH REPRESENTED SERVICES CHARGES FOR COOLING FAN AND AS THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACC OUNTING SO THE ADDITION IN THIS YEAR WAS NOT TENABLE. LEARNED CIT (A) DIRECTED THE ASSESSING OFFICER TO VERIFY AS TO WHETHER THE SAID AMOUNT HAD BEEN SHOWN IN THE A.Y. 2008-09 ON ACCRUAL BASIS. NOW THE ASS ESSEE IS IN APPEAL. 7. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SU BMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ENTIRE RECEIPTS HAD BEEN ADDED BY THE ASSESSING OFFICER BY IGNORING THE EXPENSES INCURRED BY THE ASSESSEE. IT WAS CONTENDE D THAT THE INCOME BY APPLYING NP RATE ON SUCH RECEIPTS COULD HAVE BEEN S USTAINED. 8. IN HIS RIVAL SUBMISSIONS LD. D.R. STRONGLY SUPPOR TED THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PAR TIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT 10 CASE IT IS AN ADMITTED FACT THAT THERE WAS A DIFFE RENCE BETWEEN THE TOTAL RECEIPTS SHOWN BY THE ASSESSEE IN HIS BOOKS OF ACCO UNTS AND BY THE CONTRACTEE IN FORM NO. 26AS. THE ASSESSEE COULD NO T PRODUCE ANY EVIDENCE IN SUPPORT OF HIS CONTENTION THAT THE DIFF ERENCE WAS ON ACCOUNT OF ADJUSTMENT ENTRY. IN THE PRESENT CASE IT IS CLE AR THAT THE TOTAL RECEIPTS AMOUNTING TO RS. 1 51 89 921/- WERE NOT SHOWN BY TH E ASSESSEE THERE WAS A DIFFERENCE OF RS. 24 09 162/- SINCE THE ASSES SEE HAD SHOWN THE CONTRACT RECEIPTS AT RS. 1 27 89 759/- ONLY. THE A SSESSING OFFICER MADE THE ADDITION ON ACCOUNT OF DIFFERENCE IN THOSE RECE IPTS. THE LEARNED CIT(A) SUSTAINED THE ADDITION OF RS. 22 29 386/- RE CEIVED FROM M/S. BINANI CEMENT WORKS LTD. AND FOR THE OTHER RECEIPT S OF RS. 1 79 776/- A DIRECTION WAS GIVEN TO THE ASSESSING OFFICER TO VER IFY THE CLAIM OF THE ASSESSEE THAT AS TO WHETHER THE SAID AMOUNT PERTAIN ED TO THE PRECEDING YEAR AND WAS ACCOUNTED FOR IN THAT YEAR AND IF IT W AS SO THEN NO ADDITION WAS CALLED FOR. IN OUR OPINION WHEN THE RECEIPTS WERE NOT SHOWN BY THE ASSESSEE IN THE REGULAR BOOKS OF ACCOUNTS IT CANNO T BE PRESUMED WITHOUT BRINGING COGENT MATERIAL ON RECORD THAT THE EXPENSE S RELATED TO THE SAID RECEIPTS WERE SHOWN IN THE BOOKS OF ACCOUNTS. IN O THER WORDS WHEN THE RECEIPTS WERE OUT OF THE BOOKS OF ACCOUNTS THE PAY MENT ON ACCOUNT OF EXPENSES MAY ALSO BE OUT OF THE BOOKS OF ACCOUNTS. IN SUCH 11 CIRCUMSTANCES THE ONLY WAY TO DETERMINE THE INCOME IS APPLICATION OF NP RATE. IN THE INSTANT CASE THE ASSESSEE IN THE EAR LIER YEARS WAS SHOWING THE INCOME UNDER SECTION 44AB OF THE ACT WHICH PRO VIDES THAT THE NP RATE MUST BE APPLIED AT 8%. SINCE THE CONTRACT RE CEIPTS AMOUNTING TO RS. 22 29 386/- (RS. 24 09 162/- RS. 1 79 776/-) WE RE NOT SHOWN BY THE ASSESSEE SO THE NP RATE WAS TO BE APPLIED ON THOSE RECEIPTS. WE THEREFORE DIRECT THE ASSESSING OFFICER TO APPLY NP RATE OF 8% ON THE RECEIPTS OF RS. 22 29 386/- WHICH WERE NOT ACCOUNT ED FOR BY THE ASSESSEE IN THE REGULAR BOOKS OF ACCOUNTS. AS REGA RDS TO THE REMAINING AMOUNT OF RS. 1 79 776/- WE DO NOT SEE ANY INFIRMI TY IN THE DIRECTION GIVEN BY THE LEARNED CIT(A) TO THE ASSESSING OFFICE R TO VERIFY FROM THE RECORD AS TO WHETHER THE SAID AMOUNT WAS ACCOUNTED FOR IN THE EARLIER YEAR BUT CANT BE ADDED IN THIS YEAR. 10 . THE NEXT ISSUE VIDE GROUNDS NO. 1(B) & (C) AND 2( B) RELATES TO THE SUSTENANCE OF ADDITION UNDER SECTION 40A(3) OF THE ACT. 11 . THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSING OFFICER MADE AN ADDITION OF RS. 97 360/- BY OBSERVING THAT THE ASSESSEE HAD DEBITED RS. 5 11 800/- IN THE AUDITED BOOKS OF ACCO UNTS WHICH WERE RELATED TO THE CASH PAYMENTS TOWARDS CHARGES PAID F OR THE MEALS TO THE 12 LABOURERS AND STAFF MEMBERS IN CASH. THE SAID ADDI TION WAS MADE BY THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE HA D NOT FILED COMPLETE DETAILS TO SHOW HOW MANY EMPLOYEES/LABOURERS DINED IN EACH MONTH AND AS TO WHETHER THE CONDITION OF THEIR EMPLOYMENT REQ UIRE FREE MEALS PROVISION OR NOT OR THE ASSESSEE WAS MAKING ANY REC OVERY FROM THEM. WHEN THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) HE ENHANCED THE DISALLOWANCE TO RS. 4 86 800/- BY OBSERVING THA T THE PROVISIONS OF SECTION 40A(3) WERE AMENDED W.E.F. 01/04/2009 BY FI NANCIAL ACT 2008 WHICH PROVIDES THAT THE DISALLOWANCE WHERE THE ASSE SSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT OR AGGREGAT E OF PAYMENTS MADE TO A PERSON IN A DAY OTHERWISE THAN BY A ACCOUNT P AYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT EXCEEDS RS. 20 000/- NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE. H E THEREFORE ENHANCED THE DISALLOWANCE FOR THE WHOLE AMOUNT OF RS. 4 86 8 00/-. NOW THE ASSESSEE IS IN APPEAL. 12. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE LEARNED CIT(A) ENHANCED THE DISALLOWANCE WITHOUT ISSUING AN Y SHOW-CAUSE NOTICE AND THE ASSESSING OFFICER MADE DISALLOWANCE WITHOUT APPRECIATING THE FACTS IN THE RIGHT PERSPECTIVE. IT WAS FURTHER SUB MITTED THAT NO ADDITION 13 WAS WARRANTED UNDER SECTION 40A(3) OF THE ACT SINCE THE PROFIT WAS ESTIMATED BY APPLICATION OF NP RATE. 13. IN HIS RIVAL SUBMISSIONS LEARNED D.R. SUPPORTED T HE ORDERS OF THE AUTHORITIES BELOW. 14 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE THE OBSERVATIONS OF THE ASSESSING OFFICER IN PARA 5 OF THE ASSESSMENT ORDER WAS THAT THE ASSESSEE MADE THE PAYMENTS TOWAR DS MEALS CHARGES TO LABOURERS AND STAFF MEMBERS TO SHRI AMAR SINGH SOLA NKI AND THE SAID PAYMENTS DURING THE YEAR UNDER CONSIDERATION AMOUNT ED TO RS. 5 11 800/-. THE ASSESSING OFFICER NOTICED THAT THE CASH PAYMENT IN EACH DAY EXCEEDED TO RS. 20 000/- AND IN WHOLE OF THE YE AR IT WAS AT RS. 4 86 800/-. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT THE PAYMENTS MADE TO SHRI AMAR SINGH SOLANKI WERE ON ACCOUNT OF DINING CHARGES I.E. FOR MEALS OF THE LABOURERS AND THE STAFF MEMBERS. IN OUR OPINION WHEN THE ASSESSING OFFICER HIMSELF ADMITTED THAT THOSE P AYMENTS WERE MADE ON ACCOUNT OF MEALS PROVIDED TO THE LABOURERS THEN IT CANT BE PRESUMED THAT THE PAYMENTS WERE MADE ONLY FOR ONE PERSON IN A SINGLE DAY AND NOT FOR FOODING CHARGES OF MANY PERSONS. HOWEVER AS T HE DETAILS OF SUCH EMPLOYEES/LABOURERS WERE NOT PROVIDED TO THE ASSESS ING OFFICER AND IN 14 ABSENCE OF THE DETAILS THE DISALLOWANCE WAS MADE U NDER SECTION 40A(3) OF THE ACT. WE THEREFORE DEEM IT APPROPRIATE TO REMAND THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER TO VERIFY FROM THE DETAILS IF ANY SUBMITTED BY THE ASSESSEE AS TO WHETHER THE IMPUGNE D AMOUNT WAS REIMBURSEMENT OF THE MEAL CHARGES TO SHRI AMAR SING H SOLANKI OR IT WAS PAYMENTS TOWARDS EXPENSES EXCEEDING TO RS. 20 000/- . ACCORDINGLY THIS ISSUE IS SET ASIDE TO THE ASSESSING OFFICER FOR RE- ADJUDICATION IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONA BLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 15. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY AL LOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE COURT ON 07 TH OCTOBER 2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07 TH OCTOBER 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR ITAT JODHPUR.