DCIT-6, Kanpur V. M/s. Zazsons Exports Ltd., Kanpur

ITA 517/LKW/2010

• Counselvise Citation: 51723714 RSA 2010
• Duration Of Justice: 4 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 06-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.517/LKW/2010 ASSESSMENT YEAR:2006 - 07 M/S ZAZSONS EXPORTS LTD., 4 - B, SHEETLA BAZAR, JAJMAU, KANPUR. PAN:AAACZ0776B VS DY.C.I.T. - 6, KANPUR. (RESPONDENT) (APPELLANT) SMT. NEELAM AGARWAL, D. R. APPELLANT BY SHRI R. R. JAIN, F.C.A. SHRI HIREN KUMAR SETH, F.C.A. RESPONDENT BY 03/02/2015 DATE OF HEARING 26 /02/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - II, KANPUR DATED 26/05/2010 FOR THE ASSESSMENT YEAR 2006 - 2007. 2. GROUND NO. 1 IS AS UNDER: 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1,05,01,948/ - MADE ON ACCOUNT OF SUNDRY CREDITORS U/S 68 OF THE I.T. ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THESE SUNDRY CREDITORS WERE NOT VERI FIABLE IN ABSENCE OF THEIR WHEREABOUTS, COMPLETE POSTAL ADDRESS ETC. 3. THE BRIEF FACTS, TILL THE ASSESSMENT STAGE, ARE NOTED BY LEARNED CIT(A) AS PER PARA 5.1 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 2 5.1 FACTS: THE SUNDRY CREDITORS STOOD IN THE BOOKS OF THE APPELLANT CO. AT RS.25,02,57,062/ - AS ON 31.03.2006, AS AGAINST SUNDRY CREDITORS OF RS.13,13,54,090/ - IN THE IMMEDIATELY PREVIOUS YEAR. THE DETAILS OF RS,25,02,57,062/ - WERE SUBMITTED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE APPELLANT HAD SHOWN SUNDRY CREDITORS OF RS.21,22,25,160/ - IN RESPECT OF RAW HIDE SUPPLIERS COMPARED TO RS.10,43,53,503/ - IN THE PRECEDING YEAR. THE A.O. REQUIRED THE APPELLANT TO SUBMIT THE CONFIRMATIONS FROM RAW HIDES SUPPLIER S AND TO PROVE THE CREDITWORTHINESS, GENUINENESS AND IDENTITY OF THE CREDITORS. THE APPELLANT PRODUCED SOME RAW HIDES SUPPLIERS AND BUTCHERS AND ALSO SUBMITTED OVER 1400 CONFIRMATIONS FROM THE CREDITORS. THE A.O. ACCEPTED THE CREDITORS WHOSE CONFIRMATIONS WERE FILED AND BALANCE WERE TREATED AS UNEXPLAINED AND ADDED IN THE INCOME OF THE APPELLANT CO. U/S 68 OF THE INCOME TAX ACT 196`1. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A), WHO HAS DELETED THE ADDITION AND THEREFORE, REVENUE IS IN APPEAL BEFORE US. 5. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 6. AS AGAINST THIS, LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). HE ALSO SUBMITTED THAT IN ASSESSMENT YEAR 2005 - 06 ALSO, SIMILAR ADDITION WAS M ADE BY THE ASSESSING OFFICER, WHICH WAS DELETED BY THE TRIBUNAL AND THE RELEVANT TRIBUNAL DECISION ALONG WITH THE ORDER OF THIRD MEMBER OF THE TRIBUNAL IS AVAILABLE ON PAGES 56 TO 110 OF THE PAPER BOOK. HE ALSO SUBMITTED THAT THE WRITTEN SUBMISSIONS ARE A VAILABLE ON PAGES 1 TO 16 OF THE PAPER BOOK. HE ALSO POINTED OUT THAT THE LIST OF RAW HIDE SUPPLIERS IS AVAILABLE ON PAGES 182 TO 193 OF THE PAPER BOOK. IT WAS ALSO SUBMITTED THAT THE SECOND SET OF WRITTEN SUBMISSIONS ARE AVAILABLE ON PAGES 168 TO 177 OF THE PAPER BOOK. 3 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE EXAMINE THE BASIS OF ADDITION MADE BY THE ASSESSING OFFICER AND HIS PRECISE OBJECTIONS. WE FIND THAT IN PARA NO. 9 OF THE ASSESSMENT ORDER, IT IS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITORS OF RS.2,502.57 LACS IN THE PRESENT YEAR AS AGAINST RS.1313.54 LAC IN THE IMMEDIATELY PRECEDING YEAR. REGARDING INCREASE IN TURNOVER, WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN PARA NO. 4 OF THE ASSESSMENT ORDER THAT DURING THIS YEAR, THE TURNOVER WAS RS.5882.08 LACS AS AGAINST TURNOVER OF RS.5028.23 LACS IN ASSESSMENT YEAR 2005 - 06 I.E. IMMEDIATELY PRECEDING YEAR. HENCE, IT IS SEEN TH AT THE INCREASE IN THE TURNOVER IS ABOUT 16% BUT THE INCREASE IN CREDITORS IS ALMOST 100%. THEREFORE, THE ASSESSING OFFICER ASKED THE ASSESSEE TO GIVE THE DETAILS OF SUNDRY CREDITORS WITH COMPLETE POSTAL ADDRESS ETC. IN REPLY, THE ASSESSEE SUBMITTED BEFO RE THE ASSESSING OFFICER THE DETAILS OF CREDITORS IN THIS MANNER THAT THE CREDITOR OF CHEMICAL SUPPLIER WAS RS.1434 LAC, MISC. SUPPLIERS RS.162.25 LAC, UPPER SUPPLIERS RS.74.72 LAC AND RAW HIDE SUPPLIERS RS.2122.25 LAC. REGARDING THE ADDRESS OF THE CREDI TORS, IT WAS SUBMITTED THAT THE MAJORITY AMOUNT OF RS.1981.31 LAC IS IN RESPECT OF RAW HIDE SUPPLIERS . IT WAS ALSO SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AS NOTED IN PARA 10 OF THE ASSESSMENT ORDER THAT WITH REGARD TO THEIR WHEREABOUTS, THE ADDRESSES OF THESE VENDORS IS THEIR PLACE OF BUSINESS IN RESPECTIVE MANDIES. THEREAFTER, IT IS NOTED BY THE ASSESSING OFFICER THAT THE INCREASE IN CREDITORS IN RESPECT OF SMALL VENDOR S FOR WHICH NO ADDRESS IS AVAILABLE IS TO BE EXTENT OF RS.9,03,09,714/ - . IT IS ALSO NOTED THAT THE ASSESSEE FURNISHED CONFIRMATIONS FROM A NUMBER OF RAW HIDE DEALERS AND ITS TOTAL AMOUNT IS RS.7,98,07,768/ - . FOR THE BALANCE AMOUNT OF RS.1,05,01,948/ - , IN RESPECT OF WHICH THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE OR CONFI RMATION OR ANY OTHER EVIDENCE IN SUPPORT OF HAVING RECEIVED THE GOODS ON CREDIT, THE ASSESSING OFFICER MADE THE ADDITION U/S 68 OF THE ACT. 4 8. NOW WE EXAMINE THE APPLICABILITY OF THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005 - 06. I N THIS DECISION OF THE TRIBUNAL, HEAVY RELIANCE HAS BEEN PLACED ON THE DECISION OF HON'BLE JURISDICTION HIGH COURT IN THE CASE OF CIT, AGRA VS. PANCHAM DAS JAIN [2006] 156 TAXMAN 507 (ALL). IN THIS CASE, THE BASIS OF DECISION OF HON'BLE JURISDICTIONAL HIG H COURT WAS THAT THE TRIBUNAL RECORDED A CATEGORICAL FINDING OF FACT ON THE BASIS OF APPRECIATION OF MATERIALS AND EVIDENCE ON RECORD THAT THE SAID AMOUNTS REPRESENTED THE PURCHASES MADE BY THE ASSESSEE ON CREDIT AND THEREFORE, THE PROVISIONS OF SECTION 68 COULD NOT BE ATTRACTED IN THE INSTANT CASE. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE HAS FAILED TO ESTABLISH THAT IN THE PRESENT YEAR ALSO, ENTIRE CREDITOR S SHOWN IS IN RESPECT OF GOODS ACTUALLY PURCHASED ON CREDIT. THIS IS ONE THING THAT THE ASSE SSEE IS CLAIMING THAT THE CREDITORS ARE IN THE RECEIPT OF GOODS PURCHASED ON CREDIT AND THIS IS ALTOGETHER A DIFFERENT THING TO ESTABLISH THAT THE GOODS W ERE IN FACT PURCHASED ON CREDIT . WE FIND THAT IN ASSESSMENT YEAR 2005 - 06, IT WAS NOTED BY THE TRIBUNA L THAT SALES IN THAT YEAR WERE RS.5228.23 LAC AS AGAINST SALES IN ASSESSMENT YEAR 2004 - 05 AT RS.6223.18 LAC. BUT IN THE PRESENT YEAR, THE SALES ARE SHOWING NORMAL INCREASE OF 15% TO 16 % BUT THE CREDITORS IS SHOWING INCREASE OF ALMOST 100%. FOR THIS ABNOR MAL INCREASE IN THE AMOUNT OF CREDITORS FOR SUPPLIERS OF RAWHIDE, THE ASSESSEE WAS REQUIRED TO BRING EVIDENCE ON RECORD THAT THE GOODS WERE IN FACT PURCHASED ON CREDIT. NO POSITIVE EVIDENCE COULD BE BROUGHT ON RECORD BY THE LEARNED A.R. OF THE ASSESSEE BE FORE THE AUTHORITIES BELOW OR BEFORE US TO ESTABLISH THAT THE GOODS IN FACT WERE PURCHASED ON CREDIT WITH REGARD TO CREDITORS DOUBTED BY THE A.O. ON ACCOUNT OF FAILURE OF THE ASSESSEE TO PROVIDE CONFIRMATION OR EVEN COMPLETE ADDRESS . WHEN ALL THESE FACTS ARE CONSIDERED TOGETHER I.E. ABNORMAL INCREASE IN THE CLAIM OF CREDITORS AND THE FAILURE OF THE ASSESSEE TO PROVIDE EVIDENCE REGARDING CREDITORS IN THE FORM OF CONFIRMATION / COMPLETE ADDRESS, IT CANNOT BE SAID THAT THESE CREDITORS OF RS.10,51,948/ - FOR WH ICH 5 ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE BASIS THAT NEITHER ANY CONFIRMATION WAS FURNISHED NOR ANY ADDRESS WAS GIVEN, THAT THESE CREDITORS ARE IN RESPECT OF GOODS PURCHASED ON CREDIT. PURCHASES OF GOODS IS ACCEPTED BY THE ASSESSING OFFICER BU T WHETHER THE ASSESSEE GOT CREDIT AGAINST PURCHASES OF GOODS IS NOT ACCEPTED BY THE ASSESSING OFFICER AND IN OUR CONSIDERED OPINION , BOTH THINGS ARE ALTOGETHER DIFFERENT. FOR ESTABLISHING THAT THE GOODS WERE PURCHASED ON CREDIT , THE ASSESSEE WAS REQUIRED TO FURNISH THE NAME AND ADDRESS OF THE CREDITORS FOR ESTABLISHING THEIR IDENTITY AND THE ASSESSEE WAS ALSO REQUIRED TO ESTABLISH THE CREDITWORTHINESS OF THE CREDITORS. THIS IS THE ACCEPTED POSITION OF FACT THAT EVEN AS PER THE CLAIM OF THE ASSESSEE ALSO, THESE ARE VERY SMALL SUPPLIERS AND THEREFORE, EVEN IF THE ASSESSEE WAS NOT IN A POSITION TO FURNISH THE CONFIRMATION AND ADDRESS OF THESE CREDITORS, THE ASSESSEE COULD HAVE ESTABLISHED THIS BY GIVING THE NAME WISE DETAILS OF CRE DITORS WITH DATE OF PURCHASE AND DATE WISE AMOUNT OF PURCHASE AND DATE OF ACTUAL PAYMENT. IN THAT MANNER, IT COULD HAVE BEEN ESTABLISHED THAT FOR EACH PERSON, FROM WHOM THE ASSESSEE CLAIMS TO HAVE PURCHASED RAW HIDE ON CREDIT, THE AMOUNT WAS NOT BIG AND T HE CREDIT PERIOD WAS ALSO NOT VERY LONG . IF A SMALL AMOUNT OF RS.1 0 ,000/ - IS OUTSTANDING AGAINST A SUPPLIER FOR SMALL PERIOD OF 10 - 15 DAYS, IT CAN BE ACCEPTED THAT THE ASSESSEE HAS PURCHASED THE GOODS ON CREDIT BUT IN THE ABSENCE OF EVEN SUCH DETAILS, IT IS VERY DIFFICULT TO ACCEPT THAT THE GOODS WERE IN FACT PURCHASED ON CREDIT . THIS IS VERY MUCH POSSIBLE THAT THE PAYMENT WAS MADE IN CASH FROM UNDISCLOSED SOURCES BUT SUCH PAYMENT WAS NOT ACCOUNTED FOR AND CREDITORS WERE SHOWN. WHEN WE APPRECIATE THE ENT IRE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE GOODS WERE PURCHASED ON CREDIT IN RESPECT OF CREDITORS DOUBTED BY THE A.O. AND THE ASSESSEE WAS SUPPOSED TO ESTABLISH THIS CLAIM BY BRINGING COGENT EVIDENCE ON RECORD . 6 9. IN VIEW OF OUR FINDING IN THE ABOVE PARA THAT THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE GOODS WERE IN FACT PURCHASED ON CREDIT IN RESPECT OF THE ALLEGED CREDIT OF RS.1,05,01,948/ - FOR WH ICH ADDITION WAS MADE BY THE ASSESSING OFFICER BECAUSE THE ASSESSEE COULD NOT EVEN FURNISH THE CONFIRMATION FROM THEM OR THEIR ADDRESSES OR THE PARTY WISE OUTSTANDING AMOUNT WITH PERIOD , WE ARE OF THE CONSIDERED OPINION THAT THE TRIBUNAL DECISION IN ASSESS EES OWN CASE FOR ASSESSMENT YEAR 2005 - 06 AND THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT FOLLOWED THEREIN HAVING BEEN RENDERED IN THE CASE OF PANCHAM DAS (SUPRA) ARE NOT APPLICABLE AND THEREFORE, THE ASSESSEE DO NOT GET ANY HELP FROM THESE JUDGMENTS IN THE FACTS OF THE PRESENT CASE. 10. AS PER THE DETAILS AVAILABLE ON PAGES 182 TO 193 OF THE PAPER BOOK, WE FIND THAT IN THIS DETAIL ALSO , THE DETAIL IS AVAILABLE PARTY WISE WITHOUT ADDRESS AND WITHOUT THE PERIOD OF CREDIT AND IT IS ALSO NOT INDICATED AS TO WHEN THE PAYMENT WAS ACTUALLY MADE AND SINCE WHEN THE AMOUNT IS SAID TO BE OUTSTANDING. THEREFORE, THESE DETAILS ARE NOT RENDERING ANY HELP TO THE ASSESSEE IN ESTABLISHING THAT THE GOODS WERE IN FACT PURCHASED ON CREDIT FROM THESE SUPPLIERS. 11. REGARDING THE WRITTEN SUBMISSIONS OF THE ASSESSEE, WE FIND THAT IN TH ESE WRITTEN SUBMISSIONS , THE ASSESSEE HAS MERELY STATED THE FACTS, WHICH ARE ALREADY NOTED BY THE AUTHORITIES BELOW AND CONSIDERED BY US IN ABOVE DISCUSSION . RELIANCE WAS PLACED ON THE T RIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005 - 06 AND THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT, AGRA VS. PANCHAM DAS JAIN [2006] 156 TAXMAN 507 (ALL). RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF CIT VS. SMT. P. K. NOORJAHAN [1999] 237 ITR 570 (SC) AND ALSO ON A DECISION OF KOLKATA TRIBUNAL IN THE CASE OF CHANG HING TANNERY VS. DEPARTMENT OF INCOME TAX DATED 15 TH MAY 2013 . THE 7 COPY WAS ALSO FURNISHED. AS PER RELEVANT PARA REPRODUCED BY THE ASSESSEE ON PAGE NO. 177 OF ITS WRITTEN SUBMISSIONS , IT IS NOTED THAT IN THAT CASE , THE TRIBUNAL WAS CONCERNED WITH THE ISSUE AS TO WHETHER THE ENTIRE PURCHASES CAN BE DISALLOWED PERTAINING TO 29 PARTIES ON WHICH NOTICES COULD NOT BE SER VED. IN THE PRESENT CASE, THE ASSESSING OFFICER DID NOT MAKE ANY DISALLOWANCE OF PURCHASES BUT MADE ADDITION U/S 68 FOR THE REASON THAT THE ASSESSEE COULD NOT ESTABLISH THE CREDITORS. THEREFORE, THIS TRIBUNAL DECISION IS NOT RELEVANT. SIMILARLY THE JUDG MENT OF HON'BLE APEX COURT IN THE CASE OF SMT. P. K. NOORJAHAN (SUPRA), IS ALSO NOT APPLICABLE BECAUSE IN THAT CASE, IT WAS HELD BY HON'BLE APEX COURT THAT THE ASSESSING OFFICER HAS TO TAKE INTO ACCOUNT OVERALL FACTS. THERE IS NO QUARREL ON THIS ASPECT BU T WHEN WE CONSIDER OVERALL FACTS, IT COMES OUT THAT THE ASSESSEE IS NOT IN A POSITION TO ESTABLISH THE CLAIM THAT THE GOODS WERE PURCHASED ON CREDIT FROM THESE SUPPLIERS AND THEREFORE, IN THE FACTS OF THE PRESENT CASE, THIS JUDGMENT ACTUALLY SUPPORTS THE C ASE OF THE REVENUE BECAUSE ON CONSIDERING OVERALL FACTS, IT COMES OUT THAT THE ASSESSEE HAS FAILED TO ESTABLISH THAT THIS MUCH GOODS WERE PURCHASED ON CREDIT . REGARDING THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PANCHAM DAS (SUPRA), WE HAVE ALREADY CONSIDERED THIS JUDGMENT WHILE DEALING WITH THE APPLICABILITY OF THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR PRECEDING ASSESSMENT YEAR. REGARDING TWO OTHER TRIBUNAL DECISIONS CITED BY LEARNED A.R. OF THE ASSESSEE WHICH ARE AVAILABLE O N PAGE 12 OF THE WRITTEN SUBMISSIONS, WE FIND THAT THESE ARE NOT REPORTED DECISIONS BUT THE COPY OF THE DECISIONS ARE SUBMITTED BY THE ASSESSEE ON PAGES 160 TO 164 AND 165 TO 167 OF THE PAPER BOOK. IN THE CASE OF DCIT VS. DIVINE INTERNATIONAL (SUPRA), IT WAS NOTED BY THE TRIBUNAL IN PARA 17 THAT IT WAS EXPLAINED BY THE ASSESSEE IN THAT CASE THAT IN VIEW OF THE RECORD HAVING BEEN DESTROYED IN THE FILE, IT IS NOT IN A POSITION TO GET THESE OUTSTANDING CREDITORS VERIFIED. IN THE PRESENT CASE, NO REASON HAS B EEN GIVEN BY THE ASSESSEE FOR ITS FAILURE TO OBTAIN CONFIRMATION FROM THE SUPPLIERS OF THIS AMOUNT ADDED BY THE ASSESSING OFFICER, ALTHOUGH 8 THE ASSESSEE HAS SUBMITTED CONFIRMATION OF RS. 798.07 LAC S . HENCE, FOR THIS DIFFERENCE IN FACTS, THIS TRIBUNAL DECIS ION IS NOT APPLICABLE IN THE PRESENT CASE. 12. IN THE SECOND CASE I.E. IN THE CASE OF CHANG HING TANNERY (SUPRA), ENTIRE PURCHASES WERE DISALLOWED BY THE ASSESSING OFFICER FOR WANT OF CONFIRMATION FROM THE SUPPLIERS. IN THE PRESENT CASE, THE FACTS ARE DI FFERENT BECAUSE IN THE PRESENT CASE, NO PART OF PURCHASES HAVE BEEN DISALLOWED BUT ADDITION IS MADE ON ACCOUNT OF CREDITOR S SHOWN, WHICH COULD NOT BE ESTABLISHED BY THE ASSESSEE AND THEREFORE, THIS TRIBUNAL DECISION IS NOT RENDERING ANY HELP TO THE ASSESSEE. 13. AS PER ABOVE DISCUSSION, WE HAVE SEEN THAT IN SPITE OF CONSIDERING THE WRITTEN SUBMISSIONS AND OTHER DETAILS AVAILA BLE IN THE PAPER BOOK AND ALSO VARIOUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE INCLUDING THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR PRECEDING YEAR AND ALSO THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN PANCHAM DAS (SUPRA), THE ASSESSE E IS NOT GETTING ANY HELP BECAUSE THE ASSESSEE COULD NOT ESTABLISH THE BASIC CLAIM THAT PURCHASES WERE IN FACT MADE ON CREDIT. IN FACT , THE CIT(A) HAS DELETED THIS ADDITION BY REFERRING TO THE ORDER OF CIT(A) IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 200 5 - 06 AND WE HAVE SEEN THAT THE TRIBUNAL DECISION FOR ASSESSMENT YEAR 2005 - 06 IS NOT RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. WE ALSO FIND THAT IT IS NOTED BY CIT(A) IN PARA 5.5.2 OF HIS ORDER THAT THE CREDITORS OUTSTANDING AS ON 31/03/2006 WERE PAID AT THE END OF THE FINANCIAL YEAR, WHICH MEANS THAT EVEN AFTER THE END OF THE PRESENT ACCOUNTING YEAR I.E. FINANCIAL YEAR 2005 - 06, THE CREDITORS WERE ADMITTEDLY OUTSTANDING FOR ONE FULL YEAR AND IT MAY BE THAT THE CREDITORS WERE OUTSTANDING FOR A VERY LONG PERIOD OF TIME. WE FAIL TO UNDERSTAND THAT WHETHER SMALL RAW HIDE SUPPLIERS CAN AFFORD TO PROVIDE THIS LO NG CREDIT AND HENCE, THIS CLAIM CANNOT BE ACCEPTED IN THE ABSENCE OF 9 CONFIRMATION FROM SUPPLIER AND THEIR ADDRESS ES . WE, THEREFORE, REVERSE THE ORDER OF CIT(A) ON THIS ISSUE AND RESTORE THAT OF THE ASSESSING OFFICER. GROUND NO. 1 IS ALLOWED. 14. GROUND NOS. 2 & 3 ARE INTER - CONNECTED, WHICH READ AS UNDER: 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON THE FACTS OF THE CASE THAT THE EXPENDITURE INCURRED ON LAND DEVELOPMENT IS CAPITAL IN NATURE. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.5,00,000/ - MADE ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE CLAIMED UNDER THE HEAD POWER AND FUEL WITHOUT APPRECIATING THE FACT THAT THE EXPENSES CLAIMED DURING THE YEAR WERE DISPROPORTIONATELY HIGHER THAN THE EXPENSES CLAIMED IN THE IMMEDIATE PREVIOUS YEAR. 15. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LEARNED CIT(A) AS PER PARA 9.3 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 9.3 DECISION THE DISALLOWANCE MADE BY THE A.O. IS ON ESTIMATED BASIS WITHOUT POINTING ANY SPECIFIC ITEMS OF PURCHASE OR EXPENDITURE OF UNVERIFIABLE NATURE OR WITHOUT PROPER SUPPORTING BILLS AND VOUCHERS. THERE IS NO DOUBT THAT THE PRODUCTION AS WELL AS SALES HAVE INCREASED DURING THE YEAR AND ALSO THE POWER POSITION IN KANPUR IS BAD, THEREFORE, THE EXPLANATION GIVEN BY THE A.R. FOR INCREASE IN THE EXPENSES ON POWER AND FUEL A PPEARS TO BE ACCEPTED. IN A.Y. 2005 - 2006 ALSO SIMILAR DISALLOWANCE WAS NOT FOUND SUSTAINABLE AND WAS DELETED. THE DISALLOWANCE OF 10 RS.5,00,000/ - MADE BY THE A.O. IS UNSUSTAINABLE AND IS HEREBY DELETED. 16.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY HIM THAT THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON ESTIMATED BASIS WITHOUT POINTING OUT ANY SPECIFIC ITEM OF PURCHASE OR EXPENDITURE OF UNVERIFIABLE NATURE OR WITHOUT PROPER SU PPORTING BILLS AND VOUCHERS. THIS FINDING OF CIT(A) COULD NOT BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE AND THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). ACCORDINGLY, THESE GROUNDS ARE REJECTED. 17. IN THE RESULT, THE AP PEAL OF THE REVENUE STANDS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26 /02/2015. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR