DCIT, New Delhi V. M/s. Kalindee Rail Nirman Engineers Ltd., New Delhi

ITA 6654/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6621 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 08-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY VARMA
• Keywords: Rejection of books of accounts; Principle of natural justice
• Section: 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: D: NEW DELHI) BEFORE SHRI N.K BILLAIYA, ACCOUNTANT MEMBER & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO:- 6654/DEL/2014 (ASSESSMENT YEAR: 2011-12) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 14(1), NEW DELHI. VS. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD., C-5, GAUTAM NAGAR, GULMOHAR PARK ROAD, NEW DELHI-110049. PAN NO: AAACK6371P APPELLANT RESPONDENT REVENUE BY : SH. VIJAY VARMA, CIT (DR) ASSESSEE BY : SH. KVSR KRISHNA, CA DATE OF HEARING : 12.07.2018. DATE OF PRONOUNCEMENT : 19/07/2018. ORDER PER: KULDIP SINGH, JM THE APPELLANT, DEPUTY COMMISSIONER OF INCOME TAX, C IRCLE 14(1), NEW DELHI, (HEREINAFTER REFERRED TO AS THE REVENUE ) BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATE D 24.09.2014 PASSED BY LD. CIT(A)-VIII, NEW DELHI, QUA ASSESSMENT YEAR 2011-12, ON THE GROUNDS THAT:- 2 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. 1. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DETER MINING TOTAL INCOME AT RS. 12,39,30,720/- AGAINST ASSESSED INCOM E AT RS. 26,06,61,920/-. 2. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE & IN LAW, LD. CIT(A) IS JUSTIFIED IN REJECTING THE ADDITION MADE BY THE AO AT THE RAT EOF 10% ON THE CONTRACT R ECEIPT AS THE INCOME. 3. WHETHER ON THE FACTS & IN THE CIRCUMSTANCES OF T HE CASE & IN LAW, LD. CIT(A) IS JUSTIFIED IN ACCEPTING BOOKS OF ACCOUNTS FILED BY THE ASSESSEE GIVING RELIEF TO THE ASSESSEE OF RS. 13,67,31,200/-. 4. THAT THE ORDER OF THE CIT(APPEALS) IS ERRONEOUS AND IS NOT TENABLE IN LAW AND ON FACTS. 5. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FOREGO ANY GROUND(S) OF THE APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE: THE ASSESSEE IS INTO THE B USINESS OF EXECUTION OF WORK CONTRACTS (RAILWAY AND OTHERS). DURING THE YE AR UNDER ASSESSMENT, ASSESSEE SHOWN GROSS TURNOVER OF RS. 229,64,25,365/ - AND OTHER INCOME OF RS. 3,11,39,380/-. THE OTHER INCOME INCLUDES RE NT RECEIPTS OF RS. 16,25,625/- FOREIGN CONSULTANCY INCOME OF RS. 1,07, 39,904/- AND FDR INTEREST OF RS. 1,87,73,851/-. AO NOTICED FROM THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT THAT WORK COST HAS BEEN INC REASED FROM 80.24% OF THE TURNOVER TO 83.27% OF THE TURNOVER AND THE C ONSTRUCTION AND OPERATING EXPENSES MATERIAL COST HAS BEEN INCREASED FROM 42.02% FROM 3 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. PRECEDING YEAR TO 55.44% IN THE EARLIER YEAR. ASSE SSING OFFICER AFTER REJECTING THE BOOKS OF ACCOUNTS APPLIED NET PROFIT RATE OF 10% OF THE CONTRACT RECEIPTS AT RS. 22,96,42,537/- AND THEREBY MADE AN ADDITION OF RS. 3,11,39,380/- BY ASSESSING THE TOTAL INCOME AT RS. 26,06,61,920/-. 3. THE ASSESSEE CARRIED THE MATTER BY WAY OF FILING THE APPEAL BEFORE THE LD. CIT(A), WHO HAS DELETED THE ADDITIONS BY PA RTLY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDER PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE F ACTS AND CIRCUMSTANCES OF THE CASE . 5. UNDISPUTEDLY, THE ASSESSEE COMPANY IS A PUBLIC L IMITED COMPANY BEING INTO THE BUSINESS OF LAYING RAILWAYS TRACKS U NDER RAIL VIKAS NIGAM LTD. (RVNL) OF INDIAN RAILWAYS AND MAKE METRO PROJE CTS. IT IS ALSO NOT IN DISPUTE THAT ACCOUNTS OF THE ASSESSEE COMPANY ARE A UDITED BY STATUTORY AUDITORS. IT IS ALSO NOT IN DISPUTE THAT THE MAJOR STOCKS USED BY THE ASSESSEE COMPANY ARE SUPPLIED BY THE RAILWAY DEPART MENT REMAINS UNDER ITS CONTROLS. IT IS ALSO NOT IN DISPUTE THAT THE N ET PROFIT TO SALES RATIO VARIES FROM 5.27% IN A.Y. 2010-11 TO 8.6% IN A.Y. 2008-09. IT IS ALSO UNDISPUTED FACT ON RECORD THAT THE TURNOVER OF THE ASSESSEE COMPANY HAS 4 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. SUBSTANTIALLY INCREASED FROM 54 CRORES IN A.Y. 2004 -05 TO 230 CRORES IN A.Y. 2011-12. 6. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, ORDER PASSED BY THE LOWER REVENUE AUTHORITIES, ARGUM ENT ADDRESSED BY THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, THE SOLE QUESTION ARISES FOR DETERMINAT ION IN THE CASE IS:- AS TO WHETHER ASSESSING OFFICER WAS JUSTIFIED AS CONTENDED BY THE LD. DR TO REJECT THE BOOKS OF ACCOUNT U/S 15( 3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AND THE LD. CIT(A) HAS ERRED IN ACCEPTING THE BOOKS OF ACCOUNTS. 7. THE LD. DR FOR THE REVENUE CHALLENGING THE IMPUG NED ORDER CONTENDED INTER ALIA THAT; THE AO HAS RIGHTLY REJEC TED THE BOOKS OF ACCOUNTS AS THE ASSESSEE HAS SHOWN NET PROFIT TO SA LES RATIO OF 2.2.% AS AGAINST 5.27% IN A.Y. 2010-11 AND THE ASSESSEE HAS NOT GIVEN COMPLETE DETAILS AS REQUIRED BY THE AO: THAT IN THE VAT RETU RN COLUMN FOR PURCHASE WERE LEFT BLANK; THAT THE ASSESSEE COMPANY THOUGH A LISTED COMPANY BUT IT CANNOT BE TAKEN AT ITS FACE VALUE AND THAT LD.CIT(A ) HAS VIOLATED THE RULES OF NATURAL JUSTICE BY NOT ASSOCIATING, AO DURING AP PELLATE PROCEEDINGS BY CALLING UPON THE REMAND REPORT. 5 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. 8. HOWEVER, ON THE OTHER HAND TO REPEL THE ARGUMENT ADDRESSED BY LD. DR FOR THE REVENUE. THE LD. AR CONTENDED THAT T HE ASSESSEE COMPANY IS A 30 YEARS OLD COMPANY AND AUDITED BY ST ATUTORY AUDITORS AND HAS BEEN COMPLETING EPC CONTRACTS; THAT THE ANNEXURE -A PRODUCED BEFORE AO CONTAINS COMPLETE DETAILS HAVING OPENING AND CLO SING STOCKS WHICH SHOWS THAT THE ASSESSEE HAS PRODUCED THE ENTIRE DET AILS REQUISITIONED BY THE AO; THAT DETAILS OF PURCHASES MADE BY THE ASSES SEE HAS BEEN DULY FURNISHED BEFORE THE AO AND HAS BEEN DISCUSSED BY L D. CIT(A) AT PAGE 19 OF THE IMPUGNED ORDER. 9. AT PAGE 13 AND 14 OF THE IMPUGNED ORDER, THE LD. CIT(A) HAS GIVEN THIS BULLET POINTS WHICH HAVE BEEN MADE THE BASIS O F REJECTING THE BOOKS OF ACCOUNTS BY THE AO AND TO ESTIMATE THE NET PROFI T TO SALES. HOWEVER, WHEN WE PERUSE THE IMPUGNED ORDER PASSED BY LD. CIT (A), EVERY POINT RAISED BY THE AO HAS BEEN REPLIED WITH. SO FAR QUES TION OF FURNISHING THE SITE WISE DETAILS OF RECEIPTS AND EXPENDITURES AND SITE WISE STOCKS REGISTER IS CONCERNED, UNDISPUTEDLY, WHEN THE ASSESSEE BEING A PUBLIC LTD. COMPANY HAS BEEN DEALING WITH PUBLIC SECTOR UNDERTA KINGS AND GOVERNMENT DEPARTMENT FOR THE LAST 30 YEARS, ITS EV ERY BILLS AND VOUCHERS ARE PASSED THROUGH A PROCESS UNDER ESTABLISHED RULE S. THE LD. CIT(A) HAS DULY VERIFIED STOCKS REGISTERS AND PROCEEDED TO HOL D THAT THE ASSESSEE 6 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. COMPANY WAS HAVING LEAST CONTROL ON STOCKS AS RAIL, CEMENT, STEEL ETC. ARE SUPPLIED BY RAILWAY DEPARTMENT AND KEPT IN THEIR ST ORES. 10. THE LD. CIT(A) HAS ALSO PERUSED THE MEASUREMENT BOOK, LIST OF COST CENTRE WISE, PROFIT MARGIN OF ALL 33 SITES OUT OF W HICH THE ASSESSEE HAS PROVIDE A LIST OF 28 SITES AS PER ANNEXURE-II, SHOW ING PROFIT MARGIN VARYING FROM -62.88% IN CUTTNI, MANIKPUR (JABALAPUR PROJECT ) SIGN CONTRACT RECEIPT TO 63.16% IN VILASPUR PROJECT. SO, IN THESE CIRCUM STANCES, WE ARE OF THE CONSIDERED VIEW THAT GAIN OR LOSS BY ANY COMPANY CA NNOT BE ANTICIPATED AS IT DEPENDS UPON NUMEROUS FACTORS. SO, WHEN THE A O HAS NOT DISPUTED ANY ENTRY OF BOOKS OF ACCOUNTS BEING BOGUS OR UNSUS TAINABLE OR NOT MATCHING WITH THE BILLS AND VOUCHERS, THE BOOKS OF ACCOUNTS CANNOT BE REJECTED. 11. MOREOVER, DURING THE APPELLATE PROCEEDINGS, THE LD. CIT(A) HAS DULY EXAMINED AUDITED ACCOUNTS AND SUBMISSIONS MADE BY THE ASSESSEE AND HAS PROCEEDED TO HOLD THAT AO HAS WRONGLY SATED THAT THE AUDITOR HAS NOT AUDITED THE STOCK REGISTERS. MOREOVER, WHEN TH E AO HAS DULY EXAMINED THE AUDITORS REPORT CONTAINING NOTE AS TO PHYSICAL VERIFICATION OF INVENTORY, INVENTORY RECORD WHEREIN IT IS RECORDED THAT THE DISCREPANCIES BETWEEN THE BOOKS RECORDS AND PHYSICAL RECORDS WERE NOT MATERIAL. ALL THESE FACTS HAVE NOT BEEN DISPUTED BY AO BUT PROCEE DED TO REJECT THE BOOKS OF ACCOUNTS ON FLIMSY GROUNDS. 7 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. 12. LD. CIT(A) ALSO PERUSED DAY TO DAY STOCKS DETAI LS MAINTAINED BY THE ASSESSEE. THE ASSESSEE BROUGHT ON RECORD THAT AT E ACH SITE, THE ITEMS WHICH HAVE BEEN RECEIVABLE FROM THE CONTRACTEE, THE ITEMS WHICH ARE USED FOR THE PROJECT AND THE DISCREPANCIES OR DIFFERENCE S, IF ANY, ARE TO BE RECONCILED. IN CASE, THERE IS ANY DISCREPANCIES, TH E COST IS TO BE RECOVERED FROM THE ASSESSEE. SO, THE CONTRACTS TAKEN BY THE A SSESSEE ARE TO BE EXECUTED AS PER RULES BY PREPARING PROPER STOCK REC ORDS, SO AS TO AVOID THE PAYMENT OF COST. 13. THE LD. DR FOR THE REVENUE DREW OUR ATTENTION T O THE LAST PARA AT PAGE 17 OF THE IMPUGNED ORDER WHEREIN THE LD. CIT(A ) MENTIONED THAT THE ASSESSEE COMPANY BEING A LISTED COMPANY HAVING 30 YEARS EXPERIENCE IN EXECUTING EPC PROJECTS AND CANNOT RUN ITS BUSINES S, WITHOUT MAINTENANCE OF STOCKS REGISTERS, ITS BOOKS OF ACCOU NT CANNOT BE REJECTED AND CONTENDED THAT THE LISTED COMPANY CANNOT BE TAK EN AT ITS FACE VALUE. WE ARE AGREED WITH THE CONTENTIONS RAISED BY THE LD . AR TO SOME EXTENT, HOWEVER, THE AFORESAID OBSERVATIONS MADE BY LD. CIT (A) ARE TO BE READ CONJOINTLY WITH THE PRECEDING PARAS RUNNING FROM PA GE 13 TO 16 WHEREIN THE DETAILED REASONS HAVE BEEN GIVEN TO OVERTURN TH E FINDINGS GIVEN BY THE AO. 14. FURTHERMORE, THE LD. AR FOR THE ASSESSEE BROUGH T TO OUR NOTICE THAT SITE WISE DETAILS OF RECEIPTS AND EXPENDITURES WAS DULY FILED BEFORE THE AO 8 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. WHICH WERE AVAILABLE AT PAGE 18 TO 22 OF THE PAPER BOOK HAVING BEEN FURNISHED VIDE SUBMISSIONS DATED 25.02.2014 AVAILAB LE AT PAGE 15 OF THE PAPER BOOK. WHEN WE EXAMINE THE SITE WISE RECEIPTS AND EXPENDITURES, SITE WISE SUB CONTRACT PAYMENT, RECONCILIATION OF P URCHASE WITH VAT RETURN AND LABOUR PAYMENT DETAILS AVAILABLE AT PAGE 18 TO 20 OF THE PAPER BOOK WHICH WERE ALSO EXAMINED BY LD. CIT(A), WERE F URNISHED BEFORE AO BUT HE WAS PREFERRED TO THROW THE SAME INTO THE DUS TBIN WITHOUT POINTING OUT ANY DISCREPANCIES IN THE SAME. 15. THE LD. AO WAS DULY INTIMATED VIDE LETTER DATED 22.01.2014 AVAILABLE AT PAGE 23 OF THE PAPER BOOK THAT THE MEA SUREMENT BOOK ARE MAINTAINED AND KEPT BY THE AWARDER OF THE CONTRACT, WHICH IS RAILWAY IN THIS CASE. SO, THIS FACT ALSO GOES TO PROVE, THAT T HE LD. AO HAS PROCEEDED TO REJECT THE BOOKS OF ACCOUNTS ON SURMISES WITHOUT GOING INTO THE DETAIL FURNISHED BY THE ASSESSEE. 16. SO FAR AS QUESTION OF NON-FILING OF THE RECONCI LIATION OF THE VAT RETURN OF SOME SITES WITH PURCHASES SHOWN IN THE BO OKS IS CONCERNED, AGAIN ASSESSEE BROUGHT ON RECORD LETTER DATED 19.11 .2013, 3/12/2013, 25/2/2014 FILED WITH AO, WHICH WERE ALSO PRODUCED B EFORE THE LD. CIT(A), WHICH GOES TO PROVE THAT THE RECONCILIATION OF 26AS STATEMENT WITH GROSS RECEIPTS AND TDS CLAIMED WAS PRODUCED BEFORE THE AO . WHEN SITE WISE RECEIPTS AND EXPENDITURE DETAILS, SITE WISE SUB CON TRACT AND PAYMENT 9 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. DETAILS, RECONCILIATION OF RECEIPTS AND PURCHASES W ITH THE VAT RETURNS, LABOUR PAYMENT DETAILS WERE DULY FURNISHED VIDE LET TER DATED 25.2.2014 AVAILABLE AT PAGE 14-15 OF THE PAPER BOOK, THE LD. CIT(A) HAS RIGHTLY POINTED OUT THAT IN CASE, AO DOUBTED THE PURCHASES, HE WAS REQUIRED TO EXAMINE THE SAME ON TEST CHECK BASIS. EVEN OTHERWIS E, WHEN THE ASSESSEE HAS DULY EXPENDITURE EXPLAINED THE REASONS FOR DIFFERENCE IN THE VAT RETURN VIS--VIS THE BOOKS OF ACCOUNTS, THE BOO KS OF ACCOUNTS CANNOT BE REJECTED. 17. THE HONBLE DELHI HIGH COURT IN THE CASE SITED AS PRINCIPAL COMMISSIONER OF INCOME-TAX VS. MEHTA CONSTRUCTION C O. [2018] 402 ITR 281 (DELHI) HELD BY CONFIRMING THE FINDING RETURNED BY CO- ORDINATE BENCH OF TRIBUNAL, THAT ABSENCE OF STOCKS REGISTER ALONE NOT A GROUND TO REJECT BOOKS OF ACCOUNT AND TO ESTIMATE T HE GROSS PROFIT RATE, SIMILARLY, HONBLE DELHI HIGH COURT IN THE CASE SIT ED AS COMMISSIONER OF INCOME TAX VS. PARADISE HOLIDAYS [2010] 325 ITR 13 (DELHI) HELD THAT WHEN ACCOUNTS MANAGED BY ASSESSEE NEITHER DEF ECTIVE NOR INCOMPLETE, THE BOOKS OF ACCOUNTS CANNOT BE REJECTE D MERELY ON THE ACCOUNT OF LOW NET PROFIT. FOR READY PERUSAL OPERA TIVE PART OF THE JUDGMENT OF PARDISE HOLIDAYS (SUPRA) IS EXTRACTED AS UNDER:- HELD, DISMISSING THE APPEAL, THAT THE QUESTION AS TO WHETHER THE ACCOUNTS PRODUCED BY THE ASSESSEE WERE DEFECTIVE/INCOMPLETE OR NOT WAS A QUESTION OF FACT. THE COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL HAD FOUND 10 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. THAT THE ACCOUNTS MAINTAINED BY THE ASSESSEE WERE N EITHER DEFECTIVE NOR INCOMPLETE. EVEN THE ASSESSING OFFIC ER HAD NOT FOUND ANY FAULT AS SUCH WITH THE SYSTEM OF ACCOUNTI NG BEING FOLLOWED BY THE ASSESSEE. THE TRIBUNAL WHICH WAS T HE FINAL FACT FINDING AUTHORITY HAD HELD THAT CONSIDERING TH E NATURE OF THE BUSINESS OF THE ASSESSEE, IT WAS NOT OBLIGATORY TO ENTER INTO A FORMAL AGREEMENT WITH THE FOREIGN PRINCIPAL. HENCE, NON-PRODUCTION OF FORMAL AGREEMENTS WITH THE FOREIG N PRINCIPALS WOULD NOT RENDER THE ACCOUNTS OF THE ASS ESSEE INCOMPLETE AND WOULD NOT GIVE JUSTIFICATION TO THE ASSESSING OFFICER TO REJECT THEM UNDER SECTION 145(3) OF THE ACT. SIMILARLY, THE EXPLANATION GIVEN BY THE ASSESSEE FO R THE TOUR EXPENSES NO RECONCILING WITH THE TOUR ITINERARY HAV ING BEEN ACCEPTED, BOTH BY THE COMMISSIONER (APPEALS) AS WEL L AS BY THE TRIBUNAL, THE ACCOUNTS OF THE ASSESSEE COULD NO T BE SAID TO BE DEFECTIVE ON THIS GROUND AND, THEREFORE, COUL D NOT HAVE BEEN REJECTED. IF ANY PARTICULAR EXPENSE CLAIMED B Y THE ASSESSEE REMAINED UNVERIFIED, THE ASSESSING OFFICER COULD HAVE DISALLOWED THAT PARTICULAR EXPENSE. BUT, THAT BY ITSELF COULD NOT BE A GROUND FOR REJECTION OF ACCOUNTS AS A WHOLE UNDER SECTION 145(3) OF THE ACT. SINCE THE FINDING OF FACT RECORDED BY THE TRIBUNAL WAS NOT PERVERSE NO INTERF ERENCE WAS NEEDED. 18. FURTHERMORE, CONTENTIONS RAISED BY THE LD. DR F OR THE REVENUE THAT THE LD. CIT(A) HAS RETURNED SELF-CONTRADICTORY FIND INGS AND DREW OUR ATTENTIONS TOWARDS LAST PARA OF PAGE 21 OF THE IMPU GNED ORDER WHICH IS EXTRACTED HEREINAFTER FOR READY PERUSAL ARE NOT SUS TAINABLE- FURTHER,I FIND FROM THE EXAMINATION OF VARIOUS EX PENSES THAT OUT OF THE TOTAL EXPENSES INCURRED BY THE APPELLANT, THE E XPENDITURE OF LACAL LABOUR PAYMENT OF RS. 1,57,54,535/- HAS BEEN INCURR ED TOWARDS LOCAL LABOUR PAYMENT. THE APPELLANT HAS ONLY GIVEN THE L IST OF THE PROJECT WISE LOCAL LABOUR PAYMENT EXCEPT FOR THE LIST, THER E IS NO FURTHER EVIDENCE GIVEN BY THE APPELLANT AS TO THE NAME, ADD RESS AND ENTITY ETC. THEREFORE, IN THE INTEREST OF JUSTICE 20% OF THE ABOVE EXPENSES HAVE BEEN DISALLOWED TOWARDS UN-VOUCHED AND UNVERIF IED EXPENDITURE. THEREFORE, THE TOTAL INCOME WHICH IS DETERMINED NOW WOULD BE AS UNDER:- 11 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. PROFITS & GAINS OF BUSINESS AND PROFESSION AS DECLARED BY THE ASSESSEE (AFTER 80G DEDUCTION OF RS., 1,26,000/-) RS.11,35,77,500/- ADD: INTEREST ON INCOME-TAX NOT ALLOWABLE AS DEDUCTION RS. 72,03,220/- ADD: 20% OF LOCAL LABOUR EXPENSES WHICH ARE UNVERIFIED/UN-VOUCHED RS. 12,39,30 ,720/- THE ADDITION TO THE EXTENT OF RS. 1,03,53,220/- (RS . 72,03,220 + 31,50,000) IS /CONFIRMED. THE APPELLANT WILL GET RELIEF OF RS. 26,06,61,920 RS. 12,39,30,720/-= RS. 13,67,31,200 /- 19. BECAUSE WHEN LD. CIT(A) HAS CONDUCTED THE DISCR EET ENQUIRY ON EACH AND EVERY ISSUE RAISED BY THE AO AND PROCEEDED TO HOLD THAT ASSESSEE HAS PRODUCED ALL THE REQUISITE EVIDENCES B EFORE AO, WHO HAS NOT POINTED OUT ANY DISCREPANCIES THEREIN, BUT REJECTED THE BOOKS OF ACCOUNTS ON SURMISES, THE STRAY FINDINGS IN THE AFORESAID EX TRACTED PARA THAT EXCEPT THE LIST OF PROJECT WISE LOCAL LABOUR PAYMEN T, THERE IS NO FURTHER EVIDENCE GIVEN BY THE ASSESSEE AS TO THE NAME, ADDR ESS AND ENTITY ETC., DISALLOWED THE 20% EXPENDITURE OF RS. 1,57,54,535/- ON ACCOUNT OF LOCAL LABOUR PAYMENT, ARE NOT DETRIMENTAL TO THE CASE OF ASSESSEE. IT IS A MATTER OF COMMON KNOWLEDGE THAT IN CASE OF ADHOC LA BOUR ENGAGED BY CONTRACTOR WHO CARRY OUT ANY PROJECT, IT IS NOT FEA SIBLE TO KEEP THE DETAILS OF NAME, ADDRESS, IDENTITY ETC. SO, LD. CIT(A) HAS THEREBY RIGHTLY DISALLOWED UN-VOUCHED AND UNVERIFIED EXPENDITURE TO THE EXTENT OF 20%. SO, TO OUR MIND, THESE ARE NOT THE SELF-CONTRADICTO RY FINDINGS, WHICH ARE TO BE READ WITH THE FINDINGS RETURNED IN THE PRECEDING PARAS. 12 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. 20. THE CONTENTIONS OF LD. DR THAT LOSS OF RS. 16.6 3 CRORES SHOWN BY THE ASSESSEE IS UNTHINKABLE AND FAILS THE TEST OF P REPONDERANCE OF PROBABILITIES IS MISCONCEIVED BECAUSE IN TAX ASSESS MENT EVERYTHING GOES BY STATUE AND NOTHING GOES BY PREPONDERANCE OF PROB ABILITIES. WHEN THE REVENUE AUTHORITIES DURING THE ASSESSMENT AS WELL A S APPELLATE PROCEEDINGS HAVE REQUISITE EVIDENCES ON RECORD ON T HE BASIS OF WHICH DISCREET ENQUIRY HAS BEEN CONDUCTED, THE BOOKS OF A CCOUNTS, WHICH WERE DULY AUDITED, CANNOT BE REJECTED MERELY ON THE GROU ND THAT THE ASSESSEE HAS SHOWN LOSS OF RS. 16.63 CRORES BECAUSE LOSS IN A BUSINESS SET-UP IS BASED UPON NUMEROUS FACTORS LIKE COST OF MATERIAL, COST OF LABOUR ETC.. 21. SO, IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE QUESTION FRAMED IS ANSWERED AGAINST THE REVENUE, FINDING NO ILLEGAL ITY OR PERVERSITY IN IMPUGNED ORDER PASSED BY THE LD. CIT(A), HENCE, THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/7/2018 SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 19.07.2018 POOJA/- COPY FORWARDED TO: 1. APPELLANT 13 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 14 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD. DATE OF DICTATION 12/7/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19/7/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 19/7/2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 19/7/2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS /7/2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 15 ITA NO.-6654/DEL/2014. M/S KALINDEE RAIL NIRMAN ENGINEERS LTD.