The ITO, Ward-9(1), Surat V. M/s. Bhadiyadra Brothers, Surat

ITA 1166/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72991 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 23-01-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 29-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: J P SHAH
• Keywords: Unexplained investment; Income from undisclosed sources; Source of fund; Onus to prove
• Section: 143(3); 133(6); 68; 69; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 1166/AHD/2012 (ASSESSMENT YEAR: 2004-05) ITO, WARD-9(1), ROOM NO. 422, AAYAKAR BHAVAN MAJURAGATE, SURAT V/S M/S. BHADIYADRA BROTHERS, 9- 10, SAVANI DIAMOND ESTATE, BEHIND GEETANJALI CINEMA, VARCHHA, ROAD, SURAT (APPELLANT) (RESPONDENT) PAN: AAGFM 2845 R APPELLANT BY : SHRI K.C. MATHEWS, SR. D.R . RESPONDENT BY : SHRI J.P. SHAH A.R. ( )/ ORDER DATE OF HEARING : 23-01-201 4 DATE OF PRONOUNCEMENT : 21 -02-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-V, SURAT DATED 28.02.2012 FOR A.Y. 2004-05. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF DI AMOND POLISHING WORK. ASSESSEE FILED ITS RETURN FOR AY 2004-05 ON 13.9.20 04 DECLARING TOTAL INCOME OF RS NIL. THE CASE WAS SELECTED FOR SCRUTINY AND T HEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) R.W.S 145(3) VIDE ORDER DATED 26.12.2006 AND THE TOTAL ITA NO 1166/ AHD/2 012 . A.Y. 2004- 05 2 INCOME WAS DETERMINED AT RS 1,18,00,650/-. AGGRIEVE D BY THE ORDER OF AO ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) V IDE ORDER DATED 28.3.2007 GRANTED PARTIAL RELIEF TO THE ASSESSEE. A GGRIEVED BY THE ORDER OF CIT(A), ASSESSEE AND REVENUE PREFERRED APPEAL BEFOR E TRIBUNAL. TRIBUNAL VIDE ORDER DATED 10.12.2010 (ITA NO 2743/AHD/2007 A ND 2789/AHD/2007) PARTLY ALLOWED THE APPEALS AND WITH RESPECT TO DISP UTE OF UNEXPLAINED UNPAID WAGES RESTORED THE MATTER TO AO TO VERIFY THE GENUI NENESS OF CLAIM AND THEREAFTER DECIDE THE ISSUE. PURSUANT TO THE DIRECT ION OF TRIBUNAL, AO VIDE ORDER DATED 29.12.2011 PASSED U/S 143(3) R.W.S 254 OF THE ACT AGAIN MADE ADDITION ON ACCOUNT UNPAID WAGES OF RS 96,41,849/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). C IT(A) VIDE ORDER DATED 28.2.2012 ALLOWED THE APPEAL OF THE ASSESSEE. AGGRI EVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 96,41,849/- MADE BY THE A.O. ON ACC OUNT OF UNEXPLAINED UNPAID WAGES, WITHOUT APPRECIATING THE FACTS OF THE CASE. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE ACCOUNTS OF THE ASSESSEE, AO NOTICED THAT ASSESSEE HAD CLAIM ED WAGES AGGREGATING TO RS 2,49,63,901/- AS EXPENSES OUT OF WHICH RS 1,1 3,15,082/- WAS STATED TO BE UNPAID AND WAS SHOWN AS LIABILITY IN ITS BALANCE SHEET. ASSESSEE WAS ASKED TO PROVIDE COPY OF THE UNPAID WAGES ACCOUNT, LIST OF PERSONS ALONG WITH THEIR ADDRESSES AND THE DETAILS OF PAYMENT MADE IN THE NEXT YEAR. ASSESSEE ONLY SUBMITTED WAGES PAYABLE ACCOUNT WHICH SHOWED S INGLE ENTRIES OF MONTHLY WAGES PAYABLE AND WAGES PAID. LATER ON ASSE SSEE SUBMITTED THE LIST OF EMPLOYEES BUT WITHOUT THEIR ADDRESSES AND THE DE TAILS OF SUBSEQUENT PAYMENT OF LIABILITY. FROM THE PERUSAL OF THE DETAI LS SUBMITTED BY THE ASSESSEE AO NOTICED THAT ASSESSEE HAD NOT PAID PAYM ENT TO WORKERS FROM THE MONTH OF OCT 2003 AND THUS 100%, OF SUCH WAGES WERE UNPAID AND OUTSTANDING, FOR THE MONTH OF SEPTEMBER 2003 THE UN PAID WAGES WAS ALMOST 90% OF THE WAGES. AO WAS OF THE VIEW THAT SHOWING A LMOST 50% OF THE TOTAL ITA NO 1166/ AHD/2 012 . A.Y. 2004- 05 3 WAGES FOR THE YEAR AS OUTSTANDING AND PAYABLE TO EM PLOYEES WAS NOT ACCEPTABLE IN VIEW OF THE FACT THAT IN THE DIAMOND MARKET IN WHICH THE ASSESSEE OPERATES THE WORKERS ARE PAID WAGES ON WEE KLY OR FORTNIGHTLY BASIS, THE WORKERS DO NOT STAY FOR MORE TIME WITH A PARTIC ULAR EMPLOYER BECAUSE OF THE JOB OPPORTUNITIES AND RATE DIFFERENCE IN PAYMEN T AND WORKER CANNOT BE EXPECTED TO BE WITHOUT WAGES FOR LONG. HE THEREAFTE R CONSIDERED THE BOOK RESULTS SHOWN BY THE ASSESSEE TO BE UNRELIABLE AND THEREAFTER REJECTED THE SAME U/S 145(3) OF THE ACT. AO ON PERUSING THE MONT HLY CASH BALANCE CHART (WHICH HAS BEEN REPRODUCED UNDER PARA 11 AND AT PAG E 12 OF THE ORDER) AO NOTICED THAT ASSESSEE WAS HAVING CASH AT THE END OF EACH MONTH WHICH COULD HAVE BEEN UTILIZED FOR MAKING THE PAYMENT OF WAGES MORE SO WHEN THE WAGES ARE PAID IN CASH. AO WAS THEREFORE OF THE VIEW THAT ASSESSEE MUST HAVE MADE THE PAYMENT TO WORKERS WITHIN A REASONABLE TIM E OUT OF ITS UNDISCLOSED SOURCE OF INCOME BUT CLAIMED IT AS UNPAID TILL THE ACCOUNTED FUNDS WERE RECEIVED. HE THEREFORE HELD THE UNPAID WAGES (EXCEP T FOR THE LAST MONTH OF MARCH 2004 AMOUNTING TO RS 16,73,233/-) AMOUNTING T O RS 96,41,849/- AS UNEXPLAINED AND TREATED AS PAID OUT OF UNDISCLOSED SOURCE OF INCOME AND THUS ADDED THE SAME TO THE INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WH O GRANTED PART RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASS ESSEE AND REVENUE CARRIED THE MATTER BEFORE TRIBUNAL. TRIBUNAL SET ASIDE THE ISSUE TO THE FILE OF AO TO DECIDE THE ISSUE AFRESH BY HOLDING AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, THE FINDING S OF THE ASSESSING OFFICER REJECTING THE BOOK RESULT S, INVOKING THE PROVISIONS OF SECTION 145 OF THE AC T, WERE NOT CHALLENGED BEFORE THE LD. CIT(A) NOR EVEN BEFORE US. AS IS APPARENT FROM THE ASSESSMENT ORDER, EVEN THOUGH THE AO REJECTED BOOK RESULTS, HE PROCEEDED TO DETERMINE INCOME ON THE BASIS OF NET PROFIT AS PER RETURN BEFORE SET OFF OF UNABSORBED D EPRECIATION AND CONFINED TO ADDITIONS ON THE BASIS OF SPECIFIC DEFECTS OR NON-GENUINE ENTRIES PIN POINTED BY HIM. WHETHER SPECIFIC ITEMS SHOULD BE ADDED IN ADDITION TO ESTIMATE OF GROSS RECEIPTS/PROFITS OR O NLY ONE OF THE ADDITIONS BE MADE, DEPENDS UPON FACT S OF EACH CASE. IN THE INSTANT CASE, ON FINDING THAT TRADING RESULTS WERE BETTER VIS-A-VIS PRECEDING YEA RS, ONLY SPECIFIC ITEMS HAVE BEEN ADDED BY THE AO. IN T HESE CIRCUMSTANCES, THE ONLY DISPUTE BEFORE US IS I N RESPECT OF SPECIFIC ITEMS OF ADDITIONS. THE FIRST S UCH ADDITION IS OF RS.96,41,849/-. THE AO MADE THE ADDITION SINCE THE LABOUR REGISTER MAINTAINED BY TH E ASSESSEE DID NOT INDICATE DETAILS OF WORK DONE BY A ITA NO 1166/ AHD/2 012 . A.Y. 2004- 05 4 PARTICULAR WORKER NOR EVEN THE NUMBER OF DAYS HE WO RKED NOR RECORDS OF WAGES PAID ON THE BASIS OF NUMBER OF PIECES POLISHED BY EACH WORKER, WERE PROD UCED BEFORE THE A.O. EVEN WHEN, INDISPUTABLY, WAGES WERE BEING PAID ON THE BASIS OF NUMBER OF PIECES POLISHED WHIL E WAGES FOR THE MONTHS OF OCTOBER, 2003 TO MARCH, 2004 HAD NOT BEEN PAID. DESPITE REPEATED OPPORTUNITIES THE ASSES SEE DID NOT INDICATE THE DATE AND SOURCES OF PAYMENT OF WAGES O UTSTANDING AT END OF THE YEAR NOR EVEN FURNISHED ADDRESS OF THE WORKERS TO WHOM THESE WAGES WERE TO BE PAID. EVEN A LIST OF 24 NAMES ALONG WITH THE ADDRESSES WERE PROVIDED TO THE ASSESSING OFFICER ON LY ON 26-12-2006 WHEN HARDLY 5 DAYS WERE LEFT TO COMPLETE THE ASSESSMENT PROCEEDINGS AS IT WAS GETTI NG BARRED BY LIMITATION ON 31-12-2006. IN THIS SITUATION, CONSIDERING THE PRACTICES IN THE INDUSTR Y, THE AO ADDED AN AMOUNT OF RS.96,41,849/-OUT OF OUTSTANDING WAGE AMOUNT OF RS. 1,13,15,082/-. THE S ITUATION BEFORE THE ID. CIT(A) WAS NO BETTER. THE ID. CIT(A) PARTLY REDUCED THE ADDITION SINCE THE AS SESSEE DID NOT FURNISH THE RELEVANT DETAILS EVEN BEFORE HIM WHILE THE AFFIDAVITS OF SEVENTEEN WORKER S SUBMITTED BEFORE HIM WERE NOT ADMITTED IN EVIDENCE. THE ID. AR WHILE SUBMITTING RELEVANT DATE S OF PAYMENT OF WAGES OUTSTANDING AS ON 31.3.2004 BEFORE US CONTENDED THAT THE ID. CIT(A) WAS NOT JUS TIFIED IN UPHOLDING THE ADDITION WHEN GP WAS BETTER VIS-A-VIS PRECEDING YEARS AND THE ASSESSEE DID NOT DISPUTE REJECTION OF BOOK RESULTS. WE ARE NOT IMPRESSED BY THIS CONTENTION OF THE ID. AR SINCE AF TER REJECTING BOOK RESULTS, HAVING RECOURSE TO PROVISIONS OF SEC. 145 OF THE ACT, THE AO DID NOT A DD ANY AMOUNT DEBITED IN THE TRADING ACCOUNT. SINCE THE ASSESSEE DID NOT FURNISH THE DETAILS OF PAYMENT OF OUTSTANDING WAGES , THE AO CONCLUDED THAT THE AMOUNT WAS PAID OUT OF UNDISCLOSED SOURCES. EVEN AF TER REJECTION OF BOOK RESULTS, ADDITION U/S 68 CAN BE MADE AS HELD BY THE HON'BLE APEX COURT IN GIT VS . DEVI PRASAD VISHWANATH PRASAD,72 ITR 194(SC).LN THE CASE OF INDWELL CONSTRUCTIONS(SUPRA) RELIED UPON ON BEHALF OF THE ASSESSEE, THE ISSUE WAS OF A SEPARATE ADDITION OF RS. 63,859 REPRESENTI NG THE INTEREST AND REMUNERATION PAID TO PARTNERS, TO THE INCOME ALREADY ESTIMATED AND ASSESSED FROM C ONTRACTS . HON'BLE HIGH COURT HELD THAT WHEN ALL THE DEDUCTIONS WHICH ARE REFERRED TO UNDER S. 29 AR E DEEMED TO HAVE BEEN TAKEN INTO ACCOUNT WHILE MAKING AN ESTIMATE, DISALLOWANCE U/S 40(B) COULD NO T BE MADE. BUT IN THE INSTANT CASE, SUCH A DISALLOWANCE IS NOT BEING MADE. APPARENTLY, THE DEC ISION RELIED UPON IS NOT APPLICABLE TO THE FACTS OF CASE BEFORE US. WHOLESALE DISCARD OF BOOKS IS NOT A CONSEQUENCE OF REJECTION OF BOOK RESULTS. THE FACT THAT THE AO CONSIDERED IT NECESSARY TO MAKE AN ASSE SSMENT ON HIS OWN BASIS OR TO THE BEST OF HIS JUDGMENT, DOES NOT NECESSARILY MEAN THAT BOOKS OF A CCOUNTS ARE TO BE IGNORED OR REJECTED ALTOGETHER. IN THE INSTANT CASE AFTER RECORDING FINDINGS IN SUP PORT OF REJECTION OF BOOK RESULTS, WHICH FINDINGS H AVE NOT BEEN DISPUTED BY THE ASSESSEE BEFORE THE ID. CI T(A) OR EVEN BEFORE US, THE AO DETERMINED INCOME ON THE BASIS OF NET PROFIT AS PER PROFIT AND LOSS A CCOUNT. AS ALREADY MENTIONED, DESPITE REPEATED OPPORTUNITIES, THE ASSESSEE DID NOT SUBMIT ANY COGE NT REASONS FOR NON PAYMENT OF WAGES FOR THE MONTHS OF OCTOBER,2003 TO MARCH,2004 NOR EVEN FURNISHED EV IDENCE OF PAYMENT OF OUTSTANDING WAGES EITHER BEFORE THE AO OR THE ID. CIT(A),RESULTING IN ADDITI ON ON THE GROUND THAT THE AMOUNT HAD BEEN PAID OUT OF UNDISCLOSED SOURCES OF THE ASSESSEE. FOR THE SAI D ADDITION IT IS THE ASSESSEE HIMSELF WHO IS TO BLA ME AS HE DID NOT SUBMIT PROPER ACCOUNTS AND DETAILS DE SIRED BY THE AO/LD. C1T(A). IT IS ONLY AFTER A ITA NO 1166/ AHD/2 012 . A.Y. 2004- 05 5 SPECIFIC QUERY BY THE BENCH THAT THE LD. A.R. SUBMI TTED DATES OF PAYMENT OF OUTSTANDING WAGES. SINCE THE SAID DETAILS WERE NOT THEREFORE THE AO OR ID. C IT(A) AND CONSEQUENTLY THEY DID NOT HAVE ANY OCCASION TO VERIFY THESE DETAILS WHILE EVEN A LIST OF 24 NAMES ALONG WITH THE ADDRESSES WAS PROVIDED T O THE ASSESSING OFFICER ONLY ON 26-12-2006 I.E THE DA TE WHEN ASSESSMENT WAS COMPLETED , IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE CONSIDER IT FAIR AND A PPROPRIATE TO RESTORE THE ISSUE RELATING TO THE AFORESAID ADDITION TO THE FILE OF THE AO WITH THE D IRECTIONS TO RE-EXAMINE THE MATTER, INTERALIA, AFTE R VERIFYING THE GENUINENESS OF CLAIM MADE BY THE ASSE SSEE IN RESPECT PAYMENT OF OUTSTANDING WAGES AND OF COURSE WITH SUFFICIENT OPPORTUNITY THE ASSESSEE. THE ASSESSEE IS DIRECTED TO PLACE THE RELEVANT DET AILS AND EVIDENCE IN SUPPORT OF ITS CLAIM OF PAYMENT OF OUTSTANDING WAGES BEFORE THE AO BESIDES FURNISHING THE ADDRESSES OF WORKERS AVAILABLE WITH IT THE AO I S FREE TO UNDERTAKE ANY INDEPENDENT ENQUIRES TO ASCERTAIN THE GENUINENESS OF THE AFORESAID CLAIM, I F FOUND NECESSARY AND THEREAFTER, MAY PASS SUCH ORDER AS HE DEEMS PROPER, IN ACCORDANCE WITH LAW. W ITH THESE DIRECTIONS, GROUND NO.1 IN THESE TWO APPEALS IS DISPOSED OF. 5. IN THE SET ASIDE PROCEEDINGS, AO RECORDED STATEM ENT OF 12 JOB WORKERS (LISTED AT PAGE 6 OF THE ORDER). AO NOTED THAT ALL THE WORK ERS GAVE SIMILAR TYPE OF ANSWERS AND HAVE STATED TO HAVE RECEIVED THE WAGES ONCE IN SIX MONTHS. THE ANSWERS OF THE WORKERS WERE NOT FOUND ACCEPTABLE TO AO FOR THE REASON THAT ACCORDING TO THE AO THEY WERE TAUGHT WITNESSES, THE WAGES EARNED BY EACH OF THEM WAS IN THE RANGE OF RS 3000 TO 4500 PER MON TH DEPENDING ON THE WORK CARRIED OUT BY THEM, THEY HAD COME FROM DIFFER ENT PARTS OF GUJARAT TO EARN LIVELIHOOD AND THEREFORE IT WAS NOT POSSIBLE F OR THEM TO HAVE RECEIVED WAGES FOR ENTIRE SIX MONTHS ONCE IN HALF YEAR. HE A CCORDINGLY HELD THAT THE GENUINENESS OF THE UNPAID WAGES HAVE NOT BEEN PROVE D BY THE ASSESSEE AND THEREFORE ADDED THE OUTSTANDING WAGES AMOUNT OF RS 98,41,849/- AS INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF AO IN TH E SET ASIDE PROCEEDINGS, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) V IDE HIS ORDER DATED 28.2.2012 DELETED THE ADDITION BY HOLDING AS UNDER: - 6. I HAVE GONE THROUGH AND CONSIDERED RIVAL SUBMISS IONS AND MY DECISIONS ARE AS UNDER; I AM INCLINED TO AGREE WITH THE WRITTEN SUBMISSIONS OF THE APPELLANT. THE APPELLANT HAS ALSO COMPLIED WITH THE DIRECTIONS OF THE HONBLE ITAT. T HE APPELLANT PRODUCED ALL THE BOOKS OF ACCOUNTS FOR THE A.Y. 2004-05 & A.Y. 2005-06 BEFORE THE A.O. I A LSO FIND FORCE IN THE ARGUMENT OF THE APPELLANT THA T PAYER AND PAYEE BOTH HAVE CONFIRMED THE LATE PAYMEN T OF UNPAID WAGES. THE AVAILABLE WORKERS HAVE ALSO DULY ACCEPTED AND CONFIRMED THE GENUINE FACTS OF WAGES AND LATE PAYMENT OF UNPAID WAGES NOT ITA NO 1166/ AHD/2 012 . A.Y. 2004- 05 6 ONLY BY WAY OF NOTARIZED AFFIDAVIT BUT ALSO IN STAT EMENTS RECORDED WHILE REMAINING PERSONALLY PRESENT BEFORE A.O. DURING ASSESSMENT PROCEEDINGS. SO WHEN ITS GENUINENESS OF WAGES AND WAGES PAYMENT HAVE BEEN CONFIRMED FROM BOTH END, THE QUESTION OF REJECTING THE SAME BY THE A.O. WITHOUT ANY MATERIAL AND/OR EVIDENCE IS NOT JUSTIFIED. FURTHER, I AGREE WITH THE GROUNDS OF THE APP ELLANT & ALSO FIND FORCE & MERITS THAT THE A.O. HAS NOT PROVED THE CLAIM OF ADDITION WITH ANY-SUPPORTING COGENT MARTIAL AND/OR EVIDENCE ON RECORD. THE A.O.. HAS MADE ASSUMPTION THAT THE PAYMENT OF UNPAI D WAGES HAS BEEN PAID THROUGH UNDISCLOSED SOURCES OF INCOME OF THE APPELLANT BUT THE SAME ASS UMPTION IS ONLY AN ASSUMPTION WITHOUT SUPPORT OF ANY DOCUMENTARY EVIDENCE ON RECORD. THE BURDEN IS O N THE REVENUE DEPARTMENT TO PROVE WITH DOCUMENTARY EVIDENCES THAT THE PAYMENT OF UNPAID WA GES HAVE BEEN MADE FROM UNDISCLOSED SOURCES OF INCOME BUT THE A.O. HAS FAILED TO DISCHARGE .HIS DU TY AND BURDEN TO PROVE HIS ARGUMENT WITH DOCUMENTARY EVIDENCES. WHEREAS, THE APPELLANT HAS C LEARLY PROVED THE PAYMENT OF UNPAID WAGES WITH SUFFICIENT DOCUMENTARY EVIDENCES. I ALSO AGREE WITH THE APPELLANT REGARDING BOO KS HAVE BEEN REGULARLY MAINTAINED FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING THEREBY ACCRUAL OF WAGES, WAGES AND PAYMENT REGISTER MAINTAINED, WAGES DEBITED TO THE BOOKS OF ACCOUNT, BOOKS AUDITE D, TRAIL OF PAYMENT OF WAGES PROVED FROM BOOKS ETC. ALL THIS FACTS ON RECORD TOGETHER CLEARLY AND WITHO UT DOUBT PROVES THE GENUINENESS OF UNPAID WAGES PAYMENT. ACCORDINGLY, THE ADDITION MADE ON ACCOUNT OF OUTSTANDING WAGES IS HEREBY DELETED AND THE GROUND OF APPEAL IS ALLOWED. 6. AGGRIEVED BY THE ORDER OF CIT(A) IN THE SET ASID E PROCEEDINGS, REVENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD.D.R TOOK US THROUGH THE FINDINGS O F AO IN THE ORIGINAL ASSESSMENT AND THE ASSESSMENT IN THE SET ASIDE PROC EEDINGS. HE FURTHER SUBMITTED THAT THOUGH IN THE FIRST ROUND, HON'BLE I TAT HAD DIRECTED THE AO TO RE-EXAMINE THE MATTER AFTER VERIFYING THE GENUINENE SS OF THE CLAIM MADE BY THE ASSESSEE IN RESPECT OF PAYMENT OF OUTSTANDING W AGES, ASSESSEE FURNISHED ONLY THE EVIDENCE IT HAD SUBMITTED BEFORE THE VARIOUS AUTHORITIES IN THE FIRST ROUND AND DID NOT FURNISH ANY NEW EVIDENC E TO SUPPORT ITS CLAIM OF GENUINENESS. HE FURTHER SUBMITTED THAT CIT(A) IN SE COND ROUND THEREFORE WRONGLY CONCLUDED THAT ASSESSEE HAD COMPLIED WITH T HE DIRECTIONS OF HON'BLE ITAT. HE THEREFORE SUBMITTED THAT ASSESSEE DESPITE HAVING OPPORTUNITY IN 2 ND ROUND COULD NOT PROVE THE GENUINENESS OF THE PAYMEN T AND THEREFORE THE ITA NO 1166/ AHD/2 012 . A.Y. 2004- 05 7 ORDER OF THE AO NEEDS TO BE UPHELD AND THAT THE ORD ER OF CIT(A) TO BE SET ASIDE. HE ALSO PLACED RELIANCE ON THE DECISIONS IN THE CASE OF SRINATH BULLION REFINERY VS CIT (2001) 251 ITR 540 (MP), G.ANIRUDHA N VS ACIT (1998) 60 TTJ (COCH), AND ITO VS VARIA PRATIK ENGINEERING (20 09) 120 TTJ (AHD). HE THUS STRONGLY SUPPORTED THE ORDER OF AO. 8. ON THE OTHER HAND LD.A.R. SUBMITTED THAT THE ASS ESSEE MAINLY DOES THE JOB WORK OF DIAMOND POLISHING FOR REWASHANKER GEMS, SHA RP GEMS AND BHADIYADRA GEMS. HE FURTHER SUBMITTED THAT THE ASSE SSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING. FROM THE PROFIT AND LOSS ACCO UNT FOR THE YEAR ENDED 31 ST MARCH 2004 WHICH WAS PLACED ON RECORD, HE POINTED THAT THE JOB WORK RECEIPTS FOR THE YEAR WAS RS 3.28 CRORE AND THE DEB TORS FROM WHOM IT HAD TO RECEIVE THE PAYMENTS AS ON 31.3.2004 WAS TO THE EXT ENT OF RS 1.26 CRORE. HE THEREFORE SUBMITTED THAT SINCE THERE WAS DELAY IN R ECEIVING THE JOB CHARGES FROM THE PARTIES IT WAS UNABLE TO MAKE THE PAYMENT TO THE WORKERS AND THEREFORE THE SAME WERE OUTSTANDING. HE FURTHER SUB MITTED THAT ASSESSEE HAD FURNISHED ALL THE REQUIRED DETAILS CALLED FOR BY TH E AO AND HAD ALSO PRODUCED THE BOOKS OF ACCOUNTS FOR HIS PERUSAL. HE DREW OUR ATTENTION TO THE COVERING LETTER WRITTEN TO AO AND PLACED IN THE PAPER BOOK. HE THEREFORE SUBMITTED THAT ASSESSEE HAD FULLY COMPLIED WITH THE DIRECTIONS OF HON'BLE ITAT AS NOTED BY CIT(A). HE FURTHER SUBMITTED THAT AO HAD MADE ADDIT ION U/S 69 OF ACT. UNDER PROVISION OF SECTION. 69, ONUS IS CAST ON THE AO TO PROVE UNEXPLAINED INVESTMENTS. HE ALSO SUBMITTED THAT IN THE SECOND R OUND AO HAD RECORDED THE STATEMENTS OF 12 PERSONS U/S 133(6) AND ALL THE PER SONS HAVE ADMITTED TO HAVE RECEIVED THE PAYMENTS LATE. HE FURTHER SUBMITT ED THAT AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO DISPROVE THE STAT EMENTS OF THE PERSONS. HE FURTHER POINTED TO THE FINDING OF CIT(A) ABOUT THE PAYER AND PAYEE CONFIRMING THE LATE PAYMENT OF WAGES. HE FURTHER SUBMITTED THA T ON IDENTICAL FACTS FOR SUBSEQUENT YEAR I.E AY 2005-06 THE MATTER WAS ALSO REMITTED TO THE FILE OF AO WITH SIMILAR DIRECTIONS BY HON'BLE ITAT AND PURSUAN T TO THE DIRECTIONS OF ITAT, AO VIDE ORDER DATED 25.3.2013 DELETED THE ADDITIONS . HE THEREFORE SUBMITTED ITA NO 1166/ AHD/2 012 . A.Y. 2004- 05 8 THAT WHEN ON IDENTICAL FACTS, ADDITION HAS BEEN DEL ETED IN SUBSEQUENT YEAR, THE ORDER OF CIT(A) NEEDS TO BE UPHELD. HE ALSO PLA CED RELIANCE ON THE DECISIONS IN THE CASE OF RAJARATHINA NADAR (K.P.S.V ) AND SONS VS CIT (1956) 29 ITR 834 (MAD), CIT VS NARESH KHATTAR (HUF) (2003) 2 61 ITR 664 (DEL), CIT VS SMT SURAJ DEVI (2010) 328 ITR 604 (DEL) AND CIT VS DINESH JAIN (HUF) (2013) 352 ITR 629 (DEL). HE THUS SUPPORTED T HE ORDER OF CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT DURING THE YEAR ASSESSEE HA D DEBITED RS 2,49,63,901/- AS WAGES OUT OF WHICH RS 1,13,15,082/ -(WHICH AMOUNTS TO ALMOST 45% OF THE WAGES) WAS SHOWN AS OUTSTANDING A ND PAYABLE. IT IS ALSO A FACT WHICH HAS BEEN NOTED BY THE AO THAT THE WORKER S WHO HAVE BEEN PAID THE WAGES EARN BETWEEN RS 3000 TO RS 4500 PER MONTH . FROM THE STATEMENT OF MONTH WISE OUTSTANDING WAGES REPRODUCED AT PAGE 5 OF THE ORDER OF AO IT IS SEEN THAT ENTIRE 100% OF THE WAGES WERE UNPAID F ROM OCT 2003 TO MARCH 2004 AND THE NUMBER OF PERSONS TO WHOM THE WAGES WE RE PAYABLE RANGED BETWEEN 611 (IN DEC 2003) AND 192 (IN JANUARY 2004) . AO HAD NOTED THAT THE DETAILS LIKE NAMES, ADDRESSES AND THE DATE WHEN THE Y WERE PAID SUBSEQUENTLY WAS NOT FURNISHED BY THE ASSESSEE. WE ALSO FIND THAT BASED ON THE STATEMENT OF 12 PERSONS THAT WERE RECORDED U/S 133(6), THE ADDITION HAS BEEN DELETED BY CIT(A). BEFORE US, THE ASSESSEE HAS NOT PLACED ANY MATERIAL ON RECORD TO SHOW AS TO HOW MUCH AMOUNT WAS PAID SU BSEQUENTLY IN VARIOUS YEARS AND WHAT IS THE OUTSTANDING AMOUNT WHICH STIL L REMAINS UNPAID. THE ASSESSEE HAS ALSO NOT PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THE OUTSTANDING WAGES STILL PAYABLE EMPLOYEEWISE. WE F IND FORCE IN THE ARGUMENT OF THE AO THAT IT CANNOT BE BELIEVED THAT A WORKER WOULD REMAIN UNPAID FOR MORE THAN 6 MONTHS HIS MAIN SOURCE OF LIVELIHOOD IS THE WAGES EARNED BY HIM AND THEREFORE IN THE ABSENCE OF ANY TANGIBLE MATERI AL, THE HUMAN PROBABILITY CANNOT BE IGNORED. BEFORE US, LD A.R. HAS SUBMITTED THAT IN THE SUBSEQUENT YEAR, ON IDENTICAL FACTS IN THE SET ASIDE PROCEEDIN GS THE ADDITION HAS BEEN DELETED BY AO. WE ARE HOWEVER OF THE VIEW THAT THE FACTS OF SUBSEQUENT YEAR ITA NO 1166/ AHD/2 012 . A.Y. 2004- 05 9 ARE DISTINGUISHABLE FOR THE REASON THAT AO HAS NOTE D THAT ASSESSEE HAD FURNISHED THE NAMES AND ADDRESSES OF THE LABOURS WH OSE WAGES WERE UNPAID DURING THE YEAR UNDER CONSIDERATION. ASSESSEE HAS A LSO PLACED RELIANCE ON THE VARIOUS DECISIONS CITED ABOVE BUT WE FIND THAT ALL THE DECISIONS ARE DISTINGUISHABLE ON FACTS AS IN NONE OF THE CASE RELIED UPON THE MATTER WAS WITH RESPECT TO UNPAID WAGES OF LABOURERS. ON THE O THER HAND IN THE CASE BEFORE US, WE FIND THAT AO HAD RECORDED THE STATEME NTS OF ONLY 12 PERSONS THOUGH THE WORKERS WHOSE WAGES WERE UNPAID WERE IN EXCESS OF 100. CONSIDERING THE PECULIAR FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT ENDS OF JUSTICE SHALL BE MET IF ADDITION IS RESTRIC TED TO RS 25 LACS AS AGAINST RS 96,41,849/- MADE BY THE AO. WE THUS DIRECT ACCORDIN GLY. IN THE RESULT THIS GROUND OF REVENUE IS PARTLY ALLOWED. 10. IN THE RESULT THE APPEAL OF REVENUE IS PARTLY A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON 21 - 02 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,A HMEDABAD