Mohmed Kurshid Alam Khan, Surat v. The Addl.CIT., Range-3,, Surat

ITA 4409/AHD/2007 | 2004-2005
Pronouncement Date: 28-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 440920514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 4409/AHD/2007
Duration Of Justice 3 year(s) 1 month(s) 15 day(s)
Appellant Mohmed Kurshid Alam Khan, Surat
Respondent The Addl.CIT., Range-3,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 28-01-2011
Date Of Final Hearing 05-01-2011
Next Hearing Date 05-01-2011
Assessment Year 2004-2005
Appeal Filed On 13-12-2007
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI MAHAVIR SINGH JM AND D.C.AGRAWAL AM MOHMED KURSHID ALAM KHAN PROP. HEENA ENTERPRISES TOWER BRIDGE APPTT. ADAJAN JUNCTION RANDER SURAT. VS. ADDL.CIT RANGE-3 SURAT. (APPELLANT) .. (RESPONDENT) AND ASSTT. CIT CIRCLE-3 SURAT. VS. MOHMED KURSHID ALAM KHAN PROP. HEENA ENTERPRISES TOWER BRIDGE APPTT. ADAJAN JUNCTION RANDER SURAT. (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI HARDIK VORA AR REVENUE BY:- SMT. SUMIT KAUR DR O R D E R PER D.C. AGRAWAL ACCOUNTANT MEMBER . THESE ARE TWO CROSS APPEALS ONE FILED BY THE ASSE SSEE AND THE OTHER FILED BY THE REVENUE FOR THE ASST. YEAR 2004- 05 AGAINST THE ORDER OF LD. CIT(A) DATED 15.10.2007. ITA NO.4409/AHD/2007 ASST. YEAR 2004-05 ITA NO.4490/AHD/2007 ASST. YEAR 2004-05 ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 2 2. FIRST WE TAKE UP REVENUES APPEAL WHEREIN FOLLOW ING GROUNDS HAVE BEEN RAISED :- (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLO WANCE OF OTHER DEDUCTIONS OF RS.6 71 449/- FROM THE CONTRACT RECEIPTS OF RS.8 24 889/- AS ASSESSEE COULD NOT FURNISH ANY EVI DENCE TO SUBSTANTIATE THE CLAIM. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.2 33 455/- UNDER THE PROVISIONS OF 2(24)(X) R.W.S. 36(1)(VA) OF THE IT ACT AS THE ASSE SSEE HAD DEPOSITED THE CONTRIBUTIONS MADE BY THE EMPLOYEES T O THE PROVIDENT FUND AFTER THE DUE DATE I.E. 15 TH OF THE NEXT MONTH IN RELATION TO THE MONTHS IN WHICH SUCH CONTRIBUTIONS WERE RECEIVED BY THE ASSESSEE. (3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLO WANCE OF WAGES OF RS.1 84 194/- BEING 1% OF THE WAGES CLAIME D AS THE ASSESSEE COULD NOT FURNISH PROPER EVIDENCE OF IDENT ITY ATTENDANCE AND ADDRESSES OF SOME OF THE WORKERS. (4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLO WANCE OF SITE AND CONVEYANCE OF RS.25 642/- BEING 20% OF THESE EX PENSES CLAIMED AS THE VOUCHERS PRODUCED IN SUPPORT THEREO F WERE SELF MADE AND THE SAME WERE NOT SUPPORTED BY ANY BILL. (5) IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. (6) IT IS THEREFORE PRAYED THAT THE ORDER OF THE CIT( A) BE SET-ASIDE AND THAT OF AO BE RESTORED. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N ERECTION AND FABRICATION CONTRACTOR. THE RETURN OF INCOME FOR AS ST. YEAR 2004-05 WAS FILED ON AN INCOME OF RS.9 99 260/-. THE AO HAD MAD E FOLLOWING ADDITIONS IN THE RETURNED INCOME:- ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 3 1. DISALLOWANCE OF OTHER DEDUCTIONS 6 71 449/- 2. ADDITION U/S 36(1)(VA) 233455/- 3. DISALLOWANCE OF DEPRECIATION 50 000/- 4. UNEXPLAINED INCOME 62 500/- 5. DISALLOWANCE OF BOGUS EXPENDITURE 75 000/- 6. DISALLOWANCE OF BOGUS EXPENDITURE 91 000/- 7. DISALLOWANCE OF BOGUS/INGENUINE EXPENDITURE 8 6 3 017/- 8. DISALLOWANCE OF WAGES 1 84 194/- 9. DISALLOWANCE OUT OF SITE EXPENSES AND CONVEYANCE EXPENSES 25 642/- (1) ADDITION ON ACCOUNT OF DISALLOWANCES OF OTHER DEDUC TIONS. (AS PER GROUND NO.1) 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAS SHOWN RECEIPT OF RS.8 24 889/- AS PER TDS CERTIFICATE WHEREAS HE HAS OFFERED ONLY A SUM OF RS.1 53 440/- FOR TAXATION. THE ASSESSEE DID NOT FURNISH ANY EVIDENCE IN SUPPORT OF THE CLAIM OF DEDUCTION OF RS.6 71 449/- FROM THE CONTRACT RECEIPTS OF RS.8 24 889/-. THE AO DISALLOWED THE CLAIM AND MADE THE ADDITION. 5. THE LD. CIT(A) SEEMS TO HAVE ALLOWED THE CLAIM A ND DELETED THE ADDITION ON THE GROUND THAT ALL THE DETAILS WERE SU BMITTED BY THE ASSESSEE WHICH WERE ALSO AVAILABLE WITH THE AO AND FURTHER T HAT AO COULD HAVE VERY WELL COLLECTED INFORMATION FROM THE ASSESSEE O R OTHER PARTIES. 6. THE LD. DR SUBMITTED THAT ONCE CONTRACT RECEIPTS ARE TO THE EXTENT OF RS.8 24 889/- THEN IT WAS FOR THE ASSESSEE TO EX PLAIN WHY ONLY A SUM OF RS.1 53 440/- IS OFFERED FOR TAXATION. 7. THE LD. AR ON THE OTHER HAND SUBMITTED THAT CONT RACT WAS TAKEN FROM M/S LARSEN & TOUBRO WHICH HAS DEDUCTED A SUM O F RS.6 71 449/- FOR VARIOUS ITEMS SUCH AS WORKMEN COMPENSATION SUP PLY OF MATERIAL AND USES OF THEIR EQUIPMENTS. SINCE THE ASSESSEE HAD RE CEIVED ONLY ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 4 RS.1 53 440/- IT HAS BEEN OFFERED FOR TAXATION. THE DETAILS ARE IN FACT AVAILABLE ON PAGE-2 OF THE AOS ORDER WHICH ARE AS UNDER :- CONTRACT RECEIPTS AS PER TDS CERTIFICATES TDS OTHER DEDUCTION TOTAL DEDUCTION. NET AMOUNT 188483 2073 86171 88244 100239 588505 6474 544705 551179 37326 40375 424 33130 33554 6821 7526 83 7443 7526 0 824889 9054 671449 680503 144386 IT WAS ALSO CLAIMED THAT DEDUCTIONS WERE MADE ONLY BY THE CONTRACTEE COMPANY WHICH COULD BE VERIFIED FROM THAT COMPANY. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IT IS NOT THE CASE OF THE AO THAT TDS HA S BEEN MADE ON ENTIRE SUM OF RS.8 24 889/-.IN FACT TDS HAS BEEN MADE OF R S.9054/- WHICH IS NOT CORRELATED WITH ANY PARTICULAR AMOUNT OF RECEIP T. DEDUCTIONS WERE MADE BY THE LARSEN & TOUBRO BEING THE CONTRACTEE WH ICH HAS TO BE ALLOWED AS DEDUCTION AND IF THERE WAS ANY DOUBT THE AO COULD HAVE VERIFIED IT FROM LARSEN & TOUBRO ITSELF. SINCE THER E IS NO MATERIAL TO HOLD THAT THERE WAS ANY SUPPRESSION OF RECEIPTS THERE IS NO MERIT IN THE GROUND RAISED BY THE REVENUE. THIS GROUND OF REVENUE IS RE JECTED. 9. THE NEXT ADDITION IS OF RS.2 33 455/- MADE U/S 2 (24)(X) READ WITH SECTION 36(1)(VA). THIS RELATES TO PAYMENT MADE TO EMPLOYEES PROVIDENT FUND. THE DUE DATES IN RESPECT OF EMPLOYEES CONTRIB UTION TO THE PF OF THE 15 TH OF THE NEXT MONTH AND ACTUAL DATES OF PAYMENT ARE GIVEN BY THE AO AS UNDER :- ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 5 MONTH AMOUNT DATE OF PAYMENT MARCH 2003 55762 24.4.03 APRIL 780 02.06.03 8654 02.06.03 46049 21.06.03 MAY 26135 25.6.03 780 25.06.03 10445 25.06.03 109925 25.06.03 50312 21.06.03 JUNE 15882 28.07.03 780 28.07.03 JULY 780 04.09.03 6172 04.09.03 THE AO WAS OF THE VIEW THAT PROVISIONS OF SECTION 4 3B ARE NOT APPLICABLE IN THE CASE OF EMPLOYEES CONTRIBUTION AND SINCE PA YMENTS ARE MADE BELATED THEY ARE LIABLE FOR ADDITION UNDER SECTION 2(24)(X) READ WITH SECTION 36(1)(VA). THE LD. CIT(A) DELETED THE ADDIT ION ON THE GROUND THAT PAYMENT HAS BEEN MADE BEFORE FILING OF THE RETURN A ND PROOF OF SUCH DEPOSITS HAVE BEEN FURNISHED ALONG WITH THE RETURN. 10. WE HAVE HEARD THE PARTIES. THE ISSUE IS NOW COV ERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON. SUPREME CO URT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC). T HEREFORE THE CLAIM OF THE ASSESSEE HAS RIGHTLY BEEN ALLOWED BY THE LD. CIT(A). AS A RESULT THIS GROUND OF REVENUE IS ALSO REJECTED. 11. THE NEXT ISSUE IN REVENUES APPEAL IS ON ACCOUN T OF DISALLOWANCE OF WAGES @ 1% AT RS.1 84 194/-. WHILE EXAMINING THE PROFIT AND LOSS ACCOUNT THE AO FOUND THAT ASSESSEE HAS DEBITED A SU M OF RS.1 84 19 378/- UNDER THE HEAD WAGES AGAINST THE CONTRACT RECEIPTS OF RS.3.10 CRORES. THUS THE AMOUNT OF WAGES IS 59.27% OF THE CONTRACT RECEI PTS. IN THE ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 6 IMMEDIATELY PRECEDING YEAR SUCH PERCENTAGE WAS 69%. THE WAGES WERE PAID IN CASH. THE AO REQUIRED THE ASSESSEE TO FURNI SH EVIDENCE OF ATTENDANCE IDENTITY AND ADDRESSES OF THE WORKERS F OR VERIFYING THE CLAIM AND ITS GENUINENESS BUT NO SUCH EVIDENCE WAS FURNIS HED. EVEN THE CONTRIBUTION TO PF SHOWN BY THE ASSESSEE WAS ONLY R S.2 94 183/-. FROM THAT POINT OF VIEW TOTAL WAGES WOULD COME TO RS.22 10 325/-. SINCE PAYMENTS WERE MADE IN CASH AND AMOUNTS OF WAGES ARE NOT VERIFIABLE THE AO DISALLOWED THE SAME AT 1%. 12. THE LD. CIT(A) DELETED THE ADDITION ON THE GROU ND THAT THE ADDL. CIT FAILED TO REBUT ASSESSEES SUBMISSIONS ABOUT PF CONTRIBUTION THAT MOST OF THE WORKERS WERE PAID LESS THAN RS.6 500/- AND THEREFORE PF WAS NOT DEDUCTIBLE OR NO CONTRIBUTION OF PF WAS TO BE M ADE IN RESPECT OF THEM THEREFORE WAGES PAID CANNOT BE CORRELATED WI TH PAYMENT OF PF. 13. THE LD. DR SUBMITTED THAT LD. CIT(A)S DECISION IS AGAINST THE FACTS THAT ALL THE PAYMENTS WERE MADE IN CASH. THERE IS N O EVIDENCE TO VERIFY SUCH PAYMENTS. 14. ON THE OTHER HAND THE LD. AR SUBMITTED THAT SU CH DISALLOWANCE COULD NOT BE MADE BY ESTIMATE AS THE LD. AO HAS NOT REJECTED THE BOOKS. 15. THE LD. DR ON THE OTHER HAND CLARIFIED THAT VI DE PARA 5 OF HIS ORDER THE AO HAS REJECTED THE BOOKS UNDER SECTION 145(3). 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. EVEN THOUGH DISALLOWANCE OUT OF WAGES MA Y NOT BE JUSTIFIED ON THE BASIS OF LOWER PF CONTRIBUTION AS THERE IS N O CORRECT BIFURCATION AS TO IN RESPECT OF WHOM PF ACT WAS APPLICABLE AND IN RESPECT OF OTHERS FOR WHOM PF ACT WAS NOT APPLICABLE. HOWEVER THE FACT T HAT PAYMENTS ARE ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 7 MADE IN CASH AND THERE IS NO SYSTEM OF VERIFICATION THE BOOKS HAVE BEEN RIGHTLY REJECTED BY THE LD. AO AND FROM THAT POINT OF VIEW THE DISALLOWANCE @ 1% MADE BY THE AO IS UPHELD WHICH IS APPARENTLY REASONABLE. THE ADDITION MADE BY THE AO IS RESTORED . THIS GROUND OF REVENUE IS ALLOWED. 17. THE NEXT ISSUE RAISED BY THE REVENUE IN ITS APP EAL IS ABOUT DISALLOWANCE OF SITE AND CONVEYANCE EXPENDITURE AT RS.25 642/- BEING 20% OF THE CLAIM. THE LD. AO FOUND THAT THESE EXPEN SES ARE NOT VERIFIABLE AND NO BILLS ARE RAISED ON THE ASSESSEE. HE ACCORDI NGLY DISALLOWED 20% OF THE CLAIM RESULTING IN AN ADDITION OF RS.25 642/-. THE LD. CIT(A) DELETED THE ADDITION ON THE GROUND THAT PROPER VOUCHERS HAV E BEEN MAINTAINED. 18. THE LD. DR SUBMITTED THAT LD. CIT(A) HAS IGNORE D THE FACT THAT NO BILLS ARE RAISED ON THE ASSESSEE AND EXPENDITURE HA S BEEN CLAIMED ON SELF- MADE VOUCHERS. 19. THE LD. AR ON THE OTHER HAND CLAIMED THAT THERE ARE VOUCHERS FOR ALL THE EXPENSES. 20. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE RES TRICT THE ADDITION TO 10%. THE REASONS ARE THAT THERE OUGHT TO HAVE BEEN SOME BILLS FOR ALLOWING THE CLAIM OF EXPENDITURE. SELF-MADE VOUCHE RS ARE NOT INDICATIVE OF EXPENDITURE HAVING BEEN INCURRED WHOLLY AND EXCL USIVELY FOR THE PURPOSE OF BUSINESS. THIS GROUND OF REVENUE IS PART LY ALLOWED. 21. THE OTHER TWO GROUNDS ARE GENERAL IN NATURE AND THEREFORE THEY ARE REJECTED. AS A RESULT APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. 22. IN ASSESSEES APPEAL FOLLOWING GROUNDS ARE RAIS ED :- ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 8 (1) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING DISALLOWANCE OF RS.50 000/- ON ACC OUNT OF DEPRECIATION. (2) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF RS.62 500/- FOR ALLEGE D UNACCOUNTED PAYMENTS. (3) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF RS.10 29 077/- FOR ALL EGED UNEXPLAINED PAYMENTS. (4) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN CHARGING INTEREST U/S 234B OF THE ACT. (5) IT IS THEREFORE PRAYED THAT THE ABOVE ADDITION/DISA LLOWANCE MADE BY THE AO AND CONFIRMED BY CIT(A) MAY PLEASE BE DEL ETED. (6) APPELLANT CRAVES LEAVE TO ADD ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE AP PEAL. 23. IN ASSESSEES APPEAL THE FIRST ISSUE RELATES TO CONFIRMATION OF ADDITION OF RS.50 000/- ON ACCOUNT OF DEPRECIATION. 24. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO REQUIRED THE ASSESSEE TO FURNISH PROOF OF ADDITION MADE TO THE A SSETS IN THE RELEVANT ASST. YEAR. IT WAS SUBMITTED THAT ASSETS OF RS.2 LA KHS WERE PURCHASED FROM ONE M/S ELECTRA ENGG. (P) LTD. AS THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY EVIDENCE IN SUPPORT OF THE CLAIM THE AO DISALLOWED THE CLAIM OF DEPRECIATION AT RS.50 000/-. 25. THE LD. CIT(A) CONFIRMED THE ADDITION ON THE GR OUND THAT ASSESSEE FAILED TO DISCHARGE THE ONUS OF PROVING THE PURCHAS ES AND USING THE ASSETS IN THE BUSINESS DURING THE RELEVANT ASST. YEAR. SIN CE ASSESSEE FAILED TO ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 9 DISCHARGE THIS ONUS AND FAILED TO FURNISH BASIC EVI DENCE OF PURCHASING THE ASSETS THE DISALLOWANCE OF DEPRECIATION WAS JUSTIF IED. 26. THE LD. AR SUBMITTED THAT PAYMENT OF RS.2 00 00 0/- WAS MADE THROUGH CHEQUE AND ADDRESS OF THE SUPPLIED WAS PROD UCED. THE BILLS WERE PRODUCED BEFORE THE AUDITORS AT THE TIME OF AUDIT BUT SUBSEQUENTLY IT WAS MISPLACED. HOWEVER PURCHASE OF EQUIPMENTS COULD NO T BE DISPUTED. THE AO HAS ALSO NOT CARRIED OUT ANY OTHER ENQUIRIES TO SUPPORT THE DISALLOWANCE. 27. THE LD. DR SUPPORTED THE ORDER OF LD. CIT(A). 28. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE RES TORE THE MATTER TO THE FILE OF AO WHO WILL VERIFY WHETHER EQUIPMENTS W ERE ACTUALLY PURCHASED THEY WERE TRANSPORTED TO THE SITE OF THE ASSESSEE AND THEY WERE ACTUALLY USED IN THE BUSINESS DURING THE RELEVANT A SST. YEAR. IF YES THEN THE CLAIM OF DEPRECIATION SHOULD BE ALLOWED BUT IF THERE IS NO EVIDENCE OF USE OF EQUIPMENT IN THE BUSINESS IN THE RELEVANT AS ST. YEAR THE CLAIM CAN BE DISALLOWED. AS A RESULT THIS GROUND OF ASSESSEE IS ALLOWED BUT FOR STATISTICAL PURPOSES. 29. GROUND NO.2 RELATES TO CONFIRMING ADDITION OF R S.62 500/- FOR ALLEGED UNACCOUNTED PAYMENT. 30. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT ASSESSEE HAS MADE CERTAIN PAYMENTS TO PARTIES WHICH REMAINED UNVERIFIABLE. NOTICES ISSUED UNDER SECTION 133(6) T O THEM COULD NOT BE SERVED. THE ASSESSEE FURNISHED RECONCILIATION STATE MENT. ON GOING THROUGH THIS STATEMENT THE WORKED OUT FOLLOWING UNE XPLAINED INCOME :- ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 10 (I) M/S MODI SILK CORPORATION RS.30 000/- CASH PAYMENT MADE BY ASSESSEE OUT OF UNEXPLAINED SOURCE NOT REFLECTED IN THE BOOKS OF ACCOUNT BY THE ASSESSEE. (II) M/S RAJENDRA SINGH & CO. RS.32 500/- CASH PAYMENT MADE BY ASSESSEE OUT OF UNEXPLAINED SOURCE NOT REFLECTED IN THE BOOKS OF ACCOUNT BY THE ASSESSEE. TOTAL- RS.62 500/- SINCE THESE PAYMENTS WERE NOT EXPLAINED THE AO MADE THE ADDITION OF RS.62 500/-. THE LD. CIT(A) CONFIRMED THE ADDITION ON THE GROUND THAT CASH PAYMENTS MADE BY THE ASSESSEE WERE NOT ACCOUNT ED FOR IN THE BOOKS. 31. THE LD. AR SUBMITTED THAT IT IS INCORRECT TO SA Y THAT PAYMENT WAS MADE IN CASH. HE SUBMITTED THAT PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. HE DREW OUR ATTENTION TO PAGE 17 OF ASSESS EES PAPER BOOK TO SHOW THAT M/S MODI SILK CORPORATION HAS CREDITED A SUM OF RS.30 000/- AND ON PAGES 20 TO 23 WHICH SHOWS THAT M/S RAJENDRA SINGH & CO. HAS RECEIVED RS.32 500/-. 32. THE LD. DR POINTED OUT THAT IN FACT PAGE 17 SHO WS THAT PAYMENT WAS MADE IN CASH AND PAGE 22 ALSO SHOWS THAT PAYMEN T WAS MADE IN EARLIER YEAR AND CHEQUE WAS RETURNED AND THERE IS A CONTRA ENTRY. 33. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. SINCE THE ASSESSEE HAS ONLY SHOWN THE CO PY OF ITS ACCOUNT IN THE BOOKS OF OTHER PARTY WHERE MONEY IS FOUND CREDI TED IN CASH BUT IT IS NOT EXPLAINED WHETHER PAYMENT IS RECORDED IN THE BO OKS OF ASSESSEE. SINCE NO SATISFACTORY EXPLANATION HAS BEEN FURNISHE D AS TO THE SOURCE OF RS.62 500/- WE CONFIRM THE ADDITION. ACCORDINGLY T HIS GROUND OF ASSESSEE IS REJECTED. ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 11 34. GROUND NO.3 RELATES TO UNEXPLAINED PAYMENT OF R S.10 29 077/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT FOLLOWING CASH PAYMENTS HAVE BEEN MADE :- I) R.C. CRANES SERVICES RS.15000 II) JAY JAGADAMBE CRANE SERV. RS.152970 III) AAKASH AUTO CENTRE RS.233587 IV) MAHASHAKTI ENTERPRISE RS.461520 -------------- RS.8 63 077 NOTICES WERE SENT BY THE AO AT THE GIVEN ADDRESSES BUT THEY REMAINED UNSERVED. NO CONFIRMATORY LETTERS IN RESPECT OF ABO VE PARTIES WERE PRODUCED AND NO OTHER EVIDENCE IN SUPPORT OF THE CL AIM THAT WHY PAYMENTS WERE MADE IN CASH AND FOR WHAT PURPOSES T HE AO MADE THE ADDITION OF RS.8 66 077/-. SIMILARLY THE AO FOUND PAYMENT OF RS.75 000/- CLAI MED TO HAVE BEEN MADE TO M/S APPOLLO CRANES (P) LTD. WAS NOT VE RIFIABLE. WHEN LETTER WAS SENT TO M/S APPOLLO CRANES (P) LTD. IT WAS REPL IED TO THE AO THAT THEY DID NOT HAVE ANY DEALING WITH THE ASSESSEE AND THERE IS NO ACCOUNT OF THE SAID PARTY IN THEIR BOOKS OF ACCOUNT. THE REPLY RECEIVED FROM THAT PARTY WAS SHOWN TO THE ASSESSEE WHO SUBMITTED HIS E XPLANATION AS UNDER :- WE HAVE GIVEN HIRE CHARGES FOR DELHI SITE AND NOT KOLKATTA SITE. A XEROX COPY OF SAID BILL IS ENCLOSED. THEY PARTY HAS STATED THAT THEY HAVE NOT DONE ANY TRANSACTION WITH KOLKATTA FLYOVER PROJ ECT SITE. THE SAME IS CORRECT. WE HAVE NOT PAID ANY AMOUNT FOR KOLKATTA S ITE. HOWEVER IN RESPECT OF DELHI SITE L & T ON BEHALF OF US HAS MAD E PAYMENT TO APPOLLO CRANE BY CHEQUE NO.927967 DATED 7.11.03. IN NUT SHELL THE REPLY OF THE ASSESSEE WAS THAT THE AO HAS CARRIED OUT ENQUIRY FROM KOLKATA SITE OF M/S APPOLLO CRANES (P) LTD. WHEREAS THE ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 12 ASSESSEE HAS DEALING WITH DELHI SITE OF M/S APPOLLO CRANES (P) LTD. IN WHOSE ACCOUNTS PAYMENTS ARE RECORDED. 35. THE AO ALSO FOUND THAT PAYMENT OF RS.91 000/- W AS MADE TO SHRI KAMAL KUMAR WHICH IS NOT GENUINE. WHEN NOTICE UNDER SECTION 133(6) WAS SENT TO THIS PARTY A REPLY WAS RECEIVED BY THE AO THAT THERE IS NO TRANSACTION IN THEIR BOOKS IN RESPECT OF THE ASSESS EE DURING THE FY 2003- 04 2004-05. THE AO ACCORDINGLY DISALLOWED THE CLAI M OF RS.91 000/-. 36. WHEN THE MATTER CAME BEFORE THE LD. CIT(A) THE DISALLOWANCE IN RESPECT OF SUM OF RS.75 000/- WAS CONFIRMED BY HIM ON THE GROUND THAT NO EVIDENCE HAS BEEN FURNISHED TO SUPPORT THE CLAIM THAT PAYMENT WAS MADE TO DELHI SITE OF M/S APPOLLO CRANE (P) LTD. TH ERE IS ALSO NO EVIDENCE ON RECORD TO SHOW THAT SUM OF RS.75 000/- WAS PAID BY M/S L & T TO M/S APPOLLO CRANE DELHI ON BEHALF OF THE ASSE SSEE. AS THE REASONS AS TO WHY L & T MADE THE PAYMENT ON BEHALF OF THE A SSESSEE WAS NOT SUBMITTED THE LD. CIT(A) CONFIRMED THAT ADDITION. 37. IN RESPECT OF PAYMENT TO SHRI KAMAL KUMAR FOR R S.91 000/- THE LD. CIT(A) CONFIRMED THE ADDITION ON THE GROUND THAT PA YMENT WAS MADE IN CASH TO THAT PARTY AND IS ALSO NOT ACCOUNTED FOR IN THE BOOKS OF THE ASSESSEE AND NO EXPLANATION THEREOF HAS BEEN FURNIS HED. 38. IN RESPECT OF SUM OF RS.8 63 077 LD. CIT(A) CO NFIRMED THE ADDITION ON THE GROUND THAT NO CONFIRMATORY LETTERS WERE RECEIVED FROM THE CONCERNED PARTIES. ALL THESE PARTIES ARE STILL IN EXISTENCE AND RUNNING THEIR RESPECTIVE BUSINESS AND IT IS THE RESPONSIBIL ITY OF THE ASSESSEE TO PRODUCE THE REQUISITE CONFIRMATIONS FROM THEM. THE ONLY EXPLANATION FURNISHED BY THE ASSESSEE WAS THAT SUCH PAYMENTS WE RE MADE IN CASH ON DEMAND OF BUSINESS WHICH WAS NOT FOUND SATISFACTORY BY LD. CIT(A). ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 13 39. THE LD. AR SUBMITTED THAT ALL THESE PARTIES ARE EXISTING. L & T HAS MADE PAYMENT TO M/S APPOLLO CRANE ON BEHALF OF THE ASSESSEE AND SUCH ENQUIRIES CAN BE CARRIED OUT FROM L & T. 40. IN RESPECT OF OTHERS THE LD. AR SUBMITTED THAT IN ANY CASE NET PROFIT MAY BE ESTIMATED IF IT IS FOUND THAT PAYMENTS ARE NOT VERIFIABLE. 41. THE LD. DR ON THE OTHER HAND SUPPORTED THE ORD ERS OF AUTHORITIES BELOW. 42. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE ISSUE REGARDI NG PAYMENT OF RS.75 000/- TO M/S APPOLLO CRANES CAN BE SUBJECTED TO FURTHER ENQUIRY. IF THE PAYMENT IS MADE BY L & T ON BEHALF OF THE ASSES SEE THEY CAN CONFIRM THE SAME. LET THE ASSESSEE PRODUCE THE CONFIRMATION S FROM L & T AND ALSO SHOW TO THE AO THAT JOURNAL ENTRIES HAVE BEEN PASSE D IN THE BOOKS OF THE ASSESSEE IF NOT THEN IT IS REALLY A SUPPRESSION OF RECEIPT BY THE ASSESSEE IN THE SENSE THAT CERTAIN PAYMENTS WHICH ASSESSEE OUGH T TO HAVE RECEIVED FROM L & T AND SHOWN AS RECEIPT IN THE TRADING ACCO UNT BUT HAVE ACTUALLY GONE TO M/S APPOLLO CRANE. IT CAN BE THEN PRESUMED THAT EXPENDITURE HAS BEEN CLAIMED BUT RECEIPTS HAVE NOT BEEN DECLARED. I F RECEIPTS ARE OUTSIDE THE BOOKS AND THEN EXPENDITURE HAS ALSO TO GO OUTSI DE THE BOOKS. IF EXPENDITURE IS DEBITED THEN RECEIPTS REMAINED UNACC OUNTED AND THEREFORE THEY HAVE TO BE TAXED ACCORDINGLY. IN ANY CASE THE ISSUE IS SUBJECT TO VERIFICATION AND CORRECT FACTS CAN BE FOUND ON ENQU IRY AS OBSERVED ABOVE. ACCORDINGLY THE ISSUE REGARDING RS.75 000/- IS SET ASIDE TO THE FILE OF AO FOR VERIFICATION. ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 14 43. IN RESPECT OF OTHER SUMS NAMELY RS.91 000/- CLA IMED TO HAVE BEEN PAID TO SHRI KAMAL KUMAR AND RS.8 63 077/- CLAIMED TO HAVE BEEN MADE TO OTHER FOUR PARTIES WE ARE OF THE VIEW THAT ASSE SSEE HAS FAILED TO SHOW WHY PAYMENTS HAVE BEEN MADE IN CASH AND WHETHER THE Y WERE ACTUALLY RECEIVED BY THE CONCERNED PARTIES AND IF SO THEN FO R WHAT PURPOSE. SINCE THE FACT OF RECEIVING BY OTHER PARTY IS NOT CONFIRM ED THE CLAIM OF EXPENDITURE CANNOT BE HELD AS GENUINE. ACCORDINGLY ADDITION TO THE EXTENT OF RS.91 000/- AND RS.8 63 077/- IS CONFIRME D. THIS GROUND OF ASSESSEE IS PARTLY ALLOWED. 44. GROUND NO.4 IS CONSEQUENTIAL BEING IN RESPECT O F INTEREST UNDER SECTION 234B. 45. GROUND NOS.5 & 6 ARE GENERAL IN NATURE AND HENC E THEY ARE REJECTED. AS A RESULT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 46. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL FILED BY THE RE VENUE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 28.1.11. SD/- SD/- (MAHAVIR SINGH) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD DATED : 28.1.11. MAHATA/- ITA NOS.4409 & 4490/AHD/2007 ASST. YEAR 2004-05 15 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 1.DATE OF DICTATION 18/1/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 25/1/ 2011 MEMBER.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..