Dy.Commissioner of Income Tax, Lucknow V. M/s Metro Cargo Carriers, Lucknow

ITA 159/LKW/2014

• Counselvise Citation: 15923714 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 14-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH AGRAWAL
• Section: 133(6); 145

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.159/LKW/2014 ASSESSMENT YEAR:2008-09 M/S METRO CARGO CARRIERS, D-3, TRANSPORT NAGAR, KANPUR ROAD, LUCKNOW. PAN:AABFM6827A VS DY.C.I.T., RANGE-VI, LUCKNOW. (RESPONDENT) (APPELLANT) SHRI A. K. SINGH, CIT, D. R. APPELLANT BY SHRI YOGESH AGRAWAL, ADVOCATE RESPONDENT BY 15/09/2015 DATE OF HEARING 29 /10/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORD ER PASSED BY LEARNED CIT(A)-II, LUCKNOW DATED 30/12/2013 FOR THE ASSESSM ENT YEAR 2008-09. 2. GROUND NO. 1 IS AS UNDER: 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY DEL ETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F DIFFERENCE IN PURCHASES AS SHOWN BY THE ASSESSEE AT RS.37,43,39,152/- IN ITS TRADING ACCOUNT AND AS SHO WN IN THE BOOKS OF M/S. ESCORTS TRACTOR LTD., WHICH WAS M ADE BY THE ASSESSING OFFICER AFTER NOT FURNISHING ANY S UCH IRREFUTABLE EVIDENCES BY THE ASSESSEE TO RECONCILE THE DIFFERENCES. THE CIT(A) ALSO IGNORED THE FACTS THAT THERE WAS NOT ANY ACTUAL MOVEMENT OF STOCK. THE CIT(A) AL SO IGNORED THE FACT THAT DURING REMAND PROCEEDINGS THE COPY OF VAT ORDER OBTAINED FROM SALES TAX DEPARTMENT FOR THE RELEVANT ASSESSMENT YEAR WHEREIN PURCHASES SHOWN BY THE ASSESSEE IS RS.62,48,25,339/- AND PURCHASE RETU RN IS ONLY RS.23,78,640/- AND IN THE AUDITED TRADING ACCO UNT 2 PURCHASES SHOWN AT RS.62,49,49,988/-. HENCE, THE BO OKS OF ACCOUNT OF THE ASSESSEE COULD NOT BE RELIED UPON . 3. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPO RTED THE ORDER OF LEARNED CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THIS ADDITION WAS MADE BY THE ASSESSING OFFICER BY MAKING FOLLOWI NG OBSERVATIONS IN PARA 3 OF THE ASSESSMENT ORDER, WHICH IS REPRODUCED BELO W FOR THE SAKE OF READY REFERENCE: 3. THE CONTENTION OF THE ASSESSEE IS NOT FOUND AC CEPTABLE. THE BOOKS OF THE ASSESSEE WERE EXAMINED. THE DIFFER ENCES AS RECONCILED BY THE ASSESSEE ARE ONLY SUPERFLUOUS IN NATURE. FROM THE BILLS AND VOUCHERS AND CREDIT NOTES AND DEBIT N OTES PRODUCED FOR VERIFICATION, IT WAS NOTED THAT THE SA LE TRANSACTIONS ARE WELL DOCUMENTED ON STATIONERY BEARING THE INSIG NIA OF THE SELLER (M/S ESCORTS). FURTHER THE DEBIT NOTES ARE O N PLAIN PAPER NOT HAVING ANY AUTHENTICATION MARKS AND NEITHER HAS THE ASSESSEE FURNISHED ANY SUCH IRREFUTABLE EVIDENCE, W HEREBY SUCH PAPER CAN BE RELIED ON. THERE IS EVIDENCED NO ACTUA L MOVEMENT OF STOCK. ACCORDINGLY SALES RETURN AND PURCHASE RET URNS HAVE NOT TAKEN PLACE AT ALL FROM THE BOOKS OF A/C AND SU PPORTING VOUCHERS AND BILLS IT IS NOTED THAT THE ASSESSEE HA S PREMEDITATED THIS WHOLE EXERCISE OF PURCHASE RETURN AT THE ADVENT OF THE VAT IMPLICATIONS AND AS A RESULT HAS NOT SHOWN THESE PURCHASES IN ITS FINAL ACCOUNTS AND IN TURN H AS GROSSLY SUPPRESSED ITS TURNOVER AND CORRESPONDING INCOME. T HE ASSESSEE WAS AFFORDED MANY OPPORTUNITIES TO EXPLAIN THIS DIFFERENCE IN BOOKS ARID IN ITS PROFIT AND LOSS ACC OUNT WHICH THE ASSESSEE HAS TRIED TO BUTTRESS WITH MANY FIGURES AN D FACTS, BUT HAS HOWEVER FAILED TO ADDRESS THE BASIC ISSUE OF MO VEMENT OF STOCK SUPPORTED BY FOOLPROOF DOCUMENTATION. IN ALL THIS VIEW, THE CLAIM OF THE REVENUE HOLDS CORRECT. THERE WERE ALSO CERTAIN UNSIGNED UNSTAMPED BILLS SH OWN AS PURCHASE BILLS. IN VIEW OF SUCH DISCREPANT EVIDENCES, THE CLAIM OF THE REVENUE IS SUBSTANTIATED. FURTHER, THE ASSESSEE HA S ALSO MADE 3 A SUBMISSION THAT THE SELLER/MANUFACTURER (M/S ESCO RTS) SHARES THE SAME PREMISES WITH THE ASSESSEE AS THE WAREHOUS E, WHERE GOODS FROM FARIDABAD ARE STOCKED. IN SUCH CIRCUMSTA NCES, IT IS ALL THE MORE EXPECTED THAT THE MANUFACTURER WILL BE EVER MORE CAREFUL IN DOCUMENTING SUCH SALE TRANSACTION. IT WA S NOT SO, AND THERE IS NOTHING BROUGHT ON RECORD TO PROVE ANYTHIN G CONTRARY TO THE CLAIM OF THE REVENUE. HENCE THE DIFFERENCE AMOUNT OF RS.37,43,39,152/- IS BEING DISALLOWED AND TAKEN AS INCOME OF THE ASSESSE E. ACCORDINGLY PENALTY PROCEEDINGS U/S 271(1)(C) IS BE ING INITIATED SEPARATELY ON THIS GROUND SINCE IT IS SEEN THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME WITH IN THE MEANING OF SAID SECTION.' 4.1 THE ADDITION MADE BY THE ASSESSING OFFICER HAS BEEN DELETED BY CIT(A) BY MAKING FOLLOWING OBSERVATIONS ON PAGES 57 TO 60 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY RE FERENCE: ON EXAMINATION OF WRITTEN SUBMISSIONS, COMMENTS/COUNTER COMMENTS AND FINDING GIVEN BY A.O. IN ASSESSMENT ORDER AND REMAND REPORTS, I FIND THAT TH E DIFFERENCE OF RS.37,43,39,152/- HAS DULY BEEN EXPLAINED BY THE APPELLANT. THE PAPERS/DOCUMENTS SUBMITTED ALONG WITH WRITTEN SUBMISSIONS BY APPELLANT AND COLLECTED BY A.O. EITH ER DURING ASSESSMENT PROCEEDINGS OR REMAND PROCEEDINGS, IT TR ANSPIRE THAT THE ADDITION MADE BY A.O. ON ACCOUNT OF DIFFER ENCE IN THE HEAD OF PURCHASES ACCOUNT WITHOUT PROPER VERIFICATI ON OF THE BOOKS OF ACCOUNTS, PAPERS AND DOCUMENTS AND WITHOUT CONDUCTING PROPER ENQUIRIES. THE WRITTEN SUBMISSION S MENTIONED IN SUPRA PROVE THAT THE SAID DIFFERENCE I S EXPLAINABLE ON THE BASIS OF EVIDENCES COLLECTED DURING APPELLAT E PROCEEDINGS AND EXPLANATION GIVEN BY APPELLANT ON THIS ISSUE. T HE ADDITION MADE BY A.O. CANNOT BE SAID JUSTIFIED, KEEPING IN V IEW OF FACTS MENTIONED SUPRA. THE PURCHASES RETURNS WERE DULY SU PPORTED BY PAPERS/DOCUMENTS AND CONFIRMATIONS LETTERS OBTAI NED BY A.O. U/S 133(6) OF I.T. ACT DIRECTLY FROM M/S. ESCO RTS LTD. (PRINCIPAL). THE DETAILED ENQUIRIES WERE CONDUCTED BY A.O. DURING APPELLATE PROCEEDINGS IN RESPECT OF PURCHASE S AND PURCHASE RETURNS OF VEHICLES MADE FROM M/S. ESCORTS LTD. THE A.O. HAS OBTAINED THE CONFIRMATION LETTER WITH TRAC TOR NO. CHASSIS NO. AND ENGINE NO. OF PURCHASE RETURNS OF 1 001 TRACTORS TO M/S. ESCORTS LTD. BY APPELLANT DURING T HE PERIOD 4 UNDER CONSIDERATION. IT IS OBVIOUS THAT THE PURCHAS E RETURNS OF TRACTORS WERE MADE OUT OF PURCHASES EFFECTED BY APP ELLANT. THE PURCHASE RETURNS CANNOT BE MADE WITHOUT ACCEPTING T HE CORRESPONDING PURCHASES OF 1001 TRACTORS. THESE PUR CHASES WERE RECORDED AS PER PURCHASE RETURNS IN THE BOOKS OF APPELLANT AND DULY VERIFIED FROM THE BOOKS OF ACCOUNTS, PAPERS/DOCUMENTS AVAILABLE WITH APPELLANT FOR THE P ERIOD UNDER CONSIDERATION. THE PURCHASE AND PURCHASE RETURNS CO ULD ALSO BE VERIFIED FROM THE RECORDS OF PRINCIPAL M/S. ESCORTS LTD. THESE PURCHASES AND PURCHASE RETURNS OR RECORDED IN THE B OOKS OF ACCOUNTS OF M/S. ESCORTS LTD. AS SALES AND SALE RET URNS MADE TO APPELLANT DURING THE PERIOD UNDER CONSIDERATION. TH ESE FIGURES OF SALES AND SALES RETURNS ON 1001 TRACTORS DULY RE FLECTED IN M/S. ESCORTS LTD. AND CAN BE VERIFIED FROM STATEMEN T OF ACCOUNT OF APPELLANT APPEARING IN THE BOOKS OF ACCOUNTS OF M/S. ESCORTS LTD. THESE VERIFICATIONS WERE MADE BY A.O. DURING R EMAND PROCEEDINGS AND HE CONFIRMED THAT THERE WAS NO DISC REPANCY FOUND IN THIS RESPECT OF PURCHASE RETURNS OF 1001 T RACTORS. THE A.O. HAS MENTIONED IN HIS REMAND REPORT THAT THE DE BIT NOTE WERE SIGNED BY SRI RAJESH KUMAR IN RESPECT OF PURCH ASE RETURNS WERE MADE BY APPELLANT AND HE HAS FURTHER MENTIONED THAT SRI RAJESH KUMAR WAS AUTHORIZED SIGNATORY OF M/S. ESCOR T LTD. THE APPELLANT HAS FURNISHED DETAILED COMMENTS ON REMAND REPORT ALONG WITH COPY OF CERTIFICATE ISSUED BY M/S. ESCOR T LTD. SHOWING SRI RAJESH KUMAR AS AUTHORIZED SIGNATORY ON BEHALF OF M/S. ESCORTS LTD. THE CONTENTS OF CERTIFICATE DATED 20.1 2.2013 MENTIONED THAT SRI RAJESH KUMAR S/O. SHRI SHIV SHAN KER HAS BEEN AUTHORIZED TO SIGN OF ALL THE COMMERCIAL TAX D OCUMENTS SUCH AS INVOICES, DEBIT NOTES, CREDIT NOTES ON BEHA LF OF M/S. ESCORTS LTD. HE IS AUTHORIZED BY M/S. ESCORTS LTD. FROM 1TH APRIL, 2007 TO TILL DATE I.E. 20.12.2013. THUS IT IS BEYOND DOUBT THAT SRI RAJESH KUMAR WAS AUTHORIZED BY M/S. ESCORTS LTD. TO SIGN THE PAPERS / DOCUMENTS MENTIONED SUPRA FOR THE PERIOD UNDER CONSIDERATION ON BEHALF OF M/S. ESCORTS LTD. THE AO DID NOT BRING ANY MATER IAL ON RECORD WHICH COULD PROVE THAT EITHER THE PURCHASES OF 1001 TRACTORS WERE SOLD BY THE APPELLANT OUTSIDE THE BOO KS OF ACCOUNTS OF THE APPELLANT OR AVAILABLE WITH THE APP ELLANT AS ON 31-03-2008 AS STOCK-IN-TRADE. IT IS IMPORTANT TO ME NTION HERE THAT IN EITHER CASE FIRST THE PURCHASES OF 1001 TRA CTORS HAD TO BE ENTERED AND INCLUDED IN PURCHASES OF APPELLANT F OR THE PERIOD 01-04-2007 TO 31-03-2008, SPECIFICALLY WHEN IN TRADING & PROFIT AND LOSS A/C. THE APPELLANT HAS SHOWN NET PURCHASES (EXCLUDING PURCHASES RETURN OF 1001 TRACTORS). LOOK ING TO 5 THESE FACTS THE PURCHASE RETURNS OF 1001 TRACTORS A RE DULY VERIFIABLE FROM THE RECORDS OF APPELLANT AS WELL AS M/S. ESCORTS LTD.(PRINCIPAL). THEREFORE, THE ADVERSE INFERENCE D RAWN BY A.O. BY MAKING ADDITION IGNORING THE PURCHASE RETURNS WI THOUT ANY BASIS. FURTHER ON EXAMINATION OF WRITTEN SUBMISSIONS FILED BY APPELLANT ALONG WITH PAPERS/ DOCUMENTS DURING APPE LLATE PROCEEDINGS AND REMAND REPORTS OF A.O. REVEALS THAT THE ALLEGED DIFFERENCE ON ACCOUNT OF PAYMENT COLLECTED BY APPELLANT FROM DEALERS/ DISTRIBUTORS ON BEHALF OF M/S. ESCORT S LTD. RS.1,81,54,222/-, REVERSAL OF CASH DISCOUNT BY M/S. ESCORTS LTD. AT RS.20,83,676/-, IN PUT VAT CREDIT RS.1,38,28,703 /- DISHONOURING OF CHEQUES ISSUED BY APPELLANT TO M/S. ESCORTS LTD. AMOUNTING TO RS.40,09,243/- ARE ALSO DULY VERI FIABLE FROM THE COPY OF ACCOUNT OF M/S. ESCORTS LTD. AND RECORD S OF APPELLANT. THE PAPERS/ DOCUMENTS I.E. CREDIT/DEBIT NOTES, COPY OF BANK STATEMENTS OF APPELLANT AND M/S. ESCORTS LT D., PAYMENT COLLECTED BY APPELLANT FROM DEALERS ON BEHALF OF M/ S. ESCORTS LTD. (THE APPELLANT WAS DULY AUTHORIZED TO COLLECT THE PAYMENTS ON BEHALF OF M/S. ESCORTS LTD. FROM DEALERS DISTRIB UTORS), CASH DISCOUNT, IN VAT FROM THE COPY OF ACCOUNT OF APPELL ANT IN THE BOOKS OF ACCOUNTS OF M/S. ESCORTS LTD. AND THE COPY OF ACCOUNT OF M/S. ESCORTS LTD. IN THE BOOKS OF ACCOUNTS OF AP PELLANT. IN THE VAT ORDER PASSED BY THE TRADE TAX DEPARTMENT IS ALSO VERIFIABLE FROM INFORMATION COLLECTED U/S 133(6) OF I.T. ACT, 1961 FROM TRADE TAX DEPARTMENT. DURING APPELLATE PROCEEDINGS, THE A.O. HAS MENTIONED IN HIS REMAND R EPORT THAT THE APPELLANT HAS CLAIMED DISHONOURING OF CHEQUES AMOUNTING TO RS.72,09,273/- BEFORE A.O. DURING SCRUTINY ASSES SMENT PROCEEDINGS. NOW DURING APPELLATE PROCEEDINGS THE A PPELLANT CLAIMED THE DISHONOURING OF CHEQUES AMOUNTING TO RS.40,09,243/-. THE APPELLANT HAS EXPLAINED THE REA SONS OF THE SAID DIFFERENCE THAT 'THERE IS DIFFERENCE OF RS.32, 00,000/- ONLY IN THE LIST OF DISHONORED CHEQUES PRODUCED BEFORE A .O. DURING ASSESSMENT PROCEEDINGS AND DOCUMENTS PRODUCED DURIN G APPEAL, THE CAUSE OF DIFFERENCE IS THAT WE HAVE REC EIVED A CHEQUE FROM M/S ESCORTS LTD. FOR RS.32,00,000/- ON 29.06.2007 AND WE HAVE TO MAKE PAYMENT OF RS.32,00,000/- (TWO CHEQUES OF RS.16,00,000/- TO M/S ESCORTS LTD ON THE SAME DA Y, DUE TO CLERICAL MISTAKE IT WAS TREATED AS BOUNCED CHEQUE A ND IF HE SAME IS TAKEN INTO LIST OF DISHONORED CHEQUE LIST P RODUCED BEFORE A.O. THE SAME ERROR WAS RECTIFIED AT THE TIM E OF PREPARATION OF DOCUMENTS OF APPEAL AND THE FRESH LI ST OF BOUNCE CHEQUES PRODUCED AT THE TIME OF APPEAL'. 6 THE APPELLANT HAS DULY EXPLAINED THE REASONS OF DIFFERENCE OF CLAIM IN DISHONOURING OF CHEQUES IN A SSESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS. THE A.O. HAS MENTIONED THIS FACT IN HIS REMAND REPORT SUBMITTED DURING APPELLATE PROCEEDINGS. THE DISHONOUR CHEQUES COULD BE VERIFIED FROM THE RELEVANT BOOKS OF ACCOUNTS OF APPELLANT I. E. CASH BOOK, LEDGER & BANK STATEMENTS AND ALSO FROM THE RELEVANT RECORDS OF M/S. ESCORTS LTD. TO WHOM THESE CHEQUES WERE ISSUED FOR PAYMENT OF OUTSTANDING BALANCES. THE A.O. HIMSELF H AS NOT GIVEN ANY ADVERSE FINDING ON THIS ISSUE IN HIS REMA ND REPORT AND RATHER HE HAS ACCEPTED THAT THE DIFFERENCE OF DISHO NOUR CHEQUES ARE DULY REFLECTED IN THE BANK STATEMENT FU RNISHED BEFORE HIM. THUS THE REASONS OF DIFFERENCE TO THIS EXTENT OF RS.40,09,243/- IS FULLY EXPLAINED. THE A.O. HAS DULY VERIFIED THESE ITEMS DURING THE R EMAND PROCEEDINGS AND SUBMITTED DETAILED REMAND REPORT AN D THE COUNTER COMMENTS OF APPELLANT WERE ALSO OBTAINED W HICH ARE PLACED ON RECORD. THESE REPORTS AND SUBMISSIONS WER E EXAMINED DURING APPELLATE PROCEEDINGS AND FOUND THA T THERE WAS NO DISCREPANCY/DEFICIENCY ON THESE POINTS. THER EFORE, THE ADDITIONS WERE MADE BY A.O. WHICH INCLUDED IN TOTAL ADDITION OF RS.37,43,39,152/- IS CONSIDERED IMPROPER AND UNJUST IFIED. THESE TRANSACTIONS IN RESPECT OF ALL THESE POINTS ARE DUL Y REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS OF APPELLANT AND M/S. ESCORTS LTD. (PRINCIPAL). THE ADDITION ON ACCOUNT OF OPENING CREDIT BALANCE APPEARS IN THE NAME OF M/S. ESCORTS LTD. AT RS.4,1 2,05,865.50 WAS MADE BY A.O. WHILE COMPUTING THE DIFFERENCE IN PURCHASES OF RS.37,43,39,152/-. THE COPY OF M/S. ESCORTS LTD. WAS OBTAINED BY A.O. DIRECTLY U/S 133(6) OF I.T. ACT FR OM M/S. ESCORTS LTD. AND THE OPENING DEBIT BALANCE IN THE N AME OF APPELLANT APPEARS IN THE BOOKS OF ACCOUNTS OF M/S. ESCORTS LTD. RS.4,16,08,728.20. THEREFORE, THERE WAS A DIFFERENC E OF RS.4,02,863.77 IN THE BOOKS OF ACCOUNTS OF APPELLAN T AND M/S. ESCORTS LTD. IT IS WORTHWHILE TO MENTION HERE THAT THE CREDIT BALANCE IS NOT TALLIED WITH DEBIT BALANCE APPEARING IN THE BOOKS OF ACCOUNTS OF M/S. ESCORTS LTD. IN REMAND PROCEEDI NGS THE A.O. HAS MENTIONED IN DETAILED AND RECONCILED THE O PENING BALANCE. THE APPELLANT HAS FURNISHED THE WRITTEN SU BMISSIONS AND EXPLAINED THAT THE SAID DIFFERENCE IS STILL UND ER RECONCILIATION FOR WANT OF CERTAIN DEBIT AND CREDIT ENTRIES MADE IN APPELLANT AND M/S. ESCORTS LTD., IN ITS ACCOUNT. THE DIFFERENCE 7 IN OPENING BALANCE DID NOT EFFECT THE POSITION OF P URCHASES, PURCHASE RETURNS IN RESPECT OF VEHICLES EFFECTED DU RING THE PERIOD UNDER CONSIDERATION. THE OPENING BALANCE IS CARRIED FORWARD OF PREVIOUS YEAR I.E. A.Y. 2007-08 DOSING B ALANCE. THEREFORE, IF ANY, ACTION IS REQUIRED TO BE TAKEN I N THE CONCERNED PREVIOUS YEAR. LOOKING TO THESE FACTS THE ADDITION MADE BY A.O. OF RS.4,12,05,864/- ON ACCOUNT OF OPE NING BALANCE OF M/S. ESCORTS LTD. REFLECTED IN THE BOOKS OF ACCOUNTS IS TOTALLY UNWARRANTED AND UNCALLED FOR. THE SAME IS CONSIDERED IMPROPER AND UNJUSTIFIED. AS MENTIONED THE APPELLANT HAS MAINTAINED PROPER RECORDS OF PURCHASES/PURCHASE RETURNS, SALES/SALES RETURNS, DIRECT AND INDIRECT EXPENSES, PAYMENTS MADE AND REC EIVED INCLUDING DEBIT NOTE, DEPOSITS & WITHDRAWALS FROM B ANK ACCOUNTS AND OTHER SO MANY REGULAR BUSINESS TRANSAC TIONS IN ITS BOOKS OF ACCOUNTS AND THE PROFITS FROM BUSINESS AND PROFESSION CAN BE ARRIVED FROM THE RELEVANT RECORDS OF APPELLA NT. THE BOOKS OF ACCOUNTS OF APPELLANT ARE DULY AUDITED U/S 44AB OF I.T. ACT, 1961 AND NO KIND OF QUALIFICATION IS MENTIONED BY CHARTERED ACCOUNTANT IN TAX AUDIT REPORT, THEREFORE , THE SAME CANNOT BE REJECTED WITHOUT ANY BASIS. RELIANCE IS A LSO PLACED ON THE FOLLOWING DECISIONS OF JUDICIAL AUTHORITIES- MODE OF BOOK ENTRIES GENERALLY NOT RELEVANT- SUTELJI COTTON MILLS LTD. VS. CIT (1979) 116 ITR 1 (SC). IT IS NOW WELL SETTLED THAT THE WAY IN WHICH ENTRIE S ARE MADE BY AN ASSESSEE IN HIS BOOKS OF ACCOUNTS IS NO T DETERMINATIVE OF THE QUESTION WHETHER THE ASSESSEE HAS EARNED BY PROFITS OR SUFFERED LOSS. THE ASSESSEE MAY BY MA KING ENTRIES WHICH ARE NOT IN CONFORMITY WITH THE PROPER ACCOUNT ING PRINCIPLES, CONCEALED PROFITS OR LOSS AND THE ENTRI ES MADE BY HIM CANNOT THEREFORE, BE REGARDED AS CONCLUSIVE ONE WAY OR THE OTHER. WHAT IS NECESSARY TO BE CONSIDERED IS THE TR UE NATURE OF THE TRANSACTIONS. WHETHER IN FACT IT HAS RESULTED I N P&L TO THE ASSESSEE HELD BY- 1. SUTELJI COTTON MILLS LTD. VS. CIT (1979) 116 ITR 1 (SC). FOR INSTANCE A TRADING RECEIPT WILL REMAIN A TRADIN G RECEIPT EVEN IF IT IS NOT SHOWN AS TRADING RECEIPT IN THE B OOKS OF ACCOUNTS KEPT BY ASSESSEE. 2. CIT VS. HAVELLS INDIA LTD. (2012) 253 CTR 271 ( DELHI) A.Y. 2005-06: QUESTION OF ALLOWANCE OF EXPENSES HAS TO 8 BE CONSIDERED IN THE LIGHT OF LEGAL POSITION. ACCOU NTING TREATMENT CANNOT BE CONCLUSIVE. LOOKING TO THE ABOVE FACTS & CIRCUMSTANCES, I HOLD THAT THE ADDITION OF RS.37,43,39,152/- MADE BY A.O. ON ACCOUNT OF DIFFERENCE BETWEEN PURCHASES SHOWN IN TRADING ACCOU NT AT RS.62,49,49,988/- AND ACCOUNT OF M/S. ESCORTS TRACT OR LTD. OF RS.99,92,79,140/-, IS UNCALLED FOR AND UNJUSTIFIED. THE ADDITION MADE BY A.O. DESERVES TO BE DELETED. ACCORDINGLY, T HE ADDITION OF RS.37,43,39,152/- IS HEREBY DELETED. THUS THE AP PELLANT GETS RELIEF OF RS.37,43,39,152/-. 4.2 FROM THE ASSESSMENT ORDER, AS PER RELEVANT PARA REPRODUCED ABOVE AND FROM THE OBSERVATION OF CIT(A) IN HIS ORDER, IT IS SEEN THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER IN RESPECT OF PUR CHASES RETURN CLAIMED BY THE ASSESSEE BY STATING THAT THE DEBIT NOTES ARE ON PLAIN PAPER NOT HAVING ANY AUTHENTICATION MARK AND THERE IS NO EVID ENCE OF ACTUAL MOVEMENT OF STOCK. WE ALSO FIND THAT THE SELLER IN THE PRESENT CASE IS A REPUTED COMPANY M/S ESCORTS LTD. AS AGAINST THIS, A CATEGORICAL FINDING HAS BEEN GIVEN BY LEARNED CIT(A) THAT THE PURCHASE RETU RNS WERE DULY SUPPORTED BY PAPERS AND DOCUMENTS AND CONFIRMATION LETTERS OBTAINED BY ASSESSING OFFICER U/S 133(6) OF THE ACT DIRECTLY FR OM M/S ESCORTS LTD. HE HAS ALSO OBSERVED THAT THE ASSESSING OFFICER HAS OB TAINED THE CONFIRMATION LETTER WITH TRACTOR NUMBER, CHASSIS NUMBER AND ENGI NE NUMBER OF PURCHASE RETURNS OF 1001 TRACTORS TO M/S ESCORTS LTD. BY THE ASSESSEE DURING THE PRESENT YEAR. THEREAFTER, HE HAS OBSERVED THAT IT IS OBVIOUS THAT THE PURCHASE RETURNS OF TRACTORS WERE MADE OUT OF PURCH ASES EFFECTED BY ASSESSEE. THEREAFTER, HE HAS STATED THAT THE PURCHA SE RETURNS CANNOT BE MADE WITHOUT ACCEPTING THE CORRESPONDING PURCHASES OF 1001 TRACTORS. THEREAFTER, HE HAS GIVEN A FINDING THAT THE PURCHAS E AND PURCHASE RETURNS COULD ALSO BE VERIFIED FROM THE RECORDS OF M/S ESCO RTS LTD. THEREAFTER, CIT(A) HAS OBSERVED THAT AS PER A CERTIFICATE PROVI DED BY M/S ESCORTS LTD., SHRI RAJESH KUMAR WAS AUTHORIZED BY M/S ESCORTS LTD . TO SIGN THE PAPERS/DOCUMENTS FOR THE PERIOD UNDER CONSIDERATION ON BEHALF OF M/S 9 ESCORTS LTD. AND THE ASSESSING OFFICER DID NOT BRIN G ANY MATERIAL ON RECORD WHICH COULD PROVE THAT EITHER PURCHASE OF 1001 TRAC TORS WERE SOLD BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNTS OR ARE AVAIL ABLE WITH THE ASSESSEE AS ON 31/03/2008 AS STOCK IN TRADE. THE ACTION OF THE ASSESSING OFFICER OF REJECTING THE CLAIM OF THE ASSESSEE REGARDING THE P URCHASE RETURN OF RS.31,43,39,152/- AND MAKING ADDITION OF ENTIRE AMO UNT AS INCOME OF THE ASSESSEE IS WITHOUT ANY BASIS BECAUSE THE PURCHASE RETURN OF THIS AMOUNT, AS CLAIMED BY THE ASSESSEE, HAS BEEN DULY CONFIRMED BY M/S ESCORTS LTD. BEING THE SELLER AND ALL THE DIFFERENCES POINTED OU T BY THE ASSESSING OFFICER HAVE BEEN DULY RECONCILED AS PER CATEGORICAL FINDIN G OF CIT(A) IN HIS ORDER AND NONE OF THESE FINDING OF CIT(A) COULD BE CONTRO VERTED BY LEARNED D. R. OF THE REVENUE. WE ALSO FEEL THAT THIS OBJECTION O F THE A.O. THAT THE DEBIT NOTES ARE ON PLAIN PAPER LOSES ITS SIGNIFICANCE ONC E THE FACT OF PURCHASE RETURN IS CONFIRMED BY THE SELLER I.E. M/S ESCORTS LIMITED. THE OBJECTION ON THE BASIS OF THIS ALLEGATION THAT THERE IS NO EVIDE NCE OF ACTUAL MOVEMENT OF TRACTORS ON PURCHASE RETURN IS ALSO NOT SIGNIFICANT IN VIEW OF CONFIRMATION BY THE SELLER I.E. M/S ESCORTS LIMITED. MOREOVER, IT W AS ALSO EXPLAINED THAT PURCHASE RETURN OF 1001 TRACTORS AND SUBSEQUENT PUR CHASE OF SAME TRACTORS WAS AFFECTED IN VIEW OF SOME AMENDMENTS IN VAT RULE S AND IN VIEW OF THIS, ACTUAL MOVEMENT IS NOT NECESSARY AT LEAST FOR INCOM E TAX PURPOSES. OBJECTION MAY OF VAT AUTHORITIES IF THE VAT RULES R EQUIRE ACTUAL MOVEMENT BUT EVEN IN THAT SITUATION, THE CLAIM OF PURCHASE R ETURN CANNOT BE REJECTED WHEN BOTH PARTIES ARE CONFIRMING AND THERE IS NO EV IDENCE OF SALE OUTSIDE BOOKS OR CLOSING STOCK. THEREFORE, WE DO NOT FIND A NY REASON TO INTERFERE WITH THE ORDER OF LEARNED CIT(A). GROUND NO. 1 IS REJECTED. 5. GROUND NO. 2 IS AS UNDER: 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY D ELETING THE ADDITION MADE BY THE ASSESSING OFFICER AT RS.61,19, 427/- ON ACCOUNT OF CARRIER FUEL EXPENSES AND REPAIR & MAINT ENANCE EXPENSES WHICH WAS MADE BY THE ASSESSING OFFICER AF TER 10 REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE U/S 145 OF THE INCOME-TAX ACT,1961 ON THE GROUND THAT PAYMENTS ARE MADE BY THE ASSESSEE IN CASH (VIDE IMPREST ACCOUNT OF MR. Z AFAR KHAN) TO RELATED PARTIES NAMELY M/S. REPUBLIC SERVICE CEN TRE. FURTHER, REPUBLIC SERVICE CENTRE HAS MADE THESE PAYMENTS AND NOT THE ASSESSEE HENCE THE PAYMENTS SHOULD BE ALLOWED TO M/ S. REPUBLIC SERVICE CENTRE AND NOT TO THE ASSESSEE. TH E LD. CIT(A) ALSO IGNORED THE FACT THAT DURING ASSESSMENT PROCEEDING AS WELL AS REMAND PROCEEDINGS THE ASSESSEE COULD NO T PRODUCE COUNTER FOIL OF CHEQUE THROUGH WHICH PAYMENT WAS MA DE BY THE ASSESSEE. 6. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPO RTED THE ORDER OF LEARNED CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON T HE BASIS THAT THE PAYMENT OF FUEL EXPENSES WAS MADE BY M/S REPUBLIC S ALES CORPORATION AND M/S REPUBLIC SALES CENTRE. IT WAS EXPLAINED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER ALSO THAT THE EXPENSES WERE NOT I NCURRED ACTUALLY IN CASH BUT SINCE THE FUEL IS TAKEN FROM M/S REPUBLIC SALES CENTRE, A SISTER CONCERN OF THE ASSESSEE, THE ASSESSEE FIRM WAS DEBITED BY T HEM AND THE ASSESSEE FURNISHED A COPY OF ACCOUNT OF M/S REPUBLIC SALES C ENTRE BEFORE THE ASSESSING OFFICER. THERE WAS ONE MORE OBJECTION OF THE ASSESSING OFFICER THAT SOME ADVANCE WAS GIVEN TO SHRI ZAFAR KHAN. IN THIS REGARD, IT WAS EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE SAM E IS GIVEN FOR MEETING OUT THE CARRIER REPAIR AND MAINTENANCE EXPENSES AND FOR VARIOUS OTHER MISC. EXPENSES FOR RUNNING OF THE CARRIERS AND THE SAME W AS THEREAFTER ACCOUNTED FOR AS EXPENSES INCURRED BY HIM. THE EXPLANATION W AS NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER ALLOWED E XPENSES ONLY TO THE EXTENT OF 0.28% BEING THE NET PROFIT SHOWN BY THE A SSESSEE I.E. RS.14,667/- OUT OF FUEL EXPENSES OF RS.52,38,337/- AND OUT OF C AR REPAIRS AND MAINTENANCE EXPENSES ALSO, HE ALLOWED RS.2,515/- OU T OF EXPENSES OF 11 RS.8,98,272/- AND IN THIS MANNER, HE MADE DISALLOWA NCE OF RS.61,19,427/-. THESE DISALLOWANCES WERE DELETED BY LEARNED CIT(A) AFTER MAKING COMPARISON OF THESE TWO EXPENSES IN THE PRESENT YEA R WITH SUCH EXPENSES IN EARLIER TWO YEARS I.E. ASSESSMENT YEAR 2006-07 A ND 2007-08. IN THE PRESENT YEAR, THE FUEL EXPENSES IS 36.87% AND REPAI RS AND MAINTENANCE EXPENSES IS 6.32% AND THE SAME WAS 40.68% AND 4.51% IN ASSESSMENT YEAR 2006-07 AND 44.38% AND 5.58% IN ASSESSMENT YEA R 2007-08. SINCE THE EXPENSES CLAIMED BY THE ASSESSEE IN THE PRESENT YEAR IS AT PAR WITH SUCH EXPENSES IN PRECEDING TWO YEARS AND NO ADVERSE MATE RIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER FOR MAKING THIS DISALLOWANCE AND THE SAME WAS MADE ON THIS ARBITRARY BASIS THAT THE PAYM ENT WAS NOT MADE BY THE ASSESSEE BY IGNORING THE EXPLANATION OF THE ASS ESSEE THAT THE PAYMENT WAS MADE BY SISTER CONCERN BY DEBITING THE ACCOUNT OF THE ASSESSEE FIRM, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LE ARNED CIT(A). ACCORDINGLY, GROUND NO. 2 IS REJECTED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GAROD IA ) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED:29/10/2015 *SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REG ISTRAR