The ITO, Ward-6(1), Surat V. Shri Dhansukhlal Jekishondasd, Surat

ITA 2798/AHD/2010

• Counselvise Citation: 279820514 RSA 2010
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-11-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 04-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Keywords: Corroborative evidences; Reassessment proceedings
• Section: 68; 143(3); 133(6)

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . . . . , , , , ! ! ! ! ' #$ ' #$ ' #$ ' #$ , , , , % % % % BEFORE S/SHRI N.S. SAINI, ACCOUNTANT MEMBER AND KUL BHARAT, JUDICIAL MEMBER) ITA NO.2798/AHD/2010 [ASSTT.YEAR : 1998-1999] ITO, WARD-6(1) SURAT. /VS. SHRI DHANSUKHLAL JEKISONDAS PROP. OF KIRTI SYNTHETICS BLOCK NO.110, SURVEY NO.92/1 PALOD, TAL. MANGROL MOTA VARACHHA, SURAT. ( (( ('( '( '( '( / APPELLANT) ( (( ()*'( )*'( )*'( )*'( / RESPONDENT) + , - / REVENUE BY : SHRI K.C. MATHEWS, SR.DR /$ , - / ASSESSEE BY : NONE '0 , $1/ DATE OF HEARING : 20 TH NOVEMBER, 2013 234 , $1/ DATE OF PRONOUNCEMENT : 27-11-2013 5 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A )-IV, SURAT DATED 2.7.2010. 2. IN THE APPEAL, THE REVENUE HAS RAISED THE FOLLOW ING ISSUES: I) THE CIT(A ERRED IN DELETING DISALLOWANCE MADE BY THE AO OF `1 ,13,971/- ON ACCOUNT OF OUTSTANDING LIABILITY. ITA NO.2798/AHD/2010 -2- II) THE CIT(A) ERRED IN DELETING THE DISALLOWANCE M ADE BY THE AO OF ` 3,00,000/- ON ACCOUNT OF ADVANCE FOR GOODS TREATED AS FICTITIOUS. III) CIT(A) ALSO ERRED IN RESTRICTING THE DISALLOWA NCE MADE BY THE AO OF ` 13,67,670/- ON ACCOUNT OF UNSECURED LOAN TO ` 2,00,000/- IV) CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANC E MADE BY THE AO OF ` 1,33,000/- ON ACCOUNT OF MILLIGAN EXPENSES AND OCTROI & FREIGHT EXPENSES TO ` 50,000/- 3. THE DEPARTMENT HAS FILED STATEMENT OF FACTS TOGE THER WITH ITS ARGUMENTS, AS THE DECISION OF THE LEARNED CIT(A ) IS NOT ACCEPTABLE TO THE REVENUE AND THE SAME READS AS UND ER: IN THIS CASE, RETURN OF INCOME DECLARING TOTAL INC OME AT RS.39,714/- WAS FILED BY THE ASSESSEE ON 30.11.1998 . THE ORIGINAL ASSESSMENT U/S. 144 OF THE I.T. ACT WAS FI NALIZED ON 30.01.2001 DETERMINING TOTAL INCOME AT RS.19,97,720 /-. WHILE FINALIZING THE ASSESSMENT, THE FOLLOWING ADDITIONS/DISALLOWANCES WERE MADE TO THE TOTAL INCO ME OF THE ASSESSEE. I) ADDITION ON ACCOUNT OF UNSECURED LOAN. RS.13,67, 670/- II) DISALLOWANCE OUT OF MILLIGAN EXPENSES RS.90,100 /- III) DISALLOWANCE OUT OF OCTROI & FREIGHT RS.42,900 /- IV) DIFFERENCE IN ELECTRICITY BILLS SHOWN IN P&L A/C. RS.43,366/- V) ADDITION ON ACCOUNT OF OUTSTANDING LIABILITY RS.1,13,971/- VI) ON ACCOUNT OF ADVANCE FOR GOODS RS.3,00,000/- THE ASSESSEE PREFERRED APPEAL BEFORE THE LED. CIT(A ), WHO IN TURN CONFIRMED ALL THE ADDITIONAL MADE BY THE AO . THE ASSESSEE FURTHER WENT IN APPEAL BEFORE THE HON'BLE ITAT, WHO VIDE ITS ORDER IN ITA NO. 2327/AHD/2002 DATED ITA NO.2798/AHD/2010 -3- 15.02.2008 HAS SET ASIDE THE ORDER OF BOTH THE CIT( A) AS WELL AS THE ASSESSING OFFICER WITH A DIRECTION TO M AKE THE ASSESSMENT AFRESH CONSIDERING THE DETAILS FURNISHED BY THE ASSESSEE AND GIVING OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. DURING THE COURSE OF FRESH ASSESSMENT PROCEEDINGS, AS PER THE DIRECTION OF THE HON'BLE ITAT, ASSESSEE WAS PRO VIDED AMPLE OPPORTUNITIES TO FURNISH VARIOUS DETAILS IN R ESPECT OF ITS CLAIM MADE IN THE RETURN OF INCOME ALONGWITH BO OKS OF ACCOUNT. HOWEVER, DURING THE RE-ASSESSMENT PROCEEDI NGS ALSO THE ASSESSEE HAD NOT PRODUCED ANY BOOKS OF ACC OUNTS OR OTHER RELEVANT DOCUMENTS / EVIDENCES BEFORE THE AO FOR VERIFICATION. IN ABSENCE OF THESE DOCUMENTS, THE AO HAS AGAIN MADE ALL THE ABOVE MENTIONED ADDITIONS IN THE RE- ASSESSMENT ORDER PASSED U/S. 143(3) R.W.S. 254 OF T HE ACT DATED 29.12.2009. ON APPEAL, THE LEARNED CIT(A)-IV, SURAT VIDE HIS APPELLATE ORDER NO. CAS-IV/279/2009-10 DATED 02.07. 2010 HAS GRANTED THE FOLLOWING RELIEF TO THE ASSESSEE. I) ADDITION MADE ON ACCOUNT OF UNSECURED LOAN OF RS.13,67,670/- IS REDUCED TO RS.2,00,000/- THEREBY GRANTING RELIEF OF RS.11,67,670/- TO THE ASSESSEE. II) DISALLOWANCE OF RS.1,33,000/- MADE [OUT OF MILLIGAN EXPENSES OF RS.90,000/- AND OCTROI & FREIGHT CHARGES OF RS.42,900/-] IS RESTRICTED TO RS.50,000/AND GRANTED RELIEF OF RS.83,000/-. III) ADDITION MADE ON ACCOUNT OF OUTSTANDING LIABILITY OF RS.1,13,971/- IS DELETED. IV) ADDITION MADE ON ACCOUNT OF ADVANCE FOR GOODS OF RS.3,00,000/- IS DELETED. (I) ADDITION OF RS.13,67,670/-ON ACCOUNT OF UNSECURED LOAN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WEL L AS THE REASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ITA NO.2798/AHD/2010 -4- REQUESTED TO FURNISH THE COMPLETE DETAILS UNSECURED LOANS OBTAINED FROM THE FOLLOWING PARTIES SUCH AS CONFIRM ATIONS, ACKNOWLEDGEMENT OF RETURN OF INCOME FILED AND THE B ANK STATEMENT REFLECTING THE TRANSACTION 1. DHARMESH DHANSUKHLAL, HUF RS.2,15,670/- 2. PARESH DHANSUHLAL, HUF RS.1,35,000/- 3. SANGEETA MODI RS.1,50,000/- 4. YASH EXCLUSIVE RS.1,20,000/- 5. YASH TEXTORIUM RS.5,47,000/- 6. PRAVINBHAI RS.2,00,000/- TOTAL RS.13,67,670/- HOWEVER, THE ASSESSEE FILED CONFIRMATIONS AND ACKNOWLEDGEMENT OF RETURNS OF THE PARTIES MENTIONED AT SR. NO.1 TO 5 ABOVE BUT FAILED TO PRODUCE THE BA NK STATEMENT OF ANY OF THE SAID PARTIES. IN THE CASE O F SHRI PRAVINBHAI, THE ASSESSEE EVEN FAILED TO FURNIS H THE CONFIRMATIONS. DECISION OF THE LD.CIT (A) THE ID. CIT(A) HAS CONFIRMED THE ADDITION OF RS.2,00,000/STANDING IN THE NAME OF SHRI PRAVINBHAL BUT DELETED IN THE REMAINING CASES BY OBSERVING THA T THE ASSESSEE HAS DISCHARGED THE INITIAL ONUS BY PROVIDING IDENTITY OF CREDITORS BY FURNISHING THEIR COMPLETE ADDRESS AND PAN AND THE GENUINENESS OF THE TRANSACTION IS PROVED BY THE FACT THAT ALL THE TRANSACTIONS WERE MADE THROUGH CHEQUES ONLY. THE DECISION OF THE LD.CIT(A) IS NOT ACCEPTABLE. IT IS A SETTLED LAW THAT IF THERE IS AN ENTRY IN TH E ACCOUNTS OF THE ASSESSEE, WHICH SHOWS THE RECEIPT O F A SUM, THE BURDEN IS ON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF SUCH CREDIT. IN THIS REGARD, IT HAS BEEN HELD IN NUMBER OF CASE LAWS THAT THIS INIT IAL BURDEN EXTENDS TO ESTABLISH ITA NO.2798/AHD/2010 -5- 1) IDENTITY OF THE CREDITOR/INTRODUCER, 2) CAPACITY OF PERSON WHO HAS INVESTED MONEY 3) GENUINENESS AND CORRECTNESS OF THE TRANSACTION. IN THE CASE OF CIT VS. KORLAY TRADING CO. (1998) 232-ITR-820 (CALCUTTA), IT WAS HELD THAT MER E FILING OF INCOME-TAX FILE NUMBERS OF THE CREDITORS IS NOT ENOUGH TO PROVE THE GENUINENESS OF CASH CREDIT. MOREOVER, IN THE CASE OF PRECISION FINANCE PVT. LTD . REPORTED IN 208 ITR 465, THE HON'BLE CALCUTTA HIGH COURT HAS HELD THAT MERE FURNISHING OF THE PARTICUL ARS IS ALSO NOT ENOUGH AND SIMILARLY PAYMENT BY ACCOUNT PAYEE CHEQUE IS ALSO NOT SACROSANCT NOR CAN IT MAKE A NON-GENUINE TRANSACTION GENUINE. IT WOULD NOT BE OUT OF PLACE TO MENTION THAT IF THE ASSESSEE FAILS TO ESTABLISH ANY ONE OF THE ABOVE REFERRED CONDITIONS, THE CASH CREDIT APPEARING IN THE BOOKS OF ACCOUNT I S TO BE TREATED AS BOGUS. THUS MERE FILLING OF THE CONFIRMATION OF LETTERS IS NOT SUFFICIENT TO PROVE THE UNSECURED LOAN AS GENUINE ONE. THE ASSESSEE WAS GIVE SUFFICIENT OPPORTUNITY TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. HOWEVER, THE ASSESSEE HAD TOTALLY FAILED TO PROVE THE CORRECTNES S OF THE TRANSACTION IN THE NAME OF ABOVE MENTIONED PERSONS. HENCE THE ADDITION AMOUNTING TO RS.13,67,670/TO THE TOTAL INCOME OF THE ASSESSEE. A ND THE DECISION OF THE LD. CIT (A) IS NOT ACCEPTABLE. (II) DISALLOWANCE OF RS.1,33,000/- MADE OUT OF MILGIN EXPENSES (RS. 90,000) AND OCTROI & FREIGHT CHARGES (RS.42.900/-). DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED MILLIGAN EXPENSES OF RS.3,03,312/- AND OCTROI & FREIGHT EXPENSES TO THE ITA NO.2798/AHD/2010 -6- TUNE OF RS.1,43,614/-. AS THE ASSESSEE HAS NOT PRODUCED ANY BOOKS OF ACCOUNTS, VOUCHERS, BILLS, ET C., IT CANNOT BE POSSIBLE FOR THE AO TO VERIFY THE GENUINENESS OF THE CLAIMS MADE BY THE ASSESSEE. THEREFORE, THE AO HAS RIGHTLY DISALLOWED RS.90,100/ - AND RS.42,900/- RESPECTIVELY OUT OF MILLIGAN EXPENS ES AND OCTROI & FREIGHT EXPENSES, TOTALING TO RS.1,33,000/-. DECISION OF THE LD.CIT (A) ON APPEAL, THE ID.CIT(A) HAS RESTRICTED TO ADDITION MADE ON ACCOUNT MILLIGAN EXPENSES AND OCTROI AND FREIGHT CHARGE TO RS.50,000/- AND BALANC E IS DELETED OF RS.83,000/- IN APPELLATE PROCEEDING T HE CIT(A) OBSERVED THAT THE ESTIMATION OF THIS ADDITIO N IS HIGH THE LD. C1T(A) STATE THE ADDITION MADE BY AO ON ESTIMATION BASIS IS ALSO ON HIGHER SIDE. THE DECISION OF CIT(A) IS NOT ACCEPTABLE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS NOT PRODUCED ANY BOOKS OF ACCOUNT, VOUCHERS, BILLS ETC. FOR VERIFICATION AND ALSO THE ASSESSEE HAS NOT FINISHED ANY SUPPORTING EVIDENCES IN RESPECT OF ABO VE EXPENSES IN APPELLATE PROCEEDINGS. (III) ADDITION MADE ON ACCOUNT OF OUTSTANDING LIABILITY OF RS.1,13,971/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD PAID ELECTRICITY BILL S FOR THE MONTH OF MARCH, 1998 OF RS.1,13,971/- IN THE SUBSEQUENT MONTH, HOWEVER, HE HAD NOT SHOWN THE SAID AMOUNT AS OUTSTANDING LIABILITY AS ON 31.03.1998. DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS AS WELL AS BEFORE THE APPELLATE PROCEEDINGS, THE ASSESSEE ACCEPTED THAT HE HAD NOT SHOWN THE OUTSTANDING LIABILITY BUT CONTENDED THAT HE ITA NO.2798/AHD/2010 -7- HAS ALSO NOT CLAIMED THIS EXPENDITURE IN THE YEAR UNDER CONSIDERATION BUT IN THE SUBSEQUENT MONTH ON THE BASIS OF PAYMENT. SINCE THE ASSESSEE IS FOLLOWI NG MERCANTILE SYSTEM OF ACCOUNTING, THE AO HAS RIGHTLY MADE THE ADDITION. DECISION OF THE LD.CIT (A) THE LD. CIT(A) DELETED THE ENTIRE ADDITION MADE ON ACCOUNT OF OUTSTANDING LIABILITY DURING THE APPELLA TE PROCEEDINGS, THE CIT(A) HAS STATED THAT THE MISTAKE OF THE ASSESSEE SELF-COMPENSATORY AND IS NOT RESULTING IN LOSS OF REVENUE. THE DECISION OF THE CIT(A) IS NOT ACCEPTABLE BECAUS E THE CIT(A) IS NOT APPRECIATED SINCE THE ASSESSEE FOLLOW MERCANTILE SYSTEM OF THE ACCOUNTING AND ASSESSEE HAD PAID ELECTRICITY BILL OF RS.1,13,971/- FOR THE MONTH OF MARCH-1998 IN SUBSEQUENT MONTH. HOWEVER, HE HAD NOT SHOWN SAID AMOUNT AS OUTSTANDING LIABILITY AS ON 31.3.1998. (IV) ADDITION MADE ON ACCOUNT OF ADVANCE FOR GOODS OF RS.3,00,000/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SHOWN RS.3,00,000/- AS ADVANCES FROM TWO CUSTOMERS NAMELY M/S. KAMAL TEXTILES (RS.2,60,000) AND M/S. MEENA TEXTILES (RS.40,000). DURING THE COURSE OF FRESH ASSESSMENT PROCEEDINGS, THE ASSESSE E WAS ASKED TO FURNISH THE BOOKS OF ACCOUNT OR BANK STATEMENT FOR VERIFICATION. HOWEVER, THE ASSESSEE FAILED TO PRODUCE THE SAME. IN ABSENCE OF ANY SUPPORTING EVIDENCE IT CANNOT BE POSSIBLE FOR THE A O TO VERIFY THE GENUINENESS OF THE CLAIMS MADE BY THE ASSESSEE. DECISION OF THE LD.CIT (A) ITA NO.2798/AHD/2010 -8- THE ID. CIT(A) HAS DELETED THE SAID ADDITION BY OBSERVING THAT THE ASSESSEE HAS FURNISHED CONSIDERABLE MATERIAL IN SUPPORT OF THE IDENTITY OF THE PERSONS AND ALSO ESTABLISHES THAT THEY WERE ASSESSE D TO TAX. THE ID. CIT(A) HAS FURTHER OBSERVED THAT TH E AO FAILED TO CROSS CONFIRM THE SAME BY THE PARTY BY ISSUING NOTICE U/S. 133(6) OF THE ACT. THE DECISION OF THE LD. CIT (A) IS NOT ACCEPTABLE A S THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION. IN THE CASE OF CIT VS. KORLAY TRADING CO. (1998) 232-ITR-820 (CALCUTTA), IT WAS HELD THAT MERE FILING OF INCOME-TAX FILE NUMBERS OF THE CREDITORS IS NOT ENOUGH TO PROVE THE GENUINENES S OF CASH CREDIT. MOREOVER, IN THE CASE OF PRECISION FINANCE PVT. LTD. REPORTED IN 208 ITR 465, THE HON'BLE CALCUTTA HIGH COURT HAS HELD THAT MERE FURNISHING OF THE PARTICULARS IS ALSO NOT ENOUGH AN D SIMILARLY PAYMENT BY ACCOUNT PAYEE CHEQUE IS ALSO NOT SACROSANCT NOR CAN IT MAKE A NON-GENUINE TRANSACTION GENUINE. THUS MERE FILLING OF THE CONFIRMATION OF LETTERS IS NOT SUFFICIENT TO PROVE THE UNSECURED LOAN AS GENUINE ONE. THE ASSESSEE WAS GIVE SUFFICIENT OPPORTUNITY TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. HOWEVER, THE ASSESSEE HAD TOTALLY FAILED TO PROVE T HE CORRECTNESS OF THE TRANSACTION IN THE NAME OF ABOVE MENTIONED PERSONS. HENCE THE ADDITION AMOUNTING TO RS.3,00,000/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE, AND THE DECISION OF THE LD. CIT (A) IS NO T ACCEPTABLE. 4. NOTICE OF HEARING WAS SENT TO THE ASSESSEE BY RE GISTERED POST WITH ACKNOWLEDGEMENT DUE ON 4.9.2013, WHICH WA S RETURNED BY THE POSTAL AUTHORITIES UNSERVED WITH THE REMARK LEFT. THE ITA NO.2798/AHD/2010 -9- CASE WAS ADJOURNED TO 20.11.2013 AND NOTICE WAS SEN T THROUGH LEARNED DEPARTMENTAL REPRESENTATIVE. THE LEARNED D R HAS FILED A LETTER OF THE AO, WARD-6(1), SURAT TOGETHER THE EVI DENCE OF SERVICE OF NOTICE OF THE ASSESSEE. ON 20.11.2013, THE CASE WAS CALLED OUT FOR HEARING, BUT NONE APPEARED ON BEHALF OF THE ASSESSEE AND NEITHER ANY ADJOURNMENT APPLICATION WA S FILED. IN THE CIRCUMSTANCES, THE APPEAL OF THE DEPARTMENT IS DECIDED EXPARTE QUA THE ASSESSEE, AFTER HEARING THE LEARNED DR. IT IS ALSO OBSERVED FROM THE CASE RECORDS THAT THE ORIGINAL AS SESSMENT ORDER IN THIS CASE WAS PASSED BY THE AO ON 30.1.2001 UNDE R SECTION 144 OF THE IT ACT, AS IN SPITE OF SEVERAL OPPORTUNI TIES GRANTED TO THE ASSESSEE, THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNTS AND OTHER RELEVANT DOCUMENTS IN SUPPORT OF THE RETURN O F INCOME FILED, THEREFORE, THE AO WAS COMPELLED TO MAKE THE ASSESSM ENT BY MAKING ADDITIONS TO THE INCOME RETURNED BY THE ASSE SSEE UNDER SECTION 144 WHEREIN CERTAIN ADDITIONS WERE MADE BY HIM. 5. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ADDI TION VIDE ORDER DATED 19.4.2002, AND THEREAFTER, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL, AND THE TRIBUNAL VIDE I TS ORDER DATED 27.6.2008 IN ITA NO.2327/AHD/2002 SET ASIDE THE ORD ERS OF THE LOWER AUTHORITIES AND DIRECTED THE AO TO MAKE ASSES SMENT AFRESH AFTER CONSIDERING THE DETAILS FILED BY THE ASSESSEE IN THE PAPER BOOK PAGES 69 TO 75 BEFORE THE TRIBUNAL. THE TRIBU NAL ALSO DIRECTED THE ASSESSEE TO FURNISH ALL SUCH DETAILS I N SUPPORT OF ITS CLAIM. ITA NO.2798/AHD/2010 -10- 6. PURSUANT TO THIS DIRECTION OF THE TRIBUNAL, THE AO ISSUED NOTICE TO THE ASSESSEE UNDER SECTION 143(2) OF THE ACT ON 14.7.2008. IN THE SET ASIDE PROCEEDINGS ACCORDING TO THE AO, THE ASSESSEE DID NOT COMPLY WITH THE DIRECTION OF THE T RIBUNAL. THEREFORE, THE AO REPEATED THE ADDITIONS MADE IN TH E ORIGINAL ASSESSMENT ORDER PASSED ON 30.1.2001. 7. ON APPEAL, THE LEARNED CIT(A) HAS DELETED SOME A DDITIONS AND RESTRICTED THE DISALLOWANCE IN CASE OF SOME OTH ER ADDITIONS. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US . 8. AFTER HEARING THE LEARNED DR, WE FIND THAT THE L EARNED CIT(A) DELETED THE ADDITION OF ` 11,67,670/- MADE UNDER SECTION 68 OF THE ACT BY THE AO FOR THE REASON THAT THE ASS ESSEE FAILED TO PRODUCE BANK STATEMENT OF THE PARTIES BY OBSERVING THAT, IDENTITY OF CREDITORS WAS ESTABLISHED BY GIVING THEIR COMPLE TE ADDRESSES AND PAN AND THE GENUINENESS OF THE TRANSACTION IS P ROVED, AS THE TRANSACTIONS WERE MADE THROUGH CHEQUE ONLY. WE FIN D THAT THE CIT(A) HAS OBSERVED THAT THE TRANSACTIONS WERE THRO UGH CHEQUES ONLY. THE AO HAS OBSERVED THAT THE BANK STATEMENTS OF THE CREDITORS WERE NOT FILED BEFORE THE AO. THUS, IT I S SEEN THAT THE ASSESSEE HAD FILED EVIDENCES TO THE EFFECT THAT THE LOANS WERE RECEIVED THROUGH BANKING CHANNELS, AS A RESULT, THE LEARNED CIT(A) DELETED THE ADDITION. IN OUR CONSIDERED OPI NION, THE AO SHOULD ALSO HAVE OPPORTUNITY TO VERIFY THE ADDITION AL EVIDENCES, WHICH WERE FILED BEFORE THE LEARNED CIT(A), AND WER E NOT FILED ITA NO.2798/AHD/2010 -11- BEFORE THE AO, DURING THE ASSESSMENT PROCEEDINGS. THE LEARNED CIT(A) FAILED TO CALL FOR REMAND REPORT FROM THE AO , THEREBY VIOLATING THE RULE 46A OF THE I.T. RULES, 1962. TH EREFORE, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A), AND RESTORE THIS ISSUE BACK TO THE FILE OF THE AO FOR ADJUDICATION AFRESH, WITH THE DIRECTION TO THE ASSESSEE TO FILE ALL EVIDENCES IN SUPPORT OF TH E CREDITORS BEFORE THE LEARNED CIT(A). THUS, THIS GROUND OF REVENUE I S ALLOWED FOR STATISTICAL PURPOSE. 9. FURTHER, WE FIND THAT IN RESPECT OF DISALLOWANCE OF ` 1,33,000/- MADE OUT OF MILGIN EXPENSES AND OCTROI A ND FREIGHT CHARGES, THE AO OBSERVED THAT THE ASSESSEE FAILED T O PRODUCE THE BOOKS OF ACCOUNTS, VOUCHERS, BILLS ETC., AND THEREF ORE, HE WAS UNABLE TO VERIFY THE GENUINENESS OF THE CLAIM MADE BY THE ASSESSEE. THE LEARNED CIT(A) RESTRICTING THE DISAL LOWANCE TO ` 50,000/- AND VACATED THE BALANCE AMOUNT OF DISALLOW ANCE OF ` 83,000/- BY CONSIDERING THE SAME TO BE ON HIGHER SI DE. THE LEARNED CIT(A) HAS REDUCED THE DISALLOWANCE OF ` 83,000/- WHICH WAS MADE BY THE AO IN THE ABSENCE OF VOUCHERS, BILL S ETC. BASED ON EVIDENCES FILED BY THE ASSESSEE BEFORE HIM FOR T HE FIRST TIME. THE CIT(A) HAS ACCEPTED THE SAME WITHOUT CALLING FO R A REMAND REPORT FROM THE AO. WE, THEREFORE, SET ASIDE THE O RDERS OF THE LOWER AUTHORITIES, AND REMAND THIS ISSUE ALSO BACK TO THE FILE OF THE AO FOR ADJUDICATION AFRESH WITH A DIRECTION TO THE ASSESSEE TO FILE ALL EVIDENCES IN SUPPORT OF ITS CLAIM BEFORE T HE AO. THUS, ITA NO.2798/AHD/2010 -12- THIS GROUND OF APPEAL OF THE REVENUE IS ALSO ALLOWE D FOR STATISTICAL PURPOSE. 10. FURTHER, WITH REGARD TO THE ADDITION OF ` 3,00,000/-, WE FIND THAT THE AO HAS MADE DISALLOWANCE ON THE GROUND THA T THE ASSESSEE COULD NOT PRODUCE BOOKS OF ACCOUNTS AND BA NK STATEMENTS FOR VERIFICATION, AND THEREFORE, HE WAS UNABLE TO VERIFY THE GENUINENESS OF THE CLAIM WITH SUPPORTING EVIDEN CES. THE LEARNED CIT(A) DELETED THE ADDITION BY OBSERVING TH AT THE ASSESSEE HAS FURNISHED CONSIDERABLE MATERIALS TO ID ENTIFY THE PERSONS, AND THAT THEY WERE ASSESSED TO TAX. THE AO FAILED TO CROSS-CONFIRM THE SAME FROM THE PARTIES BY ISSUING NOTICE UNDER SECTION 133(6) OF THE ACT. WE FIND THAT THE LEARNE D CIT(A) HAS DELETED THE DISALLOWANCES FOR THE REASONS AS STATED ABOVE. THE LEARNED CIT(A) COULD ALSO HAVE CROSS-CONFIRM FROM T HE PARTIES, WHOSE ADDRESSES AND PAN WERE GIVEN BY THE ASSESSEE BEFORE HIM IN ORDER TO ESTABLISH THE GENUINENESS OF THE TRANSA CTIONS. FURTHER, WE FIND THAT HE SIMPLY PUT THE BLAME ON THE AO AND DELETED THE ADDITION. WE ALSO OBSERVE THAT THE CIT(A) HAS STAT ED THAT CONSIDERABLE MATERIALS WERE FILED BEFORE HIM IN SUP PORT OF THE IDENTITY OF THE PERSONS. WE OBSERVE THAT THESE EVI DENCES WERE ACCEPTED BY THE LEARNED CIT(A) WITHOUT CALLING FOR A REMAND REPORT FROM THE AO THEREBY VIOLATING THE PROVISIONS OF RULE 46A OF THE I.T.RULES. IN OUR CONSIDERED OPINION, THE A O SHOULD ALSO HAVE OPPORTUNITY TO EXAMINE THE EVIDENCES FILED BY THE ASSESSEE, FOR THE FIRST TIME BEFORE THE LEARNED CIT(A), WHICH WERE NOT FILED ITA NO.2798/AHD/2010 -13- BEFORE THE AO, RELYING ON WHICH, THE LEARNED CIT(A) GRANTED RELIEF TO THE ASSESSEE. WE, THEREFORE, SET ASIDE T HE ORDERS OF THE AUTHORITIES BELOW, AND REMAND THE MATTER BACK TO TH E FILE OF THE AO FOR ADJUDICATION OF THE ISSUE AFRESH WITH THE DI RECTION TO THE ASSESSEE TO FILE ALL EVIDENCES IN SUPPORT OF ITS CL AIM BEFORE THE AO. THUS, THIS GROUND OF THE APPEAL OF THE ASSESSE E IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( ' #$ ' #$ ' #$ ' #$ /KUL BHARAT /JUDICIAL MEMBER . .. . . . . . /N.S. SAINI /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD