ACIT, CIR-27, HALDIA, Purba Medinipur V. M/s Blue Star Civil Engineering Co. Pvt. Ltd., Purba Medinipur

ITA 1439/KOL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1442 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 04-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: MAHADEV GHOSH
• Section: 40A(3); 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI S.S.GODARA, JM & HONBLE SHRI M.BALAGANESH, AM] I.T.A NO. 1439/KOL/2015 ASSESSMENT YEAR : 2011-1 2 ACIT, CIRCLE-27, HALDIA -VS- BLUE STAR CIVIL EN GINEERING COMPANY [PAN: AACCB 2247 B] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SAURABH KUMAR , ADDL. CIT SR. DR FOR THE RESPONDENT : SHRI MAHADEV GHOSH, ADVOCATE DATE OF HEARING : 13.11.2018 DATE OF PRONOUNCEMENT : 16.11.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE REVENUE ARISES OUT OF THE O RDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-7, KOLKATA [IN SHORT THE LD CIT (A)] IN APPEAL NO.537/CIT(A)- 7/CIR-27/14-15 DATED 16.09.2015 AGAINST THE ORDER P ASSED BY ACIT, CIRCLE- HALDIA, [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 12.03.2014 FOR THE ASSESSMENT YEAR 2011-12. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF PAYMENTS MADE TO SU B-CONTRACTORS BOTH ON GENUINENESS AND U/S 40A(3) OF THE ACT IN THE FACTS AND CIRCUMST ANCES OF THE CASE. 2 ITA NO.1439/KOL/2015 BLUE STAR CIVIL ENGINEERING COMPANY PVT. LTD. A.YR. 2011-12 2 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND EXCAVATION AND EVACUATION OF DRY F LY ASH FROM THE PLANT OF M/S WEST BENGAL POWER DEVELOPMENT CORPORATION LTD / KOLAGHAT AND DURGAPUR PROJECTS LTD. THE ASSESSEE FURNISHED THE RETURN OF INCOME FOR THE ASST YEAR 2011-12 DECLARING TOTAL INCOME OF RS 38,34,845/-. THE ASSESSEE DURING THE YEAR SUB-CONTRACTED ITS WORK OF EXCAVATION AND EVACUATION OF DRY FLY ASH TO VARIOUS SUB-CONTRACTORS INCLUDING M/S ELECON ENGG. COMPANY , M/S NOVEL ENGG. AND M/S NOVE L CONSTRUCTION. THE ASSESEE PAID AN AMOUNT OF RS 4,49,72,243/ -TO 16 SUB-CONTR ACTORS FOR CIVIL CONSTRUCTION WORK INCLUDING EXCAVATION AND EVACUATION OF DRY FLY ASH DURING THE YEAR. THE LD AO SOUGHT TO VERIFY THE SAME BY ISSUANCE OF NOTICE U/S 133(6) OF THE ACT TO VARIOUS SUB-CONTRACTORS WITH REGARD TO THE WORK UNDERTAKEN BY THEM AS SUB-C ONTRACTOR OF THE ASSESSEE. THESE PARTIES RESPONDED DIRECTLY BEFORE THE LD AO WHICH W ERE EXAMINED BY THE LD AO. ON EXAMINATION, THE LD AO FOUND THAT THESE PARTIES CON FIRMED HAVING EXECUTED THE WORK AS SUB-CONTRACTOR FOR THE ASSESSEE AND THAT THE PAYMEN TS FOR THE SAME WERE RECEIVED IN CASH AFTER DUE DEDUCTION OF TAX AT SOURCE. ALL THE PAYME NTS WERE RECEIVED BY THEM IN CASH BELOW RS 20,000/- ON EACH OCCASION ON A SINGLE DAY. HOWEVER, THE LD AO DISREGARDED THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO DI SALLOW THE PAYMENTS MADE TO M/S NOVEL ENGINEERING IN THE SUM OF RS 46,27,977/- ; M /S ELECON ENGG. CO. IN THE SUM OF RS 36,52,565/- AND M/S M CONSTRUCTION IN THE SUM OF RS 51,87,265/- U/S 40A(3) OF THE ACT IN THE ASSESSMENT. 4. THE ASSESSEE SUBMITTED AS UNDER BEFORE THE LD CI TA AS UNDER:- THE ASSESSEES NATURE OF BUSINESS IS CIVIL CONTRACT OR. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEES MAIN BUSINESS WAS TO TAKE DELIVERY OF COAL ASH AS AVAILABLE FROM SILLOS AT KOLAGHAT THERMAL POWER PROJECT AND OTHER PROJECT OF WEST BENGAL POWER DEVELOPMENT CORPORATION LIMITED AND EVACUATIO N AND DISPOSAL OF ASH FROM DIFFERENT ASH PONDS OF KOLAGHAT THERMAL POWER PROJE CT / STATION. IN THE THERMAL POWER PROJECT THERE ARE TWO TYPES OF ASH AVAILABLE. ONE I S DRY FLY ASH AND ANOTHER IS WET FLY 3 ITA NO.1439/KOL/2015 BLUE STAR CIVIL ENGINEERING COMPANY PVT. LTD. A.YR. 2011-12 3 ASH. DRY FLY ASH IS AVAILABLE FROM SILLOS (MECHANI CAL TERM) OF THE PROJECT AND WET FLY ASH IS AVAILABLE IN THE ASH PONDS. THE COLLECTION O F DRY FLASH IS A SPECIALIZED JOB. COLLECTION OF DRY FLY ASH FROM SILLO'S IS CONTINUES PROCESS IN A DAY 24 HOURS, THROUGHOUT THE YEAR. HE STATED THAT THE NATURE OF W ORK OF THE APPELLANT IS EMERGENCY BASIS FOR THE PURPOSE OF POLLUTION CONTROL FROM THE ASH OF THERMAL PROJECT. AS PER THE DIRECTION OF THE POLLUTION CONTROL BOARD AND ALSO H ONBLE CALCUTTA HIGH COURT, THE APPELLANT REQUIRED TO ATTEND THE WORK PROMPTLY AND ANY DELAY WAS TAKEN BY THE WBPDCL/ KTPS SERIOUSLY IN VIEW OF CONSTANT MONITORI NG BY POLLUTION CONTROL AUTHORITIES. THE ASSESSEE ALSO FURNISHED THE COPY O F WORK ORDER FROM THE WEST BENGAL POWER DEVELOPMENT CORPORATION LIMITED, COPY OF THE GAZETTE OF INDIA FOR CONTROL THE POLLUTION FROM THE THERMAL PROJECT. THE TERMS & CON DITIONS OF THE WORK ORDER AND CLAUSES FOR SAFETY MEASURE AND FOR THE BENEFIT OF T HE WORKER WHO ENGAGED IN THE FIELD TO EXCAVATION OF ASH. AS PER THE TERMS FROM THERMAL PR OJECT OF KTPC 3000 CUM PER DAY OR MORE AS PER THE TERMS FROM THERMAL PROJECT OF KTPC 3000 CUM PER DAY OR MORE. AS PER THE TERMS FROM THERMAL PROJECT OF DPL 3000 CUM PER DAY OR MORE. AS PER THE TERMS OF PURBA MEDINIPUR ZILLA PARISHAD 3500 CUM PER DAY OR MORE REQUIRED TO EVACUATED. THE ASSESSEES AR FURTHER STATED THAT THE ASSESSING OFFICER MENTIONED IN A CRYPTIC MANNER IN THE ASSESSMENT ORDER THAT THE ASSESSEE OR THE SUB-CONTRACTOR HAS NOT BEEN ABLE TO ESTABLISH THE GENUINENESS OF THE TRANSACTIO N. BUT THE FACTS ARE DIFFERENT. AT THE TIME OF ASSESSMENT PROCEEDINGS THE AO ISSUED THE NO TICE II/ S. 133(6) OF THE IT. ACT, 1961 TO M/S. NOVEL ENGINEERING, M/S. ELECON ENGINEE RING CO AND M/S. M. CONSTRUCTION ASKING THE LEDGER COPY, BALANCE SHEET, ACKNOWLEDGEM ENT OF RETURN FILLING, WORK ORDERS ETC. THE A.O RECEIVED THE REPLY FROM THE ABO VE MENTIONED SUB-CONTRACTORS IN RESPONSE TO THE NOTICE U/ S. 133(6) OF THE IT WITH COMPLETE INFORMATION SUCH AS LEDGER ACCOUNT, BALANCE SHEET, COPY OF ITR ACKNOWLEDGEMENT , WORK ORDER ETC AS PER THE DETAILS AS UNDER: A) ON 23 RD DECEMBER, 2013 FROM M/S. NOVEL ENGINEERING. B) ON 16 TH DECEMBER, 2013 FROM M/S. M. CONSTRUCTION. 4 ITA NO.1439/KOL/2015 BLUE STAR CIVIL ENGINEERING COMPANY PVT. LTD. A.YR. 2011-12 4 C) ON 13 TH DECEMBER, 2013 FROM M/S. ELECON ENGINEERING CO. T HE ASSESSEE OBTAINED THE CERTIFIED COPIES OF REPLY RECEIVED BY THE AO AN D SUBMITTED COPIES OF THE SAME BEFORE ME. THE ASSESSEES A.R FURTHER STATED THAT AFTER RE CEIPT OF REPLY FROM THE SUB- CONTRACTORS, THE AO DID NOT ASK ANY QUESTION OR DID NOT MAKE ANY ENQUIRY WITH THE APPELLANT OR THE SUB-CONTRACTORS IN THAT RESPECT. H E PLACED BEFORE ME COPY OF THE ORDER SHEET OBTAINED FROM THE A.O. THE ASSESSING OFFICER HIMSELF ACCEPTED THE RETURN OF INCOME OF ALL THREE SUB-CONTRACTOR NAMELY (A) M/ S. NOVEL ENGINEERING, (B) M/ S. M. CONSTRUCTION AND (C) M/ S. ELECON ENGINEERING CO AN D ASSESSED THE RETURN OF INCOME U/S. 143(1) OF THE I T. ACT, 1961. AND THE ASSESSIN G OFFICER HIMSELF HAS ALLOWED THE CREDIT OF TDS CLAIMED BY THREE SUB-CONTRACTOR DEDUC TED BY THE ASSESSEE M/ S. BLUE STAR CIVIL ENGINEERING COMPANY PRIVATE LTD, MENTION ED HEREIN WITHOUT ANY QUESTION. IT IS SHOULD BE NOTED THAT THE THREE SUB-CONTRACTOR ARE ASSESSED TO TAX BEFORE THE SAME ASSESSING OFFICER. AS SUCH, THE QUE STION OF DOUBTING SUB-CONTRACTOR JOB DOES NOT ARISE. THE AR FURTHER STATED THAT AT THE T IME OF ASSESSMENT PROCEEDING, THE A/R OF THE ASSESSEE PRODUCED THE WORK ORDER OBTAINED FR OM THE WEST BENGAL THERMAL POWER PROJECTS LTD. THE ASSESSEE FURTHER STATED THAT THE APPELLANT HAS GIVEN THE WORKS TO THE ABOVE SUB-CONTRACTOR IN THE EARLIER YEARS AND SUBSE QUENT YEARS ALSO. THE ASSESSING OFFICER HAS NEVER DOUBTED THE TRANSACTIONS AND ACCE PTED THE RETURNS OF THE ASSESSEE AS WELL AS THE SUBCONTRACTORS. THE ASSESSING OFFICER'S COMMENTS ARE TOTALLY IRRELEVANT, FAR FROM THE FACTS AND THE TRANSACTIONS WITH THE SUB-CO NTRACTORS WERE FULLY ESTABLISHED AS GENUINE AND ALLOWABLE. 5. THE LD CITA DELETED THE DISALLOWANCE BY OBSERVIN G AS UNDER:- 5.4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE BY THE ASSESSEE AND GONE THROUGH THE ASSESSMENT ORDER AND THE MATERIAL PLACE D BEFORE ME. AS PER THE ASSESSMENT ORDER THE ASSESSING OFFICER COLLECTED THE INFORMATI ON U/S 133(6) FROM THE SUBCONTRACTORS. FROM THE INFORMATION FURNISHED BY THE SUB-CONTRACTO RS AND THE ASSESSEE THE ASSESSING OFFICER HAS ANALYSED AND WRONGLY CONCLUDED THAT THE TRANSACTION WITH SUB-CONTRACTORS WERE NOT SUBSTANTIATED, INSTEAD OF MAKING ANY FURTH ER VERIFICATIONS. HE HAS NOT EVEN ASKED OR CONFRONTED EITHER WITH THE ASSESSEE OR TH E SUBCONTRACTOR AFTER THE RECEIPT OF INFORMATION. NO FURTHER ENQUIRY WAS MADE. HE DID NO T EVEN PUT BEFORE THE ASSESSEE 5 ITA NO.1439/KOL/2015 BLUE STAR CIVIL ENGINEERING COMPANY PVT. LTD. A.YR. 2011-12 5 ABOUT HIS SUSPICION FOR CLARIFICATIONS. THE ASSESSE E HAS COMPLETED THE WORK OF EVACUATION AND RECEIVED THE PAYMENT WHICH WAS OFFER ED TO TAX. THEREFORE THERE IS NO DOUBT REGARDING THE GENUINENESS OF THE ASSESSEE . T HE ASSESSEE HAS TO COMPLETE THE WORK ON HIS OWN OR THROUGH THE SUBCONTRACTORS AS PE R THE TERMS AND CONDITIONS OF WORK ORDER. THE ASSESSEE STATED THAT THE WORK WAS GIVEN TO THE SUBCONTRACTORS AND PRODUCED THE BOOKS OF ACCOUNTS VOUCHERS AGREEMENTS AND DEDUC TED THE TAX AT SOURCE. THE ASSESSING OFFICER HAS CROSS VERIFIED THE INFORMATIO N U/S 133(6) OF IT THE ACT, AND ALL THE SUBCONTRACTORS HAVE CONFIRMED THE TRANSACTION AND F URNISHED THE NECESSARY INFORMATION / DETAILS TO THE A.O. THE ASSESSEE STATED THAT THE ABOVE SUB CONTRACTORS ARE EXECUTING THE WORKS TO THE APPELLANT FOR FEW YEARS PRIOR TO T HE A.Y.2011-12 AND IN SUBSEQUENT YEARS ALSO. THE ASSESSEE WAS MAKING THE PAYMENTS AN D ALL THE YEARS THE RETURNS OF THE ASSESSEE AS WELL AS THE SUB CONTRACTORS WERE ACCEPT ED. IN THE CIRCUMSTANCES THERE IS NO CASE FOR DOUBTING THE GENUINENESS OF THE TRANSACTIO N WITH THE SUBCONTRACTORS. THE ASSESSING OFFICER SIMPLY ANALYSED THE INFORMATION A ND EVEN WITHOUT CONFRONTING THE SAME WITH ASSESSEE CONCLUDED THAT THE TRANSACTION WAS NOT GENUINE WHICH WAS NOTHING BUT HIS ASSUMPTION. ASSESSMENTS CANNOT BE MADE ON A SSUMPTIONS AND PRESUMPTIONS. IT IS SEEN FROM THE ASSESSMENT ORDER AND FROM THE COPY OF THE ORDER SHEET THAT THE ASSESSING OFFICER AFTER THE RECEIPT OF THE INFORMATION HAS NO T MADE ANY ENQUIRY OR DID NOT ASK ANY CLARIFICATION QUESTION FROM THE ASSESSEE OR THE SU B-CONTRACTOR. IN THE CASE OF M.M. CONSTRUCTION THOUGH THE ASSESSING OFFICER STATED TH AT IT WAS A RELATED CONCERN, THE SUB- CONTRACT RATE GIVEN WAS ON PAR WITH THE OTHER SUB-C ONTRACTORS I.E. RS. 15/- PER MT. THE FINDING OF THE LOCAL ENQUIRY MADE BY THE ASSESSING OFFICER WAS NEITHER CONFRONTED WITH THE ASSESSEE NOR WITH THE SUB-CONTRACTOR. THE INFO RMATION COLLECTED BEHIND THE BACK OF THE ASSESSEE REQUIRED TO BE CONFRONTED WITH THE AS SESSEE BEFORE THE INFORMATION IS USED AGAINST THE ASSESSEE . THE ASSESSEES A.R. STATED T HAT THE SUB-CONTRACTOR WAS DOING THE WORKS PRIOR TO 2011-12 THE YEAR UNDER CONSIDERATION AND SUBSEQUENT YEARS ALSO BUT ITS GENUINENESS WAS NEVER WAS NEVER DOUBTED. THE ASSESS EE FURTHER STATED THAT THE RETURNS WERE ALSO FILED BY THE SUBCONTRACTOR WITH THE SAME A.O. HONBLE SUPREME COURT IN THE CASE OF DHAKESWARI COT TON MILLS VS CIT REPORTED IN 26 ITR 775 HELD THAT 5.5. IN THIS CASE THE ASSESSING OFFICER HAS NOT MA DE ANY EFFORT TO DISPROVE THE GENUINENESS OF THE TRANSACTION IN SPITE OF THE FACT THAT BOTH THE ASSESSEE AND THE SUB- CONTRACTORS HAVE FURNISHED THE REQUIRED INFORMATION TO PROVE THE GENUINENESS OF THE TRANSACTION. IN SPITE OF PRODUCING THE BOOKS OF ACC OUNTS THE AO DID NOT FIND ANY DEFECTS ALSO. I HAVE GONE THROUGH THE INFORMATION COLLECTED FROM THE SUB-CONTRACTORS U/S 133(6) AND THE LEDGER EXTRACTS I DO NOT FIND ANY REASON T O SUSPECT THE TRANSACTION. THEREFORE, THERE IS NO CASE FOR MAKING ANY DISALLOWANCE HOLDIN G THE TRANSACTIONS AS NOT GENUINE. THEREFORE THE ADDITION MADE ON THIS GROUND CANNOT B E SUSTAINED. 5.6. SECONDLY THE ASSESSING OFFICER HAS ALSO INVOKE D THE PROVISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961 FOR DISALLOWING THE PAYMEN TS MADE TO THE SUB-CONTRACTORS. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER STATED T HAT NEITHER THE ASSESSEE NOR HIS PARTY BEEN ABLE TO ESTABLISH THAT THE PAYMENTS WERE MADE ON VARIOUS DATES AND IN EACH CASE THE PAYMENT DID NOT EXCEED RS. 20,000/-. THE ASSESS EE DURING THE APPEAL SUBMITTED THAT 6 ITA NO.1439/KOL/2015 BLUE STAR CIVIL ENGINEERING COMPANY PVT. LTD. A.YR. 2011-12 6 THE ASSESSEE HAD NEVER PAID IN A DAY MORE THAN RS. 20,000/- TO ITS SUB-CONTRACTORS IN VIOLATION OF THE PROVISIONS OF SEC 40A(3) OF THE IN COME-TAX ACT, 1961. THE ASSESSEE PRODUCED THE CASH BOOK AND LEDGER BEFORE THE ASSESS ING OFFICER AND THE SAME HAVE BEEN PRODUCED BEFORE ME ALSO . THE ASSESSING OFFICER OBT AINED THE INFORMATION FROM THE SUB- CONTRACTORS. THE CERTIFIED COPIES OF THE INFORMATIO N COLLECTED UNDER SECTION 133(6) BY THE A.O. WERE ALSO PRODUCED BEFORE ME. I HAVE GONE THROUGH THE LEDGER EXTRACTS OF THE SUB- CONTRACTORS AND THE ACCOUNT COPIES OF THE ASSE SSEE IN THE BOOKS OF SUB- CONTRACTORS AND I FIND THAT THE ASSESSEE HAS NOT MADE ANY PAYM ENT IN EXCESS OF RS. 20,000/- IN A DAY. AS PER THE PROVISIONS OF SECTION 40A(3) 'THE E XPENDITURE IN RESPECT OF WHICH A PAYMENT OR AGGREGATE PAYMENT MADE TO A PERSON IN DA Y OTHERWISE THEN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT EXCEEDS RS. 20,000/- NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPEN DITURE.' SINCE THE ASSESSEE HAD NOT MADE ANY PAYMENT IN EXCESS RS. 20,000/- ON ANY PART ICULAR DAY NO DISALLOWANCE CAN BE MADE UNDER SECTION 40A(3) AND THE ASSESSING OFFICER HAS WRONGLY INVOKED THE PROVISIONS OF SECTION 40A(3) OF THE INCOME-TAX ACT, 1961. THEREFORE, THE ADDITION MADE BY THE A.D. BY DISALLOWING THE PAYMENTS MADE TO THE SUB-CONTRACTORS AS PER THE DETAILS GIVEN BELOW IS HEREBY DELETED. (I) M/S NOVEL ENGINEERING: RS.46,27,977/- (II) M/S ELCON ENGINEERING: RS.36,52,565/- (III) M/S M CONSTRUCTION : RS.51,87,265/- THIS GROUND OF APPEAL IS ALLOWED. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T ALL THE THREE SUB-CONTRACTORS HAD RESPONDED TO THE NOTICES ISSUED U/S 133(6) OF THE A CT BEFORE THE LD AO DIRECTLY CONFIRMING THE WORKS UNDERTAKEN BY THEM AS SUB-CONT RACTORS OF THE ASSESSEE. THEY HAD ALSO CONFIRMED THE TOTAL PAYMENTS MADE BY THE ASSES SEE IN CASH TOGETHER WITH REQUISITE TDS THEREON. ALL THE THREE SUB-CONTRACTORS ARE DUL Y ASSESSED TO TAX AND THEY WERE ASSESSED BY THE VERY SAME ASSESSING OFFICER, WHOSE RETURNS WERE ACCEPTED U/S 143(1) OF THE ACT. THE LD CITA HAD CATEGORICALLY FOUND THAT THE ASSESSEE HAD BEEN HAVING SIMILAR TRANSACTIONS WITH THESE THREE SUB-CONTRACTORS IN TH E PAST WHICH WERE DULY ACCEPTED BY THE REVENUE. IN THIS SCENARIO, THE GENUINENESS OF THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS THESE THREE SUB-CONTRACTORS STANDS PROVED BEYOND DOUBT WHICH HAS BEEN CATEGORICALLY OBSERVED BY THE LD CITA IN HIS O RDER. THESE FINDINGS WERE NOT 7 ITA NO.1439/KOL/2015 BLUE STAR CIVIL ENGINEERING COMPANY PVT. LTD. A.YR. 2011-12 7 CONTROVERTED BY THE REVENUE BEFORE US. HENCE THE GR OUND RAISED BY THE REVENUE ON THE ACTION OF THE LD CITA ACCEPTING THE GENUINENESS OF EXPENDITURE REQUIRES TO BE DISMISSED. 7.1. WE FIND THAT THE LD CITA HAD CATEGORICALLY OBS ERVED THAT FROM PERUSAL OF THE CASH BOOK OF THE THREE SUB-CONTRACTORS AND THE ASSESSEE AND FOUND THAT THE ASSESSEE HAD NOT MADE CASH PAYMENTS EXCEEDING RS 20,000/- ON A SINGL E DAY . HENCE THERE IS NO VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE AC T. ADMITTEDLY, THE LEDGER ACCOUNTS OF SUB-CONTRACTORS WERE OBTAINED BY THE LD AO DIRECTLY FROM THE SUB-CONTRACTORS U/S 133(6) OF THE ACT, WHEREIN THESE FACTS WERE FOUND. THESE D ETAILS WERE OBTAINED ADMITTEDLY BY THE LD AO BEHIND THE BACK OF THE ASSESSEE AND NOTHI NG ADVERSE WAS FOUND THEREON. MOREOVER, WE FIND THAT THE LD AR RIGHTLY DREW OUR A TTENTION TO THE RELEVANT PAGE OF THE PAPER BOOK CONTAINING WORK ORDERS WHEREIN THE SUB-C ONTRACTORS HAD MANDATED PAYMENTS TO BE MADE TO THEM IN CASH EVERY DAY TO MEET THEIR DAY TO DAY EXPENSES FOR DAILY LABOUR AND LORRY HIRE FOR SMOOTH EXECUTION OF THE WORK. HE NCE BUSINESS EXPEDIENCY OF MAKING CASH PAYMENTS ON A REGULAR BASIS IS ALSO PROVED BY THE ASSESSEE IN THE INSTANT CASE. HENCE WE HOLD THAT THE LD CITA HAD RIGHTLY DELETED THE DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF GENUINENESS AND ALSO U/S 40A(3) OF THE A CT, WHICH IN OUR CONSIDERED OPINION, DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, T HE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 16.11.2018 SD/- SD/- [S.S. GODARA] [ M .BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 16.11.2018 SB, SR. PS 8 ITA NO.1439/KOL/2015 BLUE STAR CIVIL ENGINEERING COMPANY PVT. LTD. A.YR. 2011-12 8 COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-27, HALDIA, BASUDEVPUR, P.O.-KHANJA NCHAK, HALDIA, PURBA MEDINIPUR- 721602. 2. BLUE STAR CIVIL ENGINEERING COMPANY PVT. LTD., V ILLAGE-SANTIPUR, P.O.-MECHEDA, PURBA MEDINIPUR-721137, WEST BENGAL. 3..C.I.T.(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER A SSISTANT REGISTRAR ITAT , KOLKATA BENCHES