M/s Divyasree Realtors, Bangalore V. DCIT, Bangalore

ITA 808/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8751 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 17-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 18-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V NARENDRA SHARMA
• Keywords: Invalid notice
• Section: 44AD; 28

Judgement Text

ITA.808/BANG/2014 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.808/BANG/2014 (ASSESSMENT YEAR : 2007- 08) M/S. DIVYASREE REALTORS, DIVYASHREE CHAMBERS, WING A, #11, OSHAUGNESSY ROAD, BANGALORE 560 025 .. APPE LLANT PAN : AADFD7888E V. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE -2(2), BANGALORE .. RESPONDENT ASSESSEE BY : SHRI. V. NARENDRA SHARMA, ADVOCATE REVENUE BY : SHRI SUNIL KUMAR AGARWALA, JCIT HEARD ON : 17.12.2015 PRONOUNCED ON : 6 TH .01.2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE IT HAS TAKEN ALTO GETHER SIX GROUNDS WHICH ARE REPRODUCED HEREUNDER : 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS TH EY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUIT Y, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE ORDER OF ASSESSMENT PASSED ULS.143[3] RWS 153C OF THE ACT IS BAD IN LAW AND VOID-AB-INITIO IN AS M UCH AS THERE WAS NO JUSTIFICATION TO ISSUE THE NOTICE U/S. 153C OF ITA.808/BANG/2014 PAGE - 2 THE ACT AND THEREFORE, THE ORDER OF ASSESSMENT PASS ED BY THE A.O. AND SUSTAINED BY THE LEARNED CIT[A] IS OPPOSED TO LAW, CONSEQUENTLY, THE IMPUGNED ASSESSMENT ORDER DE SERVES TO BE CANCELLED. 3. WITHOUT PREJUDICE TO THE ABOVE, THE ORDER OF ASSESSMENT PASSED U/S.153C OF THE I.T.ACT IS FURTHE R BAD IN LAW AS REASONS FOR ISSUANCE OF SUCH NOTICE U/S.153C OF THE I.T.ACT HAVE NOT BEEN GIVEN AND THE APPELLANT HAS REASONS T O BELIEVE THAT THE SAME HAS NOT BEEN RECORDED AND THAT THE MA NDATORY CONDITIONS TO ASSUME JURISDICTION IS TO RECORD REAS ONS AND IN THE ABSENCE OF THE SAME, THE ASSESSMENT IS BAD IN L AW AND LIABLE TO BE CANCELLED. 4. WITHOUT PREJUDICE TO THE ABOVE, THE ORDER OF ASSESSMENT PASSED U/S.153C OF THE ACT IS BARRED BY LIMITATION IN AS MUCH AS, THE ASSESSMENT OUGHT TO H AVE BEEN COMPLETED ON OR BEFORE 31/12/2008 IN TERMS OF THE PROVISIONS OF SECTION 153B OF THE ACT AND THE ASSES SMENTS HAVING BEEN COMPLETED ON 31/12/2009 AND HENCE, SUFF ERS FROM LIMITATION AND ACCORDINGLY, THE ASSESSMENT REQ UIRES TO BE ANNULLED. 5. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED AUTHORI TIES BELOW ARE NOT JUSTIFIED IN TREATING THE INCOME RETU RNED BY THE APPELLANT UNDER THE HEAD 'BUSINESS' AS INCOME FROM 'OTHER SOURCES' IN VIEW OF CERTAIN FINDINGS IN SUPPORT OF THE SAME, WHICH ARE ALL ARBITRARY, PURELY ON CONJECTURES, SUSPICION AND SURMISE, PRESUMPTIONS AND ASSUMPTIONS AND HENCE BAD IN LAW UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 6. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBL Y PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED ITA.808/BANG/2014 PAGE - 3 02. GROUNDS 1 AND 6 ARE GENERAL IN NATURE AND DO NO T NEED ANY ADJUDICATION. 03. LEARNED COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT FOR THE IMPUGNED ASSESSMENT YEAR, ASSESSMENT WAS DONE U/S.1 43(3) OF THE INCOME- TAX ACT, 1961 (THE ACT IN SHORT) AND THOUGH IT WA S AN OFFSHOOT OF A SEARCH, IT WAS NOT PURSUANT TO ANY PROCEEDINGS U/S.153C OF THE ACT. THUS ACCORDING TO HIM GROUNDS 2 TO 4 COULD BE TREATED AS NOT PRESSED. HOWEVER, LD. AR SUBMITTED THAT HE WANTED CERTAIN OTHER LEGAL ISSUES TO BE RAISED BEFORE THIS TRIBUNAL THOUGH IT WAS NOT A PART OF TH E GROUNDS. ACCORDING TO HIM, NOTICE U/S.142(1) OF THE ACT WAS ISSUED ON 26. 06.2008 BY THE AO WHO HAD NO JURISDICTION TO ISSUE SUCH NOTICE. AS PER T HE LD. AR NOTICE WAS ISSUED BY ACIT, CENTRAL CIRCLE -2(2), BANGALORE, WH EREAS THE NOTIFICATION DATED.24.06.2008 WHEREBY ASSESSEES CASE WAS TRANS FERRED FROM ITO, WARD -1(1), BANGALORE TO ACIT CENTRAL CIRCLE -2(2), BANG ALORE, PLACED AT PAPER BOOK PAGE 61, CLEARLY MENTIONED THAT IT WAS EFFECTI VE FROM 01.07.2008. AS PER THE LD. AR, NOTICE ISSUED BY ACIT, CENTRAL CIRC LE -2(2) PRIOR TO THE SAID NOTIFICATION COMING INTO EFFECT WAS INVALID. LD. AR ALSO REFERRED TO THE ASSESSMENT ORDER WHICH ACCORDING TO HIM, CLEARL Y REFERRED TO THE NOTICE DT.26.06.2008. NEVERTHELESS AS PER THE LD. AR THER E WAS A SUBSEQUENT ITA.808/BANG/2014 PAGE - 4 NOTICE ISSUED ON 30.01.2009 BY ACIT, CENTRAL CIRCLE -2(2), BANGALORE. BUT, ACCORDING TO HIM, THIS NOTICE COULD NOT BE REC KONED AS VALID SINCE THE ASSESSMENT ORDER MENTIONED ONLY THE NOTICE DT.26.06 .2008. LD. AR SUBMITTED THAT ASSESSMENT WAS THEREFORE DONE WITHOU T ISSUE OF A VALID NOTICE U/S.142(1) OF THE ACT. 04. AS PER THE LD. AR, IN RESPONSE TO THE NOTICE DT .26.06.2008 U/S.142(1) OF THE ACT, ASSESSEE HAD ON 23.07.2008 FILED A REPL Y WHERE IT WAS POINTED OUT TO THE AO THAT THE NOTICE DT.26.06.2008 WAS INV ALID FOR WANT OF JURISDICTION. ACCORDING TO THE LD. AR ASSESSEE HAD EARLIER FILED A RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 22.02.20 08 AND ALONG WITH THE ABOVE MENTIONED LETTER FILED A COPY OF THE SAID RETURN WAS ATTACHED. THE PROCEEDINGS INITIATED BASED ON AN INVALID NOTICE U/ S.142(1) OF THE ACT, ACCORDING TO HIM, WAS INVALID. FURTHER ACCORDING T O HIM, THIS BEING A PURELY LEGAL QUESTION, THE TRIBUNAL COULD CONSIDER IT EVEN IN THE ABSENCE OF A SPECIFIC GROUND. FOR THIS RELIANCE WAS PLACED ON THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF SANKESHWAR PRINTERS P . LTD V. DCIT [(2013) 218 TAXMAN 360]. 05. CONTINUING HIS ARGUMENT ON MERITS, LD. AR SUBMI TTED THAT THE ASSESSEE WAS AGGRIEVED ON THE DIRECTIONS OF THE CIT (A) BY WHICH HE ITA.808/BANG/2014 PAGE - 5 SHIFTED THE INCOME RETURNED BY THE ASSESSEE FROM TH E HEAD INCOME FROM BUSINESS TO INCOME FROM OTHER SOURCES. AS PER T HE LD. AR ASSESSEE HAD RETURNED INCOME AT THE RATE OF 8% OF GROSS CONTRACT RECEIPTS AT RS.39,80,000/- RELYING ON SECTION 44AD OF THE ACT. LD. AR SUBMITTED THAT THESE RECEIPTS WERE FROM M/S. SHYAMARAJU & CO., AND TDS WERE DULY DEDUCTED BY M/S. SHYAMARAJU & CO. INDIA LTD. AS PE R THE LD. AR, AO HAD PLACED RELIANCE ON A STATEMENT OF SHRI. P. SHYAMARA JU, GENERAL MANAGER (FINANCE) OF M/S. SHYAMARAJU & CO. INDIA P. LTD, FO R COMING TO A CONCLUSION THAT THE TRANSACTIONS OF CONTRACT WORK W AS ONLY A MAKE-BELIEVE ONE. AS PER THE LD. AR, ASSESSEE HAD PRODUCED BIL LS FOR WORK. JUST FOR A REASON THAT WORK PLAN CERTIFICATE AND VOUCHERS WERE NOT PRODUCED, ITS HEAD OF INCOME COULD NOT HAVE BEEN SHIFTED. LD. AR SUBM ITTED THAT AO PLACED UNDUE RELIANCE ON THE WITHDRAWALS MADE BY THE ASSES SEE FROM THE BANK ACCOUNTS IMMEDIATELY AFTER THE CREDITS RECEIVED FRO M THE CLIENT. LD. AR FURTHER SUBMITTED THAT ASSESSEE WAS A PART OF DIVYA SHREE GROUP AND M/S. SHYAMARAJU & CO. INDIA P. LTD, OF WHICH SHRI. P. SH YAMARAJU WAS THE MD WAS ALSO A PARTNER IN THE ASSESSEE FIRM. HOWEVER A CCORDING TO HIM, THIS COULD NOT HAVE BEEN CITED AS A REASON FOR DIS-BELIE VING THE WORK DONE BY THE ASSESSEE FOR M/S. SHYAMARAJU & CO. INDIA P. LTD . WITHOUT ANY RHYME AND REASON, AS PER THE LD. AR ITS HEAD OF INCOME W AS SHIFTED. ITA.808/BANG/2014 PAGE - 6 06. PER CONTRA, LD. DR STRONGLY ASSAILING THE ADMIS SION OF THE GROUND RELATING TO VALIDITY OF NOTICE U/S.142(1) OF THE AC T, SUBMITTED THAT ASSESSEE HAD COOPERATED WITH THE AO IN THE COURSE OF ASSESSM ENT PROCEEDINGS. ACCORDING TO HIM, IT WAS AN ADMITTED POSITION THAT A SECOND NOTICE U/S.142(1) OF THE ACT, DT.30.01.2009 WAS ISSUED BY THE JURISDICTIONAL AO. JUST BECAUSE OF A REASON THAT THE ASSESSMENT ORDER REFERRED TO THE EARLIER NOTICE DT.24.06.2008, AS PER THE LD. DR, ASSESSMENT COULD BE CONSIDERED AS INVALID. IT WAS AT BEST, AN IRREGULARITY WHICH COU LD NOT GO TO THE ROOT OF THE ASSESSMENT. 07. ON MERITS, LD. DR SUBMITTED THAT ASSESSEE BEING A PART OF THE DIVYASHREE GROUP AND SHRI. P. SHYAMARAJU, BEING A P ARTNER OF THE ASSESSEE AS WELL AS THE DIRECTOR OF M/S. SHYAMARAJU & CO. IN DIA P. LTD, THE TRANSACTIONS BETWEEN THEM COULD NOT BE BELIEVED. A SSESSEE COULD NOT PRODUCE ANY EVIDENCE FOR HAVING DONE ANY WORK OR HA VING INCURRED ANY EXPENDITURE. THUS IT COULD NOT BE SAY THAT ITS INC OME SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS. FURTHER AS PER THE LD. DR ASSESSEE COULD HAVE FILE AN APPEAL BEFORE THE CIT (A) ONLY U NDER THE CIRCUMSTANCES MENTIONED U/S.246(1)(A) OF THE ACT. ITS APPEAL WAS NOT AGAINST AN APPEALABLE ORDER. THUS ACCORDING TO HIM, CIT (A) F ELL IN ERROR IN ITA.808/BANG/2014 PAGE - 7 ADJUDICATING THE APPEAL OF THE ASSESSEE. ACCORDIN G TO HIM AO HAD NOT MADE AN SHIFT OF THE HEAD OF INCOME. ASSESSEE WAS J UST TRYING TO GET A FAVOURABLE ORDER SO THAT OBSERVATIONS OF THE AO WIT H REGARD TO THE AUTHENTICITY OF ITS TRANSACTIONS WITH M/S. SHYAMARA JU & CO. INDIA P. LTD COULD BE EXPUNGED, WHICH WOULD IN TURN HELP M/S. SH YAMARAJU & CO. INDIA P. LTD IN THEIR ASSESSMENTS. 08. I HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. GROUNDS 2 TO 4 HAVE NOT BEEN PRESSED BY THE LD. AR AND THEREF ORE ARE DISMISSED. 09. VIS-A-VIS THE ADDITIONAL GROUND ORALLY TAKEN BY THE LD. AR, WHAT I FIND IS THAT A LEGAL GROUND CAN BE RAISED BEFORE TH E TRIBUNAL THOUGH IT IS NOT APPEARING IN THE APPEAL MEMO, AS HELD BY THE HONBL E KARNATAKA HIGH COURT IN THE CASE OF SANKESHWAR PRINTERS P. LTD (SU PRA). CASE OF THE ASSESSEE IS THAT NOTICE U/S.142(1) OF THE ACT, PLAC ED BY IT AT PAPER BOOK PAGE 6 WAS ISSUED BY THE ACIT, CENTRAL CIRCLE -2(2), BAN GALORE AND RECEIVED BY ASSESSEE ON 02.07.2008. NOTIFICATION TRANSFERRING THE ASSESSMENT JURISDICTION OF THE ASSESSEE FROM ITO, WARD -1(1) T O ACIT, CENTRAL CIRCLE - 2(2) PLACED AT PAPER BOOK PAGE 61, WAS ISSUED BY CI T, BANGALORE I ON 24.06.2008 AND THIS WAS TO TAKE EFFECT FROM 01.07.2 008. THUS AS ON THE DATE WHEN ASSESSEE RECEIVED THE NOTICE U/S.142(1) O F THE ACT, ACIT, CENTRAL ITA.808/BANG/2014 PAGE - 8 CIRCLE -2(2) WAS HAVING JURISDICTION. IN ANY CASE, I FIND THAT THERE WAS A SUBSEQUENT NOTICE DT.30.01.2009 ISSUED BY THE VERY SAME OFFICER. JUST BECAUSE ASSESSMENT ORDER REFERRED TO AN EARLIER NOT ICE WOULD NOT IN MY OPINION, BE A REASON TO SAY THAT ASSESSMENT WAS IN VALID. HENCE, I DISMISS THIS GROUND TAKEN BY THE ASSESSEE. 10. COMING TO THE MERITS OF THE ISSUE, WHAT I FIND IS THAT ASSESSEE HAD FILED ITS RETURN U/S.44AD OF THE ACT, WHICH IS REPR ODUCED HEREUNDER : '44AD SPECIAL PROVISION FOR COMPUTING PROFITS AND G AINS OF BUSINESS OF CIVIL CONSTRUCTION, ETC. (1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAI NED IN SECTIONS 28 TO 43C, * IN THE CASE OF AN ASSESSEE ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION OR SUPPLY OF LABOUR FOR CIVIL CO NSTRUCTION, A SUM EQUAL TO EIGHT PER CENT OF THE GROSS RECEIPTS PAID OR PAYABLE TO THE ASSESSEE IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BU SINESS OR, AS THE CASE MAY BE, A SUM HIGHER THAN THE AFORESAID SU M AS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME, SHALL BE D EEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO TA X UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION': PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY IN CASE THE AFORESAID GROSS RECEIPTS PAID OR PAYABLE E XCEED AN AMOUNT OF FORTY LAKH RUPEES. (2) ANY DEDUCTION ALLOWABLE UNDER THE PROVISIONS OF SECTIONS 30 TO 38 SHALL, FOR THE PURPOSES OF SUB-SECTION (1), BE D EEMED TO HAVE BEEN ALREADY GIVEN FULL EFFECT TO AND NO FURTHER DE DUCTION UNDER THOSE SECTIONS SHALL BE ALLOWED : ITA.808/BANG/2014 PAGE - 9 PROVIDED THAT WHERE THE ASSESSEE IS A FIRM, THE SAL ARY AND INTEREST PAID TO ITS PARTNERS SHALL BE DEDUCTED FROM THE INC OME COMPUTED UNDER SUB-SECTION (1) SUBJECT TO THE CONDITIONS AND LIMITS SPECIFIED IN CLAUSE (B) OF SECTION 40. (3) THE WRITTEN DOWN VALUE OF ANY ASSET USED FOR TH E PURPOSE OF THE BUSINESS REFERRED TO IN SUB-SECTION (1) SHALL BE DE EMED TO HAVE BEEN CALCULATED AS IF THE ASSESSEE HAD CLAIMED AND HAD BEEN ACTUALLY ALLOWED THE DEDUCTION IN RESPECT OF THE DE PRECIATION FOR EACH OF THE RELEVANT ASSESSMENT YEARS. (4) THE PROVISIONS OF SECTIONS 44AA AND 44AB SHALL NOT APPLY IN SO FAR AS THEY RELATE TO THE BUSINESS REFERRED TO I N SUB-SECTION (1) AND IN COMPUTING THE MONETARY LIMITS UNDER THOSE SE CTIONS, THE GROSS RECEIPTS OR, AS THE CASE MAY BE, THE INCOME F ROM THE SAID BUSINESS SHALL BE EXCLUDED. (5) NOTHING CONTAINED IN THE FOREGOING PROVISIONS O F THIS SECTION SHALL APPLY, WHERE THE ASSESSEE CLAIMS AND PRODUCES EVIDENCE TO PROVE THAT THE PROFITS AND GAINS FROM THE AFORESAID BUSINESS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR C OMMENCING ON THE 1ST DAY OF APRIL, 1997, OR ANY EARLIER ASSESSME NT YEAR, ARE LOWER THAN THE PROFITS AND GAINS SPECIFIED IN SUB-S ECTION (1), AND THEREUPON THE ASSESSING OFFICER SHALL PROCEED TO MA KE AN ASSESSMENT OF THE TOTAL INCOME OR LOSS OF THE ASSES SEE AND DETERMINE THE SUM PAYABLE BY THE ASSESSEE ON THE BA SIS OF ASSESSMENT MADE UNDER SUB-SECTION (3) OF SECTION 14 3. (6) NOTWITHSTANDING ANYTHING CONTAINED IN THE FOREG OING PROVISIONS OF THIS SECTION, AN ASSESSEE MAY CLAIM L OWER PROFITS AND GAINS THAN THE PROFITS AND GAINS SPECIFIED IN SUB-S ECTION (1), IF HE KEEPS AND MAINTAINS SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS AS REQUIRED UNDER SUB-SECTION (2) OF SECTION 44AA A ND GETS HIS ACCOUNTS AUDITED AND FURNISHES A REPORT OF SUCH AUD IT AS REQUIRED UNDER SECTION 44AB. EXPLANATION : FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'CIVIL CONSTRUCTION' INCLUDES ITA.808/BANG/2014 PAGE - 10 (A) THE CONSTRUCTION OR REPAIR OF ANY BUILDING, BRI DGE, DAM OR OTHER STRUCTURE OR OF ANY CANAL OR ROAD; (B) THE EXECUTION OF ANY WORKS CONTRACT. 11. READING OF THE ABOVE SECTION CLEARLY INDICATE T HAT IT IS APPLICABLE ONLY TO AN ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION FOR SUPPLY OF LABOUR FOR CIVIL CONSTRUCTION. AS PER TH E AO ASSESSEE WAS NOT DOING ANY OF THIS TYPE OF WORK. ASSESSEE HAD PRODU CED BEFORE THE AO A WORK ORDER DT.02.01.2006 ISSUED BY M/S. SHYAMARAJU & CO. INDIA P. LTD, COPY OF WHICH HAS BEEN PLACED AT PAPER BOOK PAGE 49 . WORK ORDER MENTIONS THE WORK AS PROJECT AS TECHNO-PARK AS THE WORK AND THE WORK TENDER TO THE ASSESSEE WAS FOR EARTH-WORK EXCAVATIO N. ASSESSEE ALSO PRODUCED A COPY OF THE BILL RAISED BY M/S. SHYAMARA JU & CO. INDIA P. LTD, WHICH WAS DT.03.07.2006, GIVING DETAILS OF THE WOR K DONE BY IT AT PAPER BOOK PAGE.51. AO HAD REJECTED THIS EVIDENCE FOR A REASON THAT SHRI. V. SHAMBAMOORTHY, GM OF M/S. SHYAMARAJU & CO. INDIA P. LTD,, WHEN EXAMINED HAD STATED THAT THE CONTROL OVER OLD BANK ACCOUNTS OF THE ASSESSEE WAS ALSO WITH HIM. RELEVANT REPLIES GIVEN BY SHRI. P. SHYAMARAJU, RELIED ON BY THE AO IS REPRODUCED HEREUNDER : 'I CAN IDENTIFY THE PERSONS NAMED AS ABOVE. THE CON TROL OVER THE ACCOUNTS IS DONE BY ME AS PER THE INSTRUCT IONS OF SHRI ITA.808/BANG/2014 PAGE - 11 P.SHYAMARAJU AND MR. BHASKAR RAJU. THESE ACCOUNTS A RE ULTIMATELY MONITORED BY THEM.' LD. AOS OBSERVATIONS ON THE ISSUE AS IT APPEAR AT PAGE 2 OF THE ASSESSMENT ORDER IS REPRODUCED HEREUNDER : SHRI P.SHYAMARAJU'S CONTENTION (VIDE LETTER DTD. 12 /6/09 SUBMITTED IN COURSE OF THE ASSESSMENT PROCEEDINGS ) ON THE ABOVE IS THAT SHRI V.SHAMBAMOORTHY , BEING A CHARTERED ACCOU NTANT HIMSELF , WAS APPROACHED BY THE SUB-CONTRACTORS CONCERNED WIT H THEIR PASS BOOKS , CHEQUE BOOKS ETC. FOR PREPARATION OF THEIR RETURNS. SHRI P.SHYAMARAJU'S SUBMISSION IS TOTALLY CONTRADICTORY TO WHAT SHRI SHAMBAMOORTHY HIMSELF HA D TO SAY ON 1/3/07AND CAN NOT BE TAKEN COGNIZANCE OF. 12. SINCE SHRI. P. SHYAMARAJU WAS ALSO A PARTNER OF THE ASSESSEE FIRM, I CANNOT FIND ANY FAULT IN HIM EXERCISING CONTROL OVE R THE ACCOUNTS OF THE ASSESSEE AS WELL. COPY OF THE PARTNERSHIP DEED PLA CED AT PAPER BOOK PAGE 34 TO 40 ALSO SHOW THAT SHRI. P. SHYAMA RAJU WAS A PARTNER OF THE ASSESSEE FIM. IN ANY CASE WE FIND THAT THE STATEMENT OF SHR I. V. SAMBA MOORTHY WAS NEITHER PUT TO THE ASSESSEE NOR ASSESSEE WAS GIVEN AN OPPORTUNITY TO CROSS EXAMINE IN THE FACT OF THIS. I AM OF THE OPINION T HAT THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN PLACING RELIANCE ON THE STATE MENT OF SHRI. V. SAMBA MOORTHY AND IGNORING THE EVIDENCE FILED BY THE ASSE SSEE. ASSESSEE, IN MY OPINION HAD PRODUCED SUFFICIENT RECORDS TO PROVE TH AT IT WAS DOING CONTRACT WORK. IT COULD VERY WELL RELY ON SECTION 44 AD OF THE ACT SINCE ITS ITA.808/BANG/2014 PAGE - 12 TURNOVER WAS LESS THAN RS.40 LAKHS. I AM OF THE OP INION THAT CIT (A) WAS THEREFORE NOT JUSTIFIED IN SHIFTING THE SOURCE OF I NCOME FROM BUSINESS TO OTHER SOURCES. GROUND 5 OF THE ASSESSEE THEREFORE STANDS ALLOWED. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DAY OF JANUARY, 2016. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR