D.C.I.T. -4(1), Agra V. M/s Adarsh Milk & Food India Pvt. Ltd., Agra

ITA 369/AGR/2010

• Counselvise Citation: 36920314 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-03-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 16-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VITHAL DAS
• Keywords: Unexplained cash credit; Depreciation; Proportionate interest; Additional evidence; Question of law; Corroborative evidences
• Section: 142(1); 68; 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.369/AGR/2010 ASSESSMENT YEAR: 2004-05 DY. COMMISSIONER OF INCOME TAX 4(1), VS. M/S. AD ARSH MILK & FOOD (I) AGRA. PVT. LTD., 14, WEST SHIVAJI NAGAR, SHAHGANJ, AGRA. (PAN: AAECA 5072 H). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI VITHAL DAS, ADVOCATE DATE OF HEARING : 06.03.2012 DATE OF PRONOUNCEMENT : 16.03.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 11.06.2010 PASSED BY THE LD. CIT(A)-I, AGRA FOR THE ASSESSMENT YEAR 2004-05. 2. THE REVENUE HAS RAISED AS MANY AS 6 GROUNDS OF A PPEAL. THE EFFECTIVE GROUNDS PERTAIN TO DELETION OF ADDITION OF ` 33,56,278/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF G.P., DELETION OF ADDITION OF ` 67,50,000/- MADE BY THE ITA NO.369/AGR/2010 A.Y. 2004-05 2 ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED SHARE M ONEY, DELETION OF ADDITION OF ` 5,05,500/- ALONG WITH THE PROPORTIONATE INTEREST TH EREON AT ` 60,660/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CR EDITS, DELETION OF ADDITION OF ` 3,59,985/- ON ACCOUNT OF DEPRECIATION. THE REVENUE HAS ALSO RAISED A GROUND THAT THE CIT(A) WITHOUT APPRECIATING THE FACTS OF THE CA SE HAS ACCEPTED CERTAIN ADDITIONAL EVIDENCES IN CONTRAVENTION OF RULE 46A O F THE INCOME TAX RULES, 1962. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER MADE ADDITION OF ` 33,56,278/- APPLYING 10% PROFIT RATE ON THE GROUND THAT THE ASSESSEE HAS FAI LED TO FURNISH DETAILS AND EVIDENCES TO JUSTIFY PURCHASE, SALES AND G.P. THER EFORE, THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE REJECTED. THE ASSESSING OFFICER WAS OF THE VIEW THAT IN THIS LINE OF BUSINESS, IN WHICH THE ASSESSEE IS ENGAGED, THE NORMAL PROFIT RATE DERIVED IS 10% IN PURCHASE AND SALE OF MILK. THE ASSESSING OFFICE R ACCORDINGLY CALCULATED PROFIT ON SALES SHOWN BY THE ASSESSEE. THE CALCULATION OF G.P. COMES TO ` 70,16,591/- AS AGAINST ` 36,60,313/- SHOWN BY THE ASSESSEE. THUS, THE ASSES SING OFFICER CALCULATED THE AMOUNT OF ADDITION AT ` 33,56,278/-. 4. THE ASSESSING OFFICER ALSO MADE ADDITION OF ` 3,59,985/- ON ACCOUNT OF EXCESS DEPRECIATION. THE ASSESSING OFFICER REJECTE D THE ASSESSEES CLAIM THAT PLANT ITA NO.369/AGR/2010 A.Y. 2004-05 3 & MACHINERY WAS INSTALLED BEFORE 30.09.2003. HOWEV ER, THE ASSESSING OFFICER ALLOWED DEPRECIATION BY HALF RATE OF NORMAL RATE OF DEPRECIATION ON THE BASIS THAT THE PLANT & MACHINERY WAS PUT TO USE AFTER 30.09.20 03. THE ASSESSING OFFICER ACCORDINGLY ALLOWED DEPRECIATION ON PLANT & MACHINE RY AT ` 5,29,449/- AS AGAINST ` 8,89,434/- CLAIMED BY THE ASSESSEE. THE ASSESSING OFFICER MADE THE ADDITION OF THE DIFFERENTIAL AMOUNT. 5. THE ASSESSING OFFICER ALSO MADE ADDITION OF ` 67,50,000/- ON ACCOUNT OF UNEXPLAINED SHARE MONEY, SHARE PREMIUM AND LOANS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN ` 19,50,000/- ON ACCOUNT OF FRESH SHARE CAPITAL AND ` 48,00,000/- ON ACCOUNT OF SHARE PREMIUM. THE ASSESSING OFFICER MADE ADDITION UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT THE ASSESSE E HAS FAILED TO FURNISH THE DETAILS. THE ASSESSING OFFICER ALSO MADE ADDITION OF ` 5,05,500/- UNDER SECTION 68 OF THE ACT ON ACCOUNT OF FRESH LOANS TAKEN BY THE A SSESSEE FROM DR. P.K. SHARMA ` 2,00,000/-, SHRI K.B. LAWANIA ` 1,00,000/- AND SMT. USHA SONDHI ` 2,05,000/-. THE ASSESSING OFFICER ALSO DISALLOWED PROPORTIONATE INTEREST APPLYING 12% INTEREST RATE IN RESPECT OF THE UNEXPLAINED LOANS OF WHICH C ALCULATION COMES TO ` 60,660/-. THE ASSESSING OFFICER ALSO CALCULATED PROPORTIONATE INTEREST IN RESPECT OF LOAN OF ` 84,000/- GIVEN TO MAIN DIRECTOR, SHRI YOGESH KUMAR SHARMA OF WHICH CALCULATION ITA NO.369/AGR/2010 A.Y. 2004-05 4 COMES TO ` 10,080/-. THUS, THE ASSESSING OFFICER DISALLOWED ` 70,740/- ON ACCOUNT OF PROPORTIONATE INTEREST. HOWEVER, THE ASSESSING OFFICER MADE THE ADDITION OF ` 62,83,375/- ON ACCOUNT OF REASONABILITY AS UNDER :- TOTAL ADDITION OF ACCOUNT OR UNEXPLAINED RECEIPT/ CREDIT OF MONEY BY WAY OF SHARE MONEY, SHARE PREMIUM AND LOAN S COMES TO RS.67,50,000/- + RS.5,05,500/- = RS.72,55,500. HOW EVER, TAKING A REASONABLE & FAIR VIEW AND PRESUMING THAT EXCESS PR OFIT DERIVED BY THE ASSESSEE AMOUNTING TO RS.33,56,278/- WAS UTILIZ ED IN THE SHAPE OF MONEY, SHARE PREMIUM AND LOANS, THE ADDITION OF UNE XPLAINED SHARE MONEY, SHARE PREMIUM AND LOANS IS RESTRICTED TO RS. 38,99,222/-. 6. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). TH E ASSESSEE MADE DETAILED SUBMISSION BEFORE THE CIT(A) AND A PAPER BOOK DATED 30.04.2007 WAS ALSO FILED BEFORE THE CIT(A). THE CIT(A) VIDE ORDER SHEET ENT RY DATED 30.04.2007 SENT THE SUBMISSION OF THE ASSESSEE TO THE ASSESSING OFFICER AND THE CASE WAS ADJOURNED SINE DIE AND DIRECTED TO BE FIXED AFTER RECEIPT OF REMAND REPORT FROM THE ASSESSING OFFICER. THE CIT(A) FURTHER PROVIDED OPPORTUNITY O F HEARING TO THE ASSESSING OFFICER VIDE ORDER SHEET DATED 16.05.2007 WHICH REA DS AS UNDER :- 3.4 VIDE ORDER SHEET ENTRY DATED 16.05.2007, CIT(A )-II, AGRA RECORDED AS UNDER :- 1.05.2007 - SHRI SAMPOORNANAD ACIT ATTENDED. HE W AS DIRECTED TO ALLOW FRESH OPPORTUNITY TO APPELLANT FO R PRODUCING A. BOOKS OF A/C WITH SUPPORTING DOCUMENTS. ITA NO.369/AGR/2010 A.Y. 2004-05 5 B. FULL DETAILS OF SHARE APPLICATION MONEY AND SHAR E MONEY RECEIVED DURING THE YEAR. C. FULL DETAILS OF LOAN CREDITORS. REPORT TO BE SUBMITTED BY 15.06.2007 AFTER EXAMININ G SHARE APPLICANTS AND LOAN CREDITORS. 7. SUBSEQUENTLY THE CIT(A) ISSUED VARIOUS REMINDERS TO THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER FURNISHD REMAND REPO RT DATED 04.06.2010 WHICH HAS BEEN REPRODUCED BY THE CIT(A) AT PAGE NOS.6 & 7 OF HIS ORDER. 8. IN RESPECT OF ADDITION MADE IN G.P., THE ASSESSI NG OFFICER REITERATED THE SUBMISSIONS WHICH WERE NOTED IN THE ORIGINAL ASSESS MENT ORDER THAT THE ASSESSEE HAS NOT PRODUCED COMPLETE BOOKS OF ACCOUNT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. IN RESPECT OF G.P. RATE OF 10%, THE A SSESSING OFFICER SUBMITTED IN THE REMAND REPORT THAT THE ASSESSEE HAS NOT FURNISHED D ETAILS OF EVIDENCE JUSTIFYING PURCHASE, SALE & G.P. THEREOF. THEREFORE, THE ESTI MATION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF G.P. IS CORRECT. 9. IN RESPECT OF ADDITION OF ` 67,50,000/-, THE ASSESSING OFFICER REITERATED THE FACTS WHICH WERE NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS. IN RESPECT OF REQUEST FOR ADDITIONAL EVIDENCE, THE ASSESSING OFFICER IN HIS REMAND REPORT SUBMITTED THAT THE ASSESSEE HAS MADE A VERY CASUAL SUBMISSION OF EVIDENCE OF ADDITIONAL EVIDENCE BUT THE ADDITIONAL EVIDENCES WERE FURNISHED FIRST TIME BEFORE ITA NO.369/AGR/2010 A.Y. 2004-05 6 THE CIT(A). IT IS ALSO STATED THAT THERE WAS NO EV IDENCE ON RECORD WHICH SUBSTANTIATES THE ASSERTION OF THE ASSESSEE WITHOUT THAT THE ASSESSING OFFICER HAD EVER REFUSED TO ADMIT THE EVIDENCE. THEREFORE, IT WAS REQUESTED TO REJECT THE ADDITIONAL EVIDENCES AS THE SAME HAS BEEN FILED AFT ER COMPLETION OF THE ASSESSMENT. SIMILAR REITERATED SUBMISSIONS WERE MADE BY THE ASS ESSING OFFICER IN THE REMAND REPORT IN RESPECT OF DISALLOWANCE OF DEPRECIATION O F ` 3,59,985/-. 10. THE CIT(A) AFTER CONSIDERING THE REMAND REPORT OF THE ASSESSING OFFICER AND AFTER CONSIDERING THE ASSESSEES SUBMISSIONS AND SU BMISSION IN REJOINDER, DELETED THE G.P. ADDITION ON THE GROUND THAT THE ASSESSEE H AS FURNISHED COMPLETE DETAILS OF SALES MADE DURING THE YEAR AND NO DISCREPANCY OR FA LSITY HAS BEEN FOUND BY THE ASSESSING OFFICER. THE ASSESSEE HAS FURNISHED DAIL Y STOCK REGISTER WHICH HAS NOT BEEN REFUTED BY THE ASSESSING OFFICER. THERE IS NO EVIDENCE ON RECORD OF SUPPRESSION OF SALE, SALE PRICE OR STATEMENT OF PUR CHASE OR PURCHASE PRICE. THERE IS NO COMPARABLE CASE CITED BY THE ASSESSING OFFICER I N SUPPORT OF REJECTION OF BOOKS OF ACCOUNT AND ADOPTING 10% G.P. INSTEAD OF 5% ADOP TED BY THE ASSESSEE. 11. THE CIT(A) EXAMINED THE ISSUE IN RESPECT OF ADD ITION ON ACCOUNT OF CASH CREDIT AND DELETED THE SAME AS UNDER :- ITA NO.369/AGR/2010 A.Y. 2004-05 7 4.9 I HAVE CONSIDERED THE RELEVANT FACTS AND RIVAL CONTENTIONS AND MY OBSERVATIONS ARE AS UNDER : - AS APPARENT FROM THE ASSESSMENT ORDER, THE ASSESS ING OFFICER MADE THE IMPUGNED ADDITIONS, STATING THAT T HE APPELLANT HAD FAILED TO FILE REQUISITE DETAILS, CONFIRMATIONS, COMPLETE ADDRESSES, EVIDENCE & GENUINENESS OF TRANSACTIONS AND THE CREDITWORTHINES S OF THE SHAREHOLDERS AND CREDITORS. HOWEVER, THE APPEL LANT HAS FURNISHED ALL THE REQUISITE EVIDENCES DURING RE MAND PROCEEDINGS. THE EVIDENCES FURNISHED BY THE APPELL ANT CANNOT BE TERMED AS FRESH EVIDENCES AS THEY COMPRIS E CONTEMPORANEOUS DOCUMENTS BY WAY OF SHARE APPLICATI ON FORMS, I.T. RETURNS OF SHAREHOLDERS, BANK STATEMENT S OF SHAREHOLDERS, MEMORANDUM & ARTICLES OF ASSOCIATION ETC. HENCE, THE IMPUGNED ADDITIONS ARE REQUIRED TO BE CONSIDERED IN THE LIGHT OF THESE EVIDENCES FURNISHE D BY IT. - THE APPELLANT HAS FURNISHED VARIOUS EVIDENCES TO SUBSTANTIATE THE IDENTITY AND CREDITWORTHINESS OF T HE SHAREHOLDERS AND CREDITORS AND THE GENUINENESS OF T HE RELEVANT TRANSACTIONS WHICH ARE DETAILED IN THE VAR IOUS SUBMISSIONS FURNISHED DURING APPELLATE AND REMAND PROCEEDINGS AND REPRODUCED HEREINABOVE. THE ASSESS ING OFFICER HAS NOT POINTED OUT ANY FALSITY IN ANY OF T HE SAID EVIDENCES OR CONTROVERTED THE APPELLANTS ARGUMENTS WITH COGENT REASONS OR EVIDENCES TO THE CONTRARY. HENCE THE ADDITIONS OF RS.72,55,000/- COMPRISING OF SHARE CAP ITAL (RS.19,50,000/-), SHARE PREMIUM (RS.48,50,000/-) AN D LOANS OF RS.5,05,000/- AS UNEXPLAINED CASH CREDITS IN TERMS OF SECTION 68 OF THE ACT ARE NOT SUSTAINABLE AND ACCORDINGLY DELETED. CONSEQUENTLY, PROPORTIONATE INTEREST OF RS.60,660/- DISALLOWED IN RESPECT OF LO ANS TREATED AS UNEXPLAINED CASH CREDIT IS ALSO NOT SUST AINABLE AND HENCE, DELETED. 12. AS REGARDS PROPORTIONATE DISALLOWANCE OF INTERE ST ` 10,080/- ON ACCOUNT OF INTEREST FREE ADVANCE TO DIRECTOR, SHRI YOGESH SHAR MA, THE CIT(A) CONFIRMED THE ITA NO.369/AGR/2010 A.Y. 2004-05 8 ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT NO COGENT REASONS OR ARGUMENT HAS BEEN PLACED BY THE ASSESSEE. THE CIT(A) ALLOWE D THE DEPRECIATION CLAIM OF THE ASSESSEE AND DELETED THE ADDITION OF ` 3,59,985/- AS UNDER :- 5.6 I HAVE CONSIDERED THE RELEVANT FACTS AND RIVAL CONTENTIONS. EACH OF THE APPELLANTS CONTENTIONS IS DISCUSSED AN D DEALT WITH AS UNDER :- (I) DISALLOWANCE OF HALF OF NORMAL DEPRECIATION ON PLANT & MACHINERY OF RS.13,38,882/- : IT IS SEEN THAT THE ASSESSING OFFICER DISALLOWED DE PRECIATION ON THE ABOVE PLANT & MACHINERY ON THE GROUNDS THAT - A) THE APPELLANT HAD NOT FURNISHED ANY EVIDENCE TO PROVE THAT THE SAID PLANT & MACHINERY WAS INSTALLED AND P UT TO USE BEFORE 30.09.2003; AND B) THE BUILDING ITSELF WAS ADMITTEDLY PUT TO USE AF TER 30.09.2003 AND HENCE, THE MACHINERY COULD NOT HAVE BEEN OPERATIONAL BEFORE 30.09.2003, INDEPENDENT OF THE BUILDING. THE APPELLANT HAS EXPLAINED THAT THOUGH THE COLD ST ORAGE BECAME OPERATIONAL AFTER 30.09.2003, THE CHILLING PLANT HA D STARTED FUNCTIONING FROM 11 TH APRIL, 2003 ITSELF AS EVIDENT FROM THE LARGE-SCALE SALE OF MILK, DETAILS OF WHICH ARE AS UNDER :- APRIL, 2003 272430.30 264010.00 MAY, 2003 198423.50 207160.00 JUNE, 2003 99118.50 103704.00 JULY, 2003 146100.00 147780.00 AUGUST, 2003 192660.50 196810.00 SEPTEMBER, 2003 486676.10 497745.00 ITA NO.369/AGR/2010 A.Y. 2004-05 9 THE PAYMENTS WERE MADE BY THE APPELLANTS BANK ON 12.06.2003 BY DRAFTS DATED DATED 11.06.2003 UPON SA NCTION OF BANK LOANS, AS UNDER:- RS.21,67,926.00 M/S ANANYA REFRIGERATION AGRA RS.2,91,100.00 M/S. MAHADEV CREAM SEPARATORS THE APPELLANTS EXPLANATION THAT THE MILK CHILLING PLANT WAS INSTALLED AND OPERATIONAL BY 30.09.2003, ENABLING THE PURCHAS E AND SALE OF MILK AND HENCE, THE RELEVANT PLANT & MACHINERY IS E LIGIBLE FOR FULL DEPRECIATION, IS FOUND TO BE TENABLE. THE ASSESSIN G OFFICER IS ACCORDINGLY DIRECTED TO ALLOW FULL DEPRECIATION ON MACHINERY OF RS.13,38,882/- AS CLAIMED BY THE APPELLANT. 13. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT THE CIT(A) HAS IGNORED T HE FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS AS PER QUESTIONNAIRE DATED 30.10.2006 BUT THE ASSESSEE DID NOT FURNISH THE COMPLETE DETAILS. THE LD. DEPARTMENTAL REPRESENTATIVE FURTH ER SUBMITTED THAT THE ASSESSEE HAS FURNISHED THE DETAILS OF STOCK REGISTER BEFORE THE CIT(A) IN CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES, 1962. THE FRESH EVIDENCE CANNOT BE CONSIDERED AT APPELLATE STAGE. SIMILAR WAS THE SUB MISSIONS IN RESPECT OF OTHER ADDITION. 14. IN RESPECT OF CASH CREDIT, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINE SS OF THE DEPOSITOR. LD. DEPARTMENTAL REPRESENTATIVE IN SUPPORT OF HIS CONTE NTION RELIED UPON THE ITA NO.369/AGR/2010 A.Y. 2004-05 10 JUDGEMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS . DIVINE LEASING & FINANCE LTD. & OTHERS, 299 ITR 268 (DEL). AS REGARDS TO AD MISSION OF FRESH EVIDENCE, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE SUB MISSIONS OF THE ASSESSING OFFICER WHICH WAS GIVEN IN REMAND REPORT THAT THE A SSESSEE, INSPITE OF SUFFICIENT OPPORTUNITY, DID NOT FURNISH THE DETAILS. THEREFOR E, THE ADMISSION OF FRESH EVIDENCE AT THIS STAGE IS AGAINST RULES 46A OF THE INCOME TA X RULES, 1962. 15. LD. AUTHORISED REPRESENTATIVE, ON THE OTHER HAN D, RELIED UPON THE ORDER OF CIT(A) AND SUBMITTED THAT THE CIT(A) DID NOT ACCEPT A SINGLE EVIDENCE OR MATERIAL WITHOUT CONFRONTING TO THE ASSESSING OFFICER. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAS ACCEPTED S ALE, PURCHASE & OTHER BUSINESS ACTIVITIES OF THE ASSESSEE AS DECLARED BY THE ASSES SEE. BUT HE DID NOT ACCEPT THE G.P. PART WHICH IS NOT FAIR AND REASONABLE. LD. AU THORISED REPRESENTATIVE SUBMITTED THAT THERE WAS NO BASIS FOR APPLYING 10% G.P. RATE. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT IN RESPECT OF SHARE A PPLICATION MONEY, HE RELIED UPON THE ORDER OF CIT(A) PARTICULARLY THE DISCUSSIONS MA DE AT PAGE NOS.20 TO 22 OF HER ORDER. IN RESPECT OF DEPRECIATION, THE LD. AUTHORI SED REPRESENTATIVE SUBMITTED HAT THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACT S DENIED THE CLAIM OF THE ASSESSEE AS TILL THE BUILDING WAS COMPLETED THE ASS ESSEE WAS RUNNING THE BUSINESS ON LEASE RENT. LD. AUTHORISED REPRESENTATIVE IN SU PPORT OF HIS CONTENTION REFERRED ITA NO.369/AGR/2010 A.Y. 2004-05 11 TO PAGE NO.15 OF CIT(A)S ORDER AND POINTED OUT THA T THE ASSESSEE HAS CLEARLY SUBMITTED THAT THE ASSESSEE HAS TAKEN PREMISES ON L EASE FROM SMT. PRAYAG DEVI, WIFE OF LATE SHRI JAGDISH PRASAD SHARMA AND SHRI YO GESH SHARMA. COPIES OF LEASE DEEDS IN SUPPORT OF THE SAME HAS BEEN FILED B EFORE THE CIT(A). LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE CIT(A) AFTER EXAMINING THE RECORD FOUND THAT THE PLANT & MACHINERY WAS INSTALLED AND PUT TO USE BEFORE 30 TH SEPTEMBER, 2003. IT WAS ALSO SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE THAT THE CASES CITED IN THE PAPER BOOK MAY ALSO BE CONSI DERED. 16. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA TTIES AND RECORDS PERUSED. EFFECTIVE GRIEVANCE OF THE REVENUE IN THE CASE UNDE R CONSIDERATION IS THAT THE CIT(A) ACCEPTED CERTAIN EVIDENCES IN CONTRAVENTION OF RULE 46A OF THE INCOME TAX RULES, 1962. IT IS ADMITTED FACT THAT THE CIT( A) HAS ALLOWED OPPORTUNITY TO THE ASSESSING OFFICER AND CALLED FOR REMAND REPORT IN R ESPECT OF SUBMISSIONS MADE BY THE ASSESSEE. IN THIS REGARD, IT IS TO STATE THAT WHEN THE ASSESSMENT ORDER IS CHALLENGED BEFORE THE APPELLATE AUTHORITY IN THE FO RM OF STATEMENT OF FACTS AND GROUNDS OF APPEAL AND MORE PARTICULARLY WHEN THE CI T(A) HAS CALLED FOR THE REMAND REPORT, THE ASSESSING OFFICER IS UNDER OBLIG ATION TO PLACE ON RECORD PROPER FACTS. INSTEAD OF MERELY CHALLENGING THE POWER OF CIT(A) FOR CALLING THE REMAND REPORT, THE ASSESSING OFFICER IS SUPPOSED TO FOLLOW THE PATH OF LAW. THE HONBLE ITA NO.369/AGR/2010 A.Y. 2004-05 12 JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/ S AAKAR CONSTRUCTION (P) LTD. IN ITA NO.8 OF 2011 DECIDED THE ISSUE IN RESPECT OF SC OPE OF RULE 46-A OF THE INCOME TAX RULES, 1962 AS UNDER :- WE HAVE HEARD LEARNED COUNSEL FOR THE APPELLANT AT LENGTH AND GONE THROUGH THE MATERIALS AVAILABLE ON RECORD. RULE 46-A OF THE INCOME TAX RULES PRESCRIBED THAT A N OPPORTUNITY WILL HAVE TO BE GIVEN TO THE A.O. BEFOR E ADMITTING FRESH EVIDENCE. IN THE INSTANT CASE, THE CIT(A) VIDE HIS LETTER DATED 08.10.2009 HAS CALLED THE REMAND REPORT FROM THE A. O., WHO IN HIS REPORT DID NOT FIND ANY DEFECT IN THE BOOKS OF ACCO UNTS PRODUCED BEFORE HIM BY THE ASSESSEE. THUS, THE A.O. GOT THE SUFFICIENT OPPORTUNITY TO EXAMINE THE BOOKS OF ACCOUNTS. THE CIT(A) HAS EXERCISED HIS POWER MENTIONED IN SECTION 250(4) OF THE ACT, WHICH PROVIDES THAT THE CIT(A) MAY REMAND THE CASE TO THE A.O. AND CALL FOR THE REMAND REPORT ON THE ASSESSMENT ON CERTAIN POIN TS. HENCE, THERE IS NO VIOLATION OF RULE 46-A. NEEDLESS TO MENTION THAT THE POWER OF THE APPELLATE COMMISSIONER IS CO-TERMINUS WITH THE POWER OF THE A SSESSING OFFICER. APPELLATE AUTHORITY HAS ALL THE POWERS, WHICH THE O RIGINAL AUTHORITY HAS SUBJECT TO CONDITION/RESTRICTION, IF ANY, PRESC RIBED BY LAW AS PER THE RATIO LAID DOWN IN THE FOLLOWING CASES: 1. JUTE CORP. OF INDIA LTD. VS. CIT, 187 ITR 688, 6 93 SC; AND 2. CIIT VS. NIRBHERAM DALURAM, (1997) 224 ITR 610 ( SC). IN VIEW OF ABOVE, WE ARE OF THE VIEW THAT NO SUBSTA NTIAL QUESTION OF LAW IS EMERGING FROM THE IMPUGNED ORDER PASSED B Y THE TRIBUNAL. THEREFORE, THE IMPUGNED ORDER PASSED BY THE TRIBUNA L IS HEREBY SUSTAINED ALONG WITH THE REASONS MENTIONED THEREIN. ITA NO.369/AGR/2010 A.Y. 2004-05 13 17. IF WE CONSIDER THE FACTS OF THE CASE UNDER CONS IDERATION IN THE LIGHT OF THE ABOVE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT, W E FIND THAT THERE IS NO VIOLATION OF RULE 46-A OF THE INCOME TAX RULES, 1962. THE CI T(A) HAS GIVEN OPPORTUNITY TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS SUBMITTED THE REMAND REPORT. IN THE REMAND REPORT, THE ASSESSING OFFICE R INSTEAD OF VERIFYING THE MATERIAL EVIDENCE AND DOCUMENTS FILED BY THE ASSESS EE BEFORE THE CIT(A), CHOSEN TO REITERATE THE FACTS WHICH EVEN RECORDED IN THE O RIGINAL ASSESSMENT PROCEEDINGS. EVEN THE REMAND REPORT WAS FURNISHED BY THE ASSESSI NG OFFICER BEFORE THE CIT(A) AFTER A NUMBER OF REMINDERS. WHEN THE CIT(A) PROVI DED OPPORTUNITY TO THE ASSESSING OFFICER FOR SUBMITTING HIS REMAND REPORT, THE ASSESSING OFFICER, WITHOUT EXAMINING THE MATERIALS, SIMPLY REITERATED THE FACT S WHICH WERE RECORDED IN THE ORIGINAL ASSESSMENT. UNDER THE CIRCUMSTANCES, SUCH CASE CANNOT BE SAID TO BE CASE OF VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1 962 AND BASED ON THIS CRUCIAL FACTS, THE REVENUE OUGHT NOT HAVE FILED APPEAL AGAI NST THE ORDER OF CIT(A), AS SUCH, THERE WAS NO GRIEVANCE TO THE REVENUE AGAINST THE O RDER OF THE CIT(A). 18. IN RESPECT OF G.P. ADDITION, IT WAS SUBMITTED B Y THE ASSESSEE BEFORE THE CIT(A) IN PAPER BOOK DATED 30.04.2007 THAT THE ASSE SSEE HAS PRODUCED BOOKS OF ACCOUNT AND VOUCHER ON SEVERAL TIMES AND ALSO ON 23 .11.2006. ON 23.11.2006 ALL THE COMPLIANCE WERE MADE, FULL AND SPECIFIC SUBMISS IONS ALONGWITH NECESSARY ITA NO.369/AGR/2010 A.Y. 2004-05 14 ENCLOSURES AND SUPPORTING EVIDENCES TO ALL QUERIES RAISED, QUESTIONNAIRE UNDER SECTION 142(1) OF THE ACT. IT WAS SUBMITTED THAT T HE HUGE ADDITIONS OF ` 76,22,525/- WAS MADE BY THE ASSESSING OFFICER IGNORING ALL MATE RIAL FACTS OF THE CASE ON RECORD AND MADE THE IMAGINARY ADDITION ON HYPOTHETICAL ASS UMPTIONS. THE ABOVE FACTS HAVE BEEN NOTED BY THE CIT(A) AT PAGE NO.3 OF HIS O RDER. IN RESPECT OF REJECTION OF BOOKS OF ACCOUNT, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE CIT(A) THAT THE ACTION OF THE ASSESSING OFFICER WAS ARBITRARY AND I LL-CONCEIVED ACT ON THE PART OF THE ASSESSING OFFICER WHERE HE IGNORED THE STATUTE PROVISION IN THE RESPECT AND APPLIED THE DISTORTED MEANING AND INTERPRETATION OF SECTION 145 & SECTION 144 OF THE ACT. THE BOOKS OF ACCOUNT MAINTAINED BY THE AS SESSEE WAS PRODUCED BEFORE THE ASSESSING OFFICER AND THE SAID BOOKS OF ACCOUNT WAS SUBJECT TO TAX AUDIT UNDER SECTION 44AB OF THE ACT. THE AUDIT REPORT WAS SUBM ITTED ALONGWITH THE RETURN OF INCOME. THE CIT(A) IN PARAGRAPH NO.3.4 OF HER ORDE R NOTED, WITH REFERENCE TO ORDER SHEET ENTRY DATED 16.05.2007, THAT ON THAT DA TE THE ASSESSING OFFICER ATTENDED AND HE WAS DIRECTED TO ALLOW FRESH OPPORTU NITY TO THE ASSESSEE FOR PRODUCING BOOKS OF ACCOUNT WITH SUPPORTING DOCUMENT S, FULL DETAILS OF SHARE APPLICATION MONEY AND SHARE MONEY RECEIVED DURING T HE YEAR AND FULL DETAILS OF LOAN CREDITORS. BUT, THE ASSESSING OFFICER FAILED TO CARRY OUT SUCH DIRECTION AND THE CIT(A) MERELY REITERATED THAT THE DETAILS WERE NOT FURNISHED BY THE ASSESSEE WHICH WAS STATED IN THE ORIGINAL ASSESSMENT. THUS, ON TH IS VERY BASIS, IT IS FAIR AND JUST TO ITA NO.369/AGR/2010 A.Y. 2004-05 15 CONFIRM THE ORDER OF THE CIT(A) ACCEPTING THE FACTS RECORDED BY THE CIT(A) IN HER ORDER AS THE REVENUE HAS FAILED TO CONTROVERT THE F ACTS NOTED BY THE CIT(A) IN RESPECT OF ALL THE GROUNDS WHERE THE ADDITION HAS B EEN DELETED. RULE-10 OF THE INCOME TAX APPELLATE TRIBUNAL RULES WHICH PROVIDES THAT WHERE THE FACTS WHICH CANNOT BE BORNE OUT BY OR CONTRARY TO THE RECORDS I S ALLEGED ITSELF SHALL BE STATED NORMALLY AND CONSCIOUSLY AND SUPPORTED BY A NEWLY S WORN AFFIDAVIT. BUT REVENUE DID NOT FILE SUCH AFFIDAVIT. IN ABSENCE OF SUCH MA TERIAL AND AFFIDAVIT, THE ORDER OF THE CIT(A) IS SUSTAINABLE. 19. AS REGARDS THE MERIT OF THE CASE, WE FIND THAT THE CIT(A) HAS DELETED THE ADDITION AFTER ELABORATE DISCUSSIONS ON THE ISSUE. WHILE DELETING THE ADDITION ON ACCOUNT OF G.P., THE CIT(A) HELD THAT THERE IS NO B ASIS FOR REJECTION OF BOOKS OF ACCOUNT AND APPLYING G.P. RATE OF 10% INSTEAD OF 5% . SIMILARLY, WHILE DELETING THE ADDITION OF SHARE CAPITAL AND CASH CREDIT, THE CIT( A) EXAMINED THE FACTS WHICH WERE FURNISHED BY THE ASSESSEE BEFORE HER IN THE FO RM OF PAPER BOOK CONTAINING 183 PAGES. THE CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS FURNISHED ALL SUFFICIENT MATERIALS AND EVIDENCES IN THE FORM OF INCOME TAX RETURNS OF SHARE HOLDERS, BANK STATEMENTS OF SHARE HOLDERS, ME MORANDUM & ARTICLES OF ASSOCIATION ETC. THE ASSESSING OFFICER FAILED TO P OINT OUT ANY FALSITY IN ANY OF THE EVIDENCES OR CONTROVERT THE ASSESSEES ARGUMENTS WI TH COGENT REASONS OR EVIDENCE ITA NO.369/AGR/2010 A.Y. 2004-05 16 TO THE CONTRARY. THE ADDITION ON ACCOUNT OF DEPREC IATION, THE CIT(A) APPRECIATED THE FACTS THAT THE PLANT & MACHINERY WAS INSTALLED BEFORE 30.09.2003 AND THE ASSESSING OFFICER HAS, WITHOUT VERIFYING THE FACTS, DISALLOWED THE DEPRECIATION CLAIM. THE ASSESSING OFFICER DID NOT APPRECIATE TH E FACTS THAT INITIALLY THE ASSESSEE WAS RUNNING THE BUSINESS IN A LEASED PREMISES TILL THE COMPLETION OF THE BUILDING. THERE IS AN APPARENT EVIDENCE THAT THERE WAS A LARG E SCALE SALES BEFORE SEPTEMBER, 2003. THE CIT(A) RECORDED EVEN FIGURES OF SALES IN HER ORDER WHICH IS REPRODUCED ABOVE AT PAGE 8 OF THIS ORDER. WHEN THE ORDER OF T HE CIT(A) IS SUPPORTED BY SUCH COGENT EVIDENCES AND THE REVENUE HAVING FAILED TO C ONTROVERT THE FINDING OF THE CIT(A) WITH COGENT EVIDENCES, THE ORDER OF THE CIT( A) IS SUSTAINABLE AND WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A). 20. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. (ORDER PRONOUNCED IN THE OPEN COURT ON 16.03.2012) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 16 TH MARCH, 2012 PBN/* ITA NO.369/AGR/2010 A.Y. 2004-05 17 COPY OF THE ORDER FORWARDED TO: APPELLANT RESPONDENT CIT CONCERNED CIT (APPEALS) CONCERNED D.R., ITAT AGRA BENCH, AGRA GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY