DCIT (CC)- 2(3), MUMBAI V. CLASSIC MARBLE CO. PVT. LTD., MUMBAI

ITA 2303/MUM/2024

AI Insights

The case involves the Deputy Commissioner of Income Tax (CC) vs. Classic Marble Co. Pvt. Ltd., where the Revenue appealed against the order of the CIT(A) that had deleted additions made by the Assessing Officer. The additions pertained to alleged unaccounted cash sales amounting to Rs. 20,13,000 and disallowance of labor charges amounting to Rs. 6,18,64,107, which were treated as non-genuine business expenditures. The Tribunal examined the evidence and previous rulings, finding that the CIT(A)'s decision was well-supported and justified, leading to the dismissal of the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470908 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2021-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TREATING
• Keywords: Business expenditure; Document seized; Documents seized; Principle of natural justice; Bogus
• Section: 143(3); 142(1); 132; 133(6); 13; 153C; 37; 37(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 2303/MUM/2024 Assessment Year: 2021-22 DCIT (CC)–2(3), Mumbai Vs. Classic Marble Co. Pvt. Ltd. 15, Subhash Nagar, Bhandup Village Road, Bhandup (W), Mumbai – 400078. PAN: AADCC3249H (Appellant) (Respondent) Present for: Assessee : Shri Aakash Kumar, CA Revenue : Shri Krishna Kumar, Sr. DR Date of Hearing : 31.12.2024 Date of Pronouncement : 07.03.2025 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order of ld. CIT(A)– 48, Mumbai, vide order no. ITBA/APL/M/250/2023- 24/1060707597(1), dated 09.02.2024, passed against the assessment order by Deputy Commissioner of Income Tax, Central Circle-2(3), Mumbai, u/s. 143(3) r.w.s. 153C of the Income-tax Act (hereinafter referred to as the “Act”), dated 28.03.2023 for Assessment Year 2021- 22. 2 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 2. Assessee is engaged in the business of import of rough marble blocks, marble slabs, granite slabs and tiles. It is also engaged in the business of manufacture of artificial marble and power generation. Ground no.1 raised by the Revenue is in respect of addition of Rs.20,13,000/- on account of disallowance of unaccounted cash sales. In this respect, it is alleged that assessee received unexplained money from Shri Kaushal Khadelia. The issue arises out of search u/s. 132 of the Income-tax Act, 1961, (\"the Act\") which was carried out at the premises of the Mr. P.V. Sarma Group on 21.10.2020 along with residence of Mr. P.V. Sarma, residence & office/godown premises belonging to Shri Kaushal Khandelia family and their related business, Dhaval Bharat Kumar Shah and other related parties. It was in the course of this search action that Shri. Kaushal Khandelia had agreed that he had paid to assessee, Rs. 20,13,000/- in cash towards purchase of marble. Shri Kaushal Khandelia, thereafter, retracted his statement by filing sworn affidavit dated 24.08.2021. Assessee submitted that it had sold marble to Smt. Kusum Khandelia and M/s. Kusum Silicones Private Limited and copy of ledger extract in the books these parties were submitted before ld. Assessing Officer. Both, Smt Kusum Khandelia and M/s Kusum Silicones Private Ltd confirmed the transactions. 2.1. Ld. CIT(A), while giving relief to the essence on this issue, noted from the seized documents in question that amount appearing as discount for alleged cash transaction is Rs. 21,12,979/- as mentioned in paragraph 2.6 of assessment order for AY 2015-16 but in summary of actual purchase as pasted by ld. Assessing Officer at page 3 of assessment order, amount comes to 20,86,396/- and the WhatsApp message mentions it as 20,13,000/-. These discrepancies make the 3 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 entire claim unreliable. He also noted that ld. Assessing Officer has taken figure of Rs 13,13,981/-, mentioned in seized documents as cheque amount and this amount was alleged to be marble supplied to Mr. Kaushal Khandelia. This amount was raised through invoice no. 2011200761 and 2011200758 both dated 12-10-2020. Ld. CIT(A) further observed that these transactions pertain to supply of marble to Smt. Kusum Khandelia and M/s. Kusum Silicones Private Limited instead of Mr. Kaushal Khandelia and that too for Rs. 12,96,908/- only. According to him, this discrepancy of recorded transaction is ignored by the ld. Assessing Officer which further strengthened the counter of the assessee that the chats retrieved from the mobile phone are rough workings/jotting's only. 2.2. Ld. CIT(A) had dealt this issue in the appeal of assessee for Assessment Year 2016-17, with similar WhatsApp messages treated by ld. Assessing Officer as purported cash sales. On similar set of facts and circumstance, ld. CIT(A) had held in favour of the assessee, accepting the explanations and evidences furnished in this regard. He thus, finally concluded to delete the addition of Rs.20,13,000/- as noted in para – 42, which is reproduced below:- “42. I have carefully gone through the submissions of the appellant in respect of the addition of Rs.20,13,000/- and also the evidence adduced by it for such addition. I have not found anything which can lead one to disbelieve the explanation and evidence adduced by the appellant in respect to the addition of Rs.20,13,000/-. 1, therefore, see no reason to confirm the addition of Rs.20,13,000/- and hence the addition of Rs.20,13,000/- is deleted.” 3. On the second ground, relating to addition of Rs.6,18,64,107/- deleted by the ld. CIT(A) which is on account of disallowance of labour charges treating it as non-genuine business expenditure, ld. Assessing Officer mentioned in his findings that a search/survey action was carried out on 14.02.2019 on the assessee and its group entities 4 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 wherein it was observed that the assessee has made labour payments to Varun Enterprises, Siddhi Vinayak Enterprises and Maruti Associates during the FY 2012-13 to 2018-19 which were found to be non- genuine and bogus entries. The same transactions were added in the total income of the assessee. Now during the year under consideration, ld. Assessing Officer found that labour payments were made to Varun Enterprises to the tune of Rs. 6,18,64,107/-, hence a show cause notice was issued to the assessee to explain why the said amount should not be added in the total income of assessee by treating same transactions as non-genuine and bogus. Assessee submitted its reply before the ld. Assessing Officer, but the same was not accepted by the ld. Assessing Officer, hence he disallowed sum of Rs. 6,18,64,107/- u/s. 37(1) of the Act and added in the total income of the assessee. 4. At the first appellate stage, ld. CIT(A) after considering the submissions and judicial precedents furnished by the assessee as well as other material placed on record, he was of the view that similar issue was decided by him in assessee’s own case in Assessment Year 2013- 14 to 2019-20 by way of consolidated order, dated 16.01.2024. In this order referred by ld. CIT(A) in para 8.27 and 8.28, it was concluded that addition of non-genuine labour expenses u/s. 37 is unwarranted and thus deleted it accordingly. Para 8.27 is reproduced as under: “8.27 In nutsheil, all three contractors have confirmed their identities and genuineness of their business transactions are established by documents submitted, statements made during assessment proceedings as well as field inspection of PF authorities in the course of the assessment proceedings which have been overlooked by the Ld. A.O and remained uncontroverted though the same are contemporaneous evidence which go to the root of the issue raised in the assessment order. Hon'ble ITAT Mumbai, therefore, on same set of facts has allowed the appeals in above quoted cases of contractors.” 5 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 4.1. Based on above findings, ld. CIT(A) found no reason to depart from this position and thus deleted the addition made on this account in the year under consideration, made on identical fact pattern. 5. It is worth taking note of the fact that both these issues had travelled before the Coordinate Bench of ITAT Mumbai in assessee’s own case for Assessment Years 2013-14 to Assessment Year 2020-21 where Revenue had challenged the deletion made by ld. CIT(A) in ITA Nos.1709/Mum/2024, 1705/Mum/2024, 1722/Mum/2024, 1720/Mum/2024, 1718/Mum/2024, 1717/Mum/2024, 1715/Mum/2024 and 1701/Mum/2024. A consolidated order was passed by the Coordinate Bench for all these Assessment Years, dated 23.09.2024. 5.1. On the first issue, the Coordinate Bench in para 11 to 13, narrated the facts and circumstances which led to the addition by the ld. Assessing Officer and subsequently deleted by ld. CIT(A). The same are extracted below for ready reference. “11. The Revenue has raised one more issue in AY 2019-20, which is related to the deletion of the addition pertaining to alleged cash sales. In this year, the AO made addition of Rs.1,47,21,196/- treating the same as unaccounted cash sales. The AO arrived at this conclusion on the basis of statement taken from certain employees and also one whats app message. The AO took the view that the assessee has received only a portion of invoice amount by way of cheque and the balance amount has been received in cash. Accordingly, he collated the above said amount of disallowance on the basis of sales made to certain parties. 12. However, the assessee demonstrated before Ld CIT(A) that it did not carry out any unaccounted cash sales. With regard to whats app message, it was submitted that the same was proforma invoice only. A detailed submission with regard to each of the customer referred by the AO was made before Ld CIT(A). Accordingly, the Ld CIT(A) was convinced with the submissions made by the assessee and deleted the above said disallowance. The observations made by Ld CIT(A) in this regard are extracted below:- 6 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 “35.1 It is noted that AO has mentioned statements of Sh. Alpesh Trivedi and Haresh Kumar Purohit, the salesmen at appellant's factory premises. They mentioned about cash sales in the company. Further, a WhatsApp message was retrieved from phone of Sh. Haresh Kumar Purohit wherein an invoice and figures in cash and cheques are mentioned. The salesman and one other employee accepted that cash is accepted against sales but for smaller retail sales. Moreover, Sh. Purohit has mentioned that invoice mentioned in WhatsApp message is proforma invoice. Message also contains the text 'Kindly send revised quote'. This also supports the statement of Sh. Purohit that this is a proforma invoice. 35.2 The statements so recorded and screenshot of WhatsApp message was confronted with Director Sh. Amit Shah. He replied as under: \"Q38. In response to Q.16 of the statement of Shri Dashrath K Patel recorded u/s 132(4) of the Income tax Act, 1961, he has stated that he has dislocated the cash counting machine under the apprehension of the action of Income tax and he has also accepted that cash counting machine is used to count the cash received from Silvasa factory, Unit-1 through angadia. Please explain. Ans. Sir, I am not aware of any cash coming and if anything is coming then it is getting deposited in the bank. Q.39. In response to the Q.19 of the statement mentioned above, he has stated that he gets message from Shri Arvind Shah and Shri Rushin Mehta, the cash is collected from angadia, Shri Babulal Kantilal and cash is handed over to Shri Popatlal Shah, who is your uncle. Please explain. Ans. Sir, I am not aware of any such transactions and I (M7 hearing the name of Babulal Kantilal for the first time. Q.1. In response to the Q.22 to 24 of the statement mentioned above, he has stated that cash transactions are unaccounted cash transactions, which are not reported in the books of accounts and these transactions are executed on the directions of Shri Amit M. Shah. And he also stated that he receives total cash of Rs. 80 lacs to Rs. 1 crore in a month. Please explain. Ans. Sir, this is not true No such amounts are received by me. I am showing you the statement of sales manager at Silvasa Unit-I, Shri Haresh Kumar Purohit, who has stated in response to Q.37 that in the case of sales made to Shri C.Manishbhai Nagpur, the cash accepted was Rs. 1,50,000/-and balance amount of Rs. 12,56,466/- was also received in cash. Please explain. Ans. Sir, I am not aware of any such transaction. No cash has been received. 7 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 Q42. In response to Q35 of the statement of Shri Haresh Kumar Purohit recorded u/s 132(4) of the Income tax Act, 1961, he has stated that the rates finalized by him with customers are reduced by 30% to 50% by Shri Jignesh Desai (General Manager at Silvasa Unit- 1). Please justify this much discount and also explain that it is not unaccounted cash component of the sales. Ans. Sir. There is a lot of discount given to customers as the market being very competitive and again discounts need to be given for the inferior quality material as well as cracked and unshaped material for which discount goes upto 50% and there is no unaccounted cash involved in the sales. Q.49. I am showing you the response to the Q17 and 18 in the statement of Shri Rushin Mehta recorded u/s 132(4) of the Income tax Act, 1961 during the search proceedings. Please comment. Ans: Sir, I am not aware of such kind of transactions of any unaccounted cash. Whatever cash is taken, has been deposited in the bank. Q.51. I am showing you the response to the Q.20 in the statement of Shri Rushin Mehta recorded u/s 132(4) of the Income tax Act, 1961 during the search proceedings. In reply, Shri Rushin Mehta has explained that the cash and the cheque component of any transaction at Silvasa are decided by Shri Jignesh Desai with your confirmation. Please comment. Ans. Sir, wherever any customer wants to take any discount, my team talks to me over phone and I give them the approval over phone only for the same accordingly. There is no unaccounted cash component that is involved. Q54. I am showing you the response to the Q. 39 to 44 in the statement of Shri Rushin Mehta recorded u/s 132(4) of the Income tax Act, 1961 during the search proceedings. Please comment. Ans. Sir. I don't know what this excel statement is all about and I am not aware of any cash transactions involved in this. This excel sheet is 10 years old.\" 35.3 It is clear that company has accepted cash against sales and recorded the same in books of accounts. Appellant has submitted details related to cash sales as under: Month of FY 2018-19 Cash Receipts April 30,36,562 May 9,22,180 June 14,80,994 July 22,25,923 August 21,42,287 8 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 September 15,56,306 October 12,42,525 November 6,90,353 December 19,70,247 January 24,19,701 February 21,86,771 March 29,91,206 Total 2,28,85,055 Similarly, appellant company has submitted total cash receipts in the years under search assessment: AY Amount (in Cr) 2013-14 24.27 2014-15 34.57 2015-16 36.92 2016-17 32.59 2017-18 17.17 2018-19 2.66 2019-2020 2.28 Total 150.48 35.4 The instance of unrecorded or unaccounted cash sales were not found in entire search. It appears that WhatsApp massages mentioned in order are communications among sales team wherein quotes are floated against sales and then after discount etc, sales are finalized. AO has assumed that all these instances are of unaccounted cash sales on the basis of these massages. Further, it appears from the assessment order that the WhatsApp chats retrieved from the mobiles of Mr. Ramkrishna Swamy and Mr. Haresh Purohit are out of context as they do not contain the complete trail of the conversation. As the entire conversation has not been taken in its entirety, they do not portray the correct picture and hence these messages cannot be termed as incriminatory on their own without any corroborative findings. 35.5 The appellant company has also submitted the detailed explanations of all the parties referred to in the table given in para no. 9.7 of assessment order along with confirmations of the parties, bank details, PAN no., etc. to show that all the transactions carried 9 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 out with those parties were recorded in the books of the appellant company which are not controverted. 35.6 Secondly, it appears from the list that many entries are repetitive in nature e.g Sr. no 4&5 are in the name of Shri R. Selvaraj. Sr no. 15,16 & 17 are against JD A/c and Sr.no 6,10 & 13 are for Mohan V Patel. It is not clear whether they pertain to same transactions or are different transactions. Further, AO has mentioned amount in fourth column of the table in para 9.7 of assessment order as 'Amount of bill according to bills or sheets',however, as per submission of the appellant even the bill amounts are not matching in 18 out of 21 cases narrated therein. In cases of R. Selvaraj and Mohan V Patel, the second instance of sales are neither confirmed by the purchasers nor recorded by the appellant as sales. The confirmations filed by the appellant are also support the figures reflected by appellant as sales in its books of account. The entire state of affairs gives credence to appellant submission that these are preliminary recordings by sales team and nothing to do with unaccounted cash sales. 35.7 It is also noted that AO has attempted to support his claim through one print out of SAP data wherein price variation has been noted and inferred that such variation can be linked to unaccounted cash acceptance by the appellant. This page was confronted with Managing Director of the appellant company: Q.61. 1 am showing you certain printouts taken from SAP data containing pages 1 to 156 having data related to sales during F.Y. 2018-19 during the search proceedings. The same is annexed herewith as Annexure-17 of the seized material. Please go through the same and explain why the same quality of the marble has been:Saki to different customers at different rates with huge variation. Ans: Sir, marble is sold keeping in mind a lot of criteria. In itself one block, there are 1.5 slabs extra first choice quality, some are normal and some are with a lot of defects. So, itself from one block, all the slabs cannot be sold at one price, even though it is coming from the same block/lot. Apart from this, it depends upon size of the slabs, big and small arc regular or irregular shape. Due to irregular shape, a lot of wastage conies out for the client. If' there are cracks and filings, then there is also a lot of variation in the selling price. _again, it depends upon the quantum of the order and the type of other material, which is sold along with all the quantity. Even prices are depending upon different thickness also. Q.62. In reference to your answer to Q.61, please prove the difference of each invoice of sales with the respective blocks and concerned defects found in the all the sub qualities of the marble and also state where you mention or record this variation of quality defects. Ans: Sit-, it is impossible to detect all quality defects as marble being completely natural has already been mentioned earlier in 10 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 the answer to Q no 61. All the prices are determined during the actual sale when the client actually comes and physically check the slabs and depending upon all the defects/quality, the price is determined all the slabs selected by a particular client. So, there is bound to have variation in price, even though the material is same and it is from the same block. lie don't mention in each sale invoice the defect as every client has different perception of detecting the quality of marble. It can be seen that appellant company has never denied that it was not doing cash sales but accounting the same as it is a prevalent business practice, as can be seen from the annual cash sales data supplied by appellant company. 35.8 The appellant company through its letters requested the A.O. to furnish the copies of the statements recorded in the search and relied upon by him, workings of the alleged unaccounted sales party-wise and the seized material retrieved from the WhatsApp chats these were not furnished to the appellant by the A.O. No opportunity to cross examine the aforesaid witnesses of the A.O. was given to the appellant company in spite of request made by the appellant. The Hon'ble Allahabad High Court in the case of Gargi Din Jwalaprasad v. CIT (96 ITR 97) held that the elementary principle of natural justice is that the assessee should have 'knowledge of the material that is going to be used against him so that he may be able to meet it. The proceedings were vitiated by violation of the principles of natural justice. In the case of Andaman Timber Industries v. Commissioner of Cental Excise (Supra) the Supreme Court held that not allowing the assessee to cross examine the witness is a serious flaw which makes the order nullity. The A.O. did not take into consideration the statement of the Managing Director recorded at the time of the search wherein he had stated that there were no unaccounted cash sales. Secondly, the A.O. did not consider the reply of the appellant that before a sale is effected many estimates are given to a customer to meet his different set of selections proposed which are tentative and therefore, the basic price is given without including GST because GST is always over and above the price. When a final estimate is given on the basis of the agreed price and quantity, GST is included. 35.9 The Hon'ble ITAT, Delhi Bench, in Designers Point (I) Pvt. Ltd. vs. ACIT and the ITAT, Mumbai Bench, in ACIT vs. Katrina Rosemary Turcotte held that WhatsApp chats have no evidentiary value in absence of other corroborative material and in absence of any direct and clinching evidence. 35.10 I have carefully gone through the submissions of the appellant in respect of the addition of Rs.1,47,21,196/- and also the evidence adduced by it for each of the additions. I have not found anything which can lead one to disbelieve the explanation and evidence adduced by the appellant in respect of each of the 21 additions aggregating to Rs.1,47,21,196/-. I, therefore, see no reason to confirm 11 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 the addition of Rs.1,47,21,196/- and hence the addition of Rs.1,47,21,196/- is deleted.” 13. We notice that the Ld.CIT(A) has noticed that the deficiencies that were pointed out by the AO in order to make addition towards unaccounted cash sales are not factually correct, meaning thereby the AO has made this addition on surmises and conjectures. Accordingly, the Ld.CIT(A) has deleted this addition. Before us, no material was placed to controvert the factual findings given by the Ld.CIT(A). Accordingly, we confirm the order(s) passed by Ld.CIT(A) on this issue.” 5. In the present case before us, addition of Rs.20,13,000/-, is on identical fact pattern which has been treated as unaccounted cash sales made by the assessee, which was deleted by the ld. CIT(A). Respectfully following the findings of Coordinate Bench of ITAT, Mumbai on the same issue in assessee’s own case, we find no reason to interfere with the findings arrived at by ld. CIT(A). Accordingly, ground no.1 raised by the Revenue is dismissed. 6. On the second issue also, the Coordinate Bench dealt it elaborately by taking into account all the facts and circumstances as well as detailed submissions made by the assessee, corroborated by documentary evidences placed on record. The Coordinate Bench noted the detailed examination carried out by ld. CIT(A) based on which genuineness of payment of labour charges were proved. The Coordinate Bench agreed with the reasoning given by ld. CIT(A), holding it as justifiable. Thus, in absence of any material brought on record to contradict the findings of ld. CIT(A), the relief given by ld. CIT(A) was confirmed. Before the Coordinate Bench, this issue pertained to three parties which includes Varun Enterprisers, who is a party in the year under consideration before us for which the payments made to have been alleged as non-genuine. 12 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 6.1. Factual observations and findings of ld. CIT(A) noted by the Coordinate Bench in its order, as well as the conclusion drawn by it is reproduced for ready reference. “4. During the course of search/survey operations, it was noticed that the assessee has paid labour charges to the following three concerns: Name of the party Name of the proprietor (S/Shri) a) Varun Enterprises Hitesh V. Patel (HUF) b) Siddi Vinayak Enterprises MehulkumarSomabhaimevada c) Maruti Associates Amit Dinesh Chandra Joshi The aggregate amount of payments made to these three persons during all the years under consideration are tabulated below: Labour expenses A.Y. 2013-14 A.Y. 2014-15 A.Y. 2015-16 A.Y. 2016-17 A.Y. 2017-18 A.Y. 2018-19 A.Y. 2019-20 A.Y. 2020-21 Varun Enterprises [HITESH V Patel (HUF)] 18425407 17727847 21990325 21990325 23133210 53608356 7870313 89855971 Siddhi Vinayak Enterprises (MEHUL KUMAR SOMABHAI MEVADA) 4982695 40887150 46881503 50040856 18037651 Nil Nil Maruti Associates (SMIT DINESHCH ANDRA JOSHI) 5226847 37397994 42090212 47269804 16481055 Nil Nil TOTAL 18425407 27937389 100275469 112075863 120443870 88127062 78703136 89855971 4.1. The AO noticed that a statement was taken from Shri Hitesh V. Patel u/s 131 of the Act, wherein hehad admitted before the search authorities that he has not supplied labour to the assessee-company. It was noticed that he was holding the Power of Attorney of other two concerns also, viz., M/s. Siddi Vinayak Enterprises and M/s. Maruti Associates also. He admitted that these persons never visited the premises and actual supply of labour does not happen from his premises. It was further noticed that the above said two concerns belong to the relatives of the Accountant of the assessee-company. It wasalso noticed that the bank accounts of above said two concerns and filing of their ITRs were also managed by the assessee-company. Shri Hitesh V. Patel also admitted that he has just signed the documents and cheques for the above said two concerns. The search team also found black documents signed by Shri Hitesh V Patel. He admitted that the cheques received from the assessee-company were realised and cash was returned back to the assessee company. He also admitted that he was getting a commission @ 5% of the total payments for signing documents/cheques. The officials also found that these three concerns operate with a single staff only.On the basis of the statement given by Shri Hitesh V Patel, 13 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 the AOcame to the conclusion that the assessee herein is controlling the operations of the above said three concerns. 4.2. The AO confronted the statement recorded from Shri Hiteh V Patel with the director Shri Amit Shah. But he pleaded ignorance with the facts revealed by Shri Hitesh Patel, as he is not in charge of labour department. 4.3. In view of the above, the AO issued notice u/s 142(1) of the Act asking the assessee to furnish complete details of labour/sub-contractor payments along with documentary evidences. The assessee also duly replied to the above said notice and furnished the details called for. The AO called for bank account details of two labourers named Shri Dhaval Kumar V Johny Sersingh Amliar by issuing notice u/s 133(6) of the Act. On analysis of those bank accounts, the AO noticed that they were receiving salaries from more than one concern. Further, one of the labourers has made meagre withdrawals. Accordingly, the AO came to the conclusion that they have only lent their names and were not doing actual work. 5. Before the AO, the assessee requested for cross-examination of Shri Hitesh V. Patel. The AOprovided the said opportunity to the assessee and cross- examination was done by Shri Bala Krishna Jhaveri, Advocate on behalf of the director of the assessee. The AO also recorded a statement from Shri Hitesh V. Patel on oath on that day. According to the AO, Shri Hitesh Patel could not furnish any document to prove the genuineness of labour supply and further, during cross examination nothing was established to prove genuineness of labour supply. Accordingly, the AO entertained the view that M/s. Varun Enterprises, the proprietary concern of Shri Hitesh V Patel did not supply labour. The AO also called for explanations from the assessee and the assessee also furnished details called for. M/s Varun Enterprises also furnished affidavits obtained from many labourers to prove the factum of supply of labour. The AO noticed that all the affidavits have been obtained on two dates only. The attendance register copies were also furnished to the AO, but the name of M/s Varun Enterprises was not seen on that register. In view of the various discrepancies noticed by him, the AO came to the conclusion that the payments made to M/s Varun Enterprises, the proprietary concern of Shri Hitesh V Patel is not genuine. 6. The AO also recorded statement on oath from the proprietors of M/s. Siddi Vinayak Enterprises and M/s. Maruti Associates. He noticed that both the persons have started their proprietary concerns in the month of January, 2014 and discontinued the business in the month of June, 2017. Both of them had same address. Further, they have given Power of Attorney to Shri Hitesh V. Patel. During the course of survey operation, the letter head of M/s. Siddi Vinayak Enterprises was also found at the premises of the assessee. According to the AO, both these persons did not explain as to why the Power of Attorney was given to Shri Hitesh V. Patel. The AO also noticed that these two persons have supplied man power to the assessee only and not to any other concern. Before the AO, they furnished affidavits of some of the labourers, who were supplied to the assessee-company. However, the AO expressed the doubt as to how these two persons were able to contact those labourers after expiry of four years from the date of discontinuance of the business. In addition to the above documents, both the persons furnished a copy of document titled as ‘Visit Note’, dt. 01-02-2021 issued by the Enforcement Officer, Regional Office, Employees Provident Fund Organisation, Vapi, wherein the above said enforcement officer has conducted 14 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 inspection of labour records with regard to supply of labourers to the assessee herein. Accordingly, it was submitted that the factum of supply of labour cannot be doubted with.The AOnoticed that the above said document was counter signed by the proprietors of the respective concerns. According to the AO, these persons should not have signed those documents, when they had already given power of attorney to Shri Hitesh V Patel. The AO also noticed that both the persons have stated before the AO that they are living now in Rajasthan. In view of their present residence, the AO expressed doubt as to how these two persons were available on the date of visit of Enforcement official of PF department. In view of the above deficiencies/defects, the AO came to the conclusion that these two concerns also have not supplied man power and consequently, the labour charges paid to these two concerns were also not genuine. 7. Accordingly, the AO disallowed the labour chargespaid to these three concerns in all the years, as tabulated in the table above. 8. In the appellate proceedings, Ld.CIT(A) deleted these additions in all the years. Hence, the Revenue has filed these appeals. 9. We heard rival contentions and perused the record. From the discussions made by the AO, we notice that the AO has primarily relied upon on surrounding circumstances, preponderance of probabilities and other deficiencies noticed by him to arrive at the conclusion that the labour charges claimed to have been paid to the above said three concerns are not genuine. We notice that the Ld CIT(A) has passed a detailed order, analyzing the facts surrounding the issue, referring to various documents furnished by the assessee evidencing genuineness of payment of labour charges and explaining as to why the disallowance made by the AO is not sustainable……. ……..10. We notice that the Ld CIT(A) has examined all the deficiencies that were pointed out by the AO in order to disallow the claim of labour charges and concluded that they do not survive in view of the evidences furnished by the assessee. Accordingly, the Ld.CIT(A) has held that the assessee has proved the genuineness of payment of labour charges and hence there was no sufficient reason to disbelieve the claim and disallow the same. Accordingly, in the facts and circumstances of the case, we find that the reasoning given by the Ld.CIT(A) and the decision taken by him are justifiable. Before us, the revenue could not furnish any material to show the perversity, if any, in the order passed by Ld.CIT(A) not they could furnish any material to contradict findings given by him on the basis of materials that were furnished before the AO. Accordingly, we confirm the order passed by Ld.CIT(A) on this issue in all the years under consideration.” 6.2. In the present case before us, identical fact pattern exist whereby the addition has been made in respect of transaction made by assessee with party, Varun Enterprisers. Transaction with this party have been dealt by the Coordinate Bench in its order (supra) holding in favour of the assessee. Respectfully following the findings arrived at by the 15 ITA No. 2303/Mum/2024 Classic Marble Co. Pvt. Ltd. AY 2021-22 Coordinate Bench the same applies mutatis mutandis to the present case before us. Accordingly, in the given set of facts and circumstances, we find no reason to interfere with the findings arrived at by ld. CIT(A). Thus, ground no.2 raised by the Revenue is dismissed. 7. In the result, appeal of the Revenue is dismissed. Order is pronounced in the open court on 07 March, 2025 Sd/- Sd/- (Amit Shukla) (Girish Agrawal) Judicial Member Accountant Member Dated: 07 March, 2025 MP, Sr.P.S. Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 5 Guard File CIT BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "