ITO, Bareilly V. M/s. Durga Trading Corporation, Bareilly

ITA 560/LKW/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9158 (ITAT-LUCKNOW)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-12-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 26-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANADI VERMA
• Assessee Lawyers: R B AGARWAL
• Keywords: Unexplained cash credit
• Section: 142(1); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, LUCKNOW BENCH 'A', LUCKNOW BEFORE SHRI H. L. KARWA, HON'BLE VICE PRESIDENT AND SHRI N. K. SAINI, ACCO UNTANT MEMBER I.T.A. NO.560/LUC/10 ASSESSMENT YEAR: 2006-2007 INCOME TAX OFFICER-1(1), VS. M/S DURGA TRAD ING COPORATION, BAREILLY. 39, VIKRAMADITYA PURI, BAREILLY . PAN:AAFFD4775Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANADI VERMA, SR. D. R. RESPONDENT BY: SHRI R. B. AGARWAL, C. A. O R D E R O R D E R O R D E R O R D E R PER N. K. SAINI: PER N. K. SAINI: PER N. K. SAINI: PER N. K. SAINI: THIS APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGA INST THE ORDER DATED 30/04/2010 OF CIT(A), BAREILLY RELATING TO ASSE SSMENT YEAR 2006- 2007. 2. GROUND NO. 1 OF THE APPEAL RELATES TO THE DELETI ON OF ADDITION OF `1,70,003/- MADE BY THE ASSESSING OFFICER U/S 145(2) ON ACCOUNT OF TRADING ACCOUNT. 3. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 06/11/2006 DECLARING AN INC OME OF `9,440/- 2 WHICH WAS PROCESSED U/S 143(1) OF THE ACT ON 28/11/2007 . LATER ON THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER FRAM ED THE ASSESSMENT U/S 144 OF THE ACT. DURING THE ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN TO TAL SALES AT `1,02,08,286/- ON WHICH GROSS PROFIT WAS SHOWN AT ` 4,89,997/- GIVING GROSS PROFIT RATE OF 4.8%. THE ASSESSING OFFICER POINTE D OUT THAT THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNTS AND PURCHAS E AND SALES BILLS/VOUCHERS FOR VERIFICATION AND DID NOT FURNISH Q UANTITATIVE DETAILS OF OPENING AND CLOSING STOCK. HE INVOKED THE PROVISIONS O F SECTION 145(2) OF THE ACT AND ESTIMATED THE SALES AT `1,10,00,000/-. ON THE SAID SALE, GROSS PROFIT RATE OF 6% WAS APPLIED. THUS, GROSS PROFIT WAS WORKED OUT AT `6,60,000/- AS AGAINST `4,89,997/- RESULTING IN TH E ADDITION OF `1,70,003/-. 4. THE ASSESSEE CARRIED THE MATTER TO LEARNED CIT(A) AN D SUBMITTED THAT THE SALE OF THE ASSESSEE WAS FULLY SUPPORTED BY BILL S AND PURCHASES WERE ALSO SUPPORTED BY THE PURCHASE BILLS AND THE BOOKS OF ACCOUNTS HAD BEEN AUDITED U/S 44AB OF THE ACT. IT WA S FURTHER STATED THAT THE DETAILS OF SALES AND THE PHOTOCOPY OF ANNUAL TRADE TAX RETURN OF PURCHASE AND SALES FILED WITH THE TRADE TAX DEPARTM ENT WERE ALSO SUBMITTED BEFORE THE ASSESSING OFFICER. THE ASSESSEE ALSO FU RNISHED 3 THE COPY OF THE ASSESSMENT ORDER PASSED U/S 7(2) OF THE TRADE TAX ACT BY THE ASSTT. COMMISSIONER OF TRADE TAX (KHAND-5, BAREI LLY) FOR THE FINANCIAL YEAR 2005-2006 ACCEPTING THE SALES OF THE A SSESSEE FIRM. IT WAS ACCORDINGLY SUBMITTED THAT THE ESTIMATION OF SALE A T `1,10,00,000/- BY THE ASSESSING OFFICER AGAINST THE ACTUAL SALES OF `1,0 2,08,286/- WAS ARBITRARY. IT WAS ALSO STATED THAT THE ASSESSING OFFICER WORKED OUT THE GROSS PROFIT BY APPLYING 6% GROSS PROFIT RATE AND MADE THE ADDITION, THEREFORE, THE ADDITION WAS LIABLE TO BE DELETED. 4.1 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE, OBSERVED THAT THE ASSESSING OFFICER MADE THE ADDIT ION OF GROSS PROFIT FOR LACK OF DETAILS FILED BY THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS. HE FURTHER OBSERVED THAT THE ASSESSING OFFI CER, IN HIS REMAND REPORT, SUBMITTED THAT THE BOOKS OF ACCOUNTS WE RE AUDITED U/S 44AB OF THE ACT AND THE BOOK RESULTS WERE ACCEPTED BY THE TRADE TAX DEPARTMENT IN THEIR ORDER U/S 7(2) OF THE TRADE AX A CT. THUS, THE CIT (A) WAS OF THE VIEW THAT THE ADDITIONS WERE MADE NOT BECAUSE OF ANY EVIDENCE IN THE POSSESSION OF THE ASSESSING OFFICER BUT ON ESTIMATE BASIS ONLY. HE, THEREFORE, DELETED THE ADDITION. NO W THE DEPARTMENT IS IN APPEAL. 4 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFUL LY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN T HE PRESENT CASE, IT APPEARS THAT THE ASSESSING OFFICER MADE THE ADDITION SINC E THE ASSESSEE WAS NON COOPERATIVE AND DID NOT ATTEND THE ASSESSME NT PROCEEDINGS. HOWEVER, IN THE REMAND REPORT ASKED BY THE LEARNED CIT (A), THE ASSESSING OFFICER ACCEPTED THAT THE BOOK RESULT S WERE ACCEPTED BY THE TRADE TAX DEPARTMENT AND THE BOOKS W ERE AUDITED U/S 44AB, THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ESTIMATING THE SALE OF THE ASSESSEE AND APPLY ING 6% GROSS PROFIT RATE INSTEAD OF 4.8% DECLARED BY THE ASSESSEE BE CAUSE NO BASIS HAS BEEN GIVEN FOR APPLYING GROSS PROFIT RATE OF 6%. WE, THEREFORE, ARE OF THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION WITHOUT HAVING ANY EVIDENCE IN HIS POSSESSION. IN THAT VIEW OF THE MATTER WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF CIT (A) ON THIS ISSUE. 6. THE NEXT ISSUE, VIDE GROUND NO. 2 OF THE APPEAL, R ELATES TO THE DELETION OF ADDITION OF `68,280/- MADE BY THE ASSESSING OFFICER OUT OF MISC. EXPENSES, VAN RUNNING EXPENSES, OFFICE MAINTENANCE EXPENSES ETC. 5 6.1 THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER POINTED OUT IN THE ASSESSMENT ORDER THAT IN THE PROFIT & LOSS ACCOUNT THE ASSESSEE HAS CLAIMED FOLLOWING EXPENSES, HOW EVER IN THE ABSENCE OF DETAILS, VOUCHERS AND BOOKS OF ACCOUNTS BEIN G NOT PRODUCED, ALL THE EXPENSES COULD NOT BE TREATED AS FUL LY EXPLAINED. HE, THEREFORE, KEEPING IN VIEW THE VOLUME OF BUSINESS, MAD E THE FOLLOWING DISALLOWANCES: HEADS OF EXPENSES EXPENSES CLAIMED EXP. DISALLOWED -------------------------- ----------------------- -- ---------------------- SALARIES 1,88,400 38,400 TELEPHONE 3,960 792 MISC. EXPENSES 5,443 1,088 VAN RUNNING EXPENSES 29,588 10,000 OFFICE MAINTENANCE EXP. 13,879 5,000 ACCOUNTING CHARGES 18,000 6,000 RENT 18,000 6,000 ELECTRICITY EXPENSES 5,424 1,000 TOTAL 68,280/- 7. THE ASSESSEE CARRIED THE MATTER TO LEARNED CIT(A) AN D SUBMITTED THAT THE IMPUGNED ADDITION ON ACCOUNT OF DISALLOWANC E OF EXPENSES HAD BEEN MADE ARBITRARILY ON ESTIMATED BASIS. IT WAS F URTHER STATED THAT IN VIEW OF THE VOLUME OF THE BUSINESS, THOSE EXPEN SES WERE REASONABLE AND SUPPORTED WITH VOUCHERS, THEREFORE, AD DITION SO MADE BY THE ASSESSING OFFICER WAS LIABLE TO BE DELETED. 6 7.1 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE, OBSERVED THAT THE ADDITION WAS MADE WITHOUT HAV ING ANY MATERIAL ON RECORD TO ESTABLISH THAT THERE WAS CLAIM O F EXPENDITURE WHICH WAS NOT INCURRED FOR BUSINESS PURPOSES. ACCORDING LY, THE ADDITION WAS DELETED. NOW THE DEPARTMENT IS IN APPEA L. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON THE RECORD. IT APPEARS THAT T HE ASSESSING OFFICER MADE THE AD HOC ADDITION WITHOUT ANY BASIS. AMOUNT O F EXPENSES APPEARS TO BE REASONABLE CONSIDERING THE TURNOVER OF THE ASSESSEE AT `1,02,08,286/-. WE, THEREFORE, ARE OF THE VIEW THA T THE LEARNED CIT (A) RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFI CER. 9. VIDE GROUND NO. 3 THE GRIEVANCE OF THE DEPARTMEN T RELATES TO THE DELETION OF ADDITION OF `12,11,308/- MADE BY THE ASSE SSING OFFICER ON ACCOUNT OF CAPITAL INTRODUCED BY THE PARTNERS. 10. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER NOTICED THAT OPENING BALANCE OF CAPITAL OF PARTNERS WAS AS UNDER: 1. SHRI ARJEN KUMAR 6,05,654/- 2. SHRI ANOOP KUMAR 6,05,654/- --------------- 12,11,308/- 7 10.1 THE ASSESSING OFFICER MADE THE ADDITION BY STATING THAT THE ASSESSEE HAD NOT FURNISHED ANY EVIDENCE IN REGARD TO CA PITAL CONTRIBUTED NEITHER ANYTHING WAS MENTIONED IN THE PA RTNERSHIP DEED THAT THE FIRM WAS IN EXISTENCE IN THE PRECEDING YEAR AND THE ASSETS AND LIABILITIES OF THE OLD FIRM HAD BEEN TAKEN OVER BY T HE NEWLY CONSTITUTED FIRM. HE, THEREFORE, TREATED THE CAPITAL SHOWN BY T HE PARTNERS AS OPENING BALANCE AS UNEXPLAINED AND ADDED TO THE INCO ME OF THE ASSESSEE U/S 68 OF THE ACT. THE ASSESSEE CARRIED THE MATTE R TO THE LEARNED CIT (A). 10.2 BEFORE THE LEARNED CIT (A), THE ASSESSEE CONTENDE D THAT IT WAS EVIDENT FROM THE PARTNERSHIP DEED ITSELF THAT THE FIR M WAS VERY MUCH IN EXISTENCE IN THE PRECEDING YEARS AND THE PARTNERSHIP D EED WAS AVAILABLE BEFORE THE ASSESSING OFFICER. IT WAS FURTHER STATED THAT THERE WAS NO ADDITION IN THE PARTNER'S CAPITAL ACCOUNT DURI NG THE YEAR EXCEPT THE INTEREST ON CAPITAL, PARTNER'S REMUNERATION AND SH ARE OF NET PROFIT FROM THE ASSESSEE FIRM, THEREFORE, THE OPENING BALANCES OF THE PARTNER'S CAPITAL WERE FULLY ESTABLISHED AND SUPPORTED WITH EVIDENCE. AS SUCH THE ADDITION MADE BY THE ASSESSING OFFICER ON TH IS ACCOUNT BEING THE OPENING BALANCE IN THE PARTNERS CAPITAL A CCOUNT WAS NOT BASED ON FACTS. 8 10.3 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, OBSERVED THAT THE DETAILS FILED BY THE ASSESSEE, PR OVED THAT EACH OF THE PARTNERS OF THE ASSESSEE WAS HAVING OPENING B ALANCE IN HIS CAPITAL ACCOUNT OF `6,05,654/- AS ON 01/04/2005 AND THE ASSESSING OFFICER, IN HIS REMAND REPORT, ALSO GAVE HIS FINDING THAT THERE WAS NO ADDITION IN THE CAPITAL OF THE PARTNERS DURING THE Y EAR EXCEPT ADDITION ON ACCOUNT OF INTEREST ON THEIR CAPITAL, REMUNERATI ON AND SHARE OF PROFIT FROM THE FIRM. ON THE BASIS OF THE SUCH FINDIN G OF THE ASSESSING OFFICER THE LEARNED CIT (A) DELETED THE ADDITION. 11. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIE S, WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL SINCE THE ASSESSING OFFICER HAD HIMSELF ADMITTED IN THE REMAND REPORT THAT NO FRESH CAPITAL WAS INTRODUCED BY THE P ARTNERS IN THEIR CAPITAL ACCOUNT DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE ORDER OF THE LEARNED CIT (A) ON THIS ISSUE IS UPHELD. 12. VIDE GROUND NO. 4 THE GRIEVANCE OF THE DEPARTME NT RELATES TO THE DELETION OF ADDITION MADE BY THE ASSESSING OFFICER IN R ESPECT OF INTEREST ON CAPITAL AND REMUNERATION PAID TO THE PAR TNER AMOUNTING TO `1,87,300/-. 9 13. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER, IN THE ASSESSMENT ORDER, MENTIONED THAT THE A SSESSEE HAD SHOWN THE PAYMENT OF INTEREST AND REMUNERATION TO THE WORKING PARTNERS AS UNDER: 1. INTEREST ON CAPITAL PAID TO PARTNERS `,1,39,300 /- 2.REMUNERATION PAID TO WORKING PARTNERS ` 48,00 0/- ---------------- `1,87,300/- 13.1 THE ASSESSING OFFICER OBSERVED THAT SINCE THE ASSESSEE H AD NOT COMPLIED WITH THE PROVISIONS OF THE NOTICE U/S 142(1) OF THE I.T. ACT, 1961, THE ASSESSMENT WAS BEING COMPLETED EX-PARTE U/S 144 OF THE ACT, THEREFORE, THE STATUS OF THE ASSESSEE FIRM SHALL BE TREATED AS AOP AND CONSEQUENTLY THE INTEREST AND REMUNERATION PAID T O THE PARTNERS WAS DISALLOWED. 14. THE ASSESSEE CARRIED THE MATTER TO LEARNED CIT(A) A ND SUBMITTED THAT SINCE THE ASSESSEE HAD ALREADY MADE THE COMPLIANCE OF SECTION 184 OF THE INCOME TAX ACT, 1961 AND FILED THE RETUR N OF INCOME UNDER THE STATUS OF FIRM AND CLAIMED THE INTEREST ON CAPITAL AND PARTNER'S REMUNERATION U/S 40(B)(IV) & (V) WHICH WAS ALLOWABLE AS PER LAW, THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER W AS NOT BASED 10 ON FACTS AND WAS AGAINST LAW. THE LEARNED CIT (A) DELETED THE ADDITION BY OBSERVING THAT THE ISSUE OF ADDITION TO TH E CAPITAL OF THE PARTNERS HAS ALREADY BEEN ADJUDICATED, THEREFORE, F OR THE SAME REASONS, THE DISALLOWANCE OF INTEREST COULD NOT BE JUSTI FIED AND SIMILARLY, THE PARTNERS WERE LOOKING AFTER THE DAY TO DAY OPERATIONS OF THE FIRM AND THAT THE ASSESSING OFFICER, IN THE REMAND REPORT, ALSO OBSERVED THAT THE ASSESSEE WAS A PARTNERSHIP FIRM. HE, TH EREFORE, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 15. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIE S, WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPE AL SINCE THE LEARNED CIT (A) CATEGORICALLY STATED THAT THE ISSUE RE LATING TO THE ADDITION ON ACCOUNT OF PARTNERS CAPITAL HAS BEEN DEC IDED IN ASSESSEES FAVOUR WHILE DECIDING GROUND NO. 3 OF THE DEPARTMEN TAL APPEAL, THEREFORE, NO ADDITION WAS CALLED FOR ON ACCOUNT OF INTEREST PAID TO THE PARTNERS. IN THE PRESENT CASE BOTH THE PARTNERS WERE WORKING PARTNERS AND THE ASSESSING OFFICER ADMITTED IN THE REMAND REPORT FURNISHED TO THE LEARNED CIT (A) THAT THE ASSESSEE WAS A PARTNERSHIP F IRM, THEREFORE, THE ADDITION ON ACCOUNT OF REMUNERATION TO THE WORK ING PARTNER WAS ALSO NOT CALLED FOR. ACCORDINGLY, THIS GROUND OF DEP ARTMENTAL APPEAL ALSO FAILS. 11 16. VIDE GROUND NO. 5, THE GRIEVANCE OF THE DEPARTM ENT RELATES TO THE DELETION OF ADDITION OF `9,53,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNSECURED LOANS. 17. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER POINTED OUT THAT THERE WERE UNSECURED LOANS A S UNDER: 1. R. P. SHARMA 5,00,000/- 2. RAVI SHARMA 1,50,000 3. JUHI SHARMA 1,50,000/- 4. NITIN SHARMA 1,50,000/- 5. MRIDUL SHARMA 30,000/- -------------- `9,80,000/- 17.1 THE ASSESSING OFFICER MADE THE ADDITION BY OBSERVIN G THAT THE ASSESSEE FAILED TO FURNISH THE DETAILS AND CONFIRMATIONS O F THE DEPOSITORS AS SUCH THE IMPUGNED AMOUNT WAS TREATED AS UNE XPLAINED AND ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE AC T. 18. BEFORE THE LEARNED CIT (A) THE ASSESSEE SUBMITTED TH AT THE FOLLOWING UNSECURED LOANS WERE OUTSTANDING: OPENING BALANCE ADDITION CLOSING BALANCE AS B/F ON 01/04/2005 DURING THE ON 31/03/2006 YEAR ------------------------- ------------------- - -------------------------- SHRI R. P. SHARMA 5,00,000 NIL 5,00,000 SMT. RANI SHARMA 1,50,000 NIL 1,50,000 12 SMT. JUNI SHARMA 1,50,000 NIL 1,50,000 SHRI MRIDUL SAXENA 30,000 NIL 30,000 SHRI NITIN SHARMA 78,000 72,000 1,50,000 ----------------------------------------------- ------------------------------- TOTAL 9,08,000 72,000 9,80,000 18.1 THE COPIES OF ACCOUNTS OF UNSECURED LOANS FROM WHOM THE SE LOANS WERE TAKEN, DULY CONFIRMED BY THEM WERE FURNISH ED TO THE LEARNED CIT (A). THE ASSESSEE ALSO FURNISHED THE NAMES, COMPLETE ADDRESS AND PROOF OF THE IDENTITY OF THE DEPOSITOR TO THE LEARNED CIT (A) AND ALSO FURNISHED PHOTOCOPY OF THE SAVING BANK PASS BO OK AND THE ACKNOWLEDGMENT OF THE INCOME TAX RETURN OF SHRI NIT IN SHARMA AS A DOCUMENTARY EVIDENCE IN SUPPORT OF ADDITION OF `72,0 00.00. IT WAS FURTHER STATED THAT SINCE THE UNSECURED LOANS OF `9,08, 000.00 WERE THE OPENING BALANCES, FULLY EVIDENCED AND ADDITION OF `7 2,000.00 DURING THE YEAR WAS FULLY CONFIRMED AND THE IDENTITY OF TH E PERSONS WERE ALSO ESTABLISHED, THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ACCOUNT OF `9,80,000.00 WAS NOT CALLED FOR. T HE LEARNED CIT (A) ASKED THE REMAND REPORT FROM THE ASSESSING OFFICER WHO S UBMITTED IN THE SAID REPORT THAT THE COPIES OF ACCOUNTS OF UNSECURE D LOANS OF THE PARTIES OBTAINED AND DULY CONFIRMED BY THEM, HAD BEE N FURNISHED. THEIR NAMES, COMPLETE ADDRESSES AND PROOF OF THEIR IDEN TITY HAD ALSO BEEN FURNISHED AND THAT THE STATEMENT ON OATH OF SHRI NITIN SHARMA WAS ALSO RECORDED. THE LEARNED CIT (A), ON THE BASIS O F FINDING OF THE 13 ASSESSING OFFICER IN THE REMAND REPORT, OBSERVED THAT TH ERE WAS NO ROOM TO DOUBT THAT THE UNSECURED LOANS WERE EXPLAINED BY THE ASSESSEE. ACCORDINGLY, ADDITION WAS DELETED. NOW THE D EPARTMENT IS IN APPEAL. 19. THE LEARNED D. R. ALTHOUGH SUPPORTED THE ORDER O F THE ASSESSING OFFICER BUT COULD NOT CONTROVERT THE FINDING GIVEN BY THE LEARNED CIT (A) IN THE IMPUGNED ORDER WHILE THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT (A) AND STRONGLY SUPPORTED THE ORDER PASSED BY THE LEARNED CIT (A). 20. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIE S, IT APPEARS THAT THE ASSESSING OFFICER, IN HIS REMAND REPORT, ACCEPT ED THE CONFIRMATION FILED BY THE DEPOSITORS WHO WERE HAVING THE OPENING BALANCE AMOUNTING TO `9,08,000/-. THE ASSESSING OFFICE R ALSO RECORDED THE STATEMENT OF SHRI NITIN SHARMA FROM WHOM A SUM OF `72,000/- WAS RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERA TION. THE SAID DEPOSITOR ALSO FILED PHOTOCOPY OF HIS SAVINGS BANK P ASS BOOKS AND THE ACKNOWLEDGEMENT OF THE INCOME TAX RETURN, WHICH WERE NOT DOUBTED BY THE ASSESSING OFFICER IN HIS REMAND REPORT. THEREFORE, THE LEARNED CIT (A) WAS JUSTIFIED IN DELETING THE ADDITIO N. 14 21. THE LAST GROUND AGITATED BY THE DEPARTMENT VIDE GROUND NO. 6 RELATES TO THE DELETION OF ADDITION OF `2,74,916/- M ADE BY THE ASSESSING OFFICER IN RESPECT OF UNEXPLAINED CREDITOR. 22. THE FACTS RELATED TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DATED 02/12/2008 POINT ED OUT THAT THE ASSESSEE HAD SHOWN CREDITORS OF `2,74,916/- AS UNDER: EVEREADY INDUSTRIES OF INDIA LTD. 2,66,425/- SYNERGY INDIA MARKET (P) LTD. 8,491/- --------------- 2,74,916/- 22.1 ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE HAD NO T FURNISHED THE DETAILS OF CREDITORS NOR FILED CONFIRMA TION COPIES AND THAT THE TAX AUDITOR HAD ALSO CERTIFIED THAT CREDIT BALAN CES WERE SUBJECT TO CONFIRMATION / RECONDILIATION. HE, THEREFORE, TREA TED THE CREDITORS SHOWN AT `2,74,916/- AS UNEXPLAINED INCOME OF THE ASSE SSEE AND ADDED THE SAME U/S 68 OF THE ACT. 23. THE ASSESSEE CARRIED THE MATTER TO LEARNED CIT(A) A ND SUBMITTED THAT THE CREDIT BALANCE OF SUNDRY CREDITOR NAMELY M /S EVEREADY INDUSTRIES INDIA LIMITED `2,66,425.00 WAS SUPPORTED BY THEIR STATEMENT OF ACCOUNT, PHOTOCOPY OF THE SAID ACCOUNT WAS FURNISH ED AND THEREFORE, THE ADDITIONS OF `2,66,425.00 U/S 68, MADE BY THE ASSESSING 15 OFFICER WAS LIABLE TO BE DELETED. AS REGARDS TO THE CREDIT OF `8,491/- IN THE NAME OF SYNERGY (INDIA) MARKETING PRIVATE LIMI TED (SALARY PAYABLE) IT WAS STATED THAT THE SAME WAS THE LIABILITY AGAINST CREDIT NOTES ISSUED BY THE SAID PARTY AND THAT THE STATEMENT OF ACCOUNT ALONG WITH THE RECONCILIATION STATEMENT FROM THE SAID PARTY WAS FURNISHED. THEREFORE, THIS ADDITION WAS ALSO LIABLE TO BE DELETED . 23.1 THE LEARNED CIT (A) ASKED THE REMAND REPORT FRO M THE ASSESSING OFFICER WHO MENTIONED IN THE REMAND REPORT THAT THE COPIES OF ACCOUNTS OF SUNDRY CREDITORS, I.E. EVEREADY INDUSTRIES ( INDIA) PVT. LTD AND SYNERGY INDIA MARKETING LTD. SHOWING OUTSTANDING BALANCE HAD BEEN FURNISHED AND SAME WERE FOUND IN ORDER. THE LEAR NED CIT (A), ON THE BASIS OF THE FINDING OF THE ASSESSING OFFICER IN THE REMAND REPORT, DELETED THE ADDITION. 24. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIE S, WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPE AL SINCE THE ASSESSING OFFICER HIMSELF IN HIS REMAND REPORT ADMITTED T HAT THE SAID CREDIT BALANCES WERE IN ORDER. THE COPY OF THE REM AND REPORT DATED 27/04/2010 IS AVAILABLE AT PAGE NO. 64 AND 65 OF THE ASSESSEES COMPILATION. IN THE SAID REPORT, THE ASSESSING OFFICER HIMSELF ADMITTED 16 THAT THE COPIES OF THE ACCOUNTS OF THE CREDITORS SHOWIN G THE BALANCE OF `2,66,425/- AND `8,491/- RESPECTIVELY HAD BEEN FURNI SHED AND WERE TALLIED. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF LEARNED CIT (A) ON THIS ISSUE. 25. IN THE RESULT, THE APPEAL IS DISMISSED. (THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11/0 1/2011) SD/. ( H. L. KARWA ) VICE PRESIDENT SD/. (N. K. SAINI) ACCOUNTANT MEMBER DATED:11/01/2001 *SINGH COPY FORWARDED TO THE: - 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR