Satish Chand Gupta, V. ITO Ward- I,

ITA 1732/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9940 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 11-08-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 06-05-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L ANEJA
• Keywords: Bogus purchase; Set aside
• Section: 244A; 234B; 143(1)

Judgement Text

ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 1732/DEL/2008 ASSESSMENT YEAR: 2004-05 SATISH CHAND GUPTA, VS. ITO, WARD-1, SHAMLI, PROP. SATYA PAL GUPTA & BROS. DISTT. MUZAFFAR NA GAR- UP MANDI JAWAHARGANJ, SHAMLI (UP) I.T.A. NO. 2168/DEL/2008 ASSESSMENT YEAR: 2004-05 ITO, WARD-1, SHAMLI VS. SATISH CHAND GUPTA, DISTT. MUZAFFAR NAGAR- UP PROP. SATYA PAL GUPTA & BROS. MANDI JAWAHARGANJ, SHAMLI (UP) (APPELLANT) (RESPONDENT) DEPARTMENT BY : MS. VANDANA RAMACHANDRAN, SR. DR ASSESSEE BY : SHRI KL ANEJA, ADVOCATE ORDER PER B.C. MEENA : AM THE ITA NO. 1732/D/08 HAS BEEN FILED BY THE ASSESSE E. THE ITA NO. 2168/DEL/08 HAS BEEN FILED BY THE REVENUE. BOTH ARE CROSS APPEALS AGAINST THE ORDER DATED 26.3.2008 OF THE CIT(A), MUZAFFAR NAGAR , UP PASSED IN APPEAL NO. ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 2 254/06-07/MZR. THE GROUNDS IN ASSESSEES APPEAL IN ITA NO. 1732/DEL/2008 READS AS UNDER:- 1. THAT THE CIT(A) HAVING BEEN SATISFIED THAT THER E BEING NO BOGUS PURCHASES AND THE APPELLANT HAVING BEEN ABLE TO EXPLAIN THE DIFFE RENCE IN THE BOOK STOCK AND THE STOCK STATEMENTS SUBMITTED TO THE BANK, OUGHT TO HAVE ACCEPTED THE TRADING RESULTS AND NO PART OF ADDITION TOWARDS GROSS PROFI TS COULD HAVE BEEN SUSTAINED. 2. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ADOPT 13% G.P. ON TURNOVER DECLARED BY APPELLANT A ND WRONGLY CONCLUDING THAT DISCREPANCIES COMBINED WITH NON-MAINTENANCE OF STOC K REGISTER, WARRANTS REJECTIONS OF ACCOUNTS AND ADOPTION OF HIGHER G.P., IGNORING THE HISTORY OF THE APPELLANTS CASES AND COMPARABLE CASES IN THE REGIO N. 3. THAT THE CIT(A) ERRED IN LAW AND ON FACTS BY DI RECTING THE ASSESSING OFFICER TO ADOPT 13% GP, RESULTING IN AN ADDITION OF RS, 2721 69/- WHICH IS VERY VERY EXCESSIVE AT ANY RATE, KEEPING IN VIEW THE BUSINESS CARRIED BY THE APPELLANT BOTH ON WHOLE AND SALE AND RETAIN BASIS IN THE RATIO OF 46% AND 54% APPROXIMATELY. 4. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS I N CONFIRMING FOLLOWING DISALLOWANCES:- (A) OUT OF PRINTING AND STATIONERY AT RS. 3590/- D ESPITE THE TOTAL EXPENDITURE INCURRED ON SUCH SCORE AT RS. 35,889/- COULD NOT BE SAID TO BE EXCESSIVE, KEEPING IN VIEW THE APPELLANTS TURNOVER OF ABOUT RS. 150 .76 LAKHS AND REQUIREMENT OF PACKING MATERIAL. (B) OUT OF TRAVELING AND CAR EXPENSES AT RS. 14332 /- OUT OF TOTAL EXPENDITURE INCURRED AT RS. 71660/- (49543+22117), WHICH COULD NOT BE SAID TO BE SAID TO BE EXCESSIVE, KEEPING IN VIEW THE TURNOVER OF JOURNEY AND DESTRUCTION OF BUS TICKETS ON TERMINATION ETC. ETC. AND ALSO IGNORING APPELLAN TS OFFER OF RS. 2000/- OF OWN ACCORD FOR POSSIBLE PERSONAL USE. 5(A). THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON F ACTS IN SUSTAINING AN ADDITION OF RS. 36,345/- ON ACCOUNT INADEQUATE WITHDRAWALS, MADE BY THE ASSESSING OFFICER ON MERE WHIMS, SURMISES AND WITHOUT BRINGING ANY MATER IAL ON RECORD TO JUSTIFY THE BACK. (B) THAT THE LD. CIT(A) WHILE CONFIRMING THE ADD BA CK ON ACCOUNT OF INADEQUATE WITHDRAWALS, OUGHT TO HAVE BEEN TAKEN INTO CONSIDER ATION THAT CERTAIN DISALLOWANCES MADE OUT OF TELEPHONE AND CAR EXPENSE S, ALLEGEDLY ON ACCOUNT OF PERSONAL USE OF THE APPELLANT, AN INDIVIDUAL AND AD DITION SUSTAINED TOWARDS TRADING ADDITION WERE SUFFICE TO COVER INADEQUATE D RAWINGS, IF ANY, AND NO EXTRA ADDITION WAS WARRANTED. 6. THAT THE LD. CIT(A) OUGHT TO HAVE DIRECTED THE A SSESSING OFFICER TO ALLOW LOSS OF SALE OF PLOT HELD AT STOCK IN TRADE AT RS. 15,660/- FROM CHARGEABLE INCOME, IN VIEW OF SELF-CONTAINED FINDINGS RECORDED BY THE ASSESSIN G OFFICER IN EARLIER YEARS AND CONFIRMED IN APPEALS BY THE APPELLATE AUTHORITIES A ND THE ASSESSING OFFICER COULD ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 3 NOT CHANGE AND CONTRADICT ITS OWN STAND IN THE FOLL OWING YEARS IN ALIKE CIRCUMSTANCES. 7. THAT THE LD. CIT(A) OUGHT TO HAVE ADJUDICATED TH E ISSUES OF CHARGE OF INTEREST UNDER SECTION 234B, 234D AND WITHDRAWAL OF INTEREST UNDER SECTION. 244A ALLOWED IN THE INTIMATION UNDER SECTION 143(1) AS D ETAILED BELOW:- (A) THE ASSESSING OFFICER ERRED IN CHARGING INTEREST U NDER SECTION 234B AS NO INTEREST WAS CHARGEABLE BY THE APPELLANT IN TERMS O F INTIMATION UNDER SECTION 143(1)(A) BECAUSE EXCESS ADVANCE TAX PAID OVER THE TAX DUE UNDER SECTION 143(1) AND THAT CHARGE OF INTEREST UNDER SECTION 234B(3) W AS NOT MANDATORY IN ALL CIRCUMSTANCES, AS NO DEFAULT WAS COMMITTED BY THE A SSESSEE IN PAYING THE ADVANCE TAX, IN THE LIGHT OF THE DECISION FROM MUMBAI TRIB UNAL IN DATAMATICS LMITED VS. ACIT, REPORTED IN (2008) 299 ITR (AT) 286. (B) ASSESSING OFFICER COULD NOT WITHDRAW INTEREST UNDER SECTION 244A WHICH HAS BEEN SUBJECTED TO TAX IN THE YEAR OF PAYMENT AND ALSO ER RED IN CHARGING INTEREST UNDER SECTION 234D OF INCOME TAX ACT. 8. THAT THE LD. CIT(A) HAS BEEN JUSTIFIED IN NOT A PPROVING ASSESSING OFFICERS FINDINGS RECORDED IN MAKING THE UNDER-NOTED ADDITIO NS, WHICH HAVE BEEN RIGHTLY DELETED AS UNDER:- (A) RS. 2341861/- HAS BEEN BOGUS PURCHASES BY HOLDING THAT THERE IS COMPLETE PURCHASE-SALE QUANTITATIVE NEXUS ON RECORD, COUPLED WITH CORROBORATIVE EVIDENCE ON RECORD BY WAY OF CONFIRMATIONS OF THE BROKER, AFFID AVITS OF TRANSPORTERS, DULY CONFRONTED TO THE ASSESSING OFFICER AND ASSESSING O FFICER COMMENTING ON THE SAME IN HIS REMAND REPORTS ETC. (B) RS. 730315/- TOWARDS ESTIMATED POSITION OF STOCK A S PER BOOKS OF ACCOUNTS REGULARLY MAINTAINED AND AS REPORTED TO THE BANKERS ON ESTIMA TE AND THE ASSESSING OFFICER COULD NOT DRAW ANY ADVERSE INFERENCE THAT THERE WAS EXCESS STOCK SO AS TO MAKE CORRESPONDING ADDITION. (C) RS. 1,00,000/- TOWARDS LOAN TAKEN FORM SHRI SHASHI KANT IN A.Y. 2000-01 HAVING NO RELEVANCE IN THE YEAR UNDER APPEAL, BUT EXCEEDED H IS JURISDICTION IN MAKING OBSERVATION THAT THE ASSESSING OFFICER MAY CONSIDER REMEDIAL MAJOR IN A.Y. 2000-01. (D) RS. 79,850/- REPRESENTING THE FUNDS MADE IN THE YEA R UNDER APPEAL, IN RESPECT OF LOAN, UNDERTAKEN IN EARLIER YEARS. (E) RS. 60,000/- RECEIVED IN THE YEAR AS ADVANCE AGAINS T SALE OF LAND AND RETURNED BACK IN THE FOLLOWING YEAR FOR WANT OF DEAL HAVING NO MATE RIALIZED. (F) RS. 149324/- TOWARDS CONSIDERING CAPITAL GAIN OVER REAL ESTATE BUSINESS SHOWN BY ASSESSEE. HOLDING THAT DEPARTMENT CANNOT CHANGE AN D CONTRADICT ITS OWN STAND TAKEN IN THE YEAR BY ASSESSING OFFICER UPHELD UPTO HONBL E ITAT AS ASSESSEE WAS ENGAGED IN REAL ESTATE BUSINESS. 9. THAT THE APPELLANT RESERVES ITS RIGHT TO ADD, AM END, MODIFIES, ELABORATE OR WITHDRAW ANY GROUND BEFORE FINAL DISPOSAL OF THE AP PEAL. ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 4 1.1 THE GROUNDS IN REVENUES APPEAL IN ITA NO. 2168 /DEL/2008 READS AS UNDER:- 1. THAT THE LD. COMMISSIONERS OF INCOME TAX (A) HA S ERRED IN LAW AND ON FACTS BY DELETING THE ADDITION OF RS. 30,72,176/- I.E. 31.57 % AS GROSS PROFIT. THE LD. CIT(A) HAS LOWERED DOWN THE GP RATE TO 13% ONLY AS AGAINST 11.19% DECLARED BY THE ASSESSEE AND 31.57% ASSESSED BY THE ASSESSING O FFICER. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW BY DELETING THE ADDITION OF RS. 79,850/-, THE PAYMENT WAS MADE TO 5 DIFFERENT PERSONS. AS LD. CIT(A) IGNORED THE FACT THAT MERELY FILING SOME DOC UMENTS CANNOT BE TREATED AS SUFFICIENT EVIDENCE TO PROVE GENUINENESS OF CREDIT AS REPORTED IN 140 ITR 151 (ALL.) AND 50 ITR (SC.). 3. THAT THE LD. CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION OF RS. 60,000/- IGNORING THE FACT THAT MERELY FILING SOME DOCUMENTS CANNOT BE TREATED AS SUFFICIENT EVIDENCE TO PROVE GENUINENESS OF CREDIT AS REPORTE D IN 140 ITR 151 (ALL.) AND 50 ITR (SC). 4. THAT ORDER OF THE LD. CIT(A) BE SET ASIDE AND TH AT OF THE ASSESSING OFFICER BE RESTORED. 2. THE GROUND NO. 1, 2, AND 3 OF THE ASSESSEES APP EAL AND GROUND NO. 1 OF THE REVENUES APPEAL ARE ON THE ISSUE OF REJECTION OF B OOKS OF ACCOUNTS AND ESTIMATING THE GROSS PROFIT RATE. HENCE, THESE ARE BEING TA KEN FOR DISPOSAL AT A TIME. 3. ON PLEADING ON BEHALF OF THE ASSESSEE THE LD. A R SUBMITTED THAT THE ASSESSEE IS DEALING IN TRADING OF CLOTH AND DURING THE YEAR THE ASSESSEE HAS MADE CERTAIN CASH PURCHASES, BUT INDIVIDUAL PURCHASES WERE LESS THAN RS. 20,000/-. THE ASSESSING OFFICER CALLED THE INFORMATION WHICH WAS SUBMITTED TO HIM. THEREAFTER THESE PURCHASES WERE VERIFIED THROUGH INSPECTOR WHICH SH OWS THAT THESE PARTIES WERE IN EXISTENCE. THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TREATING THE PURCHASES AS BOGUS PURCHASES AND RECASTING THE TRADING ACCOUNT. HE FURTHER SUBMITTED THAT FULL DETAILS WERE SUBMITTED BEFORE THE CIT(A) AND AFTE R CONSIDERING THE DETAILS, HE HAS ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 5 GIVEN PART RELIEF. HE HAS ESTIMATED THE GROSS PROFI T RATE @13% WHICH IS EXCESSIVE IN COMPARISON TO THE ASSESSES GROSS PROFIT RATE A CCEPTED BY THE DEPARTMENT IN THE PAST YEARS. HE SUBMITTED THAT THE CIT(A) SHOULD HA VE ALLOWED THE COMPLETE RELIEF ON THIS ISSUE. THE ASSESSING OFFICER RE-CASTED T HE PROFIT AND LOSS ACCOUNT WHILE ON THE OTHER HAND HE IS REJECTED THE BOOKS OF ACCOU NT. THE LD. AR ALSO RELIED ON ALL THE SUBMISSIONS MADE BEFORE THE CIT(A) WITH REGARD TO THE CASH PURCHASES. HE SUBMITTED THAT THESE PURCHASES WERE THROUGH COMMISS ION AGENTS, THE SELLERS WERE UNREGISTERED DEALERS. ASSESSEE WAS NOT IN DIRECT T OUCH OF THE SELLERS. HE ALSO SUBMITTED THAT THE CIT(A) ALSO NOT JUSTIFIED IN EST IMATING THE GROSS PROFIT RATE @13% WHEN DIFFERENCE IN THE BOOK STOCK AND THE S TOCK STATEMENT SUBMITTED TO THE BANK WAS EXPLAINED. THUS, HE SHOULD HAVE A CCEPTED THE TRADING RESULT OF THE ASSESSEES BOOKS OF ACCOUNT. HE PLEADED THAT THE S TOCK STATEMENT SUBMITTED TO THE BANK WAS BASED ON ESTIMATES AND SELLING PRICE. 4. ON THE OTHER HAND ON PLEADING ON THE GROUND NO.1 IN THE REVENUES APPEAL AND IN REPLY TO ARS PLEADINGS THE LD. DR SUBMITTED THAT ON THE SPOT VERIFICATION IN RESPECT OF THE CASH PURCHASES, IT IS FOUND THAT TH ESE PARTIES HAVE DENIED HAVING ANY TRANSACTION WITH THE ASSESSEE AND EVEN THEY HAVE S UBMITTED THAT THE CASH MEMOS WERE PRINTED IN THEIR NAMES BY FORGERY AND ALSO SUB MITTED THAT THEY HAVE NOT SOLD ANY CLOTH TO THE ASSESSEE. THEREFORE, THE CIT(A) SHOULD NOT HAVE ACCEPTED THE PLEA OF THE ASSESSEE. HE ALSO PLEADED THAT ASSESSEE C ANNOT TAKE THE PLEA THAT PARTIES ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 6 WERE IN EXISTENCE HENCE PURCHASES ARE NOT BOGUS. HE PLEADED THAT THEY HAVE DENIED ANY TRANSACTIONS WITH THE ASSESSEE. HENCE C IT(A) ORDER DESERVE TO BE REVERSED ON THIS ISSUE. HE ALSO SUBMITTED THAT THE DIFFERENCE IN THE STOCK DECLARED IN THE BOOKS OF ACCOUNT ON THE LAST DAY OF THE FINA NCIAL YEAR AND THE STOCK DECLARED WITH THE BANK WAS NOT EXPLAINED BY THE ASSESSEE. T HE ASSESSEE HAS NOT EXPLAINED THE DIFFERENCE WITH ANY EVIDENCE. IT IS ONLY A SE LF SERVING STATEMENT WHICH HAD NO LEGS TO STAND. THE CIT(A) HAS GRANTED THE RELIEF WI THOUT ANY BASIS. SHE ALSO SUBMITTED TO SET ASIDE THE ORDER OF THE CIT(A). 5. IN THE REJOINDER THE LD. AR SUBMITTED THAT IF TH E CLOSING STOCK IS ADOPTED AS PER THE STATEMENT SUBMITTED TO THE BANK THEN THE OP ENING STOCK SHOULD ALSO BE ADOPTED AS PER THE STOCK STATEMENT SUBMITTED TO THE BANK. 6. AFTER HEARING BOTH THE SIDES AT LENGTH AND GOING THROUGH THE FACTS RECORDED IN THE ORDERS OF THE AUTHORITIES BELOW, WE HOLD THAT T HE ASSESSING OFFICER HAVE REJECTED THE BOOKS OF ACCOUNT AFTER SPECIFYING THE CERTAIN DEFECTS WHICH ARE IN THE FORM OF CASH PURCHASES WHICH ARE NOT VERIFIABLE AND DIFFERENCE IN THE STOCK STATEMENT SUBMITTED TO THE BANK AND STOCK AS PER T HE BOOKS OF ACCOUNT. THEREFORE, THE A.O. WAS JUSTIFIED IN REJECTING THE BOOKS OF AC COUNT AND ESTIMATING THE PROFIT RATE. HOWEVER, WE DO NOT AGREE WITH THE ASSESSING OFFICER FOR RECASTING OF THE PROFIT AND LOSS ACCOUNT BY ADOPTING SOME OF THE FI GURES AVAILABLE IN THE BOOKS OF ACCOUNTS. THE ASSESSEES STATEMENT THAT THESE CAS H PURCHASES WERE FROM THE ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 7 UNREGISTERED DEALERS AND MADE THROUGH THE AGENTS O R COMMISSION AGENTS, THE ASSESSEE WAS NOT IN DIRECT TOUCH OF THESE SELLERS. ASSESSEE COULD NOT GET CROSS TALLIED THE PURCHASES DEBITED BY THE ASSESSEE IN IT S BOOKS OF ACCOUNT. HOWEVER, THESE DISCREPANCIES HAS REDUCED THE CREDIBILITY OF THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. SIMILAR DIFFERENCE OF THE CLOSIN G STOCK AS PER THE BOOKS OF ACCOUNT AND THE STOCK STATEMENT SUBMITTED TO THE BANK HAS NOT BEEN EXPLAINED WITH ANY EVIDENCE OR SAY CREDITABLE EXPLANATION WHI CH CAN BE RELIED UPON. THE ASSESSEE FAILS TO PRODUCE ANY EVIDENCE IN SUPPORT O F HIS CLAIM THAT STATEMENT WAS BASED ON ESTIMATES AND IT WAS ON THE BASIS OF SELLI NG PRICE. THE ASSESSEES TRADING IN THE CLOTH PARTLY ON RETAIL AND PARTLY ON WHOLESA LE BASIS. KEEPING IN VIEW THE NATURE OF BUSINESS OF THE ASSESSEE AND PLEADING PUT FORWARD TO EXPLAIN THE CASH PURCHASES, WE ARE OF THE VIEW THAT THE GROSS PROFIT RATE ESTIMATED @13% BY THE CIT(A) IS JUSTIFIED AND IT NEEDS NO INTERFERENCE. THE ASSESSEE HAS FAILED COMPLETELY TO EXPLAIN THE DISCREPANCY IN THE BOOK STOCK AND STOCK STATEMENT FILED WITH THE BANK. WE, THEREFORE, UPHOLD THE ADD ITION UPTO THE DIFFERENCE IN THE STOCK AS PER BOOKS AND STOCK STATEMENT SUBMITTED T O BANK OF RS. 7,30,315/-. SINCE WE HAVE SUSTAINED THE GROSS PROFIT ESTIMATED HIGHER THAN THE G.P. DECLARED BY THE ASSESSEE PART OF DIFFERENCE IN THE STOCK STATEMENT SUBMITTED TO THE BANK SHALL BE REDUCED ON ACCOUNT OF GIVING CREDIT TO THE ADDITION MADE ON THE BASIS OF ESTIMATED GROSS PROFIT @13%. ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 8 7. THUS, IN THE RESULT THE GROUNDS NO. 1, 2 & 3 OF THE ASSESSEES APPEAL ARE DISMISSED AND GROUND NO.1 OF THE REVENUES APPEAL ARE PARTLY ALLOWED. 8. THE GROUND 4(A) OF THE ASSESSEES APPEAL IS REG ARDING DISALLOWANCE OUT OF PRINTING AND STATIONERY. WHILE PLEADING ON THIS G ROUND THE LD. AR SUBMITTED THAT THIS DISALLOWANCE ARE UNJUSTIFIED. IN VIEW OF THE TURNOVER OF THE ASSESSEE AT RS. 1,50,76,000/- THE TOTAL EXPENDITURE DEBITED UNDER THE HEAD OF PRINTING AND STATIONERY OF RS. 35,889/- WAS NOT EXCESSIVE. KEE PING IN VIEW THE TURNOVER THIS WAS THE REASONABLE EXPENDITURE. NO PERSONAL EXPEND ITURE WERE DEBITED UNDER THIS HEAD. THEREFORE, THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THIS ADDITION. 9. THE LD. DR FOR THE REVENUE HAS RELIED ON THE ORD ER OF THE AUTHORITIES BELOW. 10. AFTER HEARING BOTH THE SIDES, WE ARE OF THE VIE W THAT THE ASSESSEE IS HAVING A TURN OVER OF RS. 1,50,76,000/- AND EXPENDITURE DEB ITED UNDER THE HEAD PRINTING AND STATIONERY WERE OF RS. 35,889/- ONLY. THE R EVENUE HAS FAILED TO PIN-POINT THAT THIS EXPENDITURE WAS EXCESSIVE IN COMPARISON T O THE TURNOVER OF THE ASSESSEE. NOTHING ON THE RECORD THAT THE EXPENSES WERE NOT FO R GENUINE NEED OF BUSINESS OF THE ASSESSEE. THEREFORE, WE DIRECT TO DELETE THIS ADDITION. 11. IN THE RESULT, THE GROUND NO. 4(A) OF THE ASSES SEES APPEAL IS ALLOWED. 12. THE GROUND NO. 4(B) OF THE ASSESSEES APPEA L IS RELATING TO 20% DISALLOWANCE FROM TRAVELLING AND CAR EXPENSES. O N PLEADING ON BEHALF OF THE ASSESSEE THE LD. AR SUBMITTED THAT THIS DISALLOWANC E WAS EXCESSIVE AND ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 9 DISALLOWANCE SHOULD BE REDUCED. HE SUBMITTED THAT THE ASSESSEE HIMSELF HAS DISALLOWED RS. 2,000/- FOR POSSIBLE PERSONAL USE AN D HE SUBMITTED TO REDUCE THE DISALLOWANCE UPTO RS. 2000/- ONLY. 13. ON THE OTHER HAND THE LD. DR FOR THE REVENUE R ELIED ON THE ORDER OF THE AUTHORITIES BELOW. 14. AFTER HEARING BOTH THE SIDES, WE FIND THAT 20% DISALLOWANCE FROM TRAVELLING AND CAR EXPENSES ARE EXCESSIVE. HOWEVER, THE DEBI TING PERSONAL EXPENSE UNDER THESE HEADS IS NOT RULED OUT. THE TOTAL EXPENDITUR E DEBITED UNDER BOTH THE HEADS WERE OF RS. 71,660/-, WHILE THE TURNOVER OF THE ASS ESSEE WAS RS. 1,50,76,000/-. THE ASSESSEE HIMSELF HAS OFFERE D SOME DISALLOWANCE FOR PERSONAL USE. THUS, THE PERSONAL EXPENDITURE DEBI TED UNDER THE HEAD ARE NOT RULED OUT. CONSIDERING THE FACTS OF THE CASE AND PLEADI NGS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT 10% DISALLOWANCE FROM THESE EXPENSES SHALL BE SUFFICIENT TO COVER THE POSSIBLE PERSONAL USE DEBITED UNDER THESE HEADS. WE DIRECT TO REDUCE THE DISALLOWANCE TO 10% OF THESE EXPENSES. 15. IN THE RESULT, THE GROUND NO. 4(B) OF THE A SSESSEES APPEAL IS PARTLY ALLOWED. 16. THE GROUND NO. 5(A) & 5(B) OF THE ASSESSEE S APPEAL ARE IN RESPECT OF THE ADDITIONS MADE ON ACCOUNT OF INADEQUATE WITHDRAWALS OF RS. 36,345/-. WHILE PLEADING ON BEHALF OF THE ASSESSEE THE LD. AR SUBMI TTED THAT THE ASSESSEE HAS ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 10 ALREADY SHOWN SUFFICIENT WITHDRAWALS FOR THE PERSON AL USE. HIS SONS WHO ARE ASSESSED TO INCOME TAX SEPARATELY AND HAVING INADEQ UATE WITHDRAWALS. THE ASSESSEE IS STAYING IN A SMALL TOWN LIKE SHAMLI-UP WHERE THERE ARE VERY LESS EXPENDITURE ON THE LIVING OF THE ASSESSEE. FURTHER , THE DISALLOWANCE HAS BEEN MADE IN THE PROPRIETORSHIP CONCERNS FROM THE EXPENDITURE DEBITED UNDER TRAVELLING AND CAR EXPENSES AND TELEPHONE ETC. ETC. WHICH EXPLAIN SOME OF THE PERSONAL EXPENDITURE. THEREFORE, THIS DISALLOWANCE WAS C OMPLETE UNJUSTIFIED AND DESERVED TO BE DELETED. 17. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ER OF THE LD. AUTHORITIES BELOW. 18. AFTER HEARING BOTH THE SIDES AND CONSIDERING TH E FACTS OF CASE, WE ARE OF THE VIEW THAT ASSESSEE IS LIVING IN A SMALL TOWN AND SH OWING WITHDRAWAL OF MORE THAN RS. 83,000/- IN THE F.Y. 2003-04 THE OTHER FAMILY MEMBERS ARE ALSO ASSESSED WITH THE INCOME TAX AND HAVING THEIR OWN WITHDRAWALS FOR HOUSE HOLD EXPENSES. CERTAIN DISALLOWANCE HAS ALSO BEEN MADE FROM THE PROPRIETO RSHIP CONCERN ON ACCOUNT OF THE POSSIBLE PERSONAL USE. THEREFORE, WE FIND NO MERIT IN THIS ADDITION SUSTAINED BY THE CIT(A). THEREFORE, WE DIRECT TO DELETE THE SAME. 19. THE GROUND NO. 6, 7, 8 & 9 OF THE ASSESSEES APPEAL WERE NOT PRESSED AT THE TIME OF PLEADINGS, HENCE, THE SAME ARE DISMISSED. ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 11 20. THE GROUND 2 OF THE REVENUES APPEAL IS AG AINST THE DELETION OF ADDITION OF RS. 79,830/- WHICH IS REPAYMENT OF LOAN DURING THE YEAR TO 5 PERSONS. WHILE PLEADING ON BEHALF OF THE DEPARTMENT THE LD. DR SUB MITTED THAT THE ASSESSEE HAS MADE THE PAYMENTS TO 5 PERSONS WHICH WERE NOT SHOWN IN THE ASSET SIDE OF THE BALANCE SHEET. THE ASSESSEE CLAIMED THAT THESE RE PAYMENTS WERE MADE AGAINST THE LOAN RAISED IN THE EARLIER YEAR. HOWEVER, THE AS SESSEE WAS NOT SUBMITTING HIS PERSONAL BALANCE SHEET AND CAPITAL ACCOUNT ALONGWIT H THE RETURN OF INCOME, THEREFORE, IT WAS NOT POSSIBLE TO VERIFY THE CLAIM OF THE ASSESSEE IN THIS REGARD. IN THE ABSENCE OF VERIFICATIONS THE ASSESSING OFFICER WAS JUSTIFIED TO MAKE THE ADDITION AND THE ORDER OF THE CIT(A) DESERVE TO BE SET ASIDE. 21. ON THE OTHER HAND, THE LD. AR FOR THE ASSESSE E SUBMITTED THAT THE LOANS WERE RAISED FROM THE 5 PERSONS IN THE EARLIER YEARS. THE PERSONAL STATEMENT OF THE ASSET AS ON 31.3.2003 WAS SUBMITTED AND NO ADDITION CAN B E MADE IN THIS YEAR WHEN THE REPAYMENT HAS BEEN MADE. THE CIT(A) HAS RIGHTLY DEL ETED THE ADDITION. 22. AFTER HEARING BOTH THE SIDES AND CONSIDERING TH E FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE SUBMITTED DETAILS IN RE SPECT OF THESE PERSONS AND ALSO PERSONAL BALANCE SHEET BEFORE THE CIT(A) WHICH HE H AS FORWARDED TO THE ASSESSING OFFICER FOR REMAND REPORT AND AFTER CONSIDERING THE REMAND REPORT, HE HAS DELETED THE ADDITION BY HOLDING THAT THESE LOANS WE RE TAKEN FROM VARIOUS PERSONS IN EARLIER FINANCIAL YEAR PERTAINING TO A.Y. 2003-04 A ND ANY VERIFICATION / ENQUIRY IN ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 12 THIS REGARD CAN BE MADE ONLY IN THE PROCEEDINGS F OR THE A.Y. 2003-04. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT SINCE THESE CREDITS WERE RECEIVED DURING THE EARLIER YEAR ONLY AND THE REPAYMENTS WERE MADE. THE CIT(A) HAS SPECIFICALLY MENTIONED THAT THESE LOANS WERE PERTAINING TO THE A.Y. 2003-04, NO ADDITION CAN BE MADE IN THE YEAR U NDER CONSIDERATION THEREFORE WE UPHOLD THE DECISION OF THE CIT(A) ON THIS ISSUE. 23. THE GROUND NO. 3 OF THE REVENUES APPEAL IS A GAINST DELETING THE ADDITION OF RS. 60,000/- MADE BY THE ASSESSING OFFICER. WH ILE PLEADING ON BEHALF OF THE REVENUE THE LD. DR SUBMITTED THAT THE ASSESSING OFF ICER ASKED THE ASSESSEE TO FILE THE COMPLETE POSTAL ADDRESS OF THE PERSONS FROM WHO M THE ADVANCE RECEIVED FOR THE SALE OF LAND. THE ASSESSEE ONLY SUBMITTED THE PO STAL ADDRESS BUT DID NOT PRODUCE THE PERSONS FOR EXAMINATION. NO AGREEMENT TO SEL L WERE SUBMITTED. THUS, THE ASSESSEES CLAIM THAT THESE ADVANCES WERE RECEIVED AGAINST THE SALE OF THE LAND HAS BECOME UNVERIFIABLE. NO DOCUMENTARY EVIDENCE WAS SUBMITTED IN THIS REGARD. THEREFORE, THE CIT(A) IS COMPLETELY UNJUSTIFIED IN DELETING THE ADDITION. THE SO- CALLED CONFIRMATION LETTER SUBMITTED BEFORE THE CIT (A) WERE NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. SHE ALSO SUBMITTED THAT THE SE ADVANCES WERE SHOWN AS RETURNED DURING THE YEAR 2004-05 AND NO LAND TRANSA CTION WAS DONE AS CLAIMED BY THE ASSESSEE. SHE ALSO SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY AND THE GENUINENESS OF THE TRANSACTION FROM WHOM TH IS MONEY WAS RECEIVED. THERE ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 13 IS DIFFERENCE IN FLOW OF CASH SHOWN AS RECEIVED IN BOOKS OF ACCOUNT AND CLAIM OF ASSESSEE THAT IT WAS ADVANCE RECEIVED FOR SALE OF LAND AND THE SAME WAS REPAID. THE AMOUNT WAS SHOWN AS RECEIVED CASH AND SHOWN AS REPAID IN CASH ALSO. SHE SUBMITTED TO SET ASIDE THE ORDER OF THE CIT(A). 24. ON THE OTHER HAND, THE LD. AR RELIED ON THE ORD ER OF THE CIT(A) AND SUBMITTED THAT THE AMOUNT WAS RECEIVED AS ADVANCE F OR SALE OF LAND AND THE SAME HAS BEEN REPAID ALSO, THEREFORE, THE CIT(A) WAS JUS TIFIED IN DELETING THE ADDITION. 25. AFTER HEARING THE BOTH THE SIDES, WE HOLD THAT ALTHOUGH THE ASSESSEE HAS CLAIMED THAT HE HAS RECEIVED ADVANCE FROM 4 PERSON S FOR THE SALE OF THE LAND, BUT NO AGREEMENT IN THIS REGARD WAS ADVANCED AS EVIDEN CE BEFORE THE AUTHORITIES BELOW. THESE PERSONS WERE ALSO NOT PRODUCED FOR EX AMINATION. THE BANK PASS BOOKS AND OTHER DOCUMENTS OF THESE PERSONS WERE ALS O NOT SUBMITTED BEFORE THE AUTHORITIES BELOW TO ESTABLISH THE GENUINENESS OF T HE TRANSACTION. THE FLOW OF CASH SHOWN AS RECEIVED ON 4 DATES AS RS. 15,000/-, RS. 16,000/-, RS. 14,000/- AND RS. 15,000/- WHILE IT IS SHOWN AS PAID TO FOUR PERS ONS AS RS. 12,000/-, RS. 15,000/- , RS. 15,000/- AND RS. 18,000/-. THUS, THERE IS DI FFERENCE IN FLOW OF RECEIPT AND REPAYMENT. IN THE ABSENCE OF ANY CREDIBLE EVIDENCE, WE FIND THAT THE CIT(A) WAS NOT JUSTIFIED IN BELIEVING THE STORY IN RESPECT OF THE CLAIM OF ADVANCE RECEIVED FROM 4 PERSONS AGAINST THE SO CLAIMED SALE OF LAND AGREED UPON. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AS THE ASSESSEE HAS F AILED TO DISCHARGE THE ONUS IN ITA NO. 1732 & 2168/DEL/2008 A.Y. 2004-05 14 RESPECT OF THE AMOUNT OF RS. 60,000/- CLAIMED TO HA VE BEEN RECEIVED FROM THESE 4 PERSONS. 26. IN THE RESULT, THE GROUND NO. 3 OF THE REVENU ES APPEAL IS ALLOWED. 27. IN THE RESULT, THE APPEAL OF THE ASSESSEE AS W ELL AS OF THE REVENUE ARE PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 TH AUGUST, 2009. SD/- SD/- (C.L. SETHI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 13 TH AUGUST, 2009. SRB COPY OF THE ORDER IS FORWARDED TO:- 1. APPELLANT. 2. RESPONDENT. 3. CIT( A), MUJAFFAR NAGAR, UP 4.COMMISSIONER OF INCOME TAX 5. THE DR, ITAT , NEW DELHI BY ORDER DY. REGISTRAR, ITAT // T RUE COPY //