ACIT, CHENNAI V. M/s. Kanishk Gold Pvt.Ltd., CHENNAI

ITA 1323/CHNY/2012

• Counselvise Citation: 132321714 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-04-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 15-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASANTH KUMAR IRS
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained cash credit; Speculation loss
• Section: 40A(3); 143(3); 43(5)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , !' , # $! % BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO. 1323/MDS/2012 # & '& / ASSESSMENT YEAR : 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(4), CHENNAI - 600 034. V. M/S KANISHK GOLD PVT. LTD., 43, USMAN ROAD, T. NAGAR, CHENNAI - 600 034. PAN : AADCK 1598 B (')/ APPELLANT) (+,')/ RESPONDENT) ') - / APPELLANT BY : SHRI VASANTH KUMAR, IRS, CIT +,') - / RESPONDENT BY : SHRI T. BANUSEKAR, FCA . - /0 / DATE OF HEARING : 30 TH APRIL, 2014 12' - /0 / DATE OF PRONOUNCEMENT : 5 TH MAY, 2014 / O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS APPEAL FILED BY THE REVENUE RELATES TO THE ASSESSMENT YEAR 2009-10. THE APPEAL IS DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III AT CHENNAI , DATED 12.3.2012 AND ARISES OUT OF THE ASSESSMENT COMPLETE D UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961. 2 I.T.A. NO. 1323/MDS/12 2. THE RESPONDENT-ASSESSEE IS A PRIVATE COMPANY ENG AGED IN THE BUSINESS OF MANUFACTURING OF AND TRADING IN GOL D JEWELLERY. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNE D ASSESSMENT YEAR ON A TAXABLE INCOME OF ` 2,03,76,208/-. INITIALLY, THE RETURN WAS PROCESSED UNDER SECTION 143(1). THEREAFTER, THE AS SESSMENT WAS COMPLETED UNDER SECTION 143(3), AFTER ISSUING A NOT ICE UNDER SECTION 143(2). 3. IN THE COURSE OF VERIFYING THE MODUS OPERANDI OF THE BUSINESS CARRIED ON BY THE ASSESSEE-COMPANY, BOOKS OF ACCOUN TS AND OTHER DETAILS, THE ASSESSING OFFICER CAME TO A CONCLUSION THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF LAW STATED IN SECTION 40A(3) FOR MAKING CASH PAYMENTS AGAINST PURCHASE OF OLD GO LD ORNAMENTS EXCEEDING THE EXEMPTION LIMIT. THE ASSESSEE-COMPAN Y IS PURCHASING OLD GOLD ORNAMENTS FROM THE CUSTOMERS AN D NEW GOLD ORNAMENTS ARE SOLD TO THOSE CUSTOMERS. IN THE PROC ESS OF THAT TRANSACTION, THE ASSESSEE IS ISSUING PURCHASE INVOI CES AGAINST THE PURCHASE OF OLD GOLD ORNAMENTS AND ISSUING SALES BI LLS FOR THE SALE OF NEW GOLD ORNAMENTS. 4. BUT, REGARDING THE PAYMENT SIDE, THE TRANSACTION IS CLOSED BY MAKING THE PAYMENT OF THE DIFFERENTIAL AMOUNT. IF A CUSTOMER PURCHASES NEW GOLD ORNAMENTS OF MORE VALUE THAN THA T OF OLD GOLD 3 I.T.A. NO. 1323/MDS/12 ORNAMENTS EXCHANGED BY HIM, THE CUSTOMER MAKES CASH PAYMENTS TO THE ASSESSEE, OF THE DIFFERENTIAL AMOUNT. LIKEW ISE, WHEN THE OLD GOLD PURCHASE VALUE IS MORE THAN THE VALUE OF THE C ORRESPONDING SALE OF NEW GOLD ORNAMENTS, THE ASSESSEE-COMPANY MA KES PAYMENTS ONLY OF THE DIFFERENTIAL AMOUNT TO THE CUS TOMER. WHEREVER SUCH PAYMENTS MADE IN CASH BY THE ASSESSEE-COMPANY, WERE IN EXCESS OF THE EXEMPTION LIMIT OF ` 20,000/-, THE ASSESSEE-COMPANY THEMSELVES HAVE TREATED THOSE PAYMENTS HIT BY SECTI ON 40A(3). 5. BUT, THE ASSESSING OFFICER HELD THAT THE PURCHAS E OF OLD GOLD ORNAMENTS AND THE CORRESPONDING SALE OF NEW GOLD OR NAMENTS ARE SEPARATE AND INDEPENDENT TRANSACTIONS AS DOCUMENTED BY THE ASSESSEE-COMPANY ITSELF. THEREFORE, THE DIFFERENTI AL AMOUNT BETWEEN THE PURCHASE AND SALE ALONE CANNOT BE TREAT ED AS THE FULL PURCHASE AND FULL SALE VALUE. THE ASSESSING OFFICE R HELD THAT EVEN THOUGH THE PAYMENTS ARE MADE ON DIFFERENTIAL BASIS, WHEREVER THE ASSESSEE-COMPANY IS MAKING PAYMENTS TO THE CUSTOMER S, THE ENTIRE PURCHASE BILL AMOUNT HAS TO BE TAKEN INTO CONSIDERA TION AND WHEN THE DIFFERENTIAL CASH PAYMENT IS MADE BY THE ASSESS EE-COMPANY, IT IS NECESSARY TO TREAT THE ENTIRE PURCHASE BILL AMOU NT HAVING BEEN MADE IN CASH. THE ASSESSING OFFICER HELD ACCORDING LY THAT IN THE MAJORITY INSTANCES OF PURCHASE OF OLD GOLD, THE PAY MENTS HAD BEEN 4 I.T.A. NO. 1323/MDS/12 MADE IN CASH AND THEREFORE, VIOLATED THE PROVISIONS OF SECTION 40A(3). ON THE BASIS OF THE ABOVE PROPOSITION, THE ASSESSING OFFICER COMPUTED SUCH AMOUNT LIABLE TO BE DISALLOWE D, TO THE EXTENT OF ` 4,35,31,892/-. THIS AMOUNT WAS ADDED IN THE ASSES SMENT. 6. THE ASSESSING AUTHORITY ALSO FOUND THAT THE ASSE SSEE HAS CLAIMED A HEDGING LOSS OF ` 99,23,199/- AND THE ASSESSING OFFICER TREATED THIS HEDGING LOSS AS SPECULATIVE LOSS AND D ISALLOWED THE SAID LOSS IN COMPUTING THE TAXABLE INCOME OF THE ASSESSE E-COMPANY. THIS HAS RESULTED IN AN ADDITION OF ` 99,23,199/-. 7. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE CREDITS REFLECTED IN THE PERSONAL ACCOUNT OF THE DIRECTOR O F THE ASSESSEE- COMPANY SHOWED CASH CREDITS OF ` 4,19,97,669/- AND THOSE CREDITS WERE NOT EXPLAINED BY THE ASSESSEE. ACCORDINGLY, H E MADE ANOTHER ADDITION OF ` 4,19,97,669/- AS UNEXPLAINED CASH CREDITS. WITH T HESE THREE ADDITIONS, THE ASSESSING OFFICER DETERMINED A TAXABLE INCOME OF ` 11,58,18,970/- AS AGAINST AN INCOME OF ` 2,03,76,208/- RETURNED BY THE ASSESSEE-COMPANY. 8. THESE THREE ADDITIONS WERE TAKEN IN FIRST APPEAL . THE COMMISSIONER OF INCOME TAX (APPEALS) EXAMINED SECTI ON 40A(3) AND RULE 6DD. HE FOUND THAT THE OPERATION OF SECTI ON 40A(3) IS 5 I.T.A. NO. 1323/MDS/12 EXCUSED WHERE THE PAYMENT MADE BY WAY OF ADJUSTMENT AGAINST THE AMOUNT OF ANY LIABILITY INCURRED BY THE PAYEE FOR A NY GOODS SUPPLIED OR SERVICES RENDERED BY THE ASSESSEE TO SUCH PAYEE. THIS EXCLUSION IS PROVIDED IN CLAUSE (D) TO RULE 6DD. T HE COMMISSIONER OF INCOME TAX (APPEALS), RELYING ON THE JUDGMENT OF THE HONBLE PUNJAB AND HARYANA HIGH COURT RENDERED IN THE CASE OF CIT V. KISHAN CHAND MAHESWARI DASS (121 ITR 232), HELD THA T SUCH EXCHANGE TRANSACTIONS ARE NOT HIT BY PROVISIONS OF SECTION 40A(3). ACCORDINGLY, THE COMMISSIONER OF INCOME TAX (APPEAL S) DELETED THE SAID ADDITION OF ` 4,35,21,892/-. REGARDING THE HEDGING LOSS OF ` 99,23,199/-, THE COMMISSIONER OF INCOME TAX (APPEAL S) EXAMINED THE ISSUE IN A DETAILED MANNER, PARTICULARLY, IN TH E LIGHT OF THE LAW STATED IN SECTIONS 43(5) AND 73 OF THE INCOME-TAX A CT, 1961. HE OBSERVED THAT WHAT CONSTITUTES SPECULATION HAS BECO ME A MATTER OF CONTROVERSY NOTWITHSTANDING THE DEFINITION OF SAME PROVISIONS IN SECTION 43(5), BEING A TRANSACTION PERIODICALLY AND ULTIMATELY SETTLED OTHERWISE THAN BY ACTUAL DELIVERY. THE COMMISSIONE R OF INCOME TAX (APPEALS) OBSERVED THAT CERTAIN CATEGORIES OF C ONTRACTS ARE NOT TREATED AS SPECULATIVE TRANSACTIONS BY VIRTUE OF TH E PROVISO TO SECTION 43(5) AND PARTICULARLY PROVIDED IN CLAUSES (A) AND (D) OF THAT PROVISO. CLAUSE (A) PROVIDES THAT A CONTRACT IN RE SPECT OF RAW MATERIALS OR MERCHANDISE ENTERED INTO BY A PERSON I N THE COURSE OF 6 I.T.A. NO. 1323/MDS/12 HIS MANUFACTURING OR MERCHANTING BUSINESS TO GUARD AGAINST LOSS THROUGH FUTURE PRICE FLUCTUATIONS IN RESPECT OF HIS CONTRACTS FOR ACTUAL DELIVERY OF GOODS MANUFACTURED BY HIM OR MERCHANDIS E SOLD BY HIM SHOULD NOT BE DEEMED TO BE AS SPECULATIVE TRANSACTI ON. THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT THE ASSESSEE- COMPANY HAD ENTERED INTO THE FUTURES CONTRACT TO GU ARD AGAINST THE LOSS THROUGH FUTURE PRICE FLUCTUATIONS IN GOLD. WH EN THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AND MERCHANDISING IN GOLD, THE FUTURES CONTRACT ENTERED INTO BY HIM WOULD BE COVER ED BY THE EXCEPTION PROVIDED IN CLAUSE (A) OF SECTION 43(5). ON THE BASIS OF THIS PRINCIPAL PROPOSITION, THE COMMISSIONER OF INC OME TAX (APPEALS) HELD THAT THE DISALLOWANCE MADE BY THE AS SESSING OFFICER IS NOT JUSTIFIED. ACCORDINGLY, THE SAID DISALLOWAN CE WAS SET ASIDE AND THE ADDITION OF ` 99,23,199/- WAS DELETED. REGARDING THE CASH CREDIT ADDITION OF ` 4,19,97,669/-, THE COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT THOSE CREDITS RELATED TO THE J OURNAL ENTRIES PASSED ON CLOSING OF ACCOUNTS ON 31.3.2009 BY APPRO PRIATING THE DEBITS AND CREDITS ON THE BASIS OF THE TRANSACTIONS THE DIRECTOR HAD WITH THE ASSESSEE-COMPANY. THE COMMISSIONER OF INC OME TAX (APPEALS) FOUND THAT THE CREDITS REFLECTED IN THE PERSONAL ACCOUNT OF THE DIRECTOR, HAVE BEEN EQUALLY DEBITED IN VARIOUS OTHER ACCOUNTS RELATING TO THE EXPENSES, PAYMENTS AND OTHER OBLIGA TIONS. 7 I.T.A. NO. 1323/MDS/12 WHEREVER THE DIRECTOR HAS SPENT MONEY FOR THE BUSIN ESS OF THE ASSESSEE-COMPANY, THE DIRECTOR HAS TO BE GIVEN CRED IT THEREON AND FOR THAT PURPOSE, THE ASSESSEE-COMPANY HAD PASSED C LOSING JOURNAL ENTRIES AND THE ASSESSING OFFICER HAS COME TO THE C ONCLUSION OF UNEXPLAINED CASH CREDITS WITHOUT EXAMINING THE CORR ESPONDING DEBIT ENTRIES PASSED BY THE ASSESSEE-COMPANY. ACCORDINGL Y, THE SAID ADDITION IS ALSO DELETED. THE REVENUE IS AGGRIEVED AND THEREFORE, THE SECOND APPEAL BEFORE THE TRIBUNAL. 9. WE HEARD SHRI VASANTH KUMAR, THE LEARNED COMMISS IONER OF INCOME TAX APPEARING FOR THE REVENUE AND SHRI T. BA NUSEKAR, THE LEARNED CHARTERED ACCOUNTANT APPEARING FOR THE ASSE SSEE. 10. IN RESPECT OF THE ISSUE OF DISALLOWANCE MADE UN DER SECTION 40A(3), THE ARGUMENT OF THE REVENUE IS THAT WHEN OL D GOLD PURCHASES ARE MADE FROM A AND NEW ORNAMENTS SOLD TO B, PROVISIONS OF RULE 6DD WILL NOT BE APPLICABLE. IT IS THE CASE OF THE REVENUE THAT NO JEWELER WILL PREPARE SEPARATE BILL FOR PURCHASE OF OLD GOLD AND SALE OF NEW ORNAMENTS WHEN THE TRANSAC TION WAS IN EXCHANGE OF OLD GOLD WITH A NEW ORNAMENT. DETAILED ARGUMENTS HAVE BEEN MADE ON THIS ISSUE. 8 I.T.A. NO. 1323/MDS/12 11. THE CONTENTION OF THE REVENUE IS THAT RULE 6DD IS NOT APPLICABLE IN A CASE WHERE PURCHASE IS MADE FROM A AND SALE IS MADE TO B. THE CONTENTION IS REALLY AGAINST THE FA CTS OF THE CASE. WE ARE NOT CONSIDERING A CASE WHERE THE ASSESSEE IS PURCHASING OLD GOLD ORNAMENTS FROM PERSON A AND SELLING NEW GO LD ORNAMENTS TO ANOTHER PERSON B. IN SUCH CIRCUMSTANCES, THOSE SALES ARE ENTIRELY DIFFERENT AND INDEPENDENT BOTH BY NATURE A ND BOTH BY THE PARTIES INVOLVED. IN SUCH A CASE, SETTLEMENT OF AC COUNT BY RECEIVING AND PAYING THE DIFFERENTIAL AMOUNTS DOES NOT ARISE AT ALL. IN THE PRESENT CASE, THAT IS NOT THE ISSUE POINTED OUT BY THE ASSESSING AUTHORITY AND REPLIED BY THE ASSESSEE. THE ISSUE AR ISES WHERE THE ASSESSEE-COMPANY PURCHASES OLD GOLD ORNAMENTS FROM A PERSON AND SELLS NEW GOLD ORNAMENTS TO THE SAME PERSON. I T IS IN SUCH CIRCUMSTANCES, THE FINAL SETTLEMENT OF THE TRANSACT IONS IS MADE BY PAYING AND RECEIVING THE AMOUNT OF DIFFERENTIAL VAL UE. 12. THE TRANSACTION CONSIDERED IN THIS CASE IS OF S AME PERSON PURCHASING NEW GOLD ORNAMENTS FROM THE ASSESSEE AGA INST OLD GOLD ORNAMENTS. IN SUCH A CASE, CLAUSE (D) OF RULE 6DD CLEARLY APPLIES. THE SAID CLAUSE READS THAT WHERE THE PAYMENT IS MAD E BY WAY OF ADJUSTMENT AGAINST THE AMOUNT OF ANY LIABILITY INCU RRED BY THE PAYEE FOR ANY GOODS SUPPLIED OR SERVICES RENDERED BY THE ASSESSEE TO 9 I.T.A. NO. 1323/MDS/12 SUCH PAYEE IS EXEMPTED FROM THE OPERATION OF SECTIO N 40A(3). THEREFORE, IN THE PRESENT CASE, AS RIGHTLY POINTED OUT BY THE COMMISSIONER OF INCOME TAX (APPEALS), THE CASE OF T HE ASSESSEE IS PROTECTED BY CLAUSE (D) OF RULE 6DD. 13. FURTHER, IN SECTION 40A(3), THE THRUST IS ON P AYMENT OF CASH FOR INCURRING EXPENDITURE. WHERE THE PAYMENT FOR P URCHASE EXCEEDED ` 20,000/- AND THE PAYMENT IS MADE IN CASH, SUCH PAYMENT SHALL BE DISALLOWED PARTLY UNDER SECTION 40 A(3). THE THRUST OF SECTION 40A(3) IS NOT DEPENDENT ON THE VA LUE OF PURCHASE BILL AND SALES BILL. IT IS NOT CONCERNED WITH THE SETTING OFF OF PURCHASE VALUE AND SALE VALUE MUTUALLY. SECTION 40A(3) IS C ONFINED ONLY TO THE ACTUAL PAYMENT OF AMOUNT IN CASH. IN THE PRESE NT CASE, THE DIFFERENTIAL AMOUNTS ARE RECEIVED AND PAID BY THE A SSESSEE IN CASH. THE QUESTION OF PAYMENT IN CASH RELATES ONLY TO THE DIFFERENTIAL AMOUNT PAYABLE BY THE ASSESSEE. 14. THE REVENUE HAS RAISED A CONTENTION IN THE GROU NDS THAT THE ASSESSEE MAY NOT RAISE SEPARATE BILLS FOR PURCHASE OF OLD GOLD AND FOR SALE OF NEW GOLD ORNAMENTS. THIS VIEW IS NOT C ORRECT. THERE IS LEVY OF PURCHASE TAX BY THE STATE GOVERNMENT ON PUR CHASE OF OLD GOLD ORNAMENTS. FOR THAT MATTER, THE ASSESSEE HAS TO KEEP A SEPARATE ACCOUNT OF OLD GOLD PURCHASE SUPPORTED BY PURCHASE 10 I.T.A. NO. 1323/MDS/12 INVOICES. LIKEWISE, SALE OF NEW GOLD ORNAMENTS ARE AGAIN SUBJECT TO SALES TAX FOR WHICH THE ASSESSEE HAS TO MAINTAIN SE PARATE SALES ACCOUNT SUPPORTED BY SALES INVOICES. 15. INTERESTINGLY, THIS GROUND IS OTHERWISE CONTRAR Y TO THE ARGUMENT RAISED BY THE REVENUE. THE WHOLE ARGUMENT OF THE REVENUE IS THAT THE AMOUNT FOR THE PURCHASE BILL OF THE OLD GOLD ORNAMENTS SHOULD BE TREATED AS PAID IN CASH BY ITSE LF, BY THE ASSESSEE, ON THE PRESUMPTION THAT THE PURCHASE AND SALES ARE TWO DIFFERENT TRANSACTIONS. 16. ANYHOW, THE REVENUE HAS TAKEN THIS ISSUE HERE A ND THERE WITHOUT UNDERSTANDING THE TRUE NATURE OF THE TRANSA CTION. WE AGREE WITH THE COMMISSIONER OF INCOME TAX (APPEALS) WITH HIS FINDING ON THIS ISSUE AND CONFIRM THE DELETION OF ` 4,35,21,892/-. 17. THE SECOND ISSUE IS DISALLOWANCE OF ` 99,23,199/- BEING HEDGING LOSS TREATED BY THE ASSESSING AUTHORITY AS SPECULATIVE LOSS. 18. SECTION 43(5) DESCRIBES WHAT IS A SPECULATIVE T RANSACTION. ACCORDINGLY, A SPECULATIVE TRANSACTION MEANS A TRAN SACTION IN WHICH A CONTRACT FOR PURCHASE OR SALE OF ANY COMMODITY, I NCLUDING STOCKS AND SHARES, IS PERIODICALLY OR ULTIMATELY SETTLED O THERWISE THAN BY THE ACTUAL DELIVERY OR TRANSACTION OF THE COMMODITY OR SCRIPS. BUT, THERE 11 I.T.A. NO. 1323/MDS/12 ARE TWO EXCEPTIONS TO THE ABOVE. ONE OF THE EXCEPT IONS IS THAT THE ABOVE DEFINITION OF SPECULATIVE TRANSACTION WILL NO T APPLY TO A CONTRACT IN RESPECT OF RAW MATERIALS OR MERCHANDISE ENTERED INTO BY A PERSON IN THE COURSE OF HIS MANUFACTURING OR MERC HANTING BUSINESS TO GUARD AGAINST LOSS THROUGH FUTURE PRICE FLUCTUATIONS IN RESPECT OF HIS CONTRACTS FOR ACTUAL DELIVERY OF GOO DS MANUFACTURED BY HIM OR MERCHANDISE SOLD BY HIM. IN THE PRESENT CASE, THE ASSESSEE HAS ENTERED INTO A FUTURE CONTRACT TO GUAR D AGAINST THE LOSS THROUGH FUTURE PRICE FLUCTUATIONS IN GOLD. TH E ASSESSEE IS IN THE BUSINESS OF MANUFACTURING AND MERCHANTING OF GOLD. THEREFORE, THE FUTURE CONTRACT ENTERED INTO BY THE ASSESSEE IS STR AIGHTAWAY COVERED BY THE FIRST EXCEPTION PROVIDED IN CLAUSE (A) OF SE CTION 43(5). WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) IS RIGHT IN HIS DECISION. 19. THE THIRD ISSUE IS REGARDING THE ADDITION OF ` 4,19,97,669/- AS UNEXPLAINED CASH CREDITS. THESE CREDITS ARE REFLEC TED IN THE PERSONAL ACCOUNT OF THE DIRECTOR OF THE ASSESSEE-CO MPANY AS A RESULT OF CLOSING ENTRY PASSED BY THE ASSESSEE-COMP ANY AT THE END OF THE PREVIOUS YEAR AS ON 31.3.2009, BY PASSING JO URNAL ENTRIES. THESE JOURNAL ENTRIES ARE PASSED TO MAKE ADJUSTMENT S BETWEEN THE PERSONAL ACCOUNT OF THE DIRECTOR AND BUSINESS ACCOUNT OF THE 12 I.T.A. NO. 1323/MDS/12 ASSESSEE-COMPANY. AS AND WHEN EXIGENCIES AROSE, TH E DIRECTOR OF THE ASSESSEE-COMPANY HAD MADE PAYMENTS TOWARDS EXPE NSES, TOWARDS PURCHASE, TOWARDS SERVICES, ETC. AS THESE PAYMENTS WERE MADE BY THE DIRECTOR, HE HAS TO BE GIVEN CREDIT FOR THE OUTGOINGS. AS THOSE OUTGOINGS RELATED TO VARIOUS EXPENDITURE I NCURRED BY THE ASSESSEE-COMPANY, SUCH OUTGOINGS SHOULD BE DEBITED IN DIFFERENT ACCOUNT OF THE ASSESSEE-COMPANY. THEREFORE, THE AS SESSEE- COMPANY HAS PASSED JOURNAL ENTRIES WITH THE CONCERN ED AMOUNTS, CREDITING THE PERSONAL ACCOUNT OF THE DIRECTOR AND DEBITING THE VARIOUS EXPENDITURE TO NOMINAL ACCOUNTS OF THE ASSE SSEE-COMPANY. IN FACT, ALL THE CREDITS REFLECTED IN THE PERSONAL ACCOUNT OF THE DIRECTOR OF THE ASSESSEE-COMPANY ARE CORRESPONDINGL Y VERY MUCH REFLECTED ON THE DEBIT SIDE OF DIFFERENT EXPENDITUR ES AND NOMINAL ACCOUNTS OF THE ASSESSEE-COMPANY. IN THAT WAY, THE SE CASH CREDITS ARE SELF-EXPLAINING IN THE BOOKS OF ACCOUNTS ITSELF . THERE IS NO BASIS FOR THE ASSESSING OFFICER TO TREAT THESE CREDITS AS UNEXPLAINED CASH CREDITS. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY DELETED THE ADDITION. 13 I.T.A. NO. 1323/MDS/12 20. IN RESULT, WE FIND THAT THIS APPEAL FILED BY TH E REVENUE IS WITHOUT ANY MERIT. IT IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED ON MONDAY, THE 5 TH OF MAY, 2014 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K. NARAYANAN) ( !' ) ( ... ) # $! /JUDICIAL MEMBER /VICE-PRESIDENT /CHENNAI, 5$ /DATED, THE 5 TH MAY, 2014. KRI. $6 - +#/7 8 '/ /COPY TO: 1. ') /APPELLANT 2. +,') /RESPONDENT 3. . 9/ () /CIT(A)-III, CHENNAI 4. . 9/ /CIT, CHENNAI-I, CHENNAI 5. :; +#/# /DR 6. ;& < /GF.