ACIT, Jaipur V. SUNRISE NATRROPATHY & HEALTH, Jaipur

ITA 1128/JPR/2010

• Counselvise Citation: 112823114 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 10-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHRI
• Assessee Lawyers: JOGINDER SINGH SHEKHAWAT
• Keywords: Rejection of books of accounts; Additional evidence; Corroborative evidences; Onus to prove
• Section: 131; 68; 6

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.1128/ & 738/JP/2010 ASSESSMENT YEAR: 2005-06 & 2006-07 PAN AAECS 2615 Q THE ACIT VS M/S. SUNRISE NATURAPATHY & HEALTH RE SORTS (P) LTD. CIRCLE- 7 VILLAGE. BILOCHI, POST KALIGHATI, TEHS IL AMER JAIPUR JAIPUR (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI VINOD JOHRI ASSESSEE BY: SHRI JOGINDER SINGH SHEKHAWAT DATE OF HEARING: 14-11-2011 DATE OF PRONOUNCEMENT: 22-12-2011 PER N.L. KALRA, AM:- THE REVENUE HAS FILED APPEALS AGAINST THE ORDER OF THE LD. CIT(A)-I JAIPUR DATED 29-06-2010 AND 29-03-2010 FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 RESPECTIVELY. 2.0 FIRST OF ALL, WE TAKE UP THE APPEAL OF THE REVE NUE FOR THE ASSESSMENT YEAR 2005- 06. 2.1 THE FIRST GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 17,06,985/- MADE BY THE AO ON ACCO UNT OF RECEIPTS WITHOUT APPRECIATING THE FACTS AS MENTIONED BY THE AO IN THE ASSESSMENT ORDER. 2.2 THE ASSESSEE COMPANY IS ENGAGED IN THE RUNNING A RESORT WITH FACILITY OF NATUROPATHY AND AAYURVEDIC TREATMENT THROUGH ITS HO SPITAL SECTION. THE RECEIPTS DURING THE YEAR ARE TO THE EXTENT OF RS. 1,28,19,583/- AS AGAINST RS. 1,19,43,514/- OF THE LAST YEAR . THE SUM OF RS. 54,56,104/- HAS BEEN SHOWN IN RESP ECT OF RECEIPTS FROM RESORT AND SUM OF RS. 57,45,845/- HAS BEEN SHOWN AS RECEIPT FROM H OSPITAL. THE RESTAURANT RECEIPTS ARE TO 2 THE EXTENT OF RS. 19,96,525/-. THE BALANCE RECEIPTS WERE FROM BAR, SWIMMING POOL, TELEPHONE ETC. BEFORE T AO, IT WAS CLAIMED THAT VIS ITOR REGISTER OF THE COMPANY WAS LOST ON 11-11-2005. THE COPY OF FIR LODGED WITH THE POL ICE STATION WAS FURNISHED. IN THE PROCEEDINGS ALSO, THE VISITOR REGISTER COULD NOT BE PRODUCED DURING THE COURSE OF LAST YEAR ASSESSMENT PROCEEDINGS AND ESTIMATED ADDITION WAS M ADE. IN ABSENCE OF VISITOR REGISTER , THE GENUINENESS OF HE GROSS RECEIPTS DECLARED BY TH E ASSESSEE COMPANY COULD NOT BE VERIFIED. ACCORDING TO THE AO, THE RECEIPTS HAVE IN CREASED FROM RS. 1.19 CRORES TO RS. 138 CRORES WHILE EXPENSES HAVE INCREASED FROM RS. 1 .17 CRORES TO RS. 134 CRORES. THE MAJOR INCREASE HAS BEEN IN THE DIRECT EXPENSES WHIC H HAVE INCREASED FROM RS. 26,59,438/- TO RS. 43,98,412/-. THE SUBSTANTIAL INCREASE WAS UN DER THE HEAD MESS EXPENSES, ELECTRICITY EXPENSES AND GAS CYLINDER. ELECTRICITY EXPENSES 2.3 DURING THE YEAR UNDER REFERENCE, THE EXPENSES U NDER THIS HEAD ARE OF RS. 14.58 LACS AS AGAINST RS. 8.16 LACS OF THE IMMEDIATELY PR ECEDING YEAR. BEFORE THE AO, IT WAS SUBMITTED THAT THE EXPENDITURE IN THE IMMEDIATELY P RECEDING YEAR WAS OF RS. 7.50 LACS ONLY BECAUSE THE ELECTRICITY CONNECTION WAS OBTAINE D IN AUG 2003. HOWEVER, THE EXPENSES DEBITED IN THE YEAR ARE FOR THE ENTIRE YEA R. MESS EXPENSES 2.4 THE MESS EXPENSES ARE TO THE EXTENT OF RS. 16,4 3,722/- AS AGAINST RS. RS. 9,37,861/- IN THE IMMEDIATELY PRECEDING YEAR. THE A SSESSEE WAS ASKED TO EXPLAIN THE REASONS FOR INCREASE IN THE EXPENSES. THE LD.AR OF THE ASSESSEE SUBMITTED THAT EXPENDITURE HAS INCREASED ON ACCOUNT OF INCREASE I N TURN OVER AS WELL AS INCREASE IN COST. THE REPLY FILED BY THE ASSESSEE WAS ALSO NOT ACCEPT ABLE TO THE AO. THE AO NOTICED THAT 3 THERE HAVE BEEN NO MESS RECEIPTS FROM SEVERAL DAYS AND STILL FOOD ITEMS/ VEGETABLES WERE PROCURED. THE LD.AR OF THE ASSESSEE SUBMITTED THAT SOME FOOD ITEMS/ VEGETABLES HAVE TO BE KEPT IN RESTAURANT IN ANTICIPATION OF GUESTS. TH E AO AFTER CONSIDERING THE ABOVE FACTS OF INCREASE IN THE EXPENSES MADE THE ADDITION OF RS . 17,06,085/- AFTER OBSERVING AS UNDER:- VI) AS HAS BEEN STATED EARLIER, VISITOR REGISTER WAS NOT AVAILABLE FOR VERIFICATION OF GENUINENESS OF THE GR OSS RECEIPTS. CONSIDERING THE SUBSTANTIAL INCREASE IN THE ELECTRI CITY EXPENSE AND MESS EXPENSES, THE GROSS RECEIPTS FROM HOSPITAL, RE SORTS AND RESTAURANT IS ESTIMATED TO BE 30% HIGHER THAN THE I MMEDIATELY PRECEDING YEAR, AFTER REJECTING THE BOOK RESULT U/S 145(3) OF THE INCOME TAX ACT. THE GROSS RECEIPT IS CALCULATED AS BELOW:- RECEIPT IN THE PRECEDING YEAR RS. 1,19,43,514/ - ESTIMATED BASIS (130%) RS. 1,55,26,568/ RECEIPT DECLARED DURING THE YEAR RS. 1,38,19,58 3/- ADDITION ON ACCOUNT OF ABOVE RS. 17,06,985/- 2.5 BEFORE THE LD CIT(A), THE LD.AR SUBMITTED THAT INCREASE IN RECEIPTS @ 30% BY THE AO IS WITHOUT ANY BASIS. THE COMPARATIVE CHART OF R ECEIPT AND EXPENSES OF THE ASSESSMENT YEAR UNDER REFERENCE AS COMPARED TO PRECEDING YEAR WAS FILED. PARTICULARS F.Y 2003-04 (A.Y 2004-05) F.Y.2004-05 (A.Y. 2005-06) INCREASE/ DECREASE RESTAURANT INCOME 725080 1996525 1271445 HOSPITAL & RESORT 10739980 11201958 461978 TOTAL 11465060 13198483 1733423 MESS EXPENSES 937861 1643722 705861 %AGE TO RESTAURANT, HOSPITAL & RESORT INCOME 8.18% 12.45% 4.27% POWER & FUEL EXP. 1263268 2037940 774672 %AGE TO RESTAURANT, HOSPITAL & RESORT INCOME 11.02% 15.44% 4.42% 4 2.6 FROM THE ABOVE CHART, THE LD.AR SUBMITTED THAT THERE IS AN INCREASE OF 4.27% OF THE MESS EXPENSES VIS A VIS TOTAL RECEIPTS AS COMPA RED TO LAST YEAR . THE POWER AND FUEL EXPENSES HAVE INCREASED BY 4.42% AS COMPARED TO PRE CEDING YEAR. THE INCREASE OF EXPENSES BETWEEN 4% TO 5% IS ON ACCOUNT OF INCREAS E IN THE COST. IF THE RECEIPTS PER PERSON OR PER ITEM OF FOOD HAVE NOT BEEN INCREASED THEN THE INCREASE IN EXPENSES CAN BE EXPLAINED FROM THE INCREASE IN COST. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE WAS TO MAKE PAYMENT FOR THE AVERAGE CONSUMPTION OF ELECTRI CITY AND IN CASE THE CONSUMPTION IS LESS THEN MINIMUM AND HENCE EXTRA CHARGES ARE INCLU DED IN THE BILL. THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE HAS MAINTAINED THE BOOK S OF ACCOUNTS. THE AO HAS NOT POINTED OUT ANY DISCREPANCY IN THE BOOKS OF ACCOUNT S. IT WAS THEREFORE, SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCO UNTS. 2.7 THE LD CIT(A) OBSERVED THAT THE ASSESSEE HAS PR ODUCED THE BOOKS OF ACCOUNTS. THE RECEIPTS CAN BE VERIFIED FROM THE BILL BOOK. CA SH BOOK IS AVAILABLE AND THE RECEIPTS CAN BE VERIFIED. THE RECEIPTS CAN BE VERIFIED FROM THE BANK ACCOUNT. THE AO HAS NOT COLLECTED ANY EVIDENCE TO SHOW THAT THE ASSESSEE HA S COLLECTED RECEIPTS OUTSIDE THE BOOKS OF ACCOUNTS. THE INCREASE IN MESS EXPENSES AND ELEC TRICITY EXPENSES IS ON ACCOUNT OF COST. THE LD CIT(A) THEREFORE, DELETED THE ADDITION OF RS. 17,06,985/-. 2.8 WE HAVE HEARD BOTH THE PARTIES. UNDER SIMILAR C IRCUMSTANCES, THE AO MADE ADDITION OF RS. 5.00 LACS IN THE IMMEDIATELY PRECED ING YEAR. THE ADDITION WAS DELETED BY THE LD CIT(A) AND THE ORDER OF THE LD CIT(A) WAS CO NFIRMED IN THE CASE OF THE ASSESSEE BY THE TRIBUNAL VIDE ITS ORDER IN ITA NO. 654/JP/2009 DATED 6-08-2010 . IT WILL BE USEFUL TO REPRODUCE PARA 4 AND 5 FROM THAT ORDER. 5 4. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT V ISITOR REGISTER WAS LOST BY THE EMPLOYEE WHEN THE SAME WAS BEING TA KEN FROM THE RESORT OFFICE TO THE CITY OFFICE FOR THE PURPOSE OF AUDIT. A COMPLAINT WAS MADE IN THE POLICE STATION AND COPY OF SUCH REPORT WAS G IVEN TO THE AO. BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE RECEIPTS CAN BE VERIFIED FROM THE BOOKS OF ACCOUNT. THE LD. CIT(A) REQUIRED THE AO TO GIVE THE REMAND REPORT . IN REMAND REPORT , THE AO MENTIONED THAT T HE ASSESSEE HAS INTENTIONALLY NOT PRODUCED THE VISITOR REGISTER. TH E LD. CIT(A) OBSERVED THAT THE VISITOR REGISTER HAS BEEN LOST AND THEREFO RE, THE SAME COULD NOT HAVE BEEN PRODUCED. THE RECEIPTS CAN BE VERIFIED FR OM THE BOOKS OF ACCOUNT BECAUSE THE RECEIPTS ARE ISSUED ON THE BASI S OF THE BILL. THE COPY OF THE BILL IS GIVEN TO THE CUSTOMERS ALSO. ACCORDI NG TO THE LD. CIT(A), THE AO SHOULD HAVE DISALLOWED THE EXPENSES IN CASE SUCH EXPENSES WERE EXCESSIVE. THE LD. CIT(A) OBSERVED THAT THE RECEIPT S FROM RESTAURANT AND RESORTS WERE TO THE EXTENT OF RS. 1.14 CRORES AS AG AINST RS. 70.0 LACS OF IMMEDIATELY PRECEDING YEAR. THE LD. CIT(A) THEREFOR E, DELETED THE ADDITION. 5. WE HAVE HEARD BOTH THE PARTIES. THE RECEIPTS AS SHOWN BY THE ASSESSEE COULD HAVE BEEN VERIFIED FROM THE BOOK S OF ACCOUNT. THE VISITOR REGISTER HAS BEEN LOST AND THE ASSESSEE HAS FILED THE COPY OF THE COMPLAINT FILED BEFORE THE POLICE AUTHORITIES. HENC E, IT CANNOT BE SAID THAT THE VISITOR REGISTER WAS NOT PRODUCED FOR ULTERIOR MOTIVE. IF AN EVIDENCE IS NOT AVAILABLE THE SAME CANNOT BE PRODUCED AND FOR THAT PURPOSE AN ADVERSE INFERENCE CANNOT DRAWN. THE AO HAS NOT MADE ANY EFFORT TO VERIFY THAT THE RECEIPTS AS MENTIONED IN THE BOOKS OF ACCO UNT ARE NOT CORRECT. IF THE AO WAS OF THE OPINION THAT THE RECEIPTS ARE EXC ESSIVE THEN THE AO SHOULD HAVE MADE SOME EFFORTS TO COLLECT THE MATERI AL TO SHOW THAT RECEIPTS WERE EXCESSIVE. THE LD. CIT(A) HAS OBSERVED THAT IN CREASE IN EXPENSES IS PROPORTIONATE TO THE INCREASE IN THE RECEIPTS AND W E FEEL THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 5.00 LACS. 6 2.9 WE HAVE ALSO NOTICED THAT THE ASSESSEE HAS FILE D THE COMPARATIVE STATEMENT OF ELECTRICITY EXPENSES AS COMPARED TO IMMEDIATELY PRE CEDING YEAR. DURING THE YEAR UNDER REFERENCE, THE ADDITIONAL CHARGES DUE TO POWER FAC TOR HAS BEEN LEVIED TO THE EXTENT OF RS. 1,63,892/-. IN THE IMMEDIATELY PRECEDING YEAR, THE CONSUMPTION OF ELECTRICITY IN UNIT WAS TO THE EXTENT OF RS. 1,34,106/- FOR 7 MONTHS. THIS GIVES AVERAGE CONSUMPTION OF 17,881/- PER UNIT. FOR THE YEAR UNDER REFERENCE, TH E CONSUMPTION IS TO THE EXTENT OF 2,17,644 FOR THE ENTIRE YEAR AND THE CONSUMPTION PE R MONTH WILL COME TO 18,137. THUS THE CONSUMPTION IN ELECTRICITY IN UNIT PER MONTH IS NOT SUBSTANTIAL. THE INCREASE IS BASICALLY ON ACCOUNT OF COST AND VARIABLE FACTOR. THE ASSESSEE HAS ALSO GIVEN THE QUANTITATIVE DETAILS IN RESPECT OF THE CONSUMPTION OF VARIOUS ITEMS FOR PREPARING FOOD IN RESTAURANT. THE PERCENTAGE OF INCREASE VARIED FROM 6.90% TO 85.19%. THE CONSUMABLES ARE ACCOUNTED AS AND WHEN THESE ARE PURCHASED. THE AO HAS NOT COLLECTED ANY EVIDENCE OR MATERIAL TO SUGGEST THAT BOOKS OF ACCOUNTS ARE U NRELIABLE OR PROFIT CANNOT BE ASCERTAINED FROM THE BOOKS OF ACCOUNTS. ALL THE BOOKS HAVE BEEN MAINTAINED FOR FINANCIAL ACCOUNTING. ONLY ON ACCOUNT OF NON-AVAILABILITY OF VISITOR REGI STER, THE AO SHOULD NOT HAVE REJECTED THE BOOKS OF ACCOUNTS. THE VISITOR REGISTER WAS LOS T ON 15-11-2005 BUT THE TAX AUDIT WAS CONDUCTED BEFORE 15-11-2011 AND THE TAX AUDIT REPOR T IS DATED 20-10-2004. THE AUDITOR HAS MENTIONED THAT THE ASSESSEE HAS MAINTAINED FOLL OWING BOOKS OF ACCOUNTS. CASH BOOK, LEDGER BOOK, JOURNAL LEDGER, SALARY A ND WAGES REGISTER AND GATE PASS REGISTER. THUS THE TAX AUDITOR HAS SCRUTINIZED THE ABOVE REFE RRED BOOKS OF ACCOUNTS AND REGISTERS BEFORE PREPARING TAX AUDIT REPORT. IN TAX AUDIT REP ORT, THE AUDITOR HAS MENTIONED THAT SINCE THE COMPANY IS SERVICE PROVIDING COMPANY THEREFORE, KEEPING STOCK FROM INCLUDIBLE VALUE 7 AND THIS VALUATION OF STOCK IS NOT APPLICABLE TO TH E COMPANY. THUS THE NON-AVAILABILITY OF GOODS RECEIPT WAS NOT SUFFICIENT FOR THE REJECTION OF BOOKS OF ACCOUNTS UNLESS SOME SPECIFIC DEFECTS IN THE FINANCIAL ACCOUNTS HAVE BEE N NOTICED. HENCE, THE REJECTION OF BOOKS OF ACCOUNTS WAS NOT PROPER AND THE LD CIT(A) HAS RI GHTLY HELD THAT REJECTION OF BOOKS OF ACCOUNTS WAS NOT CORRECT. WE THEREFORE, FEEL THAT T HE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 17,06,985/- 3.1 THE SECOND GRIEVANCE OF THE REVENUE IS THAT TH E LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 50.00 LACS MADE BY THE AO U/S 6 8 OF THE ACT AFTER ACCEPTING THE ADDITIONAL EVIDENCES UNDER RULE 46A DESPITE THE OBJ ECTIONS MADE BY THE AO. 3.2 THE AO NOTICED THAT THE ASSESSEE HAS SHOWN UNSE CURED LOAN AMOUNTING TO RS. 2,61,08,186/- AS AGAINST RS. 1,49,44,646/- AS ON 31 -03-2004. THERE IS AN INCREASE IN UNSECURED LOAN AMOUNTS FROM TWO OF THE DIRECTORS T O THE EXTENT OF RS. 2.00 LACS TO RS. 7.80 LACS. THE ASSESSEE HAS ALSO RAISED LOANS FROM THE COMPANIES AND OTHERS. THE AO VIDE SHOW CAUSE NOTICE DATED 27 TH SEPT 2007 REQUIRED THE ASSESSEE TO PRODUCE THE CON FIRMATION OF ALL THE NEW/ INCREASED UNSECURED LOANS DURING TH E YEAR ALONGWITH ADDRESS, ASSESSMENT PARTICULARS AND COPY OF BANK ACCOUNT OF THE CREDITO RS. THE CASE WAS FIXED FOR 15-10-2007. ON THIS DATE, FEW CONFIRMATIONS WERE FILED WITHOUT OTHER DOCUMENTS AS REQUIRED. IT WAS SUBMITTED BY THE LD.AR THAT OTHER CONFIRMATIONS WI LL BE FILED AS SOON AS THESE ARE RECEIVED. THE AO VIDE ORDER SHEET ENTRY DATED 16-11 -2007 ASKED THE ASSESSEE TO PRODUCE ALL PENDING CONFIRMATIONS ALONGWITH COPIES OF IT RE TURNS BY 20-11-2007. ON THIS DATE, THE ASSESSEE FILED 14 CONFIRMATION CERTIFICATES. THE C OPIES OF I.T. RETURNS AND BANK STATEMENT IN RESPECT OF THESE CREDITORS WERE NOT FILED. THE A SSESSEE WAS GIVEN FURTHER OPPORTUNITY ON 13-11-2007 TO FILE THE DETAILS BY 7 TH DEC 2007. EVEN ON THE SUBSEQUENT DATE OF 18 TH DEC. 8 2007, THE ASSESSEE COULD NOT FILE THE REQUIRED DETA ILS. THE AO MADE THE ADDITION U/S 68 OF THE ACT. IN RESPECT OF ONE CREDITOR I.E. SHRI RAJES H KUMAR, THE ASSESSEE HAS NOT FILED THE CONFIRMATION AND THEREFORE, THE CREDIT OF RS. 5.00 LACS IN HIS NAME WAS ADDED U/S 68 THE ACT IN 15 CASES, THE ASSESSEE FILED CONFIRMATIONS W ITHOUT ANY SUPPORTING EVIDENCE, SUCH AS, I.T. RETURNS, COPY OF BANK STATEMENTS, COPY OF BALANCE SHEETS AND STATEMENT OF AFFAIRS HENCE, CREDIT IN THE NAMES OF THESE 15 PARTIES TO THE EXTENT OF RS. 29.00 LACS WAS ADDED U/S 68 OF THE ACT AND INTEREST OF RS. 30,932/- WAS ALSO DISALLOWED. IN RESPECT OF 08 PARTIES, THE ASSESSEE FILED CONFIRMATIONS AND COPY OF I.T RE TURNS/ INTIMATION. HOWEVER, THE COPY OF BANK STATEMENT AND COPY OF BALANCE SHEET / STATE MENT OF AFFAIRS WERE NOT FILED. THE CREDIT WORTHINESS COULD NOT BE PROVED. THEREFORE, A SUM OF RS. 16.50 LACS WAS ADDED U/S 68 OF THE ACT IN RESPECT OF THESE 08 PARTIES AND IN TEREST OF RS. 30,154/- WAS ALSO ADDED BACK. 3.3 THE ASSESSEE HAS SHOWN RECEIPT OF RS. 5.00 LACS FROM BAJAJ TRADING CO, PROP SHRI SANDEEP KUMAR BAJAJ ON 24-01-2005. FROM THE BANK ST ATEMENT, IT WAS NOTICED BY THE AO THAT A SUM OF RS. 5.00 LACS WAS DEPOSITED IN CASH IN THE BANK ACCOUNT OF THE CREDITOR. THE AO THEREFORE, HELD THAT CREDIT WORTHINESS OF THIS C REDITOR IS NOT ACCEPTABLE. 3.4 THE ASSESSEE HAS SHOWN RECEIPT OF RS. 3.00 LACS FROM SHRI ASHOK KUAR GUPTA-II. THE AO NOTICED THAT CREDITOR HAS SHOWN INCOME OF ON LY RS49,179/- WHILE HE HAS WITHDRAWN A SUM OF RS. 13,000/-. ON THIS BASIS, IT WAS HELD THAT CREDIT WORTHINESS IS NOT ESTABLISHED. 3.5 A SUM OF RS. 4.00 LACS HAS BEEN SHOWN BY THE A SSESSEE TO HAVE RECEIVED FROM SHRI ANIL AGARWAL. THE ASSESSEE HAS FILED UNSIGNED BALANCE SHEET AND COPY OF I.T. RETURN WAS NOT FILED. THE AO THEREFORE, DISALLOWED RS. 4.0 0 LACS U/S 68 OF THE ACT. 9 3.6 IN RESPECT OF THREE CREDITORS, THE ASSESSEE HAS FILED THE COPY OF I.T. RETURN AND BALANCE SHEET. THE BANK STATEMENT WERE NOT FILED. T HE BALANCE SHEETS ARE NOT AUDITED. THEREFORE, THE CREDITS IN THE NAME OF THREE CREDITO RS TO THE EXTENT OF RS. 5.00 LACS WERE ADDED. 3.7 SIMILARLY THE CREDIT ENTRIES TO THE EXTENT OF R S.7.00 LACS IN THE NAME OF TWO PARTIES WAS ADDED U/S 68 OF THE ACT BECAUSE BANK STATEMENT AND COPY OF I.T. RETURN WERE NOT FILED. THE ASSESSEE HAS SHOWN THE LOAN OF RS. 20.00 LACS FROM SHRI RAM PRASAD VIJAY KUMAR. IN THE ABSENCE OF COPY OF BALANCE SHEET OR I .T. RETURN, THE AO HELD THAT THE AMOUNT IS TO BE DISALLOWED U/S 68 OF THE ACT. 3.8 THE AO FURTHER ADDED A SUM OF RS. 2.25 LACS IN RESPECT OF SHARE APPLICATION MONEY AND HELD AS UNEXPLAINED IN THE IMMEDIATELY PR ECEDING YEAR BECAUSE A SUM OF RS. 2.25 LACS HAS BEEN DEBITED AS INTEREST PAID TO SUCH PARTIES WHO DEPOSITED THE SHARE APPLICATION MONEY IN THE IMMEDIATELY PRECEDING YEAR . 3.9 BEFORE, THE LD CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE HAS FILED THE CONFIRMATIONS OF ALL THE CREDITORS. ALL THE CREDITO RS ARE INCOME TAX ASSESSES. THE CONFIRMATION SHOWS THE OPENING BALANCE AND THE AMOU NT RECEIVED DURING THE YEAR AND ALSO THE INTEREST PAYABLE. THE CONFIRMATIONS AND OT HER DETAILS COULD NOT BE FILED BEFORE THE AO IN RESPECT OF ALL THE CREDITORS AND ALL SUCH DET AILS WERE FILED BEFORE THE LD CIT(A) AND A REQUEST WAS MADE THAT SUCH DOCUMENT SHOULD BE ADM ITTED AS ADDITIONAL EVIDENCE. SUCH EVIDENCE COULD NOT BE FILED BEFORE THE AO BECAUSE T HE ASSESSMENT ORDER WAS GOING TO BE BARRED BY LIMITATION AND THE ASSESSEE WAS NOT PROVI DED ADEQUATE OPPORTUNITY,. SUCH ADDITIONAL EVIDENCES WERE FORWARDED TO THE AO BY TH E LD CIT(A) AND THE AO WAS REQUIRED TO OFFER HIS COMMENTS ON THE ADDITIONAL EV IDENCES. THE AO IN HIS REMAND REPORT 10 SUBMITTED THAT ASSESSEE HAS NOT FILED ANY ADDITIONA L FACT. ACCORDING TO THE AO, THE ADDITION U/S 68 HAS BEEN CORRECTLY MADE. 3.10 THE LD.AR SUBMITTED THAT THE CONFIRMATIONS IN RESPECT OF SHRI RAJESH KUMAR WAS FILED VIDE LETTER DATED 20-11-2007. IN CASE THE AO WAS NOT SATISFIED WITH THE GENUINENESS OF THE CREDIT WORTHINESS OF THE CREDITORS, THEN AO COULD HAVE ISSUED SUMMON U/S 131 OF THE ACT. IT IS NOT THE ONUS ON THE ASSESSEE TO ESTA BLISH THE SOURCE OF THE SOURCE. RELIANCE WAS PLACED ON THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE LABH CHAD BOHRA VS ITO 7 ITCD 25. 3.11 THE LD CIT(A) HAS DELETED THE ADDITION U/S 68 OF THE ACT. THE LD CIT(A) RECORDED THE FINDINGS THAT THE AO HAS FILED THE CONFIRMATION S OF SHRI RAJESH KUMAR. THE ASSESSEE HAS FILED THE COPY OF THE I.T. RETURNS OF THE CREDI TORS. LOANS HAVE BEEN RAISED THROUGH BANKING CHANNEL. THE ASSESSEE HAS DISCHARGED THE ON US CAST UPON HIM U/S 68 OF THE ACT. 3.12 WE HAVE HEARD BOTH THE PARTIES. THE COPY OF TH E REMAND REPORT IS AVAILABLE AT PAGES 265 AND 266 OF THE PAPER BOOK. THE AO IN HIS REMAND REPORT HAS ONLY REFERRED TO THE FACTS MENTIONED BY THE AO IN HIS ORDER. ACCORDI NG TO THE AO, THE ASSESSEE WAS PROVIDED AMPLE OPPORTUNITIES BUT CONFIRMATIONS OF A LL THE CREDITORS ALONGWITH NECESSARY DETAILS WERE NOT FILED. ACCORDING TO THE AO, THE AD DITIONAL EVIDENCES UNDER RULE 46A CANNOT BE INVESTIGATED AT THIS STAGE. THE LD CIT(A) HAS TO GIVE FINDINGS AS TO WHETHER THE ADDITIONAL EVIDENCES CAN BE ACCEPTED OR NOT. IN CAS E THE LD CIT(A) IS SATISFIED THAT THE ASSESSEE WAS NOT PROVIDED ADEQUATE OPPORTUNITIES OF FILING THE EVIDENCE THEN HE CAN ACCEPT THE ADDITIONAL EVIDENCE AFTER RECORDING HIS REASONS. IT IS TRUE THAT THE AO CAN OBJECT TO THE FILING OF ADDITIONAL EVIDENCES BUT IT IS ALS O THE DUTY OF THE AO TO OFFER HIS COMMENTS ON THE ADDITIONAL EVIDENCE. WHILE SUBMITTI NG THE REMAND REPORT, THE AO CAN 11 MAKE INVESTIGATIONS IN RESPECT OF ADDITIONAL EVIDEN CE. THE BASIC PURPOSE IS TO TAX ON THE PROPER INCOME ON THE BASIS OF THE ADDITIONAL EVIDEN CE. WE DO NOT AGREE WITH THE AO THAT HE COULD NOT INVESTIGATE THE ADDITIONAL EVIDENCE. T HE POWERS OF THE LD CIT(A) ARE THE SAME AS THAT OF THE AO IN RESPECT OF MAKING ENQUIRY . THE ASSESSEE HAS FILED THE ADDITIONAL EVIDENCE ALONGWITH NECESSARY DETAILS BEFORE THE LD CIT(A) AND THE LD CIT(A) AFTER GIVING OPPORTUNITY TO THE AO HAS DELETED THE ADDITION. DUR ING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS FILED ALL THE NECESSA RY DETAILS IN RESPECT OF IDENTITY OF THE CREDITORS, GENUINENESS OF THE TRANSACTIONS AND CRED IT WORTHINESS OF THE CREDITORS. THE AMOUNTS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL. THE AO OF THE ASSESSEE CAN RECORD THE FINDINGS IN RESPECT OF CREDIT WORTHINESS OF THE CREDITORS IN CASE THE CREDITORS HAVE FILED THE I.T. RETURNS. THE AO HAVING THE JURISDICTION O VER THE CREDITORS CAN RECORD THE FINDINGS IN RESPECT OF THE CREDIT WORTHINESS OF THE CREDITORS. THE AO HAS NOT MADE ANY EFFORT TO ESTABLISH THAT THE AO OF THE CREDITORS HA S TAKEN ACTION AGAINST THE CREDITORS BY RECODING A FINDING THAT THE CREDITOR IS NOT A MAN O F MEANS. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE ARAVALI TRADING CO VS ITO 220 CTR 622 HELD THAT ONCE EXISTENCE OF THE CREDITOR IS PROVED AND SUCH PERSONS OWNS THE CR EDITS THEN ONUS STAND DISCHARGED AND THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE FR OM WHICH THE CREDITOR COULD HAVE ACQUIRED THE MONEY DEPOSITED WITH THE ASSESSEE. THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IS SQUARELY APPLICABLE IN THE INSTANT CA SE, WE THEREFORE, HOLD THAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS . 19.5 LACS. 4.1 THE THIRD GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 4,32,845/- MADE BY THE AO ON ACCOUN T OF INTEREST ON UNSECURED LOANS. 12 4.2 SINCE THE ADDITION ON ACCOUNT OF UNSECURED LOA NS HAS BEEN DELETED, THEREFORE, THE INTEREST PAYABLE TO SUCH CREDITORS CANNOT BE DISALL OWED. THE AO HAS ALSO DISALLOWED THE INTEREST ON THE LOANS RAISED ON THE MONEY RECEIVED AS SHARE APPLICATION MONEY IN THE IMMEDIATELY PRECEDING YEAR. THE TRIBUNAL VIDE ORDER DATED 6-08-2010 HAS HELD THAT LD CIT(A) WAS JUSTIFIED IN REDUCING THE ADDITION TO R S. 3.00 LACS AS AGAINST RS. 51.00 LACS MADE BY THE AO IN RESPECT OF THE AMOUNT RECEIVED AS SHARE APPLICATION MONEY. HENCE, IF INTEREST HAS BEEN DEBITED IN RESPECT OF THE SUM OF RS. 3.00 LACS WHICH HAS BEEN CONFIRMED IN THE IMMEDIATELY PRECEDING YEAR THEN SUCH INTERES T WILL HAVE TO BE DISALLOWED.. HENCE, DISALLOWANCE OF INTEREST OF RS. 2.25 LACS ON THE SH ARE APPLICATION MONEY RECEIVED IN THE IMMEDIATELY PRECEDING YEAR IS RESTORED BACK ON THE FILE OF THE AO WITH THE DIRECTION THAT HE WILL VERIFY THE INTEREST IF ANY PAYABLE TO THE P ERSONS IN WHOSE CASE SHARE APPLICATION MONEY OF RS. 3.00 LACS WAS HELD AS UNEXPLAINED PARTLY ALLOWED ITA NO. 730/JP/2010 ASSESSMENT YEAR 2006-07 5.1 THE FIRST GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 26,00,577/- MADE ON ACCOUNT OF SUP PRESSION OF RECEIPTS NOT UPHOLDING REJECTION OF BOOKS OF ACCOUNTS U/S 145(3) OF THE AC T. 5.2 THIS ISSUE HAS BEEN CONSIDERED BY US WHILE DISP OSING OFF THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06. FOLLOWING OUR FINDING FOR THE ASSESSMENT YEAR 2005-06, WE HOLD THAT THE LD CIT(A) WAS JUSTIFIED I N DELETING THE ADITION OF RS. 26,00,577/-. 6.1 THE SECOND GRIEVANCE OF THE REVENUE IS THAT TH E LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 51.00 LACS MADE U/S 68 OF THE A CT IN SPITE OF THE FACT THAT THE ASSESSEE 13 FAILED TO DISCHARGE ITS ONUS TO PROVE GENUINENESS A ND CREDIT WORTHINESS OF THESE CREDITS WITHIN THE MEANING OF SECTION 68 OF THE ACT. 6.2 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS NOTICED THAT THE AO HAS RAISED UNSECURED LOANS OF RS. 51.00 LACS FROM 19 PE RSONS DURING THE YEAR. THE ASSESSEE WAS ASKED TO PRODUCE THE CONFIRMATION COPY OF ACCOU NTS ALONGWITH ADDRESSES, ASSESSMENT PARTICULARS AND COPY OF BANK ACCOUNT OF THE CREDITO RS ACCORDING TO THE AO, THE ASSESSEE HAS FILED THE CONFIRMATIONS OF THE CREDITORS BUT TH E ASSESSEE HAS NOT FILED THE COPY OF I.T. RETURNS, BANK STATEMENT ETC. FOR SOME OF THE CREDIT ORS. IT WILL BE USEFUL TO REPRODUCE THE CHART PREPARED BY THE AO IN THE ASSESSMENT ORDER. S.N. NAME AMOUNT IN (RS.) ITR B SHEET BANK STATEMENT CONFIRMATION CASH INTRODUCED 1. ALKA GUPTA 100000 YES - YES YES YES 2. BANARSI DAS GUPTA 600000 YES YES - YES - 3. DEVKINANDAN GUPTA 100000 - - YES YES YES 4. KESHAV SHARMA 500000 - - - YES - 5 LATA GOYAL 250000 YES - YES YES YES 6. LAXMI NARAYAN GUPTA 150000 - - YES YES YES 7. MEENU GUPTA 200000 YES - YES YES YES 8. BIHARI LAL VIJAI PROP BEHAN LAL & SONS 150000 YES - YES YES YES 9. RAJ KUMAR 500000 YES YES YES YES YES 10. SHYAMLAL BANSAL 300000 - - YES YES YES 11. SURESH KUMAR GUPTA HUF 300000 YES - YES YES YES 12. SURESH KUMAR GUPTA 300000 YES - YES YES YES 13. UMA MAHAVAR 500000 - YES YES YES YES 14 BRIJ BIHARI GUPTA 100000 YES - - YES - 15. DAYA RAM GUPTA HUF YES - YES YES YES YES 14 16. GEETA DEVI 250000 YES - YES YES YES 17. MAHAVEER PRASAD 100000 YES - YES YES YES 18 POORAN CHAND 200000 YES - YES YES YES 19. SANGEETA BAJAJ 300000 YES YES - YES - TOTAL 5100000 6.3 THE AO NOTICED THAT ALMOST ALL THE CASH CREDITO RS HAVE DEPOSITED CASH IN THEIR BANK ACCOUNT BEFORE ISSUING CHEQUE TO THE ASSESSEE. THE AO THEREFORE, REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE SUM OF RS. 51.00 LACS BE NOT ADDED U/S 68 OF THE ACT. THE ASSESSEE SUBMITTED THAT CASH WAS DEPOSITED BY T HE CREDITORS AND THAT BELONGED TO THAT CREDITORS AND THERE WAS NO ONUS ON THE ASSESSEE TO ESTABLISH THE SOURCE OF THE SOURCE. THE EXPLANATION OF THE ASSESSEE WAS REJECTED AND THE AO MADE AN ADDITION OF RS. 51.00 LACS. 6.4 THE LD CIT(A) HAS DELETED THE ADDITION AS ACCOR DING TO HIM, THE ASSESSEE HAS FILED CONFIRMATIONS AND COPY OF I.T. RETURNS OF CREDITOR S. THERE WAS NO ONUS ON THE ASSESSEE TO ESTABLISH THE SOURCE OF THE SOURCE. FOR THIS PRO POSITION, THE LD CIT(A) HAS RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF LAB CHAND BOHRA VS ITO 219 CTR 571. 6.5 WE HAVE HEARD BOTH THE PARTIES. THE SIMILAR ISS UE HAS BEEN CONSIDERED BY US IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-0 6. IN THAT CASE AFTER FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF ARAVALI TRADING CO (SUPRA), WE HAVE HELD THAT IN CASE THE EXISTENCE OF THE CRED ITOR IS PROVED AND SUCH CREDITOR OWNS THE AMOUNT PAID TO THE ASSESSEE THEN THE ONUS ON TH E ASSESSEE STANDS DISCHARGED. FOLLOWING THAT DECISION, WE HOLD THAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. REVENUE DISMISSED 15 7. IN THE RESULT, THE APPEALS OF THE REVENUE FOR TH E ASSESSMENT YEAR 2005-06 IS PARTLY ALLOWED AND APPEAL FOR THE ASSESSMENT YEAR 2006-07 IS DISMISSED.. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 22-12 -2011 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 22/12/2011 *MISHRA COPY FORWARDED TO :- 1. THE ACIT, CIRCLE-7, JAIPUR 2. M/S. SUNRISE NATUROPATHY & HEALTH RESORTS (P) LTD., JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.1128/JP /10) A.R, ITAT, JAIPUR