JAYANT K. FURNISHERS, MUMBAI V. ASST CIT 16(2), MUMBAI

ITA 3580/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92309 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2007-2008
• Appeal Filed On: 20-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA
• Keywords: Search and seizure; Document seized; Documents seized
• Section: 143(3); 153A; 132; 15

Judgement Text

1 3580 J K F , INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL MEMB ER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 3580 /MUM/201 4 , / ASSESSMENT YEAR - 200 7 - 08 M/S JAYANT K. FURNISHERS, JYOTI STUDIO COMPOUND, NANA CHOWK, GRANT ROAD, MUMBAI - 400078 . . . /PAN:AADFJ6246G VS ACIT - 16(2), MUMBA I. ( / ASSESSEE ) ( / RESPONDENT ) /ASSESSEE BY : SHRI VIMAL PUNMIYA / REVENUE BY : MS. S. PADMAJA / DATE OF HEARING :0 7 - 04 - 2015 / DATE OF PRONOUNCEMENT : 30 - 04 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1) OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA,AM. : CHALLENGING THE ORDER DT.27.03.2014 OF THE CIT(A) - 27,MUMBAI,ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: GROUND NO.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, T HE CIT(A) ERRED IN CONFIRMING THE ASSESSMENT PASSED BY THE LD. ASSESSING OFFICER U/S 143(3) R.W.S. 153C OF THE INCOME TAX ACT,1961 DATED 31.12.2010 IS VOID - AB - INITIO AND BAD - IN - LAW. GROUND NO.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE CIT(A ) ERRED IN CONFIRMING THE CONTENTION OF LD. ASSESSING OFFICER IN ADDITION OF RS. 2,48,03,984/ - ON ACCOUNT OF ALLEGED UNACCOUNTED CASH RECEIPTS TO THE INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. GROUND NO: 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE CIT(A) ERRED IN CONFIRMING THE CONTENTION OF THE LD. ASSESSING OFFICER IN ADDITION OF RS. 1,23,64,632/ - (NET) TO THE INCOME OF THE ASSESSEE BY REJECTING THE PROJECT COMPLETION METHOD OF ACCOUNTING REGULARLY FOLLOWED BY THE ASSESSEE. GROUND NO: 4 WITHOUT PREJUDICE TO GROUND NO. 3, ALTERNATIVELY ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE CIT(A) ERRED IN CONFIRMING THE CONTENTION OF THE LD. ASSESSING OFFICER IN NOT ALLOWING DEDUCTION OF THE TOTAL EXPENDITURE, ON ACCOUNT OF THE CONTRACT OF MR. SURESH NANDA (SONALI FARM), WHICH WAS ACCOUNTED IN A.Y. 2008 - 09 WHILE BRINGING TO TAXABLE INCOME FROM THE SAID CONTRACT IN THE A.Y. 2007 - 08. GROUND NO: 5 THE LD. ASSESSING OFFICER ERRED IN CHARGING INTEREST U/S 2348 AND 234C OF THE IT ACT. \ GROUND NO: 6 2 3580 J K F THE LD. ASSESSING OFFICER ERRED IN CHARGING INTEREST U/S 271(1)(C) OF THE INCOME TAX ACT. GROUND NO: 7 THE ASSESSEE CRAVES LEAVE TO ADD FURTHER GROUNDS OR TO AMEND OR ALTER THE EXISTING GROUNDS OF APPEAL. 2. ASSESSEE - FIRM ENGAGED IN EXECUTING WORKS CONTRACT OF INTERIOR DECORATION FILED ITS RETURN OF INCOME ON 29/10/2007 DECLARING TOTAL INCOME OF RS.1.47 CRORES. ASSESSMENT U/S. 143(3) R.W.S. 153C WAS COMPLETED ON 31.12.2010 DETERMINING THE INCOME OF THE ASSESSEE AT RS. 5.19 CRORES. A N A CTION U/S. 132 OF THE ACT WAS INITIATED IN CASE OF S URESH N ANDA ON 27/2/2007, AT DELHI .I N HIS CASE ASSESSMENT ORDER WAS PASSED U/S. 153(3) R.W.S. 153A ON 30.12.2009. CERTAIN DOCUMENTS WERE RECOVERED FROM SURESH NANDA THAT PERTAINED TO THE ASSESSEE FIRM . TH E AO OF THE ASSESSEE RECEIVED A COMMUNICATION FROM DELHI - AO TO INITIATE PROCEEDING U/S. 153 C OF THE A CT. T HE AO AT MUMBAI ISSUED NOTICE TO THE ASSESSEE FOR THE AYS 2002 - 03 TO 2007 - 08. THE ASSESS EE CHALLENGED THE ACTION OF THE AO CONTEND ING THAT DUE SATISFA CTION WAS NOT RECORDED BY DELHI - AO .H OWEVER , AO OF THE ASSESSEE HELD THAT DOCUMENTS BELONGING TO IT WERE SEIZED FROM SURESH N ANDA AND THAT IT WAS A FIT CASE TO FRAME THE ASSESSMENT. ON THE BASIS OF THE DOCUMENTS RECEIVED BY HIM THE AO HELD THAT THE ASSESSEE HAD RECEIVED 2/3 RD OF THIS CONTRACT AMOUNT IN CASH , THAT ONLY 1/3 RD OF THE RECEIPT ARE RECEIVED IN CHEQUE. HE MADE AN ADDITION OF RS. 2.48 CRORES ON ACCOUNT OF UNACCOUNTED CASH RECEIPTS FROM SONALI FARM PROJECT (SFP). HE FURTHER HELD THAT SFP HAD COMPLETED IN AY . 2007 - 08 AND HENCE THE RECEIPTS HAD TO BE BROUGHT TO TAX IN THAT YEAR NOTWITHSTANDING THE FACT THAT THE FINAL BILL WAS RAISED BY THE ASSESSEE IN APRIL 2007. THE AO REJECTED THE ASSESSEES BOOK RESULTS AND HELD THAT OPENING WORK IN PROGRESS (WIP), AS ON 1/4/2007, HAD TO BE REDUCED BY A SUM OF RS.1.24 CRORES AGGRIEVED BY THE ORDER OF AO THE ASSESSEE PREFERRED AN ORDER BEFORE FIRST APPELLATE A UTHORITY (FAA).BEFORE HIM,T HE ASSESSEE RAISED SPECIFIC GROUNDS ABOUT INITIATION OF SEC TION 153 PROCEEDING BEYOND TIME LIMIT. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER THE FAA UPHLED THE ORDER OF THE AO. 3. F IRST GROUND OF APPEAL IS ABOUT INITIATION OF PROCEEDINGS U/S. 153C OF THE ACT. AS PER THE ASSESSEE , THE ORDER PASSED BY THE AO ON 3 1.12.2010 WAS VOID - AB - INITIO AND BAD IN LAW. IT WAS CONTENDED THAT SEARCH IN THE CASE OF SURESH N ANDA HAD TAKEN PLACE ON 28.2.2007 AND THE TIME LIMIT FOR PASSING ORDER WAS 21 MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH LAST SEARCH AUTHORIZATION WAS GIVEN .IT WAS ALSO ARGUED THAT THAT TIME LIM I T FOR PREPARATION FOR SATISFACTI ON NOTE AVAILABLE TO THE DELHI - AO WAS UP TO 31.12.2009, WHEREAS HE HAD PREPARED THE SATISFACTION NOTE ON 14.1.2010.ACCORDING TO THE ASSESSEE THERE WAS DELAY O F 14 DAYS IN PREPARAT ION OF SATISFACTION NOTE AND THEREFORE THE ASSESSMENT ORDER PASSED U/S. 15 3 C WAS BAD IN LAW . AS STATED EARLIER, THE FAA DECIDED THE JURISDICTIONAL ISSUE ,ALONG WITH THE OTHER ISSUES, AGAINST THE ASSESSEE . 4 .BEFORE US, A UTHORISED R EPRESENTATIVE (AR) MADE THE SAME SUBMISSIONS THAT WERE THE PART OF THE ARGUMENTS ADVANCED DURING APPELLATE PROCEEDINGS. DEPARTMENTAL REPRESENTATIVE (DR) ARGUED THAT RECORDING OF SATISFACTION EVEN AFTER COMPLETION OF 153A ASSESSMENT WAS NOT FATAL. SHE REFERRED TO TH E JUDGMENT OF CAL CUTTA KNITWERS, DELIVERED BY THE HONBLE L SUPREME COURT (43 TAXMANN.COM 446).IT WAS ARGUED THAT SECTION 158 AND SECTION 153 WERE MORE OR LESS SAME. SHE ALSO RELIED UPON THE CASE OF SUDHIR DHINGRA OF DELHI HIGH C OURT ( 55 TAXMANN .COM 231). 3 3580 J K F 5. WE HAVE HEARD T HE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THE CASE OF S URESH N ANDA ON 2 8.2.2000, THAT THE LAST AUTHORISATION WAS ISSUED ON 24.2.2007, THAT THE ASSESSMENT U/S. 153A WAS PASSED ON 31. 12.2009, THAT THE DELHI - AO PREPARED THE SATISFACTION N OTE ON 14.12.2010. CLEARLY THE SATISFACTION NOTE WAS PREPARED AFTER THE ASSESSMENT OF SURESH NANDA.IN OUR OPINION, IF SATISF A CTION NOTE IS RECORDED EVEN AFTER THE ASSESSMENT PROCEEDINGS ARE OVE R BUT WITH IN A REASONABLE TIME , THE ASSESSMENT, WOULD NOT BE HELD TO BE VOID - AB - INITIO. IN THE CASE OF S UDHIR DHINGRA (SUPRA), THERE WAS A DELAY OF FIVE MONTHS IN ISSUING A NOTICE U/S. 158BD. THE H ONBLE DELHI HIGH COURT HELD THAT THE DELAY WAS NOT UNREASONABLE AND UP HELD THE ACTION OF THE AO.RESPECTFULLY, FOLLOWING THE ABOVE TWO JUDGMENTS WE DECIDE GROUND NO.1 AGAINST THE ASSESSEE. 6. GROUND NO.2 AND 3 ARE INTER - RELATED, WHEREAS GROUND NO.4 IS AN ALTERNATIVE GROUND . DURING THE COURSE OF SEARCH PROCEEDINGS AT THE RESIDENT IAL PREMISES OF SURESH NANDA A F UND F LOW S TATEMENT (FFS) WAS FOUND AND SEIZED. THE FFS GAVE DETAILS OF PAYMENTS MADE TILL 22.12.2005. A S PER THE STATEMENT AN AMOUNT OF RS.3.72 CRO R ES WAS PAID TO THE ASSESSEE TILL THAT DATE .THE AO FOUND THAT THE ASSESSEE IN ITS LEDGER SHOWED A RECEIPT OF RS.1.24 CRO R ES ONLY. THE AO FURTHER FOUND THAT THE SEARCH TEAM HAD CONCLUDED THAT THERE WERE TWO SETS OF BILL PREPARED BY THE ASSESSEE, THAT ONE SET OF BILL REPRESENTED THE ACTUAL AMOUNT AND THAT THE OTHER REPRESENTED ONLY 1/ 3 RD OF THE ACTUAL BILL AMOUNT THAT WAS PAID IN CHEQUE. HE HELD THAT DIFFERENCE IN TWO BILLS WAS SETTLE D AND PAID IN CASH. ACCORDINGLY,HE TREATED RS.2.48 CRORES ( R S.3.72 CR. ( - ) RS.1.25 CR.) AS UNACCOUNTED CASH RECEIPTS. HE FURTHER HEL D THAT THE ASSESSEE HAD C HARGED, IN THE FINAL BILL , RATES THAT WERE MUCH BELOW THE RATES MENTIONED IN THE RUNNING ACCOUNT BILLS (RAB). HE CONCLUDED THAT THE RATE S CH ARGED WERE ONLY HALF THE RATES. THEREF O RE , HE ESTI MA TED THAT THE BILL AMOUNT WAS RS.4.95 CRO R ES ( RS. 2.47 CR. X 2) AND CON CLUDED THAT THE ASSESSEE HAD UNDERSTATED ITS INCOME FOR THE YEAR UNDER CONSIDERATION. THE A O F URTHER MENTIONED THAT THE INCOME RECEIVED IN CASH TO THE TUNE OF RS. 2.47 CRORES WAS ALREADY CONSIDERED AND , THEREFORE, UNDER INVOICING OF THE SALE BILL WOULD HAV E NOMINAL IMPACT ON THE TAXABLE INCO ME OF THE ASSESSEE. THE AO WAS OF THE OPINION THAT THERE WAS A HUGE TIME GAP BETWEEN THE LAST RABS AND THE FINAL BILL . HE CONCLUDED THAT THE PROJECT WAS OVER IN THE AY 2008 - 09 AND THE INCOME HAD TO BE ASSESSED IN THAT YEA R ONLY. HE REDUCED THE AMOUNT OF OPENING WIP. 7. BEFORE THE FAA, THE ASSESSEE ARGUED THA T FFS, SEIZED FROM SURESH NANDA, WAS NOT RELATED TO IT , THAT FFS WAS ONLY AN ESTIMATE,THAT THE WORK WAS COMPLETED IN AY 2006 - 07, THAT T HE FINAL BILL WAS SETTLED IN AY. 2011 - 12.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER,THE FAA HELD THAT THE ASSESSEE HAD RECEIVED 2/3 RD OF THE CONTRACT V ALUE IN CASH, THAT SURESH NANDA,VIDE HIS LETTER DT.30.11.2009, HAD STATED THAT VALUE OF THE CONTRACT WITH T HE AS SESSEE WAS RS.5.09 CRORES, THAT THE ASSESSEE WAS EMPHASIZING THE FACT THAT THE VALUE OF THE CONTRACT WAS MUCH LESS . THE FAA REFERRED TO THE CASE OF DURGA PRASAD MORE ( 82 ITR 54 0), SUMATI DAYAL (214 ITR 810), S HR EE MEENAKSHI MILLS LTD. (63 ITR 609) . HE FURTHER HELD THAT THE ASSESSMENT BASED ON SEARCH AND SEIZURE STOOD ON A DIFFERENT FOOTING IN COMPARISON TO OTHER PROCEEDINGS, THAT IN SEARCH AND SEIZURE CASE S INFERENCES AND THE SEIZE D MATERIAL PLAYED A VITAL ROLE, THAT IN THE CASE UNDER CONSIDERATION AN ADVERSE INF ERENCE WAS DRAWN AGAINST THE ASSESSEE AND SAME WAS BASED ON CIRCUMSTANCES WHERE NO D IRECT EVIDENCE WAS FORTHCOMING, THAT FROM THE SEIZED DOCUMENTS THE AO HAD DRAWN A REASONABLE CONCLUSION, THAT THE SEIZED FFS WAS IN POSSESSION OF THE ASSESSEES CLIENT, THAT THE ONUS OF PROVING THAT THE ASSESSEE HAD NOT RECEIVED THE AMOUNT IN QUESTION WAS ON IT, THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE ONUS ,T HAT THE FFS DEALT WITH CASH PAYMENT TO IT BY SURESH NANDA, THAT THE ENTIRE WORK OF THE PROJECT WAS COMPLETE D IN FY. 2 0 06 - 07 THAT MERELY BECAUSE 4 3580 J K F SOME DISPUTE HAD ARISEN , INCOME COULD NOT BE POSTPONED TO NEXT YEAR, THAT THE AO WAS JUSTIFIED IN REJECTING THE ASSESSEES BOOKS OF ACCOUNT, THAT THE AO HAD RIGHTLY TAXED INCOME IN 20 07 - 08. 8. BEFORE US ,THE AR ARGUED THAT THE ASSE SSEE WAS ENGAGED IN THE BUSINESS OF INTERIOR DECORATION, THAT IT WOULD UNDERTAKE AND EXECUTE COMPREHENSIVE WORKS CONTRACTS ON TURNKEY BASIS FOR INTERIOR DECORATION PREMISES ACCORDING TO THE DRAWINGS AND SPECIFICATIONS OF CUSTOMERS,THAT ON GETTING CONTRACT S AND ADVANCES THE ASSESSEE WOULD COMMENCE PURCHASE OF SPECIFIC MATERIALS AND ENGAGE REQUISITE LABOUR FORCE ON A SUB CONTRACTUAL BASIS WHEREVER NECESSARY,THAT ALL SUCH SUB - CONTRACTORS WERE DIRECTLY RESPONSIBLE TO THE ASSESSEE,THAT RUNNING BILLS(RB) SUBMIT TED BY THE ASSESSEE WOULD BE CERTIFIED BY THE ARCHITECTS/INTERIOR DESIGNERS/PMC APPOINTED BY THE CUSTOMERS AFTER EXAMINING THE WORK DONE UPTO THE DATE OF RB AS TO THE MEASUREMENT, QUALITY, QUANTITY, ETC.,THAT BASED ON SUCH CERTIFICATION PAYMENTS WOULD BE R ELEASED TO THE EXTENT OF THE AMOUNT CERTIFIED,THAT OBSERVATION OF THE AO THAT THE SEARCH TEAM FOUND TWO SET OF RB OF SAME NUMBER, SAME DATE BUT OF DIFFERENT AMOUNT' WAS FACTUALLY INCORRECT,THAT THE AO HAD FAILED TO APPRECIATE THE FACT THAT ONE SET OF RB W ERE SEIZED DURING THE SEARCH PROCEEDINGS AND OTHER SET OF BILLS WERE PRODUCED BY THE PERSON SEARCHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS,THAT THE AO HAD FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAD NOT ISSUED TWO DIFFERENT SETS OF RB CONTAIN ING THE SAME NUMBER AND SAME DATE,THAT SURESH NANDA HAD ALSO ADMITTED DURING THE ASSESSMENT PROCEEDINGS THAT THE RB SEIZED DURING THE SEARCH WERE THE BILLS PERTAINING TO THE WORK CARRIED OUT AT THE SONALI FARM,THAT SECOND SET OF RB PRODUCED BY SURESH NANDA WERE NOT MADE AVAILABLE TO THE ASSESSEE AND THE SAME WAS ALSO NOT AVAILABLE WITH THE AO,THAT ALLEGED SECOND SET COULD NOT BE TREATED AS EVIDENCE,THAT THE AO HAD FAILED TO APPRECIATE THE FACT THAT THE AMOUNTS MENTIONED IN RB SEIZED FROM THE PREMISES OF THE CUSTOMER (SUBJECT TO CERTIFICATION OF THE ARCHITECT)AND THAT THE AMOUNT OF RB AS PER RECORDS OF THE ASSESSEE WERE THE SAME,THAT DUE TO DISPUTE IN QUANTITY, QUALITY AND RATE CHARGED BY THE ASSESSEE THE RB RAISED BY THE ASSESSEE WERE PASSED FOR AD - HOC PAYME NTS,THAT THE AO ONLY REFERRED TO THE BILL AMOUNT AND THE AMOUNT APPROVED FOR PAYMENT,THAT HE HAD NOT NOTED THE IMPORTANT AND MATERIAL REMARK BY THE PROJECT ARCHITECT THAT 'APPROVAL FOR AD - HOC PAYMENT' ON THE FACE OF RA BILL 1,2 AND 4,THAT THE ASSESSEE HAD ALSO OBJECTED THE SAME BY WRITING LETTERS TO NANDA AND THE ARCHITECT, THAT TO RESOLVE THE DISPUTE A THIRD PARTY AUDITOR WAS APPOINTED BY NANDA,THAT EXTRACT OF THE AUDIT FINDINGS PROVIDED TO THE ASSESSEE BY THE CUSTOMER WAS PLACED BEFORE THE AO,THAT ON GETT ING AUDITOR'S REPORT DETAILED DISCUSSIONS AND NEGOTIATIONS FOR PENDING ITEMS WERE HELD WITH THE CUSTOMER,THAT TO AVOID FURTHER DISPUTES AND DELAY THE ASSESSEE RAISED FINAL BILL IN RESPECT OF WORK COMPLETED ON 20.04.2007,THAT THE AO HAD IGNORED THE ABOVE R EFERRED EVIDENCES FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS,THAT WITHOUT APPRECIATING THE PRACTICE FOLLOWED IN THE INDUSTRY THE AO CONCLUDED THAT THE DIFFERENCE IN RB AMOUNT AND AMOUNT CERTIFIED BY THE CUSTOMER ON AD HOC BASIS WAS RECEIVED BY THE ASSESSEE IN CASH,THAT CONCLUSION DRAWN BY THE AO WAS WITHOUT ANY CORROBORATIVE EVIDENCE OF RECEIPT OF CASH,THAT THE ASSESSEE HAD REGULARLY FOLLOWED THE PRACTICE OF SUBMITTING RB AND FINAL BILL TO ALL CUSTOMERS,THAT IT WOULD SUBMIT FAIR AND FINAL BIL L APPROVAL OF THE ARCHITECT SPECIALLY WHEN THE WHEN CONTRACTS WERE EXECUTED OVER LONGER PERIOD OF TIME.HE FURTHER ARGUED THAT FUND FLOW STATEMENT WAS UNSIGNED LOOSE PAPER AND HENCE COULD NOT BE CONSIDERED AS EVIDENCE,THAT SURESH NANDA HAD ALSO DENIED THE C ORRECTNESS ABOUT THE REFERRED FUND FLOW STATEMENT,THAT HE HAD CONFIRMED,IN HIS REPLIES AGAINST QUERY BY HIS AO,THAT THE CONTRACT VALUE MENTIONED IN THE FUND FLOW STATEMENT WAS WRONGLY STATED,THAT THE CORRECT CONTRACT VALUE WAS RS.5.09 CRORES,THAT THE AO HA D FAILED TO APPRECIATE THE FACT THAT THE FUND FLOW STATEMENT WAS ONE OF THE ESTIMATE MADE BY THE PERSON SEARCHED,THAT HE IGNORED THE COVERING NOTE WHICH CLEARLY STATED THAT THE FIGURES 5 3580 J K F APPEARING IN THE STATEMENT WERE BUDGETED FIGURES ON THE DAY OF PREPARIN G THE STATEMENT,THAT IN THE COLUMN TITLED AS CONTRACTOR / CONSULTANT AT SR. NO. 13,15 AND 16 AND 18 OF THE STATEMENT 'YTB DECIDED' HAD BEEN TYPED WHICH MEANT THAT THE RELEVANT CONTRACTORS OF CONSULTANTS WERE YET TO BE DECIDED ON THE DATE OF PREPARATION TH E ESTIMATE,THAT THE AO FAILED TO UNDERSTAND THE CONCEPT OF THE RB WHICH INCLUDED CERTIFIED OR UNCERTIFIED AMOUNT OF PREVIOUS RB PLUS VALUE OF ADDITIONAL WORK CARRIED OUT AFTER RAISING PREVIOUS RB,THAT THE LAST RB WAS THE CORRECT INDICATOR OF THE TOTAL WO RK DONE BY THE ASSESSEE,THAT HE ADDED CUMULATIVE AMOUNT OF ALL RB INSTEAD OF CONSIDERING CUMULATIVE VALUE OF LAST RB WHILE ARRIVING AT TOTAL CONTRACT VALUE, THAT THE AO HAD ERRED IN MAKING ADDITION AMOUNTING TO RS. 2,48,03,984/ - TOWARDS UNACCOUNTED CASH RE CEIPTS WITHOUT ANY CORROBORATIVE EVIDENCE.HE FURTHER ARGUED THAT AFTER DETAILED DISCUSSIONS IN RESPECT OF AUDIT FINDINGS AND NEGOTIATIONS FOR PENDING ITEMS WITH THE CUSTOMER,IT HAD RAISED FINAL BILL IN RESPECT OF WORK COMPLETED IN AY. 2008 - 09 AND ACCOUNTE D ACCORDINGLY DURING RELEVANT AY.2008 - 09,THAT AGAINST THE BILL SO RAISED FOR RS.2,47,84,631.98, THE AMOUNT OF RS.1,24, 20, 071/ - WAS RECEIVED BY THE ASSESSEE TILL 31.03.2007,THAT BALANCE AMOUNT OF RS.1,23, 64,560/ - WAS RECEIVED BY THE ASSESSEE ON 14.06.201 1 I.E.DURING AY.2012 - 13,THAT CONSIDERING THE ISSUES INVOLVED IN DISPUTE RAISED BY THE CUSTOMER AND UNCERTAINTY ABOUT THE CERTIFIED VALUE OF THE BILL THE ASSESSEE HAD SHOWN RS.1 ,24,20,000/ - TILL 31.03.2007 AS WORK IN PROGRESS. THE AR REFERRED TO PROVISIONS OF ACCOUNTING STANDARD(AS) - 29 AND CONTENDED THAT THE ASSESSEE COULD NOT RECOGNIZE THE AMOUNT OF INCOME AS IT WAS UNCERTAIN IN A.Y.2007 - 08,THAT IT HAD RECORDED THE SAID AMOUNT IN A.Y.2008 - 09 AFTER DETAILED DISCUSSIONS AND FINALISING THE SAME,THAT AS PER A S - 1 THE REVENUE RECEIVABLE COULD NOT BE RECORDED IN BOOKS FOR THE YEAR UNDER APPEAL AS IT WAS UNCERTAIN, THAT IT WAS ONLY AFTER THIRD PARTY INDEPENDENT AUDIT AND DETAILED DISCUSSIONS THAT THE REVENUE BECAME CERTAIN,THAT THE ASSESSEE ASSESSEE HAD RIGHTLY OF FERED IT IN AY.2008 - 09. HE REFERRED TO THE PAGE NO.28,39 TO 69,70 - 72,78 - 82 OF THE PAPER BOOK(PB). 9. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL BEFORE US. ONE OF TH E QUESTIONS TO BE DECIDED,BY US, IS THE AY . IN WHICH INCOME HAS TO BE ASSESSED . THE SECOND ISSUE IS ABOUT VALUE OF THE CONTRACT.WE FIND THAT IN THE FFS (PG NO.121 OF THE P APER B OOK ) THE NAME OF THE AS SESSEE FIRM APPEARS AT SL.NO.2. THE FFS GIVES DETAIL OF CONTRACT/CONSULTANT, NATURE OF JOB, CONTRACT VALUE AND PAYMENT MADE TILL 22.12.20 05. THE DELHI - AO HAD RECORDED HIS SATISFACTION ON THE BASIS OF SAID FFS AND AO AS WELL AS THE FAA REFERRED TO IT MORE THAN ONCE WHILE PASSING THE ORDER/ DECIDING THE APPEAL. IN OUR OPINION, ONE THING IS CLEAR THAT THE FFS IS ABOUT PAYMENTS MADE TILL 22.12.20 05 AND NOT BEYOND THAT DATE AND THAT TILL THAT DATE THE SURESH NANDA HAD NOT PAID MOR E THAN RS.3.72 CRORES .IT ALSO PROVES THAT DISPUTED SUM WA S RECEIVED IN THE AY. 2006 - 07 AND NOT IN AY.2 007 - 08. WE FIND THAT THE AO IS HEAVILY RELYING ON THE FFS ON ONE HAND BUT ON THE OTHER HAND HE IGNORES THE DATE MENTIONED IN THE STATEMENT. THE AO HAS NOT GIVEN ANY REASON FOR NOT CONSIDERING THE DETAILS MENTIONED IN THE STATEMENT. IT IS A FACT THAT THE FINAL BILL WAS PREPARED IN AP RIL, 2007 AND THE ASSESSEE HAD OFFERED THE I NCOME IN THAT PARTICULAR YEAR I.E. ASSESSMENT YEAR 2008 - 09.RETURNS OF INCOME FILED BY THE ASSESSEE PROVE THAT ALL THE RECEIPTS FROM SURESH NANDA HAVE BEEN ACCOUNTED FOR IN RESPECTIVE YEARS. WE WILL DISCUSS THE ISSUE AT LENGTH WHILE DECIDING THE ISSUE OF RE CEIPT OF CASH BY THE ASSESSEE . IN OUR OPINION THE AO HAD NO DOCUMENT OR ANY OTHER EVIDENCE TO HOLD THAT A SUM ,A MOUNTING TO RS.3.72 CR ORES PERTAIN ED TO THE AY . UNDER APPEAL. THEREFORE, WE REVERSE THE ORDER OF THE FAA TO THAT EXTENT. 10. NOW WE WOULD TAKE UP T HE ISSUE OF RECEIPT OF CASH/CHEQUE IN PROPORTION OF 2/3 RD AND 1/ 3 RD BY THE ASSESSEE .AS PER THE AO THE DOCUMENTS FROM SURESH NANDA PROVE THAT 2/3 OF THE TOTAL 6 3580 J K F RECEIPTS DUE FROM HIM WERE RECEIVED IN CASH BY THE A SSESSEE .THE AO HAS ALSO MENTIONED THAT THE SEARCH PARTY WAS OF THE OPINION THAT SURESH NANDA HAD MADE ONLY 1/3 RD PAYMENT IN CHEQUE.N OUR OPINION IT IS THE AO WHO HAS TO DECIDE THE TAXABLE INCOME OF AN ASSESSEE AFTER CONSIDERING THE AVAILABLE MATERIAL.OP INION OF A SEARCH PARTY CANNOT FORM BASIS FOR DETERMINING TAX LIABILITY.IT IS AN UN CONTROVERTED FAC T, BORN OUT FROM THE CORRESPONDENCE OF THE ASSESSEE ,SURESH NANDA AND THE PRINCIPAL C ONTRACTOR, THAT THERE WAS DISPUTE ABOUT THE WORK DONE BY THE ASSESSEE IN TH E INITIAL STAGE AND MATTER HAD TO BE FINALLY REFERRED TO AN ARBITRATOR. THE ASSESSEE WAS BEING PAID ONE THIRD PAYMENT OF THE RB ON AN AD - HOC BASIS.ALL THE RBS.PROVE THAT SURESH NANDA HAD NOT PAID FULL AMOUNT AS MENTIONED IN THE BILLS. BILLS SPECIFICALLY SP EAK OF PAYMENT YET TO BE MADE. NEITHER THE ASSESSEE NOR SURESH NANDA HAD EVER ADMITTED TO RECEIVING OR PAYING CASH FOR THE WORK DONE.THERE IS NO DOCUMENTARY EVIDENCE OF CASH RECEIPT BY THE ASSESSEE .THE AO HAD,ON THE BASIS OF RBS.,ARRIVED AT THE CONCLUSIO N THAT CASH WAS PAID BY SURESH NANDA.BUT,HE DID NOT MAKE ANY INQUIRY IN THAT REGARD.HE COMPLETELY IGNORED THE SUBMISSION OF THE ASSESSEE .HE DID NOT TAKE IN TO CONSIDERATION THE DOCUMENTS THAT EVIDENCED THE EXISTENCE OF DISPUTE AND PART PAYMENT. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE,WE ARE OF THE OPINION THAT THERE WAS NO EVIDENCE THAT THE ASSESSEE HAD RECEIVED 2/3 RD OF THE TOTAL PAYMENT IN CASH. THEREFORE,REVERSING THE ORDER OF THE FAA,WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE TO THAT EXTENT . GROUND NO.2 - 3 ARE ALLOWED TO THE EXTENT MENTIONED ABOVE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH ,APRIL,2015. 30 TH , 2015 SD/ - SD/ - ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 30 .04.2015 JV . / COPY OF THE ORDER FORWAR DED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.