TaxTMI 
TaxTMI 
2011 (12) TMI 531
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....erprises, Jhamar Kotra Road, Udaipur 2. M/s. New Modern Stone Supply, NB Complex, Pratapnagar, Bypass, Udaipur. 3. M/s. Mateshwari Gitti Supplier, Titardi, Jaisarnand Road, Udaipur. 4. M/s. Mahaveer Material Supplier, Pratapnagar Chouraha, Sukher Highway, Udaipur. 5. M/s. Bharat Enterprises, Dabok Choraya, Airport Road, Udaipur. 6. M/s. Shivam Enterprises, Dabok Main, Airport Road, Udaipur. 7. M/s. Tirupati Building Material Suppliers, Dabok Chouraha, Airport Road, Udaipur. 8. M/s. Shreeji Building Material, Airport Road, Bus Stand, Bedwaas, PO: Zinc Smelter, Debari. 9. M/s. Puja Welding Work, E-Class, Pratapnagar, Udaipur 10. M/s. Shree Hingraj Fabricators, Village Odwadia, P.O. Gudli, Teh. Mavli, Distt. Udaipur. 11. M/s. Jai Laxmi Construction, Vill. Namri, Bedwas, Pratapnagar Road, Udaipur. The AO has mentioned the name of the suppliers, bill numbers and dates as under:- 1. Puja Welding Work Bill No. 423 dated 15th July. 2. Puja Welding Work Bill No. 465 dated 18th Aug. 3. M/s. Rahul Enterprises Bill No. 2024 dated 27th Aug.. The AO has also discussed construction labour charges in the assessment order from page Nos. 9 to 17. The m....
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....also shown payment of part period of the day even to the extent of 1/4`x' of the day. The labour payments are shown till 3 1St March, the last day of the financial year. According to this list, the construction work were carried on continuously for 365 days in the year and did not stop on the festivals as Diwali, Holi, Idd, Raksha Bandhan and National Holidays. The assessee has also written any name he remembers such as: Bhagwan Lal, Bheru Lal, Bhuri Lal Mukut Behari, Ram Bihar Yamuna Das, Ganga Das. During December, 2004 and January, February and March, 2005, the assessee had. not purchased the sand, bricks, gitti etc. The AO has questioned the genuineness as to what 125 karigars/mistries were doing continuously for four months without taking a break in single day or without any material. The assessee has shown the payment to the following persons with a narration "as paid to Mr. towards civil work." APRIL 2004 NAME PRATAP VENA RAM LEHRI RAM SHABBI R GOPI LAL NAND LAL 12240 AMOUNT 15400 12960 18720 16400 18920 163....
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.... NAME RAJU BABU BHAI RAM LAL BHANWAR PRAKASH TULSI RAM CHAMAN LAL AMOUNT 19000 19000 18580 18500 19500 18400 17020 TOTAL 130000 DECEMBER 2004 NAME KANAJI VARIOUS CIVIL WORKS AMOUNT 19720 18770 ALL VARIOUS CIVIL WORKS 17000 16080 16050 19800 19000 19000 19150 18000 19950 19500 18700 19725 18005 19520 19740 18575 19010 15650 16000 19000 18560 19250 16630 16500 18750 18561 14500 17000 17500 16500 19650 19700 16850 19900 16990 19970 18500 15500 16600 19000 16090 19450 18400 16700 16350 16350 19900 16040 19750 18....
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....O cannot assume that people merely writing "ji"alongwith signature makes signature bogus. c) The AO has not brought any such instance on record wherein name is repeated in the next month and signatures are not tallied. d) The AO has no basis to conclude that bogus wages sheet have been prepared by taking help of names directory. On .the contrary, names directory do not contain such names as Bhagwanlal, Bherulal, Bhuri Lal etc.In present times when women literacy is rising the A.O. has cited no reasons as to why he assumes that the lady workers are so illiterate & backward that they cannot put their signature on wages sheet and have to necessarily put their thumb impression for the wage sheets to be treated as genuine. The factory is not situated in the most backward area and neither the literacy rate is less than 50%. The A.O. has not brought on records his source of literacy rate of the belt. We would like to add that these days even illiterate persons know how to put their signatures. Moreover there is no need to put thumb impression in spite of putting signature. This is again suspicion of that the wage sheets may be not signed by the persons who had received payments w....
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.... Bills is written as (Page-21),Material is written as materiel in case of 2 different parties.(page -22 of AO's order) Such mistakes can occur ,but such genuine mistakes cannot be the basis for the treating the expenditure as bogus. e) bills are not genuine and seems to be prepared by the assessee himself for booking bogus capital expenditure ( page 20,21,22,23,25) The AO does not having any material in his possession and has relied upon his assumption only. While treating capital expenditure to the tune of Rs. 1.74 crores as bogus the AO stated on page 15 of the assessment order as under:- "I again reject that any construction work was carried out and hold that withdrawals from Cash Book for this purpose were used by the assessee for his undisclosed use. " The AO, has, however, not brought any material on record regarding utilization of alleged cash withdrawn from cash books to the tune of Rs. 1.74 crores by showing bogus capital expenditure. The AO perhaps is not aware of the, basic of construction activity. There are 3 types of construction persons under a Mistri (who is the head) viz. Karigar, Veldar and Maz....
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.... at pages B-1 to B-35, it would be observed that the bills have been prepared by different persons and sign of different persons. This can be further verified from the way the amount has been written in figures on the bills. The AO has grossly erred in concluding that bills have been arranged/ prepared by assessee himself without bringing any evidence on record. The AO in his order has heavily relied on the facts that summons issued to 11 parties were returned back. In this connection reference of decision of Hon'ble Supreme is invited in the case of Anis Ahmad and Sons v. CIT(A) (2008) 297 ITR 441 (SC) "The Supreme Court held that the appellant-assessee could not be held responsible for non-appearance of those five traders to whom the summons was issued by the assessing authority, as they are residing outside the State of U.P. For non-appearance of those traders, no adverse inference ought to have been drawn by the authorities below and the appellant-assessee has led satisfactory evidence that its business is only that of a commission agent and not `a trader' dealing in the goods. " The AR at point No. 4 of his submission dated 19.1.2009 submitted that: In a....
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....ed as under:- i) Opening assessed Work-in-Progress on 1.4.04 - Rs. 34,28,277/- ii) Payments to Jai Laxmi Construction -(treated as genuine by AO). Rs. 28,38,563/- iii) Payment to parties from whom AC Sheets/MS - Pipes/Alloys etc. purchased against C Form (All the bills, copies of `C' forms etc, have been Produced before the A.O.) Rs. 37,26,823/- iv) Purchased from local parties like AC Sheets, - MS Pipes, Alloys, Cement etc. fittings, paints, freight etc. Rs. 42,54,337/- V) Other items like Designing charges, electrical- (All the bills have been produced before AO) Rs. 8,30,302/- Total - Rs. 1,50,78,302/- In the above connection the Ld. A/R submitted that the AO has relied on presumption i rejecting the bills of labour payments, sand, gitti etc. and, therefore, without bringing any material on record, the AO has treated 50% of other material purchased for Rs. 1,51 crore to be bogus. The purchase of material can be verified from the chart prepared by the AO himself. All the bills/vouchers have been produced before the AO and he has not proved ....
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....has opted for theory part and devoted his precious time by collecting bills and vouchers, wage sheets and analyzing them in various manners and even arrived at a ratio of cement, bricks, gitti, reti and mistries and labourers. In the case of M/s. Shree Nath Material Supplier( Proprietor Shri Devi Lal), the AO treated Rs. 1,97,930/- as bogus. The AO treated 50% of the balance of Rs. 3 lacs as bogus on the basis of the statement of Shri Devi Lal that he received Rs. 3 lacs as payment for supply of stone. In this respect, the appellant submitted bill Nos. 206 & 207 for Rs. 4,97,930/-and also submitted confirmed copy of the account. The Id. AR submitted that the AO treated payment of Rs. 1,97,390/-(out of payment of Rs. 4,97,930/-) to Shree Nath Material Supplier as bogus merely on the basis of his statement, particularly when Statement of Account duly signed by the party confirming the balance of Rs. 4,97,930/- alongwith cash vouchers duly signed by the party were submitted to the AO. The AR also stated that the amount of Rs. 3 lacs included in other items of Rs. 8,30,302/-. On going through these facts, it is held that it is wrong on the part of the AO to disallow the amounts by trea....
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....k interest on the amount not utilized for construction. As the disallowance out of depreciation on building has already been deleted, here also the same facts involved, the disallowance of interest is also deleted." 7. The ld. D/R has placed reliance on the order of the Assessing Officer. 8. On the other hand, the ld. Counsel of the assessee placed reliance on the order of ld. CIT (A). It was further submitted that assessee has not claimed any subsidy and has also obtained the valuation report from Government Approved Valuer which was filed before the Bank for obtaining loan and, this fact has been disclosed by the assessee before ld. CIT (A). Attention of the Bench was drawn on the written submissions filed before ld. CIT (A) placed in the paper book. It was further submitted that assessee has maintained day to day books of account and no defect whatsoever was found by the Assessing Officer. He simply rejected the entire labour expenses and expenses incurred on tiles etc. for constructing the additional part of the building used for business purposes. The Assessing Officer on adhoc basis made disallowance @ 50% and reduced this depreciation on this account as assessee has al....