DCIT, Panchkula V. Sh. Rajeev Sud, Prop., Panchkula

ITA 259/CHANDI/2010

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1650 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.235/CHD/2010 (ASSESSMENT YEAR : 2006-07) RAJIV SUD, VS. THE A.C.I.T., PROP. M/S ESCON BUILDERS, PANCHKULA. 260, SECTOR 7, PANCHKULA. PAN: ADZPS2391E AND ITA NO.259/CHD/2010 (ASSESSMENT YEAR : 2006-07) THE A.C.I.T., VS. RAJIV SUD, CIRCLE PANCHKULA. PROP. M/S ESCON BUILDERS, 260, SECTOR 7, PANCHKULA. PAN: ADZPS2391E (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI SUDHIR SEHGAL & ASHOK GOYAL DEPARTMENT BY : SHRI MANOJ MISHRA, CIT DR DATE OF HEARING : 20.10.2015 DATE OF PRONOUNCEMENT : 18.12.2015 O R D E R PER RANO JAIN, A.M . : BOTH THE CROSS APPEALS ARE DIRECTED AGAINST TH E ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S), PANCHKULA DATED 1.1.2010 FOR ASSESSMENT YEAR 2006-0 7. 2 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN CIVIL CONSTRUCTION OF TOWER FOUNDATIONS AND ELECTRICAL WORKS. THE RETURN OF IN COME FOR THE RELEVANT FINANCIAL YEAR WAS FILED AS ON 31. 10.2006 AT RS.18,12,573/-. THE ASSESSING OFFICER NOTICED T HAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.1,17,76,840/- IN THE PROFIT & LOSS ACCOUNT ON ACCOUNT OF PAYMENT TO SUB- CONTRACTORS AND THE SAME AMOUNT IS SHOWN UNDER THE HEAD SUNDRY CREDITORS IN THE BALANCE SHEET. THE ASSES SEE EXPLAINED TO THE ASSESSING OFFICER THAT HE IS A CIV IL CONTRACTOR ENGAGED IN THE COMMUNICATION TOWER CONSTRUCTION AND IS BASED AT PANCHKULA. THE WORK I S BEING CARRIED OUT AT FAR OFF PLACES FROM THE HEADQU ARTERS IN REMOTE AREAS OF HIMACHAL PRADESH. IT IS VERY CO MMON PRACTICE TO AVAIL THE SERVICES OF THE SUB-CONTRACTO RS ON THE BASIS OF REQUIREMENTS AT WORK SITE WITHOUT ANY QUOT ATION, TENDERS, ETC. SINCE LOCAL PEOPLE HAD CONTACTS AND KNOWLEDGE OF LOCAL AREA, THEREFORE, THESE ARE ENGAG ED FOR THIS PURPOSE. THE SUB-CONTRACTS WERE GIVEN WITH MA TERIAL BECAUSE THE CONTRACT WAS AT REMOTE LOCATIONS AND TH E MATERIAL WAS PURCHASED ON A DAY-TO-DAY BASIS OR IN LOTS DEPENDING ON THE IMMEDIATE REQUIREMENT OF WORK SINC E LARGE STOCKS CANNOT BE KEPT. THE ASSESSING OFFICER NOTICED THAT THERE WERE TOTAL NUMBER OF 41 SUB- CONTRACTORS AND ASKED THE ASSESSEE TO PRODUCE SUB- CONTRACTORS ALONGWITH THEIR PAN CARDS, RETURN OF IN COME AND BANK ACCOUNTS. FOR PRODUCING THE SUB-CONTRACTO RS OPPORTUNITY WAS GIVEN TO THE ASSESSEE AS MANY AS TH REE 3 TIMES AND FURTHER SUMMONS UNDER SECTION 133 OF THE ACT WERE ISSUED TO A FEW SUB-CONTRACTORS BY THE ASSESSI NG OFFICER DIRECTLY. AFTER A LONG EXERCISE CARRIED ON BY THE ASSESSING OFFICER, THE SITUATION CULMINATED INTO TH AT IN TOTAL SUMMONS TO 9 SUB-CONTRACTORS WERE ISSUED BY T HE ASSESSING OFFICER INCLUDING THOSE PERSONS WHO WERE CALLED TO PRODUCE BY THE ASSESSEE. OUT OF THESE 9 SUB- CONTRACTORS NOTICES TO 3 PERSONS I.E. S/SHRI RAM PA L, LAL BABU AND BIPIN KUMAR CAME BACK UNSERVED. TWO PERSO NS, NAMELY S/SHRI SATBIR SINGH AND PRAVEEN KUMAR YADAV APPEARED BEFORE THE ASSESSING OFFICER. NOTICES TO KAROLI COOPERATIVE MULTIPURPOSE SOCIETY AND SHRI KAMAL KIS HORE THOUGH GOT SERVED BUT REMAINED UNCOMPLIED WITH. LE TTER FROM ONE PERSON NAMELY SHRI KAMESHWAR SHARMA WAS RECEIVED BY THE ASSESSING OFFICER, WHEREBY HE EXPRE SSED HIS INABILITY TO APPEAR BEFORE THE FIRST WEEK OF JA NUARY, 2009. REGARDING ONE PERSON, NAMELY SHRI BIRBAL SIN GH THE ASSESSING OFFICER HAS NOT STATED ANY OBSERVATIO N WHETHER REPLY WAS RECEIVED OR NOT. FURTHER, TWO MO RE PERSONS, NAMELY S/SHRI DINESH VERMA AND SANJEEV VER MA APPEARED BEFORE THE ASSESSING OFFICER. THE THREE P ERSONS, WHO APPEARED BEFORE THE ASSESSING OFFICER, STATEMEN TS OF THESE PERSONS WERE RECORDED BY HIM AND AFTER OBSERV ING VARIANCE IN THE VERSION OF THESE PERSONS, THE ASSES SING OFFICER FORMED A VIEW THAT THE CREDIT ENTRIES AGAIN ST THE SUB- CONTRACTORS PAYMENTS AND EXPENSES ARE NOT GENUINE A ND BONAFIDE. HE WAS OF THE VIEW THAT SUB-CONTRACTORS HAVE ALREADY BEEN PAID IN CASH FOR THE WORK THEY HAVE CA RRIED 4 OUT FROM THE UNDISCLOSED INCOME EARNED BY THE ASSES SEE AND THE CREDITORS SHOWN IN THE BOOKS ARE MERE BOGUS ENTRIES. IN THIS WAY, THE AMOUNT OF RS.1,17,76,840 /- DEBITED ON ACCOUNT OF PAYMENT TO SUB-CONTRACTORS IN THE PROFIT & LOSS ACCOUNT AND SHOWN IN THE BALANCE SHEE T UNDER THE HEAD SUNDRY CREDITOR WAS ADDED TO THE T OTAL INCOME OF THE ASSESSEE. 3. THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CIT (APPEALS) AND SUBMITTED THAT IN THE CONSTRUCTIO N LINE VARIOUS COURTS HAVE HELD THE NET PROFIT RATE RANGIN G FROM 8% TO 10%, WHILE THE ASSESSEE HAD SHOWN 8.52% AS N ET PROFIT AFTER DEPRECIATION, WHICH IS A VERY REASONAB LE RATE IN THIS LINE OF BUSINESS. IF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TO THE TUNE OF RS.1,17,76,840/- I S TAKEN INTO CONSIDERATION, THE ASSESSABLE INCOME COMES TO RS.1,35,89,413/- AND NET PROFIT COMES OUT TO 60.98% , WHICH IS FAR AWAY FROM REALITY AND THE APPROPRIATE RATES PRESCRIBED BY VARIOUS COURTS. IT WAS ALSO ARGUED T HAT THE ASSESSING OFFICER HAS NOT REJECTED BOOKS OF ACCOUNT AND JUST MADE THE ADDITION. FURTHER, IT WAS SUBMITTED THAT OUT OF 41 SUB-CONTRACTORS, INVESTIGATION WAS MADE O NLY IN THE CASE OF 11 SUB-CONTRACTORS. THE NON-SERVICE OF SUMMONS TO A FEW SUB-CONTRACTORS DOES NOT MEAN THAT THE SUB-CONTRACTORS WERE NOT GENUINE. THE DEFICIENCY A S POINTED OUT BY THE ASSESSING OFFICER IN THE STATEME NT RECORDED OF THE FOUR PERSONS WERE SAID TO BE MINOR IN NATURE AND IT WAS SUBMITTED THAT THE PAYMENTS TO AL L 5 THESE SUB-CONTRACTORS WERE MADE IN SUBSEQUENT YEARS THROUGH BANKING CHANNEL. THE ASSESSEE ALSO FILED C OPIES OF AFFIDAVIT FROM SHRI DINESH VERMA, ONE OF THE SUB - CONTRACTORS TO THE EFFECT THAT HE HAS ACTUALLY DONE WORK OF THE ASSESSEE AND THE PAYMENTS WERE MADE TO HIM IN SUBSEQUENT YEARS. THE LEARNED CIT (APPEALS) SENT T HE SUBMISSIONS MADE BY THE ASSESSEE TOGETHER WITH THE ADDITIONAL EVIDENCE IN THE FORM OF AFFIDAVIT TO THE ASSESSING OFFICER. IN THE REMAND REPORT, THE ASSES SING OFFICER OBJECTED TO THE ADMISSION OF ADDITIONAL EVI DENCE IN THE FORM OF AFFIDAVIT AS NONE OF THE CONDITIONS PRE SCRIBED UNDER CLAUSES (A) TO (D) OF SUB RULE 46A (1) OF INC OME TAX RULES WERE COMPLIED WITH. FURTHER, IT WAS SUBMITTE D IN THE REMAND REPORT THAT EVEN WITHOUT REJECTING THE B OOKS OF ACCOUNT THE ASSESSING OFFICER CAN MAKE DISALLOWA NCES AND ADDITIONS ON THE BASIS OF ANY OTHER VALID REAS ON. JUST BECAUSE THE BOOKS OF ACCOUNT ARE AUDITED, IT C ANNOT BE SAID THAT THE EXPENSES CLAIMED CANNOT BE BOGUS. AS REGARDS THE SUBMISSIONS OF THE ASSESSEE THAT AFTER ANALYZING ONLY A FEW SUB-CONTRACTORS, ADVERSE VIEW HAS BEEN TAKEN ON ALL THE PAYMENTS. IT WAS STATED THAT THE ASSESSING OFFICER HAS GIVEN FINDING ON THE BASIS OF HOLISTIC AND COMPREHENSIVE ANALYSIS OF THE TRANSACTIONS SHO WN WITH ALL THE SUB-CONTRACTORS. IN VIEW OF THIS THE LEARNED CIT (APPEALS) DID NOT ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE IN THE FORM OF AFFIDAVIT. IN REJOI NDER TO THE REMAND REPORT, THE ASSESSEE REITERATED THE SUBMISSIONS MADE BY HIM EARLIER. AFTER CONSIDERING ALL 6 THESE, THE LEARNED CIT (APPEALS) FORMED AN OPINION THAT REGARDING APPLICATION OF 10% PROFIT RATE IN THE CAS E BY REJECTION OF THE BOOKS OF ACCOUNT RAISED BY THE ASS ESSEE IS DEVOID OF ANY MERIT. EVEN THE ARGUMENT OF THE ASSE SSEE WITH REGARD TO REJECTION OF BOOKS OF ACCOUNT WAS DISMISS ED BY THE LEARNED CIT (APPEALS). THE ADDITIONAL EVIDENCE WAS NOT ADMITTED BY HIM. HOWEVER, THE LEARNED CIT (APPEALS ) FOUND FORCE IN THE ARGUMENT OF THE ASSESSEE THAT THE DECI SION OF THE ASSESSING OFFICER WAS BASED ONLY ON THE BASIS OF FE W SUB- CONTRACTORS OUT OF TOTAL NUMBER OF 41 SUB-CONTRACTO RS. IN THIS VIEW, THE LEARNED CIT (APPEALS) SUSTAINED THE ADDIT ION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUB-CONTRACT S EXPENSES ONLY TO THE EXTENT OF 9 SUB-CONTRACTS AMOUNTING TO RS.54,12,871/-. THE DETAILS OF WHICH ARE AS FOLLOW S : (I) SHRI BIPIN KUMAR RS.9,73,625/- (II) SHRI SATBIR SINGH RS.10,41,000/- (III) SHRI DINESH VERMA RS.8,50,769/- (IV) SHRI BIRBAL SINGH RS.1,50,000/- (V) SHRI KAMESHWAR SHARMA RS.7,73,524/- (VI) SHRI LAL BABU RS.11,21,310/- (VII) M/S KAROLI COOP SOCIETY RS.1,55,000/- (VIII) SHRI RAM PAL RS.3,03,510/- (IX) SHRI KAMAL KISHORE RS.44,133/- RS.54,12,871/- 4. AGGRIEVED BY THE SAID ORDER, BOTH THE DEPARTMEN T AND THE ASSESSEE HAVE COME UP IN APPEAL. THE ASSES SEE IS CONTESTING THE ACTION OF THE LEARNED CIT (APPEALS) IN SUSTAINING THE DISALLOWANCE WITH RESPECT TO 9 7 SUB-CONTRACTORS, WHILE THE DEPARTMENT IS IN APPEAL AGAINST THE ACTION OF THE LEARNED CIT (APPEALS) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN O THER 32 SUB-CONTRACTORS. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES A ND STATED THAT IN THE TYPE OF BUSINESS IN WHICH THE AS SESSEE IS ENGAGED, THERE IS ALWAYS A NEED TO HIRE LOCAL SU B- CONTRACTORS. THE ASSESSING OFFICER WAS NOT JUSTIFI ED TO MAKE THE DISALLOWANCE WITH RESPECT TO ALL THE SUB- CONTRACTORS ONLY ANALYZING 9 OF 41 SUCH SUB-CONTRAC TORS. AS REGARDS STATEMENT RECORDED BY THE ASSESSING OFFI CER OF A FEW SUB-CONTRACTORS, IT WAS SUBMITTED THAT ALL OF THEM HAVE CONFIRMED THAT THE WORK HAS BEEN DONE BY THEM AND PAYMENT HAS BEEN MADE TO THEM. HOWEVER, THE DISCREPANCIES AROSE ONLY OF MINOR CONSEQUENCES. BE FORE US, A CHART WAS FILED, WHEREBY IT WAS SHOWN THAT TO ALL THE CONTRACTORS WHO WERE INVESTIGATED BY THE ASSESSING OFFICER, THE PAYMENTS WERE MADE IN THE SUCCEEDING Y EARS AND THE BALANCE PAYMENTS AS ON 1.4.2008 TO THESE CONTRACTORS WERE NIL. 6. THE LEARNED D.R. RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT IN VIEW OF THE FACT THAT THE SUB-CONTRACTORS WHOSE STATEMENTS WERE RECO RDED BY THE ASSESSING OFFICER HAVE NOT CONFIRMED THE FAC TS AS STATED BY THE ASSESSEE AND IN MANY OF THE CASES, TH E SUMMONS ISSUED BY THE ASSESSING OFFICER WERE NOT SE RVED 8 AND CAME BACK UNSERVED. IN THIS VIEW, LOOKING AT L ARGE NUMBER OF SUB-CONTRACTORS HIRED BY THE ASSESSEE, IT WAS NOT POSSIBLE FOR THE ASSESSING OFFICER TO INVESTIGA TE ALL OF THEM AND A VIEW TAKEN BY HIM ON THE BASIS OF SAMPLE INVESTIGATION WAS THE RIGHT APPROACH. IN THIS WAY, A PRAYER WAS MADE TO CONFIRM THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSES SEE HAD EMPLOYED 41 SUB-CONTRACTORS DURING THE YEAR UNDER CONSIDERATION FOR THE WORK DONE BY HIM. THE ASSESS ING OFFICER HAS CARRIED ON INVESTIGATION ONLY IN 9 CASE S. ON THE BASIS OF RESULTS OF INVESTIGATION IN 9 CASES, T HE ASSESSING OFFICER HAS TAKEN ADVERSE VIEW ON WHOLE O F THE AMOUNT PAID BY THE ASSESSEE TO THE SUB-CONTRACTORS. WE ARE IN AGREEMENT WITH THE CONCLUSION REACHED BY THE LEARNED CIT (APPEALS) THAT THE ASSESSING OFFICER CA NNOT DRAW ADVERSE INFERENCE ON THE BASIS OF PART INVESTI GATION MADE BY HIM. THEREFORE, WE UPHOLD THE ACTION OF TH E LEARNED CIT (APPEALS) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PAYMENTS TO THOSE SUB-CONTRACTORS, WHO WERE NOT INVESTIGATED BY THE ASSESSING OFFICER. IN THE ABSENCE OF APPEARANCE OR RECORDING OF STATEMENT, AN ADVERSE VIEW AGAINST SUC H LEFT OUT SUB-CONTRACTORS CANNOT BE TAKEN. 9 8. IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE IS DISMISSED. 9. OUT OF 9 SUB-CONTRACTORS PAYMENTS TO WHICH HAVE BEEN CONFIRMED BY THE LEARNED CIT (APPEALS), W E OBSERVE THAT IN 3 CASES I.E. S/SHRI BIPIN KUMAR, LA L BABU AND RAM PAL, THE SUMMONS ISSUED HAVE COME BACK UNSERVED. SINCE THE ASSESSING OFFICER HAD TIME AND AGAIN ASKED THE ASSESSEE TO FILE THE LATEST WHEREABOUTS O F THESE SUB-CONTRACTORS, STILL THE ASSESSEE COULD NOT FIND THE RIGHT ADDRESSES OF THESE, WE ARE UNABLE TO ACCEPT THE CON TENTION RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT NO ADVERSE INFERENCE IN THESE 3 CASES COULD BE DRAWN. IN THIS VIEW, WE UPHOLD THE DISALLOWANCE IN THE CASE OF S/S HRI BIPIN KUMAR, LAL BABU AND RAM PAL. IN ONE OF THE C ASES, I.E. SHRI KAMESHWAR SHARMA ON RECEIPT OF SUMMONS IS SUED BY THE ASSESSING OFFICER, A REPLY WAS RECEIVED BY H IM, WHEREBY HE EXPLAINED THE SITUATION UNDER WHICH HE W AS UNABLE TO ATTEND THE OFFICE OF THE ASSESSING OFFICE R BEFORE FIRST WEEK OF JANUARY. IN THIS VIEW, IT CANNOT BE SAID THAT THE WORK OF THE ASSESSEE WAS NOT DONE BY HIM OR THE PAYMENT WAS NOT DUE TO HIM. IF THE LEARNED CIT (AP PEALS) WAS NOT CONVINCED BY THE EXPLANATION OF THE ASSESSE E, HE COULD HAVE CALLED SHRI KAMESHWAR SHARMA AND COULD H AVE MADE INVESTIGATION HIMSELF AS THE LEARNED CIT (APPE ALS) ENJOYS THE CO-TERMINUS POWER WITH THAT OF THE ASSES SING OFFICER. NO ADVERSE INFERENCE IN THIS CASE CAN BE DRAWN 10 AGAINST THE ASSESSEE. IN ONE OF THE CASES, SHRI BI RBAL SINGH, THE ASSESSING OFFICER MADE A MENTION OF HIS NAME BEING IN THE LIST TO WHOM THE SUMMON UNDER SECTION 133 OF THE ACT WAS ISSUED BUT AFTER THAT THERE IS NO ME NTION FOUND IN THE ORDER OF THE ASSESSING OFFICER WITH RE GARD TO THE SAME. WHETHER SUMMON WAS SERVED TO HIM OR NOT, WHERE THE REPLY WAS RECEIVED FROM HIM OR NOT, WE AR E NOT AWARE OF. IN SUCH A SCENARIO, NO ADVERSE VIEW AGA INST THE ASSESSEE CAN BE TAKEN. AS REGARDS THE TWO CASES TH AT OF M/S KAROLI COOPERATIVE MULTIPURPOSE SOCIETY AND SHR I KAMAL KISHORE, IN THESE TWO CASES, THE SUMMONS ISSU ED UNDER SECTION 133 OF THE ACT WERE SERVED BUT REMAIN ED UN- COMPLIED WITH. IT IS A TRITE LAW THAT IF THE ASSE SSING OFFICER INITIATES AN INVESTIGATION, HE HAS TO TAKE IT TO THE LOGICAL END. THE ASSESSEE HAS GIVEN THE ADDRESSES OF THESE TWO PERSONS, WHICH WERE NOT FOUND TO BE INCOR RECT IN VIEW OF THE FACT THAT THE SUMMONS HAVE NOT COME BAC K UNSERVED I.E. THE SUMMONS WERE DULY SERVED ON THESE PERSONS. HOWEVER, NO COMPLIANCE WAS MADE BY THEM. IN SUCH A SCENARIO, THE ASSESSING OFFICER CANNOT SHIFT THE ONUS TO PRODUCE THESE PERSONS ON THE ASSESSEE. THE ASSESSING OFFICER HAS ALL THE POWER TO CALL THESE P ERSONS FOR PERSONAL ATTENDANCE. NO ADVERSE VIEW AGAINST T HE ASSESSEE CAN BE TAKEN IN SUCH CASES. WE ARE GUIDED BY THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE O F CIT VS. ORISSA CORPORATION P. LTD. (1986) 159 ITR 78 (S C). 11 10. DURING THE COURSE OF HEARING BEFORE US, COPIES OF STATEMENTS OF SUB-CONTRACTORS RECORDED BY THE ASSES SING OFFICER WERE FILED. ON PERUSAL OF THE STATEMENT OF SHRI SATBIR SINGH, WE SEE THAT HE HAS STATED ON OATH THA T DURING THE YEAR UNDER CONSIDERATION, HE HAS DONE WO RK OF AROUND RS.11 LACS TO RS.12 LACS FOR THE ASSESSEE DU RING THE YEAR. AS PER THE ASSESSEE, THE TOTAL WORK EXEC UTED FOR THE ASSESSEE BY SHRI SATBIR SINGH IS TO THE TUNE OF RS.12,24,000/-. THEREFORE, WE DO NOT FIND ANY THI NG ADVERSE TO THE ASSESSEE IN THIS CONTEXT. FURTHER, HE HAS STATED THAT DURING THE YEAR HE HAD RECEIVED AMOUNT OF RS.2 LACS TO RS.2.5 LACS. THE SUBMISSION OF THE AS SESSEE IS THAT THE PAYMENT OUTSTANDING AS ON 31.3.2006 WAS RS.10,41,000/-, WHICH MEANS AN AMOUNT OF RS.1,83,00 0/- HAS BEEN PAID TO SHRI SATBIR SINGH DURING THE YEAR. IN THIS WAY ALSO, WE DO NOT FIND ANY ADVERSE FACT STAT ED BY SHRI SATBIR SINGH IN HIS STATEMENT RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SHRI SATBIR SING H IS STATING THE FIGURES ON AN APPROXIMATE BASIS AND WE DO NOT FIND ANY BIG VARIATION IN HIS STATEMENT AND THAT OF THE ASSESSEES SUBMISSION. FURTHER, HE HAS VERY CLEARL Y ACCEPTED THE FACT THAT HE HAS ACTUALLY WORKED FOR T HE ASSESSEE DURING THE YEAR. IF THE ASSESSING OFFICER HAD ANY SUSPICION EVEN AFTER RECORDING OF STATEMENT, HE COU LD HAVE GONE AHEAD AND MAKE FURTHER ENQUIRY. IN THIS OVERA LL SCENARIO, WE DO NOT FIND ANY REASON TO TAKE ANY ADV ERSE VIEW AGAINST THE ASSESSEE AS REGARDS PAYMENT T O SHRI 12 SATBIR SINGH. THEREFORE, WE DIRECT THE ASSESSING O FFICER TO DELETE THE DISALLOWANCE OF EXPENSES ATTRIBUTABLE TO SHRI SATBIR SINGH ON ACCOUNT OF SUB-CONTRACT WORK. 11. AS REGARDS SHRI DINESH VERMA, THE STATEMENT OF THE SAID PERSON WAS RECORDED BY THE ASSESSING OFFIC ER, WHEREBY HE HAS ACCEPTED THE FACT THAT HE HAD EXECUT ED WORK FOR THE ASSESSEE DURING THE YEAR. HE HAS ALSO AGREED THAT HE HAD RECEIVED PAYMENT DURING THE YEAR AND AL SO IN THE SUBSEQUENT YEARS. HE HAS ALSO GIVEN HIS BANK D ETAILS TO THE ASSESSING OFFICER. THE ONLY VARIATION IS IN THE AMOUNT OF WORK EXECUTED AND THE AMOUNT OF PAYMENT RECEIVED DURING THE YEAR. HERE ALSO, WE ARE OF THE VIEW THAT AN ADVERSE VIEW AGAINST THE ASSESSEE CANNOT BE TAKEN ON THE BASIS OF SUCH STATEMENT, DESPITE THE FACT TH AT THE ASSESSEE HAD MADE PAYMENT TO THIS PERSON THROUGH BANKING CHANNEL IN THE YEAR CONCERNED AS WELL AS IN THE SUCCEEDING YEAR. IF THE ASSESSING OFFICER OR EVEN THE LEARNED CIT (APPEALS) WERE APPREHENSIVE, THEY COULD HAVE GONE AHEAD AND MAKE FURTHER ENQUIRIES, WHICH NONE O F THEM PREFERRED TO DO. IN VIEW OF THIS, THE ASSESSI NG OFFICER IS DIRECTED TO DELETE THE DISALLOWANCE MADE BY HIM ON ACCOUNT OF SUB-CONTRACT PAYMENT MADE TO SHRI DIN ESH VERMA. 12. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 13 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO.235/CHD/2010 IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IN ITA NO.259/CHD/2010 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF DECEMBER, 2015. SD/- SD/- (BHAVNESH SAINI) (RANO JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18 TH DECEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH