ACIT, New Delhi V. M/s. Vinayak Remedies Ltd., New Delhi

ITA 3998/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6412 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 3
• Next Hearing Date: 19-10-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 11-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Share purchase agreement; Assessment record
• Section: 143(3); 142(1); 133(6); 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 39 98 /DEL/201 6 A.Y. : 20 1 0 - 1 1 ASST. COMMISSIONER OF INCOME TAX, CIRCLE 26(2), CR BUIDLING, I.P. ESTATE, NEW DELHI VS. M/S VINAYAK REMEDIES LTD., 1141/1, 16, BEHIND BAGGA LINK SERVICE, STATION, RITHALA, NEW DELHI 110 085 (PAN: AACCV3031F) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. F.R. MEENA, SR. DR ASSESSEE BY : MS. SANGEETA SINGH, CA AND SH. SATISH SINGH, CA ORDER ORDER ORDER ORDER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-33, NEW DELHI DATED 18.4.2016 PERTAINING TO ASSESSMENT YEAR 2010-11 ON THE FOLLOW ING GROUNDS:- 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY LD.CIT{A} HAS ERRED IN DELETING THE ADDITION OF RS. 20,00,000/- ON ACCOUNT SHARE CAPITAL & SHARE PR EMIUM BY NOT APPRECIATING THE FACT THAT ASSESSEE FAILED TO F ULFILL PARAMETERS OF SECTION 68 OF THE IT ACT AND ALSO FAILED TO APPR ECIATE THAT FACTS 2 OF THE CASE ARE SQUARELY COVERED IN THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF M/S. NOVA PROMOTERS PVT. LTD .' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD.CLT{A} ERRED IN REDUCING THE ADDITION OF RS. 29,50,000/- M ADE ON ACCOUNT OF UNSECURED LOAN TO RS. 1,35,090/- WITHOUT APPRECIATING THAT THE ASSESSEE FAILED TO FULFILL PARAMETERS OF S ECTION 68 OF THE ACT IN NOT PRODUCING DOCUMENTARY EVIDENCES IN SUPPORT O F CREDITWORTHINESS & GENUINENESS OF TRANSACTION.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD.CIT{A} ERRED IN REDUCING THE ADDITION OF RS 30,0 0,000/- MADE ON ACCOUNT OF DISALLOWANCES OF EXPENSES TO RS. 5,00 ,000/- WITHOUT APPRECIATING THE FACT THAT ASSESSEE FAILED TO FURNI SH ANY DOCUMENTARY EVIDENCE IN SUPPORT OF CLAIM OF EXPENSE S DURING ASSESSMENT PROCEEDINGS.' 4. 'THE APPELLANT CRAVES, LEAVE OR RESERVING THE RI GHT TO AMEND MODIFY, ALTER, ADD OR FOREGO ANY GROUND{S} OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THE ASSESSEE CO MPANY HAS FILED THE RETURN OF INCOME ON 24.9.2010 FOR THE AY 2010-11 DECLARING AT A LOSS OF RS. 3 66,92,217/-. THE CASE WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 1961. SUBSEQUENTLY, THE CASE WAS TAKEN UP IN SCRUTINY AND NOTICE U/S. 143(2) OF THE I.T. ACT WAS ISSUED ON 23.9.2011 AND SERVED UPON THE ASS ESSEE. THEREAFTER, NOTICES U/S. 142(1) ALONGWITH QUESTIONNAIRE WAS ISSUED AND DULY SERVED UPON THE ASSESSEE WHEREIN CERTAIN SPECIFIC DETAILS WERE CALL ED. DURING THE YEAR, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRAD ING OF MEDICIANES. IN RESPONSE TO NOTICES, THE AR OF THE ASSESSEE ATTEN DED FROM TIME TO TIME AND FILED THE NECESSARY DETAILS. THEREAFTER, THE AO MADE THE VARIOUS ADDITIONS AND MADE THE ASSESSMENT AT RS. 12,57,783/- U/S. 143(3) OF TH E I.T. ACT, 1961 VIDE HIS ORDER DATED 18.3.2013. AGGRIEVED WITH THE AFORESAID ASSE SSMENT ORDER, ASSESSEE APPEALED BEFORE THE LD. CTI(A), WHO VIDE HIS IMPUGN ED ORDER DATED 18.4.2016 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED WITH THE IMPUGNED ORDER, THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. 4. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS, ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW. I FIND THAT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED THE ISSUE IN D ISPUTE BY CONSIDERING THE 4 SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE AN D ADJUDICATED THE ISSUES IN DISPUTE AS UNDER:-. 4. SECOND GROUND RELATES TO ADDITION OF RS. 20,00,0 001- MADE BY THE A.O. BY TREATING THE SHARE CAPITAL AND SHARE PREMIU M AS UNEXPLAINED INCOME U/S 68 OF ACT. WHILE MAKING THE ABOVE DISAL LOWANCE THE A.O. HAS RECORDED AS UNDER: 'THERE IS NO EXPLANATION REGARDING THE BANK STATEME NT FOR THE WHOLE YEAR ALONGWITH THE OTHER DETAILS CALLED FOR INCLUDING TH E HUGE PREMIUM OF RS. 90 PER SHARE IN A LOSS, MAKING CONCERN. THE ASSESSEE W AS ALSO ASKED TO FURNISH THE JUSTIFICATION FOR THE PREMIUM AND CREDI TWORTHINESS WHICH HAS NOT BEEN DONE. THE ABOVE SHOWS THAT THE NECESSARY DETAI L/CONFIRMATION DESPITE BEING CALLED FOR TWICE WAS NOT FURNISH/VERI FIED. ACCORDINGLY, IT IS HELD THAT THE ABOVE MENTIONED TRANSACTION OF RS. 20 ,00,000/- STANDS UNEXPLAINED AND IS ADDED BACK TO THE INCOME OF THE ASSESSEE.' . 4.1 IT IS NOTED FROM THE ASSESSMENT ORDER THAT THE SAID SHARE APPLICATION MONEY AND SHARE PREMIUM HAS BEEN RECEIVED FROM A SI NGLE PARTY NAMELY M/S. TIMES GOODS PVT. LTD., KOLKATTA. 4.2. WHILE MAKING THE ABOVE ADDITION, IN THE ASSES SMENT ORDERS THE A.A. HAS RECORDED AS UNDER: 5 1. FURNISH COPY OF ACCOUNT OF MIS. VINAYAK REMEDIES LID. FOR THE PERIOD 01.04.2009 TO 31.03.2010, AS PER YOUR BOOKS. FURNIS H COMPLETE NARRATION OF EACH ENTRY. 2. FURNISH COPY OF ACKNOWLEDGEMENT OF YOUR ITR MENT ION YOUR PAN AND WARD/CIRCLE WHERE YOU HAVE FILED YOUR RETURN ALONG WITH YOUR COMPUTATION OF INCOME, PROFIT & LOSS ALE BALANCE SHEET. 3. BANK STATEMENT FOR THE FULL YEAR ALONG WITH NARR ATION OF ENTRIES EXCEEDING RS. 1 LAC ALONGWITH THE NAME AND ADDRESS OF THE PARTIES WITH WHOM THESE TRANSACTIONS HAVE BEEN MADE. 4. YOUR BOARD RESOLUTION REGARDING PURCHASE OF SHA RES AND PREMIUM, IF ANY, PAID ALONG WITH ITS JUSTIFICATION. 5. THE DETAILS OF THE SHARE CERTIFICATE NUMBER AND THE DISTINCTIVE NUMBER ALLOTTED TO YOU ALONGWITH COPY OF THE SAME. (A) PLEASE ALSO INFORM WHETHER AS ON DATE YOU ARE H OLDING THE SAME OR NOT. (B) IN CASE, THE SHARES HAVE BEEN SOLD, THE DETAILS OF THE TRANSACTIONS MENTIONING THE NUMBER OF SHARES SOLD, THE AMOUNT RE CEIVED, PREMIUM, IF ANY, RECEIVED AND THE NAME AND ADDRESS OF THE PARTY TO WHOM SOLD ALONGWITH PAN NUMBER MAY PLEASE ALSO BE MENTIONED 6 6. DETAILS OF THE PROSPECTUS/OR THE DETAILS OF ADV ERTISEMENT THROUGH WHICH YOU WERE MADE AWARE OF THE GROUP M/S. VINAYAK REMEDIES LTD. TILL DATE NO REPLY HAS BEEN RECEIVED AND A PERUSAL OF TH E WEBSITE ON INDIA POST REVEALS THE FOLLOWING INFORMATION.' ~ THE ASSESSMENT RECORDS HAVE BEEN CALLED AND EXAMI NED. IT IS FOUND THAT AS AGAINST THE REFERRING TO THE REPLY DATED 21.02.2 013 FILED BEFORE HIM AS A ONE PAGE REPLY, THE SAME IS A 32 PAGES SUBMISSIO N. IT IS APPARENT THAT, THE A.O. DID NOT EXAMINE THE SAID 32 PAGE SUBMISSIO N BEFORE MAKING THE ADDITION. 4.4 IT IS ALSO NOTED FROM THE BALANCE SHEET OF M/ S. TIMES GOODS PVT. LTD. THAT AS ON 3L.03.2010, THE SHAREHOLDER'S FUNDS WITH M/S. TIMES GOODS PVT. LTD. WERE 8.69 CRORES. 4.5 DURING THE APPELLATE PROCEEDINGS THE APPELLANT WAS ASKED FOR JUSTIFICATION FOR A PREMIUM OF RS.90 PER SHARE OF F ACE VALUE RS. 10. IT WAS SUBMITTED BY THE APPELLANT THAT DURING THE PRECEDIN G YE I.E. A.Y. 2009- 10, THE COMPANY EARNED RS.38.5 PER EQUITY SHARE OF RS. 10 AND AS ON 3L.03.2009 IT HAD A NET WORTH OF RS.69.88 PER SHARE OF RS.69.88 PER SHARE OF RS. 10. 7 4.6. UNDER THE ABOVE CIRCUMSTANCES, IT IS APPARENT THAT THE SHARE APPLICANT VIZ. M/S. TIMES GOODS PVT. LTD. HAD SUFFI CIENT FUNDS AVAILABLE WITH IT AND THERE IS JUSTIFICATION FOR CHARGING A S HARE PREMIUM. IN VIEW OF THESE OBSERVATIONS, I AM UNABLE TO UPHOLD THE DISAL LOWANCE MADE BY THE A.O. THE SAME IS DELETED. 5. THE GROUND NO. 3 PERTAINS TO AN ADDITION OF RS.2 9,50,000/- (REPRESENTED BY UNSECURED LOANS) AS UNDISCLOSED INC OME U/S 68. WHILE MAKING THE ADDITION, THE A.O. HAS RECORDED AS UNDER .- FURTHER, THE ASSESSEE HAS SHOWN FRESH UNSECURED LO ANS RAISED FROM THE FOLLOWING PARTNERS: S. NO. NAME AMOUNT 1 SANJAY KUMAR NATHANI 5,00,000 2 BAL KRISHNA TIBRAWAL 8,00,000 3 LJJAWAL KUMAR DALMIYA 3,00,000 4 UDAYAN TIBRAWAL 2,00,000 5 SHASHI KAMAL DALMIYA 1,00,000 6 SHASHI KAMAR DALMIYA (HUF) 4,50,000 8 7 ALKA DALMIYA 6,0,0000 THE FOLLOWING INFORMATION CALLED FOR ULS. 133(6) AS THE ASSESSEE HAD NOT FURNISHED THE CREDITWORTHINESS OF THE LOANS AS CALL ED FOR IN THE QUESTIONNAIRE AND SUBSEQUENT ENTRY DATED 21.11.2012 . 1. FURNISH COPY OF ACCOUNT OF M/S. VINAYAK REMEDIES LTD. FOR THE PERIOD 01.04.2009 TO 31.03.2010, AS PER YOUR BOOK. FURNISH COMPLETE NARRATION OF EACH ENTRY. 2. FURNISH COPY Q/ ACKNOWLEDGEMENT OF YOUR ITR MENT IONING YOUR PAN AND WARD /CIRCLE WHERE YOU HAVE FILED YOUR RETURN A LONGWIFH YOUR COMPUTATION OF INCOME. IN CASE YOU HAVE NOT DONE BUSINESS, PLEASE ATTACH C OPY OF YOUR PROFIT AND LOSS ALC AND BALANCE SHEET. 3. COPY OF YOUR BANK STATEMENT FOR THE WHOLE YEAR. NO REPLY AS CALLED FOR WAS RECEIVED EXCEPT IN THE C ASE OF SHRI U. K OALMIYA WHEREIN IT WAS NOTICED THAT THERE ARE ALSO CASH DEPOSITS BEFORE ISSUE OF CHEQUE. FURTHER, HE HAS JUST SUBMITTED COP Y OF HIS ITR ACKNOWLEDGEMENT DECLARING INCOME OF RS. 2,83,981/-. 9 THE NARRATION OF THE BACK ENTRIES IS NOT SUBMITTED. FURTHER, THE ASSESSEE'S COUNSEL, WAS AGAIN REMINDED ON 08.03.2013 TO SUBMIT THE CREDITWORTHINESS OFTHE LOANS TAKEN AS CALLED FOR IN THE ORIGINAL QUESTIONNAIRE AND ORDER SHEET ENTRY DATED 21. 11.20 12. HE WAS AGAIN REMINDED FOR THE SAME ON 13.03.2013 AND THE FINALLY THE CASE WAS ADJOURNED FOR 18.03.2013, ON 18.03.2013 THE COUNSEL ATTENDED AND FILED COPY OF ACKNOWLEDGEMENT OF ITR OF ALL PERSONS ALONG WITH THEIR BANK STATEMENTS. THE BANK STATEMENT OF SHRI B. K. TIBRAW AL WAS NOT SUBMITTED. THE OTHER BANK ACCOUNTS OF ALKA OALMIYA SHOWS CASH DEPOSITS BEFORE THE ISSUE OF CHEQUE. SIMILARLY IN THE CASE OF SHRI SANJ AY KUMAR IT IS SEEN THAT BEFORE ISSUE OF CHEQUES THERE ARE CASH DEPOSITS OF RS. 3 LACS AND 1,60,000/- ON 14.01.2010 AND 05.03.2010 BEFORE THE ISSUE OF HEQUES TO COMPANY. HIS RETURNED INCOME IS RS. 1,67, 180/-. SI MILARLY IN THE CASE OF S.K DALMIYA (HUF) WITH RETURNED INCOME OF RS. 1,62, 010/-. HIS BOOK ACCOUNT SHOWS CASH DEPOSITS BEFORE ISSUE OF RS. 1,4 8,000/- THERE ARE CASH DEPOSITS OF RS. 2,05,000/- JUST BEFORE ISSUE O F CHEQUE OF RS. 2,00,000/-. THE BANK STATEMENT OF SH. B. K TIBRAWAL HAS NOT BEEN SUBMITTED. IN LIGHT OF THE FACTS MENTIONED ABOVE THE CREDITWOR THINESS OF THE ABOVE MENTIONED PERSONS HAS RIOT BEEN PROVED AND ACCORDIN GLY, AN ADDITION OF 10 RS.29,50,000/- IS TREATED AS UNEXPLAINED INCOME AND ADDED TO THE INCOME OF THE ASSESSEE.' 5.1 AMONG OTHER THINGS IT IS NOTED FROM THE ASSES SMENT RECORDS THAT CONTRARY TO THE RECORDING BY THE A.O., THE BANK ST ATEMENT OF SH. B.K. TIBRAWAL WAS, INDEED, SUBMITTED BEFORE THE A.O. ON 18.03.2013. 5.2 AFTER CONSIDERING THE REASONING OF THE A.O. AND THE SUBMISSIONS OF THE APPELLANT HOLD THAT THE ACTION OF THE A.O. IN S UMMARILY TREATING THE ENTIRE UNSECURED LOANS OF RS. 29.50 LACS AS UNDISCL OSED INCOME ULS 68 WAS PREMATURE. 5.3 THE FOLLOWING ARE OBSERVED FROM THE SUBMISSION S MADE BY THE APPELLANT BEFORE THE A.O. (I) A SUM OF RSA,60,0001- WAS DEPOSITED IN CASH IN THE BANK ACCOUNT OF SH. SANJAY KUMAR NATHANI BEFORE CHEQUES WERE ISSUE D BY HIM TO THE APPELLANT. (II) SH. B.K.TIBRAWAL, M.COM, AGED ABOUT 55 YRS. AN D HAVING AN EXPERIENCE OF 33 YRS. AT THE TIME OF THE ASSESSMENT PROCEEDINGS, HAD A NET WORTH OF ABOUT 60 LACS AND HAD RECEIVED MONEY T HROUGH BANKING CHANNELS AFTER WHICH HE ISSUED CHEQUE TO THE APPELL ANT. 11 (III) SH. UJJAWAL KUMAR DALMIYA AGED ABOUT 35 YEARS , GRADUATE, HAVING 15 YRS. OF EXPERIENCE AT THE TIME OF ASSESSMENT HAD RE CEIVED MONEY THROUGH BANKING CHANNELS BEFORE GIVING LOAN TO THE APPELLAN T. (IV) CASH AMOUNTING TO RS. 2,00,0001- WAS DEPOSITED ON DIFFERENT DATES IN THE ACCOUNT OF SH. UDAYAN TIBRAWAL BEFORE HE ISSUED THE CHEQUE TO THE APPELLANT. THE CAPACITY OF SH. UDYAN TIBRAWAL TO PA Y IS NOT ESTABLISHED. (V) SH. SHASHI KAMAL DALMIYA HAD ISSUED A CHEQUE OF RS. 1,00,000 TO THE APPELLANT FROM OUT OF RS.L,70,0001- RECEIVED BY HIM THROUGH BANKING CHANNEL ON VARIOUS DATES BEFORE ISSUING THE CHEQUE. SH. SHASHI KAMAL DALMIYA HAS A WORK EXPERIENCE OF ABOUT 20 YRS AND I S RUNNING SHYAM MEDICAL AGENCY. VI) IN THE BANK ACCOUNT OF MIS. SHASHI KAMAL DALMIY A (HUF) CASH AMOUNTING RS.4,50,000/- WAS DEPOSITED ON DIFFERENT DATES BEFORE A CHEQUE OF THE SAME AMOUNT WAS ISSUED BY THE HUF TO THE APPELLANT. VII) CASH AMOUNTING TO RS. 1,25,000- IS OBSERVED TO HAVE BEEN DEPOSITED IN THE BANK ACCOUNT OF MS. ALKA DALMIYA DURING THE PERIOD IN WHICH SHE HAD ISSUED THREE CHEQUES AMOUNTING TO RS.6,00,000/- TO THE APPELLANT. THE CAPACITY TO PAY OF MS. ALKA DALMIYA, WHO IS NEI THER VERY QUALIFIED NOR VERY EXPERIENCED, IS NOT ESTABLISHED. 12 5.4 BASED ON THE ABOVE DISCUSSION, ADDITION AMOUNTI NG TO RS. 12.35 LACS REPRESENTING CASH DEPOSITED IN DIFFERENT BANK ACCOU NTS BEFORE RECEIVING LOAN FROM THESE PERSONS IS UPHELD AND THE REMAINING ADDITION OF RS.17.15 IS DELETED. 6. GROUND NO. 4 RELATES TO DISALLOWANCE O F EXPENSES AMOUNTING TO RS.30 LACS. IN THE ASSESSMENT ORDER THE A.O. HAS RECORDED AS UNDER:- THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF EXPE NSES ON ACCOUNT OF ADVERTISEMENT, RENT STAFF WELFARE, CONVEYANCE EX PENSES , SALES PROMOTION AND COMMISSION EXPENSES, BREAKAGE AND DAM AGE AND DISCOUNT VIDE QUESTIONNAIRE DATED 28.9.2012. THE A SSESSEE VIDE HIS LETTER SUBMITTED JUST THE AMOUNTS WITHOUT ANY DETAI LS OR EVIDENCE REGARDING THE AMOUNTS EXPENDED UNDER THESE HEADS. EXCEPT REN T PAID AGREEMENT NO OTHER DETAIL HAS BEEN FURNISHED. THE ASSESSEE WA S AGAIN SPECIFICALLY ASKED TO PRODUCE THE DETAILS OF EXPENSES AGAIN ON 2 1.11.12, BUT NO DETAILS HAVE BEEN FILED TILL DATE. THE COPY OF THE REPLY SC ANNED AND ANNEXED HEREWITH. THE ABOVE AMOUNTS WERE ALREADY IN THE PRO FIT AND LOSS ACCOUNT. THE ABOVE CHART SHOWS A TOTAL CASUAL AND LACKADAISI CAL APPROACH OF THE ASSESSEE TO THE SCRUTINY PROCEEDINGS WHICH CANNOT B E ACCEPTED. ACCORDINGLY, OUT OF THE BALANCE EXPENSES AS DISCUSS ED ABOVE OF RS.31,94,063/-, A SUM OF RS.30,00,000/- IS ADDED B ACK AS UNEXPLAINED.' 13 6.1. I FIND THAT THE ACTION OF THE A.O. OF DISALLOW ING ALMOST ENTIRE AMOUNT OF EXPENSES (RS.30,00,000 OUT OF RS. 31,94,063/-) W ITHOUT ANY RELEVANT FINDINGS OR APPLICATION OF MIND IS CLEARLY UNWARRAN TED .. 6.2. .IN THE CONTEXT OF THE APPEAL I AM OF THE OPIN ION THAT (I) IN THE BACK DROP OF EMPLOYMENT COST AMOUNTING TO RS.39 LACS, TH E STAFF WELFARE EXPENSES OF 59,728/- IS JUSTIFIABLE, (II) AGAINST A TURNOVER OF RS.8.93 CRORE IN A THE WHOLESALE BUSINESS IN MEDICINE, CONV EYANCE EXPENSES OF 15,95,677/- AND ADMINISTRATIVE EXPENSES OF RS. 57,0 00/- ARE ALSO JUSTIFIABLE, (III) THE AGREEMENT FOR RENT WAS SUBMI TTED BY THE APPELLANT BEFORE THE A.O. 6.3 WHILE THE DISALLOWANCE OF THESE EXPENSES IN TOT ALITY IS CLEARLY UNSUSTAINABLE, AS EXPENSES UNDER THESE ITEMS ARE BO UND TO BE THERE IN THE ORDINARY COURSE OF BUSINESS, IN VIEW OF APPELLANT'S LACKADAISICAL APPROACH TO THE SCRUTINY PROCEEDINGS AND NON-SUBMISSION OF T HE RELEVANT DETAILS BEFORE THE A.O., I AM UNABLE TO WRONG THE ACTION OF THE A.O. 6.4 AFTER CONSIDERING THE ISSUE IN TOTALITY, I HOLD THAT EVEN THOUGH THE RELEVANT DETAILS WERE NOT SUBMITTED TO THE A.O. AS ASKED BY HIM, THE APPELLANT DESERVES RELIEF IN RESPECT OF THE EXPENSE S CLAIMED. ACCORDINGLY, THE ADDITION OF 30 LAC IS SUSTAINED ONLY TO THE EXT ENT OF RS. 5,00,000. THE APPELLANT GETS A RE1IEF 25,00,000/- 14 5.1 ON GOING THROUGH THE AFORESAID FINDING OF THE L D. CIT(A) , WITH REGARD TO GROUND NO. 1 RELATING TO DELETION OF ADDITION OF RS . 20,00,000/- IS CONCERNED, I FIND THAT DURING THE APPELLATE PROCEEDINGS, THE ASS ESSEE WAS ASKED FOR JUSTIFICATION FOR A PREMIUM OF RS. 90 PER SHARE OF FACE VALUE RS. 10 AND IT WAS SUBMITTED BY THE ASSESSEE THAT DURING THE PRECEDIN G YEAR I.E. AY 2009-10, THE COMPANY EARNED RS. 38.5 PER EQUITY SHARE OF RS. 10 AND AS ON 31.3.2009 IT HAD A NET WORTH OF RS. 69.88 PER SHARE OF RS. 10. THERE FORE, LD. CIT(A) HAS RIGHTLY OBSERVED THAT THE SHARE APPLICANT VIZ. M/S TIMES G OODS PVT. LTD. HAD SUFFICIENT FUNDS AVAILABLE WITH IT AND THERE IS JUSTIFICATION FOR CHARGING A SHARE PREMIUM, HENCE, HE DELETED THE ADDITION IN DISPUTE WHICH DOE S NOT NEED ANY INTERFERENCE ON MY PART, THEREFORE, I UPHOLD THE SAME. AS A RES ULT, THE GROUND NO. 1 IS DISMISSED. 5.2 WITH REGARD TO GROUND NO. 2 REDUCING THE ADDIT ION OF RS. 29,50,000/- MADE ON ACCOUNT F UNSECURED LOAN TO RS. 12,35,000/- IS CONCERNED, I FIND LD. CIT(A) OBSERVED THAT ACTION OF THE AO IN TREATING T HE ENTIRE UNSECURED LOANS OF RS. 29.50 LACS AS UNDISCLOSED INCOME U/S. 68 WAS PREMAT URE. LD. CIT(A) OBSERVED THE FOLLOWING POINTS :- (I) A SUM OF RS4,60,000/- - WAS DEPOSITED IN CASH I N THE BANK ACCOUNT OF SH. SANJAY KUMAR NATHANI BEFORE CHEQUES WERE ISSUE D BY HIM TO THE APPELLANT. 15 (II) SH. B.K.TIBRAWAL, M.COM, AGED ABOUT 55 YRS. AN D HAVING AN EXPERIENCE OF 33 YRS. AT THE TIME OF THE ASSESSMENT PROCEEDINGS, HAD A NET WORTH OF ABOUT 60 LACS AND HAD RECEIVED MONEY T HROUGH BANKING CHANNELS AFTER WHICH HE ISSUED CHEQUE TO THE APPELL ANT. (III) SH. UJJAWAL KUMAR DALMIYA AGED ABOUT 35 YEARS , GRADUATE, HAVING 15 YRS. OF EXPERIENCE AT THE TIME OF ASSESSMENT HAD RE CEIVED MONEY THROUGH BANKING CHANNELS BEFORE GIVING LOAN TO THE APPELLAN T. (IV) CASH AMOUNTING TO RS. 2,00,0001- WAS DEPOSITED ON DIFFERENT DATES IN THE ACCOUNT OF SH. UDAYAN TIBRAWAL BEFORE HE ISSUED THE CHEQUE TO THE APPELLANT. THE CAPACITY OF SH. UDYAN TIBRAWAL TO PA Y IS NOT ESTABLISHED. (V) SH. SHASHI KAMAL DALMIYA HAD ISSUED A CHEQUE OF RS. 1,00,000 TO THE APPELLANT FROM OUT OF RS.L,70,0001- RECEIVED BY HIM THROUGH BANKING CHANNEL ON VARIOUS DATES BEFORE ISSUING THE CHEQUE. SH. SHASHI KAMAL DALMIYA HAS A WORK EXPERIENCE OF ABOUT 20 YRS AND I S RUNNING SHYAM MEDICAL AGENCY. VI) IN THE BANK ACCOUNT OF MIS. SHASHI KAMAL DALMIY A (HUF) CASH AMOUNTING RS.4,50,000/- WAS DEPOSITED ON DIFFERENT DATES BEFORE A CHEQUE OF THE SAME AMOUNT WAS ISSUED BY THE HUF TO THE APPELLANT. VII) CASH AMOUNTING TO RS. 1,25,000- IS OBSERVED TO HAVE BEEN DEPOSITED IN THE BANK ACCOUNT OF MS. ALKA DALMIYA DURING THE PERIOD IN WHICH SHE HAD ISSUED THREE CHEQUES AMOUNTING TO RS.6,00,000/- TO THE APPELLANT. 16 THE CAPACITY TO PAY OF MS. ALKA DALMIYA, WHO IS NEI THER VERY QUALIFIED NOR VERY EXPERIENCED, IS NOT ESTABLISHED. 5.2.1 IN VIEW OF THE ABOVE, LD. CT(A) RIGHTLY HELD THAT ADDITION OF RS. 12.35 LACS REPRESENTING CASH DEPOSITED IN DIFFERENT BANK ACCOU NTS BEFORE RECEIVING LOAN FROM THESE PERSONS AND UPHELD THE SAME ADDITION AN D THE REMAINING ADDITION OF RS. 17.15 LACS WAS DELETED. IN MY VIEW THE ACTION OF THE LD. CIT(A) IS A WELL A WELL REASONED ONE WHICH DOES NOT NEED ANY INTERFER ENCE ON MY PART, HENCE, I UPHOLD THE SAME. AS A RESULT, THE GROUND NO. 2 IS DISMISSED. 5.3 WITH REGARD TO GROUND NO. 3 RELATING TO REDUCI NG THE ADDITION FO RS. 30,00,000/- MADE ON ACCOUNT OF DISALLOWANCE OF EXP ENSES TO RS. 5,00,000/- IS CONCERNED, I FIND THE AO HAS OBSERVED AS UNDER: - THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF EXPEN SES ON ACCOUNT OF ADVERTISEMENT, RENT STAFF WELFARE, CONVEYANCE EXPEN SES , SALES PROMOTION AND COMMISSION EXPENSES, BREAKAGE AND DAMAGE AND DI SCOUNT VIDE QUESTIONNAIRE DATED 28.9.2012. THE ASSESSEE VIDE HIS LETTER SUBMITTED JUST THE AMOUNTS WITHOUT ANY DETAILS OR EVIDENCE RE GARDING THE AMOUNTS EXPENDED UNDER THESE HEADS. EXCEPT RENT PAID AGREE MENT NO OTHER DETAIL HAS BEEN FURNISHED. THE ASSESSEE WAS AGAIN SPECIFIC ALLY ASKED TO PRODUCE THE DETAILS OF EXPENSES AGAIN ON 21.11.12, BUT NO D ETAILS HAVE BEEN FILED TILL DATE. THE COPY OF THE REPLY SCANNED AND ANNEXED HER EWITH. THE ABOVE AMOUNTS WERE ALREADY IN THE PROFIT AND LOSS ACCOUNT . THE ABOVE CHART SHOWS A TOTAL CASUAL AND LACKADAISICAL APPROACH OF THE ASSESSEE TO THE 17 SCRUTINY PROCEEDINGS WHICH CANNOT BE ACCEPTED. ACCO RDINGLY, OUT OF THE BALANCE EXPENSES AS DISCUSSED ABOVE OF RS.31,94,063 /-, A SUM OF RS.30,00,000/- IS ADDED BACK AS UNEXPLAINED.' 5.3.1 I FURTHER FIND THAT LD. CIT(A) HAS NOTED THAT THE ACTION OF THE AO OF DISALLOWING ALMOST ENTIRE AMOUNT OF EXPENSES OUT ( RS.30,00,000 OUT OF RS. 31,94,063/-) WITHOUT ANY RELEVANT FINDINGS OR APPLI CATION OF MIND IS CLEARLY UNWARRANTED . IN THE CONTEXT OF THE APPEAL, LD. CI T(A) WAS OF THE OPINION THAT (I) IN THE BACK DROP OF EMPLOYMENT COST AMOUNTING TO RS .39 LACS, THE STAFF WELFARE EXPENSES OF 59,728/- IS JUSTIFIABLE, (II) AGAINST A TURNOVER OF RS.8.93 CRORE IN A THE WHOLESALE BUSINESS IN MEDICINE, CONVEYANCE EXPE NSES OF 15,95,677/- AND ADMINISTRATIVE EXPENSES OF RS. 57,000/- ARE ALSO J USTIFIABLE, (III) THE AGREEMENT FOR RENT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A .O. I FURTHER FIND THAT WHILE THE DISALLOWANCE OF THESE EXPENSES IN TOTALITY IS C LEARLY UNSUSTAINABLE, AS EXPENSES UNDER THESE ITEMS ARE BOUND TO BE THERE IN THE ORDINARY COURSE OF BUSINESS, IN VIEW OF ASSESSEE'S LACKADAISICAL APPRO ACH TO THE SCRUTINY PROCEEDINGS AND NON-SUBMISSION OF THE RELEVANT DETA ILS BEFORE THE A.O., LD. CIT(A) WAS UNABLE TO WRONG THE ACTION OF THE A.O. A FTER CONSIDERING THE ISSUE IN TOTALITY, I NOTE THAT LD. CIT(A) HAS RIGHTLY HELD THAT EVEN THOUGH THE RELEVANT DETAILS WERE NOT SUBMITTED TO THE A.O. AS ASKED BY HIM, THE ASSESSEE DESERVES RELIEF IN RESPECT OF THE EXPENSES CLAIMED. ACCORDIN GLY, THE ADDITION OF 30 LAC WAS 18 SUSTAINED ONLY TO THE EXTENT OF RS. 5,00,000. AS A RESULT, THE ASSESSEE GETS A RE1IEF 25,00,000/-. IN VIEW OF ABOVE, I AM OF THE C ONSIDERED VIEW, THAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD THE SAME. AS A RESU LT, THE GROUND NO. 3 IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/12/2016. SD/- ( (( (H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 26/12/2016 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 19