ACIT, New Delhi V. Murli Manohar Dokania, New Delhi

ITA 2132/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52878 (ITAT-DELHI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 27-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RA J TANDON
• Assessee Lawyers: MRS RANO JAIN CAS
• Keywords: Unexplained cash credit; Additional evidence
• Section: 142(1); 80G; 68

Judgement Text

ITA NO. 2132/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2132/DEL/2011 A.Y. : 2007-08 ACIT, CIRCLE - 21(1), F-2, VIKAS BHAVAN, NEW DELHI VS. MURLI MANOHAR DOKANIA, R/O C-2/14, GROUND FLOOR, PRASHANT VIHAR, DELHI 110 085 (PAN/GIR NO. : ADIPD 0524H) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. VED JAIN & MRS. RANO JAIN, CAS DEPARTMENT BY : SH. RAJ TANDON, C.I.T.(D.R.) ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 24.1.2 010 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED READ AS UNDER:- THE LD.CIT(A) ERRED IN LAW AND ON THE FACTS IN ADMIT TING THE ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE WITH OUT GIVING COGENT FINDING AS TO HOW THE ASSESSEE'S CASE WAS CO VERED BY ANY OF THE FOUR CIRCUMSTANCES MENTIONED IN RULE 46A(1) O F INCOME TAX RULES, 1962. THE CIT(A) ERRED IN LAW AND FACTS IN DELETING THE ADDITION ` 1,89,064/- MADE BY THE A.O. ON ACCOUNT OF GP RATE A PPLIED BY THE ITA NO. 2132/DEL/2011 2 A.O. IN RESPECT OF M/S MURLI TRADERS, A PROPRIETOR S HIP CONCERN OF THE ASSESSEE AFTER TAKING INTO ACCOUNT THE HIGHER G .P. RATE AS ARRIVED IN THE ASSESSEE'S OWN CASE OF M/S MANGAL TR ADERS. THE CIT(A) ERRED IN LAW AND ON FACTS IN ADMITTING THE FR ESH EVIDENCES OF BOOKS OF ACCOUNTS AND PROFIT AND LOSS ACCOUNT ET C. UNDER RULE 46A OF INCOME TAX RULES, 1962, SINCE THE ASSESSEE H AD FAILED TO PRODUCE HIS BOOKS OF ACCOUNTS BEFORE THE A.O. INSPI TE OF SEVERAL OPPORTUNITIES GIVEN DURING THE ASSESSMENT PROCEEDIN GS. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF ` 86,63,000 MADE BY THE A.O. ON ACCOUNT OF UNEXPLAIN ED SALES MADE OUTSIDE BOOKS OF ACCOUNTS AS THE SALES BILLS FR OM S.NO.1447 TO 1456 HAD NOT BEEN ENTERED IN THE BOOKS OF ACCOUNT /SALES LEDGER ACCOUNT IN RESPECT OF M/S MURLI TRADE RS, A PROPRIETOR SHIP CONCERN OF THE ASSESSEE IN ADMITTING THE FRESH EVIDENCES UNDER RULE 46 A OF INCOME TAX RULES, 1962 WITHOUT R ECORDING COGENT REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE S INSPITE OF THE FACT THAT THE ASSESSEE WAS DULY PROVIDED WITH A MPLE OPPORTUNITIES OF BEING HEARD DURING THE COURSE OF A SSESSMENT PROCEEDINGS. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN REDUCI NG THE DISALLOWANCE FROM ` 4,17,982/- TO ` 22,338/- ON ACCO UNT OF EXPENSES DISALLOWED BY THE A.O. NAMELY CONVEYANCE, SALES PROMOTION, PRINTING AND STATIONERY, STAFF WELFARE AN D TELEPHONE EXPENSES ETC. IN VIOLATION OF PROVISIONS OF RULE 46 A OF IT RULES, 1962 IN RESPECT OF M/S MURLI TRADERS, A PROPRIETOR SHIP CONCERN OF THE ASSESSEE. THE LD. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRE D IN LAW AND ON FACTS IN DELETING THE ADDITION / DISALLOWANC E OF ` ITA NO. 2132/DEL/2011 3 15,00,000/- OF SHRI GOVIND AGENCIES AND ` 15,11,4 51/- OF DOKANIA BROTHERS MADE BY THE A.O. ON ACCOUNT OF UNSEC URED LOANS OUTSTANDING AS NO DETAILS IN CONFIRMATION OF THESE LOANS WERE FILED DURING THE ASSESSMENT PROCEEDINGS IN RES PECT OF M/S MURLI TRADERS, A PROPRIETOR SHIP CONCERN OF THE ASSE SSEE IN ADMITTING ADDITIONAL EVIDENCES UNDER RULE 46A OF INC OME TAX RULES, 1962 WITHOUT RECORDING COGENT REASONS THEREO F. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF ` 10,92,93,900/- AS UN-EXPLAINED CASH CREDITS U/S 68 MADE BY THE A.O. ON ACCOUNT OF UN-EXPLAINED DEPOSIT INTO BANK A CCOUNT IN DIFFERENT PLACES ALL OVER INDIA AND IN ADMITTING AD DITIONAL EVIDENCES UNDER RULE 46A OF INCOME TAX RULES, 1962 W ITHOUT RECORDING COGENT REASONS IN RESPECT OF M/S MANGAL TR ADERS, A PROPRIETOR SHIP CONCERN OF THE ASSESSEE. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN REDUCI NG THE DISALLOWANCE FROM ` 3,87,884/- TO ` 44,250/- ON ACCO UNT OF EXPENSES DISALLOWED BY THE A.O. NAMELY CONVEYANCE, SALES PROMOTION, PRINTING AND STATIONERY, STAFF WELFARE AN D TELEPHONE EXPENSES ETC. IN VIOLATION OF PROVISIONS OF RULE 46 A OF IT. RULES, 1962 IN RESPECT OF M/S MANGAL TRADERS, A PROPRIETOR SHIP CONCERN OF THE ASSESSEE. THE LD. CIT{A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF ` 71,00,000/- MADE BY THE A.O. ON ACCOUNT OF UN-E XPLAINED CASH DEPOSIT UNDER SECTION 68 OF INCOME TAX ACT, 196 1 CONSISTING OF ` 12,00,000/- ON 06.03.2007 WITH KOTAK MAHINDRA BANK AND ` 59,00,000/ DEPOSITED ON 10.04.2006 WITH ICICI BANK IN ADMITTING ADDITIONAL EVIDENCES IN VIOLATION OF RULE 46A OF IN COME TAX RULES, 1962 WITHOUT RECORDING COGENT REASONS AS THE ASSESS EE WAS ITA NO. 2132/DEL/2011 4 ALLOWED SUFFICIENT OPPORTUNITIES OF BEING HEARD TO EXPLAIN THESE ENTRIES DURING ASSESSMENT PROCEEDINGS BY THE A.O. I N RESPECT OF M/S MANGAL TRADERS, A PROPRIETOR SHIP CONCERN OF THE ASSESSEE. THE LD. LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRE D IN LAW AND ON FACTS IN DELETING THE ADDITION OF ` 35,51,64 2/- MADE BY THE A.O. U/S 68 BEING UN-EXPLAINED OPENING STOCK OF SHA RES HELD BY THE ASSESSEE IN ADMITTING ADDITIONAL EVIDENCES IN VI OLATION OF RULE 46A OF INCOME TAX RULES, 1962 WITHOUT RECORDING COG ENT REASONS IN RESPECT OF ADDITIONS MADE IN INDIVIDUAL ACCOUNT OF THE ASSESSEE. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ALL OR ANY OF THE AFORESAID GROUNDS OF APPEAL AND ADD ANY OTHER GROUN D OF APPEAL. 3. IN THIS CASE THE ASSESSEE IS AN INDIVIDUAL, ENG AGED IN THE BUSINESS OF TRADING IN BULLION, RICE, SHARES, ETC. HE HAS THREE PROPRIETARY CONCERNS, M/S MURLI ENTERPRISES, M/S MAN GAL TRADERS AND HIS 'INDIVIDUAL ACCOUNT' IN HIS OWN NAME. THE ASSESSING OFFICER HAS STATED IN THE ASSESSMENT ORDER THAT THE BOOKS OF ACCOUNT W ERE NOT PRODUCED BEFORE HIM, APART FROM THE SALES BILLS, IN WHICH DIS CREPANCIES WERE NOTICED. THE BOOK RESULTS WERE REJECTED BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT, HOLDING THAT THE BOOKS O F ACCOUNT WERE NOT BEING MAINTAINED IN A MANNER TO ENABLE THE ASSESSING OFFICER TO CORRECTLY COMPUTE THE PROFIT. 3.1 IN THE CASE OF M/S MURLI ENTERPRISES, IT WAS NO TICED THAT THE GROSS PROFIT RATE OF 0.051% WAS LOWER THAN 0.063% SHOWN I N THE CASE OF M/S MANGAL TRADERS, THOUGH BOTH WERE CARRYING ON THE SAM E NATURE OF BUSINESS, UNDER THE SAME PROPRIETOR. HENCE THE GROS S PROFIT WAS ITA NO. 2132/DEL/2011 5 ESTIMATED AT 0.063%, AND AN ADDITION OFRS.1,89,064/ - MADE ON THIS ACCOUNT. THE ASSESSING OFFICER FURTHER FOUND THAT THE SALES INVOICES OF A TOTAL AMOUNT OF ` 86,63,000/- WERE NOT ENTERED IN THE SALES LEDGER OF M/S MURLI ENTERPRISES. NO EXPLANATION BEI NG FURNISHED, THIS SUM WAS ADDED TO THE INCOME OF THE APPELLANT. IN THIS CONNECTION, IT WAS OBSERVED THAT BILL BOOKS OF THE SAME NUMBERS, WITH DIFFERENT TRANSACTIONS, WERE BEING MAINTAINED. AS BOOKS OF ACCOUNT, BILLS AND VOUCHERS WERE NOT PR ODUCED BEFORE THE ASSESSING OFFICER, HE DISALLOWED THE SUM OF RS.4, 17,9821-, BEING 25% OF THE VARIOUS EXPENSES CLAIMED. THE ASSESSEES BALANCE SHEET SHOWED UNSECURED LOAN S FROM FOUR PERSONS OF A TOTAL AMOUNT OF ` 46,91,451/- . THE ASSESSING OFFICER HAS TREATED THIS AMOUNT AS UNEXPLA INED CASH CREDITS U/S 68 OF THE ACT, AS THE ASSESSEE FAILED T O FURNISH COPY OF INCOME TAX RETURN AND BANK STATEMENT OF THESE CREDI TORS. 3.2 IN THE CASE OF M/S MANGAL TRADERS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEES BANK ACCOUNT SHOWED CASH DEPOSITS AT VARIOUS PLACES ALL OVER INDIA OF A TOTAL AMOUNT OF ` I0,92,93,900/- . THE ASSESSEE STATED THAT IN BULLION TRADE, SALES ARE MADE THROUGH BROKERS BY TAKING ADVANCE PAYMENT FROM THE PARTIES. IN CASE OF SALES TO PARTIES OUTSIDE NOIDA, THE ASSESSEES PLACE OF BUSINESS, PAYMENTS ARE MADE INTO THE BANK ACCOUNT OF THE ASSESSEE, AFTER WHICH DELIVERY IS MADE TO THE BROKERS. BUT THE ASSESSEE DID NOT FURNISH THE NAMES AND ADDRESSES OF THE BROKERS, OR OF THE PURCHASERS, HENCE THE ASSESS ING OFFICER ADDED THE SUM OF ` I0,92,93,900/- AS UNEXPLAINED CASH CRED ITS U/S. 68 OF THE ACT. ITA NO. 2132/DEL/2011 6 THE ASSESSING OFFICER ALSO DISALLOWED 25% OF THE EX PENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT, WHICH WORKE D OUT TO ` 3,87,884/-, AS UNVERIFIABLE AND NOT CONNECTED WIT H THE BUSINESS. THE ASSESSING OFFICER FOUND THAT THERE WAS A CASH D EPOSIT OF ` 59,00,000/- ON 10.04.2006 IN THE ASSESSEES BANK ACCOUNT NO. 003105009328 WITH ICICI BANK, AND OF ` 12,00,000/- ON 06.03.2007 IN THE KOTAK MAHINDRA BANK ACCOUNT NO. 01812000002524. PRIOR TO THESE DATES, THERE WERE NO GOLD SALES THROUGH THESE BANK ACCOUNTS. THE ASSESSING OFFICER HELD THAT THESE SUMS REPRESENTED THE ASSESSEES INITIAL INVE STMENT, OUT OF UNEXPLAINED SOURCES, AND ADDED ` 71,00,000/- TO THE INCOME. THE ASSESSING OFFICER ALSO MADE AN ADDITION OF ` 30 ,48,036/- ON ACCOUNT OF UNSECURED LOANS AS ON 31.03.2007, AS THE ASSESSEE FAILED TO ESTABLISH THE IDENTITY AND CREDITWORTHINE SS OF THE PERSONS, AND THE GENUINENESS OF THE TRANSACTIONS. 3.3 IN THE 'INDIVIDUAL' ACCOUNT, THE ASSESSING OFFI CER HAS MADE AN ADDITION OF ` 35,51,642/- AS THE ASSESSEE WAS UNABL E TO PROVE THAT THIS AMOUNT REPRESENTED THE OPENING STOCK OF SHARES. THE ASSESSEE ALSO COULD NOT EXPLAIN THE SOURCE OF DONATION MADE IN RES PECT OF DEDUCTION CLAIMED U/S 80G OF ` 41,397/-, AND THE ASSESSING OFF ICER DISALLOWED THE CLAIM OF DEDUCTION. THE ASSESSEE FAILED TO PROVIDE COPIES OF INCOME TAX RETURN AND BANK STATEMENT OF PERSONS WHO HAD ADVANCED LOAN S TO THE ASSESSEE. AS THE GENUINENESS OF THE LOANS WAS NOT P ROVED, THE ASSESSING OFFICER ADDED BACK THE UNSECURED LOANS OF ` 8,78,000/- U/S. 68 OF THE ACT. ITA NO. 2132/DEL/2011 7 THE ASSESSMENT WAS COMPLETED AT AN INCOME OF ` 13,89,48,900/- AS AGAINST THE RETURNED INCOME OF ` 6,86,540/-. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD . COMMISSIONER OF INCOME TAX (APPEALS). 4. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS ), THE COUNSEL OF THE ASSESSEE FILED AN APPLICATION FOR AD MISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A OF THE IT RULES. IT WAS S UBMITTED THAT THE ASSESSING OFFICER ALLOWED A VERY SHORT TIME TO THE ASSESSEE TO FILE VARIOUS EVIDENCES, CONFIRMATIONS, ETC. IT WAS STA TED THAT THOUGH THE RETURN WAS FILED ON 15.11.2007, AND THE FIRST NOTIC E U/S 143(2) ISSUED ON 26.9.2008, THE ASSESSING OFFICER ISSUED A DETAI LED QUESTIONNAIRE ONLY ON 10.11.2009 AND COMPLETED THE ASSESSMENT ON 3 0.12.2009. LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THA T ADDITIONAL EVIDENCES WERE FORWARDED TO THE ASSESSING OFFICER, ASKING HIM TO EXAMINE THE EVIDENCE AND FURNISH HIS REPORT THEREON . CONSIDERING THE REMAND REPORT AND ASSESSEES VARIOUS SUBMISSIONS AND REJOINDER TO THE REMAND REPORT, LD. COMMISSIONER OF INCOME TAX (A PPEALS) PROCEEDED TO ADJUDICATE THE ISSUE AS UNDER:- (I) ADDITION OF ` 1,89,064/- ON ACCOUNT OF GROSS PR OFIT RATE IN THE CASE OF M/S MURLI ENTERPRISES. THESE CONTENTIONS WERE VERIFIED BY, AND ACCEPTED B Y THE ASSESSING OFFICER IN THE REMAND REPORT. HE HAS STAT ED THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER MADE A CO MPARISON OF THE RESULTS BETWEEN THE TWO ENTITIES OF THE ASSESSE E ITSELF AND ON THAT BASIS CAME TO A CONCLUSION THAT THE GROSS PROF IT RATE STATED IN THE CASE OF M/S MURLI ENTERPRISES WAS LESS THAN T HAT DECLARED IN THE CASE OF M/S MANGAL TRADERS. DURING THE COURSE OF THE REMAND ITA NO. 2132/DEL/2011 8 PROCEEDINGS, THE ASSESSEE PRODUCED THE BOOKS OF ACC OUNTS OF BOTH THESE ENTITIES AND THE DETAILS OF PURCHASES AN D SALES, WHICH WERE VERIFIED. REGARDING THE FACT THAT THE GROSS PR OFIT RATE IN ONE FIRM IS LESS AS COMPARED TO THE OTHER, THE ASSESSEE EXPLAINED THAT THE PERIODS OF SALES OF THESE TWO FIRMS ARE DIFFERE NT AND GOLD BEING A HIGHLY VOLATILE ITEM, THE PROFIT OR LOSS DEP ENDED UPON THE MARKET, AND VARIATION WAS BOUND TO HAPPEN. IN SUPPOR T THEREOF, THE ASSESSEE PRODUCED THE INVOICES OF PURCHASES WHI CH HE HAD MADE FROM ICICI BANK TO DEMONSTRATE THAT GOLD PRICES WERE HIGHLY FLUCTUATING AND AS SUCH THERE COULD NOT BE A FIXED GROSS PROFIT MARGIN. IN VIEW OF THE VERIFICATION AND REPO RT BY THE ASSESSING OFFICER, THE ADDITION OF ` 1,89,064/ON A CCOUNT OF ESTIMATED GROSS PROFIT IS DELETED. (II) ADDITION OF ` 86,63,000/- ON ACCOUNT OF SALES MADE OUTSIDE BOOKS OF ACCOUNTS IN THE REMAND REPORT DATED 15.12.2010, THE ASSESSIN G OFFICER HAS VERIFIED AND FOUND THESE CONTENTIONS TO BE TRUE. HE HAS REPORTED THAT THIS ADDITION WAS MADE ON THE GROU ND THAT SALE BILLS FROM S.NO.1447 TO 1456 HAD NOT BEEN ENTERED IN THE BOOKS OF ACCOUNT. WHILE OBJECTING TO THIS ADDITIONAL EVIDE NCE PRODUCED IN APPEAL PROCEEDINGS, THE ASSESSING OFFICER SUBMITT ED THAT, THE ASSESSEE HAD PRODUCED ITS BOOKS OF ACCOUNTS ALONG W ITH THE PURCHASE INVOICES AND THE SALES LEDGER. IT HAD BEEN CONTENDED THAT THE SAID SALE BILLS REPRESENT THE BILLS WHICH HAVE BEEN CANCELLED CONSEQUENT TO THE NON-DELIVERY OF THE GOL D BY THE ICICI BANK LTD FROM WHICH THE PURCHASES WERE MADE. IN SUPP ORT THEREOF, THE ASSESSEE PRODUCED THE PURCHASE LEDGER AND THE ITA NO. 2132/DEL/2011 9 STOCK TALLY AND ALSO THE COPY OF ACCOUNT WITH ICICI BANK LTD. DEMONSTRATING THE REVERSAL OF THE ENTRY IN RESPECT O F THE SALES MADE BY THE ICICI BANK LTD. TO THE ASSESSEE. THE TOT AL AMOUNT OF THE GOLD OF THE SALE INVOICES WHICH HAVE BEEN CANCE LLED BY THE ASSESSEE MATCHES WITH THE PURCHASES WHICH HAVE ALSO BEEN REVERSED BY THE ICICI BANK LTD. AS THIS ISSUE HAS B EEN VERIFIED IN REMAND PROCEEDINGS, AND THE SALES BILLS IN QUESTION EVIDENTLY REPRESENT CANCELLED INVOICES, THE ADDITION MADE ON T HIS ACCOUNT OF ` 86,63,000/- IS HEREBY DELETED. (III) ADDITION OF ` 4,17,982/- ARBITRARY DISALLOWAN CE OF 25% OF THE TOTAL EXPENSES. IN HIS REMAND REPORT, THE ASSESSING OFFICER HAS SU BMITTED THAT THE DISALLOWANCE OF 25 PER CENT OF THE TOTAL E XPENSES WAS MADE IN THE ABSENCE OF THE BOOKS OF ACCOUNTS. THE BO OKS OF ACCOUNTS HAVE NOW BEEN EXAMINED BY THE ASSESSING OFF ICER. ON THE BASIS OF SUCH EXAMINATION, THE ASSESSING OFFICER CONSIDERED THAT THE FOLLOWING EXPENDITURES WERE NOT FULLY VERI FIABLE: 35,764/- ON ACCOUNT OF CONVEYANCE, ` 12,685/- ON SALES PROMOT ION EXPENSES, 16,785/- ON PRINTING AND STATIONERY AND 16,345/- ON STAFF WELFARE. IN THE ABSENCE OF THESE EXPENSES BEI NG FULLY VOUCHED, A PORTION OF THE SAME WERE SUGGESTED TO BE DISALLOWED. FURTHER, A SUM OF ` 30,111/- HAD BEEN INCURRED ON TE LEPHONE EXPENSES, IN WHICH THE ELEMENT OF PERSONAL USE COUL D NOT BE TOTALLY RULED OUT. AFTER CONSIDERING THE ABOVE REPO RT, IT IS CONSIDERED REASONABLE TO DISALLOWANCE 20% OF THE EX PENSES POINTED OUT BY THE ASSESSING OFFICER, WHICH WORKS O UT TO ` 22,338/-. THIS GROUND OF APPEAL IS THEREFORE, PARTL Y ALLOWED. ITA NO. 2132/DEL/2011 10 (IV). ADDITION OF ` 46,91,451/- ON ACCOUNT OF UNSE CURED LOANS I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE APP ELLANT, AND THE REMAND REPORT. IN VIEW OF THE FACT THAT LOAN S OF ` 10,00,000/- FROM MRS. MANJU DEVI AND OF ` 6,80,000/-- FROM MS. SHILPI DOKANIA ARE OLD BALANCES, THE ADDITIONS MADE IN THIS YEAR CANNOT BE SUSTAINED. IN VIEW OF CONFIRMATIONS FILED OF LOANS OF ` 15,00,000/- FROM M/S GOVIND AGENCIES AND OF ` 15,11, 451/- FROM M/S DOKANIA BROTHERS, PROVING IDENTITY, CREDITWORTHI NESS AND GENUINENESS, THE ADDITIONS MADE ON THIS ACCOUNT ARE HEREBY DELETED. THE APPELLANT THEREFORE SUCCEEDS IN GROUND NO. 8. (V) ADDITION OF ` 10,92,93,900/- ON ACCOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSIONS. AS VERIFIED BY THE ASSESSING OFFICER, THE CASH DEPOSI TED IN THE BANK ACCOUNT TALLIES WITH THE SALE BILLS ISSUED BY THE A PPELLANT, AND DISCLOSED IN ITS RETURN OF INCOME. THERE CAN BE NO BASIS FOR PRESUMING THAT THE CASH DEPOSITS ORIGINATE FROM ANY SOURCE OTHER THAN THE RECORDED CASH SALES. THE APPELLANT HAS FRO M THE BEGINNING EXPLAINED THAT IT DELIVERS THE GOLD TO BR OKERS BUYERS ONLY AFTER ITS BANK ACCOUNT IS CREDITED WITH THE SA LES AMOUNT. IT MAKES NO DIFFERENCE TO THE BOOK RESULTS WHETHER THES E AMOUNTS OF SALES PROCEEDS ARE DEPOSITED IN THE APPELLANT'S BANK' ACCOUNT, IN NOIDA OR IN JORHAT. I FIND NO JUSTIFICATION FOR T REATING THE SALES AS ITA NO. 2132/DEL/2011 11 UNEXPLAINED CASH CREDITS, AND DELETE THE ADDITION U NDER SECTION 68 OF ` 10,92,93,900/-. (VI) ADDITION OF ` 3,87,884/- - DISALLOWANCE OF 25% OF THE TOTAL EXPENSES THE ASSESSING OFFICER, IN THE REMAND REPORT, HAS STATED THAT, AS IN THE CASE OF M/S MURLI ENTERPRISES, A SU M OF ` 3.88 LAKHS WAS DISALLOWED IN THE CASE OF MANGAL TRADER, AS THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNTS. DURING THE REMAND PROCEEDINGS, THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNTS WHICH WERE EXAMINED ON CHECK BASIS AND WERE FOUND TO BE MAINTAINED IN THE NORMAL COURSE OF BUSINESS. ON THE E XAMINATION OF THE VARIOUS EXPENSES, IT WAS NOTICED THAT THE AS SESSEE HAS INCURRED A SUM OF ` 1,13,000/- ON ACCOUNT OF CONVEY ANCE EXPENSES, ` 26,785/- ON ACCOUNT OF SALE PROMOTION EX PENSES, ` 36,125/- ON STAFF WELFARE AND ` 9,976/- ON PRINTING AND STATIONARY, WHICH WERE NOT FULLY VOUCHED. THE ASSESSEE HAS FURT HER INCURRED AN EXPENDITURE OF ` 35,365/- ON ACCOUNT OF TELEPHON E EXPENSES, IN WHICH THE PERSONAL ELEMENT CANNOT BE RULED OUT. CONSIDERING THE OBSERVATIONS OF THE ASSESSING OFFICER THAT THE ABOVE EXPENDITURES ARE NOT FULLY VERIFIABLE, I DIRECT THA T 20% THEREOF MAY BE DISALLOWED, WHICH WORKS OUT TO ` 44,250/-. (VII) ADDITION OF ` 71,00,000/- ON ACCOUNT OF CASH DEPOSIT I HAVE CONSIDERED ALL THE ABOVE FACTS. FROM THE VER IFICATION OF THE APPELLANT'S CASH BOOK, IT IS EVIDENT THAT T HE DEPOSITS IN THE BANK ACCOUNTS, TREATED AS INITIAL INVESTMENT BY THE ASSESSING OFFICER, WERE OUT OF ACCOUNTED CASH IN HAND. IT GOE S WITHOUT ITA NO. 2132/DEL/2011 12 SAYING THAT THE CASH DEPOSITS IN THE BANK ACCOUNT C ANNOT BE VIEWED IN ISOLATION FROM THE CASH SALES THROUGH THE OTHER BANK ACCOUNTS, OR THE BOOKS OF ACCOUNT. THE QUERY PUT BY THE ASSESSING OFFICER IN THE NOTICE U/S 142(1) DATED 10 .11.2009 TO EXPLAIN THE SOURCES OF INVESTMENT IN BUSINESS ALON GWITH EVIDENCES' CANNOT BE EQUATED WITH ASKING THE APPELL ANT TO EXPLAIN THE SOURCES OF CASH DEPOSITS IN TWO BANK AC COUNTS ON PARTICULAR DATES DURING THE YEAR. IT APPEARS THAT N O ACTUAL QUERY REGARDING THESE ENTRIES WAS PUT TO THE APPELLANT, A ND NO REAL OPPORTUNITY GRANTED FOR EXPLANATION THEREOF. IN VIE W OF THE VERIFICATION OF THE CASH BOOK CARRIED OUT IN REMAND PROCEEDINGS BY THE ASSESSING OFFICER, THE ADDITION MADE OF ` 71 ,00,000/- IS HEREBY DELETED, AS THE SOURCES OF CASH DEPOSITED IN THE BANK ACCOUNTS ARE ADEQUATELY EXPLAINED. (VIII) ADDITION OF ` 30,48,036/- ON ACCOUNT OF UNSE CURED LOANS. THE ASSESSING OFFICER WAS REQUIRED TO EXAMINE THIS CONTENTION IN REMAND PROCEEDINGS. THE ASSESSING OFFI CER HAS REPORTED, VIDE HIS REMAND REPORT, THAT, THE COPY OF ACCOUNT OF M/S N K TRADERS WAS EXAMINED WITH THE BOOKS OF ACCOUNTS AND IT WAS VERIFIED THAT OUT OF THE TOTAL CREDIT OF ` 30,33,03 6/-,` 28,06,236/- WAS THE OPENING BALANCE. ` 2,52,561/- WAS THE INTER EST CREDITED BY THE ASSESSEE, AND AFTER DEDUCTING TAX AT SOURCE OF ` 25,761/-, THE NET CREDIT BALANCE WAS ` 30,33,036/-. CONFIRMAT ION ALONG WITH ADDRESS AND PAN NUMBER WERE AVAILABLE ON THE ASSESSME NT RECORD ALONG WITH THE COPY OF INCOME TAX RETURN. IN RESPECT OF THE CREDIT OF ` 15,000/- FROM MRS. SHARDA DOKANIA, THE A SSESSEE HAS FILED CONFIRMATION AND THE COPY OF THE BANK ACCOUNT , SHOWING THAT ITA NO. 2132/DEL/2011 13 THE PAYMENT HAS BEEN RECEIVED BY CHEQUE. CONSIDERIN G THAT THE LOAN FROM M/S N.K. TRADERS IS AN OLD BALANCE, AND TH AT BOTH LOANS ARE SUPPORTED BY CONFIRMATIONS, THE ADDITION MADE OF ` 30,48,036/- CANNOT BE SUSTAINED. THE APPELLANT ACCO RDINGLY GETS RELIEF OF ` 30,48,036/-. (IX) ADDITION OF ` 35,51,642/- ON ACCOUNT OF OPENIN G STOCK THE ADDITIONAL EVIDENCES WERE FORWARDED TO THE ASS ESSING OFFICER FOR VERIFICATION AND REPORT, WHICH WAS SUBMI TTED AS UNDER:- MY PREDECESSOR HAS MADE AN ADDITION OF THIS AMOUNT SINCE THE ASSESSEE HAS NOT BEEN ABLE TO DEMONSTRATE THAT THIS AMOUNT REPRESENTS THE OPENING STOCK. DURING THE COURSE OF THE REMAND PROCEEDINGS, THE ASSESSEE HAS EXPLAINED THAT THIS FACT IS VERIFIABLE FROM THE BALANCE SHEET OF THE LAST YEAR WHERE THIS AMOUNT IS APPEARING AS A CLOSING STOCK. THE ASSESSEE HAS ALSO FILED THE DMAT ACCOUNT BEING MAINTAINED WITH M/S ALANKIT ASSIGNMENTS LIMITED FROM WHERE THIS OPENING BALANCE IS VERIFIABLE. I HAVE VERIFIED THE BOOKS OF ACCOUNTS, THE BALANCE SHEET AND STATEMENT OF M/S ALANKIT ASSIGNMENTS. CONSIDERING THE REPORT OF THE ASSESSING OFFICER, AN D AFTER EXAMINATION OF THE ADDITIONAL EVIDENCES, IT IS HELD THAT THE ITA NO. 2132/DEL/2011 14 ADDITION OF ` 35,51 ,642/- HAS BEEN MADE WITHOUT ANY BASIS, AND IS HEREBY DELETED. (X) ADDITION OF ` 41,397/- ON ACCOUNT OF DONATION MA DE U/S 80G IN HIS REMAND REPORT, THE ASSESSING OFFICER HAS ST ATED THAT, THE ASSESSEE, IN THE REMAND PROCEEDINGS, SUBMITTED T HE COPY OF RECEIPT ISSUED BY ROHINI EDUCATION SOCIETY TO WHOM H E HAD PAID A DONATION OF RS.5 LAKHS VIDE CHEQUE NO.211314 DATED 22.11.2006. THE ASSESSEE ALSO SUBMITTED A CERTIFICATE ISSUED BY THE DIRECTOR OF INCOME TAX GRANTING APPROVAL U/S 80G TO THE ROHI NI EDUCATION SOCIETY. IT WAS SUBMITTED THAT, THE CLAIM OF THE ASSE SSEE MAY BE ACCEPTED. AFTER CONSIDERING THE ABOVE FACTS AND THE REMAND RE PORT, THE ADDITION MADE OF ` 41,397/- IS DELETED. (XI) ADDITION OF ` 8,78,000/- ON ACCOUNT OF UNSECUR ED LOANS THE REMAND REPORT OF THE ASSESSING OFFICER WAS CALL ED FOR ON THESE CONTENTIONS, AND THE ASSESSING OFFICER HAS SUBMITTED THAT, AS REGARDS THE LOAN OF ` 8,63,000/- THE SUM R ECEIVED FROM MRS. MANJU DEVI DOKANIA IS AN OPENING BALANCE FROM THE L AST YEAR. MRS. MANJU DEVI DOKANIA IS REGULARLY BEING ASSES SED AND SHE HAS FILED THE CONFIRMATION AND COPY OF HER INC OME TAX RETURN. A SUM OF ` 15,000/- HAS BEEN RECEIVED FROM M/S DOKANI A BROTHERS OF WHICH THE PROPRIETOR IS MR. OM PRAKASH DOKANIA. T HE ASSESSEE HAS FILED CONFIRMATION, COPY OF THE BANK ACCOUNT AN D OTHER NECESSARY DETAILS, WHICH SHOW THAT THE SAME ALSO RE PRESENTS OPENING BALANCE. ITA NO. 2132/DEL/2011 15 AS STATED BY THE ASSESSING OFFICER, BOTH THE LOANS IN QUESTION ARE OLD CARRIED FORWARD BALANCES. THEY ARE ALSO SUPPORTED BY CONFIRMATIONS AND PROOF OF IDENTITY. I T APPEARS THAT THESE CONFIRMATIONS WERE FILED DURING THE ASSESSMEN T PROCEEDINGS AS WELL, BUT THE ASSESSING OFFICER STIL L PROCEEDED TO MAKE THE ADDITION. THE APPELLANT GETS RELIEF OF ` 8, 78,000/- AND SUCCEEDS AT GROUND NO.15. 5. AGAINST THE ABOVE ORDER OF THE LD. COMMISSIONER O F INCOME TAX (APPEALS), THE REVENUE IS IN APPEAL BEFORE US. 6. LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THAT A DEQUATE OPPORTUNITY WAS THERE BEFORE THE ASSESSING OFFICER, BUT ASSESSEE CHOSE NOT TO FURNISH THE DOCUMENTS. HENCE, HE PLE ADED THAT ADDITIONAL EVIDENCES SHOULD NOT HAVE BEEN ACCEPTED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). HE FURTHER C ONTENDED THAT IN THE REMAND REPORT ASSESSING OFFICER HAS NOT PROPERL Y APPLIED HIS MIND AND HENCE HE REQUESTED THAT THE MATTER MAY BE REMITT ED TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE SAME AFRESH. 6.1 LD. COUNSEL OF THE ASSESSEE, ON THE OTHER HAN D SUBMITTED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGH TLY ACCEPTED THE ADDITIONAL EVIDENCES AND AFTER PROPER CONSIDERATION OF THE REMAND REPORT, HE HAS PASSED HIS ORDER. HENCE, HE ARGUED THAT ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) BE SUSTAINED. 6.2 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT ASSESSEE HAS SUBMITTED ADD ITIONAL EVIDENCES BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WHO HAS ADMITTED THE SAME AFTER RECORDING COGENT REASONING. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RECORDED T HAT FOR ITA NO. 2132/DEL/2011 16 SUFFICIENT REASON BEING SHORTAGE OF TIME ASSESSEE WA S PREVENTED FROM PRESENTING THE EVIDENCE BEFORE THE ASSESSING OFF ICER. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS OBTAINED TH E REMAND REPORT FROM THE ASSESSING OFFICER. THEREAFTER HE HAS ADJUDI CATED THE ISSUE. IN THE REMAND REPORT THE ASSESSING OFFICER ACCEPTE D THE CONTENTION OF THE ASSESSEE AND VERACITY OF EVIDENCES AND DOCUMENT S BEING SUBMITTED. 6.3 IN ALL THE GROUNDS RAISED BEFORE US, IT HAS BEE N URGED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS WRONGLY AD MITTED THE ADDITIONAL EVIDENCES. BUT WE FIND THAT THIS GROUND IS NOT SUSTAINABLE. FURTHER AS EVIDENT FROM THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ADJUDICATION REPRODUCED IN THE PRECEDING PARAGRAPH, IN THE REMAND REPORT ASSESSING OFFICER HAS ACCEPTED THE CONTENTI ON OF THE ASSESSEE AND THE VERACITY OF EVIDENCES AND DOCUMENTS SUBMITTED . WE ALSO DO NOT AGREE WITH THE PLEA RAISED BY THE LD. DEPARTMENT AL REPRESENTATIVE THAT IN THE REMAND REPORT THE ASSESSING OFFICER HA S NOT APPLIED HIS MIND, HENCE THE MATTER SHOULD BE REMITTED TO ASSESSIN G OFFICER. WE FIND THAT IN THE REMAND PROCEEDINGS ALL THE RELEVAN T BOOKS AND DOCUMENTS WERE SUBMITTED BEFORE THE ASSESSING OFFICE R, WHO HAS DULY CONSIDERED THE SAME. HENCE, THE ASSESSING O FFICER BEING THE APPELLANT ON BEHALF OF THE REVENUE BEFORE US, CANNO T BE SAID TO BE AGGRIEVED BY HIS OWN ACTION. ITA NO. 2132/DEL/2011 17 6.4 IN OUR CONSIDERED OPINION, LD. COMMISSIONER OF IN COME TAX (APPEALS) HAS CORRECTLY APPRECIATED THE REMAND REPOR T AND RECORDED COGENT REASONING IN DELETING THE ADDITIONS. WE D O NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE SAME. HENCE, WE AFFIR M THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/9/2011. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 30/9/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES