IQBAL AHMED KHALILAMED SUBEDAR, MUMBAI V. ITO 22(1)(2), NAVI MUMBAI

MA 150/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2454 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 01-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D G; CHAUDHARY ARUN KUMAR SINGH
• Assessee Lawyers: S C TIWARI
• Keywords: Rectification of order; Search and seizure; Opportunity of being heard
• Section: 68; 28; 144; 69C; 40A(3); 43D

Judgement Text

I IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI C.N.PRASAD , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER MA NO. 150 - 151/MUM/2018 ARISING OUT OF ITA NO. 4896/MUM/2015 & 2135/MUM/2013 ASSESSMENT YEAR 2008 - 09 & 2009 - 10 MR. IQBAL AHMED KHALIL AHMED SUBEDAR, SHOP NO. 1 JAMNABHAI CHAWL, OPP. NAVAL DEPOT, CHIRAG NAGAR, GHATKOPAR(W), MUMBAI - 400086 PAN A GPPS6788L V. ITO 22(1)(2) MUMBAI APPLICANT RESPONDENT ASSESSEE BY MR. S.C.TIWARI AND MS RUTUJA N. PAWAR REVENUE BY MR. CHAUDHARY ARUN KUMAR SINGH AND MR. D.G.PANSARI, DR DATE OF HEARING : 21 - 0 6 - 2019 DATE OF PRONOUNCEMENT : 04 - 09 - 2019 ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER THESE TWO MISCELLANEOUS A PPLICATION S BEARING MA NO. 150 - 151/MUM/2018 ARISING OUT OF ITA NO. 4896/MUM/2015 AND ITA NO. 2135/MUM/2013 FOR ASSESSMENT YEAR (S) 2008 - 09 AND 2009 - 10 RESPECTIVELY , ARE FILED BY ASSESSEE U/S 254(2) OF THE INCOME - TAX ACT, 1961( HEREINAFTER CALLED THE ACT) BEING AGGRIEVED BY COMMON APPELLATE ORDER DATED 04.10.2017 PASSED BY I NCOME - TAX APPELLATE TRIBUNAL, I BENCH, MUMBAI ( HEREINAFTER CALLED THE TRIBUNAL) U/S 254(1) OF THE 1961 ACT WHEREIN ASSESSEE IS SEEKING RECTIFICATION OF MISTAKES APPARENT FROM RECORDS . THE MA NO. 150 - 151/MUM/2018 ARISING OUT OF ITA NO.4896/MUM/2015 AND 2135/MUM/2013 2 | P A G E TRIBUNAL HAS PASSED WELL REASONED DETAILED ORDER RUNNING INTO 56 PAGES FOR BOTH THE AYS VIZ. AY: 2008 - 09 AND 2009 - 10 WHEREIN ENTIRE FACTUAL MATRIX OF THE CASE, ORDERS PASSED BY AUTHORITIES BELOW, CONTENTIONS RAISED BY BOTH THE PARTIES BEFORE THE TRIBUNAL WERE ALL CONSIDERED AND THEREAFTER DETAILED WELL REASONED APPELLATE ORDER DATED 04.10.2017 WERE PASSED BY THE TRIBUNAL FOR AY: 2008 - 09 AND 2009 - 10 RUNNING INTO 5 6 PAGES . IT IS NOW WELL SETTLED THAT SCOPE OF TRIBUNAL TO RECTIFY ITS OWN APPELLATE ORDER (S) , WITHIN PROVISIONS OF SECTION 254(2) OF THE 1961 ACT IS LIMITED TO RECTIFYING MISTAKES WHICH ARE APPARENT FROM RECORDS. THE TRIBUNAL HAS NO POWERS TO REVIEW ITS OWN DECISION WITHIN LIMITED SCOPE OF SECTION 254(2) OF THE 1961 ACT. THE FIRST GRIEVANCE OF THE ASSESSEE IS THAT IN PARAGRAPH 10 OF PAGE 27 OF THE TRIBUNALS ORDERS DATED 04.10.2017 IT IS MENTIONED ERRONEOUSLY BY TRIBUNAL THAT: IT WAS ALSO SUBMITTED BY L EARNED COUNSEL FOR THE ASSESSEE THAT EVEN QUANTUM OF DISALLOWANCE MADE OF RS. 17,99,90,677/ - FOR A.Y.2009 - 10 BY INVOKING SECTION 40A(3A) IS ALSO NOT CHALLENGED BY THE ASSESSEE. THE ASSESSEE BY RAISING THIS GRIEVANCE IS NOT COMING OUT WITH COMPLETE FACTS. THE CONTENTION OF THE ASSESSEE DURING THE COURSE OF HEARING BEFORE THE BENCH WHEN APPEAL WAS ORIGINALLY HEARD THAT ONCE BOOKS OF ACCOUNTS ARE REJECTED BY THE AO U/S 145(3) , THEN ONLY RECOURSE IS TO ESTIMATE PROFITS U/S 144 OF THE 1961 ACT AND RECOURSE TO PROVISIONS OF SECTION 40A(3) AND 40A(3A) CANNOT BE TAKEN BY THE AO AND THEN IN THAT SITUATION THE AO IS BOUND TO ESTIMATE THE PROFITS BY INVOKING PROVISIONS OF SECTION 144 OF THE 1961 ACT. THE ASSESSEE IS CONTEMPLATING IN THE MA BY STATING THAT TOTAL TURNOVER FOR AY: 2009 - 10 WAS RS. 7.50 CRORES AND ADDITIONS TO THE TUNE OF RS. 17,99,90,677/ - COULD NOT BE MADE , W HILE FACT OF THE MATTER IS THAT DISALLOWANCE IN AY: 2009 - 10 WERE MADE U/S 40A(3) AND 40A(3A) AS THE PAYMENTS WERE MADE FOR PURCHASES MADE IN THE PRECEDING YEAR VIZ. AY: 2008 - 09 ALSO IN AY 2009 - 10. AS WE SEE LATER THE TRIBUNAL INFACT DIRECTED AO TO REMOVE D OUBLE JEOPARDY AS IN AY:2008 - 09 ENTIRE PURCHASES GOT ADDED BY INVOKING PROVISIONS OF SECTION 69C WHILE IN AY: 2009 - 10, THE AO INVOKED PROVISIONS OF SECTION 40A(3) AND 40A(3A) OF THE 1961 ACT. THUS, NOW THE ASSESSEE IS TRYING TO HAIR SPLIT THE ORDER OF THE TRIBUNAL BY PICKING AND CHO O SING SOME PORTIONS OF THE ORDER OF THE TRIBUNAL WHILE ON THE OTHER HAND MA NO. 150 - 151/MUM/2018 ARISING OUT OF ITA NO.4896/MUM/2015 AND 2135/MUM/2013 3 | P A G E THE TRIBUNAL DEALT IN DETAILS WITH EACH AND EVERY CONTENTION OF THE BOTH THE LITIGATING PARTIES TO ARRIVE AT A WELL REASONED DETAILED CONCLUSION IN ITS COM MON ORDER DATED 04.10.2017 FOR AY: 2008 - 09 AND 2009 - 10. THE TRIBUNAL IN ORDER TO AVOID DOUBLE JEOPARDY INSTEAD DIRECTED AO NOT TO MAKE ADDITIONS OF THE OPENING BALANCE OF CREDITORS OF RS. 10.82 CRORES AS ON 01.04.2008 AS THE SAID BALANCE GETS VIRTUALLY DIS ALLOWED TWICE BECAUSE IN AY: 2008 - 09 ALL PURCHASES STOOD DISALLOWED WHILE IN AY: 2009 - 10 , THE AO INVOKED PROVISIONS OF SECTION 40A(3) AND 40A(3A) TO DISALLOW PAYMENTS TO THESE PARTIES FROM WHOM ALLEGED PURCHASES WERE MADE OTHERWISE THAN THROUGH CROSSED AC COUNT PAYEE CHEQUES. THE DECISION OF THE TRIBUNAL STARTS FROM PAGE 32 AND ENDS ON PAGE 56 OF THE AFORESAID COMMON ORDER DATED 04.10.2017. THE OTHER GRIEVANCE IS THAT THERE CANNOT BE SIMULTANEOUS DISALLOWANCE U/S 69C IN AY: 2008 - 09 WHILE PROVISIONS OF SECTI ON 40A(3) AND 40A(3A) WERE INVOKED IN AY: 2009 - 10 , THE TRIBUNAL HAS DEALT WITH THESE ISSUES IN DETAILS WHILE PASSING DETAILED WELL REASONED COMMON ORDER DATED 04.10.2017 FOR BOTH THE YEARS. THE AO HAD BROUGHT ON RECORD INCRIMINATING MATERIALS AFTER DETAIL ED ENQUIRIES WHICH WARRANTED THESE ADDITIONS WHILE LED TRIBUNAL TO FINALLY UPHELD THE ADDITIONS . THE TRIBUNAL HAS PASSED WELL REASONED COMMON ORDER DATED 04.10.2017 FOR AY: 2008 - 09 AND 2009 - 10 WHERE ALL THE CONTENTIONS OF BOTH THE LITIGATING PARTIES WERE D EALT WITH. THE TRIBUNAL ALSO DIRECTED TO REMOVE DOUBLE JEOPARDY IN ITS ORDER SO THAT THE ASSESSEE IS NOT PREJUDICED TWICE FOR THE SAME ADDITIONS. THE POWER OF TRIBUNAL WHILE DEALING WITH MA U/S 254(2) IS VERY LIMITED TO RECTIFYING MISTAKES APPARENT FROM RE CORDS AND WE HAVE NO POWER TO REVIEW OUR DECISION . THE NEXT CONTENTION OF THE ASSESSEE IN THIS MA IS THAT THE TRIBUNAL DID NOT DEAL WITH OVERRIDING EFFECT OF SECTION 40A(3) WHEREIN IT IS NOW CONTENDED THAT IT DID NOT OVERRIDE ALL THE PROVISIONS OF THE 196 1 ACT BUT ONLY OVERRIDE PROVISIONS OF THE ACT DEALING WITH COMPUTATION OF INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION. WE ARE AFRAID THAT THIS CONTENTION OF THE ASSESSEE IS ALSO NOT ACCEPTABLE AS TRIBUNAL DULY DEALT WITH THIS ISSUE I N DETAIL IN PAGE 49 - 55 OF ITS APPELLATE ORDER DATED 04.10.2017 , AS UNDER: THE CLAIM AND CONTENTIONS OF THE ASSESSEE IS THAT ONCE BOOKS OF ACCOUNTS ARE REJECTED BY THE AO U/S 145(3) , THERE WILL BE ABSOLUTE EMBARGO ON THE AO AND MA NO. 150 - 151/MUM/2018 ARISING OUT OF ITA NO.4896/MUM/2015 AND 2135/MUM/2013 4 | P A G E HE CANNOT HAVE ANY RECOUR SE TO SUCH REJECTED BOOKS OF ACCOUNTS TO COMPUTE INCOME AND THE AO WILL BE LEFT WITH NO CHOICE BUT TO COMPUTE INCOME BY ESTIMATING PROFITS. THUS AS PER ASSESSEE, REJECTION OF THE BOOKS OF ACCOUNTS BY THE AO WILL DISABLE THE AO TO TAKE BENEFIT OF ANY ENQUIR Y OR INVESTIGATION MADE BY THE AO WHICH RESULTED IN UNEARTHING INCRIMINATING MATERIAL AND THERE IS PROHIBITION TO USE SUCH MATERIAL AGAINST THE ASSESSEE UNDER SUCH SITUATIONS . WE HAVE CAREFULLY GONE THROUGH THE CITED JUDGMENTS AND PERUSAL THEREOF BUT WE C OULD NOT FIND ANY ABSOLUTE BAR ON THE AO TO USE INCRIMINATING MATERIAL UNEARTHED AS A RESULT OF AN ENQUIRY AND / OR INVESTIGATION WHILE COMPUTING INCOME WHILE FRAMING BEST JUDGMENT ASSESSMENT AFTER REJECTING BOOKS OF ACCOUNTS RATHER RELIED UPON JUDGMENTS B Y THE ASSESSEE ITSELF HAVE HELD THAT ONLY WHEN AO CHOOSES TO ESTIMATE PROFITS WHILE FRAMING BEST JUDGMENT ASSESSMENT , THEN THERE IS NO NEED TO APPLY PROVISIONS OF SECTION 40A(3), 68 AND 69 BUT IT IS NOT SO OTHERWISE ROUND THAT WHEN BOOKS OF ACCOUNTS ARE R EJECTED BY THE AO U/S 145(3) AND HE DID NOT ESTIMATE INCOME BY APPLYING PROFITABILITY, THEN THERE IS EMBARGO ON APPLYING SECTION 40A(3), 68 AND 69. HEREIN THE INSTANT CASE, THE AO HAS NOT APPLIED THE PROFITABILITY RATES TO COMPUTE INCOME. IT IS IMPORTANT A T THIS STAGE TO REFER TO FOLLOWING IMPORTANT JUDICIAL PRONOUNCEMENTS ON THE RELEVANT SUBJECT: A) HON BLE SUPREME COURT IN THE CASE CST V. H.M.ESUFALI H.M.ABDULALI REPORTED IN (1973) 90 ITR 271(SC) HAS EXPLAINED THE DISTINCTION BETWEEN REGULAR ASSESSMENT AND BEST JUDGMENT ASSESSMENT AS UNDER: THE DISTINCTION BETWEEN A BEST JUDGMENT ASSESSMENT AND ASSESSMENT BASED ON THE ACCOUNTS SUBMITTED BY AN ASSESSEE MUST BE BORNE IN MIND. SOMETIMES THERE MAY BE INNOCENT OR TRIVIAL MISTAKES IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE. THERE MAY BE EVEN CERTAIN UNINTENDED OR UNIMPORTANT OMISSIONS IN THOSE ACCOUNTS ; BUT YET THE ACCOUNTS MAY BE ACCEPTED AS GENUINE AND SUBSTANTIA LLY CORRECT . IN SUCH CASES , THE ASSESSMENTS ARE MADE ON THE BASIS OF THE ACCOUNTS MAINTAINED EVEN THOUGH THE ASSESSING OFFICER MAY ADD BACK TO THE ACCOUNTS PRICE OF THE ITEMS THAT MIGHT HAVE BEEN OMITTED TO BE INCLUDED IN THE ACCOUNTS. IN SUCH A CASE , T HE ASSESSMENTS MADE IS NOT A BEST BEST JUDGMENT ASSESSMENT . IT IS PRIMARILY MADE ON THE BASIS OF THE ACCOUNTS MAINTAINED BY THE ASSESSEE. BUT, WHEN THE ASSESSING OFFICER COMES TO THE CONCLUSION THAT NO RELIANCE CAN BE PLACED ON THE ACCOUNTS MAINTAINED B Y THE ASSESSEE, HE PROCEEDS TO ASSESS THE ASSESSEE ON THE BASIS OF HIS BEST JUDGMENT. IN DOING SO , HE MAY TAKE SUCH ASSISTANCE AS THE ASSESSEES ACCOUNT MAY AFFORD ; HE MAY ALSO RELY ON OTHER INFORMATION GATHERED BY HIM AS WELL AS THE SURROUNDING CIRCUM STANCES OF THE CASE. THE ASSESSMENT MADE ON THE BASIS OF THE ASSESSEES ACCOUNTS AND THOSE MADE ON BEST JUDGMENT BASIS ARE TOTALLY DIFFERENT TYPES OF ASSESSMENTS .. SO LONG AS THE ESTIMATE MADE BY HIM IS NOT ARBITRARY AND HAS NEXUS WITH FACTS DISCOVERE D , THE SAME CANNOT BE QUESTIONED. IN THE VERY NATURE OF THINGS THE ESTIMATE MADE MAY BE AN OVER - ESTIMATE OR AN UNDER - ESTIMATE. BUT, THAT IS NO GROUND FOR INTERFERING WITH HIS BEST JUDGMENT. IT IS TRUE THAT THE BASIS ADOPTED BY THE OFFICER SHOULD BE RELE VANT TO THE ESTIMATE MADE. THE HIGH COURT WAS WRONG IN ASSUMING THAT THE ASSESSING AUTHORITY MUST HAVE MATERIAL BEFORE IT TO THE PROVE THE EXACT TURNOVER SUPPRESSED . IF THAT IS TRUE, THERE IS NO QUESTION OF BEST JUDGMENT ASSESSMENT. THE ASSESSEE CANNOT BE PERMITTED TO TAKE ADVANTAGE OF HIS OWN ILLEGAL ACTS. IT WAS HIS DUTY TO PLACE ALL FACTS TRUTHFULLY BEFORE THE ASSESSING AUTHORITY. IF HE FAILS TO DO HIS DUTY, HE CANNOT BE ALLOWED TO CALL UPON THE ASSESSING AUTHORITY TO PROVE CONCLUSIVELY WHAT TURNOVER HE HAD SUPPRESSED. THAT FACT MUST BE WITHIN HIS PERSONAL KNOWLEDGE. HENCE, THE BURDEN OF PROVING THAT FACT IS ON HIM. *** MA NO. 150 - 151/MUM/2018 ARISING OUT OF ITA NO.4896/MUM/2015 AND 2135/MUM/2013 5 | P A G E *** THE LAW RELATING TO BEST JUDGMENT ASSESSMENT IS THE SAME BOTH IN THE CASE OF INCOME - TAX ASSESSMENT AS WELL AS IN THE CASE OF S ALES TAX ASSESSMENT. REFERENCE IS ALSO DRAWN TO DECISION OF HON BLE HIGH COURT OF LAHORE IN THE CASE OF SETH GURMUKH SINGH V. CIT REPORTED IN (1944) 12 ITR 393|(LAH), WHEREIN JUSTICE MOHAMMAD MUNIR WRITING HIS SEPARATE JUDGMENT HELD IN CONTEXT OF INCOME - TAX ACT, 1922 AS UNDER: WHEN AN ASSESSEE PRODUCES BOOKS OF ACCOUNT EITHER IN SUPPORT OF HIS RETURN OR AS SPECIAL EVIDENCE ON A POINT SPECIFIED BY THE INCOME - TAX OFFICER, THE INCOME - TAX OFFICER HAS TO EXAMINE THE BOOKS IN THE SAME WAY AS HE WOULD EXAMINE ANY OTHER EVIDENCE PRODUCED BY THE ASSESSEE UNDER RUB - SECTION (3) OF SECTION 23. IF THE OBJECTION TO THE BOOKS IS MERELY ONE OF METHOD OR IF THE BOOKS ARE UNRELIABLE MERELY IN THE SENSE THAT, THOUGH THEY ARE A CORRECT RECORD OF THE ASSESSEE'S TRANSACTIONS , THEY HAVE BEEN KEPT IN SUCH A MANNER THAT THEY DO NOT EX FACIE REVEAL THE TRUE RESULT OF THE ASSESSEE'S TRADING ACTIVITY DURING THE PREVIOUS YEAR, AND THE INCOME - TAX OFFICER CAN, IN SOME MANNER, MAKE THEM THE BASIS OF COMPUTATION OF THE ASSESSEE'S INCOME FOR THE PREVIOUS YEAR, HE MUST PROCEED UNDER THE PROVISO TO SECTION 13. IF, HOWEVER, THE BOOKS ARE FALSE, FICTITIOUS OR 'COOKED' FOR THE PURPOSES OF ASSESSMENT TO INCOME - TAX, THE INCOME - TAX OFFICER MUST REJECT THEM, AS HE MUST REJECT ANY OTHER FALSE EVIDE NCE, AND MAKE THE ASSESSMENT ON THE OTHER MATERIAL BEFORE HIM PROVIDED THE ATTENTION OF THE ASSESSEE IS DRAWN TO THAT MATERIAL ..EVEN WHERE THE BOOKS ARE HELD TO BE FALSE, THERE IS NOTHING TO PREVENT THE INCOME - TAX OFFICER FROM USING AND ACTING ON ANY ADM ISSIONS THAT THEY MIGHT CONTAIN. FOR INSTANCE, THE INCOMETAX OFFICER MAY ACCEPT THE FIGURE OF SALES AND ESTIMATE THE PROFITS WITHOUT ACCEPTING THE TRADING ACCOUNT AS A WHOLE OR HE MAY ACCEPT THE EXPENDITURE AND ON THIS BASIS ESTIMATE THE SALES. WHILE PROCE EDING IN THIS MANNER THE INCOME - TAX OFFICER IS NOT ACTING UNDER THE PROVISO TO SECTION 13 BUT ON GENERAL RULES OF REASONING AND INDEPENDENTLY OF SECTION 13. I DO NOT, THEREFORE, THINK THAT UNLESS, THE PROVISO TO SECTION 13 IS APPLIED TO SUCH CASES THERE WO ULD BE A HIATUS IN THE ACT AND THAT SUB - SECTION (3) OF SECTION 23 WOULD NOT WORK. AS I HAVE ALREADY POINTED OUT, SUB - SECTION (3) OF SECTION 23 DOES NOT SPECIFY OR DEFINE THE MATERIAL ON WHICH THE INCOME - TAX OFFICER MAY BASE HIS FINDING. WHILE MAKING THE AS SESSMENT UNDER THAT SUB - SECTION ANY MATERIAL WHICH TENDS TO SHOW THE ASSESSABLE INCOME OF THE ASSESSEE IS GOOD MATERIAL ON WHICH ASSESSMENT MAY BE BASED, PROVIDED THE ASSESSEE'S ATTENTION HAS BEEN DRAWN TO THAT MATERIAL. HON BLE KERALA HIGH COURT IN THE CASE OF CIT V. NATHEKKATTU CONSTRUCTIONS REPORTED IN (2004) 269 ITR 346(KER.) HELD AS UNDER: 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE ALSO PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE TWO APPELLATE AUTHORITIES. AS WE HAVE ALREADY STATE D, THE ASSESSING OFFICER DID NOT ACCEPT THE BOOKS OF ACCOUNT OF THE ASSESSEE WHICH WAS SUBJECTED TO A SPECIAL AUDIT PROVIDED UNDER SECTION 45AD OF THE ACT. THE MAIN REASON FOR REJECTING THE BOOKS OF ACCOUNT WAS THAT THE ASSESSING OFFICER, AFTER CONSIDERING THE STATEMENTS AND DEPOSITIONS OF THE SEVEN SUB - CONTRACTORS, WAS OF THE VIEW THAT THEY WERE ONLY NAME LENDERS. IT IS IN THE ABOVE CIRCUMSTANCES THE CLAIM OF DEDUCTION OF A SUM OF RS. 68,43,650 WAS NOT ALLOWED AS DEDUCTION FROM THE GROSS RECEIPT. THE ASSES SING OFFICER WAS ALSO OF THE VIEW THAT THERE WAS NOTHING TO BE DEDUCTED FROM THE GROSS RECEIPT OF THE SUM OF RS. 87,51,092 RECEIVED UNDER THE AWARD OF THE ARBITRATOR. IT IS IN THAT VIEW OF THE MATTER HE HAS TREATED THE ENTIRE SUM OF RS. 87,51,092 AS INCOME . THE FIRST APPELLATE AUTHORITY HAD ADVERTED TO THE CONTENTIONS OF THE ASSESSEE WITH REFERENCE TO THE PAYMENTS MADE TO THE SUB - CONTRACTORS. HOWEVER, THE FIRST APPELLATE AUTHORITY HAS TAKEN THE VIEW THAT THIS IS AT THE MA NO. 150 - 151/MUM/2018 ARISING OUT OF ITA NO.4896/MUM/2015 AND 2135/MUM/2013 6 | P A G E MOST A CASE FOR REJECTION OF THE ACCOU NTS AND THAT IF THE ACCOUNTS ARE REJECTED THE INCOME HAS TO BE ESTIMATED. THE FIRST APPELLATE AUTHORITY WAS OF THE VIEW THAT WHEN THE INCOME IS BEING ESTIMATED THERE IS NO QUESTION OF MAKING SEPARATE ADDITIONS IN THE LIGHT OF CERTAIN DECISIONS OF THE OTHER COURTS. THE FIRST APPELLATE AUTHORITY, THEREFORE, AFTER REJECTING THE BOOKS, HAD RESORTED TO THE ESTIMATION OF INCOME ON PERCENTAGE BASIS. HERE, IT MUST BE NOTED THAT THE FIRST APPELLATE AUTHORITY DID NOT THEREAFTER MAKE ANY REFERENCE TO THE BOOKS OF ACCO UNTS AND OTHER DOCUMENTS RELIED ON BY THE ASSESSEE FOR THE PURPOSE OF ESTIMATION OF INCOME. IN OTHER WORDS HE HAD TOTALLY DISCARDED THE MATERIALS AVAILABLE IN THE FORM OF BOOKS OF ACCOUNTS AND OTHER DOCUMENTS. HE HAD RESORTED TO THE ESTIMATION ON PERCENTAG E BASIS. ON AN OVERALL VIEW WITH REGARD TO THE PROFIT THAT CAN BE DERIVED FROM A CONTRACT BUSINESS, THE FIRST APPELLATE AUTHORITY FELT THAT IT IS STRANGE TO THINK THAT OUT OF THE TOTAL CONTRACT RECEIPT OF RS. 1,15,47,373 THERE MAY BE A PROFIT TO THE TUNE O F RS. 87,51,092, WHICH WILL COME TO MORE THAN 75 PER CENT OF THE CONTRACT RECEIPT. ACCORDING TO US THE FIRST APPELLATE AUTHORITY WAS NOT JUSTIFIED ON THE FACTS OF THIS CASE TO TOTALLY DISCARD THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS RELIED ON BY THE ASSES SEE IN THE MATTER OF ESTIMATION OF INCOME. AS HELD BY THE SUPREME COURT IN CST V. GIRJA SHANKER AWANISH KUMAR[1997] 104 STC 130, EVEN AFTER REJECTION OF THE BOOKS OF ACCOUNT FOR TECHNICAL AND OTHER REASONS, IT IS FOR THE ASSESSING OFFICER ON THE FACTS OF E ACH CASE TO CONSIDER THE MATERIALS DISCLOSED TO ASCERTAIN AS TO WHAT EXTENT THE BOOKS OF ACCOUNT CAN BE RELIED ON FOR DETERMINATION OF THE TURNOVER. THE TRIBUNAL IN THE INSTANT CASE HAS ADVERTED TO THE FINDINGS OF THE ASSESSING OFFICER AND THE FIRST APPELL ATE AUTHORITY. HOWEVER, IN PARAGRAPH 16 OF THE APPELLATE ORDER, WHICH WE HAVE ALREADY EXTRACTED, THE APPELLATE TRIBUNAL DID NOT CONSIDER THIS ASPECT OF THE MATTER EVEN THOUGH THE TRIBUNAL FOUND IT DIFFICULT TO ACCEPT THE CASE OF THE ASSESSEE REGARDING PAYM ENT TO THE SUB - CONTRACTORS. WE NOTICE THAT THE TRIBUNAL HAS ADVERTED TO THE AWARD PASSED BY THE ARBITRATOR AND FOUND THAT THE AMOUNT AWARDED REPRESENTS THE VALUE OF THE EXTRA WORK DONE, WHICH ALSO REPRESENT INTEREST AT THE RATE OF 12 PER CENT. THE TRIBUNAL WAS OF THE VIEW THAT EVEN IF THE ADDITIONAL WORK WAS NOT GOT DONE THROUGH SUB - CONTRACTORS, IT MIGHT HAVE BEEN DONE BY THE ASSESSEE ITSELF, WHICH ASPECT HAS NOT BEEN CONSIDERED. THE TRIBUNAL HOWEVER, OBSERVED THAT IT IS NOT POSSIBLE TO SAY THAT THE ENTIRE AMOUNT OF AWARD IS A PROFIT TO THE ASSESSEE AND TAXABLE AS CONTENDED BY THE DEPARTMENT. IN SUCH CIRCUMSTANCES, ACCORDING TO US IT WAS FOR THE TRIBUNAL TO REMIT THE MATTER TO THE ASSESSING OFFICER OR AT ANY RATE THE FIRST APPELLATE AUTHORITY TO CONSIDER THE MATTER AFRESH. HOWEVER, WHAT WE FIND IS THAT THE TRIBUNAL HAS AGREED WITH THE FIRST APPELLATE AUTHORITY THAT THIS IS A CASE WHICH CALLS FOR ESTIMATION OF THE PROFIT ON PERCENTAGE BASIS. WE DO NOT FIND ANY REASON STATED BY THE TRIBUNAL FOR JUSTIFYING THE E STIMATE MADE ON PROFIT BASIS. WE NOTE THAT APART FROM THE GENERAL OBSERVATIONS MADE BY THE TRIBUNAL ON THE MERITS OF THE MATTER, THERE IS NO DUE CONSIDERATION OF THE CASE OF THE ASSESSEE OR OF THE DEPARTMENT IN REGARD TO THE ACCEPTANCE OF THE BOOKS OF ACCO UNTS OR THE ESTIMATION OF THE INCOME WITH REFERENCE TO ALL THE MATERIALS AVAILABLE ON RECORD INCLUDING THE BOOKS OF ACCOUNT AND DOCUMENTS. 6. THE QUESTION ON WHICH NOTICE WAS ISSUED IN THE DEPARTMENTAL APPEAL RELATES TO THE JUSTIFICATION FOR INTERFERING WI TH THE ORDER OF THE ASSESSING OFFICER IN ESTIMATING THE INCOME WITH REFERENCE TO THE BOOKS OF ACCOUNTS AND OTHER DOCUMENTS BY SUBSTITUTING IT WITH DETERMINATION OF PROFIT ON PERCENTAGE BASIS. AS WE HAVE ALREADY NOTED THE FIRST APPELLATE AUTHORITY, WITHOUT CONSIDERING THE CASE OF THE ASSESSEE BASED ON THE BOOKS OF ACCOUNTS AND OTHER RECORDS, HAD STRAIGHTAWAY THOUGHT THAT THIS IS A FIT CASE FOR ESTIMATION OF PROFIT ON PERCENTAGE BASIS. WE DO NOT THINK THAT ON THE FACTS OF THIS CASE THE FIRST APPELLATE AUTHORITY WAS JUSTIFIED IN ADOPTING SUCH A COURSE. THE TRIBUNAL HAS ALSO COMMITTED THE MISTAKE IN APPROVING THE ESTIMATION OF INCOME ADOPTED BY THE FIRST APPELLATE AUTHORITY. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE QUESTION OF ESTIMATION OF INCOME FROM THE CONTRACT RECEIPT IS A MATTER TO BE MA NO. 150 - 151/MUM/2018 ARISING OUT OF ITA NO.4896/MUM/2015 AND 2135/MUM/2013 7 | P A G E CONSIDERED BY THE ASSESSING OFFICER HIMSELF IN ACCORDANCE WITH LAW IN THE LIGHT OF THE OBSERVATIONS MADE IN THIS JUDGMENT. IN THE ABOVE CIRCUMSTANCES WE DECLINE TO ANSWER THE QUESTIONS OF LAW ON WHICH NOTICE IS ORDERED IN THE APPEAL FILED BY THE DEPARTMENT. THE ABOVE JUDGMENTS CLEARLY STIPULATES THAT THERE IS NO BAR ON TAKING RECOURSE TO INCRIMINATING MATERIAL UNEARTHED BY THE AO DURING THE COURSE OF ENQUIRY AND/OR INVESTIGATIONS DURING ASSESSMENT PROCEEDINGS EVEN AFTER REJECTING THE BOOKS OF ACCOUNTS AND IN OUR CONSIDERED VIEW THIS IS THE SETTLED POSI TION OF LAW AND THE AO COULD NOT BE RESTRICTED TO ONLY ESTIMATE INCOME BASED ON PROFITABILITY AND THE AO CAN ALSO NOT BE RESTRICTED NOT TO USE THE INCRIMINATING MATERIAL UNEARTHED DURING ENQUIRY/INVESTIGATION TO COMPUTE INCOME OF THE ASSESSEE BUT THE AO SH OULD ACT HONESTLY TO ESTIMATE INCOME OF THE ASSESSEE . IN THE INSTANT CASE, IT HAS EMERGED THAT THE ASSESSEE HAS ISSUED BEARER CHEQUES OR CROSSED CHEQUES NOT IN FAVOUR OF PURCHASING PARTIES BUT IN FAVOUR OF THIRD PARTIES WHO WERE IN THE OPINION OF THE REVE NUE MERELY AN ACCOMMODATION ENTRY PROVIDERS NOT DOING ANY GENUINE BUSINESS AS AGAINST THE SO CALLED PURCHASING PARTIES FROM WHOM THE ASSESSEE SHOWED PURCHASES . THUS, THE WHOLE EDIFICE OF THE PURCHASES AND THE BUSINESS OF THE ASSESSEE WAS DOUBTED BY THE AO KEEPING IN VIEW FACTUAL MATRIX OF THE CASE. THE ASSESSEE EVEN DID NOT PRODUCED PURCHASE BILLS AND IN - FACT ADMITTED THAT THERE WAS INFRINGEMENT OF SECTION 40A(3)/40A(3A) WHICH IS AN ADMITTED POSITION BY THE ASSESSEE. THE ENQUIRIES MADE BY THE AO WITH THESE PURCHASING PARTIES AS WELL WITH THE THIRD PARTIES IN WHOSE FAVOUR CHEQUES WERE ISSUED REVEALED THAT NONE OF THESE PARTIES EXISTED AS THEY COULD NOT BE TRACED AND IT WAS CONCLUDED THAT THEY WERE MERE ACCOMMODATION ENTRY OPERATORS . SECTION 40A(3) AND 40A(3 ) ARE DEEMING PROVISIONS WHICH BRINGS FICTIONAL INCOME TO TAX AND IT COULD NOT BE SAID THAT THE SAID INCOME HAS NOT ACCRUED TO THE ASSESSEE. THUS, THE CONTENTION OF THE ASSESSEE THAT ONCE BOOKS OF ACCOUNTS ARE REJECTED THEN THE AO CANNOT HAVE RECOURSE TO I NCRIMINATING MATERIAL GATHERED FROM BOOKS OF ACCOUNTS DURING ASSESSMENT PROCEEDINGS TO FRAME ASSESSMENT IS REJECTED. IT IS FOR THE AO TO FRAME BEST JUDGMENT ASSESSMENT IN THE MANNER LAID DOWN IN SECTION 144 OF THE ACT. THE COURTS SHALL NOT NORMALLY INTERFE RE WITH THE BEST JUDGMENT OF THE AO IN FRAMING BEST JUDGMENT ASSESSMENT TO COMPUTE INCOME OF THE TAX - PAYER UNLESS PERVERSITY IS SHOWN TO HAVE OCCURRED IN THE DECISIONS OF THE AO OR IT COULD BE SHOWN THAT AO DID NOT ACTED HONESTLY IN COMPUTING INCOME OF THE ASSESSEE AFTER TAKING RECOURSE TO BEST JUDGMENT ASSESSMENT. THE ASSESSEE HAS ALSO RAISED A FEEBLE PLEA TO SEEK PROTECTION U/R 6DD(G) AND (J) OF THE 1962 RULES BUT NO MATERIAL IS PLACED ON RECORD AS TO HOW THE ASSESSEE IS COVERED BY SAID RULE AND THIS CONT ENTION IS MERELY A BALD CONDITION AS NO MATERIAL ON RECORD SUPPORTS THE CONTENTION OF THE ASSESSEE. PERUSAL OF SECTION 144 CLEARLY REVEALS THAT IN CASE THE AO IS NOT SATISFIED WITH THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE T HE METHOD OF ACCOUNTING PROVIDED IN SUB - SECTION (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUBSECTION (2), HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE ASSESSING OFFICER MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144. PERUSAL OF S ECTION 144 WOULD CLEARLY REVEALS THAT THE AO , AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH THE AO HAS GATHERED, MA NO. 150 - 151/MUM/2018 ARISING OUT OF ITA NO.4896/MUM/2015 AND 2135/MUM/2013 8 | P A G E SHALL, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, MAKE THE ASSESSMENT OF THE TOTAL INCOME OR LOSS TO THE BEST OF HIS JUDG MENT AND WE DONOT FIND ANY LIMITATION ON THE POWERS OF THE AO NOT TO TAKE RECOURSE TO THE INCRIMINATING MATERIAL GATHERED DURING ENQUIRY/INVESTIGATION DURING ASSESSMENT PROCEEDINGS TO COMPUTE INCOME OF THE ASSESSEE WHILE FRAMING BEST JUDGMENT ASSESSMENT. F ROM THE PERUSAL OF SECTION 144 WE DONOT ALSO FIND ANY RESTRICTION ON THE POWERS OF THE AO TO ONLY ESTIMATE INCOME BASED ON PROFITABILITY AFTER REJECTING BOOKS OF ACCOUNTS. THERE IS NO EQUITY UNDER TAXING STATUTE AND IF THE PROVISION OF THE STATUTE ARE CLEA R AND UNAMBIGUOUS , FULL EFFECT IS TO BE GIVEN TO THEM TO COMPUTE INCOME OF THE ASSESSEE. THERE IS NO SCOPE OF ADDING OR DELETING ANY WORD IN TAXING STATUTE IF THE LANGUAGE IS CLEAR, SIMPLE AND UNAMBIGUOUS. WE DONOT FIND ANY RESTRICTING WORDS IN SECTION 14 4 RESTRICTING THE AO TO ONLY ASSESS PROFITABILITY AFTER REJECTING BOOKS OF ACCOUNTS TO COMPUTE INCOME OF THE ASSESSEE. FURTHER PERUSAL OF SECTION 40A(1) ALSO CLEARLY REVEALS THAT IT HAS A NON OBSTANTE CLAUSE WHICH CLEARLY STIPULATES THAT SECTION 40A(WHICH INCLUDES 40A(3)/40A(3A) ) HAS AN OVERRIDING EFFECT NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER PROVISION OF THE 1961 ACT RELATING TO THE COMPUTATION OF INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION . SECTION 28 DEAL S WITH COMPUTATION OF INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION WHICH IS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 30 TO 43D WHICH INCLUDED SECTION 40A(3)/40A(3). SECTION 40A(1) HAS A NON OBSTANTE CLAUSE NOTWITHST ANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER PROVISION OF THE 1961 ACT RELATING TO THE COMPUTATION OF INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION AS IS CONTAINED IN SECTION 40A(1) AND IN OUR CONSIDERED VIEW EVEN IF ACCOUN TS ARE REJECTED U/S 145(3) , THE AO CAN ESTIMATE INCOME OF THE ASSESSEE BY TAKING RECOURSE TO SECTION 40A(3) WHICH HAS AN OVERRIDING EFFECT OVER SECTION 145(3) R.W.S. 144. THE ASSESSEE IN THE INSTANT CASE HAS ADMITTED THAT BOOKS OF ACCOUNTS WERE RIGHTLY RE JECTED BY THE AO U/S 145(3) AND HENCE IN OUR CONSIDERED VIEW, THE AO HAS RIGHTLY FRAMED ASSESSMENT FOR AY 2009 - 10 WHICH WAS UPHELD BY LEARNED CIT(A) WHICH WE ARE NOT INCLINED TO INTERFERED AND HENCE WE UPHOLD/SUSTAIN THE APPELLATE ORDER OF LEARNED CIT(A) A ND THE ADDITIONS ARE CONFIRMED. THE ASSESSEE FAILS IN THIS APPEAL. WE ORDER ACCORDINGLY . 19. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO. 2185/MUM/2013 FOR AY 2009 - 10 IS DISMISSED . 20. SO FAR AS APPEAL OF THE ASSESSEE IN ITA NO. 4896/MUM/2015 FOR AY 20 08 - 09 IS CONCERNED, WE ARE OF THE CONSIDERED VIEW THAT OUR DECISION IN ITA NO.2185/MUM/2013 FOR AY 2009 - 10 SHALL APPLY MUTATIS MUTANDIS TO THE APPEAL FOR AY 2008 - 09 AS FACTS SITUATION ARE SIMILAR IN BOTH THE APPEALS AND THE AO SHALL WORK OUT DISALLOWANCE I N THE SIMILAR MANNER AS FOR AY 2008 - 09 AS WAS DONE FOR AY 2009 - 10 BY INVOKING APPLICABLE PROVISIONS OF SECTION 40A(3)(A) AND (B). WE ALSO HAVE NOTICED THAT ASSESSMENT FOR AY2008 - 09 WAS FRAMED BY THE AO BY INVOKING SECTION 69C WHEREIN ALL PURCHASES STOOD DI SMISSED , WHILE FOR FRAMING ASSESSMENT FOR AY 2009 - 10 , THE AO INVOKED SECTION 40A(3)/40A(3A) WHEREIN DISALLOWANCE HAS BEEN MADE BASED ON PAYMENTS MADE TO THE MA NO. 150 - 151/MUM/2018 ARISING OUT OF ITA NO.4896/MUM/2015 AND 2135/MUM/2013 9 | P A G E SO CALLED PURCHASING PARTIES IN EXCESS OF RS. 20000/ - OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR A CCOUNT PAYEE DRAFT WHICH HAS LED TO DOUBLE JEOPARDY TO THE ASSESSEE AS THE ASSESSEE HAS OPENING CREDITORS ON 01 - 04 - 2008 OF RS. 10.82 CRORES WHO VIRTUALLY GOT DISALLOWED TWICE , ONCE WHEN ENTIRE PURCHASES WERE DISALLOWED FOR AY 2008 - 09 U/S 69CAND SECONDLY W HEN PAYMENTS AGAINST THOSE PURCHASES WERE MADE AGAINST PRECEDING YEAR OUTSTANDINGS IN AY 2009 - 10 WHICH HAS LED TO DOUBLE JEOPARDY . HOWEVER, THIS FIGURE OF DOUBLE JEOPARDY NEEDS TO BE WORKED OUT BY THE AO AND IN ANY CASE SINCE NOW WE HAVE DIRECTED THE AO TO COMPUTE DISALLOWANCE WITH REFERENCE TO SECTION 40A(3)(A) AND (B) EVEN WITH RESPECT TO AY 2008 - 09, THIS DOUBLE JEOPARDY WILL AUTOMATICALLY GET ELIMINATED. THE ASSESSEE ALSO FAILS IN THE APPEAL FOR AY 2008 - 09 FOR THE REASON CITED IN OUR ORDER. WE ORDER AC CORDINGLY. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE A.Y 2009 - 10 IS DISMISSED AND APPEAL FOR A.Y 2008 - 09 IS ALSO DISMISSED IN THE MANNER INDICATED ABOVE. THUS, KEEPING IN VIEW OUR ABOVE DETAILED DISCUSSIONS, WE HOLD THAT THE ASSESSEE HAS NOT MADE OUT ANY CASE FOR RECTIFYING ANY MISTAKE WHICH IS APPARENT FROM RECORDS WITHIN LIMITED MANDATE OF SECTION 254(2) AND WHAT ASSESSEE IS SEEKING IS REVIEWING OF OUR ORDER DATED 04.10.2017 WHICH IS NOT PERMISSIBLE WITHIN LIMITED MANDATE OF SECTION 254(2) A ND HENCE THESE TWO MAS STAND DISMISSED. WE ORDER ACCORDINGLY. 2 . IN THE RESULT, M.A. NO. 151 - 152 /MUM/201 8 ARISING OUT OF APPEAL IN ITA NO. 4896/MUM/2015 AND 2135/MUM/2013 FOR AY : 2008 - 09 AND 2009 - 10 RESPECTIVELY FILED BY ASSESSEE STAND DISMISSED . ORDE R PRONOUNCED IN THE OPEN COURT ON 0 4 .0 9 .2019 0 4 .0 9 .2019 S D / - S D / - ( C.N.PRASAD ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 0 4 .0 9 .2019 COPY TO NISHANT VERMA SR. PRIVATE SECRETARY 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI MA NO. 150 - 151/MUM/2018 ARISING OUT OF ITA NO.4896/MUM/2015 AND 2135/MUM/2013 10 | P A G E 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI