Shri Rakesh Kumar Chaudhary, Durgapur V. ACIT, Cir-Durgapur, Durgapur

ITA 422/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1905 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 02-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Keywords: Bogus purchase; Gross profit estimation; Unexplained cash credit; Rejection of books of accounts; Unexplained investment; Business income; Depreciation; Wrong claim; Capital receipt; Revised return
• Section: 44AD; 40A(3); 133(6); 194C; 68; 139

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1810 / KOL / 20 16 & ITA NO.422/KOL/2017 ASSESSMENT YEAR :2009-10 ACIT, CIRCLE-1, AAYAKAR BHAWAN, CITY CENTRE, DURGAPUR-713216 SHRI RAKESH KUMAR CHOWDHURY, C-6/6, ALLAUDIN KHAN BITHI, CITY CENTRE, DURGAPUR-713216 [ PAN NO.AEAPC 6754 K ] V/S . V/S . SRI RAKESH KUMAR CHOWDHURY, C-6/6, ALLAUDIN KHAN BITHI, CITY CENTRE, DURGAPUR- 713216 ACIT CIRCLE-1, AAYAKAR BHAWAN, CITY CENTRE, DURGAPUR-713216 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SOUMITRA CHOWDHURY, ADVOCATE /BY RESPONDENT SHRI S. DASGUPTA, ADDL. CIT-DR /DATE OF HEARING 02-08-2018 /DATE OF PRONOUNCEMENT 31-08-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THE REVENUE AND ASSESSEE HAVE FILED THEIR INSTANT C ROSS-APPEAL FOR ASSESSMENT YEAR 2009-10 AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-DURGAPURS COMMON ORDER DATED 08.06.2016, PASSED IN CASE NO.96/CIT(A)/DGP/2015-16, IN PROCEEDINGS U/S. 143(3 ) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE(S) PERUSED. 2. WE ADVERT TO RIVAL PLEADINGS. THE REVENUES GRIE VANCE INTER ALIA READS THAT THE CIT(A) HAS ERRED IN DELETING THE DISALLOWA NCE(S) / ADDITION(S) OF 1,22,62,036/- CLAIMED AS LABOUR PAYMENTS WITHOUT AN Y BILLS RECEIVABLE OR ANY ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 2 WORK-IN-PROGRESS AND THE SAME WAS SHOWN WAS TO BE O UTSTANDING AT THE END OF THE YEAR WITHOUT ANY PROOF OF GENUINENESS, IN RE VERSING ASSESSMENT FINDINGS HOLDING EXPENDITURE CLAIMED IN CASE OF SHR I AMLESH THAKUR AMOUNTING TO 55,16,719/- AS BOGUS, IN DELETING SECTION 40A(3) DI SALLOWANCE OF 25,00,000/- IN REJECTING THE BOOKS OF ACCOUNT AND E STIMATING PROFITS @ 9% OF THE TOTAL TURNOVER; THEREBY GOING AGAINST THE FA CT ON RECORD AND ALSO IN CONSIDERING REVISED SUBMISSIONS IN LIGHT OF CASE LA W GOETZE (INDIA) LTD VS. CIT (2006) 284 ITR 323 (SC); RESPECTIVELY. THE ASSESSE E ON THE OTHER HAND PLEADS THAT THE CIT(A) HAS ERRED IN LAW AND ON FACT S IN ESTIMATING NET PROFIT @ 9% ON GROSS RECEIPTS OF 281,24,470; COMING TO 25,31,226/- AS WELL AS IN CONFIRMING SECTION 68 ADDITION OF UNEXPLAINED CASH CREDITS OF 8.25 LAC DESPITE THE SAME FORMING AS CASH SALES; RESPECTIVELY. 3. WE ADVERT TO RELEVANT ASSESSMENT ORDER DATED 30. 12.2011. THE ASSESSEE CLAIMED HIMSELF TO HAVE DERIVED INCOME FRO M CONTRACTOR, MATERIAL SUPPLIERS AND OTHER SOURCES. THE ASSESSING OFFICER FIRST OF ALL DISALLOWED HIS LABOUR CHARGES CLAIMED OF 122,62,034/- FROM 01.08.2008 TO 31.03.2009 IN ABSENCE OF ANY BILLS RECEIVABLE IN BALANCE-SHEET NO R WORK-IN-PROGRESS BEING RECORDED IN PROFIT AND LOSS ACCOUNT. HE THUS TREATE D THE SAME TO BE ASSESSEES UNEXPLAINED INVESTMENTS. 4. NEXT COMES THE SECOND ISSUE OF MATERIAL SUPPLIES OF 55,16,319.24 FROM SHRI AMLESH THAKUR. THE ASSESSING OFFICER FOUN D THE PAYEES IN QUESTION TO BE DUMMY PARTIES NOT SUPPLYING ANY SUPPORTING EV IDENCE OF SALES / PURCHASES DETAILS. THE ASSESSING OFFICER THEREFORE TREATED THE LATTER BUSINESS OF MATERIAL SUPPLIES ITSELF TO BE NON EST . ALL THIS CULMINATED IN THE ADDITION IN ISSUE OF 55,16,719/- AS UNEXPLAINED CASH CREDITS OUT OF THE CORRESPONDING GROSS RECEIPTS OF 155,68,753/- SINCE THE TAXPAYER HAD HIMSELF OFFERED THE REMAINING SUM OF 100,52,034/- FOR ASSESSMENT. 5. THE ASSESSING OFFICER FURTHER DECLINED ASSESSEE S COMPUTER SNAG PLEA TO DISALLOW CASH PAYMENTS OF 2.05 LAC U/S. 40A(3) OF THE ACT FOLLOWED BY YET ANOTHER SECTION 68 ADDITION OF UNEXPLAINED CASH CRE DITS AMOUNTING TO 8.25 ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 3 LAC BY REJECTING THE RELEVANT EXPLANATION CLAIMING THE SAME TO BE CASH RECEIPTS FROM SUPPLY OF MATERIALS. 6. THE CIT(A) AFFIRMED THE ASSESSING OFFICERS ACTI ON IN ENTERITY AS PER HIS FIRST ROUND LOWER APPELLATE ORDER DATED 20.09.2012. THE ASSESSEE FILED APPEAL BEFORE THIS TRIBUNAL. A CO-ORDINATE BENCH IN ITS OR DER DATED 25.06.2014 RESTORED THE FILE BACK TO THE CIT(A) FOR FRESH ADJUDICATION. 7. THE CIT(A) TOOK UP CONSEQUENTIAL PROCEEDINGS. HI S SECOND ROUND LOWER APPELLATE ORDER UNDER CHALLENGE RUNS INTO 48 PAGES IN ALL IN INTER ALIA TAKING NOTE OF THE CORRESPONDING GROUND RAISED, ASSESSMENT FINDINGS IN ISSUE, FIRST ROUND ORDER DATED 28.09.2012 AND ASSESSEES PLEADIN GS BEFORE THE TRIBUNAL FINALLY CULMINATING IN REMAND DIRECTION, HIS SUBMIS SION IN SECOND INNINGS, FORM NO.26, WRITTEN SUBMISSIONS, ASSESSING OFFICERS REM AND REPORT DATED 27.04.2016 FOLLOWED BY COUNTER COMMENTS AND RECONCI LIATION STATEMENT; RESPECTIVELY. THE CIT(A) THEREAFTER REJECTS ASSESSE ES BOOKS TO ESTIMATE HIS GROSS PROFIT @ 9% ON TURNOVER OF 289,79,740/- REDUCED BY CASH DEPOSITS OF 8,25,000/- (SUPRA) = 2,81,24,740/- COMING TO 25,31,326/- FROM CONTRACT BUSINESS. HE THEN HOLDS SECTION 40A(3) TO BE NO MOR E APPLICABLE AFTER ALTOGETHER REJECTION OF BOOKS AND CONFIRMS SECTION 68 ADDITION OF CASH DEPOSITS OF 8.25 LAC AS FOLLOWS:- (I) CONCLUSION IN THIS CASE, IN THE ORIGINAL PROFIT & LOSS ACCOUNT TWO RECEIPTS HAVE BEEN SHOWN, RELATING TO THE RECEIPT OF RS. 1,33,80,987/- AS CON TRACTUAL RECEIPT AGAINST WHICH THERE IS NO DISPUTE FOR SOURCE OF THE SAME. ANOTHER RECEI PT OF RS. 1,55,68,753/- HAS BEEN SHOWN BY THE APPELLANT IN HIS ORIGINALLY ASSESSED R ETURN. THE APPELLANT SAYS THAT OUT OF AFORESAID RECEIPT ALL THESE RECEIPTS WERE PERTAI NING TO EARLIER YEARS WHICH WERE WRONGLY SHOWN. THE DETAILS WERE COLLECTED FROM THE RESPECTIVE PAYERS. THE EVIDENCES RELATING TO AFORESAID CLAIMS WERE SENT TO THE A.O. THE A.O. ACCEPTED THE EVIDENCES TO THE EXTENT OF RS. 1,15,94,313/- BUT FO R REMAINING RS. 39,74,440/- THE APPELLANT COULD NOT PRODUCE ANY EVIDENCE BEFORE THE A.O. THEREFORE, THE SOURCE OF THE SAME REMAINED UNVERIFIED BEFORE THE A.O. AS THE APPELLANT WAS INSISTING THAT REMAINING PAYMENTS OF RS. 19,80,950/- AND RS. 7,70, 227/- WAS ALSO RECEIVED FROM M/S. HINDUSTAN STEELWORKS CONSTRUCTION LIMITED. THE REFORE, THE LETTER U/S. 133(6) WAS ISSUED TO STATE BANK OF INDIA IN ORDER TO KNOW THE DETAILS OF CREDIT MADE IN THE BANK ACCOUNT OF THE APPELLANT. THE SBI, DURGAPUR MAIN BR ANCH HAS SUBMITTED THAT AFORESAID CHEQUES WERE RECEIVED FROM M/S. HINDUSTAN STEELWORKS CONSTRUCTION LIMITED. A LETTER WAS ISSUED U/S. 133(6) TO M/S. HI NDUSTAN STEELWORKS CONSTRUCTION LIMITED FOR REPLY. M/S. HINDUSTAN STEELWORKS CONSTRUCTION LIMITED SUBM ITTED HIS REPLY DATED 23.06.2016 AS UNDER: ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 4 'KINDLY REFER TO LETTER NO.CIT(A)/DGP/2016-17/97 DT . 17.06.2016 REGARDING THE ABOVE MENTIONED SUBJECT MATTER; THIS IS TO CONFIRM YOU THAT THE FOLLOWING PAYMENTS WERE MADE TO SHRI RAKESH CHOUDHURY BY HSCL AS PER DETAILS FURNISHED BELOW: 1) CHEQUE NO.031074 DT. 31.03.2008 -RS.7,70,227.00 (RELEASED OF SD) 2) CHEQUE NOA09719 DT. 10.11.2008 -RS.10,00,000.0 0(RELEASED OF SD) 3) CHEQUE NOA09720 DT. 10.11.2008 -RS.2,59,200.00( RELEASE OF WITHHELD) 4) CHEQUE NOA09721 DT. 10.11.2008 -RS.7,21,750.00 (RELEASE OF WITHHELD & GUARANTEE COMMISSION) ---------------------- RS.27,51,177.00 IT IS REGRETTED THAT WE COULD NOT FURNISH EARLIER T HE ABOVE INFORMATION DUE TO NON AVAILABILITY OF CHEQUE REFERENCES. IN THIS CONNECTI ON PHOTOCOPIES OF PAYMENT VOUCHERS ON ACCOUNT OF PAYMENT MADE TO M/S. R.K. EN GINEERING WORKS ARE ALSO ENCLOSED HEREWITH FOR NECESSARY ACTION AT YOUR END. ' THUS, THE TOTAL SOURCE OF TRANSACTION OF THE APPELL ANT WAS EXPLAINED TO THE EXTENT OF RS. 1,43,45,490/-. CONSIDERING THE AFORESAID FACTS IT IS SEEN THAT OUT OF RECEIPT SHOWN OF RS. 1,55,68,753/- WHEREAS THE SOURCE OF RS. 1,43 ,19,930/- IS ONLY EXPLAINED. IT IS SEEN THAT THE APPELLANT WAS NOT ABLE TO SUBSTANTIAT E HIS CLAIM OF RS. 8,25,000/- AND SOURCES OF THE SAME COULD NOT BE PROVED, THEREFORE, THE SAME IS TREATED AS UNEXPLAINED WHICH HAS BEEN ADDED BY THE A.O SEPARAT ELY U/S 68 AND THE ACTION OF THE A.O IS UPHELD ON ADDITION OF RS. 8,25,000/- WHI CH IS DEALT SEPARATELY. COMMENTS ON ADDITION MADE BY THE A.O ON THE ISSUE O F LABOUR OUTSTANDING AND BOGUS PURCHASE. PERUSAL OF OBSERVATION MADE BY THE A.O FOR MAKING A DDITION RS. 1,22,00,000/- SHOWS THAT THE A.O HAS MADE ADDITION MERELY ON THE GROUND THAT NO RECEIVABLE WAS SHOWN IN THE BALANCE SHEET WHEREAS THE APPELLANT SAYS TOT AL PAYMENT OF RS. 90,19,331.20/- HAS BEEN MADE AGAINST LABOUR PAYMENT FOR THE CURREN T YEAR AND RS. 48,67,154.67/- HAS BEEN MADE FOR THE OUTSTANDING EXPENSES OF LABOU R FOR PREVIOUS YEAR THUS TOTAL PAYMENT OF ON ACCOUNT OF LABOUR HAS BEEN MADE OF RS . 1,38,86,458/- BY THE APPELLANT DURING THE YEAR. THE SUBMISSION OF APPELL ANT SHOWS THAT THE APPELLANT HAS WITHDRAWN CASH OF RS. 19,765808/- FROM SBI, RS. 841 0000/- CENTURIAN BANK OF PUNJAB AND RS. 4000000/- FROM VIJAYA BANK TOTALING AT RS. 24606808/- WHICH HAS BEEN CLAIMED FOR PAYMENT AGAINST EXPENSES. IN THIS REGARD THE APPELLANT SUBMITTED AS UNDER:- 'DURING THE COURSE OF ASSESSMENT ASSESSING OFFICER ASSESS OUR UNEXPLAINED INVESTMENT RS. 1/22/62/034/-. IT IS MADE BY HIM FRO M MANUFACTURING OF OUR TWO ACCOUNTS BASED ON ASSUMPTION. ACTUALLY WE HAVE PAYA BLE LABOUR CHARGES AS ON 31. 03.2008 RS. 1,70,94,398.84/-. DURING THE YEA R MY TOTAL LABOUR CHARGES WAS RS. 90/19/331.20/- HAVE PAID LABOUR EXPENSES RS . 1,38,86,485.87/- WHICH INCLUDES LABOUR CHARGES OF EARLIER YEAR OF RS . 48,6,154.67/-. ALL THE RELEVANT MATERIALS FROM WHICH I MADE THIS REPRESENT ATION ENCLOSED HEREWITH. WE HAVE MAINTAINED DAY TO DAY ACCOUNTS WE HAVE PAYA BLE LABOUR CHARGES ON 31.03.2009 IS RS. 1,22,27,244.17/-. WE HAVE PAID TH IS AMOUNT IN THE FINANCIAL YEAR 2009-10. ASSESSING OFFICER PASSED THE ORDER U/ S 139 FOR THE ASSESSMENT YEAR 2010-11 AFTER ACCEPTING THE SAME. DURING THE F INANCIAL YEAR 2008-09, WE HAVE WITHDRAWN CASH RS. 1/9~6~808/- FROM SB! RS. 84 ,10,000/- FROM CENTURIAN BANK OF PUNJAB RS. 40/00/000/- FROM VTJAY A BANK THUS THE TOTAL CASH WITHDRAWN BY ME RS. 3,22,83,117.00/-. AMOUNT D EPOSITED INTO BANK FROM GROSS BILL RECEIVED, REFUND OF SECURITY DEPOSIT, CO LLECTION FROM SUNDRY DEBTORS AND FROM SALES TAX REFUND. DURING THE COURSE OF HEA RING WE HAVE SUBMIT THE DETAILS OF AMOUNT RECEIVED FROM BILL FROM SECURITY DEPOSIT, FROM SUNDRY DEBTORS ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 5 AND FROM SALES TAX REFUND. ALL THIS TRANSACTION ENT ERED IN OUR BOOKS OF ACCOUNTS. A YEARLY CASH RECEIPT AND CASH PAYMENT ST ATEMENT ENCLOSED HEREWITH FOR YOUR READY REFERENCE. STATEMENT IS MAD E FROM OUR CASH BOOK AND LEDGER. NEEDLESS TO SAY WE HAVE MAINTAINED OUR DALL Y BOOKS OF ACCOUNTS. DURING THE YEAR WE HAVE PAID RS. 1,38,86,48.87 FOR WAGES. THUS THE ACCOUNTS REVEALED THAT WE HAVE SUFFICIENT CAPACITY TO PAY THE LABOUR CHARGES AS WELL AS OTHER EXPENDITURE FROM OUR SOURCES. NOTH ING IS UNEXPLAINED ARISE FROM OUR ACCOUNTS/ THEREFORE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDITION OF RS. 1,22,62,034/-. WHAT IS MATERIAL THE SAME OF PAY MENT, MY ENTIRE CONTRACT RECEIPT HAS BEEN COMES IN MY ACCOUNT. BUT MY GIANT PORTION OF RECEIPT INVESTED IN NO BUSINESS ACTIVITIES FOR WHICH LABOUR CHARGES PAYABLE AT THE END OF THE ASSESSMENT YEAR 2009-10 COMES AT RS. 1/22/2~ 244.17/-. ! HAVE TACKLED THE SITUATION IN MY OWN CAPACITY BUT IN NO CIRCUMST ANCES IT COMES AS UNEXPLAINED INVESTMENT. ASSESSING OFFICER SHOULD EX AMINE THE SOURCES OF MY RECEIPT BUT HE FAILED TO PAY HIS GOOD EFFORT FOR FI NDING THE REASON BETTER HE SHAPED HIMSELF AS A REVENUE OFFICER AND TRY TO PUT A BURDEN OF TAX ON ME BY ANY HOOK AND CROOK. THUS THE UNEXPLAINED INVESTMENT ARRIVED BY ASSESSING OFFICER IS UNWARRANTED AND UNCALLED FOR AND IS TO B E DELETED. PERUSAL OF ABOVE SUBMISSION SHOWS THAT THE A.O. HAS NOT EXAMINED THE CORRESPONDING WITHDRAWAL OF THE AFORESAID PAYMENT. RATHER THE OUTSTANDING EXPENDITURE SHOWN ON LABOUR HEAD WAS JUDGED IN TERM S OF RECEIVABLE OF THE RECEIPT. PERUSAL OF BALANCE SHEET SHOWS THE APPELLANT HAS NO OUTSTANDING RECEIVABLE OF ANY PAYMENT FROM THE AFORESAID CONTRACTOR BUT HE HAS IN VESTED FUNDS IN VARIOUS ITEMS. HAVING NO RECEIVABLE DOES NOT JUSTIFY THE CONCLUSIO N THAT ASSESSEE WILL NOT BE ABLE TO PAY, OR THIS LIABILITY TANTAMOUNT TO BE BOGUS IF TH ERE IS NO CORRESPONDING RECEIVABLE FROM THE SAME JOB, IS NOT CORRECT. WHAT WAS REQUIRE D IS THAT TO EXAMINE THE SOURCE OF PAYMENTS IN THE RESPECTIVE YEARS. THE A.A HAS NOT E XAMINED THE SOURCES OF PAYMENT OR PAYMENT, THEREFORE, ADDITION ON THIS ACCOUNT IS WITHOUT ANY FINDING MERELY ON CONJECTURE AND SURMISE. IT IS ALSO SEEN THAT THE A.O HAS ADDED RS. 55,00,00 0/- ON ACCOUNT OF BOGUS PURCHASE AS AGAINST WHICH THE APPELLANT HAS SHOWN SALE OF RS . 1,55,00,000/- NO OTHER PURCHASE HAS BEEN SHOWN AGAINST AFORESAID SALE. NOW COMING TO THE DISALLOWANCE OF RS. 55,16,719/- W HICH HAVE BEEN ADDED AS UNEXPLAINED CREDIT ON THE GROUND THAT RS. 55,16,719 /- WAS CLAIMED AS PURCHASE OF RAW MATERIAL FROM MR. AMALESH THAKUR BUT THE SAME W AS NOT PROVED. THE APPELLANT HAS ALREADY SUBMITTED BEFORE THE A.O THAT '1) IN RESPONSE OF YOUR SPECIFIC QUERY FOR SUPPLY O F MATERIALS, WE ARE BEING STATED, THAT HAS BEEN MISTAKENLY ENTERED IN OUR ACC OUNTS, NOW DELETED. 2) IN RESPONSE OF YOUR SPECIFIC QUERY FOR PURCHASE, IT IS OUR HUMBLE SUBMISSION, THAT PREVIOUSLY OUR ACCOUNTS MISTAKENLY INCLUDE 'SALE OF MATERIALS', SO UNDER MATCHING PRINCIPLE WE HAVE BOO KED 'PURCHASE'. THEREAFTER WHEN OUR ACCOUNTS ARE BEING RECTIFIED, S ALES OF MATERIALS ARE BEING DELETED, CORRESPONDINGLY PURCHASES OF RS. 55,16,719 .14 IS ALSO BEEN DELETED.' THOUGH THE APPELLANT AT LATER STAGE HAS SUBMITTED T HAT THE AFORESAID RECEIPT HAS BEEN SHOWN INADVERTENTLY AS A RECEIPT FROM SUPPLY SALE I S IN FACT, RECEIPT PERTAINING TO EARLIER YEARS OR IT IS A SECURITY DEPOSIT WHICH IS CAPITAL IN NATURE BUT FOR SAKE OF ARGUMENT IF SALE IS TAKEN AS TRUE THEN THERE CANNOT BE ANY SALE WITHOUT ANY PURCHASE AND SUPPLY OF MATERIAL CANNOT BE DENIED AS IT WAS S UPPLIED TO GOVERNMENT DEPARTMENT, THEREFORE, CORRESPONDING PURCHASE SHOUL D HAVE BEEN ALLOWED. ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 6 KEEPING IN VIEW OF THE AFORESAID FACT AT ASSESSMENT TIME ITSELF THE BOOKS OF ACCOUNTS OF THE APPELLANT SHOULD HAVE BEEN REJECTED AND ADDI TION SHOULD HAVE BEEN MADE. THEREFORE, KEEPING IN VIEW OF THE AFORESAID FACTS T HE ADDITION MADE ON ACCOUNT OF BOGUS EXPENSES IS NOT SUSTAINABLE. WHETHER REVISED AUDIT REPORT FILED BEFORE APPELLATE PROCEEDING IS ACCEPTABLE . FIRST OF ALL, IT IS TO DECIDE WHETHER REVISED AUDIT REPORT FILED BY ASSESSEE ON DURING PRESENT APPEAL PROCEEDINGS CAN BE ACCEPTED IN TERMS OF THE PROVISION OF THE INCOME TAX ACT. IN THIS REGARD, SECTION 44AB OF THE ACT IS RELEVANT WHICH PROVIDES THAT :- EVERY PERSON,- (A) CARRYING ON BUSINESS SHALL, IF HIS TOTAL SALES, TURNOVER OR GROSS RECEIPTS, AS THE CASE MAY BE, IN BUSINESS EXCEED OR EXCEEDS FORTY LA KH RUPEES IN ANY PREVIOUS YEAR [***]; OR (B) CARRYING ON PROFESSION SHALL, IF HIS GROSS RECE IPTS IN PROFESSION EXCEED TEN LAKH RUPEES IN ANY [PREVIOUS YEAR; OR (C) CARRYING ON THE BUSINESS SHALL, IF THE PROFITS AND GAINS FROM THE BUSINESS ARE DEEMED TO BE THE PROFITS AND GAINS OF SUCH PERSON U NDER 50A[SECTION 44AD OR SECTION 44AE OR SECTION 44ATJ [OR SECTION 44BB OR S ECTION 44BBB], AS THE CASE MAY BE, AND HE HAS CLAIMED HIS INCOME TO BE LOWER THAN THE PROFITS OR GAINS SO DEEMED TO BE THE PROFITS AND GAINS OF HIS BUSINESS, AS THE CA SE MAY BE, IN ANY 51A[PREVIOUS YEAR]] 52[***] THE FOLLOWING CLAUSE (D) SHALL BE INSERTED AFTER CL AUSE (C) OF SECTION 44AB BY THE FINANCE (NO. 2) ACT, 2009, W.E.F. 1-4-2011 : (D) CARRYING ON THE BUSINESS SHALL, IF THE PROFITS AND GAINS FROM THE BUSINESS ARE DEEMED TO BE THE PROFITS AND GAINS OF SUCH PERSON U NDER SECTION 44AD AND HE HAS CLAIMED SUCH INCOME TO BE LOWER THAN THE PROFITS AN D GAINS SO DEEMED TO BE THE PROFITS AND GAINS OF HIS BUSINESS AND HIS INCOME EX CEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX IN ANY PREVIO US GET HIS ACCOUNTS OF SUCH PREVIOUS YEAR [***J AUDITED BY AN ACCOUNTANT BEFORE THE SPECIFIED DATE AND [FURNISH BY] THAT DATE THE REPORT OF SUCH AUDIT IN THE PRESC RIBED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULA RS AS MAY BE PRESCRIBED: IN THE INSTANT CASE ASSESSEE HAD FILED THE TAX AUDI T REPORT AT THE TIME OF FILING OF THE RETURN U/S 139(1) OF THE ACT, BUT THAT AUDIT REPORT WAS NO INCOMPLETE AND ACCURATE AS IS EVIDENT FROM THE REVISED AUDIT REPORT. THE TAX A UDIT REPORT EITHER NOT FILED WITH THE RETURN AND FILED DURING THE COURSE OF ASSESSMENT PR OCEEDINGS CANNOT BE EVEN ACCEPTED AS HELD IN FOLLOWING CASE LAWS:- IN THE CASE OF COMMISSIONER OF INCOME-TAX V. JAIDEE P INDUSTRIES 180 ITR 81 HON'BLE PUNJAB & HARYANA HIGH COURT HAS HELD AS UNDER:- SECTION 80J(6A) CLEARLY LAYS DOWN THAT DEDUCTION CL AIMED SHALL NOT BE ADMISSIBLE UNLESS THE ASSESSEE ALSO FURNISHES ALONG WITH THE RETURN THE AUDIT REPORT IN PRESCRIBED FORM DULY SIGNED AND VERIFIED BY THE ACCOUNTANT. THERE COULD INDEED BE NO ESCAPE FROM THE CONCLUSION THAT THE REQUIREMENT OF THE AUDIT REPORT BEING FILED ALONG WITH THE RETURN OF I NCOME WAS MANDATORY. THUS/ THE TRIBUNAL ERRED IN HOLDING THAT AUDIT REPORT FIL ED DURING THE ASSESSMENT PROCEEDINGS COULD ALSO SATISFY THE REQUIREMENT OF T HE AFORESAID SECTION. IN THE INSTANT CASE, AUDIT REPORT THOUGH FILED WITH RETURN OF INCOME AS FILED U/S 139(1) OF THE ACT, BUT IT WAS NOT ACCURATE AND NOT BASED O N COMPLETE AND ACCURATE ACCOUNTS. THE FACTS ARE EVIDENT FROM THE REVISED ACCOUNTS AND TAX AUDIT REPORT WHICH PROVES THAT THERE IS LOT OF VARIATIONS IN THE FIGURES PROV IDED BY ASSESSEE HIMSELF. THIS IS THE CASE OF FILING OF REVISED ACCOUNTS AND REVISED TAX AUDIT REPORT AND NOT ACCEPTABLE BECAUSE IT IS NOT PERMISSIBLE UNDER THE INCOME TAX ACT UNDER ANY PROVISION. EVEN RETURN CANNOT BE REVISED BY ASSESSEE DURING ASSESSM ENT PROCEEDINGS. ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 7 IN THE CASE OF GOETZE (INDIA) LTD. V. COMMISSIONER OF INCOME-TAX (2006) 284 ITR 323 HON BLE SUPREME COURT HAS HELD AS UNDER:- SECTION 1] READ WITH SECTION 119(5) OF THE INCOME-T AX AC( 1961 - RETURN OF INCOME - GENERAL - ASSESSMENT YEAR 1995-96 - WHETHER AN ASSE SSEE CAN AMEND A RETURN FILED BY HIM FOR MAKING A CLAIM FOR DEDUCTION OTHER THAN BY FILING A REVISED RETURN - HELD, NO. THE FACTS OF ASSESSEE CASE ARE SIMILAR TO THE FACTS OF THE ABOVE CASE AS DECIDED BY HON'BLE SUPREME COURT. IN THE PRESENT CASE ALSO, AS SESSEE WANT TO REVISE HIS CLAIM OF DEDUCTION/ EXPENDITURE IN APPEAL PROCEEDINGS BY FILING THE REVISED PROFIT & LOSS AND REVISED AUDIT REPORT WHICH IS NOT PERMISSIBLE, HENC E REVISED ACCOUNTS OF ASSESSEE ARE NOT ACCEPTED. THE BOOKS OF ACCOUNTS OF THE APPELLANT ARE NOT RELI ABLE NOW COMING TO THE ADDITION OF RS RS. 1,88,53,753/-A S MADE BY ASSESSING OFFICER IN ASSESSMENT ORDER ON 30-12-2011, WITHOUT CONSIDERATI ON OF REVISED PROFIT & LOSS ACCOUNT AND REVISED TAX AUDIT REPORT THE DECISION I S TO BE TAKEN. IT IS UNDISPUTED FACT THAT THE APPELLANT IS CONTRACTOR/SUPPLIER TO THE GO VT. UNDER TAKING OF DURGAPUR STEEL PLANT AND HINDUSTAN STEELWORKS CONSTRUCTION LIMITED . ALL THE RECEIPTS SHOWN IN HIS PROFIT AND LOSS ACCOUNT ARE FROM THE AFORESAID UNDE R TAKINGS IN LIEU OF CONTRACTUAL JOB/SUPPLY OF MATERIAL BY THE APPELLANT. IT IS ALSO ACCEPTED THAT IN CONTRACTUAL BUSINESS THE PROFIT MARGIN IS NOT AROUND 67.37% AS IT HAS BE EN ASSESSED BY THE A.O. IT IS ALSO ESTABLISHED FROM ENQUIRY THAT RECEIPTS OF RS. 1,43, 45,490/- SHOWS FROM SUPPLY OF MATERIAL WAS INTACT RECEIPT FROM SECURITY DEPOSITS OR CONTRACTUAL RECEIPTS WHICH WERE SHOWN EITHER EARLIER YEAR OR WERE SUPPOSED TO BE SH OWN AS CAPITAL RECEIPT, ON RETURN OF SECURITY DEPOSITS. THE AFORESAID AMOUNT HAS BEEN INADVERTENTLY SHOWN AS A REVENUE RECEIPT IN THE PROFIT & LOSS ACCOUNT OF THE APPELLANT. THE CONFIRMATION OBTAINED FROM DURGAPUR STEEL PLANT AND HINDUSTAN ST EELWORKS CONSTRUCTION LIMITED CLEARLY SHOWS THAT THE AFORESAID RECEIPTS WERE PERT AINING TO CONTRACTUAL WORK OR SECURITY DEPOSITS. THE AFORESAID FACTS HAVE BEEN AC CEPTED BY THE A.O IN HIS REMAND REPORT TO THE EXTENT OF RS. 1,15,94,313/- AND REMAI NING AMOUNT OF RS. 27,51,177/- WAS CONFIRMED BY HINDUSTAN STEELWORKS CONSTRUCTION LIMITED AS REALIZE OF SECURITY DEPOSITS. THE ESTIMATED PROFIT & LOSS WHICH IS ON R ECORD IN THE ASSESSMENT FOLDER SHOWING ONLY CONTRACTUAL RECEIPT TO THE EXTENT OF R S. 1,33,80,987/- WITHOUT ANY SUPPLY SALE SHOWS THAT THERE IS FORCE IN THE APPELLANT'S S UBMISSION THAT HIS BALANCE SHEET AND INCOME WERE NOT PREPARED CORRECTLY. AS IT IS PROVED THAT THE APPELLANT WAS MISGUIDED BY THE CA AND THE CA DISCLOSED ALL THE BANK DEPOSITS AS A RECEIPT OF THE CURRENT YEAR WHEREAS THE FACT WAS THAT IT WAS CONTAINING THE DEPOSITS WHICH WERE EITHER SHOWN IN EARLIER YEARS AS INCOME OR THE SAME WERE CAPITAL RECEIPT AND THAT TO MATCH THE SAM E 'AUDITOR BOOKED EXPENSES IN THE NAME OF MR. AMALESH THAKUR WHICH WAS BOGUS. IT IS FURTHER EVIDENT FROM THE RECORD OF THE APPELL ANT THAT THE RECEIPT DECLARED IN THE LAST YEAR OF P&L A/C TO THE EXTENT OF RS. 50,00,000 /- DATED 31.03.2008 GOT INADVERTENTLY DECLARED IN THE SUBSEQUENT YEAR. THER EFORE, THERE IS FORCE IN THE SUBMISSION OF THE APPELLANT THAT EXPENSES WERE IN A DVERTENTLY DEBITED IN THE P&L A/C OF THE APPELLANT AT LEAST TO THAT EXTENT, THERE COU LD HAVE NOT BEEN ANY GENUINE EXPENSES, HENCE, FOR MATCHING PRINCIPAL TO NEUTRALI ZE THE ENTRY THE BOGUS CLAIM WAS MADE WITHOUT ANY BASIS. CONSIDERING THE CLAIM THAT THE RECEIPT THOUGH FROM EXPLAINED SOURCES BUT WAS INCORRECTLY DISCLOSED IN THE NEXT YEAR AND PURCHASE AND OTHER EXPENSES ENTRY WERE JUST FOR NEUTRALIZING THE SAME WHICH WAS MISTAKE OF THE REPRESENTATIVE, IT TANTAMOUNT BOGUS AND FALSE DEBIT. KEEPING IN VIEW THAT THE APP ELLANT IS WORKING AS CONTRACTOR WITH M/S. HINDUSTAN STEEL WORKS CONSTRUCTION LIMITE D AND MI5 DURGAPUR STEEL PLANT ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 8 WHICH ARE GOVERNMENT UNDER TAKING, THEREFORE, NO PA YMENT CAN BE MADE TO THE APPELLANT WITHOUT WORK, THEREFORE, KEEPING ASIDE TH E LABOUR ISSUE, WRONG SHOWING OF RECEIPT ETC. AND ALSO KEEPING IN VIEW THAT HIS BOOK S OF ACCOUNTS WERE NOT MAINTAINED PROPERLY, IT REQUIRES REJECTION AND ESTIMATION OF P ROFIT WHICH IS BASED ON VARIOUS JUDGMENT OF HON'BLE COURTS. THE RELIANCE FOR REJECTION OF BOOKS OF ACCOUNTS IS PLACED ON THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF AWADHESH PRATAP SINGH ABDUL REHMAN & BROS VIS. CIT 201 ITR 406(AII) 'IT IS DIFFICULT TO CATAL OGUE THE VARIOUS TYPES OF DEFECTS IN THE ACCOUNT BOOKS OF AN ASSESSEE WHICH MAY RENDER REJEC TION OF ACCOUNT BOOKS ON THE GROUND THAT THE ACCOUNTS ARE NOT COMPLETE OR CORREC T FROM WHICH THE CORRECT PROFIT CANNOT BE DEDUCED. WHETHER PRESENCE OR ABSENCE OF S TOCK REGISTER IS MATERIAL OR NOT, WOULD DEPEND UPON THE TYPE OF THE BUSINESS. IT IS T RUE THAT ABSENCE OF STOCK REGISTER OR CASH MEMOS IN A GIVEN SITUATION MAY NOT PER SE L EAD TO AN INFERENCE THAT ACCOUNTS ARE FALSE OR INCOMPLETE. HOWEVER, WHERE A STOCK REG ISTER, CASH MEMOS, ETC., COUPLED WITH OTHER FACTORS LIKE VOUCHERS IN SUPPORT OF THE EXPENSES AND PURCHASES MADE ARE NOT FORTHCOMING AND THE PROFITS ARE LOW, IT MAY GIV E RISE TO A LEGITIMATE INFERENCE THAT ALL IS NOT WELL WITH THE BOOKS AND THE SAME CANNOT BE RELIED UPON TO ASSESS THE INCOME, PROFITS OR GAINS OF AN ASSESSEE. IN SUCH A SITUATION THE AUTHORITIES WOULD BE JUSTIFIED TO REJECT THE ACCOUNT BOOKS UNDER SECTION 145(2) AND TO MAKE THE ASSESSMENT IN THE MANNER CONTEMPLATED IN THESE PROV ISIONS.' THE APPELLANT'S BOOKS DESERVES TO BE REJECTED. CONSIDERING THE AFORESAID FACTS THE APPELLANT'S BOO KS OF ACCOUNTS, DOCUMENTS TO BE REJECTED. AS REGARDS, THE CLAIM OF THE ASSESSMENT O F INCOME AT 8% U/S. 44AD IS CONCERNED THE SAME IS NOT ACCEPTED CONSIDERING THE DECISION MADE IN CASE OF M/S TEJA CONSTRUCTIONS VS. ASSISTANT COMMISSIONER OF IN COME TAX ITAT, HYDERABAD 'A' BENCH WHICH IS AS UNDER:- 'THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF BRIJ BHUSHAN LAL PARDUMAN KUMAR VS. CIT 1978 CTR (SC) 134 : (1978) 1 15 ITR 524 (SC) WHERE IT WAS HELD: 'REVERSING THE DECISION OF THE H IGH COURT, THAT SINCE IN SUBSTANCE AND IN REALITY THE MATERIALS SUPPLIED BY THE GOVERNMENT ALWAYS REMAINED THE PROPERTY OF THE GOVERNMENT AND THE ASS ESSEE MERELY HAD CUSTODY AND FIXED OR INCORPORATED THEM INTO THE WOR KS, THERE WAS NOT EVEN A THEORETICAL POSSIBILITY OF ANY ELEMENT OF PROFIT BE ING INVOLVED IN THE TURNOVER REPRESENTED BY THE COST OF SUCH MATERIALS. THOUGH, ORDINARILY, WHEN A WORKS CONTRACT WAS PUT THROUGH OR COMPLETED BY A CONTRACT OR, PROFIT FROM THE CONTRACT WAS DETERMINED ON THE VALUE OF THE CONTRACT AS A WH OLE AND NOT BY CONSIDERING THE SEVERAL ITEMS THAT WOULD GO TO FORM SUCH VALUE OF THE CONTRACT, WHERE, AS IN THIS CASE, MATERIALS WERE SU PPLIED AT FIXED RATES BY THE GOVERNMENT TO THE CONTRACTOR SOLELY FOR BEING USED, FIXED OR INCORPORATED IN THE WORKS ON THE TERMS THAT THEY WOULD REMAIN THE P ROPERTY OF THE GOVERNMENT AND ANY SURPLUS SHOULD BE RETURNED TO TH E GOVERNMENT, THE REAL TOTAL VALUE OF THE ENTIRE CONTRACT WOULD BE THE VAL UE MINUS THE COST OF SUCH MATERIALS SO SUPPLIED. SINCE NO ELEMENT OF PROFIT W AS INVOLVED IN THE TURNOVER REPRESENTED BY THE COST OF THE MATERIALS SUPPLIED B Y THE GOVERNMENT TO THE ASSESSEE, THE INCOME OR PROFITS DERIVED BY THE ASSE SSEE FROM SUCH CONTRACTS HAD TO BE DETERMINED ON THE BASIS OF THE VALUE OF T HE CONTRACTS REPRESENTED BY THE CASH PAYMENTS RECEIVED BY THE ASSESSEE FROM THE GOVERNMENT EXCLUSIVE OF THE COST OF THE MATERIALS RECEIVED FOR BEING USED, FIXED OR INCORPORATED III THE WORKS,' 'ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRES ENTATIVE SUBMITTED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE NOT RELIAB LE. THE ASSESSEE HAS NOT PRODUCED THE PROPER VOUCHERS AND BILLS IN SUPPORT O F THE CLAIM OF THE ASSESSEE, HENCE THE AO HAVING NO OPTION OTHER THAN MAKING AN ESTIMATION OF ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 9 INCOME AS SUCH, HE ESTIMATED THE INCOME OF THE ASSE SSEE. THE AO AFTER REJECTING THE BOOKS OF ACCOUNT MADE A REASONABLE ES TIMATE OF THE INCOME AT A REASONABLE PERCENTAGE OF GROSS RECEIPTS AT 10 PER C ENT. HOWEVER THE C!T(A) REDUCED THE SAME TO THE TUNE OF 9 PER CENT AND HE S UPPORTED THE ORDER OF THE C!T(A). WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. IN THE PRESENT CASE, THE AO REJECTED THE BOOKS OF ACCOUNT ON THE REASON THAT, THE ASSESSEE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNT AND ALSO FAILED TO PRODUCED VOUCHERS FOR VERIFICATION AND THE EXPENDIT URE CLAIMED BY THE ASSESSEE ARE NOT SUBSTANTIATED. THE ASSESSEE IN EAR LIER YEARS ALSO HAS NOT MAINTAINED THE PROPER BOOKS OF ACCOUNT. THE ASSESSE E'S PAST TRACK RECORDS SHOW THAT THE ASSESSEE HAS NEGLECTED THE PRESENTING OF THE BOOKS OF ACCOUNT IN ACCORDANCE WITH LAW. WHEN THE ASSESSEE CLAIMED A NY EXPENDITURE, IT IS MANDATORY ON THE PART OF THE ASSESSEE TO PRODUCE TH E BOOKS OF ACCOUNT SUPPORTED BY PROPER BILLS AND VOUCHERS. SINCE THE A SSESSEE HAS NOT PRODUCED THE PROPER BOOKS OF ACCOUNT, TRUE PROFITS OR LOSS C ANNOT BE DEDUCED FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE AO HAVING NO OTHER OPTION REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE INCOME AT 10 PER CENT OF GROSS RECEIPTS. BUT THE POSITION IS THAT, THE ASSESSEE IS CARRYING ON THREE KINDS OF CONTRACTS, AS IN EARLIER YEARS, I.E., (I) OWN CONTR ACTS, (II) CONTRACTS TAKEN FROM THE SUB-CONTRACTORS, (III) CONTRACTS GIVEN TO OTHER PARTIES ON SUB-CONTRACTS. THE ASSESSEE HAD A HIGHER RATE OF PROFIT ON THE CONTRAC TS EXECUTED BY THE ASSESSEE ITSELF. IN THESE CONTRACTS, THE ASSESSEE A GREED THAT HIS INCOME IS AT 9 PER CENT OF THE GROSS RECEIPTS. THUS, ACCORDINGLY THE AO IS DIRECTED TO ESTIMATE THE INCOME ON THE CONTRACTS EXECUTED BY TH E ASSESSEE'S OWN AT 9 PER CENT. IN CASE OF CONTRACTS TAKEN BY ASSESSEE ON SUBCONTRACT, THE INCOME TO BE ESTIMATED AT 8 PER CENT OF THE GROSS RECEIPTS . IN CASE OF CONTRACTS GIVEN BY THE ASSESSEE TO THE 3RD PARTY ON SUB-CONTRACT, I NCOME TO BE ESTIMATED AT 4 PER CENT. THIS IS, BECAUSE, WHEN THE ASSESSEE GIVES CONTRACT TO THE OTHER PARTIES ON SUB-CONTRACT, THE ASSESSEE CANNOT KEEP T HE SAME PERCENTAGE OF PROFIT AT 9 PER CENT, IT HAS TO FORGO CERTAIN PORTI ON OF PROFIT I.E., AROUND 5 PER CENT TO THE SUB-CONTRACTORS. SIMILAR POSITION IN TH E CASE OF CONTRACTS TAKEN BY ASSESSEE ON SUB-CONTRACT FROM OTHER PARTIES. FURTHE R, THE ASSESSEE IS ENTITLED FOR DEPRECIATION AND REMUNERATION, AND INTERESTS TO PARTNERS ON THE PROFIT ESTIMATED BY AO AT APPLICABLE RATES, BECAUSE THE IN COME ESTIMATED AS ABOVE OF THE ASSESSEE IS BEFORE THE DEPRECIATION AND INTE REST AND REMUNERATION OF THE PARTNERS. ACCORDINGLY, WE DIRECT THE AO TO COMP UTE THE INCOME OF THE ASSESSEE AFRESH. ACCORDINGLY, THIS GROUND OF THE AS SESSEE APPEAL IS PARTLY ALLOWED.' THE AFORESAID JUDGMENT WAS FOLLOWED IN CASE OF INCO ME TAX APPELLATE TRIBUNAL- HYDERABAD M/S BALAJI CONSTRUCTIONS, .... VS DEPARTM ENT OF INCOME TAX, ITA NO. 1349/HYD/2012, A.Y. 2009-10 WHEREIN IT WAS HELD THA T IN CASE OF M/S. TEJA CONSTRUCTIONS V/S ACIT (SUPRA), THE CO-ORDINATE BEN CH OF INCOME-TAX APPELLATE TRIBUNAL HAD DIRECTED TO ESTIMATE THE PROFIT IN CAS E OF MAIN CONTRACTOR AT 9% IN CASE OF WORK EXECUTED ON SUB-CONTRACT BASIS AT 8% AND ON SUB-CONTRACT GIVEN TO THIRD PARTY AT THE RATE OF 5%. THE SAME PRINCIPLE WAS AGA IN REITERATED BY THE CO-ORDINATE BENCH IN CASE OF ACIT V/S. M/S. TEJA CONSTRUCTIONS (ITA NO. 1191/HYD/2011 DATED 17.02.2012 WHEREIN THE INCOME-TAX APPELLATE TRIBUNA L HELD IN THE FOLLOWING MANNER:- BALAJI CONSTRUCTION, KADAPA. 'HOWEVER, THE ISSUE IS COVERED BY THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR THE EARLIER YEAR. FOR THAT YEAR THE INCOME-TAX APPELLATE TRIBUNAL HAS ESTIMATED THE PRO FITS OF THE ASSESSEE@ 9% ON OWN CONTRACT WORKS, 8% ON CONTRACTS TAKEN BY THE ASSESSEE ON SUBCONTRACTS AND @ 5% ON CONTRACTS GIVEN BY THE ASS ESSEE TO 3RD PARTY ON SUB-CONTRACTS.' ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 10 CONSIDERING THE AFORESAID JUDGMENT AND KEEPING IN V IEW OF THE FACT THAT APPELLANT FAILED TO ESTABLISH THAT HE WAS ENGAGED ANY KIND OF MATERIAL SUPPLY OR IN SUB- CONTRACTEE JOB, HE IS TREATED AS A CONTRACTOR ONLY, BECAUSE DIRECT PAYMENT HAS BEEN RECEIVED BY THE APPELLANT AND SERVICE HAS BEEN REND ERED DIRECTLY TO THE CONTRACTEE. NO COGNIZANCE OF HIS REVISED BALANCE SHEET IS TAKEN AS DISCUSSED ABOVE. THOUGH THE SOURCE OF THE RECEIPT CLAIMED FROM SALE SUPPLY ARE EXPLAINED BUT THE APPELLANT HIMSELF HAS SHOWN AS A RECEIPT IN HIS ORIGINAL PROFIT & LOS S ACCOUNT. THE SUBMISSION OF APPELLANT SHOWS THAT THE APPELLANT HAS WITHDRAWN C ASH OF RS.19,765808/- FROM SBI, RS.8410000/- CENTURIAN BANK OF PUNJAB AND RS.400000 FROM VIJAY BANK TOTALLING AT RS.24606808/- WHICH HAS BEEN CLAIMED FOR PAYMENT AG AINST EXPENSES. IT SHOWS THAT THE APPELLANT HAD CONTRACTUAL ACIVITY MORE THAN WHA T HE HAS SHOWN IN HIS REVISED BALANCE SHEET. THE AFORESAID EXPENDITURE MADE IN CA SH APART FORM OTHER PAYMENT JUSTIFIES THE ACTIVITY SHOWN IN ORIGINAL PROFIT & L OSS ACCOUNT. THEREFORE, ENTIRE RECEIPT EXCEPT UNEXPLAINED CASH DEPOSIT OF R.8,25,000/- WHI CH HAS BEEN ADDED SEPARATELY IS TAKEN ON RECEIPT. THEREFORE 9% OF GROSS PROFIT IS A PPLIED OVER THE GROSS RECEIPT OF THE APPELLANT AND HIS INCOME IS WORKED OUT AS UNDER: GROSS RECEIPT RS.2,89,49,740/-(-) RS.825000 = RS.2 8124740/- AT THE APPLICABILITY OF THE 9% ON RS.28124740/- = RS.25,31,226/- IS INCOME FROM THE CONTRACTEE BUSINESS. THE AO IS DIRECTED TO RECOMPUTED THE INCOME AND GIVE CREDIT TO THE AFORESAID DECISION. AS THE APPELLANT FAILED TO GIVE PLAUSIBLE EXPLANATI ON FOR INCORRECT/INACCURATE BOOKS OF ACCOUNT AND INCOMPLETE AUDIT REPORT FURNISHED ALONG WITH RETURN OF INCOME. WHICH IS EQUIVALENT OF NOT GETTING / NOT FURNISHING THE BOOK S OF AUDIT REPORT. HENCE, ASSESSEE IS ALSO LIABLE FOR PENAL ACTION UNDER SECTION 71B OF T HE ACT. (J) NEXT GROUND RELATES TO THE PAYMENT MADE IN EXCE SS OF RS.20,000/- BY ASSESSEE OTHERWISE THAN BY CROSSED ACCOUNT PAYEE CHEQUES/DDS VIOLATING THE PROVISIONS OF SECTION 40A(3) OF THE IT ACT, 1961. IN THIS REGARD IT IS SETTLED LAW THAT ONCE THE BOOK S HAS BEEN REJECTED THEN NOT OTHER ADDITION CAN BE MADE TO THE INCOME OF ASSESSEE. SIM ILAR VIEW HAS BEEN TAKEN BY THE SPECIAL BENCH (KOLKATA) OF THIS TRIBUNAL IN THE CAS E OF ITO VS. KENARAM SANA & SUBHASH SAHA (2008) 116 TTJ (KOL) (SB) 289; (2008) 8 DTR (KOL)(SB)(TRIB) 124: (2008) 301 ITR 171 (KOL)(SB)(AT, WHEREIN DISALLOWAN CE MADE IN TERMS OF S. 40A(3) HAS BEEN DELETED. RESPECTFULLY FOLLOWING THE DECISI ON OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF INIDWELL CONSTRUCTION (SUPRA), BESID ES THE SPECIAL BENCH DECISION OF THIS TRIBUNAL NOTED ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE INCOME OF THE ASSESSEE HAVING BEEN DETERMINED BY RESORTING TO EST IMATION, THERE IS NO SCOPE FOR ANY FURTHER DISALLOWANCE EITHER IN TERMS OF S. 40(A )(IA)/40A(3) OR OTHERWISE. (K) NEXT GROUND OF APPEAL RELATES TO THE ADDITION OF RS. 8,25,000/- MADE BY THE AO ON UNSUSTAINABLE EXPLANATION THAT 'CASH RECEIVED FR OM SUPPLY OF MATERIALS & DEPOSITED AT BANK. BEFORE THE AO APPELLANT FAILED T O EXPLAIN AS WHY THE CASH SALES WAS NOT ENTERED IN THE CASH BOOK. DURING THE APPEAL PROCEEDING IT WAS CLAIMED AS CASH SALE PROCEED BUT THE SAME COULD NOT BE CONFIRMED BY THE RESPECTIVE PAYERS. TH E APPELLANT FURTHER CLAIMED THAT THE ABOVE CASH DEPOSIT WAS MADE IN ORDER TO CLEAR T HE ISSUED CHEQUE,S .THE DEPOSIT WAS CLAIMED TO BE MADE ON DATED 17.10.2008, 02.02.2 009 AND 23.02.2009 AND THE SAME HAS ALSO BEEN MADE PART OF RECEIPT OF SALES SU PPLY TO THE TUNE OF RS. 1,55,68,735/-. AS THE APPELLANT COULD NOT SUBMIT TH E CORRESPONDING DEPOSIT AND WITHDRAWALS AND NO EVIDENCE WAS SUBMITTED IN THIS R EGARD,. THE APPELLANT TOOK VARIOUS PLEAS IN THIS REGARD WHICH HE COULD NOT SUB STANTIATE .THEREFORE, AFORESAID OF RS. 825,000/- COULD NOT BE EXPLAINED WHICH HAS BEEN ADDED BY THE A.O U/S. 68, HENCE, THE SAME IS CONFIRMED. ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 11 ALL THESE LEAVES BOTH THE PARTIES AGGRIEVED TO THE EXTENT OF THEIR ABOVE RESPECTIVE PLEADINGS. 8. WE FIND THAT SOME KEY FACTS TO BE EMERGING FORM INSTANT CROSS APPEAL. FIRST AND FOREMOST ASPECT BEFORE US IS THAT OF THE TAXPAYERS GROSS RECEIPT VIS- -VIS THE RELEVANT CONTRACT BUSINESS. THE REVENUE F AILS TO DISPUTE A VERY CLINCHING FINDING DULY ACCEPTED IN ASSESSING OFFICE RS REMAND REPORT INDICATING CORRESPONDENCE WITH THE TAXPAYER DATED 18.04.2016 D URING REMAND PROCEEDINGS THAT HE HAD DULY ACCEPTED AN AMOUNT OF 133,80,987/- TO BE REPRESENTING CONTRACTUAL RECEIPTS DERIVED FROM THE PAYEE M/S STEEL AUTHORITY OF INDIA LTD. THE RELEVANT TRACES FORM 26AS TO THIS EFFECT IS AT PAGE 1 OF THE PAPER BOOK. THE ASSESSEES CONTRACT RECEIPTS TO THI S EXTENT CAN THEREFORE NOT BE DISPUTED. 9. MR. DASGUPTA VEHEMENTLY ARGUES AT THIS POINT OF TIME THAT THE ASSESSING OFFICER HAD RIGHTLY MADE ALL FOUR DISALLOWANCES / A DDITIONS(S) (SUPRA) WHICH HAVE BEEN WRONGLY DELETED IN LOWER APPELLATE PROCEE DINGS. HE ACCUSES THAT THE ASSESSEE OF HAVING ADOPTED BLATANTLY FALSE PLEA S OF COMPUTER SNAG AND THEREAFTER FILING SELF CONTRADICTORY BOOKS ON EACH OCCASION IN VARIOUS LOWER APPELLATE PROCEEDINGS. WE FIND NO SUBSTANCE IN THE INSTANT ARGUMENTS MORE PARTICULARLY IN VIEW OF THE FACT THAT FORM 26AS AVA ILABLE IN DEPARTMENTS WEBSITE ITSELF RECORDS CORRESPONDING BUSINESS RECEI PT OF 133,80,987/- (SUPRA). THE REVENUE FURTHER RELIANCE ON GOETZE (IN DIA) LTD CASE LAW (SUPRA) IS ALSO REJECTED AS THEIR LORDSHIP MAKE IT CLEAR THAT THE SAME NOWHERE IMPINGES APPELLATE AUTHORITIES JURISDICTION TO ENTE RTAIN A NEW CLAIM IN ABSENCE OF REVISED RETURN. 10. NEXT ISSUE BETWEEN THE PARTIES IS ABOUT ASSESSE ES BOOKS OF ACCOUNTS HAVING BEEN REJECTED IN THE CIT(A)S ORDER RESULTIN G IN GROSS PROFIT ESTIMATION @ 9%. THE FACT REMAINS THAT INSTANT TAXPAYER PROVED ONLY THE CONTRACTUAL RECEIPT INCOME WITHOUT CORRESPONDING EXPENDITURE RI GHT FROM SCRUTINY TO THE CIT(A)S SECOND LOWER APPELLATE ORDER UNDER CHALLEN GE. THIS FORMS THE PRECISE REASON FOR THE LEARNED LOWER APPELLATE AUTHORITY TO REJECT THE RELEVANT BOOKS OF ACCOUNT AS PER VARIOUS JUDICIAL PRECEDENT. LEARNED DEPARTMENTAL ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 12 REPRESENTATIVE FAILS TO DISPUTE THAT ASSESSEES ENT IRE CONTRACTUAL RECEIPTS COULD NOT BE TREATED AS HIS INCOME IN THESE FACT AN D CIRCUMSTANCES. HIS CORRESPONDING EXPENDITURE HAS ADMITTEDLY NOT BEEN P ROVED. WE THEREFORE FIND NO FAULT IN THE CIT(A)S ACTION REJECTING ASSESSEE S BOOKS. 11. NEXT COMES THE EQUALLY SIGNIFICANT ASPECTS OF T HE RATE OF GROSS PROFIT ESTIMATION. THE CIT(A) HAS TAKEN 9% WITHOUT EVEN CO NSIDERING THE CORRESPONDING PROFIT RATE IN PRECEDING OR SUCCEEDIN G ASSESSMENT YEAR DESPITE THE FACT THAT THE ASSESSEE HAS BEEN CARRYING OUT HI S CONTRACT BUSINESS AS A GOING CONCERN. WE THUS REDUCE THE IMPUGNED GROSS PR OFIT ESTIMATION FROM 9 TO 8% BEING BROADLY GUIDED BY SECTION 44AD OF THE ACT WITH A CLEAR-CUT RIDER THAT SAME SHALL NOT BE TAKEN AS PRECEDENT IN ANY OTHER C ASE. 12. THE REVENUES REMAINING GROUNDS SEEK TO REVIVE LABOUR CHARGES, EXPENDITURE CLAIM SECTION 40A(3) DISALLOWANCE (SUPR A) NO MORE CARRY MERIT AS THE ABOVE REJECTION OF BOOKS FOLLOWED BY GROSS PROF IT ESTIMATION TAKES CARE OF ALL OTHER ASPECTS AS PER CIT VS. BANAWRI LAL BANSHI DHAR (1998) 229 ITR 229 (ALL). THE REVENUES APPEAL ITA NO.1810/KOL/2016 FA ILS. 13. THE ASSESSEES NEXT ENDEAVOUR IN HIS APPEAL IS TO REDUCE HIS REVENUE RECEIPTS TO THE EXTENT OF 155,68,733/-. HE TAKES US TO PAGE 10 OF THE PAPER BOOK INDICATING THE FOLLOWING COMPONENT THEREIN:- DATE NAME OF CLIENTS PAYMENT SOURCE CHEQUE NO. NET CREDIT IN BANK ACCOUNT REMARKS 02.04.08 SAIL DSP BILL AMOUNT RECEIVED FROM DSP FY 2007-08 433256 8,252,700.00 CHEQUE ISSUED ON 31.03.08 TDS DEDUCTED IN FINANCIAL YEAR 07-08 05.04.08 HSCL SECURITY DEPOSIT (SDBG) AMOUNT RELEASED BY HSCL 31074 770,227.00 PART RELEASE OF SECURITY DEPOSIT (SDBG) 09.07.08 SAIL DSP REFUND OF HOLD AMOUNT BY DSP FOR THE FY 2007- 08 437577 227,290.00 REFUND BY DSP, TDS DEDUCTED IN FY 07-08 02.08.08 SAIL DSP SECURITY DEPOSIT (SDBG) RELEASED BY SAIL DSP 438902 114,323.00 SDBG. RELEASED BY DSP 17.10.08 LOAN CENTURION BANK CASH DRAWN RS.500000/- & CASH DEPOSITED RS.400000/- TO HONOUR THE CLEARING OF POST DATED CHEQUE ISSUED TO MR. DINESH ELECTRICALS & RS.100000/- PAID TO OUR STAFF PAYMENT 400,000.00 CASH DRAWN RS.5.00 LAKH ON 16.10.08 FROM CENTURIAN BANK A/C NO.198(OD) IT IS AGAINST RS.825000/- CASH CREDIT 12.11.08 HSCL SECURITY DEPOSIT 1,980,950.00 HOLD AMO UNT ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 13 (SDBG) & HOLD AMOUNT RELEASED BY HSCL RELEASED ON 12.11.08 AGAINST WHICH TDS DEDT. IN FY 07-08 & GROSS AMOUNT OF TURNOVER SHOWN IN FY 07-08 20.12.08 HSCL HOLD AMOUNT RELEASED BY HSCL 409735 3,000,000.00 TDS DEDUCTED FY 07-08 & GROSS AMOUNT OF TURNOVER WAS SHOWN IN 07-08 02.02.09 LOAN VIJAYA BANK CASH DRAWN RS.500000/- & CASH DEPOSITED RS.400000/- TO HONOUR THE CLEARING OF POST DATED CHEQUE ISSUED TO BURNWAL STORE & R.100000/- PAID TO OUR STAFF PAYMENT 4000,000.00 WITHDRAWN FORM VIJAYA BANK ACCOUNT NO.264 DT. 27.01.09 RS.500,000.00 IT IS AGAINST RS.825000/- CASH CREDIT 03.02.09 WB GOVT. REFUND OF SALES TAX CREDIT BY LOCUP 123,984.00 REFUND FROM SALES TAX CHEQUE NO. 178357, DATED 21.01.2009 23.03.09 CASH DRQWN RS.20000/- & CASH DEPOSITED RS.25000/- THE SHORTFALL RS.5000/- WAS FROM OUT POCKET 25,000.00 WITHDRAWN FROM ICICI BANK AC. NO.262 ACCOUNT IT IS AGAINST RS.825000/- CASH CREDIT. GRAMD TOTAL 15,294,484.00 THIS IS FOLLOWED BY SUPPORTIVE PAYMENT VOUCHERS, LE TTERS AND INVOICES ETC. FORMING PART OF LOWER AUTHORITIES RECORD. THE ASSES SING OFFICERS REMAND REPORT EXTRACTED IN PAGE 35 OF THE LOWER APPELLATE ORDER DULY ACCEPTED ASSESSEES EXPLANATION TO THE EXTENT 115,94,313/-. WE DO NOT SEE ANY MERIT THEREFORE IN THE CIT(A)S APPELLATE ACTION ONCE AGA IN INCLUDING THE VERY SUM TO BE PART OF IMPUGNED ASSESSMENT YEARS TURNOVER IN T HE NATURE OF REVENUE RECEIPTS INCLUDED FOR GROSS PROFIT ESTIMATION. WE T HEREFORE DIRECT EXCLUSION OF THIS AMOUNT OF 1,15,94,313/- AT LEAST FROM ASSESSEES TURNOVER AT THIS STAGE. 14. NEXT COMES THE REMAINING COMPONENT OF 39,74,440/-. WE FIND THAT THE RELEVANT FACTUAL POSITION IS NO DIFFERENT IN CASE O F M/S HSCLS OTHER SUMS OF 7,70,227/- AND 19,80,950/- AS WELL AS TAX REFUND CREDITS OF 1,23,984/- TOTALING TO 26,75,161/- INVOLVING THE VERY KIND OF CREDITS WHIC H COULD NOT HAVE BEEN TAKEN AS PART OF THE RELEVANT TURNOVER SINCE N OT IN THE NATURE OF BUSINESS RECEIPTS PERTAINING TO THE RELEVANT PREVIOUS YEAR. WE MAKE IT CLEAR THAT PAYEES CONCERNED HAVE DULY SUPPORTED THE TAXPAYERS CASE T O THIS EFFECT IN REMAND PROCEEDINGS THAT THESE SUMS ARE NOT HIS BUSINESS RE CEIPTS. THE SAID PAYERS HAVE ALSO NOT DEDUCTED THE MANDATORY TDS U/S. 194C OF THE ACT WHEREVER ITA NO.1810/KOL/16 & 422/OL/2017 A.Y. 2009-10 ACIT CIR-1 DGP VS. SH RAKESH KR. CHOWDHUR Y PAGE 14 APPLICABLE. WE THUS ACCEPT ASSESSEES PLEADINGS QUA THE INSTANT SUM OF 28,75,161/- HEREINABOVE. 15. THIS LEAVES US WITH THE REMAINING AMOUNT OF CAS H DEPOSITS OF 8,25,000/-. IT HAS COME ON RECORD THAT THIS ASSESSE E DERIVES NO OTHER INCOME APART FROM THE ABOVE CONTRACT BUSINESS HEREINABOVE. THE SAME SUFFICIENTLY INDICATES THAT CASH DEPOSITS ARE HIS CASH SALES TO BE ASSESSED @ 8% IN TUNE WITH OUR FOREGOING DISCUSSION. THE ASSESSING OFFICE R IS ACCORDINGLY DIRECTED TO ASSESS 8% GROSS PROFIT THEREUPON AS PER LAW. THE TA XPAYERS CROSS APPEAL ITA NO. 422/KOL/2017 IS PARTLY ACCEPTED. 15. THIS REVENUES APPEAL ITA NO.1810/KOL/2016 IS D ISMISSED AND ASSESSEES CROSS APPEAL ITA NO.422/KOL/2017 IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 31/08/2018 SD/- SD/- ( ) (( ) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S )- 31 / 08 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-SHRI RAKESH KR. CHOWDHURY, C-6/6, ALLAUDI N KHAN BITHI, CITY CENTRE, DURGAPUR- 713216 2. /REVENUE-ACIT, CIR-1, AAYAKAR BHAWAN, CITY CENTRE, DURGAPUR-713216 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. 8 ((4, 4, / DR, ITAT, KOLKATA 6. = / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 4,