Param Polypack Pvt.Ltd., Baroda V. The Income tax Officer,Ward-4(2), Baroda

ITA 508/AHD/2009

• Counselvise Citation: 50820514 RSA 2009
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 08-05-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 16-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Additional evidence; Bad and doubtful debts; Notional interest; Revenue expenditure
• Section: 43B; 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.A. NO. 506, 507, 508 & 509/ AHD/209 (ASSESSMENT YEARS 2002-03, 2003-04, 2004-05 AND 2005-06) PARAM POLYPACK PVT. LTD., 208, UNIQUE TRADE CENTRE, OPP. SURYA HOTEL, SAYAJIGANJ, BARODA VS. ITO, WARD 4(2), BARODA PAN/GIR NO. : AABCP7744A (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S N SOPARKAR SR. ADV SHRI S.V. AGRAWAL, AR RESPONDENT BY: SHRI B L YADAV, SR. DR DATE OF HEARING: 08.05.2012 DATE OF PRONOUNCEMENT: 31.05.2012 O R D E R PER BENCH:- ALL THESE FOUR APPEALS ARE FILED BY THE ASSESSEE F OR THE ASSESSMENT YEARS 2002-03 TO 2005-06, WHICH ARE DIRECTED AGAINS T FOUR SEPARATE ORDERS OF LD. CIT(A) III, BARODA ALL OF DIFFERENT DATES. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL FOR THE ASSESSMENT YEAR 2002-03 IN I.T.A.NO. 506/AHD/2009. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: I.T.A.NOS.506,507,508 & 509/AHD/2009 2 THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX(AP PEALS) [CALLED, CIT(A)] IS BAD IN TAW AS WELL ON FACTS ON THE FOLLOWING GROUNDS; (1) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 35,00,000/- MADE BY A.O. FOR SHARE APPLICATION MONEY RECEIVED DURING THE YEAR. (2) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 85,7407-MADE BY A.O. ON ACCOUNT OF DEPOSITS U/S . 68 OF THE I. T. ACT. (3) THE ASSESSEE CRAVES FOR LIBERTY TO AMEND, MODIFY AND ADD ANY GROUNDS OF APPEAL OR ADDITIONAL EVIDENCES. 2.1 BRIEF FACTS REGARDING THE FIRST ISSUE TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PAR 2.1 OF HIS ORDER WHICH I S REPRODUCED BELOW: 2.1 THE A.O NOTED THAT DURING THE YEAR SHARE APPL ICATION MONEY INCREASED TO RS. 35 LACS DURING THE YEAR UNDER CONS IDERATION. ON INQUIRY, IT WAS FOUND THAT THE INCREASE IN SHARE APPLICATION MONEY WAS IN RESPECT OF SIX PARTIES AS UNDER:- 1. SIDDHIVINAYAK METAL TUBES P LTD. RS. 9,00,000/- 2. RUSHI IRON EXTRUSION P. LTD. RS.10,00,000/- 3. NEELAM OVERSEAS P. LTD. RS.10,00,000 4. VARDHAMAN METAL (INDIA) RS. 2,00,000/- 5. PADMAVATI STEEL (INDIA) RS. 2,00,000/- 6. KUNDAN STEEL RS. 2,00,000/- TOTAL- RS.35,00,000/- LETTER WERE ISSUED TO THE ABOVE PARTIES WERE RETURN ED UNSERVED WITH THE REMARKS THAT 'CLOSED', 'LEFT', ETC. NOTICES U/S 133 (6) WERE ISSUED TO THREE PERSONS BUT THERE WAS NO RESPONSE. THE INSPECTOR WA S DEPUTED TO MAKE SPOT INQUIRY OF THE CONCERNS WHO HAVE MADE SHARE AP PLICATION MONEY. THE INSPECTOR HAS REPORTED THAT PREMISES OF ALL THE PARTIES EXCEPT THAT OF PADMAVATI STEEL (INDIA), HAS BEEN CLOSED SINCE LONG . FURTHER HE HAS REPORTED THAT THE BUILDING IN WHICH PADMAVATI STEEL (INDIA) WAS CARRYING BUSINESS HAS BEEN DEMOLISHED AND A NEW BUILDING CON STRUCTED ON THE SAME PLACE. IN RESPONSE TO THE SHOW CAUSE NOTICE DA TED 16-2-2005, THE ASSESSEE FAILED TO PRODUCE INVESTORS WHO HAD ADVANC ED TO THE SHARE APPLICATION MONEY. UNDER THE CIRCUMSTANCES THE A.O HELD THAT THE IDENTIFY AND CREDITWORTHINESS OF THE INVESTORS AND THE GENUINENESS OF THE TRANSACTIONS WAS NOT ESTABLISHED BY THE ASSESSEE. A CCORDINGLY THE SHARE- APPLICATION MONEY OF RS. 35,00,000/- WAS ADDED U/S 68. I.T.A.NOS.506,507,508 & 509/AHD/2009 3 2.1.1 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSE E IS IN FURTHER APPEAL BEFORE US. 2.1.2 IT IS SUBMITTED BY THE LD. A.R. THAT THIS ISS UE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF LOVELY EXPORTS PVT. LTD. AS REPORTED IN 216 CTR 195 (S.C.). HE FURTHER SUBMITTED THAT THE ORDER OF TH E HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS DIVINE LEASING & FIN ANCE LTD. IS ALSO IDENTICAL IN SLP NO.CC375/2008 DATED 21.01.2008 AND HE SUBMITTED A COPY OF THIS JUDGMENT OF HONBLE APEX COURT. HE FU RTHER SUBMITTED THAT IN THE PRESENT CASE, THE ASSESSEE HAS FURNISHED ALL THE RELEVANT DETAILS/EVIDENCES IN SUPPORT OF IDENTITY AS WELL AS CREDITWORTHINESS OF THE SHARE APPLICANTS BY SUBMITTING THE CONFIRMATION OF ALL THESE APPLICANTS ALONG WITH PAN AND BANK STATEMENTS OF THESE SHARE A PPLICANTS. HE HAS SUBMITTED THAT THESE ARE AVAILABLE IN THE PAPER BOO K ALSO AND HENCE, NO ADDITION IS JUSTIFIED IN RESPECT OF SHARE APPLICATI ON MONEY RECEIVED BY THE ASSESSEE. 2.1.3 LD. D.R. SUPPORTED THE ORDER OF LD. CIT(A). 2.1.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. WE FIND THAT IN T HE ORDER OF LD. CIT(A) FOR THE PRESENT YEAR, HE HAS FOLLOWED THE ORDER OF HIS PREDECESSOR IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 . THE ORDER OF LD. CIT(A) IN THAT YEAR IS DATED 29.08.2008 AND THE SAM E IS WITHOUT CONSIDERING THIS JUDGEMENT OF HONBLE APEX COURT RE NDERED IN THE CASE OF LOVELY EXPORTS (SUPRA) AND ALSO IN THE CASE OF D IVINE LEASING AND FINANCE LTD. (SUPRA). IN THESE TWO CASES, IT WAS H ELD BY THE HONBLE APEX I.T.A.NOS.506,507,508 & 509/AHD/2009 4 COURT THAT IF THE SHARE APPLICATION MONEY IS RECEIV ED BY THE ASSESSEE COMPANY FROM THE ALLEGED BOGUS SHARE HOLDERS, WHOSE NAMES ARE GIVEN TO THE A.O. THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW BUT NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY WHO HAS RECEIVED THE SHARE APP LICATION MONEY. IN THE PRESENT CASE, THE ASSESSEE HAS PROVIDED TO THE A.O. NOT ONLY THE NAMES OF THE SHAREHOLDERS BUT THEIR ADDRESSES ALONG WITH PAN AND BANK STATEMENTS ETC. HENCE, THE ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS AND, THEREFORE, IN THE LIGHT OF THESE TWO JUDGMENTS OF H ONBLE APEX COURT, THE ADDITION MADE BY THE A.O. WITH REGARD TO RECEIPT OF SHARE APPLICATION MONEY CANNOT BE SUSTAINED. THE SAME IS DELETED. G ROUND NO.1 IS ALLOWED. 2.2 REGARDING GROUND NO.2, THE BRIEF FACTS ARE THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS TAKEN UNSECURED LOAN OF RS.1,85,740/- DURING THIS YEAR. THE A.O. HELD THAT IN THE ABSENCE OF PROPER ADDRESS, IDENTITY, CREDITWORTHINESS AND GENU INENESS OF TRANSACTION, WHICH ARE REQUIRED TO BE ESTABLISHED U/S 68 OF THE INCOME TAX ACT, 1961 COULD NOT BE ESTABLISHED. HE MADE ADDITION OF THIS ENTIRE AMOUNT OF RS.1,85,740/-. BEING AGGRIEVED, THE ASSESSEE CARRI ED THE MATTER IN APPEAL BEFORE LD. CIT(A). IT WAS HELD BY LD. CIT(A) THAT OUT OF THIS TOTAL ADDITION MADE BY THE A.O. OF RS.1,85,740/-, THERE W AS TYPOGRAPHICAL MISTAKE O RS.1 LAC AND THEREFORE, HE RESTRICTED THE ADDITION TO RS.85,740/-. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 2.2.1 IT IS SUBMITTED BY THE LD. A.R. THAT COMPLETE DETAILS OF UNSECURED LOAN INCLUDING OPENING BALANCE, RECEIPT AND PAYMENT S DURING THE PRESENT YEAR ARE AVAILABLE ON PAGE 18 OF THE PAPER BOOK AND FROM THIS, IT CAN BE SEEN THAT RS.85,740/- WAS RECEIVED BY THE ASSESSEE COMPANY DURING THIS I.T.A.NOS.506,507,508 & 509/AHD/2009 5 YEAR FROM THIS PARTY I.E. PARAM STEEL & ENGINEERING CO. WHO WAS HAVING OPENING BALANCE OF RS.8,61,578/-. IT WAS SUBMITTED THAT IN VIEW OF THE OPENING BALANCE OF THE HUGE AMOUNT, IT CANNOT BE SA ID THAT THE IDENTITY AND CREDITWORTHINESS OF THIS LOAN CREDITOR AND GENU INENESS OF TRANSACTION IS NOT ESTABLISHED. HE SUBMITTED THAT THIS ADDITIO N MADE BY THE A.O. IS NOT JUSTIFIED. 2.2.2 AS AGAINST THIS, IT WAS SUBMITTED BY THE LD. D.R. THAT EVEN ADDRESS IS NOT PROVIDED OF THIS LOAN CREDITOR AND HENCE, TH E ADDITION MADE BY THE A.O. SHOULD BE CONFIRMED. 2.2.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THE ASSESSEE HAS NOT PROVIDED ANY CONFIRMATION OF THIS LOAN CREDITOR OR HIS ADDRESS OR PAN ETC. AND NOTHING HAS BEEN PRO VIDED TO ESTABLISH THE CREDITWORTHINESS OF THIS LOAN CREDITOR AND, THEREFO RE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) WITH REGARD TO THIS ISSUE. ACCORDINGLY, GROUND NO.2 IS REJECTED. 2.3 IN THE RESULT, APPEAL OF THE ASSESSEE STANDS PA RTLY ALLOWED. 3. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN I. T.A.NO. 507/AHD/2009 FOR THE ASSESSMENT YEAR 2003-04. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX(AP PEALS) [CALLED, CIT(A)] IS BAD IN LAW AS WELL ON FACTS ON THE FOLLOWING GROUNDS; (1) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 37,00,000/- MADE BY A.O. U/S. 68 FOR INCREASE I N SHARE APPLICATION MONEY DURING THE YEAR. (2) THE ASSESSEE CRAVES FOR LIBERTY TO AMEND, MODIFY AND ADD ANY GROUNDS OF APPEAL OR ADDITIONAL EVIDENCES. I.T.A.NOS.506,507,508 & 509/AHD/2009 6 3.1 IT WAS AGREED BY BOTH THE SIDES THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL IS ONLY ONE I.E. REGARDING ADDITION MADE BY THE A.O. IN RESPECT OF RECEIPT OF SHARE CAPITAL DURING THIS YEA R AND THIS ISSUE IS IDENTICAL TO GROUND NO.1 IN ASSESSMENT YEAR 2002-03 AND HENCE, THE SAME CAN BE DECIDED ON THE SIMILAR LINES. IN THAT YEAR, WE HAVE DELETED THE ADDITION AS PER PARA 2.1.4 ABOVE AND HENCE, ON THE SAME LINES, IN THE PRESENT YEAR ALSO, THIS ADDITION IS DELETED BECAUSE WE FIND THAT IN THE PRESENT YEAR ALSO, THE ASSESSEE HAS SUBMITTED ALL T HE INFORMATION SUCH AS CONFIRMATION OF THE SHARE APPLICANTS AS WELL AS ADD RESS AND PAN AND THEIR BANK STATEMENT ETC. AS IN ASSESSMENT YEAR 2002-03. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS ALLOWED. 4. NOW, WE TAKE UP THE ASSESSEES APPEAL IN I.T.A.N O. 508/AHD/2009 FOR THE ASSESSMENT YEAR 2004-05. 4.1 GROUNDS NO.1 & 2 ARE INTERCONNECTED, WHICH ARE AS UNDER: THE ORDER OF LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) [CALLED, CIT(A)] IS BAD IN LAW AS WELL ON FACTS ON THE FOLLOWING GROUNDS; (1) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 31,55,000/-MADE BY A.O. IN RESPECT OF SHARE APPLICA TION MONEY RECEIVED DURING THE YEAR. (2) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 80,45,000/- MADE BY A.O. ON ACCOUNT OF UNSECURE D LOANS (DEPOSITS). (2.1) WITHOUT PREJUDICE TO MAIN GROUND NO. (2); T HE LEARNED CIT(A) & ASSESSING OFFICER (AO), BOTH HAVE COMMITTE D MISTAKE IN CALCULATING THE AMOUNT OF DISALLOWABLE AT RS. 80 ,45,000/- WHEREAS RS. 31,45,000/- REPRESENTS OLD DEPOSITS AND ALREADY DISALLOWED IN A.Y. 2002-03 AND A.Y. 2003-04 (INCLUD ED IN TOTAL DISALLOWABLE OF RS. 72,00,000/-) AS UNDER; OPENING BALANCE AS ON 01-04-2003 RS.72,00,000/- DISALLOWED IN A.Y. 02-03 35,00,000/- DISALLOWED IN A.Y. 03-04 37,00,000/- 72,00,000/- I.T.A.NOS.506,507,508 & 509/AHD/2009 7 ADDITION DURING THE YEAR 1,12,00,000/- 1,84,00,000/ - LESS : SHARES ALLOTTED 1,03,55,000/- TREATED AS UNSECURED LOANS (DEPOSITS) 80,4 5,000/-. 4.1.2 BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER ON PAGE 10 THAT UNSECURED LOAN OF RS.80.95 LACS WAS RAISED DURING THIS YEAR. THE A.O. ASKED THE ASSESS EE TO FILE CONFIRMATION AND SIMULTANEOUSLY ISSUED NOTICE U/S 133(6) TO EIGH T PARTIES. THE A.O. HAS FURTHER NOTED THAT ALL THE LETTERS EXCEPT ONE, WERE RECEIVED BACK UNSERVED WITH THE REMARKS OF POSTAL AUTHORITIES NO T TRACEABLE / NOT KNOWN. THE A.O. BROUGHT THIS FACT TO THE NOTICE O F THE ASSESSEE. THEREAFTER, IT IS NOTED BY THE A.O. THAT THE ASSESS EE HAS SUBMITTED CONFIRMATION LETTERS FROM THREE PARTIES TOTALING RS .68 LACS. THE A.O. MADE ADDITION OF RS.80.45 LACS IN RESPECT OF UNSECU RED LOAN RECEIVED BY THE ASSESSEE OUT OF TOTAL UNSECURED LOAN OF RS.80.9 5 LACS BY HOLDING THAT THE ASSESSEE COULD FURNISH ONLY ONE CONFIRMATION LE TTER FROM SHRI ASHOK BHAI PATEL FOR RS.50,000/-. THE A.O. FURTHER NOTED THAT THERE IS OPENING BALANCE IN THE SHARE APPLICATION MONEY ACCOUNT OF R S.50.55 LACS AND FURTHER THERE IS INCREASE OF RS.53 LACS IN THE PRES ENT YEAR. SOME CONFIRMATIONS WERE FURNISHED BY THE ASSESSEE WITH R EGARD TO SHARE APPLICANTS. THE A.O. ISSUED NOTICE U/S 133(6) TO T HESE APPLICANTS WHICH WERE RECEIVED UNSERVED, THEREFORE, THE A.O. MADE AD DITION OF TOTAL AMOUNT OF SHARE APPLICATION MONEY RECEIVED IN THIS YEAR OF RS.53 LACS AS WELL AS OPENING BALANCE OF RS.50.55 LACS. IN THIS MANNER, HE MADE ADDITION OF RS.80.45 LACS IN RESPECT OF UNSECURED L OAN AND OF RS.103.55 LACS IN RESPECT OF SHARE APPLICATION MONEY TOTAL OF RS.184 LACS. BEING I.T.A.NOS.506,507,508 & 509/AHD/2009 8 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4.1.3 IT IS SUBMITTED BY THE LD. A.R. BEFORE US THA T THERE WAS OPENING BALANCE OF SHARE APPLICATION MONEY OF RS.72 LACS RE CEIVED DURING HE ASSESSMENT YEAR 2002-03 AND 2003-04 AND THERE IS FU RTHER RECEIPT OF RS.112 LACS DURING THE PRESENT YEAR OUT OF WHICH RS .31.55 LACS WAS REGARDING SHARE APPLICATION MONEY AND RS.80.45 LACS WAS FOR UNSECURED LOAN. IT WAS SUBMITTED THAT IN RESPECT OF RECEIPT OF SHARE APPLICATION MONEY, NO ADDITION IS JUSTIFIED AND IT WAS AGREED B Y BOTH THE SIDES THAT THIS ISSUE IS IDENTICAL TO GROUND NO.1 RAISED IN AS SESSMENT YEAR 2002-03 AND 2003-04 AND THE SAME CAN BE DECIDED ON SIMILAR LINES BECAUSE CONFIRMATION FROM ALL THESE APPLICANTS ARE AVAILABL E IN THE PAPER BOOK CONTAINING ADDRESS, PAN AS WELL AS BANK STATEMENTS ETC. REGARDING UNSECURED LOAN OF RS.80.45 LACS RECEIVED DURING THI S YEAR, IT WAS SUBMITTED THAT ALL THESE AMOUNTS WERE RECEIVED BY A /C PAYEE CHEQUES AND CONFIRMATION ALONG WITH PAN AND BANK STATEMENTS OF LENDERS WERE SUBMITTED BEFORE THE A.O. AND ARE ALSO AVAILABLE IN THE PAPER BOOK AND, THEREFORE, NO ADDITION IS JUSTIFIED EVEN WITH REGAR D TO UNSECURED LOAN. 4.1.4 LD. D.R. SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4.1.5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE DELETE THE ADDITION ON ACCOUNT OF SHARE CAPITAL ON THE SAM E LINE AS IN EARLIER YEARS AS PER ABOVE BECAUSE NECESSARY DOCUMENTS AND EVIDENCE ARE FURNISHED BY THE ASSESSEE IN THIS YEAR ALSO. FOR U NSECURED LOANS, WE FIND THAT LD. CIT(A) HAS DECIDED THIS ISSUE ON THE BASIS OF THE ORDER OF HIS PREDECESSOR IN ASSESSMENT YEAR 2003-04 WHEREIN, IT WAS HELD BY HIM THAT THE ASSESSEE HAS FAILED TO ESTABLISH IDENTITY AND C REDITWORTHINESS OF THE I.T.A.NOS.506,507,508 & 509/AHD/2009 9 CREDITORS AND GENUINENESS OF TRANSACTIONS. WE FIND THAT IN THE PRESENT YEAR, THE ASSESSEE HAS FURNISHED THE LOAN CONFIRMAT ION FROM ALL THE LOAN CREDITORS ALONG WITH THEIR ADDRESSES AND PAN. IT I S ALSO SEEN THAT THE ASSESSEE HAS FURNISHED BANK STATEMENT OF THESE LOAN CREDITORS AND AS PER THE SAME, ALL THESE AMOUNTS WERE RECEIVED BY THE AS SESSEE BY WAY OF A/C PAYEE CHEQUES AND, THEREFORE, IN THE LIGHT OF THESE FACTS, IT IS SEEN THAT ALL THE THREE INGREDIENTS I.E. IDENTITY, CREDITWORTHINE SS OF LOAN CREDITORS AS WELL AS GENUINENESS OF TRANSACTION WERE ESTABLISHED AND IN SPITE OF HAVING SO MUCH MATERIAL ON RECORD INCLUDING PAN OF THESE L OAN CREDITORS, NO ADVERSE MATERIAL HAD BEEN BROUGHT ON RECORD BY THE A.O. AND, THEREFORE, THE ADDITION MADE BY THE A.O. SIMPLY ON THE BASIS O F THIS ASPECT HAT THE NOTICE ISSUED WERE RECEIVED BACK UNSERVED IS NOT JU STIFIED. OUT OF THIS TOTAL AMOUNT OF RS.184 LACS FOR WHICH ADDITION WAS MADE BY THE A.O., RS.72 LACS WAS RECEIVED BY THE ASSESSEE IN EARLIER YEARS FOR WHICH ADDITION WAS ALSO MADE BY THE A.O. IN EARLIER YEARS AND THE SAME IS DELETED BY US IN THE ABOVE PARAS. FOR THE REMAININ G AMOUNT OF RS.112 LACS, ALL THE DETAILS ALONG WITH CONFIRMATION CONTA INING ADDRESSES AND PAN AND ALSO THE BANK STATEMENTS OF THE LOAN CREDIT ORS ARE SUBMITTED BY THE ASSESSEE BEFORE THE A.O. AND ALSO PRODUCED BEFO RE US IN THE PAPER BOOK WHEREAS, THE A.O. HAS NOT BROUGHT ON RECORD AN Y ADVERSE MATERIAL IN SPITE OF HAVING SO MUCH MATERIAL ON RECORD AND HIS ONLY BASIS IS THAT THE NOTICE ISSUED TO THESE PERSONS U/S 133(6) HAD COME BACK UNSERVED AND THE ASSESSEE COULD NOT PRODUCE THESE PERSONS. WHEN SO MUCH MATERIAL ARE AVAILABLE ON RECORD, THE A.O. COULD HAVE MADE INDEP ENDENT INQUIRY FROM THE BANK AS WELL AS FORM THE A.O. OF THE CREDITORS AND WITHOUT DOING SO AND WITHOUT BRINGING ANY ADVERSE MATERIAL ON RECORD , ADDITION MADE I.T.A.NOS.506,507,508 & 509/AHD/2009 10 CANNOT BE SUSTAINED. THE SAME IS, THEREFORE, DELET ED. GROUNDS NO.1 & 2 OF THE ASSESSEES APPEAL ARE ALLOWED. 4.2 GROUND NO.3 IS AS UNDER: (3) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 2,12,112/- MADE BY A.O, IN RESPEC T OF REPAIRS TO PLANT & MACHINERY. 4.2.1 BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT ASSESSEE HAS CLAIMED REPAIR E XPENSES OF RS.3,34,700/- WHEREAS, IN THE IMMEDIATELY PRECEDING YEAR, SUCH CLAIM WAS ONLY RS.1,22,588/-. THE A.O. ASKED THE ASSESSE E TO EXPLAIN THE INCREASE IN THE EXPENDITURE OF RS.2,12,112/-. THE A.O. HAS NOTED THAT THE ASSESSEE HAS FAILED TO OFFER THE REASON FOR INCREAS E IN EXPENSES AND ON THIS BASIS, THE A.O. MADE DISALLOWANCE OF THIS AMOUNT OF RS.2,12,112/- OUT OF THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE OF RS .3,34,700/-. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4.2.2 IT IS SUBMITTED BY THE LD. A.R. THAT THE COMP LETE DETAILS ARE AVAILABLE ON PAGES 50-53 OF THE PAPER BOOK FOR THE ENTIRE EXPENSES OF RS.3,34,700/- AND IT CAN BE SEEN THAT ALL ARE PETTY EXPENSES. IT IS FURTHER SUBMITTED THAT REPAIRING EXPENSES CANNOT BE EQUAL I N ALL THE YEARS AND, THEREFORE, NO DISALLOWANCE IS JUSTIFIED WITHOUT BRI NGING ANY ADVERSE MATERIAL ON RECORD. 4.2.3 LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4.2.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT ADDITION WAS MADE BY THE A.O. SIMPLY ON THIS B ASIS THAT THE EXPENDITURE INCURRED IN THE PRESENT YEAR ARE MORE T HAN THE PRECEDING YEAR EXPENSES BY THE AMOUNT OF RS.2,12,112/- AND HE HAS MADE ADDITION ON I.T.A.NOS.506,507,508 & 509/AHD/2009 11 THIS BASIS ALONE WITHOUT BRINGING ANY ADVERSE MATER IAL ON RECORD THAT THE EXPENSES INCURRED BY THE ASSESSEE ARE BOGUS OR NOT REVENUE EXPENDITURE. IN THE ABSENCE OF ANY SUCH ADVERSE MATERIAL ON RECO RD, WE FEEL THAT THE ADDITION MADE BY THE A.O. IS NOT JUSTIFIED AND HENC E, THE SAME IS DELETED. WE WOULD LIKE TO OBSERVE THAT SO FAR AS THE REPAIRI NG EXPENDITURE IS CONCERNED, IT IS NOT SUCH EXPENDITURE WHICH SHOULD BE COMPARABLE IN EACH YEAR BECAUSE IN A PARTICULAR YEAR, THERE MAY BE VER Y LESS OR NIL EXPENDITURE FOR REPAIRING AND IN SOME OTHER YEAR, T HERE MAY BE HEAVY REPAIRING EXPENDITURE AND, THEREFORE, UNLESS IT IS ESTABLISHED THAT THE CLAIM OF REPAIRING EXPENDITURE IS EITHER BOGUS OR IS OF C APITAL/PERSONAL IN NATURE, DISALLOWANCE IS NOT JUSTIFIED. THIS GROUND OF THE ASSESSEES APPEAL STANDS ALLOWED. 4.3 GROUND NO.4 IS AS UNDER: (4) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,52,198/- MADE BY A.O. IN RESPECT OF FACTORY EXPS. 4.3.1 BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS CLAIMED FACT ORY EXPENSES OF RS.2,08,624/- WHEREAS IN THE IMMEDIATELY PRECEDING YEAR, THE CLAIM ON THIS ACCOUNT WAS ONLY RS.56,426/-. THE A.O. ASKED THE ASSESSEE TO EXPLAIN HUGE INCREASE IN THE EXPENDITURE OF RS.1,52 ,198/-. THE A.O. HAS NOTED THAT THE ASSESSEE HAS FAILED TO OFFER THE REA SONS FOR SUCH INCREASE AND THE A.O. DISALLOWED THE SAME. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4.3.2 IT IS SUBMITTED BY THE LD. A.R. BEFORE US THA T THE QUANTITATIVE DETAILS OF PRODUCTION FOR THE PRESENT YEAR AND PREC EDING YEAR ARE AVAILABLE ON PAGE 48 OF THE PAPER BOOK AND FORM THE SAME, IT CAN BE SEEN THAT THE I.T.A.NOS.506,507,508 & 509/AHD/2009 12 PRODUCTION IN THE PRESENT YEAR IS 926 UNITS AS AGAI NST 526 UNITS IN THE PRECEDING YEAR. IT WAS SUBMITTED THAT WHEN THERE I S INCREASE IN THE PRODUCTION QUANTITY, INCREASE IN FACTORY EXPENSES I S REASONABLE AND JUSTIFIED. 4.3.3 LD. D.R. SUPPORTED THE ORDERS OF THE AUTHORIT IES BELOW. 4.3.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT AS PER THE P & L ACCOUNT FOR THE PRESENT YEAR AVAILABLE ON PAGE 55 OF THE PAPER BOOK CONTAINING FIGURES OF PRECEDING YEAR ALSO, THE SALES OF THE PRESENT YEAR IS RS.138.55 LACS AS AGAINST RS.95.34 LACS IN THE PRECEDING YEAR. THIS GOES TO SHOW THAT THE INCREASE IN SALE IS ABOUT 50% COMPARED TO THE PRECEDING YEAR. AS PER THE QUANTITATIVE DET AILS AVAILABLE ON PAGE 48 OF THE PAPER BOOK ALSO, THE INCREASE IN PRODUCTION QUANTITY IS THERE TO THE EXTENT OF ABOUT 50%. THIS ASPECT WAS TOTALLY IGNOR ED BY THE AUTHORITIES BELOW WHILE COMPARING THE EXPENDITURE OF THE PRESEN T YEAR WITH THE PRECEDING YEAR. MOREOVER, THERE ARE VARIOUS EXPENS ES, WHICH ARE NOT COMPARABLE ON THE BASIS OF PRODUCTION OR SALE VALUE . THIS IS ALSO NOT SAID BY THE A.O. THAT ANY OF THE EXPENDITURE BOOKED BY T HE ASSESSEE UNDER THIS HEAD IS BOGUS OR CAPITAL / PERSONAL IN NATURE AND S IMPLY ON THIS BASIS THAT THE EXPENDITURE IN THE PRESENT YEAR IS MORE THAN TH E PRECEDING YEAR, NO DISALLOWANCE IS JUSTIFIED. THIS CAN BE A VALID REA SON TO INITIATE INQUIRY BUT BEFORE MAKING ADDITION SOME ADVERSE MATERIAL HAS TO BE BROUGHT ON RECORD THAT EITHER THIS EXPENDITURE BOOKED BY THE A SSESSEE UNDER A PARTICULAR HEAD IS BOGUS OR IS OF CAPITAL OR PERSON AL IN NATURE. IN THE PRESENT CASE, NOTHING LIKE THIS HAS BEEN DONE BY TH E AUTHORITIES BELOW AND, THEREFORE, DISALLOWANCE MADE BY THE A.O. IS NOT JUS TIFIED IN THE FACTS OF I.T.A.NOS.506,507,508 & 509/AHD/2009 13 THE PRESENT CASE AND THE SAME IS THEREFORE, DELETED . THIS GROUND OF THE ASSESSEE STANDS ALLOWED. 4.4 GROUND NO.5 IS AS UNDER: (5) THE LEARNED CIT(A) HAS ERRED IN PARTLY CO NFIRMING RS.4,48,715/- (TOTAL DISALLOWED BY A.O. RS.8,48,715 /- AND PARTLY ALLOWED BY CIT(A) RS.4,00,000/-) U/S. 43B IN RESPEC T OF INTEREST PAID TO SIDBI ON TERM LOANS. 4.4.1 BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS DEBITED AN A MOUNT OF RS.8,48,715/- IN THE P & L ACCOUNT ON ACCOUNT OF INTEREST AND THE SAME IS SHOWN IN SCHEDULE II OF SECURED LOAN IN THE BALANCE SHEET. THE A.O. ASKED THE ASSESSEE AS TO WHY THIS INTEREST SHOULD NOT BE DISA LLOWED BECAUSE THE SAME IS NOT PAID BEFORE THE DUE DATE OF FILING OF R ETURN OF INCOME. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT ACCRUED INTEREST OF RS.8,48,715/- IN THE SCHEDULE OF SECURE D LOAN IS INCLUSIVE OF INTEREST AMOUNT OF LAST YEAR. IT WAS FURTHER SUBMI TTED THAT INTEREST PORTION WAS NOT SHOWN SEPARATELY IN THE LAST YEARS BALANCE SHEET. THE A.O. WAS NOT SATISFIED AND HE MADE DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 43B. BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) WHO HAS HELD THAT A CERTIFICATE O F C.A. WAS PRODUCED BEFORE HIM REGARDING PAYMENT OF INTEREST AS PER WHI CH, RS.4 LACS WAS PAID BY THE ASSESSEE TOWARDS INTEREST ACCRUED UP TO THE DUE DATE OF FILING OF RETURN OF INCOME AND TO THIS EXTENT, HE DELETED THE DISALLOWANCE AND CONFIRMED THE BALANCE DISALLOWANCE OF RS.4,48,715/- . NOW, THE ASSESSEE IS IN APPEAL BEFORE US FOR PART DISALLOWANCE CONFIR MED BY LD. CIT(A). 4.4.2 BEFORE US, IT WAS SUBMITTED BY THE LD. A.R. O F THE ASSESSEE THAT THIS WAS ALSO SUBMITTED BY THE ASSESSEE BEFORE LD. CIT(A ) THAT DISALLOWABLE PORTION OF INTEREST ACCRUED U/S 43B OF RS.4,03,880/ - HAS ALREADY BEEN I.T.A.NOS.506,507,508 & 509/AHD/2009 14 SHOWN IN THE TAX AUDIT REPOT AND THE SAME WAS ALREA DY ADDED BACK BY THE ASSESSEE IN THE COMPUTATION OF INCOME AND, THEREFOR E, THIS DISALLOWANCE MADE BY THE A.O. AND CONFIRMED BY LD. CIT(A) AMOUNT S TO DOUBLE DISALLOWANCE. IT WAS SUBMITTED THAT THIS ISSUE MAY BE RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AFTER VERIFYI NG THIS ASPECT. 4.4.3 LD. D.R. OF THE REVENUE SUPPORTED THE ORDER O F LD. CIT(A). 4.4.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF UAHTORIT IES BELOW. WE FIND THAT ON PAGE 16 OF THE ASSESSMENT ORDER, THE A.O. H AS MADE ADDITION OF RS.4,03,880/- BY STATING INTEREST ON TERM LOAN FRO M SIDBI U/S 43B AND HE FURTHER MADE ADDITION OF RS.8,48,715/- REGARDING INTEREST ACCRUED AS PER HIS DISCUSSION IN PARA 7 OF THE ASSESSMENT ORDE R. HENCE, WE FIND FORCE IN THE SUBMISSIONS OF THE LD. A.R. OF THE ASSESSEE THAT THERE MAY BE DOUBLE ADDITION MADE BY THE A.O. FIRST ON THE BASIS OF TAX AUDIT REPORT AND SECOND ON THE BASIS OF FIGURES IN THE BALANCE SHEET . WE, THEREFORE, FEEL IT PROPER THAT THE ISSUE SHOULD GO BACK TO THE FILE OF THE A.O. FOR FRESH DECISION AND HENCE, WE SET ASIDE THE ORDER OF LD. C IT(A) ON THIS ISSUE AND RESTORE THIS MATTER BACK TO THE FILE OF THE A.O. FO R AFRESH DECISION. HE SHOULD EXAMINE THE CONTENTION OF THE ASSESSEE THAT DOUBLE DISALLOWANCE HAS BEEN MADE BY THE A.O. WITH REGARD TO INTEREST O N TERM LOAN FROM SIDBI AND IF THIS IS FOUND CORRECT, RELIEF SHOULD B E ALLOWED TO THE ASSESSEE AND SO MUCH ADDITION SHOULD BE MADE WHICH IS JUSTIF IED IN THE FACTS OF THE PRESENT CASE UNDER THE PROVISIONS OF SECTION 43B. THIS GROUND OF THE ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PU RPOSES. 4.5 GROUND NO.6 IS AS UNDER: (6) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.21,5337-MADE BY A.O. ON ADVANCES OF RS.2,15,329/ -. I.T.A.NOS.506,507,508 & 509/AHD/2009 15 4.5.1 BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THAT THE ASSESSEE WAS ASKED TO FUR NISH DETAILS, NAMES AND ADDRESS OF THE PERSONS TO WHOM ADVANCES OF RS.2,82, 926/- WERE GIVEN AND SHOWN IN SCHEDULE VB OF THE BALANCE SHEET AND WHAT WAS THE PURPOSE FOR GIVING THE SAID ADVANCES. THE A.O. HAS NOTED THAT THE ASSESSEE HAS NOT FURNISHED THE SAME AND, THEREFORE, THE A.O. WORKED OUT THE INTEREST @ 10% ON SUCH ADVANCES AND IN THIS MANNER, HE MADE AD DITION OF RS.21,533/-. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4.5.2 IT WAS SUBMITTED BY THE LD. A.R. THAT ADDITIO N ON ACCOUNT OF RECEIPT OF NOTIONAL INTEREST MADE BY THE A.O. IS NOT JUSTIF IED AND IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PLACED ON THE JUDGEMENT OF HONBLE GAUHATI HIGH COURT RENDERED IN THE CASE OF B & A PLANTATION S AND INDUSTRIES LTD VS CIT AS REPORTED IN 242 ITR 22. 4.5.3 LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4.5.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDER OF AUTHORITI ES BELOW AND THE JUDGEMENT CITED BY THE LD. A.R. OF THE ASSESSEE. W E FIND THAT THERE IS NO DISPUTE ABOUT THE FACT THAT SUCH ADVANCES ARE GIVEN BY THE ASSESSEE TO SOME PARTIES AND THE ASSESSEE COULD NOT EXPLAIN THE PURPOSE OF GIVING SUCH ADVANCES AND THE A.O. HAS MADE ADDITION OF RS. 21,533/- ON ACCOUNT OF INTEREST ON SUCH ADVANCE @ 10% OF THE AMOUNT OF ADVANCE. IN THE LIGHT OF THESE FACTS, WE EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HONBLE GAUHATI HIGH COURT CITED BY THE LD. A.R. I N THAT CASE, IT WAS HELD BY THE HONBLE GAUHATI HIGH COURT THAT WHEN TH ERE IS NO FINDING TO THE EFFECT THAT ACTUALLY THE LOAN HAD BEEN GRANTED ON INTEREST OR THAT I.T.A.NOS.506,507,508 & 509/AHD/2009 16 INTEREST HAS ACTUALLY BEEN COLLECTED AND COLLECTION OF INTEREST WAS NOT REFLECTED IN THE ACCOUNT, NO ADDITION CAN BE MADE O N ACCOUNT OF NOTIONAL INTEREST. IN THE PRESENT CASE ALSO, THERE IS NO AL LEGATION OF THE A.O. THAT SUCH ADVANCES WERE GRANTED ON INTEREST OR THE INTER EST WAS RECEIVED ON SUCH ADVANCES AND, THEREFORE, IN THE LIGHT OF THIS JUDGMENT OF HONBLE GAUHATI HIGH COURT, THE ADDITION MADE BY THE A.O. O N ACCOUNT OF NOTIONAL INTEREST CANNOT BE SUSTAINED. RESPECTFULL Y FOLLOWING THE JUDGEMENT OF HONBLE GAUHATI HIGH COURT, THIS ADDIT ION IS DELETED. THIS GROUND IS ALLOWED. 4.6 GROUND NO.7 IS AS UNDER: (7) THE LEARNED CIT(A) HAS ERRED IN CONFIRMIN G THE ADDITION MADE BY A.O. OF RS.5,95,768/- IN RESPECT OF BAD DEB TS WRITTEN OFF AND RS.59,080/- IN RESPECT OF ADVANCES WRITTEN OFF (RS.5,95,768/- + RS.59,080/- = RS.6,54,848/-). 4.6.1 IT WAS SUBMITTED BY THE LD. A.R. OF THE ASSES SEE THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGME NT OF HONBLE APEX COURT RENDERED IN THE CASE OF TRF LTD. RENDERED IN 323 ITR 397 (S.C.) WITH REGARD TO THE CLAIM OF THE ASSESSEE REGARDING BAD DEBITS WRITTEN OFF. REGARDING THE ADVANCES WRITTEN OFF OF RS.59,080/-, IT WAS SUBMITTED THAT THIS IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY T HE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS A BDUL RAZAK & CO. AS REPORTED IN 136 ITR 825. 4.6.2 LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4.6.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENTS CITED BY THE LD. A.R. OF THE ASSESSEE. REGARDING THE DISALLOWANCE OF BAD DEBTS WRITTEN OF RS.5,95,768/-, WE FIND THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE JUD GEMENT OF HONBLE I.T.A.NOS.506,507,508 & 509/AHD/2009 17 APEX COURT RENDERED IN THE CASE OF TRF LTD. (SUPRA) . RESPECTFULLY FOLLOWING THE SAME, THIS ASPECT IS DECIDED IN FAVOU R OF THE ASSESSEE. REGARDING THE 2 ND ASPECT I.E. ADVANCES WRITTEN OF RS.59,080/-, WE FI ND THAT THIS ADDITION WAS MADE BY THE A.O. AND CONFIRMED BY LD. CIT(A) ON THIS BASIS THAT THE ASSESSEE HAS FAILED TO OFFER EXPLANA TION ON THE NATURE OF ADVANCES. BEFORE US ALSO, THE ASSESSEE COULD NOT E XPLAIN THE NATURE OF THESE ADVANCES AND UNLESS THE NATURE OF ADVANCES IS BUSINESS ADVANCE, THE JUDGEMENT CITED BY THE LD. A.R. IS NOT APPLICABLE I N THE PRESENT CASE. WE, THEREFORE FEEL THAT NO INTERFERENCE IS CALLED F OR IN THE ORDER OF LD. CIT(A) ON THIS ASPECT AND THE ADDITION OF RS.59,080 /- IS CONFIRMED. THIS GROUND IS PARTLY ALLOWED. 4.7 IN THE RESULT, APPEAL OF THE ASSESSEE STANDS PA RTLY ALLOWED. 5. NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN I. T.A.NO. 509/AHD/2009 FOR THE ASSESSMENT YEAR 2005-06. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX(AP PEALS) [CALLED, CIT(A)] IS BAD IN LAW AS WELL ON FACTS ON THE FOLLOWING GROUNDS; (1) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 1,38,00,000/- MADE BY A.O. IN R ESPECT OF UNSECURED LOANS. 5.1 IT WAS SUBMITTED BY THE LD. A.R. THAT UNSECURED LOAN WAS RECEIVED IN THE PRESENT YEAR FROM THREE PARTIES AND FROM ALL THESE THREE PARTIES, ASSESSEE HAS FURNISHED CONFIRMATION AS WELL AS ADDR ESSES AND PAN AND ALSO SUBMITTED THEIR BANK STATEMENTS AND, THEREFORE , THE ASSESSEE HAS FULFILLED ALL THE THREE INGREDIENTS I.E. IDENTITY A ND CREDITWORTHINESS OF LOAN CREDITORS AS WELL AS GENUINENESS OF TRANSACTION AND , THEREFORE, NO ADDITION IS JUSTIFIED. I.T.A.NOS.506,507,508 & 509/AHD/2009 18 5.1.1 LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 5.1.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PER USED THE MATERIAL ON RECORD AN HAVE GONE THROUGH THE ORDERS OF AUTHORITI ES BELOW. WE FIND THAT FROM ALL THE THREE LOAN CREDITORS, ASSESSEE HAS FUR NISHED LOAN CONFIRMATION CONTAINING ADDRESS AND PAN AND ALSO SUBMITTED BANK STATEMENTS OF THESE LOAN CREDITORS AND THERE IS NO CASH DEPOSIT IN THES E BANK ACCOUNTS OF THE LOAN CREDITORS IMMEDIATELY BEFORE THE ISSUE OF CONC ERNED CHEQUES TO THE ASSESSEE. LD. CIT(A) HAS CONFIRMED THIS ADDITION S IMPLY ON THE BASIS OF THE ORDER OF HIS PREDECESSOR IN ASSESSMENT YEAR 200 3-04 WHEREAS IN THE PRESENT YEAR, THE ASSESSEE HAS FULFILLED ALL THE TH REE INGREDIENTS OF SECTION 68 I.E. IDENTITY AND CREDITWORTHINESS OF LOAN CREDI TORS AND GENUINENESS OF TRANSACTION. NO ADVERSE MATERIAL HAS BEEN BROUGHT OUT ON RECORD BY THE A.O. IN SPITE OF HAVING COMPLETE ADDRESSES, PAN, CO NFIRMATION AND BANK STATEMENTS OF THE LOAN CREDITORS. IN OUR CONSIDE RED OPINION, IN THE FACTS OF THE PRESENT CASE THIS ADDITION MADE BY THE A.O. U/S 68 IS NOT JUSTIFIED. WE, THEREFORE, DELETE THE SAME. 5.2 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 6. IN THE COMBINED RESULT, THE APPEAL OF THE ASSESS EE FOR THE ASSESSMENT YEARS 2002-03 AND 2004-05 ARE PARTLY ALL OWED AND FOR THE ASSESSMENT YEARS 2003-04 AND 2005-06 ARE ALLOWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP I.T.A.NOS.506,507,508 & 509/AHD/2009 19 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 23/5 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER25/5.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 31/5 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.31/5 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 04/06/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .