M/s. Hiren Silk Mills, Surat V. The Income Tax Officer, Ward-1(2)(2), Surat

ITA 2271/AHD/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5845 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 02-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; TDS; Audi alteram partem
• Section: 68

Judgement Text

HIREN SILK MILLS VS. ITO, WARD-1(2)(2),SURAT /ITA NO.2271/AHD/2016 FOR A.Y. 2012-13 PAGE 1 OF 11 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI SANDEEP GOSAIN, HON'BLE JUDICIAL MEMBER AND SHRI O.P.MEENA, HON'BLE ACCOUNTANT MEMBER . . ./ I.T.A NO.2271/AHD/2016 [ [ / ASSESSMENT YEAR: 2012-13 M/S.HIREN SILK MILLS, 6625/1, ROAD NO.66, A/6, GIDC, SACHIN, SURAT. [PAN: AADFH 5929 A] V S . THE INCOME TAX OFFICER, WARD-1(2)(2), SURAT. / APPELLANT /RESPONDENT STAY PETITION NO.01/SRT/2020 (ARISING OUT OF ITA NO.2271/AHD/2016) [ [ / ASSESSMENT YEAR: 2012-13 M/S.HIREN SILK MILLS, 6625/1, ROAD NO.66, A/6, GIDC, SACHIN, SURAT. [PAN: AADFH 5929 A] V S . THE INCOME TAX OFFICER, WARD-1(2)(2), SURAT. / APPELLANT /RESPONDENT [ /ASSESSEE BY SHRI RASESH SHAH CA /REVENUE BY MRS. ANUPAM SINGLA SR.DR / DATE OF HEARING: 13.02.2020 /PRONOUNCEMENT ON: 14.02.2020 /O R D E R PER SANDEEP GOSAIN, JM: 1. THIS APPEAL AND STAY PETITION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD.COMMISSIONER OF INCOME TAX(APPEALS)-II, SURAT DATED 22.06.2016 FOR THE ASSESSMENT YEAR 2012-13. 2. GROUNDS RAISED BY THE ASSESSEE READ AS UNDER: HIREN SILK MILLS VS. ITO, WARD-1(2)(2),SURAT /ITA NO.2271/AHD/2016 FOR A.Y. 2012-13 PAGE 2 OF 11 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS.21,90,000/- FOR ALLEGED UNEXPLAINED UNSECURED LOANS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING CONSEQUENTIAL DISALLOWANCE OF RS. 3,22,637/- ON ACCOUNT OF INTEREST PAID ON ABOVE LOANS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING DISALLOWANCE OF RS. 12,97,716 BEING 20% OF GENERAL LABOUR WAGES. WORKER SALARIES & FREIGHT EXPENSES ON LUMP SUM BASIS ON FRIVOLOUS GROUNDS. 4. IT IS THEREFORE PRAYED THAT THE ABOVE ADDITION/DISALLOWANCE MADE BY THE ASSESSING OFFICER MAY PLEASE BE DELETED. 5. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 19.07.2012 ALONG WITH TAX AUDIT REPORT. THE RETURN WAS SELECTED FOR SCRUTINY AND AFTER SERVING STATUTORY NOTICES AND SEEKING REPLY OF THE ASSESSEE THE ORDER OF ASSESSMENT U/S.143(3) WAS PASSED THEREBY MAKING ADDITIONS. 4. BEING AGGRIEVED WITH THE ORDER OF THE LD.ASSESSING OFFICER(AO), THE ASSESSEE FILED APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE APPEAL OF BOTH THE PARTIES, DISMISSED THE APPEAL FILED BY THE ASSESSEE BY UPHOLDING THE ADDITIONS MADE BY THE LD.AO. 5. BEING AGGRIEVED WITH THE ORDER OF THE LD.CIT(A), THE ASSESSEE FILED APPEAL BEFORE US ON THE GROUNDS MENTIONED HEREINABOVE. HIREN SILK MILLS VS. ITO, WARD-1(2)(2),SURAT /ITA NO.2271/AHD/2016 FOR A.Y. 2012-13 PAGE 3 OF 11 6. GROUND NO.1 & 2: BOTH THE GROUNDS RAISED BY THE ASSESSEE ARE INTER-RELATED AND INTER-CONNECTED THEREBY CHALLENGING THE ORDER OF THE LD.CIT(A) CONFIRMING THE ACTIONS OF THE LD.AO IN MAKING ADDITIONS ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS AND ON ACCOUNT OF INTEREST PAID ON SUCH LOANS. THEREFORE, BOTH GROUNDS ARE BEING ADJUDICATED BY THE PRESENT CONSOLIDATED ORDER. 7. THE LD.AUTHORISED REPRESENTATIVE(AR) APPEARING ON BEHALF OF THE ASSESSEE REITERATED THE SAME ARGUMENTS AS WAS RAISED BEFORE THE LD.CIT(A) AND THE SAME WERE CONTAINED IN PARA NO.5 OF THE ORDER OF THE LD.CIT(A) WHICH IS REPRODUCED BELOW: 1) IDENTITY PROVED :- THE APPELLANT HAS SUBMITTED PAN CARD AS WELL AS ELECTION CARD OF ALL THE DEPOSITORS. EVEN NOTARIZED COPIES OF PROOF OF IDENTITY HAVE BEEN SUBMITTED. THUS, THE IDENTITIES OF ALL THE DEPOSITORS HAVE BEEN PROVED BEYOND DOUBT. SO THE FIRST REQUIREMENT OF GENUINE CASH CREDIT GETS FULFILLED. 2) CREDITWORTHINESS PROVED :- THE APPELLANT HAS SUBMITTED PAN CARD AS WELL AS ACKNOWLEDGMENT OF RETURN OF INCOME OF ALL THE DEPOSITORS ALSO. ALSO THESE CUMULATIVELY PROVE WITHOUT AN IOTA OF DOUBT THE CREDITWORTHINESS OF ALL THE DEPOSITORS. SO, THE SECOND CONDITION OF CREDITWORTHINESS OF ALL THE DEPOSITORS ALSO GETS FULFILLED. 3) GENUINENESS PROVED :- THE APPELLANT HAS RECEIVED ALL THE DEPOSITS BY PAYEES A/C CHEQUES ONLY. BESIDES, THE APPELLANT HAS SUBMITTED BANK PASSBOOKS ALSO OF ALL THE DEPOSITORS. ABOVE ALL, CONFIRMATION FROM ALL THE DEPOSITORS HAVE ALSO BEEN SUBMITTED. SO, THERE IS NO QUESTION OF ANY AFTERTHOUGHT OR MAKE BELIEVE TRANSACTION. ALL THE TRANSACTIONS ARE DULY RECORDED IN REGULAR BOOKS OF ACCOUNTS & THEREFORE, GENUINENESS THEREOF IS BEYOND ALL DOUBTS. THE LEARNED AO HAS TRIED TO JUSTIFY HIS ACTIONS ON THE GROUND MENTIONED BELOW WHICH ARE COUNTERED AS FOLLOWS : - REASONS COUNTER SUBMISSION I) THE DEPOSITOR HAS FILED RETURN 4S & HENCE, IT CANT BE ASCERTAINED AS TO WHETHER HE HAS ADVANCED LOAN OR NOT THE FACT OF HAVING GIVEN LOAN IS EVIDENT & APPARENT FROM CHEQUE ENTRIES OF BANK PASSBOOK AND CONFIRMATIONS ONLY. NO FURTHER EVIDENCE IS NECESSARY II) WHETHER AMOUNT DEPOSITED PRIOR TO ISSUE OF LOAN CHEQUE IS LOAN TAKEN BY HIM OR OUT OF HIS EARLIER WHAT DIFFERENCE BOTH THE EVENTUALITIES MAKE TO THE CREDITWORTHINESS OF THE DEPOSITORS IS DIFFICULT TO HIREN SILK MILLS VS. ITO, WARD-1(2)(2),SURAT /ITA NO.2271/AHD/2016 FOR A.Y. 2012-13 PAGE 4 OF 11 DEPOSIT TO SOME OTHER PERSON UNDERSTAND & APPRECIATE. THE DEPOSITOR BEING A MAN OF MEANS IS PROVED BY ROI ETC. ILLOGICAL REASON :- THE LEARNED AO'S ALLEGATION THAT THE DEPOSITORS DID NOT HAVE TAXABLE INCOME OR HAD NEGLIGIBLE TAXABLE INCOME IS NOT CORRECT BECAUSE ALL OF THEM HAD TAXABLE INCOMES. ANOTHER REASON THAT, IN SOME CASES, TRANSFER/CLEARING IS CREDITED & LOAN HAS BEEN ADVANCED ON THE SAME DAY IS DIFFICULT TO DIGEST & UNDERSTAND, AS TO WHAT IS WRONG IN SUCH TRANSACTION. NEITHER CREDIT BY TRANSFER/CLEARING IS A CRIME OR GIVING LOAN ON THE SAME DAY IS A CRIME. NEXT REASON OF NOT HAVING MADE AVAILABLE BALANCE SHEETS OF DEPOSITORS IS ALSO NOT TENABLE AS THEY, BEING COVERED U/S 44AD/ 44AF OF THE IT ACT, ARE EXEMPTED BY THE LAW ITSELF FROM MAINTENANCE OF BOOKS OF ACCOUNTS. OTHER OBSERVATIONS OF THE LEARNED AO, BEING THE DEPOSITORS HAVING NO MEANS &BEING PAUPER ARE WITHOUT ANY EVIDENCE WITH HIM & ARE BASELESS HAVING NO CREDITABILITY. THE LEARNED AO HAS ALSO DISALLOWED RS. 12,97,716/- OUT OF AFORESAID EXPS. @ 20% THEREOF 1) FIRST OF ALL THE DISALLOWANCE HAS BEEN MADE WITHOUT ISSUING ANY SHOW CAUSE NOTICE WHICH IS PATENTLY ILLEGAL & LIABLE TO BE QUASHED IPSO FACTO AS BAD IN LAW. 2) THE DISALLOWANCE IS IN BREACH OF PRINCIPLE OF 'AUDIT ALTERAM PARTTEM' AS NO OPPORTUNITY IS AFFORDED TO THE APPELLANT TO EXPLAIN THE SO CALLED DISCREPANCIES AND IS LIABLE TO BE QUASHED AS SUCH. 3) THE REASON GIVEN FOR DISALLOWANCE OF SALARY & WAGES, THAT NO REGISTER IS MAINTAINED THEREOF & THAT SELF MADE VOUCHERS ARE MADE, IS NOT TENABLE. THIS IS BECAUSE THE LAW NOWHERE PRESCRIBES THAT FOR SALARY & WAGES EXPENSES, A REGISTER HAS TO BE MAINTAINED MANDATORILY & THAT SELF MADE VOUCHERS ARE NOT VALID. THERE IS NO LAW AS SUCH. BESIDES, THE APPELLANT RUNS FACTORY OF MANUFACTURING OF ART SILK GREY CLOTH ON POWER LOOMS. THESE POWER LOOMS ARE RUN BY LABOURS WHO ARE ILLITERATE & HAIL FROM VERY LOW FAMILIES. 'ALMOST ALL OF THEM HAVE MIGRATED FROM DIFFERENT STATES ALL OVER INDIA, IN SEARCH FOR JOB TO BECAME BREAD WINNER FOR THEIR FAMILIES. TO EXPECT THEIR OWN VOUCHERS, INVOICES ETC. FOR ALL THESE EXPENSE FROM SUCH PERSON IS LIKE FLYING IN SWEET DREAMS ONLY. SELF MADE VOUCHERS ARE THE ORDER OF THE DAY FOR SUCH KIND OF EXPENSES & THERE IS NO LAW MAKING THEM INELIGIBLE OR INADMISSIBLE PIECE OF EVIDENCE. ' 8. APART FROM THIS, THE LD.AUTHORISED REPRESENTATIVE (AR) ALSO RELIED UPON THE DECISION OF DCIT VS. M/S.ROHINI BUILDERS [SLP CC 9155 OF 2001] (SC), IN THE CASE OF DCIT VS. ROHINI BUILDERS [256 ITR 0360] OF HON'BLE GUJARAT HIGH COURT, WHEREIN IT WAS HELD AS APPEAL (HIGH COURT)-SUBSTANTIAL QUESTION OF LAW-CASH CREDIT-ASSESSEE FURNISHED COMPLETE ADDRESS OF ALL THE CREDITORS ALONG WITH GIR NUMBERS/PAN AS WELL AS CONFIRMATIONS ALONG WITH COPIES OF HIREN SILK MILLS VS. ITO, WARD-1(2)(2),SURAT /ITA NO.2271/AHD/2016 FOR A.Y. 2012-13 PAGE 5 OF 11 ASSESSMENT ORDERS PASSED IN THE CASES OF INDIVIDUAL CREDITORS, WHEREVER AVAILABLE, AND COPIES OF RETURNS FILED BY THE CREDITORS IN THE REMAINING CASES-ALL LOANS WERE RECEIVED AND REPAID BY ASSESSEE BY ACCOUNT PAYEE CHEQUES ALONG WITH INTEREST-TRIBUNAL DELETED THE ADDITION-NO SUBSTANTIAL QUESTION OF LAW ARISES-APPEAL DISMISSED. AND ALSO IN THE DECISION OF HON'BLE GUJARAT HIGH COURT IN CIT VS. RANCHHOD JIVABHAI NAKHAVA [2012] TAXMANN.COM 159 (GUJ) WHEREIN IT WAS HELD AS SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDITS - ASSESSMENT YEAR 2006-07 - WHETHER ONCE ASSESSEE HAS ESTABLISHED THAT HE HAS TAKEN MONEY BY WAY OF ACCOUNT PAYEE CHEQUES FROM LENDERS WHO ARE ALL INCOME TAX ASSESSEES WHOSE PAN HAVE BEEN DISCLOSED, INITIAL BURDEN UNDER SECTION 68 IS DISCHARGED AND THEN, IT IS ASSESSING OFFICER'S DUTY TO ASCERTAIN FROM ASSESSING OFFICER OF THOSE LENDERS, WHETHER IN THEIR RESPECTIVE RETURNS THEY 'HAVE SHOWN EXISTENCE OF SUCH AMOUNT OF MONEY AND HAVE FURTHER SHOWN THAT THOSE AMOUNT OF MONEY HAD BEEN LENT TO ASSESSEE - HELD, YES - WHETHER IF ASSESSING OFFICERS OF THOSE CREDITORS ARE SATISFIED WITH EXPLANATION GIVEN BY CREDITORS AS REGARDS THOSE TRANSACTIONS, ASSESSING OFFICER IN QUESTION HAS NO JUSTIFICATION TO DISBELIVE TRANSACTIONS REFLECTED IN ACCOUNT OF CREDITORS - HELD, YES - WHETHER IF BEFORE VERIFYING SUCH FACT FROM ASSESSING OFFICER OF LENDERS OF ASSESSEE, ASSESSING OFFICER DECIDES TO EXAMINE LENDERS AND ASKS ASSESSEE TO FURTHER PROVE GENUINENESS AND CREDITWORTHINESS OF TRANSACTIONS, IT WOULD BE AGAINST HIREN SILK MILLS VS. ITO, WARD-1(2)(2),SURAT /ITA NO.2271/AHD/2016 FOR A.Y. 2012-13 PAGE 6 OF 11 PRINCIPLES LAID DOWN UNDER SECTION 68 - HELD, YES [IN FAVOUR OF ASSESSEE]. 9. ON THE OTHER HAND, THE LD.DEPARTMENTAL REPRESENTATIVE (DR) RELIED UPON THE ORDERS OF REVENUE AUTHORITIES. 10. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE MATERIAL PLACED ON RECORDS, JUDGMENTS CITED BY THE PARTIES AS WELL AS ORDERS PASSED BY THE REVENUE AUTHORITIES. FROM THE RECORDS, WE NOTICED THAT THE LD.AO HAD MADE ADDITIONS BY HOLDING THE UNSECURED LOANS AVAILED BY THE ASSESSEE AS UNEXPLAINED ON THE GROUNDS MENTIONED BELOW: ALL THE DEPOSITORS HAVE FILED RETURN OF INCOME, NEVERTHELESS THE FACT THAT THEY DID NOT HAVE TAXABLE INCOME OR NEGLIGIBLE TAXABLE INCOME. IN MOST OF THE CASES REFUND OF TDS ON INTEREST HAS BEEN CLAIMED MEANS THEY DO NOT HAVE MUCH INCOME BUT THEY HAVE ADVANCED LOANS. IN SOME CASES CASH WAS DEPOSITED PRIOR TO LOAN GIVEN IN SOME CASES TRANSFER / CLEARING IS CREDITED AND LOANS HAS BEEN ADVANCED ON SAME DAY. NONE OF THESE DEPOSITORS HAVE MADE AVAILABLE THEIR BALANCE SHEET TO PROVE CREDITWORTHINESS NOR DID THEY PROVE THAT ANY INVESTMENT/PROVISION FOR UNFORESEEN CIRCUMSTANCES, WHICH MAY BEFALL UPON THEIR OWN FAMILY MEMBERS DESPITE THE ALLEGED AVAILABILITY OF CASH FOR ADVANCING AS A LOAN, WERE MADE. 11. THE LD.AUTHORISED REPRESENTATIVE(AR) SUBMITTED THAT ALL THE LOANS WERE AVAILED BY THE ASSESSEE THROUGH BANKING CHANNEL AND CONFIRMATION IN THAT RESPECT HAS ALREADY BEEN FILED. THE ASSESSEE HAD ALSO PLACED ON RECORD, THE RETURN OF INCOME OF THE CREDITORS IN ORDER TO DEMONSTRATE THAT DEPOSITORS WERE PERSON OF MEANS AND THE LD.AO HAD ONLY CONSIDERED THE FACT THAT THE DEPOSITORS DID NOT HAVE TAXABLE INCOME OR HAD NEGLIGIBLE TAXABLE INCOME AS THE SAID FACT IS HIREN SILK MILLS VS. ITO, WARD-1(2)(2),SURAT /ITA NO.2271/AHD/2016 FOR A.Y. 2012-13 PAGE 7 OF 11 NOT CORRECT WHEREAS ALL OF SUCH CREDITORS HAD TAXABLE INCOME AND IN SOME OF THE CASE, THE TRANSFER/CLEARING IS CREDITED AND LOAN HAS BEEN ADVANCED ON THE SAME DAY IS DIFFICULT TO DIGEST AND UNDERSTAND, AS TO WHAT IS WRONG IN SUCH TRANSACTIONS. WE HAVE ALSO CONSIDERED THE DECISIONS CONTAINED IN DCIT VS. M/S.ROHINI BUILDERS [SLP CC 9155 OF 2001] (SC), IN THE CASE OF DCIT VS. ROHINI BUILDERS [256 ITR 0360] OF HON'BLE GUJARAT HIGH COURT, WHEREIN IT WAS HELD AS APPEAL (HIGH COURT)-SUBSTANTIAL QUESTION OF LAW-CASH CREDIT-ASSESSEE FURNISHED COMPLETE ADDRESS OF ALL THE CREDITORS ALONG WITH GIR NUMBERS/PAN AS WELL AS CONFIRMATIONS ALONG WITH COPIES OF ASSESSMENT ORDERS PASSED IN THE CASES OF INDIVIDUAL CREDITORS, WHEREVER AVAILABLE, AND COPIES OF RETURNS FILED BY THE CREDITORS IN THE REMAINING CASES-ALL LOANS WERE RECEIVED AND REPAID BY ASSESSEE BY ACCOUNT PAYEE CHEQUES ALONG WITH INTEREST-TRIBUNAL DELETED THE ADDITION-NO SUBSTANTIAL QUESTION OF LAW ARISES-APPEAL DISMISSED. AND ALSO IN THE DECISION OF HON'BLE GUJARAT HIGH COURT IN CIT VS. RANCHHOD JIVABHAI NAKHAVA [2012] TAXMANN.COM 159 (GUJ) WHEREIN IT WAS HELD AS SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDITS - ASSESSMENT YEAR 2006-07 - WHETHER ONCE ASSESSEE HAS ESTABLISHED THAT HE HAS TAKEN MONEY BY WAY OF ACCOUNT PAYEE CHEQUES FROM LENDERS WHO ARE ALL INCOME TAX ASSESSEES WHOSE PAN HAVE BEEN DISCLOSED, INITIAL BURDEN UNDER SECTION 68 IS DISCHARGED AND THEN, IT IS ASSESSING OFFICER'S DUTY TO ASCERTAIN FROM ASSESSING OFFICER OF THOSE LENDERS, WHETHER IN THEIR RESPECTIVE RETURNS THEY 'HAVE SHOWN EXISTENCE OF SUCH AMOUNT OF MONEY AND HAVE FURTHER SHOWN THAT THOSE AMOUNT OF MONEY HAD BEEN HIREN SILK MILLS VS. ITO, WARD-1(2)(2),SURAT /ITA NO.2271/AHD/2016 FOR A.Y. 2012-13 PAGE 8 OF 11 LENT TO ASSESSEE - HELD, YES - WHETHER IF ASSESSING OFFICERS OF THOSE CREDITORS ARE SATISFIED WITH EXPLANATION GIVEN BY CREDITORS AS REGARDS THOSE TRANSACTIONS, ASSESSING OFFICER IN QUESTION HAS NO JUSTIFICATION TO DISBELIVE TRANSACTIONS REFLECTED IN ACCOUNT OF CREDITORS - HELD, YES - WHETHER IF BEFORE VERIFYING SUCH FACT FROM ASSESSING OFFICER OF LENDERS OF ASSESSEE, ASSESSING OFFICER DECIDES TO EXAMINE LENDERS AND ASKS ASSESSEE TO FURTHER PROVE GENUINENESS AND CREDITWORTHINESS OF TRANSACTIONS, IT WOULD BE AGAINST PRINCIPLES LAID DOWN UNDER SECTION 68 - HELD, YES [IN FAVOUR OF ASSESSEE] . 12. AFTER APPRECIATING THE FACTS AND HEARING THE PARTIES AT LENGTH, WE FIND THAT IN ALL THE CASES, ASSESSEE HAD ALREADY SUBMITTED BEFORE THE LD.AO, PAN CARDS OF ALL THE DEPOSITORS AND EVEN NOTARIZED COPY OF PROOF OF IDENTITIES HAVE BEEN SUBMITTED. ASSESSEE HAD ALSO SUBMITTED ACKNOWLEDGEMENT OF RETURN OF INCOME OF ALL THE DEPOSITORS AND BANK PASSBOOK WHICH REFLECTS THE CREDIT WORTHINESS OF THE DEPOSITORS. SINCE ALL THE CONFIRMATIONS FROM THE DEPOSITORS HAVE BEEN SUBMITTED, SO THERE WAS NO CONCLUSION OF ANY AFTERTHOUGHT OR MAKE BELIEVE TRANSACTIONS. ALL THE TRANSACTIONS ARE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THEREFORE, GENUINENESS OF THOSE CANNOT BE DOUBTED. EVEN OTHERWISE, HON'BLE JURISDICTIONAL GUJARAT HIGH COURT IN THE CASE OF DCIT VS. ROHINI BUILDERS ALONG WITH PAN AND CONFIRMATION, THEN IN THAT EVENTUALITY NO ADDITIONS ARE SUSTAINABLE. EVEN IN THE CASE OF CIT VS. RANCHHOLD JIVABHAI NAKHAVA (SUPRA)IT HAS CATEGORICALLY BEEN HELD HON'BLE JURISDICTIONAL HIREN SILK MILLS VS. ITO, WARD-1(2)(2),SURAT /ITA NO.2271/AHD/2016 FOR A.Y. 2012-13 PAGE 9 OF 11 GUJARAT HIGH COURT THAT WHEN ONCE THE INITIAL ONUS HAS ALREADY BEEN DISCHARGED BY THE ASSESSEE, THEN IN THAT EVENTUALITY IT WAS THE DUTY OF THE LD.AO TO ASCERTAIN FROM THE LD.AOS OF THOSE LENDORS, WHETHER IN THE RESPECTIVE RETURNS THEY HAVE SHOWN EXISTENCE OF SUCH AMOUNT OF MONEY OR NOT. THE LD.AO IN THE PRESENT CASE HAS NOT CARRIED OUT ANY SUCH EXERCISE AS HAS BEEN LAID DOWN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RANCHHOD JIVABHAI NAKHAVA(SUPRA). THUS, THE ADDITIONS MADE BY THE LD.AO IN THE CASE OF ASSESSEE ARE AGAINST THE PRINCIPLES LAID DOWN U/S.68 OF THE ACT. THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT NO ADDITION COULD HAVE BEEN MADE BY THE LD.AO AS IN THE PRESENT CASE THE ASSESSEE HAS ALREADY DISCHARGED HIS INITIAL ONUS. THEREFORE, THE UNSECURED LOAN RECEIVED BY THE ASSESSEE CANNOT BE TERMED AS UNEXPLAINED. THUS, NO ADDITION ON THAT ACCOUNT IS SUSTAINABLE. SINCE WE HAVE DELETED THE ADDITION ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS, THEREFORE, AS A CONSEQUENCE, WE ALSO DELETE THE ADDITIONS MADE ON ACCOUNT OF INTEREST PAID ON THE ABOVE LOAN. CONSEQUENTLY, THESE GROUND NO.1 & 2 RAISED BY THE ARE ALLOWED. 13. GROUND NO.3: THIS GROUND RELATES TO CHALLENGING THE ORDER OF LD.CIT(A) IN CONFIRMING ACTION OF THE LD.AO IN MAKING DISALLOWANCE OF RS.12,97,716/- BEING 20% GENERAL LABOUR WAGES, WORKERS SALARIES AND FREIGHT EXPENSES OF LUMSUM BASIS. HIREN SILK MILLS VS. ITO, WARD-1(2)(2),SURAT /ITA NO.2271/AHD/2016 FOR A.Y. 2012-13 PAGE 10 OF 11 14. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE MATERIAL PLACED ON RECORDS, JUDGMENTS CITED BY THE PARTIES AS WELL AS ORDERS PASSED BY THE REVENUE AUTHORITIES. FROM THE RECORDS WE NOTICED THAT THE LD.AO HAD DISALLOWED A SUM OF RS.12,97,716/- OUT OF AFORESAID EXPENSES @20% WITHOUT ISSUING ANY SHOWCAUSE NOTICE AND THUS THE SAID DISALLOWANCE WAS MADE IN BREACH OF THE PRINCIPLES AUDI ALTERAM PARTEM AS NO OPPORTUNITY WAS AFFORDED TO THE ASSESSEE TO EXPLAIN THE SO CALLED DISCREPANCIES. THE ONLY REASON FOR MAKING DISALLOWANCES WAS THAT ASSESSEE WAS NOT MAINTAINING ANY REGISTER AND HAD ONLY SUBMITTED SELF-MADE VOUCHERS. IN THIS CONNECTION, LD.AR HAD MADE SPECIFIC SUBMISSIONS THAT ASSESSEE RUNS FACTORY OF MANUFACTURING OF ART SILK GREY CLOTH OF POWER LOOMS AND THE SAID POWER LOOMS ARE BEING RUN BY LABOURERS BY ILLITERATE LABOURERS UNDER MIGRATED FROM DIFFERENT STATES ALL OVER INDIA. THUS, ACCORDING TO LD.AR THE SAID LABOURER CANNOT BE EXPECTED TO HAVE THEIR OWN VOUCHERS, INVOICES ETC., FOR ALL THESE EXPENSES, SELF-MADE VOUCHERS ARE THE ORDER OF THE DAY. EVEN OTHERWISE, FROM COMPARATIVE CHART WHICH HAS BEEN PLACED ON RECORD BY THE ASSESSEE AND THE SAME IS REPRODUCED BELOW: ASSESS MENT YEAR 2009-10 2010-11 2011-12 2012-13 AMOUNT % AMOUNT % AMOUNT % AMOUNT % TURNOVER 13532981 2078696 5 3252880 7 4170895 0 LEAVE SALARY & WAGES 33640 0.25% 72777 0.35% 25832 0.08% 38950 0.09% WORKER SALARIES 2540050 18.77 % 4046190 19.47 % 5960966 18.33 % 6172371 14.80 % FREIGHT EPENSES 58397 0.43% 94269 0.45% 111143 0.34% 121410 0 .29% HIREN SILK MILLS VS. ITO, WARD-1(2)(2),SURAT /ITA NO.2271/AHD/2016 FOR A.Y. 2012-13 PAGE 11 OF 11 15. WE NOTICE THAT IN THIS PARTICULAR YEAR, THERE ARE LESS EXPENDITURE, THEN THAT OCCURRED IN THE EARLIER YEARS. THEREFORE, KEEPING IN VIEW OF THE ABOVE SUBMISSIONS, WE ARE OF THE VIEW THAT THERE IS NO JUSTIFICATION OF MAKING ANY DISALLOWANCE ON ACCOUNT OF EXPENSES INCURRED BY THE ASSESSEE. WHEN THE ASSESSEE HAS SUBSTANTIATED THE SAME BY PRODUCING DOCUMENTS, THEREFORE, WE DELETE THE ADDITION/DISALLOWANCE, ACCORDINGLY GROUND NO.3 IS ALLOWED. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. STAY PETITION NO.01/SRT/2017: 17. SINCE WE HAVE ALREADY ALLOWED THE APPEAL OF THE ASSESSEE IN THE ABOVE MAIN APPEAL IN ASSESSEES OWN CASE IN ITA NO.2271/AHD/2016 FOR A.Y.2012-13, CONSEQUENTLY, THE STAY PETITION BY ASSESSEE BECOMES INFRUCTUOUS. 18. IN THE RESULT, STAY PETITION FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 19. ORDER PRONOUNCED IN THE OPEN COURT ON 14-02-2020. SD/- SD/- (O.P.MEENA) (SANDEEP GOSAIN) ( /ACCOUNTANT MEMBER) ( /JUDICIAL MEMBER) / SURAT, DATED : 14 TH FEBRUARY , 2020/ S.GANGADHARA RAO, SR.PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT