DCIT Central Circle -II, Gurgaon V. Orient Craft Ltd., New Delhi

ITA 5040/DEL/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5025 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2016-2017
• Appeal Filed On: 31-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAKESH GUPTA
• Keywords: Bogus purchase; Principle of natural justice; Earning of tax free income; Onus to prove; Bogus
• Section: 234B; 14A; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER I.T.A. NO.3313/DEL/2019 ASSESSMENT YEAR: 20 1 3 - 20 1 4 ORIENT CRAFT LTD., C/O RRA TAX INDIA D-28, SOUTH EXTN. PART-I, NEW DELHI. V S . DCIT, CENTRAL CIRCLE - II , GURGAON. TAN/PAN : AAACO0068M (APP ELL ANT) (RESPONDENT) I.T.A. NO.5040/DEL/2019 ASSESSMENT YEAR: 2013-2014 DCIT, CENTRAL CIRCLE - II, GURGAON. VS. ORIENT CRAFT LTD., C/O RRA TAX INDIA D-28, SOUTH EXTN. PART-I, NEW DELHI. TAN/PAN: AAACO0068M (APPELLANT) (RESPONDENT) APPELLANT BY: DR. RAKESH GUPTA, ADV. RESPONDENT BY: MS. PRAMITA M. BISWAS, CIT - D.R. DATE OF HEARING: 14 07 2021 DATE OF PRONOUNCEMENT: 24 09 2021 O R D E R I.T.AS. NO.3313 & 5040/DEL/2019 2 PER AMIT SHUKLA, JM THE ASSESSEE AND THE REVENUE BOTH ARE IN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (AP PEALS)- III, GURGAON, DATED 30.03.2019. (WRONGLY MENTIONED AS 30.3.2016 IN THE APPEAL ORDER). THE GROUNDS OF APPE AL RAISED BY THE ASSESSEE AND BY THE REVENUE, RESPECTIVELY AR E AS UNDER:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN C ONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.5,46, 18,495/- ALLEGEDLY ON ACCOUNT OF BOGUS PURCHASES FROM M/S AK ANSHA FASHION AND M/S JINDAL FASHION, MORE SO WHEN NO INCRIMINATING MATERIAL HAS BEEN FOUND AS A RESULT O F SEARCH AND IMPUGNED ADDITION HAS BEEN MADE BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE AND WITHOUT APPRECIATING/CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACT ION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MA KING ADDITION OF RS.5,46,18,495/- ALLEGEDLY ON ACCOUNT O F BOGUS PURCHASES FROM M/S AKANSHA FASHION AND M/S JINDAL FASHION, IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN C ONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.1,00, 59,836/- I.T.AS. NO.3313 & 5040/DEL/2019 3 ON ACCOUNT OF ALLEGED UNACCOUNTED CASH FOUND, MORE SO WHEN NO INCRIMINATING MATERIAL HAS BEEN FOUND AS A RESULT OF SEARCH AND IMPUGNED ADDITION HAS BEEN MADE BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE AND WITHOUT APPRECIATING/CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN S USTAINING THE DISALLOWANCE OF RS.39,992/- MADE BY LD. AO U/S 14A, MORE SO WHEN NO INCRIMINATING MATERIAL HAS BEEN FOU ND AS A RESULT OF SEARCH 5. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ADD ITION MADE IN THE IMPUGNED ASSESSMENT ORDER ARE BEYOND JURISDICTION AND ILLEGAL ALSO FOR THE REASON THAT T HESE COULD NOT HAVE BEEN MADE SINCE NO INCRIMINATING MATERIAL HAS BEEN FOUND AS A RESULT OF SEARCH. 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN C ONFIRMING THE ACTION OF LD. AO IN PASSING THE IMPUGNED ASSESS MENT ORDER WITHOUT THERE BEING REQUISITE APPROVAL IN TER MS OF SECTION 153D AND IN ANY CASE APPROVAL IF ANY IS MEC HANICAL WITHOUT APPLICATION OF MIND AND IS NO APPROVAL IN T HE EYES OF LAW. I.T.AS. NO.3313 & 5040/DEL/2019 4 7. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT REVERSING THE ACTION OF LD. AO IN CHARGING INTEREST U/S 234B OF INCOME TAX ACT, 1961. 8. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODIFY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJU DICE TO EACH OTHER. DEPARTMENTAL GROUNDS OF APPEAL I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING RELIEF OF RS. 12,00,000/- ON ACCOUNT OF UNACCOUNTED CASH FOUND DURING THE SEARCH PROCEEDINGS DESPITE THE FACT THAT THE ASSESSEE WAS UNABLE TO EXPLAIN IT. II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE DISA LLOWANCE OF PRODUCT DEVELOPMENT / SAMPLING EXPENSES RS. 20,98,66,789/- MADE BY THE AO BY IGNORING THE DECIS ION OF THE HONBLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. V. CIT 225 I TR 802. III) WHETHER SECTION 14A(1) OF THE INCOME TAX ACT, 1961 WOULD STAND ATTRACTED EVEN IF THE TAX-EXEMPT INCOME IS NOT ACTUALLY EARNED DURING A PARTICULAR YEAR SUBJEC T TO EXPENDITURE RELATABLE TO SUCH INCOME HAVING BEEN INCURRED DURING THE YEAR. I.T.AS. NO.3313 & 5040/DEL/2019 5 IV) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELE TING THE ADDITION ON ACCOUNT OF SECTION 14A WITHOUT APPRECIA TING THAT WHILE NOTICING THE OBJECTS AND REASONS BEHIND INTRODUCTION OF SECTION 14A OF THE INCOME TAX ACT 1 961, THE HONBLE SUPREME COURT HELD IN CIT V. WALFORT SH ARE & STOCK BROKERS (P) LTD. [2010] 326 ITR 1 (SC) THAT E XPENSES ALLOWED CAN ONLY BE IN RESPECT OF EARNING OF TAXABL E INCOME. V) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) IS JUSTIFIED IN DELE TING THE ADDITION MADE ON ACCOUNT OF SECTION 14A OF THE ACT WITHOUT APPRECIATING THE JUDGMENT OF HONBLE SUPREM E COURT IN CIT V. RAJENDRA PRASAD MOODY [1978] 115 I TR 519 (SC) WHICH HELD THAT THE ALLOWABILITY (OR OTHER WISE) OF AN EXPENDITURE WOULD NOT DEPEND UPON WHETHER IT HAS IN FACT RESULTED IN AN INCOME, AND THAT THE MERE FACT THAT EXPENDITURE STANDS INCURRED FOR THE PURPOSE IS SUFF ICIENT FOR ITS ADMISSIBILITY, AND WHETHER THE RATIO OF THI S JUDGMENT CAN BE APPLIED TO SAY, BY THE SAME ANALOGY , THAT THE EXPENDITURE INCURRED TO EARN AN EXEMPT INC OME IS SUBJECT TO ITS ADMISSIBILITY UNDER THE PROVISIONS O F THE INCOME TAX ACT, 1961 INCLUDING THOSE OF SECTION 14A IRRESPECTIVE OF WHETHER THERE IS A RECEIPT OF EXEMP T INCOME DURING THE YEAR UNDER CONSIDERATION. I.T.AS. NO.3313 & 5040/DEL/2019 6 VI) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DEL ETING THE ADDITION MADE ON ACCOUNT OF SECTION 14A OF ACT WITH OUT APPRECIATING THE OBSERVATIONS OF THE HONBLE SUPREM E COURT IN MAXOPP INVESTMENT LTD. REPORTED IN (2018) 91 TAXMANN.COM 154 (SC), THAT AS PER SECTION 14A(1) OF THE ACT, DEDUCTION OF THAT EXPENDITURE IS NOT TO BE ALL OWED WHICH HAS BEEN INCURRED BY THE ASSESSEE IN RELATIO N TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. VII) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) IS JUSTIFIED IN DELE TING THE ADDITION MADE ON ACCOUNT OF SECTION 14A OF ACT WITH OUT ADJUDICATING ON THE PROPOSITION OF LAW U/S 14A OF T HE INCOME TAX ACT, 1961 AS PROPOUNDED BY THE CBDT CIRCULAR NO. 5 OF 2014 DATED 11.02.2014 I.E. SECTIO N 14A IS TRIGGERED FOR DISALLOWANCE OF EXPENDITURE INCURR ED WHICH IS RELATABLE TO TAX-EXEMPT INCOME EVEN THOUGH NO TAX-EXEMPT INCOME UNDER THE ACT HAS BEEN EARNED DUR ING A PARTICULAR YEAR. VIII) WHETHER THE CBDT CIRCULAR NO 5 OF 2014 IS ILL EGAL AND NOT IN CONSONANCE WITH LEGISLATIVE INTENT BEHIN D SECTION 14A AND THE CHARGING SECTIONS 4 AND 5 OF TH E INCOME TAX ACT, 1961 WHICH LAY DOWN THAT TOTAL INCO ME UNDER THE ACT WOULD INCLUDE INCOME FROM ALL SOURCES I.T.AS. NO.3313 & 5040/DEL/2019 7 WHETHER RECEIVED, DEEMED TO BE RECEIVED, ACCRU ED OR DEEMED TO ACCRUE. IX) THE APPELLANT CRAVES TO ADD, AMEND ALTER OR MOD IFY ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 2. ASSESSEE HAS FILED PAPER BOOK IN ONE VOLUME HAVI NG PAGES 1 TO 280 , WHICH WERE REFERRED BY LD. COUNSEL ON BEHALF OF THE ASSESSEE EXTENSIVELY DURING THE COURSE OF HE ARING OF THE ABOVE APPEALS. BRIEF SYNOPSIS HAS ALSO BEEN FILED B Y LD. COUNSEL FOR THE ASSESSEE IN BOTH THE APPEALS RUNNIN G INTO 6 PAGES, WHICH IS ALSO HELD ON RECORD AND HAS ALSO BE EN CONSIDERED BY US. 3. THE CASE OF THE ASSESSEE REPRESENTED BY DR. RAKE SH GUPTA AND THAT OF REVENUE REPRESENTED BY MS. PARMIT A BISWAS. ARGUMENTS WERE EXTENSIVELY HEARD ON ALL THE GROUNDS INVOLVED. SINCE BOTH APPEALS ARE THE CROSS APPEALS AND THEREFORE, WE TAKE BOTH THE APPEALS FOR DISPOSAL BY TAKING THE ASSESSEES APPEAL FIRST. 4. GROUND NO. 1 & 2 OF THE ASSESSEES APPEAL ARE IN RESPECT OF DISALLOWANCE OF RS. 5,46,18,495/- MADE BY THE A. O. AND CONFIRMED BY CIT(A) AND ARE ON ACCOUNT OF NOT-GENUI NE PURCHASES OF FABRIC MADE BY THE APPELLANT FROM M/S JINDAL FASHION AND M/S AKANSHHA FASHION. ASSESSING OFFICER AT PAGE 2-17 OF HIS ORDER HELD SUCH PURCHASES WERE NOT GENUINE WHICH WAS UPHELD BY CIT(A) VIDE DISCUSSION MADE AT PAGE 28-35. I.T.AS. NO.3313 & 5040/DEL/2019 8 5. LD. COUNSEL FOR THE ASSESSEE FIRST OF ALL ARG UED THAT THERE WAS NO INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH IN RESPECT OF IMPUGNED DISALLOWANCE. FURTHER, IT WAS S UBMITTED BY THE LD. COUNSEL WITH THE HELP OF VARIOUS EVIDENC ES REFERRED AT PAGE 267-274 OF THE PAPER BOOK& IT WAS ARGUED THAT APPELLANT IS INTO THE BUSINESS OF GARMENTS MANUFACT URING IN WHICH FABRIC IS THE MAIN RAW MATERIAL AND INPUT. TH E APPELLANT HAS PURCHASED FABRIC FROM THE ABOVE SAID FIRM DURING THE YEAR UNDER APPEAL, WHICH IS EVIDENT FROM THE CHART ENCLOSED IN THE PAPER BOOK (PB 102-103). LD. CIT(DR) RELIED UPON THE FINDINGS CONTAINED IN THE ASSESSMENT AND F IRST APPELLATE ORDER. 6. IT IS SEEN THAT PAGE 2-17 OF THE ASSESSMEN T ORDER DOES NOT REFER ANY INCRIMINATING MATERIAL FOUND AS A RES ULT OF SEARCH IN RESPECT OF PURCHASE OF FABRIC MADE BY THE APPELLANT FROM M/S JINDAL FASHION AND M/S AKANSHA FASHION. ON LY EVIDENCE WHICH HAVE BEEN REFERRED IN THE ASSESSMENT ORDER WAS THAT LEDGER ACCOUNT OF APPELLANT IN THE BOOKS O F THE ABOVE SAID CONCERN, I.E. M/S JINDAL FASHION, M/S AKANSHA FASHION FROM WHOM THE PURCHASES WERE MADE, SHOW THAT BILLS RAISED TO THE APPELLANT BY THE SAID CONCERN HAD MOSTLY CON SECUTIVE SERIAL NUMBERS AND THE PAYMENTS MADE TO THE SAID CO NCERN WERE ALWAYS IN THE ROUND FIGURES AND THAT THE BANK ACCOUNT OF THE SUPPLIER REVEALED THAT IT RECEIVED PAYMENTS AND ON THE SAME DAY OR WITHIN A SHORT SPAN OF TIME, THE FUNDS WERE USED I.T.AS. NO.3313 & 5040/DEL/2019 9 TO BE TRANSFERRED TO OTHER ENTITIES AND FURTHER MEN TIONS THAT THE NAMES OF CERTAIN PARTIES TO WHOM THE PAYMENTS H AVE BEEN MADE BY THE SAID CONCERN AND THE NAMES OF SUCH PART IES HAVE BEEN MENTIONED BY THE LD. AO IN THE ASSESSMENT ORDE R AND THAT SEVERAL ADVERSE THINGS REGARDING THE ABOVE SUP PLIER BASED UPON SOME ALLEGED ENQUIRIES MADE. 7. WE HAVE CONSIDERED THE ENTIRE FACTS AND CI RCUMSTANCES AS REFERRED IN BOTH THE ORDERS, SUBMISSIONS OF THE ASSESSEE AND LD. CIT(DR) AND VARIOUS PAGES OF THE PAPER BOOK S FILED. FROM THE FINDINGS RECORDED IN THE ASSESSMENT ORDER, IT CAN BE SAID THAT THERE IS NO INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH IN RESPECT OF PURCHASE OF FABRIC MADE BY THE APPELLANT FROM M/S JINDAL FASHION AND M/S AKANSHA FASHION WHICH CAN BE REGARDED AS INCRIMINATING MATE RIAL. EVEN THE SURVEY PROCEEDING REFERRED IN THE ASSESSME NT ORDER DO NOT INDICATE ANY INCRIMINATING MATERIAL. 8. ARGUMENTS WERE MADE ON THE BASIS OF EVIDENCE S REFERRED AT PAGE 267-274 OF THE PAPER BOOK AND IT IS SEEN FR OM THE EVIDENCES PLACED BEFORE US AND RELIED UPON BY LD. C OUNSEL FOR THE ASSESSEE THAT THE PURCHASES OF FABRIC MADE BY T HE APPELLANT FROM M/S JINDAL FASHION AND M/S AKSNSHA F ASHION ARE GENUINE PURCHASES, WHICH IS EVIDENT FROM VOLUMI NOUS DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE COMPANY AND PAYMENT HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUE S AND DOCUMENTS AT PAGE 99-101, 97-98, 95-96 AND VARI OUS I.T.AS. NO.3313 & 5040/DEL/2019 10 PAGES OF THE PAPER BOOK REFERRED IN THE WRITTEN SUB MISSIONS AND SHOWN TO US WHICH ESTABLISH THE PURCHASES MADE BY THE ASSESSEE. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THOUGH UPHELD THE DISALLOWANCE BUT THE SUBMISSIONS AND THE EVIDENCES FURNISHED BY THE ASSE SSEE AND HELD IN THE PAPER BOOK TO WHICH OUR ATTENTION WAS D RAWN, WE FIND THAT THE ACTION OF CIT(A) IN CONFIRMING THE IM PUGNED ADDITION WAS NOT JUSTIFIED. 9. IN VIEW OF THE EXHAUSTIVE PLEADINGS AND EVI DENCES FILED BY THE ASSESSEE AND CONSIDERED BY US, THE DISALLOWA NCE MADE IN THE ASSESSMENT ORDER AND CONFIRMED BY CIT(A) IS NOT SUSTAINABLE ON MERIT. COMPREHENSIVE EVIDENCES HAVE BEEN BROUGHT ON RECORD BY THE ASSESSEE WHICH PROVE THAT PURCHASES OF THE FABRIC WERE MADE BY THE ASSESSEE. WITHOUT PURCHASES OF THE FABRIC, THE BUSINESS OF THE ASSESS EE INVOLVING SUCH LARGE EXPORT WOULD NOT HAVE BEEN POSSIBLE. BOT H THE SUPPLIERS ARE UNRELATED PARTIES AND ASSESSED TO INC OME TAX. THE ADVERSE OBSERVATIONS MADE BY THE A.O. IN THE AS SESSMENT ORDER HAVE BEEN MET BY THE ASSESSEE ONE BY ONE AND PAPER PAGES 271-274 AND WE HAVE TAKEN OURSELVES TO THESE ADVERSE OBSERVATIONS AND RESPONSE OF THE ASSESSEE AND WE AG REE WITH THE LD. COUNSEL FOR THE ASSESSEE THAT THE ADVERSE OBSERVATIONS MADE BY THE A.O. ARE NOT OF SUBSTANCE AND MISPLACED ON FACTS. CIT(A) TOO HAS MENTIONED IN HIS ORDER THE ADVERSE OBSERVATIONS OF THE A.O. ONLY WHICH IN OUR OPINION ARE MISPLACED ON FACTS. CONTENTION OF CIT(A) THAT EVIDE NCE FILED BY I.T.AS. NO.3313 & 5040/DEL/2019 11 THE ASSESSEE SELF-SERVING DOCUMENTS AND CIRCUMSTANT IAL EVIDENCE LEADS TO THE CONCLUSION OF A.O. IT WOULD B E ENOUGH FOR US TO SAY THAT VOLUMINOUS DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE ARE CLEARLY ESTABLISHING THE GENUINENE SS OF PURCHASES FABRIC FROM M/S JINDAL FASHION AND M/S AK ANSHA FASHION. WE DO NOT WANT TO BURDEN OUR ORDER BY REPE ATING THE WHOLE HOSTS OF DOCUMENTARY EVIDENCES FILED IN THIS CASE WHICH ESTABLISH THAT THE PURCHASES MADE BY THE ASSESSEE F ROM THE ABOVE SAID TWO SUPPLIERS ARE GENUINE PURCHASES. WE HAVE GONE THROUGH THE OBSERVATIONS MADE BY CIT(A) IN HIS APPEAL ORDER AND WE DO NOT AGREE WITH THEM. OPENING OF THE BANK ACCOUNT BY THE SUPPLIERS IN THE SAME BANK IN WHICH ASSESSEE HAD BANK ACCOUNT IS NOT SOMETHING WHICH IS UNUSUAL AS IT MAY BE NECESSARY FOR THE SMOOTHNESS OF THE BANKING AND AVOID THE LOSS OF TIME IN COLLECTING THE CHEQUES ET C. WE FIND THAT THE BURDEN TO PROVE PURCHASES WAS VERY WELL DI SCHARGED BY THE ASSESSEE. WE HAVE DELETED SIMILAR DISALLOWAN CE MADE IN AY 2013-14 AND 2014-15 & 2015-16. FACTS ARE IDEN TICAL IN THOSE YEARS ALSO. IN THE RESULT GROUND OF APPEAL NU MBER 1 AND 2 OF THE ASSESSEES APPEAL OF THE ASSESSEE ARE ALLO WED AND THE ADDITION OF RS. 5,46,18,495/- IS DELETED. 10. GROUND NO. 3 OF THE ASSESSEES APPEAL IS IN REGARD TO THE ADDITION OF RS. 1,00,59,836/- MADE BY AO AND CO NFIRMED BY CIT(A) AND GROUND NO. (I) OF THE DEPARTMENTAL AP PEAL IS AGAINST THE ADDITION OF RS. 12,00,000/- ON ACCOUNT OF CASH MADE BY AO BY DELETED BY CIT(A). AO HAS DISCUSSED T HESE I.T.AS. NO.3313 & 5040/DEL/2019 12 ISSUES AT PAGE 17-18 OF THE ASSESSMENT ORDER WHEREA S CIT(A) HAS DISCUSSED THESE ISSUES AT PAGE 35-38 OF THE APP EAL ORDER. 11. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT I T WAS SO EXPLAINED DURING THE COURSE OF THE ASSESSMENT PROCE EDING ALSO THAT THE CASH FOUND DURING THE COURSE OF SEARC H FOR WHICH ADDITION HAS BEEN MADE IN THE ASSESSMENT ORDE R, SHOULD BE TELESCOPED AGAINST THE CASH SCRAP SALE OF 9.20 CRORE OFFERED TO TAX IN PREVIOUS YEAR RELEVANT TO A.Y. 20 15-16 WHEREAS LD. CIT (DR) RELIED UPON THE ORDERS PASSED BY THE LOWER AUTHORITIES. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS SEEN THAT AN AGGREGATE AMOUNT OF 1,12,59,836/- HAS BEEN ADDED AS UNEXPLAINED CASH BY THE ASSESSING OFFICER WHICH WER E FOUND IN EXCESS THAN THE CASH IN HAND BEING SHOWN IN THE BOOKS OF ACCOUNTS. WE HAVE SEEN THE ASSESSMENT ORDER FOR AY 2015-16 ALSO WHEREIN AN ADDITION OF RS. 9,20,23,623/- WAS M ADE IN RESPECT OF SCRAP CASH SALE WHICH WAS HOWEVER DELETE D BY CIT(A) IN THAT YEAR ON APPEAL, ON THE GROUND THAT T HE CASH SCRAP SALE HAS BEEN ACCOUNTED FOR BY THE ASSESSEE A S ITS SALE AND OFFERED TO TAX AS PART OF TOTAL SALE IN THE RET URN OF INCOME FILED FOR A.Y. 2015-16. IT IS SEEN THAT THIS CASH S ALE OF SCRAP OFFERED TO TAX IN AY 2015-16 IS AVAILABLE WITH THE ASSESSEE COMPANY AND IT IS QUITE REASONABLE THAT THE CASH FO UND ON THE DATE OF SEARCH MAY BE TREATED TO BE COVERED BY SUCH CASH SALE OF SCRAP. REVENUE HAS NOT BEEN ABLE TO SHOW US THE APPLICATION OF CASH SCRAP SALE OF RS. 9,2023,623/- EITHER IN I.T.AS. NO.3313 & 5040/DEL/2019 13 AY 2015-16 OR AY 2016-17. HENCE TO TELESCOPE THE CA SH FOUND IN THE YEAR UNDER APPEAL BEFORE US AMOUNTING TO RS. 1,12,59,836/- AGAINST THE CASH SALE OF SCRAP OF RS. 9,20,23,623/- OF AY 2015-16 HAS TO BE GRANTED TO TH E ASSESSEE ON CONSIDERATION OF THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE. NOT TO GRANT THE TELESCO PING IN THIS FACT SITUATION WOULD AMOUNT TO DOUBLE ADDITION IN T HE HANDS OF THE ASSESSEE WHICH IS NOT PERMISSIBLE IN LAW. TH EREFORE, WE DELETE THE ADDITION OF RS. 1,12,59,836/- AND ALLOW THE APPEAL OF THE ASSESSEE IN THIS REGARD AND DISMISS THE REVE NUES APPEAL. 13. GROUND NO. 4 OF THE ASSESSEES APPEAL AND GROUND NO. (III) TO (VIII) OF THE DEPARTMENTAL APPEAL ARE IN RESPECT OF ADDITION OF RS. 4,31,36,260/- MADE BY AO UNDER SECTION 14A OUT OF WHICH A SUM OF RS. 39,992/-WAS CONFIRMED BY CIT(A) AND ON THE GROUND THAT ASSESSEE COMPANY HAS SHOWN DIVIDEND INCOME ON MUTUAL FUND / SHARES AMOUNTING TO RS. 39, 992/- AND BALANCE WAS DELETED BY CIT(A). THAT IS HOW BOTH HAVE COME BEFORE US AND GRIEVANCES ARE COVERED BY THE AB OVE MENTIONED GROUNDS OF APPEAL. ASSESSING OFFICER AT P AGE 20-21 OF HIS ORDER AND CIT(A) VIDE DISCUSSION MADE AT PAG E 38-40 OF THE APPEAL ORDER DISCUSSED THE ISSUE. 14. IT IS SEEN THAT THERE IS EXEMPT INCOME ONLY T O THE EXTENT OF RS. 39,992/- AND FOR THIS REASON ALSO, DISALLOWA NCE UNDER SECTION 14A COULD NOT HAVE EXCEEDED THIS AMOUNT IN VIEW OF THE DECISION OF DELHI HIGH COURT IN THE CASE OF JOI NT I.T.AS. NO.3313 & 5040/DEL/2019 14 INVESTMENT LTD. 372 ITR 694 AND HENCE WE UPHOLD THE ORDER OF CIT(A) TO THIS EXTENT. IN THE RESULT, GROUND NO. 4 OF THE ASSESSEES APPEAL IS DISMISSED AND GROUNDS NO. (III ) TO (VIII) OF THE DEPARTMENTAL APPEAL ARE ALSO DISMISSED. 15. GROUND NO. 5 & 7 OF THE ASSESSEES APPEAL ARE GENERAL AND DO NOT CALL FOR ANY ADJUDICATION UNDER THESE GROUND S OF APPEAL HERE. 16. GROUND NO. 6 OF THE ASSESSEES APPEAL RELATING TO INTEREST U/S 234B IS CONSEQUENTIAL IN NATURE. DEPARTMENTAL APPEAL NO. ITA 5040/DEL/2019 17. GROUNDS OF APPEAL PREFERRED BY REVENUE HAVE BEE N REPRODUCED BY ABOVE. 18. GROUND OF APPEAL NO. (I) OF REVENUES APPEAL IS AGAINST THE RELIEF OF RS. 12,00,000/- ALLOWED BY CIT(A) IN RESPECT OF THE CASH FOUND AT THE TIME OF SEARCH. THIS ISSUE HA S BEEN DEALT BY US WHILE DISPOSING THE ASSESSEES APPEAL G ROUND NO. 3. 19. GROUND OF APPEAL NO. (II) OF REVENUES APPEAL IS IN REGARD TO A DISALLOWANCE OF RS. 20,98,66,789/- MADE BY AO BY TREATING THE PRODUCT DEVELOPMENT EXPENSE AS DEFE RRED REVENUE EXPENSE WHICH WAS HOWEVER DELETED BY CIT(A) . 20. AO HAS DISCUSSED THIS ISSUE AT PAGE 19-20 OF THE ASSESSMENT ORDER WHEREAS CIT(A) HAS DISCUSSED THIS ISSUE AT PAGE 18-19 OF THE APPEAL ORDER. I.T.AS. NO.3313 & 5040/DEL/2019 15 21. LD. CIT (DR) RELIED UPON THE FINDINGS RECORDED BY AO WHEREAS LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPO N THE FINDINGS RECORDED BY CIT(A). 22. WE HAVE CONSIDERED RIVAL CONTENTIONS AND HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWER AUTHORITIES. THIS VERY ISSUE WAS THERE IN A.Y. 2013-14 & 2014-15 & 2015-16 ALSO. IT IS SEEN THAT CIT (A) HAS ALLOWED AND DELETED THE AD DITION MADE BY THE AO BY ITATS ORDER IN ASSESSEES OWN CA SE IN AY 2007-08 & 2008-09 AND ORDER OF HONBLE DELHI HIGH C OURT IN CASE OF THE ASSESSEE ONLY IN ITA 566/2016 AND ITA 5 69/2016 DATED 30.9.2016. SINCE ISSUED INVOLVED IN THE PRESE NT APPEAL IS IDENTICAL TO THE ISSUE INVOLVED IN THE ABOVE REF ERRED TRIBUNALS ORDER AND ORDER PASSED BY HONBLE HIGH C OURT , SUPRA, HENCE WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF CIT(A) AND HENCE WE DISMISS GROUND NO. (I) OF THE R EVENUES APPEAL BEFORE US. 23. GROUND NO. (III) TO (VIII) OF THE DEPARTMENTAL APPEAL RELATING TO DISALLOWANCE MADE U/S 14A HAVE BEEN TAK EN BY US ALONG WITH THE ASSESSEES APPEALS GROUND NUMBER 4. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER, 2021 SD/- SD/- [DR. B.R.R. KUMAR] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 24/09/2021 PKK: