M/S SHRI PALSIDDHA CONSTRUCTION, Buldhana V. ACIT Akola Circle, Akola

ITA 306/NAG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1291 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-06-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 01-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Income from undisclosed sources; Corroborative evidences; Retraction
• Section: 44AD; 133A; 145

Judgement Text

1 ITA NO. 306/NAG/2015. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER.. I.T.A. NO. 306/NAG/2015 ASSESSMENT YEAR : 2012 - 13. M/S SHRI PALSIDDHA CONSTRUCTION, ASSTT. COMMISSIONER OF MAIN ROAD, SAKHARKHEDA, VS. INCOME TAX, TQ. SINDKHED RAJA, DIST. BULDHANA, AKOLA CIRCLE, AKOLA. PAN ABLFS 9009H. APPELLANT. RESPONDENT. APPELLANT BY : SHRI MAHAVIR ATAL. RESPONDENT BY : SHRI A.R. NINAWE. DATE OF HEARING : 24 - 11 - 2016 DATE OF PRONOU NCEMENT : 28 TH DEC., 2016 O R D E R. PER SHAMIM YAHYA, A.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 30 - 10 - 2015 AND PERTAINS TO ASSESSMENT YEAR 2012 - 13 . THE GROUNDS OF APPEAL READ AS UNDER : 1. THE CIT(A) ERRED IN ENDORSING THE INQUIRY DONE TO THE ASSESSEE BY SURVEY TEAM & ASSESSING OFFICER, FIRSTLY BY OBTAINING FORCEFUL DISCLOSURE AND THEN DISREGARDING THE RETRACTION LETTER AND NOT FOLLOWING CBDT INSTRUCTION F. NO. 286/2/2003 - IT DATED 10/03/2003 . 2. THE CIT(A) ERRED IN CONFIRMING ADDITION, WHICH WERE MADE ON THE BASIS OF STATEMENT RECORDED DURING THE SURVEY NOT BACKED BY ANY CORROBORATIVE EVIDENCE. 3. THE CIT(A) ERRED IN ENDORSING DISALLOWANCE UNDER SECTION 40(A)(IA). 2. BRIEF FACTS OF THE CASE ARE AS UNDER : 2 ITA NO. 306/NAG/2015. A SURVEY ACTION U /S 133A OF THE I.T. ACT, 1961 WAS CONDUCTED AT THE BUSINESS PREMISES OF THE APPELLANT ON 08 - 02 - 2012. THE APPELLANT FIRM IS A GOVERNMENT CONTRACTOR, UNDERTAKING THE CONTRACTS FOR CONSTRUCTION OF ROADS AND BRIDGES ETC. THE GROSS RECEIPTS DECLARED BY THE APPELLANT DURING THE YEAR UNDER APPEAL ARE AT RS.32,71,01,603/ - ON WHICH THE TOTAL TAXABLE INCOME DECLARED IN THE RETURN FILED IS RS.2,77,12,060/ - . DURING THE COURSE OF SURVEY A TENTATIVE TRADING, PROFIT & LOSS ACCOUNT WAS PREPARED AS ON THE DATE OF SURVEY AS PER THE REGULAR BOOKS OF ACCOUNT SHOWING THE GROSS PROFIT OF RS.2,27,10,494/ - WHEREAS ANOTHER TENTATIVE TRADING ACCOUNT WAS ALSO FOUND FROM THE PREMISES OF THE ASSESSEE SHOWING THE GROSS PROFIT OF RS.5,70,34,614/ - AND BASED ON THE VARIATION IN THE FIGURES OF TRADING ACCOUNT, THE APPELLANT HAD DECLARED ADDITIONAL UNACCOUNTED INCOME OF RS.3,43,24,120/ - AND COMMITTED TO PAY TAXES DUE THEREON. HOWEVER, SUBSEQUENTLY THE APPELLANT VIDE ITS LETTER DATED 22 - 02 - 2012 ADDRESSED T O JT. COM MISSIONER OF INCOME - TAX, KHAMGAON RETRACTED THE DECLARATION GIVEN DURING THE COURSE OF SURVEY ACTION ON THE GROUND THAT THE BOOKS OF ACCOUNT WERE NOT COMPLETE AS ON THE DATE OF SURVEY AND VARIOUS BILLS FROM CREDITORS WERE YET TO BE ACCOUNTED FOR. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO ISSUED FOLLOWING QUERIES : A) FOR THE DISCREPANCIES NOTICED WHY THE BOOKS OF ACCOUNTS SHOULD NOT BE REJECTED AND ADDITION OF RS.15,79,813/ - SHOULD BE MADE TO THE TOTAL INCOME; B) WHY INTEREST PAYMENTS MADE TO SUNDERAM FINANCE AND MANGA FINANCE AT RS.23,92,290/ - SHOULD NOT BE DISALLOWED U/S 40(A)(IA); C) WHY SALE OF MATERIAL SHOWN AT THE TIME OF SURVEY AT RS.36,28,240/ - , NOT DISCLOSED IN THE FINAL ACCOUNTS SHOULD NOT BE ADDED BACK; AND D) WHY THE ADDITIONAL INCO ME AT RS.3,43,24,120/ - DECLARED DURING THE COURSE OF SURVEY, RETRACTED LATER ON, SHOULD NOT BE ADDED TO THE TOTAL INCOME. 3 ITA NO. 306/NAG/2015. 4. AS REGARDS REJECTION OF BOOKS OF ACCOUNT THE AO WAS NOT SATISFIED WITH THE ASSESSEES SUBMISSION. HE HELD AS UNDER : T H E PRESEN T AND EARLIER CONTENTIONS OF THE ASSESSEE WERE CONS I DERED CAREFULLY AND THE SA M E ARE REJECTED ON THE G R OUND THAT THE ASSESSEE I S FOLLOWING MERCANT I LE SYSTEM OF A C COUNT I N G F OR RECORD I N G EXPENSES , WHERE AS T H E INCOME I S R EPORTED ON THE CASH BAS I S . THUS I T I S NO T P OSS I BLE TO W ORK OUT CORRECT P R OF I TS EARNED BY THE ASSESSEE DUR I NG T H E Y EAR . T H E E X P EN SES A CCOUNTED FOR BY THE ASSESSEE T IL L T HE END OF T H E F I NANC I A L YEAR SHO UL D A L SO BE RE F LE CT ED I N THE F I NANC I AL STATEMENTS IN T HE FORM OF CLOS IN G WORK IN PROGRESS , W HICH THE ASSE SSE E I S NOT SHO WIN G AT ALL . THE CLOS I NG WORK IN PROGRESS IS REQUIRED TO BE COMPUTED ON TH E BASIS OF ALL THE E X PENSES INCURRED, INCLUDING PROV I SIONS MADE, WHICH WERE NOT B I LLED AND ACC OUNTE D FOR I N THE CONTRACT RECEIPTS. THE RECORDS MAINTAINED BY THE ASSESSEE ARE SUCH THA T I T IS NOT POSSIBLE TO WORK OUT THE CO R RECT PICTURE OF WORK IN PROG R ESS AT THE END OF THE YEAR . M ORE OVER REG I STERS MA I NTAINED BY THE ASSESSEE DOES NOT REVEAL CORRECT POS I T I ON R EG ARD ING T HE DATE OF WORK DONE AND AMOUNT OF PAYMENT MADE - I N RESPECT OF THAT WORK . T H U S T HE AC COUNTS OF THE ASSESSEE ARE NOT R EFLECT I NG CORRECT PICTURE OF PROF I TS EARNED BY THE A SSE SSE E. T HEREFORE , THE BOOKS OF ASSESSEE ARE REJECTED U / S 145 (3) OF THE INCOM E TAX ACT, 196 1 AND TOTAL INCOME OF THE A SSES S E E IS COMPUTED @ 8% OF THE TOTAL TURNOVER DECLARED BY T HE ASSESSEE IN LINE W I TH THE PROVISIONS OF SE C T I ON 44AD OF THE INCOME TAX ACT, 1961 . THE I NC OME TH US WORKS OUT TO RS. 2,61,68,128 / - AS AGAINST RS. 2,45,88,315/ - DECLARED BY THE ASSE SSE E . THUS ADD I TION OF RS. 15,79,813 / - IS MADE TO THE TOTAL I NCOME OF THE ASSESSEE. P E NALTY P R OCEEDINGS U/S 271(I)(C) OF THE I N COME TAX ACT, 1961 ARE I N I T I ATED SEPARATE L Y FOR FURN ISH IN G I NACCURATE PART I CULARS OF INCOME . 5. AS REGARDS DISALLOWANCE U/S 40(A)(IA) THE AO HELD AS UNDER : T H E SUBMISSION OF THE A SSESSE E HAS BEEN CAREFULLY C ONSIDERED AND THE C I TATION G I VEN B Y T HE ASS ESSEE IS A LS O GONE THR O UGH. I N TH I S REGARD I T I S SUBMITTED THAT THE AFORESAID C I TATI O N G I V E N BY THE A S SESSEE HAS BEEN OV E RRULED BY THE HON'BLE CALCUTTA H I GH CO U RT IN THE C ASE OF C I T, KO L KATA - X I VIS CRESCENT EXPO R T SY N D I CATE. ( 2 0 13) 262 CTR 525 ( CA L CUTTA ) . IN T H I S C ASE TH E HON ' B L E CA L CUTTA H I G H CO URT HAS G I VEN FIND I NGS THA T P ROV I S I O N S O F SECT I O N 4 0( A) (I A ) O F THE INCO M E TAX AC T, 196 1 A R E A P P L I CA BL E N OT ON L Y TO THE AMOU N T WH I C H I S S H O WN AS P AY AB L E ON D ATE O F BA L ANCE SHEET , B UT TH EY ARE APP L I C ABLE TO SUC H EXPEND I TURE , WH I CH BECOMES P AYAB L E AT ANY TIME DURING RE L EVANT PREV I OUS YEAR AND IS ACTUALLY PA I D WITH I N PREV I O US Y E AR WITHO UT M AK I NG TDS. THUS THI S DEC I S I ON I S C L EAR L Y APP LI CAB L E TO THE FACTS OF T HE C AS E O F ASSESS EE AND I T HAS OVERRU LED T HE DEC I S I O N OF VISHAKHAPATTANAM TR I BUNAL ' S D E C I S I O N IN THE CASE OF M ER I LYN SH I PPING & T R ANSPORT. THUS I T IS CLEAR THAT THE ASSESSEE WAS L I A B L E TO DE DUCT TA X ON THE PAYMENTS MADE TO SUNDERAM FINANCE AND MAGNA F I NANCE AT R S .23,92,290 / - . AS T HE ASSESSEE HAS F A I L ED T O DEDUCT TAX ON TH I S AMOUN T THE SAME I S D I S A L L O W E D U /S . 40(A )(I A) OF THE INCOME TA X A C T , 1961 AN D ADDED TO THE TO T A L I NCOME OF THE AS SESSEE . PEN AL TY - PR OCEED I NGS U/S 271( I )( C ) OF THE INCOME TAX ACT, 1961 ARE I NITIATED S E PA RAT EL Y F OR FURN I SH I NG I NACCURATE PA RTICU LA RS OF INCOME . 6. THE AO FURTHER ADDED THE ADDITIONAL INCOME DECLARED DURING THE COURSE OF SURVEY AND MADE FURTHER ADDITION OF RS.3,43,24,120/ - . 4 ITA NO. 306/NAG/2015. 7. THE AO FURTHER DISALLOWED TDS LATE PAYMENT INTEREST OF RS.9,351/ - DEBITED TO BANK INTEREST. 8. AGAINST THE ABOVE ORDER, THE ASSESSEE APPEALED BEFORE THE LEARNED CIT(APPEALS). THE LEARNED CIT(APPEALS) ELABORATELY CONSIDERED THE ISSUE. 9. AS REGARDS THE ADDITION ON ACCOUNT OF ADMISSION ON SURVEY, LEARNED CIT(APPEALS) CONCLUDED AS UNDER : I T IS THUS Q U I T E MAN IFE S T FRO M T HE ABOVE T HA T THE GROS S P ROFIT A S PER TEN TA TIV E T R ADING ACC O UNT I S RS . 5 , 70 , 34 , 6 14 / - W H E R E AS THE BOOK RESULTS SH O WS THE PROFITS AT RS . 2 , 2 7 , 10 , 494/ - . IT IS PERUS ED FROM T H E TWO SEPARA T E T RADIN G ACCO UN T S F O R THE S AME PERI OD THAT TH E G R OS S PROF I T I S A T A HUG E VA RIANCE O F RS . 3 . 43 C R S . THIS VARIA TION OF GROS S PROF IT IS MAINL Y ATTRIBUTED TO THE DIFFERE N CE IN THE FIGURES OF PURCHASES AND THE EXPE NSES DEBITED UNDER THE HEAD OUTSTANDING EXPENSES IN THE TWO ACCOUNTS. THE PURCHASES IN THE TRADING ACCOUNT AS PER BOOKS PREPARED BY THE SURVEY PARTY IS SHOWN AT RS.9,29,70,342/ - WHEREAS ON THE OTHER HAND THE PURCHASES IN THE OTHER TRADING ACCOUNT FOUND FROM THE PREMISES OF THE APPELLANT IS SHOWN AT RS.7,91,69,722/ - . SIMILARLY, THE EXPENSES UNDER THE HEAD OUTSTANDING EXPENSES ARE SHOW N AT RS.2,64,34,000/ - AND RS.80,33,380/ - RESPECTIVELY. THUS, THE MAJOR VARIATION UNDER THESE TWO HEADS WHICH COMES AT RS.3.22 CRS. (PURCHASES RS.1.38 CRS. AND OE RS. 1.84 CRS.) HAS NOT BEEN EXPLAINED BY THE APPELLANT DESPITE AMPLE OPPORTUNITIES CONFERRED NON HIM AT ALL STAGES. THE CONTENTIONS RAISED BY THE APPELLANT HAVE NOT BEEN SUPPORTED WITH ANY MATERIAL EVIDENCES, THEREFORE, CANNOT BE ACCEPTED FOR WANT OF ANY CORROBORATIVE MATERIAL IN SUPPORT THEREOF. SINCE, THE EVIDENCES WERE FOUND FROM THE PREMISES O F THE APPELLANT; THE ONUS THEREFORE, SQUARELY LIES ON THE APPELLANT TO EXPLAIN THE ENTRIES OF TRANSACTIONS PERTAINING TO HIS BUSINESS ACTIVITY, WHICH THE APPELLANT HAS FAILED TO DISCHARGE. THEREFORE, THE AO IS JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT A S THE APPELLANT HAS FAILED TO EXPLAIN THE VARIATION IN THE FIGURES OF PURCHASES, OUTSTANDING EXPENSES IN TWO DIFFERENT SETS OF TRADING ACCOUNT FOUND DURING THE SURVFEY ACTION WITH REFERENCE TO HIS BOOKS OF ACCOUNT AND BILLS AND VOUCHERS FOR PURCHASES AND E XPENSES. CONSEQUENTLY, THE AO IS ALSO JUSTIFIED IN TAKING COGNIZANCE OF THE MATERIAL EVIDENCES SURFACED FROM THE IMPOUNDED DOCUMENTS FOUND DURING THE COURSE OF SURVEY ACTION IN THE ABSENCE OF ANY PLAUSIBLE EXPLANATION ON THE ISSUE OF VARIATION IN THE GROSS PROFITS BETWEEN THE TWO TRADING ACCOUNS. SINCE, THE APPELLANT HAS FILED TO EXPLAIN THE DIFFERENCE; THE AO IS JUSTIFIED IN DRAWING THE INFERENCE THAT THE APPELLANT HAS INFLATED THE EXPENDITURE WITH THE MOTIVE O REDUCE THE TAXABLE PROFITS WHICH IS DETECTED DUE TO SURVEY ACTION CONDUCTED AT THE PREMISES OF THE APPELLANT. THEREFORE, RETRACTION MADE BY THE APPELLANT DOES NOT SUSTAIN AND THE SAME BEING THE SELF SECURING PIECE OF EVIDENCE WITHOUT ANY CORROBORATIVE EVIDENCES DESERVES TO BE REJECTED. ON THE OTHER H AND, THE ADDITION MADE BY THE AO OF RS.3,43,24.120/ - IS BASED ON THE MATERIAL FOUND IN THE COURSE OF SURVEY ACTION. HENCE, THE ADDITION MADE BY AO OF RS.3,43,24.120/ - IS CONFIRMED. THUS, GROUND NO. 3 IS DISMISSED. 10. THE ADDITION U/S 40(A)(IA) WAS AFFIRMED BY THE LEARNED CIT(APPEALS) BY 5 ITA NO. 306/NAG/2015. CONCLUDING AS UNDER : IN VIEW OF THE ABOVE RATIO LAID DOWN BY THE HON. PUNJAB & HRYANA HIGH COURT, AFTER TAKING INTO CONSIDERATION THE DISMISSAL OF DEPARTMENTAL SLP BY THE HON. SUPRE ME COURT IN THE CASE OF VECTOR SHIPPING, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT HAS COMMITTED THE DEFAULT BY NOT MAKING TDS ON PROFESSIONAL CHARGES AND NOT DEPOSITING THE TDS MADE ON ACCOUNT OF COMMISSION EXPENSES, HENCE HAS RENDERED HIMSELF LIA BLE FOR DISALLOWANCE U/S 40(A)(IA) OF THE I.T. ACT. THEREFORE, THIS GROUND IS DISMISSED. 11. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 12. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITT ED THAT NO COGENT MATERIAL WAS FOUND DURING THE SEARCH. HE SUBMITTED THAT THE MATERIALS AND DISCREPANCIES FOUND DURING THE SURVEY WERE AS UNDER : 1. NO UNACCOUNTED VOUCHERS OR DOCUMENTS WERE FOUND. 2. DIFFERENCE OF RS 96/ - WAS FOUND IN CASH. 3. NO EXCESS STOCK WAS FOUND. 4. ASSESSEE WAS ASKED TO PREPARE TRADING ACCOUNT ON THE BASIS OF DAILY ACCOUNTING. AS PER THE TENTATIVE TRADING ACCOUNT AS ON THE DATE OF SURVEY PREPARED BY THE ASSESSEE, GROSS PROFIT WAS RS 2,27,10,494/ - . 5. ASSESSEE WAS FORCED TO PREPARE ANOTHER TRADING ACCOUNT SCALING DOWN PURCHASES AND DIRECT EXPENSES AND AS PER THAT TRADING ACCOUNT GROSS PROFIT ARRIVED WAS RS 5,70,34,614/ - . 6. ASSESSEE WAS ASKED TO EXPLAIN THIS DIFFERENCE AND AS HE FAILED TO EXPLAIN SAID DIF FERENCE. A DISCLOSURE OF DIFFERENCE AMOUNT WAS OBTAINED FROM HIM. ASSESSEE MADE DISCLOSURE OF RS 3,43,24,120/ - (DIFFERENCE OF GROSS PROFIT). 13. LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE HAS DULY RETRACTED THE ADMISSION. IN THIS REGARD LEARNED COUNSEL PLACED RELIANCE UPON THE ORDER OF HONBLE APEX COURT IN THE CASE OF CIT VS. S. K HA DER KHAN 300 ITR 157 FOR THE 6 ITA NO. 306/NAG/2015. PROPOSITION THAT THE STATEMENTS OBTAI NED DURING THE SURVEY DEHORSE ANY OTHER SUPPORTING EVIDENCE CANNOT BE A SOLE BASIS OF ADDITION. LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE WAS IN A VERY DISTURB STATE OF MIND DURING THE COURSE OF SURVEY. HENCE HE HAS ADMITTED THE TENTATIVE PROFIT AND LOSS ACCOUNT. LEARNED COUNSEL FURTHER SUBMITTED THAT THE PROFITS COMPUTED BY THE REVENUE ON THE BASIS OF THE TENTATIVE PROFIT AND LOSS ACCOUNT IS ENORMOUS AND ABSURD. HE SUBMITTED THAT IN THE PRECEDING ASSESSMENT YEAR THIS TRIBUNAL ITSELF IN ASSESSEES OWN CAS E IN ITA NO. 465/NAG/2013 FOR ASSESSMENT YEAR 2010 - 11 VIDE ORDER DATED 24 TH SEPT., 2015 HAS HELD THAT THE RATE OF PROFIT SHOWN BY THE ASSESSEE IN THE PRECEDING ASSESSMENT YEAR WAS QUITE NORMAL. HENCE LEARNED COUNSEL PLEADED THAT THE ADDITION OF RS.3,43,24, 120/ - MADE ON THE BASIS OF STATEMENT DURING THE SURVEY SHOULD BE DELETED. 14. AS REGARDS THE ADDITION U/S 40(A)(IA), LEARNED COUNSEL PLACED RELIANCE ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S CHADDA TRANSPORT IN ITA NO. 333/NAG/2014 DATED 25 - 02 - 20 16 WHEREIN IN ABSENCE OF ANY JURISDICTIONAL HIGH COURT DECISION THIS TRIBUNAL HAD APPLI E D THE DECISION OF VECTOR SHIPPING SERVICES P. LTD. OF ALLAHABAD HIGH COURT 357 ITR 642 (ALL.) BY HOLDING THAT AS PER HONBLE APEX COURT DECISION IN THE CASE OF V EGETABL E PRODUCTS LTD. 188 ITR 192 WHEN TWO CONSTRUCTIONS ARE POSSIBLE, ONE IN FAVOUR OF THE ASSESSEE SHOULD BE ADOPTED. 15. PER CONTRA LEARNED D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 16. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND HAT IN THIS CASE THE AOS ADDITION TO THE ASSESSEES PROFIT BY REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING 8% PROFIT ON THE TOTAL TURNOVER HAS BEEN DELETED BY THE LEARNED CIT(APPEALS ) ON THE GROUND THAT THE ADDITION OF RS.3.43 CRORES O N ACCOUNT OF ADMISSION DURING SURVEY IS SUFFICIENT. WE FIND THAT THE SAID ADDITION OF RS.3.43 CRORES IN THIS CASE IS BASED UPON A TENTATIVE PROFIT AND LOSS ACCOUNT PREPARED AT THE TIME OF SURVEY. THERE IS NO OTHER CORROBORATIVE MATERIAL 7 ITA NO. 306/NAG/2015. FOUND IN THIS REGAR D. LEARNED CIT(APPEALS) HAS SUSTAINED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO RECONCILE AND EXPLAIN THE DIFFERENCE FOUND BETWEEN THE SAID TENTATIVE PROFIT AND LOSS ACCOUNT AND THE ACTUAL PROFIT AND LOSS ACCOUNT. IN OUR CONSIDERED OPINION THE TENTATIVE PROFIT AND LOSS ACCOUNT FOUND DURING THE COURSE OF SURVEY ALONE CANNOT BE A BASIS FOR MAKING AN ADDITION OF HUGE AMOUNT OF RS.3.43 CRORES. DEHORSE ANY OTHER CORROBORATIVE EVIDENCE O F SUPPRESSED SALE OR BOOKING OF ANY BOGUS EXPENDITURE , T HIS ADDITION IS NOT SUSTAINABLE ON THE ANVIL OF HONBLE APEX COURT DECISION IN THE CASE OF S. K H ADER KHAN (SUPRA). IF THE ASSESSEES BOOKS OF ACCOUNT ARE FOUND TO BE NOT RELIABLE, THE ACCEPTED AND PERMISSIVE COURSE OF ACTION IN THIS REGARD IS ESTIMATE OF PROFIT BY APPLYING THE PREVALENT RATE OF PROFIT IN THE INDUSTRY AND/OR PAST RESULTS OF THE ASSESSEE. HENCE THIS ADDITION SOLELY BASED UPON A TENTATIVE TRADING/CONTRACT WORKS ACCOUNT FOR THE PERIOD 01 - 04 - 2011 TO 07 - 02 - 2012 FOUND AT T HE TIME OF SURVEY AL ONE IN ABSENCE OF ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS FOUND IS NOT AT ALL SUSTAINABLE. SINCE NO EVIDENCE WHATSOEVER WITH REGARD TO FINDING REGARDING SUPPRESSED SALE HAS BEEN BROUGHT ON RECORD AND THE AO HAS REJECTED THE BOOKS OF ACCOUNT, WE ARE OF THE OPINION THAT THE ADDITION BY THE AO BY APPLYING 8% GROSS PROFIT AS IN EARLIER YEARS IS REQUIRED TO BE RESTORED AND THE ADDITION OF R.3,43,24,120/ - BASED UPON THE TENTATIVE TRADING ACCOUNT FOUND ON SURVEY IS LIABLE TO BE DELETED. 17. AS REGARDS THE ADDITION FOR DISALLOWANCE U/S 40(A)(IA) WE FIND THAT IT IS THE ASSESSEES PLEA THAT THE SUMS INVOLVED HAVE BEEN PAID BY THE END OF THE YEAR AND NO AMOUNTS ARE OUTSTANDING. IN SUCH CIRCUMSTANCES , WE FIND THAT IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE C ASE OF M/S CHADDA TRANSPORT IN ITA NO. 333/NAG/2014 DT. 25 - 02 - 2016 . THE TRIBUNAL IN THE AFORESAID CASE HAS OBSERVED AS UNDER: 12. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. FIRST WE DEAL WITH THE ISSUE ON THE GROUND THAT THE PR OVISIONS OF SECTION 40(A)(IA) ARE NOT ATTRACTED INASMUCH AS THE ENTIRE FREIGHT 8 ITA NO. 306/NAG/2015. EXPENDITURE IS PAID AND NOTHING IS PAYABLE AS ON 31 - 03 - 2007. THE FACTS IN THIS REGARD ARE UNDISPUTED. THE ASSESSEES PLEA IS THAT THE ENTIRE FREIGHT AMOUNT WAS PAID AND NOTHING IS PAYABLE AS ON 31 - 03 - 2007, AND THAT THIS IS DULY REFLECTED BY A PERUSAL OF THE BALANCE SHEET/PROFIT & LOSS ACCOUNT WHERE NO AMOUNT IS PAYABLE AS ON 31 - 03 - 2007. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE UPON CIT VS. VECTOR SHIPPI NG SERVICES (P) LTD. 357 ITR 642 (ALL.). IN THE SAID CASE HONBLE ALLAHABAD HIGH COURT HAS UPHELD THE FINDING THAT WHEN THE EXPENSES INCURRED BY THE ASSESSEE IS TOTALLY PAID AND NOT REMAINED PAYABLE AS AT THE END OF THE RELEVANT ACCOUNTING PERIOD, PROVISIO NS OF SECTION 40(A)(IA) ARE NOT APPLICABLE. THE HIONBLE HIGH COURT IN PARA 10 OF THE ORDER HAS CONCLUDED AS UNDER : IT IS TO BE NOTED THAT FOR DISALLOWING EXPENSES FROM BUSINESS AND PROVISION ON THE GROUND THAT TDS HAS NOT BEEN DEDUCTED, THE AMOUNT SHOU LD BE PAYABLE AND NOT WHICH HAS BEEN PAID BY THE END OF THE YEAR. 13. REVENUES APPEAL AGAINST THE ABOVE SAID DECISION OF THE HONBLE ALLAHABAD HIGH COURT WAS DISMISSED BY THE HONBLE APEX COURT IN CC NO. 8068/2014 VIDE ORDER DATED 02 - 07 - 2014. THE HONBLE APEX COURT HAS HELD AS UNDER : HEARD MR. MUKUL ROHATGI, LEARNED ATTORNEY GENERAL, FOR THE PETITIONER. DELAY IN FILING AND REFILLING SPECIAL LEAVE PETITION IS CONDONED. SPECIAL LEAVE PETITION IS DISMISSED. WE ARE ALSO AWARE THAT THERE ARE CERTAIN OTHER HONBLE HIGH COURT DECISIONS WHEREIN THIS PROPOSITION HAS NOT BEEN UPHELD THAT PROVISIONS OF SECTION 40(A)(IA) ARE ATTRACTED ONLY WHEN THE AMOUNT IS PAYABLE. HOWEVER, WE NOTE THAT THERE IS NO JURISDICTIONAL H IGH COURT DECISION ON THIS ISSUE. IN SUCH A SITUATION WE NOW HAVE A HONBLE ALLAHABAD HIGH COURT DECISION WHICH IS IN FAVOUR OF THE ASSESSEE. REVENUE DEPARTMENTS PETITION FOR SPECIAL LEAVE TO APPEAL HAS BEEN DISMISSED BY THE HONBLE APEX COURT BY CONDONI NG THE DELAY IN FILING THE LEAVE PETITION. IN SUCH A SITUATION, IN OUR CONSIDERED OPINION, THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. 188 ITR 192 HAS TO BE FOLLOWED. IN THE SAID DECISION THE HONBLE APEX COURT HAS EXPOUNDED THAT IN CASE THERE ARE TWO VIEWS POSSIBLE, THE VIEW IN FAVOUR OF THE ASSESSEE SHOULD BE FOLLOWED. ACCORDINGLY IN ABSENCE OF ANY JURISDICTIONAL HIGH COURT DECISION, WE RESPECTFULLY FOLLOW THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES (P) LTD. AS ABOVE. ACCORDINGLY SINCE NO AMOUNT OF THE FREIGHT WAS UNPAID OR WAS PAYABLE AS ON 31 - 03 - 2007 WE HOLD THAT THE PROVISIONS OF SECTION 40(A)(IA) 9 ITA NO. 306/NAG/2015. ARE NOT ATTRACTED AND IN THIS VIEW OF THE MATTER WE ARE OF THE OPINION THAT REVENUES APPEAL IS LIABLE TO BE DISMISSED. 18. ACCORDINGLY THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(APPEALS) ON THIS ISSUE IS DELETED. 19. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON THIS 28 TH DAY OF DEC., 2016. SD/ - SD/ - (RAM LAL NEGI) ( SHAMIM YAHYA) JUDICIAL MEMBER. ACOUNTANT MEMBER. NAGPUR, DATED: 28 TH DEC. , 2016. COPY FORWARDED TO : 1. M/S SHRI PALSIDDHA CONSTRUCTION, MAIN ROAD, SAKHARKHEDA, TALUKA SINDKHED RAJA, DIST. BULDHABNA, 2. A.C.I.T., AKOLA CIRCLE, AKOLA. 3. C.I.T. - I, NAGPUR. 4. CIT(APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.