DCIT, New Delhi V. M/s. Dashmesh Promoters & Developers Pvt. Ltd., New Delhi

ITA 3574/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87152 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 08-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: ADESH JAIN
• Keywords: Wrong claim; Corroborative evidences
• Section: 145; 12

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI S. V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 3574 /DEL/ 2012 (ASSESSMENT YEAR: 2009 - 10 ) DCIT CIRCLE - 10(1) NEW DELHI VS. DASHMESH PROMOTERS & DEVELOPMENT PVT. LTD, C - 23, GREATER KAILASH ENCLAVE, PART - I, NEW DELHI PAN:AABCD9490M (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. PARWINDER KAUR, SR. DR RESPONDENT BY : SHRI. ADESH JAIN, CA. DATE OF HEARING 20 . 03 . 2014 DATE OF PRONOUNCEMENT 27 . 03 .2015 O R D E R PER A. T. VARKEY, JUDICIAL MEMBER THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A), XIII, NEW DELHI DATED 30.04.2012 FOR THE ASSESSMENT YEAR 2009 - 10 . 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS: - 1. WHETHER THE CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE ADDITION OF RS.7,48,92,621/ - MADE BY THE AO U/S 41(1) OF THE IT ACT,L961. 2. WHETHER THE CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 64,10,847/ - MADE BY THE AO ON A/ C OF REJECTION OF BOOKS U/S 145 OF THE IT ACT, 1961 AND ESTIMATED PROFIT @ 8% OF THE GROSS RECEIPTS. 3. APROPOS DELETION OF ADDITION OF R S. 7,48,92,621/ - MADE BY AO U/S 41(1) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT) . 4. BRIEF FACTS OF THE CASE AS NOTED BY LD CIT(A) IS AS THAT THE ASSESSEE COMPANY IS A CIVIL CONTRACTOR ENGAGED IN THE CONSTRUCTION OF A PROJECT FOR PATNI COMPUTER LT D. A T NOIDA , DURING THE FINANCIAL YEAR UNDER CONSIDERATION. THE ASSESSEE HAS SHOWN SUNDRY CREDITORS OF RS.16,11,74,448/ - AS ON 31.03.2009 WHICH INTER ALIA INCLUDES M/S NITESH ENTERPRISES, 2941, KUCHA MAL DASS, SITA RAM BAZAR, DELHI - L10006 AND M/S SHRI RAM TRADERS, 904, GALI BERI WALI, KUCHA PATI RAM SITA PAGE 2 OF 15 RAM BAZAR, DELHI - 11000 6 SHOWING CREDIT BALANCES OF RS.4,01,03,113/ - AND RS.3,47,89,508/ - RESPECTIVELY. 5. THE AO IN HIS SCRUTINY ASSESSMENT HAS OBSERVED THAT THE ASSESSEE COULD NOT FURNISH CONFIRMATION FROM CERTAIN SUNDRY CREDITORS NAMELY M/S. NI TESH ENTERPRISES AND M/S SHRI R AM TRADERS. THE AO HAS TAKEN NOTE THAT THE ASSESSEE COMPANY WAS NOT HAVING ANY TRANSACTION WITH THESE CREDITORS DURING THE FINANCIAL YEAR UNDER CONSIDERATION , HOWEVER THE AMOUNT DUE TO THEM RS.7,48,92,621/ - IS REFLECTED AS OUTSTANDING. AO IN ORDER TO VERI FY THE EXISTENCE OF THE SAID LIABILITY AND GENUINENESS OF THE CREDIT DEPUTED AN INSPECTOR TO VERIFY FROM THESE COMPANIES AS TO WHETHER THE AMOUNT IS OUTSTANDING ON THE CLOSE OF THE FINANCIAL YEAR AND WHAT PRECISE TRANSACTIONS HAVE BEEN MADE BY THESE COMPAN IES WITH THE ASSESSEE. THE INSPECTOR DEPUTED BY THE AO, AFTER HIS ENQUIRY HAS FURNISHED THE FOLLOWING REPORT: - 'AS DIRECTED BY THE DCLT, CIRCLE 10(1), NEW DELHI IN THE CASE OF M/S DASHMESH PROMOTER & DEVELOPERS PVT. LTD. FOR THE A. Y. 2008 - 09. I VISITED TH E FOLLOWING PREMISES. THE REQUISITE REPORT IS AS FOLLOWS: 1. M/S NITESH ENTERPRISES, 2941, KUCHA MAI DAS, SITA RAM BAZAR, DELHI - 6. THERE WAS NO SIGN BOARD OF THE ABOVE FIRM AT THE ABOVE ADDRESS. UPON LOCAL INQUIRY IT WAS FOUND THAT THE NO SUCH FIRM IS FUNCTIONING FROM THE ABOVE ADDRESS. THE MARKET INQUIRY REVEAL ED THAT NO REGULAR BUSINESS WAS EVER CARRIED OUT FROM THIS PREMISES BY ANY COMPANY/FIRM. 2. M/S SHRI RAM TRADERS, 904, GALL BARIWALI, KUCHA PATTIRAM, SITA RAM BAZAR, DELHI - 6. THERE IS NO SIGN BOARD OF THE ABOVE FIRM AT THE ABOVE ADDRESS. THIS ADDRESS IS PURELY RESIDENTIAL HOUSE. THE MARKET INQUIRY REVEALED THAT NO REGULAR BUSINESS WAS EVER CARRIED OUT FROM THIS PREMISES BY ANY COMPANY FIRM. 6. THUS BASED ON THE AFORESAID REPORT OF THE INSPECTOR , THE AO WAS OF THE FIRM OPINION THAT THERE WAS NO SUCH F IRM IN EXISTENCE AT THE GIVEN ADDRESS. THEREAFTER A SHOW - CAUSE NOTICE DATED 05.12.2011 ISSUED TO THE ASSESSEE WHEREIN THE ASSESSEE WAS ASKED TO PRODUCE THE CREDITORS SO THAT THE LIABILITY CAN BE VERIFIED ; AND AT THE SAME TIME GENUINENESS OF THE TRANSACTION CAN ALSO BE VERIFIED. ON 05.12.2011 , THE AR OF THE ASSESSEE FURNISHED A WRITTEN REPLY WHEREIN HE STATED THAT HE HAS PURCHASED THE GOODS FROM M/S NITESH ENTERPRISES THROUGH SHRI BRIJ MOHAN AND FROM M/S SHR I RAM TRADERS THROUGH SHRI MUKESH AGGARWAL WHOSE MO BILE NO AND THE NEW ADDRESS OF THE FIRMS WERE ALSO FURNISHED. HOWEVER PAGE 3 OF 15 THE AO WAS OF THE OPINION THAT THE ASSESSEE FAILED TO PRODUCE THE CREDITORS. ACCORDING TO THE AO , DESPITE HAVING GRANTED SUFFICIENT OPPORTUNITY, NEITHER THE ASSESSEE COULD PRODUCE THE CREDITORS NOR FURNISH ANY CONFIRMATION FROM THE SAID SUNDRY CREDITORS. SO THE AO WAS OF THE OPINION THAT IN THE ABSENCE OF THE EXISTENCE OF THE ESTABLISHMENT S , THE LIABILITY COULD NOT BE VERIFIED; AND OTHER REASONS WERE THAT SINCE NO TRANSACTION TOOK P LACE BETWEEN THE ASSESSEE AND CREDITORS THROUGHOUT THE YEAR ; AND THE ASSESSEES INABILITY TO FURNISH THE PERMANENT ACCOUNT NUMBER (PAN) OF THE CREDIT ORS OR ASSESSEE COULD FURNISH COPY OF THE ACKNOWLEDGEMENT OF THE INCOME TAX RETURN . SO IN SUCH A SCENARIO, ACCORDING TO THE AO IT IS THE CASE OF CESSATION LIABILITY WHICH THE ASSESSEE HAS NOT OFFERED FOR TAXATION THOUGH HE WAS BOUND TO DO SO AND THEREFORE SECTION 41(1) WAS ATTRACTED AND THE AO OBSERVED THAT WHERE A DEBT DUE FROM THE ASSE SSEE WAS FOREGONE BY THE CREDITORS IN THE LATER YEAR, IT CAN BE TAXED U/S 41(1) AND HE RELIED UPON THE DECISION IN THE CASE OF CIT VS. MANOHAR BAN DHU (1984) 148 ITR 108 (BOMBAY) AND MADE AN ADDITION OF RS.7,48,92,621/ - TO THE TOTAL INCOME OF THE ASSESSEE. 7. AGGRIEVED BY THE SAID ADDITIONS MADE BY THE AO , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A) WHO WAS PLEASED TO DELETE THE SAME. AGGRIEVED BY THE SAID DELETION OF THE LD CIT(A) THE REVENUE IS BEFORE US. 8. THE LD SR. DR , SHRI PARWINDER KAUR CONTENDED THAT THERE WERE NUMBER OF SUNDRY CREDITORS REFLECTED BY THE ASSESSEE AND THERE WAS NO TRANSACTION WHATSOEVER WITH THE SAID FIRMS IN THE INSTANT ASSESSMENT YEARS. THE AO HAD MADE ENQUIRIES THROUGH THE INSPECTOR OF THE DEPARTMENT WHO HA D PHYSICALL Y GONE TO THE ADDRESS OF THE SAID FIRMS AND HAS GIVEN THE REPORT THAT THERE WAS NO SUCH FIRMS EXISTS. THE AO CONFRONTED THE ASSESSEE WITH THE SAID REPORT OF THE INSPECTOR AND GAVE THEM ENOUGH OPPORTUNITY TO PROVE THE EXISTENCE OF THE CREDITORS AND TO PROVE GENUINENESS OF THE TRANSACTIONS BETWEEN PARTIES. HOWEVER, DESPITE GIVING THE AFORESAID OPPORTUNITIES , THE ASSESSEE FAILED TO N EITHER PRODUCE THE CREDITORS , NOR CONFIRMATION FROM THEM, AND ASSESSEE COULD NOT FURNISH EVEN THE PAN AND OTHER DETAILS OF THE CR EDITORS. SO , ACCORDING TO THE LD DR, THE AO WAS JUSTIFIED IN MAKING THE SAID ADDITIONS INVOKING SECTION 41(1) OF THE ACT. ACCORDING TO THE LD DR THE LD CIT(A) ERRED IN DELETING THE SAME BY HOLDING THAT THE SUNDRY CREDITORS HAD CONFIRMED ABOUT THE SAME, WHEN THE CONFIRMATION WAS ONLY A LEDGER ENTRY OF THE ASSESSEE ITSELF. THE LD DR VEHEMENTLY CONTENDED THAT THE PAGE 4 OF 15 CONFIRMATION OF ACCOUNTS FOR 01.04.2008 TO 31.03.2009 FILED BY THE ASSESSEE (W HICH HAS BEEN FILED BY THE REVENUE IN ITS PB ) HAS NOT BEEN FILED BEFORE THE AO AND TO BUTTRESS THIS FACT, SHE TOOK OUR ATTENTION TO THE ASSESSEES PB PAGE 75 I.E. A LETTER DATED 05.12.2011 WHEREIN, THE ASSESSEE UNDERTAKE S TO PRODUCE THE CONFIRMATIONS LATER , HOWEVER SURPRISINGLY VIDE LETTER DATED 15.12.2011 (PAGE.82) OF PB, THE ASSESSEE CLAIMS THAT CONFIRMATION OF ACCOUNTS RECEIVED FROM THE SAID PARTIES AVAILABLE WITH THE ASSESSEE COMPANY HAS ALREADY BEEN SUBMITTED (PAGE 83 OF PB). SO THE LD DR IS OF THE OPI NION THAT ON ONE HAND THE ASSESSEE UNDERTAKES ON 05.12.2011 TO PRODUCE THE CONFIRMATION AND ON 15.12.2011 I.E. AFTER 10 DAYS SAYS THAT IT HAS ALREADY PRODUCED IT, WHICH ACCORDING TO THE LD DR, SUGGESTS THAT THE ASSESSEE IS TRYING TO MISLEAD THE AUTHORITIES BELOW AND IN ANY WAY ACCORDING TO HER, THE SAID DOCUMENTS WERE FILED FOR THE FIRST TIME BEFORE THE LD CIT(A) ; AND THE SAME HAS BEEN PURPORTEDLY SIGNED / INITIALLED BY SOMEBODY WHOSE NAME HAS NOT EVEN BEEN MENT IONED IN IT, MEANING IT CASTS DOUBTS ABOUT TH E GENUINENESS OF THE SAID DOCUMENTS AND THE LD CIT(A) HAS ERRED IN GIVING A FINDING THAT THE ASSESSEE HAS DISCHARGED ITS ONUS BY FILING CONFIRMATION. (PAGE 25 OF LD CIT(A) ORDER) . SO, ACCORDING TO HER T HE ASSESSEE HAS MISLED THE LD CIT(A). THEREFORE ACCORDI NG TO THE LD DR THE IMPUGNED ORDE R NEED TO BE REVERSED OR THE MATTER BE REMANDED BACK TO THE AO FOR VERIFICATION. ON THE OTHER HAND THE LD AR SHRI ADESH JAIN, CA CONTENDED THAT THE ASSESSEE WHO IS A BUILDING CONTRACTOR HAD PURCHASED GOODS FROM M/S. NITESH ENTERPRISES THROUGH SHRI BRIJ MOHAN AND FROM SHRI RAM TRADERS THROUGH SHRI MUKESH AGARWAL AND HAD FURNISHED THEIR MOBILE NUMBERS ALSO. AND THE LD AR POINTED OUT THAT THE ASSESSEE COMPANY HAS MADE PAYMENTS TO THE SAID PARTIES IN THE SUCCEEDING FINANCIAL YEARS THROUGH ACCOUNT PAYEE CHEQUES AND RTGS AND POINTED TO PAGE 100 TO 104 OF THE BANK STATEMENT OF UCO BANK OF THE ASSESSEE AND STATED THAT THE SAID PAYMENT WAS MADE TO THE PARTIES SIX MONTHS BEFORE FROM THE ASSESSMENT ORDER WAS PASSED AND THIS FACT WAS BROUGHT TO THE KNOWLEDGE OF AO. AND, ACCORDING TO THE LD AR, SINCE THE AMOUNT OUTSTANDING WAS CREDITED TO THE CREDITOR S ACCOUNT AND THIS WAS KNOWN TO THE AO AND SO IN HIS REMAND REPORT , THE AO HAS NOT MADE ANY ADVERSE OBSERVATION ABOUT THE VERACITY OF SUC H A CLAIM MADE BY THE ASSESSEE. ACCORDING TO HIM SINCE THE AMOUNT DUE TO THE SUNDRY CREDITOR M/S NITESH AND SRI RAM WERE CREDITED IN THE ACCOUNT OF THE SAID SUNDRY CREDIT ORS BY TRANSACTION THOUGH BANK , THE QUESTION OF FASTENING THE ADDITION INVOKING SECTION PAGE 5 OF 15 41(1) IS LEGALLY NOT WARRANTED AND THEREFORE THE LD CIT(A) RIGHTLY AFTER TAKING CONSIDERATION OF ALL THE EVIDENCE THAT HAVE BEEN FURNISHED BEFORE THE AO AND AFTER CONSIDERING THE REMAND REPORT HAS MAD E THE DELETION AFTER APPRECIATING THE EVIDENCE FURNISHED BY THE ASSESSEE BEFORE HIM AND THE AO. THEREFORE ACCORDING TO THE LD AR ALL THE DOCUMENTS TO PROVE THE NEW ADDRESS OF THE SUNDRY CREDITORS AND DETAILS LIKE PAN NO AND OTHER DOCUMENTS TO PROVE GENUINE NESS OF THE CREDITORS WERE ALSO FURNISHED BEFORE THE AO WHO DID NOT TAKE NOTE OF THE SAID EVIDENCE S AND ARBITRARILY BRUSHED IT ASIDE. THEREFORE, IN THE LIGHT OF THE SAID OVERWHELMING EVIDENCES ON RECORD BEFORE THE AUTHORITIES BELOW, THE LD AR DOES NOT WANT US TO INTERFERE WITH THE REASON ED ORDER OF THE LD CIT(A ) . 9 . WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE RECORDS OF THE CASE, WE FIND THAT THE AO HAS MADE THE ADDITION INVOKING SECTION 41(1) OF THE ACT , WH EN HE FOUND OUT THROUGH HIS INSPECTOR THAT THE ADDRESS ES OF THE SUNDRY CREDITORS WERE WRONG ; AND NEITHER THE ASSESSEE COULD FURNISH THE CORRECT ADDRESS NOR PRODUCE D THE CREDITORS BEFORE HIM; AND SINCE THE DETAILS LIKE PAN NO ETC OF THE CREDITORS COULD NOT BE FURNISHED BY THE ASSESSEE , THE AO I NVOKED SECTION 41(1) TO MAKE ADDITION. THE LD CIT(A) AFTER TAKING INTO CONSIDERATION THE REMAND REPORT FROM THE AO HAS DELETED THE SAID ADDITION BY HOLDING AS UNDER: - I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT, OBSERVATION OF THE ASSESSING OFFICER, REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER AND VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT IN THIS REGARD. IT IS SEEN THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER CONDUCTED ENQUIRIES ABOUT THE SUNDRY CREDITORS REFLECTED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. BASED ON THE INFORMATION SOUGHT FROM THE APPELLANT IT WAS OBSERVED BY THE ASSESSING OFFICER THAT SUNDRY CREDIT BALANCE SHOWN IN THE NAME OF M/S NITESH ENTERPRISES AND SHRI RAM TRADERS WERE STATIC DURING THE YEAR AND THERE WAS NO MOVEMENT OF FUNDS OR ANY TRANSACTION IN THESE SUNDRY CREDITORS ACCOUNTS. THEREFORE, TO VERIFY THE GENUINENESS OF TRANSACTION ASSESSING OFFICER DEPUTED HIS INSPECTOR TO CONDUCT THE ENQUIRY ON THE GIVEN ADDRESSES. AFTER CONDUCTING E NQUIRIES THE INSPECTOR REPORTED THAT HE HAS VISITED 2941, KUCHA MAL DASS, SITA RAM BAZAR DELHI AND 904, GALI BERI WALI, KUCHA PATI RAM, SITA RAM BAZAR DELHI - 110006 AND IT IS FOUND THAT THERE WAS NO SIGN BOARD OF ABOVE FIRMS AT THE GIVEN ADDRESSES. IT WAS ALSO REPORTED BY THE INSPECTOR THAT ON LOCAL ENQUIRY IT WAS FOUND THAT NO REGULAR BUSINESS WAS EVER CARRIED OUT FROM THESE PREMISES BY THE SAID FIRMS. ON RECEIPT OF THE REPORT ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE DATED 05.12.2011 TO THE APPELLANT AND ASKED THE APPELLANT TO PRODUCE THESE PARTIES FOR VERIFICATION OF THE LIABILITY AND GENUINENESS OF THE TRANSACTION. IN REPLY TO THE SHOW CAUSE NOTICE APPELLANT FURNISHED THAT IT HAD MADE PURCHASES OF MATERIAL FROM M/S NITESH ENTERPRISES AND SHRI RAM TRADER S. IT HAS ALSO GIVEN DETAILS OF THE PERSON WITH WHOM THE ENQUIRY IS TO BE MADE. THE APPELLANT PAGE 6 OF 15 HAS FURNISHED FRESH ADDRESS OF THESE PARTIES FOR CONDUCTING ENQUIRIES ON THE NEW ADDRESS. HOWEVER, THE APPELLANT SHOWN HIS INABILITY TO PRODUCE SAID PARTIES FOR V ERIFICATION. CONSIDERING THE ABOVE THE ASSESSING OFFICER ADDED THE SUNDRY CREDIT BALANCE STANDING IN THE NAME OF NITESH ENTERPRISES AND M/S SHRI RAM TRADERS OF RS.4,01,03,113/ - AND RS.3,47,89,508/ - RESPECTIVELY U/S 41(1) OF THE IT ACT. DURING THE COURSE O F APPELLATE PROCEEDING THE APPELLANT HAD FILED WRITTEN SUBMISSIONS ALONG WITH PAPER BOOK WHEREIN HE HAS FURNISHED NAME AND ADDRESS AND PAN OF THE PARTIES IN THE CASES WHERE SUNDRY CREDITOR BALANCE WERE MORE THAN 10,00,000/ - OUTSTANDING. THE APPELLANT HAS A LSO FILED COPY OF CONFIRMATION OF M/S NITESH ENTERPRISES AND M/S SHRI RAM TRADERS SHOWING CREDIT BALANCE OF RS.4,01,03,113/ - AND RS. 3,47,89,508/ - RESPECTIVELY ALONG WITH PAN OF THE PARTIES. THE APPELLANT HAS ALSO FILED COPIES OF PURCHASE BILLS OF HAVING P URCHASE PIPES AND COIL FROM M/S NITESH ENTERPRISES AND M/S SHRI RAM TRADERS RESPECTIVELY. THE APPELLANT HAS ALSO FILED THE DETAILS OF REGISTRATION OF M/S NITESH ENTERPRISES AND M/S SHRI RAM TRADERS WITH DEPARTMENT OF TRADE AND TAXES OF DELHI GOVERNMENT. IT IS CLAIMED BY THE APPELLANT THAT REGISTRATION DETAILS ARE AVAILABLE ON THE WEB SITE OF DEPARTMENT OF TRADE AND TAXES. THE APPELLANT IN ITS SUBMISSION CLAIMED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WAS PROVIDED FRESH ADDRES S OF THE PARTIES AND MOBILE NUMBERS OF THE CONTACT PERSONS FOR VERIFICATION OF SUNDRY CREDITORS. THE APPELLANT ALSO CLAIMED THAT DETAILS OF PROPRIETORS AND THEIR PAN WERE SUPPLIED TO THE ASSESSING OFFICER. IT IS CONTENDED BY THE APPELLANT THAT OBSERVATION OF THE ASSESSING OFFICER THAT CONFORMATION AND PAN WAS NOT FILED BY THE APPELLANT WITH REFERENCE TO M/S NITESH ENTERPRISES AND M/S SHRI RAM TRADERS IS FACTUALLY INCORRECT. THE APPELLANT CONTENDS THAT VIDE ITS SUBMISSION DATED 05.11.1011 AND 15.12.2011, THE APPELLANT HAD FURNISHED FRESH ADDRESS OF THE PARTIES, NAME OF THE PROPRIETORS AND THEIR PAN AND NAME OF THE CONTACT PERSON ALONG WITH MOBILE NUMBER. IT IS ALSO CONTENDED BY THE APPELLANT THAT OBSERVATION OF THE ASSESSING OFFICER THAT M/S NITESH ENTERPRISE S AND SHRI RAM TRADERS WERE NEVER EXISTS ON THE ADDRESS 2941, KUCHA MAL DASS, SITARAM BAZAR DELHI AND 904, GALI BERI WALI, KUCHA PATI RAM, SITA RAM BAZAR, DELHI RESPECTIVELY IS FACTUALLY INCORRECT. THE APPELLANT SUBMITS THAT THESE PARTIES WERE WORKING ON T HE SAID ADDRESS AND THEY HAVE BEEN REGISTERED ON THE BASIS OF SAID ADDRESS WITH DEPARTMENT OF TRADE AND TAXES GOVT OF NCT DELHI. IT IS THEREFORE, SUBMITTED BY THE APPELLANT THAT THE OBSERVATION OF THE ASSESSING OFFICER WERE NOT CORRECT. DURING THE COURSE OF APPELLATE PROCEEDINGS VIDE ITS SUBMISSION DATED 12.04.2012, THE AR OF THE APPELLANT SUBMITTED DETAILS OF THE PAYMENTS MADE TO M/S NITESH ENTERPRISES AND M/S SHRI RAM TRADERS IN JANUARY - FEBRUARY - 2010 ALONG WITH THE COPY OF THE BANK ACCOUNT OF UCO BANK, CONNAUGHT PLACE, NEW DELHI . THE APPELLANT HAS ALSO FILED COPY OF THE ACCOUNTS OF THE SAID PARTIES FROM ITS BOOKS OF ACCOUNTS WHICH REFLECTS THE DETAILS OF THE PAYMENTS MADE TO THE SAID INFORMATION ALONG WITH THE PAPERBOOK AND SUBMISSION MADE BY THE APPEL LANT WAS FORWARDED TO THE ASSESSING OFFICER VIDE THIS OFFICE LETTER DATED 12.04.2012 FOR VERIFYING THE CONTENTION OF THE APPELLANT AND FOR EXAMINATION AND CONDUCTING ENQUIRIES WITH REFERENCE TO THE PAYMENTS MADE BY THE APPELLANT TO THE SAID PARTIES. THE AS SESSING OFFICER AFTER CONDUCTING ENQUIRIES AND PAGE 7 OF 15 EXAMINATION OF THE INFORMATION SUBMITTED BY THE APPELLANT SUBMITTED HIS REMAND REPORT VIDE HIS LETTER DATED 23.04.2012. IN THE REMAND REPORT THE ASSESSING OFFICER HAS REITERATED THE OBSERVATIONS MADE IN THE AS SESSMENT ORDER. AS REGARDS THE PAYMENTS MADE THROUGH BANK ACCOUNTS TO THE SUNDRY CREDITORS M/S NITESH ENTERPRISES AND M/S SHRI RAM TRADERS, THE ASSESSING OFFICER HAS STATED THAT PAYMENT TO CREDITORS HAVE BEEN MADE BY A/C PAYEE CHEQUES AND THE APPELLANT HAS FILE COPIES OF BANK STATEMENTS AND SAME WAS EXAMINED BY THE ASSESSING OFFICER. IT IS SEEN FROM THE EVIDENCES FILED IN THE PAPER BOOK AND THE COPIES OF THE BANK STATEMENTS FILED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS THAT APPELLANT HA S DISCHARGED ITS ONUS BY FILING CONFIRMATION, PAN, NAME OF THE PROPRIETOR AND FRESH ADDRESS VIDE HIS LETTER DATED 15.12.2011. THE APPELLANT HAS ALSO SUBMITTED NAME OF THE CONTACT PERSON FOR VERIFICATION OF THE SAID PARTIES DURING THE COURSE OF THE ASSESSME NT PROCEEDINGS. HOWEVER, ASSESSING OFFICER INSISTED ON PRODUCING THE SAID PARTIES BEFORE HIM FOR VERIFICATION AND DID NOT CONDUCT FURTHER ENQUIRIES ON THE FRESH ADDRESSES SUBMITTED BY THE APPELLANT. FURTHER, THE APPELLANT HAS FILED COPIES OF THE BANK STATE MENTS RUNNING WITH UCO BANK WHEREFROM THE PAYMENTS HAVE BEEN MADE TO MLS NITESH ENTERPRISES AND SHRI RAM TRADERS AND SUCH PAYMENTS ARE DEBITED IN THE NAME OF SAID PARTIES IN THE APPELLANT'S BANK ACCOUNTS. THESE PAYMENTS WERE MADE IN THE MONTH OF JANUARY AN D FEBRUARY 2010 TO THE SAID PARTIES MUCH BEFORE THE ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER. THEREFORE, THE GENUINENESS OF THE SUNDRY CREDITORS IN THE NAME OF NITESH ENTERPRISES AND SHRI RAM TRADERS CANNOT BE DOUBTED. CONSIDERING THE DOCUMENTS AND EV IDENCES SUBMITTED BY THE APPELLANT, IT IS HELD THAT SUNDRY CREDIT BALANCE IN THE NAME OF NITESH ENTERPRISES AND SHRI RAM TRADERS WERE GENUINE CREDIT BALANCE FOR PURCHASE OF MATERIAL BY THE APPELLANT AND LIABILITY IN THE NAME OF SUCH PARTIES HAVE BEEN DULY DISCHARGED BY THE APPELLANT BY MAKING PAYMENT THROUGH RTGS I.E. A/C PAYEE CHEQUES. HENCE, THE LIABILITY IN THE NAME OF SAID PARTIES DID NOT CEASED TO EXISTS. THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING THE GENUINE LIABILITY STANDING IN THE NAME OF NI TESH ENTERPRISES AND SHRI RAM TRADERS U/S 41(1) OF THE IT ACT. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.7,48,92,621/ - IS DELETED. 10 . ON A PERUSAL OF THE RECORDS, WE FIND THAT T HE ASSESSEE COMPANY IS A BUILDING CONTRACTOR AND IN THE RELEVANT ASSESSMENT YEAR HAS SHOWN A TRADING LIABILITY TO TWO OF ITS SUNDRY CREDITORS (M/S. NITESH ENTERPRISES & M/S. SHRI RAM TRADERS) TO THE TUNE OF RS.7,48,92,621/ - , WHICH ACCORDING TO THE ASSESSEE HAS BEEN LATER CRE DITED IN THE BANK ACCOUNT OF THE RESPECTIVE SUNDRY CREDITORS FROM 09.01.2010 TO 28.04.2010; I.E. WELL BEFORE THE IMPUGNED ADDITION WAS MADE BY THE AO BY HIS ORDER DATED 26.12.2011 TAKING AID OF SECTION 41(1) OF THE ACT, DOUBTING THE VERY EXISTENCE OF THE S AID TWO FIRMS. BEF ORE WE GO FURTHER LET US SEE WHETHER AO CAN RESORT TO MAKE THE ADDITIONS WITH THE HELP OF SECTION 41(1) OF THE ACT. THE APEX COURT IN THE CASE OF CCIT VS. KESARIA TEA CO. LTD (2002) 122 PAGE 8 OF 15 TAXMAN 91 (SC) HAS HELD THAT IN ORDER TO APPLY SECTI ON 41(1), THE FOLLOWING P O INTS AR E TO BE KEPT IN VIEW: (1) IN TH E COURSE OF THE ASSESSMENT FOR AN EARLIER YEAR, ALLOWANCE OR DEDUCTION HAS BEEN MADE IN RESPECT OF TRADING LIABILITY INCURRED BY THE ASSESSEE; (2) SUBSEQUENTLY, A BENEFIT IS OBTAINED IN RESPEC T OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF DURING THE YEAR IN WHICH SUCH EVENT OCCURRED; (3) IN THAT SITUATION THE VALUE OF BENEFIT ACCRUING TO THE ASSESSEE IS DEEMED TO BE THE PROFIT AND GAINS OF BUSINESS WHICH OTHERWISE WOULD NO T BE HIS INCOME; (4) SUCH VALUE OF BENEFITS IS MADE CHARGEABLE TO INCOME - TAX AS THE INCOME OF THE PREVIOUS YEAR WHEREIN SUCH BENEFIT WAS OBTAINED. SO AO CAN RESORT TO SECTION 41(1) ONLY IF THE LIABILITY OF THE ASSESSEE CAN BE SAID TO HAVE CEASED FINALLY WI THOUT THE POSSIBILITY OF REVIVING IT. ON THE FACTS AND CIRCUMSTANCE OF THIS CASE , WE HAVE TO EXAMINE WHETHER THE LD CIT(A) WAS JUSTIFIED IN COMING TO THE CONCLUSION THAT THE TRADING LIABILITY OF THE ASSESSEE HAD NOT CEASED FINALLY DURING THE YEAR IN QUESTI ON. 11 . WE FIND THAT VIDE A LETTER DATED 15.12.2011, THE ASSESSEE HAS PRODUCED BILLS OF M/S. NITE S H ENTERPRISES DATED 29.08.2007 FOR SUPPLY OF PIPE (JINDAL) AMOUNTING TO RS.16,17,880/ - (PAGE 85 OF PB) AND BILL DATED 16.07.2007 OF SHRI RAM TRADES FOR SUPPLY OF COIL AND SWITCH AMOUNTING TO RS.11,07,600/ - (PAGE 86 OF PB). HERE WE WOULD LIKE TO POINT OUT T HAT SUNDRY CREDITOR ACCORDING TO ASSESSEE WHICH IS SHOWN IN PAGE 78 OF PB IS SHRI RAM TRADERS WHEREAS IN THE BILL PLACED IN PB PAGE 86 IS SHRI RAM TRADES, SO LD DR POINTED IT OUT THAT IT MAY BE ANOTHER COMPANY AND NOT THAT OF SHRI RAM TRADERS (THE SUNDRY C REDITOR WE ARE DEALING WITH ) . HOWEVER ON A CLOSER SCRUTINY, WE FIND THAT THE ADDRESS MENTIONED ON THE BILL OF SHRI RAM TRADES I.E. 904, GALI BERI WAL, KUCHA PATI RAM, BAZAR SITA RAM DELHI - 110006 MATCHES WITH THE ADDRESS GIVEN BY THE ASSESSEE IN PAGE 78 OF THE PB IN ITS LE T TER VIDE 05.12.2011 (PAGE 75 OF PB ) AND LATER CORROBORATED WITH THE PRINT OUTS DOWNLOADED FROM THE WEBSITE ON THE GOVT OF DELHI, DEPARTMENT OF TAXES PLACED IN PB PAGE 87 WHERE THE ADDRESS MATCHES AND IS THE SAME, SO SPELLING MISTAKE TRADE S AND TRADERS NEED TO BE IGNORED . WE ALSO FIND FROM THE PERUSAL OF THE SAMPLE BILLS PLACED ON THE PB AT PAGE 85 AND 86 OF NITESH ENTERPRISES AND SHRI RAM TRADES , THAT TIN NO. OF THESE FIRMS ARE 07060329657 AND 07600217907 RESPECTIVELY. VIDE THE SAME LET TER DATED 15.12.2011, THE ASSESSEE HAS AGAIN SUPPLIED TO THE A O THE LIST OF SUNDRY CREDITORS FOR WHOM MORE THAN RS.10 LAKHS WERE DUE AS ON 3 1.03.2009 IN WHICH WE FIND THAT: - PAGE 9 OF 15 NAME ADDRESS PAN NO. AMOUNT NATURE OF TRANSACTION M/S NITESH ENTERPRISES 2941, KUCHA MAL DASS, SITA RAM BAZAR, DELHI 110006 AIAPG0041R 40103113.00 SUPPLIER M/S SHRI RAM TRADERS 904, GALI BERI WALI, KUCHA PATI RAM, BAZAR SITA RAM, DELHI - 110006 ADPPA4501N 34789508 .00 SUPPLIER 12 . SO IT CAN BE NOT IC ED THAT, THE ASSESSEE HAD INFACT FURNISHED THE PAN NO OF THE SAID TWO FIRMS ALSO TO THE AO. A ND FROM A PERUSAL OF THE LETTER OF ASSESSEE DATED 15.12.2011 (PAGE 82) TO THE AO, THE ASSESSEE CLEARLY SPELLS OUT IN (PAGE 83 OF PB) WHICH READS THE ASSESSEE COMPANY HAS COMPLETELY MADE TH E PAYMENTS OF GOODS PURCHASED FROM THE SAID PARTIES IN DUE COURSE AND NOT TAKEN ANY BENEFIT BY WAY OF REMISSION; SO QUESTION OF TAXING OUTSTANDING AMOUNT UNDER DEEMING PROVISION OF SECTION 41(1) OF THE IT ACT 1961 DOES NOT ARISE IN OUR CASE. SO DURING THE ASSESSMENT PROCEEDING THAT IS BEFORE THE ASSESSMENT ORDER WAS PASSED ON 26.11.2011, ITSELF THE ASSESSEE HAS CLEARLY BROUGHT TO THE KNOWLEDGE OF THE AO THAT PAYMENT FOR THE GOODS SUPPLIED BY THE SAID SUNDRY CREDITORS HAVE BEEN REMITTED IN THEIR RESPECTIVE ACCOUNTS . HOWEVER, WE FIND IT STRANGE THAT IN THE ASSESSMENT ORDER AND EVEN IN REMAND REPORT THE AO STATES THAT THE ASSESSEE HAS NOT FURNISHED THE CORRECT ADDRESS, PAN DETAILS ETC WHEREAS TO THE CONTRARY WE FIND THAT ASSESSEE HAS IN FACT FURNISHED THE CORR ECT ADDRESS THOUGH MISTAKE WAS INADVERTENTLY MADE WHICH CANNOT BE TERMED AS A DELIBERATE MISTAKE, BECAUSE WE FIND THAT IN THE BILLS OF THE FIRM S AND ADDRESS GIVEN IN THE WEBSITE OF THE GOVERNMENT OF DELHI, DEPARTMENT OF TAXES THE ADDRESS WAS THAT GIVEN BY THE ASSESSEE AT THE FIRST INSTANCE , BUT LATER WE FIND VIDE LETTER DATED 15.1 2 .2011, THE ASSESSEE BROUGHT TO THE KNOWLEDGE OF THE AO, THE CHANGED CORRECT ADDRESS, AND PAN NO . SO THE FINDING OF THE FACT ON TH ESE ISSUES BY THE AO IS INCORRECT, WHEREAS WE FIN D THAT THE LD CIT(A) WHO HAS PLENARY , CO - TERMINUS AND CO - EXTENSIVE POWER OF THE AO, AFTER FORWARDING ALL THE CONTENTIONS AND DOCUMENTS FURNISHED BY THE ASSESSEE BEFORE HIM AND AFTER PERUSING THE REMAND REPOR T HAS FOUND THE AO TO WRONGLY STATE D THAT ASSESSEE DID NOT FURNISH THE CORRECT ADDRESS, PAN ETC OF THE SUNDRY CREDITOR. 13 . IN RESPECT TO THE CONTENTION OF THE LD SR DR, THAT THE CONFIRMATION OF ACCOUNTS FROM THE SUNDRY CREDITORS WERE NOT PROD UCED BEFORE THE AO AND THE DOUBT EXPRESSED ABOUT THE GENUINENESS OF THE SAID CONFIRMATION WHICH WAS PRODUCED FOR THE FIRST TIME BEFORE THE LD CIT(A) BECAUSE THE NAME OF THE PERSON PAGE 10 OF 15 WHO SIGNED ON BEHALF OF THE SUNDRY CREDITORS ARE AUTHORISED TO DO SO ; AND WHETHER LD C IT(A)HAS ERRED IN MAKING A FINDING THAT THE SAID DOCUM ENT WERE PRODUCED BEFORE THE AO ; AND IN THE SAID CIRCUMSTANCE WHETHER THE CASE NEED TO BE REMIT TED BACK TO AO FOR VERIFICATION. FOR ADJUDICATING THE SAME, WE NEED TO REPEAT CERTAIN FACTS TO CLARIFY THE FACTS EMERGING FROM THE RECORDS. A PERUSAL OF THE PB FILED BY THE ASSESSEE, WE FIND THAT VIDE DATED 15.12.2011 (PB PAGE 82), THE ASSESSEE HAD CLARIFIED THAT ADDRESSES OF THE SUNDRY CREDITORS WHICH WERE FURNIS HED EARLIER TO THE AO, WERE INFACT THAT WAS PRINTED ON THE INVOICES SUPPLIED BY THE SUPPLIERS AND SINCE THE AO HAS BROUGHT TO ITS KNOWLEDGE THE INSPECTOR REPORT, NO ENTITY BY THE NAME OF THE SUNDRY CREDITOR EXISTS AT THAT ADDRESS, THE ASSESSEE MADE ENQUIRI ES AND HAS FOUND THAT THEIR ADDRESS HAS CHANGED AND THE NEW ADDRESS WAS FURNISHED. (PAGE 82 OF PB). HOWEVER, WE FIND THAT AO HAS NOT MADE ANY ENQUIRY ON THE SAID ADDRESS OF THE SUNDRY CREDIT OR S TO FIND OUT WHETHER THERE WAS ANY FIRMS EXISTS OR NOT. ALONG W ITH THE SAID LETTER DATED 15.12.2011 (PB 82) THE ASSESSEE HAD FILED CERTAIN DOCUMENTS TO SUBSTANTIATE ITS CLAIM THAT TRADING LIABILITY WITH THE SAID SUNDRY CREDITS EXISTED AND HAS NOT CEASED. FOR THAT THE ASSESSEE HAS FILED SAMPLE BILLS OF M/S NITESH ENTER PRISES AND SHRI RAM TRADES (P 85 & 86), PRINTOUT DOWNLOADED FROM THE WEBSITE OF GOVT OF DELHI, DEPARTMENT OF TAXES (P.87 & 88), TO PROVE THAT ADDRESS WHICH IT HAD FURNISHED BEFORE THE AO, ON WHICH THE INSPECTOR OF THE DEPARTMENT SAID THAT THERE WAS NO FIRM EXISTING IN THE SAI D ADDRESS, WAS THE SAME ADDRESS AND WHICH WAS THE SAME ADDRESS GIVEN IN THE BILLS (PAGE 85 & 86) , SO THE ASSESSEE HAS NOT FURNIS HED ANY WRONG ADDRESS OR THE INF ERFERENCE DRAWN BY THE AO THAT THERE IS NO FIRM EXISTING IS WRONG. THE OTHER DOCUMENTS ALONG WITH LETTER DATED 15.11.2011 ARE THE LIST OF SU NDRY CREDITORS TO WHOM THE ASSESSEE OWE MORE THAN 10 LAKHS (PAGE 89) WHEREIN, THE ASSESSEE HAS FURNISHED THE PAN NO OF BOTH THE SUNDRY CREDITORS. THE CONFIRMATION OF ACCOUNTS FROM 01.04.2008 T O 31 ST MARCH 2009 DATED 01ST APRIL 2009 , WERE WE FIND THE SEAL OF THE SUNDRY CREDITOR, SIGNED/ INITIATED ON BEHALF BY BOTH THE SUNDRY CREDITOR M/S NITESH ENTERPRISES AND SHRI RAM TRADERS ALONG WITH THEIR PAN NO. IS ANNEXED AT PAGE 90 AND 91 OF PB. DOCUMEN TS ANNEXED TO P.92 TO 94 PERTAIN TO CONSULTANCY CHARGES PAID TO ARCHITECTURAL DESIGN SERVICE. AS PER THE INDEX OF THE PAPER BOOK OF THE ASSESSEE, SERIAL NO.6 ARE THE REPLIES DATED 25.08.2011, 02.11.2011, 15.11.2011, 05.12.2011 AND 15.12.2011 FILED ALONG WI TH ANNEXURES BEFORE THE AO DURING THE ASSESSMENT PAGE 11 OF 15 PROCEEDING NUMBERED AS PAGE 43 TO 94. AS PER THE CERTIFICATE APPENDED BELOW THE INDEX OF THE SAID PAPER BOOK THE AR OF THE ASSESSEE SHRI AKSHAT JAIN, ACA, HAS CERTIFIED THAT SERIAL NO.2 TO 9 WERE ON RECORD O F THE AO. SINCE THE DOCUMENT I.E. CONFIRMATION OF ACCOUNTS FROM 01.04.2008 TO 31 ST MARCH 2009 FIGURE IN SERIAL NO.6, PRIMA FACIE IT CAN BE INFERRED THAT THE SAID DOCUMENT WAS PLACED BEFORE THE AO. HOWEVER THE LD DR VEHEMENTLY CONTENDED THAT THE SAID DOCUMENT WAS PLACED FOR THE FIRST TIME BEFORE THE LD CIT(A) DURING THE APPELLATE PROCEED INGS. BE THAT AS IT MAY BE, EVEN IF IT HAS BEEN PRODUCED FOR THE FIRST TIME, WE FIND THE SAID DOCUMENT WAS ALSO SENT TO THE AO FOR HIS REMAND REPORT, WHERE WE DO NOT FIND ANY ADVERSE COMMENTS ABO UT IT IN HIS REMAND REPORT ( PB. P. 109 TO 113) OR NEITHER HA S IT BEEN REJECTED BY HIM N OR HAS HE DOUBTED THE VERACITY OR GENUINESS OF THE SAME. SO THE SAID CONFIRMATION OF ACCOUNTS BY THE SUNDRY CREDITORS CANNOT BE DISBELIEVED JUST BECAUSE THE NAME OF THE PERSON WHO SIGNED/ INITIALS HAS NOT BEEN RECORDED. WHEN THE FACT REMAINS THAT TIN NO., ADDRESS, PA N NO. A ND DETAILS OF THE BANK TRANSACTION (PAGE 98 TO 104) HAS COME ON RECORD WHICH HAS BEEN SEEN BY THE AO AT LEAST DURING THE REMAND PROCEEDINGS, THE PRAYER OF THE LD DR THAT THE CASE MAY BE REMITTED BACK TO THE AO F OR FURTHER VERIFICATION IS UNJUSTIFIED AND BEREFT OF MERITS; AND SO WE ARE INCLINED TO REJECT THE SAID PRAYER OF THE SR. DR. 14 . FURTHER WHEN WE LOOK INTO THE MATTER WE FIND THAT ASSESSEE HAS PRODUCED IN ITS BANK STATEMENT A/C NO.00090210000243 MAINTAINE D WITH UCO BANK, C O NNAUGHT PLACE, NEW DELHI WHEREIN WE FIND THAT PAYMENT HAS BEEN MADE TO M/S NITESH ENTERPRISES AND M/S SHIR RAM TRADE R S ON THE FOLLOWING DATE S AND AMOUNT REFLECTED : - M/S NITESH ENTERPRISES DATE OF PAYMENT AMOUNT (RS) 09 - 01 - 2010 25,00,000 11 - 01 - 2010 25,00,000 14 - 01 - 2010 25,00,000 15 - 01 - 2010 25,00,000 18 - 01 - 2010 25,00,000 19 - 01 - 2010 25,00,000 20 - 01 - 2010 50,00,000 21 - 01 - 2010 50,00,000 22 - 01 - 2010 50,00,000 26 - 04 - 2010 50,00,000 28.04.2010 51,03,113 TOTAL 4,01,03,113 PAGE 12 OF 15 M/S. SHRI RAM TRADERS DATE OF PAYMENT AMOUNT (RS) 12 - 01 - 2010 25,00,000 12 - 01 - 2010 25,00,000 14 - 01 - 2010 25,00,000 18 - 01 - 2010 25,00,000 19 - 01 - 2010 25,00,000 23 - 01 - 2010 50,00,000 08 - 02 - 2010 70,00,000 10 - 02 - 2010 18,60,000 15 - 02 - 2010 50,00,000 24 - 04 - 2010 34,29,508 TOTAL 3,47,89,508 15 . THE COPY OF THE BANK STATEMENT FROM JANUARY 2010 TO APRIL 2010 (PAGE 100 TO 108) REVEALS THAT ENTRIES GIVEN AGAINST DATE AND AMOUNT TALLIES WITH THE AFORESAID CHART GIVEN ABOVE, WHICH ESTABLISH THAT AMOUNT HAVE BEEN REMITTED TO THE RESPECTIVE FIRM S IN THEIR BANK ACCOUNT BY ACCOUNT PAYEE/ R TGS AS CONTENDED BY THE ASSESSEE AS EARLY AS 15.12.2011 BEFORE THE AO, WHICH CULMINATE D IN ASSESSMENT ORDER DATED 26.12.2011. FROM A PER USAL OF THE ABOVE CHART AND BANK STATEMENT WILL REVEAL THAT THE OUTSTANDING PAYMENTS TO THE AFORESAID SUNDRY CREDITORS FOR THE INSTANT ASSESSMENT YEAR, STANDS CREDITED TO THEIR RESPECTIVE BANK ACCOUNTS BY BANK TRANSFER BEFORE 28.04.2010 I.E. SIX MONTHS BEF ORE THE IMPUGNED ADDITION MADE BY THE AO, THOUGH IT WAS BROUGHT TO HIS KNOWLEDGE AS STATED ABOVE, THAT PAYMENTS HAVE BEEN MADE. IN THE REMAND REPORT OF THE AO, HE STATES AFTER PERUSAL OF THE AFORESAID BANK STATEMENT EVIDENCING ACCOUNT PAYEE TRANSFER OF AMO UNT TO THEIR RESPECTIVE BANK ACCOUNT, THAT APPELLANT HAS FILED COPIES OF BANK STATEMENTS AND SAME WAS EXAMINED. (PA RA 1.7 PAGE 112) (REMAND REPORT 109 TO 113 OF PB). SO THE LD CIT(A) HAS RIGHTLY CONCLUDED IN THE L IGHT OF THE AFORESAID EVIDENCE THAT SUNDRY CREDIT BALANCE IN THE NAME OF NITESH ENTERPRISES AND SHRI RAM TRADERS WERE GENUINE CREDIT BALANCE FOR PURCHASE OF MATERIAL BY THE ASSESSEE AND THE LIABILITY IN THE NAME OF SUCH PARTIES HAVE BEEN DULY DISCHARGED BY THE ASSESSEE BY MAKING PAYMENT THROUGH RTG S I.E. A/C PAYEE CHEQUES. MOREOVER, IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS NOT WRITTEN OFF THE AMOUNT TO THE CREDIT OF THE PROFIT AND LOSS ACCOUNTS AND THE OUTSTANDING LIABILITIES WERE STILL IN EXISTENCE WHICH WOULD PROVE THAT THE ASSESSEE ACKNOWL EDGED HIS LIABILITIES AS PER THE BOOK OF ACCOUNT. THUS IT HAS NOT TREATED THE MONEY AS ITS OWN MONEY. PAGE 13 OF 15 ACCORDINGLY, IT HAS NOT BECOME RICHER BY THE IMPUGNED AMOUNT AS IT CONTINUES TO HOLD OUT THAT IT IS INDEBTED TO THE AFORESAID CREDITORS, SO IT CANNOT BE I NFERRED THAT THE SAID LIABILITY HAD CEASED TO EXIST. SECTION 41(1) IS ATTRACTED ONLY WHEN THERE IS CESSATION OR REMISSION OF A TRADING LIABILITY. THE AO IN THIS CASE HAS FAILED TO PROVE THAT THE ASSESSEE HAS OBTAINED THE BENEFITS IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF. SIMPLY BECAUSE THE ADDRESS OF THE SUNDRY CREDITS HAD CHANGED, WHICH FACT WAS BROUGHT TO THE KNOWLEDGE OF THE AO, WITHOUT MAKING ANY ENQUIRY AT THE CHANGED ADDRESS, THE AO ON MERE PRESUMPTIONS, CONJECTURE S AND SURMISES HAS RESORTED TO MAKE THE ADDITIONS WITH THE A ID OF SECTION 41(1) OF THE ACT WAS MISCONCEIVED AND SO THE LD CIT(A) AFTER CONSIDERING THE EVIDENCE ON RECORD AND THE REMAND REPORT OF AO HAS RIGHTLY HELD THAT THERE WAS NO CESSATION OF TRADING LI ABILITY . SO THE QUESTION OF FASTENING THE ADDITION WITH THE AID OF SECTION 41(1) DOES NOT ARISE. 16 . SO IN THE LIGHT OF THE AFORESAID EVIDENCES, WE ARE INCLINED TO UPHOLD THE FINDING AND CONCLUSION OF THE LD CIT(A) AND SO WE CONFIRM THE SAME AND ACCORDING LY THE REVENUES APPEAL IS DISMISSED. 17 . GROUND NO. 2 RELATES TO DELETION OF ADDITION OF RS.64,10,847/ - MADE BY THE AO ON ACCOUNT OF REJECTION OF BOOKS U/S 145 OF THE ACT AND ESTIMATE D PROFIT @8.7% OF GROSS RECEIPT. 18 . THE ASSESSEE IS A CIVIL CONTRACTOR ENGAGED IN CONSTRUCTION OF A PROJECT AT NOIDA. THE ASSESSEE HAS SHOWN INCOME FROM CONTRACTS OF RS.21,26,34,926/ - ON WHICH NET PROFIT OF RS.87,01,524/ - @4.09 % HAS BEEN SHOWN. THE AO IN HIS ASSESSMENT ORDER HAS ALLEGED THAT THE ASSESSEE HAS NOT PR ODUCED THE BOOKS OF ACCOUNT AND VOUCHERS AND ESTIMATE D THE PROFIT OF RS.1,69,94,954 @ 8% OF GROSS RECEIPT OF RS.21,24,36,926/ - AND REJECTED THE BOOKS OF ACCOUNT BY INVOKING SECTION 145 OF THE ACT. 19 . AGGRIEVED BY THE SAID ORDER OF THE AO, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE LD CIT(A), WHO WAS PLEASED TO DELETE THE SAME. 20 . AGGRIEVED BY THE SAID ORDER OF THE LD CIT(A), THE REVENUE IS BEFORE US. WE FIND THAT THE AO HAS INVOKED SECTION 145 OF THE ACT BY STATING THAT THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNTS, AND DID NOT FURNISH PROOF WITH REGARD TO VARIOUS EXPENSES CLAIM ED, LIKE CONSULTANCY EXPENSES AND MAINTENANCE EXPENSES OF RS.10,83,931/ - AND THE ASSESSEE COULD NOT JUSTIFY TRAVELLING EXPENSES PAGE 14 OF 15 OF RS.20,02,000/ - , SO HE REJECTED THE BOOKS O F ACCOUNTS OF THE ASSESSEE AND ESTIMATE D THE PROFIT @ 8 % OF THE GROSS RECEIPTS. IN THE REMAND REPORT DATED 23.04.2012 ALSO HE REITERATED THE REASON FOR INVOKING SECTION 145 OF THE ACT AND JUSTIFIED HIS ACTION. IN RESPECT TO THE AOS CONTENTION TH A T BOOKS OF ACCOUNTS WERE NOT PRODUCED BY THE ASSESSEE BEFORE HIM, WE FIND THAT FOR THE REASONS GIVEN BELOW THE SAID FACTUAL FINDING IS INCORRECT AND WRONG. THE LD CIT(A) HAS RIGHTLY OBSERVED IN THE IMPUGNED ORDER IN PAGE 49 PARA 6.3 THAT AO HAS CLEARLY OBSERVED IN THE ASSESSMENT ORDER AT PAGE 2 THAT SHRI ANKUSH JAIN, FCA OF THE ASSESSEE COMPANY ATTENDED AND BOOKS OF ACCOUNTS AND OTHER RELEVANT DOCUMENTS DETAILS AS REQUIRED BY HIM H AS BEEN FILED, PERUSED AND PLACED ON RECORD . FURTHER WHEN WE PERUSE THE PAPER BOOK PAGE 83 WHICH IS THE LETTER OF THE ASSESSEE DATED 15.12.2011 TO THE AO, IT IS CLEARLY MENTIONED THAT THE ASSESSEE IS PRODUCING COMPLETE BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS OF ASSESSEE COMPANY ASKED BY HIM FOR VERIFICATION. AND IN PAGE 83 OF PB, THE ASSESSEE ANSWERS TO THE QUERY OF AO IN RESPECT TO CONSULTANCY EXPENSES, THAT IT HAS TAKEN PROFESSIONAL SERVICES IN RESPECT OF ARCHITECTURAL DESIGN FROM M/S SOPRANO LTD, (HONG KONG) AND THE PAYMENT HAS BEEN PAID A FTER DULY DEDUCTING TDS @ 10.55 75 % AND COPY OF LEDGER ACCOUNT WAS ALSO ENCLOSED (PAGE 92, 93 OF PB) INVOICE OF SOPRANO LTD (94 OF PB). ALONG WITH THE AFORESAID EVIDENCES, THE ASSESSEE HAS FILED COPY OF THE BALANCE SHEET, DETAILS OF LOANS AND ADVANCES AND ALSO MENTIONS THAT TAX AUDIT REPORT HAS ALREADY BEEN FILED BEFORE THE AO (PAGE 84 OF PB). IN THE FAC E OF THESE EVIDENCES AND HIS OWN ADMISSION I N THE ASSESSMENT ORDER THAT THE AR HAS PRODUCED THE BOOKS OF ACCOUNTS BEFORE HIM, THE REJECTION OF BOOKS OF ACCO UNTS SIMPLY BY SAYING THAT ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNT IS NOT LEGALLY PERMISSIBLE. EVEN IN THE REMAND REPORT, WE COULD NOT FIND A WHISPER OF ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. IT MUST BE NOTED THAT AS SESSEES BOOKS OF ACCOUNT ARE AUDITED AND CERTIFIED BY THE AUDITORS AND THE LD CIT(A) HAS RIGHTLY OBSERVED THAT THE ASSESSEE IS FOLLOWING THE PRESCRIBED RULES AND ACCOUNTING STANDARDS LIKE AS - 7 ETC. WE FIND THAT THE AUDITORS HAVE CERTIFIED THE BOOKS OF ACC OUNTS AND FINANCIAL STATEMENTS ARE PREPARED AS PER THE PRESCRIBED ACCOUNTING STANDARD. BEFORE REJECTING THE BOOKS OF ACCOUNT, THE AO IS BOUND TO P O INT OUT SPECIFIC DEFECTS IF ANY AND POINT OUT IF THERE IS ANY DISCREPANCY IN THE EXPENSES CLAIMED. WE FIND TH AT BOOKS OF ACCOUNT WAS PRODUCED BY THE PAGE 15 OF 15 ASSESSEE BEFORE THE AO, SO IT DOES NOT LIE IN THE MOUTH OF THE AO TO SIMPLY SAY, THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNT WHEN HE HIMSELF SAY IN PAGE 2 OF THE ASSESSMENT ORDER THAT ASSESSEE HAS PRODUCED BOOKS AND HE CANNOT REJECT THE BOOKS OF ACCOUNT WITHOUT POINTING OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT WHICH ARE AUDITED AS PER THE LAW, AND IN THE LIGHT OF ALL SUPPORTING EVIDENCES PRODUCED BY THE ASSESSEE, WE CONCUR WITH THE FINDING OF THE LD CIT(A) THAT THE ORDER INVOKING SECTION 145 IS BAD IN THE EYES OF LAW AND IS THEREFORE LEGALLY NOT TENABLE. AND IN RESPECT TO THE ESTIMATE @8% OF GROSS RECEIPT, WE CONCUR WITH THE CIT(A) THAT NEITHER THE AO POINT ED OUT ANY WRONG CLAIM OR BOGUS EXPENSE IN THE BOOKS NOR HAS GIVEN ANY COMPARATIVE CASES WHEREIN THE NET PROFIT IS SHOWN @8% OF THE GROSS RECEIPTS. SO WE FIND NO JUSTIFICATION FOR THE AO TO ESTIMATE @ 8 % OF GROSS RECEIPTS. HENCE THE LD CIT(A) HAS RIGHTLY DE LETED THE ADDITION MADE BY THE AO OF RS.64,10,847/ - . THEREFORE WE CONCUR WITH THE ORDER OF THE LD CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 21 . IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 . 03 . 2015 . - S D / - - S D / - ( S.V.MEHROTRA ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 7 / 03 / 2015 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI