ACIT, New Delhi V. M/s NYASA, New Delhi

ITA 531/DEL/2011

• Counselvise Citation: 53120114 RSA 2011
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 12-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 01-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R S NEGI
• Keywords: Gift; Bad and doubtful debts; Capital expenditure
• Section: 68; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E NEW DELHI DELHI BENCH : E NEW DELHI DELHI BENCH : E NEW DELHI DELHI BENCH : E NEW DELHI BEFORE SHRI K.G. BANSAL, ACCOUNTANT MEMBE R AND SHRI I.C. SUDHIR, JUDICIAL MEMBER I.T.A NO. 402/DEL/11 ASSTT. YEAR 2007-08 M/S. NYASA, 4, 1 ST FLOOR, JOR BAGH, NEW DELHI. AAAFN4919K VS. ACIT, CIRCLE-31(1), C.R. BUILDING NEW DELHI. (APPELLANT) (RESPONDENT) AND I.T.A NO. 531/DEL/11 ASSTT. YEAR 2007-08 ACIT CIRCLE-31(1), ROOM NO. 217, C.R. BUILDING, I.P. ESTATE, NEW DELHI. VS. M/S. NYASA, 4, 1 ST FLOOR, JOR BAGH, NEW DELHI. AAAFN4919K (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ANIL BHALLA, CA RESPONDENT BY: SHRI R.S. NEGI, SR. DR DATE OF HEARING : 12-06-2012 DATE OF PRONOUNCEMENT : 16-07-2012 ORDER PER K.G. BANSAL, AM: THESE CROSS APPEALS OF THE ASSESSEE AND THE REVENUE , ARISING FROM THE ORDER OF LD. CIT(A) XXVI, NEW DELHI, PASSED ON 2.11.2010 IN APPEAL NO. ITA NOS. 402,531/DEL/11 2 189/09-10 FOR ASSESSMENT YEAR 2007-08, WERE ARGUED IN A CONSOLIDATED MANNER BY THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. SENIOR DR, AS COMMON ISSUES ARE INVOLVED. THEREFORE, A CONSOLIDAT ED ORDER IS PASSED. 2. GROUND NO. 1 IN THE APPEAL OF THE ASSESSEE IS AS UNDER :- 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED BOTH OF FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT REGULARLY MAINTAINED BY THE APPELLANT FIRM BY WRONGLY INVOKIN G THE PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961 AND IN ESTIMATING THE INCOME UNDER THE HEAD PROFIT & G AINS OF BUSINESS AND CONFIRMING THE ADDITION TO THE EXTEN T OF ` 2,00,000/- ON AD HOC BASIS. 2.1 IN THE COURSE OF HEARING BEFORE US, THE ASSESSE E FURNISHED A REVISED GROUND IN PLACE OF THE AFORESAID GROUND, IT READS A S UNDER :- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED BOTH ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT REGULARLY MAINTAINED BY THE APPELLANT FIRM BY WRONGLY INVOKING THE PROVISIONS O F SECTION 145(3) OF THE INCOME TAX ACT, 1961 AND IN ESTIMATING THE I NCOME UNDER THE HEAD PROFIT & GAINS OF BUSINESS AND IN CONFIRMING THE ADDITION TO THE EXTENT OF ` 2,00,000/- ON ADHOC BASIS THEREBY I NCORRECTLY CONFIRMING THE REJECTION OF DECLARED BUSINESS LOSS OF ` 44,91,874/-. 2.2 IT HAS BEEN EXPLAINED TO US THAT THE TWO GROUND S ARE MORE OR LESS SAME IN CONTENT EXCEPT THAT THE AMENDED GROUND ALSO MAKES MENTION OF THE DECLARED BUSINESS LOSS OF ` 44,91,874/-. THEREF ORE, IT IS REQUESTED THAT THE AMENDMENT MAY BE ALLOWED AS NO FURTHER FACT IS REQUIRED TO BE PLACED ON RECORD OR INQUIRY INTO THE FACTS REGARDING THIS GROUND IS REQUIRED TO BE MADE. RELIANCE HAS BEEN PLACED ON THE DECISION IN T HE CASE OF NATIONAL THERMAL POWER CORPORATION, 229 ITR 383 (SC) AND GOE TZE INDIA LTD, 284 ITR 323 (SC). THE LD. SR. DR OPPOSED THE AMENDMENT OF THE GROUND. HAVING CONSIDERED THE SUBMISSIONS FROM BOTH THE SID ES, WE ARE OF THE ITA NOS. 402,531/DEL/11 3 VIEW THAT THE AMENDMENT DOES NOT ALTER THE CHARACTE R OF THE GROUND. NO NEW FACT IS STATED TO BE ADMITTED FOR THIS PURPOSE AND NO FACT IS STATED TO BE INQUIRED INTO. IN THE LIGHT OF THESE STATEMENTS, THE GROUND IS ALLOWED TO BE SUBSTITUTED. 2.3 THE GROUND TAKEN BY THE REVENUE IN ITS APPEAL I S THAT ALTHOUGH THE LD. CIT(A) HAS REJECTED THE TRADING RESULTS, SHE ER RED IN RESTRICTING THE ESTIMATION OF PROFITS TO ` 2.00 LACS WITHOUT GIVING ANY COGENT REASONS AND IGNORING THE ANALYSIS FURNISHED BY THE AO IN THE AS SESSMENT ORDER. IT WILL THUS BE SEEN THAT THE GROUNDS OF THE ASSESSEE AND T HE REVENUE DEAL WITH THE SAME ISSUE. THEREFORE, THESE GROUNDS ARE DISPOS ED OFF HEREUNDER. 3. THE LD. COUNSEL SUBMITS THAT THE ACCOUNTS OF THE ASSESSEE HAD BEEN REJECTED BY THE AO ON THE GROUND THAT VALUATION OF OPENING STOCK IS NOT IN ACCORDANCE WITH ACCOUNTING STANDARDS AND THE SALE M ADE BY THE ASSESSEE IS NOT VERIFIABLE. THE ASSESSEE HAD SHOWN SALES AT ` 9,55,992/-. THE ACCOUNTS SHOW OVERALL LOSS OF ` 44,91,874/-. AGAINS T THE AFORESAID, THE AO ESTIMATED THE SALES AT ` 35,95,149/- AND ESTIMATED PROFIT @ 10% OF SALES AT ` 3,59,514/-. IN APPEAL, LD. CIT(A) ESTIMATED T HE SALES AT ` 11,55,992/- AND PROFIT AT ` 2.00 LACS. 3.1 IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAS B EEN DEALING IN HANDICRAFTS AND GARMENTS. MAJOR SALES ARE BY WAY OF EXPORTS. DUE TO SLOW DOWN IN EXPORTS, THE ACTIVITIES OF THE ASSESSEE WER E SUBSTANTIALLY REDUCED. THEREFORE, EVEN RAW MATERIAL LYING IN STOCK WAS SOL D IN THIS YEAR. THE OPENING STOCK IN THIS YEAR HAD BEEN SHOWN AT THE SA ME FIGURE AS THE ITA NOS. 402,531/DEL/11 4 CLOSING STOCK FOR ASSESSMENT YEAR 2006-07, WHICH HA D BEEN ACCEPTED IN THAT YEAR. THE BOOKS OF ACCOUNT HAD BEEN AUDITED. N O DISCREPANCY HAS BEEN POINTED OUT IN REGARD TO MAINTENANCE OF BOOKS OF ACCOUNT. SALE BILLS WERE PRODUCED AND SALE PROCEED HAVE BEEN REALIZED I N CHEQUES AND CASH. CASH SALES AMOUNTED ONLY TO 17.7% OF THE TOTAL SA LES. THEREFORE, THE FINDING THAT OPENING STOCK VALUATION IS NOT RELIABL E AND SALES ARE NOT VERIFIABLE IS NOT BORNE BY FACTS OF RECORD. 3.2 THE LD. CIT(A) ALSO FURNISHED THE FINDINGS THAT OPENING STOCK IS NOT CORRECTLY VALUED, VALUATION OF CLOSING STOCK IS NOT SUBJECT TO VERIFICATION AND THEREFORE TRADING RESULT CANNOT BE ACCEPTED. AS SUBMITTED EARLIER THE OPENING STOCK OF THIS YEAR IS THE SAME AS CLOSING S TOCK OF LAST YEAR. THE CLOSING STOCK HAS BEEN VALUED AT COST, WHICH IN ANY CASE WILL BE MORE THAN THE REALIZABLE VALUE , AS SEEN FROM TRADING RESULT OF THIS YEAR. 3.3 LD. COUNSEL TOOK US THROUGH THE INVENTORY FOR A SSESSMENT YEARS 2004-05, 2005-06 AND 2006-07. HE ALSO TOOK US THROU GH THE SALE BILLS AND THE MODE OF REALIZATION OF SALE PROCEEDS. IT IS ARG UED THAT THE LOSS PRIMARY OCCURRED BECAUSE OLD STOCK CARRIED FORWARD FROM ASS ESSMENT YEAR 2004- 05, WHICH COULD NOT BE UTILIZED IN THE PROCESS OF M ANUFACTURE, WAS PARTLY LIQUIDATED IN THIS YEAR. OBVIOUSLY THE STOCK HAD T O BE SOLD AT LESS THAN THE COST PRICE AS IT HAD BECOME OLD. HOWEVER, THERE IS NOTHING IN THE ACCOUNTS WHICH MAKES THEM RELIABLE. 3.4 IN ORDER TO SUPPORT HIS CASE, RELIANCE IS PLACE D ON THE DECISION IN THE CASE OF SONA ELECTRIC COMPANY VS. CIT (1985) 152 IT R 507 (DEL).THE ITA NOS. 402,531/DEL/11 5 HONBLE COURT HELD THAT SECTION 68 MAKES IT CLEAR THAT THE ENTRY CAN BE REJECTED IF THE EXPLANATION OFFERED BY THE ASSESSEE CAN BE REJECTED BY THE ITO ON COGENT GROUNDS. WHEN SUCH GROUNDS ARE THEMSE LVES BASED ON NO EVIDENCE, THE QUESTION ON PRESUMPTION DOES NOT ARIS E. IN THE CASE OF AN ADMITTED SUPPLY OF GOODS AGAINST WHICH ADMITTED PAY MENT HAS BEEN MADE, THE ONLY QUESTION FOR CONSIDERATION IS WHETHE R THE PAYMENT WAS ACTUALLY MADE LATER THAN WHAT WAS SHOWN IN THE BOOK S OF ACCOUNT, AND AS THIS CANNOT BE ESTABLISHED, THE CASE WOULD BE ONE B ASED ON NO EVIDENCE. THE ARGUMENT OF THE LD. COUNSEL IS THAT BOOKS OF AC COUNT CAN BE REJECTED ONLY ON COGENT GROUNDS WHEN THERE IS EVIDENCE ON RE CORD TO DO SO AND NOT OTHERWISE. THUS IT IS ARGUED THAT THE LOWER AUTHORI TIES ERRED IN REJECTING THE ACCOUNTS AND ESTIMATING PROFITS. THERE WAS ALSO NO BASIS FOR ESTIMATING THE PROFIT AND THEREFORE THE COMPUTATION MADE BY EITHER OF THEM OF THE PROFIT HAS TO BE REJECTED. 4 IN REPLY, THE LD. DR SUBMITTED THAT GOODS OF THE VALUE OF ABOUT ` 35 LACS WERE SOLD AT ` 9 LACS. THE OPENING STOCK AND T HE CLOSING STOCK HAVE NOT BEEN VALUED ON THE BASIS OF ANY ACCEPTED ACCOUN TING STANDARD. THE INVOICES RAISED IN REGARD TO SALES DO NOT FURNISH T HE DETAILS OF THE GOODS AND IT HAS BEEN SOLD BY WEIGHT. THE OBVIOUS STATE OF AFFAIRS OF THE ACCOUNTS IS UNACCEPTABLE AND, THEREFORE, THE BOOKS OF ACCOUNT HAD BEEN RIGHTLY REJECTED BY THE LOWER AUTHORITIES. IT IS FU RTHER SUBMITTED THAT THE AO ESTIMATED PROFIT @ 10% OF SALES, WHICH IS QUITE RE ASONABLE. THEREFORE, THE LD. CIT(A) ERRED IN REDUCING THE PROFIT FROM SALES FROM ABOUT ` 3.50 LACS TO ` 2.00 LACS. ITA NOS. 402,531/DEL/11 6 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS MADE BEFORE US. WE FIND THAT THE OPENING STOCK HAS BEEN CARRIED FORWARD FROM THE IMMEDIATELY PRECEDING YEAR AT SAME VALUE. FURTH ER, THE CLOSING STOCK HAS BEEN VALUED AT COST. THE BOOK RESULT OF THIS YE AR SHOW THAT REALISABLE VALUE WILL BE LOWER THAN THE VALUE MENTIONED IN THE BOOKS. THUS THE VALUATION HAS NO NEGATIVE IMPACT ON THE OVERALL RES ULT OF THIS YEAR. THE ASSESSEE HAD ALSO FILED SALE BILLS AND ACCOUNT OF T HE PARTIES TO WHOM SALES WERE MADE BY WAY OF CHEQUE. CASH SALE FORM ONLY ABO UT 17% OF THE TOTAL SALES. THE LD. CIT(A) HAS RECORDED A FINDING THAT T HERE IS NO ERROR ETC. IN QUANTITATIVE DETAILS. THE BOOKS OF ACCOUNT CAN BE R EJECTED ON THREE GROUNDS I) WHERE THE AO IS NOT SATISFIED ABOUT TH E CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS II) WHERE THE METHOD O F ACCOUNTING, CASH OR MERCANTILE, HAS NOT BEEN REGULARLY FOLLOWED OR III) THE ACCOUNTING STANDARD AS NOTIFIED BY THE BOARD HAVE NOT BEEN REGULARLY FO LLOWED. THERE IS NO ALLEGATION IN THE IMPUGNED ORDER THAT THE ACCOUNTS ARE NOT CORRECT OR COMPLETE. IN ANY CASE THERE IS NO EVIDENCE THAT SAL ES HAVE NOT BEEN RECORDED. THERE IS ALSO NO ALLEGATION THAT A PARTIC ULAR METHOD OF ACCOUNTING HAS NOT BEEN REGULARLY FOLLOWED. THE ONL Y ALLEGATION IS THAT ACCOUNTING STANDARD HAS NOT BEEN FOLLOWED IN VALUAT ION OF INVENTORIES AND SALES ARE NOT AMENABLE TO VERIFICATION. WE HAVE A LSO SEEN THAT THE VALUATION OF INVENTORY DOES NOT ADVERSELY AFFECT TH E REVENUE. IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LOWER AU THORITIES WERE NOT RIGHT IN REJECTING THE BOOK PROFIT DECLARED BY THE ASSESS EE. GROUND NO. 1 IS ITA NOS. 402,531/DEL/11 7 ALLOWED ONLY TO THIS EXTENT BECAUSE COMPUTATION OF BUSINESS PROFIT OR LOSS IS ALSO SUBJECT TO GROUND NO. 2 TAKEN BY THE ASSESS EE. THUS, GROUND NO. 1 IS ALLOWED AS DISCUSSED ABOVE I N THE APPEAL OF THE ASSESSEE AND GROUND NO. 1 IN THE APPEAL OF THE REVENUE IS DISMISSED. 6. GROUND NO. 2 IS TO THE EFFECT THAT THE LD. CIT(A ) ERRED IN ENHANCING THE INCOME BY ` 3 ,18,770/-, REPRESENTING ADVANCES WRITTEN OFF DURING THE YEAR. 6.1 IN THE COURSE OF APPELLATE PROCEEDINGS, THE LD . CIT(A) FOUND THAT THE ASSESSEE HAS WRITTEN OFF A SUM OF ` 5,18,984/- BY D EBITING IT TO PROFIT AND LOSS ACCOUNT. AFTER HEARING THE ASSESSEE IN THE MAT TER, IT HAS BEEN HELD THAT THE CLAIM OF ` 3,18,770/- CANNOT BE ALLOWED AS BAD DEBTS. THESE AMOUNTS REPRESENT LOAN OF ` 3.00 LACS TO M/S. HERBA L GIFTS, AND SECURITY DEPOSIT WITH KINLEY WATER OF ` 2,470.- AND SECURIT Y DEPOSIT FOR ELECTRICITY METER OF ` 16,300/-. IT IS HELD THAT LOAN TO M/S. H ERBAL GIFTS IS NOT A DEBT WHICH CAN BE CONSIDERED AS BAD DEBT U/S 36(1) (VII) , AS IT IS IN THE NATURE OF LOAN AND HAS NOT BEEN CONSIDERED A PROFIT IN ANY EARLIER YEAR. IN ANOTHER WORDS, THE LOSS IS A CAPITAL LOSS. THE OTHER TWO AM OUNTS HAVE ALSO BEEN HELD TO BE CAPITAL LOSSES. 6.2 BEFORE US, LD. COUNSEL SUBMITTED THAT THE LOSSE S ARE INCIDENTAL TO CARRYING ON BUSINESS AND NOT CAPITAL LOSSES. ADVANC E WAS GIVEN TO M/S HERBAL GIFTS FOR SALES PROMOTION, WHICH COULD NOT B E RECOVERED. SIMILARLY, SECURITY DEPOSITS PLACED WITH KINLEY WATER AND FOR ELECTRICITY DEPARTMENT ITA NOS. 402,531/DEL/11 8 FOR THE METER COULD NOT BE RECOVERED. THE LD. COUNS EL ALTERED THE STAND AND CLAIMED THAT THESE EXPENSES ARE ALLOWABLE EITHE R U/S 28 OR 37(1). 6.3 IN REPLY, THE LD. SR. DR RELIED ON THE FINDINGS OF THE LD. CIT(A) TO THE EFFECT THAT THE AMOUNTS ARE NOT BAD DEBT ALLOWABLE U/S 36(1) (VII) AND THE LOSS IS A CAPITAL LOSS. 6.4 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSIONS MADE BEFORE US. WE FIND THAT THE ASSESSEE HAD SUBMITTED ITS EXPLANATION TO THE LD. CIT(A) IN LETTER DATED 13.10.2010, IN WHICH IT WAS SUBMITTED THAT THE AMOUNTS WERE GIVEN BY THE ASSESSEE IN THE NORMAL CO URSE OF BUSINESS AND THEY REMAINED OUTSTANDING FOR MORE THAN THREE YEARS . THE AMOUNTS COULD NOT BE RECOVERED INSPITE OF EFFORTS MADE BY THE ASS ESSEE. THE BUSINESS WAS DRASTICALLY CURTAILED AND THEREFORE THE AMOUNTS WERE WRITTEN OFF AS NON-RECOVERABLE. THE AMOUNTS ARE ALLOWABLE U/S 37(1 ) OR 28 AS BUSINESS LOSS. 7. WE MAY NOW PROCEED TO CONSIDER DEDUCTION OF THES E AMOUNTS INDIVIDUALLY. 7.1 THE FIRST AMOUNT OF ` 3 LACS IS IN RESPECT OF M /S. HERBAL GIFTS. THE ONLY DETAIL AVAILABLE IN THE PAPER BOOK SHOWS THE A MOUNT TO BE OUTSTANDING, THUS THE PURPOSE OF ADVANCES IS NOT AS CERTAINABLE. THE LD. CIT(A) HAS RECORDED A FINDING THAT IT IS A LOAN GIV EN TO THIS PARTY AND IN RESPECT OF THE CLAIM IT WAS SUBMITTED THAT THE AMOU NT WAS GIVEN LONG BACK FOR PROMOTING THE BUSINESS. NO BENEFIT ACCRUE D TO THE ASSESSEE NOR THE AMOUNT COULD BE RECOVERED. THEREFORE, THE AMOUN T HAS BEEN WRITTEN ITA NOS. 402,531/DEL/11 9 OFF IN THIS YEAR. THE FACT ON RECORD AS MENTIONED ABOVE IN THE SUBMISSIONS BEFORE THE LD. CIT(A) DO NOT LEAD TO THE CONCLUSION THAT THE AMOUNT WAS ADVANCED LONG BACK FOR PROMOTING THE BUSINESS. IN F ACT PAST ACCOUNTS HAVE NOT BEEN FILED AND IN PARTICULAR THE ACCOUNT F OR THE YEAR IN WHICH THE MONEY WAS ADVANCED HAS ALSO NOT BEEN FURNISHED. THE REFORE, THE CONTENTION THAT THE AMOUNT WAS GIVEN FOR PROMOTING BUSINESS IS NOT SUBSTANTIATED. IN THIS SITUATION, WE UPHOLD THE FIN DING OF THE LD. CIT(A) THAT THIS AMOUNT REPRESENTS LOAN AS SHOWN IN THE ACCOUNT S. CONSEQUENTLY WE ALSO AGREED WITH HER THAT THE AMOUNT CANNOT BE ALLO WED AS THE TRANSACTION IS IN THE CAPITAL FIELD. 7.2 THE OTHER TWO AMOUNTS ARE STATED TO BE SECURITY DEPOSITS, WHICH WERE ENTERED IN THE BOOKS AS CAPITAL EXPENDITURE. T HEREFORE, NON RECOVERY OF THESE AMOUNTS IS ALSO NOT DEDUCTIBLE AS THE EXPE NDITURE IS IN THE CAPITAL FIELD. 7.3 THE LD. COUNSEL MENTIONED SOME CASES IN HIS NOT E IN SUPPORT OF THE CLAIM. WE ARE OF THE VIEW THAT THE FACTS OF SUCH C ASES ARE DISTINGUISHABLE. IN THE CASE OF MINDA HUF LTD. VS. JCIT, (2006) 285 ITR (AT) 88 (DELHI), THE ADVANCES WERE MADE FOR PURCHASE OF RAW MATERIAL. IN THE CASE OF CIT VS. CRESCENT FILMS PVT. LTD., (2001) 248 ITR 671 (MADRA S), THE AMOUNT WAS PAID TO THE PRODUCER OF THE FILM TO COMPLETE IT FOR WHICH DISTRIBUTION RIGHTS WERE HELD BY THE ASSESSEE. THE COURT HELD THAT THE EXPENDITURE WAS IN THE REVENUE FIELD. IN THE CASE OF JHALANI & CO. VS. A CIT, (2001) 77ITD 44(DEL), THE MONEY WAS PAID TO AN EMPLOYEE AND THUS THE EXPE NDITURE WAS IN THE REVENUE FIELD. IN THE CASE OF COMMON WEALTH TRUST, 242 ITR 593 (KER), THE ITA NOS. 402,531/DEL/11 10 DEFALCATION OF THE AMOUNT BY THE EMPLOYEES WAS IN T HE COURSE OF BUSINESS AS IT WAS MEANT FOR PAYMENT OF WAGES. FINALLY IN TH E CASE OF CIT VS. ABDUL RAZAK 136 ITR 825 (GUJ.), THE ASSESSEE, CARRYING ON THE BUSINESS OF COMMISSION AGENTS, HAD ADVANCED MONEY TO THE PRINCI PAL. IT WAS HELD THAT SUCH ADVANCES WERE IN THE NORMAL COURSE OF BUSINESS . THE FACTS IN THE CASE OF THE ASSESSEE AS MENTIONED ARE DISTINGUISHAB LE AND THUS THESE CASES DO NOT ADVANCE THE ARGUMENTS OF THE LD. COUNS EL ANY FURTHER. 7.4 THE ASSESSEE HAD ALSO CITED THE DECISION IN THE CASE OF INDWELL CONSTRUCTIONS VS. CIT, (1998) 232 ITR 776 (AP) IN R ESPECT OF GROUND NO. 2.2. OUR FINDING IN RESPECT OF GROUND NO. 1 IS THAT THE BOOKS OF ACCOUNT COULD NOT HAVE BEEN REJECTED, WHICH IS CONSISTENT W ITH THIS DECISION. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. SD/- SD/- [I.C. SUDHIR] [K.G. BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT