Ekta Dairy Pvt.. Limited., Kanpur V. Income Tax Officer-6(1), Kanpur

ITA 520/LKW/2012

• Counselvise Citation: 52023714 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Depreciation; Principle of natural justice
• Section: 143(3); 68; 69; 145

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.520/LKW/2012 ASSESSMENT YEAR:2009 - 10 EKTA DAIRY PVT. LIMITED, OFFICE NO. 12, HARMONEY ARCAD, THE MALL, KANPUR. PAN:AABCE8164B VS. INCOME TAX OFFICER - 6(1), KANPUR. (APPELLANT) (RESPONDENT) ITA NO.527/LKW/2012 ASSESSMENT YEAR:2009 - 10 A.C.I.T. - 6, KANPUR. VS. EKTA DAIRY PVT. LIMITED, OFFICE NO. 12, HARMONEY ARCAD, THE MALL, KANPUR. PAN:AABCE8164B (APPELLANT) (RESPONDENT) O R D E R PER A. K. GARODIA, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE, WHICH ARE DIRECTED AGAINST THE ORDER OF CIT(A) - II, KANPUR DATED 20/07/2012 FOR ASSESSMENT YEAR 2009 - 10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. BECAUSE NO BASIS FOR SELECTION OF CASE FOR 'SCRUTINY ASSESSMENT', HAVING BEEN GIVEN, THE ASSESSING OFFICER CANNOT BE SAID TO BE VALIDLY VESTED WITH THE JURISDICTION TO MAKE ASSESSEE BY SHRI P. K. KAPOOR, C.A. REVENUE BY SHRI PUNEET KUMAR, D. R. DATE OF HEARING 25/03/2015 DATE OF PRONOUNCEMENT 0 5 /06/2015 2 ASSESSMENT UNDER SECTION 143(3) AND ACCORDINGLY THE ENTIRE VARIATION BETWEEN THE 'R ETURNED INCOME' AND THE 'ASSESSED INCOME' IS WHOLLY WITHOUT JURISDICTION. 2. BECAUSE ON A DUE CONSIDERATION OF THE MATERIAL AND INFORMATION ALREADY AVAILABLE ON RECORD, THE 'CIT(A)' SHOULD HAVE DELETED THE ENTIRE 'VARIATION' BETWEEN THE RETURNED INCOME AN D THE ASSESSED INCOME, IN EXERCISE OF HIS POWERS WHICH ARE COTERMINOUS WITH THAT OF THE ASSESSING OFFICER AND NO PART OF THE SAME COULD HAVE BEEN SUSTAINED EITHER ON FACTS OR IN LAW. WITHOUT PREJUDICE TO THE AFORESAID 3. BECAUSE THE 'C1T(A)' HAS ERRED IN LAW AND ON FACTS IN UPHOLDING REJECTION OF BOOKS OF ACCOUNT (AS HAD BEEN MADE BY THE ASSESSING OFFICER) AND IN SUSTAINING AN ADDITION OF RS.9,21,620/ - ON ACCOUNT OF EXTRA PROFIT AS WORKED OUT IN THE FOLLOWING MANNER: - ( A ) TURNOVER AS DISCLOSED BY THE APPELLA NT AND ACCEPTED IN APPEAL RS.17,43,61,117 ( B ) GROSS PROFIT AS WORKED OUT BY THE 'CIT(A)' BY APPLYING ENHANCED GROSS PROFIT RATE OF 8;5% (AS AGAINST THE DISCLOSED G.P. RATE OF 7.97%) TO THE DISCLOSED TURNOVER AS AFORESAID. : RS. 1,48,20,695 (C) GROSS PROFIT AS DISCLOSED BY THE APPELLANT RS. 1,38,99,075 ( C ) EXTRA PROFIT ADDITION AS SUSTAINED BY THE 'CIT(A)' [(B) - (C)] RS. 9,21,620 4. BECAUSE THE BOOKS OF ACCOUNT HAD BEEN MAINTAINED BY THE APPELLANT IN REGULAR COURSE OF BUSINESS WHICH WERE SUBJECTED TO STATUTORY AUDIT UNDER SECTION 227 OF THE COMPANIES ACT AND AGAIN UNDER SECTION 44AB OF THE INCOME - TAX ACT, 1961 AND THERE BEING NO PERCE PTIBLE DEFECT IN THE BOOKS OF ACCOUNT SO AUDITED, REJECTION OF THE SAME WAS WHOLLY UNCALLED FOR AND UNJUSTIFIED AND THE ADDITION OF EXTRA PROFIT OF RS.9,21,620 AS SUSTAINED BY THE CIT(A) IS WHOLLY ERRONEOUS, AS 3 BEING INCONSISTENT WITH THE FACTS OF THE CASE AND LAW APPLICABLE THERETO. 5. BECAUSE WITHOUT PREJUDICE TO THE CONTENTION RAISED IN GROUNDS NO. 3 & 4 ABOVE, IT IS CONTENDED THAT THE TRADING RESULTS AS DISCLOSED BY THE APPELLANT WERE OPEN TO VERIFICATION EVEN INDEPENDENTLY AND EVEN IF PROVISIONS OF SE CTION 145(3) ARE HELD TO BE APPLICABLE, ALTHOUGH DISPUTED BY THE APPELLANT, NO ADDITION ON ACCOUNT OF EXTRA PROFIT WAS CALLED FOR EITHER ON FACTS OR IN LAW. 6. BECAUSE IN ANY CASE THE ADDITION OF RS.9,21,620/ - ON ACCOUNT OF EXTRA PROFIT AS SUSTAINED BY TH E 'CIT(A)' IS WHOLLY ARBITRARY, MUCH TOO HIGH AND EXCESSIVE. 7. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN HOLDING THAT THERE WAS UNEXPLAINED INVESTMENT IN PURCHASE OF PLANT AND MACHINERY TO THE EXTENT OF RS.46,000/ - AND IN MAKING/UPHOLDING AN ADDITION OF RS.46,000/ - ON THAT SCORE. 8. BECAUSE THE ADDITION OF RS.46,000/ - AS HAS BEEN MADE WITH REFERENCE TO THE ENTRY APPEARING IN THE BOOKS OF ACCOUNT OF THE 3 RD PARTY CANNOT BE MADE/SUSTAINED BY INVOKING THE PROVISIONS OF SECTIO N 69 OF THE ACT. 9. BECAUSE THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN HOLDING THAT PLANT AND MACHINERY AS PURCHASED FROM M/S. MILK CRAFT ENGINEERS FOR AN AGGREGATE SUM OF RS.29,38,575/ - REMAINED UNPROVED AND ON THAT BASIS IN DISALLOWING THE APPELLANT'S CLAIM FOR DEPRECIATION THEREON, AMOUNTING TO RS,10,28,500/ - . 10. BECAUSE WHILE UPHOLDING THE DISALLOWANCE OF DEPRECIATION CLAIMED BY THE APPELLANT ON PURCHASE OF PLANT & MACHINERY FOR A VALUE OF RS.29,38,575/ - FROM M/S. MIIK CRAFT ENGINEERS, T HE AUTHORITIES BELOW HAVE FAILED TO APPRECIATE THAT; ( A ) PURCHASE OF MACHINERY IN QUESTION STOOD FULLY PROVED FROM THE BOOKS OF ACCOUNT AND OTHER RECORDS AS MAINTAINED BY THE APPELLANT; ( B ) PLANT AND MACHINERY SO PURCHASED BY THE APPELLANT HAD DULY BEEN INSTALLED AND PUT TO USE IN THE 4 MANUFACTURING ACTIVITIES CARRIED ON BY IT (THE APPELLANT); ( C ) THE PLANT AND MACHINERY SO PURCHASED AND INSTALLED BY THE APPELLANT WAS FOUND TO BE DEFECTIVE AND THE SAME WAS RETURNED TO THE SUPPLIERS NOT IN THE YEAR UNDER APPEAL BUT IN T HE SUBSEQUENT YEAR; ( D ) EX - PARTE DENIAL MADE BY THE SUPPLIER OF MACHINERIES, WITHOUT THE ASSESSING OFFICER GIVING AN OPPORTUNITY TO THE APPELLANT TO CROSS EXAMINE THE SAID SUPPLIER, CANNOT BE MADE THE BASIS FOR ARRIVING AT A CONCLUSION THAT PLANT AND MACHINERY IN QUESTION HAD NOT BEEN PURCHASED AT ALL; AND ACCORDINGLY THE DISALLOWANCE OF RS.10,28,500/ - AS HAS BEEN MADE/SUSTAINED BY THE AUTHORITIES BELOW STAND WHOLLY VITIATED. 11. BECAUSE THE ORDER APPEALED AGAINST IS CONTRARY TO THE FACTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THAT THE L D. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN REDUCING THE ADDITION ON ACCOUNT OF GROSS PROFIT FROM RS.2,08,67,745/ - TO KS.9,21,620/ - WITHOUT APPRECIATING THE FACTS THAT THE AO HAS WORKED OUT THE GROSS PROFIT ON PRO - RATA BASIS AFTER REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT AND THIS REJECTION HAS BEEN CONFIRMED BY THE CIT(A). 2. THAT THE L D. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS.7,00,000/ - MADE BY AO U/S 68 OF THE ACT WITHOUT PROPERLY APPRECIATING THE FACTS THAT THE ASSESSEE COMPANY DID NOT DISCHARGE ITS ONUS AND GROSSLY FAILED TO PROVE THE CREDITWORTHINESS OF T HE ALLEGED SHARE APPLICANT. 3. THAT THE L D. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE DISALLOWANCE OF DEPRECIATION AMOUNTING RS.6,77,724/ - CLAIMED ON OLD GENERATOR, TRANSFORMER AND OTHER ASSETS PURCHASE D DURING THE YEAR WITHOUT PROPERLY APPRECIATING THE FACTS THAT THE ASSESSEE COMPANY FAILED SUBSTANTIATE ITS CLAIM WITH COGENT 5 EVIDENCE AND ALSO DIALED TO FURNISH BILLS ETC. TO PROVE THE GENUINENESS OF ITS CLAIM. 4. THAT THE ORDER OF THE L D. COMMISSIONER O F INCOME TAX (APPEALS) BEING ERRONEOUS IN LAW AND ON FACTS DESERVES TO BE VACATED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 4. IT WAS AGREED BY BOTH THE SIDES THAT THE ISSUE RAISED BY REVENUE AS PER GROUND NO. 1 AND THE ISSUE RAISED BY THE ASSE SSEE AS PER GROUND NOS. 3 TO 6 ARE INTER - CONNECTED IN RESPECT OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF GROSS PROFIT. IN THIS REGARD, LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A) IN RESPECT OF THE GROUND RAISED BY THE REVENUE. REGARDING THE DISPUTE RAISED BY THE ASSESSEE IN ITS APPEAL FOR PART ADDITION OF RS.9,21,620/ - UPHELD BY CIT(A), IT WAS SUBMITTED THAT THE ASSESSMENT FOR ASSESSMENT YEAR 2008 - 09 W AS ALSO COMPLETED BY THE ASSESSING OFFICER U/S 143(3) AND COPY OF THE ASSESSMENT ORDER FOR THAT YEAR IS AVAILABLE ON PAGES 195 TO 201 OF THE PAPER BOOK AND IN THAT YEAR, NO ADDITION WAS MADE ON ACCOUNT OF GROSS PROFIT. HE FURTHER SUBMITTED THAT PROFIT & L OSS ACCOUNT OF THE ASSESSEE FOR THE PRESENT YEAR IS AVAILABLE ON PAGE NO. 22 AND FROM THE SAME, IT CAN BE SEEN THAT THE GROSS PROFIT SHOWN BY THE ASSESSEE IN THE PRESENT YEAR IS MUCH HIGHER THAN THE GROSS PROFIT SHOWN BY THE ASSESSEE IN ASSESSMENT YEAR 200 8 - 09 AND THEREFORE, NO ADDITION IS JUSTIFIED ON THIS ACCOUNT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT BOOKS OF ACCOUNT WERE REJECTED BY THE ASSESSING OFFICER U/S 145 OF THE ACT MAINLY ON THE BASIS THAT THE CLOSING STOCK SHOWN BY THE AS SESSEE IN BALANCE SHEET AND THE CLOSING STOCK FIGURE SUBMITTED TO BANK IS DIFFERENT AND CLOSING STOCK SHOWN TO BANK IS MUCH HIGHER. APART FROM THIS, SOME SMALL DISCREPANCIES ARE ALSO NOTED BY THE ASSESSING OFFICER AND THEREAFTER, HE REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE TURNOVER AND APPLIED GROSS PROFIT RATE 6 OF 8.5% AND MADE ADDITION OF GROSS PROFIT OF RS.2,08,67,745/ - WORKED OUT BY HIM ON THIS BASIS. WE ALSO FIND THAT IT IS NOTED BY CIT(A) ON PAGE NO. 2 OF HIS ORDER THAT THE ASSESSEE HAS SHOWN TURNOVER OF RS.1,743.61 LACS WITH GROSS PROFIT AT RS.1,38,99,075/ - , WHICH IS AROUND 7.97% OF TURNOVER. HE HAS FURTHER NOTED THAT THE ASSESSING OFFICER HAS APPLIED GROSS PROFIT RATE OF 8.5% AND WORKED OUT THE GROSS PROFIT AT RS.2,08,67,745/ - ON THE BASIS OF ESTIMATED TURNOVER AT RS.2,455.20 LACS. THE CIT(A) HAS HELD THAT THE ESTIMATION OF TURNOVER ON THE BASIS OF STOCK STATEMENT SUBMITTED TO THE BANK IS NOT JUSTIFIED. HE HAS ALSO HELD THAT ON THIS ISSUE, THE JUDGMENT OF HON'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF CIT VS. N. SWAMY [2000] 241 ITR 363 (MAD) SUPPORTS THE CASE OF THE ASSESSEE. THE CIT(A) HAS ALSO HELD THAT EVEN IF GROSS PROFIT IS WORKED OUT BY THE ASSESSING OFFICER BY APPLYING RATE OF 8.5%, CREDIT SHOULD HAVE BEEN ALLOWED BY HIM IN RESP ECT OF GROSS PROFIT SHOWN BY THE ASSESSEE, WHICH WAS NOT DONE BY THE ASSESSING OFFICER. UNDER THESE FACTS, IT WAS HELD BY LEARNED CIT(A) THAT THE GROSS PROFIT RATE OF 8.5% SHOULD BE WORKED OUT ON THE BASIS OF ACTUAL TURNOVER REPORTED BY THE ASSESSEE AND C REDIT SHOULD BE ALLOWED TO THE ASSESSEE OF RS.1,38,99,075/ - BEING GP DECLARED BY THE ASSESSEE AND HE WORKED OUT NET ADDITION OF RS.9,21,620/ - , WHICH WAS CONFIRMED BY HIM. CONSIDERING THIS JUDGMENT OF HON'BLE MADRAS HIGH COURT, WE FIND NO REASON TO INTERFE RE IN THE ORDER OF CIT(A) ON THIS ASPECT THAT ONLY BOOK TURNOVER SHOULD BE ADOPTED AND THE SAME CANNOT BE ESTIMATED MERELY ON THE BASIS OF STOCK STATEMENT SUBMITTED TO BANK. ON SECOND ASPECT ALSO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) REGARD ING REDUCTION OF GROSS PROFIT REPORTED BY THE ASSESSEE AT RS.1,38,99,075/ - FROM GROSS PROFIT TO BE WORKED OUT AFTER REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE. 6. NOW THE ONLY ISSUE REMAINS AS TO WHETHER ESTIMATION OF GROSS PROFIT AT THE RATE OF 8.5 0% IS JUSTIFIED. IN THIS REGARD, WE FIND THAT NO ADDITION 7 WAS MADE BY THE ASSESSING OFFICER IN THE PRECEDING YEAR I.E. 2008 - 09 IN RESPECT OF GROSS PROFIT ALTHOUGH THE ASSESSMENT WAS COMPLETED IN THAT YEAR U/S 143(3). MOREOVER, AS PER PROFIT & LOSS ACCOUN T OF THE ASSESSEE, AVAILABLE ON PAGE NO. 22 OF THE PAPER BOOK, FOR THE PRESENT YEAR CONTAINING FIGURES OF THE PREVIOUS YEAR ALSO, WE FIND THAT PROFIT BEFORE INTEREST AND DEPRECIATION IN THE PRESENT YEAR COMES TO RS.138.02 LAC, WHICH IS 7.92% OF THE TURNOVE R. THE SAME IN THE PRECEDING YEAR WAS RS.42.77LAC ON A TURNOVER OF RS.698.64 LAC AND THE RATE OF SUCH PROFIT WAS 6.12%. HENCE, IN THE PRESENT YEAR, THE GROSS PROFIT SHOWN BY THE ASSESSEE IS HIGHER BY 1.80% AS COMPARED TO THE PRECEDING YEAR. THE BASIS AD OPTED BY ASSESSING OFFICER FOR REJECTING THE BOOKS OF ACCOUNT IN THE PRESENT YEAR IS MAINLY FOR DIFFERENCE IN STOCK STATEMENT SUBMITTED TO BANK AND STOCK AS PER BOOKS. WHEN WE HAVE HOLD THAT NO ADDITION IS JUSTIFIED MERELY ON THE BASIS OF STOCK STATEMENT SUBMITTED BY THE ASSESSEE TO THE BANK, THIS FACTOR ALONE CANNOT BE A BASIS FOR APPLYING HIGHER GROSS PROFIT RATE PARTICULARLY WHEN GROSS PROFIT DECLARED BY THE ASSESSEE IN THE PRESENT YEAR IS BETTER COMPARED TO THE PRECEDING YEAR AND IN THAT YEAR, NO ADDIT ION WAS MADE BY ALLEGING LOWER GP IN SPITE OF SCRUTINY ASSESSMENT U/S 143 (3). APART FROM THIS, SOME OTHER DISCREPANCIES ARE ALSO NOTED IN THE ASSESSMENT ORDER BUT THE SAME ARE NOT MATERIAL BUT STILL, WE FEEL THAT EVEN IF BOOKS ARE REJECTED, ADOPTING GRO SS PROFIT RATE OF 8.5% IS EXCESSIVE CONSIDERING THE FACTS PARTICULARLY THE GROSS PROFIT OF PRECEDING YEAR AND HENCE, WE FEEL THAT IN THE INTEREST OF JUSTICE, IF GROSS PROFIT RATE OF 8% IS APPLIED, IT WILL SERVE THE INTEREST OF JUSTICE. WE DIRECT THE ASSESS ING OFFICER ACCORDINGLY. THE ASSESSING OFFICER SHOULD ADOPT THE GROSS PROFIT RATE OF 8% ON THE DECLARED TURNOVER OF RS.17,43,61,117/ - AND FROM THE GROSS PROFIT SO WORKED OUT, HE SHOULD REDUCE THE GROSS PROFIT ALREADY REPORTED BY THE ASSESSEE AND ADDITION SHOULD BE MADE ONLY FOR THE BALANCE AMOUNT. ACCORDINGLY, GROUND 8 NO. 1 OF THE REVENUE IS REJECTED WHEREAS GROUND NOS. 3 TO 6 OF THE ASSESSEE ARE PARTLY ALLOWED. 7. NOW WE TAKE UP GROUND NO. 2 OF THE REVENUE. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASS ESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) IN FAVOUR OF THE ASSESSEE BY MAKING FOLLOWING OBSERVATIONS ON PAGES 8 TO 9 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - I HAVE CONSIDERED THE ARGUMENTS AND THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE ALONG WITH CONTENTS OF THE ASSESSMENT ORDER. THE A.O. HAS ACCEPTED THE CONFIRMATION DATED 04 - 11 - 2009 ISSUED BY THE POLICE DEPARTMENT EXPLAINING THE RETIREMENT OF SHRI RAM LAKHAN SACHAN AS HEAD CONSTABLE. THE SHARE APPLICATION MONEY OF RS.7,00,000/ - CONSTITUTES THE RETIREMENT BENEFITS RECEIVED BY SHRI RAM LAKHAN SACHAN. IN SUPPORT OF THE TRANSACTIONS, THE ASSESSEE HAS SUBMITTED THE CONFIRMATION LETTER, BANK ACCOUNT, PAN AND THE L ETTER FROM POLICE DEPARTMENT. BY THIS WAY, THE ASSESSEE HAS DISCHARGED HIS ONUS OF EXPLAINING THE CREDITS APPEARING IN THE BOOKS OF ACCOUNTS. TO THIS EFFECT, RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS : - 1 . 330 ITR 298 (DEI.) - 2011, CIT VS DWARKADHEESH I NVESTMENTS PVT. LTD. 2 . 2010 TIOL - 236 - H.C. - (DEL.) I.T. - CIT VS. KAMDHENU STEELS & ALLOYS LTD. 3 . 2012 TIOL - 180 - H.C. - CHATTISGARH, CIT VS. SHRI ABDUL AZIZ 4 . 201 TIOL - 584 - H.C. - (DEL.) I.T. CIT VS. KINETIC FINANCE LIMITED. 5 . 31 DTK 371 - (ALLD.) 2012, L.D.K. SHARES & SECURITIES PVT. LTD. 'IN ALL THE ABOVE CASES, ADDITIONS HAVE BEEN DELETED AS THE ASSESSEE HAS DISCHARGED HIS ONUS'. 9 ON CONSIDERATION OF THE ABOVE DISCUSSIONS AND SUBMISSIONS, THE A.O. IS NOT JUSTIFIED IN MAKING ADDITION OF RS.7,00,000/ - SPECIALLY WHEN THE ASSESSEE HAS DISCHARGED HIS ONUS BY SUBMITTING CONFIRMATION LETTER, PAN, BANK STATEMENTS AND LETTER FROM POLICE DEPARTMENT. ACCORDINGLY, THE ADDITION OF RS.7,00,000/ - IS HEREBY DELETED. 8.1 FROM THE ABOVE OBSERVATIONS OF CIT(A), WE FIND THAT A CLEAR FINDING HAS BEEN GIVEN BY HIM THAT THE ASSESSEE HAS DISCHARGED HIS ONUS BY SUBMITTING CONFIRMATION LETTER, PAN, BANK STATEMENT AND LETTER FROM POLICE DEPARTMENT. IN THIS MANNER, WE FIND THAT THE ASSESSEE HAS ESTABLISHED ALL THE THREE ING REDIENTS OF 68 OF THE ACT I.E. IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THESE FINDINGS OF CIT(A) COULD NOT BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE AND THEREFORE, ON THIS ISSUE, WE DO NOT FIND ANY REASON TO I NTERFERE IN THE ORDER OF CIT(A). GROUND NO. 2 IS REJECTED. 9. NOW WE TAKE UP GROUND NO. 3 OF THE REVENUE AND GROUND NOS. 9 & 10 OF THE ASSESSEE. THESE GROUNDS ARE INTER - CONNECTED AND THEREFORE, THESE ARE BEING DECIDED TOGETHER. 10. LEARNED D. R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A. R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A) IN RESPECT OF THE ISSUE RAISED BY THE REVENUE IN ITS APPEAL. REGARDING THE PART ADDITION UPHELD BY CIT(A), HE SUBMITTED THAT THE MACHINERY IN QUESTION WAS RETURNED TO THE SUPPLIER IN NEXT YEAR AND THE SAME WAS USED IN PRESENT YEAR AND THEREFORE, DEPRECIATION SHOULD BE ALLOWED ON THIS MACHINE ALSO AMOUNTING TO RS.10,28,500/ - . 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGARDING THE ISSUE RAISED BY REVENUE AS PER GROUND NO. 3 I.E. REGARDING DELETION OF DISALLOWANCE OF DEPRECIATION TO THE EXTENT OF RS.6,77,724/ - , WE FIND THAT A 10 CLEAR FINDING HAS BEEN GIVEN BY CIT(A) THAT THIS DEPRECIATION IS CLAIMED IN RESPECT OF GENERATOR, TRANSFORMER AND F IXED ASSETS AND PLANT OF THE ASSESSEE COULD NOT HAVE BEEN RUN AND ACHIEVED THE TURNOVER OF RS.1,743.61 LACS WITHOUT USING THIS PLANT & MACHINERY AND THEREFORE, DEPRECIATION IS TO BE ALLOWED. THESE FINDINGS OF CIT(A) COULD NOT BE CONTROVERTED BY LEARNED D .R. OF THE REVENUE AND THEREFORE, ON THIS ASPECT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). GROUND NO.3 OF THE REVENUE IS REJECTED. 12. REGARDING THE REMAINING PART OF DISALLOWANCE OF DEPRECIATION OF RS.10,28,500/ - , WE FIND THAT THE SAME WAS C ONFIRMED BY CIT(A) ON THE BASIS THAT THE LEARNED A.R. OF THE ASSESSEE OF THE ASSESSEE HAS HIMSELF AGREED THAT THE PURCHASED PLANT & MACHINERY HAS BEEN RETURNED BACK TO THE CONCERNED SUPPLIER AND THEREFORE, IT IS CLEAR THAT THE PLANT & MACHINERY HAS NOT BEE N USED FOR BUSINESS AND THEREFORE, DEPRECIATION IS NOT ALLOWABLE. REGARDING THIS ARGUMENT OF LEARNED A.R. OF THE ASSESSEE THAT THE CONCERNED PLANT & MACHINERY WAS RETURNED IN THE NEXT YEAR AFTER USING IN PRESENT YEAR, WE ARE OF THE CONSIDERED OPINION THAT FOR ALLOWING DEPRECIATION, TWO INGREDIENTS ARE IMPORTANT; ONE IS THE OWNERSHIP OF THE ASSET IN QUESTION AND ITS USER FOR BUSINESS PURPOSE. SINCE THE MACHINERY WAS RETURNED TO THE SUPPLIER, IT CANNOT BE SAID THAT THE ASSESSEE WAS OWNER AND MACHINERY MIGHT HAVE BEEN USED BY THE ASSESSEE IN THE PRESENT YEAR BUT USER ALONE WILL NOT ENTITLE THE ASSESSEE FOR DEPRECIATION. CONSIDERING THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). ACCORDINGLY, GROUND NO. 9 & 10 OF THE ASSESSEE ARE REJECTED. 13. THERE IS NO MORE GROUND IN THE REVENUES APPEAL AND WE ARE LEFT WITH GROUND NO. 1 & 2 AND 7 & 8 IN THE ASSESSEES APPEAL REGARDING MERIT OF VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER. REGARDING TWO TECHNICAL GROUNDS I.E. GROUND NO. 1 & 2 OF THE ASSESSEE, NO ARGUMENT WAS 11 ADVANCED BY LEARNED A.R. OF THE ASSESSEE AND NO DEFECT COULD BE POINTED OUT BY LEARNED A.R. OF THE ASSESSEE IN THE ASSESSMENT FRAMED BY ASSESSING OFFICER AND THEREFORE, WE DO NOT FIND ANY MERIT IN THE GROUND 1 & 2, WHICH ARE REJECTED. 14. REGARDING GROUND NOS. 7 & 8 OF THE ASSESSEES APPEAL IN RESPECT OF ADDITION OF RS.46,000/ - CONFIRMED BY LEARNED CIT (A), WE FIND THAT THIS ADDITION WAS MADE BY THE ASSESSING OFFICER ON THE BASIS THAT AS PER ACCOUNTS STATEMENT SUBMITTED BY M/S NEW ERA DAIRY ENGINEERS INDIA PRIVATE LIMITED, AN AMOUNT OF RS.46,000/ - WAS PAID BY THE ASSESSEE TO SHRI MAHESH CHANDRA ON VARIOUS DATES IN MAY & JUNE 2008 BUT THE ASSESSEE HAS DENIED MAKING ANY PAYMENT TO SHRI MAHESH CHANDRA. THESE FINDINGS OF ASSE SSING OFFICER COULD NOT BE CONTROVERTED BY LEARNED A.R. OF THE ASSESSEE AND THEREFORE, ON THIS ASPECT, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). ACCORDINGLY GROUND NOS. 7 & 8 ARE REJECTED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND APPEAL OF THE ASSESSEE IS 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: 0 5 /06/2015 *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