Sh. Bijender Singh Nandal, Sonepat V. ITO, Sonepat

CO 6/DEL/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8507 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-11-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: BHIM SINGH
• Keywords: Rejection of books of accounts; Business income; Assessment record
• Section: 68; 145

Judgement Text

ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `A NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.5796/DEL/2012 ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER, VS SHRI BI JENDER SINGH NANDAL, WARD-3, SONEPAT. S/O SH.AMAR SINGH NANDAL, VILL. UDESHIPUR, TEHSIL GANNAUR, SONEPAT. (PAN: ADZPN1371K) C.O.NO.6/DEL/2013 (IN I.T.A.NO.5796/DEL/2012) ASSESSMENT YEAR : 2009-10 SHRI BIJENDER SINGH NANDAL, VS INCOME T AX OFFICER, SONEPAT SONEPAT. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI BHIM SINGH, SR.DR RESPONDENT BY : SHRI K. SAMPATH O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAINS T THE ORDER OF COMMISSIONER OF INCOME TAX(A)-ROHTAK DATED 14.09.20 12 IN APPEAL NO.614/SPT/2011-12 FOR AY 2009-10. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS ALSO FILED CROSS OBJECTION RELATED TO THE SAME IMPUGNED ORDER, THEREFORE, WE ARE DECIDING BOTH WITH THIS CONSOLIDA TED ORDER. ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 2 2. SOLE GROUND RAISED BY THE REVENUE READS AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING T HE ADDITION AMOUNTING TO RS.1,44,27,840/- MADE BY THE ASSESSING OFFICER AS THE ASSESSEE FAILED TO PROVE THE CREDIT WORTHINESS AND THE GENUINENESS OF THE CREDITORS DURING THE ASS ESSMENT PROCEEDINGS AS WELL AS DURING APPELLATE PROCEEDINGS , THE LD. COMMISSIONER OF INCOME TAX(A) DELETED THIS ADDITION WITHOUT APPRECIATING THE FACTS DISCUSSED IN DETAIL IN ASSESSMENT ORDER AS WELL AS IN REMAND REPORT. 3. BRIEFLY STATED, THE FACTS GIVING RISE TO THIS AP PEAL ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE CASE WAS SELECTED ON CA SS FOR COMPULSORY SCRUTINY FOR NON-CORPORATE ASSESSEE AS PER ACTION P LAN. THE ASSESSING OFFICER ISSUED NOTICES U/S 143(2) OF THE ACT ALONG WITH QUESTIONNAIRE AND SHOW CAUSE NOTICE SERVED ON THE ASSESSEE. DURING T HE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PROVE THE ID ENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTIONS SHOWN BY THE ASSESSEE AS SUNDRY CREDITORS OF RS.1,44,27,8 40/-. THE ASSESSEE SUBMITTED AFFIDAVITS OF THE SAID SUNDRY CREDITORS. THE ASSESSING OFFICER OBSERVED THAT THESE AFFIDAVITS DO NOT CONTAIN AMOUN T OF TOTAL SALES MADE DURING THE YEAR TO THE ASSESSEE, AMOUNT RECEIVED DU RING THE YEAR FROM THE ASSESSEE, DETAIL OF TDS DEDUCTED, DETAIL OF RECEIPT OF OUTSTANDING AMOUNT BY THE SUNDRY CREDITORS FROM THE ASSESSEE IN SUBSEQUEN T YEARS. THE ASSESSING OFFICER ALSO OBSERVED THAT SAID SUNDRY CREDITORS WE RE NOT INCOME TAX ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 3 ASSESSEES AND PERSONS OF MEANS. FINALLY, THE ASSES SING OFFICER HELD THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS O F SAID SUNDRY CREDITORS AND GENUINENESS OF THE TRANSACTION. THEREFORE, RESULTS SHOWN BY THE ASSESSEE WERE NOT GENUINE AND THE ASSESSING OFFICER MADE AN ADDITION AMOUNTING TO RS.1,44,27,840 U/S 68 OF THE ACT. THE ASSESSING OF FICER ALSO MADE DISALLOWANCE AND ADDITION ON ACCOUNT OF 20% OF THE EXPENDITURE CLAIMED IN P&L ACCOUNT AND TELEPHONE EXPENSES. THE ASSESSING OFFICER ALSO MADE AN ADDITION ON ACCOUNT OF INADEQUATE WITHDRAWALS FOR H OUSEHOLD EXPENSES DECLARED BY THE ASSESSEE. 4. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(A), ROHTAK WHICH WAS PARTLY ALLOWED DELETING THE ADDITION PERTAINING TO SUNDRY CREDITORS. THE COMMISSIONER OF INCOME TAX(A) OBSERVED THAT THE ASS ESSING OFFICER HAS ERRONEOUSLY APPLIED THE TEST OF CASH CREDITORS BECA USE IN THE CASE OF CASH CREDITORS, IT IS THE QUESTION OF GENUINENESS AND CR EDITWORTHINESS TO GIVE LOANS WHEREAS IN THE CASE OF SUNDRY CREDITORS, THE ISSUE OF CREDITWORTHINESS DOES NOT ARISE. THE COMMISSIONER OF INCOME TAX(A) DELETE D THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUNDRY CREDITORS BY THE IMPUGNED ORDER. NOW, THE REVENUE IS BEFORE THIS TR IBUNAL IN THIS SECOND APPEAL WITH THE SOLE GROUND AS MENTIONED HEREINABOV E. ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 4 5. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY PERUSED THE RECORD AND ORDERS OF THE AUTHORITIES BE LOW. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER RIGHTLY HELD THAT THE AS SESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF SUNDRY CREDITORS AND GENUIN ENESS OF THE TRANSACTION, THEREFORE, THE ASSESSING OFFICER RIGHTLY REJECTED T HE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT AND MADE ADDITION TO THE TOTAL IN COME OF THE ASSESSEE TREATING THE SAME AS INCOME FROM UNDISCLOSED SOURCE S. LD. DR SUBMITTED THAT SECTION 68 OF THE ACT LAY ONUS OF PROOF ON THE ASSESSEE TO SHOW THE CREDITWORTHINESS OF THE TRANSACTION BUT THE ASSESSE E FAILED TO DO SO, THEREFORE, THE ASSESSING OFFICER RIGHTLY MADE ADDITION U/S 68 OF THE ACT. THE DR ALSO SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) WA S NOT JUSTIFIED IN DELETING THE ADDITION AND THE COMMISSIONER OF INCOM E TAX(A) ERRONEOUSLY DELETED THE ADDITION ON BASELESS GROUNDS. THE DR S UBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT O F THE ASSESSING OFFICER. 6. REPLYING TO THE ABOVE, LD. COUNSEL FOR THE ASSES SEE POINTED OUT THAT THE ASSESSEE FILED AFFIDAVITS OF THE SAID SUNDRY CREDIT ORS BEFORE THE ASSESSING OFFICER WHICH WERE NOT ACCEPTED BY THE ASSESSING OF FICER AND ON FIRST APPEAL, THE COMMISSIONER OF INCOME TAX(A) RIGHTLY A UTHORIZED THE ASSESSING OFFICER U./S 250(4) OF THE ACT TO CONDUCT PROPER INQUIRY INCLUDING VERIFICATION AND RECORDING OF STATEMENT OF SUNDRY C REDITORS. THE COUNSEL ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 5 POINTED OUT THAT IN THE REMAND REPORT DATED 6.8.201 2, THE ASSESSING OFFICER STATED THAT THE STATEMENTS OF 4 SUNDRY CREDITORS NA MELY S/SH. AZAD SINGFH, BALRAJ SINGH, IQBAL SINGH AND ATTAR SINGH WERE RECO RDED ON RANDOM BASIS AND THE ASSESSING OFFICER SUBMITTED VARIOUS OBSERVA TIONS WHICH HAVE BEEN REPRODUCED BY THE COMMISSIONER OF INCOME TAX(A) IN PARA 4.1 OF THE IMPUGNED ORDER. LD. COUNSEL SUBMITTED THAT THE ASS ESSING OFFICER RELIED ON THE WRONG LEGAL PROPOSITIONS AND IF THE CONTENTION OF THE ASSESSING OFFICER OF BOGUS SUNDRY CREDITORS AMOUNTING TO RS. 1,44,27, 840 IS ACCEPTED, THEN IT WOULD RESULT IN A NET PROFIT OF RS.1,48,09,316 ON A TURNOVER OF RS.2,18,65,413/-, LEADING TO AN UNACCEPTABLE AND U NBELIEVABLE NET PROFIT RATE OF 68% OF THE TURNOVER. LD. COUNSEL VEHEMENTLY CON TENDED THAT THE ASSESSEE IS IN A WHOLESALE BUSINESS OF SUPPLY OF CONSTRUCTIO N MATERIAL NAMELY SAND, RODI, BAJRI ETC. WHICH WOULD NOT RESULT INTO A NET PROFIT OF 68% OF THE TURNOVER IN ANY CASE. THE AR SUPPORTED THE IMPUGNED ORDER A ND SUBMITTED THAT THE APPEAL OF THE REVENUE IS DEVOID OF MERITS. 7. ON CAREFUL CONSIDERATION OF ABOVE CONTENTIONS AN D SUBMISSIONS OF BOTH THE PARTIES, FROM THE IMPUGNED ORDER, WE OBSER VE THAT THE COMMISSIONER OF INCOME TAX(A) HAS INVOKED PROVISION S OF SECTION 250(4) OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO CO NDUCT PROPER INQUIRY INCLUDING VERIFICATION OF STATEMENT OF SUNDRY CREDI TORS AND THEIR AFFIDAVITS. ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 6 IN THE REMAND REPORT, THE ASSESSING OFFICER STATED THAT THE STATEMENT OF FOUR SUNDRY CREDITORS RECORDED ON RANDOM BASIS REVEALS T HAT ALL OF THEM HAVE INCOME FROM AGRICULTURE AND TRUCK RUNNING; NONE OF THEM ARE FILING INCOME TAX RETURN CLAIMING THAT THEY HAVE NO TAXABLE INCOM E, THE SUNDRY CREDITORS ADMITTED THAT THEY HAD HUGE AMOUNT OUTSTANDING WITH THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE SUNDRY CREDITORS ALSO TOLD THAT THEY USED TO WRITE ON KACHI PARCHI BUT THEY WERE UNABLE TO FU RNISH THE SAME. IN THIS SITUATION WHEN ASSESSING OFFICER HIMSELF HAS VERIFI ED THE CREDITWORTHINESS OF THE SUNDRY CREDITORS, THEN THEIR STATEMENT CANNOT B E REJECTED MERELY ON THE BASIS THAT THEY ARE NOT FILING INCOME TAX RETURN CL AIMING THAT THEY HAVE NO TAXABLE INCOME. FROM THE IMPUGNED ORDER, WE OBSERV E THAT THE COMMISSIONER OF INCOME TAX(A) HAS DISCUSSED THE ISS UE AT LENGTH AND GIVEN A REASONABLE FINDING FOR ADJUDICATION OF THE ISSUE. RELEVANT PORTION OF THE IMPUGNED ORDER READS AS UNDER:- 4.2 IN THE REJOINDER, THE APPELLANT SUBMITTED THAT AFFIDAVITS ALONG WITH ID PROOFS OF ALL THE SUNDRY C REDITORS WERE FURNISHED DURING ASSESSMENT PROCEEDINGS. FURTH ER, ALL THE SUNDRY CREDITORS EXCEPT ONE WERE PRODUCED B EFORE THE AD AND THE AD RECORDED THE STATEMENTS OF SOME O F THEM ON RANDOM BASIS. AS PER YOUR DIRECTIONS TO EXA MINE THE GENUINENESS OF THE SUNDRY CREDITORS, THE AD ISS UED NOTICE TO PRODUCE SOME OF THEM. ALL THESE SUNDRY CR EDITORS WERE PRODUCED ALONG WITH RC BOOKS, DRIVING LICENSE AND ID PROOFS. BASED ON THE STATEMENTS RECORDED, THE AO ERRONEOUSLY AND ARBITRARILY CONCLUDED THAT THEY ARE NOT MEN OF MEANS AND THE ASSESSEE COULD NOT PROVE THE ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 7 CREDITWORTHINESS AND GENUINENESS OF THE CREDITORS. WHEN THE SUNDRY CREDITORS ARE CONFIRMING THE SUPPLY OF G OODS, OUTSTANDING BALANCES, OWNERSHIP OF THE VEHICLES AND EXPLAINING THE SOURCE OF SUPPLY, THE INFERENCE DRAW N BY THE AD IS ERRONEOUS AND WITHOUT ANY BASIS. THE ACTION O F THE AD IN REJECTING THE BOOKS OF ACCOUNTS IS ARBITRARY AND ERRONEOUS WHEN THE SUNDRY CREDITORS HAVE CONFIRMED THE TRANSACTIONS BY WAY OF AN AFFIDAVIT AND REITERATED THE SAME BEFORE THE AD. IT IS WORTHWHILE TO NOTE THAT THE AD HAS DROPPED THE PENALTY PROCEEDINGS INITIATED U/S 271A FOR NOT PRODUCING/MAINTAINING REGULAR BOOKS OF ACCOUNTS VID E ORDER DATED 21.06.2012 WHICH VINDICATES THE STAND O F THE APPELLANT THAT REGULAR AND PROPER BOOKS OF ACCOUNTS WERE MAINTAINED. 5. I HAVE CAREFULLY CONSIDERED THE ISSUE, THE SUBMISSIONS MADE BY THE AR, THE REMAND REPORTS OF T HE AD AND THE ASSESSMENT RECORDS. BEFORE ADJUDICATING THE MATTER, IT WOULD BE APPROPRIATE AND RELEVANT TO UND ERSTAND THE NATURE OF THE BUSINESS OF THE APPELLANT. SUPPLY OF SAND, RODI ETC. IS IN THE UNORGANIZED SECTOR WHEREIN INDI VIDUAL VEHICLE OWNERS SUPPLY THE MATERIAL FROM THE QUARIES /MINES AT THE DESIRED DESTINATION AND USUALLY NO INVOICES ARE ISSUED. THE PAYMENTS ARE MADE ON THE BASIS OF MEASUREMENT OF QUANTITY UNLOADED AT THE SITE. THE E NTIRE BUSINESS SEEMS TO BE WORKING ON CREDIT BASIS WHEREI N THE SUPPLIERS MAKE PAYMENTS TO THE QUERIES/MINES AFTER THE RECEIPT OF PAYMENTS FROM THEIR CUSTOMERS. THE SUPPL IERS OF SAND, RODI ETC. DO NOT MAINTAIN ANY BOOKS OF ACCOUN TS AND ONLY MAINTAIN 'KACHI PARCHIES' AS THEY ARE SMALL TI ME ILLITERATE/SEMI ILLITERATE OPERATORS. MANY A TIMES THEY MAY NOT BE MAINTAINING BANK A/ C AND OFTEN THEY ARE NOT IT ASSESSEES. 5.1 IT IS EVIDENT FROM THE RECORDS THAT THE AO INIT IATED ASSESSMENT PROCEEDINGS IN A SERIOUS MANNER ONLY FRO M 11.08.2011 BY WAY OF ISSUING A GENERAL QUESTIONNAIR E. THE DETAILS OF SUNDRY CREDITORS WAS SOUGHT ONLY BY NOTI CE DATED 28.11.2011. IN THE ABOVE BACKGROUND, THE APPELLANT HAS FURNISHED AFFIDAVITS OF ALL THE SUNDRY CREDITORS AL ONG WITH ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 8 THE ID PROOFS, RC OF THE VEHICLES ETC. ALL THE SUND RY CREDITORS EXCEPT ONE (ON MEDICAL GROUNDS) WERE PROD UCED BEFORE THE AO AND THE AO RECORDED THE STATEMENTS OF FOUR SUNDRY CREDITORS. THE SUNDRY CREDITORS HAVE CONFIRM ED THE TRANSACTIONS AND THE OUTSTANDING AMOUNTS DUE WITH T HE APPELLANT BOTH IN THE AFFIDAVIT AND IN THE STATEMEN TS BEFORE THE AO. 5.2 THE AO IN PARA 2 OF THE ASSESSMENT ORDER STATED THAT 'IN SPITE OF SUFFICIENT OPPORTUNITIES OF BEING HEAR D, THE ASSESSEE HAS FAILED TO PRODUCE BOOKS OF ACCOUNTS AL ONG WITH COMPLETE VOUCHERS'. HOWEVER, ON THE OTHER HAND THE AO REJECTED THE BOOKS OF ACCOUNTS U/S 145 (3) OF TH E ACT IN PARA 3.2 OF THE ASSESSMENT ORDER ON THE GROUND THAT SHE WAS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETE NESS OF THE BOOKS OF ACCOUNTS. HAVING REJECTING THE BOOKS O F ACCOUNTS, THE AO RELIED UPON THE SAME BOOKS OF ACCO UNTS FOR DISALLOWING THE ENTIRE SUNDRY CREDITORS AND PAR T OF THE EXPENSES IN TRADING AND P&L A/C (PARA 4 & 5 OF THE ASSESSMENT ORDER). IT IS EVIDENT FROM THIS THAT THE AO GOT MISDIRECTED HERSELF AND WAS CONFUSED ON THE FACTS O F THE CASE. 5.3 IT IS SEEN THAT THE APPELLANT SUPPLIED THE MA TERIALS TO BIG AND REPUTED CONCERNS NAMELY MIS AHLUWALIA CONTR ACTS INDIA LTD., M/S ACC CONCRETE LTD. ETC. AND THE SUND RY DEBTORS STAND AT RS 1,50,76,452/-. THE SMALL DIFFER ENCES IN THE ACCOUNTS OF THE SUNDRY DEBTORS HAVE BEEN DULY RECONCILED BY THE APPELLANT DURING ASSESSMENT PROCE EDINGS (PAGES 5-12 PB). IT IS EVIDENT FROM THE ABOVE T HAT THE LIABILITY TOWARDS THE SUNDRY CREDITORS OF RS. 1,44, 27,840/- IS REFLECTED IN THE FORM OF ASSETS BY WAY OF SUNDRY DEBTORS OF RS 1,50,76,452/-. 5.4 THE ACTION OF THE AO IN ADDING THE ENTIRE SUN DRY CREDITORS ON THE GROUND THAT THEY ARE MEN OF NO MEA NS AND DO NOT HAVE THE CREDITWORTHINESS IS MISPLACED AND MISDIRECTED. THE AO HAS ERRONEOUSLY APPLIED THE TES T OF CASH CREDITORS FOR THIS CASE OF SUNDRY CREDITORS. I N THE CASE OF CASH CREDITORS, IT IS THE QUESTION OF GENUINENES S AND ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 9 CREDITWORTHINESS TO GIVE LOANS WHEREAS IN THE CASE OF SUNDRY CREDITORS THE ISSUE OF CREDITWORTHINESS DOES NOT ARISE. THE AO HAS WRONGLY APPLIED THE CASE LAWS REL ATING TO SECTION 68 FOR THE MATTER UNDER CONSIDERATION WH ICH IS REGARDING SUNDRY CREDITORS. WHEN THE SUNDRY CREDITO RS HAVE CONFIRMED THE TRANSACTIONS AND OUTSTANDING AMO UNT WITH THE APPELLANT, THERE IS NO REASON AS TO WHY IT HAS TO BE DISBELIEVED WHEN THE AO WAS NOT HAVING ANY ADVERSE MATERIAL ON RECORD. IT IS FURTHER SO WHEN THE AO HA S NOT DOUBTED THE GENUINENESS OF PURCHASES MADE BY THE APPELLANT. IT IS NOT TO BE SEEN FROM THE ASSESSMENT RECORDS THAT THE AO HAS MADE ANY ENQUIRIES REGARDING THE GENUINENESS OF PURCHASES. WHEN PURCHASES HAVE NOT B EEN DOUBTED, THE CORRESPONDING CREDITORS CANNOT BE TERM ED AS NOT GENUINE. THE AO HAS NOT DRAWN ANY ADVERSE INFER ENCE ON THE SALES TAX RETURNS PRODUCED BEFORE HER DURING ASSESSMENT PROCEEDINGS MEANING THEREBY THAT THE GENUINENESS OF SALES HAVE ALSO NOT BEEN DOUBTED. 5.5 IF THE AO'S CONTENTION OF BOGUS SUNDRY CREDIT ORS OF RS 1,44,27,840/- IS TAKEN INTO THE ACCOUNT, IT WOULD R ESULT IN A NET PROFIT OF RS 1,48,09,316/- ON A TURNOVER OF RS 2,18,65,413/- THEREBY LEADING TO ABSURD NET PROFIT RATE OF 68%. IT CANNOT BE ANY BODY'S .CASE THAT WHOLESALE B USINESS OF SUPPLY OF CONSTRUCTION MATERIAL LIKE SAND, RODI ETC. WOULD RESULT IN A NET PROFIT OF 68% . 5.6 IN VIEW OF THE ABOVE, THE ADDITION OF ENTIRE SUNDRY CREDITORS OF RS 1,44,27,840/- BY THE AO IS DELETED AND THE GROUNDS OF APPEAL ARE ALLOWED. 8. ACCORDINGLY, AFTER THOUGHTFUL CONSIDERATION OF T HE FACTS AND CIRCUMSTANCES OF THE CASE AND ON THE BASIS OF DISCU SSION MADE HEREINABOVE, WE OBSERVE THAT IF ADDITION MADE BY THE ASSESSING O FFICER IS SUSTAINED, THEN IT WOULD RESULT IN A NET PROFIT OF 68% ON THE TOTAL TURNOVER OF THE ASSESSEE ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 10 WHICH IS NOT ACCEPTABLE IN NORMAL COURSE OF BUSINES S. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY INCRIMINATING MATERIA L TO SHOW THAT THE ASSESSEE HAS EARNED SUCH AMOUNT FROM UNDISCLOSED SO URCE AND THE ASSESSEE IS SHOWING THE SAME IN THE GARB OF BOGUS SUNDRY CREDIT ORS. THE COMMISSIONER OF INCOME TAX(A) HAS MADE A DETAILED INQUIRY AND HA S ALSO CALLED A REMAND REPORT FORM THE ASSESSING OFFICER WHICH REVEALS THI S FACT THAT THE SUNDRY CREDITORS IN THEIR STATEMENT SUBMITTED THE FACT THA T THEY EXTENDED TRADE CREDITS. WE ALSO OBSERVE THAT THE ASSESSING OFFICE R HAS NOT DOUBTED THE GENUINENESS OF THE PURCHASES MADE BY THE ASSESSEE A ND WE ARE UNABLE TO SEE THAT THE ASSESSING OFFICER HAS MADE ANY INQUIRIES R EGARDING THE GENUINENESS OF THE PURCHASES. IN THIS SITUATION, WE OBSERVE TH AT WHEN THE PURCHASES SHOWN BY THE ASSESSEE IN ITS TRADING RESULTS HAVE N OT BEEN DOUBTED, THEN CORRESPONDING CREDITORS CANNOT BE TERMED AS DOUBTFU L AND NOT GENUINE. AT THIS POINT, WE ALSO OBSERVE THAT THE ASSESSING OFFI CER HAS NOT POINTED OUT ANY ADVERSE INFERENCE ON THE SALE TAX RETURN PRODUCED B EFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND IT LE ADS TO A MEANING THAT THE GENUINENESS OF THE SALES HAS ALSO NOT BEEN DOUBTED BY THE ASSESSING OFFICER. WE ARE UNABLE TO SEE ANY FACT OR EVIDENCE AGAINST T HE ASSESSEE TO SUPPORT THE CONTENTION OF THE ASSESSING OFFICER THAT THE ASSESS EE HAS SHOWN UNDISCLOSED INCOME IN THE GARB OF BOGUS SUNDRY CREDITORS. THER EFORE, WE HAVE NO REASON ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 11 TO SEEN ANY INFIRMITY OR ANY VALID REASON TO INTERF ERE WITH THE OBSERVATION AND FINDINGS OF THE COMMISSIONER OF INCOME TAX(A). ACCORDINGLY, WE HOLD THAT THE LD. COMMISSIONER OF INCOME TAX(A) HAS NOT ERRED IN LAW AND FACTS IN DELETING THE IMPUGNED ADDITION MADE BY THE ASSESSIN G OFFICER, THEREFORE, THE APPEAL OF THE REVENUE BEING DEVOID OF MERITS, DESER VES TO BE DISMISSED AND WE DISMISS THE SAME. C.O.NO.6/DEL/2013 9. THE ASSESSEE HAS RAISED CROSS OBJECTION AGAINST THE IMPUGNED ORDER WHICH READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING AN ADD ITION OF RS.80,000/- ON ACCOUNT OF LOW DRAWINGS WHICH BEING SUPERFLUOUS, UNNECESSARY AND UNCALLED FOR AND MUST BE QUASHED. 10. WE HAVE HEARD BOTH THE PARTIES AND CAREFUL PERU SED THE RECORD. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE COMMISSI ONER OF INCOME TAX(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.80,000 O N ACCOUNT OF LOW DRAWINGS WHICH BEING SUPERFLUOUS, UNNECESSARY AND U NCALLED FOR AND MUST BE DELETED. HE SUBMITTED THAT THE ASSESSEE IS LIVI NG IN VILLAGE UDESHIPUR WHERE THE COST OF LIVING IS VERY LOW, THEREFORE, IF THE ASSESSEE IS LEADING HIS LIFE IN AN ECONOMICAL MANNER BY ENJOYING LOW COST O F LIVING BENEFIT OF A VILLAGE, THEN THE ADDITION ON THE GROUND OF INSUFFI CIENT DRAWINGS CANNOT BE ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 12 SUSTAINED. LD. COUNSEL SUBMITTED THAT THE ADDITION MADE ON ACCOUNT OF LOW EXPENDITURE OR DRAWING SHOULD BE DELETED BY SETTING ASIDE THE ORDER OF THE AUTHORITIES BELOW. 11. REPLYING TO THE ABOVE, LD. DR SUBMITTED THAT TH E ASSESSEE HAS SHOWN RETURN INCOME OF RS.7,25,200 AND ALSO SHOWN DRAWING S OF RS.60,000 ONLY. THE DR SUBMITTED THAT ADMITTEDLY THE ASSESSEE IS LI VING IN A FAMILY OF FIVE MEMBERS INCLUDING THREE SCHOOL GOING CHILDREN, THEN THE AMOUNT OF WITHDRAWAL I.E. RS.60,000 IN A YEAR IS INSUFFICIENT AND, THEREFORE, ADDITION MADE BY THE ASSESSING OFFICER WAS RIGHTLY UPHELD BY THE CIT(A). 12. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, AT THE OUTSET, WE OBSERVE THAT ADMITTEDLY, THE ASSESSEE HAS DECLARED TAXABLE INCOME OF RS.7,25,200 IN ITS RETURN OF INCOME FOR THE YEAR UN DER CONSIDERATION. IT IS ALSO NOT DISPUTED BY THE ASSESSING OFFICER THAT HE HAS SHOWN DRAWING OF RS.60,000 ONLY FOR HOUSEHOLD EXPENSES FOR THE FAMIL Y OF FIVE MEMBERS INCLUDING THREE SCHOOL CHILDREN. IN THIS SITUATION , THE ACTION OF THE ASSESSING OFFICER CANNOT BE HELD AS UNJUSTIFIED BY HOLDING TH AT THE SAME WAS ON ACCOUNT OF INADEQUATE HOUSEHOLD EXPENSES AND WITHDR AWALS. IN THE FIRST APPEAL, THE COMMISSIONER OF INCOME TAX(A) HAS CONFI RMED THE ADDITION IN THIS REGARD WITH FOLLOWING OBSERVATIONS:- 6. AS REGARDS THE ADDITION ON ACCOUNT OF LOW HOUSE HOLD EXPENSES, CONTESTED IN GROUND NO. 5 OF APPEAL, THE AR ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 13 SUBMITTED THAT THE APPELLANT IS LIVING IN A VILLAGE IN HIS PARENTAL HOUSE AND HAS WITHDRAWN RS 60,000/- FROM BUSINESS FROM NOV. 2008 TO MARCH 2009. CONSIDERING THE STATUS AND STYLE OF LIVING OF THE APPELLANT, THE AD DITION MADE BY THE AO IS UNJUSTIFIED. 6.1 I HAVE CONSIDERED THE ISSUE AND THE SUBMISSIONS MADE BY THE AR. THE APPELLANT IS LIVING WITH THE FAMILY OF 5 MEMBERS INCLUDING 3 SCHOOL GOING CHILDREN. THE WITHDRAWALS SHOWN BY THE APPELLANT FROM THE BUSINES S ARE ONLY RS 60,000/-. HAVING REGARD TO THE STATUS A ND STANDARD OF LIVING OF THE APPELLANT, IT CAN BE SAFE LY PRESUMED THAT HE WOULD BE INCURRING EXPENDITURE OF AT LEAST RS 15,000/- P.M. THE ADDITION MADE BY THE AO OF RS 80,000/- IS THEREFORE HELD TO BE REASONABLE AND UPH ELD AND THE GROUND OF APPEAL IS DISMISSED. 13. IN THE LIGHT OF ABOVE FACTUAL MATRIX EMERGING F ROM THE ORDERS OF THE AUTHORITIES BELOW, WE OBSERVE THAT THE WITHDRAWALS FOR HOUSEHOLD EXPENDITURE ARE VERY LESS AS SHOWN BY THE ASSESSEE IN THE CONTEXT OF ASSESSEES RETURNED INCOME AND NUMBER OF FAMILY MEM BERS AND THEIR REQUIREMENTS. THE ASSESSING OFFICER HAS MADE AN AD DITION OF RS.80,000 ON ACCOUNT OF INSUFFICIENT WITHDRAWAL FOR HOUSEHOLD EX PENSES AND IT WAS LATER UPHELD BY THE COMMISSIONER OF INCOME TAX(A) WITH TH E OBSERVATIONS AS REPRODUCED HEREINABOVE. WE ARE UNABLE TO SEE ANY V ALID REASON TO INTERFERE WITH THE FINDINGS OF THE AUTHORITIES BELOW. ACCORD INGLY, C.O. OF THE ASSESSEE IS NOT SUSTAINABLE AND BEING DEVOID OF MERITS, WE D ISMISS THE SAME. ITA NO.5796/D/2012 & CO 6/D/2013 ASSTT. YEAR: 2009-10 14 14. IN THE RESULT, THE APPEAL OF THE REVENUE AND CR OSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.5.2013. SD/- SD/- (SHAMIM YAHYA) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 10 TH MAY 2013 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. COMMISSIONER OF INCOME TAX(A) 4. CIT 5. DR TRUE COPY BY ORDER ASSTT.REGISTRAR