DHARAM CHAND SOHAN LAL & CO., Alwar V. ITO, Alwar

ITA 37/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5381 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 12-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DHK
• Assessee Lawyers: GHANSHYAM THAKURIYA
• Keywords: Unexplained cash credit; Business income; Opportunity of being heard; Principle of natural justice; Source of fund; Fair market value; Reason to believe
• Section: 40A(3); 142(1); 133(6); 147; 145; 148; 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOE FLAG ;KNO] YS[KK LNL;] YS[KK LNL; ,OA JH YF YR DQEKJ] U;KF;D LNL; DS LE{K BEFORE: SHRI VIKRAM SINGH YADAV, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO.37/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. M/S. DHARAM CHAND SOHAN LAL & COMPANY A-13, NEW SABZI MANDI, ALWAR CUKE VS. THE ITO WARD- 2(3) ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAHFD 6576D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY :SHRI GHANSHYAM THAKURIYA (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY: SHRI O.P. BHATEJA, ADDL. CIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22-03-2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 27-04-2016. VKNS'K@ ORDER PER LALIET KUMAR, J.M. THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), ALWAR DATED 03-11-2014 FOR THE ASSESSMENT YEAR 2010-11 RA ISING THEREIN FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND EVIDENCES OF THE CASE TH E LD. ITO WARD- 2(3) ALWAR HAS ERRED TO ENHANCE THE RETURNED INCOME OF RS. 1,25,430/- TO RS. 27,43,930/- BY MAKING ADDITION OF RS. 2,09,500/-AND IMPOSED TAX AND INTEREST OF RS. 12,34,09/-. LATER O N, THE LD. CIT(A) ALWAR HAS FINALIZED THE ORDER BY GRANTING PETTY REL IEF OF RS. 1,34,500/- UNDER VARIOUS EXPENSES AND ASSESSED INCOME WAS REDU CED FROM RS. 2 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR 27,49,930/- TO RS. 2,09,430/- BY HIM, WHICH IS UNWA RRANTED AND UNCALLED FOR. 2. THAT THE ADDITIONS CONFIRMED BY LD. CIT(A) ALWAR FOR CREDITOR OF RS. 10,00,000/- ARE UNJUSTIFIED AND ILLEGAL AS T HE SAME WAS FINALIZED WITHOUT LOOKING AFTER THE HISTORY OF THE ASSESSEE A ND METHOD OF ACCOUNTING EMPLOYED IN PAST YEARS WHICH IS AGAINST THE LAW AND UNJUDICIOUS. 3. THAT THE LD. CIT(A) HAS NOT CONSIDERED THE ADDIT IONAL DOCUMENTS SUBMITTED DURING 4RR WHICH WAS NOT DEMAND ED BY ITO AT THE TIME OF ASSESSMENT PROCEEDINGS REGARDING THE F RESH CAPITAL INTRODUCED BY THE PARTNER OF RS. 11.50 LACS AND CON FIRMED THE ADDITION WHICH IS UNJUSTIFIED AND ILLEGAL. 4. THAT THE WISE ITO ALWAR HAS WRONGLY INVOKED SEC1 45 BY FORMING HIS OWN OPINION FOR METHOD OF ACCOUNTING EM PLOYED BY THE ASSESSEE EVEN AFTER THE BOOKS OF ACCOUNT HAS BEEN L OST AND REJECTING THE SAME AND APPLYING SECTION 144 AND LATER ON CONF IRMED BY LD. CIT(A), ALWAR WHICH IS AGAINST THE LAW AND NATURAL JUSTICE. 5. THAT THE WISE AUTHORITY HAS NOT CONSIDERED THE F ACTS AND DOCUMENTS ALREADY SUBMITTED BY THE APPELLANT BEFORE ADIT (INV.) JAIPUR WHICH IS AGAINST THE LAW AND FACTS OF THE CA SE. 6. THAT THE LD. CIT(A) HAS NOT PROVIDED ANY PROPER OPPORTUNITY TO THE APPELLANT EVEN AFTER THE ASSESSEE HAS SUBMITTED ALL THE RELEVANT PAPERS WHICH IS AGAINST THE NATURAL JUSTICE. 7. THAT THE LD. CIT(A), ALWAR HAS NOT GONE THROUGH THE REAL FACTS OF THE CASE BEFORE FINALIZING THE ORDER, WHICH IS U NJUDICIOUS AND UNWARRANTED. 8. THAT THE ASSESSEE RESERVES HIS RIGHT TO ADD OR A LTER ANY GROUNDS OF APPEAL AT ANY TIME DURING PROCEEDINGS. 3 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN ON 28-02-2011 DECLARING TOTAL INCOME OF RS. 1,25,430/- FOR THE YE AR UNDER CONSIDERATION. THE AO OBSERVED THAT THE ASSESSEE FIRM IS A PARTNERSHIP FI RM WHICH HAS MAINLY PARTNERS NAMELY (I) SHRI DHARAM CHAND SAINI, (II) LATE SHRI BHAGWANA RAM (DIED ON 20-05- 2012), (III) SHRI SOHAN LAL SAINI AND (IV) SHRI SU RESH KUMAR WHO USED TO DEAL IN POTATO, GREEN VEGETABLES AND ADHAT OF THE VEGETABLE S. THE AO OBSERVED THAT AS PER INFORMATION RECEIVED FROM ADIT (INV.) , JAIPUR VIDE LETTER DATED 3-03-2011 WHICH REVEALS THAT ASSESSEE FIRM HAS MADE SUBSTANTIAL TRA NSACTIONS INCLUDING CASH DEPOSITS AND WITHDRAWALS DURING THE YEAR UNDER CONSIDERATION . APART FROM THIS, THE AO ALSO OBSERVED THAT ASSESSEE HAD MADE PAYMENTS AMOUNTING TO RS. 3,16,96,415/- IN CASH WHICH IS CONTRAVENTION TO SECTION 40A(3) OF THE ACT . THE AO HAS REASON TO BELIEVE THAT THE TRANSACTION OF RS. 3,16,96,415/- HAS ESCAP ED INCOME WITHIN THE MEANING OF SECTION 147 OF THE ACT DURING THE F.Y. 2008-09. THE AO ISSUED NOTICE U/S 148 OF THE ACT TO THE ASSESSEE FIRM TO COMPLY WITH THE DIR ECTIONS. SUBSEQUENTLY, THE ASSESSEE FIRM WAS ISSUED NOTICE U/S 142(1) ON 30-07 -2013 TO REMAIN PRESENT ON THE DATE OF HEARING ALONGWITH BOOKS OF ACCOUNT AND RELE VANT RECORDS OF THE ASSESSEE FIRM. DURING THE YEAR UNDER CONSIDERATION, THE ASSE SSEE FIRM HAS SHOWN RECEIPT OF COMMISSION AMOUNTING TO RS. 20,85,250/- FOR WHICH T HE AO DESIRED TO OBTAIN THE INFORMATION FROM THE ASSESSEE ON THE QUESTIONNAIRE SENT U/S 142 OF THE ACT AS TO 4 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR THEIR BUSINESS DETAILS, BANKS DETAILS AND BOOKS OF ACCOUNT OF THE ASSESSEE FIRM ETC. AS PER RECORDS OF THE AO, THE ASSESSEE WAS GIVEN VA RIOUS DATES BY THE AO FOR SUBMISSIONS OF THE DESIRED INFORMATION. TIME AND AG AIN, THE ASSESSEE FIRM WAS GIVEN OPPORTUNITIES TO PRODUCE THE BOOKS OF ACCOUNT , BILLS/ VOUCHES AND OTHER RELEVANT RECORDS OF THE ASSESSEE BUT THE ASSESSEE F AILED TO PRODUCE THE BOOKS OF ACCOUNT AND CONCERNING RECORDS OF THE ASSESSEE FIRM . UNDER SUCH CIRCUMSTANCES, THE AO HAS NO ALTERNATIVE EXCEPT TO INVOKE THE PROV ISIONS OF SECTION 145 OF THE I.T. ACT, 1961 ON THE ASSESSEE FIRM AS IT IS IMPERATIVE FOR THE ASSESSEE FIRM TO PRODUCE THE RELEVANT RECORDS LIKE BOOKS OF ACCOUNT, BILLS/ VOUCHERS, DETAILS OF THE EXPENSES AND DETAILS OF THE BUSINESS TRANSACTIONS FOR THE YE AR UNDER CONSIDERATION AS REQUISITIONED BY THE AO FOR COMPLETING THE ASSESSME NT WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A) 2.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORDS. WE FIND FROM THE RECORDS THAT THE ASSESSEE HAS NOT MAINTAINED PROPER BOOKS OF ACCOUNT, BILLS / VOUCHERS FOR ITS BUSINESS PURPOSES. THE DETAILS ARE NOT IN ACCORDANCE WITH THE PROPER ACCOUNTING METHOD AND AL L THE TIME THE LD. AR OF THE ASSESSEE WAS PRESSING BEFORE THE LOWER AUTHORITIES THAT ITS ALL THE RECORDS ARE LOST WHICH INDICATE THAT THE ASSESSEE FIRM IS TRYING TO CONCEAL THE REAL FACTS ABOUT ITS BUSINESS TRANSACTIONS. CONSIDERING ALL THE ABOVE FA CTS AND CIRCUMSTANCES OF THE 5 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR CASE, WE FIND THAT THE LD. CIT(A) HAS RIGHTLY CONFI RMED THE PROVISIONS OF SECTION 145 OF THE ACT ON THE ASSESSEE FIRM IN VIEW OF THE DIRECTIONS GIVEN BY THE AO TO THE ASSESSEE TO PRODUCE THE DETAILS/ RECORDS OF THE ASSESSEE FIRM SO AS TO RECONCILE THE RECORDS BUT THE ASSESSEE FIRM FAILED TO PRODUCE THE DESIRED RECORDS BEFORE THE LOWER AUTHORITIES. IN THIS VIEW OF THE MATTER, WE C ONFIRM THE ACTION OF THE LD. CIT(A) ON THE ISSUE OF INVOKING THE PROVISIONS OF S ECTION 145 OF THE ACT. 2.3 THE AO FURTHER OBSERVED THAT THE PARTNERS OF TH E ASSESSEE FIRM HAS INTRODUCED FOLLOWING FRESH CAPITALS AMOUNTING TO R S. 11.50 LACS IN THE BALANCE SHEET AS UNDER:- S.NO. NAME OF THE PARTNERS FRESH CAPITAL SHOWN 1. SHRI SOHAN LAL SAINI RS. 3,50,000/- 2. SHRI DHARM CHAND SAINI RS. 4,50,000/- 3. LATE SHRI BHAGWANA RAM SAINI RS. 50,000/- 4. SHRI SURESH CHAND RS. 3,00,000/- TOTAL RS. 11,50,00 0/- THE AO DURING ASSESSMENT PROCEEDINGS REQUIRED THE A SSESSEE FIRM TO PRODUCE THE DETAILS AND SOURCE OF THE AMOUNT INTRODUCED / INVES TED IN THE PARTNERSHIP FIRM BUT THE ASSESSEE FAILED TO PROVE THE GENUINENESS AND TH E CREDITWORTHINESS OF THESE TRANSACTIONS / INVESTMENTS BEFORE THE AO. FOR WANT OF PROPER EVIDENCES, THE AO HAD CONSIDERED THE AMOUNT OF RS. 11.50 LACS AS UNDI SCLOSED INCOME OF THE ASSESSEE AND ADDED THE SAME TO ITS TOTAL INCOME. 6 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR 2.4 THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS S HOWN RS. 52,76,366/- AS CREDITS AS ON 31-03-2010 IN THE BALANCE SHEET OF TH E YEAR UNDER CONSIDERATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS NEITHER PROVIDED THE DETAILS OF CREDITORS INDICATI NG THEREIN THE NAMES AND ADDRESSES NOR SUBMITTED ANY REPLY. THE AO ENQUIRED FROM THE K RISHI UPAJ MANDI SAMITI, ALWAR U/S 133(6) OF THE ACT AS TO SALE / PURCHASES OF THE ASSESSEE FIRM DURING THE YEAR UNDER CONSIDERATION FOR WHICH THE KRISHI UPAJ MANDI SAMITI, ALWAR COMMUNICATED THAT TOTAL SALES AND PURCHASES OF AGRI CULTURAL GOODS WERE AMOUNTING TO RS. 4,34,43,109/-. THE AO OBSERVED THAT THE ASSE SSEE WAS NOT ABLE TO PROVIDE THE DETAILS OF THE CREDITORS AND THUS THE AO WAS UNABLE TO EXAMINE THESE DETAILS. THE AO OBSERVED THAT THE ASSESSEE DEALS IN ARAHAT OF VE GETABLES AND THE ASSESSEE HAS SOME CREDITORS ALSO. THE AO CONSIDERED IT FAIR AND REASONABLE TO CONSIDER UNDISCLOSED INCOME OF THE ASSESSEE FIRM AMOUNTING T O RS. 10.00 LACS WHICH HAS BEEN ADDED TO THE TOTAL INCOME OF THE ASSESSEE FIRM AS THE ASSESSEE WAS NOT ABLE TO PROVIDE ADEQUATE DETAILS OF SALES AND PURCHASES OF THE VEGETABLES FROM THE FARMERS. 2.5 THE AO FURTHER OBSERVED THAT IN FOLLOWING HEADS THE ASSESSEE FIRM HAD NOT PROVIDED THE DETAILS / RECORDS/ BILLS/VOUCHERS FOR VERIFICATION BY THE AO. THEREFORE, THE AO HAD NO OTHER ALTERNATIVE EXCEPT TO MAKE LUMP SUM ADDITION. 7 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR HEADS OF A/C AMOUNT CLAIMED BY THE ASSESSEE IN PROFIT AND LOSS ACCOUNT AMOUNT DISALLOWED BY THE AO SALARY EXPENSES 9,36,000 3,00,000 LOCAL CONVEYANCE 68,547 20,000 SHOP & DIWALI EXPENSES 83,700 25,000 TRAVELLING EXPENSES 80,517 24,000 GODOWN EXPENSE 60,000 60,000 STATIONARY EXPENSES 8,670 2,500 TELEPHONE EXPENSE 18,482 5,500 COMMISSION EXPENSES 1,17,860 40,000 INTEREST EXPENSES 24,560 7,500 TOTAL AMOUNT DISALLOWED 4,84,500 IN NUT SHELL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE AO HAS ENHANCED THE INCOME TO RS. 27,34,930 BY MAKING AN ADDITION OF RS. 26,09 ,500/- AND THUS CREATED A DEMAND OF RS. 12,34,096/- 2.6 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO CONFIRMED THE INVOCATION OF THE PROVISIONS OF SECT ION 145 OF THE ACT BECAUSE THE ASSESSEE COULD NOT PROVIDE THE BOOKS OF ACCOUNT IN CLUDING BILLS / VOUCHERS OF ITS BUSINESS ACTIVITIES. 2.7 THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESS EE FIRM COULD NOT SUPPLY THE DETAILS OF THE INTRODUCTION OF FRESH CAPITALS AMOUN TING TO RS. 11.50 LACS BY THE FOUR 8 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR PARTNERS. THEREFORE, THE LD. CIT(A) CONFIRMED THE D ISALLOWANCE OF RS. 11.50 LACS BY OBSERVING AS UNDER:- 6.8 HAVING CAREFULLY EXAMINED THE MATERIALS PLACE D ON RECORD, I FIND THAT TILL DATE THE APPELLANT COULD N OT EXPLAIN AS TO WHETHER THE CAPITAL INTRODUCED MADE BY THE PARTNERS IN THE FIRM WAS MADE IN CASH OR BY CHEQUE. NO BANK ACCOUNT OF ANY P ARTNER COULD BE PRODUCED EVEN IN THE COURSE OF APPELLATE PROCEEDING S. FURTHER THE COPY OF ITRS FILED IN THE COURSE OF APPELLATE PROCE EDINGS .. 6.9.. 6.10 CONSIDERING THE ABOVE FACTS, I HOLD THAT TH E ASSESSEE HAS FAILED TO DISCHARGE THE ONUS WHICH IS PLACED UPON HIM TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND CREDI TWORTHINESS OF THE CREDITORS. IT WOULD BE RELEVANT TO NOTE THAT HON'B LE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. DEEPAK I RON & STEEL ROLLING MILLS, 338 ITR 307 HAS UPHELD THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CREDIT ENTRIES FOUND IN THE PARTNERS CAPITAL ACCOUNT AS MAINTAINED IN THE BOOKS OF THE F IRM. IT WAS HELD BY THE COURT THAT THE UNEXPLAINED CREDIT COULD BE TAXE D AS UNEXPLAINED INCOME OF THE FIRM AS NO SATISFACTORY EXPLANATION C OULD BE OFFERED BY THE PARTNER 6.11 IN VIEW OF THE ABOVE FACTS I CONFIRM THE ADDIT ION OF RS. 11.50 LACS MADE BY THE AO UNDER THIS HEAD. 2.8 FOR NEXT ISSUE REGARDING MAKING AN ADDITION OF RS. 4,84,500/- ON ACCOUNT OF DISALLOWANCES OF VARIOUS EXPENSES, THE AO HAS TAKEN THE COMPUTATION OF INCOME AT RS. 4,59,500/- IN WHICH THE AO HAS INADVERTENTLY M ISSED THE DISALLOWANCE OF RS. 25,000/- ON ACCOUNT OF SHOP AND DIWALI EXPENSES. T HE ACTUAL DISALLOWANCES COME 9 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR UNDER VARIOUS HEADS ARE AT RS. 4,84,500/-INSTEAD OF RS. 4,59,400/-. THE LD. CIT(A) OBSERVED THAT IN ALL THESE EXPENSES, THE ASSESSEE F IRM HAS NOT PROVIDED PROPER DETAILS OF THE EXPENSES/ VOUCHERS AND BOOKS OF ACCO UNT IN SPITE OF PROVIDING VARIOUS OPPORTUNITIES BY THE AO. HOWEVER, THE LD. C IT(A) RESTRICTED THESE DISALLOWANCES TO THE EXTENT OF RS. 3,50,000/- OUT O F THE TOTAL DISALLOWANCE OF RS. 4,84,500/- OBSERVING AS UNDER:- 6.16 THE APPELLANT HAS STATED THAT THE EXPENSES HAVE BEEN INCURRED FOR THE PURPOSES OF BUSINESS AND COUL D NOT PRODUCE ANY OTHER EVIDENCE TO SUBSTANTIATE ITS CONTENTIONS. HOW EVER, THE APPELLANT HAS FILED COPIES OF THE ASSESSMENT ORDER PASSED BY THE AO FOR THE PRECEDING YEARS IN WHICH ONLY MODERATE DISALLOWANCE S ON ACCOUNT OF THESE EXPENSES HAVE BEEN MADE. 6.17 CONSIDERING THE MATERIAL AVAILABLE ON RECORD , I FIND THAT THE DISALLOWANCES MADE BY THE AO OUT OF THESE EXPENSES ARE ON A HIGHER SIDE AND HOLD THAT IT WOULD BE FAIR TO RESTR ICT THE DISALLOWANCES TO RS. 3,50,000/- OUT OF THE TOTAL DISALLOWANCES OF RS. 4,84,500/-. 2.9 THE LD. AR OF THE ASSESSEE IS NOW BEFORE US ONL Y FOR THREE ISSUES:- (I) CONFIRMATION AS UNEXPLAINED CREDITS ON ACCOUNT OF CAPITAL INTRODUCED BY THE PARTNERS AMOUNTING TO RS. 11.50 LACS (II) CONFIRMATION OF SUNDRY CREDITORS AMOUNTING T O RS. 10.00 LACS (III) DISALLOWANCE OF CERTAIN EXPENSES AMOUNTING TO RS. 3.25 LACS 10 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR 2.10 THE LD. AR OF THE ASSESSEE SUBMITTED THAT RS. 11.50 LACS WERE ON ACCOUNT OF CAPITAL INTRODUCED BY THE FOUR PARTNERS OF THE ASSE SSEE FIRM. THE DETAILS OF THE SAME ARE AS UNDER:- S.NO. NAME OF THE PARTNERS FRESH CAPITAL SHOWN 1. SHRI SOHAN LAL SAINI RS. 3,50,000/- 2. SHRI DHARM CHAND SAINI RS. 4,50,000/- 3. LATE SHRI BHAGWANA RAM SAINI RS. 50,000/- 4. SHRI SURESH CHAND RS. 3,00,000/- TOTAL RS. 11,50,00 0/- THE LD. AR SUBMITTED THAT THE PARTNERS OF THE FIRM ARE ILLITERATE PERSONS AND THEY DO NOT HOLD ANY BANK ACCOUNT AND AS A RESULT THEY HAD INTRODUCED THE CAPITAL IN THE FIRM BY DEPOSITING THE CASH. THE LD. AR OF THE ASSE SSEE SUBMITTED THAT THE ASSESSEE HAS PRODUCED THE COPY OF INCOME TAX RETURNS OF PART NERS OF THE FIRM. THE LIVING STANDARDS OF PARTNERS IS VERY LOW AND THE FUNDS NEE DED TO RUN THE HOUSE HOLD ACTIVITIES ARE VERY NORMAL FOR ALL THE PURPOSES. TH E LD. AR FURTHER SUBMITTED THAT LD. CIT(A) HAS CONFIRMED THE ADDITION ON THE GROUND THA T NO EVIDENCE COULD BE FILED BY THE ASSESSEE TO EXPLAIN THE SOURCE OF FUNDS, GEN UINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF PARTNERS. HOWEVER, THE AO HAS N EITHER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF CAPITAL INTRODUCED NOR EVEN T RIED TO GO THROUGH THE BASE 11 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR HISTORY OF THE PARTNERS. THUS THE LD. AR OF THE ASS ESSEE PRAYED FOR DELETION OF THIS ADDITION. 2.11 THE LD. DR RELIED ON THE ORDER OF THE LOWER AU THORITIES. 2.12 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE RECORDS THAT THE ASSESS EE HAS NOT MADE ANY EFFORTS TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND CREDI TWORTHINESS OF THE ASSESSEE'S PARTNERS WHO HAVE INTRODUCED SUCH A BIG AMOUNT IN C ASH IN THE FIRM. IT IS IMPERATIVE FOR THE ASSESSEE TO SUBSTANTIATE THE SOU RCE OF THE TRANSACTIONS WITH PROPER DOCUMENTARY EVIDENCE WHERE THE ASSESSEE HAS FAILED TO PROVE THE SOURCE OF THE FUNDS, GENUINENESS OF THE TRANSACTIONS AND CRED ITWORTHINESS OF THE PARTNERS BEFORE THE LOWER AUTHORITIES INCLUDING BEFORE US. T HUS FOR WANT OF PROPER EVIDENCES AS TO INTRODUCTION OF CAPITAL IN THE ASSESSEE FIRM, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS SUSTAINED ON THIS ISSUE. 2.13 NOW WE TAKE UP THE ISSUE OF SUNDRY CREDITORS AMOUNTING TO RS. 10,000,00/- WHEREIN THE ASSESSEE PRAYED THAT THE ASSESSEE FIRM DEALS WITH TOO MAY FARMERS WHO DO NOT HAVE PROPER ADDRESSES AND NAMES AND AS A RES ULT THEREOF, IT IS NOT POSSIBLE FOR THE ASSESSEE TO MAINTAIN THE RECORD OF SUCH FAR MERS INCLUDING THEIR ADDRESSES. THE LD. AR OF THE ASSESSEE SUBMITTED THE DETAILED B ALANCE SHEET IN WHICH THE NAMES OF CREDITORS ARE MENTIONED. THE LD. AR FURTHER SUBM ITTED THAT THE CREDITORS SHOWN 12 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR BY THE ASSESSEE FIRM ARE SMALL FARMERS WHO GENERALL Y COME TO THE ASSESSEE FOR SELLING THEIR GREEN VEGETABLES IN MANDI AND GET THE IR ACCOUNTS CLEARED IN A CYCLE OF 2/3 MONTHS AND THUS WHATEVER AMOUNT REMAIN WITH THE ASSESSEE DURING THE MONTH OF FEB AND MARCH END IS SHOWN AS CREDITORS IN HIS B OOKS OF ACCOUNT AND SUBSEQUENTLY IT IS CLEARED IN THE MONTH OF APRIL AN D MAY I.E. IN THE NEXT FINANCIAL YEAR. THE CHART INDICATES THAT IT IS THE ROUTINE AN D CONTINUOUS CYCLE IN ASSESSEE'S BUSINESS AS THE AMOUNT IS REPAID IN THE MONTH OF AP RIL AND MAY OF NEXT FINANCIAL YEAR. IN PRECEDING YEARS, THE LD. CIT(A) HAD ALSO A LLOWED SUCH AMOUNT UNDER THIS HEAD IN THE ASSESSMENT YEAR 2007-08. IN VIEW OF THE SE DELIBERATIONS, THE LD. AR OF THE ASSESSEE PRAYED FOR DELETION OF ADDITION OF RS. 10.00 LACS. 2.14 THE LD. DR RELIED ON THE ORDER OF THE LD. CIT( A) 2.15 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. WE FIND FROM THE RECORD THAT THE ASSESSEE H AS BEEN DEALING WITH THE FARMERS FOR PURCHASE AND SALE OF THEIR VEGETABLES IN THE MA RKET. THE FARMERS ARE IN MORE NUMBERS AND IT IS DIFFICULT FOR THE ASSESSEE TO MAI NTAIN THE RECORDS WITH THEIR ADDRESSES. THE ADJUSTMENT OF THE EXPENSES IS MADE I N A CYCLE OF 2/3 MONTHS WHICH IS A ROUTINE AND CONTINUOUS SYSTEM OF THE ASSESSEE FIRM AND THE AMOUNT IS REPAID IN THE MONTH OF APRIL AND MAY OF NEXT FINANCIAL YEAR. THE CHART SUBMITTED BY THE ASSESSEE FIRM DEPICTS THE DETAILS OF THE FARMERS FO R THE AMOUNT DUE TO THE ASSESSEE 13 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR FIRM. IN PRECEDING YEARS, THE LD. CIT(A) HAD ALSO A LLOWED SUCH AMOUNT UNDER THIS HEAD IN THE ASSESSMENT YEAR 2007-08. THE AO IN THE ASSESSMENT ORDER AT PAGE 4 IN PARA 4 HAS MENTIONED AS UNDER:- 4- YSUNKJ%& FOPKJ.KH; O'KZ ESA FU/KKZFJRH US FNUKAD 31-03-2010 DKS YSUNKJ :- 52]76]366@& DH JKFK IDDS FPV~BS (BALANCE SHEET) ESA NKKZ;H GQQBZ GSA LAFO{KK DK;ZOKGH DS NKSJKU F U/KKZFJRH LS BL LECU/K ESA FMVSYL ( YSUNKJ DS UKE O IRS ) PKGH XBZ YSFDU DKSBZ TOKC IZLRQR UGHA FD;K X;KA QEZ LS LECFU/KAR VUZVKSOJ VKFN DH TKUDKJH TKUUS GSRQ D`F'K MIT E.MH] VYOJ LS VK;DJ VF/KFU;E DH /KKJK 133 (6) DS RGR I= FY[KDJ TOKC PKGK X;K] FTLDS TOKC ESA MUG KSAUS FU/KKZFJRH DH FOPKJ.KH; O'KZ ESA DQY D`F'K FTULS DH [KJHN FCDZH :I;S 4]34]4 3]109 CRK;H X;HA FU/KKZFJRH }KJK YSUNKJ DS LECU/K ESA PKGS X;S FOOJ.K IZLRQR UGHA DJUS DS DKJ. K BUDH ;FKKZFKRK DH IJ[K UGHA DKS IK;HA ,SLH IFJFLFKFR ESA CRK;S X;S LKJS YSUNKJ LOHDKJ UGHA FD; S TK LDRS GSAA PWWFD FU/KKZFJRH }KJK FDLKUKSA LS LCTH DH [KJHN VKMR DS }KJK DJKBZ GS ,SLH FLFKFR ESA MLDS YSUNKJ HKH GKS LDRS GSA] IJURQ FU/KKZFJRH }KJK LAOH{KK DK;ZOKGH DS NKSJKU [KKRS&CGH] [KJHN&FC DZH DK FJDKWMZ IZLRQR UGHA DJUS DS DKJ.K ;G IWJH JKFK LOHDKJ UGHA DH TK LDRH GSA VR% MDR LHKH RF;KS A DKS /;KU ESA J[KRS GQ, NKOK FD;S X;S YSUNKJKSAAA ESA LS QS;J ,OA FJTUSOY :- 10]00]000 FU /KKZFJRH DH V?KKSF'KR VK; EKURS GQ, DQY VK; ESA TKS MS TKRS GSA SIMILARLY THE LD. CIT(A) IN PARA 6.12 REGARDING THE ADDITION OF RS. 10.00 LACS HAS MENTIONED AS UNDER:- 6.12 THE NEXT ISSUE IS REGARDING ADDITION OF RS. 10,00,000/- ON ACCOUNT OF DEBTORS. THE AO HAS STATED IN THE ORDER THAT IN THE BALANCE SHEET FILED BY THE APPELLANT AN AMOUNT OF RS. 52,76,366/- HAS BEEN SHOWN AS SUNDRY DEBTORS. HOWEVER, DURING THE COURSE OF PROCE EDINGS NO DETAILS OF 14 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR NAMES AND ADDRESSES OF THE SUNDRY DEBTORS COULD BE FILED BEFORE THE AO. INFORMATION HAS BEEN COLLECTED BY THE AO FROM THE K RISHI UPAJ MANDI AND IT WAS FOUND THAT THE TOTAL SALE-PURCHASE TRANSACTION OF THE APPELLANT FIRM DURING THE YEAR AMOUNTED TO RS. 4,34,43,109/-.THE A O HAS STATED THAT THE FIGURE OF SUNDRY DEBTORS GIVEN BY THE APPELLANT CAN NOT BE ACCEPTED AS THE APPELLANT IS PRIMARILY ENGAGED IN THE BUSINESS AS A COMMISSION AGENT AND ACCORDINGLY AN ADDITION OF RS. 10,00,000/- WAS MADE . HOWEVER, THE LD. AR HAS MENTIONED AT PAGE 4 IN PA RA B-1 AND B-2 OF THE WRITTEN SUBMISSION REGARDING THE SUNDRY CREDITORS AS UNDER: - B1. SIR THE CONFIRMATION OF ADDITION OF RS. 10,00 ,000/- ON ACCOUNT OF SUNDRY CREDITORS MADE BY THE COMMISSIONER (APPE ALS), ALWAR HAS BEEN MADE WITHOUT LOOKING INTO THE FACTS OF THE CAS E. B2. SIR THE ADDITION WAS MADE BY THE AO ON THE GROU ND THAT THE ASSESSEE HAS NOT PRODUCED THE NAMES AND ADDRESSES O F THE CREDITORS AND AS PER THE INFORMATION RECEIVED FROM KRISHI UPA J MANDI, ALWAR, TOTAL SALES AND PURCHASE TRANSACTION WAS OF RS. 4,3 4,43,109/- AND HENCE HE HAS DISALLOWED THE CREDITORS OF RS. 10,00, 000/- IN LUMP SUM OUT OF TOTAL CREDITORS OF RS. 52,76,366/- IN THE BA LANCE SHEET . FROM THE CONJOINT READING OF THE AO, LD. CIT(A) AND LD. AR, IT IS APPARENT THAT THE LD. AR IS REFERRING THE ADDITION OF RS. 10.00 LACS AS SUNDRY CREDITORS WHEREAS THE AO AND LD. CIT(A) ARE REFERRING TO THE DEBTORS. THU S RECORD IS NOT CLEAR AS TO WHAT 15 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR AMOUNT WAS ADDED AS DEBTORS OR AS CREDITORS. IN VIE W OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, THE LUMPSUM ADDITION MAD E BY THE AO AND CONFIRMED BY THE LD. CIT(A) REQUIRES TO BE REVISITED BY THE A O. WE, THEREFORE, REMAND THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO DE CIDE THE ISSUE AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. THE ASSESSEE IS FREE TO PRODUCE ALL THE NECESSARY DOCUMENTS AND MATERIA LS BEFORE THE AO TO SUBSTANTIATE ITS CLAIM IN THIS REGARD. THUS THIS GR OUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 2.16 NOW WE TAKE UP THE ISSUE OF DISALLOWANCE OF CE RTAIN EXPENSES AMOUNTING TO RS. 3.25 LACS. WE HAVE CONSIDERED THE ARGUMENTS, WR ITTEN SUBMISSION OF THE ASSESSEE INCLUDING THE SUBMISSIONS OF THE LD. DR DU RING THE COURSE OF HEARING. WE FIND THAT THE LD. CIT(A) HAD BEEN VERY MUCH CAUTIOU S TO GO THROUGH THE SUBMISSIONS OF BOTH THE PARTIES. THE LD. CIT(A) HAS TAKEN INTO CONSIDERATION THE DETAILS OF ALL THE EXPENSES INCURRED BY THE ASSESSE E FIRM (SUPRA). ALTHOUGH, IT WAS ALSO DIFFICULT FOR LOWER AUTHORITIES TO DEDUCE THE ACTUAL EXPENSES INCURRED FOR WANT OF PROPER DETAILS/ BILLS AND VOUCHERS ETC. YET TH E LD. CIT(A) HAS BEEN VERY CONSIDERATE IN GIVING REASONABLE RELIEF TO THE ASS ESSEE IN THE RESPECTIVE HEADS MENTIONED ABOVE. THUS THE ORDER OF THE LD. CIT(A) I S SUSTAINED ON THE ISSUE OF DISALLOWANCE OF CERTAIN EXPENSES. 16 ITA NO. 37/JP/2015 M/S. DHARAM CHAND SOHAN LAL & COMPANY VS. ITO, WARD - 2(3), JAIPUR 3.0. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 /04/2 016. SD/- SD/- FOE FLAG ;KNO YFYR DQEKJ ( VIKRAM SINGH YADAV ) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 /04/2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-M/S. DHARAM CHAND SOHAN LAL & COMPANY , JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 2 (3), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 37/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR