The ITO, Ward-2(2), Baroda V. Ravinder Singh D.Kahlon, Baroda

ITA 1469/AHD/2012

• Counselvise Citation: 146920514 RSA 2012
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 02-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Unexplained cash credit; Business expenditure; Opportunity of being heard; Relationship of principal and agent; Commercial expediency
• Section: 194C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NOS. 1436 & 1469/AHD/2012 ASSESSMENT YEARS :2006-07 SRI RAVINDER SINGH D. KAHLON PROP. KAHLON BROTHERS, SF 36, SITARAM SUPER MARKET, OPP. BARODA PACKAGING, CHHANI, BARODA 390001 ITO, WARD-2 (2), BARODA V/S . V/S . ITO, WARD-2 (2), BARODA SRI RAVINDER SINGH D. KAHLON PROP. KAHLON BROTHERS, SF 36, SITARAM SUPER MARKET, OPP. BARODA PACKAGING, CHHANI, BARODA 390001 PAN NO. ADYPJ4171G (APPELLANT) .. (RESPONDENT) BY REVENUE SHRI DINESH SINGH, SR. D.R. /BY ASSESSEE MS. URVASHI SHODHAN, A.R. /DATE OF HEARING 05.09.2012 /DATE OF PRONOUNCEMENT 19.10.2012 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND R EVENUE IN ITA NOS. 1436/AHD/12 & 1469/AHD/12 RESPECTIVELY, WHICH HAVE EMANATED FROM THE ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 2 ORDER OF CIT(A)-IV, BARODA, ORDER DATED 25.04.2012 FOR A.Y. 2006-07. THESE CROSS APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. THE EFFE CTIVE GROUNDS OF BOTH CROSS APPEALS ARE AS UNDER: GROUNDS OF ASSESSEDS APPEAL IN ITA NO.1436/AHD/201 2 1. LD. CIT (A) ERRED IN LAW AND ON FACTS IN D IRECTING AO TO GRANT EXPENSES DISALLOWED U/S 40(A)(IA) OF THE ACT AFTER VERIFYING WHETHER TDS DEDUCTED WAS PAID ON OR BEFORE THE DUE DATE OF FILI NG OF RETURN. LD. CIT (A) FAILED TO APPRECIATE THE FACT THAT IN A SSESSMENT ORDER (PAGE 2 PARA 3) AFTER DUE VERIFICATION OF TDS RETUR N AO HIMSELF NOTED TDS DEDUCTED BEING DEPOSITED ON 04/04/2006 & 02/05/2006. LD. CIT (A) OUGHT TO HAVE DELETED DISA LLOWANCE INSTEAD OF DIRECTING AO FOR VERIFICATION. 2. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CO NFIRMING ACTION OF AO IN DISALLOWING COMMISSION EXPENSES OF RS. 1, 43, 208/- INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT . LD. CIT (A) ERRED IN NOT APPRECIATING THE FACT THAT IN ABSENCE OF PRINCIPAL - AGENT RELATIONSHIP WITH THE TRANSPORT SERVICE PROVI DER, PROVISION OF SECTION 194H NOT BEING APPLICABLE, NO DISALLOWANCE IS WARRANTED U/S 40(A)(IA) OF THE ACT. LD. CIT (A) OUGHT TO HAVE DELETED ERRONEOUS DISALLOWANCE MADE BY AO. 3. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRM ING ADDITION MADE BY AO OF RS. 25, 000/- AS UNEXPLAINED CASH CRE DIT U/S 68 OF THE ACT. BOTH THE LOWER AUTHORITIES FAILED TO APPR ECIATE THE FACT THAT THE AMOUNT WAS RECEIVED BY CHEQUE FROM FATHER OF THE APPELLANT FOR BUSINESS URGENCY. LD. CIT (A) OUGHT TO HAVE DELETED SUCH DISALLOWANCE WHEN IDENTITY OF DEPOSITO R IS PROVEN AND AMOUNT IS RECEIVED BY WAY OF CHEQUE. ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 3 4. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CO NFIRMING DISALLOWANCE BY AO OF RS. 35, 441/- OF INTEREST EXP ENSES U/S 36 (1)(III) OF THE ACT. LD. CIT (A) ERRED IN NOT APPRE CIATING THE FACT THAT INTEREST FREE ADVANCES FOR BUSINESS PURPOSES WERE G IVEN DUE TO COMMERCIAL EXPEDIENCY. LD. CIT (A) OUGHT TO HAVE D ELETED DISALLOWANCE OF INTEREST EXPENSES. . 5. LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRM ING ACTION OF AO IN MAKING ADDITION OF RS. 4, 79, 059/- ON ACCOUN T OF EXCESS LIABILITY CLAIMED BY THE APPELLANT. LD. CIT (A) ER RED IN NOT APPRECIATING THE FACT THAT IN ABSENCE OF CESSATION OF LIABILITIES ARISEN DUE TO PURCHASES OF GOODS NO ADDITION U/S 41 (1) OF THE ACT IS WARRANTED FOR WANT OF CONFIRMATION. LD. CIT (A) OUGHT TO HAVE DELETED ADDITION MADE ON SURMISES & CONJECTURES. GROUNDS OF REVENUES APPEAL IN ITA NO.1469/AHD/2012 1(A). ON THE FACTS AND INT EH CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(APPEALS) ERRED IN DELETING THE ADDI TION OF RS.11,64,220/- U/S.40(A)(IA) OF THE INCOME TAX ACT, 1961, HOLDING THAT THE PROVISIONS OF SECTION 40(A)(IA) AS AMENDED BY THE FINANCE ACT, 2010 W.E.F. 01.04.2010, ARE OF CLARIFI CATORY NATURE AND, THEREFORE, RETROSPECTIVE. 1(A). THE LD.CIT(APPEALS) ERRED IN NOT CONSIDERING THE FACT THAT THE RELEVANT PORTION OF THE MEMORANDUM EXPLAINING T HE PROVISIONS IN FINANCE BILL, 2010 CLEARLY STATES THA T THIS AMENDMENT IS PROPOSED TO TAKE EFFECT FROM 01.04.201 0 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YE AR 2010-11 AND SUBSEQUENT YEARS. 2. THE FIRST GROUND OF ASSESSEE AND REVENUE IS DIRE CTED AGAINST THE ORDER OF THE CIT(A)DIRECTED TO THE A.O. TO ALLOW THE APPE AL IN FAVOUR OF THE ASSESSEE, ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 4 IF THE TDS HAS BEEN PAID ON OR BEFORE DUE DATE OF F ILING OF RETURN U/S.139(1) OF THE IT ACT. 3. THE FACTUAL MATRIX OF THE CASE IS THAT THE ASSES SEE HAD CLAIMED TRANSPORTATION CHARGES OF RS. 12,82,720/- IN TRADIN G ACCOUNT WHICH ARE COVERED UNDER THE PROVISIONS OF SECTION 194C OF THE IT ACT. THE ASSESSEE WAS GIVEN REASONABLE OPPORTUNITY OF BEING HEARD DUR ING THE COURSE OF ASSESSMENT PROCEEDING. IT WAS CLAIMED BEFORE THE A .O. THAT THE PAYMENTS WERE MADE ON 04 TH APRIL, 2006 AND 02 ND MAY, 2006. AS PER A.O., THE ASSESSEE HAD TO DEDUCT TDS AND PAY ON OR BEFORE 31 ST MARCH, 2006. BUT THE ASSESSEE HAD PAID TDS BEYOND THE FINANCIAL YEAR REL EVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. THUS, HE ATTRACTED THE P ROVISIONS OF SECTION 40(A)(IA) OF THE IT ACT. AFTER CONSIDERING THE ASS ESSEES REPLY AND REDUCING AMOUNT OF RS.1,18,500/- FROM 12,82,720/-, THE REMAI NING AMOUNT OF RS.11,64,220/- WAS DISALLOWED U/S. 40(A)(IA) OF THE IT ACT AS THE ASSESSEE DID NOT FURNISH ANY EXPLANATION ON OPPORTUNITY GRANTED BY THE A.O. 3. BEING AGGRIEVED BY THE ORDER OF A.O., THE ASSESS EE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD CONFIRMED THE ADDITION AF TER LENGTHY DISCUSSION IN ITS ORDER ON PAGE NOS. 2 TO 14 AND AFTER CONSIDERIN G THE HONBLE CALCUTTA HIGH COURT DECISION IN CASE OF CIT VS. VIRGIN CREATION IN G.A. NO.3200/2011 AND HONBLE AHMADABAD TRIBUNAL DECISION IN CASE OF ALPHA PROJECTS SOCIETY P. LTD. VS. DCIT, CIRCLE-1(1) IN ITA NO. 2869/AHD2011 AND OBSERVED THAT PAYMENT OF AMOUNT OF TAX DEDUCTED AT SOURCE HAD BEE N MADE BY THE APPELLANT ON OR BEFORE DUE DATE OF FILING OF RETURN OF INCOME U/S.139(1) OF THE IT ACT. ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 5 THEN, THE ABOVE AMOUNT OF RS.11,64,220/- CANNOT BE DISALLOWED U/S. 40(A)(IA) OF THE IT ACT. IN VIEW OF THE ABOVE, THE A.O. WAS DIRECTED TO VERIFY WHETHER THE TDS HAD BEEN PAID ON OR BEFORE DUE DATE OF FILING O F RETURN U/S. 139(1) OF THE IT ACT AND IN CASE OF SUCH AMOUNT OF TDS HAVE BEEN PAID TO THE GOVERNMENT ACCOUNT ON OR BEFORE SUCH DUE DATE, THEN ALLOW THE EXPENDITURE OF RS.11,64,220/-. 4. NOW BOTH THE PARTIES ARE BEFORE US. LD. COUNSEL FOR THE ASSESSEE, MS. URVASHI SODHAN RELIED UPON IN CASE OF VIRGIN CREATI ON (SUPRA) AND CHALLENGED THE DIRECTION GIVEN BY THE LD. CIT(A) TO THE A.O. T HAT FACTS WERE VERIFIED BY THE A.O. AND ARE ALREADY ON RECORD. THEREFORE, CIT(A) MIGHT HAVE ALLOWED THE APPEAL IN FAVOUR OF THE ASSESSEE ON THE BASIS OF HO NBLE CALCUTTA HIGH COURT DECISION IN CASE OF VIRGIN CREATION (SUPRA). LD. A.R. FURTHER RELIED IN CASE OF SHRI RAJ CORPORATION VS. ITO IN ITA NO.44/AHD/2010. THE CO-ORDINATE AHMEDABAD C BENCH DECISION WHERE IDENTICAL ISSUE WAS HELD IN FAVOUR OF THE ASSESSEE. THE OPERATIVE PORTION OF THE ORDER IS AS UNDER: 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS CAREFULLY . WE FIND THAT THE ISSUE OF DISALLOWANCE OF LABOUR AND CARTIN G EXPENSES UNDER SECTION 40(A)(IA) OF THE ACT IS COVERED IN FA VOUR OF THE ASSESSEE WITH THE DECISION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATORS DATED 23.11.2011 (SUPRA) AN D ALSO WITH THE DECISION OF THE ITAT, AHMEDABAD BENCHES IN M/S. A!PHA PROJECTS PVT. LTD. DATED 23-3-2012 (SUPRA). WE FIND THAT THE ISSUE BEFORE THE HON'BLE CALCUTTA HIGH COURT IN M/S,VIRGI N CREATORS ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 6 WAS WHETHER THE PROVISION OF SECTION 40(A)(IA) HAS RETROSPECTIVE OPERATION OR NOT AND THE ISSUE WAS DECIDED IN FAVOU R OF THE ASSESSEE. THE ITAT, AHMEDABAD BENCHES IN THE CASE O F M/S.ALPHA PROJECTS PVT. LTD. (SUPRA) HAS CONSIDERED THE DECISION CITED BY THE LEARNED DR OF THE SPECIAL BENCH IN THE CASE OF BHARATI SHIPYARD LTD. (SUPRA) AND HAS FOLLOWED THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN C REATORS (SUPRA) AND HAS DELETED THE DISALLOWANCE UNDER SECTION 40(A )(IA) OF THE ACT. WE BEING IN AGREEMENT WITH THE DECISION OF THE CO-ORDINATE BENCH OF AHMEDABAD TRIBUNAL IN THE CASE OF M/S. ALP HA PROJECTS PVT. LTD. (SUPRA) AND THERE BEING NO CONTRARY DECIS ION BROUGHT TO OUR NOTICE OF ANY OTHER HON'BLE HIGH COURTS, RESPEC TFULLY FOLLOWING THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN CIT VS. VIRGIN CREATORS (SUPRA) WE DECIDE THE ISSUE IN FAVOUR OF T HE ASSESSEE AND DELETE THE DISALLOWANCE OF LABOUR AND CARTING E XPENSES UNDER SECTION 40(A)(IA) OF THE ACT AND ACCORDINGLY ALLOW THIS GROUND OF THE ASSESSEE. FROM THE SIDE OF THE REVENUE, LD. D.R. FAIRLY CONCE DED THAT MATTER HAS BEEN SET ASIDE IN VIEW OF THE AMENDMENT MADE IN SECTION 40(A)(IA) BY FINANCE ACT IS 2010. THEREFORE, THE A.O. WAS RIGHT TO DISALLOW THE TRANSPORT EXPENSES DEBITED IN P&L ACCOUNT WITHOUT DEDUCTING TDS U/S.19 4(C)(1) OF THE IT ACT. 5. WE HAVE PERUSED THE FACTS OF THE CASE AND GONE T HROUGH THE ORDER OF THE AUTHORITIES BELOW AND HEARD THE ARGUMENTS. THE CO-ORDINATE C BENCH, ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 7 AHMADABAD, HAS ALLOWED THE IDENTICAL APPEAL IN CASE OF RAJ CORPORATION (SUPRA) AND BY CONSIDERING HONBLE CALCUTTA HIGH CO URTS DECISION IN CASE OF VIRGIN CREATION DATED 23.11.2011AND ALSO AHMADABAD BENCH DECISION IN CASE OF M/S.ALPHA PROJECTS PVT. LTD., DATED 23-3-20 12 (SUPRA ) HOLDING THAT AMENDMENT IN SECTION 40(A)(IA) IS RETROSPECTIVE. P AGE NOS. 2 & 3 OF ASSESSMENT ORDER SHOW THAT THE APPELLANT HAD DEDUCT ED TDS AND PAID ON 04 TH APRIL, 2006 AND 02 ND MAY, 2006 WHICH IS BEFORE THE DUE DATE OF RETURN F ILED U/S. 139(1) OF IT ACT. THEREFORE, WE ALLOW THE ASSESSEE S APPEAL AND DISMISS THE REVENUES APPEAL. 6. THE SECOND GROUND OF APPEAL IS DIRECTED AGAINST THE DISALLOWANCE OF COMMISSION EXPENSES OF RS.1,43,208/- INVOKING PROVI SIONS OF SECTION 40(A)(IA). THE LD. A.O. OBSERVED THAT THE ASSESSEE HAS DEBITED IN TRADING ACCOUNT AN AMOUNT OF RS.1,43,208/- AS COMMISSION EX PENSES TO M/S. HARIOM TRANSPORT. THE A.O. HAD GIVEN REASONABLE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. AS ASSESSEE HAD NOT DEDUCTED TDS, THEREF ORE, IT IS DISALLOWABLE U/S. 40(A)(IA). BUT THE ASSESSEE DID NOT FURNISH A NY EXPLANATION BEFORE THE A.O. THEREFORE, HE MADE ADDITION OF RS.1,43,208/-. 7. BEING AGGRIEVED BY THE ORDER OF A.O., THE MATTER CAME BEFORE LD. CIT(A) WHO HAD ALSO CONFIRMED THE ADDITION. THE FINDING I S REPRODUCED AS UNDER: 13. THE REASON FOR MAKING THE ADDITION OF RS.1,43, 208/- AS MENTIONED BY THE AO IN THE ASSESSMENT ORDER AS WELL AS ABOVE SUBMISSION OF THE APPELLANT HAVE BEEN CONSIDERED. I DO NOT AGREE WITH THE ABOVE SUBMISSION OF THE APPELLANT AN D IN MY OPINION TAX AT SOURCE ON PAYMENTS OF RS.1,43,208/- WAS REQUIRED TO BE MADE BY THE APPELLANT. I AGREE WITH THE FIND INGS OF ITO WD- ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 8 2(2), BARODA AS GIVEN ABOVE IN HIS REMAND REPORT. IN THE CASE OF APPELLANT, THE PAYMENT OF RS.1,43,208/- WAS CLAIMED AS COMMISSION EXPENSES IN THE BOOKS OF ACCOUNTS. NOW, HOW THE COMMISSION WAS PAID BY THE APPELLANT IS IMMATERIAL AS FAR AS TDS LIABILITY IS CONCERNED. EVEN IF COMMISSION WAS DEDUCTED BY HARIOM TRANSPORT, THE SUM DEEMED TO HAVE BEEN PAID BY THE APPELLANT AND THE SAME HAS BEEN CLAIMED AS COMMISSI ON EXPENSES BY HIM. IN THE CASE OF APPELLANT THE RATE OF COMMISSION WAS PRE DECIDED BETWEEN HIM AND HARIOM TRANSPORT FO R THE SERVICES RENDERED BY HARIOM TRANSPORT WHICH HARIOM TRANSPORT DEDUCTED UPFRONT FROM THE AMOUNT PAID BY IT TO THE APPELLANT. EVEN OTHERWISE, HARIOM TRANSPORT HAD JUST FACILITAT ED THE TRANSPORT SERVICES FOR THE APPELLANT AND PAID ALL T HE RECEIPTS TO HIM ALBEIT COMMISSION, SHORTAGE ETC. IN OTHER WORD S ALL THE EXPENSES IN FACT WERE BORNE BY THE APPELLANT ONLY. IN VIEW OF THIS THE DECISION CITED BY THE A.R. ARE NOT APPLICABLE T O THE CASE OF THE APPELLANT. 14. CONSIDERING ABOVE FACTS I HOLD THAT THE A.O. HA S CORRECTLY DISALLOWED THE EXPENSES OF RS.1,43,208/- U/S 40(A)( IA) OF THE I.T. ACT AND THEREFORE, THE SAME IS CONFIRMED. THUS THE GROUND OF APPEAL NO.2 OF THE APPELLANT IS DISMISSED. 8. NOW THE MATTER IS BEFORE US. THE LD. COUNSEL FO R THE ASSESSEE CONTENDED THAT THE PROVISIONS OF SECTION 194 ARE NO T APPLICABLE IN CASE OF ASSESSEE. THE ASSESSEE ENGAGED IN THE BUSINESS OF T RANSPORTATION AND HAD RECEIVED RELEVANT PAYMENTS FROM THE SERVICE RECEIVE R NET OF THEIR ENTITLEMENT OF TRANSPORTATION/COMMISSION CHARGES. THEREFORE, T HERE BEING RELATIONSHIP OF PRINCIPAL AND AGENT, AMOUNT DEDUCTED BY THE TRANSPO RT AGENCY WOULD NOT BE TREATED AS PAYMENT ON COMMISSION BY THE ASSESSEE AN D THEREFORE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS AT SOURCE AND SECTION194 IS NOT ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 9 APPLICABLE IN THIS CASE. THE ADDITION MADE U/S. 40 (A)(IA) IS NOT WARRANTED. HE ALSO RELIED ON FOLLOWING JUDGMENTS: (A) (2006) 200 (KER), IN CASE OF KERALA STATE STAM P VENDORS ASSOCIATION & ORS. VS. OFFICER OF THE ACCOUNTANT GE NERAL & ORS. (B) (2006) 8 SOT 513 (DEL) IN CASE OF ALL INDIA RAD IO COMMERCIAL BROADCASTING SERVICE/PRASAR BHARTI BROAD CASTING CORPORATION OF INDIA VS. INCOME TAX OFFICER. SHE FURTHER CLAIMED THAT THE FACTS OF THE APPELLANT ARE IDENTICAL WITH THE CASE OF ALL INDIA RADIO COMMERCIAL BROADCASTING SERVICE/PRA SAR BHARTI BROADCASTING CORPORATION OF INDIA (SUPRA). FROM THE SIDE OF THE REVENUE, IT IS ARGUED THAT THE CASE LAWS CITED BY THE APPELLANT ARE NOT SQUARE LY APPLICABLE IN CASE OF APPELLANT. THE APPELLANT HAD PAID COMMISSION TO M/ S. HAIROM TRANSPORT, ON WHICH NO TDS HAS BEEN DEDUCTED U/S. 194 OF THE IT A CT. THE LD. A.O. HAD RIGHTLY DISALLOWED THE COMMISSION EXPENSES. 9. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW AND GONE THROUGH THE CASE LAWS CITED BY THE APPELLANT. THE PAPER BO OK SUBMITTED BY THE APPELLANT SHOWS THAT AT PAGE NOS.18 TO 21, THERE WA S AN OPENING BALANCE IN THE NAME OF M/S. HARIOM TRANSPORT AT RS.3,83,484/- IN THE ACCOUNT, SHOWS CREDIT ENTRY OF THE TRANSPORTATION CHARGES RECEIVED AND DEBITED VARIOUS EXPENSES INCURRED ON BEHALF OF THE M/S. HARIOM TRAN SPORT. IT IS ALSO REVEALED FROM THE ACCOUNT THAT TDS HAD BEEN DEDUCTED ON VARI OUS AMOUNTS BUT IT IS NOT CLEAR ON WHAT EXPENSES/PAYMENTS, THESE TDS WERE DED UCTED AND WHETHER DEPOSITED IN GOVERNMENT EXCHEQUER OR NOT. THE FINA L CLOSING BALANCE HAS BEEN SHOWN AT RS.90,962/- AS CREDITOR. THEREFORE, THE NATURE OF PAYMENT AS ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 10 SHOWN IN THIS ACCOUNT APPEARS TO BE TRANSPORTATION CHARGE PAID TO M/S. HARIOM TRANSPORT. NEITHER LD. A.R. OF THE APPELLANT NOR R EVENUE HAD POINTED OUT ON WHAT BASIS THESE COMMISSION EXPENSES WERE CLAIMED I N P&L ACCOUNT. THEREFORE, WE HAVE CONSIDERED VIEW THAT A.O. SHOULD VERIFY THIS ACCOUNT AND TDS. IF THE PAYMENTS OF TDS HAD BEEN MADE TO THE G OVERNMENT EXCHEQUER ON OR BEFORE DUE DATE OF RETURN, THE SAME MAY BE AL LOWED AFTER VERIFYING. ACCORDINGLY, THE MATTER IS RESTORED BACK TO THE A.O . FOR DE NOVO. THE A.O. IS ALSO DIRECTED TO GIVE REASONABLE OPPORTUNITY TO THE APPELLANT. 10. GROUND NO.3 OF APPELLANT IS AGAINST CONFIRMING THE ADDITION OF RS.25,000/- AS UNEXPLAINED CASH CREDIT U/S. 68 OF T HE IT ACT. THE A.O. FOUND THAT THE ASSESSEE HAD INTRODUCED CASH IN CAPITAL AC COUNT OF RS.25,000/- DURING THE COURSE OF ASSESSMENT PROCEEDING. THE AS SESSEE HAD GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. IT WAS EXPL AINED BEFORE THE A.O. THAT RS.25,000/- WERE RECEIVED FROM HIS FATHER BUT FOR R S.25,000/- NO CONFIRMATION WAS FILED BY THE APPELLANT BEFORE THE A.O. THEREFO RE, HE MADE ADDITION OF RS.25,000/- U/S. 68 OF THE IT ACT. 11. THE MATTER CARRIED BEFORE THE LD. CIT(A) WHO HA D ALSO CONFIRMED THE ADDITION IN PARAGRAPH NOS.18 & 19, WHICH ARE REPROD UCED AS UNDER: 18. THE REASONS FOR MAKING ADDITION OF RS.75,000/- AS MADE BY THE AO U/S 68 AS WELL AS ABOVE SUBMISSION OF THE AP PELLANT HAVE BEEN CONSIDERED. AS REGARDS ADDITION OF RS.50,000/ - THE APPELLANTS AR HAS SUBMITTED THAT THIS AMOUNT WAS D IRECTLY PAID TO EAST AFRICA MOBILE PVT. LTD. BY A FRIEND OF APPE LLANT MR. AVATARSINGH BAL AND IN THE REGARD A WRITTEN SUBMISS ION WAS MADE BEFORE AO VIDE LETTER DATED 03.10.2008. IN MY OPIN ION ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 11 IDENTIFICATION OF THE PERSON I.E. SHRI AVATARSINGH BAL WAS THERE BEFORE THE AO. AGAIN THIS AMOUNT OF RS.50,000/- WA S PAID BY CHEQUE THROUGH BANK OF BARODA TO THE ABOVE MOBILE C OMPANY AND THEREFORE, GENUINENESS OF TRANSACTION CANNOT BE DOUBTED UNLESS AND UNTIL IT IS PROVED TO BE FALSE BY THE AO . AGAIN SHRI AVATARSINGH BAL IS HAVING PAN AND IS ASSESSED TO TA X AND THEREFORE HIS CREDIT WORTHINESS CAN ALSO NOT BE DIS REGARDED UNLESS AND UNTIL THE AO ESTABLISHES AS A RESULT OF EXAMINATION THAT SHRI AVATARSINGH BAL WAS NOT CAPABLE OF MAKING SUCH PAYMENT. THE AO CANNOT MAKE ADDITION MERELY ON THE GROUND THAT SUCH AMOUNTS WAS CAPITALIZED IN THE CAPITAL AC COUNT OF THE APPELLANT. THE APPELLANT HAS DISCHARGED HIS ONUS B Y FILING THE DETAILS REGARDING IDENTIFICATION OF THE CREDITORS, MODE OF TRANSACTION AND CREDIT WORTHINESS OF THE CREDITORS SHOWING THAT HE IS ASSESSED TO TAX AND THEREFORE AO IS NOT JUSTIFIE D TO MAKE ADDITION OF RS. 50,000/- U/S 68 OF THE IT ACT AND H ENCE THE SAME IS DELETED. 19. WITH REGARD TO ADDITION OF RS.25,000/- AS MADE U/S 68 OF THE IT ACT THE ABOVE SUBMISSION OF THE APPELLANTS AR IS NOT FOUND TO BE TENABLE. IT IS NOT KNOWN WHETHER THE C REDITORS I.E. FATHER OF THE APPELLANT IS ASSESSED TO INCOME TAX A ND WHETHER HE IS CAPABLE OF ADVANCING SUCH AMOUNT OF RS.25,000/-. IN VIEW OF THIS I HOLD THAT THE AO HAS CORRECTLY MADE THE ADDI TION OF RS.25,000/- U/S 68 OF THE IT ACT AND THEREFORE THE SAME IS CONFIRMED. THUS THE GROUND OF APPEAL NO.4 OF THE A PPELLANT IS PARTLY ALLOWED. 12. NOW THE MATTER IS BEFORE US. LD. COUNSEL FOR T HE ASSESSEE FILED PAPER BOOK AND CONTENDED THAT THIS AMOUNT WAS RECEIVED FR OM HIS FATHER WHO HAD PAID THE SAID SUM BY CHEQUE AND HENCE IDENTITY OF D EPOSITER WAS WELL ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 12 ESTABLISHED. FURTHER, SHE RELIED ON IN CASE OF CIT VS. ORISSA CORPORATION PVT. LTD. 159 ITR 78 (SC). SHE ALSO HAS DRAWN OUR ATTENTION ON PAGE NO.22 TH AT THE ASSESSEE CREDITED RS.25,000/- ON 22 ND JULY 2005 IN BANK ACCOUNT MAINTAINED WITH ABN-AMRO BANK THROUGH CHEQUE. BESI DES THIS, THE ASSESSEE DID NOT FILE ANY CONFIRMATION AT ANY STAGE . THEREFORE, IN ABSENCE OF CONFIRMATION WITH EVIDENCE, THE ASSESSEES EXPLANAT ION IS NOT FOUND ACCEPTABLE. WE ARE IN THE AGREEMENT WITH THE CIT(A ) AND CONFIRM THE ORDER. THUS, ASSESSEES APPEAL ON THIS GROUND IS DISMISSED . 13. GROUND NO.4 IS DIRECTED AGAINST CONFIRMING THE DISALLOWANCE OF RS.35,441/- OF INTEREST EXPENSES U/S.36(1)(III) OF THE IT ACT. THE A.O. NOTICED THAT THE APPELLANT HAD GIVEN LOANS AND ADVANCES OF RS.4,55,000/- WITHOUT INTEREST TO HIS BROTHERS. THE DETAILS ARE AS UNDER : (I) SHRI DEVINDERSINGH KHALOL RS.3,05,000/- (II) SHRI RAJINDERSINGH KAHLON RS.1,50,000/- RS.4,55,000/- THE A.O. HAD GIVEN REASONABLE OPPORTUNITY OF BEING HEARD FOR DIVERTING HIS INTEREST BEARING FUND FOR NON-BUSINESS PURPOSES. T HE ASSESSEE DID NOT FURNISH ANY REPLY EVEN REPEATED QUERRIES WERE MADE BY THE A.O. THEREFORE, HE DISALLOWED RS.35,441/- AS PROPORTIONATELY INTERE ST EXPENSES U/S.36(1)(III) OF THE IT ACT. 14. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE A SSESSEE CARRIED THE MATTER BEFORE CIT(A), WHO HAS ALSO CONFIRMED THE AD DITION BY OBSERVING AS UNDER: 21 THE ABOVE SUBMISSION OF THE APPELLANT AS WELL A S SUBMISSION OF THE AO AS MADE IN ABOVE REMAND REPORT HAVE ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 13 BEEN CONSIDERED. I FULLY AGREED WITH THE ABOVE REM AND REPORT OF THE AO AND IN MY OPINION EVEN IF THE APPELLANT HAD BUSINESS TRANSACTIONS WITH HIS BROTHERS, THE CORRESPONDING E XPENSES FOR THE SAME HAD BEEN CLAIM BY THE APPELLANT. FURTHER IT IS NOT THE CASE OF THE APPELLANT THAT HIS BROTHERS HAD CHARGED LESS TRANSPORT CHARGES FROM HIM. MERELY ON THE PRETEXT THAT IT WA S PAYING TRANSPORTATION CHARGES TO HIS BROTHERS, THE APPELLA NT CANNOT JUSTIFY THAT THE ABOVE ADVANCES OF RS.4,55,000/- WERE GIVEN OUT OF COMMERCIAL EXPEDIENCY. THE APPELLANT HAD NOT BEEN ABLE TO PROVE BY FILING DOCUMENTARY EVIDENCES THAT ABOVE AD VANCES WERE MADE OUT OF COMMERCIAL EXPEDIENCY. CONSIDERING ALL THESE FACTS, I HOLD THAT THE AO HAS CORRECTLY DISALLOWED INTERES T OF RS.35,441/- AND THEREFORE THE SAME IS CONFIRMED. THUS THE GROU ND OF APPEAL NO.5 OF THE APPELLANT IS DISMISSED. 15. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE SAID ADVANCES WERE MADE FOR THE PURPOSE OF THE BUSINESS. IT WAS ESTABLISHED FROM THE VERY FACT THAT IN THE A SSESSMENT ORDER. THE LD. A.O. CONFIRMED THAT THE ASSESSEE HAD PAID TRANSPORT ATION CHARGES TO HIS BROTHERS AND HAD CLAIMED BUSINESS EXPENDITURES. IT WAS A BUSINESS NEED AND WAS RECOVERED FROM BROTHERS TIME-TO-TIME OUT OF TRA NSPORTATION CHARGES PAID TO THEM. HENCE, THE NEXUS OF THE PAYMENT WITH THE BUS INESS REQUIREMENT IS CLEARLY ESTABLISHED. THE COPIES OF ACCOUNT OF BOTH BROTHERS HAVE BEEN ENCLOSED. SHE HAS ALSO DRAWN OUR ATTENTION ON PAGE NOS. 34 TO 37 WHICH ARE COPIES OF ACCOUNT SHOWING THE BUSINESS TRANSACTIONS BETWEEN ASSESSEE AND RAJINDERSINGH KAHLONS. FURTHER,THE LOAN OF RS.1,50 ,000/- WAS NOT GIVEN DURING THE YEAR, BUT IT WAS OPENING BALANCE. PAGE NOS. 27 & 31 IS A COPY OF ACCOUNT OF SHRI DEVINDERSINH KAHLON AND CLAIMED THAT THESE ARE BUSINESS TRANSACTIONS. ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 14 THEREFORE, NO INTEREST SHOULD BE CHARGED ON IT. FR OM THE SIDE OF THE REVENUE, IT IS SUBMITTED THAT THE APPELLANT HAD TAKEN VARIOU S SECURED LOAN FROM VARIOUS SOURCES AND PAID THE INTEREST ON IT. THE ASSESSEE HAS NOT ADVANCED THESE LOANS FOR BUSINESS PURPOSES. THEREFORE, CIT(A) WAS RIGHT TO CONFIRM THE ADDITION. 16. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AND GONE THROUGH THE PAPER BOOK SUBMITTED BY THE ASSESSEE. ON VERIF ICATION OF THE BALANCE SHEET, IT IS FOUND THAT THE ASSESSEE HAS CAPITAL A T RS.5,47,789/- AS ON 31 ST MARCH, 2006 AND ALSO TAKEN SECURED LOAN OF RS.12,53 ,504/- FROM VARIOUS SOURCES ON WHICH THE APPELLANT HAD PAID INTEREST. THERE WERE BUSINESS TRANSACTIONS BETWEEN THE APPELLANT AND HIS BROTHER, NAMELY, RAJINDERSINGH KAHLON WHO HAD ADVANCED LOAN OF RS.1,50,000/- BY TH E APPELLANT. BUT, IN CASE OF DEVINDERSINGH KAHLON, THE APPELLANT HAD NOT DEMONSTRATED ANY BUSINESS DEALINGS BETWEEN THEM. THE PAPER SHOWS ON LY LOAN OUTSTANDING RS.3,05,000/-. AFTER CONSIDERING THE FACT, WE CONC LUDE THAT THE ADVANCE GIVEN TO THE RAJINDERSINGH KAHLON IS FOR BUSINESS PURPOSE S WHEREAS ADVANCES TO SHRI DEVINDERSINGH KAHLON WAS NOT FOR BUSINESS PURP OSES. THUS, ORDER OF THE CIT(A) IS CONFIRMED TO THE EXTENT OF INTEREST DISAL LOWANCE ON RS.3,05,000/-. THE ASSESSEES APPEAL IS PARTLY ALLOWED ON THIS GRO UND. 17. GROUND NO.5 IS AGAINST CONFIRMING THE ADDITION OF RS. 4,79,059/- ON ACCOUNT OF EXCESS LIABILITY CLAIMED BY THE APPELLAN T. THE A.O. FOUND THAT THE APPELLANT HAD SHOWN SUNDRY CREDITORS OF RS.6,57,075 /- AS ON 31.02.2006. THE LD. A.O. ASKED THE APPELLANT TO FILE THE CONFIRMATI ON DURING THE COURSE OF ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 15 ASSESSMENT PROCEEDING IN CASE OF DHANALAXMI AUTOMOB ILES FOR RS.4,03,390.20/-, JAY PETROLEUM PRODUCT FOR RS.1,25 ,429/-, RAVINDER ROAD CARRIERS FOR RS.36,204/- & RAJINDERSINGH GJ 6U 5636 FOR RS.34,662/-. THE ASSESSEE FURNISHED THE CONFIRMATION EXCEPT IN CASE OF DHANLAXMI AUTOMOBILES AND ALSO THE CONFIRMATION FILED IN CASE OF JAY PETR OLEUM PRODUCT WAS TO THE EXTENT OF RS.49,760/- AS AGAINST LIABILITY OF RS.1, 25,429/-. AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD, THE A.O. PRO POSED ADDITION UNDER THIS HEAD ON THE GROUND THAT THERE IS NO CONFIRMATION IN CASE OF DHANLAXMI AUTOMOBILES AND DISCREPANCY IN THE CONFIRMATION OF JAY PETROLEUM PRODUCT TO THE EXTENT OF RS.75,669/-. THUS, HE MADE ADDITION OF RS.4,79,059/- ON ACCOUNT OF EXCESS LIABILITY CLAIMED BY THE APPELLAN T. 18. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT( A), WHO HAS CONFIRMED THE ADDITION IN PARAGRAPH NO.28 AT PAGE NO.33 OF HI S ORDER, THE OPERATIVE PART IS AS UNDER: 28. WITH REGARD TO LIABILITY OF RS.4,03,390/- NO A NY EXPLANATION AND EVIDENCES WHERE FILED BY THE APPELLANT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. THE AR OF THE APPELLANT IN HIS SUBMISSION DATED 25-10-2010 HAS STATED THAT ON PERU SAL OF LEDGER ACCOUNT OF DHANLAXMI AUTOMOBILE, IT WILL BE NOTICED THAT ALL THE CREDIT AND DEBIT TRANSACTIONS ARE SUPPORTED EIT HER BY PURCHASE BILLS OR BY PAYMENT VOUCHERS AND NO EXCESS CREDIT ON ACCOUNT OF ANY PURCHASE HAVE BEEN BOOKED BY THE APP ELLANT. THE AR HAS PLEADED THAT DUE TO NON COOPERATION OF T HE PARTY, THE APPELLANT SHOULD NOT BE PENALIZED. ON THE OTHER HA ND THE CONCERNED AO IN HIS REMAND REPORT HAS SUBMITTED THA T THE APPELLANT NEITHER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 16 NOR AT THE TIME OF APPELLATE PROCEEDINGS HAS SUBMIT TED ANY REASON FOR NOT FILING THE CONFIRMATION OF DHANLAXMI AUTOMOBILE. AS PER THE AO THE APPELLANT HAS NOT SUBMITTED ANY E VIDENCES REGARDING PAYMENT FOR THE OUTSTANDING LIABILITY AS SHOWN AS ON 31-03-2006. AS PER THE AO IT IS NOT EXPLAINED BY T HE APPELLANT WHETHER SUCH LIABILITY HAS BEEN PAID IN SUBSEQUENT YERS. AS PER THE AO THE APPELLANT HAS NOT TAKEN ANY PLEA THAT TH ERE WAS DISPUTE BETWEEN IT AND DHANLAXMI MOBNILES IN RESPEC T OF ABOVE LIABILITY OF RS.4,03,390/- AND THEREFORE THERE IS N O REASON AS TO WHY THIS PARTY WOULD NOT CLAIM THE AMOUNT AND WOULD NOT CONFIRM THE BALANCE OUTSTANDING LIABILITY OF RS.4,03,390/- . I AGREE WITH THE SUBMISSION OF THE AO. THE APPELLANTS AR HAS N OT SUBMITTED ANY EVIDENCES EVEN AT THE TIME OF APPELLATE PROCEED INGS ALSO WHICH COULD SHOW THAT SUBSEQUENT TO THE YEAR UNDER CONSIDERATION ANY PAYMENT ON ACCOUNT OF ABOVE LIABI LITY OF RS.4,03,390/- WAS MADE TO THE DHANLAXMI MOBILES. I N MY OPINION THIS IS A VERY VITAL ASPECT OF THE CASE. I N CASE IF THIS LIABILITY OF RS.4,03,390/- WAS ARISEN ON ACCOUNT OF PURCHASES OF ITEMS FROM DHANLAXMI MOBILE THEN PAYMENT ON ACCOUNT OF SUCH LIABILITY WOULD HAVE BEEN MADE BY THE APPELLANT TO SUCH PARTY AS A PRUDENT BUSINESSMAN LIKE DHANLAXMI MOBILES WOULD NOT WAIT FOR PAYMENT FROM THE APPELLANT FOR SUCH A LONG PERIOD. THE APPELLANT HAS NOT CLAIMED ALSO THAT THERE WAS DISPUTE WITH RE GARD TO PAYMENT OF ABOVE LIABILITY OF RS.4,03,390/-. EVEN IT IS CONSIDERED THAT THIS PARTY I.E. DHANLAXMI MOBILE WAS NOT COOPE RATING WITH THE APPELLANT, THEN ALSO THE PAYMENT OF RS.4,03,390/- S HOWN AS OUTSTANDING LIABILITY AS ON 31-03-2006 SHOULD HAVE BEEN MADE BY THE APPELLANT TO THIS PARTY ON ACCOUNT OF JPURCHASE S SPECIALLY WHEN SUCH PAYMENT IS NEITHER DISPUTED BY THE APPELL ANT NOR BY THIS PARTY. HOWEVER, NO EVIDENCES WITH REGARD TO P AYMENT OF ABOVE AMOUNT OF RS.4,03,390/- HAS BEEN FILED DESPIT E THE FACT ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 17 THAT A VERY LONG PERIOD HAS ELAPSED AFTER THE TRANS ACTIONS WERE MADE AND OUTSTANDING LIABILITY WAS CREATED. CONSID ERING THESE FACTS, I HOLD THAT THE AO IS CORRECT IN MAKING ADDI TION OF RS.4,03,390/- AND THEREFORE THE SAME IS CONFIRMED. 19. NOW THE ASSESSEE IS BEFORE US. LD. COUNSEL FOR THE ASSESSEE ARGUED AS UNDER: (A) THAT ON PERUSAL OF THE LEDGER ACCOUNTS OF THE ABOVE PARTIES SUBMITTED HEREWITH, IT WILL BE NOTICED THAT LL THE CREDIT AND DEBIT TRANSACTIONS ARE SUPPORTED BY THE EITHER PURCHASE B ILLS OR PAYMENT VOUCHERS AND NO EXCESS CREDIT ON ACCOUNT OF ANY PURCHASE HAVE BEEN BOOKED BY THE ASSESSEE. THE DIF FERENCE APPEARING IN THE ACCOUNT OF JAY PETROLEUM PRODUCTS IS PERTAINING TO EARLIER YEAR RELEVANT TO A.Y.2006-07 WHICH IS NO T UNDER DISPUTE. THE CONFIRMATION OF LEDGER ACCOUNT ARRANGED FROM JA Y PETROLEUM PRODUCTS IS ENCLOSED FOR YOUR KIND PERUSAL. (B) IN THE CASE OF ACCOUNT PERTAINING TO DHANLAXMI AUTOMOBILES, NON COOPERATION OF THE PARTY CAN NOT B E THE REASON WHICH PENALIZED TO THE ASSESSEE WITHOUT ANY DEFAULT ON HIS PART. HOW COULD BE THE ENTIRE LIABILITY OF THE PARTY CAN BE CONSIDERED AS WRONG. IT IS SUBMITTED THAT ALL THE ENTRIES AFFECT ED IN THE PARTYS ACCOUNT ARE SUPPORTED BY THE EVIDENCE WHICH COULD B E PRODUCED IF REQUIRED. WE HAVE ENCLOSED HEREWITH THE COPY OF LEDGER ACCOUN T OF THE ABOVE NAMED PARTY HIGHLIGHTING ALL THE PAYMENTS MAD E DURING THE YEAR FROM THE LEDGER ACCOUNT WITH THE CORRESPONDING AMOUNT CLEARED BY BANK AS EVIDENCED FROM THE COPY OF BANK STATEMENT ENCLOSED FOR YOUR KIND PERUSAL. WE HAVE ALSO PROVI DED HEREWITH THE COPY OF BILLS RAISED ON ASSESSEE BY THE ABOVE P ART AND CREDITED AS LIABILITY IN THE BOOKS OF THE APPELLANT . THE SAID LIABILITY IS ON ACCOUNT OF SUPPLY OF GOODS DURING THE YEAR UN DER ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 18 CONSIDERATION. THIS CLEARLY ESTABLISHES THAT ALL T HE TRANSACTIONS AFFECTED WITH THE SAID PARTY ARE GENUINE AND NO EXT RA LIABILITY HAVE BEEN CLAIMED BY THE APPELLANT AND AS SUCH THE SAME IS AN ALLOWABLE LIABILITY UNDER THE PURVIEW OF THE INCOME TAX ACT. C. THAT UNDER THE CIRCUMSTANCES, IT IS REQUESTED TO KINDLY GRANT US THE SUITABLE RELIEF IN THE INTEREST OF JUS TICE. LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE CO-ORD INATE A BENCH, AHMADABAD DECISION IN CASE OF DEEPAK PETROCHEM LTD. VS. THE A.C.I.T. IN ITA NO. 1465/AHD/2007 FOR A.Y. 03-04. IN GROUND NO.2 ISSUE OF CESSATION OF LIABILITIES U/S.41(1) WAS CONSIDERED BY THE CO-ORDI NATE BENCH AND IT HAS BEEN HELD BY THE CO-ORDINATE BENCH IN PARAGRAPH NO.14, A S UNDER: 14. CONSIDERING THE ABOVE FACTS AND THE DECISIONS REFERRED TO ABOVE, IT IS CLEAR THAT THE AMOUNTS HAVE BEEN SHOWN AS LIABILITY IN THE BALANCE SHEET AND NO EVIDENCE OF CESSATION OF L IABILITY HAS BEEN BROUGHT ON RECORD. THEREFORE, THE AMOUNT IN Q UESTION IS NOT ASSESSABLE U/S.41(1) OF THE IT ACT. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ENTI RE ADDITION ON THIS ISSUE. THE HONBLE CO-ORDINATE BENCH ALSO HAS CONSIDERED I TAT, AHMADABAD BENCH, DECISION IN CASE OF SHRI RAJESH MUKUNDLAL SHAH VS. ITO IN ITA NOS. 424 AND 609/AHD/2006, CIT VS. SILVER COTTON MILLS C O. LTD., 254 ITR 728(GUJ), SUGAULI SUGAR WORKS (P.) LTD. [1999] 236 ITR 518 (S C), CIT VS. CHASE BRIGHT STEEL LTD., 177 ITR 128(BOMBAY), J.K. CHEMICALS LTD . VS. CIT, [1966] 62 ITR 34, BOMBAY DYEING & MANUFACTURING CO. LTD. V. STATE OF BOMBAY, AIR 1958 SC, CIT VS. CHETAN CHEMICALS PVT. LTD. 267 ITR 770 (GUJ), IN WHICH THE RATIO LAID DOWN BY THE COURT THAT WHEN THERE IS NO CESSAT ION OF LIABILITY OR REMISSION ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 19 OF LIABILITY OF CREDITOR, THE LIABILITY SUBSIST. FR OM THE SIDE OF THE REVENUE, LD. D.R. VEHEMENTLY RELIED UPON THE ORDER OF THE CIT(A) . 20. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AND GONE THROUGH THE PAPER BOOK. ON PAGE NOS. 44 TO 46, THERE IS LE DGER COPY IN CASE OF M/S. JAY PETROLEUM PRODUCTS FOR A.Y. 07-08 NOT FOR A.Y. 06-07 WHEREIN OPENING BALANCE OF A.Y.07-08 WHICH IS CLOSING BALANCE OF A. Y. 06-07 HAS SHOWN AT RS.49,760/-. THE SAME HAS BEEN CONFIRMED BY THE PA RTNER OF M/S. JAY PETROLEUM PRODUCTS WITH PAN NO. AT PAGE NOS. 47 T O 48, THERE IS A COPY OF ACCOUNT IN THE ASSESSEES BOOK OF DHANLAXMI AUTOMOB ILES BUT IT HAS NOT BEEN CONFIRMED BY THE SIDE OF DHANLAXMI AUTOMOBILES IN W HICH OUTSTANDING CREDITOR AT RS.4,03,390/- HAS BEEN SHOWN. THE FACTS OF THE ASSESSEE ARE IDENTICAL WITH CASE LAW CITED BY THE APPELLANT. THE LD. A.O. HAS NOT BROUGHT ON RECORD ANY EVIDENCE WHETHER CREDITOR CEASED OR REMITTED THE LI ABILITY. THE CASE LAW CITED BY THE APPELLANT IS SQUARELY APPLICABLE. THE APPEL LANT HAS SHOWN CREDITOR IN CASE OF JAY PETROLEUM PRODUCTS ON PAGE 44 AT RS.49, 760/- WHEREAS IN COPY OF BALANCE SHEET ENCLOSED AT PAGE NOS. 42 TO 43 IT IS RS.1,25,429/-. THUS, THERE IS A DIFFERENCE IN ACCOUNT BY RS.75,669/-. THEREFO RE, WE DELETE THE ADDITION MADE BY THE A.O., AND CONFIRM THE ORDER OF CIT(A) O N ADDITION OF RS.75,669/-. THUS, THE ASSESSEES PARTLY ALLOWED 21. IN THE COMBINED RESULT, THE REVENUES APPEAL IS DISMISSED AND ASSESSEES APPEAL IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 19.10.2012 ITA NOS. 1436 & 1469/AHD/12 A.Y. 06-07 PAGE 20 SD/- SD/- ( MUKUL KR. SHRAWAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. '#$ / APPELLANT 2. &'#$ / RESPONDENT 3. )*)+ ' ', / CONCERNED CIT 4. ' ',- ' / CIT (A) 5. 01'' +, ' ''' +, 34 * / DR, ITAT, AHMEDABAD 6. 167 89 / GUARD FILE. BY ORDER/ , :/3' )' ' ''' +, 34 * < STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 15 & 16.10.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 17.10.2012 4) DATE OF CORRECTION ,, ,, 5) DATE OF FURTHER CORRECTION XXX 6) DATE OF INITIAL SIGN BY MEMBERS 19.10.2012 7) ORDER UPLOADED ON ,, ,, 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 19.10.2012