M/s Naresh Singh Contractor, Etawah V. A.C.I.T., Circle-(5), Firozabad

ITA 77/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0482 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 2 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-03-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 27-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Keywords: Principle of natural justice; TDS
• Section: 40A(3); 143(3); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.77/AGR/2012 ASSESSMENT YEAR: 2004-05 M/S NARESH SINGH CONTRACTOR, VS. ASSTT. COMMISSIO NER OF INCOME TAX, 42-A, FRIENDS COLONY, CIRCLE-5, FIROZABAD. ETAWAH. (U.P.). (PAN : AAEFN 4791 K). (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 21.03.2013 DATE OF PRONOUNCEMENT : 04.04.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 29.11.2011 PASSED BY THE LD. CIT(A)-II, AGRA FOR THE ASSESSMEN T YEAR 2004-05. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1) BECAUSE THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.15,16,737/- AS SUPPRESSED RECEIPT IN VIEW OF THE REGULAR METHOD OF CREDITING RECEIPTS ON THE BASIS OF TDS CE RTIFICATES FOLLOWED 2 ITA NO.77/AGRA/2012 A.Y. 2004-05 BY THE APPELLANT YEAR AFTER YEAR, WHICH GAVE CORRECT RESULTS OF PROFIT/LOSSES OF THE APPELLANT BUSINESS. 2) BECAUSE THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION IN RESPECT OF YEAR END BILL UNILATERALLY PREPARED BY C ONTRACTEE WITHOUT REDUCING THE AMOUNT OF SUCH BILL PREPARED AT THE EN D OF PREVIOUS YEAR 2002-03 AS THAT AMOUNT HAD BEEN SHOWN UNDER CONTRAC T RECEIPT DURING THE ASSESSMENT YEAR 2004-05 ON THE BASIS OF TDS CERTIFICATES, AS PER REGULAR METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT . 3) BECAUSE THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING HUGE DISALLOWANCE OF RS.7,84,807/- U/S 40A(3) OF TH E ACT IN RESPECT OF CARTAGE EXPENSES WHILE ONLY VERY FEW PAYMENTS WE RE IN VIOLATION OF SECTION 40A(3) OF THE ACT. THE DISALLOWANCE WAS MA DE IN GREAT HASTE, BY THE LD. AO . 4) BECAUSE THE LD. CIT(A) WAS NOT JUSTIFIED IN ONLY PARTLY DELETING THE DISALLOWANCE MADE BY THE AO UNDER THE HEAD TNP. 5) BECAUSE THE LD. CIT(A) HAD NOT CONSIDERED THAT THE LD. AO HAD NOT MADE A REASONABLE AND FAIR ASSESSMENT OF INCOME IN VIEW OF THE NATURE OF BUSINESS OF THE APPELLANT. 6) BECAUSE, WHILE MAKING THE ASSESSMENT THE AO MADE VARIOUS OBSERVATIONS/CONCLUSIONS WHICH ARE CONTRARY TO FACTS AVAILABLE ON RECORDS. 7) BECAUSE, THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACT S, LAW AND PRINCIPLES OF NATURAL JUSTICE AND IN ANY VI EW OF THE MATTER DESERVES TO BE QUASHED. THE APPELLANT RESERVES HIS RIGHT TO ADD, DELETE, MODIFY, ALTER OR SUBSTITUTE ANY OR ALL THE GROUNDS OF APPEAL 3. BEFORE COMING TO BRIEF FACTS, IT IS NECESSARY TO RECORD SOME RELEVANT FACTS OF THE PROCEEDINGS WHICH ARE AS UNDER:- 3 ITA NO.77/AGRA/2012 A.Y. 2004-05 4. THE ASSESSEE FILED APPEAL ON 28.02.2012. THE CA SE OF THE ASSESSEE IS ON BOARD SINCE 04.07.2012. THE HEARING FIXED ON 29.08 .2012 WAS ADJOURNED ON THE REQUEST OF LD. AUTHORISED REPRESENTATIVE. IT WAS R EQUESTED IN ADJOURNMENT APPLICATION DATED 28.08.2012 AS UNDER :- THAT THE UNDERSIGNED HAS BEEN ENGAGED IN THIS CAS E AS COUNSEL JUST FEW DAYS BACK. WHILE PREPARING THE CASE NEED FOR FEW DOCUMENTS WERE FELT WHICH HAVE BEEN CALLED UPON FROM THE LOCA L COUNSEL BASED IN ETAWAH AND IS EXPECTED TO BE AVAILABLE BY NEXT WEEK . PRAYER IN THE LIGHT OF ABOVE IT IS REQUESTED THAT IN THE I NTEREST OF JUSTICE AND EQUITY THE HEARING MAY KINDLY BE ADJOURNED FOR TODAY AND MAY KINDLY BE DIRECTED TO BE TAKEN UP ON ANY OTHER DATE AFTER THIRD WEEK OF OCTOBER SUBJECT TO THE KIND CONVENIENCE OF THE HON BLE BENCH. 5. ON 26.09.2012 THE CASE WAS ADJOURNED ON THE REQU EST OF THE LD. AUTHORISED REPRESENTATIVE VIDE APPLICATION DATED 25.09.2012, R ELEVANT PORTION IS REPRODUCED AS BELOW :- THAT THE UNDERSIGNED COUNSEL IS HEAVILY PRE-OCCUP IED IN FINALIZING INCOME TAX RETURN WHICH ARE DUE TO FAILE D LATEST BAY 30.09.2012 AND FOR WHICH ONLY THREE WORKING DAYS AR E LEFT. THEREFORE UNDER THESE CIRCUMSTANCES PAPER BOOK AND SUBMISSI ONS TO BE ADVANCED COULD NOT BE PREPARED. THEREFORE, PRESENT APPLICATION SEEKING ADJOURNMENT IS BEING FILED FOR THE KIND AND FAVOURABLE CONSIDERATION OF THE HONBLE BENCH. PRAYER IN THE LIGHT OF ABOVE IT IS REQUESTED THAT IN THE I NTEREST OF JUSTICE AND EQUITY THE HEARING MAY KINDLY BE ADJOURNED AND MAY KINDLY BE DIRECTED TO BE TAKEN UP ON ANY OTHER DATE FALLING I N THE MONTH OF NOVEMBER SUBJECT TO THE KIND CONVENIENCE OF THE HON BLE BENCH. 4 ITA NO.77/AGRA/2012 A.Y. 2004-05 6. ON 12.11.2012 THE BENCH DID NOT FUNCTION, THEREF ORE, THE CASE WAS FIXED FOR HEARING ON 10.01.2013 AND INFORMED TO THE ASSESSEE BY REGISTERED POST AD. 7. ON 10.01.2013 THE LD. AUTHORISED REPRESENTATIVE FILED ADJOURNMENT APPLICATION DATED 09.01.2013. THE RELEVANT PORTION OF THE APPLICATION READS AS UNDER :- THE AFOREMENTIONED APPEAL PREFERRED BY THE ASSESSE E, IS FIXED TODAY I.E. ON 10.01.2013 FOR HEARING, IN THIS CONNECTION, IT IS RESPECTFULLY SUBMITTED HERE AS UNDER : THAT WHILE PREPARING THE APPEAL NEED FOR NEW DOCUME NTS HAVE BEEN FELT WHICH HAVE BEEN CALLED UPON FROM THE LOCA L COUNSEL AT ETAWAH WHO REPRESENTED THE MATTER BEFORE THE AUTHOR ITIES BELOW. THE DOCUMENTS ARE EXPECTED TO REACH THE UNDERSIGNED BY NEXT WEEK IN THESE CIRCUMSTANCES PRESENT APPLICATION SEEKING ADJ OURNMENT IS BEING FILED FOR THE KIND AND FAVOURABLE CONSIDERATION OF THE HONBLE BENCH. PRAYER IN THE LIGHT OF ABOVE IT IS REQUESTED THAT THE PROC EEDINGS MAY KINDLY BE ADJOURNED FOR TODAY AND MAY KINDLY BE DIR ECTED TO BE TAKEN UP ON ANY OTHER DATE SUBJECT TO THE KIND CONVENIENC E OF THE HONBLE BENCH. 8. ON 10.01.2013 THE LD. AUTHORISED REPRESENTATIVE GIVEN UNDERTAKING READS AS NO FURTHER ADJOURNMENT WOULD BE SOUGHT. ON THE B ASIS OF UNDERTAKING OF LD. AUTHORISED REPRESENTATIVE THE HEARING WAS ADJOURNED TO 01.02.2013. ON 5 ITA NO.77/AGRA/2012 A.Y. 2004-05 01.02.2013 THE BENCH DID NOT FUNCTION, THEREFORE, T HE HEARING WAS ADJOURNED TO 01.03.2013. 9. ON 01.03.2013 ANOTHER LD. COUNSEL SHRI RAJENDRA SHARMA, ADVOCATE APPEARED AND SOUGHT ADJOURNMENT. THE CONTENTS OF A DJOURNMENT APPLICATION READS AS UNDER :- WITH REFERENCE TO THE ABOVE APPEAL FIXED FOR 10.03 .2013 IN THIS CONNECTION IT IS RESPECTFULLY SUBMITTED THAT ONE DA TE MAY KINDLY BE ALLOWED TO THE UNDERSIGNED COUNSEL FOR PREPARATION OF THE ABOVE APPEAL & OBLIGED. 10. THE ADJOURNMENT APPLICATION WAS REJECTED. HOWE VER, THE HEARING WAS ADJOURNED TO 21.03.2013 WITH FOLLOWING OBSERVATION S:- IN VIEW OF EARLIER UNDERTAKING GIVEN BY EARLIER AR , NO GROUND FOR ADJOURNMENT. REQUEST IS REJECTED. HOWEVER, IN THE INTEREST OF JUSTICE LAST CHANCE GRANTED. ADJOURNED TO 21.03.20 13. 11. ON 21.03.2013, AGAIN THE LD. COUNSEL HAS BEEN C HANGED AND EARLIER LD. AUTHORISED REPRESENTATIVE FILED ADJOURNMENT APPLICA TION DATED 20.03.2013 OF WHICH CONTENTS HAVE BEEN REPRODUCED UNDER :- THAT THE UNDERSIGNED COUNSEL SHALL BE OUT OF STATI ON TOMORROW TO ATTEND HEARING BEFORE THE ITO-2(1), AT KANPUR IN THE CASE OF SMT. ANITA CHANDRA RESIDENT OF B-40, SECTORA-20, ALIGANJ , NEAR NEHRU BAL VATIKA, LUCKNOW, AND THE MATTER BEING TIME BARRING ON 31 ST MARCH 2013 AND DURING THESE DAYS OWING TO EXTREME PRESSUR E IN ATTENDING TIME BARRING ASSESSMENTS PENDING WITH VARIOUS ASSES SING OFFICERS 6 ITA NO.77/AGRA/2012 A.Y. 2004-05 PAPER BOOK AND SUBMISSIONS TO BE ADVANCED BEFORE THE HONBLE BENCH COULD NOT BE PREPARED. THEREFORE, PRESENT AP PLICATION SEEKING ADJOURNMENT IS BEING FILED FOR THE KIND AND FAVOURA BLE CONSIDERATION OF THE HONBLE BENCH. THE COUNSEL PUT IT ON RECORDS CONVENIENCE SO FAR GR ANTED BY THE HONBLE BENCH IN PAST BUT OWING TO EXTREME PRESSURE OF WORK COULD NOT CALL FOR THE ENABLING DOCUMENTS TO JUSTIFY THE GROUNDS TAKEN IN APPEAL. PRESENT APPEAL IS DIRECTED AGAINST EX-PARTE DISPOSA L OF APPEAL BY THE LD CIT(A) THEREFORE APPELLANT IS KEEN TO GET THE SAME DISPOSED OFF AFTER HEARING OF THE APPEAL. 12. THE SAID ADJOURNMENT APPLICATION WAS REJECTED W ITH THE OBSERVATION CONSIDERING EARLIER ADJOURNMENT, NO GROUND FOR ADJ OURNMENT. REJECTED. 13. THE WAY IN WHICH THE LD. COUNSEL SEEKING ADJOUR NMENT AMOUNTS TO AGAINST ALL ETHIC, CONDUCT AND PRINCIPLE OF JUDICIARY DISCI PLINE .THERE WERE NO SUFFICIENT AND GOOD REASONS AND GROUNDS FOR SEEKING THE ADJOURNMEN T. THE COUNSELS APPEARING IN I.T.A.T. ARE RESPONSIBLE OFFICERS OF THE COURT. THE Y SHOULD FOLLOW ALL NATURAL PRINCIPLES OF DISCIPLINES TO MAINTAIN PRESTIGE OF T HE INSTITUTION AS WELL AS THE PRESTIGE OF THE PROFESSION AND BAR ASSOCIATION. IN THE CASE UNDER CONSIDERATION THE PRESENT LD. AUTHORISED REPRESENTATIVE DID NOT FURNI SH HIS FRESH POWER OF ATTORNEY. FROM THE FACTS OF THE CASE, IT APPEARS THAT EITHER THE ASSESSEE IS NOT INTERESTED IN PROSECUTION OF THE APPEAL OR THE ASSESSEE HAS NO MA TERIAL FOR FURNISHING AGAINST THE 7 ITA NO.77/AGRA/2012 A.Y. 2004-05 ORDER OF CIT(A). UNDER THE CIRCUMSTANCES, THE APPE AL OF THE ASSESSEE IS LIABLE TO BE DISMISSED IN LIMINE. HOWEVER, IN THE INTEREST OF J USTICE, WE PROCEED TO DECIDE THE APPEAL ON MERIT CONSIDERING THE MATERIAL AVAILABLE ON RECORD. 14. THE ASSESSEE HAS RAISED AS MANY AS SEVEN GROUND S OF APPEAL BUT EFFECTIVELY THE GROUNDS PERTAIN TO ADDITION OF RS.15,16,737/- O N ACCOUNT OF SUPPRESSED RECEIPTS OF RS.7,84,807/- UNDER SECTION 40A(3) AND RS.1,00,0 00/- UNDER THE HEAD TNP. THE A.O. MADE ADDITIONS AS UNDER:- (PARAGRAPH NOS. 2 TO 2.4) 2. THE ASSESSEE WAS MAINTAINING ITS BOOKS OF ACCOU NT ON MERCANTILE BASIS AS EVIDENT FROM PARA 11(A) OF FORM NO.3CD ANNEXED WITH THE RETURN OF INCOME. THE ASSESSEE HAD BEEN E XECUTING THE WORK OF CONSTRUCTION OF BUILDINGS UNDER TWO CONTRACTS WI TH UTTAR PRADESH RAJKIYA NIRMAN NIGAM LTD. (HERE-IN-AFTER REFERRED T O AS UPRNN). ONE WITH UPRNN, KANNAUJ UNIT AND THE OTHER WITH UPR NN, ETAWAH UNIT. DATE WISE DETAILS OF PAYMENTS WERE CALLED FR OM BOTH THE UNITS AND THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHET HER ALL THE PAYMENTS SHOWN BY BOTH THE UNITS HAVE BEEN ACCOUNTE D FOR. IT WAS FOUND ON VERIFICATION THAT PAYMENT OF RS.15,16,737/ - SHOWN ON 31.03.2004 BY KANNAUJ UNIT WAS NOT FOUND RECORDED I N THE BOOKS OF ACCOUNT. THE ASSESSEE DISPUTED THE DETAILS OF PAYM ENTS SHOWN BY KANNAUJ UNIT AND SIMPLY REPLIED THAT NO SUCH PAYMEN TS WERE MADE TO ASSESSEE AND THE INFORMATION SUBMITTED BY KANNAUJ U NIT IS NOT AUTHENTIC BECAUSE THE PROJECT WAS PREVIOUSLY BEING HANDLED BY ETAWAH UNIT. KEEPING IN VIEW THE CONTENTION RAISED BY THE ASSESSEE, SUMMONSES WERE ISSUED TO PROJECT MANAGER OF BOTH TH E UNITS FOR PERSONAL PRESENCE ALONG WITH DOCUMENTS. SH. PURUSH OTTAM KUMAR, PROJECT MANAGER OF KANNAUJ UNIT ACCORDINGLY APPEARE D WITH RECORDS AND CERTIFIED COPY OF ALL THE BILLS FOR THE WORK EX ECUTED BY THE ASSESSEE WERE FURNISHED. IT WAS FOUND ON VERIFICATION THAT TWO BILLS AS DETAILED HEREUNDER WERE NOT FOUND RECORDED IN THE BOOKS OF A CCOUNT. 8 ITA NO.77/AGRA/2012 A.Y. 2004-05 1. RUNNING BILL NO. 6 DATED 25.03.2004 FOR RS.12,3 3,421.67 2. RUNNING BILL NO. 7 DATED 31.03.2004 FOR RS. 2, 83,315.46 RS.15,16,737.23 2.1 THE INFORMATION WAS CONFRONTED WITH THE LEARNED A.R. OF THE ASSESSEE. THE LEARNED A.R. ADVANCED THE FOLLOWING ARGUMENTS IN THIS REGARD WHICH WERE TAKEN DOWN ON ORDER SHEET DATED 2 1.12.2006. AS REGARDS PAYMENT OF RS.15,16,737/- FROM UPRNN, K ANNAUJ UNIT THE LD. AR ARGUES THAT NO SUCH PAYMENT WAS RECEIVED BY THE ASSESSEE DURING RELEVANT PERIOD. THE LEARNED AR ON BEING CO NFRONTED WITH THE INFORMATION RECEIVED FROM UPRNN STATES THAT INFORMA TION IS NOT RELIABLE AS CREDIT OF RS.13,21,879/- HAS BEEN MADE ON 17.05.2004 AS EVIDENT FROM COPY OF FORM NO.16A DATED 30.06.2004 F ILED IN THE COURSE OF PROCEEDINGS. MOREOVER, THERE ARE NO SIGN ATURES OF THE ASSESSEE ON THE BILLS ALLEGEDLY MADE ON 31.03.2004. THE AMOUNTS CAN THEREFORE, NEITHER BE TAKEN AS WORK IN PROGRESS NOR AS DEBTORS. THE AMOUNT HAS DULY BEEN CREDITED IN THE BOOKS OF THE S UCCEEDING ASSESSMENT YEAR. 2.2 THE ARGUMENT OF THE LEARNED AR HAS CAREFULLY BE EN CONSIDERED AND NOT FOUND TENABLE FOR THE FOLLOWING REASONS: 1. THE BILL NO. 6 DATED 25.03.2004 WAS PREPARED FOR THE WORK EXECUTED UP TO 25.03.2004 AND BILL NO. 07 DATE D 31.03.2004 WAS PREPARED FOR THE WORK EXECUTED UP TO 31.03.2004. THE SPECIFICATION OF WORK COMPLETED UP TO THOSE DATES HAS CLEARLY BEEN MENTIONED IN THE BILLS ITSELF. THE WORK HAS BEEN CERTIFIED BY THE ENGINEERS AND HA S BEEN APPROVED FOR PAYMENT BY THE DESIGNATED AUTHORI TIES. 2. THE AMOUNT OF RS.15,16,737/- WAS DEBITED TO THE WORK IN PROGRESS A/C AND THE ASSESSEES ACCOUNT WAS CREDITE D BY THE CORRESPONDING AMOUNT ON 31.03.2004 VIDE JV NO. 29/12 DATED 31.03.2004 BY THE UPRNN, KANNAUJ UNIT. AS SUCH THE ASSESSEES ACCOUNT WAS CREDITED BY THE DEPARTMENT BUT THE ASSESSEE DID NOT RECORD THE AMOU NT IN ITS BOOKS OF ACCOUNT DELIBERATELY. THE COPY BILL N O. 6 DATED 25.03.2004, COPY OF BILL NO.7 DATED 31.03.200 4, 9 ITA NO.77/AGRA/2012 A.Y. 2004-05 COPY OF JOURNAL VOUCHER NO.29/12 DATED 31.03.2004 A ND COPY OF CASH VOUCHER NO.8 DATED 24.05.2006 WHEREBY PAYMENT WAS RECEIVED ARE FORMING PART OF THE ORDER AS ANNEXURE A, B, C AND D RESPECTIVELY. 3. THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNT. ALL THE INCOME AND EXPENDITURES WERE THEREFORE, TO BE RECORDED ON ACCRUAL BASIS. THE ACCOUNTANT HAS GIVE N THE FOLLOWING REMARKS IN SCHEDULE-D NOTES TO ACCOUNTS Y/E 31.03.2004 OF HIS AUDIT REPORT FILED ALONG WITH THE RETURN OF INCOME. THE FIRM HAS FOLLOWED MERCANTILE SYSTEM OF ACCOUNT ING AS IN THE PREVIOUS YEAR. ALL INCOME AND EXPENDITUR E HAVE BEEN ACCOUNTED FOR ON ACCRUAL BASIS. THE REMARK INDICATES THAT THE ASSESSEE HAD BEEN FOLLOWING THE SYSTEM OF RECORDING INCOME OR EXPENDI TURES ON ACCRUAL BASIS AND THEREFORE, THE WORK EXECUTED U P TO 31.03.2004 SHOULD HAVE FOUND PLACE IN THE BOOKS OF ACCOUNT. 2.3 FROM THE ABOVE FACTS IT IS CLEAR THAT THE PAYME NT OF RS.15,16,737/- WAS DUE TO THE ASSESSEE AS ON 31.03. 2004. IT WAS DULY CREDITED TO THE ACCOUNT OF THE ASSESSEE ON 31.03.2004 BY THE UPRNN BUT THE ASSESSEE HAS NOT CREDITED THE AMOUNT OF BOTH THE BILLS TO BOOKS OF ACCOUNT AND AS SUCH THE RECEIPTS HAVE BEEN CLEARLY SUPPRESSED BY RS.15,16,737/-. THE ARG UMENT ADVANCED BY THE LEARNED A.R. OF THE ASSESSEE IS NOT AT ALL TENABLE AND IS REJECTED. THE LEARNED A.R. OF THE A SSESSEE HAS ALREADY GIVEN THE FOLLOWING BREAKUP OF WORK IN PROG RESS. 1. CARTAGE 1,30,000/- 2. GRIT 85,000/- 3. LABOUR 85,000/- 4. DAMAR 25,000/- 5. BRICKS 65,000/- 6. CEMENT 60,000/- TOTAL 4,50,000/- 10 ITA NO.77/AGRA/2012 A.Y. 2004-05 2.4 THE WORK AS MENTIONED IN THE BOTH THE BILLS WAS IN RESPECT OF BUILDING WHILE THE ITEMS SHOWN AS WORK IN PROGRESS ARE REQUIRED FOR CONSTRUCTION OF ROADS. THE ASSESSEE WAS ALSO EXECU TING WORK OF CONSTRUCTION OF ROADS SIMULTANEOUSLY WITH OTHER DEP ARTMENTS. THIS CLEAR BEYOND DOUBT THAT THE ASSESSEE HAS NOT SHOWN WORK AS MENTIONED IN THE BILLS AS WORK IN PROGRESS ALSO. N O SET OFF OF WORK IN PROGRESS CAN THEREFORE, BE ALLOWED FROM THE AMOUNT OF BOTH THE BILLS. THE AMOUNT IS CLEARLY LIABLE TO BE ADDED TO THE INC OME OF THE ASSESSEE AND THEREFORE, THE SAME IS ADDED TO THE INCOME OF T HE ASSESSEE AS SUPPRESSED CONTRACT RECEIPTS. ALTERNATIVELY THE UP RNN, KANNAUJ UNIT COULD HAVE BEEN SHOWN AS DEBTORS FOR THAT AMOU NT BUT UNDER BOTH CIRCUMSTANCES THE AMOUNT IS LIABLE TO ADDED TO THE INCOME OF THE ASSESSEE. 15. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE INCURRED CASH EXPENDITURES EXCEEDING RS.20,000/-. THE DETAILS OF EXPENDITURES HAVE BEEN NOTED BY THE A.O. IN HIS ORDER AT PAGE NO.3 & 4. THE TOTAL OF SUCH EXPE NDITURE WAS RS.39,24,034/-. THE A.O. DISALLOWED 20% OF THAT AMOUNT OF WHICH CALCULA TION COMES TO RS.39,24,034/- UNDER SECTION 40A(3) OF THE ACT. THE FINDING OF TH E A.O. IS REPRODUCED AS BELOW :- (PARAGRAPH NOS.3.2 & 3.3) 3.2 THE EXPLANATION OFFERED BY THE LEARNED AR IS N OT AT ALL TENABLE. THE PAYMENTS IN CARTAGE ACCOUNT AS MENTIONED ABOVE HAVE BEEN MADE TO SINGLE PERSON THOUGH TWO OR THREE TRUCK NOS. HAV E BEEN MENTIONED IN THE NARRATION GIVEN IN CARTAGE ACCOUNT BUT ON VE RIFICATION OF RECEIPTS/VOUCHERS PREPARED WHILE MAKING PAYMENT IT WAS GATHERED THAT A SINGLE PERSON HAS RECEIVED THE AMOUNT SIGNED THE RECEIPT IN ALL THE ABOVE CASES. TWO-THREE TRUCK NOS. OUT OF REGIS TRATION NOS. UP- 93B/5305, UP-93E/5303, UP-75B/9794, UP-84/9272 AND UP- 75/1703 HAVE BEEN MENTIONED IN RECEIPTS/VOUCHERS RO UND THE YEAR. THE ASSESSEE HAS NOT BEEN ABLE TO GIVE DETAILS OF O WNERS OF ABOVE TRUCK NOS. DESPITE SPECIFICALLY ASKED TO PROVIDE VI DE ORDER SHEET ENTRY 11 ITA NO.77/AGRA/2012 A.Y. 2004-05 DATED 07.12.2006. THE ARGUMENT THAT THE PAYMENT HA S NOT BEEN MADE TO SINGLE PERSON AND NOT FOR THE BENEFIT OF SINGLE PERSON IS NOT CORRECT. THE LEARNED AR HAS NOT SPELT OUT THE NAME OF RURAL TOWN OR VILLAGE WHERE PAYMENTS WERE MADE. IT IS ALSO NOT STATED AS TO WHICH EXCEPTION PROVIDED UNDER RULE 6DD APPLIES TO THE CA SE OF THE ASSESSEE. SINCE THE ASSESSEE HAS PAID CARRIAGE TO THE SAME TRUCK OWNERS, IT CAN NOT BE CLAIMED THAT PAYMENT WAS MADE FOR THE FIRST TIME AND IT CAN ALSO NOT BE CLAIMED THAT THE PERSONS TO WHOM PAYMENTS HAVE BEEN MADE WERE NOT ALREADY KNOWN TO THE ASSESS EE. THE TRUCK DRIVER WHOM PAYMENTS HAVE BEEN MADE WERE NOT AGENTS OF THE ASSESSEE AND THEREFORE, RELEVANT EXCEPTION HAS NO A PPLICATION IN RESPECT OF PAYMENTS OF CARTAGE. NONE OF THE EXCEPT IONS PROVIDED UNDER RULE 6DD OF I.T. RULES WAS THEREFORE APPLICAB LE TO THE PAYMENTS OF CARTAGE MADE IN VIOLATION OF THE PROVISIONS OF S ECTION 40A(3). THE DAMMAR ACCOUNT WAS DEBITED BY WAY OF CASH PAYMENT O F RS.2,00,000/- ON 01-07-2003 AS ADVANCE FOR PURCHASE OF DAMMAR AND THE ACCOUNT HAS BEEN CREDITED BY RS.3,04,560/- ON 05-07-2003 ON ACCOUNT OF PURCHASE OF 24 TONS OF DAMMAR AND BALANCE HAS BEEN PAID ON LATER DATES. IT IS THEREFORE ESTABLISHED THAT EXPENDITUR E IN PURCHASE OF DAMMAR HAS BEEN MADE IN VIOLATION OF PROVISIONS OF SECTION 40A(3) AND NO EXPLANATION AS TO THE VIOLATION HAS BEEN OFF ERED. THE EXPENDITURE IS THEREFORE CLEARLY HIT BY THE PROVISI ON OF SECTION 40A(3). SIMILARLY, THE PAYMENTS FOR PURCHASE OF DOOR AND WI NDOWS HAVE BEEN MADE IN VIOLATION OF THE PROVISION OF SECTION 40A(3 ) AND THEREFORE DESERVE FOR DISALLOWANCE. 3.3 THE PAYMENTS MADE IN VIOLATION OF THE PROVISION OF SECTION 40A(3) AGGREGATE TO RS.39,24,034/- AND DISALLOWANCE @ 20% WORKS OUT TO RS.7,84,806.80 OR RS.7,84,807/-. A SUM OF R S.7,84,807/- IS THEREFORE ADDED TO THE INCOME OF THE ASSESSEE ON AC COUNT OF DISALLOWANCE U/S. 40A(3) OF THE INCOME TAX ACT. 16. THE A.O. ALSO MADE ADDITION OF RS.2,00,000/- AS UNDER :- (PARAGRAPH NO.4) 4. THE ASSESSEE HAS DEBITED EXPENDITURE OF RS.3,20 ,000/- UNDER THE TWP. ALL AMOUNTS DEBITED TO THIS ACCOUNT ARE IN CA SH AND THE ASSESSEE COULD NOT ANY VOUCHERS FOR THE AMOUNTS DEB ITED. IT WAS EXPLAINED THAT THE EXPENSES ARE ON ACCOUNT OF PURCH ASE OF PALLA, SPADES, GAINTI, BASKETS ETC. FOR BEING USED WHILE E XECUTING THE CONTACT 12 ITA NO.77/AGRA/2012 A.Y. 2004-05 WORKS. NO CLOSING STOCK OF SUCH TOOLS HAS HOWEVER, BEEN SHOWN IN THE BALANCE SHEET NOR ANY AMOUNT HAS BEEN FOUND CREDITE D TO THIS ON ACCOUNT OF SALE OF WORN-OUT TOOLS ETC. NO DOUBT TH AT THE ASSESSEE WOULD HAVE HAD TO INCUR SOME EXPENDITURES UNDER THI S HEAD. I THEREFORE, IN ABSENCE OF ANY EVIDENCE IN POSSESSION OF THE ASSESSEE DEEM THE EXPENDITURE TO THE EXTENT OF RS.1,20,000/- AS REASONABLE AND EXPENDITURE OF RS.2,00,000/- IS DISALLOWED AND ADDE D TO INCOME OF THE ASSESSEE. 17. THE CIT(A) DECIDED THE CASE EX-PARTE AS THE ASS ESSEE DID NOT APPEAR BEFORE HIM. THE CIT(A) CONFIRMED THE ADDITIONS OF RS.15,1 6,737/- & RS.7,84,807/. HOWEVER, IN RESPECT OF ADDITION OF RS.2,00,000/- ON ACCOUNT OF TNP THE CIT(A) RESTRICTED THE SAME TO RS.1,00,000/-. THE CIT(A) D ECIDED THE CASE EX-PARTE OBSERVING AS UNDER :- (PAGE NO.1) IN THIS CASE, THE APPEAL WAS FIXED FOR HEARING ON 15 TH OF MAY, 2007, 18 TH JULY, 2007, 14 TH AUGUST, 2007, 29 TH OF OCTOBER, 2007, 29 TH OF JULY, 2009 AND 22 ND OF SEPTEMBER, 2010. ON ALL THESE DATES FIXED FOR HEARING APPLICATIONS WERE RECEIVED SEEKING ADJOURNM ENT FOR ONE REASON OR ANOTHER. AGAIN THE CASE WAS FIXED FOR 02 ND OF JUNE, 2011 AND ON THIS DATE NEITHER ANYBODY ATTENDED THE HEARI NG NOR ANY APPLICATION FOR ADJOURNMENT WAS RECEIVED. ONCE AGA IN THE CASE WAS FIXED FOR 29.07.2011 AND AGAIN THE ADJOURNMENT WAS SOUGHT. AGAIN, ONE MORE OPPORTUNITY WAS PROVIDED TO THE ASSESSEE F OR 24.11.2011 BUT ON THIS DATE ALSO NEITHER ANYBODY APPEARED NOR ANY ADJOURNMENT APPLICATION WAS FILED. THEREFORE, I PROCEED TO DEC IDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AS THE AP PELLANT IN SPITE OF HAVING BEEN GIVEN APPELLANT : M/S NARESH SINGH CONT RACTOR, ETAWAH A.Y. 2004-05 U/S 143(3) SUFFICIENT OPPORTUNITIES OF BEING HEARD HAS CHOSEN NOT TO AVAIL OF THE SAME. 13 ITA NO.77/AGRA/2012 A.Y. 2004-05 18. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATI VE, WE NOTICED THAT THE CIT(A) HAS RIGHTLY DECIDED THE CASE EX-PARTE AS INS PITE OF SEVERAL OPPORTUNITY THE ASSESSEE DID NOT APPEAL BEFORE HIM. EVEN BEFORE US THE ASSESSEE HAS TAKEN SEVERAL DATES AS NOTED ABOVE ON ONE OR OTHER REASONS. IN A DJOURNMENT APPLICATION DATED 25.09.2012 FOR ADJOURNMENT OF HEARING DATED 26.09.2 012 THE LD. AUTHORISED REPRESENTATIVE REQUESTED FOR ADJOURNMENT THAT HE WA NT TO FILE PAPER BOOK. AFTER LAPSE OF CONSIDERABLE TIME, STILL ON HEARING ON 21. 03.2013 HE SUBMITTED THAT HE IS TO SUBMIT PAPER. WHEN THE ASSESSEE HAS FILED APPEAL O N 28.02.2012 AND ALMOST MORE THAN ONE YEAR HAS PASSED STILL HE IS IN PREPARATION , THAT MEANS THE ASSESSEE DO NOT WANT TO FILE ANYTHING. HOWEVER, AFTER CONSIDERING MATERIAL ON RECORD, WE FIND THAT THE FACTS RECORDED BY THE A.O. THAT THE ASSESSEE DI D NOT ACCOUNT FOR CONTRACT RECEIPTS OF RS.15,16,737.23 NOR IT WAS SHOWN AS WOR K-IN-PROGRESS WHEREAS AS PER MERCANTILE SYSTEM OF ACCOUNTING THE ASSESSEE IS REQ UIRED TO ACCOUNT FOR THE RECEIPT WHICH WAS ACCRUED. THERE IS NO DISPUTE REGARDING T HE FACT THAT THE SAID AMOUNT WAS ACCRUED TO THE ASSESSEE. THE CONTENTION OF THE ASSESSEE THAT CONTRACT RECEIPT WAS ACCOUNTED FOR ON THE BASIS OF TDS CERTIFICATE I S NOT A SYSTEM OR METHOD OF ACCOUNTING. ACCORDING TO SECTION 145 OF THE ACT, T WO METHODS OF ACCOUNTING, MERCANTILE AND CASH METHOD, ARE RECOGNISED METHODS. AS REGARDS PAST PRACTICE THAT SAME METHOD FOLLOWED BY THE ASSESSEE, IN THIS REGAR D, WE WOULD LIKE TO REFER A JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF C IT VS. BRITISH PAINTS INDIA 14 ITA NO.77/AGRA/2012 A.Y. 2004-05 LIMITED, 188 ITR 44 (SC). IN THAT CASE, THE ASSESS EE-COMPANY, ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF PAINTS CONTENDE D THAT IT IS ITS CONSISTENT PRACTICE TO VALUE THE GOODS-IN-PROCESS AND FINISHED PRODUCTS EXCLUSIVELY ON THE COST OF RAW MATERIAL AND BY TOTALLY EXCLUDING OVERHEAD E XPENDITURE. THE ITO HELD THAT THERE WAS NO JUSTIFICATION FOR THE ASSESSEE TO VARY FROM THE REGULAR ACCOUNTING PRINCIPLE OF VALUING STOCK AT EARLIER COST (I.E. RA W MATERIAL PLUS DIRECT EXPENDITURE) OR MARKET PRICE, WHICHEVER WAS LOWER. THE QUESTION BEFORE THE COURT WAS WHETHER THE ITO COULD REJECT THE CONSISTENT PRACTICE OF THE ASSESSEE IN VALUING STOCK IN EXERCISE OF HIS POWERS UNDER SECTION 145. THE COURT HELD THAT IT IS THE DUTY OF THE ASSESSING OFFICER TO CONSIDER WHETHER BOOKS OF ACCO UNTS DISCLOSE THE TRUE STATEMENT OF ACCOUNTS, FROM WHICH THE CORRECT INCOME CAN BE D ERIVED. THE OFFICER IS NOT BOUND TO ACCEPT THE SYSTEM OF ACCOUNTING EMPLOYED R EGULARLY, OR THE METHOD FOLLOWED IN EARLIER YEARS. THE OBJECT OF STOCK VAL UATION IS THE CORRECT DETERMINATION OF PROFITS AND LOSS RESULTING FROM THE YEARS TRADI NG ITO IS JUSTIFIED UNDER SECTION 145 TO REJECT THE BOOKS OF ACCOUNTS AND DETERMINE T HE CORRECT PROFITS AND GAINS. IF ORDINARY PRINCIPLES OF COMMERCIAL ACCOUNTING ARE NO T APPLIED. 19. IN THE LIGHT OF ABOVE DISCUSSION AND FINDING GI VEN BY THE CIT(A), WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). NEITHER THE ASSESSEE NEITHER POINTED OUT 15 ITA NO.77/AGRA/2012 A.Y. 2004-05 ANY MATERIAL NOR IS THE SAME AVAILABLE ON RECORD CO NTRARY TO THE FINDING OF REVENUE AUTHORITIES. THEREFORE, THE ORDER OF CIT(A) IS ACC ORDINGLY CONFIRMED ON THE ISSUE. 20. AS REGARDS THE SECOND GROUND THAT DIRECTION MAY BE GIVEN THAT THE A.O. MAY ALLOW BENEFIT OF RS.15,16,737/- IN A.Y. 2004-05, SI NCE THE APPEAL FOR A.Y. 2004-05 IS NOT BEFORE US, THEREFORE, SUCH DIRECTION CANNOT BE ISSUED. THIS GROUND OF THE APPEAL IS REJECTED. 21. AS REGARDS ADDITION OF RS.7,84,807/- ONLY GROUN D OF APPEAL IS THAT ONLY PAYMENTS WERE IN VIOLATION OF SECTION 40A(3) BUT IN ABSENCE OF DETAILS IN THIS REGARD RELIEF CANNOT BE GRANTED. THE AO HELD THAT T HE EXPLANATION OFFERED BY THE LEARNED AR IS NOT AT ALL TENABLE. THE PAYMENTS IN CARTAGE ACCOUNT MADE TO SINGLE PERSON THOUGH TWO OR THREE TRUCK NOS. HAVE BEEN MEN TIONED IN THE NARRATION GIVEN IN CARTAGE ACCOUNT BUT ON VERIFICATION OF RECEIPTS/ VOUCHERS PREPARED WHILE MAKING PAYMENT IT WAS GATHERED THAT A SINGLE PERSON HAS RE CEIVED THE AMOUNT SIGNED THE RECEIPT IN ALL THE ABOVE CASES. TWO-THREE TRUCK NO S. OUT OF REGISTRATION NOS. UP- 93B/5305, UP-93E/5303, UP-75B/9794, UP-84/9272 AND UP-75/1703 HAVE BEEN MENTIONED IN RECEIPTS/VOUCHERS ROUND THE YEAR. THE ASSESSEE HAS NOT BEEN ABLE TO GIVE DETAILS OF OWNERS OF ABOVE TRUCK NOS. DESPITE SPECIFICALLY ASKED TO PROVIDE VIDE ORDER SHEET ENTRY DATED 07.12.2006 OF THE AO. THE AO FOUND THAT THE 16 ITA NO.77/AGRA/2012 A.Y. 2004-05 ARGUMENT THAT THE PAYMENT HAS NOT BEEN MADE TO SING LE PERSON AND NOT FOR THE BENEFIT OF SINGLE PERSON IS NOT CORRECT. THE AO H AS ALSO NOTED THAT THE ASSESSEE FAILED TO POINT OUT AS TO WHICH EXCEPTION PROVIDED UNDER RULE 6DD APPLIES TO THE CASE OF THE ASSESSEE. THE AO HELD THAT SINCE THE AS SESSEE HAS PAID CARRIAGE TO THE SAME TRUCK OWNERS, IT CAN NOT BE CLAIMED THAT PAYME NT WAS MADE FOR THE FIRST TIME AND IT CAN ALSO NOT BE CLAIMED THAT THE PERSONS TO WHOM PAYMENTS HAVE BEEN MADE WERE NOT ALREADY KNOWN TO THE ASSESSEE. THE AO FOU ND THAT NONE OF THE EXCEPTIONS PROVIDED UNDER RULE 6DD OF I.T. RULES WAS THEREFORE APPLICABLE TO THE PAYMENTS OF CARTAGE MADE IN VIOLATION OF THE PROVISIONS OF SECT ION 40A(3). THE DAMMAR ACCOUNT WAS DEBITED BY WAY OF CASH PAYMENT OF RS.2, 00,000/- ON 01-07-2003 AS ADVANCE FOR PURCHASE OF DAMMAR AND THE ACCOUNT HAS BEEN CREDITED BY RS.3,04,560/- ON 05-07-2003 ON ACCOUNT OF PURCHASE OF 24 TONS OF DAMMAR AND BALANCE HAS BEEN PAID ON LATER DATES. THE AO HELD T HAT EXPENDITURE IN PURCHASE OF DAMMAR HAS BEEN MADE IN VIOLATION OF PROVISIONS OF SECTION 40A(3) AND NO EXPLANATION AS TO THE VIOLATION HAS BEEN OFFERED. T HE AO HELD THAT THE EXPENDITURE IS THEREFORE CLEARLY HIT BY THE PROVISION OF SECTIO N 40A(3). SIMILARLY, THE PAYMENTS FOR PURCHASE OF DOOR AND WINDOWS HAVE BEEN MADE IN VIOLATION OF THE PROVISION OF SECTION 40A(3) AND THEREFORE DESERVE FOR DISALLOWAN CE. THERE IS NO MATERIAL IN SUPPORT OF THIS GROUND AVAILABLE ON RECORD. WE, TH EREFORE, CONFIRM THE ORDERS OF THE REVENUE AUTHORITIES ON THE ISSUE. 17 ITA NO.77/AGRA/2012 A.Y. 2004-05 22. AS REGARDS GROUND NO.4 PERTAINING TO ADDITION O F RS.1,00,000/- SUSTAINED BY THE CIT(A), WE NOTICED THAT THE ASSESSEE HAS DEBITE D EXPENDITURE OF RS.3,20,000/- UNDER THE TWP. THE AO NOTED THAT ALL AMOUNTS DEBITE D TO THIS ACCOUNT ARE IN CASH AND THE ASSESSEE COULD NOT ANY VOUCHERS FOR THE AMO UNTS DEBITED. IT WAS EXPLAINED THAT THE EXPENSES ARE ON ACCOUNT OF PURCHASE OF PAL LA, SPADES, GAINTI, BASKETS ETC. FOR BEING USED WHILE EXECUTING THE CONTACT WORKS. NO CLOSING STOCK OF SUCH TOOLS HAS HOWEVER, BEEN SHOWN IN THE BALANCE SHEET NOR AN Y AMOUNT HAS BEEN FOUND CREDITED TO THIS ON ACCOUNT OF SALE OF WORN-OUT TOO LS ETC. THE AO WAS OF THE VIEW THAT THE ASSESSEE WOULD HAVE HAD TO INCUR SOME EXPE NDITURE UNDER THIS HEAD. THEREFORE, THE AO FOUND IN ABSENCE OF ANY EVIDENCE IN POSSESSION OF THE ASSESSEE DEEM THE EXPENDITURE TO THE EXTENT OF RS.1,20,000/- AS REASONABLE AND EXPENDITURE OF RS.2,00,000/- IS DISALLOWED AND ADDED TO INCOME OF THE ASSESSEE. THE CIT(A) FOUND IT REASONABLE TO THE EXTENT OF RS.1 LAKH. IT IS CASE OF ESTIMATION OF DISALLOWANCE. WE FIND THAT THERE IS NO CONTRARY MAT ERIAL AVAILABLE ON RECORD BASIS ON WHICH A DIFFERENT ESTIMATION CAN BE MADE AT THIS STAGE THEREFORE THE ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 23. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER 18 ITA NO.77/AGRA/2012 A.Y. 2004-05 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY