SETHI CONSTRUCTION COMPANY, Jaipur V. ITO, Jaipur

ITA 756/JPR/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5115 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 03-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S DAGUR CIT DHK
• Keywords: Rejection of books of accounts; Depreciation; Rule of consistency
• Section: 143(3); 142(1); 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH EQDQY DS JKOR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.756/JP/13 & 132/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 & 2011-12 M/S SETHI CONSTRUCTION COMPANY, S-53, 54 SHOPPING CENTRE, JAIPUR CUKE VS. THE INCOME TAX OFFICER, WARD 5(2), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAPFS 2462 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.S. DAGUR (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25.08.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 14/09/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-II, JAIPUR DATED 19.08.2013 AND 15.12.2014 RESPECTIVEL Y WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: ITA NO. 756/JP/13 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE ADDITION OF RS. 43,42,044/- MADE BY THE AO BY MAKING DISALLOWANCE OF EXPENSES AFTER REJECTION OF BOOKS OF ACCOUNTS. 1.1 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW A ND IN NOT FOLLOWING THE PAST HISTORY OF ASSESSEE S OWN CASE IN CONFIRMING THE ADDITION/DISALLOWANC E. ITA NO. 756/JP/13 & ITA NO. 132/JP/15 M/S SETHI CONSTRUCTION CO. VS. ITO WARD 5(2), JAIPU R 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND ROAD WORK AWARDE D BY VARIOUS GOVERNMENT DEPARTMENTS LIKE RITES, CPWD/PWD, AWHO, MES ETC. DU RING THE YEAR UNDER CONSIDERATION, IT DECLARED NET PROFIT OF RS.11,69,9 42/- ON CONTRACT RECEIPTS OF RS.5,12,14,487/- GIVING N.P. RATE OF 2.28% AS AGAIN ST NET PROFIT OF RS.3,02,627/- ON CONTRACT RECEIPTS OF RS.5,72,39,542/- GIVING N.P . RATE OF 0.53% IN THE IMMEDIATELY PRECEDING YEAR. THE AO REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) FO R THE REASON THAT STOCK REGISTER, CONSUMPTION REGISTER AND INVENTORY DETAIL S ARE NOT MAINTAINED AND THE VOUCHERS FOR EXPENSES WERE NOT PRODUCED FOR VER IFICATION. THEREFORE, HE MADE DISALLOWANCE OF RS.43,24,954/- OUT OF VARIOUS EXPENSES. THE AO FURTHER OBSERVED THAT AFTER CONSIDERING ALL THESE DISALLOWA NCES, THE NET PROFIT RATE WORKS OUT AT 10.76 % OF THE GROSS RECEIPTS WHICH IS VERY REASONABLE. HE ALSO RELIED ON THE DECISION OF ITAT, JAIPUR BENCH IN CAS E OF CHAUDHARY AND BROS. IN ITA NO. 1177/JP/2010 FOR A.Y. 07-08 WHEREIN NP RATE OF 11.5 % HAS BEEN APPLIED. THE LD. CIT(A) CONFIRMED THE ACTION OF AO IN MAKING ADDITION OF RS.43,24,954/- BY DISALLOWANCE OF EXPENSES AFTER RE JECTION OF BOOKS OF ACCOUNTS. HENCE, THE PRESENT APPEAL BEFORE US. 2.1 THE LD. AR SUBMITTED THAT THE ASSESSEE IS MAINT AINING COMPLETE BOOKS OF ACCOUNTS WHICH ARE SUBJECT TO AUDIT U/S 44AB. IN CO URSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAS PRODUCED THE BOOKS OF ACC OUNTS. THE ENTRIES IN THE BOOKS OF ACCOUNTS ARE SUPPORTED BY BILLS AND VOUCHE RS WHICH IS VERIFIED BY THE AUDITOR. THE AO VIDE NOTICE U/S 142(1) DT. 25.07.20 12 REQUIRED THE ASSESSEE TO PRODUCE BOOKS OF ACCOUNTS WITH VOUCHERS FOR VERIFIC ATION. ASSESSEE PRODUCED BOOKS OF ACCOUNTS WHICH IS EXAMINED BY THE AO BUT T HEREAFTER HE NEVER COMMUNICATED TO THE ASSESSEE THAT THE VOUCHERS BE A LSO PRODUCED. THE ASSESSEE HAS MAINTAINED SITE WISE LEDGER ACCOUNT OF PURCHASES SUPPORTED BY ALL THE BILLS. THE LEDGER ACCOUNT CONTAIN THE NAME OF T HE PARTIES FROM WHOM PURCHASES IS MADE. THE ASSESSEE ALSO PRODUCED THE M USTER ROLL IN RESPECT OF THE LABOUR CHARGES PAID VIDE LETTER DT. 19.11.2012. IN THESE CIRCUMSTANCES, DISALLOWANCE OUT OF PURCHASES AND LABOUR EXPENSES M ADE BY THE AO AND CONFIRMED BY CIT(A) IS UNJUSTIFIED MORE PARTICULARL Y WHEN THE EXPENDITURE ON ITA NO. 756/JP/13 & ITA NO. 132/JP/15 M/S SETHI CONSTRUCTION CO. VS. ITO WARD 5(2), JAIPU R 3 PURCHASES AND LABOUR ON THE CONTRACT RECEIPT IS COM PARABLE TO EARLIER YEARS AS TABULATED HERE UNDER:- ASSESSMENT YEAR 2007-08 2008-09 2009-10 2010-11 CONTRACT RECEIPTS 107409019 121791119 57239542 51214487 PURCHASES 58872011 69045257 31970496 28649176 % OF PURCHASES 54.81% 56.69% 55.85% 55.94% LABOUR EXPENSES 28065040 31545500 14419480 13345899 % OF LABOUR 26.13% 25.90% 25.19% 26.06% 2.2 THE LD AR FURTHER SUBMITTED THAT THE STAND OF T HE LOWER AUTHORITIES IS OTHERWISE CONTRADICTORY IN ITSELF. ON THE ONE HAND, THEY ARE REJECTING THE BOOKS OF ACCOUNTS AND ON THE OTHER HAND THEY ARE RELYING ON THE EXPENSES RECORDED IN THESE BOOKS OF ACCOUNT FOR MAKING THE DISALLOWAN CES. ONCE BOOKS ARE REJECTED, THOSE VERY BOOKS CANNOT BE A BASIS FOR MA KING DISALLOWANCE OUT OF EXPENSES. THIS IS BECAUSE AS PER SECTION 145(3), IF THE AO IS NOT SATISFIED ABOUT THE CORRECTNESS AND COMPLETENESS OF THE BOOKS OF AC COUNT, HE SHOULD MAKE THE ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144. S ECTION 144 PROVIDES FOR MAKING THE BEST JUDGMENT AFTER TAKING INTO ALL THE MATERIAL, WHICH THE AO HAS GATHERED. IN MAKING A BEST JUDGMENT THE AO MUST NOT ACT DISHONESTLY OR VINDICTIVELY OR CAPRICIOUSLY BECAUSE HE MUST EXERCI SE JUDGMENT IN THE MATTER. HE MUST MAKE WHAT HE HONESTLY BELIEF TO BE A FAIR E STIMATE OF THE PROPER FIGURE OF ASSESSMENT AND FOR THIS PURPOSE HE MUST B E ABLE TO TAKE INTO CONSIDERATION LOCAL KNOWLEDGE AND REPUTE IN REGARD TO THE ASSESSEE S CIRCUMSTANCES AND HIS OWN KNOWLEDGE OF PREVIOUS RET URNS BY AND ASSESSMENT OF THE ASSESSEE AND ALL OTHER MATTERS WHICH HE THIN KS WILL ASSIST HIM IN ARRIVING AT A FAIR AND PROPER ESTIMATE AND THOUGH THERE MUST NECESSARILY BE GUESS WORK IN THE MATTER, IT MUST BE HONEST GUESS WORK. IN MAK ING BEST JUDGMENT ASSESSMENT, THE AO DOES NOT POSSESS ABSOLUTELY ARBI TRARY AUTHORITY TO ASSESS AT ANY FIGURE HE LIKES. HE MUST BE GUIDED BY RULE OF J USTICE EQUITY AND GOOD CONSCIENCE. A BEST JUDGMENT ASSESSMENT IS NOT A PUN ITIVE ASSESSMENT. ITA NO. 756/JP/13 & ITA NO. 132/JP/15 M/S SETHI CONSTRUCTION CO. VS. ITO WARD 5(2), JAIPU R 4 2.3. THE LD AR FURTHER SUBMITTED THAT THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) BY DISALLOWING THE EXPE NSES, AFTER REJECTING BOOKS OF ACCOUNTS IS ARBITRARY AND WITHOUT CONSIDERING TH E ASSESSEE S OWN PAST HISTORY. THE COMPARATIVE POSITION OF THE NET PROFIT RATE DECLARED BY THE ASSESSEE IN EARLIER YEARS, CURRENT YEAR AND SUBSEQU ENT YEARS IS TABULATED AS UNDER:- A.Y. CONTRACT RECEIPTS NET PROFIT NET PROFIT RATE N.P BEFORE DEPRECIATION, FINANCIAL EXPENSES, REMUNERATION AND INTEREST TO PARTNERS N.P. RATE BEFORE DEPRECIATION, FINANCIAL EXPENSES, REMUNERATION AND INTEREST TO PARTNERS 2006-07 4,53,54,311 14,14,847 3.12% 42,84,556 9.44% 2007-08 10,74,09,019 25,76,826 2.40% 1,00,75,932 9.38% 2008-09 12,17,91,119 37,09,952 3.05% 1,30,18,109 10.69% 2009-10 5,72,39,542 3,02,627 0.53% 71,43,390 12.48% 2010-11 5,12,14,487 11,69,942 2.28% 74,23,130 14.49% 2011-12 9,27,76,952 21,42,261 2.31% 78,04,001 8.41% FROM THE ABOVE TABLE, IT CAN BE NOTED THAT THE NET PROFIT RATE DECLARED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS BET TER AS COMPARED TO EARLIER YEARS. 2.4. THE ASSESSMENT OF ASSESSEE IS CONTINUOUSLY MAD E UNDER SECTION 143(3) FROM A.Y. 2004-05. IN ALL THESE YEARS, AO MADE ASSE SSMENT BY APPLYING NET PROFIT RATE, SUBJECT TO INTEREST AND REMUNERATION T O PARTNERS. HOWEVER, HON BLE ITAT AFTER CONSIDERING REJECTION OF BOOKS OF ACCOUN TS, DIRECTED TO ASSESS THE INCOME AS UNDER:- IN A.Y. 2004-05 AND 2005-06, THE HON BLE ITAT DELETED THE ENTIRE TRADING ADDITION CONSIDERING THAT NET PROFIT DECLARED BY TH E ASSESSEE BEFORE REMUNERATION, INTEREST TO PARTNERS AND DEPRECIATION AT 6.12% AND 6.09% RESPECTIVELY WAS BETTER AS COMPARED TO RATE OF 5.96 % IN AY 2003-04. ITA NO. 756/JP/13 & ITA NO. 132/JP/15 M/S SETHI CONSTRUCTION CO. VS. ITO WARD 5(2), JAIPU R 5 IN A.Y. 2006-07, NET PROFIT DECLARED BEFORE REMUNER ATION, INTEREST TO PARTNERS AND DEPRECIATION WAS ONLY 5.31% WHICH WAS LESS AS COMPARED TO EARLIER YEARS, THEREFORE, THE HON BLE ITAT UPHELD THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION BY APPLYING NP RATE OF 10.1 7% SUBJECT TO DEPRECIATION AND FINANCIAL EXPENSES IN AY 2007-08, CIT(A) CONFIRMED THE ADDITION BY APP LYING NP RATE OF 9.5% SUBJECT TO DEPRECIATION AND FINANCE CHARGES. ON APP EAL THE HON BLE ITAT UPHELD THE ORDER OF CIT(A) BY FOLLOWING THE DECISIO N OF ITAT IN AY 2006-07 . IN AY 2008-09, CIT(A) CONFIRMED THE ADDITION BY APP LYING THE NP RATE OF 8% SUBJECT TO REMUNERATION AND INTEREST TO PARTNERS, D EPRECIATION AND FINANCIAL CHARGES. THE APPEAL FILED BY THE DEPARTMENT IS DISM ISSED BY HON BLE ITAT. IN AY 2009-10, CIT(A) CONFIRMED THE ADDITION BY APP LYING THE NP RATE OF 8% SUBJECT TO REMUNERATION AND INTEREST TO PARTNERS, D EPRECIATION AND FINANCIAL CHARGES. THE APPEAL FILED BY THE DEPARTMENT IS DISM ISSED BY HON BLE ITAT. IN A.Y. 11-12, THE AO AFTER OBSERVING THAT BOOKS OF ACCOUNT ARE NOT SUPPORTED BY PROPER VOUCHERS, REJECTED THE SAME BY APPLYING PROVISIONS OF SECTION 145(3) AND ASSESSED THE INCOME BY APPLYING NET PROFIT RATE OF 11.5% ON THE GROSS RECEIPT SUBJECT TO DEPRECIATION AND IN TEREST AND REMUNERATION TO THE PARTNERS . THE LD. CIT(A) REDUCED THE TRADIN G ADDITION BY APPLYING N.P. RATE OF 10.20% SUBJECT TO DEPRECIATION, INTERE ST AND REMUNERATION TO PARTNERS AND FINANCE CHARGES . AGAINST THIS ORDER, ASSESSEE FILED AN APPEAL BEFORE ITAT WHICH IS PENDING. 2.5 FROM THE ABOVE, IT CAN BE NOTED THAT IN PAST, I NCOME IS ASSESSED BY THE AO BY APPLYING A NET PROFIT RATE AND THEREFORE THER E IS NO REASON TO MAKE DISALLOWANCE OUT OF EXPENSES IN THE YEAR UNDER CONS IDERATION PARTICULARLY WHEN THE NATURE OF MAINTENANCE OF BOOKS OF ACCOUNT AND VOUCHERS IS THE SAME. AFTER DISALLOWANCE OF EXPENSES, THE NET PROFI T RATE IS WORKED OUT AT 10.76 % AFTER CONSIDERING INTEREST/SALARY TO PARTNE RS, DEPRECIATION AND FINANCIAL EXPENSES AS AGAINST 2.28 % DECLARED BY TH E ASSESSEE WHICH IS HIGHLY ITA NO. 756/JP/13 & ITA NO. 132/JP/15 M/S SETHI CONSTRUCTION CO. VS. ITO WARD 5(2), JAIPU R 6 UNREASONABLE, EXCESSIVE AND NOT COMPARABLE TO THE A SSESSMENT MADE IN THE PAST. HENCE, SUCH ADHOC DISALLOWANCE OUT OF THE EXP ENSES IS UNCALLED FOR. 2.6 THE AO HAS RELIED ON THE DECISION OF HON BLE ITAT IN CASE OF CHAUDHARY AND BROS. HOWEVER, HE HAS NOT SPECIFIED AS TO HOW T HIS CASE IS COMPARABLE TO THE FACTS OF THE ASSESSEE CASE VIS-A-VIS THE TURNOV ER, THE NATURE OF CONTRACT WORK EXECUTED, NAME OF THE PARTIES FOR WHOM THE CON TRACT WORK WAS CARRIED OUT, THE PLACE OF EXECUTION OF THE CONTRACT WORK ET C. THEREFORE, BY IGNORING THE PAST AND SUBSEQUENT HISTORY OF THE ASSESSEE, BLANKE T RELIANCE OF ITAT DECISION IN CASE OF CHOUDHARY AND BROTHERS IS UNJUSTIFIED. R ELIANCE IN THIS CONNECTION IS PLACED ON FOLLOWING CASES:- CIT VS. VAIBHAV GEMS LTD. (2014) 112 DTR 84 (RAJ.) (HC) DT. 21.08.2014 CIT VS. INANI MARBLES PVT LTD. 316 ITR 125 (RAJ.) ( HC) ITO VS HITIESH KUMAR PANCHORI 113 TTJ 357 (JOD.) ADDL. CIT VS. LAKHANI SHOES LIMITED 34 TAX WORLD 32 (JP) RADHA SOAMI SATSANG VS. CIT 193 ITR 0321 2.7 IT IS ALSO PERTINENT TO MENTION THAT IN A.Y. 11 -12 ALSO, THE AO MADE SIMILAR OBSERVATION ABOUT THE VARIOUS EXPENSES RECO RDED IN BOOKS OF ACCOUNTS BUT FINALLY APPLIED N.P. RATE SUBJECT TO INTEREST A ND DEPRECIATION AND CIT(A) FURTHER ALLOWED INTEREST TO THIRD PARTIES. THUS, WH EN IN PAST AND SUBSEQUENT YEARS, N.P. RATE IS APPLIED BY AO SUBJECT TO DEPREC IATION, INTEREST/REMUNERATION TO PARTNERS AND INTEREST TO THIRD PARTIES, THERE IS NO REASON TO DEVIATE FROM THE SAME IN THE YEAR UNDER CONSIDERATION. 3. THE LD DR IS HEARD WHO HAS RELIED UPON THE ORDER OF THE LOWER AUTHORITIES. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE UNDER CONSIDERATION RELATES TO ESTIMATION OF PROFIT AFTER REJECTING OF BOOKS OF ACCOUNTS U/S 145(3) OF THE AC T. ON PERUSAL OF THE ASSESSMENT ORDER, IT IS NOTED THAT THE ASSESSING OF FICER HAS DISALLOWED 10% OF THE PURCHASES AND LABOUR EXPENDITURE WHICH CONSTITU TE TWO MAJOR HEADS OF EXPENDITURE. BESIDES THESE TWO DISALLOWANCES, DIS ALLOWANCES FROM ITA NO. 756/JP/13 & ITA NO. 132/JP/15 M/S SETHI CONSTRUCTION CO. VS. ITO WARD 5(2), JAIPU R 7 TRANSPORTATION, VEHICLE, OFFICE AND TELEPHONE EXPEN SES HAVE BEEN MADE BY THE AO @ 20% OF THE RESPECTIVE EXPENSES. IN RESPECT O F PURCHASES, THE AO MENTIONED THAT THE ASSESSEE HAS FAILED TO FURNISH D ETAILS OF PURCHASES AND INVENTORIES OF OPENING AND CLOSING STOCK AND IN ABS ENCE OF SAID DETAILS, PURCHASES OF RAW MATERIAL ARE NOT VERIFIABLE AND DI SALLOWED 10% OF THESE EXPENSES AS UNVERIFIABLE EXPENDITURE . SIMILARLY IN RESPECT OF LABOUR EXPENDITURE, THE AO MENTIONED THAT THE ASSESSEE FAI LED TO PRODUCE DETAILS OF LABOUR AND WAGES SUCH AS ATTENDANCE REGISTER, PAYME NT SCHEDULE, MUSTER ROLLS OR VOUCHERS OF PAYMENTS, THEREFORE HE DISALLOWED 10 % OF THE LABOUR EXPENSES AS UNVERIFIABLE EXPENDITURE. SIMILARLY, THERE A RE DISALLOWANCES IN RESPECT OF OTHER EXPENDITURE FOR WANT OF NECESSARY VERIFICATI ON. IN RESPONSE, THE LD. AR SUBMITTED THAT IN COURSE OF ASSESSMENT PROCEEDINGS , ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNTS. THE ENTRIES IN THE BOOKS OF ACCOUNTS ARE SUPPORTED BY BILLS AND VOUCHERS WHICH IS VERIFIED BY THE AUDITOR . THE ASSESSEE HAS MAINTAINED SITE WISE LEDGER ACCOUNT OF PURCHASES SU PPORTED BY ALL THE BILLS. THE LEDGER ACCOUNT CONTAIN THE NAME OF THE PARTIES FROM WHOM PURCHASES IS MADE. THE ASSESSEE ALSO PRODUCED THE MUSTER ROLL IN RESPE CT OF THE LABOUR CHARGES PAID VIDE LETTER DT. 19.11.2012. IN THESE CIRCUMSTA NCES, DISALLOWANCE OUT OF PURCHASES AND LABOUR EXPENSES MADE BY THE AO AND CO NFIRMED BY CIT(A) IS UNJUSTIFIED. 4.1 WE HAVE GIVEN CAREFUL CONSIDERATION TO THE MATT ER AND THE OBSERVATIONS MADE BY THE AO AND THE LD CIT(A) AS WELL AS THE CON TENTIONS OF THE LD. AR AND THE LD DR. THE POSITION IN LAW IS NOW WELL SETTLED THAT ONCE THE BOOKS OF ACCOUNTS ARE REJECTED, THE ESTIMATION OF INCOME MAD E BY THE AO SHOULD BE FAIR AND PROPER AND BASED ON MATERIAL FACTS. THE ESTIMA TE SHOULD NOT BE ADHOC AND ARBITRARY RATHER IT SHOULD BE RATIONAL AND HAVI NG REASONABLE BASIS. IN THE INSTANT CASE WHAT WE HAVE OBSERVED IS THAT THOUGH T HE AO WAS NOT SATISFIED WITH THE DETAILS SUBMITTED AND THE SUBMISSION MADE IN THAT BEHALF BY THE ASSESSEE, INSTEAD OF HIGHLIGHTING THE SPECIFIC EXP ENDITURE WHICH REMAINS UNVERIFIABLE, THE AO HAS ESTIMATED 10% OF THE PURCH ASES AND LABOUR EXPENSES AS UNVERIFIABLE. SIMILAR IS THE SITUATION WITH THE OTHER DISALLOWANCES WHICH HAVE BEEN DISALLOWED AT THE RATE OF 20% OF TOTAL EX PENDITURE. THE LD. AR HAS SUBMITTED THAT THE ASSESSEE HAS MAINTAINED SITE LED GER ACCOUNT OF PURCHASES SUPPORTED BY ALL THE BILLS AS WELL AS THE MUSTER RO LLS IN RESPECT OF THE LABOUR ITA NO. 756/JP/13 & ITA NO. 132/JP/15 M/S SETHI CONSTRUCTION CO. VS. ITO WARD 5(2), JAIPU R 8 CHARGES. IT IS THEREFORE IMPERATIVE THAT THE EXPEN DITURE CLAIM OF THE ASSESSEE SHOULD GO THROUGH THE NECESSARY VERIFICATION BY THE AO AND WHERE THE AO STILL FINDS THAT THERE ARE CERTAIN SPECIFIC EXPENDITURE W HICH REMAINS UNVERIFIABLE OR HAS NOT BEEN INCURRED FOR THE PURPOSES OF THE BUSIN ESS, THE AO SHALL BE AT LIBERTY TO DISALLOW THE SAME AS PER LAW. WE THEREF ORE DEEM IT FIT AND PROPER THAT THE MATTER IS SET-ASIDE TO THE FILE OF THE AO TO EXAMINE THE CLAIM OF THE ASSESSEE IN TERMS OF MAINTENANCE AND NECESSARY SU PPORTING DOCUMENTATION IN RESPECT OF CLAIM OF THE SUBJECT EXPENSES. REGARDING THE CONTENTION OF THE AR THAT THE PERCENT AGE OF PURCHASES AS WELL AS THE LABOUR EXPENSES ARE COMPARABLE WITH EARLIER YEA RS AND NOT MUCH VARIATION IS SEEN AND FOLLOWING THE PRINCIPLE OF CONSISTENCY, THE RESULTS DECLARED FOR THE IMPUNGED ASSESSMENT YEAR SHOULD BE ACCEPTED, GIVEN THAT THERE ARE CLAIMS AND COUNTER CLAIMS IN RESPECT OF MAINTENANCE OF RELEVA NT RECORDS AND SUPPORTING DOCUMENTATION, AND THE FACT THAT WE HAVE ALREADY DE CIDED TO REFER THE MATTER BACK TO THE AO, WE ARE OF THE VIEW THAT IT WOULD N OT BE APPROPRIATE TO CONSIDER THE SAID CONTENTION RAISED BY THE LD AR AT THIS STAGE. SIMILARLY, ON SAME REASONING, WE ARE NOT EXAMINING AT THIS STAGE THE CONTENTION OF LD DR THAT THE FACTS OF CHAUDHARY BROTHERS ARE PARI-MATER IA WITH THAT OF THE ASSESSEE AND THE SAME SHOULD BE FOLLOWED. IN LIGHT OF ABOVE, THE MATTER IS SET-SIDE TO THE FI LE OF THE AO TO EXAMINE THE MATTER AFRESH HENCE THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. 4.2 IN ITA NO. 132/JP/15 FOR AY 2011-12, SIMILAR GR OUNDS OF APPEAL HAVE BEEN TAKEN BY THE ASSESSEE. OUR FINDINGS AND DIREC TION AS CONTAINED IN ITA NO. 756/JP/13 SHALL APPLY MUTATIS MUTANDIS AND THE MAT TER IS SET-SIDE TO THE FILE OF THE AO TO EXAMINE THE MATTER AFRESH. HENCE THE AP PEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN BOTH THE YEARS ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 756/JP/13 & ITA NO. 132/JP/15 M/S SETHI CONSTRUCTION CO. VS. ITO WARD 5(2), JAIPU R 9 ORDER PRONOUNCED IN THE OPEN COURT ON 14/09 /2016. SD/- SD/- (KUL BHARAT) (VIKRAM SINGH YADA V) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 14/ 09/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S SETHI CONSTRUCTION COMPANY, JAIPUR 2. THE RESPONDENT- THE ITO. WARD 5(2), JAIPUR 3. THE CIT(A) II, JAIPUR 4. THE CIT-II, JAIPUR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO.756 /JP/13 & ITA NO. 132/JP/1 5) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR .