ACIT, New Delhi V. M/s Kuber Media Ltd., New Delhi

ITA 228/DEL/2011

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4053 (ITAT-DELHI)
• Duration Of Justice: 7 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 24-04-2017
• Assessment Year: 1997-1998
• Appeal Filed On: 14-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHARAVN GOTRU
• Assessee Lawyers: SUMIT GOE L
• Keywords: Bogus Share capital; Business expenditure; Corroborative evidences
• Section: 40A(3); 234B; 37(1); 37; 68

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 228/DEL/2011 (ASSESSMENT YEAR: 1997 - 98 ) ACIT, CIRCLE - 5(1), ROOM NO. 409A, CR BUILDING, IP ESTATE, NEW DELHI VS. KUBER MEDIA LTD, S - 32, GREATER KAILASH, PART - I, NEW DELHI PAN:AABCK4179L (APPELLANT) (RESPONDENT) ITA NO. 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) KUBER MEDIA LTD, C/O. RAJ KUMAR &ASSOCIATES, CA 4435/7, ANSARI ROAD, DARYA GANJ, NEW DELHI PAN:AABCK4179L VS. ACIT, CIRCLE - 5(1), NEW DELHI (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHARAVN GOTRU, SR. DR ASSESSEE BY: SHRI SUMI T GOEL, CA DATE OF HEARING 14/11/2017 7 DATE OF PRONOUNCEMENT 15 / 01/2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1. TH ESE ARE THE APPEALS FILED BY THE REVENUE AND THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - VIII, NEW DELHI DATED 11.11.2010 FOR THE ASSESSMENT YEAR 1997 - 98. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LEARNED CIT( APPEALS ) IS ERRONEOUS & CONTRARY TO FACTS & LAW . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION MADE OF RS. 2,48,15,200/ - MADE U/S 68 OF THE I.T. ACT BEING THE UNEXPLAINED SHARE CAPITAL. 2.1. THE LD. CIT (A) IGNORED THE FINDINGS RECORDED BY THE A.O. AND THE FACT THAT THE ASSESSEE DID NOT DISCHARGE THE ONUS OF PROVING THE CREDITWORTHINESS OF THE CREDITORS AN D GENUINENESS OF THE TRANSACTION. ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 2,33,18466/ - MADE BY THE AO U/S 68 OF THE I.T.ACT BEING THE UNEXPLAINED UNSECURED LOANS. 3 .1 THE LD. CIT (A) IGNORED THE FINDINGS RECORDED BY THE A.O. AND THE FACT THAT THE ASSESSEE DID NOT DISCHARGE THE ONUS OF PROVING THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 20,03,965/ - MADE BY THE AO ON ACCOUNT OF CLOSING STOCK. 4.1. THE LD. CIT (A) IGNORED THE FINDINGS RECORDED BY THE A.O. AND THE FACT THAT THE ASSESSEE DEVIATED FROM ITS POLICY OF ACCOUNTING THE CLOSING STOCK IN THE YEAR UNDER REVIEW AS HAS BEEN FOLLOWED IN IMMEDIATE PROCEEDING AND SUCCEEDING YEARS. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE ADDITIONS MADE IN THE IMPUGNED ASSTT, ORDER ARE UNJUSTIFIED AND UNSUSTAINABLE IN LAW AS WELL AS ON MERITS. 2. THAT WITHOUT PREJUDICE, NO PROPER AND REASONABLE OPPORTUNITY OF HEARING IS ALLOWED BY THE , LD. CIT (A) AS WELL AS LD. AO. 3. THAT WITHOUT PREJUDICE, THE ASSTT. IS WITH OUT JURISDICTION. 4. THAT UNDER THE FACTS AND CIRCUMSTANCES, THE LD. AO EXCEEDED HIS JURISDICTION IN NOT TAKING INTO CONSIDERATION THE FINDINGS OF LD. CIT (A) AS GIVEN IN SECOND ROUND OF APPEAL WHILE FINALIZING THE IMPUGNED ASSTT. ORDER. THEREFORE, FOLLOWI NG THE FINDINGS OF THE LD. CIT (A), THE AO WAS REQUIRED NOT TO REPEAT THE FOLLOWING ADDITIONS WHICH ALREADY STOOD DELETED BY LD. CIT (A). ADDITION FOR SHARE CAPITAL (24815200 - 8885000) 1,60,00,200/ - ADDITION FOR LOAN FUNDS (?. 23318466 - 11350000)1,19,68 ,466/ - ADDITION FOR EXPENDITURE 1,21,77,804/ - 5. THAT UNDER THE FACTS AND CIRCUMSTANCES AND IN VIEW OF EXPLANATION / DOCUMENTS FILED, NO ADDITION OF RS. 16000200/ - FOR UN - EXPLAINED SHARE CAPITAL SHOULD HAVE BEEN SUSTAINED BY THE LD. CIT (A). 6. THAT UNDER THE FACTS AND CIRCUMSTANCES AND IN VIEW OF EXPLANATIONS / DOCUMENTS FILED, THE NO ADDITION OF RS. 1,19,68,466/ - FOR UNSECURED LOAD U/S. 68 SHOULD HAVE BEEN SUSTAINED BY THE LD. CIT (A). 7. THAT UNDER THE FACTS AND CIRCUMSTAN CES AND IN VIEW OF EXPLANATIONS / DOCUMENTS FILED, THE NO ADDITION OF RS. 1,19668466/ - ON ACCOUNT OF ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 3 DISALLOWANCE OF EXPENSES SHOULD HAVE BEEN SUSTAINED BY THE LD. CIT (A). 8. THAT UNDER THE FACTS AND CIRCUMSTANCES, NO INTEREST U/S. 234 B SHOULD HAVE BEEN CHARGED. WITHOUT PREJUDICE, IN ANY CASE, THE CALCULATIONS ARE EXCESSIVE AND INCORRECT. 4. THE ASSESSEE IS A COMPANY CARRYING ON THE BUSINESS OF NEWS PAGE AND MEDIA. IT IS ALSO PART OF KUBER GROUP OF COMPANIES AND THIS IS THE FIRST YEAR OF THE OPERATION OF THE COMPANY. THE ORIGINAL ASSESSM ENT ORDER U/ 144 OF THE ACT 31.03.2000 ON TOTAL INCOME OF RS. 38786589/ - . SUBSEQUENTLY, THE APPEAL BEFORE THE HIGHER APPELLATE FORUM WERE PREFERRED, WHEREIN, THE ORIGINAL ORDER WAS SET ASIDE. CONSEQUENTLY, SECOND ASSESSMENT WAS FRAMED U/S 144 ON 26.03.2002 AT RS. 40790554/ - . THE LD CIT(A) ON APPEAL PASSED ORDER DATED 10.11.2010 WHICH IS IN CHALLENGE IN THESE TWO APPEALS. 5. WE FIRST TAKE UP THE APPEAL OF THE ASSESSEE. 6. THE GROUND NO. 1 TO 3 OF THE APPEAL WERE NOT PRESSED AND HENCE, THEY ARE DISMISSED. 7. GROUND NO. 4 OF THE APPEAL IS GENERAL GROUND IN WHICH ALL THE ADDITIONS WERE CHALLENGED TOGETHER AND INDIVIDUAL ADDITIONS WERE FURTHER CONTESTED VIDE GROUND NO. 5 TO 7 OF THE APPEAL. 8. THE GROUND NO. 5 OF THE APPEAL IS WITH RESPECT TO ADDITION OF RS. 16000 0 0/ - ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL WHICH IS SUSTAINED BY THE LD CIT(A). 9. THE BRIEF FACTS OF THIS ISSUE IS THAT THE NET SHARE CAPITAL RAISED BY THE COMPANY IS RS. 24815200/ - WHICH WAS ADDED BY THE LD ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT AS NO D ETAILS WERE FURNISHED BY THE ASSESSEE. SIMILARLY, UNSECURED LOAN OF RS. 23318466/ - WAS ALSO ADDED ON ACCOUNT OF LOAN CREDITORS IN ABSENCE OF ANY DETAILS. THOUGH ASSESSEE SUBMITTED BEFORE THE LD AO THAT ASSESSEE HAS SUBMITTED BANK ACCOUNT OF THE ASSESSEE CO MPANY ALONG WITH BANK ACCOUNT OF ALL THE ENTITIES FROM WHERE THE MONEY HAS BEEN RECEIVED ALONG WITH THE CONFIRMATION LETTERS. HOWEVER, THE LD ASSESSING OFFICER DENIED THE SAME AND STATED THAT NO ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 4 SUCH DETAILS WERE FILED. THEREFORE, THE ADDITION WAS MADE. TH E ASSESSEE CONTESTED ABOVE ISSUE BEFORE THE LD CIT(A) WHO DEALT WITH THE SHARE CAPITAL AS UNDER: - 6. THE NEXT ISSUE RAISED IN THE APPEAL PERTAINS TO AN ADDITION OF RS 24815200 MADE ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL. 6.1 A PERUSAL OF ASSESSMENT ORDER REVEALS THAT THIS IS THE FIRST YEAR OF ASSESSEE COMPANY AND AS PER BALANCE SHEET IT HAS SHOWN ISSUED/PAID UP CAPITAL OF RS 7000 AND SHARE APPLICATION MONEY PENDING ALLOTMENT RS 24808200. ACCORDINGLY, IN TERMS OF DIRECTIONS IS SUED BY THE HONBLE ITAT, THE AO REQUIRED THE APPELLANT COMPANY TO FILE CONFIRMATION FROM THE SHARE HOLDERS AND PROOF ESTABLISHING THEIR IDENTITY AND THEIR CREDITWORTHINESS. HOWEVER, NO COMPLIANCE IN THIS REGARD WAS MADE AND IT WAS ARGUED ON BEHALF OF THE APPELLANT COMPANY THAT THE BANK A/C OF THE APPELLANT COMPANY ALONG WITH THE BANK ACCOUNTS OF ALL THE ENTITIES FROM WHERE THESE FUNDS HAD BEEN, MOVED WERE FILED ALONG WITH THE CONFIRMATION LETTER FROM THE MAIN ENTITIES BEFORE THE CIT(A). THE SAME WERE ONCE AGAIN BEING FILED SO AS TO DISCHARGE ONUS CAST UPON THE APPELLANT U/S 68 OF THE IT ACT, 1961. HOWEVER, THE AO HAS RECORDED A CATEGORICAL FINDING THAT NO SUCH DETAILS WERE FILED BEFORE HIM. THEREFORE, IN THE ABSENCE OF NECESSARY PROOF ESTABLISHING IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANTS AND GENUINENESS OF TRANSACTIONS, ADDITION OF RS 24815200 HAS BEEN MADE. 6.2 IN THE COURSE OF APPELLATE PROCEEDINGS, WRITTEN EXPLANATION HAS BEEN FILED ON BEHALF OF THE APPELLANT COMPANY, VIDE LETTER DATED 10 - 11 - 2010, AS UNDER: - ADDITION OF RS. 2,48.15.200/ - AS UNEXPLAINED SHARE CAPITAL COPY OF BALANCE SHEET ALONGWITH SCHEDULE 1 IS ATTACHED (3 - 8). IT CAN BE SEEN THAT THE ASSESSEE HAS PAID UP SHARE CAPITAL OF RS. 7000/ - AND RS. 2,48,08,200/ - IS SHARE APPLICATIO N MONEY. THE TOTAL ADDITION U/S 68 FOR UNEXPLAINED SHARE CAPITAL IS RS. 2,48,15,200/ - (7000+24808200). THE AO MADE ADDITION FOR NOT FILING CONFIRMATION, ADDRESS, PAN ETC. SO AS TO SATISFY THE INGREDIENTS OF SEC. 68. THE ADDITION IS WRONG FOR FOLLOWING SUBM ISSIONS: ONE ASSESSEE SUBMITTED ALL DOCUMENTS WHICH MAY SATISFY INGREDIENTS OF SEC.68 BEFORE CIT(A) - II VIDE ORDER DT.07.01.2003 DELETED THE MAJOR AMOUNT OF ADDITION. IT IS FURTHER TO BE NOTED THAT THE REMAND REPORT DT. 22.11.2002 WAS FILED BY AO BEFORE HO N'BLE CIT(A) AND THUS, AO GOT AMPLE OPPORTUNITY TO REBUT. THE CONTENTION AND EVIDENCES BEING FILED BY ASSESSEE. FURTHER, THE AO MUST HAVE IN HIS POSSESSION THE DOCUMENTS/ EVIDENCES FILED BEFORE CIT(A) AND HAS GROSSLY ERRED BY NOT REFERRING TO THE SAID DOCU MENTS BEFORE MAKING ADDITION AND THAT TOO WITHOUT DISCUSSING THE ADDITION ON MERITS IN THE IMPUGNED ORDER. ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 5 TWO. THE ADDITION TO SHARE CAPITAL STANDS PROVED FROM THE FOLLOWING DOCUMENTS: SI.N O, NAME DOCUMENTS 1. KUBER MEDIA (PROP. SH.P.K.SHARMA CONFIRMATION (9) 2. RISHI PRASAD RELEVANT BANK STATEMENT (11 - 12) 3. TULSI SHARMA RELEVANT BANK STATEMENT (13) (FEANK STATEMENT OF SISTER CONCERN OF ASSESSEE COMPANY FROM WHOM AMOUNT HAS BEEN RECEIVED BY TUISI SHARMA. ( ) 4. FAKRUDDIN RELEVANT BANK STATEMENT (13) BANK STATEMENT OF SISTER CONCERN OF ASSESSEE COMPANY FROM WHOM AMOUNT HAS BEEN RECEIVED BY TULSI SHARMA IN VIEW OF ABOVE DOCUMENTS, THE SHARE CAPITAL STANDS FULLY PROVED TO THE TEST OF SEC.68.' 5.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIO NS MADE ON BEHALF OF THE APPELLANT COMPANY AND THE FINDINGS RECORDED BY THE ID.AO. ON CONSIDERATION, I FIND THAT DURING THE YEAR UNDER CONSIDERATION, APPELLANT COMPANY HAS OBTAINED SHARE APPLICATION MONEY/SHARE CAPITAL OF RS 24815200 FROM RUBER MEDIA RS 88 85000, SH. RISHI PRASAD - RS 9500000, TULSI SHARMA - RS 4500000 AND FAKRUDDIN - RS 2000000. M/S RUBER MEDIA IS A PROPRIETARY CONCERN OF SH. PK SHARMA, MANAGING DIRECTOR OF THE APPELLANT COMPANY AND IS ASSESSED TO TAX AT PAN NO - A1BPS 8092F. AS PER THE CONFIRM ATION FILED BY SH. SHARMA, A TOTAL SUM OF RS 10885000 WAS PAID BY M/S RUBER MEDIA TO THE APPELLANT COMPANY DURING THE FY 96 - 97, OUT OF WHICH RS 8885000 WAS PAID TOWARDS SHARE APPLICATION MONEY. THUS, TO THE EXTENT OF RS 8885000 THE CLAIM OF THE APPELLANT C OMPANY IS ACCEPTABLE, AS SH. PK SHARMA IS THE MANAGING DIRECTOR OF THE APPELLANT COMPANY AND HIS PROPRIETORSHIP CONCERN M/S KUBER MEDIA IS FORMING PART OF HIS TAX RETURNS. THEREFORE, THERE IS NO ISSUE OF EITHER THE IDENTITY OF THE SHARE APPLICANT NOR IS TH ERE ANY ISSUE REGARDING CREDITWORTHINESS OF SH. SHARMA BECAUSE IF THE MONEY IS NOT EXPLAINED IN HIS HANDS, THEN NECESSARY ACTION WILL HAVE TO BE TAKEN IN HIS INDIVIDUAL CASE. HOWEVER, AS REGARDS OTHER SHARE APPLICANTS, NAMELY, SH. RISHI PRASAD, TULSI SHARM A AND SH. FAKRUDDIN, THE SITUATION IS ENTIRELY DIFFERENT. NEITHER ANY CONFIRMATION HAS BEEN FILED IN THEIR CASES NOR ANY THING SUGGESTING THEIR CREDITWORTHINESS HAS BEEN MADE AVAILABLE. THE ID. COUNSEL FOR THE APPELLANT PLEADED THAT THE MONEY INTRODUCED IN THEIR NAMES ACTUALLY HAS COME FROM THE GROUP COMPANIES ONLY BUT BECAUSE OF CERTAIN RESTRICTIONS PLACED BY THE RESERVE BANK OF INDIA, THE SAME HAS BEEN ROUTED THROUGH THESE THREE PERSONS. ON A CAREFUL CONSIDERATION OF THE SUBMISSION MADE BY THE APPELLANT C OMPANY, IT BECOMES CLEAR THAT (A) ALL THE THREE CREDITORS ARE PERSONS OF NO MEANS, (B) HAVE NO CAPACITY TO ADVANCE HUGE SUMS OF MONEY TO THE COMPANIES CONTROLLED BY SH. PK SHARMA, AND (C) THEIR EXISTENCE AND RELATIONSHIP WITH THE APPELLANT COMPANY REMAINS TO BE ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 6 ESTABLISHED. THEREFORE, 1 AM OF THE FIRM OPINION THAT OUT OF RS 24885000, ONLY A SUM OF RS 8885000 HAS BEEN EXPLAINED TO BE BELONGING TO SH. PK SHARMA THROUGH HIS PROPRIETORSHIP CONCERN) AND BALANCE OF RS 1.6000000 REMAINED UNEXPLAINED. ACCORDINGLY, ADDITION TO LIRE EXTENT OF RS 16000000/ - IS BEING SUSTAINED. 10. THE REVENUE IS ALSO IN APPEAL AGAINST THE DELETION OF ADDITION OF RS. 88.85 LACS VIDE GROUND NO. 2 AND ASSESSEE IS IN APPEAL VIDE GROUND NO. 5. 11. THE LD AUTHORISED REPRESENTATIVE SUBMITTED THAT OTHER THREE PERSONS WERE EMPLOYEES OF THE KUBER GROUP AND THEY WERE HAVING THE BANK ACCOUNT IN THE SAME BRANCH WHERE THE ACCOUNTS OF THE OTHER GROUP CONCERNS ARE MAINTAINED. AS THEY WERE NOT THE DIRECTORS OR SHARE HOLDERS THE AMOUNT WAS ADVANCED FIRST TO THEM AND THEN TO THE ASSESSEE COMPANY TO AVOID ANY VIOLATION OF THE COMPANIES ACT. HOWEVER, IT WAS SUBMITTED THAT THE SOURCE OF THE FUNDS IS THE GROUP COMPANIES AND TRANSACTIONS ARE THROUGH BANK. HENCE, ADDITI ON IS REQUIRED TO BE DELETED. 12. THE LD DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT RS. 88.85 LACS WERE RECEIVED FROM A PROPRIETARY CONCERN OF SHRI PK SHARMA AND NO DETAILS WERE FURNISHED AS STATED BY THE LD AO. HE FURTHER STATED THAT WITH RESPECT TO OTHER T HREE PERSONS ALSO NO DETAILS WERE SUBMITTED BEFORE THE LD AO HENCE, ADDITION IS RIGHTLY MADE. 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. WE DO NOT FIND ANY INFIRMITY IN THE DELETION OF ADDITION WITH RESPECT TO RS. 88.85 LACS FROM KUBER MEDIA WHIC H IS PROPRIETARY CONCERN OF SHRI PK SHARMA. THE AMOUNT WAS ALSO PAID BY ACCOUNT PAYEE CHEQUES AND SHRI PK SHARMA IS THE MANAGING DIRECTOR OF KUBER GROUP AND THE AMOUNT INVESTED IS ALSO THROUGH BANKING CHANNEL. IN VIEW OF THIS IDENTITY, CREDITWORTHIN E SS AND GENUINENESS OF THE ABOVE TRANSACTION IS SATISFIED AS HELD BY THE LD CIT(A). HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A) IN DELETING THE ABOVE ADDITION. HENCE, GR O UND NO. 2 OF THE APPEAL OF THE REVENUE IS DISMISSED. 14. COMING TO THE GROUN D OF THE ASSESSEE IT IS CATEGORICALLY MENTIONED BY THE LD ASSESSING OFFICER THAT NO DETAILS WERE FURNISHED. HOWEVER, THE PAPER ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 7 BOOK SUBMITTED BEFORE US SHOWED THAT VIDE LETTER DATED 18.12.2009 ALL THESE INFORMATION WAS SUBMITTED BEFORE THE LD ASSESSING OFF ICER. IN THE REMAND PROCEEDING IT IS STATED THAT THE ABOVE DETAILS WERE RECEIVED BY THE LD ASSESSING OFFICER BUT WERE NOT COMMENTED. IT IS UNDISPUTED THAT THE OTHER THREE PERSONS ARE EMPLOYEES OF KUBER GROUP AND NATURALLY THEIR CREDITWORTHINESS TO THE EXT ENT OF AMOUNT DEPOSITED IS NATURALLY DOUBTFUL. HOWEVER, THOSE PERSONS HAVE RECEIVED MONEY DIRECTLY FROM OTHER KUBER GROUP COMPANIES THROUGH ACCOUNT PAYEE CHEQUE AND THEREFORE, THE SOURCE OF THE SOURCE IS SHOWN TO HAVE BEEN PROVED BY THE ASSESSEE. HOWEVER, AS THE LD ASSESSING OFFICER HAS NOT EXAMINED THESE DETAILS WE SET ASIDE GROUND NO. 5 OF THE APPEAL OF THE ASSESSEE BACK TO FILE OF THE LD AO WITH A DIRECTION TO THE ASSESSEE SUBMIT THE COMPLETE DETAILS WITH RESPECT TO THESE THREE PERSONS, AS TO HOW THEY HA VE RECEIVED THE MONEY AND FROM WHOM WHICH IN TURN GOT INVESTED IN THE ASSESSEE COMPANY. IF ON EXAMINATION OF THE DETAILS AO IS SATISFIED THAT IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION THEN HE MAY ALLOW SO. IN VIEW OF THIS THE GROUND NO. 5 OF THE APPEAL OF THE ASSESSEE IS SET ASIDE TO THE FILE OF THE LD ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH AFTER GRANTING OPPORTUNITY OF HEARING TO THE ASSESSEE. 15. THE GROUND NO. 6 IS WITH RESPECT TO THE ADDITION OF RS. 11968466/ - AS UNSECURED LOAN A ND CONSEQUENTLY GROUND NO. 3 OF THE APPEAL OF THE REVENUE IS WITH RESPECT TO THE DELETION THE ADDITION OF RS. 11350000/ - . 16. THE LD CIT(A) HAS HELD WITH RESPECT TO THE ABOVE ADDITION AS UNDER: - 6. THE NEXT ISSUE PERTAINS TO ANOTHER ADDITION OF RS 23318466 MADE ON ACCOUNT OF UNSECURED LOANS. 6.1 A PERUSAL OF ASSESSMENT ORDER REVEALS THAT THIS ADDITION HAS BEEN MADE BY THE ID.AO FOR WANT OF NECESSARY CONFIRMATIONS AND EVIDENCE SUGGESTING IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE T RANSACTIONS. 6.2 IN THE COURSE OF APPELLATE PROCEEDINGS, THE MD. COUNSEL FOR THE APPELLANT HAS MADE THE FOLLOWING WRITTEN SUBMISSIONS: - ADDITION OF RS. 2,33,18,466/ - AS UNEXPLAINED LOAN FUNDS ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 8 COPY OF BALANCE SHEET IS ATTACHED (3 - 8). THE AO MADE ADDITION F OR NOT FILING CONFIRMATION ADDRESS. PAN ETC SO AS TO SATISFY THE INGREDIENTS OF SECTION 68, THE ADDITION IS WRONG FOR FOLLOWING SUBMISSION: - ONE, ASSESSEE SUBMITTED ALL DOCUMENTS WHICH MAY SATISFY INGREDIENTS OF SEC.68 BEFORE CIT(A) - II VIDE ORDER DT.07.01 .2003 DELETED THE MAJOR AMOUNT OF ADDITION. IT IS FURTHER TO BE NOTED THAT THE REMAND REPORT DT. 22.11.2002 WAS FILED BY AO BEFORE HON'BLE CIT(A) AND THUS, AO GOT AMPLE OPPORTUNITY TO REBUT THE CONTENTION AND EVIDENCES BEING FILED BY ASSESSEE. FURTHER, THE AO MUST HAVE IN HIS POSSESSION THE DOCUMENTS/ EVIDENCES FILED BEFORE CIT(A) AND HAS GROSSLY ERRED BY NOT REFERRING TO THE SAID DOCUMENTS BEFORE MAKING ADDITION AND THAT TOO WITHOUT DISCUSSING THE ADDITION ON MERITS IN THE IMPUGNED ORDER. TWO, THE ADDITION TO UNSECURED LOAN OF RS. 2,33,18,466/ - STANDS PROVED FROM THE FOLLOWING DOCUMENTS: S.NO. NAME DOCUMENTS 1. C.P.GOEL RELEVANT BANK STATEMENT (18 - A) FAKRUDDIN RELEVANT BANK STATEMENT (20) 3. KUBER MUTUAL BENEFITS LTD. CONFIRMATION (21) RELEVANT BANK STATEMENT(22 - 23) 4. AMRISH PANDEY RELEVANT BANK STATEMENT(24) C SJ KRISHAN KUMAR RELEVANT BANK STATEMENT(25 - 26) 6. RISHI PRASAD GUPTA RELEVANT BANK STATEMGNT(27) 7. KUBER AUTO GENERAL FINANCE & CONFIRMATION (28A) LEASING LTD. RELEVANT BANK STATEMENT (28B) 8. ____ KUBER BUILDERS CONFIRMATION (29A), RELEVANT BANK STATEMENT (29B - 36 IT IS TO BE SUBMITTED THAT THE ASSESSEE COULD NOT TRACE OUT THE SOURCE OF UNSECURED LOAN OF RS. 268466/ - SINCE THE DOCUMENTS ARE NOT FULLY AVAILABLE/TRACEABLE. THREE. WITHOUT PREJUDICE. IT IS TO BE FURTHER SUBMITTED THAT THE AO IN REMAND REPORT DATED 22.11.2002 (FILED DURING THE CIT(A) PROCEEDINGS) HAD NOT DISPUTED THE CONFIRMATION FILED BY ASSESSEE AND HAD REJECTED THE CONFIRMATIONS ONLY FOR THE REASON THAT THEY WERE NOT FILED BEFORE HIM. THUS, THE GENUINENESS OF THESE CONFIRMATIONS ARE NOT DISPUTED. UNDER THESE FACTS THE CONFIRMATIONS FROM PAYERS NEEDS TO BE ACCEPTED AS GENUINE AND NO ADDITION SHOULD HAD BEEN MADE. FURTHER DURING THE COURSE OF IMPUGNED ASSESSMEN T PROCEEDINGS THE AO HAD NO;, BOTHERED TO LOOK INTO THE REMAND REPORT BEING FURNISHED DURING THE COURSE OF ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 9 2 ND CIT(A) PROCEEDINGS AND HAS MADE THE ADDITION FOR THE REASONS BEST KNOWN TO HIM AND THAT TO WITHOUT DELIBERATING ON THE MERITS OF THE ISSUE IN THE IMPUGNED ASSESSMENT ORDER FOR THIS LEGAL PREPOSITION WE PLACE RELIANCE ON THE FOLLOWING AUTHORITY: AC XT VS, RAJAS THAN AS BEST O S CEMENT CO. 1 20091 23 DTR (JP) ( TRIB) 430 HELD THAT - ONCE THE INITIAL BURDEN HAS BEEN DISCHARGED IN RESPECT OF THE IDENTITY, EXISTENCE AND CONFIRMATION FROM SUCH INVESTOR HAS BEEN OBTAINED, THE BURDEN SHIFTED TO THE REVENUE TO PROVE NOT ONLY THAT THE INVESTED AMOUNT DID NOT BELONG TO THE CREDITOR BUT TO THE ASSESSEE. ARAVAU TRADING CO. (2008) 8 DTR (RAJ.) M (37 TO 38) HELD THAT ONCE THE CREDITORS OWNS THE CREDIT WHICH ARE FOUND IN THE BOOKS OF THE ASSESSEE, THE A SSSESSEES ONUS STANDS DISCHARGED AND THE LATTER IS NOT FURTHER REQUIRED TO PROVE THE SOURCE FROM WHICH THE CREDITORS AC QUIRED THE MONEY DEPOSITED WITH HIM. IN VIEW OF THE ABOVE SUBMISSIONS, THE ADDITION NEEDS TO BE DELETED. 6.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT COMPANY. ON A CAREFUL CONSIDERATION, 1 FIND THAT THE APPELLANT COMPANY HAS RECEIVED A SUM OF RS 11350000 FROM ITS GROUP COMPANIES, NAMELY, KUBER MUTUAL BENEFITS - RS 321ACS, KUBER AUTO GENERAL FINANCE & LEASING LTD - RS 151ACS AND KUBER BUILDERS, A PROPRIETARY CONCERN OF SH. PK SHARMA, MD OF THE APPELLANT COMPANY - RS 66.501AC S. ALL THE AFORESAID CONCERNS ARE ASSESSED TO TAX AND NECESSARY CONFIRMATIONS AND COPIES OF THEIR BANK ACCOUNTS HAVE BEEN FILED IN THE COURSE OF APPELLATE PROCEEDINGS BEFORE CIT (A) - IL, NEW DELHI. THESE DOCUMENTS ARE DULY FORMING PART OF THE ASSESSMENT REC ORDS ALSO. THEREFORE, I DO NOT AGREE WITH THE ID.AO THAT NECESSARY CONFIRMATIONS AND OTHER EVIDENCE HAS NOT BEEN MADE AVAILABLE TO HIM WITH RESPECT TO THE CASH CREDITS OF RS. 1350000/ - OBTAINED FROM THE AFORESAID GROUP CONCERNS. ACCORDINGLY, THE ADDITION T O THE EXTENT OF RS. 11350000/ - IS BEING DELETED. HOWEVER, AS REGARDS, OTHER CASH CREDITORS, I FIND THAT NO CONFIRMATIONS AND OTHER EVIDENCE EVEN SUGGESTING THEIR IDENTITY HAS BEEN FILED EITHER IN THE COURSE OF ASSESSMENT OR IN THE COURSE OF APPELLATE PROC EEDINGS. THEREFORE, THE CASH CREDITS OF RS 11968466 OBTAINED FROM SH. CP GOEL - RS 9 LACS , FAKRUDIN - RS 28 LACS , SH. AMRISH PANDEY - RS 20 LACS , KRISHAN KUMAR - RS 30 LACS , RISHI PRASAD ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 10 GUPTA - RS 30 L ACS AND MISCELLANEOUS CREDITS OF RS 268466 REMAINED UNEXPLA INED AND THE ADDITION TO THIS EXTENT IS BEING SUSTAINED. 17. THE LD AR SUBMITTED THAT THE FACTS AND CIRCUM STANCES OF THIS ADDITION ARE SIMILAR TO THE ADDITION OF SHARE CAPITAL. HE SUBMITTED THAT LOAN HAVE BEEN RECEIVED BY THE EMPLOYEES OF THE KUBER GROUP AN D INVESTED IN THE COMPANY, THEREFORE, COMPLETE TRANSACTIONS ARE THROUGH BANKING CHANNEL. HE THEREFORE, STATED THAT TOTAL ADDITION IS REQUIRED TO BE DELETED. HE SUBMITTED THAT THE LD CIT(A) HAS DELETED THE ADDITION WITH RESPECT TO KUBER BENEFIT COMPANY, KUB ER AUTO GENERAL FINANCE AND LEASING LTD, KUBER BUILDERS TO THE EXTENT OF RS. 1.13 CRORES. THE LD CIT(A) DID NOT DELETE THE OTHER LOANS AS NO CONFIRMATION WERE FILED. 18. THE LD DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD AO. 19. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS WITH RESPECT TO GROUND NO. 6 OF THE ASSESSEES APPEAL AND GROUND NO. 3 OF THE REVENUES APPEAL. THE LD CIT(A) HAS CORRECTLY DELETED THE ADDITION WITH RESPECT TO LOAN DIRECTLY RECEIVED FROM GROUP COMPANIES THROUGH CHEQUES. HOWEVER, WITH RESPECT TO LOAN FROM EMPLOYEES WAS NOT ACCEPTED AS NO CONFIRMATIONS WERE FILED. THOUGH THE ARGUMENT OF THE LD AR IS THAT ABOVE SUM HAS BEEN RECEIVED BY CHEQUE THROUGH ALL THESE COMPANIES BY THE VARIOUS EMPLOYEES AND THEN IN TURN SAME WERE DEPOSITED IN THE COMPANY. ASSESSEE HAS SUBMITTED THESE DETAILS FROM PAGE NO. 57 TO 69 OF THE PAPER BOOK. HOWEVER, IT SEEMS THAT MOST OF THE DETAILS THOUGH FURNISHED BEFORE THE LD CIT(A) WERE NOT CONSIDERED. FURTHER, SOME OF THE DETAILS WERE FURNISHED BEFORE THE LD ASSESSING OFFICER ONLY. IN ALL THESE PAGES THOUGH ASSESSEE HAS ACCEPTED THAT THESE ARE THE LOANS FROM THE EMPLOYEES WHO IN TURN RECEIVED THE SAME FROM OTHER GROUP COMPANIES AND THEREFORE, THE REAL LOAN IS FROM THE GROUP COMPANIES TO THE ASSESSEE. AS WE HAVE ALREADY SET ASIDE THE ISSUE OF SHARE CAPITAL INVESTED BY VARIOUS EMPLOYEES TO THE FILE OF THE LD ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO EXPLAIN AND DEMONSTRATED THAT AMOUNT INVESTED BY THOSE EMPLOYEES ARE ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 11 FROM GROUP CONCERNS, WE ALSO SET ASIDE THE GROUND NO. 6 OF THE APPEAL OF THE ASSESSEE. 20. THE GROUND NO. 7 OF THE APPEAL IS WITH RESPECT TO DISALLOWANCE OF EXPENSES. THE LD AO HAS DISALLOWED 50% OF THE TOTAL CASH EXPENSES AMOUNTING TO RS. 40.66 LACS AND OTHER EXPENSES OF RS. 81.11 LACS AS ASSESSEE DID NOT SHOW THE DETAILS OF THE EXPENDITURE PAID. FURTHER, THE LD AR STATED THAT COMPLETE DETAILS WERE AVAILABLE BEFORE THE LD ASSESSING OFFICER OF EXPENSES ABOVE RS. 1000/ - IN SUMMARY MANNER AND FURTHER DISALLOWING 50% OUT O F CASH EXPENSES WHICH DO NOT VIOLATE PROVISION OF SECTION 40A(3) OF THE ACT IS UNWARRANTED. 21. THE LD DR RELIED UPON THE ORDERS OF THE LD AO. HE FURTHER STATED THAT LD CIT(A) HAS ALSO JUSTIFIED THE ABOVE DISALLOWANCE. 22. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE LD CIT(A) HAS DEALT WITH THE WHOLE ISSUE VIDE PARA NO. 7 AS UNDER: - 7. NEXT GROUND PERTAINS TO AN ADDITION OF RS 12177804 MADE ON ACCOUNT OF DISALLOWANCE OF EXPENSES. 7.1 A PERUSAL OF ASSESSMENT ORDER REVEALS THAT THE ADDITION IN QUESTION HAS BEEN MADE BY THE AO VIDE PARA - 2 OF HIS ORDER AS UNDER: - 'IN RESPONSE TO QUERY IN THIS REGARD, ASSESSEE VIDE ITS REPLY DATED 18.12.2009, STATED THAT THE LD. AO HAD DISALLOWED 50% OF THE EXPENSES UNDER THE HEAD PRINTING, PERSONAL, ADMINISTRATIVE AND O THER EXPENSES AMOUNTING TO RS. 1,30,77,483/ - ON ESTIMATE BASIS. BEING AGGRIEVED ASSESSEE HAD PREFERRED A APPEAL BEFORE C I T(A) WHO HAD AFTER VERIFICATION OF VOUCHERS AND OTHER SUPPORTING EVIDENCES HAD DELETED THE TOTAL DISALLOWANCES EXCEPT FOR RS. 5,80,000/ - BY INVOKING THE PROVISIONS OF SEC. 40A(3). ONLY BANK STATEMENT AND EXPENSE DETAIL ARE FILED NOW AND VOUCHERS ARE NOT TRACEABLE. IT WOULD BE SEEN F ROM THE DETAILS THAT ALL THE EXPENSES HAD BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSIN ESS AND ALL THE CONDITIONS AS ENUMERATED IN SEC. 37(1) HAD BEEN F ULLY COMPLIED WITH AND THERE IS NO SCOPE FOR ANY DISALLOWANCE. ASSESSEE HAS FILED SUMMARY OL EXPENSES PAID THROUGH CASH AND CHEQUCS/DD/PO. IN THE SUMMARY CHART, ASSESSEE HAS SHOWN PAYMENT BY CHEQUES ETC. IN RESPECT OF EXPENSES AMOUNTING TO RS. ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 12 99,10,701/ - AND PAYMENT BY CASH IN RESPECT OF EXPENSES AMOUNTING TO RS. 81,32,922/ - TOTALING TO RS. 1,80,43,623/ - /. TOTAL OF THESE EXPENSES AMOUNTING TO RS. 2,61.54,966/ - HAVE BEEN CLAIMED IN P. I.,, A/ C, THUS IN SUMMARY CHART, THERE IS NO DETAILS OF BALANCE EXPENSES AMOUNTING TO RS. 81,11,343/ - . ASSESSEE HAS NOT PRODUCED VOUCHERS OF EXPENSES OR BOOKS OF ACCOUNT FOR VERIFICATION , HENCE, THESE EXPENSES ARE (FOOT VERIFIABLE. ASSESSEE HAS ALSO FAILED TO SU BSTANTIATE ITS CONTENTION THAT ALL THE EXPENSES HAD BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, 1 DISALLOW 50% OF THE CASH EXPENSES, IE. AMOUNTING TO RS. 40,66,461/ - AND EXPENSES NOT INCLUDED IN SUMMARY CHART, I.E., RS. 81,11,343/ - . THUS TOTAL OF RS. 1,21,77,804/ - IS DISALLOWED OUT OF EXPENSES CLAIMED PERTAINING TO PRINTING, PERSONAL, ADMINISTRATIVE AND OTHER EXPENSES. 7.2 IN THE COURSE OF APPELLATE PROCEEDINGS, THE ID. C OUNSEL FOR THE APPELLANT COMPANY HAS MADE THE FOLLOWING WRITTEN ARGUMENTS: - ADDIT I ON OF RS. 1,21,77,804/ - ON ACCOUNT OF DISALLOWANCES OF EXPENSES: ASSESSEE PREPARED DETAILED WORKING OF EXPENSES EXCEEDING RS. 1000/ - AND THEREBY BIFURCATING THE SAME INTO EXP ENSES INCURRED THROUGH CHEQUE OR CASH. TOTAL OF CASH AND CHEQUE EXPENSES WAS RS. 18043623/ - OUT OF WHICH CASH EXPENSES WERE OF RS. 8132922/ - . THE TOTAL EXPENSES CLAIMED IN PROFIT & LOSS A/C WERE OF RS. 26154966/ - . AO MADE ADDITION FOR 50% OF CASH EXPENSES FOR RS. 4066461/ - AND FOR DIFFERENCE IN EXPENSES CLAIMED IN PROFIT & LOSS A/C VIS - A - VIS DETAILS PREPARED FOR RS. 18043623/ - I.E. FOR CASH AND CHEQUE EXPENSES. THE ADDITION IS WRONG AND UNSUSTAINABLE IN LAW FOR THE FOLLOWING SUBMISSIONS: ONE, THE ACCOUNTS A RE FULLY AUDITED BY STATUTORY AUDITORS WHO HAVE CERTIFIED THE CORRECTNESS OF FINANCIAL STATEMENTS. THE AUDITORS HAD GIVEN A CLEAN REPORT. TWO. THERE IS NO BASIS FOR DISALLOWING 50% OF CASH EXPENSES. FURTHER, , THERE IS NO LOGIC AND NO REASON GIVEN BY THE LD. AO FOR ADOPTING FIGURE OF 50%. THREE. THE COMPLETE DETAILS OF CASH EXPENSES OF RS. 8132922/ - ARE ATTACHED (39 - 80). IT CAN BE SEEN THAT ALL EXPENSES INCURRED ARE ROUTINE BUSINESS EXPENSES AND ARE TO BE ALLO WED IN FULL. FOUR. LD. AO GROSSLY ERRED IN NOT APPRECIATING THE FACT THAT THE DIFFERENCE OF RS. 8111343/ - BEING DIFFERENCE OF TOTAL EXPENSES CLAIMED IN PROFIT & LOSS A/C FOR RS. 26154966/ - AND THE SUMMARY OF ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 13 EXPENSES PREPARED FOR CASH AND CHEQUE EXPENSES A MOUNTING TO RS. 18043623/ - IS FOR THE REASON THAT VARIOUS EXPENSES WHICH ARE LESS THAN RS. 100/ - ARE NOT INCLUDED IN THE SAID SUMMARY OF EXPENSES. FOR THIS ATTENTION IS INVITED TO ASSESSEES LETTER DT. 19.12.2002 BEFORE C I T(A). THUS, IT IS ONLY FOR NOT INCL UDING EXPENSES OF SMALL AMOUNT OF RS. 1000/ - OR LESS THAT THE DIFFERENCE O! RS. 811 I 343/ - WAS THERE, LD. AO MISUNDERSTOOD THIS DIFFERENCE AS BEING EXPENSES OF THE NATURE F OR WHICH NO DETAILS ARE AVAILABLE WITH THE ASSESSEE. THUS, THE DIFFERENCE ARE ALSO F OR BUSINESS PURPOSE AND ARE FULLY VOUCHED. IN VIEW OF ABOVE SUBMISSION, THE DISALLOWANCE NEEDS TO BE DELETED. 7.2 1 HAVE CAREFULLY CONSIDERED THE FINDINGS RECORDED BY THE LD.AO AND THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT COMPANY AND HAVE ALSO GONE THROUGH THE DETAILS FILED BY THE APPELLANT COMPANY IN THE COURSE OF APPELLATE PROCEEDINGS BEFORE CIT(A) - II, NEW DELHI. OIL CONSIDERATION, 1 FIND THAT THOUGH THE APPELLANT COMPANY CLAIMS THAT NECESSARY DETAILS WITH REGARD TO EXPENSES PAID BY CHEQUES - RS 99 10701 EXPENSES INCURRED IN CASH RS 8132922 AND PETTY EXPENSES - RS 8111343 HAVE BEEN DULY MADE AVAILABLE TO THE AO, I FIND THAT NECESSARY BILLS & VOUCHERS IN SUPPORT OF INCURRING OF THESE EXPENSES HAVE NOT BEEN MADE AVAILABLE TO THE A O. IT IS THE SETTLED PO SITION OF LAW THAT WHENEVER ANY CLAIM OF EXPENDITURE ASSESSEE. HE IS OBLIGATION TO PROVE THAT (A) THE EXPENDITURE HAS ACTUALLY BEEN INCURRED (B) THE EXPENDITURE HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES (C) THE EXPENDITURE PERTAINS TO THE YEAR UNDER CONSIDERATION, AND (D) THE EXPENDITURE IS DULY SUPPORTED WITH DOCUMENTARY I EVIDENCE. UNLESS THE AFORESAID REQUIREMENTS ARE FULFILLED, THE CLAIM OF THE ASSESSEE IS NOT ADMISSIBLE U/S 36 OR SECTION 37 OF THE IT ACT, 1%!. AS SAID EARLIER, THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE THE CLAIM OF EXPENDITURE WITH ANY DOCUMENTARY EVIDENCE AND ONLY SUMMARY OF EXPENDITURE HAS BEEN PLACED BEFORE ME. THEREFORE, DISALLOWANCE @ 50% OF THE TOTAL EXPENDITURE CLAIMED BY THE APPELLANT COMPANY IS NEI THER UNREASONABLE NOR UNJUSTIFIED AND THE SAME IS BEING SUSTAINED. 23. THE LD LOWER AUTHORITIES HAVE CONFIRMED THE DISALLOWANCE FOR THE REASON THAT ASSESSEE DID NOT PRODUCE NECESSARY DETAILS SUCH AS BILLS AND VOUCHERS IN SUPPORT OF INCURRING OF THESE EXPENSES AND THEREFORE, COULD NOT JUSTIFY THAT SUCH EXPENSES HAVE BEEN INCURRED. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITIES. IN THE RESULT GROUND NO. 7 OF THE APPEAL OF THE ASSESSEE IS DISMISSED. ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 14 24. GROUND NO. 8 IS AGAINST CHARGING OF INTEREST U/S 234B OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE AND THEREFORE SAME IS DISMISSED. 25. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 26. THIS LEADS US THE GROUND NO. 4 OF THE APPEAL OF THE REVENUE WHICH IS ON ACCOUNT OF ADDITION OF RS. 2003965/ - ON ACCOUNT OF CLOSING STOCK DELETED BY THE LD CIT(A). THE LD CIT(A) HAS DEALT WITH THE SAME VIDE PARA NO. 8 OF THE ORDER OF THE LD CIT(A) WHICH IS AS UNDER: - 8. THE NEXT GROUND PERTAINS TO ADDITION OF RS 2003965 MADE ON ACCOUNT OF INVENTORY OF CLOSING STOCK. 8.1 A PERUSAL OF ASSESSMENT ORDER REVEALS THAT THE SUBJECT ADDITION HAS BEEN CONSIDERED BY THE ID. AO ON ACCOUNT OF THE FACT THAT THOUGH THE CLOSING STOCK WAS FORMING PAN OF THE BALANCE SHEET, THE SAME WAS NOT CREDITED TO THE TRADING AND PROFIT& LOSS A/C FOR THE AY UNDER CONSIDERATION. ACCORDING TO THE ID. AO, THE NORMAL ACCOUNTING PRINCIPLE REQUIRES THAT THE OPENING AND CLOSING STOCK SHOULD FORM PART OF THE TRADING AND PROFIT & LOSS A/C. HOWEVER, SINCE IN THE CASE OF THE APPELLANT COMPANY THE CLOSING STOCK WA S NOT FORMING PART OF THE TRADING A/C, THE SAME HAS BEEN BROUGHT TO TAX. 8.2 IN THE COURSE OF APPELLATE PROCEEDINGS, THE ID. COUNSEL FOR THE APPELLANT COMPANY HAS CONTESTED THE ADDITION IN QUESTION ON THE FOLLOWING GROUNDS: ADDITION OF RS. 20.03,965/ - FO R CLOSING STOCK IN THE BALANCE SHEET ATTACHED AT SCHEDULE 3 INVENTORY HAS BEEN SHOWN FOR RS. 2003965.20 WHICH CONSISTS OF LOOSE TOOLS, NEWSPRINT, GLAZED PAPER AND OTHERS. THE AO HAS MADE THE ADDITION ONLY FOR THE REASONS THAT THE SAID INVENTORY IS NOT APPE ARING ON THE CREDIT SIDE OF PROFIT & LOSS A/C. THE ADDITION IS WRONG FOR THE FOLLOWING SUBMISSIONS: ONE. THE ASSESSEE FURNISHED A DETAILED REPLY VIDE LETTER DT. 18.12.2009 WHICH IS REPRODUCED AS UNDER: (A) ADDITION OF INVENTORY RS. 2003965/ - (B) THAT THE ASSESSEE COMPANY HAD SHOWN INVENTORY OF RS. 2003965/ - CONSISTING OF LOOSE TOOLS, NEW PRINTS AND GLAZE PAPER IN THE BALANCE SHEET. THE ONLY BASIS FOR MAKING ADDITION BY THE AO IS THAT THE CLOSING STOCK FIGURES ARE NOT APPEARING ON THE CREDIT SIDE OF P. & L. ACCOUNT. YOUR HONOUR THERE ARE 2 ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 15 METHOD OF PRESENTING THE CLOSING STOCK FIGURES IN THE I.E. EITHER CLOSING STOCK FIGURES APPEAR ON THE CREDIT SIDE OF THE P. & L. ACCOUNT AND ON THE ASSETS SIDE OL THE BALANCE SHEET OR THE SECOND METHOD IS THAT TH E INVENTORY FIGURES ARE REDUCED FROM THE RESPECTIVE PURCHASE ACCOUNTS AND CLOSING STOCK FIGURES ARE SHOWN IN THE BALANCE SHEET. BY FOLLOWING THIS METHOD THE CONSUMED FIGURES APPEAL IN THE PROFIT AND LOSS ACCOUNT AND THAT IS WHAT THE METHOD WHICH WAS FOLLOW ED BY THE ASSESSEE COMPANY. I HIS IS THE METHOD WHICH HAD BEEN CONSISTENTLY FOLLOWED BY THE ASSESSEE COMPANY AND THE SAID FACT IS ALSO CONFIRMED BY THE LD, 1 11(A) IN HIS APPEAL ORDER ON PAGE - 9. IN CASE STOCK FIGURES ARE NOT INCLUDED IN THE P & L ACCOUNT THEN THE FINANCIAL STATEMENT WILL NOT TALLY. IN VIEW OF ABOVE FACTUAL POSITION NO ADDITION FLAN BE MADE ON ACCOUNT OF INVENTORY. 8.3 I HAVE CAREFULLY CONSIDERED THE FINDINGS RECORDED BY THE ID.AO AND HAVE ALSO GONE THROUGH THE SUBMISSIONS MADE ON BEHALF O F THE APPELLANT COMPANY. IN MY VIEW, WHILE THE AO MAY BE RIGHT IN EXPECTING THE APPELLANT COMPANY TO PROJECT ITS ACCOUNT AS PER THE NORMAL PRACTICE, NAMELY, SHOWING OPENING & CLOSING STOCK AS A PART OF TRADING A/C, HE WAS NOT JUSTIFIED IN BRINGING TO TAX T HE CLOSING STOCK IN TOTAL DISREGARD OF THE EXPLANATION SUBMITTED BY THE APPELLANT COMPANY. THERE ARE NUMBER OF CASES WHERE ASSESSEES FOLLOW A SYSTEM IN WHICH ONLY THE COST OF SALES OR COST OF PRODUCT ON IS ONLY REFLECTED IN THE TRADING A/C AND THE VALUE OF OPENING AND CLOSING STOCK IS TAKEN CARE OF BY WAY OF SHOWING THEM UNDER DIFFERENT SCHEDULES. SINCE THIS IS THE FIRST YEAR OF THE APPELLANT COMPANY, THERE ARE NO ITEMS OF OPENING STOCK AND AS REGARDS CLOSING STOCK THE APPELLANT COMPANY CLAIMS THAT THE SAME HAS ALREADY BEEN CONSIDERED WHILE DEBITING THE COST OF SALES AND THERE WAS NO QUESTION OF SHOWING THEM SEPARATELY IN THE TRADING A/C. ADMITTEDLY, THIS CLAIM OF THE APPELLANT HAS NEITHER BEEN EXAMINED BY THE AO NOR THE SAME HAS BEEN REBUTTED. THEREFORE, IN MY VIEW, THE ADDITION IS NOT JUSTIFIED AND THE SAME IS - BEING DELETED. 27. THE LD CIT(A) HAS CORRECTLY UNDERSTOOD THAT ONLY RAW MATERIAL CONSUMED OF THE PAPERS IS REQUIRED TO BE SHOWN IN THE PROFIT AND LOSS ACCOUNT AND NOT THE OPENING AND CLOSING STOCK INDIVI DUALLY. SAME WILL FORM PART OF THE GROUPINGS OF SUCH FINANCIAL DATA. HE HAS CORRECTLY STATED THAT THE CLOSING STOCK OF RAW MATERIAL WILL NOT APPEAR SEPARATELY IN THE PROFIT AND LOSS ACCOUNT BUT WOULD BE SUBSUMED IN THE CONSUMPTION AMOUNT. THEREFORE, GROUND NO. 4 OF THE APPEAL OF THE REVENUE IS DISMISSED. ACIT, VS. KUBER MEDIA LTD, ITA NO. 228 & 170/DEL/2011 (ASSESSMENT YEAR: 1997 - 98) PAGE | 16 28. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. 29. RESULTANTLY, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COUR T ON 1 5 / 01/2018 - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 5 / 01/2018 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI