ASST CIT CIR 6(2)(2), MUMBAI V. ESSEL CORPORATE RESOURCES P.LTD, MUMBAI

ITA 3364/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0390 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 08-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice; Peak credit; Earning of tax free income; Source of fund; Onus to prove
• Section: 14A; 68; 69; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI P K BANSAL, VP & SHRI PAWAN SINGH, JM ITA NO. 1835/MUM/2017 ASSESSMENT YEAR : 2013 - 2014 ESSEL CORPORATE RESOURCES P LTD., 18 TH FLOOR, A WING, MARATHON FUTUREX, N M JOSHI MARG, LOWER PAREL, MUMBAI- 400 013 PAN AABCE0473D VS. DY. CIT 6(3)(2) (PRESENTLY ACIT 6(3)(2)) MUMBAI (APPELLANT) (RESPONDENT) ITA NO. 3364/MUM/2017 ASSESSMENT YEAR : 2013 - 2014 ACIT 6(3)(2) MUMBAI VS. ESSEL CORPORATE RESOURCES P LTD., MUMBAI PAN AABCE0473D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA REVENUE BY : SHRI ANAND MOHAN DATE OF HEARING : 13 .0 6 .2017 DATE OF PRONOUNCEMENT : 16 .0 6 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: THESE CROSS APPEALS HAVE BEEN FILED AGAINST THE ORD ER OF THE CIT(A)-12, MUMBAI, DATED 10.02.2017 FOR ASSESSMENT YEAR 20131 4. ESSEL CORPORATE RESOURCES P LTD 2 2. THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE G ROUND OF APPEAL: ADDITION U/S 68 OF THE ACT. A. THE COMMISSIONER OF INCOME-TAX (APPEALS)-12, MUMBAI (HEREINAFTER REFERRED TO AS 'THE CIT(A)) ERRED IN L AW AND FACTS IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER ('THE AO') IN MAKING AN ADDITION OF RS. 434,48,60,000/-, BEING UNSECURED LOANS RECEIVED DURING THE RELEVANT PREVIOUS YEAR, AS UNEXPLAINED C ASH CREDIT U/S 68 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED T O AS 'THE ACT') TO THE INCOME OF THE APPELLANT EVEN WHEN THE NATURE AN D SOURCE OF SUCH CREDIT STOOD DULY EXPLAINED AND PROVED. THE RE ASONS GIVEN BY HER FOR DOING SO ARE WRONG, CONTRARY TO THE FACTS O F THE CASE AND PROVISIONS OF LAW. B. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN MAKING ADDITION OF RS. 434,48,60,0007- U/S 68 OF THE ACT W ITHOUT APPRECIATING THAT THERE IS NO REQUIREMENT TO EXPLAI N 'SOURCE OF SOURCE' AND THAT NONETHELESS THE SAME WAS EXPLAINED . ADDITION DUE TO AIR MISMATCH OF RS. 41,500/- A) THE CIT(A) ERRED IN LAW AND FACTS IN UPHOLDING THE ARBITRARY ADDITION OF RS. 41 ,5007- TO THE INCOME OF THE APPE LLANT SOLELY ON ACCOUNT OF DIFFERENCE IN THE INCOME AS PER THE BOOK S OF ACCOUNTS AND THAT REFLECTING IN 26AS (AIR) DATA. THE REASONS GIVEN BY HER FOR DOING SO ARE WRONG, CONTRARY TO THE FACTS OF THE CA SE AND PROVISIONS OF LAW. B) THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS.41 ,500/- TO THE INCOME OF THE APPELLANT WITHOUT ANY EVIDENCE OF ANY REAL INCOME ACCRUED OR RECEIVED BY THE APPELLANT OR THERE BEING ANY EVIDENCE OF DEFECT IN THE BOOKS OF ACCOUNTS. WHILE THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS O F APPEAL 1. ON THE FACT AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS .6,67,296/- U/S. 37 OF THE ACT, ON ACCOUNT OF REPAIR AND MAINTENANCE EXPEN SES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS SUBMITT ED ONLY LEDGER COPY WHICH WAS NOT SUPPORTED WITH ANY BILL/VOUCHERS ESSEL CORPORATE RESOURCES P LTD 3 2. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS .11,30,242/- U/S. 37 OF THE ACT, ON ACCOUNT OF TRAVELLING, CONVEYANCE AND T ELEPHONE EXPENSES WITHOUT APPRECIATING THE FACT THAT THE ASS ESSEE HAD NOT SUBMITTED ANY DETAILS LIKE PERSON WHO HAS TRAVELLED , PURPOSE OF TRAVELLING WHICH WAS NOT SUPPORTED WITH ANY BILL/VO UCHERS 3. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LA W, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS. 2, 09,73,983/- U/S. 14A R.W. RULE 8D WITHOUT APPRECIATING THE FACT THAT INTEREST EXPENSES INCURRED WHICH ARE INDIRECTLY RELATABLE TO EARNING OF EXEMPT INCOME HAVE TO BE CONSIDERED FOR DISALLOWANC E. 3. THE FIRST GROUND IN ASSESSEES APPEAL RELATE TO SUSTENANCE OF ADDITION OF ` 434,48,60,00,000/- U/S. 68 OF THE I.T.ACT. THE BRI EF FACTS RELATING TO THIS GROUND ARE THAT DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD TAKEN UNSECURED LOANS AMOUNTING TO ` 434,48,60,000/- FROM M/S. PRIME PUBLISHING PRIVATE LTD. HE, THEREFORE, ISSUED NOTICE U/S. 142(1)TO THE ASSESSEE ASKING THE FOLLOWING: PLEASE FURNISH DETAILS ALONG WITH EXPLANATION, OF HUGE LOAN TAKEN FROM PRIME PUBLISHING PVT. LTD. WHEREAS COMPANYS CAPITAL AND RESERVES IS RS.(7,08,94,490/-) AND THERE IS NO BUSI NESS ACTIVITY OF THE COMPANY. THE COMPANY HAS ALSO DECLARED LOSS. EXPLAIN THE PURPOSE OF LOAN TAKEN AND HOW THE SAME WAS UTILIZED . THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EX PLANATION OF THE ASSESSEE EVEN THOUGH THE ASSESSEE HAS FILED LEDGER COPY OF M /S. PRIME PUBLISHING PRIVATE LTD, ALONG WITH AUDIT REPORT, BALANCE SHEET , PROFIT AND LOSS ACCOUNT AND COPY OF ITR FOR A.Y. 2013-14 TO PROVE THE IDENT ITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ASSESSING OFFI CER THEREFORE TREATED IT TO ESSEL CORPORATE RESOURCES P LTD 4 BE UNEXPLAINED CREDIT U/S. 68 AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE THE C IT(A). THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBS ERVING AS UNDER: THEREFORE, IN MY OPINION IT IS HELD THAT THOUGH T HE APPELLANT HAS EVIDENCE, THE APPELLANT HAS NOT PROVED THE CREDITWO RTHINESS OF THE LENDERS AND NATURE OF LOANS RECEIVED TO TREAT IT AS GENUINE TRANSACTIONS. THE ONUS LIES ON THE APPELLANT. UNTIL AND UNLESS IT IS PROVED THAT THE UNSECURED LOAN TRANSACTION WITHIN, GROUP CONCERNS ARE FOR GENUINE COMMERCIAL TRANSACTION IT CANNOT BE ALLOWED. APPELLANT HAS TO EXPLAIN THE SOURCE OF FUND WITHIN THE GROUP ENTITY. MERELY FILING THE COPY OF ITR ALONG WITH BALANCE SH EET, PROFIT AND LOSS ACCOUNT AND BANK STATEMENT IS NOT SUFFICIENT E SPECIALLY SO WHEN AND WHERE THE AO HAS FOUND THAT THE APPELLANT HAS N OT EXPLAINED OR PRODUCED ANY EVIDENCE TO JUSTIFY THE PURPOSE OF LOAN TAKEN AND UTILISATION OF THE SAME FOR BUSINESS PURPOSE. THOUG H IT IS NOT NECESSARY FOR THE APPELLANT TO PROVE THE SOURCE OF SOURCE IN (NORMAL CIRCUMSTANCES BUT IN THE CIRCUMSTANCES AS NARRATED ABOVE, IT IS NECESSARY FOR THE APPELLANT TO PROVIDE THE SOURCE OF SOURCE AND COMPLETE JUSTIFICATION FOR THE CREATING OF SUCH WEB OF TRANSACTION IN THE GARB OF UNSECURED LOAN. THEREFORE, THE CASE IS TO BE DEALT WITH THE PRINCIPLE OF HUMAN CONDUCT AND PROBABILITIES TH EREFORE, 1 DO NOT FIND FORCE IN THE SUBMISSION OF THE APPELLANT. ACCORDINGLY GROUND NO 1 OF THE APPEAL IS DISMISSED 4. THE LEARNED AR BEFORE US VEHEMENTLY CONTENDED TH AT THE ASSESSING OFFICER MADE THE ADDITION IN THE HANDS OF THE ASSES SEE IN RESPECT OF THE SUM OF ` 434,48,60,000/-, WHICH THE ASSESSEE HAS RECEIVED F ROM M/S. PRIME PUBLISHING PRIVATE LTD. OUR ATTENTION WAS DRAWN TO WARDS PAGE 55 OF THE PAPER-BOOK, WHICH CONTAINS THE COPY OF ACCOUNT OF M /S. PRIME PUBLISHING PRIVATE LTD. IN THE BOOKS OF THE ASSESSEE. BY REFE RRING TO THE SAID ACCOUNT IT WAS POINTED OUT THAT M/S. PRIME PUBLISHING PRIVATE LTD. WAS HAVING CREDIT BALANCE OF ` 7,92,21,18,000/- AS ON 01.04.2012 AND DURING THE Y EAR THE ESSEL CORPORATE RESOURCES P LTD 5 ASSESSEE HAD MADE A PAYMENT OF ` .6,52,61,70,000/-, WHILE THE ASSESSEE HAS RECEIVED ON DIFFERENT DATES DURING THE YEAR A SUM O F ` .434,48,60,000/- AND THE CLOSING BALANCE WAS ` 5,74,08,08,000/-. M/S. PRIME PUBLISHING PRIVATE LTD. IS A HOLDING COMPANY AND IS HAVING CURRENT ACC OUNT WITH THE ASSESSEE. ALL THE TRANSACTIONS ARE THROUGH BANKING CHANNELS. OUR ATTENTION WAS ALSO DRAWN TOWARDS THE COPY OF IDBI BANK ACCOUNT TO PROV E THIS FACT OF M/S. PRIME PUBLISHING PRIVATE LTD., WHICH IS PLACED AT PAGES 5 8 TO 65 OF THE PAPER-BOOK. FURTHER OUR ATTENTION WAS ALSO DRAWN TOWARDS COPY O F BANK STATEMENT OF THE ASSESSEE AT PAGES 66 TO 79 OF THE PAPER-BOOK. REFE RRING TO THE COPY OF FINANCIAL STATEMENTS OF M/S. PRIME PUBLISHING PRIVA TE LTD., IT WAS VEHEMENTLY CONTENDED THAT M/S. PRIME PUBLISHING PRIVATE LTD. H AS ISSUED DEBENTURES AMOUNTING TO ` 400 CRORES DURING THE YEAR AND WAS ALSO HAVING SHO RT TERM BORROWING AS ON 31.03.2013 AMOUNTING TO ` 570.02 CRORES. THE SHORT TERM DEPOSITS ARE FROM THEIR HOLDING COMPANY M/S. SPIRI T TEXTILE PVT. LTD. FOR THIS ATTENTION WAS DRAWN TO PAGE 52 OF THE PAPER-BOOK. ATTENTION WAS ALSO DRAWN TO PAGE 54, WHICH CONTAINS ACKNOWLEDGMENT OF THE IT R OF M/S. PRIME PUBLISHING PRIVATE LTD. THUS, IT WAS CONTENDED THA T THE ASSESSEE HAS NOT ONLY PROVED THE IDENTITY, CREDIT WORTHINESS AND GENUINEN ESS OF THE TRANSACTION BUT ALSO THE SOURCE OF SOURCE. OUR ATTENTION WAS FURTH ER DRAWN TO PAGE 83 OF THE PAPER-BOOK, WHICH CONTAINS LEDGER ACCOUNT OF M/S. P RIME PUBLISHING PRIVATE LTD. 01.04.2013 TO 30.04.2014 AND ON THAT BASIS IT WAS CONTENDED THAT WHATEVER WAS CLOSING BALANCE IN THE BOOKS OF ACCOUN T OF THE ASSESSEE WAS ESSEL CORPORATE RESOURCES P LTD 6 CARRIED FORWARD AND IN THE SUBSEQUENT ASSESSMENT YE AR ALSO THE ASSESSEE HAS MADE TRANSACTIONS OF PAYMENT AS WELL AS RECEIPT FRO M M/S. PRIME PUBLISHING PRIVATE LTD.. THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT FOR THE SUBSEQUENT ASSESSMENT YEAR I.E. 2014-15, DULY ACCEP TED THE UNSECURED LOAN AND NO ADDITION IN THIS REGARD U/S. 68 OF THE I T A CT HAS BEEN MADE IN THE CASE OF THE ASSESSEE. ATTENTION WAS ALSO DRAWN TOW ARDS THE COPY OF THE ASSESSMENT ORDER IN THE CASE OF M/S. PRIME PUBLISHI NG PRIVATE LTD., WHICH WAS FILED DURING THE COURSE OF HEARING AND IT WAS POINT ED OUT THAT NO ADDITION IN THIS REGARD HAS BEEN MADE IN THE HANDS OF M/S. PRIM E PUBLISHING PRIVATE LTD. EVEN THOUGH THE ASSESSMENT HAS BEEN MADE U/S. 143(3 ) OF THE I.T.ACT. HE VEHEMENTLY CONTENDED THAT THE ASSESSEE HAS DISCHARG ED THE ONUS WHATEVER LIES ON IT. THE ASSESSEE EVEN THOUGH IS NOT REQUIR ED TO PROVE THE SOURCE OF THE SOURCE AS LAID DOWN IN THE FOLLOWING CASES HAS STILL PROVED THE SOURCE OF SOURCE : CIT VS. BEDI AND COMPANY PRIVATE LIMITED 230 ITR 58 0 (SC) DCIT VS. ROHINI BUILDERS 256 ITR 360 (GUJ) 5. THE LEARNED DR, ON THE OTHER HAND, CONTENDED THA T THE ASSESSEE HAS NOT PROVED THE CREDIT WORTHINESS OF THE LENDER. LE NDER DOES NOT HAVE OWN SUFFICIENT FUNDS TO ADVANCE LOAN. NO INTEREST HAS BEEN CHARGED INSPITE OF THE FACT THAT THE LENDER HAS NEGATIVE SHARE HOLDERS FU ND AND HUGE LOSS MAKING COMPANY. THE SOURCE OF ADVANCING LOAN IS NOT FROM OWN FUNDS BUT FROM WEB OF TRANSACTIONS WITHIN THE GROUP AND HOLDING COMPAN Y. RELIANCE WAS PLACED ESSEL CORPORATE RESOURCES P LTD 7 ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF CIT VS. DURGA PRASAD MORE 82 ITR 540 (SC), AND ON THAT BASIS IT W AS CONTENDED THAT THE IT AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDI NG CIRCUMSTANCES TO FIND OUT THE REAL TRANSACTION BY APPLYING THE TEST OF HUMAN PROBABILITY. THE ASSESSEE COMPLETELY FAILED IN ESTABLISHING THE NATURE AND PU RPOSE OF THE LOAN, BEFORE THE AUTHORITIES BELOW. THE CAPACITY OF THE LENDER HAS ALSO NOT BEEN ESTABLISHED AS THE SOURCE HAS BEEN FOUND TO BE DOUB TFUL. THE ONUS OF PROVING THE SOURCE OF MONEY RECEIVED BY THE ASSESSE E LIES ON THE ASSESSEE. IF THE ASSESSEE FAILS TO SPECIFICALLY EXPLAIN THE N ATURE OF THE SOURCE, THE REVENUE IS BOUND TO MAKE THE ADDITION U/S. 68 OF TH E I.T.ACT. THE EXPRESSION ASSESSEE OFFERS NO EXPLANATION MEANS W HERE THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CREDITED IN THE BOOKS MAINTAINED BY IT. THUS, IT W AS CONTENDED THAT THE ORDER PASSED BY THE AUTHORITIES BELOW MUST BE UPHELD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE CASE LAWS AS HAS BEEN RELIED BEFORE US. UNDISP UTED FACTS BEFORE US AS APPARENT FROM PAGE 52 OF THE PAPER BOOK CONTAINING NOTES FORMING PART OF THE FINANCIAL STATEMENTS ARE THAT THE ASSESSEE RECE IVED SHORT TERM LOANS AND ADVANCES AMOUNTING TO ` 434,48,60,000/- DURING THE IMPUGNED ASSESSMENT YEAR FROM M/S. PRIME PUBLISHING PRIVATE LTD. IT IS ALSO A FACT ON RECORD THAT THE ASSESSEE WAS HAVING RUNNING ACCOUNT WITH M/S. P RIME PUBLISHING PRIVATE ESSEL CORPORATE RESOURCES P LTD 8 LTD. THE OPENING BALANCE WAS ` 7,92,21,18,000/- WHILE DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE HAS MADE THE PAYMENT O F ` 6,52,61,70,000/- TO M/S. PRIME PUBLISHING PRIVATE LTD ON DIFFERENT D ATES FROM 03.04.2012 TO 30.03.2016. THE ASSESSEE HAS RECEIVED IN TOTO A SU M OF ` .434,48,60,000/- FROM M/S. PRIME PUBLISHING PRIVATE LTD. THE CLOSIN G BALANCE IN THE RUNNING ACCOUNT OF M/S. PRIME PUBLISHING PRIVATE LTD WAS A CREDIT BALANCE AMOUNTING TO ` . 5,74,08,08,000/- . ALL THESE TRANSACTIONS ARE TH ROUGH BANKING CHANNELS. SOME OF THE CREDITS HAVE COME TOWARDS THE PAYMENT O F THE SALARY, WHICH HAS BEEN SUBSEQUENTLY REIMBURSED BY DEBITING THE ACCOUN T OF M/S. PRIME PUBLISHING PRIVATE LTD. THE ASSESSEE HAS SUBMITTED THE CONFIRMATION COPY OF THE ITR OF M/S. PRIME PUBLISHING PRIVATE LTD, ITS A UDITED BALANCE SHEET, PROFIT AND LOSS ACCOUNT, COPY OF BANK STATEMENTS OF M/S. P RIME PUBLISHING PRIVATE LTD AND THAT OF THE ASSESSEE. THE ASSESSEE HAS ALS O SUBMITTED THE CHART SUMMARIZING THE LOAN TAKEN FROM M/S. PRIME PUBLISHI NG PRIVATE LTD AS WELL AS THE CHART SUMMARIZING THE SOURCES OF M/S. PRIME PUB LISHING PRIVATE LTD AT PAGES 86 AND 87 OF THE PAPER BOOK. NOT ONLY THIS, WE NOTED THAT THE ASSESSEE HAS ALSO FILED ANALYSIS OF THE CUMULATIVE BALANCE WITHOUT OPENING BALANCE, WHICH IS AVAILABLE AT PAGES 88 AND 89 OF T HE PAPER BOOK SHOWING THE RECEIPT AND REPAYMENT OF LOANS FROM M/S. PRIME PUBL ISHING PRIVATE LTD, WHICH GIVES A PEAK CREDIT THAT ONLY ` .32,81,50,000/- TO PROVE THAT MAXIMUM AMOUNT RECEIVED BY THE ASSESSEE DURING THE IMPUGNED ASSESS MENT YEAR WAS ` 32,81,50,000/-, IF BOTH THE RECEIPTS AND PAYMENTS A RE ANALYZED. ESSEL CORPORATE RESOURCES P LTD 9 7. NOW THE QUESTION BEFORE US ARISES, WHETHER THE S AID CREDIT CAN BE ADDED U/S68 OF THE I.T.ACT TO BE HELD AS UNEXPLAINE D CASH CREDIT. BEFORE DECIDING THE ISSUE, IT IS NECESSARY TO LOOK INTO TH E PROVISIONS OF SECTION 68 OF THE I.T.ACT DURING THE IMPUGNED ASSESSMENT YEAR, WH ICH READ AS UNDER: WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESS ING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTER ESTED), AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY , SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME C ALLED, ANY EXPLANATION OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CRE DIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS A N EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSING OF FICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY; FROM THE READING OF THE AFORESAID SECTION, IT IS AP PARENTLY CLEAR THAT THIS SECTION LAYS DOWN RULE OF EVIDENCE THAT WHEN ANY SU M IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE MAINTAINED FOR ANY PREVIOUS Y EAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE O F SUCH CREDIT FOUND IN THE BOOKS OF THE ASSESSEE, OR THE EXPLANATION OFFERED B Y THE ASSESSEE IN THE ESSEL CORPORATE RESOURCES P LTD 10 OPINION OF THE ASSESSING OFFICER IS NOT SATISFACTOR Y, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX, AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 8. BEFORE CHARGING THE CREDIT AS INCOME OF THE ASSE SSEE, THE ASSESSING OFFICER HAS TO FORM AN OPINION. THIS OPINION IS SU BJECTIVE. HE MUST CONSIDER THE MATERIAL BEFORE HIM. HE HAS BEFORE HIM THE MATE RIAL SUBMITTED BY THE ASSESSEE WHILE GIVING AN EXPLANATION, THEN HE MUST COLLECT HIS OWN MATERIAL AS AN ENQUIRY OFFICER, WEIGH THE TWO MATERIALS AND AS A QUASI-JUDICIAL AUTHORITY FORM AN OPINION AS TO WHETHER EXPLANATION FURNISHED BY THE ASSESSEE IS SATISFACTORY OR NOT. IF THE AO DOES NOT APPLY HIS MIND IN EXAMINING THE DOCUMENTS FURNISHED BY THE ASSESSEE A ND DOES NOT FIND ANY SUBSTANTIVE ERROR IN THEM NOR HE COLLECTS ANY MATER IAL BY EXERCISING POWERS UNDER INCOME-TAX ACT, THEN THE CLAIM OF THE ASSESSE E CANNOT BE STRAIGHTWAY REJECTED. IF HE DOES, IT WOULD BE A VIOLATION OF PR INCIPLES OF NATURAL JUSTICE AND PROVISIONS OF SECTION 68. THE EXPRESSION 'THE ASSESSEE OFFERS NO EXPLANATION' MEANS WHERE THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABL E EXPLANATION AS REGARDS THE SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT MAIN TAINED BY THE ASSESSEE. THE OPINION OF THE AO FOR NOT ACCEPTING THE EXPLANA TION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY MUST BE BASED ON PROPE R APPRECIATION OF THE MATERIAL AND OTHER SURROUNDING CIRCUMSTANCES AVAILA BLE ON RECORD. THE OPINION OF THE AO IS TO BE BASED ON APPRECIATION OF THE MATERIAL ON RECORD. ESSEL CORPORATE RESOURCES P LTD 11 THE WORD 'MAY' USED IN SECTION 68 PROVIDES DISCRETI ON TO THE AO. IN GENERAL THE WORD 'MAY' IS AN AUXILIARY VERB CLARIFY ING THE MEANING OF ANOTHER VERB OF EXPRESSING AN ABILITY, CONTINGENCY, POSSIBI LITY OR PROBABILITY. WHEN USED IN A STATUTE IN ITS ORDINARY SENSE THE WORD IS PERMISSIVE AND NOT MANDATORY. BUT WHERE CERTAIN CONDITIONS ARE PROVIDE D IN THE STATUTE AND ON THE FULFILLMENT THEREOF A DUTY IS CAST ON THE AUTHO RITY CONCERNED TO TAKE AN ACTION, THEN ON FULFILLMENT OF THOSE CONDITIONS THE WORD 'MAY' TAKE THE CHARACTER OF 'SHALL' AND THEN IT BECOMES MANDATORY. IN SECTION 68, WE FIND THAT THERE ARE NO SUCH CONDITIONS ON THE FULFILLMEN T OF WHICH THE AO IS DUTY BOUND TO MAKE THE ADDITION. THE WORD 'MAY' DENOTES THE DISCRETION OF THE AO THAT HE CAN MAKE AN ADDITION OR CANNOT MAKE AN A DDITION. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V SMT. P K NOORJAH AN 237 ITR 570 (SC) WHILE DEALING WITH THE WORD 'MAY' IN SECTION 69 OBS ERVED, AS UNDER: 'IN THE CORRESPONDING CLAUSE OF THE BILL WHICH WAS INTRODUCED IN PARLIAMENT, WHILE INSERTING SECTION 69 IN THE INCOM E-TAX ACT, 1961, THE WORD 'SHALL' HAD BEEN USED BUT DURING THE COURS E OF CONSIDERATION OF THE BILL AND ON THE RECOMMENDATION OF THE SELECT COMMITTEE, THE SAID WORD WAS SUBSTITUTED BY THE WOR D 'MAY'. THIS CLEARLY INDICATES THAT THE INTENTION OF PARLIAMENT IN ENACTING SECTION 69 WAS TO CONFER A DISCRETION ON THE INCOME-TAX OFF ICER IN THE MATTER OF TREATING THE SOURCE OF INVESTMENT WHICH H AS NOT BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE AS THE INC OME OF THE ASSESSEE AND THE INCOME-TAX OFFICER IS NOT OBLIGED TO TREAT SUCH SOURCE OF INVESTMENT AS INCOME IN EVERY CASE WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE NOT SATISFACTORY. THE QUESTION WHETHER THE SOURCE OF THE INVESTMENT S HOULD BE TREATED AS INCOME OR NOT UNDER SECTION 69 HAS TO BE CONSIDERED IN THE LIGHT OF THE FACTS OF EACH CASE. IN OTHER WORDS , A DISCRETION HAS ESSEL CORPORATE RESOURCES P LTD 12 BEEN CONFERRED ON THE INCOME-TAX OFFICER UNDER SECT ION 69 OF THE ACT TO TREAT THE SOURCE OF INVESTMENT AS THE INCOME OF THE ASSESSEE IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT F OUND SATISFACTORY AND THE SAID DISCRETION HAS TO BE EXERCISED KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE. 9. IN THE CASE BEFORE US, THE ASSESSEE HAS RECEIVED DEPOSITS FROM M/S. PRIME PUBLISHING PRIVATE LTD. WITH WHOM THE ASSESSE E IS HAVING RUNNING ACCOUNT. M/S. PRIME PUBLISHING PRIVATE LTD. IS A N INCOME TAX ASSESSEE, HAVING PAN AND CONFIRMATION OF M/S. PRIME PUBLISHIN G PRIVATE LTD., HAS ALSO BEEN FILED, THE AMOUNT HAS BEEN RECEIVED THROUGH BA NKING CHANNEL, THE COPY OF ACCOUNT OF M/S. PRIME PUBLISHING PRIVATE LTD. IN THE BOOKS OF THE ASSESSEE AND VICE-VERSA HAS ALSO BEEN FILED. THE ASSESSEE H AS DULY EXPLAINED THE CIRCUMSTANCES UNDER WHICH THE DEPOSITS WERE RECEIVE D. THE ASSESSEE HAS ALSO GIVEN SOURCE OF THE MONEY FOR LENDER M/S. PRIM E PUBLISHING PRIVATE LTD. AND ALSO FURNISHED THE CHART SHOWING THE RECEIPT AN D PAYMENT OF LOANS FROM/TO M/S. PRIME PUBLISHING PRIVATE LTD. COPY OF BANK STATEMENT OF M/S. PRIME PUBLISHING PRIVATE LTD. AS WELL AS THE STATEM ENT SHOWING THE RECEIPT AND PAYMENT OF THE AMOUNT HAS ALSO BEEN FILED. FRO M THE COPY OF THE BALANCE SHEET OF M/S. PRIME PUBLISHING PRIVATE LTD. , WHICH IS AVAILABLE AT PAGES 38 TO 53 OF THE PAPER-BOOK, IT IS APPARENT TH AT M/S. PRIME PUBLISHING PRIVATE LTD. HAS BORROWED A SUM OF ` 400,00,00,000/- BY ISSUE OF NON- CONVERTIBLE DEBENTURES AND ` 570,02,73,000/- AS INTER CORPORATE DEPOSITS FROM SPIRIT TEXTILES PVT. LTD, WHICH IS THE HOLDING COMPANY OF M/S. PRIME PUBLISHING PRIVATE LTD. FROM ALL THESE DETAILS, I T IS APPARENT THAT THE ESSEL CORPORATE RESOURCES P LTD 13 ASSESSEE HAS PROVED ALL THE THREE INGREDIENTS I.E. IDENTITY, CREDIT WORTHINESS AS WELL AS THE GENUINENESS OF THE TRANSACTIONS. TH IS IS NOT A CASE WHERE MONEY HAS BEEN RECEIVED IN CASH OR BORROWED FROM WH OM THE MONEY HAS BEEN RECEIVED AS DEPOSIT. WE DO AGREE WITH THE LEA RNED AR THAT THE ASSESSEE HAS NOT TO PROVE THE SOURCE OF SOURCE, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. BEDI A ND COMPANY PRIVATE LIMITED 230 ITR 580 (SC). BUT IN THIS CASE, WE NOT ED THAT THE ASSESSEE HAS EVEN SUBMITTED THE EVIDENCE TO PROVE THE SOURCE OF SOURCE. THE ASSESSING OFFICER HAS NOT DOUBTED OR PROVED THE EVIDENCE FURN ISHED BY THE ASSESSEE TO BE INCORRECT. ONCE THE ASSESSEE HAS DISCHARGED ITS ONUS, THE ONUS GETS SHIFTED ON THE ASSESSING OFFICER. NO COGENT MATERI AL OR EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO PROVE THAT THE EVIDENCE FILED BY THE ASSESSEE ARE NOT GENUINE. THE LEARNED DR EVEN THOU GH VEHEMENTLY SUBMITTED BEFORE US THAT THERE IS NO REASON FOR TRA NSFER OF SUCH LARGE AMOUNT BY INTERGROUP COMPANY BUT WE DO NOT FIND ANY PROVIS IONS UNDER THE I.T. ACT, WHICH PROHIBITS THE ASSESSEE TO BORROW THE FUNDS FR OM INTER GROUP COMPANY. IN OUR OPINION, NO ADDITION ON THIS BASIS CAN BE SU STAINED. ONCE THE SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE, WE HAV E TO SEE WHETHER THE ASSESSEE HAS PROVED ALL THE THREE INGREDIENTS, I.E. IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS, OR NOT. WHET HER THE ASSESSEE HAS DISCHARGED ITS ONUS FROM THE EVIDENCES BROUGHT BEFO RE US AND FILED BEFORE THE AUTHORITIES BELOW, IT IS APPARENT THAT THE ASSESSEE HAS DULY DISCHARGES ITS ESSEL CORPORATE RESOURCES P LTD 14 ONUS TO PROVE ALL THE THREE INGREDIENTS AS LAID DOW N U/S. 68 OF THE I.T.ACT. WE HAVE ALSO GONE THROUGH THE DECISION RELIED UPON BY THE LEARNED DR IN THE CASE OF CIT VS. DURGA PRASAD MORE 82 ITR 540 (SC) AND NOTED THAT, IN THAT CASE, NO DOUBT, THE HONBLE SUPREME COURT HAS HELD THAT THE TAX AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTA NCES TO FIND OUT THE REAL TRANSACTION BY APPLYING THE TEST OF HUMAN PROBABILI TY. THIS DECISION IN OUR OPINION WILL NOT ASSIST THE REVENUE AS UNDER THE FA CTS OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE IT CANNOT BE SAID THAT TH E TRANSACTION ENTERED INTO BY THE ASSESSEE IS NOT A REAL TRANSACTION. WE HAVE ALSO GONE THROUGH THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF R OSHAN DI HATTI VS. CIT 107 ITR 938 (SC) AS WELL AS IN THAT OF KALE KHAN MO HAMMAN HANIF VS. CIT 50 ITR 1(SC). THESE DECISIONS ALSO, IN OUR OPINION, A RE BASED ON ENTIRELY DIFFERENT FACTS. THESE DECISIONS NO WHERE STATES T HAT WHERE THE ASSESSEE HAS DISCHARGED ITS BURDEN OF PROVING THE NATURE AND THE SOURCE OF CASH CREDIT, THE ASSESSING OFFICER SHALL MAKE THE ADDITION U/S. 68 I N THE INCOME OF THE ASSESSEE. WE HAVE ALREADY HELD THAT THE EXPLANATIO N GIVEN BY THE ASSESSEE, IN OUR OPINION DULY PROVE THE IDENTITY, CREDIT WORT HINESS AND GENUINENESS OF THE TRANSACTION. IT IS NOT THE CASE OF THE ASSESSE E THAT IT HAS NOT OFFERED ANY EXPLANATION. IT IS A CASE WHERE THE ASSESSEE HAS D ULY OFFERED EXPLANATION, EXPLAINING THE NATURE OF SOURCE OF THE AMOUNT BORRO WED BY IT. IN VIEW OF THESE FACTS, WE SET ASIDE THE ORDER OF T HE CIT(A) AND DELETE THE ADDITION MADE U/S. 68 OF THE I.T.ACT. ESSEL CORPORATE RESOURCES P LTD 15 10. GROUND NO.2 IN ASSESSEES APPEAL RELATE TO THE SUSTENANCE OF THE ADDITION OF ` 41,500/-. AFTER HEARING THE RIVAL SUBMISSIONS AND GOING THROUGH THE ORDER OF THE TAX AUTHORITIES BELOW, WE NOTED TH AT THE DIFFERENCE HAS ARISEN DUE TO THE MISTAKE COMMITTED BY CONTINENTAL DRUG CO MPANY PVT. LTD., WHICH IT HAS RECTIFIED BY SUBMITTING THE REVISED FORM 26A S AS CONTENDED BY THE LEARNED AR. WE, THEREFORE, IN THE INTEREST OF JUST ICE AND FAIR PLAY TO BOTH THE PARTIES SET ASIDE THE ISSUE TO THE FILE OF THE ASSE SSING OFFICER WITH A DIRECTION THAT THE ASSESSING OFFICER SHALL LOOK INTO THE REVI SED FORM 26AS AND VERIFY THE SAME. IN CASE, THE ASSESSING OFFICER FINDS THAT TH ERE IS NO DIFFERENCE IN THE REVISED FORM 26AS, THE ADDITION MADE SHALL STAND DE LETED. 11. ITA NO.3364/MUM/2017 GROUND NO. 1 RELATES TO THE DELETION OF THE ADDITIO N OF ` .6,67,296 U/S. 37 MADE BY THE ASSESSING OFFICER OUT OF REPAIRS AND MAINTENANCE ACCOUNT. THE FACTS RELATING TO THIS GROUND ARE THAT THE ASSE SSING OFFICER NOTED THAT THE ASSESSEE HAS DEBITED A SUM OF ` 66,72,959/-UNDER THE AFORESAID HEAD. THE ASSESSEE SUBMITTED THE COPY OF ITS LEDGER ACCOUNT. THE ASSESSING OFFICER ON ADHOC BASIS DISALLOWED 10% OF THESE EXPENSES AMOUNT ING TO ` .6,67,296 BY OBSERVING THAT THE LEDGER COPY IS NOT SUPPORTED WIT H ANY BILLS/VOUCHERS ETC. WHEN THE MATTER WENT BEFORE THE CIT(A), THE ASSESSE E HAS SPECIFICALLY CONTENDED BEFORE THE CIT(A) THAT THE ASSESSEE HAS S UBMITTED THE COPY OF THE LEDGER ACCOUNT ALONGWITH PAN AND TDS DEDUCTED. THE ASSESSING OFFICER DID ESSEL CORPORATE RESOURCES P LTD 16 NOT ASK FOR THE COPY OF BILLS/VOUCHERS THEREFORE, T HE ASSESSEE DID NOT PRODUCE THE SAME. THE CIT(A) THEREFORE, DELETED THE SAID A DDITION. 12. THE LEARNED DR VEHEMENTLY RELIED ON THE ORDER O F THE ASSESSING OFFICER BUT WAS NOT ABLE TO BRING TO OUR KNOWLEDGE ANY COGE NT MATERIAL OR EVIDENCE WHICH MAY PROVE THAT THE ASSESSING OFFICER HAS CALL ED FOR DETAILS OF THE BILLS/VOUCHERS FROM THE ASSESSEE, THEREFORE, WE ARE OF THE OPINION, THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. THE ORDER OF THE CIT(A) IS CONFIRMED AND THE GROUND IS DISMISSED. 13. GROUND NO.2 RELATES TO THE ADDITION OF ` 11,30,242/- OUT OF TRAVELLING, CONVEYANCE AND TELEPHONE EXPENSES. THE FACTS RELAT ING TO THESE ADDITIONS ARE THAT THE ASSESSING OFFICER NOTED THE ASSESSEE H AD DEBITED A SUM OF ` 1,13,02,344/- IN RESPECT OF THE AFORESAID EXPENSES. THE ASSESSEE SUBMITTED COPY OF THE LEDGER BUT SINCE THE ASSESSEE DID NOT S UBMIT ANY BILLS/VOUCHER, THE ASSESSING OFFICER DISALLOWED 10% OF THE EXPENSE S OBSERVING THAT PERSONAL USE OF THE AFORESAID EXPENSES CANNOT BE IGNORED. W HEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DELETED THE SAID DISA LLOWANCE. 14. AFTER HEARING THE RIVAL PARTIES AND GOING THROU GH THE ORDERS OF THE AUTHORITIES BELOW, WE DO AGREE ASSESSEE THAT THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER ARE MERELY ADHOC DISALLOWANCE. T HE ASSESSEE IS A PRIVATE LIMITED COMPANY. THERE CANNOT BE PERSONAL EXPENSES IN CASE OF AN INCORPORATED COMPANY. OUR AFORESAID VIEW IS DULY S UPPORTED BY THE DECISION ESSEL CORPORATE RESOURCES P LTD 17 OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IRON AND ENGG. CO. VS CIT 253 ITR 749. EVEN OTHERWISE, WE NOTED THAT THE ASS ESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER COPY OF THE LEDGER ACC OUNT SHOWING DETAILS OF THESE EXPENSES. THE ASSESSING OFFICER NEVER ASKED FOR BILLS/VOUCHERS FROM THE ASSESSEE. NO COGENT MATERIAL OR EVIDENCE WAS B ROUGHT TO OUR KNOWLEDGE BY THE LEARNED DR TO PROVE THAT THE ASSESSING OFFIC ER HAS GIVEN OPPORTUNITY TO THE ASSESSEE TO PRODUCE BILLS/VOUCHERS IN RESPEC T OF THE AFORESAID EXPENSES. WE, THEREFORE, CONFIRM THE ORDER OF THE CT(A) AND DELETE THE DISALLOWANCE OF ` 11,30,242/-. 15. THE THIRD GROUND RELATES TO DELEING THE DISALLO WANCE OF ` 2,09,73,983/- U/S. 14A READ WITH RULE 8D. THE FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS INCUR RED INTEREST EXPENDITURE AMOUNTING TO ` .102,65,44,828/- DURING THE YEAR. THE ASSESSEE HAS NOT EARNED ANY DIVIDEND INCOME. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF EXPENSES ADMISSIBLE U/S. 14A READ WITH RULE 8D. TH E ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DISALLOWED A SUM OF ` 75,46,64,787/- U/S. 14A READ WITH RULE 8D. THE ASSESSING OFFICER COMPUTED THE D ISALLOWANCE OF ` .77,56,37,770/- AND, THUS, DISALLOWED THE DIFFERENC E OF ` 2,09,73,983/-. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT (A) DELETED THE DISALLOWANCE BY OBSERVING AS UNDER: 8.2 1 HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. IT IS SEEN THAT THE AP PELLANT HAS ONLY ESSEL CORPORATE RESOURCES P LTD 18 AN OBJECTION AGAINST THE DISALLOWANCE OF INTEREST E XPENSE U/S 14A READ WITH RULE 8D(2)(II). IT IS FOUND THAT THE APPE LLANT HAS DISALLOWED THE INTEREST EXPENSE OF RS 74,18,87,287/ - WHERE AS AO HAS WORKED OUT THE DISALLOWANCE AT RS 76,28,61,27 07-. THE AO HAS NOT ASSIGNED ANY REASON AS TO WHY THE DISALLOWA NCE IS WORKED OUT WITH RESPECT TO THE INTEREST EXPENSES U/S 14A R EAD WITH RULE 8D (2)(II). AO HAS NOT PUT FORTH ANY FACTS FOR NON ACC EPTANCE OF THE WORKING OF DISALLOWANCE U/S 14A READ WITH RULE 8D(2 ) OF THE APPELLANT. HENCE, THE WORKING MADE BY THE A.O. IS F OUND TO BE WORKED OUT MECHANICALLY WITHOUT JUSTIFICATION. THER EFORE, I FIND FORCE IN THE SUBMISSION OF DIE APPELLANT. ACCORDING LY, GROUND NO 3 OF THE APPEAL IS ALLOWED. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERED THE SAME ALONG WITH THE ORDER OF THE AUTHORITIES BELOW AS WE LL AS THE PROVISIONS OF SECTION 14A READ WITH RULE 8D(2). SECTION 14A(2), WHICH EMPOWERS THE ASSESSING OFFICER TO DETERMINE THE AMOUNT OF EXPEND ITURE WITH REFERENCE TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL IN COME AND HAS TO BE DISALLOWED U/S. 14A(2) READ AS UNDER: 14A(2) THE ASSESSING OFFICER SHALL DETERMINE THE A MOUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHI CH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACC ORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED, IF THE ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, IS NOT SATI SFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FO RM PART OF THE TOTAL INCOME UNDER THE ACT. FROM THE READING OF THE SAID SECTION, IT IS APPAREN T THAT THE ASSESSING OFFICER CAN DETERMINE THE AMOUNT OF THE AMOUNT OF THE EXPEN DITURE INCURRED IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME IN ACCORDANCE WITH THE METHOD AS MAY BE PRESCRIBED. R ULE 8D HAS BEEN ESSEL CORPORATE RESOURCES P LTD 19 PRESCRIBED IN THIS REGARD BUT THE ASSESSING OFFICER CAN MADE SUCH DISALLOWANCE ONLY IF HE IS NOT SATISFIED WITH THE C ORRECTNESS OF THE CLAIM OF THE ASSESSEE HAVING REGARD TO THE ACCOUNT OF THE ASSESS EE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO THE INCOME WHICH DOES NO T FORM PART OF THE TOTAL INCOME. THEREFORE, IT IS NECESSARY ON THE PART OF THE AO TO RECORD THE SATISFACTION THAT THE CLAIM MADE BY THE ASSESSEE IS NOT CORRECT OR INCORRECT AND THE SATISFACTION MUST BE RECORDED HAVING REGARD TO THE ACCOUNT OF THE ASSESSEE. IN THE INSTANT CASE, WE NOTED THAT THE A SSESSING OFFICER WITHOUT RECORDING ANY SATISFACTION JUST REJECTED THE CLAIM OF THE ASSESSEE. WE NOTED THAT THE ASSESSING OFFICER HAS NOT RECORDED ANY DIS SATISFACTION WHILE DISAGREEING WITH THE ASSESSEE IN RESPECT OF THE EXP ENDITURE INCURRED BY THE ASSESSEE RELATING TO THE INCOME NOT FORMING PART OF THE TOTAL INCOME. THE AFORESAID VIEW IS DULY SUPPORTED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD, WHICH CONFIRMED THE OR DER OF MUMBAI HIGH COURT REPORTED IN 328 ITR 81. 17. THE LEARNED DR, EVEN THOUGH VEHEMENTLY RELIED O N THE ORDER OF THE ASSESSING OFFICER, COULD NOT BRING TO OUR KNOWLEDGE ANY SATISFACTION BEING RECORDED BY THE ASSESSING OFFICER AS REQUIRED/S. 14 A(2) BEFORE REJECTING THE CLAIM OF THE ASSESSEE. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE AND THIS GROUND STANDS DISMISSED. ESSEL CORPORATE RESOURCES P LTD 20 18. IN THE RESULT, THE ASSESSEES APPEAL IN ITA NO. 1835/MUM/2017 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES WHILE THE R EVENUES APPEAL IN ITA NO. 3364/MUM/2017 IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DAY OF JUNE, 2017. SD/- SD/- (PAWAN SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 16 TH JUNE, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, E BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI