Sh. Dhani Ram Atri Prop., Jammu & Kashmir V. The Income Tax Officer, Jammu & Kashmir

ITA 33/ASR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95049 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-10-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 20-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR TARUNDEEP KAUR
• Assessee Lawyers: TARUN BANSAL
• Keywords: Audit objection; Corroborative evidences
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.33(ASR)/2014 ASSESSMENT YEAR:2001-02 PAN: AAGFR-3700 SH.DHANI RAM ATRI PROP. VS. INCOME TAX OFFICER, UDHAMPUR GAS SERVICE, UDHAMPUR. UDHAMPUR (J&K) (APPELLANT) (RESPONDENT) APPELLANT BY:SH. TARUN BANSAL, ADV. RESPONDENT BY:DR. TARUNDEEP KAUR, DR DATE OF HEARING: 16/11/2015 DATE OF PRONOUNCEMENT: 26/11/2015 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2001-02, TAKING THE FOLLOWING AMENDED GROUNDS OF APPEAL: I) THAT THE LD. CIT(A) WRONGLY IGNORED AND UPHELD THE ADDITION OF RS.1,16,232/- ON AMOUNT RECEIVED AFTER TDS, ON A CCOUNT OF REIMBURSEMENT OF TRANSPORTATION CHARGES AND TOLL TAX, WHERE RECONCILIATION IS NOT POSSIBLE BEING BOOKS OF ACCOUNT LOST AND THE FACTS WERE TO BE VERIFIED FROM THE CI RCUMSTANTIAL EVIDENCE, PARI-MATERIA CASE, ACCOUNTS OF NEXT YEAR, DROPPING OF AUDIT OBJECTION FOR THE ASSESSMENT YEAR 2000-01 IN THE CASE OF THE APPELLANT AND ALSO NO ADDITION IS MADE IN PRECEDING AND SUCCEEDING YEAR. II) THAT THE LD. CIT(A) HAS WRONGLY LINKED THE STATEMEN TS OF ACCOUNTS OF IOC OF NEXT YEAR FILED AS CIRCUMSTANTIA L EVIDENCE FOR THE ADDITION OF RS.1,16,232/-, WITH THE ADDITIO N OF RS.1,65,232/-IN HIS ORDER IN DETERMINATION. PARA-2 PAGE-21). III) THAT THE LD. CIT(A) HAS WRONGLY UPHELD IN PURCHASES MADE BY THE AO AT RS.1,65,880/-, WHICH WILL RATHER REDUC E THE PROFITS AND NOT INCREASE THE PROFIT AND TOTALLY IGN ORED THE ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 2 ACCOUNTING PRINCIPLE AND ALSO ASSUMED THE FIGURE AT RS.1,65,232/- INSTEAD OF RS.1,65,880/- IN HIS ORDER IN DETERMINATION (PARA 2, PAGE 21). IV) THAT THE LD. CIT(A) HAS WRONGLY IGNORED THAT THE AU DITOR HAS NOT POINTED OUT ANY DEFECT IN THE AUDIT REPORT. V) THAT THE LD. CIT(A) HAS NOT APPRECIATED THAT THE BOOKS OF ACCOUNT WERE NOT REJECTED BEFORE MAKING ADDITIONS. 2. APROPOS GROUND NO.1, THE AO OBSERVED THAT AS PER CERTIFICATES IN FORM-16A ANNEXED WITH THE ASSESSEES RETURN OF INCO ME FOR THE YEAR AND SUBSEQUENT VERIFICATION OF THE CERTIFICATES RECEIVE D FROM IOC, SUCHI PIND, JALANDHAR, THE ASSESSEE HAD RECEIVED RS.14,29,439/- ON ACCOUNT OF TRANSPORT CARRIAGE CONTRACT, BUT HE HAD SHOWN ONLY RS.13,13,207/- IN THE INCOME AND EXPENDITURE ACCOUNT OF VEHICLE NOS.J K-02-5996 & JK-02- 2287, IN HIS RETURN OF INCOME. THIS SHOWED THAT THE ASSESSEE HAD NOT SHOWN FULL AND FINAL PAYMENT RECEIVED AND HAD ALSO FAILED TO JUSTIFY THE SAME. ACCORDINGLY, THE ASSESSEE WAS SHOW CAUSED AS TO WHY AN ADDITION OF RS.1,16,232/- BE NOT MADE TO HIS TOTAL INCOME. T HE ASSESSEE REPLIED THAT THE DIFFERENCE OF RS.1,16,232/- HAD ARISEN PRI MARILY DUE TO TOLL TAX PAID BY THE ASSESSEE TO THE GOVERNMENT OF J & K AT LAKHANPUR, OUT OF HIS OWN POCKET AND ENTRY OF CHERUB, OF RS.55,825/- , WHICH HAD BEEN RECEIVED IN THE FIRST WEEK OF APRIL, ON ACCOUNT OF LATE PAYMENT OF CHEQUE OF THE ACCOUNTING PERIOD 1999-2000, WHICH MAY HAVE BEEN CLEARED IN THE ACCOUNTING PERIOD 2000-01; THAT THE AO, HOWEVER , OBSERVED THAT IN THE ABSENCE OF ANY SUPPORTING EVIDENCE, OR BOOKS O F ACCOUNT, OR ANY OTHER DOCUMENTARY EVIDENCE, THE ASSESSEES EXPLANAT ION WAS NOT ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 3 JUSTIFIED; THAT ON THE BASIS OF THE ASSESSEES REPL Y, A LETTER HAD BEEN FAXED TO THE GM, IOC, SUCHI PIND, JALANDHAR, TO JUSTIFY THE SAME; AND THAT IN RESPONSE THERETO, THE IOC, VIDE THEIR LETTER DATED 19.03.2004, HAD NOT GIVEN ANY JUSTIFICATION/CLARIFICATION/CONFIRMATION OF THE ASSESSEES PLEA. SINCE THE CASE WAS GETTING TIME BARRED AND SINCE TH E ASSESSEE HAD NOT FURNISHED THE REQUISITE INFORMATION, THE AO MADE AN ADDITION OF RS.1,16,232/-. 3. THE LD. CIT(A) CONFIRMED THE ADDITION. 4. AS BEFORE THE TAXING AUTHORITIES, THE ASSESSEE H AS MAINTAINED THAT THE AMOUNT IN FORM NO.16A IS INCLUSIVE OF REIMBURSE MENT OF TOLL TAX PAID BY THE ASSESSEE OUT OF HIS OWN POCKET. ATTENTION HA S BEEN DRAWN TO APB 42 TO 44, WHICH IS A COPY OF THE ASSESSEES LETTER DATED 19.03.2004, TO THE AO. ATTENTION HAS ALSO BEEN DRAWN TO APB-45, A COPY OF IOCS LETTER DATED 19.03.2004 TO THE AO, AS PER WHICH LETTER, TO LL TAX PAID BY THE ASSESSEE AT THE BARRIER IS REIMBURSED TO HIM. THE L D. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT IN CASE THE AO WAS NOT SATISFIED WITH IOCS LETTER REGARDING REIMBURSEMENT, HE COULD HAVE EXAMI NED THE IOC MANAGER U/S 131 OF THE ACT, WHICH WAS NOT DONE. IT HAS BEEN CONTENDED THAT BEFORE THE AO, THE ASSESSEE HAD CITED A SIMILA R CASE OF M/S. JAGDAMBA GAS AGENCY, KISHTAWAR, WHO IS ALSO A DEALE R OF IOC AND THE SCRUTINY IN WHOSE CASE WAS ALSO BEING CONDUCTED BY THE ASSESSEES AO. SIMILAR TOLL TAX PAYMENT BY M/S. JAGDAMBA GAS AGENC Y, WAS ALSO BEING REIMBURSED BY THE IOC. HOWEVER, THE AO WRONGLY FAI LED TO CONSIDER THAT ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 4 CASE. IT HAS BEEN ARGUED THAT THE AO FAILED TO CONS IDER THAT WHILE REIMBURSING THE PAYMENT, IOC DEDUCTS TDS ON THE AMO UNT PAID. IT HAS BEEN SUBMITTED THAT THE AO WAS INFORMED BY THE ASSE SSEE THROUGH HIS LETTER DATED 19.03.2004 (SUPRA), THAT THE DIFFERENC E IS ON ACCOUNT OF TOLL TAX PAID TO THE GOVT. OF J & K AT LAKHANPUR. THE T OLL TAX IS PAID FROM THE VERY BEGINNING AND IT IS NOT INCLUDED IN THE TRANSP ORTATION CHARGES, AS THE TOLL TAX CHARGES ARE REIMBURSED TO THE ASSESSEE BY IOC SEPARATELY, BUT WHILE MAKING THE PAYMENT OF REIMBURSEMENT OF TO LL TAX BY IOC, THEY DEDUCT TDS ON THE AMOUNT SO PAID. IT HAS BEEN CONTE NDED THAT, HOWEVER, THE AO ILLEGALLY DID NOT CONSIDER THIS DOCUMENTARY EVIDENCE. IT HAS, FURTHER BEEN ARGUED THAT THE LD. CIT(A) WENT WRONG IN CONFIRMATION THE ADDITION WITHOUT CONSIDERING THE ABOVE. IT HAS BEEN CONTENDED THAT THE LD. CIT(A) WAS ALSO INFORMED THAT THE SAME ISSUE C AME UNDER AUDIT OBJECTION FOR THE ASSESSMENT YEAR 2000-01 IN THE CA SE OF THE ASSESSEE AND THE PROCEEDINGS WERE DROPPED; THAT THE LD. CIT( A) DID NOT TAKE COGNIZANCE OF THIS FACT, EVEN THOUGH HE TOOK NOTE T HEREOF AT PAGE 6 OF THE IMPUGNED ORDER. IT HAS FURTHER BEEN CONTENDED THAT THE ASSESSEE FILED COPIES OF ACCOUNTS OF PAYMENTS FOR OCTOBER AND NOVE MBER, 2001 AND JANUARY, 2002, ALONGWITH COPIES OF CHEQUES ISSUED B Y IOC, AS CIRCUMSTANTIAL EVIDENCE INDICATING THAT IOC IS RE IMBURSING THE OCTROI AND TRANSPORTATION CHARGES, ETC., AFTER DEDUCTING T DS. IT HAS BEEN POINTED OUT THAT THE LD. CIT(A) MADE A REFERENCE OF THIS EVIDENCE AT PAGE ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 5 7, PARA 3 OF THE IMPUGNED ORDER; AND THAT, HOWEVER, THE LD. CIT(A) ERRONEOUSLY DID NOT TAKE COGNIZANCE OF THIS EVIDEN CE. 5. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRON G RELIANCE ON THE IMPUGNED ORDER IN THIS REGARD. 6. QUA THIS ISSUE, IT IS SEEN THAT THE AO, WHILE PA SSING THE ASSESSMENT ORDER, TOOK NOTE THAT THE ASSESSEES BOO KS OF ACCOUNT WERE LOST AND THAT AN FIR STOOD LODGED IN THIS REGARD. H OWEVER, THE ADDITION IN QUESTION WAS MADE BY REJECTING THE ASSESSEES CO NTENTION THAT THE DIFFERENCE OF RS.1,16,232/- BETWEEN THE RECEIPT OF RS.14,29,439/- ON ACCOUNT OF TRANSPORT CARRIAGE CONTRACT AND THE AMO UNT OF RS.13,13,207/-, SHOWN IN THE INCOME AND EXPENDITURE ACCOUNT ACCOMPANYING THE ASSESSEES INCOME TAX RETURN, RE PRESENTED TOLL TAX PAID BY THE ASSESSEE AND REIMBURSED TO HIM BY IOC. THE ASSESSEES CONTENTION WAS REJECTED FOR THE REASON THAT THE AS SESSEE DID NOT FURNISH ANY DOCUMENTARY EVIDENCE IN SUPPORT THEREOF. THE LD . CIT(A) CONFIRMED THIS BASIS OF THE ADDITION. 7. THIS LINE OF REASONING IS ENTIRELY ERRONEOUS. IT IS NOT THE CASE OF THE AUTHORITIES BELOW THAT THE ASSESSEE INTENTIONALLY A ND MALAFIDE DID NOT PRODUCE HIS BOOKS OF ACCOUNT BEFORE THE AO. THE ASS ESSEES CONTENTION OF HIS BOOKS HAVING BEEN MISPLACED IS SUPPORTED BY THE FACTUM OF AN FIR HAVING BEEN LODGED IN THIS REGARD. IT HAS NOT BEEN QUESTIONED. THUS, OBVIOUSLY, IN THE ABSENCE OF BOOKS OF ACCOUNT, THE ASSESSEE COULD NOT HAVE PRODUCED ANY DOCUMENTARY EVIDENCE TO SUPPORT H IS CONTENTION OF ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 6 HAVING PAID TOLL TAX FROM HIS OWN POCKET AND IOC H AVING REIMBURSED HIM THIS AMOUNT. NOW, IT IS WELL SETTLED THAT IN TH E ABSENCE OF DIRECT EVIDENCE, CIRCUMSTANTIAL EVIDENCE IS THE BEST EVIDE NCE. THE ASSESSEE, IN SUPPORT OF HIS CLAIM, PRODUCED THE FOLLOWING CIRCUM STANTIAL EVIDENCE: I) REFERENCE TO THE SIMILAR SCRUTINY CASE OF M/S. J AGDAMBA GAS AGENCY, KISHATWAR, HANDLED BY THE ASSESSEES AO HI MSELF. II) IOCS LETTER DATED 19.03.2004 ADDRESSED TO THE AO SUPPORTING THE ASSESSEES CASE. III) THE FACTUM OF DROPPING OF PROCEEDINGS IN THE ASSESS EES CASE, FOR THE ASSESSMENT YEAR 2000-01, WHERE AN AUDIT OBJ ECTION WAS RAISED, UNDER SIMILAR CIRCUMSTANCES. IV) ACCOUNTS OF PAYMENTS FOR OCTOBER & NOVEMBER, 20 01 AND JANUARY, 2002 ALONGWITH COPIES OF CHEQUES ISSUED BY IOC, INDICATING THAT IOC WAS REIMBURSING TO THE ASSESSE E, THE OCTROI AND TRANSPORT CHARGES, ETC., AFTER DEDUCTIN G TDS. HOWEVER, NEITHER OF THE AUTHORITIES BELOW CONSIDE RED ANY OF THE CIRCUMSTANTIAL EVIDENCE PRODUCED BY THE ASSESSEE. 8. IN CHIRANJI LAL STEEL ROLLING MILLS VS. CIT, 8 4 ITR 222 (P&H), IT WAS HELD THAT WHERE BOOKS OF ACCOUNT ARE LOST AND T HERE IS NO DIRECT EVIDENCE, THE ASSESSMENT IS TO BE DONE THROUGH CIRC UMSTANTIAL EVIDENCE. 9. IN KEEPING WITH THE ABOVE, I REMIT THIS ISSUE TO THE FILE OF THE AO, TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, ON CONSID ERING THE ABOVE EVIDENCE PRODUCED BY THE ASSESSEE. THE ASSESSEE WIL L BE PROVIDED DUE AND ADEQUATE OPPORTUNITY OF HEARING BY THE AO AND THE ASSESSEE WILL CO- OPERATE IN THE PROCEEDINGS BEFORE THE AO. ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 7 10. ACCORDINGLY, FOR STATISTICAL PURPOSES, GROUND N O.1 IS TREATED AS ACCEPTED. 11. APROPOS GROUND NOS. 2 & 3, THE AO OBSERVED THAT AS PER VERIFICATION AND COPY OF PURCHASE ACCOUNT RECEIVED FROM IOC, SUCHI PIND, JALANDHAR, THE ASSESSEE HAD REFILLED 59526 GA S CYLINDERS, WHEREAS AS PER THE RETURN FILED, HE HAD SHOWN 58722 REFILLS , AMOUNTING TO RS.1,08,88,006/- . THE AO ASKED THE ASSESSEE TO FUR NISH THE MONTH-WISE PURCHASE/SALE AND COPY OF MONTH-WISE STOCK STATEMEN T MAINTAINED BY THE ASSESSEE FOR THE RELEVANT YEAR. THE ASSESSEE SU BMITTED THAT THE TOTAL PURCHASES WERE TOTALING WRONG AND WERE NOT BASED ON FACTS. HE GAVE INSTANCES, AS PER WHICH, THE DEBIT SIDE CONTAINED E NTRIES OTHER THAN THOSE OF ACTUAL PURCHASE OF CYLINDERS. THE ASSESSEE FURTH ER STATED THAT HE HAD RECEIVED DEFECTIVE CYLINDERS IN UDHAMPUR, WHICH HA D BEEN RETURNED. HOWEVER, AS IN THE CASE OF THE OTHER ADDITION OF RS .1,16,232/-, THE AO OBSERVED THAT IN THE ABSENCE OF ANY SUPPORTING EVID ENCE, OR BOOKS OF ACCOUNT, OR ANY OTHER DOCUMENTARY EVIDENCE, THE ASS ESSEES EXPLANATION WAS NOT JUSTIFIED. HE OBSERVED THAT ON THE BASIS OF THE ASSESSEES REPLY, A LETTER HAD BEEN FAXED TO THE GM, IOC, SUCHI PIND, T O JUSTIFY THE SAME; THAT IN RESPONSE THERETO, IOC HAD INTIMATED VIDE LE TTER DATED 19.03.2004, THAT ENTRY OF RS.59,188/-, DATED 16.05.2000 AND THA T OF RS.66,645/-, DATED 18.12.2000, WERE DEBIT ENTRIES IN THE PARTYS ACCOUNT AND NOT AGAINST THE PURCHASE OF THE PRODUCTS AND THAT SIMIL ARLY, ENTRY OF RS.12,525/- WAS ALSO A DEBIT ENTRY, AND THAT THE DE TAILS OF THE ENTRIES ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 8 WERE AVAILABLE IN THE IOC, JAMMU OFFICE. ON THE B ASIS OF THIS INFORMATION FURNISHED BY IOC, THE AO RECOMPUTED TH E PURCHASES OF M/S. UDHAMPUR GAS SERVICE, UDHAMPUR, THE ASSESSEES PROP RIETORY CONCERN. THIS IS AS FOLLOWS: MONTH NO. OF CYLINDERS PURCHASE AMOUNT 4/2000 4716 7,52,000 5/2000 3816 6,56,912 6/2000 4392 8,50,000 7/2000 4688 7,05,126 8/2000 5328 9,67,900 9/2000 558 10,11,589 10/2000 4418 8,30,000 11/2000 4688 9,50,711 12/2000 6138 13,60,000 1/2001 5616 10,73,151 2/2001 4888 8,57,526 3/2001 5268 10,30,971 TOTAL 59554 1,10,45,886 ACCORDING TO THE AO, EVEN ON SUCH RECOMPUTATION, TH ERE STILL REMAINED A DIFFERENCE OF RS.1,65,880/-, I.E., (1,10,45,886 1 ,08,88,006) (CYLINDERS), AFTER GIVING CREDIT OF THE WRONG ENTRIES ON THE CRE DIT SIDE, AS INTIMATED BY IOC. AS SUCH, THE ASSESSEE WAS AGAIN ISSUED A SHOW CAUSE NOTICE DATED 22.03.2004, BUT THE ASSESSEE FAILED TO GIVE ANY EXP LANATION. THE AO, THUS, MADE THE ADDITION OF RS.1,65,880/-, AS THE DI FFERENCE BETWEEN THE PURCHASE OF THE CYLINDERS AS INTIMATED BY IOC, JAL ANDHAR AND THE PURCHASE OF CYLINDERS, AS SHOWN BY THE ASSESSEE. 12. THE LD. CIT(A) CONFIRMED THE ADDITION BY OBSERV ING AS FOLLOWS: ANOTHER ADDITION MADE BY THE APPELLANT AMOUNTING T O RS.1,65,232/- RELATES TO DIFFERENCE IN THE PURCHASE PRICE AS THE ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 9 NUMBER OF CYLINDERS SHOWN AS REFILLED BY THE APPEL LANT IN THE BOOKS OF ACCOUNT DIFFERS FROM THE STATEMENT RECEIVE D FROM IOC. THE APPELLANT HAS ARGUED THAT THE DIFFERENCE IS ON ACCO UNT OF WRONG ENTRIES AMOUNTING TO RS.2,51,084/- MADE BY THE IOC AND THIS FACT IS MENTIONED ON THE PAGE 2 OF THE ASSESSMENT ORDER. HOWEVER, ON THE PERUSAL OF THE ASSESSMENT ORDER, IT IS OBSERVED THAT THE AO HAS ALREADY GIVEN BENEFIT OF THE ENTRIES WRONGLY MADE B Y THE IOC. THE STATEMENTS OF IOC SUBMITTED BY THE APPELLANT IN SU PPORT OF ITS CLAIM DOES NOT PERTAINS TO THE YEAR UNDER CONSIDERA TION. THIS GROUND OF APPEAL IS DISMISSED. 13. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE LD. CIT(A) HAS WRONGLY LINKED THE STATEMENTS OF ACCOUNT OF IOC OF THE NEXT YEAR, FILED AS CIRCUMSTANTIAL EVIDENCE FOR THE ADDITION O F RS.1,16,232/-, WITH THE ADDITION OF RS.1,65,232/-, IN THE IMPUGNED ORDE R. IT HAS BEEN CONTENDED THAT THE ASSESSEE FILED THE STATEMENTS OF IOC OF THE NEXT YEAR, AS CIRCUMSTANTIAL EVIDENCE FOR THE ADDITION OF RS.1 ,16,232/-, BUT THE LD. CIT(A) WRONGLY LINKED THE SAME WITH THE ADDITION OF RS.1,65,232/-. 14. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER ON THIS ISSUE. 15. THE ASSESSEES CONTENTION IS FOUND TO BE CORREC T. AS PER PAGE 7 OF THE IMPUGNED ORDER, THE ASSESSEE, VIDE WRITTEN SUBM ISSIONS FILED BEFORE THE LD. CIT(A), FURNISHED COPIES OF ACCOUNT FOR OCT OBER AND NOVEMBER, 2001 AND JANUARY, 2002 ALONGWITH COPIES OF CHEQUES ISSUED BY IOC. THESE DOCUMENTS, PERTAINING TO THE NEXT YEAR, WERE FILED IN SUPPORT OF THE ASSESSEES CONTENTION CONCERNING THE ADDITION OF RS .1,16,232/-, COMPRISING GROUND NO.1 AND IT HAD NOTHING TO DO WI TH THE ISSUE PRESENTLY UNDER CONSIDERATION, I.E., THE ADDITION O F RS.1,65,232/-. IN SUPPORT OF THIS CLAIM, AGAINST THE ADDITION OF RS.1 ,16,232/-, REPRESENTING ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 10 THE DIFFERENCE IN PURCHASE OF REFILLED CYLINDERS, T HE ASSESSEE DID NOT FILE ANY STATEMENT OF IOC, WHICH DID NOT PERTAIN TO THE YEAR UNDER CONSIDERATION, I.E., ASSESSMENT YEAR 2001-02. THER EFORE, GROUND NO.2 IS ACCEPTED. 16. NOW, SO FAR AS CONCERNING GROUND NO.3, ON BEHAL F OF THE ASSESSEE, IT HAS BEEN CONTENDED THAT: I) THE AO WRONGLY MADE THE ADDITION OF RS.1,65,880/ - AS DIFFERENCE IN PURCHASE OF CYLINDERS AND ADDED THE S AME AS INCOME OF THE ASSESSEE, WHICH IS AGAINST THE PRINCI PLES OF ACCOUNTING, BECAUSE ANY ADDITION IN PURCHASES WILL DECREASE THE INCOME AND WILL NOT INCREASE THE INCOME. II) THE LD. CIT(A) HAS WRONGLY TAKEN THE ADDITION O F RS.1,65,880/- AS RS.1,65,232/-, AS AVAILABLE AT PAG E 2, PARA 2 OF THE IMPUGNED ORDER. HOWEVER, THE DIFFERENCE, W HICH COMES TO RS.648/-, IS IGNORABLE. III) IOC, IN ITS LETTER TO THE AO, MENTIONED THAT THERE ARE THREE DEBIT ENTRIES OF RS.59,188/-, RS.66,645/- AND RS.1, 25,251/- TOTALING TO RS.2,51,084/-, WHICH HAVE BEEN WRONGLY ENTERED IN THE CASE OF THE ASSESSEE. IV) IF THE AO HAD TAKEN THE FIGURE OF PURCHASE OF RS.1,11,32,324/- AND HAD REDUCED THE ABOVE THREE DE BIT ENTRIES AMOUNTING TO RS.2,51,084/- OUT OF THE ABOVE FIGURE, HE WOULD HAVE ARRIVED AT THE FIGURE OF RS.1,08,81,2 40/-; THAT IF FROM THIS FIGURE, THE AO HAD REDUCED THE FIGURE OF RS.1234/-, REPRESENTING PAYMENT OF DEFECTIVE CYLIN DERS, THE FINAL FIGURE WOULD HAVE COME TO RS.1,08,80,006/-. I T HAS BEEN CONTENDED THAT THIS FIGURE OF RS.1234/- WAS AL SO EXPLAINED TO THE LD. CIT(A), AS NOTED AT PAGE 7 OF THE IMPUGNED ORDER. THE FIGURE OF RS.1,08,80,006/- IS T HAT ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 11 SHOWN BY THE ASSESSEE IN HIS TRADING ACCOUNT. IT HA S ALSO BEEN SUBMITTED THAT THE AO HAS WRONGLY CALCULATED T HE FIGURE OF CYLINDERS AT 59,554, WHEREAS ACTUALLY, T HE CORRECT FIGURE IS OF 54514 CYLINDERS. 17. PER CONTRA, THE LD. DR HAS STRONGLY PLACED RELI ANCE ON THE IMPUGNED ORDER. IT HAS FURTHER BEEN CONTENDED THAT AS PER THE ASSESSMENT ORDER, THE NUMBER OF REFILLED CYLINDERS IS LESS AND IF THIS IS SO, THE SALES THEREOF ARE TO BE CONSIDERED. THEREFO RE, ACCORDING TO THE LD. DR, THE PROFIT WILL INCREASE. 18. IN THIS REGARD, THE ASSESSEES STAND IS FOUND T O BE CORRECT. IN THEIR LETTER DATED 19.03.2004, IOC HAD INTIMATED THE AO T HAT: ENTRY OF RS.59188, DATED 16.05.2000 AND THAT OF RS .66,645/-, DATED 18.12.2000 WERE DEBIT ENTRIES IN THE PARTYS ACCOUNT AND NOT AGAINST THE PURCHASE OF THE PRODUCTS, AND THAT SIMI LARLY THE ENTRY OF RS.12,525/- ALSO ARRIVED A DEBIT ENTRY. VIDE LETTER DATED 20.02.2004 ( AS REPRODUCED BY THE LD. CIT(A) AT PAGE 8 OF THE IMPUGNED ORDER), THE AO INFORMED THE ASSESSE E, AS PER VERIFICATION AND COPY OF PURCHASE ACCOUNT RECEIVED FROM IOC, TH E ASSESSEE HAD REFILLED 59054 CYLINDERS FOR A PURCHASE AMOUNT OF RS.1,11,32,324/-. NOW, THE AMOUNT OF RS.2,51,084/- (RS.59,188 + RS.66 ,645 + RS.1,25,251/-) REPRESENTED THE CUMULATIVE FIGURE OF THREE DEBIT ENTRIES, WHICH IOC ADMITTED TO BE DEBIT ENTRIES IN THE ACCOU NT OF THE PARTY (M/S. UDHAMPUR GAS SERVICE, UDHAMPUR, THE ASSESSEES PRO PRIETORY CONCERN) AND NOT ENTRIES AGAINST THE PURCHASE OF PRODUCTS. H AD THE AO REDUCED ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 12 THIS AMOUNT OF RS.2,51,084 FROM THE FIGURE OF RS.1, 11,32,324/-, HE WOULD HAVE ARRIVED AT THE FIGURE OF RS.1,08,81,240/ -. THE ASSESSEE HAD SHOWN AN AMOUNT OF RS.1,234/- AS PAYMENT FOR DEFECT IVE CYLINDERS. REDUCING THIS AMOUNT OF RS.1234/- FROM THE FIGURE O F RS.1,08,81,240/-, THE AO WOULD HAVE ARRIVED AT THE RESULTING FIGURE O F RS.1,08,88,006/-, WHICH WAS THE FIGURE SHOWN BY THE ASSESSEE IN THE T RADING ACCOUNT FILED ALONGWITH HIS RETURN OF INCOME. IT WAS THIS FIGURE WHICH THE ASSESSEE WAS REQUIRED TO PROVE TO BE CORRECT QUOD ERAT DEMOSTRANDUM. HOWEVER, THE AO NEVER REDUCED THIS AMOUNT OF RS.2,51,084/- FROM THE AMOUNT OF RS.1,11,32,324/-. THE LD. CIT(A) HAS WRONGLY OBSE RVED THE AO TO HAVE ALREADY GIVEN THE BENEFIT OF THE ENTRIES WRONGLY MA DE BY THE IOC. RATHER, AS NOTED, IF THE AMOUNT OF RS.2,51,084/- IS REDUCED FROM THAT OF RS.1,11,32,324/-, THE RESULTING FIGURE IS THAT OF R S.1,08,81,240/-. IF THE PAYMENT OF RS.1234/-(BENEFIT WHEREOF WAS ALSO NOT G IVEN BY THE AO), FOR THE DEFECTIVE CYLINDERS, IS SUBTRACTED THEREFROM, T HE FIGURE ARRIVED AT IS THAT OF RS.1,08,80,006/-, WHICH IS THE AMOUNT SHOWN BY THE ASSESSEE IN HIS TRADING ACCOUNT. QED. 19. THEREFORE, THE ASESSEES GRIEVANCE BY WAY OF GR OUND NO.3 IS FOUND JUSTIFIED AND IS ACCEPTED. AS SUCH, THE ADDITION OF RS.1,65,232/- STANDS DELETED. 20. THE ASSESSEES CONTENTIONS REGARDING GROUND NOS . 4 & 5 ARE ALSO CORRECT. THE LD. CIT(A) HAS ERRED IN NOT CONSIDERIN G THAT NO DEFECTS WERE POINTED OUT IN THE TAX AUDIT REPORT BY THE AUDITOR. TOO, THE LD. CIT(A) ITA NO.33(ASR)/2014 ASSESSMENT YEAR: 2001-02 13 FAILED TO OBSERVE THAT THE AO DID NOT REJECT THE A SSESSEES BOOKS OF ACCOUNT BEFORE MAKING THE ADDITIONS. ACCORDINGLY, G ROUND NOS. 4 & 5 ARE ACCEPTED. 21. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED, AS INDICATED. ORDER PRONOUNCED IN THE OPEN COURT ON 26TH NOVEMBER, 2015. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 26/11/2015 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:SHRI DHANI RAM ATARI PROP. UDHAMPUR GAS SERVICE, UDHAMPUR. 2. THE ITO, UDHAMPUR. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU 5. THE SR. DR, ITAT, ASR.