Modinagar Rolls Ltd., Uttar Pradesh V. Addl. CIT, Ghaziabad

ITA 333/DEL/2015

• Counselvise Citation: 33320114 RSA 2015
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 15-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: O P SAPRA; PANKAJ GUPTACA
• Keywords: Depreciation; Search and seizure
• Section: 234B; 133(6); 131; 68; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. H. S. SIDHU , JM ITA NO. 333/DEL/2015 : ASSTT. YEAR : 2010 - 11 MODINAGAR ROLLS LTD., MAJOR ASHA RAM TYAGI ROAD, MODINAGAR, GHAZIA BAD VS ADDITIONAL COMMISSIONER OF INCOME TAX , RANGE - 1 , GHAZIABAD (APPELLANT) (RESPONDENT) PAN NO. A ABCM0137C ASSESSEE BY : SH O. P. SAPRA, ADV. & PANKAJ GUPTA,CA REVENUE BY : SH . P. DAM KANUNJNA, SR. DR DATE OF HEARING : 13 . 05 .20 15 DATE O F PRONOU NCEMENT : 07 .08 .2015 ORDER PER N.K . SAINI , A.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 13.11.2014 OF THE L D. CIT(A) , GHAZIABAD . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THAT THE LEAR NED ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE - 1, GHAZIABAD HAS ERRED IN LAW BY MAKING AN ADDITION OF RS. 1,90,00,000/ - TO THE INCOME OF THE ASSESSEE S COMPANY BEING ISSUED CAPITAL U/S 68 OF THE INCOME TAX ACT, 1961. 2. THAT THE LEARNED ASSESSING OFFICE R HAS ERRED IN LAW AND FACTS OF THE CASE IN MAKING AN ADHOC ADDITION OF RS. 500,000/ - IN THE INCOME OF THE APPELLANT FOR THE PERSONAL ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 2 USE OF VEHICLES AND RS. 46,532/ - FOR THE DEPRECIATION AS DISALLOWED ON THESE VEHICLES. 3. THAT THE LEARNED AO HAS ERRED I N LAW AND FACTS OF THE CASE IN NOT CONSIDERING THE VARIOUS DETAILS, PLEADINGS AND WRITTEN SUBMISSIONS MADE FROM TIME DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. THAT THE INTEREST AS CHARGED UNDER SECTION 234B AND 234C IS ILLEGAL ON VARIOUS FACTUAL AND LEGAL GROUNDS. 5. THAT THE DEMAND OF RS. 95,22,541/ - CREATED, PURSUANT TO THIS ASSESSMENT WHICH IS A DISPUTED DEMAND, BE KINDLY STAYED TILL DISPOSAL OF THE APPEAL. 6. THAT THE SEVERAL OBSERVATION AS MADE AND INFERENCES DRAWN ARE UNTENABLE, INCORRECT, UN WARRANTED AND UNCALLED FOR. 7. THAT THE APPELLANT MAY TAKE ANY OTHER GROUND OR GROUNDS AT THE TIME OF HEARING OF APPEAL WITH THE KIND PERMISSION OF THE LEARNED ITAT. 3. GROUND NOS. 3, 5, 6 & 7 ARE GENERAL IN NATURE SO DO NOT REQUIRE ANY COMMENTS ON OU R PART. 4. VIDE GROUND NO. 1 THE GRIEVANCE OF THE ASSESSEE RELATES TO THE CONFIRMATION OF ADDITION OF RS. 1,90,00 , 0 00 / - MADE BY THE AO U/S 68 OF THE INCOME TAX ACT, 1961 ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 3 (HEREINAFTER REFERRED TO AS THE ACT) ON ACCOUNT OF SHARE CAPITAL. 5 . FACTS RELATED T O THIS ISSUE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME THROUGH E - FILING ON 22.09.2010, DECLARING AN INCOME OF RS. 30,77,084/ - . LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT TH E ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY FROM M/S SHALINI HOLDINGS LTD. TO THE TUNE OF RS. 1,70,00,000/ - AND FROM M/S APOORVA LEASING FINANCE AND INVESTMENT CO. LTD. OF RS. 20,00,000/ - AS PER FOLLOWING DETAILS: M/S SHALINI HOLDINGS LTD. RS.30,00, 000/ - VIDE CH. NO.240580 AXIS BANK, KAROL BAGH, NEW DELHI RS.30,00,000/ - VIDE CH.NO.240581 - DO - RS.30,00,000/ - RTGS DATED 29.08.2009 - DO - RS.20,00,000/ - RTGS DATED 03.09.2009 - DO - RS.20,00,000/ - RTGS DATED 16.02.2010 AXIS BANK, 78, OLD RAJINDER NAGAR, NEW DELHI RS.40,00,000/ - RTGS DATED 24.02.2010 - DO - RS.1,70,00,000/ - M/S APOORVA LEASING FINANCE AND INVESTMENT CO. LTD. RS.20,00,000/ - RTGS DATED 13.08.2009 AXIS BANK, KAROL BAGH, NEW DELHI ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 4 6 . THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE AD DITION OF AFORESAID SHARE APPLICATION MONEY MAY NOT BE ADDED IN THE HANDS OF THE ASSESSEE BECAUSE THEIR CREDITWORTHINESS HAD NOT BEEN FOUND WORTHWHILE AND ENQUIRY REPORT RECEIVED FROM THE INVESTIGATION UNIT, DELHI IN EARLIER YEAR H AS PROVED THAT THE ENTRY IS RECEIVED FROM THE PROFESSIONAL ENTRY PROVIDER. IN RESPONSE, THE ASSESSEE SUBMITTED AS UNDER: SHARE CAPITAL: REGARDING THE SHARE CAPITAL ISSUED TO M/S APOORVA LEASING FINANCE AND INVESTMENT CO. LTD. AND M/S SHALINI HOLDINGS LTD., THE ASSESSEE HAS TO PR OVE THREE THINGS AS UNDER: I) IDENTITY II) CREDITWORTHINESS III) MODE OF TRANSACTIONS I) REGARDING THE IDENTITY OF THE COMPANIES, THE ASSESSEE ALREADY FURNISHED THE COPY OF INCOME TAX RETURN ACKNOWLEDGEMENT FOR BOTH THE COMPANIES WITH THEIR PAN NO. WHICH CLEARLY PROVE THE IDENTITY OF THE COMPANIES. II) REGARDING CREDITWORTHINESS, THE ASSESSEE HAS ALREADY FILED BALANCE SHEET OF BOTH THE INVESTOR COMPANIES. WHICH SHOWS THE SHARE CAPITAL AND FREE RESERVES OF M/S APOORVA LEASING FINANCE AND INVESTMENT CO. LTD. WORTH RS. 119,81 ,45,000/ - AND THE SHARE CAPITAL AND ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 5 FREE RESERVES OF M/S SHALINI HOLDINGS LTD. WORTH RS. 124,87,30,000/ - . THE BALANCE SHEET OF BOTH THE COMPANIES HAS ALREADY FILED AND IS AVAILABLE ON RECORD FROM THE COMPANIES HAS ALREADY FILED AND IS AVAILABLE ON RECORD F ROM PAGE NO. 14 TO PAGE NO. 78. III) ALL THE RECEIPTS OF SHARE CAPITAL BY THE ASSESSEE COMPANY IS THROUGH ACCOUNT PAYEE CHEQUES/DEMAND DRAFT/RTGS AND COPIES OF BANK ACCOUNT OF BOTH THE INVESTMENT COMPANIES ARE ALREADY FILED AND IS AVAILABLE ON RECORD FORM PAGE 14 TO PAGE 78. IN THE ABOVE LIGHT THE IDENTITY, CREDITWORTHINESS, AND MODE OF TRANSACTION STANDS PROVED AS PER LAW. 7 . THE AO OBSERVED THAT THE ASSESSEE ONLY RELIED UPON THE PAN NO. FOR THE IDENTITY OF THE SHARE APPLICATION MONEY SUBSCRIBERS, BALANCE SHEET AND ACCOUNT PAYEE CHEQUE S FOR CAPACITY AND GENUINENESS OF THE AFORESAID PARTIES. HE FURTHER OBSERVED THAT HE HAD COMPLETED AN ASSESSMENT OF M/S PARSANDI BIOTECH PARK PVT. LTD., SHASTRI NAGAR, MEERUT WHEREIN SHARE CAPITAL OF RS. 1,00,00,000/ - SUBSCRIB ED BY M/S SHALINI HOLDINGS LTD. WAS HELD TO BE BOGUS. THE AO OBSERVED THAT ON ENQUIRY, IT WAS FOUND THAT NONE OF THE DIRECTORS WAS AVAILABLE ON THE GIVEN ADDRESS OF THE AFORESAID COMPANIES AND BOTH WERE ALSO NOT ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 6 FUNCTIONING AND THAT THE NEIGHBOURS WERE ALS O NOT AWARE OF THESE COMPANIES. THE AO EXTRACTED THE FOLLOWING TABULAR MATRIX IN RESPECT OF BOTH THE COMPANIES: S. NO. NAME OF COMPANY RETURNED INCOME (IN RS.) PAID UP CAPITAL (IN RS.) SHARE PREMIUM CAPITAL (IN RS.) INVESTMENT MADE IN THE ASSESSEE CO. (IN RS.) NO. OF OTHER COS. WHEREIN INVESTMENT MADE. TOTAL INVESTMENT IN OTHER COS. (IN RS.) 1. M/S APOORVA LEASING FINANCE & INVESTMENT CO. LTD. 82,225 19.97 CRORES 99.88 CRORES 20 LACS 129 118.70 CRORES 2. M/S SHALINI HOLDINGS PVT. LTD. 1,29,653 12.75 CROR ES 112.12 CRORES 1.70 CRORES 164 106.10 CRORES 8. ON THE BASIS OF AFORESAID TABLE, THE AO OBSERVED THAT IT WAS IN COMPREHENSIBLE AS TO HOW THE ABOVE COMPANIES WITH MEAGER INCOME FROM UNKNOWN OPERATIONS WERE ABLE TO MAKE HUGE INVESTMENT IN NUMEROUS OTHER COMPANIES LOCATED ALL OVER THE COUNTRY AND WHAT WAS THE SOURCE OF FINANCE OF THOSE COMPANIES WHEN NOT AN IOTA HAS COME FROM ANY RECO GNIZED AND CREDIBLE INSTITUTION? THE AO POINTED OUT THAT THE COPIES OF BANK ACCOUNT OF THOSE TWO COMPANIES REFLECTED THAT A LL THE MONEY WAS THROUGH A DHANGURU FINANCE COMPANY, THE IDENTITY AND CREDITWORTHINESS OF WHICH WAS AGAIN A GREY AREA AND THE ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 7 ASSESSEE HAD UTTERLY FAILED TO SUBSTANTIATE THE CREDITWORTHINESS OF THESE COMPANIES WITH CORROBORATING EVIDENCES. THE AO ALSO POIN TED OUT THAT ONE INCOME TAX INSPECTOR, NAMELY, SH. VIRENDER SINGH WAS DEPUTED TO SERVE THE SUMMONS TO THE M.D OF TWO COMPANIES AND HE REPORTED TO HAVE FOUND NONE RELATED TO THE COMPANIES AT THE GIVEN ADDRESSES. THE AO AGAIN ASKED THE ASSESSEE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION S, T HE A SSESSEE FILED THE CONFIRMATIONS AND INCOME TAX PARTICULARS. THE AO WAS OF THE VIEW THAT FURNISHING OF PAN WAS NOT A BAROMETER OF UNASSAILABLE IDENTITY OF A PERSON GIVI NG HIM IMMUNITY FROM ANY PROBE AND THAT THE SUCH COMPANIES OR CONCERNS WERE QUOTED, IN COMMON PARLANCE, AS PAPER COMPANIES AND OFTEN MISUSED FOR MONEY LAUNDERING AND ROUTING OF UNACCOUNTED FUNDS. THE AO HELD THAT M/S SHALINI HOLDINGS LTD. AND M/S APOORVA L EASING FINANCE & INVESTMENT CO. LTD. WERE ONLY THE NAME LENDER COMPANIES AND THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS WERE NOT ESTABLISHED IN VIEW OF THE FOLLOWING: 1. AS PER INVESTIGATION BY I.T. DEPARTMENT THE ABOVE NAMED COMPANIES HA VE BEEN PROVED TO BE ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 8 ENGAGED IN MONEY LENDING BUSINESS AND THE MAIN ENTRY OPERATOR IS VIRENDRA KUMAR JAIN. 2. COMPANY WAS NOT AVAILABLE AT THE GIVEN ADDRESSES, MEANS COMPANY IS NOT VERIFIABLE AT THE GIVEN ADDRESS. 3. BANK ACCOUNT, COPY OF ITR, BALANCE SHE ET ETC. OF THE ABOVE - NAMED COMPANIES IS NOT FILED BY ASSESSEE COMPANY TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. 4. ASSESSEE COMPANY IS NOT A PUBLIC LIMITED CO. AND NOT OFFERED ITS SHARE TO GENERAL PUBLIC AND IT IS NOT CLEAR AS TO HOW INVESTMENT COMPANIES CONTACTED TO ASSESSEE COMPANY FOR INVESTMENT IN SHARES. 9. THE AO ACCORDINGLY MADE THE ADDITION OF RS. 1,90,00,000/ - U/S 68 OF THE ACT. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: SUMATI DAYAL 214 ITR 801 (SC) MACDOWEL L & CO. 154 ITR 148 (SC) AZADI BACHAO ANDOLAN 263 ITR 706 (SC) AVARSALE AUTOMATION LTD. 266 ITR 178 (KAR.) NIVEDAN VANIJYA NIYOJAN LTD. 263 ITR 623 (CAL) GYAN CHAND ANIL KUMAR 251 ITR 559 (MP) HINDUSTAN TEA TRADING CO. LTD. 263 ITR 289 (CAL) SOPHIA FINANCE LTD. 205 ITR 95 (DEL) (FB) RAM LAL AGGARWAL 280 ITR 547 (ALL) PRECISION FINANCE (P) LTD. 208 ITR 465 (CAL) ANIL RICE MILL 282 ITR 236 (ALL) ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 9 CIT VS M/S NOVA PROMOTERS & FINLEASE PVT. LTD., ITA NO. 342 OF 2011 (DEL) 10. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: (I) ASSESSEE COMPANY ON 24 TH DECEMBER 2012 HAS FURNISHED TO THE LD. ASSESSING OFFICER THE NECESSARY DETAILS OF THE SHARES ISSUED WHICH INCLUDE: (A) COPY OF FORM NO. 2 I.E. RETURN OF ALLOTMENT OF SHARES A LONG WITH BOARD RESOLUTION AND NAME AND ADDRESS OF THE ASSESSEE. (B) COPY OF BALANCE SHEETS OF THE APPLICANTS. (C) COPY OF BANK STATEMENT OF THE APPLICANTS (D) COPY OF INCOME TAX ACKNOWLEDGEMENT OF THE APPLICANT. (E) COPY OF APPLICATION FORMS AS SUBMITTED BY THE APPLICANT S. (II) SO THE ASSESSEE HAD SUBMITTED THE DETAILS OF THE INVESTOR COMPANIES AND HAD DISCHARGED THE BURDEN BY PROVING THE GENUINENESS OF THE TRANSACTION BY SUBMITTING THE BANK STATEMENT, THE CREDITWORTHINESS OF THE INVESTORS BY SUBMITTING THE SET OF BALANC E SHEET OF THE INVESTOR COMPANIES AND LASTLY THE IDENTITY IS PROVED BY SUBMITTING THE DETAILS OF THEIR INCOME TAX ACKNOWLEDGMENTS. THE ASSESSEE HAD PROVED ALL THE INGREDIENTS OF SECTION 68 OF THE IT ACT, 1961, FOR PROVING THE ISSUE OF SHARE CAPITAL TO GENU INE PERSONS. ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 10 (III) HOWEVER, THE LD. ASSESSING OFFICER HAD IGNORED ALL THE NORMS AND ADDED THE SHARE ISSUED INCLUDING PREMIUM IN THE HANDS OF THE ASSESSEE COMPANY ON THE WHIMS OF THAT THESE INVESTOR S COMPANIES ARE JAMA KHARCHI COMPANIES ON THE BASIS OF SOM E REFERENCE MADE OF PREVIOUS YEAR IN THE CASE OF M/S PRASANDI BIOTECH PARK LTD. AT MEERUT JURISDICTION. (IV) THE ASSESSEE IS ENCLOSING HEREWITH THE ORDER S GIVEN BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 23, NEW DELHI IN WHICH THESE INVE STOR COMPANIES ARE SCRUTINIZED AFTER THE INCOME TAX RAID ON THEM AND BEEN GIVEN A CLEAN CHIT THAT THEY ARE SIMPLY THE COMPANIES DEALING IN SHARES AND SECURITIES AND NO ADVERSE EFFECT IS GIVEN IN THEIR ASSESSMENT ORDER. (V) THE ASSESSEE IS ALSO ENCLOSING T HE LD. CIT(A) ORDER IN THE CASE OF M/S PRASANDI BIOTECH PARKS PVT. LTD. FOR ASSESSMENT YEAR 2009 - 10 IN WHICH THE FULL RELIEF WAS GIVEN BY THE LD. CIT(A ) , MEERUT. (VI) THE ASSESSEE IS ALSO ENCLOSING THE ORDER OF M/S CIT VS GANGESHWARI METAL PVT. LTD. WHICH IS SIMILAR TO THE FACTS OF THE ASSESSEE AND THIS CASE CLEARLY DISTINGUISH THE FACTS OF THE CASE WITH M/S NOVA PROMOTERS AND FINLEASE PVT. LTD. 11. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS LOVELY EXPORT (P) LTD. (2008) 216 CTR 195 (SC ) ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 11 JAYA SECURITIES LTD. VS CIT (2008) 166 TAXMAN 7 (ALL) CIT VS AKJ GRANITES (P) LTD. (2008) 301 ITR 298 (RAJ.) CIT(A) VS VALUE CAPITAL SERVICES P. LTD. (2008) 307 ITR 334 (DEL) CIT VS STELLAR INVESTMENT CO. LTD. (1991) 192 ITR 287 (DEL) CIT VS FIRST POINT FINANCE LTD. (2006) 286 ITR 477 (RAJ.) CIT VS ELECTRO POLYCHEM LTD. (2007) 294 ITR 661 (MAD.) SHOWVEEK FINANCE AND INVESTMENT PVT. LTD. VS CIT (2005) 6 MTC 951 (ITAT, LKO) JCIT(OSD) VS YUVRAJ CONSTRUCTION AND LEASING INDIA LTD. (2007) 10 MTC 271 (ITAT, LKO ) UMA POLYMERS (P) LTD. VS DCIT (2006) 100 ITD 1 (JODH) INDRADHAN AGRO PRODUCTS LTD. VS DCIT (2004) 89 TTJ 1958 (DEL) DCIT VS ARJUN COLD STORAGE AND GEN. MILLS (P) LTD. (2009) 13 MTC 1001 (ITAT, DEL) BARKHA SYNTHETICS LTD. VS ACIT (2005) 197 CTR 432 (RAJ.) ARAVALI TRADING CO. VS ITO (2010) 187 TAXMAN 338 (RAJ .) MURLIDHAR LAHORIMAL VS CIT 280 ITR 512 (GUJ.) CIT VS DAULATRAM RAWATMAL (1973) 87 ITR 349 (SC) INDIA RICE MILL VS CIT (1996) 218 ITR 508 (ALL) CIT VS JAUHARI MAL GOEL (2006) 201 CTR 54 (ALL) TOLARAM GAGA VS CIT (1966) 59 ITR 632 (ASSAM) GYAN PRAKASH BHA TIA VS ITO (2006) 8 MTC 87 (ITAT, DEL) ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 12 S. HASTIMAL VS CIT (1963) 49 ITR 273 (MAD) SAROGI CREDIT CORPORATION VS CIT 103 ITR 344 (PAT.) NEMI CHAND KOTHARI VS CIT (2004) 136 TAXMAN 213 (GUJ.) MULK RAJ VERMA VS ITO (2006) 8 MTC 671 (ITAT, LKO) ORIENT TRADING C O. LTD. VS CIT (CENTRAL) CALCUTTA 49 ITR 723 (BOM) SUNDARMAL BAGARIA VS CIT 10 CTR 349 (PAT.) ACIT VS M/S DHANVANTRI JEEWAN REKHA (P) LTD. (2005) 6 MTC 204 (ITAT, DEL.) 12. THE LD. CIT(A) ASKED THE REMAND REPORT FROM THE AO WHO REITERATED THE OBSERVATIONS IN THE ASSESSMENT ORDER. T HE ASSESSEE IN HIS REJOINDER TO THE REMAND REPORT SUBMITTED AS UNDER: THAT ALL THE INVESTIGATIONS AS MENTIONED BY THE LEARNED ASSESSING OFFICER ARE IN THE CASES OF M/S PRASANDI BIOTECH PVT. LTD. FOR A.Y 2009 - 10 WHEN THE LEARNED ASSESSING OFFICER WAS STATIONED AT MEERUT, NO SUMMON/NOTICES U/S 133(6) OR U/S 131 WERE ISSUED TO THE INVESTORS OF THE ASSESSEE, IF THE SO CALLED INVESTORS ARE NOT TRACEABLE, THEN HOW COME THE RAIDS CAN BE CONDU CTED ON THEM AND ORDER U/S 153A/153C ARE PAS SED BY THE DEPARTMENT, IN THIS CASE, THE LEARNED ASSESSING OFFICER HAS NOT GIVEN ANY OPPORTUNITY TO THE ASSESSEE NEITHER HE HAS ISSUE D ANY SUMMON U/S 133(6) ON THE VARIOUS REQUEST OF THE ASSESSEE NOR ASKED THE ASSESSEE TO PRODUCE THE INVESTOR ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 13 COMPANIES FOR VERIFICATION, THE ASSESSEE IN HIS WRITTEN SUBMISSION FILE D BEFORE YOUR HONOR ON 11.06.2013, HAS ALREADY SUBMITTED ALL THE DOCUMENTARY EVIDENCES EXPLAINING ALL THE INGREDIENTS OF SECTION 68 AND THAT IN THESE CIRCUMSTANCES, THIS REMAND REPORT IS NOTHING BUT MERELY A REPETITION OF THE ASSESSMENT ORDER. 13. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE REMAND REPORT OF THE AO OBSERVED THAT SHARE APPLICATION MONEY RECEIVED FROM M/S APOORVA LEASING FINANCE AND INVESTMENT CO. LTD. AND M/S SHALINI HOLDINGS LTD. WAS NOT PROVED GENUINE BECAUSE THEIR IDENTITY AND CREDITWORTHINESS HAD NOT BEEN PROVED AND ENQUIRY REPORT RECEIVED FROM INVESTIGATION UNIT, DELHI ARE ALSO PROVED THAT THE ENTRY WAS RECEIVED FROM THE PROFESSIONAL ENTRY PROVIDER. H E FURTHER OBSERVED THAT ON LOCAL ENQUIRIES, NO ONE CONFIRMED THE EXISTENCE OF ANY SUCH COMPANY ON THE ADDRESSES GIVEN AND THAT NOW - A - DAYS IT IS VERY EASY TO CREATE AN IDENTITY AS FAR AS FILING OF I.T RETURN, OPENING A BANK ACCOUNT AND MAINTAINING SITE/INFO RMATION ON INTERNET/SITE/ROC. THE LD. CIT(A) ALSO OBSERVED THAT FURNISHING OF PAN IS NOT A BAROMETER OF UNASSAILABLE IDENTITY OF A PERSON GIVING HIM IMMUNITY FROM ANY PROBE AND THAT THE ALLOTMENT OF PAN IS NOT ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 14 SACROSANCT AND ADEQUATE PARAMETER OF IDENTITY AND IT NEEDS TO BE STRENGTHENED AND CORRELATED WITH CREDIBLE CREDITWORTHINESS. THE LD. CIT(A) WAS OF THE VIEW THAT THE FACTS OF THE ASSESSEE CASE ARE AKIN TO THE FACTS OF CIT VS NOVA PROMOTERS AND FINLEASE PVT. LTD. RATHER THAN THAT OF CIT VS GANGESHWARI M ETALS PVT. LTD. REPORTED AT 2 0 13(1) TMI 624 (DEL) RELIED BY THE ASSESSEE. THE LD. CIT(A) FURTHER OBSERVED THAT THE FACT THAT THE ACIT, CENTRAL CIRCLE - 23, NEW DELHI HAS ACCEPTED RETURNED INCOME OF ENTRY PROVIDERS DOES NOT HELP THE CASE OF THE ASSESSEE. HE A LSO OBSERVED THAT THE TRANSACTIONS OF THE ASSESSEE WITH ENTRY PROVIDERS WERE NOT REAL TRANSACTIONS BUT ONLY PAPER TRANSACTIONS FOR WHICH THE CONDUIT COMPANIES HAD EARNED COMMISSION INCOME. THEREFORE, ACCEPTING THE RETURNED INCOME OF COMMISSION , THE ASSESSE E IN HANDS OF THE ENTRY PROVIDERS ONLY STRENGTHENS THE CONCLUSION THA T THE ASSESSEE HAD NOT BEEN ABL E TO DISCHARGE THE ONUS CAST UPON HIM U/S 68 OF THE ACT OF PROVING THE CREDIT ENTRIES FROM THESE KNOWN ENTRY PROVIDER CONCERNS AS GENUINE. THE LD. CIT(A) AL SO OBSERVED THAT THE FACTS OF THE PRESENT CASE ARE DISTINGUISHABLE FROM THE FACTS RELIED BY THE ASSESSEE IN THE CASE OF M/S PRASANDI BIOTECH PVT. LTD. WHEREIN CIT(A), MEERUT HAD GRANTED RELIEF BY FOLLOWING THE JUDGMENT OF ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 15 THE HON BLE SUPREME COURT IN THE C ASE OF CIT VS LOVELY EXPORT PVT. LTD. REPORTED AT 216 CTR 195. ACCORDINGLY, THE ADDITION MADE BY THE AO WAS CONFIRMED. 14. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FUR THER SUBMITTED THAT THE LD. CIT(A) HAD COMPLETELY IGNORED TO DEAL WITH THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE HIM WHICH HAS BEEN REPRODUCED IN PARAS 3.7 & 3.8 OF THE IMPUGNED ORDER. IT WAS FURTHER STATED THAT THE LD. CIT(A) HIMSELF ADMITTED THAT IN TH E REMAND REPORT, THE AO HAD MERELY RELIED ON THE ASSESSMENT ORDER. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TO PROVE THE SHARE APPLICATION MONEY, THE ASSESSEE HAD FURNISHED FOLLOWING DOCUMENTARY EVIDENCE BEFORE THE LD. CIT(A): A) COPIES OF FORM N O. 2 I.E. RETURN OF ALLOTMENT OF SHARES ALONGWITH BOARD RESOLUTIONS AND NAMES AND ADDRESS OF THE ALLOTTEES OF SHARES PLACED AT PAGES 182 - 188 OF THE PAPER BOOK. B) COPIES OF THE BALANCE SHEETS, BANK STATEMENTS, SHARE APPLICATION FORMS, ITRS OF M/S APOORVA LEASING FINANCE & INVESTMENT CO. LTD. PLACED AT PAGES 125 - 145. ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 16 C) COPIES OF THE BALANCE SHEETS, BANK STATEMENTS, SHARE APPLICATION FORMS, ITRS OF M/S SHALINI HOLDINGS LTD. PLACED AT PAGES 146 - 181. 15. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE AF ORESAID DOCUMENTARY EVIDENCE HAD NOT BEEN DISAPPROVED BY THE TAX AUTHORITIES, THEREFORE, THE ASSESSEE HAD DISCHARGED THE PRIMARY ONUS WHICH LAY ON IT TO PROVE THE AMOUNT PAID BY BOTH THE COMPANIES WHO HAD APPLIED FOR SHARE CAPITAL. IT WAS FURTHER STATED TH AT THE AO HIMSELF HAD REPRODUCED THE RETURNED INCOME, PAID SHARE CAPITAL ETC. OF M/S APOORVA LEASING FINANCE & INVESTMENT PVT. LTD. AND M/S SHALINI HOLDINGS LTD. WHICH REVEALED THAT IN THE YEAR UNDER CONSIDERATION THE NET OWNED FUNDS OF M/S APOORVA LEASING FINANCE & INVESTMENT PVT. LTD. WERE AT RS. 119.85 CRORES AND THAT OF M/S SHALINI HOLDINGS LTD. WERE AT RS. 124.87 CRORES AND THE INVESTMENT IN THE ASSESSEE COMPANY WAS ONLY RS. 20 LACS BY M/S APOORVA LEASING FINANCE & INVESTMENT PVT. LTD. AND RS. 1.70 CRO RES BY M/S SHAL INI HOLDINGS LTD. THE SAID FACT WAS OVERLOOKED BY THE AO WHO SIMPLY MENTIONED THE INCOME DECLARED BY THOSE COMPANIES BUT IGNORED THIS FACT THAT THE SHARE CAPITAL WAS PAID BY BOTH THE COMPANIES OUT OF THEIR CAPITAL AND NOT OUT OF THEIR INCOME . AS REGARDS TO THE REPORT OF THE INCOME ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 17 TAX INSPECTOR, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID REPORT HAD NEITHER BEEN PROVIDED NOR CONFRONTED TO THE ASSESSEE AND NO SUCH REPORT HAD BEEN ENCLOSED BY THE AO WITH THE ASSESSMENT ORDER. THERE FORE, THE OBSERVATIONS OF THE AO WERE WITHOUT ANY BASIS AND THE CASES RELIED BY HIM HAD NO APPLICATION TO THE FACTS OF THE ASSESSEE. IT WAS FURTHER STATED THAT THE ASSESSEE COMPANY IS A CLOSELY HELD PUBLIC LIMITED COMPANY AND HAS FULFILLED ALL THE PROVISIO NS PRESCRIBED TO ISSUE SHARE CAPITAL UNDER THE COMPANIES ACT AND FILED ITS RETURN OF ALLOTMENT OF SHARES IN FORM NO. 2 , COPIES OF WHICH IS PLACED AT PAGES 182 TO 188 OF THE PAPER BOOK. IT WAS FURTHER STATED THAT THE RELIANCE PLACED BY THE LD. CIT(A) IN THE CASE OF M/S NOVA PROMOTERS FINLEASE LTD. WAS MIS PLACED. IT WAS CONTENTED THAT THE SHARE APPLICANT WERE REGISTERED WITH ROC AND WERE FILING RETURN S OF INCOME , HAVING PAN S / BANK ACCOUNT, THEY FURNISHED SHARE APPLICATION FORM, MEMORANDUM OF ASSOCIATION, CERTI FICATE OF INC ORPORATION ETC. THE AFORESAID DOCUMENTARY EVIDENCE S WERE OVERLOOKED BY THE AO AND THE LD. CIT(A). IT WAS FURTHER CONTENDED THAT THE AO NEVER CALLED UPON THE ASSESSEE TO PRODUCE THE DIRECTORS OR EMPLOYEES WHICH IS EVIDENT FROM THE ORDER SHEET E NTRIES (COPY OF WHICH IS PLACED AT PAGE ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 18 NOS. 8 TO 10 OF THE ASSESSEE S PAPER BOOK). IT WAS FURTHER STATED THAT THE ASSESSMENT ORDER IN THE CASE OF SHARE APPLICANT COMPANIES HAD BEEN PASSED UNDER SECTIONS 153C/153A OF THE ACT. THEREFORE, THE ASSESSEE DISCHA RGED THE ONUS CAST UPON IT AND THE LD. CIT(A) WAS NOT JUSTIFIED IN CON FORMING THE ADDITION MADE BY THE AO. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: CIT VS VALUE CAPITAL SERVICES P. LTD. 307 ITR 334 (DEL) CIT VS STELLER INVESTMENT LTD. 192 ITR 2 87 (SC) CIT VS ELECTRO POLYCHEM LTD. 294 ITR 661 (MAD) SOPHIA FINANCE LTD. 205 ITR 98 (DEL) CIT VS OASIS HOSPITALITIES P. LTD. 333 ITR 119 (DEL) CIT VS ESPO GLOBAL INDIA LTD. 361 ITR 147 (DEL) CIT VS NIRPUMA AUTO PVT. LTD. 361 ITR 155 (DEL) PAWAN MOTORS VS CIT (2003) 131 TAXMAN 155 P.K. SETHI VS CIT 286 ITR 318 (GAU) CIT VS VACMET PACKAGING INDIA P. LTD. 367 ITR 217 (ALL) CIT VS KAMDHENU STEELS AND ALLOYS LTD. 361 ITR 220 (DEL) CIT VS FAIR FINVEST LTD. 357 ITR 146 (DEL) 16 . IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND REITERATED THE ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 19 OBSERVATIONS MADE BY THE AO AND THE LD. CIT(A). IT WAS FURTHER STATED THAT THE ASSESSEE FAILED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND GENUINENESS O F THE TRANSACTION. THEREFORE, THE ADDITION MADE BY THE AO WAS RIGHTLY CONFIRMED BY THE LD. CIT(A). 17 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN AD MITTED FACT THAT THE ASSESSEE RECEIVED A SUM OF RS. 1.70 CRORES FROM M/S SHALINI HOLDINGS LTD. AND RS. 20 LACS FROM M/S APOORVA LEASING FINANCE & INVESTMENT PVT. LTD. ON ACCOUNT OF SHARE CAPITAL. BOTH THE ABOVE SAID COMPANIES WERE REGISTERED WITH ROC AND W ERE REGULARLY ASSESSED WITH THE INCOME TAX DEPARTMENT, COPY OF ASSESSMENT ORDER OF THE ASSESSMENT YEAR 2010 - 11 OF M/S APOORVA LEASING FINANCE & INVESTMENT PVT. LTD. U/S 153C/153A IS PLACED AT PAGE NOS. 123 & 124 OF THE ASSESSEE S COMPILATION AND IN THE CAS E OF M/S SHALINI HOLDINGS LTD., THE SIMILAR DOCUMENTS ARE PLACED AT PAGE NOS. 121 & 122 OF THE ASSESSEE S PAPER BOOK WHICH CLEARLY ESTABLISHED THE IDENTITY OF BOTH THE PARTIES. THE AFORESAID PARTIES APPLIED IN PROPER APPLICATION FORM FOR ALLOTMENT OF THE S HARES OF ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 20 THE ASSESSEE COMPANY , COPIES OF WHICH ARE PLACED AT PAGE NOS. 126 AND 147 TO 152 IN THE CASE OF M/S APOORVA LEASING FINANCE & INVESTMENT PVT. LTD. AND M/S SHALINI HOLDINGS LTD. RESPECTIVELY. THE AMOUNT WAS PAID TO THE ASSESSEE THROUGH ACCOUNT PAYE E CHEQUE /RTGS WHICH IS REFLECTED IN THEIR RESPECTIVE BANK ACCOUNT STATEMENT, COPIES OF WHICH ARE PLACED AT PAGE NOS. 127 AND 153 TO 156 IN THE CASE OF M/S APOORVA LEASING FINANCE & INVESTMENT PVT. LTD. AND M/S SHALINI HOLDINGS LD. R ESPECTIVELY. BOTH THE AB OVE SAID PARTIES WERE HAVING WORTH RS. 119,85 CRORES AND RS. 124.87 CRORES RESPECTIVELY, WHICH IS EVIDENT FROM THEIR RESPECTIVE BALANCE SHEET S, COPIES OF WHICH ARE PLACED AT PAGE NOS. 136 TO 141 AND 165 TO 181 IN THE CASE OF M/S APOORVA LEASING FINANCE & I NVESTMENT PVT. LTD. AND M/S SHALINI HOLDINGS LTD. RESPECTIVELY. AFTER RECEIVING THE SHARE APPLICATION MONEY , THE SHARES WERE ALLOTTED TO BOTH THE PARTIES AND COPY OF FORM NO. 2 WAS FILED WITH REGISTRAR OF C OMPANIES WITH RESPECTIVE RESOLUTION, COP IES OF WHICH ARE PLACED AT PAGE NOS. 183 TO 188 OF THE ASSESSEE S PAPER BOOK AND THE RECEIPT OF THE REGISTRAR OF COMPANIES IS PLACED AT PAGE NO. 182 OF THE ASSESSEE S COMPILATION. FROM THE ABOVE DOCUMENTS, IT IS CLEAR THAT THE COMPANIES WHO ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 21 APPLIED FOR THE SHARES OF T HE ASSESSEE WERE INEXISTENCE , THOSE WERE ASSESSED TO TAX AND FILING THEIR REGULAR RETURN OF INCOME. THE SHARE APPLICATION MONEY WAS DRAWN FROM THEIR RESPECTIVE BANK ACCOUNT AND DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. BOTH THE COMPANIES APPLIED THE S HARES IN PROPER FORM, THE SHARES WERE ALLOTTED AND INFORMATION WAS GIVEN TO THE R EGISTRAR OF C OMPANIES AFTER ALLOTMENT OF THE SHARES ON THE BASIS OF R ESOLUTION OF BOARD OF DIRECTORS, THEREFORE, THE TRANSACTION WAS GENUINE. 18 . ON A SIMILAR ISSUE THE HO N BLE DELHI HIGH COURT IN THE CASE OF CIT VS GANGESHWARI METAL PVT. LTD. (2013) 361 ITR 10 (SUPRA) HELD AS UNDER: WHETHER AMOUNTS ARE SHOWN AS SHARE APPLICATION MONEY IT IS A SIMPLE QUESTION OF WHETHER THE ASSESSEE HAS DISCHARGED THE BURDEN PLACED UPON I T UNDER SECTION 68 OF THE INCOME - TAX ACT, 1961, TO PROVE AND ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND THE GENUINENESS OF THE TRANSACTION. IN SUCH A CASE, THE ASSESSING OFFICER CANNOT SIT BACK WITH FOLDED HANDS TILL THE ASSESSE E EXHAUSTS ALL THE EVIDENCE OR MATERIAL IN ITS POSSESSION AND THEN MERELY REJECT IT, WITHOUT CARRYING OUT ANY VERIFICATION OR ENQUIRY INTO THE MATERIAL PLACED BEFORE HIM. IT HAS BEEN FURTHER HELD AS UNDER: ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 22 THAT THERE WAS A CLEAR LACK OF INQUIRY ON THE PART OF THE ASSESSING OFFICER ONCE THE ASSESS EE HAD FURNISHED ALL THE MATERIAL . IN SUCH AN EVENTUALITY NO ADDITION COULD BE MADE UNDER SECTION 68 OF THE ACT. 19 . SIMILARLY, THE HON BLE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS EX PO GLOBAL INDIA LTD . (2014) 361 ITR 147 HAS HELD AS UNDER: THAT THE ASSESSEE HAD FURNISHED MATERIAL WHICH INCLUDED INCOME - TAX RETURNS, BALANCE - SHEETS, REGISTRAR OF COMPANIES PARTICULARS AND BANK ACCOUNT STATEMENTS. ON THE BASIS OF THESE, THE COMMISSIONER (APPEALS) HELD THA T THE SHARE APPLICATION MONEY OR THE SOURCE OF THE SHARE APPLICATION MONEY HAD BEEN SATISFACTORILY EXPLAINED. THE TRIBUNAL WAS OF THE OPINION THAT NO INTERFERENCE WAS WARRANTED HAVING REGARD TO THE FACTS OF THIS CASE. THIS WAS A PURE FINDING OF FACT. SECTI ON 68 WAS NOT APPLICABLE. 20 . WE ARE OF THE CONFIRMED VIEW THAT T HE RATIO LAID DOWN IN THE AFORESAID REFERRED TO CASES IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE BECAUSE THE ASSESSEE FURNISHED THE PAN NO. AND COPY OF INCOME TAX RETURN OF THE SHARE APPLICANTS TO PROVE THEIR IDENTITY AND FILED THE COPY OF THEIR BALANCE SHEETS TO PROVE THE CREDITWORTHINESS, SHARE APPLICATION MONEY WAS RECEIVED THROUGH BANKING ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 23 CHANNEL AND AFTER ALLOTMENT OF THE SHARES THE INFORMATION WAS FURNISHED TO THE REGISTRA R OF COMPANIES. THEREFORE, THE TRANSACTION WAS GENUINE. IN THE PRESENT CASE, THE ASSESSEE DISCHARGED THE ONUS CAST UPON IT TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE SHARE APPLICANT AND GENUINENESS OF THE TRANSACTION. THEREFORE, THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. ACCORDINGLY, THE SAME IS DELETED. 21 . THE NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE SUSTENANCE OF ADDITION OF RS. 5,00,000/ - AN ADHOC BASIS TOWARDS OUT OF CAR RUNNING & MAINTENANCE EXPENSES AND RS. 46,532/ - OUT OF DEPRECIATION OF THE CARS. 22 . FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE AO DURING THE ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE OWNED 8 VEHICLES IN ITS NAME AND DEBITED CORRESPONDING EXPENSES IN THE PROFIT AND LOSS ACCO UNT TO THE EXTENT OF RS. 10,93,514/ - , BY CONSIDERING THE TU RNOVER AND VOLUME OF BUSINESS, T HE AO CONSIDERED THE MAINTENANCE CHARGES OF VEHICLES ON HIGHER SIDE , HE ESTIMATED THE TOTAL RUNNING OF THE VEHICLES AT 21600 - 25200 KM AND WORKED OUT THE COST OF PETR OL TO RS. 1,09,200/ - BY ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 24 CONSIDERING THE AVERAGE RATE OF CONSUMPTION AT 15 KM PER LITRE AND THE RATE OF PETROL AT RS. 65 PER LITRE. HE ALSO ESTIMATED MAINTENANCE OF 6 VEHICLES @ 25000/ - PER VEHICLE AT RS. 1,50,000/ - . THE AO ESTIMATED THE EXPENDITURE OF 2 VE HICLES OF EXECUTIVE DIRECTOR AND VICE - PRESIDENT AT RS. 2,50,000/ - AND ACCORDINGLY TOTAL EXPENDITURE OF 8 VEHICLES WAS WORKED OUT AT RS. 4,00,000/ - . THE AO AFTER GIVING ANOTHER RELAXATION TO THE EXPENDITURE ON ACCOUNT OF WEAR & TEAR AT RS. 1,00,000/ - WORKED OUT TOTAL ALLOWABLE EXPENSE AT RS. 5,00,000/ - . HE DISALLOWED RS. 5,00,000/ - ON ESTIMATE BASIS OUT OF TOTAL EXPENSES OF RS. 10,93,514/ - . HE ALSO DISALLOWED PROPORTIONATE DEPRECIATION @ 15% WHICH CAME TO RS. 46,532/ - . ACCORDINGLY, DISALLOWANCE OF RS. 5,46,5 32/ - WAS MADE. 23 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: (I) THAT THE LD. ASSESSING OFFICER AS PER HIS OWN WHIMS AND FANCIES HAD ADDED RS. 5,00,000/ - ON VEHICLE EXPENSES, MAINLY ON THE CARS PROVIDED TO THE SENIOR STAFF OF THE BUSINESS AND RS. 46,532/ - ON DEPRECIATION. ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 25 (II) THAT THE COMPLETE LIST OF VEHICLES AS PROVIDED TO THE PERSONS, THEIR NAMES, DESIGNATIONS, THEIR ADDRESSES. THE DISTANCE BETWEEN THEIR RESIDENCE AND PLACE OF WORK, THEIR AREA OF WORK IN WHICH THEY TRAVEL AND APPROXIMATE DISTANCE COVERED BY THEM ALONGWITH THE EXPENDITURE VEHICLE WISE IS PLACED HEREWITH. (III) THAT THE COMPLETE BOOKS OF ACCOUNTS ARE PROPERTY AUDITED AND VOUCHED AND THERE IS NO DISPUTE ABOUT THEIR QUALITY AND GENUINENESS OF THE BOOKS OF ACCOUNTS. MOREOVER THESE BOOKS OF ACCOUNTS ARE DULY PRODUCED BEFORE THE LD. ASSESSING OFFICER AND AT NO INSTANCE HE HAS POINTED OUT ANY DISCREPANCY NOR HE HAS REJECTED THE BOOKS OF ACCOUNT. MOREOVER, THE LD. AO HAS HIMSELF QUOTED THAT AFT ER VERIFICATION OF THE SALES AND THE PURCHASES MADE BY THE COMPANY AND THE CLAIM OF EXPENSES NOTHING ADVERSE HAS BEEN NOTICED AND AS SUCH, THE TRADING RESULTS ARE ACCEPTED. (IV) THAT ALL THE VEHICLE EXPENSE ARE FULLY VOUCHED, AUDITED AND SUPPORTED. THAN ANY KIND OF ADDITION BASED ON ANY KIND OF PRESUMPTION OR ASSUMPTION BASED ON SOME SELF COOKED FORMULAS AND CALCULATIONS ARE NOT CORRECT, TRUE AND MATCH WITH THE RECORDS. (V) THAT UNDER THESE CIRCUMSTANCES WHEN THE BOOKS OF ACCOUNTS ARE FULLY VOUCHED, AND NO DISCREPANCY HAS BEEN POINTED OUT BY THE LD. ASSESSING OFFICER. THAN THIS ADHOC ADDITION OF RS. 5,00,000/ - IN VEHICLE RUNNING EXPENSES BASED ON SELF COOKED ASSUMPTIONS IS TOTALLY UNJUST, UNCALLED FOR AND NEEDS TO BE DELETED IN FULL. ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 26 (VI) THAT THE LD. ASS ESSING OFFICER HAS FORGOTTEN THAT THIS IS THE CASE OF A LIMITED COMPANY AND ANY ADDITION WITHOUT POINTING OUT ANY DISCREPANCY IN BOOKS OF ACCOUNTS/VOUCHERS IS NOT TENABLE IN THE EYES OF THE LAW AND THE DEPRECIATION SO DISALLOWED BY HIM ALSO NEEDS TO BE DEL ETED IN FULL. (VII) NOW LOOKING TO THE VARIOUS FACTS AND THE CONTRADICTION IN THE ORDER OF LD. ASSESSING OFFICER THE ADDITION OF RS. 5,00,000/ - IN VEHICLE EXPENSES AND RS. 46,532/ - IN DEPRECIATION NEEDS TO BE DELETED. 24 . THE LD. CIT(A) AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ADDITION MADE BY THE AO BY OBSERVING THAT THE PERSONAL USE OF VEHICLE IS NOT RULED OUT. A REFERENCE WAS MADE TO THE FOLLOWING CASE LAWS: SWADESHI COTTON MILLS CO. LTD. VS CIT 63 ITR 57 (SC) BENGAL ENAMEL WOR KS LTD. VS CIT 77 ITR 119 (SC) JITENDRA PRINTING WORKS VS CIT 128 ITR CTR 255, 226 (RAJ.) 25 . BEING AGGRIEVED THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE LD. CIT(A) HAD NOT DEALT WITH THE SUBMISSIONS MADE BY THE ASSESSEE AND FURTHER SUBMITTED THAT ALL THE EXPENSES WERE ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 27 FULLY VOUCHED AND VERIFIABLE , THE BOOKS OF ACCOUNTS WERE DULY AUDITED. THEREFORE, THE DISALLOWANCE ON MERE PRESUMPTION ON ADHOC BAS IS WAS NOT JUSTIFIED. IT WAS FURTHER STATED THAT NO SUCH DISALLOWANCE WAS MADE IN THE EARLIER YEARS. 26 . IN HIS RIVAL SUBMISSIONS THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 27 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAR EFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE MAINTAINED THE BOOKS OF ACCOUNTS WHICH WERE DULY AUDITED AND NO DISCREPANCY WAS POINTED OUT IN THOSE BOOKS OF ACCOUNTS WHICH HAD ALSO BE EN ACCEPTED BY THE AO. IN THE INSTANT CASE, THE AO ALTHOUGH PRESUMED THAT THE PERSONAL USE OF THE VEHICLE WAS NOT RULED OUT, HOWEVER NO SPECIFIC INSTANCE WAS POINTED OUT WHE RE THE VEHICLES WERE NOT USED FOR BUSINESS PURPOSES OR THOSE WERE USED FOR PERSONAL PURPOSES. IN THE INSTANT CASE, THE ASSESSEE IS A J URISTIC PERSON WHICH CANNOT USE THE VEHICLES ITSELF AND IF AT ALL THE VEHICLES WERE USED FOR THE PERSONAL PURPOSES BY THE DIRECTOR S OR THE EMPLOYEES THEN THE ITA NO.333 /DE L/201 5 MODINAGAR ROLLS LTD. 28 EXPENSES CAN BE CONSIDERED AS THE PERQUISITE IN THEIR RESPECTIVE HANDS BUT NO DISALLOWANCE CAN BE MADE IN THE HANDS OF THE ASSESSEE. MOREOVER, NO SPECIFIC INSTANCE OF PERSONAL USE WAS POINTED OUT EITHER BY THE AO OR BY THE LD. CIT(A) AND THE VOUCHERS MAINTAINED FOR THE EXPENSES HAD BEEN ACCEPTED. THERE FORE, THE DISALLOWANCE MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. ACCORDINGLY, THE IMPUGNED ADDITION IS DELETED. 28. AS REGARDS TO THE GROUND NO. 4 RELATING TO CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT, IT WAS THE COMMON CON TENTION OF BOTH THE PARTIES THAT IT IS CONSEQUENTIAL IN NATURE. WE ORDER ACCORDINGLY. 29 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ( ORDER PRON OUNCED IN THE COURT ON 07 /0 8 / 2015) . SD/ - SD/ - (H. S. SIDHU ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07 /0 8 /2015 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR