Parabhjot Sidhu Through L/H Mrs. Jatinder, Lucknow V. Income Tax Officer-2(2), Lucknow

ITA 160/LKW/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1084 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-03-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 06-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBMISSION OF CORRECTLY
• Keywords: Gross profit estimation; Unexplained cash credit; Rejection of books of accounts; Gift; Business expenditure; Rule of consistency
• Section: 133(6); 37(1); 68; 144

Judgement Text

I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 SHRI PARABHJOT SIDHU, THROUGH L/H MRS JATINDER C/O M/S ALLPA (INDIA) PHARMACEUTICALS, 48/2 PRAG NARAIN ROAD, LUCKNOW. PAN:AJWPS 7105 B VS. INCOME TAX OFFICER-2(2), LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A), LUCKNOW DATED 30/11/2016 RELATING TO ASSESSMENT YEA R 2012-13 TAKING THE FOLLOWING GROUNDS OF APPEAL: 1. THAT LD. COMMISSIONER (APPEALS) FAILED TO CONS IDER THE FACT AND SUBMISSION OF APPELLANT CORRECTLY AND IN R IGHT PERSPECTIVE. 2. THAT LD. LOWER AUTHORITIES ESTIMATED GROSS PROFI T OF THE APPELLANT WITHOUT REJECTING BOOKS OF ACCOUNT, HENCE APPELLANT BY S HRI DHARMENDRA KUMAR, C.A. RESPONDENT BY CHAUDHARY ARUN KUMAR SINGH, D.R. DATE OF HEARING 15 /0 3 /2018 DATE OF PRONOUNCEMENT 19/03/2018 I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 2 ASSESSMENT MADE BY HIM IS ILLEGAL AND WITHOUT JURISDICTION. 3. THAT ON HAND, LD. LOWER AUTHORITIES ESTIMATED GR OSS PROFIT OF APPELLANT, WHEREAS, ON OTHER HAND, HE MAD E DISALLOWANCES OF EXPENSES, HENCE THE ASSESSMENT MAD E HIM IS ILLEGAL, UNJUSTIFIED AND WITHOUT JURISDICTIO N. 4. THAT LEARNED LOWER AUTHORITIES ESTIMATED GROSS P ROFIT OF APPELLANT ON THE BASIS OF ALLEGED DISCREPANCIES IN FILLING COLUMNS OF BALANCE SHEET, SINCE THE BASIS OF ESTIMA TION IS INCORRECT AND INSUFFICIENT AND FURTHER AFORESAID AU THORITIES FAILED TO POINT OUT SINGLE DEFECT IN BOOKS OF ACCOU NT MAINTAINED BY APPELLANT, HENCE ADDITION OF RS.7,24, 774/- FOR LOW GROSS PROFIT IS ILLEGAL, AGAINST THE FACTS AND BASELESS. 5. THAT IN SPITE OF GROSS PROFIT RATIO REDUCED IN C OMPARISON TO IMMEDIATELY PRECEDING ASSESSMENT YEAR, THE NET P ROFIT RATIO HAS INCREASED IN COMPARISON TO IMMEDIATELY PRECEDING ASSESSMENT YEAR, WHICH RESULTED DECLARATI ON OF HIGHER INCOME, HENCE, THE ADDITION FOR LOW GROSS PR OFIT, WHILE REJECTING THE REASONS GIVEN BY APPELLANT IS UNJUSTIFIED, ARBITRARY AND WITHOUT JURISDICTION. 6. THAT LD. LOWER AUTHORITIES FAILED TO OBSERVE THA T EXPENSES INCURRED FOR SAMPLE MEDICINES GIVEN TO DOC TORS AND BOX AND KETCH COVER FOR SAMPLE IS A REGULAR FEA TURE OF BUSINESS OF APPELLANT AND APPELLANT HAS BEEN CONSISTENTLY INCURRING THE AFORESAID EXPENSES IN PA ST YEARS AND IN A.Y.2013-14 ALSO, FURTHER, RATIO OF AF ORESAID EXPENDITURE IS MUCH LOWER THAN AVERAGE RATIO OF LAS T THREE YEARS AND MUCH LOWER THAN IMMEDIATE PRECEDING ASSESSMENT YEAR, HENCE, DISALLOWANCE OF ENTIRE EXPENDITURE OF RS.13,68,582/-, WHILE REJECTING THE FACTS, PAST HISTORY, NATURE OF BUSINESS, EVIDENCES PRODUCE D AND EXPLANATIONS FURNISHED BEFORE THEM HIM ARE ARBITRAR Y, UNJUSTIFIED, AGAINST THE FACTS AND WITHOUT JURISDIC TION. 7. THAT LD. LOWER AUTHORITIES ARBITRARILY DISALLOWE D EXPENDITURE INCURRED BY APPELLANT IN RESPECT OF MAR KETING AND BUSINESS PROMOTION EXPENSES TO THE EXTENT OF I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 3 RS.19,73,241/-, WHEREAS, THE TOTAL EXPENSES CLAIMED BY APPELLANT WAS RS.19,38,190/-, HENCE, HE MADE EXCESS DISALLOWANCE OF EXPENDITURE BY RS.35,051/-. 8. THAT LD. LOWER AUTHORITIES FAILED TO CONSIDER TH AT MARKETING AND BUSINESS PROMOTION EXPENSES IS A REGU LAR FEATURE OF APPELLANT'S BUSINESS AND HE HAS BEEN CONSISTENTLY INCURRING THE AFORESAID EXPENDITURE IN PAST YEARS ALSO, FURTHER, RATIO OF AFORESAID EXPENDITURE IS MUCH LOWER THAN AVERAGE RATIO OF LAST THREE YEARS AND MU CH LOWER THAN IMMEDIATE PRECEDING ASSESSMENT YEAR, HEN CE, ADDITIONS FOR DISALLOWING THE ALLEGED EXPENDITURE O F RS.19,73,241/-, WHILE REJECTING THE FACTS, PAST HIS TORY, NATURE OF BUSINESS, EVIDENCES PRODUCED AND EXPLANAT IONS FURNISHED BEFORE THEM ARE ARBITRARY, UNJUSTIFIED, A GAINST THE FACTS AND WITHOUT JURISDICTION. 9. THAT LEARNED LOWER AUTHORITIES FAILED TO OBSERVE THAT EXPENSES INCURRED FOR ADVERTISEMENT IS A REGULAR FE ATURE OF BUSINESS OF APPELLANT AND APPELLANT HAS BEEN CONSISTENTLY INCURRING THE AFORESAID EXPENSES IN PA ST YEARS ALSO, HENCE, DISALLOWANCE OF ENTIRE EXPENDITU RE OF RS.94,464/-, WHILE REJECTING THE FACTS, PAST HISTOR Y, NATURE OF BUSINESS, EVIDENCES PRODUCED AND EXPLANATIONS FURNISHED BEFORE HIM ARE ARBITRARY, UNJUSTIFIED, AG AINST THE FACTS AND WITHOUT JURISDICTION. 10. THAT LD. LOWER AUTHORITIES FAILED TO UNDERSTAND ; THE REAL NATURE OF TRANSACTION INCURRED BETWEEN APPELLANT AN D M/S ALLPA (INDIA) MEDICINES (P) LTD AND WRONGLY ADDED RS.7,80,000/- UNDER SECTION 68 INCOME TAX ACT, 1961 , WHILE IGNORING THE FACTS THAT AFORESAID TEMPORARY L OAN WAS TAKEN THROUGH BANKING CHANNELS AND THE SAME WAS REPAID ON THE SAME DAY THROUGH BANKING CHANNELS. 11. THAT APPELLANT PROVED THE IDENTITY AND CREDITWO RTHINESS OF M/S ALLPA (INDIA) MEDICINES (P) LTD AND GENUINEN ESS OF TRANSACTION HENCE THE ADDITION OF RS.780,000/- IS A GAINST THE FACTS, ARBITRARY AND WITHOUT JURISDICTION. 2. AT THE OUTSET, LEARNED A. R. INVITING OUR ATTENT ION TO GROUNDS OF APPEAL FROM 1 TO 5, SUBMITTED THAT VIDE THESE GROUN DS OF APPEAL THE I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 4 ASSESSEE IS AGGRIEVED WITH THE APPLICATION OF HIGHE R GROSS PROFIT RATE AGAINST THE DECLARED GROSS PROFIT RATE. IT WAS SUBMITTED T HAT ASSESSING OFFICER, WITHOUT REJECTION OF BOOKS OF ACCOUNT, HAS MADE AN ADDITION ON ACCOUNT OF GROSS PROFIT BY HOLDING THAT IN EARLIER YEAR THE GR OSS PROFIT RATE WAS MORE THAN THE GROSS PROFIT DECLARED DURING THIS YEAR. I T WAS SUBMITTED THAT ASSESSING OFFICER DID NOT POINT OUT ANY MISTAKE IN THE BOOKS OF ACCOUNT EXCEPT THAT CERTAIN COLUMNS IN THE RETURN OF INCOME WERE INADVERTENTLY WRONGLY FILLED. HE SUBMITTED THAT MERE WRONG FILLI NG OF COLUMNS OF I.T. RETURN DOES NOT MEAN THAT THE ASSESSEE HAD SUPPRESS ED HIS GROSS PROFIT RATE AND THEREFORE, THE ACTION OF THE AUTHORITIES BELOW IS NOT JUSTIFIED. LEARNED A. R. IN THIS RESPECT PLACED RELIANCE ON THE JUDGME NT OF HON'BLE MADRAS HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCO ME TAX VS. MARG LIMITED WHEREIN VIDE ORDER DATED 20 TH JULY, 2017 HON'BLE COURT HAD HELD THAT WITHOUT REJECTION OF BOOKS OF ACCOUNT THE ASSESSING OFFICER IS NOT ENTITLED TO ESTIMATE THE PROFITS OF THE ASSESSEE. HE SUBMITTED THAT IT IS AN UNDISPUTED FACT THAT THE BOOKS OF ACCOUNT IN THIS CASE WERE NE VER REJECTED AND THEREFORE, IT WAS PRAYED THAT THE ADDITION SUSTAINE D BY LEARNED CIT(A) BE DELETED. 2.1 ARGUING GROUND NO. 6 LEARNED A. R. SUBMITTED TH AT ASSESSING OFFICER HAS DISALLOWED THE ENTIRE EXPENDITURE OF RS.13,68,5 82/- WHICH THE ASSESSEE HAD INCURRED FOR THE PURPOSE OF DISTRIBUTING SAMPLE S. IT WAS SUBMITTED THAT THE ASSESSEE IS A PHARMACEUTICAL COMPANY AND IS MAN UFACTURING MEDICINES AND FOR THE PURPOSE OF DEVELOPMENT OF ITS BUSINESS THE ASSESSEE USED TO GIVE SAMPLES BY MARKING THEM AS PHYSICIANS SAMPLE NOT FOR SALE. IT WAS SUBMITTED THAT IT IS A GENERAL PRACTICE IN THE TRAD E TO DISTRIBUTE SAMPLES. HE SUBMITTED THAT THE AUTHORITIES BELOW HAVE MADE DISA LLOWANCE BY HOLDING THAT THE ASSESSEE WAS NOT ABLE TO FURNISH LIST OF D OCTORS TO WHOM SAMPLES WERE GIVEN AND FURTHER THE AUTHORITIES HAVE HELD TH AT MEDICAL SAMPLES TO I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 5 DOCTORS VIOLATES LAW AS SAME WAS IN VIOLATION OF RE GULATIONS ISSUED BY MEDICAL COUNCIL OF INDIA. LEARNED A. R. SUBMITTED THAT THESE EXPENSES ON SAMPLES WERE NOT GIFTS AND FREEBEES WHICH HAVE BEEN PROHIBITED BY MEDICAL COUNCIL OF INDIA AND FURTHER BY CBDT CIRCULAR NO. 5 OF 2012. HE SUBMITTED THAT IN A RECENT ORDER HON'BLE DELHI TRIBUNAL IN TH E CASE OF ELI LILLY & CO. (INDIA) LTD. VS. ACIT HAS EXAMINED THE PROVISIONS O F MEDICAL COUNCIL OF INDIA AND AFTER ANALYZING THE SAME HON'BLE TRIBUNAL HAS HELD THAT THERE IS A CLEAR DISTINCTION BETWEEN THE FREE SAMPLES, GIFTS, TRAVEL FACILITIES, HOSPITALITY AND CASH OR MONETARY GRANTS. IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT THE DISALLOWANCE MADE BY THE AUTHORITIES BELOW SHOULD B E DELETED. 2.3 ARGUING GROUND NO. 7 & 8, LEARNED A. R. SUBMITT ED THAT THE ASSESSEE HAD INCURRED AN EXPENDITURE OF RS.19,38,190/- AS MA RKETING AND BUSINESS PROMOTION EXPENSES OUT OF WHICH THE ASSESSING OFFIC ER HAS MADE DISALLOWANCE OF RS.19,73,317/- WHICH WAS MORE THAN THE EXPENDITURE INCURRED. IT WAS SUBMITTED THAT THE AUTHORITIES BE LOW HAVE FAILED TO CONSIDER THAT MARKETING AND BUSINESS PROMOTION EXPENSES ARE REGULAR FEATURE OF APPELLANTS BUSINESS AND HE HAS BEEN CONSISTENTLY I NCURRING THE AFORESAID EXPENSES IN PAST YEARS ALSO. IT WAS SUBMITTED THAT THE RATIO OF AFORESAID EXPENDITURE TO TURNOVER IS MUCH LOWER THAN AVERAGE RATIO OF LAST THREE YEARS AND MUCH LOWER THAN IMMEDIATE PRECEDING ASSESSMENT YEAR. IT WAS SUBMITTED THAT WHILE DISALLOWING THE GENUINE EXPENS ES THE AUTHORITIES BELOW HAVE REJECTED THE FACTS, PAST HISTORY, NATURE OF BU SINESS, EVIDENCES AND EXPLANATIONS FILED BEFORE THEM. LEARNED A. R. IN T HIS RESPECT INVITED OUR ATTENTION TO COPIES OF LEDGER ACCOUNT OF MARKETING AND BUSINESS PROMOTION EXPENSES FOR THE ASSESSMENT YEARS 2009-10 TO 2011-1 2 PLACED AT PAGES 145 TO 190 OF THE PAPER BOOK. IT WAS SUBMITTED THAT IN NONE OF THE EARLIER YEARS ANY DISALLOWANCE WAS MADE ON ACCOUNT OF THESE EXPEN SES. LEARNED A. R. INVITED OUT ATTENTION TO PAGE NO. 3 OF THE PAPER BO OK WHERE A CHART SHOWING I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 6 THE PERCENTAGE OF EXPENSES TO TURNOVER FOR THE LAST THREE YEARS WAS PLACED AND SUBMITTED THAT THE PERCENTAGE OF MARKETING AND BUSINESS PROMOTION EXPENSES WAS IN LINE WITH THE PERCENTAGE OF SUCH EX PENSES INCURRED IN THE EARLIER YEARS. HE FURTHER ARGUED THAT THESE EXPENS ES WERE ARBITRARILY DISALLOWED WITHOUT POINTING OUT ANY DEFECT IN THE B OOKS OF ACCOUNT. 2.4 ARGUING GROUND NO. 9, LEARNED A. R. SUBMITTED T HAT THE AMOUNT OF RS.94,464/- HAS BEEN DISALLOWED WHICH THE ASSESSEE HAD INCURRED TOWARDS ADVERTISEMENT FOR ORGANIZING CAMPS FOR DOCTORS. LE ARNED A. R. INVITED OUR ATTENTION TO PAGES 191 TO 218 OF THE PAPER BOOK WHE RE THE ENTIRE VOUCHERS SUPPORTING THE CLAIM OF EXPENSES ON ADVERTISEMENT W AS PLACED. LEARNED A. R. SUBMITTED THAT IT IS A REGULAR FEATURE OF ASSESS EES BUSINESS TO INCUR EXPENDITURE ON ADVERTISEMENT AND SHOULD HAVE BEEN A LLOWED AS BUSINESS EXPENDITURE. 2.5 ARGUING GROUND NO. 10 & 11, LEARNED A. R. SUBMI TTED THAT THE ASSESSEE HAD PURCHASED MEDICINES FROM HIS SISTER CO NCERN AND HAD RECEIVED PAYMENT IN ITS BANK ACCOUNT IN THE FORM OF CASH WHI CH THE AUTHORITIES BELOW HAVE NOT ACCEPTED AND HAVE HELD THAT THE CASH DEPOS ITS WERE NOT VERIFIABLE AND THEREFORE, THEY HAD MADE ADDITION U/S 68 OF THE ACT. LEARNED A. R. IN THIS RESPECT INVITED OUR ATTENTION TO COPY OF ACCOU NT OF SISTER CONCERN PLACED AT PAGES 220 TO 226 OF THE PAPER BOOK WHERE A COPY OF ACCOUNT OF SISTER CONCERN OF THE ASSESSEE WAS PLACED AND IN WHICH THE RE WERE REGULAR TRANSACTIONS OF SALE AND PURCHASE AND RECEIPT OF MO NEY FROM IT. LEARNED A. R. SUBMITTED THAT THE SISTER CONCERN OF THE ASSESSE E IS A PRIVATE LIMITED COMPANY WHICH IS DULY INCORPORATED UNDER THE COMPAN IES ACT HAVING SEPARATE PAN AND THE ACCOUNTS ARE DULY AUDITED AND THEREFORE, IDENTITY AND CREDITWORTHINESS OF THE SISTER CONCERN WAS PROVED A ND THE SAID RECEIPTS WERE NOT HIT BY THE PROVISIONS OF SECTION 68 OF THE ACT. LEARNED A. R. ALSO FILED A I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 7 COPY OF INCOME TAX RETURN FILED BY THE SISTER COMPA NY WHEREIN PAN OF THE SISTER COMPANY WAS MENTIONED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, LEARNED A. R. ARGUED THAT ADDITIONS MADE BY THE ASSESSING OFFICER ARE ARBITRARY AND NEED TO BE DELETED. 3. LEARNED D. R., ON THE OTHER HAND, HEAVILY PLACED HIS RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESSEE DEALS IN THE BUSINESS OF TRADING AND MARKETING OF MEDICINES. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DECLARED A GROSS PROFIT RATE OF 68.61% AND THE ASSESSING OFFICER OBSERVED THAT IN THE EARLIER YEAR THE ASSESSEE HAD DECLARED 71.62% AS GROSS PROFIT RATE AND THEREFORE, HE HELD THAT THE GROSS P ROFIT DECLARED BY THE ASSESSEE WAS LOWER BY 3.01%. HE FURTHER HELD THAT THERE WAS DIFFERENCE IN THE FIGURES AS PER THE AUDIT REPORT AND AS PER THE RETURN FILED BY THE ASSESSEE AND THEREFORE, HE HELD THAT THE GROSS PROF IT RATE DECLARED DURING THE YEAR IS NOT ACCEPTABLE AND THEREFORE, HE WORKED OUT AN AVERAGE OF GROSS PROFIT RATE OF THREE EARLIER YEARS AND APPLIED THE SAME AND MADE THE ADDITION TO THE EXTENT OF RS.7,24,774/-. WE FIND T HAT NOWHERE IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT AND RATHER HE HAS CONFIRMED THAT BOOKS OF ACCOUNT W ERE PRODUCED AND WERE TEST CHECKED AND THE BALANCE SHEET WAS TALLIED. TH IS OBSERVATION HAS BEEN MADE BY THE ASSESSING OFFICER AT PAGE NO. 1 OF HIS ORDER. THEREFORE, WITHOUT REJECTING BOOKS OF ACCOUNT AND WITHOUT OBSE RVING ANY DISCREPANCY IN THE BOOKS OF ACCOUNT, THE ACTION OF THE ASSESSING O FFICER IN APPLYING HIGHER GROSS PROFIT RATE IS NOT JUSTIFIED. THE ASSESSING OFFICER HAS ALSO NOT REJECTED BOOKS OF ACCOUNT AND MERELY ON THE BASIS OF LOWER G ROSS PROFIT RATE AND ON THE BASIS OF SOME DISCREPANCIES IN THE FIGURES FILE D IN THE RETURN OF INCOME I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 8 AND AS PER AUDIT REPORT, HAS MADE THIS ADDITION. H ON'BLE MADRAS HIGH COURT IN THE CASE OF MARG LIMITED (SUPRA), UNDER THE SIMI LAR FACTS AND CIRCUMSTANCES, HAS HELD THAT THE ASSESSING OFFICER NEEDS TO REJECT BOOKS OF ACCOUNT BEFORE MAKING HIS OWN ASSESSMENT. HON'BLE COURT HAS HELD THAT IT IS SINE QUA NON THAT WHILE ESTIMATING THE INCOME THE ASSESSING OFF ICER HAS TO COME TO A CONCLUSION THAT THE BOOKS OF ACCOUNT M AINTAINED BY THE ASSESSEE ARE INCORRECT. THE FINDINGS OF HON'BLE CO URT, AS CONTAINED FROM PARA 4 ONWARDS, ARE REPRODUCED BELOW: 4. WE NOW PROCEED TO MERITS OF THE MATTER UNDER TH E CAPTION DISCUSSION 4(3) AS STATED SUPRA, THE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF CIVIL CO NSTRUCTION AND RELATED SERVICES. 4(B) AO HAD MADE ADDITION TO THE INCOME RETURNED BY THE ASSESSEE BY ESTIMATING GROSS PROFIT. THE POWER TO M AKE SUCH ADDITION ON ESTIMATE BASIS IS AVAILABLE TO THE AO U NDER SECTION 144 OF THE IT ACT. SECTION 145 ENABLES THE AO TO IN VOKE THE POWER UNDER SECTION 144 WHEN CERTAIN CONDITIONS ADU MBRATED IN SUB-SECTION (3) OF SECTION 145 ARE SATISFIED. TH EREFORE, IT BECOMES NECESSAIY AND USEFUL TO EXTRACT SECTION 145 (3) OF THE IT ACT, WHICH READS AS FOLLOWS: 145(3)WHERE THE ASSESSING OFFICER IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE THE METHOD OF ACCOUNTING PROVIDED IN SUB-SECT ION (I) HAS NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, OR INCOME HAS NOT BEEN COMPUTED IN ACCORDANCE WITH THE STANDARDS NOTIFIED UNDER SUB-SECTION (2), THE ASSESSING OFFICER MAY MA KE AN ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144.H 4(C) THEREFORE, IT IS SINE QUA NON THAT THE AO TO COME T O A CONCLUSION THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE ARE INCORRECT, INCOMPLETE OR UNRELIABLE AN D REJECT THE BOOKS OF ACCOUNTS BEFORE THE PROCEEDING TO MAKE HIS OWN ASSESSMENT. IN THE INSTANT CASE, THERE IS NO REFERE NCE IN THE ASSESSMENT ORDER OF THE AO REGARDING REJECTION OF B OOKS OF ACCOUNTS. I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 9 4(D) THEREFORE, THERE IS NOTHING ON RECORD TO SHOW THAT THE AO CAME TO THE CONCLUSION THAT THE BOOKS OF ACCOUNTS M AINTAINED BY THE ASSESSEE ARE INCORRECT, INCOMPLETE, UNRELIAB LE AND AS A CONSEQUENCE REJECTED THE BOOKS OF ACCOUNTS. 4(E)THEREFORE, AFTER SETTING OUT THE PLETHORA OF CA SE LAWS ON THIS POINT, CIT (A) HELD THAT THE ACCOUNTS OF THE A SSESSEE CANNOT BE REJECTED MERELY BASED ON THE PERCEPTION O F THE AO THAT THE ASSESSEE HAS DECLARED LOW PROFIT MARGIN FO R CERTAIN PROJECTS WHEN BOOKS OF ACCOUNTS HAVE NOT BEEN REJEC TED. CONSIDERING THE FACTUAL POSITION THAT THERE IS NO R EFERENCE IN THE ASSESSMENT ORDER MADE BY THE AO REGARDING THE BOOKS OF ACCOUNTS (THIS HAS BEEN FAIRLY ADMITTED BY THE REVE NUE BEFORE ITAT.), WE ARE NOT, THEREFORE, LABOURING THROUGH TH E LABYRINTH OF CASE LAWS RELIED ON BY CIT(A). 4.1 RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENTS AND THE FACTS AND CIRCUMSTANCES, WE DELETE THE ADDITION WHICH THE ASS ESSING OFFICER HAD MADE ON ACCOUNT OF LOW GROSS PROFIT RATE AND THEREFORE, GROUND NO. 1 TO 5 ARE ALLOWED. 4.2 AS REGARDS THE ADDITION ON ACCOUNT OF DISALLOWA NCE OF EXPENSES ON SAMPLES, WE FIND THAT THE AUTHORITIES BELOW HAVE SU STAINED THE DISALLOWANCE BY HEAVILY PLACING RELIANCE ON THE REGULATIONS OF M EDICAL COUNCIL OF INDIA AND ALSO BY PLACING RELIANCE ON CBDT CIRCULAR NO. 5 OF 2012 DATED 01/08/2012. WE FIND THAT HON'BLE DELHI TRIBUNAL IN THE CASE OF ELI LILLY & CO. (INDIA) LTD. (SUPRA) HAS HELD THAT GIFTS AND SAMPLES ARE TWO DIF FERENT THINGS. THE TRIBUNAL HAS HELD THAT SAMPLES ARE NOT HIT BY THE R EGULATIONS OF MEDICAL COUNCIL OF INDIA. THE FINDINGS OF THE TRIBUNAL, AS CONTAINED FROM PARA 13 TO 16, ARE REPRODUCED BELOW: 13. HAVING CONSIDERED THE RIVAL SUBMISSIONS WE FIN D THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR DRP BY AN ORD ER DATED I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 10 5.9.2013 HAD DELETED THE IDENTICAL DISALLOWANCE BY OBSERVING AS UNDER : '6.11.3 THE PANEL HAS CAREFULLY CONSIDERED THE SUBM ISSIONS MADE BY THE ASSESSEE AND ALSO GONE THROUGH THE RELE VANT ACT/RULES/GUIDELINES. FOR UNDERSTANDING THE INTENT OF THE GOVERNMENT ON THIS ISSUE, IT WOULD BE RELEVANT TO R EFER TO THE UCPMP AND REPRODUCE THE RELEVANT PROVISIONS. THIS IS A VOLUNTARY CODE OF MARKETING PRACTICES FOR INDIAN PHARMACEUTICAL INDUSTRY FOR THE PRESENT AND ITS IMP LEMENTATION WILL BE REVIEWED AFTER A PERIOD OF IMPLEMENTED EFFE CTIVELY BY THE PHARMA ASSOCIATION/COMPANIES, THE GOVERNMENT WO ULD CONSIDER MAKING IT A STATUTORY CODE. 1. ... 2. ... 4. ... 5. SAMPLES 5.1 FREE SAMPLE OF DRUGS SHALL NOT BE SUPPLIED TO A NY PERSON WHO IS NOT QUALIFIED TO PRESCRIBE SUCH PRODUCT. 5.2 WHERE SAMPLE OF PRODUCTS RE-DISTRIBUTED BY A ME DICAL REPRESENTATIVE, THE SAMPLE MUST BE HANDED DIRECTLY TO A PERSON QUALIFIED TO PRESCRIBE SUCH PRODUCT OR TO A PERSON AUTHORIZED TO RECEIVE THE SAMPLE ON THEIR BEHALF. 5.3 THE FOLLOWING CONDITIONS SHALL BE OBSERVED IN T HE PROVISIONS OF SAMPLES TO A PERSON QUALIFIED TO PRESCRIBE SUCH PRODUCT. (I) SUCH SAMPLES ARE PROVIDED ON AN EXCEPTIONAL BAS IS ONLY (SEE (II) TO (VII) BELOW) AND FOR THE PURPOSE OF ACQUIRI NG EXPERIENCE IN DEALING WITH SUCH A PRODUCT. (II) SUCH SAMPLE PACKS SHALL BE LIMITED TO PRESCRIB ED DOSAGES FOR THREE PATIENTS FOR REQUIRED COURSE OF TREATMENT. (III) ANY SUPPLY OF SUCH SAMPLE MUST BE IN RESPONSE TO A SIGNED AND DATED REQUEST FOR THE RECIPIENT. (IV) AN ADEQUATE SYSTEM OF CONTROL AND ACCOUNTABILI TY MUST BE MAINTAINED IN RESPECT OF THE SUPPLY OF SUCH SAMPLES . I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 11 (V) EACH SAMPLE PACK SHALL NOT BE LARGER THAN THE S MALLEST PACK PRESENT IN THE MARKET. (VI) EACH SAMPLE SHALL BE MARKED 'FREE MEDICAL SAMP LE-NOT FOR SALE' OR BEAR ANOTHER LEGEND OF ANALOGOUS MEANING. (VII) EACH SAMPLE SHALL BE ACCOMPANIED BY A COPY OF THE MOST UP TO DATE VERSION OF THE PRODUCT INFORMATION (AS R EQUIRED IN DRUG AND COSMETIC ACT, 1940) RELATING TO THAT PRODU CT. 6. GIFTS 6.1 NO GIFTS, PECUNIARY ADVANTAGES OR BENEFITS. IN KIND MAY BE SUPPLIED OFFERED OR SUPPLIED DRUGS BY A PHARMACEUTI CAL COMPANY OR ANY OF ITS AGENTS I.E. DISTRIBUTORS, WHO LESALERS, RETAILERS ETC. 6.2 GIFTS FOR THE PERSONAL BENEFIT OF HEALTHCARE PR OFESSIONALS AND FAMILY MEMBERS (BOTH IMMEDIATELY AND EXTENDED) (SUCH AS TICKETS TO ENTERTAINMENT EVENTS) ALSO ARE NOT BE OF FERED OR PROVIDED. 7. RELATIONSHIP WITH HEALTHCARE PROFESSIONALS 7.1 TRAVEL FACILITIES ... 7.2 HOSPITALITY ... 7.3 CASH OR MONETARY GRANTS ... WHERE THERE IS ANY ITEM MISSING, THE CODE OF MCI AS PER 'INDIAN MEDICAL COUNCIL (PROFESSIONAL CONDUCT, ETIQUETTE AN D ETHICS) REGULATION, 2002 AS AMENDED TIME TO TIME WILL PREVA IL'. 6.11.4 THUS IT IS EVIDENT FROM THE ABOVE THAT A CLE AR DISTINCTION HAS BEEN MADE BETWEEN THE FREE SAMPLES, GIFTS, TRAV EL FACILITIES, HOSPITALITY AND CASH OR MONETARY GRANTS. IT WOULD A CCORDINGLY BE INCORRECT TO PUT SAMPLES IN THE DEFINITION OF GI FTS BEING SEPARATELY CATEGORIZED IN PARA 5 & 6 OF THE UCPMP R ESPECTIVELY. IT IS NOTICED FROM THE CBDT CIRCULAR NO.5/2012 THAT IT REFERS IMC REGULATIONS 2002 WHICH IMPOSED A PROVISION ON T HE I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 12 MEDICAL PRACTITIONER FOR TAKING ANY GIFT, TRAVEL FA CILITY, HOSPITALITY, CASH AND MEDICAL GRANT FROM THE PHARMA SECTOR. THE GOVERNMENT OF INDIA HAS CLEARLY DEMARCATED THE OPERATION NATURE OF EACH TERM IN THE UCPMP, WHICH HAS BEEN D ISCUSSED ABOVE AND THEREFORE, IT CANNOT BE SAID THAT THE TER M 'GIFT' COVERS FREE SAMPLES ALSO. 6.11.5 MOREOVER A MEDICAL PRACTITIONER IS BOUND BY THE IMC REGULATIONS 2002. PARA 7.8 OF THE SAID REGULATIONS READ AS UNDER : 7.8 A REGISTERED MEDICAL PRACTITIONER SHALL NOT CON TRAVENE THE PROVISIONS OF THE DRUGS AND COSMETICS ACT AND REGUL ATIONS MADE THERE UNDER. ACCORDINGLY '1. PRESCRIBING STEROIDS/PSYCHOTROPIC DRUGS WHEN TH ERE IS NO ABSOLUTE MEDICAL INDICATIONS; 2. SELLING SCHEDULE 'H' AND 'L' DRUGS AND POISONS TO THE PUBLIC EXCEPT TO HIS PATIENT'. IN CONTRAVENTION OF THE ABOVE PROVISIONS SHALL CONS TITUTE GROSS PROFESSIONAL MISCONDUCT ON THE PART OF THE PHYSICIA N.' 6.11.6 IT IS NOTICED FROM THE ABOVE THAT THE MEDICA L PRACTITIONER IS TO ADHERE TO THE PROVISIONS OF THE, DRUGS AND 'C OSMETICS ACT AND REGULATIONS MADE THERE UNDER. THE RELEVANT REGU LATIONS 65(18) APPLICABLE TO THE LICENSE/DISTRIBUTOR AND RE GULATION 95 REGARDS AS UNDER : '65(18) NO DRUG INTENDED FOR DISTRIBUTION TO THE ME DICAL PROFESSION AS FREE SAMPLE WHICH BEARS A LABEL ON TH E CONTAINER AS SPECIFIED CLAUSE (VIII) OF SUB-RULE (1) OF RULE 96 AND NO DRUG MEANT FOR CONSUMPTION BY THE EMPLOYEES STATE INSURA NCE CORPORATION. THE CENTRAL GOVERNMENT HEALTH SCHEME, THE GOVERNMENT MEDICAL STORES DEPOTS, THE ARMED FORCES MEDICAL STORES OR OTHER GOVERNMENT INSTITUTIONS, WHICH BEAR S A DISTINGUISHING MARK OR ANY INSCRIPTION ON THE DRUG OR ON THE LABEL AFFIXED TO THE CONTAINER THEREOF INDICATING T HIS PURPOSE SHALL BE SOLD OR STOCKED BY THE LICENSEE ON HIS PR EMISES'. '95. PROHIBITION OF SALE OR DISTRIBUTION UNLESS LAB ELED-SUBJECT TO THE OTHER PROVISIONS OF THESE RULES, NO PERSON SHAL L SELL OR I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 13 DISTRIBUTE ANY DRUG (INCLUDING A PATENT OR PROPRIET ARY) UNLESS IT IS LABELED IN ACCORDANCE WITH THESE RULES.' THUS, IT BECOMES EVIDENT THAT EVEN THE DRUGS AND CO SMETICS ACT AND REGULATIONS MADE THERE UNDER DO NOT PROHIBI TED THE LICENSEE OR A MEDICAL PRACTITIONER TO DISTRIBUTE TH E FREE SAMPLES, ALBEIT FOLLOWING PRESCRIBED CONDITIONS. ON THIS ACC OUNT ALSO, THE PANEL OBSERVES THAT THE FREE SAMPLES CANNOT BE SAID TO HAVE BEEN COVERED BY A WIDER DEFINITION OF GIFT. 6.11.7 MOREOVER, AS HELD BY THE HON'BLE SUPREME COU RT IN THE CASE OF ESKAYE PHARMACEUTICALS (245 ITR 116), 'THE OBJECT OF DISTRIBUTION OF THE SAMPLES OF THE DRUGS TO THE DOC TORS IS TO MAKE THEM AWARE THAT SUCH DRUGS ARE AVAILABLE IN TH E MARKET IN RELATION TO THE CURE OF A PARTICULAR AFFLICTION AND THEREFORE, TO PERSUADE THEM TO PRESCRIBE THE SAME IN APPROPRIATE CASES AND THIS IS TANTAMOUNT TO PUBLICITY AND SALES PROMOTION .' ACCORDINGLY SUCH EXPENDITURE CANNOT BE SAID TO BE D ISALLOWABLE U/S. 37(1) OF THE INCOME-TAX ACT IN THE HANDS OF TH E PHARMA COMPANIES DISTRIBUTING SUCH FREE SAMPLES TO DOCTORS . 6.11.8 IN THE LIGHT OF THE DETAILS DISCUSSION MADE ABOVE, THE PANEL HOLDS THAT THE FREE SAMPLES ARE NOT COVERED B Y THE IMC REGULATIONS OF 2002(AS AMENDED IN 2009) READ WITH C BDT CIRCULAR NO. 5/2012, UCPMP AND THE DRUGS AND COSMET IC ACT AND REGULATIONS MADE THERE UNDER. ACCORDINGLY THE I S DIRECTED TO DELETE THE PROPOSED ADDITION ON THIS ACCOUNT. ACCORDINGLY THE AO IS DIRECTED TO DELETE THE PROPOS ED ADDITION ON THIS ACCOUNT. 14. THE ABOVE ORDER HAS ACQUIRED FINALITY AND NO AP PEAL THERE FROM HAS BEEN PREFERRED BY THE REVENUE. IN LIGHT OF THE ABOVE AND IN ACCORDANCE WITH PRINCIPLE OF CONSISTENCY THE DISALLOWANCE IS HELD TO BE LEGALLY UNTENABLE. IN SUPPORT OF THE ABOVE CONCLUSION RELIANCE IS PLACED ON THE JUDGMENT OF AP EX COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES 358 ITR 295 WH EREIN IT HAS BEEN HELD AS UNDER : '29. IN RADHASOAMI SATSANG SAOMI BAGH V. COMMISSION ER OF INCOME TAX, [1992] 193 ITR 321 (SC) THIS COURT DID NOT THINK IT APPROPRIATE TO ALLOW THE RECONSIDERATION OF AN ISSU E FOR A I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 14 SUBSEQUENT ASSESSMENT YEAR IF THE SAME 'FUNDAMENTAL ASPECT' PERMEATES IN DIFFERENT ASSESSMENT YEARS. IN ARRIVIN G AT THIS CONCLUSION, THIS COURT REFERRED TO AN INTERESTING P ASSAGE FROM HOYSTEAD V. COMMISSIONER OF TAXATION, 1926 AC 155 ( PC) WHEREIN IT WAS SAID : 'PARTIES ARE NOT PERMITTED TO BEGIN FRESH LITIGATIO N BECAUSE OF NEW VIEWS THEY MAY ENTERTAIN OF THE LAW OF THE CASE , OR NEW VERSIONS WHICH THEY PRESENT AS TO WHAT SHOULD BE A PROPER APPREHENSION BY THE COURT OF THE LEGAL RESULT EITHE R OF THE CONSTRUCTION OF THE DOCUMENTS OR THE WEIGHT OF CERT AIN CIRCUMSTANCES. IF THIS WERE PERMITTED, LITIGATION W OULD HAVE NO END, EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED. IT I S A PRINCIPLE OF LAW THAT THIS CANNOT BE PERMITTED AND THERE IS A BUNDANT AUTHORITY REITERATING THAT PRINCIPLE. THIRDLY, THE SAME PRINCIPLE, NAMELY, THAT OF SETTING TO REST RIGHTS OF LITIGANTS , APPLIES TO THE CASE WHERE A POINT, FUNDAMENTAL TO THE DECISION, TA KEN OR ASSUMED BY THE PLAINTIFF AND TRAVERSABLE BY THE DEF ENDANT, HAS NOT BEEN TRAVERSED. IN THAT CASE ALSO A DEFENDANT I S BOUND BY THE JUDGMENT, ALTHOUGH IT MAY BE TRUE ENOUGH THAT S UBSEQUENT LIGHT OR INGENUITY MIGHT SUGGEST SOME TRAVERSE WHIC H HAD NOT BEEN TAKEN.' 16. FOR THE AFORESAID REASONS STATED ABOVE THE DISA LLOWANCE MADE ARE DELETED AND GROUNDS RAISED ARE ALLOWED. 4.2.1 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND JUDICIAL PRECEDENTS, WE DELETE THE DISALLOWANCE MADE ON ACCOUNT OF DISAL LOWANCE OF SAMPLE EXPENSES AND THEREFORE, GROUND NO. 6 IS ALLOWED. 4.3 ARGUING UPON GROUND NO. 7, LEARNED A. R. SUBMIT TED THAT THE ASSESSEE HAD INCURRED AN EXPENDITURE OF RS.19,38,19 0/- ON BUSINESS PROMOTION EXPENSES AND ASSESSING OFFICER HAS DISALL OWED AN AMOUNT OF RS.19,73,241/- WHICH IS MORE THAN THE EXPENSES INCU RRED BY RS.35,051/-. LEARNED A. R. SUBMITTED THAT THE AMOUNT OF RS.19,75 ,241/- CONSISTED OF TWO ITEMS OF RS.18,45,317/- AND RS.1,27,924/-. WE FIND THAT ASSESSEE HAD INCURRED AN EXPENDITURE OF RS.19,38,190/- AS MARKET ING AND BUSINESS I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 15 PROMOTION EXPENSES AND OUT OF THAT THE MAJORITY OF EXPENSES HAVE BEEN DISALLOWED. WE FIND THAT ASSESSEE HAS BEEN INCURRI NG SUCH EXPENDITURE FOR THE LAST SO MANY YEARS AND THE PERCENTAGE OF EXPENS ES TO TOTAL TURNOVER DURING THE LAST THREE YEARS RANGES FROM 6.86% TO 7. 33%. THE AVERAGE OF THESE PERCENTAGE COMES OUT AT 7.02%. THE EXPENSES INCURRED DURING THE YEAR ARE 6.86% WHICH IS WELL BELOW THE AVERAGE OF L AST THREE YEARS. WE FURTHER FIND THAT THE REVENUE WAS NOT ABLE TO DEMON STRATE THAT IN EARLIER YEARS ALSO SIMILAR EXPENSES WERE DISALLOWED. WE FU RTHER FIND THAT OUT OF EXPENSES OF RS.19,75,241/-, THE AMOUNT OF RS.1,27,9 24/- RELATES TO REPAYMENT OF LOAN WHICH THE ASSESSEE HAD DEBITED UN DER THE HEAD MARKETING AND BUSINESS PROMOTION EXPENSES. THE RES T OF THE EXPENSES AMOUNTING TO RS.18,45,317/- ARE MARKETING AND BUSIN ESS PROMOTION EXPENSES. THE VOUCHERS FOR SUCH EXPENSES ARE PLACE D AT PAGES 161 TO 187 OF THE PAPER BOOK. THE AUTHORITIES BELOW HAVE NOT FOUND ANYTHING WRONG IN SUCH VOUCHERS. THEY HAVE DISALLOWED THE CLAIM OF E XPENSES BY HOLDING THAT THE ASSESSEE MUST HAVE PAID THESE EXPENSES TO DOCTO RS. WHILE HOLDING SO THE CONTENTION OF THE ASSESSEE THAT THE EXPENSES WE RE INCURRED FOR STOCKISTS AND DEALERS HAS NOT BEEN ACCEPTED WHEREAS WE FIND T HAT IN EARLIER YEAR ALSO THE ASSESSEE HAD INCURRED SUCH EXPENSES. THE COPIE S OF VOUCHERS AND BILLS PLACED AT PAGES 161 TO 187 OF THE PAPER BOOK ALSO S UBSTANTIATE THE CLAIM OF THE ASSESSEE REGARDING INCURRENCE OF EXPENDITURE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WE DELETE THE ADDITION OF R S.18,45,317/- WHEREAS WE SUSTAIN THE DISALLOWANCE OF RS.1,27,924/- WHICH THE ASSESSEE HAS DEBITED UNDER THE HEAD MARKETING AND BUSINESS PROMO TION EXPENSES BUT WHICH IN FACT ARE INSTALLMENTS FOR REPAYMENT OF LOA N. IN VIEW OF THE ABOVE, GROUND NO. 8 IS PARTLY ALLOWED. 4.4 AS REGARDS GROUND NO. 9 RELATING TO DISALLOWANC E OF ADVERTISEMENT EXPENSES, WE FIND THAT THE ASSESSING OFFICER HAS RE JECTED THE ENTIRE I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 16 ADVERTISEMENT EXPENSES IGNORING THE NATURE OF BUSIN ESS, BUSINESS PRACTICE, PAST HISTORY, BOOKS OF ACCOUNT AND VOUCHERS PRODUCE D BY THE ASSESSEE. THE ASSESSING OFFICER HAS MADE DISALLOWANCE BY HOLDING THAT THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE TO SHOW THAT THE CAMPS FOR DOCTORS WERE ACTUALLY HELD WHEREAS THE ASSESSEE HAD CLAIMED THAT EXPENDIT URE WAS INCURRED TOWARDS ADVERTISEMENT FOR ORGANIZING CAMPS FOR DOCT ORS. THE COPY OF ACCOUNT OF ADVERTISEMENT EXPENSES IS PLACED AT PAGE S 181 TO 190 OF THE PAPER BOOK. FROM THE LEDGER ACCOUNT OF SUCH EXPENS ES, IT IS APPARENT THAT ALL THE PAYMENTS HAVE BEEN MADE THROUGH CHEQUES AND NOT EVEN A SINGLE PAYMENT HAS BEEN MADE IN CASH. THEREFORE, THE FIND INGS OF THE ASSESSING OFFICER THAT THE EXPENSES WERE NOT GENUINE, ARE NOT CORRECT AND IN VIEW OF THE ABOVE, WE ALLOW GROUND NO. 9 TAKEN BY THE ASSES SEE. 4.5 NOW COMING TO GROUND NO. 10 REGARDING ADDITION MADE U/S 68 OF THE ACT, WE FIND THAT THE ASSESSEE HAD RECEIVED AN AMOU NT OF RS.7,80,000/- FROM ITS SISTER CONCERN NAMELY ALLPA (INDIA) MEDICI NES (P) LTD. A COPY OF ACCOUNT OF THE ABOVE SAID COMPANY IS PLACED AT PAGE S 227 TO 233 OF THE PAPER BOOK. THE COMPANY IS AN INCOME TAX ASSESSEE AND IS REGULARLY FILING INCOME TAX RETURN. THE PAN OF THE SISTER CONCERN O F THE ASSESSEE IS MENTIONED ON THE COPY OF ACKNOWLEDGEMENT OF RETURN. THE ASSESSING OFFICER HAD MADE THE ADDITION ONLY BECAUSE OF THE F ACT THAT NOTICE U/S 133(6) ISSUED TO THE SISTER CONCERN OF THE ASSESSEE WAS NOT COMPLIED WITH AND THEREFORE, HE HAS HELD THE RECEIPTS AS INGENUIN E AND UNEXPLAINED. WE FURTHER FIND THAT THE PAYMENTS NOTED BY THE ASSESSI NG OFFICER IN HIS ASSESSMENT ORDER AS NOT BEING SUBSTANTIATED HAS BEE N FOUND TO HAVE BEEN ENTERED IN THE BOOKS OF THE SISTER CONCERN OF THE A SSESSEE. FOR EXAMPLE, THE ENTRY DATED 08/10/2011 FINDS MENTION IN THE ACC OUNT OF THE SISTER CONCERN, A COPY OF LEDGER ACCOUNT IS PLACED AT PAGE NO. 223 OF THE PAPER BOOK. SIMIARLY, ENTRY OF RS.80,000/- DATED 25/10/ 2011 IS REFLECTED IN THE I.T.A. NO.160/LKW/2017 ASSESSMENT YEAR:2012-13 17 ACCOUNT IN THE LEDGER PAGE NO. 224. SIMILAR IS THE POSITION WITH REGARD TO ENTRY DATED 14/11/2011, 22/11/2011, 13/12/2011, 29. 12.2011, 30,12,2011 AND 28/01/2012. THEREFORE, SUCH PAYMENTS RECEIVED FROM SISTER CONCERN WHICH HAVE BEEN CREDITED IN THE ASSESSEES ACCOUNT AND SIMILARLY DEBITED IN THE BOOKS OF ACCOUNT OF THE SISTER CONCERN, CANNOT BE SAID TO BE INGENUINE AND UNEXPLAINED CREDITS. THEREFORE, THE ADDITION U /S 68 IS NOT AT ALL JUSTIFIED AND THEREFORE, IS DELETED. THEREFORE, GROUND NO. 1 0 IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 19/03/2018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:19/03/2018 *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