DCIT, Gurgaon V. Sh. Surinder Kumar Mehta, Gurgaon

ITA 1661/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7177 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 06-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 20-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M BARANWAL
• Assessee Lawyers: VIDHUR PURI
• Keywords: Rejection of books of accounts; Business income; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHG, NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO. 1661/DEL/2014 ASSESSMENT YEAR: 2009-10 DCIT CIRCLE - 2 GURGAON VS. SURINDER KUMAR MEHTA T-7/7, DLF PHASE-III, GURGAON PAN-AKQPM1377A [APPELLANT] [RESPONDENT] DEPARTMENT BY: SH. M. BARANWAL, SR. DR RESPONDENT BY: SH. VIDHUR PURI, CA DATE OF HEARING: 23 0 4 2018 DATE OF PRONOUNCEMENT: 11 0 7 2018 O R D E R PER N.K. SAINI, A.M: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 15.1.2014 OF THE LEARNED CIT(A), FARIDABAD. THE GRO UNDS RAISED IN THIS APPEAL READ AS UNDER:- I. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. CIT(A) WAS RIGHT ON FACT AND IN LAW IN DELETING THE ADDITION OF RS. 41,66,066/- MADE ON ACCOUNT OF TAKING 7% OF TOTAL CON TRACTUAL RECEIPTS AS THE ASSESSEE COULD NOT PRODUCE BILLS/VOUCH ERS OF VARIOUS EXPENSES I.E. RAW MATERIAL PURCHASES, SALARY, STAFF WELFARE EXPENSES, FREIGHT AND CARTAGE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) WAS RIGHT ON FACT AND IN LAW IN DELETING THE ADDITION OF RS. 80,65,117/- ON ACCOUNT OF DISALLOWANCE OF 50% ON SUNDR Y CREDITORS ITA NO. 1661/DEL/2014 2 OUTSTANDING AS ON 31.3.2009 AS THE ASSESSEE COULD NOT PRODUCE THE CREDITORS AND NATURE OF TRANSACTIONS WITH THESE CRED ITORS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. VIDE GROUND NO. 1, GRIEVANCE OF THE ASSESSEE REL ATES TO THE DELETION OF ADDITION OF RS. 41,66,066/- MADE BY THE AO ON AC COUNT OF GROSS PROFIT RATE. THE FACTS, IN BRIEF ARE THAT, THE ASSESSEE FILED TH E RETURN OF INCOME ON 25.9.2009 DECLARING AN INCOME OF RS. 16,21,010/- WH ICH WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREINA FTER REFERRED TO AS THE ACT) ON 30.3.2011. LATER ON, THE CASE WAS SELECTED FOR T HE SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED TH AT THE ASSESSEE WAS ASKED TO FURNISH THE COMPLETE DETAILS OF PAN, COMPLETE AD DRESSES, CONFIRMATION OF THE CREDITOR, THE CONTRACT AGREEMENT IN RESPECT OF WORKS UNDERTAKEN, DETAILS OF LABOUR PAYMENTS MADE WHETHER ON MUSTER ROLL OR THRO UGH CONTRACTORS AND PROOF THEREOF. HE FURTHER OBSERVED THAT THE ASSESSE E HAD SUBMITTED DETAILS OF THE SOME OF THE CREDITORS AND WAS AGAIN ASKED TO FU RNISH THE COMPLETE DETAILS OF BILLS/VOUCHERS IN RESPECT OF EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT WHICH WERE PRODUCED AND VERIFIED ON TEST CHECK BASI S. THE AO ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY HIS INCOME SHOULD NOT BE COMPLETED AT 7% OF THE GROSS CONTRACT RECEIPT FOR THE FOLLOWING REASON S:- I. A LARGE NUMBER OF EXPENSES I.E. PURCHASES OF RAW MATERIAL, WAGES, SALARY, STAFF WELFARE, FREIGHT & CARTAGE HAVE BEEN SHOWN TO BE MADE IN CASH BUT ARE NOT FULLY VOUCHED / SUPPORTED BY BILLS / INV OICES AND NO RELEVANT BILLS AND VOUCHERS ARE AVAILABLE WITH ASSESSEE. II. IN VIEW OF THE OBSERVATIONS AS ABOVE, THE BOOKS OF ACCOUNTS OF ASSESSEE AND THE RESULT OF NET PROFIT AND GROSS PROFIT ETC., CANNOT BE HELD TO BE RELIABLE AND ACCEPTABLE. 3. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND REJECTED THE BOOKS OF ACCOUNTS. HE COMPUTED THE INC OME BY APPLYING NET ITA NO. 1661/DEL/2014 3 PROFIT RATE OF 7% ON THE GROSS CONTRACT RECEIPTS AC CORDINGLY MADE THE ADDITIONS OF RS. 41,66,066/-. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED AS UNDER:- THAT 'A' IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF ROADS AND THE PROJECT SITES ARE IN REMOTE AND INTERIOR AREAS. CONSIDERING T HE NATURE AND PLACE OF BUSINESS, THE 'A' REQUIRES, FROM TIME TO TIME, SOME PORTION OF IT S PURCHASES IN SMALL INPUT ITEMS AND THESE SMALL ITEMS OF INPUT ACQUIRED FROM THE SUR ROUNDING AREAS OF THE PROJECT SITES AND THESE INPUTS ACQUIRED NORMALLY FROM SHOPS A ND ESTABLISHMENTS WHOSE ACCEPTING CASH PAYMENTS ONLY. THUS THIS EXPENDITURE ON ACCOUNT OF PURCHASES HAS TO BE PAID IN CASH. PURCHASES THAT 'A' MADE PURCHASES OF RS. 4,18,50,931.15 FROM T HE VARIOUS PARTIES DURING THE YEAR. THE SUMMARY OF CREDITOR'S ACCOUNT IS AS UNDER: OPENING BALANCE 78,59,109.75 PURCHASES 4,18,50,931.15 PAYMENTS CHEQUES - 3,55,18,891.15 CASH - 71,63,345.00 CLOSING BALANCE 70,27,804.75 THAT THE STATUS/BREAKUP OF THE CREDITORS AND PURCHAS ES MADE DURING THE YEAR ARE AS UNDER: A) THAT THE CONFIRMATION OF ACCOUNT OF PARTIES__ FROM WHOM PURCHASES OF RS. 3,03,32,632 WERE MADE DURING THE YEAR, WERE FILED D URING THE ASSESSMENT PROCEEDINGS. B) THAT PURCHASES WORTH RS. 61,68,714 WERE MADE FROM PA RTIES TO WHOM TOTAL AMOUNT WAS PAID BY CHEQUE ONLY. C) THAT PURCHASES OF BALANCE AMOUNT OF RS. 53,49,585/- WERE MADE FROM SMALL PARTIES OUT OF WHICH RS. 49,63,345 WERE PAID BY CAS H AND BALANCE STOOD PAYABLE AS ON 31.03.2009. ITA NO. 1661/DEL/2014 4 WAG ES/SALARIES EXPENSES THAT WAGES/SALARIES EXPENSES HAVE BEEN INCURRED AT THE PROJECT SITES SITUATED IN REMOTE AND INTERIOR AREAS. THE LABOUR/MANPOWER IS EMP LOYED FROM THE SURROUNDING VILLAGES OF THE PROJECT SITES AND THEY ARE NORMALLY ILLITERATE AND POOR PEOPLE WHO DON'T HAVE BANK ACCOUNTS AND WORK ON CASH PAYMENT BASIS ONLY . THIS EXPENDITURE ON ACCOUNT OF WAGES/SALARIES HAS TO BE PAID IN CASH. STAFF WELFARE THAT THE EXPENSES OF STAFF WELFARE IS INCURRED EXCL USIVELY FOR TEA AND REFRESHMENT EXPENSES PROVIDED TO LABOUR AND OTHER STAFF WORKING AT THE PROJECT SITES. THIS EXPENDITURE ALSO INVOLVES PAYMENT OF SMALL AMOUNT TO L OCAL SUPPLIER/VENDOR. FREIGHT AND CARTAGE THAT THE EXPENSES OF FREIGHT AND CARTAGE HAS BEEN I NCURRED FOR TRANSPORTATION OF CONSTRUCTIONS MATERIAL FROM PLANT TO WORK SITE THROUGH TIPPER TRUCKS. AS PER THE PRACTICE PREVALENT IN THE TRANSPORTER COMMUNITY, TRU CK DRIVERS NORMALLY COLLECT PAYMENTS ON DELIVERY AND IN CASH MODE ONLY BECAUSE T HEY HAVE TO INCUR EXPENDITURE ON DIESEL, REPAIRS, VARIOUS TAXES, FOOD, ETC IN CAS H DURING THE TRANSIT. THAT THE TOTAL EXPENSE OF FREIGHT AND CARTAGE OF RS. 22,78,004/- HAS BEEN INCURRED THROUGH PAYMENTS MADE TO TRANSPORTERS NAMELY, RAJEND ER KUMAR AND SAHUN KHAN. RS. 5,41,461/- HAD BEEN PAID BY CHEQUE, RS. 10,27,0 29/- PAID BY CASH AND RS. 25,802/- HAD BEEN DEDUCTED AS TDS AND BALANCE RS. 6 ,83,022/- WAS PAYABLE THEM AS ON 31.03.2009. THE CONFIRMATION OF LEDGER ACCOUNT OF BOTH THESE TRANSPORTERS WERE DULY FILED ALONG WITH OTHER CONFIRMATIONS DURING THE ASSESSMENT PROCEEDINGS VIDE OUR COVERING LETTER DT. 19.08.2011. THAT THE ASSESSMENT PROCEEDING WAS STARTED IN THE M ONTH OF JULY, 2011 AND THE SAME WERE DULY ATTENDED BY THE COUNSEL AND VARIOUS DETAIL S AS REQUIRED BY THE A.O., FROM TIME TO TIME, WERE DULY PLACED ON RECORD AND COMPLETE VOUCHERS/BILLS/INVOICES ALONG WITH BOOKS OF ACCOUNTS WERE DULY PRODUCED BEFORE THE A.O. THAT THE ASSESSING OFFICER VIDE ORDER SHEET ENTRY DT . 27/12/2011 (JUST 4 DAYS PRIOR TO THE LAST DATE OF ASSESSMENT) ISSUED A SHOW CAUSE REP RODUCED AS UNDER: - 'ON 27.12.2011, PRESENT SH. MANU VERMA, C. A. ON BEH ALF OF 'A' AND MADE SUBMISSION W.R.T. QUERIES VIDE LAST HEARING THE BOO KS OF ACCOUNTS WERE PRODUCED AND VERIFIED ON TEST CHECK BASIS 'A' TO SHOW CAUSE AS TO WHY INCOME OF THE 'A' SHOULD NOT BE COMPUTED AT 6% (WHICH WAS SUBSEQUENTLY CONSIDERED BY THE A.O. AT 7%) OF THE GROSS CONTRACT RECEIPTS FOR THE FOLLOWING REASONS: - I. A LARGE NUMBER OF EXPENSES I.E. PURCHASE OF RAW MAT ERIAL, WAGES, SALARY, STAFF WELFARE, FREIGHT & CARTAGE HAVE BEEN SHOWN TO BE ITA NO. 1661/DEL/2014 5 MADE IN CASH BUT ARE NOT FULLY VOUCHED/SUPPORTED BY BILLS/INVOICES AND NO RELEVANT BILLS AND VOUCHERS AR E AVAILABLE WITH THE 'A'. II. IN VIEW OF THE OBSERVATIONS AS ABOVE, THE BOOKS OF AC COUNTS OF THE 'A' AND THE RESULT OF NET PROFIT AND GROSS PROFIT ET C. CANNOT BE HELD RELIABLE AND ACCEPTABLE. PLEASE SHOW CAUSE AS TO WHY THE BUSINESS INCOME THE 'A' SHOULD NOT BE COMPUTED AT 6% (WHICH WAS SUBSEQUENTLY CONSIDERED BY THE A.O. AT 7%) OF THE G ROSS RECEIPTS. THE CASE WAS ADJOURNED TO 29.12.2011.' THAT IN SPITE OF SHORT SPAN OF TIME, THE 'A' DULY SU BMITTED A REPLY TO SHOW CAUSE ON 29.12.2011 VIDE COVERING LETTER DT. 29.12.2011. THAT THE ASSESSING OFFICER WITHOUT APPLYING THE MIN D, PASSED THE ASSESSMENT ORDER ON 29.12.2011 AND REJECTED THE BOOKS OF ACCOUNTS AND ASSESSED THE BUSINESS INCOME @ 7% ON GROSS CONTRACT RECEIPTS WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES ON RECORD AND NATURE OF BUSI NESS OF THE 'A' AND FURTHER ALLEGED THAT THE 'A' HAD AGREED FOR THIS ADDITION. TH IS HAS RESULTED IN AN ADDITION OF RS. 28,52,484/- TO THE RETURNED BUSINESS INCOME. REJECTED THE BOOKS OF ACCOUNTS: THAT THE ASSESSING OFFICER IN HER SHOW CAUSE NOTICE HAD STATED THAT SOME EXPENSES LIKE RAW MATERI AL, WAGES, SALARY, STAFF WELFARE, FREIGHT AND CARTAGE HAD BEEN MADE IN CASH AND THEY WERE NOT SUPPORTED BY VOUCHER/BILLS/INVOICES. THAT COMPLETE VOUCHERS/BILLS/INVOICES ALONG WITH BOOKS OF ACCOUNTS WERE DULY PRODUCED BEFORE THE A.O. DURING THE ASSESSMENT PROCE EDINGS WHICH HAD BEEN DULY CONFIRMED BY THE ASSESSING OFFICER IN HER ORDER . FURTHER IN THE REPLY TO THE SHOW CAUSE VIDE COVERING LETTER DT. 29.12.2011, IT WA S RESTATED THAT THE BOOKS OF ACCOUNTS WERE PRODUCED BUT THE ASSESSING OFFICER FAILED TO POINT OUT ANY DISCREPANCIES OR SHORTCOMING OR DEFECTS IN THE BOOKS AND DETAILS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. THAT THE ASSESSING OFFICER HAS HERSELF ADMITTED IN HER ASSESSMENT ORDER THAT SHRI MANU VERMA CA ATTENDED THE ASSESSMENT PROCEEDI NG FROM TIME TO TIME AND FILED NECESSARY INFORMATION AND DETAILS. THE WRI TTEN SUBMISSIONS FILED ALONG WITH NECESSARY DOCUMENTS AND EXPLANATION WERE EXAMINED AND PLACED ON RECORDS. THAT THE 'A'S AFFIDAVIT CONTRAVENING ERRONEOUS FACTS AND OBSERVATION OF ASSESSING OFFICER IS ATTACHED. THAT COMPLETE DETAIL OF OPENING AND CLOSING STOCK AND QUANTITATIVE DETAILS ABOUT PURCHASES & CONSUMPTION WERE DULY FURNISHED DURING T HE ASSESSMENT PROCEEDINGS VIDE OUR COVERING LETTER DT 26.08.2011 AND THE ASSES SING OFFICER HAS NOT POINTED OUT ITA NO. 1661/DEL/2014 6 ANY DISCREPANCIES/DEFECTS ABOUT THE CONSUMPTION OR VA LUATION OF STOCKS. MOREOVER SALES AND PURCHASES ARE DULY VOUCHED AND BOOKS OF AC COUNTS ARE DULY AUDITED BY INDEPENDENT CHARTERED ACCOUNTANTS, THEREFORE TRADING RESULTS SHOULD HAVE BEEN ACCEPTED BECAUSE THEY ARE ON THE SIMILAR LINES AS P ER THE LAST YEAR AND ACCEPTED BY THE ASSESSING OFFICER U/S 143(3). THAT DETAIL OF AL L MAJOR EXPENSES INCLUDING PURCHASES WERE DULY FURNISHED IN THE ASSESSMENT PROC EEDINGS VIDE OUR COVERING LETTER DT. 05.08.2011. THAT REASON FOR PAYMENT IN CAS H IN RESPECT OF SOME SMALL PURCHASES OF RAW MATERIAL AND SOME EXPENSES I.E. WA GES/SALARIES, STAFF WELFARE, FREIGHT AND CARTAGE INCURRED AT THE PROJECT SITE WA S DULY FURNISHED TO THE ASSESSING OFFICER VIDE OUR COVERING LETTER DT. 29.12.2011, BUT THE ASSESSING OFFICER HAS FAILED TO POINT OUT ANY DEFECT/DISCREPANCIES IN THOSE REASONS, A ND YET ASSESSED BUSINESS INCOME AT 7% OF GROSS RECEIPT. THAT MAJORITY OF THE PU RCHASES OF MATERIALS AND OTHER INPUTS HAS BEEN MADE BY CHEQUE ONLY. A CHART CONTAIN ING THE DETAILS OF THE PURCHASES MADE BY THE 'A' IS DULY ENCLOSED. THE REAS ON FOR CASH PURCHASES AT PROJECT SITE, BEING FORCED BY CIRCUMSTANCE AND PRACTICAL DIF FICULTIES, WAS DULY FURNISHED DURING THE ASSESSMENT PROCEEDINGS VIDE OUR COVERING L ETTER DT. 29.12.2011. WE RELIED ON THE FOLLOWING JUDGMENTS: A) THAT WHEN THE 'A' IS ENGAGED IN SUCH TYPES OF BUSI NESS WHICH INVOLVES ILLITERATE LABOUR, PAYMENT OF WAGES/SALARIES IN CASH, WHICH IS NOT FOUND TO BE BOGUS, CAN'T BE THE BASIS OF REJECTION OF BOOKS OF ACCOUNTS. OUR VIEW GETS SUPPORT FROM THE JUDICIAL PRONOUNCEMENT IN THE CASE OF NISAR BIRI SIK KA NO. 1 VS. COMMISSIONER OF INCOME TAX DECIDED BY HIGH COURT OF ALLAHABAD CITED I N 174 TAXMAN 51. B) THAT IN THE ABSENCE OF ANY FINDING AS TO THE UNACC EPTABILITY OF THE METHOD AND IRREGULARITY OF ACCOUNTS KEPT BY THE 'A', THE BOOK R ESULTS CAN'T BE IGNORED OR BRUSHED ASIDE. OUR VIEW GETS SUPPORT FROM THE JUDICI AL PRONOUNCEMENT IN THE CASE OF MD. UMER VS. COMMISSIONER OF INCOME TAX, HIGH COURT OF PATNA, DECIDED ON 18TH NOVEMBER, 1974. C) THAT THE METHOD OF ACCOUNTING FOLLOWED OR ADOPTE D BY 'A' AND ACCEPTED BY DEPARTMENT FOR SEVERAL YEARS INCLUDING ACCEPTANCE IN ASSESSMENT U/S 143(3) AND IT WAS NOT ESTABLISHED BY THE DEPARTMENT THAT THE METHOD WAS SUCH THAT PROFITS COULD NOT PROPERLY BE DEDUCED, THEN THE ASSESSING OFFICER WAS NOT ENTITLED TO REJECT THE BOOKS OF ACCOUNTS. OUR VIEW GETS SUPPORT FROM THE JUDIC IAL PRONOUNCEMENT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. K. SANKARAPANDI A ASARI AND SONS, HIGH COURT OF MADRAS, DECIDED ON 1ST JULY, 1980. D) THAT THE ASSESSING OFFICER CAN'T REJECT A SYSTEM O F ACCOUNTING FOLLOWED BY 'A' UNIFORMLY AND REGULARLY OVER THE YEARS AND WHICH HAS ALSO BEEN ACCEPTED BY THE DEPARTMENT. OUR VIEW GETS SUPPORT FROM THE JUDICIAL P RONOUNCEMENT IN THE CASE OF [A] COMMISSIONER OF INCOME TAX VS. MARGDARSHI CHIT FUNDS (P) LTD., HIGH COURT OF ANDHRA PRADESH. E) THAT BOOKS OF ACCOUNTS MAINTAINED BY 'A' COULD NOT B E REJECTED BECAUSE THE ITA NO. 1661/DEL/2014 7 ASSESSING OFFICER HAS FAILED TO BRING OUT NAY POSITI VE DEFECT IN THE METHOD OF ACCOUNTING. OUR VIEW GETS SUPPORT FROM THE JUDICIAL PR ONOUNCEMENT IN THE CASE OF J. A. TRIVEDI BROTHERS VS. COMMISSIONER OF INCOME T AX, HIGH COURT OF MADHYA PRADESH. F) THAT THE ASSESSING OFFICER HAS FAILED TO GIVE ANY F ACTS AND FIGURE TO DEMONSTRATE THAT THE METHOD OF ACCOUNTING EMPLOYED BY 'A ' RESULTS IN UNDER-ESTIMATION OF PROFITS, THE BUSINESS INCOME CAN'T BE ASSESSED ON AD- HOC BASIS. OUR VIEW GETS SUPPORT FROM THE JUDICIAL PRONOUNCEMENT IN THE CASE C OMMISSIONER OF INCOME TAX VS. REALEST BUILDERS & SERVICES LTD. SUPREME CO URT OF INDIA. G) THAT THE A.O. HAS NOT POINTED OUT ANY DEFECT OR N AY DISCREPANCIES IN THE ACCOUNT BOOKS MAINTAINED BY THE 'A'. THE 'A' HAS BEEN MAINTAINING REGULAR BOOKS OF ACCOUNTS, WHICH WERE DULY AUDITED BY AN INDEPENDE NT CHARTERED ACCOUNTANT. THE FINANCIAL RESULTS WERE FULLY SUPPORTED WITH VOUCH ERS/BILLS AND THE BOOKS OF ACCOUNTS WERE COMPLETE AND CORRECT IN ALL RESPECT. TH E ACCOUNTS WHICH ARE REGULARLY MAINTAINED IN THE COURSE OF BUSINESS AND ARE DULY AUDITED, FREE FROM ANY QUALIFICATION BY THE AUDITORS, SHOULD NORMALLY BE TAKEN AS CORRECT UNLESS THERE ARE ADEQUATE REASONS TO INDICATE THAT THEY ARE INCORRECT OR UNRELIABLE. OUR VIEW GETS SUPPORT FROM THE JUDICIAL PRONOUNCEMENT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. PARADISE HOLIDAYS DECIDED BY HIGH C OURT OF DELHI. CONSIDERING THE FACTS AND THE JUDICIAL PRONOUNCEMEN TS THE LEARNED ASSESSING OFFICER HAS ERRED IN REJECTING THE BOOKS OF ACCOUNTS . ALTERNATIVELY THE ASSESSING OFFICER HAS ASSESSED TH E BUSINESS INCOME @ 7% OF GROSS RECEIPTS ON AD-HOC AND ARBITRARY BASIS: A) THAT DURING THE YEAR A ' HAS EARNED GP RATE OF 12.30% AGAINST SIMILAR GP RAT E OF 12.32% IN A.Y. 2008-09. B) THAT GROSS PROFIT AND NET PROFIT COMPARISON FOR THREE YEARS IS ON RECORD AND WAS DULY FURNISHED DURING THE ASSESSMENT PROCEEDINGS VID E COVERING LETTER DT 29.12.2011. C) THAT THE ASSESSMENT FOR A.Y. 2008-09 WAS FINALIZED U/S 143(3) OF THE INCOME TAX ACT AND DECLARED TRADING RESULTS WERE DULY ACCEPTED BY THE ASSESSING OFFICER. D) THAT THERE WAS NO REASON BEFORE THE A.O. TO ASSESS T HE BUSINESS INCOME @ 7% OF GROSS RECEIPTS ON AD-HOC AND ARBITRARY BASIS. THAT THE AO ERRED IN TAW IN NOT FOLLOWING THE PRINCI PAL OF CONSISTENCY. THIS IS ACCEPTED LAW, TO BE FOLLOWED UNLESS THERE IS DIFFERE NCE IN FACTS. WHEN THE 'A'S GROSS PROFIT AND NET PROFIT HAVE BEEN DULY ACCEPTED IN TH E EARLIER YEAR IN THE ASSESSMENT PROCEEDINGS, THE AO SHOULD HAVE FOLLOWED THE SAME OR SHOULD HAVE GIVEN THE REASON FOR APPLYING A DIFFERENT RATE, THAT THE ACCEP TED NET PROFIT. THAT MOST OF THE CONTACTS EXECUTED BY THE 'A' ARE FROM THE GOVERNMENT DEPARTMENTS. 'A' HAS TO ENTER INTO A TENDER BID IN ORDER TO OBTAIN THE CONTRACT. DUE ITA NO. 1661/DEL/2014 8 TO STIFF COMPETITION AND COMPETITIVE BIDDING THROUGH T ENDERS, THE MARGIN OF PROFIT IS VERY RESTRICTIVE. THE QUALITATIVE CONTROLS, SPECIFICA TION OF MATERIALS, REGULAR INSPECTION BY THE CUSTOMER ENGINEERS DOESN'T ALLOW TO EARN ANY SUPER OR BUMPER PROFIT. THAT THE TENDERS ARE FLOATED BY THE GOVERNMENT DEPA RTMENTS AFTER COMPARING EACH AND EVERY ITEM OF COST AGAINST THE PREVAILING MARKET RATES AND THEN THE ESTIMATED COST OF THE WORK OF THE TENDER IS ANNOUNCED. TENDERS A RE ACCEPTED ONLY ON THE BASIS OF LOWEST RATES. THIS ALSO LEADS TO VERY LOW MARGIN O F PROFITS. THAT BY APPLYING N. P. RATE OF 7% AND DISALLOWANCE OF 50% OF THE SUNDRY CREDITORS, THE ASSESSING OFFICER HAS ASSUMED AND ASSESSED THE G.P. RATE @ 29.55% AND NP RATE @ 19.32@ OF GROSS RECEIPTS. SUCH TYPE OF EARNING IS ABSOLUTELY IMPOSSIBLE IN THIS TYPE OF BUSINESS OF GOVT CONTRACTORS. THAT THE ASSESSING OFFICER HAS FILED TO REFER OR QUOT E ANY COMPARABLE CASE WHERE THE NET PROFIT @ 7% HAD BEEN SHOWN OR ASSESSED. ADOPTIO N OF GROSS PROFIT RATES OF COMPARABLE BUSINESSES AND ADDITIONS TO RETURNED INCOME BASED THEREON IS NOT VALID WHERE NO DETAILS OF SUCH CASES ARE FURNISHED TO 'A'. THE ASSESSING OFFICER HAS ASSESSED INCOME WITHOUT REFERRING TO ANY OTHER COMPARA BLE CASE. THIS VIEW DULY GETS SUPPORTS FROM THE JUDICIAL PRONOUNCEMENT IN THE CASE O F JOSEPH THOMAS & BROS. VS. COMMISSIONER OF INCOME TAX, HIGH COURT OF KERALA, DE CIDED ON 6TH SEPTEMBER, 1967. THAT THE ASSESSING OFFICER HAS FAILED TO BRING ANY M ATERIAL OR NAY EVIDENCE ON RECORD TO JUSTIFY ASSESSMENT OF BUSINESS INCOME @ 7% ON GRO SS RECEIPTS. ASSESSING OFFICER IS NOT ENTITLED TO MAKE A PURE GUESS AND MAKE AN AS SESSMENT WITHOUT REFERENCE TO ANY EVIDENCE OR NAY MATERIAL AT ALL. THERE MUST BE S OMETHING MORE THAN BARE SUSPICION TO SUPPORT THE ASSESSMENT. WHEN THE RETURNS AND THE BOOKS OF ACCOUNT ARE REJECTED, THE ASSESSING OFFICER MUST MAKE AN ESTIMA TE AND TO THAT EXTENT HE MUST MAKE A GUESS; BUT HE ESTIMATE MUST BE RELATED TO SOM E EVIDENCE OR MATERIAL AND IT MUST BE SOMETHING MORE THAN MERE SUSPICION. OUR VIEW GETS SUPPORT FROM THE JUDICIAL PRONOUNCEMENT IN THE CASE OF SUPREME COURT OF INDIA RAGHUBAR MANDAL HARIHAR MANDAL VS. THE STATE OF BIHAR ON 22 MAY, 195 7. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES, THE ASSESSMENT OF BUSINESS INCOM E @7% OF GROSS RECEIPTS ON ADHOC BASIS BY THE ASSESSING OFFICER IS TOTALLY UNJU STIFIED, ILLEGAL, BASELESS, AND WITHOUT APPRECIATING THE FACTS OF THE CASE, BEING B ASED ON SURMISES OF RS. 28,52,484/- MADE TO THE BUSINESS INCOME BE DELETED I N FULL, AND JUSTICE BE RENDERED. 5. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE OBSERVED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE AUDITED AND THAT THE EXPENSES RELATING TO FREIGHT, SALARIES, STAFF WELFA RE ETC., HAD TO BE MADE TO ILLITERATE PERSONS / TRANSPORTERS WHO COULD NOT HAV E RECEIVED ANY CHEQUE PAYMENTS. HE ALSO OBSERVED THAT AS PER THE RATIO LA ID DOWN BY THE HONBLE ITA NO. 1661/DEL/2014 9 ALLAHABAD HIGH COURT IN THE CASE OF NISAR BIRI SIKKA NO. 1 VS. CIT REPORTED AT 174 TAXMAN 51 (ALL) RELIED BY THE ASSESSEE, IT HAS BEEN HELD THAT IN C ASE OF AN ASSESSEE WHO WAS ENGAGED IN THE BUSINESS WHICH INVO LVED ILLITERATE PERSONS / TRANSPORTERS, PAYMENT OF WAGES AND SALARY IN CASH, NOT FOUND TO BE BOGUS, CANNOT BE THE BASIS FOR REJECTING BOOKS OF ACCOUNT. THE LEARNED CIT(A) HELD THAT THE ESTIMATING PROFITS BY REJECTING THE BOOKS OF AC COUNT DID NOT HAVE ANY BASIS WHEN THE ASSESSEE HAS BEEN ADOPTING THE SAME METHOD OF ACCOUNTING WHICH HAD NEVER BEEN REJECTED BY THE DEPARTMENT. AS REGAR DS TO THE ADHOC ADDITION BY APPLYING THE 7% NET PROFIT RATE, THE LEARNED CIT (A) OBSERVED THAT THE ASSESSEE HAD NOWHERE ACCEPTED THAT AN ADHOC ADDITIO N MAY BE MADE. THEREFORE, THE REASONS GIVEN BY THE AO FOR REJECTIN G THE BOOKS OF ACCOUNTS AND ESTIMATING THE NET PROFIT @ 7% OF TURNOVER OF THE A SSESSEE LACK ANY BASIS ACCORDINGLY ADHOC ADDITION MADE BY THE AO WAS DELET ED. 6. NOW THE DEPARTMENT IS IN APPEAL. 7. THE LEARNED SR. DR REITERATED THE OBSERVATIONS M ADE BY THE AO AND STRONGLY SUPPORTED THE ASSESSMENT ORDER PASSED BY T HE AO. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT GIVEN ANY EXPLA NATION TO THE QUERIES RAISED BY THE AO THEREFORE, THERE WAS NO ALTERNATIV E EXCEPT TO REJECT BOOKS OF ACCOUNTS AND TO DETERMINE THE INCOME BY APPLYING TH E NET PROFIT. 8. IN HIS RIVAL SUBMISSIONS, THE LEARNED COUNSEL F OR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND FURTHER SUBMITTED THAT CONSIDERING THE NATURE OF THE BUSINE SS IN WHICH THE ASSESSEE WAS ENGAGED, THERE WAS NO ALTERNATIVE EXCEPT TO MAK E CASH PAYMENTS FOR PETTY EXPENSES. IT WAS FURTHER SUBMITTED THAT THE ASSESSE E HAD SHOWN THE G.P. RATE OF 12.3% IN COMPARISON TO THE G.P. RATE OF 12.32% F OR THE PRECEDING YEAR, A REFERENCE WAS MADE TO PAGE NO. 24 OF THE ASSESSEE P APER BOOK. IT WAS ITA NO. 1661/DEL/2014 10 CONTENDED THAT THE ADDITION MADE BY THE AO WAS WITH OUT ANY BASIS THEREFORE, THE LEARNED CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADHOC ADDITION MADE BY THE AO. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE PRESENT CAS E, IT IS NOTICED THAT THE GROSS PROFIT SHOWN BY THE ASSESSEE FOR THE YEAR UNDER CON SIDERATION SHOWN BY THE ASSESSEE AT 12.30% WAS COMPARABLE TO THE GROSS PROF IT RATE OF 12.32 % FOR THE PRECEDING YEAR WHICH HAS BEEN ACCEPTED BY THE DEPAR TMENT. IT IS ALSO NOTICED THAT THE AO WHILE APPLYING THE NET PROFIT RATE OF 7 % HAS NOT GIVEN ANY BASIS AND EVEN DID NOT CITE ANY COMPARABLE CASE OF SIMILAR NA TURE. IT IS ALSO NOT THE CASE OF THE AO THAT THERE WAS CHANGE IN THE METHOD OF AC COUNTING FOLLOWED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION VIZ A VIZ THE EARLIER YEARS. HE REJECTED THE BOOKS OF ACCOUNTS SIMPLY FOR THE REASO N THAT THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE IN CASH. HOWEVER, HE HAD NOT APPRECIATED THIS EXPLANATION OF THE ASSESSEE THAT MOST OF THE PERSON S WHO WERE ENGAGED IN THE BUSINESS OF THE ASSESSEE WERE MOSTLY ILLITERATE PER SONS, THEREFORE, THE PAYMENTS WERE MADE IN CASH FOR PETTY EXPENSES LIKE WAGES, TRANSPORTATION, FREIGHT ETC. IN THE PRESENT CASE, THE AO HAD NOT BR OUGHT ANY MATERIAL ON RECORD TO SUBSTANTIATE THAT THE EXPENSES WERE NOT INCURRED BY THE ASSESSEE FOR THE BUSINESS PURPOSES. THEREFORE, THE THE ADHOC ADDITIO N MADE BY THE AO WAS NOT JUSTIFIED AND THE LEARNED CIT(A) RIGHTLY DELETED TH E SAME. WE DO NOT SEE ANY VALID GROUND TO INTERFERE IN THE FINDINGS OF THE LE ARNED CIT(A) ON THIS ISSUE. 10. THE NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE DELETION OF ADDITION OF RS. 80,65,117/- MADE BY THE AO ON ACCOUNT OF DISALL OWANCE OF 50% OF THE SUNDRY CREDITORS. FACTS RELATED TO THIS ISSUE IN BR IEF ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE A SSESSEE HAD SHOWN SUNDRY ITA NO. 1661/DEL/2014 11 CREDITORS OF RS. 1,61,30,234/- IN HIS BALANCE-SHEET AS ON 31.3.2009. HE ALSO OBSERVED THAT NO DOCUMENTARY EVIDENCE WAS AVAILABLE WITH THE ASSESSEE REGARDING THE BUSINESS TRANSACTIONS ENTERED INTO WI TH THOSE PARTIES. HE ASKED THE ASSESSEE TO FURNISH THE COMPLETE DETAILS OF SUN DRY CREDITORS PAN, COMPLETE ADDRESSES, CONFIRMATION OF THE CREDITORS ETC. ACCOR DING TO THE AO, THE ASSESSEE FAILED TO FURNISH THE COMPLETE CONFIRMATIONS FROM T HOSE CREDITORS FOR PROVING THE GENUINENESS OF THE TRANSACTION IN THE BOOKS OF ACCOUNTS. HE DISALLOWED 50% OF THE OUTSTANDING AMOUNT CONSIDERING THE SAME AS BOGUS, NON-EXISTENT AND NON GENUINE. ACCORDINGLY, ADDITION OF RS. 80,65 ,117/- WAS MADE. 11. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED AS UNDER:- 'THAT 'A' HAS SUNDRY CREDITORS OF RS, 1,61,30,235/- IN THE AUDITED BALANCE SHEET AS ON 31ST MARCH 2009, THE 'A' HAS 19 CREDITORS AS ON 31 .03.2009. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER HAD ASKED TO FILE THE CONFIRMATION OF SUNDRY CREDITORS EXCEEDING RS. 5,00,0 00/-. THE 'A' HAS 19 CREDITORS AMOUNTING TO RS. 1,61,30,235/-, OUT OF WHIC H CONFIRMATION OF 16 CREDITORS REPRESENTING AMOUNT OF RS. 1,56,93,995/- ( MORE THAN 97%) WERE FILED FROM TIME-TO-TIME DURING THE ASSESSMENT PROCEEDINGS ( DETAIL OF CONFIRMATION FILED ON DIFFERENT DATE, OUR COVERING LETTER DATED 1 9.08.2011, 26.08.2011, 07.09.2011, 18.11.2011 AND 24.11.2011.) THAT THE CONFIRMATION FILED DURING THE ASSESSMENT PR OCEEDINGS CONTAINED ALL THE REQUISITE AND COMPLETE PARTICULARS OF THE C REDITORS, I.E. NAME, ADDRESSES, PAN, DETAILS OF TRANSACTIONS AND SIGNATURE. THAT THE ASSESSING OFFICER HAS DISALLOWED 50% OF THE SUNDRY CREDITORS ON THE FOLLOWING ERRONEOUS REASONS AGAINST THE FACTS ON RECOR D : A) MAJORITY OF THE SUNDRY CREDITORS SHOWN BY THE 'A' OUTST ANDING ON 31.03.2009 PAYMENTS HAVE BEEN MADE DURING F.Y. 2008 -09 IN CASH AND ON DOCUMENTARY EVIDENCES ARE AVAILABLE WITH THE 'A' RE GARDING THE BUSINESS TRANSACTION ENTERED INTO WITH THESE PARTIES. B) THAT 'A' FAILED TO FURNISH THE COMPLETE DETAILS OF SU NDRY CREDITORS, PAN, COMPLETE ADDRESSES, CONFIRMATIONS OF THE CREDITORS. C) 'A' COULD NOT PRODUCE THE PARTIES. D) CREDITORS OF RS. 1,61,30,234/-, 50% ARE BOGUS AND NON EXISTENT AND NON GENUINE. ITA NO. 1661/DEL/2014 12 THAT THE ERRONEOUS FACTS AND OBSERVATIONS OF THE AO ARE DULY CONTRAVENED THROUGH ASSESSEES AFFIDAVIT WHEREIN IT HAS BEEN STA TED THAT ASSESSEE HAD FILED 16 CONFIRMATIONS OUT OF A TOTAL OF 19 SUNDRY CREDITORS A ND ASSESSEE WAS NOT ASKED TO PRODUCE THE SUNDRY CREDITORS. THAT THE CONFIRMATION FILED DURING THE ASSESSMENT PROC EEDINGS CONTAINED ALL THE REQUISITE AND COMPLETE PARTICULARS OF THE CREDITORS, I.E. NAME, ADDRESSES, PAN, DETAILS OF TRANSACTIONS AND SIGNATURES. THE SUMMARY OF CREDITORS ACCOUNT IS AS UNDER:- OPENING BALANCE - 78,59,109.75 PURCHASES - 4,18,50,931.15 PAYMENTS CHEQUES - 3,55,18,891.15 CASH - 71,63,345.00 BALANCE O/S - 70,27,80 4.75 THAT THE ASSESSING OFFICER'S OBSERVATION THAT MAJORIT Y OF THE SUNDRY CREDITORS SHOWN BY THE 'A' OUTSTANDING ON 31.03.2009, WHERE PAYMENTS HAVE BEEN MADE DURING F.Y. 2008-09 IN CASH AND NO DOCUMENTARY EVIDENCES ARE AVAI LABLE WITH THE 'A' REGARDING THE BUSINESS TRANSACTION ENTERED INTO WITH THESE PA RTIES IS AGAINST THE FACTS ON RECORD WHEN CASH PAID IS ONLY RS. 71,63,345/- OUT OF PURCHA SE OF RS. 4,18,50,931/- AND MAJORITY OF SUNDRY CREDITORS CONFIRMATION'S HAVE BEE N FILED. THE BALANCE OUTSTANDING OF THE REMAINING 3 PARTIES WAS LESS THAT RS. 5,00,0 00/- INDIVIDUALLY. THE TOTAL OUTSTANDING OF THESE 3 PARTIES IS RS. 4,36,240/- ONL Y WHICH IS JUST 2.70 % OF THE TOTAL OUTSTANDING OF SUNDRY CREDITORS. EVEN ALL CASH PAYME NTS MADE TO CREDITORS ARE DULY EVIDENCED BY WAY OF DOCUMENTATION, I.E. AFFIRMATION OF TRANSACTION THROUGH CONFIRMATION FILED FROM THE SIDE OF SUNDRY CREDITORS. THAT THE 'A' HAS DULY DISCHARGED HIS ONUS BY FILING THE CONFIRMATIONS FROM SUNDRY CREDITORS, WITH COMPLETE AND DESIRED PARTICULARS. THAT THE 'A' WAS NEVER ASKED BY THE ASSESSING OFFIC ER TO PRODUCE THE SUNDRY CREDITORS AS ALLEGED AS MENTIONED BY HER IN ASSESSMENT ORDER. THERE IS NO SUCH NOTING ON THE ORDER SHEET AS OBSERVED BY THE UNDERSIGNED, WHILE M AKING INSPECTION OF ASSESSMENT RECORDS POST ASSESSMENT. THAT THE CONCLUSION DRAWN BY THE ASSESSING OFFICER THAT 50% OF SUNDRY CREDITORS ARE BOGUS, NON-EXISTENT AND NON GENUINE IS ABSOLUTELY I NCORRECT AND WITHOUT APPRECIATING THE CONFIRMATIONS FILED AND WITHOUT GOI NG THROUGH THE CONTENTS OF THE CONFIRMATIONS. APPLYING N.P. RATE OF 7% AND DISALLOWANCE OF 50% OF THE SUNDRY CREDITORS, THE ASSESSING OFFICER HAS ASSUMED AND ASSESSED THE G.P. RATE @ 29.55% AND NP RATE @ 19.32% OF GROSS RECEIPTS. SUCH TYPE OF EARNING IS AB SOLUTELY IMPOSSIBLE IN THE TYPE OF BUSINESS OF GOVT. CONTRACTORS. FURTHER ALTERNATIVELY WHEN INCOME IS ASSESSED ON AD- HOC BASIS, BY APPLICATION OF GP ITA NO. 1661/DEL/2014 13 OR NP RATE, BY REJECTING THE BOOKS OF ACCOUNTS, AS DONE BY THE ASSESSING OFFICER, NO ADDITIONAL DISALLOWANCE CAN BE MADE SEPARATELY UNDER ANY OTHER HEAD. IN THIS REGARD WE RELIED ON THE FOLLOWING JUDGMENTS- A) COMMISSIONER OF INCOME TAX VS. BANWARILAL BANSHIDHAR , HIGH COURT OF ALLAHABAD. B) COMMISSIONER OF INCOME TAX VS. SMT. SANTOSH JAIN, HIG H COURT OF PUNJAB & HARYANA. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES, THE DISALLOWANCE OF 50% OF SUNDRY CREDITORS ON AD-HOC BASIS BY THE ASSESSING OFFICER IS TOTALLY UNJUSTIFIED, ILLEGAL, BASELESS, AND WITHOUT APPRECIATING THE FACTS OF THE CASE, BEING BASED ON SURMISES AND CONJECTURES, AND HENCE UNCALLED FOR. WE REQUEST THAT ADDITION OF RS. 80,65,117/- MADE TO THE ASSESSED INCOME BE DELETED IN FULL, AND JUSTICE BE RENDERED.' 12. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSMENT RECORDS REVEALED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD GIVEN THE NAMES, ADDRESSES, PAN AND CONFIRMATIONS IN RESPECT OF 97% OF THE AMOUNT O UTSTANDING UNDER THE HEAD SUNDRY CREDITORS AS ON 31.3.2009 AND THE AO MA DE THE ADDITION ON ADHOC BASIS EVEN AFTER RECEIVING SO MUCH CONFIRMATIONS. T HE LEARNED CIT(A) CATEGORICALLY STATED THAT THE ASSESSEE HAD PRODUCED CONFIRMATIONS OF AN AMOUNT OF RS. 1,56,93,995/- OUT OF THE TOTAL AMOUNT OUTSTANDING UNDER THE HEAD SUNDRY CREDITORS OF RS. 1,61,30,235/- WHICH RE PRESENTED MORE THAN 97% OF THE TOTAL AMOUNT. HENCE, THERE WAS NOT AN IOTA O F TRUTH IN THE AOS AVERMENTS FOR MAKING AN ADHOC ADDITION ON ACCOUNT O F SUNDRY CREDITORS. HE ALSO MENTIONED THAT THE ASSESSMENT RECORD REVEALED THAT THE AO NEVER ASKED THE ASSESSEE TO PRODUCE THE SUNDRY CREDITORS. HE, T HEREFORE, DELETED THE ADHOC ADDITION MADE BY THE AO. 13. NOW THE DEPARTMENT IS IN APPEAL. 14. THE LEARNED SR. DR STRONGLY SUPPORTED THE ORDER OF THE AO AND FURTHER SUBMITTED THAT THE ONUS WAS ON THE ASSESSEE TO FURNISH THE DETAILS AS WELL AS THE CONFIRMATIONS OF THE CREDITORS WHICH WE RE NOT FURNISHED, THEREFORE ITA NO. 1661/DEL/2014 14 THE AO WAS JUSTIFIED IN MAKING THE ADDITION AND THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE SAME. 15. IN HIS RIVAL SUBMISSIONS, THE LEARNED COUNSEL F OR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND FURTHER SUBMITTED THAT THE CONFIRMATIONS, PAN IN RESPECT OF THE SUNDRY CREDITORS WERE FURNISHED BEFORE THE AO. ALL THE CREDITORS WERE GEN UINE AND THE BALANCE OF THE CREDITORS WAS COMING FROM THE EARLIER YEARS ALSO. 16. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, THE AO MADE THE ADHOC ADDITION BY DISALLOWING 50% OF THE SUNDRY CREDITORS, IN SPIT E OF THE FACT THAT THE ASSESSEE FURNISHED THE NAMES, ADDRESSES, PAN AND CO NFIRMATIONS OF THE SUNDRY CREDITORS. IN THE INSTANT CASE, THE LEARNED CIT(A) CATEGORICALLY STATED THAT AFTER EXAMINING THE ASSESSMENT RECORDS, THE ASSESSEE HAD FURNISHED THE CONFIRMATION FOR MORE THAN 97% OF THE AMOUNTS OUTST ANDING. THEREFORE, WE ARE OF THE VIEW THAT THE ADHOC ADDITION MADE BY THE AO BY DISALLOWING 50% OF THE SUNDRY CREDITORS PARTICULARLY WHEN THE PURCHASE S HAD BEEN ACCEPTED, WAS NOT JUSTIFIED AND THE LEARNED CIT(A) RIGHTLY DELETE D THE SAME. WE DO NOT SEE ANY MERIT IN THIS GROUND OF DEPARTMENTS APPEAL. 17. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. . (ORDER PRONOUNCED IN THE OPEN COURT ON 11.07.2018 .) SD/ - SD/ - [ KULDIP SINGH ] [ N.K. SAINI ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:11.07.2018 SH ITA NO. 1661/DEL/2014 15 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT AS SISTANT REGISTRAR SL. NO. PARTICULARS DATE 1. DATE OF DICTATION 9.07.2018 2. DATE ON WHICH THE DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10 .07.2018 3. DRAFT PLACED BEFORE THE OTHER MEMBER 4. APPROVED DRAFT COMES TO THE SR. PS/PS 5. KEPT FOR PRONOUNCEMENT ON 6. FINAL ORDER RECEIVED AFTER PRONOUNCEMENT 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILES GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR 10. DATE OF DISPATCH OF ORDER 11. DATE OF UPLOADING 11.07.2018