The ITO, Ward-4(3), Ahmedabad V. M/s. Freshtex India Pvt.Ltd., Ahmedabad

ITA 311/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72894 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2014
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 21-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2011
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Business expenditure; Non-deduction of tax

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO. 311/AHD/2011 ASSESSMENT YEAR 2006-07 THE INCOME TAX OFFICER WARD-4(3), AHMEDABAD VS FRESHTEX INDIA PVT. LTD. TEXCELLENCE COMPLEX, KHOKHARA MEHMEDABAD, AHMEDABAD. PAN: AAACF5396F (APPELLANT) (RESPONDENT) REVENUE BY : SH. P.L. KUREEL, JR. D.R. ASSESSEE(S) BY : SH. VIJAY RANJAN, AR / // / DATE OF HEARING : 21/01/2014 !' / DATE OF PRONOUNCEMENT : 24/01/2014 #$ #$ #$ #$/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-XX, AHMEDABAD DATED 05.11.2010. 2. THE GROUND NO. 1 OF THE APPEAL IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS 1,75,000/- MADE BY THE ASSESSING OFFICER FOR NOT DECLARING RECEIPTS FOR UTILIZATION OF PLANT AND MACHINERY BY M/S ASHIMA DYECOT PVT. LTD. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER OBSERVED THAT DURING IMMEDIATELY PRECEDING ASSESSMENT YEAR 2005-0 6, THE ASSESSEE ITA NO.311/AHD/2011 ITO, WARD-4(3) VS. FRESHTEX INDIA PVT. LTD. FOR A.Y. 2006-07 - 2 - HAD DECLARED TOTAL RECEIPTS OF RS 1,00,000/- ON ACC OUNT OF UTILIZATION OF PLANT AND MACHINERY WHEREAS DURING THE YEAR UNDER C ONSIDERATION, THE ASSESSEE HAS DECLARED TOTAL RECEIPTS OF RS 19,25,00 0/-. ON QUERY BY THE ASSESSING OFFICER, THE ASSESSEE EXPLAINED THAT THEY HAVE DISCONTINUED AGREEMENT DATED 12.09.2005 WITH M/S ASHIMA DYECOT P VT. LTD. FROM 1 ST MARCH 2006, AND THEREFORE, RECEIPTS OF RS 1,75,000 /- WAS NOT SHOWN AS INCOME. THE ASSESSING OFFICER OBSERVED THAT THE AS SESSEE HAS NOT FURNISHED THE COPY OF AGREEMENT ENTERED FOR DISCONT INUATION OF THIS TYPE OF SERVICES TO M/S ASHIMA DYECOT PVT. LTD. NOR FURN ISHED COPY OF ACCOUNT FROM THE BOOKS OF M/S ASHIMA DYECOT PVT. LT D. FURTHER THE ASSESSEE WAS INCURRING DIRECT EXPENSES SUCH AS LABO UR, STORE EXPENSES IN THE MONTH OF MARCH 2006 AND IF THE AGREEMENT OF TH E ASSESSEE WITH M/S ASHIMA DYECOT PRIVATE LIMITED WAS DISCONTINUED, THE N WHY THE ASSESSEE HAS INCURRED DIRECT EXPENSES. THEREFORE, THE ASSESSING OFFICER ADDED RS 1,75,000/- TO THE INCOME OF THE ASSESSEE A S UNDISCLOSED RECEIPT. 4. ON APPEAL, THE LD. CIT(A) OBSERVED THAT THE ASSE SSEE HAD ENTERED INTO AGREEMENT FOR LEASE OF PLANT AND MACHINERY WITH M/S ASHIMA DYECOT PRIVATE LIMITED WHICH AGREEMENT WAS RENEWED OVER A PERIOD OF TWO YEARS VIDE AGREEMENT DATED 12.09.2005. HE ALSO OBS ERVED THAT VIDE LETTER DATED 01.03.2006, THE ASSESSEE INFORMED M/S ASHIMA DYECOT PRIVATE LIMITED THAT IN VIEW OF THE FACT THAT THE J OINT VENTURE PARTNERS HAD DECIDED TO SELL THE FIXED ASSET OF THE JOINT VE NTURE AND SETTLE THE LIABILITIES OF THE JOINT VENTURE, THE DEED FOR THE RENEWAL OF LEASE DATED 12.09.2005 HAD BECOME INFRUCTUOUS. THE CIT(A) FURT HER OBSERVED THAT IT IS SEEN THAT THE LETTER WAS DULY SIGNED BY SHRI DEEPAK PARULEKAR, DIRECTOR OF M/S ASHIMA DYECOT PRIVATE LIMITED AND T HAT THE SAID LETTER WAS ALSO FILED BEFORE THE ASSESSING OFFICER. THERE FORE, HE HELD THAT IN VIEW OF THE FACT THAT THE LEASE AGREEMENT HAD BEEN TERMINATED, THE ITA NO.311/AHD/2011 ITO, WARD-4(3) VS. FRESHTEX INDIA PVT. LTD. FOR A.Y. 2006-07 - 3 - ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD EARNED INCOME OF RS 1,75,000/- AS RENT INCOME FROM THE LEASE OF SAID PLANT AND MACHINERY FOR THE MONTH OF MARCH 2006. 5. THE LD. DR ARGUED AND SUPPORTED THE ORDER OF THE ASSESSING OFFICER. HE SUBMITTED THAT NO EVIDENCE WAS FILED BEFORE THE ASSESSING OFFICER REGARDING THE TERMINATION OF THE LEASE AGREEMENT DA TED 12.09.2005 AND THAT THE CIT(A) WAS NOT JUSTIFIED IN ACCEPTING ADDI TIONAL EVIDENCE WITHOUT CALLING FOR REPORT FROM THE ASSESSING OFFIC ER AND DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. 6. THE LD. AR OF THE ASSESSEE SUBMITTED THAT IT WIL L BE SEEN FROM PAGE 14 TO 24 OF THE PAPER BOOK WHEREIN LETTER DATED 13.10. 2008 TOGETHER WITH ANNEXURES FILED BEFORE THE ASSESSING OFFICER IS PLA CED. IT WAS SUBMITTED THAT IN ANNEXURE-1 TO THE SAID LETTER DATED 01.03.2 006 WAS ANNEXED WHICH WAS LETTER WRITTEN BY M/S ASHIMA DYECOT PRIVA TE LIMITED WHEREIN THEY HAVE CONFIRMED THE TERMINATION OF THE AGREEMENT WITH EFFECT FRO M 01.03.2006. THEREFORE, THE ASSESSEE S UBMITTED THAT THE ASSESSING OFFICER WAS NOT RIGHT IN STATING THAT NO EVIDENCE FOR TERMINATION OF THE LEASE AGREEMENT DATED 12.09.2005 WAS AVAILABLE. FURTHER, IT WAS ALSO SUBMITTED THAT VIDE LETTER DAT ED 09.02.2008, THE ASSESSING OFFICER WAS INFORMED ABOUT SALE OF PLANT AND MACHINERY TO M/S ASHIMA DYECOT PRIVATE LIMITED ON 03.03.2006 AND COPIES OF INVOICE NO. FTPL/05-06/1 DATED 03.03.2006 FOR RS 26 ,01,608/- WAS ENCLOSED. THUS, ENTIRE EVIDENCE WITH REGARD TO THE TERMINATION OF THE AGREEMENT OF THE LEASE DATED 12.09.2005 WAS SUBMITT ED AND THAT THE PLANT AND MACHINERY WHICH WERE GIVEN ON LEASE TO M/ S ASHIMA DYECOT PRIVATE LIMITED WERE ULTIMATELY SOLD ON 03.03.2006 TO M/S ASHIMA DYECOT PRIVATE LIMITED AND THEREFORE, THERE WAS NO QUESTION OF RECEIVING THE LEASE RENT OF RS 1,75,000/- IN MARCH 2006 BY THE ASSESSEE, ITA NO.311/AHD/2011 ITO, WARD-4(3) VS. FRESHTEX INDIA PVT. LTD. FOR A.Y. 2006-07 - 4 - AND THEREFORE, CIT(A) WAS FULLY JUSTIFIED IN DELETI NG THE ADDITION MADE BY THE ASSESSING OFFICER. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS PERUSING ORDERS OF LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, W E FIND THAT RS 1,75,000/- WAS ADDED BY THE ASSESSING OFFICER AS UN DISCLOSED RECEIPT OF THE ASSESSEE FROM M/S ASHIMA DYECOT PRIVATE LIMITED FOR LEASE OF PLANT AND MACHINERY ON THE GROND THAT THE LEASE RENT FOR THE MONTH OF MARCH 2006 WAS NOT SHOWN BY THE ASSESSEE AS ITS INCOME. THE ASSESSEE HAD EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE LEA SE AGREEMENT DATED 12.09.2005 WAS TERMINATED WITH EFFECT FROM 01.03.20 06 AND FOR THIS, LETTER OF M/S ASHIMA DYECOT PRIVATE LIMITED FOR THE TERMINATION OF THE LEASE WAS FILED TO THE ASSESSING OFFICER ON 13.10.2 008, COPY OF WHICH IS PLACED IN THE PAPER BOOK AT PAGE 14 TO 34. FURTHER , VIDE LETTER DATED 09.02.2008 WRITTEN TO THE ASSESSING OFFICER, THE AS SESSEE HAD ALSO ENCLOSED COPY OF INVOICE DATED 03.03.2006 FOR SALE OF PLANT AND MACHINERY TO M/S ASHIMA DYECOT PRIVATE LIMITED FOR RS 26,01,608/-, COPY OF WHICH IS PLACED ON RECORD. THE LD. DR COUL D NOT CONTROVERT THESE SUBMISSIONS OF THE LD. AR OF THE ASSESSEE BY BRINGING ANY COGENT AND POSITIVE MATERIAL ON RECORD. THUS, WE FIND THA T THE LD. CIT(A) DELETED HE ADDITION OF RS 1,75,000/- ON ACCOUNT OF THE LEASE RENT FOR THE MONTH OF MARCH 2006 FOR LEASE OF PLANT AND MACHINE RY TO M/S ASHIMA DYECOT PRIVATE LIMITED BASED ON COGENT AND RELEVANT EVIDENCE WHICH WERE FILED BEFORE THE ASSESSING OFFICER. THEREFORE , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) WHICH IS HEREB Y CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 8. IN GROUND NO. 2 OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS 20,88,875/- MADE ITA NO.311/AHD/2011 ITO, WARD-4(3) VS. FRESHTEX INDIA PVT. LTD. FOR A.Y. 2006-07 - 5 - BY THE ASSESSING OFFICER ON ACCOUNT OF CLAIM OF EXC ESSIVE EXPENSES IN CERTAIN MONTHS WITHOUT DECLARING ANY INCREASE IN RE CEIPTS. 9. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER OBSERVED THAT IN THE PRECEDING ASSESSMENT YEAR 2005-06, THE ASSES SEE HAS DECLARED TOTAL RECEIPTS OF RS 96,80,000/- ON ACCOUNT OF ANCI LLARY SERVICES PROVIDED TO M/S ASHIMA DYECOT PRIVATE LIMITED AND C LAIMED OPERATIONAL EXPENSES THEREAGAINST AT RS 68,75,235/- WHEREAS DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DECLARED RECEIPTS OF RS 42,99,620/- AS AGAINST OPERATIONAL EXPENSES OF RS 6 3,88,495/-. THUS, THE ASSESSEE HAS CLAIMED EXCESS EXPENSES OF RS 20,8 8,875/- DURING THE YEAR CONSIDERATION. HE OBSERVED THAT AS THERE WAS CHANGE IN AGREEMENT AS COMPARED TO LAST YEAR, THE RATIO OF RECEIPT OF A NCILLARY SERVICES IS REQUIRED TO BE MAINTAINED AND THE RATIO OF EXPENSES ON RECEIPT OF LAST YEAR WORKED OUT TO 71% WHEREAS THE RATIO OF EXPENSE S ON RECEIPT FOR THE YEAR UNDER CONSIDERATION WORKED OUT TO 148%, HENCE, THERE WAS VAST DISCREPANCY IN THE RATIO OF EXPENSES ON RECEIPT AND IT IS CLEAR THAT THE ASSESSEE HAS NOT DECLARED PROPER BUSINESS RESULT IN THE YEAR UNDER CONSIDERATION AND HELD THAT EXCESSIVE EXPENSES OF R S 20,88,875/- WAS NOT ALLOWABLE AS BUSINESS EXPENSES. 10. ON APPEAL, THE LD. CIT(A) VACATED THE DISALLOWA NCE. HE OBSERVED THAT THE ASSESSING OFFICER HAS TREATED THIS ACTIVITY IS SOME KIND OF COMMISSION ACTIVITY AND THE ASSESSEE SHOULD ALWAYS HAVE A SURPLUS AND NEVER A LOSS. HE OBSERVED THAT IN THE LAST YEAR, T HE ASSESSEE WAS HAVING SURPLUS OF RS 28,04,765/- ON WORK DONE FOR M/S ASHI MA DYECOT PRIVATE LIMITED. HE OBSERVED THAT THE CONTENTION OF THE AS SESSEE THAT HE HAS INCURRED LOSSES DURING THE YEAR ON ACCOUNT OF ADVER SE SITUATION CANNOT BE REJECTED BY THE ASSESSING OFFICER WITHOUT MAKING INQUIRIES. HE OBSERVED THAT THE ASSESSING OFFICER HAS NOT CONS IDERED THE ITA NO.311/AHD/2011 ITO, WARD-4(3) VS. FRESHTEX INDIA PVT. LTD. FOR A.Y. 2006-07 - 6 - CONTENTION OF THE ASSESSEE THAT AS PER MUTUALLY AGR EED TERMS, PAYMENT BY M/S ASHIMA DYECOT PRIVATE LIMITED WAS TO BE MADE ON QUARTERLY BASIS. SIMILARLY, THE ASSESSEE HAD POINTED OUT CIR CUMSTANCES WHICH LED TO SHARP RISE IN EXPENSES AND DECREASE IN VOLUME. EVEN THIS PLEA WAS NOT EXAMINED BY THE ASSESSING OFFICER. HE ALSO OBS ERVED THAT THE ASSESSING OFFICER HAS NOT FOUND ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. WITHOUT FINDING SPECIFIC D EFECT IN THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE LOSSES CLAIMED BY THE APPELLANT. HE, THEREFORE, DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION MADE. 11. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE S UPPORTED THE ORDER OF THE LD. CIT(A) AND ARGUED THAT THE ASSESSEE HAD TO INCU R BOTH DIRECT AND INDIRECT EXPENSES FOR SERVICES RENDERED TO M/S ASHI MA DYECOT PRIVATE LIMITED. IT WAS THE SUBMISSION OF THE LD. AR THAT EVEN IF THERE WERE ADVERSE BUSINESS SITUATION, THE ASSESSEE HAD TO INC UR THE FIXED EXPENDITURE DURING THE YEAR UNDER CONSIDERATION AND WHICH RESULTED IN LOSS TO THE ASSESSEE. HE FURTHER SUBMITTED THAT TH E ASSESSING OFFICER HAS NOT FOUND ANY EXPENDITURE SHOWN IN THE BOOKS OF ACC OUNT TO BE BOGUS OR INFLATED. THE BOOKS OF ACCOUNT OF THE ASSESSEE HAV E BEEN ACCEPTED BY THE ASSESSING OFFICER AND NO DEFECTS HAVE BEEN POIN TED OUT THEREIN. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER MADE DISALLOWANCE OF EXPENDITURE OF RS 20,88,875/- ON ACCOUNT OF SERVICES RENDERED TO M/S ASHIMA DYECOT PRIVATE LIMI TED ON THE GROUND THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, THE ASSESSEE HAD SURPLUS OF RS 28,04,765/- AND THAT THE RATIO OF EXP ENDITURE TO RECEIPTS IN ITA NO.311/AHD/2011 ITO, WARD-4(3) VS. FRESHTEX INDIA PVT. LTD. FOR A.Y. 2006-07 - 7 - THE IMMEDIATELY PRECEDING YEAR 2005-06 WAS 71% AS C OMPARED TO 148% DURING THE YEAR UNDER CONSIDERATION. THE EXPLANATI ON OF THE ASSESSEE WAS THAT IN THE ASSESSMENT YEAR 2005-06, THE ASSESS EE HAD INCOME FROM ANCILLARY SERVICES OF RS 96,18,000/- AND DUE TO DAM AGE TO THE CLOTH RECEIVED FOR WASHING BY THE ASSESSEE FROM M/S ASHIM A DYECOT PRIVATE LIMITED, THE ASSESSEE HAD TO PAY CLAIMS OF RS 43,49 ,362/-. THUS, THE NET RECEIPT WAS RS 53,30,638/- WHEREAS IN THE ASSESSMEN T YEAR 2006-07, THE ASSESSEE HAD INCOME FROM ANCILLARY SERVICES OF RS 42,94,620/- AND CLAIMS PAID OF RS 6,125/- ONLY AND THEREFORE, THE N ET INCOME WAS RS 42,93,495/-. THE ASSESSEE HAS INCURRED EXPENSES OF RS 95,16,356/- IN ASSESSMENT YEAR 2006-07 AND THUS THE RATIO OF INCOM E TO EXPENSES IN ASSESSMENT YEAR 2005-06 WAS 56.02% AND IN THE ASSES SMENT YEAR 2006-07 WAS 56.77% AND THAT IT COMPARED VERY FAVOUR ABLY. THE ASSESSING OFFICER DID NOT FIND THE EXPLANATION OF T HE ASSESSEE AS PLAUSIBLE ONE AND HENCE DISALLOWED THE EXPENDITURE OF RS 20,88,875/-. ON APPEAL, THE CIT(A) DELETED THE ADDITION ON THE G ROUND THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE EXPLANATION OF THE ASSESSEE AND THAT HE HAS NOT FOUND ANY SPECIFIC DEFECT IN THE BO OKS OF ACCOUNT OF THE ASSESSEE. WE FIND THAT THE ASSESSEE IS A PRIVATE L IMITED COMPANY AND MAINTAINS BOOKS OF ACCOUNT WHICH ARE AIDED BY QUALI FIED CHARTERED ACCOUNTANT. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE AS SESSEE. IT IS NOT ALSO THE CASE OF THE REVENUE THAT ANY OF THE EXPENSES DE BITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE BOGUS OR INFLATED. THE ASSESSEE HAS EXPLAINED THE REASON FOR INCURRING LOSSES OF RS 20, 88,875/- DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER HA S NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE SAID EXPLANATIO N IS FALSE. WE ARE OF THE CONSIDERED OPINION THAT AS BOOK RESULTS OF THE ASSESSEE ARE NOT REJECTED BY THE ASSESSING OFFICER, THE LD. CIT(A) W AS FULLY JUSTIFIED IN DELETING THE ADDITION OF RS 20,88,875/- MADE BY THE ASSESSING OFFICER. ITA NO.311/AHD/2011 ITO, WARD-4(3) VS. FRESHTEX INDIA PVT. LTD. FOR A.Y. 2006-07 - 8 - HENCE, WE DO NOT FIND ANY GOOD AND JUSTIFIABLE REAS ON TO INTERFERE WITH THE ORDER OF THE CIT(A) WHICH IS CONFIRMED. HENCE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 13. IN GROUND NO. 3, THE GRIEVANCE OF THE REVENUE I S THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS 61,700/- ON AC COUNT OF UNDISCLOSED INCOME. 14. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS ING OFFICER OBSERVED FROM THE INFORMATION GATHERED FROM THE AIR THAT THE ASSE SSEE HAS EARNED INTEREST FROM BANK OF BARODA OF RS 61,700/- IN THE YEAR UNDER CONSIDERATION WHICH IS NOT DECLARED AS INCOME IN TH E YEAR UNDER CONSIDERATION. ON SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED CERTIFICATE FROM THE BANK WHICH STATED THAT THERE WAS NO TAX DE DUCTION ENTRY OF RS 61,700/- AS RAISED BY INCOME TAX DEPARTMENT. THE A SSESSING OFFICER DID NOT ACCEPT THIS CERTIFICATE ON THE GROUND THAT IT DID NOT ADDRESS THE QUERY WHETHER THE ASSESSEE HAS EARNED INTEREST FROM BANK AND THEREFORE HE MADE ADDITION OF RS 61,700/- TO THE INCOME OF TH E ASSESSEE OBSERVING THAT THE ASSESSEE HAD SHOWN OPENING BALANCE IN MARG IN MONEY DEPOSIT ACCOUNT OF RS 10,95,000/- IN THE FINANCIAL YEAR 200 5-06, AGAINST WHICH THE ASSESSEE HAD DECLARED INTEREST OF RS 8,195/- WH EREAS THE ASSESSEE HAS DECLARED INTEREST INCOME FROM THE SAME OF RS 1,15,9 49/- IN LAST YEAR. THUS, IT WAS CLEAR THAT THE ASSESSEE HAS NOT DECLAR ED INTEREST EARNED FROM THE BANK ON MARGIN MONEY DEPOSIT OF RS 61,700/- AND MADE AN ADDITION OF THE SAME TO THE INCOME OF THE ASSESSEE. 15. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAD BALANCE OF RS 10,95,000/- IN MARGIN MO NEY DEPOSIT ACCOUNT IN LAST YEAR ON WHICH THE ASSESSEE HAD EARN ED INTEREST OF RS 1,15,949/-. THE ASSESSING OFFICER PRESUMED THAT SU CH BALANCE ITA NO.311/AHD/2011 ITO, WARD-4(3) VS. FRESHTEX INDIA PVT. LTD. FOR A.Y. 2006-07 - 9 - CONTINUED IN THE MARGIN MONEY DEPOSIT ACCOUNT THIS YEAR ALSO. THIS PRESUMPTION OF THE ASSESSING OFFICER IS WITHOUT ANY BASIS. THE ASSESSEE HAS STATED THAT THE BALANCE IN THAT ACCOUNT HAD BEE N WITHDRAWN. THE BANKER HAD ALSO CERTIFIED THAT NO TDS OF S 61,700/- HAS BEEN MADE. THEREFORE, THE LD. CIT(A) DELETED THE ADDITION. 16. THE LD. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 17. THE LD. AR OF THE ASSESSEE ON THE OTHER HAND SU BMITTED THAT THE ASSESSEE HAD OPENED ACCOUNT WITH BANK OF BARODA, BH ADRA BRANCH, AHMEDABAD ONLY ON 08.12.2005 WHEREAS THE TRANSACTIO N IS ALLEGED TO HAVE TAKEN PLACE ON 01.10.2005 WHICH IS NOT POSSIBL E. HE SUBMITTED THAT THIS SUBMISSION WAS MADE BEFORE THE CIT(A) AS WELL AS ASSESSING OFFICER. HE THEREFORE, SUBMITTED THAT THE LD. CIT( A) HAS RIGHTLY DELETED THE ADDITION. 18. AFTER CONSIDERING THE RIVAL SUBMISSIONS, PERUSI NG THE ORDERS OF LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, W E FIND THAT THE ASSESSING OFFICER FOUND FROM AIR RECORD THAT THE AS SESSEE HAS RECEIVED INTEREST OF RS 61,700/- WHICH WAS NOT SHOWN AS INCO ME DURING THE YEAR. ON SHOW CAUSE NOTICE FROM THE ASSESSING OFFICER, TH E ASSESSEE FILED CERTIFICATE FROM THE BANK WHICH STATED THAT THERE W AS NO TAX DEDUCTION ENTRY OF RS 61,700/- AS CLAIMED BY THE INCOME TAX D EPARTMENT. THE ASSESSING OFFICER DID NOT ACCEPT THIS BANK CERTIFIC ATE ON THE GROUND THAT IT DID NOT ANSWER THE QUERY RAISED BY HIM. HE, THE REFORE, MADE ADDITION OF RS 61,700/- TO THE INCOME OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD OPENING BALANCE OF MARGIN MONEY DEPOSI T IN FINANCIAL YEAR 2005-06 OF RS 10,95,000/- AGAINST WHICH THE AS SESSEE HAD SHOWN INTEREST INCOME OF RS 1,15,949/- IN LAST YEAR COMPA RED TO RS 8,195/- IN THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSES SING OFFICER WAS OF ITA NO.311/AHD/2011 ITO, WARD-4(3) VS. FRESHTEX INDIA PVT. LTD. FOR A.Y. 2006-07 - 10 - THE VIEW THAT RS 61,700/- PERTAINED TO THE INTEREST INCOME ON MARGIN MONEY DEPOSIT ACCOUNT AND MADE THE ADDITION. THIS ADDITION WAS DELETED BY THE LD. CIT(A) ON THE GROUND THAT THE AS SESSING OFFICER HAS MADE THE ADDITION ON THE PRESUMPTION THAT MARGIN MO NEY DEPOSIT AMOUNT OF RS 10,95,000/- CONTINUED THROUGHOUT THE Y EAR WHEN IT IS THE EXPLANATION OF THE ASSESSEE THAT THE SAID AMOUNT WA S WITHDRAWN BY THE ASSESSEE. THE LD. CIT(A) HAS FOUND THAT THE ACCOUN T WITH BANK OF BARODA, BHADRA BRANCH, AHMEDABAD WAS OPENED ONLY ON 08.12.2005 AND THE TRANSACTION ALLEGED BY THE DEPARTMENT WAS D ATED 01.10.2005 WHICH WAS IMPOSSIBLE. THE LD. DR COULD NOT CONTROV ERT THIS FINDING OF THE LD. CIT(A) BY BRINGING ANY COGENT AND RELEVANT MATERIAL ON RECORD. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER . THUS, THIS GROUND OF THE APPEAL OF REVENUE IS ALSO DISMISSED. 19. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 24 TH JANUARY, 2014 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 24/01/2014 GHANSHYAM MAURYA GHANSHYAM MAURYA GHANSHYAM MAURYA GHANSHYAM MAURYA, SR. P , SR. P , SR. P , SR. P. .. .S SS S. .. .