ITO, Rohtak V. Smt Sunita Rani, Rohtak

ITA 233/DEL/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5466 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 15-01-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHYMANA SEN
• Keywords: Business income; Sham transactions
• Section: 44AD; 142(1); 133(6); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI R.C.SHARMA, AM ITA NO.224/DEL/2010 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-1, ROHTAK. VS. SMT.SAROJ BALA, W/O SHRI RAM NIWAS, H.NO.2158, SECTOR-1, ROHTAK. PAN NO.BBLPS6767H. (APPELLANT) (RESPONDENT) ITA NO.229/DEL/2010 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-1, ROHTAK. VS. SMT.SHASHI KATYAL, D/O SHRI RAM DASS, PROP. M/S SHASHI ENTERPRISES, 129/16, ASHOK NAGAR, ROHTAK. PAN NO.AOSPK7005F. (APPELLANT) (RESPONDENT) ITA NO.233/DEL/2010 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-1, ROHTAK. VS. SMT.SUNITA RANI, D/O SHRI BELAI RAM, H.NO.1257/10, FATEHPURI, ROHTAK. PAN NO.BCFPS9060N. (APPELLANT) (RESPONDENT) APPELLANT BY : MS.SHYMANA SEN, SR.DR. RESPONDENTS BY : NONE. ORDER PER R.C.SHARMA, AM : THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 6.11.2009 FOR THE AY 2006-07. ITA-224, 229 & 233/D/2010 2 2. AS COMMON ISSUE IS INVOLVED IN ALL THE APPEALS A ND THE ASSESSEES ARE ALSO RELATED, THE SAME WERE HEARD TOGETHER AND ARE NOW B EING DISPOSED OF BY THIS CONSOLIDATED ORDER. IN THESE APPEALS, NOBODY APPEA RED ON BEHALF OF THE ASSESSEE INSPITE OF SERVICE OF NOTICE. 3. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND FOUND THAT ADDITION MADE ON ACCOUNT OF CONTRACT RECEIPT WAS DE LETED BY THE CIT(A) AND HE HAS APPLIED PROVISIONS OF SECTION 44AD AND COMPUTED PRO FIT AT 8% AND ALSO DIRECTED THE AO FOR GIVING DUE CREDIT FOR TDS. AGAINST THIS ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. IN THESE CASES, CERTAIN DI SCREPANCY/INCONSISTENCY WAS FOUND IN THE CLAIM OF REFUND ON THE BASIS OF TDS CERTIFIC ATE ISSUED BY PACL INDIA LTD. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE BRIEF FACTS OF THESE CASES ARE THAT ALL THESE ASSESSES HAVE FILED RETURN S OF INCOME IN WARD-1, ROHTAK DISCLOSING CONTRACT RECEIPTS FROM M/S PACL INDIA LT D., NEW DELHI (HENCEFORTH IN THIS ORDER REFERRED TO AS PACL). AFTER CALCULATING NET PROFIT UNDER THE PROVISIONS OF PRESUMPTIVE TAX UNDER SECTION 44AD, REFUNDS OF D IFFERENT AMOUNTS HAVE BEEN CLAIMED BY THESE ASSESSES. IT WAS FOUND THAT A LAR GE NUMBER OF THESE PACL CONTRACTORS DO NOT EXIST AT THEIR GIVEN ADDRESSES A ND THAT SOME OF THEM EVEN DENIED ANY KNOWLEDGE OF THE EXISTENCE OF PACL. DURING THE ASSESSMENT PROCEEDINGS, THE NOTICES U/S 143(2) AND 142(1) ISSUED BY THE ASSESSI NG OFFICER TO THESE ASSESSES REMAINED UNCOMPLIED WITH IN 14 CASES, THOUGH THE NO TICES WERE DULY SERVED UPON THE ASSESSES. IN THREE CASES, THE ASSESSEES APPEAR ED BEFORE THE ASSESSING OFFICER AND DEPOSED THAT THEY HAVE CARRIED OUT CONTRACT WOR K FOR PACL. HOWEVER, THESE ARE SEVERAL LACUNAS OR LOOSE ENDS IN THEIR DEPOSITI ONS, LEADING TO THE SUSPICION THAT NO WORK MAY HAVE BEEN EXECUTED BY THESE PARTIES AND THAT THEY WERE MERE CONDUITS FOR CREATING A SERIES OF SHAM TRANSACTIONS ONLY ON PAPER WITH A VIEW TO INFLATING THE EXPENSES OF PACL. IN THE REMAINING ( EIGHTEENTH) CASE, THE ASSESSEE COMPLETELY DENIED HAVING CARRIED OUT ANY WORK FOR P ACL AND HAVING EVEN FILED THE RETURN PURPORTEDLY FILED BY HIM IN THE NAME AND STYLE OF M/S SAPRA TRADING CO. ITA-224, 229 & 233/D/2010 3 NOTICE U/S 133(6) WAS ALSO ISSUED TO PACL SEEKING I NFORMATION IN RESPECT OF THE CONTRACTS ALLEGEDLY AWARDED TO THESE ASSESSES. HOW EVER, NO COMPLIANCE WAS MADE BY PACL DESPITE SEVERAL REMINDERS/FOLLOW UP. A SHO W CAUSE NOTICE WAS ISSUED TO THE ASSESSES BY THE ASSESSING OFFICER ASKING FOR TH EIR COMMENTS AND OBJECTIONS TO THE PROPOSED ACTION OF THIS OFFICE TO HOLD THE ENTI RE SET OF TRANSACTIONS BETWEEN PACL AND THESE ASSESSEES AS SHAM TRANSACTION AND TO TAX THE ENTIRE RECEIPTS DISCLOSED BY THE ASSESSES AS INCOME FROM OTHER SOUR CES WITHOUT GIVING DEDUCTION FOR THE EXPENSES ON THE GROUNDS THAT (I) EITHER THE Y HAVE NOT APPEARED BEFORE THE ASSESSING OFFICER AND FILED DETAILS OR (II) THEY HA VE APPEARED BEFORE THE ASSESSING OFFICER BUT DENIED HAVING DONE WORK FOR PACL OR (II I) THEY HAVE APPEARED BEFORE THE ASSESSING OFFICER AND CONFIRMED EXECUTION OF WO RK BUT COULD NOT SUBSTANTIATE THEIR CLAIM WHEN QUESTIONED IN STATEMENTS RECORDED UNDER OATH. 4. AFTER CONSIDERING THE ASSESSEES REPLY, IT WAS F OUND THAT :- A) M/S PACL IS A LARGE CONSTRUCTION COMPANY WITH AN ALL-INDIA PRESENCE. IT IS REALLY DIFFICULT TO BELIEVE THAT F OR EXECUTING SIMPLE OPERATIONS LIKE CUTTING OF FOREST AND FILLING OF LA ND WITH SOIL IN SOME PROJECTS IN RURAL TAMIL NADU, IT SHOULD ENGAGE THES E ASSESSES, WHO ARE RESIDENTS OF ROHTAK IN HARYANA. B) THESE ASSESSES WOULD TRAVEL ABOUT 2000 KMS. FROM THEIR NATIVE PLACE TO THE SITE OF WORK WITHOUT KNOWLEDGE OF THE LOCAL LANGUAGE, ENGAGE LOCAL UNSKILLED LABOUR FROM NEARBY VILLAGES AND EXE CUTE THE WORK. C) THE CONTRACT COULD HAVE BEEN GIVEN TO ONE SINGLE LOCAL CONTRACTOR. IT IS BEYOND COMPREHENSION AS TO WHAT WAS THE ECONOMIC , COMMERCIAL, SOCIAL OR EVEN PSYCHOLOGICAL COMPULSION FOR AWARDIN G THE CONTRACT TO HUNDREDS OF PETTY CONTRACTORS (ONLY 27 WERE SELECTE D IN SCRUTINY) LOCATED HUNDREDS OF KILOMETERS AWAY FROM THE SITE. D) AMONGST THE ASSESSEES WHO APPEARED BEFORE THE AS SESSING OFFICER, THEY HAD NO PREVIOUS EXPERIENCE IN CIVIL CONTRACT W ORK, NOR DID THEY ITA-224, 229 & 233/D/2010 4 KNOW OF PACL DIRECTLY. FOR INSTANCE A LADY ASSESSE E HAS DISPOSED BEFORE THE ASSESSING OFFICER THAT SHE IS EDUCATED O NLY UP TO CLASS-IV, AND HER HUSBAND IS AN AUTO-RICKSHAW DRIVER AND NEIT HER OF THEM HAS ANY CLUE OF THE WORK ALLEGEDLY DONE BY THEM AND THE MONEY ALLEGEDLY RECEIVED BY THEM FROM PACL. SOME HAVE DE POSED THAT THEY WERE ONLY ASSURED OF A COMMISSION AND MADE TO SIGN ON PAPERS/CHEQUES/RETURNS. INCIDENTALLY, TEN OUT OF TH E EIGHTEEN ASSESSES ARE WOMEN. E) BANK ACCOUNTS WERE OPENED BY MOST OF THE ASSESSE S IN ONE PARTICULAR BRANCH OF HDFC BANK AND ALL THE TRANSACTIONS INCLUD ING DEPOSIT OF MONEY RECEIVED FROM PACL AND WITHDRAWAL OF THE ENTI RE MONEY IN CASH WERE COMPLETED IN AS SHORT A PERIOD AS FOUR DA YS. F) A LARGE NUMBER OF THESE ASSESSES, FOR THE REASON S BEST KNOWN TO THEM, HAVE COMPLETELY DISREGARDED STATUTORY NOTICES ISSUED BY THE ASSESSING OFFICER. HOWEVER, WHEN A SHOW CAUSE U/S 144A WAS ISSUED BY THIS OFFICE, ALL OF THEM (WITH NO EXCEPTI ON) REPRESENTED THEMSELVES THROUGH ONE CHARTERED ACCOUNTANT, ALLUDI NG TO THE FACT THAT THESE ASSESSES ARE POSSIBLY IN COLLUSION WITH ONE ANOTHER AND WITH PACL AND WANT TO DRAG THE CASE TO THE VERY END OF LIMITATION SO AS TO THWART ENQUIRIES BY THE DEPARTMENT. IN FACT, IN SOME CASES, THE SHOW CAUSE NOTICES HAVE COME BACK UNSERVED, YET A R EPLY HAS BEEN FILED BY THE COUNSEL ON BEHALF OF THE ASSESSEE SHOW ING POSSIBLE COMPLICITY AND CONNIVANCE OF ALL PARTIES INVOLVED I N CREATION OF A FAADE OR DECEPTION OF TRANSACTIONS THROUGH WHICH, MONEY APPEARS TO HAVE BEEN TAKEN OUT OF THE BOOKS OF PACL AND EXPENS ES HAVE BEEN BOOKED, WHILE NO REAL WORK WAS EXECUTED. 5. WE ALSO FOUND THAT THIS MATTER WAS ALSO REFERRED BY THE AO TO THE CIT(A) FOR OBTAINING DIRECTIONS/GUIDELINES U/S 144 OF THE IT ACT. AFTER ANALYZING THESE CASES, FOLLOWING DIRECTIONS/GUIDELINES WERE ISSUED :- ITA-224, 229 & 233/D/2010 5 A) IN CASES WHERE NO RESPONSE OR ATTENDANCE HAS BEE N MADE BEFORE THE ASSESSING OFFICER, ONE LAST OPPORTUNITY MAY BE GIVE N TO THE ASSESSEE TO PRESENT HIS CASE AND TO REBUT THE ASSUMPTION OF NO WORK EXECUTED FORMED BY THE DEPARTMENT ON THE BASIS OF FACTS NARRATED IN PARA 5 ABOVE. IN VIEW OF THE FACT THAT THESE CASES ARE GETTING BARRED BY LIMITATION ON 31.12.2008 AND IN VIEW OF THE FACT THAT NOTICES HAVE ALREADY BEEN SERVED UPON THE ASSESSES, NO FRESH NOT ICE IS REQUIRED TO BE ISSUED BY THE ASSESSING OFFICER. THE ASSESSEES SHALL MAKE COMPLIANCE OF THE PENDING NOTICES ON THEIR OWN BY 1 6.12.2008. IT MAY BE CLARIFIED THAT ALONG WITH THE ASSESSEE, SUCH OTHER PERSON WHO HAS THE KNOWLEDGE OF THE WORK EXECUTED AND THE TRAN SACTIONS MADE WITH PACL SHOULD ALSO ATTEND THE PROCEEDINGS BEFORE THE ASSESSING OFFICER. NO FURTHER ADJOURNMENT SHALL BE SOUGHT BY AND GIVEN TO THESE /ASSESSES. DEPENDING UPON WHETHER THE ASSESS EE MAKES COMPLIANCE OF THE NOTICE BY 16.12.2008 OR NOT, HIS CASE SHALL BE GOVERNED BY THE GUIDELINES GIVEN BELOW. B) IN CASES WHERE THE ASSESSEE HAS NOT APPEARED BEF ORE THE ASSESSING OFFICER OR WHERE THE ASSESSEE HAS APPEARED BEFORE T HE ASSESSING OFFICER AND DENIED HAVING EXECUTED ANY WORK ON BEHA LF OF PACL, THE ASSESSING OFFICER SHOULD COMPLETE THE ASSESSMEN T WITHOUT FURTHER OPPORTUNITY. IN THESE ASSESSMENTS, THE GRO SS RECEIPT SHOWN BY THE ASSESSEE SHOULD BE TAKEN AS THE TOTAL INCOME OF THE ASSESSEE AFTER DISALLOWING ALL EXPENSES OR, AS THE CASE MAY BE, THE CLAIM OF BENEFITS U/S 44AD. THESE ADDITIONS SHOULD BE MADE ON PROTECTIVE BASIS AND INTIMATION SHOULD BE SENT TO THE ASSESSIN G OFFICER OF PACL FOR MAKING SUBSTANTIVE ADDITIONS IN THE HANDS OF PACL. PENALTY PROCEEDINGS U/S 271(1)(C) WERE ALSO INITIAT ED SIMULTANEOUSLY IN THESE CASES. ITA-224, 229 & 233/D/2010 6 6. IN CASES WHERE THE ASSESSEE HAS APPEARED BEFORE THE ASSESSING OFFICER AND CONFIRMED HAVING EXECUTED WORK ON BEHALF OF PACL, T HE ASSESSING OFFICER SHALL TAKE A JUDICIOUS VIEW OF THE DEPOSITION MADE BY THE ASSESSEE AND IF THE FACTS AND CIRCUMSTANCES OF THE CASE, INCLUDING CIRCUMSTANTIAL EVIDENCE, SUGGEST TO THE FACT THAT IN REALITY NO WORK HAS BEEN EXECUTED BY THE AS SESSEE, HE SHOULD DISALLOW THE EXPENSES OR CLAIM OF SECTION 44AD BENEFITS AND ASSE SS THE ENTIRE RECEIPT AS THE TOTAL INCOME OF THE ASSESSEE ON PROTECTIVE BASIS WI TH INTIMATION TO THE ASSESSING OFFICER OF PACL FOR MAKING SUBSTANTIVE ADDITIONS IN THE HANDS OF PACL. PENALTY PROCEEDINGS U/S 271(1)(C) MAY BE SIMILARLY INITIATE D. IN THIS REGARD, THE ASSESSING OFFICER MAY BE INFORMED THAT THE BURDEN OR STANDARD OF PROOF REQUIRED UNDER THE PROVISIONS OF INCOME TAX LAW IS PREPONDERANCE OF P ROBABILITY AND NOT BEYOND REASONABLE DOUBT OR CLEAR AND CONVINCING EVIDENCE . THEREFORE, IF THE CIRCUMSTANTIAL EVIDENCES IN A CASE LEAD TO A HIGH P ROBABILITY THAT THE CLAIM OF THE ASSESSEE IS FALSE OR BOGUS, ADDITIONS CAN BE MADE B Y CAREFULLY MARSHALLING SUCH FACTS AND EVIDENCES AND DERIVING COGENT LOGICAL CON CLUSIONS. 7. WE ALSO FOUND THAT ON 15.12.2008, THE ASSESSEE A TTENDED THE PROCEEDINGS AND STATEMENT OF THE ASSESSEE WAS RECORDED. FROM T HE STATEMENT OF THE ASSESSEE AND THE MATERIAL AVAILABLE ON THE RECORD, IT HAS /B EEN OBSERVED THAT:- I) NO DOCUMENTARY EVIDENCE IN SUPPORT OF CLAIM OF D OING CONTRACT WORK OF THE PACL INDIA LTD., B 1/5, PASCHIM VIHAR, NEW DELHI HAS BEEN PRODUCED. II) NO VOUCHER OF ANY EXPENSE WAS PRODUCED. III) NEITHER THE ASSESSEE FURNISHED ANY WORK COMPLE TION REPORT TO THE PACL NOR THE SAID COMPANY HAS ASKED FOR THE SAME. IV) ASSESSEE HAS NOT EXECUTED ANY WORK FOR PAC INDI A LTD., BEFORE OR AFTER THIS WORK. THE ASSESSEE HAS NOT TAKEN CON TRACT WORK OF ANY KIND OF ANY OTHER PERSON IN HIS/HER LIFE. ITA-224, 229 & 233/D/2010 7 V) THE ASSESSEE EVEN FAILED TO GIVE THE COMPLETE AN D EXACT ADDRESS OF THE PLACE OR VILLAGE OR CITY WHERE THE SO-CALLED WORK WAS DONE. VI) THE ASSESSEE HAD NOT CONTACTED PACL ON THE BASI S OF ANY ADVERTISEMENT IN NEWSPAPER, TV, ETC. FOR TAKING THE SO CALLED CONTRACT WORK BUT ALLEGEDLY THROUGH AN UNRELATED TH IRD PERSON. VII) THE ASSESSEE WAS NOT EVEN AWARE OF THE MEASURE MENT OF /THE LAND IN WHICH THE FILING WORK WAS TO BE DONE. VIII) THE PAYMENTS FROM THE PACL HAS BEEN RECEIVED BY THE ASSESSEE WITHIN ABOUT 10 DAYS WITHOUT FURNISHING ANY EVIDENC E FOR COMPLETION OF WORK OR VOUCHERS. IX) THE ASSESSEE HAS NOT EVEN PRODUCED ANY LABOURER REGISTER OF SALARY REGISTER ETC. X) THE ASSESSEE HAS NOT EVEN BASIS WORKING KNOWLEDG E OF ANY LANGUAGE OF SOUTHERN INDIA. XI) THE ASSESSEE HAS NO EVIDENCE REGARDING ANY EXPE NSE ALSO. XII) THE ASSESSEE HAS NOT INTIMATED THE BANK ACCOUN T NUMBER, IN WHICH PAYMENTS RECEIVED FROM THE PACL HAD BEEN DEPO SITED. XIII) EVEN DETAILS OF THE MODE OF TRANSPORT USED FO R GOING TO THE WORK SITE COULD NOT BE STATED BY ANY ASSESSEE IN THE STA TEMENT RECORDED. XIV) THE ENTIRE TRANSACTIONS INVOLVING DEPOSIT OF A LLEGED CONTRACT RECEIPTS AND ITS WITHDRAWAL IN CASH FROM BANK AT RO HTAK WAS COMPLETED WITHIN A PERIOD OF LESS THAN FIFTEEN DAYS . XV) ASSESSEE HAS NOT OPENED ANY BANK ACCOUNT AT OR NEAR THE WORKSITE ALLEGED TO BE SITUATED NEAR CHENNAI, WHICH IS BEYON D COMMON SENSE AND BUSINESS PRUDENCE. XVI) BANK ACCOUNTS THROUGH WHICH THESE DEPOSITS AND WITHDRAWALS WERE MADE WERE SAVING ACCOUNTS AND NOT THE CURRENT ACCOUNTS. XVII) NO SECURITY/BANK GUARANTEE WAS ASKED FOR BY M /S PACL INDIA LTD. OR GIVEN BY THE ASSESSEE. ITA-224, 229 & 233/D/2010 8 XVIII) ASSESSEE HAS NOT FILED HIS RETURN OF INCOME FOR THE YEARS PRECEDING AND SUCCEEDING TO THE FINANCIAL YEAR 2005 -06 RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. 8. ASSESSEE HAS FAILED TO BRING ON RECORD EVEN A SI NGLE DOCUMENTARY EVIDENCE IN THE FORM OF PAYMENT THROUGH CHEQUE OR DEMAND DRA FT REGARDING PAYMENT OF ANY EXPENSE ON ACCOUNT OF ALLEGED CONTRACT WORK. 9. IT IS EVIDENT FROM THE ORDER OF THE AO AND THE D IRECTIONS ISSUED BY THE ADDITIONAL COMMISSIONER THAT THE ASSESSEE HAS NOT D ONE ANY KIND OF CONTRACT WORK OF THE PACL INDIA LIMITED, NEW DELHI. SINCE NO WOR K HAS BEEN DONE, NO EXPENSE CAN BE ALLOWED. EVEN THE PROVISIONS OF SECTION 44A D OF THE INCOME TAX ACT, 1961 SHALL NOT APPLY AS THIS SECTION PRESUMES EXPEN SES AT A PREDETERMINED RATE TO WORK OUT THE PROFITS OF A CIVIL CONTRACTOR. ACCORD INGLY, THE RECEIPTS OF THE ASSESSEE OF RS.29,40,000/- FROM M/S PACL INDIA LIMITED, NEW DELHI WAS TREATED AS INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES ON PROTECTIVE BASIS AND NECESSARY INTIMATION WAS BEING SENT TO TH E CONCERNED ASSESSING OFFICER HAVING JURISDICTION OVER THE CASE OF PACL INDIA LTD ., NEW DELHI FOR MAKING SUBSTANTIVE ADDITIONS IN THE HANDS OF PACL FOR THE ASSESSMENT YEAR 2006-07. 10. AS PER THE ORDER OF CIT(A), HE HAS DISPOSED THE APPEALS AFTER HAVING THE FOLLOWING OBSERVATION:- THE ASSESSING OFFICER HAS TREATED THE ENTIRE RECEI PTS AS INCOME FROM OTHER SOURCES WHEREAS THE APPELLANTS HAVE WIT HDRAWN MONEY FROM THE BANK ACCOUNTS; THE ASSESSING OFFICER HAS N OT GIVEN CREDIT FOR THE WITHDRAWAL. AS NOTED ABOVE, THE AMOUNTS OF RECEIPTS APPEARING IN THE BANK ACCOUNTS ARE NOT FROM CONTRAC T BUSINESS AND THAT THE SAME HAVE BEEN WITHDRAWN A FEW DAYS AFTER DEPOSIT OF THE CHEQUES; AND FURTHER THAT FOR ASSISTING A PERSON IN PASSING ITS UNDISCLOSED CASH THROUGH BANKING CHANNELS TO THE SA ME PERSONS AND VICE-VERSA. PREVALENT MARKET COST VARIES BETWEEN 2 % TO 8% AND THE APPELLANTS HAVE SHOWN, NET PROFIT @ 8% OF THE RECEI PTS (OR THEIR ITA-224, 229 & 233/D/2010 9 INCOME HAD BEEN MADE TO DECLARE @ 8% U/S 44AD). TH E INCOME DESERVES TO BE ASSESSED AT 8% OF THE RECEIPTS BECAU SE THE APPELLANT MUST NOT HAVE ALLOWED THEIR NAMES TO BE USED WITHOU T ANY CONSIDERATION, IT IS POSSIBLE THAT THEY HAVE GOT SM ALL AMOUNTS IN CASH OVER AND ABOVE THE PROFIT DECLARED IN THE INCOME TA X RETURNS. HOWEVER, THE INCOME IS TO BE ASSESSED NOT AS BUSINE SS INCOME BUT AS INCOME FROM OTHER SOURCES. THEREFORE THE INCOME DECLARED IS DIRECTED TO BE ACCEPTED AND THE CREDIT FOR TDS IS A LSO DIRECTED TO BE GIVEN. 5. IN VIEW OF THE ABOVE DISCUSSION, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES, THERE WAS NOTHING WRONG IN MAKING TH E ASSESSMENTS ON PROTECTIVE BASIS AND ASSESSING THE INCOME UNDER THE HEAD OTHER SOURCES. THE GROUNDS OF APPEAL PERTAINING TO THES E ITEMS ARE DISMISSED. 6. WHEN A PERSON MAKES A STATEMENT WITHOUT UNDUE IN FLUENCE, FRAUD OR COERCION, THE EVIDENTIARY VALUE OF THE STA TEMENT HAS TO BE RELIED UPON; EVEN OTHERWISE THE ASSESSING OFFICER H AS CORROBORATED THE FACTS EMERGING FROM THE STATEMENTS FROM THE OTH ER EVIDENCE I.E. WITHDRAWAL OF THE CASH AMOUNTS FROM THE BANK ACCOUN TS BY THE APPELLANTS WITHIN A FEW DAYS OF THE DEPOSIT OF THE SAME, THE BANK ACCOUNTS BEING IN ROHTAK WHEREAS THE WORK HAS BEEN SUBMITTED TO BE EXECUTED IN CHENNAI; THEREFORE THERE IS NO MERIT IN THE VERSION OF THE APPELLANT THAT THE STATEMENTS GIVEN BY THE APPELLAN TS DO NOT HAVE ANY EVIDENTIARY VALUE. THE GROUND OF APPEAL PERTAINING TO THIS ITEM IS ALSO DISMISSED. 11. AGGRIEVED BY THE ABOVE ORDER OF THE AO, THE ASS ESSEE APPROACHED TO THE CIT(A) WHO AFTER APPLYING THE GP RATE OF 8% ON THE CONTRACT RECEIPT, DIRECTED THE AO TO ASSESS THE SAME AS BUSINESS INCOME AND ALSO G IVE CREDIT FOR TAX DEDUCTED AT SOURCE. AGAINST THIS, THE REVENUE IS IN FURTHER AP PEAL BEFORE US. 12. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENU E :- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING ADDITIONS MADE IN THE HANDS OF TH E ASSESSEE ON THE PROTECTIVE BASIS, WHILE SUBSTANTIVE ADDITIONS MADE IN THE HANDS OF M/S PACL INDIA LTD., NEW DELHI IN THE ASSESSMENT YE AR 2006-07 WERE STILL PENDING AT THE FIRST APPELLATE STAGE. ITA-224, 229 & 233/D/2010 10 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD.C IT(A) HAS ERRED IN DIRECTING THE AO TO GIVE CREDIT OF TDS TO THE ASSESSEE EVEN AFTER HOLDING THAT THE AMOUNTS ON WHICH TAX HAS BEE N DEDUCTED AT SOURCE, HAS ACTUALLY NOT BEEN RECEIVED BY THE ASSES SEE. 13. IT IS CRYSTAL CLEAR FROM THE ORDER OF THE AO TH AT ASSESSEE HAS TREATED THE CONTRACT RECEIPT AS ITS BUSINESS INCOME AND BY APPL YING THE PROVISIONS OF SECTION 44AD OFFERED FOR TAX 8% INCOME ON SUCH CONTRACT REC EIPTS. AFTER HAVING A DETAILED ENQUIRY AND INVESTIGATION, IT WAS FOUND TH AT NO CONTRACT WORK OF PACL INDIA LTD. WAS EXECUTED BY THE ASSESSEE. NOR ANY V OUCHER FOR CLAIM OF EXPENSES WAS PRODUCED. IT WAS ALSO FOUND THAT NEITHER ASSES SEE FURNISHED WORK COMPLETION REPORT TO THE PACL INDIA LTD. NOR EXECUTED ANY WORK OF PACL INDIA LTD. IT WAS ALSO FOUND THAT ASSESSEE WAS RESIDING AT ROHTAK IN HARYANA, WHEREAS WORK WAS EXECUTED IN TAMIL NADU AND THE ASSESSEE HAS ALSO NO T UNDERTAKEN ANY TRAVEL FOR THIS WORK. AFTER RECORDING ALL THESE FINDINGS, THE AO MADE ADDITION IN RESPECT OF ENTIRE RECEIPT BY TREATING THE SAME AS INCOME FROM OTHER SOURCES. THE CIT(A) DELETED THE ADDITION IN RESPECT OF ENTIRE CONTRACT RECEIPT AND HELD THAT JUST TO ACCOMMODATE PACL INDIA LTD. FOR CLAIM OF EXPENSES, THE ASSESSEE HAS UNDERTAKEN ALL THESE TRANSACTIONS. BY STATING THAT PROFIT ON SUCH TRANSACTION VARIES BETWEEN 2% TO 8%, HE UPHELD THE ADDITION TO THE EXTENT OF 8% O F THE GROSS RECEIPTS AND DIRECTED THE AO FOR GIVING DUE CREDIT FOR THE TAX DEDUCTED A T SOURCE. IN ITS ORDER, THE CIT(A) HAS UPHELD THE ORDER OF THE AO INSOFAR AS MA KING THE ASSESSMENT ORDER ON PROTECTIVE BASIS AND ASSESSING THE INCOME UNDER THE HEAD OTHER SOURCES IS CONCERNED. ACCORDINGLY, THE GROUND RAISED BY ASSES SEE IN THIS REGARD HAS BEEN DISMISSED BY THE CIT(A). EVEN THE CIT(A) HAS ALSO OBSERVED THAT THERE WAS WITHDRAWAL OF CASH AMOUNTS FROM THE BANK ACCOUNTS O F THE ASSESSEE MAINTAINED AT ROHTAK, WHEREAS WORK HAS BEEN STATED TO BE EXECUTED IN CHENNAI. HOWEVER, IN THE LAST THREE LINES OF HIS APPELLATE ORDER IN PARA 6, THE CIT(A) HAS STATED THAT THERE IS NO MERIT IN THE VERSION OF THE ASSESSEE THAT THE ST ATEMENTS GIVEN BY THE ASSESSEE DO NOT HAVE ANY EVIDENTIARY VALUE. ACCORDINGLY, THE G ROUND OF APPEAL PERTAINING TO ITA-224, 229 & 233/D/2010 11 THIS ITEM WAS ALSO DISMISSED BY THE CIT(A). THE RE LIEF GIVEN BY THE CIT(A) PERTAINS TO THE ACCEPTING THE INCOME DECLARED BY TH E ASSESSEE AT 8% OF THE AMOUNT RECEIVED BY ASSESSEE AND GIVING CREDIT FOR THE TDS AMOUNT DEDUCTED THEREON. THIS RELIEF GIVEN BY THE CIT(A) IS NOT BASED ON ANY MATE RIAL ON RECORD, NOR HE HAS DISCUSSED THE REASON FOR TAKING INCOME VARYING BETW EEN 2% TO 8% ON THE GROSS RECEIPTS SHOWN BY THE ASSESSEE, SINCE NO EXPENSES C OULD BE EXPLAINED BY ASSESSEE BEFORE ANY OF THE LOWER AUTHORITIES. THERE ALSO APP EARS TO BE CONTRADICTION IN THE GROUND TAKEN BY THE REVENUE VIS--VIS THE ORDER PAS SED BY THE CIT(A) WHEREIN VARIOUS GROUNDS OF ASSESSEE WERE DISMISSED. IN THE FITNESS OF THINGS, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE FOR DECIDING AFRESH AFTER DISCUSSING THE RELEVANT MATERIAL FOR REACHING TO THE CONCLUSION FOR TREATING THE INCOME DERIVED FROM SUCH CONTRACT BUSINESS AS INCOM E FROM THE ACCOMMODATION PROVIDED BY ASSESSEE TO PACL INDIA LTD. WHEREIN INC OME OF 2% TO 8% WAS ALLEGED TO BE EARNED BY ASSESSEE, WHICH WAS TREATED AS INCOME FROM OTHER SOURCES. NEEDLESS TO SAY THAT SUFFICIENT OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE BEFORE DECIDING THE APPEAL. WE DIRECT ACCORDINGLY. 14. AS THE FACTS AND CIRCUMSTANCES IN THE CASE OF O THER ASSESSEES ARE ALSO PARI- MATERIA AND SIMILAR DIRECTIONS HAVE BEEN GIVEN BY T HE ADDITIONAL CIT U/S 144, THESE ORDERS OF THE CIT(A) ARE ALSO SET ASIDE ON TH E REASONING GIVEN HEREINABOVE AND TO BE DECIDED IN THE SAME MANNER. WE DIRECT AC CORDINGLY. 15. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2010. SD/- SD/- (C.L.SETHI) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15.03.2010. VK. ITA-224, 229 & 233/D/2010 12 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR