Commissioner Of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur Rajasthan v. Shri Raj Kumar Babutta

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR. D.B. Income Tax Appeal No.119/2015 APPELLANT Commissioner of Income Tax-I, New Central Revenue Building, Statue Circle, Jaipur Rajasthan. VERSUS RESPONDENTS Shri Raj Kumar Babutta, Prop. M/s. VaishnoAssociates, 169, Ist Floor, Ganpati Plaza, M.I.Road, Jaipur. DATE OF ORDER ::: 26.09.2016 HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE BANWARI LAL SHARMA Mr. Anuroop Singhi for the appellant. BY THE COURT(Per Hon'ble Jhaveri, J) 1.By way of this appeal, the department hasassailed the judgment & order of the Tribunalwhereby the Tribunal for the assessment 2008-2009& 2009-2010 dismissed the appeal of department andallowed the appeal of assessee. 2.Counsel for the appellant contended withregard to Section 145(3) which is reproduced asunder:- “Where the Assessing Officer is notsatisfied about the correctness orcompleteness of the accounts of theassessee, or where the method ofaccounting provided in sub-section(1) [has not been regularly followedby the assessee, or income has notbeen computed in accordance with thestandards notified under sub-section(2)], the Assessing Officer may makean assessment in the manner providedin section 144.]” 3.In view of the fact that some of the sub- contractors of the assessee have disputed thepayment and the AO has completely considered thebooks of accounts of the assessee. CIT(A) has heldthat since the appellant did not contravene thetwo fundamental requirements for invoking theprovisions of Section 40A(a)(2)(b) deleted thedisallowance and partly allowed the appeal of theassessee which was confirmed by the Tribunal.4.In paragraph 5.2, the Tribunal has observedas under:- “The Assessing Officer desired toverify the amounts paid to sub-contractors. The employment of sub-contractors is not disputed likewisethe payment to them through accountpayee cheques, deduction of TDSwherever applicable has not beendisputed. The Assessing Officer wantedtheir personal attendance; someattended suo motu, some were producedby the assessee, who confirmed thework. Some were examined behind theback of the assessee. Some of themadmitted doing work but expressedinability to remember the relevantdetails after a period of 2 and halfyears. Likewise some denied havingdone any work for the reasons bestknown to them, in that case AO shouldhave verified their bank pass books totesttheveracityoftheirdepositions. The assessee was notgiven an opportunity to cross examinethem and the statements have been heldto be true and a tool to reject thebooks of assessee u/s 145(3). In ourconsidered view the adverse inferencedrawn in this behalf is not tenable. Similarly in contractors cases thereare numerous occasion of drawing selfmade vouchers as they are many a timesincurred at far away sites. Therefore,self made vouchers cannot be held tobe bogus on face value and a few ofthem don't have the propensity torender the books of accounts as liablefor rejection u/s 145(3).” 5.In our opinion, in view of the payment madeby the account payee cheques was disputedtherefore, after two and half years some sub-contractors expressed inability to remember therelevant details after a period of 2 and halfyears will not be ground for rejection of books ofaccounts of the assessee. In that view of thematter, rightly the Tribunal pointed out that theAO ought to have verified the bank account. 6.In our opinion, the Tribunal is right inholding that since the assessee was not given anopportunity to cross examine them and thestatements have been held to be true and a tool toreject the books of assessee u/s 145(3). In ourconsidered view the adverse inference drawn inthis behalf is not tenable. 5.In our opinion, in view of the payment madeby the account payee cheques was disputedtherefore, after two and half years some sub-contractors expressed inability to remember therelevant details after a period of 2 and halfyears will not be ground for rejection of books ofaccounts of the assessee. In that view of thematter, rightly the Tribunal pointed out that theAO ought to have verified the bank account. 6.In our opinion, the Tribunal is right inholding that since the assessee was not given anopportunity to cross examine them and thestatements have been held to be true and a tool toreject the books of assessee u/s 145(3). In ourconsidered view the adverse inference drawn inthis behalf is not tenable. 7.In view of the above, no substantial questionof law arises in this appeal. The appeal isaccordingly dismissed. (Banwari Lal Sharma), J. (K.S. Jhaveri), J. A.Sharma/11