J.C.I.T Range - 56,kolkata, Kolkata V. M/s Arti Bright Company., Kolkata

ITA 1933/KOL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9615 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 31-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAKESH GOYAL
• Assessee Lawyers: V N PUROHIT
• Keywords: Unexplained cash credit; Depreciation; Rectification of order; Opportunity of being heard; Principle of natural justice; Question of law; Commercial expediency
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1933 & 2446/KOL/2012 ASSESSMENT YEAR:2008-09 JCIT, RANGE-56, HQRS-21, 3, GOVT. PLACE (W), 2 ND FLOOR, KOLKATA-700 001 ARTI BRIGHT COMPANY C/O D.K.DE SARKAR & CO., 167/4, LENIN SARANI, 2 ND FLOOR, KOLKATA-700 072 [PAN NO.AAKFA 7084 N ] / V/S . / V/S . M/S ARTI BRIGHT COMPANY, 167/4, LENIN SARANI, 2 ND FLOOR, KOLKATA-700 072 [ PAN NO.AAEFA 6622 J ] ACIT, RANGE-56, 3, GOVT. PLACE, KOLKATA-700 001 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI V.N.PUROHIT, FCA /BY REVENUE SHRI RAKESH GOYAL, CIT-DR /DATE OF HEARING 15-12-2016 /DATE OF PRONOUNCEMENT 11-01-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THESE CROSS-APPEALS BY THE REVENUE AND ASSESSEE ARE AGAINST THE DIFFERENT ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-XXXV I, KOLKATA DATED 29.10.2012 & 31.07.2013. ASSESSMENT WAS FRAMED BY JCIT, RANGE- 56, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 30.12.2010 FOR ASSESSMENT YEAR 2007-08. PENALTY LEV IED BY ACIT, CIRCLE-56, KOLKATA U/S 154/271(1) OF THE ACT VIDE HIS ORDER DATED 12. 07.2012. ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 2 SHRI RAKESH GOYAL, LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE AND SHRI V.N.PUROHIT, LD. AUTHORIZED REPRESENTATIVE APPEARED ON BEHALF OF ASSESSEE. 2. BOTH APPEALS ARE HEARD TOGETHER AND ARE BEING DI SPOSED OF BY WAY OF CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO.1933/KO L/2012 . 3. FACTS IN BRIEF ARE THAT ASSESSEE IS A PARTNERSHI P FIRM AND ACTING AS STOCKIST OF LOTTERY TICKETS OF M/S TIGER ASSOCIATES (MTA FOR SH ORT). THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION FILED ITS RETURN OF INCOME DECL ARING TOTAL INCOME OF RS. 29,97,712/-. THEREAFTER THE CASE WAS SELECTED UNDER SCRUTINY AND ACCORDINGLY NOTICE U/S. 143(2) WAS ISSUED AND ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT AT A TOTAL INCOME OF RS.7,62,59,520/- AFTER MAKING CERTAIN ADD ITION / DISALLOWANCE. 4. FIRST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR 6,75,99,557/- ON ACCOUNT OF DIFFERENCE IN OPENING BALANCE OF SUNDRY CREDITOR NAMELY MTA. 4.1 THE ASSESSEE IN THE IMMEDIATE PREVIOUS FINANCIA L YEAR HAS SHOWN MTA AS CREDITOR FOR 6,99,16,984/- AS ON 31.3.2007 WHICH WAS BROUGHT FOR WARD AS OPENING BALANCE TO THE YEAR UNDER CONSIDERATION AS ON 01.04 .2007. THE INCOME TAX INSPECTOR WAS DEPUTED TO VERIFY THE FIGURE OF SUNDRY CREDITOR AS DISCUSSED ABOVE IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE IT INSPECTOR IN TURN SU BMITTED THAT MTA HAS MAINTAINED TWO LEDGER ACCOUNTS OF ASSESSEE IN WHICH IT IS SHOW ING THE FOLLOWING OUTSTANDING BALANCE AS ON 01.04.2007:- 1. BALANCE OF 80,051.50 FOR WEST BENGAL STATE LOTTERY. 2. BALANCE OF 22,37,355.70 FOR OTHER STATE LOTTERY. ON THE BASIS OF IT INSPECTORS REPORT, AO OBSERVED THE DIFFERENCE OF 6,75,99,577/- BETWEEN THE ACCOUNTS OF MTA AND ASSESSEE. ACCORDING LY, AO CALLED UPON ASSESSEE TO RECONCILE THE DIFFERENCE BUT ASSESSEE FAILED TO DO SO. THUS, AO TREATED THE DIFFERENCE OF 6,75,99,577/- AS BOGUS CASH CREDIT INTRODUCED IN TH E YEAR UNDER CONSIDERATION AS ON 01.04.2007 AND ADDED TO THE TOTAL INCOME OF ASSESSE E AS UNEXPLAINED CREDITOR. ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 3 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT THE M/S BEST & COMPANY (MBC FOR SHOR T) IS THE MAIN ORGANIZER OF THE BUSINESS OF THE LOTTERY. THE ASSESSEE USED TO BUY T HE LOTTERY TICKETS FROM MBC. BUT SUBSEQUENTLY THE MBC HAS CREATED A SISTER COMPANY U NDER THE NAME & STYLE OF MTA AND TRANSFERRED PARTY OF ITS BUSINESS TO IT WITHOUT TRANSFERRING ALL ASSETS & LIABILITIES ETC. THIS FACT WAS NOT IN THE KNOWLEDGE OF THE ASSE SSEE THAT ONLY PARTIAL BUSINESS OF MBC WAS TRANSFERRED TO MTA. THEREFORE THE ASSESSEE CONTINUED TO SHOW ALL THE LIABILITIES IN ITS BOOKS IN THE NAME OF MTA OUT OF IGNORANCE OF THE FACT THAT SUCH LIABILITY HAS TO BE SHOWN IN THE NAME OF MBC & MTA. THE MBC HAS ALSO CONFIRMED THE TRANSACTION WITH THE ASSESSEE IN THE REMAND PRO CEEDINGS. ACCORDINGLY THE DIFFERENCE AS OBSERVED BY AO WAS RECONCILED. FURTHE R, ASSESSEE SUBMITTED THAT AS PER THE ACCOUNTING POLICY MBC NEVER USED TO PUT THE SA LE IN THE ACCOUNTING BOOKS. IT IS BECAUSE HUGE SALE RETURN AND MBC USED TO BOOK ONLY NET SALES. CONSIDERING THE FACTS AND CIRCUMSTANCES, LD. CIT(A) DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- I HAVE CONSIDERED BOTH THE RIVAL ARGUMENTS. BEST & CO. CONFIRMED THAT THEY DISPATCHED MATERIALS OF RS.6,75,99,577.00 BUT THEY DID NOT DEBIT THE PARTY AS PER THEIR ACCOUNTING POLICY. BUT THE APPELLANT ACCO UNTED FOR THE SAME BY CREDITING M/S BEST & CO. IMMEDIATELY AFTER RECEIVIN G THE BILL AND CHALLAN. IN MY OPINION WHEN A PARTY RECEIVE AND ACCEPT BILLS AND CHALLANS OF OTHER PARTY THEN A LIABILITY IS CREATED ON THE PARTY WHO RECEIV ED THE BILLS AS WELL THE CHALLNS. IN THIS CASE THE APPELLANT ACCEPTED THE BI LL AND CREDITED BEST & CO., IS NORMAL WAY OF ACCOUNTING. I DO NOT FIND ANY MISTAKE IN THE APPELLANTS ACCOUNTING SYSTEM. EVEN BEST & CO. BY NOT DEBITING THE APPELLANT DID NOT REDUCE THE LIABILITY. IN THE EVENT OF ANY DISPUTE T HE LIABILITY WOULD FALL ON THE APPELLANT ON THE DATE WHEN THEY ACCEPTED THE BILL A ND CHALLAN. THEIR ARGUMENT ABOUT THE RETURN OF GOODS SOLD TILL THE DRAW DATE D OES NOT REDUCE THE LIABILITY OF THE APPELLANT. ON CAREFUL CONSIDERATION ON THE ORDER PASSED BY THE AO, ARGUMENTS SUBMITTED BY THE AR AND CONFIRMATION OF THE PARTY. AO IS DIRE CTED TO DELETE THE ADDITION OF RS.6,75,99,577.00. THIS GROUND IS ALLOWED. BEING AGGRIEVED BY THIS, REVENUE HAS COME UP AN APP EAL BEFORE US. 6. BEFORE US LD. DR FOR THE REVENUE HAS FILED WRITT EN SUBMISSION, WHICH IS REPRODUCED BELOW:- ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 4 1. THE AO MADE AN ADDITION OF RS.6,75,99,577/- ON A CCOUNT OF DIFFERENCE IN THE OPENING BALANCE AS ON 01.04.2007 WITH THAT OF ITS P RINCIPAL, TIGER ASSOCIATES. THE FIGURES AS REPORTED BY M/S. TIGER ASSOCIATES AS OPE NING BALANCE AT RS.80,051.50( CR .) FOR WB STATE AND RS.22,37,355.50 ( DR ) FOR OTHER STATE AND AS PER THE RECORDS OF THE ASSESSEE THE CORRESPONDING FIGURES ARE RS.80,051.50 ( DR ) FOR WB STATE AND RS.6,99, 16,984/- FOR OTHER STATES. IT IS ALSO TO BRING ON R ECORD THAT TIGER ASSOCIATES HAS CONFIRMED SUCH FIGURE VIDE THEIR REPLY DATED 15.12. 2010. THUS THERE IS NO DIFFERENCE IN AMOUNT FOR THE WB STATE AND THE SOLE DIFFERENCE OF RS.6,75,99,577/- IS ATTRIBUTABLE FOR OTHER STATE ONLY WHICH WAS ADDED AS BOGUS CASH CRED IT. 2. BEFORE THE LD. CIT(A), THE STAND OF THE APPELLAN T CHANGED. IT WAS CLAIMED THAT THE LIABILITY OF THE ASSESSEE TO M/S. BEST & COMPANY FO R RS.7,20,74,288/- AS ON 01.04.2007 WAS TRANSFERRED TO TIGER ASSOCIATES. BUT NO CORRESPONDING LEDGER ENTRY DEBITING M/S. BEST & COMPANY AND CREDITING M/S TIGE R ASSOCIATES WITH THE AMOUNT OF RS.7,20,74,288/- WAS PASSED. IT IS ALSO POINTED OUT THAT IN COURSE OF HEARING DURING REMAND PROCEEDINGS, THE ASSESSEE FAILED TO PRODUCE ITS BOOKS OF ACCOUNTS. IT WAS ADMITTED VIDE ORDER SHEET NOTING DATED 07.02.2012 T HAT NO SUCH ENTRIES WERE PASSED IN THE LEDGER ACCOUNT OF M/S. BEST & COMPANY AND M/S. TIGER ASSOCIATES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. NO OSTENSIBLE REASON COUL D BE ADDUCED AS TO WHY THE ASSESSEE EXTINGUISHED ITS LIABILITY TO M/S. BEST & COMPANY ONLY TO CREATE ANOTHER LIABILITY OF RS.7,20,74,288/- ON 01.04.2007 IN THE ACCOUNT OF M/S. TIGER ASSOCIATES. 3. IN THIS REGARD, IT IS PERTINENT TO REFER TO THE REMAND REPORT OF THE AO WHICH SPEAKS FOR ITSELF. THERE WERE ISSUES RAISED REGARDING THE VERACITY OF SUCH CLAIM MADE BY THE ASSESSEE WHICH ARE AS UNDER: I) IF M/S. BEST & COMPANY DID NOT HAVE ANY TRANSACT IONS IN THEIR BOOKS OF ACCOUNTS DURING THE F. Y. 2006-07 WITH M/S. ARTI BR IGHT COMPANY WHY DID M/S. ARTI BRIGHT COMPANY HAVE TO CLAIM THAT AN OPEN ING BALANCE OF RS. 7,20,74,288/- AS ON 01.04.2007 WAS EXISTING AS A LI ABILITY TOWARDS M/S. BEST & COMPANY. THERE IS NO EVIDENCE THAT COULD BE PRODUCE D BY THE LD. AR THAT THE ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 5 ASSESSEE FIRM INDEED HAD ANY LIABILITY AS ON 01.04. 2007 TO M/S. BEST & COMPANY. THERE IS NO BROUGHT FORWARD LIABILITY AS O N 01.04.2007 FROM EARLIER YEARS. II) WHY DID THE LEDGER COPY OF ACCOUNT OF M/S. TIGE R ASSOCIATES IN THE BOOKS OF THE ASSESSEE FIRM FOR THE F. Y.2007-08 NOT SHOWN AN Y CREDIT ENTRY (THROUGH TRANSFER) AS ON 01.04.2007 DESPITE THE ASSESSEE'S C LAIM THAT THE LIABILITY TO M/S. BEST & COMPANY WAS TRANSFERRED TO M/S. TIGER & ASSO CIATES AS ON 01.04.2007. III) WHY DID THE LEDGER COPY OF ACCOUNT OF THE ASSE SSEE FIRM IN THE BOOKS OF M/S. BEST & COMPANY NOT SHOW ANY DEBIT ENTRY FOR RS .7,20,74,2881- AS ON 01.04.2007 TOWARDS THE ALLEGED LIABILITY OF THE FOR MER TO THE LATTER AND AN IMMEDIATE CREDIT ENTRY OF RS.7,20,74,2881- ON 01.04 .2007 ON ACCOUNT OF THE ALLEGED TRANSFER OF LIABILITY TO M/S. TIGER ASSOCIA TES? IT IS REITERATED THAT THE COPY OF LEDGER ACCOUNT OF THE ASSESSEE SENT BY M/S. BEST & COMPANY ON 09.03.2012 HAS NOT SHOWN ANY SUCH ENTRIES. IV) THE AO DURING THE COURSE OF ASSESSMENT WAS NOT SUPPLIED WITH ANY DETAILS OF SUNDRY CREDITORS FOR RS. 9,43,82, 663/- AS ON 31.03.2008 AS EVIDENT FROM HIS OBSERVATION MADE IN THE ORDER DATED 30.12. 2010 AT PARA-2 OF PAGE-4. SIMILARLY DURING THE COURSE OF REMAND PROCEEDINGS T HE ASSESSEE FAILED TO FURNISH THE DETAILS OF SUNDRY CREDITORS AS ON 31.03 .2008 SHOWN AT RS. 9,43,82,663/-. THROUGH THE BREAKUP OF SUNDRY CREDIT ORS AS ON 31.03.2007 WAS PRODUCED BEFORE THE AO AND THE AO OBSERVED THAT CRE DIT BALANCE OF RS.6,99,16,984/- WAS SHOWN IN THE NAME OF M/S. TIGE R ASSOCIATES OUT OF A TOTAL LIABILITY OF RS.7,33,79,571/-. THE SAID LIABILITY O F RS.6,99,16,984/- WAS NOT CONFIRMED BY M/S. TIGER ASSOCIATES IN THEIR LETTER DATED 15.12.2010 AS NO SUCH DEBIT ENTRY FOR RS. 6,99,16,984/- WAS FOUND IN THE LEDGER ACCOUNT OF THE ASSESSEE FIRM. 4. IT WAS HENCE CONCLUDED IN THE REMAND REPORT THAT SINCE BOTH THE PARTIES NAMELY M/S. BEST & COMPANY AND M/S TIGER & ASSOCIAT ES HAVE NOT SHOWN ANY DEBIT ENTRY ON ACCOUNT OF THE ALLEGED LIABILITY AS ON 01.04.2007 IN THEIR RESPECTIVE LEDGER ACCOUNT OF ASSESSEE THERE IS NO R EASON TO ACCEPT THE ASSESSEE'S CLAIM THAT ANY LIABILITY TO M/S. BEST & COMPANY OR M/S. TIGER ASSOCIATES TO THE ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 6 TUNE OF RS. 6,99,16,984/- AS ON 31.03.2007 DID ACTU ALLY EXIST AND THAT ITS LIABILITY TO M/S BEST & COMPANY AS ON 01.04.2007 WA S TRANSFERRED TO M/S. TIGER & ASSOCIATES. THERE IS NO SUCH BILL OR OTHER DEALINGS SHOWN BY M/S. BEST & COMPANY DURING THE YEAR WITH M/S. ARTI BRIGHT COM PANY. HOW CAN THE ASSESSEE BOOK THE AMOUNT IN THE NAME OF M/S. TIGER ASSOCIATES, IF THE STOCK WAS RECEIVED FROM M/S. BEST & COMPANY. THE STOCK AL WAYS COMES WITH A BILL WHICH MAY HAVE BEEN RECEIVED AND ENTERED IN THE NAM E OF SENDER. SINCE, THE MATERIAL WAS NOT SENT BY M/S. BEST & COMPANY, THE A SSESSEE HAS RIGHTFULLY NOT ENTERED A CREDIT ENTRY IN THE NAME OF M/S. BEST & C OMPANY IN THE BOOKS OF ACCOUNTS AND EVEN THE AUDITOR DID NOT POINT OUT ANY SUCH DEFECT ALTHOUGH THE AMOUNT WAS SO BIG AND IT COULD HAVE GOT THE ATTENTI ON OF THE AUDITOR. IT SHOWS THAT THE ENTRIES NOW BEING SHOWN AND EXPLAINED ARE AN AFTERTHOUGHT EXPLANATION. THESE ARE SELF SERVING DOCUMENTS OF TH E ASSESSEE. THE ASSESSEE NEVER PRODUCED ITS BOOKS OF ACCOUNTS BEFORE THE ASS ESSING OFFICER FOR VERIFICATION OF THESE AFTERTHOUGHT EXPLANATIONS. TH E REMAND REPORT OF THE ASSESSING OFFICER TO CIT(A)-XXXVI, KOLKATA IN PAGE 1 CLEARLY AND ELABORATELY MENTIONS AS FOLLOWS:- 'THE LD. AR COULD NOT PRODUCE THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM. HE ADMITTED VIDE ORDER SHEET DATED 07-02-2012 THAT NO SUCH ENTRIES WERE PASSED IN THE LEDGER OF M/S. BEST & COMPANY AN D M/S. TIGER ASSOCIATES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM. HE ALSO COULD NOT EXPLAIN THE REASONS AS TO WHY THE ASSESSEE FIRM EXTINGUISHED ITS LIABILITY TO M/S. BEST & COMPANY ONLY TO CREATE ANO THER LIABILITY OF RS. 7,20, 74,288/- ON 01.04.2007 IN THE ACCOUNT OF M/S. TIGER ASSOCIATES. ' THE ASSESSING OFFICER DID STATE ON PAGE 3 IN THE FI RST PARAGRAPH OF SUBMISSIONS ON POINT NO.1 AS FOLLOWS:- 'SINCE BOTH THE PARTIES NAMELY M/S. BEST & COMPANY AND M/S. TIGER & ASSOCIATES HAVE NOT SHOWN ANY DEBIT ENTRY ON ACCOUN T OF THE ALLEGED LIABILITY AS ON 01.04.2007 IN THEIR RESPECTIVE LEDG ER ACCOUNT OF M/S. ARTI BRIGHT COMPANY THERE IS NO REASON TO ACCEPT THE ASS ESSEE'S CLAIM THAT ANY ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 7 LIABILITY TO M/S. BEST & COMPANY OR M/S. TIGER ASSO CIATES TO THE TUNE OF RS.6,99,16,984/- AS ON 31.03.2007 DID ACTUALLY EXIS T AND THAT ITS LIABILITY TO M/S. BEST & COMPANY AS ON 01.04.2007 WAS TRANSFE RRED TO M/S. TIGER & ASSOCIATES. ACCORDINGLY THE ENTIRE LIABILITY OF R S.6, 77,59,680/- [RS. 6, 99,16,984/- - RS22,37,355/- + RS.80051/-} AND NO T RS. 6,75, 99, 577/- WRONGLY CALCULATED BY THE LD. A.O SHOULD BE TREATED AS BOGUS CREDIT CREATED BY THE ASSESSEE. ' THERE ARE NO SUCH TRANSACTIONS AND/OR ENTRIES SHOWN TO EVIDENCE THAT EVEN ANY LIABILITY OF M/S. BEST & COMPANY WAS TRANSFERRED TO M/S. TIGER & ASSOCIATES AS ON 01.04.2007. 5. IN THE RESPECT IT IS SUBMITTED THAT THE CIT(A) D ELETED SUCH ADDITION SOLELY AND EXCLUSIVELY RELYING ON THE REPLY OF M/S. BEST & CO. BY ACKNOWLEDGING THE SYSTEM AND ACCOUNT WITHOUT GOING INTO QUESTIONS RAI SED BY THE AO IN THE REMAND REPORT. IT SEEMS THAT THE CIT(A) ACTED IN HA STE IN CONCLUDING THAT THERE WAS NO DIFFERENCE BETWEEN THE ASSESSEE'S ACCOUNTS W ITH THAT OF BEST & CO. IN FACT THE AO HAS RAISED FOUR PERTINENT POINTS WHICH WERE NEITHER COUNTERED BY THE APPELLANT IN THEIR REPLY TO REMAND PROCEEDINGS NOT NEGATED BY THE CIT(A). THE ISSUE WAS NOT CORRECTLY UNDERSTOOD BY THE CIT(A ). IT IS NOT ON ACCOUNT OF ANY SYSTEM OF ACCOUNTING THAT THIS DISCREPANCY ARIS ES. IF THAT WOULD HAVE HAPPENED THEN THERE WOULD NOT HAVE BEEN SIMILAR FIG URES FOR WB STATE ITEMS. THE DISCREPANCY IS ON ACCOUNT OF OTHER STATE ITEMS ONLY. IT IS WHERE THE DISCREPANCY ARISES. ANOTHER PERTINENT POINT IS THAT BEST & CO. WERE INTRODUCED ONLY IN THE APPELLATE PROCEEDINGS AND NOT IN THE AS SESSMENT PROCEEDINGS. AND WHEN THE VERACITY OF THE REPLY OF BEST & CO. WAS AG ITATED BY THE AO IN THE REMAND REPORT, THE ACTION OF THE CIT(A) TO SIMPLY R ELY ON SUCH DOCUMENT AS SACROSANCT AND GIVE RELIEF TO THE ASSESSEE IS NOT W ITHIN THE FRAMEWORK OF LAW. IN FACT THE ISSUES RAISED BY THE AO IN THE REMAND REPO RT WAS NOT GONE INTO BY THE CIT(A). THE ORDER OF THE CIT (A) HAS A BENEFICIAL S LANT ON THE ASSESSEE WITHOUT ACKNOWLEDGING THE OTHER SIDE. SINCE, THE ORDER OF T HE CIT(A) DOES NOT ADDRESS ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 8 THE ISSUE CORRECTLY, THE SAME IS LIABLE TO BE SET A SIDE AND THE ORDER OF THE AO RESTORED. ON THE CONTRARY, LD. AR FOR THE ASSESSEE BEFORE US FILED A PAPER BOOK WHICH IS COMPRISING OF PAGES FROM 1 TO 41 AND REITERATED THE SUBMISSION AS MADE BEFORE THE LD. CIT(A). THE LD. AR ALSO FILED THE LEDGER COPY OF TI GER ASSOCIATES FOR THE FY 2007-08 AND DEMONSTRATED THAT THE LIABILITY AS SHOWN AS ON 31.3.2007 HAS BEEN COMPLETELY SETTLED. THE LD. AR RELIED ON THE ORDER OF LD. CIT( A). 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT THE ADD ITION WAS MADE BY AO ON ACCOUNT OF DIFFERENCE IN THE AMOUNT OF SUNDRY CREDITORS AS ON 01.04.2007 FOR 6,75,99,577/-. AT THE OUTSET, WE FIND THAT THE IMPUGNED SUNDRY CRE DITOR IS ARISING OUT OF PURCHASE OF LOTTERY TICKETS WHICH WERE PURCHASED IN THE IMMEDIA TE PRECEDING YEAR. WE FIND THAT THE BALANCE OF SUNDRY CREDITOR WAS BROUGHT FORWARD IN THE YEAR UNDER CONSIDERATION FROM THE PREVIOUS FINANCIAL YEAR. AS SUCH, WE FIND THAT THE CORRESPONDING PURCHASE IN RELATION TO IMPUGNED SUNDRY CREDITOR WAS BOOKED BY THE ASSESSEE IN THE IMMEDIATE PRECEDING YEAR WHICH HAS BEEN ALLOWED IN THE EARLIE R YEAR. THEREFORE, IN OUR CONSIDERED VIEW, THE ISSUE OF SUNDRY CREDITOR DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION BEFORE US. AS THE ISSUE IS NOT ARISIN G FOR THE SUNDRY CREDITOR IN THE YEAR UNDER CONSIDERATION, THEREFORE, NO DISALLOWANCE CAN BE MADE. HOWEVER ON MERIT AS WELL WE FIND THAT THE MBC HAS CONFIRMED THE VALUE O F THE TICKETS SOLD TO THE ASSESSEE WHICH IS EXACTLY MATCHING AS SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. TO THE CONTRARY, LD. DR HAS NOT BROUGHT ANY DEFECT IN THE CONFIRMATION RECEIVED FROM MBC. SIMPLY ASSESSEE HAS BOOKED THE SUNDRY CREDITOR LIAB ILITY WITH MTA OUT OF IGNORANCE CANNOT FORM THE BASIS FOR THE ADDITION OF SUCH SUND RY CREDITOR. SIMILARLY WHAT POLICY IS BEING ADOPTED BY MBC FOR RECOGNIZING THE SALES REVE NUE HAS NO BEARING TO THE FACTS OF THE CASE. ON PERUSAL OF THE LEDGER OF MTA, WE FI ND THAT THE ACCOUNTS WERE SETTLED IN THE YEAR UNDER CONSIDERATION. IN VIEW OF THE ABOVE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). WE HOLD ACCORDINGLY. HENCE , THIS GROUND OF REVENUE IS DISMISSED. ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 9 8. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS T HAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR 21,23,616/- ON ACCOUNT OF NON DISCLOSURE OF INCOME FROM INTEREST. 9. THE ASSESSEE HAS SHOWN NET PROFIT FOR 51,04,328/- IN ITS AUDITED PROFIT AND LOSS ACCOUNT. HOWEVER, AO OBSERVED FROM THE COMPUTATION OF INCOME FILED BY ASSESSEE THAT NET PROFIT OF 29,80,712/- WAS SHOWN BY ASSESSEE. ACCORDINGLY THE DIFFERENCE BETWEEN AMOUNT OF PROFIT SHOWN IN PROFIT AND LOSS A CCOUNT AND PROFIT SHOWN IN THE COMPUTATION OF INCOME AROSE FOR 21,23,616/- WHICH WAS ADDED BY AO TO THE TOTAL INCOME OF ASSESSEE. 10. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT THE DIFFERENCE HAS ARISEN ON ACCOUNT OF PARTNERS REMUNERATION WHICH WAS NOT SHOWN IN THE PROFIT AND LOSS ACCOUNT. BUT S AME WAS SHOWN IN PROFIT AND LOSS A/C APPROPRIATION ACCOUNT AND THE FIGURE OF PROFIT WAS TAKEN IN THE COMPUTATION OF INCOME AFTER DEDUCTING THE AMOUNT OF REMUNERATION F ROM THE NET PROFIT SHOWN BY THE ASSESSEE. THE REMUNERATION WAS ADDED TO THE TOTAL I NCOME OF THE ASSESSEE AND SUBSEQUENTLY REDUCED FROM THE TOTAL INCOME AS PER T HE PROVISION OF SEC. 40(B) OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, LD. CIT(A) DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- I HAVE EXAMINED ALL THE DOCUMENTS AND FOUND THEM I N ORDER. ONE THING I MUST SAY THAT AFTER APPREHENDING ALL THESE SHORT COMINGS , THE REMAND REPORT WAS ASKED FOR BUT IT IS FOUND FROM THE REMAND REPORT TH AT NO SUCH EFFORT WAS TAKEN BY THE ASSESSING OFFICER. HE SIMPLY TRIED TO ENDORS E THE ORDER BUT WITHOUT SOUND ARGUMENT. WHY THE DEPRECIATION AS PER IT RULE S WAS NOT ALLOWED HAS NOT BEEN MENTIONED IN REMAND REPORT. ON THE OTHER HAND THE ASSESSING OFFICER ARGUED THAT THE PARTNERS REMUNERATION WAS DEBITED IN THE APPROPRIATION PART OF THE PROFIT & LOSS ACCOUNT BUT DID NOT MENTION TH AT IN THE RETURN OF INCOME THE REMUNERATION WAS DISCLOSED. SUCH PARTIAL DISCLOSURE OF FACTS IS CONTRARY TO NATURAL JUSTICE. I HAVE GONE THROUGH THE ORDER, THE REMAND REPORT AN D SUBMISSION OF THE APPELLANT CAREFULLY AND DIRECT THE ASSESSING OFFICE R TO DELETE THE ADDITION OF RS.21,23,616.00. THIS GROUND IS ALLOWED. BEING AGGRIEVED BY THIS, REVENUE HAS COME UP IN APP EAL BEFORE US. 11. BEFORE US LD. DR SUBMITTED THAT THE ISSUE OF RE MUNERATION IS TO BE VERIFIED THEREFORE SAME SHOULD BE RESTORED TO THE FILE OF AO . THE LD. DR VEHEMENTLY SUPPORTED ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 10 THE ORDER OF THE AO. THE LD. AR FOR THE ASSESSEE, ON THE OTHER HAND, RELIED ON THE ORDER OF LD. CIT(A). THE LD. AR FURTHER DREW OUR AT TENTION ON PAGE 4 OF THE PAPER BOOK WHERE PROFIT AND LOSS ACCOUNT WAS PLACED AND A LSO FURTHER DREW OUR ATTENTION ON PAGE 25 OF THE PAPER BOOK WHERE THE COMPUTATION OF INCOME WAS PLACED. THE LD. AR SUPPORTED THE ORDER OF THE LD. CIT(A). 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE AFORESAID D ISCUSSION, WE FIND THAT AO MADE THE ADDITION ON ACCOUNT OF DIFFERENCE IN THE NET PR OFIT SHOWN BY ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT AND PROFIT SHOWN IN THE COMPUTATIO N OF INCOME. HOWEVER ON PERUSAL OF AUDITED PROFIT AND LOSS A/C OF ASSESSEE ALONG WI TH COMPUTATION OF INCOME, WE FIND THAT ASSESSEE IN ITS PROFIT AND LOSS A/C HAS NOT SH OWN ANY REMUNERATION TO THE PARTNERS BUT SAME WAS SHOWN IN THE PROFIT AND LOSS ACCOUNT A PPROPRIATION. HOWEVER THE AMOUNT SHOWN IN THE COMPUTATION OF INCOME WAS AFTER DEDUCT ION OF PARTNERS REMUNERATION. THEREFORE, MISMATCH IN FIGURE WAS OBSERVED. THEREFO RE AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, WE FIND NO DIFFERENCE B ETWEEN AMOUNT OF PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT AND IN THE COMPUTATION OF INCOME. AS SUCH, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A). WE HOLD ACCOR DINGLY. THIS GROUND OF REVENUE IS DISMISSED. 13. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR 14,18,161/- ON ACCOUNT OF DIVERSIFICATION OF INTER EST BEARING FUND TO INTEREST FREE LOAN. 14. THE ASSESSEE IN ITS BALANCE-SHEET HAS SHOWN SUN DRY DEBTORS FOR 1,59,91,359/-. ON QUESTION FOR THE DETAILS OF SUNDRY DEBTORS AS WE LL AS SUNDRY CREDITOR ASSESSEE FAILED TO SUBMIT THE SAME. ACCORDINGLY, AO TREATED THE SAM E AS DIVERSION OF FUND AND DISALLOWED THE INTEREST CLAIMED BY ASSESSEE FOR 14,18,161/- BY ADDING TO THE TOTAL INCOME OF ASSESSEE. 15. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT THE AMOUNT OF SUNDRY DEBTORS IS ONLY 3.34% OF THE NET SALE SHOWN BY ASSESSEE. IN EARLIER YEAR NO INTEREST WAS CHARGED F ROM THE DEBTOR AND THE CHARGING OF INTEREST FROM THE DEBTOR IS A BUSINESS POLICY. ACCO RDINGLY, AO CANNOT DIRECT THE ASSESSEE TO CHARGE THE INTEREST ON THE AMOUNT OF SU NDRY DEBTOR. AFTER CONSIDERING THE ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 11 SUBMISSIONS AND FACTS OF THE CASE, LD. CIT(A) DELET ED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- ADDITION WAS MADE ON TWO REASONS IN THE ORDER IT IS MENTIONED THAT INTEREST FREE LOAN WAS GIVEN TO REALTIES AND SISTER CONCERNS AND IN THE COMPUTATION PART OF THE ORDER THE REASON MENTIONED AS NO INTEREST CH ARGED FROM DEBTORS. THE REMAND REPORT ALSO FAILED TO REMOVE THIS CONFUSION. THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT DENIED BOTH THE FAC TS OF INTEREST FREE LOAN TO RELATIVES AND INTEREST TO BE CHARGED FROM DEBTORS W HICH IS 3.34% OF THE TOTAL SALES. NO INTEREST FREE LOAN WAS GIVEN TO RELATIVES AND APPELLANT IS UNDER NO OBLIGATION TO CHARGE INTEREST FROM DEBTORS. SO, IN ABSENCE OF DEFINITE REASON OF ADDITION I DIR ECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.14,18,161.00. THIS GROUND IS ALLOWED. BEING AGGRIEVED BY THIS, REVENUE HAS COME UP AN APP EAL BEFORE US. 16. BEFORE US LD. DR SUBMITTED THAT THE AO HAD MADE AN ADDITION OF RS.14,18,161/- ON THE GROUND THAT THE ASSESSEE HAS PAID INTEREST OF RS.14,18,161/- TO THE BANK BUT HAS NOT CHARGED INTEREST @12% PER ANNU M ON LOANS AND ADVANCES TOTALING TO RS.1,59,91 ,359/- GIVEN TO 20 PERSONS T HAT WORKS OUT TO RS.19,18,963/-. THE INTEREST BEARING FUNDS OF THE ASSESSEE INSTEAD OF B EING DEPLOYED IN THE BUSINESS FOR THE PURPOSE OF EARNING PROFIT HAS BEEN DIVERTED TO ITS SISTER CONCERNS AND CLOSE RELATIVES WITHOUT ANY COMMERCIAL CONSIDERATION OF CHARGING OF INTEREST. TWO MAIN ISSUES WHICH ARISE ARE AS FOLLOWS:- I) WHETHER THE LOANS GIVEN BY THE ASSESSEE TO ITS S ISTER CONCERNS AND RELATIVES CAN BE SAID TO BE OUT OF THE FUNDS OF THE ASSESSEE WHICH ARE BORROWED FROM THE BANK AND SUCH BORROWED FUNDS HAVE BEEN UTILIZED IN NON-INTEREST BEARING LOANS AND ADVANCES? II) WHETHER THERE WAS ANY COMMERCIAL EXPEDIENCY FOR GRANT OF THE LOAN TO SUCH PARTIES AND SUCH LOANS WERE GIVEN FOR PURPO SE OTHER THAN BUSINESS PURPOSE? 7. IN THE INSTANT CASE THE LOANS AND ADVANCES WERE GIVEN WITHOUT ANY BUSINESS CONSIDERATION WITH A VIEW TO ACCOMMODATING ITS SIST ER CONCERNS AND CLOSE RELATIVES. IT HAS NOT DERIVED ANY COMMERCIAL BENEFI T BY ADVANCING SUCH LOANS. THE LD. CIT (A) HAS DELETED THE ADDITION ON THE GRO UND THAT THE ASSESSEE DID NOT ADVANCE ANY INTEREST FREE LOAN TO ITS SISTER CO NCERN AND RELATIVES WHEREAS IN THE COMPUTATION PORTION IT WAS MENTIONED THAT ' NO INTEREST WAS CHARGED FROM DEBTORS '. MERELY ASSERTING THAT NO INTEREST BEARING FUNDS WERE ADVANCED DOES NOT WARRANT DELETION OF ADDITION WHICH IS BASED ON STRONG LOGIC. IN FACT THERE IS NO CONTRADICTION IN THIS RESPECT. IT IS THE CASE OF THE AO THAT INTEREST BEARING ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 12 FUNDS WERE ADVANCED TO SISTER CONCERN AND RELATIVES ON WHICH NO INTEREST WAS CHARGED. THUS, THE AO HAS CORRECTLY DISALLOWED THE ENTIRE CLAIM OF INTEREST CHARGES OF RS.14,18,161/- ON LOANS TAKEN BY IT FROM THE BANKS WHICH IS LESS THAN THE INTEREST OF RS.19,18,963/- WHICH THE ASSESSEE W OULD HAVE OTHERWISE EARNED FROM ITS DEBTORS. THE BASIS OF THE FINDING OF THE C IT(A) IS NOT JUSTIFIABLE FOR THE REASON THAT THE ADDITION WAS DELETED EXCLUSIVELY ON MERE DENIAL BY THE AIR OF THE ASSESSEE THAT THE ASSESSEE HAS NOT ADVANCED LOA NS OUT OF INTEREST BEARING FUNDS AND THEREFORE, IT WAS NOT UNDER ANY OBLIGATIO N TO CHARGE INTEREST THEREON. SINCE, THE ASSESSEE HAS FAILED TO DISPROVE THE FIND ING IN THE REMAND REPORT OF THE AO WHICH WAS ALSO NOT CONSIDERED BY THE CIT(A) WHILE DELETING SUCH ADDITION, HIS ORDER IS LIABLE TO BE SET ASIDE AND T HAT OF THE AO BE RESTORED. 8. THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF E LMER HAVELL ELECTRICS V. COMMISSIONER OF INCOME-TAX REPORTED IN [2005] 277 I TR 549 (DELHI)/[2005] 197 CTR 316 (DELHI) [2005] 148 TAXMAN 57 (DELHI) HA S HELD THAT WHERE ASSESSEE HAD BORROWED INTEREST BEARING LOANS FROM M ARKET AND AT SAME TIME IT ADVANCED INTEREST-FREE LOAN TO ITS SISTER CONCERN, ASSESSING OFFICER WAS JUSTIFIED IN MAKING AN ADDITION TO EXTENT OF PROPORTIONATE IN TEREST CHARGEABLE FROM SISTER CONCERN. IT OBSERVED AS UNDER:- '5 .... IT HAS BEEN CLEARLY ESTABLISHED ON RECORD T HAT THE ASSESSEE ITSELF HAD TAKEN LOANS WITH INTEREST AND HAD ADVANCED FUND S BY DIVERSION OR OTHERWISE TO ITS SISTER CONCERN FREE OF INTEREST. I N THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL CALLS FOR NO INTERFERENCE BY THIS COURT AN D IN ANY CASE NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATIO N IN THE PRESENT APPEAL.' 9. THEREFORE, IT IS REQUESTED THAT THE ORDER OF LD. CIT (A) MAY BE SET ASIDE AND T AT OF THE ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND THE LD. AR RELIED ON THE ORDER OF LD. CIT(A). 17. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT AO OBSERVED THAT INTEREST BEARING FUND HAS BEEN DIVERTED BY ASSESSEE TO INTEREST FREE LOAN. THEREFORE, INTEREST EXPENSE CLAIMED BY ASSESSEE WAS DISALLOWED . AT THIS JUNCTURE, WE FIND IMPORTANT TO REPRODUCE THE OBSERVATION OF AO IN HIS ORDER AS UNDER:- DURING THE YEAR UNDER CONSIDERATION, THE SUND RY DEBTORS IN THE BALANCE SHEET SHOWS RS.159,91,359/- FROM 20 (TWENTY ) PARTIES. THE ASSESSEE WAS ASKED TO GIVE WHY THE INTEREST SHOULD NOT BE CH ARGED FROM THE SAID PARTIES. NEITHER THE ASSESSEE HAS FILED THE DETAILS OF PARTI ES, NOR WAS ANY INTEREST FROM SUCH PARTIES SHOWN IN THE P & L A/C. NEITHER THE CO PIES OF THE CREDITORS, NOR THE DEBTORS WERE FILED. THEREFORE, 12% INTEREST IS LIAB LE TO CHARGED FROM THE ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 13 DEBTORS WHICH COMES TO RS.19,18,963/-. AS THE ASSES SEE HAS PAID THE BANK INTEREST OF RS.14,18,161/- TO THE BANK [IN THE IMME DIATELY PRECEDING YEAR, AN INTEREST OF RS.6,30,510/- WAS DEBITED TO THE P & L A/C IN THE AY 2007-08 AND IN THE AY 2006-07 A SUM OF RS.63,922/- WAS PAID TO THE BANK]. THUS DISALLOWANCE ON THIS ACCOUNT FOR NOT CHARGING INTEREST FROM RELA TIVES AND ASSOCIATES OF THE PARTNERS IS ADDED TO THE EXTENT OF RS.14,18,161/-. FROM THE ABOVE OBSERVATION, WE FIND THAT AO SOUGHT CLARIFICATION FROM ASSESSEE FOR NOT CHARGING THE INTEREST AMOUNT FROM DEBTORS SHOWN IN THE BALANCE-SHEET OF ASSESSEE. WE ACCORDINGLY FIND THAT THERE IS NO DISPUTE WITH R EGARD TO AMOUNT OF DEBTOR SHOWN IN THE BALANCE-SHEET VIS--VIS INTEREST FREE LOAN PROV IDED BY ASSESSEE. IN THE ABSENCE OF ANY SPECIFIC FINDING WITH REGARD TO DIVERSION OF FU ND WE ARE NOT AGREED WITH THE ARGUMENTS PLACED BY LD. DR. SIMILARLY, WE ALSO FIND THAT IT IS THE DISCRETION OF THE ASSESSEE TO CHARGE OR NOT TO CHARGE INTEREST FROM T HE DEBTORS. THE AO CANNOT ENTER INTO THE SHOES OF ASSESSEE FOR DECIDING TO CHARGE INTERE ST ON THE AMOUNT OF DEBTOR SHOWN AS ON 31.03.2008 IN ITS BALANCE SHEET. IN THE LIGHT OF ABOVE REASONING, WE HOLD THAT THE ORDER OF THE LD. CIT(A) IS CORRECT AND IN ACCORDANC E WITH LAW AND NO INTERFERENCE IS CALLED FOR. HENCE, THIS GROUND OF REVENUES APPEAL IS DISMISSED. 18. LAST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY AO FOR 4,84,456/- ON ACCOUNT OF DIFFERENCE IN GROSS PROF IT. 19. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THE AMOUNT OF GROSS PROFIT SHOWN BY THE ASSESSEE IN COMPARISON TO EARLIER YEAR IS LESS AND THEREFORE THE AO MADE THE ADDITION OF 4,84,456/- TO THE TOTAL INCOME OF ASSESSEE. 20. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO DELETED THE ADDITION MADE BY AO BY OBSERVING AS UNDER:- THE ASSESSING OFFICER CONSIDERED THE FIGURE OF RS. 4,84,456.00 ON THE BASIS OF 0.41% ON TURNOVER OF RS.1,11,16,48,144.00 WHICH IS RS.45,57,757.00 AGAINST A DISCLOSED GROSS PROFIT OF RS.40,73,301.00. SO, THE DIFFERENCE OF (45,57,757.00 40,73,301.00) = RS.4,84,456.00 WAS ADDED BACK. FROM THE ORDER, IT IS NOT CLEAR HOW THE GROSS PROFI T PERCENTAGE OF 0.41 WAS DETERMINED. THE AUTHORIZED REPRESENTATIVE DRAW MY A TTENTION TO THE AUDITED PROFIT & LOSS ACCOUNT WHERE THE ACTUAL SALE IS RS.1 ,00,27,99,834.00 WHEREAS THE ASSESSING OFFICER CONSIDERED THE SALES AT RW.1, 11,16,48,144.00. MOREOVER, ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 14 THE ASSESSING OFFICER MENTIONED IN HIS REMAND REPOR T TO CONSIDER THE ISSUE ON MERIT WITHOUT MENTIONING ANY REASON FOR SUCH RECOMM ENDATION OF ON MERIT. WHEN THE BASIC FIGURE IS WRONG AND THE ASSESSING OF FICER DID NOT MENTION THE BASIS OF GROSS PROFIT PERCENTAGE, NO MERIT CAN BE A PPLIED. FR THIS REASON THE ADDITION OF RS.4,84,456.00 ON THE GROUND OF GROSS P ROFIT PERCENTAGE IS DELETED. THIS GROUND IS ALLOWED. BEING AGGRIEVED BY THIS, REVENUE HAS COME UP AN APP EAL BEFORE US. 21. AT THE OUTSET, WE FIND THAT IT IS IMPORTANT TO REPRODUCE THE REMAND REPORT OF AO AS UNDER:- THE LD. AO HAS MADE AN ADDITION OF RS.4,4,456/- UN DER THE HEAD GROSS PROFIT DIFFERENCE BY REJECTING THE BOOK RESULT U/S 45 OF T HE INCOME TAX ACT, 1961. IN THE PROCESS HE HAS ADOPTED A GROSS PROFIT RATE OF 0 .41% ON GROSS TURNOVER OF RS.111,16,48,144/- DETERMINING GP AT RS.45,57,757/- AS AGAINST GP OF RS.40,73,301/-. IT APPEARS THAT THE LD. AO HAS NOT BROUGHT OUT ANY MATERIAL FOR REJECTION OF THE BOOKS OF ACCOUNT AND COGENT RE ASONS FOR ADOPTION OF GP RTE AT 0.41% HAVE NOT BEEN GIVEN THE ISSUE OF ADDITION MA9Y KINDLY BE CONSIDERED ON MERIT. FROM THE PERUSAL OF REMAND REPORT, IT IS AMPLE CLEA R, THAT THERE IS NO COGENT REASON FOR REJECTING THE BOOKS OF ACCOUNT AND ESTIMATING THE G ROSS PROFIT @ 0.41%. THIS FACT HAS BEEN DULY ACCEPTED BY AO IN ITS REMAND REPORT. IN T HIS VIEW OF THE MATTER, WE FIND NO REASON TO INTERFERE WITH THE FINDINGS ARRIVED BY TH E LD. CIT(A). UNDER THE CIRCUMSTANCES, THIS ISSUE OF REVENUES APPEAL IS DI SMISSED. 22. IN THE RESULT, REVENUES APPEAL IS DISMISSED. COMING TO ASSESSEES APPEAL IN ITA NO. 2446/KOL/201 3 . 23. SOLE ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY SUSTAI NING THE DISALLOWANCE OF 19,22,662/- ON ACCOUNT OF CREDIT ENTRIES FOUND IN THE BOOKS OF ACCOUNT OF ASSESSEE. 24. ASSESSING OFFICER IN HIS ASSESSMENT ORDER OBSER VED THAT THE CREDIT ENTRY IN THE NAME OF M/S VEERA ENTERPRISE (MVE FOR SHORT) WAS FO UND IN THE BOOKS OF ACCOUNT BUT NO DETAILS WAS SUBMITTED BY ASSESSEE IN SUPPORT OF IT. THEREFORE, SAME WAS DISALLOWED BUT OMITTED TO ADD IN THE COMPUTATION OF INCOME INA DVERTENTLY. THEREFORE AO RECTIFIED ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 15 ITS MISTAKE U/S. 154 OF THE ACT BY DISALLOWING A SU M OF 19,22,662/- AND ADDED TO THE TOTAL INCOME OF ASSESSEE. 25. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO UPHELD THE ORDER OF AO BY OBSERVING AS UNDER:- 4.4 THE APPELLANT HAS FURTHER CHALLENGED THAT SINC E THE ORDER WAS PASSED BY JCIT, THE RECTIFICATION CANNOT BE DONE BY AN ACIT. THE ABOVE OBJECTION OF THE APPELLANT IS NOT SUSTAINABLE. IT IS NOT NECESSARY T HAT THE RECTIFICATION ORDER HAS TO BE MADE BY THE SAME OFFICER WHO HAD EARLIER PASS ED THE ORDER TO BE RECTIFIED. WHAT IS NECESSARY IS THAT THE ORDER HAS TO BE MADE BY THE AUTHORITY WHO IS HAVING JURISDICTION OVER THE ASSESSEE AT THE TIME O F THE RECTIFICATION ORDER IS TO BE PASSED, SUBJECT TO FULFILLMENT OF THE OTHER REQU ISITE CONDITIONS PRESCRIBED IN SECTION 154. 5. IN THE RESULT, THE APPEAL IS DISMISSED. BEING AGGRIEVED BY THIS, ASSESSEE HAS COME UP AN AP PEAL BEFORE US. 26. BEFORE US LD. AR FOR THE ASSESSEE FILED PAPER B OOK RUNNING FROM PAGES 1 TO 33 AND SUBMITTED THAT CREDIT AMOUNT SHOWN IN THE NAME OF MVE IS REPRESENTING THE PURCHASE MADE FROM THE SAID PARTY. THE LD. AR IN SU PPORT OF ITS CLAIM HAS SUBMITTED THE LEDGER COPY MVE WHICH IS PLACED ON PAGES 24 TO 33 OF THE PAPER BOOK. THE LD. DR ON THE OTHER HAND, VEHEMENTLY RELIED ON THE ORDE R OF AUTHORITIES BELOW. HE STATED THAT THE ASSESSEE WAS GIVEN SUFFICIENT OPPORTUNITIE S BUT HAD NOT AVAILED THE SAME. EVEN BEFORE LD. CIT(A) ASSESSEE HAS NOT SUBMITTED THE DE TAILS IN RESPECT OF CREDIT ENTRIES FOUND IN THE NAME OF MVE IN ITS BOOKS OF ACCOUNT. L D. DR VEHEMENTLY OPPOSED TO RESTORE THE MATTER BEFORE AO AND VEHEMENTLY RELIED IN THE ORDER OF AUTHORITIES BELOW. 27. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE FIND THAT THE ADD ITION WAS MADE BY AO ON ACCOUNT OF NON-SUBMISSION OF SUPPORTING DOCUMENTS BY ASSESS EE IN RESPECT OF CREDIT ENTRIES FOUND IN THE BOOKS OF ACCOUNT OF ASSESSEE. NOW, BEF ORE US LD. AR FOR THE ASSESSEE FIRST TIME SUBMITTED THAT THE LEDGER COPY OF MVE WH ICH CONSTITUTE THE ADDITIONAL DOCUMENTS BUT THE SAME HAS NOT BEEN VERIFIED BY AUT HORITIES BELOW. NEEDLESS TO MENTION THAT THE ADDITIONAL DOCUMENT WAS NOT SUBMIT TED BEFORE AUTHORITIES BELOW BUT IT DOES NOT MEAN THAT HE SHOULD BE DEPRIVED OF JUST ICE. IN THIS VIEW OF THE MATTER AND IN ITA NO.1933 &2446/KOL/2013 A.Y. 2008-0 9 JCIT RNG-56 KOL. VS. M/S ARTI BRIGHT CO. PAGE 16 THE INTEREST NATURAL JUSTICE AND FAIR PLAY WE ARE I NCLINED TO RESTORE THE MATTER TO THE FILE OF AO FOR FRESH ADJUDICATION AS PER LAW AFTER PROVI DING REASONABLE OPPORTUNITY OF BEING HEARD TO ASSESSEE. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE IN TERMS OF ABOVE. 28. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 29. IN COMBINE RESULT, REVENUEA APPEAL STANDS DISMISSE D AS WELL AS APPEAL OF ASSESSEE STANDS ALLOWED FOR STATISTICAL P URPOSE. ORDER PRONOUNCED IN OPEN COURT ON 11/01/2017 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP SR.P.S '#$ - 11/01/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S ARTI BRIGHT CO. 167/4 LENIN SARANI, 2 ND FL. KOL-72/ ARTI BRIGHT CO. C/O D.K.DE SARKAR & CO, 167/4, LENIN SARANI, 2 ND FL. 2. /REVENUE-JCIT, RANGE-56, HQRS21, 3 GOVT. PLACE (W), 2 ND FLOOR, KOL-01/ ACIT, RANGE-56, 3, GO VT. PLACE, KOLKATA-1 3. ##%& ' / CONCERNED CIT 4. ' - / CIT (A) 5. ()* ++%& , %& / DR, ITAT, KOLKATA 6. *,- / GUARD FILE. BY ORDER/ , /TRUE COPY/ / # %&,