ITO, CHENNAI V. S.Devinder Singh, CHENNAI

ITA 1889/CHNY/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6314 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 25-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K RAVI
• Assessee Lawyers: T BANUSEKAR
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , ! ' ! # . $% , & '( BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER . / ITA NO. 1889/MDS/2015 / ASSESSMENT YEAR : 2009-10 THE INCOME-TAX OFFICER, NON-CORPORATE WARD-4(3), CHENNAI 600 006. ( /APPELLANT) V. SHRI S. DEVINDER SINGH , T-22, HORIZONE APARTMENT, NO.1030, T.H.ROAD, KALADIPET, CHENNAI 600 019. PAN AAIPS2043R RESPONDENT) / APPELLANT BY : SHRI K. RAVI, JCIT / RESPONDENT BY : SHRI T. BANUSEKAR, FCA ! / DATE OF HEARING : 07.06.2017 '# ! / DATE OF PRONOUNCEMENT: 24.08.2017 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) D ATED 2.6.2015 FOR THE ASSESSMENT YEAR 2009-10. - - ITA 1889/MDS/15 2 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL FOR ADJUDICATION. 2.1 THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE OF 24,07,726/- ON ACCOUNT OF DISCREPANCIES FOUND IN SUNDRY DEBTORS OUTSTANDING BALANCES. 3.THE LEARNED CIT(A)ERRED IN DELETING THE DISALLOWA NCE OF 95,43,566/- ON ACCOUNT OF DISCREPANCIES FOUND IN SUNDRY CREDITORS OUTSTANDING BALANCES. 4. LD. CIT(A) ERRED IN DELETING 50% OF UNEXPLAINED EXPENDITURE IN PURCHASE OF TIMBER OF 5,79,365/- WHEN DURING THE COURSE OF ASSESSMENT, THE PARTY HAS CLEA RLY CONFIRMED THAT IT HAD NO TRANSACTION WITH ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL DOING MANUFACTURE AND SALE OF CTD BARS, M.S. ROUNDS, TMT BARS, M.S. SCRAPS ETC., IN THE NAME AND STYLE OF M/S. DEV INDUSTRIES. FOR THE ASSESSMENT YEAR 2009 -10, THE ASSESSEE FILED THE RETURN OF INCOME ON 29.9.2009 DE CLARING A TOTAL INCOME OF 9,43,069/-. THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY UND ER CASS AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED ACCORDINGLY . THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 3 0.12.2011 DETERMINING THE TOTAL INCOME AT 2,12,41,336/- AND THE AO MADE CERTAIN ADDITIONS TO THE RETURNED INCOME. AGG RIEVED WITH - - ITA 1889/MDS/15 3 THE ORDER OF ASSESSING OFFICER , THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS). 3.1 ON APPEAL, THE CIT(APPEALS) CONSIDERED THE REPO RT FILED BY THE AO ON 10.01.2014 STATING THAT (I) THE ADDITIONS OF 54,39,493/-, WHICH ARE DISPUTED IN THE APPEAL, MAY BE DELETED AND HE URGED TO CONFIRM ADDI TIONS OF 1,34,33,630/- MADE IN THE ASSESSMENT ORDER. (II) OUT OF THE ADDITION OF 2,02,98,267/- MADE IN THE ASSESSMENT ORDER, A SUM OF 54,39,493/- IS DIRECTED TO BE DELETED, WHICH WAS AGREED TO BY THE AO IN HIS REPOR T. 4. ACCORDING TO THE CIT(APPEALS), IN THE CASE OF M/S. STEEL & TUBE FIELD INDIA (P) LTD ., A SUM OF 15,04,204/- BEING THE DIFFERENCE BETWEEN THE ASSESSEES BOOKS AND THE PAR TYS BOOKS WAS ADDED. FURTHER, THE CIT(APPEALS) OBSERVED THA T THE AO WAS OF THE OPINION THAT THE DIFFERENCE OF 15,04,204/- WAS UNDERSTATED BY THE ASSESSEE AND THE ASSESSEE DID NO T RECONCILE THE DISCREPANCY IN THE OPENING BALANCE WITH EVIDENC E. - - ITA 1889/MDS/15 4 4.1 THE CIT(APPEALS) OBSERVED THAT THE ASSESSEE NOW HERE FURNISHED EXPLANATION AS TO HOW THE DIFFERENCE AROS E BETWEEN THE ASSESSEES ACCOUNTS AND THE PARTYS ACCOUNTS. EVEN BEFORE THE CIT(APPEALS), THE ASSESSEE HAS NOT FILED ANY CR EDIBLE EVIDENCE TO SHOW THAT THERE IS NO DIFFERENCE. HOWE VER, THE CIT(APPEALS) OBSERVED THAT THE DIFFERENCE DOES NOT RELATE TO THE ASSESSMENT YEAR UNDER APPEAL AND NOT ATTEMPT WAS MA DE TO FIND OUT AS TO HOW THE DIFFERENCE AROSE. ACCORDING TO T HE CIT(APPEALS), WHEN AN ADDITION IS MADE, IT IS FOR T HE AO TO PROVE THAT THE PARTICULAR SUM IS TO BE TAXED. IN THE ABS ENCE OF PROPER REASONING AND CORROBORATE EVIDENCE, ACCORDING TO TH E CIT(APPEALS), ADDITION CANNOT BE SUSTAINED AND IN T HE REMAND REPORT THE AO HAS NOT MADE ANY ATTEMPT TO DISPROVE THE ASSESSEES VERSION OF BROUGHT FORWARD BALANCE. THE REFORE, ACCORDING TO THE CIT(APPEALS), THE ADDITION IS NOT WARRANTED, AS THE AO DID NOT PROVE TO WHICH YEAR THE IMPUGNED ADD ITION RELATED TO. ACCORDINGLY, HE DIRECTED THE AO TO DELETE THE ADDITION. AGAINST THE ORDER OF LD.CIT(A), NOW THE REVENUE/ASS ESSEE IS IN APPEAL BEFORE US. - - ITA 1889/MDS/15 5 4.2 WITH REGARD TO DELETING THE ADDITION OF 15,04,204/- BEING THE DIFFERENCE BETWEEN THE ASSESSEES BOOKS AND M/S. STEEL & TUBE FIELD INDIA (P) LTD ., THE LD.D.R SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAD OBTAI NED COPY OF THAT PARTYS CASH BOOK, WHICH CLEARLY DISCLOSED THE DIFFERENCES IN ASSESSEES BOOKS AND THE LD.CIT(A) FAILED TO CO NSIDER THIS EVIDENCES OBTAINED BY THE AO AND SOLELY RELIED ON T HE ARGUMENT OF THE LD.A.R AND DELETED THE ADDITION. ON THE OTH ER HAND, LD.A.R SUBMITTED THAT THE DIFFERENCE WAS NOT RELATING TO T HE ASSESSMENT YEAR UNDER CONSIDERATION, AS SUCH IT WAS DELETED BY THE LD.CIT(A). 4.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, THE AO FOUND THE DIFFE RENCE BETWEEN THE ASSESSEES BOOKS OF ACCOUNTS AND THE PARTYS AC COUNT AND MADE AN ADDITION. IF THERE IS A DIFFERENCE, IT IS THE DUTY OF THE ASSESSEE TO RECONCILE AND EXPLAIN BEFORE THE LOWER AUTHORITIES. BEFORE THE LD.CIT(A), THE ASSESSEE SUBMITTED THAT T HE DIFFERENCE IS NOT RELATING THE ASSESSMENT YEAR UNDER CONSIDERA TION. HOWEVER, THERE IS NO WHISPER WITH REGARD TO THE YEA R TO WHICH THE - - ITA 1889/MDS/15 6 DIFFERENCE RELATES. HENCE, IT IS TO BE BROUGHT ON R ECORD BY THE LD.CIT(A) AND IT HAS TO BE SPECIFIED BY THE LD.CIT( A) REGARDING THE EXACT DIFFERENCES RELATING TO THE YEAR TO WHICH IT RELATES. ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF LD. CIT(A) FOR FRESH CONSIDERATION. 5. IN THE CASE OF M/S. SAI STEEL SYNDICATE , A SUM OF 4,92,046/- WAS ADDED TO THE INCOME RETURNED BEING T HE DIFFERENCE BETWEEN THE ASSESSEES BOOKS. IN THE AS SESSMENT ORDER, IT WAS STATED THAT THIS IS ACCEPTED BY THE A R VIDE HIS REPLY DATED 28.11.2011. IN THE REMAND REPORT, THE AO ACC EPTED 2,82,046/- AS EXPLAINED AND THE BALANCE OF 2,10,000/- WAS TREATED AS UNPROVED. IN THE REPORT DATED 10.01.201 4, IT WAS STATED THAT THE PARTY HAS NOT ACCOUNTED FOR THE OPE NING DEBIT BALANCE OF 1,10,000/- AND CASH PAYMENTS OF 1,00,000/- ON VARIOUS DATES. THE AO WAS OF THE VIEW THAT IT IS B EYOND COMPREHENSION WHY THE ASSESSEE MADE PAYMENTS OF 1,00,000/- IN CASH ON VARIOUS DATES WHEN THE PARTY S ACCOUNT SHOWS A DEBIT BALANCE OF 1,10,000/- AT THE BEGINNING OF THE YEAR AS PER ASSESSEES OWN BOOKS. HENCE, THE AO RE QUESTED TO - - ITA 1889/MDS/15 7 CONFIRM THE ADDITION TO THE EXTENT OF 2,10,000/-. IN THE REPLY DATED 03.03.2014, THE ASSESSEE STATED THAT ITS PROP RIETARY BUSINESS M/S. ARJAN DEV ISPAT WAS FORMERLY KNOWN AS DEV INDUSTRIES. THE OTHER PARTY MAINTAINED TWO ACCOUNT S OF THE ASSESSEE SIMULTANEOUSLY VIZ. M/S. ARJAN DEV ISPAT U DYOG AND M/S. DEVI INDUSTRIES AND HENCE THE DIFFERENCE. IT WAS STATED THAT A SUM OF 2,00,000/- WAS TRANSFERRED TO DEV INDUSTRIES IN TH E LEDGER ACCOUNT OF THE ASSESSEE BY SAI STEEL SYNDICA TE. ACCOUNT COPY OF THE PARTY M/S. SAI STEEL SYNDICATE SHOWING ASSESSEES ACCOUNT WAS FURNISHED. THIS LEAVES ONLY 10,000/- TO BE EXPLAINED. THE CONTENTION THAT THE CASH PAYMENT OF 10,000/- WAS WRONGLY ACCOUNTED IN M/S. SAI STEEL SYNDICATE I NSTEAD OF M/S. SAI STEEL ENTERPRISE IS NOT ACCEPTABLE. HENCE , THE ADDITION TO THE EXTENT OF 2,00,000/- IS DELETED AND 10,000/- IS CONFIRMED. AGAINST THE ORDER OF LD.CIT(A), NOW THE REVENUE IS IN APPEAL BEFORE US. 5.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THE LD.CIT(A) HAD GIVEN A RE LIEF ON THE REASON THAT THE DIFFERENCE IS ON ACCOUNT OF MIXING UP OF NAMES. - - ITA 1889/MDS/15 8 BEFORE US, LD.D.R SUBMITTED THAT IT WAS ONLY AFTER- THOUGHT EXPLANATION GIVEN BY THE ASSESSEE. IN OUR OPINION, LD.CIT(A) HAS TO GIVE FINDINGS HOW THE MIXING UP OF ENTRIES WAS H APPENED AND WHAT IS THE IMPACT ON THE FINANCIAL STATEMENT OF ASSESSEE. IF THERE IS A REVENUE EFFECT AND IT IS TO BE BROUGHT T O TAX. ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF LD. CIT(A) FOR FRESH CONSIDERATION. 6. IN THE CASE OF M/S. INDORIA INDUSTRIES , THE SUM OF 4,11,476/- BEING THE CLOSING BALANCE DIFFERENCE (AS ON 31.03.2009) BETWEEN THE ASSESSEES ACCOUNTS AND PA RTYS ACCOUNTS REPRESENTED UNACCOUNTED PURCHASE BY THE AS SESSEE AND HENCE ADDED BY THE AO. IN THE REMAND REPORT, T HE AO STATED THAT THE DIFFERENCE WAS NOT EXPLAINED TO HIM EVEN AT THE TIME OF REMAND PROCEEDINGS AND HENCE URGED THAT THE ADDITION IS TO BE CONFIRMED. IT IS SEEN THAT THERE IS A CREDIT BALANCE OF 4,11,476/- IN THE NAME OF M/S. IRON STEEL, IMPORT S CRAP AND PLASTIC SCRAPE ACCOUNT IN THE ASSESSEES BOOKS. XE ROX COPY OF INDORIA INDUSTRIES BILL NO.190 DATED 8.1.2009 REVEA LS THAT THE PARTY SOLD M.S. SCRAP TO THE ASSESSEE FOR 4,11,476/-. IN THE BILL - - ITA 1889/MDS/15 9 UNDER THE NAME INDORIA INDUSTRIES, IT WAS WRITTEN A S DEALERS IN IRON STEEL, IMPORT SCRAP AND PLASTIC SCRAP. ACCORD ING TO LD.CIT(A), THIS WAS WRONGLY TAKEN AS THE NAME OF TH E PARTY AND SHOWN AS SEPARATE ACCOUNT IN THE ASSESSEES BOOKS A ND THE SAME IS SEPARATELY SHOWN IN THE AUDITED BALANCE SHE ET AS ON 31.3.2008. HENCE, THE CIT(APPEALS) OBSERVED THAT B OTH THE ACCOUNTS ARE SAME AND THERE IS NO DIFFERENCE FOR MA KING THE ADDITION AND DIRECTED THE AO TO DELETE THE ADDITION OF 2,11,476/-. AGAINST THE ORDER OF LD.CIT(A), NOW TH E REVENUE IS IN APPEAL BEFORE US. 6.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THE CASE OF M/S. INDORIA INDUSTRIES ALSO, THE ASSESSEE HAS GIVEN A REPLY THAT IT IS ON ACCOUNT O F MIXING UP OF BILLS WHILE ACCOUNTING. AS DISCUSSED IN EARLIER PAR A NO.5.1, IF IT IS ACTUALLY MIXING UP AND IT IS HAVING REVENUE EFFECT TO BE CONSIDERED AS INCOME OF THE ASSESSEE, AND TO BE BRO UGHT TO TAX. ACCORDINGLY, THIS ISSUE IS REMITTED TO THE FILE OF LD.CIT(A) FOR FRESH CONSIDERATION. FURTHER, WE MAKE IT CLEAR THAT IN A LL THESE ABOVE - - ITA 1889/MDS/15 10 THREE ISSUES, THE LD.CIT(A) HAS TO CALL FOR REMAND REPORT FROM THE LD. ASSESSING OFFICER. 7. THE NEXT GROUND IS WITH REGARD TO DELETION OF A SUM OF 6,41,488/- WAS ADDED AS UNEXPLAINED INVESTMENT AS M/S. BAJORIA STEELS HAD SHOWN NIL BALANCE AGAINST THE ASSESSEES NAME. IN THE REMAND REPORT, THE AO DID NOT ACCEPT THE EXPLAN ATION OF THE ASSESSEE WHO STATED THAT THE DIFFERENCE WAS ONLY IN THE OPENING BALANCE. THE AO WAS ALSO OF THE VIEW THAT THE EXCE SS CREDIT BALANCE OF 6,41,488/-, WHICH IS NOT DUE TO THE CREDITOR IS TO BE TREATED AS INCOME OF THE ASSESSEE. IN RESPONSE, TH E ASSESSEE STATED IN ITS REPLY DATED 03.03.2014 THAT THE PARTY DID NOT ACCOUNT THE SALE MADE TO THE ASSESSEE AND THE ASSESSEE ALSO STATED THAT THE RECEIPTS OF 2,00,000/- ON 17.12.2005 AND 2,00,000/- ON 18.2.2006 HAVE BEEN WRONGLY ACCOUNTED IN THE NAME O F M/S. SRI VINAYAKA ISPAT UDYOG. THE COPY OF THE PARTIES LEDG ER AND THE RECONCILIATION STATEMENT WERE PRODUCED FOR REFERENC E. IT SEEMS ACCEPTABLE AS SEEN FROM THE STATEMENT OF ACCOUNTS F OR THE AY 2005-06 OF THE ASSESSEE AND THE PARTY. HENCE, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION MADE. - - ITA 1889/MDS/15 11 7.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THIS ADDITION WAS DELETED B Y THE LD.CIT(A) ON ACCOUNT OF WRONG ENTRY AND ALSO ON ACC OUNT OF CERTAIN ENTRY NOT RELATING TO THE ASSESSMENT YEAR U NDER CONSIDERATION. HEREIN ALSO, WE REMIT THIS ISSUE TO THE FILE OF LD.CIT(A) TO DECIDE AFRESH BY POINTING OUT THE YEAR TO WHICH THESE ENTRIES RELATE AND ITS IMPACT ON ASSESSEE. 8. THE NEXT ISSUE IS WITH REGARD TO DELETION OF A SUM OF 89,02,078/- STANDING IN THE NAME OF M/S. QUALITY STEELS WAS ADDED AS UNEXPLAINED CREDIT BECAUSE THE LETTER SENT TO THAT PARTY RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH THE REMARK NO SUCH ADDRESSEE. D URING THE REMAND PROCEEDINGS, THE ASSESSEE STATED THAT THE CR EDITOR WOUND UP THE BUSINESS BECAUSE OF LOSS AND SHIFTED T O HYDERABAD. IT WAS FURTHER STATED THAT THERE ARE ON LY PURCHASES MADE FROM THAT PARTY. IT WAS FURTHER STATED THAT T HERE ARE ONLY PURCHASES MADE FROM THAT PARTY AND NO PAYMENTS WERE MADE TO M/S. QUALITY STEELS AND THE AMOUNTS ARE OUTSTANDING EVEN AS ON 31.3.2009. BUT THE AO HELD THAT THE CREDIT IS NOT PROVED AS A - - ITA 1889/MDS/15 12 GENUINE ONE AND ADDED THE SUM TO THE RETURNED INCOM E. THE ASSESSEE IN RESPONSE STATED THAT THE ASSESSEE IS AL SO INCURRING LOSSES AND BUSINESS WAS CLOSED AS FACTORY, LAND AND BUILDING WERE TAKEN BY THE BANK UNDER SARFAESI ACT. HENCE , HE COULD NOT REPAY THE CREDITORS. PERUSAL OF ACCOUNT COPY O F M/S. QUALITY STEELS IN THE BOOKS OF THE ASSESSEE DURING THE PERI OD 01.07.2005 TO 30.3.2006 REVEALS THAT ONLY PURCHASES WERE MADE THROUGHOUT THE YEAR AND THE BALANCE OUTSTANDING WAS 90,57,236/- AS ON 31.3.2006. 2,50,000/- PAID ON 2.9.2006 AND 2,50,000/- ON 7.9.2006 WERE THE ONLY PAYMENTS MADE BY THE ASSESSE E TO M/S. QUALITY STEELS. THE RETURN OF LETTER SENT TO THE C REDITOR CANNOT BE CONCLUSIVE PROOF FOR TREATING IT AS BOGUS CREDITOR, IT WAS CONTENDED. THE ASSESSEE ALSO PRODUCED SALES-TAX OR DER TO PROVE THAT THE ASSESSEE MADE A TURNOVER TO SUCH AN EXTENT TO COVER THE PURCHASE FROM QUALITY STEELS. THE ASSESS EE HAS TO PAY A HUGE SUM TO M/S. QUALITY STEELS AND THE AMOUN TS ARE STILL OUTSTANDING. THE AO DID NOT PROVE THAT THE PURCHAS E WAS BOGUS. THE SALE BILLS ISSUED BY M/S. QUALITY STEEL S WERE - - ITA 1889/MDS/15 13 PRODUCED BEFORE THE CIT(A) AS WELL AS BEFORE THE AO . NO ATTEMPT WAS MADE BY THE AO TO PROVE THAT THE PARTY IS FICTITIOUS CONCERN. THE AO DID NOT MAKE ANY CALCULATION TO DI SPROVE THAT THE QUANTITY OF M.S. SCRAP PURCHASED DID NOT TALLY WITH THE SALES OF THE ASSESSEE. NON-PAYMENT ALONE CANNOT BE A SOL E CRITERION TO SAY THAT THE PURCHASE IS BOGUS. THE ASSESSEE AL SO ADMITTED THAT IT IS IN A FINANCIAL DIFFICULTY. IN VIEW OF T HE ABOVE DISCUSSION THE CIT(APPEALS) OBSERVE D THAT THE PURCHASE CANNOT BE TREATED AS BOGUS. HE DIRECTED THE AO TO DELETE THE ADDITIO N MADE. . AGAINST THE ORDER OF LD.CIT(A), NOW THE REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LD.A.R RELIED ON THE JUDGEMENT OF KA RNATAKA HIGH COURT IN THE CASE OF CIT VS.ALVARES & THOMAS REPORT ED IN (2016) 95 CCH 0213(KAR.HC) FOR THE PROPOSITION THAT MEREL Y BECAUSE CREDITOR CANNOT BE TRACED ON DATE WHEN VERIFICATION IS MADE, SAME IS NOT GROUND TO CONCLUDE THAT THERE IS CESSAT ION OF LIABILITY. IN OUR OPINION, THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT CANNOT BE APPLIED TO THE FACTS OF THE PRESENT CASE. WHENEVER THE ASSESSEE HAD SHOWN ANY CREDITORS IN IT S BOOKS OF - - ITA 1889/MDS/15 14 ACCOUNTS, IT SHOULD BE EXPLAINED TO THE SATISFACTIO N OF THE AO U/S.68 OF THE ACT. IN THE PRESENT CASE, THE ASSESS EE HAS FAILED TO SATISFY THE AO REGARDING THE GENUINENESS OF THE TRA NSACTIONS AND CREDIT WORTHINESS OF THE PARTIES, WHO WERE NOT TRAC EABLE. THE LD.CIT(A) DELETED THE ADDITION ON THE REASON THAT T HE AO HAS NOT PROVED THE PURCHASE WAS BOGUS. IN OUR OPINION, LD. CIT(A) DECIDED THE ISSUE WITHOUT MAKING NECESSARY INQUIRY WITH THE PARTIES. THE AOS CONCLUSION IS BASED ON ENQUIRY M ADE BY HIM DURING ASSESSMENT STAGES AND THE LD.CIT(A) WITHOUT BRINGING ANY MATERIAL ON RECORD TO CONTRARY TO THE FINDINGS OF AO IN DELETING IS NOT PROPER. ACCORDINGLY, WE REVERSE TH E ORDER OF LD.CIT(A) AND RESTORE THE ORDER OF LD. ASSESSING OF FICER. THIS GROUND OF APPEAL BY THE REVENUE IS ALLOWED. 10. THE LAST GROUND OF APPEAL IS WITH REGARD TO UNE XPLAINED EXPENDITURE OF 5,79,365/- IS CONCERNED, THE FACTS ARE THAT THE ASSESSEE CLAIMED PURCHASE OF TIMBER FOR 5,79,365/- FROM M/S. S.S.TIMBER TRADERS, CHENNAI, WHO STATED THAT THERE WAS NO TRANSACTION WITH THE ASSESSEE DURING THE AY 2009-10 . WHEN QUESTIONED ABOUT IT, THE ASSESSEE PRODUCED ONLY QUOTATION/ESTIMATE. NO BILLS/INVOICES WERE PRODUCE D BEFORE THE - - ITA 1889/MDS/15 15 AO FOR VERIFICATION. IN THE ABSENCE OF PROOF, THE SUM WAS ADDED AS UNEXPLAINED EXPENDITURE. THE ASSESSEE, IN HIS R EPLY DATED 3.3.2014 STATED THAT THE TIMBER WAS PURCHASED FROM M/S. S.S.TIMBER TRADERS AND THE WORK WAS ENTRUSTED TO A CARPENTER WHO DOES THE PURCHASE OF TIMBER AND WOOD FOR THE DO ORS AND WINDOWS OF THE HOUSE. THE ASSESSEE ALSO STATED THA T IT WAS MENTIONED AS ESTIMATE / MEMO IN THE ALLEGED BILLS PRODUCED BY THE ASSESSEE. THE ASSESSEE ALSO CLAIMED THAT IT IS USUAL PRACTICE THAT MOST OF THE HARDWARE AND TIMBERS SHOP S GIVE ONLY MEMO BILLS INSTEAD OF PROPER BILLS. THE CIT(APPEALS ) OBSERVED THAT THERE WAS NO DENIAL BY THE AO THAT THE HOUSE W AS NOT CONSTRUCTED AND THERE WILL BE DEFINITELY PURCHASE O F WOOD AND CARPENTER CHARGES ETC. ACCORDING TO THE CIT(APPEAL S), IT IS ALSO USUAL PRACTICE FOR THE TIMBER TRADERS TO ISSUE ESTI MATES IN THE PLACE OF BILLS. THEREFORE, THE CIT(APPEALS) OBSERV ED THAT 50% OF DISALLOWANCE WILL MEET THE ENDS OF JUSTICE. ACCORD INGLY, THE CIT(APPEALS) CONFIRMED THE ADDITION OF 2,89,683/- AND DELETED BALANCE ADDITION OF 2,86,682/-. AGAINST THE ORDER OF LD.CIT(A), NOW THE REVENUE/ASSESSEE IS IN APPEAL BEFORE US. - - ITA 1889/MDS/15 16 10.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. ADMITTEDLY, THESE PAYMENTS ARE NOT SUPPO RTED BY THE PROPER VOUCHER AND ACCORDINGLY, WHENEVER THE ASSESS EE CLAIMED ANY EXPENDITURE, IT HAS TO BE PROVED THAT IT WAS WH OLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. IN THE PRESENT CASE THERE IS NO IOTA OF THE EVIDENC ES REGARDING THE EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINES S. HENCE, DISALLOWANCE IS WARRANTED AND CANNOT BE ADHOC DISAL LOWANCE OF 50% OF EXPENDITURE INCURRED. ACCORDINGLY, WE REVERS E THE ORDER OF LD.CIT(A) AND RESTORE THE ORDER OF LD. ASSESSING OFFICER. THIS GROUND OF APPEAL BY THE REVENUE IS ALLOWED. 11. IN THE RESULT, THE APPEAL OF REVENUE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 24 TH AUGUST, 2017 AT CHENNAI. SD/- SD/- ( $ % . & '( ) ( ) * + , ) DUVVURU RL REDDY - ./012304556037- 8 9: /JUDICIAL MEMBER ! 9:;<<5=1>01>?@AB@3 )8 /CHENNAI, C9 /DATED, THE 24 TH AUGUST, 2017. K S SUNDARAM - - ITA 1889/MDS/15 17 9D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H- /CIT(A) 4. H /CIT 5. FIJ K /DR 6. J(L /GF.