UEM India Pvt. Ltd., Noida V. ACIT, New Delhi

ITA 2498/DEL/2012

• Counselvise Citation: 249820114 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 19-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: SAHCIN JAI
• Keywords: Unexplained cash credit; Additional evidence; Question of law; Assessment record
• Section: 133(6); 68; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H, NEW DELHI) BEFORE SHRI I. C SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.2498 /DEL/2012 ASSESSMENT YEAR : 2008-09 UEM INDIA PVT. LTD., VS. ACIT, CIRCLE 18(1), 2 ND & 3 RD FLOOR, TOWER B, NEW DELHI A-1, WINDSOR I T PARK, SECTOR 125, NOIDA-201301 GIR / PAN:AAACU0043Q I.T.A.NO. 2658/DEL/2012 ASSESSMENT YEAR 2008-09 ACIT, CIRCLE 18(1), VS. UEM INDIA PVT. LTD., NEW DELHI 2 ND & 3 RD FLOOR, TOWER B, A-1, WINDSOR I T PARK, SECTOR 125, NOIDA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SATISH KHOSLA, SHRI MANISH MALIK, ADV. & SHRI SAHCIN JAI, CA RESPONDENT BY : SHRI SAMEER SHARMA, SR. DR ORDER PER T.S. KAPOOR, AM: THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AS W ELL AS BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 21.03 .2012. THE ASSESSEE HAS TAKEN VARIOUS GROUNDS OF APPEAL WHICH ARE DESCR IPTIVE AND ARGUMENTATIVE IN NATURE. HOWEVER, THE CRUX OF GROUNDS OF APPEAL FILED BY THE ASSESSEE RELATE TO THE ACTION OF LD. CIT(A) BY WHICH HE HAD CONFIRMED THE ADDITION OF RS.60,12,292/- ON ACCOUNT OF OUTSTANDING BALANCE OF CERTAIN CREDITORS WHO 2 ITA NO.2498,2658/DEL/2012 HAD FAILED TO COMPLY WITH NOTICES ISSUED BY A.O. U/ S 133(6) OF THE I. T. ACT, 1961. THE REVENUE IS AGGRIEVED WITH TWO ACTIONS OF LD. CIT(A) ONE OF WHICH RELATES TO DELETION OF ADDITION OF RS.59,10,2 62/- MADE BY THE A.O. ON ACCOUNT OF DIFFERENCE IN OUTSTANDING BALANCE WITH F OUR PARTIES AND FOR DIFFERENCE OF WHICH THE ASSESSEE HAD OFFERED FOR TA XATION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE 2 ND GROUND OF REVENUE RELATES TO ACTION OF LD. CIT(A) BY WHICH HE HAD DELETED AN ADDITION OF R S.52,46,328/- WHICH THE A.O. HAD MADE BY DISALLOWING 10% OF TOTAL ADMINISTR ATIVE EXPENSES. THE CASE WAS EARLIER HEARD ON 19.08.2014. HOWEVER THE CASE WAS REFIXED FOR CLARIFICATION AND WHICH WAS FINALLY HEARD ON 29.09. 2014. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF DESIGN, SUPPLY, ERECTION AND COMMISSION ING OF WATER AND WASTE WATER TREATMENT PLANTS, MACHINERY AND EQUIPMENTS. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT P ROCEEDINGS, THE A.O. OBSERVED FROM THE BALANCE CONFIRMATION OBTAINED U/S 133(6) FROM CERTAIN CREDITORS AND DEBTORS THAT THERE WAS DIFFERENCE BET WEEN THE BALANCE DECLARED BY ASSESSEE AND BALANCE AS CONFIRMED BY PARTIES. T HEREFORE, THE A.O. MADE AN ADDITION OF RS.59,10,262/- BEING DIFFERENCE BETW EEN BALANCE DECLARED BY THE ASSESSEE AND CONFIRMED BY VARIOUS PARTIES. THE A.O. FURTHER OBSERVED THAT IN RESPECT OF 7 PARTIES TO WHOM NOTICES U/S 13 3(6) WERE ISSUED, THE CONFIRMATION / REPLY WAS NOT RECEIVED BY HIS OFFICE AND NOTICES HAD COME BACK UNSERVED. THE ASSESSEE WAS SHOW CAUSED ABOUT THESE FACTS TO WHICH THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE BAL ANCES WERE APPEARING DUE TO GENUINE BUSINESS TRANSACTIONS. LD. A.R. OF THE ASSESSEE ALSO FILED COPY OF BILLS AND LEDGER ACCOUNT OF THESE SEVEN PARTIES FRO M ITS BOOKS OF ACCOUNTS. HOWEVER, THE A.O. DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND 3 ITA NO.2498,2658/DEL/2012 MADE ADDITION OF CREDIT BALANCE AMOUNTING TO RS.1,4 1,17,462/- ON ACCOUNT OF NO CONFIRMATION OF PARTIES. 3. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAD CLAIMED ADMINISTRATIVE EXPENSES OF RS.5,29,68,283/- AND THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 24.12.2010 WAS ASKED AS TO WHAT Q UANTUM OF EXPENSES IT WAS WILLING TO ADD BACK AS THEY CANNOT BE VERIFIED IN A SHORT PERIOD OF TIME, TO WHICH IT REPLIED THAT 10% OF ADMINISTRATIVE EXPE NSES CAN BE OFFERED SUO- MOTTO AS THEY CANNOT BE VERIFIED. THEREFORE, A.O. MADE A DISALLOWANCE OF AN AMOUNT OF RS.52,46,828/-. AGGRIEVED WITH THE ADDIT ION, THE ASSESSEE FILED APPEAL BEFORE LD . CIT(A). LD. CIT(A) ON THE BASIS OF VARIOUS SUBMISSIONS, FILED BY THE ASSESSEE AND ON THE BASIS OF ADDITIONA L EVIDENCES AND ON THE BASIS OF REMAND REPORT OBTAINED FROM A.O., PARTLY A LLOWED THE RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: I) DIFFERENCE IN BALANCES RS.59,10,262/-:- (A) DIFFERENCE IN THE BALANCE AS PER THE BOOKS OF ACCOUNTS AND THE CONFIRMATION RECEIVED FROM THE PARTY THE LD. AO HAS MADE AN ADDITION OF RS. 5,910,262 ON ACCOUNT OF THE DIFFERENCES BETWEEN THE BALANCE AS PER THE BOOKS OF ACCOUNTS AND BALANCE AS PER CONFIRMATION R ECEIVED FROM THE PARTIES. THE ASSESSEE HAD SUBMITTED THE DETAILS OF CREDITORS SHOWING THE ADDRESSES AND CLOSING BALANCE WITH THE LD. AO VIDE SUBMISSION DATED 13 SEPTEMBER 2010. HOWEVER, WHILE ISSUING NOTICES UNDER SECTION 133(6), THE LD AO WRONGLY ISSUED NOTICE TO 'EX-PROTECTA' INSTEAD OF ' ELECTRO SALES ', AND TO 'DYNAMIC MARKETING SERVICES ' INSTEAD OF 'DYNAMIC ENGINEERS PVT. LTD. ', HENCE, THE CONFIRMATIONS RECEIVED FROM THE ABOVE SA ID PARTIES DID NOT RECONCILE WITH THE BALANCES SHOWN IN THE ASSESSEE'S LEDGER. THE RECONCILIATION OF THE DIFFERENCE IS EXPLAINED A S UNDER: S.NO. NAME OF PARTY BAL. AS PER ASSESSEE BAL. AS PER PARTY DIFFERENCE (RS.) REASONS FOR DIFERENCES 1 ELEKTRO SALES (EX- 17,96,135 5,500 17,90,635 AS PER THE LIST OF CREDITORS SUBMITTED TO AO, NAME OF 4 ITA NO.2498,2658/DEL/2012 PROTECTA PARTY IS ELEKTRO SALES BUT THE CONFIRMATION HAS BEEN RECEIVED FROM EX- PROTECTA WHICH IS A DIFFERENT COMPANY. MOREOVER, IT IS EVIDENT FROM THE LEDGER THAT IT IS REGULAR PARTY AND PAYMENT HAS BEEN MADE IN THE NEXT FINANCIAL YEAR THROUGH PROPER BANKING CHANNEL. 2 DYNAMIC ENGINEERS PVT. LTD. 17,59,198 34,433 17,24,765 AS PER THE LIST OF CREDITORS SUBMITTED TO AO, NAME OF THE PARTY IS DYNAMICS ENGINEERS PVT. LID. BUT BALANCE CONFIRMATION HAS BEEN RECEIVED FROM DYNAMIC MARKETING SERVICES WHICH IS A DIFFERENT COMPANY. MOREOVER, IT IS EVIDENT FROM THE LEDGER THAT IT IS REGULAR PARTY AND PAYMENT HAS BEEN MADE IN THE NEXT FINANCIAL YEAR THROUGH PROPER BANKING CHANNEL 3 AUMA INDIA PVT. LTD. CALCUTTA 22,92,194 NIL 22,92,194 AMOUNT OF 'RS. 22,88,866 WRONGLY BOOKED AS SAME WAS BOOKED IN FY 2006-07. HOWEVER, THE SAME HAS BEEN REVERSED AND REDUCED FROM THE PURCHASE VALUE IN FY 2008- 09. ACCORDINGLY, EXCESS INCOME OFFERED TO TAX IN AY 2009-1 O. RELIANCE IN THIS REGARD IS PLACED ON THE JUDGMENT OF THE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. M/S VISHNU INDUSTRIAL GASES P. LID. (ITR NO. 229/1988), WHEREIN IT IS HELD THAT WHERE AN EXPENDITURE IS ALLOWED AS DEDUCTION IN PRINCIPLE, THE YEAR OF ITS ALLOWABILITY SHOULD NOT BE DISPUTED IF THE TAX RATE IN THE YEARS UNDER CONSIDERATION ARE SAME AND 5 ITA NO.2498,2658/DEL/2012 THERE IS NO LOSS OF REVENUE TO THE GOVERNMENT. 4 CALCUTTA CARRIERS OF INDIA 4,23.718 3,21,050 1,02,668 CALCUTTA CARRIERS REGULA RLY PROVIDES FREIGHT SERVICES TO UEM AND SOME BILLS RAISED BY THEM DATED 31 MARCH 2008 MAY NOT BE BOOKED BY THEM IN CURRENT YEAR. TOTAL 59,10,262 THE TRANSACTIONS WITH THE CREDITORS ARE GENUINE BUS INESS TRANSACTIONS AND DULY RECORDED IN THE BOOKS OF ACCOUNTS. THE BALANCE S SHOWCASE ACTUAL PURCHASES MADE FROM THE PARTIES AND NO BOGUS ENTRIE S WERE MADE IN THE BOOKS OF ACCOUNTS. THE CONFIRMATIONS RECEIVED FROM THE PARTIES WERE NEITHER SHARED WITH THE APPELLANT NOR WAS AN OPPORTUNITY PR OVIDED TO CROSS-EXAMINE OR TO GET THE BALANCES RECONCILED OR CHECKED WITH T HE RESPECTIVE PARTIES .. 5.1 AFTER THAT LD. AR OF THE APPELLANT HAS ALSO REL IED ON THE VARIOUS JUDGMENTS WHICH WERE CONSIDERED. IN FACT THE FIGURE S HAVE BEEN RECONCILED BY SUBMITTING THE DETAILS DURING THE COURSE OF APPE LLANT PROCEEDINGS ON WHICH AO'S COMMENTS WERE ALSO TAKEN. IT IS EVIDENT FROM THE REPLY OF THE APPELLANT THAT THERE IS MISTAKE IN ISSUING THE NOTI CE U/S. 133(6), DUE TO WHICH WHOLE THE CONFUSION HAS ARRIVED BY GIVING OPPORTUNI TY DURING THE COURSE OF EARLIER REPORT AO WAS PROVIDED ALL THE DETAILS. HOW EVER, AO HAS OBJECTED THE ADMISSION OF THE ADDITIONAL EVIDENCE-IN THIS RE GARD. IN MY CONSIDERED OPINION ACTION OF AO DESERVES TO BE DELETED. GROUND NO.2 OF THE APPELLANT IS ALLOWED. II) ADDITION ON ACCOUNT OF NO CONFIRMATION AMOUNTIN G TO RS.1,41,17,462/-: DETERMINATION: IN THIS REGARD EVEN AFTER CONSIDERING ADDITIONAL EV IDENCE FILED DURING THE COURSE OF APPELLATE STAGE LD. AR OF THE APPELLANT C OULD HAVE FILED ON THREE CONFIRMATIONS VIZ. UNIQUE CONSTRUCTION AND ENGINEER S, MIS. PEE PEE MANDAL CONSTRUCTION AND MIS. SREEYAS OVERSEAS. IN T HE CASE OF REMAINING FOUR VIZ. PRATAP KISHOR JAINA, CONTECKH CONSTRUCTIO N COMPANY, AMS 6 ITA NO.2498,2658/DEL/2012 ENGINEERS AND AGARWAL ENGINEERS, HE HAS NOT FILED A NY CONFIRMATION TILL DATE. SO TOTAL OF CONFIRMATIONS FILED BY HIM COMES TO RS. 81 ,05,170/-. IN THE CASE OF REMAINING FOUR PARTIES TOTALING TO RS.60,12 ,292/-, NO CONFIRMATION HAS BEEN FILED AND EVEN AFTER GIVING AMPLE OPPORTUN ITY BY REMANDING THE CASE TO THE AO AND GIVING OPPORTUNITY FROM TIME TO TIME, BALANCE HAS NOT BEEN CONFIRMED. IN THIS REGARD RELIANCE IS PLACED O N THE JUDGMENT OF HON'BLE GUJARAT TRIBUNAL IN THE CASE OF AGGARWAL COAL CORPO RATION PVT. LTD., REPORTED AT (2011) 63 DTR (LND) (TRIB) 201, WHEREIN , IN THE RELEVANT PARAGRAPH NO.29 IT HAS BEEN HELD AS UNDER:- 'AS PER THE PROVISIONS OF SEC. 68 OF THE ACT, IN CA SE THE ASSESSEE HAS NOT BEEN ABLE TO GIVE SATISFACTORY EXPLANATION IN R ESPECT OF NATURE AND SOURCE OF ANY SUM OR IF IN THE OPINION OF THE AO SU CH EXPLANATION IS NOT SATISFACTORY, THE AO MAY TREAT THE SAME AS UNDISCLO SED INCOME AND ADD IT TO THE INCOME OF THE ASSESSEE MEANING THEREBY THE ASSE SSEE IS REQUIRED TO GIVE SATISFACTORY EXPLANATION ABOUT THE NATURE AND SOURC E OF MUCH SUMS FOUND CREDITED IN THE BOOKS OF ACCOUNT. WHAT KIND OF PROO F IS TO BE FURNISHED BY THE ASSESSEE IS A QUESTION. IT HAS COME UP FOR DISCUSSI ON IN VARIOUS JUDGMENTS RENDERED BY VARIOUS HON'BLE COURTS INCLUDING HON'BL E SUPREME COURT AND HIGH COURTS. THE LAW DISCUSSED BY THE HONBLE COURT IN THE CASE OF CIT VS. DIVINE LEASING & FINANCE LTD. (SUPRA) IS ALSO AN IM PORTANT DECISION TO QUOTE. A DELICATE BALANCE HAS TO BE MAINTAINED. THE HON'BLE DELHI HIGH COURT IN CIT VS. DOLPHIN CONPACK LTD. (SUPRA) QUOTE D AT PAGE 193 THE FOLLOWING OBSERVATIONS:- 'CREDIT ENTRY RELATES TO THE ISSUE OF SHARE CAPITA L. THE A.O. IS ALSO ENTITLED TO EXAMINE WHETHER THE ALLEGED SHAREHOLDER S DO IN FACT EXIST OR NOT. SUCH 2M INQUIRY WAS CONDUCTED BY THE AO IN THE PRES ENT CASE. IN THE COURSE OF THE SAID INQUIRY, THE ASSESSEE HAD DISCLOSED TO THE A 0 NOT ONLY THE NAMES AND THE PARTICULARS OF THE SUBSCRIBERS OF THE SHARE S BUT ALSO THEIR BANK ACCOUNTS AND THE PANS ISSUED BY THE 1T DEPARTMENT. SUPER ADDED TO ALL THIS WAS THE FACT THAT THE AMOUNT RECEIVED BY THE COMPAN Y WAS ALL BY WAY OF CHEQUES. THIS MATERIAL WAS, IN THE OPINION OF THE T RIBUNAL, SUFFICIENT TO DISCHARGE THE ONUS THAT LAY UPON THE ASSESSEE. THE HON'BLE HIGH COURT BOOK HOLE OF MANY OTHER JUDG MENTS OF MANY OTHER HIGH COURTS ' AND ON ANALYSIS OF THOSE JUDGMENTS, F ORMULATED THE FOLLOWING PROPOSITIONS WHICH EMERGE AS UNDER CITVS. DIVINE LE ASING & FINANCE LTD. (SUPRA) .IN THIS ANALYSIS, A DISTILLATION OF THE PR ECEDENTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CONTEXT OF S. 68 OF THE 1T ACT. THE ASSESSEE HAS TO PRIMA FACIE PROVE- 7 ITA NO.2498,2658/DEL/2012 THE IDENTITY OF THE CREDITOR/SUBSCRIBER. THE GENUINENESS OF THE TRANSACTION, NAMELY, WHETHER IT HAS BEEN TRANSMITTED THROUGH BANKING OR OTHER UNDISPUTABLE CHANNELS. THE CREDITWORTHINESS OF FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER ARE F URNISHED IN THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS REGISTER, SHA RE APPLICATION FORMS, SHARE TRANSFER REGISTERS, ETC. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSEE. THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERENCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAIL S OR NEGLECTS TO RESPOND TO ITS NOTICES. THE ONUS WOULD NOT STAND DISCHARGED IF THE CREDITOR/SUBSCRIBER DENIES OR REPUDIATES THE TRANSACTION SET UP BY THE , ASSESSEE NOR SHOULD THE AO TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT, WITHOUT MORE, AGAINST THE ASSESSEE AND THE A 0 IS DUTY BOUND TO I NVESTIGATE THE CREDIT WORTHINESS OF THE CREDITOR/SUBSCRIBER, THE GENUINEN ESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION. ' 6.2 FURTHER RELIANCE IS PLACED ON THE VERY RECENT J UDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOV A PROMOTERS & FINLEASE (P) LTD, REPORTED AT 2012-TIOL-148-HC- DEL-IT, WHER EIN, IN PARA 35 OF THE ORDER HON'BLE DELHI HIGH COURT HAS HELD AS UNDER:- 'P.35. THE FACTS OF LOVELY EXPORTS P. LTD., AS NOTE D BY THIS COURT, ARE THESD. THE ASSESSEE COMPANY IN THAT CASE HAD FURNIS HED THE NECESSARY DETAILS SUCH AS PAN NO.1 INCOME TAX WARD. NO.1 RATION CARD OF THE SHARE APPLICANTS AND SOME OF THEM WERE ASSESSED TO TAX. T HE MONIES WERE RECEIVED THROUGH BANKING CHANNELS. IN SOME CASE, AFFIDAVITS/ CONFIRMATIONS OF THE SHARE APPLICANTS CONTAINING THE ABOVE INFORMATION W ERE FILED THE ASSESSIN8 OFFICER DID NOT CARRY OUT ANY INQUIRY INTO THE INCO ME TAX RECORDS OF THE PERSONS WHO HAD GIVEN THEIR FILE NUMBERS IN ORDER T O ASCERTAIN WHETHER THEY WERE EXISTENT OR NOT. HE NEITHER CONTROVERTED NOR D ISAPPROVED THE MATERIAL FILED BY THE ASSESSEE. FURTHER, THE ASSESSEE HAD SP ECIFICALLY INVITED THE ASSESSING OFFICER TO CARRY OUT AN ENQUIRY AND EXAM INE THE ASSESSMENT RECORDS OF THE SHARE APPLICANTS WHOSE INCOME TAX FI LE NUMBERS WERE GIVEN. THOUGH THE ASSESSEE OFFICER HAD SUFFICIENT TIME TO CARRY OUT THE EXAMINATION, HE DID NOT DO SO, BUT PUT FORTH AN EXCUSE THAT THE ASSESSEE WAS TAKING SEVERAL ADJOURNMENTS. THIS COURT OBSERVED THAT IT IS FOR TH E ASSESSING OFFICER TO MANAGE HIS SCHEDULE AND HE SHOULD HAVE ENSURED THAT BECAUSE OF THE ADJOURNMENTS HE DID NOT RUN OUT OF TIME FOR DISCHAR GING THE DUTIES CAST ON HIM BY LAW. IT WAS HELD THAT WHEN DETAILS WERE FURN ISHED BY THE ASSESSEE, THE BURDEN SHIFTED TO THE ASSESSING OFFICER TO INVESTIG ATE INTO THE CREDITWORTHINESS OF THE SHARE APPLICANTS WHICH HE W AS ENABLE TO DISCHARGE. 8 ITA NO.2498,2658/DEL/2012 THUS, THE ORDER OF THE TRIBUNAL DELETING THE ADDITI ON WAS HELD NOT GIVING RISE TO ANY QUESTION OF LAW, MUCH LESS - ANY SUBSTANTIAL QUESTION OF LAW. 6.3 AFTER PUTTING MY RELIANCE ON THE ABOVE MENTIONE D TWO JUDGMENTS, IT IS FOUND THAT THREE MAIN INGREDIENTS HAVE NOT BE EN FULFILLED VIZ, IDENTITY, GENUINENESS AND CREDITWORTHINESS. IN THE INSTANT CA SE, AS CONFIRMATION HAS BEEN FILED IN THREE CASES AS DISCUSSED ABOVE, SAME IS BEING TREATED AS EXPLAINED. HOWEVER, IN THE REMAINING FOUR CASES, AS DISCUSSED ABOVE, CONFIRMATIONS OF THE PARTIES HAVE NOT BEEN PUT ON T HE RECORD EVEN AFTER GIVING AMPLE OPPORTUNITY. SO, OUT OF ADDITION OF RS .L,41,17,462/-, ADDITION OF RS.81,051701- IS ALLOWED. IN THE CASE OF REMAINING BALANCE PERTAINING TO FOUR PARTIES AS DISCUSSED ABOVE, ADDITION MADE BY A O TO THE TUNE OF RS.60,12,2921- IS CONFIRMED. GROUND NO.3 IS PARTLY ALLOWED. III) ADDITION ON ACCOUNT OF ADMINISTRATIVE EXPENSES : 8. GROUND NO.4.L IS AGAINST THE AD-HOC DISALLOWANC E OF 10% OF ADMINISTRATIVE EXPENSES AMOUNTING TO RS.52,46,828/- . IN THIS REGARD AO HAS DISCUSSED IN THE BODY OF THE ASSESSMENT ORDE R, WHEREIN, IN PARA 7, 10% OF ADMINISTRATIVE EXPENSES HAVE BEEN DI SALLOWED. IN THIS REGARD NOTHING HAS BEEN BROUGHT ON RECORD BY THE AO AS TO HOW HE HAS ARRIVED AT THE FIGURE OF 10% AND AD-HOC DISALLO WANCE HAS BEEN MADE. VIDE LETTER DATED 20-3-20L2 THE ISSUE HAS BEE N CHALLENGED AS UNDER:- 'AD HOC DISALLOWANCE OF ADMINISTRATIVE EXPENSES : IT IS SUBMITTED BEFORE YOUR HONOUR THAT THE EXPENSE S CLAIMED BY THE COMPANY HAVE BEEN INCURRED WHOLLY AND EXCLUS IVELY FOR THE PURPOSES OF THE BUSINESS CARRIED ON BY THE APPELLAN T DURING THE SUBJECT YEAR. THE EXPENSES HAVE BEEN DULY ACCOUNTED FOR AND RECORDED AS PER DULY ACCEPTED AND RECOGNIZED ACCOUN TING PRINCIPLES AND STANDARDS AS WELL AS METHODS OF ACCOUNTING PRES CRIBED U/S 145 OF THE INCOME TAX ACT, 1961. FURTHER, THE LD. AO HAS WRONGFULLY CONTENDED IN THE REMAND REPORT THAT THE APPELLANT HAD SUO-MOTO OFFERED 10% OF ADMINISTRATIVE EXPENSES TO BE DISALLOWED AND TAXED. IT IS SUBMITTE D THAT THE APPELLANT NEVER OFFERED/ACCEPTED THE SAID DISALLOWANCE DURING ANY PART OF THE ASSESSMENT PROCEEDINGS. THE LD. AO DID NOT GIVE-ANY COGENT REASONS FOR MAKI NG THE ABOVE DISALLOWANCE. THE ABOVE DISALLOWANCE IS BASED ON CONJECTURES AND SURMISES AND SHOULD NOT BE SUSTAINED AND IN A PLETHORA OF JUDGMENTS, IT HAS BEEN HELD THAT NO DISALLOWANCE OF EXPENSE CAN BE 9 ITA NO.2498,2658/DEL/2012 MADE BY THE ASSESSING AUTHORITY WITHOUT GIVING COGE NT REASONS AND ON THE BASIS OF CONJECTURES AND SURMISES IN A PLETHORA OF JUDGMENTS, IT HAS BEEN HELD THAT N O DISALLOWANCE OF EXPENSE CAN BE MADE BY THE ASSESSIN G AUTHORITY WITHOUT GIVING COGENT REASONS AND ON THE BASIS OF C ONJECTURES AND SURMISES. SOME OF THE JUDICIAL PRECEDENTS ARE AS UN DER: DHAKESHWARI COTTON MILLS LTD V. CIT [1954/ 261TR 7 75 (SC) FRIENDS CLEARING AGENCY (P) LID. VS. COMMISSIONER OF INCOME TAX(2011) 237 CTR 464 (2011) (DELHI HC) NITIN SALES CORPORATION V ITO (212 TAXATION 49) (2 008) (DELHI HC) BIRLA SOFT (INDIA) LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX (2011) 136 TTJ 505 (DELHI ITA 1) IN LIGHT OF THE ABOVE, IT IS RESPECTFULLY SUBMITTED THAT YOUR HONOUR MAY KINDLY ADJUDICATE THE MATTER ON MERITS, IMPART JUSTICE AND DELETE THE IMPUGNED ADDITIONS MADE BY THE LD. A O. THE APPELLANT PRAYS BEFORE YOUR HONOUR TO TAKE THE ADDITIONAL EVI DENCE SUBMITTED BY THE APPELLANT ON RECORD AND PROVIDE AN OPPORTUNI TY OF BEING HEARD. WE SHALL BE PLEASED BE PROVIDE ANY FURTHER CLARIFIC ATION THAT YOU MAY REQUIRE IN RESPECT OF THE PRESENT CASE. 8.1 I HAVE GONE THROUGH THE FINDING OF THE AO IN TH E ASSESSMENT ORDER AND WRITTEN SUBMISSION OF THE ID AR VARIOUS C ASE LAWS RELIED UPON BY THE LD, AR OF THE APPELLANT ARE APPRECIATED AND IT IS HELD THAT THERE IS NO CASE OF MAKING AD-HOC DISALLOWANCE WHEN ACCOUNTS ARE AUDITED AND DETAILS HAVE BEEN MADE AVAILABLE. GROUN D NO.4.1 OF THE APPELLANT IS ALLOWED. 3.1 AGGRIEVED WITH THE ORDER OF LD. CIT(A), BOTH TH E PARTIES ARE IN APPEAL BEFORE US. 4. AT THE OUTSET, LD. A.R. ARGUING ABOUT THE ASSESS EES APPEAL SUBMITTED THAT IN SUPPORT OF CREDIT BALANCE APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, THE ASSESSEE HAD FURNISHED COPY OF LEDGER ACCOUNT, INVOICES, WORK ORDER SHEET FOR OBTAINING WORK ORDER, COPY OF BANK STATEMENT, EVIDENCE OF PAYMENT TO THEM IN SUBSEQUENT YEAR. IN THIS RESPEC T, LD. A.R. SUBMITTED THAT 10 ITA NO.2498,2658/DEL/2012 OUT OF 7 PARTIES AS LISTED IN ASSESSMENT ORDER AT P AGE 9, LD. CIT(A) HAS ALLOWED RELIEF IN RESPECT OF 3 SUNDRY CREDITORS ON THE BASIS THAT CONFIRMATION WAS FILED. HOWEVER, IN RESPECT OF 4 SUNDRY CREDITO RS APPEARING AT SL. NO.4-7, LD. CIT(A) DID NOT ALLOW RELIEF AS THE CONFIRMATIO N COULD NOT BE FILED. HOWEVER, IT WAS SUBMITTED THAT THE PAYMENT TO THESE CREDITORS WERE MADE IN THE SUBSEQUENT YEAR AND ALSO DOCUMENTS EVIDENCING P AYMENT TO THESE CREDITORS ALONG WITH INVOICES AND WORK ORDER, WERE SUBMITTED TO LD. CIT(A) WHO HAD FORWARDED THE SAME TO THE A.O. FOR HIS COMM ENTS AND A.O. WITHOUT GOING INTO THE MERITS OF THE CASE, AGAIN REITERATED THAT NOTICES WERE NOT RESPONDED AND LD. CIT(A) ALSO UPHELD THE DISALLOWAN CES ON THE SAME REASONS WITHOUT LOOKING INTO THE DOCUMENTS EVIDENCI NG PAYMENTS IN SUBSEQUENT YEARS. OUR ATTENTION WAS INVITED TO PA PER BOOK PAGES 47-60 WHERE COPIES OF ACCOUNT OF MR. PRADEEPTA KISHORE JA INA MENTIONED AT SL. NO.4 IS PLACED AND ON THE BASIS OF THESE DOCUMENTS, OUR ATTENTION WAS INVITED TOWARDS THE FACT THAT PAYMENTS TO THESE PARTIES WER E MADE IN THE SUBSEQUENT YEAR. THE LD. A.R. ALSO TOOK US TO PAPER BOOK PAGE S 62-68 WHERE COPIES OF BANK STATEMENT EVIDENCING THE PAYMENTS TO THE ABOVE SAID PARTIES WERE PLACED. SIMILARLY, IN RESPECT OF OTHER PARTIES, M/ S. CNTACKH CONSTRUCTION CO., WE WERE TAKEN TO PAPER BOOK PAGE 69 WHERE A CO PY OF LEDGER ACCOUNT OF THESE PARTIES WAS PLACED AND AGAIN IT WAS SUBMITTED THAT PAYMENTS TO THESE PARTIES HAVE ALSO BEEN MADE IN THE SUBSEQUENT YEAR. OUR ATTENTION WAS INVITED TO BANK STATEMENT EVIDENCING THE PAYMENT PL ACED AT PAPER BOOK PAGE 83. OUR ATTENTION WAS ALSO INVITED TO PAPER BOOK P AGES 70-82 WHERE COPIES OF CIVIL WORK ALLOTTED TO SAID PARTIES WAS PLACED. SIMILARLY, WE WERE TAKEN TO PAPER BOOK PAGES 85-86 WHERE A COPY OF LABOUR WORK GIVEN TO M/S. ANS ENGINEERS WAS PLACED. PAPER BOOK PAGES 87-88 WERE ALSO REFERRED TO HIGHLIGHT THE COPIES OF ACCOUNT OF AGRAWAL ENGINEER S TO WHICH PAYMENT OF 11 ITA NO.2498,2658/DEL/2012 OUTSTANDING WAS MADE ON 27.05.2008 AND SIMILARLY, C OPY OF WORK AGREEMENT WAS REFERRED TO AT PAPER BOOK PAGES 88-90. IT WAS SUBMITTED THAT ALL THESE DOCUMENTS WERE BEFORE THE LOWER AUTHORITIES. TO S UPPORT HIS CONTENTION THAT THESE WERE BEFORE LOWER AUTHORITIES, LD. A.R. INVIT ED OUR ATTENTION TO LD. CIT(A)S ORDER AT PAGE 10 WHERE LD. CIT(A) HAS NOTE D ABOUT THE SUBMISSIONS OF ASSESSEE WHEREIN IT HAD NOTED THAT L EDGER ACCOUNT, INVOICES AND BANK STATEMENT EVIDENCING PAYMENTS MADE IN SUBS EQUENT YEAR WERE ENCLOSED AT ANNEXURE 8. 5. IN VIEW OF THE ABOVE, IT WAS ARGUED BY LD. A.R. THAT ASSESSEE HAD COMPLETED ITS ONUS AND HAD SUBMITTED SUFFICIENT EVI DENCES TO HIGHLIGHT THAT PAYMENT TO OUTSTANDING CREDITORS WAS MADE IN THE SU BSEQUENT YEARS. THIS FACT WAS TOTALLY IGNORED BY THE A.O. DURING REMAND PROCEEDINGS. IN THIS RESPECT, OUR ATTENTION WAS INVITED TO PAPER BOOK PA GES 92-93 WHERE A COPY OF REMAND REPORT WAS PLACED. LD. A.R. INVITED OUR ATT ENTION TO PAPER BOOK PAGES 23-91 WHEREIN COPIES OF VARIOUS SUBMISSIONS T O LD. CIT(A) WERE PLACED WHICH INCLUDED THE EVIDENCE OF HAVING MADE P AYMENTS TO CREDITORS IN THE SUCCEEDING YEAR WERE PLACED. IT WAS FURTHER SU BMITTED THAT PURCHASES MADE BY THE ASSESSEE FROM THESE CREDITORS HAS BEEN ACCEPTED AND SALES MADE OUT OF THOSE PURCHASES HAS ALSO BEEN ACCEPTED AND, THEREFORE, BALANCE OUTSTANDING REFLECTS CREDIT BALANCES ON ACCOUNT OF PURCHASES AND THE ADDITION OF SUCH CREDIT BALANCES WAS NOT AS PER LAW SPECIFIC ALLY IN VIEW OF THE FACT THAT PAYMENT TO THESE CREDITORS WAS MADE IN THE SUB SEQUENT YEARS. 6. LD. D.R. ON THE OTHER HAND SUBMITTED THAT WHEN A .O. MADE THE ADDITION ON ACCOUNT OF OUTSTANDING CREDIT BALANCE I T ITSELF AMOUNTED PART REJECTION OF BOOKS OF ACCOUNT AND THEREFORE, THE CO NTENTION OF LD. A.R. THAT BOOKS OF ACCOUNTS WERE NOT REJECTED, DOES NOT CARRY ANY FORCE. IT WAS FURTHER SUBMITTED THAT DURING ASSESSMENT PROCEEDING S SUFFICIENT OPPORTUNITY 12 ITA NO.2498,2658/DEL/2012 WERE PROVIDED TO ASSESSEE WITH WHICH HE DID NOT COO PERATE. REGARDING PAYMENTS REFERRED TO BY LD. A.R., LD. D.R. SUBMITTE D THAT PAYMENTS TO THESE CREDITORS WERE MADE AFTER A PERIOD OF 2 YEARS IF FO R PAYMENTS CAN BE MADE AFTER A PERIOD OF TWO YEARS, WHAT WAS THE HITCH IN GETTING CONFIRMATIONS FROM THEM. HE ARGUED THAT MERE FACT THAT THE PAYMENTS W ERE MADE THROUGH BANK ACCOUNT IS NOT THE CONCLUSIVE EVIDENCE FOR GENUINEN ESS OF TRANSACTIONS. IN RESPECT OF AMS ENGINEERS LD. D.R. SUBMITTED THAT NO EVIDENCE WAS SUBMITTED FROM THIS PARTY AND FROM AGRAWAL ENGINEER S HE REFERRED TO PAPER BOOK PAGE 91 AND SUBMITTED THAT THIS WAS NOT A CONT RACT FOR SUPPLY OF GOODS BUT IT WAS CONTRACT FOR CONSTRUCTION OF PATHWAYS. IN VIEW OF THESE SUBMISSIONS, LD. D.R. ARGUED THAT THE ASSESSEE WAS NOT ABLE TO FURNISH THE GENUINENESS OF OUTSTANDING CREDIT BALANCES AND, THE REFORE, LD. CIT(A) HAD RIGHTLY UPHELD THE ADDITION. IT WAS FURTHER AGREED THAT TO VERIFY THE ABOVE PAYMENTS, THE MATTER CAN BE SET ASIDE TO A.O. FOR V ERIFICATION. 7. LD. A.R. JOINING IN REJOINDER SUBMITTED THAT THE ASSESSEE WAS ENGAGED INTO PROJECTS WITH A LONG GESTATION PERIOD AND THE PAYMENTS TO SUPPLIERS/CONTRACTORS WAS ALSO BEING MADE PERIODICA LLY DURING EXECUTION OF PROJECT AND THEREFORE, THERE WAS NOTHING WRONG IN M AKING PAYMENTS IN SUCCEEDING YEARS. IGNORING ALL OTHER EVIDENCES REG ARDING GENUINENESS OF TRANSACTIONS ADDITIONS ONLY ON THE BASIS THAT OUTS TANDING BALANCES WERE NOT CONFIRMED BY CREDITORS, THE ADDITION WAS NOT WARRAN TED. AS REGARDS THE CONTENTION OF LD. D.R. THAT NO OTHER EVIDENCE WAS A VAILABLE REGARDING M/S. AMS ENGINEERS AVAILABLE, THE LD. A.R. SUBMITTED THA T HE HAD CONFIRMATION FORM THIS PARTY BUT HE DOES NOT WANT TO FILE THE SA ME AS ADDITIONAL EVIDENCE AND IT WAS PRODUCED BEFORE THE BENCH AND IT WAS SU BMITTED THAT THE CASE OF THE ASSESSEE BE DECIDED ON THE BASIS OF MATERIAL AV AILABLE ON RECORD. CONTESTING UPON CASE LAW OF NOVA PROMOTERS AS RELIE D UPON BY LD. CIT(A), 13 ITA NO.2498,2658/DEL/2012 LD. A.R. SUBMITTED THAT IN THAT CASE THE ISSUE OF S HARE CAPITAL FROM SHAREHOLDERS WAS INVOLVED WHEREAS THE PRESENT CASE INVOLVES ADDITION OF OUTSTANDING SUNDRY CREDITORS WHICH HAPPEN TO BE ON ACCOUNT OF GENUINE BUSINESS TRANSACTIONS. 8. ARGUING UPON REVENUES APPEALS GROUND NO.1, THE LD. D.R. SUBMITTED THAT THE ADDITION WAS MADE ON ACCOUNT OF DIFFERENCE OF BALANCES WITH 4 PARTIES AND ASSESSEE HAD ADMITTED FOR MAKING ADDITI ON ON ACCOUNT OF DIFFERENCES AND THEREFORE, LD. CIT(A) HAD WRONGLY D ECIDED THE ISSUE IN FAVOUR OF ASSESSEE. RELIANCE IN THIS RESPECT WAS P LACED ON FOLLOWING CASE LAW: I) 168 ITR 375 RAMESHCHANDRA & CO. VS CIT II) 108 ITR 73 RAMANLAL KAMDAR VS CIT III) 123 ITR 181STERLING MACHINE TOOLS VS CIT 9. LD. D.R. ARGUED THAT IN ALL THESE CASES, IT WAS HELD THAT ASSESSEE CAN RETRACT FROM HIS STATEMENT ONLY IF THERE WAS COERCI ON ON THE PART OF A.O. IT WAS FURTHER SUBMITTED THAT LD. CIT(A) DID NOT GIVE ANY OPPORTUNITY TO A.O. TO CROSS CHECK THE DOCUMENTS FILED BEFORE LD. CIT(A ). LD. A.R. ON THE OTHER HAND SUBMITTED THAT LD. CIT(A) AT PAGE 3 OF HIS ORD ER HAD DIRECTED THE A.O. TO GIVE COMMENTS ON THE ADDITIONAL EVIDENCES AND IN THIS RESPECT, REMAND REPORT PLACED AT PAPER BOOK 92-94 WAS REFERRED. TH E A.O. IN FACT DID NOT MAKE ANY COMMENT ON MERITS AND JUMPED TO THE GROUND THAT CONFIRMATION U/S 133(6) WERE NOT FILED. LD. A.R. FURTHER SUBMIT TED THAT NOWHERE THE ASSESSEE HAD OFFERED THE DIFFERENCE FOR TAXATION AN D EVEN IF THE SAME WAS OFFERED FOR TAXATION THERE IS NO ESTOPPEL IN LAW FO R AN ASSESSEE IF IT DISCOVERS THAT DIFFERENCE WAS EXPLAINABLE. RELIANCE WAS PLAC ED ON THE JUDGEMENT OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF SAIL DSP VR EMPLOYEES ASSOCIATION VS UNION OF INDIA 262 ITR 638 AND INVIT ED OUR ATTENTION NOT 14 ITA NO.2498,2658/DEL/2012 PAGE 647 OF THE SAID JUDGEMENT. ARGUING UPON 2 ND GROUND OF APPEAL, LD. D.R. SUBMITTED THAT THE ASSESSEE ITSELF HAD OFFERED FOR DISALLOWANCE FOR AN AMOUNT EQUIVALENT OF 10% OF ADMINISTRATIVE EXPENSES AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PARA 7 OF ASSESSMENT ORDER . LD. A.R. ON THE OTHER HAND SUBMITTED THAT ASSESSMENT ORDER WAS PASSED ON 27.12.2010. IT WAS SUBMITTED THAT VIDE LETTER DATED 24.12.2010 THE ASS ESSEE HAD REQUESTED THE A.O. TO GRANT IT AT-LEAST ONE WORKING DAY TO SUBSTA NTIATE THE EXPENSES. IT WAS FURTHER SUBMITTED THAT FULL DETAILS OF EXPENSES WAS PROVIDED TO LD. CIT(A) WHO HAD FORWARDED THE SAME TO A.O. FOR COMMENTS BUT HE DID NOT OFFER ANY COMMENTS. RELYING UPON THE CASE LAWS AS RELIED BEF ORE LD. CIT(A) IN ITS SUBMISSIONS DATED 30.08.2011 PLACED AT PAPER BOOK P AGES 23 TO 91, IT WAS ARGUED THAT A.O. CANNOT MAKE ANY DISALLOWANCE WITHO UT ANY FINDINGS IN THIS RESPECT. 10. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROU GH THE MATERIAL PLACED ON RECORD. WE FIRST STAKE UP THE APPEAL FILED BY T HE ASSESSEE. THE ONLY ISSUE IS REGARDING ADDITION OF RS.60,12,292/- ON AC COUNT OF OUTSTANDING SUNDRY CREDITORS. WE FIND THAT BEFORE LD. CIT(A), ASSESSEE HAD FURNISHED FULL DETAILS WITH RESPECT TO PAYMENTS MADE TO THESE PARTIES IN SUBSEQUENT YEAR ALONG WITH COPIES OF BANK STATEMENT WHERE THE CHEQU ES WERE DEBITED ALONG WITH COPY OF CONTRACT NOTE/INVOICES AND THESE EVIDE NCES WERE FORWARDED TO A.O. FOR COMMENTS. THIS FACT IS VERIFIABLE FROM OR DER OF LD. CIT(A) AT PAGE 3 WHERE LD. CIT(A) HAS NOTED THAT VIDE LETTER DT. 3 0.08.2011 THE A.O. WAS FORWARDED WRITTEN STATEMENTS DATED 21.07.2011 AND 3 0.08.2011. HOWEVER, WE FIND THAT A.O. FAILED TO OFFER ANY COMMENT ON TH E EVIDENCES FILED BY THE ASSESSEE AND INSISTED FOR SUSTENANCE OF DISALLOWANC E ON THE BASIS THAT NOTICES U/S 133(6) REMAINED UNCOMPLIED WITH. WE FIND THAT DETAILS SUBMITTED BY THE ASSESSEE BEFORE LD. CIT(A) ARE PLACED AT PAPER BOOK PAGES 23-91 WHEREIN 15 ITA NO.2498,2658/DEL/2012 THE INVOICES RAISED BY THESE PARTIES ALONG WITH THE COPIES OF BANK STATEMENT FROM WHERE THE PAYMENTS WERE MADE, ARE PLACED. AS REGARDS CREDITOR AMS ENGINEERS OF WHICH OUTSTANDING AMOUNT IS RS.2,37,05 8/-, THE LD. A.R. DURING APPELLATE PROCEEDINGS BEFORE US HAD BROUGHT TO OUR NOTICE CONFIRMATION OF THIS PARTY FOR THE SATISFACTION OF THE BENCH BUT DID NOT FILE THE SAME AS ADDITIONAL EVIDENCE AS LD. A.R. WANTED THAT THE CASE BE DECIDED ON THE BASIS OF MATERIAL ON RECORD AND DID NOT WANT SET ASIDE. IF ALL THE FACTS AND CIRCUMSTANCES ARE TAKEN TOGETHER, WE FIND THAT ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION ON THE BASIS OF NON FILLING OF CONFIRMATIONS, IS NOT JUSTIFIED. LD. CIT(A) SHOULD HAVE CONSIDERED THE E VIDENCES FILED BY THE ASSESSEE DURING APPELLATE PROCEEDINGS BUT HE FAILED TO CONSIDER THE SAME AND EXCLUSIVELY RELIED UPON THE REMAND REPOT OF THE A.O . LD. CIT(A) VIDE HIS LETTER DATED 30.08.2011 HAD SOUGHT COMMENTS FROM A. O. ON ITS WRITTEN SUBMISSIONS. THIS FACT IS VERIFIABLE FORM LD. CIT( A) ORDER AT PAGE 3. HOWEVER, A.O. DID NOT COMMENT ON THE MERITS DURING APPELLATE PROCEEDINGS BEFORE US, LD. A.R. HAD DEMONSTRATED THAT CREDIT BA LANCES WERE DUE TO GENUINE BUSINESS TRANSACTIONS AND IN SUCCEEDING YEA RS, THE PAYMENTS WERE ACTUALLY MADE TO THESE PARTIES. WE FIND THAT SECTI ON 68 RELIED UPON BY LD. CIT(A) IS NOT APPLICABLE IN THE PRESENT CASE AS SEC TION 68 RELATES TO UNEXPLAINED CREDIT OUTSTANDING IN THE BOOKS OF ACCO UNT OF THE ASSESSEE WHEREAS THE OUTSTANDING AMOUNTS IN THE BOOKS OF ACC OUNT OF THE ASSESSEE RELATED TO BUSINESS TRANSACTIONS OF THE ASSESSEE AS HAS BEEN DEMONSTRATED BY LD. A.R., THEREFORE, WE ALLOW THE APPEAL FILED BY A SSESSEE. 11. NOW, COMING TO GROUND NO.1 OF THE APPEAL FILED BY THE REVENUE, WE FIND THAT LD. CIT(A) ON THE BASIS OF CONFIRMATION A ND EXPLANATION FILED BY ASSESSEE HAD ALLOWED THE RELIEF TO THE ASSESSEE. T HE RELEVANT FINDING OF LD. CIT(A) ARE ALREADY PRODUCED AT PARA 3(I) OF OF THIS ORDER. FROM THE PERUSAL 16 ITA NO.2498,2658/DEL/2012 OF THE SAME, WE FIND THAT OVERALL LD. CIT(A) HAD DE CIDED THE ISSUE IN RIGHT PERSPECTIVE. HOWEVER, WE FIND THAT IN THE CASE OF AUMA INDIA PVT. LTD. THE DIFFERENCE WAS EXPLAINED TO BE DUE TO A WRONG ENTRY FOR WHICH THE ASSESSEE HAD SUBMITTED THAT THE SAME WAS REVERSED AND WAS RE DUCED FROM PURCHASES IN THE SUCCEEDING YEAR. HOWEVER, LD. CIT(A) WITHOU T VERIFYING SUCH FACTS FROM THE BOOKS OF ACCOUNTS OF THE SUCCEEDING YEAR H AS ALLOWED RELIEF TO THE ASSESSEE. THEREFORE, WE ARE OF THE OPINION THAT VE RIFICATION SHOULD HAVE BEEN DONE AND, THEREFORE, WE REMIT THIS ISSUE TO TH E FILE OF THE A.O. WHO ON THE BASIS OF RELEVANT ACCOUNTS OF SUCCEEDING YEAR W ILL VERIFY REVERSAL OF ENTRY CLAIMED TO HAVE BEEN REVERSED IN THE PURCHASES ACCO UNT IN THE SUCCEEDING YEAR AND WILL DECIDE ACCORDINGLY AS PER LAW. IN VI EW OF THE ABOVE, GROUND NO.1 OF THE REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 12. AS REGARDS THE ISSUE OF DISALLOWANCE OF EXPENSE S, WE FIND THAT LD. CIT(A) AS ALLOWED RELIEF BY HOLDING AS UNDER: AD HOC DISALLOWANCE O(ADMINISTRATIVE EXPENSES: IT IS SUBMITTED BEFORE YOUR HONOUR THAT THE EXPENSE S CLAIMED BY THE COMPANY HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY F OR THE PURPOSES OF THE BUSINESS CARRIED ON BY THE APPELLANT DURING THE SUBJECT YEAR. THE EXPENSES HAVE BEEN DULY ACCOUNTED FOR AND RECORDED AS PER DULY ACCEPTED AND RECOGNIZED ACCOUN TING PRINCIPLES AND STANDARDS AS WELL AS METHODS OF ACCOUNTING PRES CRIBED U/S 145 OF THE INCOME TAX ACT, 1961. FURTHER, THE LD. AO HAS W RONGFULLY CONTENDED IN THE REMAND REPORT THAT THE APPELLANT H AD SUO-MOTO OFFERED LOSS OF ADMINISTRATIVE EXPENSES TO BE DISAL LOWED AND TAXED IT IS SUBMITTED THAT THE APPELLANT NEVER OFFERED/ACCEPTED THE SAID DISALLOWANCE DURING ANY PART OF THE ASSESSMENT PROC EEDINGS. THE LD. AO DID NOT GIVE-ANY COGENT REASONS FOR MAKI NG THE ABOVE DISALLOWANCE. THE ABOVE DISALLOWANCE IS BASED ON CO NJECTURES AND SURMISES AND SHOULD NOT BE SUSTAINED AND IN A PLETH ORA OF JUDGMENTS, IT HAS BEEN HELD THAT NO DISALLOWANCE OF EXPENSE CA N BE MADE BY THE ASSESSING AUTHORITY WITHOUT GIVING COGENT REASONS A ND ON THE BASIS OF 17 ITA NO.2498,2658/DEL/2012 CONJECTURES AND SURMISES IN A PLETHORA OF JUDGMENTS , IT HAS BEEN HELD THAT NO DISALLOWANCE OF EXPENSE CAN BE MADE BY THE ASSESSING AUTHORITY WITHOUT GIVING COGENT REASONS AND ON THE BASIS OF CONJECTURES AND SURMISES. SOME OF THE JUDICIAL PREC EDENTS ARE AS UNDER: DHAKESHWARI COTTON MILLS LID V. CIT {1954] 26 ITR 775 (SC) FRIENDS CLEARING AGENCY (P) LTD. VS. COMMISSIONER OF INCOME TAX (2011) 237 CTR 464 (2011) (DELHI HC) NITIN SALES CORPORATION V ITO (212 TAXATION 41)) ( 2008) (DELHI HC) BIRLA SOFT (INDIA) LID. VS. DEPUTY COMMISSIONER OF INCOME TAX (2011) 136 TTJ 505 (DELHI ITAT) IN LIGHT OF THE ABOVE, IT IS RESPECTFULLY SUBMITTED THAT YOUR HONOUR MAY KINDLY ADJUDICATE THE MATTER ON MERITS, IMPART JUSTICE AND DELETE THE IMPUGNED ADDITIONS MADE BY THE LD. AO. THE APPE LLANT PRAYS BEFORE YOUR HONOUR TO TAKE THE ADDITIONAL EVIDENCE SUBMITTED BY THE APPELLANT ON RECORD AND PROVIDE AN OPPORTUNITY OF B EING HEARD. WE SHALL BE PLEASED BE PROVIDE ANY FURTHER CLARIFIC ATION THAT YOU MAY REQUIRE IN RESPECT OF THE PRESENT CASE. ' 8.1 I HAVE GONE THROUGH THE FINDING OF THE AO IN T HE ASSESSMENT ORDER AND WRITTEN SUBMISSION OF THE LD AR. VARIOUS CASE LAWS RELIED UPON BY THE LD. AR OF THE APPELLANT ARE APPRECIATED AND IT IS HELD THAT THERE IS NO CASE OF MAKING AD-HOC DISALLOWANCE WHEN ACCOUNTS ARE AUDITED AND DETAILS HAVE BEEN MADE AVAILABLE. GROUN D NO.4.L OF THE APPELLANT IS ALLOWED. 13. WE FIND THAT EVEN LD. CIT(A) VIDE PAGE 4 IN HIS ORDER HAS NOTED AS UNDER: GROUND NO.4:- AD-HOC ADDITION OF RS.52,46,828/- ON ACCOUNT OF DISALLOWANCE OF 10% OF ADMINISTRATIVE EXPENSES. IN THIS REGARD, IN THE ORDER YOU HAVE MENTIONED THAT FOR WANT OF TIME YOU WERE NOT ABLE TO VERIFY THE EXPENSES. NOW, YOU ARE DIRECTED TO VERI FY ALL THE DETAILS AVAILABLE WITH YOU AS WELL AS DETAILS FILED ALONG W ITH PAPER BOOK. YOUR REPORT SHOULD REACH TO THE UNDERSIGNED BY 20.0 9.2011. 14. THE A.O. FAILED TO PROVIDE ANY ADVERSE COMMENTS DURING REMAND PROCEEDINGS AND, THEREFORE, AD-HOC ADDITION OF 10% OF EXPENSES WITHOUT 18 ITA NO.2498,2658/DEL/2012 FURNISHING ANY COGENT REASON IS NOT JUSTIFIED AND L D. CIT(A) HAS DELETED THE SAME RELYING UPON A NUMBER OF CASE LAWS AND WE ARE IN AGREEMENT WITH HIS FINDINGS. IN VIEW OF THE ABOVE, GROUND NO.2 OF TH E REVENUES APPEAL IS DISMISSED. 14. IN NUTSHELL, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED WHEREAS APPEAL FILED BY REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 15. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST NOV., 2014. SD./- SD./- (I. C. SUDHIR ) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:21 ST NOV., 2014 SP COPY FORWARDED TO:- THE APPELLANT THE RESPONDENT THE CIT THE CIT (A)-, NEW DELHI. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER