ADDL CIT 24(3), MUMBAI V. KISHORE G SHAH, MUMBAI

ITA 995/MUM/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2457 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Keywords: Bogus purchase; Business expenditure; Loose papers; Additional evidence; Corroborative evidences
• Section: 143(3); 133A

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL H BENCH MUMB AI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.995/MUM/2013 (ASSESSMENT YEAR 2009-10 ) ACIT-24(3) ROOM NO. 701, C-11, 7 TH FLOOR, BKC, BANDRA(E), MUMBAI-400051. VS. SHRI KISHORE G SHAH 1/106, RAM NAGAR, S.V. ROAD, GOREGAON(W), MUMBAI-400062. PAN: AMWPS4982R APPELLANT RESPONDENT APPELLANT BY : MISS POOJA SWAROOP (SR. DR) RESPONDENT BY : SHRI SASHI TULSIYAN (ADVOCATE) DATE OF HEARING : 11.07.2018 DATE OF PRONOUNCEMENT : 29.08.2018 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-34, MUMBAI [LD. CIT(A)] DATED 19.11.2012, WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER DATED 29.12.2 011 PASSED UNDER SECTION 143(3) FOR ASSESSMENT YEARS 2009-10. THE REVENUE HA S RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS. 2,41,03,904/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NON-GENUINE AND UNPROVED PURCHASES FR OM THE PARTIES LISTED BY THE SALES TAX DEPARTMENT AS SUSPICIOUS DEALERS AND FURT HER ERRED BY ADMITTING ADDITIONAL EVIDENCES IN CONTRAVENTION OF RULE 46A D ESPITE ASSESSEE FAILED TO PRODUCE PURCHASERS AND PROOF OF GOODS DELIVERED TO HIM DESPITE SEVERAL OPPORTUNITIES GIVEN BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS. 1.1. 0N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN NOT TAKING COGNIZANCE OF THE STATEMENT REC ORDED DURING SURVEY U/S 133A BY INVESTIGATION WING WHEN THE ASSESSEE HIMSELF HAD CATEGORICALLY ADMITTED OF TAKING BOGUS BILLS TO INFLATE PURCHASES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE UPTO RS. 1,65 ,000/- OUT OF ADDITION OF RS.3,00,000/- MADE BY THE ASSESSING OFFICER DESPITE THE ASSESSEE FAILED TO PROVE RELATION OF LABOUR EXPENSES OF RS21.98 LAKHS IN CAS H WITH BUSINESS. ITA NO. 995 MUM 2013-SHRI KISHORE G SHAH 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION BY ALLOWING TELESCOP ING SET OFF AGAINST OTHER ADDITIONS ON ACCOUNT OF INVESTMENT IN INSURANCE POL ICY OF RS. 16,56,000/-, IMPOUNDED IN LOOSE PAPERS DURING SURVEY AND ASSESSE E HIMSELF ADMITTED IT ON OATH THAT THEY ARE OUT OF UNDISCLOSED INCOME.' THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BE SET ASIDE AND MATTER MAY BE DECIDED ACCORDING TO LAW. THE APPELLA NT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD NEW GROUND WHICH MAY BE NEC ESSARY. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR, FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 ON 29. 09.2009 DECLARING TOTAL INCOME OF RS. 2,02,73,100/-. THE RETURN OF IN COME WAS SELECTED FOR SCRUTINY AND ASSESSMENT ORDER WAS PASSED ON 29.12.2 011. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER BESIDES THE OTHER ADDITION/DISALLOWANCE OF RS. 2,41,03,904/- ON ACCOU NT OF NON-GENUINE PURCHASES FROM HAWALA DEALERS, THE ADDITION/DISALLO WANCE ON ACCOUNT OF CASH LABOUR EXPENSES OF RS. 3,00,000/- AND RS. 16,5 6,000/- AND ADDITION ON ACCOUNT OF INVESTMENT IN INSURANCE POLICY. ON APPEA L BEFORE THE LD. CIT(A), THE ADDITION OF NON-GENUINE PURCHASES OF RS. 2.41 C RORE WAS DELETED. HOWEVER, THE ADDITION ON ACCOUNT OF CASH PAYMENT TO LABOUR WAS RESTRICTED TO RS. 1,65,000/- AND ADDITION ON ACCOUNT OF INVEST MENT IN INSURANCE POLICY WAS RESTRICTED TO RS.97,310/-. THUS, AGGRIEVED BY T HE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSES SEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. GROUND NO.1 & 1.1 REL ATES TO DELETING THE ITA NO. 995 MUM 2013-SHRI KISHORE G SHAH 3 ADDITION OF RS. 2.41 CRORE ON ACCOUNT OF NON-GENUIN E AND UNAPPROVED PURCHASES. THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. THE LD. DR FOR THE REVENUE SUBMITS THAT TH E SALES TAX DEPARTMENT, GOVERNMENT OF MAHARASHTRA IDENTIFIED THE SUSPICIOUS DEALERS WHO HAVE ISSUED FALSE/BOGUS BILLS WITHOUT DELIVERY OF GOODS. DURING THE ASSESSMENT, THE ASSESSEE WAS ASKED TO FURNISH THE NAME OF PARTI ES FROM WHOM THE ASSESSEE HAD MADE PURCHASES DURING THE RELEVANT FIN ANCIAL YEAR. THE ASSESSEE FURNISHED THE LIST OF PERSONS FROM WHOM TH E ASSESSEE HAS SHOWN THE PURCHASES. THE ASSESSEE WAS ASKED TO PRODUCE THE PA RTIES ALONG WITH SUPPORTING EVIDENCE TO ESTABLISH THE GENUINENESS OF PURCHASES. THE ASSESSEE FAILED TO BRING THE PARTIES AND TO GIVE THE DELIVER Y CHALLAN OF THE MATERIAL. THE ASSESSEE WITHOUT CONFRONTED SUBMITTED THAT THE PURCHASES WERE MADE BY SIDE SUPERVISOR THROUGH BROKERS AND NEED SOME TIME TO BRING THE PARTIES. THE ASSESSEE DESPITE GIVING FINAL OPPORTUNITY FAILE D TO BRING THE PARTIES AND TO PROVE THE GENUINENESS OF PURCHASES, THEREFORE, T HE ASSESSING OFFICER MADE THE ADDITION OF UNVERIFIABLE PURCHASES. THE LD . CIT(A) DELETED THE ENTIRE ADDITION ON THE BASIS OF ADDITIONAL EVIDENCE AND SUBMISSIONS FURNISHED BY ASSESSEE WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER. THE LD. CIT(A) FAILED TO TAKE COGNIZANCE OF THE STA TEMENT OF THE ASSESSEE RECORDED DURING THE SURVEY UNDER SECTION 133A ON 25 .08.2009. 4. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUBMI TS THAT THE ASSESSING OFFICER MADE THE ADDITION IN RESPECT OF PURCHASES M ADE FROM 17 PARTIES OF ITA NO. 995 MUM 2013-SHRI KISHORE G SHAH 4 AGGREGATE OF RS. 2,41,03,904/-. THE ASSESSING OFFIC ER DID NOT VERIFY WHETHER PARTIES MADE SUPPLY OR NOT. NO INDEPENDENT VERIFICATION WAS CONDUCTED BY ASSESSING OFFICER. THE ASSESSING OFFIC ER SIMPLY RECORDED THAT THE 17 PURCHASE PARTIES WERE LISTED IN THE SUS PICIOUS DEALER AND THE ASSESSEE FAILED TO BRING THOSE PARTIES DURING THE A SSESSMENT. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THAT HE IS DOING THE BUSINESS OF ROAD REPAIR AND MAINTENANCE WORK. ALL PAYMENTS WERE MADE THROUG H CHEQUES. ALL WORK EXECUTED BY ASSESSEE IS VERIFIABLE. THE ASSESSEE HA S TO EXECUTE NUMEROUS SMALL REPAIR WORKS AT A VERY SHORT NOTICE THROUGHOU T THE YEARS. THE ASSESSEE IS A SUB-CONTRACTOR. THE ASSESSMENT PROCEEDING WAS INITIATED AFTER 2 YEARS FROM THE DATE OF PURCHASES. IN SUCH CIRCUMSTANCES, THE SUPPLIERS WERE NOT AVAILABLE FOR WHICH THE ASSESSEE CANNOT BE BLAMED O R PENALIZED. THE ASSESSEE HAS CONSISTENTLY SHOWN NET PROFIT @ 5.9% I N ASSESSMENT YEAR 2006-07, 5.55% IN ASSESSMENT YEAR 2007-08, 3.41% IN ASSESSMENT YEAR 2008-09 AND 4.29% IN ASSESSMENT YEAR UNDER CONSIDER ATION. IN CASE THE ADDITIONS OF BOGUS PURCHASES ARE MADE, THE NET PROF IT WOULD INCREASE TO 23.80% WHICH IS IMPOSSIBLE FIGURE IN THE BUSINESS O F ASSESSEE. THE PRESUMPTIVE RATE OF CIVIL CONTRACTOR IS NOT MORE TH AN 8%. THE ASSESSEE FURNISHED THE COPY OF PAYMENT CERTIFICATE ISSUED BY MUNICIPAL CORPORATION OF GREATER BOMBAY (MCGM). THE PAYMENT SHOWS THAT TH E ASSESSEE CARRIED OUT THE CONTRACT WHICH WAS NOT POSSIBLE WITHOUT PUR CHASE OF MATERIAL. ITA NO. 995 MUM 2013-SHRI KISHORE G SHAH 5 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW, WE HAVE AL SO DELIBERATED ON THE VARIOUS DECISIONS RELIED BY LOWER AUTHORITIES. DURI NG THE ASSESSMENT, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE NAME OF THE PARTIES FROM WHOM THE ASSESSEE HAS SHOWN PURCHASES DURING THE RE LEVANT FINANCIAL YEAR TO PROVE THE GENUINENESS OF PURCHASES. THE ASSESSE E FURNISHED THE DETAILS OF PARTIES AND THE AMOUNT OF PURCHASES SHOWN TO THOSE PARTIES. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE PARTIES A LONG WITH THE SUPPORTING DOCUMENTS VIDE ORDER-SHEET DATED 19.12.2011 AND FIX ED THE HEARING ON 23.12.2011. ON 23.12.2011 THE ASSESSEE FURNISHED TH E DETAILS OF TOTAL PURCHASES AND CONTENDED THAT THE ASSESSEE IS CARRYI NG BUSINESS OF CIVIL CONTRACTOR AND VARIOUS KIND OF MATERIAL ARE REQUIRE D FOR EXECUTION OF WORK. THE MATERIAL IS RECEIVED BY SITE SUPERVISOR AT THE SITE. THE ASSESSEE ALSO FURNISHED THE COPY OF DELIVERY CHALLAN. HOWEVER, TH E ASSESSING OFFICER NOTED THAT NO DELIVERY CHALLAN WAS FURNISHED BY ASS ESSEE. THE ASSESSEE WAS AGAIN ASKED TO PRODUCE THE PARTIES ON 26.12.2011. T HAT ON 26.12.2011 THE ASSESSEE AGAIN CONTENDED THAT PURCHASES WERE MADE B Y SITE SUPERVISOR THROUGH BROKER AND NEED SOME MORE TIME TO CONTACT T HE PERSON/PARTIES. THE ASSESSING OFFICER FIXED THE HEARING ON 28.12.2011. ON 28.12.2011 THE ASSESSEE CONTENDED THAT THE TIME GRANTED WAS TOO SH ORT TO BRING THE PARTIES TO ATTEND THE PROCEEDING. WE HAVE NOTED THAT THE ASSES SING OFFICER PASSED THE ASSESSMENT ORDER ON 29.12.2011. THE ASSESSING OFFIC ER DISALLOWED THE ITA NO. 995 MUM 2013-SHRI KISHORE G SHAH 6 ENTIRE PURCHASES SHOWN FROM ALL 17 PARTIES. THE ASS ESSING OFFICER HAS NOT DISCUSSED THE EVIDENTIARY VALUE OF DOCUMENTARY EVID ENCES FURNISHED BY ASSESSEE. 6. BEFORE THE LD. CIT(A), THE ASSESSEE URGED THAT THE ASSESSEE EXECUTED THE WORK OF CIVIL NATURE AND REPAIR OF ROAD THROUGHOUT THE YEAR. SOME TIME THE MATERIAL REQUIRED ARE PURCHASES FROM UN-RECOGNIZED SECTOR WHEREIN THE SUPPLIER APPROACHED THE ASSESSEE ON THE SPOT, IN MA NY OF THE CASES THEY DO NOT HAVE ANY FIXED PLACE AT THE BUSINESS. THE SUPPL IES MADE BY SUCH SUPPLIER ARE PROVED BY THEIR CONSUMPTION AND SATISF ACTORY EXECUTION OF JOB WORK. THE PAYMENT RECEIVED BY ASSESSEE IS INVARIABL Y ELABORATE THE NATURE OF JOB EXECUTED AND QUANTITY OF MATERIAL CON S UMED. ONCE THE EXECUTION WORK, THE CONTRACT IS ACCEPTED AND PAYMENT IS RECEI VED FROM AUTHORITIES CONCERNED AFTER SATISFACTION ABOUT THE QUALITY AND QUANTITY OF JOB, THE ACQUISITION AND CONSUMPTION OF THE MATERIAL HAVE TO BE ACCEPTED AS A NECESSARY COLLORARY. AS THE ASSESSING OFFICER HIMSE LF HAS NOT VERIFIED WHETHER THE PARTIES HAVE ACTUALLY MADE THE SUPPLY O R NOT. THE PAYMENTS OF MATERIAL PURCHASED WERE MADE THROUGH BANKING CHALLA N AND REQUISITE QUANTITY OF MATERIAL OF PRESCRIBED SPECIFICATION WA S DELIVERED TO THE ASSESSEE. THE ASSESSEE ALSO SHOWED HIS TOTAL TURNOV ER AND NET PROFIT FOR ASSESSMENT YEAR 2006-07 TO 2009-10. ON THE BASIS OF SUBMISSION, THE LD. CIT(A) OBSERVED THAT THE ASSESSEE MOSTLY CARRIED OU T ROAD REPAIR AND MAINTENANCE WORK. THE ASSESSEE HAS FURNISHED THE SA MPLE PURCHASE BILLS ITA NO. 995 MUM 2013-SHRI KISHORE G SHAH 7 AGAINST WHICH THE ASSESSEE MADE PAYMENT THROUGH ACC OUNT PAYEE CHEQUES, WHICH CLEARLY INDICATE THAT PARTIES WERE EXISTING. THE LD. CIT(A) FURTHER OBSERVED THAT ASSESSING OFFICER COULD HAVE MADE DUE VERIFICATION ON THE BASIS OF VAT AND CST NUMBER IN CASE GENUINENESS WER E DOUBTED. THE ASSESSING OFFICER HAS FAILED TO CARRY OUT NECESSARY ENQUIRY. THE LD. CIT(A) ALSO OBSERVED THAT PAYMENT CERTIFICATE ISSUED BY MC GM INDICATES THAT ASSESSEE CARRIED OUT 11 DIFFERENT ACTIVITIES FOR WH ICH PAYMENTS WERE RECEIVED BY ASSESSEE. THE PAYMENT CERTIFICATE ISSUE D BY MCGM CARRIES UNIQUE IDENTIFICATION NUMBER (ID). THE DETAILS OF B REAKUP OF PAYMENTS ARE ALSO AVAILABLE ALONG WITH PAYMENT CERTIFICATE. THE LD. CIT(A) CONCLUDED THAT WITHOUT ACQUIRING THE MATERIAL, IT IS NOT POSSIBLE FOR THE ASSESSEE TO COMPLETE THE CONTRACT AND TO HAND OVER THE SAME TO MAIN CONT RACTOR. 7. ON THE BASIS OF CHART OF NET PROFIT FURNISHED BY AS SESSEE FOR ASSESSMENT YEAR 2006-07 TO 2009-10 AND ULTIMATE NET PROFIT. TH E LD. CIT(A) CONCLUDED THAT THE ASSESSEE HAD BEEN CONSISTENTLY DECLARED AV ERAGE NET PROFIT OF 4.61%. THE MARGIN OF MAIN CONTRACTOR IN THESE RESPE CTIVE YEARS IS 2.7%, THUS, THE TOTAL NET PROFIT DECLARED BY SUB-CONTRACT OR AND THE CONTRACTOR IS ABOUT 7.31%. THE LD. CIT(A) FURTHER CONCLUDED THAT THE NET PROFIT DECLARED BY ASSESSEE HAVE CURRENT ASSESSMENT YEAR IS 9.7% AN D MAIN CONTRACTOR IS 2.58% WHICH MORE THAN PRESUMPTIVE RATE AS PER PROVI SION OF SECTION 44AD, WHICH IS 8%. THE LD. CIT(A) FURTHER EXAMINED THAT I N CASE THE SUPPLIES TREATED AS BOGUS, THE NET PROFIT WOULD BE 23.8% WHI CH IS IMPOSSIBLE IN THE ITA NO. 995 MUM 2013-SHRI KISHORE G SHAH 8 BUSINESS OF ASSESSEE. ON THE BASIS OF RECORD AVAILA BLE WITH HIM, THE LD. CIT(A) FURTHER CONCLUDED THAT ASSESSING OFFICER HAS COMPLETED ASSESSMENT FOR ASSESSMENT YEAR 2008-09 UNDER SECTION 143(3) RE SORTING THE ESTIMATE OF 8% OF PROFIT WHICH INCLUDES THE PROFIT OF MAIN CONT RACTOR, THEREFORE, THE NET PROFIT DECLARED BY ASSESSEE AT 9.7% WAS CONSIDERED WHICH FAIR AND REASONABLE. 8. WE HAVE FURTHER NOTED THAT DURING THE ASSESSMENT PR OCEEDING, THE ASSESSING OFFICER HAS FILED HIS SUBMISSIONS ALONG WITH LETTER DATED 10.10.2012 WHEREIN HE HAS MENTIONED THAT ASSESSEE IS ALSO A PARTNER OF MAHAVIR CONSTRUCTION COMPANY, CHIRAG CONSTRUCTION AND AYUSH CONSTRUCTION . THE ASSESSING OFFICER FURTHER CONTENDED THAT A SURVEY ACTION UNDE R SECTION 133A WAS CARRIED OUT ON 07.11.2011 BY ADIT, UNIT-4, MUMBAI A ND THAT STATEMENT OF ASSESSEE WAS RECORDED. WE HAVE NOTED THAT THE LD. C IT(A) CONSIDERED THE SUBMISSION OF ASSESSING OFFICER AND OBSERVED THAT T HERE IS NO EVIDENTIARY VALUE OF STATEMENT RECORDED UNDER SECTION 133A. THE STATEMENT RECORDED MUST BE CORROBORATED TO SOME OTHER MATERIAL EVIDENC E AND IS NOT A CONCLUSIVE PIECE OF EVIDENCE IN ITSELF. ON THE BASI S OF SUBMISSION OF ASSESSING OFFICER, THE LD. CIT(A) CONCLUDED THAT NO MATERIAL GATHERED BY SURVEY TEAM/ADIT (INV.) EITHER DURING THE SURVEY OR AFTER SURVEY WHICH MAY SHOW THAT MATERIAL PURCHASED BY ASSESSEE WAS BOGUS AND THE ASSESSEE HAS INFLATED THE PURCHASES. THE ADIT (INVESTIGATION) HA D NOT MAKE ANY ENQUIRY WITH ANYONE OF THE ALLEGED SUSPICIOUS SUPPLIED NOR DID THE ASSESSING OFFICER ITA NO. 995 MUM 2013-SHRI KISHORE G SHAH 9 GATHER ANY MATERIAL DURING THE ASSESSMENT. THE ASSE SSING OFFICER SOLELY RELIED ON THE STATEMENT RECORDED DURING THE COURSE OF SURVEY WHICH HAS NO EVIDENTIARY VALUE IN ABSENCE OF CORROBORATIVE EVIDE NCE. NO MATERIAL FACT IS BROUGHT BEFORE US NOR IS ANY CONTRARY LAW BROUGHT T O OUR NOTICE TO TAKE THE CONTRARY VIEW. WE MAY FURTHER ADD THAT ASSESSEE HAS NOT FURNISHED ANY ADDITIONAL EVIDENCE WHICH MAY BE SAID IN CONTRAVENT ION OF RULE 46A. THE ASSESSING OFFICER HAS NOT DISPUTED THE CONSUMPTION OF MATERIAL AT THE VARIOUS SIDES. WE HAVE ALSO NOTED THAT THE ASSESSEE HAS PLACED ON RECORD THE COPY OF PURCHASE BILLS OF THE PARTIES (PAGE NO. 20 TO 114 OF PB), COPY OF CONFIRMATION OF PURCHASE PARTY REFLECTING THE PAYME NT MADE THROUGH CHEQUES. COPY OF PAYMENT CERTIFICATE ISSUED BY MCGM TO THE MAIN CONTRACTOR. THE LD. AR OF THE ASSESSEE HAS FURTHER CERTIFIED THAT ALL THESE DOCUMENTARY EVIDENCES WERE FURNISHED BEFORE THE ASS ESSING OFFICER AS REFERRED ABOVE, THE ASSESSING OFFICER HAS NOT GIVEN HIS FINDING ON ANY OF THE DOCUMENTARY EVIDENCES FURNISHED BY ASSESSING OFFICE R. 9. WE HAVE NOTED THAT THE LD. CIT(A) DELETED THE ADDIT ION AFTER CONSIDERING THE DOCUMENTARY EVIDENCES FURNISHED BEFORE HIM AND AFTE R CONSIDERING THE CONSISTENTLY DECLARED NET PROFIT BY ASSESSEE FROM A SSESSMENT YEAR 2006-07 ONWARD. CONSIDERING THE ABOVE FACTUAL DISCUSSION, W E DID NOT FIND ANY MERIT IN THE GROUNDS RAISED BY REVENUE. HENCE, GROUND NO. 1 & 1.1 OF THE APPEAL IS DISMISSED. ITA NO. 995 MUM 2013-SHRI KISHORE G SHAH 10 10. GROUND NO.2 RELATES TO RESTRICTING THE DISALLOWANCE OF RS. 1.65 LAKHS OUT OF ADDITION OF RS. 3,00,000/- ON ACCOUNT OF LABOUR EXP ENSES. THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. T HE LD. DR SUBMITS THAT ASSESSEE HAS DEBITED EXPENSES OF RS. 21.98 LAKHS AS CASH LABOUR EXPENSES. THE ASSESSING OFFICER CONSIDERING THE PERSONAL AND NONE-BUSINESS EXPENSES DISALLOWED ONLY RS. 3,00,000/- ON REASONABLE BASIS. THE LD. CIT(A) DELETED THE ENTIRE ADDITION. 11. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUBMI TS THAT ASSESSING OFFICER MADE DISALLOWANCE WITH OBSERVATION THAT EXPENSES WE RE MADE IN CASH, THEREFORE, ON THE PERSONAL INFLATION OF EXPENSES AN D NONE-GENUINE ELEMENT MADE ADHOC DISALLOWANCE. THE LD. CIT(A) RESTRICTED TO RS. 1.65 LAKHS HOLDING THAT RS. 3,00,000/- IS TO BE EXCESSIVE. ON HIS OBSERVATION THAT RS. 3,00,000/- IS 13.6% WHICH IS ON HIGHER SIDE. THE LD . CIT(A) RESTRICTED TO 7.5% OF THE ENTIRE LABOUR CHARGES. 12. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND HAVE PERUSED THE ORDER CAREFULLY. THE ASSESSING OFFICER DISALLOWED R S. 3,00,000/- OUT OF LABOUR EXPENSES ON HIS OBSERVATION FOR NONE-BUSINES S EXPENSES AND THE INFLATION OF EXPENSES CANNOT BE RULED OUT. THE ASSE SSING OFFICER MADE HIS OBSERVATION WITHOUT BRINGING ANY MATERIAL ON RECORD . THE LD. CIT(A) AFTER EXAMINING THE PERCENTAGE OF DISALLOWANCE RESTRICTED IT TO 7.5% OF THE TOTAL EXPENSES. THE LD. DR FOR THE REVENUE FAILED TO BRIN G ANY FACT TO OUR NOTICE AS TO WHY 7.5% DISALLOWANCE IS NOT JUSTIFIED. NO CO NTRARY LAW IS BROUGHT TO ITA NO. 995 MUM 2013-SHRI KISHORE G SHAH 11 OUR NOTICE. THEREFORE, WE DO NOT FIND ANY JUSTIFICA TION TO INTERFERE WITH THE FINDING OF LD. CIT(A). 13. GROUND NO.3 RELATES TO DELETING THE ADDITION ON ACC OUNT OF INVESTMENT IN INSURANCE POLICY. THE LD. DR FOR THE REVENUE RELIED ON THE ORDER OF ASSESSING OFFICER. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUBMITS THAT ASSESSING OFFICER MADE ADDITION OF RS. 12,96, 000/- AND RS. 3,60,000/- BEING INVESTMENT IN INSURANCE POLICY IN KOTAK LIFE INSURANCE ON THE GROUND THAT SUCH INVESTMENT WERE FROM UNDISCLOSED INCOME. THE LD. CIT(A) GRANTED BENEFIT OF TELESCOPING OF SAID ADDITION AGAINST THE ADDITION OF RS. 15,58,690/- MADE BY ASSESSING OFFICER IN ASSESSMENT YEAR 2008-09. ON THE BASIS OF TELESCOPING, THE LD. CIT(A) SUSTAINED THE ADDITION TO RS. 97,310/-. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF BOTH THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESS ING OFFICER HAS MADE THE ADDITION ON HIS OBSERVATION THAT DURING THE SURVEY ACTION, THE ASSESSEE ADMITTED THAT INSURANCE POLICIES WERE MADE OUT OF U NDISCLOSED INCOME. BEFORE THE LD. CIT(A), THE ASSESSEE EXPLAINED THAT IN ASSESSEES CASE INTANGIBLE ADDITIONS FOR LOW PROFIT WERE MADE IN PR ECEDING YEARS. THE ASSESSEE FURTHER EXPLAINED THAT ADDITION OF RS. 15, 58,510/- WAS MADE IN AY 2008-09. THE INCOME ATTRIBUTABLE TO INTANGIBLE ADDI TIONS WAS AVAILABLE TO THE ASSESSEE FOR MEETING THE EXPENSES AND MAKING IN VESTMENT WHICH REMAINED OUTSIDE THE BOOKS, AND WHICH HAS SUFFERED TAX AS INTANGIBLE ADDITION AS THE SAME ATTRIBUTES AS INCOME RECORDED IN THE BOOKS. THE LD. ITA NO. 995 MUM 2013-SHRI KISHORE G SHAH 12 CIT(A) AFTER GOING THROUGH THE ASSESSMENT ORDER FOR AY 2008-09 WHEREIN THE ASSESSING OFFICER ESTIMATED PROFIT @ 8% AND ACC ORDINGLY A PROFIT OF RS. 15,58,690/- WAS ADDED TO THE INCOME OF ASSESSEE. TH E LD. CIT(A) OBSERVED THAT THE ASSESSEE WAS HAVING PROFIT IN EARLIER YEAR S FOR MAKING INVESTMENT DURING THE YEAR OR SUBSEQUENT YEAR TO THAT EXTENT A ND THE ASSESSEE DESERVE BENEFIT OF TELESCOPING. THEREFORE, THE LD. CIT(A) O N HIS OBSERVATION THAT ASSESSEE AVAILED POLICIES OF RS. 16.56 LAKHS AND TE LESCOPING IS AVAILABLE TO THE EXTENT OF RS. 15,58,690/- WHICH STILL LEAVES A BALANCE OF RS. 97,310/-. THE LD. CIT(A) GRANTED RELIEF TO THAT EXTENT. NON C ONTRARY FACT OR LAW IS BROUGHT TO OUR NOTICE TO TAKE ANY DIFFERENT VIEW. T HEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF LD. CIT (A). 15. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 29.08.2018. SD/- SD/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 29.08.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR H BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI