SHRI ASHOK KUMAR SARASWAT, Jaipur V. ITO, Sikar

ITA 466/JPR/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87543 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Onus to prove
• Section: 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 466/JP/2011 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2004-05 SHRI ASHOK KUMAR SARASWAT, CONTRACTOR, S/O- SHRI RAM GOPAL, FATEHPUR SHEKHAWATI, SIKAR. CUKE VS. THE I.T.O., WARD-2, SIKAR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AISPS 2012 V VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL JKTLO DH VKSJ LS @ REVENUE BY : SHRI AJAY MALIK. LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 01/12/2014 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 13/02/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 01/02/2011 PASSED BY THE LEARNED CIT (A)-III, JAIPU R FOR A.Y. 2004-05. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1 THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 20,88,524/- MADE BY THE A.O. BY TREATING THE LOAN AND CREDITORS APPEARI NG IN THE BALANCE SHEET AS UNEXPLAINED INCOME OF THE ASSESSEE. HE HAS FURTHER ERRED IN CONFIRMING THE ITA 466/JP/2011_ ASHOK KR. SARASWAT VS. ITO 2 ADDITION ON THE BASIS OF BALANCE SHEET WHEN THE SAME HAS ALREADY BEEN HELD TO BE UNREAL. 2 THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ABOVE ADDITION IGNORING THAT THE A.O . HAS NOT FOLLOWED THE DIRECTION OF HONBLE ITAT IN CORRECT PERSPECTIVE. 3 THE ASSESSEE CRAVES TO AMEND, ALTER AND MODIFY ANY OF THE GROUNDS OF APPEAL. 4 THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 2. THE FIRST GROUND OF APPEAL IS AGAINST THE ADDITIO N CONFIRMED BY THE LEARNED CIT(A) AT RS. 20,88,524/- U/S 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). IN THIS CAS E, ORIGINAL ASSESSMENT WAS COMPLETED ON 30 TH NOVEMBER, 2006 AT TOTAL INCOME OF RS. 33,62,835/-, IN WHICH, ADDITION ON ACCOUNT OF LOAN A ND CREDITORS AT RS. 20,88,524/- WAS MADE BY THE ASSESSING OFFICER, WHICH WAS CHALLENGED BY THE ASSESSEE BEFORE THE LEARNED CIT(A), WHO HAD DELETED THE ADDITION IN FIRST ASSESSMENT, WHICH WAS CHALLENGED BY THE REVNEUE BEFORE THE HONBLE ITAT. THE HONBLE ITAT VIDE ITS ORD ER IN ITA NO. 950/JP/2008 DATED 19/09/2008 HAD SET ASIDE TO THE F ILE OF ASSESSING OFFICER ON ADDITION OF RS. 20,80,524/- ON THE GROUN D THAT THE LEARNED CIT(A) HAD FAILED TO UPHOLD AN OPPORTUNITY TO THE AS SESSING OFFICER AS REQUIRED UNDER RULE 46A OF INCOME TAX RULES, 1962 (I N SHORT THE RULES) TO COMMENT UPON THOSE DOCUMENTS AND EXPLANATION MAD E BY THE ITA 466/JP/2011_ ASHOK KR. SARASWAT VS. ITO 3 ASSESSEE BEFORE THE LEARNED CIT(A) WHEREAS THE ASSES SEE HAD NOT PRODUCED ANY EVIDENCE BEFORE THE ASSESSING OFFICER. IN COMPLIANCE TO ABOVE DIRECTION, THE LEARNED ASSESSING OFFICER AGAI N ISSUED NOTICE OF HEARING TO THE ASSESSEE. THE ASSESSEE WAS ASKED TO P RODUCE THE BOOKS OF ACCOUNT/DOCUMENTS IN SUPPORT OF GENUINENESS OF L OAN AND CREDITORS OF RS. 20,88,524/-. HE WAS ALSO REQUESTED BY THE ASS ESSING OFFICER TO FURNISH THE LIST OF CREDITORS ALONGWITH COMPLETE ADD RESS THEREOF AND CONFIRMATION, MENTION MODE OF RECEIPT OF SUCH AMOUN T BY SPECIFYING THE CHEQUE/DD NUMBER ALONGWITH BANK AND BRANCH AND ALSO PRODUCE SUPPORTING PAPERS BY BALANCE SHEET/CAPITAL ACCOUNT/ STATEMENT OF AFFAIRS, RELEVANT BANK PASS BOOK ETC. OF THE LOANEE TO EVIDENCE SOURCES OF SUCH FUNDS IN THE HANDS OF LOANEE FOR ADVANCEMEN T OF LOAN. IN RESPONSE TO THIS NOTICE, THE ASSESSEE FILED WRITTEN REPLY AND PRODUCED PHOTO COPY OF AFFIDAVITS OF CREDITORS AND SIMPLY FU RNISHED A LIST OF LOANS AND CREDITORS WITHOUT ANY DOCUMENTARY EVIDENCE REGAR DING THEIR GENUINENESS. THE ASSESSEE HAD ALSO NOT PRODUCED COM PLETE BOOKS OF ACCOUNTS BEFORE HIM. HE HAD ALSO NOT PRODUCED ANY D OCUMENTARY EVIDENCE IN SUPPORT OF GENUINENESS OF LOAN AND CRED ITORS IN SPITE OF SPECIFIC REQUIREMENT VIDE LETTER DATED 17/09/2009. DURING THE ASSESSMENT PROCEEDINGS, STATEMENT ON OATH RECORDED OF FOUR PERSONS ITA 466/JP/2011_ ASHOK KR. SARASWAT VS. ITO 4 NAMELY SHRI SHYAM BIHARI SHARMA, SHRI SUDARSHAN KUM AR SHARMA, SHRI DEVKI NANDAN SHARMA AND SHRI SUNIL KUMAR SHARMA. OU T OF FOUR PERSONS, THREE PERSONS ARE YOUNGER BROTHERS OF THE ASSESSEE. THE LEARNED ASSESSING OFFICER REPRODUCED THE GIST OF ST ATEMENT ON PAGE NOS. 3-4 OF ASSESSMENT ORDER. THE REMAINING CREDITOR S WERE NOT PRODUCED BY THE APPELLANT FOR VERIFICATION. NO EVID ENCE TO SATISFY THE GENUINENESS OF LAND AND BOOKS OF ACCOUNT WERE PRODUC ED, THEREFORE, HE AGAIN DECIDED THAT THESE LOANS AND CREDITORS AMOUNT ING TO RS. 20,88,524/- SHOWN IN THE BALANCE SHEET REMAINED UNE XPLAINED AND SAME WERE ADDED IN THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A ), WHO HAD DISMISSED THE APPEAL BY OBSERVING THAT FOUR CREDITO RS WERE PRODUCED BEFORE THE ASSESSING OFFICER, HAD NO CAPACITY TO AD VANCE THE MONEY. THEREFORE, THE CONCLUSION OF THE ASSESSING OFFICER WA S RIGHT TO ADD BACK THE CREDITORS IN THE INCOME OF THE ASSESSEE. DURING THE ASSESSMENT/APPELLANT PROCEEDINGS, IT WAS CLAIMED BY THE APPELLANT THAT THESE CREDITORS WERE IN FORM OF LOAN BUT THE APPELLA NT PURCHASED THE MATERIAL AND TAKEN SERVICES FROM THEM. THE DETAILED LIST HAD BEEN FURNISHED BEFORE THE ASSESSING OFFICER ALONGWITH AFF IDAVITS. THE ITA 466/JP/2011_ ASHOK KR. SARASWAT VS. ITO 5 CREDITORS HAVE ADMITTED IN AFFIDAVIT THAT THEY HAVE RECEIVED THE OUTSTANDING IN SUBSEQUENT YEAR. THE LEARNED ASSESSIN G OFFICER DID NOT ASK ANY QUESTION REGARDING REPAYMENT OF OUTSTANDING . THERE IS NO NEED IN CASE OF MATERIAL AND SERVICES PROVIDED TO PROVE THE CREDITWORTHINESS OF THE DEPOSITORS. THE REMAINING CREDITORS WERE NOT IN TOUCH WITH THE ASSESSEE AND LEFT THE NATIVE PLACE IN SEARCH OF EMP LOYMENT. THE MAIN CONTRACTOR M/S AGARWAL CONSTRUCTION HAD NOT PAID THE OUTSTANDING TO THE APPELLANT, THEREFORE, HE COULD NOT MAKE THE PAY MENT OF OUTSTANDING ON ACCOUNT OF MATERIAL AND SERVICES RENDERED BY THE M. THE BOOKS OF ACCOUNTS COULD NOT BE PRODUCED BECAUSE THERE WAS A D ISPUTE WITH THE MUNIM SHRI VIKASH KUMAR, WHATEVER INCOME DISCLOSED I N THE RETURN, THE LEARNED CIT(A) HAD ACCEPTED THE INCOME FROM IT AS I NCOME FROM OTHER SOURCES. THE ASSESSEE ALSO RELIED BEFORE THE ASSESSI NG OFFICER THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CAS E OF CIT VS. PANCHAM DAS JAIN 205 CTR 444. AFTER CONSIDERING THE ASSESSEES REPLY, THE LEARNED CIT(A) HELD THAT THE APPELLANT HAD SHOWN THESE PARTIES AS DEPOSITORS, WHICH WERE RELATED TO MATERIAL AND SERVI CES SUPPLIED AND ALSO FURNISHED THE AFFIDAVITS BUT THE ASSESSEES AR GUMENT THAT THESE DEPOSITS ARE GENUINE BUT THE INCOME FROM THE OTHER SOURCES CANNOT BE HELD JUSTIFIED. THE ONUS ON THE ASSESSEE TO PROVE T HAT THESE ARE ITA 466/JP/2011_ ASHOK KR. SARASWAT VS. ITO 6 GENUINE EXPENDITURE. THE ASSESSEES CLAIM THAT THESE DEPOSITS ARE AGAINST THE MATERIAL SUPPLIED AND SERVICES RENDERED ARE NOT VERIFIABLE AS NO BOOKS OF ACCOUNT WERE PRODUCED EITHER IN ORIGINAL PROCEEDING OR IN REMAND PROCEEDING. THERE IS NO EVIDENCE WITH THE ASSE SSEE FOR NOT PRODUCING THE BOOKS OF ACCOUNT THAT THERE WAS A DISP UTE BETWEEN MUNIM, ACCOUNTANT AND ASSESSEE IN FORM OF POLICE CO MPLAINT. THE DEPOSITS HAVE NO CAPACITY TO ADVANCE OR PROVIDE ANY GOODS OR SERVICE TO THE APPELLANT. THE DEPOSITORS ARE LABOUR CLASS AND E ARNING BETWEEN 10,000/- TO 60,000/-. THE LABOURERS CANNOT ADVANCE T O THAT EXTENT MONEY OR GOODS ON CREDIT IN LIMITED SOURCE OF INCOM E. ALL THE INCOME HAS BEEN SHOWN AS DEPOSITED WITH THE ASSESSEE AND NO AMOUNT TO LOOK AFTER THE FAMILY OF THE DEPOSITS WITH THEM. THEY ALSO ARE CASUAL LABOURERS. SMT. KRISHNA DEVI AND SMT. USHA DEVI HAD NOT PRODUCED FOR VERIFICATION AT THE TIME OF REASSESSMENT PROCEEDING S. THERE IS ALSO NOT EVIDENCE THAT THESE LABOURERS HAVE GONE TO FOREIGN COUNTRY. ACCORDINGLY, HE DID NOT FIND ANY REASON TO INTERVEN E IN THE ORDER OF ASSESSING OFFICER. THE APPEAL OF THE ASSESSEE WAS REJ ECTED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARN ED AR FOR THE ASSESSEE SUBMITTED AS UNDER: ITA 466/JP/2011_ ASHOK KR. SARASWAT VS. ITO 7 THE AO COMPLETED THE ORIGINAL ASSESSMENT OF ASSES SEE BY MAKING TRADING ADDITION & ADDITION ON ACCOUNT OF UN EXPLAINED LOANS & CREDITORS ON PROTECTIVE BASIS SINCE ASSESSEE WAS H ELD AS NOT A GENUINE SUB-CONTRACTOR IN THE ASSESSMENT OF M/S AGARWAL CONS TRUCTION COMPANY, THE MAIN CONTRACTOR. THEREAFTER, LD. CIT(A) DELETED THE TRADING ADDITION BY HOLDING THAT ASSESSEE IS NOT HA VING ANY INCOME FROM SUB-CONTRACT BUSINESS & ALSO DELETED THE ADDITION O N ACCOUNT OF UNEXPLAINED LOANS & CREDITORS BY HOLDING THAT THE S AME HAS NO BASE WHEN FIGURES RELATED TO CIVIL CONTRACT WORK IS HELD T O BE UNREAL. HE, THEREFORE, ASSESSED THE INCOME OF RS. 2,93,390/- DE CLARED BY ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES. BEFORE HONBLE ITAT, DEPARTMENT ONLY CHALLENGED THE DELETION OF ADDITION OF RS. 20,88,524/- ON ACCOUNT OF UNEXPLAINED LOANS & CREDITORS. IT, TH EREFORE, ACCEPTED THE FINDINGS OF CIT(A) THAT ASSESSEE IS NOT HAVING ANY I NCOME FROM SUB- CONTRACT BUSINESS & THE INCOME DECLARED BY THE ASSE SSEE IS INCOME FROM OTHER SOURCES. THUS, WHEN THE ACCOUNTS OF THE A SSESSEE IS HELD TO BE UNREAL & THIS FACT WAS NOT CHALLENGED BY THE D EPARTMENT BEFORE HONBLE ITAT, ANY ADDITION ON THE BASIS OF THESE ACC OUNTS IS UNJUSTIFIED. CIT(A) IN THE SET ASIDE ORDER WHILE CONFIRMING THE AD DITION OF RS. 20,88,524/- ON ACCOUNT OF UNEXPLAINED LOANS & CREDI TORS HELD THAT ASSESSEE IS TRYING TO TAKE DOUBLE BENEFIT BY RELYIN G ON THE ORDER OF PREDECESSOR CIT(A) ON ONE HAND & ON OTHER HAND CLAIM ING THE CREDITORS TO BE REAL BY PRODUCING AFFIDAVITS. IT MAY BE NOTED THAT THE SAME CIT(A) WHILE CONFIRMING THE ADDITION HAS ALSO TAKEN A DOUBL E STAND IN AS MUCH AS HE HAS ACCEPTED THAT THE ACCOUNTS PREPARED BY TH E ASSESSEE IS NOT REAL & THEREBY TAXING THE BUSINESS INCOME DECLARED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES & AT THE SAME TIME RELYIN G ON THE SAME ITA 466/JP/2011_ ASHOK KR. SARASWAT VS. ITO 8 BOOKS OF ACCOUNTS FOR CONFIRMING THE ADDITION ON AC COUNT OF UNEXPLAINED CREDITORS WHEREAS IN THE FIRST ORDER ON THESE VERY F ACTS HE HAS DELETED THE ADDITION. THE ADDITION OF RS. 20,88,524/- ON ACC OUNT OF UNEXPLAINED LOANS & CREDITORS MADE BY AO & CONFIRMED BY CIT(A) I N SET ASIDE ORDER IS U/S 68. IN FACT THIS IS NOT THE AMOUNT OF LOAN B UT CREDITORS FOR UNPAID EXPENSES. THE CONDITION FOR APPLICABILITY OF S. 68 I S THAT THERE SHOULD BE A CREDIT OF SUM IN THE BOOKS OF ACCOUNT OF AN ASSES SEE. IN THE PRESENT CASE, NO SUM IS CREDITED IN THE BOOKS OF ACCOUNTS O F ASSESSEE. THE CREDIT IS ON ACCOUNT OF UNPAID SALARY/HIRE CHARGES/ SUPPLY OF MATERIAL. FOUR PERSONS WHO WERE PRODUCED VIDE LETTER DT. 15.12. 2009 & OTHER PERSONS WHO HAVE FILED AFFIDAVITS VIDE LETTER DT. 15 .10.2009 HAVE ALSO STATED THAT OUTSTANDING WAS AGAINST SALARY/HIRE CHAR GES/SUPPLY OF MATERIAL & NOT AGAINST PROVIDING ANY SUM TO THE ASS ESSEE. EVEN CIT(A) IN SET ASIDE ORDER GAVE A FINDING THAT IN THE STATE MENT CREDITORS ACCEPTED TO HAVE WORKED. IN VIEW OF SAME, NO ADDITION COULD BE MADE U/S 68. RELIANCE IN THIS CONNECTION IS PLACED IN CA SE OF CIT VS. PANCHAM DASS JAIN 156 TAXMAN 507 (ALL.) (HC) WHEREIN IT WAS H ELD THAT WHERE THE TRIBUNAL HAD RECORDED A CATEGORICAL FINDING OF F ACT BASED ON APPRECIATION OF MATERIALS AND EVIDENCE ON RECORD TH AT THE AMOUNTS REPRESENTED THE PURCHASES MADE BY ASSESSEE ON CREDI T AND THEREFORE THE PROVISIONS OF SECTION 68 COULD NOT BE ATTRACTED , THE VIEW TAKEN BY THE TRIBUNAL WAS CORRECT & THEREFORE THERE WAS NO QUES TION OF MAKING ANY ADDITION U/S 68. IN RESPECT OF CREDITORS OF UN PAID SALARY/HIRE CHARGES/SUPPLY OF MATERIAL, THE BURDEN OF PROOF IS NOT THE SAME AS THE BURDEN OF PROOF REQUIRED U/S 68. THE ASSESSEE BY PRO VIDING THE FOLLOWING EXPLANATIONS/DOCUMENTS HAS DISCHARGED HIS BURDEN:- ITA 466/JP/2011_ ASHOK KR. SARASWAT VS. ITO 9 (I) COMPLETE LIST INDICATING THE NATURE OF EXPENSES AG AINST WHICH THE AMOUNT WAS OUTSTANDING. (II) THE CREDITORS WERE OUTSTANDING SINCE ASSESSEE DID NO T RECEIVE THE PAYMENT FROM THE MAIN CONTRACTOR. IN SUBSEQUENT YEAR, WHEN ASSESSEE RECEIVED THE PAYMENT FROM MAIN CONTRAC TOR I.E. M/S AGARWAL CONSTRUCTION COMPANY FOR RS. 5,56,000/- AND RS. 17,60,000/- ON 6-04-2004 & 9-04-2004 RESPECTIVELY, THE AMOUNT WAS WITHDRAWN IN CASH AND PAYMENT TO THE CREDITORS WER E MADE. THIS IS ALSO ESTABLISHED FROM THE AFFIDAVIT OF THE CREDITORS WHEREIN THEY HAVE ACCEPTED TO HAVE RECEIVED THE OUTS TANDING AMOUNT IN THE SUBSEQUENT YEAR. (III) SO FAR AS OBSERVATION OF AO & CIT(A) WITH REGARD TO C REDIT WORTHINESS OF THE CREDITORS IS CONCERNED, THE SAME H AS NO RELEVANCE AS THE OUTSTANDING CREDIT IS ON ACCOUNT O F UNPAID SALARY/HIRE CHARGES/SUPPLY OF MATERIAL IN RESPECT O F WHICH THE BURDEN OF PROOF IS NOT THE SAME AS THE BURDEN OF PR OOF REQUIRED U/S 68. (IV) THE FACT THAT THE CREDITORS ARE ONLY FOR EXPENSES IS ALSO PROVED FROM THE FACT THAT ASSESSEE HAS NOT CLAIMED ANY EXP ENDITURE ON INTEREST. AS PER THE BALANCE SHEET FILED BY THE ASSESSEE, THE LOAN & CREDITORS IS SHOWN AT RS. 20,88,523/- BUT IN FACT IT ONLY REP RESENT THE CREDITORS FOR EXPENSES FOR WHICH LIST IS AVAILABLE AT. AS PER THIS BALANCE SHEET, CASH & BANK BALANCE INCLUDING CHEQUES IN HAND IS OF RS. 25,33,810/- OUT OF WHICH AN AMOUNT OF RS. 23,16,000/- IS CHEQUE IN HAND WHICH CLEARED FROM THE BANK ACCOUNT ON 06.04.2004 FOR RS. 5,56,000/- AND ON 09.04.2004 FOR RS. 17,60,000/-. THIS AMOUNT WAS WI THDRAWN FROM ITA 466/JP/2011_ ASHOK KR. SARASWAT VS. ITO 10 THE BANK & UTILIZED IN PAYMENT TO CREDITORS. IN THE FIRST ROUND OF APPEAL, THIS FACT WAS EXPLAINED TO CIT(A) & THIS FAC T IS RECORDED BY HIM IN PARA 4.2 OF THE ORDER. SINCE THIS WAS EXPLAIN ED FOR THE FIRST TIME BEFORE CIT(A), HONBLE ITAT SET ASIDE THE ORDER OF CIT(A) TO EXAMINE THE CLAIM OF THE ASSESSEE IN VIEW OF THE MAT ERIAL ON RECORD. THE MATERIAL ON RECORD CLEARLY ESTABLISH THAT THESE ARE CREDITORS FOR EXPENSES & HAS BEEN PAID SUBSEQUENTLY. STILL, THE A O WITHOUT FOLLOWING THE DIRECTION OF HONBLE ITAT IN CORRECT P ERSPECTIVE HAS MADE THE ADDITION WHICH IS CONFIRMED BY CIT(A). THE LEARNED A.R. ALSO DRAWN OUR ATTENTION THAT APPEA L OF THE MAIN CONTRACTOR NAMELY SHRI JAI PRAKASH AGARWAL IN ITA NO . 948/JP/2008 FOR A.Y. 2003-04, ITA NO. 763/JP/2008 FOR A.Y. 2004-05 HAS BEEN DECIDED BY THIS HONBLE BENCH VIDE HIS ORDER DATED 25/1/201 0. IT WAS ARGUED THAT THE APPELLANT NAMELY ASHOK KUMAR SARASWAT HAVE DONE ONLY CONTRACT WORK OF RS. 70,85,318 ON WHICH TDS @ 2% AT RS. 1,41,706/- HAD BEEN DEDUCTED BY THE MAIN CONTRACTOR, WHICH PROV ES THAT THE ASSESSEE HAD PURCHASED THE MATERIAL AND TAKEN SERVI CES OF PERSONS REFERRED IN THE BALANCE SHEET. THEREFORE, HE PRAYED TO REVERSE THE ORDER OF THE LEARNED ASSESSING OFFICER CONFIRMED BY THE L EARNED CIT(A). 5. AT THE OUTSET, THE LEARNED D.R. VEHEMENTLY SUPPO RTED THE ORDER OF THE LEARNED CIT(A). ITA 466/JP/2011_ ASHOK KR. SARASWAT VS. ITO 11 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS A FACT THAT T HE ASSESSEE IS A SUB- CONTRACTOR OF SHRI JAI PRAKASH AGARWAL, FROM WHICH HE GOT THE CONTRACT BUSINESS, ON WHICH THE MAIN CONTRACTOR HAS DEDUCTED THE TDS @ 2%. THE INCOME IN THE HANDS OF JAI PRAKASH AGARWAL HAS BE EN ASSESSED SUBSTANTIALLY AND IN THE HANDS OF SUB-CONTRACTOR ON PROTECTIVE BASIS. THE COORDINATE BENCH HAD CONFIRMED THE TRADING ADDITION IN CASE OF JAI PRAKASH AGARWAL AND HELD THAT PAYMENT TO THE SUB-CON TRACTOR ARE GENUINE IN PARAGRAPH NO. 3 ON PAGE 12 OF ITS ORDER. THE CREDITORS WERE OUTSTANDING SINCE THE ASSESSEE DID NOT RECEIVE THE PAYMENT FROM THE MAIN CONTRACTOR. IN SUBSEQUENT YEAR, THE ASSESSEE P AID THESE OUTSTANDING WHEN RECEIVED FROM THE MAIN CONTRACTOR N AMELY M/S AGARWAL CONSTRUCTION COMPANY, FOR WHICH THE A.R. PAPE R BOOK ANNEXED AT PAGE NO. 23 TO 37 ARE RELEVANT. THE ASSESSEE RECE IVED THE AMOUNT FROM THE MAIN CONTRACTOR, WHICH WAS CLEARED IN THE BA NK ON 06/04/2004 AND 09/04/2004. THE AMOUNT WAS WITHDRAWN FROM THE BANK AND PAID TO THE CREDITORS. THE MATERIAL FACT THAT THESE CREDITOR S WERE RELATED TO MATERIAL SUPPLIED AND SERVICES RENDERED WERE BEFORE THE ASSESSING OFFICER AS WELL AS THE CIT(A) IN ORIGINAL ASSESSMENT AS WELL AS IN SET ASIDE PROCEEDINGS. THEREFORE, THE LEARNED CIT(A) OVER LOOKED THE FACTS ITA 466/JP/2011_ ASHOK KR. SARASWAT VS. ITO 12 OF THE CASE AND HAS NOT CONSIDERED THE EVIDENCES PR OPERLY. ACCORDINGLY WE REVERSE THE ORDER OF THE LEARNED CIT(A). 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/02/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 13 TH FEBRUARY, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI ASHOK KUMAR SARASWAT, SIKAR 2. IZR;FKHZ @ THE RESPONDENT- THE ITO, WARD-2, SIKAR. 3. VK;DJ VK;QDR @ CIT(A)-III, JAIPUR 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 5. XKMZ QKBZY @ GUARD FILE (ITA NO. 644/JP/2011) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR