Sh. Brij Mohan Sharma, Prop., Hathras V. I.T.O., Ward-3(4), Hathras

CO 30/AGR/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7540 (ITAT-AGRA)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 04-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KM ANURADHA
• Assessee Lawyers: R A AGARWAL
• Keywords: Bogus purchase; Rejection of books of accounts; Opportunity of being heard; Additional evidence
• Section: 40A(3); 143(3); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.68/AGR/2012 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, VS. SHRI BRIJ MOHAN SHARMA (H UF), WARD 3(4), HATHRAS. PROP. M/S NAROTTAM DAS BR IJ MOHAN, SARRAFA BAZAR, HATHRAS. (PAN: AAEHB 6404 P). C.O. NO.30/AGR/2012 (IN ITA NO.68/AGR/2012) ASSESSMENT YEAR: 2007-08 SHRI BRIJ MOHAN SHARMA (HUF), VS. INCOME TAX OFFIC ER, PROP. M/S NAROTTAM DAS BRIJ MOHAN, WARD 3(4), H ATHRAS. SARRAFA BAZAR, HATHRAS. (PAN: AAEHB 6404 P). (APPELLANTS) (RESPONDENTS) REVENUE BY : KM. ANURADHA, JR. D.R. ASSESSEE BY : SHRI R.A. AGARWAL, ADVOCATE DATE OF HEARING : 10.09.2012 DATE OF PRONOUNCEMENT OF ORDER : 21.09.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 2 THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION B Y THE ASSESSEE HAVE BEEN FILED AGAINST THE ORDER DATED 16.11.2011 PASSE D BY THE LD. CIT(A), GHAZIABAD FOR THE ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ARE AS UNDER :- 1. THE LD. CIT (A) HAS ERRED IN LAW AS WELL AS ON FACTS, IN ACCEPTING THE BOOK RESULT DISCLOSED BY THE ASSESSEE , WHILE THE A.O. REJECTED THE BOOKS OF ACCOUNTS AND RIGHTLY INV OKED PROVISIONS OF SECTION 145(3) ON THE BASIS OF DEFECT S AS DISCUSSED IN THE ASSESSMENT ORDER. 2. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN ACCEPTING THE ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE WITH OUT AFFORDING ANY OPPORTUNITY TO THE A.O. FOR EXAMINATI ON OF THE SAME IN CONTRAVENTION TO THE RULE 46A OF THE LT. RU LE, 1962. 3. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS, I N DELETING THE ADDITION RS.13,685/- MADE BY THE A.O. ON ACCOUNT OF INTEREST RECEIVED ON PAWNING. 4. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS, I N DELETING ADDITION OF RS.1,56,405/- MADE BY THE A.O. ON ACCOU NT OF JAYDAD BRINDAWAN. 5. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS, I N DELETING ADDITION OF RS.4,79,445/- MADE BY THE A.O. ON ACCOU NT OF NAROTTAM DAS SHARMA AMANAT KHATA I. 6. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS, I N DELETING ADDITION OF RS.4,14,460/- MADE BY THE A.O. ON ACCOU NT OF NAROTTAM DAS SHARMA AMANAT KHATA 2. ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 3 7. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS, I N DELETING ADDITION OF RS.3,27,632/- MADE BY THE A.O. IN THE N AME OF COLLECTOR BABU GUPTA. 8. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS, I N DELETING ADDITION OF RS.30,000/- MADE BY THE A.O. ON ACCOUNT OF DIFFERENCE BETWEEN SALARY CERTIFICATES AND THE SALA RY ACCOUNT. 9. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS, I N DELETING ADDITION OF RS.1,00,000/- MADE BY THE A.O. ON ACCOU NT OF MARRIAGE OF DAUGHTER OF SHRI BRIJ MOHAN SHARMA. 10. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS, IN DELETING ADDITION OF RS.78,000/- MADE BY THE A.O. ON ACCOUNT OF LOW HOUSE HOLD EXPENSES. 11. THE LD. CLT (A) HAS ERRED IN LAW AND ON FACTS, IN DELETING ADDITION OF RS.1,05,877/- MADE BY THE A.O. ON ACCOU NT OF GOLD NIRMAN KHATA. 12. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS, IN DELETING ADDITION OF RS.70,113/- MADE BY THE A.O. ON ACCOUNT OF SILVER NIRMAN KHATA. 13. APPELLANT CRAVES LEAVE TO AMEND, ALTER, ADD OR MODIFY ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF CASE. 3. THE GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION ARE AS UNDER :- 1. BECAUSE A LD. CIT(A) HAS ERRED ON LAW AND FACTS BY NOT ACCEPTING GENUINE PAYMENT THUS CONFIRMING DISALLOWA NCE U/S 40A(3) OF THE INCOME TAX ACT, 1961. 2. BECAUSE THE LD. CIT(A) HAS ERRED IN LAW AND FACT S BY CONFIRMING WAGES RS.8,276/- (SILVER A/C) RS.14,460/ - (GOLD A/C) INSPITE OF THE FACT NO MANUFACTURING IN THE APPELLANTS CA SE, ALSO NO EVIDENCE ON RECORD BY THE A.O. ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 4 RS.13,685/- ON ACCOUNT OF INTEREST 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E ENGAGED IN THE BUSINESS OF SARRAFA AND PAWNING. DURING THE ASSESSMENT PROCEED INGS, THE A.O. NOTICED THE SARRAFA SET ON MERCANTILE AND GAHNA SET ON CASH SYS TEM. THE A.O. NOTICED THAT THE ASSESSEE MAINTAINS BOOKS OF ACCOUNTS ON MIXED SYSTE M OF ACCOUNTING WHICH IS NOT PERMISSIBLE. THE A.O. FURTHER NOTICED THAT ALMOST ALL PURCHASES HAVE BEEN MADE THROUGH CASH BELOW RS.20,000/- EXCEPT TWO PURCHASES OF WHICH ACCOUNTS HAVE BEEN PRODUCED BY THE ASSESSEE. HE FURTHER NOTICED THAT THE PURCHASES, EXCEPT 3 OR 4, COULD NOT BE VERIFIED IN ANY CONDITION BECAUSE IN T HE PURCHASE VOUCHERS OF THE ASSESSEE ADDRESSES OF THE SELLER WERE NOT AVAILABLE . ALMOST ALL PURCHASES WERE MADE FROM THE PERSONS HAVING NO ADDRESS. ON THE SP ECIFIC QUESTION BY THE A.O. THE ASSESSEE SUBMITTED THAT ALL THE SELLERS ARE THE INDIVIDUAL PERSONS HAVING NO SHOPS, CAME TO THE SHOP AND SOLD THEIR GOLD AND SIL VER BULLION/ORNAMENTS TO THE ASSESSEE. IT HAS ALSO BEEN NOTED BY THE A.O. THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PAWNING NAMED AS GAHNA SET IN HIS BOOKS OF ACCOUNT. THE A.O. NOTED THAT IN THIS CONTEXT, THE ASSESSEE WAS REQUIRED TO PRODUCE THE VALID CERTIFICATE OF RENEWAL FOR THE RELEVANT PERIOD. THE ASSESSEE DID NOT PRODUCE THE SAME. THE A.O. HELD THAT IN THE ABSENCE OF RENEWED CERTIFICATE, IT CANNOT BE ASCERTAINED ABOUT THE PAWNING BUSINESS OF THE ASSESSEE. THE A.O., UNDER THE CIRCUMSTANCES, NOTED THAT ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 5 HE HAS NO ALTERNATE EXCEPT TO REJECT THE BOOKS OF A CCOUNT AS PER THE PROVISIONS UNDER SECTION 145(3) OF THE ACT. AFTER REJECTING THE BOO KS OF ACCOUNT, THE A.O. EXAMINED THE PAWING BUSINESS AND NOTED THAT THE ASSESSEE DID NOT CARRY OVER YEAR TO YEAR THE NET RESULT OF HIS PAWNING DETAILS, THEREFORE YEAR-W ISE DETAILS OF AMOUNT OF ADVANCE TO DIFFERENT PARTIES WERE NOT AVAILABLE. THE ASSES SEE EXPRESSED HIS INABILITY IN FURNISHING THE YEAR WISE DETAILS OF PAWNING/ADVANCE AMOUNT BECAUSE NO DETAILS WERE CARRIED OVER YEAR TO YEAR. THE ASSESSEE EXPLA INED BEFORE THE A.O. THAT THE ADVANCE OF PAWNING IS ENTERED IN PAWNING BAHI SINCE SO MANY YEARS. THUS, IT WAS NOT EASILY POSSIBLE TO SORT OUT THE YEAR WISE DETAI LS OF ADVANCE MONEY. THE OPENING AND CLOSING IS SHOWN ON THE BASIS OF ORIGIN AL PAYMENT RECEIVED DURING THE YEAR. THE INTEREST ON AMOUNT WAS CHARGED AT THE RA TE OF 21% PER ANNUM. IT WAS FURTHER EXPLAINED BY THE ASSESSEE THAT WHEN PERSONS CONCERNED CAME TO TAKE HIS VALUABLES PAWNED, THEN OLD ADVANCES ARE SORTED OUT FROM OLD BAHI AND DETAILS ARE TALLIED AND AMOUNTS INCLUDING INTEREST ARE RECOVERE D. THE A.O. AFTER CONSIDERING THE ABOVE SYSTEM OF ACCOUNTING FOUND THAT UNDER THE SE CIRCUMSTANCES LEAKAGES CANNOT BE RULED OUT. HENCE THE A.O. ESTIMATED THE INTEREST RECEIVED ON ACCOUNT OF PAWNING AT RS.3,50,000/- AS AGAINST DISCLOSED BY TH E ASSESSEE OF RS.3,36,315/-. THE A.O. MADE ADDITION OF RS.13,685/-. ADDITION OF RS.1,56,405/- ON ACCOUNT OF JAYDAD BRIN DAWAN ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 6 5. THE SECOND ITEM OF ADDITION MADE BY THE A.O. IS OF RS.1,56,405/-. ON VERIFICATION OF BOOKS OF ACCOUNT THE A.O. NOTICED T HAT IN THE ACCOUNT OF JAYDAD BRINDAWAN THE OPENING BALANCE AS ON 01.04.2006 WAS RS.3,738/- AND THERE WAS A FRESH ADDITION OF RS.1,39,565/-. THE INTEREST OF R S.13,102/- WAS ALSO FOUND CREDITED AS ON 31.03.2007. THUS, TOTAL LIABILITY O F RS.1,56,405/- HAS BEEN SHOWN IN THE BALANCE SHEET AS ON 31.03.2007. THE A.O. SPECI FICALLY ASKED THE ASSESSEE TO EXPLAIN THE REAL STATUS OF HIS ACCOUNT AND IN WHICH HAND THE TAX LIABILITY OF HIS ACCOUNT RELATES, WHO IS THE OPERATOR OF THIS ACCOUN T AND WHO IS THE REAL CLAIMANT OF THIS ACCOUNT AND WHO IS RESPONSIBLE TO PAY THE TAX LIABILITY ON ACCOUNT OF CREDIT OF INTEREST AND ON TOTAL AMOUNT OF THIS ACCOUNT. IN R ESPONSE THE AOS QUERY, THE ASSESSEE SUBMITTED THAT THE SAID ACCOUNT IS FROM OL D ACCOUNT LEFT BY ASSESSEES GRAND FATHER IN THIS NAME FOR MISCELLANEOUS PURPOSE . THE A.O. NOTICED THAT THERE IS A FRESH CREDIT DURING THIS YEAR OF RS.1,39,565/- FO R WHICH NO SPECIFIC REPLY WAS GIVEN BY THE ASSESSEE. AFTER CONSIDERING THE FACTS OF THE CASE, THE A.O. FOUND THAT THIS ACCOUNT IS BOGUS/BENAMI AND CREATED BY THE ASS ESSEE TO REDUCE HIS INCOME BY CREATING BOGUS LIABILITIES AND INTRODUCING UNACCOUN TED MONEY THROUGH THIS ACCOUNT. THE A.O. THUS MADE THE ADDITION OF RS.1,56,405/-. ADDITION OF RS.4,79,455/- ON ACCOUNT OF NAROTTAM DA S SHARMA AMANAT KHATA NO.1 ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 7 6. THE A.O. NOTICED THAT IN THIS ACCOUNT THERE IS O PENING BALANCE OF RS.3,356/- AND DURING THE YEAR RS.4,36,143/- WAS CREDITED ON 2 9.06.2006AND INTEREST OF RS.39,946/- WAS ALSO CREATED AS ON 31.03.2007. THE CLOSING BALANCE OUTSTANDING IN THIS ACCOUNT WAS RS.4,79,445/-. THE A.O. ALSO ASKE D THE ASSESSEE TO EXPLAIN THE STATUS OF THIS ACCOUNT AS ASKED IN CASE OF JAYDAD B RINDAWAN DISCUSSED ABOVE. THE ASSESSEE REPLIED THAT SHRI NAROTTAM DAS SHARMA WAS HIS FATHER WHO DIED SO MANY YEARS AGO AND THIS AMANAT KHATA WAS CRATED FOR THE PURPOSE OF DHARMADA. THE A.O. ASKED ABOUT THE REASONS FOR INCREASE IN THIS A CCOUNT. THE A.O. NOTED THAT THE ASSESSEE DID NOT FURNISH SATISFACTORY EXPLANATION. THE ASSESSEE HAS FAILED TO EXPLAIN THE STATUS OF THIS ACCOUNT, WHO IS THE OPER ATOR OF THIS ACCOUNT, WHO IS THE REAL CLAIMANT OF THIS ACCOUNT, THE INTEREST OF RS.3 9,946/- HAS BEEN CREDITED IN WHOSE HANDS AND IN WHOSE HANDS THIS INTEREST HAS BEEN ASS ESSED TO TAX. IN ABSENCE OF SATISFACTORY EXPLANATION, THE A.O. MADE THE ADDITIO N OF RS.4,79,445/- TREATING THE SAME AS BOGUS/BENAMI LIABILITY. ADDITION OF RS.4,14,460/- ON ACCOUNT OF NAROTTAM DA S SHARMA AMANAT KHATA NO.1 7. IN THIS ACCOUNT, OPENING BALANCE WAS RS.3,70,054 /- AND DURING THE YEAR INTEREST OF RS.44,406/- WAS CREDITED AS ON 31.03.20 07. CLOSING BALANCE AS ON ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 8 31.03.2007 WAS RS.4,14,416/-. THE A.O. ASKED THE A SSESSEE TO EXPLAIN THE STATUS OF THIS ACCOUNT IT WAS EXPLAINED BY THE ASSESSEE THAT SHRI NAROTTAM DAS SHARMA WAS HIS FATHER WHO DIED SO MANY YEARS AGO AND THIS AMAN AT KHATA WAS CRATED. IN ABSENCE OF SATISFACTORY EXPLANATION, THE A.O. MADE ADDITION OF RS.4,14,460/-. ADDITION OF RS.3,27,632/- ON ACCOUNT OF COLLECTOR B ABU GUPTA. 8. THE A.O. NOTICED THAT THERE WAS OUTSTANDING LIAB ILITY OF RS.3,27,632/- IN THE NAME OF COLLECTOR BABU GUPTA. IT WAS EXPLAINED BEF ORE THE A.O. BY THE ASSESSEE THAT THE COLLECTOR BABU GUPTA WAS EXPIRED SO MANY Y EARS AGO AND THE SUCCESSOR OF COLLECTOR BABU GUPTA WAS NOT KNOWN TO THE ASSESSEE, EVEN THE ADDRESSES ARE NOT KNOWN. IN THE ABSENCE OF CONFIRMATION AND OTHER EX PLANATION, THE A.O. TREATED THE SAID LIABILITY AS UNEXPLAINED BENAMI LIABILITY AND MADE ADDITION OF RS.3,27,632/-. 9. THE A.O. FURTHER NOTED THAT THE INTEREST PAYABLE TO NAROTTAM DAS SHARMA, AMANAT KHATA NO.1 RS.39,946, NAROTTAM DAS GUPTA, AM ANAT KHATA NO.2 RS.44,406/- AND RS.13,102/- IN THE NAME OF JAYADAD BRINDAWAN CLAIMED BY THE ASSESSEE ARE ALSO DISALLOWABLE. THE A.O. DID NOT M AKE SEPARATE ADDITIONS ON THESE INTEREST AMOUNTS AS THE ADDITIONS HAVE ALREADY BEEN MADE IN THE PRINCIPLE AMOUNTS. ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 9 10. THE A.O. ALSO MADE ADDITION OF RS.30,000/- ON A CCOUNT OF SALARY, RS.1,00,000/- ON ACCOUNT OF MARRIAGE CEREMONY OF AS SESSEES DAUGHTER AND RS.11,055/- UNDER SECTION 40A(3), RS.78,000/- ON AC COUNT OF HOUSEHOLD EXPENSES. RS.1,05,877/- ON ACCOUNT OF EXCESS GOLD JEWELLERY 11. DURING THE ASSESSMENT PROCEEDINGS THE A.O. NOTI CED THAT THE ASSESSEE PURCHASED GOLD BULLION AND SILVER BULLION. THE ASS ESSEE GOT MANUFACTURED THE ORNAMENTS OF GOLD AND SILVER ON LABOUR PAYMENT BASI S. IT CAME UNDER THE PROCESS OF MANUFACTURING OF GOLD AND SILVER ORNAMENTS FOR W HICH THE ASSESSEE DECLARED SO CALLED TRADING. THE A.O. ASKED THE ASSESSEE TO FUR NISH THE MANUFACTURING ACCOUNT OF GOLD AND BULLION ORNAMENTS BUT THE ASSESSEE HAS FAILED TO FURNISH THE MANUFACTURING ACCOUNT AS REQUIRED. THE ASSESSEE SU BMITTED BEFORE THE A.O. THAT THE MANUFACTURING OF ORNAMENTS ARE NO5 DONE BY THE ASSESSEE BUT IT IS GOT DONE ON THE LABOUR PAYMENT BASIS. IT WAS SUBMITTED THAT TH ERE WAS NO MANUFACTURING IN THE YEAR HENCE NO LABOUR CHARGES WERE DEBITED. ORNAMEN TS WERE SOLD FROM OLD STOCK. ON EXAMINATION OF SONA NIRMAN KHATA THE A.O. OBSE RVED UNDER :- (PAGE NO.9) THE ASSESSEE IN SONA NIRMAN KHATA SHOWN THAT THE ASSESSEE HAS PURCHASED PURE GOLD (BULLION) OF 24 CARAT - 1-1 23-650 (KG.- GM.- MG.) FOR RS.10,28,235/- AND OPENING BALANCE WAS - 4 -640-555 OF RS.29,46,752/-. THE TOTAL PURE GOLD OF 24 CARAT WA S - 5-764-205 ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 10 WORTH RS.39,75,136/- WITH THE ASSESSEE. THE CLOSIN G BALANCE OF PURE GOLD 24 CARAT REMAINS AT THE END OF THE YEAR 4-658- 970. THUS THE ASSESSEE MANUFACTURED GOLD ORNAMENTS OF 22 CARAT- 1 -105-235 OF RS.11,64,664/-. THE ASSESSEE MANUFACTURED 22 CARAT GOLD JEWELLERY BY 24 CARAT WEIGHT OF 1-205-710 (1-105-235/22 X 24) . THUS THE ASSESSEE CONVERTED 24 CARAT GOLD INTO 22 CARAT AND THE DIFFERENCE BY THIS CONVERSION COMES TO 0-100-475 (22 CARAT GOLD J EWELLERY MANUFACTURED 1-205-710 LESS BY 1-105-235 AS THE ASS ESSEE DISCLOSED THE SALE). THE VALUE OF EXCESS GOLD JEWELRY OUT OF BOOKS COMES TO 0- 100-475 OF RS.1,05,877/- (THE VALUE IS TAKEN AVERAG E SELL RATE 1164664/ 1-105-235 X 0-100-475) THE DIFFERENCE AS A BOVE. THUS THE VALUE OF EXCESS GOLD JEWELLERY OUT OF BOOKS COMES T O RS.1,05,877/-, WHICH IS ADDED IN THE TOTAL INCOME OF THE ASSESSEE. RS.70,113/- EXCESS SILVER ORNAMENT 12. THE A.O. ALSO EXAMINED THE SILVER BULLION ACCOU NT. THE ASSESSEE DID NOT SUBMIT ANY ACCOUNT OF MANUFACTURING AS REQUIRED BY THE A.O. IT WAS SUBMITTED BY THE ASSESSEE THAT THERE WAS NO MANUFACTURING IN THE YEAR HENCE NO LABOUR CHARGES DEBITED. ORNAMENTS WERE SOLD FROM OLD STOCK. THE A.O. EXAMINED THE SILVER NIRMAN KHATA AND OBSERVED AS UNDER :- (PAGE NO.10) THE ASSESSEE IN SILVER NIRMAN KHATA SHOWN THAT T HE ASSESSEE HAS PURCHASED PURE SILVER (BULLION)- 33-79 4-000 (KG.- GM.- MG.) FOR RS.6,10,688/- AND OPENING BALANCE WAS- 42- 638-100 OF RS.4,87,140/-. THUS THE TOTAL PURE SILVER WAS- 76- 432-100 WORTH RS.10,97,928/- WITH THE ASSESSEE. THE CLOSING BALA NCE OF SILVER BULLION REMAINS AT THE END OF THE YEAR 53-403-800 O F RS.7,74,355/-. THUS THE ASSESSEE MANUFACTURED SILVER ORNAMENTS OF 23-028-000 OF RS.4,67,427/-. THE ASSESSEE MANUFACTURED SILVER OR NAMENTS WEIGHT OF 23-028-300. THE 15% EXCESS IS TAKEN OF SILVER ORNA MENTS FROM SILVER BULLION, WHICH COMES TO WT. OF 3-454-245, WHICH BEC OME THE VALUE OF ON AVERAGE RATE OF SALES TO RS.70,113/-. THUS THE ASSESSEE CONVERTED ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 11 SILVER ORNAMENTS FROM SILVER BULLION, WHICH FOUND I N EXCESS, WHICH HAVE NOT BEEN IN THE BOOKS OF ACCOUNTS. THE VALUE OF EXCESS SILVER ORNAMENTS OUT OF BOOKS COMES TO RS.70,113/- (THE VA LUE IS TAKEN AVERAGE SELL RATE. THUS THE VALUE OF EXCESS SILVER ORNAMENTS OUT OF BOOKS COMES TO RS.70,113/-, WHICH IS ADDED IN THE T OTAL INCOME OF THE ASSESSEE. RS.14,460/- ON ACCOUNT OF LABOUR PAYMENT OUT OF BO OKS OF ACCOUNTS 13. DURING THE ASSESSMENT PROCEEDINGS WHILE EXAMINI NG THE BOOKS OF ACCOUNTS AND MANUFACTURING ACCOUNT THE A.O. EXAMINED THE LAB OUR CHARGES OF MANUFACTURING OF GOLD ORNAMENTS AND NOTICED THAT TH E LABOUR AMOUNT OF RS.14,460/- HAS NOT BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. THE RELEVANT FINDING OF THE A.O. IS REPRODUCED AS UNDER :- (PAGE NO.9) THE ASSESSEE EXPLAINED THAT THE LABOUR CHARGES ARE PAID BY THE CUSTOMERS. SINCE THE ASSESSEE HAS NOT FURNISHE D ANY MANUFACTURING ACCOUNT COVERING ALL THE EXPENSES WHI CH ARE NECESSARILY INCURRED IN THE COURSE OF MANUFACTURING OF ORNAMENTS, IT WAS NOTICED THAT THE EXPENSE OF RS.149/- AS LABOUR CHARGE OF MANUFACTURING OF GOLD ORNAMENTS WAS DEBITED, THE AS SESSEE WAS REQUIRED TO PRODUCE THESE BILLS ON WHICH THIS LABOU R CHARGES HAVE BEEN SHOWN. AS PER BILL DATED 31.1.2007, IT WAS NO TICED THAT RS.149/- AS LABOUR HAVE BEEN GIVEN ON ORNAMENT OF WEIGHT OF 0-12-410, WHICH COMES AT THE RATE OF 12 PER GRAM (149/12-4). THE A SSESSEE HAS GOT MANUFACTURED WT. OF GOLD 1-205-710, THE LABOUR @ RS .12/- PER GRAM COMES TO RS.14,460/-. THIS AMOUNT OF LABOUR, WHICH HAS NOT BEEN SHOWN IN THE BOOKS OF ACCOUNT TREATED AS PAYMENT MA DE OUT OF BOOKS AND ADDED IN THE TOTAL INCOME OF THE ASSESSEE. ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 12 RS.8,276/- ON ACCOUNT OF CHANDI NIRMAN LABOUR PAYME NT OUT OF BOOKS OF ACCOUNT. 14. THE RELEVANT FINDING OF A.O. IS AS UNDER :- THE ASSESSEE WAS REQUIRED TO FURNISH THE MANUFACTU RING ACCOUNT OF SILVER ORNAMENTS, BUT THE ASSESSEE DID N OT FURNISH THE SAME. AS PER ORDER SHEET ENTRY DATED 30.12.2009, T HE ASSESSEE WAS REQUIRED TO EXPLAIN THE PAYMENT OF LABOUR CHARGES W HICH HAVE NOT BEEN SHOWN IN THE SILVER NIRMAN KHATA. THE ASSESSE E EXPLAINED THAT THE LABOUR CHARGES ARE PAID BY THE CUSTOMERS. SINC E THE ASSESSEE HAS NOT FURNISHED ANY MANUFACTURING ACCOUNT COVERING AL L THE EXPENSES WHICH ARE NECESSARILY INCURRED IN THE COURSE OF MAN UFACTURING OF ORNAMENTS, IT WAS NOTICED THAT THE EXPENSE OF RS.5, 540/- AS LABOUR CHARGE OF MANUFACTURING OF SILVER ORNAMENTS WAS DEB ITED, THE ASSESSEE WAS REQUIRED TO PRODUCE THESE BILLS ON WHI CH THIS LABOUR CHARGES HAVE BEEN SHOWN. AS PER BILL DATED 31.3.20 07, WHICH RELATES TO SILVER ORNAMENTS NIRMAN REFLECTS THAT 215.500 GM . SILVER ORNAMENTS PREPARED AND LABOR CHARGES ARE RS.128/-. THUS THE A VERAGE OF PER GRAM COMES TO RS.0.60 PER GRAM. THE ASSESSEE HAS G OT MANUFACTURED WT. OF SILVER ORNAMENTS 23-028-300 (KG.- GM.- MG.). THE LABOUR @RS.0.60 PER GRAM COMES TO RS.13,816/- (23-028-300 X 0.60). THE ASSESSEE HAS SHOWN RS.5,540/- IN THE CHANDI NIRMAN KHATA AS MAJDURI OF ORNAMENTS. THUS THIS AMOUNT IS REDUCED. THUS A MOUNT OF LABOUR, WHICH HAS NOT BEEN SHOWN IN THE BOOKS OF ACCOUNT CO MES TO RS.8,276/. THIS AMOUNT OF RS,.8,276/- LABOUR TREATED AS PAYMEN T MADE OUT OF BOOKS AND ADDED IN THE TOTAL INCOME OF THE ASSESSEE . 15. THE CIT(A) DECIDED THE ISSUES AS UNDER :- (PAGE NOS.18 TO 22) THE REJECTION OF BOOKS IS FOUND TO BE UNWARRANTED. THE APPELLANT HAS BEEN CONSISTENTLY MAINTAINING THE SEP ARATE METHOD OF ACCOUNTING AND SEPARATE SET OF BOOKS FOR ITS TWO BU SINESS. BOOKS HAVE BEEN PRODUCED AND TEST-CHECKED. THE PURCHASES ARE ALL SUPPORTED BY SPECIFIC VOUCHERS GIVING NAMES AND ADDRESS (NAME OF VILLAGE) OF THE SELLERS AND THAT IS AS PER PREVALENT AND PLAUSIBLE BUSINESS PRACTICE ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 13 THE A.O. HAS NEITHER FOUND ANY DEFECT, NOR HAS DETE CTED ANY BOGUS PURCHASE. SO, APPLICATION OF SECTION 145(3) IS HELD AS UNWARR ANTED. INTEREST RS.13,685/-: THE A.O. HAS FAILED TO BRING-OUT ANY COGENT REASON OR BASIS FOR ESTIMATING AND ADDING ABOVE INT EREST AMOUNT SPECIALLY WHEN THE APPELLANT HAS FILED DETAILED STA TEMENT FOR EACH LOAN ADVANCED (PAWNING A/C) AND INTEREST CHARGED THEREO N. I DONT AGREE WITH THE A.O. THAT IT IS NECESSARY TO CARRY FORWARD EACH OF THESE PAWN ACCOUNTS, AT THE END OF EVERY YEAR. I FIND THAT THE APPELLANT HAS MAINTAINED A PROPER CHRONOLOGICAL PAWNING REG ISTER, WRITING THE AMOUNT OF INTEREST RECEIVED ON CASH BASIS, WHEN EVER A PARTICULAR PAWN ACCOUNT SQUIRED OFF. THIS CASH SYSTEM HAS B EEN MAINTAINED CONSISTENTLY OVER THE YEARS, THUS I DONT FIND ANY LEAKAGE IN SUCH SYSTEM OF ACCOUNTING. SO, ESTIMATED ADDITION OF RS.13,685/-, IS DELETED. JAYDAD BRINDAWAN A/C: I FIND THAT THE SOURCE OF RS.1,56,405/- IS WELL MAINTAINED FROM THE PAST HISTORY OF THE A/C AS PER COPY OF A/C OF PAST YEARS FILED NO EVIDENCE BROUGHT ON RECORD. THE FRE SH DEPOSIT IN THIS A/C. IS DULY COVERED BY DEBIT ENTRIES MADE FOR INVE STMENT IN U.T.I. AND LEAVES NO SCOPE FOR ADDITION. THE A.O. HAS GROSSLY ERRED BY NOT APPRECIATING THE REAL NATURE OF CREDIT AND HAS DRAWN AN UNWARRANTED INFERENCE. FURTHER, THE ADDITION IS WITHOUT AFFORDING AN OPPORTUNITY AS REQ UIRED IN LAW AND SUPPORTED BY COURTS CITATION REFERRED BY THE A.R. ALSO, OTHERWISE, THIS A/C IS DULY EXPLAINED AND PROVED AND ALSO ACCE PTED BY THE SAME A/O IN ASSESSMENT U/S 143(3) FOR 06-07. THUS, THERE IS NO REASON FOR ADDITION AND THEREFORE ADDITION AND INTEREST PAID THEREON, DESERVES TO BE DELETED AND A RE HEREBY DELETED. 5.4. NAROTTAM DAS AMANAT KHATA NO.1 RS.4,79,445/- & NAROTTAM DAS AMANAT KHATA NO.2 RS.4,14,360/- : THE NATURE OF THE DEPOSITS IN BOTH THESE LOANS A/C ARE IDENTICAL, COMING FROM PAST 20 YEARS. THESE HAVE ALSO BEEN AC CEPTED BY A.O. IN ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 14 ASSESSMENT FOR 2006-07, U/S 143(3) AS PER PHOTO COP Y B/SHEET AFTER MAKING ENQUIRY, INVESTIGATION AND SATISFACTION. TH E FRESH DEPOSIT WAS IN THIS BOTH A/C ARE SUPPORTED WITH THE COMPLETE EV IDENCES OF INVESTMENTS MADE IN U.T.I. IN EARLIER YEAR, WHICH H AVE BEEN FILED. AN OPPORTUNITY OF BEING HEARD BEFORE ADDING THE AMOUNT S WAS ALSO NOT GRANTED, AS PER COURTS CITATION REFERRED BY THE A. R. IT IS THUS HELD THAT THE A.O. IS IN ERROR TO ADD BA CK THESE AMOUNTS, DULY EVIDENCED FROM PROVED SOURCE AND TO D ISALLOW INTEREST PAID THEREON. THE ADDITIONS IN BOTH THE ABOVE A/C AND INTEREST DISALLOWED ARE HEREBY DELETED. 5.5 COLLECTOR BABU RS.3,27,632/-: LIKE AFOREMENTIONED LOAN A/CS, THIS IS ALSO AN OLD A/C. THE FACT THAT THE A.O. DURING THE COURSE OF THE ASSESSMENT P ROCEEDINGS, FOR THE ASSESSMENT YEAR 2006-07 U/S 143(3) ENQUIRED ABOUT T HIS LOAN A/C, IS PROVED FROM THE COPY OF THE ORDER SHEET FOR 2006-07 AND REPLY DT. 28.03.08 OF THE ASSESSEE. IT IS SENT THAT A.O., AF TER BEING SATISFIED, ACCEPTED THE SAME. THE COPY OF THE ASSESSMENT ORDE R DT. 28.03.08 FOR THE ASSESSMENT YEAR 2006-07 AND APPELLANTS REPLY D ATED 28.03.08 (06-07) SUPPORTS THE CONTENTION. THE A.O. WITHOUT LOOKING INTO HIS PAST YEARS ASSESSMENT ORDER AND WITHOUT AFFORDING AN OPPORTUNITY REQUIRED IN LAW, HAVE ADDED THE AMOUNT, WHICH IS AP PARENTLY WRONG AND UNSUSTAINABLE AND THEREFORE, THE ADDITION RS.3, 27,632/- IS DELETED. 5.6 SALARYRS.30,000/-: AS PER DETAILS FILED AND LIST OF EMPLOYEES PER COPY OF THE PAPER BOOK, THE A.O. FAILED TO POINT-OU T THE NAME OF ANY STAFF, WHOSE SALARY HE INTENDS TO DISALLOW AND THER EFORE, SUCH ADHOC ADDITION IN ABSENCE OF STAFF NAME OR ITS EXCESSIVE SALARY ACTION IS NOT SUSTAINABLE AND IS DELETED. 5.7 MARRIAGE EXP. RS.1,00,000/-: THE A.O. HAS NOT BROUGHT ON RECORD ANY BASIS OR ANY CLINCHING FACT OR MATERIAL EVIDENCE, EXCEPT BY ESTIMATING THE EXP. RESULTING IN ADDITION. SUCH WILD ESTIMATE IS NOT SUSTAINABLE UNDER LAW WHEN THE DETAIL OF EXPENSES HAS BEEN PLACED ON RECORD BY THE APPELLANT. THE APPELLANT HAS PLACED RELIANCE ON DECISION OF THE JO DHPUR I.T.A.T. IN CASE OF PYARELAL (2007) 201 TAXMAN 295 AND OF THE A GRA I.T.A.T. IN ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 15 APPELLANTS OWN CASE (2010) 214 TAXMAN 7, I FIND T HAT THESE CASE LAWS ARE DIRECTLY AND FAVOURABLY APPLICABLE TO THE FACTS OF THE PRESENT CASE. THUS, I AGREE WITH THE CONTENTIONS AND ALSO THE RAT IO OF THE CITED CASES, AND THUS, HOLD THAT THE ADDITION WAS UNCALLE D FOR AND TO BE DELETED. 5.8 HOUSE HOLD EXP. RS.78,000/-: THE A.O. HAS NOT PUT ANY FRESH MATERIAL TO JUSTIFY ADDITION, EXCEPT REPETITION OF LAST YEARS FACT, WHICH HAVE AL READY BEEN BRUSHED ASIDE BY LD. I.T.A.T. IN APPELLANTS APPEAL COPY JU DGEMENT (2010) 214 TAXATION (7) AGRA I.T.A.T. BRIJ MOAHN SHARMA V/S I. T.O. FOR THE ASSESSMENT YEAR 2006-07 IN APPELLANTS OWN CASE FIL ED AND, FOLLOWING THE SAME FINDING, IN ABSENCE OF ANY FRESH AND RELEV ANT MATERIAL TO JUSTIFY AOS ACTION, ADDITION UNDER THIS HEAD DOES NOT STAND GOOD AND HEREBY DELETED. 5.9 PAYMENT U/S 40A(3) RS.11,055/-: ON THIS ISSUE, I FIND THAT THE APPELLANT HAS HARPED ON UNAVOIDABLE AND EXCEPTIONAL CIRCUMSTANCE WITH N O C.B.S. SYSTEM IN BANK A/C, IN HATHRAS ON THE RELEVANT PAYMENT DAT E, DULY PROVED AND EVIDENCED BY BANK CERTIFICATE FILED IN PAPER BOOK, AND ALSO HAS FURNISHED TAN/PAN, ADDRESS, OF THE SELLER VERIFIABL E, AS PROVIDED U/S R 6 DD (J) OF THE INCOME TAX RULES. HOWEVER, THERE IS NO SUB-CLAUSE (J) FOR UNAVAILABLE AND EXCEPTIONAL CIRCUMSTANCES , AFTER THE RECENT AMENDMENTS. THE APPELLANTS COUNSEL HAS FAILED TO REFER TO ANY SPECIFIC CLAUSE U/R 6DD, CAN BE HELD TO BE FAVOURAB LY APPLICABLE IN APPELLANTS CASE. I FIND THAT THESE CASH PAYMENT ARE NOT COVERED BY A NY OF THE SUB-CLAUSES OF R 6DD, AND, HENCE, I HOLD THAT THE A DDITION FOR RS.11,055/- ON A/C OF PURCHASES FOR RS.55,528/- IS COVERED U/S 40A(3) AND CONSEQUENTLY ADDITION RS.11,055/- IS UPHELD. 5.10 GOLD NIRMAN KHATA RS.1,05,877/- & SILVER NIRMAN K HATA RS.70,113/-: ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 16 ADDITION IN BOTH THE ABOVE A/C ARE ON IDENTICAL REA SONING. I FIND THAT THE A.O. HAS WORKED OUT EXTRA PROFITS BY FOLLOWING A UNIQUE SYSTEM, NOT BASED ON WORKABLE AND PRACTICABLE FORMU LA. IN FACT, AS THE APPELLANT HAS POINTED OUT PURITY IN GOLD AND SI LVER ITEMS VARIES FROM ITEM TO ITEM AND THEIR MAKE. THE A.O. HAS N OT ESTABLISHED ANY DEFECT AND DEFICIENCY OR PLACED ANY ADVERSE EVIDENC E IN THE APPELLANTS BUSINESS SYSTEM. THE A.O. IS NOT SUPPO SED TO GUIDE THE ASSESSEE REGARDING THE MANNER AND SYSTEM FOR CARRYI NG ON BUSINESS. ALSO THE SYSTEM OF VALUING CLOSING STOCK CANNOT BE DISTURBED, WHEN THE ASSESSEE IS FOLLOWING SAME PATTERN YEAR AFTER YEAR AND ACCOUNT BOOKS HAVE ALWAYS BEEN ACCEPTED IN ASSESSMENT U/S 143(1) OR 143(3) OF THE I/TAX ACT 61, AND THEREFORE, ADDITION IN BOTH THE A/C DOES NOT STAND FIT IN THE EYE OF LAW AND DESERVE DELETION. BOTH THE A DDITIONS ARE DELETED. 5.11 WAGES RS.8,276/- (SILVER A/C) & WAGES R.14,460/- (G OLD A/C): THE APPELLANT HAS DEBITED TOTAL WAGS OF ONLY RS.5,5 40/- DURING THE WHOLE YEAR WHICH DOES NOT APPEAR TO BE REASONAB LE. THE A.O. HAS FOLLOWED A LOGICAL BASIS FOR WORKING OUT THE ABOVE ADDITIONS ON ACCOUNT OF WAGES SUPPRESSED. THE APPELLANT HAS FAI LED TO GIVE ANY PROPER EVIDENCE THAT SUCH EXTRA WAGE AMOUNTS WERE A CTUALLY PAID BY CUSTOMERS; NO SINGLE DOCUMENT SUPPORTS SUCH CONTENT ION. THUS, I HOLD THAT THERE IS SOME SUPPRESSION OF LABO UR CHARGES. ADDITIONS MADE BY THE A.O., OF RS.8,726/- AND RS.14 ,460/- ARE UPHELD. 16. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE FIND THAT THE CIT(A) AFTER REPRODUCING THE AOS ORDER, GROUNDS OF APPEAL AND ASSESSEES WRITTEN SUBMISSION DECIDED THE GROUNDS O F APPEAL RAISED BEFORE HIM IN FAVOUR OF THE ASSESSEE WITHOUT APPRECIATING THE FAC TS AND ISSUES NOTED BY THE A.O. AS REGARDS REJECTION OF BOOKS OF ACCOUNTS, THE CIT( A) HELD THAT APPLICATION OF SECTION 145(3) IS UNWARRANTED OBSERVING THAT THE SE PARATE METHOD OF ACCOUNTING ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 17 AND SEPARATE SETS OF BOOKS OF ACCOUNTS OF TWO BUSIN ESS HAS BEEN MAINTAINED BY THE ASSESSEE. PURCHASES AND SALES ARE FULLY SUPPORTED BY VOUCHERS GIVING NAMES AND ADDRESS OF VILLAGERS OF THE SELLERS AND PURCHASERS WHEREAS THE A.O. IN HIS ORDER IN PAGE NO.2, PARAGRAPH NO.2 HAS CLEARLY STATED THAT T HE ASSESSEE MAINTAINED MIX SYSTEM OF ACCOUNTING. ALMOST ALL PURCHASES HAVE BE EN MADE THROUGH CASH BELOW RS.20,000/- EXCEPT TWO PURCHASES OF WHICH ACCOUNTS HAVE BEEN PRODUCED BY THE ASSESSEE. THE PURCHASES, EXCEPT 3 OR 4, COULD NOT BE VERIFIED BECAUSE THE PURCHASE VOUCHERS DO NOT CARRY THE ADDRESS OF THE SELLERS AN D PURCHASERS. THE ASSESSEE ALMOST HAS ONLY PURCHASE BILLS OF CASH CREATED BY H IM. THE PURCHASES HAVE BEEN MADE BY THE ASSESSEE WITHOUT BILLS OF THE PARTY CON CERNED. THE ASSESSEE DID NOT FURNISH YEAR WISE DETAILS OF ADVANCE MONEY IN RESPE CT OF PAWNING BUSINESS. IN ABSENCE OF SUCH DETAILS, THE A.O. IS BOUND TO ESTIM ATE THE INTEREST INCOME RECEIVED ON ACCOUNT OF PAWNING BUSINESS. THE CIT(A) HAS DEL ETED THE ADDITION OF RS.13,685/- MADE BY THE A.O. ON ACCOUNT OF INTEREST AFTER REJECTING THE BOOKS OF ACCOUNT. THE CIT(A) OBSERVED THAT THE ASSESSEE MAI NTAINED A PROPER PAWNING REGISTER. THE CIT(A) DID NOT AGREE WITH THE A.O. T HAT IT IS NECESSARY TO CARRY FORWARD EACH OF THESE PAWN ACCOUNT AT THE END OF TH E YEAR. THE CIT(A) DELETED THE ADDITION WITHOUT APPRECIATING THE CASE MADE OUT BY THE A.O. ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 18 17. IN RESPECT OF JAYDAD BRINDAWAN ACCOUNT, THE ASS ESSEE TOLD A DIFFERENT STORY BEFORE THE A.O. AND THE CIT(A) SIMPLY ACCEPTED THE ASSESSEES SUBMISSION AND DELETED THE ADDITION. THE CIT(A) NOTED THAT FRESH DEPOSIT IN THIS ACCOUNT IS DULY COVERED BY DEBIT ENTRIES MADE FOR INVESTMENT IN U.T .I. AND LEAVES NO SCOPE FOR ADDITION, WHEREAS, BEFORE THE A.O. IT WAS SUBMITTED BY THE ASSESSEE THAT THIS IS VERY OLD ACCOUNT LEFT BY THE GRAND FATHER IN HIS NAME FO R MISCELLANEOUS PURCHASE. THE ASSESSEE DID NOT FURNISH ANY REPLY IN RESPECT OF CR EDIT ENTRY OF RS.1,39,565/- EVEN THOUGH SPECIFIC QUERY WAS MADE BY THE A.O. 18. SIMILAR IS THE POSITION IN RESPECT OF NAROTTAM DAS AMANAT KHATA NO.1 & 2. THE ASSESSEE HAS TAKEN DIFFERENT STANDS BEFORE THE A.O. AND BEFORE THE CIT(A). BEFORE THE A.O. IT WAS SUBMITTED THAT THE NAROTTAM DAS SHARMA WAS ASSESSEES FATHER WHO EXPIRED SO MANY YEARS AGO AND THAT THE A MANAT KHATA NO.2 WAS CREATED. SIMILARLY, IN RESPECT OF AMANAT KHATA NO .1, THE A.O. SPECIFICALLY ASKED ABOUT THE STATUS OF THESE ACCOUNTS THAT IN WHOSE HA NDS THE TAX LIABILITY OF THIS INTEREST ACCOUNT IS ASSESSED WHEN FATHER OF THE ASS ESSEE HAS EXPIRED LONG BACK. THE CIT(A) WHILE DELETING THE ADDITION ACCEPTED THE ASS ESSEES CONTENTION THAT BOTH THESE LOAN ACCOUNTS ARE IDENTICAL, COMING FROM PAST 20 YEARS AND THE A.O. HAS ACCEPTED THE SAME IN A.Y. 2006-07 WHILE MAKING THE ASSESSMENT UNDER SECTION 143(3). THE CIT(A) FURTHER NOTED THAT BOTH THESE A CCOUNTS ARE SUPPORTED WITH ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 19 COMPLETE EVIDENCE OF INVESTMENT MADE IN U.T.I. IN E ARLIER YEARS. THE CIT(A) DID NOT GIVE ANY FINDING REGARDING PERSONS WHO WERE THE OWNERS OF THESE AMANAT KHATA NOS.1 & 2. THE A.O. HAS RIGHTLY ASKED QUESTI ON THAT WHO WILL BE SUBJECTED TO TAX THIS PAYMENT OF INTEREST ON THESE ACCOUNTS. 19. IN THE CASE OF COLLECTOR BABU GUPTA, THE CIT(A) HAS DELETED THE ADDITION ON THE SAME REASON AS GIVEN IN THE CASE OF NAROTTAM DA S AMANAT KHATA NOS.1 & 2 AS DISCUSSED ABOVE. THE A.O. NOTED THAT THE ASSESSEE HAS NEITHER FILED CONFIRMATION NOR COLLECTOR BABU GUPTA WAS PRODUCED BEFORE THE A. O. BEFORE THE A.O., ON A SPECIFIC QUERY, THE ASSESSEE SUBMITTED THAT COLLECT OR BABU GUPTA WAS EXPIRED SO MANY YEARS AGO AND THE SUCCESSOR OF COLLECTOR BABU GUPTA ARE NOT KNOWN TO THE ASSESSEE, EVEN THE ADDRESSES ARE NOT KNOWN. 20. IN RESPECT OF SALARY ADDITION OF RS.30,000/- WH ICH HAS BEEN DELETED BY THE CIT(A) OBSERVING THAT THE A.O. FAILED TO POINT OUT THE NAME OF ANY STAFF WHOSE SALARY HE INTENDS TO DISALLOW. CONTRARY TO THAT FI NDING OF CIT(A), THE A.O. COMPARED THE SALARY ACCOUNT DEBITED TO PROFIT & LOS S ACCOUNT AND SALARY CERTIFICATE SUBMITTED FOR VERIFICATION. THE A.O. AFTER EXAMINI NG THE EMPLOYEE WISE ANNUAL SALARY AND FOUND THAT AS PER THE SALARY CERTIFICATE SUBMITTED BY THE ASSESSEE THE TOTAL PAYMENT OF SALARY COMES TO RS.1,65,600/- TO 5 STAFF MEMBERS. THE ASSESSEE FAILED ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 20 TO EXPLAIN DIFFERENCE OF RS.30,000/-, DEBIT OF RS.1 ,95,500/- IN SALARY ACCOUNT AND THE DIFFERENCE NOTED OF RS.1,65,600/- IN THE CERTIF ICATE FURNISHED BY THE ASSESSEE. THE FINDING OF CIT(A) IS PERVERSE WITHOUT VERIFYING THE FACTS OF THE ISSUE. 21. IN RESPECT OF GOLD NIRMAN AND SILVER NIRMAN KHA TA, THE CIT(A) DELETED THE ADDITIONS OBSERVING AS UNDER :- (PARAGRAPH NO.5.10) 5.10 GOLD NIRMAN KHATA RS.1,05,877/- & SILVER NIRMAN K HATA RS.70,113/-: ADDITION IN BOTH THE ABOVE A/C ARE ON IDENTICAL REA SONING. I FIND THAT THE A.O. HAS WORKED OUT EXTRA PROFITS BY FOLLOWING A UNIQUE SYSTEM, NOT BASED ON WORKABLE AND PRACTICABLE FORMU LA. IN FACT, AS THE APPELLANT HAS POINTED OUT PURITY IN GOLD AND SI LVER ITEMS VARIES FROM ITEM TO ITEM AND THEIR MAKE. THE A.O. HAS N OT ESTABLISHED ANY DEFECT AND DEFICIENCY OR PLACED ANY ADVERSE EVIDENC E IN THE APPELLANTS BUSINESS SYSTEM. THE A.O. IS NOT SUPPO SED TO GUIDE THE ASSESSEE REGARDING THE MANNER AND SYSTEM FOR CARRYI NG ON BUSINESS. ALSO THE SYSTEM OF VALUING CLOSING STOCK CANNOT BE DISTURBED, WHEN THE ASSESSEE IS FOLLOWING SAME PATTERN YEAR AFTER YEAR AND ACCOUNT BOOKS HAVE ALWAYS BEEN ACCEPTED IN ASSESSMENT U/S 143(1) OR 143(3) OF THE I/TAX ACT 61, AND THEREFORE, ADDITION IN BOTH THE A/C DOES NOT STAND FIT IN THE EYE OF LAW AND DESERVE DELETION. BOTH THE A DDITIONS ARE DELETED. 22. WE NOTICED THAT THE A.O. BEFORE MAKING THE ADDI TION MADE SOME QUANTITY CALCULATION WHICH IS EVIDENT FROM THE FACTS REPRODU CED ABOVE FROM THE ASSESSING OFFICERS. THE CIT(A) SIMPLY ACCEPTED THE ASSESSEE S CONTENTION THAT WITHOUT EXAMINING THE FACTS THAT HOW THE QUANTITY DETAILS G IVEN BY THE A.O. IS INCORRECT. ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 21 23. THE CIT(A) DELETED THE ADDITION OF RS.1,00,000/ - ON ACCOUNT OF MARRIAGE EXPENSES AND HOUSE HOLD EXPENSES OF RS.78,000/- ON THE GROUND THAT THE ESTIMATION MADE BY THE A.O. IS WILLED ESTIMATE AND FOLLOWED SO ME ORDER OF THE I.T.A.T., AGRA BENCH. WE NOTICE THAT THE ASSESSEE IS HUF AND THE A.O. MADE THE ADDITION ON ACCOUNT OF MARRIAGE EXPENSES RS.1,00,000/- ON ACCOU NT OF MARRIAGE OF DAUGHTER OF SHRI BRIJ MOHAN SHARMA, THE ASSESSEE, AND THE HOUSE HOLD EXPENSES. IN RESPECT OF THESE TWO ADDITIONS, IN PRINCIPLE WE DO NOT AGREE W ITH THE A.O. THAT SUCH ADDITION IS WARRANTED IN THE HANDS OF THE HUF AS THESE ITEMS AR E PERTAINING AND RELATED TO THE PERSONAL ACCOUNT OF MEMBERS OF HUF. IN THE LIGHT O F THE FACT, THE ADDITIONS DELETED BY THE CIT(A) ARE CONFIRMED NOT ON THOSE GROUNDS ON WHICH THE CIT(A) HAS DELETED BUT ON THE GROUND OF REASONS AS DISCUSSED A BOVE. IN THE LIGHT OF THE ABOVE DISCUSSION AND ON CONSIDERATION OF GROUND NO.2 OF R EVENUES APPEAL, WE FIND THAT THE ORDER OF THE CIT(A) IS IN CONTRAVENTION TO RULE 46A OF THE I.T. RULES. WE NOTICE AND THE SAME IS CLEAR FROM THE ORDER OF CIT( A) THAT THE CIT(A) HAS CONSIDERED VARIOUS EVIDENCES, DOCUMENTS AND EXPLANA TION WHICH WERE NEITHER BEFORE THE A.O. NOR FURNISHED BEFORE THE CIT(A). T HE CIT(A) WITHOUT PROVIDING OPPORTUNITY OF HEARING TO THE A.O. DECIDED THE ISSU ES IN FAVOUR OF THE ASSESSEE. THERE IS NO EVIDENCE OR MATERIAL BEFORE THE A.O. IN RESPECT OF JAYDAD VRINDABAN ON ACCOUNT IF ADDITION OF RS.1,56,405/- BEFORE THE A.O. BUT THE CIT(A) NOTED THAT ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 22 FRESH DEPOSIT IN THIS ACCOUNT IS DULY COVERED BY DE BIT ENTRIES MADE FOR THE INVESTMENT IN U.T.I. 24. SIMILARLY, IN RESPECT OF NAROTTAM DAS AMANAT KH ATA NOS.1 & 2 WHEREIN THE CIT(A) RELIED UPON THE ORDER OF A.O. FOR A.Y. 2006- 07 AND NOTED THAT FRESH DEPOSIT IN BOTH THE ACCOUNTS ARE SUPPORTED WITH COMPLETE EV IDENCES OF INVESTMENT MADE IN U.T.I. IN EARLIER YEARS. THE NATURE OF THESE ACCOU NTS ARE NOT CLEAR AS DISCUSSED THAT WHO WERE THE OWNERS OF THESE ACCOUNTS AND TO WHOM A ND HOW INVESTMENTS MADE IN U.T.I. IS SUPPORTED WITH THESE ACCOUNTS. 25. SIMILARLY, IN CASE OF COLLECTOR BABU GUPTA, THE CIT(A) DELETED THE ADDITION MERELY ACCEPTING THE ASSESSEES CONTENTION THAT ASS ESSMENT FOR A.Y. 2006-07 HAS BEEN COMPLETED UNDER SECTION 143(3) WHEREAS BEFORE THE A.O. IT WAS THE SUBMISSION OF THE ASSESSEE THAT COLLECTOR BABU GUPT A HAS DIED LONG BACK. 26. SIMILAR IS THE POSITION IN RESPECT OF GOLD & SI LVER NIRMAN KHATA. IN ABSENCE OF COMPLETE FINDING OF FACTS, THESE ISSUES CANNOT B E DECIDED AT THIS STAGE. THE ORDER OF CIT(A) IS IN CONTRAVENTION TO RULE 46A AS IS CON SIDERED IN VARIOUS EXPLANATIONS AND DISCUSSIONS ABOVE WITHOUT PROVIDING OPPORTUNITY OF HEARING TO THE A.O. WE, THEREFORE, FIND IT APPROPRIATE TO SEND BACK THIS MA TTER TO THE FILE OF CIT(A) WITH THE ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 23 DIRECTION TO DECIDE THE ISSUES AFRESH IN ACCORDANCE WITH LAW AFTER VERIFYING AND RECORDING COMPLETE FACTS BY A SPEAKING ORDER. C.O. NO.30/AGR/2012 BY THE ASSESSEE 27. THE ASSESSEE HAS RAISED TWO GROUNDS IN HIS CROS S OBJECTION WHICH ARE ADDITION CONFIRMED BY THE CIT(A) RS.11.055/- UNDER SECTION 40A(3) AND ADDITIONS OF RS.8.276/- AND RS.14,460/- ON ACCOUNT OF WAGES I N SILVER AND GOLD ACCOUNTS. 28. AFTER HEARING THE LD. REPRESENTATIVES OF THE PA RTIES, IN RESPECT OF PAYMENT UNDER SECTION 40A(3) WE NOTICE THAT THE ASSESSEE HA S MADE CASH PURCHASES AND BEFORE THE A.O. IT WAS SUBMITTED THAT THESE PAYMENT S WERE COVERED BY THE PROVISIONS OF RULE 6DDJ AS THE PAYMENTS WERE MADE O N DIWALI FESTIVAL. THE A.O. NOTED THAT WHEN THE PAYMENT WAS MADE IN CASH THERE WAS NO DAY OF DIWALI FESTIVAL, IT WAS THURSDAY AND A BANK WORKING DAY. THE CIT(A) CONFIRMED THE ORDER OF THE A.O. ON THE GROUND THAT THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE PAYMENT IS COVERED BY RULE 6DDJ. THE CIT(A) ALSO FOUND THAT T HE PAYMENT IS NOT COVERED BY EXCEPTIONAL CIRCUMSTANCES PROVIDED UNDER RULE 6DDJ. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE PAYMEN T IS COVERED UNDER RULE 6DD AS THE PAYMENTS WERE MADE TO COTTAGE INDUSTRIES. ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 24 29. AFTER HEARING THE LD. REPRESENTATIVES OF THE PA RTIES, THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE IS NOT ACCEPTABLE AS THE ASSESSEE CHANGED THE STAND AT EACH LEVEL BEFORE THE A.O. AND CIT(A) WITH SOME DIF FERENT REASONS. THE ASSESSEE HAS FAILED TO POINT OUT HOW THE PAYMENT MADE WAS CO VERED BY COTTAGE INDUSTRIES. IN THE LIGHT OF THE FACT, WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE CIT(A) IN SUSTAINING THE ADDITION OF RS.11,055/- UNDER SECTIO N 40A(3) OF THE ACT. 30. AS REGARDS CONFIRMATION OF ADDITIONS OF RS.8,27 6/- AND RS.14,460/- ON ACCOUNT OF WAGES IN SILVER AND GOLD ACCOUNTS. AS D ISCUSSED IN REVENUES APPEAL, WHEREIN THE ISSUE RELATING TO INVOCATION OF SECTION 145(3) AND OTHERS HAVE BEEN SENT BACK TO THE FILE OF CIT(A) AND SINCE BOTH THESE ITE MS OF ADDITIONS ARE RELATED TO TRADING RESULT, THEREFORE, WE FIND IT APPROPRIATE T O SEND THE ISSUE BACK TO THE FILE OF CIT(A) WITH IDENTICAL DIRECTIONS AS GIVEN IN THE CA SE OF REVENUES APPEAL ABOVE. 31. IT IS TO MENTION THAT THE CIT(A) WILL DECIDE TH E ISSUES AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE SIDES . 32. IN THE RESULT, APPEAL OF THE REVENUE AND C.O. O F THE ASSESSEE BOTH ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO.68/AGR/12 & CO NO.30/AGR/12 A.Y. 2007-08. 25 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY