Shri Ketankumar Pravinchandra Gor, Ahmedabad V. The Income tax Officer,.Ward-10(2), Ahmedabad

ITA 1306/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9160 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 07-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P S CHAUDHARY
• Assessee Lawyers: N C AMIN
• Keywords: Rejection of books of accounts; Business expenditure; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Additional evidence; Corroborative evidences; Competent authority; Commercial expediency; Revenue expenditure; Capital expenditure
• Section: 143(3); 142(1); 194C; 145; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE SHRI S. S. GODARA, JM & SHRI MANISH BORAD, AM. ITA NO.1306/AHD/2013 ASST. YEAR: 2009-10 SHRI KETANKUMAR P. GOR, 302, AARSI CORNER, OPP. GUJARAT COLLEGE, ELLISBRIDGE, AHMEDABAD. VS. ITO, WARD-10(2), AHMEDABAD. APPELLANT RESPONDENT PAN ADVPG 4024C APPELLANT BY SHRI N. C. AMIN, AR RESPONDENT BY SHRI P. S. CHAUDHARY, SR.DR DATE OF HEARING: 17.01.2017 DATE OF PRONOUNCEMENT: 16/02/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF ASSESSEE FOR ASST. YEAR 2009-10 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-XVI, AHMEDABAD, DAT ED 22/02/2013 VIDE APPEAL NO. CIT(A)-XVI/ITO-WD-10(2)/563/2011-12 ARISING OUT OF ORDER U/S 143(3) OF THE IT ACT, 1961 (IN SHORT THE ACT) FRAMED ON 26.12.2011 BY ITO, WD-10(2), AHMEDABAD. ASSESSEE HA S RAISED FOLLOWING GROUNDS OF APPEAL :- 1.THAT THE LEARNED A.O. HAS ERRED BOTH IN LAW AND O N THE FACTS OF THE CASE IN REJECTING BOOKS OF ACCOUNT U/S 145(3) OF THE I.T.AC T 1961. ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 2 2.THAT THE BOOKS OF ACCOUNTS ARE AUDITED U/S 44AB A ND THERE IS NO ANY ADVERSE COMMENTS BY THE CHARTERED ACCOUNTANTS AND G .P. ADDITIONS OF RS.11,24,013/- MADE BY LEARNED A.O. AND CONFIRMED B Y LEARNED CIT(A) DESERVES TO BE DELETED CONSIDERING NATURE OF BUSINE SS, TURNOVER ETC. THAT THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLAN T FOR A.Y. 2009-10 AND 2010-11 ARE NOT IDENTICAL, HENCE G.P. ADDITIONS DES ERVES TO BE DELETED. 3. THAT THE APPELLANT HAS BORROWED LOAN FROM FINANC IAL INSTITUTIONS FOR THE PURPOSE OF THE BUSINESS ARID AS SUCH INTEREST EXPEN SES OF RS.5,87,769/- AND RS.1,29,509/- BEING PROCESSING CHARGES CLAIMED WHIC H IS ADMISSIBLE EXPENDITURE U/S 36 OF THE I.T.ACT 1961 4. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT, BOTH THE EXPENDITURES CLAIMED IN GROUND NO.(3) IS MISSIBLE DEDUCTION U/S 30 TO 36 OF THE I.T.ACT 1961., 5. THAT THE ASSOCIATION EXPENSES OF RS.79,000/- CLAIMED BY THE APPELLANT IS FOR THE PURPOSE OF BUSINESS OF THE APP ELLANT AND ON THE PRINCIPLE OF COMMERCIAL EXPEDIENCY THE SAID EXPENDITURE IS ADMIS SIBLE DEDUCTION U/S 30 TO 37 OF THE I.T. ACT 1961 WHICH LEARNED CIT(A), OUGHT TO HA\/E ALLOWED. 6. THAT THE LEARNED A.O. HAS DISALLOWED LUMP SUM EX PENSES OF RS. 50,000/- OUT OF TRANSPORT EXPENDITURE OF RS.2,26,464/- AND CONFI RMED BY LEARNED CIT(A) WHICH IS ADMISSIBLE EXPENSE CONSIDERING THE FACTS AND CIR CUMSTANCES OF THE CASE /THE SAME REQUIRES TO BE ALLOWED. 7. THAT THE DENIAL OF CLAIM U/S 80GGC OF RS. 3,51,0 00/- MADE BY LEARNED A.O. AND CONFIRMED BY LEARNED CIT(A) WHICH IS AGAIN ST THE DOCUMENTARY EVIDENCES LYING ON THE RECORD OF THE LEARNED A.O. A S WELL AS CIT(A) AND CONSIDERING THE SAME, THE CLAIM OF THE APPELLANT BE ALLOWED. 8. THAT THE LEARNED CIT(A) HAS OBTAINED REMAND REP ORT FROM LEARNED A.O. ON VARIOUS GROUNDS AND CONSIDERING IT, THE APPEAL O F THE APPELLANT WAS DECIDED WITHOUT GIVING AN OPPORTUNITY TO THE APPELL ANT TO REBUT THE SAME AND THEREBY THERE IS GROSS VIOLATION OF PRINCIPLE O F NATURAL JUSTICE.; 9. THAT THE APPELLANT WAS PREVENTED BY REASONABLE A ND SUFFICIENT CAUSE, EVEN THOUGH THE LEARNED A.O. AS WELL AS CIT(A) BOTH HAVE NOT CONSIDERED RELEVANT MATERIALS SUBMITTED DURING THE COURSE OF REMAND PRO CEEDINGS ON MERITS AND REJECTED THE SAME WHICH IS AGAINST THE I.T. RULES AND PROVISIONS THE ACT AND CONSIDERING THE SAME ALSO, THE APPEAL OF THE APPELL ANT BE DECIDED ON MERITS. ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 3 10. YOUR APPELLANT CRAVES LEAVE TO ADD, TO ALTER OR TO AMEND ANY OF THE GROUNDS TILL THE APPEAL IS FINALLY HEARD AND DECIDE D. 2. BRIEFLY STATED FACTS OF THE CASE AS CULLED OUT F ROM THE RECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL RUNNING A SO LE PROPRIETARY CONCERN IN THE NAME OF M/S A. CREASCENT MARKETING E NGAGED IN THE BUSINESS OF TRADING OF PLASTIC PACKING MATERIAL. E- RETURN OF INCOME DECLARING TOTAL INCOME AT RS.1,90,360/- WAS FILED O N 5.9.2009. CASE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER CASS AND NOTICE U/S 143(2) OF THE ACT DATED 30.08.2010 WAS ISSUED ALONG WITH NOTICE U/S 142(1) OF THE ACT DATED 27.12.2010 AND SPECIFIC QUE STIONNAIRE AND WERE DULY SERVED ON THE ASSESSEE. TOTAL TURNOVER OF THE ASSESSEE WAS AT RS.3,35,60,936/-. BOOKS OF ACCOUNTS ARE AUDI TED AND TAX AUDIT REPORT ALONG WITH ENCLOSURES WERE FILED. AS O BSERVED BY LD. ASSESSING OFFICER IN THE ASSESSMENT ORDER, ASSESSEE PRODUCED PART OF THE DETAILS AND THE REMAINING DETAILS WERE NOT F ILED EVEN AFTER GIVING VARIOUS OPPORTUNITIES OF BEING HEARD. IN ALL LD. ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS NOT PRODUCED ITEMWISE QU ANTITATIVE DETAILS, NO CORROBORATIVE DETAILS FILED OF REJECTIO N OF MATERIAL, ALTERATION IN PURCHASE BILLS AND MOST OF THE PURCHASES WERE IN CASH. IT WAS ALSO OBSERVED THAT APART FROM THE ABOVE DEFECTS, GP RATE CAME DOWN TO 8.65% AS AGAINST 13.92% IN THE IMMEDIATELY PRECEDIN G FINANCIAL YEAR. ACCORDINGLY, LD. ASSESSING OFFICER KEEPING IN VIEW THE INCREASE IN TURNOVER, REJECTION OF MATERIAL INCLUDING PURCHASES , EARING OF PROFITS @ 22.92% ON SUBSTANTIAL SALE TO ASSOCIATE CONCERN AND OVER ALL HOLISTIC CONSIDERATION REJECTED THE BOOK RESULTS AND ESTIMAT ED THE GP AT 12% AND MADE TRADING ADDITION OF RS.11,24,013/-. APART FROM MAKING TRADING ADDITION LD. ASSESSING OFFICER ALSO OBSERVE D THAT ASSESSEE ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 4 HAS PAID INTEREST OF RS.5,87,769/- TO VARIOUS PARTI ES LIKE ABM AMRO, BERCLAYS, G. MONEY, HDFC PERSONAL LOAN, ICICI PERSO NAL LOAN, ICICI LOAN & RELIANCE CAPITAL PERSONAL LOAN AND THE PROCE SSING CHARGES OF RS.1,29,509/-, BUT DISALLOWED THE SAME AS ASSESSEE WAS UNABLE TO PROVE THAT THE SAME WERE UTILIZED FOR THE BUSINESS PURPOSES. LD. ASSESSING OFFICER ALSO DISALLOWED RS.79,000/- PAID AS ASSOCIATION EXPENSES DUE TO LACK OF EVIDENCE TO PROVE THE GENUI NENESS. LUMP SUM DISALLOWANCE OF RS.50,000/- WAS MADE OUT OF THE TOTAL TRANSPORTATION EXPENSES, DEDUCTION U/S 80GGC OF THE ACT AT RS.3,51,000/- WAS DENIED AS NO PROOF WAS PLACED ON RECORD FOR VERIFICATION. LD. ASSESSING OFFICER ALSO DISALLOWED RS.1,08,200/- TOWARDS PURCHASES MADE AT RS.20,000/- AND LESS WITH THE VIEW THAT THEY HAVE BEEN KEPT BELOW RS.20,000/- INTENTIONALLY . IN ALL AFTER MAKING ADDITION OF RS.20,78,491/- AND DEYING DEDUCT ION U/S 80GGC OF THE ACT AT RS.3,51,000/- INCOME WAS ASSESSED AT RS.26,18,850/-. ASSESSEE WENT IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX(A) AND GOT PARTLY SUCCEEDED AS LD. COMMISSIONER OF INC OME TAX(A) DELETED THE ADDITION OF RS.1,08,200/- RELATING TO P AYMENT IN CASH FOR PURCHASES, BEING BELOW RS.20,000/- AND CONFIRMED AL L OTHER ADDITIONS. 3. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. GROUND NO.1 & 2 READ AS UNDER :- 1.THAT THE LEARNED A.O. HAS ERRED BOTH IN LAW AND O N THE FACTS OF THE CASE IN REJECTING BOOKS OF ACCOUNT U/S 145(3) OF THE I.T.AC T 1961. 2.THAT THE BOOKS OF ACCOUNTS ARE AUDITED U/S 44AB A ND THERE IS NO ANY ADVERSE COMMENTS BY THE CHARTERED ACCOUNTANTS AND G .P. ADDITIONS OF ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 5 RS.11,24,013/- MADE BY LEARNED A.O. AND CONFIRMED B Y LEARNED CIT(A) DESERVES TO BE DELETED CONSIDERING NATURE OF BUSINE SS, TURNOVER ETC. THAT THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLAN T FOR A.Y. 2009-10 AND 2010-11 ARE NOT IDENTICAL, HENCE G.P. ADDITIONS DES ERVES TO BE DELETED. 4. GROUND NOS. 1 & 2 OF THE APPEAL ARE AGAINST THE ACTION OF LD. COMMISSIONER OF INCOME TAX(A) CONFIRMING THE ORDER OF LD. ASSESSING OFFICER, REJECTING BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT AND CONFIRMING TRADING ADDITION OF RS.11,,24,023/-. LD. AUTHORISED REPRESENTATIVE (AR) THROUGH HIS WRITTEN SUBMISSIONS SUBMITTED THAT LD. ASSESSING OFFICER FOUND THAT PURCHASES AND SALE S WERE PROPERLY VOUCHED AND WERE VERIFIABLE THOUGH STOCK REGISTER WAS NOT KEPT. HOWEVER, THE ASSESSEE HAS FURNISHED INVENTORY OF OP ENING AND CLOSING STOCK WHICH WERE NOT FOUND TO BE INCORRECT HE ALSO FOUND THAT POSITION REGARDING BOOKS OF ACCOUNT CONTINUED TO BE SAME AS IN THE PAST AND WERE REGULARLY AUDITED BY THE CHARTERED A CCOUNTANTS. WITH THIS ADMITTED POSITION, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS SOLD ITS GOODS TO ITS ASSOCIATE CONCERN AT A HI GHER PROFIT AS COMPARED TO GP RATE IN COMPARISON OF OTHERS THE ASS ESSEE HAS SHOWN IN PREVIOUS YEAR GP RATE OF 13 92 % BY TAKING ENTIRE BUSINESS AS WHOLE, BUT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN GP RATE OF 8.65% ONLY, WITH THIS PREMISE, HE REJECTED THE BOOKS OF ACCOUNT. IT HAS BEEN HELD BY HON. HIGH COU RT OF RAJASTHAN IN THE CASE OF MALANI RAMJIVAN JAGANNATH V. ASSTT. CIT (2009) 316 ITR 120 (RAJ) THAT MERE DEVIATION IN GP RATE CANNOT BE A GROUND FOR REJECTING BOOKS OF ACCOUNT AND ENTERING REALM OF ES TIMATE AND GUESS WORK WHERE LOWER GP RATE SHOWN IN THE BOOKS OF ACCO UNT. THE REJECTION OF THE BOOKS OF ACCOUNT WAS THEREFORE, NO T JUSTIFIED NOR ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 6 RESORT TO SUBSTITUTION OF ESTIMATED GP BY RULE OF T HUMB MERELY FOR MAKING CERTAIN ADDITIONS. THE AUDITED TRADING ACCOU NT SHOWS OPENING STOCK, PURCHASE, SALES AND CLOSING STOCK THE QUANTU M AND VALUE OF PURCHASE AND SALES HAD NOT BEEN IN DISPUTE IN AS MU CH AS THEY WERE HELD TO BE FULLY VOUCHED. VALUE OF OPENING STOCK AL SO CAN NOT BE DISPUTED AS IT CAME FROM CLOSING STOCK OF PREVIOUS YEAR THE INVENTORIES OF CLOSING STOCK WAS ALSO NOT FOUND TO BE INCORRECT THAT IS TO SAY ACTUAL STOCK POSITION WAS NOT IN DISPUTE. IN THE PREVIOUS YEAR THE BOOKS OF ACCOUNT WERE NOT FOUND TO BE INCORRECT . THE GROSS PROFIT RATE IS PRIMARILY RESULT OF EXCESS OF SALES AND CLO SING STOCK OVER PURCHASES/ OPENING STOCK. ADMITTEDLY OUT OF THESE F OUR COMPONENTS OF TRADING RESULT, THERE COULD NOT HAVE BEEN ANY GR OUND FOR THE ASSESSING OFFICER TO ARRIVE AT DIFFERENT RESULT SO FAR AS CLOSING STOCK IS CONCERNED AS INVENTORIES OF EXISTING STOCK WERE FOU ND TO BE CORRECT AND THERE BEING NO DISPUTE ABOUT THE SALES AND PURC HASES. 4.1 LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTE D THAT IT WAS HELD IN THE CASE OF INDIA FINANCE AND CONSTRUCTION COMPANY PVT LTD V. B.N. PANDA DY. CIT (1993) 200 IT R 710 (BOM) FOLLOWING THE FINDING OF HON. SUPREME COURT I N CIT V. RAMAN & CO. (1988) 67 ITR 1 (SC) THAT THE LAW DOES NOT OBLIGE A TRADER TO MAKE A MAXIMUM PROFIT THAT HE CAN OUT OF TRADING TR ANSACTIONS INCOME WHICH ACCRUES TO A TRADERS IS TAXABLE IN HIS HANDS INCOME WHICH HE COULD HAVE BUT HAS NOT EARNED IS NOT TAXAB LE IN HIS HANDS. THE INCOME WHICH HE COULD HAVE BUT HAS NOT EARNED I S NOT MADE TAXABLE AS INCOME ACCRUED TO HIM. THE LD. AUTHORISE D REPRESENTATIVE RELIED ON THE FOLLOWING DECISIONS :- ASST. CIT V. G RADNPRIX FAB P LTD. ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 7 DY. CIT (2010) 33 (II) ITCL 90 (DEL-TRIB) (2010) 12 8 TTJ (DEH'D'-TRIB) 60 UNITED EXPORTS V. CIT (2010) 31(1) ITCL 32 (DEL- HC) (2009) 185 TAXMAN 374 (DEL) (2010) 229 CTR (DEL) 93 4.2 LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE APPELLANT HAS REGULARLY FOLLOWED THE METHOD OF ACCO UNTING AND IT HAS BEEN ACCEPTED BY THE REVENUE AUTHORITIES A STRONG B URDEN LIES UPON REVENUE TO ESTABLISH THAT THE METHOD FOLLOWED BY TH E ASSESSEE IS CONTRARY TO LAW OR IT DOES NOT ENABLE TO DEDUCED TR UE PROFIT ASSESSABLE TO TAX. ALSO, THERE WAS NO MATERIAL ON RECORD TO JU STIFY CONCLUSION REACHED UPON BY ASSESSING OFFICE FOR REJECTION OF B OOKS OF ACCOUNT WHEN ASSESSEE MAINTAIN COMPLETE BOOKS OF ACCOUNTS I N ACCORDANCE WITH PROVISION OF ACT AND SAME WERE AUDITED BY AUDI TOR. THEREFORE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F FALL IN GROSS PROFIT WOULD BE LIABLE TO BE DELETED. MERE ABSENCE OF DAY TO DAY STOCK RECORD OR MEAGER FALL IN GROSS PROFIT RATE CAN NOT BE THEMSELVES JUSTIFY REJECTION OF BOOK RESULTS, THEREFORE ADDITION ON ES TIMATE BASIS WAS NOT JUSTIFIED. APPELLANT HAS MAINTAINED COMPLETE LEDGER ACCOUNTS OF SALE AND PURCHASES AND SAME WERE VERIFIABLE AND THEREFOR E, THE BOOKS OF ACCOUNTS CAN NOT BE REJECTED. ASSESSING OFFICER COU LD NOT ESTABLISH THE INCORRECTNESS AND INCOMPLETENESS OF THE ACCOUNT S OR INCONSISTENCY IN THE METHOD OF ACCOUNTING ACCEPTED BY THE ASSESSEE THEREFORE ASSESSING OFFICER WAS NOT JUSTIFIED IN RE JECTING BOOK RESULT AND MAKING ADDITIONS. 4.3 THE LD. AUTHORISED REPRESENTATIVE ALSO SUBMITT ED THAT THE LEARNED ASSESSING OFFICER HAS MENTIONED IN THE ASSE SSMENT ORDER, ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 8 THAT, THEY HAVE PURCHASED MATERIAL FROM JIGGAR PALL ET. VALSAD AT A COST OF RS. 3700/- AND SOLD TO ASSOCIATE CONCERN P. N. REASOURCES. INC @RS. 3800/- PER PIECE AND SOLD TO OTHER CLIENT / CUSTOMER BY FURTHER INCREASE IN THE COST THE PROFIT RATIO WITHI N THE INSIDE TRANSACTION WAS @22.92%. IN ORDER TO INVOKE SECTION 40A(2)(B) THERE MUST BE A PAYMENT IN REGARDS TO AN EXPENDITURE. IN A GIVEN CASE EVEN IF THE ASSESSEE BONA FIDE SELLS GOODS AT A PRI CE LOWER THEN MARKET PRICE THERE IS NO EXPENDITURE INCURRED BY HI M AND SECTION 40A(2)(B) CAN NOT BE INVOKE IN VIEW OF THE FOLLOWIN G DECISIONS. CIT V. A. K. SUBBARAYA CHETTY & SONS (1980) 123 ITR 592 (M AD); CIJ V. UDHOJI SHRIKRISHNADAS (1983) 139 ITR 827 (MP). 4.4 ON FACTS OF THE CASE, BOOKS OF ACCOUNT COULD NO T BE REJECTED ONLY ON THE GROUND OF GROSS PROFIT RATE AND NON VER IFICATION OF ONLY SINGLE ITEM OF PURCHASE WHERE TRADING ACCOUNT PURCH ASE, SALES AND CLOSING STOCK WAS VERIFIABLE AND INCOME OF ASSESSEE AS WELL AS OF ITS SISTER CONCERN COULD NOT BE CLUBBED TO ARRIVE AT GR OSS PROFIT RATE BY AVERAGING THE TURN OVER. THE COMPLETENESS & CORRECT NESS OF THE BOOKS OF ACCOUNT MAINTAINED BY THE ADDRESS COMPANY ARE IN NO WAY IN DISPUTE OR DOUBTS BY ASSESSING OFFICER AND HENC E THE PROVISION OF SECTION 145 HAVE BEEN INCORRECTLY & INDISCREETLY AP PLIED BY ASSESSING OFFICER MERELY BECAUSE THE PROFIT ARC LOW COMPARED TO THE EARLIER YEAR IS NOT A CIRCUMSTANCES OR MATERIAL TO JUSTIFY AN ESTIMATE IN THE CIRCUMSTANCES AND FACTS OF THE CASE. IT WOULD BE AP PRECIATED FROM THE COMPARISON OF RAW MATERIAL PRICE FOR THE FINANCIAL YEAR 2007-08 AND 2008-09 THAT AS THE RAW MATERIAL PRICE WAS MORE IN RESPECT OF PLASTIC ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 9 FILM ROLL FOR THE YEAR 2008-09 AND WITH LOW PROFIT MARGIN TO ACHIEVE THE HIGH TURNOVER THE G P. WAS LOW. DESCRIPTION OF ITEM 2007-08 2008-09 INVOICE NO. RATE PER UNIT INVOICE NO. RATE PER UNIT PLASTIC FILM ROLL 69 70 18 80 PLASTIC FILM ROLL 75 70 134 80 PLASTIC FILM ROLL 77 70 041 84 PLASTIC FILM ROLL 92 70 51 84 PLASTIC FILM ROLL `96 71 70 96.5 PLASTIC FILM ROLL 108 71 96 97 PLASTIC FILM ROLL 114 71 101 97 PLASTIC FILM ROLL 136 74 128 90 PLASTIC FILM ROLL 154 76 129 99 PLASTIC FILM ROLL 167 78 138 88 4.5. AS THE ASSESSING OFFICER HAS APPLIED SECTION 1 45(3) WITHOUT ESTABLISHING THAT BOOKS OF ACCOUNT ARE INCORRECT OR INCOMPLETE AND METHOD OF ACCOUNTING IS NOT FOLLOWED CONSISTENTLY D URING THE YEAR UNDER CONSIDERATION, THEREFORE, SECTION 145(3) APPL IED IS WHOLLY UNJUSTIFIED. 4.6 LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTE D THAT ASSESSEE IS ALSO EARNING INCOME FROM COMMISSION WHICH STOOD AT RS.5,92,563/- IN F.Y. 2008-09 AS AGAINST RS.1,894,598/- IN F.Y.20 07-08. FURTHER IF GP IS CALCULATED WITHOUT INCLUDING COMMISSION INCOM E IN THE GROSS RECEIPTS THEN GP RATE FOR THE YEAR UNDER APPEAL WIL L BE 6.88% AS AGAINST 4.86% IN F.Y.2008-09 WHICH IS ABOUT 2% HIGH ER. IT IS EVIDENT THAT COMMISSION INCOME IS GENERALLY PART OF PROFIT AND LOSS ACCOUNT AND IN AUDITED FINANCIAL STATEMENTS IT HAS BEEN FOR MING PART OF TRADING ACCOUNT. IT IS ALSO A FACT THAT ASSESSEE HAS SHOWN AN IMPROVED ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 10 TURNOVER OF RS.3,35,60,936/- IN COMPARISON TO PRECE DING F.Y. TURNOVER OF RS. 2,09,28,595/-. ASSESSEES BOOKS OF ACCOUNT A RE AUDITED, QUANTITATIVE DETAILS ARE MENTIONED IN THE AUDIT REP ORT, REJECTION OF MATERIAL ARE FULLY PROVED WITH THE COPY OF ACCOUNTS OF THE PARTIES AND OVERALL GP RATE IS POSITIVE AND, THEREFORE, LD. ASS ESSING OFFICER ERRED IN REJECTING BOOKS OF ACCOUNTS U/S 145(3) OF THE AC T MAKING TRADING ADDITION OF RS.11,24,013/-. 5. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD AND GONE THROUGH THE WRITTEN SUBMI SSIONS FILED BY THE ASSESSEE. THE ISSUES RAISED IN THESE GROUND NOS .1 & 2 ARE CHALLENGING LD. CIT(A)S ORDER CONFIRMING THE ACTIO N OF LD. ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT U/S 145(3 ) OF THE ACT AND ESTIMATING GP @ 12% RESULTING INTO TRADING ADDITION OF RS.11,24,013/-. 7. WE OBSERVE THAT LD. ASSESSING OFFICER REJECTED B OOKS OF ACCOUNTS U/S 145(3) OF THE ACT AS THE ASSESSEE WAS UNABLE TO PRODUCE QUANTITY-WISE STOCK REGISTER, SUPPORTING EV IDENCES IN RESPECT OF REJECTION OF MATERIAL ADDED IN THE PURCHASES, NO JUSTIFICATION IN RESPECT OF BILLS CORRECTED AND ACCOUNTED AS PURCHAS ES, EARNING OF PROFITS @ 22.92% ON SUBSTANTIAL SALES WITH ASSOCIAT E CONCERNS, NO JUSTIFICATION FOR ADOPTION OF HIGHER VALUE FOR CLOS ING STOCK EVEN WHEN THE METHOD OF VALUING CLOSING STOCK CONDUCTED BY AS SESSEE IS AT COST ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 11 PRICE OR MARKET PRICE WHICHEVER IS LESS. WE FURTHE R OBSERVE THAT LD. CIT(A) CONFIRMED THE ASSESSING OFFICERS ACTION REJ ECTING BOOKS OF ACCOUNT U/S 145(3) OF THE ACT AND ALSO CONFIRMED TH E ESTIMATION OF GP AT 12% GIVING RISE TO ADDITION OF RS.11,24,013/- BY OBSERVING AS FOLLOWS :- 4.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND THE SUBMISSIONS MADE BY THE APPELLANT THE ADDITIONS MADE BY THE ID A O C HALLENGED BY THE APPELLANT THROUGH GROUND OF APPEAL NO 2 1 TO 4 1 ARE ANALYSED HEREUNDER. A; AO'S ACTION OF REJECTING THE BOOKS OF ACCOUNTS U /S. 145(3) AND ESTIMATING THE GP AND MAKING ADDITION OF RS.11,24,013/- ON ACCOUNT OF SUCH ESTIMATION THE APPELLANT HAD CHALLENGED CORRECTNESS OF A OS AC TION OF REJECTING HIS BOOKS OF ACCOUNTS U/S. 145(3) AND THE CONSEQUENT ESTIMATION OF HIS GP AND ADDITION OF 11.24 013/-. PERUSAL OF THE ASSESSMENT ORDER INDICA TES THAT THE A O HAD REJECTED THE BOOKS OF ACCOUNTS AND MADE ADDITIONS TO GP ON T HE PLEA THAT THE SAME WERE NOT REFLECTING THE TRUE AND CORRECT POSITION OF APP ELLANTS PROFITABILITY AND CONSEQUENT TAXABILITY WHILE CONCLUDING SO THE ID A O NOTED IHAT APPELLANTS GROSS PROFIT HAD FALLEN FROM 13 92% IN THE PRECEDING YEAR TO 8 6% IN THE CURRENT YEAR THE TURNOVER DISCLOSED DURING THE CORRESPONDING PER IOD WAS 3 35.60.936/- IN TNE CURRENT YEAR AS AGAINST 2 09.28.595/- IN THE PRECED ING YEAR THE A 0 WHILE EXAMINING THE BOOKS OF ACCOUNTS NOTED DISCREPANCIES , WHICH HAVE BEEN INDICATED ON PAGE-2. PAGE-3 & PAGE 4 OF THE ASSESSM ENT ORDER EXTRACTED ABOVE. THE ARGUMENTS OF THE APPELLANT CHALLENGING A OS ACT ION OF REJECTING THE BOOKS OF ACCOUNTS AND MAKING CONSEQUENT GP ADDITION ON THE B ASIS OF ESTIMATION HAVE BEEN ANALYSED AND HAVE BEEN FOUND TO NON MAINTAINAB LE HON'BLE APEX COURT IN THE CASE OF CIT VS BRITISH PAINTS INDIA LTD 188 ITR 44 HAVE HELD THAT IF THE METHOD OF ACCOUNTING FOLLOWED BY AN ASSESSEE. EVEN THOUGH CONSISTENTLY FOLLOWED, DOES NOT DISCLOSE TRUE AND PROPER INCOME, THE A O IS ENTITLED TO ADOPT APPROPRIATE COMPUTATION TO DETERMINE TRUE INCOME IN THE CASE OF VIJAY PROTEINS LTD VS ACIT 58 ITD 428 HON'BLE JUNSDICTIONAL TRIBUN AL HAVE HELD THAT GP ADDITION IS JUSTIFIED IF AN ASSESSEE FAILS TO PROVE GENUINEN ESS OF PURCHASES AGAIN IN THE CASE OF DCIT VS SAMEER DIAMOND EXPORTS PVT LTD 71 I TD 75 HON'BLE MUMBAI TRIBUNAL HAVE HELD THAT THE MERE FACT THAT BOOKS OF ACCOUNTS WERE CORRECT AND COMPLETE IN PRECEDING YEAR CANNOT BE A CONCLUSIVE P ROOF FOR THEIR BEING CORRECT AND COMPLETE IN SUBSEQUENT YEARS ALSO AND THAT ANY REJECTION OF BOOKS OF ACCOUNTS BASED ON ANY CONTEMPORARY AND CORROBORATIN G EVIDENCE WAS JUSTIFIED FURTHER, IN THE CASES OF CIT VS PARECK BROTHERS 167 ITR 344 (PATNA), RATANLAL OMPRAKASH VS CIT 132 ITR 640 (ORISSA) AND CHHABILDA S TNBHUVANDAS SHAH & OTHERS VS CIT 59 ITR 733 (SC) IT HAS BEEN HELD THAT REJECTION OF BOOKS OF ACCOUNTS ARE JUSTIFIED IF NO DAY TO DAY STOCK ACCOU NT IS MAINTAINED. IN THIS CASE, THE APPELLANT HAS NOT BEEN ABLE TO PROVE WITH DEMON STRATIVE EVIDENCES THAT THE ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 12 MISTAKES IDENTIFIED BY THE A O WERE NON MAINTAINABL E TO ILLUSTRATE IN THE REMAND REPORT DATED 10-1-2013 SUPRA, THE A O HAS STATED TH AT THE ENTRY OF RS 22,636/- PERTAINING TO ONE M/S SMGHAL SONS INTERNATIONAL IN RESPECT OF BILL DATED 19-11- 2008 IS NOT REFLECTED IN THE BOOKS OF ACCOUNTS THE APPELLANT HAS ARGUED THAT GOODS WORTH 4407 WERE RECEIVED BACK FROM THE-PARTY WHICH HAS BEEN INCLUDED IN THE REJECTION MATERIAL ACCOUNT ON 3-1-2009 THE APPE LLANT HAS BY WAY OF ADDITIONAL EVIDENCES ATTEMPTED TO GET ADMITTED A CO PY OF THE BILL DATED 19-11- 2008 FOR 22636/ AND A DEBIT NOTE OF A PARTY DATED 1 -1-2009 WITHOUT PREJUDICE TO THE ABOVE DECISION OF REJECTION OF IMPUGNED ADDITIO NAL EVIDENCES, IT IS SEEN THAT EVEN ON MERITS THE SAID EVIDENCE DO NOT SUPPORT APP ELLANTS CASE. THE DETAILS OF ITEMS IN TERMS OF QUANTITY, WEIGHT ETC INDICATED IN THE DEBIT NOTE DO NOT MATCH EVENLY WITH THE ITEM IN TERMS OF QUANTITY, WEIGHT E TC INDICATED ON THE SALE BILL DATED 19-11-2008. SAME IS THE CASE WITH THE ANOTHER ITEM OF RS. 2,20,543/- IN RESPECT OF ONE M/S SIDDHARTH ENTERPRISES. THE ARGUM ENT OF THE APPELLANT THAT THE DEBIT NOTE WAS ISSUED AND WHICH IS RECORDED IN THE REJECTION MATERIAL ACCOUNT HAVE BEEN FOUND TO BE SUFFERING FROM THE VICE OF MI ST-MATCH OF QUANTITATIVE AND QUALITATIVE DETAILS BETWEEN THE SALE BILLS AND THE DEBIT NOTES FURTHER THE APPELLANT HAS ADMITTED THAT STOCK REGISTER IS NOT MAINTAINED BY HIM A FACT WHICH IS ALSO CERTIFIED BY THE AUDITOR IN THE AUDIT REPORT IN FOR M 3CD AT SR NO 9(B) THE APPELLANT HAS ALSO NOT OFFERED ANY JUSTIFICATION F OR THE ERASERS AND OVERWRITING NOTED BY THE ID A O IN THE BILLS ISSUED BY THE PART Y NAMELY JIGAR PALATE SYSTEMS. THE APPELLANT HAS ALSO NOT BEEN ABLE TO CONTROVERT THE OBSERVATIONS OF THE A O AS TO WHY THE JOURNAL ENTRY ROUTE WAS ADOPTED FOR TRAN SACTIONS INVOLVING DISCREPANCIES NOTED BY THE A O. AGAIN THE APPELLANT HAS FAILED TO OFFER F ANY WORTHWHILE COMMENTS WITH COGENT EVIDENCES W R T DIS CREPANCIES NOTED BY THE A O PERTAINING TO TRANSACTIONS WITH NOVA FLEXI PACH P VT LTD. SHREEJI STRETCH FILM INDUSTRIES. JIGAR PALATE SYSTEM ETC IN VIEW OF THE DISCUSSIONS MADE IN THE PRECEDING PARAS, IT IS HELD THAT GIVEN THE GLARING MISTAKES NOTED BY THE ID A O IN THE BOOKS OF ACCOUNTS OF THE APPELLANT, THE ACTION OF THE ID A O IN REJECTING BOOKS OF ACCOUNTS U/S 145(3) IS A LEGALLY CORRECT DECISIO N AND THE CONSEQUENT ESTIMATION OF GP AND THE ADDITION OF RS 11 24.013/- ON ACCOUNT OF GP IS BASED UPON CORRECT UNDERSTANDING OF THE FACTS OF THE CASE . THE ADDITION MADE BY THE ID A O OF RS. 11.24.013/- IS THEREFORE CONFIRMED AND T HE CONNECTED GROUNDS OF APPEAL RAISED ARE DISMISSED. 8. FROM GOING THROUGH THE ABOVE OBSERVATIONS OF ASS ESSING AUTHORITY AND LD. CIT(A) WE FIND THAT THE MAIN REAS ON FOR REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING GP AT 12% WAS THAT ASSESSEE DID NOT PRODUCE ITEMWISE QUANTITATIVE DETAILS, DID NOT FILE PROPER EVIDENCE TO PROVE THE REJECTION OF MATERIAL, OVERALL LOWER G P RATE OF 8.65% AS AGAINST 13.92% AND SOME OTHER MISTAKES RELATING TO IMPROPER ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 13 VALUATION OF CLOSING STOCK AT HIGHER VALUE AND ALTE RATION IN PURCHASE BILLS. WE FURTHER OBSERVE THAT THERE ARE CERTAIN FA CTS WHICH ARE UNDISPUTEDLY ACCEPTED BY THE REVENUE WHICH ARE THAT ASSESSEES BOOKS OF ACCOUNTS ARE AUDITED U/S 44AB OF THE ACT A ND AS PER TAX AUDIT REPORT ASSESSEE IS MAINTAINING REGISTER FOR P URCHASE AND SALE, BANK BOOK, CASH BOOK, VAT REGISTER, JOURNAL REGISTE R. TAX AUDIT REPORT ALSO SHOWS THE QUANTITATIVE DETAILS OF GOODS TRADED BY THE ASSESSEE. ASSESSEE ALSO DEMONSTRATED WITH THE COPY OF ACCOUNTS OF M/S SIDDHARTH ENTERPRISE, CHENNAI THAT REJECTION OF MATERIAL WAS GENUINE. THE QUANTUM OF VALUE OF PURCHASE AND SALE HAS NOT BEEN DISPUTED AS THEY WERE FULLY VOUCHED. 9. WE FURTHER OBSERVE THAT LD. ASSESSING OFFICERS MAIN REASON OF REJECTING BOOKS OF ACCOUNT WAS LOWER GP RATE WHICH AS PER HIS OBSERVATION CAME DOWN TO 8.65% FROM 13.92% IN PRECE DING FINANCIAL YEAR. HOWEVER, ON PERUSAL OF TRADING ACCOUNT FOR FI NANCIAL YEAR 2007- 08 AND FINANCIAL YEAR 2008-09 WE OBSERVE THAT ASSES SEE HAS BEEN SHOWING COMMISSION INCOME IN TRADING ACCOUNT WHICH STOOD AT RS.18,94,598/- AND RS.5,92,562/- RESPECTIVELY. AS P ER THE WRITTEN SUBMISSIONS OF LD. AUTHORISED REPRESENTATIVE THIS C OMMISSION INCOME HAS BEEN EARNED FROM CADILA HEALTHCARE, CADI LA PHARMA ACME, NIRMA ETC. FOR RENDERING SERVICES WHICH HAS N O CONNECTION WITH THE PURCHASE AND SALES OF PLASTIC PACKING MATERIAL. THE DEFECTS OBSERVED BY ASSESSING OFFICER WAS IN RELATION TO BU SINESS CARRIED OUT IN RELATION TO PLASTIC PACKING MATERIAL AND IF GROS S PROFIT RATE IS WORKED OUT KEEPING ASIDE THE COMMISSION INCOME THE PICTURE OF COMPARATIVE ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 14 OF GROSS PROFIT RATE WITH COMMISSION AND WITHOUT CO MMISSION WILL BE AS FOLLOWS :- GROSS PROFIT (WITHOUT COMMISSION) ASST. YEAR 2009-10 2008-09 FINANCIAL YEAR 2008-09 2007-08 GROSS PROFIT 23,10,734 10,18,470 TURNOVER 3,35,60,936 2,09,28,595 GROSS PROFIT RATE 6.88% 4.86% GROSS PROFIT (WITH COMMISSION) ASST. YEAR 2009-10 2008-09 FINANCIAL YEAR 2008-09 2007-08 GROSS PROFIT 29,03,292 29,13,068 TURNOVER 3,35,60,936 2,28,23,193 GROSS PROFIT RATE 8.65% 12.76% ON PERUSAL OF THE ABOVE CHARTS WE FIND THAT WHEN TH E COMMISSION INCOME IS NOT CONSIDERED FOR CALCULATING GROSS PROF IT RATE THEN THE REAL PICTURE OF THE BUSINESS OF TRADING OF PACKING MATER IAL SHOWS THAT ASSESSEE HAS A BETTER GROSS PROFIT OF 6,88% AS AGAI NST 4.68% OF PRECEDING YEAR COUPLED WITH A BETTER TURNOVER FIGUR E OF RS.3,35,60,936/- AS AGAINST TURNOVER OF FINANCIAL Y EAR 2007-08 AT RS.2,09,28,595/-. THIS IS A KNOWN FACT THAT COMMISS ION INCOME IS A INDIRECT INCOME WHICH NORMALLY FORMS PART OF PROFIT AND LOSS ACCOUNT AND, THEREFORE,TRADING FIGURES (EXCLUDING COMMISSI ON) SHOWS THAT ASSESSEE HAS AN IMPROVED GROSS PROFIT RATE. ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 15 9.1 WE, THEREFORE, ARE OF THE VIEW THAT IN THE TOTA LITY OF FACTS AND OUR DISCUSSION MADE ABOVE WHEREIN ASSESSEE IS REGULARLY MAINTAINING BOOKS OF ACCOUNT WHICH ARE AUDITED, REGULAR RETURNS UNDER VAT HAVE BEEN FILED, NO MAJOR DEFECT IN THE QUANTUM OF PURCH ASE AND SALE HAS BEEN OBSERVED, QUANTITATIVE DETAILS OF CLOSING STOC K AS ON THE YEAR END HAS BEEN FURNISHED, DETAILS OF REJECTION OF MAT ERIAL DULY PROVIDED BEFORE THE LOWER AUTHORITIES AND ABOVE ALL A BETTER TURNOVER AND IMPROVED GROSS PROFIT, ACTION TAKEN BY LD. ASSESSIN G OFFICER REJECTING BOOKS OF ACCOUNTS IS HELD TO BE INCORRECT. WE, THER EFORE, ACCEPT THE TRADING RESULTS OF THE ASSESSEE AND DELETE THE IMPU GNED ADDITION OF RS.11,24,013/-. THESE GROUNDS OF ASSESSEE ARE ALLOW ED. 10. NOW WE TAKE UP GROUND NOS. 3 & 4 WHICH RELATE T O DISALLOWANCE OF INTEREST EXPENSES AND PROCESSING CHARGES OF RS.5 ,87,769/- ANDRS.1,29,509/- RESPECTIVELY RELATING TO FUNDS BOR ROWED FROM FINANCIAL INSTITUTIONS 11. BRIEF FACTS RELATING TO THESE GROUNDS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. ASSESSING OFFICER OBS ERVED THAT ASSESSEE PAID INTEREST OF RS.5,87,769/- ON VARIOUS PERSONAL LOANS OBTAINED FROM NON-BANKING FINANCIAL INSTITUTIONS AN D PROCESSING CHARGES OF RS.1,29,509/- WERE PAID FOR GETTING THES E LOANS. HOWEVER, AS THE ASSESSEE WAS UNABLE TO PROVE WITH SUPPORTING EVIDENCE THAT ALL THE BORROWED FUNDS WERE UTILISED FOR BUSINESS P URPOSES AND NO TDS HAS BEEN DEDUCTED ON SUCH PAYMENTS AS WELL AS P ROCESSING CHARGES THE IMPUGNED INTEREST PAYMENT OF RS.5,87,76 9/- AND ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 16 PROCESSING CHARGES OF RS.1,29,509/- WERE DISALLOWED . WHEN THE MATTER CAME UP BEFORE LD. COMMISSIONER OF INCOME TA X(A) THE GROUND OF ASSESSEE WAS DISMISSED BY LD. COMMISSIONE R OF INCOME TAX(A) BY OBSERVING AS FOLLOWS :- B) THE ACTION OF THE A.O. IN MAKING ADDITION OF RS. 5, 87,769/- ON ACCOUNT OF INTEREST EXPENSES AND 1,29,509/- ON ACCOUNT OF P ROCESSING CHARGES. THE APPELLANT HAS CLAIMED INTEREST EXPENSES OF RS. 5,87.769/- ON THE PLEA OF SAME BEING RELATABLE TO CAPITAL BORROWED FROM NBFCS UTILISED FOR THE PURPOSES OF BUSINESS. FURTHER AN AMOUNT OF RS 1 29.509/- IS CLA IMED TO HAVE BEEN PAID TO SUCH NBFCS FOR PROCESSING APPELLANTS REQUEST FOR GR ANT OF LOAN IN THE ASSESSMENT ORDER MENTIONED SUPRA, THE A O HAD NOTED THAT NO SUPPORTING EVIDENCE IN RESPECT OF BORROWED CAPITAL UTILISED FO R THE PURPOSES OF BUSINESS WAS PROVIDED THE A O FURTHER HELD THAT NO TDS HAS BEEN DEDUCTED ON THE IMPUGNED INTEREST PAYMENTS. CONSEQUENTLY, THE AMOUNT OF RS. S.87.769/- WAS ADDED BACK THE AMOUNT OF RS 1.29.509/- BEING THE PROCESSING CH ARGES PAID WITH RESPECT OF ABOVE LOANS WAS ALSO ADDED BACK SINCE THE NEXUS BET WEEN THE BORROWED CAPITA! AND THE PURPOSES OF BUSINESS REMAINED UNEXPLAINED. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAS ATTEMPTED TO PRODUCE ADDITIONAL EVIDENCES CONTAINING DETAILS OF AMOUNTS RECEIVED FROM NBFCS A ND ITS NEXUS WITH THE PURPOSES OF BUSINESS. IT HAS BEEN HELD IN THE PRECE DING PARAS THAT THE ADDITIONAL EVIDENCES PURPORTED TO BE INTRODUCED BY THE APPELLA NT CANNOT BE ACCEPTED IN VIEW OF REASONS GIVEN THEREIN WITHOUT PREJUDICE TO THE SAME IT IS SEEN THAT EVEN ON MERITS THE SAID ADDITIONAL EVIDENCE DOES NOT SUP PORTS APPELLANTS CASE TO ILLUSTRATE THE APPELLANT HAS GIVEN A TABULAR CHART INDICATING NAME OF THE NBFC. DATE OF RECEIPT OF LOAN, AMOUNT THEREOF NAME OF PARTY AMOUNT THEREOF AND CHEQUE NUMBER ACCORDING TO APPELLANT, AN AMOUNT OF RS 9.71.695/- WAS RECEIVED FROM BARCLAYS ON 8-10-2008 THE CORRESPONDING UTILISATION IS TOTALLY INEXPLICABLE SINCE ACCORDING TO APPELLANT HE PAID RS 9 36.000/- BY CHE QUE NO.909704 TO A PARTY NAMED JIGAR PALATES ON 3-10-2008. NOW HOW CAN A PAY MENT MADE ON 3.10.2008 TO BE LINKED TO AN AMOUNT OF LOAN WHICH WAS RECEIVED ON 8-10-200 8 AGAIN AN AMOUNT OF RS. 5.40.629/- RECEIVED FROM HDFC ON 24-1 0-2008 IS LINKED TO A PAYMENT TO JIGAR PALATES OF RS. 4.00.000/- ON 24-10 -2008. IN THIS DETAIL, THE CHEQUE NUMBER IS NOT GIVEN AND THERE IS AN OVERWRIT ING ON THE DATE OF PAYMENT. THE GENUINENESS OF THE TRANSACTION HENCE REMAINS UN EXPLAINED THUS, THE EVIDENCES PRODUCED BY THE APPELLANT ALSO DO NOT SUP PORT ITS CASE ON THE ISSUE OF THE ADDITION OF RS 5.87.769/- BEING MADE BY THE ID A O ON THE PLEA OF NON DEDUCTION OF TAX THE APPELLANT HAS PLAC ED HIS RELIANCE UPON THE DECISION OF SPECIAL BENCH OF HON'BLE HAT VISHAKHAPA TTANAM IN THE CASE OF MERYLME FINANCE WHEREIN IT WAS HELD THAT PROVISIONS OF SECTION 40(A){IA) ARE ONLY APPLICABLE IN RESPECT OF UNPAID AMOUNTS OUTSTANDING ON THE LAST DAY OF THE ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 17 FINANCIAL YEAR. THE APPELLANT HAS ARGUED THAT THE A DDITION U/S. 40(A)(IA) IS ALSO UNWARRANTED AS THE ENTIRE AMOUNT OF INTEREST WAS PA ID DURING THE YEAR AND NOTHING WAS OUTSTANDING. THE APPELLANT HAS THUS ADM ITTED THAT TDS WAS NOT DEDUCTED ON THE IMPUGNED AMOUNT OF INTEREST. AS FAR AS THE DECISION OF HON'BLE ITAT. VISHAKHAPATANNAM IS CONCERNED, THE SAME HAS B EEN, AT THE BEHEST OF THE DEPARTMENT MADE IN OPERATIONAL BY HON BLE ANDHRA PR ADESH HIGH COURT AND THE DECISION HAS BEEN TEMPORARILY SUSPENDED (I1TAMP NO 908 OF 2012 IN ITTA NO 384 OF 2012} CONSEQUENTLY THERE IS NO FORCE IN THE ARGUMENT OF THE APPELLANT ON THE CONTROVERSY OF PAID AND PAYABLE' WHICH SOLELY H AS ARISEN FROM THE DECISION OF THE HON BLE ITAT VISHAKHAPATANNAM IN THE CASE OF ME RLYNE FINANCE SUPRA THE ADDITION OF RS. 1.29 509/- PERTAINING TO PROCES SING CHARGES PAID FOR THE ABOVE LOANS TAKEN FROM NBFCS HAS ALSO BEEN EXAMINED AS DISCUSSED ABOVE, AS CLEAR NEXUS BETWEEN BORROWINGS' AND ITS UTILI SATION WITH BUSINESS REMAINS UN-ESTABLISHED IN THIS CASE CONSEQUENTLY, THE PROCE SSING CHARGES WHICH ARE CONNECTED WITH THESE LOANS CANNOT BE TAKEN AS GENUI NE BUSINESS EXPENSES. IN VIEW OF THE DISCUSSIONS MADE IN THE PRECEDING PA RAS, IT IS HELD THAT THE ADDITION OF RS. 5,87,769/- ON ACCOUNT OF INADMISSIBLE INTERE ST EXPENSES AND OF RS. 1.29.509/- ON ACCOUNT OF INADMISSIBLE PROCESSING CH ARGES MADE BY THE AO IS BASED UPON CORRECT UNDERSTANDING OF THE FACTS OF TH E CASE AND THE CONTEMPORARY STATUTE. ACCORDINGLY, THE ADDITION MADE BY THE A O OF RS.5,87,769/- AND RS. 1.29.509/- IS CONFIRMED AND THE CONNECTED GROUNDS O F APPEAL STANDS DISMISSED. 12. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 13. LD. AUTHORISED REPRESENTATIVE THROUGH HIS WRITT EN SUBMISSIONS SUBMITTED THAT - OUT OF INTEREST CLAIM RS.5,87,769/- U/S 194A DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS AL READY PAID INTEREST OF RS 5.87.769/- TO VARIOUS NON BA NKING FINANCE COMPANIES AND NOTHING REMAINS OUTSTANDING AS ON 37' MARCH 2009. THE ASSESSEE HAS BORROWED MONEY FROM NBFC FOR THE PURPOSE OF BUSINESS TAX IS ALSO NOT REQUIRED TO B E DEDUCTED IN CASE OF ANY NOTIFIED INSTITUTION. BODY OR ASSOCIATION. A. RELIANCE CAPITAL B. ICICI BANK. C GE MONEY ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 18 D BARCLAYS C HOF : C BANK F. ATTN-AMRO BANK TEJA CONSTRUCTION V. ASST. CIT (2010) 35(11) ITCL 4 50 (HYDA-TRIB) : 2010 129 TTJ (HYDA-TRIB) 57 (2010) 36 DTP (HYDA-TRI B) 220 THERE IS A CONNECTION BETWEEN EXPENDITURE CLAIMED BY THE ASSES SEE AND MAKING NON DEDUCTION OF TDS. IN THE PRESENT CAS E THE PAYMENT IS NOT IN DISPUTE AND ON THE ISSUE WHETHER TAX IS T O BE DEDUCTED AT SOURCE ON SUCH PAYMENT IS NOT FREE FROM DOUBT. IN A NY CASE, IF THE ASSESSEE HAS PAID THE IMPUGNED AMOUNT AND SAME IS N OT PAYABLE AT THE END OF THE YEAR ON THE DATE OF BALANCE SHEET, T HEN THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE. IT IS ONLY APPLICABLE IN RESPECT OF 'PAYABLE AMOUNT' SHOWN IN THE BALANCE SHEET AS O UTSTANDING EXPENSES ON WHICH TDS HAS NOT BEEN MADE. FURTHER TA X IS DEDUCTED U/S. 193. 194A. 194C, 194H AND 194J CITHER AT THE T IME OF PAYMENT OR AT THE TIME OF GIVING CREDIT TO THE RECIPIENT HOWEV ER, SECTION 40(A)(IA) IS APPLICABLE ONLY IN RESPECT OF TDS DEDUCTION AMOU NT IS PAYABLE' THERE IS DIFFERENCE BETWEEN THE WORD 'PAID' OR PAYA BLE, THE LEGISLATURE USED THE WORD VERY CAREFULLY IN SECTION 40(A)(IA) AND IN ALL ITS WISDOM AT THE TIME OF INCORPORATING THE SECTION BY WAY OF FINANCE (NO. 1) BILL 2004 IT WAS INSERTED IN SECTION 40(A)( IA) THAT THE AMOUNT PAYABLE TO CONTRACTOR OR SUBCONTRACTOR LIABLE FOR D ISALLOWANCE, ITS TDS NOT DEDUCTED. SECTION 40(A)(IA) HAS TO BE SUBJECTED TO STRICT INTERPRETATION. GOING BY THE RULE OF STRICT INTERPR ETATION THE DEFAULT WITH REFERENCE TO ACTUAL PAYMENT OF EXPENDITURE WOULD NO T ENTAIL DISALLOWANCE. THIS IS BECAUSE THE LANGUAGE USED IN THE SECTION 40(A)(IA) IS VERY SIMPLE, CLEAR AND UNAMBIGUOUS. AS SUCH THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE IN THE PRESENT FACTS OF THE CASE. THE DISALLOWANCE, IF ANY REQUIRED TO BE MADE SHALL BE RESTRICTED TO THE EXTENT OF PAYABLE S HOWN IN THE BALANCE SHEET END OF THE YEAR. WITHOUT PREJUDICE TO THE ABOVE, BASED ON THE RELIAN CE ON THE SAME BOOKS FOR THE PURPOSE OF INVOKING THE PROVISION OF SECTION 40(A)(IA) IS IMPROPER. THE ESTIMATION OF INCOME TAKES CARE OF TH E IRREGULARITIES ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 19 COMMITTED BY THE ASSESSEE FURTHER ADDITION BY INVOK ING SECTION 40(A)(IA) AMOUNTS TO PUNISHING THE ASSESSEE FOR A S AME OFFENCE ON DOUBLE OCCASIONS WHICH IS NOT PERMITTED BY LAW THER E IS A CONNECTION BETWEEN EXPENDITURE CLAIMED BY THE ASSESSEE AND MAK ING NON DEDUCTION OF TDS PROCESSING CHARGE CLAIM RS.1,29,509/~U/S.37(1) FINANCIAL CHARGES. LEGAL CHARGES AND PROFESSIONAL C HARGES AND UPFRONT FEE PAID FOR OBTAINING LOAN IS A REVENUE EX PENDITURE ALLOWABLE AS EXPENDITURE IT WAS HELD IN THE CASE OF SHRI RAMA MULTITECH LTD. V. CIT (2005) 92 TTJ (AHD-TRIB) 568 RELIANCE IS PLACED IN THE JUDGMENT OF CIT V. SRI ME ENAKSHI MILLS LTD (2007) 290 ITR 107 (MAD.) IT WAS HELD THAT UPFRONT FEE PAID BY ASSESSEE TO THE BANK IS NOTHING BUT THE BANK CHARGE S AND THE SAME CAN NOT BE CONSTRUED AS A CAPITAL EXPENDITURE. SEVE RAL OTHER HIGH COURT HAS DELIVERED JUDGMENT IN FAVOUR OF THE ASSES SEE HOLDING THAT SUCH EXPENDITURE IS A REVENUE EXPENDITURE ASSESSEE HAS TAKEN UNSECURED LOAN FROM VARIOUS NON BANKING FINANCE COMPANIES FOR BUSINESS PURPOSE. ASSESSEE HA S PAID PROCESSING CHARGES TO THE NBFC FOR AVAILING UN SECURED LOAN. XEROX COPY OF SANCTIONED LETTER IS ENCLOSED HEREWIT H. LEDGER ACCOUNT FOR PAYMENT OF PROCESSING FEES IS ENCLOSED HEREWITH. RELIANCE IS ALSO PLACED IN THE JUDGMENT OF INDIA CE MENT LTD V. DY. CIT (2006) 6 SOT 585 (DEL-TRIB) 14. ON THE OTHER HAND LD. DEPARTMENTAL REPRESENTATI VE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 15. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THROUGH THESE GROUNDS ASSESSEE HA S CHALLENGED THE COMMISSIONER OF INCOME TAX(A)S ORDER CONFIRMIN G DISALLOWANCE ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 20 OF INTEREST OF RS.5,87,769/- PAID TO FINANCIAL INST ITUTIONS AND RS.1,29,509/- PAID AS PROCESSING CHARGES. TWO ISSUE S EMERGED OUT OF THESE GROUNDS FIRSTLY WHETHER PERSONAL LOANS TAK EN BY ASSESSEE ARE FOR THE PURPOSE OF BUSINESS OR NOT AND SECONDLY IF THEY ARE FOR THE PURPOSE OF BUSINESS THEN WHETHER DISALLOWANCE IS CA LLED FOR U/S 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TDS. REGA RDING THE FIRST ISSUE AS THE LOAN TAKEN FOR BUSINESS PURPOSE OR NOT , WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSE E WAS UNABLE TO SUBSTANTIATE WITH SUPPORTING EVIDENCE TO PROVE T HAT THE BORROWED FUNDS WERE UTILIZED FOR BUSINESS PURPOSES. THEREAFT ER WHEN THE MATTER CAME UP BEFORE LD. COMMISSIONER OF INCOME TA X(A) AN ATTEMPT WAS MADE BY THE ASSESSEE TO PROVE THE NEXUS OF THE BORROWED CAPITAL FOR THE PURPOSE OF BUSINESS. LD. C OMMISSIONER OF INCOME TAX(A) HAS GIVEN FEW INSTANCES IN HIS ORDER WHEREIN FIRSTLY IN THE CASE OF LOAN FROM BARCLAYS BANK OF RS9,71,695/- RECEIVED ON 8.10.2008 WHICH HAS BEEN SHOWN TO BE UTILIZED FOR M AKING PURCHASES FROM M/S JIGAR PALATES ON 3.10.2008 SHOWING THAT TH E PAYMENT WAS MADE 5 DAYS AFTER THE DATE OF CHEQUE AND SECONDLY A GAIN IN THE CASE OF JIGAR PALATES LD. COMMISSIONER OF INCOME TAX(A) DID NOT ACCEPT THE UTILIZATION OF HDFC LOAN TOWARDS PURCHASES WHIC H HAPPENED TO BE ON THE SAME DATE BUT THERE WAS A OVERWRITING ON THE DATE OF PAYMENT. APART FROM THESE TWO OBSERVATIONS NOTHING ELSE HAS BEEN BROUGHT ON RECORD. 16. WE FURTHER OBSERVE THAT ASSESSEE IN ITS AUDITED BALANCE SHEET PLACED AS ON 31.3.2009 AT PAGE 28 OF THE PAPER BOOK ALONG WITH SCHEDULE B OF UNSECURED LOAN AT PAGE 31 SHOWS A LI ST OF UNSECURED ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 21 LOAN OF RS.44,60,171/- WHICH INTER ALIA INCLUDES AL LEGED BUSINESS LOANS FROM ABN AMRO, BABAA CHEM, BARCLAYS, DCB BANK , GE MONEY, HDFC, ICICI BANK PL, ICICI LOAN A/C., RELIAN CE CAPITAL PL. WHEN WE FURTHER PERUSED THE AUDITED BALANCE SHEET A S ON 31.3.2008 AT PAGE 78 OF PAPER BOOK DATED 13.7.2016, WE CAME A CROSS LIST OF UNSECURED LOAN OF RS.3,140,467/- WHICH INCLUDES LOA N FROM ABN AMRO, BABAA CHEM, BARCLAYS, DCB BANK, GE MONEY, HDF C, ICICI BANK PL. THESE TWO DETAILS SHOW THAT MOST OF THE PE RSONAL LOANS ARE BEING BROUGHT FORWARD FROM PREVIOUS YEAR AND SOME A RE TAKEN FRESH DURING FINANCIAL YEAR 2008-09. ON FURTHER PERUSAL O F THE BALANCE SHEET AND MORE PARTICULARLY THE FIXED ASSETS CHART AT PAGE 33 OF THE PAPER BOOK DATED 8.6.2016 WE FIND THAT IT CONTAINS INVESTMENT IN RESIDENCE AT FLAT NO.603 IN WHICH OPENING VALUE AS ON 1.4.2008 IS SHOWN AT RS.1,164,085/- WITH A FURTHER ADDITION DUR ING THE YEAR AT RS.3,07,502/- AND RS.5,74,340/- WHICH IN TOTAL INVE STMENT IN RESIDENTIAL FLAT AT RS.2,045,927/-. AS AGAINST THIS INVESTMENT IN RESIDENTIAL HOUSE ASSESSEE HAS SHOWN SECURED HOME L OAN FROM RELIANCE HOME LOAN AT RS.8,31,636/- IN OVERALL PERS PECTIVE THERE SEEMS TO BE A FAIR POSSIBILITY THAT SOME PORTION OF THE PERSONAL LOANS MIGHT HAVE BEEN DIVERTED TO THE INVESTMENT IN RESID ENTIAL HOUSE. APART FROM THIS, ASSESSEE HAS BEEN UNABLE TO SPECIF ICALLY PROVE THAT BORROWED FUNDS HAVE BEEN UTILIZED FOR THE PURPOSE O F BUSINESS ONLY. WE FURTHER OBSERVE THAT ASSESSEE HAS CLAIMED INTERE ST EXPENSES AT RS5,70,075/- DURING FINANCIAL YEAR 2007-08 AND AN INTEREST OF RS.7,77,896/- IN FINANCIAL YEAR 2008-09. ALSO ASSES SEE HAS NOT CLAIMED ANY DEDUCTION FOR INTEREST PAID ON HOUSING LOANS UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS WELL AS U/S 80 C OF THE ACT. THE ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 22 REASONS FOR ALL THESE DISCUSSION THAT ASSESSEE IS H AVING BORROWED FUNDS ON ACCOUNT OF HOME LOANS, PERSONAL LOANS FRO M FINANCIAL INSTITUTIONS AS WELL AS FROM BANKS AND ALL THESE FU NDS HAVE BEEN UTILIZED EITHER FOR BUSINESS OR FOR PROVIDING LOANS AND ADVANCES OR INVESTMENT INTO RESIDENTIAL HOUSE. FURTHER THERE IS NO DETAILS AVAILABLE OF THE INTEREST PAID NOR IS THERE ANY DISALLOWANCE IN THE COMPUTATION OF INCOME TOWARDS THE INTEREST PAID ON HOUSING LOAN S. THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, MATT ER NEEDS TO BE RE- EXAMINED BY THE ASSESSING AUTHORITY SPECIFICALLY FO R THE LOANS TAKEN DURING FINANCIAL YEAR 2008-09 AND ASSESSEE IS REQUI RED TO SUPPLY NECESSARY INFORMATION AND SUPPORTING EVIDENCES TO P ROVE THAT PERSONAL LOANS TAKEN FROM NON BANKING FINANCIAL INS TITUTIONS DURING FINANCIAL YEAR 2008-09 HAVE BEEN UTILIZED SPECIFICA LLY FOR THE PURPOSE OF BUSINESS AND NOT FOR PERSONAL PURPOSES. LD. ASSE SSING OFFICER HAS ALSO TO EXAMINE ALL EXPENDITURE FOR INTEREST CLAIME D WITH SPECIFIC DETAILS OF INTEREST PAID ON PERSONAL LOANS AND HOUS ING LOANS AND IF EXPENSES INCLUDE INTEREST PAID ON HOME LOAN TO RELI ANCE CAPITAL OR OTHERS THE SAME NEEDS TO BE DISALLOWED. AS FAR AS O THER PERSONAL LOANS TAKEN DURING THE YEAR, IF LD. ASSESSING OFFIC ER IS SATISFIED THAT THEY HAVE BEEN UTILIZED FOR THE PURPOSE OF BUSINESS THEN WITH REGARD TO DISALLOWANCE U/S 40(A)(IA) OF THE ACT FOR NON-DE DUCTION OF TDS. ISSUE IS NOW WELL SETTLED BY THE JUDGMENT OF HON. D ELHI HIGH COURT IN THE CASE OF IN THE CASE OF CIT VS. ANSAL LANDMARK TOWNSHIPS PVT. LTD. (ITA NO.160/2015 DTD.26.8.2015) OBSERVING THAT THE INSERTION OF SECOND PROVISO INSERTED BY THE FINANCE (NO. 2) ACT, 2004.TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1ST APRIL, 2005,AND TO BE GIVEN RETROSP ECTIVE EFFECT AND TO ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 23 BE APPLIED IN THE CASES WHERE TDS HAS NOT BEEN DEDU CTED ON THE PAYMENTS BUT EXPENSES SHOULD BE ALLOWED IF ASSESSE E IS ABLE TO PROVE THAT THE PAYEE ALSO HAS INCLUDED THE RECEIPT FROM ASSESSEE IN THE RETURN OF INCOME AND PAID DUE TAXES. ACCORDINGL Y LD. ASSESSING OFFICER MAY ASK THE ASSESSEE TO FURNISH A CERTIFICA TE OF CHARTERED ACCOUNTANT AS WELL AS COPIES OF INCOME-TAX RETURNS OF THE ALLEGED FINANCIAL INSTITUTIONS WHICH CAN PROVE THAT INTERES T PAID BY THE ASSESSEE HAS BEEN INCLUDED IN THEIR INCOME. NEEDLES S TO MENTION THAT PROPER OPPORTUNITY OF BEING HEARD MAY BE GIVEN TO THE ASSESSEE TO PROVIDE ALL THE DETAILS AND ASSESSEE HAS TO ADHE RE TO AND COMPLY WITH THE INSTRUCTIONS AND DETAILS CALLED FOR BY THE ASSESSING OFFICER, ON THE GIVEN DATES. 17. WE FURTHER OBSERVE THAT AS REGARDS PROCESSING C HARGES OF RS.1,29,509/- IS CONCERNED THEY WILL BE ALLOWED ONL Y IN RESPECT OF PERSONAL LOANS UTILIZED FOR BUSINESS PURPOSES WHICH WILL DEPEND ON THE RESULT OF THE FRESH EXAMINATION TO BE CARRIED O UT BY THE ASSESSING OFFICER AS DISCUSSED IN THE PRECEDING PARAGRAPH. AC CORDINGLY, BOTH THE GROUNDS OF ASSESSEE RELATING TO DISALLOWANCE OF INTEREST OF RS.5,87,769/- AND PROCESSING CHARGES OF RS.1,29,509 /- ARE SET ASIDE FOR STATISTICAL PURPOSES. 18. NOW WE TAKE UP GROUND NO.5 WHICH READS AS UNDER :- 5. THAT THE ASSOCIATION EXPENSES OF RS.79,000/- CLAIMED BY THE APPELLANT IS FOR THE PURPOSE OF BUSINESS OF THE APP ELLANT AND ON THE PRINCIPLE OF COMMERCIAL EXPEDIENCY THE SAID EXPENDITURE IS ADMIS SIBLE DEDUCTION U/S 30 TO 37 OF THE I.T. ACT 1961 WHICH LEARNED CIT(A), OUGHT TO HA\/E ALLOWED. ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 24 19 BRIEF FACTS RELATING TO THIS GROUND ARE THAT ASS ESSEE HAS DEBITED A SUM OF RS.79,000/- UNDER THE HEAD ASSOCIATION EXP ENSES BUT WHEN THE SUPPORTING EVIDENCE IN THE FORM OF COPY OF RECE IPT WERE EXAMINED IT WAS OBSERVED BY THE ASSESSING OFFICER THAT NONE OF THEM WAS IN THE NAME OF ASSESSEE AND THEREFORE CONSIDERED IT TO BE NON-GENUINE PAYMENT NOT RELATING TO THE BUSINESS. EVEN WHEN THE MATTER CAME UP BEFORE LD. COMMISSIONER OF INCOME TAX(A) THE GROUND OF ASSESSEE WAS DISMISSED BY OBSERVING AS UNDER :- C) ADDITION OF RS. 79,000/- ON ACCOUNT OF ASSOCIATION EXPENSES THE A O HAD NOTED THAT THE RECEIPTS PRODUCED BY THE APPELLANT IN SUPPORT OF ITS CLAIM OF ASSOCIATION EXPENSES WERE NOT IN HIS NAME AND HENCE THE SAME WERE SUFFERING FROM THE VICE OF BEING GENUINE BUSINESS E XPENSES THE APPELLANT HAS ARGUED THAT IT HAS BOUGHT A PROPERTY AND THE RECEIP TS ARE IN NAME OF ORIGINAL OWNER FROM WHOM THE SAID PROPERTY WAS BOUGHT. BY WA Y OF ADDITIONAL EVIDENCES, THE APPELLANT HAS ATTEMPTED TO PRODUCE A COPY OF TH E PURCHASE AGREEMENT OF THE IMPUGNED PROPERTY IT HAS BEEN HELD IN THE PRECEDING PARAS THAT THE ADDITIONAL EVIDENCES PURPORTED TO BE INTRODUCED BY THE APPELLA NT CANNOT BE ACCEPTED IN VIEW OF REASONS GIVEN THEREIN WITHOUT PREJUDICE TO THE SAME, IT IS SEEN THAT EVEN ON MERITS THE SAID ADDITIONAL EVIDENCE DOES NOT SUP PORTS APPELLANTS CASE TO ILLUSTRATE THE PURCHASE AGREEMENT FILED BY THE APPE LLANT CLEARLY INDICATES AT CLAUSE NO 10 OF THE AGREEMENT THAT THE LIABILITY FOR PAYME NT OF ALL THE OUTSTANDING EXPENSES AS ON THE DATE OF SALE SHALL BE THAT OF TH E SELLER. THE RECEIPTS AVAILABLE ON RECORDS INDICATE THAT THE PAYMENTS DEMANDED BY T HE SOCIETY PERTAIN TO THE PERIOD PRIOR TO THE DATE OF SALE AGREEMENT NOW WHEN THE AGREEMENT STIPULATED THAT THE OUTSTANDING EXPENSES SHALL BE BORNE BY THE SELLER , THE APPELLANT CANNOT BE ALLOWED ANY DEDUCTION THEREFROM. ACCORDINGLY IT IS HELD THAT THE ADDITION OF RS.79,000- MADE BY THE A O IS BASED UPON CORRECT UN DERSTANDING OF THE FACTS OF THE CASE AND HENCE THE SAME IS CONFIRMED AND THE CO NNECTED GROUND OF APPEAL STANDS DISMISSED. 20. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 21. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT IT HAS PURCHASED THE PROPERTY VIDE PURCHASE DEED DATED 4.3.2008 FOR A TOTAL ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 25 CONSIDERATION OF RS.10,35,000/- IN ARSI CO-OP. HOUS ING SOCIETY LTD, OPPOSITE GUJARAT COLLEGE, AHMEDABAD AND MAINTENANCE CHARGES OF RS.79,000/- FOR FINANCIAL YEAR 2008-09 TOWARDS COMM ON ELECTRIC EXPENSES, LIFT, SWEEPER AND WATER CHARGES WAS PAID. PAYMENTS HAVE BEEN MADE FOR OFFICE PURPOSES BUT RECEIPTS HAVE BEE N ISSUED IN THE NAME OF FAMILY MEMBERS WHO HAVE PAID THE AMOUNT. TH E OFFICE WAS PURCHASE ON 4.3.2008. HOWEVER, THE PRIOR PERIOD EXP ENSES HAVE BEEN INCURRED ON THE PRINCIPLE OF COMMERCIAL EXPED IENCY AND, THEREFORE, THE IMPUGNED AMOUNT OF RS.79,000/- SHOUL D HAVE BEEN ALLOWED. 22. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 23. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. ASSESSEE IS AGGRIEVED WITH THE DI SALLOWANCE OF RS.79,000/- TOWARDS ASSOCIATION EXPENSES RELATING T O MAINTENANCE CHARGES, PAID TO THE CO-OPERATIVE HOUSING SOCIETY. WE OBSERVE THAT UNDISPUTEDLY RECEIPTS SUBMITTED RELATING TO EXPENSE S OF RS.79,000/- DO NOT HAVE THE NAME OF ASSESSEE. FURTHER PAYMENTS MADE RELATE TO FINANCIAL YEAR 2006-07, 2007-08, FLAT TRANSFER FEES ETC. WHICH HAVE BEEN PAID TO SHRI HARSHAD R. SHAH, BHAVNA K. GOR AN D, SHANTABEN B. SHAH. WE FURTHER OBSERVE THAT THE AUDITED BALANC E SHEET OF THE ASSESSEE FILED ON 31.3.2009 UNDER THE HEAD FIXED A SSET THERE IS NO OFFICE BUILDING SHOWN RATHER AT SL.NO. 9 OF THE SCH EDULE HOUSE- RESIDENCE IS SHOWN AT RS 3,38,380/- AND AT SL.10 INVESTMENT IN RESIDENCE AT FLAT NO.603 IS SHOWN AT RS 20,45,927/- IT SEEMS THAT ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 26 ASSESSEE HAS PAID THE IMPUGNED EXPENSES OF RS.79,00 0/- WITH RELATION TO THE RESIDENCE AT FLAT NO.603 AND THE EX PENSES ALSO RELATES TO COMMON MAINTENANCE, ELECTRICITY CHARGES ETC. IN THE GIVEN FACTS OF THE CASE AS WELL AS RECEIPTS OF THE IMPUGNED EXPENS ES IT IS VERY WELL EVIDENT THAT ASSESSEE HAS MISERABLY FAILED TO PROVE THAT THE IMPUGNED EXPENSES OF RS.79,000/- HAS BEEN MADE TOWA RDS BUSINESS EXPENDITURE NO CONCRETE EVIDENCE HAS BEEN PLACED BEFORE THE LOWER AUTHORITIES AND EVEN BEFORE US. WE, THEREFORE, ARE OF THE VIEW THAT LD. ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE ASSOCI ATION EXPENSES OF RS.79,000/-. WE, THEREFORE, FIND NO REASON TO INTER FERE WITH THE ORDER OF LD. COMMISSIONER OF INCOME TAX(A) AND ACCORDINGL Y DISMISS THIS GROUND OF ASSESSEE. 24. NOW WE TAKE UP GROUND NO.6 WHICH READS AS UNDER :- 6. THAT THE LEARNED A.O. HAS DISALLOWED LUMP SUM EX PENSES OF RS. 50,000/- OUT OF TRANSPORT EXPENDITURE OF RS.2,26,464/- AND CONFI RMED BY LEARNED CIT(A) WHICH IS ADMISSIBLE EXPENSE CONSIDERING THE FACTS AND CIR CUMSTANCES OF THE CASE /THE SAME REQUIRES TO BE ALLOWED. 25. BRIEF FACTS RELATING TO THIS GROUND ARE THAT WH EN THE TRANSPORT EXPENSES OF RS.2,26,464/- WERE EXAMINED BY LD. ASSE SSING OFFICER HE OBSERVED THAT THEY WERE PAID TO ONE SHRI RAMSINGHBH AI AND PAYMENTS ARE IN THE NATURE OF CASH. ASSESSEE COULD NOT PRODUCE ANY VOUCHER IN RESPECT OF SUCH PAYMENT AND ACCORDINGLY THE ADDITION OF RS.50,000/- WAS MADE. WHEN THE MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY ADDITION OF RS.50,000/- WAS CON FIRMED BY LD. COMMISSIONER OF INCOME TAX(A) BY OBSERVING AS UNDER :- ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 27 E) ACTION OF A O IN MAKING ADDITION OF RS. 50.000 ON A CCOUNT OF TRANSPORTATION CHARGES DURING THE ASSESSMENT PROCEEDINGS, THE A O NOTED TH AT APPELLANT HAS DEBITED AN AMOUNT OF RS 2.20.464/- UNDER THE HEAD TRANSPORT EX PENSES AND THAT MAJORITY OF THESE WERE MADE TO ONE RAMSMGBHAI BEFORE THE A O TH E SAID RAMSINGHBHAI WAS STATED TO BE A LABOURER SINCE NO VOUCHERS WERE PRODUCED THE A O ADDED BACK AN AMOUNT OF RS. 50.000A ON ESTIMATE BASIS IT IS THE CASE OF THE APPELLANT THAT THE SAID RAMSMGBHAI IS PROPRIETOR OF M/S. AKSH AR CARGO MOVERS AND HAS PROVIDED THE SERVICES OF A TRANSPORTER TO HIM DURIN G THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS ATTEMPTED TO INTRODU CE A COPY OF A TRANSPORT ACCOUNT AND COPIES OF BILLS RAISED BY SAID M/S AKSH AR CARGO MOVERS AS ADDITIONAL EVIDENCES IN HIS REMAND REPORT DATED 10-1-13 SUPRA, THE ID A O HAS STATED THAT IMPUGNED ADDITION IS JUSTIFIED AS THE PROVISIONS OF SECTION 40(A)(IA) ARE ALSO ATTRACTED SINCE NO IDS WAS DEDUCTED AGAINST PAYMENT MADE TO THE TRANSPORT CONTRACTOR. THE APPELLANT HAS ARGUED THAT 40(A)(IA) ARE NOT ATTRACTED SINCE RAMSMGBHAI IS PROPRIETOR OF M/S AKSHAR CARGO MOVERS HAS PA NO BEING AHPPR 7753K AND THEREFORE PROVISIONS OF SECTION 194C(6) A RE ATTRACTED THE ARGUMENT OF THE ID A O OF COVERING THE ADDITION U/S 40(A)(IA) C ANNOT BE ACCEPTED SINCE IT WAS NOT INVOKED DURING THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS HAVING SAID THAT THE ARGUMENT OF THE APPELLANT THAT PROVISIONS OF SE CTION 194C(6) ARE ATTRACTED ARE ALSO NON MAINTAINABLE IT HAS BEEN HELD IN THE PRECE DING PARAS THAT THE ADDITIONAL EVIDENCES PURPORTED TO BE INTRODUCED BY THE APPELLA NT CANNOT BE ACCEPTED IN VIEW OF REASONS GIVEN THEREIN WITHOUT PREJUDICE TO THE SAME, IT IS SEEN THAT EVEN ON MERITS THE SAID ADDITIONAL EVIDENCE DOES NOT SUP PORTS APPELLANTS CASE TO ILLUSTRATE THE BILLS ISSUED BY RAMSMGBHAI IS PROPRI ETOR OF M/S AKSHAR CARGO MOVERS DO NOT CONTAIN HIS P A NO. SECTION 194C(6) P RESCRIBES THAT THE PA NO HAS TO BE CONVEYED BY THE DEDUCTEE TO THE DEDUCTOR THE SAME COULD HAVE BEEN DONE BY MENTIONING THE SAME ON THE BILL WHICH HAS N OT BEEN DONE WITHOUT PREJUDICE, THE ARGUMENT OF THE APPELLANT FAILS BECA USE 194C(6} RUNS IN CONJUNCTION WITH SECTION 194C(7) AND THE APPELLANT HAS NOT ADDUCED ANY EVIDENCE THAT PROVISIONS OF SECTION 194C(7) WERE CO MPLIED BY HIM THEN AGAIN, EVEN BY WAY OF ADDITIONAL EVIDENCES THE APPELLANT H AS MERELY PRODUCE THE BILLS OF THE PARTY NO EVIDENCE OF MODE OF PAYMENT HAS BEEN F ILED. THE OF RS. 50,000/- MADE BY THE ID A O IS THEREFORE CONFIRMED AND THE C ONNECTED GROUND OF APPEAL RAISED IS DISMISSED. 26. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 27. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT TH E TRANSPORT EXPENDITURE INCURRED DURING THE YEAR WAS AT RS.2,26 ,464/- WHICH WERE MEAGERLY 0.6% OF THE TOTAL TURNOVER OF RS.3.36 CROR ES WHEREAS IN THE PRECEDING YEAR IT WAS AT RS.122828/- AND THE TURNOV ER WAS AT RS.2.09 ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 28 CRORES AND, THEREFORE, AD HOC DISALLOWANCE OF RS.50 ,000/- MADE WITHOUT POINTING OUT ANY SINGLE MISTAKE OF NON-GENU INE TRANSPORT EXPENSES, IS UNCALLED FOR. IT WAS FURTHER SUBMITTED THAT THE TRANSPORT EXPENSES OF RS.2,26,464/- WERE PAID TO VARIOUS TRAN SPORTERS FOR INWARD AND OUTWARD TRANSPORTATION AND WHEN ALL DETA ILS LIKE NAMES ETC. WERE AVAILABLE MATCHING WITH THE SALES MADE BY THE ASSESSEE NO AD HOC DISALLOWANCE SHOULD HAVE BEEN MADE. 28. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 29. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THROUGH THIS GROUND ASSESSEE HAS CHALLENGED THE LUMP SUM DISALLOWANCE OF RS.50,000/- OUT OF TRANSPO RT ALLOWANCE OF RS.2,26,464/-. WE OBSERVE THAT THE ASSESSEE WAS UNA BLE TO PRODUCE PROPER DOCUMENTS AND VOUCHERS DURING ASSESSMENT PRO CEEDINGS MAJORITY OF THE EXPENSES WERE PAID TO ONE MR. RAMSI NGHBHAI WHO IS STATED TO BE A LABOURER BUT ACTUALLY HE IS THE PROP RIETOR OF AKSHAR CARGO MOTORS. DURING THE COURSE OF PROCEEDINGS BEFO RE LD. COMMISSIONER OF INCOME TAX(A) ASSESSEE ADMITTED THE ENTRIES TO TRANSPORT ACCOUNT AND COPIES OF BILLS AS ADDITIONAL EVIDENCE. IN THE REMAND REPORT DATED 10.1.13 WHEREIN IT WAS OBSERVED THAT PROVISIONS OF SECTION 40(A)(IA) ARE ATTRACTED SINCE NO TDS WAS DEDUCTED AGAINST THE PAYMENT MADE TO THE TRANSPORT CONTRACTOR. HOWEV ER, LD. COMMISSIONER OF INCOME TAX(A) DISREGARDED THE PROVI SIONS OF SECTION 40(A)(IA) OF THE ACT WHICH WAS NOT TAKEN UP DURING ASSESSMENT PROCEEDINGS BUT CONFIRMED THE ADDITION B Y COMPLYING THE ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 29 PROVISIONS OF SECTION 194C SUB-SEC.(6) OF THE ACT A S THE PAN OF THE TRANSPORTER WAS NOT MENTIONED ON THE BILL AND CONFI RMED THE ADDITION. WE OBSERVE THAT ASSESSEE HAS NOT TRIED TO PLACE MAT ERIAL EVIDENCE IN A PROPER WAY BEFORE BOTH THE LOWER AUTHORITIES WHIC H COULD HAVE BEEN EASILY DONE BECAUSE ASSESSEES ACCOUNTS ARE AUDITED AND ASSESSEE IS STRONGLY SUPPORTING THE SAME. CERTAINLY WHEN INF ORMATION WERE NOT AVAILABLE WITH THE ADJUDICATING AUTHORITIES IT IS V ERY HARD TO VERIFY THE GENUINENESS OF THE EXPENDITURE AND THE SAME HAS HAP PENED IN THIS CASE ALSO. WE ALSO OBSERVE THAT FACTS RELATING TO THIS GROUND ARE VARYING SINCE THE ASSESSMENT PROCEEDINGS THEN BEFOR E THE FIRST APPELLATE AUTHORITY AS WELL AS IN THE ADDITIONAL E VIDENCE EXAMINED BY THE LD. ASSESSING OFFICER. AS A RESULT OF THIS VARI ATION IN FACTS, ADJUDICATION OF THE ISSUE IS NOT MATERIALIZING TO A CORRECT FINDING. WE, THEREFORE, ARE OF THE VIEW THAT THIS ISSUE OF TRAN SPORT EXPENSES NEEDS TO BE EXAMINED AFRESH BY THE LD. ASSESSING OFFICER ON THE BASIS OF DOCUMENTS AND DETAILS TO BE PROVIDED IN TOTALITY BY THE ASSESSEE. NEEDLESS TO MENTION A PROPER OPPORTUNITY OF BEING H EARD TO BE GIVEN TO THE ASSESSEE BEFORE ADJUDICATION. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 30. NOW WE TAKE UP GROUND NO.7 WHICH READS AS UNDER :- 7. THAT THE DENIAL OF CLAIM U/S 80GGC OF RS. 3,51,0 00/- MADE BY LEARNED A.O. AND CONFIRMED BY LEARNED CIT(A) WHICH IS AGAIN ST THE DOCUMENTARY EVIDENCES LYING ON THE RECORD OF THE LEARNED A.O. A S WELL AS CIT(A) AND CONSIDERING THE SAME, THE CLAIM OF THE APPELLANT BE ALLOWED. THE ASSESSEE HAS CHALLENGED THE LD. COMMISSIONER OF INCOME TAX(A) ORDER CONFIRMING THE ACTION OF LD. ASSESSING OFFICE R DENYING CLAIM OF ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 30 DEDUCTION OF RS.3,51,000/- FOR PAYMENT TO THE POLIT ICAL PARTY U/S 80GGC OF THE ACT. 31. BRIEF FACTS RELATING TO THIS GROUND ARE THAT AS SESSEE PASSED A CASH ENTRY ON 31.3.2009 OF RS.3,51,000/- AS DONATIO N TO A POLITICAL PARTY NAMELY M/S LOK JAN SHAKTI PARTY CLAIMING DEDU CTION U/S 80GGC OF THE ACT. HOWEVER, DURING THE COURSE OF ASS ESSMENT PROCEEDINGS NO PROOF WAS PLACED ON RECORD FOR VERIF ICATION AND, THEREFORE, DEDUCTION U/S 80GGC OF THE ACT WAS DENIE D BY LD. ASSESSING OFFICER. IN APPEAL BEFORE LD. COMMISSIONE R OF INCOME TAX(A) ASSESSEE PLACED ON RECORD RECEIPT NO.507C DA TED 31.3.209 IN RESPECT OF THE CLAIM. HOWEVER, AS PER REMAND REPORT THIS CLAIM WAS NOT ADMITTED AS ONLY PHOTOCOPY WAS PLACED. LD. COMM ISSIONER OF INCOME TAX(A) CONFIRMED THE ACTION OF LD. ASSESSING OFFICER OF DENYING DEDUCTION U/S 80GGC OF THE ACT OF RS.3,51,0 00/- BY OBSERVING AS UNDER :- 1) ADDITION ON A/C OF DENIAL OF CLAIMED OF DEDUCTION U /S. 8QGGC OF RS. 3,51,000/- THE A O HAD NOTED THAT THE APPELLANT HAD PASSED A C ASH ENTRY OF RS. 3 51.000/- TOWARDS DONATION U/S 80GGC, HOWEVER NO PROOF WAS GI VEN FOR ESTABLISHING GENUINENESS THEREOF THE A O THEREFORE MADE THE IMPU GNED ADDITION IT IS THE CASE OF THE APPELLANT THAT IT HAS MADE A DONATION O F RS 3 51.000/- TO ONE LOK JANSHAKTI PARTY ON 31-3-2009 VIDE RECEIPT NO 507C T HE APPELLANT ATTEMPTED TO INTRODUCE ADDITIONAL EVIDENCES BY WAY OF RECEIPT IS SUED BY THE SAID PARTY IN THE REMAND REPORT DATED 10-1-2013 SUPRA, THE A O HAS IN DICATED THAT THE APPELLANT HAS FILED ONLY A PHOTO COPY AND NO ORIGINAL OR ANY ELIGIBILITY CERTIFICATE ISSUED BY ANY COMPETENT AUTHORITY WAS PROVIDED HIM FOR VERIFI CATION IT HAS BEEN HELD IN THE PRECEDING PARAS THAT THE ADDITIONAL EVIDENCES PRODU CED BY THE APPELLANT CANNOT BE ADMITTED SINCE APPELLANT HAS FAILED TO PROVIDE W ITH ANY COGENT AND JUSTIFIED REASONS FOR THEIR NON PRODUCTION BEFORE THE A O DUR ING ASSESSMENT PROCEEDINGS AND HAS ALSO NOT AVAILED THE OPPORTUNITY GETTING SU CH ADDITIONAL EVIDENCES VERIFIED BEFORE THE A O DURING THE REMAND PROCEEDIN GS CONSEQUENTLY IT IS HELD ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 31 THAT NO INTERFERENCE IS REQUIRED TO BE MADE TO THE ACTION OF THE A O IN MAKING IMPUGNED ADDITION OF RS 3.51.000/- AT THIS STAGE TH E ADDITION MADE IS THEREFORE CONFIRMED AND THE CONNECTED GROUND OF APPEAL RAISED DISMISSED. 32. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 33. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT LD . ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF DEDUCTION U/S 8 0GGC OF THE ACT FOR WANT OF REGISTRATION OF THE POLITICAL PARTY WIT H THE ELECTION COMMISSION OF INDIA AND HAS ISSUED LETTER DATED 31. 1.2001 PLACED AT PAGE 55 OF THE PAPER BOOK AND FURTHER THERE IS NO P ROHIBITION OF CASH PAYMENT OF DONATION FOR THE YEAR UNDER CONSIDERATIO N. ALSO IN THE REMAND REPORT TO THE ASSESSING OFFICER AT PAGE 76 O F THE PAPER BOOK LD. ASSESSING OFFICER HAS ACCEPTED THAT ASSESSEE HA S FILED A PHOTO COPY OF THE RECEIPT OF PAYMENT MADE TO LOK JAN SHAK TI PARTY OF RS.3,51,000/- WHICH IS ADMISSIBLE AS AN EVIDENCE AN D CONSIDERING THE SAME THE CLAIM OF ASSESSEE BE ALLOWED. 34. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 35. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THROUGH THIS GROUND ASSESSEE HAS CHALLEN GED THE ORDER OF LD. COMMISSIONER OF INCOME TAX(A) CONFIRMING THE AC TION OF ASSESSING OFFICER DENYING DEDUCTION OF RS.3,51,000/ - U/S 80GGC OF THE ACT FOR PAYMENT TO A POLITICAL PARTY NAMELY LOK JAN SHAKTI PARTY. WE OBSERVE THAT DURING THE COURSE OF ASSESSMENT PRO CEEDINGS A SPECIFIC QUERY WAS RAISED TO FILED EVIDENCE IN SUPP ORT OF ITS CLAIM FOR ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 32 DEDUCTION U/S 80GGC OF THE ACT OF RS.3,51,000/- PAI D IN CASH ON 31.3.2009. BUT NO SUCH PROOF WAS PLACED ON RECORD F OR VERIFICATION DUE TO WHICH DEDUCTION U/S 80GGC WAS DENIED. WHEN T HE ASSESSEE CAME UP BEFORE FIRST APPELLATE AUTHORITY HE REQUEST ED FOR ACCEPTING ADDITIONAL EVIDENCES AND PURSUANT THERETO THE REMAN D REPORT WAS CALLED FOR IN RELATION TO THE PAYMENT OF RS.3,51,00 0/- MADE TO LOK JANSHAKTI PARTY ON 31.3.2009 VIDE RECEIPT NO.507C. IN THE REMAND PROCEEDINGS ALSO ORIGINAL RECEIPT WAS NOT SUBMITTED AND ONLY PHOTOCOPY WAS FILED AND IN ABSENCE OF THE ORIGINAL DOCUMENT ASSESSEES CLAIM WAS NOT CONSIDERED. ACCORDINGLY LD . COMMISSIONER OF INCOME TAX(A) ALSO DISMISSED ASSESSEES GROUND. WE FURTHER OBSERVE FROM THE PERUSAL OF THE PAPER BOOK AT PAGE 55 SHOWING A LETTER DATED 31.1.2001 ISSUED BY ELECTION COMMISSIO N OF INDIA FAVOURING LOK JANSHAKTI PARTY ISSUED ANNUAL REGISTR ATION U/S 29A OF THE REPRESENTATION OF THE PEOPLE ACT, 1951 ESTABLIS HING IT AS A POLITICAL PARTY. FURTHER AT PAGE 57 TO 60 ASSESSEE HAS PLACED RECEIPTS OF DONATION GIVEN TO LOK JANSHAKTI PARTY WHICH ARE DETAILED AS UNDER : RECEIPT NO. DATE AMOUNT 68 7.6.2009 1,00,000 72 12.8.2009 50,000 75 22.10.2009 50,000 78 3.12.2009 1,51,000 TOTAL 3,51,000 ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 33 36. WE ARE REALLY VERY SURPRISED TO OBSERVE THAT TH E ABOVE RECEIPTS WHICH TOTALED TO RS.3,51,000/- PAID IN CASH TO LOK JANSHAKTI PARTY ARE PAID IN FINANCIAL YEAR 2009-10 RELEVANT TO ASST. YE AR 2010-11 WHEREAS ASSESSEE HAS CLAIMED DEDUCTION FOR FINANCIA L YEAR 2008-09 RELEVANT TO ASST. YEAR 2009-10 SHOWING THAT PAYMENT IN CASH OF RS.3,51,000/- HAS BEEN MADE ON 31.3.2009. IT IS VER Y STRANGE THAT THE DEDUCTION WHICH HAS BEEN CLAIMED FOR FINANCIAL YEAR 2008-09 THE CORRESPONDING PAYMENT HAS BEEN MADE IN 2009-10 AND EVER SINCE THE ASSESSMENT PROCEEDINGS ASSESSEE IS GIVING DIFFE RENT SUBMISSIONS ALONG WITH OTHER EVIDENCES. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WHEREIN THE IMPUGNED PAYMENTS OF DONATION HAVE BEEN MADE IN FINANCIAL YEAR 2009-10 EVIDENCED BY THE REC EIPTS ISSUED BY THE POLITICAL PARTY WHEREAS CLAIM HAS BEEN MADE FOR FINANCIAL YEAR 2008-09 WE ARE OF THE CONSIDERED VIEW THAT ASSESSEE IS NOT ELIGIBLE FOR ANY DEDUCTION U/S 80GGC OF THE ACT AT RS.3,51, 000/-. WE THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORD ER OF LD. COMMISSIONER OF INCOME TAX(A), WE UPHOLD THE SAME. ACCORDINGLY, THIS GROUND OF ASSESSEE IS DISMISSED. 37. OTHER GROUNDS ARE OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. 38. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ITA NO. 1306/AHD/2013 ASST. YEAR 2009-10 34 ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH FEBRUARY, 2017 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 16/02/2017 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 14/02/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 16/02/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 17/2/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: