M/s Vishal Industries, Yamunanagar V. JCIT, Yamunanagar

ITA 411/CHANDI/2015

• Counselvise Citation: 41121514 RSA 2015
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 17-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT ITA NO. 411/CHD/2015 (ASSESSMENT YEAR: 2008-09) M/S VISHAL INDUSTRIES, VS. THE J.C.I.T., E-23, INDUSTRIAL AREA, YAMUNA NAGAR RANGE, YAMUNA NAGAR. YAMUNA NAGAR. PAN NO. AABFV0158K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 25.06.2015 DATE OF PRONOUNCEMENT : 17.07.2015 O R D E R PER H.L.KARWA, VP : THIS APPEAL FILED BY THE ASSESSEE IS DIR ECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PANCHKULA DATED 12.2.2015 RELATING TO AS SESSMENT YEAR 2008-09. 2. GROUND NOS. 1 AND 2 OF THE APPEAL READS AS UNDE R : 1. THAT THE LD. COMMISSIONER OF INCOME TAX( APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN REJECTING THE BOOK S OF ACCOUNT APPLYING THE PROVISIONS OF SECTION 145(3) IN UTT ER 2 DISREGARD OF THE EXPLANATIONS RENDERED WHICH IS ARBITRA RY AND UNJUSTIFIED. 2. THAT THE LD. COMMISSIONER OF INCOME TAX( APPEALS) HAS FURTHER ERRED IN DIRECTING THE ASSESSING OFFICER TO IMP OSE GP RATE OF 11% ON GROSS RECEIPTS WHICH IS ARBITRARY AN D UNJUSTIFIED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G OF CORE- VINEER AND CABLE AND DRUMS. THE CASE OF THE ASSES SEE WAS SELECTED FOR SCRUTINY. FIRST STATUTORY NOTICE UND ER SECTION 143(2) OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT) WAS ISSUED TO THE ASSESSEE ON 19.9.2009. SUBSEQUENTLY , THE ASSESSING OFFICER ISSUED A DETAILED QUESTIONNAIRE O N 13.1.2010 ALONGWITH STATUTORY NOTICES. FOR THE AS SESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DECLARED SALES OF RS.1,32,29,596/-, ON WHICH GROSS PROFIT OF RS.14,48 ,780/- GIVING GROSS PROFIT RATE OF 10.95% WAS SHOWN. B ESIDES THE ABOVE, THE ASSESSEE HAS ALSO SHOWN JOB WORK RECEIPT S OF RS.19,59,908/-. THE ASSESSING OFFICER OBSERVED THA T IF THE JOB WORK RECEIPTS AND PROPORTIONATE EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT ARE EXCLUDED, THE GROSS PROFIT RATE WILL BE EVEN LOWER. THE ASSESSING OFFICER HAS ALSO MENTIONED TH AT AS PER COLUMN 28(B) OF THE AUDIT REPORT, WITH REGARD TO QU ANTITATIVE DETAILS OF OPENING STOCK, CLOSING STOCK PURCHASES, SALES AND CLOSING STOCK THE REMARKS HAVE BEEN GIVEN THAT KEE PING IN VIEW THE NATURE OF BUSINESS IT IS PRACTICALLY NOT P OSSIBLE TO ASCERTAIN THE QUANTITATIVE DETAILS OF MATERIAL CONS UMED AND PRODUCTION THEREFROM. ACCORDING TO THE ASSESSING OFFICER, 3 THE ABOVE DETAILS ARE VITAL PART OF TRADING RESULTS WITHOUT WHICH THE TRADING RESULTS CANNOT BE RELIED UPON. HE FURTHER POINTED OUT THAT NO DAY-TO-DAY STOCK REGISTER HAS B EEN MAINTAINED AND PRODUCED. THE ASSESSING OFFICER AL SO STATED THAT THE RAW MATERIAL IS BEING PURCHASED IN QUINTAL S/CUBIC FEET, WHEREAS FINISHED PRODUCTS SUCH AS CABLE DRUMS ARE BEING SOLD IN NUMBERS AND CORE-VENEER BEING SOLD IN SQUAR E FEET. THE ASSESSING OFFICER ALSO OBSERVED THAT THE PAYMEN T MADE ON ACCOUNT OF FUEL AT RS.30,81,663/- WAS EXCESSIVE. OUT OF THE ABOVE PAYMENT, AN AMOUNT OF RS.21,52,303/- HAS BEEN PAID ON DIFFERENT DATES IN CASH. THUS, 69% OF TOTAL PA YMENTS HAVE BEEN MADE IN CASH, WHICH WERE NOT VERIFIABLE. SIM ILARLY, THE ASSESSEE CLAIMED RS.4,90,014/- UNDER THE HEAD REPA IR AND MAINTENANCE. PROPORTION OF CASH PAYMENT MADE UND ER THE SAID HEAD ALSO APPEARED TO BE VERY HIGH. THE ASSE SSING OFFICER ALSO NOTICED THAT THE VOUCHERS WERE SELF MA DE, AND HENCE, NOT VERIFIABLE. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE HAD PURCHASED TIMBER FROM SHRI VI SHAL GUPTA AT RS.19,60,000/-. THE ASSESSEE FIRM HAS CH ARGED INTEREST OF RS.29,498/- ON THE DEBIT BALANCE IN THE CAPITAL ACCOUNT OF SHRI VISHAL GUPTA BUT NO INTEREST HAS BE EN CHARGED ON THE DEBIT BALANCE IN IMPREST ACCOUNT. THE ASSE SSING OFFICER ALSO NOTED THAT MOST OF THE SALES/RECEIPTS FROM JOB WORK WERE FROM ITS SISTER CONCERN. THEREFORE, KEE PING IN VIEW THE ABOVE DISCREPANCY, THE ASSESSING OFFICER REJECT ED THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND TRA DING RESULTS AS WELL BY INVOKING THE PROVISIONS OF SECTI ON 145(3) OF THE ACT AND APPLIED A GROSS PROFIT RATE OF 15% ON G ROSS 4 RECEIPTS OF RS.1,51,89,504/-, WHICH RESULTED INTO A N ADDITION OF RS.8,29,645/- (RS.22,78,425/- - RS.14,48,780/- S HOWN BY THE ASSESSEE). 4. ON APPEAL, THE LEARNED CIT (APPEALS) UPHELD THE ORDER OF THE ASSESSING OFFICER WITH RESPECT TO REJE CTION OF BOOKS OF ACCOUNT UNDER SECTION 145(3) OF THE ACT. HOWEVER, THE LEARNED CIT (APPEALS) DIRECTED THE ASSESSING OF FICER TO RECOMPUTE THE GROSS PROFIT @ 11% INSTEAD OF 15% OF THE GROSS RECEIPTS, OBSERVING AS UNDER : 5.4 FURTHER , AFTER REJECTION OF BOOKS OF ACCOUNT, THE AO HAS ESTIMATED GROSS PROFIT BY APPLYING A GP RATE OF 15% ON THE GROSS RECEIPTS. THE APPELLANT HA S SHOWN THAT THERE HAS BEEN A SLIGHT FALL OF 0.34% IN THE GROSS PROFIT AS COMPARED TO THE IMMEDIATELY PRECEDING YEAR, WHICH IS BASICALLY ON ACCOUNT OF INCREASE IN THE GROSS RECEIPTS AS COMPARED TO THE PRECEDING YEAR. IT IS NOTED THAT THE GROSS PROFIT DECLARED BY APPELLANT IN A.Y. 2007-08 WAS 9.88% WHICH CAME DOWN TO 9.54% DURING THE YEAR. IT IS AL SO NOTED THAT IN A.Y. 2007-08 THE AO MADE SIMILAR OBSERVATIONS AS WELL EXPENSES DEBITED TO P&L ACCOUNT WERE NOT FULLY VOUCHED. FURTHER THERE WERE ELEMENTS OF PERSONAL USE OF TELEPHONE, TRAVELLING E TC. ON ACCOUNT OF THESE OBSERVATIONS, THE AO MADE A TRADING ADDITION OF RS.2.5 LACS WHICH WAS AGREED UPON BY THE APPELLANT. FURTHER, THE APPEAL WAS ALSO WITHDRAWN CONSIDERING THE TRADING ADDITION MADE IN IMMEDIATELY PRECEDING YEAR, THE GROSS PROFIT RAT E WORKS OUT @ 12.8%. THE APPELLANT'S SUBMISSION THAT IN A.Y. 2006-07, CIT(A) ESTIMATED 7.5% AS REASONABLE ESTIMATE IS NOT ACCEPTABLE ON THE FACTS THAT THE APPELLANT HAS TAKEN PLEA BEFORE CIT(A) ON CHANGE IN BUSINESS AS COMPARED TO THE PRECEDING A.YS. 2004- 5 05 & 2005-06, THEREFORE, EFFECTIVELY THERE HAS BEEN FALL IN THE GROSS PROFIT FROM 12.8% IN IMMEDIATELY PRECEDING YEAR TO 9.54% DURING UNDER CONSIDERATION. BUT THE TRADING ADDITION IN THE PRECEDING YEAR ALSO INCLUDED THE COMPONENTS RELATED TO DISALLOWANCE ON ITEMS INCLUDED IN P&L ACCOUNT HAVING EFFECT NOT ON GP BUT ON NET PROFIT. THEREFORE, MAKING A DISCOUNT ON THIS ACCOUNT A REASONABLE ESTIMATE OF GROSS PROFIT RATE IS ESTIMATED AT 11% ON THE GROSS RECEIPTS. THEREFORE, THE AO IS DIRECTED TO RE-COMPUTE THE GR OSS PROFIT @ 11% INSTEAD OF 15% OF THE GROSS RECEIPTS. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 5. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AT LENGTH AND ALSO PERUSED THE MATERIALS AV AILABLE ON RECORD. SHRI TEJ MOHAN SINGH, LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THERE HAD BEEN AN I NCREASE OF RS.66.46 LACS WHICH IS 77.80% INCREASE IN THE GR OSS RECEIPTS OF THE ASSESSEE AS COMPARED TO THE IMMEDIA TELY PRECEDING YEAR. HE HAS FURTHER SUBMITTED THAT THER E WAS NO JUSTIFICATION IN REJECTING THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. IN MY OP INION, THERE IS NO FORCE IN THE ABOVE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE. THE ASSESSING OFFICER WAS FULLY JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. TH E ASSESSEE HAD NOT MAINTAINED PROPER STOCK REGISTER TO FIND OU T THE QUANTITATIVE DETAILS OF OPENING AND CLOSING STOCK, EXPENDITURE ON BILLS AND EXPENDITURE MADE ON SELF MADE VOUCHERS , WHICH WERE NOT VERIFIABLE. FURTHERMORE, THE MAJORITY OF THE SALES AND RECEIPTS FROM JOB WORK ARE FROM SISTER CONCERNS . EVEN THE AUDITORS OF THE ASSESSEE HAVE STATED THAT IN VI EW OF THE 6 NATURE OF BUSINESS OF THE ASSESSEE, IT IS PRACTICAL LY NOT POSSIBLE TO ASCERTAIN THE QUANTITATIVE DETAILS OF T HE MATERIAL CONSUMED AND PRODUCTION THEREFROM. IN MY OPINION, THE ASSESSING OFFICER WAS JUSTIFIED IN INVOKING THE PRO VISIONS OF SECTION 145(3) OF THE ACT. AS REGARDS THE GROSS P ROFIT RATE, THE LEARNED CIT (APPEALS) HAS ADOPTED THE SAME @ 11 % INSTEAD OF 15% OF THE GROSS RECEIPTS. IN THIS YEAR, THE AS SESSEE HAD DECLARED GROSS PROFIT @ 9.54% AS AGAINST GROSS PROF IT @ 9.88% DURING THE YEAR ENDING 31.3.2007 AND 7.40% DURING T HE YEAR ENDING 31.3.2006. THERE IS INCREASE OF RS.66.46 LA CS IN THE GROSS RECEIPTS OF THE ASSESSEE DURING THIS YEAR AS COMPARED TO THAT IN IMMEDIATELY PRECEDING YEAR. THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DECLARED RATE OF GR OSS PROFIT OF 9.54% WAS MUCH ABOVE THE AVERAGE RATE OF 8.94% D ECLARED IN LAST THREE YEARS. THIS YEAR, THE ASSESSING OFF ICER HAS APPLIED GROSS PROFIT @ 15% ON GROSS RECEIPTS ON ADH OC BASIS. THE ASSESSING OFFICER HAS NOT DISCUSSED THE PAST HI STORY OF THE ASSESSEES CASE. HE HAS ALSO NOT CITED ANY COM PARABLE CASE WHILE APPLYING THE GROSS PROFIT RATE OF 15%. HOWEVER, THE LEARNED CIT (APPEALS) ESTIMATED THE GROSS PROFI T RATE AT 11% ON THE GROSS RECEIPTS FOR THE REASONS STATED IN PARA 5.4 OF HIS ORDER, REPRODUCED HEREINABOVE. THE LEARNED CI T (APPEALS) OBSERVED THAT THERE WAS A FALL IN THE GROSS PROFIT RATE FROM 12.8% IN THE IMMEDIATELY PRECEDING YEAR TO 9.54% DU RING THE YEAR UNDER CONSIDERATION. IT IS WELL SETTLED THAT THE GROSS PROFIT RATE CANNOT BE UNIFORM IN ALL THE YEARS AND IT MAY VARY DUE TO VARIOUS FACTORS, E.G., THE GENERAL MARKET CO NDITIONS, RISE OR FALL IN MARKET RATES, THE TURN OVER ACHIEVE D, AND MANY 7 OTHERS WHICH MAY PREVAIL IN THE BUSINESS. IT IS O BSERVED THAT THE LEARNED CIT (APPEALS) HAS ALSO APPLIED AN ADHOC RATE OF GROSS PROFIT OF 11%, WHICH APPEARED TO HIM AS REASO NABLE ESTIMATE OF GROSS PROFIT. HOWEVER, THE LEARNED CI T (APPEALS) HAS NOT GIVEN ANY COGENT REASON WHILE ADOPTING THE GROSS PROFIT @ 11% OF THE GROSS RECEIPTS. THERE SHOULD B E REASONABLE BASIS OF ESTIMATE. THE REVENUE CAN NOT APPLY ARBITRARY RATE OF PROFIT. CONSIDERING THE ENTIRE F ACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND KEEPING IN VI EW THE PAST HISTORY, I AM OF THE OPINION THAT THE ENDS OF JUSTICE WILL MEET IF THE GROSS PROFIT RATE OF 10% IS ADOPTED. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE THE GROSS PROFIT @ 10% INSTEAD OF 11% APPLIED BY THE LEARNED CIT (AP PEALS). THIS GROUND OF APPEAL STANDS ALLOWED PARTLY. 6. GROUND NOS.3 AND 4 OF THE APPEAL READ AS UNDER : 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE DISALLOWANCE OF INTEREST OF RS.2,23,882/- ON ALLEGED DEBIT BALANC ES OF SH. VISHAL GUPTA AND SH. VED PARKASH GUPTA WHICH IS ARB ITRARY AND UNJUSTIFIED. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS FURTHER ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE DI SALLOWANCE OF INTEREST OF RS.1,98,392 ON ALLEGED DEBIT BALANCES O F M/S VIBHU COMPOSITE WORKS AND M/S PRAGATI POLYMERS WHICH IS A RBITRARY AND UNJUSTIFIED. 7. THE ASSESSEE HAD PURCHASED TIMBER WORTH RS.38,36,036/- DURING THE YEAR UNDER CONSIDERATION. ACCORDING TO THE ASSESSING OFFICER, ON A PERUSAL OF IMPREST 8 ACCOUNT OF SHRI VISHAL GUPTA (PARTNER), IT WAS NOTI CED THAT THE OPENING DEBIT BALANCE OF SHRI VISHALA GUPTA WAS AT RS.31,39,323/-. THE SAME ACCOUNT FURTHER REVEALED THAT THE ASSESSEE FIRM HAS PURCHASED TIMBER FROM SHRI VISHAL GUPTA AT RS.19,60,000/-. THE ASSESSING OFFICER FOUND THAT T HE ASSESSEE FIRM HAS CHARGED AN INTEREST OF RS.29,498/ - ON THE DEBIT BALANCE IN THE CAPITAL ACCOUNT OF SHRI VISHAL GUPTA BUT NO INTEREST HAS BEEN CHARGED ON THE DEBIT BALANCE I N IMPREST ACCOUNT. THEREFORE, THE INTEREST EXPENDITURE ON A CCOUNT OF LOAN FROM BANK WAS DISALLOWED TO THE EXTENT INTERES T NOT CHARGED FROM THOSE PERSONS AND SISTER CONCERNS AS M ENTIONED IN PARA 3 OF THE ASSESSING OFFICER. THE CALCULATIO N GIVEN BY THE ASSESSING OFFICER READS AS UNDER : I) INTEREST ON DEBIT BALANCE OF SH.VISHAL G UPTA =RS. 1,52,359/- ON RS,25,39,323/- FOR 01.04.2007 TO 30.09.2007 @ 12 % =RS. 1,52,359/- ON AVERAGE BALANCE OF RS.25,19,400/- FOR THE MONTH OF OCTOBER 2007 =RS.20,436/- ON AVERAGE BALANCE OF RS.10,63,552/- FOR THE MONTH OF NOVEMBER 2007 =RS. 10,635/- ON RS.3,28,971/- FOR DECEMBER TO MARCH 2008 4 MONTHS @12% =RS. 13,158/- TOTAL INTEREST TO BE DISALLOWED =RS. 1,96,588/- II) INTEREST ON DEBIT BALANCE OF SH.VED PRAKASH ON RS.4,03,354/- FROM 01.04.2007 TO 14.05.2007 44 DAYS @ 12% RS. 5,834/- ON RS.2,03,354/- FROM 15.05.2007 TO 31.03.2008 321 DAYS @ 12% RS.21,460/ - TOTAL INTEREST TO BE DISALLOWED RS.27,294/- III) INTEREST ON DEBIT BALANCE WITH M/S VIBHU COMPOSITE WORKS (SISTER CONCERN). ON RS.5,95,000/- FROM DECEMBER 2007 TO MARCH 2008 @ 12% RS . 23 800/- IV) INTEREST ON DEBIT BALANCE WITH M/S PRAGTI POLY MERS (SISTER CONCERN) 9 ON RS. 14,09,936/- FROM 01.04.2007 TO 30.06.2007 @1 2% FOR 3 MONTHS RS. 42,298/- ON RS.14,69,936/- FROM 1.04.2007 TO 31.03.2008 @12 % FOR 9 MONTHS RS. 1,32.294/- TOTAL RS. 1,74,592/- TOTAL INTEREST DISALLOWABLE = RS.L,96,588+ RS.27,29 4+ RS.23,800 + L,74,592 = RS.4,26,774/- 8. ON APPEAL, THE LEARNED CIT (APPEALS) RESTRICTED THE DISALLOWANCE TO RS.4,22,274/- FOR THE REASONS STATE D IN PARA 6.2 OF THE IMPUGNED ORDER. 9. I HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES ON THIS ISSUE. THE LEARNED COUNSEL FOR TH E ASSESSEE POINTED OUT THAT THE ASSESSEE HAS SUBMITTED DETAILE D WRITTEN SUBMISSIONS BEFORE THE LEARNED CIT (APPEALS) ON 16. 10.2012. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE LEARNED CIT (APPEALS) HAS NOT CONSIDERED THE SAID SUBMISSIO NS IN ITS ENTIRETY. ACCORDING TO THE LEARNED COUNSEL FOR TH E ASSESSEE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACT URING OF TIMBER PRODUCTS. THE ASSESSEE PURCHASES TIMBER DI RECTLY FROM FARMERS IN THE OPEN MARKET. SUCH FARMERS INS ISTED ON PAYMENT BE MADE TO THEM IN CASH AT THE TIME OF DELI VERY. IN ORDER TO MEET THE ABOVE SAID REQUIREMENT, THE ASSES SEE WAS OBLIGED TO KEEP SUBSTANTIAL AMOUNT OF CASH WITH IT WHICH IS ENTRUSTED TO THE PARTNERS AS THEIR IMPREST/FOR SAFE CUSTODY AND THIS ASPECT OF THE MATTER WAS EXPLAINED TO THE ASSESSING OFFICER VIDE LETTERS DATED 3.12.2010 AND 30.8.2010. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT WAS 10 EXPLAINED TO THE AUTHORITIES BELOW THAT NO TIMBER W AS PURCHASED FROM SHRI VISHAL GUPTA AS ALLEGED BY THE ASSESSING OFFICER VIDE PARA 2.2 OF THE ASSESSMENT ORDER. IN FACT, THE PAYMENT FOR PURCHASE OF TIMBER WAS MADE THROUGH HIS IMPREST ACCOUNT. IN VIEW OF THE ABOVE, THE SAID ITEM WAS NOT MENTIONED IN THE AUDIT REPORT UNDER SECTION 44AB OF THE ACT BY THE AUDITORS. AS REGARDS THE DEBIT BALANCE OF RS.27,294/- OF IMPREST ACCOUNT OF SHRI VED PARKASH GUPTA, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E WAS OBLIGED TO KEEP SUBSTANTIAL AMOUNT OF CASH WITH IT FOR THE SMOOTH RUNNING OF ITS BUSINESS. THE AMOUNT HELD B Y THE PARTNERS AS CASH IN THEIR IMPREST WAS FOR PURCHASES TO BE MADE/HOLDING CASH FOR SAFE CUSTODY. THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT BY NO STRETCH OF IMAGIN ATION, ANY PART OF INTEREST CAN BE DISALLOWED ON THIS AMOUNT. HE FURTHER SUBMITTED THAT THE COPIES OF ACCOUNTS OF THE ABOVE SAID PARTNERS FOR THE YEAR ENDING 31.3.2009, WHEREIN T HE ABOVE SAID ACCOUNTS ARE ADJUSTED, WERE DULY FILED WITH TH E ASSESSING OFFICER, HOWEVER, HE HAS CONVENIENTLY IGNORED THE SAME. THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE ASSESSEE HAS NEVER PURCHASED TIMBER FROM SHRI VISHA L GUPTA OF RS.19,60,000/- AS ALLEGED BY THE ASSESSING OFFIC ER. IN FACT, THE PAYMENT FOR PURCHASE OF TIMBER WAS MADE THROUGH HIS IMPREST ACCOUNT. AS REGARDS THE INTEREST ON DEBIT BALANCE WITH M/S VIBHU COMPOSITE WORKS (SISTER CONCERN) AND INTEREST ON DEBIT BALANCE WITH M/S PRAGTI POLYMERS (SISTER C ONCERN), THERE IS NO DISCUSSION IN THE ORDER OF THE ASSESSIN G OFFICER. HE HAS GIVEN ONLY CALCULATION OF DISALLOWANCE WITHO UT 11 CONSIDERING THE EXPLANATION OF ASSESSEE. CONSIDERI NG THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, I AM OF THE OPINION THAT THE SUBMISSIONS MADE BY THE LEARNED CO UNSEL FOR THE ASSESSEE NEEDS TO BE VERIFIED AT THE LEVEL OF T HE ASSESSING OFFICER. THE CONTENTION OF THE ASSESSEE IS THAT I T HAS NOT PURCHASED ANY TIMBER FROM SHRI VISHAL GUPTA OF RS.19,60,00/- AS ALLEGED BY THE ASSESSING OFFICER. ON THE CONTRARY, IT IS CLAIMED THAT THE ISSUE WAS EXPLAINE D TO THE ASSESSING OFFICER AND SUPPORTING EVIDENCES WERE ALS O PRODUCED BEFORE THE AUTHORITIES BELOW. IN VIEW OF THE ABOVE, I THINK IT APPROPRIATE TO SET ASIDE THE FINDINGS OF T HE LEARNED CIT (APPEALS) ON THIS ISSUE AND REMAND THE MATTER T O THE ASSESSING OFFICER WITH DIRECTION TO DECIDE THE ISSU E AFRESH KEEPING IN VIEW THE ABOVE OBSERVATIONS AND ALSO IN ACCORDANCE WITH LAW AFTER AFFORDING DUE AND REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. THE GROUND NOS.3 AND 4 OF THE APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED PARTLY AND PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF JULY, 2015. SD/- (H.L.KARWA) VICE PRESIDENT DATED : 17 TH JULY, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 12