Shri Kishorebhai D.Shah, Baroda V. The ACIT.,Circle-2(1), Baroda

ITA 2979/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85527 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 30-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Bogus purchase; Additional evidence; Retraction

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.2979/AHD/2011 ( / ASSESSMENT YEAR : 2007-08) SHREE KISHORBHAI D.SHAH PROP. OF KISHORE METAL CORPORATION 749-4 GIDC ESTATE MAKARPURA, BARODA 390 014 / VS. THE ACIT CIRCLE-2(1) BARODA ./ ./ PAN/GIR NO. : AGAPS 6480 L ( # / APPELLANT ) .. ( $% # / RESPONDENT ) #& / APPELLANT BY : SHRI TUSHAR P. HEMANI $% #'& / RESPONDENT BY : SHRI M.K.SINGH, SR.DR ()'* / DATE OF HEARING 18/12/2014 +,-.'* / DATE OF PRONOUNCEMENT 09/01/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-II, BARODA (CIT(A) IN SHORT) DATED 23/09/2011 PERTAINING TO ASSESSMENT YEAR (AY) 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEA L:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACT S OF THE CASE IN NOT APPRECIATING THE FACTS THAT THE APPELLA NT HAD ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 2 - ALREADY PLACED ON RECORD THE RELEVANT EVIDENCES TO PROVE GENUINENESS OF THE PURCHASES AND THEY WERE NOT THE ADDITIONAL EVIDENCES. 2. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON F ACTS OF THE CASE IN CONFIRMING THE ACTION OF THE LD. AO IN DISA LLOWING PURCHASE RS.15,74,663/- AFTER TREATING THE SAME AS BOGUS PURCHASES. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF LD. AO BY MAKING ADDITION OF RS.46,585/- BEING @ 20% OF RS.2,32,926/- AFTER TREA TING THE SAME AS OF PERSONAL NATURE. 4. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDER S WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHE R ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIE S IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTI CE AND THEREFORE DESERVES TO BE QUASHED. 5. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN CHARGING INTEREST U/S 234B/C/D OF THE ACT. 6. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE A SSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 24/12/2009, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE DISALLOWANCE OF RS.15,74,663/- TREATING THE SAME AS EXPENDITURE ON ACCOUNT OF BOGUS PURCHASES AND ALSO MADE ADHOC DISA LLOWANCE @ 20% ON THE EXPENDITURES RELATED TO CONVEYANCE, TELEPHON E & PETROL TREATING ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 3 - THE SAME AS PERSONAL IN NATURE. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE, DISMISSED THE APPEAL. AGGRIEVED BY THE O RDER OF THE LD.CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US . 3. APROPOS TO GROUND NO.1, AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE DOES NOT WISH TO PRESS T HIS GROUND. THE LD.SR.DR HAS NO OBJECTION OF THE SUBMISSION OF THE LD.COUNSEL FOR THE ASSESSEE. HENCE, GROUND NO.1 IS DISMISSED AS NOT P RESSED. 4. SECOND GROUND OF APPEAL IS AGAINST CONFIRMING TH E ADDITION OF RS.15,74,663/- AFTER TREATING THE SAME AS BOGUS PUR CHASE. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) HAS E RRED IN NOT APPRECIATING THAT THE ASSESSEE HAS PLACED ON RECORD RELEVANT EVIDENCES TO PROVE THE GENUINENESS OF PURCHASES BEFORE AO AS WEL L. HENCE, RELEVANT MATERIAL WAS BEFORE THE LOWER AUTHORITIES. HE SU BMITTED THAT IN ANY CASE, IF THE LD.CIT(A) WAS OF THE VIEW THAT SUCH EV IDENCES WERE ADDITIONAL EVIDENCES, THEN IN THE LARGER INTEREST O F JUSTICE, HE OUGHT TO HAVE ADMITTED THE SAME AND CALLED FOR A REMAND REPO RT THE AO. HE RELIED ON THE JUDGEMENT OF HONBLE DELHI HIGH COURT RENDER ED IN THE CASE OF CIT VS. TEXT HUNDRED INDIA (P.) LTD. REPORTED AT (2 013) 351 ITR 57 (DELHI). HE SUBMITTED THAT THE AO MADE THE IMPUGNE D ADDITION RESPECT OF CLOSING BALANCES OF PARTIES; NAMELY, M/S.BHAGYOD AY ENTERPRISE OF ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 4 - RS.14,96,267/- AND M/S.BHAVANA TRADING OF RS.78,396 /- TOTALLING TO RS.15,74,663/-. HE SUBMITTED THAT THE AFORESAID AD DITION WAS MADE AFTER ERRONEOUSLY CONCLUDING THAT THE AFORESAID PARTIES W ERE ENGAGED IN ISSUING BOGUS BILLS FOR PURCHASE. HE SUBMITTED THAT THE A O AND CIT(A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE HAS PLACED ON RE CORD THE DOCUMENTARY EVIDENCES REGARDING CONFIRMATION OF BHAGYODAY ENTER PRISE AT PAGE NOS.22 & 23 OF THE PAPER-BOOK, PURCHASE BILLS ISSUE D BY BHAGYOGDAY ENTERPRISE PLACED AT PAGE NOS.24 TO 62 OF THE PAPER -BOOK AND LEDGER OF BHAVANA TRADING FOR FYS 2006-07 & 2007-08 PLACED AT PAGE NOS.63 & 64 OF THE PAPER-BOOK. HE SUBMITTED THAT THE AO AND CIT(A) OUGHT TO HAVE APPRECIATED THAT PAYMENTS HAVE BEEN MADE TO TH ESE PARTIES BY WAY OF CHEQUES. HE SUBMITTED THAT THE AFORESAID AMOUNT S ARE REFLECTED IN AUDITED ACCOUNTS WHICH ARE PLACED AT PAGE NOS.1 TO 21 AND AT PAGE NO.6 OF THE PAPER-BOOK UNDER THE HEAD SUNDRY CREDITORS AND NO ADVERSE COMMENTS WERE MADE BY AUDITOR IN RESPECT OF THE SAM E. HE SUBMITTED THAT THE AFORESAID EVIDENCES AMPLY PROVE THAT THE S AID PURCHASE TRANSACTIONS ARE GENUINE AND NOT BOGUS TRANSACTIONS . HE FURTHER SUBMITTED THAT THE STATEMENT OF SUCH PARTIES ALLEGE D TO HAVE BEEN RECORDED U/S.131(1A) BY DEPARTMENT IN WHICH SUCH PARTIES HAV E STATED DETAILS ABOUT THEIR MODUS OPERANDI WERE NEVER PROVIDED TO T HE ASSESSEE. ASSESSEE WAS ALSO NOT GIVEN AN OPPORTUNITY OF CROSS -EXAMINING SUCH PARTIES. THIS VIOLATES THE PRINCIPLES OF NATURAL J USTICE. HE SUBMITTED THAT IN RESPECT OF PURCHASES MADE FROM M/S.BHAGYODAY ENT ERPRISE, THE AO ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 5 - HAS DISALLOWED CLOSING BALANCE (I.E. RS.14,91,267 /-) AND NOT THE TOTAL PURCHASES (I.E.27,95,297/-) MADE DURING THE YEAR W HICH ARE PLACED AT PAGE NOS.22 & 23 OF THE PAPER-BOOK. HE SUBMITTED THAT THE CLOSING BALANCE CANNOT BE SUBJECT MATTER OF ADDITION IF PUR CHASES ARE TREATED AS BOGUS. ACT OF AO IMPLIES HE CONSIDERS ONLY THE OUT STANDING BALANCE AS BOGUS PURCHASES AND CONSIDERS REST OF PURCHASE AS G ENUINE IN RESPECT OF WHICH PAYMENT HAS BEEN MADE. SUCH AN ACT IS NOT TE NABLE IN THE EYE OF LAW. HE SUBMITTED THAT THEREFORE THE ADDITION TO T HE EXTENT OF RS.14,91,267/- COULD NOT HAVE BEEN MADE. HE FURT HER SUBMITTED THAT IN RESPECT OF M/S.BHAVANA TRADING, NO PURCHASES HAVE B EEN MADE DURING THE YEAR UNDER CONSIDERATION. THE SUM OF RS.78,396 /- WAS OPENING BALANCE DURING THE YEAR UNDER CONSIDERATION AND ALS O THE CLOSING BALANCE. HE SUBMITTED THAT THE SAID LIABILITY HAS BEEN DISCH ARGED IN SUBSEQUENT YEAR. HE DREW OUR ATTENTION TOWARDS COPIES OF LEDG ER OF M/S.BHAVANA TRADING CO. THAT ARE PLACED AT PAGE NOS.63 & 64 OF PAPER-BOOK. HE SUBMITTED THAT NO PURCHASES HAVE BEEN MADE FROM M/S .BHAVANA TRADING DURING THE YEAR UNDER CONSIDERATION, NO ADDITION CA N BE MADE IN RESPECT OF CLOSING BALANCE BY TREATING THE SAME AS BOGUS PU RCHASES. HE SUBMITTED THAT IN ANY CASE, ADDITION IN RESPECT OF CLOSING BALANCE OF SUNDRY CREDITORS CAN BE MADE ONLY U/S.41(1) PROVIDE D THE STATUTORY REQUIREMENTS AS MENTIONED THEREIN ARE FULFILLED. H E SUBMITTED THAT IT IS SETTLED LAW THAT EVEN IF GENUINENESS OF CREDITORS I S UNDER SERIOUS DOUBT, NO ADDITION CAN BE MADE U/S.41(1). HE RELIED ON THE JUDGEMENT OF ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 6 - HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE C ASE OF CIT VS. BHOGILAL RAMJIBHAI ATARA IN TAX APPEAL NO.588 OF 20 13 DATED 04/02/2014. HE SUBMITTED THAT THUS EVEN U/S.41(1), THE ADDITION COULD NOT HAVE BEEN MADE. THEREFORE, UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE SUBMISSIONS MADE BEFORE THE TRIBUNAL, THE LD.COUNSEL FOR THE ASSESSEE PRAYED THE ADDITION MAD E BY THE AUTHORITIES BELOW BE DELETED. 5. ON THE CONTRARY, LD.SR.DR SHRI M.K. SINGH VEHEME NTLY OPPOSED THE SUBMISSIONS OF THE LD.COUNSEL FOR THE ASSESSEE AND SUBMITTED THAT THERE IS A CATEGORICAL FINDING THAT THE PARTIES FRO M WHOM THE ASSESSEE HAS MADE PURCHASES WERE ISSUED BOGUS BILLS. HE SUPPORT ED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENTS RELIED UPON BY THE LD.CO UNSEL FOR THE ASSESSEE. WE FIND THAT THE AO TREATED THE EXPENDITURE OF RS.1 4,96,267/- AND RS.78,396/- TOTALLING TO RS.15,74,663/- IN RESPECT OF THE PURCHASES MADE FROM M/S.BHAGYODAY ENTERPRISE AND M/S.BHAVANA TRADI NG CO. AS BOGUS PURCHASES. THE BASIS OF TREATING THE SAME WAS THAT ON VERIFICATION REGARDING BANKING CASH TRANSACTION TAX WERE MADE BY THE DDIT(INV)-I, BARODA WITH HDFC BANK AND SUBSEQUENT ENQUIRES MADE BY THE ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 7 - DDIT(INV), BARODA, IT WAS FOUND THAT THE PARTIES (A SSESSEES); NAMELY, M/S.BHAGYODAYA ENTERPRISE AND M/S.BHAVANA TRADING C O. ARE ISSUING BOGUS BILLS FOR PURCHASES. IT IS RECORDED BY THE A O THAT STATEMENT U/S.131A OF THE ACT WERE RECORDED ON OATH FROM THES E PARTIES IN WHICH THEY HAVE STATED IN DETAIL ABOUT THE MODUS OPERANDI OF THEIR BUSINESS. WE FIND THAT THE REVENUE HAS NOT PLACED THE STATEMENT RECORDED U/S.131A OF THE ACT. IT IS ALSO UNDISPUTED FACT THAT THE ASSES SEE WAS NOT AFFORDED CROSS-EXAMINATION OF THE PARTIES WHOSE STATEMENT WE RE RECORDED AND ON THE BASIS OF STATEMENT, IT WAS INFERRED BY THE AO T HAT THE PURCHASES WERE BOGUS. THE AO HAS ALSO RECORDED THAT THE INSPECTOR WHO WAS DEPUTED FOR SERVICE OF THE NOTICE HAS SUBMITTED REPORT THAT NO SUCH PARTIES AS M/S.BHAGYODAYA ENTERPRISE, C-163, RAJ RATAN SOCIETY , NEAR BAGI KHANA, BARODA AND M/S.BHAVNA TRADING CO., C-163, RA J RATAN SOCIETY, NEAR BAGI KHANA, BARODA, EXIST AND ON FURTHER ENQUI RIES, IT REVEALED THAT NO MEMBER OF THE SOCIETY KNOWS ABOUT M/S.BHAGYODAY ENTERPRISE. ON THIS BASIS, THE AO PROCEEDED TO TREAT THE PURCHASES CLAIMED TO HAVE BEEN MADE FROM M/S.BHAGYODAY ENTERPRISE AND BHAVNA TRAD ING CO. AS BOGUS PURCHASES. THE LD.CIT(A) CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- 3.1 AS MENTIONED IN PRECEDING PARAS, THOUGH SEVERA L OPPORTUNITIES WERE GIVEN TO THE APPELLANT, TIME AND AGAIN, TO ATTEND THE HEARINGS, HE FAILED TO DO SO LEADING ONE TO THE IMPRESSION THAT THE APPELLANT HAS NOTHING TO SAY IN HIS DEFENCE ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 8 - AGAINST THE ASSESSMENT ORDER OF THE ASSESSING OFFIC ER. THE AUTHORIZED REPRESENTATIVE ONCE REQUESTED TO ADMIT A DDITIONAL EVIDENCES U/S 46A AND THEN REVOKED HIS REQUEST. HE THEN WANTED TO PRODUCE RELEVANT RECORDS TO PROVE THE GENUINENES S OF PURCHASES, WHICH WAS NEVER DONE, DESPITE REPEATED O PPORTUNITIES. ON THE OTHER HAND, THE ASSESSING OFFICER HAS NOTED THAT THE DDIT(INV), BARODA HAD CARRIED OUT ENQUIRIES AND FOU ND THAT THE FOLLOWING 2 PARTIES, HAD ISSUED BOGUS BILLS TO MANY PARTIES INCLUDING THE ASSESSEE. 1) M/S. BHAGYODAY ENTERPRISE 2) M/S. BHAVANA TRADING CO. THEIR STATEMENTS WERE ALSO RECORDED ON OATH, IN WHI CH THEY HAVE ADMITTED THEIR MODUS OPERANDI. EVEN THE ASSESSING O FFICER GOT FIELD ENQUIRIES CONDUCTED BY THE INSPECTOR AND FOUN D THAT NO SUCH PARTIES EXIST AT THE GIVEN ADDRESS. ACCORDINGLY THE ASSESSING OFFICER DISALLOWED THE PURCHASES OF RS.15,74,663/- SHOWN FROM THESE PARTIES, TREATING THEM AS BOGUS. SINCE THERE IS NOTHING ON RECORD TO SHED LIGHT ON THIS GROUND OF APPEAL EXCEP T THE ASSESSMENT ORDER WHEREIN, THE ISSUE HAS BEEN DISCUS SED IN DETAIL AND THE ADDITION HAS BEEN MADE ON PROPER APPRECIATI ON OF FACTS AND CARRYING OUT FIELD ENQUIRY, I SEE NO REASON TO INTERFERE WITH THE ORDER OF THE ASSESSING OFFICER AND CONFIRM THE SAME. 6.1. THE LD.CIT(A) HAS RECORDED THE AUTHORIZED R EPRESENTATIVE REQUESTED THAT THE APPELLANT WOULD LIKE TO PROVE T HE GENUINENESS OF THE PURCHASES BY PRODUCING DAY-TO-DAY STOCK REGISTER, Q UANTITATIVE TALLY, VAT AUDIT REPORT AND THE RETRACTION OF THE TWO PARTIES WHO HAD EARLIER ADMITTED TO HAVE BEEN GIVEN BOGUS BILL TO PARTIES, INCLUDING THE ASSESSEE. THE ASSESSEE WAS GIVEN TIME TO PRODUCE THESE RECORDS ON 03/08/2011, 17/08/2011, 02/09/2011, 15/09/2011 AND ON 15/09/201 1, NO ONE ATTENDED ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 9 - NOR ANY ADJOURNMENT WAS SOUGHT FOR. UNDER THESE CI RCUMSTANCES, THE LD.CIT(A) CONFIRMED THE ADDITIONS BY OBSERVING THAT THERE IS NOTHING ON RECORD TO SHED LIGHT ON THIS GROUND OF APPEAL EXCEP T THE ASSESSMENT ORDER. WE FIND THAT THE ASSESSEE HAS GIVEN A CERTIFICATE S TATING THEREIN THAT PAGE NOS.1 TO 64 WERE PLACED BEFORE THE LOWER AUTHORITIE S. FROM PAGE NOS.22 TO 64 ARE THE CONFIRMATIONS, ETC. THESE DOC UMENTS WERE NOT CONSIDERED BY THE LD.CIT(A). UNDER THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN CONFIR MING THE ACTION OF THE AO WITHOUT GIVING ANY FINDING ON THE EVIDENCES PROD UCED BY THE ASSESSEE. THE CONTENTION OF THE LD.COUNSEL FOR TH E ASSESSEE IS ALSO THAT THESE DOCUMENTS WERE PLACED EVEN BEFORE THE AO. TH E AO HAS OBSERVED THAT COPIES OF AUDITED BALANCE-SHEET, PROFIT AND LO SS ACCOUNT ALONG WITH SCHEDULES AND AUDIT REPORT IN FORM NOS.3CB AND 3CD WERE CALLED FOR, VERIFIED AND PLACED ON RECORD. DETAILS AS PER QUES TIONNAIRE WERE CALLED FOR, VERIFIED AND PLACED ON RECORD. BOOKS OF ACCOU NT, BANK PASS-BOOKS AND OTHER DETAILS WERE CALLED FOR AND VERIFIED ON T EST CHECK BASIS. THEREFORE, THE OBSERVATION OF THE LD.CIT(A) THAT ON LY ASSESSMENT ORDER WAS ON RECORD IS NOT CORRECT. THE CONDUCT OF THE ASSESSEE AS RECORDED BY THE LD.CIT(A) ALSO CANNOT BE JUSTIFIED IN VIEW OF THE FACT THAT THE ASSESSEE HIMSELF HAD REQUESTED TO LD.CIT(A) TO GRAN T OPPORTUNITY FOR PRODUCING DAY-TO-DAY REGISTER, QUANTITATIVE TALLY, VAT AUDIT REPORT AND THE RETRACTION OF THE TWO PARTIES; NAMELY, M/S.BHAG YODAY ENTERPRISE AND M/S.BHAVANA TRADING CO. THE ASSESSEE HAS ALSO NOT PLACED ANYTHING ON ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 10 - RECORD SUGGESTING THAT IT HAD MADE ANY REQUEST TO T HE LOWER AUTHORITIES FOR CROSS-EXAMINING THOSE PERSONS WHO HAD MADE STATEMEN TS, ON THE BASIS THE AUTHORITIES HAVE PROCEEDED TO TREAT THE PURCHASES M ADE FROM THOSE PARTIES AS BOGUS. 6.2. AFTER CONSIDERING THE TOTALITY OF THE FACTS AN D CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF SETTLED PRINCIPLE OF LAW, THAT THE ASSESSEE HAS TO PROVE THE EXPENDITURE INCURRED FOR BUSINESS PURPOSE , IN THE CASE IN HAND, THERE IS SPECIFIC FINDING RECORDED BY THE LD.CIT(A) THAT THE AR REQUESTED THAT THE APPELLANT WOULD LIKE TO PROVE THE GENUINEN ESS OF PURCHASES BY PRODUCING DAY-TO-DAY STOCK REGISTER, QUANTITATIVE T ALLY, VAT AUDIT REPORT AND RETRACTION OF THE TWO PARTIES WHO HAD EARLIER A DMITTED TO HAVE GIVEN BOGUS BILL TO THE PARTIES, INCLUDING THE ASSESSEE. ACCORDINGLY, THE AR WAS GIVEN TIME TO PRODUCE THESE RECORDS AND DATE WA S FIXED FOR 03.08.2011. NO ONE ATTENDED ON 03/08/2011 AND THE CASE WAS FIXED FOR HEARING ON 17/08/2011. ON 17/08/2011, THE AR SOUGH T ADJOURNMENT AND THE CASE WAS FIXED FOR 02/09/2011. AGAIN ON 02/09/ 2011, THE AR SOUGHT ADJOURNMENT AND THE CASE WAS FIXED FOR 15/09/2011. ON 15/09/2011, NO ONE ATTENDED NOR ANY ADJOURNMENT WAS SOUGHT FOR. WE FEEL THAT THIS ISSUE BE RESTORED TO THE FILE OF LD.CIT(A) FOR DECI SION AFRESH IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT THE LD.C ITA) WOULD AFFORD REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTI ES. THUS, THIS GROUND ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOS ES. ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 11 - 7. NEXT GROUND IS AGAINST IN CONFIRMING THE ADDI TION OF RS.46,585/- BEING 20% OF VARIOUS EXPENSES AGGREGATING TO RS.2,3 2,926/- AFTER TREATING THE SAME AS OF PERSONAL NATURE BY THE LD.CIT(A). THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO MADE IMPUGNED DISALL OWANCE @ 20% OF THE EXPENDITURE ARE MADE PURELY ON THE BASIS THAT T HESE VARIOUS EXPENSES, SUCH AS, CONVEYANCE, TELEPHONE AND PETROL INCURRED FOR PERSONAL AND NON- BUSINESS PURPOSE CANNOT BE RULED OUT. THE LD.COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE AO OUGHT TO HAVE APPRECIATED THA T SUCH EXPENSES FROM PART OF DULY AUDITED ACCOUNTS. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT SUCH EXPENSES HAVE BEEN INCURRED EXCLUSIVELY F OR THE BUSINESS PURPOSE OF THE ASSESSEE. THE AO HAS NOT FOUND SUCH EXPENSES TO BE NON- GENUINE. HE SUBMITTED THAT THERE IS NO FIRM BASIS FOR MAKING SUCH DISALLOWANCE. HE SUBMITTED THAT THE ACTION OF THE AUTHORITIES BELOW IS CONTRARY TO THE SETTLED POSITION OF LAW. 7.1. ON THE CONTRARY, SR.LD.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE AO MADE DISALLOWANCE BY OBSERVING THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO F URNISH THE DETAILS LIKE ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 12 - BILLS/VOUCHERS OF THE EXPENSES DEBITED TO THE PROFI T AND LOSS ACCOUNT FOR VERIFICATION. SOME VOUCHERS ARE DEFECTIVE AND NOT FULLY VERIFIABLE. MOST POST THE PAYMENTS WERE MADE IN CASH. THE AO OBSERV ED THAT THESE TYPES OF TRANSACTIONS, EXPENSES INCURRED FOR PERSONAL AND FOR NON-BUSINESS PURPOSES CANNOT ENTIRELY BE RULED OUT. ON THE CON TRARY, THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS THAT THE EXPENDI TURE IS WELL AUDITED AS THE ACCOUNTS ARE AUDITED BY THE AUDITORS, THEREFORE ADHOC DISALLOWANCE WITHOUT ANY BASIS IS NOT CALLED FOR. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE AO HAS NOT DOUBTED THE CORRECTNESS OF THE ACCOU NTS OF THE ASSESSEE, THEREFORE THE ADHOC DISALLOWANCE MADE ON THE BASIS OF CONJECTURES AND SURMISES CANNOT BE SUSTAINED. HENCE, THE AO IS HER EBY DIRECTED TO DELETE THE ADDITION. THUS, THIS GROUND OF ASSESSEES APPE AL IS ALLOWED. 10. GROUND NO.4 IS GENERAL IN NATURE WHICH REQUIRES NO INDEPENDENT ADJUDICATION. 11. GROUND NO.5 IS AGAINST CHARGING OF INTEREST U/S .234B, 234C & 234D OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE. ITA NO.2979/AHD /2011 SHREE KISHORBHAI D.SHAH VS. THE ACIT ASST.YEAR 2007-08 - 13 - 12. GROUND NO.6 IS AGAINST INITIATION OF PENALTY PR OCEEDINGS U/S.271(1)(C) OF THE ACT. THE ISSUE IS PRE-MATURE AND, THEREFORE, THE SAME IS DISMISSED AS SUCH. 13. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 09 TH DAY OF JANUARY, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 09 / 01 /2015 2*..,(.../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT 2. $% # / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-II, BARODA 5. 7(8$45 , *45. , 3 / DR, ITAT, AHMEDABAD 6. 8:;<) / GUARD FILE. ! / BY ORDER, %7$ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD