A Srigiri, Chamarajanagar V. ITO, Chamarajanagar

ITA 210/BANG/2012

• Counselvise Citation: 21021114 RSA 2012
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 10-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A SUNDAR RAJAN
• Assessee Lawyers: C S RAMPRIYADAS
• Keywords: Bogus purchase; Unexplained cash credit; Principle of natural justice
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO. 210 /BANG/20 12 (ASSESSMENT YEAR : 2008-09) SHRI A. SRIGIRI, PROP. SHILPA GRANITES, BILIGIRI, B.R. HILLS ROAD, CHAMARAJNAGAR. PAN AHQS 3447Q VS. INCOME TAX OFFICER, WARD 1, CHAMARAJNAGAR. APPELLANT RESPONDENT. APPELLANT BY : SHRI C.S. RAMPRIYADAS. RESPONDENT BY : SHRI A. SUNDAR RAJAN. DATE OF HEARING : 01.11.2012. DATE OF PRONOUNCEMENT : 14.12.2012. O R D E R PER SHRI JASON P. BOAZ : THIS APPEAL, BY THE ASSESSEE, IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), MYSORE DATED 29.11.2011 FOR ASSESSMENT YEAR 2008-09. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE, PROPRIETOR OF M/S. SHILPA GRANITE S, IN THE BUSINESS OF EXTRACTION AND PROCESSING OF GRANITES, FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 30.9.2008 DECLARING TOTAL INCOME OF RS.1,97,540. T HE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER RE FERRED TO AS 'THE ACT') AND TAKEN UP FOR SCRUTINY BY ISSUE OF NOTICE UNDER SECTION 143(2 ) OF THE ACT. THE ASSESSMENT WAS COMPLETED BY AN ORDER UNDER SECTION 143(3) OF THE A CT ON 31.12.2010 DETERMINING THE INCOME OF THE ASSESSEE AT RS.33,20.408 WHEREIN THE ASSESSING OFFICER MADE THE FOLLOWING DISALLOWANCES / ADDITIONS TO THE RETURNED INCOME OF RS.1,97,540 :- 2 ITA NO.210/BANG/12 I) DISALLOWANCE UNDER QUARRY DIESEL EXPENSES RS.1,97,540 II) DISALLOWANCE UNDER QUARRY CONSUMABLES RS. 1,83,183 III) DISALLOWANCE UNDER QUARRY LUCH EXPENSES RS. 87,870 IV) DISALLOWANCE UNDER MACHINERY MAINTENANCE RS. 43,467 V) DISALLOWANCE UNDER VEHICLE MAINTENANCE RS. 43,896 VI) DISALLOWANCE UNDER BOGUS PURCHASES RS. 5,95,380 VII) UNEXPLAINED CASH CREDITS RS.4,68,000 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR A SSESSMENT YEAR 2008-09 DT.31.12.2010, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT (APPEALS ), MYSORE WHO DISPOSED OFF THE APPEAL BY ORDER DT.29.11.2011 ALLOWING THE ASSESSEE PARTIA L RELIEF AS UNDER : S.NO. ISSUE OF D ISALLOWANCE DISALLOWANCE / ADDITION MADE BY THE A. O. ADDITIONS SUSTAINED BY LEARNED CIT (A) 1. PURCHASE OF DIESEL RS. 17,10,072 RS.6,80,428 2. QUARRY CONSUMABLES RS. 1,83,183 RS. 1,46,406 3. QUARRY LUNCH EXPENSES RS. 87,870 RS. 35,148 4. VEHICLE MAINTENANCE RS. 43,896 RS. 35,117 3.0 AGGRIEVED BY THE ORDER OF THE CIT (APPEALS), MYSORE DT.29.11.2011 FOR ASSESSMENT YEAR 2008-09 THE ASSESSEE IS NOW BEFORE THIS TRIBUN AL. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL : 1. THE ORDER OF THE LEARNED CIT (APPEALS), MYSOR E IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT (APPEALS) ERRED IN DISALLOWING A SUM OF RS.6,80,428 BEING 20% OF RS.34,02,144 THE TOTL AMOUNT EXPENDED FOR TH E PURCHASE OF DIESEL. 3.THE LEARNED CIT (APPEALS) DID NOT CONSIDER THE FA CT THAT ALL THE MACHINERY USED IN QUARRYING ARE HEAVY DUTY HIGH TORQUE EQUIPM ENT THAT CONSUMES GENEROUS QUANTITY OF DIESEL AND THE FACT THAT THE ASSESSEE H AS EXTRACTED AND PROCESSED GRANITES WHICH WOULD CERTAINLY REQUIRE THE USE OF H EAVY EQUIPMENT. 4. THE LEARNED CIT (APPEALS) ERRED IN FAILING TO C ONSIDER THE FACT THAT THE ASSESSEE'S QUARRY IS 30 KMS AWAY FROM CHAMARAJANAG AR TOWN AND IS NOT CONNECTED TO ANY CITY WITH PROPER ROADS AND HENCE S PECIFIC CONSIDERATION SHOULD BE MADE WITH REGARD TO THE EXPENDITURE INCUR RED. 3 ITA NO.210/BANG/12 5. THE LEARNED CIT (APPEALS) ERRED IN DISALLOWING A SUM OF RS. 1,46,406 BEING 20% OF QUARRIES CONSUMABLES AMOUNTING TO RS.7,32,03 2 WITHOUT ASSIGNING ANY REASON OR JUSTIFICATION FOR THE SAME. 6. THE SUM OF RS. 7,32,032 BEING THE AMOUNT EXPE NDED FOR PURCHASE OF CONSUMABLES SUCH AS BLASTING MATERIALS, DRILLING CO NSUMABLES ARE VITAL TO THE PROCESS OF EXTRACTING AND PROCESSING OF GRANITES. 7. THE LEARNED CIT (APPEALS) ERRED IN DISALLOWING A SUM OFRS.35,148 BEING 20% OF QUARRY LUNCH EXPENSES AMOUNTING TO RS.1,75,740 W ITHOUT ASSIGNING ANY REASON OR JUSTIFICATION FOR ARRIVING AT THIS PERCENTAGE AN D IN FAILING TO CONSIDER THE REMOTE AND INACCESSIBLE LOCATION OF THE QUARRY. 8. THE LEARNED CIT (APPEALS) ERRED IN DISALLOWING A SUM OF RS.35,117 BEING 20% OF AN AMOUNT OF RS.1,75,586 EXPENDED TOWARDS VE HICLE MAINTENANCE WITHOUT ASSIGNING ANY REASON OR JUSTIFICATION FOR A RRIVING AT THIS PERCENTAGE AND IN FAILING TO CONSIDER THE REMOTE AND INACCESSIBLE LOCATION OF THE QUARRY. 9. THE LEARNED CIT (APPEALS) ERRED IN DISALLOWING A SUM OF RS.4,68,000 AS UNEXPLAINED CASH CREDITS BY RELYING ON THE REPORT O F THE INSPECTOR OF INCOME TAX. 10. THE LEARNED CIT (APPEALS) ERRED IN FAILING TO CONSIDER THAT NO OPPORTUNITY WAS GIVEN TO THE APPELLANT TO JUSTIFY AND REBUT THE STATEMENT PURPORTEDLY RECORDED BY THE INSPECTOR OF INCOME TAX AND FURTHER MORE IN FAILING TO COMPREHEND THAT NEITHER THE REPORT OF THE INSPECTOR NOR THE STATEMENTS OF THE VENDORS WERE SUBMITTED TO THE APPELLANT FOR HIS EXAMINATION, AS REQUIRED TO SERVE THE CAUSE OF JUSTICE. 11. YOUR APPELLANT CRAVES LEAVE TO ADD, TO AMEND O R ALTER ANY OF THE FOREGOING GROUNDS. 12. FOR THOSE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE APPEAL MAY BE ALLOWED. 4.0 ON PERUSAL OF THE GROUNDS RAISED, WE FIND THAT THE GROUNDS AT S.NOS.1, 11 AND 12 ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED FOR THEREON. 5.0 IN THE COURSE OF HEARING BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUNDS RAISED AT S.NOS.5, 6, 7 AND 8 ARE NOT BEING PRESSED IN THIS APPEAL. IN VIEW OF THESE GROUNDS NOT BEING PRESSED, THEY ARE RENDER ED INFRUCTUOUS AND ARE ACCORDINGLY DISMISSED. 6.1 IN THE GROUNDS RAISED AT S.NOS.2 TO 4 , THE ASSESSEE ARGUED THAT THE LEARNED CIT (APPEALS) WHILE SUSTAINING THE DISALLOWANCE TO 20% OF THE DIESEL EXPENDITURE, DID NOT CONSIDER THE FACT THAT ALL MACHINERY USED IN QUARRY ING ARE HEAVY DUTY HIGH TORQUE EQUIPMENT THAT CONSUMES LARGE QUANTITIES OF DIESEL AND THAT THE CONCERNED QUARRY WHERE THE WORK IS DONE IS 30 KMS AWAY FROM CHAMRAJNAGAR T OWN AND NOT WELL CONNECTED BY PROPER 4 ITA NO.210/BANG/12 ROADS. IN THIS FACTUAL MATRIX, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE BEING GENUINE, NO DISALLOWANCE WAS CALLED FOR AND ITS CLAIM FOR EXPENDITURE ON DIESEL BE ALLOWED IN FULL. 6.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTA TIVE SUPPORTED THE ORDER OF THE LEARNED CIT (APPEALS) IN SUSTAINING THE DISALLOWANC E TO THE EXTENT OF 20% OF THE DIESEL EXPENDITURE OF RS.34,02,144 AS BEING VERY REASONABL E CONSIDERING THAT HE HAD OBSERVED THAT BILLS RAISED FOR THESE EXPENSES WERE SELF VOUC HED AND THAT THERE WAS SCOPE FOR INFLATING SUCH EXPENDITURE. 6.3 WE HAVE HEARD BOTH PARTIES AND CAREFULLY PERUSE D AND CONSIDERED THE MATERIAL ON RECORD. IN THE RELEVANT PERIOD, THE ASSESSEE CLAIM ED TO HAVE INCURRED EXPENDITURE AMOUNTING TO RS.32,02,144 ON DIESEL EXPENSES FOR OP ERATING HEAVY DUTY EQUIPMENT LIKE CRANE, TIPPERS AND EXCAVATORS IN OPERATING HIS BUSI NESS OF EXTRACTION AND PROCESSING OF GRANITE AT HIS QUARRIES LOCATED ABOUT 30 KMS FROM C HAMRAJNAGAR TOWN. ON EXAMINATION OF THE DETAILS OF THIS EXPENDITURE THE ASSESSING OFFIC ER WAS OF THE VIEW THAT SINCE ONLY SELF PREPARED VOUCHERS ARE PRODUCED, THEY ARE UNVERIFIAB LE AND THEREFORE CAME TO THE CONCLUSION THAT THE ASSESSEE HAS INFLATED THE CLAIM FOR DIESEL EXPENSES AND MADE AN ADHOC DISALLOWANCE OF 50% OF EXPENDITURE CLAIMED WHICH AM OUNTED TO RS.17,01,072. THE LEARNED CIT (APPEALS) WHILE AGREEING WITH THE ASSESSING OFF ICER, THAT THE SCOPE FOR INFLATION OF SUCH EXPENDITURE CANNOT BE RULED OUT, SUSTAINED THE ADHOC DISALLOWANCE TO THE EXTENT OF 20% OF THE DIESEL EXPENSES CLAIMED VIZ. RS.6,80,428 THEREBY GRANTING THE ASSESSEE PARTIAL RELIEF. 6.4 FROM THE DETAILS ON RECORD, IT IS SEEN THAT THI S IS THE SECOND YEAR OF THE ASSESSEE'S BUSINESS OPERATIONS IN THE FIELD OF EXTRACTION AND PROCESSING OF GRANITES IN QUARRIES LOCATED ABOUT 30KMS FROM CHAMRAJNAGAR TOWN. THE TUR NOVER HAS INCREASED FROM RS.5,87,247 IN THE PREVIOUS YEAR TO RS.81,95,531 IN THE CURRENT YEAR RELEVANT TO ASSESSMENT YEAR 2008-09. WE FIND THAT ON EXAMINATI ON OF THE EXPENDITURE ON DIESEL THE ASSESSING OFFICER OBSERVED THAT WHILE THE PURCHASES ARE MADE IN CASH, NO PAYMENT WAS IN EXCESS OF RS.20,000. WE ALSO FIND THAT THE ASSESSI NG OFFICER HAS NOT DETECTED AND QUANTIFIED THE EXTENT OF INFLATION OF BOGUS DIESEL EXPENSES AS HE OUGHT TO HAVE DONE BUT 5 ITA NO.210/BANG/12 HAS MERELY SURMISED THAT THIS COULD BE CASE AND MAD E AN ADHOC DISALLOWANCE, WHICH IN OUR CONSIDERED OPINION, WAS NOT WARRANTED IN THE FACTS OF THE CASE AND IS UNSUSTAINABLE. WE, THEREFORE, FEEL IT WOULD BE JUST AND EQUITABLE TO R ESTRICT THE DISALLOWANCE TO 10% OF DIESEL EXPENSES OF RS.34,02,144 I.E. RS.3,40,214 IN VIEW O F THE RECORDED FACT THAT MANY OF THE VOUCHERS PRODUCED BEFORE THE AUTHORITIES BELOW WERE SELF MADE VOUCHERS AND THE CHANCES OF INFLATION OF THESE EXPENSES CANNOT BE COMPLETELY RULED OUT. IT IS ORDERED ACCORDINGLY. 7.1 IN THE GROUNDS OF APPEAL RAISED AT S.NOS.9 AND 10 , THE ASSESSEE CHALLENGES THE ACTION OF THE LEARNED CIT (APPEALS) IN CONTAINING T HE ASSESSING OFFICERS FINDING THAT A SUM OFRS.4,68,000 WAS UNEXPLAINED CASH CREDITS BY R ELYING ON THE REPORT OF THE INSPECTOR OF THE INCOME TAX DEPARTMENT. IT WAS FURTHER CONTE NDED THEREIN THAT NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO REBUT THE STATEMENTS P URPORTEDLY RECORDED BY THE INSPECTOR OF INCOME TAX AND HIS REPORT THEREON NOR WAS THE SA ID REPORT MADE AVAILABLE TO THE ASSESSEE BEFORE AN ADVERSE VIEW WAS TAKEN WHICH GRO SSLY VIOLATE THE PRINCIPLES OF NATURAL JUSTICE. 7.2 FROM THE RECORD IT APPEARS THAT IN THE COURSE O F ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD REC EIVED AMOUNTS AGGREGATING RS.4,68,000 FROM 12 PERSONS AS LISTED AT PAGE 7 OF THE ASSESSMENT ORDER. THESE WERE STATED TO BE AMOUNTS RECEIVED BACK IN THE CURRENT Y EAR OUT OF ADVANCES MADE BY THE ASSESSEE 4 5 YEARS BACK. THE ASSESSEE FURNISHED THE NAMES AND ADDRESSES OF THESE PARTIES TO THE ASSESSING OFFICER. THE ASSESSING OF FICER CAUSED ENQUIRIES TO BE MADE IN REGARD TO THESE CREDITS BY THE INSPECTOR OF HIS OFF ICE. THE INSPECTOR REPORTED THAT HE COULD CONTACT AND EXAMINE 6 OUT OF THE 12 PARTIES L ISTED THEREIN VIZ. THE PERSONS LISTED AT S.NOS.2,4,5,7,10 AND 11 WHO STATED THAT THEY HAD NO T RETURNED ANY MONEY TO THE ASSESSEE. IN THESE CIRCUMSTANCES, THE ASSESSING OFFICER HELD THE ENTIRE CREDITS IN THE NAMES OF THESE 12 PERSONS AGGREGATING RS.4,68,000 AS UNEXPLA INED CASH CREDITS UNDER SECTION 68 OF THE ACT AND BROUGHT THESE TO THE TAX IN THE ASSESSE E'S HANDS. THE LEARNED CIT (APPEALS) AFTER NOTING THAT THE INSPECTORS REPORT WAS NOT MA DE AVAILABLE TO THE ASSESSEE, CALLED FOR A FRESH REMAND REPORT ON THE MATTER FROM THE ASSESS ING OFFICER AND ON THE BASIS OF THE 6 ITA NO.210/BANG/12 SAID REPORT DT.9.9.2011 CONFIRMED THE ADDITION OF R S.4,68,000 UNDER SECTION 68 OF THE ACT MADE BY THE ASSESSING OFFICER. 7.3 WE HAVE HEARD BOTH THE LEARNED COUNSEL FOR THE ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THIS ISSUE AND CAREF ULLY PERUSED THE MATERIAL ON RECORD. IT IS A MATTER OF RECORD THAT SUMS AGGREGATING RS.4 ,68,000 WERE FOUND TO BE CREDITED IN THE ASSESSEE'S BOOKS OF ACCOUNTS FROM 12 PERSONS UN DER THE HEAD QUARRY ADVANCES. ON BEING ASKED TO EXPLAIN THE NATURE OF THESE CREDIT S BY THE ASSESSING OFFICER, THE ASSESSEE STATED THAT THESE AMOUNTS REPRESENTED RETU RN OF ADVANCES MADE BY HIM TO THESE TWELVE PERSONS IN EARLIER YEARS AND FURNISHED DETA ILS OF THE NAMES AND ADDRESSES OF THESE PERSONS ALONG WITH THE AMOUNTS WHICH ARE AS UNDER : SL.NO. NA ME AND ADDRESS AMOUNT RS. 1, SRI H.M. NATARAJU, HANUMANAPURA 1,00,000 2. SRI MAHADEVAIAH, HANUMANAPURA 1,00,000 3. SRI SEETHARAMU, HANUMANAPURA 50,000 4. SRI CHANNAIAH,S/O THIMMAMESTRY. 20,000 5. SRI DEVAIAH, S/O CHAKRASIDDAIAH, HANUMANAPURA 30,000 6. SRI DEVAIAH, S/O BASAVARAJU, HANUMANAPURA 60,000 7. SRI KALAIAH & SONS, S/O MARISWAMY, HANUMANAPURA 25,000 8. SRI MAHADEVAIAH, S/O CHAKRASIDDAIAH, HANUMANAPURA 13,000 9. SRI MAHADEVAIAH, S/O MADAIAH, HANUMANAPURA 10,000 10. SRI SIDDARAJU & SHIVAMALLU, HANUMANAPURA 20,000 11. SRI SIDDAVEERAIAH, MAHADEVAIAH & SONS, HANUMANAPURA 20,000 12. SRI SUBRAMANYA & PUTTASWAMY, HANUMANAPURA 20,000 TOTAL : 4,68,000 WE FIND FROM THE RECORD THAT THE ASSESSING OFFICER BASED ON THE INSPECTORS REPORT, WHEREIN THE INSPECTOR HAD EXAMINED THE PERSONS AT S .NOS.2,4,5,7,10 AND 11 OF THE LIST AND WHO HAD DENIED PAYING BACK THE SAID AMOUNTS TO THE ASSESSEE, TOOK THE VIEW THAT THE ENTIRE AMOUNT OF RS.4,68,000 REPRESENTED UNEXPLAINE D CASH CREDITS AND BROUGHT THE SAME TO TAX IN THE HANDS OF THE ASSESSEE. IT IS EVIDENT FROM THE LEARNED CIT (APPEALS)S ORDER THAT THIS INSPECTORS REPORT WAS NOT MADE AVAILABLE TO THE ASSESSEE BY THE ASSESSING 7 ITA NO.210/BANG/12 OFFICER FOR HIS EXPLANATION THERETO AND FOR AN OPPO RTUNITY TO REBUT THE SAME, WHICH ACTION IS CLEARLY IN VIOLATION OF THE PRINCIPLES OF NATURA L JUSTICE. IT IS SEEN FROM THE APPELLATE ORDER THAT THE LEARNED CIT (APPEALS) HAD CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER BEFORE SUSTAINING THE ASSESSING OFFICERS A DDITION OF RS.4,68,000 UNDER SECTION 68 OF THE ACT. HERE TOO, NEITHER DO WE FIND ANY I NDICATION THAT THE ASSESSING OFFICERS REPORT HAD BEEN MADE AVAILABLE TO THE ASSESSEE FOR REBUTTAL NOR ARE THE FACTS OF THE SAID REMAND REPORT BROUGHT OUT IN THE ORDER OF THE LEARN ED CIT (APPEALS). THE LEARNED CIT (APPEALS) HAS SUMMARILY SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT ASSIGNING ANY REASON WHATSOEVER FOR HIS ACTION. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ACTION OF THE LEARNED CIT (APPEALS) IS UNS USTAINABLE. IT IS A MATTER OF RECORD THAT ON ENQUIRY MADE BY THE ASSESSING OFFICER AND A S REQUIRED, THE ASSESSEE HAD FURNISHED THE NAME AND ADDRESS OF THE 12 PERSONS FR OM WHOM AMOUNTS AGGREGATING RS.4,68,000 HAD BEEN RECEIVED AND WERE CREDITED IN HIS ACCOUNTS IN THE RELEVANT PERIOD. SINCE THE ASSESSING OFFICER DID NOT FIND THE DETAIL S FURNISHED ADEQUATE, HE CAUSED FURTHER ENQUIRIES TO BE MADE BY HIS INSPECTOR. THE ORDER OF ASSESSMENT CLEARLY STATES THAT THE INSPECTOR WAS ONLY ABLE TO CONTACT THE PER SONS LISTED AT S.NOS.2,4,5,7, 10 & 11 WHO REPORTEDLY DENIED MAKING THE SAID PAYMENTS INDI CATED AGAINST THEIR NAMES TO THE ASSESSEE. IN RESPECT OF THE OTHER 6 PARTIES, WE FA IL TO UNDERSTAND HOW THE ASSESSING OFFICER AND THE LEARNED CIT (APPEALS) COULD COME TO THE ADVERSE VIEW THAT THE CREDITS APPEARING IN THE NAMES OF THE OTHER SIX PERSONS AT S.NOS.1, 3, 6, 8, 9 AND 12 WERE INCORRECT, WITHOUT EVEN HAVING EXAMINED ANY OF THEM . ADMITTEDLY, ONCE THE ASSESSEE HAD FURNISHED THE NAMES AND ADDRESSES OF THE 12 PERSONS IN WHOSE NAMES THE CREDITS APPEARED, AND THE ASSESSING OFFICER WAS NOT SATISFI ED WITH THE EXPLANATION GIVEN, THE ONUS WAS UPON THE ASSESSING OFFICER TO ESTABLISH THAT TH ESE CREDITS WERE INCORRECT. HAVING FAILED TO DO SO IN THE CASE OF THESE 6 PERSONS, WE ARE AMAZED THAT THE ASSESSING OFFICER / CIT (APPEALS) COULD COME TO AN ADVERSE VIEW WITHOUT ANY FINDING TO THAT EFFECT, WHEN THE RECORDS ALSO CONFIRM THAT THESE 6 PERSONS HAVE NOT BEEN EXAMINED. IN THIS VIEW OF THE MATTER, WE HOLD THAT THE DISALLOWANCE UNDER SECTION 68 OF THE ACT IS SUSTAINED IN RESPECT OF THE CREDITS APPEARING IN THE NAMES OF THE PERSON S LISTED AT S.NOS.2, 4, 5, 7, 10 & 11 FOR 8 ITA NO.210/BANG/12 AMOUNTS AGGREGATING TO RS.2,15,000. THE ADDITIONS AGGREGATING RS.2,53,000 IN RESPECT TO CREDITS APPEARING IN THE NAMES OF PERSONS LISTED AT S.NOS.1, 3, 6, 8, 9 AND 12 WHO HAVE NOT BEEN EXAMINED BY THE LOWER AUTHORITIES ARE HEREBY D ELETED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DEC., 2012. SD/- SD/- (N.V. VASUDEVAN) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, - C BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDE R SR. PRIVATE SECRETARY, ITAT, BANGALORE