The appeal by the Revenue is directed against the order of ld. CIT (Appeals), Alwar dated 30.10.2014 pertaining to assessment year 2010-11. The revenue has raised the following grounds of appeal :-

That the Commissioner of Income Tax (Appeals), Alwar has erred in law as well as on the facts and circumstances of the case in restricting the trading addition of Rs. 1,00,00,000/- to Rs. 3,11,343/- made by the AO by invoking the provisions of section 145(3) of the Act.

2. Briefly stated the facts are that a survey action was conducted under section 133A of the I.T. Act, 1961 (hereinafter referred to as the Act) at the business premises of the assessee on 25.11.2009. Subsequently the case was picked up for ITA No. 879/JP/2014 ACIT vs. Shri Ashok Kumar Jain scrutiny assessment and the assessment under section 143(3) of the Act, 1961 was framed thereby the AO rejected the books of accounts and made addition of Rs.1,00,00,000/- in the total income of the assessee. Apart from this, the AO also made disallowance of deduction under section 80C of the Act. The assessee aggrieved by this order of the AO, preferred appeal before ld. CIT (A) who after considering the submissions of the party allowed the appeal thereby the addition of Rs. 1,00,00,000/- was reduced to Rs. 3,11,343/- and balance was deleted. In respect of the disallowance under section 80C of the Act, Rs. 20,000/- was sustained by the ld. CIT (A).

3. The revenue aggrieved by this order of ld. CIT (A), preferred appeal before this Tribunal.

3.1. The ld. D/R supported the order of the AO and submitted that the ld. CIT (A) was not justified in reducing the trading.

3.2. On the contrary, ld. Counsel for the assessee supported the order of the ld. CIT (A) and submitted that ld. CIT (A) has given a finding of fact which is not rebutted by the revenue by placing any contrary material on record. He submitted that the AO has accepted the contention of the assessee in remand proceedings.

3.3. We have heard rival contentions, perused the material and gone through the orders of the authorities below. The ld. CIT (A) has given a finding of fact by observing in para 4.7 to 4.14 of his order as under :-

4.7. I have perused the assessment order, remand reports of the AO, detailed submissions made including judicial citations given therein and cross reply of the appellant and find that a trading addition of Rs. 1 crore was made by the AO on estimate basis. The AO has invoked the provisions of section 145 of the IT Act and has stated the following ITA No. 879/JP/2014 ACIT vs. Shri Ashok Kumar Jain defects in the books of accounts, in the course of assessment proceedings :- (i) Stock, Purchases and Sales are not verifiable as the books of account were found to be not complete on the date of survey on

25.11.2009. The entries were found recorded only upto 28.10.2009. (ii) The expenses claimed on account of un-recovered security deposit of Rs. 30,94,678/-, late delivery and other deductions of Rs. 31,69,739/-, Job work charges of Rs. 18,79,832/-, RST deduction charged by JVVNL of Rs. 2,62,929/- and dismantle charges of Rs. 10,20,224/- are not supported with documentary evidences. (iii) Certain loose paper were found showing payments in cash, which are not verifiable. (iv) Cash of Rs. 56,000/- was found at the time of survey but after completion of entries in the books of accounts, cash balance works out to Rs. 44,75,428/- in the firm M/s. Kumar Construction Co. and of Rs. 56,917/- in the firm M/s. Jain Poles. No satisfactory explanation could be offered. (v) Advancing interest free funds to the proprietor and claiming deduction for interest on loans taken.

4.8. The appellant has stated that it is carrying out work of installation/induction of transformers, supplying and erection of distribution boxes, renovation work etc. at various sub stations over the State of Rajasthan for Jaipur Vidhyut Vitaran Nigam Limited (JVVNL) for the last many years. As per the terms of the work order with JVVNL assessee has to complete the work within a time frame and deposit the retrieved material. The assessee is required to furnish the security deposit to the JVVNL for satisfactory completion of work. A bill is raised after completion or part performance of the work. The JVVNL after making deduction on account of TDS, WCT, RMD, deduction n account of retrieved material, late delivery charges etc. passes the bill for payment. Accordingly, assessee accounts for the same by debiting to JVVNL and by crediting the same to job work receipt.

4.9. In course of this working, certain security deposits given by the assessee is forfeited or a deduction is made on account of late delivery or on account of non deposition of retrieved material or on account of RST deduction by the JVVNL. During the year after verifying and analyzing the recovery/realization of such deduction/deposit, the assessee has charged the unrecoverable security deposit/deductions to ITA No. 879/JP/2014 ACIT vs. Shri Ashok Kumar Jain the profit & loss account. Copy of the ledger account of all these heads were filed from which it can be noted that Rs. 75,26,060/- has been claimed under these heads. It is submitted that as per the books of accounts even after charging such amount to the P&L account, Rs. 63,96,455/- is shown as recoverable from JVVNL whereas JVVNL vide its letter dt. 21.03.2013 has intimated that only a sum of Rs. 34,68,463/- is due to the assessee and this amount is also deducted against various tenders on account of non furnishing of bank guarantees and penalty towards delay in delivery which is adjustable/payable only after receipt of clearance from the order placing authorities.

4.10. The evidence filed with regard to the quantum of deductions made by the JVVNL from the bills filed by the appellant on account of job work/installation/erection charges has also been examined in the course of remand proceedings. The additional evidence i.e. the certificate of JVVNL dated 21.03.2013, wherein it was confirmed that only an amount of Rs. 34,68,463/- is payable to the appellant as against the amount of Rs. 63,96.445/- shown as recoverable from JVVNL as on 31.03.2012 as per the audited books of accounts, was obtained by the Tax Recovery Officer from the JVNNL. The evidence and submissions filed by the appellant in this regard have been examined by the AO and has been accepted as verified.

4.11. The submissions made by the appellant as regards loose papers are concerned have been examined by the AO in the course of remand proceedings and have been accepted as such without giving an adverse finding. Further the cash balance as per the books of accounts and the cash found at the time of survey has also been examined by the AO and he has accepted the contentions of the appellant.

4.12. Further, as regards the claim of job work charges of Rs. 18,79,832/- are concerned, the appellant has stated that complete vouchers were produced before the AO and in the absence of any specific defect being pointed out by the AO there is no justification in making the disallowance. However, to prevent any leakage of revenue on this account, I hold that it would be fair to make the disallowance @ 10% of the total job work charges which comes to Rs. 1,87,983/-. As regards the issue of giving interest free loans to the proprietor is concerned, it is submitted that interest free funds are available in the form of capital account balance of the proprietor. On this issue, I find that M/s. Kumar Constructions has given interest free advances to the proprietor and other concerns to the extent of Rs. 10,28,000/- as against the borrowed funds on which interest amounting to Rs. 4,23,248/- has been paid during the period under consideration. These facts have been examined by the AO in the course of remand proceedings. ITA No. 879/JP/2014 ACIT vs. Shri Ashok Kumar Jain

4.13. However, in my view there is no force in the argument of the appellant that sufficient interest free funds are available in the business as the funds are fungible and no correlation could be worked out between the source and utilization of funds by the appellant. The capital account balance shows only an amount of Rs. 11.09 lacs and these funds have been invested in the assets of the concern. As against this balance, the borrowed funds are to the tune of Rs. 1.37 crores. Therefore, I hold that it would be fair and just to disallow the proportionate interest expenses debited in the P&L account of Rs. 1,23,360/- (by taking 12% interest on Rs. 10,28,000/-.

4.14. Further, it is seen that the Net Profit rate declared by the appellant (after considering the surrendered income) is 20.54% in AY 2007-08, 14.92% in AY 2008-09, 20.61% in AY 2009-10 and 23.34% in AY 2010-11 i.e. in the period under consideration. Therefore, I do not find any justification in the order passed by the AO as the net profit rate (trading results) declared is much better in the current year as compared to the earlier years. However, for the reasons stated above, I confirm an addition of Rs. 3,11,343/- (Rs.1,87,983 + 1,23,360) out of the total trading addition of Rs. 1 crore made by the AO on estimated basis under this head.

The above finding of the ld. CIT (A) has not been controverted by the revenue. On the contrary, the ld. D/R has conceded the fact that the AO has accepted the explanation in remand proceedings. Therefore, we do not see any reason to interfere into the order of ld. CIT (A). The same is hereby upheld. The ground raised by the revenue is rejected.

4. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 13/06/2016. Sd/- Sd/- foe flag ;kno ( dqy Hkkjr) (VIKRAM SINGH YADAV) ( KUL BHART ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 13/06/2016. Das/ ITA No. 879/JP/2014 ACIT vs. Shri Ashok Kumar Jain vknsk dh izfrfyfi vxzsf"kr@Copy of the order forwarded to:

1. The Appellant- The ACIT, Circle-1, Alwar.

2. The Respondent- Shri Ashok Kumar Jain, Alwar.

3. The CIT(A).

4. The CIT,

5. The DR, ITAT, Jaipur

6. Guard File (ITA No. 879/JP/2014) vknskkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar