ITO (Central), Kolhapur V. M/s. Asian Radio House, Sangli

ITA 1971/PUN/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2501 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K RASTOGI
• Keywords: Depreciation; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NOS.1968 TO 1971/PN/2012 A. YRS. : 2004-05 TO 2006-07, 2008-09 THE INCOME TAX OFFICER, (CENTRAL), KOLHAPUR. . APPELLANT VS. M/S ASIAN RADIO HOUSE, SANGLI MIRAJ ROAD, NEAR MARKET YARD, SANGLI 416 416. PAN : AACFA7794F . RESPONDENT / APPELLANT BY : SHRI S. K. RASTOGI, CIT / RESPONDENT BY : SHRI KISHOR PHADKE / DATE OF HEARING : 20.01.2016 / DATE OF PRONOUNCEMENT: 18.03.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE ABOVE CAPTIONED FOUR APPEALS FILED BY THE REVEN UE ARE AGAINST THE COMMON ORDERS OF CIT(A), KOLHAPUR DATED 23.07.2012 RELATING TO ASSESSMENT YEARS 2004-05 TO 2006-07 & 2008-09 PASSED UNDER SEC TION 143(3) R.W.S. 153A(B) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. SINCE THE ISSUES INVOLVED IN APPEAL ARE SIMILAR FOR THE ASSESSMENT YEARS UNDER CONSIDERATION, THEY ARE BEING DISPOSED OF IN THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NOS.1968 TO 1971/PN/2012 ITA NO.1968/PN/2012 (A.Y. 2004-05): 3. FIRST, WE SHALL TAKE-UP THE APPEAL OF THE REVENU E IN ITA NO.1968/PN/2012 RELATING TO ASSESSMENT YEAR 2004-05 FOR ADJUDICATION. 4. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL :- 01. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE CIT(A) ERRED IN DELETING ADDITION OF RS.9,35,165/- MADE ON ACCOUNT OF PURCHA SES RECORDED IN THE BOOKS WHERE NO GOODS WERE RECEIVED. 02. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) ERRED DELETING THE ADDITION OF RS.5,86,098/- MADE ON ACCO UNT OF DIFFERENCE IN RECORDING EXPENSES IN THE BOOKS OF ACCOUNT, IGNORING THE SPEC IFIC PROVISIONS UNDER RULE 46A OF THE IT RULES 1962. 03. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CI T(A) BE VACATED AND THAT OF THE AO'S ORDER BE RESTORED. 04. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND , MODIFY ANY OF THE ABOVE GROUNDS RAISED AT THE TIME OF PROCEEDINGS BEFORE TH E HON'BLE INCOME TAX APPELLATE TRIBUNAL. 5. THE RELEVANT FACTS OF THE CASE, IN BRIEF, ARE TH AT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TRADING OF ELECTRONIC G OODS ON WHOLESALE AND RETAIL BASIS. A SEARCH ACTION UNDER SECTION 132(1) WAS CO NDUCTED AT THE BUSINESS PREMISES ON 18.10.2007. AS PER GROUND NO.1 OF THE APPEAL, REVENUE IS AGGRIEVED BY THE ACTION OF THE CIT(A) IN DELETING T HE ADDITION OF RS.9,35,165/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PURCHAS ES RECORDED IN THE BOOKS WHERE NO GOODS WERE RECEIVED. THE ASSESSING OFFICE R MADE AN ADDITION OF RS.9,35,165/- ON ACCOUNT OF INFLATED PURCHASES IN T HE BOOKS OF THE ASSESSEE. SIMILAR ADDITIONS WERE MADE BY THE ASSESSING OFFICE R IN SUBSEQUENT ASSESSMENT YEARS I.E. A.Y.2005-06 AND 2006-07 IN AP PEAL FOR AN AMOUNT OF RS.8,58,516/- AND RS.3,41,088/- RESPECTIVELY. IN A SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THOUGH THE ASSESSEE HAD ACCOUNTED FOR PURCHASES OF ELECTRONIC GOODS FROM ITS MAJOR SUPPLI ER M/S VIDEOCON INDUSTRIES LTD., THESE GOODS WERE NOT RECEIVED BY THE ASSESSEE TILL 18.10.2007 (I.E. THE DATE OF SEARCH). THE DETAILS OF THE SAME AS TABULA TED BY THE ASSESSING OFFICER IS AS UNDER :- 3 ITA NOS.1968 TO 1971/PN/2012 ASSESSMENT YEAR INVOICES DEBITED BY M/S VIDEOCON INDUSTRIES LTD. (RS.) INVOICES DEBITED BY M/S VIDEOCON INDUSTRIES LTD. (A.C. DIVISION) (RS.) ADDITION MADE BY AO ON ACCOUNT OF INFLATED PURCHASES (COL.2+3) (RS.) 1 2 3 4 2004-05 9,19,175 15,990 9,35,165/- 2005-06 8,42,526 15,990 8,58,516/- 2006-07 3,23,888 17,200 3,41,088/- UNDER THESE CIRCUMSTANCES, IT WAS HELD THAT THE ASS ESSEE HAD BOOKED THE PURCHASES OF ELECTRONIC ITEMS FOR WHICH GOODS WERE NOT RECEIVED AS ON THE DATE OF SEARCH ACTION. THE TOTAL INFLATED PURCHASES WOR KED OUT WERE BROUGHT TO TAX IN THE RESPECTIVE YEARS. 6. AGGRIEVED BY THE ACTION THE ASSESSING OFFICER, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEED INGS BEFORE THE CIT(A), IT WAS CONTENDED IN REBUTTAL THAT THERE ARE NO DOUBLE OR MULTIPLE RECORDING OF PURCHASES AND THE SUPPLIERS ACCOUNT ARE ALSO TALLIE D AND RECONCILED. THE CIT(A) AFTER EXAMINING THE VERSION OF THE ASSESSEE THREADBARE FOUND THAT DIFFERENCE BETWEEN THE ACCOUNT MAINTAINED BY THE AS SESSEE QUA THE ACCOUNT MAINTAINED BY THE SUPPLIER M/S VIDEOCON INDUSTRIES LTD. STANDS EXPLAINED AND RECONCILED. IT WOULD BE APT TO RECORD THE RELEVANT FINDINGS OF THE CIT(A) ON THE ISSUE :- 19. IN RESPECT OF ADDITION OF RS.9,35,165/- MADE B Y A.O. FOR A.Y. 2004-05, THE APPELLANT HAS SUBMITTED THAT THE FIGUR E OF RS.9,35,165/- CONSISTS OF TWO AMOUNTS. FIRST IS AN AMOUNT OF RS.9 ,19,175/- WHICH IS IN RESPECT OF VARIOUS INVOICES RAISED BY CTV / AUDIO D IVISION OF VIDEOCON INDUSTRIES LTD AND SECOND IS THE AMOUNT OF RS.15,99 0/- IS IN RESPECT OF INVOICE RAISED BY A.C. DIVISION OF VIDEOCON INDUSTR IES LTD. IN RESPECT OF ADDITION OF RS.9,19,175/-, IT IS CONTENDED THAT NOT ONLY THE GOODS, BUT ALSO THE INVOICES IN RESPECT OF THESE GOODS, WERE NOT RECEIV ED BY THE APPELLANT ON THE DATE OF SEARCH. IT WAS CONTENDED THAT THE BILLS WER E DEBITED BY M/S VIDEOCON INDUSTRIES IN ITS BOOKS OF ACCOUNTS AS IF GOODS WER E SOLD TO THE APPELLANT; HOWEVER, THE APPELLANT HAS NOT RECORDED THEM IN ITS BOOKS OF ACCOUNTS BECAUSE NEITHER INVOICES NOR THE MATERIAL WERE RECE IVED BY THE APPELLANT AS ON THE DATE OF SEARCH. IF ANY INVOICE WAS UNRECORDE D OR ANY MATERIAL WAS NOT SHOWN, THEN THE SAME WOULD BE DISCOVERED DURING THE COURSE OF SEARCH. BUT THIS IS NOT THE CASE AND NOTHING IN RESPECT OF UNRE CORDED INVOICES OR UNRECORDED STOCK HAS BEEN POINTED OUT DURING SEARCH & SEIZURE ACTION IN RESPECT OF THESE ENTRIES. THUS, THERE WAS NO RECORD ING OR ACCOUNTING OF THESE INVOICES BY THE APPELLANT IN ITS BOOKS OF ACCOUNT. THEREFORE, THE QUESTION OF INFLATION OF PURCHASES DOES NOT ARISE AT ALL. IT WA S ALSO ARGUED THAT EVEN IF IT IS PRESUMED THAT THESE INVOICES WERE RECORDED AGAINST GOODS TO BE RECEIVED, IT WOULD NOT BE A CASE OF INFLATED PURCHASES UNLESS THESE WERE RECORDED MORE THAN ONCE. THERE IS NO CASE OF INFLATION OF PURCHAS ES, AS INFLATION OF 4 ITA NOS.1968 TO 1971/PN/2012 PURCHASES SUGGESTS TWICE OR MORE THAN ONCE RECORDIN G OF SAME PURCHASE INVOICE. THE BALANCE IN ACCOUNTS OF M/S VIDEOCON AN D APPELLANT ALSO TALLY SUBJECT TO THESE ENTRIES. THUS, THE ADDITION OF RS. 9,19,175/ - IS ON WRONG FOOTING, UNJUSTIFIED, INCORRECT APPRECIATION OF FAC TS AND HENCE DESERVES TO BE QUASHED. WITHOUT PREJUDICE TO THE ABOVE, THE APPELL ANT HAS FURTHER CONTENDED THAT IF THE ASSESSING OFFICER'S CONCLUSIO N IS TO BE ACCEPTED, THEN THE APPELLANT SHOULD BE ALLOWED TO RECORD THE PURCH ASES IN ITS BOOKS AT LEAST ONCE AND CLAIM THE SAME AS EXPENDITURE. IN RESPECT OF ADDITION MADE BY A.O. AMOUNTING TO RS.15,990/- ON ACCOUNTS OF DEBITS BY A.C. DIVISION OF VIDEOCON INDUSTRIES LTD IS CONCERNED, IT IS SUBMITT ED BY THE APPELLANT THAT THIS AMOUNT WAS IN RESPECT OF INVOICES DEBITED BY V IDEOCON INDUSTRIES LTD, BUT THE INVOICES WERE NOT RECEIVED BY THE APPELLANT . IN FACT, M/S VIDEOCON INDUSTRIES LTD. HAS GIVEN CREDIT NOTE ON 08/01/2008 FOR INVOICE NO. SD/592 AND HAVE RECTIFIED ITS MISTAKE, A COPY OF CREDIT NO TE IS SUBMITTED BEFORE ME. THE APPELLANT HAS NOT RECORDED THIS CREDIT NOTE BEC AUSE IT HAS NOT RECORDED THE ORIGINAL INVOICE ALSO. IN SUPPORT OF ITS CLAIM, THE APPELLANT HAS FURNISHED STATEMENT OF ACCOUNTS OF VIDEOCON AND ALS O RELEVANT EXTRACT OF VIDEOCON FROM THE APPELLANT'S BOOKS OF ACCOUNT ALON GWITH SUMMARIZED POSITION. 20. ON PERUSAL OF DOCUMENTS SUBMITTED BEFORE ME, IT IS SEEN THAT THE INVOICES TOTALING TO RS.9,19,175/- WERE DEBITED BY M/S VIDEOCON INDUSTRIES ON VARIOUS DATES DURING 20/08/2003 TO 25 /03/2004 IN ITS BOOKS OF ACCOUNTS AS IF GOODS WERE SOLD TO THE APPELLANT; HOWEVER, NO MATERIAL OR INVOICE WAS RECEIVED BY THE APPELLANT. THEREFORE, T HE APPELLANT DID NOT RECORD ANY TRANSACTION IN ITS BOOKS OF ACCOUNTS AS SHOWN BY THE PRINCIPLE 'VIDEOCON' IN ITS BOOKS OF ACCOUNTS ON THE DATE OF SEARCH. AS THERE WAS NO RECORDING OR ACCOUNTING OF THESE INVOICES BY THE AP PELLANT IN ITS BOOKS OF ACCOUNT, THE QUESTION OF INFLATION OF PURCHASES DOE S NOT ARISE AT ALL. IN VIEW OF THE ABOVE, THE ADDITION RS.9,19,175/- STANDS DEL ETED. IN RESPECT OF ADDITION OF RS.15,990/-, IT IS SEEN THAT M/S VIDEOCON INDUST RIES LTD. HAS GIVEN CREDIT NOTE ON 08/01/2008 FOR INVOICE NO. SD/592 DEBITED B Y IT. THE GOODS BOOKED UNDER INVOICE NO. SD/592 WERE NOT SOLD TO THE APPEL LANT AND M/S VIDEOCON INDUSTRIES LTD HAVE LATER RECTIFIED ITS MISTAKE BY ISSUE OF CREDIT NOTE DT. 08/01/2008. I FIND THAT THE APPELLANT HAS NOT RECOR DED THIS CREDIT NOTE BECAUSE IT HAS NOT RECORDED THE ORIGINAL INVOICE AL SO AS THE SAME WAS NEVER RECEIVED. THE REASON FOR NOT RECORDING INVOICE NO. SD/592 DT. 08/03/2004 AMOUNTING TO RS.15,990/- IN THE BOOKS OF ACCOUNTS O F THE APPELLANT IS SATISFACTORILY EXPLAINED BY THE APPELLANT. THEREFOR E, THE ADDITION OF RS.15,990/- IS UNWARRANTED. IN THE RESULT, ADDITION OF RS.9,35,165 /- (RS.9,19,175/- + RS. 15,990/-) IS DIRECTED TO BE DELETED. THE APPELLANT GETS RELIE F OF RS.9,35,165/ -. IN THE RESULT, THE GROUND OF APPEAL IN THIS RESPECT IS ALLOWED FOR A.Y . 2004-05. 7. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 8. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND POINTED OUT THAT THE VARIATION IN THE DEBTORS AND CREDITORS WERE ADMITTED BY THE ASSESSEE AND THE REFORE RELIEF GRANTED BY THE CIT(A) WAS NOT JUSTIFIED. 5 ITA NOS.1968 TO 1971/PN/2012 9. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE, ON THE OTHER HAND, SUBMITTED THAT THE DIFFERENCES BETWEEN THE ACCOUNT OF THE ASSESSEE AND THE SUPPLIER M/S VIDEOCON INDUSTRIES LTD. ARE DULY RECO NCILED AND FULLY EXPLAINED. ACCORDINGLY, THERE IS NO EXCESS RECORDING OF ANY PU RCHASES. 10. WE FIND THAT THE CIT(A) HAS GRANTED THE RELIEF TO THE ASSESSEE AFTER PROPER APPRECIATION OF THE FACTS AND CIRCUMSTANCES INVOLVED IN THIS CASE AS REPRODUCED IN PARA 6 ABOVE. WE DO NOT FIND ANY INF IRMITY IN THE FINDINGS ARRIVED AT BY THE CIT(A) WHICH ARE BASED ON APPRECI ATION OF OBJECTIVE FACTS. WE NOTICE THAT THE DIFFERENCE BETWEEN THE OUTSTANDI NG BALANCES OF THE TWO PARTIES WERE ATTRIBUTABLE TO ACCOUNTING TREATMENT A ND ARE DULY RECONCILED TO THE SATISFACTION OF CIT(A). IT WAS FOUND BY THE CIT(A) THAT THE ASSESSEE HAS RECORDED THE PURCHASE INVOICES ONLY WHERE GOODS WER E ACTUALLY RECEIVED. WITHOUT REPEATING THE FINDINGS OF THE CIT(A), WE EN DORSE THE SAME IN TOTALITY. THUS, WE FIND NO MERIT IN THE GROUND TAKEN BY THE R EVENUE AND ACCORDINGLY THE GROUND NO.1 IS DISMISSED. 11. IN THE SECOND GROUND, THE ASSESSING OFFICER HAS ASSAILED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS.5,86,098/ - MADE ON ACCOUNT OF DIFFERENCE IN RECORDING OF EXPENSES IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS OBS ERVED THAT WHEREAS ON THE ONE HAND M/S VIDEOCON LTD. HAD CREDITED APPELLANTS ACCOUNTS BY AN AMOUNT OF RS.1,17,69,178/- ON ACCOUNT OF CASH DISCOUNT, CR EDIT NOTES, SCHEME/BONUS, INCENTIVE, OCTROI ETC. IN THEIR BOOKS OF ACCOUNTS, ON THE OTHER HAND, THE ASSESSEES BOOKS REFLECTED CORRESPONDING DEBITS BY AN AMOUNT OF RS.1,11,83,080/- ONLY. THE ASSESSING OFFICER WAS O F THE VIEW THAT THE DIFFERENCE TOTALING TO RS.5,86,098/- WAS ON ACCOUNT OF NON-ACCOUNTING OF CREDIT NOTE DTD. 07/08/2003 FOR RS.3,35,790/- AND C REDIT NOTE DTD. 08/11/2003 FOR RS.2,50,308/- BY THE ASSESSEE IN ITS BOOKS OF A CCOUNTS. THE ASSESSING OFFICER OBSERVED IN THE ASSESSMENT ORDER THAT ASSES SEE WAS CONFRONTED WITH THESE FACTS DURING THE COURSE OF POST SEARCH VERIFI CATIONS AND ASSESSEE AGREES WITH THE SAME. IN VIEW OF THIS, THE DIFFERENTIAL A MOUNT OF RS.5,86,098/- WAS BROUGHT TO TAX CONSIDERING THE SAME AS ASSESSEES U NDISCLOSED INCOME. 6 ITA NOS.1968 TO 1971/PN/2012 11.1 IN THE FIRST APPELLATE PROCEEDINGS BEFORE THE CIT(A), THE ASSESSEE CHALLENGED THE ADDITION MADE BY THE ASSESSING OFFIC ER AND SUBMITTED THAT THE ASSESSING OFFICER HAS MADE A FALSE ALLEGATIONS THAT DIFFERENCES IN M/S VIDEOCON INDUSTRIES LTD. ACCOUNT WERE CONFRONTED TO THE ASSESSEE AND THE ASSESSEE AGREED WITH THE SAME. THE ASSESSEE FURTHE R STATED THAT ADDITION OF RS.5,86,098/- CONSIST OF TWO AMOUNTS, VIZ: (I) RS.3 ,35,790/- AND (II) RS.2,50,308/-. IN RESPECT OF AMOUNT OF RS.3,35,790 /-, THE ASSESSEE EXPLAINED THAT M/S VIDEOCON LTD. HAD ISSUED BILL OF RS.5,61,5 90/-, VIDE INVOICE NO. ID04548 DATED 21.07.2003, AND HAD ALSO GIVEN CREDIT NOTE DATED 07.08.2003 FOR OCTROI AMOUNTING TO RS.3,35,790/-. THE ASSESSEE HA VE BOOKED/ ACCOUNTED FOR ONLY THE NET AMOUNT OF RS.2,25,800/- (RS.5,61,590/- MINUS RS.3,35,790/-) ON 21.08.2003 IN ITS BOOKS OF ACCOUNT. THE ASSESSEE C ONTENDED THAT IT HAS NOT BOOKED THE PURCHASES TO THE EXTENT OF RS.3,35,790/- AS WELL AS CREDIT NOTE OF RS.3,35,790/- IN ITS BOOKS OF ACCOUNT. SIMILARLY, REGARDING ADDITION OF RS.2,50,308/-, THE ASSESSEE SUBMITTED THAT A CREDIT NOTE WAS ISSUED BY M/S VIDEOCON LTD. ON 08.11.2003, BUT THE ASSESSEE HAS B OOKED THE SAME ON 06.08.2003 ON THE BASIS OF TELEPHONIC TALK. HENCE, THE AMOUNT IS CREDITED IN THE BOOKS OF THE ASSESSEE EVEN PRIOR TO THE RECEIPT OF CREDIT NOTE PHYSICALLY. THEREFORE, IT WAS SUBMITTED THAT SINCE THE AMOUNT A GGREGATING TO RS.5,86,098/- (RS.3,35,790/- AND RS.2,50,308/-) WAS ALREADY ACCOU NTED FOR, THE ADDITION MADE WAS UNWARRANTED AND OPPOSED TO THE FACTS ON RE CORD. AS NOTED BY THE CIT(A), THE ASSESSEE IN SUPPORT OF ITS CLAIM FURNIS HED STATEMENT OF ACCOUNT OF M/S VIDEOCON INDIA LTD. AND ALSO RELEVANT ACCOUNT E XTRACT OF M/S VIDEOCON INDIA LTD. FROM ASSESSEES BOOKS ALONG WITH SUMMARI ZED POSITION. ON PERUSAL OF FACTS, THE CIT(A) FOUND MERIT IN THE EXPLANATION OFFERED BY THE ASSESSEE AND GRANTED RELIEF. THE RELEVANT EXTRACT OF THE ORDER OF THE CIT(A) DEALING WITH THE ISSUE IS REFERRED HEREUNDER :- 30. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT WITH REFERENCE TO THE FACTS OF THE CASE. IN RESPECT OF CREDIT NOTE NO. CGCT004 19 DT. 07/08/2003 AMOUNTING TO RS.3,35,790/-, I FIND THAT AS AGAINST INVOICE NO.ID 04548 DT. 21/07/2003 OF RS.5,61,590/- AND CREDIT NOTE NO. CGCT00419 DT. 07/ 08/2003 OF RS.3,35,790/- ISSUED BY M/S VIDEOCON, THE APPELLANT HAS ACCOUNTED FOR ON LY THE NET AMOUNT OF RS.2,25,800/- (RS.5,61,590/- MINUS RS.3,35,790/-) I N ITS BOOKS ON 21/08/2003. IN RESPECT OF CREDIT NOTE NO.C900017821 DT. 08/11/2003 FOR RS.2,50,308/- IS CONCERNED, I FIND THAT THE AMOUNT IS CREDITED BY THE APPELLANT IN ITS BOOKS OF ACCOUNTED ON 7 ITA NOS.1968 TO 1971/PN/2012 06/08/2003 ON THE BASIS OF TELEPHONIC TALK, I.E. MU CH BEFORE THE DATE ON WHICH IT WAS PHYSICALLY RECEIVED BY THE APPELLANT. SINCE THE DI FFERENCE OF RS.5,86,098/- IS SATISFACTORILY EXPLAINED BY THE APPELLANT, THE ADDI TION OF RS.5,86,098/- IS DIRECTED TO BE DELETED. THE GROUNDS OF APPEAL FOR A.Y. 2004-05 IN THIS RESPECT STANDS ALLOWED. 11.2 AGGRIEVED BY THE ACTION OF THE CIT(A), THE REV ENUE IS IN APPEAL BEFORE US. 11.3 THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE RE VENUE RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND PLEADED REVERSAL OF THE ORDER OF THE CIT(A). 11.4 THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSE SSEE, ON THE OTHER HAND, CONTENDED THAT THE RELIEF HAS BEEN GRANTED BY THE C IT(A) ON PROPER ANALYSIS OF THE FACTS AS NOTED IN THE FIRST APPELLATE ORDER. T HEREFORE, NO INTERFERENCE THEREOF IS CALLED FOR. 11.5 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). WE NOTICE THAT T HE DIFFERENCE OF RS.5,86,098/- BETWEEN THE ACCOUNT MAINTAINED BY THE SUPPLIER M/S VIDEOCON VIS--VIS THE ACCOUNT MAINTAINED BY THE ASSESSEE IS ON ACCOUNT OF TWO ENTRIES ONLY FOR WHICH THE DIFFERENCE WERE DULY IDENTIFIED AND RECONCILED BEFORE THE CIT(A). THE CONCLUSION OF THE CIT(A) GRANTING RELI EF TO THE ASSESSEE EMANATES FROM THE OBJECTIVE APPRECIATION OF THE FACTS IN PER SPECTIVE. THEREFORE, WE FIND NO INFIRMITY IN THE FINDINGS OF THE CIT(A) REPRODUC ED IN PARA 11.1 (SUPRA). ACCORDINGLY, GROUND NO.2 OF THE REVENUE APPEAL IS A LSO DISMISSED. 12. GROUND NOS.3 AND 4 ARE GENERAL IN NATURE AND DO ES NOT CALL FOR ANY ADJUDICATION. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.1968/PN/2012 RELATING TO ASSESSMENT YEAR 2004-05 IS DISMISSED. 8 ITA NOS.1968 TO 1971/PN/2012 ITA NO.1969/PN/2012 (A.Y. 2005-06): 14. NOW, WE SHALL TAKE-UP THE APPEAL OF THE REVENUE IN ITA NO.1969/PN/2012 RELATING TO ASSESSMENT YEAR 2005-06 FOR ADJUDICATION. 15. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 01. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE CIT(A) ERRED DELETING THE ADDITION OF RS.8,58,516/- MADE ON ACCOUNT OF PU RCHASES RECORDED IN THE BOOKS WHERE NO GOODS WERE RECEIVED, IGNORING THE SPECIFIC PROVISIONS UNDER RULE 46A OF THE IT RULES 1962. 02. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) ERRED DELETING THE ADDITION OF RS.86,871/ - MADE ON ACCOUNT OF DIF FERENCE IN CASH DISCOUNT FOR PURCHASES MADE FROM VIDEOCON LTD., WHICH WERE UNACC OUNTED IN THE BOOKS OF ACCOUNTS, AFTER VERIFYING THE RELEVANT RECORD PRODU CED BEFORE HIM, IGNORING THE SPECIFIC PROVISIONS UNDER RULE 46A OF THE IT RULES 1962. 03. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) ERRED DELETING THE ADDITION OF RS.91,627/- MADE ON ACCOUNT OF CASH DISCOUNT AND UNACCOUNTED CREDIT NOTES IN THE BOOKS OF ACCOUNTS AFTER VERIFYI NG THE RELEVANT RECORDS PRODUCED BEFORE HIM, IGNORING THE SPECIFIC PROVISIONS UNDER RULE 46A OF THE IT RULES 1962. 04. THE APPELLANT PRAYS THAT THE ORDER OF THE LD.CI T(A) BE VACATED AND THAT OF THE AO'S ORDER BE RESTORED. 05. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND , MODIFY ANY OF THE ABOVE GROUNDS RAISED AT THE TIME OF PROCEEDINGS BEFORE TH E HON'BLE INCOME TAX APPELLATE TRIBUNAL. 16. BY WAY OF GROUND NO.1, THE REVENUE HAS RAISED G RIEVANCE AKIN TO GROUND NO.1 CONCERNING ASSESSMENT YEAR 2004-05. IN THE FINANCIAL YEAR 2004- 05 RELEVANT TO ASSESSMENT YEAR 2005-06, THE ASSESSI NG OFFICER MADE AN ADDITION OF RS.8,58,516/- TOWARDS INFLATED PURCHASE S ATTRIBUTABLE TO SUPPLIER M/S VIDEOCON INDUSTRIES LTD. ON THE SIMILAR FOOTING AS NOTED IN ASSESSMENT YEAR 2004-05 (SUPRA). THE CIT(A) IN APPEAL GRANTED RELIEF TO THE ASSESSEE IN TERMS OF THE FINDINGS NOTED AS UNDER :- 21. IN RESPECT OF ADDITION OF RS.8,58,561/- MADE B Y A.O. FOR A.Y. 2005-06, THE APPELLANT HAS SUBMITTED THAT THE FIGUR E OF RS.8,58,516/- CONSISTS OF TWO AMOUNTS. THE AMOUNT OF RS.8,42,526/ - IS IN RESPECT OF VARIOUS INVOICES RAISED BY CTV / AUDIO D IVISION OF VIDEOCON INDUSTRIES LTD AND ANOTHER AMOUNT OF RS.15,990/- IS IN RESPECT OF INVOICE RAISED BY A.C. DIVISION OF VIDEOCON INDUSTR IES LTD. IN RESPECT OF ADDITION OF RS.8,42,526/-, IT IS CONTENDED THAT OUT OF THIS AMOUNT, BILLS NO.10167 DT. 16/03/2005 FOR RS.38,990/- HAS BEEN RECORDED BY THE APPELLANT IN ITS BOOKS OF ACCOUNT ON 31/03/2008. FOR THE BALANCE AMOUNT OF R S.8,03,536/- (RS.8,42,526/- 9 ITA NOS.1968 TO 1971/PN/2012 MINUS RS.38,990/-), IT IS CONTENDED THAT NOT ONLY T HE GOODS, BUT ALSO THE INVOICES IN RESPECT OF THESE GOODS, WERE NOT RECEIV ED BY THE APPELLANT ON THE DATE OF SEARCH. IT WAS CONTENDED THAT THE BILLS WER E DEBITED BY M/S VIDEOCON INDUSTRIES IN ITS BOOKS OF ACCOUNTS AS IF GOODS WER E SOLD TO THE APPELLANT; HOWEVER, THE APPELLANT HAS NOT RECORDED THESE TRANS ACTIONS IN ITS BOOKS OF ACCOUNTS BECAUSE NEITHER INVOICES NOR THE MATERIAL WAS RECEI VED BY THE APPELLANT ON THE DATE OF SEARCH. IF ANY INVOICE WAS UNRECORDE D OR ANY MATERIAL WAS NOT SHOWN, THEN THE SAME WOULD BE DISCOVERED DURING THE COURSE OF SEARCH. BUT THIS IS NOT THE CASE AND NOTHING IN RESPECT OF UNRE CORDED INVOICES OR UNRECORDED STOCK HAS BEEN POINTED OUT DURING SEARCH & SEIZURE ACTION IN RESPECT OF THESE ENTRIES. THUS, THERE WAS NO RECORD ING OR ACCOUNTING OF THESE INVOICES BY THE APPELLANT IN ITS BOOKS OF ACCOUNT. THEREFORE, THE QUESTION OF INFLATION OF PURCHASES DOES NOT ARISE AT ALL. IT WA S ALSO ARGUED THAT EVEN IF IT IS PRESUMED THAT THESE INVOICES TOTALING TO RS.8,03,53 6/- WERE RECORDED AGAINST GOODS TO BE RECEIVED, IT WOULD NOT BE A CASE OF INFLATED PURCHASES UNLESS THESE WERE RECORDED MORE THAN ONCE. THERE IS NO CASE OF INFLAT ION OF PURCHASES, AS INFLATION OF PURCHASES SUGGESTS TWICE OR MORE THAN ONCE RECORDIN G OF SAME PURCHASE INVOICE. THE ACCOUNT OF M/S VIDEOCON AND APPELLANT ALSO TALLY SUBJECT TO THESE ENTRIES. THUS, IT WAS CONTENDED TH AT THE ADDITION OF RS.8,42,526/- IS ON WRONG FOOTING, UNJUSTIFIED, ON INCORRECT APPRECI ATION OF FACTS AND HENCE DESERVES TO BE QUASHED. WITHOUT PREJUDICE TO THE ABOVE, THE APPELLANT HAS FURTHER CONTENDED THAT IF THE ASSESSING OFFICER'S CONCLUSIO N IS TO BE ACCEPTED, THEN THE APPELLANT SHOULD BE ALLOWED TO RECORD THE PURCH ASES IN ITS BOOKS AT LEAST ONCE AND CLAIM THE SAME AS EXPENDITURE. IN RESPECT OF ADDITION MADE BY A.O. AMOUNTING TO RS.15,990/- ON ACCOUNTS OF DEBITS BY A.C. DIVISION OF VIDEOCON INDUSTRIES LTD IS CONCERNED, IT IS SUBMITT ED BY THE APPELLANT THAT THIS AMOUNT WAS IN RESPECT OF INVOICES DEBITED BY V IDEOCON INDUSTRIES LTD, BUT THE INVOICES WERE NOT RECEIVED BY THE APPELLANT . IN FACT, M/S VIDEOCON INDUSTRIES LTD. HAS GIVEN CREDIT NOTE ON 08/01/2008 FOR INVOICE NO. SD/311 AND HAVE RECTIFIED ITS MISTAKE, A COPY OF CREDIT NO TE IS SUBMITTED BEFORE ME. THE APPELLANT HAS NOT RECORDED THIS CREDIT NOTE BEC AUSE IT HAS NOT RECORDED THE ORIGINAL INVOICE ALSO. IN SUPPORT OF ITS CLAIM, THE APPELLANT HAS FURNISHED STATEMENT OF ACCOUNTS OF VIDEOCON AND ALS O RELEVANT EXTRACT OF VIDEOCON FROM THE APPELLANT'S BOOKS OF ACCOUNT ALON GWITH SUMMARIZED POSITION. 22. ON PERUSAL OF DOCUMENTS SUBMITTED BEFORE ME, IT IS SEEN THAT THE INVOICES TOTALING TO RS.8,42,526/- WERE DEBITED BY M/S VIDEOCON INDUSTRIES ON VARIOUS DATES DURING 11/09/2004 TO 16 /03/2005 IN ITS BOOKS OF ACCOUNTS AS IF THE GOODS WERE SOLD TO THE APPELL ANT; HOWEVER, NO MATERIAL WAS RECEIVED BY THE APPELLANT, EXCEPT BILL NO. 1016 7 DT. 16/03/2005 FOR RS.38,990/-. THIS BILL WAS RECORDED BY THE APPELLANT IN ITS BOOK S OF ACCOUNT ON 31/03/2008. FOR THE REMAINING AMOUNT OF INVOICES TO TALING TO RS.8,03,536/- (RS.8,42,526/- MINUS RS.38,990/-), IT IS FOUND THAT THE APPELLANT HAS NOT AT ALL RECORDED THE INVOICES TOTALING TO RS.8,03,536/- IN ITS BOOKS OF ACCOUNTS BECAUSE NEITHER THE INVOICES NOR THE MATERIAL WAS E VER RECEIVED BY THE APPELLANT ON THE DATE OF SEARCH. AS THERE WAS NO RE CORDING OR ACCOUNTING OF THESE INVOICES BY THE APPELLANT IN ITS BOOKS OF ACC OUNT, THE QUESTION OF INFLATION OF PURCHASES DID NOT ARISE AT ALL. IN VIE W OF THE ABOVE, THE ADDITION RS.8,42,526/- STANDS DELETED. IN RESPECT OF ADDITIO N OF RS.15,990/-, IT IS SEEN THAT M/S VIDEOCON INDUSTRIES LTD. HAS GIVEN CREDIT NOTE ON 08/01/2008 FOR INVOICE NO. SD/311 DT. 25/06/2004 DEBITED BY IT. TH E GOODS BOOKED UNDER INVOICE NO. SD/311 WERE NOT SOLD TO THE APPELLANT, AND M/S VIDE OCON INDUSTRIES LTD HAVE LATER RECTIFIED ITS MISTAKE BY ISSUE OF CREDIT NOTE DT. 0 8/01/2008. I FIND THAT THE APPELLANT HAS NOT RECORDED THIS CREDIT NOTE BECAUSE IT HAS NO T RECORDED THE ORIGINAL INVOICE ALSO AS THE SAME WAS NEVER RECEIVED. THE REASON FOR NOT RECORDING INVOICE NO. SD/311 DT. 25/06/2004 AMOUNTING TO RS.15,990/- IN T HE BOOKS OF ACCOUNTS OF THE 10 ITA NOS.1968 TO 1971/PN/2012 APPELLANT IS SATISFACTORILY EXPLAINED BY THE APPELL ANT. THEREFORE, THE ADDITION OF RS.15,990/- IS UNWARRANTED. IN THE RESULT, ADDITION OF RS.8,58,516/- (RS.8,42,526/- + RS.15,990/-) IS DIRECTED TO BE DELETED. THE APPELLA NT GETS RELIEF OF RS.8,58,516/ -. IN THE RESULT, THE GROUND OF APPEAL IN THIS RESPECT IS ALLOWED FOR A.Y. 2005-06. 16.1 AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVE NUE IS IN APPEAL BEFORE US. 16.2 FOR THE PARITY OF REASONINGS AS NOTED FOR ASSE SSMENT YEAR 2004-05, WE FIND NO INFIRMITY IN THE FACTUAL APPRECIATION MADE BY THE CIT(A). ACCORDINGLY, WE DECLINE TO INTERFERE WITH THE SAME. WE SIMULTAN EOUSLY NOTE THAT THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT DEMONSTRATE T HAT CIT(A) HAS RELIED ON ANY NEW MATERIAL OR EVIDENCE BEHIND THE BACK OF THE ASSESSING OFFICER. MERE RE-APPRECIATION OF EXISTING FACTS BY CIT(A) WOULD N OT TANTAMOUNT TO INFRINGEMENT OF RULE 46A OF THE I.T. RULES, 1962. IN THE RESULT, GROUND NO.1 OF THE REVENUE APPEAL FOR THIS ASSESSMENT YEAR I.E. A.Y. 2005-06 ALSO DISMISSED. 17. IN THE SECOND GROUND, THE ASSESSING OFFICER HAS ASSAILED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS.86,871/- MADE ON ACCOUNT OF DIFFERENCE IN RECORDING OF EXPENSES IN THE BOOKS OF ACCOUNT. SINCE THE FACTS AND CIRCUMSTANCES ARE SIMILAR TO GROUND NO.2 FOR TH E ASSESSMENT YEAR 2004-05, FOR THE PARITY OF REASONINGS AS NOTED FOR ASSESSMENT YEAR 2004-05, WE FIND NO INFIRMITY IN THE FACTUAL APPRECIATION MADE BY THE CIT(A). ACCORDINGLY, WE DECLINE TO INTERFERE WITH THE SAME. IN THE RESU LT, GROUND NO.2 OF THE REVENUE APPEAL FOR THIS ASSESSMENT YEAR I.E. A.Y. 2 005-06 IS ALSO DISMISSED. 17.1 THE REVENUE HAS SIMILAR GRIEVANCE IN GROUND NO .3 AKIN TO GROUND NO.2 IN RESPECT OF OTHER SUPPLIER NAMELY SONY INDIA. TH E RELEVANT FACTS CONCERNING THE ISSUE ARE THAT ON VERIFICATION OF THE ACCOUNT O F EXTRACT OF SUPPLIERS NAMELY M/S SONY INDIA PVT. LTD., THE ASSESSING OFFICER OBS ERVED THAT THE AMOUNTS SHOWN AS CASH DISCOUNTS AND ON ACCOUNT OF CREDIT NO TES GIVEN VARIED QUA THE AMOUNTS REFLECTED BY THE ASSESSEE IN ITS BOOKS. TE ASSESSING OFFICER, 11 ITA NOS.1968 TO 1971/PN/2012 THEREFORE, BROUGHT TO TAX THE DIFFERENTIAL AMOUNTS IN THE RESPECTIVE YEARS UNDER CONSIDERATION, HOLDING THE SAME TO BE ASSESSEES UN DISCLOSED INCOME. 17.2 IN THE FIRST APPELLATE PROCEEDINGS, THE ASSESS EE SUBMITTED THAT THE ABOVE ADDITIONS WERE INCORRECT AND UNWARRANTED AS THE ABO VE AMOUNTS WERE DULY RECORDED IN THE BOOKS OF ACCOUNT BY THE ASSESSEE, T HE DETAILS OF WHICH WERE FURNISHED BEFORE THE ASSESSING OFFICER DURING ASSES SMENT BUT DID NOT RECEIVE HER ATTENTION. IN SUPPORT OF HIS CLAIM, THE ASSESS EE HAS FURNISHED COPY OF STATEMENT OF ACCOUNT OF M/S SONY INDIA LTD. IN THE BOOKS OF THE ASSESSEE. 17.3 THE CIT(A) FOUND HIMSELF IN AGREEMENT WITH THE SUBMISSIONS OF THE ASSESSEE AND GRANTED RELIEF. THE RELEVANT EXTRACT OF THE ORDER OF THE CIT(A) IS REPRODUCED HEREUNDER :- 42. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT. IN RESPECT OF ADDITION OF RS.65,065/- ON ACCOUNT OF CASH DISCOUNT AND ADDITIO N OF RS.26,562/- ON ACCOUNT OF CREDIT NOTES, TOTALING TO RS.91,627/- FOR A.Y. 2005 -06, THE APPELLANT HAS FURNISHED EXTRACT OF ACCOUNT OF SONY INDIA PVT. LTD. IN THE B OOKS OF ACCOUNTS FOR THE PERIOD 01/04/2005 TO 31/03/2006. ON PERUSAL OF THE ACCOUN T EXTRACT, IT IS SEEN THAT THE APPELLANT HAS ACCOUNTED FOR AMOUNT OF RS.91,627/- O N 01/04/2005 WHICH REPRESENTS CASH DISCOUNT OF RS.65,065/- AND CREDIT NOTES OF RS .26,562/-. SINCE THESE AMOUNTS ARE ALREADY ACCOUNTED FOR BY THE APPELLANT IN ITS B OOKS OF ACCOUNT, THE ADDITION MADE BY THE A.O. DOES NOT SURVIVE. THE A.O. IS DIR ECTED TO DELETE THE AGGREGATED ADDITION OF RS.91,627/- FOR A.Y. 2005-06. IN THE R ESULT, THE GROUND OF APPEAL FOR A.Y. 2005-06 STANDS ALLOWED. 17.4 WE NOTICE THAT OBSERVATIONS OF THE CIT(A) THAT THE DIFFERENCE OF RS.91,627/- TOWARDS CREDIT NOTES/CASH DISCOUNT ISSU ED BY THE SUPPLIER M/S SONY INDIA HAS BEEN ACCOUNTED FOR IN THE FIRST DAY OF TH E NEXT YEAR. SINCE THE SAME ARE ALREADY ACCOUNTED FOR BY THE ASSESSEE IN THE BO OKS OF ACCOUNT, WE FIND NO ERROR IN THE CONCLUSION OF THE CIT(A) THAT ADDITION MADE BY THE ASSESSING OFFICER ON THIS SCORE DOES NOT SURVIVE. THUS, GROU ND NO.3 OF THE REVENUE APPEAL IS ALSO DISMISSED. 18. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.1969/PN/2012 RELATING TO ASSESSMENT YEAR 2005-06 IS DISMISSED. 12 ITA NOS.1968 TO 1971/PN/2012 ITA NO.1970/PN/2012 (A.Y. 2006-07): 19. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 01. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE CIT(A) ERRED DELETING THE ADDITION OF RS.2,09,217/- MADE ON ACCOUNT OF DI SCREPANCIES IN RECORDING PURCHASES IN THE BOOKS OF ACCOUNTS AFTER VERIFYING THE RELEVANT RECORDS PRODUCED BEFORE HIM AND IGNORING THE SPECIFIC PROVISIONS UND ER RULE 46A OF THE IT RULES 1962. 02. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) ERRED DELETING THE ADDITION OF RS.3,41,086/- MADE ON ACCOUNT OF DI SCREPANCIES IN RECORDING PURCHASES IN THE BOOKS WHERE NO GOODS WERE RECEIVED AFTER VERIFYING THE RELEVANT RECORD PRODUCED BEFORE HIM, IGNORING THE SPECIFIC P ROVISIONS UNDER RULE 46A OF THE IT RULES 1962. 03. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) ERRED DELETING THE ADDITION OF RS.33,528/- MADE ON ACCOUNT OF CASH DISCOUNT AND UNACCOUNTED CREDIT NOTES IN THE BOOKS OF ACCOUNTS AFTER VERIFYI NG THE RELEVANT RECORDS PRODUCED BEFORE HIM, IGNORING THE SPECIFIC PROVISIONS UNDER RULE 46A OF THE IT RULES 1962. 04. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) ERRED DELETING THE ADDITION OF RS.39,520/- MADE ON ACCOUNT OF DIFF ERENCE IN RECORDING PURCHASES MADE FROM M/S. SONY INDIA PVT. LTD., WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS, AFTER VERIFYING THE RELEVANT RECORDS PROD UCED BEFORE HIM. 05. THE LD.CIT(A) IS NOT JUSTIFIED IN FACTS IGNORIN G THE SPECIFIC PROVISIONS UNDER RULE 46A OF THE INCOME TAX RULES 1962. 06. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. C IT(A) BE VACATED AND THAT OF THE AO'S ORDER BE RESTORED. 07. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND , MODIFY ANY OF THE ABOVE GROUNDS RAISED AT THE TIME OF PROCEEDINGS BEFORE TH E HON'BLE INCOME TAX APPELLATE TRIBUNAL. 20. IN GROUND NO.1, THE REVENUE HAS IMPUGNED THE AC TION OF THE CIT(A) IN DELETING THE ADDITION OF RS.2,09,217/- MADE ON ACCO UNT OF DISCREPANCIES IN RECORDING PURCHASES IN BOOKS OF ACCOUNT WITH RESPEC T TO THE SUPPLIER M/S KEN STAR. 20.1 THE ASSESSING OFFICER NOTED THAT PURCHASE AMOU NT OF GOODS SUPPLIED BY M/S KEN STAR DIFFERED FROM THE AMOUNTS RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. THE GOODS SOLD BY M/S KEN STAR FOR THE RELEVANT ASSESSMENT YEAR WAS STATED TO BE RECORDED AT RS.61,63,480/- WHEREAS CORRESPONDING PURCHASES OF RS.59,54,263/- WAS ONLY RECORDED BY THE ASSESSEE AS ALLEGED. ACCORDINGLY, THE ASSESSING OFFICER ASSERTED THAT THERE IS A SHOR T PURCHASE OF RS.2,09,217/- IN 13 ITA NOS.1968 TO 1971/PN/2012 THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSIN G OFFICER ADDED BACK THE AFORESAID AMOUNT TO THE TOTAL INCOME. 20.2 AS NOTED BY THE CIT(A), THE ASSESSEE IN FIRST APPEAL PLACED ON RECORD, A CHART SHOWING ACCOUNTS OF M/S KEN STAR IN ASSESSEE S BOOKS AND THE ASSESSEES ACCOUNTS IN THE BOOKS OF M/S KEN STAR. IT WAS SUBM ITTED THAT THESE RECONCILIATION STATEMENTS WERE ALREADY MADE AVAILAB LE WITH THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT, BUT THE ASSESSIN G OFFICER FAILED TO PROPERLY APPRECIATE IT. IT WAS SUBMITTED THAT THE ASSESSING OFFICER MADE ADDITION ON THE INCORRECT PREMISE THAT THE DIFFERENCE IN PURCHASES WERE CONFRONTED WITH ASSESSEE AND THE ASSESSEE AGREES WITH THE SAME. TH E ASSESSEE VEHEMENTLY ARGUED THAT NO SUCH CONFRONTATION WAS MADE WITH THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AND THEREFORE, TH ERE IS NO QUESTION OF AGREEING WITH THE SAME. 20.3 THE CIT(A) AFTER EXAMINING THE FACTS IN DETAIL ARRIVED AT A FINDING IN FAVOUR OF THE ASSESSEE AND GRANTED RELIEF TO THE EX TENT OF RS.2,05,644/- AS AGAINST THE ADDITION OF RS.2,09,217/-. THE RELEVAN T EXTRACT OF THE CIT(A) CONCERNING THE ISSUE IS REPRODUCED HEREUNDER :- 12. FOR THE A.Y. 2006-07, ON GOING THROUGH THE ACC OUNTS EXTRACTS OF M/S KEN STAR IN THE BOOKS OF APPELLANT AND ACCOUNTS EXTRACT OF APPELLANT IN THE BOOKS OF M/S KEN STAR, IT IS SEEN THAT CONTRARY TO THE SO-CALLED SHORT PURCHASES OF RS.2,09,217/-, THE APPELLANT HAS RECORDED PURCHASES TOTALING TO RS .2,41,495/- IN ITS BOOKS OF ACCOUNTS ON VARIOUS DATES (RS.1,06,410/- RECORDED O N 01/11/2006, RS.16,980/- ON 25/01/2008, RS.10,430/- ON 13/07/2006, RS.3,090/- O N 24/07/2006, RS.4,635/- ON 24/07/2006, RS.77,600/- ON 25/01/2008, RS.9,150/- O N 01/03/2007, AND RS.13,200/- ON 01/03/2007). IT IS FURTHER CONTENDED THAT THE G OODS AMOUNTING TO RS.35,851/- (RS.1,125/- RECORDED BY APPELLANT IN ITS BOOKS OF A CCOUNTS ON 10/09/2005, RS.3,849/- ON 30/09/2005, RS.2,002/- ON 28/10/2005, RS.200/- O N 31/10/2005, RS,9,474/- ON 19/12/2005, RS.6,498/- ON 10/02/2006, RS.511/- ON 1 1/02/2006, RS.907/- ON 11/02/2006, RS.11,607/- ON 11/03/2006 AND RS.218/- ON 12/03/2006), WERE NOT SHOWN BY M/S KEN STAR AS SOLD TO THE APPELLANT, THO UGH THE SAME WERE PURCHASED BY THE APPELLANT. HENCE, THERE IS NET DIFFERENCE OF R S.3,573/- ONLY (RS.2,41,495/- MINUS RS.35,851/-). MOREOVER, THIS DIFFERENCE OF RS.3,57 3/- IS IN THE BOOKS OF M/S KEN STAR AND NOT IN THE BOOKS OF THE APPELLANT. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT CONTENDED THAT ENTIRE DIFFERENCE OF R S.2,09,217/- IS RECONCILED, THE ADDITION IS UNWARRANTED AND DESERVES TO BE DELETED. IN VIEW OF THE ABOVE FACTS GIVEN, SINCE THE APPELLANT HAS RECONCILED THE DIFFE RENCE TO THE EXTENT OF RS.2,05,644/- THE APPELLANT GETS RELIEF OF RS.2,05,644/- AND THE UN-RECONCILED DIFFERENCE AMOUNT OF RS.3,573/- IS CONFIRMED. IN RESULT, THIS GROUND OF APPEAL FOR A.Y. 2006-07 IS PARTLY ALLOWED. 14 ITA NOS.1968 TO 1971/PN/2012 20.4 THE ISSUE INVOLVES PURE EXAMINATION OF FACTS. THE ISSUE RAISED IS SIMILAR TO DIFFERENCES ON OTHER SUPPLIERS ACCOUNTS. WE FIN D THAT THE CIT(A) HAS EXAMINED THE ISSUE THREADBARE AND HIS CONCLUSION TH EREON CANNOT BE FAULTED. THEREFORE, WE FULLY ENDORSE THE FACTUAL OBSERVATION S MADE BY THE CIT(A) NOTED HEREINABOVE. THE DISCREPANCY IN PURCHASES QUA SUPPLIER THUS ARE NOT FOUND TO BE SUBSISTING ON FACTS. IN THE RESULT, WE DECLINE TO INTERFERE WITH THE ORDER OF THE CIT(A) AND DISMISS GROUND NO.1 OF THE REVENUE A PPEAL. 21. IN GROUND NO.2, THE REVENUE HAS RAISED SIMILAR GRIEVANCE IN LINE WITH GROUND NO.1 OF CONCERNING ASSESSMENT YEARS 2004-05. IN THE FINANCIAL YEAR 2005-06 RELEVANT TO ASSESSMENT YEAR 2006-07, THE AS SESSING OFFICER MADE AN ADDITION OF RS.3,41,086/- TOWARDS INFLATED PURCHASE S ATTRIBUTABLE TO SUPPLIER M/S VIDEOCON INDUSTRIES LTD. ON THE SIMILAR REASONS AS NOTED IN ASSESSMENT YEAR 2004-05 (SUPRA). THE CIT(A) GRANTED RELIEF TO THE ASSESSEE IN TERMS OF THE FINDINGS NOTED AS UNDER :- 23. IN RESPECT OF ADDITION OF RS.3,41,088/- MADE BY A.O. FOR A.Y. 2006-07, THE APPELLANT HAS SUBMITTED THAT THE FIGUR E OF RS.3,41,088/- CONSISTS OF TWO AMOUNTS. THE AMOUNT OF RS.3,23,888/ - IS IN RESPECT OF VARIOUS INVOICES RAISED BY CTV / AUDIO DIVISION OF VIDEOCON INDUSTRIES LTD AND ANOTHER AMOUNT OF RS.17,200/- IS IN RESPECT OF INVOICE RAISED BY A.C. DIVISION OF VIDEOCON INDUSTRIES LTD. IN RESPECT OF ADDITION OF RS.3,23,888/-, IT IS CONTENDED THAT NOT ONLY THE GOODS, BUT ALSO THE INVOICES IN RESPECT OF THESE GOODS, WERE NOT RECEIVED BY THE APPELLANT ON THE DA TE OF SEARCH. IT WAS CONTENDED THAT THE BILLS WERE DEBITED BY M/S VIDEOC ON INDUSTRIES IN ITS BOOKS OF ACCOUNTS AS IF GOODS WERE SOLD TO THE APPE LLANT; HOWEVER, THE APPELLANT HAS NOT AT ALL RECORDED THESE INVOICES IN ITS BOOKS OF ACCOUNTS BECAUSE NEITHER THE INVOICES NOR THE MATERIAL WERE RECEIVED BY THE APPELLANT ON THE DATE OF SEARCH. IF ANY INVOICE WAS UNRECORDE D OR ANY MATERIAL WAS NOT SHOWN, THEN THE SAME WOULD BE DISCOVERED DURING THE COURSE OF SEARCH. BUT THIS IS NOT THE CASE AND NOTHING IN RESPECT OF UNRECORDED INVOICES OR UNRECORDED STOCK HAS BEEN POINTED OUT DURING SEARCH & SEIZURE ACTION IN RESPECT OF THESE ENTRIES. SINCE THERE WAS NO RECORD ING OR ACCOUNTING OF THESE INVOICES BY THE APPELLANT IN ITS BOOKS OF ACCOUNT, THE QUESTION OF INFLATION OF PURCHASES DOES NOT ARISE AT ALL. IT WAS ALSO ARGUED THAT EVEN IF IT IS PRESUMED THAT THESE INVOICES WERE RECORDED AGAINST GOODS TO BE RECEIVED, IT WOULD NOT BE A CASE OF INFLATED PURCHASES UNLESS TH ESE WERE RECORDED MORE THAN ONCE. THERE IS NO CASE OF INFLATION OF PURCHAS ES, AS INFLATION OF PURCHASES SUGGESTS TWICE OR MORE THAN ONCE RECORDIN G OF SAME PURCHASE INVOICE. THE BALANCE IN ACCOUNTS OF VIDEOCON AND AP PELLANT ALSO TALLY SUBJECT TO THESE ENTRIES. THUS, THE ADDITION OF RS.3,23,888/- IS ON WRONG FOOTING, UNJUSTIFIED, ON INCORRECT APPRECIATION OF FACTS AND HENCE DESERVES TO BE QUASHED. WITHOUT PREJUDICE TO THE ABOVE, THE APP ELLANT HAS FURTHER CONTENDED THAT IF THE ASSESSING OFFICER'S CONCLUSIO N IS TO BE ACCEPTED, THEN THE APPELLANT SHOULD BE ALLOWED TO RECORD THE PURCH ASES IN ITS BOOKS AT LEAST 15 ITA NOS.1968 TO 1971/PN/2012 ONCE AND CLAIM THE SAME AS EXPENDITURE. IN RESPECT OF ADDITION MADE BY A.O. AMOUNTING TO RS.17,200/- ON ACCOUNT OF DEBITS BY A.C. DIVISION OF VIDEOCON INDUSTRIES LTD IS CONCERNED, IT IS SUBMITT ED THAT THIS AMOUNT WAS IN RESPECT OF INVOICE NO. 1921 DT. 23/09/2005 WHICH WAS DEBITED BY VIDEOCON INDUSTRIES LTD, BUT THE SAID INVOICE WAS N EVER RECEIVED BY THE APPELLANT. IN FACT, M/S VIDEOCON INDUSTRIES LTD. HA S GIVEN CREDIT NOTE ON 08/01/2008 FOR RS.17,200/- AGAINST INVOICE NO. 1921 DT. 23/09/2005 FOR RS.17,200/- AND HAS RECTIFIED ITS MISTAKE, A COPY OF CREDIT NOT E IS SUBMITTED BEFORE ME. THE APPELLANT HAS NOT RECORDED THIS CRED IT NOTE BECAUSE IT HAS NOT RECORDED THE ORIGINAL INVOICE AND ALSO BECAUSE IT WAS NEVER RECEIVED. IN SUPPORT OF ITS CLAIM, THE APPELLANT HAS FURNISHED S TATEMENT OF ACCOUNTS OF VIDEOCON AND ALSO RELEVANT EXTRACT OF VIDEOCON FROM THE APPELLANT'S BOOKS OF ACCOUNT ALONGWITH SUMMARIZED POSITION. 24. ON PERUSAL OF DOCUMENTS SUBMITTED BEFORE ME, IT IS SEEN THAT THE INVOICES TOTALING TO RS.3,23,888/- WERE DEBITED BY M/S VIDEOCON INDUSTRIES ON VARIOUS DATES DURING 28/05/2005 TO 31 /03/2006 IN ITS BOOKS OF ACCOUNTS AS IF GOODS WERE SOLD TO THE APPELLANT; HOWEVER, NO INVOICE OR MATERIAL WAS RECEIVED BY THE APPELLANT. THEREFORE, THE APPELLANT DID NOT RECORD ANY TRANSACTION REFLECTED BY THESE INVOICES IN ITS BOOKS OF ACCOUNTS BECAUSE NEITHER THE INVOICES NOR ANY MATERIAL WAS E VER RECEIVED BY THE APPELLANT. THIS FACT IS CONFIRMED IN SEARCH AND SEI ZURE PROCESS. SINCE THERE WAS NO RECORDING OR ACCOUNTING OF THESE INVOICES BY THE APPELLANT IN ITS BOOKS OF ACCOUNT, THE QUESTION OF INFLATION OF PURC HASES DOES NOT ARISE AT ALL. IN VIEW OF THE ABOVE, THE ADDITION RS.3,23,888/ - S TANDS DELETED. IN RESPECT OF ADDITION OF RS.17,200/- IS CONCERNED, IT IS SEEN TH AT M/S VIDEOCON INDUSTRIES LTD. HAS LATER GIVEN A CREDIT NOTE ON 08/01/2008 FO R RS.17,200/- AGAINST INVOICE NO. 1921 DT. 23/09/2005 WHICH WAS DEBITED B Y IT. SINCE THE GOODS BOOKED UNDER INVOICE NO.1921 WERE NOT SOLD TO THE A PPELLANT, M/S VIDEOCON INDUSTRIES LTD HAS RECTIFIED ITS MISTAKE BY ISSUE O F A CREDIT NOTE DT. 08/01/2008. I FIND THAT THE APPELLANT HAS NOT RECOR DED THE CONTENT OF CREDIT NOTE BECAUSE CORRESPONDING TRANSACTION AS PER THE ORIGIN AL INVOICE WAS NOT RECORDED AS WELL. THE REASON FOR NOT RECORDING INVO ICE NO. 1921 DT. 23/09/2005 OF RS.17,200/- IN THE BOOKS OF ACCOUNTS OF THE APPELLANT IS SATISFACTORILY EXPLAINED BY THE APPELLANT. THEREFOR E, THE ADDITION OF RS.17,200/- IS UNWARRANTED. IN THE RESULT, ADDITION OF RS.3,41,088 /- (RS.3,23,888/- + RS.17,200/-) IS DIRECTED TO BE DELETED. THE APPELLANT GETS RELIEF O F RS.3,41,088/-. IN THE RESULT, THE GROUND OF APPEAL IN THIS RESPECT IS ALLOWED FOR A.Y . 2006-07. 21.1 FOR THE PARITY OF REASONINGS AS NOTED FOR ASSE SSMENT YEAR 2004-05, WE FIND NO INFIRMITY IN THE FACTUAL APPRECIATION MADE BY THE CIT(A). ACCORDINGLY, WE DECLINE TO INTERFERE WITH THE SAME. IN THE RESU LT, GROUND NO.2 OF THE REVENUE APPEAL FOR THIS ASSESSMENT YEAR I.E. A.Y. 2 006-07 ALSO DISMISSED. 22. BY WAY OF GROUND NO.3 THE REVENUE HAS ASSAILED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS.33,528/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH DISCOUNT AND UNACCOUNTED CREDIT NOTES IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 16 ITA NOS.1968 TO 1971/PN/2012 22.1 THE RELEVANT FACTS CONCERNING THE ISSUE ARE TH AT THE ASSESSEE HAS FURNISHED EXTRACT OF ACCOUNT OF SONY INDIA PVT. LTD . IN THE BOOKS OF ACCOUNTS FOR THE PERIOD 01.04.2006 TO 31.03.2007. ON PERUSA L OF THE SAID ACCOUNT EXTRACT, IT WAS OBSERVED BY THE CIT(A) IN PARA 43 O F ITS ORDER THAT THE ASSESSEE HAS DULY ACCOUNTED FOR AMOUNT OF RS.948/-, RS.1,854 /-, RS.1,854/-, RS.19,646/- AND RS.9,226/-, REPRESENTING THE CREDIT NOTES RECEI VED FOR RATE DIFFERENCE, TOTALING TO RS.33,528/- ON 01.02.2007. WE OBSERVE THAT SINCE THESE AMOUNTS ARE ALREADY ACCOUNTED FOR BY THE ASSESSEE IN ITS BO OKS OF ACCOUNT, THE ADDITION MADE BY THE ASSESSING OFFICER DOES NOT SURVIVE. TH E ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS.33,528/- MADE FOR ASSESSMENT YEAR 2006-07. 22.2 THE GROUND NO.3 OF THE REVENUE APPEAL IS DISMI SSED. 23. THE FACTS CONCERNING GROUND NO.4 OF THE REVENUE APPEAL ARE THAT AS PER THE ASSESSING OFFICER THAT THE ACCOUNTS OF M/S SONY INDIA PVT. LTD. REFLECTED AN AMOUNT OF RS.51,67,304/- BEING GOODS SOLD TO THE AS SESSEE WHEREAS THE ASSESSEE HAS SHOWN PURCHASES OF RS.52,06,554/- FROM M/S SONY INDIA PVT. LTD.. THEREFORE, THE EXCESS PURCHASES SHOWN BY THE ASSESSEE TO THE TUNE OF RS.39,520/- WAS CONSIDERED AS ITS UNDISCLOSED INCOM E AND ADDED TO THE TOTAL INCOME. 23.1 THE CIT(A) AFTER EXAMINING THE FACTUAL ASPECTS , GRANTED RELIEF TO THE ASSESSEE AS NOTED HEREUNDER :- 50. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT WITH REFERENCE TO THE FACTS ON RECORD. ON PERUSAL OF EXTRACT OF ACCOUNTS OF TH E APPELLANT AS APPEARING IN THE BOOKS OF M/S SONY INDIA PVT. LTD. AND EXTRACT OF AC COUNT OF M/S SONY INDIA PVT. LTD. IN THE BOOKS OF APPELLANT, IT IS SEEN THAT TOTAL SA LES MADE BY M/S SONY INDIA TO APPELLANT DURING F.Y. 2005-06 WAS OF RS.51,67,034/- AND NOT RS.51,67,304/- AS MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER. THE TOTAL PURCHASES BOOKED BY APPELLANT DURING F.Y. 2005-06 WERE OF RS.52,14,946/ -. OUT OF THIS, THE APPELLANT HAS RETURNED GOODS AMOUNTING TO RS.27,852/- TO M/S SONY INDIA. THEREFORE, THE NET PURCHASES BOOKED BY APPELLANT WERE AT RS.51,87,094/ - (RS.52,14,946/- MINUS RS.27,852/-). THUS, THERE IS DIFFERENCE IN PURCHAS ES OF RS.20,060/- (RS.51,87,094/- LESS RS.52,14,946/-). OUT OF THIS AMOUNT OF RS.20, 060/-, THE AMOUNT OF RS.8,388/- WAS IN RESPECT OF DEBIT NOTES ISSUED BY M/S SONY IN DIA FOR F.Y. 2004-05, WHICH WERE ACCOUNTED BY APPELLANT IN F.Y. 2005-06. THE REMAIN ING DIFFERENCE OF RS.11,672.83 WAS REVERSED BY THE APPELLANT IN F.Y. 2006-07 ON 01 /04/2006, HENCE, THERE WAS NO 17 ITA NOS.1968 TO 1971/PN/2012 DIFFERENCE REMAINED IN THE PURCHASES OR OTHERWISE B ETWEEN APPELLANT AND SONY INDIA PVT. LTD. SINCE THE ENTIRE DIFFERENCE WORKED OUT BY THE A.O. HAS BEEN RECONCILED BY THE APPELLANT, THE ADDITION OF RS.39,520/- IS DELET ED. IN RESULT, THE GROUND NO.3 FOR A.Y. 2006-07 IS ALLOWED. 23.2 WE ONCE AGAIN OBSERVE THAT THE ACCOUNTING DIFF ERENCES STAND RECONCILED AND FOUND TO BE DULY RECORDED IN THE BOOKS OF ACCOU NT ALBEIT AT DIFFERENT POINT OF TIME NOTED BY THE CIT(A). THEREFORE, THERE IS N O OVERSTATEMENT OF PURCHASES AS ALLEGED BY THE ASSESSING OFFICER. IN THE RESULT, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A). GROUND NO.4 IS DISMISSED. 24. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.1970/PN/2012 RELATING TO ASSESSMENT YEAR 2006-07 IS DISMISSED. ITA NO.1971/PN/2012 (A.Y. 2008-09): 25. THE GROUNDS OF APPEAL BY THE REVENUE IS NOTED H EREUNDER :- 01. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.3,08,338/- MADE ON ACCO UNT OF UN-ACCOUNTED CREDIT NOTES IN THE BOOKS OF ACCOUNTS AND RS.6,24,750/ -ON ACCOU NT OF CASH DISCOUNT AFTER VERIFYING THE RELEVANT RECORDS PRODUCED BEFORE HIM, IGNORING THE SPECIFIC PROVISIONS UNDER RULE 46A OF THE INCOME TAX RULES 1962. 02. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,86,456/- MADE ON ACCO UNT OF CASH DISCOUNT AND UN ACCOUNTED CREDIT NOTES IN THE BOOKS OF ACCOUNTS AFT ER VERIFYING THE RELEVANT RECORDS PRODUCED BEFORE HIM, IGNORING THE SPECIFIC PROVISIO NS UNDER RULE 46A OF THE INCOME TAX RULES 1962. 03. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.8,27,370/ - MADE ON ACC OUNT OF DIFFERENCE IN OCTROI AND CASH DISCOUNT MADE FROM VIDEOCON LTD WHICH WERE UN- ACCOUNTED IN THE BOOKS OF ACCOUNTS AFTER VERIFYING THE RELEVANT RECORDS PRODU CED BEFORE HIM, IGNORING THE SPECIFIC PROVISIONS UNDER RULE 46A OF THE INCOME TA X RULES 1962. 04. THE LD. CIT(A) IS ERRED IN FACTS IGNORING THE S PECIFIC PROVISIONS UNDER RULE 46A OF THE IT RULES , 1961. 05. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEPREC IATION ON WIND MILL ON THE BASIS OF BIFURCATION OF COMPONENTS WHEN THE DEPRECIATION WAS ALLOWED RELYING UP ON THE HON'BLE ITAT PUNE BENCH, PUNE'S ORDER IN THE CASE O F POONAWALLA FINVEST & AGRO (P) LTD. REPORTED IN 118 TTJ 68 (PUNE). 06. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. C IT(A) BE VACATED AND THAT OF THE AO'S ORDER MAY BE RESTORED. 18 ITA NOS.1968 TO 1971/PN/2012 07. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND , MODIFY ANY OF THE ABOVE GROUNDS RAISED AT THE TIME OF PROCEEDINGS BEFORE TH E HON'BLE TRIBUNAL WHICH MAY PLEASE BE GRANTED. 26. IN GROUND NO.1 THE REVENUE HAS ASSAILED THE ACT ION OF THE CIT(A) IN DELETING THE ADDITION OF RS.3,08,338/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED DISCREPANCY TOWARDS UN-ACCOUNTED CREDIT NOTES ETC. IN THE BOOKS OF ACCOUNTS PERTAINING TO SUPPLIER AKAI AND RS.6,24,750/- PERTAINING TO TATA SKY. 26.1 THE CIT(A) HAS DISPOSED OF THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT FINDINGS ARE EXTRACTED HEREUNDER :- 63. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT. IN RESPECT OF DIFFERENCE IN ACCOUNT OF M/S AKAI LTD., ON VERIFICATION OF EXT RACT OF ACCOUNTS OF THE M/S AKAI IN THE BOOKS OF ACCOUNT OF THE APPELLANT, IT IS SEEN T HAT THE APPELLANT HAS DULY ACCOUNTED FOR CREDIT NOTES TOTALING TO RS.1,98,420/- ON VARIO US DATES AS UNDER :- SR. NO. TYPE OF ADDITION AMOUNT (RS.) DATE ON WHICH AMOUNT ACCOUNTED FOR BY THE APPELLANT IN ITS BOOKS OF ACCOUNT 1 CREDIT NOTE 18,005 25/01/2008 2 1,88,868 25/01/2008 3 13,863 25/01/2008 4 1,900 12/02/2008 5 631 12/02/2008 2,23,267 TOTAL LESS : AMT. PERTAINING TO VIDEOCON WHICH WAS WRONGLY BOOKED IN AKAI, HENCE APPELLANT HAS REVERTED THE AMOUNT ON 31/10/2007 (-) 24,847 31/10/2007 TOTAL 1,98,420 ON PERUSAL OF EXTRACT OF ACCOUNT OF THE APPELLANT I N THE BOOKS OF M/S AKAI LTD., IT IS SEEN THAT FOLLOWING AMOUNTS WERE REVERTED BY M/S AK AI LTD. IN ITS BOOKS OF ACCOUNT. SR. NO. TYPE OF ADDITION AMOUNT (RS.) DATE ON WHICH AMOUNT REVERTED BY M/S AKAI LTD. IN ITS BOOKS OF ACCOUNT 1 CREDIT NOTE 94,980 19/05/2007 2 14,938 22/07/2007 TOTAL 1,09,918 FROM THE ABOVE CHART, IT IS CLEAR THAT THE APPELLAN T HAS DULY ACCOUNTED FOR CREDIT NOTES AMOUNTING TO RS.1,98,420/- IN ITS BOOKS OF AC COUNT, AND M/S AKAI LTD. HAS REVERTED THE CREDIT NOTES AMOUNTING TO RS.1,09,918/ -. THEREFORE, THE ENTIRE DIFFERENCE OF RS.3,08,338/- AS WORKED OUT BY THE A. O. IS RECONCILED BY THE APPELLANT. 19 ITA NOS.1968 TO 1971/PN/2012 THE A.O. IS THEREFORE DIRECTED TO DELETE THE ADDITI ON OF RS.3,08,338/-. IN THE RESULT, THE GROUND NO.4 FOR A.Y. 2008-09 IS ALLOWED. 64. ON VERIFICATION OF EXTRACT OF ACCOUNT OF THE AP PELLANT IN THE BOOKS OF ACCOUNT OF M/S TATA SKY AND EXTRACT OF ACCOUNT OF M/S TATA SKY LTD. IN THE BOOKS OF ACCOUNTS, THE CREDIT NOTES ISSUED BY M/S TATA SKY LTD. WERE F OUND TO BE DULY ACCOUNTED FOR BY THE APPELLANT AS UNDER :- SR. NO. DATE OF CREDIT NOTE ISSUED BY M/S TATA SKY LTD. AMOUNT (RS.) DATE ON WHICH ACCOUNTED BY APPELLANT IN ITS BOOKS 1 26/05/2007 1,74,450 31/03/2008 2 19/06/2007 1,12,500 31/03/2008 3 17/07/2007 500 31/03/2008 4 30/07/2007 500 31/03/2008 5 21/08/2007 10,000 31/03/2008 6 28/08/2007 26,800 31/03/2008 7 26/09/2007 2,00,000 31/03/2008 8 19/10/2007 1,75,000 31/03/2008 TOTAL 6,99,750 FROM THE ABOVE CHART, IT IS CLEAR THAT THE APPELLAN T HAS RECEIVED TOTAL CREDITS NOTES TOTALING TO RS.6,99,750/-, BUT A.O. HAS WRONGLY ADD ED RS.6,24,750/-, I.E. LESS BY RS.75,000/-. THERE MIGHT BE TOTALING MISTAKE ON TH E PART OF THE A.O.. SINCE THE APPELLANT HAS DULY ACCOUNTED FOR CREDIT NOTES AMOUN TING TO RS.6,99,750/- IN ITS BOOKS OF ACCOUNT, THE ADDITION MADE BY THE A.O. DOE S NOT SURVIVE. THE A.O. IS THEREFORE DIRECTED TO DELETE THE ADDITION OF RS.6,2 4,750/-. IN THE RESULT, THE GROUND NO.5 FOR A.Y. 2008-09 IS ALLOWED. 26.2 AS CAN BE SEEN FROM THE AFORESTATED PROCESS OF REASONING BY CIT(A), THE ALLEGED DISCREPANCY IN ACCOUNTS STAND RECONCILED AN D EXPLAINED. THEREFORE, THERE IS NO WARRANT TO INTERFERENCE WITH SAME. GRO UND NO.1 OF THE REVENUE APPEAL IS ACCORDINGLY DISMISSED. 27. IN GROUND NO.2 THE REVENUE HAS ASSAILED THE ACT ION OF THE CIT(A) IN DELETING THE ADDITION OF RS.1,86,456/- MADE ON ACCO UNT OF CASH DISCOUNT AND UN-ACCOUNTED CREDIT NOTES IN THE BOOKS OF ACCOUNT P ERTAINING TO SUPPLIER M/S SONY INDIA. 27.1 THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN TERMS OF HIS FINDINGS HEREUNDER :- 46. IN RESPECT OF ADDITION OF RS.84,322/- ON ACCOU NT OF CASH DISCOUNT AND RS.1,02,134/- ON ACCOUNT OF CREDIT NOTES, TOTALING TO RS.1,86,456/- FOR A.Y. 2008-09, THE APPELLANT HAS FURNISHED EXTRACT OF ACCOUNT OF S ONY INDIA PVT. LTD. IN THE BOOKS OF ACCOUNTS FOR THE PERIOD 01/04/2007 TO 31/03/2008 AN D ALSO EXTRACT OF ACCOUNT OF SCHEME AND BONUS SHOWING DISCOUNT INCOME FROM SONY AND SUBMITTED THAT THE 20 ITA NOS.1968 TO 1971/PN/2012 APPELLANT HAS RECORDED AND SHOWN THE INCOME OF RS.8 4,322/- AND ALSO RS.1,02,134/- AS INCOME/ DISCOUNT ON 31/10/2007. ON PERUSAL OF T HE ACCOUNT EXTRACT FURNISHED BY THE APPELLANT, IT IS SEEN THAT THE APPELLANT HAS DU LY ACCOUNTED FOR AMOUNT OF RS.1,86,456/- ON 31/10/2007. SINCE THE AMOUNTS ARE ALREADY ACCOUNTED FOR BY THE APPELLANT IN ITS BOOKS OF ACCOUNT, THE ADDITION MAD E BY THE A.O. DOES NOT SURVIVE. THE A.O. IS DIRECTED TO DELETE THE ADDITION OF RS.8 4,322/- AND RS.1,02,134/- FOR A.Y. 2008-09. IN THE RESULT, THE GROUND OF APPEAL FOR A .Y. 2008-09 ALLOWED. 27.2 WE FIND NO INFIRMITY IN THE FACTUAL OBSERVATIO NS OF THE CIT(A) WHILE GRANTING RELIEF. THE GROUND NO.2 OF THE REVENUE AP PEAL IS DEVOID OF ANY MERIT AND IS THUS LIABLE TO BE DISMISSED. 28. BY WAY OF GROUND NO.3, THE REVENUE HAS RAISED G RIEVANCE AKIN TO GROUND NO.1 CONCERNING ASSESSMENT YEAR 2004-05 PERT AINING TO SUPPLIER VIDEOCON. IN THE FINANCIAL YEAR 2007-08 RELEVA NT TO ASSESSMENT YEAR 2008- 09, THE ASSESSING OFFICER MADE AN ADDITION OF RS.8, 27,370/- TOWARDS INFLATED PURCHASES ATTRIBUTABLE TO SUPPLIER M/S VIDEOCON IND USTRIES LTD. ON THE SIMILAR FOOTING AS NOTED IN ASSESSMENT YEAR 2004-05 (SUPRA) . 38. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT WITH REFERENCE TO THE FACTS OF THE CASE. FIRST OF ALL, IT IS SEEN FROM THE ASS ESSMENT ORDER THAT THE A.O. HAS TAKEN CREDIT NOTE NO.180032763 DT. 17/09/2007 FOR RS.30,0 00/- AND CREDIT NOTE NO.180035602 DT. 29/09/2007 FOR RS.36,894/-, TWICE WHILE WORKING OUT THE DIFFERENCE. THEREFORE, THE DIFFERENCE WORKED OUT B Y THE A.O. AT RS.8,27,370/- IS REQUIRED TO BE CORRECTED TO RS.7,60,476/-. ON PERU SAL OF LEDGER ACCOUNT STATEMENT OF M/S VIDEOCON AS APPEARING IN THE BOOKS OF THE APPEL LANT AND RECONCILIATION STATEMENT, IT IS SEEN THAT THE APPELLANT HAS ACCOUN TED FOR THE CREDIT NOTES ON THE FOLLOWING DATES. DATE PARTICULARS CREDIT NOTE NUMBER AMOUNT (RS.) DATE ON WHICH ACCOUNTED BY APPELLANT IN ITS BOOKS 29/09/2007 OCTROI 180035610 4,576.00 27/01/2008 17/09/2007 CASH DISCOUNT 180032763 30,000.00 31/01/2008 29/09/2007 OCTROI 180035602 36,894.00 27/01/2008 29/09/2007 OCTROI 180035607 22,223.00 27/01/2008 05/07/2007 OCTROI 180017095 63,600 30/11/2007 30/08/2007 SCHEME 180029447 2,61,950.00 20/01/2008 11/09/2007 CLAIM 180031503 58,500.00 20/01/2008 17/09/2007 CASH DISCOUNT 180032761 60,000.00 31/01/2008 29/09/2007 OCTROI 180035598 1,92,733.00 27/01/2008 17/09/2007 SPL. DISCOUNT 180032762 30,000.00 31/01/2008 TOTAL 7,60,476.00 IN VIEW OF ABOVE FACTUAL POSITION, SINCE THE APPELL ANT HAS DULY ACCOUNTED FOR THE CREDIT NOTES IN ITS BOOKS OF ACCOUNTS, THE ADDITION DOES NOT SURVIVE. THEREFORE, THE 21 ITA NOS.1968 TO 1971/PN/2012 A.O. IS DIRECTED TO DELETE ADDITION OF RS.8,27,370/ -. IN THE RESULT, THE GROUNDS OF APPEAL IN THIS RESPECT STANDS ALLOWED FOR A.Y. 2008 -09. 28.1 FOLLOWING THE PARITY OF REASONINGS AS NOTED FO R ASSESSMENT YEAR 2004- 05, WE FIND NO INFIRMITY IN THE FACTUAL APPRECIATIO N MADE BY THE CIT(A). ACCORDINGLY, WE DECLINE TO INTERFERE WITH THE SAME. IN THE RESULT, THE GROUND NO.3 OF THE REVENUE APPEAL FOR THIS ASSESSMENT YEAR I.E. A.Y. 2008-09 IS ALSO DISMISSED. 29. AS PER GROUND NO.4, THE REVENUE HAS RAISED OBJE CTION THAT THE ORDER OF THE CIT(A) IS NOT IN CONFORMITY WITH RULE 46A OF TH E INCOME TAX RULES, 1962. SIMILAR OBJECTION OF INFRINGEMENT OF RULE 46A WAS R AISED IN OTHER GROUNDS ALSO PERTAINING TO THIS YEAR APPEAL AS WELL AS IN EARLIE R YEARS APPEAL. IN THIS CONNECTION, WE OBSERVE THAT THE LD. DEPARTMENTAL RE PRESENTATIVE FOR THE REVENUE COULD NOT DEMONSTRATE IN WHAT MANNER RULE 4 6A HAS BEEN BYPASSED BY THE CIT(A). IN OUR VIEW, THE CIT(A) HAS DISPOSE D OF THE APPEAL ON RE- APPRECIATION OF THE MATERIAL AND EVIDENCES WHICH WE RE ALREADY BEFORE THE ASSESSING OFFICER. IN THE ABSENCE OF RELIANCE ON A NY NEW EVIDENCE OR MATERIAL WITHOUT THE KNOWLEDGE OF THE ASSESSING OFFICER, WE FIND NO MERIT IN THE AFORESAID GROUND CONCERNING THIS YEAR APPEAL AS WEL L AS RELATING TO OTHER EARLIER YEARS APPEAL. THUS, GROUND NO.4 IS ALSO DISMISSED. 30. IN GROUND NO.5, THE REVENUE HAS CHALLENGED THE ACTION OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEPREC IATION ON VARIOUS INCILLIARY COMPONENTS OF WIND MILL AT THE SAME ACCELERATED RAT E AT PAR WITH WINDMILL ITSELF. 30.1 THE FACTS CONCERNING THE ISSUE AS NOTED BY THE ASSESSING OFFICER ARE THAT THE ASSESSEE HAD CLAIMED ACCELERATED DEPRECIATION O N THE ENTIRE INCIDENTAL CAPITAL EXPENDITURE TOGETHER WITH PURCHASE AND INST ALLATION OF WIND MILLS. THE ASSESSING OFFICER WAS OF THE VIEW THAT CIVIL WORK O F CONTROL ROOM, SITE DEVELOPMENT AND INTERNAL ROAD AND FOUNDATION MADE F OR THE WIND MILL, TRANSFORMER DEVICE ETC. WERE NOT INTEGRAL PART OF W INDMILLS AND THEREFORE, 22 ITA NOS.1968 TO 1971/PN/2012 ASSESSEE DOES NOT QUALIFY FOR HIGHER RATE OF DEPREC IATION @ 80% BUT IS ENTITLED TO NORMAL RATE OF DEPRECIATION AS APPLICABLE. THER EFORE, THE EXCESS DEPRECIATION CLAIMED BY APPELLANT ON COST OF ERECTI ON AND INSTALLATION, TRANSFORMER AND OTHER COST OF COMPONENTS TABULATED BELOW WAS DISALLOWED BY THE ASSESSING OFFICER. FOR DOING SO, THE ASSESSING OFFICER RELIED ON THE DECISION GIVEN BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALA FINVEST & AGRO (P) LTD. VS. ACIT (2008) 118 TTJ 68 (PUNE). AGGRIEVED BY THE ACTION OF THE ASSESSING OFFICER, THE ASSESSEE C ARRIED THE MATTER BEFORE THE CIT(A). 30.2 THE CIT(A) ANALYZED THE VARIOUS COMPONENTS OF THE COST OF WINDMILL REPRODUCED HEREUNDER :- SR.NO. PARTICULARS AMOUNT 1. COST OF WIND TURBINE GENERATOR RS. 2,31,67,800 2. A) COST OF COMPONENT & ACCESSORY (COPPER WOUND WITH ACCESSORIES) B) COST OF COMPONENT FOR GENERATION OF ELECTRICITY SUPPLY OF ROTOR BLADES 40,00,000 C) ELECTRICAL ITEMS, COMPONENTS OF RE DEVICE AND TRANSFORMER 20,82,200 RS. 60,82,200 3. COST OF TUBULAR TOWER RS. 4. COST OF WORK INCLUDING FOUNDATION WORK RS. 32,84 ,366 5. LABOUR RELATED COST A) INSTALLATION OF WINDMILL 9,43,824 B) INSTALLATION OF ELECTRICAL LINE FOR POWER TRANSMISSION AND METER 9,72,922 C) FINAL TESTING AND COMMISSIONING 67,416 RS. 19,84,162 6. REIMBURSEMENT OF POWER EVACUATION FACILITY AND C REATION OF INFRASTRUCTURE RS. 7. MISCELLANEOUS (LAND COST) A) PROFESSIONAL FEES/ MISC. EXP 5,66,860 D) TOWARDS PURCHASE OF LAND 15,56,000 E) TOWARDS PURCHASE OF LAND 2,80,000 F) STAMP DUTY / FRANKING CHARGES TOWARDS LAND 53,140 RS. TOTAL LAND COST 24,56,000 RS. TOTAL COST OF WIND TURBINE UNIT 3,45,18,528 30.3 ON EXAMINATION OF THE COST STRUCTURE OF WINDMI LL AND HAVING REGARD TO THE OBSERVATIONS MADE BY THE PUNE BENCH OF THE TRIB UNAL IN THE CASE OF POONAWALA FINVEST & AGRO (P.) LTD. VS. ACIT, (2008) 118 TTJ 68 (PUNE), THE CIT(A) ACCEPTED THE HIGHER RATE OF DEPRECIATION CLA IMED ON COMPONENTS, ACCESSORIES, TRANSFORMERS, ETC. AND COST INCURRED T OWARD FOUNDATION WORK. 23 ITA NOS.1968 TO 1971/PN/2012 30.4 WE FIND THAT DECISION OF PUNE TRIBUNAL IN POON AWALA FINVEST (SUPRA) RELIED UPON BY ASSESSING OFFICER INFACT SUPPORTS TH E CASE OF ASSESSEE. WE OBSERVE THAT THE VARIOUS COMPONENTS OF CAPITAL EXPE NDITURE TABULATED ABOVE ARE CLEARLY ATTRIBUTABLE TO ENABLE THE WINDMILL TO OPER ATE AND FUNCTION. 30.5 WE ALSO FIND THAT THE CONTROVERSY IN THE PRESE NT CASE IS SQUARELY COVERED BY THE RECENT DECISION OF THE PUNE BENCH OF THE TRI BUNAL IN THE CASE OF SHREEM ELECTRIC LIMITED VS. JCIT IN ITA NO.2107/PN/2013, O RDER DATED 30.11.2015 WHEREIN THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOU R OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE ORDER OF THE TRIBUNAL ON TH E ISSUE IS REPRODUCED HEREINBELOW :- 8. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMISSIONS MADE ON BEHALF OF THE REVENUE. THE ONL Y ISSUE FOR ADJUDICATION BEFORE US IS ALLOWABILITY OF SIMILAR DEPRECIATION RATE AS APPLICABLE TO WINDMILLS, ALSO TO THE FOUNDATION & CIVIL WORK AND ERECTION & COMMISSIO NING WORK EXECUTED FOR THESE WINDMILLS. IT IS THE CASE OF THE ASSESSEE BEFORE T HE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) THAT ENTIRE EXPENDITURE TOGETHER WITH COST OF WINDMILL IS ENTITLED TO SAME RATE OF DEPRECIATION AT 80% AS THE OTHER EXPEN DITURE INCURRED TOWARDS FOUNDATION & CIVIL WORK AND ERECTION & COMMISSIO NING WORK, ETC. ARE INTEGRAL PART OF WINDMILLS AND ARE DIRECTLY ATTRIBUTABLE TO INSTALLATION AND OPERATIONAL FUNCTIONING OF WIND TURBINE. SINCE THE CIVIL WORK AND ERECTION & COMMISSIONING EXPENSES INCURRED ARE IN RELATION TO INSTALLATION O F WINDMILL, DEPRECIATION ON THE SAME SHOULD BE PROVIDED AT THE RATE APPLICABLE TO W INDMILL. WE FIND THAT THE AFORESAID ASSERTIONS MADE ON BEHALF OF THE ASSESSEE BEFORE THE REVENUE REMAINS UNCONTROVERTED. ACCORDINGLY, WE ARE OF THE FIRM VI EW THAT THE EXPENSES INCURRED ON ERECTION & COMMISSIONING, CIVIL WORK, ETC. BEING NE CESSARY ADJUNCT TO THE WINDMILL AND IS NOT MEANT FOR ANY OTHER PURPOSES OTHER THAN FOR OPERATIONAL FUNCTIONING OF WIND TURBINE AND THEREFORE CANNOT BE TREATED DIFFER ENTLY. THEREFORE, IMPUGNED CAPITAL EXPENDITURE TOWARDS CIVIL WORK & COMMISSION ING ETC. ALSO WILL QUALIFY FOR THE SAME RATE OF DEPRECIATION AS APPLICABLE TO WIND TUR BINE ITSELF. THE ISSUE IS NO LONGER RES-INTEGRA AND IS COVERED BY THE DECISION OF CO-OR DINATE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALA FINVEST & AGRO (P.) LTD. VS. ACIT, (2008) 118 TTJ 68 (PUNE) WHEREIN IT HAS BEEN CLEARLY HELD THAT THE CAPITAL E XPENDITURE INCIDENTAL TO THE WINDMILL HAS TO BE TESTED ON THE TOUCHSTONE OF THE FUNCTIONAL TEST AND THE ASSESSEE WILL BE ENTITLED TO HIGHER RATE OF DEPRECIATION ON SUCH INCIDENTAL EXPENDITURE, IF IT HAS NO OTHER USE EXCEPT FOR POWER GENERATION DONE B Y THE WINDMILL. OUR VIEW IS ALSO SUPPORTED BY ANOTHER DECISION OF THE CO-ORDINATE BE NCH OF PUNE TRIBUNAL IN THE CASE OF M/S D.J. MALPANI VS. ACIT IN ITA NOS.1148 T O 1154/PN/2013, ORDER DATED 30.10.2015. ACCORDINGLY, WE HOLD THAT THE REVENUE IS MISDIRECTED ITSELF IN LAW IN MAKING THE IMPUGNED DISALLOWANCE OF DEPRECIATION. 30.6 IN THE LIGHT OF THE AFORESAID PRECEDENTS ON TH E ISSUE, WE FIND NO MERIT IN THE GROUND NO.5 RAISED BY THE REVENUE. WE HOLD THA T VARIOUS COMPONENTS OF WINDMILLS TABULATED ABOVE ARE INTEGRALLY CONNECTED TO WINDMILLS AND CANNOT BE 24 ITA NOS.1968 TO 1971/PN/2012 TREATED IN ISOLATION FOR THE PURPOSE OF DEPRECIATIO N ALLOWANCE. IN THE RESULT, GROUND NO.5 OF THE REVENUE APPEAL IS DISMISSED. 31. THE OTHER REMAINING GROUND NOS.6 AND 7 IN THIS REVENUE APPEAL ARE GENERAL IN NATURE AND THUS DO NOT CALL FOR ANY ADJU DICATION. 32. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.1971/PN/2012 RELATING TO ASSESSMENT YEAR 2008-09 IS DISMISSED. 33. RESULTANTLY, ALL THE CAPTIONED APPEALS OF THE R EVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 18 TH DAY OF MARCH, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 18 TH MARCH, 2016. % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT-II, KOLHAPUR; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE