ITO 9(1)(4), MUMBAI V. GROWEL ENERGY CO. LTD, MUMBAI

ITA 338/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79069 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 10-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO
• Assessee Lawyers: PRADIP KEDIA
• Keywords: Depreciation; Business expenditure; Source of fund; Deemed to accrue or arise in india; Additional evidence; Reasonable cause; Onus to prove; Capital expenditure
• Section: 69C; 68; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 338/MUM/2011 (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER-9(1)(4) M/S. GROWEL ENERGY CO. LTD. ROOM NO. 224, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 VS. GROWEL HOUSE, AKURLI ROAD KANDIVALI (E), MUMBAI 400101 PAN - AABCG9989L APPELLANT RESPONDENT APPELLANT BY: SHRI SHRIKANT NAMDEO RESPONDENT BY: SHRI PRADIP KEDIA DATE OF HEARING: 10.06.2014 DATE OF PRONOUNCEMENT: 13.06.2014 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-19, MUMBAI AND IT PERTAINS TO A.Y. 2007-08. 2. AT THE OUTSET IT MAY BE MENTIONED THAT THE INCOME T AX OFFICER, WHO IS THE APPELLANT HEREIN, AS WELL AS THE COMMISSIONER O F INCOME TAX, WHO HAS AUTHORISED THE AO TO PREFER AN APPEAL, DID NOT APPL Y THEIR MIND IN THE CORRECT PERSPECTIVE AND IN A VERY LACKLUSTRE AND RO UTINE MANNER FILED THE APPEAL WHICH, IN TURN, RESULTED IN WASTAGE OF TIME OF THE COURT WHICH WOULD BE HIGHLIGHTED AT APPROPRIATE PLACES. 3. ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEVE LOPING, BUILDING AND IMPLEMENTING HYDROELECTRIC PROJECTS ON BUILT, O WN AND OPERATE BASIS. FOR THE PREVIOUS YEAR ENDED ON 31.03.2007 THE ASSES SEE DECLARED NIL INCOME. THOUGH THE RETURN WAS PROCESSED ACCORDINGLY , IT WAS LATER ON TAKEN UP FOR SCRUTINY BY ISSUING NOTICE UNDER SECTION 143 (2)/142(1) OF THE ACT. DURING THE COURSE OF SCRUTINY PROCEEDINGS THE AO NO TICED THAT THE CLAIMS MADE BY THE ASSESSEE WERE NOT IN ACCORDANCE WITH LA W, WHICH WERE ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 2 DISALLOWED AND ULTIMATELY COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF ` 57,91,270/-. WE SHALL TAKE UP THE FACTS CONCERNING EACH GROUND SEPARATELY. 4. GROUND NO. 1 READS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE HON'BLE CIT(A) IS JUSTIFIED IN LAW IN DELETING THE ADDITION OF RS.12,76,655/- MADE U/S. 69C OF THE ACT BEING THE UNEXPLAINED EXPE NDITURE IN THE BOOKS OF THE ASSESSEE. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT UNDER THE HEAD CAPITAL WORK-IN-PROGRESS THE ASSES SEE SHOWED GROSS EXPENDITURE OF ` 12,76, 655/- ON ACCOUNT OF PROFESSIONAL FEES PAID. ASSESSEE FURNISHED NAMES OF THE PARTIES, AMOUNT PAID AND PRO OF OF TDS. IN THE OPINION OF THE AO MERELY BECAUSE TAX WAS DEDUCTED O N PAYMENT MADE IT DOES NOT AUTOMATICALLY LEAD TO JUSTIFICATION OF THE PURPOSE; ASSESSEE HAS TO ESTABLISH THE PURPOSE, GENUINENESS AND BUSINESS EXP EDIENCY OF SUCH EXPENDITURE. IT IS NOT IN DISPUTE THAT THE ASSESSEE CLAIMED IT AS CAPITAL EXPENDITURE BUT THE AO PROCEEDED TO TREAT IT AS UNE XPLAINED EXPENDITURE WITHIN THE MEANING OF SECTION 69C OF THE ACT AND AC CORDINGLY BROUGHT TO TAX A SUM OF ` 12,76,655/-. 6. SECTION 69C REFERS TO A SITUATION WHERE THE SOURCE OF EXPENDITURE IS NOT PROPERLY EXPLAINED. SECTION 69C READS AS UNDER: - 69C. WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS IN CURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATIS FACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. A CAREFUL PERUSAL OF THE RELEVANT PROVISION SHOWS T HAT WHEN AN ASSESSEE INCURS EXPENDITURE FROM KNOWN SOURCES SECTION 69C D OES NOT GET ATTRACTED; IN ORDER TO INVOKE THE SECTION IT HAS TO BE SHOWN T HAT THE ASSESSEE HAD NOT EXPLAINED ABOUT THE SOURCE OF SUCH EXPENDITURE OR P ART THEREOF. IN THE INSTANT CASE THERE IS NO DISPUTE WITH REGARD TO THE SOURCE OF EXPENDITURE AND IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE INCURRE D EXPENDITURE. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE CLAIMED IT AS BUSINESS EXPENDITURE. IT WAS ONLY ADDED TO THE CAPITAL WORK-IN-PROGRESS. ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 3 7. ASSESSEE CONTENDED BEFORE THE CIT(A) THAT IT HAD FU RNISHED COMPLETE DETAILS OF THE EXPENDITURE SUCH AS NAMES OF THE CON SULTANTS TO WHOM PROFESSIONAL FEES HAS BEEN PAID, ADDRESS OF THE PAR TY/PARTIES ALONGWITH RELEVANT DETAILS. AFTER THE SAID DETAILS WERE FILED THE AO CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE SAID EXPENDITURE SHOULD NOT BE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. AGAIN, IN RESPO NSE TO THE SAID LETTER, THE ASSESSEE FURNISHED ITS REPLY DATED 25 TH AUGUST, 2009 ALONGWITH COPIES OF QUARTERLY TDS CERTIFICATES AND A SUMMARY OF THE TDS PAID TO SHOW THAT NO PART OF THE EXPENDITURE CAN BE DISALLOWED UNDER SEC TION 40(A)(IA) OF THE ACT. HOWEVER, THE AO DISALLOWED THE ENTIRE EXPENDITURE O N THE GROUND THAT THERE WAS NO JUSTIFICATION OF HAVING INCURRED SUCH EXPEND ITURE, WHICH IS TOTALLY ILLOGICAL AND WITHOUT ANY BASIS. 8. THE LEARNED CIT(A) EXAMINED THE ISSUE IN THE BACKDR OP OF THE FACTS PLACED BEFORE HIM AND NOTICED THAT THE ASSESSEE EXP LAINED THE SOURCE OF THE EXPENDITURE AND HENCE THE CASE FALLS OUTSIDE THE AM BIT OF SECTION 69C OF THE ACT. IN THIS REGARD HE OBSERVED AS UNDER: - 4.2 I HAVE CONSIDERED THE FINDINGS OF THE AO AS CO NTAINED IN PARAGRAPH 3.1 OF THE ASSESSMENT ORDER AND ALSO SUBM ISSIONS AS MADE BY THE APPELLANT. IT IS A FACT THAT AO DOES NOT DIS PUTE GENUINENESS OF THE EXPENSES AS CLAIMED. IN FACT IT IS ON RECORD TH AT DETAILS OF THE PAYMENT AS MADE TO VARIOUS PARTIES ALONG WITH THEIR NAMES, COMPLETE ADDRESS, PAN DETAILS, AMOUNTS PAID AND FURTHER THE TDS DEDUCTED WERE FURNISHED BEFORE THE AO. IT IS NOT DISPUTED TH AT FROM THE DETAILS AS FURNISHED BEFORE THE AO, IT IS SEEN THAT SAID PARTI ES ARE MAINLY CONSULTANTS TO WHOM THE PAYMENTS HAVE BEEN MADE. TH US ON THE SAID EXPENDITURE, THE APPELLANT HAD OFFERED ALL THE DETA ILS WHICH THE AO HAD CALLED FOR. IT IS NOT AS THOUGH NO EXPLANATION ABOU T THE SAID EXPENDITURE OR IT SOURCE THEREOF WERE NOT EXPLAINED TO THE SATI SFACTION OF THE AO. ONLY OBJECTION TAKEN BY THE AO IS THAT JUSTIFICATIO N FOR HAVING INCURRED SAID EXPENDITURE HAS NOT BEEN ESTABLISHED. THIS REA SONING OF THE AO IS CERTAINLY OUTSIDE THE SCOPE AND AMBIT OF THE PROVIS IONS OF SECTION 69C. IN FACT THE CONDITION PRECEDENT FOR APPLYING THE PR OVISIONS OF SECTION 69C ARE NOT PRESENT IN THIS CASE. THE CONDITION PRE CEDENT IS TO ESTABLISH EXISTENCE OF EXPENDITURE WHICH IS NOT EXPLAINED SAT ISFACTORILY BY EVIDENCE OR MATERIAL ON RECORD. IN FACT THE BURDEN ON THE ASSESSEE HAS BEEN DISCHARGED WITH ALL AVAILABLE DETAILS FURNISHE D, AS CALLED FOR BY THE AO. THE NAMES, ADDRESS & PAN WERE AVAILABLE BEF ORE HIM. IN FACT IT IS NOT THAT AS THOUGH THE EXPENSES WERE NOT EXPL AINED, THE DISALLOWANCE IS BASED ONLY ON THE REASON THAT THERE WAS NO JUSTIFICATION FOR THE SAME. FROM THE FACTS OF THE C ASE, IT IS HELD THAT THE CONDITIONS PRECEDENT FOR INVOKING PROVISIONS OF SEC TION 69C ARE ABSENT ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 4 IN THIS CASE, THAT THE EXPENDITURE HAS BEEN EXPLAIN ED BY ADDUCING EVIDENCE AND OTHER RELEVANT MATERIAL AND HENCE IT W AS NOT OPEN TO THE AO TO DISALLOW THE SAID EXPENDITURE OR TO TREAT THE SAME AS DEEMED INCOME UNDER S. 69C OF THE I.T. ACT. WHEN THE BOOKS OF ACCOUNT HAVE BEEN MAINTAINED AND EXPENDITURE RECORDED WITH FULL DETAILS AND SUPPORTED BY VOUCHERS, THEN NO ADDITION CAN BE MADE UNDER S. 69C VIDE CIT VS. PRATAP SINGH AMAR SINGH (1993) 200 ITR 788 (RAJASTHAN) . UNDER THE CIRCUMSTANCES, THE ADDITION MADE UNDER S. 69C CANNOT BE SUSTAINED AND IS HEREBY DELETED. A PLAIN LOOK AT THE FINDINGS OF THE CIT(A) CLEARLY INDICATE THAT THE AO WAS DESPERATE TO MAKE ADDITION INITIALLY UNDER SECTION 40(A)(IA) OF THE ACT THEREAFTER UNDER SECTION 69C OF THE ACT BY STRETCHI NG THE LANGUAGE OF THE SECTION TO AN EXTENT WHERE NO PERSON WITH A REASONA BLE UNDERSTANDING OF LAW WOULD NOT HAVE APPLIED SECTION 69C IN THE SAID CONTEXT. HOWEVER, HE CHOOSES TO FILE A FURTHER APPEAL AND SEEKS PERMISSI ON OF THE COMMISSIONER WHO HAS IMMEDIATELY GRANTED PERMISSION. AT THIS JUN CTURE IT MAY BE NOTICED THAT THE POWER IS VESTED IN THE COMMISSIONER OF INC OME TAX AND NOT WITH THE AO BECAUSE THE LEGISLATURE, IN ITS WISDOM, THOU GHT THAT A SUPERIOR/ SENIOR OFFICER CAN TAKE A MORE BALANCED DECISION SO AS TO AVOID FILING FRIVOLOUS APPEALS IN ROUTINE MANNER. HOWEVER, EVEN THE COMMISSIONER HAS NOT GIVEN HIS REASONS AS TO WHY HE HAS AUTHORISED T HE AO TO FILE AN APPEAL ON THIS ISSUE. THE AO, WHILE FILING THE APPEALS, SU PPORTS THE STAND TAKEN BY THE CIT(A) IN GROUND NO. 1 BY THE VERY FACT THAT GR OUND NO. 1 DOES NOT BEGIN WITH THE EXPRESSION WHETHER. IN OTHER WORDS, THE GROUND RAISED BY THE AO SHOWS THAT THE CIT(A) IS JUSTIFIED IN DELETING THE ADDITION. EITHER HE SHOULD HAVE USED THE EXPRESSION CIT(A) IS NOT JUSTIFIED I N LAW IN DELETING THE ADDITION OR HE SHOULD HAVE QUESTIONED WHETHER THE CIT(A) IS JUSTIFIED IN LAW. THE GROUND RAISED BY THE AO, ON THE OTHER HAN D, APPEARS TO HAVE COME FROM HIS HEART I.E., THE TRUE POSITION ON THIS ISSU E WAS REFLECTED IN THE GROUNDS OF APPEAL. THOUGH THE REVENUE PREFERRED AN APPEAL, NEITHER THE LEARNED D.R. CARED TO LOOK AT THE GROUNDS NOR THE AO INTENDED TO CHANGE THE GROUNDS OF APPEAL. EVEN IF IT IS ASSUMED THAT THE AO SEEKS TO CHALLENGE THE ORDER PASSED BY THE CIT(A) ON THIS ISSUE, EVEN BEFORE US NO MATE RIAL, WHATSOEVER, WAS PLACED TO SHOW AS TO UNDER WHICH PROVISION OF LAW A DDITION CAN BE MADE WITH REGARD TO THE SUM OF ` 12,76,655/- WHICH AS ADMITTEDLY NOT CLAIMED AS BUSINESS EXPENDITURE BUT WAS ADDED TO THE CAPITAL W ORK-IN-PROGRESS. ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 5 9. HAVING HEARD THE LEARNED D.R. AND THE LEARNED COUNS EL FOR THE ASSESSEE IN THIS REGARD WE ARE OF THE FIRM VIEW THA T THE AO HAS RAISED A SOULLESS GROUND WHICH DESERVES TO BE DISMISSED IN L IMINE. WE COULD HAVE SAVED A LOT OF TIME HAD THE COMMISSIONER NOT GIVEN HIS AUTHORISATION ON SUCH FRIVOLOUS ISSUES. ON THE CONTRARY, IT IS INCUM BENT UPON THE COMMISSIONER, AS A SUPERVISORY AUTHORITY, TO ADMONI SH THE AO FOR MAKING AN ADDITION WITHOUT BASIC UNDERSTANDING OF LEGAL PO SITION. 10. GROUND NO. 2 READS AS UNDER: - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE HON'BLE CIT(A) IS JUSTIFIED IN LAW IN ALLOWING THE CAPITALI ZATION OF EXPENSES RS.18,83,222/- REPRESENTING EXPENDITURE OF PENAL NA TURE INCURRED BY ASSESSEE FOR BREACH ON CONTRACT. 11. THIS ISSUE WAS DEALT WITH IN PARA 3.2 OF THE ASSESS MENT ORDER. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE CAPITALISED A SUM OF ` 18,83,222/- REFERABLE TO RENT, RATES, FEES, TAXES, ETC. UNDER THE HEAD CAPITAL WORK-IN-PROGRESS. THE ASSE SSING OFFICER WAS OF THE OPINION THAT THE ACTUAL RENT WORKS OUT TO ` 28,000/- WHEREAS THE ASSESSEE CLAIMED MORE. SIMILARLY, A SUM OF ` 8,00,000/- PAID TO FISHERIES DEVELOPMENT FUND WAS CONSIDERED AS A PAYMENT IN THE NATURE OF PENALTY. THE ASSESSEE ALSO PAID A SUM OF ` 7,88,845/- FOR EXTENSION OF IMPLEMENTATION AGREEMENT FOR ANNI HYDROELECTRIC PROJECT. THIS WAS ALSO TREATED AS IN THE NATURE OF PENALTY WITHIN THE MEANING OF PROVISIONS OF SECTION 37 OF THE ACT. IN HIS OPINION THESE AMOUNTS CANNOT BE PERMITTED TO BE CAPITALISED. IT IS NOT IN DISPUTE THAT NO EXPENDITURE WAS CLAIMED AS DEDUC TION BUT IF THE EXPENDITURE HAS TO BE TREATED AS CAPITAL IN NATURE THE ASSESSEE MAY CLAIM DEPRECIATION IN THE SUBSEQUENT YEARS. THE TOTAL DIS ALLOWANCE WORKS OUT TO ` 15,91,645/-. IN OTHER WORDS, THE AO HIMSELF HAS NOT DISALLOWED ` 18,83,222/- BUT RESTRICTED THE DISALLOWANCE TO ` 15,91,645/-. HOWEVER, IN THE GROUNDS OF APPEAL FILED BEFORE THE TRIBUNAL THE FIGURE OF ` 18,83,222/- IS MENTIONED AND HERE ALSO THE GROUND MERELY SAYS THAT THE CIT(A) WAS JUSTIFIED IN LAW IN ALLOWING THE CAPITALISATION OF EXPENSES. THIS FIGURE FINDS PLACE EVEN IN THE AUTHORISATION MEMO ISSUED BY THE COMMISSIONER OF INCOME TAX, WHICH CLEARLY SHOWS THAT NEITHER THE AO NOR THE CIT HAVE ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 6 APPLIED THEIR MIND TO WHAT WAS THE ISSUE, HOW MUCH IS THE EXPENDITURE WHICH WAS DISALLOWED FROM THE CAPITAL WORK-IN-PROGR ESS AND THE REASONS THEREFOR. THOUGH THE AO ON ONE HAND SAYS THAT THE E XCESS RENT CLAIMED IS ` 2,000/- BUT THE ACTUAL DISALLOWANCE IS ` 2,800/- FOLLOWING WERE THE DISALLOWANCES: - (A) AMOUNT PAID TO FISHERIES DEVELOPMENT FUND FOR OBTAINING NOC ` 8,00,000/- (B) AMOUNT PAID FOR EXTENSION OF IMPLEMENTATION AGREEMENT FOR HYDROELECTRIC PROJECT ` 7,88,845/- (C) EXCESS RENT ALLEGED TO HAVE BEEN CLAIMED `2,800/- 12. ASSESSEE CHALLENGED THE DISALLOWANCES BEFORE THE CI T(A). IT DESERVES TO BE NOTICED THAT COPY OF THE GROUNDS OF APPEAL AND S TATEMENT OF FACTS (IF ANY) WERE NOT FURNISHED BY THE REVENUE AT THE TIME OF FI LING THE APPEAL BEFORE THE ITAT BUT THE LEARNED D.R. APPEARS TO HAVE BEEN FULL Y PREPARED WITHOUT EVEN KNOWING WHETHER ALL THE PAPERS WERE AVAILABLE WITH HIM OR NOT. ANY WAY, WE HAVE GONE THROUGH THE ORDER PASSED BY THE CIT(A) TO UNDERSTAND AS TO WHAT WAS THE CONTENTIONS OF THE ASSESSEE. IT WAS STATED BEFORE THE LEARNED CIT(A) THAT ` 8,00,000/- HAD BEEN PAID TO THE DIRECTORATE OF FISH ERIES, HIMACHAL PRADESH FOR ISSUE OF NOC TO THE ASSESSEES POWER PR OJECT. IT WAS SUBMITTED THAT THE SAID EXPENDITURE WAS INCURRED TO GET CLEAR ANCE OF FLOW OF WATER DOWNSTREAM, SINCE THE NATURE OF BUSINESS OF THE ASS ESSEE IS TO GENERATE HYDROELECTRIC POWER AND IT IS NOT POSSIBLE TO GENER ATE THE SAME WITHOUT FLOW OF WATER. THE ASSESSEE ALSO PRODUCED A COPY OF THE NOC FROM THE DIRECTORATE OF FISHERIES, HIMACHAL PRADESH TO EMPHASISE THAT IT IS NOT IN THE NATURE OF PENALTY. 13. SIMILARLY, AS REGARDS PAYMENT OF ` 7,88,845/- IT WAS CONTENDED THAT THE ASSESSEE HAVING NOT COMMENCED COMMERCIAL OPERAT IONS, THE EXPENDITURE INCURRED IN THE NORMAL COURSE WAS CAPITALISED. THIS EXPENDITURE PERTAINS TO EXTENSION FEES FOR IMPLEMENTATION OF ITS PROJECT AN D IT WAS PAID TO HIMACHAL PRADESH ENERGY DEVELOPMENT AGENCY. ASSESSEE PRODUCE D COPY OF THE LETTER FROM HIMACHAL PRADESH ENERGY DEVELOPMENT CORPORATIO N. THUS, IT WAS CONTENDED THAT IT CANNOT BE TREATED AS EXPENDITURE IN THE NATURE OF PENALTY. ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 7 14. WITH REGARD TO THE BALANCE DISALLOWANCE IT WAS STAT ED THAT IT IS NOT UNDERSTOOD AS TO WHY THE AO DISALLOWED A SUM OF ` 2,800/-. 15. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) DIRECTED THE AO TO PERMIT THE ASSESSEE TO CAPITALIS E THE SUM OF ` 15,91,645/- BY OBSERVING AS UNDER: - 5.4 I HAVE CONSIDERED THE SUBMISSIONS AS MADE AND PERUSED THE DOCUMENTS AS FILED WHICH WERE EARLIER FILED BEFORE THE AO. AS PER LETTER FROM THE DIRECTORATE OF FISHERIES AND IN THE CONTEX T OF SETTING UP ANNI (5.00 MW), HYDRO ELECTRIC PROJECT IN KULLU DISTRICT (HIMACHAL PRADESH) FOR THE PURPOSE OF GRANT OF NOC, AS PER SAID LETTER , IT WAS DECIDED TO CHARGE RS.8,00,000/- AS FISHERY DEVELOPMENT FUND IN LIEU OF LOSS OF FISHERY RESOURCES. FROM THE SAID LETTER IT CAN BE I NFERRED THAT SAID AMOUNT WAS CHARGED FOR THE PURPOSE OF GRANT OF NOC FOR SETTING UP HYDRO ELECTRIC PROJECT. AS EARLIER STATED, THE NATU RE OF BUSINESS OF THE APPELLANT IS TO GENERATE HYDRO POWER. UNDER THE CIR CUMSTANCES, IT IS HELD THAT THERE IS NO INFIRMITY IN THE ACTION OF TH E APPELLANT IN CLAIMING EXPENSES UNDER CAPITAL WORK-IN-PROGRESS. IT IS NOWH ERE MENTIONED THAT THE SAID PAYMENT IS IN THE NATURE OF PENALTY. AS RE GARDS THE EXPENDITURE OF RS.7,88,845/-, AS PER COPY OF THE LE TTER FROM THE HIMACHAL PRADESH ENERGY DEVELOPMENT AGENCY ON RECOR D, THE SAID SUM DENOTES THE EXTENSION FEES PAID SINCE THE APPEL LANT COMPANY HAD REQUESTED FOR 6 MONTHS EXTENSION OF TIME PERIOD FOR IMPLEMENTATION OF AGREEMENT. THIS WAS ON ACCOUNT OF THE FACT THAT THE COMPANY WAS NOT ABLE TO START WORK ON THE DATE AS STIPULATED. THERE FORE IT WAS IN ORDER TO REQUIRE EXTENSION IN THE IMPLEMENTATION OF AGREE MENT IN RESPECT OF ANNI HYDRO ELECTRIC PROJECT FOR A PERIOD OF 6 MONTH S THAT THE SAID EXPENDITURE WAS INCURRED. SINCE THE APPELLANTS COM MERCIAL OPERATIONS HAD NOT YET STARTED, THE APPELLANT HAD CAPITALIZED THE SAID EXPENDITURE. IT IS HELD THAT SINCE THE EXPENDITURE IS INCIDENTAL TO THE BUSINESS CARRIED ON BY THE APPELLANT, IT HAS BEEN CORRECTLY CAPITALI ZED. AS REGARDS THE BALANCE OF RS.2,800/-, IT IS SEEN THAT SAID SUM HAS BEEN DISALLOWED WITHOUT ASSIGNING ANY SPECIFIC REASON OR DETAILS. O N THE BASIS OF THE ABOVE DISCUSSION, IT IS HELD THAT THE CLAIM OF THE APPELLANT FOR CAPITALIZATION OF THE ABOVE STATED EXPENDITURE IN A SUM OF RS.15,91,645/- REQUIRES TO BE ALLOWED AND IS THEREF ORE DIRECTED TO BE ALLOWED TO BE CAPITALIZED TO THE WORK-IN-PROGRESS. 16. REVENUE PREFERRED AN APPEAL AND, AS ALREADY NOTICED , THE AO JUSTIFIES THE ACTION OF THE CIT(A). IT ALSO DESERVES TO BE NO TICED THAT DESPITE SPECIFIC FINDINGS OF THE CIT(A) THE REVENUE DID NOT CHOOSE T O FILE PAPERS TO CONTRADICT THE FINDINGS OF THE CIT(A) BUT MERELY RELIED UPON B Y THE ORDER PASSED BY THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OT HER HAND, ADVERTED OUR ATTENTION TO THE PAPER BOOK FILED BY THE ASSESSEE C OMPANY TO SUBMIT THAT THE ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 8 PAYMENT FOR OBTAINING NOC AND TOWARDS EXTENSION FEE S CANNOT, BY ANY STRETCH OF IMAGINATION, BE TREATED AS PENALTY IN NA TURE. WITH REGARD TO THE BALANCE AMOUNT OF ` 2,800/- HE SUBMITTED THAT IT IS NOT KNOWN AS TO WHY THIS DISALLOWANCE WAS MADE BUT IT HAS TO BE PRESUME D THAT IT IS CONCERNED WITH THE EXCESS RENT CLAIMED, IF ANY, BUT BECAUSE O F THE SMALLNESS OF THE AMOUNT HE DID NOT ARGUE IN DETAIL. EVEN THE LEARNED D.R. COULD NOT FURNISH ANY DETAILS AS TO HOW THIS SUM ` 2,800/- WAS ARRIVED AT. IN FACT THE LEARNED CIT(A) HAS SET ASIDE THE DISALLOWANCE MAINLY ON THE GROUND THAT THE AO SOUGHT TO DISALLOW WITHOUT ASSIGNING ANY SPECIFIC R EASON OR DETAILS. THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTED OUR ATTEN TION TO PAGES 42 AND 43 OF THE PAPER BOOK TO HIGHLIGHT THAT THE PAYMENT OF ` 8,00,000/- AND ` 7,88,845/- ARE IN THE NORMAL COURSE OF BUSINESS AND THEY CANNOT BE TREATED AS PENALTY. 17. HAVING REGARD TO THE CIRCUMSTANCES AND CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS THE LEARNED D.R . IN THIS REGARD WE ARE OF THE FIRM VIEW THAT THE ORDER PASSED BY THE CIT(A) D OES NOT CALL FOR ANY INTERFERENCE ON THIS ISSUE AND WE HOLD ACCORDINGLY. 18. GROUNDS NO. 3 & 4 PERTAIN TO THE ADDITION MADE BY T HE AO UNDER SECTION 68 OF THE ACT WHICH WAS SET ASIDE BY THE CI T(A). THESE GROUNDS ARE EXTRACTED FOR IMMEDIATE REFERENCE: - 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE HON'BLE CIT(A) IS JUSTIFIED IN LAW IN DELETING THE ADDITION OF RS.45,14,610/- MADE U/S. 68 OF THE ACT BEING THE UN EXPLAINED CREDITS IN THE BOOKS OF THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE HON'BLE CIT(A) IS JUSTIFIED IN ADMITTING THE ADDITIONAL EVI DENCES IN VIOLATION OF PROVISIONS OF RULE 46A OF I.T. RULES 1 962. 19. THE AO NOTICED THAT THE ASSESSEE HAD SHOWN SHARE AP PLICATION MONEY PENDING ALLOTMENT AS ON 31.03.2007 AT ` 67,19,610/- AS AGAINST PRECEDING YEARS FIGURE OF ` 22,05,000/-. THEREFORE THERE IS A NET RECEIPT OF ` 45,14,610/- DURING THIS YEAR TOWARDS SHARE APPLICATION MONEY. T HE AO FURTHER NOTICED THAT THE ASSESSEES PAID UP CAPITAL ALSO INCREASED BY ` 4,80,390/-. HE APPEARS TO HAVE SPECIFICALLY ASKED THE ASSESSEE TO FURNISH THE DETAILS VIDE LETTERS DATED 04.08.2009 AND 21.08.2009. IN THIS RE GARD THE AO OBSERVED ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 9 THAT DESPITE SPECIFICALLY ASKING FOR DETAILS THE AS SESSEE MERELY FORWARDED A LETTER FROM M/S. TOPTRACK GARMENTS PVT. LTD., WHICH IS AN ASSOCIATE COMPANY OF THE ASSESSEE COMPANY, WHEREIN THEY HAVE STATED THAT A SUM OF ` 62,00,000/- WAS PAID TOWARDS SHARE APPLICATION MONE Y. THE CONFIRMATION LETTER WAS NOT EVEN SINGED BY THE DIRECTOR OF THE C OMPANY AND NO DOCUMENTARY EVIDENCE TO PROVE THE GENUINENESS OF TH E TRANSACTION, SOURCE AND CREDITWORTHINESS OF THE PERSON ADVANCING SUCH A MOUNT WAS PRODUCED. HE THEN REFERRED TO SECTION 68 OF THE ACT TO HIGHLI GHT THAT THE ASSESSEE HAS TO FULFIL THREE INGREDIENTS AND MERE EXPLANATION IS NO T SUFFICIENT. IF THERE IS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF A S UM SO CREDITED CAN BE CHARGED TO INCOME TAX UNDER SECTION 68 OF THE ACT. IN HIS OPINION THERE IS A DIFFERENCE BETWEEN BURDEN OF PROOF AND ONUS OF P ROOF; BURDEN OF PROOF LIES ON THE PERSON WHO HAS TO PROVE A FACT AND IT NEVER SHIFTS BUT THE ONUS MAY SHIFT. IN HIS OPINION THE ASSESSEE DID NOT DISCHARG E ITS INITIAL ONUS EVEN AFTER AVAILING SUFFICIENT OPPORTUNITIES AND THEREFORE BY APPLYING THE DOCTRINE OF NOTORIOUS FACT HE ASSUMED THAT THE AFOREMENTIONED SHARE APPLICATION MONEY MUST HAVE FLOWN FROM THE ASSESSEE AND ACCORDI NGLY ADDED THE SUM UNDER SECTION 68 OF THE ACT. IN THE INSTANT CASE TH E ASSESSEE STATED TO HAVE RECEIVED MONEY FROM M/S. TOPTRACK GARMENTS PVT. LTD . TOWARDS SHARE APPLICATION, BUT SUBSEQUENTLY REFUNDED SHARE APPLIC ATION MONEY. 20. AGGRIEVED, ASSESSEE CONTENDED BEFORE THE FIRST APPE LLATE AUTHORITY THAT THE INITIAL ONUS WAS DISCHARGED BY FURNISHING DETAI LS SUCH AS CONFIRMATION LETTER AND SOURCE OF MONEY; THE ASSESSEE HAD FORWAR DED A LETTER OF M/S. TOPTRACK GARMENTS PVT. LTD. STATING THAT THE SAID C OMPANY HAD PAID A SUM OF ` 62,000,000/- TOWARDS SHARE APPLICATION MONEY. IN FA CT, THE TOTAL SHARE APPLICATION MONEY, AS PER THE BALANCE SHEET, PENDIN G ALLOTMENT AS ON 31.03.2007, IS ` 67,19,610/- OUT OF WHICH ` 45,14,610/- WAS RECEIVED IN THE CURRENT YEAR. THE AO REJECTED THE LETTER FROM M/. T OPTRACK GARMENTS PVT. LTD. FOR THE REASON THAT THE CONFIRMATION WAS NOT S IGNED BY THE DIRECTOR OF THE COMPANY AND THE ADDRESS OF THE COMPANY IS THE S AME AS THAT OF THE ASSESSEE COMPANY. 21. THE CASE OF THE ASSESSEE, ON THE OTHER HAND, WAS TH AT IN RESPONSE TO THE NOTICE DATED 04.08.2009 THE ASSESSEE FURNISHED DETAILS OF INCREASE IN ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 10 SHARE CAPITAL WITH NAME AND ADDRESS OF THE PARTY, P AN, CONFIRMATION AND BANK STATEMENT TO PROVE THE SOURCE OF FUND. DETAILS SHOWING THE CHEQUE NUMBER, DATE AND AMOUNT RECEIVED ALONG WITH CONFIRM ATION LETTER FROM M/S. TOPTRACK GARMENTS PVT. LTD. ARE ON RECORD. MERELY B ECAUSE THE SAID COMPANY HAS THE SAME CORRESPONDENCE ADDRESS IT WILL NOT MAKE THE TRANSACTION NON-GENUINE. ASSESSEES REGISTERED OFFI CE IS IN MUMBAI WHEREAS THE OTHER COMPANYS REGISTERED OFFICE IS IN NEW DEL HI. FURTHER, BOTH THE COMPANIES NEITHER HAVE COMMON DIRECTOR NOR ANY COMM ON SHAREHOLDER AND THEREFORE IT IS INCORRECT ASSUMPTION OF THE AO THAT THE ASSESSEE IS AN ASSOCIATE COMPANY. WITH REGARD TO THE PLEA OF THE A O THAT CONFIRMATION LETTER IS NOT SIGNED BY THE DIRECTOR AND THEREFORE NOT ACCEPTABLE, IT WAS CONTENDED BEFORE THE CIT(A) THAT CONFIRMATION WAS S INGED BY A PERSON DULY AUTHORISED BY THE BOARD AND THEREFORE IT IS NOT COR RECT TO SAY THAT IT HAS NO VALIDITY. EVIDENCE OF AUTHORISATION WAS PLACED IN T HE FORM OF COPY OF BOARD RESOLUTION. IT WAS THUS CONTENDED THAT IDENTITY OF THE PARTY WAS PROVED. PAYMENT WAS THROUGH CHEQUE AND PAN ETC. WERE AVAILA BLE ON RECORD AND HENCE THE AO COULD HAVE ISSUED SUMMONS TO PARTY OR DIRECTED THE ASSESSEE TO PRODUCE THE PARTY BUT AO HAD NOT DONE AND ARBITR ARILY PROCEEDED TO MAKE ADDITION UNDER SECTION 68 OF THE ACT WITHOUT MAKING FURTHER/PROPER ENQUIRY. 22. THE LEARNED CIT(A) WAS SATISFIED WITH THE PLEA OF T HE ASSESSEE AND THEREFORE CALLED FOR A REMAND REPORT FROM THE AO. I N THE REMAND REPORT THE AO ADMITTED, BY OBSERVING THAT NO ADVERSE CONCLUSIO N CAN BE DRAWN ON THIS ISSUE; IN THE LIGHT OF THE FACTS BROUGHT ON RECORD THE AO ADMITTED THAT NO CASE CAN BE MADE OUT TO MAKE ADDITION UNDER SECTION 68 OF THE ACT. HOWEVER, WITH REGARD TO ADMISSION OF NEW EVIDENCE T HE AO OBJECTED BY STATING THAT UNDER RULE 46A OF THE I.T. RULES THE A SSESSEE HAS TO SHOW REASONABLE CAUSE FOR NON-PRODUCTION OF THE EVIDENCE BEFORE THE AO WHEREAS IN THE INSTANT CASE AMPLE OPPORTUNITIES WERE GIVEN BY THE AO TO PRODUCE THE DETAILS AND HENCE THE NEW EVIDENCE SHOULD NOT BE AD MITTED. 23. THE LEARNED CIT(A) CONSIDERED THE ISSUE IN THE BACK DROP OF THE FACTS AVAILABLE ON RECORD BEFORE THE AO AS WELL AS THE SU BMISSIONS MADE BEFORE HIM AND THE REMAND REPORT OBTAINED FROM THE AO. HE CONCLUDED THAT IT IS A FIT CASE FOR ADMISSION OF ADDITIONAL EVIDENCE AND O N THE FACTS HE WAS OF THE ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 11 VIEW THAT NO CASE WAS MADE BY THE AO TO MAKE THE AD DITION UNDER SECTION 68 OF THE ACT. DETAILED REASONS GIVEN BY THE CIT(A) ARE EXTRACTED FOR IMMEDIATE REFERENCE: - 6.3. THE FINDINGS OF THE AO AND THE SUBMISSIONS AS MADE BY THE APPELLANT WERE CONSIDERED. IT IS INDEED A FACT THAT THE NAME AND ADDRESS OF THE APPLICANT ALONG WITH PAN DETAILS WER E FURNISHED TO THE AO. SO ALSO THE DETAILS OF CHEQUES ISSUED BY THE AP PELLANT DETAILING THE CHEQUE NO. DATE AND AMOUNTS WERE FURNISHED. THE APP ELLANT HAS ALSO FILED CONFIRMATION LETTER FROM TOP TRACK GARMENTS P VT. LTD. SAID LETTER WAS SIGNED BY AN AUTHORIZED SIGNATORY. THERE IS ALS O ON RECORD A COPY OF THE BOARD RESOLUTION PASSED BY THE COMPANY ON 12 JANUARY, 2008 AUTHORIZING ONE MR. J.S. RANA TO SIGN ALL PAPERS, C ONFIRMATIONS AND ALL OTHER DOCUMENTS AS MAY BE REQUIRED TO BE SUBMITTED TO THE AUTHORITIES. HOWEVER, IT WAS DEEMED NECESSARY TO REMAND THE MATE R TO THE FILE OF THE AO TO CONDUCT NECESSARY AND PROPER ENQUIRY IN O RDER TO VERIFY THE CLAIM AS MADE BY THE APPELLANT. THE FRESH MATERIAL AS FURNISHED BY THE APPELLANT SUCH AS CONFIRMATION LETTER SIGNED BY THE DIRECTOR DURING THE COURSE OF HEARING OF THE APPEAL WERE THUS REMITTED BACK TO THE AO. COPIES OF BANK STATEMENT OF THE APPELLANT, ANNUAL R EPORT, COPY OF IT RETURN FOR A.Y. 2007-08 OF THE APPELLANT I.E. ALL D OCUMENTS FURNISHED IN CONTINUATION OF THE DETAILS ALREADY FILED BEFORE TH E AO, WERE REMITTED BACK TO THE AO FOR EXAMINATION OF REPORT. 6.4. AFTER CONDUCTING NECESSARY ENQUIRY AND AFTER E XAMINING THE DOCUMENTS THAT WERE FILED BEFORE THE CIT(A) DURING THE COURSE OF HEARING OF THE APPEAL, THE AO FURNISHED HIS REMAND REPORT A S PER LETTER NO. ITO. ((1)(4)/REMAND REPORT/2010-11 DATED 06.10.2010. IT IS STATED BY THE AO IN THE REMAND REPORT THAT DETAILS AVAILABLE ON RECO RD AS WELL AS THE DETAILS WHICH WERE FRESH PRODUCED WERE EXAMINED. TH E DOCUMENTS EXAMINED INCLUDED AUDITED ACCOUNTS OF THE SHARE APP LICANT, THE BANK ACCOUNT OF THE APPELLANT AND THE SHARE APPLICANT, A ND COPIES OF THE I.T. RETURN OF THE SHARE APPLICANT. IT IS FURTHER STATED THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO HAD ALSO EXAMINED TH E SHARE REGISTER IN ORIGINAL WHERE FROM IT WAS CONFIRMED THAT SHARE APP LICATION PENDING ALLOTMENT FROM TOP TRACK GARMENTS P. LTD. WAS RS.62 ,19,610/- AS ON 31.03.2007. IT IS REPORTED BY THE AO THAT THERE WAS PAYMENT OF REFUND APPLICATION MONEY TO THE EXTENT OF RS.17,19,610/- I N THE SUBSEQUENT YEAR. THE CONCLUSION AS ARRIVED AS IN THE REMAND REPORT I S QUOTED BELOW. THE ABOVE SUBMISSION OF ASSESSEE WITH REVERENCE T O DETAILS AVAILABLE ON RECORD AS WELL AS THE DETAILS PRODUCED NOW HAVE BEEN EXAMINED. IN THE AUDITED BALANCE SHEET OF M/S. TOP TRACK GARMENTS P. LTD. OF MARCH 2007 IN THE SCHEDULE IV (INVESTMENTS) IT IS REFLECTED THAT INVESTMENT IS MADE IN 67000 SHARES @ RS.10/- EACH O F GROWEL ENERGY CO. LTD. EQUIVALENT TO RS.67,00,000/- PREVIOUS YEAR IT IS SHOWN AT RS.5,00,000/-. FURTHER IN THE BANK STATEMENT OF M/S . GROWEL ENERGY CO. LTD. AND M/S TOP TRACK GARMENTS P. LTD. THE PAY MENTS AND RECEIPT WERE DULY REFLECTED. FURTHER IN SHARE ALLOTMENT REG ISTER SHARES NUMBERING 46039 WERE SHOWN AGAINST THE NAME OF M/S. TOP TRACK ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 12 GARMENTS P. LTD. AS SUCH NO ADVERSE CONCLUSIONS CAN BE DRAWN ON THIS ISSUE IN LIGHT OF THE NEW FACTS BROUGHT ON RECORD. 6.5. THE AO HAS RAISED OBJECTION REGARDING ADMISSIB ILITY OF THE NEW EVIDENCE. IN THIS REGARD IT IS TO BE STATED THAT WI TH REGARD TO THE SHARE APPLICATION MONEY, THE BASIC DETAILS SUCH AS NAME O F THE PARTY, ADDRESS, PAN AND DETAILS OF THE CHEQUE ISSUED WERE ALREADY PRODUCED BEFORE THE AO. ONCE PRELIMINARY DETAILS ARE FURNISH ED, THEN IT IS A SETTLED LEGAL POSITION THAT THE ONUS SHIFT TO THE A O TO CONTROVERT THE ASSESSEES STAND IF HE IS NOT AGREEABLE WITH THE SU BMISSIONS AND EVIDENCE AS FURNISHED. SINCE ON FACTS OF THE CASE, THE AO HAD NOT DISPROVED THE MATERIAL PLACED BEFORE HIM, IT WAS FO UND NECESSARY TO REMAND THE MATTER BACK TO THE FILE OF THE AO FOR TH IS LIMITED PURPOSE AND TO CONDUCT PROPER ENQUIRY WITH REFERENCE TO THE MATERIAL ALREADY ON RECORD AND THAT FURNISHED AFRESH BEFORE THE CIT(A), WHICH WAS IN CONTINUATION OF THE MATERIAL ALREADY FURNISHED. UND ER THE CIRCUMSTANCES, THE CASE OF THE APPELLANT COMES WITH IN THE AMBIT OF RULE 46A. IN THE LIGHT OF THESE FINDINGS AND ALSO THE CO NCLUSION OF THE AO THAT NO ADVERSE INFERENCE CAN BE DRAWN IN THE LIGHT OF THE FACTS WHICH ARE ON RECORD, IT IS HELD THAT ADDITION MADE UNDER SECTION 68 REQUIRES TO BE DELETED. THEREFORE, ADDITION OF RS.45,14,610/- I S HEREBY DELETED. 24. THE AO, AS USUAL, SUBMITTED IN GROUND NO. 3 THAT TH E CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION AND JUSTIFIED IN ADMITTING THE ADDITIONAL EVIDENCE. HOWEVER, EVEN ASSUMING THAT THE REVENUE I S AGGRIEVED BY THE ORDER OF THE CIT(A), EVEN AT THIS STAGE THE LEARNED D.R. COULD HAVE PLACED SOME MATERIAL TO CONTRADICT THE FINDINGS OF THE LEA RNED CIT(A); EXCEPT SUBMITTING THAT THE LEARNED CIT(A) SHOULD NOT HAVE ADMITTED THE ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULES, NO MATER IAL WAS FILED BY THE REVENUE TO SUPPORT THEIR STAND. 25. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT EVEN SANS THE REMAND REPORT AND THE ADDITIONAL EVIDENCE SUBMITTED BEFORE THE LEARNED CIT(A) THE ADDITION MADE BY THE AO IS ARBITRARY AND WITHOUT ANY BASIS; WHEN THE BASIC MATERIAL IS PLACE D BEFORE THE AO, IT IS THE DUTY OF THE AO TO MAKE FURTHER ENQUIRY BY PUTTING I T TO THE ASSESSEE AND IN THE ABSENCE OF MAKING PROPER ENQUIRY THE ADDITION M ADE BY THE AO UNDER SECTION 68 DESERVES TO BE SET ASIDE. HE REFERRED TO THE ORDER PASSED BY THE CIT(A) AND CONTENTIONS MADE BEFORE THE LEARNED CIT( A) BY THE ASSESSEE COMPANY TO SUBMIT THAT M/S. TOPTRACK GARMENTS PVT. LTD. IS AN INDEPENDENT COMPANY AND PAYMENTS WERE MADE BY CHEQU E, PAN DETAILS ETC. WERE FURNISHED BEFORE THE AO AND ONCE THE IDENTITY OF THE PARTY IS ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 13 ESTABLISHED AND BASIC DETAILS WERE FURNISHED ESTABL ISHING THE GENUINENESS AND CREDITWORTHINESS IT IS THE DUTY OF THE AO TO MA KE FURTHER ENQUIRY SINCE THE ONUS SHIFTS UPON HIM TO PROVE THAT THE AMOUNT R ECEIVED BY THE ASSESSEE, IN THE FORM OF SHARE APPLICATION MONEY, WAS UNEXPLA INED INCOME OF THE ASSESSEE. IN THE INSTANT CASE NO SUCH EFFORTS WERE MADE BY THE AO. IN FACT, UNDER SECTION 68 OF THE ACT THE AO IS DUTY BOUND TO PROVE THAT THE ASSESSEE WOULD HAVE EARNED SUCH ADDITIONAL INCOME, BY THE US E OF THE EXPRESSION MAY IN SECTION 68 OF THE ACT, WHEREAS IN THE INST ANT CASE THE AO TRIED TO MAKE A CASE ON ASSUMPTIONS, WITHOUT PROVING THAT TH E MATERIAL AVAILABLE BEFORE THE AO IS WRONG AND INSUFFICIENT. IN FACT ON LY TWO OPPORTUNITIES WERE GIVEN AND THE ASSESSEE FURNISHED THE DETAILS. THUS THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LEARNED CIT(A). 26. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE LEARNED CIT(A) HAS TAKEN NOTE OF THE FA CT THAT M/S. TOPTRACK GARMENTS PVT. LTD. CANNOT BE TREATED AS AN ASSOCIAT E COMPANY AND DULY AUTHORISED PERSON HAS SIGNED THE CONFIRMATION LETTE R. IT IS ALSO NOT IN DISPUTE THAT PAYMENTS WERE MADE BY CHEQUE AND PAN DETAILS W ERE ALSO ON RECORD BEFORE THE AO. EVEN AT THIS STAGE THE LEARNED D.R. COULD NOT POINT OUT AS TO ON WHAT BASIS THE REVENUE CAN ASSAIL THE ORDER OF THE CIT(A). IN SUCH CASE IT IS THE DUTY OF THE ADMINISTRATIVE COMMISSIONER TO TAKE PRO PER CARE TO VERIFY THE FACTS THOROUGHLY BEFORE APPENDING HIS SIGNATURE IN THE FO RM OF AUTHORISATION MEMO AND THE AO IS EQUALLY RESPONSIBLE IN FURNISHING NEC ESSARY DETAILS IN THE FORM OF PAPER BOOK BEFORE THE TRIBUNAL IF HE IS OF THE OPIN ION THAT THE PLEA RAISED BEFORE THE TRIBUNAL HAS SOME FORCE. IT IS A VERY RARE SCEN ARIO IN THE TRIBUNAL THAT THE AO PERSONALLY TAKES CARE TO ASSIST THE DEPARTMENTAL REPRESENTATIVE BY FURNISHING NECESSARY DETAILS TO SUPPORT THE PLEA RA ISED BY HIM. IN FACT THIS IS A PECULIAR CASE WHERE EVEN THE COMMISSIONER (ADMINIST RATION) WHO IS SUPPOSED TO SUPERVISE THE PROPER FUNCTIONING OF THE AO, UNDE R HIS CHARGE, HAS ALLOWED HIM TO FILE APPEALS WITHOUT PROPERLY EXAMINING THE ASSESSMENT ORDER AND THE ORDER OF THE LEARNED CIT(A), WHICH RESULTS IN UNNEC ESSARY EXPENDITURE TO THE ASSESSEE WHEN APPEAL IS FILED BY THE REVENUE AND TH E ASSESSEE HAD TO UNDERGO THE TRAUMA OF ENGAGING COUNSEL AND PAYING SUBSTANTI AL FEES TO DEFEND THE CASE WHEN THE REVENUE HAS NO CASE AT ALL. ITA NO. 338/MUM/2011 M/S. GROWEL ENERGY CO. LTD. 14 27. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE A RE OF THE FIRM VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NO T CALL FOR ANY INTERFERENCE. WE HOLD ACCORDINGLY. 28. AS WE HAVE ALREADY MENTIONED, ON ACCOUNT OF IMPROPE R ACTION ON THE PART OF THE COMMISSIONER OF INCOME TAX AS WELL AS T HE AO, THE ASSESSEE HAD TO ENGAGE A COUNSEL AND INCUR SUBSTANTIAL EXPENDITU RE TO DEFEND ITS CASE. THEREFORE WE AWARD A TOKEN COST OF ` 5,000/- UPON THE COMMISSIONER OF INCOME TAX WHO HAS GIVEN THE AUTHORISATION AND COST OF ` 10,000/- UPON THE AO WHO HAS FILED THIS APPEAL. 29. THE SAID PAYMENT SHOULD BE MADE TO THE ASSESSEE WIT HIN ONE MONTH FROM THE DATE OF RECEIPT OF THIS ORDER. REGISTRY IS ALSO DIRECTED TO MARK A COPY TO THE CHAIRMAN, CBDT SO THAT IN FUTURE THE INCOME TAX COMMISSIONERS, WHO ARE RESPONSIBLE FOR FILING APPEAL BEFORE THE TR IBUNAL, WOULD TAKE PROPER CARE TO SCRUTINISE THE ISSUES BEFORE AUTHORISING TH E AO TO FILE APPEALS BEFORE THE TRIBUNAL. WITH THESE OBSERVATIONS THE APPEAL FI LED BY THE REVENUE IS TREATED AS DISMISSED WITH COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JUNE, 2014. SD/- SD/- (N.K. BILLAIYA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 13 TH JUNE, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 19, MUMBAI 4. THE CIT 9, MUMBAI CITY 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.