M/s. Fasttract Packers Pvt. Ltd., Ahmednagar V. Asst. CIT, Central Circle 1(1), Pune

ITA 1116/PUN/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1076 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 26-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VERMA SINGH
• Keywords: Capital asset; Income from undisclosed sources; Document seized; Opportunity of being heard; Source of fund; Cost of acquisition; Retraction; Documents seized; Capital expenditure
• Section: 132; 10

Judgement Text

] IQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE ! ' BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NOS.1116 AND 1117/PN/2013 !# $ %$ / ASSESSMENT YEARS : 2009-10 & 2010-11 M/S. FASTTRACK PACKERS PVT. LTD., 48/1, KASARA DUMALA, AKOLE ROAD, SANGAMNER, DIST : AHMEDNAGAR, PIN 422605 PAN NO.AAACF9531G . / APPELLANT VS. ACIT CENTRAL CIRCLE-1(1), PUNE . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / DEPARTMENT BY : SMT. M.S. VERMA . SINGH & / ORDER PER R.K. PANDA, AM : THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE SEPARATE ORDERS DATED 20-03-2013 OF THE C IT(A)-I, PUNE RELATING TO ASSESSMENT YEARS 2009-10 AND 2010-11 RESP ECTIVELY. FOR THE SAKE OF CONVENIENCE BOTH THE APPEALS WERE HEARD TO GETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. / DATE OF HEARING : 26.05.2015 / DATE OF PRONOUNCEMENT: 24.07.2015 2 ITA NO.1116/PN/2013 (A.Y. 2009-10) : 2. GROUNDS OF APPEAL NO.1 TO 1.3 BY THE ASSESSEE RELATE TO THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE IN RESPECT OF GROUP GRATUITY INSURANCE PREMIUM OF RS.50,50,544/- MADE BY THE ASSESSING OFFICER U/S.40A(9) OF THE I.T. ACT. 3. AFTER HEARING BOTH THE SIDES, WE FIND THE ASSESSEE COM PANY HAD CLAIMED DEDUCTION OF RS.5,50,544/- ON ACCOUNT OF GROUP GRAT UITY INSURANCE PREMIUM AND CLAIMED THE SAME AS BUSINESS EXPEN DITURE. THE ASSESSING OFFICER DISALLOWED THE SAID AMOUNT U/S.40A(9) O F THE I.T. ACT ON THE GROUND THAT AS PER PROVISIONS OF SECTION 40A(9) THE CONTRIBUTION TO OWN FUNDS/TRUST/COMPANY IS ALLOWABLE ONLY WHEN THE SAME IS APPROVED BY THE CIT. IN APPEAL THE LD.CIT(A) UPH ELD THE ACTION OF THE ASSESSING OFFICER FOR WHICH THE ASSESSEE IS I N APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET REFER RED TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 200 7-08 AND A.Y. 2008-09 VIDE ITA NOS. 1043 & 1044/PN/2013 ORDER DA TED 25- 11-2014 AND SUBMITTED THAT THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE ON THE GROUND THAT NO SUCH APPR OVAL HAS BEEN RECEIVED FROM THE CIT TILL DATE. IN VIEW OF THE ABOVE AND FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSE ES OWN CASE FOR THE PRECEDING TWO ASSESSMENT YEARS, THE GROU NDS RAISED BY THE ASSESSEE ON THIS ISSUE ARE DISMISSED. 5. IN GROUNDS OF APPEAL NO.2 TO 2.4 THE ASSESSEE HAS CH ALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.16,83,5 00/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF RECEIPT OF CAS H OF RS.16,83,500/- FROM M/S. RAJENDRA TRADING COMPANY. 3 6. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS P RIVATE LIMITED COMPANY. A SEARCH ACTION U/S.132 OF THE I.T. ACT WAS CONDUCTED IN THE MALPANI GROUP OF CASES ON 06-10-2009. SINCE WARRANT OF AUTHORISATION U/S.132(4) OF THE I.T. ACT WAS EXE CUTED IN THE CASE OF THE ASSESSEE, THE ASSESSING OFFICER ISSUED NOT ICE U/S.153A OF THE I.T. ACT WHICH WAS DULY SERVED ON THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASSESSEE FILED THE RETURN OF INCOME ON 24-0 6-2010 DISCLOSING TOTAL INCOME OF RS.2,31,00,278/- WHICH IS SAME AS TH E INCOME RETURNED VIDE ORIGINAL RETURN FILED ON 21-09-2009. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NO TED THAT SIMULTANEOUS SEARCH ACTION U/S.132 OF THE I.T. ACT WAS A LSO CARRIED OUT ON 06-10-2010 AT THE BUSINESS PREMISES OF SHRI RAJENDRA S. R AKA PROPRIETOR OF M/S. RAJENDRA TRADING COMPANY AT MALEGAON ROAD, SATANA, NASHIK. THE STATEMENT OF SHRI RAJENDRA S. RAKA W AS RECORDED U/S.132(4) ON 06-10-2009. IN THE SAID STATEMEN T HE HAD ADMITTED THAT HE IS A DEALER OF MALPANI GROUP FOR ITS TOBAC CO PRODUCT IN THE NAME OF GAI CHHAP JARDA. FOR LAST MANY YEARS HE USED TO PURCHASE THE BAGS OF GAI CHHAP JARDA FROM SARGAM RET AILS PVT. LTD. @ RS.2,350/- PER BAG UPTO 31-12-2008 AND THAT W.E.F. 01- 10-2009 HE STARTED PURCHASING THE SAME BAGS OF GAICHHAP JARDA FRO M MALPANI GROUPS SISTER CONCERN M/S. FASTTRACK PACKERS PVT. LTD . @ RS.1,850/- PER BAG AND THAT AS A PART OF THE SAID ARRANGEMENT HE WAS RETURNING THE CASH @ RS.500/- PER BAG TO M/S. FASTTRACK PACKER S PVT. LTD. BETWEEN 01-01-2009 TO 06-10-2009 (I.E. UPTO THE DATE OF SEARCH). 7. THE AO FURTHER NOTED THAT VIDE QUESTION NOS.10, 11,12,1 3 AND 14 OF SAID STATEMENT DATED 06-10-2009 SRI RAJENDRA S. R AKA HAS CONFIRMED THAT HE HAS RETURNED TOTAL CASH OF RS.49,24,500/ - TO M/S. FASTTRACK PACKERS PVT. LTD. WHICH IS NOT RECORDED IN HIS BOOKS OF ACCOUNT. VIDE QUESTION NO.14 HE STATED THAT THE TOTAL C ASH RETURNED 4 TO M/S. FASTTRACK PACKERS PVT. LTD. UNDER THE SAID ARRA NGEMENT FOR A.Y. 2009-10 WORKS OUT TO RS.16,83,500/- @ RS.500/- PER B AG FOR 3367 BAGS. THE ASSESSING OFFICER THEREFORE CONFRONTED THE ASSESSEE BY PUTTING THE FOLLOWING QUESTIONS : YOUR ATTENTION IS DRAWN TOWARDS THE FACT THAT DURING THE COURSE OF SEARCH ACTION, SHRI RAJENDRA S. RAKA (PROPRIETOR OF M/S RAJENDRA TRADING COMPANY, SATANA, NASHIK) IN HIS STATEMENT U/S 132(4) HA S DEPOSED THAT HE HAS BEEN PURCHASING GOODS DIRECTLY FROM THE ASSESSEE CO MPANY M/S FASTTRACK PACKERS PVT. LTD. AND HAS BEEN GIVING SUBSTANT IAL UNACCOUNTED CASH TO M/S FASTTRACK PACKERS PVT. LTD. / MALPANI GROUP . IN VIEW OF THE ABOVE YOU ARE REQUESTED TO EXPLAIN AS TO HOW THIS UNAC COUNTED CASH RECEIVED BY YOUR COMPANY HAS BEEN ACCOUNTED IN YOUR REGULAR BOOKS OF ACCOUNTS FOR AY 2006-07 TO AY 2010-11.' 8. THE ASSESSEE IN HIS REPLY SUBMITTED THAT HE HAS NOT RECEIVED ANY SUCH UNACCOUNTED CASH FROM SHRI RAJENDRA S. RAKA. IT WAS STATED THAT ALTHOUGH SHRI RAJENDRA S. RAKA HAS GIVEN INIT IAL STATEMENT HE HAS CLARIFIED LATER THAT NO SUCH AMOUNT OF RS.500/- PER BAG WAS PAID IN CASH. IT WAS STATED THAT IT IS IMPOSSIBLE FOR HIM TO PAY RS.500/- PER BAG BY WAY OF CASH SINCE HIS MARGIN WAS ABOUT RS.500/- PER BAG OUT OF WHICH HE HAS TO INCUR ALL THE EXP ENSES FOR SELLING THE GOODS. IT WAS ARGUED THAT HIS PREMISES WERE ALSO COVERED DURING THE COURSE OF SEARCH ACTION AND NO INCRIMINATING DO CUMENTS SHOWING ASSESSEES NAME HAS BEEN FOUND IN HIS PREMISES. EVEN DURING THE SURVEY IN THE ASSESSEES PREMISES NO INCRIMINA TING DOCUMENT WAS FOUND. IT WAS STATED THAT INITIAL STATEMENT GIVEN BY SHRI RAJENDRA S. RAKA WAS TOTALLY INCORRECT AND THIS FACT WAS ALSO CLARIFIED BY HIM IN THE STATEMENT RECORDED U/S.131 ON 27-0 1-2010. HE HAS ALSO MENTIONED THAT THE ORIGINAL STATEMENT GIVEN U /S.132(4) WAS WRONG AND IT WAS GIVEN DUE TO MISUNDERSTANDING OF THE QUESTION S AND THE PANICKY STATE OF MIND. 9. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE SAME . HE NOTED THAT DURING THE COURSE OF SEARCH ACTION ON THE B USINESS PREMISES OF SHRI RAJENDRA S. RAKA HIS STATEMENT U/S.132(4 ) WAS 5 RECORDED ON 06-10-2009 AND HE HAD CONFIRMED THAT HE H AS RETURNED THE TOTAL CASH OF RS.49,24,500/- TO THE ASSESSEE M/S. FAS TTRACK PACKERS PVT. LTD. WHICH IS NOT RECORDED IN HIS BOOKS AND THAT UNDER THE SAID ARRANGEMENT AN AMOUNT OF RS.16,83,500/- HAS BEE N RETURNED TO THE ASSESSEE DURING A.Y. 2009-10 @ RS.500/- PER BAG FOR 3367 BAGS. THE ASSESSING OFFICER THEREFORE AGAIN CONFRONTE D THE ASSESSEE BY ISSUING THE FINAL SHOW CAUSE NOTICE. THE ASSE SSEE IN RESPONSE TO THE SAME SUBMITTED HIS REPLY WHICH HAS BEE N SUMMARISED BY THE ASSESSING OFFICER AND WHICH READS AS UNDER : ONCE SHRI RAKA HAS RETRACTED FROM THE ORIGINAL STATE MENT, NO ADDITION CAN BE MADE ON THE BASIS OF ORIGINAL STATEMENT. IN THE ABSENCE OF ANY INCRIMINATING EVIDENCE, NO ADD ITION CAN BE MADE SOLELY ON THE BASIS OF THE STATEMENT RECORDED U/S.132(4) WHICH WAS ALSO RETRACTED. IT IS A SETTLED LAW THAT NO ADDITION CAN BE MADE ON T HE BASIS OF THE STATEMENT OF THIRD PARTY AND PARTICULARLY WHEN THIRD PARTY HAS RETRACTED FROM THE SAID STATEMENT. ASSESSEE HAS ALSO SUBMITTED AFFIDAVIT OF SHRI RAKA STATING THAT HE HAD WRONGLY STATED THAT HE PAID RS.500/- PER BAG UNACCOUN TED CASH TO THE FAST TRACK PACKERS PVT. LTD. IN THE INITIAL STATEMENT RECORDED U/S.132(4) ON 06-10-2009. HE ONCE AGAIN CONFIRMED THAT HE HAD NOT PAID ANY UNACCOUNTED CASH TO COMPANY. 10. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH TH E EXPLANATION GIVEN BY THE ASSESSEE. DISTINGUISHING THE VARIO US DECISIONS CITED BEFORE HIM AND REJECTING THE VARIOUS SUBMIS SIONS, HE MADE THE ADDITION OF RS.16,83,500/- TO THE TOTAL INCOME OF THE ASSESSEE AS HIS UNDISCLOSED INCOME. THE REASONS FOR SUCH ADDITION WHICH HAS BEEN SUMMARISED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER READS AS UNDER : 1) AS A RESULT OF SEARCH ACTION U/S 132 OF THE I.T A CT AND BASED ON THE STRENGTH OF IRREFUTABLE EVIDENCES GATHERED DURING THE SAID SEARCH ACTION, MODUS OPERAND! OF MALPANI GROUP FOR UNACCOUN TED CASH GENERATION WAS UNEARTHED BY THE DEPARTMENT AND THE SA ME WAS ADMITTED/ACCEPTED BY KEY PERSON OF THE GROUP SHRI. R AJESH MALPANI VIDE HIS STATEMENT DATED 03/12/2009 RECORDED ON OATH U/S 13 2(4) OF THE IT ACT. AS PER THIS MODUS OPERANDI DISCOVERED BY THE DEPAR TMENT, MALPANI GROUP USED TO RECEIVE UNACCOUNTED CASH BACK FROM ITS D EALERS, AS THE 6 DEALERS WERE UNDER THE CONTROL AND INFLUENCE OF THE GROUP. THE INSTANT CASE IS ONE SUCH EXAMPLE OF RECEIPT OF UNACCOUNTED CASH FROM ONE OF ITS DEALER SHRI RAJENDRA S. RAKA @ RS.500/- PER BAG OF G AICHHAP JARDA. 2) SHRI RAJENDRA S RAKA IS A DEALER OF MALPANI GRO UP FOR ITS TOBACCO PRODUCT IN THE NAME OF GAI CHHAP JARDA FOR LAST MANY YEARS. HE USED TO PURCHASE BAGS OF GAI CHHAP JARDA FROM M/S SARGAM RETAI LS PVT. LTD. @ RS.2,350/BAG UPTO 31/12/2008 AND SUDDENLY AND INCONCE IVABLY, W.E.F. 01/01/2009, HE STARTED PURCHASING THE SAME BAGS OF GAI CHHAP JARDA FROM MALPANI GROUP'S SISTER CONCERN, M/S FASTTRACK PACKE RS PVT. LTD. @ RS. 1,850/ BIG I.E. AT A LESSER COST OF @ RS. 500/BAG OF GAI CHHAP JARDA. 3) WHEN CONFRONTED WITH THE EVIDENCES GATHERED DURI NG THE SEARCH, SHRI. RAKA, DEALER OF M/S FASTTRACK PACKERS PVT LTD (A CONCERN OF GROUP) ADMITTED IN HIS SWORN STATEMENT U/S 132(4), THAT THIS W AS H WINDFALL GAIN FOR HIM IN THE FORM OF ENHANCED PROFIT OF RS. 500/BA G OF GAI CHHAP JARDA, BUT IT WAS A PART OF AN ARRANGEMENT BETWEEN HIM AND MALPANI GROUP ( HE BEING UNDER THEIR INFLUENCE AND CONTROL, BEING THEI R DEALER), WHEREIN HE WAS REQUIRED TO RETURN THIS CASH @ RS. 500/BAG TO M/S. F ASTTRACK PACKERS PVT LTD. 4) VIDE QUESTION NO. 10, 11, 12, 13 & 14 OF THE SAID STATEMENT DTD. 6/10/2009 RECORDED U/S 132(4), SHRI RAKA HAS CONFIRME D THAT HE HAS RETURNED A TOTAL CASH OF RS. 49,24,500/- TO M/S FASTTRA CK PACKERS PVT. LTD. (FTPPL) WHICH IS NOT RECORDED IN HIS BOOKS. ACCORDINGL Y, VIDE Q. NO. 14, TOTAL CASH RETURNED TO FTPPL UNDER THE SAID ARRANGEME NT FOR A.Y. 2009- 10, HAS BEEN WORKED OUT AT RS. 16,83,500/- @ 500/- PE R BAG FOR 3,367 BAGS. 5) THIS ADMISSION ON THE PART OF SHRI RAKA, OF THE FA CT OF RETURNING OF CASH @ 500/BAG TO M/S FASTTRACK PACKERS PVT. LTD., IS CO RROBORATED AND SUBSTANTIATED BY A NUMBER OF IRREFUTABLE EVIDENCES GAT HERED DURING THE SEARCH. 6) THE DELAYED, WHIMSICAL AND UNSUBSTANTIATED RETRACT ION ON THE PART OF SHRI. RAKA, IS NEITHER CORROBORATED OR SUBSTA NTIATED THROUGH ANY EVIDENCE, NOR ANY ELEMENT OF COERCION COULD BE ATTR IBUTED/PROVED WHILE RECORDING THE STATEMENT U/S. 132(4), WHEREIN THE SAID ADMISSION WAS MADE BY SHRI. RAKA. THUS, THE SAID RETRACTION IS NOTH ING BUT AN AFTERTHOUGHT AND IS MADE AS PER THE DIKTATS OF MALPAN I GROUP, SINCE, BEING THEIR DEALER, SHRI. RAKA IS UNDER MALPANI GROU P'S INFLUENCE AND CONTROL. THE RETRACTION IS THUS, MERELY A DEVICE TO F RUSTRATE THE EFFORTS OF THE DEPARTMENT TO BRING TO TAX, THE UNACCOUNTED INC OME OF THE ASSESSEE AS DISCOVERED DURING THE SAID SEARCH ACTION. 11. BEFORE CIT(A) THE ASSESSEE REITERATED THAT HE HAS N OT RECEIVED ANY UNACCOUNTED CASH FROM SHRI RAJENDRA S. RAKA. IT WA S SUBMITTED THAT SHRI RAJENDRA S. RAKA WAS APPOINTED AS DEALER BY T HE ASSESSEE COMPANY FROM 01-01-2009. IN HIS INITIAL STATEMENT RECORDE D ON 06- 10-2003 HE HAD STATED THAT HE USED TO PAY RS.500/- P ER BAG TO THE ASSESSEE. HOWEVER, WITHIN A SPAN OF 4 DAYS FROM THE ORIG INAL STATEMENT, THE ASSESSEE VIDE LETTER DATED 10-10-2009 R EQUESTED THE 7 INVESTIGATING OFFICER TO GIVE HIM AN OPPORTUNITY OF BEING HEA RD IN ORDER TO CLARIFY CERTAIN FACTS WHICH WERE INCORRECTLY STA TED IN THE ORIGINAL STATEMENT. THE ASSESSEE WAS GIVEN AN OPPORTUN ITY OF BEING HEARD IN THE MONTH OF JANUARY 2010 AND IN THE STATEMEN T RECORDED ON 27-01-2010 SHRI RAJENDRA S. RAKA CLARIFIED THIS FACT A ND EXPRESSLY STATED THAT NO SUCH AMOUNT OF RS.500/- PER BAG WAS PA ID BY HIM TO THE ASSESSEE COMPANY IN CASH. 12. IT WAS ARGUED THAT SHRI RAJENDRA S. RAKA WAS ORIGIN ALLY BUYING GOODS FROM SARGAM RETAILS PVT. LTD. SUBSEQUENTLY, BECAUS E OF HIS PERSONAL CONTACT WITH THE DIRECTOR OF THE COMPANY M/S . FASTTRACK PACKERS PVT. LTD., THE ASSESSEE OBTAINED DEALERSHIP DIRECT LY FROM THE ASSESSEE. ACCORDINGLY, HE ENTERED INTO A SETTLEMENT WITH SARGAM RETAILS PVT. LTD. THEREBY PAYING A TOTAL SUM OF (RS.15.20 L AKHS @ RS.95/- PER BAG FOR 16000 BAGS) TOWARDS COMPENSATION IN RESPECT OF NON COMPETE FEES. IT WAS CLARIFIED THAT AT THE TIME OF SUR VEY SHRI RAJENDRA S. RAKA CONFUSED THE SAID PAYMENT TO BE THE A LLEGED PAYMENT TO THE ASSESSEE WHICH WAS INCORRECT. THUS, FROM JANUARY 2009 ONWARDS, THE ASSESSEE AVAILED THE GOODS AT DISCOUN TED PRICE OF RS.1,850/- PER BAG FROM THE ASSESSEE. IT WAS ACCORDING LY STATED THAT THE ASSESSEE HAS NOT RECEIVED ANY CONSIDERATION OVER A ND ABOVE THE AMOUNT OF RS.1,850/- PER BAG AS RECORDED IN THE BOOKS O F THE ASSESSEE. 13. THE ASSESSEE FURTHER ARGUED THAT THE ASSESSING OFFIC ER HAS NO WHERE DISPUTED THAT THE SALE PRICE DECLARED IN THE BOOKS OF M/S. RAJENDRA TRADING COMPANY IS UNDER STATED OR THAT M/S. RAJENDRA TRADING COMPANY HAS RECEIVED SOMETHING OVER AND ABOVE THE SALE PRICE DECLARED BY IT. ALL THE SALES MADE BY M/S. RAJENDRA TRADING COMPANY HAVE BEEN MADE AT A PRICE OF RS.2,350/- PER BAG . THE 8 ASSESSMENT ORDER OF SHRI RAJENDRA S. RAKA FOR A.Y. 2009-1 0 WAS ALSO BROUGHT TO THE NOTICE OF THE CIT(A). 14. AS REGARDS THE CONCLUSION OF THE ASSESSING OFFICER THA T APART FROM PURCHASE CONSIDERATION OF RS.1,850/- PER BAG STATED IN THE BOOKS OF M/S. RAJENDRA TRADING COMPANY, M/S. RAJENDRA TR ADING COMPANY HAS MADE UNACCOUNTED PAYMENT OF RS.500/- PER BAG TO THE ASSESSEE IS CONCERNED, IT WAS STATED THAT IF THE CONTENT ION OF THE ASSESSING OFFICER IS TO BE ACCEPTED, IT WOULD LEAD TO THE C ONCLUSION THAT M/S. RAJENDRA TRADING COMPANY HAD SOLD THE GOODS @ RS.2,350/- PER BAG , I.E. AT THE PURCHASE PRICE PAID PER BA G BY IT IN RESPECT OF THE SAID GOODS. THIS COULD MEAN THAT M/S. RAJ ENDRA TRADING COMPANY HAS NOT EARNED ANY PROFIT IN RESPECT OF THE ABOVE TRANSACTIONS. IT WAS ARGUED THAT NO PRUDENT BUSINESSM AN WOULD CARRY OUT SUCH TRANSACTIONS OVER A SUBSTANTIAL PERIOD W ITHOUT EARNING ANY PROFIT. THE ASSESSEE SUBMITTED THAT THERE IS NO JUS TIFICATION ON THE PART OF THE ASSESSING OFFICER TO RELY ON THE INITIAL STA TEMENT RECORDED OF SHRI RAJENDRA S. RAKA WITHOUT APPRECIATING TH E FACT THAT THE SAME HAD BEEN RETRACTED BY HIM LATER ON. THE STAT EMENT GIVEN U/S.132(4) BY SHRI RAJENDRA S. RAKA WAS WRONG AND IT WAS GIVEN DUE TO MISUNDERSTANDING OF THE QUESTIONS AND THE PANICKY ST ATE OF MIND. THE ASSESSEE FURTHER ARGUED THAT DESPITE A SEARCH CON DUCTED AT THE BUSINESS PREMISES OF SHRI RAJENDRA S. RAKA NO INCRIMINATING DOCUMENT SHOWING THE NAME OF THE ASSESSEE WAS FOUND IN HIS PREMISES. EVEN DURING THE COURSE OF SEARCH ACTION CONDU CTED AT THE BUSINESS PREMISES OF THE ASSESSEE NO INCRIMINATING DOCUMEN T WAS FOUND IN RESPECT OF THE ALLEGED UNACCOUNTED RECEIPT FROM S HRI RAJENDRA S. RAKA. THEREFORE, IN ABSENCE OF ANY INCRIMINAT ING EVIDENCE NO ADDITION CAN BE MADE SOLELY ON THE BASIS OF THE STATEME NT RECORDED U/S.132(4) WHICH WAS ALSO RETRACTED BY SHRI RAJE NDRA S. 9 RAKA. IT WAS ARGUED THAT IT IS THE SETTLED PROPOSITION O F LAW THAT NO ADDITION CAN BE MADE ON THE BASIS OF THE STATEMENT OF A THIRD PARTY AND PARTICULARLY WHEN SUCH THIRD PARTY HAS ALSO RETRACT ED FROM THE SAID STATEMENT. 15. AS REGARDS THE OBSERVATION OF THE ASSESSING OFFICER T HAT DURING THE COURSE OF SEARCH PROCEEDINGS IN THE CASE OF MALPANI G ROUP, THE MODUS OPERANDI OF THE GENERATION OF UNACCOUNTED CASH R ECEIPTS WHICH HAS BEEN UNEARTHED HAS BEEN ACCEPTED BY THE MA LPANI GROUP AND THAT THE ASSESSEE COMPANY IS A SISTER CONCERN OF T HE MALPANI GROUP, IT WAS ARGUED THAT THE ASSESSEE COMPANY IS NO W AY RELATED AS A SISTER CONCERN OF MALPANI GROUP. THE DIRECTORS AND SHA REHOLDERS OF THE ASSESSEE COMPANY ARE DIFFERENT. THE DIRECTORS OF THE ASSESSEE COMPANY ARE IN NO WAY RELATED WITH THE PARTNERS OR DIRE CTORS OF THE COMPANY OR THE PARTNERSHIP FIRMS OF MALPANI GROUP. IT WAS STATED THAT THE CONTROL, MANAGEMENT AND SOURCE OF FUNDS OF THE ASSESSEE COMPANY ARE TOTALLY INDEPENDENT. IT WAS FURTHER SUBMITT ED THAT IT IS NOT IN ANY WAY RELATED TO M/S. SARGAM RETAILS PVT. LTD. FINALLY, IT WAS ARGUED THAT THE STATEMENT OF SHRI RAJENDRA S. RAK A MAY BE RELEVANT FOR DECIDING THE CASE OF SHRI RAJENDRA S. RAKA. HOWEVER, ON THAT BASIS NO ADDITION SHOULD BE MADE IN THE CASE OF THE ASSESSEE IN THE ABSENCE OF ANY INCRIMINATING EVIDENCE FOUND AS A RESUL T OF THE SEARCH. IT WAS ACCORDINGLY ARGUED THAT NO SUCH ADDITIO N SHOULD BE MADE IN THE HANDS OF THE ASSESSEE. 16. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE ARGUMEN TS ADVANCED BY THE ASSESSEE. SHE HELD THAT THE STATEMEN T RECORDED U/S.132(4) HAS GOOD EVIDENTIARY VALUE. THE INITIAL REACTION OF THE ASSESSEE DURING SEARCH ACTION IS TO REVEAL THE TRUTH TO AVOID ANY HARDSHIP AND INCONVENIENCE LATER. THEREFORE, UNLESS IT IS PR OVED FROM THE RECORD THAT THE STATEMENT MADE BY SHRI RAJENDRA S. RAKA ON 06- 10 10-2009 WAS RECORDED UNDER COERCION OR UNDUE INFLUENCE, THE SAID STATEMENT IS TO BE HELD AS TRUE AND CORRECT. SINCE THE RE WAS NO COERCION, THEREFORE, HIS STATEMENT THAT CASH PAYMENTS WE RE MADE TO THE ASSESSEE @ RS.500/- PER BAG HAS TO BE ACCEPTED AS TRUE AND CORRECT STATEMENT. THE MAIN WITNESS IN THIS CASE SHRI R AJENDRA S. RAKA HAD NOT OBTAINED ANY STATEMENT OR AFFIDAVIT FROM THE INDEPENDENT WITNESSES PRESENT DURING THE RECORDING OF TH E STATEMENT IN SUPPORT OF THE PLEA THAT THE STATEMENT WAS OBTAINED BY COERCION OR INTIMIDATION. 17. AS REGARDS THE SUBMISSION OF THE ASSESSEE THAT SHRI RAJENDRA S. RAKA HAD REQUESTED THE INVESTIGATING OFFICER WITHIN A P ERIOD OF 4 DAYS OF THE RECORDING OF THE STATEMENT ON OATH, I.E. ON 10 -10-2009 FOR AN OPPORTUNITY OF BEING HEARD IN ORDER TO CLARIFY CERTAIN FACTS, SHE NOTED THAT THE COPY OF THE SAID REQUEST LETTER IS UNSIGN ED AND DOES NOT BEAR ANY ACKNOWLEDGEMENT ON BEHALF OF THE INVESTIGAT ION UNIT. THE ASSESSEE WAS EXAMINED ON OATH BY THE ITO (INVESTIG ATION), NASHIK SINCE HE WAS LOCATED AT NASHIK BUT THE LETTER HAS BEEN ADDRESSED TO THE INVESTIGATION UNIT, PUNE. THEREFORE, SHE HELD THAT THE ALLEGED LETTER DATED 10-10-2009 CANNOT BE HELD TO B E A GENUINE LETTER. 18. SO FAR AS THE ARGUMENT OF THE ASSESSEE THAT EVEN DURING THE COURSE OF SEARCH ACTION CONDUCTED AT THE PREMISES OF TH E ASSESSEE COMPANY NO INCRIMINATING DOCUMENT HAS BEEN FOUND IN RESPE CT OF THE ALLEGED UNACCOUNTED RECEIPTS FROM SHRI RAJENDRA S. RAKA, S HE NOTED THAT THERE WAS A CLEAR ADMISSION OF SHRI RAJENDRA S. RAKA WHO WAS COVERED IN SURVEY ACTION BY THE DEPARTMENT SIMULTANEOUS TO THE SEARCH ACTION OF MALPANI GROUP ON BEING SHOWN EVIDENCE OF CHALLAN NO.242 BUNDLE NO.Z-2 DATED 7-08-2009 SEIZED FROM THE OFFIC E AT MALPANI GROUP, SANGAMNER EVIDENCING PAYMENT OF RS.12,16,387/ - BY 11 M/S. RAJENDRA TRADING COMPANY TO THE ASSESSEE. ON BEIN G ASKED TO SHOW THE CORRESPONDING JOURNAL ENTRY IN HIS BOOKS OF AC COUNT, SHRI RAJENDRA S. RAKA VIDE QUESTION NO.13 OF HIS STATEMENT REC ORDED UNDER OATH U/S.132(4) HAD STATED THAT THE ENTRY DOES N OT EXIST IN HIS BOOKS OF ACCOUNT BUT REPRESENTS THE CASH AMOUNT RETU RNED BACK TO THE ASSESSEE. HE HAD ALSO STATED THAT SINCE HE WAS TH E DEALER OF MALPANI GROUP, IT WAS AS PER THE DIRECTION OF THAT GROUP THAT HE HAD TO SHOW RS.1,850/- AS PURCHASE COST IN BOOKS AND PAY T HE DIFFERENCE OF RS.500/- PER BAG IN CASH TO THE ASSESSEE. THUS, THE ASSESSEE IS NOT CORRECT IN STATING THAT NO INCRIMINATING EVIDENCE WA S FOUND DURING THE COURSE OF SEARCH AT ITS PREMISES. SHE NOTED THAT THE SU RVEY COVERED THE BUSINESS PREMISES OF SHRI RAJENDRA S. RAKA AND THEREFO RE HIS DEPOSITION SUBSEQUENTLY THAT HE WAS NOT IN POSSESSIO N OF THE ACCOUNTS AND SEIZED DOCUMENTS IS ALSO SEEN TO BE TOTA LLY INCORRECT. SHE FURTHER NOTED THAT IT IS ALSO AN ADMITTED FACT THAT D URING THE COURSE OF SEARCH ON THE PREMISES OF SARGAM RETAILS PVT. LTD. AT SANGAMNER THE SEIZED DOCUMENTS FOUND DURING THE SEARCH SHOWED THAT SHRI RAJENDRA S. RAKA HAD PAID RS.95/- PER BAG TO SARGAM RETAILS PVT. LTD. AS PER THE MOU DATED 12-10-2009 WHICH HAS NOT BEEN DISCLOSED TO THE DEPARTMENT. THIS FACT WAS ALSO ACC EPTED BY SARGAM RETAILS PVT. LTD. WHO IS THE RECIPIENT. SHRI RAJENDR A S. RAKA HAS OFFERED TO DISCLOSE ADDITIONAL INCOME ON THIS ACCOUNT. SHE FURTHER NOTED THAT SARGAM RETAILS PVT. LTD. WHICH WAS THE MAIN BUSINESS CONCERN OF THE MALPANI GROUP HAS APPROACHED TH E SETTLEMENT COMMISSION FOLLOWING THE SEARCH ADMITTING THAT UNACCOUNTED INCOME HAD BEEN GENERATED THROUGH THE MO DUS OPERANDI OF CASH RECEIPTS NOT RECORDED IN THE BOOKS OF ACCOUNT. 19. SHE NOTED THAT IN HIS STATEMENT RECORDED U/S.131 O N 27-01-2010 SHRI RAJENDRA S. RAKA IN RESPONSE TO QUESTIO N NO.6 HAS 12 UNEQUIVOCALLY MENTIONED ABOUT THE PAYMENT OF CASH OF RS .6.50 LAKHS FOR THE PERIOD APRIL 2008 TO DECEMBER 2008 AS PER THE C ASH COLLECTED ON BEHALF OF MALPANI GROUP ON THE SALES MADE THROUGH HIM. THEREFORE, THE ENTIRE MODUS OPERANDI OF UNACCOUNTED CAS H PAYMENT FOR PURCHASE OF JARDA BY THE DEALER SHRI RAJENDRA S. RAK A AND UNACCOUNTED SALES BEING REPAID IN CASH TO THE MALPANI GR OUP IS PROVED NOT ONLY FROM THE ORIGINAL STATEMENT BUT ALSO THE SUBSEQUENT STATEMENT OF SHRI RAJENDRA S. RAKA. IT IS ALSO PROVED FRO M THE CONDUCT OF SARGAM RETAILS PVT. LTD. BY THEIR CONSEQUENTIAL ACT OF APPROACHING THE SETTLEMENT COMMISSION. THE MODUS OPERAN DI OF CASH COMPONENT OF SALE WITH PURCHASE HAS BEEN SOUGHT T O BE DISGUISED SUBSEQUENTLY AS PAYMENT AGAINST TARGET DISCOU NT BY THE DEALER SHRI RAJENDRA S. RAKA WHICH IS UNDOUBTEDLY UNDER THE CONTROL AND INFLUENCE OF THE MALPANI GROUP. 20. AS REGARDS THE SUBMISSION OF THE ASSESSEE THAT THE STATEMENT HAS NO VALUE IN ABSENCE OF ANY EVIDENCE OR ANY INCRIMINATING MATERIAL FOUND AT THE BUSINESS PREMISES OF SHRI RAJENDRA S. RAKA OR AT THE BUSINESS PREMISES OF THE ASSESSEE WHICH WERE COVERED D URING THE COURSE OF SEARCH, SHE HELD THAT SAME STANDS DISPROVED IN VIEW OF CLEAR EVIDENCE FOUND DURING THE SEARCH WHICH HAS BEEN MENTIONE D EARLIER. EVEN OTHERWISE ALSO SHE NOTED THAT EXAMINATION OF ANY PE RSON UNDER SUB SECTION 4 OF SECTION 132 MAY BE NOT MERELY IN RESPE CT OF ANY BOOKS OF ACCOUNT, OTHER DOCUMENT OR ASSETS FOUND AS A RESULT OF THE SEARCH BUT ALSO IN RESPECT OF ALL MATTERS RELEVANT FOR THE PURPOSE OF ANY INVESTIGATION CONNECTED WITH ANY PROCEEDING UNDER TH E INDIAN INCOME TAX ACT, 1961. SHE FURTHER NOTED THAT THE EXAM INATION OF THE BOOKS OF ACCOUNT WITH SARGAM RETAILS PVT. LTD. THE ASSESS EE AND SHRI RAJENDRA S. RAKA, ALL OF WHOM WERE COVERED DURING THE COU RSE OF SEARCH CONDUCTED SIMULTANEOUSLY ON 06-10-2009 AT THEIR RESPECTIVE 13 PREMISES, CLEARLY SHOW THE DISCREPANCY BETWEEN THE PURC HASE PRICE OF RS.2,350/- PER BAG OF THE GAI CHHAP JARDA UPTO 31-12-2008 AND THEREAFTER THE SUDDEN DECREASE OF THE PURCHASE PRICE FROM 01-01-2009 @ RS.1,850/- PER BAG OF THE SAME GAI CHHAP JARDA . 21. SHE FURTHER NOTED THAT THE ORIGINAL STATEMENT RECOR DED ON OATH ON 06-10-2009 WAS RETRACTED BY SHRI RAJENDRA S. RAKA ONLY ON 27-01-2010, I.E. ALMOST 3 MONTHS LATER. THERE IS NO SUBS TANTIATION OF THE CLAIM THAT SHRI RAJENDRA S. RAKA HAD INDEED MADE A PLEA TO THE INVESTIGATION UNIT ON 10-10-2009 TO ALLOW HIM TO BE HEARD AGAIN. IN ABSENCE OF ANY EVIDENCE TO SUPPORT THE SAME THE CI T(A) HELD THAT A STATEMENT VOLUNTARILY RECORDED UNDER OATH CANNOT BE A LLOWED TO BE DISBELIEVED OR REJECTED THROUGH A MERE RETRACTION AND R ETHINKING UNLESS EVIDENCE IS BROUGHT ON RECORD THAT UNDUE INFLUENC E OR COERCION WAS APPLIED AT THE TIME OF RECORDING THE INITIAL STA TEMENT. RELYING ON VARIOUS DECISIONS THE LD.CIT(A) HELD THAT THE RE TRACTION BY SHRI RAJENDRA S. RAKA IS NOT BE RELIED UPON AND THE TOTA LITY OF THE FACTS AND CIRCUMSTANCES INCLUDING THE DISCOVERY OF INCRIMINAT ING AND UNCONTROVERTIBLE EVIDENCE DURING THE COURSE OF SEARCH CLE ARLY SHOW THAT THE UNACCOUNTED CASH RECEIVED FROM M/S. RAJENDRA TRADING COMPANY, PROPRIETOR SHRI RAJENDRA S. RAKA OF RS.16,83,500/ - HAS BEEN CORRECTLY ASSESSED IN THE HANDS OF THE ASSESSEE. 22. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 23. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY OBJECTED TO THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ASSESSEE IS IN NO WA Y RELATED TO THE MALPANI GROUP. THE ASSESSEE IS ONLY PACKING THE MAT ERIAL AND NOT THE MANUFACTURER. THE SEARCH TOOK PLACE IN THE CAS E OF SHRI RAJENDRA S. RAKA ON 06-10-2009. SIMULTANEOUS SEARCH ALS O TOOK 14 PLACE IN THE CASE OF THE ASSESSEE AS WELL AS IN THE CASE OF MALPANI GROUP. THE MALPANI GROUP HAS NOT STATED ANYTHING AGAINS T THE ASSESSEE. HE SUBMITTED THAT INITIALLY SHRI RAJENDRA S. RAK A PURCHASED THE GOODS FROM SARGAM RETAILS PVT. LTD. @ RS.2,3 50/- PER BAG WHICH CONTINUED UPTO 31-12-2008. SUBSEQUENTLY, W.E.F. 01-01- 2009 SHRI RAJENDRA S. RAKA STARTED PURCHASING THE SAME BAGS OF GAI CHHAP JARDA FROM M/S. FASTTRACK PACKERS PVT. LTD., I.E. TH E ASSESSEE @ RS.1,850/- PER BAG WITHOUT INVOLVING SARGAM RETAILS PVT. L TD. THEREFORE, IN THE PROCESS IT IS SARGAM RETAILS PVT. LTD. WHO IS THE LOSER. HE SUBMITTED THAT PRESUMPTIONS IF ANY U/S.132(4) MUS T BE IN THE HANDS OF SHRI RAJENDRA S. RAKA. HOWEVER, HE HAS SU BSEQUENTLY RETRACTED THE STATEMENT. HE SUBMITTED THAT ADDITION, IF A NY, CAN BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF STATE MENT RECORDED OF A THIRD PARTY PROVIDED THE SAME IS CLEAR AND SUPPORTE D WITH CORROBORATIVE EVIDENCE. IT CANNOT BE ON THE BASIS OF A STATEMENT WHICH LEAD TO ANARCHY. HE SUBMITTED THAT WHEN SHRI RAJE NDRA S. RAKA PURCHASED THE GOODS AT RS.1,850/- PER BAG AND SE LLS THE SAME AT RS.2,350/- PER BAG, THERE IS MARGIN OF ONLY RS.500/- P ER BAG. OUT OF THE SAME, HE HAS TO GIVE RS.95/- PER BAG TO SARGAM R ETAILS PVT. LTD. HE HAS ALSO TO PAY TAX ON THE PROFIT. THEREFORE, IN ABSENCE OF ANY CONCRETE EVIDENCE, IT IS HIGHLY IMPROBABLE THAT SHRI RA JENDRA S. RAKA WILL GIVE AN AMOUNT OF RS.500/- PER BAG TO THE ASSES SEE ONLY TO INCUR LOSS. 24. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ADDL.CIT VS. MISS LATA MANGESHKAR REPORTED IN 97 ITR 696 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID DECISION HAS UPHELD THE DECISION OF THE TRIBUNAL WHERE IT HAS BEEN HELD THAT ADDITION CANNOT BE MADE ON THE BASIS OF MERE STATEMENT OF PERSON S IN 15 ABSENCE OF ANY CORROBORATIVE EVIDENCE. HE ACCORDINGLY S UBMITTED THAT ADDITION MADE IN THE HANDS OF THE ASSESSEE SHOULD BE DELETED. 25. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT SHRI RAJENDRA S. RAKA HAS RETRACTED HIS STATEMENT AFTER A GAP OF 4 MONT HS AND THEREFORE SUCH RETRACTION HAS NO EVIDENTIARY VALUE WHICH IS AFTER CONSIDERABLE TIME. AGAIN REFERRING TO THE LETTER ADDRESSED TO THE ADIT (INVESTIGATION) SEEKING FOR CLARIFICATION HE REITERATED THE FIN DINGS OF THE CIT(A) THAT THE SAID LETTER WAS UNDATED AND UNSIGNED AND THEREFORE SUCH SOCALLED LETTER ADDRESSED TO THE INVESTIG ATION UNIT AFTER 4 DAYS FROM THE RECORDING OF STATEMENT U/S.132(4) IS DOUB TFUL. HE SUBMITTED THAT THE ASSESSEE HAS TO FIRST EXPLAIN AS TO W HY HE GAVE SUCH A STATEMENT STATING THAT RS.500/- PER BAG HAS TO BE GIVEN TO THE ASSESSEE IN CASH WHEN THERE WAS NO THREAT OR COERCION. 26. SO FAR AS THE ARGUMENT OF THE LD. COUNSEL FOR THE AS SESSEE THAT ASSESSEE HAS GOT NOTHING TO DO WITH MALPANI GROUP, HE SUBMITTED THA T NOTHING HAS BEEN BROUGHT ON RECORD TO SUBSTANTIATE TH AT ASSESSEE IS NOT RELATED TO THE MALPANI GROUP. HE SUBMITTED THAT THE SAME SETS OF PEOPLE ARE THE DIRECTORS IN BOTH THE COMPANIES. FURTHER , WHEN SARGAM RETAILS PVT. LTD. WAS SUPPLYING THE MATERIAL AT RS.2, 350/- PER BAG, M/S.FASTTRACK PACKERS PVT. LTD., ALL OF A SUDDEN STAR TED SUPPLYING THE SAME GOODS AT RS.1,850/- PER BAG. THEREFO RE, THERE IS NO JUSTIFICATION FOR SUCH SUDDEN FALL IN THE RATE UNLESS THE ASSESSEE IS REQUIRED TO RETURN EQUIVALENT CASH AMOUNT. REFERRING TO THE ORDER OF THE CIT(A) AT PARA 6.5 HE SUBMITTED THAT THE CIT(A) HAS GIVEN CATEGORICAL FINDING THAT THE CHALLAN NO.242 BUNDLE Z-2 DATE D 07-08- 2009 SEIZED FROM THE OFFICE OF THE ASSESSEE EVIDENCES PAYM ENT OF RS.12,16,387/- BY M/S. RAJENDRA TRADING COMPANY WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF M/S. RAJENDRA TRADING COM PANY. 16 REFERRING TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SUMATI DAYAL REPORTED IN 214 ITR 801 AND VARIOUS OTHER DECISIONS HE SUBMITTED THAT THE ORDER OF THE CIT(A) SHOULD BE UPHELD. 27. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDER RE FERRING TO THE ORDER OF THE CIT(A) FROM PAGES 11 TO 15 DREW THE AT TENTION OF THE BENCH TO PAGE 15 OF THE ORDER AND SUBMITTED THAT THE ASSESSEE HAD CATEGORICALLY STATED THAT THE SHAREHOLDERS OF THE ASSES SEE COMPANY AND THAT OF THE MALPANI GROUP ARE DIFFERENT AND THE DIREC TORS OF THE ASSESSEE COMPANY ARE NOT RELATED WITH THE PARTNERS, D IRECTORS, COMPANY AND PARTNERSHIP FIRMS OF THE MALPANI GROUP. AS R EGARDS THE OBSERVATION OF THE CIT(A) THAT EVIDENCE WAS FOUND FROM THE OFFICE OF THE APPELLANT AT MALPANI HOUSE, HE SUBMITTED THAT THE AD DRESS OF THE ASSESSEE IS AKOLA ROAD, SANGAMNER ROAD, AHMEDNAGAR AND NOT AT MALPANI HOUSE, SANGAMNER AS POINTED OUT BY THE LD.CIT(A). AS REGARDS THE ARGUMENT OF THE LD. DEPARTMENTAL REPRESENT ATIVE THAT THE LETTER ADDRESSED TO THE ADIT IS UNSIGNED AND UNDAT ED AND THEREFORE SUCH RETRACTION HAS NO EVIDENTIARY VALUE, HE SU BMITTED THAT EVEN IF THE ASSESSEE HAD NOT RETRACTED, THEN ALSO NO AD DITION CAN BE MADE IN ABSENCE OF ANY CORROBORATIVE EVIDENCE. HE SUBM ITTED THAT THE THEORY OF PROBABILITY CANNOT BE APPLIED FOR MAKING ADD ITION IN THE HANDS OF THE ASSESSEE THAT TOO IN A SEARCH CASE. 28. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER MADE ADDITION OF RS.16,83,500/- IN THE HAND S OF THE ASSESSEE BEING CASH PAID TO THE ASSESSEE BY SHRI R AJENDRA S. RAKA @ RS.500/- PER BAG FOR 3367 BAGS. THE SAME WAS ON THE BASIS OF THE REPLY OF SHRI RAJENDRA S. RAKA IN RESPONSE TO QUE STION NO.10 17 TO 14 OF THE STATEMENT RECORDED U/S.132(4) ON 06-10-200 9. WE FIND THE CIT(A) UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND THAT SHRI RAJENDRA S. RAKA IN HIS STATEMENT U/S.1 32(4) HAD CONFIRMED THE PAYMENT OF RS.500/-PER BAG TO THE ASSESSE E FROM 01-01-2009 TO 06-10-2009 AND THE AMOUNT RECEIVED BY THE ASSESSEE WAS SUBSTANTIATED BY A NUMBER OF IRREFUTABLE EVIDENCES GA THERED DURING THE SEARCH. FURTHER, THE MODUS OPERANDI OF THE M ALPANI GROUP HAD BEEN DISCLOSED BEFORE THE SETTLEMENT COMMISISON AND SHRI RAJENDRA S. RAKA WAS UNDER THE INFLUENCE AND CONTROL OF THE MALPANI GROUP. THE POSSIBILITY OF SUCH UNACCOUNTED PAYMENTS MADE BY SHRI RAJENDRA S. RAKA TO THE ASSESSEE COULD NOT BE DENIED. IT IS ALSO THE OBSERVATION OF THE CIT(A) THAT RETRACTION OF STATEMENT BY SHRI RAJENDRA S. RAKA WAS ONLY AN AFTER THOUGHT. IT IS THE S UBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT NO INCRIMINATING MAT ERIAL OR EVIDENCE WAS FOUND IN THE COURSE OF THE SEARCH ON THE ASSESSEE THAT IT HAD RECEIVED RS.500/-PER BAG FROM M/S. RAJENDRA TRADING COMPANY AND THAT THE ASSESSEE IS NO WAY RELATED TO THE MALPANI GROUP AND THEREFORE THE MODUS OPERANDI OF THE BUSINESS TRANSACTION OF THE MALPANI GROUP UNEARTHED DURING THE SEARCH ON THE MALPAN I GROUP HAD NO BEARING ON THE CASE OF THE ASSESSEE. IT IS ALSO THE CASE OF THE LD. COUNSEL FOR THE ASSESSEE THAT SHRI RAJENDRA S. RAKA HAD RETRACTED FROM HIS STATEMENT RECORDED U/S.132(4), THEREFOR E, THE ASSESSING OFFICER HAD NO REASON TO PLACE RELIANCE ON THE S TATEMENT RECORDED U/S.132(4). 29. WE FIND SOME FORCE IN THE ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE. ADMITTEDLY, SHRI RAJENDRA S. RA KA SUBSEQUENT TO THE STATEMENT RECORDED U/S.132(4) HAD RE QUESTED THE ADIT (INVESTIGATION) TO GIVE HIM AN OPPORTUNITY OF BEING HE ARD TO CLARIFY CERTAIN FACTS. ON THE BASIS OF SUCH LETTER, ALTHOUG H SAME IS 18 UNDATED AND UNSIGNED, WE FIND THE ADIT (INVESTIGATION) ALLOWE D HIM AN OPPORTUNITY ON 27-01-2010 WHEREIN HE HAD CLARIFIED CER TAIN ASPECTS. THE RELEVANT QUESTIONS PUT BY THE ADIT (INVES TIGATION) AND ANSWERS BY SHRI RAJENDRA S. RAKA READ AS UNDER : Q.5 PLEASE EXPLAIN THE REASON FOR DEMANDING THE OPPO RTUNITY OF BEARING HEARD. A.5 DURING THE COURSE OF SEARCH ACTION AT MY BUSINESS P REMISES, MY STATEMENT WAS RECORDED ON 6-10-2009 AND 7-10-2009. S UBSEQUENTLY, I HAVE WENT THROUGH THE STATEMENT AS PROVIDED TO ME AN D ALSO THE SEIZED MATERIAL AND MY ACCOUNTS. I REALISED THAT I HAVE MAD E MISTAKES IN STATING THE CORRECT FACTS AS I WAS TO ANSWER THE QUESTIONS INSTANT LY WITHOUT STUDYING THE ACCOUNTS AND SEIZED MATERIAL THOROUGHLY. Q.6 EXPLAIN THE POINTS IN RESPECT OF WHICH YOU CLAIM TO HAVE MADE INCORRECT STATEMENT OF FACTS AND SUPPOSEDLY CORRECT FAC TS. A.6 I GOT THE DEALERSHIP DIRECTLY FROM FAST TRACK PAC KERS PRIVATE LIMITED WHERE WE GOT BETTER MARGINS, HENCE WE DECIDE D TO TAKE THE PRODUCTS OF FAST TRACK DIRECTLY FROM THEM INSTEAD OF F ROM SARGAM RETAILS PRIVATE LIMITED. THE SAID DEALERSHIP WE GOT FROM THE FAST TRACK THROUGH MY PERSONAL CONTACTS WITH MR. SACHIN PALOD. AS FAR AS MY KNOWLEDGE IS CONCERNED, AS PER THE POLICY OF THE SARGAM RETAILS PVT. LTD., OUR CONCWERN HAS BEEN BILLED AT RS. 2350 PER BAG FOR GAI CHAP, JARDA. THIS IS AFTER DEDUCTION OF RS.95 TOWARDS THE TARGET DISCOUNT. AS PER THE RULES FRAMED BY THE COMPANY WITH EFFECT FR OM 01/04/2008, AS WE COULD NOT ACHIEVE THE TARGET AND DUE TO FAILURE OF OTHER TERMS, WE PAID THE CASH OF ABOUT RS.6.50 LACS IN FOR THE PERIOD OF AP RIL 2008 TO DEC., 2008 AS AGAINST THE TARGET DISCOUNT TO MALPANI GROUP FROM T HE CASH COLLECTED ON BEHALF OF THEM ON SALES MADE THROUGH US, TO FURTHE R PERIOD FROM JAN 2009 ONWARDS, TO AVOID CUT THROAT COMPETITION, WE CO MPROMISED WITH SARGAM RETAILS PRIVATE LTD. AND PAID THEM AN AMOUNT OF ABOUT RS.15.20 LACS FOR 16000 NO. OF BAGS (AT THE RATE OF RS.95 PER BAG) AS A SORT OF COMPENSATION FOR SRPL NOT ENTERING MY JURISDICTIONAL AREA AND ALSO FOR LEAVING THEIR DEALERSHIP AND ACCEPTING THAT OF FASTTR ACK PACKERS PVT. LTD. OUT GROSS MARGINS ARE REFLECTED IN OUR BOOKS OF ACCOUNT S WHICH ARE SEIZED BY THE DEPARTMENT. I HAVE NOT PAID ANY CASH T O FAST TRACK PACKERS (P) LTD. OR MR. SACHIN PALOD. Q.7 YOU HAVE ALREADY STATED IN YOUR EARLIER STATEMENT THAT YOU HAVE PAID RS.49,24,500/- TO FASTTRACK PACKERS PRIVATE LIMIT ED. A.7 SINCE I WAS LITTLE TENSE AT THE TIME OF SEARCH, AN D WAS NOT IN POSSESSION OF THE ACCOUNTS AND SEIZED DOCUMENTS FROM DIFFE RENT PREMISES, MY REPLIES WERE NOT TOTALLY AS PER FACTS. EAR LIER OUR GROSS MARGINS WERE ABOUT RS.500/- PER BAG OUT OF WHICH RS.9 5/-PER BAG WERE COLLECTED ON BEHALF OF MALPANI GROUP. I THEREFORE WRONGLY MULTIPLIED THE NUMBER OF BAGS PURCHASED BY THIS GROSS MARGIN AND GAVE T HE ANSWER. PLEASE CONSIDER THE FACT THAT IF I WAS RETURNING ENTIR E GROSS MARGIN TO MALPANI GROUP THEN WHY WOULD I DO SUCH BUSINESS WHERE I WONT EARN ANYTHING. SEIZED BOOKS OF ACCOUNTS ALSO HAS EVIDENCE T HAT THE SELL BILLS ARE DULY ACCOUNTED THEN HOW I CAN COLLECT SUCH CASH A MOUNT OUT OF BOOKS? YOU CAN ALSO VERIFY MY PROFIT AND LOSS ACCOUNT W HERE SUCH MARGIN IS ALREADY SHOWN. I HAVE NOT MADE ANY CASH PAYMENTS TO FASTTRACK PACKERS PRIVATE LIMITED. 19 30. AS REGARDS THE OBSERVATION OF THE LD.CIT(A) AT PARA 6.5 OF HER ORDER THAT EVIDENCE OF CHALLAN BEARING NO.242 BUNDLE Z-2 D ATED 07- 08-2009 SEIZED FROM THE OFFICE OF THE ASSESSEE AT MALPANI H OUSE, SANGAMNER EVIDENCING PAYMENT OF RS.12,16,387/- BY M/S. RAJ ENDRA TRADING COMPANY TO THE ASSESSEE IS CONCERNED, WE FIND TH E OFFICE ADDRESS OF THE ASSESSEE AS MENTIONED IN THE ASSESSMENT ORDER IS AT 48/1, KASARA DUMALE, AKOLA ROAD, SANGAMNER, AHMEDNAGAR A ND NOT AT MALPANI HOUSE, SANGAMNER. THEREFORE, IN ABSENCE OF ANY PROOF THAT THE ASSESSEES OFFICE IS FUNCTIONING FROM MALPANI HOUSE AT SANGAMNER, THE ABOVE OBSERVATION OF THE CIT(A) THAT EVIDE NCE WAS FOUND FROM THE OFFICE OF THE ASSESSEE AT MALPANI HOUSE IS INC ORRECT. THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE BEFORE THE CIT(A) THAT NONE OF THE DIRECTORS OF THE ASSESSEE COMPANY ARE DIRECTORS OR PARTNERS OR NOWHERE RELATED TO ANY OF THE DIRECTORS OR PARTNERS OF THE MALPANI GROUP COULD NOT BE CONTROVERTED BY THE LD. DEPA RTMENTAL REPRESENTATIVE. WE FIND THE ASSESSEE BEFORE THE CIT(A) HA S CATEGORICALLY STATED THAT IT IS IN NO WAY RELATED TO THE MALPANI GROUP WHICH IS BORNE OUT FROM THE ORDER OF THE CIT(A). WE FIND T HE LD. CIT(A) AT PAGE 15 OF HER ORDER HAS EXTRACTED THE SUBMIS SION OF THE ASSESSEE AND THE RELEVANT PORTION OF THE SAME READS AS UNDER : 5.11. LASTLY, THE ASSESSEE WOULD LIKE TO SUBMIT THAT TH E LEARNED A.O. HAS STRESSED ON THE FACT THAT IN THE COURSE OF SEARCH PROCEE DINGS IN THE CASE OF MALPANI GROUP, THE MODUS OPERANDI OF GENERATION OF U NACCOUNTED CASH RECEIPTS HAS BEEN UNEARTHED AND ACCEPTED BY THE MALPA NI GROUP. THE LEARNED A.O. HAS STATED THAT THE ASSESSEE COMPANY IS A SISTE R CONCERN OF THE MALPANI GROUP AND THAT THE ABOVE STATED ALLEGED UNACCOUNTED RECEIPTS IS ANOTHER SUCH ARRANGEMENT TO AVOID TAXES. IN THIS RESPECT, THE ASSESSEE WOULD LIKE TO CLARIFY THAT THE ASSESSEE COMPANY I S NOWHERE RELATED AS A SISTER CONCERN OF MALPANI GROUP. THE DIRE CTORS AND SHAREHOLDERS OF THE ASSESSEE COMPANY ARE DIFFERENT. IT IS TO BE NOTED THAT DIRECTORS OF THE ASSESSEE COMPANY ARE NOWHERE RELATED WI TH THE PARTNERS, DIRECTORS, COMPANY AND PARTNERSHIP FIRMS OF T HE MALPANI GROUP. IT IS FURTHER CLARIFIED THAT THE CONTROL, MANAGEMENT AND SOURCE OF FUNDS OF THE APPELLANT COMPANY ARE TOTALLY INDEPENDENT. THE ASSESSEE ALSO STATES THAT IT IS NOT IN ANY WAY RELATED TO M/S. SARGAM RETA ILS PVT. LTD. THEREFORE, IT IS SUBMITTED] THAT THE LEARNED A.O. IS N OT JUSTIFIED IN HOLDING 20 THAT THE ASSESSEE HAS RECEIVED UNACCOUNTED INCOME IN C ASH TO THE EXTENT OF RS. 16.83,500/-. THEREFORE, WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHEN THE ASSESSEE IS NO WAY RELATED TO THE MALPANI GROUP AND SINCE SHRI RAJENDRA S. RAKA HAS RETRACTED FRO M HIS STATEMENT, THOUGH BELATEDLY, AND IN ABSENCE OF ANY CORRO BORATIVE EVIDENCE THAT THE ASSESSEE HAS RECEIVED CASH OF RS.500/ - PER BAG FOR 3367 BAGS, THEREFORE, NO ADDITION CAN BE MADE IN THE HAND S OF THE ASSESSEE. 31. WE FURTHER FIND MERIT IN THE SUBMISSION OF THE LD. COU NSEL FOR THE ASSESSEE THAT WHEN SHRI RAJENDRA S. RAKA HAS PURC HASED THE GOODS FROM THE ASSESSEE @ RS.1,850/- PER BAG AND SELLS T HE SAME AT RS.2,350/- HE MAKES PROFIT OF R.500/- ONLY PER BAG, OUT OF THE SAME PAYS RS.95/- PER BAG TO SARGAM RETAILS PVT. LTD., AS COM PENSATION AND ALSO PAYS INCOME-TAX ON THE PROFIT. THEREFORE, THER E IS NO SURPLUS TO THE EXTENT OF RS.500/- PER BAG TO BE GIVEN T O THE ASSESSEE. IF THE CONTENTION OF THE ASSESSING OFFICER IS ACCEPTED, THEN SHRI RAJENDRA S. RAKA HAS TO INCUR LOSS WHICH NO PRUDENT BU SINESSMAN WILL DO AND IT IS AGAINST THE THEORY OF HUMAN PROBABILITY TH AT ANYBODY WILL DO BUSINESS TO INCUR LOSS. 32. WE FURTHER FIND MERIT IN THE SUBMISSION OF THE LD. COUN SEL FOR THE ASSESSEE THAT WHEN THE OFFICE OF THE ASSESSEE WAS S IMULTANEOUSLY SEARCHED ON THE VERY SAME DATE AND SINCE NO IOTA OF EVIDENCE WAS FOUND FROM THE OFFICE OF THE ASSESSEE TO SHOW THAT IT HAS RECEIVED ANY UNACCOUNTED CASH, THEREFORE, MERELY ON THE BASIS OF STAT EMENT GIVEN BY SHRI RAJENDRA S. RAKA, WHICH HAS BEEN RETRACTED SUBS EQUENTLY, CANNOT BE THE BASIS OF ANY ADDITION IN THE HANDS OF THE A SSESSEE. IN THIS VIEW OF THE MATTER, WE HOLD THAT THE CIT(A) WAS NOT J USTIFIED IN SUSTAINING THE ADDITION MADE BY THE ASSESSING OFFICER AMOUN TING TO 21 RS.16,83,500/- ON ACCOUNT OF UNACCOUNTED CASH RECEIVED BY THE ASSESSEE FROM SHRI RAJENDRA S. RAKA OF M/S. RAJENDRA TRA DING COMPANY. WE ACCORDINGLY SET ASIDE THE SAME AND GROUND S RAISED BY THE ASSESSEE ON THIS ISSUE ARE ALLOWED. ITA NO.1117/PN/2013 (A.Y. 2010-11) : 33. GROUNDS OF APPEAL NO.1 TO 1.3 BY THE ASSESSEE RELA TE TO THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.30,04 ,387/- MADE BY THE ASSESSING OFFICER U/S.40A(9) OF THE I.T. ACT. 34. AFTER HEARING BOTH THE SIDES WE FIND THE ABOVE GROUN DS ARE IDENTICAL TO GROUNDS OF APPEAL NO.1 TO 1.3 IN ITA NO.1116/PN /2013 FOR A.Y. 2009-10. WE HAVE ALREADY DECIDED THE ISSUE AND T HE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN DISMISSED. FOLLOWING THE SAME RATIO, THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE ARE DISMISSED . 35. GROUNDS OF APPEAL NO. 2 TO 2.8 BY THE ASSESSEE RELAT E TO THE ORDER OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.36 LAKH S MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOSS ON ACCOU NT OF FORGERY. 36. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSING O FFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT SCHED ULE 21 OF THE AUDIT REPORT TITLED EXTRAORDINARY EXPENSES SHOW THAT IN RESPECT OF THE PREVIOUS YEAR EXCEPTIONAL ITEM I,E. ADVANCES GIVEN OF RS .36 LAKHS IN THE EARLIER YEAR FOR PURCHASE OF CAR TO RUN IT ON HIRE BASIS HAS BEEN FOUND TO BE MISAPPROPRIATED BY FORGERY BY PERSON TO WHO M ADVANCES ARE GIVEN. HE ALSO OBSERVED THAT LEGAL CRIMINAL CASE HAS BE EN FILED IN THE MONTH OF MAY 2009. THE ASSESSEE ACCORDINGLY CLAIMED SUCH LOSS ON ACCOUNT OF FORGERY AS BUSINESS LOSS. SINCE NEITHER RU NNING OF CAR ON HIRE BASIS NOR GIVING ADVANCE IS ONE OF THE OBJECTS OF THE ASSESSEE 22 COMPANY THE ASSESSING OFFICER HELD THAT THE SAID LOSS IS NO T AN ALLOWABLE EXPENSES FOR THE BUSINESS PURPOSE OF THE ASSESS EE. HE THEREFORE DIRECTED THE ASSESSEE TO SUBSTANTIATE THE CLA IM MADE BY IT. IT WAS ARGUED THAT THE LOSS HAS OCCURRED FOR THE BUSIN ESS PURPOSE AND THEREFORE THE SAME SHOULD BE ALLOWED AS A DEDUCTIO N. THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. SASOON J. DAVID AND COMPANY REPORTED IN 146 ITR 390 WAS RELIED UPON, ACCORDING TO WHICH EMBEZZLEMENT OF MONEY BY THE DIRECTOR IS A BUSINESS LOAN. 37. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE ABO VE SUBMISSION OF THE ASSESSEE. ACCORDING TO HIM, ASSESSEE HA D GIVEN ADVANCE OF RS.36 LAKHS FOR PURCHASE OF CAR TO RUN ON HIR E BASIS. THE CAR IS NOTHING BUT A CAPITAL ASSET AND THEREFORE THIS ADV ANCE IS IN NATURE OF CAPITAL ASSET. WHEN THE ASSESSEE HAS WRITTEN OFF THIS AMOUNT TO PROFIT AND LOSS ACCOUNT, ITS BASIC NATURE STILL RE MAINS AND IT IS NOTHING BUT CLEARLY A CAPITAL EXPENDITURE. RELYING O N THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CAS E OF VST INDUSTRIES LTD. VS. ACIT REPORTED IN 6 TAXMANN.COM 86 WH ERE IT HAS BEEN HELD THAT TO CLAIM DEBT AS BAD DEBT AND AS A DEDU CTION IT SHOULD BE IN THE RESPECT OF BUSINESS WHICH IS CARRIED ON BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR THE ASSESSING OFFICER REJEC TED THE CLAIM OF DEDUCTION OF RS.36 LAKHS TREATING THE SAME AS A CAPITAL LOSS. 38. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE ASSES SING OFFICER. WHILE DOING SO, SHE NOTED THAT THE ASSESSEE COMPA NY IS NOT AUTHORISED TO CARRY ON THE BUSINESS OF HIRE PURCHASE O F VEHICLES AS PER MEMORANDUM AND ARTICLES OF ASSOCIATION. NO STEPS HA VE BEEN TAKEN TO REVISE THE MEMORANDUM AND ARTICLES OF ASSOCIATIO N FOLLOWING THE BOARD RESOLUTION DATED 02-02-2009. THE ASSESSEE P URPORTEDLY RENTED OUT THE CARS ON 25-02-2009 WHEN THE PAYMENT HAD NOT BEEN 23 MADE NOR THE PHYSICAL OWNERSHIP TRANSFERRED TO THE ASSE SSEE. NO REMEDIAL MEASURES HAVE BEEN TAKEN TO RECOVER LOSS OF R S.36 LAKHS WHICH IS SUBSTANTIAL AMOUNT. NOT EVEN A POLICE FIR HAS BEE N REGISTERED BY THE ASSESSEE NOR ANY CRIMINAL COMPLAINT FILED AGAINST THE SUSPECT. WITHOUT PREJUDICE TO THE ABOVE, SHE FURTHE R NOTED THAT THE LOSS DOES NOT PERTAIN TO THE IMPUGNED ASSESSMENT Y EAR AS THE FIRST INSTALMENT OF RS.14,40,000/- WAS MADE THROUGH RTGS ON 19-03-2009. SHE ACCORDINGLY HELD THAT THE ASSESSING OFFIC ER WAS JUSTIFIED IN DISALLOWING THE LOSS CLAIMED BY THE ASSESSEE U/ S.37(1) AS WELL AS 36(1)(VII). 39. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 40. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT CONTRO VERT ANY OF THE OBSERVATIONS GIVEN BY THE CIT(A) TO SUBSTANTIATE THE ALLOWABILITY O F THE CLAIM. IN ABSENCE OF ANY VALID ARGUMENT BY THE LD. C OUNSEL FOR THE ASSESSEE ON THIS ISSUE, WE FIND NO INFIRMITY IN THE ORDE R OF THE CIT(A) UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER WHICH IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS LEGALLY JUSTIFIED AND PROPER. GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE ARE ACCOR DINGLY DISMISSED. 41. GROUNDS OF APPEAL NO.3 TO 3.4 BY THE ASSESSEE RELATE S TO THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.32,41,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH RECEIVED FROM M/S. RAJENDRA TRADING COMPANY BEING RS.500/- PER BACK FOR 6482 BAGS. 42. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUNDS RAIS ED BY THE ASSESSEE ARE IDENTICAL TO THE GROUNDS OF APPEAL NO. 2 TO 2.4 BY THE ASSESSEE IN ITA NO.1116/PN/2013 FOR A.Y. 2009-10. WE HAVE ALREADY 24 DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE ASSESS EE HAVE BEEN ALLOWED. FOLLOWING THE SAME RATIO, THE GROUNDS RAISED BY T HE ASSESSEE ON THIS ISSUE ARE ALLOWED. 43. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24-07-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 24 TH JULY, 2015. LRH'K &'(!)*+%) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. ! ! ' ( ) -I, IQ.KS / THE CIT(A)-I, PUNE ! ! ' -I, IQ.KS / THE CIT-I, PUNE 5 . %&' (()* , ! )* , IQ.KS / DR, ITAT, A PUNE; 6 . ',- . / GUARD FILE. !0 / BY ORDER , % ( //TRUE COPY// % ( //TRUE COPY// 123 (4 )5 / SR. PRIVATE SECRETARY ! )* , IQ.KS / ITAT, PUNE