M/s Rawal Pindi Jewellers Pvt. Ltd., Delhi V. ITO, New Delhi

CO 392/DEL/2007

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4275 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 9 month(s) 6 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 25-07-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 23-11-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: F R MEENA SENIOR D
• Assessee Lawyers: HARDIPENDER SI NGH
• Keywords: Unexplained cash credit; Depreciation; Business expenditure; Additional evidence; Set aside
• Section: 40A(3); 133A; 131; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3855/DEL./2007 (ASSESSMENT YEAR : 2004-05) ITO, WARD 15 (3), VS. M/S. RAWALPINDI JEWELLE RS PVT. LTD., NEW DELHI. 2298, CLOCK TOWER, SUBZI MANDI, NEW DELHI. (PAN : AAACR1571J) CO NO.392/DEL./2007 ITA NO.3855/DEL./2007 (ASSESSMENT YEAR : 2004-05) M/S. RAWALPINDI JEWELLERS PVT. LTD., VS. ITO, WARD 15 (3), 2298, CLOCK TOWER, SUBZI MANDI, NEW DELHI. NEW DELHI. (PAN : AAACR1571J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HARDIPENDER SINGH, ADVOCATE REVENUE BY : SMT. MEENAKSHI SINGH, CIT DR AND SHRI F.R. MEENA, SENIOR DR DATE OF HEARING : 25.07.2016 DATE OF ORDER : 30.08.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN BOTH THE AFORESAID APPEAL AND CROSS OBJECTION, T HE SAME ARE BEING ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 2 DISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSION. 2. APPELLANT, INCOME-TAX OFFICER, WARD 15(3), NEW D ELHI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILIN G THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATE D 28.06.2007 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- XVIII, NEW DELHI QUA THE ASSESSMENT YEAR 2004-05 ON THE GROUND S INTER ALIA THAT :- 1. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND C IRCUMSTANCES OF THE CASE IN DIRECTING THE A.O TO CONSIDER THE LO SS ON THE SALE OF ASSETS AMOUNTING TO RS.5166/- IN THE BLOCK OF ASSET IGNORING THAT SAID LOSS CLAIMED AS REVENUE LOSS IS CAPITAL IN NAT URE AS ALSO ADMITTED BY ASSESSEE. 2 . L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND C IRCUMSTANCES OF THE CASE IN DELETING THE DISALLOWANCE OF TRAVELI NG EXPENSES AMOUNTING TO RS.24210/-AS NO DOCUMENTARY EVIDENCE W AS FILED BY ASSESSEE DURING THE ASSTT. PROCEEDINGS TO PROVE THA T THE SAID EXPENSES WERE FOR PURPOSE OF BUSINESS . 3. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE DISALLOWANCE OF DEPRECI ATION ON NEW CAR AMOUNTING TO RS.38742 MADE BY A.O WITHOUT APPRECIAT ING THE FACT THAT THE DATE OF REGISTRATION OF THE SAID CAR WAS 8 /4/2004 I.E AFTER CLOSING OF PREVIOUS YEAR. 4. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DIRECTING AO TO ALLOW DEPRECIATION O N INSURANCE PREMIUM CAPITALISED IN RESPECT OF NEW CAR AS ASSESS EE COMPANY FAILED TO PROVE THAT THE CAR WAS PUT TO USE IN THE PREVIOUS YEAR UNDER CONSIDERATION. 5. LD CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE DISALLOWANCE OF RS.7395 L-MADE BY AO ON ACCOUNT OF CAR MAINTENANCE EXPENSES. 6. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.11000/-M ADE BY AO IN ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 3 RESPECT OF FEE PAID FOR PREPARATION AND FILLING OF INCOME TAX RETURN . 7. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CIR CUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.2500/-MA DE BY AO ON ACCOUNTS OF FEE PAID IN RESPECT OF PREPARATION OF S ALES TAX RETURN. 8. L'D CIT( A) HAS ERRED IN LAW AND IN FACTS AND C IRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.500000/- MADE BY AO U/S 68 OF INCOME TAX ACT 1961 IN RESPECT OF INTEREST FR EE LOAN TAKEN FROM SHRI BUDH SINGH PROPRIETOR OF M/S.BHAWNA JEWEL LERS. 9. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CIR CUMSTANCES OF THE CASE IN DELETING THE AUDITION OF RS.250000/ MADE BY AO U/S 68 OF INCOME TAX ACT 1961 IN RESPECT OF DEPOSITS IN THE CURRENT ACCOUNT OF MRS MEENA BHASIN. 10. L'D CIT( A) HAS ERRED IN LAW AND IN FACTS AND C IRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.8,40,000 /- MADE BY A.O UNDER SECTION 68 OF THE INCOME TAX ACT 1961 IN RESP ECT OF DEPOSIT IN THE CURRENT ACCOUNT OF SHRI ANKUSH BHASIN . 11. L'D CIT(A) HAS ERRED IN LAW AND IN FACT AND CIR CUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.530,000/ -MADE BY AO U/S 68 OF INCOME TAX ACT 1961IN RESPECT OF UNEXPLAINED CREDIT ENTRIES IN THE ACCOUNT OF SH. JAGDISH LAL BHASIN, WITHOUT G IVING AN OPPORTUNITY TO AO WHILE ADMITTING THE ADDITIONAL EV IDENCE UNDER RULE 46A OF INCOME TAX RULES 1962. 12. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.100000/- MADE BY A.O U/S 68 OF INCOME TAX ACT 1961IN RESPECT OF UNEXPLAI NED CREDIT ENTRY IN THE ACCOUNT OF M/S MAHINDRA FASTENER LTD. WITHOUT GIVING AN OPPORTUNITY TO AO WHILE ADMITTING THE ADDITIONAL EVIDENCE UNDER RULE 46A OF INCOME TAX RULES 1962. 13. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.13875/- MADE BY OUT OF DEPRECIATION CLAIMED ON PHOTO COPY MACHINE . 14. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE DISALLOWANCE OF FINANCE CHARGES AMOUNTING TO RS.12356/- ALLEGEDLY INCURRED IN RESPE CT OF PURCHASE OF PHOTO COPY MACHINE DESPITE THE FACT THAT THE PUR CHASE OF SAID MACHINE REMAINED UNPROVED, 15. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE REASONABLE 1/3 RD DISALLOWANCE MADE BY A.O OUT OF STAFF WELFARE EXPENSES TO THE TUNE OF RS .24903/-. ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 4 16. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE DISALLOWANCE OF RS.1187 26/- MADE BY A.O OUT OF ELECTRICITY EXPENSES PERTAINING TO ELECT RICITY METER INSTALLED AT PREMISE NO.2300, SUBZI MANDI WITHOUT T AKING INTO ACCOUNT THE FACT THAT THE THERE IS NO MENTION OF SU CH ADDRESS IN THE RETURN OF INCOME, AUDIT REPORT, BILL ISSUED, LETTE R HEAD OF THE ASSESSEE OR ANY OTHER DOCUMENTS . 17. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION AMOUNTING TO R S.122000/- MADE BY A.O ON ACCOUNT OF LEGAL CHARGES. 18. LD CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION AMOUNTING TO R S.263025/-MADE B A.O ON ACCOUNT OF BOGUS SALARY EXPENSES. 19. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION AMOUNTING TO R S.43,895/- MADE BY A.O ON ACCOUNT OF REPAIRS AND MAINTENANCE. 20. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION AMOUNTING TO R S.300000/- MADE BY A.O ON ACCOUNT OF INTEREST AND FINANCE CHARGES. 21. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF CASE IN DIRECTING THE A.O TO ALLOW THE DEPRECIAT ION AS PER REVISED CHART. 22. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION AMOUNTING TO R S.60000/- MADE BY A.O ON ACCOUNT OF SALE OF CAR. 23. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION AMOUNTING TO R S.80175/- MADE BY A.O ON ACCOUNT OF PACKING CHARGES IGNORING THE F ACT THAT THE PARTIES TO WHOM ALLEGED PAYMENT WERE MADE WERE FOUN D NOW EXISTENT AS PER REMARKS OF POSTAL AUTHORITIES. 24. ON THE FACTS AND CIRCUMSTANCES OF THE CASE L'D CIT (A) HAS ERRED TO SET ASIDE THE DISALLOWANCE AS TO ADVERTISE MENT EXPENSES TO THE TUNE OF RS.111540/- FOR MAKING FRESH ENQUIRIES NON- WITHSTANDING IN FACT THAT AS PER POSTAL REMARKS EIT HER THE GIVEN ADDRESS DOES NOT EXIST OR AT THE GIVEN ADDRESS THE IMPUGNED CONCERN DID NOT EXIST. 25. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE ADDITION OUT OF CASH PU RCHASES ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 5 AMOUNTING TO RS.211994/- MADE BY A.O U/S 40A(3) OF INCOME TAX ACT 1961. 26. L'D CIT(A) HAS ERRED IN LAW AND IN FACTS AND CI RCUMSTANCES OF THE CASE IN DELETING THE TRADING ADDITION AMOUNT ING TO RS.1000000/- MADE BY AO. 27. THE APPELLANT CRAVES TO BE ALLOWED TO AMEND, D ELETE OF ADD ANY OTHER GROUNDS OF APPEAL DURING THE COURSE OF HE ARING OF THIS APPEAL. 3. THE OBJECTOR, BY FILING THE PRESENT CROSS OBJECT ION, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 28.06.2007 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-XVIII, NEW DEL HI QUA THE ASSESSMENT YEAR 2004-05 ON THE GROUND THAT :- 1. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) HAS ERRED IN NOT ALLOWING AMOUNT OF RS.30,000/- PAI D TOWARDS RECONCILIATION WORKS UNDER THE HEAD ACCOUNTING CHAR GES. 2. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APP EALS) HAS ERRED IN HOLDING SERVICES RENDERED BY THE DIREC TOR OF THE COMPANY AS UNSUBSTANTIATED THEREBY DISALLOWING HER REMUNERATION AMOUNTING TO RS.120,000/-. 3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APP EALS) HAS ERRED IN HOLDING ADDITION OF RS.66,000/- AS CAS H ADVANCE UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961. 4. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APP EALS) HAS ERRED IN HOLDING ADDITION OF RS.36,000/- AS UNE XPLAINED EXPENDITURE UNDER SECTION 69 OF THE INCOME-TAX ACT, 1961. 4. BRIEFLY STATED THE FACTS OF THIS CASE ARE : ASSE SSEE FILED THE RETURN OF INCOME AT RS.36,70,360/- ON 29.10.2004. SHRI T.S. KAKKAR, CA/AR OF THE ASSESSEE PUT IN APPEARANCE DUR ING SCRUTINY PROCEEDINGS AND FILED NECESSARY DETAILS. ASSESSEE IS INTO THE BUSINESS OF SALE AND PURCHASE OF GOLD AND DIAMOND J EWELLERY. A ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 6 SURVEY OPERATION WAS CONDUCTED UNDER SECTION 133A O F THE INCOME- TAX ACT, 1961 (FOR SHORT THE ACT) ON 31.10.2003 L EADING TO THE RECOVERY OF UNACCOUNTED EXCESS STOCK AND IN THIS RE GARD, ASSESSEE SURRENDERED A SUM OF RS.30,18,369/- AND ADMITTED TO DECLARE IT AS AN ADDITIONAL INCOME FOR ASSESSMENT YEAR 2004-05. EXCESS UNACCOUNTED CASH OF RS.5,00,030/- WAS ALSO RECOVERE D WHICH THE ASSESSEE AGREED TO DECLARE AS ADDITIONAL INCOME FOR AY 2004-05. 5. FROM THE P&L ACCOUNT, IT IS NOTICED THAT A SUM O F RS.5,166/- HAS BEEN DEBITED ON ACCOUNT OF LOSS ON SALE OF ASSE T WHICH THE ASSESSEE HAS FAILED TO EXPLAIN AND AS SUCH NOT ALLO WED BY THE AO AND ADDED BACK TO THE INCOME OF THE ASSESSEE. 6. ASSESSEE DEBITED A SUM OF RS.24,210/- TO THE P&L ACCOUNT ON ACCOUNT OF TRAVELLING EXPENSES REGARDING VISIT O F SHRI JAGDISH LAL BHASIN, DIRECTOR ALONG WITH HIS WIFE, SMT. MEEN A BHASIN TO MUMBAI. ASSESSEE FAILED TO EXPLAIN THE BUSINESS EX PEDIENCY OF SUCH EXPENSES AND CONSEQUENTLY, AO DISALLOWED THE A MOUNT OF RS.24,210/- AS BUSINESS EXPENSES AND TREATED THE SA ME AS PERSONAL ONE. 7. ASSESSEE, DURING THE YEAR UNDER ASSESSMENT, HAS SHOWN AN ADDITION OF NEW SANTRO CAR COSTING RS.3,87,429/-. AO DISALLOWED THE DEPRECIATION AMOUNTING TO RS.38,472/- CLAIMED O N THE SAID CAR ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 7 ON THE GROUND THAT THE CAR WAS GOT REGISTERED ON 08 .04.2004 I.E. 8 DAYS AFTER END OF THE RELEVANT ACCOUNTING YEAR. 8. ASSESSEE DEBITED CAR MAINTENANCE EXPENSES TO THE TUNE OF RS.40,244/- TO P&L ACCOUNT AND OUT OF WHICH AMOUNT OF RS.3,266/- HAS BEEN DEBITED ON ACCOUNT OF INSURANCE PREMIUM OF OLD SANTRO CAR NO.DLICG2328 FOR THE PERIOD 25.06.2003 TO 24.06 .2004. OUT OF WHICH, THE AO DISALLOWED THE AMOUNT OF RS.760/- BEING RELATED TO THE PERIOD 01.04.2004 TO 24.06.2004 ON THE GROUN D THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTI NG. AO DISALLOWED 1/5 TH OF THE TOTAL EXPENSES AND THEREBY MADE ADDITION OF RS.7,395/-. 9. ASSESSEE DEBITED AN AMOUNT OF RS.11,000/- ON ACC OUNT OF INCOME-TAX FEE AND RS.2,500/- ON ACCOUNT OF SALES-T AX FEE IN THE P&L ACCOUNT BEING CHARGES OF PREPARATION AND FILING OF INCOME-TAX RETURN AND SALES-TAX RETURN WHICH HAS BEEN DISALLOW ED BY THE AO ON THE GROUND THAT FEE PAID TO CHARTERED ACCOUNTANT FOR PREPARING AND FILING OF INCOME AND SALES CANNOT BE CONSIDERED AS AN EXPENDITURE LAID OUT WHOLLY AND EXCLUSIVE FOR THE P URPOSE OF BUSINESS OR FOR EARNING INCOME AND THEREBY MADE AN ADDITION OF RS.11,000/- AND RS.2,500/- RESPECTIVELY. ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 8 10. AO NOTICED THAT THE ASSESSEE HAS RECEIVED INTER EST FREE UNSECURED LOAN OF RS.5,00,000/- FROM M/S. BHAWANA J EWELLERS WHOSE NAME WAS SHOWN IN THE LIST OF SUNDRY CREDITOR S. AO MADE AN ADDITION OF RS.5,00,000/- ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THE CAPACITY OF M/S. BHAWANA JEWELL ERS WHOSE ASSESSED INCOME FOR AY 2004-05 WAS ONLY RS.54,620/- ON WHICH IT HAS PAID MEAGER TAX TO THE TUNE OF RS.462/-. 11. AO NOTICED THAT MRS. MEENA BHASIN HAS GIVEN A C REDIT OF RS.2,50,000/- TO THE ASSESSEE COMPANY. ON PERUSAL OF THE BANK STATEMENT OF MRS. MEENA BHASIN, IT IS NOTICED THAT PRIOR TO LENDING AMOUNT OF RS.2,50,000/- TO THE ASSESSEE COMPANY, A CASH EQUIVALENT TO THE SAID ENTRY I.E. RS.2,50,000/- WAS DEPOSITED IN HER BANK ACCOUNT. IT WAS STATED THAT THE SAID AMOUNT W AS DEPOSITED IN THE BANK AFTER SELLING A CAR BUT THE ASSESSEE HAS F AILED TO SUBMIT REGISTRATION CERTIFICATE OF THE SAID CAR. CONSEQUE NTLY, THE AO MADE AN ADDITION OF RS.2,50,000/- BEING AN UNEXPLAINED C REDIT. 12. AO FURTHER NOTICED FROM THE COPY OF ACCOUNT OF SHRI ANKUSH BHASIN IN THE BOOKS OF ASSESSEE COMPANY THAT A SUM OF RS.7,50,000/- WAS GIVEN TO THE ASSESSEE COMPANY BY SHRI ANKUSH BHASIN. AO ALSO NOTICED ANOTHER CREDIT ENTRY OF RS .90,000/- ON 16.03.2004 GIVEN BY SHRI ANKUSH BHASIN TO THE ASSES SEE COMPANY. ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 9 ON FAILURE OF THE ASSESSEE COMPANY TO FURNISH BANK STATEMENT OF SHRI ANKUSH BHASIN ALONG WITH DOCUMENTARY EVIDENCE AO MADE AN ADDITION OF RS.8,40,000/- TO THE INCOME OF THE A SSESSEE. 13. AO NOTICED FROM THE COPY OF ACCOUNT OF SHRI JAG DISH LAL BHASIN IN THE BOOKS OF THE ASSESSEE THAT THE AMOUNT OF RS.5,00,000/-, RS.30,000/- AND RS,3,45,000/- WAS GI VEN BY SHRI JAGDISH LAL BHASIN TO THE ASSESSEE COMPANY ON 06.08 .2003, 21.08.2003 AND 27.03.2004 RESPECTIVELY AND OUT OF W HICH, RS.3,45,000/- WAS RECEIVED BY SHRI JAGDISH LAL BHAS IN IN RESPECT OF FAMILY HEALTH PLAN FROM GLOBAL TRUST BANK AND ON FA ILURE OF THE ASSESSEE TO PROVE THE REMAINING AMOUNT, AN ADDITION OF RS.5,30,000/- WAS MADE TO THE INCOME OF THE ASSESSE E COMPANY. 14. AO NOTICED THAT ASSESSEE SHOWN TO HAVE RECEIVED AMOUNT OF RS.1,00,000/- FROM SALE OF SHARES OF MFL (MAHINDRA FASTNERS LTD.). BUT ON FAILURE OF THE ASSESSEE COMPANY TO P ROVE THE CONTRACT NOTE AS TO THE SALE AND PURCHASE OF THE SAID INVEST MENT OR ANY INFORMATION FROM MFL MADE AN ADDITION OF RS.1,00,00 0/- AS UNEXPLAINED AMOUNT U/S 68 OF THE ACT. 15. AO NOTICED THAT DURING THE YEAR UNDER ASSESSMEN T, ASSESSEE COMPANY HAS SHOWN AN ADDITION OF A PHOTOCOPYING MAC HINE OF RS.1,11,000/- ON 24.11.2003. ASSESSEE FILED PURCHA SE BILL DATED ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 10 24.11.2003 ISSUED BY M/S. LA XEROX POINT WITH TELEP HONE NOS.9811082407 AND 31022901, WHICH WERE FOUND TO BE NOT IN EXISTENCE. THEN ASSESSEE WAS CALLED UPON TO PRODUC E PHOTOCOPY OF DELIVERY CHALLANS AS TO THE PURCHASE OF THE PHOTOCO PY MACHINE WHICH IT FAILED TO PRODUCE. CONSEQUENTLY, CLAIM OF DEPRECIATION OF RS.13,875/- HAS BEEN DISALLOWED BY THE AO. 16. SIMILARLY, ON FAILURE OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION CLAIMED AS FINANCE CHARGES AS TO THE ACQUISITION OF THE PHOTOCOPY MACHINE BY FURNISHING ANY COPY OR DETAILS AS TO ANY AGREEMENT OF FINANCE, AO DISALLOWED THE FINANCI AL CHARGES AMOUNTING TO RS.12,356/- 17. ASSESSEE DEBITED AN AMOUNT OF RS.74,710/- TO P& L ACCOUNT UNDER THE STAFF WELFARE EXPENSES AND BROUGHT ON R ECORD COPY OF LEDGER ACCOUNT. AO NOTICED THAT THE ENTIRE EXPENSE S HAVE BEEN INCURRED IN CASH. AO, FINDING DISCREPANCIES IN THE INTERNAL VOUCHERS, DISALLOWED 1/3 RD OF THE EXPENSES DEBITED UNDER THE HEAD STAFF WELFARE EXPENSES AMOUNTING TO RS.24,903/-. 18. ASSESSEE CLAIMED AN AMOUNT OF RS.2,37,715/- UND ER THE HEAD ELECTRICITY EXPENSES AND BROUGHT ON RECORD BILLS PERTAINING TO THE METERS INSTALLED AT SUBZI MANDI. AO NOTICED THAT I N THE BILL PERTAINING TO METER NO.970024, THE NAME OF ONE SHRI TILAK RAJ ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 11 BHASIN IS MENTIONED BUT NAME OF ASSESSEE COMPANY IS MISSING. EVEN THE ADDRESS OF 2300, SUBZI MANDI IS NOT MENTIO NED ON ANY OF THE DOCUMENT. SO, THE AO DISALLOWED THE ELECTRICI TY EXPENSES TO THE TUNE OF RS.1,18,726/- PERTAINING TO THE METER N O.970024 INSTALLED AT 2300, SUBZI MANDI. 19. ASSESSEE DEBITED A SUM OF RS.1,22,000/- TO P&L ACCOUNT ON ACCOUNT OF LEGAL CHARGES BUT NO SUCH EXPENSES WERE CLAIMED IN THE PRECEDING ASSESSMENT YEAR AND ACCORDINGLY, DETAILS WERE CALLED. AO NOTICED THAT ON 31.03.2006, ENTIRE LIABILITY OF RS.1,22,000/- WAS OUTSTANDING. SO, THE SAID UNASCERTAINED AND UNACCR UED PROVISION WAS MADE ON THE PENULTIMATE DATE OF ACCOUNTING TO R EDUCE THE ADDITIONAL INCOME DECLARED. AO CAME TO THE CONCLUS ION THAT IT WAS A CASE WHERE AN EXPENSE OF RS.1,22,000/- HAS BEEN C LAIMED BUT CORRESPONDING TAX ON THE INCOME IS TO BE PAID EVEN AFTER LAPSE OF ABOUT 33 MONTHS FROM THE DATE OF PROVISION AND THER EBY DISALLOWED THE SAME. 20. DURING THE YEAR UNDER ASSESSMENT, THE AO DISALL OWED THE AMOUNT OF RS.2,63,025/- ON ACCOUNT OF BOGUS SALARY EXPENSES ON THE GROUND THAT NAME OF SIX PERSONS, NAMELY, BIJEND ER SINGH AND OTHERS ARE NOT APPEARING IN THE LIST DURING THE SUR VEY PROCEEDINGS. ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 12 21. ASSESSEE CLAIMED AN AMOUNT OF RS.71,619/- ON AC COUNT OF REPAIR AND MAINTENANCE. IN THE IMMEDIATE PRECEDING YEAR, AN AMOUNT OF RS.43,774/- WAS CLAIMED. DETAILS OF EXPE NSES ALONG WITH COPIES OF BILL WERE CALLED FOR. ON FAILURE OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTION AMOUNT OF RS.43,895/-, OUT OF THE TOTAL AMOUNT OF RS.71,619/-, HAS BEEN DI SALLOWED. 22. ASSESSEE CLAIMED AN AMOUNT OF RS.18,74,588/- UN DER THE HEAD INTEREST AND FINANCE CHARGES. AO NOTICED TH AT THE AMOUNT OF RS.15,17,541/- HAS BEEN GIVEN TO M/S. BHASIN PROPER TIES AS INTEREST FREE ADVANCES. SO, THE AO HAS PROPORTION ATELY DISALLOWED THE AMOUNT FROM THE INTEREST AND FINANCE CHARGES CLAIMED BY THE ASSESSEE @ 15% ON INTEREST FREE ADVANCES AND DISA LLOWED THE AMOUNT OF RS.3,00,000/-. 23. ASSESSEE SHOWN TO HAVE SOLD SANTRO CAR NO.DL1CG 2228 ON 26.03.2004 FOR RS.1,00,000/- BY RECEIVING CASH PAYM ENT. BUT, AO NOTICED THAT AT PAGE NO.20 OF THE LEDGER INITIALLY AN AMOUNT OF RS.1,60,000/- WAS ENTERED AND THEN LATER ON, THE SA ME IS CHANGED THROUGH PENCIL TO RS.1,00,000/- AND THE CORRESPONDI NG ENTRY IN THE CASH BOOK, THERE IS OVERWRITING OF RS.1,60,000/- CH ANGED TO RS.1,00,000/-. ON FAILURE OF THE ASSESSEE TO SUBST ANTIATE THE VALUE ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 13 OF THE CAR IN QUESTION SHOWN IN THE BOOKS, AO MADE AN ADDITION OF RS.60,000/- TO THE INCOME OF THE ASSESSEE. 24. AO NOTICED THAT PAGE NO.289 OF THE LEDGER ACCOU NT OF QUALITY PACKERS IS WRITTEN WITH PENCIL AND A CASH PAYMENT O F RS.80,175/- IS SHOWN TO HAVE BEEN MADE TO VERIFY THE GENUINENESS O F THE PURCHASES OF THE PACKING MATERIAL. SUMMONS WERE SE NT WITH REMARKS THAT NO SUCH CONCERN ARE EXISTING AT THE GI VEN ADDRESS, SO THE AO DISALLOWED THE AMOUNT OF RS.80,175/- AND ADD ED THE SAME BACK TO THE INCOME OF THE ASSESSEE. 25. ASSESSEE DEBITED AMOUNT OF RS.1,97,180/- UNDER THE HEAD ADVERTISEMENT WHICH WAS AN INCREASE FROM RS.1,21, 200/- IN THE AY 2003-04. IN ORDER TO VERIFY THE INCREASED CLAIM , COPY OF BILL WAS CALLED WHICH THE ASSESSEE HAS FAILED TO VERIFY AND THE SUMMONS SENT TO M/S. IMPERIAL PLASTICS AND M/S. ANAND ADVER TISER RECEIVED BACK WITH THE REPORT THAT NO SUCH FIRM ARE EXISTING IN THE GIVEN ADDRESS. SO, THE AO DISALLOWED THE AMOUNT OF RS.80 ,300/- BEING THE ADVERTISEMENT EXPENSES PAID TO M/S. IMPERIAL PL ASTICS, RS.31,240/- PAID TO M/S. ANAND ADVERTISER AND RS.11 ,000/- PAID TO RAMLILA COMMITTEE AND THEREBY MADE AN ADDITION OF R S.1,22,540/-. 26. AO DISALLOWED THE AMOUNT OF RS.2,11,994/- ON AC COUNT OF CASH PURCHASES MADE BY THE ASSESSEE DURING THE PERI OD 01.11.2003 ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 14 TO 31.03.2004 REGARDING GOLD BY INVOKING THE PROVIS IONS CONTAINED U/S 40A (3) TO THE TUNE OF RS.71,994/- AND FURTHER DISALLOWED THE AMOUNT ON PRORATA BASIS TO THE TUNE OF RS.1,40,000/ - ON FAILURE OF THE ASSESSEE TO PRODUCE PURCHASE VOUCHER FROM 01.04 .2003 TO 30.10.2003 AND MADE A TOTAL DISALLOWANCE OF RS.2,11 ,994/- 27. AO MADE AN ADDITION OF RS.10,00,000/- TO THE IN COME OF THE ASSESSEE ON ACCOUNT OF TRADING ADDITION ON FAILURE OF THE ASSESSEE TO EXPLAIN AS TO HOW THE UNACCOUNTED CASH OF RS.5,00,0 00/- WAS GENERATED HAVING BEEN FOUND DURING THE SURVEY PROCE EDINGS. ASSESSEE HAS ALSO FAILED TO GET THE CASH PURCHASES VERIFIED AS NAMES OF THE SELLER WERE NOT EVEN MENTIONED 28. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL. FEELING AGGRIEVED, THE REVEN UE HAS COME UP BEFORE THE TRIBUNAL BY CHALLENGING THE IMPUGNED ORD ER PASSED BY THE LD. CIT (A) BY WAY OF FILING THE PRESENT APPEAL . 29. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE S OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 15 30. AO DISALLOWED AN AMOUNT OF RS.5,166/- DEBITED O N ACCOUNT OF LOSS OF SALE OF ASSETS ON THE GROUND THAT THE SA ME IS OF CAPITAL IN NATURE. HOWEVER, THE SAME IS ALLOWED BY CIT (A) BY CONSIDERING THE SAME IN THE BLOCK OF ASSETS AS PER INCOME-TAX L AW. WE ARE OF THE CONSIDERED VIEW THAT DURING ASSESSMENT PROCEEDI NGS, ASSESSEE HAS FILED REVISED DEPRECIATION CHART WHICH HAS BEEN REJECTED BY THE AO WITHOUT ANY REASON. CIT (A) HAS RIGHTLY DIRECTE D THE AO TO CONSIDER THE SAME IN THE BLOCK OF ASSETS. EVEN OTH ERWISE, KEEPING IN VIEW THE SMALLNESS OF THE AMOUNT, NO INTERFERENC E IS REQUIRED AT THIS STAGE. SO, GROUND NO.1 IS DETERMINED AGAINST THE REVENUE. GROUND NO.2 31. THE AMOUNT OF RS.24,210/- DISALLOWED AS TRAVELL ING EXPENSES STATED TO HAVE BEEN INCURRED BY SMT. MEENA BHASIN, ONE OF THE DIRECTORS, HAS BEEN ALLOWED BY THE LD. CIT (A) BY T AKING INTO ACCOUNT THE FACT THAT THE ASSESSEE COMPANY HAS SUBS TANTIAL TRADING IN DIAMONDS FOR WHICH SUPPLIES COME FROM MUMBAI, A BIGGEST WHOLESALE MARKET IN INDIA AND A TOUR TO MUMBAI FOR SURVEY OF DIAMOND MARKET, QUALITY OF DIAMOND AND PREVAILING P RICES WOULD BE A NORMAL BUSINESS PROPOSITION. AO MERELY DISALL OWED THESE EXPENSES ON THE GROUND THAT SMT. MEENA BHASIN IS NO T A WORKING DIRECTOR BUT THIS IS NOT PERMISSIBLE BECAUSE A DIRE CTOR THOUGH NOT A ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 16 WORKING DIRECTOR HAS SUBSTANTIAL INTEREST IN THE WO RKING AND PROFIT OF THE COMPANY, SO CIT (A) HAS RIGHTLY DELETED THE ADDITION OF RS.24,210/- MADE BY THE AO. GROUNDS NO.3 & 4 32. AO DISALLOWED DEPRECIATION ON NEW CAR TO THE TU NE OF RS.38,472/- WHICH HAS BEEN DELETED BY THE LD. CIT ( A) VIDE THE IMPUGNED ORDER. AO HAS MERELY DISALLOWED THE DEPRE CIATION ON THE GROUND THAT CAR IN QUESTION HAS BEEN REGISTERED WITH REGISTERING AUTHORITY ON 08.04.2004. HOWEVER, WHEN ASSESSEE HA S DULY PROVED THAT THE DELIVERY OF THE CAR WAS TAKEN ON 29.03.200 4 AS PER PURCHASE INVOICE AND GATE-PASS ISSUED BY SUHRIT HYU NDAI, THE DEPRECIATION HAS BEEN RIGHTLY CLAIMED AS REGISTRATI ON OF THE VEHICLE WILL RELATE BACK TO THE DATE OF ACTUAL DELIVERY OF THE CAR I.E. 29.03.2004 IN QUESTION BY THE ASSESSEE COMPANY. LI KEWISE, THE CIT (A) HAS RIGHTLY DIRECTED THE AO TO ALLOW DEPREC IATION OF RS.5,606/- ON INSURANCE PREMIUM CAPITALIZED IN RESP ECT OF NEW CAR BECAUSE THE SAME WAS PROVED TO PUT TO USE W.E.F. 29 .03.2004. WE FIND NO GROUND TO INTERFERE IN THE FINDINGS RETURNE D BY THE LD. CTI (A) AND CONSEQUENTLY, GROUNDS NO.3 & 4 ARE DETERMIN ED AGAINST THE REVENUE. ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 17 GROUND NO.5 33. AO HAS DISALLOWED 1/5 TH OF THE CAR MAINTENANCE EXPENSES ON THE GROUND THAT CAR IN QUESTION WAS USED BY THE DIR ECTORS, THEIR FAMILY MEMBERS, RELATIVE AND FRIENDS FOR PERSONAL U SE. BUT WE ARE OF THE CONSIDERED VIEW THAT NO SUCH MAINTENANCE EXP ENSES CAN BE DISALLOWED ON ACCOUNT OF PERSONAL USE OF DIRECTOR A ND FAMILY MEMBERS. MOREOVER, AO HAS NOT BROUGHT ON RECORD AN Y EVIDENCE TO PROVE THE ELEMENT OF PERSONAL USE OF THE CAR PAR TICULARLY WHEN THE SAME HAS BEEN PURCHASED IN THE NAME OF THE COMP ANY AND STATED TO HAVE BEEN USED FOR THE COMPANY BY THE ASS ESSEE. SO, FINDING NO ILLEGALITY AND PERVERSITY IN THE FINDING RETURNED BY THE LD. CIT (A), GROUND NO.5 IS ALSO DETERMINED AGAINST THE REVENUE. GROUND NOS.6 & 7 34. AO DISALLOWED THE AMOUNT OF RS.11,000/- AND RS. 2,500/- IN RESPECT OF FEE PAID IN RESPECT OF PREPARATION AND F ILING OF INCOME- TAX RETURN AND IN RESPECT OF SALES-TAX FEE RESPECTI VELY WHICH HAS BEEN ALLOWED BY THE CIT (A). WE AGAIN FIND NO ILLE GALITY AND PERVERSITY IN THE FINDINGS RETURNED BY THE LD. CIT (A) ON THE GROUND THAT PREPARATION AND FILING OF INCOME-TAX AND SALES -TAX RETURN CAN ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 18 ONLY BE MADE BY AN EXPERT HAND I.E. CHARTERED ACCOU NTANT WHOSE SERVICES ARE AVAILABLE ONLY ON PAYMENT. SO, GROUND NOS.6 & 7 ARE DETERMINED AGAINST THE REVENUE. GROUND NO.8 35. AO MADE AN ADDITION OF RS.5,00,000/- TAKEN BY T HE ASSESSEE AS UNSECURED LOAN FROM M/S. BHAWANA JEWELLERS ON TH E GROUND THAT THE ASSESSEE COMPANY HAS FAILED TO PROVE THE CAPACI TY OF THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION. H OWEVER, THE ADDITION HAS BEEN DELETED BY THE CIT A) ON THE GROU NDS INTER ALIA THAT WHEN THE IDENTITY, CREDITWORTHINESS AND GENUIN ENESS OF THE TRANSACTION IS ESTABLISHED; THAT THE LOAN IS PROVED TO HAVE BEEN GIVEN / RETURNED THROUGH ACCOUNT PAYEE CHEQUE WHICH HAS BEEN VERIFIED BY THE AO AND THAT M/S. BHAWANA JEWELLERS HAVE DULY CONFIRMED ADVANCEMENT OF THE LOAN, IN THE GIVEN CIR CUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT MERELY BECAUSE OF T HE FACT THAT LENDER, M/S. BHAWANA JEWELLERS, IS LIVING IN LIG FL AT AND HAS SHOWN AN INCOME OF RS.54,620/- ONLY BY PAYING TAX O F RS.462/- DURING THE RELEVANT ASSESSMENT YEAR AND THAT HE WAS ALREADY IN DEBT OF RS.5,00,000/- QUA THE LOAN TAKEN FROM SHRI ANAND JAIN AND ANITA JAIN, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED. MOREOVER, THE AMOUNT OF RS.5,00 ,000/- WAS ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 19 RETURNED BY THE ASSESSEE COMPANY BY WAY OF CHEQUE O N 09.09.2004 AND THIS FACT HAS NOT BEEN DISPUTED BY THE AO. SO, FINDINGS RETURNED BY THE LD. CIT (A) ARE HEREBY AFFIRMED AND THE GROUND NO.8 IS DETERMINED AGAINST THE REVENUE. GROUND NO.9 36. AO MADE AN ADDITION OF RS.2,50,000/- BEING UNEX PLAINED CREDIT ENTRY IN THE CURRENT ACCOUNT OF SMT. MEENA B HASIN. ASSESSEE COMPANY CLAIMED THAT THE SAID AMOUNT WAS CREDITED B EING THE SALE PROCEEDS OF CAR BEARING REGISTRATION NO.DL0065. AO MADE AN ADDITION ON THE GROUNDS INTER ALIA THAT MODEL AND M AKE OF THE CAR IS NOT MENTIONED; THAT NAME AND ADDRESS OF THE PURCHAS ER OF THE CAR IS NOT DISCLOSED; THAT PROOF OF PURCHASE OF CAR IN INS TALLMENTS NOT FILED; THAT IT IS NOT BELIEVABLE THAT THE CAR HAVIN G ORIGINAL VALUE OF ABOUT RS.3,00,000/- WAS SOLD AFTER FOUR YEARS AT TH E SALE CONSIDERATION OF RS.2,50,000/-. HOWEVER, CIT (A) A FTER ENTERTAINING ADDITIONAL EVIDENCE UNDER RULES 46A OF THE INCOME- TAX RULES, 1962 DELETED THE ADDITION ON THE GROUND THAT FROM THE EVIDENCES IN THE FORM OF DELIVERY RECEIPT AND CASH RECEIPT WHICH CORROBORATES THE AFFIDAVIT ALREADY FILED BY SMT. ME ENA BHASIN, THE AMOUNT OF RS.2,50,000/- IN HER CURRENT ACCOUNT STAN DS EXPLAINED. THE CONTENTION OF THE LD. AR THAT SINCE AO HAS NOT BEEN GIVEN AN ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 20 OPPORTUNITY TO FILE REPLY TO THE APPLICATION FOR AD DITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME-TAX RULES, 1962, THE M ATTER SHOULD BE REMITTED TO THE AO IS NOT TENABLE BECAUSE THE AO WAS GIVEN SUFFICIENT TIME BY CIT (A) DURING APPELLATE PROCEED INGS BUT HE HAS NOT PREFERRED TO RAISE ANY OBJECTION TO THE APPLICA TION FOR ADDITIONAL EVIDENCE. MOREOVER, THE DOCUMENTS ENTERTAINED BY C IT (A) IN ADDITIONAL EVIDENCE WERE MERELY TO SUBSTANTIATE THE AFFIDAVIT ALREADY FILED BY SMT. MEENA BHASIN AND WAS NOT ORDI NARILY REQUIRING VERIFICATION. SO, FINDING NO ILLEGALITY OR INFIRMITY IN THE FINDINGS RETURNED BY LD. CIT (A), GROUND NO.9 IS AL SO DETERMINED AGAINST THE REVENUE. GROUND NOS.10, 11 & 12 37. CIT (A) DELETED AN ADDITION OF RS.8,40,000/- MA DE BY THE AO U/S 68 OF THE ACT BY ENTERTAINING APPLICATION FO R ADDITIONAL EVIDENCE. AO HAD NOTICED THAT ON 17.07.2003, AN AM OUNT OF RS.7,50,000/- WAS GIVEN TO ASSESSEE COMPANY BY SHRI ANKUSH BHASIN AND ANOTHER CREDIT ENTRY OF RS.90,000/- DATE D 16.03.2004 WAS ALSO NOTICED FROM SHRI ANKUSH BHASIN TO ASSESSE E COMPANY AND SINCE THE ASSESSEE COMPANY HAS FAILED TO FURNIS H BANK STATEMENT OF SHRI ANKUSH BHASIN ALONG WITH DOCUMENT ARY EVIDENCE ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 21 AS TO THE SOURCE OF RECEIPT OF MONEY BY SHRI ANKUSH BHASIN, AO MADE ADDITION OF RS.8,40,000/- (RS.7,50,000/- + RS. 90,000/-). 38. HOWEVER, DURING APPELLATE PROCEEDINGS BEFORE TH E CIT (A), ASSESSEE PRODUCED SALE DEED OF A FLAT SOLD BY SHRI ANKUSH BHASIN TO SHRI KULDIP SINGH FOR RS.7,50,000/- ON 07.07.200 3 AND ALSO PRODUCED MATURITY RECEIPT OF KISAN VIKAS PATRA OF R S.90,000/- VIDE CHEQUE NO.596314, SBI, TIS HAZARI ISSUED BY GPO, DE LHI IN THE BANK ACCOUNT OF SHRI ANKUSH BHASIN ACCOUNT NO.52642 , UBI, SUBZI MANDI AND LD. CIT (A) FOUND THAT CREDIT ENTRY OF RS .8,40,000/- STANDS PROVED AND DELETED ADDITION THEREOF. 39. THE ADDITION OF RS.5,30,000/- MADE ON ACCOUNT O F CREDIT ENTRIES APPEARING IN THE CURRENT ACCOUNT OF SHRI JA GDISH LAL BHASIN, THE DIRECTOR OF THE ASSESSEE COMPANY, MADE BY THE A O HAS BEEN DELETED BY CIT (A) AFTER ENTERTAINING ADDITIONAL EV IDENCE TO THE EFFECT THAT SHRI JAGDISH LAL BHASIN HAS TAKEN LOAN FROM M/S. BBC FINANCIERS PVT. LTD. ON 17.07.2003 AND RS.30,000/- WAS TRANSFERRED FROM HIS SAVING BANK ACCOUNT WHICH WAS REQUIRED TO BE VERIFIED BY THE AO FROM THE COPY OF THE PASSBOOK FILED WITH HIM . SO, THE CIT (A) ON THE BASIS OF COGENT EVIDENCE ADDUCED BEFORE HIM DELETED THE ADDITION OF RS.5,30,000/-. ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 22 40. SIMILARLY, AO MADE AN ADDITION OF RS.1,00,000/- ON THE GROUND THAT ASSESSEE HAS FAILED TO FILE THE CONFIRM ATION OF SALE OF 10,000 EQUITY SHARES OF MAHINDRA FASTNERS LTD. (MF L) OF THE COMPANY OF RS.1,00,000/- TO PROVE DEPOSIT OF RS.1,0 0,000/- IN THE COMPANY ACCOUNT. HOWEVER, DURING APPELLATE PROCEED INGS BEFORE LD. CIT (A), ASSESSEE EXPLAINED THAT INVESTMENT IN THE SHARES OF MFL HAS BEEN DULY RECORDED IN THE BALANCE SHEET UND ER THE HEAD INVESTMENT AS MFL SHARES AND ALSO PLACED ON RECORD COPY OF ACCOUNT LEDGER FOLIO 25. SO, WHEN THE AMOUNT OF RS .1,00,000/- STANDS EXPLAINED, THE CIT (A) HAS RIGHTLY DELETED T HE ADDITION. 41. LD. DR FOR THE ASSESSEE CONTENDED THAT SINCE TH E AO HAS NOT BEEN PROVIDED WITH AN OPPORTUNITY TO CONTROVERT THE ADDITIONAL EVIDENCE ENTERTAINED BY THE CIT (A), THE MATTER IS REQUIRED TO BE RESTORED BACK TO THE AO FOR VERIFICATION. THE CONTE NTION RAISED BY LD. DR FOR THE REVENUE THAT THE AO MUST HAVE BEEN P ROVIDED WITH AN OPPORTUNITY TO CONTROVERT THE ADDITIONAL EVIDENC E ENTERTAINED BY THE CIT (A) DURING APPELLATE PROCEEDINGS IS NOT TEN ABLE BECAUSE DOCUMENTS TAKEN IN ADDITIONAL EVIDENCE BY THE CIT ( A) ARE PRIMA FACIE TENABLE AND ALL THE TRANSACTIONS HAVE BEEN RO UTED THROUGH BANK AND MOREOVER AO WAS PROVIDED WITH ENOUGH OPPOR TUNITY TO CONTROVERT THE APPLICATION FOR ADDITIONAL EVIDENCE WHO HAS NOT ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 23 PREFERRED TO AVAIL OF THE OPPORTUNITY. SO, GROUND NOS.10, 11, AND 112 ARE DETERMINED AGAINST THE REVENUE. GROUND NOS.13 & 14 42. LD. CIT (A) DELETED THE DISALLOWANCE OF RS.13,8 75/- AND RS.12,356/- DISALLOWED BY THE AO BEING THE DEPRECIA TION CLAIMED BY THE ASSESSEE ON PHOTOCOPY MACHINE AND FINANCE CH ARGES RESPECTIVELY. AO DISALLOWED THE DEPRECIATION AND F IANC CHARGES ON THE SOLE GROUND THAT THE ASSESSEE HAS FAILED TO GET THE PURCHASE BILL VERIFIED DURING THE ASSESSMENT PROCEEDINGS. H OWEVER, DURING APPELLATE PROCEEDINGS, ASSESSEE PROVED THAT PHOTOCO PIER MACHINE WAS PURCHASED IN INSTALLMENT FOR RS.1,11,000/- AND PURCHASE BILL THEREOF HAS BEEN FILED WITH CIT (A). SO, THE CIT ( A) HAS RIGHTLY ALLOWED THE DEPRECIATION ON PHOTOCOPY MACHINE AND F INANCE CHARGES, WHICH NEEDS NO INTERFERENCE AND CONSEQUENT LY GROUND NOS.13 & 14 ARE DETERMINED AGAINST THE REVENUE. GROUND NO.15 43. CIT (A) DELETED THE AMOUNT OF RS.24,903/- BEING 1/3 RD DISALLOWANCE MADE BY THE AO OUT OF THE STAFF WELFAR E EXPENSES INCURRED BY THE ASSESSEE. AO DISALLOWED 1/3 RD OF THE STAFF WELFARE EXPENSES ON THE GROUND THAT ONLY INTERNAL VOUCHERS WERE PRODUCED ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 24 AND NO SINGLE PAKKA VOUCHER WAS PRODUCED. HOWEVER, CIT (A) ALLOWED THE STAFF WELFARE EXPENSES ON THE GROUND TH AT IN THE LAST YEAR, EXPENSES UNDER THIS HEAD WERE RS.74,980/- AND IN VIEW OF THE NATURE OF ASSESSEES BUSINESS, DISALLOWANCE MADE BY THE AO IS UNREASONABLE, HENCE DELETED. IN THE GIVEN CIRCUMST ANCES, WE FIND NO GROUND TO INTERFERE IN THE FINDINGS RETURNED BY THE LD. CIT (A), HENCE GROUND NO.15 IS DETERMINED AGAINST THE REVENU E. GROUND NO.16 44. LD. CIT (A) DELETED THE DISALLOWANCE OF RS.1,18 ,726/- MADE BY THE AO OUT OF ELECTRICITY EXPENSES ON THE GROUND THAT ELECTRICITY METER NO.930424 IS IN THE NAME OF SHRI TILAK RAJ BH ASIN WHO IS NEITHER DIRECTOR NOR EMPLOYEE OF THE ASSESSEE COMPA NY NOR ADDRESS OF 2300, SUBZI MANDI IS MENTIONED ON ANY DOCUMENT. HOWEVER, FINDINGS RETURNED BY THE AO ARE WELL-REASONED AND B ASED ON COGENT EVIDENCE THAT NEITHER SHRI TILAK RAJ BHASIN IS DIRE CTOR NOR EMPLOYEE OF THE ASSESSEE COMPANY NOR ADDRESS BEARIN G NO.2300, SUBZI MANDI PERTAINS TO ASSESSEE COMPANY IN ANY MAN NER AND IT IS UNDISPUTED FACT THAT DURING SURVEY PROCEEDINGS, ONL Y ADDRESS OF ASSESSEES COMPANY IS 2298, SUBZI MANDI. SO, WHEN THE ELECTRIC METER IS INSTALLED AT SOME OTHER PLACE THE SAME CAN NOT BE CONSIDERED TO HAVE BEEN USED FOR BUSINESS PURPOSE B Y THE ASSESSEE ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 25 COMPANY. SO, THE CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE AO. SO, GROUND NO.16 IS DETERMINED IN FAVOUR OF THE REVENUE. GROUND NO.17 45. CIT (A) DELETED THE ADDITION OF RS.1,22,000/- M ADE BY THE AO ON ACCOUNT OF LEGAL CHARGES DEBITED BY THE ASSES SEE COMPANY TO P&L ACCOUNT. AO DISALLOWED THE LEGAL CHARGES ON TH E GROUND THAT THE SAME ARE APPARENTLY ON VERY HIGH SIDE WHICH CAN NOT BE SAID TO BE WHOLLY INCURRED FOR BUSINESS PURPOSES. HOWEVER, CIT (A) DELETED THE DISALLOWANCE ON THE GROUND THAT SINCE T HE ASSESSEE COMPANY HAS BEEN CONSISTENTLY FOLLOWING THE MERCANT ILE METHOD OF ACCOUNTING MAKING A PROVISION FOR LEGAL CHARGES TO ATTEND THE POST SURVEY PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION ARE VALID ONE. WHEN THE AO HIMSELF HAS NOT DISPUTED THE FACT THAT LEGAL CHARGES IN SUCH PROCEEDINGS ARE REQUIRED TO BE PAID THE SAME C ANNOT BE DISALLOWED ON THE BASIS OF CONJECTURES AND SURMISES THAT THE SAME ARE ON HIGHER SIDE. MOREOVER, WHEN PROVISION HAS B EEN MADE UNDER THE MERCANTILE METHOD OF ACCOUNTING FOR LEGAL CHARGES AS HELD BY CIT (A) THE DISALLOWANCE MADE BY THE AO IS NOT SUSTAINABLE. HENCE, WE FIND NO GROUND TO INTERFERE WITH THE ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 26 FINDINGS RETURNED BY THE LD. CIT (A), SO GROUND NO. 17 IS DETERMINED AGAINST THE REVENUE. GROUND NO.18 46. LD. CIT (A) DELETED THE ADDITION OF RS.2,63,025 /- MADE BY THE AO ON ACCOUNT OF BOGUS SALARY EXPENSES. AO MAD E THIS ADDITION ON THE GROUND THAT SALARY EXPENSES FOR SIX PERSONS WERE CLAIMED WHOSE NAMES WERE NOT APPEARING IN THE LIST OF EMPLOYEES FURNISHED BY THE ASSESSEE DURING ASSESSMENT PROCEED INGS NOR THE ASSESSEE COMPANY FURNISHED THE PHOTOCOPIES OF APPOI NTMENT LETTER OF THOSE EMPLOYEES. HOWEVER, CIT (A) DELETED THE A DDITION AFTER PERUSAL OF ATTENDANCE REGISTER, SALARY PAYMENT REGI STER, PROVIDENT FUND REGISTER AND ESI RECORD AND OBSERVED THAT IN T HE FACE OF AFORESAID DOCUMENTS, POSSIBILITY OF OMISSION OF INC LUDING THESE PERSONS IN THE LIST PREPARED AT THE TIME OF SURVEY PROCEEDINGS CANNOT BE RULED OUT. WHEN THE NAMES OF THE AFORESA ID SIX EMPLOYEES ARE APPEARING IN PF AND ESI RECORD PREPAR ED IN THE DUE COURSE OF OFFICIAL DUTIES BY THE CONCERNED DEPARTME NT, THE SALARY BILL CANNOT BE TREATED AS BOGUS. SO, THE CIT (A) H AS RIGHTLY DELETED THE ADDITION MADE ON THIS ACCOUNT, HENCE GROUND NO. 18 IS RETURNED AGAINST THE REVENUE. ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 27 GROUND NO.19 47. CIT (A) DELETED THE DISALLOWANCE OF RS.43,895/- MADE BY THE AO BEING THE AMOUNT CLAIMED TO HAVE INCURRED BY THE ASSESSEE FOR PURCHASE OF ELECTRICAL GOODS FROM M/S. VISHAL ELECT RICALS AND M/S. KRISHNA ENTERPRISES ON THE GROUND THAT ASSESSEE HAS FAILED TO PRODUCE SHRI VEER SEN CHOPRA TO PROVE JOB CHARGES E TC. BY TREATING THE SAME AS BOGUS EXPENSES. HOWEVER, CIT (A) ON TH E BASIS OF FACTS AND DOCUMENTARY EVIDENCE FOUND THE EXPENDITUR E GENUINE BEING THE ANNUAL MAINTENANCE CHARGES PAID VIDE BILL DULY PLACED BEFORE THE AO BY THE ASSESSEE. SO FINDING NO GROUN D TO INTERFERE, WE HEREBY DECIDE GROUND NO.19 AGAINST THE REVENUE. GROUND NO.20 48. LD. CIT (A) DELETED THE ADDITION OF RS.3,00,000 /- MADE BY THE AO ON ACCOUNT OF INTEREST AND FINANCE CHARGES C LAIMED BY THE ASSESSEE. AO MADE ADDITION ON THE GROUND THAT WHEN THE ASSESSEE HAS HIMSELF GIVEN INTEREST FREE ADVANCES TO M/S. BH ASIN PROPERTIES, SANJAY BHASIN, TILAK RAJ BHASIN AND ANJU BHASIN OF RS.15,17,541/-, RS.1,42,919/-, RS.2,99,663/- AND RS .15,916/- RESPECTIVELY, THE FUNDS CANNOT BE TREATED TO HAVE A VAILED FOR BUSINESS PURPOSE. ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 28 49. HOWEVER, LD. CIT (A) DELETED THE ADDITION OF RS .3,00,000/- ON THE GROUND THAT WHEN THE INTEREST FREE ADVANCES GIVEN BY THE ASSESSEE COMPANY TO IS EX-DIRECTORS AND RELATIVES A RE OLD ONE AND ARE TO THE TUNE OF RS.19,76,000/-. THE ASSESSEE CO MPANY HAS ALSO GOT INTEREST FREE LOANS/ADVANCES FROM ITS DIRECTORS AND RELATIVES TO THE TUNE OF RS.75,55,000/- ON WHICH NO INTEREST HAS BEEN PAID, ADDITION IS NOT SUSTAINABLE. EVEN OTHERWISE, THE I NTEREST ON ACCOUNT OF INTEREST FREE LOANS CANNOT BE DISALLOWED PRIMARI LY ON THE GROUND THAT THE ASSESSEE HAD SUFFICIENT FUNDS OUT OF WHICH ADVANCES HAVE BEEN MADE. SO, IN THE GIVEN CIRCUMSTANCES, WE FIND NO GROUND TO INTERFERE IN THE FINDINGS RETURNED BY LD. CIT (A), HENCE GROUND NO.20 IS DETERMINED AGAINST THE REVENUE. GROUND NO.21 50. LD. CIT (A) DIRECTED THE AO TO ALLOW THE REVISE D DEPRECIATION AS PER THE COMPANIES ACT TO THE TUNE OF RS.1,43,315/- INVOLVING AN AMOUNT OF RS.25,911/-. AO DECLINED TH E REVISED DEPRECIATION ON THE SOLE GROUND THAT THE REVISED CH ART IS NOT SIGNED BY THE AUTHORIZED REPRESENTATIVE. HOWEVER, IN THE GIVEN CIRCUMSTANCES, THE CIT (A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT IN THE GIVEN CIRCUMSTAN CES, AO WAS REQUIRED TO ASK THE AR TO SIGN THE REVISED DEPRECIA TION CHART, WHICH ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 29 IS OTHERWISE NOT DISPUTED BY THE AO DURING THE ASSE SSMENT PROCEEDINGS. SO AGAIN, WE FIND NO GROUND TO INTERF ERE INTO THE FINDINGS RETURNED BY THE LD. CIT (A). GROUND NO.21 IS DETERMINED AGAINST THE REVENUE. GROUND NO.22 51. LD. CIT (A) DELETED THE ADDITION OF RS.60,000/- MADE BY THE AO ON ACCOUNT OF SALE OF CAR. AO HAS MADE THE ADDI TION MERELY ON THE GROUND THAT THERE IS OVER WRITING IN THE BOOKS OF ACCOUNT. HOWEVER, CIT (A) AFTER PERUSING THE CASH RECEIPT AN D DELIVERY RECEIPT OF THE SALE OF THE CAR FOR RS.1,00,000/- AN D COPIES OF CASH BOOK AND LEDGER WHERE THE TOTAL TALLY WITH THE FIGU RE OF RS.1,00,000/- DELETED THE ADDITION, WHICH REQUIRES NO INTERFERENCE BY THE TRIBUNAL, HENCE GROUND NO.22 IS ALSO DETERMI NED AGAINST THE REVENUE. GROUND NO.23 52. CIT (A) HAS DELETED THE ADDITION OF RS.80,175/- MADE BY THE AO ON ACCOUNT OF PACKAGING CHARGES. AO MADE THE AD DITION ONLY ON THE GROUND THAT THE SUMMONS ISSUED U/S 131 OF TH E ACT TO SOME PARTIES WERE RECEIVED BACK UNSERVED. HOWEVER, CIT (A) AFTER PERUSING THE PACKING EXPENSES ACCOUNT, COPIES OF BI LLS/VOUCHERS ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 30 AND IN VIEW OF THE CUSTOMARY AND FACTUAL EVIDENCE, CAME TO THE CONCLUSION THAT EXPENSES IN QUESTION WERE INCURRED FOR BUSINESS REQUIREMENT AS GOLD AND DIAMOND JEWELLERY HAS TO BE SOLD IN JEWELLERY BOXES, PURSES, POUCHES, ETC. WHICH ARE CO MMENSURATE WITH THE TURNOVER OF THE ASSESSEE COMPANY TO THE TU NE OF RS.2.64 CRORES. SO AGAIN, WE FIND NO GROUND TO INTERFERE I NTO THE FINDINGS RETURNED BY THE LD. CIT (A), HENCE GROUND NO.23 IS DETERMINED AGAINST THE REVENUE. GROUND NO.24 53. ASSESSEE HAS CLAIMED AN AMOUNT OF RS.1,97,180/- UNDER HEAD ADVERTISEMENT EXPENSES OUT OF WHICH RS.1,22,540/- HAS BEEN DISALLOWED BY THE AO ON THE GROUND THAT SUMMONS ISS UED TO TWO PARTIES RECEIVED BACK UNSERVED. HOWEVER, OUT OF DI SALLOWANCE OF RS.1,22540/-, CIT (A) ALLOWED THE AMOUNT OF RS.11,0 00/- PAID TO THE RAMLILA COMMITTEE AND QUA THE REMAINING ADDITIO NS SET ASIDE THE MATTER AND DIRECTED THE AO FOR FRESH ENQUIRY TH ROUGH INSPECTOR BY GIVING AN OPPORTUNITY TO THE ASSESSEE. WE ARE O F THE CONSIDERED VIEW THAT WHEN THE AMOUNT CLAIMED BY THE ASSESSEE H AS NOT BEEN GOT VERIFIED BY THE AO DURING ASSESSMENT PROCEEDING S, THE CIT (A) HAS RIGHTLY SET ASIDE THE MATTER TO AO TO DECIDE AF RESH. SO, WE FIND NO GROUND TO INTERFERE INTO THE FINDINGS RETURNED B Y THE LD. CIT (A) ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 31 AND AO TO PROCEED AS PER DIRECTIONS ISSUED BY THE L D. CIT (A). SO, GROUND NO.24 IS DETERMINED AGAINST THE REVENUE. GROUND NO.25 54. CIT (A) DELETED THE ADDITION OF RS.2,11,994/- I N RESPECT OF CASH PURCHASES MADE BY THE ASSESSEE COMPANY. AO DI SALLOWED THE AMOUNT OF RS.2,11,994/- UNDER SECTION 40(A)(3). HO WEVER, THE CIT (A) DELETED THE ADDITION BY MAKING FOLLOWING OB SERVATIONS :- AO OBSERVATIONS AND ASSESSEE SUBMISSIONS HAVE BEE N GONE THROUGH. IT IS NOTED THAT THE AO HAS CLUBBED THE C ASH PURCHASES OF GOLD MADE ON A SINGLE DAY WHICH WERE LESS THAN RS.2 0,000/- EACH IN ORDER TO INVOKE THE PROVISION OF SECTION 40(A)(3 ). THIS IS CONTRARY TO THE RECORD OF GOLD REGISTER KEPT ON A R EGULAR BASIS WHERE EACH CASH PURCHASE OF GOLD THROUGH SERIALED PURCHAS E VOUCHER WEIGHT WISE HAS BEEN ENTERED. THUS, CLUBBING OF TH ESE PURCHASES IS ARBITRARY AND IS BASED ON SURMISES. THE ADDITION T HEREFORE IS DELETED. 55. AO CHOOSES TO INVOKE PROVISIONS CONTAINED U/S 4 0(A)(3) CLUBBED THE CASH PURCHASES OF GOLD MADE IN A SINGLE DAY WHICH IS NOT PERMISSIBLE WHEN THE RECORD OF GOLD REGISTER IS MAINTAINED ON A REGULAR BASIS WHEREIN EACH CASH PURCHASE OF GOLD TH ROUGH PURCHASE VOUCHER, WEIGHT-WISE HAS BEEN ENTERED. SO, IN THE GIVEN CIRCUMSTANCES, THE CIT (A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO. SO, GROUND NO.25 IS DETERMINED AGAINST THE REVENUE. GROUND NO.26 56. AO HAS MADE AN AD HOC ADDITION OF RS.10,00,000/ - ON ACCOUNT OF NON-FURNISHING OF BOOKS OF ACCOUNT, RELE VANT DOCUMENTS ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 32 AND STOCK INVENTORY, WHICH HAS BEEN DELETED BY THE CIT (A) BY MAKING FOLLOWING OBSERVATIONS :- A.O.'S OBSERVATION AND ASSESSEE'S SUBMISSION HAVE BEEN GONE THROUGH. AS REGARDS THE ALLEGATION OF NON-FURNISHIN G OF THE BOOKS OF ACCOUNTS, THE ASSESSEE COMPANY HAS FURNISHED THE PHOTOCOPY OF THE NOTINGS OF ORDER SHEET IN THE ASSESSMENT PROCEE DINGS WHICH CLEARLY INDICATE THAT THE BOOKS OF ACCOUNTS AND DOC UMENTS AS CALLED FOR FROM TIME TO TIME HAVE BEEN PRODUCED BEFORE THE A.O. PHOTOCOPY OF THE DOCUMENTS INCLUDING PURCHASE AND S ALE VOUCHERS, CASH BOOK., LEDGER, BANK BOOK HAVE BEEN FILED WHERE FROM THE A.O HAVE POINTED OUT FURTHER ENQUIRIES. THUS, THE ALLEG ATION THAT BOOKS OF ACCOUNTS HAVE NOT BEEN PRODUCED IS WITHOUT ANY B ASIS. AS REGARD THE FURNISHING OF INVENTORY THE ASSESSEE COMPANY HAVE GIVEN THE BASIS OF VALUATION CONSISTENTLY FOLLOWED BY IT AND OTHERS IN THE TRADE OF GOLD/DIAMONDS VIZ WEIGHT OF GOLD/DI AMONDS AS PER STOCK REGISTER KEPT ON REGULAR BASIS ALONG WITH MON THWISE PURCHASE AND SALE OF GOLD / DIAMONDS IN WEIGHT IN GRAMS / CA RAT. THERE IS NO CHANGE IN THE BASIS OF VALUATION. THE A.O. HAS NOT POINTED OUT ANY DISCREPANCY IN THIS REGARD. IT IS ALSO NOTED THAT G .P. RATE DECLARED DURING THIS IS BETTER OVER LAST YEAR- GOLD 18.22% A S AGAINST 16.73% LAST YEAR, DIAMOND 29.57% AS AGAINST 26.30% LAST YE AR. THE ASSESSING OFFICER HAS NOT POINTED ANY DEFECT / DISC REPANCY IN ACCOUNTS. IN VIEW OF THE ABOVE DISCUSSION, IN MY CONSIDERED O PINION, THE TRADING ADDITION OF RS.10 LAC MADE BY THE A.O. IS N OT SUSTAINABLE AND THEREFORE, DIRECTED TO BE DELETED. 57. PERUSAL OF THE AFORESAID FINDINGS RETURNED BY L D. CIT (A) GOES TO PROVE THAT THE CIT (A) HAS AFTER EXAMINING THE MATTER THREADBARE CAME TO THE CONCLUSION THAT THE BOOKS OF ACCOUNT AND REQUISITE DOCUMENTS HAVE BEEN PRODUCED BEFORE AO AN D PHOTOCOPIES OF THE SALE VOUCHERS, CASH BOOK, LEDGER AND BANK BOOK WERE ALSO FILED AND AS SUCH, THE ALLEGATION OF NON- PRODUCING THE BOOKS OF ACCOUNT IS WITHOUT ANY BASIS. WHEN THE AO HAS NOT DISPUTED THE ACCOUNT BOOKS THE CIT (A) HAS RIGHTLY DELETED THE ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 33 ADDITION. SO, WE FIND NO GROUND TO INTERFERE WITH THE FINDINGS RETURNED BY THE LD. CIT (A) AND THE GROUND NO.26 IS DETERMINED AGAINST THE REVENUE. CO NO.392/DEL./2007 GROUNDS NO.1 & 4 58. AT THE VERY OUTSET, THE LD. AR FOR THE ASSESSEE /CROSS OBJECTOR HAS STATED THAT KEEPING IN VIEW THE SMALLNESS OF TH E AMOUNT INVOLVED, HE DOES NOT PRESS GROUND NOS.1 & 4. CONS EQUENTLY, GROUNDS NO.1 & 4 ARE DETERMINED AGAINST THE ASSESSE E/CROSS OBJECTOR. GROUND NO.2 59. CIT (A) AFFIRMED THE ADDITION OF RS.1,20,000/- MADE BY THE AO BY DISALLOWING THE REMUNERATION ALLEGED TO HAVE BEEN PAID TO MS. SONIKA BHASIN, ONE OF THE DIRECTORS OF THE ASSE SSEE COMPANY BY RETURNING FOLLOWING FINDINGS :- THE RIVAL POSITION HAS BEEN CAREFULLY CONSIDERED. IT IS NOTED THAT THERE IS CONTRADICTION IN THE STATEMENT OF SHRI RAW AT, ACCOUNTANT OF THE FIRM AS RECORDED BY THE A.O. AND HIS SUBSEQUENT AFFIDAVIT FILED BEFORE HIM. THE LADY DIRECTOR HAS NOT BEEN PRODUCE D FOR EXAMINATION FOR WHATEVER REASON ADVANCED BY THE COM PANY. THE SERVICES RENDERED BY THE LADY REMAIN UNSUBSTANTIATE D AND THEREFORE, A.O. WAS JUSTIFIED IN DISALLOWING THE REMUNERATION OF RS.120,000/- PAID TO HER. THE ADDITION IS, THEREFORE, UPHELD. ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 34 60. BARE PERUSAL OF THE FINDINGS RETURNED BY AO AS WELL AS CIT (A) GOES TO PROVE THAT THERE ARE INHERENT CONTRADIC TION IN THE STATEMENT OF MR. RAWAT, ACCOUNTANT OF THE FIRM WITH HIS SUBSEQUENT AFFIDAVIT FILED DURING ASSESSMENT PROCEE DINGS WHICH HAS FAILED TO SUBSTANTIATE THE SERVICES RENDERED BY SON IKA BHASIN, THE ADDITION MADE BY AO HAS BEEN RIGHTLY AFFIRMED BY LD . CIT (A). EVEN OTHERWISE, SONIKA BHASIN, DIRECTOR OF A COMPAN Y HAVING TURNOVER OF RS.2.64 CRORES IS NOT PROVED TO HAVE AS SIGNED ANY SUBSTANTIAL ROLE TO RUN THE BUSINESS OF THE ASSESSE E COMPANY AS NO SUCH DOCUMENT HAS COME ON RECORD NOR SUCH REMUNERAT ION HAS EARLIER BEEN CLAIMED BY THE ASSESSEE COMPANY. SO, IN THESE CIRCUMSTANCES, WE FIND NO GROUND TO INTERFERE INTO THE FINDINGS RETURNED BY THE LD. CIT (A), HENCE GROUND NO.2 IS D ETERMINED AGAINST THE ASSESSEE. GROUND NO.3 61. AS REGARDS ADDITION OF RS.66,000/-, IT IS NOTIC ED THAT THE ASSESSEE COMPANY CLAIMED THAT IT HAS RECEIVED AMOUN T OF RS.66,000/- FROM SMT. NIDHI ON 30.03.2004 FOR PURCH ASING GOLD WORTH RS.1,06,278/- VIDE SALE BILL NO.98 DATED 18.0 4.2004 AND THE SAID ADVANCE WAS ADJUSTED. AO MERELY MADE AN ADDIT ION ON THE BASIS OF REPLY RECEIVED FROM SMT. NIDHI U/S 133 (6) STATING THEREIN ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 35 THAT SHE HAS GIVEN OLD GOLD AND NOT CASH OF RS.66,0 00/-. WHEN THE ASSESSEE HAS CATEGORICALLY PLEADED THAT ON THE SALE BILL, IT IS SPECIFICALLY WRITTEN THAT RS.66,000/- VIDE RECEIPT NO.511 DATED 30.03.2004 IS ON ACCOUNT OF ADJUSTMENT OF CASH PAYM ENT, THE ADDITION CANNOT BE MADE MERELY ON THE BASIS OF REPL Y BY SMT. NIDHI WITHOUT PROVIDING OPPORTUNITY TO CROSS EXAMINE HER BY THE ASSESSEE. THIS FACT HAS ALSO NOT BEEN TAKEN CARE O F BY THE LD. CIT (A) WHEN THE SALE BILL NO.98 DATED 18.04.2004 AND A DJUSTING CASH PAYMENT OF RS.66,000/- VIDE RECEIPT NO.511 DATED 30 .03.2004 HAS NOT BEEN DISPUTED BY THE AO NOR HAS DISPUTED THE BO OKS OF ACCOUNT, THIS ADDITION IS NOT SUSTAINABLE IN THE EYES OF LAW . HENCE, GROUND NO.3 OF THE CROSS OBJECTION IS ALLOWED IN FAVOUR OF THE CROSS OBJECTOR/ASSESSEE. 62. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE A PPEAL FILED BY THE REVENUE (ITA NO.3855/DEL/2007) IS PARTLY ALL OWED FOR STATISTICAL PURPOSES AND CROSS OBJECTION FILED BY T HE ASSESSEE (CO NO.392/DEL/2007) IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2016. SD/- SD/- (J.S. REDDY) (KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH DAY OF AUGUST, 2016/TS ITA NO.3855/DEL./2007 CO NO.392/DEL./2007 36 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) - XVIII, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.