The ACIT, Circle-8, Surat V. M/s. Maruti Construction, Surat

ITA 2141/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1738 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 26-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 30-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C S SHARMA
• Assessee Lawyers: R B SHAH
• Keywords: Business expenditure; Bad and doubtful debts
• Section: 143(3)

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.2141/AHD/2011 [ASSTT.YEAR 2008-09] ACIT, CIR.8 SURAT. VS M/S.MARUTI CONSTRUCTIONS 407, KRISHNA APARTMENT, AMBICA NAGAR 2, KATARGAM ROAD SURAT 395 001. PAN : AAHFM 9988 J )* / (APPELLANT) +, )* / (RESPONDENT) REVENUE BY : SHRI C.S. SHARMA , SR.DR ASSESSEE BY : SHRI R.B. SHAH, AR / DATE OF HEARING : 26/04/2016 / DATE OF PRONOUNCEMENT: 02/05/2016 -./ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LD.CIT(A)-V, SURAT DATED 25.5.2011 PASSED FOR THE A SST.YEAR 2008-09. 2. GROUND NO.1 AND 2 ARE INTER-CONNECTED WITH EACH OTHER. IN THESE GROUNDS, THE GRIEVANCE OF THE REVENUE IS THAT THE L D.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.59,39,127/- WHICH WAS M ADE BY THE AO BY MAKING A DISALLOWANCE OUT OF PRIOR PERIOD EXPENSES. ITA NO.2141/AHD/2011 2 3. BRIEF FACTS OF THE CASE RE THAT THE ASSESSEE IS AN INDIVIDUAL RUNNING PROPRIETOR-SHIP CONCERN IN THE NAME OF M/S.MARUTI CONSTRUCTIONS. HE HAS FILED HIS RETURN OF INCOME ELECTRONICALLY ON 30 .9.2008 DECLARING TOTAL INCOME AT RS.45,88,990/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT WAS ISSUED AND SERVED UPON THE ASSESSEE ON 27.8 .2009. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASS ESSEE HAD DEBITED AN AMOUNT OF RS.59,39,127/- WITH RESPECT TO THE CONSTR UCTION CARRIED OUT AT JAMNAGAR. IT FURTHER MERGES OUT THAT THE ASSESSEE HAS CARRIED OUT CONSTRUCTION WORK FOR M/S.ESSAR CONSTRUCTION (INDIA ) LTD. THE ASSESSEE HAS RAISED THREE BILLS TOTALING TO RS.2,76,46,141/- . M/S.ESSAR PROJECT LTD. HAS SANCTIONED A SUM OF RS.2,17,07,014/-. THERE WA S A DIFFERENCE OF RS.59,39,127/-. ACCORDING TO THE ASSESSEE, IT HAS CARRIED OUT THE WORK IN THE ASSTT.YEAR 2005-06. THE BILLS WERE RAISED IN T HAT YEAR. THE ASSESSEE HAS RECOGNIZED THE CONTRACT RECEIPT OF RS.2,76,46,1 41/- IN THE ASSTT.YEAR 2005-06. IN THE ACCOUNTING YEAR RELEVANT TO THE A. Y.2008-09. THE ASSESSEE HAS WRITTEN OFF A SUM OF RS.59,39,127/- ON THE GROUND THAT OUT OF TOTAL BILLS RAISED BY IT AGAINST THE ESSAR CONST RUCTION LTD., THERE ARE NO CHANCE TO RECOVERY OF THIS AMOUNT, BECAUSE, THE PAY ER HAS RETAINED THIS AMOUNT ON ACCOUNT OF CERTAIN DISPUTES. THE ASSESSE E HAS CLAIMED THE DEDUCTION OF THIS AMOUNT. THE AO HAS DISALLOWED TH E CLAIM OF THE ASSESSEE. THE TWIST OF THE DISPUTE IS THAT THE ASSE SSEE, INSTEAD OF CLAIMING IT AS BAD DEBTS, HAS REDUCED THE SALES IN THE LEDGE R TO THAT EXTENT. THE CONTENTIONS OF THE ASSESSEE IS THAT BY CHANGING NOM ENCLATURE OF THE ACCOUNTS, WOULD NOT CHANGE THE NATURE OF RECEIPTS. THE AO DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND OBSERVED THAT THE EXPENSES ITA NO.2141/AHD/2011 3 PERTAINING TO F.Y.2005-06 AND IT CANNOT BE CLAIMED IN THE F.Y.2007-08. ACCORDINGLY, HE MADE ADDITION OF RS.59,39,127/-. 4. DISSATISFIED WITH THE ACTION OF THE ASSESSEE, TH E ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A). HE MADE FOLLOWING SUBM ISSIONS: 5.2. BEFORE ME, THE AR OF THE APPELLANT ALSO CONTE NDED THAT THE NATURE OF TRANSACTIONS BETWEEN ASSESSEE AND COMPANY IS RECURRING IN NATURE AND IT IS GENERAL PRACTICE OF HIM TO CRED IT THE CONTRACT RECEIPTS AT TIME OF RAISING THE BILLS TO THE COMPAN Y WITH THE AMOUNT OF BILL RAISED BY HIM AND OFFER IT FOR TAXATION ACC ORDINGLY IN THE RELEVANT ASSESSMENT YEAR. THE COMPANY SANCTIONED TH E BILLS RAISED BY THE ASSESSEE AFTER RECONCILING THE WORK DONE BY HIM CERTIFIED BY THE ENGINEER OF THE COMPANY AND AFTER THAT PAYMENTS MADE BY THE COMPANY TO THE CONTRACTOR AFTER DEDUCTING TAX ON TH E SAME. SOMETIME THE BILLS RAISED BY THE ASSESSEE IS PARTLY SANCTIONED BASED ON THE COMPLETION OF WORK AND PAYMENTS ARE MA DE IN ROUND FIGURES. REGARDING DISPUTED CONTRACT RECEIPTS ALSO THE ASSESSEE RAISED TOTAL BILLS OF RS. 2,76,46,141/- AND OUT THE SAME THE COMPANY CLEARED THE AMOUNT OF RS.78,00,000/- , RS.1 ,25,00,000/- AND RS.14,07,014/- TOTALING TO RS.2,17,07,014/-. DU RING THE YEAR IN CONCERN THE ASSESSEE DISCUSSED THE DIFFERENCE AMOUN T WITH THE COMPANY AND TRIED TO RECONCILE THE SAME AS THERE IS LONG GAP OF ALMOST THREE YEARS PASSED AWAY. THE COMPANY CLEARED THE MATTER REPLYING THAT THE AMOUNT APPROVED AND SANCTIONED BY THE ENGINEER OF THE COMPANY IF FULL AND FINAL AMOUNT AND THERE I S NOT FURTHER OUTSTANDING THESE BILLS ARE CONCERNS AS PER RECORDS OF THE COMPANY. AS THE AMOUNTS IS PARTS OF DEBTS WHICH IS IRRECOVERABLE AND THE SAME IS ALREADY OFFERED FOR TAXATION BY THE ASSESSEE IN PREVIOUS YEAR I.E. A.Y. 2006-07, HENCE WRITTEN OFF THE SAME AMOUNT BY PASSING JOURNAL ENTRY BY DEBITING CONTRACT RECEI PTS ACCOUNT AND CREDITING ESSAR CONSTRUCTION COMPANY ACCOUNT IN HIS BOOKS OF ACCOUNT DURING THE YEAR. THE AR OF THE APPELLANT FURTHER CONTENDED THE VIEW OF THE LEARNED AO REGARDING ACCOUNTING ENTRY AND NON-PROVIDING EVI DENCE TO JUSTIFY THE CLAIM OF HIS DEBTS BECAME IRRECOVERABLE AND STATED THAT ACCORDING TO SEC. 36(L)(VII) OF THE I.T. ACT., IF A DEBT HAS BEEN ITA NO.2141/AHD/2011 4 WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE, IT WILL SUFFICIENT FOR CLAIMING BAD DEBTS AND AFTER AMENDED PROVISIONS OF THIS SECTION W.E.F. 1ST APRIL 1989 WORD 'ESTABLISHE D' HAS BEEN DELETED AND ONCE THE ASSESSEE WRITE OFF THE AMOUNTS IN THE BOOKS OF ACCOUNTS, HE IS ENTITLED TO CLAIM DEDUCTION FOR THE SAME WITHOUT FURTHER PROVIDING ANY EVIDENCE TO ESTABLISH THE FAC TS BEFORE ASSESSING OFFICER. THE AR OF THE ASSESSEE RELIED ON VARIOUS JUDGMENTS TO PROVE HIS CONTENTION. 5. THE LD.CIT(A) HAS ACCEPTED THE CONTENTIONS OF TH E ASSESSEE AND DELETED THE ADDITION. 6. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT THE AS SESSEE HAS SUBMITTED THE DETAILS OF RECEIPTS. HE HAS DISCLOSED THE BILL AMOUNTS, THE AMOUNTS SANCTIONED BY ESSAR PROJECTS AND THE DIFFERENCE. T HE ASSESSEE HAS ALSO DISCLOSED INVOICE NUMBERS TO THE AO AND PRODUCED TH E DETAILS. THE AREA OF THE DISPUTE BETWEEN THE ASSESSEE AND THE AO ARE THE INTERPRETATION GIVEN TO THE TRANSACTION. ACCORDING TO THE ASSESSE E, IT HAS RECOGNIZED THE CONTRACT RECEIPTS IN THE F.Y.2005-06, BUT COULD NOT REALIZE THE TOTAL RECEIPTS, AND THEREFORE, IN THE ASSTT.YEAR 2008-09 I.E. F.Y.2007-08, HE HAS REDUCED THE SALES. HAD HE CLAIMED BAD DEBTS, T HERE COULD NOT BE ANY PROBLEM TO THE AO. IN OUR OPINION, INSTEAD OF STRI CTLY GOING BY THE ACCOUNTING TREATMENT GIVEN BY THE ASSESSEE IN THE B OOKS, THE LD.AO OUGHT TO HAVE VISUALIZED THE TRANSACTION ITSELF AND IF A SALE WAS RECOGNIZED BY THE ASSESSEE AND ACCOUNTED IN THE BOO KS, ON THE BASIS OF WHICH, THE TOTAL INCOME WAS COMPUTED, BUT ACTUALLY HE FAILED TO REALIZE THOSE SALES, THEN, THE UNREALIZED AMOUNTS WILL BE B AD DEBT TO THE ASSESSEE OR A BUSINESS LOSS. THAT COULD BE CLAIMED BY THE A SSESSEE IN SUBSEQUENT PERIOD. THE LD.AO HAS CONSTRUED THE TRANSACTION IN DIFFERENT MANNER, AS ITA NO.2141/AHD/2011 5 IF ASSESSEE HAS CLAIMED DEDUCTION OF EXPENDITURE. IN THAT CONTEXT HE MADE REFERENCE TO THE CONFIRMATION FROM ESSAR. HE OUGHT TO HAVE RECONCILED THE CONTRACT RECEIPT ACCOUNTED BY ASSESS EE ON ACCRUAL BASIS AND ULTIMATELY REALIZED. IT ACCOUNT HAS THE LD.CIT (A) HAS CONSIDERED THIS ISSUE WITH THIS ANGLE AND DELETED THE DISALLOW ANCE. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT(A), AND THEREF ORE, THE GROUND NO.1 AND 2 ARE REJECTED. 7. THE GROUND NOS.3 AND 4 ARE INTER-CONNECTED. IN THESE GROUNDS, THE GRIEVANCE OF THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE AT 2% INSTEAD OF 10% MADE BY THE A O OUT OF LABOUR EXPENSES. 8. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA D CLAIMED LABOUR EXPENSES OF RS.2,62,38,677/-. THE LABOUR WAGES CLA IMED TO THE EXTENT OF RS.2,27,16,989/- WERE INCURRED IN CASH. THE LD.AO HAS DISALLOWED 10% OF THIS EXPENDITURE. ACCORDINGLY, THE AO MADE ADDI TION OF RS.22,71,698/-. 9. DISSATISFIED WITH THE ACTION OF THE AO, THE ASSE SSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). HE HAS MADE WRITTEN SUBMISSIONS WHICH ARE REPRODUCED BY THE LD.CIT(A) IN PARA 6.2 O F HIS ORDER. THE SAID SUBMISSIONS OF THE ASSESSEE ALONG WITH THE FINDING OF THE LD.CIT(A) IS WORTH TO NOTE. IT READS AS UNDER: 6.2 THE AR APPELLANT IN HIS WRITTEN SUBMISSION HAS CONTENDED THAT FULL SET OF LABOUR REGISTER WAS PRODUCED BEFOR E THE AO. COPY OF CERTAIN PAGES RANDOMLY SELECTED FOR EACH MONTH O F THE YEAR WAS ALSO SUBMITTED BEFORE TO MY OFFICE. THE ASSESSEE CO NTENDED THAT HE USED TO DEPLOY TWO TYPES OF LABOUR ONE CONTRACTUAL LABOUR AND ITA NO.2141/AHD/2011 6 OTHER OWN LABOUR. THE LD. AO HAD NO CONTENTION ON C ONTRACTUAL LABOUR, BUT FOR OWN LABOUR DIRECTLY DEPLOYED. THE L EARNED AO DISALLOWED 10% OF THE ABOVE LABOUR CHARGES DUE TO A BSENCE OF PAN AND FULL ADDRESS OF THE LABORERS. THE ASSESSEE MAINTAINS FULL SET OF LABOUR REGISTER ALONG WITH NAME, TYPE OF WOR K DONE, WAGES PAID AND SIGNATURE. THE AR OF THE APPELLANT FURTHER CONTENDED THAT EACH LABOURER HAD ITS DESIGNATION ALSO PRINTED ALON G WITH HIS NAME FOR EXAMPLE CARPENTER, PLUMBER ETC. MOREOVER THE AP PELLANT HAS ONLY TWO SITES WORKING IN THE YEAR IN CONCERN ONE A T SURAT AND THE OTHER AT VADINAR, JAMNAGAR. SEPARATE LABOUR REGISTE RS WERE MAINTAINED BY THE APPELLANT FOR BOTH THE PLACES. IT WAS ALSO VEHEMENTLY ARGUED BEFORE ME THAT AUDIT REPORT WITH ALL BOOKS OF ACCOUNTS WAS PRODUCED BEFORE THE AO. THE ASSESSEE H AS SHOWN AN INCREASE IN GROSS PROFIT 4.85% TO 11.27% VIS-A-VIS THE PRECEDING PREVIOUS YEAR. THE ASSESSEE WAS SUBJECTED TO SCRUTI NY U/S 143(3) IN A.Y. 06-07 & 07-08 AND NO SUCH ADDITION WERE MADE I N THE YEAR OTHER THAN SOME MINOR ESTIMATED ADDITIONS. COPY OF SUCH ORDERS WAS SUBMITTED DURING THE COURSE OF APPELLATE PROCEE DINGS BEFORE MY OFFICE. THE NATURE OF BUSINESS CARRIED OUT BY TH E APPELLANT REMAINS THE SAME AS IN THE EARLIER YEARS. THE ONLY ADVERSE INFERENCE THAT HAS BEEN DRAWN BY THE AO IS ABOUT LA BOUR REGISTER. THE ASSESSEE FURTHER SUBMITTED THAT LABOUR REGISTER IS MAINTAINED AT THE SITE PLACE WHERE IT IS ALWAYS NOT POSSIBLE T O KEEP ALL DETAILS AS WORKING CONDITIONS ARE NOT VERY HUMAN. MORE OVER DUE TO SHIFT CHANGE WORK TO WORK DETAILS CANNOT BE PROVIDED IN S UCH TYPE OF WORK AS IT IS NOT A CONTINUOUS PRODUCTION ACTIVITY BUT CONSTRUCTION ACTIVITY A PART OF INFRASTRUCTURE SECTOR. THE ADDIT ION AS MADE BY THE AO RESULTS IN A GP RATE OF 13.85% WHICH IS UNHE ARD OF IN THIS TYPE OF BUSINESS. FURTHER, THE AR ALSO SUBMITTED TH AT THE ASSESSEE HAS REDUCED HIS BURDEN OF LABOUR CHARGES VIS-A-VIS THE PREVIOUS YEAR WHEN THE LABOUR TO TURNOVER RATIO IS COMPARED. THE ASSESSEE HAD EXPENDED 49.37% OF EXPENSES ON LABOUR VIS-A-VIS TURNOVER. THE SAME WAS 29.85% OF TURNOVER IN THE YEAR IN CONC ERN. THUS THERE WAS SUBSTANTIAL REDUCTION IN LABOUR TO TURNOV ER RATIO IN SPITE OF EVER INCREASING COST OF LABOUR AS AN INPUT COST. REGARDING NON FURNISHED PAN AND FULL ADDRESSES OF LABOURER THE AS SESSEE ARGUED THAT THE LABORERS AS EMPLOYED BY THE ASSESSEE ON SI TE AND DO NOT HAVE ANY REGULAR ADDRESS. MOREOVER EXPECTING THEM T O HAVE PAN IS NEXT TO IMPOSSIBLE FOR SUCH A UNEDUCATED AND ILL ITERATE PERSONS. THE ASSESSEE ALSO CONTENDED THAT WHAT CAN BE TAX IS THE REAL ITA NO.2141/AHD/2011 7 INCOME AND NOT THE HYPOTHETICAL INCOME AND HENCE LA BOUR WAGES OF THE APPELLANT SHOULD BE ALLOWED AS AN LEGITIMATE BUSINESS EXPENDITURE. DECISION: 6.3. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER AS WELL AS THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO GONE THROUGH THE COPIES OF SUBMISSIONS MADE BY THE APPELLANT DURING ASSESSMENT PROCEEDINGS. I HAVE ALSO GONE THROUGH THE COPIES OF LABOUR REGISTER AS PRODUCED BEFORE ME. IT CAN BE CLEARLY M ADE OUT FROM THE SUBMISSIONS MADE BY THE APPELLANT DURING ASSESS MENT PROCEEDINGS THAT LABOUR REGISTER WERE PRODUCED BEFO RE THE AO, BUT THE SAME WERE NOT COMPLETE AND HAD CERTAIN INHERENT DEFECT IN IT. THE ASSESSEE WAS NOT ABLE TO FULLY SUBSTANTIATE HIS CLAIM FOR OWN LABOUR FOR WANT OF CERTAIN DETAILS AND ERRORS IN TH E LABOUR REGISTER. ON THE SIMILAR ISSUE, IN THE ASSESSEE'S OWN CASE FO R THE A.Y. 2007- 08, I HAVE RESTRICTED THIS DISALLOWANCE TO APPROXIM ATELY 2% OF TOTAL LABOUR EXPENSES. FOLLOWING THE SAID DECISION, A LUMP-SUM AMOUNT OF RS.5,25,000/- IS SUSTAINED AND THE BALANC E IS DELETED. 10. THE LD.DR, WHILE IMPUGNING THE ORDER OF THE LD. CIT(A) CONTENDED THAT IN THE ASSTT.YEAR 2007-08, THE ITAT HAS UPHELD THE DISALLOWANCE AT 10%. HE PLACED ON RECORD COPY OF THE TRIBUNAL ORDE R PASSED IN ITA NO.3054/AHD/2010. 11. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSES SEE CONTENDED THAT THERE WERE SPECIFIC REASONS FOR UPHOLDING THE DISAL LOWANCE TO THE EXTENT OF 10% IN THE ASSTT.YEAR 2007-08. HE FIRSTLY CONTE NDED THAT IN THE ASSTT.YEAR 2007-08, THE ASSESSEE DID NOT PRODUCE TH E DETAILS OF LABOUR EXPENSES, BECAUSE, IT WAS AN EX PARTE ASSESSMENT ORDER. IN THE PRESENT YEAR, THE ASSESSEE HAS PRODUCED COMPLETE DETAILS. THE AO HAS NOT POINTED OUT SPECIFIC DEFECT IN THE DETAILS MAINTAIN ED BY THE ASSESSEE. THE DEFECT POINTED OUT BY THE AO THAT THE ASSESSEE FAILED TO GIVE ITA NO.2141/AHD/2011 8 PERMANENT ACCOUNT NUMBER OF THE LABOURERS WITH THE INCOME TAX DEPARTMENT. THE LD.COUNSEL FOR THE ASSESSEE HAS EM PHASISED THAT ALL THESE LABOURERS WERE HIRED BY THE ASSESSEE AT SITE. THEY WERE NOT HAVING ANY PAN AND IT WAS NOT POSSIBLE AT ALL FOR THE ASSE SSEE TO ASK THEM TO HAVE PAN. THE ASSESSEE HAS SUBMITTED LABOUR LEDGER WHICH CONTAINED NAMES OF LABOURERS IN FULL, DESIGNATED WORK IN WHIC H HE WAS EMPLOYED I.E. CARPENTER, PLUMBER, ELECTRICIAN ETC. THE AMOU NT OF WAGES PAID TO THEM IS DISCERNIBLE, SIGNATURE/THUMB IMPRESSION ON REVENUE STAMPS WERE SUBMITTED. THE LD.CIT(A) HAS RETAINED A NOMINAL DI SALLOWANCE AT 2%, THEREFORE, THE ASSESSEE DID NOT CHOOSE TO FILE APPE AL BEFORE THE ITAT. OTHERWISE, THIS DISALLOWANCE AT 2% WOULD NOT BE REM AINED THERE. HE FURTHER CONTENDED THAT THE REVENUE CANNOT DRAW ANY BENEFIT FROM THE ORDER OF THE ITAT, BECAUSE, IN PAST IT WAS A PARTIC ULAR SITUATION, WHERE NO DETAILS WERE SUBMITTED BY THE ASSESSEE. THE LD.COU NSEL FOR THE ASSESSEE FURTHER TOOK US THROUGH THE SUBMISSION REPRODUCED B Y THE LD.CIT(A) AT PAGE NO.7 EXTRACTED SUPRA. HE ALSO TOOK US THROUGH THE SUBMISSIONS MADE BEFORE THE AO. 12. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. IT IS VERY IMPORTANT TO TAKE NOT E OF THE FINDING OF THE AO ON THIS ISSUE. IT READS AS UNDER: AFTER CAREFUL CONSIDERATION OF THE SUBMISSION MADE BY THE ASSESSEE I FOUND THAT THE CONTENTION PUT FORTH BY T HE ASSESSEE IS ACCEPTABLE TO SOME EXTENT ONLY. IT IS TRUE THAT THE GROSS PROFIT AND NET PROFIT RATIO OF THE ASSESSEE HAS BEEN INCREASED AS COMPARE TO IMMEDIATE PRECEDING YEAR. BUT THE ASSESSEE DID NOT FURNISH ALL THE DETAILS WHICH WERE ASKED DURING THE COURSE OF ASSES SMENT PROCEEDING. ASSESSEE DID NOT FURNISH THE DETAILS OF WAGES PAID BY HIM TO LABORERS SITE WISE ON ACCOUNT OF WORK COMPLE TED BY ASSESSEE AT THE DIFFERENT SITES OF ESSAR GROUP. FUR THER ASSESSEE ITA NO.2141/AHD/2011 9 DID NOT SUBMIT THE ADDRESSES AND PAN OF THE LABORER S. FURTHER ASSESSEE HAS PAID THE WAGES EXPENSES OF RS. 2,27,16 ,989/- IN CASH ONLY. IN THESE CIRCUMSTANCES AFTER CONSIDERING THE ABOVE DEFICIENCIES 1 DISALLOWED THE 10% OF THE ABOVE LABO UR WAGES EXPENSES OF RS. 22,71,698/- AND ADDED BACK TO THE T OTAL INCOME OF THE ASSESSEE FOR A.Y. 2008-09. DISALLOWANCE 22,71,698/- 13. COPY OF THE SHOW CAUSE NOTICE ISSUED BY THE AO ON 24.12.2010 HAS ALSO BEEN REPRODUCED IN THE ASSESSMENT ORDER ON PAGE NO.7. THE AO HAS ALLEGED THAT THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF LABOUR WAGES ALONG WITH NAMES AND ADDRESS AND PAN OF THE LABOURE RS, DETAILS OF WORK AT WHICH SITE THEY HAVE PERFORMED THEIR DUTIES ALON G WITH NATURE OF WORK DONE BY THEM. THE AO HAS OBSERVED THAT THE LABOUR LEDGER PRODUCED BY THE ASSESSEE DOES NOT DISCLOSE ADDRESS AND PAN OF T HE LABOURERS. IT ALSO DOES NOT DISCLOSE THE DATE OF PAYMENT. THE ASSESSE E HAS REFUTED ALL THESE ALLEGATIONS IN ITS REPLY SUBMITTED TO THE AO. AFT ER THE REPLY OF THE ASSESSEE, THE AO HAS RECORDED A FINDING EXTRACTED S UPRA. IN THE ABOVE FINDING, THE AO HAS NOWHERE ALLEGED THE SPECIFIC IN FORMATION WHICH HAS DISABLED HIM TO DEDUCE THE TRUE INCOME FROM THE CON TRACT RECEIPTS OF THE ASSESSEE. WHAT WAS THE ANGLE HE WANTED TO INQUIRE FROM THE LABOURERS ? THE ASSESSEE HAS ALLEGED THAT NAME, DATE OF PAYMENT , SITE, DESIGNATION OF THE WORKERS I.E. CARPENTERS, PLUMBER, ELECTRICIAN E TC. WERE DISCLOSED TO THE AO. IN SPITE OF THAT, THE AO SIMPLY DISALLOWED 10% OF THE EXPENDITURE BY OBSERVING THAT DETAILS WERE NOT SUBM ITTED. THE CHALLENGE OF THE ASSESSEE IS WHICH DETAIL WAS NOT SUBMITTED T O THE AO. BEFORE THE LD.CIT(A) HE HAD REITERATED HIS CONTENTIONS IN THE WRITTEN SUBMISSION. THE LD.CIT(A), THOUGH CONCURRED WITH THE AO WITH RE GARD TO THE SUBMISSIONS OF THE DETAILS, BUT SCALED DOWN THE DIS ALLOWANCE TO 2% ON ITA NO.2141/AHD/2011 10 ADHOC BASIS. HE MADE REFERENCE TO HIS ORDER IN THE ASST T.YEAR 2007-08 ALSO. NO DOUBT IN THE ASSTT.YEAR 2007-08, THE TRIB UNAL HAS RESTORED THIS DISALLOWANCE TO 10%, BUT REASONS FOR SUCH RESTORATI ON WAS THAT NO DETAILS WERE SUBMITTED BY THE ASSESSEE. IT WAS AN EX PARTE ORDER. HAD THE ASSESSEE CHALLENGED THE ORDER OF THE LD.CIT(A), PRO BABLY THIS 2% WOULD HAVE NOT REMAINED THERE IN THIS ASSESSMENT YEAR, BE CAUSE, IN OUR UNDERSTANDING THE AO HAS NOT MADE A CASE FOR ADHOC DISALLOWANCE AT 10%. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FI ND ANY MERIT IN THESE GROUNDS OF APPEAL. THESE ARE REJECTED. 14. THE GROUND NOS.5 AND 6 ARE INTER-CONNECTED WITH EACH OTHER. THE ISSUE IN THESE GROUNDS IS THAT THE ASSESSEE COULD N OT MAKE THE PAYMENT OF EMPLOYEES CONTRIBUTION TO THE PF ACCOUNT WITHIN TH E TIME STIPULATED UNDER THE PF ACT. THE AO HAS DISALLOWED THE CLAIM OF THE ASSESSEE. HOWEVER, THE LD.CIT(A) HAS DELETED THE DISALLOWANCE . WE ARE OF THE VIEW THAT THIS ISSUE IS SQUARELY COVERED AGAINST TH E ASSESSEE BY THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION LTD., 366 ITR 170. IN VIEW OF THE HONBLE GUJARAT HIGH COURTS DECISION, THE O RDER OF THE LD.CIT(A) IS SET ASIDE ON THIS ISSUE, AND THAT OF THE AO IS R ESTORED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 2 ND MAY, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 02/05/2016