Dilip Khushalchand Shah, Kolhapur V. Income-tax Officer,

ITA 380/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9596 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 28-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Gross profit estimation; Unexplained cash credit; Principle of natural justice
• Section: 43B; 40A(3); 143(3); 234B; 133(6); 131; 68

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 380/PUN/2014 / ASSESSMENT YEAR : 2010 - 11 SHRI DILIP KUSHALCHAND SHAH, PROP. RAMISNA METAL CORPORATION, 1401 - C, LAXMIPURI, KOLHAPUR ....... / APPELLANT PAN : AEKPS0058L / V/S. THE INCOME TAX OFFICER, WARD - 1(1) , KOLHAPUR / RESPONDENT A SSESSEE BY : NONE REVENUE BY : SHRI ANIL CHAW A RE / DATE OF HEARING : 17 . 04 .201 7 / DATE OF PRONOUNCEMENT: 28 .04 .201 7 / ORDER PER SUSHMA CHOWLA , JM : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A), KOLHAPUR, DATED 17.12.2013 RELATING TO ASSESSMENT YEAR 2010 - 11 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 ITA NO. 1085/PUN/2013 2. THE APPEAL OF THE ASSESSEE WAS FIXED FOR HEARING ON 02.02.2015 AND IT WAS ADJOURNED TO 27.04.2015 AT THE REQUEST OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. IT WAS FURTHER ADJOURNED ON 27.04.2015 TO 09.07.2015 AND VARIOUS OTHER DATES BEFORE THE DIVISION BENCH. HOWEVER, BECAUSE OF THE CHANGE IN MONETARY LIMITS OF SMC BENCH, THE MATTER WAS TRANSFERRED TO THE SMC BENCH ON 29.09.2016 AND THE APPEAL WAS FIXED ON 06.10.2016. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSE E SOUGHT ADJOURNMENT ON 06.10.2016, 25.10.2016 AND ALSO ON 13.12.2016. THE REQUEST OF THE ASSESSEE WAS ALLOWED AND THE APPEAL WAS FIXED FOR HEARING ON 17.04.2017. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE APPOINTED DATE OF HEARING NOR ANY A PPLICATION WAS RECEIVED FOR ADJOURNMENT. ACCORDINGLY, THE APPEAL IS DECIDED ON ITS MERITS AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 3. THE ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPEAL AND IT IS PROCEEDED TO DECIDE THE PRESEN T APPEAL AFTER REFERRING TO THE INDIVIDUAL GROUND OF APPEAL. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WAS ENGAGED IN SALE AND PURCHASE OF SCRAP. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.11,81,640/ - ON THE BASIS OF AUDI TED BOOKS OF ACCOUNT. THE ASSESSING OFFICER MADE VARIOUS ADDITIONS WHICH ARE AS UNDER: - A) ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT OF RS.4,50,000/ - ; B) ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT OF RS.20,000/ - ; C) ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT OF RS.59,500/ - ; D) DISALLOWANCE OF INTEREST PAID ON UNSECURED LOANS OF RS.3,967/ - ; E) DISALLOWANCE OF EXPENSES IN VIEW OF PROVISIONS OF SECTION 43B OF THE ACT OF RS.8,170/ - ; 3 ITA NO. 1085/PUN/2013 F) ADDITION ON ACCOUNT OF CESSATION OF LIABILITY AT RS.11,55,725/ - ; G) DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT AT RS.23,474/ - ; H) ADDITION / DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT OF RS.64,600/ - ; I) ADDITION ON ACCO UNT OF UNEXPLAINED PURCHASES OF RS.12,73,456/ - ; J) ADDITION ON ACCOUNT OF GROSS PROFIT ON ACCOUNTED SALES; K) ADDITION ON ACCOUNT OF LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES OF RS.1,25,500/ - ; AND L) DISALLOWANCE OUT OF EXPENDITURE O RS.24,868/ - 5. BEFORE THE CIT(A), THE ASSESSEE FILED STATEMENT OF FACTS WHICH ARE AVAILABLE ON RECORD AND ALSO MADE SUBMISSIONS. THE CIT(A) HOWEVER, UPHELD THE ORDER OF ASSESSING OFFICER IN RESPECT OF EACH OF THE ADDITIONS . 6. NOW, IT IS DECIDED TO DEAL WITH THE ISSUES INDIVIDUALLY. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS AGAINST THE ADDITION MADE UNDER SECTION 68 OF THE ACT, WHICH READS AS UNDER: - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE A DDITION MADE BY THE A.O OF RS. 4,50,000/ - UNDER S. 68 OF THE ACT WITHOUT PROPERLY APPRECIATING THE INGREDIENTS OF S. 68 OF THE ACT. THE ADDITION BEING CONTRARY TO THE PROVISIONS OF LAW BE QUASHED. 7. THE ASSESSEE IS AGGRIEVED BY THE ADDITION OF RS.4,50,000/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSEE HAD FILED CONFIRMATION FROM SMT. APEKSHA H. SHAH AND CLAIMED THAT HE HAD RECEIVED SUM OF RS.4,50,000/ - DURING THE YEAR. HOWEVER, BEFORE THE CIT(A), HE CLAIMED THAT THE SAID AMOUNT W AS RECEIVED IN EARLIER YEARS. THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM AS THE ASSESSEE FAILED TO FURNISH CREDITWORTHINESS OF THE SAID PARTY, WHO HAD ADVANCED THE LOAN. THE CIT(A) VIDE PARA 4 OBSERVED AS UNDER: - 4. IN THE APPEAL THE APPELLANT HAS T AKEN THE GROUND THAT THE ADDITION IS NOT ACCORDING TO LAW. IT IS OLD CARRIED FORWARD BALANCE FROM EARLIER YEARS AND IS NOT A NEW LOAN. HOWEVER, SUBMISSION OF THE APPELLANT IS NOT BASED ON CORRECT FACTS. COPY OF CONFIRMATION AND ACCOUNTS WERE FILED BEFORE T HE UNDERSIGNED AS PER WHICH 4,15,000/ - WAS RECEIVED ON 06/04/2009 AND 35,000/ - WAS RECEIVED ON 4 ITA NO. 1085/PUN/2013 15/04/2009. THE LOAN WAS TAKEN DURING THE CURRENT YEAR THEREFORE, THE ASSESSING OFFICER WAS WELL WITHIN HIS POWER TO QUESTION THE GENUINENESS OF THE LOAN. TH E ASSESSING OFFICER HAS GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE AND THE CREDITOR AND IN FACT, ALSO ISSUED SUMMONS UNDER SECTION 131 TO THE CREDITOR TO APPEAR AND EXPLAIN THE SOURCE OF INCOME. INSPITE OF REPEATED OPPORTUNITIES SHE EVADED APPEARANCE BEF ORE THE ASSESSING OFFICER. COPY OF ACCOUNT FILED DURING THE APPEAL MENTIONS INCOME - TAX PAN OF ASSESSEE BUT IT DOES NOT CONTAIN PAN OF THE CREDITOR. COPY OF HER BANK ACCOUNT WAS ALSO FILED WHICH SHOWS THAT PRIOR TO THE DEBIT OF 4,15, 000 / - THERE IS A CREDI T OF EQUAL AMOUNT ON THE SAME DATE. THIS NEEDS TO BE ENQUIRED WHICH COULD NOT BE DONE DUE TO NON - COMPLIANCE BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION WHICH I S HEREBY SUSTAINED. 8. THE ASSESSEE HAS FAILED TO CONTROVERT THE FINDING OF THE CIT(A), WHEREIN PRIOR TO DEBIT OF SUM OF RS.4 ,1 5,000/ - PAID ON 06.04.2009, THERE IS CREDIT OF EQUAL AMOUNT IN THE BANK ACCOUNT OF THE CREDITOR. FURTHER, THE ASSESSEE HAD RECEIVED RS.35,000/ - ON 15.04.2009 FOR WHICH ALSO, THE ASSESSEE HAS FAILED TO FURNISH SOURCE OF THE SAID LOAN IN THE ACCOUNT OF THE LOAN CREDITOR. ACCORDINGLY, THE ADDITION OF RS.4,50,000/ - IS UPHELD IN THE HANDS OF ASSESSEE. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS THUS, DISMISSED. 9. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE READS AS UNDER: - 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.20,000/ - MADE BY THE A.O WITHOUT ASSIGNING ANY REASONS FOR SUCH SUSTENANCE. THE ADDITION BE DELETED. 10. BY WAY OF GROUND OF APPEAL NO.2, THE ASSESSEE IS AGGRIEVED BY THE ADDITION OF RS.20,000/ - , WHEREIN IN THE LIST OF SUNDRY CREDITORS IN RESPECT OF MR. MUNAF A. MANER, RS.1,20,000/ - WAS SHOWN AS BALANCE, WHICH CONTINUED FROM FINANCIAL YEAR 2006 - 07 AT RS.1,00,000/ - AND WHICH WAS CONFIRMED BY THE SAID CREDITOR AS INTEREST FREE . D UE TO THE MIS - MATCH , T HE ADDITIONAL AMOUNT OF RS.20,000/ - WAS ADDED AS UNEXPLAINED CREDIT IN THE HANDS OF ASSESSEE. THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF ADDITIONAL SUM OF RS.20,000/ - AND EVEN THE CREDITOR IN WHOSE NAME THE AMOUNT WAS OUTSTANDING, HAD DENIED THE KNOWLEDGE OF THE SAME. ACCORDINGLY, ADDITION WAS UPHELD BY THE CIT(A). THE 5 ITA NO. 1085/PUN/2013 ASSESSEE BEFORE THE TRIBUNAL HAS FAILED TO FURNISH ANY FURTHER EVIDENCE AND ACCORDINGLY, THE ORDER OF CIT(A) IS UPHELD. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS, DISMISSED. 1 1 . THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE READS AS UNDER: - 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 59,500/ - MADE BY A.O. INVOKING PROVISIONS OF S. 68 OF THE ACT. THE APPELLANT DID PROVE THE IDENTITY AND CAPACITY OF THE LENDER. THE ADDITION U/S 68 BEIN G UNWARRANTED BY DELETED. 12. THE ISSUE IN GROUND OF APPEAL NO.3 IS AGAINST THE ADDITION OF UNEXPLAINED CASH CREDIT OF RS.59,500/ - . THE ASSESSEE CLAIMED TO HAVE RECEIVED THE SAID LOAN FROM HIS SON MOHAN D. SHAH. HOWEVER, THE ASSESSEE HAD FAILED TO FURN ISH EXTRACT OF BANK ACCOUNT OF HIS SON, EVIDENCE OF SOURCE OF INCOME AND COPY OF ANY RETURN OF INCOME. THE ASSESSEE WAS ALSO ASKED TO PRODUCE THE CREDITOR FOR VERIFICATION. EVEN SUMMONS WERE ISSUED WHICH WAS NOT COMPLIED WITH. THE SAID ADDITION WAS MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF THE ACT FOR NOT ESTABLISHING THE CREDITWORTHINESS OF THE CREDITOR AND NOT ESTABLISHING THE GENUINENESS OF THE TRANSACTION. 13. BEFORE THE CIT(A), THE CONTENTION OF ASSESSEE WAS THAT IT WAS A FAMILY LOAN AND WHERE THE LENDER WAS IDENTIFIED AND IT WAS PALTRY SUM OF RS.59,500/ - , NO ADDITION SHOULD BE MADE. HOWEVER, THE CIT(A) REJECTED THE SAME. THE ONUS WAS UPON THE ASSESSEE TO ESTABLISH THE CAPACITY OF THE PERSON ADVANCING THE LOAN, EVEN IF HE IS FAMILY MEMBE R. WHERE THE ASSESSEE HAS FAILED TO DISCHARGE THE SAID ONUS CAST UPON HIM, THERE IS NO MERIT IN THE PLEA OF THE ASSESSEE AND ACCORDINGLY, ADDITION OF RS.59,500/ - IS UPHELD. THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS THUS, DISMISSED. 6 ITA NO. 1085/PUN/2013 14. THE GROUND OF APPEAL NO.4 RAISED BY THE ASSESSEE READS AS UNDER: - 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ADDITIONS SUSTAINS BY THE LD. CIT(A) OF RS. 3967/ - AND RS. 8170/ - ARE NOT JUSTIFIED. THE SAME BE DELETED. 15. THE ISSUE IN GROUND OF APPEAL NO.4 IS AGAINST THE DISALLOWANCE OF INTEREST OF RS.3,967/ - ON THE AMOUNT RECEIVED FROM SHRI MOHAN D. SHAH OF L OAN OF RS.59,500/ - . SINCE THE AMOUNT OF LOAN WAS NOT ACCEPTED AND THE INTEREST PAID ON SUCH LOAN WAS DISALLOWED BY THE ASSESSING OFFICE R AND CONFIRMED BY THE CIT(A). IN VIEW OF DISMISSAL OF GROUND OF APPEAL NO.3, THE DISALLOWANCE OF INTEREST OF RS.3,967/ - IS UPHELD IN THE HANDS OF ASSESSEE. 16. BY WAY OF GROUND OF APPEAL NO.4 ITSELF, THE ASSESSEE IS ALSO AGGRIEVED BY THE ADDITION OF RS. 8,170/ - WHICH IS ON ACCOUNT OF GRAM PANCHAYAT TAX SHOWN AS PAYABLE. THE ASSESSEE HAD FAILED TO FURNISH ANY EVIDENCE OF PAYMENT AND THEREFORE, THE SAME WAS DISALLOWED IN THE HANDS OF ASSESSEE. WHERE THE ASSESSEE HAS FAILED TO FURNISH EVIDENCE OF PAYMENT OF SUM OF RS.8,170/ - ON ACCOUNT OF GRAM PANCHAYAT TAX, THE ADDITION MADE BY THE AUTHORITIES BELOW IS CONFIRMED. 17. THE GROUND OF APPEAL NO.5 RAISED BY THE ASSESSEE READS AS UNDER: - 5) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN LAW AND FACTS TO CONFIRM THE ADDITION OF RS.11,55,725/ - MADE BY THE A.O U/S 41(1) OF THE A.O. IN THE ABSENCE OF ANY CESSATION OF LIABILITY THE PROVISIONS OF S. 41(1) CANNOT BE INVOKED. THE LD. CIT(A) SIMPLY RELIED UPON WHAT THE A.O STATED IN THE ASSESSMENT ORDER. THE CONDITIONS OF S. 41(1) HAVING NOT SATISFIED THE ADDITION MADE INVOKING S. 41(1) IS NOT SUSTAINABLE. IT BE QUASHED. 18. THE ASSESSEE BY WAY OF GROUND OF APPEAL NO.5 IS AGGRIEVED BY THE ADDITION MADE UNDER SECTION 41(1) OF THE ACT OF RS.11,55,725/ - . ADMITTEDLY, THE SAID ENTRIES WERE SHOWN BY THE ASSESSEE AS BALANCE DUE TO M/S. SPECIFIC ALLOYS 7 ITA NO. 1085/PUN/2013 PVT. LTD. SINCE FINANCIAL YEAR 2007 - 08. THE ASSESSING OFFICER WAS OF THE VIEW THAT WHERE THE ASSESSEE HAS FAILED TO GIVE ANY REASON IN NON - REPAYMENT OF LOAN AND WHERE NO CONFIRMATION HAS BEEN RECEIVED, THE SAID AMOUNT IS TO BE ADDED UNDER SECTION 41(1) OF THE ACT. THE CIT(A) HAS UPHELD THE ORDER OF ASSESSING OFFICER FOR NON - FILING OF THE CONFIRMATION. 19. THE ASSESSEE BY WAY OF STATEMENT OF FACTS HAS REFERRED TO VARIOUS DECISIONS ON CESSATION OF LIABILITY AS ENSHRINED IN SECTION 41(1) OF THE ACT. BY WAY OF SAID SECTION 41(1) OF THE ACT, THERE IS CREATION OF LEGAL FICTION AND THE CONDITIONS PRECEDENT FOR RAISING SUCH A LEGAL FICTION, MERITS TO BE SATISFIED TO JUSTIFY THE ADDITION UNDER SECTION 41(1) OF THE ACT. HE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON BLE BOMBAY HIGH COURT IN SWAN MILLS LTD. VS. CIT (1995) 215 ITR 1 (BOM) AND CIT VS. BE NNETT COLEMAN AND CO. LTD. (1993) 201 ITR 1021 (BOM). RELIANCE WAS ALSO PLACED ON OTHER DECISIONS OF SEVERAL HIGH COURTS. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE ASSESSEE HAS ACKNWOELDGED THE DEBT DUE AND MERELY THE DEBT HAS BEEN OVERDUE, DOES NOT JUSTIFY INVOKING OF PROVISIONS OF SECTION 41(1) OF THE ACT. ACCORDINGLY, THERE IS MERIT IN THE PLEA OF ASSESSEE IN THIS REGARD AND THE ADDITION MADE UNDER SECTION 41(1) OF THE ACT AT RS.11,55,725/ - IS THUS, DELETED. 20. THE GROUND OF APPEAL NO.6 RAISED BY THE ASSESSEE READS AS UNDER: - 6) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE A.O. OF RS.23,474/ - INVOKING S. 40(A)(I - A) OF THE ACT. THE ADDITION BE DELETED. 21. THE NEXT ADDITION MADE IS FOR VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AT RS.23,474/ - . THE ASSESSEE HAD FAILED TO DEDUCT THE TAX AT S OURCE OUT OF INTEREST PAID ON LOAN AMOUNT PAID , ON THE PREMISE THAT IT WAS PAID TO TWO 8 ITA NO. 1085/PUN/2013 PERSONS, WHO HAD FURNISHED FORM NO. 15 G. THE ASSESSING OFFICER OBSERVED THAT THE SAID FORMS WERE SUBMITTED TO THE OFFICE OF COMMISSIONER ON 15.04.2010, WHEREAS THE SAME SHOULD HAVE BEEN SUBMITTED WITHIN SEVEN DAYS FROM THE END OF MONTH IN WHICH DECLARATION WAS OBTAINED ; HENCE, DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT . THE CIT(A) UPHELD THE SAME AND OBSERVED THAT UNDER THE PROVISIONS OF THE ACT, IT IS INCUMBENT UPO N THE ASSESSEE EITHER TO DEDUCT TAX AT SOURCE O R IF HE HAD RECEIVED ANY COMMUNICATION FROM THE LENDERS, BY WAY OF FORM NO.15G, THE SAME SHOULD BE FILED IN THE OFFICE OF COMMISSIONER - I, KOLHAPUR. THE ASSESSEE ADMITTEDLY, HAD RECEIVED FORM NO.15G FROM THE TWO PERSONS AND THESE WERE FILED BEFORE THE COMMISSIONER - I, KOLHAPUR ON 15.04.2010. THE ASSESSEE ADMITTEDLY, HAS VIOLATED THE PROVISIONS OF EXPLANATION TO SECTION 197A OF THE ACT AND ACCORDINGLY, DISALLOWANCE UNDER SECTIO N 40(A)(IA) OF THE ACT AT RS.23,474/ - IS UPHELD. 22. THE GROUND OF APPEAL NO.7 RAISED BY THE ASSESSEE READS AS UNDER: - 7) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE A.O. O F RS. 64,600/ - INVOKING S. 40A(3) OF THE ACT. IN ANY CASE PAYMENT BEING GENUINE AND COVERED BY THE PROVISO TO S. 40A(3) OF THE ACT THE ADDITION WAS NOT WARRANTED. IT BE DELETED. 23. THE ISSUE IN GROUND OF APPEAL NO.7 IS AGAINST THE DISALLOWANCE MADE UNDE R SECTION 40A(3) OF THE ACT AT RS.64,600/ - . THE ASSESSEE HAS MADE CASH PURCHASES OF RS.64,600/ - FROM MANJARA SAH. SAJK. KARKHANA . THE ASSESSEE WAS ASKED AS TO WHY THE SAID CASH PAYMENT SHOULD NOT BE DISALLOWED. THE ASSESSEE CLAIMED THAT THE SAID PAYMENTS WERE MADE AFTER BANKING HOURS WHICH WERE NECESSARY IN THE INTEREST OF BUSINESS ACTIVITY. THE ASSESSEE FURTHER EXPLAINED THAT IT HAD PURCHASED SCRAP IN AUCTION AND 25% OF THE CONSIDERATION WAS REQUIRED TO BE DEPOSITED ON THE SPOT . SINCE, IT WAS N OT ASCERTAINABLE AS TO HOW MUCH AMOUNT WAS REQUIRED TO BE PAID AS MARGIN MONEY, THEREFORE, THE 9 ITA NO. 1085/PUN/2013 CASH PAYMENT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF HIS STATEMENT AND HENCE, MADE THE DISALLOWANCE U NDER SECTION 40A(3) AT RS.64,600/ - . 24. BEFORE THE CIT(A), THE STAND OF ASSESSEE WAS THAT THE PAYMENT WAS MADE AFTER BANKING HOURS WHICH WAS NECESSARY IN THE INTEREST OF BUSINESS ACTIVITY. THE ASSESSEE IN THE WRITTEN SUBMISSIONS ON THE OTHER HAND, POINTE D OUT THAT THE CASH PAYMENT WAS MADE FOR PURCHASE OF SCRAP IN AUCTION. THE ASSESSEE IS CHANGED ITS STAND BEFORE THE ASSESSING OFFICER AND ALSO BEFORE THE CIT(A). THE ASSESSEE FIRST TAKES ONE STAND OF MAKING THE CASH PAYMENT AFTER BANKING HOURS, ON THE OT HER HAND, IT STATES THAT IT WAS FOR PURCHASING SCRAP IN AUCTION. HOWEVER, THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF ITS CLAIM AND IN THE ABSENCE OF THE SAME, THERE IS NO MERIT IN THE PLEA OF ASSESSEE. ACCORDINGLY, THE DISALLOWANCE MAD E UNDER SECTION 40A(3) OF THE ACT AT RS.64,600/ - IS UPHELD. 25. THE GROUND OF APPEAL NO.8 RAISED BY THE ASSESSEE READS AS UNDER: - 8) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN FACTS AND LAW IN CONFIRMING THE ADDITION OF RS. 1273,456/ - MADE BY THE A.O ON ACCOUNT OF UNEXPLAINED PURCHASE AND NON RECONCILIATION OF SUNDRY CREDITORS BALANCES. THE FACTS SHOW THAT THE LD. A.O. VIOLATED THE PRINCIPLES OF NATURAL JUSTICE IN THE PROCESS OF MAKING SUCH ADDITION. THE ADDITION IS NOT SUSTAINABLE FOR EVEN A MOMENT AS IT IS MADE VIOLATING THE FUNDAMENTAL RIGHTS OF THE ASSESSEE RESULTING INTO VIOLATION PRINCIPLES OF NAT URAL JUSTICE. THIS IS ALSO AMOUNTS TO DOUBLE ADDITION AS GP% ON THIS HAS BEEN ESTIMATED, ADDED AND SO CONFIRMED BY CIT(A). THE ADDITION BE QUASHED. 26. THE NEXT ISSUE BY WAY OF GROUND OF APPEAL NO.8 IS AGAINST THE ADDITION OF RS.12,73,456/ - ON ACCOUNT OF UNEXPLAINED PURCHASES AND NON RECONCILIATION OF SUNDRY CREDITORS BALANCE. 10 ITA NO. 1085/PUN/2013 27. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE WAS ASKED TO FURNISH CONFIRMATION OF SUNDRY CREDITORS. ON VERIFICATION OF THE DETAILS FURNISHED BY THE ASSESSEE , THE A SSESSING OFFICER NOTED THAT THE ASSESSEE HAD SHOWN BALANCE IN THE CASE OF UGAR SUGAR WORKS LTD. THE ASSESSING OFFICER NOTED THAT THE PARTY HAD JUST ACKNOWLEDGED THE EXTRACT OF ACCOUNT, HOWEVER, NOT CONFIRMED THE BALANCE. THEREFORE, VIDE OFFICE LETTER DAT ED 20.11.2012 , THE ASSESSEE WAS INFORMED AND IN REPLY, THE ASSESSEE FURNISHED THE ACKNOWLEDGEMENT FOR CONFIRMATION LETTER SENT TO THE SAID PARTY. HOWEVER, THE ASSESSEE HAS FAILED TO FURNISH THE CONFIRMATION AND CONFIRMATION WAS SOUGHT FROM THE SAID PARTY UNDER SECTION 133(6) OF THE ACT. THE ACCOUNT EXTRACT SUBMITTED BY THE SAID PARTY INCLUDED NUMBER OF TRANSACTIONS WHICH WERE NOT REFLECTED IN THE BOOKS OF THE ASSESSEE. THE ASSESSEE WAS SHOW CAUSED AND IT FURNISHED RECONCILIATION OF THE SAID ACCOUNT AND S TATED THAT THE MATERIAL PURCHASED BY OTHER PART Y VIZ. MAHALAXMI RESELLERS PVT LTD. AMOUNTING TO RS.9,74,948/ - , PRIME INDUSTRIES AMOUNTING TO RS.1,17,470/ - AND S.S. METALS AMOUNTING TO RS.1,81,038/ - WERE SHOWN BY THE UGAR SUGAR WORKS LTD. IN ASSESSEES ACC OUNT. THE ASSESSEE IN SUPPORT FURNISHED THE EXTRACT OF ACCOUNT IN THE BOOKS OF MAHALAXMI RESELLERS PVT. LTD. AND PRIM E INDUSTRIES LTD. THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WAS ASKED TO FURNISH CONFIRMATION FROM THE UGAR SUGAR WORKS AN D ALSO FILE THE COPIES OF BILLS ISSUED BY IT IN THE NAME OF OTHER PARTY. HOWEVER, THE ASSESSEE FAILED TO FURNISH THE SAME. THE ASSESSING OFFICER ALSO NOTED ON VERIFICATION OF EXTRACT OF ACCOUNT IN THE BOOKS OF ASSESSEE THAT THE PAYMENT IN RESPECT OF MAHA LAXMI RESELLERS PVT. LTD. WAS ALSO MADE BY THE ASSESSEE. THE ASSESSEE FAILED TO OFFER ANY EXPLANATION IN THIS REGARD. IN RESPECT OF SECOND PARTY, THE ASSESSEE FAILED TO FURNISH ANY REASONS OR ANY EXPLANATION. IN VIEW THEREOF, THE ASSESSING OFFICER MADE ADDITION OF 11 ITA NO. 1085/PUN/2013 RS.12,73,456/ - . THE CIT(A) UPHELD THE ADDITION IN THE ABSENCE OF ANY CONFIRMATION FROM THE RESPECTIVE PARTIES. 28. BEFORE THE TRIBUNAL ALSO, THE ASSESSEE FAILED TO FURNISH ANY CONFIRMATION AND FILE ANY OTHER EXPLANATION. MERELY STATING THAT IN THE ACCOUNT OF UGAR SUGAR WORKS , THE TRANSACTION OF PURCHASES MADE BY ANY OTHER PARTY WERE SHOWN CANNOT ABSOLVE THE ASSESSEE FROM ITS ONUS OF SUBSTANTIATING ITS EXPLANATION WITH PROPER EVIDENCE. IN THE ABSENCE OF SAME, THE ADDITION MADE BY THE CIT(A) A T RS.12,73,456/ - IS UPHELD. 29. THE GROUND OF APPEAL NO.9 RAISED BY THE ASSESSEE READS AS UNDER: - 9) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE A.O. OF RS. 2,04,899/ - ESTIMATING THE GP% ON UNEXPLAINED PURCHASES. THIS AMOUNTS TO DOUBLE ADDITION AS THE ADDITION MADE ON ACC OUNT OF UNEXPLAINED PURCHASE OF RS. 12,73,456/ - HAS ALSO BEEN CONFIRMED BY CIT(A). NO ADDITION ON ACCOUNT OF GP ESTIMATION CAN BE MADE UNLESS THE ACCOUNTS REGULARLY MAINTAINED AND AUDITED ARE REJECTED U/S 145(3) OF THE ACT. THE ADDITION BE DELETED. 30. THE GROUND OF APPEAL NO.9 IS AGAINST THE CONFIRMATION OF ADDITION OF RS. 2,04,899/ - BY ESTIMATING THE GP ON UNEXPLAINED PURCHASES. THE ASSESSEE IS AGGRIEVED BY THE SAID ADDITION BEING DOUBLE ADDITION I.E. ONCE UPHOLDING THE PURCHASES AND THEREAFTER, MAKING ADDITION ON ACCOUNT OF GP. THE ASSESSING OFFICER HAD MADE THE SAID ADDITION ON THE PREMISE THAT THE CORRESPONDING SALES WERE NOT REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND GP AT 16.09% WAS RESULTED IN ADDITION OF RS.2,04,899/ - . THE SAID ADDIT ION WAS UPHELD BY THE CIT(A). THERE IS NO MERIT IN THE SAID ORDERS OF AUTHORITIES BELOW, WHERE ON THE FIRST HAND, THE ADDITION IS UPHELD IN THE HANDS OF ASSESSEE ON ACCOUNT OF UNEXPLAINED PURCHASES AT RS.12,73,456/ - . THERE IS NO EVIDENCE BROUGHT ON RECOR D BY THE ASSESSING OFFICER OR THE CIT(A) THAT THE ASSESSEE HAS MADE CORRESPONDING SALES TO THE SAID PURCHASES AND IN THE ABSENCE OF THE SAME, NO 12 ITA NO. 1085/PUN/2013 ESTIMATION COULD BE MADE ON ACCOUNT OF GP RATE. THE GROUND OF APPEAL NO.9 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 31. THE GROUND OF APPEAL NO.10 RAISED BY THE ASSESSEE READS AS UNDER: - 10) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ADDITION ON ACCOUNT OF LOW HOUSE HOLD EXPENSES OF RS. 40,000/ - CONFIRMED BE DELETED. 32. THE NEXT ADDITION IS ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS. THE TOTAL HOUSEHOLD WITHDRAWALS SHOWN BY THE ASSESSEE FOR THE MAINTENANCE OF FAMILY OF FIVE MEMBERS WAS RS.1,14,500/ - . CONSIDERING THE SIZE OF THE FAMILY, COST OF LIVING, COST OF EDUCATION OF CHILDREN, THE ASSESSI NG OFFICER ESTIMATED THE EXPENSES AT RS.4,000/ - PER MONTH AND RESULTING IN ADDITION OF RS.1,25,500/ - . THE CIT(A) HAS SCALED DOWN THE ADDITION AND ALLOWED RELIEF OF RS.40,000/ - . 33. THE ASSESSEE BY WAY OF GROUND OF APPEAL NO.10 HAS POINTED OUT THAT THE ADDITION ON ACCOUNT OF LOW HOUSEHOLD EXPENSES OF RS.40,000/ - CONFIRMED BY THE CIT(A) BE DELETED. THERE IS NO MERIT IN THE GROUND OF APPEAL RAISED BY THE ASSESSEE, WHERE THE ASSESSEE HAD GOT RELIEF OF RS.40,000/ - AND THE SAME IS DISMISSED. 34. THE GROUND OF APPEAL NO.11 RAISED BY THE ASSESSEE READS AS UNDER: - 11) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW AND PERUSAL OF THE APPEAL ORDER OF THE CIT(A) REVEALS THAT THE SAME IS NOT A SPEAKING ORDER IN CONFORMITY WITH THE PROVISIONS OF S. 250(6) OF THE ACT. THE LD. CIT(A) HAS JUST CONFIRMED THE ADDITIONS MADE BY THE A.O. WITHOUT ASSIGNING ANY COGENT REASONS AS PER LAW. IT BE HELD ACCORDINGLY. 35. THE ASSESSEE BY WAY OF GROUND OF APPEAL NO.11 IS AGGRIEVED BY THE ORDER OF CIT(A) BEING NOT SPEAKING ORDER. THERE IS NO MERIT IN THE SAID PLEA RAISED BY THE ASSESSEE. THE CIT(A) HAS INDIVIDUALLY DEALT WITH EACH OF THE ISSUES AND HAVE CONFIRMED THE ADDITION BUT THAT CANNOT BE THE REASON TO HOLD 13 ITA NO. 1085/PUN/2013 THAT IT WAS NOT SPEAKING ORDER IN CONFORMITY WITH THE PROVI SIONS OF SECTION 250(6) OF THE ACT. THE GROUND OF APPEAL NO.11 RAISED BY THE ASSESSEE IS THUS, DISMISSED. 36. THE GROUND OF APPEAL NO.12 RAISED BY THE ASSESSEE READS AS UNDER: - 12) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEVY OF INTEREST U/S 234B AND 234C IS NOT JUSTIFIED. THE LEVY OF INTEREST BE QUASHED. 37. THE GROUND OF APPEAL NO.12 IS AGAINST LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT, WHICH IS CONSEQUENTIAL AND HENCE, THE SAME IS DISMISSED. 38. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRO NOUNCED ON THIS 28 TH DAY OF APRIL , 201 7 . SD/ - ( SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE; / DATED : 28 TH APRIL , 2017 . GCVSR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS) , KOLHAPUR, 4. THE CIT ( CENTRAL), PUNE. 5 . , , - , / DR, ITAT, SMC BENCH, PUNE. 6 . / GUARD FILE. / BY ORDER, // TRUE COPY// / ASSISTANT REGISTRAR , / ITAT, PUNE