The ACIT,Vapi Circle, Vapi V. Shri Ather Yakub Saiyed, Vapi

ITA 2251/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0685 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AHD
• Assessee Lawyers: CO AHD; CO NOS AHD
• Keywords: Reopening of assessment; Unexplained cash credit; Unexplained investment; Unexplained expenditure; Business expenditure; Rectification of order; Tax effect
• Section: 40A(3); 143(3); 133A; 147; 131; 68; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD .., , !' BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER SL. NO(S) ITA NO(S)/ CO NO. ASSESSMENT YEAR APPEAL(S)/CO BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 2656/AHD/2011 2007-08 THE ACIT VAPI CIRCLE- VAPI (REVENUE) M/S.ZAYBA CONSTRUCTION CO. 17/B-2, JAY TOWER VAPI SIVASSA ROAD, IMRANNAGAR, VAPI PAN: AAAFZ 3949 F (ASSESSEE) 2. CO NO. 22/AHD/12 ( IN ITA NO.2656/AHD/11 ) 2007-08 ASSESSEE REVENUE 3. 2663/AHD/11 2008-09 REVENUE ASSESSEE 4. CO NO. 23/AHD/12 ( IN ITA NO.2663/AHD/11 ) 2008-09 ASSESSEE REVENUE 5. 1694/AHD/12 2009-10 ITO VAPI WARD-3 ASSESSEE 6. 2251/AHD/2011 2008-09 ACIT VAPI CIR.VAPI SHRI ATHER YAKUB SAIYED PROP.APEX INDIA CONSTRUCTION FLAT NO.11, AZAD MANSION IMRAN NAGAR, VAPI PAN: BDKPS 4350P 7. CO NO. 208/AHD/11 ( IN ITA NO.2251/AHD/11 ) 2008-09 SH.ATHER YAKUB SAIYED,VAPI ACIT VAPI CIRCLE VAPI ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 2 - REVENUE BY : SHRI SANJAY KUMAR, SR.DR ASSESSEE BY : SHRI S.N. SOPARKAR, AR #$ / DATE OF HEARING 23/06/2016 %&'$ / DATE OF PRONOUNCEMENT 18/08/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : ALL THESE APPEALS BY THE REVENUE AND ASSESSEE ARE D IRECTED AGAINST THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOM E TAX(APPEALS)- VALSAD DATED 29/07/2011 AND 30/06/2011 FOR ASSESSM ENT YEARS (AYS) 2007-08 & 2008-09 AND DATED 23/05/2012 FOR AY 2009- 10 PERTAINING TO ASSESSEE OF THE SAME GROUP BUT DIFFERENT ASSESSMEN T YEARS (AYS) AND SOME OF THE ISSUES ARE COMMON. THE ASSESSEES HAVE ALSO FILED CROSS OBJECTIONS FOR AYS 2007-08 AND 2008-09. 2. BEFORE US, AT THE OUTSET LD.AR SUBMITTED THAT TH OUGH THE APPEALS RELATE TO THE ASSESSEES BELONG TO SAME GROUP AND DI FFERENT ASSESSMENT YEARS BUT SINCE MOST OF THE ISSUES ARE COMMON, THE SUBMISSIONS MADE BY HIM ON SUCH COMMON ISSUES WOULD BE APPLICABLE TO AL L THE APPEALS AND THEREFORE SUBMITTED THAT ALL THE APPEALS CAN BE HEA RD TOGETHER. THE LD.SR.DR DID NOT OBJECT THE AFORESAID SUBMISSIONS O F THE LD.AR. WE THEREFORE, FOR THE SAKE OF CONVENIENCE, PROCEED TO DISPOSE OF ALL THE APPEAL BY A CONSOLIDATED ORDER. ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 3 - 2.1. WE FIRST TAKE UP THE REVENUES APPEAL IN ITA N O.1694/AHD/2012 FOR AY 2009-10. 2.2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD.CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE AT 50% OF RS.12,27,746/- MADE BY THE AO ON ACCOUNT OF UNEXPLA INED EXPENDITURE ON URD PURCHASES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 3,98,214/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED EXPENDITURE ON LAB OUR PAYMENT. 3. AT THE OUTSET, THE LD.AR SUBMITTED THAT THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT AND, THEREFORE, BE DISMISSED. THE LD. SR.D.R. FAIRLY ADMITTED THAT THE TAX EFFECT ON THE IMPUGNED ADDITIONS IS LESS THAN THE LIMIT PRESCRIBE D BY THE CBDT CIRCULAR OF 10/12/2015 BEARING NO. 21 OF 2015. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS AVAILABLE ON RECORD. ON PERUSING THE GROUNDS OF APPEAL RAISED B Y THE REVENUE, WE FIND THAT REVENUE IS AGGRIEVED BY THE ORDER OF LD. CIT(A) IN RESPECT OF THE RELIEF GIVEN BY HIM. AS PER THE ANNOUNCEMENT OF CENTRAL BOARD OF DIRECT TAXES (CBDT) DATED 10/12/2015 (CIRCULAR NO. 21 OF 2015), NO DEPARTMENT APPEALS ARE TO BE FILED AGAINST RELIEF G IVEN BY LD. CIT(A) BEFORE THE INCOME TAX TRIBUNAL UNLESS THE TAX EFFEC T, EXCLUDING INTEREST EXCEEDS RS. 10 LACS AND IT FURTHER STATES THAT THE INSTRUCTIONS WILL APPLY ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 4 - RETROSPECTIVELY TO THE PENDING APPEALS. IN THE PRES ENT CASE, IT IS AN UNDISPUTED FACT THAT ON THE ADDITIONS WHICH ARE IN DISPUTE, THE TAX EFFECT IS LESS THAN RS. 10 LACS. FURTHER, IN THE ABSENCE OF ANY MATERIAL PLACED ON RECORD BY THE REVENUE TO DEMONSTRATE THAT THE ISSUE IN THE PRESENT APPEAL IS COVERED BY EXEMPTIONS SPECIFIED IN CLAUSE (8) OF THE AFORESAID CBDT CIRCULAR, WE ARE OF THE VIEW THAT THE MONETARY LIMI T PRESCRIBED BY THE INSTRUCTIONS OF THE AFORESAID CBDT CIRCULAR WOULD B E APPLICABLE TO THE PRESENT APPEAL OF THE DEPARTMENT AND THEREFORE THE PRESENT APPEAL IS NOT MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT. IN SUCH CIRCUMSTANCES, WE DISMISS THE APPEAL OF REVENUE WITHOUT EXPRESSING AN Y OPINION ON MERITS OF THE CASE. HOWEVER, IN CASE THERE IS ANY ERROR IN THE COMPUTATION OF THE TAX EFFECT INVOLVED OR IF FOR ANY REASON, THE A FORESAID CBDT CIRCULAR IS NOT APPLICABLE, IT WOULD BE OPEN TO THE REVENUE TO SEEK REVIVAL OF THE APPEAL. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.1694/AHD/2012 FOR AY 2009-10 IS DISMISSED. 6. NOW WE TAKE UP THE REVENUES APPEAL IN ITA NO.2 656/AHD/2011 FOR AY 2007-08 AND ASSESSEES CROSS OBJECTION NO.2 2/AHD/2012 FOR AY 2007-08. ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 5 - 6.1. THE RELEVANT FACTS AS CULLED OUT FROM THE MATE RIALS ON RECORD ARE AS UNDER:- 6.2. ASSESSEE IS A PARTNERSHIP-FIRM STATED TO BE E NGAGED IN THE BUSINESS OF CONSTRUCTION. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR AY 2007-08 ON 08/11/2007. THE RETURN OF INCOME WAS IN ITIALLY PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') ON 23/03/2009 AND THEREAFTER ORDER U/S.154 OF THE ACT WAS PASSED ON 25/06/2009. THE CASE WAS REOPENED BY ISSUING N OTICE U/S.148 DATED 19/05/2009 AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S.143(3) R.W.S.147 OF THE ACT VIDE ORDER DATED 31/12/2010 A ND THE TOTAL INCOME WAS DETERMINED AT RS.1,82,07,520/-. AGGRIEVED BY T HE ORDER OF THE ASSESSING OFFICER (AO), ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE ORDER DATED 29/07/2011 (IN APPEAL NO.CIT(A )/VS/261/10- 11) GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRI EVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND H AS RAISED THE FOLLOWING GROUND:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE UNEXPLAINED CASH CREDITS OF RS.1,24,88,240/- SHOWN IN THE BOOKS. 6.3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND I N ITS CROSS OBJECTION:- ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 6 - 1. LD.CIT(A) ERRED IN CONFIRMING 20% OF DISALLOWANCE OF CASH EXPENSES MADE BY AO INVOKING PROVISIONS OF SECTION 40A(3) OF THE ACT. BOTH THE LOWER AUTHORITIES ERRED IN NOT APPRE CIATING THE DOCUMENTARY EVIDENCE SUBSTANTIATING THE CLAIM THAT NO SINGLE PAYMENT EXCEEDING AMOUNT OF RS.20,000/- AT ONE TIME WAS MADE BY THE APPELLANT TO ATTRACT DISALLOWANCE OF THE EXPENS ES. LD.CIT(A) OUGHT TO HAVE DELETED SUCH DISALLOWANCE TOTALLY THA T WAS UNJUST, UNCALLED FOR AN UNWARRANTED IN LIGHT OF THE SUBMISS IONS ON RECORD. 6.4. WE FIRST PROCEED WITH REVENUES APPEAL IN ITA NO.2656/AHD/2011 FOR AY 2007-08. 6.5. A SURVEY U/S.133A OF THE ACT WAS CARRIED OUT ON 19/03/2008 AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM AND AT THAT TIME CASH BOOK WAS IMPOUNDED. ON PERUSING THE IMPOUNDED CASH-BOOK, AS SESSING OFFICER (AO) NOTICED THAT IT SHOWED NEGATIVE CASH BALANCE OF RS.72,56,362/- ON 17/02/2007. FROM THE CASH BOOKS SUBMITTED DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT THERE WERE CASH PAYMENTS OF RS.52,31,886/- UPTO 28/02/2007. THE ASSESSEE WAS T HEREFORE ASKED TO CLARIFY AS TO HOW THE CASH AMOUNTING TO RS.1,24,88, 240/- (72,56,362 + 52,31,886) WAS AVAILABLE WITH THE ASSESSEE UPTO 28/ 02/2007 FOR MAKING THE CASH PAYMENTS TO WHICH IT WAS INTER-ALIA SUBMITTED THAT THE IMPOUNDED CASH-BOOK WAS NOT COMPLETE AND THAT AO SH OULD CONSIDER THE AUDITED CASH BOOK. THE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE AO AS HE WAS OF THE VIEW THAT THE IMPOUNDED BOOK WAS FOUND FROM THE PREMISES OF THE ASSESSEE AND IT CANN OT BE REJECTED AS ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 7 - INCOMPLETE BOOKS. HE THEREAFTER CONSIDERED THE BOO K RESULTS SHOWN AS PER IMPOUNDED BOOKS TO BE ORIGINAL AND REJECTED THE AUDITED BOOK RESULTS PRESENTED DURING THE ASSESSMENT PROCEEDINGS. AO WA S OF THE VIEW THAT SINCE NO PROPER EXPLANATION WAS OFFERED FOR CASH OF RS.1,24,88,240/-, HE CONSIDERED THE SAME TO BE UNEXPLAINED CASH CREDIT A ND MADE ADDITION U/S.68 OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) WHO AFTER CONSIDERING THE S UBMISSIONS OF THE ASSESSEE DELETED THE ADDITION BY HOLDING AS UNDER:- 6.3 DECISION:- I HAVE CONSIDERED CAREFULLY THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIONS RAI SED BY THE AR OF THE APPELLANT. FROM THE ASSESSMENT ORDER WHAT IS CLEAR IS THE AO RELIED ON THE UNCOMPLETED SETS OF ACCOUNT IGNORING THE AUDITED AC COUNT. AT THE SAME TIME THE APPELLANT PLEADED BEFORE THE AO THAT THE AUDITE D ACCOUNT BE VERIFIED/EXAMINED TO DETERMINE OR DETECT ANY DEFECT S IN THE BOOKS OF A/C AND CONCEALMENT THEREOF. THE APPELLANT EXPLAINED UNDER WHAT CIRCUMSTANCES THE A/C FOR THE A.Y.2007-08 IN THE COMPUTER WAS INCOMPL ETE? THE OBSERVATIONS MADE BY THE AO FOR MAKING SUCH HUGE ADDITION WAS VE RY SIMPLE AND CASUAL. HE STATED THAT THE BOOKS OF A/C SUBMITTED BY THE ID . AR WAS NOT ACCEPTABLE AND THE BOOKS IMPOUNDED DURING THE SURVEY WAS PROPER BO OKS OF A/C AND THEREFORE THE ADDITIONS WAS MADE U/S. 68 OF THE ACT. THIS IS AN ATROCIOUS APPROACH ADOPTED BY THE AO FOR MAKING SUCH HUGE ADDITION. TH E AO COMPLETELY LOST THE SITE AND CONTRADICTED HIMSELF IN MAKING ADDITION HE RE. FOR EXAMPLE, THE NEGATIVE CASH BALANCE WHICH HE ADDED WAS TAKEN FROM THE UNCOMPLETED BOOKS WHEREAS HE PICKED UP CASH PAYMENT UPTO 28.02.2007 F ROM THE AUDITED BOOKS OF A/C SUBMITTED BY THE APPELLANT DURING THE ASSESS MENT PROCEEDING. HE HAS NOT GIVEN ANY REASONS WHY HE DISBELIEF THE RECONCIL IATION STATEMENT SUBMITTED BY THE APPELLANT OR WHY HE DID NOT ASK THE APPELLAN T TO RECONCILE THE ACCOUNTS AND FURNISHED THE EXPLANATION. THE ACTION OF THE AO IN THIS REGARDS CALLS FOR SEVERE REPRIMAND. I HAVE PERUSED THE STATEMENT FURN ISHED ABOVE BY THE APPELLANT AND FOUND NO DISCREPANCY IN THE CASH POSI TION. FURTHER, THE ID. AR SUBMITTED THAT IN THE INCOMPLETE CASH BOOK, THE ENT RY OF CASH RECEIVED ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 8 - AMOUNTING TO RS. 77,50,000/- FROM THE PARTNER, SHRI MOHMAD YAKUB AHMED SAIYAD, WHICH WAS WITHDRAWN FROM HIS PROPRIETARY FI RM'S I.E. ZAYBA CONSTRUCTION'S BANK ACCOUNT, WAS PENDING TO BE RE-E NTERED BY THE ACCOUNTANT AT THE TIME OF SURVEY. THE LAO HAS NOT CONSIDERED T HE AUDITED CASH BOOK, IN WHICH THE RECEIPTS OF RS.77,50,000/- WAS ENTERED, WHICH WAS PRODUCED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AND HAD MA DE THE ADDITION ON ACCOUNT OF INCOMPLETE CASH BOOK AMOUNTING TO RS.72, 56,362/- . FURTHER, THE LAO MADE ADDITION TO THE TUNE OF RS.52,31,886/- FOR THE MONTH OF FEBRUARY 2007 FROM THE AUDITED CASH BOOK WHICH INCLUDES RS. 18,93,510/- WAS RECORDED IN BOTH THE CASH BOOKS I.E. INCOMPLETE AND AUDITED CASH BOOK. THEREFORE RS.18,93,510/- IS TO BE DEDUCTED FROM THE AMOUNT OF RS. 52,31,886/- TO ARRIVE AT THE EXPENSES MADE FOR THE MONTH OF FEB RUARY 2007 FROM THE AUDITED CASH BOOK THE DETAILS OF WHICH ARE GIVEN IN THE TABLE ABOVE. FURTHER, THE EXPLANATION FOR THE BALANCE EXPENSE AMOUNT OF R S. 33,38,376/- (I.E. RS. 52,31,886 - RS. 18,93,510) FOR THE MONTH OF FEBRUAR Y FROM THE AUDITED CASH BOOK WAS DEMONSTRATED IN ANOTHER TABLE IN THE SUBMI SSION. AFTER CAREFULLY PERUSAL OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM CONVINCED THAT THE AO HAS TAKEN ABSURD STEPS FOR MAKING SUCH HUGE ADDITIO N. IT IS NOT COMPREHENDIBLE HOW CAN SUCH ADDITION BE MADE IGNORI NG THE GLARING DETAILS BEFORE THE AO. THUS, THE AO IS DIRECTED TO DELETE T HE ADDITION. THIS GROUND IS ALLOWED. 6.6. AGGRIEVED BY THE ORDER OF LD.CIT(A) REVENUE I S NOW IN APPEAL BEFORE US. 6.7. BEFORE US, LD.SR.DR SUPPORTED THE ORDER OF AO. LD.AR, ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND LD.CIT(A) AND SUPPORTED THE ORDER OF LD.CIT(A) 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO AD DITION U/S.68 OF THE ACT. WE FIND THAT LD.CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE HAS ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 9 - GIVEN A FINDING THAT AO HAD RELIED ON THE INCOMPLET E SET OF ACCOUNTS BY IGNORING THE AUDITED ACCOUNTS. HE HAS ALSO NOTED THAT ASSESSEE HAD ELECTRONICALLY FILED ITS RETURN OF INCOME ON 31/10/ 2007 AND THEREAFTER ORDER U/S.154 OF THE ACT WAS PASSED ON 25/06/2009 A ND SURVEY WAS CONDUCTED ON 19/03/2008 AND THEREAFTER THE CASE WAS REOPENED U/S.147 OF THE ACT WHICH MEANS THAT ASSESSEE HAD GOT ITS ACCO UNTS AUDITED MUCH BEFORE THE SURVEY WAS CONDUCTED AND WHILE PASSING T HE RECTIFICATION ORDER U/S.154 OF THE ACT AO HAD CONSIDERED THE BOOK RESUL TS SUBMITTED ALONG WITH RETURN OF INCOME FILED BY THE ASSESSEE; MEANIN G THEREBY THAT AO HAD ACCEPTED THE BOOK RESULTS FOR THE SAME PERIOD. HE HAS NOTED THAT ON ONE HAND AO HAD CONSIDERED THE NEGATIVE CASH BALANCE FR OM THE UNCOMPLETED BOOKS, WHEREAS ON THE OTHER HAND HE HAD PICKED UP T HE CASH PAYMENT UPTO 20/02/2007 FROM THE AUDITED BOOKS OF ACCOUNT S UBMITTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, WHICH H E HAD HIMSELF REJECTED AS BEING INCOMPLETE. HE HAS FURTHER GIVEN A FINDING THAT THE ADDITIONS MADE BY THE AO WAS WITHOUT ANY BASIS. BEF ORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF THE LD.CIT(A). IN VIEW OF THESE FACTS, WE SEE NO REASO N TO INTERFERE WITH THE FINDINGS OF THE LD.CIT(A) AND THUS THE GROUND OF RE VENUE IS DISMISSED. 8. IN THE RESULT, REVENUES APPEAL IN ITA NO.2656/A HD/2011 FOR AY 2007-08 IS DISMISSED. ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 10 - 9. NOW WE SHALL TAKE UP ASSESSEES CROSS OBJECTION NO.22/AHD/2012 FOR AY 2007-08. 9.1. THE SOLITARY ISSUE IN THIS CO IS WITH RESPECT TO DISALLOWANCE U/S.40A(3) OF THE ACT. 9.2. ON THE BASIS OF IMPOUNDED BOOKS OF ACCOUNTS, A O NOTICED THAT THE ASSESSEE HAD MADE CASH PAYMENTS OF RS.8 LACS TO SHR I H.Y. KHATRI ON 31/08/2006 AND RS.29,50,000/- TO SHRI BALABHAI BACH UBHAI PRAJAPATI ON 31/03/2007. ASSESSEE WAS ASKED TO EXPLAIN THE SA ME TO WHICH ASSESSEE INTER-ALIA SUBMITTED THAT THE IMPOUNDED BOOKS WERE INCOMPLETE AND THAT THERE ARE NO CASH PAYMENTS AS PER AUDITED BOOKS OF ACCOUNTS. THE SUBMISSION OF ASSESSEE WERE NOT FOUND ACCEPTABLE TO AO. AO BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE AC T, DISALLOWED THE AGGREGATE PAYMENT OF RS.37,50,000/-. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), W HO GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- 5.3. DECISION :- I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS O F THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTE NTIONS RAISED BY THE AR OF THE APPELLANT. THE AO MADE THOSE ADDITION PUR ELY BY REJECTING THE AUDITED ACCOUNT FILED BEFORE HIM AND RELYING ON THE INCOMPLETE ACCOUNT IN THE SYSTEM. THE AO HAS NOT GIVEN ANY FINDINGS IN THE ASSESSMENT ORDER, WHY THE AUDITED ACCOUNT WAS REJECTED AND UND ER WHICH PROVISIONS OF THE ACT. HE, IN THE ASSESSMENT ORDER, MERELY STATED THAT ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 11 - 'AS IMPOUNDED BOOK RESULT ARE CONSIDERED TO BE ORIG INAL AND PROPER BOOKS OF RESULT, THE BOOK RESULT PRESENTED DURING T HE ASSESSMENT PROCEEDING BY THE AUTHORISED REPRESENTATIVE WHICH A RE DIFFERENT FROM THE BOOKS RESULT AS PER IMPOUNDED BOOK RESULT ARE THEREFORE, REJECTED' COMPLETELY IGNORING THE SUBMISSIONS MADE BY THE I D. AP, DURING THE ASSESSMENT PROCEEDING. FIRST OF ALL, THE FACTS NEEDED TO BE SET STRAIGHT. THE APPELLANT FILED E-RETURN ON 31.10.200 7 ITR-V WAS FILLED ON 08.11.2007 AND THEREAFTER ORDER U/S. 154 WAS PAS SED ON 25.06.2009 ASSESSING TOTAL INCOME AT RS.19,69,278/-. THE SURVE Y U/S. 133A WAS CONDUCTED ON 19.03.2008. THEREAFTER, THE CASE WAS RE-OPENED U/S. 147 OF THE ACT. THAT MEANS, THE APPELLANT HAD AUDITED ITS ACCOUNT MUCH BEFORE THE SURVEY WAS CONDUCTED. EVEN WHILE PASSING THE RECTIFICATION ORDER U/S.154 ON 25.06.2009, THE AO HAS CONSIDERED THE BOOK RESULT SUBMITTED ALONG WITH THE E-R/I FOR THE A.Y.2007-08. IN OTHER WORDS, THE AO HAS ACCEPTED THE AUDITED BOOK R ESULT FOR THE SAME PERIOD. CAN THE BOOK RESULT BE REJECTED BY THE AO W ITHOUT ASSIGNING THE REASONS OR JUSTIFICATION? IN MY HUMBLE OPINION, THE AO CANNOT REJECT THE BOOKS OF A/C. SUMMARILY AND WITHOUT REASONS. TH E AO IS DUTY BOUND TO CLEARLY BROUGHT ON RECORD THE REASONS WHY THE BO OKS OF A/C. BE REJECTED. IN THE INSTANT CASE, A SURVEY WAS CONDU CTED ON 19.03.2008 IN THE BUSINESS PREMISES AND CERTAIN BOOKS/DOCUMENTS W ERE IMPOUNDED. DURING THE SURVEY IT WAS NOTICED THAT CERTAIN A/C F OR THE F.Y.2006-07 WERE YET TO BE COMPLETED IN THE COMPUTER. THE APPEL LANT EXPLAINED TO THE AO THAT THE A/C. HAS ALREADY BEEN COMPLETED AND THE R/I WAS FILED AS EARLY AS 31.10.2007. DUE TO THE LOSS OF DATA IN THE SYSTEM, THE DATA WERE RE-ENTERED IN COMMENSURATION WITH THE HARD COPY AVA ILABLE WITH THE APPELLANT. BUT THE AO FIRMLY IGNORED THOSE EXPLANAT ION BY THE APPELLANT. AS SEEN ABOVE, THE AO HAD ACCEPTED THE BOOK RESULT ON 25.06.2009 AT THE TIME OF PASSING RECTIFICATION ORDER MUCH AFTER THE SURVEY, THERE IS NO JUSTIFICATION IN REJECTION THE AUDITED A/C IN A CAS UAL MANNER WITH GIVING ANY REASONS FOR DOING SO. THEREFORE, THE REJECTION OF THE BOOK RESULT BY THE AO IS NOT JUSTIFIED. SECONDLY, THE ASSESSMENT WAS RE-OPENED AND COMPLETE D U/S.143(3) R.W.S.147 OF THE ACT. IN THE ASSESSMENT ORDER, THE AO HAS NOT RECORDED ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 12 - REASONS FOR SUCH REOPENING OF ASSESSMENT. THE SURVE Y WAS ON 19.03.2008 AND THE DISCREPANCY FOUND DURING THE YEA R WAS RELEVANT TO A.Y.2008-09. THERE IS NOTHING IN THE ASSESSMENT ORD ER THAT CAN BE ATTRIBUTABLE TO DISCREPANCY DETECTED PERTAINING TO A.Y. 2007-08. IN THIS CIRCUMSTANCES, THE ADDITIONS MADE BY THE AO WERE DI SCUSSED ON MERIT AND ACCEPTING THE BOOK RESULTS SHOWN BY THE APPELLA NT. 5.3.1. IN THIS CASE PAYMENTS IN CASH MADE TO SHRI H ..Y.KHATRI AND SHRI. BALABHAI BACHUBHAI PRAJAPATI AMOUNTING TO RS. 8,00, 000/- AND 29,50,000/- RESPECTIVELY ARE IN QUESTION. THE ID. A R WAS ASKED TO EXPLAIN THE DETAILS OF PAYMENT MADE TO SHRI H.Y.KHA TRI. HE SUBMITTED THAT THE PAYMENTS WERE MADE TO H. Y. KHATRI AT DIFF ERENT TIME AND NO SUCH PAYMENT OF RS. 8,00,000/- WERE MADE AT A TIME. THUS, THERE IS NO MENS-RIA OF THE APPELLANT FOR MAKING THE PAYMENT IN CASH FOR PURCHASE OF SAND FROM SHRI H. Y. KHATRI. FURTHER, IT IS THE GENERAL PRACTICE THAT, PAYMENTS WERE MADE IN CASH FOR SUCH TRANSACTION AS AND WHEN THE MATERIAL (I.E. SAND) IS RECEIVED. THE COPY OF PURCH ASE BILL IS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALONG W ITH THE COPY OF BILLS/CHALLANS FOR INDIVIDUAL TRUCKS. THESE EVIDENC ES PROVED THAT THE APPELLANT HAS NO GUILTY MIND OR ANY INTENTION TO EV ADE THE TAX ALL THE INDIVIDUAL PAYMENTS MADE IN CASH WERE GENUINE AND T HE CASH BOOK AND OTHER RECORDS WERE PRODUCED DURING THE ASSESSMENT P ROCEEDINGS U/S. 143(3) OF THE ACT BEFORE THE AO. IT IS A FACT THAT CASH PAYMENT IS INVOLVED IN PURCHASE OF SAND, STONE, GETTI, BRICKS ETC. THE APPELLANT HAS FOLLOWED THE SAME FOR PURCHASING SAND, THE APPELLAN T FAILED TO DEMONSTRATE BEFORE ME THAT ALL SUCH PAYMENTS ARE BE LOW THE PRESCRIBED LIMIT AS PER THE PROVISIONS U/S.40A(3). IN THIS CI RCUMSTANCES, I AM INCLINED TO AGREE WITH THE FINDING OF THE AO FOR AT TRACTING PROVISIONS U/S.40A(3). HOWEVER, THE AO HAD ADDED THE ENTIRE A MOUNT OF RS.8,00,000/- PAID TO SHRI KHATRI. THE FINANCE ACT , 1995 W.E.F. 1 ST APRIL, 1996, THE MANDATE OF THE PROVISIONS IS THAT TWENTY PERCENT OF SUCH EXPENDITURE SHALL NOT BE ALLOWED AS DEDUCTED AS EXPLAINED IN THE CBDT CIRCULAR NO.717, DT. 14 AUG 1996. IN VIEW OF THE ABOVE, THE AO IS DIRECTED TO DISALLOW 20% OF RS.8,00,000/- AS PER SECTION 40A(3) OF THE ACT. ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 13 - AS REGARDS THE PAYMENTS MADE TO BALABHAI BACHUBHAI PRAJAPTI OF RS.29,50,000/- THE APPELLANT ARGUED THAT ONLY RS.4, 25,000/- WAS RAISED IN HIS CASE AND THE SAME WAS PAID THROUGH CHEQUE ON LY. THERE IS A FORCE IN THE ARGUMENT OF THE LD.AR. DURING THE YEA R, THE APPELLANT HAD EFFECTED TRANSACTIONS WITH BALABHAI BACHUBHAI PRAJA PATI ONLY OF RS.4,25,000/-. THE AMOUNT WAS ALSO PAID BY CHEQUES AND THEREFORE, THERE IS NO QUESTION OF INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE AO IS DIRECTED TO DELETE THIS ADDITION MA DE. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 9.3. AGGRIEVED BY THE ORDER OF LD.CIT(A) ASSESSEE I S IN CROSS-OBJECTION BEFORE US. 9.4. BEFORE US, LD.AR REITERATED THE SUBMISSIONS M ADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT NONE OF THE C ASH-PAYMENTS MADE TO SHRI H.Y.KHATRI OR SHRI BALABHAI BACHUBHAI PRAJAPAT I EXCEEDED RS. 20,000/- IN A DAY AND IN SUPPORT OF WHICH HE PO INTED TO THE COPY OF THE LEDGER ACCOUNTS OF THOSE PERSONS WHICH ARE PLAC ED IN THE PAPER-BOOK. HE THEREFORE SUBMITTED THAT THE ADDITION BE DELETED . AS AN ALTERNATE, HE SUBMITTED THAT THE MATTER MAY BE REMITTED BACK TO T HE FILE OF AO FOR VERIFICATION AND IF THE CASH PAYMENTS ARE FOUND TO BE IN EXCESS OF RS.20,000/-, THE SAME BE DISALLOWED. THE LD.SR.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF AO AND LD.CIT(A). ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 14 - 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DI SALLOWANCE OF U/S.40A(3) OF THE ACT. BEFORE US, IT IS LD.ARS SU BMISSION THAT THERE ARE NO INSTANCES OF CASH PAYMENT EXCEEDING RS.20,000/- IN A DAY TO SHRI HY KHATRI OR SHRI BALABHAI BACHUBHAI PRAJAPATI AND IN SUPPORT OF WHICH HE HAS POINTED OUT TO THE LEDGER ACCOUNTS PLACED IN TH E PAPER-BOOK. ON THE OTHER HAND, LD.CIT(A) HAS OBSERVED THAT ASSESSEE HA D FAILED TO DEMONSTRATE THAT ALL THE PAYMENTS ARE BELOW THE PRE SCRIBED LIMIT PRESCRIBED U/S.40A(3) OF THE ACT. IN VIEW OF THE C ONTRADICTORY STAND OF BOTH THE PARTIES AND IN VIEW OF THE ALTERNATE SUBM ISSION OF LD.AR, WE ARE OF THE VIEW THAT IN THE INTEREST OF JUSTICE, ONE MO RE OPPORTUNITY BE GRANTED TO THE ASSESSEE TO DEMONSTRATE BEFORE AO THAT THERE ARE NO PAYMENT IN EXCESS OF THE LIMIT PRESCRIBED U/S.40A(3) OF THE AC T. WE THEREFORE RESTORE THE ISSUE TO THE FILE OF AO TO DECIDE THE ISSUE OF DISALLOWANCE U/S.40A(3) IN ACCORDANCE WITH LAW AFTER CONSIDERING THE SUBMIS SION OF THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO PROMPTLY FURNISH A LL THE NECESSARY EVIDENCES IN SUPPORT OF ITS CLAIM. THUS, THIS GROU ND OF ASSESSEES CO IS ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, ASSESSEES CO NO.22/AHD/2012 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 15 - 12. NOW WE TAKE UP THE REVENUES APPEAL IN ITA NO.2 663/AHD/2011 FOR AY 2008-09 AND ASSESSEES CROSS OBJECTION NO.23 /AHD/2012 FOR AY 2008-09. 12.1. REVENUE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE SUPPRESSION OF SALES TO R S.90,04,081/- SHOWN IN THE BOOKS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING THE DISALLOWANCE MADE U/S.40A (3) OF RS.14,74954/-. 12.2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS CO:- 1. LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMI NG DISALLOWANCE OF LEGITIMATE BUSINESS EXPENSES OF RS.16,66,815/- INCU RRED BY THE APPELLANT THAT IS SUPPORTED BY THIRD PARTY EVIDENCE. LD.CIT( A) DESPITE HAVING ACCEPTED THE AUDITED ACCOUNTS OF THE APPELLANT CONF IRMED DISALLOWANCE ON THE BASIS OF CONJECTURE, SURMISES AND SUSPICION. LD.CIT(A) OUGHT TO HAVE DELETED SUCH DISALLOWANCE OF EXPENSES INCURRED FOR COMPLETION OF THE PROJECTS UNDERTAKEN BY THE APPELLANT. 2. LD.CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMIN G ADDITION OF RS.8.45 LACS @ 13% OF RS.65 LACS AS PER THE PAYMENT DETAILS TO DIRECTOR OF ALOK INDUSTRIES IN IMPOUNDED DOCUMENT FOUND DURING SURVE Y. LD.CIT(A) SIMPLY RELYING ON THE APPELLATE ORDER OF THE PARTNE R OF THE FIRM CONFIRMED THE ADDITION IN THE HANDS OF THE APPELLAN T IGNORING THE SUBMISSIONS OF THE APPELLANT. LD.CIT(A) OUGHT NOT TO HAVE MADE SUCH ADHOC ADDITION. ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 16 - 13. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE DOES NOT WISH TO PRESS THE CROSS OBJECTION (FOR AY 2008-09) FILED BY THE ASSESSEE. 13.1. IN VIEW OF THE AFORESAID SUBMISSIONS OF LD.A R THE ASSESSEES CROSS-OBJECTION ARE DISMISSED AS NOT PRESSED. 14. REVENUES APPEAL FOR AY 2008-09 14.1. FIRST GROUND IS WITH RESPECT TO ADDITION ON A CCOUNT OF SUPPRESSED SALES. 14.2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED THAT AS PER IMPOUNDED BOOKS, THE PROFIT UPTO 08/08/2008 WAS SHOWN AT RS.1,56,76,680/- WHEREAS AS PER AUDITED ACCOUNTS, THE PROFITS WAS RS.22,82,387/-. HE ALSO NOTICED THAT AS PER THE AUDITED ACCOUNTS, CASH ON HAND WAS SHOWN AT RS.1,28,048/-, WHEREAS AS PER THE CASH BOOK WHICH WAS PREPARED UPTO 08/08/2008 AND WHICH WAS IMPOUNDE D, THE CASH AVAILABLE WAS SHOWN AT RS.1,03,53,333/-. HE ALSO N OTICED THAT THE SALES FIGURE AS PER THE AUDITED ACCOUNTS AND AS PER THE I MPOUNDED BOOKS WAS SHOWN AT RS.3.55 CRORES. THE ASSESSEE WAS ASKED T O CLARIFY THE DIFFERENCE IN CASH BALANCES AND PROFITS AS PER THE AUDITED ACCOUNTS AND IMPOUNDED BOOKS, TO WHICH IT WAS INTER-ALIA SUBMIT TED THAT THE IMPOUNDED BOOKS WERE THE INCOMPLETE BOOKS AND THERE FORE BOTH ARE NOT COMPARABLE. THE ASSESSEES SUBMISSION WAS NOT FOUN D ACCEPTABLE TO THE AO. SINCE THE SUPPRESSED PROFIT AS PER THE IMPOUND ED BOOKS WAS MORE ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 17 - THAN RS.1,33,83,293/- (RS.1,56,76,680 RS.22,82,38 7) AND THE AMOUNT OF UNEXPLAINED EXPENDITURE OF RS.1,02,25,285/- (RS.1,0 3,53,333 RS.1,28,048), HE MADE ADDITION OF SUPPRESSED PROFIT OF RS.1,33,83,293/- AS ADDITIONAL INCOME (OF THE HIGHER AMOUNT BEING RS .1,33,83,293/-). AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO DELETED THE ADDITION BY OBSERVING AS UNDER:- 5.3. DECISION :- I HAVE CONSIDERED CAREFULLY THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTION R AISED BY THE AR OF THE APPELLANT. LIKE THE PREVIOUS YEAR ASSESSMENT IN T HIS YEAR TOO THE AO RELIED ON THE INCOMPLETE SETS OF BOOKS OF A/C INSTEAD OF A UDITED A/C. THE ISSUE CONTEMPLATED BY THE AO IN THE ASSESSMENT ORDER WAS OF SALES SUPPRESSION DURING THE YEAR. THE FACTUM OF THE CASE IS THAT TH E APPELLANT IS ENGAGED IN THE CONSTRUCTION BUSINESS. A SURVEY U/S. 133A OF THE AC T WAS CARRIED OUT ON 19.03.2008 AT THE BUSINESS PREMISES OF THE FIRM. ST ATEMENT U/S. 131 OF THE ACT OF ONE OF THE PARTNERS SHRI MOHMAD YAKUB SAIYED WAS RECORDED ON 24.03.2008 AND CONCLUDED ON 25.03.2008. THE APPELLA NT HAS E-FILLED ITS RETURN OF INCOME ON 30.09.2008. DURING THE ASSESSME NT PROCEEDING, THE AO ASKED THE APPELLANT TO JUSTIFY THE WHY BOOK AUDITED BOOK RESULT SHOULD BE ADOPTED INSTEAD OF THE BOOK RESULT AS PER IMPOUNDED BOOKS. THE APPELLANT SUBMITTED BEFORE THE AO THAT THE IMPOUNDED BOOKS AR E INCOMPLETE AND THE R/I WAS FILED AFTER THE ACCOUNT WAS STATUTORILY AUDITED U/S.44AB OF THE ACT. THE APPELLANT FILED AN AFFIDAVIT ON 31.12.2010 DECLARIN G THAT THE BOOKS OF A/C WAS AUDITED AND THE RESULTS ARE CORRECT. FURTHER, THE A PPELLANT FILED AN AFFIDAVIT FROM AUDITOR CERTIFYING THAT THE A/C WAS AUDITED BY THEM. HOWEVER, THE AO DID NOT AGREE WITH THE APPELLANT'S PLEA AND ADOPTED THE FIGURE/RESULT FROM THE IMPOUNDED BOOKS. THE AO HAS NOT GIVEN ANY FINDINGS IN THE ASSESSMENT ORDER, WHY THE AUDITED ACCOUNT WAS REJECTED AND UNDER WHIC H PROVISIONS OF THE ACT. CAN THE BOOK RESULT BE REJECTED BY THE AO WITHOUT A SSIGNING THE REASONS OR JUSTIFICATION? IN MY HUMBLE OPINION, THE AO CANNO T REJECT THE BOOKS OF A/C. SUMMARILY AND WITHOUT REASONS. THE AO IS DUTY BOUND TO CLEARLY BROUGHT ON RECORD THE REASONS WHY THE BOOKS OF A/C. BE REJECTE D. IN THE INSTANT CASE, A SURVEY WAS CONDUCTED ON 19.03.2008 IN THE BUSINESS PREMISES AND CERTAIN BOOKS/DOCUMENTS WERE IMPOUNDED. DURING THE SURVEY I T WAS NOTICED THAT CERTAIN A/C FOR THE F.Y.2007-08 WERE YET TO BE COMP LETED IN THE COMPUTER. THE ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 18 - APPELLANT EXPLAINED TO THE AO THAT THE A/C HAS ALRE ADY BEEN COMPLETED AND THE R/I WAS FILED AS EARLY AS 30.09.2008. THE APPELLANT ALSO CONTENDED THAT THE R/I WAS FILED ON THE BASIS OF AUDITED ACCOUNT. THE AO H AD NOT FOUND ANY DEFICIENCY IN THE AUDITED ACCOUNT. BUT THE AO FIRML Y IGNORED THOSE EXPLANATIONS OFFERED BY THE APPELLANT AND RELIED ON THE ACCOUNT AS ON THE DATE OF SURVEY. THERE IS NO JUSTIFICATION IN REJECTION T HE AUDITED A/C IN A CASUAL MANNER WITH GIVING ANY REASONS FOR DOING SO. THEREF ORE, THE REJECTION OF THE BOOK RESULT BY THE AO IS NOT JUSTIFIED. HAVING CONS IDERED THE FACTS AND CIRCUMSTANCES UNDER WHICH THE AO REJECTED THE BOOK RESULT, IT IS NECESSARY TO EXAMINE THE CONTEXT OF THE ADDITION MADE BY THE AO IN THIS CASE. THE AO FOUND PROFITS AS ON THE DAY OF SURVEY (19.03.2008) WAS RS. 1,56,76,680/- BUT AS PER THE AUDITED A/C. THE PROFI T SHOWN AT THE END OF THE FINANCIAL YEAR WAS RS.22,88,387/-. THE SALE FIGURE ON THE DATE OF SURVEY AND AT THE YEAR END REMAINED SAME AT RS.3.55 CRORES. THE A PPELLANT EXPLAINED THAT ON THE DATE OF SURVEY THE A/C WAS INCOMPLETE AND SO ME EXPENDITURES WERE YET TO BE RECORDED IN THE BOOKS WHICH WAS COMPLETED AT THE YEAR END AND THE A/C WAS DULY AUDITED BY THE AUDITOR. THE AO MADE ADDITI ON TO THE INCOME OF THE APPELLANT THE DIFFERENCE OF PROFIT ARRIVED ON 19.03 .2008 AND THE YEAR END PROFIT CALCULATED BY THE APPELLANT. THE APPELLANT A LSO CONTENDED THAT INCOME CANNOT BE DETERMINED FROM THE UNCOMPLETED A/C. IN T HIS CIRCUMSTANCES, IT IS APPROPRIATE TO ADOPT THE AUDITED BOOK RESULT IN THI S CASE. DURING THE APPELLATE PROCEEDING THE APPELLANT WAS ASKED TO PRODUCED THE BOOKS OF A/C INCLUDING B/S AND P&L A/C. FURTHER, THE APPELLANT WAS ASKED T O JUSTIFY WHICH ARE THE EXPENDITURE INCURRED BEFORE THE DATE OF SURVEY AND YET TO BE ENTERED IN THE BOOKS OF A/C. THE APPELLANT SUBMITTED 3 MONTHS EXPE NSES FROM JANUARY 2008 TO MARCH 2008 WERE YET TO BE ENTERED IN THE BOOKS O F A/C. DURING THE APPELLATE PROCEEDING THE ID. AR WAS ASKED TO SUBMIT P&L A/C. AND TRIAL BALANCE FOR THE PERIOD FROM JANUARY 2008 TO MARCH 2 008. THE ID. AR ALSO WAS ASKED TO EXPLAIN DETAILS OF EXPENDITURE INCURRE D WITH EVIDENCES DURING THESE THREE MONTHS. THE APPELLANT SUBMITTED THAT TH E APPELLANT TOOK PROJECT [GREEN PARK ENTERPRISE] FOR CONSTRUCTION OF 4 BUILD INGS CONSISTING OF 80 FLATS. THE APPELLANT ALSO CONSTRUCT FACTORY SHED OF ALOK I NDUSTRIES LTD. AS AND WHEN THE PART OF THE CONSTRUCTION COMPLETED, THE APPELLA NT RAISED THE BILLS TO THE PARTY. DURING PERIOD FROM JANUARY, 2008 TO MARCH, 2008 WORK WAS UNDER THE PROGRESS. THEREFORE, THE COST WAS CONTINUED TO BE I NCURRED IN THE SAME PERIOD AND THE COST OF CONSTRUCTION INCLUDES PURCHASE OF M ATERIALS (INCLUDING WAGES AND DIRECT EXPENSES). FURTHER, IT IS SUBMITTED FURT HER THAT DURING THE MONTH OF APRIL, 2008, APPELLANT RAISED THE BILLS FOR BOTH TH E PROJECT I.E. GREEN PARK ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 19 - ENTERPRISES AND ALOK INDUSTRIES LTD. AS THE PART OF THE PROJECT WAS COMPLETED IN THAT MONTH. THE LEDGER COPY FOR THE SAME IS ENCL OSED HEREWITH FOR READY REFERENCE. FURTHER, DURING THE PERIOD FROM JANUARY, 2008 TO MARCH, 2008, FOLLOWING EXPENSES INCURRED WHICH FURTHER REDUCED T HE PROFIT;- PARTICULARS AMOUNT IN RS. FABRICATION WORKS 15,79,550 BUILDING INTERIOR EXPENSES 47,896 ELECTRIC REPAIR & MAINTENANCE EXPENSES 39,360 TOTAL 16,66,815 AS THE SALES BILLS WERE NOT ISSUED AFTER THE MONTH OF DECEMBER, 2007, BUT THE MATERIAL COST AND DIRECT EXPENSES WERE TO BE INCURR ED, IT IS CLEAR THAT AS AND WHEN THE PART OF THE PROJECT WAS COMPLETED AND THE COMPLETION CERTIFICATE WAS RECEIVED FROM THE ARCHITECT, THE BILL WAS ISSUED TO PARTY. THE LAO NOT CONSIDERED THE SAME AS THE SAID EXPENSES WERE GENUI NE AND SUPPORTED BY THIRD PARTY EVIDENCES I.E. BILLS/VOUCHERS. IN ADDIT ION TO RESIDENTIAL CONSTRUCTION PROJECT (GREEN PARK ENTERPRISE), THE A PPELLANT FIRM ALSO CONSTRUCTS THE FACTORY SHED OF ALOK INDUSTRIES LTD. 5.3.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE ID. ID. AR AND THE EXPLANATIONS OFFERED BY THE APPELLANT IS NOT CO NVINCING. THE APPELLANT PUTTING HARD TO JUSTIFY THE ANTICIPATED BILLS AS EX PENDITURE INCURRED. IT IS APPROPRIATE TO HOLD THAT THE EXPENSES REFERRED ABOV E OF RS.16,66,855/- DO NOT JUSTIFY THE CONTEXT HEREIN. IN OTHER WORDS THE .EXP ENSES SHOWN ABOVE APPEARS TO BE SUSPECT BECAUSE THE APPELLANT COULD NOT PRODU CE SUFFICIENT EVIDENCES. IN VIEW OF THIS, I AM OF THE OPINION THAT THOSE EXPENS ES DESERVED TO BE DISALLOWED. ACCORDINGLY THE AO IS DIRECTED TO DISAL LOW RS.16,66,815/- AND ADD TO THE PROFIT (RS.22,88,387/-) AS PER THE AUDIT ED BOOK RESULT IN THIS CASE. 5.3.2. WHILE DEALING WITH THE APPEAL IN THE CASE O F ATHER YAKUB SAIYED VIDE APPEAL NO. CIT(A)/VLS/263/10-11 DATED 30.06.2011 ON E ISSUE RELATING TO THE RETURN OF RS.65,00,000/- TO SHRI SURENDRABHAI JIW RAJKAR, WHO IS ONE OF DIRECTOR OF ALOK INDUSTRIES LTD. THE DOCUMENT RELAT ING TO THIS PAYMENT WAS FOUND AND IMPOUNDED BY THE AO DURING THE SURVEY. TH AT DOCUMENT WAS MADE ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 20 - PART OF THE ASSESSMENT ORDER IN ATHER YAKUB SAIYED CASE. MY DECISION IN THAT CASE WAS 'I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE SUBMISSION MADE BY THE AR OF THE APPELLANT C AREFULLY. THE FACTS OF THE CASE NEEDED TO BE CLARIFIED HERE IS THAT A SURVEY ACTION WAS CONDUCTED IN THE BUSINESS PREMISE OF M/S. ZAYBA CONSTRUCTION CO. AND CERTAIN DOCUMENTS IMPOUNDED WHEREIN IT WAS NOTED THAT AN AMOUNT OF RS . 65,00,000/- WAS RETURNED TO SHRI SURENDRABHAI JIWRAJKAR, WHO IS ONE OF DIRECTOR OF ALOK INDUSTRIES LTD. THE AO OBSERVED THAT THE AMOUNT OF RS. 65,00,000/- PAID TO SHRI. SURENDRABHAI JIWRAJKAR WAS OUT OF BOOKS OF A/ C. ACCORDINGLY, THE AO MADE ADDITION OF RS.65,00,000/- U/S. 69 OF THE ACT. THE APPELLANT HAS IS A GROUP CONCERNS OF M/S. ZAYBA CONSTRUCTION CO. THE I MPOUNDED DOCUMENTS ARE RELATED TO THE ALL GROUP CONCERNS INCLUDING THE APPELLANT. I HAVE ALSO PERUSED THE DOCUMENTS RELIED UPON BY THE AO IN THIS CASE. ALTHOUGH THE ID. AR DISPUTED THAT THE SAID AMOUNT WAS NOT PAID TO SHRI. SURENDRABHAI JIWRAJKAR, BUT THE DOCUMENT CLEARLY INDICATES THAT THE AMOUNT WAS PAID. CLOSE SCRUTINY OF THE DOCUMENT REVEALED THAT IT CONTAINED THE DETAILS OF TRANSACTIONS OF THREE CONCERNS I) ZYABA CONSTRUCTION CO (ZCC), II) APEX I NDIA CONSTRUCTION AND III) PEARLS CONSTRUCTION CO. THE APPELLANT IS THE P ROPRIETOR OF APEX INDIA CONSTRUCTION. THE AMOUNT OF RS.65.00 LAKHS PAID BY ZYABA CONSTRUCTION CO (ZCC) TO SHRI. SURENDRABHAI JIWRAJKAR AS PER THE DO CUMENTS. IN THAT CASE THE SAID AMOUNT CANNOT BE ASSESSED IN THE HAND OF THE A PPELLANT AT BEST CAN BE ASSESSED IN THE HAND OF ZCC. THE MATTER WAS DISCUSS ED IN DETAILS WITH THE ID. AR. THE ID. AR ALSO CONCURRED THAT THE DOCUMENTS CO NCERNING THE SAID TRANSACTION RELATES TO THE ZCC AND AGREED THAT THE INCOME OF 13% OF 65.00 LAKHS MAY IF AT ALL BE TAXED IN THE HANDS OF ZCC. I AM IN AGREEMENT WITH THE ID. AR IN VIEW OF THE FACTS NARRATED ABOVE. THEREFO RE, THE AO IS DIRECTED TO DELETE THE ADDITIONS BECAUSE THE APPELLANT HAS NOTH ING TO DO WITH THAT PAYMENT. I AM CEASED WITH THE APPEAL OF ZCC FOR THE SAID PERIOD AND THE FACTS AND CIRCUMSTANCES AS APPLICABLE WILL BE DEALT THERE IN. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED'. IT IS VERY CLEAR FROM THE FINDING THEREON WAS THAT THE AMOUNT OF RS.65.00 LAKHS PAID BY ZYABA CONSTRUCTION CO (ZCC) TO SHRI. SURENDRABHAI JIWRAJKAR AS PER THE DOCUMENTS AND NOT REFUTED. THEREFORE, TH E SAID AMOUNT TO BE ASSESSED IN THE HAND OF ZCC. THE MATTER WAS DISCUSS ED IN DETAILS WITH THE ID. ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 21 - AR. THE LD.AR ALSO CONCURRED THAT THE DOCUMENTS CO NCERNING THE SAID TRANSACTION RELATES TO THE ZCC AND AGREED THAT THE INCOME OF 13% OF 65.00 LAKHS MAY IF AT ALL BE TAXED IN THE HANDS OF ZCC. A CCORDINGLY, THE AMOUNT TO BE TAXED IN THE APPELLANTS HAND IS RS. 8.45 LAKHS BEING 13% OF 65.00 LAKH. THE AO IS DIRECTED TO MAKE FURTHER ADDITION OF RS. 8.45 LAKHS IN THE HANDS OF THE APPELLANT. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 14.3. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS IN APPEAL BEFORE US. 14.4. BEFORE US, LD.SR.DR SUPPORTED THE ORDER OF A O. LD.AR, ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT THE COMPUTER SYSTEM OF THE ASSESSEE WAS CORRUPTED DUE TO WHICH FINAL DATA FOR FY 2007-08 WA S LOST AND THE ASSESSEE WAS IN THE PROCESS OF REPROCESSING THE DAT A AND DURING THAT TIME SURVEY WAS CONDUCTED. HE SUBMITTED THAT THE BOOKS FOUND AT THE TIME OF SURVEY WERE INCOMPLETE BOOKS AND THEREFORE SIMPLY ON ITS BASIS NO ADDITION COULD BE MADE. HE FURTHER SUBMITTED THAT THERE WAS NO DIFFERENCE IN THE SALES AS PER THE AUDITED ACCOUNTS AND THE IMPOUNDED FIGURE AND DURING THE COURSE OF ASSESSMENT, AUDIT R EPORT, WAS SUBMITTED AND THE AUDITOR HAD NOT BEEN POINTED ANY DEFICIENCY IN THE BOOKS OF ACCOUNTS. HE THEREFORE SUBMITTED THAT NO ADDITION WAS CALLED FOR. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT LD.CIT(A) WHILE DECIDING THE ISSUE HAS NOTED THAT AO HAD SUMMARILY AND WITHOUT GIVING ANY REASONS REJECTED T HE AUDITED ACCOUNTS ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 22 - OF THE ASSESSEE. HE HAS FURTHER NOTED THAT FOR REJ ECTION OF THE AUDITED ACCOUNTS AO HAS NOT GIVEN ANY FINDING IN THE ASSESS MENT ORDER. WE FURTHER FIND THAT THE LD.CIT(A) AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE AND AFTER CONDUCTING THE NECESSARY VERIFIC ATION OF THE EVIDENCES FURNISHED BEFORE HIM AND BY A DETAILED AND WELL-RE ASONED HAS DECIDED THE ISSUE. BEFORE US, NEITHER ASSESSEE NOR REVENUE HAS PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF TH E LD.CIT(A). IN VIEW OF THESE FACTS, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A). THUS, THIS GROUND OF REVENUE IS DISMISSED. 16. NEXT GROUND IN THE REVENUES APPEAL IS WITH RES PECT TO ALLOWING THE DISALLOWANCE MADE U/S.40A(3) OF THE ACT. 16.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON THE BASIS OF IMPOUNDED CASH BOOK, AO NOTICED THAT ASSESSEE HAD MADE PAYMENT AGGREGATING TO RS.14,74,954/- IN CASH TO VARIOUS PE RSONS LISTED AT PAGE NO.3 OF THE ASSESSMENT ORDER. AS THE PAYMENTS WER E IN CASH AND SINCE THE IMPOUNDED BOOKS WERE CONSIDERED BY HIM TO BE CO RRECT, HE DISALLOWED THE AGGREGATE PAYMENT OF RS.14,74,954 U/ S.40A(3) OF THE ACT. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO DELETED THE ADDITION BY HOLDING AS U NDER:- 6.3. DECISION :- I HAVE CONSIDERED CAREFULLY TH E OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE CONTENTIO NS RAISED BY THE AR OF THE APPELLANT. I FOUND THERE IS FORCE IN THE AR GUMENTS. DURING THE ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 23 - APPELLATE PROCEEDING THE LD.AR PRODUCED LEDGER A/C. EXAMINATION OF THE LEDGER A/C SUPPORTED THE CONTENTION OF THE APPELLAN T. IN VIEW OF THE ABOVE, THE AO IS DIRECTED TO DELETE THE ADDITION MA DE IN THIS GROUND OF APPEAL. THUS, THIS GROUND IS ALLOWED. 16.2. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS IN APPEAL BEFORE US. 16.3. BEFORE US, LD.SR.DR SUPPORTED THE ORDER OF AO . LD.AR, ON THE OTHER HAND, REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND SUPPORTED THE ORDER OF THE LD.CIT(A). 17. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT LD.CIT(A) WHILE DELETING THE ADDITION HAS NOTED THAT ASSESSEE HAD PRODUCED LEDGER ACCOUNT DURING THE APP ELLATE PROCEEDINGS AND THE EXAMINATION OF THE LEDGER ACCOUNT REVEALED THAT THERE WAS NO PAYMENT IN CASH. BEFORE US, THE REVENUE HAS NOT CO NTROVERTED THE FINDINGS OF THE LD.CIT(A) NOR HAS POINTED ANY FALLA CY IN THE FINDING OF LD.CIT(A). WE THEREFORE FIND NO REASON TO INTERFER E WITH THE ORDER OF LD.CIT(A). THUS, THIS GROUND OF REVENUE IS DISMIS SED. 18. IN THE RESULT, REVENUES APPEAL IN ITA NO.2663/ AHD/2011 IS DISMISSED. ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 24 - 19. LASTLY, WE TAKE UP THE REVENUES APPEAL IN ITA NO.2251/AHD/2011 FOR AY 2008-09 (IN THE CASE OF SHR I ATHER YAKUB SAIYED) AND ASSESSEES CROSS OBJECTION NO.208/AHD/ 2011. 19.1. REVENUE HAS RAISED THE FOLLOWING GROUND:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ALLOWING ADDITION OF RS.65,00,0-00/- O N ACCOUNT OF UNEXPLAINED INVESTMENT. 19.2. ASSESSEE HAS RAISED THE FOLLOWING GROUND IN I TS CROSS-OBJECTION:- THIS CROSS OBJECTION IS FILED AGAINST THE APPEAL FI LED BY ACIT, VAPI, IN RESPECT OF ORDER PASSED BY THE HONBLE CIT(APPEALS) , VALSAD, WHO IS WITH A VIEW THAT THE APPELLANT MADE UNEXPLAINED INV ESTMENT OF 65,00,000/- IN THE NAME OF SHRI SURENDRABHAI JIWAR AJKAR, ONE OF THE DIRECTORS OF ALOK INDUSTRIES LTD. 20. BEFORE US, LD.AR SUBMITTED THAT GROUNDS RAISED BY ASSESSEE AND REVENUE BEING INTER-CONNECTED WITH THE GROUNDS RAIS ED IN THE APPEALS RELATING TO M/S.ZAYBA CONSTRUCTION(SUPRA) AND THE I SSUES RAISED IN THE PRESENT APPEALS ARE ALREADY CONSIDERED WHILE DECID ING THE APPEAL IN THE CASE OF ZAYBA CONSTRUCTION CO. (SUPRA), NO SEPARATE ADJUDICATION IS REQUIRED AS THE GROUNDS ARE CONSEQUENTIAL IN NATURE . LD.SR.DR DID NOT OBJECT THE AFORESAID SUBMISSION OF THE LD.AR. 20.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. IN VIEW OF THE AFORESAID SUBMISSIONS OF BO TH THE PARTIES, THE REVENUES APPEAL AND ASSESSEES CROSS OBJECTION ARE DISMISSED. ITA NOS.2656,2663/AHD/2011, ITA NO.1694/AHD/12 & 2251/AHD/11(BY REVENUE) CO NOS.22, 23/AHD/12 & CO 208/AHD/11 (BY ASSESSEES ) ACIT/ITO VS. ZAYBA CONSTRUCTION CO. &OTHER ASST.YEARS 2007-08, 2008-09 & 2009- 10 - 25 - 22. WE SUMMARIZE THE RESULT AS UNDER:- (I) REVENUES APPEAL IN ITA NO.2656/AHD/11 FOR AY 2007-08 IS DISMISSED. (II) REVENUES APPEAL IN ITA NO.2663/AHD/11 FOR AY 2008-09 IS DISMISSED. (III) REVENUES APPEAL IN ITA NO.1694/AHD/12 FOR AY 2009-10 IS DISMISSED. (IV)ASSESSEES CO NO.22/AHD/12 FOR AY 2007-08 IS AL LOWED FOR STATISTICAL PURPOSES. (V) ASSESSEES CO NO.23/AHD/12 FOR AY 2008-09 IS DI SMISSED. (VI) REVENUES APPEAL IN ITA NO.2251/AHD/2011 FOR A Y 2008-09 IS DISMISSED. (VII)ASSESSEES CO NO.208/AHD/2011 FOR AY 2008-09 I S DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/08/2016 SD/- SD/- .. () () ( R.P. TOLANI ) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 18/ 08 /2016 ,..,.../ T.C. NAIR, SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. -. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 123 4 / CONCERNED CIT 4. 4 ( ) / THE CIT(A)-VALSAD 5. 567/23 , 23' , 1 / DR, ITAT, AHMEDABAD 6. 79:# / GUARD FILE. / BY ORDER, 05/ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD