TMI Blog2017 (11) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... red income of the assessee in return of income he total income stood at approx 8% of the gross contract value which in the case of the tax-payers engaged in civil contracts is considered as bench mark under presumptive tax scheme for small contractors u/s 44AD . - I.T.A. No. 642/Mum/2014 - - - Dated:- 14-11-2017 - SHRI D.T GARASIA, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Revenue : Shri. Saurabh Kumar Rai For The Assessee : Shri Ajay R. Singh ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the Revenue, being ITA No. 642/Mum/2014 for assessment year 2009-10, is directed against the appellate order dated 01-11-2013 passed by learned Commissioner of Income Tax (Appeals)-35, Mumbai (hereinafter called the CIT(A) ), for assessment year 2009-10, appellate proceedings had arisen before learned CIT(A) from the assessment order dated 29.12.2011 passed by learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called the Act ). 2. The grounds of appeal raised by the Revenue in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts as on 31.03.2009, which were taken up for test check by the AO wherein notices were issued by the AO u/s. 133(6) to various parties, out of which 5 notices returned un-served sent to the following parties:- SI. No. Name of the Party Amount (In Rs.) 1 Tara Enterprise 15,48,287.00 2 Deep Enterprises 42,16,943.00 3 V. K. Enterprise 2,85,002.45 4 Balaji Traders 1,46,880.00 The assessee was directed by the AO to produce these five parties and furnish details and documents regarding goods and services supplied by these parties to the assessee. However, the assessee did not furnish confirmations/ details of goods and services supplied by these five parties and had also failed to furnish any corroborative evidence regarding receipt of goods and services from theses parties. The AO thus concluded that the assessee has not purchased any goods and services from these five parties and the assessee is not in a po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of ₹ 20,12,218/- being payable to Shah Industries as the liability has not ceased to exist as submitted by the AO in his remand report to the learned CIT(A). With respect to the additions to the income made by the AO on account of purchases which were held to be non genuine, the assessee during the course of appellate proceedings before learned CIT(A) submitted following documents i Paper Book I containing the work order form MCGM, certified payment order, details of contract receipts with bank statement evidencing the receipt of remittances from MCGM ii. Paper Book II containing purchase invoices, ledger a/c confirmation and bank statements evidencing the payments to each of the parties involved in disallowance. iii. Paper Book III containing purchase and consumption records (party wide, item wise, month wise) in quantitative and value wise extracted from invoices entered in books of accounts and from stock records maintained by the assesses and its comparative analysis of cross tally between accounted invoices with physical stock records of particularly parties involved in disallowance. All statements are certified by chartered accountant for its accur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) that if these additions as made by the AO are added to the income, the GP ratio would go up to 26.80% which led learned CIT(A) to conclude that the assessee has discharged its onus of maintaining and submitting various evidences to substantiate the genuineness of the purchases and the additions as were made by the AO stood deleted, vide appellate order dated 01-11-2013 passed by learned CIT(A). 5. Being aggrieved by the appellate order dated 01-11-2013 passed by the learned CIT(A), the Revenue has come in appeal before the tribunal . The Ld. DR submitted that an assessee is civil contractor and is proprietor of M/s. Narendra Construction Company . It was submitted that during the course of assessment proceedings u/s 143(3) r.w.s. 143(2), the AO had issued notices u/s. 133(6) to the suppliers to verify the purchases and large sundry creditors as are appearing in books of accounts . It was submitted that the notices issued u/s 133(6) were returned un-served. It was submitted that even fresh notices u/s 133(6) were issued by the AO during remand proceedings which also returned unserved. It was also submitted that the assessee did not produced these parties despite being c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. DR submitted in rejoinder that the A.O has not commented on the submissions of the assessee during the remand report proceedings .It was submitted that it was incumbent on the learned CIT(A) in such situation to have done detailed analysis of the utilisation of material to substantiate consumption of material for civil contracts under taken by the assessee as assessee is civil contractor . The learned DR relied upon the assessment order of the A.O. . 6. We have considered rival contentions and perused the material on record including orders of the authorities below and cited case laws. We have observed that the assessee is civil work contractor working under the name and style of Narender Construction Company engaged in the business of execution of civil construction work and takes various civil construction contracts from local authorities. The assessee case was selected by Revenue for framing scrutiny assessment u/s 143(3) . During the course of assessment proceedings u/s 143(3) r.w.s. 143(2), notices u/s 133(6) were issued by the AO to the selling parties from whom the assessee had allegedly purchased material which notices returned unserved with respect to ten partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II containing purchase and consumption records (party wide, item wise, month wise) in quantitative and value wise extracted from invoices entered in books of accounts and from stock records maintained by the assesses and its comparative analysis of cross tally between accounted invoices with physical stock records of particularly parties involved in disallowance. All statements are certified by chartered accountant for its accuracy and extraction. Also it contains GP ratio with and without purchases in question statement containing effect on consumption if purchases from parties in question is removed. iv. Paper Book IV containing stock inward/outward register evidencing the physical movement of purchased materials. v. Paper Book V containing copy of job cards maintained at various evidencing the physical receipts of materials. The Ld. CIT(A) forwarded these aforesaid evidences to the A.O for verification and remand report . The AO again issued fresh notices u/s 133(6) to these parties during remand proceedings which also returned unserved . The assessee could not produced these parties before the AO during remand proceedings as well before learned CIT(A) during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that notices u/s 133(6) sent twice by the AO returned unserved as also the assessee did not produced these parties. The learned CIT(A) also did not considered it relevant that these selling parties are listed as hawala dealers by Maharashtra VAT authorities and they are engaged in issuing merely bogus bills without supplying any material . The learned CIT(A) also did not considered it relevant that onus is on the assessee to prove genuineness of these purchases as these purchases appeared in books of accounts of the assessee. At the same time, the assessee did came forward and gave document to prove utilisation/consumption of material which was commented by learned CIT(A) to have proved utilisation/consumption of material for construction contracts executed by the assessee. Under these circumstances, the fair conclusion that can be drawn is that the assessee did purchased these material but from grey market at lower price and obtained bills from these ten parties at higher rates to justify utilisation/consumption for construction contracts and to suppress profits. The end of justice in this case will be met if the profit embedded in such alleged purchases is estimated being savin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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