DCIT, New Delhi V. M/s. S.M. International, New Delhi

ITA 3463/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5068 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 29-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 06-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Rejection of books of accounts; Reasonable cause; Onus to prove; Revised return
• Section: 142(1); 144

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI C.M.GARG , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3463/DEL/2014 (ASSESSMENT YEAR: 2008 - 09 ) DCIT, CIRCLE - 25(1), NEW DELHI VS. SM INTERNATIONAL, 84, EAST AVENUE ROAD, PUNJABI BAGH, NEW DELHI PAN:AABFS0371F (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SS RANA, CIT DR ASSESSEE BY: NONE DATE OF HEARING 01/08 / 2017 DATE OF PRONOUNCEMENT 0 4 / 08 / 2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - XXIV DATED 03.03.2014 FOR THE ASSESSMENT YEAR 2008 - 09. THE REVENUE HAS RAISED EFFECTIVELY FOLLOWING FOUR GROUNDS OF APPEAL WHEREIN ADDITIONS HAVE BEEN DELETED AS UNDER: - 1. DELE TING THE ADDITION OF RS.72,76,6847 - MADE BY THE AO ON ACCOUNT OF UNACCOUNTED SALES. 2. DELETING THE ADDITION OF RS.17,00,000/ - MADE BY THE AO ON ACCOUNT OF CAPITAL INTRODUCED OUT OF UNDISCLOSED SOURCES. 3. DELETING THE ADDITION OF RS.7,68,3547 - MADE BY THE AO ON ACCOUNT OF TRADING EXPENSES. 4. DELETING THE ADDITION OF RS. 12,04,8507 - MADE BY THE AO ON ACCOUNT OF INTEREST/BANK CHARGES. 5. THE APPELLANT CRAVES THE RIGHT TO ADD, ALTER OR DEMAND ANY GROUND OF APPEAL 2. THE BRIEF FACTS OF THE CASE IS T HAT THE ASSESSEE IS A PARTNERSHIP FIRM WHO FILED ITS RETURN OF INCOME ON 30.09.2008 SHOWING NIL INCOME. IT IS ENGAGED IN THE BUSINESS OF EXPORT OF FABRICS, READYMADE GARMENTS AND JOB WORK. THE LD AO HAS GAVE MANY OPPORTUNITIES TO THE ASSESSEE FOR PRODUCING THE BOOKS OF ACCOUNT AND RELEVANT PAGE 2 OF 8 DETAILS FOR THE PURPOSE OF ASSESSMENT, HOWEVER THE ASSESSEE FOR THE REASON BEST KNOWN TO IT DID NOT PRODUCE THE RELEVANT DETAILS. FINALLY THE ASSESSEE WAS ASKED TO PROVIDE VARIOUS DETAILS OF 16.12.2010 IN THE FORM SHOW CA USE NOTICE IN RESPONSE THAT TO THE ASSESSEE DID NOT FILE DETAILS PROPERLY. IN VIEW OF THIS THE LD AO MADE AN ADDITION OF RS. 10988389/ - TO THE TOTAL INCOME OF THE ASSESSEE AND PASSED ASSESSMENT ORDER U/S 144 OF THE INCOME TAX ACT, 1961, INVOKING THE PROVISIONS OF SECTION 145(3) OF TH E ACT THEN DETERMINED THE TOTAL TAXABLE INCOME OF RS. 11506820/ - AGAINST THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A) WHO CONSIDERED THE SUBMISSION OF THE ASSESSEE DELETED THE ADDITION AS UNDER: - 5. I HAVE CAREFULLY CONSIDERED THE SUBMISSION S MADE BY THE LD. AR AND HAVE GONE THROUGH THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED RELEVANT PRIMARY EVIDENCE FILED/ PRODUCED BY THE APPELLANT BEFORE THE A.O. I HAVE ALSO PERUSED THE SHOW CAUSE NOTICE DATED 16.12.2010 WHICH IS REPRODUCED IN PAGES 11 - 13 , OF THE ASSESSMENT ORDER. THE LD.AR PLEADED THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ASSESSMENT U/S 144 OF THE ACT OR IN REJECTING THE BOOKS ''OTACCOUNTS. IT IS ARGUED THAT THERE WAS NO NON - COMPLIANCE OF THE STATUTORY NOTICES BY THE APPELLANT AND EVEN FOR THE SAKE OF ARGUMENT, IF IT IS ASSUMED THAT THERE WAS NON - COMPLIANCE, THE LD. A.O. HAS NOT MADE THE 'BEST JUDGMENT ASSESSMENT', BUT HE HAS DETERMINED TOTAL INCOME WITH REFERENCE TO THE AUDITED ACCOUNTS ONLY BY MAKING CERTAIN DISALLOWANCES. IT IS NOTED THAT THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNTS OF THE APPELLANT ON THE GROUND THAT CERTAIN SALE BILLS WERE NOT RECORDED IN THE LEDGER OF THE APPELLANT AND SOME OF THE EXPENSES CLAIMED IN THE PROFIT & LOSS ACCOUNT WERE MANIPULATED. HOWEVER, IT IS NOTED THAT INSPITE OF REJECTING THE BOOKS FO ACCOUNTS OF THE APPELLANT, THE ASSESSING OFFICER HAS RELIED UPON THE SAME BOOKS OF THE APPELLANT AND HAVE MERELY DISALLOWED CERTAIN EXPENSES AND SALE BILLS. THIS MAKES VERY CLEAR THAT PROFITS CAN BE DERIVE D FROM THE BOOKS OF ACCOUNTS OF THE APPELLANT. IT IS FURTHER NOTED THAT THE APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING CONSISTENTLY FROM WHICH PROFIT CAN BE DEDUCED. INDEED, THIS IS PRECISELY WHAT THE LD. A.O. HAS DONE WHILE COMPUTING THE TOTAL INCOME BY MAKING CERTAIN DISALLOWANCE OF EXPENSES AND OTHER CLAIMS. FURTHER, DURING THE COURSE OF ASSESSMENT THE APPELLANT HAS COMPLIED TO THE NOTICES U/S 142(1) AND 143(2) OF THE INCOME TAX ACT AND HAVE FURNISHED THE DETAILS REQUISITIONED BY THE ASSESSIN G OFFICER.THEREFORE, IT IS NOT A CASE WHERE THE APPELLANT HAS NOT COMPLIED TO THE TERMS OF THE NOTICES U/S 142(1) AND 143(2) OF THE INCOME TAX ACT, OR NOT FURNISHED ANY DETAILS AS REQUISITIONED BY THE ASSESSING OFFICER. THEREFORE, IN MY OPINION, THE ASSESS ING OFFICER HAS ERRED IN INVOKING THE PROVISIONS OF SECTION 144 OF THE INCOME TAX ACT AND IN FRAMING THE BEST JUDGEMENT ASSESSMENT ORDER. IN CIT VS. SEGU BUCHIAH SETTY (77 ITR 639), THE SUPREME COURT HAS OBSERVED THAT IN CASE OF NON - COMPLIANCE OF STATUTORY NOTICE, THE AO MUST MAKE A BEST JUDGMENT ASSESSMENT.THE RELEVANT OBSERVATION IS REPRODUCED BELOW: - 'THE CLEAR IMPORT OF SECTION 23(4) OF THE INDIAN INCOME - TAX ACT, 1922, IS THAT ON THE ASSESSEE'S COMMITTING ANY ONE OF THE DEFAULTS MENTIONED THEREIN THE INCOME - TAX OFFICER IS BOUND TO MAKE THE ASSESSMENT TO THE PAGE 3 OF 8 BEST OF HIS JUDGMENT. IN OTHER WORDS, IF A PERSON FAILS TO MAKE THE RETURN REQUIRED BY A NOTICE UNDER SECTION 22(2) AND HE HAS FURTHER NOT M ADE A RETURN OR A REVISED RETURN UNDER SECTION 22(3), THE INCOME - TAX OFFICER MUST MAKE AN ASSESSMENT UNDER SECTION 23(4). SIMILARLY, IF THE PERSON FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSUED UNDER SECTION 22(4) OR IF HE FAILS TO COMPLY WITH ALL T HE TERMS OF A NOTICE ISSUED UNDER SECTION 23(2)' IN CIT VS. ESUFALI (HM) [1973](90 ITR 271 AT 276) THE HON'BLE SUPREME COURT HAS EXPLAINED THE DISTINCTION BETWEEN THAT 'BEST JUDGMENT 1 AND REGULAR ASSESSMENT AS FOLLOWS: - 'THE DISTINCTION BETWEEN A 'BEST JUDGMENT' ASSESSMENT AND ASSESSMENT BASED ON THE ACCOUNTS SUBMITTED BY AN ASSESSEE MUST BE BORNE IN MIND. SOMETIMES THERE MAY BE INNOCENT OR TRIVIAL MISTAKES IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE. THERE MAY BE EVEN CER TAIN UNINTENDED OR UNIMPORTANT OMISSIONS IN THOSE ACCOUNTS; BUT YET THE ACCOUNTS MAY BE ACCEPTED AS GENUINE AND SUBSTANTIALLY CORRECT. IN SUCH CASES, THE ASSESSMENTS ARE MADE ON THE BASIS OF THE ACCOUNTS MAINTAINED EVEN THOUGH THE ASSESSING OFFICER MAY ADD BACK TO THE ACCOUNTS PRICE OF ITEMS THAT MIGHT HAVE BEEN OMITTED TO BE INCLUDED IN THE ACCOUNTS. IN SUCH A CASE, THE ASSESSMENT MADE IS NOT A 'BEST JUDGMENT ' ASSESSMENT. IT IS PRIMARILY MADE ON THE BASIS OF THE ACCOUNTS MAINTAINED BY THE ASSESSEE. BUT, W HEN THE ASSESSING OFFICER COMES TO THE CONCLUSION THAT NO RELIANCE CAN BE PLACED ON THE ACCOUNTS MAINTAINED BY THE ASSESSEE, HE PROCEEDS TO ASSESS THE ASSESSEE ON THE BASIS OF HIS ' BEST JUDGMENT'. IN DOING SO, HE MAY TAKE SUCH ASSISTANCE AS THE ASSESSEE'S ACCOUNTS MAY AFFORD; HE MAY ALSO RELY ON OTHER INFORMATION GATHERED BY HIM AS WELL AS THE SURROUNDING CIRCUM - STANCES OF THE CASE. THE ASSESSMENTS MADE ON THE BASIS OF THE ASSESSEE'S ACCOUNTS AND THOSE MADE ON ' BEST JUDGMENT ' BASIS ARE TOTALLY DIFFERENT TYPES OF ASSESSMENTS.' IN VIEW OF THE ABOVE I HOLD THAT NOT ONLY WAS THE AO NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 144, BUT ALSO THAT HE HAS NOT MADE THE BEST JUDGMENT ASSESSMENT IN ACCORDANCE WITH SECTION 144. WITH THESE COMMENTS, I PROCEED TO DISPOSE THE OTHER GROUNDS OF THE ACT. 5.1 IT IS FURTHER NOTED THAT THE DOMESTIC SALES COMPRISED OF CREDIT SALES OF RS 69,38,1247 - AND CASH SALES OF RS 3,38,5607 - . AS REGARDS THE CREDIT SALES OF RS 69,38,1247 - , THE SALES BILLS WERE DULY PRESENTED ALONG WITH THE SALE VOUCHERS BEFORE THE AO. THE PAYMENTS WERE RECEIVED THOUGH CHEQUES. COPY OF ACCOUNT OF PARTIES (ALONG WITH AMOUNT OF SALES) WERE ALSO FILED BEFORE THE A.O. THEREFORE, IN MY OPINION THE APPELLANT HAD DISCHARGED THE BURDEN OF PROOF U7S 68 AND TH E AO ERRED IN TREATING CREDIT SALES OF RS. 69,38,1247 - AS UNACCOUNTED SALES WITHOUT QUESTIONING THE VERACITY OF THE EVIDENCES FILED WITH HIM AND WITHOUT BRINGING ON RECORD ANY MATERIAL TO CONTRADICT IT. IT IS FURTHER OBSERVED THAT THE FIRM IS AN OLD ONE AN D IN THE PAST ALSO IT HAS BEEN CONSISTENTLY DECLARING BOTH EXPORT AND DOMESTIC SALES OF FABRIC, GARMENTS ETC. ON CREDIT AND IN CASH. AS REGARDS THE RETAIL CASH SALES AGGREGATING RS. 3,28,560, I FIND THAT IT REPRESENTS A SMALL FRACTION OF THE DOMESTIC SALE S. THESE SALES ARE FULLY VOUCHED AND LEDGERISED. I ALSO FIND THAT THE RELEVANT INVOICES WERE AVAILABLE, PAGE 4 OF 8 COPY OF LEDGERS ACCOUNT WAS ALSO SUBMITTED WITH AO VIDE LETTER DT 20.10.2010 WHICH IS AT PG 57 OF THE PAPER BOOK. IT WAS EXPLAINED THAT THE APPELLANT SE LLS DEFECTIVE GOODS IN RETAIL AS SECONDS IN CASH WHICH IN MY OPINION IS A NORMAL PRACTICE IN THE BUSINESS OF MANUFACTURE AND SALE OF READYMADE GARMENTS. KEEPING IN VIEW THE PAST HISTORY OF THE CASE, THERE IS NO REASON FOR TREATING THESE SALES AS UNEXPLAINE D. AS A RESULT, ENTIRE ADDITION OF RS. 72,76,6847 - IS DELETED 5.2 I HAVE ALSO CONSID ERED THE EVIDENCE FILED BY THE APPELLANT WITH THE ASSESSING OFFICER IN SUPPORT OF THE THE SOURCE OF CAPITAL INTRODUCED BY THE PARTNER OF THE APPELLANT FIRM NAMELY SRI MUNI SH KUMAR. IT IS NOTED THAT SRI MUNISH KUMAR HAS WITHDRAWN CASH FROM HIS ACCOUNT NO. 051621431 AT HSBC BANK (AS PROPRIOTER OF M7S V.M.ENTERPRISES) ON THE FOLLOWING DATES WHICH HAS BEEN RE - DEPOSITED IN THE ACCOUNT OF THE APPELLANT FIRM AS CAPITAL: DATE PART ICULARS AMOUNT 04.10.2007 CASH 1,10,000 08.10.2007 CASH 1,00,000 18.10.2007 - DO - 1,00,000 20.10.2007 - DO - 1,00,000 22.10.2007 - DO - 1,50,000 30.10.2007 - DO - 2,00,000 08.11.2007 - DO - 50,000 27.11.2007 - DO - 1,00,000 14.12.2007 - DO - 1,50,000 03.01.2008 - DO - 1,00,000 15.01.2008 - DO - 1,00,000 17.01.2008 - DO - 3,00,000 TOTAL 15,60,000 THE AO HAS NOT CONTROVERTED THE FACT THAT THE AFORESAID PARTNER INJECTED THE ADDITIONAL CAPITAL FROM HIS OWN RESOURCES, AS EXPLAINED ABOVE. IN FACT, NEITHER ANY DOUBT ABOUT THE SOURCE OF THE FUNDS NOR THE CREDIT WORTHINESS OF SHRI GUPTA WAS RAISED BY THE ASSESSING OFFICER. HE ONLY QUESTIONED THE PROPRIETY OF T HE PARTNER IN INJECTING MORE CAPITAL IN THE FIRST EVEN THOUGH IT DOES NOT NEED IT. IT IS AN UNDISPUTED FACT THAT NO INTEREST WAS PAID TO THE PARTNERS ON THEIR CAPITAL FUNDS LYING WITH THE FIRM. THEREFORE THIS TRANSFER OF CAPITAL FUNDS BY THE PARTNER IS TAX NEUTRAL. THE ADDITION OF RS. 17 LAKHS HAS BEEN ON A VAGUE SURMISE. IN THIS REGARD, IT IS WORTHWHILE TO MENTION THAT IT IS NOT FOR THE TAX AUTHORITIES TO PUT THEMSELVES IN THE SHOES OF THE BUSINESSMAN TO DECIDE WHEN AND HOW MUCH CAPITAL IS REQUIRED FOR THE PURPOSES OF THE BUSINESS OF A BUSINESSMAN. IT IS THE SOLE DISCRETION OF THE BUSINESS MAN/ MANAGEMENT TO ASCERTAIN THE AMOUNT OF CAPITAL NEEDED AND THE AO CANNOT QUESTION IT AS LONG AS THE SOURCE OF SUCH CAPITAL IS PROCESS AND THE TRANSACTION IS LEGAL. THE REFORE, THE ADDITION OF RS. 17 LAKHS IS HEREBY DIRECTED TO BE DELETED. 5.3 IT IS FURTHER OBSERVED THAT THE APPELLANT HAD SUBMITTED THE DETAILS OF EXPENSES PAGE 5 OF 8 SUCH AS DESIGNING AND SAMPLING CHARGES, DYING PRINTING & FINISHING CHARGES, ELECTRICITY & WATER CHARG ES, FABRICATION EXPENSES, GENERATOR AND BOILER REPAIR AND MAINTENANCE EXPENSE, PACKING EXPENSES VIDE LETTERS DATED. 03.11.2010, 02.12.12 & 06.12.12 ( PG 123 - 135 OF PB). THE AO HAS NOT QUESTIONED THE VERACITY OR THE GENUINENESS OF SUCH EXPENSES. HE HAS NOT POINTED OUT ANY EXPENSE WHICH HAS NOT BEEN VOUCHED. THE AO HAS ALSO NOT GIVEN ANY REASON AS TO WHY 10% OF THE CLAIM SHOULD BE DISALLOWED. ON THE OTHER HAND, THE EXPENDITURE INCURRED THIS YEAR COMPARES WELL WITH THE CLAIM MADE IN THE EARLIER YEARS. THEREFOR E, THE ADHOC DISALLOWANCE @10% IS HEREBY DIRECTED TO BE DELETED. AS REGARDS THE BALANCE CLAIM OF RS 10,24,748/ - ON ACCOUNT OF BANK INTEREST; IT IS OBSERVED THAT THE AO HAS ALLOWED RS. 3,20,276 (I.E. RS. 15,25,276 - RS.12,04,850 ) AND HAS DISALLOWED THE BALANCE SUM OF RS. 7,07,4577 - . I FIND THAT OUT OF BALANCE ADVANCES AGGREGATING ABOUT RS 107 LAKHS CONSIDERED AS 'NON - BUSINESS' BY THE AO, ADVANCES AGGREGATING RS 73.32 LAKHS HAVE BEEN MADE TO THE BUILDERS FOR BOOKING FLATS AS INVES TMENT. I AGREE WITH THE AO THAT THESE ADVANCES FOR BOOKING OF FLATS HAVE NO NEXUS WITH THE APPELLANT'S BUSINESS. HOWEVER, ON PERUSAL OF THE BALANCE SHEETS FOR F.Y. 2006 - 07 & 2007 - 08. I FIND THAT THE OPENING BALANCE OF ADVANCES TO BUILDERS AS ON 1.4.2007 IS RS. 60.92 AND THE END OF THE FINANCIAL YEAR 2007 - 08, IT HAS INCREASED BY ABOUT RS. 7.50 LAKHS ONLY AS UNDER: - 2007 2008 31.3.2007 31.3.2008 INVESTMENT'S PARSAVNATH(GOMIT NAGAR) 14,81,792 / - 18,88,062 / - PARSANATH (JAIPUR) 4,09,500 / - 4,09,500 / - PARSAVNATHFMOHAN ESTATES) 6,94,838 / - 10,44,413 / - PARSAVNATH (PRESTIGE) 35,06,011 / - 35,06,011 / - TOTAL 60,92,141/ - 68,47,986 / - HOWEVER, ON THE LIABILITIES SIDE OF THE BALANCE SHEET FOR FINANCIAL YEAR 2007 - 08, I FIND THAT THE PARTNER'S CAPITAL HAS INCREASED FROM 603 LAKHS TO 618 LAKHS. THE BANK LOAN OF RS. ABOUT 82 LAKHS IS BY WAY OF PACKING CREDIT. DURING THE YEAR THE OVERDRAFT BA LANCE WITH CANARA BANK HAS INCREASED BY RS. 1.96 LAKH ONLY (5.57 - 3.61) (PG. 18 OF P.B.). IT IS THEREFORE NOTED THAT ALMOST THE ENTIRE OVERDRAFT IS ON ACCOUNT OF PACKING CREDIT FOR EXPORTS. THIS YEAR, THE INCREASE IN INVESTMENT IN REAL ESTATE IS ABOUT RS. 8 LAKHS + 2 LAKHS OF OVERDRAFT IN CANARA BANK. THE PARTNER HAS INJECTED RS. 17 LAKHS BY WAY OF ADDITIONAL CAPITAL, WHICH ACCORDING TO THE AO HIMSELF WAS NOT NEEDED FOR THE FIRM'S BUSINESS. THUS, IT IS CLEAR THAT THIS YEAR, THE BANK LOAN HAS NOT BEEN USED FO R MAKING INVESTMENT IN FLATS. IT IS FURTHER EXPLAINED THAT OTHER ADVANCES ARE BUSINESS ADVANCES MADE IN ORDINARY COURSE OF BUSINESS. THESE ARE DISCUSSED AS FOLLOWS: - PAGE 6 OF 8 I). RS 10,21.7807 - UNDER THE HEAD TDS: - IT IS EXPLAINED THAT TDS WAS DEDUCTED AGAINST THE JOB WORK BUSINESS CARRIED ON BY THE FIRM AND REFUND/ADJUSTMENT WAS TO BE MADE AFTER GETTING THE REFUND OR ADJUSTMENT OF TAX ON RECEIPT OF THE INCOME TAX ORDERS WHICH WERE PENDING. II). RISHU TEXTILES DEBIT BALANCE RS 14,8Q.293/~: - DURING THE YEAR THE APPELLANT PURCHASED GOODS WORTH RS 24,643/ - AND ALSO PAID FOR DESIGNING /SAMPLING RS 2,013/ - (PAGES 97 OF THE PAPER BOOK). IT IS NOTED THAT THE FIRM WAS HAVING OPENING CREDIT BALANCE OF 5.93.050/ - HOWEVER THE AMOUNT PAID IN THE MO NTH OF JANUARY 2008 IS RS. 15,00,0007 - AS ADVANCE AGAINST THE PURCHASE ORDER WHICH COULDN'T GET MATERIALIZED. III). B. DEEPA RS.1,47.376/ - : - THE AMOUNT PAID AS RENT SECURITY FOR PREMISES SITUATED AT BANGALORE. THE FIRM WAS HAVING A FACTORY AT BANGALORE, THIS AMOUNT RECOVERED IN THE NEXT YEAR WHEN THE FACTORY WAS CLOSED. IV). KANISHQ FAB RS.2.77.386/ - : - ADVANCE WAS GIVEN FOR SUPPLY OF FABRIC. ON DEFAULT BY THE PARTY, RECOVERY SUIT HAS BEEN FILED IN THE COURT. V). MR. K.C. VIRMANI RS. 1.19.OOP: - AN EMP LOYEE OF THE FIRM. THE AMOUNT WAS GIVEN AS AN ADVANCE SALARY VI). MR MUNISH KUMAR GUPTA (IMPREST) RS 1.06.509: - AMOUNT WAS PAID TO THE MANAGING PARTNER AGAINST IMPREST FOR MEETING DAY TO DAY EXPENSES OF THE FIRM. VII). FLORA SECURITY SERVICES RS 65.089/ - : - THIS PARTY WAS PROVIDING SECURITY SERVICES TO THE APPELLANT OUTSTANDING ADVANCE WAS RECOVERED NEXT DAY. COPY OF ACCOUNT IS PRODUCED. VIII). SHARAT DEV KAPILA RS 1.50.000/ - : - AMOUNT WAS PAID AS ADVANCE TO MR. SHARAT DEV KAPILA, ADVOCATE, FO R REPRESENTING THE APPELLANT FIRM IN THE APPELLATE TRIBUNAL. HIS BILL WAS AWAITED. NECESSARY TDS WAS ALSO DEDUCTED. COPY OF ACCOUNT IN THE FIRM IS PRODUCED. IT IS CLARIFIED THAT NONE OF THESE PARTIES ARE IN ANY WAY RELATED TO THE PARTNERS OF THE APPELLANT FIRM. THE LD. A.O. HAS NOT DISCUSSED ANY OF THESE ADVANCES. IN VIEW OF THE FOREGOING DISCUSSION, THE ADDITION OF RS. 12.04850/ - IS DELETED. 3. THE REVENUE BEING WITH THE ORDER OF THE LD CIT(A) PREFERRED AN APPEAL BEFORE US. 4. THE LD DR VEHEMENTL Y SUBMITTED THAT THE LD CIT(A) HAS BELIEVED THE VERSION OF THE ASSESSEE WITHOUT CONFIRMING THE FACTS THAT HOW THE ASSESSEE HAS NOT PRODUCE THE RELEVANT DETAILS BEFORE THE LD AO. EVEN OTHERWISE THE LD CIT(A) ACCORDING TO HIM HAS NOT CALLED FOR ANY REMAND RE PORT FROM THE AO HE THEREFORE STATED THAT THE ORDER PASSED BY THE LD CIT(A) IS AS SUCH UNSUSTAINABLE IN LAW. 5. DESPITE NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE. ON EARLIER OCCASION ON 20.02.2017 AND 29.05.2017 THE CASE WERE FIXED FOR HEARING BUT WERE ADJOURNED ON THE REQUEST OF LD DR ON THE APPOINTED DATE OF HEARING NONE APPEARED ON BEHALF OF PAGE 7 OF 8 THE ASSESSEE AND THEREFORE THIS APPEAL IS DISPOSED OFF ON THE BASIS OF INFORMATION AVAILABLE ON RECORD. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND AL SO PERUSED THE ORDERS OF LOWER AUTHORITIES. THE LD AO HAS GIVEN AMPLY NUMBER OF OPPORTUNITIES NOT LESS THAN 15 TIMES AND COMPLIANCE FROM THE SIDE OF THE ASSESSEE WAS MINIMAL OR NONE. THEREFORE, THE LD AO MADE AN ADDITION BY INVOKING THE PROVISIONS OF SECTI ON 145(3) OF THE ACT U/S 144 MAKING THE ABOVE IMPUGNED ADDITION. BEFORE THE LD CIT(A) ASSESSEE SUBMITTED THAT THERE WAS A REASONABLE CAUSE FOR NOT APPEARING BEFORE THE LD AO AND SEEKING ADJOURNMENT. THE LD CIT(A) DELETED THE ADDITION VIDE PARA NO. 5 OF THE ORDER WITH THE ABOVE INCLUDING REJECTION OF BOOKS OF ACCOUNT WERE HELD BY HIM AGAINST THE LD AO AND DELETED THE ADDITION WITHOUT EVEN CALLING FOR REMAND REPORT FROM THE AO AS WELL AS GIVING AN OPPORTUNITY OF HEARING TO THE LD AO. IT IS ALSO NOT KNOWN FROM THE ORDER OF THE LD AO THAT BEFORE HOLDING THAT THE LD CIT(A) NOT JUSTIFYING IN MAKING ASSESSMENT U/S 144 OF THE ACT REQUISITE DETAILS OF THE ASSESSMENT WAS CALLED FOR OR VERIFIED OR NOT. WHEN THE SUMMONS WERE ISSUED TO THE PARTNERSHIP U/S 133 OF THE ACT AND THEY DID NOT APPEAR BEFORE THE LD AO AS PER PARA NO. 4 OF THE ORDER OF THE LD CIT(A), HOW THE LD CIT(A) HAS REACHED TO A PARTICULAR DECISION WITHOUT EXAMINING THE PARTNERS OF THE ASSESSEE AND DELETING THE ADDITIONS. IN VIEW OF THE ABOVE FACTS AND ON RE ADING OF THE ORDER OF THE LD CIT(A) IT IS APPARENT THAT HE HAS MERELY BELIEVE THE VERSION OF THE ASSESSEE WITHOUT EVEN CONFRONTING THE AO OR CALLING FOR REMAND REPORT. IT IS ALSO THE CLAIM OF THE ASSESSEE THAT NOT PROPER OPPORTUNITY WAS GIVEN TO THE AO THE REFORE, IN THE INTEREST OF JUSTICE WE SET ASIDE THE ISSUE BACK TO THE FILE OF THE AO TO MAKE THE ASSESSMENT DE NOVO AFTER CARRYING OUT PROPER EXAMINATION. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED IN THE OPEN COURT ON 0 4 / 08 / 2017 . - S D / - - S D / - ( C.M.GARG ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER D ATED: 0 4 / 08 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) PAGE 8 OF 8 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI