ACIT, Meerut V. M/s. Eastern Drug & Sanitary Products, Meerut

ITA 224/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97702 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Onus to prove

Judgement Text

ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `B NEW DELHI BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER I.T.A.NO.224/DEL/2012 ASSESSMENT YEAR : 2008-09 ASSTT.COMMISSIONER OF INCOME TAX, VS EASTE RN DRUG & SANITARY PRODUCTS, CIRCLE-1, 770, SOTI GANJ, MEERUT. MEERUT. (PAN: AAAFE2946D) (APPELLANT) (RESPO NDENT) APPELLANT B Y: SMT. PARWINDER KAUR, SR.DR RESPONDENT BY : SHRI R.K. GARG, ADVOCATE DATE OF HEARING: 19.08.2015 DATE OF PRONOUNCEMENT: 29.10.2015 O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAIN ST THE ORDER OF CIT(A), MEERUT DATED 12.10.11 IN APPEAL NO. 228/10- 11 FOR AY 2008-09. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER:- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN DELETING THE ADDITION OF RS.61,96,307/-IN SPITE OF THE FACT THAT THE ASSESSEE FAILED TO FILE BALANCE CONFIRMATIONS EVEN AFTER AVAILING SUFFICIENT OPPORTUNITIES AND ASSESSEE WAS NEVER PRE VENTED FROM PRODUCING THE SAME BEFORE THE AO. THE ONUS WAS CERT AINLY UPON THE ASSESSEE TO PROVE THE CREDITS APPEARING IN ITS BOOKS. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS :- L I. CIT VS KORLAY TRADING CO. LTD. (CAL.) 232 ITR 82 0. ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 2 II. 'KRISHAN KUMAR JHAMB VS ITO AND ANR (PUNJAB & HARYANA) 17 DTR 249' III. M/S SEJAI INTERNATIONAL LTD VS CIT MEERUT (AL L.) APPEAL NO.306 OF 2010 2. WHETHER LD. CIT (APPEAL) WAS JUSTIFIED IN ACCEPT ING THE FRESH CONFIRMATIONS AS SUBMITTED BY THE ASSESSEE TO PROVE THE GENUINENESS OF TRADE CREDITORS. FURTHER, IT WAS AN ADDITIONAL EVIDENCE ACCEPTED BY LD. CIT (A) WITHOUT PROVIDING OPPORTUNITY TO AO IGNORING THE PROVISIONS OF RULES 46 A(3) OF T HE INCOME TAX RULES 1962. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN DELETING THE ADDITION OF RS.6,00,000/- IN SPITE OF THE FACTS THAT COMPLETE BOOKS OF ACCOUNTS AND SUPPORTIVE DOCUMENTS WERE NOT PRODUCED BEFORE THE AO. EVEN IN THE AUDIT REPORT TH E AUDITOR HAS MENTIONED THAT IN ABSENCE OF PROPER BILLS AND VOUCH ERS, GENUINENESS OF THE EXPENSES CREDIT AND PIL A/C CAN NOT BE VERIFIED. 2. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APP EAL ARE THAT THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICE U/S 143( 2) OF THE INCOME TAX ACT, 1961 WAS ISSUED AND SERVED UPON THE ASSESSEE. THE AO NOTED THAT THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNTS BUT IT F AILED TO PRODUCE THE SAME. THE AO REJECTED THE TRADING RESULTS OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT AS THE AO WAS NOT SATI SFIED WITH THE COMPLETENESS OF THE BOOKS OF ACCOUNTS. THE AO COMPLETED THE ASS ESSMENT AT TAXABLE TOTAL INCOME OF RS. 1,28,10,160 ON ACCOUNT OF BOGUS CREDI T LIABILITY RELEVANT TO TRADING PURCHASES. HOWEVER, SUBSEQUENTLY THE AO HI MSELF RECTIFIED AND DELETED THE ADDITION OF RS.66,13,853 IN RESPECT OF M/S RAJA STHAN DRUG AND PHARMACEUTICALS LTD., JAIPUR AND THUS THE ADDITION CAME DOWN TO RS.61,96,307. ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 3 THE CIT(A) MEERUT DIRECTED THE ASSESSEE TO DELETE B OTH THE SAID ADDITIONS AND HENCE THE REVENUE IS BEFORE THIS TRIBUNAL IN THIS S ECOND APPEAL WITH THE GROUNDS AS REPRODUCED HEREINABOVE. GROUND NO. 2 OF THE REVENUE 3. LD. DR SUBMITTED THAT THE LD. CIT (APPEAL) WAS N OT JUSTIFIED IN ACCEPTING THE FRESH CONFIRMATIONS AS SUBMITTED BY THE ASSESSE E TO PROVE THE GENUINENESS OF TRADE CREDITORS. LD. DR FURTHER CONTENDED THAT THE CIT(A) ACCEPTED, ADMITTED AND CONSIDERED ADDITIONAL EVIDENCE WITHOUT PROVIDIN G DUE OPPORTUNITY TO COMMENT UPON ADMISSIBILITY AND MERIT OF THE SAME AN D IGNORING AND VIOLATING THE PROVISIONS OF RULES 46 A(3) OF THE INCOME TAX RULES 1962. 4. REPLYING TO THE ABOVE, LD. COUNSEL OF THE ASSESS EE HAS DRAWN OUR ATTENTION TOWARDS COPY OF THE REMAND REPORT FILED BY THE AO B EFORE THE CIT(A) AVAILABLE AT PAGES 46 AND 47 OF THE ASSESSEES PAPER BOOK AND SUBMITTED THAT THE CIT(A) ADMITTED AND CONSIDERED ADDITIONAL EVIDENCE AS PER PROVISIONS OF RULE 46A OF THE RULES AS THE ADDITIONAL EVIDENCE WAS SENT TO TH E AO TO COMMENT UPON THE ADMISSIBILITY AND MERITS OF THE PROPOSED ADDITIONAL EVIDENCE AND THE AO SUBMITTED REMAND REPORT DATED 22.9.2011 OBJECTING T O THE ADMISSIBILITY OF ADDITIONAL EVIDENCE AS WELL AS ON THE MERITS OF ADD ITIONAL EVIDENCE ON BOTH THE ISSUES. LD. COUNSEL ALSO POINTED OUT THAT THE AO P LACED HIS DETAILED COMMENTS OBJECTING TO THE ADMISSIBILITY OF ADDITIONAL EVIDEN CE AND ALSO ON MERITS, THEREFORE, THERE IS NO VALIDITY OF RULE 46A OF THE RULES. ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 4 5. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS AN D FROM VIGILANT READING OF THE REMAND REPORT DATED 22.9.2011, WE CLEARLY OB SERVE THAT IN PARA (III), THE AO HAS SUBMITTED HIS VIEWS OBJECTING TO THE ADMISSI BILITY OF ADDITIONAL EVIDENCE AND IN PARA (I) AND (II) OF THE REMAND REP ORT, THE AO HAS ELABORATELY COMMENTED AND SUBMITTED HIS STAND ON BOTH THE POINT S ALLEGING THE MERITS AND CONSIDERATION OF THE PROPOSED ADDITIONAL EVIDENCE, HENCE, WE ARE UNABLE TO SEE ANY SITUATION WHEREIN THE CIT(A), MEERUT HAS FLOUTE D THE RELEVANT PROVISIONS OF RULE 46A OF THE RULES. WE ARE UNABLE TO AGREE WITH THE CONTENTION OF LD. DR THAT THE CIT(A) ADMITTED AND CONSIDERED ADDITIONAL EVIDENCE IN CONTRAVENTION TO PROVISIONS OF RULE 46A OF THE RULES. ACCORDINGLY, GROUND NO. 2 OF THE REVENUE BEING DEVOID OF MERITS IS DISMISSED. GROUND NO. 1 6. APROPOS GROUND NO.1, LD. DR SUBMITTED THAT THE A O RIGHTLY NOTED THAT THE ASSESSEE HAS DECLARED SUNDRY CREDITORS OF HUGE AMOU NT UNDER THE HEAD OF CURRENT LIABILITY WHICH WAS APPROXIMATELY 62% OF THE TOTAL TURNOVER. LD. DR FURTHER CONTENDED THAT WHEN THE AO ASKED THE ASSESSEE TO FI LE CONFIRMATION OF THESE SUNDRY CREDITORS WITH THE DETAILS OF OUTSTANDING BA LANCE ABOVE RS.1 LAKH, THEN FROM THE LIST SUBMITTED BY THE ASSESSEE, IT WAS OBS ERVED THAT THE BALANCE WAS PAYABLE TO 389 PERSONS AND THE ASSESSEE FAILED TO P RODUCE CONFIRMATION OF 32 PERSONS AGAINST WHOM OUTSTANDING AMOUNT WAS RS. 1,2 8,10,160/- HAVING BALANCE OF MORE THAN RS.1 LAKH. LD. DR FURTHER SUB MITTED THAT THE ASSESSEE ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 5 FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINE NESS OF THE CREDIT LIABILITY SHOWN IN ITS ACCOUNT. THEREFORE, THE AO RIGHTLY MA DE ADDITION IN THIS REGARD TREATING THE SAME TO BE BOGUS. 7. LD. DR VEHEMENTLY CONTENDED THAT THE CIT(A) GRAN TED RELIEF TO THE ASSESSEE WITHOUT ANY BASIS AND, THEREFORE, THE IMPU GNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 8. REPLYING TO THE ABOVE, LD. COUNSEL OF THE ASSESS EE HAS DRAWN OUR ATTENTION TOWARDS PARA 6 TO 6.5 OF THE IMPUGNED ORDER AND SUB MITTED THAT THE AO HERSELF RECTIFIED AND DELETED THE ADDITION OF RS.66,13,853. SUBSEQUENTLY, ON THE BASIS OF CONFIRMATION FILED BY THE ASSESSEE PERTAINING TO M/S RAJASTHAN DRUG AND PHARMACEUTICALS LTD., JAIPUR, LD. COUNSEL OF THE A SSESSEE FURTHER SUBMITTED THAT THE ASSESSEE FILED DETAILED SUBMISSIONS BEFORE THE LOWER AUTHORITIES AND ALL RELEVANT CONFIRMATIONS WERE ALSO FILED WHICH WERE P ROPERLY CONSIDERED BY THE CIT(A) AND HENCE RELIEF GRANTED TO THE ASSESSEE ON THE BASIS OF PROPER CONFIRMATION OF 32 ALLEGED CREDITORS. LD. COUNSEL VEHEMENTLY POINTED OUT THAT DURING THE REMAND PROCEEDINGS, THE AO DID NOT CARE AND CONSIDER THE CONFIRMATIONS FILED BY THE ASSESSEE AND WHEN THE AS SESSEE HAS DISCHARGED ITS ONUS TO PROVE GENUINENESS OF SUNDRY CREDITORS BY WA Y OF FILING CONFIRMATION AND OTHER RELEVANT DETAILS, THEN ONUS WAS SHIFTED TO TH E AO TO BRING OUT ANY DEFECT OR DEFICIENCY IN THE EXPENDITURE AND CONFIRMATION FILE D BY THE ASSESSEE. LD. COUNSEL LASTLY POINTED OUT THAT THE AO HERSELF RECT IFIED ADDITION OF RS.66,13,853 ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 6 IN RESPECT OF M/S RAJASTHAN DRUG AND PHARMACEUTICA LS LTD., JAIPUR AFTER ACCEPTING THE CONFIRMATION FILED BY THE ASSESSEE. FROM THE ASSESSMENT ORDER, WE NOTE THAT THE AO MADE ADDITION BY OBSERVING THAT TH E ASSESSEE FAILED TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS OF TH E CREDIT LIABILITY SHOWN IN ITS ACCOUNTS AND THE AO TREATED THE SAME TO BE BOGUS AN D ADDITION WAS MADE ON THIS BASIS. DURING FIRST APPELLATE PROCEEDINGS, TH E ASSESSEE FILED REQUIRED CONFIRMATIONS AND THE CIT(A) ALSO CALLED COMMENTS O F THE AO AND THE AO SUBMITTED REMAND REPORT CONTENDING THAT THE CONTENT ION OF THE ASSESSEE IS NOT CORRECT AND DESERVES TO BE REJECTED. THE AO ALSO F ILED REJOINDER AND SUBMITTED THAT THE AO COMPLETED THE ASSESSMENT PROCEEDINGS IN A HASTY MANNER AND, THEREFORE, THE ASSESSEE FILED APPLICATION UNDER RUL E 46A DURING FIRST APPELLATE PROCEEDINGS. FROM THE OPERATIVE PART OF THE IMPUGN ED ORDER, WE NOTE THAT THE CIT(A) GRANTED RELIEF TO THE ASSESSEE WITH FOLLOWIN G OBSERVATIONS AND CONCLUSION:- 6.2. AR'S SUBMISSIONS: AR MADE SUBMISSIONS AS UNDER: 'GROUND NO. 2 ADDITION OF RS. 1,28,10,160/-: THAT THE LEARNED A.O. REQUIRED CONFIRMATION FROM AL L SUNDRY CREDITORS, HAVING THE BALANCE OF RS. 1,00,0001-, OR MORE. OUT OF THE TOTAL SUNDRY CREDITORS, THE ASSESSEE HAS FILED CONFIRMATION OF MORE THEN 100 CREDITORS, AND VIDE LETTER DATED 1611 2/2010, IT WAS SUBMITTED 'THAT CONFIRMATION FROM THE CREDITORS OBT AINED TILL TODAY ARE ENCLOSED HEREWITH. THE BALANCE COPY OF AC COUNT HAS BEEN SENT FOR CONFIRMATION, WHICH MAY BE FILED, AS SOON AS THEY ARE RECEIVED. THE CREDITORS REPRESENT THE UNPAID BA LANCE AGAIN THE CREDIT PURCHASE, THE PAYMENT OF WHICH IS BEING MADE IN ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 7 REGULAR COURSE OF BUSINESS AND YOUR HONOUR IS REQUE STED TO ACCEPT THE CREDITOR.' THE LEARNED A.O., HOWEVER, DI D NOT ENTERTAIN REMAINING CONFIRMATION, WHICH WERE OBTAIN ED UPTO 23/1212010, ON THE PLEA THAT NO FURTHER TIME CAN BE ALLOWED, AS THE CASE IS GOING TO BE BARRED BY LIMITATION. HOWEV ER, ON RECTIFICATION APPLICATION FILED, THE LEARNED A.O. W AS KIND ENOUGH TO REDUCE THE AMOUNT OF RS. 66,13,853/-, IN RESPECT OF RAJASTHAN DRUG AND PHARMACEUTICAL LTD., WHOSE CONFIRMATION WA S ALREADY ON RECORD. AS THE ASSESSEE WAS PREVENTED BY SUFFICI ENT CAUSE NOT TO FILE THE CONFIRMATION, AN APPLICATION U/R 46A, I S TILED WITH REQUEST TO ADMIT 32, CONFIRMATIONS, WHICH COULD NOT BE FILED, AS NOT RECEIVED TILL 16/12/2010. YOUR HONOUR IS REQUES TED TO ADMIT THE SAME, AS THE CASE OF THE ASSESSEE IS COVERED UN DER SUB CLAUSE (A), (B),(C) & (D). AS THE SUNDRY CREDITOR REPRESENTS OUTSTANDING PAYME NT AGAINST THE CREDIT PURCHASES, THERE IS NO JUSTIFICA TION, TO HOLD THAT SUNDRY CREDITORS HAVE BOGUS, IN ABSENCE OF ANY MATE RIAL PLACED ON RECORD. AS REGARDS THE ONUS, TO PROVE THE SAME I S PROVED FROM THE BOOKS OF ACCOUNTS MAINTAINED AND AUDITED BY THE AUDITOR, THE NATURE OF DEPOSIT WAS AGAINST THE CREDIT PURCHASE A ND THE SOURCE WAS THE MATERIAL PURCHASED .FROM THE MANUFACTURES A ND CREDIT WORTHINESS IS FROM THE FACT THAT THE MANUFACTURING THE GOODS AND SUPPLY THE SAME ON CREDIT TO THE APPELLANT. THERE I S NO INSTANCE THAT THE PURCHASES ARE NOT GENUINE OR PAYMENT WAS N OT OUTSTANDING AGAINST THE ASSESSEE. THUS THE ADDITION OF RS. 1,28,10,160/-, MINUS 66,13,853/-, I.E. 61,96,307/-, BEING WITHOUT ANY BASIS DESERVES TO BE DELETED. 6.3. AO'S COMMENTS IN REMAND REPORT : 'ADDITION ON ACCOUNT OF DISALLOWANCE OF SUNDRY CRED ITORS: THE ADDITION OF RS.1,28,10,160/- WAS MADE ON ACCOUN T OF DISALLOWANCE OF SUNDRY CREDITORS IN RESPECT OF WHOM CONFIRMATIONS WERE NOT FILED BY THE ASSESSEE. OUT O F THIS ADDITION, ADDITION OF RS.66,13,853/- WAS REDUCED ON ACCOUNT O F ALLOWANCE OF SUNDRY CREDITOR IN THE CASE OF M/S. RAJASTHAN DR UG AND PHARMACEUTICALS LTD., JAIPUR. AS REGARDS, BALANCE S UNDRY CREDITORS, THE ASSESSEE WAS FREQUENTLY ASKED TO FIL E THE SAME DURING THE ASSESSMENT PROCEEDINGS. BUT THE ASSESSEE FAILED TO FILE THE SAME TILL DATE OF ASSESSMENT. THE CONTENTION OF THE ASSESSEE THAT IT PRODUCED BALANCE CONFIRMATIONS ON 23.12.201 0 BUT WERE NOT ENTERTAINED BY THE AO IS NOT CORRECT AS IT IS C LEAR FROM THE ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 8 ORDER SHEET DATED 23.12.2010 THAT THE COUNSEL OF TH E ASSESSEE APPEARED ON THAT DATE AND THE CASE WAS DISCUSSED. H AD HE PRODUCED THE BALANCE CONFIRMATIONS OF SUNDRY CREDIT ORS, THERE WOULD BE NO REASON WITH THE AO FOR NOT ENTERTAINING THEM. HENCE, THE CONTENTION OF THE ASSESSEE IS NOT CORRE CT AND DESERVES TO BE REJECTED.' - 6.4 . AR'S REJOINDER: 'DISALLOWANCE ON SUNDRY CREDITORS : OUT OF THE OUTSTANDING SUNDRY CREDITORS OF 398, PER SONS, THE LEARNED A.O. REQUIRED TO PRODUCE CONFIRMATION F ROM 131 PERSONS. THE ASSESSEE FILED CONFIRMATION OF 100 PER SONS AND REQUESTED TO PRODUCE THE BALANCE CONFIRMATION, AS S OON AS THEY ARE RECEIVED, IN AS MUCH AS, OBTAINING THE CONFIRMA TION FROM SUNDRY CREDITORS WAS BEYOND THE CONTROL OF ASSESSEE , HOWEVER, THE CREDITOR WERE VERIFIABLE WITH THE SUPPORT OF CR EDIT PURCHASES AND COPY OF ACCOUNT PRODUCED. ON HEARING DATED 18/1 2/2010, ASSESSEE FURNISHED THE CONFIRMATION AND FOR THE BAL ANCE CONFIRMATION REQUESTED TO GIVE MORE TIME AS TWO BRO THERS OF EXISTING ACCOUNTANT MET WITH FETTLE ACCIDENT AND AC COUNTANT WAS NOT ABLE TO ATTEND THE OFFICE FOR WHICH NECESSARY D OCUMENTS WERE NOT PRODUCED. ON 23 DECEMBER, UNDER SIGNED COUNSEL APPEARED AND ASK TO ALLOW FURTHER TIME BUT THE LEARNED A.O. ON THE PLEA THAT THE CASE IS GOING TO BE BARRED BY LIMITATION C OMPLETED THE ASSESSMENT WITH THE UNDERSTANDING THAT THE CONFIRMA TION SHALL THE CONSIDERED IF RECEIVED ON THE VERY NEXT DATE. IT WA S NOT POSSIBLE TO FURNISH BALANCE CONFIRMATION ON NEXT DATE, HOWEV ER THE CONFIRMATION TRIED TO BE FILED ON THE NEXT WORKING DAY ON 27TH DECEMBER WERE NOT ADMITTED. NOW THE ASSESSEE HAS PR ODUCED ALL THE CONFIRMATION, WHICH DESERVE TO BE CONSIDERED IN VIEW OF, FAIRNESS EQUITY AND JUSTICE AND PROVISION CONTAINED IN RULE 46A.' 6.5. DECISION AND REASONS THEREFOR : I HAVE CONSIDERED FACTS CAREFULLY. I FIND THAT THE ASSESSEE OBTAINED CONFIRMATION OF 32 CREDITORS BY 23.12.2010 BUT THE AO DID NOT ENTERTAIN THE SAME AND PASSED THE ASSESSMEN T ORDER ON 27.12.2010. IN ANY CASE, EVEN DURING REMAND PROCEED INGS, THE AO HAS NOT CARED TO CONSIDER AND EXAMINE THE CONFIR MATIONS FILED. THE SUNDRY CREDITORS ARE ALL TRADE CREDITORS . OUT OF THE TOTAL ADDITION OF RS.1,28,10,160/- THE AO HERSELF RECTIFI ED THE ADDITION OF RS.66,13,853/- SUBSEQUENTLY IN ASSESSEE'S FAVOUR ON THE BASIS OF THE CONFIRMATION FILED. ON A CONSIDERATION OF TO TALITY OF THESE ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 9 FACTS, THE ADDITION OF RS.61,96,307/- TOWARDS BALAN CE SUNDRY CREDITORS IS NOT FOUND SUSTAINABLE. THE ADDITION IS ACCORDINGLY DELETED. 9. IN VIEW OF ABOVE, WE ARE OF THE CONSIDERED OPINI ON THAT THE AO MADE ADDITION BY OBSERVING THAT THE ASSESSEE FAILED TO D ISCHARGE ITS ONUS AND DURING FIRST APPELLATE PROCEEDINGS, THE ASSESSEE FILED EXP LANATION AND CONFIRMATION AND AFTER CALLING REMAND REPORT FROM THE AO, THE CIT(A) GRANTED RELIEF TO THE ASSESSEE BY OBSERVING THAT THE AO HAS NOT CARED TO CONSIDER CONFIRMATION AND OTHER RELEVANT DETAILS FILED BY THE ASSESSEE EVEN D URING THE REMAND PROCEEDINGS. THE CIT(A) FURTHER OBSERVED THAT SUNDRY CREDITORS ARE ALL TRADE CREDITORS AND MAJOR PART OF ADDITION WAS DELETED BY THE AO HERSEL F SUBSEQUENTLY AND FINALLY THE CIT(A) GRANTED RELIEF TO THE ASSESSEE AND DIREC TED THE AO TO DELETE ENTIRE ADDITION. WE ARE UNABLE TO SEE ANY INFIRMITY, PERV ERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER AND WE UPHOLD THE SAME. 10. ACCORDINGLY, GROUND NO. 1 OF THE REVENUE BEING DEVOID OF MERITS IS ALSO DISMISSED. GROUND NO.3 11. APROPOS GROUND NO. 3, LD. DR SUBMITTED THA LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.6,00,000/- IN SPITE OF THE FACTS THAT COMPLETE BOOKS OF ACCOUNTS AND SUPPORTIV E DOCUMENTS WERE NOT PRODUCED BEFORE THE AO. LD. DR VEHEMENTLY CONTENDED THAT EVEN IN THE AUDIT REPORT THE AUDITOR HAS MENTIONED THAT IN ABSENCE OF PROPER BILLS AND VOUCHERS, ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 10 GENUINENESS OF THE EXPENSES CREDITED TO PROFIT AND LOSS ACCOUNT COULD NOT BE VERIFIED. LD. DR SUBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. REPLYING TO THE ABOVE, L D. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSE E WERE DULY AUDITED AND DISCLOSED THE HIGHER TURNOVER, GP AND NP RATE AS CO MPARED TO THE PRECEDING YEARS. LD. COUNSEL FURTHER POINTED OUT THAT OUT OF TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE, THE ASSESSEE HAS PAID FBT ON AMOUNT O F RS.2,20,674/- WHICH WERE COVERED BY THE PROVISIONS OF FBT AND THERE WAS NO LOGIC OR JUSTIFICATION TO MAKE FURTHER AD HOC ADDITION OF RS. 6 LAKH. LD. CO UNSEL CONTENDED THAT WHEN BOOKS OF ACCOUNTS WERE AUDITED AND NO DEFECT HAS BE EN POINTED OUT BY THE AO, NO ADDITION CAN BE MADE IN THIS REGARD. 12. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE NOTE THAT THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE WITH FOLLOWING O BSERVATIONS AND CONCLUSION:- 5.2. AR'S SUBMISSIONS : AR MADE SUBMISSIONS AS UNDER: 'GROUND NO.1. ADDITION OF RS. 6,00,000/- IN TRADING RESULT : THAT THE LEARNED ASSESSING AUTHORITY ON THE PLEA, T HAT SINCE ASSESSEE HAS FAILED TO PRODUCE THE BOOKS OF ACCOUNT S, THE CAUSE OF DEATH OF ACCOUNTANT WAS NOT CONVINCING AND MADE IN AD HOC ADDITION OF RS. 6,00,000/-, IN ORDER TO COVER THE P OSSIBLE LEAKAGE. THE APPELLANT PRODUCED THE CASH BOOK, ALONG WITH CO PY OF LEDGER AND DOCUMENTS, HOWEVER, IN ABSENCE OF PART LEDGER T HE LEARNED A.O. DID NOT EXAMINE THE BOOKS OF ACCOUNTS. IT MAY BE POINTED OUT THAT COPIES OF ACCOUNT OF ALL MAJOR EXPENSES WE RE FILED AND ASSESSEE PRODUCED THE BILLS AND VOUCHERS. NONE OF T HE EXPENSE WAS FOUND TO BE NOT RELATED TO BUSINESS OR EXCESSIV E. THE LEARNED ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 11 A.O. HAS NOT POINTED OUT THE SPECIFIC DISALLOWANCE OF ANY EXPENDITURE INCURRED OR NOT COMSURATING TO EXPENSES INCURRED IN THE PRECEDING YEARS. THE TURNOVER DISCLOSED BY THE ASSESSEE WAS HIGHER, THE GROSS PROFIT DISCLOSED WAS ALMOST GIVIN G THE SAME GROSS PROFIT RATE AND THERE WAS INCREASE OF NOT PRO FIT FROM RS. 13,92,225/-, TO RS. 23,95,2981-. ALL THESE FACTS WE RE AVAILABLE ON THE RECORD, HOWEVER, THE ADDITION HAS BEEN MADE FOR SAKE OF ADDITION. THUS ADDITION MADE BY THE LEARNED AO IS N OT BASED ON ANY MATERIAL PLACED ON RECORD BUT ONLY ON PRESUMPTI ON SURMISES AND CONJECTURES, WHICH DESERVES TO BE DELETED.' 5.3. AO'S COMMENTS IN REMAND REPORT: ' ADDITION OF RS.6,00,000/- THE ASSESSEE HAS SUBMITTED BEFORE YOUR HONOUR THAT IT HAD PRODUCED CASH BOOK ALONG WITH COPY OF LEDGER AND DO CUMENTS AND ALSO THE BILLS AND VOUCHERS. BUT AS MENTIONED I N THE ASSESSMENT ORDER, THE ASSESSEE DID NOT PRODUCE COMP LETE BOOKS OF ACCOUNTS DURING THE ASSESSMENT PROCEEDINGS. ON T HE BASIS OF INCOMPLETE BOOKS AND SUPPORTING BILLS AND VOUCHERS, CORRECT INCOME AND EXPENSES CANNOT BE ASCERTAINED. FURTHER THE REASONS GIVEN BY THE ASSESSEE WERE NOT ACCEPTABLE IN THE LI GHT OF THE FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FO R THE A.Y. 2007 -08 ALSO THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNTS. HENCE, IN THE CIRCUMSTANCES, THE AO WAS RIGHT TO RE JECT THE TRADING RESULTS DECLARED BY THE ASSESSEE AND MAKE A DDITION OF RS.6,00,000/- IN THE ABSENCE OF COMPLETE BOOKS OF A CCOUNTS. ' 5.4. AR'S REJOINDER: 'ADDITION OF RS. 6,00,000/-. THE OBSERVATION OF THE LEARNED A.O. THAT COMPLETE B OOKS OF ACCOUNTS WERE NOT PRODUCED, IS NOT DENIED, HOWEVER FACT REMAINS THAT BOOKS OF ACCOUNTS WERE PRODUCED OUT OF WHICH O NE VOLUME OF LEDGER WHICH WAS WITH THE DECEASED ACCOUNTANT COULD NOT BE PRODUCED FOR THE REASONS SUBMITTED VIDE REPLY DATED 16/12/20 10. THE APPELLANT ASSESSEE IS OLD ASSESSEE, DISCLOSING THE PROGRESSIVE TURNOVER AND PROFIT. REASONS FOR NON PRODUCTION OF PART OF THE LEDGER WERE NOT ACCEPTED BY THE LEARNED A.O. WITH T HE REMARK. 'THE STATEMENT OF ASSESSEE CONSIDERED CAREFULLY BUT FOUND NOT CONVERSING SINCE DURING A. Y 2007-08, ALSO, THE ASS ESSEE HAS FAILED TO PRODUCE BOOKS OF ACCOUNTS. SO THE CAUSE S HOWN BY THE ASSESSEE BEING DEATH OF ACCOUNTANT IS NOT CONVERSIN G.' FROM THE ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 12 BOOKS OF ACCOUNTS PRODUCED, NO INFIRMITY OR ABNORMA LITY IN THE EXPENDITURE SHOWN WAS NOTED. THE BOOKS OF ACCOUNTS WERE DULY AUDITED AND DISCLOSED THE HIGHER TURNOVER, GP AND N P, AS COMPARED TO THE PRECEDING YEARS. OUT OF THE TOTAL E XPENDITURE CLAIMED THE ASSESSEE HAS PAID FBT ON AMOUNT OF RS. 2,20,674/~, WHICH WERE COVERED BY THE PROVISION OF FBT AND THER E WAS NO LOGIC OR JUSTIFICATION FURTHER TO MADE AD HOC ADDIT ION OF RS. 6 LACS, BY THE LEARNED A.O., WHEN BOOK RESULT ARE PRO GRESSIVE. 5.5. DECISION AND REASONS THEREFOR : I HAVE CONSIDERED THE FACTS OF THE CASE EMANATING F ROM THE AO'S ORDER AND THE AR'S SUBMISSIONS. THE AO HAS HAR PED ON THE FACT THAT COMPLETE BOOKS OF ACCOUNTS WERE NOT PRODU CED. THE AR HAS PLEADED THAT CASH BOOK WAS PRODUCED AND COPIES OF ACCOUNTS OF ALL MAJOR EXPENSES ALONG WITH BILL AND VOUCHERS WERE PRODUCED AND THAT ONLY PART LEDGER COULD NOT BE PRO DUCED FOR REASONS BEYOND CONTROL. I FIND THAT THE BOOKS OF AC COUNTS WERE AUDITED. THE AO DID NOT FIND ANY DEFECTS IN THE PAR T OF BOOKS OF ACCOUNTS PRODUCED. THE TRADING RESULT SHOWN HAS BEE N PROGRESSIVE. ON A TOTALITY OF THESE FACTS, I DO NOT SEE JUSTIFIABLE REASONS FOR: AN AD HOC ADDITION. THE ADDITION OF RS .6 LAKHS IS, THEREFORE, DELETED. 13. IN VIEW OF ABOVE, WE ARE IN AGREEMENT WITH THE CONCLUSION OF THE CIT(A) THAT THE AO MERELY HARPED ON THE FACT THAT COMPLETE BOOKS OF ACCOUNT WERE NOT PRODUCED. AT THE SAME TIME, WE CANNOT IGNORE THAT THE ASSESSEE FILED AUDIT REPORT ALONG WITH CASH BOOK AND COPIES OF ALL RELEV ANT ACCOUNTS OF ALL MAJOR EXPENSES ALONG WITH BILLS AND VOUCHERS. THE CIT(A) RIGHTLY NOTED THAT THE AO DID NOT FIND ANY DEFECT IN ANY PART OF THE BOOKS OF ACCOUNTS PRODUCED BEFORE HIM AND THE RESULT SHOWN BY THE ASSESSEE HAS BEEN PROGR ESSIVE, THEREFORE, THE IMPUGNED AD HOC ADDITION COULD NOT BE HELD AS SUSTA INABLE AND IN ACCORDANCE WITH LAW AND, THEREFORE, THE CIT(A) RIGHTLY DELETED THE ADDITION. ACCORDINGLY, GROUND NO. 3 OF THE REVENUE IS DISMISSED. ITA NO. 224/DEL/2012 ASSTT.YEAR: 2008-09 13 14. WE ARE UNABLE TO SEE ANY INFIRMITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE IN THE ORDER OF THE CIT(A). 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.10.2015. SD/- SD/- (T.S. KAPOOR) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 29 TH OCTOBER 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR