The ITO, Ward-1, Navsari V. Shri Atulkumar Nandlal Daftary, Navsari

ITA 3170/AHD/2011

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3185 (ITAT-SURAT)
• Duration Of Justice: 9 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 15-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Rule of consistency; TDS
• Section: 142(1); 40(a)(ia); 143(1); 143(2); 69; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA NOS. 3169 & 3170/AHD/2011 (ASSESSMENT YEAR: 2007-08) ( VIRTUAL COURT) INCOME TAX OFFICER, WARD - 3, NAVSARI. VS . SHRI MUKESH N ANDLAL DAFTARY, PROP. OF ASHISH ENTERPRISES, 59/B, 1 ST FLOOR, SIX-O-AVENUE, STATION ROAD, NAVSARI. PAN : AIHPD0434G REVENUE ASSESSEE INCOME TAX OFFICER, WARD - 1, NAVSARI. VS. SHRI ATUL KUMAR N ANDLAL DAFTARY, 59, SIX-O-AVENUE, OPP. RAILWAY STATION ROAD, NAVSARI-396445. PAN : ACBPD2934M REVENUE ASSESSEE APPELLANT BY NONE. RESPONDENT BY SHRI RITESH MISHRA, CIT - DR DATE OF HEARING 17 / 0 9 / 2021 DATE OF PRONOUNCEMENT 11 / 10 / 2021 ORDER PER PAWAN SINGH, JUDICIAL MEMBER : 1. THESE TWO APPEALS BY REVENUE ARE DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), VALSAD [IN SHORT THE LD. CIT(A)] DATED 26.09.2011 FOR ASSESSMENT YEAR (AY) 2007-08. 2. IN BOTH THE APPEALS, THE REVENUE HAS RAISED CERTAIN COMMON GROUND OF APPEAL. FACTS IN BOTH THE APPEALS ARE SIMILAR EXCEPT VARIATION OF DISALLOWANCE UNDER SECTION 40(A)(IA) AND ESTIMATION OF GROSS PROFIT (GP). THEREFORE, BOTH THE APPEALS WERE HEARD AND DECIDED BY COMMON ORDER. FOR APPRECIATION OF 2 ITA NOS.3169 & 3170/AHD/2011 ASSESSMENT YEAR.2007-08 MUKESH NANDLAL & ATULKUMAR NANDLAL DAFTARY FACTS IN ITA NO.3169/AHD/2011 FOR AY.2007-08 TREATED AS LEAD CASE. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (APPEALS), VALSAD ERRED IN DIRECTING TO RECOURSE THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT, 1961 AND DIRECTING THE APPELLANT TO FURNISH DETAILS REGARDING THE SAME BEFORE THE AO INSTEAD OF CONFIRMING THE WHOLE AMOUNT OF ADDITION OF RS.3,32,86,165/- MADE ON ACCOUNT OF DISALLOWANCE OF DIAMOND LABOUR EXPENSES AS THE ASSESSEE HAS NOT PRODUCED THE DETAILS CALLED FOR DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS DURING THE APPELLATE PROCEEDINGS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (APPEALS), VALSAD ERRED IN DIRECTING THE AO TO ADOPT 3% GP AND COMPUTE THE TAXABLE INCOME INSTEAD OF CONFIRMING THE WHOLE AMOUNT OF RS.22,68,512/- MADE ON ACCOUNT OF DISALLOWANCE OF PURCHASES AS THE ASSESSEE HAS NOT PRODUCED DETAILS CALLED FOR DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS DURING THE APPELLATE PROCEEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (APPEALS), VALSAD OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 4. IT IS, THEREFORE PRAYED TO SET-ASIDE THE ORDER OF THE CIT (APPEALS), VALSAD AND RESTORE THE ORDER PASSED BY THE ASSESSING OFFICER. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUNDS OF APPEAL. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF INCOME FOR AY.2007- 08 ON 29.10.2007 DECLARING INCOME OF RS.1,32,870/-. INITIALLY THE RETURN WAS PROCESSED UNDER SECTION 143(1) AND ACCEPT IT ON 28.11.2008 WITHOUT ANY VARIATION. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. THE AO WHILE PASSING THE ASSESSMENT ORDER FROM 30.03.2009 UNDER SECTION 144 MADE ADDITION ON ACCOUNT OF LABOUR EXPENSES OF RS.3.32 CRORE, PURCHASES OF RS.22.68 LACS AND 3 ITA NOS.3169 & 3170/AHD/2011 ASSESSMENT YEAR.2007-08 MUKESH NANDLAL & ATULKUMAR NANDLAL DAFTARY UNEXPLAINED INVESTMENT OF RS.5.25 LACS. THE AO DURING THE ASSESSMENT NOTED THAT NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE ON 23.09.2008, THE NOTICE WAS RETURNED BACK BY THE POSTAL AUTHORITY WITH REMARKS NO IDENTIFICATION OF THE PERSON HENCE RETURNED BACK TO SENDER . THEREAFTER, THE AO SEND NOTICES ANOTHER ADDRESS AT 102, TIRUPATI COMPLEX, VIJALPORE, NAVSARI. THE SAME WAS ALSO RETURNED BACK WITH REMARK LEFT . THE AO THEREAFTER AGAIN SEND NOTICE UNDER SECTION 142(1) AT THE ENTRIES AT B/9, BHAVANIPRASAD SOCIETY, BHAVANI MATA ROAD, AMBOLI-ANDHERI-WEST, MUMBAI, MAHARASHTRA-400058. THE NOTICE WAS AGAIN RETURNED BACK UNCLAIMED. THE AO NOTED THAT THE ASSESSEE IS AVOIDING ASSESSMENT PROCEEDINGS. THE AO DEPUTED WARD INSPECTOR TO CARRY OUT INQUIRY ON THE ADDRESS GIVEN BY THE ASSESSEE ON THE RETURN OF INCOME AS THAT THE 59/B, 1 ST FLOOR, SIX-O-AVENUE, STATION ROAD, NAVSARI. NOWHERE ABOUT THE ASSESSEE COULD BE FOUND. THE AO THEREAFTER PROCEEDED EX PARTE PROCEEDING AND DECIDED TO MADE ADDITION UNDER SECTION 144 ON THE BASIS OF DETAILS AVAILABLE. 4. ON THE BASIS OF REPORT FURNISHED IN FORM NO.3CD, THE AO NOTED THAT ASSESSEE HAS SHOWN BUSINESS AND PROFESSION OF DIAMOND CUTTING AND POLISHING MAJOORI ON COMMISSION BASIS. THE ASSESSEE HAS NO BUILDING OR FACTORY PREMISES. THE ASSESSEE MADE TRANSACTION WITH FOUR PARTIES ABOUT LABOUR JOBS WORK OF FIVE PARTIES AGGREGATING TO RS.22,68,512/- AND SINCE OF DIAMOND OF RS.12,07,194/- AND RS.10,89,359/- (R.D SALES). THE AO FURTHER NOTED THAT IN SIMILAR CASE OF ANIL CMRUTLAL CHAWALA ENGAGED IN THE SIMILAR BUSINESS IN DEPTH INQUIRY WAS 4 ITA NOS.3169 & 3170/AHD/2011 ASSESSMENT YEAR.2007-08 MUKESH NANDLAL & ATULKUMAR NANDLAL DAFTARY MADE AND ON THE BASIS OF DEPTH INQUIRY OF LABOUR EXPENSES OF RS.3,32,86,165/- CRORE BY ASHISH ENTERPRISES AND PURCHASE OF RS.22,68,512/- WAS TAXED PROTECTIVELY IN THE HANDS OF ASSESSEE AND SUBSTANTIVELY IN THE HANDS OF THE RESPECTIVE PARTIES WHO CLAIMED LABOUR EXPENSES. THE AO FURTHER FIND THAT THE ASSESSEE ADVANCES LOAN OF RS.5,25,000/- TO SWETABEN VIPULBHAI. THE ASSESSEE HAS ON HIS OBSERVATION THAT ASSESSEE FAILED TO PROVE THE SOURCE OF ALLEGED INCOMES, THE SAID AMOUNT WAS TREATED AS UNEXPLAINED INVESTMENT AND ADDED UNDER SECTION 69 OF THE ACT. THE ASSESSEE CHALLENGED THE ADDITION OF LABOUR EXPENSES AD PURCHASES ONLY. 5. ON APPEAL BEFORE THE LD. CIT(A) ON DISALLOWANCE OF LABOUR EXPENSES PASSED THE FOLLOWING PARA NO.7.1 OF THE ORDER: 7.1 DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. I HAVE ALSO PERUSED THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER AND THE SUBMISSION MADE BY THE LD. AR. THE FACT IS THAT THIS CASE IS IDENTICAL TO THE CASE OF ATUL NANDALAL DAFTARY. ON THE IDENTICAL SET OF FACTS AND CIRCUMSTANCES IN THE CASE OF ATUL NANDALAL DAFTARY, I HAVE DECIDED THE ISSUE AS UNDER: THE APPELLANT HAS UNDERTAKEN LABOUR CONTRACT JOB AND DONE TRADING OF DIAMONDS. THE LABOUR CONTRACT JOB WAS FURTHER SUB- CONTRACTED TO VARIOUS PARTIES. THE RECEIPT AND PAYMENT TOWARDS CONTRACT AND SUB-CONTRACT JOB WERE DULY REFLECTED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT. THAT LEAVES THE MATTER TO BE DECIDED ON THE PAYMENT MADE BY THE APPELLANT TO THE SUB- CONTRACT WHERE SUCH PAYMENT WAS SUBJECTED TO TAX DEDUCTED AT SOURCE U/S 194C. ACCORDINGLY TO THE INFORMATION FURNISHED BY THE APPELLANT IT IS CLEAR THAT THE APPELLANT HAS NOT DEDUCTED TAX AT 5 ITA NOS.3169 & 3170/AHD/2011 ASSESSMENT YEAR.2007-08 MUKESH NANDLAL & ATULKUMAR NANDLAL DAFTARY SOURCE EVEN THOUGH THE PAYMENTS MADE TO THE SUB-CONTRACTOR WERE IN EXCESS OF RS.50,000/-, THEREBY ATTRACTING PROVISIONS U/S 40(A)(IA). THE ASSESSING OFFICER SHOULD HAVE TAKEN RECOURSE OF THE PROVISIONS U/S 40(A)(IA) ON THE AMOUNT WHERE TDS WAS NOT EFFECTED. DURING THE APPELLATE PROCEEDING THIS ISSUE WAS DISCUSSED WITH THE LD. AR. THE LD. AR WAS IN AGREEMENT THAT SEC. 40(A)(IA) IS A OVERRIDING PROVISION AND THE PAYMENT MADE TO SUB- CONTRACTORS ATTRACTS THIS PROVISIONS OF THE ACT. IT WAS ALSO ACCEPTED BY THE LD. AR THAT THE APPELLANT HAD NOT DEDUCTED TAX AT SOURCE FOR THE PAYMENT MADE TO THE SUB-CONTRACTORS. IN VIEW OF THIS, THE EXPENDITURE CLAIMED BY THE APPELLANT TOWARDS THE PAYMENT MADE TO THE SUB-CONTRACTORS TO THE EXTENT OF THE AMOUNT WHERE TAX WAS NOT DEDUCTED AT SOURCE IS CONFIRMED . HOWEVER, IN THE INTEREST OF JUSTICE AND FAIRNESS, THE AO IS DIRECTED TO WORK OUT THE ACTUAL AMOUNT TO BE DISALLOWED BY INVOKING SEC. 40(A)(IA) OF THE ACT. THE APPELLANT SHALL FURNISHED TO THE AO THE DETAILS OF LABOUR CHARGES PAID TO INDIVIDUAL PARTIES WITHIN 10 DAYS FROM THE RECEIPT OF THE ORDER TO ASSIST THE DETERMINATION OF DISALLOWABLE AMOUNT. 6. ON ADDITION OF PURCHASE OF DIAMOND OF RS.22,68,521/-, THE LD. CIT(A) DIRECTED TO ADOPT THREE PER CENT OF GROSS PROFIT AND GRANTED PARTIAL LEAVE TO THE ASSESSEE BY PASSING THE FOLLOWING PARA NO.8.1 OF THE LD. CIT(A) ORDER: 8.1 DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. I HAVE ALSO PERUSED THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER AND THE SUBMISSION MADE BY THE LD. AR. THE FACT IS THAT THIS CASE IS IDENTICAL TO THE CASE OF ATUL NANDALAL DAFTARY. ON THE IDENTICAL SET OF FACTS AND CIRCUMSTANCES IN THE CASE OF ATUL NANDALAL DAFTARY, I HAVE DECIDED THE ISSUE AS UNDER: AT THE OUTSET THE FINDINGS IN THE CASE OF ANIL AMRITLAL CHAHAWALA CANNOT BE APPLIED IN THIS CASE FOR MAKING 6 ITA NOS.3169 & 3170/AHD/2011 ASSESSMENT YEAR.2007-08 MUKESH NANDLAL & ATULKUMAR NANDLAL DAFTARY DISALLOWANCE OF ENTIRE PURCHASES AS BOGUS. THE LD. AR CONTENDED THAT THE APPELLANT HAD MAINTAINED SUFFICIENT RECORDS TO SHOW THAT THE SALES AND PURCHASES WERE MADE DURING THE YEAR. THE SALES ARE RECEIVED IN CHEQUES. IT CONTENDED THAT IF PURCHASES ARE NOT THERE, IN THAT CASE THERE CANNOT BE SALES. UNDER SUCH CIRCUMSTANCES THE LD. AR CONTENDED THAT EVEN IF THE INCOME SHOWN BY THE APPELLANT AS PER THE FINANCIAL STATEMENTS FILED BY HIM WERE NOT ACCEPTABLE TO THE LAO, HE OUGHT TO HAVE ESTIMATED THE INCOME OF THE APPELLANT AT REASONABLE LEVEL. THIS IS BECAUSE ANY PERSON CANNOT EARN 100% INCOME FROM THE TOTAL RECEIPTS EARNED BY HIM. FURTHER, IT WAS RESPECTFULLY SUBMITTED THAT THE APPELLANT HAD EARNED A NET PROFIT AT THE RATE OF LESS THAN 1.00% AGAINST THE TOTAL TRADING RECEIPT OF RS.1,15,81,660/-. THE LD. AR ALSO CONTENDED THAT FROM THE FINANCIAL STATEMENTS LIKE PROFIT & LOSS ACCOUNT, BALANCE SHEET ETC., YOUR HONOUR WILL APPRECIATE THAT THE EXPENSES CLAIMED BY THE APPELLANT WERE AT A VERY REASONABLE LEVEL AND THE NET INCOME SHOWN BY HIM WAS QUITE REASONABLE. IN THIS CIRCUMSTANCES, THE LAO OUGHT TO HAVE EITHER ACCEPTED THE NET PROFIT AS SHOWN BY THE APPELLANT OR SHOULD HAVE ESTIMATED THE GROSS PROFIT AT THE MOST REASONABLE LEVEL. THE ABOVE SUBMISSION BY THE LD. AR HAS A FORCE AND SERVE TO THE CAUSE OF THE APPELLANT. THE PROFIT/INCOME MUST BE ARRIVED AFTER ALLOWING REASONABLE EXPENDITURE INCURRED BY THE APPELLANT. THEREFORE, A REASONABLE ESTIMATE OF GP/NP WILL RENDER JUSTICE TO THE APPELLANT. THE APPELLANT HAS SHOWN 1.417% GP AND 0.61 % NP. WHILE DECIDING AN IDENTICAL CASE BY ME I CHANCED UPON A DECISION OF THE HONBLE ITAT, AHMEDABAD-M/S. BHADIADRA DIAMONDS SURAT VS. DCIT PRONOUNCED ON 08-11-2005 VIDE ORDER NO. IT(SS)A NOS.16/AHD/1999 WHEREIN THE HONBLE ITAT, AHD HAD ESTIMATED 6% GP. IN THE INSTANT CASE THE G.P/N.P. SHOWN IS ABYSMALLY LOW PARTICULARLY THE APPELLANT HAD NO INFRASTRUCTURE OF ITS OWN. AT THE SAME TIME WE MUST BE SENSITIVE TO THE PREVAILING 7 ITA NOS.3169 & 3170/AHD/2011 ASSESSMENT YEAR.2007-08 MUKESH NANDLAL & ATULKUMAR NANDLAL DAFTARY PRICES FOR LABOUR AND OTHER COSTS IN THAT CASE AND THE CASE IN HAND. DEFINITELY, THE COSTS HAVE BEEN MORE IN RECENT YEARS THAN THE EARLIER YEARS BECAUSE OF VARIOUS FACTORS SUCH AS INFLATION, TAX IMPLICATION AND THE GAP BETWEEN DEMAND & SUPPLY, COST OF RAW MATERIAL, LABOUR ETC. THEREFORE, IN THE INTEREST OF JUSTICE AND KEEPING IN VIEW OF THE SMALLNESS OF THE BUSINESS CARRIED OUT BY THE APPELLANT, THE AO IS DIRECTED TO ADOPT 3% GP AND COMPUTE THE TAXABLE INCOME OF THE APPELLANT. THE AO IS DIRECTED TO FOLLOW THE DIRECTION GIVEN ABOVE IN THIS CASE AS WELL. THUS, THE APPELLANT GETS PART RELIEF IN THIS GROUND OF APPEAL. 7. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED PRESENT APPEAL BEFORE TRIBUNAL. 8. NOTICE OF HEARING OF APPEAL WAS SERVED TO THE ASSESSEE ON THE ADDRESS GIVEN IN THE FORM-36. INITIALLY COUNSEL FOR BOTH THE ASSESSEE APPEARED AND SOUGHT ADJOURNMENT FOR SEVERAL YEARS. HOWEVER, ON THE 11 TH JANUARY 2021 THE LD AR FOR THE ASSESSEE SUBMITS THAT HE IS WITHDRAWING HIS AUTHORITY FORM THESE APPEALS. THE LD AR FOR THE ASSESSEES ALSO SUBMITS THAT HE HAS ALREADY INFORMED THE ASSESSEE BY WAY OF REGISTERED LETTER, BUT THE SAID LETTER IS RETURN BACK, COPY OF WHICH IS FILED ON RECORD. AFTER WITHDRAWING THE AUTHORITY LETTER BY LD AR FOR THE ASSESSEES WE AGAIN SENT THE NOTICE OF HEARING OF APPEAL THROUGH REGISTERED LETTER WITH ACKNOWLEDGE DUE (RPAD) FOR FIXING HEARING ON 03.05.2021. THE FRESH NOTICE WAS SENT AT THE NEW ADDRESS PROVIDED BY ASSESSEE AT C/O ADVOCATE BADRESH SONI, 4/790, RANGAVASYAM, GALWAD GATE, NAVASARI- 396445. DEPITE SERVICE OF THE NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE, THEREFORE, WE LEFT NO OPTION EXCEPT TO DECIDE THE 8 ITA NOS.3169 & 3170/AHD/2011 ASSESSMENT YEAR.2007-08 MUKESH NANDLAL & ATULKUMAR NANDLAL DAFTARY APPEALS AFTER HEARING THE SUBMISSIONS OF THE LD DR FOR THE REVENUE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 9. THE LD. CIT-DR FOR THE REVENUE SUBMITS THAT THE AO DURING THE ASSESSMENT NOTED THAT THE ASSESSEE HAS NO BUILDING OR FACTORY PREMISES. THE ASSESSEE MADE TRANSACTION WITH FOUR PARTIES ABOUT LABOUR JOBS WORK OF FIVE PARTIES AGGREGATING TO RS.22,68,512/- AND SINCE OF DIAMOND OF RS.12,07,194/- AND RS.10,89,359/- (R.D SALES). THE AO FURTHER NOTED THAT IN SIMILAR CASE OF ANIL AMRUTLAL CHAWALA ENGAGED IN THE SIMILAR BUSINESS IN DEPTH INQUIRY WAS MADE AND ON THE BASIS OF DEPTH INQUIRY OF LABOUR EXPENSES OF RS.3,32,86,165/- CRORE BY ASHISH ENTERPRISES AND PURCHASE OF RS.22,68,512/- WAS TAXED PROTECTIVELY IN THE HANDS OF ASSESSEE AND SUBSTANTIVELY IN THE HANDS OF THE RESPECTIVE PARTIES WHO CLAIMED LABOUR EXPENSES. THE AO FURTHER FIND THAT THE ASSESSEE ADVANCES LOAN OF RS.5,25,000/- TO SWETABEN VIPULBHAI. THE LD CIT- DR SUBMITS THAT HE FULLY SUPPORT THE ORDER OF THE AO AND PRAYED TO REVERSE THE FINDING OF THE LD CIT(A). 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD CIT-DR FOR THE REVENUE AND HAVE GONE THROUGH THE ORDER OF THE LOWER AUTHORITIES CAREFULLY. THE AO MADE ADDITIONS IN THE ASSESSMENT COMPLETED UNDER SECTION 144 OF THE ACT. THE WHILE MAKING ADDITIONS NOTED THAT THE ASSESSEE HAS DEBITED HUGE EXPENSES OF LABOUR EXPENSES, THE ASSESSEE HAS NO BUILDING OR FACTORY PREMISES. FURTHER, THE ASSESSEE MADE TRANSACTION WITH FOUR PARTIES ABOUT LABOUR JOBS WORK OF FIVE 9 ITA NOS.3169 & 3170/AHD/2011 ASSESSMENT YEAR.2007-08 MUKESH NANDLAL & ATULKUMAR NANDLAL DAFTARY PARTIES AGGREGATING TO RS.22,68,512/- AND SINCE OF DIAMOND OF RS.12,07,194/- AND RS.10,89,359/- (R.D SALES). THE AO FURTHER NOTED THAT IN SIMILAR CASE OF ANIL AMRUTLAL CHAWALA ENGAGED IN THE SIMILAR BUSINESS IN DEPTH INQUIRY WAS MADE AND ON THE BASIS OF DEPTH INQUIRY OF LABOUR EXPENSES OF RS.3,32,86,165/- CRORE BY ASHISH ENTERPRISES AND PURCHASE OF RS.22,68,512/- WAS TAXED PROTECTIVELY IN THE HANDS OF ASSESSEE AND SUBSTANTIVELY IN THE HANDS OF THE RESPECTIVE PARTIES WHO CLAIMED LABOUR EXPENSES. 11. WE FIND THAT DURING THE APPELLATE STAGE THE ASSESSEE FURNISHED CERTAIN SUBMISSIONS. THE LD CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE ON THE ISSUE OF DISALLOWANCES UNDER SECTION 40(A)(IA) HELD THAT AS PER THE SUBMISSIONS FURNISHED BY THE ASSESSEE IT IS CLEAR THAT THE APPELLANT HAS NOT DEDUCTED TAX AT SOURCE EVEN THOUGH THE PAYMENTS MADE TO THE SUB-CONTRACTOR WERE IN EXCESS OF RS.50,000/-, THEREBY ATTRACTING PROVISIONS U/S 40(A)(IA). THUS THE AO SHOULD HAVE TAKEN RECOURSE OF THE PROVISIONS U/S 40(A)(IA) ON THE AMOUNT WHERE NO TDS WAS MADE. IT WAS HELD THAT DURING THE APPELLATE PROCEEDING THIS ISSUE WAS DISCUSSED WITH THE LD. AR OF THE ASSESSEE, WHO WAS IN AGREEMENT THAT SEC. 40(A)(IA) IS OVERRIDING PROVISION AND THE PAYMENT MADE TO SUB-CONTRACTORS ATTRACTS THIS PROVISIONS OF THE ACT AND THAT HE THAT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE FOR THE PAYMENT MADE TO THE SUB- CONTRACTORS. THEREFORE, THE EXPENDITURE CLAIMED BY THE ASSESSEE TOWARDS THE PAYMENT MADE TO THE SUB-CONTRACTORS TO THE EXTENT OF THE AMOUNT WHERE TAX 10 ITA NOS.3169 & 3170/AHD/2011 ASSESSMENT YEAR.2007-08 MUKESH NANDLAL & ATULKUMAR NANDLAL DAFTARY WAS NOT DEDUCTED AT SOURCE IS CONFIRMED. HOWEVER, IN THE INTEREST OF JUSTICE AND FAIRNESS, THE LD CIT(A) DIRECTED THE AO TO WORK OUT THE ACTUAL AMOUNT TO BE DISALLOWED BY INVOKING SEC. 40(A)(IA) OF THE ACT AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. IN OUR VIEW THE LD CIT(A) HAS PASSED THE ORDER AFTER CONSIDERING THE OVERALL FACTS OF THE CASE IN GRANTING PARTIAL RELIEF TO THE ASSESSEE, WHICH WE AFFIRM. NO CONTRARY FACTS WERE BROUGHT TO OUR NOTICE TO TAKE OTHER VIEW. IN THE RESULT THE GROUND NON1 OF THE APPEAL IS DISMISSED. 12. ON THE ISSUE RAISED IN THE GROUND NO. 2, WE FIND THAT THE AO MADE ADDITION OF ENTIRE OF PURCHASE. THE AO FAILED TO APPRECIATE THAT NO SALE IS POSSIBLE IN ABSENCE OF PURCHASES. THE AO MADE ADDITIONS OF THE ENTIRE PURCHASES, WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE HAS SHOWN SALES, WHICH IS NOT DISPUTED BY THE AO. THE LD CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF 3% BY FOLLOWING THE DECISION IN CASE OF ATUL KUMAR ( ASSESSEE IN CONNECTED APPEAL), WHEREIN THE LD. CIT(A) RELIED ON THE ORDER OF ANIL AMRITLAL CHAHAWALA . IN OUR VIEW THE DISALLOWANCES RESTRICTED BY LD CIT(A) IS SUFFICIENT TO PREVENT THE POSSIBILITY OF THE REVENUE LEAKAGE, WHICH WE AFFIRMS. IN THE RESULT THIS GROUND OF APPEAL IS ALSO REJECTED. 13. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO. 3170 /AHD/2011 14. CONSIDERING THE FACTS THAT THE REVENUE HAS RAISED SIMILAR GROUNDS OF APPEAL AS RAISED IN ITA NO. 3169/AHD/2011, WHICH WE HAVE DISMISSED, FACTS IN THE 11 ITA NOS.3169 & 3170/AHD/2011 ASSESSMENT YEAR.2007-08 MUKESH NANDLAL & ATULKUMAR NANDLAL DAFTARY APPEAL IS ALMOST SIMILAR, THEREFORE, FOLLOWING THE PRINCIPLE OF CONSISTENCY THIS APPEAL IS ALSO DISMISSED WITH SIMILAR DIRECTIONS. 15. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER ANNOUNCED IN COURT ON 11.10.2021BY PLACING THE RESULT ON THE NOTICE BOARD. SD/- SD/- (DR. A. L. SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED: 11/10/2021 SAMANTA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. PR.CIT 5. DR BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR/SR. PS/PS ITAT, SURAT