The ITO, Ward-2(3), Bhavnagar V. Shri Dharmesh Ghanshayambhai Joshi, Bhavnagar

ITA 1928/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9353 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-12-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 31-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGADISH
• Keywords: Gross profit estimation; Income from undisclosed sources; Principle of natural justice; Source of fund; Third party statement
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NOS.1928 & 1968AHD/2012 (ASSESSMENT YEAR:2008-09) INCOME-TAX OFFICER, WARD-2(3), BHAVNAGAR APPELLANT VS. DHARMESH GHANSHYAMBHAI JOSHI PROP. OF M/S. SHIVANGI IMPEX, VADVA, VADVA PANVADI ROAD, BHAVNAGAR RESPO NDENT / CROSS APPELLANT PAN: AENPJ3441H /BY REVENUE : SHRI JAGADISH, CIT. D.R. /BY ASSESSEE : SHRI TUSHAR P. HEMANI /DATE OF HEARING : 06.12.2016 /DATE OF PRONOUNCEMENT : 20.01.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THE REVENUE AND ASSESSEE HAVE FILED THE INSTANT CRO SS APPEALS FOR ASSESSMENT YEAR 2008-09 AGAINST THE CIT(A)-XX, AHME DABADS ORDER DATED 06.06.2012 IN CASE NO. CIT(A)/XX/479/10-11 IN PROCE EDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE A CT. 2. WE COME TO RIVAL PLEADINGS FIRST. THE REVENUE R AISES TWO SUBSTANTIVE GROUNDS IN ITS APPEAL ITA NO.1928/AHD/2012. FORMER ONE CHALLENGES ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 2 - CIT(A)S LOWER APPELLATE ORDER REVERSING ASSESSING OFFICERS ACTION IN ASSESSMENT ORDER DATED 31.12.2010 MAKING ADDITIONS OF RS.7,11,38,628/- ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS, RS.74,88,3 82/- PERTAINING TO UNEXPLAINED ADVANCES FROM CUSTOMERS AND RS.50,59,88 8/- RELATING TO UNEXPLAINED UNSECURED LOANS; RESPECTIVELY. ITS LAT TER SUBSTANTIVE GROUND ASSAILS CORRECTNESS OF THE LOWER APPELLATE ORDER AL LEGING THE SAME TO HAVE ESTIMATED TOO LOW GROSS PROFITS @0.94% ON ALLEGED U NACCOUNTED SALES TO M/S. AVDHESH TRADING COMPANY AND MAA AMBA ENTERPRISES. 3. THE ASSESSEES CROSS APPEAL ITA NO.1968/AHD/2012 RAISES THREE SUBSTANTIVE ISSUES. ITS FIRST THREE SUBSTANTIVE GR OUNDS SEEK TO DELETE GROSS PROFITS ESTIMATION IN CASE OF THE ABOVE TWO ENTITIE S @0.94% TO THE EXTENT OF NET PROFITS OF 0.74%. IT THEN CHALLENGES BOTH THE LOWER AUTHORITIES ACTION; MORE PARTICULARLY THAT OF THE CIT(A) UPHOLDING ADDI TION OF RS.10,12,000/- OUT OF RS.60,71,888/- UNDER THE HEAD OF UNEXPLAINED UNS ECURED LOANS THEREBY DELETING THE REMAINING ADDITION SUM OF RS.50,59,888 /- PLEADED IN REVENUES APPEAL. THE ASSESSEES THIRD SUBSTANTIVE GROUND TH EN PLEADS THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE ERRED IN ADDING INTEREST PAYABLE OF RS.6,47,594/- TO M/S. ALANG MARINE MAKING IT A C ASE OF DOUBLE ADDITION SINCE THE SAID AMOUNT ALREADY STOOD ADDED IN A FIGU RE OF RS.49,64,888/- BY THE ASSESSING OFFICER. BOTH THE LEARNED REPRESENTATIVES AGREE AT THE OUTSE T THAT REVENUES AS WELL AS ASSESSEES PLEADINGS ARE INTER-CONNECTED. WE THUS PROCEED TO TAKE UP THESE APPEALS TOGETHER FOR DISPOSAL. 4. WE NOW ADVERT TO REVENUES FIRST SUBSTANTIVE GRO UND SEEKING TO REVIVE UNEXPLAINED SUNDRY CREDITORS ADDITION OF RS.7,11,38 ,628/-. THIS CASE FILE REVEALS THAT THE ACTUAL AMOUNT INVOLVED UNDER THIS HEAD IS THAT OF RS.6,12,30,589/- AS PER ASSESSMENT ORDER DATED 31.1 2.2010. THERE ARE TOTAL ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 3 - SEVEN PARTIES IN THE INSTANT ISSUE. FIRST ONE IN M /S. AVDHESH TRADING COMPANY INVOLVING AN AMOUNT OF RS.1,00,10,000/- ALO NG WITH ACCOUNT BALANCE OF RS.8,50,000/-. IT FILED REPLY AND CONFIR MATION SUPPORTING ASSESSEES BOOKS OF ACCOUNT. THE ASSESSING OFFICER ADDED THE SUM TOTAL OF THE ABOVE TWO FIGURES COMING TO RS.1,08,60,000/- SI NCE THE SAME WERE NOT REFLECTED IN ASSESSEES BOOKS. M/S. DEEPAK TRADING CO. HAPPENS TO BE THE SECOND P ARTY QUA AN AMOUNT OF RS.14,45,387/-. THE ASSESSING OFFICER AD DED THIS FIGURE FOR ASSESSEES FAILURE IN GETTING ITS REPLY TO SECTION 133(6) NOTICE REMAINING UNSERVED. THIRD ENTITY RELEVANT TO THE INSTANT ISS UE IS M/S. KETA TRADING CO. QUA A SUM OF RS.1,33,83,346/-. THE ASSESSING OFFIC ER ADDED THE SAME FOR WANT OF ITS REPLY DESPITE SERVICE OF NOTICE AS WELL AS IN VIEW OF THE FACT THAT ITS VAT TIN STOOD CANCELLED. HE OBSERVED THAT THE SAID ENTITY WAS A BILLING ENTRY PROVIDER WITHOUT INVOLVING GENUINE TRANSACTIO NS. SIMILAR ARE THE FACTS REGARDING NEXT FOUR ENTITIES M/S. MAA AMBA ENTERPRI SES (RS.1,83,618/-), MARUTI TRADERS (RS.2,25,26,901/-) AND M/S. PARESH T RADING CO. (RS.2,23,50,077/-); RESPECTIVELY. THEY ALSO DID NO T FILE REPLY TO SECTION 133(6) NOTICES. LAST ENTITY IS M/S. RAMESH MULJI B HANUSHALI (RS.5,07,935/-). ITS VAT REGISTRATION HAD BEEN CANCELLED. IT FURTHE R DID NOT SUBMIT REPLY TO SECTION 133(6) NOTICES. THE ASSESSING OFFICER THUS MADE THE IMPUGNED UNEXPLAINED SUNDRY CREDITORS ADDITIONS OF RS.6,12, 380/-. 5. WE COME TO THE LOWER APPELLATE PROCEEDINGS NOW. THE ASSESSEE FILED ADDITIONAL SUBMISSIONS / EVIDENCE. THE CIT(A) CALL ED FOR REMAND REPORT. THE ASSESSING OFFICER FILED THE SAME INTER ALIA CON TENDING THEREIN THAT HE HAD AFFORDED THREE FRESH OPPORTUNITIES. THE ASSESSEE D ID NOT PRODUCE THE ABOVE SEVEN CREDITOR PARTIES MAKING HIM TO CONFIRM THE IM PUGNED ADDITION. THE ASSESSEE FILED REJOINDER THERETO PLEADINGS TO HAVE FILED LEDGER ACCOUNT OF ALL PARTIES IN ITS BOOKS, CONTRA CONFIRMATION ACCOUNTS, PAN DETAILS, INCOME TAX ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 4 - RETURNS, BANK STATEMENTS, SALE-PURCHASE INVOICES TO PROVE GENUINENESS / CREDITWORTHINESS OF ITS EXPLANATION. THE CIT(A) TH EREAFTER DELETES THE IMPUGNED ADDITION EXCEPT TO THE EXTENT OF APPLYING GROSS PROFIT RATE @ 0.94% IN CASE OF M/S. AVDHESH TRADING AND MAA AMBA ENTERP RISES HAVING RESPECTIVE AMOUNTS OF RS.1,08,60,000/- AND RS.1,83, 618/-; COMING TO RS. 97,097/- AND RS.4,864/-; RESPECTIVELY. WE DEEM IT APPROPRIATE THE LOWER APPELLATE FINDINGS UNDER CHALLENGE READING AS FOLLO WS: 3.3. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A. R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER. IN THE A SSESSMENT ORDER, THE AO OBSERVED THAT THE APPELLANT WAS A TRADER OF FERROUS & NON-FE RROUS AND MACHINERY PARTS ETC; IN RESPECT OF SUNDRY CREDITORS IN SPITE OF SEVERAL OPPORTUNITIES GIVEN, THERE WAS NO RESPONSE; IN RESPONSE TO LETTERS U/S.133(6) ISSUED TO 7 SUNDRY CREDITORS, IN RESPECT OF 5 PARTIES NO REPLY WAS RECEIVED AND THEREFORE TH E OUTSTANDING BALANCES WERE BEING ADDED; IN RESPECT OF TWO OTHER PARTIES IN VIE W OF THE DISCREPANCY BETWEEN APPELLANT'S BOOKS AND THE LETTERS RECEIVED IN RESPO NSE TO 133(6) NOTICES, ADDITION WAS BEING MADE. ACCORDINGLY, HE ADDED SUMS OF RS.1, 00,10,000/-, RS.8.5 LACS AND RS.6,12,30,589/-. AT THE LAST PAGE OF THE ASSESSMEN T, A.O. MADE A PASSING REMARK THAT THE APPELLANT AND HIS CUSTOMERS ARE INVOLVED I N BILLING SYSTEM. 3.4. IN THE FIRST WRITTEN SUBMISSION FILED BY THE A PPELLANT, IT WAS CONTENDED THAT ALL THE INFORMATION AND DETAILS CALLED FOR WERE FUR NISHED DURING THE ASSESSMENT PROCEEDING AND THE AO IGNORED OR OVERLOOKED THE DET AILS FURNISHED. AS SEEN FROM THE REMAND REPORT, AO DID NOT CONTROVERT THIS CONTE NTION. THUS THE ABOVE ADDITIONS WERE MADE PRIMARILY ON ACCOUNT OF NON-RESPONSE TO N OTICES U/S. 133(6) OR DISCREPANCY BETWEEN THE BOOKS OF THE APPELLANT AND BOOKS OF THE CREDITORS. IN THIS BACKGROUND THE ADDITIONS MADE PARTY-WISE ARE ADJUDI CATED AS FOLLOWS:- (1) AVDESH TRADING CO. RS.1,00,10,000/- + RS. 8,50,000/- AO STATED IN A CRYPTIC MANNER THAT AS SEEN FROM THE REPLY RECEIVED FROM THE PARTY SALES OF RS.1,00,10,000/- WERE MADE BY THE AP PELLANT TO THE SAID PARTY. SINCE THE SALES WAS NOT REFLECTED IN APPELLANT'S BOOKS TH E SAID SUM WAS BEING ADDED. FURTHER HE ADDED THE SUM OF RS.8.5 LACS BEING CREDI T BALANCE SHOWN IN THE APPELLANT'S BOOKS IN THE NAME OF THE SAID PARTY. TH E CONTENTIONS OF THE LD.AR. ARE THAT THE ENTIRE AMOUNT OF SALES CANNOT BE ADDED AND ONLY NET PROFIT OF 0.74% MAY BE ASSESSED TO TAX. AS REGARDS, THE SUM OF RS.8.5 L ACS IT IS CONTENDED THAT THIS IS THE AMOUNT RECEIVABLE AGAINST THE UNACCOUNTED SALES MAD E TO THE PARTY AND THEREFORE NO SEPARATE ADDITION IS REQUIRED TO BE MADE. AS REG ARDS THE UNACCOUNTED SALES MADE TO THE PARTY, I AM OF THE VIEW THAT IT IS REAS ONABLE TO ASSESS THE GROSS PROFIT ON THE SALES. APPELLANT ADMITTED GROSS PROFIT @0.94 %. THUS THE INCOME ASSESSABLE ON THE UNACCOUNTED SALES WOULD WORK OUT TO RS.97,09 7/-. AS REGARDS THE AMOUNT OF RS.8.5 LACS THE APPELLANT'S CONTENTION THAT THE SAI D CREDIT BALANCE IS ATTRIBUTABLE TO THE UNACCOUNTED SALES STANDS TO REASON. HENCE NO SE PARATE DISALLOWANCE OF THIS ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 5 - AMOUNT NEEDS TO BE MADE. IN THIS CONNECTION, IT IS TO BE NOTED THAT IN THE REMAND REPORT THE ONLY CONTENTION OF THE AO IS THAT SINCE THE PARTIES WERE NOT PRODUCED THE ADDITIONS MAY BE UPHELD. IN THE ABSENCE OF AO ISSUI NG SUMMONS TO THE PARTIES TO ENFORCE THEIR ATTENDANCE, APPELLANT'S INABILITY TO PRODUCE PARTIES BEFORE THE AO CANNOT LEAD TO ANY ADVERSE INFERENCE THAT TOO KEEPI NG IN VIEW THE FACT THAT ALL THE CREDITORS ARE TRADE CREDITORS. ACCORDINGLY ADDITION OF THIS SUM OF RS.97,097/- IS UPHELD. BALANCE ADDITION IS NOT SUSTAINABLE. (2) DEEPAK TRADING CO. RS.14,45,387/- IN THE ASSESSMENT ORDER, AO OBSERVED THAT SINCE NO REPLY WAS RECEIVED IN RESPONSE TO LETTER U/S.133(6) THE AMOUNT OUTSTANDIN G IN THE NAME OF THE PARTY WAS BEING ADDED. THE CONTENTIONS OF THE LD.A.R. ARE THA T DURING THE COURSE OF ASSESSMENT PROCEEDINGS CONTRA CONFIRMATION FROM THE PARTY, RETURN OF INCOME FILED BY THE PARTY, COPY OF BANK STATEMENT OF THE PARTY W ERE FURNISHED; THE SAID AMOUNT REPRESENTED ADVANCE RECEIVED AGAINST WHICH SALES WE RE MADE IN THE SUCCEEDING YEAR AND NON-RESPONSE TO NOTICE U/S.133(6) CANNOT B E THE BASIS FOR MAKING THE ADDITION. KEEPING IN VIEW THE FACT THAT ALL THE NEC ESSARY DETAILS IN SUPPORT OF THE ADVANCE RECEIVED FROM THE PARTY AND THE SALES MADE TO THE PARTY WERE FURNISHED AND NO ATTEMPT WAS MADE BY THE AO TO ENFORCE THE AT TENDANCE OF THE PARTY, I AM INCLINED TO ACCEPT THE CONTENTIONS OF THE LD.A.R. D URING THE COURSE OF REMAND PROCEEDINGS, THE AR OF THE PARTY APPEARED BEFORE TH E AO AND FURNISHED RELEVANT DETAILS APPEARING IN THE BOOKS OF ACCOUNTS OF THE P ARTY. AO DID NOT MAKE ANY ADVERSE COMMENTS IN THE REMAND REPORT SPECIFICALLY. THEREFORE ADDITION OF THE IMPUGNED AMOUNT IS NOT SUSTAINABLE. (3) KETA TRADING CO. RS.1,33,83,346/- IN THE ASSESSMENT ORDER, AO OBSERVED THAT THE PARTY DID NOT RESPOND THE NOTICE U/S. 133(6); THE TIN NUMBER OF THE PARTY WAS CANCELLED BY THE VAT DEPARTMENT; THEREFORE THE TRANSACTIONS WERE NOT GEN UINE AND ACCORDINGLY THE OUTSTANDING AMOUNT OF RS.1,33,83,346/- WAS BEING AD DED. THE CONTENTIONS OF THE ID.A.R. ARE THAT DURING THE YEAR UNDER CONSIDERATI ON PURCHASES OF RS.1,36,73,528/- WERE MADE FROM THE PARTY, PAYMENT OF RS.2,90,182/- WAS MADE TO THE PARTY LEAVING CLOSING BALANCE OF RS.1,33,83,34 6/-; BANK STATEMENT SHOWING PAYMENTS TO THE PARTY, ENTIRE SET OF PURCHASE INVOI CES AND CONTRA ACCOUNT WERE FURNISHED DURING THE ASSESSMENT PROCEEDINGS; TIN NU MBER WAS CANCELLED W.E.F. 01.07.2008 MEANING THEREBY THAT FOR THE YEAR UNDER CONSIDERATION IT HAD NO EFFECT; THE ENTIRE AMOUNT OUTSTANDING WAS ACTUALLY PAID IN THE SUCCEEDING YEAR AS MAY BE SEEN FROM THE LEDGER ACCOUNT AND COPY OF BANK STATE MENT AND THEREFORE NO ADDITION WAS WARRANTED. I HAVE CONSIDERED THE FACTS OF THE M ATTER. I AM INCLINED TO ACCEPT THE CONTENTIONS OF THE A.R. THE ONLY GROUND ON WHIC H THE ADDITION WAS MADE WAS THAT NO REPLY WAS RECEIVED IN RESPONSE TO NOTICE U/ S. 133(6). SINCE A.O. DID NOT ISSUE SUMMONS TO ENFORCE THE ATTENDANCE OF THE PART Y, NO ADVERSE INFERENCE CAN BE DRAWN ONLY ON THE BASIS OF APPELLANT'S INABILITY TO PRODUCE THE PARTY BEFORE THE A.O. IMPUGNED ADDITION IS NOT SUSTAINABLE. (4) MA AMBA ENTERPRISE RS. 1,83,618/- ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 6 - IN THE ASSESSMENT ORDER, AO OBSERVED THAT IN RESPON SE TO NOTICE U/S. 133(6), REPLY WAS RECEIVED FROM THE PARTY; THERE WAS A DIFF ERENCE OF RS.1,83,618/- AND THEREFORE THE SAID SUM WAS BEING ADDED. THE CONTENT IONS OF THE ID.A.R. ARE THAT THE DIFFERENCE WAS ATTRIBUTABLE TO THE ACCOUNTANT NOT A CCOUNTING FOR ONE SALE INVOICE AMOUNTING TO RS.5,17,504/- IN THE APPELLANT'S BOOKS OF ACCOUNTS AND AT BEST THE GROSS PROFIT ON THE SAID SALES OMITTED TO BE ACCOUN TED FOR MAY BE ESTIMATED. I HAVE CONSIDERED THE FACTS OF THE MATTER. I CONSIDER IT R EASONABLE TO ESTIMATE THE GROSS PROFIT @0.94% ADMITTED BY THE APPELLANT ON THE UNAC COUNTED SALES OF RS.5,17,504/-, WHICH WORKS OUT TO RS.4,864/-. ADDIT ION TO THAT EXTENT IS UPHELD. BALANCE ADDITION IS NOT SUSTAINABLE. (5) MARUTI TRADERS RS.2,25,26,901/- IN THE ASSESSMENT ORDER, THE AO OBSERVED THAT IN RE SPONSE TO THE NOTICE U/S.133(6), NO REPLY WAS RECEIVED; IT CAME TO HIS N OTICE THAT THE TIN NUMBER OF THE PARTY WAS CANCELLED BY THE VAT DEPARTMENT; THIS PAR TY WAS ONLY A BILLING PARTY AND THE TRANSACTIONS WERE NOT GENUINE AND THEREFORE THE OUTSTANDING AMOUNT IN RESPECT OF THIS PARTY WAS BEING ADDED. THE CONTENTI ONS OF THE ID.A.R. ARE THAT THE CORRECT NAME OF THE PARTY IS MARUTI TRADING CO.; DU RING THE YEAR, THE APPELLANT MADE TOTAL PURCHASES OF RS .4,43,41,665/-, MADE PAYMENT OF RS.2,18,14,764/- LEAVING THE CLOSING BALANCE AT RS.2,25,26,901/-; DU RING THE ASSESSMENT PROCEEDINGS, THE LEDGER ACCOUNT FOR THE YEAR UNDER CONSIDERATION AND FOR THE SUCCEEDING YEAR, BANK STATEMENT FOR BOTH THE YEARS AND INVOICES WERE FURNISHED TO THE AO; NOT RECEIVING REPLY TO NOTICE U/S. 133(6) C ANNOT BE THE BASIS FOR MAKING THE ADDITION; CANCELLATION OF TIN OF THE PARTY AT A LAT ER DATE BY THE VAT DEPARTMENT DOES NOT MAKE THE TRANSACTIONS NON-GENUINE; IN THE SUCCEEDING YEAR THE ENTIRE OUTSTANDING AMOUNT WAS PAID TO THE PARTY AS MAY BE SEEN FROM THE LEDGER ACCOUNT AND BANK STATEMENT FURNISHED DURING THE ASSESSMENT PROCEEDINGS. I HAVE CONSIDERED THE FACTS ON THE MATTER. I AM INCLINED T O ACCEPT THE CONTENTIONS OF THE ID.A.R. NEITHER IN THE ASSESSMENT ORDER NOR IN THE REMAND REPORT AO COULD POINT OUT ANY DEFECTS/CONTRADICTIONS IN THE EVIDENCES FUR NISHED BY THE APPELLANT IN SUPPORT OF THE PURCHASES MADE FROM THE PARTY. THERE FORE, ADDITION MADE IS NOT SUSTAINABLE. (6) PARESH TRADING CO. RS.2,23,50,077/- LN THE ASSESSMENT ORDER, THE AO OBSERVED THAT IN RE SPONSE TO THE NOTICE U/S.133(6), NO REPLY WAS RECEIVED; IT CAME TO HIS N OTICE THAT THE TIN NUMBER OF THE PARTY WAS CANCELLED BY THE VAT DEPARTMENT W.E.F. 1. 7.2008; THIS PARTY WAS ONLY A BILLING PARTY AND THE TRANSACTIONS WERE NOT GENUINE AND THEREFORE THE OUTSTANDING AMOUNT IN RESPECT OF THIS PARTY WAS BEING ADDED. TH E CONTENTIONS OF THE ID.A.R. ARE THAT DURING THE YEAR, THE APPELLANT MADE TOTAL PURC HASES OF RS.6,80,15,509/-, MADE PAYMENT OF RS.4,56,65,432/-LEAVING THE CLOSING BALA NCE AT RS.2,23,50,077/-; DURING THE ASSESSMENT PROCEEDINGS, THE LEDGER ACCOU NT FOR THE YEAR UNDER CONSIDERATION AND FOR THE SUCCEEDING YEAR, BANK STA TEMENT FOR BOTH THE YEARS AND INVOICES WERE FURNISHED TO THE AO; NOT RECEIVING RE PLY TO NOTICE U/S.133(6) CANNOT BE THE BASIS FOR MAKING THE ADDITION; CANCELLATION OF TIN OF THE PARTY AT A LATER DATE BY THE VAT DEPARTMENT DOES NOT MAKE THE TRANSA CTIONS NON-GENUINE; IN THE SUCCEEDING YEAR THE ENTIRE OUTSTANDING AMOUNT WAS P AID TO THE PARTY AS MAY BE SEEN FROM THE LEDGER ACCOUNT AND BANK STATEMENT FUR NISHED DURING THE ASSESSMENT ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 7 - PROCEEDINGS. I HAVE CONSIDERED THE FACTS ON THE MAT TER. I AM INCLINED TO ACCEPT THE CONTENTIONS OF THE ID.A.R. NEITHER IN THE ASSESSMEN T ORDER NOR IN THE REMAND REPORT AO COULD POINT OUT ANY DEFECTS/CONTRADICTIONS IN TH E EVIDENCES FURNISHED BY THE APPELLANT IN SUPPORT OF THE PURCHASES MADE FROM THE PARTY. THEREFORE, ADDITION MADE IS NOT SUSTAINABLE. (7) RAMESH MULJI BHANUSHALI RS.5,07,935/- IN THE ASSESSMENT ORDER, AO OBSERVED THAT IN RESPON SE TO THE NOTICE U/S. 133(6), NO REPLY WAS RECEIVED AND THEREFORE THE OUT STANDING AMOUNT WAS BEING ADDED. THE CONTENTIONS OF THE ID.A.R. ARE THAT DURI NG THE YEAR UNDER CONSIDERATION THERE WAS NO TRANSACTION WITH THE PARTY; CLOSING BA LANCE WAS THE SAME AS OPENING BALANCE OF THE YEAR AND THEREFORE NO ADDITION WA S WARRANTED. I AM INCLINED TO ACCEPT THE CONTENTIONS OF THE ID.A.R. DURING THE C OURSE OF REMAND PROCEEDINGS, THE A.R. OF THE PARTY APPEARED BEFORE THE AO AND FU RNISHED RELEVANT DETAILS APPEARING IN THE BOOKS OF ACCOUNT OF THE PARTY. AO DID NOT MAKE ANY ADVERSE COMMENTS IN THE REMAND REPORT SPECIFICALLY. THEREFO RE, ADDITION MADE IS NOT SUSTAINABLE. 3.5. IN THIS CONNECTION, IT IS ALSO SEEN THAT IN TH E IMMEDIATELY PRECEDING ASSESSMENT YEAR 2007-08, ADDITION OF SUNDRY CREDITO RS OUTSTANDING WAS MADE. MY PREDECESSOR VIDE HIS ORDER DT.25.11.2010 DELETED TH E ADDITION BY OBSERVING AS UNDER:- '4.2(1) A REMAND REPORT WAS CALLED FOR FROM THE AO VIDE THIS OFFICE LETTER DATED: 13-5-2010 AND THE AO HAS SUBMITTED HIS REPOR T VIDE HIS LETTER DATED 16-7-2010. IT IS SEEN THAT AS FAR AS THE ADDITION ON ACCOUNT OF UNDISCLOSED SOURCES OF INCOME TOTALING TO RS. 1,81,81,579/- IS CONCERNED, THE AO HAS ONLY REITERATED THE FACT THAT THESE AMOUNTS -WERE C REDITED TO THE BOOKS OF THE APPELLANT HENCE THE SAME SHOULD BE ADDED UNDER SECTION 68 OF THE IT ACT. HE HAS NOT MADE ANY ATTEMPT TO VERIFY THE G ENUINENESS OF THE CREDITORS. 4.2(11) IT IS SEEN THAT THE DEBIT BALANCE OF RS.1,8 1,81,579/-ARISES OUT OF ACCOUNTS OF TWO PARTIES SUHANI ENTERPRISE AND RAJ E NTERPRISE AMOUNTING TO RS.80,30,555/- AND RS.1,01,51,024/-RESPECTIVELY. CONFIRMATIONS FROM BOTH THESE PARTIES HAVE BEEN FILED. IT IS SEEN THAT THE AO DID NOT EXAMINE THE CREDITWO RTHINESS OF BOTH THESE PARTIES. BOTH THE ABOVE PERSONS HAVE S TATED THAT THE AMOUNTS DUE FROM THE APPELLANT IS ON ACCOUNT OF SALES EFFEC TED BY THEM WITH THE APPELLANT. IN VIEW OF THE ABOVE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.1,81,81,579/- IN RESPECT OF ABOVE PARTIES. ADDI TION MADE BY THE AO HENCE DELETED. 3.6 IN VIEW OF THE ABOVE DISCUSSION, ADDITION TO TH E EXTENT OF RS.1,01,961/- IS UPHELD AND THE BALANCE ADDITION IS DELETED. THESE GROUNDS OF APPEAL ARE PARTLY ALLOWED. ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 8 - 6. WE HAVE HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STANDS. LEARNED REPRESENTATIVES THEREAFTER VEHEMENTLY ARGUE D ABOUT CORRECTNESS OF GP ESTIMATION @0.94%. THE REVENUE SEEKS TO ENHANCE THE SAME WHEREAS ASSESSEES CASE IN ITS FIRST THREE SUBSTANTIVE GROU ND IS THAT ONLY THE PROFIT ELEMENT IN THE NATURE OF NET PROFITS IS TO BE ADDED INSTEAD OF GROSS PROFITS AS PER HONBLE JURISDICTIONAL HIGH COURT DECISION IN C IT VS. PRESIDENT INDUSTRIES 258 ITR 654. 7. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. IT HAS ALREADY COME ON RECORD THAT THE ASSESSEE HAS FILED A DETAILED COMPILATION OF PARTY-WISE PARTICULARS IN CASE OF ALL SEVEN CREDITO RS (SUPRA). WE PUT UP A SPECIFIC QUERY TO THE REVENUE TO REBUT CIT(A)S FIN DINGS EXTRACTED HEREINABOVE THAT THE ASSESSEE HAD FILED ALL RELEVAN T DETAILS OF THE ABOVE SEVEN CREDITORS RIGHT FROM SCRUTINY WHICH WERE NOT EVEN D EALT WITH EITHER IN ASSESSMENT ORDER OR IN ASSESSING OFFICERS REMAND R EPORT. THIS MADE THE CIT(A) TO OBSERVE THAT THE ASSESSEE HAS PLACED THE NECESSARY RELEVANT INFORMATION IN THE NATURE OF BOOKS OF ACCOUNT/CONTR A ACCOUNTS, CONFIRMATIONS, PARTY-WISE LEDGERS, BANK STATEMENTS, PAN DETAILS, R ETURNS OF ALL SEVEN CREDITOR ENTITIES NOT ATTRACTING ANY DOUBT AT A SLIGHTER PRE TEXT EVEN TO DOUBT GENUINENESS OF ITS CLAIM. IT IS THUS APPARENT THAT THE ASSESSING OFFICER HAD MERELY QUOTED FAILURE OF THE ABOVE ENTITIES IN REPL YING TO SECTION 133(6) NOTICES WITHOUT ADVERTING TO THE OTHER RELEVANT EVI DENCE ON RECORD. WE ACCORDINGLY FIND NO REASON TO INTERFERE WITH THE LO WER APPELLATE FINDINGS EXTRACTED IN PRECEDING PARAGRAPH DELETING THE IMPUG NED ADDITION OF UNEXPLAINED SUNDRY CREDITORS. 8. WE NOW PROCEED TO DEAL WITH THE CIT(A)S ACTION ESTIMATING GROSS PROFITS (SUPRA) @0.94%. HONBLE JURISDICTIONAL HIG H COURT ADMITTEDLY HOLDS IN PRESIDENT INDUSTRIES CASE (SUPRA) THAT ONLY THE PROFIT ELEMENT IS TO BE ADDED ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 9 - IN SUCH A CASE. IT IS VERY MUCH CLEAR THAT THE CIT (A) ADOPTED THE ABOVE GROSS PROFITS @0.94% WITHOUT EVEN TAKING COGNIZANCE OF TH E FACT THAT HE WAS DEALING IN UNACCOUNTED SALES NOWHERE FORMING PART O F ASSESSEES BOOKS. WE FURTHER FIND ASSESSEES ARGUMENTS ALSO SEEKING TO D ELETE THE ABOVE GP ESTIMATION FIGURE IN PRINCIPLE WHEREIN IT HAS ALREA DY BEEN FOUND TO HAVE ADJUDICATED UNACCOUNTED SALES. WE THUS GRANT ONLY PART RELIEF TO THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO GRANT IT A LUMP SUM DECREASE IN ABOVE PROFITS OF RS.10,000/- OUT OF THE ABOVE TWO SUMS OF RS.97,097/- & RS.4,864/- HEREINABOVE. THE REVENUES ARGUMENTS ARE REJECTED ON BOTH COUNTS ALONG WITH ITS CORRESPONDING SUBSTANTIVE GROUNDS WHEREAS ASSESSEES FIRST THREE GROUNDS ARE PARTLY ACCEPTED. 9. NEXT COMES REVENUES ARGUMENT SEEKING TO REVIVE UNEXPLAINED ADVANCE ADDITION OF RS.74,88,382/- PERTAINING TO FO R PARTIES NAMELY M/S. ACCOST IMPEX PVT LTD. (RS.10LACS), M/S. ARTI AGENCY (RS.10,282/-), M/S. URMI AGENCY (RS.56,22,519/-) AND M/S. VINOD TRADERS (RS.8,55,581/-); RESPECTIVELY. THE ASSESSING OFFICER MADE THE IMPUG NED ADDITION CITING THESE PARTIES NO RESPONSE/ABSENCE OF COGENT EVIDENCE TO SUPPORT ASSESSEES CLAIM. 10. IT IS EVIDENT TO US THAT THE CIT(A) SOUGHT FOR ASSESSING OFFICERS REMAND REPORT ALIKE THE FIRST ISSUE HEREIN AS WELL TO DELETE THE IMPUGNED ADDITION AS UNDER: 4.1. IN THIS REGARD, THE RELEVANT PARAS OF THE WRIT TEN SUBMISSIONS FILED BY THE A R. OF THE APPELLANT ARE REPRODUCED HEREUNDER :- 2.1 THE ID. AO HAS MADE ADDITION IN RESPECT OF FOLL OWING PARTIES : S.NO. PARTICULARS AMOUNT IN RS. 1. ACCOST IMPEX PVT. LTD. 10,00,000/- 2. ARTI AGENCY 10,282/- 3. URMI AGENCY 56,22,519/- 4. VINOD TRADERS 8,55,581/- TOTAL 74,88,382/- ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 10 - 2.2. ACCOST IMPEX PVT. LTD. - RS. 10,00,000/- LD. AO ISSUED NOTICE U/S 133(6) OF THE ACT, BUT IT WAS NOT REPLIED BY THE SAID PARTY. ACCORDINGLY, THE ID. AO WITHOUT ANY GIVING FURTHER OPPORTUNITY TO THE APPELLANT AND WITHOUT ANY COGENT REASON AND MERELY ON THE BASIS OF ASSUMPTION, SURMISES AND SUS PICIOUS MADE AN ADDITION OF RS.10,00,000/-. DURING THE COURSE OF REMAND PROCEEDINGS, THE ACCOUN TANT OF ACCOST IMPEX PVT. LTD. REPRESENTED HIMSELF BEFORE THE ID. AO AND FURNISHED PA NO., ROI, CONTRA-CONFIRMATION ACCOUNT AND BALANC E SHEET, WHEREIN CATEGORICALLY, ADVANCES OF RS.10,00,000/- M ADE TO THE APPELLANT HAS BEEN REFLECTED. PI. REFER PAGE NOS.19 8-204 OF P/B. FROM THE REMAND REPORT, IT CAN BE SEEN THAT THE ID. AO HAS NOT RAISED ANY OBJECTION OR HAS MADE ANY ADVERSE OBSERV ATION, WHICH ITSELF SUGGESTS THAT DOCUMENTS / EVIDENCES PLACED O N RECORD IN AS MUCH AS APPEARANCE OF ACCOUNTANT BEFORE THE ID. AO, HAS SATISFIED THE VERIFICATION OF THE ID. AO AND THEREFORE, ADDIT ION MADE BY THE ID. AO IS REQUIRED TO BE DELETED. 2.3. ARTI AGENCY - RS.10,282/- THE APPELLANT HAS PLACED CONFIRMATION-CONTRA ACCOUN T, PA NO. AND LEDGER ACCOUNT ON PAGE NOS. 205-210 OF P/B. CONSIDERING-TH E SAME ADDITION MADE BY THE ID. AO IS REQUIRED TO BE DELET ED. 2.4 URMI TRADERS - RS.56,22,519/- NOTICE U/S 133(6) OF THE ACT WAS ISSUED BY ID. AO, WHICH WAS NOT REPLIED BY URMI TRADERS AND ACCORDINGLY, THE ID. AO MADE ADDITION OF RS.56,22,519/-, AGAIN WHICH IS NOTHING, BUT THE CLOSING BALANCE OUTSTANDING IN THE BOOKS OF ACCOUNTS OF THE APPELLA NT. THE APPELLANT, IN THIS CONNECTION, DURING THE COURSE OF REMAND PROCEEDINGS, SUBMITTED CONFIRMATION-CONTRA ACCOUNTS , PA NO. AND COPY OF PASSPORT OF PROPRIETOR, ROI AND BANK STATEM ENT. IN FACT, THE ACCOUNTANT OF URMI TRADERS APPEARED BEFORE THE ID. AO AND PLACED ON RECORD ALL THE ABOVE EVIDENCES. PL REFER PAGE NO S. 214 TO 229. FROM THE REMAND REPORT, IT CAN BE SEEN THAT THE ID. AO HAS NOT RAISED ANY OBJECTION OR HAS MADE ANY ADVERSE OBSERV ATION, WHICH ITSELF SUGGESTS THAT DOCUMENTS / EVIDENCES PLACED O N RECORD IN AS MUCH AS PERSONAL APPEARANCE OF ACCOUNTANT BEFORE TH E ID. AO, HAS SATISFIED THE VERIFICATION OF THE ID. AO AND THEREF ORE, ADDITION MADE BY THE ID. AO IS REQUIRED TO BE DELETED. 2.5. VINOD TRADERS - RS.8,55,581/- THE APPELLANT HAS PLACED ON RECORD LEDGER ACCOUNT O F VINOD TRADERS AND CONFIRMATION-CONTRA ACCOUNT ALONGWITH P A NO., ADDRESS, SALES TAX NO. ETC. PI. REFER PAGE NOS. 230 TO 232 OF P/B. FROM THE PERUSAL OF SUCH RECORD, IT CAN BE SEEN THA T THE AMOUNT OF RS.8,55,5817- REPRESENTS DIFFERENCE IN OPENING BALA NCE IN THE BOOKS ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 11 - OF ACCOUNTS OF THE APPELLANT AND IN THE BOOKS OF VI NOD TRADERS, OTHERWISE, THE TRANSACTIONS CARRIED OUT DURING THE YEAR UNDER CONSIDERATION IS TALLIED. THEREFORE, THE DIFFERENCE AMOUNT IS PERTAINING TO EARLIER YEAR AND ACCORDINGLY THE SAME CANNOT BE ADDED TO THE TOTAL INCOME FOR THE YEAR UNDER CONSID ERATION. THEREFORE, IN VIEW OF ABOVE SUBMISSION, ADDITION MA DE BY ID. AO IS REQUIRED TO BE DELETED. 2.6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, I T WAS SUBMITTED AND EXPLAINED TO THE ID. AO THAT ADVANCES RECEIVED FROM CUSTOMERS HAVE BEEN SETTLED EITHER BY SELLING THE MATERIAL OR MAKI NG REPAYMENT THERETO IN THE SUBSEQUENT YEAR/S AND THEREFORE NO I NFERENCE CAN BE DRAWN WITH REGARD TO CREDIT BALANCE OUTSTANDING IN THE BALANCE SHEET, PARTICULARLY WHEN THE OTHER SIDE OF BOOKS OF ACCOUNTS HAS NOT BEEN DISTURBED AND ACCEPTED BY THE ID.AO. IN FACT, THIS SUBMISSION OF THE APPELLANT IS REPRODUCED IN THE BODY OF ASSES SMENT ORDER BY THE ID. AO. HOWEVER, THE ID. AO WITHOUT APPRECIATIN G THE FACTS AND EXPLANATION SUBMITTED BY THE APPELLANT AND WITHOUT PLACING ON RECORD ANY EVIDENTLY PROOF, HE MADE AN ADDITION FOR THE SAKE OF MAKING THE SAME AND THAT ALSO WITHOUT PROVIDING ANY COGENT REASONS. IN FACT, IN REMAND REPORT ALSO, NO COMMENT HAS BEEN GIVEN BY THE ID. AO WITH REGARD TO THE CLAIM OF THE APPEL LANT. THEREFORE, IN VIEW OF THIS SUBMISSION, THE ADDITION MADE BY TH E ID. AO IS REQUIRED TO BE DELETED. 4.2 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A . R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER. VIDE PAR A-5 OF THE ASSESSMENT ORDER, AO MADE ADDITION OF RS.74,88,382/- BEING THE ADVANCES RECEIVED BY THE APPELLANT FROM HIS FOUR CUSTOMERS. WHILE DOING SO, ASSESSING OFFIC ER OBSERVED THAT IN RESPONSE TO THE NOTICES U/S.133(6), NO REPLY WAS RECEIVED FROM ANY OF THE PARTIES AND THEREFORE THE SAID SUM WAS BEING CONSIDERED AS ASSESSEE'S INC OME FROM UNDISCLOSED SOURCES. THE CONTENTIONS OF THE ID.A.R. ARE THAT ALL THE NEC ESSARY EVIDENCES IN SUPPORT OF THE ADVANCES RECEIVED FROM FOUR PARTIES WERE FURNISHED TO THE A.O. EITHER DURING THE ASSESSMENT PROCEEDINGS OR DURING THE REMAND PROCEED INGS; SUCH EVIDENCES INCLUDED PAN, COPIES OF WRITTEN SUBMISSION, CONTRA CONFIRMATION FROM THE PARTIES, PASSPORT, BANK STATEMENTS ETC.; DURING THE ASSESSME NT PROCEEDINGS, IT WAS ALSO SUBMITTED THAT THE ADVANCES RECEIVED WERE SETTLED E ITHER BY SELLING MATERIAL OR MAKING REPAYMENTS IN THE SUBSEQUENT YEAR; AO DID NO T CONTROVERT OR FIND DEFECTS IN THE EVIDENCES FURNISHED; DURING THE REMAND PROCE EDINGS, THE A.R. OF THE FIRST THREE PARTIES (MENTIONED BY THE A.O. AT PARA-5 OF T HE ASSESSMENT ORDER) APPEARED BEFORE THE AO AND CONFIRMED THE TRANSACTIONS WITH S UPPORTING EVIDENCES; IN RESPECT OF THE FOURTH PARTY, THE OUTSTANDING AMOUNT REPRESENTED ONLY THE OPENING BALANCE AND NO TRANSACTIONS WERE MADE DURING THE YE AR AND THEREFORE THE ADDITION IS UNWARRANTED. 4.3. I HAVE CONSIDERED THE FACTS OF THE MATTER. THE ONLY BASIS FOR THE ADDITION MADE WAS THAT NO RESPONSE WAS RECEIVED FROM ANY OF THE PARTIES IN RESPONSE TO NOTICES U/S.133(6). OTHER THAN THIS, THERE IS NO AD VERSE OBSERVATION BY THE AO EITHER IN THE ASSESSMENT ORDER OR IN THE REMAND REP ORT. IN THIS CONNECTION, IT IS ALSO SEEN THAT AO DID NOT ISSUE SUMMONS TO ANY OF T HE PARTIES TO ENFORCE THEIR ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 12 - ATTENDANCE NOR HE DID BRING ANY MATERIAL ON RECORD TO CONTROVERT THE CONTENTIONS OF THE APPELLANT. THEREFORE, THE ADDITION IS WITHOU T ANY BASIS. IT IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 11. HEARD BOTH SIDES VEHEMENTLY SUPPORTING THEIR RE SPECTIVE STANDS. RELEVANT FINDINGS PERUSED. IT TRANSPIRES THAT THE CIT(A) REASONING HEREIN AS WELL QUA THE INSTANT ISSUE ARE IDENTICAL TO THOSE I N FIRST SUBSTANTIVE ISSUE THAT THE ASSESSEE HAD PLACED ON RECORD ALL THE RELEVANT PARTICULARS OF ABOVE FOUR PARTIES IN ORDER TO PROVE GENUINENESS OF CUSTOMERS ADVANCES RECEIVED FROM THEM. LD. DEPARTMENTAL REPRESENTATIVE FAILS TO REB UT THE SAME IN THE COURSE OF HEARING. THIS REVENUES PLEA IS ACCORDINGLY DEC LINED. 12. THE REVENUES NEXT SUBSTANTIVE GRIEVANCE SEEKS TO RESTORE UNSECURED LOANS ADDITION OF RS.60,71,888/- INVOLVING THREE PA RTIES I.E. M/S. ALANG MARINE (RS.49,64,888/-), M/S. GAYATRI MINERAL RS.12 ,000/-) & M/S. HARSH IMPEX (RS.10LACS); RESPECTIVELY AS ADDED BY THE ASS ESSING OFFICER AND PARTLY CONFIRMED TO THE EXTENT OF LATTER TWO PARTIES IN CO URSE OF THE LOWER APPELLATE PROCEEDINGS. THE CIT(A) OBSERVES THAT THE ASSESSEE ITSELF DID NOT PURSUE ITS GROUND PERTAINING TO M/S.GAYATRI MINERALS KEEPING I N MIND SMALLNESS OF THE AMOUNT INVOLVED OF RS.12,000/-. HE THEN UPHOLDS TH E LAST FIGURE OF RS.10LACS IN CASE OF M/S. HARSH IMPEX AS FOLLOWS: 5.1. WITH REGARD TO THE ABOVE GROUND, THE RELEVANT PARAS OF THE WRITTEN SUBMISSIONS FILED BY THE A. R. OF THE APPELLANT ARE REPRODUCED HEREUNDER :- '3.1 THE ID. AO HAS MADE ADDITION WITH RESPECT TO FOLLOWING PARTIES S.NO. PARTICULARS AMOUNT IN RS. 1. ALANG MARINE 49,64,888/- 2. GAYATRI MINERAL 12,000/- 3. HARSH IMPEX 10,00,000/- TOTAL 60,71,888/- 3.2. ALANG MARINE - RS.49,64,888/- OUT OF TOTAL AMOUNT OF RS.49,64,888/-, AN AMOUNT OF RS.43,17,294/-PERTAINS TO CARRIED FORWARD FROM THE PREVIOUS YEAR 2006-07, WHEREIN, THE SAME WAS RECEIVED AND BALANCE AMOUNT OF RS.6,47,594/- PERTAI NS TO THE INTEREST ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 13 - THEREON. PI. REFER PAGE NOS.235-237. IT IS SETTLED LAW THAT U/S 68 OF THE ACT, ADDITION CAN BE MADE ONLY WITH RESPECT TO THE CREDI T ENTRY FOUND DURING THE YEAR UNDER CONSIDERATION. HENCE, ON THIS SHORT GROU ND ONLY ADDITION MADE BY THE ID. AO IS REQUIRED TO BE DELETED. THE ID. AO HAS FURTHER DISALLOWED AN AMOUNT OF RS.6,47,594/- U/S 40(A)(IA) OF THE ACT ON THE GROUND THAT THE APPELLANT HAS FAILED TO DEDUCT TAX AT SOURCE ON SUC H INTEREST AMOUNT. IN THIS CONNECTION, IT IS SUBMITTED THAT DIRECTION MAY BE G IVEN TO THE ID. AO TO ALLOW THE EXPENDITURE IN THE YEAR IN WHICH TDS IS P AID. FURTHER IT IS POINTED OUT THAT WHILE COMPUTING THE TOTAL INCOME, THE ID. AO HAS ADDED AN AMOUNT OF RS.6,47,594/- TWICE, ONCE WH ILE MAKING AN ADDITION OF RS.60,71,888/- (WHICH INCLUDES AMOUNT O F RS.49,64,888/-) AND SECOND TIME BY MAKING DISALLOWANCE AND ADDING RS.6, 47,594/- TO THE TOTAL INCOME OF THE APPELLANT. THEREFORE, ALTERNATIVELY A ND WITHOUT , PREJUDICE TO ABOVE, DIRECTION MAY BE GIVEN TO DELETE THE SAME. 3.3. GAYATIR MINERAL - RS. 12,000/- FOR SMALLNESS OF AMOUNT, NOT PRESSED. 3.4. HARSH IMPEX- RS.10,00,000/- NO ADDITION CAN BE MADE MERELY ON ACCOUNT OF NON-RE PLY IN PURSUANT TO NOTICE ISSUED U/S 133(6) OF THE ACT. HENCE, ADDITIO N MADE BY LD. AO IS REQUIRED TO BE DELETED. 4 THE APPELLANT MOST RESPECTFULLY SUBMITS THAT ID. AO HAS NOT PROPERLY APPRECIATED AND CONSIDERED VARIOUS SUBMISSIONS, EVIDENCES AND SUPPORTING PLACED ON RECORD DURING THE COURSE OF TH E ASSESSMENT PROCEEDINGS AND NOT PROPERLY APPRECIATED VARIOUS FA CTS AND LAW IN ITS PROPER PERSPECTIVE. APPELLANT MOST RESPECTFULLY SUB MITS THAT THIS ACTION OF ID. AO IN NOT APPRECIATING VARIOUS EVIDENCES PLACED BEFORE HIM AND FRAMING ASSESSMENT ORDER WITHOUT REFERRING TO EVIDE NCES PLACED BEFORE HIM IS IN BREACH OF PRINCIPLES OF NATURAL JUSTICE AND T HEREFORE DESERVES TO BE QUASHED.' 5.2. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A. R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER. AT PAR A-6 OF THE ASSESSMENT ORDER, AO OBSERVED THAT IN RESPECT OF THREE PARTIES FROM WHOM UNSECURED LOANS WERE OBTAINED BY THE APPELLANT, NOTICES WERE ISSUED U/S.133(6). IN RESPECT OF THE FIRST PARTY NAMELY ALANG MARINE, THE NOTICE WAS SERVED BU T NO REPLY WAS RECEIVED AND THEREFORE A SUM OF RS.49,64,888/- WAS BEING ADDED. THE CONTENTIONS OF THE LD.A.R, ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDING S, IT WAS EXPLAINED THAT OUT OF THE AMOUNT OUTSTANDING OF RS.49,64,888/-, THE SUM O F RS,43,17,294/- WAS CARRIED FORWARD FROM THE EARLIER YEAR AND THE BALANCE AMOUN T OF RS.6,47,594/- WAS THE INTEREST CREDITED THEREON; SINCE THE AMOUNT WAS N OT BORROWED DURING THE YEAR, NO ADDITION COULD HAVE BEEN MADE. I HAVE CONSIDERED T HE FACTS OF THE MATTER. I AM INCLINED TO ACCEPT THE CONTENTIONS OF THE APPELLANT . THE ADDITION OF THE SAID SUM CANNOT BE SUSTAINED. ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 14 - 5.3. AS REGARDS THE SECOND PARTY NAMELY M/S.GAYATRI MINERAL, THE LD.A.R. STATED THAT HE DID NOT WANT TO PRESS THE ISSUE IN VIEW OF THE MEAGER QUANTUM INVOLVED. THEREFORE, ADDITION MADE OF RS.12,000/- IN RESPECT OF THE SAID PARTY IS UPHELD. AS REGARDS THE THIRD PARTY M/S. HARSH IMPEX, THE LD. A .R. COULD NOT FURNISH ANY DETAILS REGARDING THE LOAN SECURED OF RS.10 LAKHS FROM THE SAID PARTY. THEREFORE, ADDITION OF THE SAID SUM OF RS.10 LAKHS IN RESPECT OF THIS P ARTY IS UPHELD. 5.4 TO SUM UP, OUT OF THE ADDITION MADE OF RS.60,71 ,888/- ADDITION TO THE EXTENT OF RS.10,12,000/- IS UPHELD AND BALANCE IS DELETED. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 13. THIS LEAVES BOTH THE PARTIES AGGRIEVED. THE RE VENUES GRIEVANCE SEEKS TO RESTORE THE ENTIRE ADDITION SUM. THE ASSESSEES SUBSTANTIVE GROUND NO.4 IN ITS CROSS APPEAL PRAYS FOR DELETING THE REMAINING A DDITION OF RS.10,12,000/- DESPITE THE FACT THAT IT HAD ITSELF NOT PRESSED FOR ITS GRIEVANCE IN CASE OF M/S. GAYATRI MINERALS. 14. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO R IVAL SUBMISSIONS. IT IS EVIDENT THAT THE CIT(A) HAS CONSIDERED ASSESSEES R ELEVANT DETAILS FILED PERTAINING TO M/S. ALANG MARINE (SUPRA) TO DELETE T HE FIRST ADDITION AMOUNT TO RS.49,64,888/-. BOTH THE PARTIES FAILED TO PIN POI NT ANY SPECIFIC IRREGULARITY OR INFIRMITY THEREIN. WE THUS CONCLUDE THAT THE LD . CIT(A) HAS CORRECTLY APPRECIATED FACTS PERTAINING TO THE INSTANT ISSUE A LONG WITH ALL NECESSARY EVIDENCE ON RECORD. WE THUS FIND NO REASON TO INTE RFERE WITH THE LOWER APPELLATES FINDINGS CHALLENGED BY BOTH THE PARTIES . THE REVENUES LAST SUBSTANTIVE PLEA AS WELL AS ITS APPEAL ITA NO.1928/ AHD/2012 FAILS. 15. WE NOW COME TO ASSESSEES LAST SUBSTANTIVE GROU ND THAT THE CIT(A) HAS ERRED IN CONFIRMING INTEREST DISALLOWANCE OF RS .6,47,594/- AS MADE BY THE ASSESSING OFFICER FOR NON DEDUCTION OF TDS U/S. 40( A)(IA) OF THE ACT. IT PLEADS THAT THE SAME HAS AMOUNTED TO DOUBLE ADDITIO N SINCE THE VERY FIGURE FORMED PART OF THE ADDITION OF RS.49,64,888/-. WE NOTICE THAT THE CIT(A) ORDER IN PARA 6 PAGE 21 ALREADY TAKES NOTE OF ASSES SEES ARGUMENT TO CONCLUDE THAT ITS DOUBLE ADDITION PLEA NO MORE SURVIVES SINC E THE FORMER ADDITION FIGURE ITA NOS. 1928 & 1968/AHD/2012 (ITO VS. DHARMESH G. JOSHI) A.Y. 2008-09 - 15 - ALREADY STANDS DELETED TO THE TUNE OF RS.49,64,888/ -. LEARNED COUNSEL IS UNABLE TO REBUT THIS FACTUAL POSITION. WE THUS FIN D NO REASON TO INTERFERE IN THE CIT(A)S FINDINGS PERTAINING TO THE INSTANT ISS UE. THIS ASSESSEES GROUND IS ACCORDINGLY REJECTED. ASSESSEES APPEAL 1928/AH D/2012 IS PARTLY ACCEPTED. 16. THE REVENUES APPEAL ITA NO.1928/AHD/2012 IS DI SMISSED AND ASSESSEES CROSS APPEAL ITA NO.1968/AHD/2012 IS PAR TLY ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 20 TH DAY OF JANUARY, 2017.] SD/- SD/- ( PRAMOD KUMAR ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 20/01/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0