M/s Trimurti Exports., V. Asst. Commissioner of Income Tax, Central Circle, Panaji., Panaji

ITA 3/PAN/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1427 (ITAT-PANAJI)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 02-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH LD
• Assessee Lawyers: SAMIR C ANVEKAR
• Keywords: Unexplained investment; Unexplained expenditure; Corroborative evidences; Commercial expediency; Revised return; Revenue expenditure; Capital expenditure
• Section: 40A(3); 143(3); 153A; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON'BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NOS. 1 TO 5/PNJ/2015 : (A.YS 2006 - 07 TO 2010 - 11) M/S. TRIMURTI EXPORTS C/F - 1 & 3, J.B. APARTMENTS, NEAR PANDAVA CHURCH, AQUEM ALTO, MARGAO, GOA. (APPELLANT) PAN : AADFT5082G VS. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, PANAJI, GOA. (RESPONDENT) ASSESSEE BY : PRAMOD VAIDYA, ADV. & SAMIR C. ANVEKAR, CA REVENUE BY : K.M. MAHESH, LD. DR DATE OF HEARING : 10/08/2015 DATE OF PRONOUNCEMENT : 10/08/2015 O R D E R PER GEORGE MATHAN : 1. THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDERS OF CIT(A) - VI, BANGALORE IN ITA NO S . 265/266/ACIT, CC PANAJI/CIT(A) - VI/BLORE/2013 - 14 DT. 11.9.2014 FOR A.YS 2006 - 07 & 2007 - 08, ITA NO. 267/ACIT, CC PANAJI/CIT(A) - VI/BLORE/2013 - 14 DT. 11.9.2014 FOR A.Y 2008 - 09, ITA NO S . 268/269/ACIT, CC PANAJI/CIT(A) - VI/BLORE/2013 - 14 DT. 11.9.2014 FOR A.YS 2009 - 10 & 2010 - 11 . AS ALL THESE APPEALS RELATE TO THE SAME ASSESSEE AND ALSO CONTAIN CONNECTED ISSUES, ALL THESE APPEALS ARE DISPOSED OFF BY THIS COMMON ORDER. SHRI PRAMOD VAIDYA, ADV OCATE ALONGWITH SHRI SAMIR C. ANVEKAR, CA 2 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI K.M. MAHESH, LD. DR REPRESENTED ON BEHALF OF THE REVENUE. ITA NO. 1/PNJ/2015 (A.Y : 2006 - 07) : 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED A.O. ERRED IN SUSTAINING ESTIMATED ADDITION OF RS.50,00,000/ - AFTER MAKING SEPARATE ADDITION OF I) UNEXPLAINED EXPENDITURE RS.10,00,000/ - II) AMOUNT PAID IN CASH TOWARDS PURCHASE OF PROPERTY RS.13,67,380/ - III) PROPOR TION ATE BANK INTEREST TO SISTER CONCERN RS.19,32,187/ - & IV) DISALLOWANCE U/S 40(A)(IA) RS.9,44,900/ - AGGREGATING TO RS. 52,44 ,467/ - . 2. THE LEARNED A.O ERRED IN TAKING TOTAL INCOME RETURNED AS RS.3,46,49,980/ - INSTEAD OF ACTUAL FIGURE OF RS.3,36 , 49,980 / - WHICH IS ALSO EVIDENCED BY ORIGINAL ASST ORDER U /S 143 (3) DT.30.12 . 2008. 3. THE LEARNED A.O ERRED IN MAKING ADDITION OF RS.10,00,000/ - AS UNEXPLAINED INVESTMENT. 4. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE OF AMOUNT OF RS. 1 3,67,380/ - PAID TOWARDS PURCHASE OF PROPERTY . 5. THE LEARNED A.O ERR ED IN MAKING DISALLOWANCE OF PROPO RTIONA TE BANK INTEREST OF RS. 19,32,187/ - IGNORING THE FACT THAT ASSESSEE HAD SUFFICIENT OWN FUNDS TO COVER INTEREST FREE LOAN GIVEN AND BORROWED FUNDS WERE NOT DIVERTED. 6. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE OF RS.9,44,900/ - U/S 40(A)(IA). 7. THE APPELLANT CRAVES LEAVE TO ADD , ALTER, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL AND/OR ADDUCE ANY FURTHER RECORDS, EVIDENCES DURING THE COURSE OF APPEAL. 3. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THAT THE ASSESSEE DID NOT WISH TO PRESS GROUND NOS. 3 & 4. CONSEQUENTLY, THE SAID GROUND NOS. 3 & 4 STAND DISMISSED AS NOT PRESSED. 4. IN REGARD TO GROUND NO. 1 OF THE APPEAL , IT WAS SUBMITTED BY THE LD. AR THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING IN I RON ORE. T HERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE ON 12.10.2010. IT WAS THE SUBMISSION THAT FOR THE 3 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) A.Y 2006 - 07 THE ORIGINAL RETURN CAME TO BE FILED ON 31.10.2006 DECLARING AN INCOME OF RS. 3,36,49,980/ - . THE ASSESSMENT HAD ORIGINALLY BEEN COM PLETED U/S 143(3) ON 30.12.2008 WHEREIN ADDITION OF RS. 50 LACS HAD BEEN MADE ON AN ESTIMATED BASIS AND THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 3,86,49,980/ - . IT WAS THE SUBMISSION THAT AS A CONSEQUENCE OF THE SEARCH, AND IN RESPONSE TO NOTIC E U/S 153A, THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 11.8.2011 DECLARING AN INCOME OF RS. 3, 3 6,49,980/ - . IT WAS THE SUBMISSION THAT THIS RETURN WAS REVISED BY FILING A REVISED RETURN DT. 7.2.2013 DECLARING INCOME OF RS.3,94,96,880/ - . IT WAS THE SUB MISSION THAT THE 153A ASSESSMENT CAME TO BE COMPLETED ON 28.3.2013 WHEREIN THE AO HAS REITERATED THE ADDITION MADE IN THE ORIGINAL ASSESSMENT ORDER DT. 30.12.2008 AT RS. 50 LACS. IT WAS THE SUBMISSION THAT AS THE ORIGINAL ASSESSMENT ORDER HAD ABATED ON AC COUNT OF THE SEARCH, THE ADDITION MADE IN THE ORIGINAL ASSESSMENT ORDER COULD NOT BE MADE ON AN ESTIMATED BASIS IN THE PROCEEDINGS U/S 153A AS THE ASSESSMENT , AS A CONSEQUENCE OF THE SEARCH U/S 153A , WAS TO BE COMPLETED ONLY ON THE BASIS OF THE MATERIALS FOUND IN THE COURSE OF THE SEARCH. IT WAS THE SUBMISSION THAT THE ADDITION OF RS.50 LACS WAS LIABLE TO BE DELETED. 5. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD. CIT( A). IT WAS THE SUBMISSION THAT THE ADDITION OF RS. 50 LACS ON AN ESTIMATED BASIS HAD BEEN AGREED BY THE ASSESSEE IN THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS. 6. IN REGARD TO GROUND NO. 2 OF THE APPEAL, IT WAS THE SUBMISSION BY THE LD. AR THAT IN THE COURSE OF THE ASSESSMENT THE AO HAD ERRONEOUSLY TAKEN THE TOTAL INCOME RETURNED BY THE ASSESSEE AT RS. 3,46,49,980/ - INSTEAD OF THE ACTUAL FIGURE RETURNED BY THE ASSESSEE OF RS. 3,36,49,980/ - . THE LD. AR DREW OUR ATTENTION TO THE ORIGINAL ASSESSMENT ORDER WHEREIN THE SAID FIGURE OF RS. 3,36,49,980/ - IS 4 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) EVIDENCED. IT WAS THE SUBMISSION THAT THE ERROR IN THE ORDER OF THE AO WAS LIABLE TO BE CORRECTED. 7. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 8. IN REGARD TO GROUND NO. 5 OF THE APPEAL, IT WAS SUBMITTED BY THE LD. AR THAT THE AO HAD DISALLOWED PROPORTIONATE BANK INTEREST OF RS. 19,32,187/ - ON THE GROUND THAT THE ASSESSEE HAD DIVERTED INTEREST BEARING FUNDS FOR NON - BUSINESS PURPOSES. IT WAS THE SUB MISSION THAT THE ASSESSEE HAD ADVANCED AN AMOUNT OF RS. 2,09,30,199/ - TO THE ASSESSEES SISTER CONCERN, M/S. ON & OFFSHORE HITECH ENGINEERS PVT. LTD. IT WAS THE SUBMISSION THAT THE ADVANCE WAS MADE DURING THE RELEVANT ASSESSMENT YEAR. IT WAS THE SUBMISSI ON THAT THE SAID ADVANCE WAS GIVEN TOWARDS PILING WORK FOR BARGE FILLING JETTY. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD ALSO TAKEN PACKING CREDIT FOR ITS EXPORT BUSINESS FROM CANARA BANK AND HAD ALSO TAKEN CASH CREDIT LOAN FROM THE STATE BANK OF INDIA FOR ITS INLAND BUSINESS. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD ADEQUATE FUNDS OF ITS OWN TO COVER THE INTEREST FREE AMOUNT GIVEN TO M/S. ON & OFFSHORE HITECH ENGINEERS PVT. LTD. THE LD. AR DREW OUR ATTENTION TO THE BALANCE SHEET AT PAGE 2 7 OF THE P APER BOOK TO SUBMIT THAT THE ASSESSEE HAD NEARLY RS. 2 .20 CRORES IN THE FORM OF PARTNERS CAPITAL ACCOUNT AND HAD ALSO CASH AND BANK BALANCES OF RS.2,81,75,2 9 1/ - AND THE PROFITS OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR BEFORE TAXATION WAS RS. 3,40, 00,000/ - AND AFTER TAXATION WAS RS. 2,25,00,000/ - . IT WAS THE SUBMISSION THAT AS THE ASSESSEE HAD SUFFICIENT FUNDS OF ITS OWN TO COVER INTEREST FREE AMOUNT GIVEN TO M/S. ON & OFFSHORE HITECH ENGINEERS PVT. LTD., NO ADDITION WAS CALLED FOR IN THE HANDS OF THE ASSESSEE. FOR THIS PROPOSITION, HE ALSO RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MUNJAL SALES CORPORATION REPORTED IN 298 ITR 298 (SC) AS ALSO THE 5 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF R ELIANCE UTILITIES AND POWER LTD. REPORTED IN 313 ITR 340 (BOM) . 9. IN REPLY, THE LD. DR SUBMITTED THAT THE CLAIM OF THE ASSESSEE THAT THE ADVANCE WAS PAID FOR BUILDING OF A JETTY HAD NOT BEEN PROVED. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO A ND THE LD. CIT(A). 10. IN REGARD TO GROUND NO. 6 OF THE APPEAL, IT WAS SUBMITTED BY THE LD. AR THAT THE ASSESSEE DID NOT WISH TO PRESS THE SAID GROUND TO THE EXTENT OF RS.8,44,900/ - . IT WAS THE SUBMISSION THAT THE AO HAD DISALLOWED RS. 9,44,900/ - BY INVO KING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD NOT DEDUCTED TDS. IT WAS THE SUBMISSION THAT THE SAID DISALLOWANCE CONSISTED OF TWO ADDITIONS . IT WAS THE SUBMISSION THAT THE AMOUNT OF RS. 8,44,900/ - WAS SCREENING CHAR GES PAID TO M/S. SALGAONC AR MINING INDUSTRIES PVT. LTD. IT WAS THE SUBMISSION THAT THIS ISSUE WAS NOT BEING PRESSED. T HE OTHER ADDITION WAS AN AMOUNT OF RS. 1,00,000/ - PAID AS COMPENSATION TO COMMUNIDADE OF TIVIM. THE LD. AR DREW OUR ATTENTION TO PAGES 16 & 17 OF THE PAPER BOOK WHICH WAS THE LETTER OF COMMUNIDADE OF TIVIM WHEREIN IT IS MENTIONED THAT THE COMMUNIDADE HAD NO OBJECTION FOR LEASING THE USE OF A PIECE OF LAND OF 1,00,000 SQ. MTRS. IN TIVIM FOR AN AMOUNT OF RS. 1,00,000/YEAR AS RENT. IT WAS THE SUBMISSION THAT AS THIS WAS THE RENT PAID, AND AS THE AMOUNT DID NOT EXCEED RS. 1,20,000/ - , THE REQUIREMENT OF SEC. 194I DID NOT ARISE AND NO TDS WAS LIABLE TO BE MADE. THE LD. AR FURTHER DREW OUR ATTENTION TO THE DECISION OF THE HON'BLE ALLAHABAD HIG H COURT IN THE CASE OF VECTOR SHIPPING SERVICES PVT. LTD. REPORTED IN 38 TAXMANN.COM 77. IT WAS THE SUBMISSION THAT THERE WAS NO OUTSTANDING OR ANY AMOUNT PAYABLE AS ON THE YEAR END AND CONSEQUENTLY, THE PROVISIONS OF SEC. 40(A)(IA) DID NOT GET ATTRACTED. IT WAS THE FURTHER SUBMISSION THAT THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE 6 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) CASE OF VECTOR SHIPPING SERVICES PVT. LTD. WAS THE SUBJECT MATTER OF SLP BEFORE THE HON'BLE SUPREME COURT BY THE REVENUE AND THE SAME HAD ALSO BEEN DISMISSED. IT WAS THE SUBMISSION THAT CONSEQUENTLY NO ADDITION WAS LIABLE TO BE CALLED FOR TO THE EXTENT OF RS. 1,00,000/ - . 11. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD. CIT(A). 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN REGARD T O GROUND NO. 1 REPRESENTING ADDITION OF RS. 50,00,000/ - IT WAS NOTICED THAT THE AO HAS NOT MENTIONED ANYTHING REGARDING THIS ADDITION OF RS. 50,00,000/ - IN THE ASSESSMENT ORDER. ALL THAT THE AO HAS STATED IN THE COMPUTATION OF TOTAL INCOME IS THAT THIS WA S A DISALLOWANCE MADE AS PER THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) DT. 30.12.2008. THIS WOULD NOT SUFFICE FOR MAKING AN ADDITION. ONCE A REVISED RETURN IS FILED, MORE SPECIFICALLY AFTER A SEARCH U/S 132 AND THE PROCEEDINGS OF SEC. 153A HAS BEEN INVOKED, ALL PREVIOUS PROCEEDINGS ARE DEEMED TO HAVE ABATED AND THE PROCEEDINGS U/S 153A ARE FRESH PROCEEDINGS AND FRESH ASSESSMENT ORDER HAS TO BE PASSED. A S PER THE PROVISIONS OF SEC. 153A OF THE ACT , T HE AO HAS TO ASSESS OR RE - ASSESS THE TOTAL INCOME O F 6 ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH WAS CONDUCTED. ADMITTEDLY, THE PROVISO TALKS OF PENDING PROCEEDINGS. HOWEVER, THE PROVISIONS OF SEC. 153A(B) REQUIRES THAT THE TOTAL INCOME IS TO BE ASSESSED OR RE - ASSESSED. WHEN A RE - ASSESSMENT IS DONE UNDER THE PROVISIONS OF SEC. 153A, ALL THAT IS DONE IN THE ORIGINAL ASSESSMENT WOULD STAND EFFACED. CONSEQUENTLY, AS THERE HAS BEEN NO EVIDENCE FOUND IN THE COURSE OF THE SEARCH WHICH HAS GI VEN THE FOUNDATION FOR MAKING ADDITION OF RS. 50,00,000/ - ON ESTIMATED BASIS IN THE HANDS OF THE ASSESSEE, THE ADDITION MADE BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED. HERE, WE MAY ALSO MENTION THAT 7 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAS ALSO NOT BEEN REJECTED, NOR ANY DEFECTS POINTED OUT WHICH COULD GIVE ROOM FOR AN ESTIMATED ADDITION. CONSEQUENTLY, GROUND NO. 1 OF THE ASSESSEES APPEAL STANDS ALLOWED. 13. IN REGARD TO GROUND NO. 2, IT IS NOTICED THAT THE AO HAS ERRONEOUSLY TAKEN T HE FIGURE OF RS. 3,46,49,980/ - IN PLACE OF RS. 3,36,49,980/ - AS IS EVIDENT FROM THE ASSESSMENT ORDER ITSELF WHEREIN AT PAGE 2 THE AO HAS RECORDED THAT THE INCOME RETURNED IN THE RETURN FILED U/S 139(1) WAS AN AMOUNT OF RS.3,36,49,980/ - . CONSEQUENTLY, THE AO IS DIRECTED TO RECTIFY THE MISTAKE AND ADOPT THE FIGURE OF RS. 3,36,49,980/ - IN PLACE OF RS. 3,46,49,980/ - . CONSEQUENTLY, GROUND NO. 2 OF THE ASSESSEES APPEAL STANDS ALLOWED. 14. IN REGARD TO GROUND NOS. 3 & 4, THE SAME STANDS DISMISSED AS NOT PRESSE D. 15. IN REGARD TO GROUND NO. 5, IT IS NOTICED THAT THE ASSESSEE DOES HAVE SUBSTANTIAL AND SUFFICIENT OWN FUNDS TO COVER THE INTEREST FREE AMOUNT GIVEN TO M/S. ON & OFFSHORE HITECH ENGINEERS PVT. LTD. THOUGH THE ASSESSEE HAS CLAIMED THAT THIS IS AN AMOUNT GIVEN FOR BUILDING OF THE JETTY, THE ASSESSEE IS UNABLE TO PRODUCE ANY EVIDENCE TO PROVE THE CONTRACT. THUS, THIS AMOUNT WOULD HAVE TO BE TREATED AS INTEREST FREE ADVANCE GIVEN TO M/S. ON & OFFSHORE HITECH ENGINEERS PVT . LTD. ONCE THIS IS SO AND IT IS NOTICED THAT THE ASSESSEE DOES HAVE SUFFICIENT FUNDS TO GIVE THIS INTEREST FREE ADVANCE INSOFAR AS THE ASSESSEE HAS CAPITAL ACCOUNT OF RS. 2.20 CRORES AND CASH AND BANK BALANCES OF RS. 2.81 CRORES AND THE ASSESSEE HAS DISC LOSED PROFIT FOR THE RELEVANT ASSESSMENT YEAR AFTER TAX AT RS. 2.25 CRORES, RESPECTFULLY FOLLOWING THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MUNJAL SALES CORPORATION REFERRED TO SUPRA AS ALSO THE DECISION OF THE HON'BLE JURISDICT IONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. ( SUPRA ) WHEREIN IT HAS BEEN HELD 8 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) IF THERE BE INTEREST - FREE FUNDS AVAILABLE TO AN ASSESSEE SUFFICIENT TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSESSEE HAD RAISED A LOAN IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM THE INTEREST - FREE FUNDS AVAILABLE. IN OUR OPINION THE SUPREME COURT IN EAST INDIA PHARMACEUTICAL WORKS LTD.S CASE (SUPRA) HAD THE OCCASION TO CONSIDER THE DECISION OF THE CALCUTTA HIGH COURT IN WOOLCOMBERS OF INDIA LTD.S CASE (SUPRA) WHERE A SIMILAR ISSUE HAD ARISEN. BEFORE THE SUPREME COURT IT WAS ARGUED THAT IT SHOULD HAVE BEEN PRESUMED THAT IN ESSENCE AND TRUE CHARACTER THE TAXES WERE PAID OUT OF THE PROFITS OF THE RELEVANT YEAR AND NOT OUT OF THE OVERDRAFT ACCOU NT FOR THE RUNNING OF THE BUSINESS AND IN THESE CIRCUMSTANCES THE APPELLANT WAS ENTITLED TO CLAIM THE DEDUCTIONS. THE SUPREME COURT NOTED THAT THE ARGUMENT HAD CONSIDERABLE FORCE, BUT CONSIDERING THE FACT THAT THE CONTENTION HAD NOT BEEN ADVANCED EARLIER I T DID NOT REQUIRE TO BE ANSWERED. IT THEN NOTED THAT IN WOOLCOMBERS OF INDIA LTD.S CASE (SUPRA) THE CALCUTTA HIGH COURT HAD COME TO THE CONCLUSION THAT THE PROFITS WERE SUFFICIENT TO MEET THE ADVANCE TAX LIABILITY AND THE PROFITS WERE DEPOSITED IN THE OVE RDRAFT ACCOUNT OF THE ASSESSEE AND IN SUCH A CASE IT SHOULD BE PRESUMED THAT THE TAXES WERE PAID OUT OF THE PROFITS OF THE YEAR AND NOT OUT OF THE OVERDRAFT ACCOUNT FOR THE RUNNING OF THE BUSINESS. IT NOTED THAT TO RAISE THE PRESUMPTION, THERE WAS SUFFICIE NT MATERIAL AND THE ASSESSEE HAD URGED THE CONTENTION BEFORE THE HIGH COURT. THE PRINCIPLE THEREFORE WOULD BE THAT IF THERE ARE FUNDS AVAILABLE BOTH INTEREST - FREE AND OVERDRAFT AND/OR LOANS TAKEN, THEN A PRESUMPTION WOULD ARISE THAT INVESTMENTS WOULD BE OU T OF THE INTEREST - FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST - FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENTS. THE ADDITION AS MADE BY THE AO, AND AS SUSTAINED BY THE LD. CIT(A) STANDS DELETED. IN THE RESULT, GROUND NO. 5 OF TH E ASSESSEES APPEAL STANDS ALLOWED. 16. IN REGARD TO GROUND NO. 6, AS THE ASSESSEE IS CONTESTING ONLY THE DISALLOWANCE MADE BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT TO THE EXTENT OF RS. 1 LAC PAID TO COMMUNIDADE OF TIVIM AND AS IT IS NOTICE D THAT THE PROVISIONS OF SEC. 194I DOES NOT APPLY TO THE ASSESSEES CASE, AS ALSO ON THE GROUND THAT NO AMOUNT IS PAYABLE AS ON THE YEAR END , IN VIEW OF THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES PVT. LTD. REFE RRED TO SUPRA, THE SLP AGAINST WHICH HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT, THE ADDITION MADE BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED. AS THE ASSESSEE HAS NOT CHALLENGED THE ADDITION TO THE 9 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) EXTENT OF RS. 8,44,900/ - , THE SAME STANDS CONFIRMED. IN THE RESULT, GROUND NO. 6 OF THE ASSESSEES APPEAL STANDS PARTLY ALLOWED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 2 /PNJ/2015 (A.Y : 200 7 - 0 8 ) : 18. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED A.O ERRED IN MAKING ADDITION OF RS. 51,19,000/ - AS UNEXPLAINED EXPENDITURE. 2. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE OF PROPORTIONATE BANK INTEREST OF RS. 32,16,825/ - IGNORING THE FACT THAT ASSESS EE HAD SUFFICIENT OWN FUNDS TO COVER INTEREST FREE LOAN GIVEN AND BORROWED FUNDS WERE NOT DIVERTED. 3. THE APPELLANT CRAVES LEAVE TO ADD , ALTER, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL AND/OR ADDUCE ANY FURTHER RECORDS, EVIDENCES DURING THE COURSE OF APPEAL. 19. AT THE TIME OF HEARING IT WAS SUBMITTED BY THE LD. AR THAT THE ASSESSEE DID NOT WISH TO PRESS GROUND NO. 1, CONSEQUENTLY, THE SAME STANDS DISMISSED AS NOT PRESSED. 20. IN REGARD TO GROUND NO. 2 OF THE APPEAL, IT WAS SUBMITTED BY THE LD. AR T HAT THE ISSUE WAS IDENTICAL TO GROUND NO. 5 OF THE ASSESSEES APPEAL IN ITA NO. 1/PNJ/2015 FOR A.Y 2006 - 07 . IT WAS THE SUBMISSION THAT DURING THE RELEVANT ASSESSMENT YEAR THE AO HAD DISALLOWED PROPORTIONATE BANK INTEREST. IT WAS THE SUBMISSION THAT DURIN G THE RELEVANT ASSESSMENT YEAR THE ADVANCE TO M/S. ON & OFFSHORE HITECH ENGINEERS PVT. LTD. INCREASED BY AN AMOUNT OF RS. 1.18 CRORE. IT WAS THE SUBMISSION THAT DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEES PROFIT WAS RS. 5 CRORES. 10 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) 21. IN REPLY, TH E LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). 22. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS THE ASSESSEE HAS NOT PRESSED GROUND NO. 1, THE SAME STANDS DISMISSED AS NOT PRESSED. 23. IN REGARD TO GROUND NO. 2, AS WE HAVE ALREADY DELETED TH E IDENTICAL ADDITION MADE BY THE AO BY APPLYING THE PRINCIPLES LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MUNJAL SALES CORPORATION AND THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. REFERRED TO SUPRA , THE ADDITION MADE BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED ON IDENTICAL FINDING. THUS, GROUND NO. 2 OF THE ASSESSEES APPEAL STANDS ALLOWED. 24. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 3 /PNJ/2015 (A.Y : 200 8 - 0 9 ) : 25. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW THE LEARNED A.O. ERRED IN MAKING ADDITION OF RS. 1.70 CR IN RESPECT OF PAYMENT TO MR.ASHOK KAKODKAR. 2. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE OF PROPOR TION ATE BANK INTEREST OF RS.53,78,047/ - IGNORING THE FACT THAT ASSESSEE HAD SUFFICIENT OW N FUNDS TO COVER INTEREST FREE LOAN GIVEN AND BORROWED FUNDS WERE NOT DIVERTED. 3. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE U/S 40 A (3) OF RS.30,00,000/ - TOWARDS TRANSPORTATION OF ORE . 4. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE U/S 40(A)(IA) OF R S. 16,45,000/ - 5. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE U/S 40A(3) OF RS.14,20,67,225/ - IGNORING THE FACT THAT THE PAYMENTS OUT OF BUSINESS EXPEDIENCY WERE MADE WITHIN THE LIMITS AS SPECIFIED U/S 40A(3). 6. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE OF PURCHASES OF RS.16,75,25,784/ - 7. REASONS ASSIGNED FOR MAKING THE ADDITION ARE INSUFFICIENT AND CONTRARY TO LAW AND FACTS OF THE CASE. 11 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) 8. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL. 9. THE APPELLA NT CRAVES LEAVE TO ADD,ALTER,AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL AND/OR ADDUCE ANY FURTHER RECORDS, EVIDENCES DURING THE COURSE OF APPEAL. 26. IT WAS SUBMITTED BY THE LD. AR THAT THE ASSESSEE DID NOT WISH TO PRESS GROUND NO. 1 OF THE APPEAL, CON SEQUENTLY, THE SAME STANDS DISMISSED AS NOT PRESSED. 27. IN REGARD TO GROUND NO. 2, IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE WAS IDENTICAL TO GROUND NO. 5 IN THE ASSESSEES APPEAL IN ITA NO. 1/PNJ/2015 FOR THE A.Y 2006 - 07. IT WAS THE SUBMISSION THAT DURING THE RELEVANT ASSESSMENT YEAR THE ADVANCE TO M/S. ON & OFFSHORE HITECH ENGINEERS PVT. LTD. HAD INCREASED BY AN AMOUNT OF RS. 2.14 CRORES. IT WAS THE SUBMISSION THAT THE CAPITAL ACCOUNT SHOWS A BALANCE OF RS. 11.76 CRORES, THE CASH AND BANK BALANCES WAS RS. 16.50 CRORES AND THE PROFITS AFTER TAXATION WAS RS. 5.54 CRORES. 28. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD. CIT(A). 29. IN REGARD TO GROUND NO. 3, IT WAS SUBMITTED THAT THE ASSESSEE DID NOT WISH TO PRESS THE SAID GROUND, CONSEQUENTLY, THE SAME STANDS DISMISSED AS NOT PRESSED. 30. IN REGARD TO GROUND NO. 4, IT WAS THE SUBMISSION BY THE LD. AR THAT THE AO HAD DISALLOWED AN AMOUNT OF RS. 16,45,000/ - REPRESENTING RENT PAID TO COMMUNIDADE OF SIRSAIM. IT WAS THE S UBMISSION THAT THE ISSUE WAS IDENTICAL TO GROUND NO. 6 IN ITA NO. 1/PNJ/2015 FOR THE A.Y 2006 - 07. IT WAS THE SUBMISSION THAT NO AMOUNT WAS PAYABLE AS ON THE YEAR END. 12 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) 31. IN REGARD TO GROUND NO. 5, IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE WAS AGAINS T THE DISALLOWANCE MADE BY THE AO BY INVOKING THE PROVISIONS OF SEC. 40A(3) IN RESPECT OF PAYMENT S MADE TO THE TRUCK OWNERS TOWARDS SUPPLY OF IRON ORE. THE LD. AR DREW OUR ATTENTION TO PAGES 41 TO 46 OF THE PAPER BOOK WHICH CONTAINS THE LEDGER ACCOUNTS OF THE PAYMENT MADE TO THE TRUCK OWNERS. IT WAS THE SUBMISSION THAT THE PAYMENTS WERE ALL BELOW RS. 20,000/ - AND THERE WAS ONLY ONE PAYMENT PER TRUCK PER PERSON PER DAY, CONSEQUENTLY THE PROVISIONS OF SEC. 40A(3) DID NOT APPLY. IT WAS THE SUBMISSION THAT THESE PAYMENTS WERE MADE FOR PROCUREMENT OF IRON ORE FROM THE 9 MT TRUCK LOAD TIPPERS. IT WAS THE SUBMISSION THAT THE TRUCK OWNERS DEMANDED CASH AS THERE WAS A DEMAND AND SUPPLY ISSUE. IT WAS THE SUBMISSION THAT AS THE ASSESSEE HAD TO MEET CONTRACT REQUIREMENT, THE ASSESSEE HAD TO BUY FROM THE TRUCK OWNERS BY PAYING CASH. THE LD. AR DREW OUR ATTENTION TO PAGES 13 & 15 OF THE ASSESSMENT ORDER TO SUBMIT TH AT EVEN THE AO HAD RECOGNIZED THAT THERE WAS NO PAYMENT TO ANY TRUCK OWNER EXCEEDING RS. 20,000/ - ON A SINGLE OCCASION . IT WAS THE SUBMISSION THAT NO ADDITION WAS CALLED FOR IN THE HANDS OF THE ASSESSEE. 32. IN REPLY, THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT THE CASH PAYMENTS WERE NOT MADE ON THE SAME DAY. 33. TO THIS, THE LD. AR DREW OUR ATTENTION TO THE LEDGER COPIES TO SHOW THAT THE PAYMENT HAS BEEN CLEARLY RECORDED ON DIFFERENT DATES AND NO TWO PAYMENTS WERE MADE ON THE SAME DAY. THE LD. AR ALSO DREW OUR ATTENTION TO THE PROVISIONS OF SEC. 40A(3) TO SUBMIT THAT THE PROVISIONS REQUIRED THAT THE PAYMENTS SHOULD NOT EXCEED RS. 20,000/ - PER DAY. IT WAS THE SUBMISSION THAT THE ISSUE OF PER DAY WAS BROUGHT INTO THE STATUTE FROM THE YEAR 2009 - 10 AND THE RELEVANT ASSESSMENT YEAR WAS 2008 - 09. IT WAS THE SUBMISSION THAT IN ANY CASE 13 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) NO PAYMENT EXCEEDED RS. 20,000/ - AND ALL THE PAYMENTS WERE FAR BELOW THE PRESCRIBED LIMIT. 34. IN REGARD TO GROUND NO. 6 IT WAS SUBMITTED B Y THE LD. AR THAT THE AO HAD DISALLOWED PURCHASES TO AN EXTENT OF RS. 16 , 75, 2 5,784/ - REPRESENTING PURCHASES FROM UNREGISTERED VENDORS. IT WAS THE SUBMISSION THAT AS THE ASSESSEE REQUIRED IRON ORE, THE PURCHASES WERE MADE FROM UNREGISTERED VENDORS AND STOC K WAS MAINTAINED AT HOSPET IN KARNATAKA. IT WAS THE SUBMISSION THAT SUBSEQUENTLY ON ACCOUNT OF BAN BY THE HON'BLE SUPREME COURT IN RESPECT OF IRON ORE MINING, THE SAID PURCHASES WERE RETURNED AND THE AMOUNT RECEIVED BACK AND THE REVERSAL ENTRY HAS BEEN PA SSED DURING THE ASSESSMENT YEAR 2010 - 11. IT WAS THE SUBMISSION THAT DURING THE ASSESSMENT YEAR 2010 - 11 THE ASSESSEE HAD TREATED THE HOSPET PURCHASES AS CANCELLED TO AN EXTENT OF RS. 20,84,53,000/ - AND EXCESS INCOME OF RS. 38,88,210/ - HAD ALSO BEEN DISCLOS ED ON ACCOUNT OF THE DIFFERENCE IN THE RATES OF VALUATION OF THE CLOSING STOCK. THE LD. AR DREW OUR ATTENTION TO THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.3.2010 WHEREIN IN THE COMPUTATION OF TOTAL INCOME THE ASSESSEE HAS SHOWN THE AMOUNT OF RS.16,75,25,784/ - FOR THE A.Y 2008 - 09 AND AN AMOUNT OF RS. 3,70,39,006/ - FOR THE A.Y 2009 - 10 TOTALLING TO RS. 20,45,64,790/ - . THE RETURN WAS FILED FOR A.Y 2010 - 11 ON 7.2.2013. IT WAS THE SUBMISSION THAT AS THE SAID AMOUNT HAS ALR EADY BEEN DISCLOSED IN THE RETURN FOR THE A.Y 2010 - 11, NO ADDITION WAS CALLED FOR IN THE RELEVANT ASSESSMENT YEAR. 35. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD. CIT(A). 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN REG ARD TO GROUND NO. 1, AS THE ASSESSEE HAS NOT PRESSED THE SAID GROUND, SAME IS DISMISSED AS NOT PRESSED. 14 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) 37. IN REGARD TO GROUND NO. 2 IN RESPECT OF DISALLOWANCE OUT OF BANK INTEREST, AS IT IS NOTICED THAT THE ISSUE IS IDENTICAL TO THE ISSUE IN GROUND NO. 5 OF THE ASSESSEES APPEAL IN ITA NO.1/PNJ/2015, ON IDENTICAL FINDING RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MUNJAL SALES CORPORATION AND THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. REFERRED TO SUPRA , THE ADDITION AS MADE BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED. THUS, GROUND NO. 2 STANDS ALLOWED. 38. IN REGARD TO GROUND NO. 3, AS THE SAID GROUND WAS NOT PRESSED, THE SAME STANDS DISMISSE D AS NOT PRESSED. 39. IN REGARD TO GROUND NO. 4 IN REGARD TO COMPENSATION, MORE SO, RENT PAID TO COMMUNIDADE OF SIRSAIM, AS NO AMOUNT IS FOUND PAYABLE AS ON THE YEAR END, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES PVT. LTD., SLP FROM WHICH HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT, THE ADDITION AS MADE BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED. THUS, GROUND NO. 4 STANDS ALLOWED. 40. IN REGARD TO GROUND NO. 5, AS IT IS NOTICED THAT THE ASSESSEE HAS NOT PAID ANY AMOUNT EXCEEDING RS. 20,000/ - TO ANY OF THE TRUCK OWNERS IN RESPECT OF THE PURCHASES OF IRON ORE, AS ALSO ON THE GROUND THAT NO PAYMENT IN EXCESS OF RS.20,000/ - HAS BEEN MADE DURING A SINGLE DAY TO A SINGLE TRUCK OWNER , THE ADDITION AS MADE BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED. THUS, GROUND NO. 5 STANDS ALLOWED. 15 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) 41. IN REGARD TO GROUND NO. 6 REPRESENTING THE DISALLOWANCE OF PURCHASES FROM THE UNREGISTERED VENDORS, AS IT IS NOTICED T HAT THE ASSESSEE HAS ON ITS OWN ACCOUNT REVERSED THESE ENTRIES DURING THE A.Y 2010 - 11 AND AS THE SAME HAS ALSO BEEN ACCEPTED BY THE AO FOR THE A.Y 2010 - 11, THE ADDITION AS MADE BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) IN RESPECT OF THE SAID PURCHASES STANDS DELETED. THUS, GROUND NO. 6 STANDS ALLOWED. 42. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 4 /PNJ/2015 (A.Y : 200 9 - 1 0) : 43. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW THE LEARNED A.O. ERRED IN IN MAKING DISALLOWANCE OF PURCHASES OF RS.3,70,00,000/ - . 2. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE U/S 40A(3) OF RS.5,21,00,000/ - IGNORING THE FACT THAT THE PAYMENTS OUT OF BUSINESS EXPEDIE NCY WERE MADE WITHIN THE LIMITS AS SPECIFIED U/S 40A(3). 3. THE LEARNED A.O ERRED IN MAKING ADDITION OF RS.16,00,000/ - AS STOCK DIFFERENCE. 4. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE OF PROPOR TIONATE BANK INTEREST OF RS.81,00,000/ - IGNORING THE FACT T HAT ASSESSEE HAD SUFFICIENT OWN FUNDS TO COVE R INTEREST FREE LOAN GIVEN AND BORROWED FUNDS WERE NOT DIVERTED. 5. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE OF COMPENSATION PAID OF RS.5,00,00,000/ - FOR CLEARING THE HINDRANCES HOLDING IT AS CAPITAL EXPENDITURE IGNORING THE FACT THAT EXPENDITURE OF CAPITAL NATURE OUT OF THE TOTAL PAYMENT WAS ALREADY CAPITALIZED. 6. THE LEARNED A.O ERRED IN MAKING ADDITION OF RS.6,17,00,000 / - U/S 69 ON THE BASIS OF PROVISIONAL B/S SUBMITTED TO B ANK. 7. THE LEARNED A.O. ERRED IN MAKING DISALLOWANCE U/S 40(A)(IA) OF RS.54,21,880/ - 8. REASONS ASSIGNED FOR MAKING THE ADDITION ARE INSUFFICIENT AND CONTRARY TO LAW AND FACTS OF THE CASE. 9. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY O F THE GROUNDS OF APPEAL AND/OR ADDUCE ANY FURTHER RECORDS, EVIDENCES DURING THE COURSE OF APPEAL. 16 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) 44. IN RESPECT OF GROUND NO. 1 REPRESENTING THE DISALLOWANCE OF PURCHASES FROM UNREGISTERED VENDORS TO AN EXTENT OF RS. 3,70,39,006/ - , IT WAS SUBMITTED BY T HE LD. AR THAT THE ISSUE WAS IDENTICAL TO GROUND NO. 6 OF THE ASSESSEES APPEAL IN ITA NO. 3/PNJ/2015. 45. IN RESPECT OF GROUND NO. 2 IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE WAS IDENTICAL TO GROUND NO. 5 WHICH WAS AGAINST THE ACTION OF THE LD. CIT(A ) IN CONFIRMING THE DISALLOWANCE MADE BY THE AO BY INVOKING THE PROVISIONS OF SEC. 40A(3) OF THE ACT IN RESPECT OF THE PURCHASES FROM THE TIPPER OWNERS ON THE GROUND THAT THE PAYMENTS HAD EXCEEDED RS. 20,000/ - . IT WAS THE SUBMISSION THAT THE ISSUE WAS IDE NTICAL TO GROUND NO. 5 OF THE ASSESSEES APPEAL IN ITA NO. 3/PNJ/2015. 46. IN RESPECT OF GROUND NO. 3 REPRESENTING ADDITION ON ACCOUNT OF STOCK DIFFERENCE, IT WAS SUBMITTED BY THE LD. AR THAT THE ASSESSEE DID NOT WISH TO PRESS THE SAID GROUND. CONSEQUENT LY, THE SAME STANDS DISMISSED AS NOT PRESSED. 47. IN RESPECT OF GROUND NO. 4 WHICH WAS AGAINST DISALLOWANCE OF PROPORTIONATE BANK INTEREST , IT WAS SUBMITTED BY THE LD. AR THAT DURING THE RELEVANT ASSESSMENT YEAR ADVANCE S TO M/S. ON & OFFSHORE HITECH ENGIN EERS PVT. LTD. INCREASED BY AN AMOUNT OF RS. 1.40 CRORE. IT WAS THE SUBMISSION THAT THE CAPITAL ACCOUNT WAS TO AN EXTENT OF RS. 12.18 CRORES , THE CASH AND BANK BALANCES WAS TO AN EXTENT OF RS. 3.18 CRORES AND THE PROFITS AFTER TAXATION WAS A LOSS OF RS. 2 5,61,000/ - . FURTHER, IT WAS THE SUBMISSION THIS LOSS WAS ON ACCOUNT OF DECREASE IN THE VALUE OF THE STOCK AS ALSO ON ACCOUNT OF PROVISION FOR INCOME TAX OF RS. 4,86,00,000 / - . IT WAS THE SUBMISSION THAT THE PROFIT BEFORE TAXATION WAS RS. 4.60 CRORES . IT WAS THE SUBMISSION THAT NO ADDITION WAS CALLED FOR IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MUNJAL SALES 17 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) CORPORATION AS ALSO THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. REPORTED IN 313 ITR 340 (BOM) . 48. IN REGARD TO GROUND ON. 5, IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE WAS AGAINST CONFIRMATION OF DISALLOWANCE OF COMPENSATION PAID OF RS.4,99,76,312/ - TOWARDS CLEARING OF HINDRANCE WHICH HAD BEEN HELD BY THE AO AS CAPITAL EXPENDITURE. IT WAS THE SUBMISSION THAT THE ASSESSEE IS IN THE BUSINESS OF RAISING OF ORE. THE ASSESSEE HAD ENTERED INTO AN AGREEMENT ON 1.7.2006 FOR A PERIOD OF 7 YEARS. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD MADE TOTAL PAYMENT OF RS. 1 1,10,80,146/ - . OUT OF THE SAID AMOUNT, AN AMOUNT OF RS. 6,86,77,818/ - WAS TOWARDS ACQUIRING THE SURFACE RIGHTS WHICH WAS IN THE NATURE OF CAPITAL EXPENDITURE AND THE SAME HAD ALSO BEEN RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS AS SUCH. THE BALANC E OF RS. 4,24,02,328/ - WAS MADE ON ACCOUNT OF COMPENSATION FOR LOSS OF CASHEW CROPS AND LOSS ON ACCOUNT OF DUST POLLUTION TO VILLAGERS HAVING PLANTATION IN THE AREA. THE ASSESSEE DID NOT DERIVE ANY ENDURING BENEFIT BY MAKING THIS PAYMENT AND THE ASSESSEE HAD CONSEQUENTLY CLAIMED THE SAME AS REVENUE EXPENDITURE. THE EXPENDITURE WAS INCURRED ONLY TO FACILITATE THE SMOOTH FUNCTIONING OF THE ASSESSEES BUSINESS AND OUT OF COMMERCIAL EXPEDIENCY. THE LD. AR DREW OUR ATTENTION TO THE AGREEMENT BETWEEN THE MINE OWNER AND THE ASSESSEE WHEREIN IN CLAUSE NO. 12 IT IS CLEARLY ADMITTED THAT THE ASSESSEE DOES NOT CLAIM ANY LEASE RIGHTS IN RESPECT OF THE MINE AND THAT THE ASSESSEE IS ONLY AN ORE RAISING CONTRACTOR. IT WAS THE SUBMISSION THAT THE ASSESSEE HAVING NOT DER IVED ANY ENDURING BENEFIT BY INCURRING THE SAID EXPENDITURE, THE SAID EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT LIABLE TO BE TREATED AS CAPITAL EXPENDITURE BUT AS REVENUE EXPENDITURE. IT WAS THE FURTHER SUBMISSION THAT THE AO HAD FOLLOWED THE DECISION I N THE CASE OF M/S. SALGAONCAR MINING INDUSTRIES. IT WAS THE SUBMISSION THAT THE AO WAS UNDER MISTAKEN IMPRESSION THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR 18 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) ACQUIRING MINING RIGHTS. IT WAS THE SUBMISSION THAT THE ASSESSEE HAS NOT DERIVED ANY MINI NG LEASE. IT WAS THE SUBMISSION THAT CLAUSE 12 OF THE SAID AGREEMENT CLEARLY SHOWED THAT THE ASSESSEE DID NOT HAVE ANY MINING LEASE AND THE ASSESSEE WAS ONLY ACTING AS A CONTRACTOR FOR RAISING ORE. IT WAS THE SUBMISSION THAT THE SAID EXPENDITURE WAS LIAB LE TO BE HELD AS REVENUE EXPENDITURE. 49. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD. CIT(A). 50. IN REGARD TO GROUND NO. 6, IT WAS SUBMITTED BY THE LD. AR THAT IN THE COURSE OF THE SEARCH A PROVISIONAL BALANCE SHEET HAD BEE N FOUND. ON THE BASIS OF THE SAID PROVISIONAL BALANCE SHEET ON ACCOUNT OF THE DIFFERENCE BETWEEN THE VALUE AS DISCLOSED IN THE PROVISIONAL BALANCE SHEET AND AS PER THE AUDITED BALANCE SHEET, THE AO HAD MADE AN ADDITION OF RS. 6,17,34,569/ - . IT WAS THE SU BMISSION THAT IN THE COURSE OF THE SEARCH WHEN THE ASSESSEE WAS QUESTIONED IN RESPECT OF THE SAID PROVISIONAL BALANCE SHEET IT WAS SPECIFICALLY ADMITTED THAT THE SAID BALANCE SHEET WAS PREPARED ONLY FOR THE PURPOSE OF GETTING BETTER FINANCE FROM THE BANKS. IT WAS THE SUBMISSION THAT THE SAID BALANCE SHEET WAS NOT SUPPORTED BY ANY SUPPORTING DOCUMENTS. IT WAS THE SUBMISSION THAT EVEN THE STOCK STATEMENTS WERE NOT CORRECT. IT WAS THE FURTHER SUBMISSION THAT THE MAIN DIFFERENCE BETWEEN THE PROVISIONAL BALAN CE SHEET AND THE AUDITED BALANCE SHEET WAS ON ACCOUNT OF THE CURRENT ASSETS AND CURRENT LIABILITIES. IT WAS THE SUBMISSION THAT IN THE PROVISIONAL BALANCE SHEET, THE CURRENT ASSETS INSTEAD OF BEING DEDUCTED FROM THE CURRENT LIABILITIES , WERE ADDED. THE L D. AR DREW OUR ATTENTION TO PAGE 185 OF THE PAPER BOOK WHICH WAS COPY OF THE SAID PROVISIONAL BALANCE SHEET WHEREIN THE CURRENT ASSETS HAVE BEEN SHOWN AT RS. 74,23,29,000/ - AND THE SAID AMOUNT , THOUGH IT IS MENTIONED THAT THE CURRENT LIABILITIES AND PROVIS IONS WERE TO BE REDUCED, HAS BEEN ADDED. THE CORRESPONDING CORRECTION 19 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) HAS BEEN SHOWN IN THE SECURED LOANS WHEREIN IN THE AUDITED BALANCE SHEET THE SECURED LOAN IS SHOWN AT A FIGURE OF RS. 46 CRORES , IN T HE PROVISIONAL BALANCE SHEET SHOWS AN AMOUNT OF RS. 57,76,00,000/ - . IT WAS THE SUBMISSION THAT RIGHT FROM THE TIME OF THE SEARCH THE ASSESSEE HAS CATEGORICALLY SUBMITTED THAT THE SAID PROVISIONAL BALANCE SHEET IS NOT SUPPORTED BY ANY DOCUMENTS AND IT WAS PREPARED ONLY FOR GETTING BETTER FINANCIAL DEAL FROM THE BANKS. IT WAS THE SUBMISSION THAT NO ADDITION WAS CALLED FOR IN THE HANDS OF THE ASSESSEE. 51. IN REPLY, THE LD. DR DREW OUR ATTENTION TO PAGE 30 OF THE ASSESSMENT ORDER TO SUBMIT THAT THE AO HAD CONSIDERED THE DIFFERENCE BETWEEN THE INCOME AND EXPENDITURE SHOWN IN THE PROVISIONAL BALANCE SHEET TO DERIVE THE PROFIT BEFORE TAXATION AT RS. 7,27,00,000 / - AND AS THE ASSESSEE HAS ONLY DISCLOSED IT AS RS.1,10,00,000/ - DURING THE YEAR, THE DIFFERENCE HAD BEEN TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD. CIT(A). 52. IN REGARD TO GROUND NO. 7 WHICH WAS IN RESPECT OF DISALLOWANCE MADE BY INVOKING THE PROVISIONS OF SEC. 40(A)(IA), THE LD. AR SUBMITTED THAT THE ASSESSEE DID NOT WISH TO PRESS THE SAME. CONSEQUENTLY, THE SAME STANDS DISMISSED AS NOT PRESSED. 53. WE HAVE CONSIDERED THE RIVAL SUB MISSIONS. IN REGARD TO GROUND NO. 1 REPRESENTING DISALLOWANCE OUT OF PURCHASES OF RS. 3,70,39,006 / - , AS IT IS NOTICED THAT THE ISSUE IS IDENTICAL TO THE ISSUE IN GROUND NO. 6 OF THE ASSESSEES APPEAL IN ITA NO. 3/PNJ/2015, AND AS IT IS A CONTINUATION OF T HE SAME CALCULATION AND AS IT IS NOTICED THAT THE SAID AMOUNT HAS BEEN DISCLOSED AND IS ASSESSED FOR THE A.Y 2010 - 11, ON IDENTICAL FINDING AS IN GROUND NO. 6 FOR THE A.Y 2008 - 09 IN ITA NO. 20 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) 3/PNJ/2015, THE DISALLOWANCE AS MADE BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED. THUS, THIS GROUND STANDS ALLOWED. 54. IN REGARD TO GROUND NO. 2 REPRESENTING DISALLOWANCE MADE BY INVOKING THE PROVISIONS OF SEC. 40A(3) OF THE ACT, AS IT IS NOTICED THAT THE ISSUE IS IDENTICAL TO GROUND NO. 5 OF THE ASSES SEES APPEAL IN ITA NO. 3/PNJ/2015, ON IDENTICAL FINDING THE SAID DISALLOWANCE STANDS DELETED. THUS, THIS GROUND STANDS ALLOWED. 55. GROUND NO. 3 OF THE ASSESSEES APPEAL HAVING BEEN NOT PRESSED, THE SAME IS DISMISSED AS NOT PRESSED. 56. IN REGARD TO GROUND NO. 4, AS IT IS NOTICED THAT THE ISSUE IS IDENTICAL TO GROUND NO. 5 IN ASSESSEES APPEAL IN ITA NO. 1/PNJ/2015, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MUNJAL SALES CORPORATION AND THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. REFERRED TO SUPRA , THE DISALLOWANCE AS MADE BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED. THUS, THIS GROUND STANDS ALLOWED. 57. IN REGARD TO GROUND NO . 5 REPRESENTING DISALLOWANCE OF THE COMPENSATION PAID OF RS. 4,99,76,312/ - , IT IS NOTICED THAT THE ASSESSEE IS NOT HAVING ANY MINING RIGHTS NOR THE MINING LEASE. THE ASSESSEE IS ONLY DOING CONTRACT OF RAISING OF IRON ORE. THE ASSESSEE HAS ALSO CAPITALIZ ED THE AMOUNT EXPENDED BY IT TOWARDS ACQUIRING THE SURFACE RIGHTS. THE BALANCE OF RS. 4,24,02,328 / - REPRESENTING THE COMPENSATION PAID TOWARDS LOSS OF CASHEW CROP AND OTHER LOSSES ARE CLEARLY ON THE REVENUE FIELD. THE SAID EXPENDITURE HAVING BEEN INCURRE D ADMITTEDLY FOR FACILITATING THE SMOOTH FUNCTIONING OF THE ASSESSEES BUSINESS, THE SAME IS LIABLE TO BE TREATED AS REVENUE EXPENDITURE AND WE DO SO. 21 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) IN THE CIRCUMSTANCES, THE AO IS DIRECTED TO ALLOW THE SAID EXPENDITURE AS CLAIMED BY THE ASSESSEE AS REV ENUE EXPENDITURE. 58. IN REGARD TO GROUND NO. 6 REPRESENTING THE ADDITION ON THE BASIS OF THE PROVISIONAL BALANCE SHEET SUBMITTED TO THE BANKS, THE ASSESSEE HAS BEEN ABLE TO SUBSTANTIALLY PROVE THE REASON FOR DIFFERENTIAL IN THE PROVISIONAL BALANCE SHEET INSOFAR AS THE CURRENT LIABILITIES HAVE ALSO BEEN ADDED TO THE CURRENT ASSETS. FURTHER, NO SUPPORTING EVIDENCE HAS BEEN FOUND IN THE COURSE OF THE SEARCH TO SUPPORT ANY OF THE FIGURES AS HAS BEEN FOUND IN THE PROVISIONAL BALANCE SHEET WHICH IS ALSO BEING CALLED A PROJECTED BALANCE SHEET. IN THE CIRCUMSTANCES, AS IT IS CLEAR THAT THE SAID BALANCE SHEET PREPARED ITSELF IS AN ERRONEOUS BALANCE SHEET AND IS NOT ON THE BASIS OF ANY ACCOUNTING PRINCIPLES, THE ADDITION MADE BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED. THUS, THIS GROUND STANDS ALLOWED. 59. IN REGARD TO GROUND NO. 7, AS THE SAME IS NOT PRESSED BY THE ASSESSEE, THE SAME IS DISMISSED AS NOT PRESSED. 60. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 5 /PNJ/20 15 (A.Y : 20 10 - 11 ) : 61. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1 . THE LEARNED A.O ERRED IN MAKING DISALLOWANCE OF PROPOR TIONATE BANK INTEREST OF RS.42,52,096/ - IGNORING THE FACT THAT ASSESSEE HAD SUFFICIENT OWN FUNDS TO COVER INTEREST FREE LOAN GIVEN AND BORROWED FUNDS WERE NOT DIVERTED. 2. THE LEARNED A.O ERRED IN MAKING DISALLOWANCE OF COMPENSATION PAID OF RS.93,50,000/ - FOR CLEARING THE HINDRANCES HOLDING IT AS CAPITAL EXPENDITURE 22 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) IGNORING THE FACT THAT EXPENDITURE OF CAPITAL NATURE OUT OF THE TOTAL PAYMENT WAS ALREADY CAPITALIZED. 3. THE LEARNED A.O ERRED TO TAKE THE FACTS THAT THE PAYMENTS WERE DONE BY THE APPELLANT ON BEHALF OF ZANTYE & CO P.LTD FOR THE AGAINST THE AGREEMENT OF EXCAVATION OR FOR RAISING ORE WHICH IS PURELY IN FORM OF REVENUE TRANSACTION. 4. THE LEARNED A.O. ERRED IN MAKING DISALLOWANCE OF ALLEGED CASH PAYMENT TO M/S CHOWGULE AND COMPANY LIMITED ON THE BASIS OF LOOSE PAPER FOUND DURING THE SEARCH IGNORING THE FACT THAT THE SAID TRANSACTION DID NOT MATERIALIZE 5. THE LEARNED A.O. ERRED IN MAKING DISALLOWANCE OF PAYMENTS OF RS.22,70,000/. 6. THE LEARNED A.O ERRED NOT TAKE THE FACT THAT THE PURCHASE OF IRON ORE THAT WERE RETURNED WERE ALREADY CREDITED TO P/L ACCOUNT AND THAT TH E CREDITORS ON THESE PURCHASES WERE ALSO WRITTEN BACK TO THE P/L ACCOUNT AND THUS THE ENTIRE PURCHASES WERE ALREADY OFFERED TO INCOME AS A WRITE BACK. THE LD A.O NOT ONLY ASSESSED THE SAME IN MULTIPLE YEARS BUT ERRED IN LAW NOT TAKE THE REVISED RETURN FILE D IN AY 2010 - 11 WHICH REQUESTED FOR CLAIMING THE DOUBLE ADDITION MADE IN THE AY 2010 - 11 W.R.S TO AY 2008 - 09 AND AY 2009 - 10. THE LD A.O FURTHER ERRED IN EVEN NOT CONSIDERING THE RECTIFICATION REQUEST TO CORRECT HIS MISTAKE FILED U/S 154 OF THE I .T ACT, 1961 THEREBY CAUSING A BURDEN OF ONLY TAXING THE SAME AMOUNTS DOUBLY AND MAKING AN ERRONEOUS DEMAND ON THE SAME. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL AND/OR ADDUCE ANY FURTHER RECORDS, EVIDENCES DURING THE C OURSE OF APPEAL. 62. IN RESPECT OF GROUND NO. 1, IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE WAS IDENTICAL TO GROUND NO. 5 IN THE ASSESSEES APPEAL IN ITA NO. 1/PNJ/2015 FOR THE A.Y 2006 - 07. 63. IN RESPECT OF GROUND NOS. 2 & 3, IT WAS SUBMITTED BY T HE LD. AR THAT THE ISSUE WAS IDENTICAL TO GROUND NO. 5 IN THE ASSESSEES APPEAL IN ITA NO. 4/PNJ/2015 FOR THE A.Y 2009 - 10. 64. IN RESPECT OF GROUND NO. 4, IT WAS SUBMITTED BY THE LD. AR THAT THE ISSUE WAS AGAINST THE ADDITION REPRESENTING ALLEGED PAYMENT OF RS. 1,43,00,000/ - TO M/S. CHO U GULE & CO. IT WAS THE SUBMISSION THAT IN THE COURSE OF THE SEARCH A PAPER WAS FOUND WHEREIN IT WAS MENTIONED THAT THE ASSESSEE WAS TO PAY AN 23 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) AMOUNT OF RS. 1,43,00,000/ - TO M/S. CHO U GULE & CO. FOR PROCURING IRON ORE FROM ONDA CCL, GAVANEM CCL AND COSTI TAILING. IT WAS THE SUBMISSION THAT THE SAID PAPER CLEARLY SHOWED THAT CASH WAS TO BE PAID. IT WAS THE SUBMISSION THAT AS M/S. CHOUGULE & CO. WAS NOT ABLE TO SOURCE THE IRON ORE FROM GAVANE M CCL & COSTI TAILING, THE ASSESSEE HAD NOT PAID THE AMOUNT. IT WAS THE SUBMISSION THAT HOWEVER THE ASSESSEE HAD PURCHASED 20389.61 MT FROM ONDA CCL AS AGAINST 20000 MT AND THE SAME WAS ALSO ACCOUNTED IN ITS BOOKS OF ACCOUNTS. IT WAS FURTHER SUBMISSION T HAT GAVANAM CCL HAD SOLD IRON ORE TAILINGS OF 13571.75 MT FROM PALE MINE AND THUS TOTAL PURCHASES WAS TO AN EXTENT OF 33961.36 MT VALUED AT RS. 1,31,37,794/ - AND THE SAME WAS ADJUSTED AGAINST THE ADVANCE PAID OF RS. 1,99,68,200/ - AND THE BALANCE OF RS.68,3 0,206/ - WAS RETURNED BY M/S. CHOWGULE & CO. TO THE ASSESSEE. IT WAS THE SUBMISSION THAT IN THE COURSE OF THE SEARCH THIS WAS ALSO CLARIFIED AND THE SAME HAS ALSO BEEN BROUGHT OUT IN THE ASSESSMENT ORDER AT PAGES 6 TO 9. IT WAS THE SUBMISSION THAT THE AO ON THE BASIS OF THE SEIZED MATERIAL HAS MADE ASSUMPTION THAT THE ASSESSEE HAS PAID RS. 1,46,00,000/ - WHEREAS, IN FACT, THE ASSESSEE HAS NOT PAID RS. 1,46,00,000/ - AND ALL THE PURCHASES HAVE BEEN CLEARLY RECORDED IN THE BOOKS. IT WAS THE SUBMISSION THAT NO ADDITION WAS CALLED FOR IN THE HANDS OF THE ASSESSEE. 65. IN REPLY, THE LD. DR SUBMITTED THAT THE AO HAS MADE THE ADDITION ON THE BASIS OF THE SEIZED MATERIAL. 66. IN REGARD TO GROUND NO. 5 WHICH WAS AGAINST THE DISALLOWANCE OF PAYMENT OF RS. 2,27,000/ - , IT WAS SUBMITTED BY THE LD. AR THAT THE ASSESSEE DID NOT WISH TO PRESS THE SAME. CONSEQUENTLY, THE SAME IS DISMISSED AS NOT PRESSED. 24 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) 67. IN REGARD TO GROUND NO. 6, IT WAS THE SUBMISSION BY THE LD. AR THAT THIS WAS BALANCE OF PURCHASE RETURN CREDITED TO THE PROFIT & LOSS ACCOUNT AND REVISED RETURN FILED BY THE ASSESSEE HAD NOT BEEN CONSIDERED. IT WAS THE SUBMISSION THAT THE ISSUE WAS IDENTICAL TO THE ISSUE IN GROUND NO. 6 OF THE ASSESSEES APPEAL IN ITA NO. 3/PNJ/2015. IT WAS THE SUBMISSION THAT THIS R ELATED TO STOCK RETURNS WHICH HAS BEEN DISCLOSED IN THE REVISED RETURN FOR THE A.Y 2010 - 11. IT WAS THE SUBMISSION THAT NO ADDITION WAS CALLED FOR IN THE HANDS OF THE ASSESSEE. 68. WE HAVE CONSIDERED THE RIVAL SUBMISSION. IN REGARD TO GROUND NO. 1 IN RES PECT OF DISALLOWANCE OF PROPORTIONATE BANK INTEREST, AS IT IS NOTICED THAT THE ISSUE IS IDENTICAL TO GROUND NO. 5 OF THE ASSESSEES APPEAL IN ITA NO. 1/PNJ/2015 FOR THE A.Y 2006 - 07, ON IDENTICAL FINDING THE DISALLOWANCE MADE BY THE AO, AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED. THUS, THIS GROUND STANDS ALLOWED. 69. IN REGARD TO GROUND NOS. 2 & 3 REPRESENTING DISALLOWANCE OF COMPENSATION PAID, AS IT IS NOTICED THAT THE ISSUE IS IDENTICAL TO GROUND NO. 5 IN ASSESSEES APPEAL IN ITA NO. 4/PNJ/2015 FO R THE A.Y 2009 - 10, ON IDENTICAL FINDING THE DISALLOWANCE STANDS DELETED. THUS, THESE GROUNDS STAND ALLOWED. 70. IN REGARD TO GROUND NO. 4 IN RESPECT OF DISALLOWANCE OF THE ALLEGED PAYMENTS TO M/S. CHOWGULE & CO., AS IT IS NOTICED THAT IN THE COURSE OF SEARCH ITSELF THE ASSESSEE HAS SPECIFICALLY CLARIFIED THE SEIZED MATERIAL IN PAGE 122 OF THE PAPER BOOK REPRESENTING THE PURCHASES FROM M/S. CHOWGULE & CO. THIS CLARIFICATION GIVEN IN THE COURSE OF THE SEARCH H AS ALSO BEEN RECORDED BY THE AO IN THE ASSESSMENT ORDER. THIS CLARIFICATION IS ALSO SUPPORTED BY THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE SEARCH HAS NOT BROUGHT OUT ANY EVIDENCE TO 25 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) DISPROVE THE CLAIM OF THE ASSESSEE. THE AO IS ALSO UNABLE TO PRODUCE A NY EVIDENCE TO DISLODGE THE SUBMISSIONS MADE BY THE ASSESSEE WHICH IS SUPPORTED BY ITS BOOKS OF ACCOUNTS. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ADDITION OF RS. 1,43,00,000/ - IS UNSUSTAINABLE ON THE FACTS OF THE CASE AND CONSEQUENTLY DELETE THE SAME. THUS, THIS GROUND STANDS ALLOWED. 71. IN REGARD TO GROUND NO. 5, AS THE SAME IS NOT PRESSED BY THE ASSESSEE, THE SAME STANDS DISMISSED AS NOT PRESSED. 72. IN REGARD TO GROUND NO. 6, AS IT IS NOTICED THAT THE ASSESSEE HAS DISCLOSED THE AMOUNT OF R S. 19,84,53,000/ - UNDER SCHEDULE G UNDER THE HEAD OTHER INCOME AND PURCHASE RETURNS FOR THE A.Y 2010 - 11. THE RETURNS FILED BY THE ASSESSEE ON 7.2.2013 FOUND AT PAGE 134 & 135 OF THE PAPER BOOK AND THE COMPUTATION THEREON ALSO CLEARLY DISCLOSES THIS A MOUNT. A PERUSAL OF THE ASSESSMENT ORDER FOR THE A.Y 2010 - 11 SHOWS THAT THE AO HAS NOT REDUCED THE SAID AMOUNT THOUGH HE HA S MADE THE ADDITION FOR THE A.YS 2008 - 09 AND 2009 - 10. THIS ADMITTEDLY HAS RESULTED IN A DOUBLE ADDITION. HOWEVER, AS WE HAVE DELET ED THE ADDITION FOR THE A.YS 2008 - 09 AND 2009 - 10, NO DELETION OF THE SAME CAN BE DONE FOR THE A.Y 2010 - 11 AS THE ASSESSEE HIMSELF HAS OFFERED THE SAME TO TAX AND HAS TREATED IT AS INCOME. A PERUSAL OF THE GROUND OF APPEAL ALSO SHOWS THAT THE ASSESSEE HAS CHALLENGED THE ACTION OF THE AO IN NOT CONSIDERING THE RECTIFICATION APPLICATION U/S 154 ON THIS GROUND THEREBY RESULTING IN TAXING THE SAME AMOUNT TWICE. AS WE HAVE ALREADY DELETED THE CORRESPONDING ADDITION IN THE A.YS 2008 - 09 AND 2009 - 10, NO FURTHER AC TION IS CALLED FOR THE RELEVANT ASSESSMENT YEAR. CONSEQUENTLY, THIS GROUND OF THE ASSESSEES APPEAL STANDS DISMISSED AS INFRUCTUOUS . 73. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 26 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) 74. IN THE RESULT, ALL THE APPEALS FILED BY THE ASSESSE E STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/08/2015. S D / - (N.S. SAINI) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 10/08/ 201 5 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 27 ITA NOS. 1 TO 5/PNJ/2015 (A.YS : 2006 - 07 TO 2010 - 11) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 10/08/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 11/08/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 1 2 /08/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 1 2 /08/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 1 2 /08/2015 SR.PS 6. DATE OF PRONOUNCEMENT 10/08/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 1 2 /08/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER