ACIT, CHITTORGARH V. Shri Amol Agarwal, CHITTORGARH

ITA 413/JODH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82960 (ITAT-JODHPUR)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 04-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: THIS COMM ON
• Keywords: Business income; Revision of order; Depreciation; Business expenditure; Cost of acquisition
• Section: 69; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA , JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 412 & 413 / JU/ 20 1 4 [ ASSESSMENT YEAR S : 200 8 - 0 9 & 2010 - 1 1] THE A.C.I.T VS. SHRI AMOL AGARWAL CIRCLE B - 65, BAPU NAGAR CHITTORGARH CHITTORGARH PAN NO. A BGPA 67 36 J (APPELLANT) (RESPONDENT) A SSESSEE B Y : SHRI SANDEEP JHANWAR DEPARTMENT B Y : SHRI JAI SINGH , DR DATE OF H EARING : 2 2 . 0 9 .201 4 DA TE OF PRONOUNCEMENT : 25 . 0 9 . 201 4 ORDER PER HARI OM MARATHA , J .M. TH ESE TWO APPEAL S BY THE REVENUE ARE DIRECTED A GAINST T WO SEPARATE ORDER S OF THE CIT (A) , UDAIPUR BOTH DATED 02.05.2014. SINCE THE ISSUES IN THESE TWO APPEALS ARE COMMON, WE ARE DISPOS ING THEM OFF BY THIS COMMON ORDER. 2 2. GROUND NOS . 1 TO 4 OF THE REVENUES APPEAL S IN BOTH THE YEARS ARISES OUT OF SAME COMMON FINDINGS OF CIT (A). 2.1 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM CONTRACT BUSINESS. THE AO POINTED OUT CERTAIN DEFECTS IN THE BOOKS OF ACCOUNTS AND APPLIED PROVISIONS OF SECTION 145(3) OF THE INCOME - TAX ACT, 1961 ['THE ACT' FOR SHORT]. HE ESTIMATED THE NET PROFIT IN THE CONTRACT BUSINESS OF THE ASSESSEE BY APPLYING A RATE OF 9% IN BOTH THE Y EARS AND THUS MADE A TRADING ADDITION OF RS. 1,63,81,705/ - IN A.Y. 2008 - 09 AND RS. 1,29,74,404/ - IN A.Y. 2010 - 11. IN A.Y. 2008 - 09, A FURTHER SUM OF RS. 7,27,823/ - HAS BEEN SEPARATELY ADDED IN RESPECT OF INTEREST, DISCOUNT, SHARE TRADING AND SALES TAX REFU ND. LIKEWISE IN A.Y. 2010 - 11, A FURTHER SUM OF RS. 1,26,82,857/ - HAS BEEN SEPARATELY ADDED IN RESPECT OF THESE ITEMS INCLUDING INCOME SURRENDERED DURING SURVEY OF RS. 1,01,25,000/ - . THE ASSESSEE HAD ALSO INCLUDED THE SAID INCOME SEPARATELY IN PROFIT & LOS S ACCOUNT. IN THE APPELLATE PROCEEDINGS THE LD. CIT(A) FOUND THAT THE DEFECTS POINTED OUT BY THE AO WERE SAME AS POINTED OUT IN A.Y. 2009 - 10. THE MATTER FOR A.Y. 2009 - 10 TRAVELED UPTO ITAT, JODHPUR BENCH AND IT WAS FOUND THAT THE APPLICATION OF PROVISIONS OF SECTION 145(3) OF THE ACT W ERE NOT JUSTIFIED LOOKING AT THE 3 NATURE OF DEFECTS POINTED OUT BY THE AO. HE ACCORDINGLY DELETED THE ENTIRE TRADING ADDITION. 2.2 BEFORE US, THE L D. D . R POINTED OUT THAT THE ADDITION FOR A.Y. 2008 - 09 WAS MADE PURSUANT TO DIR ECT IONS OF THE CIT U/S 263 OF THE ACT . HE FURTHER SUBMITTED THAT EACH YEAR IS SEPARATE AND INDEPENDENT AND FINDINGS GIVEN IN A.Y. 2009 - 10 BY THE ITAT MAY NOT APPLY IN OTHER YEARS AND , THEREFORE , DELETION OF ADDITION ON THIS BASIS IS NOT JUSTIFIED. HE ALSO POINTED OUT THAT DURING THE COURSE OF SURVEY PROCEEDINGS DURING A.Y. 2010 - 11, THE ASSESSEE SURRENDERED A SUM OF RS. 1,01,25,000/ - WHICH ITSELF SHOWS THAT THE BOOKS OF ACCOUNTS OF ASSESSEE ARE NOT RELIABLE SO AS TO COMPLETE THE TOTAL INCOME. THE LD. A. R , ON THE OTHER HAND , HAS POINTED OUT THAT THE REASONS GIVEN FOR REJECTION OF BOOKS OF ACCOUNT ARE EXACTLY SAME AS WERE GIVEN IN A.Y. 2009 - 10 AND ACCORDINGLY THE FINDINGS GIVEN BY ITAT IN THAT YEAR WOULD SQUARELY APPLY TO THESE TWO CASES ALSO. HE FURTHER POINTE D OUT THAT THE CIT U/S 263 OF THE ACT DID NOT GIVE ANY SPECIFIC DIRECTIONS TO ADOPT THE METHOD ON WHICH INCOME IS TO BE COMPUTED AND ACCORDINGLY THE A O COMPUTED THE INCOME IN THE MAN NER COMPUTED IN OTHER YEARS ONLY. THEREFORE, HE SUBMITTED THAT PROCEEDINGS U/S 263 OF THE ACT HAS GOT NO RELEVANCE IN THIS CASE. HE FURTHER POINTED OUT THAT THE OTHER INCOME OF RS. 4 7,27,823/ - IN A.Y. 2008 - 09 AND RS. 1,26,82,857/ - INCLUDING SURRENDERED AMOUNT OF RS. 1,01,25,000/ - HAS ALREADY BEEN INCLUDED IN INCOME IN THE PROFIT & LOSS ACCOUNT. HE SUBMITTED THAT THE SUM OF RS. 1,01,25,000/ - HAS BEEN SURRENDERED AS INCOME FOR A.Y. 2010 - 11 BUT THAT HAS BEEN SEPARATELY CONSIDERED BY THE ASSESSEE AS WELL AS DEPARTMENT WHILE COMPUTING THE BUSINESS INCOME. THE AO ALSO ADDED THE SAME TO THE TOTAL INCOME OVER AND ABOVE THE ESTIMAT ED INCOME BY APPLYING NET PROFIT RATE. THEREFORE, NO INFERE NCE OUT OF THAT COULD BE TAKEN IN RESPECT OF INCOME DETERMINED ON THE BASIS OF ENTRIES MADE IN THE REGULAR BOOKS OF ACCOUNTS. THE BOOKS MAY ONLY BE REJEC TED ON ACCOUNT OF SPECIFIC DEFECT IN BOOKS OF ACCOUNTS. ON THIS BASIS, HE SUPPORTED THE ORDER OF CIT (A). 2.3 WE HAVE PERUSED THE MATERIAL ON RECORD AND ALSO THE RIVAL SUBMISSION MADE BY THE PARTIES. WE FIND THAT THE PROVISIONS OF SECTION 145(3) OF THE AC T HAVE BEEN APPLIED ON THE BASIS OF SAME REASONS AS CONSIDERED BY US IN APPEAL NO. 391/JODH/2013 & CO NO. 25/JODH/13 IN THE ASSESSEES CASE FOR A.Y. 2009 - 10. WE HAVE DEALT THE ISSUE IN DETAIL IN THAT ORDER DATED 25.09.2013. WE FIND THAT THE FACTS AND CIRCU MSTANCES IN THESE TWO YEARS ARE SAME. THE ASSESSEE CONTINUOUS T O DERIVE INCOME FROM CONTRACTOR SHIP BUSINESS AND THE MANNER OF KEEPING 5 THE BOOKS OF ACCOUNTS IS SAME. THE BOOKS OF ACCOUNTS ARE AUDITED AND NOTHING HAS BEEN POINTED OUT TO SHOW DIFFERENT FACTS. THE FACT OF SURRENDER MADE DURING SURVEY IS SEPARATELY CONSIDERED BY THE ASSESSEE AS WELL AS BY THE AO WHILE COMPUTING THE INCOME. THEREFORE, THE FACT OF SURRENDER OF INCOME CANNOT BE A REASON FOR NOT ACCEPTING THE INCOME DERIVED FROM THE REGULAR BOOKS OF ACCOUNTS. SPECIFIC DEFECTS ARE TO BE POINTED OUT TO REJECT THE DULY AUDITED BOOKS OF ACCOUNTS. ACCORDINGLY, FOLLOWING OUR OWN AFORESAID ORDER IN THE ASSESSEES CASE FOR THE A Y 2009 - 10 WE ARE OF THE CONSIDERED OPINION THAT THE REJECTION OF BOOKS OF ACCOU NTS IS NOT JUSTIFIED IN THIS CASE. THE PROCEEDINGS U/S 263 OF THE ACT IN A Y 2008 - 09 WOULD ALSO NOT MAKE ANY DIFFERENCE FOR THE REASON THAT THE C OMMISSION ER HAD NOT GIVEN ANY SPECIFIC DIRECTION AND THE ASSESSMENT ORDER HAS ALSO BEEN MADE LIKE REGULAR ASSE SSMENT. THE REASONS/FINDINGS GIVEN IN THE ASSESSMENT ORDER ARE SAME AS GIVEN IN THE ASSESSMENT FOR THE ASSESSMENT YEAR 2010 - 11. WE , THEREFORE , UPHOLD THE ORDER OF CIT(A) AND REJECT GROUND N OS. 1 TO 4 OF BOTH THE REVENUES APPEALS. 3. GROUND NO. 5, 5(A) & 5(B) IN BOTH THE APPEALS ARE TAKEN AGAINST DELETION OF DISALLOWANCE OF WAGES OF RS. 1,43,00,450/ - FOR A.Y. 2008 - 09 AND RS. 1,05,31,837/ - FOR A.Y. 2010 - 11. 6 3.1 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE AO HAD FOUND THAT THE EXPENSES ARE VERY HIGH I.E. RS. 5,59,52,210/ - IN THE A.Y. 2008 - 09 AND RS. 4,39,09,336/ - IN THE A.Y. 2010 - 11. OUT OF TOTAL WAGES, A SUM OF RS. 2,02,50,700/ - WAS OUTSTANDING AS AT THE END OF A.Y. 2008 - 09 AND A SUM OF RS. 1,53,00,051/ - WAS OUTSTANDING AS AT THE END OF A.Y. 201 0 - 11. HE OBSERVED THAT THE ADDRESS OF PAYEES IS NOT AVAILABLE AND MOST OF THE VOUCHERS CONTAINED THUMB IMPRESSIONS. THE ATTENDANCE OF THE LABOUR IS ALREADY PRINTED IN THE ATTENDANCE REGISTERS AND SUPERVISOR HAS NOT SIGNED THE ATTENDANCE REGISTER. HE ALSO O BSERVED THAT LARGE AMOUNT OF WAGES WAS OUTSTANDING WHICH IS 36.2 % OF TOTAL WAGES IN A.Y. 2008 - 09 AND 34.84 % OF TOTAL WAGES IN A.Y. 2010 - 11. ACCORDING TO HIM, IT IS NOT POSSIBLE TO HAVE SUCH A HUGE WAGES OUTSTANDING. HE CONSIDERED OUTSTANDING WAGES OF TWO MONTHS AS REASONABLE AND ACCORDINGLY ALLOWED THE CLAIM OF WAGES TO THE EXTENT OF AMOUNT PAID AND OUTSTANDING W AGES OF TWO MONTHS. 3.2 THE LD. CIT (A) ON THE OTHER HAND IN PARA 4.2 OF HIS ORDER FOR A.Y. 2008 - 09 HAS FOUND THAT THE ASSESSING OFFICER HAS HEL D THE OUTSTANDING WAGES FOR TWO MONTHS AT RS. 59,50,250/ - AS REASONABLE AND GENUINE , PURELY ON ESTIMATE/GUESS BASIS. THE NATURE OF PAYMENT TO LABOURS WILL NOT DEFER THE WAGES FOR THE MONTHS AND YEARS. THE LD. CIT(A) ALSO 7 FOUND THAT THE APPELLANT HAS EXPLA INED THE REASONS FOR DEFERRING THE WAGES DUE TO FINANCIAL SHORTAGE WHICH HAD ARISEN DUE TO BLOCK OF HIS SUBSTANTIAL FUNDS AS SECURITY BY THE CONTRACTS AWARDEES. HE OBSERVED THAT THE CONTENTION OF THE APPELLANT IS VERIFIABLE FROM THE SCHEDULE I WHICH IS P ART AND PARCEL OF THE BALANCE SHEET OF THE APPELLANT OF THE A.Y. UNDER CONSIDERATION. ACCORDING TO THIS, THERE IS A DEPOSIT OF RS. 5,87,86,023/ - WHICH IS SUBSTANTIALLY HIGH IN COMPARISON TO THE IMMEDIATELY PRECEDING A.Y. FURTHER, THE DELAY IN RECEIVING THE PAYMENTS FROM THE CONTRACT AWARDEES WAS ALSO ONE OF THE REASONS FOR DEFERRING THE WAGES FOR THE NEXT YEAR. FURTHER, ADMITTEDLY, THE APPELLANT HAS PAID THE WHOLE WAGES TO THE LABOURS IN THE NEXT YEAR AND NO WAGES WHICH WAS CARRIED FORWARD AS OUTSTANDING. H E FURTHER MENTIONED THAT IT IS NOT A CASE OF AO THAT THE WAGES CLAIMED IS NOT GENUINE BUT, IT IS THE CASE OF THE AO THAT THE REASONS GIVEN FOR DEFERRING THE WAGES FOR THE NEXT YEAR WERE NOT SATISFACTORY WHEREAS THE CONTENTION OF THE APPELLANT THAT SUBSTANT IAL AND SIGNIFICANT AMOUNT OF THE APPELLANT WAS BLOCKED BY THE AWARDEES IS VERIFIABLE FROM THE AUDITED BALANCE SHEET FILED ALONGWITH THE RETURN. FURTHER, WHILE DECIDING THE GROUND NO. 1 & 2 REGARDING REJECTION OF BOOKS OF ACCOUNT AND APPLICATION OF HIGHER NET PROFIT RATE, IT HAS BEEN CLEARLY HELD THAT PROVISIONS OF SECTION 145(3) IS NOT APPLICABLE IN THE CASE OF THE 8 APPELLANT AND THE SUBSEQUENT ADDITION MADE BY APPLICATION OF HIGHER NET PROFIT RATE HAS BEEN DELETED AS THERE WAS NO SERIOUS DEFECTS IN MAINTAI NING THE BOOKS OF ACCOUNT AND THE DEFECTS POINTED OUT BY THE AO ARE INSIGNIFICANT. IN VIEW OF THESE FINDINGS HE DELETED THE ADDITION. HE ALSO DELETED THE ADDITION FOR THE A.Y. 2010 - 11 ON THE BASIS OF SIMILAR FINDINGS. 3.3 BEFORE US, THE L D. D . R SUPPORTE D THE ASSESSMENT ORDER AND REQUESTED TO RESTORE THE ADDITION. 3.4 ON THE OTHER HAND , LD. A.R SUPPORTED THE ORDER OF CIT (A) AND SUBMITTED THAT ONCE A O ACCEPTED CLAIM OF OUTSTANDING WAGES FOR 2 MONTHS, THE DEFECTS POINTED OUT BY HIM BECOMES IRRELEVANT. HE POINTED OUT THAT ON THE BASIS OF SAME VOUCHERS WHEN THE WAGES PAID AND OUTSTANDING WAGES FOR 2 MONTHS CAN BE ALLOWED, THERE REMAINS NO LOGIC FOR NOT ALLOWING THE BALANCE OUTSTANDING WAGES. ACCORDING TO HIM EXPENDITURE REMAINING OUTSTANDING PER SE CANNOT BE ANY REASON FOR MAKING DISALLOWANCE SPECIFICALLY IN THE CIRCUMSTANCES WHERE PROOF OF PAYMENT IN THE NEXT YEAR HAS BEEN SUBMITTED. HE ACCORDINGLY REQUESTED TO UPHOLD THE ORDER OF CIT (A) ON THIS COUNT. 9 3.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAREF ULLY PERUSED THE RELEVANT MATERIAL ON RECORD IN RESPECT OF DISALLOWANCE OF WAGES FOR THE A.Y. 2008 - 09 AND A.Y. 2010 - 11. WE FIND THAT NO SUCH DISALLOWANCE WAS MADE IN A.Y. 2009 - 10. OTHERWISE ALSO THE AO POINTED OUT CERTAIN DEFECTS REGARDING ADDRESS OF THE L ABOUR, THUMB IMPRESSION, ATTENDANCE RECORD, BUT AT THE SAME TIME HE ALLOWED THE ENTIRE WAGES PAID DURING THE YEAR AND THE OUTSTANDING WAGES FOR TWO MONTHS. AS SUCH, THERE APPEARS TO BE NO NEXUS BETWEEN THE DEFECTS POINTED OUT AND THE AMOUNT DISALLOWED. WE ALSO FIND THAT THE ONLY APPREHENSION OF AO AS APPEARS FROM HIS ORDER IS ABOUT THE HUGE OUTSTANDING WAGES AND THAT TOO ONLY IN RESPECT OF OUTSTANDING FOR A PERIOD OF MORE THAN TWO MONTHS. THE ASSESSEE FURNISHED APPROPRIATE EXPLANATION GIVING REASON FOR SHOR TAGE OF FUND AS CONSIDERED BY THE CIT(A) IN HIS ORDER. ASSESSEE ALSO FURNISHED DETAILS OF PAYMENT OF OUTSTANDING AMOUNT IN THE NEXT YEAR. IN SUCH FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO REASON TO DISAGREE WITH THE VIEW TAKEN BY THE CIT (A). WE ACCO RDINGLY UPHOLD HIS ORDER FOR BOTH THE YEARS AND REJECT GROUND NO. 5, 5(A) & 5(B) OF BOTH THE DEPARTMENTAL APPEALS. 4. NOW WE TAKE UP REMAINING GROUNDS OF APPEAL FOR A.Y. 2008 - 09. 10 4.1 GROUND N O. 6 OF THE DEPARTMENTAL APPEALS IS AGAINST DELETION OF DISALLO WANCE OF RS. 6,67,918/ - . 4.2 THE A.O FOUND THAT TDS WAS NOT MADE ON CERTAIN PAYMENTS OF FREIGHT & REPAIRS ON WHICH TAX SHOULD HAVE BEEN DEDUCTED U/S 194C. HE ACCORDINGLY APPLIED PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND DISALLOWED RS. 6,67,918/ - WHI LE COMPUTING THE TOTAL INCOME. LD. CIT(A) ON THE OTHER HAND ALLOWED THE CLAIM OF THE ASSESSEE, FINDING THAT PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE WHERE THE EXPENDITURE HAS ALREADY BEEN PAID AND IT IS NOT OUTSTANDING AT THE END OF THE YEAR. HE RELIED ON ITAT BANGALORE BENCH JUDGMENT IN THE CASE OF S. S. WARD VS. ADDL. CIT (2012) 19 ITR (TRIB.) 35. 4.3 WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ENTIRE EXPENDITURE IN QUESTION HAS BEEN PAID BY THE ASSESSE E AND NOTHING REMAINS PAYABLE AS ON THE END OF THE YEAR. THE SPECIAL BENCH, VISHAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORT VS. ADDL. CIT, 136 ITD 23 HAS DECIDED THIS ISSUE IN ASSESSEES FAVOUR. HOWEVER THE ANDHRA PRADESH HIGH COURT HAS PUT THI S ORDER UNDER INTERIM SUSPENSION. ON THE OTHER HAND GUJRAT HIGH COURT IN CIT VS. SIKANDAR KHAN N TUNVAR, 33 TAXMAN.COM 133 AND CALCUTTA HIGH 11 COURT IN CIT VS. CRESCENT EXPORTS SYNDICATE, 33 TAXMAN.COM HAS DECIDED THE MATTER AGAINST THE ASSESSEE. ON THE CONT RARY ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICES (P) LTD. (SUPRA) HAS GIVEN DECISION IN FAVOUR OF THE ASSESSEE AND SLP AGAINST THE SAME HAS BEEN DISMISSED ON 6 TH JULY 2014. GIVING PREFERENCE TO THE LATEST UPDATE OF DISMISSAL OF SLP AGAINST THE FAVOURABLE DECISION, WE ARE INCLINED TO UPHOLD THE FINDING OF LD. CIT (A) ON THIS ALTERNATIVE REASON FOR DECIDING THE APPEAL IN ASSESSEES FAVOUR. WE ALSO TAKE SUPPORT FROM THE DECISION OF ITAT CHENNAI IN THE CASE OF ITO VS. THEEKATHIR PRESS, ITA NO. 2076(MDS)/2012 (ORDER DATED 18 TH SEPTEMBER, 2013) AND ALSO ACIT VS. M/S ESKAY DESIGNS, ITA NO. 1951/MDS/12 WHEREIN THE MATTER WAS DECIDED IN FAVOUR OF THE ASSESSEE ON THE SAME ISSUE AFTER TAKING INTO CONSIDERING THE CONTROVERSY CREATED FROM DIFFERE NT DECISIONS OF GUJARAT, CALCUTTA AND ALLAHABAD HIGH COURTS. THE CHENNAI BENCH RELIED ON THE DECISION OF SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD., 88 ITR 192 WHEREIN IT WAS HELD THAT IN CASE OF JUDICIAL CONTROVERSY, THE VIEW FAVOURABLE TO THE ASSESSEE SHOULD BE ADOPTED. THIS GROUND OF APPEAL IS ACCORDINGLY DISMISSED. 12 5. GROUND NO. 7 IN THE DEPARTMENTAL APPEAL IS TAKEN AGAINST DELETION OF DISALLOWANCE OF DEPRECIATION OF RS. 1,01,272/ - . 5.1 BRIEFLY STATED, THE FACTS OF THE CASE ARE TH AT THE A.O NOTICED THAT THE ASSESSEE FAILED TO SUBMIT DETAILS OF ADDITION TO FIXED ASSETS OF COMPUTER OF RS. 1,19,646/ - AND STONE CRUSHER PLANT OF RS. 1,96,566/ - . HE ACCORDINGLY DISALLOWED DEPRECIATION OF RS. 1,01,272/ - CLAIMED ON THESE ASSETS. THE L D. C IT(A) IN PARA 3.5 OF HIS ORDER HAS DELETED THE SAID DISALLOWANCE BY FINDING THAT THE APPELLANT HAS PURCHASED COMPUTERS AND STONE CRUSHER PLANT DURING THE YEAR AND THE PAYMENTS HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUE. BUT THE AO PROPOSED TO MAKE DISALLO WANCE OF DEPRECIATION CLAIMED ON BOTH THE ASSETS AS THE ASSESSEE FAILED TO PRODUCE THE BILLS OF THE ASSETS PURCHASED WHEREAS THE APPELLANT HAS FILED COPY OF THE BILLS OF THE FIXED ASSETS ACQUIRED DURING THE YEAR VIDE LETTER DATED 08.03.2013. HE FURTHER OBS ERVED THAT IT IS NOT A CASE OF THE AO THAT THE ASSETS ON WHICH THE DEPRECIATION WAS DISALLOWED, HAS BEEN USED FOR THE PURPOSE OTHER THAN BUSINESS. HE ACCORDINGLY DELETED THE DISALLOWANCE. 13 5.2 BEFORE US, THE L D. D . R SUPPORTED THE ORDER AND SUBMITTED THAT IN ABSENCE OF PROPER DETAILS OF FIXED ASSETS PURCHASED, DEPRECIATION CANT BE ALLOWED. 5.3 THE LD. A.R ON THE OTHER HAND SUPPORTED THE ORDER OF CIT(A) BY SUBMITTING THAT BOTH THE COMPUTERS AND STONE CRUSHER PLANTS WAS PURCHASED BY THE ASSESSEE DURING THE YEAR AND THE COST WAS PAID BY CHEQUE AND DULY AND ENTERED IN THE BOOKS OF ACCOUNTS AS EVIDENT FROM COPIES OF LEDGER ACCOUNT SUBMITTED. THE ASSETS COULD WELL BE PHYSICALLY VERIFIED BY ANYBODY. THE AUDITORS HAD DULY VERIFIED THE BOOKS OF ACCOUNT AND VOUCHE RS AND HAD HELD THE DEPRECIATION ALLOWABLE IN THEIR TAX AUDIT REPORT. THE ASSESSEE COULD NOT PRODUCE PURCHASE BILLS AT THE TIME OF HEARING OF ASSESSMENT PROCEEDING BECAUSE THE BILLS WERE MISPLACED BY STAFF DUE TO SHIFTING OF RECORD ON THE OCCASION OF DIWAL I. HOWEVER PURCHASE COST OF BOTH THE COMPUTER AND THE STONE CRUSHER PLANT ARE DULY ENTERED IN THE BOOKS OF ACCOUNT WHICH IS SUFFICIENT EVIDENCE TO PROVE THAT THE ASSESSEE HAD PURCHASED AND USED THE ASSETS DURING THE YEAR. ON THIS BASIS HE SUBMITTED TO UPHO LD THE ORDER OF CIT(A) ON THIS GROUND. 14 5.4 WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE DEPRECIATION IS DISALLOWED ONLY FOR THE REASON OF ABSENCE OF VOUCHERS THOUGH THE PAYMENTS HAVE BEEN MADE THRO UGH ACCOUNT PAYEE CHEQUES. IN OUR CONSIDERED VIEW, THE AO SHOULD HAVE GIVEN WEIGHTAGE TO THE AUDITED ACCOUNTS AND THE TAX AUDIT REPORT WHERE THE AUDITORS HAVE GIVEN TRUE AND CORRECT INFORMATION IN FORM 3CD READ WITH FORM 3CB. THESE ARE STATUTORY DOCUMENTS AND EVIDENCES SHOULD BE BROUGHT ON RECORD TO PROVE ANY MENTION IN THESE FORM S AS INCORRECT. FURTHER THE ASSETS HAVE PHYSICAL SUBSTANCE WHICH CANNOT BE DENIED. THE PAYMENTS ARE MADE THROUGH ACCOUNT PAYEE CHEQUE. IN SUCH CIRCUMSTANCES, ONLY NON - AVAILABIL ITY OF VOUCHER CANNOT BE A REASON FOR MAKING DISALLOWANCE OF DEPRECIATION. WE THEREFORE UPHOLD THE ORDER OF THE CIT (A) ON THIS GROUND AND REJECT THE GROUND OF APPEAL OF THE REVENUE. 6. IN G ROUND N O. 8 THE REVENUE HAS CHALLENGED DELETION OF DISALLOWANCE O F RS. 2,62,205/ - IN RESPECT OF REPAIRS AND MAINTENANCE EXPENSES. THE DISALLOWANCE HAS BEE N MADE FOR WANT OF VOUCHERS. THE LD. CIT(A) HAS DELETED THE SAME BY FINDING THAT THE APPELLANT HAS ACCOUNTED FOR THE ABOVE EXPENSES IN HIS BOOKS OF ACCOUNT WHICH HAVE BEEN AUDITED BY STATUTORY AUDITORS AND ADMITTEDLY, THEY HAVE NOT 15 POINTED OUT ANY SPECIFIC DEFECT IN CALMING THE EXPENDITURE. HE FURTHER MENTIONED THAT THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT W ERE HELD TO BE ACCEPTABLE. HE OBSERVED THAT THE APPELL ANT HAS PLAUSIBLE REASONS DUE TO WHICH HE COULD NOT PRODUCE THE VOUCHERS FOR THE EXPENSES. ACCORDING TO CIT(A), THE AO HAS NOT BROUGHT ANY MATERIAL TO ESTABLISH THAT THE EXPENDITURE CLAIMED OF RS. 2,62,205/ - WAS INCURRED BY THE APPELLANT FOR THE PURPOSE O THER THAN HIS BUSINESS, THUS HE HELD THE DISALLOWANCE AS INAPPROPRIATE AND DELETED THE SAME. 6.1 BEFORE US L D. D R SUBMITTED THAT THE CIT( A) HAS WRONGLY DELETED THE DISALLOWANCE MADE FOR WANT OF VOUCHERS. THE L D. A . R ON THE OTHER HAND SUBMITTED THAT THE EX PENDITURE HAS BEEN RECORDED ON DAY TO DAY BASIS IN BOOKS OF ACCOUNTS OF THE ASSESSEE. THESE ACCOUNTS ARE AUDITED BY THE AUDITORS AND NO ADVERSE OPINION HAS BEEN GIVEN BY THE AUDITORS. IN SUCH CIRCUMSTANCES , THE DISALLOWANCE MADE ONLY FOR THE REASON OF NON - SUBMISSION OF VOUCHER WAS NOT JUSTIFIED. HE ACCORDINGLY SUPPORTED THE ORDER OF CIT(A). 6.2 WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT ASSESSING OFFICER HAS GIVEN OVER WEIGHTAGE ON VOUCHERS OF THE EXPENSE S. THE EXPENDITURE ON REPAIRS 16 APPEARS TO HAVE BEEN INCURRED IN NORMAL COURSE OF BUSINESS. THERE IS NO OBSERVATION THAT THESE EXPENSES ARE EXCESSIVE LOOKING AT THE NATURE OF BUSINESS OF THE ASSESSEE. THE ASSESSEE HAS FAIRLY LARGE SIZE OF TURNOVER AND ABSEN CE OF FEW VOUCHERS IS INEVITABLE IN SUCH CASES. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO UPHOLD THE FINDINGS GIVEN BY CIT (A) AND REJECT THIS GROUND OF APPEAL ALSO. NOW WE GO TO THE ONLY REMAINING GROUNDS NO. 6 IN APPEAL FOR THE A.Y . 2010 - 11 WHICH IS TAKEN AGAINST DELETION OF ADDITION OF RS. 15,22,979/ - MADE BY APPLYI NG THE PROVISIONS OF SECTION 69 C OF THE ACT . 6.3 THE A.O FOUND THAT THE ASSESSEE HIMSELF ADMITTED ENTRIES OF RS. 1,16,47,979/ - OUT OF REGULAR BOOKS DURING THE COURSE O F SURVEY AND HE HAS SURRENDERED A SUM OF RS. 1,01,25,000/ - AGAINST THE UNMATCHED ENTRIES OF EXPENSES. HE ACCORDINGLY ADDED THE BALANCE SUM OF RS. 15,22,979/ - . ON THE CONTRARY , THE L D. CIT (A) DELETED THE ADDITION. IN PARA 3.3 OF HIS ORDER, LD. CIT(A) HAS F OUND THAT THE SUBMISSIONS OF THE APPELLANT THAT THE ENTRIES FOUND IN THE EXERCISE BOOK IS PART AND PARCEL OF THE TOTAL EXPENDITURE RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND FOR MINOR DISCREPANCIES, THE APPELLANT HAS SURRENDERED SUBSTANTIAL AMOUNT OF INC OME AND PAID THE TAX ON SUCH SURRENDERED INCOME AND THEREFORE NO FURTHER ADDITION IS REQUIRED TO BE MADE IS ACCEPTABLE. 17 FURTHER, IT IS NOT A CASE OF THE AO THAT THE APPELLATE HAS MADE THE EXPENDITURE FROM UNDISCLOSED INCOME. EVEN IF, SUCH EXPENDITURE WAS I NCURRED OUT OF UNDISCLOSED SOURCES, THE APPELLANT HAS SURRENDERED SUBSTANTIAL AMOUNT OF INCOME AND PAID THE TAX. IN SUCH A SITUATION, THERE IS NO JUSTIFICATION FOR MAKING FURTHER SEPARATE ADDITION. BEFORE US THE LD. D.R SUBMITTED THAT THE ADDITION HAS BEE N WRONGLY DELETED. THE ADDITION WAS MADE IN RESPECT OF ENTRIES FOUND IN THE IMPOUNDED BOOKS WHICH COULD NOT BE EXPLAINED AND THEREFORE ORDER OF CIT(A) NEEDS TO BE REVERSED ON THIS ISSUE. THE LD. A.R ON THE OTHER HAND SUBMITTED THAT THE AMOUNT OF RS. 1 , 16 , 4 7 , 979/ - REPRESENTS VARIOUS EXPENSES OF DIFFERENT SITES MAINTAINED BY STAFF IN DIARIES ETC. TH IS EXPENDITURE, AFTER DUE VERIFICATION AND CORRECTIONS IS ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. THE TOTAL EXPENDITURE CLAIMED IN THE BOOKS OF ACCOUNTS FOR THE YE AR ARE 17 , 25 , 65 , 778/ - AND THE ENTRIES FOUND IN IMPOUNDED RECORDS WAS PART OF TOTAL BUSINESS EXPENSES ONLY WRITTEN ON UNSYSTEMATIC BASIS. THE SURRENDER WAS NOT ON ACCOUNT OF TH IS EXPENDITURE BUT IT WAS ON OVERALL BASIS TO BUY PEACE OF MIND ON ASSURANCE OF T HE DEPARTMENT THAT IF SURRENDER IS MADE THERE WILL NOT BE FURTHER SCRUTINY OF THE CASE. THEREFORE, THE ADDITION MADE BY CORRELATING THESE AMOUNTS WITH THE AMOUNT OF SURRENDER WAS NOT JUSTIFIED. HE ACCORDINGLY SUPPORTED THE ORDER OF CIT (A). 18 6.4 WE HAVE HEA RD THE PARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO PERUSED THE STATEMENTS OF THE ASSESSEE RECORDED DURING THE COURSE OF SURVEY. WE ARE UNABLE TO ACCEPT THE VIEW OF THE AO AND THE LD. D. R THAT ASSESSEE HAS SURRENDERED A SUM OF RS . 1 , 01 , 25 , 000/ - OUT OF THIS AMOUNT OF RS.1,16,47,979/ - . THE SURRENDER OF RS. 1,01,25,000/ - WAS IN FACT MADE ON OVERALL BASIS WITH A MENTION OF NOT LEVYING ANY PENALTY ON THE SAME. THE SUM OF RS. 1,16,47,979/ - IS IN RESPECT OF VARIOUS EXPENDITURE. ASSESSE E HAS CLAIMED TOTAL EXPENDITURE OF RS. 17,25,65,778/ - AS PER BOOKS OF ACCOUNT FOR VARIOUS SITES WHICH IS MUCH HIGHER THAN THE AMOUNT OF EXPENDITURE OF RS. 1,16,47,979/ - . ON ONE HAND, THE REVENUE CLAIMS THAT THE ASSESSEE HAS RECORDED HIGHER EXPENDITURE FOR THE PURPOSE OF PROPOSING ITS DISALLOWANCES AND AT THE SAME TIME PROPOSES ADDITION IN RESPECT OF UNBOOKED EXPENSES WHICH IS NOT JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE EXPENDITURE OF RS. 1,16,47,979/ - IS IN FACT PART OF OVERALL EXP ENDITURE OF RS. 17,25,65,778/ - CLAIMED BY THE ASSESSEE. WE ARE INCLINE D TO AGREE WITH THE VERSION OF THE ASSESSEE THAT THE EXPENDITURE WHICH HAS BEEN WRITTEN AT VARIOUS SITES BY DIFFERENT PERSONS IN AN UNSYSTEMATIC MANNER HAD BEEN DULY INCORPORATED IN THE BOOKS OF ACCOUNTS ON SYSTEMATIC BASIS. WE HAVE ALREADY GIVEN A FINDING THAT THE AO DID NOT POINT OUT 19 ANY SUBSTANTIAL DEFECT IN THE BOOKS OF ACCOUNTS. IN SUCH FACT S AND CIRCUMSTANCES OF THE CASE AND LOOKING AT THE OVERALL QUANTUM OF EXPENDITURE OF RS.17,25, 65,778/ - CLAIMED BY THE ASSESSEE IN COMPUTING THE BUSINESS PROFITS, WE DO NOT AGREE WITH THE VERSION OF THE DEPARTMENT AND REJECT THIS GROUND OF APPEAL. 7 . IN THE RESU LT, BOTH THE APPEAL S OF THE REVENUE IN ITA NO. 412 & 413 /JU/2014 FOR A.Y. 200 8 - 0 9 AND 20 10 - 11 STAND DISMISSED. ORDER PRON OUNCED IN THE COURT ON 25 TH SEPTEMBER , 2014. SD/ - SD/ - (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEM B ER DATED : 25 TH SEPTEMBER , 201 4 VL/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR SENIOR PRIVATE SECRETARY ITAT, JODHPUR