Income Tax Officer-Ward-12(3), Kolkata, Kolkata V. M/s Attire Arts Pvt. Ltd. (formerly Nishant Overseas Pvt. Ltd.), Kolkata

ITA 2618/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9432 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 13-10-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 18-11-2013
• Court: TRIBUNAL
• Department Lawyers: S ALLONG YADEN CIT LD
• Assessee Lawyers: BISHNU KANTI AGARWAL FCA LD
• Keywords: Unexplained cash credit; Deemed to accrue or arise in india; Bad and doubtful debts; Assessment record; Onus to prove; Revenue expenditure
• Section: 143(3); 142(1); 133(6); 131; 68

Judgement Text

ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL,ABENCH, KOLKATA BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 2618/KOL/2013 A.Y: 2006-07 INCOME TAX OFFICER WARD 12(3), KOLKATA APPELLANT VS. M/S. ATTIRE ARTS P.LTD (FORMERLY NISHANT OVERSEAS PVT. LTD) PAN: AABCN 2989H RESPONDENT APPEARANCES BY : SHRI SALLONG YADEN, ADDL. CIT, LD.DR FOR THE RE VENUE SHRI BISHNU KANTI AGARWAL, FCA, LD.AR FOR THE A SSESSEE DATE OF HEARING : 05-12-2016 DATE OF PRONOUNCEMENT : 03-02-2017 O R D E R SHRI S.S. VISWANETHRA RAVI, JM :- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 05-08-2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS), XII, KOLKATA FOR THE ASSESSMENT YEAR 200 6-07. 2. THE APPELLANT REVENUE HAS RAISED THE FOLLOWING E FFECTIVE GROUNDS OF APPEAL:- 1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. CIT(A)-XII, KOLKATA WAS RIGHT ON DELETING THE ADDIT IONS MADE ON THE CLAIM OF BAD DEBTS WRITTEN OFF RS.87,450/- 2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE CIT(A)- XII, KOLKATA WAS RIGHT ON DELETING THE ADDITIONS MA DE ON THE CLAIM OF LOSS ON ACCOUNT OF FOREIGN LOSS RS.4,32,836/-. ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 2 3) BASED ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(A)-XII, HAS ERRED IN ALLOWING THE TRAVELLING EX PENSES OF RS.2,66,504/-. 4) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. CIT(A)-XII, KOLKATA WAS RIGHT ON DELETING THE ADDIT IONS MADE ON ACCOUNT OF UNPLAINED CASE CREDITS. FROM THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER IT IS SEEN THAT NO REPLY W AS RECEIVED FROM SHRI BIRJU SINGH SEKHWAT AND M/S. BIRJU SINGH SEKHWAT & SONS THAT TWO PERSONS FROM WHOM LOAN WERE TAKEN. FURTHER, THE BAN K ACCOUNTS OF THE PERSONS (I) KISHORE SINGH KUMAR (II) KISHORE SINGH KUMAR (HUF) THE OTHER TWO PERSONS FROM WHOMELOANS HAD BEEN TAKEN HA D SHOWN CASH DEPOSITS OF IDENTICAL AMOUNT ON THE SAME DATE ON WH ICH THE LOANS WERE ADVANCED BY THEM. AND (III) KARNIRAM DAYAL AN AMOUN T OF RS.3,50,000/- WAS CLEARED ON AND THE NEXT DAY THE S AME AMOUNT OF LOAN WAS ADVANCED. THE ABOVE FACTS WERE NOT EXPLAIN . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY AND ENGAGED IN EXPORT BUSINESS AND FILED ITS RETURN OF INCOME ON 31-10-06 DECLARING A TOTAL INCOME OF RS.11,43,27 0/-. UNDER SCRUTINY, NOTICES U/S. 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO WHICH, THE ASSESSEE APPEARED AND FIL ED DETAILS IN SUPPORT OF ITS RETURN FILED. BASING ON WHICH THE AO DETERMINED THE INCOME OF THE ASSESSEE AT RS.60,26,660/- AND PA SSED THE ASSESSMENT ORDER ON 31-12-08 U/S. 143(3) OF THE ACT BY MAKING THE FOLLOWING ADDITIONS TO THE INCOME OF THE ASSESSEE:- UNDER THE HEAD S AMOUNT OF ADDITION/ DISAL LOWANCE BY THE AO 1)BAD DEBTS W/OFF RS. 87,450/- 2)FOREIGN EXCHANGE LOSS RS. 4,32,836/- 3)TRAVELLING & CONVEYANCE RS. 2,66,504/- 4)TELEPHONE EXPENSES RS.40,16,706/- 4. GROUND NO.1 RELATES TO DELETION OF ADDITION OF R S.87,450/- MADE ON ACCOUNT OF WRITTEN OFF BAD DEBTS. 5. DURING THE SCRUTINY PROCEEDINGS, THE AO FOUND TH AT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.87,450/- ON AC COUNT OF BAD DEBTS WRITTEN OFF. IN EXPLANATION, THE ASSESSEE SUBMITTED THAT THE RECOVERY MEASURES HAVE BEEN UNDERTAKEN TO RECOVER ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 3 SUCH DEBTS, THEREBY THE SAME WERE WRITTEN OFF. THE AO NOT SATISFIED WITH THE EXPLANATION AS OFFERED BY ASSESS EE ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 6. BEFORE THE CIT-A THE ASSESSEE CONTENDED THAT THE AMOUNT OF BAD DEBTS REPRESENTING THE AMOUNT NOT REALIZED O N ACCOUNT OF EXPORTS MADE IN THE FINANCIAL YEAR 2002-03. THE SAI D AMOUNT WAS WRITTEN OFF AS BAD DEBTS, WHICH WAS OFFERED AS INCOME IN THE PREVIOUS YEAR IN WHICH THE SALE TRANSACTION WAS OCCURRED. THE CIT-A HAVING SATISFIED WITH THE EXPLANATION AS OFFERED BY THE ASSESSEE DELETED THE SAID ADDITION BY STATING A S UNDER:- BEFORE ME, IT IS SUBMITTED ON BEHALF OF THE APPELL ANT THAT DURING THE ASSESSMENT PROCEEDINGS THE APPELLANT HAD DETAILS OF BAD DEBTS CLAIMED INFORMING THE ASSESSING OFFICER THAT THE AMOUNT OF BAD DEBTS REPRESENTED THE AMOUNT NOT REALIZED ON ACCOUNT OF EXPORTS MADE IN THE FINANCIAL YEAR 2002-02, AND THAT THE EXPORTS WERE INSURED WITH ECG C PF INDIA LTD, THE AMOUNT LYING UNREALISED AFTER RECEIVING CLAIMS FROM ECGC WERE WRITTEN OFF AS BAD DEBTS. IT IS CONTENDED THAT THE DISALLOWANCE HAS BEEN MADE WITHOUT CONSIDERING THE FACTS OF THE CASE. IT IS ALSO ARGUE D THAT THE TRANSACTIONS OCCURRED BETWEEN THE PARTIES WERE OF REVENUE IN NAT URE AND SALE TO THE CUSTOMERS ARE, AS A MATTER OF ACCOUNTING PRINCIPLE CREDITED TO THE PROFIT & LOSS ACCOUNT OF AN ENTERPRISE. IT IS SUBMITTED THAT THE AMOUNT CLAIMED AS BAD DEBTS WERE OFFERED FOR INCOME IN THE PREVIOUS Y EAR IN WHICH THE SALE TRANSACTION OCCURRED. IT IS FURTHER SUBMITTED THAT THE EXPORTS WERE INSURED WITH THE ECGC OF INDIA LTD AND THAT THE PAYMENT OF CLAIM BY ECGC IS A MONETARY TRANSACTION WHICH FINANCIALLY AFFECTS THE INSURER AND AS A PRUDENCE THEY ARE MORE CONCERNED ABOUT THE RECOVERY MEASURES BY THE INSURED. THE CLAIMS WERE PASSED BY ECGC AND CONFIRM THE MEASURES TAKEN BY THE APPELLANT WITHIN THEIR BUSINESS PRUDENCE CAN NOT BE DOUBTED. IN SUPPORT OF THE CLAIM, THE APPELLANT FILED BEFORE ME EVIDENCES IN THE FORM OF BILLS RAISED, PAYMENT AND CLAIMS RECEIVED ALONG WIT H RELEVANT DOCUMENTS. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE. T HE PRINCIPLES FOR ALLOWING BAD DEBTS HAS BEEN DISCUSSED IN TRAVANCORE TEA ESTATES CO. LTD V. CIT [1992] 197 ITR 528(KER), WHEREIN IT HAS BEEN HE LD THAT THE BURDEN OF PROOF THAT THERE IS DEBIT OWING TO THE ASSESSEE TH AT IT HAS BEEN TAXED IN THE EARLIER YEARS, THAT THE DEBIT AROSE IN THE COUR SE OF BUSINESS OF THE ASSESSEE AND FINALLY, THAT IT HAD BECOME BADE IN TH E YEAR O ACCOUNT, IS ALL ON THE ASSESSEE. THE DOCUMENTS FURNISHED BY THE AP PELLANT COMPANY AND THE EXPLANATION OFFERED BEFORE THE ASSESSING OFFICE R AND THOSE REITERATED BEFORE ME SHOW THAT IT HAS DISCHARGED ITS BURDEN OF PROOF. APPARENTLY, THE ENTRIES WRITTEN OF DO NOT APPEAR FAKE, BUT GENUINE, IT IS NOT THE CASE OF THE OF THE ASSESSING OFFICER, ON THE STRENGTH OF ANY MA TERIAL ON RECORD, THAT THE DEBTS WRITTEN OFF IS FAKE OR NON-GENUINE. THE APPEL LANT COMPANY HAS WRITTEN OF THE BALANCE AMOUNTS AFTER SET OFF OF THE CLAIM R ECEIVED FROM THE INSURANCE COMPANY. IN THE CASE OF T.R.F LTD VS. CIT (2010) 323 ITR 397(SC), THE ISSUE INVOLVED WAS WHETHER IT IS MANDA TORY FOR ASSESSEE FROM 01.04.1989 [(AFTER AMENDMENT IN SECTION 36(1)(VII)] TO ESTABLISH THAT DEBTS HAD BECOME BAD ON MERELY WRITING OFF THE DEBT S AS IRRECOVERABLE IN THE ACCOUNTS IS SUFFICIENT. THE HONBLE SUPREME COU RT HAS HELD THAT IT IS NOT NECESSARY FOR ASSESSEE TO ESTABLISH THAT DEBT, IN FACT, HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRIT TEN OFF AS IRRECOVERABLE IN ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 4 THE ACCOUNTS. HAVING REGARD TO THE FACTS AND THE LE GAL PROPOSITIONS, IN MY VIEW, THE APPELLANT COMPANY HAS FULFILLED THE CONDI TIONS LAID DOWN UNDER SEC 36 (1)(VII) READ WITH SEC. 36(2) OF THE ACT. TH EREFORE, THE CLAIM OF BAD DEBTS WRITTEN OFF IN THE BOOKS IN THE PRESENT ASSES SMENT YEAR IS ALLOWED. THE APPELLANT GETS RELIEF OF RS.87,450/- ON THIS GR OUND. THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 7. BEFORE US, THE LD.DR RELIED ON THE ORDER OF THE AO IN DISALLOWING THE IMPUGNED ADDITION. 8. ON THE OTHER HAND, THE LD.AR OF THE ASSESSEE SUB MITS THAT ALL THE DETAILS OF BAD DEBTS WERE FILED BEFORE THE AO AND WITHOUT CONSIDERING THE SAME THE AO DISALLOWED. THE SAME DE TAILS WERE CONSIDERED BY THE CIT-A AND BASIS ON WHICH, HE DELE TED THE SAID ADDITION. HE FURTHER SUBMITS THAT THE EXPORTS WERE INSURED WITH THE ECGC INDIA LTD AND THE PAYMENT OF CLAIM WAS PAS SED BY M/S. ECGC. THE ASSESSEE FILED BY WAY OF EVIDENCES I N THE FORM OF BILLS RAISED, PAYMENT AND CLAIMS RECEIVED ALONG WITH RELEVANT DOCUMENTS BEFORE THE CIT-A. 9. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE CIT-A ACKNOWLEDG ED IN THE FIRST APPELLATE PROCEEDINGS THAT ALL THE DETAILS WE RE AVAILABLE BEFORE THE AO. WE ALSO FIND THAT THE IMPUGNED AMOUN T DISALLOWED ON ACCOUNT OF WRITING OFF BAD DEBTS REPR ESENTS THE AMOUNT NOT REALIZED ON ACCOUNT OF EXPORTS MADE IN T HE FY 2002- 03 AND THE SAME WERE WRITTEN OFF AFTER THE RECEIPT OF PAYMENT OF CLAIMS FROM ECGC. THE EXPORTS WERE INSURED WITH ECGC AND THE AMOUNT LYING UNREALISED AFTER RECEIVING CLAIMS FROM ECGC WERE WRITTEN OFF AS BAD DEBTS. WE FIND THAT THE CIT -A RIGHTLY OBSERVED THAT ALL THE DETAILS WERE AVAILABLE BEFORE THE AO AND WITHOUT CONSIDERING THE FACTS OF THE CASE THE AO MA DE THIS ADDITION/DISALLOWANCE. THEREFORE, WE FIND NO REASON TO INTERFERE ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 5 WITH SUCH ORDER OF THE CIT-A IN DELETING THE SAME. THUS, THIS GROUND NO-1 OF REVENUE IS DISMISSED. 10. GROUND NO.2 IS RELATING TO DELETION OF ADDITION OF RS.4,32,836/- ON ACCOUNT OF LOSS DUE TO FLUCTUATION IN FOREIGN EXCHANGE RATE. 11. THE AO FOUND THAT THE ASSESSEE DEBITED AN AMOUN T OF RS.4,32,836/- ON ACCOUNT OF LOSS DUE TO FLUCTUATION OF FOREIGN EXCHANGE RATE. ACCORDING TO AO, IT WAS NOTIONAL LOS S AS THERE WAS NO ACTUAL LOSS AND THE ASSESSEE GIVEN ONLY THE NET FIGURE OF FOREIGN EXCHANGE LOSS AND AS THERE WAS NO TRANSACTI ON TAKEN PLACE. ACCORDINGLY, HE DISALLOWED THE SAID AMOUNT A S ASSESSEE NOT SUBSTANTIATED WHETHER SUCH LOSS WAS ACTUAL IN N ATURE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 12. BEFORE THE CIT-A THE ASSESSEE SUBMITTED THE EXP ORT INVOICES RAISED ON PREVAILING EXCHANGE RATE AND BAN K CREDITS IN THE ACCOUNT AS PER EXCHANGE RATE PREVAILING AT THE TIME OF RECEIPT OF PAYMENTS. THE ASSESSEE ENTERED THE DIFFE RENCE AT PREVAILING RATES ON THE INVOICES RAISED AND THE MON EY RECEIPTS AS GAIN OR LOSS AND SUBMITTED THE DETAILS OF TRANSA CTIONS SHOWING THE PROFIT AND GAINS. THE CIT-A AFTER EXAMI NING THE DETAILS DIRECTED THE AO TO ALLOW THE SAID LOSS AS B USINESS LOSS BY STATING AS UNDER:- ON BEHALF OF THE APPELLANT, LEARNED A/R OF THE AP PELLANT SUBMITTED THAT WHENEVER EXPORT INVOICES ARE RAISED, THE SAME IS BO OK IN ACCOUNT AT THE PREVAILING EXCHANGE RATE, WHENEVER PAYMENTS ARE REC EIVED, BANK CREDITS THE PROCEEDS IN THE ACCOUNT AS PER EXCHANGE RATE PREVAI LING AT THE TIME OF RECEIPT; THERE IS ALWAYS SOME DIFFERENCE IN THE EXC HANGE RATE AT THE TIME OF RAISING OF EXPORT INVOICE AND AT THE TIME OF REALIZ ATION. SUCH DIFFERENCE, IT IS SUBMITTED, IS RECOGNIZED IN THE BOOKS OF ACCOUNTS A S FOREIGN EXCHANGE FLUCTUATION GAIN/LOSS. IT IS POINTED OUT THAT THE S AID ACCOUNTING TREATMENT IS IN ACCORDANCE WITH ACCOUNTING STANDARD AS-II- THE E FFECT FOR CHANGES IN FOREIGN EXCHANGE RATES. IT IS FURTHER SUBMITTED THA T THE APPELLANT HAS ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 6 ACCOUNTED FOR THE FOREIGN EXCHANGE TRANSACTIONS IN ACCORDANCE WITH THE SAID AS-II, WHICH IS APPLICABLE TO ALL ENTERPRISES AS PE R COMPANIES ACT, 1956. ALL SUCH TRANSACTIONS ARE MONETARY TRANSACTIONS AND ARE NOT NOTIONAL TRANSACTIONS AS HELD BY THE ASSESSING OFFICER. THE APPELLANT FURNISHED DETAILS OF TRANSACTION WISE PROFIT/GAINS ON EACH FOREIGN EX CHANGE TRANSACTION ENTERED INTO DURING THE YEAR UNDER CONSIDERATION TO PROVE T HAT NONE OF THE TRANSACTIONS WAS NOTATIONAL IN NATURE AND LOSS HAS ACTUALLY INCURRED. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE M ATERIAL BROUGHT ON RECORD AND ALSO SUBMISSIONS PUT FORTH ON BEHALF OF THE APPELLANT. IN THE CASE OF CIT V. CANARA BANK LTD [ 1967] 63 ITR 328 (SC), IT HAS BEEN HELD THAT IF BY VIRTUE OF EXCHANGE OPERATIONS PROFITS ARE MADE D URING THE COURSE OF BUSINESS AND IN CONNECTION WITH BUSINESS TRANSACTIO NS, THE EXCESS RECEIPTS ON ACCOUNT OF CONVERSION OF ONE CURRENCY INTO ANOT HER WOULD BE REVENUE RECEIPTS. BUT IF THE PROFIT BY EXCHANGE OPERATIONS COMES IN, NOT BY WAY OF BUSINESS OF THE ASSESSEE, THE PROFIT WOULD BE CAPIT AL PROFIT. CONVERSELY, THE LOSS INCURRED IN THE CASE OF EXCHANGE OPERATIONS DU RING THE COURSE OF BUSINESS AND IN CONNECTION WITH BUSINESS TRANSACTIO NS THE DEFICIT ON ACCOUNT OF CONVERSION OF ONE CURRENCY INTO ANOTHER WOULD BE REVENUE LOSS. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE ACCOUNTING ST ANDARD FOLLOWED BY THE APPELLANT COMPANY, I AM INCLINED TO ACCEPT THE SUBM ISSION OF THE APPELLANT THAT NONE OF THE TRANSACTIONS WAS NOTIONAL IN NATUR E AND LOSS HAS ACTUALLY BEEN INCURRED DUE TO FOREIGN EXCHANGE FLUCTUATION. THE RESULTANT LOSS AS CLAIMED BY THE APPELLANT IS HELD TO BE ACTUAL BUSIN ESS LOSS LIABLE TO DEDUCTED FROM THE PROFITS. THE ASSESSING OFFICER IS HEREBY D IRECTED TO ALLOW THE SAID LOSS AS BUSINESS LOSS. THE APPELLANT WOULD GET RELI EF OF RS.4,32,836/- ON THIS GROUND. 13. BEFORE US THE LD.DR HAS RELIED ON THE ORDER OF THE AO IN MAKING THE SAID DISALLOWANCE. 14. ON THE OTHER HAND, THE LD.AR OF THE ASSESSEE HA S REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE CIT-A AND RELIED ON THE IMPUGNED ORDER OF THE CIT-A ON THIS I SSUE. 15. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND FORCE IN THE SUBMISSIONS OF THE ASSESSEE, WHEREIN THE ASSESSEE FURNISHED ALL SUCH DETAILS OF TRANSACTION OF FOREIGN EXCHANGE TRANSACTION. THE CIT-A AFTER EXAMI NING THE SAME DIRECTED THE AO TO DELETE THE SAID ADDITION ON THIS COUNT. WE FIND NO REASON TO INTERFERE WITH THE FINDING OF THE CIT-A ON THIS ISSUE. THUS, THIS GROUND NO. 2 OF REVENUE IS D ISMISSED. ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 7 16. GROUND NO-3 IS RELATING TO ALLOWANCE OF TRAVELL ING EXPENSES OF RS.2,66,504/-. 17. THE AO FOUND THAT THE ASSESSEE HAS DEBITED AN A MOUNT OF RS.14,28,706/- ON ACCOUNT OF FOREIGN TRAVELLING EXP ENSES. OUT OF SUCH EXPENDITURE, THE ASSESSEE DEBITED/INCURRED TOWARDS FOREIGN TRAVELLING UNDERTAKEN BY ITS DIRECTOR OF RS .11,04,523/- AND FOR NON DIRECTOR, MISS MOUMITA BANERJEE IS OF R S.2,27,999/. THE AO FOUND THAT AN ELEMENT OF PERSONAL USE AND FO R THE NON SUBMISSION OF ANY DETAILS IN SUPPORT OF THIS EXPEND ITURE, THE AO DISALLOWED RS.2,66,504/- BEING 20% OF ABOVE EXPENDI TURE AND ADDED THE SAME TO THE TOTAL INCOME OF ASSESSEE. 18. BEFORE THE CIT-A THE ASSESSEE CONTENDED THAT FO REIGN TRAVEL IS AN INTEGRAL PART OF BUSINESS PROCESS SINC E IT IS ENGAGED IN A EXPORT BUSINESS AND ITS DIRECTORS WOULD VISIT THE CUSTOMERS ABROAD TO MAINTAIN AND JUSTIFY ITS BUSINESS PROCESS IRRESPECTIVE OF ORDERS FROM THE CUSTOMERS ABROAD. THE CIT-A FOUN D THAT THE SAID ADDITION HAS MADE BY THE AO ON AD-HOC BASIS WI THOUT SPECIFICALLY POINTING OUT ANY ITEM OF EXPENDITURE T HAT SO INCURRED BEING PERSONAL IN NATURE AND THEREBY HE DE LETED THE IMPUGNED ADDITION BY STATING AS UNDER:- ON BEHALF OF THE APPELLANT, IT IS SUBMITTED THAT T HE APPELLANT IS PRE- DOMINANTLY ENGAGED IN EXPORT BUSINESS AND ALMOST HU NDRED PERCENT TURNOVER IS ON ACCOUNT OF EXPORT. IT IS SUBMITTED THAT TRAVE LLING FORMS AN INTEGRAL PART OF BUSINESS PROCESS IRRESPECTIVE OF THE IMMEDIATE G AIN OUT OF ANY PARTICULAR TRAVELLING. IT IS CONTENDED THAT AN ENTREPRENEUR HA S TO VISIT THE CUSTOMERS IRRESPECTIVE OF THE FACT WHETHER ANY ORDERS HAVE BE EN SECURED IN THAT PARTICULAR VISIT AND THAT IT IS ALSO NOT POSSIBLE F OR A BUSINESSMAN TO MAINTAIN RECORD TO JUSTIFY HOW EACH AND EVERY VISIT HAS HELP ED IN HIS BUSINESS. IT IS ALSO CONTENDED THAT IF THERE IS NO TRAVELLING, WHIC H IS AN INTEGRAL PART OF THE BUSINESS PROCESS OF THE APPELLANT, THE BUSINESS WOU LD SUFFER IMMEDIATELY AND THERE WOULD BE DE-GROWTH. IT IS EXPLAINED THAT THE TRAVELLING EXPENSES HAD BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS P URPOSES AND THAT THERE IS NO PERSONAL ELEMENT INVOLVED THEREIN. I HAVE CONSIDERED THE SUBMISSION. THE APPELLANT COM PANY IS ALREADY IN THE BUSINESS OF EXPORTING GARMENTS. IT IS NOT TH E CASE OF THE ASSESSING OFFICER THAT THE EXPENDITURE WAS INCURRED IN CONNEC TION WITH SETTING UP OF ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 8 NEW BUSINESS. THE DISALLOWANCE HAS BEEN MADE ON AD HOC BASIS WITHOUT SPECIFICALLY POINTING OUT ANY ITEMS OF EXPENDITURE OF PERSONAL NATURE. KEEPING IN VIEW THE FACTS OF THE CASE, FOREIGN TRAV EL CANNOT BE CONSIDERED TO BE FOR NON-BUSINESS PURPOSES. THE EXPENDITURE IS AL LOWABLE AS REVENUE EXPENDITURE. THE ADDITION ON ACCOUNT OF SUCH DISALL OWANCE AT RS.2,66,504/- IS, THEREFORE, DELETED. 19. BEFORE US THE LD. DR HAS RELIED ON THE ORDER OF THE AO. 20. ON THE OTHER HAND THE LD.AR URGED US TO ADOPT T HE SAME SUBMISSION AS MADE BEFORE THE CIT-A AND SUPPORTED T HE FINDING OF THE CIT-A IN DOING SO. 21. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THE AO NOTED THAT NO DETAIL S WERE FURNISHED IN SUPPORT OF CLAIM TOWARDS FOREIGN TRAVE L EXPENDITURE. THE AO DISALLOWED THE SAME @ 20% OF RS.11,04,523/- ON AD-HOC BASIS WITHOUT MAKING SPECI FICALLY POINTING OUT OF ANY ITEMS OF EXPENDITURE INCURRED BEING PERSONAL NATURE. THE CIT-A TAKING INTO CONSIDERATIO N THE NATURE OF ASSESSEES BUSINESS AS THE ASSESSEE IS ENGAGED I N @100% EXPORTS BUSINESS FOUND SATISFIED WITH THE SUBMISSIO NS OF ASSESSEE. THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE CIT-A IN DELETING THE SAID ADDITION. T HIS GROUND NO- 3 OF REVENUES APPEAL IS DISMISSED. 22. GROUND NO-4 IS RELATING TO DELETION OF ADDITION OF RS.40,16,706/- ON ACCOUNT OF UNEXPLAINED CASH CREDI T U/S. 68 OF THE ACT. 23. THE AO FOUND THAT THE ASSESSEE HAS OBTAINED LOA NS FROM THE FOLLOWING PERSONS APART FROM ITS DIRECTORS, FAM ILY MEMBERS OF DIRECTORS AND THEIR RESPECTIVE HUFS:- ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 9 SL.NO NAME ADDRESS CLOSING BALANCE RATE OF INTEREST 1 BAIKUNTH NATH MISHRA 5, BURRO SHIBTALLA MAIN ROAD, KOLKATA-38 4,39,514 9% 2 BAIKUNTH NATH MISHRA & SONS (HUF) 5, BURRO SHIBTA LLA MAIN ROAD, KOLKATA-38 3,26,773 9% 3 BIRJU SINGH SHEKHWAT 5, BURRO SHIBTALLA MAIN ROAD, KOLKATA-38 5,51,185 9% 4 KISHORE SINGH KUMAR 21, CHANDITALA MAIN ROAD,KOL-53 3,09,312 9% 5 KISHORE SINGH KUMAR (HUF) 21, CHANDITALA MAIN ROAD,KOL-53 1,55,544 9% 6 BIRJU SINGH SHEKHWAT & SONS (HUF) 5, BURRO SHIBTA LLA MAIN ROAD, KOLKATA-38 1,67,482 9% 7 KARNI RAM DHAYAL 5, BURRO SHIBTALLA MAIN ROAD, KOLKATA-38 4,62,910 9% 8 SURAJ KUMAR SHAW 121/6A, CIRCULAR GARDEN REACH ROAD, KOL-23 2,52,484 9% 9 SAURABH PODDAR 9C, MATHUR SEN GARLANE, KOL-6 2,54,539 9% 10 NK PODDAR & SONS (HUF) 9C, MATHUR SEN GARLANE, KOL-6 4,57,861 9% 11 SUDHA DEVI PODDAR 9C, MATHUR SEN GARLANE, KOL-6 3,05,447 9% 36,85,051 24. TO VERIFY THE ABOVE THE AO DEPUTED AN INSPECTOR WHO VIDE HIS REPORTS DATED 27-11-08/ 03-12-08 STATED THAT NO NE OF SUCH PERSONS EXISTED IN THEIR RESPECTIVE ADDRESSES. THER EAFTER, THE AO ISSUED SUMMONS U/S. 131 OF THE ACT, WHICH WAS AF FIXED ON THEIR ADDRESSES AS SUPPLIED BY THE ASSESSEE. THE AO WAS OF THE VIEW THAT THE ASSESSEE FAILED TO PROVE THE IDENTITY AND GENUINENESS OF ALL CREDITORS AND AS SUCH HE ADDED T HE AMOUNT OF RS.40,16,706/- U/S. 68 OF THE ACT. 25. BEFORE THE CIT-A THE ASSESSEE CONTENDED THAT TH E AMOUNT TO AN EXTENT OF RS.36,85,051/- WAS BROUGHT FORWARD BALANCE AS ON 01-04-2005, BEING THE AMOUNT NOT CREDITED DURING THE YEAR AND THE OTHER AMOUNT OF RS.3,31,655/- WAS INTEREST ACCUMULATED, WHICH WAS CREDITED TO THE RESPECTIVE LOAN CREDITORS ACCOUNT. FURTHER, THE ASSESSEE CONTENDED BEFORE HIM THAT ALL DETAILS OF LOAN CREDITORS ALONG WITH THEIR RESPECTIVE PANS WERE SUBMITTED BEFORE THE AO. THE REPORT, WHIC H HAS BEEN ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 10 FILED BY THE INSPECTOR WAS NEVER CONFRONTED WITH TH E ASSESSEE. TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE AS SESSEE, CIT- A SOUGHT REMAND REPORT FROM THE AO. THE CIT-A FOUND THAT THE AO DID NOT MAKE ANY ADVERSE COMMENTS AGAINST THE LO AN CREDITORS AT SL.NOS 1 TO 6 ABOVE. REGARDING THE CR EDITORS AT SL.NOS. 7 AND 8, THE CIT-A FOUND ARE ONE AND THE S AME REPRESENTING INDIVIDUAL AND ANOTHER REPRESENTING TH E HUF FOR WHICH THE ASSESSEE SUBMITTED BEFORE THE CIT-A THAT THE SAID KARTA, BIRJU SINGH SEKHWAT WAS EXPIRED ON 24-07-200 7 AND TO THAT EFFECT A CERTIFICATE WAS FILED BEFORE THE CIT- A BY WAY OF PAPER BOOK. THE CIT-A FOUND REGARDING THE OTHER CRE DITORS AT SL.NOS 9, 10 & 11, THAT THE AO DID NOT DOUBT THE I DENTITY OF SAID CREDITORS, BUT ONLY DOUBTED THE CREDITWORTHINE SS AND GENUINENESS OF THE TRANSACTIONS. ACCORDINGLY, THE C IT-A ON BEING SATISFIED WITH SUCH REMAND REPORT AS THERE WA S NO ADVERSE COMMENTS MADE BY THE AO DELETED THE SAID AD DITION BY STATING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE MATERIAL PLACED ON RECORD AND THE EXPLANATION OFFERED BY THE APPELL ANT. REGARDING THE FIRST SIX CREDITORS, THE ASSESSING OFFICER HAS FORWARDED THE REPORTS OF THE INSPECTOR WITHOUT ANY COMMENTS. ON GOING THROUGH TH E INSPECTORS REPORT, I FIND THAT THE INSPECTORS REPORT COUPLED WITH THE D OCUMENTS FURNISHED IN RESPECT OF THE CREDITS DURING THE ASSESSMENT PROCEE DINGS CONFIRMS THE IDENTITY OF THE PERSONS WHO HAVE GIVEN LOAN TO THE APPELLANT AND CONFIRMS THE GENUINENESS OF THE TRANSACTIONS WITH THE APPELL ANT. THE INSPECTORS REPORT CONFIRMS THE IDENTITY, PLACE OF RESIDENCE, INCOME T AX PAN, DETAILS OF TRANSACTIONS OF LOAN CREDITORS WITH THE APPELLANT B OTH FROM BANK STATEMENTS AND THEIR ASSESSMENT RECORDS. THIS BEING SO, I HAVE NO HESITATION IN HOLDING THAT THE APPELLANT HAS DISCHARGED ITS ONUS OF PROOF BY ESTABLISHING THE IDENTITY OF THE CREDITORS, THEIR CREDIT-WORTHINESS AND GENUINENESS OF THE TRANSACTIONS. APPARENTLY, PROVISIONS OF SEC. 68 ARE NOT ATTRACTED IN THESE CASES. THEREFORE, THE ADDITION MADE IN RESPECT OF T HE PRINCIPAL AMOUNTS AND DISALLOWANCE OF INTEREST ACCRUED ON THOSE CREDITS I N RESPECT OF THE FIRST SIX CREDITORS IS LIABLE TO BE DELETED. AS REGARDS CREDITORS AT SL. NOS. 7 AND 8, THE ASSES SING OFFICER HAS REPORTED THAT HE HAD NOT RECEIVED ANY RESPONSE TO N OTICE UNDER SEC. 133(6) OF THE ACT. THE APPELLANTS SUBMISSION IS THAT THE CREDITOR SHRI BIRJU SINGH SEKHWAT HAD ALREADY EXPIRED ON 24/07/2007 AND AS SU CH NO REPLY HAD BEEN RECEIVED EITHER FROM HIS OR THE HUF OF WHICH HE WAS KARTA. BOTH BIRJU SINGH SEKHWAT AND BIRJU SINGH SEKHWAT & SONS HAVE FILED T HEIR RETURN OF INCOME FOR ASST YEAR 2006-07. COPY OF ACKNOWLEDGEMENT OF R ETURN AND THEIR STATEMENT OF AFFAIRS AS ON 31 ST MARCH, 2006 WHICH INCLUDED LOAN TO THE APPELLANT ALONG WITH COPY OF LOAN CONFIRMATION DULY SIGNED HAS BEEN FILED ALONG WITH THE PAPER BOOK. HAVING REGARD TO THE FAC TS, IN MY OPINION, THE ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 11 APPELLANT HAS DISCHARGE ITS ONUS OF PROOF. IT CANNO T BE SAID THAT THE APPELLANT HAS SHOWN TO HAVE RECEIVED THE LOANS FROM NON-EXISTING PERSONS. REGARDING OTHER THREE PERSONS FROM WHOM REPLIES HAV E BEEN RECEIVED NAMELY (A) KISHORE SINGH KUMAR, KISHORE SINGH KUMHA R HUF, AND KARNIRAM DOYAL, THE ASSESSING OFFICER HAS NOT APPARENTLY DOU BTED THE IDENTITY OF THE CREDITORS. HE HAS DOUBTED THE GENUINENESS OF THE TR ANSACTIONS ON THE GROUND THAT THE RELEVANT BANK STATEMENTS WERE NOT FILED. T HE APPELLANT HAS, ON THE OTHER HAND, FURNISHED DETAILS OF THE BANK ON WHICH THE CHEQUES HAVE BEEN DRAWN BY THE CREDITORS AND THE STATEMENT OF AFFAIRS /CASH FLOW CHART FURNISHED SHOWED AVAILABILITY OF FUNDS AS ON THE DATE ON WHIC H THE CHEQUES WERE ISSUED. CONSIDERING THE FACTS, IN MY VIEW, THE APPE LLANT HAS DISCHARGED ITS INITIAL BURDEN OF PROVING THE IDENTITY OF THE LOAN CREDITORS, THEIR CAPACITY AND ALSO THE GENUINENESS OF THE TRANSACTIONS BY FILING DOCUMENTARY EVIDENCE ON RECORD. CONFIRMATION LETTERS WERE MADE AVAILABLE, T RANSACTIONS WERE BY CHEQUES. THE CREDITORS ALSO RESPONDED TO NOTICES UN DER SECTION 133(6) OF THE IT ACT. IN S.K BOTHRA & SONS, HUF V. ITO [2011] 203 TAXMAN 436 (KOL), IT HAS BEEN HELD THAT IT IS SETTLED LAW THAT WHILE CO NSIDERING THE QUESTION WHETHER THE ALLEGED LOAN TAKEN BY THE ASSESSEE WAS A GENUINE TRANSACTION, THE INITIAL ONUS IS ALWAYS UPON THE ASSESSEE AND IF NO EXPLANATION IS GIVEN OR THE EXPLANATION GIVEN BY THE ASSESSEE IS NOT SATISF ACTORY, THE ASSESSING OFFICER CAN DISBELIEVE THE ALLEGED TRANSACTION OF L OAN. BUT THE LAW IS EQUALLY SETTLED THAT IF THE INITIAL BURDEN IS DISCHARGED BY THE ASSESSEE BY PRODUCING SUFFICIENT MATERIALS IN SUPPORT OF THE LOAN TRANSAC TION, THE ONUS SHIFTS UPON THE ASSESSING OFFICER AND AFTER VERIFICATION, HE CA N CALL FOR FURTHER EXPLANATION FROM THE ASSESSEE AND IN THE PROCESS, T HE ONUS MAY AGAIN SHIFT FROM THE ASSESSING OFFICER TO THE ASSESSEE. HOWEVER , THE ASSESSING OFFICER WOULD NOT BE JUSTIFIED IF HE MERELY DIRECTED THE IN SPECTOR TO VERIFY THE STATEMENTS, AND LATER ON THE BASIS OF HIS REPORT, S TRAIGHTAWAY ARRIVE AT THE CONCLUSION THAT THE TRANSACTIONS WERE NOT GENUINENE SS WITHOUT GIVING FURTHER OPPORTUNITY TO THE ASSESSEE TO EXPLAIN THE ALLEGED INFORMATION DISCLOSED BY THE INSPECTOR TO THE ASSESSING OFFICER. NOW, IN THE APPELLANTS CASE, VERIFICATION OF THE C REDITS THROUGH THE INSPECTOR OF INCOME-TAX A SECOND TIME AND CALLING F OR INFORMATION UNDER SEC. 133(6) DID NOT BRING ANY MATERIAL ON RECORD TO ESTA BLISH THAT THE APPELLANT COULD NOT PROVE THE IDENTITY OF THE CREDITORS, THEI R CREDIT-WORTHINESS OR THE GENUINENESS OF THE TRANSACTIONS. IN CIT V. P. MOHAN KALA [2007] 291 ITR 278 (SC), THE OBSERVATION OF THE HONBLE SUPREME COURT IS THAT IT IS TRUE THAT THE OPINION OF THE ASSESSING OFFICER FOR NOT ACCEPT ING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUM STANCES AVAILABLE ON RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQ UIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL AVAILABL E ON RECORD. APPLICATION OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION. IN THE PRESENT CASE, THERE IS NO MATERIAL BROUGHT ON RECORD TO ESTABLISH THAT THE APPELLANT HAS NOT DISCHARGED ITS ONUS OF PROVING THE IDENTITY OF THE CREDITORS, THEIR CREDIT- WORTHINESS OR THE GENUINENESS OF THE TRANSACTIONS. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLA INED CASH CREDITS AS INCOME OF THE APPELLANT UNDER SEC. 68 OF THE IT ACT IS NOT TENABLE. IT MAY ALSO BE NOTED THAT THE AFORESAID 11 LOAN CRE DITORS AMOUNTING TO RS.36,85,051/- IS, IN FACT, BROUGHT FORWARD BALA NCES AS ON 1 ST APRIL, 2005. BASED ON THE REPORT OF THE INCOME TAX INSPECTOR DAT ED 27 TH DEC. 2008 AND 3 RD DECEMBER, 2008, WHICH STATED THAT THE LOAN CREDITOR S WERE NOT FOUND AT THE ADDRESS GIVEN IN THE LOAN CONFIRMATION AND THUS NOT AVAILABLE, ADDED BACK THE ENTIRE OPENING BALANCE OF RS.36,85,051/- ALONG WITH INTEREST CREDITED TO THEIR ACCOUNT BEING RS.3,31,655/- TOTALLING TO RS.4 0,16,706/- AS UNEXPLAINED CASH CREDIT. IN CIT VS. ORISSA STEEL CORPN PVT. LTD (1982) 31 CTR (CAL) 160 (1983) 144 ITR 662 (CAL) AND CIT V. CHHYABAN (P) LT D (1980) 121 ITR 644 (CAL), IT HAS BEEN HELD THAT IN A CASE WHERE THE CASH CRED ITS APPEARED IN THE BOOKS BEFORE 1 ST APRIL, 1961, BUT THE PREVIOUS YEAR OF THE ASSESSEE WAS SUCH AS TO BE RELEVANT TO THE ASSESSMENT YEAR 1962-63, T HE CASH CREDITS WOULD BE ASSESSABLE UNDER SECTION 68 FOR THE ASSESSMENT YEAR 1962-63. THE KARNATKA ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 12 HIGH COURT HAS TAKEN A CONTRARY VIEW IN STERLING CO RPORATION AND TRADING CO. VS. ITO (1976) 102 ITR 43 (KAR). ACCORDING TO THE K ARNATAKA HIGH COURT, WHERE THE UNDISCLOSED INCOME RELATED TO THE FINANCI AL YEAR 1960-61, THEY COULD BE ASSESSED AS THE INCOME OF THE ASSESSMENT Y EAR 1961-62 ONLY AND NOT OF THE ASST. YEAR 1962-63. HOWEVER, WHERE THE A SSESSEES EXPLANATION THAT THE AMOUNT CREDITED IN THE RELEVANT PREVIOUS Y EAR RELATES TO AN EARLIER YEAR IS ACCEPTED,THEN SECTION 68 CANNOT BE INVOKED TO TAX THE RELEVANT CREDIT AMOUNT AS THE INCOME OF THE PREVIOUS YEAR CIT VS. OM PRAKASH MAHAJAN & SONS (1984) 152 ITR 583(DEL). FOLLOWING THIS LEGAL PROPOSITION, EVEN IF IT IS ASSUMED THAT THE BROUGHT FORWARD CASH CREDITS DEEME D TO BE THE INCOME OF THE APPELLANT, THE SAME COULD NOT BE ADDED AS THE I NCOME OF THE PREVIOUS YEAR. IN THE LIGHT OF THE ABOVE DISCUSSION AND OBSERVATIO N AND HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS.40,16,706/-, MADE BY THE ASSESSING ON ACCOUNT O F UNEXPLAINED CASH CREDITS DEEMING THE SAME AS INCOME OF THE APPELLANT UNDER SEC. 68 OF THE IT ACT IS HEREBY DIRECTED TO BE DELETED. THUS THIS GRO UND OF APPEAL OF THE APPELLANT IS ACCORDINGLY ALLOWED. 26. BEFORE US THE LD.DR RELIED ON THE ORDER OF THE AO IN MAKING SUCH ADDITION/DISALLOWANCE. HE ALSO SUBMITS THAT THE CIT-A DID NOT EXAMINE THE ISSUE IN A PROPER MANNER. THE CIT-A HAS GIVEN RELIEF ONLY ON SATISFACTION THAT ALL THE TRANSACTIONS WERE MADE THROUGH CHEQUES. 27. ON THE OTHER HAND, THE LD.AR OF ASSESSEE HAS RE ITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE CIT-A AND S UPPORTED THE IMPUGNED ORDER OF THE CIT-A ON THIS ISSUE. 28. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THE CIT-A EXAMINED THE REMA ND REPORT AND SATISFIED WITH THE AO DID NOT MAKE ANY ADVERSE REMARKS REGARD TO SL. NOS. 1 TO 6. WE ALSO FIND THAT THE C IT-A EXAMINED IN DETAIL THE INSPECTORS REPORT COUPLED WITH THE D OCUMENTS AS FURNISHED IN RESPECT OF THE CREDITS DURING THE ASSE SSMENT PROCEEDINGS CONFIRMED THE IDENTITY OF THE PERSONS W HO HAVE GIVEN LOAN TO THE ASSESSEE AND CONFIRMS THE GENUINE NESS OF THE TRANSACTIONS WITH THE ASSESSEE. BASING ON THE INSPE CTORS REPORT THE CIT-A CONFIRMED THE IDENTITY, PLACE OF RESIDENC E, INCOME TAX ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 13 PAN, DETAILS OF TRANSACTIONS OF LOAN CREDITORS WITH THE ASSESSEE TAKING INTO CONSIDERATION THE BANK STATEMENTS AND T HEIR ASSESSMENT RECORDS. IN VIEW OF THE SAME , WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT-A AND IT IS JUSTIFIED, THEREFORE, WE DELETE THE ADDITION REGARDING CREDITO TORS AT SL.NOS 1 TO 6 . 29. FROM THE ORDER OF THE CIT-A FOUND, WHEREIN IT W AS STATED BY HIM THAT THE LOAN CREDITOR AT SL. NO. 7 IS A KAR TA OF LOAN CREDITOR REPRESENTING HUF AT SL. NO. 8 AND THE SAID KARTA WAS DIED ON 24-07-2007 AND TO THAT EFFECT A CERTIFICATE WAS FILED BEFORE THE CIT-A BY WAY OF A PAPER BOOK. IT IS OBSE RVED THAT THE CREDITORS AT SL.NOS 7 & 8 HAVE FILED THEIR RET URN OF INCOME FOR A.Y 2006-07 ALONG WITH A COPY OF ACKNOWLEDGEMEN T OF RETURN AND THEIR STATEMENT OF AFFAIRS AS ON 31-03- 2006 INCLUDING THE LOAN TO THE ASSESSEE ALONG WITH COPY OF LOAN CONFIRMATION DULY SIGNED FILED ALONG WITH THE PAPER BOOK BEFORE THE CIT-A. WE FIND THAT THE CIT-A EXAMINED THE RETU RN OF INCOME FOR THE AY 2006-07 ALONG WITH STATEMENT OF A FFAIRS AS ON 31-03-06, WHICH INCLUDES CONFIRMATION OF LOAN GIVEN TO ASSESSEE BY WAY OF PAPER BOOK. THEREFORE, THE THREE INGREDIE NTS OF SECTION 68 ARE FULLY SATISFIED. THUS, THE ADDITION REGARDING SL.NOS 7 & 8 ARE NOT MAINTAINABLE AND ACCORDINGLY DELETED. 30. THE LOAN CREDITORS AT SL. NO. 9,10 AND 11 OF TH E ABOVE CHART THE AO DOUBTED ONLY THE CREDITWORTHINESS OF S UCH PARTIES. THE CIT-A EXAMINED THE RELEVANT DETAILS, THEIR CAPA CITY AND GENUINENESS OF THE TRANSACTIONS AND FOUND SATISFIED THAT THE SAID TRANSACTIONS WERE ROUTED THROUGH BANKING CHANN EL BY ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 14 CHEQUE. THEREFORE, WE DO NOT SEE ANY REASON TO INTE RFERE WITH THE ORDER OF THE CIT-A IN DELETING THE IMPUGNED ADD ITION INVOLVING CREDITORS AT SL.NOS 9,10 AND 11, ACCORDI NGLY DELETED, BESIDES, IT IS PERTINENT TO NOTE THAT THE AMOUNT OF RS.36,85,051/- WAS ONLY BROUGHT FORWARD BALANCES AS ON 01-04- 05. THE REMAINING SUM OF RS. 3,31,655/- IS ONLY INT EREST ACCRUED THEREON. HENCE, WE HOLD THAT NO ADDITION U/ S. 68 OF THE ACT COULD BE MADE ON THE OPENING BALANCE OF LOAN C REDITOR AS DEEMED INCOME OF THE PREVIOUS YEAR. THEREFORE, THIS GROUND NO- 4 OF REVENUES APPEAL IS DISMISSED. 31. IN THE RESULT, THE APPEAL OF REVENUE IS DISMIS SED. ORDER PRONOUNCED IN OPEN COURT ON 03-02- 2017 SD/- SD/- M.BALAGANESH S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 03/02/2017 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT/ DEPARTMENT: INCOME TAX OFFICER , WARD - 12(3) AAYAKAR BHAVAN, 7 TH FLOOR, P-7 CHOWRINGHEE SQ, KOLKATA-69. 2 THE RESPONDENT/ASSESSEE: M/S. ATT IRE ARTS PVT. LTD (FORMERLY NISHANT OVERSEAS PVT. LTD LTD 1 SWASTIK B UILDING, 1 ST FLOOR, 1 SARDAR SANKAR ROAD, KOLKATA-26. 3 / THE CIT(A) 4.THE CIT 5 . DR, KOLKATA BENCH 6 . GUARD FILE . **PP/SPS TRUE COPY, BY ORDER, ASSTT REGISTR AR ITA NO. 2618/KOL/13 M/S. ATTIRE ARTS PVT. LTD 15