Vimal Oil & Foods Ltd., Ahmedabad V. The DY.CIT., Cent.Circle-1(2), Ahmedabad

CO 189/AHD/2009

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9913 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-10-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 20-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBHASH BAINS SHRI V R CHOKSI
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Corroborative evidences
• Section: 143(3); 80HHC; 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER SL. NO(S) ITA NO(S) /CO NOS. ASSESSMENT YEAR(S) APPEAL(S) /COS BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 2504/AHD/2007 2003-04 DCIT CENTRAL CIRCLE-1(2) AHMEDABAD VIMAL OIL & FOOD LTD. 1/2, NATIONAL CHAMBERS ASHRAM ROAD AHMEDABAD PAN:AABCV 0765H 2. 2505/AHD/2007 2004-05 -DO-REVENUE -DO-ASSESSEE 3. 250 6 /AHD/2007 2005 - 06 REVENUE ASSESSEE 4. CO NO. 189/AHD/2009 (IN ITA NO.2504/AHD/07) 2003-04 ASSESSEE REVENUE 5. CO NO. 190/AHD/2009 (IN ITA NO.2505/AHD/07) 2004-05 ASSESSEE REVENUE 6. CO NO. 191/AHD/2009 (IN ITA NO.2506/AHD/07) 2005-06 ASSESSEE REVENUE REVENUE BY : SHRI SUBHASH BAINS, CIT-DR ASSESSEE BY : SHRI V.R. CHOKSI, A.R. / DATE OF HEARING 09/10/2014 !' / DATE OF PRONOUNCEMENT 31/10/2014 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE THREE APPEALS BY THE REVENUE AND THREE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDE RS OF THE ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 2 - LD.COMMISSIONER OF INCOME TAX(APPEALS)-I, AHMEDABA D (CIT(A) IN SHORT) ALL IDENTICALLY DATED 30/03/2007, PERTAININ G TO ASSESSMENT YEARS (AYS) 2003-04,2004-05 & 2005-06. SINCE COMMON ISSUE S AND FACTS ARE INVOLVED IN THESE APPEALS AND CROSS-OBJECTIONS, THE SE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDAT ED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE REVENUES APPEAL IN ITA NO .2504/AHD/2007 FOR AY 2003-04. THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.17,06,797/-, RS.56,919/- AND RS.31,2 96/- AND THE GROSS PROFIT ESTIMATED THEREON OF RS.1,00,000/-, RS .3,000/- AND RS.3,000/- RESPECTIVELY MADE BY THE A.O. U/S.14A OF THE ACT. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLO WING THE INCOME FROM INSURANCE COMMISSION AND POWER GENERATION FOR CALCULATING DEDUCTION U/S.80IA OF THE ACT, WHICH DO NOT FORM PART OF INCOME DERIVED FROM MANUFACTURING ACTIVITIES. 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN REDU CING THE AMOUNT OF DEDUCTION U/S.80IA/80IB OF THE ACT, BEFORE CALCU LATING THE DEDUCTION ALLOWABLE U/S.80HHC OF THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTEN T. ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 3 - 2.1. BRIEFLY STATED FACTS ARE THAT A NOTICE U/S.153 A OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE, ASSESSEE FILED ITS RETUR N OF INCOME FOR THE YEAR DECLARING THE INCOME AT RS.62,46,170/-. THE AO FRA MED THE ASSESSMENT U/S.153A RWS 143(3) OF THE ACT, THEREBY THE AO MADE ADDITION OF RS.17,06,797/- ON ACCOUNT OF UNEXPLAINED INVESTMENT AND RS.1 LAC ON ACCOUNT OF INCOME DERIVED FROM UNEXPLAINED INVESTME NT. THE AO ALSO MADE ADDITION ON ACCOUNT OF INFLATED PURCHASES AS U NEXPLAINED INVESTMENT AMOUNTING TO RS.56,919/- AND INCOME DERI VED THEREFROM OF RS.3,000/-. THE AO ALSO MADE ADDITION OF RS.31,296 /- ON THE BASIS OF INFLATED PURCHASES AND THUS TOTAL ADDITION WAS MADE OF RS.19,01,012/-. THE AO REVISED THE DEDUCTION CLAIMED BY THE ASSESS EE U/S.80IA/B OF THE ACT. THE AO ALSO REVISED THE DEDUCTION CLAIMED U/ S.80HHC OF THE ACT. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL. NOW, THE REVENUE AND THE ASSESSEE HAVE CHALLENGED THE ORDER OF THE LD.CIT(A) BY WAY OF APPEAL AND CROSS-OBJECTION RESP ECTIVELY. 3. THE FIRST GROUND OF REVENUES APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.17,06,797/-. THE LD.CIT-DR SUPPORTE D THE ORDER OF THE AO AND SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFI ED IN DELETING THE DISALLOWANCE. ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 4 - 4. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SUP PORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE ORDER OF THE L D.CIT(A) IS JUSTIFIED AS THE AO HAS FAILED TO APPRECIATE THE FACT IN RIGHT P ERSPECTIVE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT APROPOS TO GROUND NO.1, THE LD.CIT(A) HAS GIVEN A FINDING ON FACT IN PARAS-4.4 & 5.4 OF HIS ORDER AS UNDER:- 4.4. I HAVE CAREFULLY CONSIDERED THE VARIOUS ARGUM ENTS OF THE AUTHORIZED REPRESENTATIVE AND ASSESSMENT ORDER PASS ED BY ASSESSING OFFICER. THE ASSESSING OFFICER HAS MADE ADDITION BASED ON DIFFERENCE IN QUANTITY OF PURCHASE OF WASHED COT TON AS PER STOCK MOVEMENT REGISTER AS COMPARED TO PURCHASE AS PER BO OKS OF ACCOUNT AND DIFFERENCE WAS TREATED AS INFLATED PURC HASES RECORDED IN THE BOOKS OF ACCOUNT. HOWEVER, ASSESSING OFFICE R HAS NOT DOUBTED GENUINENESS OF ANY PURCHASES RECORDED IN TH E BOOKS OF ACCOUNT AND EVEN IN CASE OF ASSESSEE ENTIRE PAYMENT S HAVE BEEN MADE THROUGH BANKING CHANNELS. THE AO HAS MADE ADD ITION PURELY ON ASSUMPTION AND WITHOUT BRINGING ANY CORRO BORATIVE EVIDENCE TO ESTABLISH THAT IN CASE OF APPELLANT, IN FLATED PURCHASES HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT. THE AO HAS IGNORED THE CLAIM OF APPELLANT THAT DIFFERENCE IS DUE TO SH ORTAGES AND IN HANDLING OF MATERIAL, SUCH TYPE OF SHORTAGES ARE BO UND TO INCUR. EVEN IN CASE OF APPELLANT, TOTAL SHORTAGES FOUND FO R WASH COTTON DURING THE YEAR IS 44119 KGS WHICH IS JUST 0.18% OF TOTAL PURCHASES OF WASH COTTON AND SAME IS VERY NEGLIGIBLE. CONSID ERING THE SAME, THE ADDITION MADE BY AO TREATING THE ALLEGED DIFFER ENCE IN QUANTITY AS PER STOCK MOVEMENT REGISTER AND BOOKS OF ACCOUNT AS INFLATED PURCHASES FOR RS.17,06,797 IS DELETED AND CONSEQUEN TIAL ADDITION OF GROSS PROFIT OF RS.1,00,000 IS ALSO DELETED. TH E GROUND OF ASSESSEE IS ALLOWED. ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 5 - 5.1. THE ABOVE FINDING OF THE LD.CIT(A) HAS NOT BEE N CONTROVERTED BY THE REVENUE. THEREFORE, WE DO NOT FIND ANY REASON TO INTEREFERE WITH THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THU S, THIS GROUND OF REVENUES APPEAL IS REJECTED. 6. GROUND NOS.2 & 3 OF REVENUES APPEAL ARE INTER-R ELATED AND, THEREFORE, THE SAME ARE DECIDED TOGETHER. THE LD.C IT-DR SUPPORTED THE ORDER OF THE AO, WHEREAS THE LD.COUNSEL FOR THE ASS ESSEE SUPPORTED THE ORDER OF THE LD.CIT(A). THE LD.COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THESE GROUNDS ARE SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH (ITAT AHMEDABAD A BENCH) RENDERED IN ASSESS EES OWN CASE FOR AYS 2001-02 & 2002-03 IN ITA NOS.2502 & 2503/AH D/2007, DATED 12/09/2014. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE TRIBUNAL IN ITA NOS.2502 & 2503/AH D/2007 HAD DECIDED BOTH THESE ISSUES IN FAVOUR OF THE ASSESSEE BY RELYING ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF DY.CIT VS. BLUE BELL POLYMERS (P.) LTD. REPORTED AT (2008) 217 CTR 324 (GUJ.):: 2010) 327 ITR 259(GUJ.). SINCE THE FACTS ARE IDENT ICAL IN THIS YEAR ALSO AND THE REVENUE HAS NOT POINTED OUT ANY CHANGE IN T HE FACTS OF THE PRESENT CASE, THEREFORE TAKING A CONSISTENT VIEW, T HESE GROUNDS OF THE REVENUES APPEAL ARE REJECTED. ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 6 - 8. GROUND NOS.4 & 5 ARE GENERAL IN NATURE REQUIRE N O INDEPENDENT ADJUDICATION. 9. AS A RESULT, REVENUES APPEAL IN ITA NO.2504/AHD /2007 FOR AY 2003-04 IS DISMISSED. 10. NOW, WE TAKE UP THE ASSESSEES CROSS OBJECTION NO.189/AHD/2009 FOR AY 2003-04 (IN ITA NO.2504/AHD/ 2007 FOR AY 2003-04). THE ASSESSEE HAS RAISED THE FOLLOWING GR OUNDS IN ITS CROSS- OBJECTION: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN REJECTING THE RESPONDENTS GROUND O F APPEAL CHALLENGING THE PROCEEDINGS INITIATED U/S.153A OF T HE INCOME-TAX ACT AND THE CONSEQUENTIAL ASSESSMENT ORDER PASSED BY TH E ASSESSING OFFICER U/S.153A. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED CONFIRMING THE FINDING OF THE ASSESSIN G OFFICER THAT DEDUCTION U/S.80-IA IS NOT ADMISSIBLE IN RESPECT OF KASAR/VATAV WRITTEN BACK IN THE PROFIT AND LOSS ACCOUNT. 3. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AN D/OR WITHDRAW ANY GROUND OR GROUNDS OF CROSS-OBJECTIONS EITHER BE FORE OR AT THE TIME OF HEARING OF THE CROSS-OBJECTIONS. 10.1. AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESSE E SUBMITTED THAT HE DOES NOT WISH TO PRESS GROUND NO.1 OF THE CROSS-OBJECTIO N. IN VIEW OF THE STATEMENT MADE BY THE LD.COUNSEL FOR THE ASSESSEE, GROUND NO.1 OF THE ASSESSEES CROSS-OBJECTION IS REJECTED AS NOT PRESS ED. 11. GROUND NO.2 OF ASSESSEES CROSS-OBJECTION IS AG AINST IN CONFIRMING THE FINDING OF THE AO BY THE LD.CIT(A) THAT DEDUCTI ON U/S.80IA IS NOT ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 7 - ADMISSIBLE IN RESPECT OF KASAR/VATAV WRITTEN BACK I N THE PROFIT & LOSS ACCOUNT. 11.1. THE LD.COUNSEL FOR THE ASSESSEE POINTED OUT T HAT SIMILAR DISALLOWANCE WAS MADE IN EARLIER YEAR AND THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ITA NOS.2502 & 2503/AHD/2007(SUPRA) IN FAVOUR OF THE ASSESSEE. HE HAS DRAWN OUR ATTENTION TOWARDS THE T RIBUNALS ORDER DATED 12/09/2014(SUPRA), WHEREIN THE TRIBUNAL AFTER CONS IDERING THE SUBMISSIONS OF THE ASSESSEE HAD COME TO THE CONCLUS ION THAT THE AMOUNT IN RESPECT OF THE KASAR/VATAV IS DIRECTLY RELATED T O THE BUSINESS ACTIVITY OF THE ASSESSEE. THEREFORE, THE CLAIM OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH, DATED 12/09/2 014(SUPRA). 11.2. ON THE CONTRARY, LD.CIT-DR SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NOS.2502 & 2503/AHD/2007(SUPRA) HAD DECIDED THIS ISSUE IN FAVO UR OF THE ASSESSEE. THEREFORE, TAKING A CONSISTENT VIEW IN THIS YEAR AL SO, THIS GROUND OF ASSESSEES CROSS-OBJECTION IS ALLOWED AND THE AO IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE ACCORDINGLY. 13. GROUND NO.3 OF ASSESSEES CROSS OBJECTION IS GE NERAL IN NATURE REQUIRE NO INDEPENDENT ADJUDICATION. ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 8 - 14. NOW, WE TAKE UP THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IN ITS CROSS-OBJECTION NO.189/AHD/2009 FOR AY 2003-04 WHICH READS AS UNDER:- 1. ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(A) ERRED IN CONFIRMING THE FINDING OF THE ASSESSING OF FICER THAT WHILE COMPUTING DEDUCTION U/S.80HHC OF THE I.T.ACT, 90% O F GROSS INTEREST RECEIPT HAS TO BE EXCLUDED FROM ELIGIBLE P ROFIT UNDER CLAUSE (BAA) OF THE EXPLANATION, AS AGAINST THE CLAIM OF T HE ASSESSEE THAT FOR THIS PURPOSE ONLY NET INTEREST INCOME HAS TO BE CONSIDERED. 14.1. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE LD.CIT(A) WAS NOT JUSTIFIED IN NOT GRANTING THE NETTING OF THE IN TEREST WHILE COMPUTING THE DEDUCTION U/S.80HHC OF THE ACT. HE SUBMITTED T HAT THE LD.CIT(A) ERRED IN GIVING A FINDING THAT THE ASSESSEE COULD N OT PROVE THE NEXUS BETWEEN THE INTEREST INCOME AND EXPENDITURE, HENCE DISALLOWED THE NETTING OF THE INTEREST. HE SUBMITTED THAT THERE I S NEXUS BETWEEN THE EXPENDITURE AND INTEREST INCOME. 14.2. ON THE CONTRARY, LD.CIT-DR SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ASSESSEE IS REQUIRED TO PROVE THE NEXUS BETWEEN THE EXPENDITURE AND THE INTEREST INCOME. 14.3. IN REJOINDER, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF BUSINESS, THE ASSESSEE HAS EARNED INT EREST INCOME OF RS.27,39,727/- AND HAS INCURRED EXPENDITURE OF RS.2 ,65,58,664/-. HE SUBMITTED THAT IF THE INTEREST INCOME IS NETTED AGA INST INTEREST INCOME, ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 9 - THERE WILL BE NET INTEREST EXPENDITURE, HENCE NO IN TEREST INCOME IS REQUIRED TO BE REDUCED FROM THE PROFIT OF BUSINESS AS PER SECTION 80HHC OF THE ACT. THE LD.COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS:- (I) KANTILAL CHOTALAL 68 ITD 395 (MUMBAI TRIB.) (II) PINK STAR VS. DCIT 72 ITD 137 (MUMBAI TR IB.) (III)R.PRAKASH VS. ACIT 19 DTC 747 (COCHIN TRIB .) (IV) INFOTECH ENT.LTD. VS. JT.CIT (HYO) - 85 TIO 3 25 (HYO) (V) DIAMOND CREEK 82 ITD 291 (MUM TRIB.) 15. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISIONS RELIED UPON BY THE LD.COUN SEL FOR THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS, WE ARE OF THE VI EW THAT THE CONTENTION OF THE ASSESSEE IS REQUIRED TO BE VERIFIED BY THE A O, HENCE THIS GROUND IS REMITTED BACK TO THE FILE OF AO FOR VERIFICATION AN D ADJUDICATION. THUS, THIS ADDITIONAL GROUND RAISED BY THE ASSESSEE IN IT S CROSS-OBJECTION NO.189/AHD/2009 IS ALLOWED FOR STATISTICAL PURPOSES . AS A RESULT, CO FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATIST ICAL PURPOSES. 16. NOW WE TAKE UP THE REVENUES APPEAL IN ITA NO.2 505/AHD/2007 FOR AY 2004-05. THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE DISALLOWANCE OF RS.4,54,575/- MADE BY THE A.O. U/S. 14A OF THE ACT. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.10,37,291/- MADE BY THE A.O. ON ACCOUNT OF SALE OF OIL TINS OUT OF BOOKS WITHOUT CONSIDERING THE FACTS THAT THE ENTRIE S IN THIS REGARD WERE ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 10 - MADE IN THE DOCUMENTS FOUND AND SEIZED FROM THE PRE MISES OF THE ASSESSEE. 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.14,91,868/- MADE BY THE A.O. ON ACCOUNT OF INFLA TED PURCHASES AND CONSEQUENTIAL ESTIMATION OF GROSS PROFIT OF RS.1,00 ,000/- WITHOUT CONSIDERING THE FACT THAT THE ENTRIES IN THIS REGAR D WERE MADE IN THE DOCUMENTS FOUND AND SEIZED FROM THE PREMISES OF THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 15.1. THE FIRST GROUND IS AGAINST THE DELETION OF D ISALLOWANCE OF RS.4,54,575/- MADE BY THE AO U/S.14A OF THE ACT. T HE FACTS RELATED TO THIS ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD MADE INVESTMENT IN SH ARES DURING THE YEAR UNDER CONSIDERATION AND EARLIER YEARS. THE ASSESSE E, IN RESPONSE TO QUERY OF THE AO, SUBMITTED THAT THE INVESTMENT MADE DURIN G THE YEAR WERE OUT OF OWN FUNDS AND NOT FROM INTEREST BEARING FUND. A LL THE INVESTMENT MADE DURING THE YEAR AND OUTSTANDING AS ON 31.03.20 01 WERE EITHER FROM CURRENT ACCOUNT OR CASH CREDIT ACCOUNT WHICH HAD DE BIT BALANCE AS AND WHEN THE PAYMENT WERE BEING MADE. ACCORDINGLY NO I NTEREST BEARING FUNDS WERE UTILIZED FOR PURCHASE OF SHARES. THIS C ONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND MADE ADDITI ON OF RS.4,54,575/-. AGAINST THIS, ASSESSEE FILED AN APPEAL BEFORE THE L D.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION MADE BY THE AO. NOW, THE REVENUE IS IN APPEAL BEFORE US. 15.2. THE LD.CIT-DR SUPPORTED THE ORDER OF THE AO, WHEREAS LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT( A). THE LD.COUNSEL FOR ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 11 - THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED B Y THE DECISION OF COORDINATE BENCH PASSED IN ITA NOS.2502 & 2503/AHD/ 2009(SUPRA). 16. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) WHILE DELETING THE DISAL LOWANCE HAS GIVEN A FINDING ON FACT VIDE PARA-4.3 OF HIS ORDER THAT EVE N IN THE CASE OF THE ASSESSEE INTEREST-FREE FUNDS AVAILABLE WITH IT IS F AR IN EXCESS IN COMPARISON OF SHARES ACQUIRED BY IT. THIS FINDING ON FACT IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD, THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, THIS GROUND OF THE REVENUE S APPEAL IS REJECTED. 17. GROUND NO.2 OF REVENUES APPEAL FOR AY 2004-05 IS AGAINST THE DELETION OF ADDITION OF RS.10,37,291/- MADE BY THE AO ON ACCOUNT OF SALE OF OIL TINS. THE FACTS WITH REGARD TO THIS GROUND ARE THAT THE AO FOUND DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE DIF FERENCE IN SALES WITH REGARD TO EMPTY TIN OF GROUND-NUT OIL. THE ASSESSE E MADE SUBMISSION WHICH WAS NOT ACCEPTED BY THE AO AND MADE THE ADDIT ION OF RS.10,37,291/-. HOWEVER, LD.CIT(A) AFTER CONSIDERI NG THE FACTS, DELETED THE ADDITION MADE BY THE AO. 17.1. THE LDCIT-DR SUBMITTED THAT THE AO HAS ANALYZ ED AND HAS RIGHTLY CAME TO THE CONCLUSION THAT THERE WERE DISCREPANCIE S WHICH WERE NOT ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 12 - RECONCILED BY THE ASSESSEE. THEREFORE, LD.CIT(A) W AS NOT JUSTIFIED IN DELETING THE ADDITION. 17.2. ON THE CONTRARY, THE LD.COUNSEL FOR THE ASSES SEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LOWER AUTHORITI ES. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO REJECTED THE EXPLANATION OF THE ASSESSEE BY OBSERVING AS UNDER:- I) AS REGARDS TO CONTENTION OF THE ASSESSEE THAT FOR THE MONTH OF APRIL & MAY PURCHASE FIGURE HAS INADVERTENTLY TAKEN AT 5088890 KG AND 508260 KG. INSTEAD OF ACTUAL FIGURE OF 1005480 KG. AND 19463553 KG. RESPECTIVELY IS CONCERNED, SAME WAS VERIFIED WI TH THE SEIZED DATA FILE AND FOUND CORRECT. II) AS REGARDS TO CONTENTION OF THE ASSESSEE THAT MONTHWISE QUANTITY DETAILS IS BECAUSE OF DIFFERENT ACCOUNTING METHOD O F RECORDING THE STOCK BOOK BY THE ASSESSEE IS CONCERNED, SAME IS ALSO FOU ND ACCEPTABLE AND ACCORDINGLY COMPARISON IS MADE ON YEARLY BASIS. III) EVEN IF COMPARISON IS MADE ON YEARLY BASIS D IFFERENCE OF 1357 TINS ARE REMAIN UNEXPLAINED. FOR THAT ASSESSEE HAS SIM PLY SAY THAT DIFFERENCE IS VERY NOMINAL ACCORDINGLY LIABLE TO BE IGNORED. IV) THE ASSESSEE COULD NOT RECONCILE THE DIFFEREN CE IN SALE WITH DOCUMENTARY EVIDENCES DESPITE AMPLE OPPORTUNITIES G IVEN. THEREFORE, IT CAN BE CONCLUDED THAT THIS IS NOTHING BUT, UNACCOUN TED SALE MADE BY THE ASSESSEE DURING THE YEAR AND THEREFORE LIABLE TO BE ADDED IN THE TOTAL INCOME OF THE ASSESSEE AS UNACCOUNTED INCOME. SINC E ASSESSEE HAS ALREADY CLAIMED ALL DIRECT AND INDIRECT EXPENSES TO WARDS THE UNACCOUNTED SALE NO DEDUCTION WILL BE ALLOWED. V) AS THE ASSESSEE ITSELF HAS ADMITTED THE DISCREP ANCIES NOTICED WHILE COMPARING THE SEIZED DATA AND BOOKS OF ACCOUNTS, UN ACCOUNTED SALE OF ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 13 - RS.10,37,291/- IS LIABLE TO BE ADDED IN THE TOTAL I NCOME OF THE ASSESSEE AS UNACCOUNTED INCOME DERIVED FROM UNACCOUNTED SALE . 18.1. THE ASSESSEE HAD MADE AN ALTERNATE REQUEST BE FORE THE AO THAT IN CASE THE ADDITION IS MADE IN RESPECT OF THE GROUND- NUT OIL (FILTERED) BY 1357 TINS, THEN CREDIT FOR THE GROUND-NUT OIL (REFI NED) SHOULD BE GIVEN. THIS REQUEST OF THE ASSESSEE IS NOT CONSIDERED BY T HE AO. HOWEVER, THE LD.CIT(A), VIDE PARA-5.3 OF HIS ORDER, HAS DECIDED THIS ISSUE BY OBSERVING AS UNDER:- 5.3. I HAVE CAREFULLY CONSIDERED THE VARIOUS ARGUM ENTS OF THE AUTHORIZED REPRESENTATIVE AND ASSESSMENT ORDER PASS ED BY ASSESSING OFFICER. THE ASSESSING OFFICER HAS MADE ADDITION B ASED ON DIFFERENCE IN STOCK OF TINS ISSUED FOR PACKING OF OIL AS PER BOOK S OF ACCOUNT AND AS PER SEIZED MATERIAL. THE ASSESSING OFFICER HAS OBSERVE D THAT EXCESS OF TINS USED FOR PACKING OF OIL AS PER SEIZED MATERIAL IS U NACCOUNTED SALES OF ASSESSEE COMPANY. THE ASSESSING OFFICER HAS NOT DO UBTED GENUINENESS OF PURCHASE AND SALES RECORDED IN THE BOOKS OF ACCO UNT. THE AO HAS NOT ESTABLISHED THAT SUCH EMPTY TINS WERE USED FOR SALE WITH ANY SUPPORTED EVIDENTIARY DOCUMENTS AND ENTIRE ADDITION MADE BY AO SEEMS TO BE PURELY ON ASSUMPTION. THE AO HAS IGNORED THE FACT THAT STOCK MOVEMENT REGISTER INCLUDES THE TINS USED FOR PACKIN G OF FINISHED GOODS AND TINS DAMAGED/BROKEN DURING THE PROCESS OF PACKI NG OR HANDLING OF GOODS & TREATED AS SCRAP MATERIAL WHEREAS TINS USED FOR PACKING AS PER BOOKS OF ACCOUNT INCLUDES ONLY ACTUAL TINS USED FOR PACKING OF FINISHED GOODS. THE DIFFERENCE DURING THE YEAR IS ONLY 0.08 % OF TOTAL PURCHASES OF TINS MADE DURING THE YEAR. THE APPELLANT COMPAN Y IS SELLING SUCH SCRAPPED TINS AND SALE VALUE HAVE ALREADY BEEN OFFE RED TO TAX ON YEAR TO YEAR BASIS WHICH PROVES THE FACT THAT IN HANDLING O F MATERIAL AND IN USAGE OF SUCH TINS FOR PACKING, BREAKAGES/DAMAGES H APPEN. EVEN DURING THE COURSE OF SEARCH PROCEEDINGS, AUTHORIZED OFFICER HAS NOT POINTED OUT ANY DISCREPANCY IN PHYSICAL STOCK AND B OOK STOCK OF OIL WHICH PROVES THAT NO TINS HAVE BEEN UTILIZED FOR MA KING ANY UNACCOUNTED SALE OF FINISHED GOODS. CONSIDERING SU CH FACTS, ADDITION MADE BY ASSESSING OFFICER IS DELETED. ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 14 - 18.2. AFTER CONSIDERING THE TOTALITY OF THE FACTS O F THE CASE AND THE SUBMISSIONS MADE BY THE PARTIES, WE ARE OF THE CONS IDERED VIEW THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) AS HE HAS EXAMINED THE PRACTICAL ASPECT OF THE BUSINESS OF THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CI T(A), SAME IS HEREBY UPHELD. THUS, THIS GROUND OF THE REVENUES APPEAL IS REJECTED. 19. GROUND NO.3 OF REVENUES APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.14,91,868/- ON ACCOUNT OF INFLATED P URCHASES AND CONSEQUENTIAL ESTIMATION OF GP OF RS.1 LAC. THE F ACTS OF THE ISSUE ARE THAT THE AO NOTICED CERTAIN DISCREPANCIES WITH REGA RD TO THE PURCHASES MADE BY THE ASSESSEE. IN RESPONSE TO THE NOTICE IS SUED BY THE AO, THE ASSESSEE MADE A DETAILED SUBMISSION WHICH HAS BEEN REPRODUCED BY THE AO IN ITS ORDER. HOWEVER, THE AO DID NOT ACCEPT TH E EXPLANATION OF THE ASSESSEE AND PROCEEDED TO MAKE ADDITION OF RS.13,91 ,547/- AS UNEXPLAINED INVESTMENT AND ALSO MADE ADDITION OF RS.1 LAC AS IN COME DERIVED FROM SUCH INVESTMENT. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE DELETED THE ADDITION. 19.1 THE LD.CIT-DR SUPPORTED THE ORDER OF THE AO, W HEREAS THE LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A). THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THE SAME IS REQUIRED TO BE UPHELD. ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 15 - 20. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) AFTER CONSIDERING THE SU BMISSIONS OF THE ASSESSEE HAS DECIDED THIS ISSUE IN PARA-6.4 OF HIS ORDER BY OBSERVING AS UNDER:- 6.4. I HAVE CAREFULLY CONSIDERED THE VARIOUS ARGUM ENTS OF THE AUTHORIZED REPRESENTATIVE AND ASSESSMENT ORDER PASS ED BY ASSESSING OFFICER. THE ASSESSING OFFICER HAS MADE ADDITION B ASED ON DIFFERENCE IN QUANTITY OF PURCHASE OF WASHED COTTON AS PER STOCK MOVEMENT REGISTER AS COMPARED TO PURCHASE AS PER BOOKS OF ACCOUNT AND DIFFERENCE WAS TREATED AS INFLATED PURCHASES RECORDED IN THE BOOKS OF ACCOUNT. HOWEVER, ASSESSING OFFICER HAS NOT DOUBTED GENUINEN ESS OF ANY PURCHASES RECORDED IN THE BOOKS OF ACCOUNT AND EVEN IN CASE OF ASSESSEE ENTIRE PAYMENTS HAVE BEEN MADE THROUGH BANKING CHAN NELS. THE AO HAS MADE ADDITION PURELY ON ASSUMPTION AND WITHOUT BRINGING ANY CORROBORATIVE EVIDENCE TO ESTABLISH THAT IN CASE OF APPELLANT, INFLATED PURCHASES HAVE BEEN RECORDED IN THE BOOKS OF ACCOUN T. THE AO HAS IGNORED THE CLAIM OF APPELLANT THAT DIFFERENCE IS D UE TO SHORTAGES AND IN HANDLING OF MATERIAL, SUCH TYPE OF SHORTAGES ARE BO UND TO INCUR. EVEN IN CASE OF APPELLANT, SUCH SHORTAGES ARE 0.10% TO 1 % OF TOTAL PURCHASE MADE DURING THE YEAR. THE SAME IS VERY NEGLIGIBLE. CONSIDERING THE SAME, THE ADDITION MADE BY AO TREATING THE ALLEGED DIFFERENCE IN QUANTITY AS PER STOCK MOVEMENT REGISTER AND BOOKS O F ACCOUNT AS INFLATED PURCHASES FOR RS.13,91,547 IS DELETED AND CONSEQUENTIAL ADDITION OF GROSS PROFIT OF RS.1,00,000 IS ALSO DEL ETED. THE GROUND OF ASSESSEE IS ALLOWED. 20.1. THE ABOVE FINDING OF THE LD.CIT(A) HAS NOT BE EN CONTROVERTED BY THE LD.CIT-DR BY PLACING ANY MATERIAL ON RECORD, TH EREFORE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), S AME IS HEREBY UPHELD. THUS, THIS GROUND OF REVENUES APPEAL IS REJECTED. ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 16 - 21. GROUND NOS.4 & 5 ARE GENERAL IN NATURE REQUIRE NO INDEPENDENT ADJUDICATION. 22. AS A RESULT, REVENUES APPEAL IN ITA NO.2505/AH D/2007 FOR AY 2004-05 IS DISMISSED. 23. NOW, WE TAKE UP THE ASSESSEES CROSS OBJECTION NO.190/AHD/2009 FOR AY 2004-05 (IN ITA NO.2505/AHD/ 2007 FOR AY 2004-05). THE ASSESSEE HAS RAISED THE FOLLOWING GR OUNDS IN ITS CROSS- OBJECTION: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF FOREIGN TRAVELI NG EXPENDITURE OF RS.2,00,000 MADE BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN HOLDING THAT FOR THE PURPOSES OF CLAUSE (B AA) OF THE EXPLANATION TO SECTION 80HHC OF THE INCOME-TAX ACT NETTING OF I NTEREST IS NOT TO BE DONE. 3. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF CROSS-OBJECTIONS EITHER BE FORE OR AT THE TIME OF HEARING OF THE CROSS-OBJECTIONS. 23.1. APROPOS TO GROUND NO.2 OF ASSESSEES CROSS OB JECTION, THE FACTS ARE IDENTICAL TO THE FACTS OF ADDITIONAL GROUND RAI SED IN ASSESSEES OWN CROSS-OBJECTION NO.189/AHD/2009 FOR AY 2003-04(SUPR A). THEREFORE, FOR THIS YEAR ALSO, WE HAVE NO REASON TO TAKE ANY OTHER VIEW BUT TO FOLLOW THE VIEW ALREADY TAKEN IN ASSESSEES CROSS OBJECTION FO R AY 2003-04(SUPRA). THEREFORE, THIS GROUND OF ASSESSEES CROSS-OBJECTIO N IS REMITTED BACK TO THE FILE OF AO FOR VERIFICATION AND ADJUDICATION. C ONSEQUENTLY, FOR THIS ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 17 - YEAR AS WELL THE GROUND RAISED IN ASSESSEES CROSS- OBJECTION IS ALLOWED FOR STATISTICAL PURPOSES. 24. GROUND NO.1 OF THE ASSESSEES CROSS OBJECTION FOR AY 2004-05 IS AGAINST IN CONFIRMING THE DISALLOWANCE OF RS.2 LAC INCURRED FOR FOREIGN TRAVELLING EXPENDITURE. THE LD.COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE AO DISALLOWED FOREIGN TRAVEL EXPENDITURE AMOUNTING TO RS.2 LACS INCURRED BY THE ASSESSEE-COMPANY IN CONNECTION WIT H THE FOREIGN TRAVEL OF THE DIRECTORS FOR BUSINESS PURPOSES, ON THE GROU ND THAT DOCUMENTARY EVIDENCE WAS NOT AVAILABLE. HE SUBMITTED THAT THE AFORESAID EXPENDITURE HAS BEEN INCURRED AS AUTHORIZED BY THE RESOLUTION O F THE BOARD OF DIRECTORS. HE FURTHER SUBMITTED THAT THE ASSESSEE- COMPANY IS ENGAGED IN IMPORT OF OIL AND FOR THIS PURPOSE THE DIRECTORS OF THE COMPANY AND OTHER TECHNICAL PERSONS HAVE TO FREQUENTLY TRAVEL TO RELE VANT COUNTRIES. IN THE CASE IN HAND, THE DOCUMENTARY EVIDENCE EVIDENCING T HE INCURRING OF THE EXPENDITURE WAS NOT TRACEABLE AT THAT TIME AND, THE REFORE, THE SAME COULD NOT BE PRODUCED BEFORE THE LOWER AUTHORITIES. HE S UBMITTED THAT HAVING REGARD TO THE ENTIRE FACTS AND CIRCUMSTANCES THE DI SALLOWANCE SUSTAINED BY THE LEARNED CIT(A) IS NOT JUSTIFIED AND THE SAME MA Y BE DELETED. 24.1. ON THE CONTRARY, LD.CIT-DR SUPPORTED THE ORDE RS OF THE AUTHORITIES BELOW. 25. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS CONFIRMED THE ADDITI ON BY OBSERVING THAT ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 18 - THE EXPENDITURE HAS BEEN DEBITED IN THE BOOKS OF AC COUNT WHICH HAVE BEEN APPROVED BY BOARD OF DIRECTORS HOWEVER AS ASSE SSEE HAS NOT SUBMITTED ANY PROOF REGARDING FOREIGN TRAVELLING EX PENDITURE CLAIMED IN PROFIT AND LOSS ACCOUNT. EVEN BEFORE THIS TRIBUNA L, THE ASSESSEE HAS NOT PLACED ANY SUPPORTING EVIDENCE ON RECORD. THEREFOR E, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), SAME IS HE REBY UPHELD. AS A RESULT, ASSESSEES THIS CROSS-OBJECTION FOR AY 2004 -05 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 26. NOW WE TAKE UP THE REVENUES APPEAL IN ITA NO.2 506/AHD/2007 FOR AY 2005-06. THE REVENUE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE DISALLOWANCE OF RS.1,37,906/- MADE BY THE AO U/S.14 A OF THE ACT. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.1,71,927/- MADE BY THE AO ON ACCOUNT OF SALE OF DISALLOWANCE OF TRAVELLING EXPENSES. 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.2,42,857/- MADE BY THE AO ON THE BASIS OF THE DO CUMENTS FOUND AND SEIZED AT THE TIME OF SEARCH. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 26.1. APROPOS TO GROUND NO.1 OF REVENUES APPEAL F OR AY 2005-06, THE FACTS ARE IDENTICAL TO THE FACTS AS WERE RAISED IN GROUND NO.1 OF REVENUES APPEAL AY 2004-05(SUPRA), WHEREIN WE HAVE TAKEN A VIEW IN FAVOUR OF THE ASSESSEE BY REJECTING REVENUES APPEAL, THEREFO RE, WE HAVE NO REASON TO TAKE ANY OTHER VIEW BUT TO FOLLOW THE VIEW ALREA DY TAKEN IN REVENUES ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 19 - APPEAL FOR ASST.YEAR 2004-05(SUPRA). CONSEQUENTLY , FOR THIS YEAR AS WELL REVENUES GROUND NO.1 IS HEREBY DISMISSED. 27. GROUND NO.2 OF REVENUES APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.1,71,927/- ON ACCOUNT OF SALE OF DIS ALLOWANCE OF TRAVELLING EXPENSES. THE AO MADE ADDITION OF RS.5,33,886/- ON THE BASIS THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM WITH SUPP ORTING EVIDENCES. HOWEVER, THE LD.CIT(A) DELETED THE ADDITION ON THE BASIS THAT A SUM OF RS.1,71,927/- WAS INCURRED BY THE ASSESSEE ON THE V ISIT OF THE DIRECTOR OF THE COMPANY TO CHINA AS A DELEGATE OF SOLVANT EXTRA CTORS ASSOCIATION OF INDIA IN WHICH THE ASSESSEE-COMPANY IS A MEMBER. 28. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON F ACT. DURING THE COURSE OF HEARING BEFORE US, LD.COUNSEL FOR THE ASS ESSEE DREW OUR ATTENTION TOWARDS PAGE NOS.22 TO 24 OF THE PAPER BOOK, WHEREI N THE EVIDENCE OF FOREIGN TOUR TO THE EXTENT OF RS.1,71,000/- IS GIVE N. THIS FACT IS NOT CONTROVERTED BY THE REVENUE, THEREFORE WE DO NOT FI ND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, THIS GROUND OF REVENUES APPEAL IS REJECTED. 29. GROUND NO.3 OF REVENUES APPEAL IS AGAINST DELE TION OF ADDITION OF RS.2,42,857/-. THE CIT-DR SUPPORTED THE ORDER OF T HE AO, WHEREAS LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER FO THE LD.CIT(A). THE ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 20 - LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO D ID NOT CONSIDER THE EXPLANATION OF THE ASSESSEE IN A RIGHT PERSPECTIVE. 30. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO WHILE MAKING THE ADDITION ON TH IS ISSUE HAS OBSERVED AS UNDER:- 5. DURING THE COURSE OF SEARCH PROCEEDINGS AT VIMA L HOUSE, HIGHWAY, MEHSANA, ITEM NO.14 & 15 OF ANNEXURE-A FOU ND FROM THE OFFICE PREMISE OF VIMAL OIL & FOODS LTD. WHICH CONT AINS DETAILS OF PURCHASE AND SALE OF SHARES FROM 11.06.2002 TO 18.0 8.2004. WHILE CONFRONTING WITH THE SAME SHRI CHANDUBHAI I.PATEL, MANAGING DIRECTOR OF THE ASSESSEE COMPANY HAS DENIED OF HAVING ANY KN OWLEDGE ABOUT THE TRANSACTIONS RECORDED IN THESE TWO FILES. AS THE S EIZED PAPERS WERE FOUND FROM THE PREMISES OF THE ASSESSEE COMPANY AS PER SECTION 132(4A) OF THE ACT, ONUS LIES ON THE ASSESSEE TO EXPLAIN TH E DETAILS OF TRANSACTIONS NOTED. IN VIEW OF THE ABOVE MENTIONED FACTS AND CIRCUMSTANCES THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME VIDE NOTICE U/S.142(1) DATED 15.12.006. CONTENTS OF THE NOTICE ARE AS UNDER:- PLEASE REFER TO ITEM NO.14 & 15 OF ANNEXURE-A FOUND FROM THE OFFICE PREMISE OF VIMAL OIL & FOODS LTD. WHICH CONT AINS DETAILS OF PURCHASE AND SALE OF SHARES FROM 11.06.2002 TO 1 8.08.2004 IT IS NOTICED FROM THE SEIZED PAPER THAT TOTAL SALES O F SHARE IS RS.78,32,108/- AND CORRESPONDING PURCHASES ARE RS.7 5,89,215/-. THUS, THERE IS NET PROFIT OF RS.2,42,857/-. AS THE SEIZED PAPERS AS REFERRED ABOVE ARE FOUND FROM THE BUSINESS PREMISE OF THE COMPANY YOU ARE REQUIRED TO EXPLAIN AND RECONCILE T HE SAME WITH SUPPORTING DOCUMENTARY EVIDENCES. YOU ARE ALS O REQUIRED TO SHOW CAUSE THAT WHY THE SAME SHOULD NOT BE CONSI DERED AS UNACCOUNTED RECEIPT OF THE COMPANY FOR THE AY 2005- 06. 5.1. IN RESPONSE TO THAT ASSESSEE HAS NOT FURNISHED ANY WRITTEN SUBMISSION/EXPLANATION. HOWEVER, AR OF THE ASSESSE E HAS CLAIMED THAT THESE TRANSACTIONS ARE NOT RELATED TO THE ASSESSEE COMPANY. BUT HE ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 21 - COULD NOT SUBSTANTIATE HIS CLAIM WITH SUPPORTING DO CUMENTARY EVIDENCES. HERE IT IS ALSO PERTINENT TO NOTE THAT DURING THE COURSE OF POST SEARCH INVESTIGATION ALSO ASSESSEE WAS ASKED T O EXPLAIN AND RECONCILE THE TRANSACTIONS NOTED IN ABOVE SEIZED PA PERS VIDE LETTER DATED 25.10.2004. AT THAT TIME ALSO ASSESSEE DID NOT COM PLY THE NOTICE. AS PER SECTION 132(4A) OF THE ACT IT IS THE PRIMARY ON US OF THE ASSESSEE TO EXPLAIN THE TRANSACTIONS NOTED ON THE SEIZED PAPERS FOUND FROM ITS CUSTODY. HOWEVER, ASSESSEE COULD NOT DISCHARGE ITS ONUS DESPITE THE AMPLE OPPORTUNITY GIVEN. IN VIEW OF THE ABOVE IT C AN BE SAFELY CONCLUDED THAT ASSESSEE HAS RECEIVED AN AMOUNT OF R S.2,42,857/- OUT OF SALE CONSIDERATION OF SHARES. SINCE ASSESSEE HAS N OT RECORDED THE SAME IN ITS REGULAR BOOKS OF ACCOUNTS SAME IS LIABLE TO BE ADDED IN THE TOTAL OF THE ASSESSEE AS UNACCOUNTED INCOME. 30.1. HOWEVER, THE LD.CIT(A) DELETED THE ADDITION B Y OBSERVING AS UNDER:- 6.4. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF THE AUTHORISED REPRESENTATIVE FOR THE APPELLANT AND THE ORDER PASS ED BY THE ASSESSING OFFICER. THE AFORESAID SEIZED PAPERS HAVE BEEN FOU ND FROM THE PREMISES OF VIMAL HOUSE WHERE VARIOUS COMPANIES ARE OPERATIN G AND NUMBER OF STAFF IS WORKING. LOOSE PAPER FOUND FROM SUCH HOUS E ON THE BASIS OF WHICH AO HAS MADE ADDITION DOES NOT BEAR THE NAME O F APPELLANT COMPANY. THE AO HAS NOT ISSUED ANY NOTICE DURING T HE COURSE OF ASSESSMENT PROCEEDINGS FOR MAKING ANY EXPLANATION O F APPELLANT COMPANY BUT SAME WAS ASKED TO GUJARAT SPICES & OIL SEED GROWERS CO-OP. UNION LTD. IT IS OBSERVED THAT AO HAS NOT B ROUGHT ANY OTHER EVIDENCE TO SUPPORT HIS PLEA THAT SUCH TRANSACTIONS BELONG TO APPELLANT COMPANY AND ADDITION HAS BEEN MADE ON PRESUMPTION/A SSUMPTION. THE ADDITION CANNOT BE IN ANY CASE MADE ON SUCH ASSUMPT ION HENCE SAME IS DELETED. 30.2. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDIN G ON FACT THAT THE LOOSE-PAPERS SEIZED FROM THE PREMISES OF THE VIMAL HOUSE, WHERE VARIOUS COMPANIES ARE OPERATING AND NUMBER OF STAFF ARE WOR KING. ON SUCH LOOSE-PAPERS, THE NAME OF THE APPELLANT-COMPANY IS NOT MENTIONED. THIS ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 22 - FINDING OF THE LD.CIT(A) IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY MATERIAL ON RECORD, THEREFORE, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THU S, THIS GROUND REVENUES APPEAL IS REJECTED. 31. GROUND NOS.4 & 5 ARE GENERAL IN NATURE REQUIRE NO INDEPENDENT ADJUDICATION. 32. AS A RESULT, REVENUES APPEAL FOR AY 2005-06 IS DISMISSED. 33. LASTLY, WE TAKE UP THE ASSESSEES CROSS OBJECTI ON NO.191/AHD/2009 FOR AY 2005-06 (IN ITA NO.2506/AHD/ 2007 FOR AY 2005-06). THE ASSESSEE HAS RAISED THE FOLLOWING EF FECTIVE GROUND IN ITS CROSS-OBJECTION:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE TO THE EXTE NT OF RS.3,61,959 FROM OUT OF THE TOTAL FOREIGN TRAVEL EX PENDITURE OF RS.5,33,886 DISALLOWED BY THE ASSESSING OFFICER. 33.1. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS.3,61,559/- OUT OF TOTAL FOREIGN TRAVEL EXPENDITU RE OF RS.5,33,886/- DISALLOWED BY THE AO. 33.2. ON THE CONTRARY, THE LD.CIT-DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE. ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 23 - 34. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE DISALLOWANCE WAS CONFIRMED BY THE LD.CIT(A) ON THE BASIS THAT THE ASSESSEE COULD NOT PRODUCE ANY EVIDE NCE IN SUPPORT OF ITS CLAIM. BEFORE THIS TRIBUNAL ALSO, THE ASSESSEE HAS NOT PLACED ANY MATERIAL ON RECORD IN SUPPORT OF ITS CLAIM OF FOREIGN TRAVEL EXPENDITURE, EXCEPT THE LEDGER ACCOUNT. THEREFORE, WE DO NOT FIND ANY REAS ON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, THE SOLE GROUND RAISED IN ASSESSEES CROSS OBJECTION IS REJE CTED. AS A RESULT, ASSESSEES CROSS-OBJECTION FOR AY 2005-06 IS DISMIS SED. 35. WE SUMMARIZE THE RESULT AS UNDER:- (I) REVENUES APPEAL, I.E. ITA NO.2504/AHD/2007 FOR AY 2003- 04 IS DISMISSED, WHEREAS ASSESSEES CROSS OBJECTION NO.189/AHD/2009 FOR AY 2003-04 IS PARTLY ALLOWED FO R STATISTICAL PURPOSES. (II) REVENUES APPEAL, I.E. ITA NO.2505/AHD/2007 FOR AY 2004- 05 IS DISMISSED, WHEREAS ASSESSEES CROSS OBJECTION NO.190/AHD/2009 FOR AY 2004-05 IS PARTLY ALLOWED FO R STATISTICAL PURPOSES. (III) REVENUES APPEAL, I.E. ITA NO.2506/AHD/2007 F OR AY 2005-06 AND ASSESSEES CROSS OBJECTION NO.191/AHD/2009 FOR AY 2005-06 BOTH ARE DISMISSED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31/ 10 /2014 (..,.../ T.C. NAIR, SR. PS ITA NOS.2504,2505 & 2506/AHD/2007 (BY REVE NUE) AND CO NOS.189,190 & 191/AHD/2009 (BY ASSESSEE-RESP ECTIVELY) DCIT VS. VIMAL OIL & FOOD LTD. ASST.YEARS 2003-04,2004-05 & 2005-06 RESPECTIVELY - 24 - !'#'$ / COPY OF THE ORDER FORWARDED TO : 1. )* +, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. /0/12 3 / CONCERNED CIT 4. 3 ( )* ) / THE CIT(A)-I, AHMEDABAD 5. 45-12 , )* )12' , )0 / DR, ITAT, AHMEDABAD 6. 5789 / GUARD FILE. / BY ORDER, .4*- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..28/19.10.14 (DICTATION-PAD 35 -PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..28/29.10.14 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BAC K TO THE SR.P.S./P.S. 31.10.14 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31.10.14 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER