Shri Dharmesh Rajnikant Shah, Ahmedabad V. The ACIT, B.K. Circle, Palanpur

ITA 373/AHD/2014

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3917 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 05-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH PATHAK
• Assessee Lawyers: S N DIVATIA
• Keywords: Principle of natural justice; Avoidance of tax
• Section: 44AD; 40A(3)

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD LOZJH LOZJH LOZJH LOZJH OLHE OLHE OLHE OLHE VGEN] YS[KK VGEN] YS[KK VGEN] YS[KK VGEN] YS[KK LNL; ,OA LNL; ,OA LNL; ,OA LNL; ,OA EK/KQFERK EK/KQFERK EK/KQFERK EK/KQFERK JKW;] U;KF;D JKW;] U;KF;D JKW;] U;KF;D JKW;] U;KF;D LNL; LNL; LNL; LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.373/AHD/2014 ( / ASSESSMENT YEAR : 2010-11) SHRI DHARMESH RAJNIKANT SHAH, PRO. VIJAY CONTRUCTION C/O KIRAN JOSHI, RTO AGENT DELHI GATE, PALANPUR. / VS. ACIT, B.K. CIRCLE, PALANPUR. ./ ./ PAN/GIR NO. : AFSPS 6359 F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.N. DIVATIA, A.R. / RESPONDENT BY : SHRI OM PRAKASH PATHAK, SR. D.R. / DATE OF HEARING 11/07/2018 !'# / DATE OF PRONOUNCEMENT 03/10/2018 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)XX, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-XX/90/12-13 DATED 04.12.2013 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S.143(3 ) OF THE INCOME TAX ACT, 1961(HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 31.12.2012 RELEVANT TO ASSESSMENT YEAR (AY) 2010-11. - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE A RE AS UNDER:- THE APPELLANT CRAVES LIBERTY TO PLACE ON RECORD CO NCISE GROUNDS OF APPEAL AS FOLLOWS IN LINE WITH RULE 8 OF THE INCOME-TAX (APPE LLATE TRIBUNAL) RULES, 1963: 1.1 THE ORDER PASSED U/S.250 ON 04.12.2013 FOR A.Y 2010 -11 BY CIT(A)-XX ABAD CONFIRMING THE DISALLOWANCE AGGREGATING TO R S.29,53,043/- IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON F ACTS IN NOT CONSIDERING FULLY AND PROPERLY THE EXPLANATION FURN ISHED AND THE EVIDENCE PRODUCED BY THE APPELLANT. 2.1THE ''LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW OR O N FACTS IN CONFIRMING THE DISALLOWANCE OF FOLLOWING EXPENSES. (I) LABOUR EXP. O F YOGESH SHAH RS.25,66,963 (II) OUT OF DIESEL EXP. RS.3,61,080 (III) DISALLOWANCE U/S 40A(3) RS.25,000 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL IN AS IN LAW, THE ''LD.CIT(A) HAS GRIEVOUSLY ERRED IN CONFIRMING THE DISALLOWANCE OF THE AFORESAID EXPENSES. 3.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN CONFIRMIN G THAT THE LABOUR EXPENSES PAID TO SHRI YOGESH SHAH WERE NOT GENUINE. 4.1 THE OBSERVATION MADE AND CONCLUSION REACH BY CI T(A) FOR THE PURPOSE OF CONFIRMING THE DISALLOWANCE OF ABOVE EXPS. ARE NOT ADMITTED BY THE APPELLANT AND THE SAME ARE PRESUMPTION. 5.1 WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTER NATIVE, THE DISALLOWANCE OF EXPENSE OF LABOUR AND DIESEL MADE BY AO WAS HIGHLY EXCESSIVE AND CALLED FOR SUBSTANTIAL REDUCTION. IT IS THEREFORE PRAYED THAT THE DISALLOWANCE MADE B Y THE AO AND CONFIRMED BY CIT(A) SHOULD BE DELETED. 3. THE ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPEAL BUT THE SAME C AN BE CATEGORIZED AS UNDER: I. DISALLOWANCE OF LABOUR EXPENSES FOR RS. 25,66,963/- - 3 - II. DISALLOWANCE OF DIESEL EXPENSES FOR RS. 3,61,080/- III. DISALLOWANCE U/S 40A(3) OF THE ACT FOR R S. 25,000/- 4. NOW WE PROCEED TO DEAL THE AFORESAID ISSU ES INDIVIDUALLY. 5. THE FIRST ISSUE RAISED BY THE ASSESSEE IS AGAINST THE CONFIRMATION OF L D CIT(A) FOR LABOUR EXPENSES OF RS.25,66,963/-. 6. BRIEFLY, STATED FACTS ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSE E DURING THE YEAR CLAIMED LABOUR EXPENSES OF RS. 1,62,88,744/- ONLY. OUT OF W HICH A SUM OF RS. 25,66,963/- WAS PAID TO M/S. YOGESH R. SHAH. THE AO DURING THE ASSE SSMENT PROCEEDINGS DOUBTED THE FINANCIAL CAPACITY O F SHRI YOGESH R. SHAH FOR THE EXECUTION OF THE LABOUR CONTRACT. THER EFORE THE ASSESSE E WAS CALLED UPON FOR EXPLANATION. 6.1 THE ASSESSE E DURING THE ASSESSMENT PROCEEDINGS SUBMITTED THAT THE LABOUR EXPENSES FOR RS. 25,66,963/- HAVE BEEN IN CURRED FOR GETTING THE WORK EXECUTED BY YOGESH R. SHAH AT FAR OFF PLACE FROM PA LANPUR AT THE BORDER OF INDO-PAK. 6.2 SHRI YOGESH R. SHAH HAS ALSO UNDERTAKEN THE WORK OF LABOUR OF RANDOM RUBBLE MASONRY AND SPREADING OF THE METAL AN D GRI T. THIS WAS A QUITE TECHNICAL JOB, WHICH WAS EXECUTED BY THE TEAM OF SH RI YOGESH R. SHAH. - 4 - 6.3 THE ASSESSEE FILED THE COPY OF INCOME TAX RETURN OF SHRI YOGESH R . SHAH ALONG WITH HIS PAN. 6.4 THE ASSESSEE ALSO SUBMITTED THAT THE PAYMENT WAS MADE TO SHRI YOGESH R. SHAH AFTER DEDUCTING THE TDS. 6.5 SUBSEQUENT PAYMENT TO THE LABOURERS BY SHRI YOGESH R. SHAH WAS MADE AS PER HIS UNDERSTANDING AND THE SAME WAS RECORDED IN THE BOOKS OF ACCOUNTS. 6.6 SHRI YOGESH R. SHAH HAS PRESENTLY APPEARED DURING THE ASSESSMENT PROCEEDINGS AND CONFIRMED THE SAME ON THE BASIS OF HIS BOOKS OF ACCOUNTS. 6.7 HOWEVER, THE AO DURING THE ASSESSMENT PROCEEDINGS M ADE CERTAIN OBSERVATION AS DETAILED UNDER: I. THE BANK ACCOUNT OF YOGESH R. SHAH WAS OPENED AS ON 31-03- 2009 IN UNION BANK OF INDIA. II. THE ASSESSE E WAS THE INTRODUCER FOR THE OPENING OF BANK ACCOUN T OF M/S. YOGESH R. SHAH. III. THERE WAS VERY INSUFFICIENT BALANCE IN THE BANK ACCOUNT OF SHRI YOGESH R. SHAH. 6.8 IN VIEW OF ABOVE, THE AO WAS OF THE VIEW THAT SHRI YOGESH R. SHAH IS AN EMPLOYEE OF THE ASSESSEE AND LABOUR EXPENSES PAID TO HIM ARE REPRESENTING THE BOGUS EXPENSES. ACCORDINGLY, THE S AME WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. - 5 - 7. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD CIT(A). THE ASSESSE E BEFORE THE LD CIT(A) SUBMITTED THAT THE PAYMENT WAS MADE THROUGH BANKING CHANNEL TO SHRI YOGESH R. SHAH FOR THE LABOUR CHARG ES. 7.1 THE PAYMENT WAS MADE TO SHRI YOGESH R. SHAH A FTE R DEDUCTING THE TDS WHICH WAS CLAIMED BY HIM IN HIS INCOM E TAX RETURN. THE COPY OF PAN OF SHRI YOGESH R. SHAH WAS DULY FURNISHED TO THE AO DU RING THE ASSESSMENT PROCEEDINGS. 7.2 SHRI YOGESH R. SHAH HAS PRESENTLY APPEARED BEFORE THE AO FOR THE PURPOSE OF CONFIRMING THE TRANSACTION WITH THE ASSE SSEE . THE AO HAS NOT POINTED OUT ANY DEFECT IN THE CONFIRMATION FILED BY SHRI YOGESH R. SHAH. 7.3 THE AO HAS NOT DISPUTED THE SERVICES RENDERED BY SH RI YOGESH R. SHAH. 7.4 THE SINGLE PAYMENT WAS ALSO MADE TO SHRI YOGE SH R. SHAH IN THE EARLIER YEAR AND NO DISALLOWANCE WAS MADE ON ACCOUN T OF SUCH LABOUR EXPENSES. 7.5 THERE WAS NO EVIDENCE AVAILABLE WITH THE AO SUGGEST ING THAT THE MONEY PAID BY THE ASSESSEE TO SHRI YOGESH R. SHAH H AS COME BACK TO THE ASSESSEE. THE ASSESSEE WAS THE INTRODUCER IN THE BANK ACCOUNT OPENING OF SHRI YOGESH R. SHAH BUT THE SAME CANNOT BE THE CONCLUSIVE EVIDENCES THA T - 6 - THE LABOUR PAYMENT IS BOGUS. 7.6 THE GROSS PROFIT RATIO DECLARED BY THE ASSESS E E WAS DULY ACCEPTED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. HOWEVER, LD CIT(A) DISREGARDED THE CONTENTIONS OF T HE ASSESSE E AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER: 4.4. ON THE BASIS OF THE DETAILS FURNISHED DURING THE AP PELLATE PROCEEDINGS, IT WAS FOUND THAT THERE WAS THE OPENING CREDIT BALANCE IN THE LEDGER ACCOUNT OF SHRI YOGESH R. SHAH IN THE BOOKS OF APPELLANT AS ON 1.4.2009 AT RS.6,76,646/- . NO PAYMENT OUT OF THIS AM OUNT WAS MADE BY THE APPELLANT TO SHRI YOGESH R. SHAH DURING THE ENTIRE YEAR AND THIS OPENING BALANC E ALONG WITH THE LABOUR CLAIM OF THE YEAR UNDER CONSIDERATION WAS CARRIED F ORWARD TO THE SUBSEQUENT YEAR. THEREFORE, IT IS EVIDENT THAT SHRI YOGESH R. SHAH WAS DOING SERVICE WITH THE APPELLANT AND WOULD NOT HAVE CARRIED OUT THE CO NTRACT WORK IN ABSENCE OF THE FUNDS WHEN HE WAS NOT HAVING ANY BANK BALANCES AND NEITHER RECEIVED THE DUES FROM THE APPELLANT. APPELLANT'S SUBMISSION THA T THE LABOUR CHARGES WERE PAID BY CHEQUE WHICH WAS ONLY OF RS.3,84,573/- OUT OF THE TOTAL CLAIM OF RS.25,66,963/- DOES NOT PROVE THE ENTIRE CLAIM AS GENUINE BECAUSE THE SUBSTANTIAL AMOUNT OF LABOUR EXPENSES WAS OUTSTANDI NG ON THE LAST DAY OF THE ACCOUNTING YEAR AND NO DETAILS ARE AVAIL ABLE ABOUT THE PAYMENT OF SUCH OUTSTANDING DUES IN THE SUBSEQUENT YEARS. APPELLANT 'S CLAIM THAT TDS WAS MADE ON SUCH PAYMENT IS ALSO NOT A CONCLUSIVE EVIDE NCE IN ESTABLISHING THE GENUINENESS OF THE CLAIM. SHRI YOGESH R. SHAH WAS A SSESSED TO TAX AND FILED T HE RETURN OF INCOME ON 12.10.2012 JUST BEFORE THE C OMPLETION OF THE ASSESSMENT IN APPELLANT'S CLAIM AS PER SECTION 44AD IS ALSO A FACTOR FOR RAISING THE DOUBTS ON THE GENUINENESS OF THE CLAIM. IN FACT THE RETURN OF INCOME IN THE CASE OF YOGESH R. SHAH WAS DUE TO B E FILED IN JULY, 2010 WHICH WAS FILED ON 12.10.2012 JUST TWO MONTHS BEFORE THE COMPLETION OF THE ASSESSMENT COMPLETED ON 31.12.2012 IN THE CASE OF APPELLANT. S O RETURN OF INCOME FILED BY SHRI SHAH WAS INVALID RETURN IN THE EYES OF LAW. AL THOUGH COP Y OF SAID RETURN OF INCOME IS NOT ON RECORD BY IT IS EXPLICIT THAT BY MAKING THE RETURN AS PER SECTION 44AD, NO TAXES MIGHT HAVE BEEN PAID AS THE INCOME RETURNED MUST HAVE BEEN WITHIN THE LIMITS OF MAXIMUM INCOME NOT C HARGEABLE TO TAX OR NEAR TO SAME. SO B Y DEBITING THE EXPENDITURE IN THE HANDS OF THE APPE LLANT AND BY - 7 - SHOWING A LITTLE INCOME IN THE HANDS OF SHRI YOGESH R. SHAH THERE IS CLEARLY AVOIDANCE OF TAXES IN THE HANDS OF THE APPELLANT. I T WAS CLAIMED THAT SHRI YOGESH SHAH WAS PRODUCED FOR INTERROGATI ON BEFORE THE AO BUT DURING INQUIRY AND VERIFICATION WHAT HAS TRANSPIRED ABOUT THE GENU INENESS OF THE CLAIM WAS NOT EXPLAINED BY THE APPELLANT. FURTHER IT IS A SET TLED LEGAL POSITION THAT THE PRINCIPLE OF RES-JUDICATA DOES NOT APPLY IN I.T. PR OCEEDINGS HEN CE MERELY THE SIMILAR PAYMENTS HAVE BEEN MADE TO SHAH IN THE PAST DOES NOT GIVE THE REASON TO ACCEPT THE SIMILAR CLAIM IN THE YEAR UNDER CONSI DERATION. NO DETAILS ABOUT THE SCRUTINY ASSESSMENT OF THOSE PRECEDING YEARS AR E AVAILABLE. HENCE NO POSITIVE FINDINGS CAN BE GIVEN ON THE CONTENTIONS O F THE APPELLANT. 4.5. IN THE WRITTEN SUBMISSION, THE APPELLANT HA S MENTIONED AS UNDER:- 'THE LABOURERS HAD TO BE TAKEN THERE AND LOOKED AFT ER BEING ILLITERATE. THEREFORE, SHRI YOGESH SHAH BEING A TRUSTE D PERSON WAS APPOINTED TO LOOK AFTER THIS WORK. HERE ALSO IT IS APPARENT THAT SHRI SHAH WAS APPOINT ED TO LOOK AFTER THE WORK AS A SUPERVISOR SO AS TO TAKE WORK FROM LABOURERS. THUS IT WAS ONLY THE EMPLOYEE OF APPELLANT AND COULD NOT BE SAID TO BE CONTRACTOR. 4.6. IN VIEW OF THE ABOVE DISCUSSION, THE DISALLOWANCE M ADE BY THE A.O. TOWARDS THE LABOUR EXPENSES TO MR. SHAH CLAIMED IN THE YEAR UNDER CONSIDERATION IS CONFIRMED AND GROUND OF APPELLANT IS DISMISSED. 7.7 BEING AGGRIEVED BY THE ORDER OF LD CIT(A) ASS ESSE E IS IN SECOND APPEAL BEFORE US. 8. THE LD AR BEFORE US FILED A PAPER BOOK RUNNIN G FROM PAGES 1 TO 39 AND SUBMITTED THAT THE STATEMENT RECORDED BY THE AO FROM SHRI YOGESH R. SHAH WAS NOT FORWARDED TO THE ASSESSEE FOR HIS REBUTTABL E. ACCORDINGLY, I T CAN BE PRESUMED THAT THE STATEMENT FAVORABLE TO THE ASSESS EE WAS GIVEN BY SHRI YOGESH R. SHAH. - 8 - 8.1 THE ASSESSE E HAS BEEN MAKING THE PAYMENT TO SHRI YOGESH R. SHA H CONSISTENTLY BUT THE SAME WAS NOT DISALLOWED IN ANY OF THE YEAR. 8.2 SHRI YOGESH R. SHAH HAS FILED ITS INCOME TAX RETURN DECLARING THE RECEIPT FROM THE ASSESSEE AND PAID THE TAXES ON HIS INCOME WHI CH WAS ACCEPTED BY THE REVENUE. THE ASSESSE E EXECUTED THE JOB FOR THE BORDER SECURITIES FORCES WHICH IS AT FAR OFF PLACES AT THE INDO- PAK BORDER. THE PAYMENT WAS MADE BY THE ASSESSEE TO SHRI YOGESH R. SHAH IN THE SUBSEQUENT YEAR AND THE SAME WAS DULY ACCEPTED BY T HE REVENUE. 8.3 THE L D AR IN SUPPORT OF HIS CLAIM DREW OUR ATTENTION ON THE COPIES OF THE LEDGERS OF SHRI YOGESH R. SHAH WHICH ARE PLACED ON PAGES 13 TO 20 OF THE PAPER BOOK. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF AUT HORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE DISALLOWANCE W AS MADE ON ACCOUNT OF LABOUR EXPENSES TREATING THE SAME AS BOGUS ON THE GROUND OF INADEQUATE FINANCIAL CAPACITY OF THE LABOUR CONTRACTOR. HOWEVE R, ON PERUSAL OF THE DETAIL FILED BY THE ASSESSEE REGARDING THE LABOUR EXPENSES I T WAS NOTED THAT THE SAME WERE CLAIMED IN THE EARLIER YEARS BUT NO DISAL LOWANCE OF WHATSOEVER WAS MADE BY THE AO IN ANY OF THE YEAR. 9.1 WE ALSO NOTE THAT THE GP RATIO HAS BEEN ACCEPTED BY THE AO DURING THE - 9 - ASSESSMENT PROCEEDINGS. WE ALSO FIND THAT THE BOOKS OF ACCOUNTS WERE DULY ACCEPTED FILED BY THE ASSESSEE DURING THE ASSESSMEN T PROCEED INGS. WE ALSO NOTE THAT THE PAYMENT WAS MADE THROUGH BANKING CHAN NEL AFTER DEDUCTI NG THE TDS ON SUCH PAYMENT. THERE WAS NO DEFECT POINTED OUT ON THE ABOVE SUBMISSION OF THE ASSESSEE. 9.2 IN VIEW OF ABOVE, WE ARE NOT INCLINED TO UPHO LD THE ORDER OF AUTHORITIES BELOW. HENCE, WE REVERSE THE SAME. THUS, THE GROUND OF APPEAL FILED BY THE ASSESSEE IS ALLOWED. 10. THE NEXT ISSUE RAISED BY THE ASSESSEE IN THIS APPEA L IS THAT LD CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY CONFIRMING T HE DISALLOWANCE OF RS.3,61,080/- ON ACCOUNT OF DIESEL EXPENSES. THE AO DURING THE ASSESSMENT PROCEEDINGS OBSERVED T HAT TH E ASSESSEE HAS CLAIMED MORE DIESEL EXPENSES IN THE MONTH OF FEBRUA RY AND M ARCH, 2010. THE NECESSARY DETAILS OF THE DIESEL EXPENSES STANDS AS UNDER: MONTH AMOUNT IN RS. PURCHASE FROM NOVEMBER 134308 ACHARYA AUTO CENTRE DECEMBER 96928 ACHARYA AUTO CENTRE JANUARY 0 - FEBRUARY 325064 JALARAM PETROLEUM MARCH 521390 ACHARYA AUTO CENTRE 361080 JALARAM PETROLEUM 44000 JALARAM PETROLEUM TOTAL 14,78,616 - 10 - 11.1 AS PER THE AO, THE DIESEL EXPENSES HAVE NOT BEEN INCURRED UNIFO RMLY OVER THE YEAR. ON QUESTION BY THE AO, THE ASSESSEE SUBMITTED THAT THE WORK WAS CARRIED OUT AT THE INDO-PAK BORDER AFTER THE SU MMER SEASON MOSTLY IN THE MONTH OF FEBRUARY AND MARCH. THEREFORE THE CONSUMPT ION OF DIESEL EXPENSE WAS HIGHER. 11.2 HOWEVER, THE AO DISBELIEVED THE CONTENTIONS OF THE ASSESSEE AND OBSERVED THAT THE DIESEL EXPENSES OF RS.9,26,470/- PERTAINING TO THE MONTH OF MARCH REPRESENTS 62.66% OF THE TOTAL DIESEL EXPENDITURE. ACCORDINGLY, THE AO OBSERVED THAT THE EXPENSES INCURRED IN THE MONTH OF FEBRUARY AND MARCH ARE UN REASONABLY HIGH. ACCORDINGLY, THE AO DISALLOWED THE EXPENSES OF RS.3,61,080/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 12. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD CIT(A). THE ASSESSEE BEFORE THE LD CIT(A) SUBMITTED THAT THE AO HAS MADE THE ADDITION ON HIS PRESUMPTION AND JUNCTURE AND WITHOUT REJECTING THE BOOKS OF ACCOUNTS. THE ASSESSEE ALSO SUBMITTED THAT THE GP RATIO H AS BEEN ACCEPTED BY THE AO. THEREFORE THERE CANNOT BE ANY DISALLOWANCE ON ACCOU NT OF DIESEL EXPENSES. 12.1 IT WAS EXPLAINED THAT THE JOB WORK WAS COMME NCED AFTER THE MO NSOON SEASON AND THE SAME WAS COMPLETED BEFORE THE MONTH OF MARCH. THEREFORE, THE DIESEL EXPENSES WERE HIGH IN THE MONTH OF THESE MONTHS. 12.2 THE ASSESSEE ALSO SUBMITTED THAT ALL THE EXPENSES I NCURRED BY IT WERE DULY SUPPORTED WITH THE BILLS/VOUCHERS. THEREFORE, NO DIS ALLOWANCE ON - 11 - ACCOUNT OF DIESEL EXPENSES CAN BE MADE. HOWEVER, THE LD CIT(A) DISREGARDED THE CONTENTION OF THE ASSESSE E AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER: 5.3. THE A.O. HAS MADE THE DISALLOWANCE OF DIE SEL EXPENSES OF RS.3,61,080/- FOR THE REASON THAT IN THE MONTH OF MARCH, 2010, TH E DIESEL EXPENSES OF RS.9,26,470/ - WAS DEBITED WHICH WAS 62.62% OF THE TOTAL DIESEL EX PENSES OF THE YEAR UNDER CONSIDERATION. THUS, THERE WAS ABNORMAL CLAIM OF DIESEL EXPENSES IN A MONTH OF MARCH. THE A PPELLANT CLAIMED THAT BECAUSE OF THE RAINY SEASON T HE WORK GOT SPEED - UP IN THE END OF THE YEAR WHICH RESULTED INTO THE I NCREASE IN EXPENDITURE OF DIESEL. BUT THE EXPLANATION IS NOT CONVINCING FO R THE REASON THAT THE MONSOON SEASON ALMOST ENDED BY THE END O F SEPTEMBER SO EVEN THE WORK OUGHT TO HAVE BEEN CARRIED OUT ATLEAST FROM NOVEMBER ONWARDS TILL MARC H, 2010 AND IN ANY CASE IT IS NOWHERE THAT 60% WORK WAS COMPLETED IN A SINGLE MON TH THAT TO LAST MONTH OF ACCOUNTING YEAR. EVEN FROM THE LEDGER ACCOUNT COPY OF JAIARAM PETROLEUM, IT WAS SEEN THAT THE DIESEL PURCHASES WAS DEBITED ON 29.3. 2010 AT RS.4,73,416/- AND RS.44,000/ - ON 31.3.2010. SO IT CANNOT BE THE SITUATION THAT EV EN IN THE LAST WEEK OF THE LAST MONTH OF THE YEAR SO MUCH OF DIESEL MIGHT HAVE BEEN CON SUMED. EVEN IF THE SAME IS NOT CONSUMED THE BALANCE STOCK SHOULD H AVE BEEN SHOWN AS CLOSING STOCK BUT IN ABSENCE OF SUCH CLOSING STOCK IT IS IM PLIED THAT THE EXPENDITURE CLAIMED IS NOT GENUINE AND IN MORE PARTICULARLY NO DETAILS OF CONSUMPTION OF DIESEL, T HE CLAIM OF THE APPELLANT IS NOT VERIFIABLE AND HEN CE DISALLOWANCE MADE BY THE A.O. IS CONFIRMED AND THE GROUND OF THE APPELLA NT IS DISMISSED. 12.3 BEING AGGRIE VED BY THE ORDER OF LD CIT(A) ASSESSEE IS IN SECOND APPEAL BEFORE US. THE LD AR BEFORE US REITERATED TH E SUBMISSIONS AS MADE BEFORE THE LD CIT(A). ON THE OTHER HAND, LD DR VEHEMENTLY SUPPORTED THE O RDER OF AUTHORITIES BELOW. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE - 12 - ON RECORD. IN THE INSTANT CASE, THE DIESEL EXPENSES WERE DISALLOWED BY THE AO BY OBSERVING THAT THESE EXPENSES WERE NOT INCURR ED UNIFORMLY THROUGHOUT THE YEAR. AS PER THE AO, THESE EXPENSES WERE I NCURRED MORE IN THE MONTH OF FEBRUARY AND MARCH. THEREFORE, THE SAM E CANNOT BE ALLOWED. THE VIEW TAKEN BY THE AO WAS SUBSEQUENTLY CONFIRMED BY THE LD CIT(A). 13.1 FROM THE PRECEDING DISCUSSION, WE FIND THAT THE ASS ESSEE HAS FURNISHED ALL THE NECESSARY DETAILS IN SUPPORT OF DIESEL EXPENSES AND NO DEFECT OF WHATSOEVER WAS POINTED OUT BY ANY OF THE A UTHORITY. THE ASSESSEE ALSO EXPLAINED THAT THE WORK WAS CARRIED OUT A T THE LOCATION ONLY AFTER THE MONSOON SEASON . THE ASSESSEE ALSO SUBMITTED THAT THERE WAS MORE W ORK DURING THE FAG END OF THE PREVIOUS YEAR I.E. THE MO NTH OF FEBRU ARY AND MARCH OF 2010. THEREFORE, MORE DIESEL EXPENSES WERE INCURRED BY IT. WE NOTE THAT THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT DOUBT ED, DISREGARDED BY ANY OF THE AUTHORITY BELOW. THEREFORE, WE HOLD THAT THE ADDITION WAS MADE BY THE AO AND SUBSEQUENTLY CONFIRMED BY THE LD C IT(A) IS BASED ON SURMISE AND CON JUNCTURE. THEREFORE, WE HAVE NO HESITATION IN REVER SING THE ORDER OF AUTHORITIES BELOW. HENCE, THE GROUND OF APPEAL OF T HE ASSESSEE IS ALLOWED. 14. THE THIRD ISSUE RAISED BY THE ASSESSEE IS THAT LD C IT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 25,000/- U/S 40A (3) OF THE ACT. 15. THE LD COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL. THEREFORE SAME WAS DISMISSED AS NOT PRESSED. - 13 - 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 03/10/2018 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 03/10/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-XX, AHMEDABAD. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD. 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 26/07/2018 (DICTATION-PAD 7 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 26/09/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 01/10/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER