ITO, RAJSAMAND V. Shri Krishan Vallabh Sanadhya, RAJSAMAND

ITA 145/JODH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70351 (ITAT-JODHPUR)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 13-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: SACHIN CHOWDHARY; VIKASH BALIA
• Keywords: Rejection of books of accounts; Capital asset; Business income; Depreciation; Notional interest
• Section: 44AD; 40A(3); 143(3); 194C; 145; 11

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 145/JODH/2013 (A.Y. 2009-10) ITO, WARD-1, VS. SHRI KRISHAN VALLABH SANADHYA, RAJSAMAND. NEAR RAILWAY STATION, VILLAGE KUNWARIA, RAJSAMAND. PAN NO. AKQPS 1475 D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIKASH BALIA & SHRI SACHIN CHOWDHARY DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 01/11/2013. DATE OF PRONOUNCEMENT : 22/11/2013. O R D E R PER N.K.SAINI, A.M THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 03/12/2012 OF LD. CIT (A), UDAIPUR. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) HAS ERRED IN 2 1. REDUCING THE TRADING ADDITION OF RS. 32,20,774/- BY REDUCING N.P. RATE OF 8% APPLIED BY THE AO TO 5%, WITHOUT GIVING ANY B ASIS FOR THE SAME. (I) FURTHER GIVING DEDUCTION OF INTEREST AND DEPRECIATI ON EVEN ON THE LOWER RATE OF 5% APPLIED BY THE LD. CIT(A). (II) IGNORING THE FACT THAT IN PRECEDING TWO YEARS THE N .P. RATE SHOWN BY THE ASSESSEE HIMSELF WAS 6.2% ON TURNOVER OF RS.2.5 CRORE AND 6.07% ON TURNOVER OF RS. 5.15 CRORE IN AY 2008-09 & 2007-08 RESPECTIVELY. 2. DIRECTING THE AO TO ASSESS INTEREST INCOME OF RS . 1,00,869/- AS BUSINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCE S HELD BY THE AO. 2. THE GRIEVANCE OF THE DEPARTMENT VIDE GROUND NO.1 R ELATES TO THE DELETION OF TRADING ADDITION MADE BY THE ASSESSING OFFICER BY APPLYING NET PROFIT (NP) RATE. 3. FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 30/09/2009 DECLARING TOTAL INCO ME OF RS. 3,98,630/-, WHICH WAS PROCESSED UNDER SECTION 143(3) OF THE I.T . ACT, 1961 (HEREINAFTER REFERRED TO AS ACT, IN SHORT) ON 12/ 01/2010. LATER ON, CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE DECLARED NP OF RS. 4,98,634/- ON GROSS CONTRACT RECEIPTS OF RS. 4,51,97,483/- WHICH IN TERMS OF PERCENTAGE CAME TO 1.1% AND IF THE INTERES T AMOUNT OF RS. 1,00,869/- WAS TO BE EXCLUDED, THEN THE PERCENTAGE CAME TO 0.88%. HE 3 ALSO OBSERVED THAT THE NP DECLARED BY THE ASSESSEE WAS LOW IN COMPARISON TO THE NP OF THE EARLIER ASSESSMENT YEARS DECLARED AT 4% AND 5% IN THE A.Y. 2008-09 & 2007-08 RESPECTIVELY. WHEN THE ASSES SEE WAS CALLED UPON TO EXPLAIN THE REASON FOR LOW NP RATE, IT WAS STATE D THAT IT WAS DUE TO PAYMENT OF INTEREST TO THE BANK AND DEPRECIATION ON CAPITAL ASSETS. THE ASSESSING OFFICER POINTED OUT CERTAIN DEFECTS IN TH E BOOKS OF ACCOUNTS AND INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT BY MENTIONING THE FOLLOWING POINTS:- 1. AS PER THE BALANCE SHEET, A SUM OF RS. 1,81,71, 315/- IS STANDING AS ON 31/03/2009 AS SECURITY DEPOSIT BUT NO INTEREST INCO ME ON THE ABOVE SECURITY DEPOSIT WAS CREDITED IN THE PROFIT AND LOS S ACCOUNT 2. AS PER THE LEDGER ACCOUNT OF SH. VIJAY PRAKASH SANADHYA, A SUM OF RS.12,90,000 HAS BEEN PAID TO HIM AGAINST HIS CREDI T OF RS.5,29,989 AND THE BALANCE AMOUNT 0FRS.7,60,011 WAS TRANSFERRED TO SECURITY DEPOSIT ACCOUNT WHICH IS NOT JUSTIFIED AS THERE WAS NO REQU IREMENT OF ANY SECURITY DEPOSIT TO BE PAID TO SH. VIJAY PRAKASH AN D AS SUCH THIS AMOUNT REPRESENTS LOAN/ADVANCE ON WHICH INTEREST IS RECEIVABLE. 3. FURTHER, AS PER THE LEDGER ACCOUNT OF MATERIAL CONSUMED, THE ASSESSEE HAS DEBITED SUBSTANTIAL AMOUNT TO THE BANK, THE DET AILS OF WHICH HAS BEEN GIVEN AT PAGE NO.15 OF THE ASSESSMENT ORDER. H OWEVER, THE ASSESSEE FAILED TO FURNISH COPIES OF PURCHASE BILLS OF THE MATERIALS CONSUMED THROUGH THE ABOVE ENTRIES MADE IN THE JOUR NAL EXCEPT TWO BILL OF RS.8,34,000 DATED 03,.12.2008 AND RS.6 LAKH S DATED 20.01.2009 CHAIN SINGH WHOSE PAYMENT WAS MADE TO SHRI HARI SIN MGH RAWAT THE COLLECTED INFORMATION U/S.133(6) FROM BANK BRA NCHES AS PER THE LEDGER ACCOUNT AND IT IS FOUND THAT THE PAYMENT OF CHEQUES FOUND DEBITED FOR THE MATERIAL CONSUMED WERE TRANSFERRED TO THE ACCOUNT OF THE PERSONS MENTIONED AT PAGE 15 & 16 OF THE ASSESS MENT ORDER. IN THIS CONNECTION IT HAS BEEN MENTIONED BY THE A.O. T HAT THE PERSONS TO 4 WHOSE ACCOUNT THE PAYMENTS OF CHEQUES WERE TRANSFER RED ARE ENGAGED IN THE BUSINESS OF CIVIL CONTRACT AND THERE FORE IT IS VERY POSSIBLE THAT AMOUNT WAS TRANSFERRED AGAINST SUB CO NTRACT AND THE AMOUNT HAS BEEN DEBITED AGAINST MATERIAL PURCHASE T O AVOID THE COMPLIANCE OF PROVISIONS OF SECTION 194C OF THE ACT WHICH LED TO DISALLOWANCE U/S.40(A)(IA) IN CASE OF NON COMPLIANC E OF SECTION 194C OF THE ACT. 4. FURTHER, IT HAS ALSO BEEN NOTICED THAT THE INTER EST OF RS.11,190 ALLOWED BY THE DY. COMMISSIONER OF COMMERCIAL TAX DEPARTMEN T, BHILWARA HAS BEEN FOUND CREDITED IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME O F THE ASSESSEE BY APPLYING NP RATE OF 8% AS SPECIFIED IN THE PROVI SIONS OF SECTION 44AD OF THE ACT TREATING THE CASE OF THE ASSESSEE AS NO BOO KS OF ACCOUNT CASE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LEARNED CIT(A) AND THE FOLLOWING SUBMISSIONS MADE AS INCORP ORATED IN PARA 3.2 OF THE IMPUGNED ORDER WERE AS UNDER:- 2.0. THE ASSESSING OFFICER HAS INVOKED THE PROVIS IONS OF SECTION 145(3) OF THE ACT AND REJECTED THE BOOKS OF ACCOUNTS OF THE A PPELLANT. 2.1 THE ASSESSING OFFICER HAS MENTIONED CERTAIN PO INTS IN HIS ASSESSMENT ORDER AS BASIS FOR REJECTION OF BOOKS OF ACCOUNTS; HE HAS TAKEN THE FIRST POINT OF LOWER THE NET PROFIT AS COMPARE TO T HE PREVIOUS YEARS. 2.2 IT IS SUBMITTED THAT THE TURNOVER OF THE APPEL LANT WAS INCREASED FROM RS. 3.26 CRORE TO RS. 4.52 CRORE DURING THE YE AR UNDER CONSIDERATION. THEREFORE, IT IS WORTHWHILE TO MENTI ON HERE THAT UNLESS A BUSINESS ENTERPRISES OFFER SOME EXTRA DISC OUNT OR REBATE THE TURNOVER CANNOT BE INCREASED LIKE IN THE CASE O F APPELLANT. THE TURNOVER IS INCREASED BY 38.05% AS COMPARED TO PREC EDING PREVIOUS YEAR IS HAPPENED ON REDUCTION OF RATES. 5 2.3 THE APPELLANT HUMBLY SUBMITS THAT THE LD ASSES SING OFFICER HAS WITHOUT APPRECIATING THE FACTS OF THE CASE ARBITRAR ILY TAKEN THIS ISSUE AS BASIS, 2.4 THEREFORE, THE BASIS OF LOWERING THE NET PROFI T TAKEN BY THE ASSESSING OFFICER IS BASED ON HIS PREDETERMINED MIN D SET ARID IS NO- WHERE MENTIONED IN THE LAW AS WELL AS HELD BY THE C OURTS. OUR CONTENTIONS ARE WELL SUPPORTED BY THE RAJASTHAN HIG H COURT IN THE FOLLOWING CASE : MALANI RAMJIVAN JAGANNATH VS. ASST . COMMISSIONER OF INCOME-TAX [2007] 163 TAXMAN 731 / [2009] 316 LT RL20 (RAJ ). THE COURT HELD THAT MERE DEVIATION IN GROSS PROFIT RATE CANNOT BE A GROUND FOR REJECTING BOOKS OF ACCOUNT AND ENTERING INTO REALM OF ESTIMATE AND GUESSWORK. 2.5 THE ID ASSESSING OFFICER HAS FURTHER TAKEN A P OINTS IS HUGE PAYMENT OF WAGES I.E. 90% OF THEM WERE DEBITED THROUGH INTE RNALLY PREPARED BILLS WITH NO REGISTERED DEALER, DATE OF PURCHASE E TC., IN THIS REGARD IT IS SUBMITTED THAT THE APPELLANT HAS PURCHASED FROM VARIOUS LOCAL SUPPLIERS OF THE NEARBY AREAS OF SITES AND THEY HA VE NOT ISSUED PREPRINTED BILLS FOR THE SAME. BUT THEY HAVE ACKNO WLEDGED THE PURCHASE TRANSACTIONS BY WAY OF CONFIRMATIONS PLACE D ON RECORD. THE LD ASSESSING OFFICER HAS WITHOUT CONFRONTING AN D PROVING THEM FALSE CASUALLY MADE THE BASIS OF REJECTION OF BOOKS OF ACCOUNTS. THE APPELLANT HAS ALSO FURNISHED THE CREDITORS CONFIRMA TIONS FOR RS. 80.95 LACS OUT OF THE TOTAL CREDITORS OF RS. 142.42 LACS. THAT THE NONE OF CONFIRMATION OF THE CREDITORS BEING HELD OR PROV ED AS FALSE BY THE LD ASSESSING OFFICER. IT CAN BE VERY WELL SAID THAT THE MOST OF THE CREDITORS WERE CONFIRMED AND REMAINING WERE ALSO SI MILAR. IT IS NOT PRACTICALLY POSSIBLE TO COLLECT THE CONFIRMATIONS O F ALL THE CREDITORS APPEARING IN THE BALANCE SHEET, ESPECIALLY WHEN THE Y ARE LOCATED AT VARIOUS PLACES. 2.6 THE ASSESSING OFFICER HAS FURTHER MENTIONED TH AT THERE ARE NUMBER OF INSTANCES OF CASH PAYMENTS IN VIOLATION OF SECTI ON 40A(3) OF THE ACT. LT IS SURPRISE TO FIND THAT NONE OF INSTANCE HAS BEEN NARRATED IN THE IMPUGNED ASSESSMENT ORDER. PARTICULARLY, WHEN S UCH ELABORATIVE ASSESSMENT ORDER BEEN DRAFTED BY THE ASSESSING OFFI CER. THEREFORE, IT WAS THE IMAGINATION OF THE ASSESSING OFFICER THA T THERE WAS 6 VIOLATION OF THE PROVISIONS OF THE SECTION 40A(3) O F ACT. THE ASSESSMENT ORDER AND ADDITIONS/REJECTION OF BOOKS O F ACCOUNTS CANNOT BE DONE BASED ON THE SUSPICION AND IMAGINATI ON OF THE ASSESSING OFFICER. 2.7 THE LD ASSESSING OFFICER FURTHER DISCUSSED THE ISSUE OF POSSIBILITIES OF VIOLATION OF PROVISIONS OF SECTION 194C AND LEADING TO THE DISALLOWANCES UNDER SECTION 40A(IA) OF THE ACT. AS THE APPELLANT HAS FURNISHED THE CONFIRMATION OF THE ACCOUNT STATEMENT S OF THE 2.8. MATERIAL SUPPLIERS, WHICH CONTAINS THE DETAILS OF EACH AND EVERY PURCHASES AND PAYMENTS MADE DURING THE YEAR UNDER A PPEAL, THEREFORE, IT IS THE PURE GUESS WORK OF THE ASSESSI NG OFFICER THAT THERE WAS POSSIBILITY OF VIOLATIONS. LT IS REQUESTE D THAT NONE OF THE AUDITED BOOK RESULTS CAN BE REJECTED ON THE MERE IM AGINATION OF POSSIBILITY OF VIOLATION. THE ID ASSESSING OFFICER WAS COMPLETELY FAILED TO PLACE ON RECORD ANY ONE OF THE SINGLE TRANSACTIO N AS ALLEGED BY HIM. 2.9 THE ASSESSING OFFICER FURTHER ARGUED THAT THE PAYMENTS OF RS. 19,500/- WERE MADE TO CREDITORS AND VOUCHERS WERE N OT PRODUCED FOR VERIFICATIONS. LN THIS REGARD IT IS RESPECTFULL Y SUBMITTED THAT THE APPELLANT HAS FURNISHED THE CONFIRMATIONS OF ACCOUN T WHICH CONTAINS ALL THE PAYMENTS. LOOKING TO THE VOLUME OF THE VOUC HERS, HE HAS FURNISHED THE CONFIRMATIONS FOR- NECESSARY EXAMINAT IONS. FOR THE CONVENIENCE, THE APPELLANT HAS FURNISHED THE CONFIR MATIONS INSTEAD OF THE HUGE NUMBER OF VOUCHERS. THEREFORE, THE VERY PURPOSE OF VERIFICATION OF PAYMENTS AND PURCHASES WERE SATISFI ED BY FURNISHING OF THE CONFIRMATIONS. 2.10 THE ASSESSING OFFICER HAS ALSO EXPRESSED HIS OPINION OVER THE PAYMENT OF RS. 760,011/- TO MR VIJAY PRAKASH SANADH YA, HE SAID THIS AMOUNT SHOULD HAVE BEEN TRANSFERRED TO LOANS AND AD VANCES ACCOUNT INSTEAD OF THE SECURITY DEPOSIT ACCOUNT. TH EREFORE, THIS CHANGE IN THE ACCOUNTING ENTRY WOULD NOT AFFECT THE BOOK RESULTS AND BECOME A CAUSE FOR REJECTION OF ACCOUNTS. MR VI JAY PRAKASH SANDHYA IS VERY CLOSE RELATIVE AND ALSO ENGAGED IN THE BUSINESS OF CIVIL CONTRACT AND GIVES HIS VALUABLE ADVICES IN PE RFORMANCE OF WORKS 7 CONTRACT AS WELL. WE ALSO CARRIED OUT SUB CONTRACT ASSIGNMENTS FOR HIM. THEREFORE, CHARGING INTEREST FROM HIM IS NOT P OSSIBLE AND REQUIRED AS WELL. THUS, THE HYPOTHETICALLY NOTIONAL INTEREST INCOME CANNOT BE BASE FOR REJECTION OF BOOKS OF ACCOUNTS 2.11 FURTHERMORE, THE ASSESSING OFFICER HAS TAKEN THE SIXTH POINT OF THE BASIS FOR REJECTION OF BOOKS OF ACCOUNTS IS NON MAI NTENANCE OF STOCK REGISTER. THE APPELLANT HUMBLY STATES THAT HE IS CO NTRACTOR NOT A TRADER, AND HE CONSUMED THE-MATERIAL WHAT HE PURCHA SED IN HIS JOB ASSIGNMENT. HE IS ALSO NOT HAVING ANY CLOSING STOC K AND OPENING STOCK DURING THE YEAR AS IS EVIDENT FROM THE BALANC E SHEET. IMPORTANTLY HE PURCHASES THE MATERIAL AS AND WHEN R EQUIRED FOR THE CONSUMPTION, SO, HE HAS NOT MAINTAINED THE STOCK RE GISTER. THE NON- MAINTENANCE OF STOCK REGISTER IN CASE OF A TRADER C AN BE SOUND POINT FOR THE REJECTION OF BOOKS BUT IN CASE OF A CONTRAC TOR IT CANNOT BE. THUS, THIS ALSO CANNOT BE THE BASIS FOR REJECTION O F BOOKS OF ACCOUNTS OF CONTRACTOR OF SUB CONTRACTOR. 2.12 THE ASSESSING OFFICER HAS TAKEN THE LAST POIN T OF THE REJECTION OF BOOKS OF ACCOUNTS IS NON SUBMISSION OF DETAILS OF W IP AS 0N 31-03- 2009. LT IS SUBMITTED THAT THERE WAS NO CLOSING AND OPENING BALANCE OF WIP IN THE CASE OF APPELLANT, SO, NO DETAILS WER E REQUIRED TO FURNISH. UNDER THE CIRCUMSTANCES THE BOOKS OF ACCOU NTS OF THE APPELLANT CANNOT BE REJECTED FOR SUCH IRRELEVANT DE TAILS. 2.13 THEREFORE, IN VIEW OF THE FOREGOING FACTS AND CIRCUMSTANCES THE BASIS TAKEN BY THE ASSESSING OFFICER TO REJECT THE BOOKS OF ACCOUNTS IS FALSE AND BASED ON HIS PREDETERMINED MIND SET, WHIC H HAS NO PLACE IN THE EYES OF THE LAW. 2.14 THE APPELLANT HUMBLY STATES THAT THE BOOKS OF ACCOUNTS WERE DULY AUDITED BY A QUALIFIED CHARTERED ACCOUNTANT AND NO INHERITANCE DEFECT WAS NOTICED BY THE ASSESSING OFFICER. FURTH ER THE APPELLANT HAS FOLLOWED THE SAME METHOD OF ACCOUNTING SINCE TH E INCEPTION OF THE BUSINESS AND THERE WAS NO DIVERSION IN METHOD O F ACCOUNTING. UNDER THE CIRCUMSTANCES PROVISIONS OF SECTION 145(3 ) MAY NOT BE INVOKED. 2.15 IN THE PRESENT CASE THE FINDINGS ARE BASED ON NO EVIDENCE AND/OR WHILE ARRIVING AT THE SAID FINDING, RELEVANT ADMISS IBLE EVIDENCE HAS 8 NOT BEEN TAKEN INTO CONSIDERATION, INADMISSIBLE EVI DENCE HAS BEEN TAKEN INTO CONSIDERATION, LEGAL PRINCIPLES HAVE NOT BEEN APPLIED IN APPRECIATING THE EVIDENCE, AND THE EVIDENCE HAS BEE N MISREAD. 2.16 WHERE ASSESSING OFFICER HAD NOT BROUGHT ANY M ATERIAL OR EVIDENCE TO INDICATE ANY INSTANCES OF UNDISCLOSED PURCHASE/S ALE OR EXPENSES BY ASSESSEE, REJECTION OF BOOKS OF ACCOUNT WAS NOT JUSTIFIED AS HELD BY THE RAJASTHAN HIGH COURT INCASE OF CIT, JAIPUR-I II VS. RELAXE RUBBER PRODUCTS [2012] 204 TAXMAN 88 (RAJ) (MAG). 2.17 IN VIEW OF THE RATIO LAID DOWN BY THE HIGH CO URT IN THE CASE OF CLT V. OM OVERSEAS [2009]315 ITR 185 (P&H) AND THAT OF THE GAUHATI HIGH COURT IN THE CASE OF MADNANI CONSTRUCTION CORPORATI ON PVT. LTD. VS. CIT [2008] 296 ITR 45 (GAUHATI) THE ASSESSING OFFIC ER WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 145 WHEN THE DULY AUDITED BOOK VERSION WAS NOT CHALLENGED BY THE ASSE SSING OFFICER OR ANY COURT, AND THE AUDITED PARTICULARS/ DETAILS WER E NOT AT ALL DISPUTED AS TO THERE BEING DEFECTS WHATSOEVER IN TH EM. AS TO THE BOOKS OF ACCOUNT AND VOUCHERS MAINTAINED, THEY, THE REFORE, REFLECT A TRUE PICTURE OF THE ACCOUNTS OF THE APPELLANT. 2.18 HENCE, THE BUSINESS RESULTS DECLARED BY THE A PPELLANT-COMPANY NEED NOT HAVE BEEN INTERFERED WITH BY THE ASSESSING OFFICER IN ESTIMATING ITS PROFITS BY APPLYING AN ARBITRARY RAT E. MERELY BECAUSE THE PROFITS ARE LOW COMPARED TO THE EARLIER YEAR IS NOT A CIRCUMSTANCE OR MATERIAL TO JUSTIFY AN ESTIMATE IN THE CIRCUMSTANCES AND FACTS OF THE CASE, AS HELD BY THE HIGH COURT IN THE CASE OF PANDIT BROS. VS. CIT [1954] 26 ITR 159 (P&H). SIMILALRY T HE BOOKS OF ACCOUNT CAN BE REJECTED UNDER SECTIN 145 ONLY WHERE EIEHTER NO METHOD OF ACCOUNTING WAS EMPLOYED OR THE METHOD EMP LOYED WAS SUCH THAT IT DID NOT DISCLOSE THE TRUE PROFITS, IN VIEW OF THE DECISION OF THE HIGH COURT IN THE CASE OF CIT VS. K.S. BHATI A [2004] 269 ITR 577 (P & H). THUS, THE ESTIMATION OF PROFIT IS MER ITLESS AND HENCE STANDS DELETED. 2.19 THE BOOK RESULTS COULD NOT BE REJECTED ON THE BASIS OF ANY HYPOTHETICAL CALCULATIONS BASED ON ERRONEOUS PRESUM PTION. 9 5. IT WAS FURTHER STATED THAT THE ASSESSING OFFICER E RRED IN ESTIMATING THE NP @ 8% AND MAKING THE TRADING ADDITION OF RS. 32,20,774/- AND ALSO SUBMITTED AS UNDER:- 3.1 THE ASSESSING OFFICER HAS REJECTING THE BOOKS O F ACCOUNTS ADOPTED PROFIT RATE 8% OF THE GROSS RECEIPTS AS MENTIONED I N THE PROVISIONS OF SECTION 44AD OF THE ACT. IT IS IMPORTANT TO MENTIO N HERE SECTION 44AD WAS INTRODUCED FOR THOSE ASSESSES WHO ARE NOT ABLE TO MAINTAIN REGULAR BOOKS OF ACCOUNTS. THIS WAS A PRE SUMPTIVE SECTION OF THE CHARGING INCOME TAX FOR THE SMALL CONTRACTOR S WHOSE TURNOVER DOESNT EXCEED RS. 40.00 LACS IN WHOLE YEAR. 3.2 IN THE INSTANT CASE THE TURNOVER WAS MORE THAN 10 TIMES OF THE LIMIT PRESCRIBED IN SECTION 44AD, THEREFORE, THE ASSESSIN G OFFICER HAS WRONGLY APPLIED THE PROVISIONS OF SECTION AND ESTIM ATED THE INCOME @ 8% OF THE GROSS RECEIPTS. 3.3 THE APPELLANT FURTHER STATES THAT THE NET PROFI T PERCENTAGES WERE IN DECREASE TREND FOR LAST TWO YEARS, AND THIS WAS NOT ONLY AFFECTED THE APPELLANT BUT THE OTHER CONTRACTORS AS WELL. A DETA ILED COMPARATIVE CHART FOR LAST 3 YEARS IS ENCLOSED HEREWITH. 3.4 THE DECLINE IN THE NET PROFIT OF PERCENTAGE IN THE SIMILAR TRADE OF CONTRACTOR BUSINESS WAS THERE AND APPELLANT WAS ALS O AFFECTED BY THE SAME. 3.5 LOOKING TO THE ATTACHED COMPARATIVE DETAILS OF CONTRACT RECEIPTS, EXPENSES AND NET PROFIT IT CAN BE SAFELY SAID THAT THE ASSESSING OFFICER WAS NOT INTERESTED IN THE FAIR ESTIMATION O F INCOME RATHER CONCERN WITH HIS PREDETERMINED INTENTION OF MAKING HUGE ADDITION. 3.6 WHEREAS, WITH THE CORRECT PRESENTATION OF THE RECEIPTS AND COMPARISON THEREOF IS AS UNDER: 10 PARTICULARS A.Y 2009 - 10 A.Y 2008 - 09 A.Y 2007 - 08 CONTRACT RECEIPTS 4,34,93,357 2,53,66,916 5,15,78,790 SUB CONTRACT RECEIPTS 17,04,176 72,89,870 0 TOTAL CONTRACT RECEIPTS 4,51,97,533 3,26,56,786 5,15,78,790 DEPRECIATION 8,10,588 3,99,594 2,95,485 INTEREST 5,35,543 3,20,145 2,57,578 NET PROFIT BEFORE DEP. AND INT. 18,44,765 20,23,876 31,32,103 PROFIT % 4.08% 6.20% 6.07% 3.7 THE APPELLANT RESPECTFULLY STATE THAT THE NET PROFIT BEFORE DEPRECIATION AND INTEREST WAS 4'08% IS LOWER THAN T HE PAST YEAR OF 6.20 % AND 6.07% THIS REDUCTION OF AROUND 2% WAS DU E TO INCREASE IN COST OF MATERIAL CONSUMPTION FROM 43.56% TO 55.5 8%. THEREFORE, THIS INCREASE OF MATERIAL CONSUMPTION DRAGS THE PRO FIT BY MORE THAN 2%. 3.8 LT IS ALSO RELEVANT TO MENTION HERE THAT THERE IS ECONOMIC SLOWDOWN DURING THE ASSESSMENT YEAR AS COMPARED TO THE EARLI ER YEARS PARTICULARLY IN INFRASTRUCTURE SECTOR. 3.9 LT IS PRIME AND UTMOST DUTY OF THE ASSESSING O FFICER WHEN HE HAS TO ESTIMATE THE PROFIT, HE HAS TO ACT JUDICIOUSLY, APP LY HIS MIND WITH REFERENCE TO EARLIER YEAR RESULTS, AND RESULTS OF T HE SAME YEAR OF OTHER CASES OF SIMILAR BUSINESS AND FACTS AND CIRCU MSTANCES OF THE CASE, WHEREAS, IN THE INSTANT CASE THE ASSESSING OF FICER HAS ARBITRARILY DECIDED THE PERCENTAGE I.E. 8% PROFIT A ND FASTENED HUGE DEMAND OVER THE APPELLANT. 3.10 THE LD ASSESSING OFFICER HAS AFTER REJECTING THE BOOKS OF ACCOUNTS INVOKED THE PROVISIONS OF THE SECTION 44AD AND APPL IED THE 8% NET PROFIT RATE, IT IS HUMBLY SUBMITTED THAT THE INTROD UCTION OF SECTION 44AD WAS FOR THE SMALL CONTRACTORS HAVING TURNOVER OF LESS THAN 40 LACS, THIS PRESUMPTIVE OPTION IS GIVEN TO THE SMALL CONTRACTORS TO ALLOW THEM TO NOT TO KEEP THE REGULAR BOOKS OF ACCO UNT. SURPRISING TO FIND THAT THE LD ASSESSING OFFICER HAS INVOKED T HE PROVISIONS OF THE 11 SAID SECTION INTO THE APPELLANT'S CASE WHERE THE TU RNOVER IS MORE THAN 10 TIMES OF THE ACT SAYS. 3.11 LT IS AN EXTREME SIDE OF THE INTERPRETATION O F THE LAW BY THE ID ASSESSING OFFICER AND APPLY IN THE ASSESSMENTS WHER E THE BOOKS OF THE ACCOUNTS IS REJECTED ARBITRARY. 3..12 THE APPELLANT VERY RESPECTFULLY STATES THAT THERE IS NO RELEVANCE WITH THE PROVISIONS OF SECTION 44AD IN HIS CASE AND ALSO AGAINST THE INTENTION OF THE HON'BLE PARLIAMENT, WHO MADE THE L AW. 3.13 THE ASSESSING OFFICER HAS DISCUSSED THE 12.50 % PROFIT OF THE GROSS CONTRACT RECEIPTS BEFORE THE DEPRECIATION IN HIS AS SESSMENT ORDER BY QUOTING THE DECISION OF THE RAJASTHAN HIGH COURT IN CASE OF CIT VS JAIN CONSTRUCTION CO AND OTHER 245 ITR 527 AND SOME OTHER DECISIONS OF THE OTHER COURTS AS WELL. 3.14 LT IS NECESSARY TO MENTION HERE THAT THE FACT S OF THE ABOVE QUOTED CASE ARE TOTALLY DIFFERENT FROM THE CASE OF THE APP ELLANT. THE QUOTED CASE BELONGS TO A PARTNERSHIP FIRM WHEREAS THE APPE LLANT IS PROPRIETOR OF THE CONCERN. 3.15 LT IS ALSO FOUND THAT THE ASSESSING OFFICER H AS WRONGLY INTERPRETED THE DECISION, THE QUESTION BEFORE THE HIGH COURT WAS RE GARDING ALLOWBILITY OF DEPRECIATION AND INTEREST ON PARTNER 'S CAPITAL FROM THE ESTIMATED PROFIT AND SAME WAS-HELD AFFIRMATIVELY AN D ALLOWED THE APPEAL OF THE APPELLANT. THUS, THERE WAS NO QUESTIO N OF APPLYING THE RATE OF PROFIT. SO, THE QUOTED CASE HAS NO RELEVANC E IN THE PRESENT CASE (THE COPY OF THE DECISION IS ENCLOSED HEREWITH ). 3.16 SIMILARLY, THE OTHER TWO QUOTED CASES WERE ALS O NEITHER APPLICABLE NOR HAVE RELEVANCE IN THE APPELLANTS CASE (THE COP Y OF THE QUOTED CASES IS ENCLOSED HEREWITH) 3.17 THUS, THE WHOLE ESTIMATION OF THE PROFIT IS B ASED ON IRRELEVANT DECISIONS, AND COMPLETELY OVERLOOKING TO THE PRECED ENCE OF THE COMPARISON OF THE EARLIER RESULTS OF THE APPELLANT HIMSELF, OR CASES OF THE SAME YEAR OF THE SIMILAR KIND OF CONTRACT BU SINESSES. 12 3.18 THE JURISDICTIONAL HIGH COURT HAS HELD IN THE CASE OF CIT VS LNANI MARBLE (P.) LTD. [2008] 175 TAXMAN 56 (RAJ.) THAT I N ABSENCE OF ANY CHANGE IN FACTUAL POSITION, PROFIT RATE DECLARED AN D ACCEPTED IN PRECEDING YEARS CONSTITUTED A GOOD BASIS FOR WORKIN G OUT GROSS PROFIT RATE. LN THE INSTANT CASE THERE WAS NO CHANGE IN FACTUAL POSITION AS COMPARED TO EARLIER YEARS, SO, THE PROFIT FOR THE P AST YEARS MAY BE GOOD BASIS FOR ESTIMATION OF PROFIT FOR THE YEAR UN DER APPEAL. MALANI RAMJIVAN JAGANNATH V. ASSTT. COMMISSIONER O F LNCOME-TAX [2007] 163 TAXMAN 731 / [2009] 316 ITR 120 (RAJ.) F URTHER HELD THAT MERE DEVIATION IN GROSS PROFIT RATE CANNOT BE A GROUND FOR REJECTING BOOKS OF ACCOUNT AND ENTERING INTO REALM OF ESTIMATE AND GUESSWORK. 3.19 THE APPELLANT RESPECTFULLY STATES THAT THE AS SESSING OFFICER HAS ESTIMATED THE PROFIT UNDER THE PRESUMPTION AND ASSU MPTION, BASED ON SURMISES AND CONJECTURES, IS COMPLETELY ILLEGAL AND LIABLE TO QUASH. 3.20 LT IS SETTLED POSITION OF THE LAW THAT NO GUE SS WORK, ASSUMPTION AND PRESUMPTIONS ARE REQUIRED, WHENEVER THE ESTIMATION IS .REQUIRED TO BE MADE. 3.21 HOWEVER, THE LD ASSESSING OFFICER SHOULD HAVE FAIRLY ESTIMATE THE PROFIT CONSIDERING THE PAST RECORDS, SUBSTANTIAL IN CREASE IN THE TURNOVER, ECONOMIC SLOWDOWN IN THE COUNTRY, SHARE O F THE SUB CONTRACT RECEIPTS IN THE TOTAL RECEIPTS, COMPARISON OF SIMILAR CASES. 3.22 LOOKING TO THE AFORESAID FACTS, COMPARISONS, ARGUMENTS AND FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT VERY H UMBLY PRAYS OF THE CASE. 6. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS O F ASSESSEE ALLOWED THE RELIEF TO RS. 27,03,408/- BY CONSIDERIN G IT FAIR AND REASONABLE 13 TO APPLY THE NP RATE OF 5%, INSTEAD OF 8% APPLIED B Y THE ASSESSING OFFICER BY OBSERVING AS UNDER:- 3.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT AS WELL AS THE FINDINGS OF THE A.O. GIVEN IN THE ASSESSMENT ORDER, IT IS SEEN THAT THE A.O. HAS POINTED OUT VARIOUS DEFECTS IN THE BOOKS OF ACC OUNT MAINTAINED BY THE APPELLANT LIKE NON MAINTENANCE OF STOCK REGISTER, I N RESPECT OF PURCHASES, CONSUMPTION OF MATERIALS AND WORK IN PROGRESS, AND MAINTENANCE OF PROPER VOUCHERS FOR THE CASH PAYMENTS MADE IN FRACTION OF RS.19,500. SIMILARLY, NO CONFIRMATION WAS FILED IN RESPECT OF CREDITS OF RS. 61,46,770 CLAIMED ON ACCOUNT OF PURCHASE OF MATERIALS. SIMILARLY, THE WA GE EXPENSES CLAIMED ARE ALSO NOT SUBJECT TO COMPLETE VERIFICATION. EVEN DUR ING THE APPEAL, THE APPELLANT COULD NOT EXPLAIN THE ABOVE DEFECTS PROPE RLY. IN SUCH CIRCUMSTANCES, THE INVOCATION OF PROVISIONS OF SECT ION 145(3) OF THE I.T. ACT IS HELD TO BE JUSTIFIED AND NO INTERFERENCE ON THIS ACCOUNT IS CALLED FOR. HOWEVER, THE INVOCATION OF PROVISIONS OF SECTION 44AD IN THE CASE OF THE APPELLANT CANNOT BE HELD TO BE JUSTIFIED BECAUS E THE SAID PROVISION IS FOR THE TRADERS WHOSE TURNOVER DOES NOT EXCEED THE LIMI T OF RS.40 LAKHS. ADMITTEDLY, THE TURNOVER IN THE CASE OF THE APPELLA NT IS SUBSTANTIALLY HIGH THAN THE LIMIT PROVIDED U/S.44AD OF THE ACT. MERELY SOME DEFECTS WERE THERE IN THE BOOKS OF ACCOUNT MAINTAINED BY THE APP ELLANT DO NOT EMPOWER THE A.O. TO INVOKE THE PROVISIONS OF LAW WHICH IS A PPARENTLY NOT APPLICABLE IN THE CASE OF THE APPELLANT. THEREFORE, THE INVOCA TION OF PROVISIONS OF SECTION 44AD IS HELD TO BE UNJUSTIFIED. AS REGARDS THE APPLICATION OF HIGHER GROSS PROFI T RATE, IT MAY BE MENTIONED HERE THAT DURING THE APPEAL IT HAS BEEN S UBMITTED THAT THERE IS SLIGHT FALL IN THE GROSS PROFIT RATE DUE TO INCREAS E IN THE COST OF MATERIALS, LABOUR PAYMENTS ETC. FURTHER, IT HAS BEEN SUBMITTED THAT THE GROSS CONTRACT RECEIPTS DECLARED BY THE APPELLANT ALSO INCLUDE THE SUB-CONTRACT RECEIPTS IN WHICH THE MARGIN OF PROFIT IS VERY LOW. AFTER CONSI DERING THE SUBMISSIONS AS WELL AS THE DEFECTS POINTED OUT BY THE A.O. IN MAIN TAINING THE BOOKS OF ACCOUNT AND OTHER FACTS OF THE CASE, IN MY VIEW, IT WILL MEET THE ENDS OF JUSTICE IF A NET PROFIT RATE OF 5% IS APPLIED ON GR OSS CONTRACT RECEIPTS OF RS. 4,52,42,544 INCLUDING THE CONTRACT RECEIPTS NOT INC LUDED IN THE CONTRACT RECEIPTS DECLARED BY THE APPELLANT SUBJECT TO FURTH ER DEDUCTION OF 14 DEPRECIATION AND INTEREST PAYMENTS. ON THIS BASIS, THE NET PROFIT OF THE APPELLANT IS WORKED OUT AS UNDER: NET PROFIT AT THE RATE OF 5% ON GROSS CONTRACT REC EIPTS OF RS.4,52,42,544 = RS. 22,62,127 LESS: DEPRECIATION RS. 8,10,588 INTEREST PAID RS. 5,35,543 RS. 13,46 ,131 NET PROFIT RS. 09,15,996 THUS, THE APPELLANT WILL GET A RELIEF OF RS.27,03, 408 ON THIS ACCOUNT. THIS GROUND OF APPEAL IS PARTLY ALLOWED. NOW THE DEPARTMENT IS IN APPEAL. 7 . LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSM ENT ORDER. 8. IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS BE EN DECIDED AGAINST THE DEPARTMENT VIDE ORDER DATED 26/08/2013 IN I.T.A.NO. 149/JODH/2013 FOR THE A.Y. 2009-10 IN THE CASE OF ACIT, CIRCLE-2, UDAIPUR VS. SHRI MADHAV LAL JAT (COPY OF THE SAID ORDER WAS FURNISHED). 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE PRESENT CASE, IT APPEARS THAT, ASSESSING OFFICER WH ILE ESTIMATING THE INCOME BY APPLYING NP RATE OF 8%, HAD NOT CONSIDERE D THE PAST HISTORY OF 15 THE ASSESSEE. ON THE CONTRARY, LEARNED CIT(A) APPR ECIATED THE FACTS IN RIGHT PERSPECTIVE BY CONSIDERING THE PAST HISTORY. HE APPLIED NP RATE OF 5%, AFTER CONSIDERING THE VARIOUS FACTORS WHICH WER E RELEVANT FOR DECREASING THE PROFIT FOR THE YEAR UNDER CONSIDERAT ION. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT NP RATE OF THE AS SESSEE WAS DECREASING YEAR AFTER YEAR. WE, THEREFORE, DO NOT SEE ANY VAL ID GROUND TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A) ON THIS ISS UE. ACCORDINGLY, DO NOT SEE ANY MERIT ON THIS ISSUE OF THE DEPARTMENTAL APP EAL. 10. THE NEXT ISSUE VIDE GROUND NO.2 RELATES TO THE DIRE CTION OF THE LEARNED CIT(A) TO ASSESSING OFFICER TO ASSESS THE I NTEREST INCOME OF RS. 1,00,869/- AS BUSINESS INCOME INSTEAD OF INCOME FROM OTHER SOURCES. 11. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSEE HAD SHOWN INTEREST INCOME OF RS. 1,00,869/- IN THE PROF IT & LOSS ACCOUNT, WHICH ACCORDING TO ASSESSING OFFICER WAS ASSESSABLE SEPARATELY UNDER THE HEAD INCOME FROM OTHER SOURCES. 12. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT THE INTEREST WAS MAINLY E ARNED FROM BANK FDRS, WHICH WERE NECESSARY TO KEEP WITH THE BANK AG AINST THE MARGIN MONEY ETC. TO GET BANK GUARANTEE. LEARNED CIT(A) D ELETED THE ADDITION 16 MADE BY THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE HAD PURCHASED THE FDR FROM THE BANK IN ORDER TO GET BAN K GUARANTEE FOR GETTING CONTRACT WORK ALLOTTED TO THE ASSESSEE AND WITHOUT GIVING SUCH BANK GUARANTEE TO THE CONCERNED DEPARTMENT, THE ASS ESSEE WILL NOT GET CONTRACT WORK. HE FURTHER OBSERVED THAT THE INVEST MENT IN FDR WAS CAPITAL INVESTMENT TO START THE CONTRACT WORK AND A NY INCOME FROM SUCH INVESTMENT WAS BUSINESS INCOME AND, THEREFORE, THE INTEREST EARNED ON SUCH FDRS COULD NOT BE ASSESSED AS INCOME FROM OTHE R SOURCES. NOW, THE DEPARTMENT IS IN APPEAL. 13. DURING THE COURSE OF HEARING, LEARNED D.R. SUPPORTE D THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE AND AGAINST THE DEPARTMENT VIDE ORDER DATED 26/08/2013 IN THE C ASE OF ACIT, CIRCLE- 2, UDAIPUR VS. SHRI MADHAV LAL JAT (SUPRA). 14. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS WAS AL SO INVOLVED IN THE CASE OF ACIT, UDAIPUR VS. SHRI MADHAV LAL JAT (SUPRA) AN D THE ISSUE WAS DECIDED AGAINST THE DEPARTMENT VIDE ORDER DATED 26/ 08/2013 IN I.T.A.NO. 17 149/JODH/2013 FOR THE A.Y. 2009-10 WHEREIN THE RELE VANT FINDINGS HAVE BEEN GIVEN IN PARA 13 & 14, WHICH READ AS UNDER:- 13. IN THE PRESENT CASE, IT APPEARS THAT ASSESSEE PURCHASED THE FDRS TO GET BANK GUARANTEE, WHICH WAS ESSENTIAL FOR GETTING THE CONTRACT. FDRS WERE PURCHASED BY THE ASSESSEE TO GET CONTRACT AND WITHOUT FDR, BANK GUARANTEE COULD NOT HAVE BEEN ISSUED TO HIM. THESE FDRS WERE NOT MADE OUT OF THE SURPLUS MONEY LYING IDLE WITH THE ASSESS EE IN ORDER TO EARN INTEREST. ON THE CONTRARY, THE AMOUNT OF INTEREST WAS EARNED FROM THE FIXED DEPOSIT, WHICH WAS KEPT IN THE BANK FOR OBTAINING T HE BANK GUARANTEE. IT HAD AN INEXTRICABLE NEXUS WITH SECURING THE WORKS C ONTRACT AND BUSINESS. IN OTHER WORDS, THE INTEREST ON MARGIN MONEY AGAINST T HE SAID BANK GUARANTEE WAS INEXTRICABLY LINKED AND INTRINSICALLY CONNECTED WITH THE EXECUTION OF THE CONTRACT AWARDED TO THE ASSESSEE. ON A SIMILAR ISS UE, THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. KARNAL COOPERATIVE SUG AR MILLS LTD. HELD AS UNDER:- IN THE PRESENT CASE, THE ASSESSEE HAD DEPOSITED MONEY TO OPEN A LETTER OF CREDIT FOR THE PURCHASE OF THE MACHINERY REQUIRED FOR SETTING UP ITS PLANT IN TERMS OF THE ASSESSEES AGREEMENT WITH THE SUPPLIER. IT WAS ON THE MONEY SO DEPOSITED THAT SOM E INTEREST HAS BEEN EARNED. THIS IS, THEREFORE, NOT A CASE WHERE A NY SURPLUS SHARE CAPITAL MONEY WHICH IS LYING IDLE HAS BEEN DEPOSITE D IN THE BANK FOR THE PURPOSE OF EARNING INTEREST. THE DEPOSIT OF MON EY IN THE PRESENT CASE IS DIRECTLY LINKED WITH THE PURCHASE OF PLANT AND MACHINERY. HENCE, ANY INCOME EARNED ON SUCH DEPOSIT IS INCIDEN TAL TO THE ACQUISITION OF ASSETS FOR THE SETTING UP OF THE PLA NT AND MACHINERY. 14. IN THE PRESENT CASE ALSO, IT IS NOT THE CASE OF THE DEPARTMENT THAT THE FDRS WERE PURCHASED BY THE ASSESSEE FROM SURPLUS MO NEY, WHICH WAS LYING IDLE AND HAD BEEN DEPOSITED IN THE BANK FOR T HE PURPOSE OF EARNING INTEREST. ON THE CONTRARY, THE FDRS WERE P URCHASED OUT OF MONEY, WHICH WERE NECESSARY TO GET BANK GUARANTEE W HICH WAS ESSENTIAL TO GET THE CONTRACT AND THERE WAS A DIREC T LINK WITH THE PURCHASE OF FDRS AND THE CONTRACT AWARDED TO THE AS SESSEE. THEREFORE, LD. CIT(A) WAS JUSTIFIED IN DIRECTING TH E AO TO TREAT THE INTEREST INCOME AS BUSINESS INCOME. WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. 18 15. SINCE, THE FACTS RELATING TO THIS ISSUE ARE IDENTIC AL TO THE FACTS INVOLVED IN THE CASE OF ACIT, UDAIPUR VS. SHRI MADH AV LAL JAT (SUPRA), SO BY RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 26/08/2013, WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 16. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSE D. (ORDER PRONOUNCED IN THE COURT ON 22 ND NOVEMBER, 2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 22 ND NOVEMBER , 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.