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TMI Blog2012 (7) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... is amount is shown in the balance sheet but is not shown in the trading account. (iii) On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance of Rs.20,000/- being provision for legal and consultancy charges debited to Profit & Loss account, although no explanation for its admissibility was submitted by the assessee. (iv) On the facts and circumstances of the case, the Ld. CIT(A) has erred in holding that the additions as mentioned in ground No.1, 2 & 3 above are covered in the surrender of Rs.5 lacs made by the assessee during the course of assessment proceedings whereas the said surrender by the assessee was specifically to cover up the possible leakage of income due to missing bills and vouchers as mentioned by the assessee in its letter dated 28.12.2007 as well as per order sheet entry dated 28.12.2007. (v) The appellant craves leave to add/alter the grounds of appeal." 3. The first ground of appeal pertains to addition of Rs.17,74,861/-. 4. The brief facts of this ground are that the assessee is a contractor doing work for different Departments. During the assessment proceedings, the Assessing Officer found that the assessee did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence in total contract receipts from G.M., M.P.R.R.D.A. which is Rs.24,36,247/-. However, the ld. Authorised Representative with reference to the letter dated 06.12.2007 of M.P.R.R.D.A submitted that the difference was not on account of contract receipt but the amount was payable as the awarder has deducted some amount from G.M., M.P.R.R.D.A contract receipt on account of Excise Duty for 25%, E.W. for other reasons for non-employment of technical staff etc. It is relevant to reproduce the explanation filed by the Ld. Authorised Representative before us which reads as under :- "As per copy of letter dated 6.1.207 (para 5) of the aforesaid letter the amount payable as on 31.03.2005 has been informed by MPRRDA, Raisen as under : As per agreement No.40/PM/GSY/04 Dt. 10.03.2004 1307622.00 41/PM/GYS/04 dt. 10.03.2004 467239.00 The A.O. has treated this amount as unaccounted for contract receipts. Whereas these are the deductions made by the contractee out of gross contract receipts for various reasons such as E.D. for 25% E.W., E.W. for other reasons for non employment of technical staff etc. as per details given on page 6 & 7 and is clear from the following. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee has neither completed the work of the aforesaid sum for GM, MPRRDA nor had he raised any bill for the same, nor any such amount has either being received or shown as receivable in the accounts of the assessee's firm, nor any such amount has been remitted after making TDS to the appellant by the said GM, MPRRDA. In fact, it relates to next accounting year and the same is found credited in next year and the appellant has also offered the same in the next year after accounting for it in the receipts. Therefore the addition made by the A.O. being without basis is incorrect. It may be submitted that the amount included by the AO in asstt. Year 05-06 on the basis of information received from the GM MPRRDA does not mention any details as to how this amount has been worked out and the amount if any was really determined payable and if so why the same was not subjected to TDS because whatever, the amount has been determined as payable on final submission of bill are subjected to TDS and once the TDS has been made in the Asstt. Year 2006-07 and so also the amount has been paid and credited in assessee's account in the said asstt. Year 06-07 the same cannot be brought to tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther explain which is just contrary to the earlier explanation that the amount was payable on account of E.D. royalty and others etc. It is also relevant to state that this explanation furnished before us is also not supported by the relevant abstract of books of account which is very well in the possession of the assessee and the burden is on the assessee to furnish such information and details of documents to ascertain the correct fact. The law of mandate provides that a person possessing the relevant material and not furnishing before the Court, an adverse inference can be taken as held by Hon'ble High Court of Madras in the case of CIT vs. Krishna Veni Ammal, 158 ITR 826 (Mad). In the said case, there were crossed cheques but the same were not produced. The Court held as under :- "Held, (1) that, in the instant case, the Tribunal acted on the sole interested statement of the assessee and even though crossed cheques were available, they were not produced and, hence the Tribunal's conclusion was not correct. (2) that taking into consideration the difference in peak credit transactions between the assessment years 1956-57 and 1957-58 (under reference), a sum of Rs.16,000 was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esel and material expenses. This fact is verifiable from the copies of the ledger account of financial statement furnished by the assessee and available in the Paper Book. When purchases expenses have been debited to Profit & Loss account by net amount, naturally the stock in hand in this account remains in the respective individual account which can be said to be individual trading account. The corresponding effect of the accounting entries are shown by the assessee in the Balance Sheet. The Assessing Officer did not appreciate the fact. We, therefore, find that this addition is not warranted. Therefore, the same is deleted on the reasons discussed above and not for the reasons given by the CIT(A) for deleting this addition that the assessee has sundered Rs.5,00,000/- which covers this addition also and addition of Rs.6,11,586/- on account of closing stock is not warranted. Therefore, we do not find substance in this ground of appeal of the Revenue and the same is, therefore, dismissed. 12. The third ground is in respect of deletion of addition of Rs.20,000/- on account of provision for legal and consultancy charges. The A.O. disallowed the said amount as the assessee failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. I have gone through the order of assessment and also the submission made by the Learned A.R. and after considering the above facts as regards outstanding wages are concerned, it has been the practice of the appellant to pay wages late from last several years. The payment of wages is duly supported by labour payment register which has been verified by the A.O. Therefore, the addition of Rs.39,08,700/- does not survive which is hereby deleted. Similarly additions of Rs.12,22,500/-. Rs.22,57,700/- and Rs.18,74,411/- towards liabilities relating to the Gitti, material, Gitti, hathturai, sand etc. is genuine as these expenses are not challenged and the A.O. has not pointed out if the cash payment has already been made to the suppliers and only bogus liabilities are appearing in the balance sheet. The case of the A.O. is that the suppliers are not persons of means but this presumption has no realistic basis on one hand, while on the other hand even a person with no substantial means may be involved in supplies of goods late and may receive payments depending upon the facts and circumstances. It is for the A.O. to establish whether the expenses claimed are excessive or pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside the order of CIT(A) and restore the order of A.O. and addition of Rs.39,08,700/- on account of outstanding wages, Rs.22,57,700/- on account of unconfirmed/bogus liability, Rs.12,22,500/- on account of liability where confirmation letter not filed and Rs.18,74,411/- on account of unexplained unconfirmed liability are confirmed. Therefore, ground nos.1, 2, 3 & 4 are decided in favour of the Revenue as above. 20. Ground no.5 is in respect of deletion of addition of Rs.7,08,444/- on account of work in progress. During the assessment proceedings the A.O. called the detailed closing stock including work in progress. The information received from MPRRDA that the assessee received contract receipt for Rs.7,08,444/- on 31.05.2006 but working of this amount was not done by the assessee during the F.Y. 2005-06 relevant to A.Y. 2006-07. The assessee submitted before the A.O. that the said amount is included in work in progress amounting to Rs.26,38,639/-. The amount received in the year 2006-07 and same has been considered as contract receipt in the year 2006-07. The A.O. made addition of Rs.7,08,454/- observing as under :- (A.O. page no.7) "The assessee was specifically asked vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.26,38,639/- includes this amount of Rs.7,08,444/-. The CIT(A) without verifying the fact deleted the addition merely by accepting submissions made by the assessee. As per the detailed discussion which were made while deciding appeal for A.Y. 2005- 06 in paragraph nos.6 to 9 of this order wherein it has been held that the law of mandate provides that a person possessing the relevant material and not furnishing before the Court, an adverse inference can be taken as held by Hon'ble High Court of Madras in the case of CIT vs. Krishna Veni Ammal, 158 ITR 826 (Mad). Following the said discussion, the addition of Rs.7,08,444/- is warranted for want of explanation as per the above law of evidence. In the light of the fact, we set side the order of CIT(A) on the issue and restore that of the A.O. and confirm the addition of Rs.7,08,444/- made by the A.O. 23. As retards the decision cited by the ld. A.R. of which copies has been placed in Paper Book in the case of CIT vs. Gotan Lime Khanij Udhyog, 256 ITR 2453 (Raj), Order of I.T.A.T. Agra Bench in ITA No.117/Agr/2008 order dated 13.02.2009 and I.T.A.T., Hyderabad Bench in the case of Vishal Infrastructure Limited vs. ACIT, 104 ITD 537 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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