GUMAN FURNITURE & SERVICES P LTD., Jaipur V. ACIT, Jaipur

ITA 394/JPR/2011

• Counselvise Citation: 39423114 RSA 2011
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Unexplained cash credit; Additional evidence; Commercial expediency; Retraction
• Section: 68; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.394/ JP/2011 ASSESSMENT YEAR 2008-09 PAN: AABCG 7610 G M/S. GUMAN FURNITURE & SERVICE (P) LTD. VS. THE A CIT A-2, RANA PRATAP NAGAR CENTRAL CIRCLE- 1 JHOTWARA, JAIPUR JAIPUR (APPELLANT ) (RESPONDENT) ITA NO.418/ JP/2011 ASSESSMENT YEAR 2008-09 PAN: AABCG 7610 G THE DCIT VS. M/S. GUMAN FURNITURE & SERVICE (P) LTD CENTRAL CIRCLE- 1 A-2, RANA PRATAP NAGAR JAIPUR JHOTWARA, JAIPUR (APPELLANT ) (RESPONDENT) ASSESSEE BY: SHRI K.L. MOOLCHANDANI DEPARTMENT BY : SHRI SUNIL MATHUR DATE OF HEARING: 09-08-2011 DATE OF PRONOUNCEMENT:02-09-2011 ORDER PER N.L. KALRA, AM:- THE ASSESSEE AS WELL AS REVENUE HAVE FILED APPEA LS AGAINST THE ORDER OF THE LD. CIT(A), CENTRAL JAIPUR DATED 28-01-2011 FOR THE ASSESSMENT YEAR 2008-09. 2 2.1 THE FIRST GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN SUSTAINING THE TRADING ADDITION TO THE EXTENT OF RS . 2,43,468/- OUT OF ADDITION OF RS. 5,22,592/- MADE BY THE AO. 2.2 THE REVENUE VIDE GROUND NO. 1 IS AGGRIEVED AGAI NST DELETION OF ADDITION OF RS. 2,79,124/-. 2.3 THE AO NOTICED THAT THE ASSESSEE HAS DECLARED T HE TOTAL TURNOVER OF RS. 1,75,37,176/- AND SHOWED THE G.P.RATE RS. 17,50,809 /-BY GIVING THE G.P.RATE OF 9.98% AS COMPARED TO G.P.RATE OF 9.92% OF THE IMMEDIATELY PRECEDING YEAR. SEARCH PROCEEDINGS WERE UNDERTAKEN DURING THE PREVIOUS YEAR AND AS ON THE DATE OF SEARCH I.E. 16-11-07, TH E STOCK FOUND AT THE PREMISES WAS TO THE EXTENT OF RS. 36,57,796/-. AS P ER BOOKS OF ACCOUNT, IT SHOULD HAVE BEEN RS. 60,60,841/-. THUS THE SHORTAGE OF STOCK AMOUNTING TO RS.24,03,045/- WAS FOUND. THE AO APPLIED THE G.P.RA TE OF 15% ON THE TURNOVER OF RS. 1,51,56,010/- AND MADE THE TRADING ADDITION OF RS. 5,22,592/- . 2.4 BEFORE THE LD. CIT(A), THE ASSESSEE MADE THE F OLLOWING SUBMISSIONS. 2.3 SUBMISSION OF THE ASSESSEE IS AS FALLOWS:- A) THE LD. A.O. COMPLETED THE ASSESSMENT WITHOUT PROVI DING ADEQUATE AND REASONABLE OPPORTUNITIES TO THE ASSESSEE TO EXP LAIN HIS CASE AND FOR FILING OF EVIDENCES. SHRI SHANKAR KHANDELWAL IS THE MAIN DIRECTOR OF THE COMPANY WHO WAS LOOKING AFTER ALL THE AFFAIR S OF THE COMPANY 3 WAS SUFFERING FROM CANCER. THE ASSESSEE COULD NOT S UBMIT THE EVIDENCE AND REQUISITE OTHER REQUIRED INFORMATION. HOWEVER, THE ASSESSEE HAS PRODUCED COMPLETE AUDITED BOOKS OF ACC OUNTS WITH ANNEXURE BEFORE A.O. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS FOR VERIFICATION THE TRADING RESULTS. B) IT IS ALSO SUBMITTED THAT THE A.O. HAS MADE THE TRA DING ADDITION APPLYING G.P. RATE OF 15% AS PER FINDINGS GIVEN IN THE ASSESSMENT ORDERS OF LAST YEARS WHICH IS WITHOUT ANY BASIS OR ON SOUND FOOTING. THE ADDITION MADE BY A.O. ON HIS OWN SWEET WILL AND NOT BASED ON THE FACTS OF THE CASE. THE G.P. RATE APPLIED BY THE A.O. IS HIGHLY EXCESSIVE AND NOT AT ALL POSSIBLE IN THIS LINE OF T RADE. THE AO HAS NOT GIVEN ANY COMPARABLE CASE OF THIS LINE. THE ASSESSE E HAS SHOWN BETTER RESULTS OF HIS BUSINESS IN COMPARE TO PRECED ING YEAR IN TRADING ACCOUNT. HE HAS SHOWN G.P. 9.98% AS AGAINST 9.92%% OF LAST YEAR. THUS THE ASSESSEE HAS SHOWN BETTER RESULTS IN COMPA RE TO LAST YEAR G.P. RATE. C) THE FINDINGS OF THE AO ARE CONTRARY ITSELF. ONE SID E HE ESTIMATED THE SHORT STOCK BY ACCEPTING THE GP RATE OF 9.98% AND O N OTHER SIDE HE ESTIMATED THE GP OF THE ASSESSEE FOR WHOLE YEAR BY APPLYING GP RATE OF 15%. D) THE SHORT STOCK MAY RESULT DUE TO TWO REASONS, (I) FIRST IF SOME STOCK IS SOLD OUTSIDE THE BOOKS OR (II) IF HIGHER GP HAS BEEN DECLARED IN PREVIOUS YEARS WHICH WOULD RESULT HIGHER AMOUNT OF OPENING STOCK AND WOULD RESULT THE HIGHER AMOUNT OF BOOK STOCK, I F THE CLOSING STOCK IS CALCULATED BY APPLYING GP RATE METHOD. IN THE CASE OF THIS ASSESSEE, THE DEPARTMENT HAS CARRIED OUT INTENSIVE SEARCH OPERATIONS AND NO ANY DOCUMENT WAS FOUND SHOWING UNACCOUNTED P URCHASE AND SALES. THEREFORE, THE PRESUMPTION OF UNACCOUNTED SA LES IS NOT SUPPORTED BY EVIDENCE. THEREFORE, THE SHORTAGE OF S TOCK IS ON ACCOUNT OF SHOWING HIGHER GP IN EARLIER YEARS, WHIC H RESULTED THE HIGHER AMOUNT OF BOOK STOCK. E) THEREFORE, EVEN IF THE BOOKS OF ACCOUNTS ARE REJECT ED ON THE BASIS OF DEFECTS POINTED OUT BY THE LD. AO, NO ADDITION DESE RVES TO BE MADE BECAUSE THE TRADING RESULT OF THE ASSESSEE FOR THE CURRENT YEAR IS BETTER THAN THE LAST YEAR. RELIANCE IS PLACED ON TH E FOLLOWING DECISIONS: 4 (I) CIT VS GOTAN LIME KHANIJ UDHOG (2002) 256 ITR 243 (RAJ). (II) J.C.SHARMA VS ITO 33 TAXWORLD 80 ITAT JAIPUR BENCH 2.5 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S SUSTAIN THE ADDITION TO THE EXTENT OF RS. 2,43,468/- AFTER OBSERVING AS UNDER:- 2.4 I HAVE CONSIDERED THE SUBMISSION OF LD AR AND MATERIAL AVAILABLE ON RECORD. I FIND THAT THE AO HAS WORKED OUT BOOK STOCK BY APPLYING THE GP RATE OF 9.98% AND FOUND OUT THE SHO RTAGE OF STOCK, WHEREAS WHILE CALCULATING THE GROSS PROFIT, THE A.O . HAS APPLIED G .P .RATE OF 15%. THE A.O. WAS NOT JUSTIFIED IN TAKING DIFFERENT ON G.P FOR DETERMINING FOR SHORTAGE OF STOCK AND ANOTHER G.P. RATE FOR WORKING OUT GROSS PROFIT. I AM OF THE CONSIDERED OPINION THAT I F TRADING RESULT OF THE APPELLANT IS REJECTED THEN WHATEVER G.P. RATE IS AD OPTED BY THE A.O., SAME SHOULD BE APPLIED AS FAR AS CALCULATIONS RELAT ING TO G.P. RATE ARE CONCERNED. IN VIEW OF THE VARIOUS DEFECTS NOTICED IN THE BOOKS OF ACCOUNT IN THE EARLIER YEARS AND SAME DEFECTS BEING EXISTING DURING THE YEAR, THE A.O. WAS JUSTIFIED IN REJECTING THE TRADI NG RESULTS OF THE APPELLANT AND APPLYING THE G.P. RATE IN THE APPEAL ORDER OF THE APPELLANT IN EARLIER YEARS, THE UNDERSIGNED HAS UPHELD THE G. P. RATE OF 10% ON TURNOVER OF RS. 150.47 LAKHS IN A.Y 2004-05 AND 8% ON TURNOVER OF RS. 289.54 LAKHS IN A.Y 2005-06. CONSIDERING THAT TURNO VER DURING THE YEAR IS RS. 175.37 LAKHS, IT WILL BE REASONABLE AND APPR OPRIATE TO APPLY THE G.P. RATE OF 10% CONSIDERING THE QUANTUM OF TURNOVE R. ACCORDINGLY, THE CLOSING STOCK AS PER BOOKS AS ON THE DATE OF SURVEY /SEARCH I.E ON 16.11.07 WILL COME TO RS. 60,63,392/- AS AGAINST RS . 60,60,841/- TAKEN 5 BY THE A.O. THUS THE SHORTAGE OF STOCK WOULD COME T O RS. 24,05,596/ - AS AGAINST RS. 24,03,045/- TAKEN BY THE A.O. THUS T HE TOTAL TURNOVER INCLUDING UNACCOUNTED SALE RELATED TO SHORTAGE OF S TOCK WOULD COME TO RS. 1,99,42,773/-. TAKING G.P.@ 10%, THE ESTIMATED GROSS PROFIT WILL COME TO RS. 19,94,277/- AS AGAINST THE DECLARED G.P . OF RS. 17,50,809/-, THEREBY RESULTING INTO TRADING ADDITION TO THE EXTE NT OF RS. 2,43,468/-. IN BRIEF TRADING ADDITION OF RS. 2,43,468/- IS SUSTAIN ED AND BALANCE RS. 2,79,124/- IS DELETED. 2.6 BEFORE US, THE MADE THE FOLLOWING SUBMISSIONS T O SAY THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE PART OF THE TRADIN G ADDITION. (I) THE LD. CIT(A) HAD ERRED IN REJECTING THE BO OKS RESULTS FOLLOWING THE FINDINGS OF THE LD. AO ON THE POINT W ITHOUT ATTRIBUTING ANY REASON OR POINTING OUT ANY SPECIFI C INSTANCES OF THE UN-VOUCHED AND UNVERIFIABLE SALES AND PURCHASES . IN ABSENCE OF ANY SPECIFIC DISCREPANCY OR INSTANCE, TH E BOOK RESULTS COULD NOT BE REJECTED BY GENERAL AND CURSOR Y REMARKS. THUS SUCH CONCLUSION IS ILLOGICAL AND BAD IN LAW. (II) AGAIN, THE LD. CIT (A) DID NOT ANALYZE THE NAT URE & VOLUME OF THE TRADED GOODS, NATURE OF THE RECEIPTS OF THE PROCEEDS ETC. IN ABSENCE OF EXAMINATION OF THESE F ACTS, NO LOGICAL CONCLUSION COULD BE ARRIVED AT. IN THE PRES ENT CASE, THE LD. CIT (A) HAD APPLIED FLAT RATE OF 10% WITHOUT CA RRYING OUT SUCH AN EXERCISE. THUS SUCH WORKING IS WITHOUT ANY BASIS AND IS CONTRARY TO THE JUDICIAL DISCIPLINE. IN FACT, THE A PPELLANT CO. HAD BEEN TRADING IN ELECTRONICS. THERE IS A VAST COMPET ITION IN MARKET IN THE ELECTRONIC GOODS. GENERALLY ELECTRONI C GOODS ARE FAST SELLING GOODS WHICH YIELD VERY NOMINAL MARGIN OF PROFIT. IN THE CIRCUMSTANCES, FOR APPLYING FAIR AND REASONABLE RATE OF PROFIT ALL THESE FACTORS ARE NECESSARILY TO BE TAKEN CARE OF. THUS G.P. RATE SO APPLIED BY THE LD. CIT (A) FOR SUSTAINING S UCH ADDITION IS OBVIOUSLY ARBITRARY AND WITHOUT ANY BASIS. 6 (III) AGAIN, PAST HISTORY OF THE CASE IS VERY IMPOR TANT GUIDING FACTOR TO DETERMINE THE G.P. RATE AS HELD IN NUMBER OF JUDGMENTS, FOR READY REFERENCE KINDLY REFER TO THE FOLLOWING CITATIONS: (I) M/S KANSARA BEARING P. LTD. VS CIT 270 ITR 235(RAJ) (II) ADDL. CIT VS LAKHANI SHOES LTD. (ITAT, JAIPUR BENCH, JAIPUR) 34 TW 32 (III) J.C. SHARMA VS ITO (ITAT, JAIPUR BENCH, JAIPUR. 33 TW 80. IN VIEW OF ABOVE DISCUSSIONS, THE ADDITION OF RS. 2 ,43,468/- CONFIRMED BY THE LD. CIT (A) BY APPLYING ADHOC G. P. RATE OF 10% IS ARBITRARY AND DESERVES TO BE DELETED. 2.7 ON THE OTHER HAND, THE LD. DR DREW OUR ATTENTIO N TO THE FACT THAT THE STOCK FOUND WAS LESS WHEN SEARCH PROCEEDINGS WERE U NDERTAKEN AND ON THE SPOT VERIFICATION CLEARLY SUGGESTS THAT THE BOOKS O F ACCOUNT OF THE ASSESSEE ARE NOT CORRECT. THIS ALSO SHOWED THAT THE ASSESSEE IS INDULGING IN THE SALES OUTSIDE THE BOOKS OF ACCOUNT. IT WAS THEREFORE, SUB MITTED THAT THE AO HAS RIGHTLY INCREASED THE TURNOVER AND MADE THE TRADING ADDITION. 2.8 WE HAVE HEARD BOTH THE PARTIES. DURING THE YEAR UNDER REFERENCE, THE ASSESSEE HAS SHOWN THE G.P.RATE OF 9.98% AS AGAINST 9.92% OF THE IMMEDIATELY PRECEDING YEAR. THE AO INITIALLY MADE T HE TRADING ADDITION IN THE IMMEDIATELY PRECEDING YEAR BUT THE SAME WAS DEL ETED BY THE AO BY PASSING THE ORDER U/S 154 OF THE ACT ON 4-06-10. TH US THE G.P.RATE DISCLOSED BY THE ASSESSEE IN THE IMMEDIATELY PRECEDING YEAR H AS BEEN ACCEPTED. HENCE, 7 THE G.P.RATE SHOWN BY THE ASSESSEE IN THIS YEAR IS REASONABLE. HOWEVER, WE HAVE CONSIDERED THE FACT THAT THE STOCK WAS FOUND L ESS AT THE TIME OF SEARCH. THE ASSESSEE HAS NOT PLACED ANY EVIDENCE TO SHOW TH AT SUCH STOCK LESS HAS BEEN INCLUDED IN THE SALES AFTER THE SEARCH. HENCE, ON THE DIFFERENCE OF STOCK, ONE WILL HAVE TO CONSIDER THE TRADING ADDITION. THE STOCK FOUND LESS WAS TO THE EXTENT OF RS. 24,03,045/-. CONSIDERING THE G.P. RATE DISCLOSED BY THE ASSESSEE, WE FEEL THAT THE LD. CIT(A) IS JUSTIFIED IN CONFIRMING THE TRADING ADDITION TO THE EXTENT OF RS. 2,43,468/-. HENCE, GR OUND NO. 1 OF THE ASSESSEE AND GROUND NO. 1 OF THE REVENUE BOTH ARE DISMISSED. 3.1 THE SECOND GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 10.00 LACS ON ACCOUN T OF UNEXPLAINED CASH FOUND AT THE TIME OF SEARCH AND SURRENDER AT THE TI ME OF SEARCH. 3.2 WE HAVE HEARD BOTH THE PARTIES. WE HAVE CONSIDE RED THE RETRACTION OF THE STATEMENT IN THE CASE OF SHRI SHANKAR LAL KHAND ELWAL. LOOKING TO OUR FINDINGS RECORDED IN THE CASE OF SHRI SHANKAR LAL K HANDELWAL, WE HOLD THAT THE ADDITION COULD NOT HAVE BEEN MADE SIMPLY ON THE BASIS OF THE CONFESSIONAL STATEMENT. AS PER BOOKS OF ACCOUNT PRE PARED AFTER THE SEARCH, THE CASH ON THE DATE OF SURVEY STANDS EXPLAINED. MO REOVER, THE ASSESSEE WAS FOUND SHORT IN STOCK AND THE TRADING ADDITION ON AC COUNT OF THAT SHORT STOCK 8 HAS BEEN CONFIRMED BY US. HENCE, WE HOLD THAT THE L D. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS. 10.00 L ACS. 4.1 THE THIRD GROUND OF THE ASSESSEE IS THAT THE LD . CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST PAID TO THE BANKS TO THE EXTENT OF RS. 12,66,625/- OUT OF TOTAL ADDITION OF RS. 32,02,670/ - AS MADE BY THE AO. 4.2 THE REVENUE VIDE GROUND NO. 3 IS AGGRIEVED AGAI NST THE RELIEF ALLOWED TO THE EXTENT OF RS. 19,36,045/- OUT OF DIS ALLOWANCE OF INTEREST. 4.3 THE AO HAS DISALLOWED THE ENTIRE INTEREST DEBIT ED IN THE P & L A/C ON THE GROUND THAT THE ASSESSEE HAS GIVEN INTEREST FRE E LOANS TO THE DIRECTORS AND OTHER PARTIES TOTALING TO RS. 2.98 CRORES. THE LOAN S FROM BANKS WERE TO THE EXTENT OF RS. 2.37 CRORES. 4.4 BEFORE THE LD. CIT(A), THE ASSESSEE RAISED THE FOLLOWING SUBMISSIONS. (I) THE FINDING OF THE ASSESSING OFFICER IS N OT WHOLLY BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND WITHOUT CON SIDERING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. FURTHER THE AMOUNT O F RS. 2,98,04,671/- ALSO INCLUDES THE CASH SEIZED BY THE INCOME-TAX DEP ARTMENT AMOUNTING TO RS. 10,00,000/-. DURING THE YEAR UNDER CONSIDERA TION THE ASSESSEE COMPANY HAS CHARGED INTEREST ON LOANS AND ADVANCES AT RS. 19,36,045/- AND CREDITED IN P&L ACCOUNT. THUS THE ADDITION ON A CCOUNT OF NOT CHARGING OF INTEREST ON LOANS AND ADVANCES IS NOT J USTIFIABLE, BAD IN LAW, AND UNREASONABLE, AND THUS DESERVES TO BE DELETED. (II) THE ASSESSEE FURTHER SUBMITTED DETAIL OF LOA N TAKEN AND GIVEN, WHICH IS AS UNDER:- LIST OF SECURED LOAN / CC / OD TAKEN FROM 9 NAME CLOSING BALANCE OF INTEREST FREE LOAN TAKEN CLOSING BAL. OF INTEREST BEARING LOAN TAKEN INTEREST PAID BANK OF INDIA (7865) 7,963,350.00 1,021,085.00 UNION BANK OF INDIA CC (125) 7,331,602.25 1,131,413.12 UCO BANK CC (5441) 7,062,991.81 1,050,172.00 TOTAL - 22,357,944.06 3,202,670.12 LIST OF UNSECURED LOAN TAKEN FROM NAME CLOSING BALANCE OF INTEREST FREE LOAN TAKEN CLOSING BAL. OF INTEREST BEARING LOAN TAKEN INTEREST PAID @9% NIDHI KHANDELWAL 500,000.00 SUJATA SINGH 800,000.00 TIKAM KHANDELWAL (C/A) 2,544,449.95 46,696.00 TOTAL 1,300,000.00 2,544,449.95 46,696.00 LIST OF LOANS ADVANCE GIVEN NAME CLOSING BALANCE OF INTEREST FREE LOAN GIVEN CLOSING BAL. OF INTEREST BEARING LOAN GIVEN INTEREST RECEIVED @9% CASH WITH INCOME TAX DEPARTMENT 1,000,000.00 DILIP KUMAWAT 1,124,835.00 74,835.00 G.P.THAKUR 500,000.00 GUMAN KHANDELWAL 2,830,803.00 325,589.00 KHANDELWAL BUILDCON PVT. LTD., 1,469,747.00 15,371.00 KHANDELWAL BUILDING MATERIAL SUPPLIERS 607,138.00 52,042.00 MOHANLAL KHANDELWAL 975,748.00 82,912.00 MOHANLAL KHANDELWAL S/D 400,000.00 SHANKAR KHANDELWAL 8,208,322.88 1,121,685.00 SHANKAR KHANDELWAL (ADV FOR PURCHASE) 1,050,000.00 10 SHRI GOVIND KRIPA BUILDMART PVT. LTD., 11,625,884.00 217,639.00 SUNIL FURNITURE 12,184.00 92,668.00 TOTAL 2,950,000.00 26,854,661.88 1,982,741.00 4.5 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S CONFIRMED THE ADDITION TO THE EXTENT OF RS. 12,66,625/- AFTER OBS ERVING AS UNDER:- 5.4 I HAVE CONSIDERED THE SUBMISSION OF LD AR AN D MATERIAL AVAILABLE ON RECORD. THE LD AR COULD NOT EXPLAIN TH E BUSINESS EXPEDIENCY OF THE INTEREST FREE LOANS AND ADVANCES GIVEN BY THE ASSESSEE COMPANY. THEREFORE, THE AO HAS RIGHTLY DISALLOWED T HE INTEREST. HOWEVER, THE ASSESSEE HAS SHOWN THE RECOVERY OF INT EREST OF RS. 19,36,045/- FROM THE PARTIES TO WHOM IT GAVE THE LO AN. THE DISALLOWANCE FOR THE NET INTEREST PAID WHICH COMES TO RS. 32,02, 670+ 46696- 1982741=12,66,625/- IS CONFIRMED AND THE ADDITION F OR THE REMAINING AMOUNT RS. 1936045/- IS HEREBY DELETED. 4.6 BEFORE US, THE LD. AR HAS MADE THE FOLLOWING SU BMISSIONS. (I) THE AUTHORITIES BELOW HAD INCORRECTLY OBSERV ED THAT THE APPELLANT CO. HAD ADVANCED INTEREST FREE L OANS TO THE DIRECTORS AND OTHER PARTIES. ON PERUSAL OF THE CHAR T AS FURNISHED DURING THE COURSE OF APPEAL PROCEEDINGS, IT WOULD B E NOTED THAT THERE WAS NO INTEREST FREE LOANS AS OBSERVED BY THE AUTHORITIES. IN FACT, TOTAL ADVANCES SHOWN DURING THE YEAR WERE FOR RS.29,50,000/- ONLY AND NOT THE ENTIRE AMOUNTS OF S ECURED AND UNSECURED LOANS AS ALLEGED BY THE AUTHORITIES. FU RTHER OUT OF SUCH LOANS, RS.19,50,000/- WERE GIVEN TO SVS. G.P. THAKUR, MOHANLAL KHANDELWAL, & SHANKARLAL KHANDELWAL AS SEC URITY DEPOSIT AND ADVANCE FOR PURCHASING THE PIECES OF L AND. THUS SUCH LOANS WERE VERY MUCH INCIDENTAL TO THE BUSINES S ACTIVITIES OF THE CO. BALANCE AMOUNT OF RS.10 LAC WERE SEIZED BY THE I.T. DEPTT. DURING THE COURSE OF SEARCH PROCEEDINGS. THU S ALL THE LOANS AS SHOWN IN THE CHART WERE NECESSITATED BY TH E BUSINESS EXIGENCIES ONLY. IN THE CIRCUMSTANCES, THE AUTHORI TIES BELOW 11 HAD INCORRECTLY OPINED THAT THESE LOANS WERE GIVEN WITHOUT ANY BUSINESS NECESSITY. (II) AGAIN IT IS A MATTER OF COMMON PRUDENCE THAT I N THE BUSINESS OF REAL ESTATE, THE RATE OF INTEREST BEING CHARGED IS 9% ONLY. THUS THE APPELLANT CO. HAD CHARGED INTEREST @ 9% FROM THE CONCERNED PARTIES ON THE PREVALENT RATES ONLY. THUS IT IS NOT A CASE OF UNDER-CHARGING OF THE INTEREST. MORE-OVER THE DEPARTMENT COULD NOT BRING ANY MATERIAL ON RECORD T O ESTABLISH UNDER-CHARGING OF THE INTEREST. (III) WITHOUT PREJUDICE TO THE ABOVE FACTS, THE LD . CIT(A) HAD DISALLOWED THE BALANCE AMOUNT OF INTEREST PAYMENT OF RS.12,66,625/- IN A SHORT SLIP MANNER WITHOUT LOOK ING INTO THE DETAILS OF THE AMOUNTS INVOLVED IN THE SEIZED CASH, SECURITY DEPOSIT, AND OTHER ADVANCES ETC. TOTAL OF SUCH AMOU NTS (WHICH DID NOT YIELD INTEREST) WERE HARDLY RS.29.5 LAC, SO THE TOTAL DISALLOWANCE, IF AT ALL CALLED FOR WOULD WORK OUT T O RS. 2.65 LAC ONLY AND NOT RS. 12,66,625/- AS DISALLOWED BY THE L D. CIT (A). THUS THE WORKING OF THE DISALLOWANCE OF SUCH INTERE ST PAYMENTS IS MATHEMATICALLY INCORRECT AND NEEDED TO BE MODIFI ED. IN VIEW OF ABOVE DISCUSSIONS, THE DISALLOWANCE OF RS.12,66,625/- AS CONFIRMED BY THE LD CIT (A) DESERVES TO BE DELETED. 4.7 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE AO. 4.8 WE HAVE HEARD BOTH THE PARTIES. THE INTEREST FR EE FUNDS ARE AS UNDER:- 1. EQUITY SHARE CAPITAL RS. 65,38,000/- 2. SHARE APPLICATION MONEY RS. 62,19,700/- 3. RESERVE & SURPLUS RS. 8,01,758/- RS. 1,35,59,458/- INTEREST FREE UNSECURED LOANS RS. 13,00,000/- INTEREST FREE LOANS @ 9% RS. 25,44,449/- FROM TIKAM KHANDELWAL 12 THE CLOSING BALANCE OF INTEREST FREE LOANS AS PER C HART REPRODUCED ABOVE FROM THE ORDER OF THE LD. CIT(A) IS RS. 29.50 LACS. THE CLOSING BALANCE OF INTEREST BEARING LOANS AS PER CHART REPRODUCED ABOV E FROM THE ORDER OF THE LD. CIT(A) IS RS. 2,68,54,661/-. WE HAVE CONSIDERED THI S ISSUE WHILE DECIDNG THE APPEAL FOR THE ASSESSMENT YEAR 2007-08. THE INT EREST FREE ADVANCES ARE TO THE EXTENT OF RS. 1,48,59,458/-. THERE ARE ADVANCES TO THE EXTENT OF RS. 29.30 LACS FOR THE PURPOSE OF BUSINESS AND THEREFORE, THE SE ARE TO BE EXCLUDED WHILE CONSIDERING THE DISALLOWANCE OF INTEREST, IF ANY, U /S 36(1)(III) OF THE ACT. THE ASSESSEE IS HAVING INTEREST BEARING LOANS OF RS. 25 ,44,448/- AT 9% AND LOANS ADVANCES AT @ 9% TO THIS EXTENT IS TO BE REDUCED FROM LOANS AND ADVANCES AT 9% FOR THE PURPOSE OF CONSIDERING THE DISALLOWAN CE OF INTEREST ON ACCOUNT OF RATE OF INTEREST PAID TO THE BANK AND RATE OF IN TEREST CHARGED FROM THE PARTIES TO WHOM LOANS AND ADVANCES GIVEN. THUS THE CLOSING BALANCE WHICH IS TO BE CONSIDERED FOR THE PURPOSE OF COMPUTING TH E DISALLOWANCE OF INTEREST ON ACCOUNT OF DIFFERENT OF RATE OF INTEREST WILL BE RS.2,68,54,661 (-) 25,44,449 = RS. 2,43,110,212/-. SHRI SHANKAR LAL KH ANDELWAL IS HAVING CURRENT ACCOUNT WITH THE ASSESSEE AND IS DOING TRAN SACTION ON BEHALF OF THE ASSESSEE. IF THAT ADVANCE IS CONSIDERED AS HAVING B EEN MADE FOR COMMERCIAL EXPEDIENCY THEN THE BALANCE ADVANCE WILL BE LESS TH AN THE FUNDS AVAILABLE WITHOUT INTEREST. IT WAS STATED BEFORE THE LD. CIT( A) THAT SHRI GUMAN 13 KHANDELWAL IS PROPRIETOR OF M/S. SUNIL FURNITURE A ND IS HAVING COMMERCIAL TRANSACTION. THE CLOSING BALANCE IN RESPECT OF M/S. SUNIL FURNITURE IS RS. 12,184/- THOUGH INTEREST CHARGES IS RS. 92,668/-. L OOKING TO OUR FINDINGS GIVEN WHILE DECIDING THE APPEAL FOR THE ASSESSMENT YEAR 2007-08, WE HOLD THAT THERE IS NO CASE OF MAKING ANY DISALLOWANCE U/ S 36(1)(III) OF THE ACT. ACCORDINGLY THE DISALLOWANCE OF RS. 12,66,625/- CON FIRMED BY THE LD. CIT(A) IS DELETED. THUS GROUND NO. 3 OF THE ASSESSE E IS ALLOWED AND GROUND NO. 3 OF THE REVENUE IS DISMISSED. 5.1 THE FOURTH GROUND OF THE ASSESSEE IS THAT THE L D. CIT(A) HAS ERRED IN RESTRICTING THE SET OFF BENEFIT UNDER TELESCOPING T HEORY TO THE EXTENT OF PROFIT OF RS. 2,40,560/- EARNED ON THE SALES OF THE SHORT OF STOCK OF RS. 24,05,596/-. 5.2 WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. W E FEEL THAT THE LD. CIT(A) IS JUSTIFIED IN RESTRICTING THE TELESCOPING THEORY TO THE EXTENT OF RS. 2,40,560/-. IT IS NOT THE CASE OF THE ASSESSEE THAT IT HAS ESTABLISHED THAT ENTIRE STOCK FOUND SHORT AND SOLD WAS AVAILABLE FOR SET O FF. THERE MAY BE CREDIT SALES OR THERE MAY BE PAYMENT TO THE PURCHASER. TEL ESCOPING IS TO BE CONSIDERED TO THE EXTENT OF PROFIT EARNED. WE THERE FORE, DISMISS THE GROUND NO. 4 OF THE ASSESSEE. 14 6.1 THE 5TH GROUND OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO GIVE SET OFF FOR THE PROFIT EAR NED DUE TO SHORTAGE OF STOCK OF RS. 2,40,560/- WITHOUT ANY BASIS. 6.2 WE HAVE HEARD BOTH THE PARTIES. WE HAD ALREADY DISPOSED OFF THIS ISSUE WHILE DECIDING THE APPEAL OF THE ASSESSEE. IT IS AN ACCEPTED PROPOSITION THAT THE STOCK WAS FOUND SHORT. ONCE THE PROFIT IS BEING ADDED ON THE BASIS OF THE SALE OF STOCK AND THEN SUCH PROFIT IS TO BE CON SIDERED AS AVAILABLE TO THE ASSESSEE FOR SETTING OFF. THE LD. CIT(A) WAS THEREF ORE, JUSTIFIED IN DIRECTING THE AO TO GIVE SET OFF FOR THE PROFIT EARNED DUE TO SHORTAGE OF STOCK. HENCE, GROUND NO. 5 OF THE REVENUE IS DISMISSED. 71 THE SECOND GROUND OF THE REVENUE IS THAT THE LD . CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 42.49 LACS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AFTER ACC EPTING THE ADDITIONAL EVIDENCES. 7.2 THE AO AT PAGE 3 OF THE ASSESSMENT ORDER HAS GI VEN THE NAMES OF THE PARTIES FROM WHOM THE ASSESSEE HAS RECEIVED THE PAY MENTS AMOUNTING TO RS. 42.49 LACS. ACCORDING TO THE AO, THE ASSESSEE HAS N OT FILED THE CONFIRMATIONS OR INCOME TAX PARTICULARS. THEREFORE, A SUM OF RS. 42.49 LACS ADDED TO THE INCOME OF THE ASSESSEE. 15 7.3 BEFORE THE LD. CIT(A), THE ASSESSEE FILED THE A DDITIONAL EVIDENCES IN SUPPORT OF THE AMOUNTS RECEIVED FROM THE PARTIES. I T WILL BE USEFUL TO REPRODUCE THE SUBMISSIONS OF THE ASSESSEE FILED BEF ORE THE LD. CIT(A). DURING THE YEAR, THE ASSESSEE HAD RECEIVED PAYME NTS FROM THE FOLLOWING PARTIES:- 1. M/S. SURYA INTERIOR. 5,00,000/- 2. B.S. RAJBALA 13,00,000/- 3. SHRI DILIP KUMAWAT. 11,50,000/- 4. SHRI GOPAL SAINI. 5,99,000/- 5. SHRI HARISH SHARMA. 7,00,000/- TOTAL. 42,49,000/- THE DETAILS OF THE EACH CASE ARE GIVEN AS UNDER: - 1. M/S. SURYA INTERIOR PROP. SHRI VIKAS VIJAIVARG IA RS. 5,00,000/- AFFIDAVIT AND CONFIRMATION OF THE PARTLY FILED IN YOUR OFFICE AS ADDITIONAL EVIDENCE U/R 46A P.B. (PAGE NO. (38 & 39 ). DETAILS OF SOURCE OF DEPOSIT DATE AMOUNT. NATURE OF ENTRY EXPLANATION 18.6.2007 2,00,000 CHEQUE AMOUNT OF RS. 2,00,000/- RECEIVED BY CHEQUE NO.949302 OF UNION BANK OF INDIA. NO CASH DEPOSITS IN THE BANK ACCOUNT IN ORDER TO ISSUE THE CHEQUE TO THE ASSESSEE. THE COPY OF BANK STATEMENT IS ENCLOSED AS PER PB/II PAGE NO. 49 & 50) 18.6.2007 3,00,000 CHEQUE AMOUNT OF RS. 2,00,000/- RECEIVED BY CHEQUE NO.949303 OF UNION BANK OF INDIA. NO CASH DEPOSITS IN THE BANK ACCOUNT IN ORDER TO ISSUE THE CHEQUE TO THE ASSESSEE THE COPY OF BANK STATEMENT IS ENCLOSED AS PER PB/II PAGE NO. 49 &50 16 2. B.S. RJABALA. RS. 13,00,000/- AFFIDAVIT, CONFIRMATION, COPY OF ACKNOWLEDGEMENT OF I.T.R AND COPY OF BANK ACCOUNT OF THE PARTY FILED IN YOUR OFF ICE AS ADDITIONAL EVIDENCE U/R 46A P.B. (PAGE NO. (40 TO 4 4) DETAILS OF SOURCE OF DEPOSIT. DATE AMOUNT. NATURE OF ENTRY EXPLANATION 01.05.2007 13,00,000 CHEQUE AMOUNT OF RS.13,00,000/- RECEIVED BY CHEQUE NO.845980 OF DENA BANK. NO CASH DEPOSITS IN THE BANK ACCOUNT IN ORDER TO ISSUE THE CHEQUE TO THE ASSESSEE. ALL THE DEPOSITS IN THE ACCOUNT BY CLEARING OF CHEQUES. THE COPY OF BANK STATEMENT AND THE COPY OF ACKNOWLEDGEMENT OF ITR HAVING PAN ABMPM1861A. AND ASSESSED TO TAX IN ITO WARD 7(3), JAIPUR IS ENCLOSED AS PER PB/II PAGE NO. 51 TO 53. 3. SHRI DILIP KUMAWAT RS. 11,50,000/- COPY OF LEDGER ACCOUNT FILED IN YOUR OFFICE AS ADDITIONAL E VIDENCE U/R 46A P.B. (PAGE NO. 45). DETAILS OF SOURCE OF DEPOSIT. DATE AMOUNT. NATURE OF ENTRY EXPLANATION 16.08.2007 5,00,000 CHEQUE AMOUNT OF RS. 5,00,000/- PAID BY THE ASSESSE E BY CHEQUE OF SBBJ AND RECEIVED BACK BY TRANSFER. COPY OF BANK STATEMENT IS ENCLOSED AS PER PB/II PAGE 54 & 55. 27.03.2008 6,50,000 CHEQUE AMOUNT OF RS. 6,50,000/- RECEIVED BY CHEQUE NO. 747588 OF SBBJ WHICH WAS RECEIVED FROM SUNIL FURNITURE. COPY OF BANK STATEMENT IS ENCLOSED AS PER PB/II PAGE NO. 54 & 55. 17 4. SHRI GOPAL SAINI RS. 5,99,000/- AFFIDAVIT AND CONFIRMATION OF THE PARTY FILED IN YOUR OFFICE AS A DDITIONAL EVIDENCE U/R 46A P.B. (PAGE NO. 46). DETAILS OF SOURCE OF DEPOSIT. DATE AMOUNT. NATURE OF ENTRY EXPLANATION 21.4.2007 2,50,000 JOURNAL ENTRY THIS IS A JOURNAL ENTRY. THE AMOUNT TRANSFERRED FROM SHRI TIKAM KHANDELWAL.ON A/C. OF PURCHASE OF PLOT NO. 27-28 MITRA NAGAR, JAIPUR 21.4.2007 2,50,000 JOURNAL ENTRY THIS IS A JOURNAL ENTRY. THE AMOUNT TRANSFERRED FROM SHRI TIKAM KHANDELWAL ON A/C. OF PURCHASE OF PLOT NO. 27-28 MITRA NAGAR, JAIPUR 8.11.2007 99,000 CHEQUE AMOUNT OF RS. 99,000/- RECEIVED BY CHEQUE NO.40477 OF BOB. THERE IS NO CASH DEPOSIT IN THE BANK ACCOUNT. COPY OF BANK STATEMENT IS ENCLOSED AS PER PB/II PAGE NO. 56. 5. SHRI HARISH SHARMA RS. 7,00,000/- AFFIDAVIT AN D CONFIRMATION OF THE PARTY FILED IN YOUR OFFICE AS ADDITIONAL EVIDENCE U/R 46A P.B. (PAGE NO. (47 & 48 ). DETAIL OF SOURCE OF DEPOSITS. DATE. AMOUNT. NATURE OF ENTRY. EXPLANATION. 21.05.2007 7,00,000 CHEQUE. AMOUNT OF RS. 7,00,000/- RECEIVED BY CHEQUE NO. 331854 OF CENTURION BANK OF PUNJAB LTD. NO CASH DEPOSITS IN THE BANK ACCOUNT IN ORDER TO ISSUE THE CHEQUE TO THE ASSESSEE. ALL THE DEPOSITS IN THE ACCOUNT BY CLEARING OF CHEQUES. THE COPY OF BANK STATEMENT AND THE COPY OF ACKNOWLEDGEMENT OF ITR HAVING PAN AABCH7086D AND ASSESSED TO TAX IN ITO WARD 1(4) JAIPUR, IS ENCLOSED AS PB/II PAGE 57 TO 59. IN VIEW OF SUBMISSION MADE ABOVE, THE ADDITION MA DE BY THE LD. A.O. IS IN BAD IN LAW, UNREASONABLE AND UNJ USTIFIABLE DESERVES TO 18 BE DELETED. THE APPELLANT PRAYS YOUR HONOUR TO KIND LY DELETE THE ABOVE ADDITIONS MADE BY A.O. UNDER SECTION 68 OF I.T. ACT , AND OBLIGE. 7.4 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE DELETED THE ADDITION AFTER OBSERVING AS UNDER:- 4.4 I HAVE CONSIDERED THE SUBMISSION MADE BY THE LD AR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING TH E COURSE OF APPEAL HEARING, SH. SHAILESH KUMAR ACIT CC-1, JAIPU R PRESENT AND ONE SET OF SUBMISSION ALONGWITH OTHER DOCUMENTS WAS GIVEN TO HIM. THE A.R. HAS EXPLAINED THE ENTRIES AND THE DOCUMENTS TO THE A.O AND ALSO TO THE UNDERSIGNED. A.O. WAS REQUE STED TO SUBMIT REMAND REPORT THE AMOUNTS CREDITED IN THE BOOKS OF ACCOUNT IN THE FOLLOWING NAMES ARE SUPPORTED BY CONFIRMATION/AFFIDAVITS FILE D BEFORE ME. THE ASSESSEE HAS ALSO FILED EVIDENCE IN SUPPORT OF THEIR BEING INCOME TAX ASSESSEE. FURTHER THE ASSESSEE HAS FURNI SHED COPY OF BANK STATEMENT OF THESE PARTIES IN THE PAPER BOOK A ND THE AMOUNT IS FOUND VERIFIABLE FROM BANK STATEMENT. MOREOVER I ALSO FOUND THAT THERE WERE NO IMMEDIATE CASH DEPOSITS IN THE B ANK ACCOUNT OF THESE PERSONS TO ENABLE TO CHEQUE CLEARING. 1. M/S. SURYA INTERIOR. 5,00,000/- 2. B.S. RAJBALA 13,00,000/- 3. SHRI HARISH SHARMA. 7,00,000/- THE A.O. HAS SEEN, CHECKED AND VERIFIED THESE CREDI TS AND HE, BEING SATISFIED, HAS NOT GIVEN ANY ADVERSE COMMENT S ON THESE CREDITS IN HIS REMAND REPORT DATED 28.2.11. THEREFO RE THE CASH 19 CREDITS IN NAME OF THESE PERSONS CANNOT BE HELD AS UNEXPLAINED CASH CREDIT AND INCOME OF THE ASSESSEE. 4.5 IN RESPECT OF CREDIT IN THE NAME OF SH. DILIP K UMAWAT AND SH. GOPAL SAINI, THE A.O. GIVEN FOLLOWING COMMENT I N THE REMAND REPORT. SHRI DILIP KUMAWAT ( RS. 11,50,000/- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE ASSE SSEE A.R DURING APPELLATE ASSESSEE HAS FIELD COPY OF LEDGER ACCOUNT OF THE PARTY AS ADDITIONAL EVIDENCE U/R 46A AND FURTHER AS SESSEE HAS FILED DETAILS OF BANK ACCOUNT SHOWING ENTRY OF RS. 5,00,000/-DATED 16.8.07 BY CHEQUE OF SBBJ AND RECEIVED BAN BY TRANS FER AND RS. 6,50,000/- DT 27.3.08 OF SBBJ RECEIVED FROM SUNIL F URNITURE, BANK STATEMENT SEEN. DURING ASSESSMENT PROCEEDINGS ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSPITE OF NU MBER OF OPPORTUNITY GIVEN. SHRI GOPAL SAINI (RS. 5,99,000/-) I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE ASS ESSEE A.R DURING APPELLATE PROCEEDINGS ASSESSEE HAS FILED AFF IDAVITS, CONFIRMATION OF THE PARTY AS ADDITIONAL EVIDENCE U/ R 46A AND FURTHER ASSESSEE HAS FILED DETAILS THAT RS. 2.5 LAK HS DT. 21.4.07 AND RS. 2.5 LAKHS DT.21.9.07 IS JOURNAL ENTRY AMOUN T TRANSFERRED FROM SH. TIKAM KHANDELWAL ON ACCOUNT PURCHASES OF P LOT NO. 27- 28 MITRA NAGAR JAIPUR AND FURTHER AMOUNT OF RS. 99, 000/- DT 8.11.07 RECEIVED BY CHEQUE NO. 40477 OF BOB, COPY S TATEMENT FILED WHICH WAS RECEIVED ON HOUSING LOAN FROM GUMAN KHANDELWAL. DURING ASSESSMENT PROCEEDINGS ASSESSEE HAD FAILED TO FURNISH SOURCES OF FUND INSPITE OF NUMBER OF OPP ORTUNITY GIVEN. FROM THE PERUSAL OF REMAND REPORT OF THE A.O. IT IS EVIDENT THAT HE HAS SEEN, CHECKED AND VERIFIED THE DETAILS AND FOUN D THEM TO BE SATISFACTORY AS REGARDS SOURCE OF MONEY IN THE HAND S OF SH. DILIP KUMWAT AND SH. GOPAL SAINI IS CONCERNED, AND ACCORD INGLY HE HAS NOT GIVEN ANY ADVERSE COMMENT ON THESE CASH CRE DITS EXCEPT LEGAL OBJECTION OF ADMISSION OF ADDITIONAL EVIDENCE S. THE ISSUE 20 REGARDING ADMISSION OF THE ADDITIONAL EVIDENCES HAD BEEN DECIDED BY THE UNDERSIGNED AND THESE HAVE BEEN ALLOWED TO B E ADMITTED. MOREOVER, I HAVE ALSO PERUSED THE DETAILS AND EVID ENCE FURNISHED IN THE APPELLANT PROCEEDINGS AND FOUND THAT THOUGH THESE TWO PERSONS ARE BENAMI BUT AS THE SOURCE OF MONEY IN TH EIR HANDS IS EXPLAINED AND SAME HAS MOSTLY COME THROUGH BANKING CHANNEL AND HAS BEEN EFFECTIVELY ROUTED FROM THE GROUP CONC ERNS, WHICH HAS ALSO BEEN FOUND VERIFIABLE BY THE A.O, THE ADDI TIONS SO MADE BY THE A.O. IN THE ASSESSMENT ORDER NOW DO NOT SURV IVE IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES IN RESPECT OF THESE TWO CREDITORS ALSO. 7.5 WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) IN HIS ORDER HAS CLEARLY MENTIONED THAT THE AO HAS NOT GIVEN ANY ADV ERSE COMMENTS IN RESPECT OF THREE CREDITS IN THE REMAND REPORT. ACCO RDINGLY SUCH CREDITS HAVE BEEN ACCEPTED. IN RESPECT OF OTHER TWO CREDITS, THE LD. CIT(A) HAS REPRODUCED THE COMMENTS OF THE AO IN HIS REMAND REPORT. BOTH T HESE CREDITORS ARE BENAMI OF SHRI SHANKAR LAL KHANDELWAL. THE CASH FLO W STATEMENTS OF THESE PARTIES WERE FILED. WE HAD ALREADY HELD IN THIS GRO UP OF CASES THAT SUCH CASH FLOW STATEMENT IS PREPARED BECAUSE THE REGULAR BOOK S OF ACCOUNT WERE NOT AVAILABLE WITH THE ASSESSEE. HENCE, IT IS CLEAR THA T THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. IN RESPECT OF A DMISSION OF ADDITIONAL EVIDENCES, WE HAVE NOTICED FROM THE ORDER SHEET THA T THE ASSESSEE HAS NOT BEEN GIVEN ADEQUATE OPPORTUNITY. WE THEREFORE, FEEL THAT THE LD. CIT(A) WAS JUSTIFIED IN ADMITTING THE ADDITIONAL EVIDENCES. TH US GROUND NO. 2 OF THE REVENUE IS DISMISSED. 21 8.1 THE 4TH GROUND OF THE REVENUE IS AGAINST ADMIS SION OF ADDITIONAL EVIDENCES UNDER RULE 46A. 8.2 WE HAVE HEARD BOTH THE PARTIES. WE HAVE SEEN TH AT THE ASSESSEE HAS FILED THE ADDITIONAL EVIDENCES IN RESPECT OF THE CA SH CREDITS. IN RESPECT OF ISSUE OF DISALLOWANCE OF INTEREST, THE ASSESSEE FIL ED THE DETAILS FROM THE BOOKS OF ACCOUNT. THESE CANNOT BE CONSIDERED AS ADDITIONA L EVIDENCES. WE HAD ALREADY HELD THAT THE LD. CIT(A) WAS JUSTIFIED IN A CCEPTING THE ADDITIONAL EVIDENCES IN RESPECT OF CASH CREDITS. WE THEREFORE, DISMISS THE GROUND NO. 4 OF THE REVENUE. 9. IN THE RESULT, THE APPEALS OF THE ASSESSEE IS P ARTLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 02-09 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 02 /09/2011 *MISHRA COPY FORWARDED TO :- 1. M/S. GUMAN FURNITURE & SERVICES (P) LTD. , JAIPUR 2. THE ACIT, / DCIT , CENTRAL CIRCLE- 1, JAIPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.394/JP /11) A.R, ITAT, JAIPUR 22 23 24 25 26 . 27 28 `