DCIT, Jalgaon V. Maharashtra Solvent Extraction P.Ltd, Jalgaon

ITA 1434/PUN/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0059 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-01-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 08-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Business income; Corroborative evidences; Revenue expenditure
• Section: 133A; 37(1); 37; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , ' BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1434/PUN/2013 $ $ / ASSESSMENT YEAR : 2010-11 MAHARASHTRA SOLVENT EXTRACTION PVT. LTD., C/O. S.K. OIL INDUSTRIES COMPOUND, SHIVAJI NAGAR, JALGAON-425 001 PAN : AADCM8466G ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, JALGAON / RESPONDENT . / ITA NO.1640/PUN/2013 $ $ / ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, JALGAON ....... / APPELLANT / V/S. MAHARASHTRA SOLVENT EXTRACTION PVT. LTD., C/O. S.K. OIL INDUSTRIES COMPOUND, SHIVAJI NAGAR, JALGAON-425 001 PAN : AADCM8466G / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 14.08.2018 / DATE OF PRONOUNCEMENT : 12.09.2018 / ORDER PER D. KARUNAKARA RAO, AM : THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVEN UE INVOLVING A.Y. 2010-11. THEY ARE FILED AGAINST THE ORDER OF CIT(A)-II , NASHIK, DATED 21-06-2013. 2 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. WE SHALL FIRST TAKE UP ASSESSEES APPEAL FIRST. ITA NO.1434/PUN/2013 BY ASSESSEE A.Y. 2010-11 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.40,00,000/- U/S. 68 ON ACCOUNT OF ALLEGED UNEXPL AINED SHARE APPLICATION MONEY. 2. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.1,81,389/- ON ACCOUNT OF DISALLOWANCE OF PART OF INTEREST U/S.36 (1)(III) OF THE ACT. 3. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.1,90,238/- ON ACCOUNT OF DISALLOWANCE OF PART OF INTEREST U/S.36(1)(III) OF THE ACT. 4. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMATION THE ADDITION OF RS.50,00,000/- OFFERED TO TAX BY THE ASSESSEE TOWAR DS POSSIBLE REVENUE LEAKAGE, ALLEGED LOW YIELD AND STOCK DIFFERENCE IF ANY, TO BUY PEACE OF MIND, WITH THE CONDITION THAT NO OTHER ADDITION SHALL BE MADE AND THE A.O. HAS NOT KEPT HIS ASSURANCE AND HAS MADE OTHER ADDITIONS. 5. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.8,85,501/- ON ACCOUNT OF COMMISSION PAID TO SANJ AY AGRAWAL-HUF. 6. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMING ADDITION TO THE EXTENT OF RS.9,95,840/- ON ACCOUNT OF DISALLOWANCE OF COMMISSION PAID TO SHRI RAVI SANJAY AGRAWAL. 7. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.6,50,000/- ON ACCOUNT OF DISALLOWANCE OF PART OF THE SALARY PAID TO SMT. SANTOSH SANJAY AGRAWAL. 8. ON THE FACTS AND IN LAW THE CIT(A) HAS ERRED IN NOT ALLOWING TELESCOPING OF THE ADDITIONS AGAINST EACH OTHER AND PARTICULARLY I N NOT TELESCOPING THE ADDITION OF RS.40,00,000/- ON ACCOUNT OF ALLEGED UN EXPLAINED CASH CREDIT AGAINST OTHER ADDITIONS ON ACCOUNT OF ALLEGED EXCES SIVE EXPENDITURE ETC. 3. BACKGROUND FACTS OF THE ASSESSEE INCLUDE THAT THE A SSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.4.25 CRORES (R OUNDED OFF). AO MADE VARIOUS ADDITIONS AND DETERMINED THE ASSESSED INCO ME AT RS.10.40 CRORES (ROUNDED OFF). DETAILS OF THE ADDITIONS ARE GIVEN IN PA RA NO.11 OF THE ASSESSMENT ORDER AND THE SAME ARE EXTRACTED HERE AS UNDER : 3 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. 11. CONSIDERING THE FACTS OF THE CASE AND THE SUBMI SSIONS MADE, THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER: NET TAXABLE INCOME AS PER RETURN FILED - RS.4,25, 35,020/- ADDITION ON ACCOUNT OF I) AD-HOC ADDITION ON A/C OF FALL IN YIELD AS PER PARA 2.4 5000000 II) INTEREST ON BORROWED FUNDS U/S.36(I)(III) AS PER PARA-3.2 380476 III) PAYMENT MADE U/S.40A(2)(B) AS PER PARA-4 3060476 IV) ADDITION U/S.68 OF THE SHARE APPLICATION MONEY AS PER PARA-6 14500000 V) INTEREST ON INTEREST FREE ADVANCES U/S.36(1) AS PER PARA 8 362778 VI) CONSIGNMENT EXPENSES AS PER PARA-9 5456065 VII) UNSECURED LOAN CREDITOR AS PER PARA-10 32734084 RS.6,14,93,879/- ASSESSED INCOME RS. 10,40,28,899/- ROUNDED OFF TO RS. 10,40,28,900/- FROM THE ABOVE, IT IS EVIDENT THAT THE AO MADE 7 ADDITIO NS TOTALING TO RS.6,14,93,879/-. THE ADDITION OF RS.3,37,34,084/- WAS MADE ON ACCOUNTS OF UNSECURED LOAN CREDITORS AND SHARE APPLICATION MONEY O F RS.1.45 CRORES (IV, AND VII ABOVE) WHICH WORKS OUT TO OF RS.4,72,34,084/- (RS .1.45 CRORES + RS.3,37,34,084). DURING THE ASSESSMENT PROCEEDINGS, AN AMOU NT OF RS.50 LAKHS WAS OFFERED BY THE ASSESSEE ON THESE ACCOUNTS. F URTHER, AO MADE OTHER ADDITIONS TOO AS MENTIONED AT SL.NOS. II, III, V, AND VI O F PARA 11 OF THE ASSESSMENT ORDER BY EITHER ON ACCOUNT OF SECTION 36(1)(III) O R ON ACCOUNT OF SECTION 40A(2)(B) OR SECTION 37(1) OF THE ACT ETC. 4. DURING THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) GRANTED PART RE LIEF TO THE ASSESSEE. ACCORDINGLY, A SUM OF RS.40 LAKHS WAS CON FIRMED AGAINST THE ADDITION OF RS.1.45 CRORES ON ACCOUNT OF THE SAID SHARE AP PLICATION MONEY. ASSESSEE OFFERED RS.50 LAKHS ON THESE ACCOUNTS AND THE SAME STANDS ALSO CONFIRMED. THUS, THE TOTAL ADDITION CONFIRMED ON ACCOUNTS O F UNSECURED LOAN CREDITOR AND SHARE APPLICATION MONEY WORKS OUT TO R S.90 LAKHS. 4 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. REGARDING THE OTHER ADDITIONS, THE CIT(A) GRANTED PART/FULL RELIEF, AS THE CASE MAY BE. AGGRIEVED WITH THIS PART RELIEF, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. FURTHER, AGGRIEVED WITH THE RELIEF GRANTED BY THE CIT(A) THE REVENUE IS IN APPEAL WITH THE GROUNDS REFERRED ABOVE. 5. REFERRING TO GROUND NOS. 2, 3 AND 5 TO 7, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ISSUES RAISED IN THESE GRO UNDS AND SUBMITTED THAT THE ADDITIONS ON ACCOUNT OF SECTION 36(1)(III) OF THE ACT , AND THE DISALLOWANCE OF COMMISSION PAID TO (A) SANJAY K. AGRAWAL, HUF , (B) RAVI SANJAY AGRAWAL, (C) SMT.SANTOSH SANJAY AGRAWAL, STAND C OVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF ORDER OF TRIBUNAL FOR THE A.Y. 2 009-10. HE ALSO SUBMITTED THAT THE FACTS ARE IDENTICAL IN THIS YEAR TOO. IN SUPPORT OF THE SAME, LD. COUNSEL FILED A COPY OF THE ORDER OF TRIBUNAL IN A SSESSEES OWN CASE FOR THE A.Y. 2009-10 IN ITA NO.73/PUN/2013 AND ITA NO.606/PUN/2013, DATED 16-08-2017. FURTHER, LD. COUNSE L FAIRLY REQUESTED TO DIRECT THE AO FOR ADOPTING THE SIMILAR RATIO LAID DOWN BY THE TRIBUNAL ON THESE ISSUES. PER CONTRA, CONSIDERING THE SAID ORDER OF THE TRIBUNAL, LD. DR FOR THE REVENUE HAS NO OBJECTION FOR THE SAID PROPOSITION AND HOWEVER, HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A) DUTIFULLY. 6. ON HEARING BOTH THE SIDES AND ON PERUSAL OF THE ORDE R OF TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009-10 (SUPRA), WE FIND THE ISSUES ARE ONE AND THE SAME AND STANDS COVERED IN FAVOUR OF THE A SSESSEE. FOR THE SAKE OF COMPLETENESS, WE REPRODUCE THE FINDING BY THE TRIBUNAL HERE AS UN DER : FINDING OF TRIBUNAL ON ACCOUNT OF DISALLOWANCE OF PART OF INTEREST U/S.36(1)(III) OF THE ACT : 34. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE ISSUE OF DISALLOWANCE UNDER SECTION 36(1)(III) OF THE ACT AN D WHETHER THE SAME IS MERITED OR NOT IS TO BE ADJUDICATED KEEPING IN MIND THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE AND IN CASE THEY ARE SO AVAILABLE, THEN NO DISALLOWANCE IS WARRANTED UNDER SECTION 36(1)(III) OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS REFE RRED TO THE BALANCE SHEET ALONG WITH ANNEXURE WHICH ARE PLACED AT PAGES 73 ON WARDS. THE PERUSAL OF 5 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. SAID DETAILS REFLECT THAT THE INTEREST FREE FUNDS A VAILABLE TO THE ASSESSEE I.E. IN THE FORM OF RESERVES AND SURPLUS WITH OPENING BALAN CE TO THE TUNE OF RS.11 CRORES. THE CASE OF ASSESSEE THAT IT HAD SUFFICIENT NON-INTEREST BEARING FUNDS, WHICH COULD TAKE CARE OF ADVANCES MADE INTEREST FRE E BY THE ASSESSEE, IS CORRECT. WE FIND SUPPORT FROM THE RATIO LAID DOWN B Y THE HONBLE BOMBAY HIGH COURT IN CIT VS. RELIANCE UTILITIES AND POWER LTD. (SUPRA) IN THIS REGARD. ACCORDINGLY, WE HOLD THAT THERE IS NO MERIT IN DISA LLOWING ANY PART OF INTEREST EXPENDITURE UNDER SECTION 36(1)(III) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF ASSESSEE IN ENTIRETY VIS--VIS GROUNDS OF APPEAL NO.5, 6 AND 7 RAISED BY THE ASSES SEE ARE ALLOWED AND GROUNDS OF APPEAL NO.9 AND 10 RAISED BY THE REV ENUE ARE DISMISSED. . REGARDING COMMISSION/SALARY PAID TO MR. SANJAY AGRA WAL-HUF, SMT. SANTOSH SANJAY AGARWAL AND MR. RAVI SANJAY AGR AWAL (GROUND NOS. 5 TO 7 OF THE APPEAL) FINDING OF TRIBUNAL ON ACCOUNT OF COMMISSION PAID TO SANJAY AGRAWAL-HUF : 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IS AGAINST THE CLAIM OF COMMISSION PAID TO SANJAY AGRAWAL-HUF WHO WAS ARRANGING PURCHASE OF SOYA SEEDS ON BEHALF OF T HE ASSESSEE. THE TOTAL COMMISSION PAID TO THE SAID HUF WAS RS. 8,80,047/-. THE FIRST ISSUE WHICH IS RAISED AGAINST THE ASSESSEE IS THAT IT HAD NOT PROV ED SERVICES RENDERED BY THE HUF. HOWEVER, WE FIND THAT SIMILAR SERVICES WERE AV AILED BY THE ASSESSEE IN EARLIER YEARS AND NO DISALLOWANCE WAS MADE OUT OF C OMMISSION PAID TO HIM. IN SUCH CIRCUMSTANCES, IT COULD NOT BE SAID THAT THE S AID PERSON HAS NOT RENDERED ANY SERVICES TO THE ASSESSEE. 13. THE OTHER ASPECT OF THE ISSUE IS THAT THE COMMI SSION PAID TO HUF HAS BEEN INCLUDED IN ITS RETURN OF INCOME AND CONSEQUENTLY, THERE IS NO LEAKAGE OF REVENUE. IN SUCH SCENARIO, THE EXPENDITURE MERITS T O BE ALLOWED IN THE HANDS OF ASSESSEE IN LINE WITH THE RATIO LAID DOWN BY THE HO NBLE BOMBAY HIGH COURT IN CIT VS. INDO SAUDI SERVICES (TRAVEL) PVT. LTD. (SUP RA). WE HOLD SO. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DEL ETE THE ADDITION OF RS.8,80,047/-. . 14. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSE E IS AGAINST DISALLOWANCE OF SALARY PAID TO SMT. SANTOSH S. AGAR WAL OF RS. 5 LAKHS. THE REVENUE VIDE GROUND OF APPEAL NO.6 IS AGGRIEVED BY DELETION OF RS.4,60,000/- IN RESPECT OF SALARY PAID TO SMT. SANTOSH S. AGARWA L. 15. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD PAID SALARY OF RS.9,60,000/- TO SMT. SANTOSH S. AGARWAL, WHO ADMIT TEDLY, WAS A SPECIFIED PERSON UNDER SECTION 40A(2)(B) OF THE ACT. THE CLA IM OF ASSESSEE WAS THAT SHE WAS ATTENDING OFFICE AND DOING INTERNAL CHECKING OF BUSINESS TRANSACTIONS AND WAS LOOKING AFTER OTHER ADMINISTRATIVE WORK OF ASSE SSEE COMPANY. THE ASSESSING OFFICER DISALLOWED THE EXPENDITURE OF RS. 9,60,000/- ON THE GROUND THAT THE SAID LADY WAS NOT QUALIFIED AND EVEN THE P ROVISIONS OF SECTION 40A(2)(B) OF THE ACT WERE APPLICABLE. THE CIT(A) N OTED THAT IN EARLIER YEAR, SUM OF RS.4 LAKHS WAS PAID AS SALARY TO THE LADY AND HE ACCORDINGLY, CONSIDERED SALARY OF RS.4,60,000/- AS REASONABLE AND THE BALAN CE SUM OF RS.5 LAKHS WAS DISALLOWED. 16. BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL AGAINST THE SAME. 6 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. 17. ON CONSIDERING THE TOTAL FACTS AND CIRCUMSTANCE S OF THE CASE, WE FIND NO MERIT IN THE CLAIM OF ASSESSEE, WHEREIN AS AGAINST SALARY PAID OF RS.4 LAKHS IN THE PRECEDING YEAR, FOR THE YEAR UNDER CONSIDERATIO N THE ASSESSEE HAS PAID SALARY OF RS.9,60,000/-. THE ASSESSEE HAS FAILED TO BRING ON RECORD THE NECESSARY EVIDENCE OF HER HAVING REQUISITE QUALIFIC ATIONS TO CARRY OUT THE WORK AND IN ANY CASE IN THE PRECEDING YEAR, SALARY TO TH E TUNE OF RS.4 LAKHS WAS ONLY PAID. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) IN ALLOW ING THE SALARY CLAIMED AT RS.4,60,000/- AND DISALLOWING BAL ANCE SUM OF RS.5 LAKHS. THE PLEA OF ASSESSEE HAVING PAID THE TAXES AND HEN CE, NO DISALLOWANCE IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. INDO SAUDI SERVICES (TRAVEL) PVT. LTD. ( SUPRA), DOES NOT STAND SINCE THE RATE OF TAXES ON THE INCOME DISCLOSED BY THE AS SESSEE IS ON LOWER END. ACCORDINGLY, THE GROUND OF APPEAL NO.2 RAISED BY TH E ASSESSEE AND GROUND OF APPEAL NO.6 RAISED BY THE REVENUE ARE DIS MISSED. . FINDING OF TRIBUNAL ON ACCOUNT OF COMMISSION PAID TO RAVI SANJAY AGARWAL : 23. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD ENGAGED THE SERVICES OF RAVI AGARWAL, WHO WAS A N MBA, WAS LOOKING AFTER THE EXPORT BUSINESS. FOR THE YEAR UNDER CONSI DERATION, THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.18,50,327/-, WHICH COMPRISE D OF SALARY OF RS.9,60,000/- AND COMMISSION OF RS.8,90,327/-. THE A SSESSING OFFICER HAD ALLOWED ONLY SALARY TO THE EXTENT OF RS.7,20,000/- AND THE CIT(A) HAD ALLOWED TOTAL SALARY OF RS.9,60,000/-. BOTH THE AUTHORITIES BELOW DISALLOWED THE CLAIM OF COMMISSION PAID OF RS.8,90,327/-. WE FIND THAT W HERE THE ASSESSEE HAS ESTABLISHED THE SERVICES RENDERED BY THE SAID PERSO N AND SINCE THE SALARY PAID TO RAVI AGARWAL HAS BEEN ALLOWED AS DEDUCTION IN TH E COMPUTATION OF INCOME, HENCE ITS STANDS ESTABLISHED THAT RAVI AGARWAL HAS CONTRIBUTED HIS SERVICES TO THE ASSESSEE COMPANY. 24. NOW, THE QUESTION WHICH ARISES IS WHETHER THE COMMISSION PAID TO RAVI AGARWAL BY THE ASSESSEE COMPANY MERITS TO BE ALLOWED OR NOT? IN THE FIRST INSTANCE, THE ASSESSING OFFICER HAS FAILED TO BRING ON RECORD ANY EVIDENCE TO ESTABLISH THAT THE CLAIM OF COMMISSION PAID BY T HE ASSESSEE IS NOT CORRECT. THE ASSESSEE IS THE BEST JUDGE OF ITS AFFAIRS AND O NCE IT HAD AGREED TO PAY THE COMMISSION TO A PERSON WHO IS PROVIDING HIS SERVICE S TO THE ASSESSEE COMPANY, THEN UNLESS OTHERWISE, IT IS NOT ALLOWABLE BECAUSE OF ANY RESTRICTIONS PUT UNDER THE SECTION, THE EXPENDITURE AS SUCH IS A LLOWABLE IN ENTIRETY UNDER SECTION 37(1) OF THE ACT. ACCORDINGLY, WE HOLD SO. 25. THE SECOND ASPECT OF THE RECIPIENT HAVING INCLU DED THE SAID INCOME IN ITS RETURN OF INCOME AND PAYING TAXES AND THERE BEING N O LOSSES TO THE EXCHEQUER, SINCE THE RATE OF TAXES PAID ARE SAME IN THE HANDS OF ASSESSEE AND THE RECIPIENT AND APPLYING THE PRINCIPLE LAID DOWN BY T HE HONBLE BOMBAY HIGH COURT IN CIT VS. INDO SAUDI SERVICES (TRAVEL) PVT. LTD. (SUPRA), WE HOLD THAT THE EXPENDITURE IS TO BE ALLOWED IN ENTIRETY IN THE HANDS OF ASSESSEE. ACCORDINGLY, THE GROUND OF APPEAL NO.3 RAISED BY TH E ASSESSEE IS ALLOWED AND THE GROUND OF APPEAL NO.7 RAISED BY THE REVENU E IS DISMISSED. FROM THE ABOVE ORDER OF THE TRIBUNAL, WE FIND THE ISSUES R AISED IN GROUND NOS. 2, 3, 5 AND 6, I.E.. (1) DISALLOWANCE OF PART OF INT EREST U/S.36(1)(III) OF THE ACT (2) COMMISSION PAID TO SANJAY AGRAWAL-H UF AND SHRI RAVI SANJAY AGRAWAL ARE HELD IN FAVOUR OF THE ASSESSEE. H OWEVER, THE ISSUE 7 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. RAISED BY THE ASSESSEE IN GROUND NO.7 RELATING TO PART O F THE SALARY PAID TO SMT. SANTOSH SANJAY AGRAWAL STANDS CONFIRMED BY THE TRIBUNAL (SUPR A). CONSIDERING THE ABOVE, WE DIRECT THE AO TO FOLLOW THE RATIO GIVEN BY THE TRIBUNAL ON THE AFORESAID ISSUES. ACCORDINGLY, WE REMAND T HESE ISSUES TO THE FILE OF AO WITH DIRECTION TO COMPLY STRICTLY WITH THE DE CISION OF THE TRIBUNAL ON COMPARING THE FACTS OF THE SAID ISSUES RELATING TO INTEREST AND COMMISSION DISALLOWANCE. AO SHALL GRANT REASONABLE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. THUS, GROUND NOS. 2, 3, 5 TO 7 RAISED BY THE ASSESSEE STANDS COVERED ISSUES. ACCORDINGLY, THE G ROUNDS NO.2, 3 AND 5 TO 7 ARE ALLOWED FOR STATISTICAL PURPOSES. THAT LEAVES GROUND NOS. 1, 4 AND 8 FOR ADJUDICATION. 7. GROUND NO.1 RELATES TO THE CONFIRMATION OF ADDITION OF R S.40 LAKHS U/S.68 OF THE ACT ON ACCOUNT OF UNEXPLAINED SHARE APPLICAT ION MONEY. RELEVANT FACTS INCLUDE THAT THE ASSESSEE RAISED SHARE AP PLICATION MONEY OF RS.1.45 CRORES DURING THE YEAR FROM 7 SUBSCRIBERS. DETAILS ARE GIVEN IN TABLE WHICH IS EXTRACTED BELOW : NAME OF THE SHARE APPLICATION MONEY APPLICANT OPENING BALANCE MONEY RECEIVED DURING THE YEAR MONEY REPAID DURING THE YEAR CLOSING BALANCE AJIT VORA 0 7,00,000 0 7,00,000 NIRANJAN BHATWAL 21,00,000 0 16,00,000 5,00,000 BHAGWATI SHAH 0 10,00,000 0 10,00,000 CHARULATA A. VOJA 0 8,00,000 0 8,00,000 M.. INTERNATIONAL 0 1,00,00,000 0 1,00,00,000 R. ARVINDKUMAR 0 5,00,000 0 5,00,000 SIDDHI T. SHAH 0 3,00,000 0 3,00,000 TUSHAR P. SHAH 0 7,00,000 0 7,00,000 VIJAY KUMAR GWALERWALA-HUF 0 5,00,000 0 5,00,000 PRERNA INDUSTRIES 13,00,000 0 0 13,00,000 34,00,000 1,45,00,000 16,00,000 1,63,00,000 8 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. THE AO IN PARA 6 OF HIS ORDER HELD THAT THE ASSESSEE FAILE D TO PROVIDE SUPPORTING EVIDENCES SHOWING THE (1) CREDIT WORTHINESS AN D (2) GENUINENESS OF THE SHARE APPLICANTS. THE AO ALSO OBSERVED THAT THE AUTHORIZED CAPITAL OF THE ASSESSEE IS ONLY RS.3 CRORES AND SAME WAS ALREADY SUBSCRIBED FULLY. THEREFORE, AS PER AO, RAISING ADDITIONAL SHARE APPLICATION MON EY WITHOUT HAVING EXTENDED AUTHORIZED CAPITAL INDICATES THE BOGUS NA TURE OF THE SHARE APPLICATION MONEY. RELEVANT PORTION OF THE ASSESSMENT ORDER READ S AS UNDER IN SUPPORT OF MONEY BORROWED DURING THE YEAR NO SU PPORTING IN RESPECT OF CREDITWORTHINESS AND GENUINENESS OF THE SHARE APPLI CANT IS PLACE ON RECORD, DESPITE BEING SPECIFICALLY REQUESTED TO SUBSTANTIAT E VIDE QUESTION NO.5 OF NOTICE ISSUED U/S.142(1) OF 01-03-2013. FURTHER ON GOING THROUGH THE SCHEDULE 1 OF BALANCE SHEET IT IS NOTICED THAT THE COMPANYS AUTHORIZED SHARE CAPITAL IS OF 3000000 SH ARES OF RS.10 EACH AND WHICH IS FULLY SUBSCRIBED AND OVER AND ABOVE COMPAN Y IS CALLING SHARE APPLICATION MONEY AGAINST COMPANY IS NOT ABLE TO IS SUE SHARES AND CONVERT SAID SUM IN SHARE CAPITAL. THIS SHOWS THE DELIBERA TE ACT OF THE ASSESSEE TO INTRODUCE THE FUNDS BY WAY SHARE APPLICATION WHICH IT CANNOT CONVERT INTO SHARE CAPITAL. AS THE ASSESSEE IS NOT ABLE TO PROV E THE GENUINENESS AND CREDITWORTHINESS OF SHARE APPLICATION MONEY I HEREB Y ADD THE SAID SUM TO THE TOTAL INCOME OF RS.1,45,00,000/- 8. DURING THE FIRST APPELLATE PROCEEDINGS, ASSESSEE FILED V ARIOUS DOCUMENTS IN SUPPORT OF CORRECTNESS OF THE CREDIT WORTH INESS AND GENUINENESS OF THE TRANSACTION. CIT(A) HANDED OVER THE P APERS TO THE AO FOR WANT OF A REMAND REPORT. ON OBTAINING THE SAME FROM TH E AO, AFTER FULFILLING THE DUE PROCESS OF LAW, THE CIT(A) SCRUTINIZED THE ISSU E AND HELD THAT ONLY RS.40 LAKHS SHOULD BE DISALLOWED. CONTENTS OF PA RA NO.6.5 OF THE ORDER OF CIT(A) ARE RELEVANT AND THEREFORE THE SAME IS EX TRACTED HERE AS UNDER : 6.5. KEEPING IN VIEW THE QUANTUM OF RETURNED INCOME AND ABSENCE OF ANY DOCUMENTARY EVIDENCE FOR ADVANCING R S.3 LAC TO THE APPELLANT COMPANY, I AM OF THE VIEW THAT THE APPELLANT HAS FA ILED TO PROVE THE CREDITWORTHINESS OF THE SHARE APPLICANT IN ITS ENTI RELY. I THEREFORE, UPHOLD THE ADDITION OF RS.3 LAC OUT OF RS.5 LAC U/S. 68 OF THE ACT. TO SUM UP, ADDITION OF RS.40 LAC ( SHRI AJIT VORA RS. 7 LAC, BHAGWATI SHAH RS.10 LAC; SMT. CHARULATA A VORA RS.8 LAC; SHRI ARVIND KUMAR RS.2 LAC ; SHRI SIDDHI T. SHAH RS.3 LAC; SHRI TUSHAR A SHAH RS. 7 LAC AND SHRI VINALY KUMAR GHUWALEWALA ( HUF) 9 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. RS.3 LAC) OUT OF THE TOTAL ADDITION OF RS.1,45,00,0 00/- IS UPHELD U/S. 68 OF THE ACT. THE APPELLANT GETS A RELIEF OF RS.1,05,00,000/ - GROUND NO. 2 IS PARTLY ALLOWED. THUS, OUT OF THE TOTAL NINE SHARE APPLICATION MONEY SUBSC RIBERS, 7 ARE CURRENT SUBSCRIBERS AND MOST OF THEM ARE FOUND TO HAVE NO CREDITW ORTHINESS. THE CIT(A) CONFIRMED THE ADDITION OF RS.40 LAKHS OUT OF RS.1 .45 CRORES AS UNEXPLAINED SHARE APPLICATION MONEY AND GRANTED RELIEF TO T HE EXTENT OF BALANCE OF RS.1.05 CRORES. FURTHER, IT IS NOTICED FROM THE A BOVE EXTRACTED PARAGRAPH THE RELEVANT DISCUSSION GIVING REASONS FOR A LLOWING THE SAID BALANCE OF RS.1.05 CRORES. FURTHER, ON OBSERVING THE CON TENTS OF PARA NO.6.4, WE FIND THE CIT(A) GRANTED RELIEF IN CASES, WHEREVER T HERE ARE CASH DEPOSITS BEFORE THE CHEQUES ARE GIVEN TO THE ASSESSEE TOWARDS SHARE APPLICATION MONEY. FURTHER, ON ACCOUNT OF VARIOUS SUSPICIO US ORIENTED FINDING, THE CIT(A) CONFIRMED THE ADDITION OF RS.40 LAKHS MADE B Y THE AO IN THIS REGARD. 9. AGGRIEVED WITH THE SAID CONFIRMATION OF ADDITION OF RS.40 LAKHS THE ASSESSEE IS IN APPEAL VIDE GROUND NO.1 ABOVE. OFCOURSE, TH E REVENUE IS IN APPEAL AGAINST THE RELIEF OF RS.1.05 CRORES GRANTED BY THE CIT(A) TO THE ASSESSEE. CONSIDERING THE NEXUS OF THE ISSUE, WE PROCEE D TO DEAL WITH THE ISSUE IN A HOLISTIC MANNER IN THE SUCCEEDING PARAGRAPHS OF THE ORDER. BEFORE THE TRIBUNAL 10. BEFORE US, ON THIS ISSUE OF CONFIRMATION OF RS.40 LAKHS, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE 7 OF SHARE APPLICATION M ONEY SUBSCRIBERS ARE ASSESSED TO TAX. IN THIS REGARD, LD. COUNSEL BROUG HT OUR ATTENTION TO VARIOUS EVIDENCES BY WAY OF PAN CARDS, BANK STATEMENTS, CONFIRMATION LETTERS ETC., AND SUBMITTED THAT THE TRANSACTIONS ARE GE NUINE TRANSACTIONS AND THE DETAILS ARE ON RECORDS OF INCOME-TAX DEPARTMENT FOR VARIOUS YEARS. 10 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. THE FACT THAT THEY ARE ASSESSED TO TAX REGULARLY WAS ALSO DEMONS TRATED BEFORE US. LD. COUNSEL ARGUED FOR GRANTING RELIEF IN RESPECT OF THIS AMOUNT OF RS.40 LAKHS CONSIDERING THE CREDITWORTHINESS AND GENUINENESS OF THE TRAN SACTION. WITHOUT PREJUDICE, LD. COUNSEL SUBMITTED THAT THE ASSESSE E VOLUNTARILY OFFERED A SUM OF RS.50 LAKHS DURING THE ASSESSM ENT PROCEEDINGS ON ADHOC BASIS TOWARDS THE DISCREPANCIES IF ANY IN MATTE RS OF CLAIM IN THE RETURN OF INCOME BY THE ASSESSEE. FOR THIS PROPOSITION, H E BROUGHT OUR ATTENTION TO THE LETTER OF THE ASSESSEE, COPY OF WHICH IS PLACED IN THE PAPER BOOK AT PAGE NO.72 OF THE PAPER BOOK AND READ OUT TH E RELEVANT LINES. FURTHER, ARGUING AGAINST ANY SEPARATE ADDITION ON ACCOUN TS OF SHARE APPLICATION MONEY OR UNSECURED LOAN ETC. LD. COUNSEL SUBMIT TED THAT SAID SUM OF RS.40 LAKHS ADDED U/S.68 OF THE ACT IS NOTHING BUT PART OF THE BUSINESS INCOME EARNED BY THE ASSESSEE AND THE SAME IS OFFERED TO PLUG ANY DEFICIENCIES. THEREFORE, AS PER LD. COUNSEL, THE ASSESSEE IS ENTITLED TO TELESCOPIC BENEFIT. REFERRING TO GROUND NOS. 4 AND 8, LD. CO UNSEL SUBMITTED THAT WHILE THE GROUND NO.4 DEALS WITH THE ADDITION OF RS.50 LAKHS OFFERED SUO MOTO BY THE ASSESSEE AND THE GROUND NO. 8 RELATES TO THE REQUEST FOR TELESCOPIC BENEFIT AGAINST SET OFF OF SUM OF RS.50 LAKHS OFFERE D BY THE ASSESSEE. FURTHER, LD. COUNSEL SUBMITTED THAT IT IS NOT T HE CASE OF THE AO THAT THE ASSESSEE HAS OTHER STREAMS OF INCOME AND THE REFORE CASE FOR SEPARATE ADDITION OF RS.50 LAKHS OR SAID ADDITION OF RS. 40 LA KHS ON ACCOUNT OF SHARE APPLICATION MONEY IS REQUIRED TO BE DELETED AND A LLOW THE BENEFIT OF TELESCOPIC BENEFIT. HE SUMMED UP BY SAYING THAT, IN A WAY, GROUND NOS. 1, 4 AND 8 ARE INTERLINKED. FURTHER, MENTIONING THAT ASSESSE E OFFERED SUM OF RS.50 LAKHS ON ADHOC BASIS TOWARDS ANY DISCREPANCIES IN T HE ASSESSMENT TO AVOID LITIGATION WHERE THE AO MADE ITEMIZED ADDITIONS AMOUNT ING TO RS.6,14,97,879/- CONSTITUTES DOUBLE ADDITION TO THE EXTENT OF RS.50 LAKHS. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ONLY RS.50 LA KHS SHOULD BE 11 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. ADDED AT THE END OF THE ASSESSMENT AND THE BALANCE A DDITIONS SHOULD BE DELETED. THE FACT THAT CIT(A) APPRECIATED COUNSELS ARGU MENT TO SOME EXTENT WAS ALSO DEMONSTRATED BY THE LD. COUNSEL. HOWEVER, LD . COUNSEL WAS CRITICAL OF THE ORDER OF CIT(A) IN NOT ONLY CONFIRMING THE ADD ITION OF RS.40 LAKHS BUT ALSO SHARE APPLICATION MONEY TO THE EXTENT OF R S.40 LAKHS AND THE SAID ORDER CONSTITUTES AN UNFAIR ONE. 11. LD. COUNSEL ALSO FILED WRITTEN SUBMISSIONS ON THE ISSUE S RAISED IN GROUND NO. 1, 4 AND 8 AND THE SAME ARE EXTRACTED HERE AS UNDER : GROUND NO.1 ADDITION OF RS.40,00,000/- U/S.68. THE A.O. HAS MADE ADDITION U/S 68 OF RS. 1 . 45 CRS. OUT OF THIS ADDITION, THE CIT(A) HAS CONFIRMED AN ADDITION OF RS. 40 LACS. TH IS ISSUE IS DISCUSSED BY THE CIT(A) IN PARA 6.5 OF HIS ORDER, PAGE 21 . THE ASSESSEE SUBMITS THAT THE ADDITION MADE IS NOT JUSTIFIED SINCE THE RELEVANT D ETAILS OF THE PERSONS FROM WHOM THE SHARE APPLICATION MONEY WAS RECEIVED WAS D ULY SUBMITTED TO THE A.O. ACCORDINGLY, THE ADDITION CONFIRMED OF RS. 40 LACS MAY KINDLY BE DELETED. GROUND NO. 4 AND 8 - ADDITION OF RS. 50 LACS AND BENEFIT OF TELESCOPING: THE ASSESSEE HAD OFFERED AN AMOUNT OF RS. 50 LACS IN THE ASST . PROCEEDINGS ON AN AD-HOC BASIS. THE A.O. HAS MADE THE SAID ADDITIO N. THE ASSESSEE SUBMITS THAT SINCE OTHER ADDITIONS ARE MADE BY THE A . O, THE ADDITION OF RS. 50 LACS SHOULD NOT BE MADE. HOWEVER, WITHOUT PREJUDICE , IT IS SUBMITTED THAT IN THE ASST . PROCEEDINGS, THE ASSESSEE HAD MADE AN AD- HOC DECLA RATION OF RS.50 LAKHS TO COVER FOR ANY ERRORS/OMISSIONS. THE LETTER MAKING THE SAID DECLARATION IS ON PAGE 72 OF THE PAPER BOOK . THE ASSESSEE SUBMITS THAT THE A.O. AND CIT(A) HAS TAXED RS. 50 LAKHS IN ADDITION TO SEPARATE INDIVIDUAL ADDITIONS. IT IS SUBMITTED THAT THE ADDITION OF RS. 50 LAKHS SHOULD BE TELESCOPED AGAINST ANY OTHER ADDITION BEING CONFIRMED AND THERE IS NO REASON TO SEPARATELY MAKE INDIVIDUAL ADDITIONS AND ALSO TH E ADDITION OF RS. 50 LACS OFFERED BY THE ASSESSEE ON AN AD-HOC BASIS. THUS, T HE ADDITION OF RS. 50 LACS SHOULD BE TELESCOPED AGAINST OTHER INDIVIDUAL ADDIT IONS FINALLY CONFIRMED. 12. ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED HEAV ILY ON THE ORDERS OF THE AO/CIT(A) TO THE EXTENT OF RS.90 LAKHS (RS.50 LAKHS + RS.40 LAKHS). FURTHER, LD. DR WAS CRITICAL OF THE DECISION OF CIT(A) IN GRANT ING RELIEF OF RS.1.05 CRORES ON ACCOUNT OF SHARE APPLICATION MONEY, LD. DR ARGUED FOR CONFIRMING THE ENTIRE ADDITION OF RS.1.45 CRORES AS WELL AS RS .50 LAKHS OFFERED BY THE ASSESSEE. 12 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. FURTHER, LD. DR FOR THE REVENUE ARGUED IN FAVOUR OF REMA NDING THE ENTIRE ISSUE TO THE FILE OF THE AO AND ARGUED ON THE CIT(A )S FAILURE TO REMAND THE ISSUES TO THE AO. IN THIS REGARD, TO THE SIGNIFICANCE THIS NEW DEMAND OF LD. DR, GRANTED 2 MONTHS TIME ON 07-06-2018 TO FURNISH A REMAND REPORT ANYTHING FROM THE AO. ON 30-07-2018, LD. DR FILED A COPY O F THE SAID REMAND REPORT DATED 18-07-2018 FROM THE DCIT, CIRCLE-1, JALGAON. THE CONTENTS OF PARA NO.7 OF THE REMAND REPORT RELATES TO T HE SHARE APPLICATION MONEY AND THE LD. DR RELY ON THE SAME ON THIS ISSUE OF SHARE APPLICATION MONEY. HOWEVER, IT IS AN ADMITTED POSITION THAT THE AO AN D THE DR HAS NOTHING TO DISPUTE OR CONTRIBUTE ON THE ISSUE OF TELESCOP Y ON THE ALLEGATION OF DOUBLE ADDITION. 13. WE HEARD BOTH THE PARTIES ON THIS ISSUE OF SHARE AP PLICATION MONEY OF RS.1.45 CRORES ON ONE SIDE, CONFIRMING THE ADDITION TO THE E XTENT OF RS.40 LAKHS IN THE ORDER AND THE REQUEST FOR TELESCOPY BENEFIT AGAINST THE SET OFF OF RS.50 LAKHS OFFERED BY THE ASSESSEE DURING THE ASSESSMEN T PROCEEDINGS. WE HAVE ALSO CONSIDERED THE WRITTEN SUBMISSIONS OF THE LD. A O/DR BY WAY OF REMAND REPORT AND FIND THE CONTENTS OF PARA NO.7 ARE R ELEVANT. PARA NO. 7 READS AS UNDER : 7. WITHOUT PREJUDICE TO ABOVE, IT IS SEEN THAT TH E ASSESSEE HAS COLLECTED SHARE APPLICATION MONEY FROM EIGHT PERSONS, DETAILS OF THE SAME ARE AS UNDER : 1. AJIT VORA RS.7,00,000/- 2. BHAGWATI SHAH RS.10,00,000/- 3. CHARULATA VORA RS.8,00,000/- 4. M.S. INTERNATIONAL RS.1,01,00,000/- 5. R. ARVINDKUMAR RS.5,00,000/- 6. SIDDHI T. SHAH RS.3,00,000/- 7. TUSHAR SHAH RS.7,00,000/- 8. VINAYKUMAR (HUF) RS.5,00,000/- ---------------------------------- TOTAL : RS.1,45,00,000/- ----------------------------------- THE CIT(A) HAS DELETED THE ADDITION IN RESPECT OF F OLLOWING PERSONS : 1. M.S. INTERNATIONAL RS.1,01,00,000/- 2. R. ARVINDKUMAR RS.3,00,000/- (OUT OF 5 LACS) 13 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. 3. VINAYKUMAR (HUF) RS.1,00,000/- (OUT OF 5 LACS) THE CIT(A) HAS HELD THAT THE CREDITWORTHINESS OF AM OUNT OF RS.1,05,000- IS PROVED BY THE ASSESSEE. IN THIS, MAJOR AMOUNT PERT AINS TO M.S. INTERNATIONAL. FOLLOWING CHEQUES ARE CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE. DATE AMOUNT 15-07-2009 RS.14,00,000/- 16-01-209 RS.16,00,000/- 20-08-2009 RS.20,00,000/- 22-08-2009 RS.10,00,000/- 06-10-2009 RS.40,00,000/- THE ASSESSEE HAS SUBMITTED CONFIRMATIONS FROM SHARE APPLICANT, COPY OF RETURN OF INCOME AND BANK ACCOUNT STATEMENT OF THE SHARE A PPLICANT. THE CIT(A) HAS SATISFIED ON THE SUBMISSION OF THE ASSESSEE AND DEL ETED THE ADDITION ON THE GROUND THAT THE ENTRIES IN THE BANK ACCOUNT OF SHAR E APPLICANT ARE THROUGH CHEQUE ONLY. HOWEVER, CREDITWORTHINESS OF THE LEND ERS CANNOT BE GENUINE SOLELY ON THE BASIS OF MOVEMENT OF CHEQUES IN THE B ANK ACCOUNT. THE SOURCE OF SHARE APPLICANT REQUIRES TO BE THOROUGHLY EXAMINED. THOUGH THE IDENTITY IS PROVED, BUT CREDITWORTHINESS AND GENUINENESS OF TRA NSACTION IS NOT PROVED BY THE ASSESSEE. ON PERUSAL OF BANK ACCOUNT OF SHARE APPLICANT, IT IS SEEN THAT THE AMOUNTS ARE CREDITED BY RTGS TRANSFER BEFORE RE MITTING THE SAME TO THE ASSESSEE CO. THE SOURCES OF SUCH RTGS AMOUNT ARE R EMAINED TO BE VERIFIED. SIMILARLY, SOURCES OF OTHER TWO SHARE APPLICANTS TO WHOM PARTIAL RELIEF IS GRANTED ARE ALSO REMAINED TO BE VERIFIED. SIMILARL Y IT IS ALSO SEEN THAT AUTHORIZED SHARE CAPITAL OF THE ASSESSEE CO. IS FUL LY SUBSCRIBED, HENCE THERE IS NO SCOPE TO ACCEPT FURTHER SHARE APPLICATION MONEY. IN ADDITION TO THIS, NO RESOLUTION OF BOARD OF DIRECTORS IS FURNISHED TO AC CEPT FURTHER SHARE APPLICATION MONEY. IT IS ALSO SEEN THAT THOUGH THE CO. HAS RES ERVE IN BALANCE SHEET BUT NEVER HAS DECLARED ANY DIVIDEND. EVEN AFTER THESE CIRCUMSTANCES, THE INVESTOR HAS INVESTED THE AMOUNT OF RS.1 CR. THE INVESTOR H AS GOT NO BENEFIT. HE WAS NOT ALLOTTED THE SHARES AND HE WAS GIVEN THE MONEY BACK WITHOUT ANY INTEREST. THUS THE CIRCUMSTANTIAL EVIDENCE LEADS TO THE CONCL USION THAT SHARE APPLICATION MONEY RECEIVED IS NOT GENUINE AND ADDITION OF RS.1. 05 CR REQUIRES TO BE CONFIRMED. 13.1 FURTHER, ON THIS ISSUE, THE CASE OF THE ASSESSEE IS THAT THE DECISION OF THE CIT(A) IS HYPERTECHNICAL IN CONFIRMING THE SAID SUM OF RS .40 LAKHS ON THE REASONING THAT THE CASH WAS FOUND DEPOSITED IN THE BANK ACCOUNTS OF THE SHARE APPLICATION SUBSCRIBERS JUST BEFORE THE CHEQUES AR E ISSUED TO THE ASSESSEE. IN THE PROCESS, HE IGNORED THE FACT THAT THE SAID SUBSCRIBERS WERE EXAMINED AND THEIR FINANCIAL STATEMENTS WERE SCRUTINIZED. I T IS A FINDING OF THE CIT(A) THAT THE IDENTITY OF THE SAID INDIVIDUALS AS WELL AS THE CREDITWORTHINESS OF THE SAME ARE BEYOND DOUBT. IN SUCH CIRCUMSTANCES, DISBELIEVING THE PART PAYMENTS TOWARDS THE SUBSCRIBERS C ANNOT BE SUSTAINED 14 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. ON MERITS. FURTHER, HE DID NOT DISTURB THE CLAIMS OF THE S UBSCRIBERS IN THEIR INDIVIDUAL RETURNS. FURTHER, WE CONSIDERED THE ASSESSEES OFFER OF ROUND-SUM OF RS.50 LAKHS TOWARDS THE UNSPECIFIED DISCREPANCIES IF ANY, S UCH AS SHARE APPLICATION MONEY, UNSECURED LOANS ETC. AND FIND THAT THE OFFER STANDS EVEN TODAY. IN SUCH CIRCUMSTANCES, MAKING SEPARATE ADDITION O F RS.40 LAKHS ON ACCOUNT OF SPECIFIC DISCREPANCIES IN SHARE APPLICATION MONEY ACCOUNT IS NOT LEGALLY SUSTAINABLE AS THE SAME AMOUNTS TO DOUBLE TAXATIO N. AS PER LD. COUNSEL, THE CIT(A) ALSO IGNORED THE FACT THAT THE SAID OFFER OF RS.50 LAKHS WAS ALSO EARNED OUT OF BUSINESS ACTIVITIES OF THE ASSESSEE AND MAKING SEPARATE ADDITION ON ACCOUNT OF RS.50 LAKHS, IN ADDITION TO THE SAID RS.40 LAKHS, IS NOT PROPER. IT IS THE CLAIM OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE IS ENTITLED TO TELESCOPY BENEFIT TO THE EXTE NT OF RS.40 LAKHS OUT OF THE SAID OFFER OF RS.50 LAKHS. 14. PER CONTRA, ON THIS ISSUE OF ADDITION OF RS.40 LAKHS, ADDITION OF RS.50 LAKHS AND THE CLAIM OF TELESCOPY BENEFIT, LD. DR FOR THE REVE NUE HAS NOTHING TO SAY EXCEPT RELYING ON THE WRITTEN REMAND REPORT OF THE AO. THE SAID REMAND REPORT OF THE AO DATED 18-07-2018 IS ALSO SILENT ON THIS PART OF CLAIMS OF THE ASSESSEE. IN ANY CASE, IT IS THE GENERAL CAS E OF THE REVENUE THAT ENTIRE AMOUNTS OF RS.1.45 CRORES AS WELL AS RS.50 LAKH S NEEDS TO BE CONFIRMED. 15. WE HEARD BOTH THE PARTIES ON THE ISSUE OF CONFIRMING OF RS.40 LAKHS ABOVE FOR WHICH THE ASSESSEE IS IN APPEAL. WE FIND THERE IS NO DISPUTE ON THE FACTS. THE CORE REASON FOR CONFIRMING THE SAID ADDITION OF R S.40 LAKHS INVOLVING 7 SHARE APPLICATION SUBSCRIBERS IS DEPOSITING OF CAS H IN THEIR BANK ACCOUNTS BEFORE THE CHEQUES ARE ISSUED TO THE ASSESSE E TOWARDS SHARE APPLICATION MONEY. OTHERWISE, AO DID NOT GIVE ANY FINDING OF FA CT WITH REGARD TO THE ABSENCE OF ADEQUATE CASH FLOW AND POSITIVE CASH BALANCES IN 15 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. THE ACCOUNTS OF RESPECTIVE SUBSCRIBERS. NOTWITHSTANDING THE ABOVE ARGUMENT, WE FIND THAT THE ASSESSEE STILL ABIDE BY THE DIS CLOSURE OF RS.50 LAKHS MADE BY THE ASSESSEE DURING THE ASSESSMENT PROC EEDINGS. NO CASE IS MADE OUT BY THE AO THAT THE SAID RS.50 LAKHS IS NOT EAR NED BY THE ASSESSEE FROM THE EXISTING BUSINESS OPERATIONS OF THE ASSESSEE. ON THIS ISSUE OF TELESCOPY, IT IS SETTLED LEGAL PROPOSITION THAT THE TELESCOPY BENEFIT NEEDS TO BE GRANTED SO LONG AS NO SEPARATE SOURCE OF INCOME IS DISCO VERED BY THE AO. THEREFORE, WE ARE OF THE OPINION THAT THE CLAIM OF THE ASSE SSEE FOR GRANT OF TELESCOPY BENEFIT AGAINST THE DISCLOSURE OF RS.50 LAKHS SHOU LD BE ALLOWED. THUS, GROUND NO.1 IS PARTLY ALLOWED AND GROUND NO. 8 IS ALLO WED. ACCORDINGLY, WE ORDER. CONSEQUENTLY, THE CIT(A) DECISION OF MAKING DOUBLE ADDITION O F RS.40 LAKHS AS WELL AS RS.50 LAKHS STANDS REVERSED. THE OVERALL ADDITION SHOULD BE RESTRICTED TO ONLY RS.50 LAKHS AS OFFERED BY THE ASSESSEE. THUS , GROUND NO.4 IS PARTLY ALLOWED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. WE SHALL NOW TAKE UP THE APPEAL OF THE REVENUE. ITA NO.1640/PUN/2013 BY REVENUE A.Y. 2010-11 17. GROUNDS RAISED BY THE REVENUE READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE HON'BLE CIT(A), NASHIK HAS ERRED IN DELETING THE ADDITIONS MADE U/S .68 AND HOLDING THAT THE CREDITORS HAVE ESTABLISHED THEIR CREDITWORTHINESS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE HON'BLE CIT(A), NASHIK HAS ERRED IN DELETING THE ADDITIONS MADE ON A/C OF ALLEGED UNEXPLAINED 16 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. SHARE APPLICATION MONEY AND HOLDING THAT THE SHARE APPLICATION MONEY AS GENUINE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE HON'BLE CIT(A), NASHIK HAS ERRED IN DELETING THE ADDITION MADE U/S. 37 ON ACCOUNT OF CONSIGNMENT EXPENSES AND HOLDING THAT THE CONSIGNME NT EXPENSES ARE GENUINE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE HON'BLE CIT(A), NASHIK HAS ERRED IN DELETING THE ADDITIONS MADE ON A/C OF DISALLOWANCE OF INTEREST ON INTEREST FREE ADVANCES U/S.36(1)(III) A ND HOLDING THEM AS GENUINE. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY , DELETE AMEND ANY OF THE GROUNDS WITH PRIOR PERMISSION OF THE HON'BLE CIT, A S PER THE CIRCUMSTANCES OF THE CASE. 6. THE APPELLANT PRAYS TO FILE ANY OF THE ADDITIONA L EVIDENCE APPROPRIATE TO THE GROUNDS TAKEN IN APPEAL. 18. AT THE OUTSET, LD. DR FOR THE REVENUE SUBMITTED THA T GROUND NO.4 OF THE APPEAL IS CONNECTED TO GROUND NO. 2 AND 3 OF THE ASSESSEES APPEAL. CONSEQUENTLY, THE SAID GROUND NO.4 IS REQUIRED TO BE CON SIDERED AS COVERED BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009-10 (SUPRA). WE ORDER ACCORDINGLY. THUS, GROUND NO.4 RAISED B Y THE REVENUE IS DISMISSED. 19. GROUND NOS. 5 AND 6 BY THE REVENUE ARE GENERAL IN N ATURE AND THEREFORE THEY ARE DISMISSED AS SUCH. THAT LEAVES GROUN D NOS.1 TO 3 FOR ADJUDICATION. 20. GROUND NO.1 RELATES TO DELETION OF ADDITION OF RS.3,27,34,08 4/- ON ACCOUNT OF UNSECURED LOANS. RELEVANT FACTS INCLUDE THAT T HE AO CALLED FOR THE DETAILS OF SUPPORTING DOCUMENTS IN RESPECT OF SAID CLAI M OF UNSECURED LOANS. AO GRANTED COUPLE OF OPPORTUNITIES BEFORE ASSUMING THAT THE SAID LOAN CREDITORS ARE BOGUS AND NON-GENUINE. RELEVANT LINES FROM PARA NO.10 ARE EXTRACTED HERE AS UNDER : 10. UNSECURED LOAN CREDITORS ADDITION U/S. 68 OF T HE ACT. ON THIS ISSUE ASSESSEE WAS GIVEN OPPORTUNITY 2 TIME S TO SUBMIT THE DETAILS AND SUPPORTIVE DOCUMENTS IN RESPECT OF UNSECURED LO AN BORROWED DURING THE YEAR. ASSESSEE WAS ASKED TO PROVE THE CREDITWORTHIN ESS AND GENUINENESS OF 17 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. THE LENDERS FROM WHOM THE ASSESSEE HAS BORROWED THE FUNDS DURING THE YEAR. AFTER GIVING SUFFICIENT TIME ASSESSEE AGAIN ON 05-0 3-2013 FILED ON ACCOUNT STATEMENT OF UNSECURED LOAN HOLDERS AND HAS STATED IN ITS SUBMISSION THAT THEY WILL BE SUBMITTING THE DOCUMENTS PROVING THE C REDITWORTHINESS AND GENUINENESS OF THE LENDERS IN DUE COURSE. THE SAME IS ALSO NOT FILED TILL DATE, WHICH APPARENTLY PROVES THAT THE AMOUNT BORROWED DU RING THE YEAR IS BOGUS AND NON GENUINE. FURTHER AS PER COMPANIES ACT PVT. LTD COMPANY CAN BORROW THE FUNDS ONLY FORM ITS SHAREHOLDERS AND CLOSED REL ATIVE OF SHAREHOLDERS ONLY AND NON SUBMISSION OF CREDITWORTHINESS DOCUMENTS AN D CONFIRMATION OF THE SAME HAS CAUSED ME TO A BASIS FOR MAKING OF ADDITIO N OF THE LOAN FUND BORROWED DURING THE YEAR AS AN BOGUS BORROWING AND LIABLE TO ADDED U/S 68 OF THE ACT. DURING THE YEAR COMPANY HAS BORROWED TO RS .9,98,34,114/- FROM VARIOUS PERSON OTHER THAN BANKS/FINANCIAL INSTITUTI ONS AS PER TAX AUDIT REPORT, OUT OF WHICH A SUM OF RS.6,71,00,030/ - WAS REPAID TO ONE PARTY AND BALANCE OF RS.3,27,34,084/- IS STILL OUTSTANDING WHICH IS A DDED TO THE TOTAL INCOME OF THE ASSESSEE. 21. DURING THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) ANALY SED ALL THE UNSECURED LOAN CREDITORS AND TABULATED THE CREDITWORTHIN ESS OF THE SAID LENDERS, THEIR INCOME-TAX PARTICULARS, THEIR GROSS INCOME RE TURN PARTICULARS, BANK DETAILS, CREDITWORTHINESS DETAILS OF EACH AND EVERY C ASE IN PAGE NOS. 9 TO 12 OF THE ORDER OF CIT(A). FURTHER, THE CIT(A) CONSIDERE D THE REMAND REPORT FROM THE AO ON EACH OF THE LENDERS AND HELD THAT THE AO IS UNJUSTIFIED IN MAKING ADDITIONS BY GIVING THE STATEMENTS. CONTENTS OF PARA NO.5.8 O F THE ORDER OF CIT(A) ARE RELEVANT AND THE SAME ARE REPRODUCED HERE AS UN DER : 5.8. IN VIEW OF THE ABOVE FACTS NOTICED ON VERIFIC ATION OF THE SUBMISSION AND ENCLOSURES FILED BY THE APPELLANT, I AM OF THE CONS IDERED VIEW THAT THE CREDITWORTHINESS OF THE CREDITORS IN RESPECT OF WHI CH ADDITION HAS BEEN MADE BY A.O. U/S. 68 OF THE ACT STANDS SATISFACTORILY PR OVED. FURTHER, IF NECESSARY THE A.O. CAN TAKE ACTION AGAINST THE LENDERS AFTER DUE VERIFICATION IF NECESSARY, AS THE ADDRESSES AND PANS OF THE LENDERS ARE AVAILA BLE IN THE SUBMISSION FILED BY THE APPELLANT. THE COMMENT OF THE A.O. THAT THE CREDITWORTHINESS OF THE CREDITORS HAS NOT BEEN PROVED IS NOT JUSTIFIED IN V IEW OF ANY SUPPORTING EVIDENCE ON RECORD ESPECIALLY IN THE LIGHT OF AVAIL ABILITY OF THE BALANCE SHEETS, BANK STATEMENTS, COMPUTATION OF INCOME AND ACKNOWLE DGMENT OF RETURNS OF LENDERS ON RECORD. THE SAID DETAILS FILED BY THE AP PELLANT HAVE BEEN REPRODUCED IN THE PRECEDING PARAGRAPHS. THE SWEEPIN G COMMENT OF THE A.O. ABOUT CREDITWORTHINESS OF LENDERS IN THE REMAND REP ORT HAS BEEN MADE WITHOUT BRINGING ON RECORD ANY EVIDENCE SHOWING THAT THE LE NDERS WERE NOT CREDITWORTHY, PARTICULARLY IN VIEW OF THE FACT THAT THE LENDERS ARE ASSESSED TO TAX AND THEIR ADDRESSES AND PANS AND ALSO ACKN. OF I.T. RETURNS SHOWING THE WARD/CIRCLE WHERE THE LENDERS ARE ASSESSED ARE FILE D BY THE APPELLANT. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS SATISFACTORILY PROVED THE GENUINENESS OF THE TRANSACTIONS, IDENTITY OF THE CREDITORS AND THEIR AND CREDITWORTH INESS. THE AO IS, THEREFORE, NOT JUSTIFIED IN MAKING ADDITIONS OF RS.3,27,34,084 /- U/S 68 OF THE ACT ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS. THE ADDITIO N OF RS.3,27,34,084/- IS THEREFORE, DELETED. THE A.O. IS DIRECTED ACCORDING LY. GROUND NOS.1 IS ALLOWED. 18 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. 22. AGGRIEVED WITH THE ABOVE DECISION OF CIT(A) IN FAVOUR OF T HE ASSESSEE, THE REVENUE IS IN APPEAL RAISED GROUND NO.1. 23. BEFORE US, LD. DR FOR THE REVENUE EXPLAINED THE ABOV E DEVELOPMENTS ON THIS ACCOUNT OF UNSECURED LOANS AND SUBMITTED THAT T HE CIT(A) HAS NOT GIVEN SUFFICIENT TIME TO THE AO FOR CONDUCTING SCRUTINY OF AC COUNTS OF THE LENDERS QUA THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION AND REQUESTED FOR GRANT OF ONE MORE OPPORTUNITY. HE ALSO RE FERRED TO THE ADDITIONAL TIME GRANTED BY THE BENCH FOR FURNISHING THE REM AND REPORT AND ENQUIRY REPORT IF ANY WITHIN THE SPECIFIED TIME FOR ADJUDICATING THE ISSUE . 24. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE BROU GHT OUR ATTENTION TO THE DISCUSSION GIVEN BY THE CIT(A) IN PARA NOS. 5.3 TO 5 .8 OF HIS ORDER AND BROUGHT OUR ATTENTION TO THE TABULATION GIVEN THEREIN. L D. COUNSEL HIGHLIGHTED THE FACT THAT IN MOST OF THE CASES THE BANKS HAVE PROVIDED CASH CREDIT FACILITY TO THE LENDERS. THE FACT OF (1) INCOME RETURN ED BY THE LENDERS IS MORE THAN RS.10 LAKHS; (2) CASH CREDIT LIMIT APPEARING IN TH E BANK STATEMENTS IS SUBSTANTIAL; AND (3) THE NET WORTH/CAPITAL AC COUNT BALANCE CONSIDERING THE VALUE OF THE ASSETS ONLY AT COST ARE A LSO HIGHLIGHTED. BRINGING OUR ATTENTION TO PARA NOS. 5 AND 6 OF THE ORD ER OF CIT(A). LD. COUNSEL MENTIONED THAT THE AO WAS VERY CASUAL AND CARE LESS IN GIVING ADVERSE FINDINGS AGAINST THE ASSESSEE WITHOUT APPLYING HIS MIND DURING THE ASSESSMENT PROCEEDINGS WHEN THE SAME IS CALLED FOR BY THE CIT(A). T HUS, LD. COUNSEL SUBMITTED THAT THE ORDER OF CIT(A) IS FAIR AND REAS ONABLE AND THE SAME SHOULD NOT BE DISTURBED. 25. WE HEARD BOTH THE PARTIES ON THIS ISSUE OF ADDITION U /S.68 OF THE ACT AND PERUSED THE ORDERS OF THE REVENUE. AO MADE ADDITIO N OF RS.3,27,34,084/- RAISING THE ISSUES RELATING TO CREDITWORTHINE SS OF THE 19 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. CREDITORS. THE CIT(A) EXAMINED THIS ISSUE AND SCRUTINIZED THE DOCUMENTS RELATING TO THE CREDITWORTHINESS OF THE CREDITORS. THUS, H E WAS SATISFIED ABOUT THE DOCUMENTATION FURNISHED BY THE ASSESSEE AND GRANTED RELIEF TO THE ASSESSEE. FURTHER, CIT(A) HELD THAT, IN CASE OF ANY REQUIRE MENT OF TAKING ACTION ON THESE CREDITS, THE SAME CAN BE TAKEN UP ONL Y AGAINST THE LENDERS AFTER DUE VERIFICATION AND DUE PROCESS OF LAW. 25.1 WE HAVE ALSO EXAMINED THE REMAND REPORT FURNISHED BY THE AO/CIT- DR, IN PARTICULAR, AND CONTENTS OF PARA NO.8, IN PARTICULAR RE LATING TO THE UNSECURED LOAN CREDITORS AND FIND THE AO MERELY ENLISTED/ DISCUSSED THE VARIOUS GROUPS OF LENDERS AND COMMENTED BY STATING THA T THERE ARE CERTAIN PENDING VERIFICATIONS TO BE DONE AT THE END OF THE AO AND THEREFORE, REQUESTED FOR CONFIRMING THE ADDITIONS IF NOT REMANDED TO HIS FILE. OTHERWISE, THE AO DID NOT BOTHER TO EXAMINE THE CREDITOR S BY INVOKING THE PROVISIONS OF SECTION 131, 132, 133A ETC., IN THE 2 MONTHS TIME GIVEN BY THE TRIBUNAL AT THE TIME OF CALLING THE REMAND REPORT ON 07- 06-2018. THIS INACTION OF THE AO IS UNSUSTAINABLE LEGALLY AND IT CONSTITU TES UNACCEPTABLE PASSIVENESS OF AO. REQUESTING THE TRIBUNAL FOR FURTHER RE MANDING THE ENTIRE ISSUE TO THE FILE OF AO WITHOUT HAVING CREDIBLE REASONS AMOU NTS TO GRANTING OF ONE MORE OPPORTUNITY TO THE REVENUE. ANY REMAND O F AN ISSUE AMOUNTS TO CAUSING HEAVY INCONVENIENCE TO THE ASSESSEE IN MATTE RS OF ATTENDING TO THE AOS OFFICE, EXPLAINING/EVIDENCING ETC., DURING SUCH REMAN D PROCEEDINGS. HOW MANY TIMES THE ASSESSEE SHALL UNDERGO THIS RIGOUR ? THEREFORE, WE FIND THE LAW DOES NOT PERMIT SUCH LIBERAL GRANT OF REQUEST O F THE AO. AS SUCH, IT IS A CASE OF CALLING FOR RESTORING THE ISSUE TO THE FILE OF AO FO R ONE MORE ROUND WITHOUT HAVING ANY CONCRETE EVIDENCES AT HIS END. IN OUR VIEW, IT IS A CASE OF MERE DOUBTS AND SURMISES OF THE AO THAT LED HIM TO MAKE ADDITIONS ON ACCOUNT OF UNSECURED LOANS OF 20 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. RS.3,27,34,084/-. FURTHER, WE ALSO EXAMINED PARA NOS. 5.3 TO 5.8 OF THE ORDER OF CIT(A) WHICH ARE ALREADY EXTRACTED ABOVE. WE FIND THE CIT(A) HAS UNDERTAKEN THE SCRUTINY OF THE CREDITORS IN A SYSTEMATI C MANNER AND DELETED THE ADDITIONS ON FINDING THAT THERE IS NO ISSUE RELATING TO THE IDENTITY, CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS . IN OUR VIEW, THE SAID ORDER OF THE CIT(A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.1 RAISED BY THE REVENUE IS DIS MISSED. 26. GROUND NO.2 OF THE REVENUE RELATES TO THE ISSUE OF SH ARE APPLICATION MONEY AND THE RELIEF GRANTED BY THE CIT(A) TO THE EXTENT OF RS.1.05 CRORES. THIS ISSUE HAS ALREADY BEEN DEALT WITH WHILE ADJUDICATING TH E ASSESSEES APPEAL VIDE GROUND NOS. 1, 4 AND 8. IN THAT APPEAL, WE C ONFIRMED THE ADDITION OF RS.50 LAKHS (GROUND NO.4) AND ALLOWED THE BENEFIT O F TELESCOPY TO THE CONFIRMED SUM OF RS.40 LAKHS OUT OF RS.1.45 CRORES ADDE D BY THE AO. FURTHER, WE HAVE ALSO EXAMINED THE MANNER OF RELIEF GRANTE D BY THE CIT(A) TO THE EXTENT OF RS.1.05 CRORES AND FIND THE ORDER OF THE CIT(A) IS FAIR AND REASONABLE AS THE RELIEF WAS GRANTED AFTER SCRUTINIZING THE EVIDENCES FURNISHED BY THE ASSESSEE, AS DISCUSSED IN PARA NO.5.8 OF T HE ORDER OF CIT(A). CONSIDERING THE SAME, THIS GROUND RAISED BY THE REVENUE IS DISMISSED. 27. GROUND NO.3 RELATES TO THE RELIEF GRANTED BY THE CIT(A ) IN CONNECTION WITH THE ADDITION OF RS.54,56,065/- ON ACCOUNT OF CONSIGNME NT EXPENSES. RELEVANT FACTS ON THIS ISSUE INCLUDE THAT THE ASSESSEE C LAIMED SAID EXPENSES AS ALLOWABLE EXPENDITURE. FOR THE REASONS GIVEN IN PARA N O.9 IN THE ASSESSMENT ORDER, THE AO DISALLOWED THE SAME. CONTENTS OF THE SAID REASONS ARE EXTRACTED HERE AS UNDER : 9. DISALLOWANCE U/S.37(1) - CONSIGNMENT EXPENSES. EVEN AFTER REQUESTING THE ASSESSEE MORE THAN ONCE F OR CLARIFICATION REGARDING CONSIGNMENT EXPENSES PAID ASSESSEE HAS FAILED TO PU T ON RECORD CONCLUSIVE SUPPORTING EVIDENCES IN RESPECT OF PAYMENT MADE FOR CONSIGNMENT EXPENSES. ALTHOUGH IT IS CLAIMED BY THE ASSESSEE THAT IT IS R EIMBURSEMENT TO THE 21 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. CONSIGNMENT AGENT NO DOCUMENTS IN SUBMITTED FOR THE SAME. FOR CLAIMING ANY EXPENDITURE AS REVENUE EXPENDITURE IT IS HAS TO BE INCURRED FOR THE RUNNING BUSINESS AND IN THE COURSE OF BUSINESS. THE ASSESSE E HAS FAILED TO PROVE THE SAME AND ACCORDINGLY THE CONSIGNMENT EXPENSES OF RS .54,56,065/- IS HEREBY DISALLOWED FOR WANT SUPPORTIVE DOCUMENT. 28. DURING THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) DELETED THE ADDITION. AGGRIEVED WITH THE ORDER OF CIT(A), THE REVENUE IS IN APPEA L BEFORE THE TRIBUNAL VIDE GROUND NO.3. 29. LD. DR FOR THE REVENUE RELIED HEAVILY ON THE ORDER OF THE AO. 30. PER CONTRA, LD. COUNSEL FOR THE ASSESSEE FILED THE FOLLOW ING WRITTEN SUBMISSIONS IN SUPPORT OF HIS ARGUMENTS : GROUND NO. 3 DISALLOWANCE ON ACCOUNT OF CONSIGNME NT EXPENSES : 2.1] THIS ISSUE IS DISCUSSED BY CIT(A) IN PARAS 7 - 7.3, PAGES 23 - 25 OF HIS ORDER. THE LEARNED A.O. HAD MADE A DISALLOWANCE OF CONSIGNMENT EXPENSES OF RS.54,56,065/- ON THE GROUND THAT THE SAID EXPENDIT URE WAS NOT INCURRED FOR THE BUSINESS OF THE ASSESSEE. THE LEARNED CIT(A) HA S NOTED THE FACT THAT THE ASSESSEE HAS SOLD GOODS OUTSIDE THE STATE OF MAHARA SHTRA THROUGH AGENTS/ DEPOTS. THE A.O. HAD MADE THE DISALLOWANCE ON THE G ROUND THAT PROPER EVIDENCES WERE NOT FURNISHED BY THE ASSESSEE. HOWEV ER, BEFORE THE LEARNED CIT(A), DETAILED EVIDENCES WERE SUBMITTED WHICH IS NOTED BY THE CIT(A) IN PARA 7.3 OF HIS ORDER. HE HAS ALSO NOTED THAT THE ASSESS EE HAS SOLD GOODS WORTH RS.14.70 CRS. OUTSIDE MAHARASHTRA STATE AND THE EXP ENDITURE INCURRED EARN FREIGHT, SALES COMMISSION, LOADING AND UNLOADING OF GOODS WAS REQUIRED TO BE INCURRED FOR MAKING THE SAID SALES. CONSIDERING THE DETAILED EVIDENCES FURNISHED BY THE ASSESSEE, THE LEARNED CIT(A) HAS D ELETED THE ADDITION MADE. THE ASSESSEE SUBMITS THAT THE ADDITION HAS BEEN RIG HTLY DELETED BY THE LEARNED CIT(A) AND THE ENTIRE EXPENDITURE IS INCURR ED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 31. WE HEARD BOTH THE SIDES AND PERUSED THE ORDERS OF THE REVENUE ON THIS ISSUE. WE FIND CONTENTS OF PARA NO.7.3 OF THE ORDER OF CIT(A) ARE RELEVA NT AND THEREFORE, THE SAME ARE EXTRACTED HERE AS UNDER : 7.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND RIVAL CONTENTIONS AND GONE THROUGH THE COPIES OF BILLS, SALES TAX RET URNS, LEDGER A/C OF CONSIGNMENT SALES ETC. FILED BY THE APPELLANT BEFOR E ME. ON PERUSAL OF THE SAME IT HAS BEEN NOTICED THAT THE A.O HAS DISALLOWE D THE TOTAL CONSIGNMENT EXPENDITURE OF RS.54,56,065/- WHICH HAS BEEN INCURR ED BY THE APPELLANT IN RESPECT OF THE GOODS SOLD OUT OF MAHARASHTRA STATE THROUGH AGENTS/DEPOTS OUTSIDE MAHARASHTRA. THE A.O. HAS DISALLOWED THE CO NSIGNMENT EXPENDITURE CLAIMED BY THE APPELLANT FOR WANT OF DOCUMENTARY EV IDENCE. THE ABOVEMENTIONED EVIDENCE FILED BY THE APPELLANT WAS FORWARDED TO THE AO FOR HIS COMMENTS VIDE LETTER DT. 30/04/2013. THE AO, HA S FILED HIS COMMENTS STATING THAT DURING ASSESSMENT PROCEEDINGS THE ASSE SSEE HAS NOT PROPERLY 22 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. LINKED AND SUBSTANTIATED THE CONSIGNMENT EXPENSES A ND SALES AND HENCE THE ADDITION WAS MADE. HE FURTHER STATED THAT A REPORT WILL BE SENT AFTER DUE VERIFICATION OF THE ISSUE AFTER 9/6/2013. THE AO HA S HOWEVER, NOT SENT ANY REPORT TILL DATE. IT IS MORE THAN 45 DAYS SINCE THE REFERENCE WAS MADE TO AO I.E. ON 30/04/2013. IT IS ALSO NOT CLEAR FROM HIS INTERI M REPORT AS TO WHAT SORT OF ENQUIRIES HE IS MAKING. IT HAS BEEN NOTICED FROM TH E SUBMISSION FILED BY THE APPELLANT THAT DURING APPELLATE PROCEEDINGS THE APP ELLANT HAS FILED SUBMISSION WHICH HAS SUPPORTED AND ESTABLISHED THE CONSIGNMENT EXPENDITURE INCURRED WHICH WAS NOT FILED BEFORE THE A.O. DURING ASSESSME NT PROCEEDINGS, AS STATED BY THE A.O. IN HIS COMMENT REPRODUCED ABOVE. FROM T HE ABOVE EVIDENCES FILED BY THE APPELLANT, SUCH AS VAT RETURNS FILED WITH SA LES TAX DEPARTMENT, GOVT. OF MAHARASHTRA AND FORM NO. F ISSUED BY DEPOTS LOCATED OUTSIDE THE STATE OBTAINED FROM THEIR STATE GOVERNMENT DEPARTMENTS; IT IS EVIDENT THAT THE APPELLANT HAS SOLD GOODS TO THE EXTENT OF RS.14.70 CRORES OUTSIDE THE MAHARASHTRA STATE. FURTHER, FOR SELLING THE SAID GO ODS THE EXPENDITURE TOWARDS FREIGHT, SALES COMMISSION, LOADING AND UNLO ADING CHARGES ETC. ARE REQUIRED TO BE INCURRED. THE SAID EXPENDITURE I S SUPPORTED BY BILLS ISSUED BY THE DEPOTS. FURTHER, THE APPELLANT HAS MA INTAINED REGULAR BOOKS OF ACCOUNTS IN THE COURSE OF BUSINESS AND THE SAME ARE AUDITED AND THE AUDITOR HAS ALSO NOT MENTIONED ANY ADVERSE COMMENT IN REGARD TO THE SAID EXPENDITURE. THE A.O IN HIS COMM ENTS SUBMITTED DURING APPELLATE PROCEEDINGS, ON THE SUBMISSION OF THE APPELLANT, HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO PROVE THAT TH E EXPENDITURE INCURRED AND CLAIMED IS BOGUS OR NON GENUINE . IN VIEW OF THE ABOVE FACTS THE A.O IS NOT JUSTIFIED IN DISALLOWING THE CONSIGN MENT EXPENDITURE AMOUNTING TO RS.54,56,065/-. THE ADDITION OF RS.54,56,065/-IS THEREFORE, DELETED . GROUND NO.3 IS ALLOWED. FROM THE ABOVE, WE OBSERVE THAT THE CIT(A) HAS RIGHTLY A PPRECIATED THE FACT THAT THE ASSESSEE INCURRED THE EXPENSES ON ACCOU NT OF GOODS SOLD OUT OF MAHARASHTRA STATE AND THE SAME ARE SUPPORTED BY BILLS. REVENUE COULD NOT ESTABLISH ANYTHING AGAINST THE ASSESSEE BY BRINGING ANY CONTRARY MATERIAL TO PROVE THAT THE CONSIGNMENT EXPENSES INCURRED BY THE ASSESSEE ARE BOGUS. THEREFORE, WE UPHOLD THE ORDER OF CIT(A) AS FAIR AND REASO NABLE. GROUND NO.3 RAISED BY THE REVENUE IS DISMISSED. 32. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 33. TO SUM UP, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 12 TH DAY OF SEPTEMBER, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 12 TH SEPTEMBER, 2018. SATISH 23 ITA NOS.1434 & 1640/PUN/2013 MAHARASHTRA SOLVENT EXTRACTION P. LTD. ' ) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEAL)-II, NASHIK. 4. THE CIT-II, NASHIK. 5. , , ' , / DR, ITAT, B BENCH, PUNE. 6. % / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.