Dy.CIT, Agra V. M/s Bansal Timber Products, Agra

ITA 36/AGR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6996 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: MAHESH AGARWAL
• Keywords: Unexplained investment; Unexplained expenditure; Depreciation; Business expenditure; Loose papers; Corroborative evidences; Valuation report
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 36/AGRA/2010 ASSTT. YEAR : 2006-07 D.C.I.T. CIRCLE -1, VS. M/S. BANSAL TIMBER PROD UCTS, AGRA. 21/18D, FREEGANJ, AGRA. (PAN : AABFB 2920 K) C.O. NO. 25/AGRA/2010 (IN ITA NO. 36/AGRA/2010) ASSTT. YEAR : 2006-07 M/S. BANSAL TIMBER PRODUCTS, VS. D.C.I.T. CIRCLE -1, 21/18D, FREEGANJ, AGRA. AGRA. (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI A.K. SHARMA, JR. DR FOR ASSESSEE : SHRI MAHESH AGARWAL, C.A. ORDER PER P.K. BANSAL, A.M. : THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE HAVE BEEN FILED AGAINST THE ORDER OF CIT(A) DATED 30.11.2009. THE REVENUE H AS TAKEN FOLLOWING EFFECTIVE GROUNDS IN APPEAL : 1. THAT THE CIT(A)-I, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1,53,581/- WITHOUT A PPRECIATING THE FACTS THAT ADDITION WAS MADE ON THE BASIS OF VALUATION REPORT OF DVO WHO HAS MADE VALUATION OF PREMISES AFTER CONSIDERING ALL ASPECTS AND MATERIAL AVAILABLE WITH RESPECT TO THE CASE. 2. THAT THE CIT(A)-I, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.3,61,933/- MADE ON ACCO UNT OF NEGATIVE CASH BALANCE WITHOUT APPRECIATING THE FACTS THAT THERE WAS NO IM PREST ACCOUNT FOUND DURING THE COURSE OF SURVEY U/S. 133A OF THE ACT AND IF ANY TR ANSACTION OF DEBITS OR CREDITS IN RESPECT OF SURVEY OF THE ACT AND IF ANY TRANSACTION OF DEBITS OR CREDITS IN RESPECT OF 2 PARTNERS IS DONE BY THE FIRM THE SAME WOULD HAVE BE EN ENTERED INTO PARTNERS CAPITAL ACCOUNT. 3. THAT THE CIT(A)-I, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.20,906/- MADE ON ACCOUN T OF DEPRECIATION ON CAR AS THE CAR WAS PURCHASED BY THE PARTNER IN HIS OWN NAM E INSTEAD IN THE NAME OF THE FIRM, HENCE, PERSONAL USE OF CAR CANNOT BE OVERRULE D. 4. THAT THE CIT(A)-I, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.16,829/- MADE ON ACCOUN T OF ADVERTISEMENT EXPENSES WITHOUT APPRECIATING THE FACTS THAT MOST OF THE PAY MENT HAS BEEN MADE IN CASH AND MOST OF THE VOUCHERS PRODUCED BY THE ASSESSEE A RE SELF MADE AND NOT OPEN TO VERIFICATION. 5. THAT THE CIT(A)-I, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.6,89,901/- MADE ON THE BASIS OF ENTRIES FOUND RECORDED ON LOOSE PAPERS WITHOUT APPRECIATING THE FACTS THAT THEY ARE NOT RECORDED IN REGULAR BOOKS OF ACCOUNTS AND THAT THE SURRENDERED AMOUNT OF RS.60,00,000/- HAS ALREADY BEEN CONSIDERED AS THE UNACCOUNTED INVESTME NT IN THE OFFICE BUILDING OF THE ASSESSEE. 2. IN THE CROSS OBJECTION, THE ASSESSEE HAS TAKEN F OLLOWING EFFECTIVE GROUNDS : 1. THAT THE LD. AUTHORITIES WERE UNREASONABLE IN M AKING NOTIONAL ADDITION OF RS.9,000/- MERELY ON SUSPICION WITHOUT HAVING ANYTHING ON RECORD. THE SATISFACTION OF THE LD. AUTHORITIES THAT THE RE SPONDENT FAILED TO GIVE EXPLANATION OR FURNISH EVIDENCE IS PURELY BASED ON CONJECTURES, SUSPICIONS AND SURMISES. 2. THAT THE LD. AUTHORITIES WERE UNREASONABLE IN D ISALLOWING THE DEPRECIATION OF RS.1050/- ON SCOOTER WITHOUT APPREC IATING THE FACT THAT THE EXPENDITURE ON PETROL OF SCOOTER HAVE NEVER BEEN CO VERED FOR THE PURPOSE OF LEVY OF FRINGE BENEFIT TAX, ONLY PETROL EXPENSES ON CAR ATTRACTS THESE PROVISIONS. 3. GROUND NO. 1 IN REVENUES APPEAL RELATES TO THE DELETION OF ADDITION OF RS.1,53,581/-. THE BRIEF FACTS OF THE CASE ARE THAT THERE HAD BEEN A SURVEY ON 26.12.2005 IN THE CASE OF THE ASSESSEE. DURING THE COURSE OF SURVEY, STATEMENT OF ONE OF THE PARTNERS SHRI VIKAS BANSAL WAS RECORDED. HE OFFERED AN INCOME OF RS.55,00,000/- TO AVOID LITIGATION, PURCHASE OF PEACE AND TO COVER UP ALL POSSIBLE LEAKAGE. SUBSEQUENTLY ON 04.0 1.2006, THE SURRENDERED AMOUNT OF 3 RS.55,00,000/- WAS RAISED TO RS.60,000/- TO COVER U P UNACCOUNTED INVESTMENT IN BUILDING AND OTHER ITEMS ALSO. THE ASSESSING OFFICER ISSUED COMM ISSION U/S. 142(A) OF THE ACT ON 10.11.2008 DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR DET ERMINING THE COST OF CONSTRUCTION OF THE PROPERTY AT 21/16/17, FREE GANJ, AGRA. THE DVO ESTI MATED THE COST OF CONSTRUCTION OF THE BUILDING AT RS.1,12,27,400/- FROM F.Y. 2001-02 TO 2 006-07. FOR THE YEAR UNDER CONSIDERATION, THE COST OF CONSTRUCTION WAS ESTIMATED AT RS.75,84,923/ - WHEREAS AS PER THE BOOKS, INCLUDING THE SURRENDERED AMOUNT, THE COST OF CONSTRUCTION FOR TH E DISPUTED YEAR WAS RS.74,31,342/-. THE DEFERENCE BEING RS.1,53,581/- WAS ADDED BY THE ASSE SSING OFFICER AS THE INCOME OF THE ASSESSEE U/S. 69 OF THE ACT. 4. WHEN THE MATTER WENT IN APPEAL BEFORE THE CIT(A) , THE CIT(A) DELETED THE ADDITION AFTER NOTING THAT THE DVO HAS NOT DEDUCTED THE SELF SUPER VISION CHARGES @ 12.5% AS PER PRESCRIBED RATE. HE HAS ONLY DEDUCTED 7.5% ON THIS HEAD. THE A DDITIONAL DEDUCTION @ 1% ON ACCOUNT OF WATER CHARGES WAS NOT ALLOWED. THE COST OF MARBLE W AS TAKEN @ RS.1050 PER SQ. METER AGAINST ACTUAL COST INCURRED AT THE RATE OF RS. 382/- PER S Q. METER DULY SUPPORTED BY BILLS. NO CREDIT FOR USE OF SALVAGE/RESIDUE OF THE OLD BUILDING WAS GIVE N TO THE ASSESSEE. IF THESE CONSIDERATIONS ARE TAKEN INTO ACCOUNT, THEN THE VALUATION MADE BY THE DVO SHOULD HAVE BEEN REDUCED BY RS.10,63,830/-. THE CIT(A), THEREFORE, DELETED THE ADDITION OF RS.1,53,581/- BY HOLDING AS UNDER: 3.3. I HAVE CONSIDERED THE RELEVANT FACTS AND RIVA L CONTENTIONS. IT IS SEEN THAT THE APPELLANT HAD RECORDED INVESTMENT IN THE CONSTRUCTION OF THE OFFICE AT RS.14,31,342/- IN ITS BOOKS OF ACCOUNT. PURSUANT TO A SURVEY U/S. 133A OF THE ACT IN ITS PREMISES ON 26.12.2005, THE APPELLANT SURREN DERED RS.55 LACS VIDE LETTER DATED 26.12.2005. VIDE SUBSEQUENT LETTER DATED 04.0 1.2006, THE APPELLANT STATED AS UNDER :- 2. FURTHER, AS DISCUSSED WITH YOU WE ARE SURREND ERING RS.60 LAC OVER AND OVER THE REGULAR INCOME TO AVOID LITIGATION, TO 4 PURCHASE PEACE. THE SURRENDERED INCOME WILL COVER I NVESTMENT IN BUILDING ON THE LAND BELONGING TO PARTNERS AND OTHE RS AND ALL OTHER POSSIBLE LEAKAGE / DISCREPANCIES. THUS, THE TOTAL INVESTMENT ADMITTED BY THE APPELLAN T WORKS OUT TO RS.69,41,342/-. THE DIFFERENCE BETWEEN INVESTMENT E STIMATED BY THE DVO AT RS.75,84,923/- AND THE INVESTMENT ADMITTED BY THE A PPELLANT AT RS.69,31,342/- WORKS OUT TO RS.6,53,581 WHICH IS WELL WITHIN THE P ERMISSIBLE MARGIN OF TOLERANCE OF 10% TO 15% AS ENUNCIATED IN THE FOLLOWING DECISI ONS :- K.P. VARGHESE VS. ITO 131 ITR 597 (SC) CIT VS. ABEESON HOTELS (P) LTD. 191 CTR 263 ACIT, CIRCLE 1 BHATINDA VS. DD COTTON (P) LTD. 15 5 TAXMAN 219 SMT. SAROJ GUPTA VS. ITO 106 TTJ 1073 ITAT, DELHI B BENCH ITO VS. RAM NATH AGARWAL 132 TAXMAN 178. HENCE, THE ADDITION OF RS.1,53,581/- IS NOT SUSTAIN ABLE AND ACCORDINGLY, DELETED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE C IT(A). THE COST OF CONSTRUCTION AS ESTIMATED BY THE DVO IS IN FACT THE ESTIMATE AND CANNOT BE REGAR DED TO BE THE ACTUAL INVESTMENT MADE BY THE ASSESSEE IN THE CONSTRUCTION OF BUILDING. THERE IS ALWAYS DIFFERENCE IN THE ACTUAL COST AND THE ESTIMATE AS MAY BE WORKED OUT. THE ASSESSEE HAS POI NTED OUT THE SPECIFIC POINTS FOR WHICH CREDIT HAS NOT BEEN GIVEN BY THE DVO WHILE ESTIMATING THE COST OF CONSTRUCTION. IF THE CREDIT FOR THOSE ITEMS IS GIVEN, THERE WILL NOT BE ANY DIFFERENCE. E VEN OTHERWISE ALSO, THE DIFFERENCE, AS HAS BEEN POINTED OUT BY THE CIT(A), IN THE ESTIMATE MADE BY THE DVO AND THE COST OF CONSTRUCTION AS ADMITTED BY THE ASSESSEE IS BETWEEN 10 TO 15% WHICH IS WITHIN THE PERMISSIBLE LIMIT. WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A). GROUND NO. 1 STANDS DISMISSED. 6. GROUND NO. 2 RELATES TO DELETION OF ADDITION OF RS.3,61,933/- ON ACCOUNT OF NEGATIVE CASH BALANCE. THE BRIEF FACTS RELATING TO THIS ADDITION ARE THAT THE ASSESSING OFFICER NOTICED NEGATIVE 5 BALANCE OF RS.3,61,933/- IN THE MONTH OF DECEMBER, 2005 ON THE BASIS OF AUDITORS NOTE. ON BEING ASKED, THE ASSESSEE SUBMITTED THAT IN THE MON TH OF DECEMBER, 2005, THE ASSESSEE FIRM WAS IN LIQUIDITY CRUNCH AND HAD MADE NECESSARY BUSINESS EXPENDITURE OVER AND ABOVE THE AVAILABLE LIQUIDITY AND SUCH BUSINESS NEED OF THE CASH WAS TE MPORARILY MET OUT FROM THE PARTNERS IMPREST ACCOUNT, WHICH WAS PAID OFF LATER ON IN THE SAME MO NTH ON 20 TH DECEMBER, 2005 ITSELF. IT BEING A TEMPORARY ARRANGEMENT WAS NOT CREDITED TO THE RESPE CTIVE CAPITAL ACCOUNTS OF THE PARTNERS. THEREFORE, THIS SHORT TERM INFUSION OF FUND TO SUPP ORT THE FIRM FROM PARTNERS IMPREST ACCOUNT DOES NOT WARRANT ADDITION ON THIS ACCOUNT. THE ASSE SSING OFFICER, HOWEVER, OBSERVED THAT THE CONTENTION OF ASSESSEE WAS NOT SUPPORTED BY ANY EVI DENCE. THE FACTUM OF MAINTAINING IMPREST ACCOUNT OF PARTNERS WAS NEITHER MENTIONED IN THE BA LANCE SHEET NOR WAS SO STATED BY THE PARTNERS IN THEIR STATEMENTS RECORDED AT THE TIME OF SURVEY. HE, THEREFORE, TREATED THE NEGATIVE CASH BALANCE OF RS.3,61,933/- AS UNEXPLAINED EXPENDITURE INCURRE D FROM UNACCOUNTED SOURCES OVER AND ABOVE RS.60 LACS SURRENDERED BY THE ASSESSEE AND ADDED TH E SAME IN THE TOTAL INCOME OF THE ASSESSEE. THE CIT(A) DELETED THE ADDITION HOLDING THAT NO SEP ARATE ADDITION OF RS.3,61,933/- IS WARRANTED, AS THE SAID AMOUNT IS COVERED IN THE AMOUNT OF RS.6 0,00,000/- SURRENDERED BY THE ASSESSEE. 7. THE LEARNED DR ARGUED THAT THE CIT(A) IS NOT JUS TIFIED IN DELETING THE ADDITION, AS THE ADDITION MADE ON ACCOUNT OF NEGATIVE CASH BALANCE W AS OVER AND ABOVE THE SURRENDERED AMOUNT. HE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 8. THE LEARNED AR, ON THE OTHER HAND, CONTENDS THAT THE REASON OF SUCH NEGATIVE CASH BALANCE ON SOME DATES WAS FULLY EXPLAINED TO THE AO , WHICH HE FAILED TO APPRECIATE IN RIGHT PERSPECTIVE. HE ALSO FAILED TO CONSIDER THAT AT THE END OF THE YEAR NO NEGATIVE CASH BALANCE WAS 6 FOUND. MOREOVER, THE ASSESSING OFFICER HAS NOT REJE CTED THE BOOKS OF ACCOUNT AND THE ULTIMATE BOOK RESULTS HAVE BEEN ACCEPTED BY HIM. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE NOTED THAT THE ASSESSING OFFICER HAS NOT REJECTED THE BOOK VER SION OF THE ASSESSEE ON THIS ACCOUNT. IT IS NOT DISPUTED THAT THERE WAS NO NEGATIVE CASH BALANCE AT THE END OF THE YEAR. IT IS ALSO NOT DISPUTED THAT THE FUND TEMPORARILY USED BY THE FIRM FROM THE ALLE GED IMPREST ACCOUNT OF THE PARTNERS TO MEET OUT THE NECESSARY BUSINESS EXPENDITURE, WAS PAID OF IN THE SAME MONTH OF DECEMBER, 2005 AND THERE WAS NO NEGATIVE CASH BALANCE AT THE END OF TH E YEAR. IT DOES NOT EMERGE OUT OF THE ASSESSMENT ORDER THAT THE SURVEY TEAM HAD THROWN AN Y QUESTION ABOUT MAINTENANCE OF IMPREST ACCOUNT WHILE RECORDING THE STATEMENTS OF THE PARTN ERS. IN VIEW OF ALL THESE FACTS WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION OF RS.3,61,933 /- MADE ON ACCOUNT OF NEGATIVE CASH BALANCE DOES NOT STAND ON SOUND FOOTING AND THE CIT(A) HAS RIGHTLY DELETED THE SAME, THOUGH BY TELESCOPING THE SAME WITH THE SURRENDERED AMOUNT. A S A RESULT, THIS GROUND OF REVENUE STANDS REJECTED. 10. GROUND NO. 3 RELATES TO THE DELETION OF ADDITIO N OF RS.20,906/- ON ACCOUNT OF DEPRECIATION ON RECORD. THE BRIEF FACTS ARE THAT THE ASSESSEE CL AIMED DEPRECIATION ON CAR OF RS.69,688/- OUT OF WHICH THE ASSESSING OFFICER MADE DISALLOWANCE OF RS .20,906/- ON THE GROUND THAT THE CAR WAS PURCHASED IN THE NAME OF THE PARTNER AND THE ASSESS EE COULD NOT EXPLAIN HOW THE CAR WAS USED FOR THE BUSINESS PURPOSE. HE, THEREFORE, ESTIMATED 50% OF CAR DEPRECIATION RELEVANT FOR PERSONAL PURPOSES, I.E., AMOUNTING TO RS.34,844/- AS DISALLO WABLE DEPRECIATION AND AFTER GIVING BENEFIT OF 20% OF THIS DISALLOWABLE DEPRECIATION ALREADY OFFER ED BY THE ASSESSEE UNDER FRINGE BENEFIT TAX, 7 ADDED THE BALANCE AMOUNT OF RS.20,906/- TO THE TOTA L INCOME OF ASSESSEE. THE CIT(A) DELETED THE ADDITION. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERED THE SAME. THE ASSESSEE HAS HIMSELF OFFERED 20% OF THE DEPRECIATION FOR TAX UND ER FBT. WE DO NOT FIND ANY MATERIAL ON RECORD TO SUPPORT AND JUSTIFY THE FINDING OF THE AS SESSING OFFICER THAT 50% OF THE DEPRECIATION SHOULD BE TREATED AS RELEVANT TO PERSONAL USE OF CA R. WE, THEREFORE, FIND NO GOOD REASON TO INTERFERE WITH THE FINDING REACHED BY THE CIT(A) WH ILE DELETING THE IMPUGNED ADDITION. AS A RESULT, THE GROUND RAISED BY REVENUE STANDS DISMISS ED. 12. GROUND NO.4 CHALLENGES THE DELETION OF ADDITION 16,829/- MADE ON ACCOUNT OF ADVERTISEMENT EXPENSES. THE BRIEF FACTS ARE THAT TH E ASSESSEE DEBITED ADVERTISEMENT EXPENDITURE OF RS.84,145/- IN THE PROFIT AND LOSS ACCOUNT WHICH WAS NOT COVERED FOR TAXATION UNDER FBT. THE ASSESSING OFFICER MADE DISALLOWANCE @ 20% OF THE AF ORESAID EXPENDITURE, I.E., RS.16,829/- ON THE GROUND THAT THE SAID EXPENDITURE WERE NOT SUPPO RTED BY BILLS AND THE VOUCHERS PRODUCED WERE SELF MADE. THE CIT(A) DELETED THE ADDITION HOLDING THAT THERE IS NO MATERIAL ON RECORD TO SHOW THAT THESE EXPENSES WERE NOT INCURRED BY ASSESSEE A ND WERE FALSELY CLAIMED. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE RED THE SAME. WE FIND NO MATERIAL ON RECORD FROM THE SIDE OF REVENUE TO REBUT THE FINDIN G RECORDED BY THE CIT(A). THE ASSESSING OFFICER HAS NOT POINTED OUT SUCH EXPENSES WHICH HAV E BEEN INCURRED FOR THE PURPOSE OTHER THAN BUSINESS. KEEPING IN VIEW THE NATURE OF EXPENSES, I .E., TOWARDS ADVERTISEMENT WHICH ARE MADE FOR SALE PROMOTION OF THE BUSINESS, WE HOLD THAT DISALL OWANCE OF 20% OF SUCH EXPENSES ON ADHOC 8 BASIS, HAS RIGHTLY BEEN DELETED BY THE CIT(A). WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) ON THIS COUNT. 14. NEXT GROUND NO.5 RELATES TO THE DELETION OF ADD ITION OF RS.6,89,901/- MADE ON THE BASIS OF ENTRIES ON THE LOOSE PAPERS FOUND AND IMPOUNDED AT THE TIME OF SURVEY AS ANNEXURE-6. THE ASSESSING OFFICER OBSERVED THAT THE MOST OF THE ENT RIES PERTAIN TO THE FINANCIAL YEAR 2005-06 WITH PARTIES NAME AS JAIN HARDWARE ETAWAH. SINCE THE ASS ESSEE FAILED TO VERIFY THE ENTRIES ON LOOSE PAPERS MENTIONED AT PAGE 6 OF THE ASSESSMENT ORDER, FROM THE REGULAR BOOKS OF ACCOUNT, THE ASSESSING OFFICER CONCLUDED THAT THE ENTRIES MADE O N THE LOOSE PAPERS WERE IN THE FORM OF EITHER UNACCOUNTED PURCHASES OR UNACCOUNTED SALES OUT OF B OOKS OF ACCOUNT. HE, THEREFORE, ADDED THE ENTIRE AMOUNT OF RS.6,89,901/- AS INCOME OF THE ASS ESSEE FROM UNDISCLOSED SOURCES U/S. 69 OF THE ACT. THE LEARNED CIT(A) AFTER CONSIDERING THE CONTE NTIONS OF THE ASSESSEE DELETED THE ADDITION BY TELESCOPING THE SAME FROM THE SURRENDERED AMOUNT OF RS.60,00,000/-. 15. LEARNED DR BEFORE US CONTENDED THAT SINCE THE L OOSE PAPERS WERE DETECTED FROM THE PREMISES OF THE ASSESSEE, THE ONUS LIES ON THE ASSE SSEE TO PROVE THAT THE SAID LOOSE PAPER DID NOT BELONG TO HIM. THE NATURE OF ENTRIES DEPICTS THE BU SINESS TRANSACTION OUT OF BOOKS AND FOR WANT OF SATISFACTORY EXPLANATION WITH RESPECT THERETO, THE ASSESSING OFFICER HAS RIGHTLY ADDED THE SUM OF RS.6,89,901/- AS UNDISCLOSED INCOME OF THE ASSESSEE U/S. 69 OVER AND ABOVE THE SURRENDERED AMOUNT. 16. THE LEARNED AR, ON THE OTHER HAND, REITERATING THE REPLIES AND EXPLANATIONS TENDERED BEFORE THE AUTHORITIES BELOW, CONTENDED THAT THE LO OSE PAPERS FOUND AT THE TIME OF SURVEY DID NOT 9 BELONG TO THE ASSESSEE OR ITS BUSINESS TRANSACTIONS , RATHER THEY ARE DUMB DOCUMENTS. THE ENTRIES CONTAINED ON THE LOOSE PAPERS WERE NOT MADE IN THE HAND WRITING OF THE ASSESSEE OR ANY OF ITS EMPLOYEES. THEY DO NOT REFLECT THE NAME OF THE ASSE SSEE NOR GAVE DESCRIPTION OF TRANSACTIONS. RATHER THE LOOSE PAPERS CLEARLY MENTIONED THE NAME OF M/S. JAIN HARDWARE ETAWAH. IT WAS EXPLAINED THAT MOST PROBABLY THOSE PAPERS WOULD HAV E BEEN LEFT BY SO CALLED PARTY OF ETAWAH SOMETIMES AT THE BUSINESS PREMISES OF THE ASSESSEE BECAUSE THE PARTY IN THE NAME OF M/S. JAIN PLY WOOD ETAWAH HAD SOME PURCHASE FROM THE ASSESSEE FIR M DURING THE PREVIOUS YEAR 2005-06 RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. IT WAS ALSO EXPLAINED THAT THE BARE READING OF THESE PAPERS SHOWS THAT LOOSE PAPER NO. 7 IS NOTHIN G BUT THE SUMMARY OF LOOSE PAPER NO. 2 TO 6 AND THE ASSESSING OFFICER WHILE MAKING ADDITION, CA LCULATED THE FIGURES OF INDIVIDUAL LOOSE PAPER NO. 2 TO 6 AND FURTHER CLUBBED THIS AMOUNT WITH THE ADDITION ON LOOSE PAPER NO. 7 FOR MAKING TOTAL ADDITION. IT WAS ALSO ARGUED THAT NO EXPLANAT ION WAS CALLED FOR LOOSE PAPER NO. 156 AND 172 OF ANNEXURE A-6, WHICH NEITHER CONTAINED ANY DATE O R ANY NAME. IT WAS FURTHER ARGUED THAT EVEN THE ASSESSING OFFICER WAS NOT SURE AS TO THE NATURE OF THE ENTRIES WHETHER THEY REPRESENTED UNACCOUNTED PURCHASE OR UNACCOUNTED SALE. HE, HOWEV ER, HAS WRONGLY MADE THE ADDITION AS UNDISCLOSED INCOME OF THE ASSESSEE. IT WAS CONTENDE D THAT THE ALLEGED LOOSE PAPERS, THEREFORE, HAVE WRONGLY BEEN READ AGAINST THE ASSESSEE WITHOUT ANY ENQUIRY AND EVIDENCE. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY CONSIDERED THE SAME ALONG WITH THE ORDERS OF TAX AUTHORITIES BELOW. WE HAVE ALSO PERUS ED THE COPIES OF LOOSE PAPERS NO. 2 TO 8, 156 & 172 OF ANNEXURE-6 IMPOUNDED AT THE TIME OF SURVEY , WHICH ARE PLACED ON RECORD BEFORE US. ON PERUSAL OF THESE DOCUMENTS, WE FIND SUBSTANTIAL FOR CE IN THE CONTENTION OF THE ASSESSEE THAT LOOSE PAPER NO. 7 IS THE SUMMARY OF LOOSE PAPERS NOS. 2 T O 6 AND THUS, THE DUPLICITY OF ENTRIES 10 CONSIDERED FOR ADDITION AMOUNTED TO 1,57,000/-. FRO M THE PERUSAL OF VARIOUS LOOSE PAPERS, IT ALSO REVEALS THAT MONETARY ENTRIES WHICH DO NOT RELATE T O THE YEAR UNDER CONSIDERATION AMOUNTED TO RS.96,795/-. THEREFORE, WE ARE OF THE CONSIDERED OP INION THAT IT WAS WRONG ON THE PART OF THE ASSESSING OFFICER TO ASK FOR VERIFICATION OF THESE FIGURES FROM THE REGULAR BOOKS OF ACCOUNT FOR THE YEAR UNDER CONSIDERATION AND TO MAKE ADDITION O N ITS BASIS. IT IS OBVIOUS ON THE FACE OF LOOSE PAPERS THAT MOST OF THEM CONTAINED THE NAME OF M/S. JAIN HARDWARE, MAINPURI. THE CONTENTION OF THE ASSESSEE HAS BEEN THAT NONE OF THESE LOOSE PAPE RS CONTAINED THE NAME OF ASSESSEE NOR WERE THEY WRITTEN IN HAND WRITING OF ANY OF THE PERSON O R EMPLOYEE OF ASSESSEE FIRM. HE ALSO PLEADED THAT M/S. JAIN PLYWOOD, MAINPURI MADE SOME PURCHASE S FROM THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND THERE IS POSSIBILITY THAT THEY WO ULD HAVE LEFT THEIR PAPERS AT THE PREMISES OF THE ASSESSEE. HAVING CONSIDERED THE SUBMISSION OF THE A SSESSEE IN THE LIGHT OF LOOSE PAPERS, WE FIND THAT ONCE THE ASSESSEE CLAIMED THAT A PARTICULAR PA RTY OF MAINPURI WOULD HAVE LEFT THESE PAPERS AT THE PREMISES AND THE LOOSE PAPERS THEMSELVES CONTAI NED THE NAME OF JAIN HARDWARE MAINPURI, IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO BRING S OME CORROBORATING EVIDENT IN SUPPORT OF HIS CONCLUSION THAT THE ENTRIES MADE ON THE SAID LOOSE PAPERS REPRESENT THE UNDISCLOSED INCOME OF THE ASSESSEE, WHICH IS LACKING IN THE PRESENT CASE. THE REFORE, THE ADDITION MADE ON THE BASIS OF SUCH DOCUMENTS WHICH HAVE BEEN DENIED BY THE ASSESSEE AN D POINTED OUT TO HAVE RELATED TO SOME OTHER PARTY OF MAINPURI, HAS RIGHTLY BEEN DELETED BY THE CIT(A). FOR WANT OF ANY SUPPORTING EVIDENCE, WE ARE, THEREFORE, OF THE OPINION THAT THE ASSESSIN G OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION ON THIS COUNT. SOME LOOSE PAPERS DID NOT CONTAIN EV EN THE DATE OR NAME OF ANY PERSON ON SOME MONETARY FIGURES, WHICH BEING DUMB DOCUMENTS CANNOT BE READ AGAINST THE ASSESSEE AS HELD BY VARIOUS HIGH COURTS IN SEVERAL CASES. HAVING GONE T HROUGH THE ASSESSMENT ORDER, WE ALSO FIND THAT EVEN THE ASSESSING OFFICER IS NOT SURE AS TO T HE NATURE OF ENTRIES ON THE SAID PAPERS WHETHER 11 THEY RELATE TO CLANDESTINE PURCHASE OR UNACCOUNTED SALES OF ASSESSEE. THE ASSESSING OFFICER HAS SIMPLY NOTED THAT THESE ENTRIES ARE RELATING TO EIT HER UNACCOUNTED PURCHASE OR UNACCOUNTED SALE. IN OUR CONSIDERED OPINION, IN CASE THE ENTRIES RELA TE TO UNACCOUNTED PURCHASE, THE ADDITION COULD BE MADE AS UNEXPLAINED INVESTMENT U/S. 69 AND IF TH E ENTRIES RELATE TO UNACCOUNTED SALE, THE ADDITION COULD BE MADE AFTER WORKING OUT THE PROFIT THEREON. HOWEVER, IN THE INSTANT CASE, AS DISCUSSED ABOVE, THE ASSESSING OFFICER HAS MADE THE ADDITION OF ENTIRE AMOUNT U/S. 69 OF THE ACT WITHOUT ARRIVING AT A DEFINITE STAND THAT THE SAID ENTRIES RELATED TO UNEXPLAINED INVESTMENT OF THE ASSESSEE. IN FACT, HE HIMSELF WAS CONFUSED IN RESPE CT OF ENTRIES WHETHER THEY RELATED TO UNACCOUNTED PURCHASE OR UNACCOUNTED SALE. THEREFORE , THE ADDITION MADE ON THE BASIS OF ASSUMPTION AND PRESUMPTION ON THIS COUNT IS NOT TEN ABLE IN THE EYE OF LAW FOR WANT OF ANY CORROBORATING EVIDENCE AGAINST THE VERSION OF ASSES SEE. WE, THEREFORE, CONFIRM THE DELETION OF THIS ADDITION. GROUND NO. 5 OF REVENUE IS, THIS, DI SMISSED. 18. COMING TO THE CROSS OBJECTION FILED BY THE ASSE SSEE, GROUND NO. 1 RELATES TO ADDITION OF RS.9,000/- ON ACCOUNT OF DISALLOWANCE OF INTEREST O N THE ALLEGED ADVANCE GIVEN TO SJP REAL ESTATE FOR BOOKING OF OFFICE. AFTER HEARING BOTH TH E PARTIES, WE NOTED THAT SINCE THE ASSESSEE FAILED TO FURNISH THE DETAILS OF THE PROPERTY FOR W HICH THE ADVANCE WAS GIVEN ALONG WITH CORROBORATIVE EVIDENCE, THE LD. AUTHORITIES BELOW H AVE RIGHTLY DISALLOWED THE SAME AND MADE ADDITION OF RS.9,000/- ON THIS ACCOUNT. WE, THEREFO RE, DISMISS THIS GROUND OF CROSS OBJECTION. 19. AS REGARDS THE SECOND GROUND OF CROSS OBJECTION WHICH RELATES TO DISALLOWANCE OF RS.1050/- SUSTAINED BY CIT(A) ON ACCOUNT DEPRECIATI ON ON SCOOTER, WE FIND THAT THE DISALLOWANCE TO THE EXTENT OF 50% OF DEPRECIATION CLAIMED ON SCO OTER WAS MADE ON ACCOUNT OF PERSONAL USER OF 12 SCOOTER, WHICH WAS RESTRICTED TO 20% BY THE CIT(A). KEEPING IN VIEW THE POSSIBILITY OF PERSONAL USE OF SCOOTER, WE DO NOT FIND ANY REASON TO INTERF ERE WITH THE ORDER OF CIT(A). ACCORDINGLY, THIS GROUND OF CROSS OBJECTION STANDS REJECTED. 20. THE THIRD GROUND OF CROSS OBJECTION CHALLENGES THE SUSTENANCE OF ADDITION OF RS.3,615/- ON ACCOUNT OF EXPENDITURE ON PETROL OF SCOOTER. AFT ER HEARING BOTH THE PARTIES, WE NOTED THAT THE EXPENDITURE INCURRED ON PETROL OF SCOOTER HAVE NEVE R BEEN COVERED FOR THE PURPOSE OF LEVY OF FRINGE BENEFIT TAX AND ONLY PETROL EXPENSES ON CAR ATTRACTS THESE PROVISIONS. THEREFORE, THE EXPENDITURE INCURRED ON PETROL OF SCOOTER DESERVES TO BE ALLOWED. ACCORDINGLY, THIS GROUND OF CROSS OBJECTION IS ALLOWED. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.06.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17 TH JUNE, 2011 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY