MIDASTOUCH DYES & INTERMEDIARIES LTD, MUMBAI V. ACIT CC 13, MUMBAI

CO 154/MUM/2011

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7831 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 10 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-07-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 07-07-2015
• Assessment Year: misc
• Appeal Filed On: 02-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus Share capital; Gift; Depreciation; Income from undisclosed sources; Search and seizure; Additional evidence; Corroborative evidences; Block assessment; Revenue expenditure; Capital expenditure
• Section: 143(3); 250; 142(2A); 158BC; 158B(b); 13; 158BD; 132; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENCH MUM BAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER IT (SS) A NO.22/MUM/2008 (BLOCK PERIOD: 01.04.1988 TO 28.04.1998) ACIT, CENTRAL CIRCLE-13 11 TH FLOOR, OLD CGO BLDG. ANNEXE, M.K.ROAD MUMBAI-400 020 VS. M/S. MIDASTOUCH DYES & INTERMEDIATES LTD. PLOT NO.45, GANPATI BHAVAN M.G.ROAD, GOREGAON(W) MUMBAI- 400 062 PAN/GIR NO. A A CCM3642B ( APPELLANT ) .. ( RESPONDENT ) & CROSS OBJECTION NO.154/MUM/2011 (BLOCK PERIOD: 01.04.1988 TO 28.04.1998) M/S. MIDASTOUCH DYES & INTERMEDIATES LTD. PLOT NO.45, GANPATI BHAVAN M.G.ROAD, GOREGAON(W) MUMBAI- 400 062 VS. ACIT, CENTRAL CIRCLE-13 11 TH FLOOR, OLD CGO BLDG. ANNEXE, M.K.ROAD MUMBAI-400 020 PAN/GIR NO. AACCM3642B (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI. VIPUL JOSHI, AR REVENUE BY SHRI. RAHUL RAMAN, CIT-DR DATE OF HEARING 21/07/2020 DATE OF PRONOUNCEME NT 29 /0 7 / 20 20 / O R D E R PER G.MANJUNATHA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N FILED BY THE ASSESEE ARE DIRECTED AGAINST ORDER OF THE LD. C OMMISSIONER OF INCOME TAX (APPEALS), CENTRAL-VII, MUMBAI, DATED 10 /01/2008 AND PERTAINS TO BLOCK PERIOD FROM 01/04/1988 TO 28/04/1 998. SINCE, FACTS ARE IDENTICAL AND ISSUES ARE COMMON, FOR THE SAKE O F CONVENIENCE, IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 2 THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED -OFF BY THIS CONSOLIDATED ORDER. ITA(SS)A NO.22/MUM/2008:- 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF UNEXPLA INED SHARE CAPITAL/SHARE APPLICATION MONEY OF RS.5,53,46,000/ - EVEN WHEN THE ASSESSEE FAILED TO PROVE CREDITWORTHINESS OF THE SH AREHOLDERS / SHARE APPLICANTS AND THE GENUINENESS OF THE TRANSACTIONS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDENCE IN CONTRAVENTION OF RULE 46A(1) AND DELETED THE DISALLOWANCES OF BOGUS DEPRE CIATION OF RS.5,38,417/- AND BOGUS EXPENSES OF RS.58,00,077/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY WAS INCORPORATED IN FINANCIAL YEAR [FY] 1994-95 AND BEL ONGS TO THE REVATI GROUP OF COMPANIES. THE MAIN PROMOTERS AND P ERSONS CONTROLLING THE AFFAIRS OF VARIOUS COMPANIES WERE I TS TWO DIRECTORS NAMELY, SHRI. GIRISH SHAH AND SHRI MANISH SHAH, THE LATER IS BEING THE SON OF THE FORMER. A SEARCH AND SEIZURE ACTION U/S 132 OF THE I.T.ACT, 1961 WAS CONDUCTED ON 28/04/1998 ON THE RE SIDENTIAL AND BUSINESS PREMISES OF SHRI. GIRISH SHAH AND SHRI. MA NISH SHAH. DURING THE COURSE OF SEARCH, IT WAS ALLEGED THAT TH E GROUP HAD UTILIZED THEIR UNACCOUNTED INCOME TO BRING INTO THE BOOKS OF ACCOUNTS OF THE GROUP COMPANIES BY PUBLIC ISSUE OF SHARES. C ONSEQUENT TO SEARCH, THE CASES WERE TAKEN UP FOR ASSESSMENT AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE CASES WERE RE FERRED FOR SPECIAL AUDIT U/S 142(2A) OF THE I.T.ACT, 1961. THE SPECIAL AUDITORS IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 3 SUBMITTED THEIR REPORT ON 28/01/2003 WITH CERTAIN O BSERVATIONS. THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) R.W.S. 158 BD R.W.S. 158BC OF THE I.T.ACT, 1961 ON 29/07/2003 AND DETERM INED TOTAL INCOME AT RS.6,23,38,339/-, AFTER MAKING ADDITIONS TOWARDS SHARE CAPITAL OF RS.5,53,46,000/- U/S 68 OF THE I.T.ACT, 1961 AND DISALLOWANCES OF VARIOUS EXPENSES AND BOGUS DEPRECI ATION OF RS.58,00,077/-. THE RELEVANT FINDINGS OF THE LD. AO ARE AS UNDER:- 6. SHARE CAPITAL : THE ASSESSEE COMPANY WAS INCORPORATED IN FY 94-95 W ITH A SHARE CAPITAL OF RS. 4,50,00,000. THIS SHARE CAPITAL WAS INCREASED T O RS. 5, 56, 42, 000 IN FY 95-96 AND HAS REMAINED CONSTANT SINCE THEN. FURTHER , THE ASSESSEE RECEIVED SHARE APPLICATION MONEY OF RS. 12,00,000 IN FY. 96- 97 AND RS. 21,54,000 IN FY 97-98. IN ITS REPLY DATED 21/7/03, THE ASSESSEE COM PANY VIDE PARA NO 2 STATED THAT 'THE COMPANY WAS SUPPOSED TO COME UP WITH A PUBLIC ISSUE TO PART FINANCE THE PROJECT COST, BUT DUE TO CIRCUMSTANCES OUT OF THEIR CONTROL, THE COMPANY COULD NOT COME OUT WITH THE PUBLIC ISSUE AND THEREFORE CO ULD NOT ACHIEVE FINANCIAL CLOSURE. SETTING UP OF A PLANT OF A SMALLER CAPACIT Y WAS FOUND TO BE UNFEASIBLE' IN THE SAME LETTER, THE ASSESSEE HAD MADE CONTRADIC TORY STATEMENT REGARDING SHARE CAPITAL AS '.....IT IS SUBMITTED THAT THE COM PANY HAD RAISED RS 556.42 LAKHS FROM THE PUBLIC.....' (PARA 7) THE ASSESSEE WAS ASKED TO FURNISH VIDE QUESTION NO. 15 OF QUESTIONNAIRE (RELEVANT PORTION REPRODUCED EARLIER) DATED 8/5/200 3, THE LIST OF SHARE HOLDERS, DETAILS OF THEIR CAPITAL CONTRIBUTION AND PAN. THE ASSESSEE HAS NOT FURNISHED ANY DETAILS REGARDING THE SHARE CAPITAL. HOWEVER, D URING THE COURSE OF DISCUSSION THE A.R HAS STATED THAT THE SAID SHARE C APITAL HAS ALREADY BEEN VERIFIED EXHAUSTIVELY BY THE CONCERNED AO WHILE COM PLETING THE SCRUTINY ASSESSMENT U/S. 143(3) FOR A.Y. 1995-96. THE ASSESS EE HAS MERELY FURNISHED BANK STATEMENTS FOR THE BLOCK PERIOD WHICH SHOWS NU MEROUS DEPOSITS THROUGH CHEQUE DURING THE PERIOD NOV, DEC, 1994, THE TIME W HEN SHARE CAPITAL WAS RAISED. OTHER THAN THIS THE ASSESSEE HAS NOT FURNIS HED ANY OTHER EVIDENCE. THUS, EVEN THE BASIC INFORMATION LIKE NAME AND ADDR ESSES OF THE SHAREHOLDERS HAS NOT BEEN FURNISHED. THE ASSESSEE'S CLAIM IS WITHOUT ANY MERITS. THE ASS ESSMENT ORDER FOR A.Y. 1995-96 FURNISHED BY THE A.R IN THIS REGARD DO ES NOT SUPPORT THE ASSESSEE'S CLAIM THAT THE SAID SHARE CAPITAL HAS BE EN EXHAUSTIVELY VERIFIED. IN FACT, IT DOES NOT MENTION ANYTHING ABOUT THE SHARE CAPITAL. FURTHER, AS REGARDS THE RECEIPT OF SHARE APPLICATION MONEY THROUGH CHEQ UE FOR WHICH THE ASSESSEE HAD RELIED ONLY ON THE BANK STATEMENT, IT IS PERTIN ENT TO NOTE THAT THE ASSESSEE IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 4 HAS FAILED TO DISCHARGE ITS PRIMARY ONUS BY NOT PRO VING - 1) IDENTITY OF THE SHARE HOLDER 2) CREDIT WORTHINESS OF THE SHARE HOLDER 3) GENUINENESS OF THE TRANSACTIONS. IN THE SPECIAL AUDIT REPORT DT. 21/1/2003 RECEIVED ON 28/1/2003, THE AUDITORS HAVE OBSERVED AS UNDER :- FINANCIAL YEAR 1994-95 SR.NO. LIST OF BOOKS REMARKS 1. CASH BOOK NO VOUCHERS AVAI LABLE 2. BANK BOOK VOUCHERS AVAILABL E PARTLY WITHOUT SUPPORTINGS 3. JOURNAL REGISTER VOUCHERS AVAILABLE WITHOUT SUPPORTINGS AND NARRATION 4. GENERAL LEDGER FINANCIAL YEAR 1995-96 1. CASH BOOK VOUCHERS AVAILAB LE WITHOUT SUPPORTINGS 2. BANK BOOK VOUCHERS AVAILABLE WITH FEW HAVING PROPER SUPPORTING 3. JOURNAL REGISTER VOUCHERS AVAILABLE WITHOUT SUPPORTINGS AND NARRATION 4. GENERAL LEDGER FINANCIAL YEAR 1996-97 1. CASH BOOK VOUCHERS AVAILAB LE WITHOUT SUPPORTINGS 2. BANK BOOK VOUCHERS AVAILAB LE PARTLY WITHOUT SUPPORTINGS 3. JOURNAL REGISTER VOUCHERS AVAILABLE WITHOUT SUPPORTINGS AND NARRATION 4. GENERAL LEDGER NO BOOKS OF ACCOUNT PRODUCED FOR VERIFICATION AS TH E SAME ARE STATED TO BE LYING WITH INCOME TAX DEPT. FINANCIAL YEAR 1998-99 (UP TO 30.6 .1998) NO BOOKS OF ACCOUNT PRODUCED FOR VERIFICATION'. REGARDING THE SHARE CAPITAL, THE AUDITORS HAVE OBSE RVED AS UNDER :- INTRODUCTION OF THE UNACCOUNTED MONEY IN CASH IN PR OMOTER'S QUOTE OF THE ON THE BASIS OF EXAMINATION OF BOOKS OF ACCOUNT AND OTHER DOCUMENTS, AS PRODUCED BEFORE US, THE COMPANY HAS NOT RECEIVED AN Y SHARE APPLICATION MONEY IN CASH. HOWEVER, THE SHARE APPLICATION MONEY RECEI VED FROM THE PROMOTERS IS NOT ASCERTAINABLE, AS THE VOUCHERS ARE NOT CONTAINI NG ANY DETAILS OF THE PARTIES IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 5 FROM WHOM THE SHARE APPLICATION MONEY WAS F F RECEI VED. FURTHER, NO DOCUMENTARY EVIDENCES HAVE BEEN MADE AVAILABLE FOR VERIFICATION OF, RECEIPT OF THE SAID MONEY. 3) .... THE COMPANY HAS ALSO RECEIVED RS 36, 50,0007- FROM M/S. REVATI ORGANICS LTD ON ACCOUNT OF SHARE APPLICATION MONEY IN THE F. Y. 1995-96.....' CONSIDERING ALL ABOVE FACTS, IT IS CLEAR THAT THE SHARE CAPITAL CLAIMED TO HAVE BEEN RAISED THROUGH PRIVATE PLACEMENT WAS BOGUS AND ACCORDINGLY IT HAS TO BE TAXED IN THE HANDS OF THE ASSESSEE SINCE THE SOURCE OF THE SAME HAS NOT BEEN DISCLOSED BY THE ASSESSEE. THE YEAR WISE BREAK-UP I S AS UNDER :- F.Y.1994-95(A.Y. 1995-96) RS 4,50,00,000/- F.Y. 1995-96(A.Y. 1996-97} RS 6992000/-( OUT OF T OTAL INCREASE OF SHARE CAPITAL BY RS 10642000, THE AMOUNT OF RS*4650000/- HAS BEEN CONFIRMED BY THE SPECIAL AUDITOR AS PAID BY M/S. REVATI ORGANICS LTD. F.Y. 1996-97(A.Y. 1997-98) RS 12,00,000/- ON A CCOUNT OF UNEXPLAINED SHARE CAPITAL F.Y. 1997-98 (A.Y. 1998-99) RS 2154000/- ON ACC OUNT UNEXPLAINED SHARE APPLICATION MONEY. THE ASSESSEE HAS NOT FURNISHED ANY DETAILS AS TO WHETHER THIS AMOUNT INCLUDES THE SHARE APPLICATION MONEY RECEIVED IN THE PREVIOUS FY I.E FY 96-97. TO SUMMARISE THE ABOVE, FIGURES ARE TABULATED AS UN DER:- SR.NO A. YEAR UNEXPLAINED SHARE CAPITAL / SHARE APPLICATION MONEY 1 1995-96 45,000,000 2 1996-97 6,992,000 3 1997-98 1,200,000 4 1998-99 2,154,000 TOTAL 55,346,000 7. INCOME THROUGH STOCK INVEST (RELEVANT FO R AY 97-98) DURING THE DISCUSSION WITH THE AR, IT WAS ADMITTED THAT SINCE THE COMPANY HAD FAILED TO START THE PROJECT, IT DECIDED TO DEPLOY I TS FUNDS IN VARIOUS FINANCIAL ACTIVITIES. ONE OF SUCH ACTIVITY WAS THE (MIS)USE O F STOCK INVEST INSTRUMENT. HOWEVER, THE ASSESSEE BEING A COMPANY COULD NOT LEG ALLY MAKE USE OF STOCK IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 6 INVEST INSTRUMENT. THEREFORE, IT LENT MONEY TO SHRI GIRISH SHAH AND HIS VARIOUS FAMILY MEMBERS WHO INVESTED IN PUBLIC ISSUE OF VARI OUS COMPANIES THROUGH STOCK INVEST INSTRUMENT AND EARNED A TOTAL OF 30% I NTEREST ON SUCH TRANSACTIONS MADE THROUGH STOCK INVEST INSTRUMENT. THE FUND WAS LENT TO AN INDIVIDUAL FAMILY WHO WOULD KEEP THE MONEY IN THE FIXED DEPOSIT AND T AKE THE STOCK INVEST AGAINST. IT IS IMPORTANT TO NOTE HERE THAT THE STOC K INVEST INSTRUMENT WAS BACKED BY THE GUARANTEE OF THE FIXED DEPOSIT. THROUGH THIS STOCK INVEST THE INDIVIDUALS EARNED INTEREST INCOME @ 11% ON THE AMOUNT OF FIXED DEPOSIT BACKING THE STOCK INVEST WHILE THE ASSESSEE COMPANY RECEIVED ISSUE MA RKETING CHARGES @ 19%, ANOTHER NAME FOR INTEREST INCOME, FROM THE COMPANY WHICH HAD BROUGHT OUT THE PUBLIC ISSUE AND MADE USE OF THE FUNDS OF THE ASSES SEE COMPANY BY WAY OF STOCK INVEST INSTRUMENT. OUT OF THE SAID 30% OF INTEREST, 11% WAS PAID TO TH E INDIVIDUALS WHO HAD INVESTED THROUGH STOCK INVEST AND 19% WAS PAID TO T HE ASSESSEE DIRECTLY BY THOSE COMPANIES FIN WHICH THE INDIVIDUALS HAD INVES TED) UNDER THE GARB OF 'ISSUE MARKETING CHARGES'. THE INDIVIDUALS WHO RECEIVED 11 % INTEREST, AFTER DEDUCTING 1% AS THEIR OWN COMMISSION PASSED ON THE BALANCE 10 % TO THE ASSESSEE WHICH IT CREDITED AS INTEREST EARNED IN ITS P & L A/C . H OWEVER, THERE IS AGAIN AN ABERRATION AS FAR AS THE 19% COMPONENT OF ISSUE MAR KETING CHARGES ARE CONCERNED. IT HAS BEEN ADMITTED BY THE A.R THAT 1/3 RD OF 19% WAS RETAINED BY THE OTHER 2 GROUP COMPANIES NAMELY M/S MIDAS TOUCH HOLDINGS PVT. LTD. (MHPL) AND M/S REVATI FINCAP PVT. LTD, (RFPL). IN V IEW OF THE ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS ULTIMATELY EARNED 29% INTERES T ON FUNDS DEPLOYED THROUGH THE STOCK INVEST INSTRUMENT. OUT OF THE ABOVE, IT I S SEEN FROM THE RECORDS THAT THE ASSESSEE HAS DISCLOSED INCOME OF RS. 987271 IN ITS REGULAR RETURN OF INCOME FOR AY 97-98 AS ISSUE MARKETING CHARGES. NOW, IN THE BL OCK RETURN OF INCOME THE ASSESSEE HAS DISCLOSED A FURTHER SUM OF RS. 493562 FOR AY 97-98 AS ISSUE MARKETING CHARGES. IN ADDITION TO THIS, IT HAS FURT HER DISCLOSED RS. 160283 UNDER THE HEAD 'INTEREST SHOWN AS INCOME BY INDIVIDUALS' AS UNDISCLOSED INCOME. THE SAME HAS BEEN VERIFIED AND NO FURTHER ADDITION IS C ALLED FOR UNDER THESE HEADS BEYOND WHAT HAS BEEN DISCLOSED. THEREFORE, FIGURES DISCLOSED BY THE ASSESSEE HAVE BEEN CONSIDERED WHILE COMPUTING THE TOTAL UNDI SCLOSED INCOME FOR AY 97- 98. 8. EXPENSES IT IS SEEN FROM THE RECORDS AND THE SUBMISSIONS THA T THE ASSESSEE COMPANY HAD NOT CARRIED OUT ANY MANUFACTURING ACTIVITY DURING T HE BLOCK PERIOD. IT HAD EARNED INCOME THROUGH INTEREST, BILL DISCOUNTING (WHICH HA S BEEN DISCLOSED IN THE REGULAR RETURNS) AND THE USE OF STOCK INVEST INSTRU MENT FOR DERIVING INCOME AS DISCUSSED ABOVE. INTERESTINGLY, ALTHOUGH THERE WAS NO MANUFACTURING ACTIVITY, YET THE ASSESSEE HAS SHOWN HUGE SUMS AS CAPITAL WOR K-IN-PROGRESS. THIS BOGUS CAPITAL WORK-IN-PROGRESS WAS NOTHING BUT A CAMOUFLA GE. IN FACT, THE ASSESSEE HAD, IN FACT, ADVANCED LOANS TO VARIOUS PARTIES FOR CARRYING OUT FINANCIAL TRANSACTIONS AND THOSE LOANS IN THE BALANCE SHEET A PPEAR UNDER HEAD 'CAPITAL WORK-IN-PROGRESS'. FURTHER, NO BILLS OF ADDITIONS T O THE FIXED ASSETS OR ITEMS OF CAPITAL WORK-IN-PROGRESS WERE FURNISHED EITHER BEFO RE THE SPECIAL AUDITORS OR DURING THE COURSE OF BLOCK ASSESSMENT. THIS ONLY SU GGEST THAT THERE WAS NO CAPITAL EXPENDITURE. IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 7 AS REGARDS THE REVENUE EXPENDITURE, THE SPECIAL AUD ITORS HAVE CLEARLY SPECIFIED IN THE SPECIAL AUDITOR REPORT THAT BILLS AND VOUCHERS AND FOR SOME YEARS EVEN BOOKS OF ACCOUNTS (AS ALREADY ELABORATED IN EA RLIER PARA) WERE NOT PRODUCED. IF ONE GOES BY THE NATURE OF SOURCES OF A SSESSEE'S INCOME, IT IS CLEAR THAT THE ASSESSEE HAD NO LOCUS STANDI TO CLAIM ANY EXPENSES AS THE ONLY ACTIVITY CARRIED OUT THROUGHOUT THE BLOCK WAS FINANCING. THE ASSESSEE HAD DEPLOYED ITS OWN SOURCES I.E SHARE CAPITAL, IN ITS FINANCIAL ACT IVITIES, IT HAD NOT BORROWED FUNDS AND THEREFORE, THERE WAS NO INTEREST PAYABLE. HOWEV ER, AS CAN BE SEEN THAT FROM VARIOUS BALANCE SHEETS, FOR THE BLOCK ASSESSME NT YEARS, THE ASSESSEE HAS CLAIMED DEPRECIATION, HUGE ADMINISTRATIVE AND OTHER EXPENSES AGAINST THE INTEREST AND BILL DISCOUNTING INCOME EARNED. AS IT HAS FAILED TO SUBSTANTIATE, JUSTIFY AND FURNISH SUPPORTIVE EVIDENCE TOWARDS THE SAID EXPENDITURE THE SAME IS BEING DISALLOWED EXCEPT THE DIRECTORS' REMUNERATION AND SITTING FEES. THE ASSESSEE ON ITS OWN HAS OFFERED THE FOLLOWING A MOUNTS UNDER THE HEAD EXPENSES AS UNDISCLOSED INCOME. AY AMOUNT 1997-98 RS. 665000 1998-99 RS. 1111187 1999-2000 RS. 75000 THESE AMOUNTS HAVE BEEN INCLUDED IN THE DISALLOWANC E WORKED OUT FOR THIS HEAD OF EXPENSES. THE DISALLOWANCE UNDER THIS HEAD IS, THEREFORE, AS UNDER: SR. A. YEAR BOGUS BOGUS TOTAL NO DEPRECIATION EXPENSES EXPENSES DISALLOWED 1995-96 NIL NIL NIL 2 1996-97 3 1997-98 339,344 2,531,173 4 1998-99 182,686 3,203,176 3,385,862 5 1999-20 16,387 405,072 421,459 00, TILL THE DATE OF SEARCH * TOTAL 538,417 5,800,077 6,338,494 IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 8 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE TH E LD.CIT(A), THE ASSESSEE HAS MADE VOLUMINOUS SUBMISSION IN SUPPORT OF ITS GROUND OF APPEAL, INCLUDING CHALLENGING ADDITIONS MADE BY THE LD. AO TOWARDS SHARE CAPITAL AND ALLEGED BOGUS EXPENSES WI THOUT ANY REFERENCE TO INCRIMINATING MATERIAL FOUND AS A RESU LT OF SEARCH. DURING THE APPELLATE PROCEEDINGS, THE LD.CIT(A) VI DE LETTER DATED 04/06/2004 FORWARDED SUBMISSIONS OF THE ASSESSEE TO THE LD. AO FOR REMAND REPORT, AND THE LD. AO VIDE LETTER DATED 16/ 01/2006 SUBMITTED HIS REMAND REPORT AND COMMENTED UPON ADMI SSIBILITY OF ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. FINALLY , A REMAND REPORT DATED 23/10/2007 HAS BEEN FURNISHED, WHERE THE LD. AO HAS REITERATED HIS OBSERVATIONS MADE IN ASSESSMENT PROC EEDINGS REGARDING ADDITIONS MADE TOWARDS SHARE CAPITAL AND ALLEGED BOGUS EXPENSES. 6. THE LD. CIT(A) AFTER CONSIDERING RELEVANT SUBMIS SIONS OF THE ASSESSEE, REMAND REPORT OF THE LD. AO AND BY FOLLOW ING CERTAIN JUDICIAL PRECEDENTS, INCLUDING THE DECISION OF HON BLE BOMBAY HIGH COURT, IN THE CASE OF CIT VS. SURETECH HOSPITAL AND RESEARCH LTD. (2007) 164 TAXMANN.COM 168 (BOM) ADMITTED ADDITIONA L EVIDENCES FILED BY THE ASSESSEE AND TO DECIDE THEE ON MERITS. AS REGARDS ADDITIONS MADE TOWARDS SHARE CAPITAL, THE LD.CIT(A) HAS OBSERVED THAT ADDITIONS MADE BY THE LD. AO TOWARDS SHARE CAP ITAL IS NOT SUSTAINABLE IN LIGHT OF THE PROVISIONS OF SECTION 1 58B(B) OF THE ACT, BECAUSE THERE WAS NO EVIDENCE SEEMS TO HAVE BEEN UN EARTHED IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 9 DURING THE COURSE OF SEARCH TO SHOW THAT THE ASSE SSEE HAS EARNED UNDISCLOSED INCOME. THE LD.CIT(A,) FURTHER NOTED TH AT IT IS A WELL SETTLED PRINCIPLES OF LAW BY VARIOUS DECISIONS OF H IGH COURTS, INCLUDING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS BALAJI WIRE PVT.LTD. ( 2007) 212 CTR 35 (DEL.) THAT IN A BLOCK ASSESSMENT UNDISCLOSED INCOME IS REQUIRED TO BE COM PUTED ON THE BASIS OF EVIDENCE GATHERED DURING THE COURSE OF SEA RCH. IN THIS CASE, NOTHING INCRIMINATING WAS FOUND AND ADDITION WAS MA DE ON THE STATEMENT OF THE VICE PRESIDENT AND THAT TOO AFTER THE SEARCH AND BEHIND THE BACK OF THE ASSESSEE. HE, FURTHER, NOTED THAT EVEN, OTHERWISE, THE ASSESSEE HAS FURNISHED ALL EVIDENCES TO PROVE THE IDENTITY OF THE SHAREHOLDERS HAS ALSO, THEIR RESPEC TIVE SHARE HOLDINGS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. THE LD. AO HAS MADE ADDITIONS PURELY ON A MECHANICAL MA NNER BASED ON CONJUNCTION AND SURMISE ONLY WITHOUT THERE BEING ANY INCRIMINATING EVIDENCES WERE FOUND IN THE COURSE OF SEARCH PROCEEDINGS, AND ACCORDINGLY, DELETED ADDITIONS MAD E BY THE LD. AO. THE RELEVANT FINDINGS OF THE LD.CIT(A) ARE AS U NDER:- 5.5 EVIDENTLY, NO ADDITION WAS TRADE IN THE ORDER IN THIS RESPECT. IT MAY P BE STATED HERE THAT IN THE COURSE OF APPEAL PROCEED INGS, THE APPELLANT HAD CONTESTED THE ADDITION BY CLAIMING THAT DURING THE SEARCH, NO INCRIMINATING MATERIALS WERE FOUND BY THE DEPARTMEN T WHICH COULD SHOW THE BOGUS NATURE OF THE SHARE HOLDING. IN THIS CONN ECTION, THE ASSESSING OFFICER VIDE LETTER DATED 28.9.2007,WAS SPECIFICALL Y REQUESTED TO GIVE DETAILS OF SUCH INCRIMINATING BOOKS OF ACCOUNT, PAP ERS AND DOCUMENTS FOUND CURING SEARCH ON THE BASIS OF WHICH THE PROCE EDINGS U/S 158BD WAS INITIATED AND THE ASSESSMENT WAS COMPLETED BY T REATING THE SHARE INVESTMENT AS UNEXPLAINED OF THE APPELLANT. HOWEVER , THE REMAND REPORT DATED 23.10.2007 IS COMPLETELY SILENT ON THE ISSUE WHICH CONFIRMS THE STAND OF THE APPELLANT. THUS, THE ADDITION COULD NO T BE JUSTIFIED IN THE LIGHT OF THE PROVISIONS OF SECTION 158B(B) ALSO AS NO EVI DENCE SEEMS TO HAVE BEEN UNEARTHED TO SHOW THAT THE APPELLANT EARNED UN DISCLOSED INCOME. IN THIS CONNECTION, REFERENCE COULD BE MADE OF DECISIO NS OF VARIOUS COURTS OF LAW WHERE EXISTENCE OF INCRIMINATING EVIDENCE WAS C ONSIDERED AS SIN QUA NON FOR THE PURPOSES OF BLOCK ASSESSMENT. IN A RECE NT CASE OF CIT VS IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 10 BALAJI WIRE P.LTD(2007) 212 CTR 35(DEL), IT WAS HEL D THAT IN A BLOCK ASSESSMENT, UNDISCLOSED INCOME IS REQUIRED TO BE CO MPUTED ON THE BASIS OF EVIDENCE GATHERED DURING SEARCH. IN THIS CASE, N OTHING INCRIMINATING WAS FOUND AND THE ADDITION WAS MADE ON THE STATEMEN T OF THE VICE PRESIDENT AND THAT TOO AFTER THE SEARCH AND BEHIND THE BACK OF THE ASSESSEE. THE VP ALSO RETRACTED HIS STATEMENT SUBSEQUENTLY AND MADE A DIFFERENT STATEME NT. THE ACTION OF THE TRIBUNAL IN DELETING THE ADDITION WAS AFFIRMED. RELIED ON CIT VS RAVI KANT JAIN 250 ITR 141(DEL),CIT VS ELEGANT HONES P.L TD 259 ITR 232(RAJ) AND JUPITER BUILDERS P.LTD 287 ITR 287(DEL ). IN ANOTHER CASE OF ACIT VS K.L.JOLLY AND SONS 18 SOT 501(DEL), IT WAS DECIDED THAT ONCE THE INCOME OR THE TRANSACTION(IN THIS CASE GIFTS) W ERE ALREADY DISCLOSED BY THE ASSESSEE IN THE REGULAR RETURN OF INCOME, NO BL OCK ASSESSMENT WAS PERMISSIBLE, UNLESS SOME INCRIMINATING OR ADVERSE M ATERIAL WAS FOUND DURING SEARCH AND FURTHER THERE SHOULD BE A POSITIV E FACTUM OF NON- DISCLOSURE ON THE PART OF THE ASSESSEE AND SUCH NON -DISCLOSURE SHOULD HAVE BEEN DETECTED BY THE DEPARTMENT AS A RESULT OF SEARCH. 5.6 SEEN IN THE LIGHT OF THE FACTS OF THE CASE, THE LEGAL POSITION AS ENUNCIATED IN THE CITATIONS QUOTED ABOVE, IT IS HE LD THAT THE APPELLANT HAD FURNISHED ALL THE PRIMARY INFORMATION BOTH AT THE T IME OF ASSESSMENT AS ALSO DURING REMAND PROCEEDINGS AND THE EVIDENCES FU RNISHED GO TO PROVE THE IDENTITY THE SHARE HOLDER AS ALSO THEIR RESPEC TIVE SHAREHOLDERS, THE ASSESSING OFFICER S FAILED TO PROVE THAT THE SHAREH OLDING WAS BOGUS BY ANY COGENT EVIDENCE OR A RESULT OF ANY ENQUIRY WORT H THE NAME. THE ADDITION HAS BEEN MADE PURELY IN MECHANICAL MANNE R BASED ON CONJECTURES AND SURMISES ONLY AND NO INCR IMINATING EVIDENCE WERE FOUND IN THE COURSE OF SEARCH PROCEEDINGS WHICH COU LD PROVE THE CONCLUSION DRAWN BY THE AO. ACCORDINGLY, THE ADDITI ON BEING DEVOID OF ANY MERITS IS, HEREBY, DELETED. 7. AS REGARDS, ADDITIONS TOWARDS ALLEGED CLAIM OF BOGUS EXPENDITURE AND BOGUS DEPRECIATION, THE LD.CIT(A) N OTED THAT ALTHOUGH, THE ASSESSEE HAS NOT COMMENCED ITS MANUF ACTURING ACTIVITY DURING THE BLOCK PERIOD, BUT THE BUSINESS ACTIVITY WAS BEING CARRIED OUT AND ACCORDINGLY, THE CLAIM OF DEPRECIAT ION ON OFFICE EQUIPMENTS, FURNITURE AND FIXTURES ETC., WHICH WERE EVIDENTLY PUT TO USE APPEARS TO BE CORRECT. FURTHER, THE LD. AO HAS DISALLOWED DEPRECIATION ONLY ON THE GROUND THAT NO MANUFACTURI NG ACTIVITY IS COMMENCED DURING THE BLOCK PERIOD, WITHOUT APPRECIA TING THE OTHER EVIDENCES FILED BY THE ASSESSEE. ACCORDINGLY, DIREC T THE LD. AO TO IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 11 VERIFY THE CLAIM OF THE ASSESSEE, IN LIGHT OF VARIO US EVIDENCES AND ALLOW THE CLAIM. AS REGARDS, DISALLOWANCES OF EXPEN SES, THE LD.CIT(A) NOTED THAT THE ASSESSEE HAS INCURRED MAJO R PART OF THE EXPENSES FOR DIFFERENT ASSESSMENT YEARS THROUGH CHE QUE AND NO ADVERSE FINDING IS BORNE FROM THE RECORDS THAT THE EXPENSES WERE OTHERWISE BOGUS, NON-GENUINE OR INFLATED. SINCE, TH E LD. AO HAS FAILED TO POINTED OUT ANY DISCREPANCY IN THE EVIDE NCES FILED BY THE ASSESSEE, THERE IS NO REASONS TO APPROVE THE FINDIN GS OF THE LD. AO FOR DISALLOWANCES OF EXPENDITURE AND ACCORDINGLY, D ELETED ADDITIONS MADE BY THE LD. AO TOWARDS DISALLOWANCES OF EXPENSE S. AGGRIEVED BY THE LD.CIT(A) ORDER, THE REVENUE IS IN APPEAL BE FORE US AND ASSESSEE HAS FILED CROSS OBJECTION. 8. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION FROM GROUND NO.1 OF REVENUES APPEAL IS ADDITIONS TOWARDS ALLEG ED BOGUS SHARE CAPITAL OF RS.5,56,42,000/-. THE FACTS BORNE OUT FR OM THE RECORDS INDICATE THAT THE ASSESSEE COMPANY WAS INCORPORATED IN THE FY 1994-95 WITH A SHARE CAPITAL OF RS.4.5 CRORES, WHIC H WAS INCREASED TO RS.5,56,42,000/- IN FY 1995-96. THE COMPANY HAD RECEIVED SHARE APPLICATION MONEY OF RS.12 LACS IN FY 1996-97 AND R S. 21,54,000/- IN FY 1997-98. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE LD. AO MADE ADDITIONS TOWARDS SHARE CAPITAL, ON THE GROUND THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE IDENTITY OF TH E SHAREHOLDERS, THEIR CREDITWORTHINESS AND ALSO, THE GENUINENESS OF THE TRANSACTIONS. THE LD. AO HAD ALSO TAKEN INTO CONSIDERATION CONTEN TS OF THE REPORT OF THE SPECIAL AUDITORS, WHO HAD OBSERVED THAT INVE STMENTS WERE NOT MADE IN CASH, BUT BY WAY OF CHEQUE, SHARE APPLICATI ON MONEY RECEIVED FROM THE PROMOTERS WAS NOT ASCERTAINABLE I N THE ABSENCE OF IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 12 RELEVANT VOUCHERS AND THERE WAS NO DOCUMENTARY EVID ENCE REGARDING RECEIPT OF THE MONEY. 9. THE LD. DR SUBMITTED THAT THE LD.CIT(A) HAS ERRE D IN DELETING THE ADDITIONS OF UNEXPLAINED SHARE CAPITAL AND SHAR E APPLICATION MONEY, EVEN WHEN THE ASSESSEE FAILED TO PROVE CREDI TWORTHINESS OF THE SHAREHOLDERS AND THE GENUINENESS OF THE TRANSAC TIONS. 10. THE LD. AR FOR THE ASSESSEE, ON THE OTHER HAND STRONGLY SUPPORTING ORDER OF THE LD.CIT(A) SUBMITTED THAT TH E LD.CIT(A) HAS APPRAISED THE FACTS IN LIGHT OF PROVISIONS OF SECTI ON 158B(B) OF THE ACT AND NOTED THAT ADDITIONS MADE BY THE LD. AO IS WITH OUT ANY REFERENCE TO INCRIMINATING MATERIAL FOUND AS A RESU LT OF SEARCH. THEREFORE, NO ADDITIONS COULD BE MADE IN THE BLOCK ASSESSMENT. 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. IT IS AN ADMITTED FACT THAT THE LD. AO HAS FAILED TO LINK AN Y INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH TO THE A DDITIONS MADE TOWARDS SHARE CAPITAL IN THE BLOCK ASSESSMENTS. IT IS A WELL SETTLED PROPOSITION OF LAW THAT IN A BLOCK ASSESSMENT UNDIS CLOSED INCOME IS REQUIRED TO BE COMPUTED ON THE BASIS OF EVIDENCES G ATHERED DURING COURSE OF SEARCH. THIS LEGAL PROPOSITION IS SUPPORT ED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS B ALAJI WIRE PVT.LTD. (SUPRA). THIS PROPOSITION IS FURTHER SUPPORTED BY T HE DECISION OF HONBLE DELHI HIGH COURT, IN THE CASE OF CIT VS RAV IKANTH JAIN 250 ITR 141 (DEL.) AND CIT VS ELEGANT HOMES PVT.LTD. 25 9 ITR 232 (RAJASTHAN). FURTHER, IN CASE OF ACIT VS K.L. JOLLY & SONS 18 SOT 501 (DELHI), IT WAS HELD THAT ONCE THE INCOME OR TH E TRANSACTIONS IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 13 WERE ALREADY DISCLOSED BY THE ASSESSEE IN THE REGUL AR RETURN OF INCOME, NO BLOCK ASSESSMENT WAS PERMISSIBLE, UNLESS SOME INCRIMINATING OR ADVERSE MATERIAL WAS FOUND DURING THE SEARCH AND FURTHER, THERE SHOULD BE A POSITIVE FACTUM OF NON D ISCLOSURE ON THE PART OF THE ASSESSEE AND SUCH NON DISCLOSURE SHOULD HAVE BEEN DETECTED BY THE DEPARTMENT AS A RESULT OF SEARCH. I N THIS CASE, ON PERUSAL OF FACTS AVAILABLE ON RECORD, INCLUDING THE FINDING OF THE LD.CIT(A), IT IS ABUNDANTLY CLEAR THAT THERE IS NO REFERENCE TO ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH TO ADDITIONS MADE TOWARDS SHARE CAPITAL. IN FACT, THE ASSESSEE HAS PR OVED THAT SHARE CAPITAL RAISED DURING BLOCK PERIOD WAS ACCOUNTED IN REGULAR BOOKS OF ACCOUNTS AND SAME HAS BEEN SCRUTINIZED BY THE LD. A O IN THE SCRUTINY ASSESSMENT PROCEEDINGS PASSED U/S 143(3) O F THE ACT. WE, THEREFORE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE LD. CIT(A), WHILE DELETING ADDITIONS MADE TOWARDS SHARE CAPITAL U/S 68 OF THE ACT. FURTHER, EVEN OTHERWISE THE ASSESSEE HAS FILED VARIOUS EVIDENCES TO PROVE IDENT ITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE SHAREHO LDERS. THEREFORE, ON THIS COUNT ALSO, THE ADDITIONS MADE BY THE LD. A O CANNOT SURVIVE. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE LD.CI T(A) WAS RIGHT IN DELETING THE ADDITIONS MADE TOWARDS SHARE CAPITAL A ND HENCE, WE ARE INCLINED TO UPHOLD THE FINDING OF LD.CIT(A) AND REJ ECT GROUND TAKEN BY THE REVENUE. 13. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO.2 OF REVENUE APPEAL IS DISALLOWANCES OF BOGUS DE PRECIATION OF RS.5,38,417/- AND BOGUS EXPENSES OF RS.58,00,077/-. DURING THE ASSESSMENT YEARS 1997-98, 1998-99 & 1999-2000, THE ASSESSEE HAD INCURRED VARIOUS EXPENDITURES FOR THE PURPOSE O F RUNNING IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 14 BUSINESS CARRIED ON BY IT. THE SAID EXPENSES WERE V ERIFIED IN THE SCRUTINY ASSESSMENT FOR RESPECTIVE PREVIOUS YEARS A ND PART OF THE EXPENSES WAS DISALLOWED, WHILE CONCLUDING THE ASSES SMENT. DURING THE SEARCH ASSESSMENT PROCEEDINGS, WHILE CONCLUDING THE BLOCK ASSESSMENT, THE LD. AO HAS MADE ADDITIONS TOWARDS DEPRECIATION OF RS.5,38,417/- FOR AY 1997-98 TO 1999-2000 AND BO GUS EXPENDITURE OF RS.58,00,077/-, ON THE GROUND THAT A LTHOUGH, THERE WAS NO MANUFACTURING ACTIVITY, THE ASSESSEE HAS CLA IMED HUGE EXPENSES WITHOUT ANY SUPPORTING EVIDENCES. THE LD. AO HAD ALSO TAKEN SUPPORT FROM THE REPORT OF SPECIAL AUDITORS, WHERE THEY HAD CLEARLY STATED THAT THE ASSESSEE DID NOT PRODUCE BI LLS AND VOUCHERS AND IN SOME YEARS, EVEN THE BOOKS OF ACCOUNTS. THE LD.CIT(A) ON APPEAL, DELETED ADDITIONS MADE BY THE LD. AO BY HOL DING THAT ADDITIONS MADE BY THE LD. AO IS NOT SUPPORTED BY AN Y SEIZED MATERIAL FOUND AS A RESULT OF SEARCH. 14. THE LD. DR SUBMITTED THAT THE LD.CIT(A) HAS ERR ED IN ADMITTING ADDITIONAL EVIDENCES IN CONTRAVENTION OF RULE 46A(1 ) AND DELETED THE DISALLOWANCES OF BOGUS DEPRECIATION AND BOGUS EXPEN SES, EVEN THOUGH, THE ASSESSE HAS NOT FILED ANY EVIDENCES AN D ADDUCED ANY REASONS FOR CLAIMING HUGE EXPENSES WITHOUT THERE BE ING ANY MANUFACTURING ACTIVITY FOR THE PERIOD UNDER CONSIDE RATION. 15. THE LD. AR FOR THE ASSESSEE, ON THE OTHER HAND STRONGLY SUPPORTING ORDER OF THE LD.CIT(A) SUBMITTED THAT FI RST OF ALL, ADDITIONS MADE BY THE LD. AO IN BLOCK ASSESSMENT IS NOT SUPPO RTED BY ANY INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH AND SECONDLY, THE SAID EXPENDITURE WAS DISCLOSED IN THE REGULAR BOOKS OF ACCOUNTS AND WAS SUBJECTED TO VERIFICATION FROM THE LD. AO DURIN G REGULAR IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 15 ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT. THE L D.CIT(A) AFTER CONSIDERING RELEVANT FACTS HAS RIGHTLY DELETED ADDI TIONS MADE BY THE LD. AO AND HIS ORDER SHOULD BE UPHELD. 16. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. AS REGARDS, CLAIM OF DEPRECIATION, THE LD.CIT(A) HAD R ECORDED CATEGORICAL FINDING THAT CLAIM OF DEPRECIATION WAS MADE ON OFFICE EQUIPMENTS, FURNITURE AND FIXTURES ETC., WHICH WERE EVIDENTLY PUT TO USE, BUT NOT ON PLANT AND MACHINERY AS CLAIMED BY T HE AO. ACCORDINGLY, HE HAS DIRECTED THE LD. AO TO VERIFY T HE CLAIM OF THE ASSESSEE, IN LIGHT OF VARIOUS EVIDENCES AND ALLOW T HE DEPRECIATION, IF THE CLAIM OF THE ASSESSEE IS CORRECT. WE, THEREFORE ARE OF THE CONSIDERED VIEW THAT WHEN THE ISSUE HAS BEEN SET AS IDE TO THE LD. AO FOR VERIFICATION OF FACTS, THERE IS NO GRIEVANCE FOR REVENUE TO AGITATE SUCH FINDINGS AND HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LD.CIT(A) AND REJECT ARGUMENTS OF T HE REVENUE. INSOFAR AS, DISALLOWANCES OF EXPENDITURE, THE LD.CI T(A) HAS RECORDED CATEGORICAL FINDING TO THE EFFECT THAT MAJOR PART O F EXPENSES FOR DIFFERENT ASSESSMENT YEARS WERE INCURRED THROUGH CH EQUE AND NO ADVERSE FINDINGS IS BORNE FROM THE RECORDS THAT THE EXPENSES WERE OTHERWISE BOGUS, NON GENUINE OR INFLATED. FURTHER, PRIMARY DETAILS HAVING BEEN FURNISHED AND NO DISCREPANCY WAS NOTICE D OR POINTED OUT BY THE LD. AO. WE, FURTHER, NOTED THAT ALL EXP ENSES WERE RECORDED IN REGULAR BOOKS OF ACCOUNTS AND WERE SUBJ ECT TO VERIFICATION FROM THE LD. AO DURING REGULAR ASSESSM ENT PROCEEDINGS. FURTHER, THE ASSESSEE ITSELF HAS DISALLOWED MAJOR P ART OF CASH EXPENSES AS UNACCOUNTED. UNDER THESE CIRCUMSTANCES, THERE WOULD BE NO JUSTIFICATION FOR MAKING FURTHER ADDITION, WH ICH EVIDENTLY WOULD IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 16 LEAD TO DOUBLE TAXATION. WE FIND THAT THE REVENUE H AS FAILED TO CONTROVERT THE FINDINGS RECORDED BY THE LD.CIT(A) W ITH ANY EVIDENCES. WE, THEREFORE ARE OF THE CONSIDERED OPIN ION THAT THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE LD.CIT(A) TO INTERFERE BY US AT THIS STAGE. HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF LD.CIT(A) AND REJECT GROUND TAKEN BY THE REVENUE. 17. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. CO.NO.154/MUM/2011 18. THE ASSESSEE HAS FILED CROSS OBJECTION IN SUP PORT OF THE ORDER OF THE LD.CIT(A), BUT THE CROSS OBJECTION FILED BY THE ASSESEE IS DELAYED BY 1234 DAYS, FOR WHICH NO PROPER EXPLANATI ON WAS FURNISHED. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE CROSS OBJECTION FILED BY THE ASSESEE IS NOT MAINTAINABLE AND HENCE, THE CROSS EXAMINATION FILED BY THE ASSESSEE IS DISMISSE D AS INFRUCTUOUS. 19. AS A RESULT, APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED UNDER RULE 34(4) OF IT RULES, 1962 THROUGH NOTICE TO PARTIES ON 29/07/2020 SD/- (RAM LAL NEGI) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER IT(SS) A NO.22/MUM/2008 CO.NO.154/MUM/2011 MIDASTOUCH DYES & INTERMEDIATES LTD. 17 MUMBAI ; DATED: 29 /07/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//