KFJ Gold & Diamonds (P) Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1450/CHNY/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2664 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 16-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-07-2012
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: LAKSHMI SRIRAM
• Keywords: Unexplained cash credit; Business income; Speculation loss; Futures and options
• Section: 43(5); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D' BENCH : CHENNAI , ! ' ! # . $ , & '( ) [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] ./ I.T.A.NOS.1491 & 1492/MDS/2012 / ASSESSMENT YEARS : 2007-08 & 2008-09 THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE II(4) CHENNAI VS. M/ S KFJ GOLD & DIAMONDS P LTD AC-3 AVENUE, ANNA NAGAR CHENNAI - 40 [PAN AACCK 7263 K] ( *+ / APPELLANT) ( ,-*+ /RESPONDENT) ./ I.T.A.NO.14 50 /MDS/2012 /ASSESSMENT YEAR : 2008 - 09 M/S KFJ GOLD & DIAMONDS P LTD AC-3 AVENUE, ANNA NAGAR CHENNAI - 40 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE II(4) CHENNAI ( *+ / APPELLANT) ( ,-*+ /RESPONDENT) ./ I.T.A.NO.1493/MDS/2012 / ASSESSMENT YEAR : 2007-08 THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE II(4) CHENNAI VS. SHRI SUJITH CHERIAN 67, LUZ CHURCH ROAD MYLAPORE, CHENNAI 600 004 [PAN AADPC 7155 R] ( *+ / APPELLANT) ( ,-*+ /RESPONDENT) ITA NO.1491/12 ETC. :- 2 -: DEPARTMENT BY : DR. B. NISCHAL, JCIT ASSESSEE BY : MS. LAK SHMI SRIRAM, ADVOCATE . / 0 123 / DATE OF HEARING : 16 - 02 - 2016 45 0 123 / DATE OF PRONOUNCEMENT : 26 - 0 2 - 2016 . / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY THE REVENUE AND THE ASSESSEES ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF THE COMMI SSIONER OF INCOME- TAX(APPEALS) FOR ASSESSMENT YEARS 2007-08, 2008-09. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON IN NATU RE, THESE WERE CLUBBED TOGETHER, HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE IN THIS CASE IS ENGAGED IN THE BUSIN ESS OF TRADING IN GOLD, SILVER AND DIAMOND JEWELLERY. IT ALSO TRANSACTED OTHER COMMODITIES IN MCX STOCK EXCHANGE LTD. DURING THE Y EAR UNDER CONSIDERATION. THE ASSESSEE SET OFF THE SPECULATIV E LOSS OF ` 1,42,27,933/- AGAINST THE PROFIT OF NON-SPECULATION BUSINESS. THE ASSESSING OFFICER ON VERIFICATION OF THE PROFIT & L OSS ACCOUNT FOUND THAT THE ASSESSEE HAS SHOW A SUM OF ` 1,42,27,933/- TOWARDS ET LOSS ON TRADING IN COMMODITIES INEX FUTURES. HE ASKED T HE ASSESSEE TO ESTABLISH THAT SUCH ACTIVITIES HAD NEXUS TO ITS BUS INESS OPERATION. THE ASSESSEE PRODUCED THE LEDGER ACCOUNT SHOWING THE TR ANSACTIONS TRADING IN FUTURES EXECUTED THROUGH RELIGARE COMMOD ITIES LTD AND ITA NO.1491/12 ETC. :- 3 -: ANGEL COMMODITIES BROKING (P) LTD. THESE DEPOSITIO N SHOWED THAT THE ASSESSEE HAD BUSINESS ACTIVITY AS IT WAS EXECUTING CONTRACTS FOR VARIOUS COMMODITIES SUCH AS CRUDE OIL, ZINC, NICKEL ETC BESIDES GOLD AND SILVER. THE ASSESSEE SUBSEQUENTLY EXPLAINED T HAT THE TRANSACTIONS ARE HEDGING IN NATURE AND THEREFORE, CANNOT BE TR EATED AS SPECULATION. THE ASSESSING OFFICER FURTHER OBSER VED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE OF OLD GOLD, BULLION GOLD AND CONVERT THESE GOLD INTO JEWELLERY. IT SEL LS THE JEWELLERY IN THE OPEN MARKET. FOR THIS PURPOSE, IT COULD EXECUTE FU TURES CONTRACT FOR GOLD IN COMMODITIES EXCHANGE TO HEDGE ITS BUSINESS POSITION RISK. THE ASSESSING OFFICER STATED THAT INASMUCH AS THE ASSE SSEE IS A TRADER OF GOLD ORNAMENTS AND IN PURCHASE OF ITS BUSINESS OPER ATION THE ASSESSEE BUYS OLD GOLD, BULLION GOLD, BULLION JEWEL LERY FROM OTHER MANUFACTURERS AND ALSO GETS HIS GOLD CONVERTED INTO JEWELLERY AND THEY ARE NOT DEALING WITH CRUDE OIL, LEAD, ZINC ETC. DUR ING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2008-09, THE BEHAVI OR EXHIBITED BY THE ASSESSEE IN TRADING IN THE FUTURES AND COMMODI TIES MARKET DO NOT APPEAR TO HEDGE THEIR BUSINESS RISKS THUS THIS ACTI VITY HAS NO NEXUS TO THE BUSINESS ACTIVITY. THE ASSESSEE ALSO DID NOT FURNISH THE DETAILS TO SHOW THAT TRANSACTIONS IN FUTURE TRADING WERE CARRI ED OUT WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE. ACCORDING TO ASSE SSING OFFICER , THE DIRECT INFERENCE OF THE DEALINGS DONE BY THE ASSESS EE INDICATES THAT IT ITA NO.1491/12 ETC. :- 4 -: HAD SPECULATED ON THE COMMODITIES MARKET AS A VENTURE TO EARN PROFIT FROM A SEPARATE LINE OF BUSINESS. HE FURTHER STATED THAT ALL THE TRANSACTIONS WERE ENTERED INTO BY SHRI SUJITH CHERI AN, DIRECTOR IN HIS INDIVIDUAL CAPACITY. THE ASSESSEE, IN REPLY, PRODUC ED RESOLUTION OF THE BOARD OF DIRECTORS OF THE COMPANY WHEREIN IT AUTHOR IZED SHRI SUJITH CHERIAN TO DEAL IN COMMODITY MARKET THROUGH MCX & NCDEX COMMODITY BROKERS. THE ASSESSING OFFICER OBSERVED THAT THE RESOLUTION DID NOT HAVE ANY REFERENCE TO ANY HEDGIN G OPERATION. THE ASSESSING OFFICER STATED THAT 'ASSIGNING THE REASO N THAT IT IS FOR THE PURPOSE OF HEDGING THE BUSINESS OPERATIONS APPEARS TO BE AN AFTER THOUGHT CONNIVED TO TAKE ADVANTAGE OF THE LOSS TO B E ADJUSTED AGAINST BUSINESS INCOME. THE TRANSACTION WHICH WAS TAKEN BY SHRI SUJITH CHERIAN WITH RELIGARE HAS BEEN SETTLED WITHOUT PHYS ICAL TRANSFER OF ANY ASSET IN THE COMMODITY MARKET. ANY LOSS SUFFERED ON ACCOUNTS OF FUTURES AND OPTIONS IS A SPECULATIVE LOSS, THAT IS TO BE DISALLOWED U/S U/S 43(5).' THE ASSESSING OFFICER RELIED ON-THE D ECISION OF THE ITAT, BANGALORE IN THE CASE OF ACIT V. K. MOHAN & CO (EXPORTS) PVT LTD. HE FURTHER STATED THAT THE BOARD OF DIRECTORS EXCEEDED ITS AUTHORITY IN GRANTING SUCH A PRIVILEGE TO THE DIRECTOR AND SUCH APPROVAL CANNOT BE RECOGNIZED. HE REFERRED TO PROVISIONS OF SEC 43(5) AND SEC 73 OF THE ACT AND DISALLOWED THE SET OFF OF AFORESAID SPECULA TION LOSS AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) ITA NO.1491/12 ETC. :- 5 -: OBSERVED THAT THE ASSESSEE IS NOT COVERED BY NOTIFI CATION NO.46/2009 DATED 22.5.2009 SO AS TO BE COVERED BY THE EXCEPTIO N PROVIDED UNDER CLAUSE(D) OF SE 43(5) OF THE ACT BECAUSE MCX STOCK EXCHANGE LTD HAS BEEN NOTIFIED AS A RECOGNIZED STOCK EXCHANGE VIDE N OTIFICATION DATED 46/2009 DATED 22.5.2009 WITH EFFECT FROM THE SAME DATE. SINCE THE RELEVANT TRANSACTIONS UNDER CONSIDERATION TOOK PLAC E IN THE PREVIOUS YEAR PRIOR TO THE DATE OF NOTIFICATION, THE ASSESSE E IS NOT ENTITLED FOR EXCEPTION UNDER THIS CLAUSE. HOWEVER, HE OBSERVED THAT THE ASSESSEE IS ELIGIBLE FOR SET OFF IN RESPECT OF THE TRANSACT IONS IN COMMODITIES I.E GOLD AND SILVER WHICH HAS DIRECT NEXUS WITH ITS BUS INESS. THE CIT(A) OBSERVED THAT ONLY AN AMOUNT OF ` 37,31,630/- IS RELATING TO TRADING IN GOLD AND SILVER WHICH COULD BE CONSIDERED AS NOT SP ECULATIVE LOSS. REGARDING THE BALANCE AMOUNT OF ` 1,04,96,303/- RELATING TO OTHER COMMODITIES SUCH AS COPPER, NATURAL GAS, ZINC, LEAD ETC., THESE COMMODITIES HAVE NO NEXUS WITH THE BUSINESS OF THE ASSESSEE. ACCORDINGLY, THE CIT(A) OBSERVED THAT THIS LOSS CA NNOT BE CONSIDERED TO BE SPECULATIVE LOSS. THE REVENUE IS IN APPEAL B EFORE US WITH REGARD TO DELETION OF ADDITION OF ` 37,31,630/- CONSIDERING IT AS BUSINESS LOSS AND NOT AS A SPECULATIVE LOSS. THE ASSESSEE IS IN APPEAL BEFORE US WITH REGARD TO THE TREATMENT OF ` 1,04,96,303/- AS SPECULATIVE LOSS. ITA NO.1491/12 ETC. :- 6 -: 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE LD. LD. A.R SUBMITTED THA T SIMILAR ISSUE CAME UP BEFORE THIS TRIBUNAL IN THE CASE OF M/S AMBATTUR CLOTHING LTD. VS JCIT IN I.T.A.NOS.1436/MDS/2014 & OTHERS DATED 28.1 2.2015 WHEREIN THE TRIBUNAL ADJUDICATED THE ISSUE WITH REGARD TO T RADING LOSS ON ACCOUNT OF CANCELLATION OF FORWARD CONTRACTS IN FO REX DERIVATIVES AS BUSINESS LOSS AND NOT AS SPECULATION LOSS. WE HAVE GONE THROUGH THE ABOVE ORDER OF THE TRIBUNAL. IN THAT CASE, THE TRI BUNAL OBSERVED THAT THE CIT(A) IS JUSTIFIED IN REMITTING THE MATTER BAC K TO THE ASSESSING OFFICER TO VERIFY ANY FORWARD CONTRACTS HAVE BEEN CANCELLED PREMATURELY AND VERIFY THE REASONS FOR PREMATURE CA NCELLATION IN THE LIGHT OF THE ORDER OF THE TRIBUNAL IN THE CASE OF L ONDON STAR DIAMOND COMPANY (I) P. LTD VS DCIT, 37 CCH 217 (MUMB) AND A LSO GIVEN A DIRECTION THAT THE LOSS ARISING OUT OF DERIVATIVE T RANSACTION IN EXCESS OF EXPORT TURNOVER HAS TO BE CONSIDERED AS SPECULATIVE LOSS BECAUSE EXCESS DERIVATIVE TRANSACTION HAS NO PROXIMITY WITH EXPORT TURNOVER. BEING SO, THE ABOVE ORDER OF THE TRIBUNAL IS HAVING NO APPLICATION TO THE FACTS OF THE PRESENT CASE. THE RELIANCE PLACED BY THE LD.A.R IS TOTALLY MISCONCEIVED. 4. IN OUR OPINION, THE ISSUE IN DISPUTE IS SQUARELY CO VERED BY THE ORDER OF MUMBAI TRIBUNAL IN THE CASE OF VARSHA CORPORATION LTD VS DCIT, 153 ITD 395 WHEREIN HELD AS FOLLOWS: ITA NO.1491/12 ETC. :- 7 -: MCX, THROUGH WHICH THE ASSESSEE HAD CARRIED OUT THE TRANSACTIONS, WAS NOT A RECOGNIZED STOCK EXCHANGE A S REQUIRED UNDER THE PROVISIONS OF SECTION 43(5)(D) O F THE ACT. MCX, THROUGH WHICH THE ASSESSEE HAD CARRIED OU T THE TRANSACTIONS, WAS NOTIFIED AS A 'RECOGNIZED ASSOCIATION' FOR THE PURPOSES OF CLAUSE (E) OF PROV ISO TO CLAUSE 5 OF SECTION 43 OF THE ACT. CLAUSE (E) OF PROVISO TO SUB-SECTION (5) OF SECTION 43 HAS RECENTLY BEEN INSERTED BY THE FINANCE ACT, 2013 W.E.F. 1ST APRIL, 2014. THEREFORE, THE EXEMPTION TO THE TRANSACTIONS GIVEN BY THE STATUTE IS W.E.F. 1-4-2014 AND THIS WAS INSERTE D BY THE FINANCE ACT, 2013. IF THE ASSESSEE IS SEEKING BENEFIT OF CLAUSE (E) OF PROVISO TO SECTION 43(5), THEN SUCH BENEFIT CAN BE EXTENDED TO ASSESSEE ONLY IN RESPECT OF ASSESSMENT YEAR 2014-2015 AS THE PROVISI ONS OF CLAUSE (E) OF PROVISO TO SECTION 43(5) ARE INSERTED BY THE STATUTE W.E.F. 1-4-2014. TRANSACTIONS DONE BY TH E ASSESSEE RELATE TO FINANCIAL YEAR 2008-09. FOR THES E TRANSACTIONS, THERE WAS NO PROVISIONS IN THE STATUT E TO GIVE THE BENEFIT TO THE ASSESSEE IN RESPECT OF TRANSACTIONS OF COMMODITIES, WHICH WAS ULTIMATELY SETTLED OTHERWISE THEN BY ACTUAL DELIVERY OR TRANSF ER OF THE COMMODITY AS PER SECTION 43(5) OF THE ACT. ASSESSEE WAS NOT ENTITLED TO CLAIM THE BENEFIT OF C LAUSE (E) OF THE PROVISO TO SECTION 43(5) OF THE ACT. 5. IN VIEW OF THE ABOVE ORDER IN THE CASE OF VARSHA CO RPORATION, WE ARE INCLINED TO UPHOLD THE ORDER OF THE ASSESSIN G OFFICER THAT LOSS ARISING OUT OF THE COMMODITIES DEALT WITH BY THE AS SESSEE I.E GOLD, SILVER, COPPER, ZINC, NATURAL GAS, NICKEL ETC ARE T O BE CONSIDERED AS SPECULATION LOSS ONLY AND THE ASSESSEE IS NOT ENTIT LED TO SET OFF THE SAME AGAINST BUSINESS INCOME OF THE ASSESSEE. THUS , THE GROUND IN REVENUES APPEAL IS ALLOWED AND THE GROUND IN ASSES SEES APPEAL IS DISMISSED. ITA NO.1491/12 ETC. :- 8 -: 6. THE NEXT COMMON GROUND IN REVENUES APPEALS I.T.A.NO.1491 AND 1493/MDS/2012 FOR ASSESSMENT YEAR 2007-08 AND I.T.A. NO.1492/MDS/2012 FOR ASSESSMENT YEAR 2008-09 IS WITH REGARD TO DELETION OF ADDITION MADE TOWARDS INFLATED PURCH ASE OF GOLD. ` .1.06 CRORES AND ` 75.40 LAKHS IN ASSESSMENT YEAR 2007-08 AND ` 2.36 CRORES IN ASSESSMENT YEAR 2008-09. 7. WE NARRATE THE FACTS OF ASSESSMENT YEAR 2007-08 IN I.T.A.NO.1491/MDS/2012. THE ASSESSEE PURCHASED OLD GOLD OF ` 1,06,80,212/-. THE ASSESSING OFFICER ASKED THE ASS ESSEE TO PRODUCE THE DETAILS OF THE PARTIES FROM WHOM OLD GOLD WAS P URCHASED. SINCE THE ASSESSEE COULD NOT PRODUCE THE DETAILS, THE ASS ESSING OFFICER TREATED SUCH PURCHASES AS INFLATED PURCHASES AND DI SALLOWED THE ENTIRE PURCHASE OF ` 1,06,80,212/- FOR THE ASSESSMENT YEAR 2007-08. SIMILARLY, FOR ASSESSMENT YEAR 2008-09 THE ASSESSIN G OFFICER TREATED INFLATED PURCHASES OF ` 2,36,57,817/- OUT OF PURCHASE OF GOLD OF ` 5,61,43,624/-. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS PRODUCED THE COPIES OF SALES TAX ASSESSMENT ORDER, STOCK RECONCILIATION, SAMPLE SALES INVOICES FOR PURCHASE OF GOLD AND BILLLWISE PURCHASE OF OLD GOLD. HE ALSO CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER. AFTER GOING THROUGH IT, THE CI T(A) OBSERVED THAT IT IS COMMON PRACTICE IN JEWELLERY BUSINESS THAT CONSU MERS EXCHANGE/SELL OLD JEWELLERY TO BUY NEW ORNAMENTS AND RECEIVE CASH FOR THE EXCESS ITA NO.1491/12 ETC. :- 9 -: JEWELLERY SOLD. HE SATISFIED WITH THE RECONCILIATIO N STATEMENT SHOWING PURCHASE OF OLD GOLD, CONVERSION OF THE SAME INTO J EWELLERY, PAYMENT OF CONVERSION CHARGES AND ULTIMATE SALE OF NEW JEWE LLERY AND DELETED THE ADDITION IN BOTH THE ASSESSMENT YEARS UNDER CON SIDERATION. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 8. THE CONTENTION OF THE LD.D.R BEFORE US IS THAT THE ASSESSEE DID NOT PRODUCE ANY DETAILS AT THE TIME OF ASSESSM ENT, THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN GIVING RELIEF TO THE ASS ESSEE ON THE BASIS OF SIMPLE SALES INVOICES PRODUCED BY THE ASSESSEE TO EVIDENCE THE PURCHASE OF OLD GOLD. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE M ATERIAL AVAILABLE ON RECORD. ADMITTEDLY, IN THIS CASE, THE ASSESSEE SAID TO BE PURCHASED OLD GOLD JEWELLERY FROM CUSTOMERS FOR WHI CH THE ASSESSEE HAS NOT PRODUCED THE NAMES AND ADDRESSES OF THE PAR TIES FROM WHOM IT HAS PURCHASED OLD JEWELLERY. WHEN THE ASSESSEE CLAIMS ANY EXPENDITURE, IT IS THE DUTY OF THE ASSESSEE TO SUPP ORT THE SAME BY PRODUCING RELEVANT EVIDENCE SUCH AS BILLS AND VOUCH ERS. IN THIS CASE, WHEN THE ASSESSEE IS NOT IN A POSITION TO LEAD THE NECESSARY EVIDENCE IN SUPPORT OF THE PURCHASE OF OLD JEWELLERY FROM TH E CUSTOMERS, THE ASSESSING OFFICER IS AT LIBERTY TO DISALLOW THE CLA IM FOR WANT OF PROOF. HOWEVER, THE CIT(A) PLACED RELIANCE ON THE COMMON T RADE PRACTICE AND ITA NO.1491/12 ETC. :- 10 -: ACCEPTANCE OF THE ASSESSEES SALES BY THE SALES TAX DEPARTMENT, DELETED THE ADDITION. IN OUR OPINION, THE COMMON P RACTICE IN THE JEWELLERY BUSINESS CANNOT PROVE GENUINENESS OF THE PURCHASES MADE BY THE ASSESSEE. FURTHER, THE SALES TAX DEPARTMENT IS ONLY CONCERNED WITH THE SALES TAX ON THE SALES MADE BY THE ASSESSE E. THEY ARE NOT CERTIFYING THE CORRECTNESS OF THE LOCAL PURCHASES M ADE BY THE ASSESSEE. BEING SO, IT CANNOT BE CONSIDERED AS THE EVIDENCE PRODUCED BY THE ASSESSEE IS FOOLPROOF. SINCE THE ASSESSEE H AS NOT PRODUCED ALL RELEVANT RECORDS TO PROVE THE GENUINENESS OF THE LO CAL PURCHASES MADE BY THE ASSESSEE, THE ASSESSING OFFICER IS JUSTIFIED IN DISALLOWING THE CLAIM TOWARDS THE LOCAL PURCHASES OF OLD GOLD JEWEL LERY MADE BY THE ASSESSEE. THIS GROUND RAISED BY THE REVENUE IS AL LOWED. 10. THE NEXT GROUND IN I.T.A.NO.1491/MDS/2012 FOR ASSES SMENT YEAR 2007-08 IS WITH REGARD TO DELETION OF ADDITION MADE U/S 68 TOWARDS SUNDRY CREDITORS TO THE EXTENT OF ` 2.10 CRORES REPRESENTING CHIT COLLECTIONS OF 1.86 CRORES, SECURITY DEPOSIT O F ` 1.20 LAKHS AND PURCHASES OF ` 21.42 LAKHS. THE ASSESSING OFFICER STATED THAT TH E ASSESSEE WAS NOT ABLE TO OFFER ANY EXPLANATION ABOU T ITS SOURCE AND NATURE. THE ASSESSEE HAS PRODUCED ONLY LEDGER COPI ES OF THE CREDITORS AND NO FURTHER EVIDENCE WAS PRODUCED. THEREFORE, T HE ASSESSING OFFICER TREATED THE AMOUNT AS UNEXPLAINED CASH CRED IT U/S 68 OF THE ITA NO.1491/12 ETC. :- 11 -: ACT AND MADE ADDITION. ON APPEAL, THE CIT(A) SIMPL Y OBSERVED THAT I FIND THAT THE ASSESSING OFFICER AFTER DUE VERIFICAT ION HAS NOT COMMENTED ADVERSELY ON ANY OF THE EXPLANATION GIVEN BY THE APPELLANT AND DELETED THE ADDITION. THE FINDINGS OF THE CIT(A) IS VERY CRYPTIC. THERE ARE NO DETAILS ON THE BASIS OF WHIC H HE HAS GIVEN RELIEF TO THE ASSESSEE. HENCE, IN OUR OPINION, IT IS APPR OPRIATE TO REMIT THE MATTER BACK TO THE FILE OF THE CIT(A) FOR RECONSIDE RATION. THE LD. CIT(A) SHALL PASS A DETAILED ORDER IN ACCORDANCE WI TH LAW. 11. THE NEXT ISSUE IN I.T.A.NO.1493/MDS/2012 IN THE CAS E OF SHRI SUJITH CHERIAN, FOR ASSESSMENT YEAR 2007-08, IS TH AT THE CIT(A) ERRED IN DELETING THE ADDITION MADE TOWARDS CASH DEPOSITS OF ` 63.47 LAKHS AS UNEXPLAINED CREDITS U/S 68 OF THE ACT. 12. THE FACTS OF THE ISSUE ARE THAT THE ASSESSING OFFIC ER ON PERUSAL OF THE LEDGER OF DIRECTORS LOAN NOTICED TH AT THE ASSESSEE HAS RECEIVED CASH OF ` 63,47,441/-. THE ASSESSING OFFICER ALSO PERUSED THE BANK STATEMENTS AND FOUND THAT THE ASSESSEE HAS CREDITED CASH DEPOSITS INTO BANK AC. SINCE THE ASSESSEE COULD NO T PRODUCE THE DETAILS OF PARTIES FROM WHOM THE CASH WAS RECEIVED AND WAS NOT ABLE TO OFFER EXPLANATION ABOUT ITS NATURE AND SOURCE, T HE ASSESSING OFFICER TREATED THE SUM OF ` 63,47,441/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF T HE ASSESSEE BY ITA NO.1491/12 ETC. :- 12 -: PLACING RELIANCE ON THE JUDGMENT OF THE SUPREME COU RT IN THE CASE OF CIT VS P. MOHANKALA, 291 ITR 278. ON APPEAL, THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 6.4 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND THE SUBMISSIONS OF THE LD.A.R. I HAVE ALSO PERUSED HE DETAILS SUBMITTED BY THE APPELLANT. I HAVE ALSO CAREFULLY GONE THROUGH THE REMAND REPORT OF THE ASSESSING OFFICER AND REJO INDER OF THE APPELLANT. THE ASSESSING OFFICER HAS VERIFIED THE INVOICES AND LEDGER ACCOUNTS FOR F.YS 2006-07 AND 2007-08 RELEVANT FOR ASSESSMENT YEARS 2007-08 AND 2008-09 AND HAS NOT GIVEN AN ADVERSE COMMENT. HOWEVER, I FIND THAT THE EXPENSES INCLUDE ADVERTISEMENT AND AUDIT EXPENSES ON WHICH TDS IS DEDUCTIBLE. IF THE AMOUNT IS PAYABLE AT THE END OF THE YEAR AND TDS HAS NOT BEEN DEDUCTED, THE EXPENDITURE IS TO BE DISALLOWED U/S 40(A)(IA) AND IS TO BE ALLOWED IN THE YEAR WHEN SUCH TAX IS PAID. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE ABOVE AND ALLOW DEDUCTION THEREAFTER. THE GROU ND IS ALLOWED FOR STATISTICAL PURPOSES. 13. AS DISCUSSED IN EARLIER PARAGRAPH, THE ABOVE FINDIN G OF THE CIT(A) IS VERY CRYPTIC AND GENERAL IN NATURE. HE H AS NOT DISCUSSED THE ISSUE IN DETAIL. THEREFORE, WE ARE UNABLE TO UPHOL D THE ORDER OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY, THE ISSUE IS RE MITTED BACK TO THE FILE OF THE CIT(A) FOR RECONSIDERATION AND PASS A DETAI LED ORDER. ITA NO.1491/12 ETC. :- 13 -: 14. IN THE RESULT, THE REVENUES APPEALS I.T.A.NO.1491 & 1493/ MDS/2012 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE S WHEREAS I.T.A.NO. 1492/MDS/2012 IS ALLOWED. ASSESSEES APPEAL I.T.A. NO.1450/MDS/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY, 2016, AT CHENNAI. SD/- SD/- ( ! ' ! # . $ ) ( DUVVURU RL REDDY ) & / JUDICIAL MEMBER ( ) ( CHANDRA POOJARI ) / ACCOUNTANT MEMBER 678 / / CHENNAI 9: / DATED: 26 TH FEBRUARY, 2016 RD :7; 0 < 1=> ?7>1 / COPY TO: 1 . @A / APPELLANT 4. . B1 / CIT 2. DE < 1 F / DR 3. . B1 () / CIT(A) 6. EI J/ / GF