SONALDEVI H. JAIN, MUMBAI V. ITO WD 1(4), THANE

ITA 243/MUM/2011

• Counselvise Citation: 24319914 RSA 2011
• Duration Of Justice: 2 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 08-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Salary income; Opportunity of being heard; Additional evidence; Corroborative evidences
• Section: 68

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI .. , ; BEFORE SHRI P.M. JAGTAP, AM AND SHRI VIVEK VARMA, J M ./ I.T.A. NO.7490 /MUM/2010 ( / ASSESSMENT YEAR : 2007-2008 INCOME TAX OFFICER - WARD 1(4), KALYAN, 2 ND FLOOR,RANI MANSION, MURBAD ROAD, KALYAN. / VS. SMT. SONALDEVI HULLASKUMAR JAIN, H NO. 1216, IST FLOOR, GALA NO. 01, JAI MAHARASHTRA COMPOUND, BHANDARI ROADM NARPOLI, BHWANDI. . / PAN : AVDPJ6960H ( # / APPELLANT ) .. ( $%# / RESPONDENT ) ./ I.T.A. NO.243 /MUM/2011 ( / ASSESSMENT YEAR : 2007-2008 SMT. SONALDEVI HULLASKUMAR JAIN, H NO. 1216, IST FLOOR, GALA NO. 01, JAI MAHARASHTRA COMPOUND, BHANDARI ROADM NARPOLI, BHWANDI. / VS. INCOME TAX OFFICER - WARD 1(4), KALYAN, 2 ND FLOOR,RANI MANSION, MURBAD ROAD, KALYAN. ./ PAN : AVDPJ6960H ( # / APPELLANT ) .. ( $%# / RESPONDENT ) ASSESSEE BY SHRI KISHORE K. PODDAR DEPARTMENT B Y : SHRI PIRAMBAR DAS ITA 7490/M/10 & 243/M/11 2 ) * / DATE OF HEARING : 08-10-2013 ) * / DATE OF PRONOUNCEMENT : 06-12-2013 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THESE TWO APPEALS, ONE BY THE ASSESSEE BEING ITA NO . 243/MUM/2011 AND THE OTHER BY THE REVENUE BEING ITA NO. 7490/MUM /2010 ARE CROSS APPEALS WHICH ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A) 1, THANE DATED 30- 07-2010. 2. AT THE OUTSET, IT IS NOTED THAT THERE IS A DELAY OF 71 DAYS IN FILING THE APPEAL BY THE ASSESSEE. IN THIS REGARD, THE ASSESS EE HAS FILED AN AFFIDAVIT GIVING REASONS FOR THE DELAY AND SEEKING CONDONATIO N THEREOF. KEEPING IN VIEW THE SAID REASONS GIVEN BY THE ASSESSEE, WE ARE SATI SFIED THAT THERE WAS SUFFICIENT CAUSE FOR THE DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL. THE LD. D.R. HAS ALSO NOT RAISED ANY MATERIAL OBJECTION IN THIS REGARD. WE, ACCORDINGLY, CONDONE THE DELAY IN THE PART OF THE A SSESSEE IN FILING THE APPEAL BEFORE THE TRIBUNAL AND PROCEED TO DECIDE THE SAME ON MERIT ALONG WITH THE CROSS APPEAL FILED BY THE REVENUE. 3. THE GROUNDS RAISED BY THE REVENUE IN THIS APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A)-L, THANE ERRED IN ADMITTING FRESH EVIDENCE W ITHOUT GIVING AN OPPORTUNITY TO THE A.O. TO REBUT THE ADDITIONAL EVI DENCE THEREBY VIOLATING THE PROVISIONS OF RULE 46A. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF UNSECU RED LOANS OF RS.46,13,000/- CONSIDERING THE BASIS THAT THE CREDI TORS ARE ASSESSED TO TAX. 3. .ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.3.36 LAKHS ON ACCOUNT OF SALARY. AS REGARDS THE DISALLOWANCE OF ASSESSEE S NO GENUINE EXPENDITURE ON COMMISSION OF RS. 355417 , THE HONBLE CIT(A) RESTR ICTED TO 20% I.E. RS. ITA 7490/M/10 & 243/M/11 3 71000 BY OVERLOOKING THE FACT THAT THE ASSESSEE FAI LED TO FURNISH ANY EVIDENCES AND UNABLE TO PROVE THE GENUINENESS OF TH E SAID EXPENDITURE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES THE LEARNE D CIT(A) ERRED IN DELETING THE ADDITION OF RS.3,46,160 UNDER THE HEAD WEAVING CHARGES. THE LEARNED CIT(A) ERRED IN ADMITTING FRESH EVIDENC E WITHOUT GIVING AN OPPORTUNITY TO A.O. THEREBY VIOLATING THE PROVISION S OF RULE 46A OF I.T. RULES. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS T HE COMMON ISSUE RAISED IN GROUND NO. 1 & 2 RELATING TO THE DELETION BY THE LD . CIT(A) OF THE ADDITION OF RS. 4613000/- MADE BY THE A.O. ON ACCOUNT OF UNSECU RED LOANS TREATING THE SAME AS UNEXPLAINED CASH CREDITS, IT IS OBSERVED TH AT IN THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME, THE ASSESSEE , CARRYING ON THE BUSINESS OF MANUFACTURING AND TRADING OF TEXTILE CLOTHS, HAD SHOWN UNSECURED LOANS OF RS. 77,52,943/-. DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSEE WAS CALLED UPON BY THE A.O. TO PROVE THE IDENTITY A ND CREDITWORTHINESS OF THE LOAN CREDITORS AS WELL AS TO ESTABLISH THE GENUINEN ESS OF THE RELEVANT LOAN TRANSACTIONS. ALTHOUGH, THE ASSESSEE FILED CONFIRM ATIONS OF THE LOAN CREDITORS, THE YEAR-WISE BIFURCATION OF THE LOANS WAS NOT PROV IDED BY HIM AS REQUIRED BY THE A.O. THE RELEVANT BANK ACCOUNT COPIES WERE ALS O NOT FURNISHED BY THE ASSESSEE. EVEN THE COPIES OF INCOME TAX RETURNS WE RE FILED IN THE CASE OF ONLY FIVE CREDITORS. ACCORDING TO THE A.O., THE ASSESSEE THUS COULD NOT EXPLAIN SATISFACTORILY THE LOAN AMOUNTS IN QUESTION IN TERM S OF SECTION 68 OF THE INCOME TAX ACT, 1961 INSPITE OF GIVING REPEATED OPP ORTUNITY. HE, THEREFORE, INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT AND ADDED THE UNSECURED LOANS OF RS. 4613000/- RECEIVED BY THE ASSESSEE DURING TH E YEAR UNDER CONSIDERATION TO THE TOTAL INCOME OF THE ASSESSEE T REATING THE SAME AS UNEXPLAINED CASH CREDITS. 3. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E THE LD. CIT(A), YEAR- WISE BIFURCATION OF THE UNSECURED LOANS WAS FILED B Y THE ASSESSEE TO SHOW THAT NEW LOANS AGGREGATING TO RS. 4613000/- WERE RECEIVE D BY THE ASSESSEE DURING ITA 7490/M/10 & 243/M/11 4 THE YEAR UNDER CONSIDERATION FROM SEVEN PERSONS. IT WAS SUBMITTED BY THE ASSESSEE THAT OUT OF THESE SEVEN PERSONS, FIVE PERS ONS WERE FAMILY MEMBERS OF THE ASSESSEE WHILE THE REMAINING TWO PERSONS WERE W ELL KNOWN PARTIES. THE ACCOUNTS AND CONFIRMATIONS OF THE SAID TWO PERSONS WERE SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A). COPIES OF BANK ACCO UNTS OF ALL THE FIVE FAMILY MEMBERS WERE ALSO FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT(A) TO SHOW THAT ALL THEIR LOAN TRANSACTIONS WERE ROUTED THROUG H BANKING CHANNEL. AS REGARDS THE MAJOR LOAN OF RS. 35.72 LACS RECEIVED F ROM M/S ADVANCE FIN STOCK PVT. LTD., COPY OF INCOME TAX RETURN OF THE SAID PA RTY WAS FILED BY THE ASSESSEE TO SHOW THAT THE TOTAL INCOME OF THE SAID CREDITOR FOR THE YEAR UNDER CONSIDERATION WAS RS. 32.27 LACS. SIMILARLY, COPY OF INCOME TAX RETURN OF OTHER THIRD PARTY NAMELY M/S MAHAMANTRA FABRICS WAS FILED BY THE ASSESSEE SHOWING THAT THE SAID CONCERN FROM WHOM RS. 5 LACS HAD BEEN RECEIVED BY THE ASSESSEE WAS REGULARLY ASSESSED TO TAX AT KALYAN. AFTER HAVING CONSIDERED ALL THESE DETAILS AND DOCUMENTS, THE LD. CIT(A) TREATED THE UNSECURED LOANS RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONS IDERATION AS DULY EXPLAINED AND THE ADDITION MADE U/S 68 OF THE ACT W AS DELETED BY HIM. 4. THE LD. D.R. SUBMITTED BEFORE US THAT THE CONFIR MATIONS OF ONLY FIVE CREDITORS BELONGING TO THE FAMILY MEMBERS OF THE AS SESSEE WERE FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S. HE SUBMITTED THAT THE OTHER RELEVANT DETAILS IN THE FORM OF COPIES OF INCOME TAX RETURNS OR BANK STATEMENTS AS REQUIRED BY THE A.O., HOWEVER, WERE N OT FURNISHED BY THE ASSESSEE. HE SUBMITTED THAT THE MAJOR AMOUNT OF UN SECURED LOAN TO THE EXTENT OF RS. 40.72 LACS WAS RECEIVED BY THE ASSESS EE FROM THE THIRD PARTY NAMELY M/S ADVANCE FIN STOCK PVT. LTD. AND M/S MAHA MANTRA FABRICS AND THE RELEVANT DOCUMENTARY EVIDENCE IN THE FORM OF TH EIR INCOME TAX RETURNS, BANK STATEMENT ETC. WAS FILED BY THE ASSESSEE FOR T HE FIRST TIME BEFORE THE LD. CIT(A). HE CONTENDED THAT THE LD. CIT(A) HAS DELETE D THE ADDITION MADE BY THE A.O. ON ACCOUNT OF UNSECURED LOAN U/S 68 OF THE ACT RELYING ON THIS ITA 7490/M/10 & 243/M/11 5 DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE BEFORE H IM FOR THE FIST TIME WITHOUT GIVING ANY OPPORTUNITY TO THE A.O. TO VERIF Y THE SAME. HE CONTENDED THAT THERE IS THUS A CLEAR VIOLATION OF RULE 46-A O F THE INCOME TAX RULES, 1962 AND THE MATTER SHOULD BE SENT BACK TO THE LD. CIT(A ) FOR GIVING THE A.O. AN OPPORTUNITY TO VERIFY THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE HIM. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, SUBMITTED THAT THE CONFIRMATIONS OF ALL THE LOAN CREDITORS WERE FILED BY THE ASSESSEE BEFORE THE A.O. AS MENTIONED ON PAGE 9 OF THE ASSESSMENT ORDER . HE SUBMITTED THAT THE OTHER DOCUMENTARY EVIDENCE REQUIRED BY THE A.O. IN THE FORM OF COPY OF BANK STATEMENTS, INCOME TAX RETURNS ETC. WAS FILED BY TH E ASSESSEE IN RESPECT OF FIVE LOAN CREDITORS WHO WERE FAMILY MEMBERS BUT THE SAME COULD NOT BE FILED IN RESPECT OF THIRD PARTIES. HE SUBMITTED THAT THE LD. CIT(A), THEREFORE, REQUIRED THE ASSESSEE TO FILE THIS DOCUMENTARY EVID ENCES AND ONLY AFTER HAVING SATISFIED HIMSELF ON THE VERIFICATION OF THIS EVIDE NCE, HE DELETED THE ADDITION MADE BY THE A.O. U/S 68 OF THE ACT. HE CONTENDED T HAT THERE IS THUS NO VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 ON THE PART OF LD. CIT(A) AS ALLEGED BY THE LD. D.R. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE RELEVANT DOCUMENTARY EVIDENCE IN THE FORM OF INCOME TAX RETU RNS, BANK STATEMENTS ETC. IN RESPECT OF MAJOR LOAN CREDITORS WAS NOT FIL ED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS DESPITE SUFFICIENT OPPORTUNITY AFFORDED BY THE A.O. ALTHOUGH THESE DOCUMENTS ARE CLAIMED TO B E FILED BEFORE THE LD. CIT(A) FOR THE FIRST TIME AT THE BEHEST OF THE LD. CIT(A), THERE IS NOTHING IN THE IMPUGNED ORDER OF THE LD. CIT(A) TO SHOW THAT THE A SSESSEE WAS REQUIRED BY HIM TO FURNISH THIS DOCUMENTARY EVIDENCE. ON THE OT HER HAND, THERE IS A CLEAR MENTION IN THE IMPUGNED ORDER OF THE LD. CIT(A) THA T A WRITTEN SUBMISSION ITA 7490/M/10 & 243/M/11 6 WAS FILED BY THE ASSESSEE ALONG WITH ALL THESE DOCU MENTS WHICH CLEARLY CONSTITUTED ADDITIONAL EVIDENCE FILED BY THE ASSESS EE FOR THE FIRST TIME BEFORE THE LD. CIT(A). SINCE THE LD. CIT(A) HAS GIVEN REL IEF TO THE ASSESSEE ON THE ISSUE OF ADDITIONS MADE ON ACCOUNT OF UNSECURED LOA NS U/S 68 OF THE ACT RELYING ON THE SAID EVIDENCE WITHOUT GIVING ANY OPP ORTUNITY TO THE A.O. TO VERIFY THE SAME, WE ARE OF THE VIEW THAT THERE IS A CLEAR VIOLATION OF PROVISIONS OF RULE 46-A AS RIGHTLY CONTENDED BY THE LD. D.R. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH AFTER VERIFYING THE DOCUMENTS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) FOR THE FIRST TIME. THE A.O. SHALL AFFORD SUFFICIENT OPPORTUNITY OF BEING HEARD ON THIS ISSUE AND DECIDE THE SAME AFRESH ON MERIT IN ACCORDANCE WITH LAW. GROUND NO. 1 & 2 OF REVENUES APPEAL ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 7. IN GROUND NO. 3, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS. 3.36 LACS MADE BY T HE A.O. ON ACCOUNT OF DISALLOWANCE OF SALARY AND RESTRICTING THE ADDITION OF RS. 3,55,417/- MADE BY THE A.O. ON ACCOUNT OF COMMISSION TO RS. 71,000/-. THE ASSESSEE, ON THE OTHER HAND, HAS RAISED GROUND NO. 2 IN HER APPEAL C HALLENGING THE ORDER OF THE LD. CIT(A) SUSTAINING THE DISALLOWANCE MADE BY THE LD. CIT(A) OUT OF COMMISSION TO THE EXTENT OF RS. 71,000/-. 8. IN THE P&L ACCOUNT FILED ALONG WITH THE RETURN O F INCOME, THE ASSESSEE HAD DEBITED A SUM OF RS. 4,99,670/- ON ACCOUNT OF S ALARY AND BONUS. ON EXAMINATION OF DETAILS OF SALARY AND BONUS CLAIMED BY THE ASSESSEE, THE A.O. FOUND THAT THE SALARY TO THE EXTENT OF RS. 3,36,000 /- WAS PAID BY THE ASSESSEE TO HER RELATIVES. ON FURTHER EXAMINATION, HE FOUND THAT THE SAID RELATIVES WERE RESIDENT OF AHMEDABAD WHEREAS THE BUSINESS OF THE ASSESSEE WAS SITUATED IN BHWANDI. THE RELEVANT DETAILS ABOUT THE TERMS OF THEIR EMPLOYMENT COULD NOT BE PRODUCED BY THE ASSESSEE. THE ASSESSEE ALSO FAILED ITA 7490/M/10 & 243/M/11 7 TO FURNISH ANY DETAILS OF RESPONSIBILITIES ENTRUSTE D TO THE SAID EMPLOYEES. THE A.O., THEREFORE, DISALLOWED THE CLAIM OF THE ASSESS EE FOR EXPENDITURE ON SALARY TO THE EXTENT OF RS. 3,36,000/- BEING NOT GENUINE. THE ASSESSEE HAD ALSO CLAIMED EXPENDITURE OF RS. 4,20,315/- UNDER THE HEA D BROKERAGE AND COMMISSION. ON EXAMINATION OF THESE EXPENSES CLAIM ED BY THE ASSESSEE, THE A.O. FOUND THAT SOME OF THE COMMISSION WAS PAID BY THE ASSESSEE TO HER RELATIVES AND OTHER PERSONS BELONGING TO AHMEDABAD. THE ASSESSEE ALSO FAILED TO SUBSTANTIATE HER CLAIM FOR PAYMENT OF COMMISSION TO THESE PERSONS WITH ANY SUPPORTING EVIDENCE. THE A.O., THEREFORE, HELD THAT THE ONUS THAT LAY ON THE ASSESSEE TO PROVE THE GENUINENESS OF THE COMMIS SION EXPENSES WAS NOT DISCHARGED AND ACCORDINGLY THE COMMISSION CLAIMED T O BE PAID BY THE ASSESSEE TO HER RELATIVES AMOUNTING TO RS. 3,55,417 /- WAS DISALLOWED BY HIM. 9. THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF SALARY AND COMMISSION WAS CHALLENGED BY THE ASSESSEE IN AN APP EAL FILED BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE SALARY OF RS. 3,36,000/- WAS PAID TO THE PERSON S WHO WERE NONE OTHER THAN THE HUSBAND, FATHER-IN-LAW, MOTHER-IN-LAW AND BROTHER-IN-LAW OF THE ASSESSEE WHO WERE RESIDING WITH HER IN BHIWANDI. TH E COPIES OF THEIR INCOME TAX RETURNS WERE ALSO FILED BY THE ASSESSEE SHOWING THAT THE SALARY INCOME WAS DULY DECLARED BY THEM TO TAX. KEEPING IN VIEW T HESE DOCUMENTS FILED BY THE ASSESSEE AS WELL AS HAVING REGARD TO THE FACT T HAT THE TOTAL TURNOVER OF THE ASSESSEE WAS RS. 3.15 CRORES AGAINST WHICH SALARY O F RS. 4.99 LACS ONLY WAS CLAIMED, THE LD. CIT(A) HELD THAT THE CLAIM OF THE ASSESSEE FOR SALARY WAS NOT UNREASONABLE. HE ALSO HELD THAT THERE WAS NOTHING BROUGHT ON RECORD BY THE A.O. TO SHOW THAT THE EXPENSES CLAIMED BY THE ASSES SEE ON SALARY WERE NOT GENUINE. THE CLAIM OF THE ASSESSEE FOR PAYMENT OF C OMMISSION TO HER RELATIVES WAS ALSO HELD TO BE GENUINE BY THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION THAT THE SAID PAYMENTS WERE MADE THROUGH BANKING C HANNEL, COMMISSION PAID WAS IN RESPECT OF SPECIFIC SALES MADE BY THE A SSESSEE AND COMMISSION ITA 7490/M/10 & 243/M/11 8 RECEIVED WAS DULY DECLARED BY THE RECIPIENTS IN THE IR RETURNS OF INCOME. HE, HOWEVER, STILL SUSTAINED THE DISALLOWANCE MADE BY T HE A.O. OUT OF COMMISSION TO THE EXTENT OF RS. 71,000/- IN ORDER TO RULE OUT ANY OVERSTATEMENT BY THE ASSESSEE OF PAYMENT OF COMMISSION TO THE RELATIVES. 10. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE CLAIM OF THE ASSESSEE FOR SALARY AND COMMISSION PAID TO THE RELA TIVES WAS DISALLOWED BY THE A.O. ON THE BASIS OF SPECIFIC REASONS GIVEN IN THE ASSESSMENT ORDER. AS REGARDS SALARY, IT WAS CATEGORICALLY NOTED BY HIM I N HIS ORDER THAT THE TERMS OF APPOINTMENT OF THE CONCERNED RELATIVES AS EMPLOYEES WERE NOT PROVIDED BY THE ASSESSEE. IT WAS ALSO NOTED BY HIM THAT THE ASSESSE E HAD ALSO FAILED TO FURNISH ANY DETAILS OF THE RESPONSIBILITIES ENTRUSTED TO TH EM. SIMILARLY, IN THE CASE OF COMMISSION PAID TO RELATIVES, IT WAS NOTED BY THE A .O. THAT THE ASSESSEE COULD NOT FURNISH THE RELEVANT DETAILS OR EVIDENCE TO SUB STANTIATE HER CLAIM OF COMMISSION PAID TO THE RELATIVES. IN THIS REGARD, T HE BURDEN WAS ON THE ASSESSEE TO ESTABLISH ON EVIDENCE THE SERVICES REND ERED BY THE SAID RELATIVES TO JUSTIFY THE PAYMENT OF COMMISSION. IN OUR OPINI ON, ALL THESE ASPECTS OF THE MATTER WERE IMPORTANT TO JUSTIFY THE CLAIM OF THE A SSESSEE FOR THE SALARY AND COMMISSION PAID TO THE RELATIVES. IT APPEARS THAT T HE LD. CIT(A), HOWEVER, OVERLOOKED THE SAME AND TRIED TO PUT THE ONUS ON TH E A.O. TO SHOW THAT THE EXPENSES WERE NOT GENUINE WHILE IT WAS ACTUALLY ON THE ASSESSEE TO ESTABLISH ON EVIDENCE THAT THE EXPENSES ON COMMISSION AND SAL ARY PAID TO THE RELATIVES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOS E OF THE BUSINESS. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR DECI DING THE SAME AFRESH AFTER GIVING THE ASSESSEE ONE MORE OPPORTUNITY TO JUSTIFY HER CLAIM FOR SALARY AND COMMISSION PAID TO THE RELATIVES BY PRODUCING THE R ELEVANT SUPPORTING EVIDENCE. GROUND NO. 3 OF THE REVENUES APPEAL AND GROUND NO. 2 OF THE ASSESSEES APPEAL ARE ACCORDINGLY TREATED AS ALLOWE D FOR STATISTICAL PURPOSE. ITA 7490/M/10 & 243/M/11 9 11. IN GROUND NO. 4, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS. 3,46,160/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF WEAVING CHARGES. 12. THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCO UNT OF WEAVING CHARGES AMOUNTING TO RS. 62,45,197/- WAS FOUND BY THE A.O. TO BE DISPROPORTIONATELY ON THE HIGHER SIDE. HE, THEREFORE, PROCEEDED TO EX AMINE THE SAME AND FOUND ON SUCH EXAMINATION THAT THE WEAVING CHARGES AMOUNT ING TO RS. 2,40,658/- AND RS. 1,05,502/- WERE CLAIMED TO BE PAID BY THE A SSESSEE TO M/S PATEL TRANSPORT AND SHREE BHAIRAV TRANSPORT RESPECTIVELY. ACCORDING TO THE A.O., THE SAID PARTIES, GOING BY THEIR NAMES COULD NOT BE WEAVERS AND SINCE THE ASSESSEE ALSO COULD NOT SUBSTANTIATE HER CLAIM OF W EAVING CHARGES PAID TO THEM ON PROPER EVIDENCE, THE CLAIM OF THE ASSESSEE FOR WEAVING CHARGES WAS DISALLOWED BY THE A.O. TO EXTENT OF RS. 3,46,160/-. ON APPEAL, THE LD. CIT(A) DELETED THE DISALLOWANCE MADE BY THE A.O. OUT OF WE AVING CHARGES AFTER HAVING FOUND THAT THE LIST OF WEAVERS FURNISHED BY THE ASS ESSEE DID NOT CONTAIN ANY NAME OF THE TRANSPORTERS AS ALLEGED BY THE A.O. HE ALSO FOUND THAT THE RATIO BETWEEN THE WEAVING CHARGES PAID BY THE ASSESSEE AN D CORRESPONDING SALES HAD REMAINED UNCHANGED IN THE YEAR UNDER CONSIDERAT ION AND THERE WAS ACTUALLY INCREASE IN THE RATE OF GP AND NP DURING T HE YEAR UNDER CONSIDERATION. HE, THEREFORE, HELD THAT THE CLAIM MADE BY THE ASSESSEE ON ACCOUNT OF WEAVING CHARGES IS REASONABLE AND ACCORD INGLY DELETED THE DISALLOWANCE MADE BY THE A.O. 13. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE CLAIM OF THE ASSESSEE OF HAVING PAID WEAVING CHARGES OF RS. 3,46 ,160/- WAS DISALLOWED BY THE A.O. MAINLY ON THE GROUND THAT THE SAID WEAVING CHARGES WERE PAID TO TWO TRANSPORTERS. ON VERIFICATION OF THE RELEVANT DETA ILS, THE LD. CIT(A), HOWEVER, ITA 7490/M/10 & 243/M/11 10 FOUND THAT THE LIST OF WEAVERS FURNISHED BY THE ASS ESSEE DID NOT CONTAIN ANY NAME OF THE TRANSPORTERS. HE ALSO FOUND THAT THE RA TIO OF WEAVING CHARGES AND THE CORRESPONDING SALES FOR THE YEAR UNDER CONSIDER ATION WAS THE SAME AS THAT OF THE EARLIER YEARS AND THE FINDINGS GIVEN BY THE A.O. THAT IT WAS HIGHLY DISPROPORTIONATE WAS FACTUALLY INCORRECT. HE ALSO F OUND THAT THE GP RATE DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDE RATION AFTER PAYMENT OF WEAVING CHARGES WAS ACTUALLY MORE THAN THAT OF THE EARLIER YEARS. HAVING REGARD TO ALL THESE FINDINGS OF FACTS RECORDED BY T HE LD. CIT(A), WHICH HAVE NOT BEEN REBUTTED OR CONTROVERTED BY THE LD. D.R., WE A RE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE FOR WEAVING CHARGES WAS REASO NABLE AND THERE WAS NO JUSTIFICATION ON THE PART OF THE A.O. TO MAKE A DIS ALLOWANCE OUT OF WEAVING CHARGES. IN THAT VIEW OF THE MATTER, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUND NO. 4 OF REVENUES APPEAL. 14. IN GROUND NO. 1 OF HER APPEAL, THE ASSESSEE HAS DISPUTED THE ADDITION OF RS. 68,888/- MADE BY THE A.O. U/S 41(1) OF THE ACT WHICH IS CONFIRMED BY THE LD. CIT(A). 15. WHILE VERIFYING THE PURCHASES MADE BY THE ASSES SEE, THE A.O. FOUND FROM THE COPY OF ACCOUNT RECEIVED FROM ONE SUPPLIER ALKESH SYNTHETICS PVT. LTD. THAT THE AMOUNT PAYABLE BY THE ASSESSEE TO THE SAID PARTY WAS RS. 1,92,183/- AS AGAINST THE AMOUNT OF RS. 2,61,063/- SHOWN BY THE ASSESSEE IN HER BALANCE SHEET. SINCE THE ASSESSEE COULD NOT RE CONCILE THE DIFFERENCE OF RS. 68,888/-, THE DISCREPANCY IN ACCOUNTS WAS TREATED B Y THE A.O. AS UNPROVED LIABILITY AND THE SAME WAS ADDED TO THE TOTAL INCOM E OF THE ASSESSEE. BEFORE THE LD. CIT(A), IT WAS SUBMITTED ON BEHALF OF THE A SSESSEE THAT THE DIFFERENCE IN BALANCE HAD ARISEN DUE TO RETURN OF GOODS WHICH THE PARTY M/S ALKESH SYNTHETICS DID NOT ACCEPT. IT WAS SUBMITTED THAT TH E ASSESSEE THEREFORE DID NOT MAKE ANY ENTRY IN THE BOOKS OF ACCOUNT ON ACCOU NT OF RETURN OF GOODS ITA 7490/M/10 & 243/M/11 11 WHILE THE OTHER PARTY M/S ALKESH SYNTHETICS MADE SU CH ENTRY WHICH RESULTED IN THE DIFFERENCE. IT WAS POINTED OUT THAT THIS DI FFERENCE, HOWEVER, WAS SETTLED IN THE SUBSEQUENT YEAR ON 18-7-2008. THIS EXPLANATI ON OF THE ASSESSEE WAS NOT ACCEPTED BY THE LD. CIT(A) AND TREATINF THE SAM E AS AN AFTER-THOUGHT, HE CONFIRMED THE ADDITION MADE BY THE A.O. ON THIS ISS UE. 16. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE EXPL ANATION OFFERED BY THE ASSESSEE IN RESPECT OF DIFFERENCE IN BALANCE WAS RE JECTED BY THE LD. CIT(A) WITHOUT GIVING ANY CONVINCING REASON. IN OUR OPINI ON, HE SHOULD HAVE VERIFIED THIS EXPLANATION OF THE ASSESSEE FROM THE RELEVANT DOCUMENTARY EVIDENCE INSTEAD OF REJECTING THE SAME BY TREATING IT AS AN AFTER-THOUGHT. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON T HIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR DECIDING THE SAM E AFRESH AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN AND RECONCIL E THE DIFFERENCE IN THE ACCOUNTS WITH SUPPORTING EVIDENCE. GROUND NO. 1 OF ASSESSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSE. 17. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND APPEAL OF THE ASSESSEE IS T REATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER, 2013. . ) 0 1 06-12-2013 ) SD/- SD/- (VIVEK VARMA) (P.M. JAGTAP ) JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 DATED 06-12-2013. [ ITA 7490/M/10 & 243/M/11 12 .../ RK , SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $%# / THE RESPONDENT. 3. 4 () / THE CIT(A)1, THANE, MUMBAI. 4. 4 / CIT II, THANE,, MUMBAI 5. $8 , * 8 , / DR, ITAT, MUMBAI E BENCH 6. / GUARD FILE. / BY ORDER, % $ //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI