M/s. Kapadia Corporation, Ahmedabad V. The Income tax Officer,Ward-9(2), Ahmedabad

ITA 2474/AHD/2009

• Counselvise Citation: 247420514 RSA 2009
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-10-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 25-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: A C SHAH
• Section: 69C; 133(6)

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH BEFORE S/SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND TEJ RAM MEENA, ACCOUNTANT MEMBER) ITA NO.2474/AHD/2009 [ASSTT.YEAR : 1998-1999] M/S. KAPADIA CORPORATION AKAR COMPLEX, CELLAR NR.DARPAN SIX ROAD NAVRANGPURA, AHMEDABAD 380 014. PAN : AAFFB 2690 G /VS. ITO, WARD-9(2) AHMEDABAD. ( (( ( / APPELLANT) ( (( ( / RESPONDENT) !'/ ASSESSEE BY : SHRI A.C. SHAH $%& !'/ REVENUE BY : SHRI Y.P.VERMA !'&( )*/ DATE OF HEARING : 10 TH OCTOBER, 2012 +,- )*/ DATE OF PRONOUNCEMENT : 07-12-2012 '. / O R D E R PER T.R. MEENA, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1998-1999 I S DIRECTED AGAINST THE ORDERS OF THE CIT(A)-XV, AHMEDABAD DATED 31.7.2 009. 2. THE SOLE GROUND OF THE ASSESSEES APPEAL IS AGA INST CONFIRMATION OF THE PENALTY OF RS.7,42,781/- IMPOSE D BY THE AO UNDER SECTION 271(1)(C) OF THE I.T.ACT AT THE RATE OF 150 % OF THE TAX SOUGHT TO BE EVADED. ITA NO.2474/AHD/2009 -2 3. THE AO OBSERVED THAT THE ASSESSEE HAD CLAIMED LA BOUR CHARGES OF RS.26,37,584/-. OUT OF THE SAID PAYMENT, THE AS SESSEE HAD STATED TO HAVE PAID LABOUR CHARGE TO THREE PERSONS VIZ. SHRI PRASHANT N. PATEL, SHRI PRATAPSINGH N. RAJPUT AND SHRI KARIMBHAI A. SH AIKH. THE AO VERIFIED THE GENUINENESS OF THE LABOUR CHARGES AND ASKED THE ASSESSEE TO PRODUCE THE ABOVE THREE PERSONS. THE ASSESSEE C OULD PRODUCE ONLY SHRI KARIMBHAI A. SHAIKH AND NOT SHRI PRASHANT N. P ATEL AND SHRI PRATPSINGH N. RAJPUT TO WHOM THE PAYMENT OF RS.8,96 ,550/- AND RS.5,18,267/- RESPECTIVELY WERE PAID. THE AO FURTH ER NOTICED THAT ADDRESSES OF BOTH THESE PERSONS WERE SAME, AND ACCO RDINGLY NOTICES UNDER SECTION 133(6) OF THE ACT WERE ISSUED TO BOTH THE PERSONS AT THE GIVEN ADDRESS, AGAINST WHICH SENT A REPLY CLAIMED T O BE WRITTEN BY SHRI PRASHANT N. PATEL CONFIRMING LABOUR WORK DONE FOR T HE ASSESSEE AND THE RECEIPT OF LABOUR PAYMENT. THE AO FURTHER MADE INQUIRY FROM THE KALUPUR COMMERCIAL CO-OP. BANK WHERE SHRI PRASHANT N. PATEL AND SHRI PRATAPATSINGH N. RAJPUT WERE HOLDING A JOINT B ANK ACCOUNT IN WHICH ALLEGED PAYMENTS WERE DEPOSITED. ON THE BASI S OF THIS INQUIRY, THE FOLLOWING FACTS EMERGED: ' I) DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 1997- 98 A STATEMENT OF SHRI PRASHANT N. PATEL WAS RECORD ED U/S.131 ON 09/03/2000 BY THE THEN ASSESSING OFFICER (COPY O F THE SAME WAS SUPPLIED TO THE ASSESSEE DURING THE COURSE OF A SSESSMENT PROCEEDINGS FOR A.Y. 199198). IN THIS STATEMENT SH RI PRASHANT N. PATEL HAS STATED THAT HE HAS NOT CARRIED OUT ANY WORK FOR M/S. KAPADIA CORPORATION DURING FINANCIAL YEAR 1997-98 I .E. THE YEAR UNDER CONSIDERATION. HOWEVER, IN THE CONFIRMAT ION SUBMITTED IN RESPONSE TO QUERY U/S. 133(6) AND SIGN ED BY SHRI PRASHANT N. PATEL IT IS CLAIMED THAT HE HAS WORKED FOR ITA NO.2474/AHD/2009 -3 M/S.KAPADIA CORPORATION DURING THE YEAR UNDER CONSI DERATION. HOWEVER, IT IS NOTICED THAT THE SIGNATURE OF SHRI P RASHANT N. PATEL AS GIVEN IN THE LETTER DATED 12/02/2002 DO NO T TALLY WITH THE SIGNATURES IN THE ACCOUNT OPENING FORM SUBMITTE D TO THE KALUPUR COMM.CO. OP. BANK WHILE OPENING THE JOINT A CCOUNT WITH SHRI PRATAPSINGH N. RAJPUT. IN VIEW OF THIS TH E GENUINENESS OF THE LETTER DATED 12/02/2002 SUBMITTED BY SHRI PR ASHANT N. PATEL APPEARED TO BE DOUBTFUL. II) A JOINT BANK ACCOUNT WAS OPENED BY SHRI PRASHAN T N. PATEL AND SHRI PRATAP N. RAJPUT (ACCOUNT NO. 6757) IN THE KALUPUR COMM. CO. OP. BANK, ST. XAVIER'S BRANCH, AHMEDABAD ON 25/04/1997. THE INTRODUCTION FOR OPENING THIS ACCOU NT HAS BEEN GIVEN BY THE ASSESSEE FIRM. ON VERIFICATION OF THE BANK ACCOUNT STATEMENT OF THIS ACCOUNT IT IS SEEN THAT T HE ENTIRE PAYMENTS MADE BY THE ASSESSEE TO THE ABOVE REFERRED PERSONS HAVE BEEN WITHDRAWN FROM THIS ACCOUNT BY WAY OF SEL F CHEQUES ON THE SAME DAY ON WHICH THE CHEQUES HAVE BEEN ISSU ED BY THE ASSESSEE. AT THIS POINT IT IS WORTH WHILE TO MENTIO N HERE THAT IN HIS STATEMENT RECORDED U/S. 131 ON 09/03/2000, SHRI PRASHANT N. PATEL HAS STATED THAT THE PAYMENT RECEIVED FROM KAPADIA CORPORATION DURING F.Y. 1997-98 WERE RECEIVED BY HI M BY CHEQUES AND AFTER WITHDRAWING THE SAME THE AMOUNTS WERE RETURNED BACK TO KAPADIA CORPORATION. IN VIEW OF THE FACTS AS DISCUSSED ABOVE AND SINCE B OTH THESE PERSONS HAVE NOT BEEN PRODUCED BEFORE THE UNDERSIGN ED FOR WHICH AN OPPORTUNITY WAS ALSO PROVIDED TO THE ASSES SEE, THE GENUINENESS OF THE TRANSACTIONS MADE WITH THESE PER SONS APPEARED TO BE DOUBTFUL. SINCE THE DEDUCTION ON ACC OUNT OF ITA NO.2474/AHD/2009 -4 LABOUR WORK CLAIMED TO HAVE BEEN DONE BY SHRI PRASH ANT N. PATEL AND SHRI PRATAP N. RAJPUT HAS BEEN CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME SIGNED AND VERIFIE D BY ITS PARTNER, IT IS DUTY OF THE ASSESSEE TO PROVE THE GE NUINENESS OF SUCH EXPENSES ALSO. A SHOW CAUSE LETTER WAS THEREFO RE ISSUED TO THE ASSESSEE ON 15/03/2002 AND THE ASSESSEE WAS, TH EREFORE, REQUESTED TO SHOW CAUSE AS TO WHY EXPENDITURE OF RS .8,96,550/- CLAIMED IN THE NAME OF SHRI PRASHANT N. PATEL AND R S.5,18,267/- CLAIMED IN THE NAME OF SHRI PRATAP N. RAJPUT SHOULD NOT BE DISALLOWED AND ADDED BACK TO ITS INCOME IN LIGHT OF THE (ACTS AS DISCUSSED ABOVE AND MENTIONED IN THE SHOW CAUSE LET TER ALSO.' 4. THE ASSESSEE WAS GIVEN SHOW CAUSE NOTICE VIDE LE TTER DATED 15.3.2002 BY THE AO TO EXPLAIN AS TO WHY THE CLAIM OF EXPENDITURE IN THE NAMES OF BOTH THE PERSONS SHOULD NOT BE DISALLO WED AND ADDED BACK TO ITS INCOME IN THE LIGHT OF FACTS DISCUSSED IN THE SHOW CAUSE NOTICE. THE ASSESSEE SUBMITTED REPLY BEFORE THE AO , BUT WAS NOT CONVINCED WITH REPLY & EXPLANATION AND REJECTED THE CLAIM OF THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS: DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A Y 1997-98 A STATEMENT OF SHRI PRASHANT N. PATEL WAS RECORDED U/S 131 ON 09-03-2002 BY THEN ASSESSING OFFICER, WHEREIN SHRI PRASHANT N PATEL HAS ADMITTED THAT HE HAS NOT CARRIED OUT ANY WORK FOR M/S. KAPADIA CORPORATION. II) THE ASSESSEE HAS TAILED TO PRODUCE BOTH THESE P ERSONS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS, IT HAS FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS OF THE EXPENSES CLAIMED BY IT IN THE RETURN OF INCOME SIGNED AND VE RIFIED BY ITS PARTNER. III) THE EXPLANATION OF THE ASSESSEE REGARDING THE DIFFERENCE IN THE SIGNATURES OF SHRI PRASHANT N PATEL, IN HIS CON FIRMATION ITA NO.2474/AHD/2009 -5 LETTER AND COPY OF RETURN, IS ALSO NOT FOUND TO BE CONVINCING AT ALL. THE DIFFERENCE IN THE SIGNATURES, AS NOTED IN BOTH THESE PAPERS, IS QUITE APPARENT. THIS FACT IS FURTHER STR ENGTHENED WHEN THE SIGNATURE ON THE CONFIRMATION LETTER (COPY ENCLOSED AS PER ANNEXURE A-1) IS COMPARED WITH THE SIGNATURE OF STIFF P.N.PATEL AS GIVEN OF STATEMENT RECORDED U/S 131 DA TED 09-03- 2006 (COPY ENCLOSED AS PER ANNEXURE A-2) IN VIEW OF THE ABOVE THE CONFIRMATION LETTER DATED 12.02.2002 CLAI MED TO BE THAT OF SHRI P.N. PATEL CANNOT BE RELIED UPON AS TH E SAME IS NOT CONSIDERED GENUINE. IV) THE ASSESSEE'S CONTENTION THAT IT HAD MERELY I NTRODUCED BOTH THESE PERSONS AT THE TIME OF OPENING BANK ACCO UNT (ACCOUNT NO 6757 OF KALUPUR BANK) AND THAT IT HAS N O KNOWLEDGE, OF WHAT BOTH THESE PERSONS HAVE DONE IN RESPECT OF PAYMENTS WHICH WERE MADE TO THEM BY WAY OF ACCOUNT PAYEE CHEQUE IS ALSO FALSE. IN THIS CONNECTION COPIES OF CHEQUES THROUGH WHICH THE PAYMENTS WERE WITHDRAWN FROM THE SAID BANK ACCOUNT NO. 6757 OF SH P.N.PATEL & SH. P.N RAJ PUT HAVE BEEN OBTAINED AND THE SAME ARE ALSO ATTACHED WITH A ND MADE PART OF THIS ASSESSMENT ORDER AS PER ANNEXURE 8, C, & D. ON VERIFICATION OF BACK SIDE OF THESE BEARER/SELF CHEQ UES, IT IS SEEN THAT THE CHEQUES HAVE BEEN SIGNED BY THE PERSONS WH O ARE EITHER CONNECTED WITH THE ASSESSEE FIRM OR ARE ITS EMPLOYEES. THESE PERSONS HAVE SIGNED THESE CHEQUES AT THE BACK SIDE IN TOKEN OF HAVING WITHDRAWN THE MONEY FROM THIS BANK ACCOUNT. THE DETAILS OF SUCH WITHDRAWALS FROM THIS BANK ACCO UNT IS AS UNDER: SR NO DATE OF WITHDRAWAL AMOUNT (RS.) NAME OF THE PERSON WHO HAS SIGNED AT BACK AT TIME OF WITHDRAWAL ANNEXURE NO ( ATTACHED WITH THIS 1. 22.04.98 2,00,000 PARAG B-1 2. 27-04-98 1,50,000 PARAG B-2 3. 25-02-99 1,80,862 PARAG B-3 4 04-10-99 37,700 PARAG B-4 5. 28-09-98 50,000 DHAVAL V SHAH C-1 6. 12-01-99 50,000 DHAVAL V SHAH C-2 7. 21-05-99 1,50,000 K.V.PATEL C-3 8. 21-09.99 1,00,000 KAUSHIK D - 1 .J ITA NO.2474/AHD/2009 -6 THUS, AS CAN BE SEEN FROM THE ABOVE, THE PERSONS WH O HAVE SIGNED AT THE BACK OF THESE CHEQUES IN TOKEN OF HAV ING RECEIVED THE MONEY FROM THE BANK ACCOUNT ARE NONE OTHER THAN THE PERSONS WHO ARE CONNECTED WITH THE ASSESSEE. SHRI PARAG WHO HAS MADE MOST OF THE WITHDRAWALS IS AN RELATIVE OF ONE OF THE PARTNERS OF THE FIRM AND HIS SIGNATURE IN THE CHEQU ES (B-1 TO B- 4) TALLIES WITH THE SIGNATURE GIVEN BY HIM IN CONFI RMATION OF HAVING RECEIVED A NOTICE U/S.148 ISSUED BY THIS OFF ICE DATED 24.03.200 WHICH IS ATTACHED WITH THIS ORDER AS ANNE XURE B-5. SIMILARLY, DHAVAL V. SHAH AND K.V. PATEL (ACTUAL NA ME KASHIK V. PATEL) ARE BOTH EMPLOYEES O THE ASSESSEE FIRM. SHRI DHAVAL V. SHAH IS A SITE SUPERVISOR AND K.V. PATEL IS WORK ING AS CLERK WITH THE ASSESSEE FIRM. THERE NAMES APPEAR ON THE DETAILS OF SALARY EXPENSES GIVEN BY THE ASSESSEE DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. THE COPY OF THIS LIST IS A TTACHED AS PER ANNEXURE C.4. SIMILARLY THE SIGNATURE OF PERSON, W HO HAS SIGNED AS KASHIK AT THE BACK OF THE CHEQUE D-1, A LSO TALLIES WITH THE SIGNATURE OF THE PERSON WHO HAS RECEIVED A NOTICE OF THIS OFFICE ON BEHALF OF THE ASSESSEE AS GIVEN AS P ER ANNEXURE D- 2. IN VIEW OF THE ABOVE FACTS THE ASSESSEES CONTE NTION THAT HE HAS NO KNOWLEDGE OF WHAT SHRI PRASHANT N. PATEL HAS DONE WITH THE PAYMENTS HAS BEEN PROVED TO BE WRONG. THE EVID ENCES IN THE SHAPE OF COPIES OF CHEQUES ATTACHED ALONG WITH THIS ORDER AS PER ANNEXURE B TO D CLEARLY PROVED THAT THE ENTIRE PAYM ENTS WHICH HAS BEEN MADE IN THE NAME OF SHRI PRASHANT N. PATEL AND SHRI PRATAP N. RAJPUT HAS BEEN ULTIMATELY COLLECTED BY T HE ASSESSEE FIRM THROUGH BEARER CHEQUES, WHICH WERE KEPT AT THE PLACE OF THE ASSESSEE. THESE FACTS CLEARLY LEAD TO BELIEF THAT ASSESSEE HAS DEBITED BOGUS BILLS IN RESPECT OF LABOUR EXPENSES T HAT ARE IN REALITY NOT INCURRED BY IT AND THE PAYMENTS MADE FO R SUCH BOGUS EXPENSES HAVE BEEN WITHDRAWN BY IT FROM THE BENAMI BANK ACCOUNT WHICH WAS ALSO INTRODUCED BY THE ASSESSEE A ND ALSO OPERATED BY IT THROUGH ITS EMPLOYEES OR RELATIVES. THE ASSESSEE HAS THUS CONCEALED THE INCOME TO THE EXTENT TO WHIC H IT HAS RAISED BILLS IN THE NAME OF SHRI PRASHANT N. PATEL AND PRATAP N. RAJPUT FOR WHICH PENALTY PROCEEDINGS ARE BEING INIT IATED SEPARATELY. 5. THE AO THUS HELD THAT THE PAYMENT MADE TO THESE TWO PERSONS WERE BOGUS AND ACCORDINGLY ADDED TO THE TOTAL INCOM E OF THE ASSESSEE ITA NO.2474/AHD/2009 -7 AND ALSO IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CON CEALING INCOME. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) I N FIRST APPEAL, WHO CONFIRMED THE ACTION OF THE AO BY FOLLOWING OBSERVA TIONS: 5. AFTER GOING THROUGH RIVAL SUBMISSIONS I AM OF THE CONSIDERED VIEW THAT THE AO TOOK PAINS TO PIERCE TH E VEIL OF CHEQUE OF RS.14,14,817 CLAIMED AS LABOUR EXPENSES P AID TO TWO PERSONS. THE ASSESSING OFFICER GAVE OPPORTUNITIES TO THE APP ELLANT TO CROSS EXAMINE SHRI PRASHANT PATEL WHO STATED THAT P AYMENTS MADE WERE WITHDRAWN IN CASH AND RETURNED BACK TO TH E ASSESSEE. THIS STATEMENT HAD BEEN CORROBORATED FURT HER BY THE ASSESSING OFFICER THROUGH ENQUIRIES FROM KALUPUR CO MMERCIAL CO.OP. BANK. COPIES OF CHEQUES WHICH WERE ISSUED BY THE ASSESSES WERE OBTAINED AND THESE SHOWED THAT THEY W ERE BEARER CHEQUES AND CASH WAS WITHDRAWN BY EMPLOYEES OF THE ASSESSEE. THE BANK ACCOUNT WAS A JOINT BANK ACCOUNT IN THE NA ME OF TWO PERSONS IN QUESTION, OPENED THROUGH THE ASSCSSEE. THE HIGHEST FACT FINDING BODY THAT IS ITAT AHMEDABA D BENCH 'A' HAS NOT FOUND THE LABOUR CHARGES DEBITED OF RS. 14,14,817 IN THE NAME OF TWO PERSONS AS GENUINE. HONBLE TRIBUN AL DID NOT FIND TH4E ASSESSEE HAVING DISCHARGED ITS ONUS OF PR OVING THE LABOUR EXPENSES CLAIMED. HONBLE SUPREME COURT DECISION IN THE CASE OF DHARM ENDRA TEXTILE PROCESSORS, 306 ITR 277 (SC) IS SQUARELY AP PLICABLE HERE BECAUSE THE EXPENDITURE CLAIMED WAS NOT FOUND BONA FIDE. IT IS NOT THE CSE OF ROUTINE ADDITION FOLLOWED BY M ECHANICAL IMPOSITION OF PENALTY. MEN-REA IS PROVED. THEREFO RE, PENALTY IMPOSED BY THE AO AT 150% OF RS.7,42,781 IS UPHELD. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE STATEMENT OF SHRI PRASHANT PATEL SHOULD BE READ AS A WHOLE AND NOT IN PART. THE ASSESSEE RELIED ON REPLIES TO QUESTION N OS.2, 6, 7, 01, 12, 13, 18, 19 AND 20 MADE BY SHRI PRASHANT NATARLAL PATEL DURING THE ITA NO.2474/AHD/2009 -8 STATEMENT RECORDED UNDER SECTION 131 BEFORE THE AO. IT IS SUBMITTED THAT IN REPLY TO QUESTION NO.19, IT WAS STATED THAT SHRI PRASHANT PATEL USED TO RECEIVE CASH FROM M/S.KAPADIA CORPORATION T OWARDS HIS BILLS AND USE TO MAKE PAYMENT TO SUB-CONTRACTORS FROM THE SAID CASH. IT IS THEREFORE CLEAR THAT THE EXPENDITURE INCURRED IS GE NUINE WHICH WERE SUPPORTED BY THE WORKING GIVEN BY THE ASSESSEE DURI NG THE ASSESSMENT PROCEEDINGS. IT IS SUBMITTED THAT THE SOURCE PAYM ENT MADE BY M/S.KAPADIA CORPORATION TO PRASHANT PATEL IN CASH W AS NOT KNOWN. THEREFORE, THE ADDITION SHOULD HAVE BEEN MADE UNDER SECTION 69C AND NOT AS NON-GENUINE EXPENDITURE. THE ASSESSEE FURTH ER SUBMITTED THAT THOUGH THE ADDITION WAS CONFIRMED BY THE ITAT, THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE DIFFERENT. THE PENALTY IS INITIATED ON THE SATISFACTION THAT THE EXPENDITURE IS INFLATED AND NOT GENUINE IN THE COURSE OF ASSESSMENT PROCEEDINGS. T HE PENALTY WAS LEVIED ON THE SAME GROUND. THE CIRCUMSTANCES TAKE N FOR LEVY OF PENALTY BEING DIFFERENT FROM THOSE ON WHICH SATISFA CTION WAS RECORDED BY THE AO, ACTION IS UNJUSTIFIED AND BAD IN LAW. T HE ASSESSEE RELIED ON THE DECISION OF THE ITAT, AHMEDABAD BENCH IN THE CASE OF PANNEABEN P. DESAI, 79 ITD 30 (AHD) (SMC) AND GUJAR AT HIGH COURT DECISION IN THE CSE OF CIT VS. LAKHDHIR LALJI, 85 I TR 77. IT IS FURTHER SUBMITTED THAT IF THE PENALTY IS NOT LEVIED FOR A.Y .1997-98, THE PENALTY CANNOT BE LEVIED FOR A.Y.1998-99. RELIANCE WAS PLA CED ON CIT VS. SOOD HARVESTORS, 304 ITR 279 (P&H) AND K.M. BHATIA (QUARRY) VS. CIT, 193 ITR 379. IT IS SUBMITTED THAT THE PENALT Y WAS LEVIED ONLY ON THE BASIS OF FINDING IN THE ASSESSMENT ORDER AND NO COGENT MATERIAL IS BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE HAS CON CEALED THE INCOME AND HENCE PENALTY SHOULD BE DELETED. THE ASSESSEE ALTERNATIVELY PLEADED THAT IF THE EXPLANATION GIVEN BY THE ASSESS EE IS NOT ACCEPTABLE, ITA NO.2474/AHD/2009 -9 THEN THE PENALTY SHOULD HAVE BEEN IMPOSED AT THE MO ST 100% AND NOT AT 150% FOR THE REASONS STATED HEREIN. 7. FROM THE SIDE OF THE REVENUE, THE LEARNED DR VEH EMENTLY RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND ALSO ARGUED THAT QUANTUM ADDITION HAS BEEN CONFIRMED BY THE ITAT VID E ORDER ITA NO.3217/AHD/2003 DATED 26.10.2007 WHEREIN THE TRIBU NAL HELD THAT THE ASSESSEE HAD FAILED TO ESTABLISH ITS CASE AND F AILED TO REFUTE THE STATEMENT MADE BY SHRI PRASHANT PATEL, AO WAS JUSTI FIED IN RELYING ON THE STATEMENT OF SHRI PRASHANT PATEL. THEREFORE, P ENALTY WAS RIGHTLY IMPOSED BY THE AO WHICH SHOULD BE CONFIRMED. 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND HAVE PE RUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT IN Q UANTUM APPEAL OF THE ASSESSEE FOR A.Y.1998-99 THE ITAT CONFIRMED THE ADDITION MADE BY THE AO VIDE ITS ORDER IN ITA NO.3217/AHD/2003 (S UPRA). THE RELEVANT PORTION OF THE ITAT IS REPRODUCED BELOW: 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, FACTS AND CIRCUMSTANCES OF THE CASE AND HAVE PERUSED THE STAT EMENT OF SHRI PRASHANT N.PATEL, COPY OF WHICH HAS BEEN PLACE D BY THE ASSESSEE AT PAGE NO.17 OF THE PAPER-BOOK. 10. SO FAR AS CLAIM FOR EXPENDITURE OF RS.8 LACS SH OWN BY THE ASSESSEE AS PAYABLE AT THE END OF THE ACCOUNTING YE AR TO PRASHANT PATEL IS CONCERNED, WE, AFTER HAVING CONSI DERED THE STATEMENT OF PRASHANT PATEL, THE ENQUIRY MADE BY TH E ASSESSING OFFICER AND THE FACT THAT THE ASSESSEE FAILED TO CR OSS-EXAMINE SHRI PRASHANT PATEL IN SPITE OF TWO OPPORTUNITIES G RANTED BY THE ASSESSING OFFICER AND ALSO TO FURNISH ANY EVIDENCE TO REFUTE THE STATEMENT OF SAID SHRI PRASHANT PATEL, THE CIT(APPE ALS) WAS NOT JUSTIFIED IN DELETING THE ADDITION BY HOLDING T HAT PAYMENT IN QUESTION WAS MADE IN SUBSEQUENT FINANCIAL YEAR BY C ROSS CHEQUES. FACTUM OF MAKING OF PAYMENT BY CRESS CHEQU ES IN SUBSEQUENT YEARS WAS NOT RELEVANT IN VIEW OF THE ST ATEMENT OF ITA NO.2474/AHD/2009 -10 SHRI PRASHANT PATEL WHO HAD SPECIFICALLY SATED THAT AMOUNTS PAID TO HIM BY WAY OF CROSS CHEQUES IN SUBSEQUENT Y EARS, WERE WITHDRAWN FROM BANK IN CASH AND RETURNED TO THE ASS ESSEE. IF THE ASSESSEE HAD NOT MADE THE PAYMENT IN CASH DURIN G THE FINANCIAL YEAR 1996-97 AND HAD NOT RECEIVED BACK TH E CASH AGAINST CROSS CHEQUES PAID IN SUBSEQUENT FINANCIAL YEAR 1997- 98, THE ONUS WAS ON THE ASSESSEE TO ESTABLISH HIS C LAIM BY COGENT MATERIAL AS WELL AS TO REFUTE THE STATEMENT OF SAID SHRI PRASHANT PATEL WHICH WAS RECORDED TWICE AND THAT TO O U/S.131 OF THE ACT. 11. IN VIEW OF THE TOTALITY OF THE FACTS AND CIRCU MSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE ASSESSEE H AD FAILED TO ESTABLISH ITS CASE AND ASSESSING OFFICER WAS QUITE JUSTIFIED IN RELYING ON THE STATEMENT OF SHRI PRASHANT PATEL. CO NSEQUENTLY, WE REVERSE THE ORDER OF THE CIT(APPEALS) AND UPHOLD THE ADDITION OF RS.8 LACS. 12. SO FAR AS ASSESSEE'S CLAIM OF EXPENDITURE ON AC COUNT OF LABOUR CHARGES PAYABLE TO SHRI PRABHAT N.RPJPUT IS CONCERNED, IT IS QUITE CLEAR FROM THE ENQUIRY MADE BY THE ASSE SSING OFFICER THAT SAID SHRI PRABHAT RAJPUT WAS NOT FOUND AVAILAB LE AT THE ADDRESS GIVEN BY THE ASSESSEE. WHEN THE ASSESSING O FFICER ISSUED SHOW-CAUSE NOTICE TO THE ASSESSEE, IT WAS IN CUMBENT UPON THE ASSESSEE EITHER TO PROVIDE COMPLETE AND CO RRECT ADD OR TO PRODUCE HIM FOR EXAMINATION, BUT THE ASSESSEE IN STEAD OF DISCHARGING ITS ONUS HARPED UPON LEGAL PROPOSITION AND FACT OF HAVING MADE THE PAYMENT BY CROSS CHEQUES IN SUBSEQU ENT FINANCIAL YEAR. WHEN THE PERSON WHO HAD CARRIED ON WHO HAD CARRIED ON THE LABOUR WORK ITSELF WAS NOT AVAILABLE , THE FACTUM OF HAVING MADE PAYMENT BY CHEQUE COULD BE ACCEPTED. EVEN OTHERWISE, THE BANK ACCOUNT BEING IN THE JOINT NAME S OF SHRI PRASHANT N.PATEL AND PRABHAT N.RAJPUT AND SHRI PRAS HANT PATEL HAVING CONFIRMED THAT THE AMOUNT PAID BY WAY OF CROSS CHEQUES WERE RETURNED BACK TO THE ASSESSES AFTER WI THDRAWING IN CASH THE THAT AMOUNTS AID BY CROSS CHEQUES TO SH RI PRABHAT N.RAJPUT ALSO GOT RE-PAID TO THE ASSESSEE~ STANDS E STABLISHED AND IF THAT WAS NOT THE CASE, THEN THE ONUS WAS UPO N THE ASSESSEE TO REFUTE THIS FACT BY WAY OF COGENT MATER IAL. HERE AGAIN, THE ASSESSEE HAVING FAILED EVEN TO ESTABLISH THE IDENTITY OF SHRI PRABHAT RAJPUT AND ALSO TO REFUTE THE FACTU M OF HAVING RECEIVED BACK THE AMOUNTS CLAIMED TO HAVE BEEN PAID BY CROSS ITA NO.2474/AHD/2009 -11 CHEQUES, THERE WAS NO INFIRMITY IN THE ORDER OF THE AO. CONSEQUENTLY, WE ARE OF THE OPINION THAT THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION SIMPLY ON THE BA SIS OF FACT OF AMOUNTS PAID IN SUBSEQUENT YEARS BY CROSS CHEUES WI THOUT GOING INTO THE FACTUAL POSITION EMERGING OUT OF STA TEMENT OF SHRI PRASHANT PATEL. THE ORDER OF THE CIT(A) IS THEREFO RE REVERSED AND ADDITION IS RESTORED. 9. THE LEARNED AO HAS ESTABLISHED CONCEALMENT OF IN COME AS THE ASSESSEE HAS OBTAINED BOGUS BILLS AND INFLATED THE EXPENDITURE. THE DETAILED INVESTIGATION HAD BEEN MADE BY THE AO AT T HE TIME OF ASSESSMENT AND AGAIN THE ASSESSEE WAS ALLOWED OPPOR TUNITY AT THE TIME OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF T HE ACT TO ESTABLISH ITS CASE. BUT THE ASSESSEE HAS NOT REBUTTED THE FA CT OF THE CASE BY PRODUCING ANY EVIDENCES. THE STATEMENT OF SHRI PRA SHANT PATEL THAT AMOUNTS PAID TO HIM BY WAY OF CROSS CHEQUES IN SUBS EQUENT YEARS WERE WITHDRAWN FROM BANK IN CASH AND RETURNED TO TH E ASSESSEE HAS NOT BEEN REFUTED OR DENIED BY THE ASSESSEE NOR ANY CONVINCING EXPLANATION PLACED BEFORE US TO TAKE A DIFFERENT VI EW. THEREFORE, WE FIND THAT THIS IS A FIT CASE FOR IMPOSITION OF PENA LTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, WE ARE OF THE VIEW THAT THE PENALTY IMPOSED BY THE AO APPEARS TO BE ON HIGHER SIDE, AND ACCORDINGLY RESTRICT THE IMPUGNED PENALTY AT 100% OF THE TAX SO UGHT TO BE EVADED BY THE ASSESSEE INSTEAD OF 150% IMPOSED BY THE AO. WE DIRECT ACCORDINGLY. 10. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER (TEJ RAM MEENA) ACCOUNTANT MEMBER