RAVI CONSTRUCTION COMPANY, JHUNJHUNU V. ACIT, JHUNJHUNU

ITA 310/JPR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1803 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K L MULCHANDANI
• Assessee Lawyers: R A VERMA CIT DHK
• Keywords: Unexplained cash credit; Income from undisclosed sources; Source of fund; Corroborative evidences
• Section: 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 310/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12. M/S RAVI CONSTRUCTION COMPANY KATEWA BHAWAN, ROAD NO. 1, JHUNJHUNU. CUKE VS. ACIT, JHUNJHUNU CIRLCE-JHUNJHUNU. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAGFR 7353 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI K.L MULCHANDANI (C.A.) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI R.A. VERMA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 26.12.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 27.12.2017 VKNS'K@ ORDER PER SHRI BHAGCHAND, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT (A)- 3, JAIPUR DATED 07/01/2016 PERTAINING TO A.Y. 2011- 12. 2. THE ASSESSEE IS A CIVIL CONTRACTOR. DURING THE YEAR UNDER CONSIDERATION ON GROSS TURNOVER OF RS. 5,62,77,049/- ON WHICH THE PR OFIT DECLARED WAS RS. 47,72,294/- AND THE NET PROFIT DECLARED WAS RS. 1.02% AS AGAINS T 1.46% IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR. THE RETURN OF INCOME WA S FILED ON 25.09.2011 AND AFTER SCRUTINY, ASSESSMENT WAS FINALIZED AS TOTAL INCOME OF RS. 1,06,77,020/- THE LD. CIT(A) GRANTED THE PART RELIEF TO THE ASSESSEE. NOW , THE ASSESSEE IS IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. UNDER THE FACTS AND CIRCUMSTANCES, THE HONBLE CIT(A) HAS LEGALLY AND FACTUALLY ERRED BY CONFIRMING THE ADDITION UNDER SE CTION 68 OF THE ACT 2 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. FOR MAKING ADDITIONS ON ACCOUNT OF THE SO CALLED UN EXPLAINED CREDIT ENTRIES. 2. UNDER THE FACTS AND CIRCUMSTANCES, THE HONBLE C IT(A) HAS CONFIRMED THE ADDITION OF 1.5% OF THE CONTRACT EXPENSES I.E A SUM OF RS. 7,25,704.00 ON ESTIMATION BASIS WITHOUT GIVING ANY JUSTIFICATION, REASONABLENESS AND PAST HISTORY OF THE CASE. 3. UNDER THE FACTS AND CIRCUMSTANCES, THE HONBLE C IT(A) HAS LEGALLY AND FACTUALLY ERRED IN CONFIRMING THE ADDITIONS UNDER S ECTION 40A(IA) OF THE ACT FOR MAKING ADDITIONS ON ACCOUNT OF INTEREST PAI D. 4. THE ASSESSEE MAY CRAVE TO AMEND, ALTER, MODIFY O R RAISE ANY OTHER GROUND OF APPEAL. 3. GROUND NO. 1 IS AGAINST CONFIRMING THE ADDITION MADE U/S 68 OF THE INCOME TAX ACT OF RS. 78,77,500/-. 3.1 THE ASSESSEE HAS SHOWN RECEIPT OF THE CASH AMOU NT FROM VARIOUS PERSONS DURING THE YEAR. ON EACH OCCASION THE AMOUNT TRANSA CTION SHOWN IS AS BELOW 20,000/-. THE DETAILS OF SUCH CASH RECEIPT HAS BEEN MADE ANNEXURE A TO THE ASSESSMENT ORDER BY THE ASSESSING OFFICER. THE ASSE SSING OFFICER ASKED TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T RANSACTIONS SHOWN IN THE BOOKS OF ACCOUNTS. THE AO ASKED TO FURNISHED THE COMPLETE DE TAILS ALONG WITH THE SUPPORTING EVIDENCE TO ESTABLISH THE IDENTITY, CREDITWORTHINES S AND GENUINENESS OF THESE TRANSACTIONS. THE AO ASKED TO FILE PROOF THE IDENT ITY, BANK STATEMENT, EARNING CAPACITY OF THE PERSONS, IF AGRICULTURISTS THEN COP Y OF LAND HOLDING AND THE AGRICULTURAL PRODUCTS EMERGED OUT AND SOLD BILLS AN D CERTIFICATE FROM CONCERN AUTHORITIES TO SHOW AND ESTABLISH THE AGRICULTURE P RODUCTS CULTIVATED IN THE RESPECTIVE LAND. BUT NOTHING WAS PRODUCED IN THE ASSESSMENT PR OCEEDINGS TO ESTABLISH THE CREDIT WORTHINESS OF THESE PEOPLE. THE PRIMARY ONUS TO EXPLAIN THE NATURE AND 3 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. SOURCE OF CREDIT IN THE BOOKS OF ACCOUNT LIES ON AS SESSEE. THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO BY HOLDING AS UNDER: 4.3 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE A O AS ALSO ARGUMENTS OF THE LD. AR OF THE APPELLANT. THE ASSESSEE STATED THAT HE HAD FILED AFFIDAVITS AND CONFIRMATIONS. THE AO HAD REBUTTED THESE IN HIS ORDER AS UNDER:- 'ON EXAMINATION OF BOOKS OF ACCOUNTS PRODUCED DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS IT IS OBSERVED THAT DURING T HE PERIOD UNDER CONSIDERATION THE ASSESSEE FIRM HAS RECEIVED PAYMEN TS FROM VARIOUS PERSONS AMOUNTING TO RS. 78,77,500/- AND MULTIPLE TRANSACTI ONS HAVE BEEN MADE WITH A SINGLE PERSON. IN THIS REGARD, THE ASSESSEE VIDE SHOW CAUSE NOTICE DATED 05-02-2014 WAS ASKED TO PROVE THE CREDITWORTHINESS, IDENTITY AND GENUINENESS OF THE TRANSACTION IN THIS REGARD LIST OF SUCH TRANSACTIONS SUPPLIED TO THE ASSESSEE MARKED WITH ANNEXURE 'A'. WHICH IS ALSO PART OF THIS ASSESSMENT ORDER? IN REPLY TO THE ABOVE QUERY AND S HOWCASE LETTER ISSUED BY THIS OFFICE THE A/R OF THE ASSESSEE FILED CONFIRMAT ION IN THE FORM OF AFFIDAVITS MENTIONING THE AMOUNT OF PAYMENT GIVEN TO THE ASSES SEE FIRM. THE AFFIDAVITS FILED BY THE ASSESSEE IN THE NAME OF VARIOUS PERSON S. THE CONTENTS OF THESE AFFIDAVITS HAVE BEEN GONE THR OUGH AND AS A SAMPLE CONTENTS OF SUCH AFFIDAVITS ARE REPRODUCED AS UNDER :- (I) SH. SUBHASH CHANDRA:- I SUBHASH CHANDRA S SH. RAM KARAN SINGH AGED ABOUT 45 SHEARS R/O MAN NAGAR, JHUNJHUNU (RAJ) DO SOLEMNLY AFFIRMS AND STATE THAT: - I HAVE GIVEN A SUM OF RS. 19,000/- ON 17-04-2010, R S. 19,5(H) - ON 19-04-2010 AND RS. J 9,000/- ON 21-04-2010 IN CASH TO M/S RAVI CON STRUCTION COMPANY, KATEWA BHAWAN JHUNJHUNU. 4 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. THE AMOUNT WAS GIVEN OUT OF MY GENUINE SOURCES OF I NCOME. I WORK AS A FARMER IN MY NATIVE VILLAGE CHARANWAS. I HAVE AGRICULTURE LAND O F 24 BIGHTS AT VILLAGE CHARANWAS AND HAVE ELECTRICAL IRRIGATION FACILITIES. THE AMOUNT WAS GI VEN OUT OF MY AGRICULTURE INCOME. THE ABOVE AMOUNT WAS RECEIVED ON 24-04-2010, 26-04- 2010 AND 21-04-2010 BY ME FROM M/S RAVI CONSTRUCTION CO. JHUNJHUNU AND THERE IS NO OUTSTANDING BALANCE AS ON 31-03- 2011 . THE AFFIDAVIT FILED BY SH. SUBHASH CHANDRA AS CONFI RMATION IN RESPECT OF PAYMENT GIVEN TO M/S RAVI CONSTRUCTION CO., WAS EXAMINED IN THE LIGHT OF CREDIT ENTRIES IN THE BOOKS OF ACCOUNTS OF THE ASSE SSEE FIRM AND DECLARATION MADE IN THE AFFIDAVIT, IT IS NOTED THAT THE CREDITO R HAS FILED CONFIRMATION ONLY IN RESPECT OF THREE ENTRIES WHEREAS THE ENTRIES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AS FOLLOWS:- 19 - 04 - 2010 19500 21 - 04 - 2010 19000 17 - 04 - 2010 19000 14 - 05 - 2010 19000 21 - 05 - 2010 19000 11 - 06 - 2010 19500 12 - 06 - 2010 19500 11 - 08 - 2010 19000 16 - 08 - 2010 19500 26 - 08 - 2010 18500 11 - 09 - 2010 19500 24 - 09 - 2010 19000 02 - 10 - 2010 18000 05 - 10 - 2010 19500 09 - 10 - 2010 18500 14 - 10 - 2010 19000 26 - 10 - 2010 19500 28 - 10 - 2010 19500 30 - 10 - 2010 19500 06 - 02 - 2011 19500 FROM THE ABOVE CHART IT IS CLEAR THAT THE CREDITOR SH. SUBHASH CHANDRA HAD GIVEN PAYMENTS MORE THAN THREE TIMES AS STATED AND DECLARATION MADE IN 5 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. THE AFFIDAVIT. THIS SHOWS THAT THE CREDIT ENTRIES R EFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM ARE NOT FULLY SUPPORT ED BY THE AFFIDAVIT FILED BY THE CONCERNED CREDITOR SH. SUBHASH CHANDRA WHEREIN HE HAD STATED TO ADVANCE ONLY THREE ENTRIES AGGREGATE TO RS. 57,500/ - WHEREAS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AN AMOUNT OF RS. 3,83,000/ -CREDITED AS LOAN RECEIVED FROM SH. SUBHASH CHANDRA ON 20 OCCASIONS. (II) SH. ROSHAN LAI:- ' I ROSHAN LAL S/O SH. DAYALA RAM AGED ABOUT 32 YEA RS R/O JEEWA KA BASS. JHUNJHUNU (RAJ) DO SOLEMNLY AFFIRMS AND STATE THAT:- I HAVE GIVEN A SUM OF RS. 19.000/- ON 21-04-2010 IN CASH TO MS RAVI CONSTRUCTION COMPANY. KATEWA BHAWAN JHUNJHUNU. THE AMOUNT WAS GIVEN OUT OF MY GENUINE SOURCES OF I NCOME. I WORK AS A FARMER IN MY NATIVE VILLAGE JEEVA KA BASS. I HAVE AGRICULTURE LA ND OF 22 BIGHTS AT VILLAGE JEEVA KA`BASS AND HAVE ELECTRICAL IRRIGATION FACILITIES. THE AMOUNT W AS GIVEN OUT OF MY AGRICULTURE INCOME. THE ABOVE AMOUNT WAS RECEIVED ON 27-04-2010 BY ME F ROM M/S RAVI CONSTRUCTION CO. JHUNJHUNU AND THERE IS NO OUTSTANDING BALANCE A S ON 31-03-2011.' THE AFFIDAVIT SO FILED BY SH. ROSHAN LAL AS CONFIRM ATION IN RESPECT OF PAYMENT GIVEN TO M/S RAVI CONSTRUCTION CO., WAS EXA MINED IN THE LIGHT OF CREDIT ENTRIES IN THE BOOKS OF ACCOUNTS OF THE ASSE SSEE FIRM AND DECLARATION MADE IN THE AFFIDAVIT, IT IS NOTED THAT THE CREDITO R HAS FILED CONFIRMATION ONLY IN RESPECT OF ONE ENTRY WHEREAS THE ENTRIES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE AS FOLLOWS:- 21 - 04 - 2010 19000 16 - 09 - 2010 18500 01 - 10 - 2010 19500 07 - 10 - 2010 19500 11 - 10 - 2010 19000 13 - 10 - 2010 19000 16 - 10 - 2010 18500 19 - 10 - 2010 19000 6 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. FROM THE ABOVE CHART IT IS CLEAR THAT THE ASSESSEE FIRM RECEIVED 8 CREDIT ENTRIES AGGREGATING TO RS. 1,52,000/- ON VARIOUS DA TES FROM SH. ROSHAN LAI S SH. ROSHAN LAI IN HIS AFFIDAVIT ONLY CONFIRMS A SIN GLE ENTRY GIVEN ON 21- 04- 2010 AMOUNTING TO RS. 19,000/-. THIS SHOWS THAT THE CREDIT ENTRIES REFLECT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM ARE NOT FULLY SUPPORTED BY THE AFFIDAVIT FILED BY THE CONCERNED CREDITOR SH. ROSHA N LAL. LIKEWISE, ASSESSEE HAD FILED AFFIDAVIT OF OTHER FOU RTEEN PERSONS CONFIRMING LOAN ADVANCED TO THE ASSESSEE FIRM. IN A LL THE AFFIDAVITS SIMILAR LANGUAGE WAS USED REGARDING SOURCE OF INCOME I.E. H AVING AGRICULTURE LAND AND HAVING ELECTRICAL IRRIGATION FACILITIES. HOWEVE R, NO ANY PROOF REGARDING LAND HOLDING I.E. JAMABANDHI AND PROOF OF AGRICULTURE AC TIVITIES DONE IN THE FORM OF GIRDAWARI HAS BEEN PRODUCED DURING THE COURSE OF AS SESSMENT PROCEEDINGS. FURTHER IT IS NOTED THAT THE QUANTUM OF LOAN AND AD VANCES DECLARED BY THE CREDITORS IN THEIR AFFIDAVIT DOES NOT MATCHES WITH THE ENTRIES SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM. AS EVIDENT FROM THE DISCUSSION OF ABOVE TWO SAMPLE EXAMPLES OF CREDITORS WHEREIN SH. SUBHASH CHANDRA-AND SH. ROSHAN LAL STATED ON OATH TO HAVE GIVEN AN AMO UNT OF RS.57,500/- AND RS. 19,000/- RESPECTIVELY WHEREAS THE ASSESSEE HAS SHOWN AN AMOUNT OF RS. 3,83,000/- AND RS. 1,52,000/- RESPECTIVELY RECEIVED FROM THESE TWO PERSONS. IN SUCH A SITUATION HOW AFFIDAVIT FILED IN THE NAME OF THESE TWO PERSONS CAN BE CONSIDERED AS CONFIRMATION OF CREDIT ENTRIES SHO WN BY THE ASSESSEE FIRM. SIMILAR FACTS ARE REGARDING THE OTHER FOURTEEN PERS ONS IN WHOSE NAME AFFIDAVITS HAS BEEN FILED. DECLARATION MADE BY THES E PERSONS WITH REGARD TO QUANTUM OF LOAN AND ADVANCES MADE TO THE ASSESSEE F IRM AND AMOUNT SHOWN IN BOOKS OF ACCOUNT OF ASSESSEE FIRM ARE TOTALLY DI FFERENT FIGURES. FURTHER, ON PERUSAL OF AFFIDAVITS FILED BY THE VARIOUS PERSONS IT IS NOTED THAT THESE PERSONS VIDE AFFIDAVIT IN THEIR INDIVIDUAL NAMES CONFIRMS O NLY 2-4 TRANSACTIONS WHEREAS 7 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FIRM TRANSA CTIONS ENTERED IN THE NAME OF THESE PERSONS WERE MANY FOLD THEN DECLARED AND A FFIRMED IN THE AFFIDAVIT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES IT IS CONCLUDED THAT THE ASSESSEE FIRM HAS FILED WRONG AFFIDAVITS IN THE NAM E THESE PERSONS WHICH ARE IN NO MANNER ROUND RELIABLE AND GENUINE TO BE CONSI DERED CONFIRMATION OF CREDIT ENTRIES SHOWN BY FILE ASSESSEE FIRM. THE ASSESSEE WAS REQUESTED TO FURNISH COGENT AND SU PPORTING DOCUMENTS IF ANY FOR THE ABOVE SAID 'SO-CALLED' LOA NS RECEIVED FROM THE VARIOUS ABOUT CREDITWORTHINESS AND GENUINENESS OF T HE TRANSACTIONS. THE ASSESSEE HAS FAILED TO PRODUCE ANY SPECIFIC DETAILS WITH RESPECT TO THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THESE CREDITORS. HENCE MERE FILING OF CONFIRMATORY LETTERS/AFFIDAVITS DOES NOT DISCHARGE THE ONUS THAT LIES UPON THE ASSESSEE. IT IS WORTHWHILE TO MENTION THAT IN ORDER TO JUSTIF Y THE CREDIT ENTRIES SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IT I S FIRST AND FOREMOST DUTY OF THE ASSESSEE TO GIVE COMPLETE DETAILS ALONG WITH SU PPORTING DOCUMENTS SUCH AS PROOF OF IDENTITY, BANK STATEMENT, EARNING CAPAC ITY OF THE PERSON, IF AGRICULTURISTS THEN COPY OF LAND HOLDING AND THE AG RICULTURAL PRODUCTS EMERGED OUT AND SOLD, BILLS AND CERTIFICATE FROM CONCERNED AUTHORITY TO SHOW/PROVE THE AGRICULTURAL PRODUCT CULTIVATED IN THE RESPECTIVE L AND. BUT NOTHING WAS PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDING S WHICH WOULD HAVE SHOWN THE IDENTITY AND SOURCE OF INCOME FOR WHICH P RIMARY ONUS LIES ON THE ASSESSEE TO PROVE THE NATURE AND SOURCE OF CREDIT I N ITS ACCOUNT. IT IS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FACIE THE IDENTITY OF HIS CREDITORS, THE CAPACITY OF SUCH CREDITORS TO ADVANCE THE MONEY AND LASTLY THE GENUINENESS OF THE TRANSACTIONS, ONLY WHEN THESE TH INGS ARE PROVED BY THE ASSESSEE PRIMA FACIE AND ONLY AFTER THE ASSESSEE HA S ADDUCED EVIDENCE TO 8 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. ESTABLISH THE AFORESAID FACTS DOES THE ONUS SHIFT O N TO THE DEPARTMENT. MERE FILING OF AFFIDAVIT DOES NOT AUTOMATICALLY SHIFT TH E ONUS OF ASSESSEE TO THE DEPARTMENT. AN AFFIDAVIT IS A FORMAL WRITTEN DOCUMENT. THE CONT ENT OF THE AFFIDAVIT MUST BE: FACTUAL GENERALLY OF THE MAKER'S OWN KNOWLEDGE. I HE CONTENTS SHOULD ALSO ONLY INCLUDE INFORMATION THAT IS DIRECTLY RELATED TO THE ISSUE TO BE DECIDED. AN AFFIDAVIT IS A SWORN STATEMENT THAT A PERSON MAK ES REGARDING A SPECIFIC SUBJECT OR INCIDENT. AN AFFIDAVIT IS A DEC LARATION OF FACTS OR OATH, MADE BY AN INDIVIDUAL. IT IS USUALLY CONSIDERED A STRONG ER STATEMENT, SINCE IT IS ATTESTED TO IN FRONT OF A NOTARY PUBLIC OR SOMEONE ELSE AUTHORIZED TO ADMINISTER SUCH AS OATH. IN THE INSTANT CASE THE MAIN ISSUE WAS REGARDING VE RIFICATION OF CREDIT ENTRIES RECEIVED FROM VARIOUS PERSONS ENTERED IN TH E BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM FROM VARIOUS PERSONS. HOWEVER, CONTEN TS OF THE AFFIDAVIT ARE NOT FOUND FACTUAL AS DISCUSSED IN THE FOREGOING PAR AS AS SUCH INFORMATION AND DECLARATION MADE IN THE AFFIDAVITS CANNOT BE CONSID ERED AS DECIDING FACTOR OR INSTRUMENTAL WITHOUT ANY SINGLE PROOF IN SUPPORT OF DECLARATION MADE BY THE PERSONS SIGNING THE AFFIDAVIT. FURTHER, CONTENTS OF AFFIDAVIT ARE NOT SPECIFIC TO DECIDE THE ISSUE. ON PERUSAL OF CONTENTS OF THE AFF IDAVIT IT IS NOTED THAT THE ASSESSEE IN CASUAL MANNER PICKED UP THE ENTRIES OF APRIL AND MAY MONTH ENTERED IN THE BOOKS OF ACCOUNTS IN THE NAME OF THE SE PERSONS AND ARRANGE TO FILE THE AFFIDAVIT IRRESPECTIVE OF AMOUNT OF LOAN A ND ADVANCES ENTERED IN BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM. 9 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. AN AFFIDAVIT IS NOT AN ORDINARY STATEMENT. IT IS A STATEMENT ON OATH AND HAS THE STATUS OF EVIDENCE. FALSE AFFIDAVIT EXPOSES A PERSON TO PROSECUTION UNDER CHAPTER OF THE IPC. ESPECIALLY SECTION 193 RE AD WITH 191 OF THE IPC. SINCE THE AFFIDAVIT REMAINED UNCONTROVERTED IT MUST BE INVARIABLY ACCEPTED AS RELIABLE, IT HAS BEEN HELD BY THE HON'BLE SUPREME C OURT OF INDIA IN THE CASE OF MEHTA PARIKH & CO, VS CIT, 30 ITR 181. HOWEVER, IN THE INSTANT CASE THE ASSESSEE HAS MISLE D THE DEPARTMENT BY FILING /WRONG AFFIDAVIT. THE INTENTION OF THE AS SESSEE IS MALAFIDE AND DELIBERATELY ATTEMPTED TO GIVE WRONG INFORMATION IN THE NAME OF VARIOUS PERSONS. IT IS TOTALLY FALSE AND CONTRADICTORY TO T HE FIGURES APPEARING IN THE BOOKS OF ACCOUNT IN THE NAME OF THESE PERSONS. HENCE IT IS CLEAR FROM THE ABOVE DISCUSSION THAT TH E CREDIT ENTRIES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARC UNEXPLAINED C REDIT ENTRIES INTRODUCED IN THE BOOKS OF ACCOUNT FROM UNDISCLOSED SOURCES OF IN COME. THEREFORE, AMOUNT OF RS. 78,77,5007- IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE TREATING THE SAME AS UNEXPLAINED CREDIT ENTRIES ( AS PER ANNEXUR E ( A') U/S 68 OF THE IT ACT, 1961.' DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAD NOTICED NUMBER OF CASH DEPOSITS APPEARING IN THE BOOKS. TO GET SUCH DEPOSITS VERIFIED ON TEST CHECK BASIS, 24 AFFIDAVITS WERE SUBMITTED B Y ASSESSEE IN SUPPORT OF SOME OF SUCH SUNDRY CREDITORS (OUT OF 43 PARTIES WH OSE CONFIRMATION WERE ON PLAIN PAPERS DULY SIGNED BY THE CONCERNED PERSONS A ND THE APPELLANT CONFIRMING THEREIN ABOUT SUCH PETTY DEPOSITS). AFTE R DEALING WITH TWO AFFIDAVITS OF SVS. SUBHASH CHANDRA AND ROSHAN LAL, THE AO HAD CONCLUDED THAT 'THE APPELLANT HAD FILED 'WRONG AFFIDAVITS' IN THE NAME OF THESE PERSONS WHICH ARE IN NO MANNER FOUND RELIABLE AND GENUINE A ND CANNOT BE CONSIDERED 10 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. CONFIRMATION OF CREDIT ENTRIES SHOWN BY THE ASSESSE E FIRM.' HENCE IT IS CLEAR FROM THE ABOVE DISCUSSION THAT THE CREDIT ENTRIES I N THE BOOKS OF ACCOUNT ARE FROM UNDISCLOSED SOURCES OF INCOME. THEREFORE, AMOU NT OF RS. 78,77,500/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE TREAT ING THE SAME AS UNEXPLAINED CREDIT ENTRIES U/S 68. ASSESSEE REITERATED THE SAME FACTS BEFORE ME. ON FA CTS ASSESSEE HASN'T GIVEN ANY NEW EVIDENCE IN HIS DEFENSE. ON PERUSAL O F ASSESSMENT ORDER, AR SUBMISSIONS, I FIND THAT THE ASSESSEE SUBMITTED CON FIRMATIONS ONLY BUT NO SUPPORTING EVIDENCE WITH REGARD TO CREDIT WORTHINES S AND GENUINENESS WAS FURNISHED. THE AFFIDAVITS WERE FULL OF OMISSIONS AN D ERRORS, FOR EXAMPLE SEVERAL TIMES MONEY WAS GIVEN BY SH. SUBHASH CHANDR A AS PER ASSESSEE'S BOOKS OF ACCOUNTS BUT THE AFFIDAVIT OF SUBHASH CHAN DRA STATED THAT HE GAVE IT 3 TIMES ONLY. IN THE CASE OF ROSHAN LAL, HE GAVE MO NEY 8 TIMES AS PER BOOKS OF ACCOUNT BUT IN AFFIDAVIT ONLY ONCE IS MENTIONED. CONSIDERING ALL THESE FACTS I FIND THAT THE ASSESSEE FAILED TO DISCHARGE HIS ON US OF PROVING IDENTITY, GENUINENESS AND CREDIT WORTHINESS OF THE CREDITORS. ACCORDINGLY, THE ADDITION MADE BY THE AO IS CONFIRMED. THIS GROUND IS DISMISSED. OTHERWISE ALSO, THE ASSESSEE HAS VIOLATED THE PROVI SIONS OF SEC. 269SS/ 269T AS EVEN AS PER THE ASSESSEE, THE LOAN RECEIVED / RE PAID IN CASH IS MORE THAN RS. 20,000/- AT A TIME. 3.2 WE HAVE HEARD BOTH THE SIDES OF THIS ISSUE AND WE HAVE ALSO GONE THROUGH THE VARIOUS FACTUAL ASPECTS NARRATED IN THE ORDER A S WELL AS STATED BEFORE US DURING THE HEARING. THE FACTUAL ASPECTS SUGGESTS THAT THE ASSESSEE HAS INTRODUCED THE CASH IN VARIOUS NAMES ON VARIOUS DATES AND IN EACH CASE THE AMOUNT WAS KEPT BELOW RS. 11 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. 20,000/-, SO THE PROVISIONS OF SECTION 269SS AND 26 9T ARE NOT ATTRACTED. THE ASSESSEE HAS FAILED TO ESTABLISH THE IDENTITY, CRED ITWORTHINESS AND GENUINENESS OF THESE TRANSACTIONS. THERE IS NO SUPPORTING EVIDENC E WITH REGARD TO THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION TO FURNISH BEFORE THE AUTHORITIES BELOW. THE AFFIDAVITS FILED ARE ALSO NOT EXPLAININ G FULL TRANSACTIONS. THE VERACITY OF THESE AFFIDAVIT IS NOT ESTABLISHED. THE PRIMARY ON US LIES ON THE ASSESSEE TO EXPLAIN THESE CREDITS IN BOOKS BUT ASSESSEE HAS FAILED TO D ISCHARGE THE SAME. THEREFORE, WE HAVE NO HESITATION IN CONFIRMING THE ACTION OF THE AUTHORITIES BELOW AND WE DISMISS THIS GROUND OF ASSESSEES APPEAL. 4. GROUND NO. 2 IS AGAINST SUSTAINING THE DISALLOWANCE UP TO 1.5% OF THE CONTRACT EXPENSES AMOUNTING TO RS. 75,25,704/-. 4.1 BEFORE US, THE LD. AR SUBMITTED THAT THE AUTHOR ITIES BELOW HAVE NOT ACCEPTED THE PAST HISTORY OF THE ASSESSEE. IN THIS CASE, THE DISALLOWANCE OF CONTRACT EXPENSES @ 3% WERE MADE BY THE ASSESSING OFFICER AND THE CIT (A) HAS GRANTED THE PART RELIEF BY HOLDING AS UNDER: 6.3 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF TH E AO AS ALSO ARGUMENTS OF THE LD. AR OF THE APPELLANT. IT IS SEEN THAT THE D ISALLOWANCE OF 3% OF CONTRACT EXPENSES MADE BY THE AO, CONSIDERING VARIOUS DEFECT S POINTED OUT IS PROPER BUT APPEARS TO BE ON HIGHER SIDE SPECIALLY WHEN NET PROFIT RATE IS COMPARABLE WITH THE LAST YEAR. ACCORDINGLY I FIND IT REASONAB LE TO RESTRICT THE DISALLOWANCE TO 1.5% OF THE CONTRACT EXPENSES. THIS IS OVER AND ABOVE THE DISALLOWANCE OF RS. 725704/- CONFIRMED IN GROUND NO. 3. THIS GROUND IS PARTLY ALLOWED . 12 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. 4.2 WE HAVE HEARD BOTH THE SIDES OF THIS ISSUE. TH E LD. A/R HAS PLEADED THAT THE GROSS PROFIT RATE OF YEAR UNDER CONSIDERATION WAS B ETTER FROM THE RECORD. WE FIND THAT THERE IS NO SUCH FINDING OF THE AUTHORITIES BE LOW WITH REGARD TO THE COMPARISON OF THE BOOKS RESULTS WITH THE PRECEDENTS YEARS. TH E CONTRACT EXPENSE FOR THE YEAR WAS 88.72% OF THE TOTAL RECEIPT. THE SAME HAS BEEN HELD EXCESSIVE WITHOUT COMPARING WITH THE PAST RESULT OF THE ASSESSEE. TH E HONBLE RAJASTHAN HIGH COURT HELD IN VARIOUS CASES THAT WHILE COMPARING THE BOOK RESULTS FOR THE YEAR UNDER CONSIDERATION THE PAST HISTORY OF THE ASSESSEE IS B ETTER GUIDE. NONE OF THE AUTHORITIES BELOW HAVE DONE SO. THEREFORE, IN THE INTEREST OF J USTICE WE ARE RESTORING THIS ISSUE TO THE FILE OF THE AO TO BE DECIDED DENOVO BY CONSI DERING THE PAST BOOK RESULTS OF THE ASSESSEE AND ALSO THE RATIO DECIDED BY HONBLE RAJASTHAN HIGH COURT IN VARIOUS CASES WITH REGARD TO THE PAST HISTORY. IN THE RESU LT, THIS GROUND IS RESTORES TO THE FILE OF THE AO. 5. GROUND NO. 3 RD IS AGAINST SUSTAINING THE DISALLOWANCE MADE U/S 40 A(IA) OF IT ACT ON ACCOUNT OF INTEREST PAID. 5.1 THE ASSESSING OFFICER FOUND THAT ASSESSEE HAS M ADE INTEREST PAYMENT OF RS. 7,25,704/- OF NON BANKING FINANCIAL INSTITUTIONS WI THOUT DEDUCTING ANY TAX. THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO BY HOLDIN G AS UNDER:- 5.3 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF TH E AO AS ALSO ARGUMENTS OF THE LD. AR OF THE APPELLANT REGARDING APPLICATION O F SEC. 40(I)(A). NO TDS WAS DEDUCED ON PAYMENT TO NBFCS. THE LD. AR RELIED ON VARIOUS CASES STATING THAT WHERE CONTRACT EXPENSES ARE DISALLOWED AFTER REJECTING BOOKS OF ACCOUNTS, NO FURTHER DISALLOWANCE U/S 40(A)(IA) IS CALLED FOR. HOWEVER IN THIS 13 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY. CASE NEITHER THE AO NOR I HAVE APPLIED A PROFIT RAT E. THEREFORE THE VARIOUS CASES REFERRED BY THE AR ARE IRRELEVANT. ACCORDING LY THE DISALLOWANCE MADE BY THE AO IS CONFIRMED. THIS GROUND IS DISMISSED. 5.2 BEFORE US, THE LD. AR SUBMITTED THAT THE ASSESS EES BOOK RESULTS WERE REJECTED AND THE PROFIT WAS ESTIMATED. THEREFORE, N O FURTHER DISALLOWANCE IS CALLED FOR U/S 40A(IA) OF THE IT ACT FOR NON-DEDUCTION OF TDS ON THE PAYMENTS MADE TO NBFCS. WE HAVE RESTORED THE ISSUE OF REJECTION OF BOOKS OF ACCOUNT AND ESTIMATING THE INCOME TO THE AO. IN VIEW OF THESE FACTS, THIS ISSUE IS ALSO RESTORED TO THE FILE OF THE AO TO BE DECIDED DENOVO AS PER LAW. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER IS PRONOUNCED IN THE OPEN COURT ON 27/12/20 17. SD/- SD/- ( DQY HKKJR ) ( HKKXPUN ( KUL BHARAT ) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED: 27/12/2017 POOJA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S RAVI CONSTRUCTION COMPANY, K ATEWA BHAWAN, ROAD NO.1. 2. THE RESPONDENT ACIT, CIRCLE- JHUNJHUNU. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 310/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 14 ITA NO. 310/JP/2016. M/S RAVI CONSTRUCTION COMPANY.