Late Shri Sanjay Paliya Through L/H Smt. Jaishree Paliya, Pipariya V. THE DCIT, Circle, Itarsi

ITA 922/IND/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2206 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-05-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 06-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: N D PATWA
• Keywords: Income from undisclosed sources
• Section: 234B; 68

Judgement Text

LATE SHRI SANJAY PALIYA ITA 922/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIB UNAL, INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER .../ ITA. NO. 922/IND/2016 / ASSESSMENT YEAR: 2012-13 LATE SHRI SANJAY PALIYA THROUGH L/H SMT. JAISHREEPALIYA PIPARIYA PAN ABXPP 5864H :: / APPELLANT VS DY. CIT, CIRCLE ITARSI :: ! / RESPONDENT '# $ % & / ASSESSEE BY SHRI ASHISH GOYAL & SHRI N.D. PATWA '( $ % & / REVENUE BY SHRI MOHD. JAVED ) * $ #+ DATE OF HEARING 24.5.2017 ,-./ $ #+ DATE OF PRONOUNCEMENT 3 0 .5.2017 / O R D E R PER SHRI C.M. GARG, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE LEARNED CIT(A)-I, BHOPAL, DATED 10.6.2016 IN FI RST APPEAL NO. CIT(A)-1/BPL/IT-641/14-15 FOR THE ASSESSMENT YEARS 2012-13. LATE SHRI SANJAY PALIYA ITA 922/IND/2016 2 2. THE EFFECTIVE GROUNDS OF APPEAL TAKEN BY THE ASS ESSEE ARE AS UNDER :- (I) THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.5,00,000/- BEING LOAN RECEIVED FROM SMT. PARVATI BAI CHOUHAN WITHOUT CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE AND WITHOUT CONSIDERING THE DOCUMENTS SUBMITTED FROM WHICH THE GENUINENESS OF THE TRANSAC TION AND IDENTITY AND CREDITWORTHINESS OF THE LENDER IS CLEARLY ESTABLISHED. (II) THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OFRS.,6,08,632/- OF THE LABOUR AND WAGES EXPENSES WITHOUT CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE THAT THE REGULAR AND PROPER BOOKS OF ACCOU NTS ARE MAINTAINED BY THE ASSESSEE AND HENCE NO DISALLOWANCE IS CALLED FOR. LATE SHRI SANJAY PALIYA ITA 922/IND/2016 3 3. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ORDER OF THE LEARNED CIT(A) CONFIRMING THE INITIATI ON OF PENALTY PROCEEDINGS U/S 271(1)(C) IS NOT JUSTIFIED. 4. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE ORDER OF THE LEARNED CIT(A) CONFIRMING THE CHARGING OF INTEREST OF RS. 28,292/- U/S 234B IS NOT JUSTIFIED. 3. APROPOS GROUND NO. 1, BRIEF FACTS ARE THAT THE A SSESSING OFFICER NOTICED THAT THE ASSESSEE HAD TAKEN LOAN OF RS. 5 L ACS FROM SMT. PARVATI BAI CHOUHAN ON 29.9.2011 VIDE CHEQUE NO. 15 3401 OF BANK OF INDIA. IN RESPONSE TO QUERY, THE ASSESSEE EXPLAI NED THAT THE LENDER WAS A CLOSE RELATION OF THE ASSESSEE AND SHE , BEING A TEACHER, WAS GETTING PENSION OF RS. 14,000/- APPROX. P.M. HO WEVER, THE ASSESSING OFFICER NOTICED THAT AN AMOUNT OF RS. 5 L ACS WAS DEPOSITED IN CASH IN THE SAME BANK ACCOUNT JUST BEF ORE GIVING OF UNSECURED LOAN TO THE ASSESSEE. AS THE LENDER WAS A N OLD LADY PENSION WHO ALSO DID NOT FILE INCOME TAX RETURN AND AS NO JUSTIFICATION REGARDING THIS DEPOSIT OF CASH WAS GI VEN BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, THEREFO RE, IN THE ABSENCE OF THE CREDITWORTHINESS OF THE LENDER, THE ASSESSING OFFICER LATE SHRI SANJAY PALIYA ITA 922/IND/2016 4 ADDED THIS AMOUNT TO THE TOTAL INCOME OF THE ASSESS EE. IN APPEAL ALSO THE ASSESSEE COULD NOT PROVE THE CREDITWORTHIN ESS AND THE GENUINENESS OF THE TRANSACTION. THE COMMISSIONER OF INCOME TAX (APPEALS), THEREFORE, CONFIRMED THE ACTION OF THE A SSESSING OFFICER. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. APROPOS GROUND NO. 1 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 5 LACS U/S 68 OF THE ACT BEING THE LOAN RECEIVED FROM SMT. PARVATI BAI CHOUH AN WITHOUT CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE AND WITHOUT CONSIDERING THE ARGUMENTS SUBMITTED FROM WHICH THE GENUINENESS OF TRANSACTION, IDENTITY AND CREDITWORTHINESS OF TH E LENDER WAS CLEARLY ESTABLISHED. THE LEARNED COUNSEL FOR THE AS SESSEE DREW OUR ATTENTION TO VARIOUS DECISIONS OF THE HON'BLE HIGH COURTS INCLUDING THE DECISION OF THE HON'BLE MADHYA PRADESH HIGH COU RT IN THE CASE OF CIT VS. METACHEM INDUSTRIES; 245 ITR 160(MP), DE CISION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF ARAVALI TRADING COMPANY VS. ITO; (2010) 187 TAXMAN 338(RAJ.) AND SU BMITTED THAT THE ASSESSEE SUBMITTED CONFIRMATION, COPY OF BANK S TATEMENT, LATE SHRI SANJAY PALIYA ITA 922/IND/2016 5 ADHAR CARD, COPY OF ACCOUNT IN THE BOOKS OF THE ASS ESSEE AND AN IMPORTANT FACT THAT SMT. PARVATI BAI CHOUHAN WAS RE CEIVING PENSION OF RS. 14,000/- P.M. AND THE AMOUNT WAS GIV EN TO THE ASSESSEE FROM HER SAVINGS OVER THE PERIOD OF TIME. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT THE ASSESSEE RECEIVED LOAN FROM SMT. PARVATI BAI CHOUHAN ON 29.9.2011 THR OUGH CHEQUE NO. 153401 OF BANK OF INDIA AND SIMPLY BECAUSE CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE LENDER, IT DOE S NOT AUTOMATICALLY PROVE THAT THE CASH DEPOSITED IN THE BANK ACCOUNT OF THE LENDER BELONGS TO THE ASSESSEE. 5. THE LEARNED COUNSEL FOR THE ASSESSEE PRESSED INT O SERVICE THE RATIO OF THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF ARAVALI TRADING COMPANY (SUPRA) AND SUBMITTED TH AT WHEN THE ASSESSEE HAS FURNISHED ALL THE DETAILS OF LENDER TH EN UNLESS IT IS ESTABLISHED BY THE ASSESSING OFFICER THAT THE CASH DEPOSITED BY THE LENDER BELONGS TO THE ASSESSEE, ADDITION CANNOT BE MADE U/S 68 OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE STREN UOUSLY POINTED OUT THAT THE ASSESSEE HAVING DISCHARGED HIS BURDEN BY BRINGING EXISTENCE OF THE DEPOSITOR/LENDER AND THE DEPOSITOR /LENDER OWING LATE SHRI SANJAY PALIYA ITA 922/IND/2016 6 THE DEPOSITS THEN THE ASSESSEE IS NOT REQUIRED TO P ROVE THE SOURCE OF SOURCE. PLACING RELIANCE ON THE RATIO OF THE DECISI ON OF THE HON'BLE HIGH COURT OF MADHYA PRADESH IN THE CASE OF METACHE M INDUSTRIES (SUPRA), THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED THAT WHEN CASH CREDIT IS FOUND IN THE ASSESSEES BOOKS AND TH E ASSESSEE HAS ESTABLISHED THAT THE AMOUNT HAS BEEN GIVEN TO HIM B Y A PARTICULAR PERSON THEN THE RESPONSIBILITY OF THE ASSESSEE IS O VER AND THERE IS NO REQUIREMENT ON THE PART OF THE ASSESSEE TO FURTH ER SHOW WHETHER THE AMOUNT RECEIVED BY HIM HAS BEEN PROPERLY TAXED IN THE CREDITORS HANDS. THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE LENDER, SMT. PARVATI BAI CHOUHAN, WAS HAVI NG ONLY MONTHLY INCOME OF RS. 14,000/- FROM PENSION AND SHE WAS 78 YEARS OLD SENIOR CITIZEN LADY AND SHE MIGHT NOT HAVE FILE D THE RETURN, AS SHE WAS NOT REQUIRED TO FILE THE SAME AS HER INCOME WAS NOT LIABLE TO BE TAXED BEING LESSER IN QUANTUM. THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER SHOUL D HAVE BROUGHT ON RECORD ANY EVIDENCE THAT THE AMOUNT IN THE BANK ACCOUNT OF THE LENDER WAS THE MONEY OF THE ASSESSEE OR NOT HER MON EY AND WHEN THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS TO EST ABLISH IDENTITY, CREDITWORTHINESS OF LENDER AND GENUINENESS OF THE T RANSACTION LATE SHRI SANJAY PALIYA ITA 922/IND/2016 7 THROUGH BANKING CHANNEL THEN THE ADDITION MADE BY T HE ASSESSING OFFICER AND UPHELD BY THE COMMISSIONER OF INCOME TA X (APPEALS) U/S 68 OF THE ACT CANNOT BE HELD AS SUSTAINABLE AND THUS THE SAME MAY KINDLY BE DELETED. 6. REPLYING TO THE ABOVE, THE LEARNED DR STRONGLY S UPPORTED THE ACTION OF THE AUTHORITIES BELOW AND SUBMITTED THAT AS PER THE RATIO OF THE DECISION OF THE HON'BLE GUJARAT HIGH COURT I N THE CASE OF UMESH KRISHNANI (2013) 35 TAXMANN.COM 598(GUJ.) WHE RE SUBSTANTIAL AMOUNT WAS DEPOSITED IN THE BANK ACCOUN TS OF THE LENDER SHORTLY PRIOR TO THE ISSUANCE OF CHEQUE BY T HEM, TRANSACTION, IN QUESTION, BEING SHAM, LOAN AMOUNT WASA TO BE ADD ED TO THE ASSESSEES TAXABLE INCOME U/S 68 OF THE ACT. 7. PLACING REJOINDER TO THE ABOVE SUBMISSIONS OF TH E LEARNED DR, THE CLA SUBMITTED THAT THE RATIO OF THE DECISION OF THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF METACHEM I NDUSTRIES (SUPR) IS APPLICABLE TO THE PRESENT CASE BEING PROP OSITION LAID DOWN BY THE HON'BLE HIGH COURT, THEREFORE, THE ADDITION MAY KINDLY BE DELETED. LATE SHRI SANJAY PALIYA ITA 922/IND/2016 8 8. ON CAREFUL CONSIDERATION OF THE ABOVE RIVAL SUBM ISSIONS, WE ARE OF THE VIEW THAT UNDISPUTEDLY THE ASSESSEE HAS FILED CONFIRMATION, COPY OF BANK STATEMENT, ADHAR CAR AND COPY OF ACCOUNT OF THE LENDER IN THE BOOKS OF THE ASSESSEE, WHICH ARE AVAILABLE AT PAGES 9 TO 12 OF THE ASSESSEES PAPER BOOK. FURTHER, IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE RECEIVED L OAN FROM HIS RELATIVES SMT. PARVATI BAI CHOUHAN THROUGH CHEQUE. HOWEVER, CONTROVERSY AROSE WHEN THE ASSESSING OFFICER NOTICE D THAT CASH AMOUNT HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF TH E LENDER IMMEDIATELY BEFORE ISSUANCE OF CHEQUE TO THE ASSESS EE AND HE MADE ADDITION U/S 68 OF THE ACT. 9. AT THIS JUNCTURE, WE RESPECTFULLY TAKE COGNIZANC E OF THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN TH E CASE OF ARAVALI TRADING COMPANY (SUPRA) WHEREIN THEIR LORDSHIPS HEL D THAT IT COULD NOT BE PRESUMED THAT THE DEPOSITS MADE BY THE CREDI TORS WERE THE MONIES OF THE ASSESSEE AND THERE WAS NO BASIS FOR S UCH PRESUMPTION AND IN SUCH AN EVENT IF THE CREDITORS N OT FOUND TO BE ACCEPTABLE, THE INVESTMENTS OWNED BY SUCH PERSONS M AY BE LATE SHRI SANJAY PALIYA ITA 922/IND/2016 9 SUBJECTED TO THE PROCEEDINGS FOR INCLUSION OF SUCH INVESTMENTS AS THEIR INCOME FROM UNDISCLOSED SOURCES BUT IN ORDER TO FASTEN LIABILITY ON THE ASSESSEE BY INCLUDING SUCH CREDITS AS INCOME FROM UNEXPLAINED SOURCES, NEXUS HAS TO BE ESTABLISHED TH AT THE SOURCE OF DEPOSITS HAS FLOWN FROM THE ASSESSEE. THEIR LORDSH IPS HAVE HELD THAT IN THE ABSENCE OF ANY SUCH LINK, ADDITIONS OF CASH CREDITS FOUND IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COULD NOT BE CONSIDERED TO BE UNEXPLAINED INCOME OF THE ASSESSEE WHERE EXISTEN CE OF DEPOSITOR OF SUCH CREDITS WAS ESTABLISHED AND SUCH DEPOSITS/A DVANCES/LOAN WERE OWNED BY SUCH EXISTING PERSON. WE ALSO TAKE RE SPECTFUL COGNIZANCE OF THE DECISION OF THE HON'BLE HIGH COUR T OF MADHYA PRADESH IN THE CASE OF METACHEM INDUSTRIES (SUPRA) WHEREIN THEIR LORDSHIPS RENDERING THE PROPOSITION FOR JURISDICTIO NAL HIGH COURT HELD THAT WHEN CASH CREDIT IS FOUND IN THE ASSESSEE S BOOKS THEN THE RESPONSIBILITY OF THE ASSESSEE IS OVER AND THERE IS NO REQUIREMENT ON THE PART OF THE ASSESSEE TO FURTHER SHOW WHETHER TH E AMOUNT RECEIVED BY HIM AS LOAN HAS BEEN PROPERLY TAXED IN THE CREDITORS HANDS. LATE SHRI SANJAY PALIYA ITA 922/IND/2016 10 10. IN THE PRESENT CASE, THE ASSESSEE HAS ESTABLISH ED THE IDENTITY, CREDITWORTHINESS AND SOURCE OF LOAN FROM SMT. PARVA TI BAI CHOUHAN BEING 78 YEARS OLD SENIOR CITIZEN PENSIONER LADY AN D THE ASSESSING OFFICER WITHOUT MAKING ANY INQUIRY FROM THE LENDER LADY, PROCEEDED TO MAKE THE ADDITION U/S 68 OF THE ACT MERELY ON TH E BASIS THAT CASH WAS DEPOSITED IMMEDIATELY BEFORE ISSUANCE OF C HEQUE TO THE ASSESSEE. UNLESS IT IS ESTABLISHED THAT THE MONEY DEPOSITED BY THE ASSESSEE WAS FLOWN FROM THE ASSESSEE AND THE SAME W AS ROUTED THROUGH A FICTITIOUS LENDER BY MANIPULATING THE BOO K ENTRY THEN ONLY THE AMOUNT CAN BE TAXED IN THE HANDS OF THE AS SESSEE BY MAKING THE ADDITION U/S 68 OF THE ACT. AT THIS JUNC TURE, WE RESPECTFULLY NOTE THAT SINCE THERE IS A DIRECT PROP OSITION OF HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF METACHEM I NDUSTRIES (SUPRA) IN FAVOUR OF THE ASSESSEE, THE BENEFIT OF R ATIO OF THE DECSION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF UM ESH KRISHNANI (SUPRA) IS NOT AVAILABLE TO THE REVENUE IN THE PRES ENT CASE. ACCORDINGLY, GROUND NO. 1 OF THE ASSESSEE IS ALLOWE D AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITIO N. LATE SHRI SANJAY PALIYA ITA 922/IND/2016 11 11. APROPOS GROUND NO. 2 THE LEARNED COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPE ALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 6,08,632/- BEING 5% OF LABOUR AND WAGES EXPENSES WITHOUT CONSIDERING THE EXPLANAT ION OFFERED BY THE ASSESSEE THAT THE REGULAR AND PROPER BOOKS OF A CCOUNTS HAVE BEEN MAINTAINED BY THE ASSESSEE, THEREFORE, NO DISA LLOWANCE IS CALLED FOR. 12. REPLYING TO THE ABOVE, THE LEARNED DR DREW OUR ATTENTION TO RELEVANT OPERATIVE PART PARA 5 AT PAGES 2 AND 3 OF THE ASSESSMENT ORDER AS WELL AS PARA 6 OF THE IMPUGNED FIRST APPEL LATE ORDER AND SUBMITTED THAT THE AD HOC DISALLOWANCE OF 5% OF TOT AL EXPENDITURE HAS BEEN MADE AS THE AR OF THE ASSESSEE AGREED THAT 5% OF SUCH EXPENSES MAY BE DISALLOWED BECAUSE OF DISCREPANCIES FOUND BY THE ASSESSING OFFICER IN THE BOOKS OF THE ASSESSEE. 13. PLACING REJOINDER TO THE ABOVE, THE LEARNED COU NSEL FOR THE ASSESSEE SUBMITTED THAT MERELY BECAUSE THE AR HAS A GREED FOR DISALLOWANCE, THE SAME CANNOT BE PLACED AS BINDING ON THE ASSESSEE AND, THEREFORE, AD HOC ADDITION MADE MAY KINDLY BE DELETED. LATE SHRI SANJAY PALIYA ITA 922/IND/2016 12 14. ON CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIO NS, WE FIND FROM PARA 5 OF THE ASSESSMENT ORDER THAT ON BEING A SKED AND CONFRONTED BY THE ASSESSING OFFICER WITH THE DISCRE PANCIES FOUND IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THE AR VOLUN TARILY AGREED THAT 5% OF EXPENSES ON WAGES AND LABOUR MAY BE DISA LLOWED. PRAS 5 OF THE ASSESSMENT ORDER READS AS UNDER :- 5. ON PERUSAL OF AUDITED PROFIT & LOSS ACCOUNT, IT WAS FOUND THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 1,21,72, 645/- TOWARDS LABOUR WAGES EXPENSES. VIDE ORDER SHEET EN TRY DATED 09.01.2015 THE ASSESSEE WAS ASKED TO PRODUCE ALL BI LLS AND VOUCHERS OF SAID EXPENDITURE. ON 12.01.2015, THE AR OF THE ASSESSEE PRODUCED THE ASKED BILLS/VOUCHERS FOR VERI FICATION. ON PERUSAL OF BILL AND VOUCHERS OF LABOUR WAGES EXPENS ES, IT WAS OBSERVED THAT SOME OF VOUCHERS ARE MISSING AND THE BILLS AND VOUCHERS ARE NOT MAINTAINED PROPERLY. SOME OF THEM ARE SELF- MADE. THEREFORE, THE EXPENSES DEBITED UNDER THE ABO VE HEAD ARE NOT FULLY VERIFIABLE. VIDE ORDER SHEET ENTRY DA TED 12.01.2015 THE AR OF THE ASSESSEE WAS CONFRONTED WITH THE DISC REPANCY LATE SHRI SANJAY PALIYA ITA 922/IND/2016 13 FOUND AND THE AR OF THE ASSESSEE AGREED THAT 5% OF SAID EXPENSES I.E. RS.6,08,632/- SHOULD BE DISALLOWED BE CAUSE OF DISCRPEANCIES FOUND. THEREFORE, AN AMOUNT OFRS. 6,0 8,632/- SHOULD BE DISALLOWED BECAUSE OF DISCREPANCIES FOUND . THEREFORE, AN AMOUNTOFRS. 6,08,632/- IS HEREBY DISA LLWOED OUT OF LABOUR WAGES EXPENSES CLAIMED IN P&L ACCOUNT AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. FROM THE RELEVANT PARA 6 OF THE ORDER OF THE COMMIS SIONER OF INCOME TAX (APPEALS) WE OBSERVE THAT THE COMMISSION ER OF INCOME TAX (APPEALS) DISMISSED THE GROUND OF THE ASSESSEE BY OBSERVING THAT ON VERIFICATION OF BILLS AND VOUCHERS IT WAS N OTICED BY THE ASSESSING OFFICER THAT THE SAME WERE NOT MAINTAINED PROPERLY AND SOME OF THE VOUCHERS WERE SELF-MADE AND EXPENSES UN DER THE HEAD WERE NOT FULLY VERIFIABLE, THEREFORE, ON BEING CONF RONTED WITH THESE SERIOUS DISCREPANCIES, THE AR AGREED THAT 5% OF SUC H EXPENSES MAY BE DISALLOWED BECAUSE OF DISCREPANCIES FOUND. ON BE ING SPECIFICALLY ASKED BY THE BENCH, THE LEARNED COUNSEL FOR THE ASS ESSEE COULD NOT CONTROVERT THIS FACT THAT SOME DISCREPANCIES IN THE BOOKS OF LATE SHRI SANJAY PALIYA ITA 922/IND/2016 14 ACCOUNTS WERE CONFRONTED TO THE AR OF THE ASSESSEE BY THE A.O. AND INSTEAD OF SUBMITTING PROPER EXPLANATION AGAINST TH E DISCREPANCIES POINTED OUT BY THE ASSESSING OFFICER, THE AR AGREED THAT 5% OF SUCH EXPENSES MAY BE DISALLOWED. FROM THE OBSERVATIONS O F THE AUTHORITIES BELOW, WE CLEARLY OBSERVE THAT THE DISC REPANCIES WERE POINTED OUT BY THE ASSESSING OFFICER TO THE AR VIDE ORDER SHEET ENTRY DATED 9.1.2015 AND ON 12.1.2015 THE AR AGREED TO DI SALLOWANCE OF 5%, HENCE IT CAN BE SAFELY PRESUMED THAT THE AR AGR EED TO THE IMPUGNED DISALLOWANCE AFTER TAKING INSTRUCTION FROM THE ASSESSEE AND WE ALSO POINT OUT THAT AS PER GROUND NO. 2 MENT IONED IN FORM NO. 35 BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS) IT IS NOT THE CONTENTION OR CASE OF THE ASSESSEE THAT THE AR AGREED TO THE AD HOC DISALLOWANCE WITHOUT ANY INSTRUCTIONS FROM THE ASSESSEE. WE ARE, THEREFORE, UNABLE TO SEE ANY VALID REASON TO I NTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW WHEREIN THEY HAVE M ADE AD HOC- DISALLOWANCE OF 5% OF TOTAL EXPENSES CLAIMED BY THE ASSESSEE ON LABOUR AND WAGES. THEREFORE, THE ADDITION MADE BY T HE ASSESSING OFFICER AND UPHELD BY THE COMMISSIONER OF INCOME TA X (APPEALS) IS CONFIRMED AND CONSEQUENTLY GROUND NO. 2 OF THE ASSE SSEE, BEING DE VOID OF MERIT, IS DISMISSED. LATE SHRI SANJAY PALIYA ITA 922/IND/2016 15 15. GROUND NOS. 3 AND 4 ARE CONSEQUENTIAL IN NATURE AND GROUND NO. 5 IS GENERAL IN NATURE AND AS SUCH THEY NEED NO ADJUDICATION. 16 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 30 TH MAY, 2017. SD/- SD/- &+ ( ( (O.P.MEENA) (C.M. GARG) ACCOUNTANT MEMBER J UDICIAL MEMBER MAY 30, 2017. DN/