Income-tax Officer, V. Nabaji Pralhad Kalbhor, Pune

ITA 430/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1687 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Income from undisclosed sources; Additional evidence; Retraction; Revised return
• Section: 40A(3); 133A; 2

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE ! ' , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM ITA NO.430/PN/2014 ASSESSMENT YEAR : 2009-10 THE INCOME TAX OFFICER, WARD 4(3), PUNE. .. APPELLANT VS. NABAJI PRALHAD KALBHOR, AT POST LONI KALBHOR, PUNE SOLAPUR ROAD, PUNE 412 201. PAN: AIDPK6547M ... RESPONDENT / APPELLANT BY : SHRI MUKESH JHA / RESPONDENT BY : SHRI PRAMOD SHINGTE / DATE OF HEARING : 21.04.2016 / DATE OF PRONOUNCEMENT: 28.06.2016 % / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINS T THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 22.10.2013 FOR THE ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF POULTRY AN D BREEDING FARM UNDER THE NAMES M/S KIRAN POULTRY FARM AND M/S KIRAN BREEDING FARM AT LONI KALBHOR, PUNE. THE ASSESSEE HAD FILED HIS ORIGINAL RETURN OF INCOM E FOR THE IMPUGNED ASSESSMENT YEAR ON 18.09.2009 DECLARING LOSS OF RS.1,38,177/-. A SURVEY ACTION UNDER SECTION 2 ITA NO.430/PN/2014 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFER RED TO AS THE ACT) WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 23. 02.2010. THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE IMPOUNDED DURING THE C OURSE OF SURVEY. THE ASSESSEE IN HIS STATEMENT RECORDED DURING SURVEY HA D DECLARED ADDITIONAL INCOME OF RS.40 LAKHS FOR THE ASSESSMENT YEAR 2009-10. TH EREAFTER, THE ASSESSEE FILED HIS REVISED RETURN OF INCOME ON 12.10.2010 DECLARING IN COME OF RS.28,390/-. ALONG WITH REVISED RETURN OF INCOME, THE ASSESSEE FILED A NOTE RETRACTING FROM THE DECLARATION MADE AT THE TIME OF SURVEY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE FOLLOWING A DDITIONS/DISALLOWANCES IN THE INCOME RETURNED BY THE ASSESSEE :- (I) ADDITIONAL INCOME DECLARED DURING THE COURSE OF SURVEY ACTION : RS. 40,00,000/- (II) DISCREPANCY IN STOCK : RS. 22,04,832/- (III) EXCESS LIABILITY IN SUNDRY CREDITORS : RS. 7,21,323/- (IV) ADDITIONS U/S 40(A)(IA) FOR NON-DEDUCTION OF TDS ON PAYMENT OF RENT : RS. 4,34,100/- (V) AD-HOC DISALLOWANCE ON ACCOUNT OF DIESEL & OIL EXPENSES, REPAIRS & MAINTENANCE EXPENSES, ETC. : RS. 5,76,431/- TOTAL : RS. 79,36,686/- 3. AGGRIEVED BY THE ASSESSMENT ORDER DATED 26.12.20 11, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE IMPUGNED ORDER ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND DELETED THE ENT IRE ADDITIONS MADE ON ACCOUNT OF DISCREPANCY IN STOCK, EXCESS LIABILITY TOWARDS S UNDRY CREDITORS, DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT. IN SO FAR AS THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE IN STATEMENT MADE DURING SURVEY ACT ION, THE CIT(A) DELETED THE ADDITION OF RS.10,00,000/- BY GIVING THE BENEFIT OF EXCEPTION PROVIDED UNDER RULE 6DD(E)(II) OF THE INCOME TAX RULES, 1962 (HEREINAFT ER REFERRED TO AS THE RULES) AND IN RESPECT OF THE REMAINING RS.30,00,000/-, THE CIT(A) RESTRICTED THE ADDITION BY APPLYING GROSS PROFIT RATE OF 20% ON UNACCOUNTED SA LES. WITH REGARD TO THE AD-HOC 3 ITA NO.430/PN/2014 DISALLOWANCES MADE ON EXPENSES, THE CIT(A) RESTRICT ED THE DISALLOWANCE TO 10% IN RESPECT OF OIL AND DIESEL EXPENSES AND 15% ON TRANS PORTATION, REPAIRS & MAINTENANCE EXPENSES. AGAINST THESE FINDINGS OF TH E CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN DELETING THE ADDITION OF RS. 10 LACS U/S. 40A(3) OF INCOME TAX A CT, 1961 HOLDING THAT ASSESSEE'S BUSINESS FALLS UNDER THE SPECIFIC EXCEPTION PROVIDE D IN RULE 6DD(E)(II) OF INCOME TAX RULES, 1962 WITHOUT APPRECIATING THAT THE EXCEPTION IS PROVIDED FOR PAYMENTS MADE FOR PURCHASE OF PRODUCE OF POULTRY FARMING AND NOT FOR ASSESSEES ENGAGED IN POULTRY FARMING. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN APPLYING THE GROSS PROFIT RATE OF 20% ON THE UNACCOUNTED SALES O F RS. 30,00,000/-, THEREBY RESTRICTING THE ADDITION TO RS. 6,00,000/-, WITHOUT APPRECIATING THE FACT THAT THERE WERE NO EVIDENCE OF ANY CORRESPONDING PURCHASES DEB ITED TO P&L ACCOUNT RELATABLE TO UNACCOUNTED SALES. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN RESTRICTING THE ABOVE ADDITION WHEN THE ASSESSEE HIMSELF HAD ADMITT ED UNACCOUNTED SALES OF RS. 30 LACS IN THE COURSE OF SURVEY ACTION U/S. 133A OF THE ACT ON THE BASIS OF EVIDENCES FOUND AND NO AUTHENTIC REASONS FOR RETRACTION HAS B EEN SUBMITTED BY THE ASSESSEE EITHER AT THE ASSESSMENT OR APPELLATE PROCEEDINGS. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN HOLDING THAT THERE WAS NO DISCREPANCY IN OPENING STOCK OF CONSOL IDATED P&L ACCOUNT WHEN THE DISALLOWANCE WAS MADE ON ACCOUNT OF DISCREPANCY FOU ND IN THE CLOSING STOCK OF A.Y. 2008-09 (RS. 20,36,821/- FOR KIRAN POULTRY FAR M & KIRAN BREEDING FARM) AND OPENING STOCK FOR A.Y. 2009-10 (RS. 42,41,653/-) WH ICH HAS NOT BEEN CONSIDERED. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING THE DISALLOWANCE OF RS. 7,21,323/- ADMITTING ADDITIONAL EVIDENCE IN THE SHAPE OF CERTAIN RECONCILED LEDGER EXTRACTS WITHOUT GIVING ANY OPPOR TUNITY TO THE ASSESSING OFFICER. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN DELETING THE ABOVE DISALLOWANCE WITHOUT APPRECIATING THE FACT TH AT THE DISALLOWANCE WAS MADE ON VERIFICATION OF THE LEDGER EXTRACTS & CONFIRMATI ONS SUBMITTED BY THE FOUR CREDITORS AND AS THE ACCOUNT BALANCE DID NOT TALLY WITH THE F IGURES APPEARING IN THE ACCOUNTS OF THE ASSESSEE. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OR ALL THE GROUNDS OF APPEAL. 4. SHRI MUKESH JHA REPRESENTING THE DEPARTMENT VEHE MENTLY SUPPORTED THE FINDINGS OF THE ASSESSING OFFICER IN MAKING THE ADD ITIONS. THE LD. DR SUBMITTED THAT DURING THE COURSE OF SURVEY THE ASSESSEE HAD MADE A STATEMENT AND HAD DECLARED RS.40,00,000/- AS ADDITIONAL INCOME. SUBSEQUENTLY, THE ASSESSEE RETRACTED FROM THE DISCLOSURE STATEMENT MADE DURING SURVEY. WHILE RETRACTING THE STATEMENT, THE 4 ITA NO.430/PN/2014 ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE REASONS F OR RETRACTING AS MANDATED UNDER THE PROVISIONS OF SECTION 292C OF THE ACT. T HE CIT(A) HAS ERRED IN ACCEPTING THE CONTENTIONS OF THE ASSESSEE AND DELETING THE AD DITION OF RS.40,00,000/- BY BRINGING THE SAID AMOUNT WITHIN THE EXCEPTION PROVI DED UNDER RULE 6DD(E)(II) OF THE RULES. THE LD. DR CONTENDED THAT THE PROVISIONS OF RULE 6DD(E)(II) WOULD NOT APPLY IN THE CASE OF ASSESSEE AS THE EXCEPTION UNDER THE SAID RULE IS FOR MAKING PAYMENT FOR THE PURCHASE OF PRODUCE OF POULTRY FARMING AND IT IS NOT AVAILABLE TO THE ASSESSEES WHO ARE ENGAGED IN THE BUSINESS OF POULTR Y FARMING. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE IN HIS STATEMENT RECORD ED DURING SURVEY HAS HIMSELF ADMITTED UNACCOUNTED SALES OF RS.30,00,000/- AND NO VALID REASONS WHATSOEVER WAS GIVEN BY THE ASSESSEE FOR RETRACTING HIS STATEM ENT. THEREFORE, THE CIT(A) OUGHT TO HAVE CONFIRMED THE ADDITION OF RS.30,00,00 0/-. 4.1 IN RESPECT OF DISCREPANCY IN OPENING AND CLOSIN G STOCK, THE LD. DR SUBMITTED THAT THE ASSESSEE IN HIS BOOKS FOR THE FINANCIAL YE AR 2007-08 HAS SHOWN THE CLOSING STOCK OF RS.20,36,821/- AND IN THE OPENING STOCK FO R THE FINANCIAL YEAR 2008-09 RS.42,41,653/-. THE ASSESSING OFFICER HAS MADE ADD ITION OF DIFFERENCE BETWEEN THE CLOSING STOCK OF THE EARLIER FINANCIAL YEAR AND OPENING STOCK OF THE SUCCEEDING FINANCIAL YEAR. THE CIT(A) HAS ERRED IN DELETING T HE ADDITIONS MERELY ON THE BASIS OF ASSERTIONS MADE BY THE ASSESSEE. 4.2 IN RESPECT OF DELETING THE DISALLOWANCE OF RS.7 ,21,323/-, THE LD. DR SUBMITTED THAT THE CIT(A) DELETED THE ADDITION AFTER ACCEPTIN G THE ADDITIONAL EVIDENCE IN THE SHAPE OF LEDGER EXTRACTS WITHOUT AFFORDING OPPORTUN ITY TO THE ASSESSING OFFICER TO EXAMINE THE SAME OR SEEKING REMAND REPORT ON THE AD DITIONAL EVIDENCE FILED BY THE ASSESSEE. THE LD. DR PRAYED FOR SETTING ASIDE THE IMPUGNED ORDER AND RESTORING THE FINDINGS OF THE ASSESSING OFFICER. 5 ITA NO.430/PN/2014 5. ON THE OTHER HAND, SHRI PRAMOD SHINGTE APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY SUPPORTED THE FINDINGS OF THE C IT(A). THE LD. AR SUBMITTED THAT DURING THE COURSE OF SURVEY BOOKS OF ACCOUNT O F THE ASSESSEE WERE IMPOUNDED. THE ASSESSEE RE-CASTED HIS BOOKS OF ACC OUNT AFTER TAKING PHOTOCOPIES OF THE BOOKS FROM THE DEPARTMENT. THE RE-CASTED BO OKS OF ACCOUNT AND ALL OTHER RELEVANT DOCUMENTS WERE FURNISHED BY THE ASSESSEE B EFORE THE ASSESSING OFFICER. NO FRESH EVIDENCE WAS FILED BEFORE THE CIT(A) DURIN G FIRST APPELLATE PROCEEDINGS. THE LD. AR CONTENDED THAT DURING THE COURSE OF SURV EY, THE ASSESSEE HAD MADE A STATEMENT DECLARING RS.40,00,000/- AS ADDITIONAL IN COME. THE ASSESSEE HAD CATEGORICALLY STATED THAT RS.10,00,000/- IS DECLARE D ON ACCOUNT OF CASH PAYMENTS EXCEEDING RS.20,000/- AND RS.30,00,000/- TOWARDS CA SH SALES OUTSIDE THE CASH BOOK. AT THE TIME OF MAKING STATEMENT, THE ASSESSE E COULD NOT UNDERSTAND THE IMPLICATIONS OF THE SAME AND THAT THE DECLARATION W AS MADE WITHOUT MAKING REFERENCE TO ANY DOCUMENT. THE ASSESSEE SUBSEQUENT LY RETRACTED FROM THE SAID STATEMENT. THE LD. AR FURTHER SUBMITTED THAT EXCEP T FOR THE STATEMENT OF THE ASSESSEE DECLARING ADDITIONAL INCOME OF RS.40,00,00 0/-, THERE IS ABSOLUTELY NO DOCUMENT ON RECORD NOR ANY DOCUMENT WAS SEIZED DURI NG THE COURSE OF SURVEY WHICH WOULD CORROBORATE WITH THE STATEMENT OF THE A SSESSEE. THE LD. AR SUBMITTED THAT IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL A DDITION CANNOT BE MADE MERELY ON THE BASIS OF DECLARATION. IN SUPPORT OF HIS SUB MISSIONS, THE LD. AR PLACED RELIANCE ON THE DECISION RENDERED BY THE HONBLE SU PREME COURT OF INDIA IN THE CASE OF CIT VS. S. KHADER KHAN SON REPORTED AS 352 ITR 480 (SC) AND CBDT INSTRUCTIONS DATED 10 TH MARCH, 2003 AND 18 TH DECEMBER, 2014 ON THE SUBJECT. IN RESPECT OF DISCREPANCY IN CLOSING STOCK, THE LD. AR SUBMITTED THAT THE ASSESSEE IS CARRYING ON POULTRY BUSINESS UNDER TWO SEPARATE NAMES I.E. M/S KIRAN POULTRY FARM AND M/S KIRAN BREEDING FARM AND IS MAI NTAINING SEPARATE BOOKS OF ACCOUNT FOR BOTH THESE ENTITIES. IN HIS ORIGINAL R ETURN OF INCOME, THE ASSESSEE HAD 6 ITA NO.430/PN/2014 SUBMITTED SEPARATE PROFIT & LOSS ACCOUNT AND BALANC E SHEET FOR THE AFORESAID POULTRY BUSINESS. THE OPENING STOCK IN RESPECT OF M/S KIRAN POULTRY FARM WAS RS.20,36,821/- AND IN RESPECT OF M/S KIRAN BREEDING FARM WAS RS.22,04,832/-. HOWEVER, IN THE REVISED RETURN OF INCOME THE ASSESS EE FURNISHED CONSOLIDATED TRADING AND PROFIT & LOSS ACCOUNT OF BOTH THE BUSIN ESS FIRMS SHOWING OPENING STOCK OF RS.42,41,653/-. THE ENTIRE CONFUSION OCCURRED B ECAUSE EARLIER THE ASSESSEE HAD GIVEN SEPARATE TRADING AND PROFIT & LOSS ACCOUNT FO R THE TWO BUSINESSES AND SUBSEQUENTLY THE ASSESSEE FURNISHED CONSOLIDATED TR ADING AND PROFIT & LOSS ACCOUNT FOR HIS TWO DIFFERENT POULTRY BUSINESS FIRM S. THE ASSESSEE EXPLAINED THE REASONS FOR DIFFERENCE IN OPENING AND CLOSING STOCK BEFORE THE CIT(A). THE CIT(A) AFTER VERIFYING THE SAME DELETED THE ADDITION. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS, COMPARED THE FIGURES OF THE OPENING STOCK OF THE CONSOLIDATED TRADING AND PROFIT & LOSS ACCOUNT WITH THE CLOSING BALANCE OF M/S KIRAN POULTRY FARM OF THE PRECEDING FINANCIAL YEAR AND MADE ADDITIONS OF THE DIFFERENCE IN AMOUNT OF RS.22,04,832/-. 5.1 THE LD. AR FURTHER SUBMITTED THAT IN SO FAR AS EXCESS LIABILITY IN SUNDRY CREDITORS IS CONCERNED, THE ASSESSING OFFICER ADDED THE AMOUNT WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSEE TO EXPLAIN AND RECONCIL E THE FIGURES. THE ASSESSEE EXPLAINED THE SAME FROM THE LEDGER EXTRACTS OF THE FOUR PARTIES DURING APPELLATE PROCEEDINGS. THE CIT(A) AFTER VERIFYING THE DETAIL S DELETED THE ENTIRE ADDITION. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE IMPUG NED ORDER PASSED BY THE CIT(A) IS WELL REASONED AND THUS DOES NOT CALL FOR ANY INTERFERENCE. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRES ENTATIVES OF THE RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DOCUMENTS AND DECISIONS ON WHICH THE LD. AR HAS PLACED RELIANCE. 7 ITA NO.430/PN/2014 IT IS AN UNDISPUTED FACT THAT DURING THE COURSE OF SURVEY, THE ASSESSEE MADE DECLARATION OF ADDITIONAL INCOME OF RS.40,00,000/-. THE RELEVANT EXTRACT OF THE STATEMENT OF ASSESSEE RECORDED DURING THE COURSE OF SURVEY UNDER SECTION 133A IS AS UNDER :- Q13 ON PERUSAL OF THE CASH BOOKS FOR THE FINANCIAL YEAR 2008-09, FOUND DURING THE COURSE OF SURVEY CONDUCTED AT YOUR BUSINESS PRE MISES, IT IS SEEN THAT CERTAIN CASH PAYMENTS EXCEEDING RS.20000/- HAVE BEEN MADE B Y YOU TO DIFFERENT PARTIES. THERE ARE ALSO INSTANCES OF CASH SALES WHICH ARE NO T FULLY REFLECTED IN YOUR RETURN OF INCOME. PLEASE EXPLAIN THE SAME? A13 IN OUR BUSINESS IT IS IMPERATIVE TO PAY CASH TO CARRY OUT THE BUSINESS ON A DAILY BASIS. I AM NOT CONVERSANT WITH THE PROVISIO NS OF THE INCOME TAX ACT, WHICH PROHIBITS CASH PAYMENTS ABOVE RS.20000/-. I ALSO A DMIT THAT CERTAIN CASH SALES HAVE NOT BEEN ENTERED INTO BOOKS AND HAVE NOT DISCL OSED THE SAME IN THE RETURN OF INCOME. I HAVE WORKED OUT THE QUANTUM OF SUCH IRRE GULARITY WHICH INVOLVES CASH PAYMENTS ABOVE RS.20000/- AMOUNTING TO RS.10,00,000 AND CASH SALE OUTSIDE BOOK AMOUNTING TO RS.30,00,000/-. ACCORDINGLY, I P ROPOSE TO REVISE MY RETURN OF INCOME FOR THE ASST. YR. 2009-10 OFFERING AN ADDITI ONAL INCOME OF RS.4000000/-. I INTEND TO FILE THE REVISE RETURN AND THE PAY THE TA XES ACCORDINGLY BEFORE 15 TH MARCH, 2010. 7. AT THE TIME OF FILING OF REVISED RETURN OF INCOM E ON 12.10.2010, THE ASSESSEE FILED NOTE RETRACTING FROM ADMISSION OF ADDITIONAL INCOME DECLARED DURING THE COURSE OF SURVEY. THE RELEVANT EXTRACT OF THE NOTE IS REP RODUCED HEREIN-BELOW :- SURVEY ACTION U/S 133 A WAS CARRIED AT MY BUSINESS PREMISES ON 23/02/2010 DURING THE ACTION, MY BOOKS OF ACCOUNTS AND RELEVANT PAPERS AND DOCUMENTS WERE IMPOUNDED. DURING THE SURVEY AS PER ADVICE OF OFFICERS OF SURVEY PARTY, I HAD DECLARED INCOME AT RS.40,00,000 (FORTY LACS ONLY) WITHOUT UNDERSTANDING IN THE CORRECT FACTS AND FIGURES. HOWEVER, SUBSEQUENTLY I HAVE TAKEN THE XEROX COPIES OF ALL THE IMPOUNDED BOOKS, RELEVANT PAPERS AND DOCUMENTS AND RECASTED M Y ACCOUNTS. CONSIDERING ENTIRE TRANSACTION THE CORRECT PROFIT AS PER RE-CAS TED BOOKS OF ACCOUNTS IS WORKS AT RS.509697/- (RS.260,337/- OF KIRAN POULTRY FARM AND 2,49,360/- OF KIRAN BREEDING FARM) INSTEAD OF LOSS SHOWN IN ORIGINAL RE TURN AT RS.1,38,320. FURTHER IT IS BROUGHT TO YOUR NOTICE THAT DUE TO THE MISTAKE AT O UR ACCOUNTS, THE SOME OF THE TRANSACTION WERE NOT RECORDED THERE WE HAVE RECASTE D ACCOUNTS AND REMAINED TO BE RECORDED. IN VIEW OF THE ABOVE FACTS AND CONSIDERING ENTIRE R ECORD/PAPER IMPOUNDED A CORRECT INCOME IS NOW SHOW IN THE REVISED RETURN OF INCOME. UNDER THE CIRCUMSTANCES THE DECLARATION GIVEN DURIN G SURVEY IS HEREBY RETRACTED AND REVISED RETURN OF INCOME IS FILED, CO NSIDERING ALL IMPOUNDED BOOKS/PAPERS. 8 ITA NO.430/PN/2014 8. A PERUSAL OF THE DECLARATION MADE BY THE ASSESSE E (IN ANSWER TO QUESTION NO.13 REPRODUCED ABOVE) WOULD SHOW THAT THE ADDITIO NAL INCOME DECLARED BY THE ASSESSEE COMPRISES OF TWO COMPONENTS: (I) RS.10,00, 000/- ON ACCOUNT OF IRREGULARITIES MADE WITH RESPECT TO CASH PAYMENTS E XCEEDING RS.20,000/-; AND (II) RS.30,00,000/- ON ACCOUNT OF CASH SALES OUTSIDE CAS H BOOK. 8.1 IN SO FAR AS RS.10,00,000/- IS CONCERNED, THE A DDITION IS MADE ON ACCOUNT OF VIOLATION OF SECTION 40A(3) OF THE ACT. THE ASSESS EE HAS SOUGHT EXEMPTION OF RS.10,00,000/- IN RESPECT OF CASH PAYMENTS BY TAKIN G THE SHELTER OF RULE 6DD(E)(II) OF THE RULES. THE CIT(A) HELD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM THE BENEFIT OF EXCEPTION PROVIDED UNDER RULE 6DD(E)(II) OF THE INC OME TAX RULES. WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) WAS JUSTIFIED IN GR ANTING THE BENEFIT OF RULE 6DD(E)(II). THE EXCEPTION UNDER RULE 6DD(E)(II) DO ES NOT ONLY INCLUDE THE PAYMENTS MADE FOR THE PURCHASE OF PRODUCE OF POULTR Y FARMING BUT ALSO FOR THE PAYMENTS RELATING TO THE POULTRY BUSINESS. EXCEPTI ONS UNDER RULE 6DD ARE PROVIDED TO MITIGATE THE GENUINE DIFFICULTIES FACED BY ASSESSEES IN MAKING PAYMENTS. TO OVERCOME PRACTICAL PROBLEMS IN BUSINE SS ESPECIALLY IN RURAL AREAS WHERE THE ILLITERACY RATE IS HIGH, AWARENESS OF TAX LAWS IN SCANTY AND BANKING FACILITIES ARE NOT ALWAYS AVAILABLE, THE PAYMENTS A RE MADE IN CASH IN VIOLATION OF THE PROVISIONS OF THE INCOME TAX ACT. THE EXCEPTIONS G IVEN IN RULE 6DD TAKE CARE OF SUCH SITUATIONS AND PROVIDE REPRIEVE FROM VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THUS, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE CIT(A) ON THIS ISSUE. THE ASSESSEE IS ELIGIBLE TO CLAIM THE BENEF IT OF EXCEPTION PROVIDED UNDER RULE 6DD(E)(II) OF THE RULES. 8.2 WITH REGARD TO ADDITION OF REMAINING AMOUNT OF RS.30,00,000/- ON ACCOUNT OF SUPPRESSED SALES, IT HAS BEEN CONTENDED THAT THE DE CLARATION MADE BY THE ASSESSEE WITH REGARD TO THE SUPPRESSED SALES IS NOT SUPPORTED BY ANY DOCUMENTARY 9 ITA NO.430/PN/2014 EVIDENCE. IT IS A WELL SETTLED LAW THAT NO ADDITIO N CAN BE MADE MERELY ON THE BASIS OF DECLARATION MADE BY THE ASSESSEE DURING SEARCH O R SURVEY. THE DECLARATION MADE BY THE ASSESSEE HAS TO BE SUBSTANTIATED WITH T HE CORROBORATIVE EVIDENCE. THE CBDT HAS ALSO DEPRECIATED THE PRACTICE OF MAKIN G ADDITION MERELY ON THE BASIS OF STATEMENT RECORDED DURING SEARCH/SURVEY WITHOUT ANY CREDIBLE EVIDENCE. THE RELEVANT EXTRACT OF THE CBDT INSTRUCTIONS DATED 10. 03.2003 AND 18.12.2014 ARE REPRODUCED HEREINBELOW :- CONFESSION OF ADDITIONAL INCOME DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATION F. NO. 286/2/2003-IT (INV) GOVERNMENT OF INDIA MINISTRY OF FINANCE & COMPANY AFFAIRS DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES ROOM NO. 254/NORTH BLOCK, NEW DELHI, THE 10TH MARCH , 2003 TO ALL CHIEF COMMISSIONERS OF INCOME TAX, (CADRE CONTR A) & ALL DIRECTORS GENERAL OF INCOME TAX INV. SIR SUBJECT : CONFESSION OF ADDITIONAL INCOME DURING TH E COURSE OF SEARCH & SEIZURE AND SURVEY OPERATION -REGARDING INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHER E ASSESSEES HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED INCOME DURING THE COURSE OF THE SEARCH & SEIZURE AND SURVEY OPERATIONS. SUCH CONFESSIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, ARE LATER RETRACTED BY THE CONCERNED ASSESSEES WHILE FI LING RETURNS OF INCOME. IN THESE CIRCUMSTANCES, ON CONFESSIONS DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS DO NOT SERVE ANY USEFUL PURPOSE. IT IS, THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME W HICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEPARTMENTS. SIMILARLY, WHILE RECORDING STATEMENT DURING THE COU RSE OF SEARCH IT SEIZURES AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONF ESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSEL Y. FURTHER, IN RESPECT OF PENDING ASSESSMENT PROCEEDIN GS ALSO, ASSESSING OFFICERS SHOULD RELY UPON THE EVIDENCES/MATERIALS GATHERED DURING THE CO URSE OF SEARCH/SURVEY OPERATIONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT OR DERS YOURS FAITHFULLY, SD/- (S. R. MAHAPATRA] UNDER SECRETARY (INV. II) ***************** 10 ITA NO.430/PN/2014 ADMISSIONS OF UNDISCLOSED INCOME UNDER COERCION/PRE SSURE DURING SEARCH/SURVEY F. NO. 286/98/2013-IT (INV.II) GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES ROOM NO. 265A, NORTH BLOCK NEW DELHI, THE 18TH DECEMBER, 2014 TO 1. ALL PRINCIPAL CHIEF COMMISSIONERS OF INCOME TAX 2. ALL CHIEF COMMISSIONERS OF INCOME TAX 3. ALL DIRECTORS GENERAL OF INCOME TAX (INV.) 4. DIRECTOR GENERAL OF INCOME TAX (I & CI), NEW DEL HI SUBJECT: ADMISSIONS OF UNDISCLOSED INCOME UNDER COE RCION/PRESSURE DURING SEARCH/SURVEY REG. REF: 1) CBDT LETTER F. NO. 286/57/2002-IT (INV.II) DT. 03-07-2002 2) CBDT LETTER F. NO. 286/2/2003-IT (INV.11) DT. 10 -03-2003 3) CBDT LETTER F. NO. 286/98/2013-IT (INV.11) DT. 0 9-Q1-2014 SIR/MADAM, INSTANCES/COMPLAINTS OF UNDUE INFLUENCE/COERCION HA VE COME TO NOTICE OF THE CBDT THAT SOME ASSESSEES WERE COERCED TO ADMIT UNDISCLOSED IN COME DURING SEARCHES/SURVEYS CONDUCTED BY THE DEPARTMENT. IT IS ALSO SEEN THAT M ANY SUCH ADMISSIONS ARE RETRACTED IN THE SUBSEQUENT PROCEEDINGS SINCE THE SAME ARE NOT BACKE D BY CREDIBLE EVIDENCE. SUCH ACTIONS DEFEAT THE VERY PURPOSE OF SEARCH/SURVEY OPERATIONS AS THEY FAIL TO BRING THE UNDISCLOSED INCOME TO TAX IN A SUSTAINABLE MANNER LEAVE ALONE L EVY OF PENALTY OR LAUNCHING OF PROSECUTION. FURTHER, SUCH ACTIONS SHOW THE DEPARTM ENT AS A WHOLE AND OFFICERS CONCERNED IN POOR LIGHT 2. I AM FURTHER DIRECTED TO INVITE YOUR ATTENTION T O THE INSTRUCTIONS/GUIDELINES ISSUED BY CBDT FROM TIME TO TIME, AS REFERRED ABOVE, THROUGH WHICH THE BOARD HAS EMPHASIZED UPON THE NEED TO FOCUS ON GATHERING EVIDENCES DURING SEARCH/ SURVEY AND TO STRICTLY AVOID OBTAINING ADMISSION OF UNDISCLOSED INCOME UNDER COERCION/UNDU E INFLUENCE. 3. IN VIEW OF THE ABOVE, WHILE REITERATING THE AFOR ESAID GUIDELINES OF THE BOARD, I AM DIRECTED TO CONVEY THAT ANY INSTANCE OF UNDUE INFLUENCE/COER CION IN THE RECORDING OF THE STATEMENT DURING SEARCH/SURVEY/OTHER PROCEEDING UNDER THE I.T . ACT, 1961 AND/OR RECORDING A DISCLOSURE OF UNDISCLOSED INCOME UNDER UNDUE PRESSU RE/ COERCION SHALL BE VIEWED BY THE BOARD ADVERSELY. 4. THESE GUIDELINES MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED IN YOUR REGION FOR STRICT COMPLIANCE. 5. I HAVE BEEN FURTHER DIRECTED TO REQUEST YOU TO C LOSELY OBSERVE/OVERSEE THE ACTIONS OF THE OFFICERS FUNCTIONING UNDER YOU IN THIS REGARD. 6. THIS ISSUES WITH APPROVAL OF THE CHAIRPERSON, CB DT (K. RAVI RAMCHANDRAN) DIRECTOR (INV.)-II, CBDT 11 ITA NO.430/PN/2014 8.3 THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. S. KHADER KHAN SON (SUPRA) HAS UPHELD THE DECISION OF HONBLE MADR AS HIGH COURT IN THE CASE OF CIT VS. S. KHADER KHAN SON REPORTED AS 300 ITR 157 (MADRAS). THE HONBLE HIGH COURT AFTER CONSIDERING THE FACTS OF THE CASE AND V ARIOUS DECISIONS ON THE ISSUE HELD, THAT SECTION 133A DOES NOT EMPOWER ANY INCOME TAX AUTHORITY TO EXAMINE ANY PERSON ON OATH, HENCE, ANY SUCH STATEMENT HAS N O EVIDENTIARY VALUE AND ANY STATEMENT AND ADMISSION MADE DURING SUCH STATEMENT CANNOT, BY ITSELF, BE MADE THE BASIS OF ADDITION. THE RELEVANT EXTRACT OF THE JUDGEMENT OF HONBLE HIGH COURT IS REPRODUCED AS UNDER :- 7. FROM THE FOREGOING DISCUSSION, THE FOLLOWING PR INCIPLES CAN BE CULLED OUT : (I) AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THAT THE ASSESSEE SHOULD B E GIVEN A PROPER OPPORTUNITY TO SHOW THAT THE BOOKS OF ACCOUNT DO NOT CORRECTLY DIS CLOSE THE CORRECT STATE OF FACTS, VIDE DECISION OF THE APEX COURT IN PULLANGODE RUBBE R PRODUCE CO. LTD. V. STATE OF KERALA [1973] 91 ITR 18 ; (II) IN CONTRADISTINCTION TO THE POWER UNDER SECTIO N 133A, SECTION 132(4) OF THE INCOME-TAX ACT ENABLES THE AUTHORIZED OFFICER TO EX AMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATI ON CAN ALSO BE USED IN EVIDENCE UNDER THE INCOME-TAX ACT. ON THE OTHER HAN D, WHATEVER STATEMENT IS RECORDED UNDER SECTION 133A OF THE INCOME-TAX ACT I S NOT GIVEN ANY EVIDENTIARY VALUE OBVIOUSLY FOR THE REASON THAT THE OFFICER IS NOT AUTHORISED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVI DENTIARY VALUE AS CONTEMPLATED UNDER LAW, VIDE PAUL MATHEWS AND SONS V. CIT [2003] 263 ITR 101 (KER) ; (III) THE EXPRESSION 'SUCH OTHER MATERIALS OR INFOR MATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER' CONTAINED IN SECTION 158BB OF TH E INCOME-TAX ACT, 1961, WOULD INCLUDE THE MATERIALS GATHERED DURING THE SURVEY OP ERATION UNDER SECTION 133A, VIDE CIT V. G. K. SENNIAPPAN [2006] 284 ITR 220 (MAD) ; (IV) THE MATERIAL OR INFORMATION FOUND IN THE COURS E OF SURVEY PROCEEDING COULD NOT BE A BASIS FOR MAKING ANY ADDITION IN THE BLOCK ASS ESSMENT, VIDE DECISION OF THIS COURT IN T. C. (A) NO. 2620 OF 2006 (BETWEEN CIT V. S. AJIT KUMAR [2008] 300 ITR 152 (MAD) ; (V) FINALLY, THE WORD 'MAY' USED IN SECTION 133A(3) (III) OF THE ACT, VIZ., 'RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THIS ACT', AS ALREADY EXTRACTED ABOVE, MAKES IT CLEAR THAT THE MATERIALS COLLECTED AND THE STATEMENT RECORDED DURING THE SUR VEY UNDER SECTION 133A ARE NOT CONCLUSIVE PIECE OF EVIDENCE BY ITSELF. 8. FOR ALL THESE REASONS, PARTICULARLY, WHEN THE C OMMISSIONER AND THE TRIBUNAL FOLLOWED THE CIRCULAR OF THE CENTRAL BOARD OF DIREC T TAXES DATED MARCH 10, 2003, EXTRACTED ABOVE, FOR ARRIVING AT THE CONCLUSION THA T THE MATERIALS COLLECTED AND THE STATEMENT OBTAINED UNDER SECTION 133A WOULD NOT AUT OMATICALLY BIND UPON THE ASSESSEE, WE DO NOT SEE ANY REASON TO INTERFERE WIT H THE ORDER OF THE TRIBUNAL. 12 ITA NO.430/PN/2014 8.4 THE ASSESSEE BEFORE THE CIT(A) HAS MADE TWO-FOL D SUBMISSIONS. IN THE FIRST INSTANCE, THE ASSESSEE HAS PRAYED FOR DELETING THE ENTIRE ADDITION OF RS.30,00,000/- AND IN ALTERNATE SUBMISSION THE ASSESSEE PRAYED FOR MAKING ADDITION ON THE BASIS OF GROSS PROFIT MARGIN OF 9.64%. THE CIT(A) REJECT ED THE FIRST SUBMISSION OF THE ASSESSEE AND MADE ADDITION BY ACCEPTING THE GROSS P ROFIT @ 20% OF UNACCOUNTED SALES. THE RELEVANT EXTRACT OF THE FINDINGS OF THE CIT(A) ARE AS UNDER :- 3.6.2 IN VIEW OF THE ESTABLISHED LAW, THE MANDATE IS THAT ONLY A NET RATE OF PROFIT CAN BE APPLIED IN RESPECT OF THE GOODS SOLD OUTSIDE THE BOOKS OF ACCOUNT. IN THE PRESENT CASE THE APPELLANT HAS HIMSELF ADMIT TED TO SALES NOT RECORDED TO THE EXTENT OF RS. 30 LACS AND AT THE SAME TIME SOLD GOO DS WHICH HAVE ALSO BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT WHERE G.P. MA RGIN IS STATED TO BE 9.64%. HOWEVER, THE G.P. RATE OUGHT TO BE INCREASED FURTHE R ON THE GROUND THAT THE MARGIN OF THE PROFIT IN THE UNACCOUNTED SALES IS LI KELY TO BE HIGHER AS THE RISK FACTOR IS HIGHER. THE EXPENSES DIRECTLY RELATED TO THE UNACCOUNTED SALES WHICH ARE MATCHING IN SCALE WITH THE ACCOUNTED SALES HENC E ALREADY BEEN CLAIMED BY THE APPELLANT. HENCE, THIS IS A CASE OF APPLYING A HIGHER G.P. RATE. THE PROFIT ARISING OUT OF THE UNACCOUNTED SALES NEEDS TO BE TA XED AT A HIGHER MARGIN OF GROSS PROFITS AND THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE UNACCOUNTED INCOME BY APPLYING THE GROSS PROFIT RATE AT 20% ON THE UNACCOUNTED SALES OF RS. 30,00,000/-, WHICH WORKS OUT AT RS. 6,00,000/-. THU S THE ADDITION MADE OF RS. 30,00,000/- IS UPHELD TO THE EXTENT OF RS. 6,00,000 /- AND THE REMAINING AMOUNT OF RS. 24 LACS IS DIRECTED TO BE DELETED. THE ASSESSEE IS NOT IN APPEAL AGAINST THE ADDITION MADE BY THE CIT(A) ON THIS ISSUE. WE FIND THAT THE ORDER OF CIT(A) IS WELL RE ASONED AND DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NOS.2 AND 3 RAIS ED BY THE DEPARTMENT IN ITS APPEAL ARE DISMISSED. 9. IN GROUND NO.4, THE DEPARTMENT HAS ASSAILED THE FINDINGS OF THE CIT(A) IN DELETING THE DISALLOWANCE MADE ON ACCOUNT OF DISCRE PANCY IN THE OPENING STOCK. THE ASSESSEE HAS EXPLAINED THAT THE CONFUSION REGAR DING DISCREPANCY IN STOCK OCCURRED BECAUSE AT THE TIME OF FILING OF ORIGINAL RETURN OF INCOME THE ASSESSEE HAD FILED SEPARATE PROFIT & LOSS ACCOUNT AND BALANCE SH EET FOR TWO BUSINESSES OF THE ASSESSEE I.E. M/S KIRAN POULTRY FARM AND M/S KIRAN BREEDING FARM. THE OPENING STOCK OF THE SAID FIRMS WAS RS.20,36,821/- AND RS.2 2,04,832/- RESPECTIVELY. AT THE TIME OF FILING THE REVISED RETURN OF INCOME, THE AS SESSEE FILED CONSOLIDATED TRADING 13 ITA NO.430/PN/2014 AND PROFIT & LOSS ACCOUNT OF BOTH THE BUSINESSES SH OWING OPENING STOCK OF RS.42,41,653/- (M/S KIRAN POULTRY FARM RS.20,36,821 /- + M/S KIRAN BREEDING FARM RS.22,04,832/-). THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS, INADVERTENTLY COMPARED THE CLOSING STOCK OF M/S KIR AN POULTRY FARM FOR PREVIOUS YEAR WITH CONSOLIDATED OPENING BALANCE OF BOTH THE FIRMS AND THUS MADE AN ADDITION OF RS.22,04,832/-. SINCE THIS DISCREPANCY WAS EXPL AINED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS, THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS COUNT WAS DELETED. WE FIND THAT THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE DISCREPANCY IN THE CLOSING AND OPENING STOCK, THE CIT(A) HAS RIGHTLY D ELETED THE ADDITION. THEREFORE, NO INTERFERENCE IS WARRANTED IN THE FINDINGS OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO.4 RAISED IN THE APPEAL OF THE DEPARTMENT IS DISMISSED. 10. IN GROUND NOS.5 AND 6, THE DEPARTMENT HAS ASSAI LED THE ACTION OF THE CIT(A) IN DELETING THE DISALLOWANCE OF RS.7,21,323/- ON AC COUNT OF EXCESS LIABILITY IN SUNDRY CREDITORS. THE CONTENTION OF THE DEPARTMENT IS THAT THE ASSESSEE HAS FURNISHED ADDITIONAL EVIDENCE BEFORE THE CIT(A). T HE CIT(A) WITHOUT AFFORDING OPPORTUNITY TO ASSESSING OFFICER TO EXAMINE THE SAM E HAS DELETED THE ADDITION. THE LD. AR OF THE ASSESSEE HAS POINTED OUT THAT NO FRESH EVIDENCE WAS FILED BY THE ASSESSEE DURING THE FIRST APPELLATE PROCEEDINGS. T HE ASSESSEE HAD ONLY FURNISHED EXTRACT OF LEDGER ACCOUNT OF THE CREDITORS WHICH WE RE AVAILABLE BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER DID NOT AFFORD SUFF ICIENT OPPORTUNITY TO THE ASSESSEE TO EXPLAIN AND RECONCILE THE AMOUNTS. THE ASSESSEE HAS FILED LEDGER EXTRACTS OF THE CREDITORS I.E. SHRI SURESH T. KORE, SHRI DILIP S. G ANDHI, M/S MHAVEER TRADING CO. AND M/S PASHU JIVEN AT PAGES 57 TO 61 OF THE PAPER BOOK. THE SAID LEDGER ACCOUNTS WERE FILED BY THE ASSESSEE BEFORE THE CIT( A) AND ASSESSING OFFICER. THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER : - 14 ITA NO.430/PN/2014 ON PERUSAL OF THE LEDGER ACCOUNTS OF SHRI SURESH T . KORE, SHRI DILIP S. GANDHI, MHAVEER TRADING CO. AND PASHU JIVEN, IT IS NOTICED THAT THE AFORESAID PERSONS / CONCERNS HAVE A REGULAR ACCOUNT AND TRANSACTIONS WI TH THE APPELLANT ON ACCOUNT OF THE PURCHASES MADE BY THE APPELLANT OF MAIZE AND PU RCHASE OF MEDICINES AND ALSO FOR THE TRANSPORTATION / FREIGHT FOR THE GOODS PURC HASED BY THE APPELLANT. THE TRANSACTION ENTERED WITH ALL THE FOUR PARTIES IS ON A REGULAR BASIS AND THE ACCOUNTS HAVE BEEN SETTLED BY WAY OF CHEQUE. THE ASSESSING O FFICER AS IT IS APPARENT, HAS NOT EXAMINED THE DETAILS FROM THE LEDGER EXTRACTS N OR SOUGHT ANY EXPLANATION OF THE APPELLANT OR CONFRONTED HIM IN THIS REGARD. THE TRA NSACTIONS APPEARING IN ALL THE FOUR LEDGER EXTRACTS REVEAL THAT THE FOUR PARTIES A RE REGULAR SUPPLIERS TO THE APPELLANT AND HENCE THEIR GENUINENESS CANNOT BE DOU BTED AND THE ACCOUNT BALANCE AS SHOWN DO TALLY WITH THE FIGURES APPEARIN G IN THE ACCOUNTS OF THE APPELLANT. THE ENTIRE DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER WITHOUT AFFORDING ANY OPPORTUNITY TO THE APPELLANT FOR RECONCILIATION OF THE ACCOUNTS NOR PROVIDED THE COPY OF THE CONFIRMATION TO THE APPELLANT. IN THE CIRCUMSTANCES, THE DISALLOWANCE MADE BY THE ASSESSI NG OFFICER CANNOT BE UPHELD AND IS DIRECTED TO BE DELETED. 11. AFTER PERUSAL OF THE FINDINGS OF THE CIT(A), WE ARE OF THE OPINION THAT THE FINDINGS GIVEN BY CIT(A) ARE REASONED AND ARE BASED ON PROPER APPRECIATION OF FACTS. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE SAME EXCEPT FOR ASSERTING THAT OPPORTUNITY WAS NOT AFFORDED TO THE ASSESSING OFFICER TO EXAMINE THE ADDITIONAL EVIDENCE. WE DO NOT FIND MERIT IN THE ASSERTIONS O F THE LD. DR. ACCORDINGLY, THE GROUND NOS.5 AND 6 RAISED IN THE APPEAL OF THE DEPA RTMENT ARE DISMISSED. 12. GROUND NO.7 RAISED IN THE APPEAL OF THE DEPARTM ENT IS GENERAL IN NATURE AND THEREFORE THE SAME IS NOT REQUIRED FOR ANY ADJUDICA TION. 13. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED BEING DEVOID OF MERIT. ORDER PRONOUNCED ON TUESDAY, THE 28 TH DAY OF JUNE, 2016. SD/- SD/- ( R.K. PANDA ) ( VIKAS AWASTHY ) / ACCOUNTANT MEMBER # / JUDICIAL MEMBER PUNE ; DATED : 28 TH JUNE, 2016. 15 ITA NO.430/PN/2014 %&'#()!*!+( / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %, / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE