D.C.I.T. Central cricle, RAIPUR V. M/S R.K. FERRO ALLOYS PVT. LTD, KORBA(CG)

ITA 261/BIL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8924 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 30-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Assessee Lawyers: G S AGRAWAL
• Keywords: Unexplained cash credit; Rejection of books of accounts; Search and seizure; Salary income; Accommodation entries
• Section: 133(6); 68; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH , RAIPUR BEFORE : SHRI N.S.SAINI, A M & SHRI PAV AN KUMAR GADALE, J M ITA NO. 260 & 261 / RPR /20 1 4 (ASSESSMENT YEAR : 20 07 - 20 08 & 2012 - 2013 ) DCIT, CENTRAL CIRCLE, RAIPUR - 492001 V S R.K.FERRO ALLOYS PVT. LTD. BESI DE CEAT TYRE, TRANSPORT NAGAR, KORBA (CG) P AN NO. : A A BCR 7964 C (APPELLANT ) .. T N E D N O P S E R AND CROSS OBJECTION NO . 09 & 10 /RPR/201 5 (ASSESSMENT YEAR :20 07 - 20 08 & 2012 - 2013 ) R.K.FERRO ALLOYS PVT. LTD. BESIDE CEAT TYRE, TRANSPORT NAGAR, KORBA (CG) V S DCI T, CENTRAL CIRCLE, RAIPUR - 492001 PAN NO. : A ABCR 7964 C (APPELLANT ) .. T N E D N O P S E R REVENUE BY : SHRI P.K.MISHRA , CIT DR ASSESSEE BY : SHRI G.S.AGRAWAL , AR DATE OF HEARING : 1 5 / 01 /201 8 DATE OF PRONOUNCEMENT 31 / 01 /201 8 / O R D E R PER SHRI N.S.SAINI , A M : TH ESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE COMMON ORDER OF THE CIT(A ), RAIPUR , DATED 23.07.2014 FOR THE ASSESSMENT YEAR 20 07 - 2008 & 2012 - 2013 . THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS. 2 . THE ONLY ISSUE INVOLVE D IN THE A PPEAL OF THE REVENUE FOR ASSESSMENT YEARS 2007 - 0 8 IS DIRECTED AGAINST THE ORDER OF CIT(A) IN DELETING THE ADDITIONS OF RS. 36,50 ,000/ - ON ACCOUNT OF SHARE APPLICATION/CAPITAL RECEIVED AS UNEXPLAINED CASH CREDITS U/S.68 OF THE INCOME TAX ACT, 1961 . 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF FERRO VANADIUM. A SEARCH ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 2 AND SEIZURE OPERATION WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 24 TH AND 25 TH MAY, 2011. IN PURSUANCE TO THE SAME, NOTICE U/S.153A OF THE ACT WAS ISSUED AND IMPUGNED ORDER OF ASSESSMENTS WAS PASSED. IT IS NOT IN DISPUTE THAT ASSESSMENT FOR THE ASSESSMENT YEAR 2007 - 08 WAS COMPLETED PRIOR TO THE D ATE OF SEARCH. IN OTHER WORDS, THE ASSESSMENT FOR THIS ASSESSMENT YEAR WAS NOT ABATED. 4 . WE FIND THAT THE ABOVE ADDITION MADE BY THE AO IN THE IMPUGNED ASSESSMENT YEAR W AS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF THE SEARCH. 5 . THE REVENUE COULD NOT SHOW ANY INCRIMINATING MATERIAL, WHICH WAS FOUND DURING THE COURSE OF THE SEARCH ON THE BASIS OF WHICH ABOVE ADDITION COULD HAVE BEEN MADE. IT IS A SETTLED POSITION OF LAW THAT IN AN ASSESSMENT MADE IN PURSUANCE TO SEARCH IN RESPECTI VE ASSESSMENT YEAR FOR WHICH ASSESSMENT PROCEEDINGS WERE NOT ABATED, ADDITION CANNOT BE MADE DE HORS THE INC RIMINATING MATERIALS FOUND DURING THE COURSE OF SEARCH. WE, THEREFO RE, DO NOT FIND ANY MERIT IN THIS APPEAL OF THE REVENUE. ACCORDINGLY, THE APPEAL OF REVENUE FOR THE ASSESSMENT YEAR 2007 - 08, IS DISMISSED. 6. GROUND NO.1 & 2 IN THE A PPEAL OF THE REVENUE FOR ASSESSMENT YEARS 2012 - 13 ARE DIRECTED AGAINST THE ORDER OF CIT(A) IN DELETING THE ADDITION OF RS. 15,00,000/ - ON ACCOUNT OF SHARE APPLICATION/CAPI TAL RECEIVED AS UNEXPLAINED CASH CREDITS U/S.68 OF THE INCOME TAX ACT, 1961 . 7. BRIEF FACTS RELATING TO THE ABOVE GROUNDS ARE THAT THE AO IN THE ASSESSMENT ORDER HAS STATED AS UNDER : - ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 3 '8.3 THE ASSESSEE HAS SUBMITTED THE DOCUMENTS RELATED TO IDENTITY, CRED ITWORTHINESS AND GENUINENESS OF TRANSACTIONS RELATED TO SHARE CAPITAL RECEIVED DURING A.Y. 2012 - 13. NO DOCUMENTS HAVE BEEN FILED REGARDING THE SHARE CAPITAL RECEIVED DURING F . Y. 2007 - 08. 8.5 REGARDING THE SHARE APPLICATION MONEY RECEIVED FROM CONSOLIDAT ED FINLEASE LIMITED, IT IS FOUND THAT THE COMPANY IS MERELY AN INVESTMENT COMPANY, WHO DOES NOT CARRY OUT ANY MANUFACTURING OR ACTUAL REVENUE GENERATING ACTIVITIES. REGARDING THE SHARE APPLICATION MONEY RECEIVED FROM DELHI AND KOLKATA BASED INVESTMENT COMP ANIES, NO DETAILS HAVE BEEN FILED. THE REPLY OF THE ASSESSEE ON THE ISSUE OF THE SHARE CAPITAL RECEIVED FROM DELHI AND KOLKATA BASED INVESTMENT COMPANIES AND FROM CONSOLIDATED FINLEASE LIMITED, HAS BEEN CONSIDERED BUT NOT FOUND SATISFACTORY IN VIEW OF DISC USSIONS MADE IN SUCCEEDING PARAS. FIRSTLY, THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN AS TO WHY THE COMPANIES BASED AT DELHI AND KOLKATA WILL INVEST IN THE SHARES OF A CLOSELY HELD PRIVATE LIMITED COMPANY WHOSE PRINCIPLE PLACE OF BUSINESS IS KORBA, CHHATTIS GARH. 8.6 THE ASSESSEE HAS ALSO NOT EXPLAINED AS TO HOW THESE COMPANIES CONTACTED THE ASSESSEE COMPANY. 8.7 LETTERS U/S 133(6) OF THE ACT WERE SENT TO THE INVESTOR COMPANIES OF KOLKATA AND DELHI, ON THE ADDRESSES AS PROVIDED BY THE ASSESSEE. IN NONE OF THE CASES, THE REPLIES WERE RECEIVED. FURTHER, THE POINTS OF CONSIDERATION ARE: (I) THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE INVESTOR COMPANIES OF KOLKATA AND DELHI REMAIN UNESTABLISHED AND DOUBTFUL. (II) THE ENTIRE INVESTMENT BY THESE CO MPANIES HAS BEEN MADE IN UNQUOTED AND PRIVATE COMPANY. (III) THE ABOVE DISCUSSION CLEARLY SUGGESTS THAT THESE COMPANIES ARE ACCOMMODATION ENTRY PROVIDERS ONLY. 8.8 SECTION 68 OF THE ACT CLEARLY PROVIDES THAT IF THE ASSESSEE IS NOT ABLE TO GIVE SATISFAC TORY EXPLANATION AS TO THE NATURE AND SOURCE OF A SUM FOUND CREDITED IN HIS BOOKS, THE SUM MAY BE TREATED AS THE UNDISCLOSED INCOME OF THE ASSESSEE. IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS FAILED TO PROVIDE SATISFACTORY EXPLANATION AS TO THE 'NATURE AND SOURCE' OF A SUM FOUND CREDITED IN HIS BOOKS. MERELY, BASED ON ARRANGED AFFAIRS AND SUPPORTING DOCUMENTS, THE IDENTITY CANNOT BE SAID TO BE ESTABLISHED. 8.9 IN VIEW OF THE ABOVE DISCUSSION MADE IN ABOVE PARAS, IT IS CLEAR THAT THE ASSESSEE HA S FAILED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS IN RESPECT OF THE AMOUNTS CREDITED IN THE BOOKS OF THE ASSESSEE. IT IS ALSO ESTABLISHED THAT THE AMOUNTS CLAIMED BY THE ASSESSEE' RECEIVED AS SHARE APP LICATION MONEY FROM VARIOUS ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 4 COMPANIES REMAINS UNEXPLAINED. THEREFORE, THE SAME IS TREATED AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. HOWEVER, THE INVESTMENTS MADE BY THE IN - HOUSE COMPANIES AND INDIVIDUALS WARRANTS NO INTERFERENCE. ' 8 . AGGR IEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND SUBMITTED THAT THE AO HAS MADE ENQUIRY AT HIS END DIRECTLY FROM VARIOUS SHARE APPLICANT COMPANIES, NOT DISCLOSED TO THE APPELLANT. IT IS CLAIMED THAT IT IS NOT K NOWN TO WHOM NOTICES U/S 133(6) WERE SENT BY THE AO AND AT WHAT ADDRESS. IT IS FURTHER ARGUED THAT THE ASSESSEE HAS FILED VARIOUS SUPPORTINGS, CONCERNING ALL THE SHARE APPLICANTS, SUCH AS COPIES OF SHARE APPLICATION FORMS, CERTIFICATE OF REGISTRATION FROM REGISTRAR OF COMPANIES IN CASE WHERE THE SHARE APPLICANT IS A COMPANY, PAN CARD, ACKNOWLEDGEMENT OF FILING OF INCOME TAX RETURN BY THE SHARE APPLICANT, AUDITED FINAL ACCOUNTS WITH AUDIT REPORT OF THE SHARE APPLICANT, MEMORANDUM & ARTICLES OF ASSOCIATION OF SHARE APPLICANT, BANK STATEMENT OF SHARE APPLICANT FROM WHERE THE AMOUNT WAS DRAWN FOR INVESTMENT INTO APPELLANT COMPANY, ETC. IT IS SUBMITTED THAT THE ASSESSEE HAS DISCHARGED THE BURDEN OF PROVING IDENTITY, CREDIT - WORTHINESS AND GENUINENESS OF TRANSACTIO NS. THE AR OF THE ASSESSEE RELIED UPON THE VARIOUS JUDGEMENTS INCLUDING THAT OF THE JURISDICTIONAL HIGH COURT AND OTHER HIGH COURTS AND APEX COURT. THE AR OF THE ASSESSEE FURTHER SUBMITTED THAT WITHOUT PREJUDICE AND IN ALTERNATE, THERE IS NO FINDING THAT T HE AFORESAID SHARE APPLICATION MONEY WAS INCOME OF THE APPELLANT AND BELONGED TO THE ASSESSEE . IT WAS FURTHER ARGUED THAT THE LEARNED AO HAS NOT CONSIDERED THE EXPLANATION FILED BY THE ASSESSEE JUDICIOUSLY TO HAVE THE SATISFACTIO N AS PER PROVISIONS OF SEC. 68 OF THE ACT. ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 5 9 . THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE, DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER : - 7. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. IT IS GATHERED TH AT IN A.Y. 20 07 - 08 THE APPELLANT RECEIVED SHARE APPLICATION MONEY AMOUNTING TO RS.36,50,000 FROM FOUR SHAR E APPLICANT COMPANIES, NAMELY M/ S. MA NASROWAR DEALERS PVT. LTD., RS.19,00,000/ - ; M/ S. ADHISHWAR NIRMAN PVT. LTD. RS. 7,50,000/ - ; M/S. MLF CLASSIC FINANCE LIMITED R S.5,00,000/ - ; AND M/ S. SUBHANGI ENGINEERS & CONSULTANCY PVT. LTD. RS. 5,00,000/ - . IN A.Y. 2012 - 13, THE APPELLANT RECEIVED SHARE APPLICATION MONEY AMOUNTING TO RS. 15,00,000/ - FROM ONE COMPANY, NAMELY M/ S. CONSOLIDATED FINLEASE LIMITED, DELHI. FOR A.Y. 2007 - 08, THE AO OBSERVED THAT NO DOCUMENTS HAVE BEEN FILED REGARDING SHARE APPLICATION MONEY RECEIVED DURING 2007 - 08. THE LEARNED AR OBJECTED AND SUBMITTED THAT EVIDENCES WERE FILED BEFORE THE AO. I FIND TH A T THE APPELLANT HAD FILED DOCUMENTARY EVIDENCES IN SU PPORT OF SHARE APPLICATION MONEY RECEIVED FROM VARIOUS APPLICANTS BEFORE THE AO. THESE EVIDENCES INCLUDE SUPPORTING OF SHARE APPLICANTS SUCH AS PAN, CERTIFICATE OF REGISTRATION FROM THE ROC WHERE THE SHARE APPLICANTS IS A COMPANY, COPY OF BANK ACCOUNT FROM WHERE THE SHARE APPLICATION MONEY WAS WITHDRAWN, COPY OF INCOME TAX RETURN FILED, SHARE APPLICATION FORM, RESOLUTION OF BOARD OF DIRECTORS AUTHORIZING TO INVEST INTO SHARE CAPITAL OF THE APPELLANT COMPANY, AUDITED FINAL ACCOUNTS OF THE COMPANIES INCLUDING BALANCE SHEET. 8. THE PRESENT ACTION OF THE A. O IS NOT CULMINATING FROM ANY SPECIFIC FINDING AGAINST THE APPELLANT THAT IT WAS A BENEFICIARY OF ANY RACKET WHICH HAS BEEN UNEARTHED AS A RESULT OF SEARCH PROCEEDINGS NOR HAS THE A. O BROUGHT ON RECORD ANY O THER EVIDENCE TO INDICATE THAT THE APPELLANT DID MAKE UNDISCLOSED INCOME AND SUCH EVIDENCE CAME ON THE SURFACE AS A RESULT OF SEARCH PROCEEDINGS. THE A. O HAS NOT REBUTTED THE EVIDENCES SUBMITTED BY THE APPELLANT TO DEMONSTRATE THAT THE SUBSCRIBERS HAD SUFF ICIENT MEANS TO INVEST IN THE SHARE APPLICATION/CAPITAL OF THE APPELLANT COMPANY, I HAVE ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 6 EVALUATED THE CREDITWORTHINESS OF THE SUBSCRIBERS WITH REFERENCE TO THE AUDITED FINANCIAL STATEMENTS OF THE SUBSCRIBERS AND FOUND SATISFACTORY. IN THIS BACKGROUND, IN MY CONSIDERED VIEW, THERE IS NO SCOPE AND REASON TO TAKE A CONTRARY VIEW THAN THAT TAKEN BY THE THEN A. O WITHOUT THERE BEING ANY DOCUMENTARY EVIDENCE AGAINST THE APPELLANT TO DEMONSTRATE THAT THE SHARE APPLICATION MONEY WAS NOTHING BUT UNDISCLOSED INCOME O F THE APPELLANT. 9. IT IS AN UNDISPUTED FACT THAT THE NAMES, ADDRESSES AND ASSESSMENT PARTICULARS OF THE INVESTORS, CERTIFICATE OF REGISTRATION FROM THE ROC AND BANK STATEMENT OF THE APPLICANTS HAD BEEN FURNISHED BY THE APPELLANT BEFORE THE AO. IT IS FUR THER OBSERVED THAT THE SHARE APPLICATION/CAPITAL MONEY HAS BEEN RECEIVED BY WAY OF ACCOUNT PAYEE CHEQUES FROM THE INVESTORS MOST OF WHOM ARE COMPANIES AND IS IN THE BANK ACCOUNT OF THE APPELLANT. I HAVE PERUSED THE BANK STATEMENTS OF THE INVESTORS, THEIR A U DITED FINANCIAL STATEMENTS AND CONFIRMATION FOR MAKING SUCH INVESTMENTS, WHICH CLEARLY ESTABLISHES THE FACTUM OF MAKING INVESTMENTS. THESE FACTS ARE CLEARLY ESTABLISHING THE IDENTITY OF THE INVESTORS AND THE GENUINENESS OF THE IMPUGNED TRANSACTIONS. 10. THERE IS NOTHING ON RECORD WHICH CAN INDICATE THAT THE RECEIPT OF SHARE APPLICATION MONEY WAS BY WAY OF ACCOMMODATION ENTRIES ONLY. IT IS ALSO NOT THE CASE OF THE A.O THAT THE INVESTORS HAVE ACCEPTED BY WAY OF STATEMENT THAT THE SUMS PAID TO THE APPELLANT WAS IN FACT RECEIVED FROM THE APPELLANT. AND INVESTORS MERELY ROUTED THE UNDISCLOSED INCOME OF THE APPELLANT THROUGH MONEY LAUNDERING PROCESS IN THE FORM OF SHARE APPLICATION MONEY. ON THE CONTRARY, THE A.O HIMSELF HAS STATED IN THE ASSESSMENT ORDER THAT THE INVESTORS HAVE SENT CONFIRMATORY LETTERS. IN THE BACKDROP OF THESE FACTS AND DOCUMENTARY EVIDENCES, IN MY CONSIDERED OPINION, THE IDENTITY AND CREDITWORTHINESS OF THE SUBSCRIBERS HAS BEEN ESTABLISHED AND CANNOT BE DOUBTED, IT IS NOT JUSTIFIED ON THE PA RT OF THE A.O TO SIMPLY REJECT THE DOCUMENTARY EVIDENCES ON RECORD AND TAKE AN ADVERSE VIEW AND CLOTHING THE CASE OF THE APPELLANT WITH THE ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 7 JUDICIAL PRONOUNCEMENTS WHICH HAVE BEEN RENDERED ON ABSOLUTELY DIFFERENT FACTS AND CIRCUMSTANCES. 11. THE APPELLAN T HAS RELIED UPON VARIOUS JUDICIAL PRONOUNCEMENTS AND CORRELATED THE FACTS IN THOSE DECISIONS WITH THE FACTS IN THE CASE OF THE APPELLANT. I AM CONVINCED THAT THE DECISIONS RELIED UPON BY THE APPELLANT ARE CERTAINLY APPLICABLE IN THE CASE OF THE APPELLANT AS THE FACTS ARE NOT ONLY SIMILAR BUT IDENTICAL. THE APPELLANT HAS ALSO RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT AND JURISDICTIONAL HIGH COURT WHICH CANNOT BE IGNORED. THE A.O HAS REFERRED TO THE NOTICES ISSUED UNDER SECTION 133(6) WHICH HAVE BEEN RETURNED UN - SERVED IN SOME OF THE CASES. IT APPEARS THAT THE APPELLANT HAS NOT BEEN CONFRONTED WITH THE RESULTS OF THE ENQUIRY CONDUCTED BY THE A.O. IT IS FURTHER OBSERVED THAT NO FURTHER ENQUIRY OR INVESTIGATION HAS BEEN CONDUCTED BY THE AO TO CORROB ORATE OR SUPPORT THE CONCLUSIONS DRAWN IN THE ASSESSMENT ORDER SO AS TO ASSESS THE SHARE CAPITAL MONEY AS THE UNDISCLOSED INCOME OF THE APPELLANT COMPANY. IN MY CONSIDERED OPINION, APART FROM DRAWING PRESUMPTIONS, THE AO HAS NOT BROUGHT ANY CLINCHING MATER IAL OR EVIDENCE ON RECORD TO PROVE THAT THE SAID SHARE CAPITAL MONEY BELONGS TO THE APPELLANT SINCE NO NEXUS HAS BEEN ESTABLISHED THAT THE MONEY FOR AUGMENTING THE INVESTMENT IN THE BUSINESS HAS FLOWN FROM APPELLANT'S OWN MONEY WHICH IS AN ESSENTIAL PRE - RE QUISITE FOR MAKING ADDITION IN SUCH CASES. I AM CONVINCED THAT THE CASE OF THE APPELLANT IS SQUARELY COVERED BY THE DECISIONS RENDERED BY THE HON'BLE APEX COURT IN THE CASE OF THE CIT VS. LOVELY EXPORTS (P) LTD. REPORTED IN 216 CTR 195 AND THE JURISDICTION AL HIGH COURT VIZ. THE CHHATTISGARH HIGH COURT IN THE CASE OF THE ACIT VS. VENKATESHWAR ISPAT (P) LTD. REPORTED IN 3 I 9 ITR 393 FOR THE REASON THAT THE FACTS IN SUCH CASES ARE ENTIRELY SAME, PARTICULARLY, WHEN NO DIFFERENTIATION COULD BE EFFECTIVELY DEMO NSTRATED AND BROUGHT ON TO THE RECORD BY THE AO. THE SUBMISSIONS OF THE AO THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (P) LIMITED WAS RENDERED IN THE LIGHT OF DIFFERENT FACTS INASMUCH AS THE SAID JUDGEMENT WAS RENDERED BY THE HON 'BLE SUPREME COURT IN THE ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 8 CONTEXT OF PUBLIC ISSUE, IS DEVOID OF MERIT BECAUSE THE DECISION WAS RENDERED BY THE H ON 'BLE SUPREME COURT IN THE CASE OF LOVELY EXPORTS (P) LTD. WHICH IS A PRIVATE LIMITED COMPANY AND WHICH CANNOT BRING PUBLIC ISSUE OF SH ARES. I FIND THAT THE INVESTMENTS MADE BY THE SHARE APPLICANTS WERE DULY REFLECTED IN THE AUDITED FINANCIAL STATEMENTS OF THE CORPORATE INVESTORS. IT IS A SETTLED PRINCIPLE OF LAW THAT REASON FOR SUSPICION, HOWEVER GRAVE IT MAY BE, CANNOT BE A BASIS FOR HO LDING ADVERSITY AGAINST APPELLANT. 12. THE ASSESSING OFFICER HAS DISREGARDED THE DOCUMENTARY EVIDENCES ADDUCED BY THE APPELLANT SUCH AS CONFIRMATION FROM THE SHARE APPLICANTS, THEIR PAN, CERTIFICATE OF INCORPORATION OF SUBSCRIBER COMPANIES. THE SUBSCRIPT ION FOR THE SHARES WAS RECEIVED THROUGH CHEQUES. THE INVESTOR - COMPANIES ARE DULY REGISTERED WITH ROC. THOSE COMPANIES WERE ALSO HAVING THEIR INCOME TAX PAN NUMBERS AND REGULARLY FILED RETURNS OF INCOME. NO MATERIAL WAS BROUGHT ON RECORD BY THE A.O INDEPEND ENTLY OF THE INFORMATION RECEIVED, IF ANY, FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT TO SHOW THAT THE MONIES REPRESENTED THE APPELLANT'S UNDISCLOSED INCOME. 13. THE HON'BLE SUPREME COURT IN CIT VS. LOVELY EXPORT, 216 ITR 198 SC AND THE DEL HI HIGH COURT IN DIVINE LEASING AND FINANCE LIMITED, (2008) 299 ITR 268 HAVE HELD THAT IN THE CASE OF MONEY RECEIVED TOWARDS SHARE CAPITAL ONLY THE IDENTITY OF THE SHARE HOLDERS NEEDS TO BE PROVED AND ONCE THAT IS ESTABLISHED AND IT IS ALSO SHOWN THAT THE MONEY DID IN FACT COME FROM THEM, IT IS NOT FOR THE ASSESSEE TO PROVE AS TO HOW THE SHARE APPLICANTS CAME TO BE IN POSSESSION OF THE MONEY. IN THE LIGHT OF THE ABOVE DISCUSSION, I AM INCLINED TO AGREE WITH THE ARGUMENTS AND EVIDENCES PROVIDED BY THE APPELL ANT TO SUBSTANTIATE THAT THE TRANSACTION REGARDING SHARE APPLICATION MONEY RECEIVED BY IT WERE GENUINE TRANSACTIONS AND THE SAME WERE NOT ACCOMMODATION ENTRIES. I ALSO DO NOT FIND ANY EVIDENCE COLLECTED BY THE A.O ,WHICH COULD PROVE OTHERWISE. ACCORDINGLY, THE AO WAS NOT JUSTIFIED IN TREATING THE AMOUNT OF SHARE ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 9 APPLICATION MONEY RECEIVED BY THE APPELLANT AS ITS UNDISCLOSED INCOME. 14. THE CASE OF THE APPELLANT FINDS SUPPORT FROM THE DECISION IN: 1 . CIT VS. KAMDHENU STEEL & ALLOYS LIMITED & ORS. (2012) 68 DTR (DEL) 38. 2. IN THE CASE OF COMMISSIONER OF INCOME - TAX V. HLT FINANCE (P.) LTD. [2011] 12 TAXMANN.COM 247 - (DELHI) 3. IN THE CASE OF COMMISSIONER OF INCOME - TAX - IV V. DWARKADHISH INVESTMENT (P.) LTD. [2010] 194 TAXMAN 43 (DELHI) 4. IN THE CASE OF COMMISSIONER OF INCOME - TAX V. WINSTRAL PETROCHEMICALS (P.) LTD. [2011] 10 TAXMANN.COM 137 (DELHI). 5. IN THE CASE OF COMMISSIONER OF INCOME - TAX V. ARUNANANDA TEXTILES (P.) LTD. [2011] 15 TAXMANN.COM 226 (KAR.), 6. IN THE CASE OF COMMISSIONER OF INCOME - TAX V. CREATIVE WORLD TELEFILMS LTD. [2011] 15 TAXMANN.COM 183 (BOM.) 15. THE A.O HAS RELIED UPON THE DECISION IN CIT V. NOVA PROMOTERS & FINLEASE (P) LTD. [2012] 342 ITR 169/206 TAXMAN 207118 TAXMANN.COM 217 (DELHI). HOWEVER, ON GOING THROUGH THE SAID DECISION IN NOVA PROMOTERS & FINLEASE (P) LTD. (SUPRA) I FIND THAT THE FACTS ARE CLEARLY DISTINGUISHABLE. IN FACT, IN NOVA PROMOTERS & FINLEASE (P) LTD. (SUPRA) ITSELF THE HON'BLE DELHI HIGH COURT HAS OBSERVED, IN THE CONTEXT OF LOVELY EXPORTS (P) LTD. (SU PRA), AS UNDER: - 'THE RATIO OF A DECISION IS TO BE UNDERSTOOD AND APPRECIATED IN THE BACKGROUND OF THE FACTS OF THAT CASE. SO UNDERSTOOD, IT WILL BE SEEN THAT WHERE THE COMPLETE PARTICULARS OF THE SHARE APPLICANTS SUCH AS THEIR NAMES AND ADDRESSES, INCOM E TAX FILE NUMBERS, THEIR CREDITWORTHINESS, SHARE APPLICATION FORMS AND SHARE HOLDERS' REGISTER, SHARE TRANSFER REGISTER ETC. ARE FURNISHED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT CONDUCTED ANY ENQUIRY INTO THE SAME OR HAS NO MATERIAL IN HIS POSSESSION TO SHOW THAT THOSE PARTICULARS ARE FALSE AND CANNOT BE ACTED UPON, THEN NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY UNDER SEC.68 ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 10 AND THE REMEDY OPEN TO THE REVENUE IS TO GO AFTER THE SHARE APPLICANTS IN ACCORDANCE WITH LAW. WE ARE A FRAID THAT WE CANNOT APPLY THE RATIO TO A CASE, SUCH AS THE PRESENT ONE, WHERE THE ASSESSING OFFICER IS IN POSSESSION OF MATERIAL THAT DISCREDITS AND IMPEACHES THE PARTICULARS FURNISHED BY THE ASSESSEE AND ALSO ESTABLISHES THE LINK BETWEEN SELF - CONFESSED ' ACCOMMODATION ENTRY PROVIDERS', WHOSE BUSINESS IT IS TO HELP ASSESSEES BRING INTO THEIR BOOKS OF ACCOUNT THEIR UNACCOUNTED MONIES THROUGH THE MEDIUM OF SHARE SUBSCRIPTION, AND THE ASSESSEE. THE RATIO IS INAPPLICABLE TO A CASE, AGAIN SUCH AS THE PRESENT ONE , WHERE THE INVOLVEMENT OF THE ASSESSEE IN SUCH MODUS OPERANDI IS CLEARLY INDICATED BY VALID MATERIAL MADE AVAILABLE TO THE ASSESSING OFFICER AS A RESULT OF INVESTIGATIONS CARRIED 'OUT BY THE REVENUE AUTHORITIES INTO THE ACTIVITIES OF SUCH 'ENTRY PROVIDERS '. THE EXISTENCE WITH THE ASSESSING OFFICER OF MATERIAL SHOWING THAT THE SHARE SUBSCRIPTIONS WERE COLLECTED AS PART OF A PRE - MEDITATED PLAN - A SMOKESCREEN - CONCEIVED AND EXECUTED WITH THE CONNIVANCE OR INVOLVEMENT OF THE ASSESSEE EXCLUDES THE APPLICABIL ITY OF THE RATIO. IN OUR UNDERSTANDING, THE RATIO IS ATTRACTED TO A CASE WHERE IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON HIM UNDER SEC. 68 TO PROVE AND ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APP LICANT AND THE GENUINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSEE EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN HIS POSSESSION AND THEN COME FORWARD TO MERELY REJECT THE SAME, WITHOUT CARRYI NG OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. THE CASE BEFORE US DOES NOT FALL UNDER THIS CATEGORY AND IT WOULD BE A TRAVESTY OF TRUTH AND JUSTICE TO EXPRESS A VIEW TO THE CONTRARY.' 16. THE CASE OF THE APPELLANT ALSO FINDS SUPP ORT FROM THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - (A) COMMISSIONER OF INCOME - TAX - III V. NAMASTEY CHEMICALS (P.) LTD. [2013} 33 TAXMANN. COM 271 (GUJ ARAT); ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 11 (B) COMMISSIONER OF INCOME TAX V. KUBER PLORITECH LTD. [20IO} 2 DTLONLINE 136 (DELHI); (C) COMM ISSIONER OF INCOME - TAX V. TANIA INVESTMENTS (P.) LTD. IT APPEAL NO. 15 OF 2009, HIGH COURT OF MUMBAI; (D) BHAV SHAKTI STEEL MINES (P.) LTD. V. COMMISSIONER OF INCOME - TAX [2009} 179 TAXMAN 25 (DELHI); (E) COMMISSIONER OF INCOME - TAX V. SAMIR BIO - TECH (P. ) LTD. [20IO} 325 ITR 294 (DELHI) (F) COMMISSIONER OF INCOME - TAX - I V. MICRO MELT (P.) LTD. [2009} 177 TAXMAN 35 (GUJ.) . (G) COMMISSIONER OF INCOME - TAX - V V. REAL TIME MARKETING (P.) LTD. [2008} 173 TAXMAN 41 (DELHI) (H) ASSISTANT COMMISSIONER OF INCO ME - TAX V. MANSAROVAR URBAN CO - OPERATIVE BANK LTD. [2009} 124 TT] 269(LUCKNOW); (I) COMMISSIONER OF INCOME - TAX - IV V. EMPIRE BUILDTECH (P.) LTD. [20I4} 43 TAXMANN. M 269 (DELHI); (J) COMM ISSIONER OF INCOME - TAX V. MULBERRY SILK 'INTERNATIONAL LTD. [20I2 } 19 TAXMANN. COM 31 (KAR.); (K) COMMISSIONER OF INCOME - TAX - III V. NILCHEM CAPITAL LTD. [2012]18 TAXMANN.COM 350 (GUJ.); (I) COMMISSIONER OF INCOME - TAX V. JAY DEE SECURITIES & FINANCE LTD. [2013] 32 TAXMANN.COM 91 (ALLAHABAD); (M) COMMISSIONER OF INC OME - TAX, DELHI - IL V. KINETIC CAPITAL FINANCE LTD. [2011] 14 TAXMANN. COM 150 (DELHI); (N) COMMISSIONER OF INCOME - TAX V. VLS FOODS (P.) LTD. [2011] 15 TAXMANN.COM 225 (DELHI); (0) COMMISSIONER OF INCOME - TAX V. AMBUJA GINNING PRESSING AND OIL CO. (P.) LT D. [2011]15 TAXMANN.COM 273 (GUJ.); (P) COMMISSIONER OF INCOME - TAX V. ROCK FORT METAL & MINERALS LTD. [2011] 198 TAXMAN 497 (DELHI); (Q) COMMISSIONER OF INCOME - TAX V. SIRI RAM SYAL HYDRO POWER (P.) LTD.[2011] 196 TAXMAN 441 (DELHI); ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 12 (R) COMMISSIONER OF INCOME - TAX V. ORBITAL COMMUNICATION (P.) LTD. [2010] 327 ITR 560 (DELHI); (S) COMMISSIONER OF INCOME - TAX - I V. HIMATSU BIMET LTD. [2011] 12 TAXMANN.COM 87 (GUJ.); (T) COMMISSIONER OF INCOME - TAX - I, JAIPUR V. A.L. LALPURIA CONSTRUCTION (P.) LTD. [201 3] 32 TAXMANN.COM 384 (RAJASTHAN); (U) LUMINANT INVESTMENTS (P.) LTD. V. DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 40, MUMBAI [2014]42 TAXMANN.COM 14 (MUMBAI - TRIB.); 17. I AM CONVINCED THAT THE APPELLANT HAS BEEN ABLE TO ESTABLISH THE IDENTIT Y AND CREDITWORTHINESS OF THE SUBSCRIBERS AS ALSO THE GENUINENESS OF THE TRANSACTIONS. IN MY CONSIDERED OPINION, THE RATIO OF THE AFORESAID JUDGEMENTS OF THE HON'BLE SUPREME COURT IN LOVELY EXPORTS AND THAT OF JURISDICTIONAL HIGH COURT ARE CERTAINLY BINDIN G IN NATURE ON ALL THE REVENUE AUTHORITIES AND COURTS ETC. AND FURTHER, THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT AS WELL AS THAT OF THE HON'BLE SUPREME COURT IN LOVELY EXPORTS HAS BEEN RENDERED, ON IDENTICAL FACTS. HENCE, IT IS IMPERMISSIBLE TO DEVIA TE FROM THE RATIO LAID DOWN THEREIN AND AGAINST THE LAW OF JUDICIAL PRECEDENTS. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE RATIO OF THE BINDING JUDGMENTS, THE ADDITION OF SHARE APPLICATION/CAPITAL MONEY OF RS.36,50,000/ - AND RS.15,00,000/ - AS UNEX PLAINED CASH CREDITS UNDER SECTION 68 IS UNCALLED FOR AND HENCE, DELETED. THE APPELLANT GETS RELIEF OF RS.36,50,000/ - IN A.Y.2007 - 08 AND RS.15,00,000/ - IN A.Y.2012 - 13. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND M ATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE RECEIVED RS. 15,00,000/ - AS SHARE APPLICATION FROM M/S CONSOLIDATED FINLEASE LIMITED, DELHI . THE AO OBSERVED THAT A LETTER U/S.133(6) OF THE ACT WAS SENT AT THE ADDRESS PROVIDED BY THE ASSESSEE OF ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 13 THE INVESTOR COMPANY AND NO REPLY WAS RECEIVED. THEREFORE, IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE INVESTOR COMPANY REMAINED UNESTABLISHED AND DOUBTFUL. THEREFORE, HE TREATED THE AMOUNT OF RS.15,00,000/ - RECEIVED AS SHARE APPLICATION MONEY AS UNEXPLAINED CREDIT U/S.68 OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 11. ON APPEAL, THE CIT(A) DELETED THE ADDITION. HE OBSERVED THAT THE ASSESSEE IN SUPPORT OF THE SHARE APPLICATION MONEY FILED DOCUMENTS SUCH AS PAN, CERTIFICATE OF REGISTRATION FROM THE ROC, WHERE THE SHARE APPLICANT IS A COMPANY, COPY OF BANK ACCOUNT FROM WHERE THE SHARE APPLICATION MONEY WAS WITHDRAWN, COPY OF INCOME TAX RETURN FILED, SHARE APPLICATION FORM, RESOLUTION OF BOARD OF DIRECTORS AUTHORIZING TO INVEST I NTO SHARE CAPITAL OF THE ASSESSEE COMPANY, AUDITED FINAL ACCOUNTS OF THE COMPANIES INCLUDING BALANCE SHEET. HE OBSERVED THAT THE AO DID NOT REBUT THE EVIDENCES SUBMITTED BY THE ASSESSEE TO DEMONSTRATE THAT THE SUBSCRIBERS HAD SUFFICIENT MEANS TO INVEST IN THE SHARE APPLICATION/CAPITAL OF THE ASSESSEE COMPANY . HE ALSO OBSERVED THAT H E FOUND FROM THE AUDITED FINANCIAL STATEMENT OF THE SUBSCRIBERS HAD THE CREDITWORTHINESS TO INVEST IN THE SHARE APPLICATION OF THE ASSESSEE COMPANY. HE FURTHER OBSERVED THAT THE SHARE APPLICATION MONEY WAS RECEIVED THROUGH BANKING CHANNEL AND THAT ON VERIFICATION OF THE BANK STATEMENT OF THE INVESTOR COMPANY IT IS FOUND THAT THOUGH THE COMPANIES HAVE MADE THE INVESTMENT IN THE ASSESSEE COMPANY. HE HELD THAT THE AO WAS NOT JUSTIFIE D TO SIMPLY REJECT THE DOCUMENTARY EVIDENCES ON RECORD AND TAKE AN ADVERSE VIEW. THE CIT(A) OBSERVED THAT THE AO HAS REFERRED TO NOTICE ISSUED U/S.133(6) ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 14 OF THE ACT WHICH WAS UNSERVED. HE OBSERVED THAT THE AO HAS NOT CONFRONTED THIS TO THE ASSESSEE. 12. W E FIND THAT U/S.68 OF THE ACT, INITIAL BURDEN IS ON THE ASSESSEE TO PROVE THE IDENTITY OF THE SHARE APPLICANT, CREDITWORTHINESS OF THE SHARE APPLICANT AND GENUINENESS OF THE TRANSACTION. WE FIND THAT THE IDENTITY OF THE SHARE APPLICANT WAS PROVED BY THE AS SESSEE BY FILING THE REGISTRATION CERTIFICATE WITH THE REGISTRAR OF COMPANIES, PAN NUMBER AND THE BANK STATEMENT OF THE INVESTOR COMPANY. FURTHER, GENUINENESS OF THE TRANSACTION WAS PROVED BY FILING THE BANK STATEMENT AND THE AUDITED ACCOUNTS OF THE INVEST OR COMPANY WHERE THE INVESTMENTS MADE BY THEM IN THE ASSESSEE COMPANY ARE REFLECTED. THE INITIAL BURDEN CAST ON THE ASSESSEE, WAS, THUS, DULY DISCHARGED BY IT. THE ONUS THEN SHIFTED ON THE AO TO BRING MATERIAL ON RECORD AFTER VERIFYING THE DOCUMENTS AND EV IDENCES IN SUPPORT OF THE SHARE APPLICATION MONEY FILED BY THE ASSESSEE TO SHOW THAT THE SHARE APPLICATION MONEY IS BOGUS OR THAT THE SHARE APPLICANTS DID NOT HAVE THE MEANS TO INVEST IN THE SHARE APPLICATION OF THE ASSESSEE COMPANY OR THAT THE SHARE APPLI CATION MONEY RECEIVED BY THE ASSESSEE, IN FACT, THE MONEY OF THE ASSESSEE COMPANY ITSELF. IN ABSENCE OF ANY MATERIAL BEING BROUGHT ON RECORD, IN OUR CONSIDERED VIEW THE ADDITION MADE IS UNSUSTAINABLE. FURTHER, IT IS OBSERVED THAT THE AO HAS ALSO NOT REFERR ED TO ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH WHICH EVIDENCES THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE IS NOT GENUINE. IN ABSENCE OF THE SAME, WE FIND NO GOOD REASON ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 15 TO INTERFERE WITH THE ORDER OF THE CIT(A) WHICH IS CONFIR MED AND THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. 13 . GROUND NO . 3 IN APPEAL FOR THE ASSESSMENT YEAR 2012 - 2013, IS DIRECTED AGAINST THE ORDER OF CIT(A) IN ALLOWING SET OFF OF BUSINESS LOSS OF RS.5,97,920/ - AGAINST INCOME FROM OTHER SOURCES FOR THE A. Y.2012 - 2013. 14 . BRIEF FACTS OF THE CASE RELATING TO THE ABOVE GROUND ARE THAT T HE AO HAS STATED THAT THOUGH THE ASSESSEE ADMITTED RS. 90,00,000 / - AS HIS UNDISCLOSED INCOME BUT THE ASSESSEE RETURNED THE INCOME AT RS. 84,02,880 / - AND THERE WAS DIFFERENCE OF R S. 5,97,920 / - AND DISALLOWED THE SAME. 15 . AGGRIEVED THEREBY THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND SUBMITTED THAT THE SUM OF RS. 90,00,000 / - WAS DULY CONSIDERED IN THE BOOKS OF ACCOUNTS AND IS EXHIBITED UNDER THE HEAD 'OTHER INCOME' IN THE FI NAL ACCOUNTS. AFTER ADJUSTING THE INCOME & EXPENDITURE AS PER AUDITED PROFIT & LOSS ACCOUNT, THE NET INCOME AS PER BOOKS OF ACCOUNTS WAS ARRIVED AT RS.84,86,199/ - . ACCORDINGLY , HE ARGUED THAT THE SUM OF RS. 90,00,000/ - IS DOUBLY CONSIDERED FOR TAXATION, ONC E IN BOOKS OF ACCOUNTS AND AGAIN IN THE ASSESSMENT ORDER. IT WAS ALSO EXPLAINED THAT REASONS FOR LOSS, AS PER BOOKS OF ACCOUNTS, WITHOUT CONSIDERING THE INCOME DISCLOSED, WAS EXPLAINED DURING ASSESSMENT PROCEEDINGS BEFORE AO, SUCH AS DECLINE IN SALE PRICE, INCREASE IN PRICES OF VARIOUS RAW MATERIAL ETC. IT WAS ALSO ARGUED THAT BOOKS OF ACCOUNTS WERE AUDITED AND NO DISCREPANCIES HAVE BEEN FOUND BY THE AO. IT IS ALSO EXPLAINED THAT THE TRADING RESULTS ARE BETTER AS COMPARED TO THE EARLIER YEAR. ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 16 16 . THE CIT(A ) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE DELETED THE ADDITIONS MADE BY THE AO BY OBSERVING AS UNDER : - 21. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. I FIND THAT THE INCOME SURRENDERED BY THE APPELLANT AMOUN TING TO RS. 90,00,000 / - HAS BEEN DISCLOSED IN THE BOOKS OF ACCOUNTS UNDER THE HEAD ,'INCOME FROM OTHER SOURCES'. HOWEVER, THE INCOME RETURNED IS SHORT BY RS. 5,97,920/ - . IF THE SUM OF RS. 90,00,000 / - IS NOT CONSIDERED, THERE IS LOSS AS COMPARED TO NET PROF IT. IT IS SEEN THAT THE A.O HAS MADE THE ADDITION ON THE GROUND THAT THE LOSS UNDER THE HEAD BUSINESS CANNOT BE SET OFF AGAINST INCOME FROM OTHER SOURCES. IN MY CONSIDERED VIEW, THERE IS NO MERIT IN THE ACTION OF THE A.O IN DENYING THE SET OFF OF LOSS FOR THE REASON THAT THERE IS NO RESTRICTION IN THE ACT ON SUCH SET OF BUSINESS LOSS AGAINST INCOME FROM OTHER SOURCES AS IS THERE IN CASE OF SALARY INCOME. HENCE, THE ADDITION OF RS.5,97,920/ - IS DELETED. 17 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE OR DERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE DR THOUGH SUPPORTED THE ORDER OF AO BUT COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF CIT(A) BY BRINING ANY POSITIVE AND COGENT MATERIAL ON RECORD. HENCE, WE DO NOT FIND ANY GOOD REA SON TO INTERFERE WITH THE ORDER OF CIT(A), WHICH IS CONFIRMED AND THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. 18 . GROUND NO. 4 IN APPEAL FOR THE ASSESSMENT YEAR 2012 - 2013 IS DIRECTED AGAINST THE ORDER OF CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT O F APPLYING NET PROFIT RATE AFTER REJECTION OF BOOKS OF ACCOUNTS U/S.145 OF THE ACT FOR RS. 9,52,904/ - . 19 . BRIEF FACTS RELATING TO THE ABOVE GROUND ARE THAT T HE AO HAS STATED THAT THERE WAS DIFFERENCE IN STOCK AS PER BOOKS OF ACCOUNTS AND STOCK TAKEN AT THE TIME OF PHYSICAL VERIFICATION . T HE EXPLANATION FILED BY THE ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 17 APPELLANT IS NOT SATISFACTORY . T HE ASSESSEE WAS ENGAGED IN UNACCOUNTED PRODUCTION & SALES DURING THE A.Y. 2012 - 13. AS AGAINST THE TURNOVER AS PER BOOKS OF ACCOUNTS AT RS.23,57,78,416 / - , THE AO ES TIMATED THE SALE OF RS.25,00,00,000 / - AND APPLIED GROSS PROFIT RATE OF 6.7% ON THE DIFFERENCE OF RS. 1,57,97,096 / - TH E REBY MAKING THE ADDITION OF RS. 9,52,904/ - . 20 . AGAINST THE ORDER OF ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AN D SUBMITTED THAT THE PROVISIONS OF SEC. 145 ARE NOT APPLICABLE AS THE ASSESSEE HAS KEPT AND MAINTAINED PROPER BOOKS OF ACCOUNTS AND THE ACCOUNTS WERE AUDITED. THE ITEMS PRODUCED BY THE ASSESSEE ARE SUBJECT TO EXCISE DUTY AND THE ASSESSEE HAS KEPT AND MAINT AINED DAY- TO - DAY PRODUCTION RECORDS. HE ALSO EXPLAINED THAT THE TURNOVER OF THE ASSESSEE IS TO THE TUNE OF RS.23 CRORES AND THE ASSESSEE WAS CARRYING INVENTORY TO THE EXT ENT OF RS. 5,00,00,000 / - AND THAT SOMETIMES THE GOODS I.E., RAW MATERIAL IS IN PROCESS WHICH MAY RESULT DIFFERENCE IN FINISHED, SEMI- FINISHED AND RAW MATERIAL STOCK. THE LEARNED AR ALSO FILED A COMPILATION SHOWING QUANTITY OF VARIOUS ITEMS AS PER QUANTITY RECORDS KEPT WITH THE QUANTITY FOUND AT THE TIME OF PREPARATION PHYSICAL INVENTORY. I T WAS CLAIMED THAT THERE IS NO DIFFERENCE WITH REGARD TO QUANTITY OF STOCK. THE DIFFERENCE IS BECAUSE OF VALUATION OF STOCK. IT IS SUBMITTED THAT THE ASSESSEE VALUE S STOCK ONLY AS ON 31 ST MARCH, THEREFORE, VALUATION AS ON THE DATE WHEN PHYSICAL INVENTORY WAS PREPARED IS NOT RELEVANT AND ONLY QUANTITY RECORDS SHOULD BE CONSIDERED. HE ACCORDINGLY SUBMITTED THAT THERE WAS NO EXCESS STOCK, AND THEREFORE, ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 18 BOOKS OF ACCOUNTS SHOULD NOT BE REJECTED, SALES SHOULD NOT BE ESTIMATED AND ADDITION BE DELETED. 21 . THE C IT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER : - 25. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. IT IS A MATTER ON RECORD THAT THE APPELLANT HAS MAINTA INED QUANTITATIVE RECORDS OF RAW MATERIAL CONSUMED AND FINISHED PRODUCT PRODUCED. THE BOOKS OF ACCOUNTS WERE SUBJECTED TO TAX AUDIT AS WELL AS AUDIT UNDER COMPANY LAW WHICH WERE PRODUCED BEFORE THE A.O. TOGETHER WITH BILLS AND VOUCHERS AND THE SAME WERE EX AMINED BY TEST CHECK. IT IS SEEN THAT THE APPELLANT DID MAINTAIN EXCISE RECORDS AND NO DISCREPANCY HAS BEEN POINTED OUT BY THE A.O NOR IT IS THE CASE OF THE A.O THAT THE EXCISE DEPARTMENT DID NOT ACCEPT THE EXCISE RETURNS FILED BY THE APPELLANT. I AM IN AG REEMENT WITH THE ARGUMENT OF THE LEARNED AR THAT WHERE QUANTITY RECORDS ARE AVAILABLE, THEN THE QUANTITY AS PER RECORDS MAINTAINED BY THE APPELLANT SHOULD BE COMPARED WITH THE QUANTITY OBTAINED DURING PHYSICAL VERIFICATION UNDERTAKEN DURING OPERATION U/S 1 32. IT IS NOTICED THAT THE QUANTITY RECORDS KEPT BY THE APPELLANT DO NOT SHOW DIFFERENCE WHEN COMPARED WITH QUANTITY FOUND DURING PHYSICAL VERIFICATION AS SUMMARIZED BELOW: SL. NO. PARTICULARS QUANTITY AS PER PHYSICAL VERIFICATION QUANTITY AS PER BOOKS DI FFERENCE 1 VANADIUM SLUDGE 16.228 16.228 NIL 2 ACID 23.191 23.191 NIL 3 ALUMINUM 10.05 11.37 - 1.32 4 VANADIUM OXO METALLIC COMPOUND 48.315 48.315 NIL 5 MOLY OXIDE 1.6 1.6 NIL 6 VANADIUM PENTAOXIDE 9.278 9.278 NIL 7 FERRO VANADIUM 12.568 12.568 NIL 8 MISC MATERIAL - - 9 SODA ASH 17.5 - 17.5 I FIND THAT THERE IS NO DIFFERENCE IN THE QUANTITY AS PER QUANTITY RECORDS AND AS FOUND DURING PHYSICAL VERIFICATION. THE AP PELLANT HAS ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 19 ALSO OFFERED RS. 90,00,000 / - TOWARDS INCOME WHICH WILL COVER POSSIBLE LEAK AGE. THE A.O HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SUBSTANTIATE HIS ESTIMATION OF UNACCOUNTED SALES. EVEN IF THE BOOK RESULTS ARE REJECTED, THERE HAS TO BE REASONABLE BASIS OF THE ESTIMATION AND IN THE ABSENCE OF REASONABLE BASIS, THE ADDITION CANNOT B E SUSTAINED. THEREFORE, THE ADDITION OF RS.9,52,904/ - THE APPELLANT GETS RELIEF OF RS.9,52,904/ - 22 . WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE DR THOUGH SUPPORTED THE ORDER OF AO BUT COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF CIT(A) BY BRINING ANY POSITIVE AND COGENT MATERIAL ON RECORD. HENCE, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF CIT(A), WHICH IS CONFIRMED AND THIS GROUND OF APPEAL OF REVENUE IS DI SMISSED. 23. THE CROSS OBJECTIONS FILED BY THE ASSESSEE FOR BOTH THE YEARS UNDER CONSIDERATION ARE IN SUPPORT OF THE ORDER OF CIT(A). AS THE ASSESSEE HAS NO GRIEVANCE AGAINST THE ORDER OF CIT(A), THE CROSS OBJECTIONS FILED BY THE ASSESSEE FOR ALL THE ASSES SMENT YEARS UNDER CONSIDERATION ARE INFRUCTUOUS AND ACCORDINGLY DISMISSED. 24 . IN THE RESULT, BOTH APPEAL S FILED BY REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN PURSUANCE WITH RULE 34/4 OF ITAT RULES, BY PUTTING T HE COPY OF THE SAME ON NOTICE BOARD ON WEDNESDAY THE 31 ST JANUARY,2018 AT RAIPUR. SD/ - ( PAVAN KUMAR GADALE ) SD/ - (N. S. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER RAIPUR ; DATED 31 /01/2018 . . / PKM , SENIOR PRIVATE SECRETARY ITA NO. 260 &261 /RPR/201 4 & CO NOS.9&10/RPR/15 20 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) INCOME TAX APPELLATE TRIBUNAL, RAIPUR 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , RAIPUR / DR, ITAT, RAIPUR 6. / GUARD FILE. //TRUE COPY//