DEPUTY COMMISSIONER OF INCOME-TAX vs. PUNDALIK TUKARAM CHOWGULE,, PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

are as under :-

Assessee is an individual having income from salary and

other sources. Assessee filed his return of income for A.Y. 2006-07

on 30.10.2006 declaring total income of Rs.7,81,35,577/-. The

case was selected for scrutiny and thereafter assessment was

framed u/s 143(3) of the Act vide order dt.26.12.2008 and the total

income was determined at Rs.11,05,43,570/-. Aggrieved by the

order of AO, assessee carried the matter before Ld.CIT(A), who vide

order dt.16.06.2014 (in appeal No.PN/CIT(A)-II/Addl.CIT

R-4/706/2008-09) granted partial relief to the assessee. Aggrieved

by the order of Ld.CIT(A), assessee and Revenue are now in appeal

before us.

No.1943/PUN/2014 reads as under :

“1. The learned CIT(A) erred in law and on facts in confirming addition of Rs.1,28,01,600/- being the part of the amount on estimated basis out of the total payment of Rs. 1,46,00,000/- & Rs.14,02,000/- made to the 7 sub-contractors & labour charges to the labourers respectively. 2. The learned CIT(A) has confirmed the addition without actually taking into account the documentary evidences and the facts of the case.

The addition be deleted

appeal No.1928/PUN/2014 reads as under :

“1. The order of the learned Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case.

inter-connected, both the appeals are considered together.

assessee had purchased land admeasuring 23500 sq.mt situated at

Sangamwadi Village, Yerawada, Pune from M/s. Sangam Estate

Pvt. Ltd., vide sale deed dt.31.03.2000 for a consideration of

Rs.22,64,066/-. Out of this land, land admeasuring 16000 sq. mt

was sold to Sangam Sarita Society vide sale deed dt.30.11.2005 for

a consideration of Rs.8,61,12,000/-. It was further noticed that

assessee had received contract amount of Rs.4.5 crore from

Sangam Sarita Co-operative Housing Society for leveling, clearing

and fencing work etc. on 16000 sq mtrs land sold on 30.11.2005.

Assessee submitted the copies of bills raised by the sub-contractors

for cutting of trees and bushes, dismantling or demolition of

structures, excavation, embankment etc. (the details of which are

listed at page 3 of the assessment order) the amount being

Rs.307,00,399/-. AO also noticed that assessee apart from

incurring the expenditure for sub-contracts had also claimed to

have incurred expenditure of Rs.14,02,000/- towards labour

charges and has been stated to have earned profit of

Rs.1,28,97,601/- from the contract of Rs.4.5 crores entered into

with the Society. Assessee was asked to submit the copy of

contract agreement with the Society and to show the working of the

contract amount. It was submitted that there was no written

agreement with the Society for the work entrusted to it. Assessee

was confronted with the fact that the identity and the genuineness

of the society and the transaction with the Society did not appear

to be genuine, in view of the absence of any work or contract order

from the Society and non-deduction of TDS by the Society from the

contract amount of Rs.4.5 crores. The assessee was therefore

asked to prove the genuineness of the transaction. AO on the basis

of the perusal of the documents and the enquiries noted that

although there was no encroachment on the land as evident from

the agreement, the Society agreed to pay Rs.4.5 crores for clearing

the illegal encroachments and unauthorized constructions from

the Society land. The nature of work mentioned on the bills of

sub-contracts did not show that the work stated to have been done

for the Society. Later, one of the sub-contractors Shri Sudher Patil

has stated that the amount was received for cutting of the trees on

land. AO noted that since the land was in Green Belt Zone, no

trees could have been cut without the permission of the appropriate

authorities and the site visit on 13.12.2008 showed that the big

trees still existed on both sides of the 30 meter road under

construction. He also noted that assessee did not submit any plan

to the PMC for the development of land for non-agricultural use

and therefore the activities relating to the land as claimed in the

bills of sub-contracts were not possible. AO also noted that the

payment to the sub-contractors was made after 9 to 12 months

from the date of completion of the alleged work. He was of the view

that it was unbelievable that the contract work involving

transportation of stones and debris by trucks could be made after

such a long time. He therefore held that the entire transaction

relating to the payment to alleged sub-contractors to be not

genuine as no work was actually done by the assessee for the

Society. He therefore concluded that the payment for the society

and the payments to the alleged sub-contractors were non-genuine

contracts. He accordingly taxed the entire receipt of 4.5 crore

received from the Society. Aggrieved by the order of Ld.CIT(A),

assessee carried the matter before Ld.CIT(A), who after considering

the submissions of the assessee, the remand report of the AO and

assessee’s reply to the remand report decided the issue by holding

as under :-

“ 3.5 I have considered the submission made by the appellant and perused material on record. The appellant has contested the treatment of contractual receipt amounting to Rs.4,50,00,000/- from Sangam Sarita Co-op Hsg. Society Ltd was not genuine and also the expenditure of Rs.3,23,07,997/- against the aforesaid receipt also to be not genuine. The appellant is a civil engineer carrying on the business of undertaking different types of civil contract and during the year under consideration has taken a civil contract from Sang am Sarita Co-op Hsg. society Ltd for a sum of Rs.4.50 crores for removing encroachment, cutting trees, bushes, fencing, boundary fixing and other earth works for the land located at S.No 47B/1, 48A/1 at Sangamwadi, Pune. The fact of the case is that the assessee purchased land admeasuring 23,500 sq. mtrs. at Sangamwadi, Yerwada Pune from Sangam Estate (P) Ltd vide sale deed dated 31-03-2000 for a consideration of Rs. 22,64,066/-. The appellant out of the aforesaid land sold 16000 sq.ft to Sangam Sarita Co-op Hsg. Society Ltd (society hereinafter) vide sale deed dated 30-11-2005. The appellant disclosed the long term capital gain of Rs.6,41,92,456/- after claiming exemption u/s 54 for purchase of agricultural lands at Sangamwadi village and at Madilage, Kolhapur and investment in capital gain bond. The appellant against the contract received of Rs. 4.50 crores after claiming .expenditure of Rs. 3,07,00,399/- towards payment to sub contractor at Rs.14,02,000/- towards labor charges offered net profit of Rs. 1,28,97,601/-. The Assessing Officer during the assessment proceedings did not accept the details and explanation filed by the appellant taxed the entire receipt of Rs. 4.50 crores and did not allow the claim of expenditure of Rs. 3,23,07,997/-.The Assessing Officer has held the evidences submitted by the appellant to be not valid and has held that the payments received from the society and the payment to the sub contractors to be non genuine transaction and also that the evidence

were created with a view to conceal the real income. The Assessing Officer has also questioned the transaction with the society by the appellant for the reason that no contract works order was given and no deduction of tax was made by the society with respect to the contract payment among other observations. The fact brought on record, however, indicate that the society is registered on 7-11-2005 with the Registrar of Maharashtra Co-op Society and Shri. Rakesh Sharma is the Chairman and Shri. Bhupesh Gupta is the Secretary of the said society and the bye laws and registration of the society had also been filed before the Assessing Officer. These facts do indicate that the society exists and, therefore, its genuineness prima facie could not be doubted. The society after the purchase of land gave a contract of Rs. 4.50 crores to the appellant, which was in consequence to the quotation submitted by the appellant. The said contract is seen to have been given by Shri. Rakesh Sharma, the Chairman of the society who also signed the sale deed on behalf of the society for the purchase of the said land. Thus in the circumstances the responsibility to deduct TDS lay on the society and, therefore, the contention raised by the Assessing Officer in this regard is not of much significance as the appellant cannot be held responsible for non deduction of TDS. The observation of the Assessing Officer that the quotation given by the appellant has been based on the negotiation and discussion carried on with the society's Chairman, Shri Rakesh Sharma and the nature of work to be carried has been specified by the appellant in the said quotation in consequence to which the works order specifying the nature of works to be carried out and the amount agreed has been issued by the society. The society's letter dated 1-2-2006 whereby the Chairman of the society has agreed that work of clearing the encroachment and other work has been carried out and as per the agreement a draft of Rs. 4.50 crores bearing No 110827 drawn on ICICI Bank towards the consideration and expenses incurred has been.given.by the society through its. Bank a/c No.- 000705012771. Hence the society did acknowledge the work carried out by the appellant and only after being satisfied has issued the payment of Rs. 4.50 crores as agreed.

3.5.1 So far as the observation of the Assessing Officer that the Chairman of the society is employed with DLF Ltd and the appellant received 1 crore from DLF Ltd earlier, as such there is no bar legally for a person being an employee of a company can also be a Chairman of the society at the same and the payment of Rs. 1 crore received from DLF Ltd by the appellant was because of the fact that initially the aforesaid company wanted to purchase the land from the appellant for which the said advance of 1 crore was given but subsequently decided not to purchase the land and the said amount was refunded back to the company, and subsequent to the above transaction the appellant entered into the agreement with the society for the sale of land. The society purchased the land' on as is where is basis. Thus the sale of land did take place and the appellant has also disclosed the long term capital gain arising out of the transaction in its return of income. The society has not denied the contract given to-the appellant and which is also backed-by- evidences submitted-by the appellant and has also acknowledged the work contract undertaken and completed for which payment of Rs.4.5 crores has been made and which has also been disclosed by the appellant. Moreover, the Assessing Officer has observed that the society did not have any account which is factually not correct as the material on record do point out that the society is having bank account No. 000705012771 with the ICICI Bank through which the payment for the purchase of land and subsequently for the contract work has been made by them to the appellant. This fact becomes more evident from the copy of the bank statement filed by the

appellant. Further the Assessing Officer has also pointed out to the fact that the land being located in a green belt zone was a no development zone on which a 30 meter wide road is proposed in the development plan is an observation for which the appellant was in no way responsible as it was the decision of the society to purchase the land being fully aware of the aforesaid fact though it has been explained by the appellant that the society wanted access to the river view and other adjoining plots which it intended to purchase in future and the access to the other plots was possible only if the land/plot of the appellant was purchased. The Assessing Officer has also -observed that there was no encroachment on the land and still the society agreed to pay Rs. 4.50 crores for clearing illegal encroachment, unauthorized construction, making payments to encroachers etc to which it has been contended by the appellant that encroachment does not only mean illegal occupation of land but in a wider sense i.e. debris dumping, movement of cattle and such activities which prevent from putting it to use as intended. It has also been contended that there was no fencing and the land needed to be leveled and bushes to be cleared. The appellant in order to justify its stand has also drawn attention towards the notices issued by the PMC against the illegal dumping in the green belt of mula mutha river bed and, therefore, cleaning became necessary of the debris dumping in the area. Thus the payment made by the society has been for a diverse nature of works carried out which also included removing of unauthorized constructions/encroachment. The Assessing Officer has also observed that the society did not submit any plan to the PMC for the development of the land for non agricultural use, hence activities relating to land as claimed in the bills of . the sub contract was not possible to which the . appellant has vehemently stated that the society because the owner of the land and it was the society which was required to submit the plan to the PMC for development Of the land for non agricultural use and the appellant in no way is concerned with the non submission of plan to the PMC and hence the issue is not relevant on its part. In view of the above fact the contention raised by the AO with respect to the transaction of contract work given by the society to the appellant is apparently not correct as the material brought on record indicate the. transaction with respect to the contract work to have taken place and its genuineness cannot be doubted.

3.5.2 The appellant has also contested the disallowance of the claim of expenses incurred of Rs. 3,23,09,'997/- treated by the Assessing Officer as non-genuine. It is noticed that out of the total expenses of Rs. 3,23,07,997/- a sum of Rs.1,61,00,399/-was paid by the appellant to chowgule infrastructure Pvt. Ltd a company where the appellant himself is the Managing Director and Rs. 14,02,000/- paid as labor charges directly by the appellant and the remaining amount of Rs.1,48,05,592/- has been paid to 7 sub-contractors. Thus it is noticed that the major part of the work related to the contract was sub-contracted to Chowgule infrastructure Pvt. Ltd which had the capacity to undertake such type of works with its existing resources and machineries being in such type of business for the past eight years. It has been stated by the appellant that with a view to complete the work within the limited time of 3 months given by the society the part of the contract work had to' be sub contracted to outside sub contractors. The appellant has outlined the nature of works carried out by the sub contractors and also the details of the payments made to them. Further the appellant has also filed certain additional evidence u/s.46A, which goes to the root of the matter hence, is necessary for adjudication and in deciding the issue at hand.

3.5.3 It is trite law that the powers of the CIT (Appeals) are coterminous with the powers of A.O. In the case of Smt. Prabhavati S. Shah Vs CIT (1998) 231 ITR 1 (MUM) it was held that sub-rule (4) of Rule 46A specifically restore power of appellate authority to call for production of any document to enable him to dispose appeal. Sub-section (4) of section 250 empowers the appellate authority to take additional evidence. Scope of power is conterminous with ITO. Conjoint reading of section 250 and Rule 46A shows that restrictions on the appellant do not affect the powers of the Appellate Authority for the purpose of Rule 46A appears to be to ensure that evidence is primarily led before the Assessing Officer. Section 250(4) being a quasi-judicial powers, it is incumbent on CIT (Appeals) to exercise the same if the facts and circumstances justify. It appears that due to some genuine reasons the same could not be produced during the assessment proceedings, therefore, the evidence produced by the appellant is being taken into consideration for deciding the issue and is accordingly admitted for adjudication.

3.5.4 In view of the above facts the request for the admission of additional evidence filed by the appellant is acceded to and the same is admitted as the appellant was prevented by sufficient cause from producing the evidence before the Assessing Officer.

3.5.5 It is noticed that during the assessment proceedings the Assessing Officer came to the conclusion that the entire expenses claimed to be bogus and non genuine and the evidences regarding the payment to the sub contractors to be self serving accommodation entries. The Assessing Officer observed that the payments were made to the sub contractors after a gap of 9 to 10 months from the date of completion of the contract work except to the appellant's own company namely Chowgule Infrastructure P Ltd. During the assessment proceedings the Assessing Officer had examined Shri. Ramachandra U Birdawade, one of the sub contractor on 24-12- 2008 and in his statement had retracted from what he had stated with respect to the existence of old houses when confronted by the Assessing Officer with the statement of the appellant. The Assessing Officer has also noted that most of the sub contractors did not have PAN numbers at the time of contract and four of them had been allotted PAN numbers on 3-1-2007 and Shri. Birdawade on 9-1- 2007. The Assessing Officer has also observed that none of the sub contractors had paid any advance tax and they had filed their return of income for AY. 2006-07 disclosing income u/s 44AD and paid self assessment tax. The Assessing Officer also treated the payment to the appellant's company chowgule infrastructure Ltd for the contract work to be a self serving document to which no evidentiary value could-be accorded. The Assessing Officer with respect to the payment of Rs.14.02 lacs as labor charges for the contract work was treated as non genuine and not related to contract work and created only to justify the contract work. Subsequently during the remand proceedings the Assessing Officer examined the payment made to the sub contractors and also examined under oath. The Assessing Officer also took into account the additional evidences produced by the appellant.

3.5.6 The appellant has paid Rs.1,61,00,399/- to M/s. Chowgule infrastructure (P) Ltd for the sub contract work of excavation, embankment etc as noted by the Assessing Officer. The Assessing Officer in the remand report has observed that the appellant furnished the bank account statement, contract receipt ledger account, details of expenses related to sub contract work, the copy of the assessment order for A.Y. 2006-07 of the said company and the copy of the bill raised by the company to the appellant for the sub contract amount of Rs. 1,61,00,399/- and the Assessing Officer has

noted that the aforesaid payment had been made by the appellant to the company. The appellant on the other hand produced the photographs of the actual work carried out by the use of machineries though the Assessing Officer has not considered the same. However, the fact remains the aforesaid receipt in the hands of the company had been disclosed in their accounts and the company had also confirmed the receipt of the amount for the work done by them during the remand proceedings. During the assessment proceedings of the company the Assessing Officer has not found any defect or any false claim of expenses by them. The Assessing Officer has merely doubted the transaction based on presumption and assumption arrived at the finding that no work had been carried out by them. The books of account of the company has also been subjected to tax audit and no such adverse finding or observation has been made by the auditor. The said company is in the contract business since 8 to 9 years. The Assessing Officer either during the assessment proceedings or during the remand proceedings has not been able to bring any such material evidence which could justify the fact that the aforesaid company had not carried out any work. There is no material to suggest the said view taken by the Assessing Officer. In the circumstances it is difficult to doubt the payments made by the appellant to Chowgule infrastructure (P) Ltd of Rs.1,61,00,399/-, which has also been offered to tax and the assessment u/s.143(3) completed.

3.6 So far as the payments made by the appellant to the other 7 sub-contractors are concerned, the Assessing Officer during the remand proceedings has observed that the individual sub- contractors and partners of Sahara constructions, the firm were neither related nor had any other relationship with the appellant except having business transactions. The details of the work carried out by them and the payments made to them have been tabulated by the Assessing Officer. On going through the findings of Assessing Officer in respect of the sub-contractors, it is noticed that most of the sub contractors have admitted to have carried out the sub contract work but the extent of work for which the payment have been made by the appellant has not been conclusively proved. In almost all the cases it is noticed that after receipt of the payment by the sub contractors there has been immediate withdrawal of the amount deposited in cash by them. Shri Sudhir Patil has stated to have received Rs.18,11,100/- by cheque from the appellant for the work carried out, however, has categorically admitted that Rs.10 Lacs was spend on the contract work and the remaining amount of Rs.8,11,000/- was given back to the appellant. Likewise, Shri Dadamiya Shaikh has stated that the entire amount deposited in his bank account was taken back by Shri. Chowgule, the appellant on various dates. Further, the sub-contractor has also not kept any records of the work done by them. The aforesaid fact certainly raises doubt with respect to the claim of expenditure made by the appellant in respect of the transactions carried out with the 7 sub-contractors. Further, all the sub contractors have filed their return of income u/s. 44AD and despite the fact as contended by the appellant that such income shown' as per see 44AD and there is no requirement to explain the entries in the bank statement, cash withdrawals from the bank account etc., the material on record lead to the inference that the claim of the entire expenditure on account of the payment made to the sub contractor cannot be held to be genuine in its entirety. Similarly, the payment made of Rs.14.02 lacs for the labor charges the appellant is seen to have made the payment entire in cash though has produced the muster and the cash vouchers and also the names of the laborers during the remand proceedings to justify the said payment though the appellant had failed to produce them in view of the considerable elapse of time, they being not

traceable. The appellant has certainly failed to conclusively prove that the entire claim of expenses to be genuine. Mere production of vouchers in support of the claim of deduction in explanation would not prove the claim made by the assessee. It is the duty to prove payment especially when the Assessing Officer doubts the genuineness thereof.

3.7 The appellant though has outlined the works assigned to the seven sub-contractors and has vehemently emphasized on the payment made to them, however, the appellant has failed to fully justify the payment for the nature and quantum of works carried out by them. During the course of the assessment proceedings the Assessing Officer had recorded the statement of one of the sub- contractors Shri Ramchandra U. Birdawade on 24.12.2008 who had initially claimed that there were 50 old dilapidated single storey houses and he has assigned to remove the debris of the dismantled houses by trucks for which Rs.1000/- for each trip was charged out of which he received a commission of Rs. 100/-, while rest was kept by the truck owner. However, when the Assessing Officer confronted him with the statement of the appellant, Shri Birdawade retracted from his earlier statement and agreed to the fact that there were only two room houses on the plot. The Assessing Officer also provided the appellant the opportunity to cross examine him which was declined. Likewise, in the case of Shri Sudhir Patil it has been noted by the Assessing Officer in the remand proceedings that out of the total payment made of Rs.18,11,000/- a sum of Rs.10,00,000/- was stated to have been spent on the work and remaining amount returned back to the appellant. Similar is the case of Ramchanda Birdawade whole work involved dismantling of structure had earlier admitted to the fact of having only 2 single storey old structure as against 50 claimed earlier by him. Further in the case of Shri Dadamiya Shaikh who was paid a sum of Rs. 29.04 lacs has categorically admitted that he received contract for Rs.3 to 4 lacs in cash from the appellant for the work carried out and that the aforesaid amount of Rs. 29.04 lacs deposited in the bank has been withdrawn by the appellant for which he has given signed cheques and the same was kept by the appellant and nothing remained with him. Thus, it is noticed that though the sub-contractors have confirmed to have carried out the work assigned and sub-contracted by the appellant, but the quantum of work shown by the appellant to have been carried out by them certainly appears to be highly inflated. The appellant apart from the above payments made to the seven sub-contractors has also claimed Rs.14.02 lacs as labour charges to nearly 58 - 59 persons to whom payment have also been made in cash and cash vouchers submitted in support though expressed inability to produce them for obvious reasons. The claim of the appellant that the work assigned to them was of cleaning the land prior to the sale of land does not appear to be fully justified and convincing. It is also noticed that in most cases in respect of the payment made there has been withdrawal of the amount deposited either on the very next day or two which also raises doubts with respect to the credibility of the claim made though it has been contended by the appellant that the withdrawals made by the sub- contractors were for the purposes of making payment to the labourers employed and also the other parties by them. Despite the fact that the seven sub contractors may not have been related to the appellant and some of them been in the line of contract business for a number of years and the payment having been made by way of cheques, the claim of the expenses made by them and appellant has not been conclusively and entirely proved. The apex court in the case of CIT Vs. Calcutta Agency Ltd. (1951) 19 ITR 191 (SC) has held that in order to claim those expenditure falls u/s. 37(1) the burden of

proving the necessary facts in that connection is on the assessee. Thus the material brought on record and also in view of the findings of the Assessing officer during the remand proceedings the appellant has not been able to fully justify the claim of entire payment made to the 7 sub contractors and labor charges and it is settled law that for judging the evidence test of human probabilities should be applied and courts have held that the tax authorities were entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probability. An explanation offered, if not accepted is no explanation in law. The Apex court in the case of CIT Vs. Durga Prasad More (1971) 82 ITR 540 (SC) has held that

"Science has not yet invented any instrument to test the reliability of the evidence placed before a court or a Tribunal. Therefore, the courts and Tribunals have to judge the evidence before them by applying the test of human probabilities. Human minds may differ as to the reliability of a piece of evidence. -But in that sphere the decision of the final fact finding authority is made conclusive by law. "

The appellant has not been able to fully justify the extent of payment made to the sub-contractors and labour charges amounting to Rs.1,60,02,000/-(Rs.1,46,00,000/- to sub contractor and Rs. 14,02,000/- as labour charges) as the possibility of inflating the expenses certainly exists in the given fact of the case and in the given circumstances there is no other option than to estimate the expenses. Keeping in view the material and facts brought on record in this regard.

3.8 In the fact and circumstances of the case it is held that the claim of expenses on account of payments to the seven sub- contractors and on labour charges , 20% of the expenses is held to be allowable i.e.20% of Rs.1,60,02,000/- i.e. Rs.32,00,400/- and the remaining amount of Rs.1,28,01,600/- is liable to be upheld. Thus, out of the total disallowance of Rs.3,23,07,991/- the addition to the extent of Rs.1,28,01,600/- is upheld and the remaining amount of Rs.1,95,06,391/- is allowed.”

Aggrieved by the order of Ld.CIT(A), assessee and Revenue are now

in appeal before us.

and Ld.CIT(A) and further submitted that if the addition made by

the Ld.CIT(A) is sustained, the profits would work out to around

50% which is quite high and not possible. She further submitted

that out of the contract receipt of Rs.4.5 crore received from the

Society, assessee had spent around Rs.3 crore including Rs.1.6

crore paid to Chowgule Infrastructure Pvt. Ltd., a company in

which assessee is a Managing Director. She therefore submitted

that the remaining payment of Rs.1.48 crores are to outside parties

and that assessee has already offered Rs.1.2 cores as profit. She

therefore submitted that the addition as upheld by Ld.CIT(A) is on

higher side and the disallowance be restricted to reasonable

amount. Ld.D.R. on the other hand, took us through the order of

AO and supported the order of AO.

material on record. The issue in the present case is with respect to

disallowance of expenses. We find that as far as payment to

Chowgule Infrastructure Pvt Ltd., is concerned, Ld.CIT(A) has noted

that the amount paid by the assessee has been reflected by

Chowgule Infrastructure in its return of income and Chowgule

Infrastructure had also confirmed the receipt of work done during

the remand proceedings. He thereafter has concluded that AO has

not found any defect or false in claim of expenses by them, the

books of accounts of the Chowgule Infrastructure were subject to

tax audit and there was no adverse finding and observation made

by the Auditor. He further noted that no material or evidence has

been brought on record to prove that no work was carried out by

Chowgule Infrastructure. He accordingly allowed the expenses

made by assessee to Chowgule Infrastructure. The aforesaid

findings of Ld.CIT(A) has not been controverted by Revenue. In

such a situation, we find no reason to interfere with the order of

Ld.CIT(A) so far as allowing the expenses paid to Chowgule

Infrastructure is concerned.

noting that from sub-contracts to whom the assessee had paid, it is

the finding of Ld.CIT(A) that the amount paid to the sub-contractors

were not related to the assessee. Ld.CIT(A) has also noted that

though the sub-contractors have confirmed to have carried out the

work by the assessee but the question of work allotted by assessee

appears to be highly inflated, the withdrawal of money in cash

immediately after deposit of cheque received from assessee by sub-

contractor also raises doubt. At the same time, it is assessee’s

submission that the addition if made by Ld.CIT(A) is considered, the

profits would be around 50% which is not possible in the present

case. Considering the totality of the aforesaid facts, we are of the

view that in the present case, ends of justice shall be met if

disallowance is restricted to Rs.50 lakhs. We therefore direct that

the disallowance be restricted to Rs. 50 lakhs. Thus, the ground of

assessee and Revenue are partly allowed.

are partly allowed.

Order pronounced on 15th day of February, 2018.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 15th February, 2018. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-II, Pune. 4. CIT-II, Pune. . �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, 5. ITAT, “B” Pune; 6. गाड� फाईल / Guard file.

आदेशानुसार/ BY ORDER,स �या // True Copy // / TRUE COP

व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune