Shri Tribhovandas R.Prajapati, Anand V. The Income tax Officer,Ward-1, Anand

ITA 3287/AHD/2009

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6434 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M G PATEL
• Keywords: Rejection of books of accounts
• Section: 44AD; 133A; 28

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI BHAVNESH SAINI, JM AND D.C.AGRAWAL, A M SHRI TRIBHOVANDAS R. PRAJAPATI, DEPAWALI SOCIETY, INDIRA GANDHI ROAD, 100 FT. ROAD, ANAND. VS. INCOME-TAX OFFICER, WARD- 1, ANAND. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI M. G. PATEL, AR RESPONDENT BY:- SHRI SAMIR TEKRIWAL, SR.DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS:- (1) THE LD. CIT(A)-IV, BARODA HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE BY CONFIRMING THE ACTION OF THE AO IN R EJECTING THE BOOKS OF ACCOUNTS U/S 145(3) OF THE INCOME-TAX ACT, 1961 THOUGH THE APPELLANTS ACCOUNTS ARE DULY AUDITED U/ S 44AB OF THE INCOME-TAX ACT, 1961. (2) THE LD. CIT(A)-IV, BARODA HAS ERRED IN LAW AS WELL AS ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN E STIMATING THE NET PROFIT OF THE APPELLANT @ 8% WITHOUT QUOTING CO MPARABLE INSTANCE AND IGNORING THE COMPARATIVE INSTANCES QUO TED BY THE APPELLANT. 2. THE FACTS RELATING TO THE ISSUE ARE THAT A SURVE Y OPERATION U/S 133A WAS CARRIED OUT ON THE BUSINESS PREMISES OF THE ASS ESSEE ON 3.2.2006. ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 2 DURING THE COURSE OF SURVEY THE AO FOUND THAT BOOKS OF ACCOUNTS IN PARTICULAR CASH BOOK WAS NOT COMPLETE, CASH BALANCE AS ON 31.12.2005 WAS SHOWN AT RS.15,42,449/-. THE AO FURTHER FOUND T HAT ASSESSEE HAS SHOWN TO HAVE MADE PAYMENT OF RS.38,34,943/- FOR WH ICH THERE WERE NO VOUCHERS ON THE SPOT. HE ALSO FOUND THAT PART OF TH E CONTRACT WORK IN WHICH ASSESSEE WAS DEALING WAS ASSIGNED TO HIS RELA TIVES NAMELY RAMESH R. PRAJAPATI, AMBALAL R. PRAJAPATI, NAGINBHA I R. PRAJAPATI & HARSHAD N. PRAJAPATI. THE WORK ASSIGNED TO THEM VAL UED AS UNDER :- (1) RAMESH R. PRAJAPATI RAJPIPALA SITE 20,00,000/- (2) AMBALAL R. PRAJAPATI KOTHAMBA SITE 8,00,000/- (3) NAGIN R. PRAJAPATI GARBADA SITE 5,00,000/- (4) HARSHAD N. PRAJAPATI DAHOD SITE 5,00,000/- 3. THE ASSESSEE FILED RETURN OF INCOME ON 29.12.200 6 ON AN INCOME OF RS.4,32,282/- AND AGRICULTURAL INCOME OF RS.1,05,20 0/-. THE AO CALLED FOR THE BOOKS OF ACCOUNT OF THE ASSESSEE AND VOUCHE RS. THE ASSESSEE PRODUCED BEFORE THE AO ANOTHER CASH BOOK WHICH SHOW ED CASH BALANCE OF RS.18,112/- AS ON 31.12.2005. THE ASSESSEE ALSO PRO DUCED VARIOUS VOUCHERS IN RESPECT OF PAYMENT OF LABOUR CHARGES AM OUNTING TO RS.38,34,943/-. THE AO ALSO FOUND THAT RATES AT WHI CH LABOUR PAYMENT WAS SHOWN TO HAVE BEEN MADE IN THE FINAL BOOKS WAS MUCH HIGHER THAN WHAT WAS STATED BY THE ASSESSEE DURING THE COURSE O F SURVEY PROCEEDINGS. HE ACCORDINGLY REJECTED THE BOOKS OF ACCOUNT AND IN VOKED THE PROVISIONS ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 3 OF SECTION 145(3) AND PROCEEDED TO ESTIMATE THE INC OME. HE APPLIED THE NET PROFIT RATE OF 8% ON THE TOTAL RECEIPTS WHICH R ESULTED IN AN ADDITION OF RS.21,47,192/-. IN ADDITION TO THIS, THE AO HAD PRO POSED ANOTHER ADDITION OF RS.10,41,611/- U/S 40(A)(IA). 4. WHEN THE MATTER CAME UP BEFORE THE LD. CIT(A) HE DELETED THE ADDITION MADE U/S 40(A)(IA) ON THE GROUND THAT ONCE PROFITS ARE ESTIMATED THEN NO FURTHER ADDITION U/S 28 TO SECTION 43D CAN BE MADE. IN RESPECT OF REJECTION OF BOOKS OF ACCOUNTS THE LD. CIT(A) OBSER VED THAT VOUCHERS PREPARED BY THE ASSESSEE IN RESPECT OF LABOUR PAYME NTS OF RS.39,34,943/- ARE SELF MADE AND ONLY PRODUCED AT THE TIME OF ASSE SSMENT PROCEEDINGS AND WERE NOT FOUND AT THE TIME OF SURVEY. THE NATUR E OF VOUCHERS, PHYSICAL LOOK, NARRATION ETC. SHOWED THAT THEY WERE WRITTEN BY A SINGLE PERSON IN ONE SITTING. THE LABOURERS TO WHOM SUCH P AYMENTS ARE SHOWN TO HAVE BEEN MADE ARE NOT IDENTIFIABLE DUE TO NON-AVAI LABILITY OF THEIR ADDRESSES. THE ASSESSEE WAS NOT ABLE TO EXPLAIN SAT ISFACTORILY THE DIFFERENCE BETWEEN THE AMOUNTS PAID TO SUB-CONTRACT ORS WHO WERE RELATED TO THE ASSESSEE AND WHICH OUGHT TO HAVE BEEN PAID A S PER STATEMENT GIVEN BY THE ASSESSEE AT THE TIME OF SURVEY. HE ALSO OBSE RVED THAT THE BOOKS WERE NOT WRITTEN ON A REGULAR BASIS AS FOUND DURING THE COURSE OF SURVEY. ACCORDINGLY, HE UPHELD THE APPLICABILITY OF PROVISI ONS OF SECTION 145(3). ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 4 5. IN RESPECT OF APPLICATION OF NET PROFIT RATE, TH E LD. CIT(A) OBSERVED THAT THERE ARE CASES WHERE NET PROFIT RATE OF LESS THAN 8% ARE APPLIED AND THERE ARE ALSO CASES WHERE NET PROFIT RATE ABOVE 8% IS APPLIED. EVEN THE TRIBUNAL IN THE CASE OF SHRI RAM JHANWARLAL VS. ITO (2005) 98 TTJ 630 (JODHPUR) HELD THAT IT WOULD BE FAIR AND REASONABLE IF THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED ON THE BASIS OF SECTION 44 AD THOUGH THAT SECTION IS NOT STRICTLY APPLICABLE. ACCORDINGLY THE LD. CIT (A) CONFIRMED THE ADDITION MADE ON APPLYING NET PROFIT RATE OF 8%. 6. BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED AGAINST REJECTION OF BOOKS THAT ASSESSEE HAD EXPLAINED ALL THE DISCREPAN CIES WHICH WERE NOT CONSIDERED BY THE AO. HE SUBMITTED THAT FINAL CASH BOOK WAS LYING WITH THE ACCOUNTANT WHICH WAS SUBMITTED TO THE AO IMMEDI ATELY WHEN HE CALLED AT THE TIME OF ASSESSMENT. THE RECONCILIATIO N OF CASH DIFFERENCE AS ON 31.12.2005 WAS SUBMITTED TO THE AO WHICH IS AS U NDER:- DATE 5.12.2008 TO THE INCOME-TAX OFFICER, WARD-1, ANAND. SUB: SCRUTINY ASSESSMENT FOR THE ASST. YEAR 2006-07 IN CASE OF TRIBHOVANBHAI R. PRAJAPATI, ANAND. IN CONTEXT TO THE ABOVE MENTIONED SUBJECT, PLEASE F IND THE FOLLOWING DETAILS IN ORDER FOR YOUR KIN CONSIDERATION. ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 5 1. PLEASE FIND THE RECONCILIATION STATEMENT FOR THE CASH BALANCE AS PER THE BOOKS WRITTEN UPTO THE DATE OF SURVEY AND AFTER FINALIZATION OF ACCOUNTS AS ON 31.3.2006. CASH BALANCE AS ON 31.12.2005 AS PER OLD CASH BOOK - RS.1542439/- ADD: ADDITIONAL BANK WITHDRAWALS AND SCRAP SALE WH ICH NOT ENTERED IN OLD CASH BOOK RS.1858040/- -------------------- RS.3400479/- LESS: ADDITIONAL PAYMENTS AND EXPENDITURE NOT ENTE RED IN OLD CASH BOOK RS.3382367/- ----------- -------- CASH AS PER NEW CASH BOOK RS.18,112/- ---------- -------- PLEASE FIND THE COPY OF OLD AND NEW CASH BOOK FOR Y OUR KIND CONSIDERATION. ALSO WE HAVE ATTACHED THE ZEROX COPY OF DETAILED OF WITHDRAWAL MADE FROM THE BANK AND EXPENDITURE INCUR RED WHICH WERE ENTERED IN THE BOOKS AFTER THE DATE OF SURVEY. THE ASSESSEE IS CARRYING OUT CONTRACT WORK AT VARIO US SITES FOR GUJARAT STATE POLICE HOUSING CORPORATION LTD. THESE SITES A RE AT RAJPIPALA, KOTHAMBA, DAHOD AND GARBADA. THE SITES ARE HANDLED BY UNEDUCATED SUPERVISORS. THEREFORE, THE ASSESSEE HAS HIMSELF PR EPARED THE VOUCHERS. HE SUBMITTED THAT STATEMENT GIVEN FOR LABOUR PAYMEN TS TO THE RELATIVES WAS ON ESTIMATE BASIS WHEREAS IN THE FINAL BOOKS AC TUAL PAYMENTS WERE WRITTEN. THE DETAILS WERE AS UNDER :- NAME SURVEY (RS.) ACTUAL BILL (RS.) RAMESH R. PRAJAPATI 20,00,000/- 16,23,730/- AMBALAL R. PRAJAPATI 8,00,000/- 16,55,515/- NAGIN R. PRAJAPATI 5,00,000/- 15,86,750/- HARSHAD N. PRAJAPATI 5,00,000/- 12,47,015/- ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 6 HE SUBMITTED THAT FINAL AMOUNT PAID TO THE SUB-CONT RACTORS DEPENDED ON ADDITIONAL/EXTRA WORK AS SUGGESTED BY THE CONTRACTE E. IN RESPECT OF APPLICATION OF NET PROFIT RATE LD. AR SUBMITTED EVE N IN A CASE WHERE BOOKS ARE REJECTED NET PROFIT SHOULD BE APPLIED ACCORDING TO THE PAST HISTORY OF THE CASE. HE SUBMITTED THAT IN THE PAST FOLLOWING N ET PROFIT RATE HAS BEEN DECLARED BY THE ASSESSEE :- ASST. YEAR CONSTRUCTION RECEIPTS GROSS PROFIT NET PROFIT G.P.% N.P.% 2004-05 11370873 835349 245739 7.35% 2.16% 2005-06 19237281 972171 223887 5.05% 1.16% 2006-07 26839900 1844279 593682 6.87% 2.21% THE LD. AR SUBMITTED THAT NET PROFIT RATE SHOWN BY THE ASSESSEE THIS YEAR IS BETTER THAN ASST. YEAR 2004-05, THE RESULT DECLA RED BY IT SHOULD HAVE BEEN ACCEPTED AND NO ADDITION BE MADE. HE REFERRED TO THE FOLLOWING JUDGMENT OF THE TRIBUNAL FOR THE PROPOSITION THAT P AST HISTORY OF THE ASSESSEE SHOULD BE CONSIDERED WHILE ESTIMATING NET PROFIT:- ACIT VS. KANHIYA LAL CHOUDHARY (2011) 7 ITR (TRIB) 61 (JAIPUR) IN ADDITION TO ABOVE, THE LD. AR RELIED ON FOLLOWIN G FOUR JUDGMENTS FOR THE PROPOSITION THAT HIS BOOK RESULTS SHOULD BE ACC EPTED:- 1. SHRI RAM JHANWAR LAL VS. ITO 321 ITR 400 (RAJ) 2. NISAR BIRI SIKKA NO.1 VS. CIT 174 TAXMAN 51 (ALL) 3. ITAT B BENCH AHMEDABAD ORDER IN THE CASE OF KANUB HAI RAMJIBHAI MAKWANA IN ITA NO.3883/AHD/2007 & ITA ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 7 NO.464/AHD/2008 FOR ASST. YEAR 2004-05 & 2003-04 RESPECTIVELY. 4. ITAT B BENCH AHMEDABAD ORDER IN THE CASE OF KANUB HAI RAMJIBHAI MAKWANA IN ITA NO.3983/AHD/2008 ASST. YEA R 2005-06. 7. AGAINST THIS, THE LD. DR SUBMITTED THAT THE AUTH ORITIES RELIED ON BY THE LD. AR CANNOT BE APPLIED TO THE FACTS OF THE PR ESENT CASE BECAUSE THEY WERE NOT THE CASES WHERE SURVEY WAS DONE AND DIFFER ENCES IN WRITING THE BOOKS WERE DETECTED ON THE SPOT. THE LD. DR EXHAUST IVELY REFERRED FROM THE STATEMENT OF ASSESSEE RECORDED AT THE TIME OF S URVEY TO HIGHLIGHT HOW THE ASSESSEE IS NOT MAINTAINING PROPER BOOKS OF ACC OUNT. HE REFERRED TO THE QUESTION/ANSWER NO.5 TO HIGHLIGHT THE POINT THA T THE ASSESSEE DOES NOT KNOW WHAT IS THE CASH BALANCE ON TO-DAY I.E. ON THE DATE OF SURVEY. Q.5 SINCE HOW LONG YOU ARE KEEPING BOOKS OF ACCOUNT S? AND PRESENTLY UPTO WHICH DATE THEY ARE WRITTEN ? A.5 I AM DOING THE BUSINESS SINCE LAST 5-6 YEARS AN D KEEPING BOOKS OF ACCOUNTS. AS ON 31.12.2005 THE BOOKS SHOWS BALANCE OF RS.15,42,499/-. I DONT KNOW WHAT IS TODAYS CASH B ALANCE. HE REFERRED TO QUESTION/ANSWER NO.8 TO SHOW THAT TH E PART OF THE WORK HAS BEEN ASSIGNED TO BROTHERS :- Q.8 OUT OF THE ABOVE WHICH WORKS HAVE BEEN ALLOTTED TO YOUR BROTHERS? A.8 OUT OF THE ABOVE FOLLOWING WORKS HAVE BEEN ALLO TTED TO MY BROTHERS : 1. RAMESHBHAI -LABOUR CONTRACT RAJPIPLA RS.20,00, 000 2. AMBALALBHAI LABOUR CONTRACT KOTHAMBA RS.8,00,0 00 ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 8 3. HARSHADBHAI LABOUR CONTRACT,S.P.OFFICE,DAHOD RS .5,00,000 4. NAGJIBHAI -LABOUR CONTRACT, GARBADA RS.4,00,0 00 HE REFERRED TO QUESTION/ANSWER NO.4 SAYING THAT CAS H BALANCE IS NOT KEPT AT THE SITE AND CASH OF HOUSEHOLD AND BUSINESS IS M IXED. Q.4 WHERE YOU ARE MAINTAINING BOOKS OF ACCOUNTS PER TAINING TO YOUR BUSINESS ? A.4 BOOKS OF ACCOUNTS OF THE BUSINESS ARE KEPT WITH MY ACCOUNTANT NARESHBHAI PRAJAPATI, SWASTIK COMPLEX, NEAR ANAND U RBAN CO-OP. BANK, ANAND. IN ADDITION TO THIS VOUCHERS FOR LABOU R PAYMENTS AND CERTAIN BILLS ARE LYING AT SITE AND THE PAYMENTS AR E BEING MADE FROM THE SITE. THE CASH HAS BEEN WITHDRAWN AS AND WHEN R EQUIRED. I AM KEEPING THE BALANCE AT MY RESIDENCE. I AM NOT KEEPI NG SEPARATE CASH FOR BUSINESS AND HOUSE HOLD. LD. DR POINTED OUT THAT EVEN AS PER ASSESSEES VERS ION THE NET PROFIT RATE IS OF 4.5% AND NOT 2%. HE REFERRED TO QUESTION/ANSW ER NO.10 AS UNDER :- Q.10 GIVE THE DETAILS OF GROSS PROFIT RATIO AND NET PROFIT RATIO IN YOUR BUSINESS. A.10 IN MY BUSINESS GENERALLY THE GROSS PROFIT RATI O IS 8% AND NET PROFIT RATIO IS 4-5%. LD. DR POINTED OUT THAT ASSESSEE DOES NOT HAVE ANY OTHER VOUCHERS EXCEPT WHAT IS SHOWN AT THE TIME OF SURVEY. HE REFERRED TO QUESTION/ANSWER NO.21 IN THIS REGARD AS UNDER :- Q.21 FOR ALL THE FOUR YEARS I.E. FROM FINANCIAL YEA R 2002-03 TO DATE 31.1.2006 PRESENT THE CASE BOOK, ALONG WITH PAYMENT VOUCHERS AND ALSO THE RECEIPT. ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 9 A.21 I HAVE PRESENTED BEFORE YOU THE VOUCHERS WHAT SOEVER I HAVE, EXCEPT THIS I DONT HAVE ANY VOUCHERS OR RECEIPTS. CASH BOOK HAS BEEN PRESENTED BEFORE YOU. HE SUBMITTED THAT CASH BALANCE OF RS.67,500/- FOUND AT THE TIME OF SURVEY COULD NOT BE RECONCILED WITH THE BOOKS. HE REFERRED TO QUESTION/ANSWER NO.22 AS UNDER :- Q.22 IN THE ANSWER TO Q.5 THERE WAS A CASH OF RS.1 5,42,449/- WHILE TODAY PHYSICAL CASH WAS FOUND RS.67,500/- DURING SURVEY, WHAT YOU WANT TO SAY REGARDING THE DIFFERENCE ? A.22 THE CASH BALANCE OF RS.15,42,449/- WAS THERE O N 31.12.2005. EXPENSES & PAYMENTS AFTER THAT HAVE NOT BEEN DEDUCT ED. CASH BOOK HAS NOT WRITTEN AFTER THAT AND NO ACCOUNT MAIN TAINED FOR INCOMES AND EXPENSES. AFTER RECONCILIATION OF CASH BOOK I WILL PRESENT THE SAME BEFORE YOU IN 10 DAYS. I SHALL DIS CLOSE THE AMOUNT OF DIFFERENCE IF ANY I AM BOUND BY IT. THE ASSESSEE HAD ADMITTED THAT BOOKS ARE NOT WRITTE N TILL DATE AS PER QUESTION/ANSWER NO.23:- Q.23 YOU HAVE MENTIONED IN YOUR AUDIT REPORT THAT C ASH BOOK IS MENTIONED DAILY, THEN WHY THE CASH BOOK HAS NOT WRI TTEN TILL DATE? A.23 I KNOW THIS THING, BUT GRANDMOTHER OF MY ACCOU NTANT WAS DIED DURING FIRST WEEK OF JANUARY, SO BOOKS HAVE NOT BEE N WRITTEN TILL DATE. FINALLY THE LD. DR SUBMITTED THAT BOOKS OF ACCOUNTS HAVE BEEN RIGHTLY REJECTED BY THE AO AND AFFIRMED BY THE LD. CIT(A) A ND ALSO NET PROFIT RATE APPLIED AT 8% AS PER SECTION 44AD IS CORRECT AND R EASONABLE. ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 10 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF LD. CIT(A). THE BOOKS ARE RIGHTLY REJECTED BECAUSE AT THE TIME OF SURVEY WHICH WAS DONE ON 3.2.2006, THE ASSESSEE DID NOT PRODUCE THE CASH BOOK ALLEGEDLY LYING WITH THE ACCOUNTANT. IF T HE CASH BOOK WAS LYING WITH THE ACCOUNTANT THEN WHAT WAS THE CASH BOOK PRE SENT AT THE TIME OF SURVEY WHICH SHOWED THE CASH BALANCE OF RS.15,42,44 9/- AS ON 31.12.2005. IT IS QUITE CLEAR THAT ASSESSEE HAS BEE N MAINTAINING DUPLICATE SETS OF ACCOUNTS ONE WHICH WAS ACTUALLY FOUND AT TH E TIME OF SURVEY AND THE OTHER WHICH IS SUBSEQUENTLY WRITTEN BY THE ACCO UNTANT AFTER ADJUSTING VARIOUS EXPENSES TO SHOW THE PROFIT SOUGHT TO BE DE CLARED. WE DO NOT FIND ANY REASON AS TO WHY ASSESSEE HAD NOT COME UP TO TH E AO TO SHOW THE FINAL BOOK JUST ON THE RETURN OF ACCOUNTANT AND EXP LAINED THE DIFFERENCE BETWEEN THE ENTRIES MADE ON 31.12.2005 IN THE CASH BOOK FOUND AT THE TIME OF SURVEY AND OF RS.18,112/- SHOWN IN THE FINA L BOOK ON THAT DAY. IT HAS TAKEN ALMOST 2 YEARS I.E. AS LATE AS 5.12.2008 , THE CHARTERED ACCOUNTANT OF THE ASSESSEE EXPLAINED THE DIFFERENCE BY SHOWING ADDITIONAL PAYMENTS AND EXPENDITURE AT RS.33,82,367 /-. THERE IS NO EXPLANATION AS TO HOW THIS MUCH EXPENDITURE WAS INC URRED AND WHY ITS EVIDENCE WAS NOT AVAILABLE WITH THE ASSESSEE AT THE TIME OF SURVEY. IN THE TOTAL WORK OF RS.2.68 CRORES THE CLAIM OF EXPENDITU RE OF RS.33.82 LAKHS IS SUBSTANTIAL AND ASSESSEE OUGHT TO HAVE ITS VOUCHERS AND OTHER EVIDENCES AT ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 11 THE TIME OF SURVEY WHICH OUGHT TO HAVE BEEN SHOWN T O THE SURVEY PARTY. ON THE OTHER HAND THERE IS A CATEGORICAL STATEMENT GIVEN BY THE ASSESSEE AS REFERRED TO ABOVE THAT HE DID NOT HAVE WRITTEN VOUC HERS EXCEPT WHAT IS PRODUCED BEFORE THE SURVEY PARTY. THEREFORE, THE CL AIM OF EXPENDITURE OF RS.33.82 LACS SO AS TO BRING DOWN THE CASH AS PER N EW CASH BOOK/CASH BOOK WRITTEN BY ACCOUNTANT IS NOT ACCEPTABLE AND ON LY INFERENCE IS THAT THIS CLAIM WAS MADE IN THE REAL CASH BOOK TO BRING DOWN THE PROFITS AND ALSO THE CASH BALANCE AS ON 31.12.2005. 9. WE ALSO NOTICE THAT ASSESSEE PRODUCED THE VOUCHE RS OF LABOUR PAYMENTS AT RS.38,34,943/- BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH ARE APPARENTLY NOT REL IABLE. THE LD. DR RIGHTLY POINTED OUT THAT THESE VOUCHERS WERE NOT PR ESENT AT THE TIME OF SURVEY AND, THEREFORE, CLEARLY THEY WERE MADE SUBSE QUENTLY TO ADJUST THE PROFIT. THE AO HAS GIVEN FOLLOWING REASONS FOR REJE CTING THESE VOUCHERS WHICH IN OUR VIEW REQUIRE TO BE UPHELD:- 1. NO PROPER NUMBERING OF THE VOUCHERS ARE GIVEN. 2. THE PHYSICAL LOOK, COLOUR OF THE VOUCHERS IS SIMILA R AND IDENTICAL. 3. THE NARRATION OF THE VOUCHERS, DATE & AMOUNT ARE AL SO APPEARED TO BE WRITTEN/PREPARED BY ONE PERSON IN SIMILAR HAN DWRITING. 4. AS REGARDS THE IDENTIFICATION/VERIFICATION FROM THE SIDE OF RECIPIENT ONLY INITIAL SIGNATURE OR THUMBPRINT WERE PUT ON. ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 12 THE ASSESSEE HAS HIMSELF ADMITTED THESE VOUCHERS WE RE WRITTEN SUBSEQUENTLY. UNDER THESE CIRCUMSTANCES THEIR AUTHE NTICITY AND GENUINENESS OF THE WORK FOR WHICH THEY WERE CLAIMED , CANNOT BE ESTABLISHED. 10. WE ALSO NOTICE THAT SUB-CONTRACT AWARDED TO THE BROTHERS IS APPARENTLY AT HIGHER RATES AS RECORDED IN THE BOOKS . WHILE GIVING THE STATEMENT AT THE TIME OF SURVEY AMOUNT OF WORK AWAR DED WAS MUCH LOWER THAN FINALLY RECORDED IN THE BOOKS AND ALSO THE RAT ES AT WHICH SUCH WORK WAS AWARDED WAS MUCH HIGHER AS FINALLY RECORDED IN THE BOOKS THAN AS STATED BY THE ASSESSEE DURING THE COURSE OF SURVEY. LOOKING TO ALL THESE ASPECTS AND THE CONDUCT OF THE ASSESSEE, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW HAVE RIGHTLY REJECTED THE BOOKS A ND INVOKED THE PROVISIONS OF SECTION 145(3) FOR ESTIMATING THE PRO FITS. 11. SO FAR AS ESTIMATE OF PROFIT IS CONCERNED NORMA LLY THE PAST HISTORY IS A GOOD GUIDE BUT WHEN CIRCUMSTANCES ARE EXCEPTIONAL THE AO IS WITHIN HIS POWER TO DEVIATE FROM SUCH PAST HISTORY. IN THE PAS T THERE WAS NO EVIDENCE FOUND AT THE SPOT AS FOUND IN THE CURRENT YEAR AT T HE TIME OF SURVEY. THE CASH BOOK OF THE ASSESSEE WAS NOT UP-DATED. CASH BA LANCES WERE NOT EXPLAINED ON THE SPOT. EVIDENCES SUBMITTED SUBSEQUE NTLY TO EXPLAIN THE DIFFERENCE WERE NOT FOUND SATISFACTORY. LARGE CHUNK OF EXPENDITURE WAS SUBSEQUENTLY SUPPORTED BY VOUCHERS WHICH WERE NOT A VAILABLE OR EXISTED ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 13 AT THE TIME OF SURVEY. EVEN THE PRECEDENCE IN THE C ASE OF ACIT VS. KANHIYA LAL CHOUDHARY (SUPRA) REFERRED TO BY THE AS SESSEE NET PROFIT RATE OF 8% HAS BEEN UPHELD. CONSIDERING THE HIGHLY INFLA TED EXPENDITURE, AS RECORDED IN THE FINAL BOOK ON THE BASIS OF WHICH BO OKS ARE WRITTEN WE UPHOLD APPLICATION OF NET PROFIT RATE OF 8% WHICH I S PROVIDED IN SECTION 44AD ALSO AND WHICH IN OUR VIEW WOULD BE A FAIR AND REASONABLE BASIS FOR ESTIMATING THE PROFITS IN THE CASE LIKE THIS. AS A RESULT, WE UPHOLD THE ORDER OF LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE ASSESSEE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 31.5.2011. SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 31.5.2011. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD ITA NO.3287/AHD/2009 ASST. YEAR 2006-07 14 1.DATE OF DICTATION 30/05/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 31/05/2011 MEMBER .OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..