ITO, Central, Aurangabad, Aurangabad V. Ghanshyam J. Agarwal, Jalgaon

ITA 140/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9720 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-08-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 02-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Assessee Lawyers: M MANI; DR JAYANT M RANADE
• Keywords: Unexplained investment; Peak credit
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI G.S.PANNU, ACCOUNTANT MEMBER. ITA.NOS.140 TO 145/PN/2011 (ASSTT. YEAR : 2000-01 TO 2005-06) ITO, CENTRAL, AURANGABAD. .. APPELLANT VS. SHRI GHANSHYAM J. AGRAWAL, C/O M/S.SUNDERPURIYA STEEL & ROLLER MILLS PVT. LTD ., H/05, MIDC, JALGAON. .. RESPONDENT ASSESSEE BY : SHRI M.MANI & DR.JAYANT M.RANADE DEPARTMENT BY : SHRI MUKESH VERMA, CIT(DR) DATE OF HEARING : 22.08.2012 DATE OF PRONOUNCEMENT : 28.08.2012 ORDER PER G.S.PANNU, AM : THE CAPTIONED APPEALS BY THE REVENUE ARE DIRECTED AGAINST A COMMON ORDER OF THE CIT(A) DATED 15.11.2010 AND PER TAIN TO THE A.YS. 2000-01 TO 2005-06 WHICH IN TURN HAVE ARISEN FROM ASSESSMENTS MADE BY THE ASSESSING OFFICER U/S.153A R.W.S. 143(3) OF THE ACT FOR THE RESPECTIVE YEARS. 2. THE ASSESSEE IS AN INDIVIDUAL, WHO IS A PART OF SUNDARPURIYA GROUP OF CASES OF JALGAON, WHICH WAS SUBJECTED TO S EARCH AND SEIZURE ACTION U/S.132(1) OF THE ACT ON 19.10.2005. IN CONSEQUENCE TO THE ACTION U/S.132 OF THE ACT, THE ASSESSING OFF ICER ISSUED NOTICES U/S.153A OF THE ACT FOR THE CAPTIONED ASSES SMENT YEARS, CALLING FOR RETURNS OF INCOME. THE RETURNS SO FURN ISHED BY THE ASSESSEE WERE SUBJECT TO ASSESSMENT WHICH RESULTED IN VARIED 2 ADDITIONS FOR THE RESPECTIVE YEARS, WHICH WAS ALSO THEREAFTER A SUBJECT MATTER OF APPEAL BEFORE THE CIT(A). SOME O F THE RELIEFS GRANTED BY THE CIT(A) IN VARIOUS YEARS ARE THE SUBJ ECT MATTER OF DISPUTE BEFORE US IN THE CAPTIONED APPEALS PREFERRE D BY THE REVENUE. 3. IN THIS BACKGROUND, WE MAY TAKE UP FOR CONSIDERA TION ITA.NO.140/PN/2011 WHICH IS AN APPEAL PERTAINING TO THE A.Y. 2000-01. THE ASSESSEE IS AN INDIVIDUAL WHO IS ENGA GED IN THE BUSINESS OF TRADING OF WHEAT AND MAKKA ETC. 4. THE FIRST GRIEVANCE OF THE REVENUE IN THIS APPEA L IS WITH REGARD TO THE ACTION OF CIT(A) IN DELETING AN ADDITION OF RS.8,80,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CIRCULATING CAPITAL AS WELL AS THE DELETION OF ADDITION OF RS.1 1,20,000/- MADE ON SIMILAR GROUND ON PROTECTIVE BASIS. IN BRIEF, T HE FACTS ARE THAT IN THE COURSE OF SEARCH, ASSESSEE WAS FOUND TO BE MAIN TAINING A ROUGH CASH BOOK WHICH CONTAINED ENTRIES IN RELATION TO DE ALINGS OF VARIOUS GROUP CONCERNS. THIS ROUGH CASH BOOK WAS IN ADDITI ON TO THE REGULAR ACCOUNT BOOKS MAINTAINED FOR THE RESPECTIVE GROUP CONCERNS. THE ASSESSING OFFICER NOTICED THE FOLLOW ING: THAT THERE WAS NO EXPLANATION IN RESPECT OF AN AMOUNT OF RS.71 ,58,260/- FOUND CREDITED IN THE CASH BOOK MAINTAINED AT BRANC H OFFICE IN SILLOD; THAT ON VARIOUS DATES FROM 25.02.2000 TO 31 .03.2000 AMOUNTS WERE CREDITED IN THE CASH BOOK MAINTAINED I N JALGAON WHEREIN THE HIGHEST AMOUNT OF RS.7,15,000/- WAS INT RODUCED ON 31.03.1999 WHICH ACCORDING TO THE ASSESSING OFFICER WAS UNEXPLAINED; THAT THERE WAS NEGATIVE CASH BALANCE O N SOME DATES IN THE ROUGH CASH BOOK; THAT THE ASSESSEE WAS ENGAGED IN UNACCOUNTED TRANSACTIONS OF SALE AND PURCHASES IN T HE NAME OF SOME FIRMS; AND SOME OF CREDITS IN THE ROUGH CASH B OOK WERE NOT EXPLAINED. FOR ALL THE ABOVE REASONS THE ASSESSING OFFICER ESTIMATED A TOTAL ADDITION OF RS.20,00,000/- FOR TH E A.Y. 2000-01, ON ACCOUNT OF INVESTMENT IN CIRCULATING CAPITAL IN THE HANDS OF THE ASSESSEE AND HIS TWO BROTHERS, SHRI NARENDRA JWALAP RASAD AGRAWAL 3 AND SHRI MAHENDRA JWALAPRASAD AGRAWAL. THE ADDITIO N OF RS.20,00,000/- WAS SPREAD OUT ON SUBSTANTIVE BASIS IN THE HANDS OF THE THREE ASSESSEES, NAMELY, THE APPELLANT R.8,80 ,000/-; HIS TWO BROTHERS SHRI NARENDRA JWALAPRASAD AGRAWAL RS.5,6 0,000/- AND SHRI MAHENDRA JWALAPRASAD AGRAWAL RS.5,60,000/-. SIMULTANEOUSLY, THE ASSESSING OFFICER ALSO MADE PRO TECTIVE ADDITION OF RS.11,20,000/- IN THE HANDS OF THE ASSESSEE. TH E ADDITIONS IN SAME FASHION HAVE BEEN MADE IN CASE OF THE OTHER TW O BROTHERS ALSO. 5. IN APPEAL BEFORE THE CIT(A), THE ASSESSEE MADE F ACTUAL SUBMISSIONS ASSAILING THE ADDITION WAS MADE BY THE ASSESSING OFFICER. AS PER THE ASSESSEE, THE ROUGH CASH BOOK WAS UNRELIABLE AS IT WAS A MERE MEMORANDUM RECORDING OF TRANSACTIONS FOR MEMORY WHICH WERE LATER ENTERED INTO REGULAR CASH BOOK; TH AT THE ROUGH CASH BOOK DID NOT PERTAIN TO TRANSACTIONS OF THE AS SESSEE ALONE BUT IT CONTAINED TRANSACTIONS OF OTHER GROUP CONCERNS A LSO, AS THERE WAS INTERMINGLING OF CASH; THAT THE ASSESSING OFFICER H AD NOT NOTICED ANY TRANSACTION RECORDED IN ROUGH CASH BOOK WHICH W AS NOT RECORDED IN THE REGULAR CASH BOOK; THAT THE CASH BA LANCE APPEARING IN THE ROUGH CASH BOOK BELONGED TO THE TOTAL GROUP CONCERNS AND THE SAME WAS PHYSICALLY CARRIED TO THE HOUSE FOR SA FE CUSTODY AND THE NARRATION IN THE ROUGH CASH BOOK IS GHAR-PAR AND ON THE NEXT DAY IT WAS BROUGHT BACK AND THE NARRATION IS GHAR- SE AND ALL SUCH AMOUNTS APPEARING IN ROUGH CASH BOOK ARE GENERATED THROUGH RECORDED TRANSACTIONS; THAT THE ASSESSING OFFICER W AS WRONG IN PRESUMING THAT THE AMOUNT OF RS.7,15,000/- BROUGHT FROM HOUSE ON 31.03.2000 WAS AN EXTRA, CIRCULATING CAPITAL OUT SIDE THE ACCOUNT BOOKS; THAT AS ALL THE PURCHASES AND SALES ARE RECO RDED IN THE REGULAR CASH BOOKS WHICH HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER, THEREFORE, THERE WAS NO UNACCOUNTED CAPITA L INTRODUCTION. IN THIS MANNER, THE ADDITION MADE BY THE ASSESSING OFFICER WAS SOUGHT TO BE ASSAILED. 4 6. THE CIT(A) HAS SINCE DELETED THE ADDITION. THE CIT(A) HAS FOUND IT FIT TO DELETE THE ADDITION ON TWO COUNTS. FIRSTLY THE CIT(A) NOTICED THAT SIMILAR ADDITION MADE IN THE CASE OF T HE ASSESSEES BROTHER SHRI MAHENDRA JWALAPRASAD AGRAWAL WAS DELET ED BY THE THEN CIT(A). THE CIT(A) HAS FURTHER NOTICED IN PAR A 5.2.2. OF THE IMPUGNED ORDER THAT SUCH DELETION WAS NOT CHALLENGE D BY THE DEPARTMENT IN APPEAL BEFORE THE TRIBUNAL AS WAS EVI DENT FROM THE ORDER OF THE TRIBUNAL DATED 24.06.2010 IN THE CASE OF SHRI MAHENDRA JWALAPRASAD AGRAWAL IN ITA.NO.1020 TO 1026 /PN/2008. SECONDLY, THE CIT(A) ALSO CONCLUDED THAT THERE WAS NO SPECIFIC ENTRY IN THE ROUGH CASH BOOK WHICH HAS BEEN POINTED OUT T O BE NOT RECORDED IN THE REGULAR CASH BOOK; THAT AN AMOUNT O F RS.5,00,000/- HAS BEEN SURRENDERED IN THE CASE OF THE MAIN CONCER N M/S.SUNDARPURIYA FLOUR AND ROLLER MILLS PVT. LTD., WHICH TAKES CARE OF THE DEFECTS, IF ANY, REMAINING IN THE ROUGH CASH BOOK AS THE SAME WAS A COMBINED CASH BOOK FOR ALL THE GROUP CONCERNS . IN THIS MANNER, CIT(A) CAME TO A FINDING THAT THERE WAS NO CORROBORATIVE EVIDENCE IN SUPPORT OF THE ASSESSING OFFICERS ASSE RTION THAT ASSESSEE AND HIS BROTHERS HAVE ANY CIRCULATING CAPI TAL OUTSIDE THE BOOKS OF ACCOUNT. ACCORDINGLY, FOR THE A.Y. 2000-0 1, THE ADDITIONS ON ACCOUNT OF CIRCULATING CAPITAL MADE ON SUBSTANTI VE BASIS OF RS.8,80,000/- AND ON PROTECTIVE BASIS OF RS.11,20,0 00/- HAVE BEEN DELETED BY THE CIT(A). AGAINST THE AFORESAID, THE REVENUE IS IN APPEAL BEFORE US. 7. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE H AS CONTESTED THE ORDER OF THE CIT(A) PRIMARILY BASED ON THE DISC USSION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND I N THIS REGARD REFERENCE HAS ALSO BEEN MADE TO THE STATEMENT OF FA CTS ANNEXED TO THE MEMORANDUM OF APPEAL. THE REASONS WEIGHING WIT H THE ASSESSING OFFICER TO JUSTIFY THE ADDITION HAVE ALRE ADY BEEN NOTICED BY US IN PARA 4 OF OUR ORDER, WHICH HAVE BEEN REITE RATED BY THE LD. DEPARTMENTAL REPRESENTATIVE BEFORE US, AND THE SAME ARE NOT BEING REPEATED FOR THE SAME OF BREVITY. 5 8. ON THE OTHER HAND, THE LD. COUNSEL FOR THE RESPO NDENT ASSESSEE HAS VEHEMENTLY POINTED OUT THAT THERE WAS NO JUSTIFICATION IN THE GROUND RAISED BY THE REVENUE IN AS MUCH AS T HE CIT(A) HAS APPRECIATED THE FACTUAL POSITION IN THE APPROPRIATE MANNER AND ONLY THEREAFTER DELETED THE ADDITION. IT IS ALSO CANVAS SED THAT THERE IS NO MATERIAL TO CONTROVERT THE REASONS TAKEN BY THE CIT (A) IN ORDER TO DELETE THE ADDITION. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. AT THE OUTSET WE MAY NOTICE THAT PARA 4 OF THE ASSESSMENT ORDER, WHEREIN SUCH ADDITION HAS BEEN DISCUSSED BY THE ASSESSING O FFICER, CLEARLY SHOWS THAT THE ENTIRE ADDITION IS A MERE ESTIMATION TO THE EFFECT THAT THE ASSESSEE AND HIS TWO BROTHERS POSSESS UNACCOUNT ED CIRCULATING CAPITAL FOR USE IN THEIR BUSINESS. THE PRIMARY REA SON WEIGHING WITH THE ASSESSING OFFICER TO INFER THAT THE ASSESSEE HA S INVESTED SOME MONEY IN BUSINESS OUTSIDE THE BOOKS OF ACCOUNT WAS THE PRESENCE OF A ROUGH CASH BOOK. THOUGH THE ASSESSING OFFICER HAS REFERRED TO CERTAIN AMOUNTS CREDITED IN THE ROUGH CASH BOOK WHI CH ACCORDING TO HIM REMAIN UNEXPLAINED, HOWEVER, THERE IS NO ASS ERTION MUCH LESS AN ALLEGATION BY THE ASSESSING OFFICER THAT TH E AMOUNTS RECORDED IN THE ROUGH CASH BOOK DID NOT FORM PART O F THE REGULAR ACCOUNT BOOKS OF VARIOUS CONCERNS OF THE GROUP. IN FACT, THE CIT(A) HAS CORRECTLY APPRECIATED THAT THE ENTRIES IN THE R OUGH CASH BOOK PERTAIN TO VARIOUS GROUP CONCERNS AND NOT MERELY TO THE ASSESSEE ALONE. NOTABLY IN SO FAR AS THE FACTUAL FINDING RE CORDED BY THE CIT(A) IS CONCERNED, THERE IS NO COGENT MATERIAL BR OUGHT OUT BY THE REVENUE TO NEGATE THE SAME. APART THEREFROM, THE RE VENUE HAS ALSO NOT BROUGHT ANYTHING ON RECORD TO REBUT THE ASSERTI ON OF THE CIT(A) THAT SIMILAR ADDITION DELETED BY HIM IN THE CASE OF ASSESSEES BROTHER SHRI MAHENDRA JWALAPRASAD AGRAWAL WAS NOT T AKEN UP IN APPEAL BY THE REVENUE BEFORE THE TRIBUNAL AND, THER EFORE, ACCORDING TO HIM, SUCH ISSUE HAS BEEN ACCEPTED BY THE DEPARTM ENT. FOR THE AFORESAID REASON ALSO, WE ARE INCLINED TO AFFIRM TH E ORDER OF THE CIT(A) ON THIS GROUND. WE ACCORDINGLY UPHOLD THE O RDER OF THE CIT(A) AND THE GROUND OF APPEAL RAISED BY THE REVEN UE IS DISMISSED. 6 10. THE NEXT GROUND IN THIS APPEAL RELATES TO THE D ECISION OF THE CIT(A) IN DELETING ADDITIONS OF RS.2,80,965/- AND R S.2,00,000- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN BANK A CCOUNTS. IN THIS REGARD, THE RELEVANT FACTS ARE THAT DURING THE COURSE OF SEARCH, SEVEN BANK ACCOUNTS IN VARIOUS NAMES, DETAILED IN P ARA 3 OF THE ASSESSMENT ORDER, WERE FOUND WHICH THE ASSESSEE ACC EPTED TO BE BELONGING TO HIM. ADDITIONAL INCOME ON SUCH COUNT W AS ALSO OFFERED. HOWEVER, THE CASH FLOW STATEMENT OF UNACCOUNTED TRA NSACTIONS PREPARED BY THE ASSESSEE WAS NOT FULLY ACCEPTED BY THE ASSESSING OFFICER IN THIS REGARD. THE ASSESSING OFFICER MADE 3 ADDITIONS OF RS.2,80,965/-, RS.2,00,000/- AND RS.4,74,000/- AMOU NTING TO RS.9,54,965/- ON THIS COUNT, WHICH WAS ASSAILED IN APPEAL BEFORE THE CIT(A). THE CIT(A) HAS SINCE DELETED THE ADDIT IONS OF RS.2,80,965/- AND RS.2,00,000/- WHILE RETAINING THE ADDITION OF RS.4,74,000/-. THE REVENUE IS IN APPEAL BEFORE US ON THE ADDITIONS OF RS. 2,80,965/- AND RS.2,00,000/-, WHICH HAVE BEE N DELETED BY THE CIT(A). 11. AS REGARD THE ADDITION OF RS.2,80,965/-, THE SA ME IS PART OF THE OPENING BALANCE CLAIMED BY THE ASSESSEE OF RS.3 ,80,965/- AS ON 01.04.1999. THE ASSESSING OFFICER NOTICED THAT ON 30.03.1999, THE ASSESSEE HAD WITHDRAWN AN AMOUNT OF RS.1,00,000/- I N CASH FROM HIS PROPRIETORY CONCERN AND THAT ONLY SUCH AMOUNT W AS AVAILABLE TO BE CONSIDERED AS OPENING BALANCE AS ON 01.04.1999, AND ACCORDINGLY, HE TREATED THE BALANCE OF RS.2,80,965/ - AS UNEXPLAINED. THE ASSESSEE SUPPORTED HIS CLAIM OF O PENING BALANCE OF RS.3,80,965/- BY POINTING OUT THAT THE SAME REPR ESENTED PEAK BALANCE IN THE BANK ACCOUNT OF HIS CONCERN HARIOM T RADING CO., IN THE F.Y. 1998-99 AND THAT SUCH BALANCE WAS ON 04.07 .1998. THE ASSESSEE ALSO POINTED OUT THAT THE PROFIT OF UNDISC LOSED SALES OF HARIOM TRADING CO., WAS DEPOSITED IN THE BANK ACCOU NT UNDER CONSIDERATION WHICH WAS AVAILABLE AS ON 01.04.1999. IN SUM AND SUBSTANCE, THE PLEA OF THE ASSESSEE WAS THAT AS THE QUANTUM OF UNDISCLOSED INCOME OFFERED TO TAX ON ACCOUNT OF UND ECLARED 7 TRANSACTIONS OF HARIOM TRADING CO., WAS RS.4,94,963 /-, WHICH WAS DEPOSITED IN BANK, THEREFORE, THE PEAK BALANCE APPE ARING IN THE BANK ACCOUNT IN THE F.Y. 1998-99 BE CONSIDERED AS H AVING ARISEN FROM THE PROFITS OF THE F.Y. 1998-99, AND ACCORDING LY JUSTIFIED THE ADOPTION OF RS.3,80,965/- AS OPENING CASH BALANCE A S ON 01.04.1999. 12. THE CIT(A) HAS ACCEPTED THE PLEA OF THE ASSESSE E BY MAKING THE FOLLOWING DISCUSSION IN PARA 8.3 OF HIS ORDER: 8.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDERS, REMAND REPORT OF THE A.O. AND THE SUBMISSIONS AND A RGUMENTS OF THE APPELLANT. AS REGARDS THE ADDITION ON ACCOU NT OF UNEXPLAINED OPENING BALANCE OF RS.2,80,965/-, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN N OT ACCEPTING THE OPENING BALANCE OF HARIOM TRADING COMPANY IN RE SPECT OF UNDISCLOSED BUSINESS CLAIMED ON THE BASIS OF PEAK B ALANCE APPEARING IN THE PASS BOOK AS ON 4/7/1998. THE A.O . HAS ACCEPTED THE SAID OPENING BALANCE CLAIMED BY THE AP PELLANT WHILE WORKING OUT THE NEGATIVE CASH BALANCE OF THE CASH FLOW STATEMENT SUBMITTED BY THE APPELLANT. WHILE MAKING THE ADDITION OF RS.2,80,965/- THE A.O. HAS ACCEPTED THE OPENING BALANCE ON ACCOUNT OF BANK WITHDRAWAL OF RS.1,00,00 0/- AS ON 30/3/1999, HOWEVER, HAS NOT ACCEPTED THE WITHDRAWAL S FOR THE EARLIER PERIOD STATING THAT THERE IS TIME GAP AND T HE DESTINATION OF THE WITHDRAWALS IS NOT KNOWN. THIS CONTENTION O F THE A.O. CANNOT BE ACCEPTED IN THE ABSENCE OF ANY EVIDENCE O N RECORD TO PROVE THAT THE WITHDRAWALS WERE UTILIZED ELSEWHERE. THE A.O. HAS ALSO MENTIONED THAT THE APPELLANT HAS NOT PRODU CED PROOF IN SUPPORT OF THE UNDISCLOSED SALES, HOWEVER, IT IS NOT LOGICAL TO EXPECT PROOF OF SALE IN THE FORM OF SALE BILLS, ETC . WHERE THE TURNOVER IS OUTSIDE THE BOOKS. IN VIEW OF THE TOTA LITY OF THE FACTS, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN TREATING THE OPENING BALANCE AS ON 1/4/1999 CLAI MED BY THE APPELLANT AS UNEXPLAINED TO THE EXTENT OF RS.2, 80,965/-. THE ADDITION OF RS.2,80,965/- IS THEREFORE DELETED. 13. ANOTHER ADDITION OF RS.2,00,000/- WAS MADE BY T HE ASSESSING OFFICER WITH REGARD TO A CASH DEPOSIT MADE IN THE U NDISCLOSED BANK ACCOUNT WITH CHIKLI URBAN COOPERATIVE BANK, SILLOD. IN THIS REGARD, THE ASSESSEE EXPLAINED AS UNDER: 9.1 IN REGARD TO THE ADDITION OF RS.2,00,000/- ON ACCOUNT OF UNEXPLAINED DEPOSIT ON 11/8/1999 IN CHIKHLI URBAN C O-OP BANK IN THE NAME OF SHRI GANESH S.BANSAL, THE APPEL LANT 8 SUBMITTED THAT HE COULD NOT LOCATE THE SAID ENTRY I N THE BANK ACCOUNT. THE APPELLANT FURTHER CLAIMED THAT AN AMO UNT OF RS.4,94,963/- HAS BEEN OFFERED TO TAX AS INCOME IN A.Y. 1999- 2000. THE OPENING BALANCE AS ON 1/4/1999 AVAILABLE WITH THE APPELLANT IS RS.3,80,965/- AND HENCE TOTAL AMOUNT O F RS.8,75,928/- IS AVAILABLE FOR DEPOSIT OF RS.2,00,0 00/- AND HENCE THE ADDITION OF RS.2,00,000/- MADE BY THE A.O . ON ACCOUNT OF UNEXPLAINED DEPOSIT IN BANK IS NOT JUSTI FIED. 14. THE CIT(A) HAS SINCE DELETED THE ADDITION ON TH E GROUND THAT THE AMOUNT OF RS.8,75,928/- WAS AVAILABLE WITH THE ASSESSEE OUT OF WHICH THE DEPOSIT OF RS.2,00,000/- IN THE BANK ACCO UNT WITH CHIKLI URBAN COOPERATIVE BANK, SILLOD, STOOD EXPLAINED. 15. BEFORE US, THE DEPARTMENT HAS NOT DEMONSTRATED AS TO HOW THE EXPLANATIONS ACCEPTED BY THE CIT(A) ARE WRONG O R ARE NOT BORNE OUT OF RECORD. AS A RESULT THEREOF, WE HEREBY AFFI RM THE ACTION OF THE CIT(A) ON THE BASIS OF THE FINDING ARRIVED AT BY HI M IN HIS ORDER, AND ACCORDINGLY, THE REVENUE FAILS. 16. IN THE RESULT, THE APPEAL OF THE REVENUE FOR TH E A.Y. 2000-01 IS HEREBY DISMISSED. ITA.NO.141/PN/2011 17. IN THIS APPEAL FOR A.Y. 2001-02, THE ONLY ISSUE IS WITH REGARD TO AN ADDITION OF RS.15,00,000/- ON ACCOUNT OF UNEXPLA INED CIRCULATING CAPITAL. THE ADDITION STANDS ON SIMILA R FOOTING AS CONSIDERED BY US IN GROUND NO.1 IN THE REVENUES AP PEAL FOR A.Y. 2000-01. AS A RESULT, OUR DECISION IN THE A.Y. 200 0-01 APPLIES MUTATIS MUTANDIS IN THIS GROUND ALSO AND ACCORDINGL Y, THE APPEAL OF THE REVENUE IS DISMISSED. ITA.NO.142/PN/2011 18. IN THIS APPEAL FOR A.Y. 2002-03, THE FIRST GROU ND IS WITH REGARD TO AN ADDITION OF RS.5,00,000/- ON ACCOUNT OF UNEXP LAINED CIRCULATING CAPITAL. THE ADDITION STANDS ON SIMILA R FOOTING AS CONSIDERED BY US IN GROUND NO.1 IN THE REVENUES AP PEAL FOR A.Y. 9 2000-01. AS A RESULT, OUR DECISION IN THE A.Y. 200 0-01 APPLIES MUTATIS MUTANDIS IN THIS GROUND ALSO AND ACCORDINGL Y, THE GROUND OF THE REVENUE IS DISMISSED. 19. THE SECOND GROUND IN THIS APPEAL RELATES TO THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS.6,12,167/- MA DE ON ACCOUNT OF NEGATIVE CASH BALANCE ALLEGEDLY APPEARING IN THE SE IZED ROUGH CASH BOOK. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER NOTICED THAT AS ON 05.02.2002, THERE WAS A NEGATIVE CASH BALANCE IN THE ROUGH CASH BOOK OF RS.6,12,167/- AND , THEREFORE, HE ADDED THE SAME TO THE INCOME OF THE ASSESSEE. IN A PPEAL BEFORE THE CIT(A), ASSESSEE EXPLAINED THAT THE GROUP CONSISTED OF SHRI GHANSHYAM AGRAWAL (ASSESSEE), SHRI NARENDRA AGRAWAL , SHRI MAHENDRA AGRAWAL, SUNDERPURIYA STEEL AND ROLLE R FLOUR MILLS. AS PER THE SEIZED ROUGH CASH BOOK, THERE WAS A DEFI CIT OF RS.6,12,168/- IN THE CASE OF SHRI GHANSHYAM AGRAWAL (ASSESSEE), BUT IN CASE OF OTHER CONCERNS TOTAL CASH AVAILABLE WAS RS.6,33,092/-, AS PER THE DETAILS NOTED BY THE CIT( A) IN PARA 7.1 OF THE IMPUGNED ORDER. SINCE THE ASSESSEE WAS MANAGIN G THE ENTIRE BUSINESS OF THE GROUP, HE HAD ACCESS TO THE CASH AV AILABLE WITH OTHER CONCERNS AND HE TEMPORARILY UTILISED THAT MON EY FOR HIS PERSONAL BUSINESS, WHICH WAS SUBSEQUENTLY RECOUPED. AS PER THE ASSESSEE, IN DECIDING THE CASH BALANCE IN THE GROUP , THE GROUP AS A WHOLE SHOULD BE TAKEN BECAUSE ALL THE PERSONS WERE LIVING TOGETHER, AND THUS NO ADDITION WAS WARRANTED. THE FACTUAL SUB MISSIONS OF THE ASSESSEE HAVE BEEN REPRODUCED BY THE CIT(A) IN PARA 7.1 OF THE IMPUGNED ORDER. THE CIT(A) HAS CONSIDERED THE SUBM ISSIONS OF THE ASSESSEE AS WELL AS THE REMAND REPORT OF THE ASSESS ING OFFICER AND THEREAFTER DELETED THE ADDITION BY MAKING THE FOLLO WING DISCUSSION IN PARA 7.2 OF HIS ORDER. 7.2. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ERS AND THE REMAND REPORT OF THE A.O. AND THE SUBMISSIONS O F THE APPELLANT. IT IS UNDISPUTED FACT THAT SHRI GHYANSH YAM AGRAWAL IS IN OVERALL CHARGE OF THE ENTIRE GROUP. THE ENTRIES RECORDED IN THE SEIZED MATERIAL POINTED OUT BY THE APPELLANT IN HIS WRITTEN SUBMISSION REPRODUCED ABOVE IN RESPECT OF A.YRS. 10 2002-03 AND 2003-04 IS THE EVIDENCE SUPPORTING THE CLAIM OF THE APPELLANT THAT THE CASH BALANCE OF OTHER CONCER NS WAS TEMPORARILY USED BY THE APPELLANT. THE SOURCE OF T HE SAID NEGATIVE BALANCES THEREFORE STANDS EXPLAINED. THE SAME LOGIC ALSO APPLIES TO THE SUBSEQUENT ASSESSMENT YEARS 200 4-05 AND 2005-06. IN VIEW OF THE ABOVE DISCUSSIONS AND THE CONTENTIONS OF THE APPELLANT, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN MAKING ADDITIONS ON ACCOUNT OF NEG ATIVE CASH BALANCES IN ROUGH CASH BOOK OF RS.6,12,167/-, RS.4, 14,029/-, RS.6,48,981/- AND RS.3,64,995/- IN A.YRS. 2002-03 T O 2005- 06 RESPECTIVELY. THE SAID ADDITIONS ARE THEREFORE DELETED. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE HAS NOT DEMONSTRATED IN ANY MANNER AS TO HOW THE FACTUAL FI NDINGS OF THE CIT(A) ARE UNTENABLE. AS PER THE CIT(A), THE SOURC E OF THE SO CALLED NEGATIVE CASH BALANCE STANDS EXPLAINED IN AS MUCH A S IN THE CASE OF OTHER GROUP CONCERNS, ADEQUATE CASH WAS AVAILABLE. THE CIT(A) HAS PROCEEDED ON THE BASIS THAT THE NEGATIVE CASH BALAN CE IS TO BE CONSIDERED NOT ON INDIVIDUAL BASIS BUT AFTER CONSID ERING THE POSITION IN THE TOTAL GROUP CONCERNS AND ONCE IT IS SO CONSI DERED THERE WAS NO NEGATIVE CASH BALANCE AS PER THE STATEMENTS FURN ISHED BY THE ASSESSEE. IN OUR CONSIDERED OPINION, IN THE ABSEN CE OF ANY COGENT MATERIAL ON RECORD TO NEGATE THE AFORESAID APPRECIA TION OF FACTS DONE BY THE CIT(A), WE FIND NO REASON TO INTERFERE WITH HIS CONCLUSION. THE SAME ARE ACCORDINGLY AFFIRMED AND THE REVENUES APPEAL ON THIS GROUND FAILS. 20. AS A RESULT, THE APPEAL IN ITA.NO.142/PN/2011 I S HEREBY DISMISSED. ITA.NO.143/PN/2011 21. IN THIS APPEAL FOR A.Y. 2003-04, THE ONLY GROUN D RELATES TO AN ADDITION OF RS.4,14,029/- ON ACCOUNT OF NEGATIVE CA SH BALANCE ALLEGEDLY APPEARING IN THE SEIZED ROUGH CASH BOOK. IT WAS A COMMON GROUND BETWEEN THE PARTIES THAT THE FACTS AND CIRCU MSTANCES LEADING UP TO THE SAID ADDITION ARE SIMILAR TO GROU ND NO.2 CONSIDERED BY US IN ITA.NO.142/PN/2011 PERTAINING T O A.Y. 2002- 03. AS A RESULT, OUR DECISION IN THE A.Y. 2002-0 3 APPLIES MUTATIS 11 MUTANDIS IN THIS GROUND ALSO AND ACCORDINGLY, THE G ROUND OF THE REVENUE IS DISMISSED. ITA.NO.144/PN/2011 22. IN THIS APPEAL FOR A.Y. 2004-05, THE FIRST GROU ND IS WITH REGARD TO AN ADDITION OF RS.3,00,000/- ON ACCOUNT OF UNEXP LAINED CIRCULATING CAPITAL. THE ADDITION STANDS ON SIMILA R FOOTING AS CONSIDERED BY US IN GROUND NO.1 IN THE REVENUES AP PEAL FOR A.Y. 2000-01. AS A RESULT, OUR DECISION IN THE A.Y. 200 0-01 APPLIES MUTATIS MUTANDIS IN THIS GROUND ALSO AND ACCORDINGL Y, THE GROUND OF THE REVENUE IS DISMISSED. 23. THE SECOND GROUND RELATES TO AN ADDITION OF RS. 6,48,981/- ON ACCOUNT OF NEGATIVE CASH BALANCE ALLEGEDLY APPEARIN G IN THE SEIZED ROUGH CASH BOOK. IT WAS A COMMON GROUND BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES LEADING UP TO THE SAID ADDITION ARE SIMILAR TO GROUND NO.2 CONSIDERED BY US IN ITA.NO.1 42/PN/2011 PERTAINING TO A.Y. 2002-03. AS A RESULT, OUR DEC ISION IN THE A.Y. 2002-03 APPLIES MUTATIS MUTANDIS IN THIS GROUND ALS O AND ACCORDINGLY, THE GROUND OF THE REVENUE IS DISMISSED . ITA.NO.145/PN/2011 24. IN THIS APPEAL FOR A.Y. 2005-06, THE FIRST GROU ND IS WITH REGARD TO AN ADDITION OF RS.3,00,000/- ON ACCOUNT OF UNEXP LAINED CIRCULATING CAPITAL. THE ADDITION STANDS ON SIMILA R FOOTING AS CONSIDERED BY US IN GROUND NO.1 IN THE REVENUES AP PEAL FOR A.Y. 2000-01. AS A RESULT, OUR DECISION IN THE A.Y. 200 0-01 APPLIES MUTATIS MUTANDIS IN THIS GROUND ALSO AND ACCORDINGL Y, THE GROUND OF THE REVENUE IS DISMISSED. 25. THE SECOND GROUND RELATES TO AN ADDITION OF RS. 3,64,995/- ON ACCOUNT OF NEGATIVE CASH BALANCE ALLEGEDLY APPEARIN G IN THE SEIZED ROUGH CASH BOOK. IT WAS A COMMON GROUND BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES LEADING UP TO THE SAID ADDITION ARE SIMILAR TO GROUND NO.2 CONSIDERED BY US IN ITA.NO.1 42/PN/2011 PERTAINING TO A.Y. 2002-03. AS A RESULT, OUR DEC ISION IN THE A.Y. 12 2002-03 APPLIES MUTATIS MUTANDIS IN THIS GROUND ALS O AND ACCORDINGLY, THE GROUND OF THE REVENUE IS DISMISSED . 26. THE LAST GROUND IN THIS APPEAL IS WITH REGARD T O EXPENDITURE OF RS.2,20,000/- WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. IN THIS REGARD, THE FACTS ARE THAT THE ASSESSEE INCURR ED EXPENSES OF RS.1,20,000/- AND RS.1,00,000/- TOWARDS GODOWN RENT AND CHARGES FOR MACHINERY/ELECTRICITY RESPECTIVELY. THE PAYMENT S IN THIS REGARD WERE MADE TO M/S.SUNDARPURIA FOODS LTD. THE ASSES SING OFFICER DISALLOWED THE EXPENDITURE FOR THE REASON THAT NO S UCH EXPENDITURE WAS INCURRED IN THE PAST AND THAT THE ENTIRE PAYMEN T HAS BEEN SO MADE AS NOT TO INVITE THE PROVISIONS OF TAX DEDUCTI ON AT SOURCE. THE ASSESSING OFFICER ALSO NOTICED THAT THE COMPANY, M/ S.SUNDARPURIA FOODS PVT. LTD., HAS ALSO NOT PASSED A RESOLUTION I N THIS REGARD. THE AFORESAID REASONS WERE CHALLENGED BY THE ASSESSEE I N APPEAL BEFORE THE CIT(A). THE ASSESSEE CONTENDED THAT THE EXPEND ITURE WAS INCURRED ON ACCOUNT OF BUSINESS EXPEDIENCY AND THAT THE RECIPIENT, M/S.SUNDARPURIA FOODS PVT. LTD., HAD DULY ACCOUNTED FOR SUCH RECEIPTS IN ITS BOOKS OF ACCOUNT. THE ASSESSEE ALS O EXPLAINED THAT IT IS FOR THE FIRST TIME DURING THE YEAR UNDER CONSIDE RATION THE GODOWN OF M/S.SUNDARPURIA FOODS PVT. LTD. WAS TAKEN ON REN T ON A REGULAR BASIS WHICH INVOLVED USAGE OF MACHINERY, ELECTRICIT Y ALSO; THAT IN THE PAST NO SUCH EXPENDITURE WAS INCURRED AS THE USAGE OF SUCH PREMISES OF M/S.SUNDARPURIA FOODS PVT. LTD. WAS ONL Y OCCASIONAL AND TEMPORARY. CONSIDERING THE SUBMISSIONS PUT FOR TH BY THE ASSESSEE, THE CIT(A) HAS ALLOWED THE CLAIM OF THE A SSESSEE AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 27. BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE APPE ARING FOR THE REVENUE HAS CONTENDED THAT THE ASSESSING OFFICER WA S JUSTIFIED IN DISALLOWING ASSESSEES CLAIM FOR THE REASONS STATED IN THE ASSESSMENT ORDER. IN OUR CONSIDERED OPINION, THE A SSESSING OFFICER HAS MISDIRECTED HIMSELF IN MAKING THE IMPUGNED ADDI TION ON MERE SURMISES AND CONJECTURES. MERELY BECAUSE THE EXPEN DITURE WAS NOT INCURRED IN THE PAST OR THAT THE PAYMENTS HAVE BEEN SO MADE AS NOT TO INVOLVE THE PROVISIONS OF WITHHOLDING TAX CANNOT BE JUSTIFIABLE 13 REASONS TO DISALLOW EXPENDITURE, ESPECIALLY WHEN NE ITHER THE REASONABLENESS NOR GENUINENESS OF THE EXPENDITURE H AS BEEN DEMONSTRATED TO BE SUSPECT. IN THIS VIEW OF THE MA TTER, WE THEREFORE, FIND NO REASONS TO INTERFERE WITH THE CO NCLUSION OF THE CIT(A) TO THE EFFECT THAT THE IMPUGNED EXPENDITURE IS DULY ALLOWABLE. THUS, ON THIS GROUND ALSO REVENUE FAILS. 28. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 29. RESULTANTLY, THE CAPTIONED SIX APPEALS OF THE R EVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF AUGUST, 2012. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) ( G.S.PANNU ) JUDICIAL MEMBER ACCOUNTANT MEMBER GSPS PUNE, DATED THE 28 TH AUGUST, 2012. COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ITO, CENTRAL, AURANGABAD. 3. THE CIT(A), AURANGABAD. 4. THE CIT(CENTRAL), NAGPUR. 5. THE DR A BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.