Shri Mahendra Jwalaprasad Bansal, Jalgaon V. ITO, Ward 1(1), Jalgaon

ITA 1294/PUN/2013

• Counselvise Citation: 129424514 RSA 2013
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: CHANDRASEKHAR; JAYANT M RANADE
• Keywords: Unexplained investment; Opportunity of being heard; Earning of tax free income; Source of fund; Deemed dividend
• Section: 143(3); 147; 263; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1294/PN/2013 (ASSESSMENT YEAR : 2008-09) SHRI MAHENDRA J.BANSAL, SAVITA BUILDING, SAGAR PARK, JALGAON-425 001 .. APPELLANT PAN NO.AAGHM9492Q VS. ITO, WARD-1(1), JALGAON .. RESPONDENT ITA NO. 1228/PN/2013 (ASSESSMENT YEAR : 2008-09) ITO, WARD-1(1), JALGAON .. APPELLANT VS. SHRI MAHENDRA J. BANSAL, SAVITA BUILDING, SAGAR PARK, JALGAON-425 001 .. RESPONDENT PAN NO.AAGHM9492Q ITA NO. 2063/PN/2014 (ASSESSMENT YEAR : 2010-11) SUNDERPURIYA STEEL & ROLLER MILLS PVT. LTD., H-5, MIDC, AJANTHA ROAD, JALGAON-425003 PAN NO.AAECS5393M .. APPELLANT VS. ITO, WARD-1(2), JALGAON .. RESPONDENT ASSESSEE BY : SHRI JAYANT M. RANADE & SHRI CHANDRASEKHAR REVENUE BY : SHRI RAJESH DAMOR DATE OF HEARING : 07-05-2015 DATE OF PRONOUNCEMENT : 27-05-2015 2 ORDER PER R.K.PANDA, AM : ITA NO.1294/PN/2013 FILED BY THE ASSESSEE AND ITA NO.1228/PN/2013 FILED BY THE REVENUE ARE CROSS APPE ALS AND ARE DIRECTED AGAINST THE ORDER DATED 30-03-2013 OF THE CIT(A)-II, NASHIK RELATING TO ASSESSMENT YEAR 2008-09. ITA NO.2063/PN/2014 FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 28-08-2014 OF THE CIT(A)-II, NASHIK RELATING TO ASSESSMENT YEAR 2010-11. THESE APPEALS WERE HEARD TOGETHER AN D ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. ITA NO.1294/PN/2013 (BY ASSESSEE) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN HUF AND IS ENGAGED IN THE BUSINESS OF GRAIN MERCHANT. IT F ILED ITS RETURN OF INCOME ON 31-03-2009 DECLARING TOTAL INCOME OF RS.4 ,47,630/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE IS CARRYING OUT BUSINESS IN THE NAME AND S TYLE OF M/S. SUNDERPURIYA BROTHERS AND IS ALSO A DIRECTOR IN A C OMPANY M/S. SUNDERPURIYA STEEL AND ROLLER FLOUR MILLS PVT. LTD. THE ASSESSEE DERIVES INCOME FROM PROPRIETARY CONCERN AND REMUNER ATION FROM THE COMPANY. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS THE AO OBSERVED FROM THE AUDIT REPORT THAT THE AUDITOR HAS POINTED OUT THE FOLLOWING DIFFERENCES IN LOANS AND ADVANCES : 3 NAME OF THE PARTY AS PER BOOKS OF ASSESSEE AS PER BOOKS OF PARTY SUNDERPURIYA FOOD - LOAN A/C 17,84,593.61/ - 28,84,593,61/ - HARIYANA TRADING COMPANY 0.00 49,805/ - SUNDERPURIYA MILLS 34,85,875.72/ - 44,35,575.72/ - 2.1 THE AO THEREFORE COMPUTED THE DIFFERENCE POINTE D OUT BY THE AUDITOR AND DETERMINED THE DIFFERENCE AT RS.20,99,5 06/- WHICH IS AS UNDER : NAME OF THE PARTY AS PER BOOKS OF ASSESSEE AS PER BOOKS OF PARTY DIFFERENCE IN LOANS & ADVANCES SUNDERPURIYA FOOD - LOAN A/C 17,84,593.61/ - 28,84,593.61/ - 11,00,000 HARIYANA TRADING COMPANY 0.00 49,805/ - 49,805 SUNDERPURIYA MILLS 34,85,875.72/ - 44,35,575.72/ - 9,49,700 TOTAL 20,99,506 2.2 THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE AFORESAID DIFFERENCE IN THE LOANS AND ADVANCES AS POINTED OUT BY THE AUDITOR SHOULD NOT BE ADDED TO HIS TOTAL INCOME. HE ALSO I SSUED SUMMONS U/S.131 TO SHRI GHANSHYAM J. AGRAWAL OF SUNDERPURIY A FOOD, HARYANA TRADING COMPANY AND SUNDERPURIYA STEEL AND ROLLER FLOUR MILLS. 2.3 THE AO NOTED THAT ON 28-12-2010 SHRI GHANSHYAM J. AGRAWAL SUBMITTED ONLY THE ACCOUNTS EXTRACTS OF SUN DERPURIYA FOODS PVT. LTD., AND HARYANA TRADING COMPANY. HOWE VER, HE DID NOT PRODUCE THE REQUIRED BOOKS OF ACCOUNT AS ASKED FOR BY THE AO FOR SPECIFIC VERIFICATION. SIMILARLY, SHRI MAHENDR A J. BANSAL, DIRECTOR OF SUNDERPURIYA STEEL AND ROLLER FLOUR MIL LS PVT. LTD., ONLY FURNISHED THE ACCOUNT EXTRACT IN RESPECT OF TH E LOANS AND ADVANCES OF SUNDERPURIYA STEEL AND ROLLER FLOUR MIL LS PVT. LTD., 4 AND DID NOT PRODUCE THE BOOKS OF ACCOUNT AS CALLED FOR SPECIFIC VERIFICATION OF THE WITHDRAWALS IN LOANS AND ADVANC ES. THE AO FURTHER NOTED THAT THERE IS A DIFFERENCE IN THE AMO UNTS OF LOANS AND ADVANCES IN THE BALANCE SHEET WHICH WAS SHOWN IN TH E BALANCE SHEET AT RS.60,59,008/- WHEREAS IN THE SCHEDULE OF LOANS AND ADVANCES TO THE BALANCE SHEET THE TOTAL LOANS AND ADVANCES ARE SHOWN AT RS.70,09,008/-. IN VIEW OF THE ABOVE, THE AO MADE ADDITION OF RS.20,99,506/- TO THE TOTAL INCOME OF THE ASSESSEE. THE AO HAD ALSO MADE ADDITION OF RS.1,27,717/- BEING THE DIFFERENCE IN THE BANK ACCOUNT AND THE BALANCE SHOWN IN THE BALANCE SHEET OF THE ASSESSEE. THUS, THE AO DETERMINED THE TOTAL INCOME AT RS.26,7 4,853/- AS AGAINST THE RETURNED INCOME OF RS.4,47,630/-. 3. BEFORE CIT(A) APART FROM TAKING VARIOUS GROUNDS CHALLENGING THE ADDITIONS THE ASSESSEE TOOK AN ADDITIONAL GROUN D CHALLENGING THE VALIDITY OF THE ASSESSMENT STATING THAT THE AO HAD NO JURISDICTION. IT WAS STATED THAT AFTER CENTRALIZATION, THE JURISDICT ION WAS WITH ITO, CENTRAL, AURANGABAD AND THEREFORE THE ASSESSMENT OR DER PASSED BY ITO, WARD-1(1), JALGAON U/S.143(3) OF THE I.T. ACT ON 29-12-2010 WAS NULL AND VOID. IT WAS SUBMITTED THAT SINCE THE JURISDICTION ISSUE IS A LEGAL ISSUE IT SHOULD BE DECIDED FIRST BEFORE DECIDING THE APPEAL ON MERIT. SINCE THE SEARCH TOOK PLACE AT HIS PREMI SES ON 19-10- 2005 AND HIS CASES WERE CENTRALIZED WITH ITO CENTRA L, AURANGABAD U/S.127 OF THE I.T. ACT, IT WAS ARGUED THAT THE ORD ER PASSED BY THE ITO, WARD-1(1), JALGAON U/S.143(3) OF THE I.T. ACT, 1961 ON 29-12- 2010 BE HELD AS NULL AND VOID. 5 4. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DECIDED THE ADDITIONAL GROUND AGAINST THE ASSESSEE BY OBSERVING AS UNDER : 10. I HAVE GONE THROUGH THE ASSESSMENT FOLDER AND FIND THAT THE APPELLANT HAS HIMSELF FILED HIS RETURN OF INCOME FOR A .Y. 2008-09 UNDER THE NAME 'MAHENDRA JWALAPRASAD BANSAL' GIVING P AN 'AAGHM9492Q' WITH ITO WARD 1(1), JALGAON ON 31/03/2 009 (ACKNOWLEDGEMENT RECEIPT NUMBER 0111010445). THE SAI D RETURN WAS PROCESSED U/S. 143(1) OF THE I.T ACT ON 29/03/2010 RESULTING INTO A REFUND OF RS.16,990/-. THE AO (ITO WARD 1(1) , JALGAON) ISSUED NOTICE U/S 143(2) OF THE IT ACT ON 11/09/2009. THE SAID NOTICE WAS RECEIVED BY THE APPELLANT ON 13/09/2009. THE AO SOUGHT CERTAIN DETAILS IN CONNECTION WITH THE SCRUTINY ASSESSMENT VIDE LETTER DATED 05/07/2010 WHICH WAS RECEIVED BY A PPELLANT'S WIFE SMT. MADHUBALA MAHENDRA AGARAWAL ON 06/07/2010. THE APPELLANT FILED DETAILS VIDE LETTER DID 29/07/2010 WHICH WAS RECEIVED IN THE OFFICE OF ITO WARD 1(1) ON 10/08/20 10. THE AO WARD 1(1) THEREAFTER ISSUED NOTICES U/S 143(2) & 142(1 ) OF THE IT ACT ON 12/08/2010 WHICH WERE RECEIVED BY ONE MS. KAV ITA-M. BANSAL ON 17/08/2010. THE AO AGAIN ISSUED NOTICE U/S 14 3(2) ON 07/09/2010 WHICH WAS ALSO RECEIVED BY MISS KAVITA M. BA NSAL ON 10/09/2010. THE APPELLANT IN RESPONSE TO AO'S NOTICE DTD. 12/08/2010, FURNISHED VARIOUS DETAILS. I FIND FROM THE RECORD THAT THE AO DURING THE COURSE OF APPELLATE PROCEEDINGS SOUG HT VARIOUS OTHER DETAILS AS WELL WHICH THE APPELLANT HAD COMPLIE D OATH. THE ASSESSMENT ORDER WAS PASSED ON 29/12/2010 AT AN INCOME OF RS.26,74,853/-. THE ASSESSMENT ORDER U/S 143(3) WAS RECEIV ED BY THE APPELLANT HIMSELF ON 31/12/2010. IT IS IMPORTANT TO NOTE HERE THE APPELLANT HAD SIGNED THE RETURN AS WELL AS ACKNOWL EDGEMENT RECEIPT OF THE ORDER ON 31/12/2010 AS MAHENDRA JWALA PRASAD AGRAWAL. THE APPELLANT FILED AN APPEAL BEFORE ME AG AINST THE AFORESAID ASSESSMENT ORDER ON 24 TH JANUARY 2011 CONTESTING VARIOUS ADDITIONS MADE BY THE AO. THE APPELLANT DID N OT CONTEST THE ISSUE OF JURISDICTION OR STATUS BEFORE ME AS EVIDENT FROM HIS GROUNDS OF APPEAL. THE AO HAD MADE THE ASSESSMENT IN T HE STATUS OF HUF AS EVIDENT BY THE ASSESSMENT ORDER DTD. 29/12/2010 A S THE APPELLANT HAD MENTIONED THE PAN OF ITS HUF. I ALSO FI ND FROM THE RECORD THAT THE APPELLANT VIDE LETTER DATED 24 IH JANUARY 2011 REQUESTED THE ITO WARD 1(1), JALGAON TO MODIFY THE STATUS AND PAN MENTIONED IN THE SAID ASSESSMENT ORDER STATING THAT HIS C. A. HAD INADVERTENTLY QUOTED THE PAN OF HUF INSTEAD OF CORRE CT STATUS OF AN INDIVIDUAL (AAMPB3938J). 11. THE ADDITIONAL GROUND OF THE APPELLANT IN REGAR D TO JURISDICTION OF THE CASE WAS SENT TO ITO WARD 1(1), JAL GAON VIDE THIS OFFICE LETTER DTD. 08/06/2012 FOR COMMENTS. THE ITO VIDE LETTER DTD. 27/10/2012 STATED THAT THE APPELLANT DID NOT RAISE AN Y OBJECTION IN REGARD TO JURISDICTION DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THAT APPELLANT'S RAISING OF THIS ISSUE BEFORE THE AP PELLATE AUTHORITY WAS AFTER THOUGHT TO SAVE HIMSELF FROM TAX LIABILITY AND PENAL PROCEEDINGS. A PERUSAL OF RECORDS GATHERED IN C ONNECTION WITH THE ISSUE OF JURISDICTION REVEALS THAT CIT(C), NA GPUR VIDE ORDER DATED 29/03/2012 U/S 127(2) OF THE IT ACT 1961 HAD D ECENTRALIZED THE CASES RELATING TO AGRAWAL GROUP WHICH INTER-ALIA INCLUDED THE APPELLANT TO ITO WARD 1(1), JALGAON WITH EFFECT FRO M 01/04/2012. 6 12. FROM THE FACTS OF THE CASE AS MENTIONED ABOVE IT I S NOT IN DISPUTE THAT THE APPELLANT HIMSELF SUBJECTED TO THE TE RRITORIAL JURISDICTION OF THE AO BY FILING RETURN ON 31/03/200 9 AND DID NOT RAISE ANY OBJECTION WITH REGARD TO JURISDICTION DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS. THE APPELLANT HAD ALSO NOT OBJEC TED TO THE VALIDITY OF THE ASSESSMENT ORDER QUESTIONING THE JURISDIC TION OF THE AO IN HIS GROUNDS OF APPEAL FILED ON 31/01/2011. NOW SINCE AN ADVERSE ASSESSMENT ORDER HAS BEEN PASSED BY THE AO, THE APP ELLANT HAS RAISED THE ADDITIONAL GROUND OF JURISDICTION OF TH E AO. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITIONAL GROU ND OF THE APPELLANT IS REJECTED. THE HON'BLE HIGH COURT OF ALL AHABAD IN THE CASE OF CIT VS. BRITISH INDIA CORPORATION LTD. ((2011) 245 CTR (ALL)] HAS HELD THAT IF OBJECTION IN RESPECT OF JURISDICTION OF AO IS NOT RAISED WITHIN PRESCRIBED TIME, QUESTION OF JURISDICTION OF THE AO CANNOT BE DISPUTED AFTER THE COMPLETION OF ASSESSMENT PR OCEEDINGS. IT HAS ALSO HELD THAT ALTERNATIVELY, IF SUCH A QUESTION ARISES, THE SAID QUESTION CAN BE ADDRESSED BY THE CIT OR THE BOARD AS TH E CASE MAY BE IN VIEW OF THE SUB.SEC.(4) OF S. 124 OF THE IT ACT . IT FURTHER HELD THAT THE QUESTION OF JURISDICTION OF AO COULD NOT BE RAISED AND ENTERTAINED BY THE APPELLATE AUTHORITY OR TRIBUNAL FOR THE FIRST TIME IN APPEAL WHEN THE SAME WAS NOT AGITATED BEFORE THE A O). THE HON'BLE HIGH COURT REVERSED THE ORDER OF THE HON'BLE ITAT, ALLAHABAD (BENCH B). IN VIEW OF THE ABOVE FACTS AND RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HON'BLE ALLAHABAD HI GH COURT (SUPRA), THE ADDITIONAL GROUND OF THE APPELLANT IN R ESPECT OF JURISDICTION IS DISMISSED. 5. SO FAR AS THE MERITS OF THE CASE ARE CONCERNED, THE ASSESSEE MADE ELABORATE SUBMISSIONS BEFORE CIT(A) BASED ON W HICH THE LD.CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. THERE ARE 2 REMAND REPORTS FROM THE AO AND ANOTHER FROM THE JCI T. AFTER CONSIDERING THE REMAND REPORTS SUBMITTED BY THE AO AS WELL AS THE JCIT AND AFTER CONSIDERING THE OBJECTIONS OF THE AS SESSEE TO SUCH REMAND REPORTS THE LD.CIT(A) DELETED THE ADDITION O F RS.11 LAKHS ON ACCOUNT OF LOAN GIVEN TO SUNDERPURIYA FOODS PVT. LTD., THE ADDITION OF RS.49,805/- ON ACCOUNT DIFFERENCE IN TH E BALANCE SHEET OF SISTER CONCERN AND THE ADDITION OF RS.1,27,717/- ON ACCOUNT OF DIFFERENCE IN THE HDFC BANK. HE, HOWEVER, SUSTAINED THE ADDITION OF RS.9,45,700/- ON ACCOUNT OF DIFFERENCE IN THE AC COUNT OF SUNDERPURIYA STEEL AND ROLLER FLOUR MILLS. FURTHER , THE L.CIT(A) ENHANCED THE INCOME BY MAKING ADDITION OF RS.69,917 /- U/S.14A, RS.9,29,945.06 BEING DIFFERENCE IN CAPITAL SHOWN IN THE INCOME-TAX 7 RETURN VIS--VIS, BALANCE SHEET AND RS.48,500/- ON ACCOUNT OF NON- DEDUCTION OF TDS U/S.194J. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE ORDER PASSED U/S.143(3) DATED 29-12-2010 BY TH E AO IS WITHOUT JURISDICTION AND HENCE INVALID AB-INITIO AND THE CIT(A) ERRED IN CONFIRMING THE ORDER. 2. THE CIT(A) ERRED IN ENHANCING THE INCOME OF THE ASSESSEE WITHOUT A REASONABLE OPPORTUNITY OF BEING HEARD. 3. THE ORDER OF CIT(A) IN ENHANCING THE INCOME WAS W ITHOUT JURISDICTION AS THE ITEMS OF THE INCOME ARE DIFFERENT SOURCES OF INCOME AND NOT PART OF THE SUBJECT MATTER OF ASSESSMENT . 4. THE CIT(A) ERRED IN RELYING THE REPORT OF JCIT D ATED 14-02- 2012 AS THE JCIT HAD NO ROLE IN THE ASSESSMENT OF THE IN COME AS THE WAS NOT CONCERNED AO. 5. WITHOUT PREJUDICE TO THE ABOVE SUBMISSION THE CIT(A ) ERRED IN ENHANCING AN INCOME OF RS.69,777/- ON ACCOUNT OF DISALLOWANCE U/S.14A. 6. THE CIT(A) ERRED IN ENHANCING THE INCOME OF RS.9, 49,700/- BEING THE DIFFERENCE IN THE BALANCE OF SISTER CONCERN AS ON 31-03- 2008. 7. THE CIT(A) ERRED IN ENHANCING AN AMOUNT OF RS.48 ,500/- THE FEES PAID TO AUDITOR U/S.40(A)(IA) FOR NON DEDUCTION OF TAX U/S.194J. 8. ANY OTHER GROUNDS THAT MAY BE TAKEN AT THE TIME O F HEARING. 7. THE ASSESSEE HAS ALSO TAKEN AN ADDITIONAL GROUND WHICH READS AS UNDER : ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD.CIT(A) ERRED IN MAKING ADDITION OF RS.9,29,945/-. 8. THE LD. COUNSEL FOR THE ASSESSEE, REFERRING TO T HE ADDITIONAL GROUND SUBMITTED THAT INADVERTENTLY THE ABOVE GROUN D COULD NOT BE INCLUDED IN THE APPEAL MEMO DUE TO OVERSIGHT. RELY ING ON VARIOUS DECISIONS THE LD. COUNSEL FOR THE ASSESSEE ARGUED T HAT SINCE ALL MATERIAL FACTS ARE AVAILABLE IN THE ORDER OF THE LD .CIT(A) THEREFORE THIS GROUND SHOULD BE ADMITTED FOR ADJUDICATION. 8 9. AFTER HEARING BOTH THE SIDES, THE ADDITIONAL GRO UND RAISED BY THE ASSESSEE WHICH ACCORDING TO HIM WAS INADVERTENT LY OMITTED TO BE RAISED IN THE ORIGINAL GROUNDS OF APPEAL, IS ADM ITTED FOR ADJUDICATION. 10. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING DID NOT PRESS GROUNDS OF APPEAL NO.2 FOR WHICH THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, THE ABOVE GROUND IS DISMISSED AS NOT PRESSED. 11. GROUNDS OF APPEAL NO.8 BEING GENERAL IN NATURE IS DISMISSED. 12. SO FAR AS GROUNDS OF APPEAL NO.1 IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME ARGUME NTS AS MADE BEFORE THE CIT(A). IT WAS SUBMITTED THAT ONCE THE AO HAD NO JURISDICTION OVER THE ASSESSEE, THEREFORE, MERELY B ECAUSE THE RETURN WAS FILED BEFORE HIM AND THE ASSESSEE PARTICIPATED IN THE ASSESSMENT PROCEEDINGS THE SAME CANNOT BE A GROUND NOT TO TREA T THE ASSESSMENT ORDER AS NULL AND VOID. 13. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT T HE ASSESSEE HAD FILED THE RETURN KNOWING FULLY WELL THAT THE AO HAD NO JURISDICTION OVER HIM AND HIS RETURN IS TO BE FILED BEFORE THE I TO, AURANGABAD. NOT ONLY THIS EVEN FOR SUBSEQUENT ASSESSMENT YEARS ALSO THE ASSESSEE HAS FILED HIS RETURN OF INCOME BEFORE ITO, JALGAON. THEREFORE, WHEN THE AO PASSED THE ORDER AFTER SERVI NG DUE STATUTORY NOTICES TO THE ASSESSEE AND THE ASSESSEE PARTICIPAT ED IN THE ASSESSMENT PROCEEDINGS AND NOT RAISED ANY OBJECTION DURING THE 9 COURSE OF ASSESSMENT PROCEEDINGS AND INITIALLY IN A PPEAL PROCEEDINGS WHILE FILING THE APPEAL, THEREFORE, THE ASSESSEE NOW CANNOT TAKE THE GROUND THAT THE AO HAD NO JURISDICT ION. THE ASSESSEE IS ONLY TRYING TO DELAY THE ASSESSMENT PRO CEEDINGS BY RAISING FRIVOLOUS GROUNDS. 14. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH 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 ASSESSEE FILED HIS RETURN OF INCOME BEFORE ITO, WAR D-1(1), JALGAON ON 31-03-2009 DECLARING TOTAL INCOME OF RS.4,47,630 /-. THE ASSESSEE IS A RESIDENT OF JALGAON AND WAS ORIGINALL Y ASSESSED TO TAX UNDER ITO, JALGAON BEFORE THE CASES WERE CENTRALISE D. ALTHOUGH THE ASSESSEE WAS AWARE OF HIS JURISDICTION WHICH WAS IT O, AURANGABAD, STILL THE ASSESSEE DELIBERATELY FILED HIS RETURN OF INCOME BEFORE ITO, WARD-1(1), JALGAON. ON A POINTED QUERY BY THE BENC H AS TO WHY THE ASSESSEE FILED HIS RETURN OF INCOME AT JALGAON INST EAD OF AURANGABAD, THE LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT 31-03- 2009 BEING THE LAST DATE FOR FILING OF THE RETURN F OR A.Y. 2008-09, TO AVOID PENALTY, THE ASSESSEE INSTEAD OF GOING TO AUR ANGABAD FILED HIS RETURN OF INCOME AT JALGAON, BEFORE ITO, WARD-1(1). NOT ONLY THIS WE FIND FROM THE CONDUCT OF THE ASSESSEE THAT THE S TATUTORY NOTICES ISSUED BY THE AO FROM TIME TO THE TIME WERE RECEIVE D BY HIS FAMILY MEMBERS, I.E. WIFE OR DAUGHTER AND THE ASSESSEE HAS DULY PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. THE AS SESSEE HAS NEVER RAISED ANY OBJECTION BEFORE THE AO CHALLENGING HIS JURISDICTION OVER 10 HIM. EVEN WHILE FILING THE APPEAL BEFORE CIT(A) TH E ASSESSEE HAS NOT RAISED ANY GROUND BEFORE CIT(A) CHALLENGING THE JURISDICTION ISSUE. THE SAME WAS CHALLENGED IN AN ADDITIONAL GR OUND. FURTHER, WHEN THE AO HAD ASSESSED THE ASSESSEE IN THE STATUS OF HUF SINCE THE ASSESSEE HAD MENTIONED THE PAN OF HUF, THE ASSE SSEE MADE AN APPLICATION VIDE LETTER DATED 24-01-2011 REQUESTING THE ITO, WARD- 1(1), JALGAON TO MODIFY THE STATUS TO ENTER CORRECT PAN NUMBER. UNDER THESE CIRCUMSTANCES WE FIND NO INFIRMITY IN T HE ORDER OF THE CIT(A) UPHOLDING THE VALIDITY OF THE ASSESSMENT ORD ER. FURTHER, WHILE DOING SO, WE FIND THE LD.CIT(A) HAS RELIED ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BRITISH INDIA CORPORATION LTD., REPORTED IN 245 CTR WHERE IT HAS BEEN HELD THAT IF OBJECTION IN RESPECT OF JURISDICTION OF AO IS NOT R AISED WITHIN PRESCRIBED TIME, QUESTION OF JURISDICTION OF THE AO CANNOT BE DISPUTED AFTER THE COMPLETION OF ASSESSMENT PROCEED INGS. IT HAS FURTHER BEEN HELD THAT ALTERNATIVELY IF SUCH A QUES TION ARISES, THE SAID QUESTION CAN BE ADDRESSED BY THE CIT OR THE BOARD A S THE CASE MAY BE IN VIEW OF THE SUB-SECTION 4 OF SECTION 124 OF T HE I.T. ACT. IT HAS FURTHER BEEN HELD THAT QUESTION OF JURISDICTION OF THE AO CANNOT BE RAISED AND ENTERTAINED BY THE APPELLATE AUTHORITY O R TRIBUNAL FOR THE FIRST TIME IN APPEAL WHEN THE SAME WAS NOT AGITATED BEFORE THE AO. UNDER THESE CIRCUMSTANCES WE FIND NO INFIRMITY IN T HE ORDER OF THE CIT(A) ON THIS ISSUE AND THE GROUND RAISED BY THE A SSESSEE ON THIS ISSUE IS DISMISSED. 11 15. SO FAR AS GROUNDS OF APPEAL 2 TO 5 & 7 ARE CONC ERNED THEY ALL RELATE TO THE ORDER OF THE CIT(A) IN ENHANCING THE INCOME OF THE ASSESSEE BY MAKING THE FOLLOWING ADDITIONS : DISALLOWANCE U/S.14A RS.69,977/- DIFFERENCE IN THE CAPITAL SHOWN IN THE I.T. RETURN VIS--VIS BALANCE SHEET RS.9,29,945.06 ADDITION ON ACCOUNT OF NON-DEDUCTION OF TDS U/S.194J RS.48,500/- 16. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE AO HAS NOT DISCUSSED THESE ISSUES IN THE ASSESS MENT ORDER NOR MADE ANY ADDITIONS ON ACCOUNT OF ABOVE ITEMS IN THE ASSESSMENT ORDER. THE LD.CIT(A) ON THE BASIS OF THE REMAND RE PORT OF THE JCIT, WHO IS NOT THE AO IN THIS CASE HAD ENHANCED T HE INCOME. HE SUBMITTED THAT THE AO IN THE 2 REMAND REPORTS GIVEN BY HIM HAS NOT DISCUSSED THESE ISSUES. THEREFORE, WHEN NO ADDITIO N WAS MADE BY THE AO ON THESE ISSUES NOR THERE ANY DISCUSSION IN THE BODY OF THE ASSESSMENT ORDER AND THE AO IN THE 2 REMAND REPORTS HAS NOT EVEN DISCUSSED THESE ISSUES, THEREFORE, THE LD.CIT(A) WA S NOT JUSTIFIED IN ENHANCING THE INCOME OF THE ASSESSEE ON THESE ISSUE S WHICH WERE NEW SOURCE OF INCOME ON THE BASIS OF THE REMAND REP ORT OF THE JCIT WHO HIMSELF IS NOT THE AO. 16.1 REFERRING TO THE PROVISIONS OF SECTION 251 WHI CH SPEAKS OF POWERS OF THE COMMISSIONER (APPEALS) HE SUBMITTED T HAT THERE IS NO DOUBT THAT THE POWERS OF THE CIT(A) ARE VERY WIDE I N AN APPEAL AGAINST THE ORDER OF ASSESSMENT. HE MAY CONFIRM, R EDUCE, ENHANCE OR ANNUL THE ASSESSMENT. HOWEVER, THE LAW DOES NOT PERMIT THE CIT(A) TO INTRODUCE A NEW SOURCE OF INCOME WHICH WA S NOT DECIDED 12 BY THE AO FOR NO MISTAKE ON THE PART OF THE ASSESSE E FOR SUCH ITEMS. THE OTHER REMEDIAL PROVISIONS SUCH AS PROVISIONS OF SECTION 147 OR 263 ARE AVAILABLE IN THE STATUTE. THEREFORE, THE L D.CIT(A) IN THE INSTANT CASE HAS GONE BEYOND HIS JURISDICTION IN EN HANCING THE INCOME BY INTRODUCING NEW SOURCE OF INCOME ON THE B ASIS OF A REMAND REPORT THAT TOO NOT OF THE AO BUT OF THE JCI T. FOR THE ABOVE PROPOSITION, HE RELIED ON THE DECISION OF HONBLE D ELHI HIGH COURT IN THE CASE OF CIT VS. UNION TYRES REPORTED IN 240 ITR 556 (DEL.) 17. SO FAR AS MERIT OF THE ISSUES ARE CONCERNED HE SUBMITTED THAT THERE WAS NEITHER ANY DISCUSSION BY THE AO IN THE B ODY OF THE ASSESSMENT ORDER NOR IN THE REMAND REPORT REGARDING DISALLOWANCE U/S.14A AMOUNTING TO RS.69,977/-. THE JCIT IN HIS REMAND REPORT HAD REPORTED THAT ASSESSEE HAS EARNED EXEMPT INCOME OR IS EXPECTED TO EARN EXEMPT INCOME U/S.10 OF THE I.T. ACT ON ACC OUNT OF INVESTMENT OF RS.20,64,422/- AS ON 31-03-2008. HE ACCORDINGLY PROPOSED AN ENHANCEMENT OF INCOME TO THE TUNE OF 0. 5% OF AVERAGE INVESTMENT AMOUNTING TO RS.10,322/- UNDER RULE 8D(2 )(III). SIMILARLY, HE ALSO PROPOSED AN ENHANCEMENT OF INCOM E BY RS.59,655/- UNDER RULE 8D(2)(II) TOWARDS ADMINISTRA TION EXPENSES. THE LD.CIT(A) ON THE BASIS OF THE ABOVE ISSUED AN E NHANCEMENT NOTICE TO THE ASSESSEE. REJECTING THE VARIOUS CONT ENTIONS RAISED BEFORE HIM THE CIT(A) DISALLOWED AN AMOUNT OF RS.69 ,977/- U/S.14A OF THE I.T ACT. THE LD. COUNSEL FOR THE AS SESSEE DREW THE ATTENTION OF THE BENCH TO THE BALANCE SHEET OF THE ASSESSEE AND SUBMITTED THAT THE CAPITAL ACCOUNT OF THE ASSESSEE AS ON 31-03-2008 STANDS AT RS.82.13 LAKHS WHEREAS THE INVESTMENT IN SHARES/BONDS THE 13 INCOME OF WHICH IS TAX FREE IS ABOUT RS.20 LAKHS. THERE IS NO FINDING BY ANY OF THE AUTHORITIES THAT THE BORROWED FUNDS ARE USED FOR TAX FREE INVESTMENTS. HE SUBMITTED THAT AS AGA INST UNSECURED LOAN OF RS.98.17 LAKHS THE CURRENT ASSETS OF THE AS SESSEE STANDS AT RS.1.70 CRORES. REFERRING TO THE DECISION OF THE C HENNAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. ALLIED INVESTM ENTS HOUSING PVT. LTD. VIDE ITA NO.305/MDS/2013 ORDER DATED 07-1 1-2013 FOR A.Y. 2009-10 HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT THE AO CANNOT APPLY PROVISIONS OF RU LE 8D WITHOUT POINTING OUT ANY INACCURACY IN THE METHOD OF APPORT IONMENT OR ALLOCATION OF EXPENSES. FURTHER, THE ONUS IS ON TH E AO TO SHOW THAT EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE FOR E ARNING TAX FREE INCOME. WITHOUT DISCHARGING THE ONUS, THE AO IS NO T ENTITLED TO MAKE ANY ADHOC DISALLOWANCE. IT WAS HELD THAT A CLE AR FINDING OF INCURRING OF EXPENDITURE IS NECESSARY. NO DISALLOW ANCE CAN BE MADE ON THE PRESUMPTIONS. 18. SO FAR AS ENHANCEMENT OF INCOME DUE TO DIFFERE NCE IN CAPITAL SHOWN IN THE TAX RETURN AND BALANCE SHEET AMOUNTING TO RS.9,49,700/- IS CONCERNED HE SUBMITTED THAT HERE A LSO THE AO HAS NOT DISCUSSED THE ISSUE. THE CIT(A) ON THE BASIS O F THE REMAND REPORT OF THE JCIT HAS MADE THE ENHANCEMENT. REFER RING TO PAGE 83 OF THE PAPER BOOK THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SUNDRY CREDITORS ARE SHOWN AT RS.15,57,486.20 I N THE BALANCE SHEET WHEREAS THE SCHEDULE OF SUNDRY CREDITORS APPE AR AT PAGE 85 OF THE PAPER BOOK SHOWS THE SAME AT RS.25,07,486.20. SIMILARLY, THE LOANS AND ADVANCES/ASSET UNDER THE HEAD CURRENT ASS ET IS SHOWN AT 14 RS.60,59,008/- WHEREAS THE SCHEDULE OF LOANS AND AD VANCES AS PER PAGE 89 OF THE PAPER BOOK SHOWS THE TOTAL AT RS.70, 09,008/-. HAD THE CORRECT FIGURES IN THE SCHEDULES BEEN TAKEN TO THE BALANCE SHEET, THERE WOULD NOT HAVE BEEN ANY DIFFERENCE AND DIFFER ENCE, IF ANY, IS ONLY COMPENSATORY ERROR. REFERRING TO PAGE 93 OF T HE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE NOTES OF ACC OUNTS BY THE AUDITORS AND SUBMITTED THAT THE AUDITORS HAVE ERRON EOUSLY MENTIONED THAT THERE IS DIFFERENCE IN THE SISTER CO NCERNS BALANCE AS ON 31-03-2008. 19. SO FAR AS THE ENHANCEMENT ON ACCOUNT OF NON DED UCTION OF TAX IS CONCERNED, HE SUBMITTED THAT THERE WAS NO DISCUS SION BY THE AO ON THIS ISSUE AND THE CIT(A) FOR THE FIRST TIME ON THE BASIS OF THE REMAND REPORT OF THE JCIT HAS DISALLOWED THE SAME U /S.40(A)(IA) OF THE I.T. ACT. HE SUBMITTED THAT THE AUDITORS HAVE CLEARLY MENTIONED THAT THE PAYEE SHRI VIKARM R. AMEEN TO WHOM THE AMO UNTS HAVE BEEN PAID OR CREDITED WITHOUT TDS HAS FURNISHED HIS RETURN OF INCOME FOR THE A.Y. 2008-09 AND HAS PAID THE TAXES. THEREFORE, NO DISALLOWANCE U/S.40(A)(IA) IS CALLED FOR. 20. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT T HE JCIT IS A SUPERIOR AUTHORITY OVER THE AO AND HE HAS GOT EVERY RIGHT TO IMPROVE UPON THE REPORT OF THE AO WHICH IS FORWARDE D TO THE CIT(A) THROUGH HIM. THEREFORE, THERE IS NOTHING WR ONG IN THE REMAND REPORT OF THE JCIT WHO POINTED OUT THE OTHER IRREGULARITIES WHICH WERE NOTICED BY HIM AND THE CITI(A) WAS FULLY JUSTIFIED IN ENHANCING THE INCOME. HE SUBMITTED THAT IT IS THE WELL SETTLED 15 PRINCIPLE OF LAW THAT THE POWERS OF THE CIT(A) ARE CO-TERMINUS WITH THAT OF THE POWERS OF THE AO. THE CIT(A) CAN DO WH ICH THE AO HAS FAILED TO DO. THEREFORE, UNDER THE FACTS AND CIRCU MSTANCES OF THE CASE, THE LD.CIT(A) WAS FULLY JUSTIFIED IN ENHANCIN G THE INCOME OF THE ASSESSEE ON ACCOUNT OF 3 ITEMS WHICH THE AO HAS FAILED TO DO. 21. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH 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. THERE IS NO DISPUTE TO THE FACT THAT THE 3 ISSUES ON WHICH THE LD.CIT(A) HAS ENHANCED THE INCOME OF THE ASSESSEE ARE NEITHER DIS CUSSED BY THE AO IN THE BODY OF THE ASSESSMENT ORDER NOR ANY ADDI TION MADE BY THE AO ON ACCOUNT OF THOSE ISSUES. IT IS ALTOGETHE R A NEW SOURCE OF INCOME WHICH THE LD.CIT(A) HAS INTRODUCED IN THE AP PEAL ORDER ON THE BASIS OF A REMAND REPORT GIVEN BY THE JCIT. TH EREFORE, THE QUESTION THAT ARISES IS AS TO WHETHER THE CIT(A) CA N ENHANCE THE INCOME OF THE ASSESSEE BY INTRODUCING A NEW SOURCE OF INCOME WHEN THERE IS NO ADDITION OR DISCUSSION BY THE ASSE SSING OFFICER ON AN ISSUE IN THE BODY OF THE ASSESSMENT ORDER. 22. THE ISSUE REGARDING POWER OF THE CIT(A) TO ENHA NCE THE INCOME OF AN ASSESSEE BY INTRODUCING A NEW SOURCE O F INCOME WHICH WAS NOT THE SUBJECT MATTER OF ASSESSMENT BEFO RE THE ASSESSING OFFICER HAS COME UP BEFORE THE HONBLE DE LHI HIGH COURT IN THE CASE OF CIT VS. UNION TYRES REPORTED I N 240 ITR 556. THE HONBLE HIGH COURT RELYING ON THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SHAPOORJI PALL ONJI MISTRY 16 REPORTED IN 44 ITR 891 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : A QUESTION REGARDING POWERS OF THE FIRST APPELLATE AU THORITY CAME UP FOR CONSIDERATION BEFORE THE SUPREME COURT RECENT LY IN CIT V. NIRBHERAM DALURAM [1997] 224 ITR 610. FOLLOWING THE IR EARLIER DECISIONS IN KANPUR COAL SYNDICATE [1964] 53 ITR 225 AND JUTE CORPORATION OF INDIA'S CASE [1991] 187 ITR 668 THOUGH THEIR LORDSHIPS REITERATED THAT THE APPELLATE POWERS CONFERR ED ON THE APPELLATE ASSISTANT COMMISSIONER UNDER SECTION 251 COULD NOT BE CONFINED TO THE MATTER WHICH HAD BEEN CONSIDERED BY THE INCOME TAX OFFICER, AS THE APPELLATE ASSISTANT COMMISSIONER IS V ESTED WITH ALL THE PLENARY POWERS WHICH THE INCOME TAX OFFICER MAY HAVE WHILE MAKING THE ASSESSMENT, BUT DID NOT COMMENT ON THE ISSUE W HETHER THESE WIDE POWERS ALSO INCLUDE THE POWER TO DISCOVER A NEW SOURCE OF INCOME. THEREFORE, THE PRINCIPLE OF LAW LAID DOW N IN SHAPOORJI'S CASE [1962] 44 ITR 891 (SC) AND CHAMARIA'S CASE [1967] 66 ITR 443 (SC) STILL HOLDS THE FIELD. THUS, THE PRINCIPLE EMERGING FROM THE AFORENOTED PRO NOUNCEMENTS OF THE SUPREME COURT IS, THAT THE FIRST APPELLATE AUT HORITY IS INVESTED WITH VERY WIDE POWERS UNDER SECTION 251(1)(A) OF THE ACT AND ONCE AN ASSESSMENT ORDER IS BROUGHT BEFORE THE AUTH ORITY, HIS COMPETENCE IS NOT RESTRICTED TO EXAMINING ONLY THOSE A SPECTS OF THE ASSESSMENT ABOUT WHICH THE ASSESSEE MAKES A GRIEVANCE AND RA NGES OVER THE WHOLE ASSESSMENT TO CORRECT THE ASSESSING OFFICER NOT ONLY WITH REGARD TO A MATTER RAISED BY THE ASSESSEE IN APPEAL BUT ALSO WITH REGARD TO ANY OTHER MATTER WHICH HAS BEEN CONSID ERED BY THE ASSESSING OFFICER AND DETERMINED IN THE COURSE OF ASSESSMEN T. HOWEVER, THERE IS A SOLITARY BUT SIGNIFICANT LIMITATIO N TO THE POWER OF REVISION, VIZ., THAT IT IS NOT OPEN TO THE APPELL ATE ASSISTANT COMMISSIONER TO INTRODUCE IN THE ASSESSMENT A NEW SOURCE O F INCOME AND THE ASSESSMENT HAS TO BE CONFINED TO THOSE IT EMS OF INCOME WHICH WERE THE SUBJECT MATTER OF ORIGINAL ASSES SMENT. APPLYING THE ABOVE WELL SETTLED PRINCIPLES OF LAW TO THE FACTS OF THE INSTANT CASE, WE ARE OF THE VIEW THAT THE TRIBUNAL WA S JUSTIFIED IN HOLDING THAT IN CALLING FOR A REMAND REPORT ON THE AFORENOTED FOUR POINTS THE APPELLATE ASSISTANT COMMISSIONER HAD EXCEEDED HIS JURISDICTION. WHILE COMPUTING THE TOTAL BUSINESS INCOM E OF THE ASSESSEE, THE ASSESSING OFFICER HAD ESTIMATED THE SALES AT AN ENHANCED FIGURE AND HAD APPLIED A HIGHER RATE OF GR OSS PROFIT. THUS, THE ONLY MATTER DEALT WITH BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER WAS THE ESTIMATION OF PROFITS AND GAINS O F THE BUSINESS OF THE ASSESSEE. NONE OF THE AFORENOTED FOUR PO INTS HAD ANY BEARING ON THE QUESTION OF ESTIMATION OF EITHER T HE SALES OR THE GROSS PROFIT RATE. FROM THE OBSERVATIONS, EXTRACTED ABO VE, IT IS EVIDENT THAT THE APPELLATE ASSISTANT COMMISSIONER HAD HI S DOUBTS ABOUT THE CAPACITY OF THE ASSESSEE TO RAISE FINANCES FOR THE PURCHASE OF GOODS AND SHOW A HUGE TURNOVER IN THE VERY FIRST YE AR OF HIS BUSINESS. IN OTHER WORDS, THE ENQUIRY ORDERED BY THE AP PELLATE ASSISTANT COMMISSIONER WAS TO SATISFY HIMSELF ABOUT THE SOURC E OF INVESTMENT BY THE ASSESSEE. IT IS AXIOMATIC THAT FAILURE TO PROVE THE SOURCES OF INVESTMENT WILL RESULT IN ADDITION IN THE HA NDS OF THE ASSESSEE UNDER A DIFFERENT PROVISION OF LAW AND WILL NOT HAVE MUCH RELEVANCE IN THE ESTIMATION OF SALES AND GROSS PROFIT RA TE ADOPTED BY THE ASSESSING OFFICER. IN OUR OPINION, ANY ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT WOULD CONSTITUTE A NEW SOURCE O F INCOME 17 WHICH WAS NOT THE SUBJECT MATTER OF ASSESSMENT BEFORE TH E ASSESSING OFFICER AND, THEREFORE, IT WAS NOT OPEN TO TH E FIRST APPELLATE AUTHORITY TO DIRECT THE ASSESSING OFFICER TO CONDUCT ENQUIRY ON THE SAID FOUR POINTS. 22.1 SINCE IN THE INSTANT CASE THE ASSESSING OFFICE R HAS NOT DEALT WITH THE ISSUES ON WHICH THE LD.CIT(A) HAS ENHANCED THE INCOME, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF UNION TYRES (SUPRA) AND I N ABSENCE OF ANY DISTINGUISHABLE FEATURES BROUGHT TO OUR NOTICE BY THE LD. DEPARTMENTAL REPRESENTATIVE WE HOLD THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) WAS NOT JUSTIF IED IN ENHANCING THE INCOME OF THE ASSESSEE ON ACCOUNT OF THE ABOVE 3 ITEMS. 23. SINCE THE ASSESSEE SUCCEEDS ON THIS PRELIMINARY ISSUE, I.E. THE CIT(A) HAS NO POWER TO ENHANCE THE INCOME BY INTROD UCING A NEW SOURCE OF INCOME WHICH WAS NOT THE SUBJECT MATTER I N ASSESSMENT PROCEEDINGS, THEREFORE, THE ARGUMENTS OF THE ASSESS EE ON MERIT BECOME ACADEMIC IN NATURE AND THEREFORE THE SAME AR E NOT BEING ADJUDICATED. 24. IN GROUNDS OF APPEAL NO.6 THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE CIT(A) IN UPHOLDING THE ADDITION OF RS .9,49,700/- MADE BY THE AO ON ACCOUNT OF DIFFERENCE IN THE BALA NCE SHEET OF ASSESSEE AND SISTER CONCERN SUNDERPURIYA STEEL AND FLOUR MILLS PVT. LTD. 24.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THE AO O BSERVED FROM THE AUDIT REPORT THAT THE AUDITOR HAS NOTED THAT THE AS SESSEE HAS SHOWN A BALANCE OF RS.34,85,875.72 IN THE NAME OF SUNDERPUR IYA MILLS WHEREAS RS.44,35,575.72 HAS BEEN SHOWN BY THE LATTE R IN THEIR 18 BOOKS OF ACCOUNTS IN THE NAME OF THE ASSESSEE. IN ABSENCE OF ANY SATISFACTORY EXPLANATION, THE AO, MADE AN ADDITION OF RS.9,49,700/- TO THE TOTAL INCOME OF THE ASSESSEE. 24.2 IN APPEAL THE LD.CIT(A) UPHELD THE ADDITION MA DE BY THE AO BY OBSERVING AS UNDER : 13.2 ADDITION OF RS. 9,49,700/- ON ACCOUNT OF DIFFE RENCE IN THE ACCOUNT OF SUNPURIYA STEEL AND ROLLER FLOUR MILLS. A PERUSAL OF THE AUDIT REPORT, BALANCE SHEET AND THE LEDGER ACCOUNT O F M/S. SUNDERPURIYA BROTHERS PROP, CONCERN OF THE APPELLANT REVEALS SUNDRY CREDITORS AT RS.15,57,486/- AND LOANS AND ADVANC ES AT RS.60,59,008.33. LEDGER ACCOUNTS ON THE OTHER HAND SH OW SUNDRY CREDITORS AT RS.25,07,486.20 AND LOAN AND ADVANCES AT RS.70,09,008.33. THE APPELLANT HAS STATED THAT THE DIF FERENCE OF RS.9,50,000/- WAS ON ACCOUNT OF ONE SUNDRY CREDITOR NA MELY SARASWATI CATTLE FEED WHICH WAS NOT PROPERLY ACCOUNT ED FOR BY THE AUDITORS. FURTHER THE AUDITOR HAS ALSO NOTED THAT THE APPELLANT HAS SHOWN A BALANCE OF RS.34,85,875.72 IN THE CASE OF SUN DERPURIYA MILLS AS AGAINST RS.44,35,575.72 SHOWN BY THE LATTER IN ITS BOOKS OF ACCOUNTS. THE AO HAD THEREFORE, MADE AN ADDITION OF RS.9,49,700/-. I HAVE GONE THROUGH THE DETAILS IN HIS REGARD. THE EX PLANATION OF THE APPELLANT IS NOT ACCEPTABLE AS IT LACKS ANY CORROBORAT IVE EVIDENCE. THE APPELLANT SEEMS TO HAVE INTRODUCED THE FICTITIOUS AMOUNT IN THE NAME OF SARASWATI CATTLE FEED FOR BALANCING THE LOAN AND ADVANCES SHOWN AT RS.70,09,008.33 IN ITS LEDGER ACCOUNT VIS--V IS RS.60,59,008.33 SHOWN IN THE BALANCE SHEET. THERE IS NO DISPUTE IN REGARD TO THE FIGURE OF RS.70,09,008.33 WHICH COMPRI SES OF RS.7,88,839/- ON ACCOUNT OF INCOME TAX OFFICE, RS.17, 84,593.61 ON ACCOUNT OF SUNDERPURIYA FOOD PVT. LTD AND RS.44,35,5 75.72 ON ACCOUNT OF M/S. SUNDERPURIYA STEEL AND ROLLER FLOUR MILLS PVT.LTD. THE APPELLANT'S LETTER FROM SUNDERPURIYA STEEL AND R OLLER FLOUR MILLS (P) LTD. CERTIFYING THAT THERE WAS A DEBIT BALA NCE OF RS.9,50,000/- AS ON 31-03-2008 IN THE NAME OF SUNDERP URIYA BROTHERS ALSO REMAINED UNCORROBORATED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPELLANT'S BOOKS DO NOT S HOW THE CORRECT RECONCILIATION. HENCE THE APPELLANT'S EXPLAN ATION IS NOT ACCEPTABLE. THE ADDITION OF RS.9,49,700/- IS THEREFO RE, CONFIRMED. THIS ADDITION WILL ALSO TAKE CARE OF THE DIFFERENCE O F RS.9,49,700/- REPORTED BY THE AUDITOR IN SCH. 17 IN TAX AUDIT REP ORT. IN THE SAID TAX AUDIT REPORT, THE AUDITOR HAS REPORTED THAT THE APPELLANT HAD SHOWN A BALANCE OF RS.34,85,875.72 AGAINST THE M/S. SUN DERPURIYA STEEL AND ROLLER FLOUR MILLS PVT.LTD., AS AGAINST RS.44 ,35,575.72 SHOWN IN THE LATTER'S BOOKS OF ACCOUNT. THE AO IN THE REMAND REPORT HAS ALSO PROPOSED AN ADDITION OF RS.9,50,000/- ON ACCOU NT OF DIFFERENCE IN THE LOANS AND ADVANCES IN THE BALANCE SH EET VIS--VIS LEDGER STATEMENT OF ACCOUNT. HOWEVER, TAKING INTO C ONSIDERATION THE FACTS IN ENTIRETY, I AM OF THE VIEW THAT ALL THE SE DIFFERENCES ARE INTERCONNECTED AND A SEPARATE ADDITION OF RS.9,50,000 /- WILL AMOUNT TO DOUBLE ADDITION ON THE SAME GROUND. SINCE , THIS ISSUE HAS ALREADY BEEN COVERED IN THE LOAN AND ADVANCE NO SEPARATELY ADDITION ON THIS ACCOUNT IS CALLED FOR. HOWEVER, ADD ITION OF RS.9,49,700/- IS CONFIRMED. 19 24.3 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 24.4 AFTER HEARING BOTH THE SIDES, WE DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE CIT(A). THE AUDITORS HAVE CATEGORI CALLY GIVEN A FINDING THAT ASSESSEE HAS SHOWN A BALANCE OF RS.34, 35,875.72 IN THE NAME OF SUNDERPURIYA STEEL AND ROLLER FLOUR MILLS P VT. LTD. WHEREAS THE BOOKS OF ACCOUNTS OF SUNDERPURIYA STEEL AND ROLLER FLOUR MILLS PVT. LTD. SHOWS THE BALANCE AGAINST THE NAME OF THE ASSESSEE AT RS.44,35,575.72. ALTHOUGH THE ASSESSEE AS WELL AS SUNDERPURIYA STEEL AND ROLLER FLOUR MILLS PVT. LTD. ARE SISTER CONCERNS STILL THE ASSESSEE WAS UNABLE TO RECONCILE THE DIFFERENCE OF RS.9,49,700/- SATISFACTORILY. UNDER THESE CIRCUMST ANCES AND CONSIDERING THE VARIOUS DEFECTS IN THE BOOKS OF ACC OUNT OF THE ASSESSEE NOTED BY THE AUDITORS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) UPHOLDING THE ADDITION OF RS.9, 49,700/-. ACCORDINGLY, WE UPHOLD THE SAME. THIS GROUND RAISE D BY THE ASSESSEE IS ACCORDINGLY DISMISSED. 25. SO FAR AS THE ADDITIONAL GROUND IS CONCERNED TH E SAME RELATES TO THE ORDER OF THE CIT(A) IN MAKING ADDITION OF RS .9,25,945/-. 25.1 FACTS OF THE CASE, IN BRIEF, ARE THAT THERE WA S NO DISCUSSION BY THE AO ON THIS ISSUE. THE CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS OBSERVED THAT THE ASSESSEE HAS SHOWN CA PITAL OF RS.82,12,755.94 IN THE BALANCE SHEET WHEREAS THE SA ME WAS SHOWN BY THE ASSESSEE AT RS.91,42,701/- IN THE INCOME-TAX RETURN FILED. IT WAS EXPLAINED THAT THE DIFFERENCE WAS DUE TO THE MI STAKE COMMITTED BY HIS AUDITOR AND THE FIGURES GIVEN IN THE INCOME- TAX RETURN ARE NOT 20 SUPPORTED BY THE BOOKS OF ACCOUNTS. THE LD.CIT(A) DID NOT BUY THIS PROPOSITION BY OBSERVING THAT FOR EVERY MISTAK E IN THE BOOKS OF ACCOUNTS THE ASSESSEE HELD HIS AUDITORS RESPONSIBLE . HE OBSERVED THAT THE ASSESSEE HAS ALSO SIGNED THE BALANCE SHEET AND THE INCOME- TAX RETURN. THEREFORE, IN ABSENCE OF ANY SATISFACT ORY EXPLANATION BY THE ASSESSEE TO EXPLAIN THE DIFFERENCE OF RS.9,29,9 45/- HE ISSUED AN ENHANCEMENT NOTICE AND MADE THE ADDITION. AGGRIEVE D WITH SUCH ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US . 25.2 AFTER HEARING BOTH THE SIDES, WE FIND THIS ISS UE WAS NEITHER DISCUSSED BY THE AO IN THE BODY OF THE ASSESSMENT O RDER NOR ADDITION MADE IN THE ASSESSMENT ORDER. ALTHOUGH TH ERE WAS DIFFERENCE IN THE BALANCE SHEET AND THE FIGURES GIV EN IN THE INCOME TAX RETURN, NO ADDITION HAS BEEN MADE BY THE ASSESS ING OFFICER. UNDER THESE CIRCUMSTANCES, THE QUESTION THAT ARISES IS AS TO WHETHER SUCH DIFFERENCE CAN BE RECTIFIED BY THE LD.CIT(A) B Y ISSUING ENHANCEMENT NOTICE. IN THE PRECEDING PARAGRAPHS, WE HAVE ALREADY DISCUSSED THE POWER OF THE CIT(A) AND HAVE HELD THA T THE CIT(A) CANNOT INTRODUCE ANY NEW SOURCE OF INCOME WHICH WAS NOT THERE IN THE ASSESSMENT ORDER. FOR SUCH TYPE OF MISTAKES TH E REMEDIAL MEASURES SUCH AS PROVISIONS OF SECTION 147 AND 263 ARE THERE IN THE STATUTE BOOK. FURTHER, WE HAVE ALREADY UPHELD ADDI TION OF RS.9,49,700/- IN THE PRECEDING PARAGRAPHS WHICH WIL L TAKE CARE OF SUCH DIFFERENCE. THIS GROUND BY THE ASSESSEE IS AC CORDINGLY ALLOWED. 21 ITA NO.1228/PN/2013 (BY REVENUE) (A.Y. 2008-09 : 26. GROUNDS OF APPEAL NO.1 AND 3 BY THE REVENUE ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT (A)-II, NASHIK HAS ERRED IN DELETING THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS SUFFICIENT CREDIT BALANCE IG NORING THE FACT THAT LOAN GIVEN BY THE COMPANY HAS NOT DEBITED FROM THE ASSESSEE'S CREDIT BALANCE AND ASSESSEE HAS RECEIVED INTEREST OVER CREDIT BALANCE & LOAN WAS GIVEN SEPARATELY. ON THE CO NTRARY, IT SHOULD HAVE BEEN ADDED U/S 2(22)(E) OF THE I. T. ACT, 1961, TO THE EXTENT OF RS.11,00,000/-. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-II, NASHIK HAS NOT CONSIDERED THE FACTS DISCUSSED I N REMAND REPORT ON THE ISSUES OF DEEMED DIVIDEND U/S 2(22)(E) OF THE IT. ACT AT RS.11,00,000/- & PEAK INVESTMENT IN PURCHASES AT RS. 6,11,931/- . 26.1. FACTS OF THE CASE, IN BRIEF, ARE THAT THERE W AS NO ADDITION OR DISCUSSION ON THIS ISSUE BY THE AO IN THE BODY OF T HE ASSESSMENT ORDER. HOWEVER, THE JCIT IN HIS REMAND REPORT HAS SUGGESTED FOR ADDITION OF RS.11 LAKHS U/S.2(22)(E) OF THE I.T. AC T. THE LD.CIT(A) AT PARA 13.1 OF THE ORDER HAS DISCUSSED THE ISSUE A ND DELETED THE ADDITION OF RS.11 LAKHS BY OBSERVING AS UNDER : 13.1 ADDITION OF RS.11 LAC ON ACCOUNT OF LOAN GIVEN TO SUNDERPURIYA FOOD PVT.LTD. ON PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, I FIND THAT M/S. SUNDERPURIYA FOOD PVT. LTD. HAS CREDITED THE APPELLANT'S (MAHENDRA J. BANSAL) ACCOUNT BY RS. 8 LAC AND RS. 3 LAC ON 12/02/2008 AND 18/02/2008, RESPECTIVELY. THE CLOSI NG CREDIT BALANCE IS SHOWN AT RS. 28,84,593.61 AS AGAINST RS.17,84, 593.61 SHOWN IN THE BOOKS OF ACCOUNT SUNDERPURIYA BROTHERS, A PROP, CONCERN OF THE APPELLANT. THE APPELLANT HAS STATED TH AT RS. 8 LAC AND RS. 3 LAC WERE GIVEN BY M/S. SUNDERPURIYA STEEL AND R OLLER. FLOUR MILLS PVT.LTD. TO M/S. SURDERPURIYA FOOD PVT. LTD. O N 08/02/2008 AND'09/02/2008, RESPECTIVELY. M/S. SUNDERPURIYA STEEL AND ROLLER FLOUR MILLS PVT. LTD. HAS DEBITED THE ACCOUNT OF SUND ERPURIYA FOOD PVT. LTD. BY RS. 11 LAC. THE CLOSING BALANCE IS SHOWN A T RS.19,13,606/-. THE APPELLANT IS ONE OF THE DIRECTORS IN M/S. SUNDERPURIYA STEEL AND ROLLER FLOUR MILLS PVT. LTD A ND HAS A CREDIT BALANCE OF RS.44,35,575.72 AS ON 31/03/2008 IN THE BO OKS OF THE COMPANY. THE OPENING BALANCE OF THE APPELLANT IN TH E SAID COMPANY WAS RS. 37,03,878.12. THE APPELLANT HAS STATED THAT SUN DERPURIYA FOOD PVT. LTD. INADVERTENTLY CREDITED HIS ACCOUNT BY RS. 11 LAC INSTEAD OF CREDITING THE ACCOUNT OF M/S. SUNDERPURIYA STEEL AND ROLLER FLOUR MILLS PVT. LTD. WHICH HAD GIVEN IT AN A DVANCE OF RS.11 LAC. THE STATEMENTS OF ACCOUNT OF THE VARIOUS PARTIES C ONCERNED REINFORCE THE APPELLANT'S CONTENTION. THE ABOVE TWO TRANSACTIONS HAVE TAKEN PLACE THROUGH BANKING CHANNELS. M/S. SUNDE RPURIYA STEEL AND ROLLER FLOUR MILLS PVT. LTD. HAS NOT DEBITE D THE ACCOUNT OF THE APPELLANT BY RS. 11 LAC CONFIRMING THAT LOAN OF RS. 11 LAC TO 22 SUNDERPURIYA FOOD PVT. LTD. WAS GIVEN BY IT AND NOT ITS DIRECTOR SHRI MAHENDRA JWALAPRASAD BANSAL (APPELLANT). IN VIEW OF T HE ABOVE, THE ADDITION OF RS. 11 LAC MADE BY THE AO ON ACCOUNT OF DIFFERENCE IN THE APPELLANT'S BOOKS OF ACCOUNT AND THAT OF SUNDERPU RIYA FOOD PVT. LTD. STANDS PROPERLY EXPLAINED. THE AO'S REMAND REPORT DTD. 14/02/2012 SUGGESTING ADDITION U/S.2(22)(2) OF THE I.T . ACT IN THE HANDS OF THE APPELLANT IS NOT TENABLE AS THE APPELLAN T HAD A CREDIT BALANCE OF RS.37,03,878.12 AS ON 01/04/2007 AND CREDI T BALANCE OF RS.44,35,575.12 AS ON 31/03/2008. THE ADDITION OF RS. 11 LAC IS THEREFORE DELETED. 26.2. THE LD. DEPARTMENTAL REPRESENTATIVE AT THE TI ME OF HEARING COULD NOT CONTROVERT THE FACTUAL FINDINGS GIVEN BY THE LD.CIT(A) THAT THE ASSESSEE HAS A CREDIT BALANCE OF RS.37,03, 878.12 AS ON 01- 04-2007 AND CREDIT BALANCE OF RS.44,35,575.12 AS ON 31-03-2008 FOR WHICH THE LD.CIT(A) DELETED THE ADDITION U/S. 2 (22)(E) OF THE I.T. ACT. EVEN OTHERWISE ALSO IT IS AN ADMITTED FA CT THAT THERE WAS NO DISCUSSION OR ADDITION ON THIS HEAD BY THE AO IN THE BODY OF THE ASSESSMENT ORDER. THEREFORE, THE POWERS OF THE LD. CIT(A) FOR ENHANCING OF INCOME BY INTRODUCING A NEW SOURCE OF INCOME ARE LIMITED AS OBSERVED AT PARA 21 TO 22.1 OF THE IMPUG NED ORDER. IT HAS BEEN HELD THAT THE CIT(A) HAS NO POWER TO ENHANCE T HE INCOME BY INTRODUCING A NEW SOURCE OF INCOME WHEN THERE IS NO ADDITION OR DISCUSSION BY THE AO ON THIS ISSUE IN THE ASSESSMEN T ORDER. THEREFORE, FOLLOWING THE SAME REASONINGS ALSO THE G ROUNDS RAISED BY THE REVENUE ARE NOT TENABLE IN LAW. ACCORDINGLY, T HE ABOVE 2 GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 27. GROUND OF APPEAL NO.2 BY THE REVENUE READS AS U NDER : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A)-II, NASHIK HAS ERRED IN NOT ENHANCING THE DIFFERENCE POINTED OUT TO THE CIT(A) & THIS FACT CAME TO THE KN OWLEDGE OF THE DEPT. AFTER COMPLETION OF ASSESSMENT. THEREFORE, THE PU RCHASES SHOWN FOR SEPTEMBER 2009 AMOUNTING TO RS.6,11,931/- HAS BEEN TAKEN AS PEAK INVESTMENT BUT THE HON. CIT(A)-II, NASHI K HAS NOT CONSIDERED IT IN THE FIGURES OF PURCHASES. 23 27.1 AFTER HEARING BOTH THE SIDES, WE FIND THE REVE NUE IN THIS GROUND HAS CHALLENGED THE ORDER OF THE CIT(A) IN NO T ENHANCING THE DIFFERENCE POINTED OUT TO THE CIT(A) ABOUT A FACT T HAT CAME TO THE KNOWLEDGE OF THE DEPARTMENT AFTER COMPLETION OF THE ASSESSMENT. AS ALREADY MENTIONED THERE WAS NO SUCH DISCUSSION I N THE ASSESSMENT ORDER. IF SOMETHING CONTRARY TO FACTS C AME TO THE KNOWLEDGE OF THE DEPARTMENT AFTER COMPLETION OF THE ASSESSMENT THERE ARE OTHER REMEDIES AVAILABLE IN THE STATUTE B UT THE AO IN A REMAND REPORT IN OUR OPINION CANNOT SUGGEST THE CIT (A) TO ENHANCE THE INCOME. THE POWERS OF THE LD.CIT(A) TO ENHANCE THE INCOME BY INTRODUCING A NEW SOURCE OF INCOME WHICH WAS NOT A SUBJECT MATTER IN THE ASSESSMENT PROCEEDINGS AND WHEN THERE IS NO DISCUSSION ABOUT THE SAME OR ANY ADDITION ON THIS A CCOUNT IN THE ASSESSMENT ORDER ARE LIMITED. WE HAVE ALREADY DISC USSED THE ISSUE IN THE PRECEDING PARAGRAPHS AND HAVE DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE AT PARA 21 TO 22.1 OF THE IMPUGNED ORD ER. FOLLOWING THE SAME REASONINGS THIS GROUND BY THE REVENUE IS D ISMISSED. ITA NO.2063/PN/2014 (BY ASSESSEE) (A.Y. 2010-11) : 28. GROUNDS OF APPEAL NO.1 BY THE ASSESSEE READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE L D.CIT(A) ERRED IN CONFIRMING ACTION OF AO WHO PASSED ORDER U/S. 143(3) ON 28-03-2013 WITHOUT JURISDICTION AS THE NOTICE ISSUED U/ S.143(2) ON 22-09-2011 WAS WITHOUT ANY AUTHORITY AS JURISDICTION A T THAT TIME WAS WITH ITO, CENTRAL, AURANGABAD WHILE CASE WAS TRANS FERRED U/S.127(2) BY CIT, CENTRAL, NAGPUR TO ITO, WARD-1(2) , JALGAON W.E.F., 01-04-2012. 28.1 AFTER HEARING BOTH THE SIDES, WE FIND AN IDENT ICAL GROUND HAS COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1294/PN/2013. WE HAVE ALREADY DISCUSSED THE ISS UE AND THE 24 GROUND RAISED BY THE ASSESSEE HAS BEEN DISMISSED. FOLLOWING THE SAME REASONINGS THIS GROUND BY THE ASSESSEE IS DISM ISSED. 29. GROUND OF APPEAL NO.2 BY THE ASSESSEE READS AS UNDER : 2. WITHOUT PREJUDICE TO ABOVE GROUND, LD.CIT(A) ER RED IN RESTRICTING THE ADDITION MADE BY AO, ON ACCOUNT OF G ROSS PROFIT, TO THE EXTENT OF RS.20,48,668/- WITHOUT ANY BASIS. 29.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESS EE IS ENGAGED IN THE MANUFACTURING OF RAW ATTA, SUJI, MAIDA, BRAN FR OM FLOUR MILL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE AUDITORS IN THE AUDIT REPORT AT POINT NO.7 HAVE OBSERVED AS UNDER: MANY OF THE PURCHASE DEBITED TO TRADING ACCOUNT ARE ON THE BASIS OF SELF MADE VOUCHERS, BILLS OR INVOICE ARE NOT MADE A VAILABLE AT THE TIME OF AUDIT. THESE REMARKS OF THE AUDITORS ACCORDING TO THE AO G O TO PROVE THAT THE ASSESSEES BOOKS OF ACCOUNT ARE NOT SUPPORTED B Y PROPER VOUCHERS. THE AUDITOR HIMSELF HAS STATED THAT THE BILLS/INVOICES WERE NOT MADE AVAILABLE AT THE TIME OF AUDIT. THE BILLS OR INVOICES WERE NOT MADE AVAILABLE OR IS NOT THERE IS A FACT B EST KNOWN TO THE ASSESSEE. EVEN THE ASSESSEE HAS NOT FILED THE COMP ANYS AUDIT REPORT. THE AO NOTED THAT THE ASSESSEE COMPANY HAS SHOWN PURCHASES TO THE TUNE OF RS.19,26,73,561/- AND HAS SHOWN GROSS PROFIT OF 22.12% ON TOTAL TURNOVER OF RS.20,48,66,8 07/-. THE ASSESSEE HAS NOT PRODUCED ANY SUCH PRODUCTION RECOR D, THE BILLS/VOUCHERS FOR THE VARIOUS EXPENSES CLAIMED. B ASED ON THE AUDITORS REMARKS AND CONSIDERING THE NON COOPERATI VE ATTITUDE OF THE ASSESSEE COMPANY AND THE FACTS AND CIRCUMSTANCE S OF THE CASE, THE AO REJECTED THE BOOK RESULTS AND ESTIMATED THE GROSS PROFIT @ 25 5% WHICH RESULTED INTO AN ADDITION OF RS.58,90,699/ -, THE DETAILS OF WHICH ARE AS UNDER : 5% GP ON TURNOVER OF RS.20,48,66,807/- RS.1,02,43,340 /- LESS : GP SHOWN RS. 43,52,641/- ---------------------- GP ADDITION RS.58,90,699/- ---------------------- 29.2. IN APPEAL THE LD.CIT(A) RESTRICTED THE DISALL OWANCE OF RS.20,48,668/- BY OBSERVING AS UNDER : 9. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE A PPELLANT AND THE ASSESSMENT ORDER. IT APPEARS THAT THE OBSERVATI ON OF AO IS NOT CORRECT REGARDING THE RATE OF GP IN EARLIER YEA RS. THE ASSESSEE IS SHOWING HIGHER G.P. FOR AY 2010-11 AS COMPARED TO E ARLIER YEARS. THE TREND OF GP IS INCREASING ONE IN THE LAST THREE YEAR S. THE TURNOVER IS ALMOST SAME IN THESE THREE YEARS. IN THE INSTANT CASE, TH E AUDITORS AND THE AO HAVE COME TO THE SAME CONCLUSION THAT TH E MOST OF THE PURCHASES DEBITED TO TRADING ACCOUNT ARE BASED ON S ELF -MADE VOUCHERS, BILLS, INVOICES AND THEY ARE NOT PRODUCED FOR VERIFICATION. THE AO HAS ALSO POINTED OUT THAT THE APPELLANT HAS NOT PRODUCED THE AUDIT REPORT, BILLS, VOUCHERS AND INVOICES IN SUPP ORT OF VARIOUS EXPENSES CLAIMED BY THE APPELLANT. THIS BEING THE CASE, THE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT ARE NOT PROPER AND RELIABLE. THE TRUE INCOME OF THE APPELLANT CANNOT BE DEDUCED FROM SUCH DEFECTIVE ACCOUNTS. THEREFORE, THE BOOKS OF ACCOUNT S MAINTAINED BY THE APPELLANT DESERVES TO BE REJECTED AND THE PROVISIO NS OF SECTION 145(3) OF THE I.T. ACT NEED TO BE INVOKED. THIS BEI NG THE CASE, THE INCOME OF THE APPELLANT IS REQUIRED TO BE ESTIMATED IN A FAIR AND REASONABLE MANNER KEEPING IN VIEW OF THE PAST YEARS' PERFORMANCES AND PROFITABILITY IN THIS LINE OF BUSINESS. THIS IS A CASE OF ESTIMATION OF FAIR RATE OF G.P. THE AO HAS NOT GIVEN ANY COMPARAB LE CASE WHERE GP AT 5% IS CONSIDERED REASONABLE IN THIS LINE OF BUSI NESS. HOWEVER, LOOKING TO THE PAST GP RATIO, THE ESTIMATE MADE BY TH E AO IS ON THE HIGHER SIDE. AFTER CONSIDERING THE SUBMISSIONS OF THE AR AND TAKING INTO ACCOUNT THE TOTALITY OF THE FACTS AND CIRCUMST ANCES, I AM OF THE OPINION THAT THE ADDITION OF GP BY 1% OVER AND ABOV E THE GP OF 2.12% SHOWN BY THE APPELLANT WILL MEET THE END OF J USTICE. IN OTHER WORDS, THE GP IS ESTIMATED AT 3.12% WHICH IS FAIR AN D REASONABLE. ACCORDINGLY, THE ADDITION ON THIS COUNT IS RESTRICTED TO RS. 20,48,668/-. THUS, THIS GROUND IS PARTLY ALLOWED AND T HE APPELLANT GETS A RELIEF OF RS.38,42,031/-. 29.3 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 29.4. AFTER HEARING BOTH THE SIDES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). ADMITTEDLY, THE ASSESSEE HAS NOT PRODUCED THE PRODUCTION RECORDS, BILLS/VOUCHERS FOR THE VARI OUS EXPENSES 26 CLAIMED BEFORE THE AO. FURTHER, THE AUDITORS IN T HEIR AUDIT REPORT HAVE ALSO REMARKED THAT MANY OF THE PURCHASES DEBIT ED TO TRADING ACCOUNT ARE ON THE BASIS OF SELF-MADE VOUCHERS AND BILLS/INVOICES WERE NOT MADE AVAILABLE AT THE TIME OF AUDIT. UNDE R THESE CIRCUMSTANCES THE BOOK RESULTS IN OUR OPINION CANNO T BE RELIABLE FOR WHICH THE AO WAS JUSTIFIED IN REJECTING THE BOOK RE SULTS. HOWEVER, THE ADOPTION OF 3.12% OF GP BY THE LD.CIT(A) AS AGA INST 2.12% DECLARED BY THE ASSESSEE APPEARS TO BE ON THE HIGHE R SIDE. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE A DOPTION OF GP RATE OF 2.5% IN OUR OPINION WILL MEET THE ENDS OF JUSTIC E. WE HOLD AND DIRECT ACCORDINGLY. THIS GROUND BY THE ASSESSEE IS ACCORDINGLY PARTLY ALLOWED. 30. IN THE RESULT, ITA NO. 1294/PN/2013 AND ITA NO.2063/PN/2014 FILED BY THE ASSESSEE ARE PARTLY AL LOWED AND ITA NO.1228/PN/2013 FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 27-05-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PAN DA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 27 TH MAY, 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-II, NASHIK 4. THE CIT-II, NASHIK 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE