ACIT, Faridabad V. M/s Gurshant Electricals Pvt. Ltd, Faridabad

ITA 2782/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3776 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-06-2011
• Assessment Year: misc
• Appeal Filed On: 04-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Depreciation; Wrong claim; Revenue expenditure
• Section: 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 2782/DEL/2010 ASSESSMENT YEAR: 2007-08 ACIT, VS. GURSHANT ELECTRICALS PVT. LTD., CIRCLE 1, BLOCK 1-B, PLOT NO. 64, CGO COMPLEX, NH-4, SECTOR 27A, FARIDABAD. FARIDABAD. AAACG4588Q (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. MONA MOHANTY, SR. DR RESPONDENT BY : SH. K. SAMPATH, ADV. ORDER PER I.P. BANSAL, J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST ORDER PASSED BY LD. CIT(A) DATED 31.3.2010 FOR A.Y. 2007-08. GROUNDS OF APPEAL READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THA T THE AOS ACTION OF REJECTION OF BOOKS OF ACCOUNT U/S 14 5 IS WHOLLY UNSUSTAINABLE, SO THE ADDITIONS SO MADE AT R S. 6,63,815/- ALSO BECOME UNTENABLE EVEN THOUGH HE HAS COMMITTED ILLEGALITY BY FAILING TO CONSIDER ALL MAT ERIAL FACTS AND EVIDENCE BROUGHT ON RECORD BY THE AO AND ITA NO. 2782/D/2010 2 FURTHER FAILED TO RECORD THE FINDING ON ALL THE ISS UES BEFORE HIM AND HAS ERRONEOUSLY DELETED THE ADDITION OF RS. 6,63,815/- AS IT IS INCUMBENT UPON HIM TO APPRE CIATE THE EVIDENCE, CONSIDER THE REASONS OF THE AO AND AS SIGN HIS OWN REASONS AS TO WHY HE DISAGREES WITH THE REA SONS AND FINDINGS OF THE AO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING T HE AO TO ALLOW THE SET OFF AND CARRY FORWARD OF THE DEPRE CIATION LOSS AFTER DUE VERIFICATION DISREGARDING THE FACT T HAT BOOKS OF ACCOUNT HAD BEEN REJECTED AND THE EXPENSES HAD BEEN ENTIRELY DISALLOWED AT RS. 6,63,815/- SINCE TH E BUSINESS ACTIVITIES OF THE ASSESSEE COULD NOT BE ESTABLISHED AS GENUINE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING TH E ADDITION OF RS. 1,48,000/- MADE BY THE AO ON ACCOUN T OF WRONG CLAIM OF RECEIPTS AS SALE PROCEEDS DISREGARDI NG THE FACT THAT THE SO CALLED PURCHASER NAMELY M/S HI TECH ENTERPRISES HAD CATEGORICALLY DENIED OF ANY PURCHAS E FROM THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING TH E ADDITION OF RS. 9,62,675/- MADE BY THE AO BY INVOKI NG THE PROVISIONS OF SEC. 41(1) READ WITH EXPLANATION- 1 OF THE INCOME TAX ACT, 1961 DISREGARDING THE FACT THAT THE LIABILITY WAS ONLY ON PAPER AND THERE BEING NO ACTU AL LIABILITY FROM M/S HARYANA WOOL & ALLIED INDUSTRIES LTD. ITA NO. 2782/D/2010 3 5. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD , DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. GROUND NO. 1, 2 & 3 ARE INTERCONNECTED. THE RET URN OF INCOME WAS FILED BY THE ASSESSEE AT AN INCOME OF RS. 5,57, 520/-. IT HAS BEEN NOTICED BY THE AO IN THE ASSESSMENT ORDER THAT ASSE SSEE APART FROM SHOWING SINGLE INSTANCE OF SALE TO ONE PARTY NAMELY M/S HITECH ENTERPRISES, D-209, SECTOR-10, NOIDA (U.P) IN A CAS H OF RS. 1,48,000/-, AGAINST WHICH MATERIAL CONSUMED IS STAT ED TO BE A SUM OF RS. 3,04,330/-. THE ASSESSEE HAS ALSO INCURRED PER SONAL EXPENSES OF RS. 2,49,013/- AND OTHER EXPENSES OF RS. 3,45,149/- , DEPRECIATION OF RS. 28,445/- AND REVENUE EXPENDITURE OF RS. 8,333/- BESIDES RENTAL INCOME OF RS. 8,12,500/-. IT IS FURTHER NOTICED TH AT TOTAL PURCHASES OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AR E RS. 73,690/- DETAILED BELOW AND OPENING STOCK OF RS. 2,30,640/-: - S.NO. NAME OF THE PARTY AMOUNT ITEM PURCHASED 1. DEV INDUSTRIES, 7090/- SHEET METAL PAHARGANJ, NEW DELHI. 2. SURBHI GRAPHICS, 2600/- PKG. BOXES NIT, FARIDABAD. 3. HARYANA WOOL & ALLIED INDUSTRIES 64000/- ELECTRI C PARTS PVT. LTD., 3776/108, NETAJI SUBHASH MARG, DARYA GANJ, NEW DELHI-110002. ITA NO. 2782/D/2010 4 3. TO VERIFY THE GENUINENESS OF PURCHASE OF RS. 64, 000/- AND THE SALE OF RS. 1,48,000/- THE AO ISSUED SHOW CAUSE NOT ICE TO THE ASSESSEE. IT WAS REVEALED THAT M/S HARYANA WOOL & ALLIED INDUSTRIES PVT. LTD. FROM WHOM THE ASSESSEE HAD SHO WN PURCHASE OF RS. 64,000/- OF ELECTRICAL PARTS WAS ASSOCIATED CON CERN OF THE ASSESSEE AND M/S HITECH ENTERPRISES, TO WHOM THE SA LE OF RS. 1,48,000/- WAS MADE IN CASH WAS AN INDEPENDENT PART Y. IN RESPONSE TO SUMMONS ISSUED BY THE AO, HUSBAND OF SMT. NITA K OCHAR, PROPRIETOR OF M/S HITECH ENTERPRISES SUBMITTED THAT THEY DID NOT ENTER INTO ANY TRANSACTION WITH THE ASSESSEE COMPAN Y. HOWEVER, IT IS NOTED BY THE AO THAT THE SAID SALE WAS MADE BY TWO BILLS OF RS. 1,44,000/-DATED 30 TH SEPTEMBER, 2006 WHICH INCLUDE A SALES TAX OF RS. 16,000/- AND ANOTHER SALE OF RS. 22,500/- DATED 30.06.2006 WHICH INCLUDED SALES TAX OF RS. 2,500/-. THE AO DI SBELIEVE THE SALE MADE BY THE ASSESSEE TO M/S HITECH ENTERPRISES ON T HE GROUND THAT PURCHASER BY WAY OF AN AFFIDAVIT HAS DENIED THE TRA NSACTION. THE PURCHASE MADE BY THE ASSESSEE FROM M/S HARYANA WOOL & ALLIED INDUSTRIES PVT. LTD. HAS ALSO BEEN DISBELIEVED BY T HE AO ON THE GROUND THAT THE SAID PARTY WAS NOT FOUND AT THE GIV EN ADDRESS. IT WAS SUBMITTED BY THE ASSESSEE THAT DIRECTOR OF M/S HARY ANA WOOL & ALLIED INDUSTRIES WAS NOT WELL AND THE SIGN-BOARD O F THE COMPANY WAS GIVEN FOR REPAIRS. HOWEVER, IT WAS SUBMITTED T HAT THE SAID ITA NO. 2782/D/2010 5 AMOUNT OF RS. 64,000/- WAS DULY DEPICTED IN THE SAL ES TAX RETURN, THE COPY OF WHICH WAS PRODUCED BEFORE THE AO. THE AO D ISBELIEVE THE SAID SALES TAX RETURN ON THE GROUND THAT THE NAME O F THE ASSESSEE AGAINST THE SALE MADE WAS NOT WRITTEN. HAVING FOUN D THAT SALE AND PURCHASE SHOWN BY THE ASSESSEE IS NOT PROPERLY EXPL AINED, LD. AO OBSERVED THAT THE ACCOUNTS OF THE ASSESSEE ARE NOT RELIABLE. HE OBSERVED THAT ASSESSEE HAS ADOPTED A MODE OF EVADIN G TAX PAYABLE BY IT ON RENTAL INCOME BY SHOWING BUSINESS LOSS OCC URRED ON SUCH TRANSACTION. HE, THEREFORE, REJECTED THE ACCOUNTS OF THE ASSESSEE AND DISALLOWED THE EXPENSES CLAIMED BY THE ASSESSEE AT RS. 5,90,125/- AND THE PURCHASE OF RS. 73,690/- WHICH HAVE ALREADY BEEN LISTED OUT IN THE ABOVE PART OF THIS ORDER AND THUS, ENTIRE EX PENSES OF RS. 6,63,815/- WERE DISALLOWED. LD. AO ALSO HAS ADDED THE SUM OF RS. 1,48,000/- SHOWN BY THE ASSESSEE AS SALE TO M/S HIT ECH ENTERPRISES AS HAVING NOT BEEN EXPLAINED BY THE ASSESSEE. 4. THE AO ALSO DID NOT GIVE THE BENEFIT TO THE ASSE SSEE REGARDING SET OFF AND CARRY FORWARD OF DEPRECIATION LOSS CLAI MED BY THE ASSESSEE YEAR WISE AND WITHOUT GIVING SUCH BENEFIT THE ASSESSMENT WAS FRAMED. ITA NO. 2782/D/2010 6 5. FURTHER IT WAS FOUND BY THE AO THAT ASSESSEE HAD SHOWN A LIABILITY OF RS. 10,26,673/- WHICH WAS SHOWN IN THE BALANCE SHEET IN THE NAME OF HARYANA WOOD & ALLIED INDUSTRIES LTD. IT WAS NOTICED BY HIM THAT SUCH ACCUMULATED LIABILITY WAS SHOWN BY THE ASSESSEE FROM YEAR TO YEAR IN ITS ACCOUNT BOOKS. THE LIABILI TY OF RS. 9,62,673/- WAS SHOWN FOR THE YEAR ENDING 31.3.2006 WHICH PERSI STED FOR SO MANY YEARS AND TO WHICH AMOUNT A SUM OF RS. 64,000/ - WAS ADDED DURING THE YEAR UNDER CONSIDERATION ON ACCOUNT OF P URCHASE MADE IN THE YEAR UNDER CONSIDERATION AND THUS, THE TOTAL LI ABILITY AS ON 31.3.2007 WAS SHOWN AT RS. 10,26,673/-. IT IS ALSO NOTICED BY THE AO THAT ASSESSEE HAS ALSO SHOWN INVESTMENT IN THE S HARES OF M/S HARYANA WOOL & ALLIED INDUSTRIES AMOUNTING TO RS. 2 4,54,900/-FOR SO MANY YEAR. ACCORDING TO AO, THE SAID LIABILITY WAS ON PAPER ONLY AND THERE WAS NO ACTUAL LIABILITY EXISTING. HE, TH EREFORE, ADDED THE SAID SUM OF RS. 9,62,673/- TO THE INCOME OF THE ASS ESSEE U/S 41(1) OF THE ACT. HE EXCLUDED RS. 64,000/- REPRESENTING PUR CHASE MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION ON THE GROUND THAT THE SAID AMOUNT HAS ALREADY BEEN ADDED AS A PART OF DISALLOWANCE OF EXPENDITURE OF RS. 6,63,815/-. IT IS IN THIS MANNE R THE ASSESSMENT HAS CAME TO BE FRAMED. ITA NO. 2782/D/2010 7 6. ALL THE ADDITION HAVE BEEN DELETED BY LD. CIT(A) AND SUCH DELETIONS ARE AGITATED BY THE REVENUE IN ITS GROUND S OF APPEAL. 7. LD. CIT(A) WHILE DELETING THE ADDITION HAS OBSER VED THAT BOOKS OF ACCOUNT OF THE ASSESSEE ARE STATUTORILY AU DITED UNDER THE COMPANIES ACT, 1956. THESE ARE ALSO TAX AUDITED U/ S 44AB OF THE ACT. THE ASSESSEE IS ALSO DULY REGISTERED WITH SAL ES TAX AUTHORITIES AND HAS BEEN FILING ITS SALES TAX RETURNS IN ACCORD ANCE WITH PROVISIONS OF THE ACT. THE AO DID NOT CHALLENGE TH E STATUTORY CORPORATE AUDIT REPORT, TAX AUDIT REPORT THE EXISTE NCE OF SALES TAX LICENSE AND ASSESSMENT THERE UNDER AND HAS REJECTED THE PURCHASES AND SALES OF THE ASSESSEE. THE AO DID NOT BRING OU T ANY DEFECT OR DISCREPANCY OR DEFICIENCY IN THE BOOKS OF ACCOUNT M AINTAINED BY THE ASSESSEE AND IT IS ALSO NOT THE CASE OF THE AO THAT IT DID NOT PRODUCE VOUCHERS OR OTHER DOCUMENTS. THE REJECTION OF ACCO UNTS IS BASED ON CONJUNCTURES AND IMAGINARY PRESUMPTIONS. HE OBSERV ED THAT AOS ALLEGATION THAT ASSESSEE HAS ADOPTED A MODE TO AVOI D TAXES ON HOUSE PROPERTY INCOME IS NOT SUPPORTED BY ANY EVIDENCE AS WHAT WAS CLAIMED BY THE ASSESSEE WAS EXPENDITURE WHICH WAS S HOWN TO BE INCURRED IN THE BUSINESS CARRIED ON BY THE ASSESSEE AND HE HAS GIVEN A FINDING THAT ASSESSEE COMPANY IS A COOPERATIVE TA X PAYER AND THERE IS NO HISTORY FOR TAX EVASION AND THERE WERE NO CIR CUMSTANCES TO ITA NO. 2782/D/2010 8 WARRANT SUCH INFERENCE. THE AOS ACTION IN EXAMINI NG THE SALE AND PURCHASE IS PIECEMEAL, FAULTY AND ARBITRARY. THE A SSESSEE WAS NOT CONFRONTED WITH THE REPORT OF THE INSPECTOR DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS IS EVIDENT FROM ASSESSEE S REPLY DATED 30.12.2009. THE INSPECTOR VISITED THE OFFICE OF TH E COMPANY AT FARIDABAD WHILE THE REGISTERED OFFICE WAS AT DELHI. THE INSPECTOR HAD REFUSED TO SERVE THE NOTICE, KNOWING THE ACTUAL WAREABOUTS OF THE COMPANY AT THE WORKS OFFICE AT FARIDABAD AND TH US, THE ENQUIRY MADE BY THE AO WAS NOT IN SPIRIT OF A GENUINE INQUI RY. THE AO DID NOT MAKE VERIFICATION OF OTHER TWO PURCHASES WHICH SHOWN THAT THE ENQUIRY MADE BY THE AO WAS HALF HEARTED AND BIASED AND PIECEMEAL APPROACH TO THE WHOLE SUBJECT. THE AFFIDAVIT FILE D BY THE PURCHASER COULD NOT BE THE BASIS TO DRAW INFERENCE AS THE SAL E WAS CASH SALE AND IT WAS NOT MANDATORY ON THE PART OF THE ASSESSEE TO MAINTAIN THE WAREABOUTS OR ADDRESS OF THE PARTY TO WHOM THE SALE IS MADE BUT DESPITE THAT FACT THE ASSESSEE HAD PROVIDED THE ADD RESSES OF ALL THE SALE BILLS BEFORE THE AO WHICH HAVE NOT BEEN APPREC IATED BY THE AO. THE ASSESSEE HAS BEEN ABLE TO DISCHARGE ITS ONUS BY PROVING THE VERACITY OF THE ACCOUNT BOOKS MAINTAINED AND THE GE NUINENESS OF THE SALES AND PURCHASES AS PER THE SALES TAX ASSESSMENT ORDERS. HENCE, THE AO WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC. 145(3) ITA NO. 2782/D/2010 9 AND MAKING THE ASSESSMENT U/S 144 OF THE ACT. IN T HIS MANNER, HE HAS DELETED THE ADDITION OF RS. 6,63,815/-. 8. HE HAS ALSO ACCEPTED THE CLAIM OF THE ASSESSEE R EGARDING SET UP OFF BROAD FORWARD DEPRECIATION OF LOSS WHICH HAS BEEN LISTED IN PARA 11 OF THE ORDER OF CIT(A) AND DESCRIBE HEREIN BELOW: - ASSESSMENT YEAR AMOUNT 2006-07 26,930 2005-06 1,09,351 2004-05 69,099 2002-03 5,938 2001-02 8,084 2000-01 5,947 9. HE ACCEPTED THE CLAIM OF THE ASSESSEE THAT THE A FOREMENTIONED DETERMINED DEPRECIATION/BUSINESS LOSS ARE REQUIRED TO BE SET OFF UNDER THE PROVISIONS OF SEC. 72 OF THE ACT. HOWEVE R, HE HAS DIRECTED THE AO TO ALLOW SUCH CLAIM AFTER DUE VERIFICATION O F THE CLAIM FROM THE RECORD. 10. LD. CIT(A) HAS ALSO DELETED THE ADDITION OF RS. 1,48,000/- ON THE BASIS OF THIS ADDITION MADE IS BASELESS. SINCE BOOKS OF ACCOUNT HAVE BEEN DECLARED TO BE ACCEPTABLE AND SINCE SALES TAX ASSESSMENT OF THE ASSESSEE HAS CERTIFIED THE AUTHENTICITY OF T HE SALES FIGURES, THE RECEIPT OF RS.1,48,000/- FROM M/S HITECH ENTERPRISE S IS GENUINE. ITA NO. 2782/D/2010 10 11. LD. CIT(A) HAS ALSO DELETED THE ADDITION OF RS. 9,62,673/- ON THE GROUND THAT THE PROVISIONS OF SEC. 41(1) WERE N OT APPLICABLE. LIABILITY EXISTS AS SUCH IT IS NOT A LIABILITY ON P APERS AND THE CLAIM OF THE ASSESSEE IS SUPPORTED BY THE DECISION OF JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT, FARIDABAD VS. SMT. SITA D EVI JUNEJA IN ITA NO. 619/2009 DECIDED ON 2.12.2009, WHEREIN IT WAS H ELD BY THE HONBLE HIGH COURT THAT MERELY BECAUSE SUCH LIABILI TY IS OUTSTANDING FOR MANY YEARS, IT CANNOT BE ASSUMED THAT IT HAS CE ASED TO EXIST SO AS TO ATTRACT THE PROVISIONS OF SEC. 41(1) OF THE ACT. IN THIS MANNER LD. CIT(A) HAS DELETED ALL THE ADDITIONS. THE DEPARTME NT IS AGGRIEVED, HENCE HAS RAISED AFOREMENTIONED GROUNDS OF APPEAL. 12. LD. DR AFTER NARRATING THE FACTS RELYING UPON T HE OBSERVATIONS OF AO, WHICH HAVE ALREADY BEEN DESCRIBED IN DETAIL, PLEADED THAT SALE AND PURCHASE OF THE ASSESSEE WERE NOT SUPPORTE D BY COGENT EVIDENCES, THEREFORE, THE ACCOUNTS OF THE ASSESSEE WERE RIGHTLY REJECTED BY THE AO. SHE SUBMITTED THAT LD. CIT(A) HAS WRONGLY DELETED THE ADDITION. THE AO WHILE MAKING THE ADDI TION HAS GIVEN THE REASONS IN DETAIL. THEREFORE, SHE SUBMITTED TH AT THE ASSESSMENT ORDER SHOULD BE RESTORED AND THAT OF CIT(A) SHOULD BE SET ASIDE. ITA NO. 2782/D/2010 11 13. ON THE OTHER HAND, RELYING UPON THE PLEADINGS M ADE BY THE ASSESSEE BEFORE AO AND CIT(A) IT WAS SUBMITTED BY L D. AR THAT LD. CIT(A) AFTER APPRECIATING THE EVIDENCE PLACED ON RE CORD HAS RIGHTLY DELETED THE ADDITIONS WHICH WERE NOT JUSTIFIED. HE SUBMITTED THAT WITH REGARD TO ADDITION MADE FOR RS. 9,62,675/- THE LIABILITY WAS EXISTING IN THE BALANCE SHEET OF THE ASSESSEE AND C ONFIRMATION TO THAT EXTENT WAS ALSO SUBMITTED TO AO AND CIT(A). HE HAS SUBMITTED BEFORE US COPY THEREOF AND THUS, HE WAS SUBMITTED T HAT ALL THE ADDITIONS HAVE RIGHTLY BEEN DELETED BY THE LD. CIT( A) AND HIS ORDER SHOULD BE UPHELD. 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. IT HAS NOT BEEN DISPUTED BY THE AO THAT ASSESSEE IS CARRYING ON BUSINESS. THE AO D OUBTED THE PURCHASES AS WELL AS SALE MADE BY THE ASSESSEE IN R ESPECT OF PARTIES MENTIONED ABOVE. SO AS IT RELATES TO SALE MADE BY THE ASSESSEE TO M/S HITECH ENTERPRISES, THE ALLEGATION OF THE AO IS THAT THE HUSBAND OF THE PROPRIETOR OF THAT CONCERN DENIED TO HAVE MA DE ANY PURCHASED FROM THE ASSESSEE. AS AGAINST THAT THE ASSESSEE NOT ONLY HAS PRODUCED PHOTO COPIES OF BILL ISSUED BY IT IN THE NAME OF TH E SAID PARTY. THE SAID BILL WAS ALSO SHOWING THE LEVY OF SALES TAX WH ICH FACT HAS BEEN MENTIONED BY THE AO IN THE ASSESSMENT ORDER ITSELF. THE ASSESSEE TO ITA NO. 2782/D/2010 12 SUPPORT SUCH SALE HAS ALSO FILED COPIES OF SALES TA X RETURNS IN WHICH SUCH SALE WAS DULY SHOWN. LD. CIT(A) HAS ALSO REFE RRED TO THE SALES TAX ASSESSMENT OF THE ASSESSEE. THERE IS NO RESTRI CTION ON THE ASSESSEE TO MAKE CASH SALES. KEEPING IN VIEW ALL T HESE FACTS AND CIRCUMSTANCES, IT CANNOT BE SAID THAT THERE IS ANY INFIRMITY IN THE ORDER OF CIT(A) WHEN HE HAS OBSERVED THAT THE SALES SHOWN BY THE ASSESSEE WAS GENUINE. 15. SO AS IT RELATES TO PURCHASE MADE FROM HARYANA WOOL & ALLIED INDUSTRIES WHICH IS AN ASSOCIATE CONCERN OF THE ASSESSEE, THE EXISTENCE OF THE SAID CONCERN IS NOT DOUBTED. THE SAID CONCERN HAS ALSO DULY SHOWN SALES MADE TO THE ASSESSEE OF RS. 6 4,000/- AND TO SUPPORT SUCH SALES TAX RETURN AND SALES TAX ASSESSM ENT WERE FURNISHED. THE SAID EVIDENCE HAS BEEN REJECTED BY THE AO SIMPLY ON THE GROUND THAT THEY DO NOT SUPPORT THE CASE OF THE ASSESSEE. IF A SALE IS DULY SHOWN IN THE SALES TAX RETURN OF A PARTY, T HE SAME CANNOT BE REJECTED SIMPLY FOR THE REASON THAT THE PARTY WAS N OT AVAILABLE AT THE ADDRESS GIVEN PARTICULARLY WHEN IT WAS CLEARLY STAT ED BY THE ASSESSEE VIDE REPLY DATED 30.12.2009 THAT ASSESSEE WAS NOT C ONFRONTED TO SUCH EVIDENCE. MOREOVER, THE SAID CONCERN WAS AN ASSOCI ATE CONCERN OF THE ASSESSEE. THEREFORE, WE HOLD THAT CIT(A) WAS R IGHT IN HOLDING THAT THE SAID PURCHASE OF THE ASSESSEE HAS WRONGLY BEEN REJECTED. IN ITA NO. 2782/D/2010 13 VIEW OF THE FACT THAT NO DEFECT COULD BE FOUND WITH REGARD TO SALE AND PURCHASE OF THE ASSESSEE, THE BOOKS COULD NOT BE RE JECTED ONLY FOR THE REASON THAT ASSESSEE SALE AND PURCHASE WERE NOT SUP PORTED AND THE BUSINESS WAS SHOWN BY THE ASSESSEE FOR THE REASON O F REDUCING ITS HOUSE PROPERTY INCOME. IN VIEW OF THESE FINDINGS, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) VIDE WHICH HE HAS DELETED THE ADDITION OF RS. 6,63,815/- WHICH INCLUDE THE PURCHA SE MADE BY THE ASSESSEE FROM ITS ASSOCIATE CONCERN. 16. NOW COMING TO THE DIRECTION OF LD. CIT(A) RE GARDING BENEFIT GIVEN TO THE ASSESSEE WITH REGARD TO BROUGHT FORWAR D DEPRECIATION AND LOSS ETC. AFTER HEARING BOTH THE PARTIES, WE A RE OF THE OPINION THAT LD. CIT(A) HAS RIGHTLY HELD THAT THE SAME SHOU LD BE ALLOWED AFTER DUE VERIFICATION OF THE CLAIM FROM THE RECORD. IF THE SAME IS DETERMINED TO BE CARRIED FORWARD THEN THE BENEFIT O F THE SAME IS TO BE ALLOWED TO THE ASSESSEE. THEREFORE, WE DECLINE TO INTERFERE IN SUCH FINDINGS OF LD. CIT(A). 17. NOW COMING TO THE ADDITION OF RS. 1,48,000/- WH ICH HAS BEEN ADDED BY THE AO WITH REGARD TO SALES MADE BY THE AS SESSEE TO M/S HITECH ENTERPRISES. THE SAID AMOUNT REPRESENTS SAL ES MADE BY THE ASSESSEE WHICH WERE DULY DISCLOSED IN THE SALES TAX RETURN. SALES TAX ITA NO. 2782/D/2010 14 WAS ALSO CHARGED. THEREFORE, WE DECLINE TO INTERFE RE IN THE ORDER OF CIT(A) VIDE WHICH SUCH ADDITION HAS BEEN DELETED. 18. COMING TO THE ADDITION OF RS. 9,62,673/-,THE FA CT IS UNDISPUTED THAT THE SAID LIABILITY WAS BEING BROUGHT FORWARD Y EAR TO YEAR AND DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. THE SAID LIABILITY IS ALSO EXISTING IN THE BALANCE SHEET OF THE FINANCIAL YEAR UNDER CONSIDERATION. THE LIABILITY HAS NOT BEEN WRITTEN OFF. IF IT IS SO, WE SEE NO JUSTIFICATION IN INTERFERING WITH THE FINDIN GS OF LD. CIT(A). WHILE DELETING SUCH ADDITION LD.CIT(A) HAS RELIED U PON DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT, FARIDABAD VS. SMT. SITA DEVI. LD. AR ALSO HAS PLAC ED BEFORE US DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. G.P. INTERNATIONAL LIMITED 229 CTR 86, WHER EIN IT HAS BEEN HELD THAT ASSESSEE HAVING SHOWN THE AMOUNT PAYABLE BY IT TO ANOTHER COMPANY AS AN EXISTING LIABILITY IN ITS BOOKS AND N OT RETURNED BACK THE SAME, IT CANNOT BE SAID THAT AFORESAID LIABILIT Y HAS CEASED TO EXIST AND, THEREFORE, IT CANNOT BE THEREFORE, ASSESSED AS INCOME BY INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT . THEREFORE, WE DECLINE TO INTERFERE IN SUCH DELETION AND THIS GROU ND OF THE REVENUE IS ALSO DISMISSED. ITA NO. 2782/D/2010 15 19. IN VIEW OF ABOVE DISCUSSION, THERE BEING NO MER IT IN THE DEPARTMENTAL APPEAL. THE SAME IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 17.06.201 1 SD/- SD/- (SHAMIM YAHYA) (I.P. BANSA L) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17.6.11 *KAVITA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR