Baba Farid Solvex (P) Ltd., Faridkot V. The Income Tax Officer, Faridkot

CO 25/ASR/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2731 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-12-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 23-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y K SUD
• Keywords: Unexplained investment
• Section: 143(3); 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNA AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.SANJAY GARG, JUDICIAL MEMBER I.T.A NO.449(ASR)/2016 ASSESSMENT YEAR: 2012-03 ITO, WARD-3(4), FARIDKOT. VS. M/S. BABA FARID SOLVEX PVT. LTD., SADIQ ROAD FARIDKOT. PAN:AACCB2941G (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.25(ASR)/2016 (ARISING OUT OF ITA NO.449(ASR)/2016) ASSESSMENT YEAR: 2012-13 M/S. BABA FARID SOLVEX PVT. LTD., SADIQ ROAD FARIDKOT. PAN:AACCB2941G VS. ITO, WARD-3(4), FARIDKOT. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY: SH. RAHUL DHAWAN, DR. RESPONDENT BY: SH. Y.K.SUD, CA. DATE OF HEARING: 01.12.2016 DATE OF PRONO UNCEMENT: 07.02.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDER OF LEARNED CIT(A), BATHINDA, DATED 30.06.2016 FOR ASST. YEAR:2 012-13. 2. THE REVENUE HAS TAKEN VARIOUS GROUNDS OF APP EAL, HOWEVER, THE CRUX OF GROUNDS OF APPEAL IS THE ACTION OF LEARNED CIT(A), BY WHICH HE HAS DELETED THE ADDITION OF RS.3,75,95,038/- WHICH WAS MADE BY ASSESSING ITA NO.449 & C.O.NO .25 (ASR)/2016 ASST. YEAR: 2012-1 3 2 OFFICER ON ACCOUNT OF VALUATION DIFFERENCE IN THE C LOSING STOCK FIGURES AS SHOWN IN THE BALANCE SHEET AND THE VALUATION FIGURE S AS AVAILABLE FROM BANK AUTHORITIES. THE ASSESSEE HAS FILED CROSS OBJE CTIONS FOR DELETION OF AMOUNT OF RS.2,00,000/- WHICH THE LD. CIT(A) HAS CO NFIRMED ON ACCOUNT OF ADDITION OUT OF FREIGHT AND CARTAGE EXPENSES . 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE ASSE SSMENT ORDER ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECALI NG INCOME OF RS.2.06.030/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSING OFFICER REQUISITIONED U/S 133(6), COPY OF STOCK STATEMENT SUBMITTED BY ASSESSEE TO PUNJAB & SINDH BANK, FARID KOT FROM WHOM, THE ASSESSEE HAD OBTAINED CASH CREDIT LIMIT AGAINST THE HYPOTHECATION OF STOCKS. A PERUSAL OF BANK STATEMENT REVEALED DIF FERENCE AS PER DETAILS IN THE STOCK STATEMENT REPORTED TO THE BANK AND AS PER VALUATION APPEARING IN AUDIT REPORT FILED DURING THE COURSE O F ASSESSMENT PROCEEDINGS. THEREFORE, ASSESSING OFFICER MADE AN A DDITION OF RS.3,75,95,038/- ON ACCOUNT OF DIFFERENCE BETWEEN T HE TWO VALUATIONS. WHILE MAKING THE ADDITION THE ASSESSING OFFICER HAD RELIED ON THE JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHAKUNTALA THAKRAL VS. CIT, [2014] 366 ITR 644. THE ASSESSING OFFICER ALSO MADE AN AD HOC ADDITION OF RS.2,00,000/- OUT O F FREIGHT AND CARTAGE EXPENSES. ITA NO.449 & C.O.NO .25 (ASR)/2016 ASST. YEAR: 2012-1 3 3 4. AGGRIEVED WITH THE ORDER THE ASSESSEE FILED APPE AL BEFORE LD. CIT(A) AND SUBMITTED VARIOUS SUBMISSIONS. THE LD. CIT(A) A FTER CONSIDERING THE ARGUMENTS OF ASSESSEE DELETED THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN VALUATION OF STOCKS. HOWEV ER, REGARDING AD HOC DISALLOWANCE HE CONFIRMED THE SAME. WHILE ALLOWING THE APPEAL OF ASSESSEE THE LD. CIT(A) HAS RELIED ON VARIOUS CASE LAWS. THE LD. CIT(A) HAD ALSO DISTINGUISHED THE CASE LAW OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE SMT. SHAKUNTALA THAKRAL VS. CIT, [2014] 366 ITR 644 AS RELIED ON BY ASSESSING OFFICER . 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US AND ASSESSEE HAS FILED CROSS OBJECTION FOR CONFIRMATION OF AD HOC DISALLOW ANCE. 6. THE LD. DR HAD MOVED AN APPLICATION FOR ADJOURNM ENT TO WHICH LD. AR OBJECTED AND SUBMITTED THAT THE CASE OF THE ASSE SSEE WAS DULY COVERED IN FAVOUR OF ASSESSEE BY VARIOUS DECISIONS OF HONBLE PUNJAB & HARYANA HIGH COURT AND WAS FURTHER COVERED BY VARIO US DECISIONS OF ITAT, AMRITSAR BENCH AND HE SUBMITTED THAT THE LD. CIT(A) HAS NOTED DOWN THESE JUDGMENTS. FINDING THE ISSUE COVERED IN FAVOUR OF ASSESSEE BY VARIOUS ORDERS OF THE AMRITSAR BENCH OF TRIBUNAL , THE ADJOURNMENT APPLICATION FILED BY REVENUE WAS REJECTED AND LD. D R WAS DIRECTED TO PROCEED WITH HIS ARGUMENTS. ITA NO.449 & C.O.NO .25 (ASR)/2016 ASST. YEAR: 2012-1 3 4 7. THE LD. DR HEAVILY PLACED HIS RELIANCE ON THE OR DER OF ASSESSING OFFICER WHEREAS THE LD. AR HEAVILY PLACED HIS RELIA NCE ON THE ORDERS OF LD. CIT(A). 8. AS REGARDS THE AD HOC ADDITION OF RS.2,00,000/- SUSTAINED BY LD. CIT(A), THE LD. AR SUBMITTED THAT ASSESSING OFFICER HAS NOT POINTED OUT ANY PARTICULAR DISCREPANCY IN ANY OF THE EXPENDITUR E AND AD HOC DISALLOWANCE WAS NOT WARRANTED IN VIEW OF THE VARIO US DECISIONS OF JURISDICTIONAL HIGH COURT AND OTHER HIGH COURTS. RE LIANCE IN THIS RESPECT RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS. (I) 73 ITR (1969)192(P&H)- JHANDU MAL TARA CHAND RI CE MILLS VS. CIT (II) 106 TTJ(2006) 6169DELHI) ACIT VS. ALLIED CONST RUCTION (III) 119 TTJ (2008) 434 (JABALPUR)- VINDHYA TELEIN K LTD. VS. CIT (JAB) (IV) 123 TTJ (2009) 246 (JOD)- OM PARKASH JOSHI VS. ITO (V) 130 TTJ (2010) 301 (MUM)-INTERVET INDIA (P) LTD . VS.ACIT (IV) 133 TTJ (2010) 2 (AGRA)-ITO VS. MAYUR AGARWAL (VI) 134 TTJ (2010) 559 (DEL)-SEASONS CATERING SERV ICES (P) LTD. VS. DCIT (VII) 141 TTJ (2011) 75 (CHD)-BABU JEWELLERS VS. IT O(UO) (VIII) 94 TTJ(2005)91071(DEL)- BAJRANG LAL BANSAL V S. DCIT (IX) 254 ITR (2002) 216 (SC)-J.J. ENTERPRISES VS. C IT (X) 298 ITR (2008) 203 (RAJ)-LAXMI ENGINEERING IND. VS. ITO 9. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF AUTHORITIES BELOW. 10. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE FIRST G ROUND OF APPEAL FILED BY ITA NO.449 & C.O.NO .25 (ASR)/2016 ASST. YEAR: 2012-1 3 5 REVENUE IS THAT THE LD. CIT(A) HAD NOT FOLLOWED RAT IO OF JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. SHAKUNTALA THAKRAL VS. CIT, [2014] 366 ITR 644. WE FIND THAT LD. CIT(A) HAS CLEARLY DISTINGUISHED THE FACTS OF THE PRESENT CASE WITH THE FACT OF THE CASE LAW RELIED UPON BY ASSESSING OFFICER. HE HAS HELD THAT BOOKS IN THE CA SE OF SMT. SHAKUNTALA THAKRAL VS. CIT, [2014] 366 ITR 644 WERE NOT FOUND TO BE ACCURATE BY ASSESSING OFFICER BECAUSE OF THE SPECIFIC DEFECT IN NON RECORDING OF SALES. HE HAS FURTHER HELD IN THAT CASE STOCK STATEMENT FI ELD ON 4.7.2007 WAS REPLACED BY ANOTHER STOCK STATEMENT WHICH ESTABLISH ED THAT NO STOCK INVENTORY PREPARED AS THE CLOSE OF THE YEAR. HE HAS FURTHER HELD THAT IN THAT CASE OF SMT. SHAKUNTALA THAKRAL VS. CIT, [2014] 366 ITR 644 , SHE HERSELF HAD NOT DISPUTED THAT THE STOCK WHOSE VALUE WAS SUBMITTED TO THE BANK WAS ACTUALLY LAYING IN THE BUSINESS PREMISES A S ON 31.03.2005. IT WAS FURTHER HELD BY LD. CIT(A) THAT REPORTS OF PHYS ICAL INSPECTION CARRIED OUT BY BANK AUTHORITIES IN RESPECT OF SMT. THAKRAL S STOCK AT QUARTERLY INTERVAL WAS AVAILABLE FOR THE PERUSAL OF THE AO AN D THE APPELLATE AUTHORITIES. MOREOVER, WE FIND THAT AMRITSAR BENCH OF HONBLE ITAT IN ITS ORDER DATED 26.03.2016 IN THE CASE OF ISHAR INFRAST RUCTURE DEVELOPMENT (P) LTD. AFTER CONSIDERING THE CASE LAW OF SMT. SHA KUNTLA THAKRAL (SUPRA) HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. IN VIEW OF THE ABOVE, THE FIRST GROUND OF APPEAL TAKEN BY REVENUE DOES NOT HOLD ANY FORCE. ITA NO.449 & C.O.NO .25 (ASR)/2016 ASST. YEAR: 2012-1 3 6 11. NOW COMING TO THE ADDITION, WE FIND THAT TH E LD. CIT(A) HAS RELIED UPON THE JUDGMENT OF HONBLE PUNJAB & HA RYANA HIGH COURT IN THE CASES OF SANTOSH BOX FACTORY; (I I) SIDHU RICE MILLS; AND (III) M/S. DEVI DAYAL RICE MILS. T HE LD. CIT(A) HAS ALSO HELD THAT IN THESE JUDGMENTS THERE WAS A C LEAR UNANIMITY OF THE OPINION TO THE EFFECT THAT STOCK I N THE STATEMENT MADE BEFORE THE BANK FOR HYPOTHECATION PU RPOSES CANNOT BE HELD AGAINST THE ASSESSEE. WE FIND THAT H ONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHEENA EXPORTS IN ITA 382 OF 2011 HAS HELD THAT VALUE FURNISHED TO THE BANK WITHOUT ANY DETAIL OR VERIFICATION BY THE BANK MAY NOT CONSTITUTE THE BASIS TO MAKE ADDITIONS IN THE FACE OF OTHER EVIDENCE TO THE CONTRARY. WE FURTHER FIND THAT IN T HE PRESENT CASE ASSESSING OFFICER DID NOT POINT OUT ANY DISCRE PANCIES IN THE BOOKS WITH REFERENCE TO PURCHASE SALE OR CLOSIN G STOCK. THE AMRITSAR TRIBUNAL IN THE CASE OF MS. ISHAR INFRASTR UCTURE DEVELOPMENT (PVT) LTD. IN ITA NO. 198(ASR)/2013 VI DE ORDER DATED 26.03.2016 HAS ALSO DECIDED SIMILAR ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER. 24. IT IS A FACT ON RECORD THAT THE CREDIT FACILIT Y HAS BEEN EXTENDED BY THE BANK TO THE ASSESSEE AGAINST THE HYPOTHECATION OF STOCK AND NOT AGAINST PLEDGE OF STOCK, IN WHICH THE CONTROL AND P OSSESSION OF THE STOCK REMAINED WITH THE ASSESSEE. 25. THE AO HAS NOT POINTED OUT ANY DISCREPANCY IN T HE BOOKS OF ACCOUNT OR PURCHASE/SALES OR HAS NOT BROUGHT ON RECORD TO P ROVE THAT EXTRA PURCHASES HAVE BEEN MADE BY THE ASSESSEE AT ANY POI NT OF TIME. THE ITA NO.449 & C.O.NO .25 (ASR)/2016 ASST. YEAR: 2012-1 3 7 BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED IS NOT UNDER DISPUTE AND NO DEFECT BY THE AUDITOR HAS BEEN POINTED OUT. IT IS T HE REAL INCOME WHICH CAN BE TAXED, WHEREAS IN THE PRESENT CASES ALL THE ADDI TIONS ARE MADE ON CONJECTURES AND SURMISES. 26. TIME AND AGAIN BEFORE BOTH THE AUTHORITIES BELO W, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THE EXPLANATION THA T THE STATEMENT HAS BEEN SUBMITTED BEFORE THE BANK AUTHORITIES ONLY ON ESTIMATED BASIS TO AVAIL OF THE BANK LOAN AND THERE IS NO OTHER PURPOS E. THIS CONTENTION OF THE ASSESSEE HAS NOT BEEN REBUTTED AT ANY POINT OF TIME BY THE AO OR BY THE LD. DR. IT IS A FACT THAT THE AO AS NOT POINTED O UT ANY DEFECTS IN THE BOOKS OF ACCOUNT AND IN FACT, THE AO HAS NOT INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. AS ARGUED BY THE LD. DR THAT CA SH CREDIT LIMIT IS CALCULATED ON THE BASIS OF DP REGISTER, WHICH IN TU RN IS MAINTAINED ON PHYSICAL VERIFICATION OF THE STOCK AND NO DOCUMENTA RY EVIDENCE HAS BEEN BROUGHT ON RECORD THAT THE STOCK MENTIONED IN THE . DP REGISTER BY THIRD PARTY I.E. BANK AUTHORITIES, HAS BEEN MAINTAINED ON PHYSICAL VERIFICATION OF THE STOCK, MAINTAINED BY THE ASSESSEE AT DIFFERENT CITIES IN DIFFERENT STATES. 27. THE AO HAS MUCH RELIED ON THE DECISION IN THE C ASE OF DEVGAN RICE & GENERAL MILLS (SUPRA). THE ISSUE BEFORE THE HONB LE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF DEVGAN RICE & GENERAL MI LLS (SUPRA) WAS WITH REGARD TO THE PROCEEDINGS U/S 148 OF THE ACT AND WH ETHER THE SAID PROCEEDINGS U/S 148 OF THE ACT COULD BE INITIATED O N THE BASIS OF INFORMATION REGARDING INFLATING THE VALUE OF THE S TOCK IN THE BANK STATEMENT WAS RECEIVED FROM THE BANK AFTER COMPLETI ON OF ASSESSMENT U/S 143(3) OF THE ACT.. THE HONBLE HIGH COURT HAS HELD THAT THE REOPENING IN SUCH CASES CAN BE DONE. HOWEVER, THE DECISION OF HO NBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF DEVGAN RICE & GEN ERAL MILLS (SUPRA) WAS WITH REGARD TO A DIFFERENT CONTEXT AND DID NOT PROVE THAT THE ASSESSEE HAD MADE UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 28. MUCH RELIANCE HAS BEEN PLACED BY THE LD. DR ON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHAKUNTLA THUKRAL VS. CIT REPORTED AT 366 ITR 644. AS REQUIRE D ORDER OF THE CIT(A) IN THE CASE OF SHAKUNTLA THUKRAL WAS PLACED ON RECORD BY THE PARTY AND ON PERUSAL OF THE SAME IN PARA 2.11 TO 2.18 AND AT PAG E 4 OF CIT(A)S ORDER, IT WAS FOUND THAT THE BOOKS OF THE ASSESSEE WERE NOT A CCURATE BECAUSE OF SPECIFIC DEFECT OF NON-RECORDING OF SALES IN THE B OOKS OF ACCOUNT .POINTED OUT. IN PARA 2.8 AT PAGE 6 OF CIT(A)S ORDER IN TH E CASE OF SHAKUNTLA THUKRAL, STOCK STATEMENT FILED ON 04.07.2007 HAS BE EN REPLACED BY OTHER STOCK STATEMENT WHICH ESTABLISHES THAT NO STOCK INV ENTORY WAS PREPARED AT THE CLOSE OF THE FINANCIAL YEAR, WHEREAS THERE ARE NO SUCH FINDING BY THE AO IN ANY OF THE PRESENT APPEALS. 29. FURTHER, IN THE CASE OF SHAKUNTLA THUKRAL (SUPR A), THE LD. CIT(A) HAS RECORDED FINDING AT PARA 2.11 (PAGE 24), OF THE ORD ER THAT THE HIGHER STOCK AS ON 31.03.2005 WAS GIVEN FOR THE PURPOSE OF MAKI NG PAYMENT FOR IMPORT OF MACHINERY CANNOT BE ACCEPTED AS THE PAYME NT FOR PURCHASE OF MACHINERY HAD ALREADY BEEN RELEASED IN FEBRUARY, 20 05. IN PARA 2.12.1 (PAGE 25) OF LD. CIT(A)S ORDER, IT HAS BEEN PERUS ED THAT TAT THERE ARE ITA NO.449 & C.O.NO .25 (ASR)/2016 ASST. YEAR: 2012-1 3 8 REPORTS OF PHYSICAL INSPECTION CARRIED OUT BY THE B ANK AUTHORITIES IN RESPECT OF ASSESSEES STOCK AT QUARTERLY INTERVALS IS AVAIL ALE AND SUCH FINDINGS HAS NOT BEEN REBUTTED BEFORE THE ITAT OR BEFORE THE HON BLE HIGH COURT. BUT IN THE PRESENT CASE IN VIEW OF OUR FINDINGS HEREINABOV E, NOTHING HAS BEEN ESTABLISHED THAT PHYSICAL INSPECTION OF THE STOCK HAS BEEN CARRIED OUT AS PER FACTS ON RECORD. FURTHER, IN PARA 2.12.2 (PAGE 25), OF CIT(A)S ORDER IN THE CASE OF SMT. SHAKUNTLA THUKRAL (SUPRA), IT HAS BEEN STATED BY THE LD. CIT(A) THAT THE ASSESSEE HAS NOT DISPUTED THE STOC K OF THE VALUE WHICH WAS SUBMITTED TO THE BANK WAS ACTUALLY LYING IN BUS INESS PREMISES AS ON 31.03.2005. BUT IN THE PRESENT APPEAL THE ASSESSEE ALL ALONG BEFORE THE AO AND THE LD. CIT(A) AND BEFORE US STATING THAT THE S TOCK WAS INFLATED TO GET THE CASH CREDIT LIMIT FROM BANK. THUS, IN THE CASE OF SMT. SHAKUNTAL THUKRAL (SUPRA), THE AO AFTER POINTING OUT DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE A CATEGORICAL FINDING HAS BEEN GIVEN T HAT THE BOOKS OF ACCOUNT ARE NOT ACCURATE AND MEANING THEREBY THAT THE BOOKS OF ACCOUNT WERE REJECTED. BUT IN THE PRESENT APPEAL, THERE IS NO SUCH FINDING BY THE AO AND NO BOOKS OF ACCOUNT HAVE BEEN REJECTED AND PROVISIONS OF SECTION 145(3) HAVE NOT BEEN INVOKED. IN THE CASE OF SMT. S HAKUNTLA THUKRAL (SUPRA), THE LD. CIT(A) HAS RELIED UPON THE PHYSIC AL INSPECTION CARRIED OUT BY THE BANK AUTHORITIES IN RESPECT OF ASSESSEES ST OCK AT QUARTERLY INTERVALS, AS MENTIONED HEREINABOVE AND SUCH FINDIN GS HAVE NEITHER BEEN REBUTTED BEFORE THE LD. CIT(A) OR ITAT OR HONBLE H IGH COURT. BUT IN THE PRESENT CASE, THE ASSESSEE HAS ESTABLISHED THAT NO PHYSICAL INSPECTION OF THE STOCK HAS BEEN CARRIED AS PER FACTS ON RECORD. 30. FURTHER AND FINALLY, IN THE CASE OF SHAKUNTLA THUKRAL (SUPRA), THE LD. CIT(A) HAS RECORDED THE FINDING THAT THE ASSESS EE HAS ACCEPTED THAT FACT THAT THE STOCK AS PER STOCK STATEMENT AS ON 31.03.2005 WAS LYING IN THE PREMISES OF THE ASSESSEE.. BUT IN THE PRESENT APPEAL, THE ASSESSEE ALL ALONG STATED BEFORE THE AUTHORITIES BELOW AND BEFO RE US THAT THE STOCK WAS INFLATED TO GET THE CASH CREDIT LIMIT FROM BAN K AND THE ONUS IS ON THE REVENUE TO PROVE THAT THE ASSESSEE OWNED THE STOCK MORE THAN THE STOCK REFLECTED IN THE BALANCE SHEET AS ON 31.03.2005, WH ICH HAS NOT BEEN DONE IN ANY OF THE CASE REFERRED TO HEREINABOVE. 31. IN VIEW OF THE ABOVE DISCUSSION, THE DECISION O F SMT. SHAKUNTLA THUKRAL (SUPRA) AS RELIED UPON BY THE LD. DR IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 32. THE DECISIONS RELIED UPON BY THE LD. CIT(A) OF THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASES OF M/S.SANTOSH BOX FACTORY, M/S. SIDHU RICE MILLS AND IN THE CASE OF M/S. DEVI DA YAL RICE MILLS ARE SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CAS E AS THE REVENUE AS THE REVENUE HAS NOT BROUGHT ON RECORD DURING THE ASSESS MENT PROCEEDINGS OR BEFORE THE LD. CIT(A) OR EVEN BEFORE US THAT PHYSI CAL VERIFICATION OF THE STOCK HAS ACTUALLY BEEN DONE AND ACCORDINGLY STOCK STATEMENTS SO SUBMITTED BEFORE THE BANK AUTHORITIES AND DP REGIS TER CANNOT BE RELIED UPON. 33. IN THE CASE OF CIT VS. VEERDIP ROLLER (P) LTD. (2010) 323 ITR 341 (GUJ), THE FACTS ARE THAT THE AO MADE ADDITION ON A CCOUNT OF DIFFERENCE IN ITA NO.449 & C.O.NO .25 (ASR)/2016 ASST. YEAR: 2012-1 3 9 THE VALUE OF CLOSING STOCK FURNISHED TO THE BANK AN D THE VALUE OF THE STOCK FOUND IN THE BOOKS OF ACCOUNT FURNISHED TO THE INCO ME TAX AUTHORITIES INFLATED STOCK WAS HYPOTHETICAL AND NOT PLEDGED AND THE BANK OFFICIALS HAD NOT VERIFIED THE STATEMENT SHOWING INFLATED STOCK SO PRODUCED BY THE ASSESSEE. THE ADDITION ON ACCOUNT OF DIFFERENCE FUR NISHED TO THE BANK AS PER BOOKS OF ACCOUNT U/S 69B OF THE ACT CAN NOT BE SUSTAINED. CONSEQUENTLY, THE APPEAL WAS DISMISSED BY THE HONB LE GUJRAT HIGH COURT AGAINST THE SAID DECISION, THE REVENUE WENT IN APPE AL BEFORE THE HONBLE SUPREME COURT AND THE HONBLE SUPREME COURT VIDE IT S ORDER DATED 13.12.2008 DISMISSED THE SLP FILED BY THE DEPARTME NT. 34. SIMILAR DECISIONS HAVE BEEN MADE BY VARIOUS COU RTS OF LAW REFERRED TO HEREINABOVE: I) CIT VS. SIDHU RICE & GENERAL MILLS REPORTED IN 2 81 ITR 428 (P&H) II) CIT VS. SANTOSH BOX FACTORY (P) LTD.., 44 IT RE PS. 472 (P&H) III) CIT VS. N. SWAMY REPORTEDE IN 241 ITR 363 (MAD RAS) I) ITO VS. DEVI DAYAL RICE MILLS REPORTED IN 75 TTJ 24 (ITAT, AMRITSAR BENCH. II) CIT VS. SIROHI STEEL ROLLING MILLS, REPORTED IN 200 CTR 595 (ALL.) III) ASHOK KUMAR VS. ITO, REPORTED IN 201 CTR 178 ( J & K) IV) CIT VS. DAS INDUSTRIES, REPORTED IN 303 ITR 199 (AL L.) V) CIT VS. SRI PADMAVATHI COTTON MILLS, REPORTED IN 23 6 ITR 340 (MAD.) VI) JAI SHARDA RICE MILLS. VS ITO REPORTED IN 36 ITD 25 4 (ITAT, ASR.) VII) CIT VS. RIDDHI STEEL AND TUBES (P) LTD. REPORTED I N 220 TAXMAN 148 (GUJ.) VIII) CIT VS. APCOM COMPUTERS P. LTD. REPORTED IN (2007) 292 ITR 630 (MAD.). 35. IN THE FACTS AND CIRCUMSTANCES, THE ARGUMENTS M ADE BY THE LD. DR IN HIS WRITTEN SUBMISSIONS AND COUNTER SUBMISSIONS CANNOT HELP THE REVENUE AND ACCORDINGLY, WE FIND NO INFIRMITY IN TH E ORDER OF THE LD. CIT(A) IN THE CASE OF M/S. ISHAR INFRASTRUCTURE DEVELOPERS (P LTD. IN ITA NO.198(ASR)/2013 IN THE IMPUGNED YEAR. IN VIEW OF THE FACTS AND CIRCUMSTANCES AS ABOVE, AN D IN VIEW OF THE JUDICIAL PRECEDENTS, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF LD. CIT(A), THEREFORE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO.449 & C.O.NO .25 (ASR)/2016 ASST. YEAR: 2012-1 3 10 12. NOW COMING TO THE CROSS OBJECTIONS FILED BY ASS ESSEE, WE FIND THAT ASSESSING OFFICER HAS MADE AN ADDITION OF RS.2,00,000/- OUT OF EXPENSES BOOKED BY ASSESSEE UN DER THE HEAD SELLING AND DISTRIBUTION EXPENSES BY HOLDING T HAT SOME OF THE BILLS DID NOT CONTAIN COMPLETE ADDRESS OF THE P AYEES. AND IN SOME OF THE CASES THE PAYMENTS WERE MADE IN CASH . WE FIND THAT THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JHANDU MAL TARA CHAND RICE MILLS VS. CIT (1969) 73 ITR 192(P&H) HAS HELD THAT INCOME TAX AUTHORITIES NOT H AVING DETERMINED ANY BASIS OR MANNER OF COMPUTATION OF TH E TRUE INCOME WERE NOT JUSTIFIED IN ARBITRARILY ADDING RS. 15,000/- IN ROUND FIGURE TO THE INCOME OF THE ASSESSEE. SIMILAR LY, THE DELHI TRIBUNAL IN THE CASE OF ACIT VS. ALLIED CONST RUCTION (2006)106 TTJ 616(DEL.) HAS HELD THAT AD HOC DISALL OWANCE OF LABOUR EXPENSES COULD NOT BE MADE SIMPLY ON THE BAS IS THAT THE VOUCHERS WERE SELF MADE AND NOT RELIABLE WITHOU T MAKING ANY TEST CHECK AND PINPOINTING WHICH ITEM OF EXPEND ITURE WAS NOT VERIFIABLE. SIMILARLY THE JODHPUR TRIBUNAL IN T HE CASE OF OM PRAKASH JOSHI VS. ITO (2009)123 TTJ 246(JOD) HAS HELD THAT AN AD HOC DISALLOWANCE FROM JOB WORK CHARGES M ADE ON THE GROUND THAT THE EXPENSES CLAIMED BY THE ASSESSE E WERE NOT EXCESSIVE AS COMPARED TO EXPENSES INCURRED IN THE IMMEDIATELY PROCEEDING YEAR CANNOT BE SUSTAINED. SI MILAR ITA NO.449 & C.O.NO .25 (ASR)/2016 ASST. YEAR: 2012-1 3 11 FINDINGS HAS BEEN MADE BY VARIOUS BENCHES OF THE TR IBUNAL WHICH HAS BEEN RELIED UPON BY LD. AR. WE FIND THAT IT IS AN UNDISPUTED FACT THAT ASSESSING OFFICER HAS NOT POIN TED OUT ANY ITEM OF EXPENDITURE WHICH WAS NOT GENUINE. THEREFOR E, FOLLOWING THE JUDICIAL PRECEDENTS, WE FIND THAT AD HOD DISALLOWANCE OF RS.2,00,000/- SUSTAINED BY LD. CIT( A) WAS NOT WARRANTED, THEREFORE, CROSS OBJECTIONS FILED BY ASS ESSEE ARE ALLOWED. 10. IN NUTSHELL, THE APPEAL FILED BY REVENUE IS DIS MISSED AND THE CROSS OBJECTIONS FILED BY ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/02/2017 . SD/- SD/- (SANJAY GARG) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07/02/2017 /PK/PS COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER