V.V. Constructions, Pune V. ACIT, Circle-8, Pune

ITA 1641/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93809 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 29-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y K BHASKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1641/PN/2013 (ASSESSMENT YEAR : 2009-10) V.V. CONSTRUCTIONS, AT POST : NARAYANGAON, TALUKA JUNNAR, DIST : PUNE - 410504 PAN NO. AALFM3554A .. APPELLANT VS. ACIT, CIRCLE-8, PUNE .. RESPONDENT ITA NO.1768/PN/2013 (ASSESSMENT YEAR : 2009-10) DCIT, CIRCLE-8, PUNE .. APPELLANT VS. V.V. CONSTRUCTIONS, AT POST : NARAYANGAON, TALUKA JUNNAR, DIST : PUNE - 410504 PAN NO. AALFM3554A .. RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK DEPARTMENT BY : SHRI Y.K. BHASKAR DATE OF HEARING : 10-06-2015 DATE OF PRONOUNCEMENT : 12-06-2015 ORDER PER R.K. PANDA, AM : THESE ARE CROSS APPEALS. THE FIRST ONE IS FILED BY THE AS SESSEE AND THE SECOND ONE FILED BY THE REVENUE AND ARE DIRECTE D AGAINST THE ORDER DATED 24-06-2013 OF THE CIT(A)-V, PUNE RELAT ING TO ASSESSMENT YEAR 2009-10. FOR THE SAKE OF CONVENIENCE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTIO N. IT FILED ITS RETURN OF INCOME ON 19-09-2009 DECLARING TOTAL INCO ME OF RS.41,21,819/-. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE ASSESSING OFFICER NOTED THAT ASSESSEE FIRM HAS SHOWN NET PROFIT OF RS.47,21,819/- ON A TOTAL TURNOVER OF RS.8,68,76,534/- WHICH COMES TO 5.48%. HE NOTED THAT IN THE IMMEDIATELY PRECEDING ASS ESSMENT YEAR THE ASSESSEE HAS SHOWN NET PROFIT OF RS.53,32,302/- ON A TOTAL TURNOVER OF RS.6,52,17,258/- WHICH COMES TO 8.18%. THUS, TH E PROFIT PERCENTAGE HAS FALLEN DOWN BY 2.7% OF THE TOTAL TU RNOVER AS COMPARED TO THE PRECEDING ASSESSMENT YEAR. HE OBSERV ED THAT THERE WAS NO CLAIM OF RECESSION IN THAT PERIOD CONSIDERING OVERA LL MARKET SITUATION AND MOST OF THE CONTRACTORS HAD SHOWN BETTER BOOK RESULTS IN COMPARISON TO PREVIOUS YEAR. 3. ON BEING ASKED BY THE ASSESSING OFFICER IT WAS CLAIMED T HAT THE FALL IN PROFIT WAS DUE TO INCREASE IN LABOUR, MATERIAL AND OVERHEAD COST. THE ASSESSEE FIRM ALSO SUBMITTED THE COM PARATIVE DETAILS OF GROSS PROFIT/OPERATIONAL PROFIT FOR THE PRECEDING Y EAR AS WELL AS CURRENT YEAR. FROM THE VARIOUS DETAILS FURNISHED B Y THE ASSESSEE THE ASSESSING OFFICER NOTED THAT THERE IS SUBST ANTIAL INCREASE IN DIESEL, PETROL, SALARY AND BONUS, WAGES AND TRANSPORTATION CHARGES. FROM THE VARIOUS BILLS AND VOUCH ERS PRODUCED BEFORE THE ASSESSING OFFICER HE NOTED THAT IN TH E WAGES REGISTER ONLY NAME OF THE WORKERS ARE MENTIONED. THEIR COMPLETE ADDRESS AND NATURE OF WORK CARRIED OUT BY THEM OR DET AILS OF WORK COMPLETED BY THEM ARE NOT MENTIONED. FURTHER, MOST OF THE SIGNATURES PLACED ON REGISTER WERE IN ENGLISH WHICH ACCORD ING TO THE AO SEEMS TO BE DOUBTFUL. FURTHER, NO INDEPENDENT VERIFICA TION CAN BE MADE IN THE AVAILABLE CIRCUMSTANCES. THEREFORE, HE WAS OF THE 3 OPINION THAT THE WAGES CLAIMED AT RS.1,83,01,225/- AS AGAIN ST RS.1,30,66,346/- IN THE PRECEDING YEAR CANNOT BE JUSTIFIED. SIMILARLY, FROM VERIFICATION OF THE TRANSPORT BILLS, HE NOTED T HAT THE BILLS DO NOT SHOW TELEPHONE NO., REGISTRATION NO., DETAILED ADDRESSES ETC. THE TRANSPORT BILLS DO NOT SHOW THE MOD E OF VEHICLE, VEHICLE NO. ETC. THEREFORE, HE WAS OF THE OPINION THAT INDEP ENDENT VERIFICATION CANNOT BE MADE. FURTHER, THE TRANSPORT BILL DOES NOT SUPPORT VOUCHER OF HAMALI EXPENSES. HE THEREFORE WAS OF THE OPINION THAT THE TRANSPORT CHARGES AMOUNTING TO RS.6,73,6 06/- DURING THE IMPUGNED ASSESSMENT YEAR AS AGAINST RS.2,92,37 7/- IN THE PRECEDING ASSESSMENT YEAR SEEMS VERY EXCESSIVE. T HE ASSESSING OFFICER SIMILARLY NOTED ON VERIFICATION OF SUB CONTRACT BILLS THA T MOST OF THE BILLS SHOW SIMILAR ENTRIES LIKE CEMENT, CONCRETE FOR CANAL SITE, LAYING CHIP MASONARY ETC. FURTHER, SOME OF THE BILLS RAISED W ERE HANDWRITTEN AND DO NOT CONTAIN DETAILED ADDRESSES, TELEPH ONE NOS. ETC. FURTHER, ONE BILL WAS TAMPERED SINCE AS AGAINST THE DATE 28-02- 2009 IT WAS HAND WRITTEN EARLIER AS 28-02-2008. FURTHER , CERTAIN BILLS WERE COMPUTERISED PRINT OUTS AND DO NOT CONTAIN DET AILED ADDRESSES, CONTACT NUMBER, REGISTRATION NUMBER ETC. ON BEING QUESTIONED BY THE ASSESSING OFFICER, IT WAS CLARIFIED THAT IN T HIS LINE OF BUSINESS THE PERSONS INVOLVED THEREIN ARE FROM REMOTE VILLAGES AND ARE MOSTLY UNEDUCATED. HOWEVER, THE AO WAS NOT S ATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND OBSERVED THA T POSSIBILITY OF INFLATION OF EXPENSES CANNOT BE RULED OUT ESPECIALLY WHEN MOST OF THE PAYMENTS WERE MADE IN CASH. IN VIEW OF THE ABOVE, T HE ASSESSING OFFICER WAS OF THE OPINION THAT THE BOOK RESULT S HOWN BY THE ASSESSEE IS NOT RELIABLE AND NOT VERIFIABLE. HE THEREFO RE INVOKED THE PROVISIONS OF SECTION 145(3) AND REJECTED THE BOOK RE SULTS. THE ASSESSING OFFICER THEREAFTER ANALYSED THE PROFIT SHOWN BY THE ASSESSEE DURING THE CURRENT YEAR AS WELL AS IN THE PREC EDING 4 ASSESSMENT YEAR. REJECTING THE VARIOUS EXPLANATIONS GIVE N BY THE ASSESSEE AND OBSERVING THAT THE ASSESSEE FIRM FAILED TO J USTIFY THE FALL IN GP FROM 19.26% IN THE PRECEDING YEAR TO 13.60% IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSING OFFICER ADOPTED 2 0% GP HOLDING THE SAME TO BE MOST REASONABLE. SINCE THE ASSES SEE HAS ALREADY OFFERED GP RATE OF 13.60% DURING THE YEAR UNDER CONSIDERATION THE BALANCE 6.4% ON TURNOVER OF WHICH COMES TO RS.55,08,898/- WAS TREATED BY HIM AS SUPPRESSED PROFIT OF THE IMPUGNED ASSESSMENT YEAR. HE ACCORDINGLY MADE ADDITION OF RS.55,08,898/- TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEFORE CIT(A) THE ASSESSEE STRONGLY OBJECTED TO THE REJECTION OF BOOK RESULTS AS WELL AS ADOPTION OF GP RATE OF 20%. BASE D ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) HELD T HAT MERELY BECAUSE THE WAGE REGISTER IS SIGNED BY SOME LABOURERS IN ENGLISH THE AUTHENTICITY OF THE SAME CANNOT BE DOUBTED. HOWEVE R, HE OBSERVED THAT THE TRANSPORT BILLS DO NOT CONTAIN THE RE GISTRATION NO. OF VEHICLES AS WELL AS DETAILED ADDRESSES AND CONTACT NUMB ERS OF SUPPLIERS. FURTHER, SOME OF THE BILLS ARE NOT EVEN SIGNED OR STAMPED, THEREFORE, THE BILLS AND VOUCHERS OF THE ASSESSEE FIRM CANNOT BE RELIED UPON FULLY. HE, THEREFORE, UPHELD THE ACT ION OF THE ASSESSING OFFICER IN REJECTING THE BOOK RESULTS. 5. SO FAR AS THE ADOPTION OF GP PROFIT @20% ADOPTED BY TH E ASSESSING OFFICER AS AGAINST 13.60% BY THE ASSESSEE IS CON CERNED HE OBSERVED THAT THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE FALL IN GP RATE FROM 19.26% TO 13.60%. HE OBSERVED THAT THERE IS SOME TRUTH IN THE EXPLANATION OF THE ASSESSEE THAT DUE TO INCREASE IN CERT AIN OVERHEAD EXPENSES AS WELL AS ROYALTY PAYMENT THERE WAS DECLINE IN PROFIT. HOWEVER, THE ASSESSEE COULD EXPLAIN ONLY TO THE EXTENT OF RS.33,43,403/- TOWARDS FALL IN GROSS PROFIT DUE TO SUCH HIGHE R 5 ROYALTY PAYMENT AND INCREASED OVERHEAD EXPENSES. THUS , THE DIFFERENCE OF RS.21,65,495/- STILL REMAINS UNEXPLAINED. THEREFOR E, HE WAS OF THE OPINION THAT IF NET PROFIT IS ADOPTED AT 8% T HEN THE NET PROFIT WILL BE RS.69,50,123/- AS AGAINST NET PROFIT OF RS.47,21,81 9/- LEAVING THE DIFFERENCE OF RS.22,28,304/-. HOWEVER, CONSIDERIN G THE FACT THAT CERTAIN PERCENTAGE HAS BEEN RETAINED BY M/S. RIGHT CONSTRUCTION FROM WHOM THE ASSESSEE HAS RECEIVED SOME CONTRACT WORK, HE HELD THAT A LUMPSUM ADDITION OF RS.20 LAKHS WILL MEET THE ENDS OF JUSTICE. HE ACCORDINGLY DIRECTED THE AO TO REST RICT THE ADDITION OF RS.20 LAKHS. 6. AGGRIEVED WITH SUCH PART RELIEF GIVEN BY THE CIT(A) THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : GROUNDS BY ASSESSEE : 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ACTION OF ASSESSING OF FICER IN REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ACTION OF ASSESSING OF FICER IN ESTIMATING THE GROSS PROFIT INSTEAD OF RELYING ON THE A UDITED ACCOUNTS OF THE ASSESSEE. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT (APPEALS) ERRED IN MAINTAINING THE ADDITION OF RS.20 LACS MADE BY THE ASSESSING OFFICER BY ESTIMATING THE GROSS PROFIT OF THE ASSE SSEE. 4) ANY OTHER GROUNDS OF APPEAL THAT MAY BE RAISED AT THE TIME OF HEARING OF THE APPEAL. GROUNDS BY REVENUE : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITIO N MADE BY THE A.O. ON ACCOUNT OF FALL IN GROSS PROFIT WHEN SEVERAL DISCREP ANCIES WERE NOTICED BY THE A.O. LEADING TO REJECTION OF BOOK RE SULTS FOR WHICH NO SATISFACTORY EXPLANATION IS SEEN TO HAVE BEEN OFFERED B Y THE ASSESSEE? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION M ADE BY THE AO ON ACCOUNT OF FALL IN GROSS PROFIT BY REJECTING THE BOOK S OF ACCOUNTS, WHEN 6 THE CIT(A) HIMSELF HAS UPHELD THE DECISION OF THE AO IN REJECTING THE BOOKS OF ACCOUNTS. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION M ADE BY THE AO ON ACCOUNT OF FALL IN GROSS PROFIT WHEN THE ASSESSEE COULD NOT PROVE THE ALLOCATION OF COST AMONG SUB-LET, SUB CONTRACT AND OTH ER CONTRACTS ALONGWITH SUPPORTING PURCHASES AND EXPENSES BILLS FOR SUCH WORK. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE ABOVE GROUNDS OF APPEAL 7. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLENGED T HE ORDER OF THE CIT(A) SUSTAINING ADDITION OF RS.20,00,000/-. HE SUB MITTED THAT AS AGAINST SUB CONTRACT WORK OF 26% OF THE TOTAL C ONTRACT RECEIPT IN THE PRECEDING ASSESSMENT YEAR THE SUB CONTR ACT RECEIPT DURING THE CURRENT ASSESSMENT YEAR IS 54% OF THE TOTAL CONTRACT RECEIPTS. HE SUBMITTED THAT THE AO REJECTED THE BOOKS OF ACCOUNT ON 3 GROUNDS, I.E. (1) THE WAGE REGISTER DO NOT GIVE THE COMPLE TE ADDRESS OF THE LABOURERS AND SOME OF THE SIGNATURES ARE IN ENGLISH , (2) THE TRANSPORT EXPENSES DO NOT GIVE THE MODE OF TRANSPORT AND VEHICLE NUMBER ETC., AND (3) THE PAYMENT TO SUB CONTRACTORS AR E NOT FULLY VERIFIABLE DUE TO INCOMPLETE ADDRESS AND MOST OF THE PAYME NTS ARE MADE BY CASH. 8. SO FAR AS THE SIGNATURE OF THE LABOURERS IN ENGLISH IS CONCERNED HE SUBMITTED THAT THE SAME CANNOT BE A GRO UND FOR REJECTION OF THE BOOK RESULTS. NOW-A-DAYS EVEN HIGHLY E DUCATED PERSONS ARE DOING LABOUR WORK, THEREFORE, MERELY BECAUS E SOME OF THE LABOURERS HAVE SIGNED IN ENGLISH THE SAME CANNOT BE A GROUND TO DISBELIEVE THE WAGE REGISTER. SO FAR AS THE TRANSPORT ATION EXPENSES ARE CONCERNED THE LD. COUNSEL FOR THE ASSESSEE DREW TH E ATTENTION OF THE BENCH TO PAGES 76 TO 82 OF THE PAPER BOOK AND SU BMITTED THAT OUT OF THE TRANSPORTATION CHARGES OF RS.6,72,606/- THE M AJOR AMOUNT IS PAID TO SHRI KHILARI BALASAHEB K. HE SUBMITTED TH AT HIS PAN NUMBER WAS GIVEN AND TDS OF RS.13,604/- WAS DEDUC TED FROM 7 THE BILL AMOUNT. HIS COMPLETE ADDRESS WAS ALSO GIVEN. REFER RING TO THE BILLS ISSUED BY HIM HE SUBMITTED THAT SINCE SHRI KHILARI BALASAHEB HAS ISSUED THE BILLS GIVING FULL DETAILS, PAN NUMBER A ND TDS HAS BEEN MADE, THEREFORE, THE AO SHOULD NOT HAVE DIS BELIEVED THE TRANSPORTATION CHARGES. HE SUBMITTED THAT THE OTH ER TRANSPORTATION CHARGES ARE HARDLY ABOUT RS.13,000/- PA ID TO 4 PERSONS. THEREFORE, IN ABSENCE OF ANY ADVERSE MATERIAL B EFORE THE AO, THE AO SHOULD NOT HAVE REJECTED THE BOOK RESULTS O N ACCOUNT OF TRANSPORTATION CHARGES. 9. EXPLAINING THE PAYMENTS MADE TO THE SUB CONTRACTORS, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE H AS MADE PAYMENT OF RS.1,12,24,253/- TO 17 SUB CONTRACTORS. IN A LL THE CASES THE ASSESSEE HAS PROVIDED THE PAN NUMBERS OF THE SUB CONTRACTORS AND TDS HAS BEEN MADE. THE ASSESSEE HAS GIVEN THE DE TAILED ADDRESSES OF THE SUB CONTRACTORS, THE LIST OF WHICH IS PLAC ED AT PAGES 83 & 84 OF THE PAPER BOOK. AS REGARDS THE ALLEGATION O F THE AO THAT THERE IS OVERWRITING IN ONE BILL, THE LD. COUNSEL FOR THE ASS ESSEE DREW THE ATTENTION OF THE BENCH TO PAGE 93 OF THE PAPE R BOOK WHERE THE DATE WAS OVERWRITTEN, I.E. AS AGAINST 28-02-2009 IT WA S EARLIER WRITTEN AS 28-02-2008. HE SUBMITTED THAT MISTAKE CAN H APPEN BY ANYBODY AND SINCE IT WAS A HAND WRITTEN BILL MERELY BECAU SE THERE IS SOME OVERWRITING THE BOOK RESULTS CANNOT BE REJECTED O N THIS TRIVIAL DEFECT. 10. REFERRING TO PAGE 102 OF THE PAPER BOOK THE LD. COUN SEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE P ROFIT AND LOSS ACCOUNT AND SUBMITTED THAT AS AGAINST THE MATERIAL CONS UMPTION AT 28.89% IN THE PRECEDING YEAR SUCH CONSUMPTION HAS GONE UPTO 36.79% DURING THE CURRENT YEAR. SIMILARLY, AS AGAINST ROY ALTY CHARGE OF RS.3,67,898/- IN THE PRECEDING YEAR, THE SAME HA S GONE 8 UPTO RS.23,23,403/- DURING THE CURRENT YEAR. HE SUBMITTE D THAT ROYALTY PAYMENT IS PAID TO THE GOVERNMENT AND THERE IS NO SCOPE OF ANY PILFERAGE. HE SUBMITTED THAT AS AGAINST 16.96% PROFIT FR OM OWN CONTRACT WORK THE ASSESSEE HAS EARNED 10.3% IN CASE O F SUB CONTRACT WORK AND 12.18% ON OTHER CONTRACT WORK. THE REFORE, WHEN THE ASSESSEE RECEIVES THE CONTRACT AMOUNT FROM THE PR INCIPAL CONTRACTOR AS A SUB CONTRACTOR PROFIT PERCENTAGE CANN OT BE HIGHER LIKE THAT OF A CONTRACTOR. 11. REFERRING TO THE ASSESSMENT ORDER FOR A.Y. 2006-07 HE SUBMITTED THAT IN THAT YEAR THE ASSESSEE HAD NOT GIVEN THE LIST OF SUNDRY DEBTORS, SUNDRY CREDITORS AND WORK IN PROGRESS FOR WHICH THE BOOK RESULTS WERE REJECTED. HOWEVER, FOR THE CURRENT YE AR THERE IS NO SUCH DEFECT. THE ASSESSEE HAS FULLY EXPLAINED ALL THE DETA ILS. REFERRING TO THE COPY OF THE ASSESSMENT ORDER FOR A.Y. 20 12-13 HE SUBMITTED THAT THE AO HAS ACCEPTED THE BOOK RESULTS A ND HAS NOT GONE FOR ANY ESTIMATION. REFERRING TO THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. OM OVERSEAS REPORTED IN 315 ITR 185 HE SUBMITTED THAT IN ABSENCE OF SPECIFIC DE FECT IN THE BOOKS OF ACCOUNT THE LOWER PROFIT CANNOT BE A GROUND FO R REJECTING THE BOOK RESULTS. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF R.B. JESSARAM FATECHAND (SUGAR DEPARTMENT) VS. CIT REPORTED IN 75 ITR 33 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS HELD THAT BO OKS OF ACCOUNTS CANNOT BE REJECTED AND PROFIT ESTIMATED MEREL Y ON THE GROUND THAT ADDRESS OF THE ASSESSEES ARE NOT MENTIONE D IN THE CASE OF CASH TRANSACTIONS. HE ACCORDINGLY SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE REJECTION OF BOOKS OF ACCOUNT AND SUSTAINING ADDITION OF RS.20,00,000/-. 9 12. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE AO. HE SUBMITTED THAT THE AO HAD CATEGORICALLY GIVEN A FINDING THAT THE BOOK RESULTS ARE NO T RELIABLE DUE TO DEFECTS IN WAGE REGISTER, TRANSPORTATION EXPENSES AND THE DEFECTS IN THE BILLS RAISED BY THE SUB CONTRACTORS AND OV ERWRITING IN SOME OF THE BILLS. THEREFORE, THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING ONLY AN AMOUNT OF RS.20,00,000/- AS AGAINST RS.55,08,898/- ADDED BY THE AO. 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIN D THE ASSESSEE IN THE INSTANT CASE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. IT HAS RECEIVED CONTRACTS FROM GOVERNMEN T DEPARTMENTS AS WELL AS FROM PRIVATE PARTIES AS SUB CONT RACTOR. THE GROSS PROFIT DECLARED BY THE ASSESSEE DURING THE IMPUGNE D ASSESSMENT YEAR IS ABOUT 13.6% AS AGAINST 19.34% GP IN T HE PRECEDING ASSESSMENT YEAR. WE FIND THE ASSESSING OFFICER D URING THE COURSE OF ASSESSMENT PROCEEDINGS EXAMINED THE BOOK S OF ACCOUNT AND NOTED THAT THE WAGE REGISTER DOES NOT CO NTAIN THE COMPLETE ADDRESS OF THE LABOURER NOR THE NATURE OF WORK CARRIED OUT BY THE LABOURERS. FURTHER, SOME OF THE SIGNATURES ARE IN ENGLISH. HE, THEREFORE, WAS OF THE OPINION THAT THE CLAIM MADE ON A CCOUNT OF WAGES IS NOT JUSTIFIED. SIMILARLY, HE ALSO OBSERVED THAT SOM E OF THE TRANSPORT BILLS DO NOT CONTAIN THE MODE OF TRANSPORT AND THE VEHICLE NUMBERS ETC. FURTHER, THE PAYMENTS MADE TO THE SUB C ONTRACTORS ARE MADE IN CASH AND THE BILLS ISSUED BY THEM DO NOT GIVE COMPLETE ADDRESS AND CONTACT NUMBERS AND REGISTRATION NO. ETC. FURTHER, THERE WAS OVERWRITING OF DATE IN ONE BILL. IN VIEW OF THE AB OVE AND 10 CONSIDERING THE FACT THAT THE GP FOR THE IMPUGNED ASSESS MENT YEAR IS LESS THAN THE PRECEDING ASSESSMENT YEAR, HE REJECTED THE BOOK RESULTS AND ADOPTED 20% GP. 14. WE FIND THE LD.CIT(A) WHILE UPHOLDING THE REJECTION OF BOOK S OF ACCOUNTS, HOWEVER, SUSTAINED ADDITION OF RS.20,00,000/- AS A GAINST ADDITION OF RS.55,08,898/- MADE BY THE ASSESSING OFFICER. FRO M THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE, WE FIND FROM PAG E 76 OF THE PAPER BOOK THAT THE ASSESSEE HAS INCURRED TRANSP ORTATION CHARGES OF RS.6,73,606/- OUT OF WHICH AN AMOUNT OF RS.6,60,39 6/- HAS BEEN PAID TO ONE MR. KHILARI BALASAHEB K. WHOSE PAN NU MBER IS GIVEN AND TDS HAS BEEN MADE FROM THE TRANSPORTATION CH ARGES. THE BALANCE AMOUNT IS PAID TO 4 PERSONS TOTALLING TO RS.13,210/ -. FURTHER, COMPLETE ADDRESS OF ALL THE 5 TRANSPORTS ARE GIV EN. THEREFORE, UNDER THESE CIRCUMSTANCES, WE ARE OF THE CON SIDERED OPINION THAT THE ASSESSING OFFICER SHOULD NOT HAVE DISBELIEVE D THE TRANSPORTATION CHARGES. SIMILARLY, THE OTHER GROUND ON W HICH THE AO REJECTED THE BOOKS OF ACCOUNT IS THAT SOME OF THE S IGNATURES ARE IN ENGLISH IN THE WAGE REGISTER AND THAT IS AN INCOMPLETE W AGE REGISTER SINCE THE WORK DONE BY THE LABOURERS ARE NOT MENTIONED. WE FIND THE LD.CIT(A) HAS ALREADY REJECTED THE CONTENTION OF THE AO REGARDING SIGNATURE IN ENGLISH AND THE REVENUE IS NOT IN A PPEAL. FURTHER, WAGES REGISTER USUALLY DO NOT GIVE THE NATURE OF WORK DONE. ADDRESS OF THE LABOURERS IN SOME REGISTERS ARE OPTIONAL. THIS IN OUR OPINION CANNOT BE A GROUND FOR REJECTING THE BOOK RESULTS. 15. SO FAR AS THE PAYMENT TO THE SUB CONTRACTORS ARE CONCERNED WE FIND FROM PAGES 83 AND 84 OF THE PAPER BOOK THAT THE ASSESSEE HAS GIVEN COMPLETE ADDRESS OF THE 17 LABOUR CONTRACTORS GIVING THEIR NAME, ADDRESS, ETC. THE ASSESSEE HAS GIVEN PAN NUMBER S IN ALL CASES AND TDS HAS BEEN DEDUCTED FROM SUCH PAYMENTS. UNDER 11 THESE CIRCUMSTANCES WE DO NOT FIND ANY JUSTIFICATION FOR RE JECTING THE BOOK RESULTS. SO FAR AS THE OTHER OBSERVATION OF THE ASS ESSING OFFICER THAT IN ONE OF THE BILL THERE IS SOME OVERWRITING THE SAME IN OUR OPINION IS TOO SILLY AND CANNOT BE A GROUND FOR REJECTING THE ENTIRE BOOK RESULT. 16. FROM THE COMPARISON OF THE PROFIT AND LOSS ACCOUNT FOR A.Y. 2008-09 AND A.Y. 2009-10, WE FIND THE MATERIAL CONSUMPTION WAS 36.79% DURING THE CURRENT YEAR AS AGAINST 28.89% IN THE PRECEDING YEAR. SIMILARLY, AS AGAINST RS.3,67,898/- INCURRED TOWARDS R OYALTY CHARGES IN THE PRECEDING ASSESSMENT YEAR THE ASSESSEE HAS INCURRED RS.23,43,403/- TOWARDS ROYALTY CHARGE DURING THE IMPUGNE D ASSESSMENT YEAR. THE ROYALTY CHARGES HAS BEEN PAID TO GOVERN MENT, THUS, THERE IS ALMOST AN INCREASE OF ABOUT RS.20 LAKHS IN THE ROYALTY PAYMENT. FURTHER, WE FIND MERIT IN THE SUBMISSION OF THE LD . COUNSEL FOR THE ASSESSEE THAT THE PROFIT FROM SUB-CONTRA CT WORK WILL BE LESS SINCE THE MAIN CONTRACTOR RETAINS A PART OF THE PROFIT. THEREFORE, AS AGAINST 17.96% PROFIT FROM OWN CONTRACT WORK , THE ASSESSEE HAS EARNED 10.38% FROM SUB CONTRACT WORK AND THEREFORE PROFIT FROM SUB CONTRACT WORK CANNOT BE AT PAR WITH PRO FIT FROM CONTRACT WORK. 17. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF R.B. JESS ARAM FATECHAND (SUPRA) HAS HELD THAT IN THE CASE OF CASH TRAN SACTION WHERE DELIVERY OF GOODS IS TAKEN AGAINST PAYMENT, IT IS HA RDLY NECESSARY FOR THE SELLER TO BOTHER ABOUT THE NAME AN D ADDRESS OF THE PURCHASER. THE ACCOUNT BOOKS OF AN ASSESSEE CANNOT T HEREFORE BE REJECTED MERELY ON THE GROUND THAT THE PARTICULARS OF THE ASSESSEE ARE NOT MENTIONED IN THE CASE OF CASH TRANSACTIONS. T HE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF OM OVERSEAS (SUPRA) HAS HELD THAT IN ABSENCE OF ANY SPECIFIC DEFECTS POINTED O UT IN THE 12 BOOKS OF ACCOUNT, THE BOOK RESULTS CANNOT BE REJECTED MERELY ON THE GROUND THAT THERE IS FALL IN PROFIT RATIO. 18. SINCE IN THE INSTANT CASE, WE HAVE ALREADY HELD THAT T HE DEFECTS AS POINTED OUT BY THE ASSESSING OFFICER ARE TRIVIAL IN NATURE WHICH DO NOT CALL FOR REJECTION OF THE BOOK RESULTS, THEREFO RE, CONSIDERATION THE TOTALITY OF THE FACTS OF THE CASE AND IN VIEW OF OUR DISCUSSION IN THE FOREGOING PARAGRAPHS, WE ARE OF THE CONS IDERED OPINION THAT THE REJECTION OF BOOKS OF ACCOUNT IN THE INS TANT CASE IS NOT JUSTIFIED. WE THEREFORE HOLD THAT THE INCOME RETURNED BY THE ASSESSEE HAS TO BE ACCEPTED. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. CONSEQUENTLY THE GROUNDS RAISE D BY THE REVENUE ARE DISMISSED. 19. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISS ED AND THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 12-06-2015. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE DATED: 12TH JUNE, 2015 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-V, PUNE 4. CIT-V, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE