ITO, Tumkur V. Sri. N. Muddaiah, Tumkur

ITA 19/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60779 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 12-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Assessee Lawyers: H GURUSWAMY ITP
• Keywords: Corroborative evidences
• Section: 40A(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.19(BNG.)/2011 (ASSESSMENT YEAR : 2007-08) THE INCOME-TAX OFFICER, SHRI N.MUDDAIAH WARD-1, PWD CONTRACTOR, TUMKUR. CHIKKONAHALLI, PAN NO.ALOPM 7657G VS KORA POST, TUMKUR. APPELLANT RESPONDENT REVENUE BY : SMT. SUSAN THOMAS JOSE, JCIT ASSESSEE BY : SHRI H. GURUSWAMY, ITP DATE OF HEARING : 1 4-06-2012 DATE OF PRONOUNCEMENT : 29-06-2012 O R D E R PER SHRI N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 30- 09-2010 OF CIT(A)-II, BANGALORE RELATING TO AY: 20 07-08. 2. THE ASSESSEE AN INDIVIDUAL IS A PWD CONTRACTOR. FOR THE AY: 2007-08 HE FILED RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.5,43,511/-. ON 17-12-2007, A SURVEY U/S 133A OF THE IT ACT, 1961 (THE ACT) WAS CARRIED OUT BY THE DEPARTMENT IN THE BUSINESS PREMISES OF THE ASSESSEE. AT THE TIME OF SURVEY, N EITHER THE BOOKS OF ACCOUNTS NOR THE VOUCHERS WERE AVAILABLE IN THE BUS INESS PREMISES. THE STATEMENT OF THE ASSESSEE WAS RECORDED AT THE T IME OF SURVEY ITA NO.19(B)/2011 2 AND HE SUBMITTED THAT THE BOOKS OF ACCOUNTS WERE WI TH THE CHARTERED ACCOUNTANT ONE SHRI C.S.PRAHALAD. ON THE SAME DAY, A SURVEY WAS CONDUCTED U/S 133A OF THE ACT IN THE BUS INESS PREMISES OF SHRI C.S.PRAHALAD, CA. WHEN ASKED ABOUT THE BOO KS OF ACCOUNTS OF THE ASSESSE, SHRI PRAHALAD, DENIED HAVING ANY BO OKS OF ACCOUNTS OF THE ASSESSEE. EVEN IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS INIT IALLY. THEREAFTER, THE CASH BOOK AND LEDGER AND TWO NANDI FILES CONTAI NING VOUCHERS RELATING TO AY: 2006-07 AS PRODUCED AND THE SAME WA S IMPOUNDED. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ON EXAMINATION OF CASH BOOK FOUND THAT AS ON 31-03-2006 THERE WAS A CLOSING CASH BOOK OF RS.15,05,497/-. THE SAID LOSING BALANCE WA S THE OPENING BALANCE OF THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2007-08. THE AO WAS OF THE VIEW THAT THE ASSESSEEE DID NOT D ECLARE SUFFICIENT INCOME IN THE RETURNS OF INCOME FILED FOR THE ASSES SMENT YEAR 1999- 200 O 2006-07 AND THEREFORE, THE SOURCE OF OPENING CASH BALANCE AS ON 01-04-2007 COULD NOT BE PROPERLY EXPLAINED BY TH E ASSESSEE. THE AO ALSO FOUND THAT THERE WAS NO WITHDRAWAL FROM THE BANK ACCOUNTS OF THE ASSESSEE WHICH CAN EXPLAIN THE SOUR CE OF OPENING CASH BALANCE AS PER THE CASH BOOK. THE AO THEREFO RE, ADDED A SUM OF RS.15,05,497/- AS INCOME FROM OTHER SOURCES. 4. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT T HE CASH BALANCE AS ON 31-03-2006 CANNOT BE SUBJECT MATTER OF INVEST IGATION IN ASSESSMENT YEAR 2007-08, AS THE PREVIOUS YEAR FOR A SSESSMENT YEAR 2007-08 WAS THE PERIOD FROM 01-04-2006 TO 31-03-200 7 AND DURING THAT PERIOD THERE WAS NO CASH RECEIPTS. THE ASSESS EE RELIED ON THE ITA NO.19(B)/2011 3 DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F BALADIN RAM VS CIT 71 ITR 427(SC) WHEREIN IT AS BEEN HELD AS FO LLOWS; IT IS NOW WELL SETTLED HAT THE ONLY POSSIBLE WAY IN WHICH INCOME FROM AN UNDISCLOSED SOURCE CAN BE ASSESSED O R REASSESSED IS TO MAKE THE ASSESSMENT ON THE BASIS T HAT THE PREVIOUS YEAR FOR SUCH AN INCOME WOULD BE THE ORDIN ARY FINANCIAL YEAR. EVEN UNDER THE PROVISIONS EMBODIED IN SEC.68 O THE IT ACT, 1961 IT IS ONLY WHEN ANY AMOUNT IS FO UND CREDITED IN THE BOOKS OF ASSESSEE FOR ANY PREVIOUS YEAR THAT THE SECTION WILL APPLY, AND THE AMOUNT SO CREDITED MAY BE CHARGED TO TAX AS THE INCOME OF THAT PREVIOUS YEAR. IF THE ASSESSEE OFFERS NO EXPLANATION OR THE EXPLANATION O FFERED BY HIM IS NOT SATISFACTORY. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS N.L.SATHYANARAYA NA SETTY 129 ITR 226(KAR.) WHEREIN IT HAS BEEN HELD AS UNDER; THE TRIBUNAL HELD THAT THE AMOUNT COULD BE TREATE D ONLY AS INCOME FROM OTHER SOURCES, AND THAT THE PRE VIOUS YEAR IN RESPECT OF SUCH INCOME FROM UNDISCLOSED SOU RCES WOULD BE THE FINANCIAL YEAR AND THE ASSESSMENT YEAR IN WHICH IT COULD BE ASSESSED WOULD BE THE ASSESSMENT YEAR 1959-60. 5. ON THE ABOVE SUBMISSIONS, THE CIT(A) HELD AS FO LLOWS; THE FACTS OF THE CASE AND ALSO THE ASSESSEES SUBM ISSIONS AS PUT FORTH ABOVE HAVE BEEN CONSIDERED BY ME. THE ASSESSEE HAS FURNISHED THE BALANCE SHEET AS ON 31-0 3-2006 WHEREIN CASH ON HAND HAS BEEN DISCLOSED AT RS.15,05 ,497/-. OBVIOUSLY, THE SAME WOULD BE THE OPENING BALANCE IN THE CASH BOOK AS ON 01-04-2006. CORRESPONDINGLY, THE SAME AMOUNT WAS RECORDED IN THE CASH BOOK AS OPENING CAS H BALANCE AS IN THE BEGINNING OF THE PREVIOUS YEAR. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO WAS NOT S ATISFIED THAT THERE WOULD BE CLOSING BALANCE OF RS.15,05,497 /- BY OBSERVING THAT THE ASSESSEE HAS NOT MAINTAINED BOOK S OF ITA NO.19(B)/2011 4 ACCOUNT AND THE INCOME WAS OFFERED U/S 44F SINCE HE ASSESSMENT YEAR 1999-2000. HENCE, NO INCOME WAS AVAILABLE TO BE CARRIED AND ACCUMULATED. IN THE BA NK ACCOUNT, CLOSING BALANCE IS NOT SUFFICIENT TO WITHD RAW CASH. FROM THESE IT CAN BE SEEN THAT ON THE ONE HAND, THE AO CONSIDERED THAT CASH BALANCE APPEARS AS ON31-03-200 6 AND ON THE OTHER HAND, IT FALLS DURING THE FINANCIAL YE AR 2005-06. THUS THERE IS MERIT IN THE ASSESSEES SUBMISSION TH AT THE AO OUGHT TO HAVE EXAMINED THE BOOKS OF ACCOUNT FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2006-07. THE S ECOND OBJECTION IS THAT THE CLOSING BALANCE FOR THE PREVI OUS YEAR ENDING AS ON 31-03-2006 CANNOT BE SUBJECT TO TAX FO R THE ASSESSMENT YEAR 2007-08. THE THIRD OBJECTION IS TH AT THE AO HAS NOT BROUGHT ANY EVIDENCE TO SHOW THAT THE OPENI NG CASH IS PERTAINING TO THE PREVIOUS ASSESSMENT YEAR UNDER CONSIDERATION. FURTHER, IT IS ALSO OBSERVED THAT CASH-IN-HAND APPEARS ON THE ASSETS SIDE OF THE BALANCE SHEET AS ON 31-03- 2006 IN WHICH THE ASSET CANNOT BE TAXED AS INCOME. 6. THE CIT(A) ALSO HELD AS FOLLOWS; 4. IT IS SIGNIFICANT TO NOTE THAT DURING THE PREV IOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2006-07, THE ASSESS EE CARRIED OUT SIMILAR CONTRACT WORK AND DISCLOSED GRO SS RECEIPTS OF RS.30, 98,108/-. THE DETAILS OF CONTR ACT RECEIPTS ARE GIVEN BELOW; DATE GROSS AMOUNT NE T AMOUNT RECEIVED, AFTER DEDUCTION OF TDS, SALES TAX, ROYALTY ETC. 28/6/2005 77,519 69,832 7/2/2006 9,99,131 9,00,000 7/2/2006 9,98,968 8,97,086 23/3/2006 9,98,515 9,10,184 25/3/2006 23,975 10,000 TOTAL 30,98,108 28,08,782 ITA NO.19(B)/2011 5 OUT OF THE TOTAL RECEIPTS, RS.9.99,086/- AND RS.10,00,000/- DEPOSITED IN SB ACCOUNT BEARING NO.1 9047 WERE IN TURN, WITHDRAWN (SELF WITHDRAWALS) ON THE FOLLOW ING DATES; DATE AMOUNT (RS.) 21/2/2006 1,00,000 27/2/2006 80,000 3/3/2006 1,00,000 6/3/2006 8,000 6/3/2006 19 ,000 8/3/2006 50 ,000 9/3/2006 10,000 15/3/2006 50,000 20/3/2006 50,000 22/3/2006 80,000 24/3/2006 30,000 27/3/2006 55,000 28/3/2006 1,50,000 28/3/2006 1,00,000 -------------------------- TOTAL 8,82,00 0 ------------------------- SIMILARLY, RECEIPTS OF RS.8,97,086/- WERE DEPOSITED IN ANOTHER ACCOUNT AND THE SAME WAS ALSO WITHDRAWN AS SELF WITHDRAWALS. IT IS OBSERVED THAT THE AMOUNT WAS WI THDRAWN DURING THE MONTH OF MARCH, 2006. THEN THERE WOULD BE SUFFICIENT CASH AVAILABLE IF THE SAME HAD NOT BEEN APPLIED FOR PAYMENTS. THE AO SHOULD HAVE EXAMINED THIS ASPECT B EFORE ARRIVING AT THE CONCLUSION THAT THERE WOULD HAVE BE EN NO CASH BALANCE AVAILABLE AS ON 31-03-2006. THE AO CAN EXA MINE THIS ASPECT TO ASCERTAIN THE AVAILABILITY OF CASH BALANC E, KEEPING IN MIND THE OBSERVATIONS MADE ABOVE, IF DEEMED FIT. IN VIEW OF THESE OBSERVATIONS, THE AOS CONCLUSIONS ARE ON WRONG FOOTING AD WITHOUT ANY SUPPORTING EVIDENCE. HENCE, THE ADDITION OF RS.15,05,497/- IS DELETED.. 7. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED COU NSEL FOR THE ASSESSEE AND THE LEARNED DR. THE LEARNED DR RELIED ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF C.P AKIRISAMY VS ACIT315 ITR 293 WHEREIN THE HONBLE COURT HELD THE REJECTION OF OPENING BALANCE OF CAPITAL ON THE GROUND THAT THE A SSESSEE FAILED TO ITA NO.19(B)/2011 6 PROVE THE SOURCE OF SUCH OPENING CAPITAL IN THE BAL ANCE SHEET IS VALID. THE LEARNED COUNSEL FOR THE ASSESSEE RELIE D ON THE ORDER OF THE CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE A RE OF THE VIEW THAT THE ADDITION WAS RIGHTLY DELETED BY THE CIT(A) . AS ALREADY SEEN THE CIT(A) ALSO FOUND JUSTIFICATION IN THE CLAIM OF THE ASSESSEE REGARDING THE AVAILABILITY OF OPENING CASH BALANCE AS ON 01-04-2006. THE LEARNED DR HARPED ON THE POINT HAT THE ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNTS AND DID NOT PRODUCE THE BOOKS OF ACCOUNTS DESPITE REPEATED REQUESTS BY THE AO. THE LEARNED DR COULD NOT CONTROVERT THE FINDINGS OF THE CIT(A) ON THE EXPLANATION REGARDING THE SOURCE OF CASH, EXCEPT TO SAY THAT TH E AO DID NOT HAVE OPPORTUNITY OF EXAMINING THE SAID CLAIM. APART FRO M THE ABOVE, WE ARE ALSO OF THE VIEW THAT THE OPENING CASH BALANCE CANNOT BE SAID TO BE ANY SUM FOUND CREDITED IN THE BOOKS OF THE ASSES SEE MAINTAINED FOR THE PREVIOUS YEAR WHICH IS THE YEAR FROM 01-04- 2006 TO 31-03- 2007. THE DECISIONS RELIED UPON BY THE ASSESSEE BEF ORE THE CIT(A) SUPPORT THE PLEA OF THE ASSESSEE. THE DECISION OF THE HONBLE MADRAS HIGH COURT IS CONTRARY TO THE DECISION RENDE RED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS N.L.SATHYANARAYANA SETTY, (SUPRA). THEREFORE, THE SAME WOULD NOT BE BINDING. FOR THE REASONS GIVEN ABOVE, WE CONFIR M THE ORDER OF THE CIT(A) AND DISMISS GROUND NOS.1 TO 3. 9. GROUND NOS.4,5 & 8 CAN BE TAKEN UP TOGETHER. TH ESE GROUNDS READ AS FOLLOWS; ITA NO.19(B)/2011 7 4. THE CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.4,10,900/- MADE ON ACCOUNT OF SUNDRY CREDITORS. 5. THE CIT(A) STAND THAT BOOKS/DOCUMENTS WERE IMPOUNDED BY THE AO AND THE ASSESSEE WAS NOT PREVEN TED FROM PRODUCING THE SAME BEFORE THE AO IS UNTENABLE. 8. THE CIT(A) HA ERRED IN DISALLOWING A SUM OF RS.4,80,827/- U/S 40A(3) ON ACCOUNT OF CASH PAYMENT EXCEEDING RS.20,000/- 10. THE SUM OF RS.4,10,900/- WHICH IS CHALLENGED I N GR.NO.4 AND 5 BY THE REVENUE COMPRISES OF TWO PARTS. THE FIRST P ART RELATES TO A SUM OF RS.1,69,150/- AND THE OTHER PART RELATES TO A SUM OF RS.2,41,050/-. WE WILL DEAL WITH THE TWO PARTS SEP ARATELY IN THE FOLLOWING PARAGRAPHS. BEFORE WE DEAL WITH THE ADDI TIONS CHALLENGED IN GR.NO.4 AND 5 AND 8, WE HAVE TO MAKE A REFERENCE TO A DISALLOWANCE OF RS.36,64,141/- BECAUSE THEY ARE INT ER CONNECTED TO THE DISALLOWANCES CHALLENGED IN GR.NO.4, 5 AND 8. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO DISALLOWED A SUM OF RS.36,64,141/- WHICH WAS THE SUM DEBITED IN THE P & L ACCOUNT UNDER THE HEAD LABOUR CHARGES. THE FOLLOWING WE RE THE DETAILS OF THE LABOUR CHARGES PAID BY THE ASSESSEE. I) KUMAR RS. 9,15,041 II) JAGADEESH RS. 9,23,200 III) HANUMAIAH RS. 8,74,550 IV) EMAM RS. 9,50,550 TOTAL RS.36,63,341 THE DISALLOWANCE WAS MADE BY THE AO FOR THE FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE WHILE MAKING THE AFORESAID PAYMENTS BY INVOKING THE PROVISIONS OF SC.40(A)(IA) OF THE ACT. ITA NO.19(B)/2011 8 11. NOW WE WILL DEAL WITH THE DISALLOWANCE OF RS.1 ,69,850/- WHICH IS PART OF THE DISALLOWANCE DELETED CHALLENGED IN G R.NO.4 AND 5 BY THE REVENUE. THE AO NOTICED THAT A SUM OF RS.1,69, 850/- WAS SHOWN AS OUTSTANDING AMOUNT PAYABLE TO SHRI EMAM. SINCE THE ASSESSEE DID NOT PRODUCE EMAM TO SATISFACTORILY EXP LAIN THE CREDIT IN HIS ACCOUNT, THE AO MADE AN ADDITION OF RS.1,69, 850/- U/S 68 OF THE IT ACT. THE CIT(A) FOUND THAT A SUM OF RS.9,5 0,550/- WHICH WAS LABOUR CHARGES PAID TO SHRI EMAM HAS ALREADY BE EN DISALLOWED U/S 40(A)(IA) OF THE ACT. HE THEREFORE, DELETED ADD ITION OF RS.1,69,850/-BECAUSE THE SAID AMOUNT HAS ALREADY BE EN INCLUDED IN THE SUM OF RS.9,50,550/- DISALLOWED. AGAINST THIS ORDER OF THE CIT(A), THE REVENUE HAS RAISED GROUND NOS.4 & 5. 12. WE ARE OF THE VIEW THAT AS FAR AS THE DELETION OF ADDITION OF RS.1,69,850/- IS CONCERNED, THE CIT(A) WAS JUSTIFI ED IN HIS CONCLUSIONS, AS SUSTAINING THE SAID DISALLOWANCE WO ULD AMOUNT TO MAKING DISALLOWANCE TWICE. 13. THE REMAINING SUM OF RS.2,41,050/- (4,10,900 = 1,69,850) WHICH IS CHALLENGED BY THE REVENUE IN GROUND NO.4 & 5 IS WITH REGARD TO THE OUTSTANDING AMOUNT SHOWN BY THE ASSES SEE IN THE BALANCE SHEET TOWARDS WATER CHARGES, ROAD ROLLER CH ARGES AND LABOUR WELFARE. AS FAR AS THIS ADDITION IS CONCERNED, TH E CIT(A) HAS DELETED THE ADDITION FOR THE FOLLOWING REASONS; 6.6 SO FAR AS THE ADDITIONS ON ACCOUNT OF OTHER CR EDITS ARE CONCERNED, THE ASSESSEE CONTENDS THAT THE BOOKS OF ACCOUNT AND OTHER RELEVANT MATERIALS WERE IMPOUNDED AND THE SAME WERE UNDER THE CONTROL AND CUSTODY OF THE AO. THE AO HAS NOT ALLOWED THE ASSESSEE TO TAKE PHOTOCOPIES OF THE ITA NO.19(B)/2011 9 IMPOUNDED BOOKS OF ACCOUNT AND OTHER DOCUMENTS AND HENCE, THE ASSESSEE WAS NOT IN A POSITION TO FURNIS H THE NAME AND COMPLETE ADDRESSES OF THE CREDITORS. FUR THER, IT IS STATED THAT THE AO HAS NOT MADE ANY EXERCISE TO ENS URE THE GENUINENESS OF THE CREDITS THROUGH THE ENTIRE SETS OF BOOKS OF ACCOUNT, WHICH WERE UNDER HIS CUSTODY. 6.7 IN THE REMAND REPORT, THE AO IS SILENT ON THIS ASPECT EXCEPT MERELY STATING THAT THE ASSESSEE FAILED EITH ER TO FURNISH THE FULL ADDRESS OF THE PERSONS, WHO HAVE C ARRIED OUT THE MACHINERY WORK, OR TO PRODUCE THE SAID PERSONS BEFORE HIM FOR VERIFICATION. 6.8 IT IS A FACT THAT THE ENTIRE AFFAIRS OF THE BU SINESS TRANSACTIONS AS WELL AS THE NAMES AND ADDRESSES OF THE PERSONS WITH WHOM TRANSACTIONS WERE MADE ARE AVAILA BLE IN THE BOOKS OF ACCOUNT AND THE RELEVANT PAPERS/DOCUME NTS. IN THE ABSENCE OF THE BOOKS OF ACCOUNT, THE REQUIRED I NFORMATION COULD NOT BE GATHERED BY HE ASSESSEE. IN VIEW OF T HESE FACTS, THERE IS MERIT IN THE ASSESSEES SUBMISSIONS THAT T HE AO SHOULD HAVE CAUSED ENQUIRIES AS PER THE INFORMATION AVAILABLE IN THE IMPOUNDED MATERIALS AND BROUGHT ON RECORD ANY ADVERSE FINDINGS. THEREFORE, IN MY OPINION, TH E ACTION OF THE AO IN DISALLOWING THE CREDITS OF RS.4,10,900/- IS NOT JUSTIFIED. HENCE, THE SAME IS DELETED. THUS, THE ASSESSEEE GETS RELIEF OF RS.4,10,900/-. 14. THE LEARNED DR SUBMITTED THAT THE CIT(A) OUGHT TO HAVE VERIFIED THE DETAILS AND CALLED FOR EXPLANATION FROM THE ASS ESSEE AND OUGHT NOT TO HAVE DELETED THE DISALLOWANCE MADE BY THE AO . WE HAVE CONSIDERED HER SUBMISSIONS. THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY ADMITTED THAT THE DETAILS HAVE TO BE LOOKED INTO FROM THE IMPOUNDED BOOKS AND THEREFORE, ADDITION TO THE EXTE NT OF RS.2,41,050/- CAN BE SET ASIDE AND THE ISSUE REMAND ED TO THE AO TO ENABLE THE ASSESSEE TO SATISFACTORILY EXPLAIN THE C REDIT IN QUESTION. THUS, GROUND NOS. 4 & 5 ARE PARTLY ALLOWED FOR STAT ISTICAL PURPOSES. ITA NO.19(B)/2011 10 15. AS FAR AS GROUND NO.8 IS CONCERNED, THE FACTS ARE THAT THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT T HE ASSESSEE HAD MADE CASH PAYMENTS AS FOLLOWS; I) KUMAR RS. 6,58,611 II) JAGADEESH RS. 3,96,600 III) HANUMAIAH RS. 6,82,665 IV) EMAM RS. 6,66,266 TOTAL RS.24,04,136 16. SINCE THESE PAYMENTS EXCEEDED RS.20,000/- AND WERE MADE IN CASH, THE AO INVOKING PROVISIONS OF SEC.40A(3) DISA LLOWED 20% THEREOF RESULTING IN ADDITION OF RS.4,80,827/- TO T HE TOTAL INCOME OF THE ASSESSEE. ON APPEAL BY THE ASSESSEE THE CIT(A) FOUND THAT THE AFORESAID CASH PAYMENTS WERE MADE ON ACCOUNT OF LAB OUR CHARGES WHICH WAS ALREADY DISALLOWED BY THE AO AND SUCH DIS ALLOWANCE UPHELD BY HIM. IN THE CIRCUMSTANCES, THE CIT(A) W AS OF THE VIEW THAT MAKING DISALLOWANCE U/S 40A(3) OF THE ACT WOUL D AMOUNT TO DOUBLE DISALLOWANCE. HE ACCORDINGLY, DELETED THE A DDITION MADE BY THE AO GIVING RISE TO GROUND NO.8 BY THE REVENUE BE FORE THE TRIBUNAL. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AR E OF THE VIEW THAT THE CIT(A) WAS RIGHT IN DELETING THE ADDITION MADE BY THE AO FOR THE REASON THAT THE ADDITION WOULD AMOUNT TO DOUBLE DISALLOWANCE. WE THEREFORE, DISMISS GROUND NO.8 OF THE REVENUE. 18. GROUND NOS. 6 & 7 RAISED BY THE REVENUE READS AS FOLLOWS; 6. THE CIT(A) HAS ERRED IN DISALLOWING A SUM OF RS.4,60,000/- U/S 37 ON ACCOUNT OF FAILURE TO PRODU CE THE RELEVANT DETAILS. ITA NO.19(B)/2011 11 7. THE CIT(A) STAND THAT BOOKS/DOCUMENTS WERE IMPOUNDED BY THE AO AND THE ASSESSEE WAS NOT PREVEN TED FROM PRODUCING THE SAME BEFORE THE AO IS UNTENABLE . 19. THE AO DISALLOWED THE CLAIM OF THE ASSESSEE FO R DEDUCTION OF A SUM OF RS.4,60,000/-. THE ASSESSEE HAD CLAIMED AN EXPENDITURE OF RS.23,00,095/- UNDER THE HEAD MACHINERY CHARGES, T IPPER CHARGES, TRACTOR CHARGES, WATER CHARGES, ROAD ROLLER CHARGES , COMPRESSOR CHARGES AND LABOUR WELFARE. THE ASSESSEE COULD NOT FURNISH THE FULL DETAILS VIZ., NAME AND ADDRESS OF THE PERSONS TO WH OM THE AFORESAID PAYMENTS WERE MADE. UNDER THE CIRCUMSTANCES, THE AO DISALLOWED 20% OF THE AFORESAID EXPENSES RESULTING AN ADDITION OF RS.4,60,000/-. ON APPEAL BY THE ASSESEEE, THE CIT( A) DELETED THE DISALLOWANCE FOR THE FOLLOWING REASONS; 7.3 A PERUSAL OF THE ASSESSMENT ORDER REVEALS THA T THE DISALLOWANCE WAS MADE SINCE THE ASSESSEE DID NOT PR ODUCE THE COMPLETE DETAILS. IN THE REMAND REPORT ALSO, TH E AO HAS NOT REPORTED ANY SPECIFIC FINDING AS TO WHETHER THE EXPENDITURE CLAIMED IS EXCESSIVE, BOGUS OR NOT RELA TED TO THE ASSESSEE BUSINESS. ON THE OTHER HAND, THE ASSESSEE REITERATED THAT THE ENTIRE BOOKS OF ACCOUNT WERE UN DER THE AOS CUSTODY AND THE RELEVANT INFORMATION COULD HAV E BEEN CULLED OUT BY HIM FROM THE BOOKS OF ACCOUNT. THER E WAS NO NECESSITY FOR THE AO TO CALL UPON THE ASSESSEE TO V ERIFY THE BOOKS OF ACCOUNT AND FURNISH THE INFORMATION. 7.4 I FIND MERIT IN THE ASSESEES SUBMISSION THAT THE BOOKS OF ACCOUNT WERE IMPOUNDED AND KEPT UNDER HIS CUSTOD Y AND COPIES OF THE SAME WERE NOT PROVIDED TO THE ASSESSE E. SINCE THE BOOKS OF ACCOUNT AND OTHER MATERIALS WERE IN HI S CUSTODY, HE COULD HAVE EXAMINED AND, IF ANY ADVERSE FINDINGS WERE FOUND, THE ASSESSEE COULD NOT FURNISH THE REQUISITE DETAILS. IT CANNOT BE THE GROUND FOR DIS ALLOWANCE. IN VIEW OF THESE FACTORS, THERE IS NO JUSTIFICATION O MAKE THE DISALLOWANCE. HENCE, THE DISALLOWANCE OF RS.4,60,0 00/- IS DELETED. ITA NO.19(B)/2011 12 20. AT THE TIME OF HEARING, IT WAS AGREED BY THE PA RTIES THAT THE ISSUE SHOULD BE REMANDED TO THE AO TO ENABLE THE AO TO VERIFY THE BOOKS OF ACCOUNTS AND CULL OUT THE REQUIRED INFORMA TION AND CONSIDER THE ISSUE AFRESH. WE ACCORDINGLY, SET ASI DE THE ORDER ON THIS ISSUE AND REMAND THE SAME TO THE AO FOR FRESH CONSIDERATION, TO ENABLE THE ASSESSEEE TO SUBSTANTIATE THE CLAIM FOR DEDUCTION OF THE ENTIRE SUM OF RS.23,00.095/-. FOR STATISTICAL PURPO SES, GROUND NO.6 & 7 ARE TREATED AS ALLOWED. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 29 TH JUNE, 2012. SD/- SD/- (JASON P BOAZ) (N.V.VASUD EVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE: D A T E D : 29-06-2012 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-IV, BANGALORE. 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE (1+1) SR. PRIVATE SECRETARY, ITAT, BANGALORE