M/s. Monohar Cycle Works, Amritsar. V. The Income-tax Officer, Amritsar.

ITA 50/ASR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0649 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-05-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 17-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Search and seizure; Earning of tax free income
• Section: 143(3); 14A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.49(ASR)/2013 ASSESSMENT YEAR: 2005-06 UNITED AUTOMOBILES COURT ROAD, AMRITSAR. PAN:AABF41659E VS. ITO, WARD-5(4) AMRITSAR. (APPELLANT) (RESPONDENT) I.T.A NO.50(ASR)/2013 ASSESSMENT YEAR: 2005-06 SH. MANOHAR CYCLE WORKS COURT ROAD, AMRITSAR. PAN:AAHFM2485Q VS. ITO, WARD-5(3) AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. ASHWANI KALIA (CA) RESPONDENT BY: SH. UMESH TAKYAR (DR) DATE OF HEARING: 17.05.2016 DATE OF PRONO UNCEMENT: 16.06.2016 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEALS FILED BY DIFFERENT ASSES SEES AGAINST THE SEPARATE ORDERS OF CIT(A), BOTH DATED 12.11.2012 FOR THE ASS T. YEAR:2005-06. 2. SIMILAR ISSUES ARE INVOLVED IN THESE APPEALS AND THESE WERE HEARD TOGETHER, THEREFORE, FOR THE SAKE OF CONVENIENCE A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. 3. THE APPEALS WERE EARLIER DISMISSED FOR CERTAIN D EFECTS IN THE APPEALS VIDE SEPARATE ORDERS OF TRIBUNAL DATED 14.0 8.2013, HOWEVER, THE ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 2 SAME WERE RECALLED AND THE CASES WERE LISTED FOR HE ARING ON MERITS VIDE SEPARATE ORDERS OF TRIBUNAL BOTH DATED 28.03.2014. 4. THE COMMON ISSUE IN THESE APPEALS IS THE ACTION OF LEARNED CIT(A) BY WHICH HE HAD CONFIRMED THE ADDITION MADE BY ASSE SSING OFFICER ON ACCOUNT OF DIFFERENCES IN VALUE OF CLOSING STOCK AN D SUNDRY DEBTORS BETWEEN THE STATEMENTS SUBMITTED TO BANK AND THOSE FILED BY ASSESSEE WITH THE RETURNS OF INCOME. THE OTHER COMMON ISSUE IS THE ACTION OF LEARNED CIT(A) BY WHICH HE HAD CONFIRMED THE ADDITI ON MADE BY ASSESSING OFFICER ON ACCOUNT OF ALLEGED BRIBE PAID BY ASSESSEE TO THE BANK MANAGER FOR GETTING ENHANCEMENT OF CASH CREDIT LIMITS. 5. IN ITA NO.49(ASR)/2013, THERE IS AN ADDITIONAL I SSUE OF ADDITION OF RS.3,29,159/- ON ACCOUNT OF DISALLOWANCE OF INTERES T ON ACCOUNT OF NON CHARGING OF INTEREST ON FUNDS ALLEGED TO HAVE BEEN DIVERTED FOR NON BUSINESS PURPOSES. IN ITA NO.50(ASR)/2013 THERE IS ANOTHER ISSUE OF ADDITION OF RS.22,000/- AS UNEXPLAINED CREDITS IN T HE CAPITAL ACCOUNT OF A PARTNER. THE ASSESSEE HAD ALSO RAISED LEGAL ISSUE R EGARDING PROCEEDINGS U/S 147 VIDE GROUND NO.1, HOWEVER, AT THE TIME OF H EARING THE SAID GROUNDS WERE NOT PRESSED AND THEREFORE, GROUND NO.1 IN BOTH APPEALS IS DISMISSED. 6. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT ASS ESSING OFFICER HAD MADE THE ADDITION ON ACCOUNT OF DIFFERENCES IN VALU ES OF STOCK AND DEBTORS AS PER STATEMENTS SUBMITTED TO BANK AND AS PER THE VALUE AS PER RETURNS FILED BY ASSESSEE. EXPLAINING THE FACTS OF THE CASES, THE LEARNED ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 3 AR SUBMITTED THAT THE ASSESSEES WERE ENJOYING WORKI NG LIMITS WITH UCO BANK AND DUE TO CONTINUOUS LOSSES THE ASSESSEES WER E NOT ABLE TO MEET THE WORKING CAPITAL REQUIREMENTS AND THE CREDITORS WERE EXERTING A LOT OF PRESSURE FOR RECOVERY OF THEIR DUES AND ULTIMATELY THE ASSESSEES COULD MANAGE TO GET ENHANCED WORKING CAPITAL LIMITS FROM INDIAN OVERSEAS BANK TO RS.25 LACS AND RS.80 LACS IN THE ABOVE FIRM S RESPECTIVELY. HOWEVER, THE ASSESSEES WERE NOT ABLE TO BAIL OUT TW O FIRMS AND THE TOTAL BANK LOAN BECAME NPA DUE TO NON SERVICING OF DEBT. IT WAS SUBMITTED THAT DUE TO CONTINUATIONS LOSSES THE ASSESSEE FAILE D TO SERVICE THE DEBTS AND THE BANK INVOKED THE PROVISIONS OF SARFAESI ACT FOR TAKING POSSESSION OF THE BUSINESS ASSETS AND PERSONAL ASSE TS. HE FURTHER SUBMITTED THAT NOT ONLY TWO FIRMS BECAME BANKRUPT B UT ALSO THE OTHER TWO FIRMS IN WHICH MAIN PARTNER SH. AVTAR SINGH WAS ALSO GOT BANKRUPT AND THEIR BANK ALSO INVOKED THE PROVISIONS OF SARFA ESI ACT. IT WAS ALSO SUBMITTED THAT THE BANK HAD SOLD THE HOUSE PROPERTY IN THE NAME OF SH. AVTAR SINGH AND HAD ADJUSTED THE AMOUNT RECEIVED ON SALE OF SUCH PROPERTY AGAINST ITS DUES AND IN THIS RESPECT OUR A TTENTION WAS INVITED TO (PB PAGE -8) WHERE A COPY OF ADVERTISEMENT BY CANAR A BANK FOR SALE OF PROPERTY BELONGING TO SH. AVTAR SINGH WAS PLACED. I T WAS ALSO SUBMITTED THAT THE BANK ALSO REFERRED THE CASE TO CBI AND CBI ALSO RAIDED THE PREMISES OF HOUSE OF PARTNERS OF THE FIRM. HE SUBM ITTED THAT DUE TO THESE FACTORS THE MAIN PARTNER OF THE FIRM MR. AVTA R SINGH BECAME MENTALLY SICK AND GOT TREATMENT FROM GOVT. HOSPITAL , AMRITSAR AND OUR ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 4 ATTENTION WAS INVITED TO COPIES OF MEDICAL PRESCRIP TION PLACED AT (PB-PAGE 21 TO 26). THE LEARNED AR SUBMITTED THAT HE HAD EXP LAINED THE BACK GROUND OF ASSESSEES TO HIGH LIGHT THE FACT THAT IT WAS NOT A CASE OF ASSESSEES HAVING HIDDEN INCOME AND RATHER THESE WER E THE CASES WHERE THE ASSESSEE HAD HIDDEN LOSSES. HE SUBMITTED THAT I F ASSESSEE HAD HIDDEN INCOME THEN THE BANKS WOULD NOT HAVE INVOKED SARFAESI ACT TO TAKE OVER THE ASSETS OF ASSESSEE. THE LEARNED AR SU BMITTED THAT TO AVAIL MORE FINANCES FROM BANKS THE ASSESSEE INFLATED FIGU RES OF STOCK AND DEBTORS AND WHICH WERE NOWHERE NEARER TO THE ACTUAL FIGURES AS PER BOOKS OF ACCOUNTS. HE SUBMITTED THAT THE AUTHORITIE S BELOW DID NOT FIND ANYTHING WRONG IN THE BOOKS OF ACCOUNTS OF ASSESSEE AND SIMPLY BECAUSE THERE WAS DIFFERENCE IN THE VALUE OF STOCKS AND DEB TORS IN THE STATEMENT SUBMITTED TO BANK AND FILED WITH THE RETURN OF INCO ME THE ADDITIONS WERE MADE. THE LEARNED AR SUBMITTED THAT IN A NUMBER OF CASES PASSED BY VARIOUS TRIBUNALS AND COURTS IT HAS BEEN HELD THAT ADDITION ON THE BASIS OF DIFFERENCE IN BANK STATEMENT AND IN BOOKS CANNOT BE MADE AND RELIANCE IN THIS RESPECT WAS PLACED ON THE FOLLOWIN G CASE LAWS. I) CIT VS. SIDHU RICE & GEN MILLS (2004) 192 CTR (P&H) 349 (281 1TR 428) II) CIT VS. APCOM COMPUTER PVT LTD (2007) 292 1TR 630 (MAD) III) ASHOK KUMAR VS. ITO (2005) 149 TAXMAN 479 (J&K) (201 CTR 178) (JK) IV) CIT VS. N.SWAMY (2000) 241 1TR 363 (MAD) V) CIT VS DAS INDUSTRIES 199 CTR (ALL) 370 (303 ITR 19 9) ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 5 VI) CIT VS. KHAN & SIROHI STEEL ROLLING MILLS (2006) 20 0 CTR 595 (ALL) VII) ASHOK KUMAR VS. ITO 201 CTR 178( J & K ) VIII) CIT VS. SRI PADMAVATHI COTTON MILLS 236 ITR 340(MAD ) IX) CIT V ACROW INDIA LTD (2008) 298 ITR 447 (BOM) X) SUDHIR INDUSTRIES VS. ITO (2003) 81 TTJ (JD) 765 XI) ITO VS. DEVI DAYAL RICE MILLS 75 TTJ 24 (ASR BENCH) XII) JAI SHARMA RICE MILLS VS. ITO 36 ITD 254 (ASR BENCH ) THE LEARNED AR FURTHER RELIED UPON THE DECISION OF HONBLE AMRITSAR BENCH OF ITAT, IN THE CASE OF DCIT CIRCLE-1, BATHIN DA VS. ISHAR INFRASTRUCTURE DEVELOPER (PVT.) LTD., BATHINDA IN I TA NO.198(ASR)/2013. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES THE LE ARNED AR SUBMITTED THAT ADDITION MADE ON ACCOUNT OF DIFFERENCE IN VALU E OF STOCK AND DEBTORS BE DELETED. 7. ARGUING UPON THE OTHER ISSUE OF ADDITION ON ACCO UNT OF ALLEGED BRIBE PAID BY ASSESSEE FOR ENHANCEMENT OF ITS WORKI NG CAPITAL LIMITS, THE LEARNED AR SUBMITTED THAT ADDITION WAS MADE AND CON FIRMED BY AUTHORITIES BELOW ON THE BASIS OF STATEMENT MADE BY SH. AVTAR SINGH, PARTNER OF THE FIRMS WHO HIMSELF HAD BECOME MENTALL Y SICK PERSON AND OUT OF FRUSTRATION AND DUE TO CONTINUOUS OF LOSSES, HE ALLEGED TO HAVE PAID THE BRIBE. HE SUBMITTED THAT IN THE STATEMENTS SH. AVTAR SINGH HAS NOT MENTIONED THE YEAR IN WHICH THE ALLEGED BRIBE A MOUNT WAS PAID, ASSESSING OFFICER HAD JUST ASSUMED THAT THE PAYMENT WAS MADE IN THE YEAR UNDER CONSIDERATION. 8. WITHOUT PREJUDICE THE LEARNED AR SUBMITTED THAT SH. AVTAR SINGH HAD STATED THAT THE AMOUNT OF RS.25 LACS WAS PAID A S BRIBE OUT OF THE ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 6 WITHDRAWAL FROM THEIR CC LIMIT BUT AO DID NOT BOTHE R TO CHECK CC LIMIT ACCOUNT TO VERIFY AS TO WHETHER AMOUNT WAS WITHDRAW N OR NOT. THE LEARNED AR SUBMITTED THAT THERE WAS NO CASH WITHDRA WAL OF RS.25 LACS FROM THE CC LIMIT ACCOUNTS. FURTHER IT WAS SUBMITTE D THAT ASSESSEES WERE ALREADY ENJOINING CC LIMIT CASH CREDIT FACILIT IES OF 65 LACS FROM UCO BANK AND WOULD NOT HAVE BRIBED RS.25 LACS JUST TO G ET ENHANCEMENT OF RS.40 LACS. FINALLY THE LEARNED AR ARGUED THAT THE ASSESSING OFFICER HAD EXAMINED MANAGER OF BANK AND ALSO WHO AUTHENTICALLY AND CATEGORICALLY DENIED HAVING RECEIVED SUCH AMOUNTS AND THEREFORE, IT WAS ARGUED THAT THE ADDITIONS WERE MADE ONLY ON THE BASIS OF STATEM ENTS OF SH. AVTAR SINGH AND NO EVIDENCE WAS AVAILABLE AND THEREFORE, THE ADDITIONS CANNOT BE SUSTAINED. 9. ARGUING UPON THE GROUND NO.3 IN ITA NO.49(ASR)20 13 REGARDING SUSTENANCE OF DISALLOWANCE OF RS.3,29,159/- OUT OF INTEREST PAID TO BANK, THE LEARNED AR SUBMITTED THAT ASSESSING OFFICER HAD WRONGLY PRESUMED THAT THE ASSESSEE HAD ADVANCED AN AMOUNT OF RS.12,8 3,547/-BUT IN FACT THE AMOUNT WAS NOT ADVANCES BUT WAS SUNDRY DEBTORS TO WHOM SALES WERE MADE AND FROM SUNDRY DEBTORS THE ASSESSEE CANN OT BE EXPECTED TO CHARGE INTEREST. IT WAS FURTHER ARGUED THAT BOTH AU THORITIES BELOW HAS WRONGLY INVOKED THE PROVISIONS OF SECTION 14A AS S ECTION 14A OF THE ACT IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE AS 14A RELATES TO THE DISALLOWANCE OF EXPENDITURE INCURRED BY ASSESSEE TO EARN EXEMPT INCOME. ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 7 10. ARGUING UPON GROUND NO.4 IN ITAT NO.50(ASR)2013 , THE LEARNED AR SUBMITTED THAT THE ADDITIONS OF RS.22,000/-BEING AM OUNT INTRODUCED BY PARTNER OF FIRM IS NOT JUSTIFIED, AS ASSESSING OFFI CER DID NOT DISCUSS THE SAME IN ASSESSMENT ORDER. 11. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 12. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. THE FIRST ISSUE TO BE DE CIDED BY US IS AS TO WHETHER THE ADDITION MADE ON THE BASIS OF DIFFERENC ES IN VALUES OF STOCK AND DEBTORS SUBMITTED TO BANK AND AS PER BOOKS OF A CCOUNTS CAN BE SUSTAINED OR NOT. WE FIND THAT ASSESSING OFFICER DI D NOT FIND ANYTHING WRONG WITH THE BOOKS OF ACCOUNTS AND NO MISTAKE WER E POINTED OUT BY THE ASSESSING OFFICER AND THE ADDITIONS WERE MADE S IMPLY ON THE BASIS OF STOCKS STATEMENT SUBMITTED TO BANK. WE FIND THAT TH IS ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY VARIOUS JUDGMENTS OF VARIOUS COURTS. THE ITAT, AMRITSAR BENCH IN A BUNCH OF APPEALS FIL ED BY REVENUE UNDER SIMILAR FACTS AND CIRCUMSTANCES VIDE ORDER DATED 26 .03.2015 HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. WHILE DECIDING THE ISSUE THE TRIBUNAL HAS TAKEN THE LEAD CASE IN ITA NO.198(ASR)/2013 IN THE CASE OF ISHAR INFRASTRUCTURE DEVELOPERS (PVT.) LTD., BATHINDA. TH E FINDINGS OF THE TRIBUNAL ARE CONTAINED FROM PARA 18 ONWARDS WHICH A RE REPRODUCED BELOW. ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 8 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. THE LD. DR WHILE STARTED THE ARGUMENTS INITIA LLY TOOK UP THE MATTER IN THE CASE OF M/S. ISHAR INFRASTRUCTURE DEVELOPER (P) LTD. FOR THE ASSESSMENT YEAR 2009-10 BEING A LEAD CASE AND ARGUE D THAT ALL OTHER MATTERS ARE IDENTICAL AND THEREFORE, THE DECISION I N THE CASE OF M/S. ISHAR INFRASTRUCTURE DEVELOPER (P) LTD. FOR THE ASSESSMEN T YEAR 2009-10 IS TO BE FOLLOWED IN OTHER APPEALS IDENTICALLY. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE WHILE ARGUING THE MATTER ARGUED FROM ALL THE APPEALS SEPARATELY AND ACCORDINGLY THE LD. DR SUBMITTED THAT COUNTER WRITTEN SUBMISSION DEALING WITH EACH AND EVERY APPEAL, WHICH HAS BEEN REPRODUCED HEREINABOVE. ACCORDINGLY, WE DEAL WITH MATTER AS UN DER: 19. THE LD. DR AT PAGE 2 TO 6 OF HIS WRITTEN SUBMIS SIONS DATED 02.02.2015 REPRODUCED HEREINABOVE, AS STATED THAT T HE ORDER OF THE LD. CIT(A) IS PERVERSE BECAUSE THE FINDINGS GIVEN BY T HE LD. CIT(A) THAT THE BANK AUTHORIOTIES ARE NOT CONCERNED WITH THE AVAILA BILITY OF ADEQUATE STOCK AS THEIR INTERESTS ARE COVERED BY THE COLLAT ERAL SECURITY PROVIDED BY THE ASSESSEE. IF IT IS SO WHY HYPOTHECATION OF THE STOCK IS MADE BY THE BANK WHEREAS THE DRAWING POWER IS DETERMINED ON THE BASIS OF THE STOCK AND NOT ON THE BASIS OF COLLATERAL SECURITIES. THE LD. CIT(A) IGNORED THE STATEMENT OF SENIOR BRANCH MANAGER OF THE SAME VERY BRANCH AND THE LD. CIT(A) HAS NOT DOUBTED THE CORRECTNESS OF THE STAT EMENT OF SENIOR BRANCH MANAGER, WHICH CANNOT BE TRASHED WITHOUT GIVING ANY COGENT REASONS. HOWEVER, THE LD. DR RELIED UPON THE STATEMENT OF S H.TEJINDER SHARDA AND DP REGISTER WHICH WAS IGNORED BY THE LD. CIT(A). T HE LD. COUNSEL FOR THE ASSESSEE HAS ALREADY GIVEN HIS SUBMISSIONS TO THE SAID ARGUMENTS MADE BY THE LD. DR WHICH HAS BEEN CONSIDERED BY US AND WHICH HAS BEEN REPRODUCED HEREINABOVE. 20. OUR FINDINGS ARE BASED ON THE SAID ARGUMENTS M ADE BY THE LD. DR AND THE LD. COUNSEL FOR THE ASSESSEE WITH REGARD TO THE SAID COLLATERAL SECURITIES AND DP REGISTER AND THE STATEMENT OF SEN IOR BRANCH MANAGER SH.TEJINDER SHARDA AND THE STOCK STATEMENT FILED BY THE ASSESSEE FOR THE A.Y. 2009-10 ON 02.02.2015 AVAILABLE AT PB 12 & 13 WHICH ARE UNSIGNED ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 9 . THE LD. COUNSEL FOR THE ASSESSEE HAS POINTED OUT CERTAIN DEFICIENCIES IN THE DP REGISTER ON WHICH THE LD. DR HAS PLACED HEAV Y RELIANCE BUT HAS NOT BEEN REBUTTED BY THE LD. DR IN HIS COUNTER ARGUMEN TS OR COUNTER WRITTEN SUBMISSIONS. THE SAID DEFICIENCIES EVEN THOUGH REP RODUCED HEREINABOVE BY THE LD. COUNSEL FOR THE ASSESSEE IN HIS WRITTEN SUBMISSIONS I.E. VITAL INFORMATION RELATING TO PHYSICAL VERIFICATION OF TH E STOCK HAS NOT BEEN RECORDED AND THERE IS NO COLUMN IN THE REGISTER F OR KEEPING THE RECORD THAT ON WHICH DATE STOCK STATEMENT HAS BEEN RECEIVED. TH E COLUMN FOR ACCOUNTANT INITIALS IS BLANK AND COLUMN FOR INSPECT ION IS MOSTLY BLANK EXCEPT INITIALS IN SOME OF THE COLUMNS AND DATE OF 19.01.2010 AGAINST THE STOCK STATEMENT OF 31.08.2009, 30.09.2009 AND 31.1 0.2009 WHICH SHOWS THE REALITY OF PHYSICAL VERIFICATION OF STOCK AS ON DIFFERENT DATES OF THREE MONTHS. THE LD. COUNSEL FURTHER ARGUED THAT COLUMN FOR FULL SIGNATURE OF INCUMBENT INCHARGE IS ALSO BLANK EXCEPT STARTING FR OM ENTRIES FOR THE MONTH OF MARCH 2009 TO DEC., 2009 BUT NO NAME OF THE PERS ON WHO DID THE INITIALS CAN BE MADE OUT. 21. AS REGARDS THE STATEMENT OF SENIOR BRANCH MANAG ER, SH. TEJINDER SHARDA, IT WAS ONLY A GUESS WORK THAT HIS PREDECESS OR MUST HAVE GONE THROUGH THE MODUS OPERANDI OF MAINTAINING THE RECO RDS BY THE BANK AS HE WAS NOT IN THE BRANCH OF THE BANK DURING THE RELEVA NT PERIOD. IN FACT, BANK DOES NOT HAVE ANY RECORD OF ANY PHYSICAL VERIFICATI ON OF THE STOCK AS ON 31.03.2009 AND THE DRAWING POWER REGISTER CANNOT BE RELIED UPON. THAT THE ASSESSEE HAD IN FACT MORE STOCK AS COMPARED TO THE STOCK DECLARED IN THE AUDITED PROFIT & LOSS ACCOUNT AND BOOKS OF ACCO UNT. IN FACT, A PROCEDURE HAS BEEN STATED BY SH.TEJINDER SHARDA OF MAINTAININ G THE DRAWING POWER REGISTER AND IN FACT, NOTHING HAS BEEN BROUGHT ON R ECORD TO JUSTIFY THAT THE PHYSICAL VERIFICATION HAS BEEN DONE. IN FACT, THE P RESENT INCHARGE OF THE BANK, WHO ALLEGEDLY AS MENTIONED BY THE AO AS VERIF IED THE STOCK PHYSICALLY WAS NEVER CROSS-EXAMINED AND NOTHING HAS BEEN BROUGHT ON RECORD BY THE AO OR EVEN BY THE LD. DR, MR. TARSEM LAL THAT THE STOCK WHICH IN ALL THE CASES MENTIONED HEREINABOVE, WHICH IS LYING AT DIFFERENT SITES, NOT AT ONE PLACE IN ONE CITY BUT AT DIFFERE NT CITIES IN DIFFERENT STATES. NOT EVEN A SINGLE DOCUMENTARY EVIDENCE WAS PLACED O N RECORD TO ESTABLISH ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 10 THAT ANY BANK OFFICER HAS EVER VISITED DIFFERENT SI TES AND DIFFERENT CITIES IN DIFFERENT STATES AND THAT TOO ON ANY DATE AND THERE ARE NO DETAILS AVAILABLE WITH THE BANK AUTHORITIES WITH REGARD TO THE MATERI AL, SPECIFICATIONS AND WEIGHMENT AND/OR NUMBERS OF MATERIAL AVAILABLE. HA D IT BEEN VERIFIED PHYSICALLY, THE SAME SHOULD HAVE BEEN THERE. THE L D. DR TOTALLY RELIED UPON THE DP REGISTER, A COPY OF WHICH IS PART OF TH E ASSESSMENT ORDER BUT THE SAME IS NOT BACKED BY ANY DOCUMENTARY EVIDENCE WHICH CAN PROVE THAT THE PHYSICAL VERIFICATION HAS BEEN DONE BY ANY OF THE BANK AUTHORITIES AT ANY POINT OF TIME DURING THE IMPUGNED YEAR IN A NY OF THE CASE MENTIONED HEREINABOVE. 22. MUCH RELIANCE HAS BEEN PLACED ON THE STATEMENT OF BANK MANAGER, SH. TEJINDER SHARDA IN THE CASE OF MUNISH KUMAR BA NSAL CONTRACTOR BUT THE AO HAS FAILED TO PROVE THAT ANY PHYSICAL VERIFI CATION HAS BEEN MADE OF THE STOCK. HOWEVER, A STATEMENT RECORDED OF THE BRA NCH MANAGER IN THE CASE OF SH. MUNISH KUMAR BANSAL CONTRACTOR, WHO HAS BEEN ASSESSED BY THE AO, THE SAME CANNOT AFFECT THE ASSESSMENT OF TH E PRESENT APPEAL AND CANNOT BE BLINDLY APPLIED IN THE PRESENT APPEAL AUT OMATICALLY. HOWEVER, THE MATTER IN THE CASE OF SH. MUNISH KUMAR BANAL CO NTRACTOR, TRAVELLED UPTO THE ITAT, AMRITSAR BENCH AND THE ITAT, AMRITSA R BENCH IN ITS DECISION IN ITA NO.391(ASR)/2012 DATED 12.09.2013 D ELETED THE ADDITION THOUGH THE FACTS IN THAT CASE WERE DIFFERENT.. 23. THE LD. DR HAS TRIED TO REBUT THE CONTENTION OF THE ASSESSEE THAT THE ACTUAL PHYSICAL VERIFICATION OF THE STOCK HAS BEEN DONE BY THE BANK AUTHORITIES BY RELYING ON DP REGISTER WHICH SHOWS T HAT THE PHYSICAL VERIFICATION OF THE STOCK STATEMENT DATED 31.03.200 9 WAS MADE ON 03.04.2009 (PAGE 45). IT WAS EXPLAINED BY THE LD. C OUNSEL FOR THE ASSESSEE THAT IT WAS IMPOSSIBLE FOR THE BANK AUTHORTIES TO P HYSICALLY VERIFY THE STOCK AS PER STOCK STATEMENT DATED 31.03.2009, AS THE STO CK WAS LYING AT DIFFERENT SITES IN MADHYA PRADESH. THIS ARGUMENT OF THE LD. DR CANNOT BE ACCEPTED AT ALL IN VIEW OF THE ABOVE FACTS. HENCE, IT STANDS PROVED THAT THE BANK MANAGER ONLY NARRATED THE PROCEDURE AND NOTHI NG HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE STOCK HAS BEEN PHYSICAL LY VERIFIED AT ANY POINT ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 11 OF TIME AND NO DOCUMENTARY EVIDENCE HAS BEEN PLACED ON RECORD BY THE REVENUE. 23.1 AS REGARDS THE COUNTER COMMENTS/SUBMISSIONS BY THE LD. DR, OUR FINDINGS ARE : I) THAT THE STOCK STATEMENTS FOR THE ASSESSMENT YEA R 2009-10 AS CLAIMED BY THE ASSESSEE ARE NOT INFLATED BUT DE FLATED. HE HAS COMPARED THE VALUE OF THE STOCK AS PER STOCK ST ATEMENT WITH THE SANCTIONED LIMIT INSTEAD OF STOCK AS PER B ALANCE SHEET AS ON 31.03.2009. HENCE, THE COUNTER COMMENT IS FACTUALLY WRONG. II) THE LD. DR STATED THAT DURING THE AY 2010-11, T HE ASSESSEE HAS NOT CLAIMED THAT HE FILED INFLATED STOCK STATEM ENT. BUT ON PAGE 6 OF THE ORDER OF THE AO, THE AO HAS REPRODUCE D IN PARA 2.4 IN WRITTEN SUBMISSION OF THE ASSESSEE AND IT HA S BEEN CLAIMED BY THE ASSESSEE THAT THE INFLATED STOCK ST ATEMENTS WERE SUBMITTED TO THE DEPARTMENT FOR GETTING LOANS. HENCE, THE COUNTER COMMENT OF THE LD. DR IS FACTUALLY WRON G. I) ON PAGE 4 OF THE COUNTER COMMENTS, THE LD. DR HAS D ISCUSSED REGARDING CROSS EXAMINATION OF SH. KAMLESH GUPTA BU T THIS CROSS EXAMINATION WAS MADE BY THE ASSESSEE DURING T HE A.Y. 2010-11. MOREOVER, THE LD. CIT(A) HAS GIVEN DE TAILED FINDING REGARDING NON-PHYSICAL VERIFICATION OF THE STOCK AT PARA 12(III) OF THE APPELLATE ORDER FOR AY 2009-10 II) THE LD. DR HAS DISCUSSED ON PAGE 5 OF THE WRITTEN SUBMISSION REGARDING STATEMENT OF THE BANK MANAGER REGARDING INDEPENDENT VERIFICATION OF THE STOCK DAT ED 4.2.2010. BUT THE AO HAS NEVER TAKEN ANY COGNIZANCE OF THIS INDEPENDENT STOCK AUDIT REPORT IN THE ASSESSMENT O RDER. MOREOVER, THIS INDEPENDENT VERFICIATION RELATES TO STOCK STATEMENT DATED 31.01.2010 ALLEGEDLY MADE ON 4.2.20 10 BUT NOT TO THE STOCK STATEMENT DATED 20.03.2010 ON THE BASIS OF ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 12 WHICH ADDITION HAS BEEN MADE . HENCE, NO RELIANCE CAN BE PLACED ON THE INDEPENDENT STOCK VERIFICATION. III) ON PAGE 6 OF THE COUNTER COMMENTS, THE LD. DR HAS S TATED THAT THE VALUE OF THE STOCK HAS BEEN MENTIONED AT STOCK STATEMENT DATED 31.03.2009 AT RS.12,62,06092/- BUT THE ASSESSEE NEVER STATED THAT THE STOCK STATEMENT WAS INFLATED AND IT HAS ONLY STATED BY THE ASSESSEE THAT IT IS U NSIGNED. BUT IN THIS REGARD, THE ASSESSEE HAS ALL ALONG STA TED THAT THE STOCK AS PER STOCK STATEMENT HAS BEEN INFLATED TO A VAIL CC LIMIT FROM THE BANK. THE PHYSICAL VERIFICATION OF THE STOCK HAS NEVER BEEN PROVED BY THE DEPARTMENT. HENCE, THI S COUNTER COMMENT OF THE LD. DR IS ALSO FACTUALLY WRO NG. IV) THE LD. DR HAS AGAIN RELIED ON THE DP REGISTER FOR THE AY 2009-10 AND ACCORDING TO HIM THE BRANCH MANAGER SIG NED THE D.P.REGISTER IN TOKEN OF HAVING PHYSICALLY VERI FIED THE STOCK AND THE SAME IS FURTHER COUNTER SIGNED BY TH E CHIEF MANAGER AT THAT TIME. BUT THE ASSESSEE IN HIS COU NTER COMMENTS HAS BROUGHT OUT THE VITAL DEFECTS IN THE DP REGISTER, WHICH HAS BEEN DISCUSSED (SUPRA). HENCE, THIS DP REGISTER HAS NO AUTHENTIC VALUE AND THE COMMENTS OF THE LD. DR ARE LIABLE TO BE REJECTED. V) THE LD. DR HAS ALSO STATED THAT THE ASSESSEE HAS TR IED TO RELY ON THE DECISION OF THIS BENCH IN THE CASE OF M UNISH KUMAR BANSAL AND ACCORDING TO HIM, THE FACTS OF THI S CASE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT ASSE SSEE. BUT THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE BENCH THAT IN THE ABOVE SAID CASE, THE ADDITION HAS BEEN DELETED AND NO FURTHER RELIANCE HAS BEEN PLACED. MOREOVER, REGARDI NG DIFFERENCE OF RS.1,73,16,531/- POINTED OUT BY THE LD. DR, THIS ISSUE IS COVERED BY THE FINDING THAT THE ASSESSEE HAS FILED INFLATED STOCK STATEMENT. VI) ACCORDING TO THE LD. DR, THE ASSESSEE HAS STATED TH AT THE AUDITED ACCOUNTS FILED WITH THE BANK ARE THE SAME A S WITH ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 13 THE INCOME TAX DEPARTMENT AND BECAUSE OF THIS FACT, IT WAS IN THE KNOWLEDGE OF THE BANK THAT THE ACTUAL STOCK AS ON 13.03.2009 AND 20.03.2010 WAS MUCH LESS THAN THE ST OCK AS PER STOCK STATEMENT BUT NO ACTION WAS TAKEN AS P ER STOCK STATEMENT SUBMITTED TO THE BANK. AS PER LD. DR, THE COMMENTS OF THE ASSESSEE HAS NO RELEVANCE. BUT THIS FACT IS IMPORTANT BECAUSE THE BANK HAS NOT TAKEN NOTE OF DIFFERENCE IN STOCK. VII) THE LD. DR HAS GIVEN COMMENTS ON HYPOTHECATION OF S TOCK, WHICH HAS ALREADY BEEN DISCUSSED IN THIS ORDER SUPR A. VIII) THE LD. DR HAS FURTHER STATED THAT THE ASSESSEE MAD E BLANKET CLAIM THAT IT HAS SHOWN INFLATED STOCK FOR THE AY 2010-11. THIS IS IN CONTRADICTION TO THE COUNTER CO MMENTS OF THE LD. DR ON PAGE 4 THAT NO SUCH CLAIM WAS MADE BY THE ASSESSEE IN AY 2010-11. XI THE SAME FACTS HAVE BEEN DISCUSSED IN RESPECT O F OTHER CASES WHICH ARE BEFORE US AND THE FINDINGS ALREADY RECORDED ABOVE SHALL APPLY ACCORDINGLY TO ALL OTHER CASES MENTIONED HEREINABOVE, MUTATIS MUTANDIS. 24. IT IS A FACT ON RECORD THAT THE CREDIT FACILITY HAS BEEN EXTENDED BY THE BANK TO THE ASSESSEE AGAINST THE HYPOTHECATION OF STOCK AND NOT AGAINST PLEDGE OF STOCK, IN WHICH THE CONTROL AND P OSSESSION OF THE STOCK REMAINED WITH THE ASSESSEE. 25. THE AO HAS NOT POINTED OUT ANY DISCREPANCY IN T HE BOOKS OF ACCOUNT OR PURCHASE/SALES OR HAS NOT BROUGHT ON RECORD TO P ROVE THAT EXTRA PURCHASES HAVE BEEN MADE BY THE ASSESSEE AT ANY POI NT OF TIME. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED IS NOT UNDER DISPUTE AND NO DEFECT BY THE AUDITOR HAS BEEN POINTED OUT. IT IS T HE REAL INCOME WHICH CAN BE TAXED, WHEREAS IN THE PRESENT CASES ALL THE ADDI TIONS ARE MADE ON CONJECTURES AND SURMISES. 26. TIME AND AGAIN BEFORE BOTH THE AUTHORITIES BELO W, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THE EXPLANATION THA T THE STATEMENT HAS ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 14 BEEN SUBMITTED BEFORE THE BANK AUTHORITIES ONLY ON ESTIMATED BASIS TO AVAIL OF THE BANK LOAN AND THERE IS NO OTHER PURPOS E. THIS CONTENTION OF THE ASSESSEE HAS NOT BEEN REBUTTED AT ANY POINT OF TIME BY THE AO OR BY THE LD. DR. IT IS A FACT THAT THE AO AS NOT POINTED O UT ANY DEFECTS IN THE BOOKS OF ACCOUNT AND IN FACT, THE AO HAS NOT INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. AS ARGUED BY THE LD. DR THAT CA SH CREDIT LIMIT IS CALCULATED ON THE BASIS OF DP REGISTER, WHICH IN TU RN IS MAINTAINED ON PHYSICAL VERIFICATION OF THE STOCK AND NO DOCUMENTA RY EVIDENCE HAS BEEN BROUGHT ON RECORD THAT THE STOCK MENTIONED IN THE . DP REGISTER BY THIRD PARTY I.E. BANK AUTHORITIES, HAS BEEN MAINTAINED ON PHYSICAL VERIFICATION OF THE STOCK, MAINTAINED BY THE ASSESSEE AT DIFFERENT CITIES IN DIFFERENT STATES. 27. THE AO HAS MUCH RELIED ON THE DECISION IN THE C ASE OF DEVGAN RICE & GENERAL MILLS (SUPRA). THE ISSUE BEFORE THE HONB LE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF DEVGAN RICE & GENERAL MI LLS (SUPRA) WAS WITH REGARD TO THE PROCEEDINGS U/S 148 OF THE ACT AND WH ETHER THE SAID PROCEEDINGS U/S 148 OF THE ACT COULD BE INITIATED O N THE BASIS OF INFORMATION REGARDING INFLATING THE VALUE OF THE ST OCK IN THE BANK STATEMENT WAS RECEIVED FROM THE BANK AFTER COMPLETION OF ASSE SSMENT U/S 143(3) OF THE ACT.. THE HONBLE HIGH COURT HAS HELD THAT THE REOPENING IN SUCH CASES CAN BE DONE. HOWEVER, THE DECISION OF HONBLE PUNJA B & HARYANA HIGH COURT IN THE CASE OF DEVGAN RICE & GENERAL MILLS (S UPRA) WAS WITH REGARD TO A DIFFERENT CONTEXT AND DID NOT PROVE THAT THE A SSESSEE HAD MADE UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 28. MUCH RELIANCE HAS BEEN PLACED BY THE LD. DR ON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHAKUNTLA THUKRAL VS. CIT REPORTED AT 366 ITR 644. AS REQUIRE D ORDER OF THE CIT(A) IN THE CASE OF SHAKUNTLA THUKRAL WAS PLACED ON RECORD BY THE PARTY AND ON PERUSAL OF THE SAME IN PARA 2.11 TO 2.18 AND AT PAG E 4 OF CIT(A)S ORDER, IT WAS FOUND THAT THE BOOKS OF THE ASSESSEE WERE NOT A CCURATE BECAUSE OF SPECIFIC DEFECT OF NON-RECORDING OF SALES IN THE B OOKS OF ACCOUNT .POINTED OUT. IN PARA 2.8 AT PAGE 6 OF CIT(A)S ORDER IN TH E CASE OF SHAKUNTLA THUKRAL, STOCK STATEMENT FILED ON 04.07.2007 HAS BE EN REPLACED BY OTHER ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 15 STOCK STATEMENT WHICH ESTABLISHES THAT NO STOCK INV ENTORY WAS PREPARED AT THE CLOSE OF THE FINANCIAL YEAR, WHEREAS THERE ARE NO SUCH FINDING BY THE AO IN ANY OF THE PRESENT APPEALS. 29. FURTHER, IN THE CASE OF SHAKUNTLA THUKRAL (SUPR A), THE LD. CIT(A) HAS RECORDED FINDING AT PARA 2.11 (PAGE 24), OF THE ORD ER THAT THE HIGHER STOCK AS ON 31.03.2005 WAS GIVEN FOR THE PURPOSE OF MAKI NG PAYMENT FOR IMPORT OF MACHINERY CANNOT BE ACCEPTED AS THE PAYME NT FOR PURCHASE OF MACHINERY HAD ALREADY BEEN RELEASED IN FEBRUARY, 20 05. IN PARA 2.12.1 (PAGE 25) OF LD. CIT(A)S ORDER, IT HAS BEEN PERUS ED THAT TAT THERE ARE REPORTS OF PHYSICAL INSPECTION CARRIED OUT BY THE B ANK AUTHORITIES IN RESPECT OF ASSESSEES STOCK AT QUARTERLY INTERVALS IS AVAIL ALE AND SUCH FINDINGS HAS NOT BEEN REBUTTED BEFORE THE ITAT OR BEFORE THE HON BLE HIGH COURT. BUT IN THE PRESENT CASE IN VIEW OF OUR FINDINGS HEREINABOV E, NOTHING HAS BEEN ESTABLISHED THAT PHYSICAL INSPECTION OF THE STOCK H AS BEEN CARRIED OUT AS PER FACTS ON RECORD. FURTHER, IN PARA 2.12.2 (PAGE 25), OF CIT(A)S ORDER IN THE CASE OF SMT. SHAKUNTLA THUKRAL (SUPRA), IT HAS BEEN STATED BY THE LD. CIT(A) THAT THE ASSESSEE HAS NOT DISPUTED THE STOC K OF THE VALUE WHICH WAS SUBMITTED TO THE BANK WAS ACTUALLY LYING IN BUS INESS PREMISES AS ON 31.03.2005. BUT IN THE PRESENT APPEAL THE ASSESSEE ALL ALONG BEFORE THE AO AND THE LD. CIT(A) AND BEFORE US STATING THAT THE S TOCK WAS INFLATED TO GET THE CASH CREDIT LIMIT FROM BANK. THUS, IN THE CASE OF SMT. SHAKUNTAL THUKRAL (SUPRA), THE AO AFTER POINTING OUT DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE A CATEGORICAL FINDING HAS BEEN GIVEN T HAT THE BOOKS OF ACCOUNT ARE NOT ACCURATE AND MEANING THEREBY THAT THE BOOKS OF ACCOUNT WERE REJECTED. BUT IN THE PRESENT APPEAL, THERE IS NO SUCH FINDING BY THE AO AND NO BOOKS OF ACCOUNT HAVE BEEN REJECTED AND PROVISIONS OF SECTION 145(3) HAVE NOT BEEN INVOKED. IN THE CASE OF SMT. S HAKUNTLA THUKRAL (SUPRA), THE LD. CIT(A) HAS RELIED UPON THE PHYSIC AL INSPECTION CARRIED OUT BY THE BANK AUTHORITIES IN RESPECT OF ASSESSEES ST OCK AT QUARTERLY INTERVALS, AS MENTIONED HEREINABOVE AND SUCH FINDIN GS HAVE NEITHER BEEN REBUTTED BEFORE THE LD. CIT(A) OR ITAT OR HONBLE H IGH COURT. BUT IN THE PRESENT CASE, THE ASSESSEE HAS ESTABLISHED THAT NO PHYSICAL INSPECTION OF THE STOCK HAS BEEN CARRIED AS PER FACTS ON RECORD. ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 16 30. FURTHER AND FINALLY, IN THE CASE OF SHAKUNTLA T HUKRAL (SUPRA), THE LD. CIT(A) HAS RECORDED THE FINDING THAT THE ASSESSEE H AS ACCEPTED THAT FACT THAT THE STOCK AS PER STOCK STATEMENT AS ON 31.03 .2005 WAS LYING IN THE PREMISES OF THE ASSESSEE.. BUT IN THE PRESENT APPE AL, THE ASSESSEE ALL ALONG STATED BEFORE THE AUTHORITIES BELOW AND BEFO RE US THAT THE STOCK WAS INFLATED TO GET THE CASH CREDIT LIMIT FROM BAN K AND THE ONUS IS ON THE REVENUE TO PROVE THAT THE ASSESSEE OWNED THE STOCK MORE THAN THE STOCK REFLECTED IN THE BALANCE SHEET AS ON 31.03.2005, WH ICH HAS NOT BEEN DONE IN ANY OF THE CASE REFERRED TO HEREINABOVE. 31. IN VIEW OF THE ABOVE DISCUSSION, THE DECISION O F SMT. SHAKUNTLA THUKRAL (SUPRA) AS RELIED UPON BY THE LD. DR IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 32. THE DECISIONS RELIED UPON BY THE LD. CIT(A) OF THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASES OF M/S.SANTOSH BOX FACTORY, M/S. SIDHU RICE MILLS AND IN THE CASE OF M/S. DEVI DA YAL RICE MILLS ARE SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CAS E AS THE REVENUE AS THE REVENUE HAS NOT BROUGHT ON RECORD DURING THE ASSESS MENT PROCEEDINGS OR BEFORE THE LD. CIT(A) OR EVEN BEFORE US THAT PHYSI CAL VERIFICATION OF THE STOCK HAS ACTUALLY BEEN DONE AND ACCORDINGLY STOCK STATEMENTS SO SUBMITTED BEFORE THE BANK AUTHORITIES AND DP REGIS TER CANNOT BE RELIED UPON. 33. IN THE CASE OF CIT VS. VEERDIP ROLLER (P) LTD. (2010) 323 ITR 341 (GUJ), THE FACTS ARE THAT THE AO MADE ADDITION ON A CCOUNT OF DIFFERENCE IN THE VALUE OF CLOSING STOCK FURNISHED TO THE BANK AN D THE VALUE OF THE STOCK FOUND IN THE BOOKS OF ACCOUNT FURNISHED TO THE INCO ME TAX AUTHORITIES INFLATED STOCK WAS HYPOTHETICAL AND NOT PLEDGED AND THE BANK OFFICIALS HAD NOT VERIFIED THE STATEMENT SHOWING INFLATED STOCK SO PRODUCED BY THE ASSESSEE. THE ADDITION ON ACCOUNT OF DIFFERENCE FUR NISHED TO THE BANK AS PER BOOKS OF ACCOUNT U/S 69B OF THE ACT CAN NOT BE SUSTAINED. CONSEQUENTLY, THE APPEAL WAS DISMISSED BY THE HONB LE GUJRAT HIGH COURT AGAINST THE SAID DECISION, THE REVENUE WENT IN APPE AL BEFORE THE HONBLE ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 17 SUPREME COURT AND THE HONBLE SUPREME COURT VIDE IT S ORDER DATED 13.12.2008 DISMISSED THE SLP FILED BY THE DEPARTME NT. 34. SIMILAR DECISIONS HAVE BEEN MADE BY VARIOUS CO URTS OF LAW REFERRED TO HEREINABOVE: I) CIT VS. SIDHU RICE & GENERAL MILLS REPORTE D IN 281 ITR 428 (P&H) II) CIT VS. SANTOSH BOX FACTORY (P ) LTD.., 44 IT REPS. 472 (P&H) III) CIT VS. N. SWAMY REPORTE DE IN 241 ITR 363 (MADRAS) IV) ITO VS. DEVI DAYAL RICE MILLS REPORTED IN 75 TTJ 24 (ITAT, AMRITSAR BENCH. V) CIT VS. SIROHI STEEL ROLLING MILLS, REPORTE D IN 200 CTR 595 (ALL.) VI) ASHOK KUMAR VS. ITO, REPORTED IN 201 CTR 17 8 ( J & K) VII) CIT VS. DAS INDUSTRIES, REPORTED IN 303 I TR 199 (ALL.) IX) CIT VS. SRI PADMAVATHI COTTON MILLS, REPORTED IN 23 6 ITR 340 (MAD.) IX) JAI SHARDA RICE MILLS. VS ITO REPORTED IN 36 ITD 254 (ITAT, ASR.) X) CIT VS. RIDDHI STEEL AND TUBES (P) LTD. REPO RTED IN 220 TAXMAN 148 (GUJ.) XI) CIT VS. APCOM COMPUTERS P. LTD. REPORTED IN (2007) 292 ITR 630 (MAD.). 35. IN THE FACTS AND CIRCUMSTANCES, THE ARGUMENTS M ADE BY THE LD. DR IN HIS WRITTEN SUBMISSIONS AND COUNTER SUBMISSIONS CANNOT HELP THE REVENUE AND ACCORDINGLY, WE FIND NO INFIRMITY IN TH E ORDER OF THE LD. CIT(A) IN THE CASE OF M/S. ISHAR INFRASTRUCTURE DEVELOPERS (P LTD. IN ITA NO.198(ASR)/2013 IN THE IMPUGNED YEAR. THE FACTS AND CIRCUMSTANCES IN THE PRESENT CASES AR E PARI MATERIA TO THE TRIBUNAL ORDERS AS REPRODUCED ABOVE AND THEREFORE, WE DELETE THE ADDITIONS SUSTAINED BY LEARNED CIT(A) ON ACCOUNT OF DIFFERENCES IN VALUE OF STOCK AND DEBTORS SUBMITTED TO BANK AND THOSE FI LED WITH THE RETURN OF INCOME. ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 18 13. IN VIEW OF THE ABOVE, GROUND NOS.2 TO 3 IN ITA NO.49(ASR)2013 AND GROUND NO.2 IN ITA NO.50(ASR)/2013 ARE ALLOWED. 14. NOW COMING TO GROUND NO.4 IN ITA NO.49(ASR)/201 3, WE FIND THAT ASSESSING OFFICER HAS MADE AN ADDITION ON ACCOUNT O F NON CHARGING OF INTEREST ON ADVANCES AND HAS HELD THAT THE FUNDS WE RE DIVERTED FOR NON BUSINESS PURPOSES BUT FROM THE ORDER OF ASSESSING O FFICER ITSELF, IT IS APPARENT THAT THE SAID AMOUNTS WERE NOT ADVANCES BU T WERE SUNDRY DEBTORS AS NOTED BY ASSESSING OFFICER AT PAGE 3 OF HIS ORDER AND THEREFORE, THE DISALLOWANCE OF INTEREST FOR NON CHA RGING OF INTEREST FROM DEBTORS IS NOT JUSTIFIED AND MOREOVER, THE ASSESSIN G OFFICER HAS DISALLOWED THE AMOUNT U/S 14A WHICH IS NOT APPLICAB LE TO THE FACTS AND CIRCUMSTANCES OF THE CASE AS THERE IS NO EXEMPT INC OME AND THERE IS NO SUCH EXPENDITURE RELATABLE TO EXEMPT INCOME. 15. IN VIEW OF THE ABOVE, GROUND NO.4 IN ITA NO.49( ASR)/2013 IS ALSO ALLOWED. 16. NOW COMING TO GROUND NO.5 IN ITA NO.49(ASR)2013 AND GROUND NO. 3 IN ITA NO.50(ASR)/2013, REGARDING ADDITION OF ACCOUNT OF ALLEGED BRIBE PAID TO BANK MANAGER WE FIND THAT THE ADDITIO N HAS BEEN SUSTAINED ONLY ON THE BASIS OF STATEMENT OF A PARTNER WHO WAS NOT WELL AND WHO HAD BEEN UNDER GOING TREATMENT FOR MENTAL DISORDER AS IS EVIDENT FROM THE COPIES OF PRESCRIPTION OF MR. AVTAR SINGH PLACE D AT (PB PAGE-23 & 24). ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 19 MOREOVER, WE FIND THAT THERE IS NO EVIDENCE OF MAKI NG ANY BRIBE AFTER THAN THE STATEMENT OF MR. AVTAR SINGH WHO HAD CLAIM ED TO HAVE PAID THE AMOUNT AFTER WITHDRAWAL FROM CASH CREDIT LIMIT BUT ASSESSING OFFICER DID NOT FIND ANY WITHDRAWAL IN THE CASH CREDIT LIMIT FO R MAKING BRIBE TO THE MANAGER. ABOVE ALL THE STATEMENT DOES NOT INDICATE AS TO IN WHICH YEAR THE BRIBE WAS ALLEGED TO HAVE BEEN PAID AND THEREFO RE, ASSUMPTION OF ASSESSING OFFICER THAT BRIBE MUST HAVE BEEN PAID IN THIS YEAR IS ALSO NOT JUSTIFIED. MOREOVER, WE FIND THAT ASSESSEES WERE EN JOYING CASH CREDIT LIMIT OF 65 LACS AND GOT ITS LIMIT ENHANCED RS.105 LACS A ND GOT ONLY RS.40 LACS AS ADDITIONAL WORKING CAPITAL AND ONLY INSANE PERSO N CAN PAY AN AMOUNT OF RS.25 LACS FOR ADDITIONAL CAPITAL OF RS.40 LACS. 17. IN VIEW OF THE ABOVE ADDITION MADE AND SUSTAINE D BY LEARNED CIT(A) IS NOT BASED UPON THE FACTS AND CIRCUMSTANCES AND T HEREFORE, WE DELETE THE SAME AND THEREFORE, GROUND NO.5 IN ITA NO.49(AS R)/2013 AND GROUND NO.3 IN ITA NO.50(ASR)2013 IS ALLOWED. 18. NOW COMING TO GROUND NO.4 IN ITA NO.50(ASR)/201 3 REGARDING ADDITION ON ACCOUNT OF INTRODUCTION OF CAPITAL OF R S.22,000/-BY ONE OF THE PARTNERS WE FIND THAT ADDITION IS NOT SUSTAINABLE I N VIEW OF THE FACT THAT ASSESSING OFFICER DID NOT DISCUSS THIS ADDITION IN THE ASSESSMENT ORDER AND LEARNED CIT(A) ALSO DISMISSED THE GROUND OF APP EAL WITHOUT BRINGING ANYTHING ON RECORD. ITA NO.49 & 50 (ASR)/ 2013 ASST. YEAR: 2005-0 6 20 19. IN VIEW OF THE ABOVE, GROUND NO.4 IN ITA NO. 50 (ASR)/2013 IS ALSO ALLOWED. 20. IN NUTSHELL, THE APPEALS FILED BY ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:16.06.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER