The Deputy Commissioner of Income-tax, Jammu V. M/s. J.K.Oil Industries, Jammu

ITA 306/ASR/2013

• Counselvise Citation: 30620914 RSA 2013
• Duration Of Justice: 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 08-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R L GUPTA
• Keywords: Gift; Opportunity of being heard
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.207 & 306(ASR)/2013 ASSESSMENT YEAR:2006-07 PAN :AAEFJ1962A DY.COMMR. OF INCOME TAX VS. M/S. J.K. OIL INDUSTRIE S TRADING WING, CIRCLE-1, JAMMU. INDUSTRIAL AREA, GANGYAL, JAMMU . (APPELLANT) (RESPONDENT) APPELLANT BY:SH. MAHAVIR SINGH, DR RESPONDENT BY: SH. R.L.GUPTA, ADVOCATE DATE OF HEARING:29/01/2014 DATE OF PRONOUNCEMENT:28/02/2014 ORDER PER BENCH ; THESE TWO APPEALS OF THE REVENUE ARISE FROM TWO DI FFERENT ORDERS OF CIT(A), JAMMU EACH DATED 18.01.2013 FOR THE ASSESSM ENT YEAR 2006-07. THE REVENUE IN ITA NO.207(ASR)/2013 HAS RAISED FOLLOWIN G GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.46,09,004/- MA DE ON ACCOUNT OF INADMISSIBLE EXPENDITURE WHEN THE ASSESSEE IN IT S BOOKS OF ACCOUNT HAS GIVEN THE NARRATION ADVERTISEMENT & PU BLICITY IN ALL THE BILLS RAISED FROM M/S. RATNA ENTERPRISES ON DIFFERENT DATES AND COMMITTING MISTAKE EVERY TIME DID NOT SEE M TO BE ITA NOS. 207 & 306(ASR)/2013 2 GENUINE. EVEN, THE AUDITORS HAVE NOT POINTED IT OUT IN THE AUDIT REPORT. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.46,09,004/- MA DE ON ACCOUNT OF INADMISSIBLE EXPENDITURE WHEN THE CHEQUES ISSUED BY THE ASSESSEE DURING THE PERIOD AND BEEN DEPOSITED IN TH E BANK ACCOUNT OF M/S. RATNA ENTERPRISES AND ON THE DAY OF DEPOSIT, WITHDRAWAL OF EQUAL AMOUNT HAD BEEN MADE. FURTHER, THE SAID PARTY HAS NEITHER ISSUED CHEQUE PAYMENT TO ANY PERS ONS/PARTY NOR HAD IT RECEIVED ANY CHEQUES FROM OTHER PARTY OT HER THAN THE ASSESSEE WHICH SHOWS THAT THE SO CALLED PAYMENTS MA DE TO M/S. RATNA ENTERPRISES WERE A DEVICE TO REDUCE ITS TAXAB LE INCOME. 3. THE APPELLANT CRAVES TO AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 2. IN ITA NO.306(ASR/2013, THE SOLE GROUND RAISED BY THE REVENUE IS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION MADE BY TREATING THE EXPENDITURE AS SALE PROMOTION ON PROTECTIVE BASIS WHEN THE DECI SION OF THE LD. CIT(A) ON QUANTUM ADDITION HAVE BEEN FILED CHA LLENGED BEFORE THE HONBLE ITAT, AMRITSAR. 3. FIRST OF ALL, WE TAKE UP APPEAL OF THE REVENUE I N ITA NO.207(ASR)/2013 WHERE THE BRIEF FACTS AS PER AOS ORDER AT PAGES 2 TO 10 ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER : THE ASSESSEE FIRM IS TRADING IN SALE AND PURCHASE O F EDIBLE OIL, REFINED OIL AND VANASPATI GHEE ETC. ON TOTAL SALE O F RS.78,89,51,192/- GROSS PROFIT OF RS.1,55,58,984/- HAS BEEN SHOWN GI VING GP RATE OF 1.92%, WHICH IS QUITE NOMINAL IN THIS TRADE. THE TR ADING RESULTS COULD NOT BE VERIFIED WITH REFERENCE TO THE PURCHASE BILL S, SALE BILLS, VALUATION OF STOCK AS NO BOOKS OF ACCOUNT AND OTHER VOUCHERS HAVE ITA NOS. 207 & 306(ASR)/2013 3 BEEN PRODUCED FOR VERIFICATION. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, WHILE FILING THE DETAILS AS PER THE QU ESTIONNAIRE THE ASSESSEE HAS FILED A COPY OF ACCOUNT AS EXISTING IN ITS BOOKS OF ACCOUNT IN THE NAME OF M/S. RATNA ENTERPRISES, WARE HOUSE, JAMMU FOR THE PERIOD FROM 1.4.2005 TO 31.3.2006 AND A PERUSAL OF THE SAID COPY OF ACCOUNT REVEALS THAT OPENING CREDIT BALANCE HAS BEE N SHOWN AT RS.1,88,816/- AND DURING THE PERIOD FROM 4.6.2005 T O 6.1.2006 THE ASSESSEE HAS RECEIVED VARIOUS BILLS FROM THE SAID P ARTY, AMOUNTING TO RS.46,09,004.88 WHOSE DETAILS ARE GIVEN HEREUNDER: S. NO. PARTICULARS DATE BILL NO. AMOUNT IN RS. 1. ADVERTISEMENT & PUBLICITY 04.06.2005 2501 49,000.50 2. ADVERTISEMENT & PUBLICITY 06.06.2005 2502 24,500.25 3. ADVERTISEMENT & PUBLICITY 07.06.2005 2502 24,500.25 4. ADVERTISEMENT & PUBLICITY 08.06.2005 2504 36,000.00 5. ADVERTISEMENT & PUBLICITY 09.06.2005 2505 60,249.37 6. ADVERTISEMENT & PUBLICITY 18.06.2005 2506 96,399.00 7. ADVERTISEMENT & PUBLICITY 19.06.2005 2507 58,500.00 8. ADVERTISEMENT & PUBLICITY 20.06.2005 2508 54,149.62 9. ADVERTISEMENT & PUBLICITY 21.06.2005 2513 48,399.75 10. ADVERTISEMENT & PUBLICITY 22.06.2005 2518 52,873.59 11. ADVERTISEMENT & PUBLICITY 23.06.2005 2528 66,498.75 12. ADVERTISEMENT & PUBLICITY 24.06.2005 2529 64,709.21 13. ADVERTISEMENT & PUBLICITY 28.06.2005 2534 66,298.50 ITA NOS. 207 & 306(ASR)/2013 4 14 ADVERTISEMENT & PUBLICITY 29.06.2005 2535 33,149,25 15. ADVERTISEMENT & PUBLICITY 30.06.2005 2544 30,124.60 16. ADVERTISEMENT & PUBLICITY 03.07.2005 2546 63,149.50 17. ADVERTISEMENT & PUBLICITY 04.07.2005 2552 84,199.50 18. ADVERTISEMENT & PUBLICITY 05.07.2005 2559 33,099.75 19. ADVERTISEMENT & PUBLICITY 05.07.2005 2561 78,249.37 20. ADVERTISEMENT & PUBLICITY 13.07.2005 2564 29,503.12 21. ADVERTISEMENT & PUBLICITY 15.07.2005 2565 66206.25 22. ADVERTISEMENT & PUBLICITY 19.07.2005 2571 31,334.06 23. ADVERTISEMENT & PUBLICITY 20.07.2005 2572 66,206.25 24 ADVERTISEMENT & PUBLICITY 27.07.2005 2573 97,860.93 25. ADVERTISEMENT & PUBLICITY 30.07.2005 2577 87,257.81 26. ADVERTISEMENT & PUBLICITY 01.08.2005 2581 78,257,81 27. ADVERTISEMENT & PUBLICITY 03.08.2005 2584 27,718.59 28. ADVERTISEMENT & PUBLICITY 08.08.2005 2586 18,000.00 29. ADVERTISEMENT & PUBLICITY 24.08.2005 2590 57,206.25 30. ADVERTISEMENT & PUBLICITY 25.08.2005 2592 48,480.46 31 ADVERTISEMENT & PUBLICITY 26.08.2005 2593 72,154.68 32. ADVERTISEMENT & PUBLICITY 29.08.2005 2596 75,206.25 33. ADVERTISEMENT & 30.08.2005 2597 45,703.12 ITA NOS. 207 & 306(ASR)/2013 5 PUBLICITY 34. ADVERTISEMENT & PUBLICITY 31.08.2005 2600 1,12,886.71 35. ADVERTISEMENT & PUBLICITY 3.9.2005 2601 63.149.62 36 ADVERTISEMENT & PUBLICITY 5.9.2005 2606 66,199.50 37. ADVERTISEMENT & PUBLICITY 6.9.2005 2607 49,649.62 38 ADVERTISEMENT & PUBLICITY 9.9.2005 2612 27,000.00 39. ADVERTISEMENT & PUBLICITY 15.9.2005 2616 69,099.75 40. ADVERTISEMENT & PUBLICITY 16.9.2005 2617 30,093.75 41. ADVERTISEMENT & PUBLICITY 22.9.2005 2618 66,375.00 42. ADVERTISEMENT & PUBLICITY 24.9.2005 2621 10,140.62 43. ADVERTISEMENT & PUBLICITY 29.09.2005 2622 78,468.75 44. ADVERTISEMENT & PUBLICITY 01.10.2005 2627 66,375.00 45. ADVERTISEMENT & PUBLICITY 07.10.2005 2635 31,050.00 46. ADVERTISEMENT & PUBLICITY 08.10.2005 2637 63,281.25 47. ADVERTISEMENT & PUBLICITY 14.10.2005 2641 75,375.00 48. ADVERTISEMENT & PUBLICITY 19.10.2005 2645 99,562.50 49. ADVERTISEMENT & PUBLICITY 21.10.2005 2647 41,287.50 50. ADVERTISEMENT & PUBLICITY 31.10.2005 2651 90,562.50 51 ADVERTISEMENT & PUBLICITY 12.11.2005 2656 48,375.00 52 ADVERTISEMENT & PUBLICITY 14.11.2005 2659 48,375.00 ITA NOS. 207 & 306(ASR)/2013 6 53 ADVERTISEMENT & PUBLICITY 15.11.2005 2260 18,000.00 54. ADVERTISEMENT & PUBLICITY 21.11.2005 2667 96,215.62 55. ADVERTISEMENT & PUBLICITY 22.11.2005 2668 1,11,656.25 56 ADVERTISEMENT & PUBLICITY 24.11.2005 2670 58,443.75 57 ADVERTISEMENT & PUBLICITY 25.11.2005 2671 1,11,262.50 58. ADVERTISEMENT & PUBLICITY 26.11.2005 2672 84,937.50 59. ADVERTISEMENT & PUBLICITY 27.11.2005 2674 42,187.50 60. ADVERTISEMENT & PUBLICITY 28.11.2005 2678 38,587.50 61. ADVERTISEMENT & PUBLICITY 29.11.2005 2680 20,559.37 62 ADVERTISEMENT & PUBLICITY 30.11.2005 2682 54,281.25 63 ADVERTISEMENT & PUBLICITY 01.12.2005 2685 14,765.62 64. ADVERTISEMENT & PUBLICITY 01.12.2005 2687 66,375.00 65. ADVERTISEMENT & PUBLICITY 02.12.2005 2689 78,468.75 66. ADVERTISEMENT & PUBLICITY 05.12.2005 2695 66,375.00 67. ADVERTISEMENT & PUBLICITY 06.12.2005 2701 54281.25 68. ADVERTISEMENT & PUBLICITY 07.12.2005 2705 55,490.63 69. ADVERTISEMENT & PUBLICITY 08.12.2005 2708 42,890.63 70. ADVERTISEMENT & PUBLICITY 09.12.2005 2711 63078.75 71 ADVERTISEMENT & PUBLICITY 10.12.2005 2716 50,169.38 72. ADVERTISEMENT & 10.12.2005 2719 63,646.88 ITA NOS. 207 & 306(ASR)/2013 7 PUBLICITY 73 ADVERTISEMENT & PUBLICITY 12.12.2005 2723 53,071.88 74 ADVERTISEMENT & PUBLICITY 13.12.2005 2724 54,281.25 75 ADVERTISEMENT & PUBLICITY 16.12.2005 2727 66,375.00 76 ADVERTISEMENT & PUBLICITY 16.12.2005 2729 10,546.88 77 ADVERTISEMENT & PUBLICITY 21.12.2005 2734 36,787.50 78. ADVERTISEMENT & PUBLICITY 24.12.2005 2736 56,981.25 79 ADVERTISEMENT & PUBLICITY 30.12.2005 2741 60,328.13 80 ADVERTISEMENT & PUBLICITY 3.1.2006 2748 42,806.25 81 ADVERTISEMENT & PUBLICITY 5.1.2006 2752 30,093.75 82 ADVERTISEMENT & PUBLICITY 6.1.2006 2757 35,606.26 TOTAL 46,09,004.88 THE SAID COPY OF ACCOUNT FURTHER REVEALS THAT THE A SSESSEE HAS MADE PAYMENTS TO THE SAID PARTY ON DIFFERENT DATES AMOUNTING TO RS.53,50,000 AND THUS AT THE CLOSE OF THE YEAR I.E. ON 31.03.2006 THE ASSESSEE HAS SHOWN DEBIT BALANCE OF RS.5,52,179.12. THE PAYMENTS HAVE BEEN MADE FROM TWO BANK ACCOUNTS MAINTAINED BY THE ASSESSEE WITH THE JAMMU AND KASHMIR BANK LTD. RESIDENCY ROAD , JAMMU A/C NO. 0076CD1999 AND THE J & K BANK, GANGYAL A/C NO.1 455 AND THE AMOUNTS HAVE BEEN CREDITED IN A/C NO.0076CD2084 IN THE NAME OF M/S. RAMA ENTERPRISES, WITH THE K & K BANK LTD. RES IDENCY ROAD, JAMMU. 2.2. AFTER GOING THROUGH THE INFORMATION FILED BY THE ASSESSEE AND THE INFORMATION OBTAINED FROM THE BANKS, VIDE THIS OFFI CE LETTER DATED 08.12.2008, THE ASSESSEE WAS ASKED TO EXPLAIN AS UN DER: ITA NOS. 207 & 306(ASR)/2013 8 AFTER TEST CHECK OF THE INFORMATION FILED BY YOU, IT HAS BEEN OBSERVED THAT YOU HAVE SHOWN DEBIT BALANCE OF RS.5, 52,179.12 AGAINST THE NAME OF M/S. RATNA ENTERPRISES, WARE HOUSE, JAM MU AS ON 31.03.2006 WHEREAS THERE WAS CREDIT BALANCE OF RS.1 ,88,816/- AS ON 1.4.2005. YOUR BANK ACCOUNTS MAINTAINED WITH J & K BANK LTD. GANGYAL BRANCH AND RESIDENCEY ROAD BRANCH SHOW THAT DURING THE YEAR YOU HAVE MADE TOTAL PAYMENT OF RS.53,50,000/- ON DIFFERENT DATES THROUGH CHEQUES. THE COPY OF ACCOUNT AS EXISTING IN YOUR BOOKS OF ACCOUNT SHOWS THAT THE SAID PARTY HAS RAISED BILLS ON DIFFERENT DATES ON ACCOUNT OF ADVERTISEMENT AND PUBLICITY. YOU ARE R EQUIRED TO FURNISH THE FOLLOWING INFORMATION ON THIS ACCOUNT: I. PLEASE FURNISH THE COMPLETE NAME AND ADDRESS OF THE PARTY; IN CASE OF PROPRIETORSHIP, PLEASE PROVIDE THE NAME AND COMPLETE ADDRESS OF THE PROPRIETOR; II. NATURE OF THE BUSINESS CARRIED OUT BY THE SAID CONC ERN ALONGWITH ITS PAN NUMBER AND PARTICULARS OF WARD/CI RCLE WHERE SAME IS BEING ASSESSED. III. PLEASE FURNISH THE ORIGINAL BILLS ISSUED BY THE SAI D CONCERN ON THE BASIS OF WHICH YOU HAVE CREDITED ITS ACCOUNT AS EXISTING IN YOUR BOOKS OF ACCOUNT; IV. NATURE OF ADVERTISEMENT AND PUBLICITY AND HOW SAM E HAS BEEN ACCOUNTED FOR IN YOUR BOOKS OF ACCOUNT. 2. PLEASE STATED WHETHER THE PARTNERS OF THE ASSESS EE FIRM HAVE RELATIONSHIP WITH THE PARTNERS/PROPRIETOR OF THE SA ID CONCERN, IF SO, PLEASE JUSTIFY THE PAYMENTS MADE WITH REFERENCE TO THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. 2.3. A NOTICE U/S 142(1) WAS ALSO ENCLOSED ALONGWIT H THE SAID LETTER AND AS PER THE SAID NOTICE, THE DATE OF HEARING WAS FIXED FOR 12.12.2008 AND ASSESSEE WAS ASKED TO PRODUCE COMPLE TE BOOKS OF ACCOUNT RELEVANT TO THE ABOVE ASSESSMENT YEAR AND ALSO THE INFORMATION AS PER THE ABOVE LETTER. THE SAID LETTE R ALONG WITH NOTICES WAS DULY SERVED UPON THE ASSESSEE ON 10.12.2008. HO WEVER, ON THE SAID DATE OF HEARING, NONE ATTENDED THE PROCEEDINGS NOR ANY REQUEST FOR ADJOURNMENT OF THE CASE WAS FILED NOR THE INFOR MATION AS ASKED FOR WAS FILED BY THE ASSESSEE. INSPITE OF THE FACT THAT THE CASE WAS GOING BARRED BY LIMITATION, STILL TO BE MORE REASONABLE, ANOTHER SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 19.12.2008 ALO NGWITH NOTICES U/S ITA NOS. 207 & 306(ASR)/2013 9 143(20 AND THE ASSESSEE WAS ASKED TO FURNISH THE F OLLOWING INFORMATION AND ALSO PRODUCE THE BOOKS OF ACCOUNT O N THE DATE OF HEARING WHICH WAS FIXED FOR 26.12.2008. IN THE SAID LETTER THE ASSESSEE WAS ASKED TO FURNISH THE FOLLOWING: PLEASE REFER TO THE ABOVE. ON THE LAST DATE OF HEA RING I.E. 03.11.2008, SHRI RATTAN LAL GUPTA, ADVOCATE, ALONGW ITH SH. VIJAY MENGI, ACCOUNTANT ATTENDED AND FILED THE INFORMATIO N. THE CASE WAS ADJOURNED TO 12.11.2008 BUT ON THE SAID DATE OF HEA RING, NONE HAS ATTENDED. SUBSEQUENTLY, A LETTER DATED 08.12.2008 A LONGWITH NOTICES U/S 143(2/142(1) WERE ISSUED AND CASE WAS FIXED FOR HEARING ON 12.12.2008 AND YOU WERE REQUIRED TO FURNISH THE FOL LOWING INFORMATION:- AFTER TEST CHECK OF THE INFORMATION FILED BY YOU, IT HAS BEEN OBSERVED THAT YOU HAVE SHOWN DEBIT BALANCE OF RS.5, 52,179.12 AGAINST THE NAME OF M/S. RATNA ENTERPRISES, WARE HOUSE, JAM MU AS ON 31.03.2006 WHEREAS THERE WAS CREDIT BALANCE OF RS.1 ,88,816/- AS ON 1.4.2005. YOUR BANK ACCOUNTS MAINTAINED WITH J & K BANK LTD. GANGYAL BRANCH AND RESIDENCEY ROAD BRANCH SHOW THAT DURING THE YEAR YOU HAVE MADE TOTAL PAYMENT OF RS.53,50,000/- ON DIFFERENT DATES THROUGH CHEQUES. THE COPY OF ACCOUNT AS EXISTING IN YOUR BOOKS OF ACCOUNT SHOWS THAT THE SAID PARTY HAS RAISED BILLS ON DIFFERENT DATES ON ACCOUNT OF ADVERTISEMENT AND PUBLICITY. YOU ARE R EQUIRED TO FURNISH THE FOLLOWING INFORMATION ON THIS ACCOUNT: V. PLEASE FURNISH THE COMPLETE NAME AND ADDRESS OF THE PARTY; IN CASE OF PROPRIETORSHIP, PLEASE PROVIDE THE NAME AND COMPLETE ADDRESS OF THE PROPRIETOR; VI. NATURE OF THE BUSINESS CARRIED OUT BY THE SAID CONC ERN ALONGWITH ITS PAN NUMBER AND PARTICULARS OF WARD/CI RCLE WHERE SAME IS BEING ASSESSED. VII. PLEASE FURNISH THE ORIGINAL BILLS ISSUED BY THE SAI D CONCERN ON THE BASIS OF WHICH YOU HAVE CREDITED ITS ACCOUNT AS EXISTING IN YOUR BOOKS OF ACCOUNT; VIII. NATURE OF ADVERTISEMENT AND PUBLICITY AND HOW SAM E HAS BEEN ACCOUNTED FOR IN YOUR BOOKS OF ACCOUNT. ITA NOS. 207 & 306(ASR)/2013 10 2. PLEASE STATED WHETHER THE PARTNERS OF THE ASSESS EE FIRM HAVE RELATIONSHIP WITH THE PARTNERS/PROPRIETOR OF THE SA ID CONCERN, IF SO, PLEASE JUSTIFY THE PAYMENTS MADE WITH REFERENCE TO THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. HOWEVER, ON THE SAID DATE OF HEARING NONE ATTENDED NOR ANY BOOKS OF ACCOUNT HAVE BEEN PRODUCED FOR EXAMINATION. AS YOU HAVE FAILED TO COMPLY WITH THE TERMS OF SAID NOTICE AS NEITHER THE REQUISITE INFORMATION, ORIGINAL BILLS NOR THE BOOKS OF ACCOUN T HAVE BEEN PRODUCED, THEREFORE, I AM LEFT WITH NO ALTERNATIVE BUT TO RESORT TO THE PROVISIONS OF SECTION 145A OF THE ACT TO COMPUTE Y OUR INCOME. IN THIS REGARD, YOU ARE REQUESTED TO FURNISH THE A BOVE INFORMATION ON THE NEXT DATE OF HEARING WHICH IS NOW FIXED FOR 26. 12.2008 AT 11.30A.M. AND ALSO PRODUCE THE BOOKS OF ACCOUNT/VOU CHERS AND BELOW INFORMATION ON THE SAID DATE OF HEARING: 1. AS PER TRADING ACCOUNT, IT IS OBSERVED THAT YOU HAVE SHOWN PURCHASES AS UNDER: A. INTERSTATE PURCHASES RS.11,29,25,651.50 B. PURCHASE 4% RS.64,48,97,354.86 C. PURCHASE 12.5% RS. 3,69,114.00 D. CONSIGNMENT PURCHASE RS. 1,50,30,320.34 IN THIS REGARD, YOU ARE REQUIRED TO FURNISH THE IN FORMATION IN THE FOLLOWING FORMAT: I. SERIAL NO. II. NAME AND COMPLETE ADDRESS OF THE PARTY FROM WHOM PU RCHASES MADE. III. TOTAL VALUE OF THE PURCHASES IV. TOTAL PAYMENTS MADE DURING THE YEAR V. BALANCE OUTSTANDING AS ON 31.3.2006 VI. PARTICULARS OF THE PURCHASES MADE. A NOTICE U/S 143(20/142(1) IS ALSO ENCLOSED FOR COM PLIANCE. 2.4. AGAIN THE ASSESSEE FAILED TO COMPLY WITH THE TERMS OF THE SAID NOTICES AND NOBODY ATTENDED THE PROCEEDINGS. HOWEVE R, SH. ITA NOS. 207 & 306(ASR)/2013 11 RATTAN LAL GUPTA, ADVOCATE, COUNSEL OF THE ASSESSEE FILED REPLY TO THE ABOVE LETTER AT 5.30 A.M. AND THE SAME HAS B EEN TAKEN ON RECORD. IN THE SAID LETTER THE ASSESSEE INTIMATED THE ADDRESS OF M/S. RATNA ENTERPRISES AS WARE HOUSE, JAMMU BUT UNA BLE TO PROVIDE THE NAME OF THE PROPRIETOR OR CONFIRM WHETH ER THE CONCERN IS A PROPRIETORSHIP CONCERN OR A PARTNERSHI P FIRM. HE FURTHER INTIMATED THAT THE CONCERN IS DEALING IN WA SHING SOAP, EDIBLE OILS, GHEE ETC. HE ALSO FILED PHOTOCOPIES OF FEW PURCHASE BILLS, TO SHOW THAT THE ASSESSEE HAS PURCHASED WASH ING SOAP FROM THE SAID CONCERN. IT HAS ALSO BEEN STATED IN T HE SAID LETTER THAT THE NATURE OF THE ACCOUNT HEAD ADVERTISEMENT & PUBLICITY BASICALLY IS NOT ADVERTISEMENT OR PUBLICITY BUT IT IS ACCOUNT OF COMBO SALES OF WASHING SOAP WITH PACKING OF EDIBLE OILS. IT HAS FURTHER BEEN CLAIMED IN THE LETTER THAT THE COMBO S ALE PRICE OF EDILBLE OILS INCLUDED THE REALIZATION OF WASHING SO AP COST AND THUS THE COST REALIZATION OF WASHING SOAP HAS BEEN CREDITED TO THE SAID ACCOUNT HEAD AND STATED THAT ALL THE PURCH ASES OF WASHING SOAP ARE PROPERLY ACCOUNTED FOR IN THE BOOK S OF ACCOUNT AND ALL THE PAYMENTS HAD BEEN MADE TO THE P ARTY THROUGH ACCOUNT PAYEES CHEQUES. DURING THE COURSE O F DISCUSSION WITH THE COUNSEL OF THE ASSESSEE, HE PRO DUCED SOME PURCHASE BILLS, WHICH HE STATED TO BE ORIGINAL BILL S RAISED BY M/S. RATNA ENTERPRISES ON ACCOUNT OF SALE OF SOAP T O THE ASSESSEE AND FURTHER STATED THAT TEHSE BILLS ARE AC COUNTED FOR IN THE BOOKS OF ACCOUNT IN SUPPORT OF WHICH HE AGAIN F ILED A COPY OF ACCOUNT AS EXISTING IN HIS ACCOUNTS. HOWEVER, N O BOOKS OF ACCOUNT WERE PRODUCED TO VERIFY THE CONTENTION OF T HE ASSESSEE. 2.5. AFTER GOING THROUGH ALL THE FACTS AS BOUGHT ON RECO RD AND AFTER PERUSAL OF THE VARIOUS DOCUMENTS BROUGHT ON RECORD, THE COUNSEL FOR THE ASSESSEE WAS ASKED TO JUSTIFY THE P URCHASE OF WASHING SOAP FROM M/S. RATNA ENTERPRISES AND ITS FU RTHER SALE TO DIFFERENT PARTIES. HE WAS ALSO ASKED TO PROVIDE THE PARTICULARS OF THE PARTIES TO WHOM THE SALES WERE M ADE. IT WAS ALSO POINTED OUT TO HIM THAT AS PER THE REPORT OF T HE AUDITORS IN FORM NO.3CD IT HAS BEEN CLEARLY BEEN MENTIONED IN P ART-B OF THE SAID REPORT THAT THE ASSESSEE IS TRADING IN VAN ASPATI GHEE, EDIBLE PET CAKE AND MUSTERED CAKE AND HOW HE JUSTIF IES THE SALE OF WASHING SOAP. HE WAS ALSO ASKED TO PROVIDE THE NAME AND ADDRESS OF THE PERSON WHO IS RUNNING THE CONCER N UNDER THE NAME AND STYLE OF M/S. RATNA ENTERPRISES AT WARE HO USE, ITA NOS. 207 & 306(ASR)/2013 12 JAMMU AND A COPY OF RETURN OF INCOME OR ANY OTHER I NFORMATION TO IDENTITY THE SAME PERSON. IN RESPONSE TO THESE Q UERIES, HE STATED THAT THE ASSESSEE FIRM FLOATED A SCHEME THAT WITH EACH TIN OF 1KG, 2KG AND 5 KG. OF HIS EDIBLE OIL PACK, THE A SSESSEE PROVIDED PACKETS OF WASHING SOAP TO BOOST ITS BUSIN ESS. HE WAS FURTHER ASKED TO PROVIDE A COPY OF SUCH SCHEME AND ALSO EXPLAIN FOR WHICH PERIOD SUCH SCHEME WAS FLOATED IN THE MAR KET, HE WAS UNABLE TO EXPLAIN OR FURNISH ANY SUCH DETAILS. HE I NFORMED THAT IT WAS DULY MENTIONED IN THE PACKING OF THE ARTICL E BUT WAS UNABLE TO PROVIDE THE DETAILS OF SUCH SCHEMES. AS PER THE PARTNERSHIP DEED IT HAS BEEN STATED THAT THE PARTNE RSHIP CONCERN SHALL CARRY ON THE BUSINESS OF SALE AND PUR CHASE OF EDIBLE OIL WHICH IS DULY REFLECTED BY THE AUDITORS IN THEIR AUDIT REPORT ON FORM NO.3CD. WHEN THE ASSESSEE WAS CONFRO NTED TO EXPLAIN THE NATURE OF ADVERTISEMENT AND PUBLICITY WHICH THE ASSESSEE FIRM HAS UNDERTAKEN AND FOR WHICH THE ASSE SSEE FIRM HAS MADE HUGE PAYMENTS, IT CHANGED ITS STAND AND ST ATED THAT THE NATURE OF THE ACCOUNT HEAD ADVERTISEMENT AND P UBLICITY BASICALLY IS NOT ADVERTISEMENT OR PUBLICITY BUT IT IS ACCOUNT OF COMBO SALES OF WASHING SOAP WITH PACKING OF EDIBLE OILS AND IS INCLUSIVE OF THE SALE PRICE OF EDIBLE OILS. WHEN TH E ASSESSEE WAS ASKED TO IDENTIFY THE PARTIES TO WHOM SUCH SALES HA VE BEEN MADE HE WAS UNABLE TO PROVIDE THE DETAILS. EVEN HE COULD NOT PROVIDE THE PARTICULARS OF THE PARTIES TO WHOM SUCH SALES HAVE BEEN MADE. AS IS EVIDENT FROM THE FACTS OF THE CASE , THE ASSESSEE HAS SHOWN TOTAL TURNOVER OF RS.77.39 CRORES AND ENT IRE SALES ARE TO RETAILERS AND NO DIRECT SALE TO CUSTOMERS HA VE BEEN MADE. THEREFORE, APPARENTLY IT IS MADE UP AFTER THO UGHT STORY WITH CLEAR INTENTION TO TWIST THE ISSUE. HAD THERE BEEN ANY SUCH SCHEME, IT SHOULD HAVE BEEN MEANT FOR RETAILERS WHO HAVE MADE HUGE PURCHASES FROM THE ASSESSEE OR AT LEAST THEY S HOULD HAVE SOME KNOWLEDGE ABOUT SUCH SCHEME. BUT THE ASSESSEE, HAS FAILED TO PRODUCE ANY SUCH EVIDENCE IN AS MUCH AS E VEN THE BOOKS OF ACCOUNT, PURCHASE AND SALE VOUCHERS AND OT HER MISC. VOUCHERS, THEREFORE, IT IS DIFFICULT TO BELIEVE THE STORY. 2.6. THIS FACT IS FURTHER STRENGTHENED BY THE FACT THAT THE ASSESSEE FIRM HAS FLOATED ONLY ONE SCHEME WHICH WAS VALID FR OM 20.12.2005 TO 31.01.2006 AND THE SAID SCHEME PROVID ED AS UNDER: ITA NOS. 207 & 306(ASR)/2013 13 JUMBO FAMILY IS HERE WITH A GRAND BONAZA INTRODUCT ORY FOR OUR VALUED CUSTOMERS FOR TAJ MAHAL BAKERY, POWERMA N SOYA BEEN REFINED OIL AND VIP MUSTARD OIL GRADE-1. 1) I) ON PURCHASE AND DELIVERY OF 300 BOXES OF TAJ MAHAL BAKERY: ONE MOBILE PHONE WORTH RS.2800/- II) ON PURCHASE AND DELIVERY OF 500 BOXES OF TAJ MA HAL BAKERY : ANY ONE ITEM I.E. MOBILE PHONE OR ROOM HEA TER WORTH RS.5000/- III) ON PURCHASE AND DELIVERY OF 750 BOXES OF TAJ M AHAL BAKERY: ANY ONE ITEM I.E. MOBILE PHONE OR COLOUR TV WORTH RS.8000/- 2. I) ON PURCHASE AND DELIVERY OF 600 TINS POWERMAN REFINED SOYABEEN OIL: ONE MOBILE PHONE WORTH RS.2800/-. II) ON PURCHASE AND DELIVERY OF 600 TINS POWERMAN REFIN ED SOYABEEN OIL: ANY ONE ITEM I.E. ROOM HEATER OR MOBI LE PHONE WORTH RS.5000/- III) ON PURCHASE AND DELIVERY OF 1200 TINS POWERMAN REFI NED SOYABEEN OIL: ANY ONE ITEM I.E. COLOUR TV OR MOBILE PHONE WORTH RS.8000/-. 3. I) ONE PURCHASE AND DELIVERY OF 600 TINS MUSTARD OIL GRADE-1 : ONE MOBILE PHONE WORTH RS.2800/- II) ONE PURCHASE AND DELIVERY OF 1200 TINS MUSTARD OIL GRADE-1:ANY ONE ITEM I.E. ROOM HEATER OR MOBILE PH ONE WORTH RS.5000/- III) ONE PURCHASE AND DELIVERY OF 1500 TINS MUSTAR D OIL GRADE-1:ANY ONE ITEM I.E. ONE COLOUR TV OR MOBILE P HONE WORTH RS.8,000/- 2.7. THIS CLEARLY SHOWS THAT THE CONTENTION OF THE ASSESSEE THAT CUSTOMERS SCHEME WAS FLOATED FOR WHICH PURCHASES OF WASHING SOAP WAS MADE FROM M/S. RATNA ENTERPRISES IS WITHOUT ANY BASIS AND THE ARGUMENT HAS BEEN PUTFORTH ONLY TO MINIMIZE THE INC IDENCE OF TAXATION BY WAY OF DEBITING BOGUS EXPENDITURE IN THE TRADIN G ACCOUNT. THE ASSESSEE WAS NOT IN A POSITION TO SUPPORT ITS BOOKS OF ACCOUNT AS PER WHICH IT HAS SHOWN TO HAVE RECEIVED VARIOUS BILLS F ROM M/S. RATNA ENTERPRISES AND GIVEN THE NARRATION ADVERTISEMENT & PUBLICITY AS ITA NOS. 207 & 306(ASR)/2013 14 WHEN POINTED OUT, HE REALIZED THAT IN CASE HE SUPP ORTED THE SAME, THEN THE DEPARTMENT WOULD CALL FOR EXPLANATION AS T O WHETHER TDS HAS BEEN DEDUCTED ON THE SAID PAYMENTS AND AS TO WHY TH E SAME HAS NOT BEEN CHARGED TO FRINGE BENEFIT TAX. IT WOULD HAVE B EEN VERY EMBRACING FOR THE ASSESSEE TO SUPPORT THIS VERSION AS DEPICTED IN ITS BOOKS OF ACCOUNT. THEREFORE, IT WAS CAUGHT BETWEEN DEVIL AND THE DEEP SEA AND THUS UNABLE TO SUPPORT ITS OWN THEORY. IF F OR ARGUMENT SAKE, WE BUY THE ARGUMENT OF THE ASSESSEE THAT IT IS MIST AKE, BUT MISTAKE CANNOT BE REPEATED EVERY TIME WHICH IS EVIDENT FROM THE FACT THAT WHILE MAKING POSTINGS IN THE ACCOUNT OF M/S. RATNA ENTERPRISES AS MAINTAINED BY THE ASSESSEE SCORES OF ENTRIES HAVE B EEN MADE AND HAD IT BEEN A MISTAKE IT WOULD HAVE COME TO THE KNOWLED GE OF THE ASSESSEE KEEPING IN VIEW THE QUANTUM OF HUGE PAYMENTS MADE. EVEN THE AUDITORS HAVE NOT POINTED IT OUT. THIS CLEARLY SHOW S THE INTENTIONS OF THE ASSESSEE THAT THIS ACCOUNT HAS BEEN CREATED TO SNIFF OUT MONEY FROM THE FIRM AND BY CREATING SUCH ACCOUNT AND THR OUGH THIS ACCOUNT TRANSFERRED THE MONEY TO THE ACCOUNT OF M/S. RATNA ENTERPRISES, WHICH HAS BEEN OPENED WITH THE J & K BANK LTD. RESIDENCY ROAD, JAMMU. THIS FURTHER GETS STRENGTHENED FROM THE FACT THAT A FTER GOING THROUGH THE COPY OF ACCOUNT OF M/S. RATNA ENTERPRISES, IT I S OBSERVED THAT BILLS WHICH ARE MOSTLY IN SERIATIM, HAVE BEEN ISSUED IN F AVOUR OF THE ASSESSEE. COPY OF BANK ACCOUNT OF M/S. RATNA ENTER PRISES ALSO SHOWS THAT OPENING BALANCE AS ON 1.4.2005 HAS BEEN SHOWN AT RS.302.60 AND THE CLOSING BALANCE IN THE ACCOUNT AS ON 31.3.2006 IS RS.236.60. DURING THE PERIOD ONLY THE CHEQUES ISSUED BY THE AS SESSEE FIRM HAVE BEEN DEPOSITED IN THE SAID ACCOUNT AND ON THE DAY O F DEPOSIT, WITHDRAWALS OF THE EQUAL AMOUNT HAVE BEEN MADE. THE CHEQUES THROUGH WHICH THE WITHDRAWALS HAVE BEEN MADE ARE AL SO MOSTLY IN SERIATIM WHICH SHOWS THAT NEITHER M/S. RATNA ENTERP RISES HAS ISSUED ANY CHEQUE PAYMENT TO ANY OTHER PERSON/PARTY NOR HA S IT RECEIVED ANY CHEQUES FROM SOME OTHER PARTY THAN THE ASSESSEE. CO PIES OF SOME OF THE CHEQUES ISSUED BY THE ASSESSEE HAVE BEEN OBTAIN ED FROM THE BANK ALONGWITH COPIES OF THE PAY-IN-SLIPS. THE DETAILS O F WHICH ARE GIVEN HEREUNDER: S.NO. CHEQUE NO. DATE OF CHEQUES AMOUNT IN RS. 1 5044749 17.06.2005 2,50,000 2. 5044773 06.07.2005 4,00,000 3 5044775 24.08.2005 6,00,000 4. 5044777 3.9.2005 6,00,000 ITA NOS. 207 & 306(ASR)/2013 15 5. 5044778 04.10.2005 4,00,000 THESE CHEQUES ALONGWITH PAY-IN-SLIPS FORM ANNEXURE- A TO THIS ORDER. A PERUSAL OF THESE CHEQUES AND PAY IN SLIPS REVEA LS THAT THE PERSON WHO HAS PREPARED THE CHEQUES AND THE PERSON WHO HAS DEPOSITED THESE CHEQUES AS PER PAY-IN-SLIPS IN THE ACCOUNT OF M/S. RATNA ENTERPRISES IS ONE AND THE SAME PERSON AS IS EVIDEN T FROM THE HAND- WRITING ON THESE DOCUMENTS AND THE DATE OF DEPOSIT AND DATE OF WITHDRAWAL IS ALSO THE SAME. THIS ALSO PROVES THAT IT IS ONE MAN SHOW AS THE SAME PERSON HAS ISSUED THE CHEQUES, DEPOSITE D THEM AS PER PAY- IN-SLIP FOR AFFORDING CREDIT IN SOME OTHER ACCOUNT. THEREFORE, IT IS HARD TO BELIEVE THE THEORY OF THE ASSESSEE THAT IT DOES NOT KNOW AS TO WHO RUNS THE CONCERN UNDER THE NAME AND STYLE OF M/S. R ATNA ENTERPRISES. THUS, IT IS CLEAR THAT THIS MODUS OPERANDI HAS BEEN ADOPTED BY THE ASSESSEE TO SNIFF OUT THE MONEY FROM THE CONCERN AN D ALSO REDUCE ITS PROFITS BY DEBITING INFRUCTUOUS BILLS IN ITS TRADIN G ACCOUNT. THE SETTLED LEGAL POSITION, AS ENUNCIATED BY VARIOUS HIGH COURT S AND SUPREME COURT IS THAT THE OBLIGATION IS ON THE ASSESSEE TO FURNISH REASONABLY ACCEPTABLE EXPLANATION REGARDING THE ENTRIES MADE I N ITS BOOKS OF ACCOUNT. 2.8. UNDER SUCH CIRCUMSTANCES WHEN THE ASSESSEE HAS FAILED TO PRODUCE THE BOOKS OF ACCOUNT AND GIVEN REASONABLE E XPLANATION TO JUSTIFY THE NATURE OF ITS CLAIM, HOW IT QUALIFIES F OR DEDUCTION AND HOW WHATSOEVER EVIDENCE IS BROUGHT ON RECORD DOES SUBST ANTIATE THE THEORY PURTFORTH BY IT, A PRUDENT MAN FACE WITH SUCH A SIT UATION WILL WEIGH THE VARIOUS PROBABILITY TO FIND WHETHER THE PREPONDERAN CE IS IN FAVOUR OF EXISTENCE OF THE OF THE PARTICULAR FACTS. THE LIAB ILITY TO EXPLAIN THE NATURE OF THE ENTRY IS UNDOUBTEDLY UPON THE ASSESSE E AS THE FACT IS WITHIN ITS KNOWLEDGE BUT WHEN IT FAILS TO DISCLOSED THE SAME OR TRIES TO CAMOUFLAGE THE SAME, IT CANNOT BE SAID THAT THE ASS ESSEE HAS DISCHARGED ITS ONUS. THE EVIDENCE LIKE THE SERIATIM POSTING OF BILLS, ENTRIES IN THE BANK ACCOUNTS OF M/S. RATNA ENTERPRI SES SHOWING THE DEBIT AND CREDIT ENTRIES THEREIN AND THE OPENING AN D CLOSING BALANCES IN THE SAID ACCOUNT AND ALSO THE VERSION OF THE ASS ESSEE THAT THE EXISTING NARRATION IN THE ACCOUNT OF M/S. RATNA ENT ERPRISES MAINTAINED BY IT I.E. ADVERTISEMENT & PUBLICITY HA VING MISTAKENLY BEEN MADE, PROVES BEYOND DOUBT THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE IS NOT GENUINE. MOREOVER, KEEPING IN VIEW THE PAUCITY OF THE TIME AND NON COOPERATION ON THE PART OF THE ASSESSE E AND ALSO THE FACT THAT BEST JUDGMENT ASSESSMENT IS BEING FRAMED, I AM LEFT WITH NO ITA NOS. 207 & 306(ASR)/2013 16 ALTERNATIVE BUT TO HOLD THAT THE CLAIM OF THE ASSES SEE BEING UNJUSTIFIED, THE SAME IS REJECTED. ACCORDINGLY, IT WOULD RESULT IN A DISALLOWANCE OF RS.46,09,004.88 BEING INADMISSIBLE EXPENDITURE HAVI NG BEEN DEBITED BY THE ASSESSEE TO REDUCE ITS PROFITABILITY. THIS W ILL ALSO COVER ANY OTHER DISCREPANCY IN THE TRADING RESULTS WHICH COUL D NOT BE VERIFIED IN THE ABSENCE OF BOOKS OF ACCOUNT. AS THE ASSESSEE HA S FURNISHED INACCURATE PARTICULARS OF ITS INCOME, THEREFORE, PE NALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 ARE ALSO INITIATED SEPARATELY. 3. THE LD. CIT(A) DELETED THE ADDITIONS FOR THE REA SONS MENTIONED IN HIS ORDER AND THE RELEVANT FINDINGS AT PAGES 7-8 OF TH E ORDER ARE REPRODUCED AS UNDER: THERE IS NO DENIAL BY THE AO THAT FREE GIFT SCHEME WAS IN PLACE. THE THEN PAMPHLET OF FREE GIFT OF SOAP WITH JUMBO BRAND MUSTARD OIL OF DIFFERENT PACK WAS ALSO PLACED BEFORE ME IN THE AP PELLATE PROCEEDINGS. THE APPELLANT FLOATED TWO SCHEMES, ON E FOR CUSTOMERS AND OTHER FOR SHOPKEEPERS. FOR CUSTOMERS, SCHEME PE RTAINING TO SALE OF SMALL POUCHES OF 1 KG, 2 KG AND 5 KG. OF EDIBLE OI LS WAS UNDER OPERATION WHERE FREE GIFTS OF WASHING SOAP WERE GIV EN, WHILE FOR BULK PURCHASE BY SHOPKEEPERS OF BIG PACKS OF TIN AND BOX ES FREE GIFTS OF COLOR TV, MOBILE PHONE, ROOM HEATER ETC. WERE IN PL ACE. THE APPELLANT VIDE ITS LETTER DATED 30.10.2008 HAS STAT ED ABOUT SUCH SCHEMES BEFORE THE AO DURING THE COURSE OF ASSESSME NT PROCEEDINGS. 2. THE AO HAS PERUSED THE BILLS OF PURCHASE OF WASH ING SOAP FROM M/S. RATNA ENTERPRISES WARE HOUSE, JAMMU, FOR RS.46 ,09,004/- AND IT IS REFLECTED IN PARA 2.1 AND 2.2 OF THE ASSESSMENT ORDER. THE AO OBTAINED INFORMATION FROM THE BANK OF THE APPELLANT AND FOUND THAT THE PAYMENTS MADE TO M/S. RATNA ENTERPRISES THROUGH ACC OUNT PAYEE CHEQUES OF TWO BANK ACCOUNTS MAINTAINED BY THE APPE LLANT WITH J & K BANK LTD. RESIDENCY ROAD, JAMMU AND J.K. BANK GANGY AL, JAMMU. 3. THE AO HAS ALSO VERIFIED THAT CHEQUE ISSUED BY T HE APPELLANT WAS CREDITED IN THE BANK ACCOUNT NO.0076CD2084 OF M /S. RATNA ENTERPRISES WARE HOUSE JAMMU. ITA NOS. 207 & 306(ASR)/2013 17 4. M/S. RATNA ENTERPRISES HAS RAISED BILLS OF WASHI NG SOAP IN THE NAME OF APPELLANT AND ORIGINAL COPY OF WHICH WERE P RODUCED BEFORE THE AO. HOWEVER, MISTAKENLY THESE PURCHASES WERE WR ONGLY DEBITED BY THE ACCOUNTANT UNDER THE HEAD ADVERTISEMENT AND PUBLICITY UNDER THE IMPRESSION THAT THE SALES PROMOTION ITEM OF FRE E GIFTS IS SYNONYMOUS WITH ADVERTISEMENT AND PUBLICITY. 5. THE APPELLANT VIDE LETTER DATED 26.12.2008 HAS G IVEN COMPLETE INFORMATION ABOUT M/S. RATNA ENTERPRISES I.E. ADDRE SS THE NATURE OF BUSINESS, THE ORIGINAL BILLS AND RELATION WITH THE APPELLANT FIRM. 6. THE AO HAS NOT ESTABLISHED ANY RELATION OF M/S. RATNA ENTERPRISES WITH THE APPELLANT COMPANY. THE APPELLA NT PROVIDED TO THE AO COMPLETE ADDRESS OF M/S. RATNA ENTERPRISES ALONG WITH COPY OF VAT REGISTRATION, TIN NO. AND ANNUAL VAT RETURN. TH E AO HAS NOT ESTABLISHED THAT THE TRANSACTIONS WITH M/S. RATNA ARE SHAM AND BOGUS AND THE MONEY PAID BY THE APPELLANT HAS COME BACK T O THEM IN ANY FORM. 7. THE AO HAS MADE THIS ADDITION ON ERRONEOUS PRESU MPTION THAT WHEN THE APPELLANT WAS DEALING IN TRADING OF VANASP ATI GHEE, EDIBLE OIL AND MUSTARD CAKE ETC. HOW THEN CAN BE JUSTIFY T HE SALE OF WASHING SOAP. THE ADDITION IS MADE WITHOUT GOING INTO DETAI L FACTS OF THE CASE. IN VIEW OF THE ABOVE OBSERVATIONS, I FIND THAT THE ADDITIONS ARE NOT BASED ON MATERIAL EVIDENCE BUT A GUESS WORK. HENCE, IT CANNOT BE SUSTAINED AND THUS DELETED. 5. THE LD. DR RELIED UPON THE ORDER OF THE AO AND A RGUED THAT THE ASSESSEE HAS DEBITED BOGUS EXPENDITURE FOR THE REAS ONS THAT THE BILLS WHICH WERE ISSUED BY M/S. RATNA ENTERPRISES ARE MOSTLY I N SERIATUM. COPY OF BANK ACCOUNT OF M/S. RATNA ENTERPRISES SHOWS THAT CHEQUE S ISSUED BY THE ASSESSEE FIRM AND DEPOSITED IN THE SAID ACCOUNT OF M/S. RATN A ENTERPRISES HAVE BEEN WITHDRAWN ON EQUAL AMOUNT ON THE DAY OF DEPOSIT ITS ELF. THE CHEQUES THROUGH WHICH THE WITHDRAWAL HAVE BEEN MADE ARE ALS O MOSTLY IN SERIATUM ITA NOS. 207 & 306(ASR)/2013 18 WHICH SHOWS THAT NEITHER M/S. RATNA ENTERPRISES HA S ISSUED ANY CHEQUE TO ANY OTHER PERSON NOR IT HAS RECEIVED ANY CHEQUE FRO M OTHER PARTIES THAT THE ASSESSEE. PERUSAL OF THESE CHEQUES AND PAY-IN-SLIPS REVEAL THAT PERSON WHO HAS PREPARED THE CHEQUES AND THE PERSON WHO HAS DEP OSITED THESE CHEQUES AS PER PAY-IN-SLIPS IN THE ACCOUNT OF M/S. RATNA ENTER PRISES IS ONE AND THE SAME PERSON AS IS EVIDENT FROM THE HAND-WRITING ON THESE DOCUMENTS AND THE DATE OF DEPOSIT AND DATE OF WITHDRAWAL IS ALSO THE SAME, WHICH PROVES THAT IT IS ONE MAN SHOW. THE ASSESSEE HAS NOT DISCHARGED ITS O NUS TO PROVE EXPENDITURE CLAIMED AS GENUINE AND EXPLANATION HAS BEEN FOUND TO BE NOT SATISFACTORY. THE LD. DR FURTHER ARGUED THAT COPY O F THE SCHEME WAS NOT PROVIDED TO THE AO AND NO DETAILS HAVE BEEN FURNISH ED TO WHOM SUCH FREE GIFT, AS CLAIMED HAS BEEN DISTRIBUTED. THE ASSESSE E COULD NOT PROVIDE PARTICULARS OF THE PARTIES TO WHOM SUCH SALES HAVE BEEN MADE I.E. THE PARTIES TO WHOM FREE GIFTS HAVE BEEN MADE. IT IS FOR THE AS SESSEE TO PROVE THE GENUINENESS OF THE EXPENDITURE AND TO PROVIDE DETAI LS TO THE AO, WHICH HAS NOT BEEN DONE IN THE PRESENT CASE. THEREFORE, IN T HE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) IS NOT AT ALL JUSTIFIED IN REVERSING THE ORDER OF THE ASSESSING OFFICER BY ACCEPTING THE EXPLANATION OF THE ASSESSE E THAT THE ASSESSEE HAS OBTAINED THE BILLS, AS MADE THE PAYMENT THROUGH CHE QUES A/C PAYEE CHEQUES. THE PAYMENT THROUGH A/C PAYEE CHEQUE IS NOT SACROSA NCT IS A SETTLED LAW. ITA NOS. 207 & 306(ASR)/2013 19 THEREFORE, THE LD. DR PRAYED TO REVERSE THE ORDER O F THE LD. CIT(A) AND UPHOLD THE ORDER OF THE A.O. 6. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND THE ORDE R OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT, AS IS EVIDENT FROM THE ORDER OF THE AO AND THE ARGUMENTS MADE BY THE LD. DR THAT MOST OF THE BILLS ISSUED BY M/S. RATNA ENTERPRISES ARE IN SERIATIM, CHEQUES ISSUED BY THE ASSESSEE FIRM WHICH WERE DEPOSITED IN THE SAID ACCOUNT OF M/S. RATNA ENTERPR ISES, WERE WITHDRAWN OF EQUAL AMOUNT ON THE SAME DATE, CHEQUES AND PAY-IN-S LIPS HAVE BEEN PREPARED BY ONE AND SAME PERSON IN ONE HAND-WRITING. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT REBUTTED THESE ALLEGATIONS AND FAC TS ON RECORD AND NO MATERIAL REBUTTING THE SAID FINDINGS OF THE AO HAVE BEEN BROUGHT ON RECORD BEFORE THE LD. CIT(A) AND EVEN BEFORE US. 7.1. AS REGARDS THE CLAIM OF THE ASSESSEE THAT THE DISTRIBUTION OF GIFTS WERE MADE FREE OF COST, NO IDENTITY OF THE CUSTOMERS HAV E BEEN PLACED ON RECORD, EITHER BEFORE THE AO OR BEFORE THE LD. CIT(A) OR EV EN BEFORE US. THEREFORE, IN THE FACTS AND CIRCUMSTANCES, OBTAINING BILLS FR OM PARTIES, IN THE FACTS AND CIRCUMSTANCES, AS MENTIONED HEREINABOVE AND PAYMENT THROUGH CHEQUES BY THE PARTY IS NOT SACROSANCT AND FURNISHING THE PART ICULARS IS NOT ENOUGH, AS ITA NOS. 207 & 306(ASR)/2013 20 HELD BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. PRECISION FINANCE PVT. LTD. REPORTED IN 208 ITR 465 AND HONB LE SUPREME COURT, IN THE CASE OF KACHWALA GEMS VS. JCIT REPORTED IN 288 ITR 10. IN THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) IS NOT JUSTIFIED IN ACCEPTING THE TECHNICAL RULE OF EVIDENCE AND IGNORING THE CIRCUMSTANCES, AS MENTIONED HEREINABOVE IN AOS ORDER. ACCORDINGLY, THE ORDER OF THE LD. CI T(A) IS DIRECTED TO BE REVERSED AND THAT OF THE AO IS RESTORED. THUS, BOTH THE GROUNDS OF THE REVENUE ARE ALLOWED. IN THE RESULT, THE APPEAL OF T HE REVENUE IS ALLOWED. 7, NOW, WE TAKE UP THE APPEAL OF THE REVENUE IN ITA NO.306(ASR)/2013. THE BRIEF FACTS AS PER AOS ORDER ARE REPRODUCED FO R THE SAKE OF CONVENIENCE AS UNDER: WHILE GOING THROUGH THE SCHEDULE-2 FOR VALUE OF FR INGE BENEFIT IT IS OBSERVED THAT UNDER THE HEAD SALES PROMOTION THE AS SESSEE HAS SHOWN ONLY EXPENDITURE OF RS.2,31,247/- AND RS.2,31,271/- . HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS UNDER THE INCO ME TAX ACT, IT HAS BEEN NOTICED THAT IN ADDITION TO THESE EXPENDITURES MADE ON SALE PROMOTION, THE ASSESSEE HAS ALSO DEBITED AN EXPENDI TURE OF RS.46,09,004/- IN THE TRADING ACCOUNT OF M/S. RAMA ENTERPRISES, WARE HOUSE, JAMMU. KEEPING IN VIEW THE DETAILED DISCUSSI ON AS HELD IN THE ASSESSMENT ORDER FRAMED UNDER INCOME TAX ACT, THE S AME AMOUNT IS TAKEN AS SALE PROMOTION ON PROTECTIVE BASIS AS PER THE PROVISIONS OF SECTION 115WB(2)(D) OF THE INCOME TAX ACT, 1961 AND 20% OF IT IS CHARGED TO FRINGE BENEFIT TAX WHICH WORKS OUT TO RS .9,21,800/-. 8. BEFORE, THE LD. CIT(A), THE ASSESSEE MADE THE SU BMISSIONS AND THE LD. CIT(A) DELETED THE SAME VIDE PARAS 4.1 & 4.2 AS UND ER: ITA NOS. 207 & 306(ASR)/2013 21 4.1. THE ADDITION OF RS,46,09,004/- HAS BEEN DELET ED IN THE QUANTUM APPEAL FOR THE ASSESSMENT YEAR 2006-07. THEREFORE, FRINGE BENEFITS TAX CHARGE ON 20$ OF RS.46,09,004/- WILL NOT SURVIVE. T HE ADDITION ON THIS ACCOUNT IS THUS DELETED. 4.2. THE OTHER ADDITION ON ACCOUNT OF INTEREST U/S 115WJ(4) AND 115 WJ(5) FOR RS.4,29,306/- AND RS.1,00,302/- RESPECTIV ELY WILL ALSO NOT SURVIVE BEING CONSEQUENTIAL IN NATURE. 9. THE LD. DR, RELIED UPON THE ORDER OF THE A.O. 10. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD. CIT(A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE LD. COUNSEL FOR THE ASSESSEE BEFORE THE LD. CIT (A) HAS SUBMITTED THE DEFINITION OF SALES PROMOTION AND THE DECISION OF THE HONBLE DELHI COURT IN THE CASE OF T & T MOTORS LTD. VS. ACIT, IN INCOME TAX APPEAL NO.899 OF 2010 DECIDED ON 24.01.2012 AND REQUESTED THAT THE SAID PROVISIONS OF FBT ARE NOT APPLICABLE ON THE ASSESSEE, WHEREAS THE LD. CIT(A) HAS DELETED THE ADDITIONS. SINCE THE ADDITIONS HAVE BEEN DELETED IN QUANTUM APPEAL BY THE LD. CIT(A), BUT NOW THE QUANTUM APPEAL DECIDED BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE HAS BEEN REVERSED BY OUR OR DER OF EVEN DATE AND THEREFORE, THIS ORDER OF THE LD. CIT(A) WILL NOT S URVIVE. BUT AT THE SAME TIME, THE LD. CIT(A) HAS NOT DECIDED THE ISSUE ON MERITS. THEREFORE, IT WILL BE IN THE INTEREST OF JUSTICE, IF THE MATTER IS SET ASIDE TO THE LD. CIT(A), WHO WILL ITA NOS. 207 & 306(ASR)/2013 22 DECIDE THE ISSUE ON MERITS, KEEPING INTO CONSIDERAT ION THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LD. CIT(A) AND OUR ORDER IN QUANTUM APPEAL IN ITA NO.207(ASR)/2013 OF EVEN DATE, BUT BY AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, THE GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.207(ASR)/2013 IS ALLOWED AND THE APPEAL OF THE REVENUE IN ITA NO.306 (ASR)/2013 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH FEBRUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28TH FEBRUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. J.K. OIL INDUSTRIES TRADING WING, GANGYAL, JAMMU. 2. THE DY. CIT,CIR.1, JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR