ITO, New Delhi V. M/s Hisaria Impex Pvt. ltd., New Delhi

ITA 3847/DEL/2012

• Counselvise Citation: 384720114 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 24-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Rejection of books of accounts; Depreciation; Additional evidence
• Section: 143(3); 133(6); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI G. D. AGARWAL, VICE PRESIDENT & SHRI H.S.SIDHU, JUDICIAL MEMBER ITA NO. 3847/DEL/12 ASSESSMENT YEAR: 2007-08 ITO VS. HISARIA IMPEX P. LTD., WARD- 12(4), ROOM NO. 331 WZ- 9, STREET NO. 13, C.R.BUILDING I.P.ESTATE GURUNANAK NAGAR NEAR CRPF CAMP (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SATPAL SINGH, SR. DR ASSESSEE BY : SHRI RAJIV JAIN, CA ORDER PER H.S.SIDHU, J.M : THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST TH E IMPUGNED ORDER DATED 11/05/2012 PASSED BY CIT(A), NEW DELHI, ASSES SMENT YEAR 2007- 08. 2. THE FACTS RELATING TO THE ISSUE IN D ISPUTE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ELECTRONICALLY FOR THE ASSESSMENT YEAR 2007-08 ON 31/10/2007 DECLARING AN INCOME OF RS. 4, 02,020/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 ON 2 3/02/2009. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) WAS ISSUED ON 16/09/2008. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPORT OF GRANITE, MARBLE AND OTHER NATURAL STONES. IT ALSO IMPORTS FO OD STUFF LIKE DRY GINGER AND GUM ARABIC, PROCESSES IT AND SELLS IT IN THE LO CAL MARKET. . ITA NO. 3847/DEL/2 012 2 3. IN RESPONSE TO THE STATUTORY NOTICES THE AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE APPEARED IN THE ASSE SSMENT PROCEEDING BUT IN THE LAST STAGES OF THE PROCEEDINGS, NO COMPL IANCE HAS BEEN MADE IN THIS CASE FOR THE BEST REASONS KNOWN TO THE ASSESSE E. THE ASSESSING OFFICER FIXED THE CASE FOR 22.12.2009 FOR FILING DE TAILS / EXPLANATION AND CASE WAS ADJOURNED FOR 23/12/2009, ON 23/12/2009, NOBODY APPEAR NOR ANY ADJOURNMENT SOUGHT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 144 OF THE ACT VIDE ORDER DATED 29/12/2009 AND ASSE SSED THE INCOME AT RS. 45,04,793/- AFTER MAKING ADDITIONS AGGREGATING TO RS. 41,02,774/- TO THE RETURNED INCOME WHICH INCLUDES THE FOLLOWING AD DITIONS :- LIABILITY TOWARDS SUPPLIER (SHRI SHYAM GRANITE & MA RBLES) RS. 10,11,900/- LIABILITY TOWARDS SUPPLIER (LOVELY INDUSTRIES ) RS. 3,60,000/- DISALLOWANCE OF DIRECTORS REMUNERATION RS. 1,36,000/- DISALLOWANCE OF DEPRECIATION RS. 785 0/- DISALLOWANCE OUT OF TELEPHONE & ELECTRICITY EXPENSE S RS. 20,000/- TRADING ADDITION RS. 25,67,024/- 4. THE ASSESSEE AGGRIEVED BY THE ASSESSMENT O RDER DATED 29.12.2009 PASSED BY THE ASSESSING OFFICER FILED ON APPEAL BEFORE LD. FIRST APPELLATE AUTHORITY WHO VIDE IMPUGNED ORDER D ATED 11.5.2012 DELETED THE ADDITION IN DISPUTE BY PARTLY ALLOWING THE APPE AL FILED BY THE ASSESSEE. 5. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNED ORDER DATED 11.5.2012 PASSED BY THE CIT(A) AND FILED THE PRESENT APPEAL. LD DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER P ASSED BY THE ASSESSING OFFICER AND THE CONTENTION RAISED BY THE REVENUE IN ITS GROUNDS OF APPEAL. ON THE CONTRARY, LD. COUNSEL FOR THE ASS ESSEE RELIED UPON IMPUGNED ORDER PASSED BY THE CIT(A) AND CONTENDED T HAT LD. FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITIONS IN DI SPUTE ON THE BASIS OF . ITA NO. 3847/DEL/2 012 3 ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AND AFTE R TAKING THE REMAND REPORT FROM THE ASSESSING OFFICER FOR WHICH THE ASS ESSING OFFICER HAVE NOT RAISED ANY OBJECTION FOR THE ADMISSION OF ADDITIONA L EVIDENCES FILED BY THE ASSESSEE. HE REQUESTED THAT APPEAL FILED BY THE REV ENUE MAY BE DISMISSED. 6. WE HAVE HEARD BOTH THE PARTIES AND PE RUSED THE ORDERS PASSED BY THE REVENUE AUTHORITY. AS PER THE ISSUE INVOLVED IN GROUND NO. 1 REGARDING DELETION OF ADDITION OF RS. 10,11,900/- O N ACCOUNT OF LIABILITY TOWARDS SUPPLIER THAT IS SHRI SHYAM GRANITE AND MAR BLES. THE ASSESSING OFFICER HAS MADE THIS ADDITION TREATING THIS LIABIL ITY AS A BOGUS. THE PLEA OF THE ASSESSEE THAT DURING THE YEAR ASSESSEE HAD OUTS TANDING CREDITOR OF RS. 34,89,550/- AS ON 31/03/2007 IN THE NAME OF M/S. SH REE SHYAM GRANITE & MARBLE (SSGM) AGAINST THE REQUISITION OF A.O. DATE D 13.11.2009, COPY OF ACCOUNT ALONGWITH CONFIRMATION OF THE BALANCE FROM THE CREDITOR WAS SUBMITTED BEFORE THE A.O. DURING THE COURSE OF PROC EEDING. THE A.O. ALSO ISSUED NOTICE U/S 133(6) OF THE ACT TO M/S. SSGM TO CONFIRM THE BALANCE OUTSTANDING IN THE BOOKS OF ACCOUNT OF M/S SSGM. B UT NO REPLY WAS RECEIVED FROM SSGM AGAINST THE SAID NOTICE. 7. AS STATED IN THE ORDER, ON ENQUIRY FROM T HE ASSESSING OFFICER OF SSGM I.E. ITO SIKAR, IT WAS LEARNT THAT THE CASE OF SSGM WAS ALSO UNDERGOING SCRUTINY FOR ASSESSMENT YEAR 2007-08 AND THAT SSGM HAD SHOWN THE DEBIT BALANCE OF RS. 24,77,650/- AGAINST THE ASSESSEE COMPANY. AS PER THE ASSESSMENT ORDER A NOTICE IS ALLEGED TO HAVE BEEN ISSUED U/S 133(6) FROM THE OFFICE OF ITO SIKAR TO M/S HISSARIA IMPEX (PVT.) LTD. WHICH WAS NOT RESPONDED TO INITIALLY AND WHEN THE MATTER WAS ACTIVELY PURSUED, A FAX WAS RECEIVED ON 18.12.2009 AT THE OFFICE OF ADD L. CIT SIKAR (WHICH WAS ALLEGED TO BE RECEIVED FROM HISSARIA IMPEX (P.) LTD .) REVEALING THE CLOSING BALANCE AT RS. 24,80,166/-. THEREUPON, AFTER DELIBE RATIONS WITH THE ITO SIKAR, AN AFFIDAVIT WAS RECEIVED BY THE ITO SIKAR F ROM THE PROPRIETOR OF . ITA NO. 3847/DEL/2 012 4 SSGM STATING THE DEBIT BALANCE OF HISSARIA IMPEX (P .) LTD. AT RS. 24,77,650/- WHICH IN TURN WAS RECEIVED BY THE A.O. OF THE ASSESSEE COMPANY THROUGH FAX ON 29.12.2009. 8. THE ASSESSEE CONTENDED THAT NO NOTICE I SSUED U/S 136(6) FROM THE OFFICE OF ITO, SIKAR WAS EVER RECEIVED BY ASSESSEE COMPANY AND AS SUCH FAXING ANY STATEMENT OF ACCOUNTS DOES NOT A T ALL ARISES. THE STATEMENT OF ACCOUNT ALLEGED TO BE RECEIVED ON 18.1 2.2009 THROUGH FAX DEPICTING THE CLOSING BALANCE OF RS. 24,80,166/- HA S NO EVIDENTIARY VALUE MORE SO WHEN THE SAME IS ON A PLAIN PAPER WHICH IS UNDATED AND EVEN UNSIGNED. ON A RECONCILIATION OF THE ACCOUNT OF M/S SSGM AS SHOWN IN THE BOOKS OF THE ASSESSEE COMPANY WITH THAT OF THE ALLE GED STATEMENT WHICH THE ASSESSEE HAS FILED BEFORE THE LD. FIRST APPELLA TE AUTHORITY. THE ASSESSEE CONTENDED THAT IT CAN BE PROVED BEYOND DOU BT THAT THE SAID STATEMENT IS A FORGED ONE AND HAS NOTHING TO DO WIT H THE ASSESSEE COMPANY. 9. AS REGARD TO THE AFFIDAVIT FILED BY THE M/S SSGM WITH ITO, SIKAR, SIKAR IS CONCERNED THE ASSESSEE SUBMITTED TH AT SSGM WAS ALSO UNDERGOING SCRUTINY AND THE AFFIDAVIT WAS FURNISHED BY M/S SSGM IN HIS OWN CASE. NO AFFIDAVIT WAS FURNISHED BY M/S SSGM BE FORE ASSESSING OFFICER OF THE ASSESSEE COMPANY. ASSESSEE FURTHER, STATED THAT COPY OF AFFIDAVIT RECEIVED BY A.O. FROM THE ITO, SIKAR ONLY REVEALS ABOUT THE CLOSING BALANCE AND NO STATEMENT OF ACCOUNT FOR THE YEAR 20 06-07 HAS BEEN EVER RECEIVED FROM M/S SSGM. ASSESSEE ALSO CONTENDED THA T THE COPY OF AFFIDAVIT WAS RECEIVED BY A.O. 29.12.2009 AND ASSES SMENT ORDER PASSED ON THE SAME DAY. THE ASSESSING OFFICER HAS NOT GIVE N ANY OPPORTUNITY TO THE ASSESSEE NOR ANY EFFORT WERE MADE TO RECONCILE THE DIFFERENCE. ASSESSEE ALSO CONTENDED THAT ALLEGED THE AFFIDAVIT WAS NEVER REVEALED TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. AN AFFIDAVIT AFFIRMING ALL FACTS FORM PART OF PAPER BOOK OF THE ASSESSEE FILED BEFORE THE LD. FIRST . ITA NO. 3847/DEL/2 012 5 APPELLATE AUTHORITY. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 10,11,900/- ON THE BASIS OF THESE TWO DOCUMENTS AS RECEIVED THROUGH ITO, SIKAR WHICH IS CONTRARY TO THE LAW AND FACTS ON THE FILE. 10. LD. FIRST APPELLATE AUTHORITY HAS CONSID ERED THE ALL ARGUMENTS OF THE PARTIES AND PERUSED THE DOCUMENTAR Y EVIDENCES FILED BY THE ASSESSEE AND HAS RIGHTLY HELD THAT ADDITION IN DISPUTE HAS BEEN MADE ON THE BASIS OF DIFFERENCE IN BALANCES OF A PARTICU LAR DATE. HE, FURTHER, HELD THAT A COPY OF AFFIDAVIT WAS RECEIVED BY A.O. ON 29 .12.2009 AND AO PASSED AN ORDER ON THE SAME DATE WITHOUT GIVING OPPORTUNIT Y TO THE ASSESSEE AND WITHOUT MAKING AN EFFECTS TO RECONCILE THE DIFFEREN CE. HE IS OF THE VIEW THAT SAID AFFIDAVIT WAS NEVER REVEALED TO THE APPELLANT DURING THE ASSESSMENT PROCEEDING. THE ASSESSING OFFICER COMPLETED THE ASS ESSMENT AND MADE THE ADDITION IN DISPUTE ON THE BASIS OF THESE TWO D OCUMENTS WHICH HE HAS RECEIVED THROUGH ITO, SIKAR. THE LD. FIRST APPELLAT E AUTHORITY AFTER PERUSING THE DOCUMENTS FILED BY THE ASSESSEE HAS ST ATED THAT IN ABSENCE OF THE STATEMENT OF ACCOUNT CONFIRMING CLOSING BALANCE OF RS. 24,77,650/-, EVEN RECONCILIATION BETWEEN THE STATEMENT OF ACCOUN T ALLEGED TO BE RECEIVED THROUGH FAX DEPICTING CLOSING BALANCE OF R S. 24,80,166/- AND THAT DISCLOSED BY THE BOOKS OF THE ASSESSEE, IT WOULD RE VEAL THAT THREE SALES INVOICES AS ISSUED BY SSGM FOR AN AGGREGATE AMOUNT OF RS. 8,49,404/- ARE NOT ACCOUNTED FOR IN THE SAID STATEMENT. THESE ARE THE INTER STATE SALE TRANSACTIONS MADE AGAINST FORM H OF THE CENTRAL S ALES TAX ACT AND THE ASSESSEE COMPANY HAS ISSUED THE REQUIRED FORM H TO M/S SSGM AGAINST THOSE PURCHASES AFTER OBTAINING THE SAME FROM VAT D EPARTMENT, DELHI. THERE ARE OTHER DIFFERENCES MORE PARTICULARLY SHOWN IN THE RECONCILIATION STATEMENT WHICH FORMS PART OF THE STATEMENT. 11. FURTHER, M/S SSGM CONFIRM THE STATEMENT O F ACCOUNTS IN THE BOOKS OF THE ASSESSEE UP TO 31.03.2010. THIS CONFIR MATION FURTHER PROVE THE CORRECTNESS OF THE BALANCE OF RS. 34,89,550/- A S SHOWN BY THE BOOKS OF . ITA NO. 3847/DEL/2 012 6 THE ASSESSEE COMPANY AS ON 31.03.2007. AND THREE IN VOICES AS ISSUED BY SSGM FOR AN AGGREGATE AMOUNT OF RS. 8,49,404/- ARE NOT ACCOUNTED FOR IN THE SAID STATEMENT. THESE ARE THE INTER STATE SALE TRANSACTIONS MADE AGAINST FORM H OF THE CENTRAL SALES TAX ACT AND T HE ASSESSEE COMPANY HAS ISSUED THE REQUIRED FORM H TO M/S SSGM AGAINST THOSE PURCHASES AFTER OBTAINING THE SAME FROM VAT DEPARTMENT, DELHI . LIKEWISE, THERE ARE OTHER DIFFERENCES MORE PARTICULARLY SHOWN IN THE RE CONCILIATION STATEMENT WHICH FORMS PART OF THE STATEMENT. FURTHER, M/S SSG M CONFIRMED THE STATEMENT OF ACCOUNT IN THE BOOKS OF ASSESSEE UP TO 31.3.2010. THIS CONFIRMATION, FURTHER, PROVE THE CORRECTNESS OF BAL ANCE OF RS. 34,89,550 AS SHOWN BY THE BOOKS OF THE ASSESSEE COMPANY AS ON 31 .3.2007. 12. LD. FIRST APPELLATE AUTHORITY HAS PERUSED T HE TWO STATEMENTS WHICH SHOW BALANCES AS RS. 34,89,550/- THAT BALANCE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, AND RS. 24,77,650/-. AS PE R AFFIDAVIT FROM SSGM RECONCILED THE SAME AS STATED ABOVE AND FINALLY HAS RIGHTLY HELD THAT THERE IS NO DISCREPANCY IN THE BOOKS OF ACCOUNTS OF THE A SSESSEE AND DELETED THE ADDITION IN DISPUTE OF RS. 10,11,900/-. 13. IN VIEW OF THE AFORESAID DISCUSSION, WE ARE OF THE VIEW THAT LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY RECONCILE D THE TWO STATEMENT AND FINALLY HAS RIGHTLY HELD THAT THERE IS NO DISCREPAN CY IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND HAS RIGHTLY DELETED THE ADDITIO N IN DISPUTE. WE UPHOLD THE IMPUGNED ORDER ON THE ISSUE INVOLVED IN GROUND NO.1. 14. AS REGARD TO THE DELETION OF ADDITION OF RS. 3,,60,000/- ON ACCOUNT OF LIABILITY OUTSTANDING TOWARDS ONE OF THE SUPPLIERS M/S LOVELY INDUSTRY. THE ASSESSEE CONTENDED THAT DURING THE YE AR UNDER APPEAL ,ASSESSEE HAD OUTSTANDING CREDIT TO RS. 3,60,000/- IN THE NAME OF ONE M/S LOVELY INDUSTRIES. THE ASSESSING OFFICER ISSUE NOTI CE U/S 133(6) OF THE ACT . ITA NO. 3847/DEL/2 012 7 ASKING FOR BALANCE CONFIRMATION AND RECEIVED STATEM ENT OF ACCOUNT CONFIRMING NIL BALANCE ON THE BASIS OF DIFFERENCE B ETWEEN TO ACCOUNT. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 3,60,000 /- CONSIDERING THIS AS A BOGUS LIABILITY. 15. AFTER HEARING THE BOTH PARTIES, LD. FIRS T APPELLATE AUTHORITY HAS HELD THAT ASSESSEE WAS DEALING WITH M/S LOVELY INDUSTRY THROUGH THE MEDIATOR ONLY AND ON SOME OCCASION PAYMENT WAS MADE TO LOVELY INDUSTRIES BY THESE MEDIATOR. DURING THE YEAR ALSO PAYMENT OF RS. 1,80,000/- BY CHEQUE DATED 28.8.2006 WAS MADE BY ON E SDB GRANITES P. LTD. TO M/S LOVELY INDUSTRIES ON BEHALF OF THE ASSE SSEE AS SHOWN BY CONFIRMATION STATEMENT RECEIVED FROM M/S LOVELY IN DUSTRIES. ASSESSEE IS HAVING REGULAR BUSINESS WITH SDB GRANITES P. LTD., THIS ADJUSTMENT ENTRY SOMEHOW, GOT A MISS AND COULD NOT BE PASSED THROUGH THE BOOKS OF ACCOUNT OF THE APPELLANT COMPANY LEAVING A SIMILAR DIFFERENCE IN THE ACCOUNT OF M/S SDB GRANITES P. LTD. ASSESSEE FILED ITS NECESSARY EVIDENCES FOR SUBSTANTIATING ITS CLAIM BEFORE THE L D. FIRST APPELLATE AUTHORITY AS AN ADDITIONAL EVIDENCES UNDER RULE 46A OF IT RULES, 1962. 16. LD. FIRST APPELLATE AUTHORITY HAS TAKEN A REMAND REPORT DATED 11.4.20012 FROM THE ASSESSING OFFICER IN WHICH THE ASSESSING OFFICER HAS WRITTEN THAT HE HAS CROSS VERIFIED THE CONFIRMATION S AND COPIES OF ACCOUNTS SUBMITTED BY THESE ENTITIES FROM THE BOOKS OF ACCOU NTS OF THE ASSESSEE AND HE HAS NOT RAISED ANY OBJECTION FOR THE ADMISSION O F ADDITION EVIDENCES. ON THE BASIS OF REMAND REPORTS AS WELL AS THE ADDITION AL EVIDENCES FILED BY THE ASSESSEE, LD. FIRST APPELLATE AUTHORITY HAS HELD TH AT THE PAYMENT OF RS. 1,80,000/- MADE BY CHEQUE DATED 28.8.2006 WAS MADE BY SDB GRANITES P. LTD. TO M/S LOVELY INDUSTRY ON ASSESSEES BEHALF AS SHOWN BY THE CONFIRMATION STATEMENT OF M/S LOVELY INDUSTRY. THE PAYMENTS WERE RECEIVED BY M/S LOVELY INDUSTRIES RB ENTERPRISES, A SSESSEE HAS ACKNOWLEDGED THESE AMOUNT AS DUE TO RB ENTERPRISES. NOW SINCE THIS . ITA NO. 3847/DEL/2 012 8 ENTRY OF RS. 1,50,000/- AND 30,000/- HAS BEEN INTER EST WITH THE ACCOUNT OF M/S RB ENTERPRISES. THE ASSESSING OFFICER IN THE RE MAND REPORT HAS STATED THAT THESE CONFIRMATIONS OF COPY OF ACCOUNT, ACCOUN T SUBMITTED BY THESE ENTITIES HAVE BEEN CROSS VERIFIED FROM THE ACCOUNTS BOOKS OF THE ASSESSEE. 17. ON THE BASIS OF ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AND THE REMAND REPORT TAKEN FROM THE ASSESSING OFFI CER. LD. FIRST APPELLATE AUTHORITY FULLY SATISFIED WITH THE EXPLANATION OF T HE ASSESSEE AND HAS RIGHTLY HELD THAT THE AMOUNT OF RS. 3,60,000 HAS FULLY BEE N EXPLAINED BY THE ASSESSEE DURING THE COURSE OF APPEAL AND HE DELETED THE ADDITION OF RS. 3,60,000/-. WE ARE OF THE VIEW THAT LD. FIRST APPEL LATE AUTHORITY AFTER APPRECIATING THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AND ON THE BASIS OF REMAND REPORT HAS RIGHTLY DELETED THE ADDI TION OF RS.3,60,000/-. WE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE INVOLVE IN GROUND NO. 2. 18. AS REGARDS TO THE ISSUE INVOLVED IN GROUN D NO. 3 IN WHICH THE REVENUE HAS CHALLENGED THE DELETION FINDING OUT OF THE LD. FIRST APPELLATE AUTHORITY WHEREIN THE REMUNERATION OF THE DIRECTOR AMOUNTING TO RS. 1,36,000/- HAS BEEN ALLOWED. THE ASSESSING OFFICE R ASKED THE ASSESSEE TO PRODUCE SMT. SARITA AGGARWAL FOR PERSONAL DEPOSI TION BUT ASSESSEE COULD NOT PRODUCE HER BEFORE HIM AND THE ASSESSING OFFICER HAS DISALLOWED THE REMUNERATION OF RS. 1,36,000/- PAID TO THE DIRE CTOR OF THE ASSESSEE COMPANY. BUT IN THE APPELLATE PROCEEDING THE ASSESS EE CONTENDED THAT SMT. SARITA AGGARWAL IS A PROMOTOR DIRECTOR OF THE COMPANY SINCE 3 RD OCTOBER, 2009 AND IS LOOKING AFTER THE ADMINISTRATI ON OF THE COMPANY IN GENERAL AND IS A REGULAR INCOME TAX ASSESSEE IN CIR CLE 12(1), NEW DELHI. THE ASSESSEE HAS ALSO PRODUCED THE COPY OF RESOLUTI ON PASSED IN THE MEETING OF BOARD OF DIRECTOR OF THE COMPANY ON 25.4 .2006 AS WELL AS ITR COPY OF SMT. SARITA AGGARWAL IN THE ASSESSMENT PROC EEDING. ASSESSEE HAS ALSO CONTENDED THAT SMT. SARITA AGGARWAL WAS AWAY T O HER HOME TOWN AT . ITA NO. 3847/DEL/2 012 9 PILANI, HER NATIVE PLACE FOR SOME RITUALS AND SHE W AS EXPECTED TO COME BACK AFTER 23.12.2009. ASSESSEE REQUESTED FOR ADJOU RNMENT OF THE CASE FOR 24.12.2009 BUT THE ASSESSING OFFICER REJECTED THE R EQUEST OF ASSESSEE AND ADJOURN THE HEARING ON 23.12.2009 AND REFUSED TO EN TERTAIN THE DIRECTORS WHEN THEY APPEARED BEFORE THE ASSESSING OFFICER ON 24.12.2009. LD. FIRST APPELLATE AUTHORITY AFTER APPRECIATING THE FACTS AN D CIRCUMSTANCES OF THE CASE ON THE ISSUE IN DISPUTE HAS ALLOWED OF REMUNER ATION OF RS. 1,36,000/- PAID TO SMT. SARITA AGGARWAL AND HAS HELD THAT NON- DEPOSITION BEFORE THE ASSESSING OFFICER COULD NOT BE GROUND FOR DISALLOWI NG REMUNERATION PAID TO THE DIRECTOR OF THE ASSESSEE COMPANY WHICH OTHERWIS E IS SUPPORTED BY SUFFICIENT EVIDENCES AND OFFERED FOR TAX IN HER INC OME TAX RETURN. WE ARE FULLY WITH THE AGREEMENT OF THE FINDINGS GIVEN BY T HE LD. FIRST APPELLATE AUTHORITY IN WHICH HE HAS ALLOWED THE REMUNERATION OF RS. 1,36,000/- PAID TO SMT. SARITA AGGARWAL AND DISMISSED THIS GROUND N O. 3 RAISED BY THE REVENUE. 19. AS REGARD TO DELETION OF ADDITION OF RS. 25,7,024/- ON ACCOUNT OF DISCREPANCIES FOUND AND OVERALL MARGIN I N THE TRADING BY ADOPTING THE GP RATE OF 10% BY THE ASSESSING OFFICE R AGAINST THE GP RATE SHOWN BY THE ASSESEE AT THE RATE OF 6.02% OF THE TO TAL SHARES OF RS. 64,45,7,811 BY APPLYING THE PROVISION OF SECTION 14 5(3) OF THE IT ACT. 20. LD. FIRST APPELLATE AUTHORITY AFTER CON SIDERING THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE ON THE ISSUE IN DIS PUTE AS WELL AS COMPARATIVE CHART SHOWING GP RATE FOR EARLIER YEARS HAS DELETED THE DISALLOWANCE TO THE TUNE OF RS. 25,7,024/-. 21. AFTER HEARING BOTH THE PARTIES AND PER USING THE ORDER PASSED BY THE REVENUE AUTHORITY, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER MAINLY REJECTED THE BOOKS OF ACCOUNTS FOR T HE REASON THAT CERTAIN CONFIRMATIONS FROM THE PARTIES COULD NOT BE SUBMITT ED OR THAT THE CERTAIN . ITA NO. 3847/DEL/2 012 10 REPLIES COULD NOT BE RECEIVED AGAINST ISSUE OF NOTI CE U/S 133(6) OF THE ACT AS WELL AS CERTAIN DIFFERENCES IN THE ACCOUNTS OF T WO PARTIES. AS A MATTER OF RECORD THE NOTICE U/S 133(6) WERE ISSUED ON 01.12.2 009 AND THE ASSESSMENT WAS GETTING TIME BARRED ON 31.12.2009. C ERTAIN NOTICE WAS RETURNED ANSWER FOR THE REASON THAT THE ADDRESSEES HAVE SHIFTED THEIR OFFICES OR FOR CLOSED THEIR BUSINESS. ASSESSEE TRIE D HIS BEST TO GET THE CONFIRMATIONS FROM THE PARTIES BUT COULD NOT GATHE R THE SAME WITHIN TIME AS MOST OF THE PARTIES WERE RESIDENT OUTSIDE DELHI. AS SESSING OFFICER HAS NOT GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE AND CO MPLETED ASSESSMENT ON THE SECTION 144 OF THE ACT ON 29.12.2009.THE CONTEN TION OF THE ASSESSEE, IS THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE DECLARING RESULTS AND ASSUMING THE GROSS PROFIT AT RS. 64,45, 781/-, COMPUTED @ 10% OF THE TURN OVER OF RS. 6,44,57,811/- RESULTING IN ADDITION OF RS. 25,67,024/- WHICH IS ON THE PURELY ON THE BASIS OF ASSUMPTION A ND HYPOTHETICAL AND INCOMPLETE DISREGARD TO THE FINANCIAL POSITION AND HISTORY OF THE ASSESSEE ESPECIALLY AGAINST THE COMPARABLE ON THE SHOWING GP RATE OF EARLIER YEARS EVEN FOR AY 2006-07, GP RATE 5.02% HAS BEEN ACCEPTE D IN ASSESSMENT U/S 143(3) OF THE IT ACT. 22. LD. COUNSEL FOR THE ASSESSEE HAS CITED VAR IOUS CASE LAW BEFORE THE LD. FIRST APPELLATE AUTHORITY WHICH HAS BEEN CONSIDERED BY THE LD. FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER AND FINALLY THE LD. FIRST APPELLATE AUTHORITY HAS HELD THAT THE ASSESSING OFF ICER WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS BY APPLYING SECTION 145(3) OF THE IT ACT AND ESTIMATING NET PROFIT AT THE RATE OF 10% OF THE GROSS RECEIPTS. LD. FIRST APPELLATE AUTHORITY HAS ALSO HELD THAT GP RATE DURI NG THE YEAR UNDER CONSIDERATION IS BETTER AS COMPARED TO THE PREVIOUS YEARS . THE ASSESSEE HAS SHOWN ITS GP RATE AS 6.02 % IN THE YEAR UNDER C ONSIDERATION AS COMPARED TO 5.02% IN THE PREVIOUS YEAR AND 5.91 IN THE YEAR PREVIOUS TO PREVIOUS YEAR. . ITA NO. 3847/DEL/2 012 11 23. KEEPING IN VIEW THE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE AS DISCUSSED ABOVE, THE LD. FIRST APPELLATE AU THORITY HAS DELETED THE ADDITION DISALLOWANCE OF RS. 25,67,024/- ON THE BAS IS OF DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE AS WELL AS VARIOUS CASE LAW RELIED UPON BY THE ASSESSEE. WE ARE OF THE VIEW THAT LD. FIRST AP PELLATE AUTHORITY HAS PASSED THE WELL REASONED ORDER ON THE BASIS OF DOCU MENTARY EVIDENCES FILED BY THE ASSESSEE AND HAS RIGHTLY DELETED THE A DDITION IN DISPUTE. THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE IMP UGNED ORDER AND WE UPHOLD THE SAME BY DISMISSING THE APPEAL FILED BY T HE REVENUE. 24. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JUNE, 2014. SD/- SD/- (G.D.AGARWAL) (H.S.SIDHU) VICE PRESIDENT JUDICIAL MEMBER DATED 27 TH JUNE, 2014 B.RUKHAIYAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. CIT (ITAT), NEW DELHI