2013 (11) TMI 569

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....iness of construction work. It filed its return of income on 15.12.2006 showing total income at Rs.10,18,101/-. The Assessing Officer, during the course of assessment proceedings, asked the assessee to furnish details of site wise material consumed and labour expenses. The Assessing Officer observed that in some cases, there was only labour contract and material supplied by the contractee. On the ground that the assessee failed to furnish evidences to substantiate this aspect, and as the assessee's Representative agreed to determination of net profit at 5% of the gross receipts after rejecting the books of accounts, the Assessing Officer applied provisions of section 145 of the Act and computed the total income at 5% of turnover. Thereafter....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s only labour element as the material is supplied by the contractee. The Assessing Officer was not satisfied with this Explanation. He applied the decision of the Hon'ble Supreme Court in the case of K.P.Madhusudan vs. CIT, 251 ITR 99, the Ld.Commissioner of Income Tax (Appeals) relied on the decision of Hon'ble Delhi High Court in the case of CIT vs. Zoom Communications, reported in 191 Taxman 179 (Del) and confirmed the penalty. 7. The Ld.Counsel for the assessee relied on the following decisions. i. CIT vs. Vatika Construction P.Ltd. in ITA 1246/2010 judgement dt. 11.10.2012 of Hon'ble Delhi High Court. ii. DCIT vs. M/s Fine Line Construction P.Ltd. in ITA no.1270/Del/2011 Delhi 'B' Bench of the Tribunal order dt. 20.7.2012 i....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....more than the amount disallowable u/s 40A(3). 14. In the present case, the assessee's cash payments were concededly not the amount which was disallowed; they had no correlation to what could not be established, and were disallowable. Further, the judicial record would show that when the Assessing Officer decided to initiate penalty proceedings, he had no material to conclude that the assessee had concealed income or provided inaccurate particulars. The assessee did provide particulars, but could not back up its claim with confirmation; its explanation was that the payees insisted on immediately payment, to fulfill their contractual commitment to their suppliers. The payees were small vendors, willing to ensure supply of materials to the ....