The ITO, Ward-9(1), Ahmedabad V. Shree Parshwanath Corporation, Ahmedabad

ITA 1693/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5124 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 11-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P SRIVASTAVA
• Keywords: Bogus purchase
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER 1. ./ITA NO.872/AHD/2015 2. ./ITA NO.1693/AHD/2015 ( / ASSESSMENT YEAR : 2010-11) 1.SHREE PARSHWANATH CORPORATION 50, 3 RD FLOOR HARISIDDH CHAMBERS ASHRAM ROAD AHMEDABAD-380 014 2. INCOME-TAX OFFICER WARD-9(1) AHMEDABAD / VS. 1. THE INCOME TAX OFFICER, WARD-9(1) AHMEDABAD 2. SHREE PARSHWANATH CORPORATION, AHMEDABAD ./ ./ PAN/GIR NO. : AADFS 3093 C ( / APPELLANTS ) .. ( / RESPONDENTS ) ASSESSEE BY : MS. ARTI SHAH, AR RE VENUE BY : MR. B.P. SRIVASTAVA, SR.DR / DATE OF HEARING 31/12/2018 !' / DATE OF PRONOUNCEMENT 01/02/2019 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED CROSS-APPEALS HAVE BEEN FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE COMMON ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS)AHMEDABAD-5, [CIT(A) IN SHORT] VIDE A PPEAL NO.CIT(A)- XV/ITO.9(1)/18/2013-14 AND NOW CIT(A)-5/WD.9(1)/121 /2014-15 DATED 02/03/2015 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 2 - INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'TH E ACT') DATED 28/03/2013 RELEVANT TO ASSESSMENT YEAR (AY) 2010-1 1. 2. THE ASSESSEE (IN ITA NO.872/AHD/2015) HAS RAISE D THE FOLLOWING GROUNDS OF APPEAL:- THE LEARNED COMMISSIONER OF INCOME TAX, (APPEALS)-5 , AHMEDABAD HAS ERRED IN LAW AND ON FACTS OF THE CASE BY HOLDING THAT IN PRINCIPLE THE ASSESSING OFFICER ACTION OF T REATING THE CLAIM OF PURCHASE OF RS.1,45,49,013/- AS BOGUS IS CORRECT AND ACCORDINGLY IT IS TO BE REDUCED FROM CLOSING WORK I N PROGRESS. 3. THE REVENUE (IN ITA NO.1693/AHD/2015) HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,45,49,013/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASE/EXPENDITURES CLAIMED BY T HE APPELLANT AFTER HAVING CONFIRMED THAT THESE PURCHASES/EXPENDI TURES WERE INDEED BOGUS AND THE ASSESSING OFFICER WAS CORRECT IN DISALLOWING THE SAME. THE CIT(A) OUGHT TO HAVE UPHELD THE ADDI TION OF THE SAME TO THE RETURNED INCOME OF THE ASSESSEE. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION OF RS.4,76,465/- MADE BY THE AO ON ACCOUNT OF EXCESS EXPENDITURES CLAIMED BY THE APPELLANT THOUGH THE CI T(A) HAS HIMSELF CONFIRMED THE DISALLOWANCE MADE BY THE AO IN RESPECT OF THIS EXPENDITURE. 4. THE ONLY ISSUE RAISED BY THE ASSESSEE AND T HE FIRST ISSUE RAISED BY THE REVENUE ARE INTER-CONNECTED. THEREFORE, WE HAV E CLUBBED THEM ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 3 - TOGETHER FOR THE SAKE OF CONVENIENCE AND ADJUDICATI ON. THE COMMON ISSUE RELATES TO THE LABOR/MATERIAL AND CONSULTANCY CHARGES INCURRED BY THE ASSESSEE FOR RS. 1,45,49,013/-. 5. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PARTNERSHIP-FIRM AND ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTION. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS SHOWN CLOSING WORK-IN- PROGRESS OF RS. 30,87,72,885/- AND SHOWN LOSS IN THE PROFIT & LOSS ACCOUNT AMOUNTING TO RS. 44,82,661/- ONLY. HOWEVER, THE ASSESSEE DECLAR ED TAXABLE INCOME IN ITS INCOME-TAX RETURN AMOUNTING TO RS. 23,690/- ONL Y. AS SUCH, THE ASSESSEE HAS CAPITALIZED A LOT OF ITS EXPENSES UNDE R THE HEAD WORK-IN- PROGRESS DURING THE YEAR UNDER CONSIDERATION. 5.1. THE ABOVE VALUE OF WORK-IN-PROGRESS CONSISTS O F PURCHASE EXPENSES, LABOR EXPENSES AND CONSULTANCY CHARGES OF RS. 9,70,95,475/-, RS. 2,86,41,975/- AND RS. 58,83,382/- RESPECTIVELY . THE ASSESSEE IN SUPPORT OF THESE EXPENSES FILED THE COPIES OF LEDGE R ALONG WITH THE NAMES AND ADDRESSES OF THE PARTIES. 5.2 THE ASSESSING OFFICER TO VERIFY THE GENUINENESS OF THE ABOVE EXPENSES ISSUED NOTICE U/S 131 OF THE ACT TO 15 PAR TIES REQUIRING THEM TO FURNISH THE FOLLOWING DETAILS: I. IN CASE OF A LABOUR CONTRACTOR (I) ITR ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 4 - (II) BANK STATEMENT OF THE PARTIES (III) BOOKS OF ACCOUNTS AND CASH BOOK (IV) COPY OF AGREEMENT (V) ALL MEASUREMENT OF WORK (VI) SERVICE TAX RETURN II. IN CASE OF MATERIAL SUPPLIER (I) ITR (II) BANK STATEMENT OF THE PARTIES (III) BOOKS OF ACCOUNTS AND CASH BOOK (IV) PURCHASE BILL, SALE BILL, AND DELIVERY-SLIP (V) STOCK REGISTER 5.3. OUT OF 15 PARTIES, SIX PARTIES FAILED TO APPEA R AND FILED THE NECESSARY DETAILS IN RESPONSE TO THE NOTICE ISSUED U/S 131 OF THE ACT. THE ASSESSEE ALSO FAILED TO PRODUCE THESE PARTIES BEFOR E THE ASSESSING OFFICER. 5.4. HOWEVER, THE ASSESSEE IN SUPPORT OF THE ABOVE EXPENSES FURNISHED THE CERTAIN DETAILS AS MENTIONED BELOW: SL.NO. PARTY NAME DOCUMENTS 1. MUKESH NARAJI VACHERA CONFIRMATION AND ACKNOWLEDGEMENT OF INCOME-TAX RETURN 2. HEMA CONSTRUCTION CONFIRMATION AND MEASUREMENT OF WORK- SHEET, 3. A-FIELD CONSTRUCTION CONFIRMATION AND ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 5 - MEASUREMENT OF WORK DONE 4. ARTI ENGINEERING CONFIRMATION, RECONCILIATION STATEMENT AND MEASUREMENT OF WORK 5. AB CORPORATION COPY OF LEDGER ACCOUNT AND RECONCILIATION STATEMENT. 6. NACHIKETA TRADERS COPY OF THE LEDGER AND PURCHASE BILL. 5.5. THE ASSESSEE IN ADDITION TO THE ABOVE ALSO FIL ED THE COPIES OF PANS OF ALL THE PARTIES AND SUBMITTED THAT ALL THE PARTI ES WERE REGISTERED WITH SERVICE TAX AND SALES TAX DEPARTMENT. 5.6. THE ASSESSEE ALSO CLAIMED TO HAVE MADE THE PAY MENTS TO THE ABOVE PARTIES THROUGH BANKING CHANNEL. THUS, THE ABOVE EX PENSES CANNOT BE TREATED AS BOGUS MERELY ON THE GROUND THAT THESE PA RTIES FAILED TO COMPLY WITH THE NOTICE ISSUED U/S 131 OF THE ACT. 5.7. WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE A LSO SUBMITTED THAT ALL THESE EXPENSES WERE TRANSFERRED TO WORK-IN-PROGRESS . THEREFORE, THERE IS NO QUESTION OF TREATING THEM AS INCOME AFTER THE DI SALLOWANCE. AT THE MOST, THE ABOVE EXPENSES CAN BE REDUCED FROM THE WO RK-IN-PROGRESS WITHOUT MAKING ANY ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. 5.8. HOWEVER, THE ASSESSING OFFICER OBSERVED THAT N ONE OF THE PARTY APPEARED IN RESPONSE TO THE NOTICE ISSUED U/S 131 O F THE ACT. ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 6 - 5.9. IN THE CASE OF LABOR CONTRACTORS, THERE WAS NO PERIOD OF WORK MENTIONED IN THE BILL. THEREFORE, IT WAS NOT POSSI BLE TO VERIFY/MEASURE THE WORK CARRIED OUT BY THE PARTIES. 5.10. REGARDING THE CONSULTANCY CHARGES, THERE WAS NO DETAIL FOR THE NATURE OF SERVICES RENDERED BY THE PARTY. 5.11. REGARDING THE MATERIAL PURCHASED EXPENSES, TH ERE WAS NO CONFIRMATION FILED BY THE ASSESSEE FROM THE PARTY. THE ASSESSEE HAS ALSO FAILED TO FILE THE STOCK REGISTER, LORRY RECEIPT AN D THE PAN OF THE PARTY. 5.12. ALL THE EXPENSES AS DESCRIBED ABOVE WERE CLAI MED IN FEBRUARY AND MARCH WHICH STRONGLY INDICATE THAT THESE CHARGES WE RE CLAIMED TO INFLATE THE EXPENSES. THEREFORE, THE ASSESSING OFFICER HEL D THAT THESE EXPENSES ARE BOGUS. 5.13. AS THE EXPENSES WERE NOT VERIFIABLE AND BOGUS , THEREFORE THE BENEFIT OF THE SAME CANNOT BE GIVEN EVEN AGAINST TH E FUTURE INCOME OF THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER DISAL LOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LD .CIT (A). ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 7 - 7. THE ASSESSEE BEFORE THE LD.CIT (A) SUBMITTED THA T IT HAS REQUESTED TO NCHIKETA TRADERS TO CONFIRM THE PURCHASE OF THE MATERIALS FROM IT. THUS, THE SAME WILL BE FILED IMMEDIATELY ON RECEIPT FROM THE PARTY. 7.1. THE ASSESSEE FURTHER REITERATED THE SUBMISSION S AS MADE BEFORE THE ASSESSING OFFICER. HOWEVER, THE LD.CIT (A) OBSERVE D CERTAIN FACTS AS DETAILED UNDER: I. IN CASE OF A LABOUR CONTRACTOR, THE ASSESSEE FAILED TO FILE THE FOLLOWING DETAILS: (I) INCOME TAX RETURN OF THE PARTY (II) BANK STATEMENT OF THE PARTY (III) BOOKS OF ACCOUNTS AND CASH BOOK OF THE PARTY (IV) COPY OF AGREEMENT (V) ALL MEASUREMENT OF WORK (VI) SERVICE TAX RETURNS (VII) THE PARTIES DID NOT APPEAR BEFORE THE ASSESSING OFF ICER (VIII) BILLS FILED WERE WITHOUT THE DATE AND THE PERIOD OF WORK II. IN CASE OF MATERIAL SUPPLIER (I) COPY OF INCOME TAX RETURN (II) BANK STATEMENT OF THE PARTY (III) BOOKS OF ACCOUNTS AND CASH BOOK (IV) PURCHASE BILL, SALE BILL AND DELIVERY-SLIP (V) STOCK REGISTER ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 8 - (VI) SALES TAX RETURNS (VII) NON-APPEARANCE OF THE PARTY 7.2. SIMILARLY, THE LD.CIT (A) OBSERVED THAT THE AS SESSEE FAILED TO PRODUCE THE DETAILS AS DISCUSSED ABOVE ABOUT THE CO NSULTANCY CHARGES PAID IT. 7.3. BECAUSE OF THE ABOVE, THE LD.CIT (A) HELD THAT THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE EXPENSES CLAIMED BY IT. THUS, THE LD.CIT (A) HELD THE EXPENSES AS NON-VERIFIABLE AND THEREFO RE BOGUS. 7.4. HOWEVER, THE LD.CIT (A) FURTHER OBSERVED THAT THESE EXPENSES WERE NOT CLAIMED IN THE PROFIT & LOSS ACCOUNT, BUT THESE WERE CAPITALIZED UNDER THE HEAD WORK-IN-PROGRESS. THEREFORE, THE LD.CIT (A) REDUCED THE SAME FROM THE WORK-IN-PROGRESS AND DELETED TH E ADDITION MADE BY THE ASSESSING OFFICER. 8. BEING AGGRIEVED BY THE ORDER OF THE LD.CIT (A), BOTH THE ASSESSEE AND REVENUE ARE IN APPEALS BEFORE US. 9. THE ASSESSEE IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT (A) DIRECTING THE ASSESSING OFFICER TO REDUCE THE EXPEN SES FROM THE WORK-IN- PROGRESS, WHEREAS THE REVENUE IS IN APPEAL AGAINST THE ORDER OF LD. CIT(A) FOR DELETING THE SAME FROM INCOME. ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 9 - 10. THE LD.AR BEFORE US FILED PAPER-BOOK RUNNING FR OM PAGES 1 TO 247 AND SUBMITTED THAT ALL THE LABOR EXPENSES WERE INCURRED AFTER THE DEDUCTION OF TDS. THE DETAILS OF THE PANS OF ALL T HE PARTIES WERE DULY FURNISHED DURING THE ASSESSMENT PROCEEDINGS. THE P AYMENT TO THE LABOR CONTRACTOR WAS PAID THROUGH BANKING CHANNEL. 10.1. THE LD.AR REGARDING THE MATERIAL PURCHASED AN D THE CONSULTANCY CHARGES PLACED THE SAME ARGUMENTS AS PLACED ABOUT T HE LABOR EXPENSES. 11. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT TH E ASSESSEE HAS CONSENTED TO REDUCE THE ABOVE EXPENSES FROM THE AMO UNT OF WORK-IN- PROGRESS. THEREFORE, THE ASSESSEE CANNOT AGITATE T HE ORDER OF THE LD.CIT (A) ON THE SAME GROUND. IT IS BECAUSE THERE IS NO GRIEVANCE TO THE ASSESSEE. 12. BOTH THE PARTIES RELIED ON THE ORDERS OF THE AU THORITIES BELOW AS FAVORABLE TO THEM. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE AO MA DE THE DISALLOWANCE OF THE LABOUR EXPENSES, MATERIAL PURCHASES, AND CONSUL TANCY CHARGES. THE NECESSARY DETAILS OF THE EXPENSES STAND AS UNDER: 13.1. LABOR EXPENSES PAID TO THE PARTIES AS DETAI LED UNDER: ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 10 - PARTY NAME AMOUNT (RS.) (I) SHREE MUKESH NARAJI VANJARA 11,37,785/- (II) M/S HEMA CONSTRUCTION 38,72,099/- (III) M/S A-FIELD CONSTRUCTION 16,29,822/- (IV) M/S AARTI ENGINEERING 52,35,048/- 13.2. MATERIAL PURCHASES FROM THE PARTY AS DETAILED UNDER: PARTY NAME AMOUNT (RS.) (I) M/S NACHIKETA TRADERS 13,46,539/- 13.3. CONSULTANCY CHARGES PAID TO THE PARTY AS DETA ILED UNDER: PARTY NAME AMOUNT (RS.) (I) M/S A.B. CORPORATION 13,27,720/- 13.4. REGARDING LABOUR EXPENSES PAID TO THE PART IES AS DISCUSSED ABOVE, WE NOTE THAT THE ASSESSEE HAS FURNISHED THE NECESSARY DETAILS AS STATED BELOW: MUKESH NARAJI VANJARA THE ASSESSEE HAS FILED THE FOLLOWING DETAILS: I. CONFIRMATION FROM THE PARTY WITH PAN, (PAGE NO.60-6 2 OF PB) II. ACKNOWLEDGMENT OF THE INCOME TAX RETURN. (PAGE NO.6 3OF PB) III. COPY OF LEDGER (PAGE NO.132-135OF PB) IV. COPY OF THE BILL (PAGE NO.136-154OF PB) V. PAYMENT AFTER TDS VI. PAYMENT THROUGH BANKING CHANNEL ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 11 - M/S HEMA CONSTRUCTION THE ASSESSEE HAS FILED THE FOLLOWING DETAILS: I. CONFIRMATION FROM THE PARTY WITH PAN, (PAGE NO.64-6 7 OF PB) II. COPY OF LEDGER (PAGE NO.155-158OF PB) III. COPY OF THE BILL, CONTAINS SERVICE TAX NO AND LEVY SERVICE TAX (PAGE NO.159-174OF PB) IV. PAYMENT AFTER TDS V. PAYMENT THROUGH BANKING CHANNEL M/S A-FIELD CONSTRUCTION THE ASSESSEE HAS FILED THE FOLLOWING DETAILS: I. CONFIRMATION FROM THE PARTY WITH PAN, (PAGE NO.68-7 0 OF PB) II. COPY OF LEDGER (PAGE NO.175-177OF PB) III. COPY OF ABSTRACT AND MEASUREMENT SHEET, CONTAIN SER VICE TAX NO AND LEVY SERVICE TAX (PAGE NO.178-194OF PB) IV. PAYMENT AFTER TDS V. PAYMENT THROUGH BANKING CHANNEL M/S AARTI ENGINEERING THE ASSESSEE HAS FILED THE FOLLOWING DETAILS: I. CONFIRMATION FROM THE PARTY WITH PAN, (PAGE NO.71-7 5 OF PB) II. RECONCILIATION STATEMENT (PAGE NO.76-77OF PB) III. LEDGER ACCOUNT IN PARTY BOOKS (PAGE NO.78-79 OF PB) IV. COPY OF LEDGER (PAGE NO.219-221OF PB) V. COPY OF BILL AND MEASUREMENT SHEET, CONTAIN SERVICE TAX NO AND LEVY SERVICE TAX (PAGE NO.195-218 OF PB) VI. PAYMENT AFTER TDS VII. PAYMENT THROUGH BANKING CHANNEL ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 12 - 13.5. NONE OF THE AUTHORITIES BELOW HAS POINTED O UT ANY DEFECT IN THE DETAILS FILED BY THE ASSESSEE. THUS THE NON-APPEARA NCE OF THE PARTY IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 131 OF THE ACT, THE ASSESSEE CANNOT BE PENALIZED. AS PER THE PROVISIONS OF SECTI ON 272A OF THE ACT, THE AO IS EMPOWERED TO LEVY THE PENALTY ON THE PART Y IF IT DOES NOT RESPOND TO THE NOTICE ISSUED UNDER SECTION 131 OF T HE ACT. THERE IS NO OBLIGATION IMPOSED ON THE ASSESSEE TO COMPEL THE PA RTY TO APPEAR BEFORE THE AO IN RESPONSE TO THE NOTICE ISSUED TO HIM UNDE R SECTION 131 OF THE ACT. ONCE THE ASSESSEE HAS FURNISHED THE NECESSARY DETAILS AS DISCUSSED ABOVE, IT CAN BE ASSUMED THAT THE ASSESSEE HAS DISC HARGED HIS LIABILITIES IMPOSED UNDER THE ACT. IN THIS REGARD, WE FIND SUPP ORT AND GUIDANCE FROM THE JUDGMENT OF GUJARAT HIGH COURT IN CASE OF CIT V S. R.N.DOBARIA REPORTED IN 42 TAXMANN.COM 196 WHEREIN IT WAS HELD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE IF HE HAS FURN ISHED THE NECESSARY DETAILS. 13.6. SIMILARLY, IF THE PARTY DOES NOT REPLY TO T HE NOTICE ISSUED UNDER SECTION 131 OF THE ACT, THE ASSESSEE CANNOT BE PENA LIZED BY MAKING THE DISALLOWANCE OF THE EXPENSES OR IN ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. 13.7. SIMILARLY, THE EXPENSES CANNOT BE TREATED A S BOGUS IF THE PERIOD OF WORK IS NOT MENTION IN THE BILL. IT IS BECAUSE THE PAYMENT WAS MADE AFTER THE DEDUCTION OF TDS AND THROUGH BANKING CHANNEL. ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 13 - 14. THE AO WAS EMPOWERED TO DEPUTE THE INSPECTOR OF THE INCOME TAX TO CONDUCT THE NECESSARY INQUIRIES DIRECTLY FROM TH E PARTIES TO VERIFY THE GENUINENESS OF THE TRANSACTIONS OF THE ASSESSEE, BU T THE AO HAS FAILED TO DO SO. 14.1. REGARDING MATERIAL EXPENSES PAID TO NACKINE TA TRADERS AS DISCUSSED ABOVE, WE NOTE THAT THE ASSESSEE HAS FURN ISHED THE NECESSARY DETAILS AS STATED BELOW: I. COPIES OF THE BILL ALONG WITH VAT(PAGE NO.94-131OF PB) II. COPY OF THE LEDGER OF THE PARTY IN THE BOOKS OF THE ASSESSEE. (PAGE NO.90-93OF PB) III. PAYMENT VOUCHERS SHOWING THE PAYMENT THROUGH BANKIN G CHANNEL (PAGE NO.94-131OF PB) 14.2. REGARDING CONSULTANCY CHARGES PAID TO A.B. CORPORATION AS DISCUSSED ABOVE, WE NOTE THAT THE ASSESSEE HAS FURN ISHED THE NECESSARY DETAILS AS STATED BELOW: I. LEDGER ACCOUNT IN PARTY BOOKS (PAGE NO.80OF PB) II. RECONCILIATION STATEMENT (PAGE NO.81OF PB) III. COPY OF THE LEDGER OF THE PARTY IN THE BOOKS OF THE ASSESSEE. (PAGE NO.222-223 OF PB) IV. COPY OF THE BILL, CONTAIN SERVICE TAX NO AND LEVY S ERVICE TAX (PAGE NO.224-233OF PB) V. PAYMENT VOUCHERS SHOWING THE PAYMENT THROUGH BANKIN G CHANNEL (PAGE NO.224-233 OF PB) 14.3. FROM THE PRECEDING DISCUSSION, WE CONCLUDE THAT THE ASSESSEE HAS DISCHARGED HIS DUTY TO PROVE THE GENUINENESS OF THE EXPENSES AND ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 14 - BUSINESS CONNECTION IN SUPPORT OF THE EXPENSES AS D ISCUSSED ABOVE BY FURNISHING THE NECESSARY DETAILS IN SUPPORT OF THES E EXPENSES. AS THERE WAS NO DEFECT POINTED OUT BY THE INCOME TAX AUTHORI TIES BELOW IN THE DETAILS FURNISHED BY THE ASSESSEE, WE ARE INCLINED TO HOLD THAT THE AO MADE THE DISALLOWANCES ON HIS SURMISE AND CONJECTUR E. THEREFORE, THE QUESTION OF REDUCING THE SAME FROM THE CAPITAL WORK IN PROGRESS DOES NOT ARISE. 14.4. WE ALSO NOTE THAT THE ASSESSEE AGREED TO REDU CE THE EXPENSES FROM THE CAPITAL WORK IN PROGRESS WITHOUT PREJUDICE TO I TS CLAIM TO TREAT THE SAME AS GENUINE EXPENSES. THEREFORE IT CANNOT BE CO NCLUDED THAT THE ASSESSEE AGREED FOR THE REDUCTION FROM THE CAPITAL WIP. HAD THE ASSESSEE NOT CLAIMED FOR THE REDUCTION FROM THE WIP ALTERNAT IVELY, THERE WOULD HAVE BEEN OUTSTANDING DEMAND OF THE TAX AS RAISED B Y THE AO DURING THE ASSESSMENT PROCEEDINGS. 14.4. ACCORDINGLY, WE HOLD THAT ALL THESE EXPENSE S ARE GENUINE IN THE GIVEN FACTS AND CIRCUMSTANCES. THEREFORE NO DISALLO WANCE IS WARRANTED. ACCORDINGLY, WE REVERSE THE ORDER OF AUTHORITIES BE LOW. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 15 - NOW COMING TO THE GROUND OF APPEAL OF THE REVENUE 15. AS WE HAVE ALREADY HELD IN THE PARAGRAPH OF NO. 14 OF THIS ORDER THAT THE EXPENSES AS DISCUSSED ABOVE ARE GENUINE, A ND THEREFORE NO DISALLOWANCE IS WARRANTED. MOREOVER, WE ALSO NOTE T HAT THE ASSESSEE HAS NOT CLAIMED THESE EXPENSES IN THE PROFIT AND LOSS A CCOUNT. THUS THE QUESTION OF TREATING THE SAME AS INCOME OF THE ASSE SSEE DOES NOT ARISE. HENCE WE DO NOT FIND ANY REASON TO DISTURB THE FIND ING OF LD.CIT (A). HENCE, THE GROUND OF APPEAL OF THE REVENUE IS DISMI SSED. 16. AS A RESULT, GROUND RAISED BY THE ASSESSEE IS A LLOWED, WHEREAS GROUND RAISED BY THE REVENUE IS DISMISSED. 17. THE SECOND ISSUE RAISED BY THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF THE EXCESS EXPENDITURE OF RS. 4,76,465/- ONLY. 17.1. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS CLAIMED THE MISCELLANEOUS EXPENSE OF RS.10,00,500/- ONLY. HOWE VER, THE ASSESSING OFFICER IN RESPONSE TO THE NOTICE ISSUED U/S 131 OF THE ACT FOUND THAT THE ACTUAL EXPENSES INCURRED BY THE ASSESSEE IS FOR A S UM OF RS. 5,24,035/- ONLY. BUT THE ASSESSEE HAS CAPITALIZED WORK-IN-PR OGRESS BY AN AMOUNT OF RS.10,00,500/-. ACCORDINGLY, AN EXPLANATION WAS SOUGHT FROM THE ASSESSEE. THE ASSESSEE CONCEDED THE MISTAKE COMMITT ED BY IT AND SUBMITTED THAT A RECTIFICATION ENTRY HAS ALREADY BE EN PASSED IN THE FY ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 16 - 2011-12. THUS, THE EXCESS CLAIM OF EXPENSE HAS ALR EADY BEEN SUFFERED TAX IN THE SUBSEQUENT FINANCIAL YEAR. 17.2. HOWEVER, THE ASSESSING OFFICER DISREGARDED T HE CLAIM OF THE ASSESSEE BY OBSERVING THAT THERE WAS NO EVIDENCE FU RNISHED IN SUPPORT OF THE RECTIFICATION OF ENTRY IN THE PREVIOUS YEAR 201 1-12. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE SUM OF RS. 4,76,465/- AS BOGUS EXPENSES. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE S AME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 18. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE L D.CIT (A). THE ASSESSEE BEFORE THE LD.CIT (A) SUBMITTED THAT THE R ECTIFICATION ENTRY IN THE ACTUAL EXPENSES HAS ALREADY BEEN CARRIED OUT IN THE PREVIOUS FY 2011- 12. THEREFORE, THERE IS NO LOSS TO THE REVENUE. 18.1. WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE ALSO SUBMITTED THAT IT HAD NOT CLAIMED ANY EXPENSE IN THE PROFIT & LOSS AC COUNT RATHER THE SAME WAS ADDED TO THE WORK-IN-PROGRESS. THEREFORE, NO ADDITION CAN BE MADE TO THE TOTAL INCOME. AT THE MOST, THE AMOUNT OF EX CESS EXPENSE CAN BE REDUCED FROM THE WORK-IN-PROGRESS. 19. THE LD.CIT (A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE, DIRECTED THE ASSESSING OFFICER TO REDUCE THE EXCESS EXPENSES CLAIMED BY IT FROM THE WIP. ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 17 - 20. BEING AGGRIEVED BY THE ORDER OF LD.CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 21. THE LD. DR BEFORE US SUBMITTED THAT THE AMOUNT OF EXCESS CLAIM ON ACCOUNT OF MISCELLANEOUS EXPENSES SHOULD ALSO BE REDUCED FROM THE OPENING BALANCE OF THE WIP CARRIED FORWARD TO THE N EXT YEAR. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER. 21.1. ON THE OTHER HAND, THE LD AR SUBMITTED THAT IT HAS ALREADY OFFERED THE EXCESS CLAIM OF THE EXPENSES TO TAX IN THE FY 2011-12. THEREFORE, ANY ADDITION OF THE SAME IN THE YEAR UND ER CONSIDERATION WILL LEAD TO DOUBLE ADDITION IN THE HANDS OF THE ASSESSE E. THE LD. AR VEHEMENTLY SUPPORTED THE ORDER OF THE LD.CIT (A). 22. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSES SEE HAS CLAIMED EXCESS EXPENSES FOR RS. 4,76,465/-ONLY. THEREFORE, THE AO TREATED THE SAME AS INCOME OF THE ASSESSEE. 22.1. HOWEVER, THE LD.CIT (A) FOUND THAT THE SAID EXPENSES WERE CAPITALIZED AND ADDED IN WORK IN PROGRESS. AS SUCH THESE EXPENSES WERE NOT CLAIMED IN THE INCOME TAX RETURN, ACCORDINGLY, THE LD.CIT (A) DELETED THE ADDITION MADE BY THE AO BUT DIRECTED TO REDUCE FROM THE CAPITAL WORKING WORK IN PROGRESS. WE ALSO NOTE THAT THE AS SESSEE HAS NOT ITA NO.872/AHD/2015 (BY ASSESSEE) AND ITA NO.1693/AHD/2015 (BY REVENUE) SHREE PARSHWANATH CORPORATION VS. ITO (CROSS-APPEA LS) ASST .YEAR - 2010-11 - 18 - CLAIMED SUCH EXPENSE IN THE PROFIT AND LOSS ACCOUNT . THUS THE QUESTION OF TREATING THE SAME AS INCOME OF THE ASSESSEE DOES NO T ARISE. HENCE WE DO NOT FIND ANY REASON TO DISTURB THE FINDING OF LD.CI T (A). HENCE THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 23. AS A RESULT, THE GROUND OF ASSESSEES APPEAL IS ALLOWED, WHEREAS GROUND OF REVENUES APPEAL IS DISMISSED. 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED, AND THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 01/02/2019 SD/- SD/- (MS.MADHUMITA ROY) (WASEEM AH MED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 01/02/2019 %.., .'.. / T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ()* + / CONCERNED CIT 4. + ( ) / THE CIT(A)-AHMEDABAD-5 5. ./0 '')* , )*' , ( / DR, ITAT, AHMEDABAD 6. 034 5 / GUARD FILE. / BY ORDER, . ' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) $%, / ITAT, AHMEDABAD