M/s Akrati Promoters & Developers, Agra V. A.C.I.T.-4(1), Agra

ITA 152/AGR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1972 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 16-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: E PASS ROAD AGRA PAN NO AACFAE
• Assessee Lawyers: R C TOMAR SH WASEEM ARSHAD
• Keywords: Rejection of books of accounts

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO.152/AG/2014 ASSESSMENT YEAR:2009-10 M/S AKRATI PROMOTERS & DEVELOPERS, VS. THE ACIT-4 (1), C-S/1-3, RASHMI PALACE, AGRA, BYE PASS ROAD, AGRA PAN NO. AACFA3117E (APPELLANT) (RESPONDENT) APPELLANT BY : SH. R.C. TOMAR RESPONDENT BY : SH. WASEEM ARSHAD DATE OF HEARING : 08/02/2016 DATE OF PRONOUNCEMENT :21/04/2016 ORDER PER ANNAPURNA MEHROTRA A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- II, AGRA DATED 10/12/2013. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THERE IS NO REJECTION OF BOOKS OF ACCOUNTS OR INVOKING OF PROVISION OF SECTION 145. 2. THAT CIT(A) HAS ERRED ON FACTS AND IN LAW TO PRE SUME THAT SUB CONTRACT WORK WAS NOT ACTUALLY CARRIED OUT BY SH. SANJAY AGARWAL, SUBODH AGARWAL, RR AGARWAL AND PRESUME POSSIBILITY OF MAKING EXCESS PAYMENT TO THE AFORESAID SUB CONTRACTORS. 3. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW TO HOLD THAT PAYMENTS TO SUB- CONTRACTOR IN THE NAME OF THREE AFORESAID PERSONS H AVE NOT BEING SHOWN CORRECTLY. 4. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW TO INFER THAT THERE IS DIFFERENCE BETWEEN THE AMOUNT AS MENTIONED IN THE ADULT REPORT , TDS CERTIFICATES AND THE AMOUNT SHOWN IN THE LEDGER ACCOUNT OF THE SUB CONTR ACTORS. 5. THAT THE CIT(A) HAS ERRED ON FACTS AND IN LAW TO ESTIMATE & DISALLOW RS. 1628539/- BEING 20% OF PAYMENTS MADE TO SUB CONTRAC TORS WHEN GP RATE HAD INCREASED FROM 12.59% OF IMMEDIATELY PROCEEDING YEA R TO 14.78% DURING THE YEAR. 6. THAT CIT(A) HAS ERRED ON FACTS AND IN LAW TO PRE SUME THE SALE OF SCRAP AND TO SUSTAIN ADDITION OF RS. 50,000/-. 2 2. GROUND NO. 1,2,3,4 AND 5 RAISED BY THE ASSESSEE IS AGAINST THE DISALLOWANCE OF A SUM OF RS. 16,28,539/- BEING 20% OF THE PAYMENT MADE TO SUB-CONTRACTORS. 3. BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURIN G THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAD SHOWN PAYMENTS MADE ON ACCOU NT OF SUB-CONTRACT WORK TO SH.SANJAY AGARWAL, SH. SUBODH AGARWAL AND S H. R. R. AGARWAL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THESE PERSONS DID NOT HAVE THE CAPACITY TO DO SUB-CONTRACT WORK AND ALSO NO BOOKS WERE MAINTAINED BY THEM SHOWING ANY SUB-CONTRACT WORK DONE. IT WAS ALSO FOUND BY THE AO THAT THESE PERSONS WERE ACTUALLY WORKING AS EMPLOYEES IN THE ASSESSEE FIRM. THEREFORE HE CONCLUDED THAT THESE PERSONS DID NOT D O ANY WORK IN THE CAPACITY OF SUB CONTRACTORS BUT WERE SUPERVISORS FOR WHICH S ALARY AS PAID TO OTHER SUPERVISORS WAS TO BE ALLOWED, DISALLOWING THE BALA NCE AMOUNT. MOREOVER, THE AO ALSO FOUND THAT THESE PERSONS WERE CLOSE RELATIV ES OF THE PARTNERS OF THE ASSESSEE FIRM. THEREFORE THE EXCESS AMOUNT BEING RS . 29,37,497/-, RS. 16,94,702/- & RS. 34,28,498/- PAID TO THE THREE PERSONS OTHERWI SE THAN BY SALARY WAS DISALLOWED ALSO BY INVOLVING THE PROVISIONS OF THE SECTION 40A(2) OF THE ACT. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A) WHERE THE ASSESSEE ARGUED THAT SIMILAR ADDITION WAS MADE IN A SSESSMENT YEAR 2008-09 ALSO WHICH WAS SUSTAINED TO THE EXTENT OF 20% ONLY BY TH E ITAT, AGRA IN ITS ORDER NO. 129/AGR/2012 AND 157/AGR/2012. AFTER CONSIDERING TH E SAME THE LD. CIT(A) HELD THAT SINCE THE FACTS IN ASSESSMENT YEAR 2008-09 WE RE IDENTICAL TO THE FACTS IN THE PRESENT CASE, THE DECISION RENDERED BY THE ITAT IN ASSESSMENT YEAR 2008-09 SQUARELY APPLIED TO THE ASSESSEES CASE. FOLLOWING THE SAME LD. CIT(A) HELD THAT NO SUB CONTRACT WORK WAS CARRIED OUT BY THE ABOVE N AMED SUB-CONTRACTORS BUT AT THE SAME TIME IT COULD NOT BE DENIED THAT SINCE THE ASSESSEE HAD UNDERTAKEN CONTRACTUAL WORK, THE SUBCONTRACT WORK HAD BEEN CAR RIED OUT BY OTHER PARTIES. 3 THEREFORE IN THE FACTS OF THE CASE IT WAS CONSIDERE D FAIR AND REASONABLE THAT 20% OF THE PAYMENT MADE TO SUB CONTRACTORS BE DISALLOWE D. IT WAS ALSO ARGUED BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE HONBLE ITAT HAD SUSTAINED THE ADDITION OF 20% IN THE PRECEDING YEAR SINCE THERE W AS A FALL IN GP RATE FROM THE IMMEDIATELY PRECEDING YEAR. LD. COUNSEL FOR THE ASS ESSEE PLEADED BEFORE THE LD. CIT(A) THAT SINCE THERE WAS AN INCREASE IN THE GP RATE IN THE IMPUGNED YEAR AS COMPARED TO THE PRECEDING YEAR, THE DISALLOWANCE TO THE EXTENT OF 20% ALSO COULD NOT BE SUSTAINED. LD. CIT(A) REJECTED THE ASS ESSEES CONTENTION BY POINTING OUT THAT THOUGH THERE WAS AN IMPROVEMENT I N GP RATE, THE NET PROFIT RATE HAD GONE DOWN AND FURTHER THE LD. CIT(A) STATE D THAT DESPITE THE GP RATE SHOWING AN IMPROVEMENT AS COMPARED TO LAST YEAR, IT WAS STILL LOWER THAN ASSESSMENT YEAR 2007-08 WHICH WAS CONSIDERED BY TH E HONBLE ITAT WHILE RENDERING ITS JUDGMENT FOR THE PRECEDING YEAR. THUS THE LD. CIT(A) UPHELD DISALLOWANCE OF PAYMENT MADE ON ACCOUNT OF SUB CONT RACT WORK TO THE ABOVE STATED THREE SUB CONTRACTORS TO THE EXTENT OF 20% O F THE PAYMENT MADE. LD. CIT(A)FURTHER POINTED OUT THAT WHILE THE ASSESS EE HAD SHOWN THE TOTAL PAYMENTS MADE TO THESE THREE SUB CONTRACTORS AS PER THEIR LEDGER ACCOUNTS TO BE AS RS. 81,32,697/- AS FOLLOWS: SH. SANJAY AGARWAL RS. 29,61,497/- SH. SUBODH AGARWAL RS. 34,76,798/- SH. R.R. AGARWAL RS. 16,94,702/- RS. 81,32,697/- THE TAX AUDIT REPORT SHOWED THE AMOUNTS PAID TO THE SE SUB CONTRACTORS AS RS. 90,12,424/- AS FOLLOWS: SH. SANJAY AGARWAL RS. 33,32,503/- SH. SUBODH AGARWAL RS. 38,00,077/- SH. R.R. AGARWAL RS. 18,79,844/- RS. 90,12,424/- IN VIEW OF THE DIFFERENCE OF THE TWO FIGURES, LD. C IT(A) DIRECTED THE AO TO DETERMINE THE CORRECT AMOUNT PAID TO THE SUB CONTRA CTORS AND THEREAFTER DISALLOW 20% OF THE SAME. 4 5. AGGRIEVED BY THE SAME, THE ASSESSEE RAISED GROUN D NO. 1, 2,3,4, & 5 BEFORE US. 6. IN GROUND NO. 1 THE ASSESSEE HAS AGITATED AGAINS T THE APPLICATION OF N.P. RATE TO ESTIMATE THE INCOME OF THE ASSESSEE WITHOUT REJECTING ITS BOOKS OF ACCOUNTS OR INVOKING THE PROVISION OF SECTION 145. GROUND NO. 2 RAISED BY THE ASSESSEE IS AGAINST THE FINDINGS OF THE LD. CIT(A) THAT NO CONTRACT WORK WAS CARRIED OUT BY THE IMPUGNED THREE CONTRACTORS AND T HAT EXCESS PAYMENT WAS MADE TO THEM. 7. BEFORE US, LD. AR AGREED THAT ON IDENTICAL SET O F FACTS IN THE PRECEDING YEAR, DISALLOWANCE TO THE EXTENT OF 20% OF THE AMOU NT PAID TO THE THREE SUB- CONTRACTORS BEEN UPHELD BY THE ITAT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDER OF THE AUTHORITIES BELOW. 9. WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) . UNDISPUTEDLY THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THAT IN THE PRECEDING YEAR I.E. ASSESSMENT YEAR 2008-09. THE THREE SUB CONTRACTORS I.E; SH. SANJAY AGARWAL , SH. SUBODH AGARWAL, SH. R. R. AGARWAL, PAYMENTS MADE TO WHOM WAS DISALL OWED BY THE AO IN THIS YEAR, ARE THE SAME WHOSE PAYMENTS WERE DISALLOWED I N THE PRECEDING YEAR ALSO. THE REASON FOR DISALLOWING THE PAYMENTS ARE A LSO IDENTICAL TO THAT IN THE PRECEDING YEAR BEING THAT NO SUB CONTRACT WORK WAS FOUND TO HAVE BEEN DONE BY THESE THREE PERSONS AND INFACT THEY WERE FOUND T O BE EMPLOYEES OF THE ASSESSEE FIRM. THE LD. AR HAS NOT BEEN ABLE TO POIN T OUT BEFORE US AS TO HOW THE FACTS OF THE CASE DIFFER FROM THE PRECEDING YEAR. T HEREFORE, SINCE ON IDENTICAL SET OF FACTS , THE HONBLE ITAT HAD IN THE PRECEDING YE AR HELD THAT NO SUB CONTRACT WORK WAS CARRIED OUT BY THESE THREE PERSONS, BUT AT THE SAME TIME SINCE ORIGINAL CONTRACT WAS EXECUTED BY THE ASSESSEE, THE SUB CONT RACT WORK WAS CARRIED OUT BY OTHER PARTIES AND IN VIEW OF THE SAME IT WAS FAI R AND REASONABLE TO DISALLOW 5 20% ON AMOUNT OF PAYMENT MADE ON ACCOUNT OF SUB CON TRACT WORK, THE SAME RULING APPLIES IN THE PRESENT CASE ALSO. THE HONBLE ITAT WHILE DEALING WITH THIS ISSUE IN T HE PRECEDING YEAR IN THE CASE OF THE ASSESSEE IN ITA NO. 129/AG/2012 & 157/AG/2012 H ELD AS FOLLOWS: 23. WE HAVE HEARD THE LD. REPRESENTATIVE OF THE PAR TIES AND RECORDS PERUSED. THE CASE OF THE REVENUE IS THAT THE ASSESSEE HAS CL AIMED PAYMENTS TO SUB- CONTRACTORS WHICH WERE NOT GENUINE SUB-CONTRACTORS. THE CIT(A) FOUND THAT MERELY FILING AFFIDAVIT IS NOT SUFFICIENT UNLESS SO ME CORROBORATIVE EVIDENCE IS FURNISHED. IN THE CASE UNDER CONSIDERATION SUB-CONT RACTORS COULD NOT BE PRODUCED OR ANY EVIDENCE TO ESTABLISH THAT THEY HAD ACTUALLY CARRIED OUT ANY WORK AS CLAIMED BY THE ASSESSEE. THEY COULD NOT PRO DUCE BOOKS OF ACCOUNT, VOUCHER, BILL ETC. THE AO HAS ALSO BROUGHT ON RECOR D THEIR FINANCIAL SOUNDNESS WHICH SUGGESTS THAT THE SUB-CONTRACTORS COULD NOT H AVE UNDERTAKEN THE WORK AS CLAIMED BY THEM. IT IS ALSO ADMITTED FACT THAT SUB- CONTRACTORS ARE RELATIVE OF THE ASSESSE AS REQUIRED UNDER SECTION 40A(2)(B) OF THE ACT. SRI SANJAY AGARWAL IS SON OF PARTNER SMT. UMA DEVI, SRI SUBODH AGARWAL IS ALSO S ON OF PARTNER SMT. UMA DEVI SRI R.R. AGARWAL IS HUSBAND OF THE PARTNER SMT. UMA DEV I. THE ABOVE DETAILS HAVE BEEN NOTED FROM THE ASSESSEES PAPER BOOK AT PAGE N O. 258. IN THE LIGHT OF THE FACT AND THE MATERIAL AVAILABLE ON RECORD, IN PRINC IPLE WE AGREE THAT THE SUB- CONTRACT WAS NOT CARRIED OUT BY THE ABOVE SUB-CONTR ACTORS AND IN THIS REGARD THE FINDINGS OF THE REVENUE AUTHORITIES IS CONFIRMED. H OWEVER, IT IS ALSO ADMITTED FACT THAT THE ASSESSEE HAS CARRIED OUT CONTACT WORK, MAY BE NOT FROM THESE SUB- CONTRACTORS BUT BY OTHER PARTIES OR BY OTHERWISE. O N CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE NOTICE A COMPARATIVE CHART OF G.P. WHICH HAS BEEN REPRODUCED BY THE CIT(A) AT PAGE NO. 2 OF HIS ORDER . WE NOTICE THAT THE ASSESSEE HAS SHOWN COMPARATIVELY LOWER G.P. RATE OF 11..2% A S AGAINST 15.60% IN THE IMMEDIATELY PRECEDING YEAR I.E. A.Y. 2007-08. UNDER THE FACTS AND CIRCUMSTANCES, WE FIND SUBSTANCE IN THE ALTERNATE REASON FOR ADDIT ION BY THE AO THAT IT IS DISALLOWABLE UNDER SECTION 40A(20)(A) OF THE ACT. C ONSIDERING THE G.P. DECLARED BY THE ASSESSEE ON THE INCOME DECLARED IN THE RETUR N OF RS. 30,06,760/- CONSIDERING THE FACT THAT THE SUB-CONTRACTOR WORK M AY BE CARRIED OUT BY OTHER MODE OF CARRYING OUT WORK NOT BY THESE SUB-CONTRACT ORS, WE ARE OF THE VIEW THAT IT WILL BE FAIR AND REASONABLE IF 20% OF THE EXPEND ITURE CLAIMED AS PAYMENT TO SUB-CONTRACTORS IS DISALLOWED OF WHICH CALCULATION COMES TO RS. 12,35,225/- (20% OF 61,76,126/-)(21,57,500 + 26,09,254 + 14,09,372). THE ADDITION TO THE EXTENT OF RS. 12,35,225/- IS CONFIRMED AND THE BALANCE ADDITION O F RS. 49,40,901/- IS DELETED. IN VIEW OF THE ABOVE, WE CONCUR WITH THE FINDINGS O F THE LD. CIT(A) THAT NO SUB CONTRACT WORK WAS EXECUTED BY THE THREE SUB CONTRAC TORS AND INFACT EXCESS PAYMENT WAS MADE TO THEM. FURTHER WE CONCUR WITH TH E LD. CIT(A) IN HOLDING THAT THOUGH SUB CONTRACT WORK HAS NOT BEEN CARRIED OUT BY THE THREE SUB CONTRACTORS, IT HAS BEEN CARRIED OUT BY SOME OTHER PARTIES AND IN THE VIEW THEREOF IT IS FAIR AND REASONABLE TO DISALLOW 20% O F THE AMOUNT PAID ON ACCOUNT OF SUBCONTRACT WORK. 10. GROUND NO. 1 & 2 RAISED BY THE ASSESSEE ARE THE REFORE DISMISSED. 6 11. IN GROUND NO. 5 THE ASSESSEE HAS AGITATED AGAIN ST THE DISALLOWANCE OF 20% OF THE SUB CONTRACT EXPENSES MADE BY FOLLOWING EARLIER YEARS ORDER WHEN THE G.P. RATE SHOWN BY THE ASSESSEE IN THE IMPUGNED YEAR WAS PROGRESSIVE AS COMPARED TO THE PRECEDING YEAR. 12. BEFORE US LD. AR STATED THAT DISALLOWANCE TO TH E EXTENT OF 20% HAD BEEN UPHELD BY THE HONBLE ITAT IN THE PRECEDING YEAR, I N VIEW OF THE FALL IN G.P. RATE SHOWN BY THE ASSESSEE, BUT IN THE IMPUGNED YEAR SIN CE THE G.P. RATE HAD SHOWN AN IMPROVEMENT HAVING INCREASED FROM 12.59% IN THE PRECEDING YEAR TO 14.785% IN THE IMPUGNED YEAR, NO DISALLOWANCE SHOULD BE MAD E. ON THIS ISSUE, WE AGREE WITH THE LD. CIT(A) THAT TH E ADDITION TO THE EXTENT OF 20% IS TO BE SUSTAINED DESPITE THE FACT THAT THE GP RAT E HAS INCREASED FROM THE PRECEDING YEAR, SINCE IT IS NOT DENIED THAT THE NET PROFIT RATE HAS SHOWN A FALL AS COMPARED TO THE PREVIOUS YEAR AND FURTHER AS COMPAR ED TO ASSESSMENT YEAR 2007-08, CONSIDERING WHICH THE HONBLE ITAT HAS REN DERED ITS JUDGMENT FOR ASSESSMENT YEAR 2008-09, THE GP RATE STILL SHOWS A DECLINE. WE FIND THAT THE GP RATE IN THE ASSESSMENT YEAR 2007-08 WAS 15.6% WHIL E IN THE IMPUGNED ASSESSMENT YEAR THE GP RATE IS 14.785%. THEREFORE SINCE THE G.P. RATE IN THE CURRENT YEAR IS ON THE LOWER SIDE AS COMPARED TO A. Y. 2007-08, WHICH WAS CONSIDERED BY THE ITAT, WHILE RENDERING ITS JUDGMEN T FOR ASSESSMENT YEAR 2008- 09, WE UPHOLD DISALLOWANCE TO THE EXTENT OF 20% OF THE CONTRACT WORK DONE BY THREE SUB CONTRACTORS. 13. IN VIEW OF THE SAME WE DISMISS GROUND NO. 5 RAI SED BY THE ASSESSEE. 14. AS REGARDS GROUND NO. 3 AND 4 THE ASSESSEE HAS AGITATED AGAINST THE FINDINGS OF THE LD. CIT(A) THAT THERE IS A DIFFEREN CE BETWEEN THE AMOUNT OF PAYMENT MADE ON ACCOUNT OF SUB CONTRACTOR WORK TO T HE ABOVE MENTIONED THREE PARTIES IN THE LEDGER ACCOUNTS AND THAT SHOWN IN THE TAX AUDIT REPORT. 7 WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ASPECT ALSO SINCE UNDISPUTEDLY THE ASSESSEE HAS SHOWN DIFFERENT FIGUR ES IN THE TAX AUDIT REPORT AND IN THE LEDGER ACCOUNTS OF THE PARTIES. WHILE THE TA X AUDIT REPORT SHOWS PAYMENTS MADE TO THESE SUB-CONTRACTORS AMOUNTING TO RS. 90,1 2,424/- THE LEDGER ACCOUNT SHOWS THE SAME AS RS. 81,32,697/-. THE LD. AR HAS N OT BEEN ABLE TO DEMONSTRATE BEFORE US AS TO HOW THERE WAS NO DIFFERENCE IN THE TWO FIGURES. THE LD. CIT(A)HAS THEREFORE RIGHTLY RESTORED THE MATTER TO THE AO TO THE LIMITED EXTENT OF DETERMINING THE CORRECT AMOUNT OF PAYMENT MADE AND THEREAFTER DISALLOW 20% OF THE SAME. 15. GROUND NO. 3 AND 4 RAISED BY ASSESSEE ARE THERE FORE DISMISSED. 16. IN EFFECT GROUND NO. 1,2, 3, 4 AND 5 RAISED BY THE ASSESSEE ARE DISMISSED. 17. GROUND NO. 6 RAISED BY THE ASSESSE IS AGAINST T HE ADDITION OF A SUM OF RS. 60,000/- ON ACCOUNT OF SALE OF SCRAP. 18. BRIEF FACTS RELATING TO THE ISSUE ASSESSEE THAT DURING ASSESSMENT PROCEEDINGS AO HELD THAT SCRAP GENERATED DURING CON STRUCTION PROCESS MUST HAVE BEEN SOLD BY THE ASSESSEE. HE THEREFORE ESTIMA TED THE SALE ON ACCOUNT OF SCRAP AND EMPTY BAGS TO BE RS. 1,00,000/- AND MADE ADDITION OF THE SAME. BEFORE THE LD. CIT(A) THE ASSESSEE ARGUED THAT THE ADDITION HAS BEEN MADE MERELY AN CONJECTURES AND SURMISES WITHOUT ANY SUPP LEMENTARY MATERIAL AND MOREOVER SINCE THE TRADING RESULTS WERE PROGRESSIVE , NO SUCH ADDITION WAS WARRANTED. LD. CIT(A) REJECTED THE ASSESSEES CONTE NTIONS AND UPHELD THE ADDITION MADE BY STATING THAT GENERATION OF SCRAP C OULD NOT BE RULED OUT, AS ALSO THE SALE OF SCRAP. LD. CIT(A) HELD AT PARA 8 O F HIS ORDER AS FOLLOWS: I HAVE CONSIDER THE CONTENTION OF THE LD. AR AND ALSO DISCUSSION MADE BY AO IN ASSESSMENT ORDER AND AS POINTED OUT BY THE AO, IN T HE NATURE OF CONTRACT WORK DONE BY THE ASSESSEE (APPELLANT), GENERATION OF SCR AP AND EMPTY BAGS OF CEMENT CANNOT BE RULED OUT. IT IS TRUE THAT NO EVID ENCE HAS BEEN BROUGHT ON RECORD BY THE AO TO SHOW SALE OF ANY BAG OR SCRAP B UT LOOKING TO THE NATURE OF CONTRACT WORK BEING DONE BY THE ASSESSEE (APPELLANT ), SUCH SALE OF SCRAP AND EMPTY BAGS CANNOT BE RULED OUT. IT IS REALLY DIFFIC ULT TO GATHER ANY EVIDENCE OF SALE OF SCRAP OR EMPTY BAGS DURING THE COURSE OF AS SESSMENT PROCEEDINGS AFTER 8 FILING OF INCOME TAX RETURN FOR A PARTICULAR YEAR B UT IT IS ALSO IMPOSSIBLE TO BELIEVE THAT NO INCOME ON SUCH SALE WOULD HAVE EARNED BY TH E ASSESSEE. THE ASSESSEE (APPELLANT) ON HIS OWN HAS NOT SHOWN ANY SUCH INCOM E ON SALE OF SCRAP OR EMPTY BAGS. HENCE, TAKING INTO ACCOUNT THE TOTALITY OF TH E FACTS AND ALSO CONSIDERING THAT SUCH ADDITION MADE BY THE AO IS ONLY ON ESTIMA TION BASIS, I SUSTAIN THE ADDITION UP TO RS. 50,000/-. THEREFORE, GROUND NO. 10 IS PARTLY ALLOWED. 19. BEFORE US LD. AR REITERATED THE CONTENTIONS MAD E BEFORE THE LOWER AUTHORITIES AND STATED THAT NO SCRAP WAS SOLD BY TH E ASSESSEE BUT WAS INFACT UTILIZED IN THE CONSTRUCTION WORK AGAIN. 20. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE CIT(A). 21. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED ORDERS OF THE AUTHORITIES BELOW. 22. THE FACTS EMERGING IN THE PRESENT CASE ARE THAT UNDENIABLY DURING THE CARRYING ON OF THE BUSINESS OF CONSTRUCTION SOME SC RAP OF IRON AND ALUMINIUM PIECES IS GENERATED AS ALSO EMPTY BAGS. WHILE THE A SSESSEES CONTENTION IS THAT THIS SCRAP IS REUSED IN THE CONSTRUCTION BUSINESS A ND THE EMPTY BAGS ARE USED BY THE LABOUR FOR RESTING AND OTHER PURPOSES AND NO SC RAP IS THEREFORE SOLD, THE CASE OF THE REVENUE IS THAT THE EXPLANATION OF THE ASSESSEE IS NOT PLAUSIBLE AND SOME SCRAP MUST HAVE BEEN SOLD BY THE ASSESSEE. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THIS RESPECT AND AGREE WITH HIS FINDINGS THAT IT IS IMPOSSIBLE TO BELIEVE THAT NO SCRAP WAS SOLD DURING THE YEAR AND THAT THE ENTIRE SCRAP IS REUSED IN THE BUSINESS OF THE ASSESSEE. WE THEREFORE UPHOLD THE ORDER OF THE LD. CIT(A) SUSTAINING THE A DDITION OF RS. 50,000/- MADE ON ACCOUNT OF SALE OF SCRAP. THIS GROUND OF APPEAL OF THE ASSESSEE IS THEREFORE DISMISSED. 23. THE APPEAL OF THE ASSESSEE IS THEREFORE DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :21/04/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR