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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH, JM & SHRI SANJAY ARORA, AM
सुनवाई क" तार"ख / : 21.7.2016 Date of Hearing घोषणा क" तार"ख / : 10.08.2016 Date of Pronouncement आदेश / O R D E R Per Mahavir Singh, JM: These two appeals by the Revenue are arising out of the different orders of CIT(A) in Appeal No. 35/AC.25(1)/ITA-198 & 199/11-12, orders dated 28.1.2014 and 19.3.2014. The assessment was completed by the ACIT, Central Circle-25, Mumbai u/s. 143(3) of the Income Tax Act, 1961 (‘the Act’ hereinafter) for the assessment year (A.Y.) 2008-09 vide his order dated 10.12.2010. The penalty under dispute was levied by the Assessing Officer (A.O.) u/s. 271(1)(c) of the Act vide his order dated 28.6.2011.
First we will take up the quantum appeal in ITA No.2520/Mum/2014.At the outset, it is noticed that the Revenue has raised the grounds regarding :
2 & 2520/Mum/2014 (A.Y. 2008-09) Asst. CIT vs. Chopda Corporation (i) Deletion of disallowance of labour charges - Rs.73,46,980/-; (ii) Deletion of addition of Rs.1,55,000/- and Rs.51,09,000/- regarding disallowance of payments to sub-contractors; and (iii) Deletion of addition of estimated profit @ 8% of the turnover.
The ld. Counsel for the assessee before us stated that the assessee was not having access to seized documents. The documents were seized by CBI and not yet released in relation to these three additions. The ld. Departmental Representative (DR) also drew our attention to para 5.5 of CIT(A) order which reads as under:
5.5. The issues in appeal in Ground Nos.3,5, & 7 are dealt with together since in all these three issues, the appellant has been able to produce part of the evidences but not the entire evidence to justify the claim of these expenses. With respect to issue No.3 which is provision for outstanding labour charges, the A.O. has submitted in the remand report that it is seen that the appellant has not been able to provide independent evidence in support of the said labour charges claimed as expenses. During appeal, the appellant has once again reiterated that certain documents especially related to salary and wages were seized by CBI in the survey conducted at the premises of the appellant on 28.02.2009 in relation to PF matter of its customer, M/s. Hiranandani Builders and Developers and as such the appellant was not able to produce wage related documents before the A.O. at the time of assessment. Similar constraint has been expressed during the course of remand proceedings also. The appellant has however given whatever evidences he had in terms of the bank statement, cash book and ledgers to justify the availability of cash in its books and to this extent I find merit in the arguments of the appellant that since the documents were seized by the CBI and the same have still not been released, but since the appellant is providing evidences of the availability of cash and its own ledger accounts, the extent of the expenditure cannot be entirely doubted. Nevertheless, since the appellant is unable to give the entire evidences, it has also referred to the ratio in the case of Shri Narayansingh Deora v/s Asst. Commissioner of Income Tax, wherein the Hon'ble Tribunal increased the profit percentage on the basis of section 44AD of the I.T. Act. The appellant has therefore submitted that the said percentage of turnover may be adopted. After going through the facts and circumstances of the case, it is apparent that the appellant is definitely engaged in the activity of construction and could have booked the expenses on labour, however in the light of lack of evidences for the claim of the said expenses, the entire claim cannot be held to be duly vouched for and genuine. With respect to issue No.7 which pertains to disallowance of 5% of the labour payment, during the assessment proceedings, the appellant had not submitted any further details. The submission of the appellant that the net profit should be taken at 8% is accepted with respect to this addition also.’ In view of the above findings by the CIT(A) that the relevant documents like bank statement, cash book and ledger were available with the assessee but other related documents and other evidences like bills and vouchers and supporting evidences were seized by CBI and 3 ITA No. 4660 & 2520/Mum/2014 (A.Y. 2008-09) Asst. CIT vs. Chopda Corporation some have still not been released or copies were not allowed to the assessee or the Revenue. When a query was put to the ld. Counsel for the assessee that in such situation how we can reach to conclusion in the absence of the evidence, he fairly conceded that the quantum appeal can be set aside to the file of the A.O. for fresh adjudication and the assessee will obtain the copies of the seized documents from CBI so that he can file during the course of assessment proceedings. On this, the ld. Sr. DR also agreed and stated that the Revenue will also try to obtain the copies of the seized documents from CBI and will frame assessment accordingly.
In view of the above facts and circumstances, we are of the view that let the assessment and the appellate order set aside and matter may be remanded back to the file of AO for fresh assessment on the above issues afresh. In term of the above, we set aside the order of the lower authorities and remit the matter back to the file of the AO for fresh adjudication, after securing the seized material from CBI so that the matter can be adjudicated. In term of the above, the appeal of the Revenue is allowed for statistical purposes.
Coming to the Revenue’s appeal in CIT(A). As we have already set aside the orders to the file of the lower authorities in quantum proceedings, the penalty will not survive. Accordingly, we dismiss the appeal of the Revenue, confirming the order of the CIT(A) deleting the penalty. However, during the course of set aside assessment, if the A.O. is satisfied that this is a fit case for initiating the penalty proceedings against the assessee u/s. 271(1)(c) of the Act and he may initiate the same. Accordingly, the appeal of the Revenue is dismissed.
In the result, the appeal of the Revenue in is allowed for statistical purposes and the appeal of the Revenue in is dismissed.
Order pronounced in the open court on August 10th, 2016 (Sanjay Arora) (Mahavir Singh) लेखा सद"य / Accountant Member "या"यक सद"य / Judicial Member मुंबई Mumbai; "दनांक Dated : 10.08.2016 व."न.स./Roshani, Sr. PS