Zacfa Chemicals, Bhavnagar V. The ITO, Ward No.- 1(2), Bhavnagar, Ahmedabad

ITA 1513/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5738 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G C DAXINI
• Assessee Lawyers: B R POPAT
• Keywords: Document seized; Documents seized; Set aside
• Section: 271(1)(c); 69C; 133A; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTNAT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO.1513/AHD/2016 ( / ASSESSMENT YEAR : 2011-12 ) ZACFA CHEMICALS 212/A, GIDC CHITRA BHAVNAGAR 364 004 / VS. THE INCOME TAX OFFICER WARD NO.1(2) BHAVNAGAR ./ ./ PAN/GIR NO. : AAAFZ 0923 B ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI B.R. POPAT, AR / RESPONDENT BY : SHRI G.C. DAXINI, SR. DR / DATE OF HEARING 31/10/2018 !'# / DATE OF PRONOUNCEMENT 03/12/2018 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-6 /175/14-15 DATED 21/03/2016 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'TH E ACT') DATED 28.03.2014 RELEVANT TO ASSESSMENT YEAR (AY) 2011-12 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF (APPEALS) HAS ERRED IN LAW AND ON FACTS BY NOT ALLOWING PROPER OPPORTUNITY OF BEIN G HEARD BY DISREGARDING THE ADJOURNMENT LETTER FILED. THE SAM E THEREFORE ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 2 - AMOUNT TO VIOLATION OF PRINCIPLES OF NATURE JUSTICE AND IS LIABLE TO BE QUASHED AND SET ASIDE. 2. DESPITE ADJOURNMENT SOUGHT BY THE APPELLANT THE LEA RNED COMMISSIONER OF (APPEALS) HAS ERRED IN ASSUMING THA T APPELLANT IS NOT INTERESTED IN PURSUING THE APPEAL. 3. THE LEARNED COMMISSIONER OF (APPEALS) ERRED IN LAW AND ON FACTS BY UPHOLDING THE ACTIONS OF THE LEARNED ITO R EJECTING THE BOOKS OF THE ACCOUNTS OF THE ASSESSEE AND INVOKING THE PROVISIONS OF SECTION 145 OF THE IT ACT 1961. THE LEARNED COMMISSIONER OF (APPEALS) HAS IGNORED THE FACTS ON RECORDS SUGGESTING THAT ALL THE DETAILS/DOCUMENTS/EXPLANATI ONS AS REQUIRED BY THE LEARNED ITO WAS PROVIDED TO HIM AND THERE IS NO ADVERSE COMMENTS ON THE SAME FROM THE LEARNED IT O. 4. THE LEARNED COMMISSIONER OF (APPEALS) ERRED IN LAW AND ON FACTS BY REJECTING THE SALES FIGURE AS PER AUDITED BOOKS WHICH IS SUPPORTED UP BY ALL THE EVIDENCES AND AGAINST THAT UPHELD THE FIGURES OF SALES AS PER ONE ROUGH DIARY AS FINAL FI GURE WHICH OTHERWISE IS NOT BACKED UP BY ANY CORROBORATIVE EVI DENCES. 5. THE LEARNED COMMISSIONER OF (APPEALS) ERRED IN LAW AND ON FACTS BY CONFIRMING THE ACTIONS OF LEARNED ITO MAKI NG ADDITIONS OF RS.1613656 TREATING THE SAME AS AN AMO UNT OF SUPPRESSED SALES. WHILE UPHOLDING THE ADDITIONS TH E LEARNED COMMISSIONER OF (APPEALS) HAS IGNORED THE FACT THAT A RECONCILIATION STATEMENT ASCERTAINING THE DIFFERENC E AT RS 270154 ONLY, EXPLANATIONS AND SUPPORTING/CORROBORAT IVE EVIDE3NCES WERE VERY MUCH PROVIDED TO THE LEARNED I TO AND HE WAS IN POSSESSIONS OF THE RELATED DATA/DOCUMENTS AS WELL BUT HE HAS NOT OBJECTIVELY ANALYZED THE SAME. 6. THE LEARNED COMMISSIONER OF (APPEALS) ERRED IN NOT CONSIDERING THE FACT THAT RECONCILIATION BETWEEN DA TA OF SALES AS PER THE IMPOUNDED DIARY AND AUDITED BOOKS HAS BEEN ACCEPTED IN THE EARLIER YEAR BY THE DEPARTMENT. ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 3 - 7. THE LEARNED COMMISSIONER OF (APPEALS) HAS ERRED IN LAW AND FACTS BY EVEN COMPLETELY REJECTING THE ALTERNATIVE GROUND OF THE APPEAL THAT ONLY G.P. SHOULD BE ADDED AGAINST THE S O CALLED SUPPRESSED AMOUNT OF SALES AND NOT THE ENTIRE AMOUN T OF SALES. 8. THE LEARNED COMMISSIONER OF (APPEALS) ERRED IN LAW AND ON FACTS BY CONFIRMING THE PART ADDITIONS OF RS.39223 U/S 69C OF THE IT ACT 1961. THE LEARNED COMMISSIONER OF (APPE ALS) OUGHT TO HAVE CONSIDERED THAT OUT OF RS.39223 RS.25920 HA S BEEN PAID TO ONE EMPLOYEE UNDER THE HEAD OF CONVEYANCE E XPENSES AND THE ADDITIONS THEREFORE SHOULD BE REDUCED ACCOR DINGLY. 9. THE LEARNED COMMISSIONER OF (APPEALS) ERRED IN LAW AND ON FACTS BY UPHOLDING THE ADDITIONS OF RS.1050234 ON A CCOUNT OF BOGUS EXPENDITURES AS REPORTED BY THE LEARNED ITO W HICH IS PURELY ON HIS IMAGINATIONS AND PRESUMPTIONS. 10. WHILE UPHOLDING THE ADDITIONS OF RS.1050234 AS MENT IONED ABOVE THE LEARNED COMMISSIONER OF (APPEALS) ERRED I N LAW AND ON FACTS BY IGNORING THE FACTS THAT THE LEARNED ITO HAS NEVER GIVEN ANY SPECIFIC SHOW CAUSE NOTICE SPECIFYING THE QUANTUM OF THE SO CALLED BOGUS EXPENSES VOUCHERS AND SPECIFIC QUERIES ABOUT THE EXPENSES VOUCHERS. THIS IS DESPITE THE F ACT THAT ASSESSEE HAS CATEGORICALLY ASKED FOR THE SAME. THE LEARNED COMMISSIONER OF (APPEALS) HAS FURTHER IGNORED THE F ACT THAT THE OBSERVATIONS OF THE LEARNED ITO THAT ASSESSEE HAS N OT SUBMITTED ITS WORKING FOR THE CLAIM OF GROSS PROFIT OF RS.3010293 IN THIS CONTEXT INCORRECT SINCE ASSESSEE HAS CERTAINLY SUBMITTED THE SAME. 11. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE ACTIONS OF LEARNED ITO IN INITIAT ING THE PENALTY PROCEEDING U/S. 271(1)(C) OF THE ACT. 3. AT THE OUTSET, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT HE HAS BEEN INSTRUCTED NOT TO PRESS THE GROUND NOS.1 TO 4, 6, 8 AND 11. THEREFORE, WE DISMISS THE SAME AS NOT PRESSED. ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 4 - 4. THE FIRST ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 5 & 6 IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 16,13,656/- ON ACCOUNT OF SUPPRESSED SALES. 5. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS A PARTNERSHIP-FIRM AND ENGAGED IN THE BUSINESS OF MAN UFACTURING AND TRADING OF CHEMICALS. THERE WAS A SURVEY CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE U/S 133A OF THE ACT DATED 10.03.2011. AS A RESULT OF SURVEY, CERTAIN DOCUMENTS WERE IMPOUNDED INCLUDING A PIECE OF PAPER BEARING NO. 34 WHERE THE MONTH-WISE SALE MADE BY THE ASSESSEE WAS RECORDED UP TO THE MONTH OF JANUARY-2011. AS P ER THE IMPOUNDED DOCUMENT, THE SALES MADE BY THE ASSESSEE UP TO JANU ARY-2011 WAS SHOWN AT RS.1,54,23,281/- WHEREAS THE ASSESSEE HAS SHOWN SALES UP TO THE MONTH OF JANUARY-2011 IN ITS BOOKS OF ACCOUNTS AT RS.1,3 8,09,628/- ONLY. THUS, A DIFFERENCE OF RS.16,13,656/- WAS OBSERVED BY THE LD. ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. 6. IN VIEW OF THE ABOVE, THE LD. ASSESSING OFFICER ISSUED SHOW-CAUSE NOTICE TO THE ASSESSEE VIDE LETTER DATED 19.02.2014 FOR THE CLARIFICATION OF THE MISMATCH IN THE SALES AS DISCUSSED ABOVE. IN CO MPLIANCE TO THE NOTICE, THE ASSESSEE SUBMITTED THAT THE SALES SHOWN IN THE IMPOUNDED DOCUMENTS IS ROUGH AND INCOMPLETE WORKING HAS BEEN MADE BY TH E ACCOUNTANT. THE ASSESSEE ALSO SUBMITTED THAT THE DIFFERENCE IS COMI NG MAINLY ON ACCOUNT OF SALES RETURN AND THE SALES DECLARED IN THE VAT R ETURN WHICH WAS INCLUSIVE OF VAT AMOUNT. AS SUCH, THE ASSESSEE IS F OLLOWING EXCLUSIVE METHOD OF ACCOUNTING FOR RECORDING THE TRANSACTION OF PURCHASE AND SALES ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 5 - IN ITS BOOKS OF ACCOUNTS. THE ASSESSEE, IN SUPPORT OF HIS CLAIM, HAS ALSO FILED A RECONCILIATION STATEMENT FOR THE MISMATCH O F THE SALES BETWEEN THE BOOKS OF ACCOUNTS AND IMPOUNDED DOCUMENTS. 7. THE ASSESSEE ALTERNATIVELY ALSO SUBMITTED THAT T HE ENTIRE AMOUNT OF DIFFERENCE IN SALES CANNOT BE ADDED TO THE INCOME O F THE ASSESSEE BUT ONLY THE PROFIT ELEMENT EMBEDDED IN THE AMOUNT OF SALES SHOULD BE ADDED TO THE INCOME OF THE ASSESSEE. 8. HOWEVER, THE ASSESSING OFFICER DISAGREED WITH TH E CONTENTION OF THE ASSESSEE AND MADE THE ADDITION OF RS.16,13,656/ -, AS SUPPRESSED SALES, TO THE TOTAL INCOME OF THE ASSESSEE. 9. AGGRIEVED, ASSESSEE PREFERRED APPEAL TO LD. CIT( A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT THE DIFFERENCE AS OBSERVED BY THE ASSESSING OFFICER IS ARISING DUE TO THE FOLLOWING R EASONS: (I) SALES RETURN NOT CONSIDERED IN THE IMPOUNDED DOCUMENTS AMOUNTING TO RS.9,36,061/- ONLY. (II) AMOUNT OF VAT FOR RS.3,74,235/- HAS BEEN CONSI DERED SEPARATELY IN THE FINANCIAL STATEMENT WHICH WERE NOT CONSIDERE D IN THE SALES RECORDED IN THE IMPOUNDED DOCUMENT AS THE ASSESSEE IS FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING. (III) THE AMOUNT OF FREIGHT EXPENSES OF RS.19,06 4/- HAS BEEN CONSIDERED SEPARATELY IN THE FINANCIAL STATEMENT WHICH WERE NO T CONSIDERED IN THE SALES RECORDED IN THE IMPOUNDED DOCUMENT. 10. IN VIEW OF ABOVE, THE ASSESSEE SUBMITTED THAT T HERE IS A DIFFERENCE OF RS.2,84,296/- ONLY WHICH WAS NOT RECONCILED. T HEREFORE, AT THE MOST THE PROFIT ELEMENT ON SUCH UNRECONCILED AMOUNT OF S ALE CAN BE ADDED TO ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 6 - THE TOTAL INCOME OF THE ASSESSEE WHICH IS COMING TO RS. 51,173/- BEING 18% OF RS. 284296/-. 11. HOWEVER, THE LD. CIT(A) DISREGARDED THE CONTENT ION OF THE ASSESSEE AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDER: 12. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT OR DER, STATEMENT OF FACT AND MATERIAL AVAILABLE ON RECORDS. IT IS SEEN THAT THE AO HAS ANALYZED FINDING OF THE SURVEY AND FINALLY CONCLUDED THAT TH E ASSESSEE HAS FAILED TO EXPLAIN THE DIFFERENCE IN SALES AS PER THE BOOKS OF ACCOUNTS AND SALES AS PER NOTE BOOK. 12.1 HOWEVER THE APPELLANT SUBMITTED THAT THE DIA RY FOUND DURING THE SURVEY CANNOT BE TREATED GENUINE AND STATUTORY RECO RD AND CONTENDED THAT THE OBSERVATION OF THE AO IS INCORRECT. 12.2 THE CONTENTION OF THE APPELLANT IS VAGUE AND W ITHOUT ANY SUBSTANCE THE AS NO SUPPORTING DOCUMENT OR EXPLANAT ION HAS BEEN FILED DURING THE APPELLATE PROCEEDINGS. IT IS SEEN THAT DURING THE SURVEY FROM THE PREMISES OF THE ASSESSEE A DIARY, CONTAINING SP ECIFIC NOTING OF SALES, WAS FOUND. THE AO HAS WORKED OUT THE UNACCOUNTED S ALES ON THE BASIS OF THE SAME. THE APPELLANT COULD NOT EXPLAIN THE N OTING IN THE DIARY, THEREFORE THE AO IS JUSTIFIED IN TREATING THE SAME AS UNACCOUNTED SALES AND ADDITION MADE BY THE AO IS CONFIRMED. THE GROU ND IS DISMISSED. 12. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 13. THE LD.AR BEFORE US FILED A PAPER-BOOK RUNNING INTO PAGES FROM 1 TO 25 AND REITERATED THE SUBMISSIONS AS WERE MADE B EFORE THE LD. CIT(A). THE LD.AR FOR THE ASSESSEE ALSO SUBMITTED THAT IN T HE IDENTICAL FACTS AND CIRCUMSTANCES IN ASSESSEES OWN CASE THE HONBLE IT AT IN ITA NO.625/AHD/2016 PERTAINING TO AY 2009-10 WAS PLEASE D TO RESTORE THE MATTER TO THE ASSESSING OFFICER FOR FRESH ADJUDICA TION AS PER THE PROVISIONS OF LAW VIDE ORDER DATED 26.07.2016. ACC ORDINGLY, THE LD.AR ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 7 - PRAYED BEFORE US TO RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION AS PER LAW. 14. ON THE OTHER HAND, THE LD. DR DID NOT OBJECT IF THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION AS PER THE PROVISIONS OF LAW. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORDS. 16. AT THE OUTSET, WE NOTE THAT THE FACTS OF THE PR ESENT CASE ARE IDENTICAL TO THE FACTS OF THE CASE OF THE ASSESSEE PERTAINING TO AY 2009-10(SUPRA). THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: 4. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PER USED. LEARNED COUNSEL POINTS OUT IN THE COURSE OF HEARING THAT IT IS PRIMARILY A RE- CONCILIATION ISSUE BETWEEN ASSESSEES SALES RECORDE D IN BOOKS/VAT RETURN AND THOSE MENTIONED IN THE IMPOUNDED DOCUMEN TS IN THE COURSE OF SURVEY. HE TAKES US TO PAGE 20 OF THE PAPER BOO K CONTAINING COPY OF THE SEIZED DOCUMENTS DEMONSTRATING ASSESSEES SALES FROM ASSESSMENT YEARS 2007-08 TO 2010-11 INCLUDING THE IMPUGNED ASS ESSMENT YEAR. SHRI POPAT THEREAFTER INVITES OUR ATTENTION TO ASSE SSING OFFICERS REGULAR ASSESSMENT ORDER DATED 27-02-2015 ACCEPTING ASSESSE ES RECONCILIATION BETWEEN THE IMPOUNDED DOCUMENTS AND ACTUAL FIGURES ON THE BASIS OF ITS VAT RETURN FOLLOWING EXCLUSIVE METHOD ON REGULAR BA SIS. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO REBUT THIS FAC TUAL POSITION. WE OBSERVE IN THESE PECULIAR FACTS THAT THE ASSESSING OFFICER HAS ADOPTED DIFFERENT APPROACHES FOR ADDING THE IMPUGNED SALES FIGURE RECORDED IN THE IMPOUNDED DIARY DOCUMENT. THE FACT ALSO REMAIN S THAT ASSESSEES VAT RETURN IN QUESTION WAS NOT FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS. WE ADOPT CONSISTENCY AND DIRECT THE A SSESSING OFFICER TO FOLLOW THE SAME COURSE OF ACTION IN THE IMPUGNED AS SESSMENT YEAR AS IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR IN ORDER TO VERIFY AND RECONCILE THE ASSESSEES SALE FIGURES AS PER ITS VA T RETURN. THE ISSUE IS ACCORDINGLY SET ASIDE TO THE FILE OF ASSESSING OFFI CER FOR FURTHER ACTION AS PER LAW. ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 8 - 17. RESPECTFULLY FOLLOWING THE SAME, WE REMIT THE I SSUE BACK TO THE FILE OF AO TO DECIDE AFRESH IN ACCORDANCE WITH THE PROVI SION OF LAW. ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 18. THE SECOND ISSUE RAISED BY THE ASSESSEE IN GROU ND NO. 9 & 10 IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER O F ASSESSING OFFICER BY DISALLOWING THE EXPENSES OF RS. 10,50,234/- AS BOGU S EXPENDITURE. 19. THE ASSESSING OFFICER DURING THE COURSE OF ASSE SSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAD CLAIMED EXPENSES AMOUNTING TO RS. 21,00,467/- ON THE BASIS OF THE VOUCHERS WHI CH WERE NOT FOUND ON THE DATE OF SURVEY. THESE VOUCHERS WERE NOT SUPPOR TED WITH THE BILLS FOR THE PURPOSES OF VERIFICATION. THE PAYMENT WAS MADE BY THE ASSESSEE IN CASH. THEREFORE, THE ASSESSING OFFICER DOUBTED THE GENUINENESS OF THE EXPENSES AND ACCORDINGLY SOUGHT CLARIFICATION FROM THE ASSESSEE. 20. THE ASSESSEE, IN COMPLIANCE TO IT, SUBMITTED TH AT THERE WERE CERTAIN VOUCHERS WHICH WERE NOT AVAILABLE AT ITS PREMISES O N THE DATE OF THE SURVEY. AS SUCH, THESE VOUCHERS WERE AVAILABLE WIT H THE ACCOUNTANT AT HIS HOME, AND SEVERAL VOUCHERS WERE AVAILABLE AT TH E FACTORY OF THE ASSESSEE. DURING SURVEY, IT WAS BROUGHT TO THE NOT ICE THAT BOOKS OF ACCOUNTS OF THE ASSESSEE ARE NOT COMPLETE AND THERE ARE MANY ENTRIES WHICH NEEDS TO BE RECORDED IN THE BOOKS OF ACCOUNTS . 21. DURING THE SURVEY, A PROFIT AND LOSS ACCOUNT WA S DRAWN AND GROSS PROFIT OF RS.18,65,194/- WAS SHOWN. HOWEVER, THE A SSESSEE HAS SHOWN IN ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 9 - ITS BOOKS OF ACCOUNTS, AS ON DATE OF SURVEY, A GROS S PROFIT OF RS. 30,10,293/- WHICH EVIDENCES THAT THERE ARE CERTAIN VOUCHERS WHICH WERE NOT ENTERED IN THE BOOKS OF ACCOUNTS. 22. THE ASSESSEE FURTHER REQUESTED THE ASSESSING OF FICER TO SPECIFY THE EXPENSES WHICH ARE NOT SUPPORTED ON THE BASIS OF BI LLS SO THAT THE NECESSARY CONFIRMATION AND OTHER SUPPORTING EVIDENC ES CAN BE ARRANGED. 23. HOWEVER, THE ASSESSING OFFICER DISAGREED WITH T HE CONTENTION OF THE ASSESSEE AND OBSERVED THAT THE PAYMENT HAS BEEN SHOWN ON THE BASIS OF VOUCHERS NOT FOUND ON THE DATE OF SURVEY RANGING FROM RS.15,000 18,000 ONLY. THESE VOUCHERS WERE NOT SUPPORTED ON THE BASIS OF NECESSARY PAPERS. HOWEVER, THE ASSESSING OFFICER FU RTHER OBSERVED THAT CONSIDERING THE NATURE OF THE BUSINESS, THE EXPENSE S INCURRED BY THE ASSESSEE COULD NOT BE DENIED. ACCORDINGLY, THE ASS ESSING OFFICER MADE THE DISALLOWANCE @ 50% OF THE EXPENSES OF RS. 21,00 ,467/- AMOUNTING TO RS.10,50,234/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 24. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE LD. CIT(A) WHEREIN ASSESSEE SUBMITTED THAT NO SPECIFIC INSTANC ES WERE POINTED OUT BY THE ASSESSING OFFICER WHICH WERE NOT SUPPORTED WITH PROPER EVIDENCES. IN FACT, THE ASSESSEE REQUESTED THE ASSESSING OFFIC ER AT THE TIME OF HEARING TO PROVIDE THE LIST OF THE EXPENSES IN RESP ECT OF WHICH SUPPORTING DOCUMENTS WERE NOT AVAILABLE. 25. AT THE TIME OF THE SURVEY, IT WAS ADMITTED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE NOT COMPLETE. THEREFO RE, THE POSSIBILITY OF ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 10 - THE EXPENSES CLAIMED BY THE ASSESSEE IN THE INCOME- TAX RETURN INCURRED EXCLUSIVELY FOR THE PURPOSE OF BUSINESS CANNOT BE R ULED OUT. HOWEVER, THE LD. CIT(A) DISREGARDED THE CONTENTION OF THE AS SESSEE AND CONFIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER:- 24. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER, STATEMENT OF FACT AND MATERIAL AVAILABLE ON RECORDS. IT IS SEEN THAT THE APPELLANT HAS CLAIMED THE EXPENSES OF RS.21,00,467/-. THE AO HAS NOTED THAT THE EXPENSES WERE INCURRED IN CASH AND THERE WAS NO SUP PORTING DOCUMENT AND EVIDENCE AND BILLS FOR THESE EXPENSES. EVEN DU RING THE APPELLATE PROCEEDINGS IN SPITE OF VARIOUS OPPORTUNITIES GIVE N, NONE ATTENDED NOR FILED ANY DETAILS AND EVIDENCE IN SUPPORT OF THE EX PENDITURE CLAIMED THEREFORE THE CONTENTION OF THE APPELLANT IS NOT TE NABLE AND ACCEPTABLE. THEREFORE THE 50% OF DISALLOWANCE OF EXPENSES OF RS .10,50,234/- IS CONFIRMED. THUS THE GROUND IS DISMISSED. 26. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), ASSES SEE PREFERRED AN APPEAL BEFORE US. 27. THE LD.AR REITERATED THE SUBMISSIONS AS WERE MA DE BEFORE THE AUTHORITIES BELOW. 28. ON THE OTHER HAND, THE LD. DR RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW. 29. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORDS. 30. FROM THE PRECEDING DISCUSSIONS, WE NOTE CERTAIN DEFECTS FROM THE ORDER OF THE ASSESSING OFFICER AS DETAILED BELOW: ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 11 - (I) THE ASSESSING OFFICER HAS NOT PINPOINTED THE SPECIF IC EXPENSES WHICH WERE NOT SUPPORTED WITH THE EVIDENCE S. (II) THE ASSESSEE ALSO REQUESTED TO REFER THE SPECIFIC R EFERENCES WHICH WERE DOUBTED BY THE ASSESSING OFFICER ABOUT T HEIR GENUINENESS, BUT THE ASSESSING OFFICER FAILED TO DO SO. (III) THE CONTENTION OF THE ASSESSEE THAT ALL THE DOCUMEN TS WERE NOT SEIZED DURING THE SURVEY WHICH WERE AVAILABLE W ITH THE ACCOUNTANT AND AT THE FACTORY PREMISES AT THE TIME OF SURVEY HAS NOT BEEN REJECTED WITH REASONS. (IV) THERE IS NO ALLEGATION THAT THE VOUCHERS OF THE EXP ENSES WERE NOT AVAILABLE AT THE PREMISES OF THE ASSESSEE BUT T HE ASSESSING OFFICER ALLEGES THAT MANY VOUCHERS WERE N OT SUPPORTED WITH EVIDENCES. BUT THE ASSESSING OFFICE R HAS NOT MADE ANY SPECIFIC REFERENCE FOR SUCH EXPENSES IN IT S ORDER. 31. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS DUTY BOUND TO PINPOINT THE EXPENSES BEFORE MAKI NG THE DISALLOWANCE ON THE GROUND THAT THESE WERE NOT SUPPORTED ON THE BASIS OF EVIDENCES. MOREOVER, WE ALSO NOTE THAT THE ASSESSING OFFICER H IMSELF ADMITTED IN THE ASSESSMENT ORDER THAT POSSIBILITY OF THESE EXPE NSES INCURRED FOR THE PURPOSE OF BUSINESS CANNOT BE DENIED. ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 12 - 32. FROM A SPECIFIC QUERY FROM THE BENCH ABOUT THE NATURE OF THE EXPENSES OF RS. 21,00,467/- VIZ A VIZ THE EXPENSES DISALLOWED BY THE AO, THE LD. DR HAS NOT MADE ANY SATISFACTORY REPLY. TH EREFORE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS MADE THE DISALL OWANCE ON AN AD-HOC BASIS WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF LAW. IN THESE CIRCUMSTANCES, WE ARE OF VIEW THAT THE ESTIMATED DI SALLOWANCE IS NOT SUSTAINABLE IN THE EYES OF LAW. IN THIS CONNECTION, WE ALSO RELY IN THE ORDER OF CO-ORDINATE BENCH OF ITAT KOLKATA IN THE CASE OF ANIMESH SADHU VS. ACIT IN ITA 11/KOL/2013 DATED 12.11.2014. THE RELEVANT EXTRACT IS REPRODUCED BELOW.:- 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER H AS DISALLOWED 20% OF THE EXPENSES ON ESTIMATE BASIS ON THE GROUND THA T NO INDEPENDENT VERIFICATION TO BE MADE TO FIND OUT THE AUTHENTICIT Y OF THE EXPENSES. LD. CIT(APPEALS) HAS REDUCED THE SAME ON THE SAME GROUN D. HOWEVER, WE ARE OF THE VIEW THAT NO ESTIMATED DISALLOWANCE SCAN BE MADE FOR INABILITY TO MAKE INDEPENDENT VERIFICATION. IF ANY SPECIFIC EXPENDITURE IS UNVERIFIABLE OR IS UN-VOUCHED, THEN SUCH SPECIFIC E XPENDITURE IS DISALLOWABLE. HER NO SUCH SPECIFIC IDENTIFICATION H AS BEEN DONE. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ESTIMATE D DISALLOWANCE AS CONFIRMED BY THE LD. CIT(APPEALS) IS UNSUSTAINABLE. CONSEQUENTLY THE SAME STANDS DELETED. IN THE RESULT, GROUNDS NO. 2 & 3 OF THE ASSESSEES APPEAL STAND ALLOWED. 33. RESPECTFULLY, FOLLOWING THE ORDER OF THE CO-O RDINATE BENCH (SUPRA), WE DELETE THE ADDITION MADE BY THE LOWER AUTHORITIE S. HENCE, THIS GROUND OF ASSESSEE IS ALLOWED. ITA NO.1513/AHD/2016 ZACFA CHEMICALS VS. ITO ASST .YEAR 2011-12 - 13 - 34. IN VIEW OF THE ABOVE, WE HOLD THAT THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER AND SUBSEQUENTLY CONFIRMED BY THE LD. CIT(A) IS NOT SUSTAINABLE. THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE B Y HIM AND HENCE THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 35. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 03/12/2018 SD/- SD/- (MS.MADHUMITA ROY) (WASEEM AH MED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 03/12/2018 &.., .(.. / T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-6, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) $%, / ITAT, AHMEDABAD