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2019 (10) TMI 194

..... Since the ld.CIT(A) has restricted the disallowance at 12.5% on the basis of finding recorded in the Asstt.Year 2011-12, but that finding of the ld.CIT(A) was not upheld by the ITAT, and has scaled down to 2%. Therefore, respectfully following the order of the Co-ordinate Bench, we allow this ground of appeal and direct the AO to compute disallowance out of labour expenses at 25% of the total labour payment made by the assessee. In other words, it should 2% (two percent) of ₹ 1,90,43,133/-. This ground of appeal is partly allowed. - ITA No.399/Ahd/2017 - 1-10-2019 - Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member For the Assessee : Shri Tushar Hemani, AR For the Revenue : Shri Alok Singh, CIT-DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Assessee is in appeal before the Tribunal against order of ld.CIT(A), Gandhinagar dated 23.12.2016 passed for the assessment year 2012-13. 2. Grounds of appeal taken by the assessee are not in consonance with the Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963 - they are descriptive and argumentative in nature. In the first fold of grievance, the assessee has pleaded that the ld.CIT(A) has erred in confirm .....

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..... erefore, it does not carry any evidentiary value except as a corroborative piece of information for setting the machinery of investigation in motion. For buttressing his contentions, he relied upon the judgment of Hon ble Supreme Court in the case of CIT Vs. S. Khader Khan Son, 25 taxmann.com 413 (SC). He relied upon the judgment of Hon ble Kerala High Court in the case of Paul Mathews & Sons Vs. CIT reported in 263 ITR 101. He placed on record copy of judgment of Hon ble Supreme Court in the case of S. Khader khan (supra) reported in 300 ITR 157. With regard to the recovery of diary, he alleged that an affidavit was filed by the assessee retracting the statement given at the time of survey and also alleged that this diary was created by the Revenue authorities. The ld.counsel for the assessee took an alternative plea whereby he contended that the AO himself has alleged that amounts reflected in the diary from 84 persons who have booked shops/residential flats which were reflected in the list of unit holders, therefore, at the most it could be construed as acceptance of onmoney in cash. It is to be treated as part of total sale consideration and only the element of profit invol .....

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..... vey does not carry evidentiary value and on the strength of such evidence no addition can be made is concerned, we are of the view that in the present case, addition has not been solely on the basis of the statement. The addition has been made on the cumulative settings of the disclosure made by a partner during the course of survey coupled with discovery of a diary containing details of on-money received by the assessee from 84 persons. The partner, Shri Nikil Prahladbhai Patel though filed an affidavit deposing therein that this diary was prepared during the course of survey by the survey-team, but it is to be seen that the names of 84 persons are written in this diary, neither the assessee has produced any one nor the AO has called for any one, whether they have given money in cash to the assessee. If the names reflected in the diary are common with ultimate purchasers of the shops/residential flats, then it is difficult to construe that the diary was created with fictitious names. The stand of the AO is that head of survey team, Shri Mohan Kumar is a non-Gujarati and it was difficult for him to arrange a list of 84 persons in the early hours of the morning for incorporating in .....

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..... eceipts from the sale of row houses done during the block period?" 5. Learned counsel for the revenue, Shri Sudhir Mehta submitted that the Tribunal committed a serious error in reversing the order of the Assessing Officer. He submitted that the on money collection by the respondent - assessee firm was established. The Tribunal having confirmed such findings, ought not to have rescinded the directions for collection of tax, interest etc. 6. On the other hand, learned senior counsel Shri S. N. Soparkar appearing for the respondent - assessee opposed the appeal contending that no question of law arises. He drew out attention to section 260- A of the Income Tax Act to contend that even after admission of the appeal, it would be open for the assessee to contend that no question of law arises. 7. He submitted that even if the on money collection of ₹ 62 lakhs is believed, what could be taxed in the hands of the assessee is only the income and not the entire receipt. He submitted that the Tribunal having accepted that such income could not exceed ₹ 26 lakhs out of total receipt of ₹ 62 lakhs, no interference is called for, since estimation of income could not give .....

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..... of Income Tax v. Gurubachhan Singh J. Juneja, reported in (2008) 302 ITR 63 (Guj.), once again a somewhat similar issue came up before this Court. In the said case, the assessee was engaged in the business of trading of tyres. Search proceedings were carried out at the residential and business premises of the assessee. On the basis of loose sheets which were seized during such search operation, the Assessing Officer held that sales to the extent of ₹ 10.85 lakhs was not found in the books of account. Such amount was included in the total income of the assessee. The Commissioner (Appeals) gave substantial relief to the assessee and reduced the income on the basis of gross profit rate. The Tribunal confirmed the order of the Commissioner (Appeals). On further appeal before the High Court by the revenue, the High Court refused to refer any question holding that in absence of any material on record to show that there was any unexplained investment made by the assessee which was reflected by the alleged undisclosed sales, the finding of the Tribunal that only the gross profit on the said amount can be brought to tax does not call for any interference. 12. Counsel also relied on th .....

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..... ) on the basis of finding recorded by his predecessor in earlier years, where similar addition was made. The ld.counsel for the assessee at the very outset submitted in the Asstt.Year 2011-12 this issued travelled to the Tribunal in ITA No.1767/Ahd/2015 wherein the Tribunal has confirmed the disallowance to 2% of the total expenditure. Thus, he contended that the issue in dispute is squarely covered in favour of the assessee by the decision of the Tribunal in the Asstt.Year 2011-12. The ld.CIT(A) has followed the decision of his predecessor in the Asstt.Year 2011-12 and that disallowance has been further scaled down by the Tribunal. The ld.DR was unable to controvert this contention of the ld.counsel for the assessee. 14. We find that there is no disparity on facts. All the details have been considered by the Tribunal in its order for the Asstt.Year 2011-12. The relevant finding of the Tribunal reads as under: 6. We have heard the rival contentions and perused the materials available on record. In the instant case, the labor expenses incurred by the assessee was disallowed by the AO on the ground that the labor expenses were bogus. How the ld CIT(A) reduced the disallowance made by .....

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