M/s Bell Intercom Pvt. Ltd., New Delhi V. ITO, New Delhi

CO 240/DEL/2011

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0522 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 20-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Business income; Depreciation; Additional evidence; Corroborative evidences
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A , NEW DELHI BEFORE SH. N. K. SAINI , AM AND SH. A. T. VARKEY , JM ITA NO. 2959/DEL/2011 : ASSTT. YEAR : 2006 - 07 ITO, WARD 2(4), R. N O. 301, 3 RD FLOOR, CENTRAL REVENUE BUILDING, I. P. ESTATE, NEW DELHI - 110002 VS M/S BELL INTERCOM PVT. LTD. 8/6417, DEV NAGAR, KAROL BAGH, NEW DELHI (APPELLANT) (RESPONDENT) CO NO. 240/DEL/2011 : ASSTT. YEAR : 2006 - 07 M/S BELL I NTERCOM PVT. LTD. 8/6417, DEV NAGAR, KAROL BAGH, NEW DELHI VS ITO, WARD 2(4), R. NO. 301, 3 RD FLOOR, CENTRAL REVENUE BUILDING, I. P. ESTATE, NEW DELHI - 110002 (APPELLANT) (RESPONDENT) PAN NO.AAACB2763Q ASSESSEE BY : DR. RAKESH GUPTA , ADV. REVENUE BY : SH . B. R. R. KUMAR , SR. DR DATE OF HEARING : 20 . 04 .2015 DATE O F PRONOUNCEMENT : 23 .04 .2015 ORDER PER N.K . SAINI , A.M. THE APPEAL BY THE DEPARTMENT AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 24.03.2011 OF LD. CIT(A) - V, NEW DELHI. 2. FIRST WE WILL DEAL WITH THE APPEAL OF THE DEPARTMENT. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL : - ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 2 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING ADDITION OF RS. 26,34,866/ - MADE BY THE ASSESSING OFFICER AS INCOME FROM OTHER UNEXPLAINED SOURCE IGNORING THAT THE ASSESSEE DID NOT PRODUCED ANY EVIDENCE WITH RESPECT TO THE CLAIM OF BUSINESS RECEIPTS. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING ADDITION OF RS. 2,16,177 / - ON ACCOUNT OF DEPRECIATION IGNORING THAT THE ASSESSEE FAILED TO PRODUCE ANY BILL WITH RESPECT TO PURCHASE OF ASSET AND ALSO FAILED TO SUBMIT ANY EVIDENCE WITH RESPECT TO ANY BUSINESS BEING CONDUCTED BY THE ASSESSEE. 3. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING ADDITION OF RS. 9,17,946/ - ON ACCOUNT OF UNEXPLAINED EXPENSES IGNORING THAT THE ASSESSEE FAILED TO PRODUCE ANY BILL WITH RESPECT TO THE EXPENSES CLAIMED AND ALSO FAILED TO SUBMIT ANY EVIDENCE WITH RESPECT OF ANY BUSINESS BEING CONDU CTED BY THE ASSESSEE. 4. THE APPELLANT CRAVES LEAVES FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL 3. VIDE GROUND NO. 1 THE GRIEVANCE OF THE DEPARTMENT RELA TES TO THE DELETION OF ADDITION OF RS. 26,34,866/ - MADE BY THE AO. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 29.11.2006 DECLARING NIL INCOME. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. ACCORDING TO THE AO THE ASSESSEE DID NOT COMPLY WITH THE VARIOUS NOTICES ISSUED U/S 143(2) AND 142(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). HE, THEREFORE, PROCEEDED TO FRAME THE ASSESSMENT EX - PARTE U/S 144 ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 3 OF THE ACT. A CCORDING TO THE AO, THE AS SESSEE HAD NOT FILED ANY DETAILS OF HIRE CHARGES EARNED BY IT AMOUNTING TO RS. 14,23,065/ - . HE ALSO NOTICED THAT ALMOST ALL THE RECEIPTS WERE RECEIVED IN CASH EXCEPT A FEW AMOUNTING TO RS. 5,00,000/ - AND THAT THERE WAS ANOTHER RECEIPTS OF RS. 12,11,801/ - T O WHICH NO EXPLANATION WAS OFFERED. THE AO ADDED RS. 26,34,866/ - (RS.14,23,065/ - + RS.12,11,801/ - ) CONSIDERING THE SAME AS INCOME FROM OTHER SOURCES. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE WAS REGULARLY APPEARING BEFORE THE AO AND WAS CARRYING BOOKS OF ACCOUNTS BUT HE DID NOT EXAMINE THE SAME. IT WAS FURTHER SUBMITTED THAT CERTAIN DETAILS AS ASKED FOR , WERE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH IS EVIDENT FROM PARA 4 OF THE ASS ESSMENT ORDER. THE LD. CIT(A) ASKED THE REMAND REPORT OF THE AO WHO VIDE HIS REPORT DATED 18.11.2010 STATED AS UNDER: IT HAS BEEN CONTENDED BY THE ASSESSEE BEFORE YOUR GOOD SELF THAT THE COMPLETION OF ASSESSMENT U/S 144 OF THE ACT WAS BAD IN LAW AND FACT S AND ILLEGAL AND UNJUSTIFIED. THE ASSESSEE IS A COMPANY EXISTING ON THE RECORDS OF THE GOVERNMENT OF INDIA. THE ASSESSEE COMPANY IS DOING BUSINESS FOR LAST 10 YEARS. MOREOVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE COMPANY HAS SUBMITTED REQUISITE DETAILS ALONG WITH THE REPLY BEFORE LD. AO. THEREFORE, OBSERVATIONS OF THE LD. AO IN THE FIRST PART ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 4 OF THE ASSESSMENT ORDER THAT THERE WAS NO COOPERATION FROM THE ASSESSEE AND NO REPLY WAS FILED, IS MISPLACED AND IS FACTUALLY INCORRECT. IT WOULD BE SELF EVIDENT FROM THE PERUSAL OF THE ENTIRE ASSESSMENT ORDER THAT IN THE FIRST PART OF THE ASSTT. ORDER, LD. AO MADE A MENTION THAT NO REPLIES WERE FILED WHEREAS IN THE SECOND PART OF THE ASSESSMENT ORDER HE HAD DISCUSSED ABOUT SOME HOLES IN THE REPLIES FILED. THEREFORE, THE APPROACH OF LD. AO WAS SELF CONTRADICTORY AS WHEN HE HIMSELF DISCUSSED ABOUT THE REPLIES FILED, THEN HIS EARLIER ALLEGATION THAT NO REPLIES WERE FILED WAS JUST IN THE AIR AND FACTUALLY INCORRECT, UNFAIR AND UNJUSTIFIED. IN THIS REGA RD, IT IS SEEN FROM THE PERUSAL OF NOTE SHEET ENTRIES THAT THE SUFFICIENT OPPORTUNITIES WERE GIVEN TO THE ASSESSEE TO PRODUCE THE DETAILS WITH REGARDS TO THE NATURE OF RECEIPTS. IN THIS BACK GROUND OF THE FACTS, THE CONTENTION OF THE ASSESSEE THAT PROPER O PPORTUNITIES WERE NOT PROVIDED IS ERRONEOUS AND SHOULD BE REJECTED. IT IS SUBMITTED THAT THE AO HAD NOT MADE AN ADDITION OF RS. 12,11,801/ - AS MENTIONED BEFORE YOUR GOOD SELF. THE REFERENCE TO RS. 12,11,801/ - HAS BEEN MADE WHILE MENTIONING THE REPLY OF T HE ASSESSEE. THIS IS WITH REGARD TO THE EXPLANATION GIVEN BY THE ASSESSEE TO JUSTIFY ITS NATURE OF BUSINESS. SINCE, THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE ITS EXPLANATION, HIS CONTENTION WAS REJECTED. IN THE END, IN VIEW OF THE FACT THAT THE ASSESSEE IS NOT DOING ANY BUSINESS AND IS FOUND TO BE IN THE BUSINESS OF PROVIDING ENTRIES, THE TOTAL RECEIPTS HAVE BEEN ADDED AS THESE ARE FOUND TO BE FROM UNDISCLOSED SOURCES. IT HAS SPECIFICALLY MENTIONED IN THE ORDER THAT THE RECEIPTS SHOWN BY THE ASSESSEE WAS LESS THAN WHAT WAS ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 5 SHOWN IN THE COPY OF BANK ACCOUNTS OF THE ASSESSEE COMPANY. SINCE, IT WAS FOUND THAT THE ASSESSEE HAD SHOWN ALL BOGUS ACTIVITIES, THE ENTIRE RECEIPTS AS PER THE BANK ACCOUNT WAS ADDED. HENCE, IT IS SEEN THAT THERE IS NO AMBIGUITY IN THE FIGURES. IN VIEW OF ABOVE, IT IS REQUESTED THAT THE CONTENTION OF THE ASSESSEE IS WRONG FOOTED AND SHOULD BE REJECTED. THE ADDITION MADE BY THE AO MAY PLEASE BE UPHELD. 5 . THE SAID REPORT WAS FORWARDED TO THE ASSESSEE WHO FURNISH ED IN REJOINDER DATE D 16.12.2010 BY STATING AS UNDER: LD. AO HAS MENTIONED IN THE REMAND REPORT THAT THE CASE OF THE ASSESSEE WAS COMPLETED U/S 144 IN THE ABSENCE OF NON PRODUCTION OF BILLS, AND ADDITION OF RS. 26,34,866/ - WAS MADE AS INCOME FROM OTHER SOURCES BEING RECEIPT S FROM UNEXPLAINED SOURCES. WITH REGARD TO STAND OF THE ASSESSEE THAT SUFFICIENT OPPORTUNITY WAS NOT PROVIDED BEFORE PASSING EX - PARTE ORDER U/S 144, IT MAY KINDLY BE SEEN THAT EVEN IN THE REMAND REPORT, LD. AO IS NOT ABLE TO CONTROVERT THE FACTS THAT NO SHOW CAUSE WAS ISSUED TO THE ASSESSEE COMPANY BEFORE MAKING THE IMPUGNED ADDITION OF RS. 26,34,866/ - . THE REQUISITE DETAILS WERE FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ALL DETAILS WITH REGARD TO EXPENSES CLAIMED, DETAILS OF HIRE C HARGES RECEIVED OUT OF HIRING OF EARTH - MOVING MACHINERY OF RS. 14,23,065/ - FOR LIFTING OF MATERIALS AT VARIOUS PLACES, (REFER PB 23, 26), DETAILS OF REPAIRS AND MAINTENANCE OF MACHINE, MACHINERY EXPENSES, VEHICLE EXPENSES (REFER PB 26 TO 30), WHICH ARE PAR T OF ACCOUNTS OF THE ASSESSEE FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. PARTY ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 6 WISE DETAILS OF HIRE CHARGES INCOME RECEIVED FROM EARTH MOVING MACHINES, AND DETAILS OF MACHINERY REPAIR, MACHINERY RUNNING EXPENSES & VEHICLES EXPEN SES, DETAILS OF CLOSING STOCK AND ITS VALUATION, WERE FURNISHED ALSO WITH REPLY SUBMITTED DATED 17.11.2008 (REFER PB 31). LD. AO IN PARA 2.1 OF THE IMPUGNED ORDER HAS MENTIONED THAT AR OF THE ASSESSEE APPEARED ON 17.11.2008, BUT THE COPY OF BANK ACCOUNT WAS NOT FILED, AND SUBSEQUENTLY IN THE SAME BREATH IT IS STATED THAT NEITHER ANY DETAILS WERE FILED NOR THE BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS WERE PRODUCED, WHEREAS THE FACT IS THAT ALL REQUISITES DETAILS WITH REFERENCE OF BOOKS OF ACCOUNT WE RE DULY FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN PARA 3.0 OF THE IMPUGNED ORDER LD. AO HAS ARRIVED ON SOME IMAGINARY FIGURE OF RS. 12,11,801/ - , IT IS NOT UNDERSTOOD FROM WHERE THESE FIGURES HAVE BEEN ADOPTED BY THE AO. LD. AO NEVER QUESTIONED ABOUT THIS FIGURE OR POINTED OUT, AS TO FROM WHERE THE SAME WAS TAKEN, AS NO SHOW CAUSE WAS GIVEN BY THE AO BEFORE PASSING THE IMPUGNED ORDER U/S 144 OF THE ACT. RESPECTFULLY SUBMITTED THAT ALL FACTS WITH REGARD TO RECEIPT AND EXPENSES C LAIMED HAVE BEEN EXPLAINED EVEN DURING THE COURSE OF APPELLATE PROCEEDINGS BY WAY OF WRITTEN SUBMISSIONS SUBMITTED. DETAILED SUPPORTING EVIDENCES, WITH BOOKS OF ACCOUNTS WERE SUBMITTED IN THE PAPER BOOK AS WELL WHICH WERE FORWARDED TO THE LD. AO BY YOUR PR EDECESSOR CIT(A), BUT IGNORING THE SAME THE LD. AO HAS AGAIN MENTIONED THAT THE BOOKS OF ACCOUNTS WERE NOT PRODUCED. LD. AO COULD NOT SPECIFY EVEN IN THE REMAND PROCEEDINGS AS TO WHAT IS THE BASIS FOR ARRIVING AT A FIGURE OF RS. 12,11,801/ - OR RS. 26,34,86 6/ - . ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 7 IN THE REMAND REPORT LD. AO HAS MADE ALLEGATION THAT THE ASSESSEE IS NOT DOING ANY BUSINESS AND IS FOUND TO BE IN THE BUSINESS OF PROVIDING ENTRIES, BUT WHAT IS THE BASIS OF SUCH A BALD ALLEGATION MADE BY THE AO HAS NOT BEEN DESCRIBED ANYWHERE IN THE REMAND REPORT, NOR ANY SUCH SUPPORTING DOCUMENTS HAS BEEN FURNISHED BY THE AO TO PROVE SUCH A BALD ALLEGATION. LD. AO HAS FURTHER MENTIONED IN THE REMAND REPORT THAT THE RECEIPTS SHOWN BY THE ASSESSEE WAS LESS THAN WHAT WAS SHOWN IN THE COPY OF BANK ACC OUNTS OF THE ASSESSEE COMPANY. PB 51 - 52 IS COPY OF THE BANK ACCOUNT OF BANK OF INDIA, AND PB 53 - 54 IS COPY OF THE BANK ACCOUNT OF SYNDICATE BANK. EVEN COMPLETE TOTAL OF THESE ACCOUNTS DO NOT REACH TO THE FIGURE OF RS. 26,34,866/ - . LD. AO HAS MENTIONED THAT ENTIRE RECEIPTS AS PER THE BANK ACCOUNT WAS ADDED IS AGAIN APPEARS TO BE WITHOUT CONSIDERING THE PAPER BOOK SUBMITTED BY THE ASSESSEE, AND THE DETAILS FILED THEREIN. TO SUM UP THE LD. AO COULD NOT MAKE ANY JUSTIFICATION FOR MAKING AN IMAGINARY ADDITION OF RS. 26,34,866/ - . NO OPPORTUNITY WAS GIVEN BY THE LD. AO TO EXPLAIN HIS DOUBTS, EVEN IN THE REMAND PROCEEDINGS. THUS YOUR HONOUR MAY KINDLY SEE FROM THE REMAND REPORT THAT THE SAME HAS BEEN PREPARED WITHOUT CONSIDERING THE DETAILS SUBMITTED BY THE APPELL ANT IN THE PAPER BOOK WHICH WAS DULY FORWARDED BY YOUR PREDECESSOR TO THE AO FOR CONSIDERATION AND COMMENTS. IN VIEW OF THE ABOVE FACTS, SINCE THE LD. AO COULD NOT REBUT ANY OF THE FACTS, AND SUBMISSIONS MADE BY THE APPELLANT, IT IS HUMBLY SUBMITTED THAT THE ADDITIONAL EVIDENCES MAY KINDLY BE ADMITTED, AS THESE GO TO THE ROOT OF THE MATTER, AND EVEN NO EX - PARTE ASSESSMENT CAN BE MADE JUST ON PRESUMPTIONS AND ASSUMPTIONS, ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 8 AND WITHOUT CONSIDERING THE MATERIAL AVAILABLE ON RECORDS AND FILED BY THE ASSESSEE D URING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS ONCE AGAIN RESPECTFULLY SUBMITTED THAT ASSESSEE IS READY TO PRODUCE THE BOOKS OF ACCOUNTS WITH COMPLETE VOUCHERS BEFORE YOU HONOUR AS WELL, IF CONSIDERED NECESSARY. IT IS THEREFORE, HUMBLY PRAYED THAT T HE IMPUGNED ADDITION MADE BY THE AO, MAY KINDLY BE DIRECTED TO BE DELETED. 6 . THE ASSESSEE ALSO SUBMITTED BEFORE THE LD. CIT(A) THAT THE AUDITED BALANCE SHEET AND THE ACCOUNTS WERE SUBMITTED TO THE AO IN WHICH NO DISCREPANCY HAD BEEN NOTICED AND THAT TH E AUDITED BALANCE SHEET WAS PREPARED ON THE BASIS OF BOOKS OF ACCOUNTS WHICH WERE EXAMINED BY THE AUDITORS BEFORE SIGNING THE BALANCE SHEET. IT WAS ALSO STATED THAT THE AO HIMSELF DISCUSSED ABOUT TH E REPLIES FILED BY THE ASSESSEE WHICH SHOWS THAT THERE WAS APPEARANCE FROM THE ASSESSEE S SIDE AND THE DETAILS WERE FURNISHED. THEREFORE, THE ACTION OF THE AO FRAMING THE ASSESSMENT U/S 144 OF THE ACT WAS NOT JUSTIFIED. 7 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT OF THE AO OBSERVED THAT THE ASSESSEE APPEARED ON VARIOUS DATES AND FILED SOME DETAILS BEFORE THE AO. HE FURTHER OBSERVED THAT THE AO DID NOT ISSUE ANY SHOW CAUSE NOTICE BEFORE MAKING EX - PARTE ORDER TO SHOW ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 9 ON WHAT ACC OUNT AND WHAT ADDITIONS HE WANTED TO MAKE . HE ALSO OBSERVED THAT THE AO HAD NOT GIVEN ANY COMMENTS WHEN THE ADDITIONAL EVIDENCES AND THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE WERE CONVEYED TO HIM. THE LD. CIT(A) CATEGORICALLY STATED THAT HIS PREDECESSOR ASKED THE AO TO REPORT ABOUT THE ADDITI ON OF RS. 12,11,801/ - IN THE TOTAL RECEIPTS DECLARED BY THE ASSESSEE AT RS. 14,23,065/ - BUT THE AO ARRIVED AT A FIGURE OF RS. 26,34,866/ - AND REMAINED SILENT IN HIS REMAND REPORT ON THE BOOKS OF ACCOUNTS FURNISHED BY THE ASSESSEE. THE LD. CIT(A) OBSERVED T HAT THE PAPER BOOK OF THE ASSESSEE CONTAINING BOOKS OF ACCOUNTS WAS FORWARDED WHICH HAD BEEN EXAMINED BY THE AO WHO DID NOT FIND ANY DISCREPANCY IN THOSE AND HAD NOT COMMENTED ON THE EVIDENCES FURNISHED BY THE ASSESSEE. HE ALSO OBSERVED THAT THE AO HAD NOT GIVEN ANY REASON FOR MAKING THE ADDITION OF RS. 12,11,801/ - . ACCORDINGL Y, THE SAID ADDITION WAS DELETE D. A S REGARDS TO THE REMA INING AMOUNT OF RS. 14,23,065/ - , T HE LD. CIT(A) OBSERVED THAT THE SOURCE OF RECEIPT WAS ONLY OUT OF HIRING OF MACHINERY , THE ASS ESSEE RECEIVED HIRE CHARGES OF RS. 14,23,065/ - FROM DIFFERENT PARTIES AND NOTHING ADVERSE HAD BEEN BROUGHT ON RECORD BY THE AO TO CONTROVERT THAT THIS RECEIPTS WERE NOT FROM HIRE CHARGES OF MACHINERY OWNED BY THE ASSESSEE. HE, THEREFORE, DIRECTED THE AO TO CONSIDER THE ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 10 RECEIPTS OF RS. 14,23,065/ - AS BUSINESS RECEIPTS INSTEAD OF INCOME FROM OTHER SOURCES . 8 . NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE AO AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER . IN HI S RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 9 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY G ONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE ASSESSEE FURNISHED ALL THE RELEVANT DETAILS ALONG WITH THE BOOKS OF ACCOUNTS BEFORE THE LD. CIT(A) WHO FORWARDED THE SAME TO THE AO FOR HIS EXAMINATION. HOWEVER, THE AO IN HIS REMAND REPORT DID NOT POINT OUT ANY SPECIFIC DISCREPANCY IN THOSE BOOKS OF ACCOUNTS AND OTHER DETAILS. THE AO HAD NOT GIVEN ANY REASON FOR MAKING THE ADDITION OF RS. 12,11,801/ - WHICH WAS LESSER THAN THE TOTAL RECEIPTS DECLARED BY THE ASSESSEE A T RS . 14,23,065/ - . IN OTHER WORDS THE TOTAL RECEIPTS DECLARED BY THE ASSESSEE AT RS. 14,23,065/ - ALSO INCLUDED RS. 12,11,801/ - WHICH WERE ARBITRARILY ADDED BY THE AO SEPARATELY. IN THE PRESENT CASE, THE ASSESSEE WAS CARRYING OUT THE BUSINESS OF LAYING UNDE RGROUND CABLE WIRES/EXCAVATION WORK AND RECEIVED ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 11 HIRING CHARGES OF RS. 14,23,065/ - , THEREFORE, THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO TREAT THE RECEIPT OF RS. 14,23,065/ - AS BUSINESS RECEIPTS. WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH T HE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE. 1 0 . THE NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE DELETION OF ADDITION OF RS. 2,16,177/ - MADE BY THE AO ON ACCOUNT OF DEPRECIATION. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AO DI SALLOWED A DEP RECIATION OF RS. 2 ,16,177/ - BY OBSERVING THAT THE BILLS PRODUCED BY THE ASSESSEE FOR THE PURCHASED ASSETS DID NOT INDICATE THE NAME OF THE ASSESSEE COMPANY AND THAT THERE WAS NO INDICATION OF ANY BUSINESS BEING CONDUCTED BY THE ASSESSEE. ACCORDINGLY, THE D EPRECIATION OF RS. 2,16,177/ - WAS DISALLOWED. 1 1 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE FURNISHED THE COPIES OF BILLS FOR THE ASSETS PURCHASED DURING THE YEAR AGGREGATING TO RS. 3,87,680/ - AND FU RTHER SUBMITTED THAT A CAR FOR RS. 60,120/ - WAS PURCHASED BY THE ASSESSEE ON 11.02.2006 AS PER THE SALE LETTER AND DELIVERY RECEIPT WHEREAS THE OPENING WRITTEN DOWN VALUE OF THE CAR WAS RS. 6,08,852/ - . IT WAS ALSO POINTED OUT THAT THE DEPRECIATION WAS CLAI MED ON ACCOUNT OF OTHER ASSETS AND THAT THE OPENING WRITTEN DOWN VALUE OF THE ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 12 ASSETS WAS AT RS. 14,13,240/ - WHICH WAS USED FOR THE BUSINESS PURPOSES, THEREFORE, THE DISALLOWANCE MADE BY THE AO WAS NOT JUSTIFIED. 12 . THE LD. CIT(A) AFTER CONSIDERING THE S UBMISSIONS OF THE ASSESSEE OBSERVED THAT THE EVIDENCES FILED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS WERE F ORWARDED TO THE AO FOR COMMENTS WHO HAD NOT OFFERED ANY ADVERSE COMMENT AFTER EXAMINING THE SAID DOCUMENTS. HE FURTHER OBSERVED TH AT THERE WERE TWO BILLS FOR PAYMENT OF RS. 18,000/ - TO DARSHAN SINGH FOR FURNITURE MAKING AND RS. 10,087/ - TO PAINTER CHOTTE LAL FOR LABOUR CHARGES . IT WAS ALSO OBSERVED THAT THE AFORESAID TWO BILLS REVEALED THAT THE TIMBER WAS PURCHASED IN THE NAME OF ROH IT BHARDWAJ AND ONE BILL AMOUNTING TO RS. 38,561/ - FOR WOODEN PURCHASED FROM DURGA TIMBER TRADING COMPANY WAS ALSO IN THE NAME OF ROHIT BHARDWAJ, PALAM VIHAR. THE LD. CIT(A) HELD THAT THE DEPRECIATION WAS NOT ALLOWABLE ON THE ABOVE SAID PAYMENTS OF RS. 38, 561/ - , RS. 18,000/ - AND RS. 10,087/ - . BUT THE REST OF THE BILLS EITHER WERE CASH BILLS OR WERE IN THE NAME OF THE ASSESSEE WHICH DID NOT PROVE THAT THOSE WERE NOT USED FOR THE BUSINESS PURPOSE. HE, THEREFORE, DIRECTED THE AO TO ALLOW THE DEPRECIATION IN RE SPECT OF OTHER ASSETS. 1 3 . NOW THE DEPARTMENT IS IN APPEAL. ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 13 1 4 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT THE ASSESSEE WAS HAVING OLD ASSETS WITH OPENING WRIT TEN DOWN VALUE OF RS. 13,14,240/ - AND PURCHASED NEW ASSETS OF RS. 3,87,680/ - . THE LD. CIT(A) FOUND THAT OUT OF THE AFORESAID NEW ASSETS THREE BILLS WERE IN THE NAME OF ROHIT BHARDWAJ AND NOT IN THE NAME OF THE ASSESSEE COMPANY. THEREFORE, THE DEPRECIATION WAS NOT ALLOWABLE ON THOSE NEW ASSETS AND THE LD. CIT(A) RIGHTLY DIRECTED THE AO IN NOT ALLOWING THE DEPRECATION ON THE FURNITURE AMOUNTING TO RS. 66,648/ - (RS.38,561/ - + RS.18,000 + RS.10,087/ - ). I N RESPECT OF OTHER ASSETS NOTHING WAS BROUGHT ON RECORD TO SUBSTANTIATE THAT THOSE WERE NOT USED FOR THE PURPOSE OF BUSINESS. WE, THEREFORE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). 1 5 . THE LAST ISSUE VIDE GROUND NO. 3 RELATES TO THE DELETION OF ADDITION OF RS. 9,17,946/ - MAD E BY THE AO ON ACCOUNT OF UNEXPLAINED EXPENSES. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AO FOR MAKING THIS DISALLOWANCE OBSERVED THAT THE ASSESSEE HAD NOT FILED ANY BILL RELATING TO THE EXPENSES CLAIMED AND THERE WAS NO INDICATION OF ANY BUSINESS ACTIVITY. HOWEVER, T HE AO ALLOWED ONLY RS. 84,827/ - OUT OF THE TOTAL EXPENSES CLAIMED AT RS. 9,17,946/ - . ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 14 1 6 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE COMPLE TE SET OF BOOKS OF ACCOUNTS WAS FURNISHED DURING TH E COURSE OF APPELLATE PROCEEDINGS WHICH WERE EXAMINED BY THE AO WHO DID NOT MAKE ANY ADVERSE REMARK ON THE BOOK S FURNISHED OR EXPENSES INCURRED. IT WAS FURTHER STATED THAT THE ASSESSEE HAD SHOWN BUSINESS RECEIPTS AS HIRE CHARGES RECEIVED FOR MACHINERY AND THAT IN ORDER TO MAINTAIN THE MACHINERY AND TO RUN ITS BUSINESS, THE EXPENDITURE HAD BEEN INCURRED BY THE ASSESSEE WHICH WAS ALLOWABLE. IT WAS FURTHER STATED THAT THE ASSESSEE FURNISHED THE DETAILS OF HIRE CHARGES RECEIVED AS WELL AS DETAILS OF OPENING AND CLOSING STOCK AND PURCHASES MADE DURING THE YEAR. THEREFORE, IT CANNOT BE SAID THAT NO BUSINESS ACTIVITY WAS CARRIED OUT BY THE ASSESSEE. AS REGARDS TO THE CLOSING STOCK, THE ASSESSEE FURNISHED THE DETAILS WHICH INCLUDED BUILDING MATERIAL E.G. BRICK, SAND , STONES ETC. AND SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF LYING OF UNDERGROUND CABLES AND THIS PROJECT REQUIRE D USER OF MACHINERY , THE BUILDING MATERIAL FOR EXCAVATION AND REFILLING/LEVELING OF THE LAND AFTER LAYING THE CABLE. 17 . THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE EXPENSES CLAIMED BY THE ASSESSEE DID NOT INCLUDE EXPENSES OF PERSONAL NATURE AND THAT TO KEEP ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 15 THE STATUS TO CONTINUE AND TO RUN THE BUSINESS , EXPENSES WERE NECESSARY . HE FURTHER OBSERVED THAT NO ADVERSE MATERIAL W AS BROUGHT ON RECORD BY THE AO, HE , THEREFORE, HELD THAT THE EXPENSES WERE INCURRED BY THE ASSESSEE TO RUN ITS BUSINESS. ACCORDINGLY, THE DISALLOWANCE MADE BY THE AO WAS DELETED. 1 8 . NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR REITERATED THE OBSERVATIONS MADE BY THE AO AND FURTHER SUBMITTED THAT THE ASSESSEE WAS NON - COOPERATIVE AND DID NOT PROVIDE THE BILLS FOR PURCHASES AND THE EXPENSES CLAIMED IN THE BOOKS OF ACCOUNTS. HE FURTHER STATED THAT FROM THE DETAIL OF THE CLOS ING STOCK IT WAS NOT CLEAR AS THE SAME WAS USED TO WHICH BUSINESS OF THE ASSESSEE. THEREFORE, THE AO RIGHTLY MADE THE DISALLOWANCE AND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE SAME. 19 . IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE REI TERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE EXPENSES WERE INCURRED FOR THE BUSINESS PURPOSES . IT WAS ALSO SUBMITTED THAT THE ASSESSEE FURNISHED BOOKS OF ACCOUNTS, PAPER BOOK AND WRITTEN SUBMISSION DURING THE COU RSE OF APPELLATE PROCEEDINGS WHICH WERE FORWARDED BY THE LD. CIT(A) TO THE AO FOR HIS EXAMINATION AND THE AO DID NOT MAKE ANY ADVERSE REMARKS ON THE BOOKS OF ACCOUNTS AND THE EXPENSES INCURRED. THEREFORE, ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 16 THE ARBITRARY DISALLOWANCE MADE BY THE AO WAS RIGHT LY DELETED BY THE LD. CIT(A). 2 0 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE AO MADE THE DISALLOWANCE OF ALMOST ALL THE EXPENSES CLAIMED BY THE ASSESSEE BY P RESUMING THAT NO BUSINESS ACTIVITY WAS UNDERTAKEN BY THE ASSESSEE. ON THE CONTRARY THE AO ADMITTED THE RECEIPTS OF RS. 14,23,065/ - WHICH WERE ON ACCOUNT OF MACHINERY HIRE CHARGERS AND EARTH EXCAVATION. THE ASSESSEE WAS ALSO ENGAGED IN T HE BUSINESS OF LAY ING UNDERGROUND CABLE WIRES, THEREFORE, SOME EXPENSES WERE REQUIRED TO BE INCURRED IN THE BUSINESS ACTIVITY . IN THE PRESENT CASE, THE AO DID NOT BRING ANY MATERIAL ON RECORD TO SUBSTANTIATE THAT THE EXPENSES CLAIMED , WERE NOT INCURRED FOR BUSINESS PURPOSES BUT FOR PERSONAL PURPOSES OR OTHER PURPOSES. WE, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS, DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 21 . DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE DID NO T PRESS THE CROSS OBJECTION. ACCORDINGLY THE SAME IS DISMISSED AS NOT PRESSED. ITA NO. 2959 & CO 240 /DE L/2011 BELL INTERCOM PVT. LTD. 17 2 2 . IN THE RESULT, APPEAL OF THE DEPARTMENT AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED . ( ORDER PRON OUNCED IN THE COURT ON 23 /04 / 2015) . SD/ - SD/ - (A. T. VARKEY ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23 /04 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR