ITO, PALI V. Dev Raj prop. M/s. D.D. textile, PALI

ITA 198/JODH/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7966 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANIDR
• Assessee Lawyers: G S MEHTA
• Keywords: Gross profit estimation; Cost of acquisition; Corroborative evidences
• Section: 143(3); 133(6); 68; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 198/JODH/2010 [ASSESSMENT YEAR 2007-08] INCOME TAX OFFICER, VS DEV RAJ WARD-1, PROP. M/S. D.D. TEXTILE, PALI. 125- MAHAVEER NAGAR, PALI. AAGPR8258K C.O. NO. 10/JODH/2010 (ARISING OUT OF ITA NO. 198/JODH/2010) [ASSESSMENT YEAR 2007-08] DEV RAJ VS INCOME TAX OFFICER, PROP. M/S.D.D. TEXTILE, WARD-1, 125-MAHAVEER NAGAR, PALI. PALI. AAGPR8258K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.S. MEHTA. DEPARTMENT BY : SHRI G.R. KOKANI(DR) DATE OF HEARING : 29.11.2012 DATE OF PRONOUNCEMENT : 13.12.2012 2 ORDER PER HARI OM MARATHA, J.M. THE APPEAL BY REVENUE AND CROSS OBJECTION (C.O.) B Y THE ASSESSEE FOR A.Y. 2007-08 ARE DIRECTED AGAINST THE OF LD. CIT(A) DATED 15.02.2010. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE TRADES IN CLOTH AND FOR A.Y. 2007-08, HE H AS FILED RETURN OF INCOME (ROI) ON 22.10.2007, DECLARING TOT AL INCOME OF RS. 92,460/-. HE HAS DECLARED A GROSS PROFIT OF RS. 39,27,116/- ON A TOTAL TURNOVER OF RS.3,77,35,156/- GIVING G.P. RATE OF 10.41% IN A.Y. 2006-07 THIS RATE WAS 12.56% ON TOTAL TURNOVER OF RS. 2,80,09,544/-. THE A.O. ISSUE D A QUESTIONNAIRE, THROUGH LETTER DATED 10.11.2009, WHI CH HAS BEEN EXTRACTED BY LD. CIT(A) AT PAGES 3 ONWARDS OF HIS ORDER. THE REPLY OF THE ASSESSEE DATED 25.11.2009 AND THE EXCERPTS FROM THE LETTER OF A.O. DATED 10.11.2009, ARE BEING REPRODUCED BELOW :- 3 1. DURING ASSESSMENT PROCEEDING, IT WAS SUBMITTED BY Y OU THAT AFTER PURCHASE, GREY THANS ARE SENT DIRECTLY T O OUTSIDE PARTIES FOR DYEING AND OTHER ALLIED JOB WOR K PROCESS THROUGH CHALLANS WITH SPECIFIC DIRECTION AB OUT THE DYEING AND NAME/MARK TO BE PRINTED ON THE SAME. IT WAS FURTHER BEEN EXPLAINED THAT GREY THANS HAVE TO BE P ASSED THROUGH VARIOUS STAGES OF JOBWORK PROCESS TO GET TH E FINISHED PRODUCT AND UNPROCESSED/SEMI PROCESSED GRE Y THANS LYING WITH OUTSIDE PARTIES FOR JOB WORK AT THE END OF THE YEAR ARE SHOWN UNDER THE HEAD GREY IN THE LIST OF C LOSING STOCK. A. IT IS FURTHER TO NOTE THAT AS YOU HAVE CATEGORIC ALLY DENIED OF HAVING BEEN MAINTAINED ANY KIND OF STOCK REGISTE R, SO THE CHALLANS THROUGH WHICH GREY THANS ARE SENT FOR JOBW ORK TO A PARTICULAR PARTY ARE IMPORTANT TOOL IN ASSESSING TH E NUMBER OF GREY THANS PURCHASED ON A PARTICULAR DATE, NUMBER O F THANS SENT OUTSIDE THE BUSINESS PREMISES FOR A PARTICULAR TYPE OF JOB WORK TO A PARTICULAR PROCESS HOUSE. THROUGH CHA LLAN ONLY, IT CAN BE SEEN THAT THE PARTICULAR GREY THAN RECEIV ED BACK AFTER GETTING THE PARTICULAR TYPE OF PROCESS DONE O N A PARTICULAR DATE. WITHOUT CHALLANS, IT IS NOT POSSIB LE FOR ANY PRUDENT BUSINESS MAN LIKE YOU TO HAVE AN IDEA ABOUT THE *'? NUMBER OF THANS LYING IN THE PARTICULAR PROCESS HO USE FOR A PARTICULAR PROCESS ON A PARTICULAR DAY OR AT THE EN D OF THE YEAR. HENCE IN ABSENCE OF STOCK REGISTER AND CHALLA NS 4 VALUATION OF STOCK AT THE END OF THE YEAR CANN.PT D EPICT TRUE STATE OF AFFAIR OF THE BUSINESS. 2. DURING THE COURSE OF ASSESSMENT PROCEEDING YOU H AVE FAILED TO JUSTIFY AGAINST WHICH PURCHASES CORRESPON DING SALES HAVE BEEN MADE. FURTHER YOU HAVE FAILED TO JUSTIFY THE RATE CHARGED/VALUE ADOPTED FOR THE SALE OF PARTICULAR/TY PE OF FINISHED PRODUCT. HERE IT IS AGAIN PERTINENT TO MEN TION THAT THE PURCHASE COST OF GREY THANS DEPEND UPON THE QUALITY AND JOB CHARGES ON THE SAME ALSO VARIES ACCORDINGLY. YOU H AVE FAILED TO JUSTIFY THE SALES WITH CORRESPONDING PURC HASE OF SPECIFIC GREY THANS AND EXPENSES INCURRED ON THEM U NDER THE HEAD PROCESS COST, UP TO THE DATE OF SALE. 3. YOU HAVE FAILED TO JUSTIFY THE SHORTAGE CLAIMED WITH SUPPORTIVE EVIDENCE. THIS SHOWS THAT THE SA ME WAS CLAIMED WITHOUT ANY BASIS JUST TO REDUCE THE GROSS PROFIT OF THE CONCERN 4. DURING COURSE OF ASSESSMENT PROCEEDING YOU HAV E FAILED TO JUSTIFY WITH CORROBORATIVE EVIDENCE LIKE COPY OF CH ALLANS AS WELL AS JOB PROCESS BILL OF INDIVIDUAL PURCHASE JUS TIFYING THAT THE GREY THANS PURCHASED ON DATES MENTIONED BELOW W ERE GOT PROCESSED UP TO 31.03.2006 AND RECEIVED BACK FROM T HE PROCESS HOUSE. HERE IT IS PERTINENT TO MENTION T HAT GREY 5 THANS PURCHASED PRIOR TO THE DATES MENTIONED B ELOW I.E ON 07.03.2007, 09.03.2007, 12.03.2007 ETC. WERE SH OWN AS GREY STOCK IN THE DETAIL OF CLOSING ST OCK FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDING. THIS STRENGTHENS THE FACT THAT STOCK ON LAST DAY OF THE FINANCIAL YEAR WAS TAKEN AS BALANCING FIGURE JUST TO REDUCE T HE GROSS PROFIT OF THE CONCERN. DATE OF BILL NAME OF THE PARTY QUALITY NO. OF THANS AMOUNT 27.03.2007 NAVNIDHI CORPORATION, ICHALKARANJI 40X60 55X56,48' 50 66812 27.03.2007 NAVNIDHI CORPORATION, ICHALKARANJI 40X60 48X50,46' 44 49053 22.03.2007 ASHOK KUMAR RAJESH KUMAR I CHALKARANJI 50X50 38' 42 49220 22.03.2007 NAVNIDHI CORPORATION, ICHALKARANJI 40X60 55X56,48' 50 68799 16.03.2007 ASHOK KUMAR RAJESH KUMAR ICHALKARANJI 50X50 38' 56 64454 16.03.2007 OM SHANTI TEXTILES ICHALKARANJI 72X68 40X60,38' 48 51700 14.03,2007 ASHOK KUMAR RAJESH KUMAR ICHALKARANJI 45X42 45' 45 51000 14,03.2007 OM SHANTI TEXTILES 72X68 40X60,38' 48 51436 ICHALKARANJI 14.03.2007 NAVNIDHI CORPORATION, ICHALKARANJI 40X60 55X56,48' 50 67951 14.03.2007 BHAGWATI ' TEXTILES, BHURHANPUR 45X42 45 47149 13.03.2007 BHAGWATI TEXTILES, BHURHANPUR 50X50 46 85639 12.03.2007 NAVNIDHI CORPORATION, ICHALKARANJI 40X60 55X56,48' 50 67945 10.03.2007 NAVNIDHI CORPO RATION, ICHALKARANJI 40X60 55X52,38' 48 51588 7727467- 6 IN THIS CONTEXT YOU ARE GIVEN AN OPPORTUNITY TO FUR NISH DETAIL WITH SUPPORTIVE EVIDENCE JUSTIFYING THAT THE GREY THANS MENTIONED ABOVE WERE CONVERTED INTO FINISHED GOODS OR THE SAME WERE SOLD PRIOR TO 31 ST OF MARCH 2007. IF YOU FAILED TO JUSTIFY THE SAME THEN IT WILL BE PRESUMED THAT THE GREY THANS AMOUNTING TO KS. 772746/- HAVE BEEN DELIBERATELY NOT SHOWN UNDER THE HEAD CLOSING STOCK OF GREY JUST TO DECLARE LOW GROSS PROFIT AND THE AMOUNT OF RS. 772746/- SHALL BE ADDED TO THE TOTAL INCOME JUST TO BRING THE TRUE TRADING RESULTS ON RECORD. 5. FURTHER YOU HAVE FAILED TO JUSTIFY THE VALUATION OF THE GREY THANS SHOWN UNDER THE HEAD CLOTH UNDER PROCESS WITH SUPPORTIVE EVIDENCES LIKE PURCHASE BILLS, CHAL LANS AND PROCESS BILLS RELATED TO INDIVIDUAL LOT OF GREY TH ANS REFLECTED UNDER THESE HEADS. IN ABSENCE OF THESE EVIDENCES, A PPEARS THAT YOU HAVE TAKEN THE VALUE OF CLOTH UNDER PROCES S AS BALANCING FIGURE IN THE TRADING ACCOUNT JUST TO RED UCE THE GROSS PROFIT OF THE CONCERN. 6. ON PERUSAL OF THE AUDIT REPORT, IT WAS N OTICED THAT YOU HAVE ACCEPTED FRESH LOANS FROM 5 PARTIES FOR WH ICH CONFIRMATION OF ACCOUNTS HAVE ALSO BEEN FILED. IN O RDER TO VERIFY GENUINENESS OF THE LOAN AMOUNT, OUT OF 5, TH E FOLLOWING 4 PARTIES WERE REQUESTED TO FURNISH COPY OF CAPITAL ACCOUNT, BALANCE SHEET ACKNOWLEDGEMENT OF RETURN FI LED AND 7 COPY OF BANK ACCOUNT, U/S 133(6) OF THE IT ACT. BU T TILL DATE ONLY ONE PARTY M/S KOTHAMASU ADINARAYAN HAS FILED C OPY OF YOUR ACCOUNT APPEARING IN THEIR BOOKS, WHICH SHOWS THAT THE LOAN AMOUNT OF KS. 2 LAC WAS BROUGHT FORWARD ENTRY FROM THE LAST YEAR, WHERE AS YOU HAVE SHOWN IT AS LOAN ACCEP TED IN THE YEAR UNDER REFERENCE AS ON 01.04.2006. NO RESPONSE HAS BEEN RECEIVED FROM THE BALANCE 3 PARTIES. KINDLY EXPLAIN AS TO WHY THE LOAN TAKEN FROM THESE PARTIES SHOULD NOT BE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME AS GENUINENESS OF TH E TRANSACTION, CREDITWORTHINESS AND IDENTITY OF THE C REDITOR HAS NOT BEEN PROVED. A. UNSECURED LOAN OF RS 2 LAC FROM M/S KOHAMASU ADI NARAYANA. B. UNSECURED LOAN OF KS 2 LAC FROM SMT MADHUBALA H JAIN C. UNSECURED LOAN OF RS 3 LAC FROM SHRI HIRACHAND M JAIN. D. UNSECURED LOAN OF RS 3 LAC FROM SHRI RAKESH KUMA R H JAIN ON PERUSAL OF BOOKS OF ACCOUNTS IT WAS NOTICED THAT YOU HAVE TAKEN LOAN BELOW RS. 20000/- IN CASH FROM THE FOLL OWING PERSONS. IN SPITE OF REPEATED REQUEST YOU H AVE FAILED TO PRODUCE THESE PERSONS FOR EXAMINATION. K INDLY EXPLAIN AS TO WHY THE LOAN TAKEN FROM THESE PARTIES SHOULD NOT BE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME AS GE NUINENESS OF THE TRANSACTION, CREDITWORTHINESS AND IDENTITY OF T HE CREDITOR HAS NOT BEEN PROVED. 8 A. UNSECURED LOAN FROM SHRI DALURAM S/O SHRI LALURAM J I- RS. 16000/- B. UNSECURED LOAN FROM SHRI JITENDRA KUMAR S/O SHRI BHANWAR LAL JI - RS. 16000/- CONSIDERING THE DEFECTS IN MAINTENANCE OF B OOKS OF ACCOUNTS AS MENTIONED ABOVE, YOU ARE SHOW CAUSED AS TO WHY PROVISIONS OF SECTION 145(3) SHOULD NOT BE INVOKED AND GROSS PROFIT IN THE CURRENT YEAR SHOULD NOT BE DETERMINED AT THE GROSS PROFIT RATE DECLARED IN THE IMMEDIATE PRE CEDING YEAR WHICH IS 12.56% IN PLACE OF 10.41% DECLARED BY THE YOU FOR CURRENT YEAR. IN RESPONSE TO THE SAME, THE ASSESSEE VIDE LETTER D TD. 25.11.2009 FILED A REPLY. THE RELEVANT PARA FRO M THE SUBMISSION IS REPRODUCED AS UNDER: 'WITH REFERENCE TO YOUR LETTER DTD. 10.11.2009, WE BEG TO STATE THAT WE HAD PRODUCED ALL SUPPORTING EVIDENCE AND CI RCUMSTANCES WHICH ARE LIABLE TO REDUCE THE GROSS PROFIT OF AS C OMPARED WITH PRECEDING YEAR. FURTHER WE BEG TO REPLY YOUR ABOVE SAID LETTER AS UNDER: 1. AS WE HAD ALREADY STATE IN OUR PREVIOUS REPLY THAT CLOTH WHICH IS EITHER SEMI-FINISHED OR DYED AND BILLS OF THAT ARE NOT PRODUCED BY THE JOB WORKER IT WILL BE TREATED AS GR EY CLOTH. 9 SIMPLY WHEN WE HAD NOT PAID ANY AMOUNT IN THIS REGA RD THEN WHO WE CAN INCLUDED IN COST OF CLOSING STOCK. THE A SSESSEE IS NOT MAINTAINED CATEGORICALLY STOCK REGISTER BUT HE IS MAINTAINED CHALLAN BOOK WHICH SHOWS ALL THE STOCK L YING WITH JOB WORKER AND WHEN GOODS RETURNED AFTER PROCESSED IS ACCOUNTED FOR WITH CHALLAN NO. AND DETAILS THEREOF IN THE BOOKS ACCORDINGLY. WE HAD PRODUCED SOME CHALLAN AND SUBMI TTED THE COPIES OF THE CHALLANS IN OUR PREVIOUS REPLY. THE V ALUATION OF STOCKS ARE DETERMINED AS PER THE CHALLAN ETC. 2. SINCE THERE ARE LOT OF ACCOUNTING TRANSACTIONS AND SALES PURCHASES ARE MADE BUT IT IS IMPOSSIBLE TO JUSTIFY AGAINST WHICH PURCHASE CORRESPONDING TO SALE HAVE BEEN MADE. COST OF TH E GREY THANS HAVE DIFFERENT QUALITY AND WE HAD SUBMITTED COPY OF PURCHASE REGISTER AT PREVIOUS HEARING. THE STOCKS ARE VALUED AT COST OF PURCHA SE REGISTER AT PREVIOUS HEARING. THE STOCKS ARE VALU ED AT COST OR MARKET PRICE WHICH EVER IS LESS THAN HOW IT IS POSSIBLE TO CONSIDER THE RATE OF PARTICULAR PURCHAS E BILL, THE VALUATION DATE OF CLOSING STOCK WAS 31.03 .2009. 3. WE HAVE GIVEN QUANTITATIVE DETAIL OF GOODS PURCHASED, SOLD, OPENING AND CLOSING STOCK. MONTHWISE WHICH IS RECONCILES CORRESPONDING TO T HE BOOKS OF THE ACCOUNTS. SHORTAGE IS SHOWN MONTH WI SE 10 AS GENERATED TIME TO TIME AND THIS IS NOT CLAIMED O N PREDICTION BASIS. IT IS ACTUAL SHORTAGE WHICH IS GENERATED DURING THE PROCESS OF GOODS AS WELL AS IN PACKING. 4. AS WE HAD STATED ABOVE THAT PARTICULAR PURCHASE BILL COULD NOT VERIFY IN CORRESPONDING TO CLOSING STOCKS WE AGAIN PRODUCED HEREWITH THE BOOKS OF ACCOUNT AND AND SUPPORTIVE EVIDENCE FOR YOUR KIN D PERUSAL. 5. WE HAD REPLIED AS ABOVE 02. 6. REGARDING UNSECURED LOANS CONFIRMATION WAS DISPATCHED TO YOUR OFFICE AND ONE MORE COPY WAS RECEIVED BY US. IF RESPECTED SIR MAY ALLOW ME TO SUBMIT THE SAME BEFOR YOU. 7. BOTH THE CREDITORS ARE NOT TRACEABLE AT THIS MOMENT HOWEVER WE HAD SUBMITTED THEIR AFFIDAVITS DULY ATTESTED BY THE NOTARY ALONG WITH T HEIR ADDRESS. 11 8. IT IS OUT KIND REQUEST THAT ON THE ABOVE SAID GROUNDS THE PROVISION OF SECTION 145(3) MAY NO T BE APPLIED AND ASSESSED THE RETURN OF INCOME. 3. AFTER CONSIDERING THE SAME THE A.O. ADOPTED A G. P. RATE OF 12.56%. BUT LD. CIT(A) HAS ADOPTED THIS RATE AT 10.90%. THE REVENUE BEING AGGRIEVED, HAS RAISED THE FOLLOWI NG GROUNDS :- 1. DIRECTING THE AO TO DETERMINE GROSS PROFIT OF THE ASSESSEE BY ADOPTING AVERAGE OF THE GROSS PROFIT RATES DECLARED BY THE ASSESSEE OR DETERMINED UPON ASSESSMENT, WHICHEVER IS HIGHER, FOR THE CURRENT ASSESSMENT YEAR AND TWO IMMEDIATELY PRECEDIN G YEARS BEING A.Y. 2006-07 & 2005-06, IGNORING THE FA CTS MENTIONED BY THE AO IN THE ASSESSMENT ORDER. 2. DIRECTING THE AO TO DETERMINE GROSS PROFIT OF THE ASSESSEE BY ADOPTING AVERAGE OF THE GROSS PROFIT RATES DECLARED BY THE ASSESSEE OR DETERMINED UP ON ASSESSMENT, WHICHEVER IS HIGHER, FOR THE CURRENT ASSESSMENT YEAR AND TWO IMMEDIATELY PRECEDIN G YEARS BEING A.Y. 2006-07 & 2005-06, IGNORING THE FA CT THAT THE ASSESSEE HAS UNDERSTATED THE VALUE OF CLOS ING STOCK BY NOT SHOWING THE VALUE OF GREY THANS TO THE 12 TUNE OF RS.7,72,746/- PURCHASED BY HIM BETWEEN 10.03.2007 TO 27.03.2007 THOUGH THE ID. CIT(A) HAS AGREED THAT THE AO HAS ARRIVED AT A JUSTIFIABLE CONCLUSION THAT THE CLOSING STOCK WAS TAKEN AS A BALANCING FIGURE AND ACCORDINGLY CONFIRMED AO'S ACTION OF REJECTING ASSESSEE'S BOOKS OF ACCOUNT U/S 145(3). 3. DELETING THE ADDITION OF RS.3,00,000/- MADE BY THE AO U/S 68 IGNORING THE FACTS MENTIONED BY THE AO IN THE ASSESSMENT ORDER. 4. DELETING THE ADDITION OF RS.3,00,000/- MADE BY THE AO U/S 68 IGNORING THE FACT THAT THE GENUINENESS OF TH E TRANSACTION CAN BE REJECTED EVEN IF THE ASSESSEE LEADS EVIDENCE WHICH IS NOT TRUSTWORTHY EVEN IF THE DEPARTMENT DOES NOT LEAD ANY EVIDENCE ON SUC H ISSUE. 4. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN HI S C.O. : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN 1. DIRECTING THE A.O. TO DETERMINE THE GROSS PROFIT OF THE ASSESSEE BY ADOPTING AVERAGE OF THE GROSS PROFI T RATES DECLARED BY THE ASSESSEE OR DETERMINED UPON 13 ASSESSMENT WHICHEVER IS HIGHER FOR THE CURRENT A.Y. AND TWO IMMEDIATELY PRECEDING YEARS BEING A.Y. 2006-07 AND 2005-06 IGNORING THE FACTS MENTIONED BY THE ASSESSEE 2. CONFIRMING THE ADDITION OF RS. 32000/- U./S 68 OF T HE ACT. 5. WE HAVE HEARD RIVAL SUBMISSION AND HAVE CAREFULL Y CONSIDERED THE RECORDS AVAILABLE BEFORE US. WE HAVE NOTICED THAT A LITTLE FALL IN THE G.P. RATE IN THIS YEAR HA S LED THE A.O. TO EXAMINE VARIOUS FACTS AS ARE DETAILED ABOVE. BUT , WE ARE OF THE CONSIDERED OPINION, THE A.O. HAS NOT BEEN AB LE TO PIN- POINT ANY MATERIAL DEFECT(S) IN THE BOOKS OF ACCOUN TS. HE HAS SIMPLY RELIED ON VARIOUS REPLIES WHICH ARE NOT BE R ELEVANT FOR THE PURPOSE. THEREFORE, WE HOLD THAT THERE IS NO GO OD REASONS FOR THE REJECTING THE BOOKS. ACCORDINGLY, W E REVERSE THE FINDING REGARDING REJECTION OF THE BOOKS OF ACC OUNTS AND ORDER THAT THE G.P. RATE OF 10.41% DECLARED BY THE ASSESSEE BE ACCEPTED. HENCE GROUND NOS. 1 AND 2 OF REVENUES APPEAL 14 ARE DISMISSED AND GROUND NO. (1) OF CROSS OBJECTION IS ALLOWED. 6. THE NEXT ISSUE IS REGARDING ADDITION OF RS. 3 LA KHS U/S 68 OF THE ACT. SHRI HEERA CHAND M. JAIN ADVANCED A SUM OF RS. 3 LAKHS TO THE ASSESSEE ON 14.07.2006. THIS AMOUNT WA S PAID THROUGH CHEQUE. THE A.O. DEMANDED PERSONAL APPEARAN CE OF SHRI JAIN, FAILING WHICH HE REFUSED TO ACCEPT HIS CREDITWORTHINESS. THE ASSESSEE HAS FURNISHED CONFIR MATION OF ACCOUNT AND BANK ACCOUNT OF HIRACHAND M. JAIN. THE A.O. HAS NOTICED THAT THE SOURCE OF THE SUM OF RS. 3,00,000/ - ADVANCED ON 17.07.2006 IS A CHEQUE DEPOSIT ENTRY OF RS. 3 LAKHS MADE ON 14.07.2006. NON-PRODUCTION OF THIS CR EDITOR LED TO IMPUGNED ADDITION U/S 68. THE LD. CIT(A) AFT ER CONSIDERING THE SAME VERY SUBMISSION AS PUT FORTH O N BEHALF OF THE ASSESSEE, HAS ACCEPTED THIS DEPOSIT AS WELL EXPLAINED. 7. AFTER CONSIDERING RIVAL SUBMISSIONS WE HAVE FOUN D THAT SHRI HIRALAL JAIN IS A OLD CREDITOR OF THE ASSESSEE , COMING IN THE BOOKS W.E.F. 01.04.2001. THIS CREDITOR HAS BEEN ACCEPTED 15 AS CREDITWORTHY IN A.Y. 2006-07 BY THE A.O. WHILE M AKING HIS ORDER U/S 143(3) OF THE ACT. WE HAVE CONSIDERED ALL THE ASPECTS, THE REPLIES AND THE LEGAL POSITION WHICH I S REQUIRED TO BE DEALT WITH UNDER SECTION 68. WE ARE CONSIDERE D THAT THE ASSESSEE HAS DISCHARGED INITIAL ONUS CAST ON HI M BY THE PRECINCTS OF SECTION 68, BY PROVING IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND ALSO ESTABLISH ED THE GENUINITY OF THE TRANSACTION OF DEPOSIT. ACCORDINGL Y, WE UPHOLD THIS DELETION AND DISMISS GROUND NOS. 3 AND 4 OF REVENUES APPEAL. 8. IN THE CROSS OBJECTION, GROUND REGARDING SUSTAIN ED ADDITION OF TWO CREDITORS NAMELY (1) SHRI JITENDER KUMAR AND (2) SH. DAULA RAM HAS BEEN RAISED. THE ASSESSEE DID NOT, ADMITTEDLY, PROVE EVEN THEIR ADDRESSES, SO THE AMOU NT OF THESE CREDITORS TOTALING IS RS. 32,000/-, NEEDS TO BE CONFIRMED AS ADDITION U/S 68 OF THE ACT ON THAT SCO RE ALONE. THEREFORE, GROUND NO. (2) IN CROSS OBJECTION IS DIS MISSED. 16 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED, AND CROSS OBJECTIONS IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 13 TH DECEMBER, 2012. SD/- SD/- (N.K.SAINI) [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13 TH DECEMBER , 2012 VL/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) BY ORDER 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR