Shrinet and Shandilya Construction Pvt. Ltd., Ghaziabad V. Addl. CIT, New Delhi

ITA 6198/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2930 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 13-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Assessee Lawyers: S K JAWARANI
• Keywords: Rejection of books of accounts; Business income; Depreciation; Principle of natural justice; Additional evidence
• Section: 133(6)

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.:- 6198/DEL /2014 ASSESSMENT YEAR: 2010-11 SHRINET AND SHANDILYA CONSTRUCTION PVT. LTD. 2 ND FLOOR, GREEN PLAZA SHOPPING COMPLEX, PLOT NO. A, ABHAY KHAND-3, INDIRAPURAM GHAZIABAD 201010 PAN AAECS9455N VS. ADDL. CIT RANGE-8, NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO.:- 6609/DEL /2 014 ASSESSMENT YEAR: 2010-11 DY. COMMISSIONER OF INCOME TAX, CIRCLE-23 (1), NEW DELHI. VS. SHRINET AND SHANDILYA CONSTRUCTION PVT. LTD. UNIT NO. 143, FIRST FLOOR, TRIBHUVAN COMPLEX, MAHARANI BAGH CHOWK, NEW DELHI 110065 PAN AAECS9455N (APPELLANT) (RESPONDENT) O R D E R PER AMIT SHUKLA, J.M. ASSESSEE BY: SHRI S.K. JAWARANI, ADVOCATE DEPARTMENT BY : SHRI KAUSHLENDRA TIWARI, SR. DR DATE OF HEARING 13/03/2018 DATE OF PRONOUNCEMENT 13/03/2018 ITA NO. 6198/DEL/ 14 AND ITA NO.6609/DEL/14SHRINET AND SHANDILYA CONSTRUCTION VS DCIT 2 THE AFORESAID CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE AGAINST THE IMPU GNED ORDER DATED 8.9.2014, PASSED BY LD. CIT (APPEALS) X I NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143( 3) FOR A.Y. 2010-11. IN ASSESSEES APPEAL, FOLLOWING GROUN DS HAVE BEEN RAISED: GROUND NO. 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DISALLOWING RS. 1,34,22,499/- WITH RESPECT TO 19 SU NDRY CREDITORS WHO ARE PETTY CONTRACTORS AND SUPPLIERS O F MATERIAL AND AGGREGATE AND PLACED IN REMOTE DESTINATIONS AND SITES UNDER TOUGH WORKING CONDITIO NS AND NATURE OF BUSINESS AND THE ASSESSEE PURCHASED T HE MATERIAL FROM SUCH PERSON IN UNORGANIZED SECTORS. GROUND NO. 2 THE LD. CIT (A) IGNORED THE FACT THAT THE APPELLANT HAD SATISFACTORILY EXPLAINED THE CREDITORS BY WAY OF AF FIDAVITS AND CONFIRMATION OF BALANCES. WHEREAS IN THE REVENUES APPEAL, THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION MADE BY THE AO ON ACCOUNT OF ITA NO. 6198/DEL/ 14 AND ITA NO.6609/DEL/14SHRINET AND SHANDILYA CONSTRUCTION VS DCIT 3 BOGUS CREDITORS TO RS. 1,34,22,499/- AS AGAINST RS. 1,71,03,987/- MADE BY THE AO. 2. THE LD. CIT (A) HAS ERRED IN LAW IN DELETING THE AD DITION OF RS. 81 LACS MADE BY THE AO ON ACCOUNT OF UNSECUR ED LOAN. 2. THE FACTS IN BRIEF ARE THAT ASSESSEE IS A CIVIL CONTRACTOR AND ENGAGED IN THE EXECUTING OF ROAD PROJECTS LIKE GOVERNMENT ROAD CONSTRUCTION DEPARTMENT NO. 1, RSVY PROJECT DIVISION CPWD RURAL ENGINEERING SERVICES DE ORIA, U.P. ROAD DIVISION CHAIBASA, NHPC LTD. MOTIHARI, BI HAR, PACL LTD. THE ENTIRE CONTRACT RECEIPTS WERE DULY RE CONCILED FROM FORM 26AS ALSO WHICH REFLECTS GROSS RECEIPTS AT RS. 47,68,80,785/-. THE LD. AO FROM THE PERUSAL OF THE BALANCE SHEET NOTED THAT ASSESSEE HAS SHOWN TRADE CREDITOR S AT RS. 3,88,68,131/- AS ON 31.3.2010 AND REQUESTED THE ASS ESSEE TO FURNISH THE CONFIRMATION AND OTHER RELEVANT DET AILS OF MAJOR CREDITORS HAVING OUTSTANDING AMOUNT OF MORE T HAN RS. ONE LAC. IN RESPONSE, ASSESSEE COULD NOT FILE THE C ONFIRMATION IN RESPECT OF 23 PERSONS WITH OUTSTANDING AMOUNT AGGREGATING TO RS. 1,71,03,9897/-. IN ABSENCE OF AN Y CONFIRMATION FROM THE PARTIES, HE ADDED THE SAID AM OUNT TO THE INCOME OF THE ASSESSEE. FURTHER, AO HAS MADE AD DITION ON ACCOUNT OF UNSECURED LOANS OF RS. 81 LACS SHOWN IN THE NAME OF SHRI BRIJESH KUMAR JAISWAL ON THE GROUND TH AT ASSESSEE COULD NOT FURNISH RELEVANT CONFIRMATION, D ETAILS AND ITA NO. 6198/DEL/ 14 AND ITA NO.6609/DEL/14SHRINET AND SHANDILYA CONSTRUCTION VS DCIT 4 DOCUMENTS EXCEPT FOR PHOTOCOPY OF TDS CERTIFICATE A ND FORM 16A IN RESPECT OF INTEREST PAID TO THE SAID PERSON. SINCE, ASSESSEE COULD NOT ESTABLISH THE INGREDIENTS OF SEC TION 68; HE THEREFORE, ADDED THE SAID AMOUNT OF RS. 81 LACS. LA STLY, ON PERUSAL OF VARIOUS HEADS OF EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT, AO HAD OBSERVED THAT ASSESSEE COU LD NOT PRODUCE BOOKS OF ACCOUNTS ALONGWITH RELEVANT BILLS AND VOUCHERS FOR VERIFICATION AND FOR CHECKING THE GENU INENESS OF THE SAID EXPENSES. ACCORDINGLY, HE REJECTED THE BOO KS OF ACCOUNTS AND AUDIT REPORT ALONGWITH THE TRADING RES ULT BY INVOKING THE PROVISION OF SECTION 145(3) AND THEREB Y ESTIMATING THE NET PROFIT RATE OF 8% OF THE GROSS C ONTRACT RECEIPT FROM OPERATIONS. THE NET PROFIT RATE OF 8% WAS DETERMINED AT RS. 3,71,48,550/-. POST APPLICATION O F NET PROFIT RATE, HE HAS NOT GIVEN ANY DEDUCTION OF DEPR ECIATION OR SALARY. ACCORDINGLY, THE NET INCOME FROM THE BUSINE SS WAS TAKEN OF RS. 3,71,48,550/- INSTEAD OF RETURN INCOME OF RS. 2,09,54,808/- AND ALSO FURTHER ADDED THE AMOUNT OF RS. 1,71,03,987/- ON ACCOUNT OF SUNDRY CREDITORS AND RS . 81 LACS ON ACCOUNT OF UNEXPLAINED LOAN. 3. BEFORE THE LD. CIT (A) THE ASSESSEE SUBMITTE D THAT TRADE CREDITORS ARE NOT BOGUS BUT MOST OF THEM WERE VERY SMALL SUPPLIERS WERE GIVEN TEMPORARY WORK FOR SUPPLY OF CONSTRUCTION MATERIAL DUE TO THEIR PROXIMITY WITH T HE CONSTRUCTION SITE. THE ASSESSEE HAD FURTHER SUBMITT ED ITA NO. 6198/DEL/ 14 AND ITA NO.6609/DEL/14SHRINET AND SHANDILYA CONSTRUCTION VS DCIT 5 CONFIRMATION FROM EIGHT MAJOR PARTIES BEFORE THE AO ; HOWEVER ASSESSEE WAS UNABLE TO GIVE CONFIRMATION FROM OTHER PARTIES AT THAT TIME. AO HAD ALSO NOT ISSUED ANY NOTICES U/ S 133(6) BEFORE COMING TO THE CONCLUSION THAT CREDITORS ARE NOT GENUINE. A PETITION FOR ADDITIONAL EVIDENCE WAS FIL ED BEFORE CIT (A) ENCLOSING A LIST OF SUNDRY CREDITORS WITH T HE AMOUNT OUTSTANDING ALONGWITH THEIR ADDRESSES AND OTHER DET AILS, LIST OF WHICH HAS BEEN GIVEN AT PAGE 6 OF THE APPELLATE ORDER. SIMILARLY WITH REGARD TO UNSECURED LOANS, COPY OF I TR OF THE SAID PERSON ALONGWITH THE PAN DETAILS WAS GIVEN WHI CH WAS SUBMITTED THAT THE SAME MAY BE TREATED AS ADDITIONA L EVIDENCE. ASSESSEES DETAILED SUBMISSIONS AND EVIDE NCES WERE FORWARDED TO THE AO TO SUBMIT A REMAND REPORT, THE CONTENT OF WHICH HAS BEEN INCORPORATED IN THE APPEL LATE ORDER ON PAGES 9 AND 10. LD. CIT (A) AFTER CONSIDER ING THE ENTIRE FACTS AND MATERIAL ON RECORD AND THE REMAND REPORT, ACCEPTED THE OUTSTANDING AMOUNT IN RESPECT OF FOUR SUNDRY CREDITORS ONLY AND FOR OTHER 19 SUNDRY CREDITORS WH O WERE SMALL SUPPLIERS OF SAND, BAZRI, SOIL, ETC., FOR WHI CH ASSESSEE COULD NOT FILE CONFIRMATION, HE DID NOT ACCEPT THE AMOUNT OUTSTANDING AGAINST THEM AGGREGATING TO RS. 1,34,22 ,499/- THE DETAILS OF SUCH PERSONS HAVE BEEN INCORPORATED AT PAGE 12 AND 13 OF THE APPELLATE ORDER. THUS, THE ONLY PA RT RELIEF WAS GIVEN OUT OF TOTAL ADDITION OF RS. 1,71,03,987/ - AND BALANCE AMOUNT OF RS. 1,34,22,499/- WAS UPHELD. ITA NO. 6198/DEL/ 14 AND ITA NO.6609/DEL/14SHRINET AND SHANDILYA CONSTRUCTION VS DCIT 6 4. REGARDING ADDITION ON ACCOUNT OF UNEXPLAINE D AMOUNT OF RS. 81 LACS RECEIVED FROM SHRI BRIJESH KUMAR JAI SWAL, LD. CIT (A) APPRECIATED THAT ASSESSEE HAS FILED THE COP Y OF PAN; COPY OF ACKNOWLEDGEMENTS OF RETURN FOR THE SAME ASS ESSMENT YEAR; AND THAT THE PARTY WAS OLD LENDER SINCE EARLY YEARS AND INCOME TAX HAS BEEN DEDUCTED AT SOURCE ON INTEREST PAID TO HIM. LD. CIT (A) HAD DELETED THE SAID ADDITION AFTE R OBSERVING AND HOLDING AS UNDER:- 8.2 I HAVE CONSIDERED THE ENTIRE FACTS OF THE C ASE AND THE ARGUMENTS FORWARDED BY THE APPELLANT IN THIS RE GARD. THE APPELLANT HAD ALREADY TAKEN SUBSTANTIAL LOANS F ROM THE PERSON IN EARLIER YEARS WHICH HAVE BEEN ACCEPTE D BY THE DEPARTMENT AND NO ADVERSE VIEW WAS EVER TAKEN REGARDING THE SAME. PERUSAL OF TDS CERTIFICATE (FOR M NO. 16A) BY WHICH THE APPELLANT DEDUCTED TAX ON INTERES T PAID TO SHRI BRIJESH KUMAR JAISWAL, FROM WHOM UNSECURED LOANS WERE OBTAINED BY THE APPELLANT, IT IS OBSERVED THAT THE CERTIFICATE CLEARLY SHOWS THE PAN OF THE PARTY. THE AO HAS NOT AT ALL BOTHERED TO VERIFY THE AUTHENTICITY OF PAN AND THE FACT REGARDING THE FILI NG OF THE RETURN, BY THE PARTY. DURING THE APPELLATE PROCEEDI NGS, THE AO HAS NOW VERIFIED THAT PAN QUOTED BY THE PART Y IS GENUINE. MOREOVER, SINCE THE MONEY HAS TRAVELLED TO THE APPELLANT THROUGH BANKING CHANNEL, THE GENUINENESS OF TRANSACTION CANNOT BE DOUBTED. REGARDING THE ITA NO. 6198/DEL/ 14 AND ITA NO.6609/DEL/14SHRINET AND SHANDILYA CONSTRUCTION VS DCIT 7 CREDITWORTHINESS OF SHRI BRIJESH KUMAR JAISWAL, THE COPY OF RETURN FILED BY HIM SHOWS HIS GROSS TOTAL INCOME TO THE TUNE OF ~25,80,033/-. THIS RETURN HAS BEEN FILED BY SHRI BRIJESH KUMAR JAISWAL ON 13.10.2011 WITH DCIT, CIRC LE 2, GORAKHPUR WHICH IS MUCH PRIOR TO THE INITIATION OF SCRUTINY ASSESSMENT IN APPELLANT'S CASE. THE FACTS BEING SO, THESE EVIDENCES BEING PART OF THE DEPARTMENTAL RECORDS ARE ADMITTED UNDER RULE 46A OF THE INCOME T AX RULES, 1962 IN THE INTEREST OF NATURAL JUSTICE. AS ALL THE PARAMETERS VIZ. IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION HAVE BEEN ESTABLISHED IN RESPECT OF UNSECURED LOAN RECEIVED BY THE APPELLANT , THE AO'S ACTION IN MAKING THE ADDITION OF RS.81 LACS ON ACCOUNT OF UNSECURED LOAN IS NOT JUSTIFIED. THE SAM E IS DIRECTED TO BE DELETED. GROUND NO. 2 OF THE APPEAL IS ALLOWED. 5. LASTLY ON THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF NET PROFIT RATE 8% WHEREBY THE AO HAS ENHANCED THE BUSINESS INCOME BY MAKING ADDITION OF RS. 1,61,93,740/-, LD. CIT(A) UPHELD THE ACTION OF THE AO IN REJECTING THE BOOKS OF ACCOUNTS AND ALSO THE APPLIC ATION OF NET PROFIT RATE OF 8%, BUT THE ACCEPTED CLAIM OF DE PRECIATION AFTER APPLYING THE SAID RATE AFTER DISCUSSING VARIO US JUDGMENTS ON ALLOWABILITY OF DEPRECIATION POST APPL YING NET PROFIT RATE. HOWEVER HE HELD THAT, SINCE ALREADY AD DITION ON ITA NO. 6198/DEL/ 14 AND ITA NO.6609/DEL/14SHRINET AND SHANDILYA CONSTRUCTION VS DCIT 8 ACCOUNT OF INFLATED SUNDRY CREDITORS TO THE TUNE OF RS.1,34,22,499/- HAS ALREADY BEEN UPHELD BY HIM, TH EREFORE, SEPARATE ADDITION BY APPLYING THE NET PROFIT IS NOT JUSTIFIED. 6. AFTER HEARING BOTH THE PARTIES AND ON PERUS AL ON THE MATERIAL PLACED ON RECORD, WE FIND THAT THERE IS NO DISPUTE WITH REGARD TO THE TOTAL TURNOVER FROM THE GROSS CO NTRACT RECEIPT DECLARED AT RS. 47,68,80,785/-. THE SAID TU RNOVER IS ALSO VERIFIABLE FROM FORM NO. 26AS WHICH HAS BEEN P LACED ON THE PAPER BOOK FROM PAGES 54 TO 57. LD. AO HAS FIRS TLY, MADE THE ADDITION BY DISALLOWING PART OF THE OUTSTANDING AMOUNT UNDER THE HEAD TRADE CREDITORS SHOWN AT RS. 3,88, 68,131/- AND THEREBY MADE ADDITION OF RS. 1,71,03,987/- ON T HE GROUND THAT ASSESSEE COULD NOT FURNISH THE CONFIRMA TION IN RESPECT OF 23 PARTIES; SECONDLY, AFTER MAKING THE S AID ADDITION, AO FURTHER WENT TO REJECT THE ASSESSEES BOOKS OF ACCOUNTS AFTER INVOKING PROVISION OF SECTION 145(3) ON THE GROUND THAT THE SAME ARE NOT RELIABLE INCLUDING THE NET PROFIT SHOWN IN THE AUDIT REPORT AND IN THE TRADING ACCOUN T. HE PROCEEDED THE ESTIMATE THE NET PROFIT RATE OF 8% FR OM THE GROSS RECEIPT AND ENHANCED THE BUSINESS INCOME BY A N AMOUNT OF RS. 1,61,93,740/- AFTER DENYING THE CLAI M OF DEDUCTION OF DEPRECIATION FROM THE SAID NET PROFIT RATE. LD. CIT(A) HAD ACCEPTED THE OUTSTANDING AMOUNT AGAINST FOUR TRADE CREDITORS ONLY AND REDUCED THE ADDITION FROM RS. 1,71,03,987/- TO RS. 1,34,22,499/-. AFTER SUSTAININ G THIS ITA NO. 6198/DEL/ 14 AND ITA NO.6609/DEL/14SHRINET AND SHANDILYA CONSTRUCTION VS DCIT 9 MUCH AMOUNT OF ADDITION ON ACCOUNT OF SUNDRY CREDIT ORS, HE FURTHER UPHELD ACTION OF THE AO IN REJECTING THE TR ADING RESULT IN THE BOOKS OF ACCOUNTS AND THE APPLICATION OF NET PROFIT RATE OF 8%. HOWEVER, HE HAS ACCEPTED THE ASSESSEES CLAI M FOR ALLOWING OF DEPRECIATION ON SUCH AN AMOUNT FOLLOWIN G THE VARIOUS JUDGMENTS OF HONBLE HIGH COURTS AS WELL AS THE CBDT CIRCULAR; AND ACCORDINGLY THE ADDITION ON ACCO UNT OF NET PROFIT RATE WAS WORKED OUT OF RS. 35,25,490/-. SINCE HE HAD ALREADY SUSTAINED THE ADDITION ON ACCOUNT OF SU NDRY CREDITORS WHICH WAS A HIGHER AMOUNT, HE DID NOT MAD E SEPARATE ADDITION IN TERMS OF APPLICATION OF NET PR OFIT OF RS. 35,25,490/-. THE CASE OF THE REVENUE BEFORE US IS T HAT, THE OUTSTANDING TRADE CREDITORS IS A PART OF BALANCE SH EET ITEM, THEREFORE, SEPARATE ADDITION CAN BE MADE OVER AND A BOVE THE BUSINESS INCOME ASSESSED BY APPLYING THE NET PROFIT RATE AFTER REJECTING THE BOOKS OF ACCOUNTS, WHEREAS THE CASE OF THE ASSESSEE IS THAT, FIRSTLY, LOOKING TO THE ENTIRE GR OSS TURNOVER OF THE ASSESSEE, THE TRADE CREDITORS AND DISALLOWAN CE ON ACCOUNT OF SUCH OUTSTANDING TRADE LIABILITY IS ONLY 8.2%, WHICH CANNOT BE SAID TO BE MORE IN THE ASSESSEES L INE OF BUSINESS; AND SECONDLY, LOOKING TO THE NATURE OF MA TERIAL SUPPLIED TO THESE PARTIES LIKE GRIT, SAND, DUST AND MORAM WHICH HAS TO BE PURCHASED FROM UNORGANISED SECTORS, IT IS DIFFICULT TO OBTAIN ANY CONFIRMATION AFTER LAPSE OF SUBSTANTIAL PERIOD. THE ASSESSEE HAD DULY PROVIDED ALL THE RELE VANT DETAILS AND REQUESTED THE AO IN THE REMAND PROCEEDI NGS TO ITA NO. 6198/DEL/ 14 AND ITA NO.6609/DEL/14SHRINET AND SHANDILYA CONSTRUCTION VS DCIT 10 INDEPENDENTLY VERIFY THE SAME WHICH HAS NOT BEEN DO NE, WHEREVER THE ASSESSEE COULD NOT OBTAIN THE CONFIRMA TION FROM THE PARTIES. HE FURTHER SUBMITTED THAT IF TRAD ING RESULTS AND BOOKS OF ACCOUNTS HAVE BEEN REJECTED, THEN ADDI TION IF AT ALL CAN BE MADE IS ON ACCOUNT OF NET PROFIT RATE WH ICH HAS BEEN APPLIED BY THE AO AT 8%, WHICH HAS ALSO BEEN U PHELD BY THE LD. CIT (A) AFTER ALLOWING DEPRECIATION. ONC E THAT IS SO, THEN NO FURTHER ADDITION SHOULD BE MADE TO THE INCO ME OF THE ASSESSEE. 7. SO FAR AS REJECTION OF BOOKS OF ACCOUNTS ARE CONCERNED THE LD. COUNSEL HAS NOT PLACED ANY OBJECTION WHICH INTER ALIA LEADS TO AN INFERENCE THAT BOOKS OF ACCOUNTS HAVE R IGHTLY BEEN REJECTED BY THE AUTHORITIES BELOW ALONGWITH TH E APPLICATION OF NET PROFIT RATE OF 8%. ONCE THE TRAD ING RESULTS AND BOOKS OF ACCOUNTS HAVE BEEN REJECTED AND INCOME IS BEING ESTIMATED BY APPLYING NET PROFIT RATE ON THE DECLARED GROSS CONTRACT RECEIPT, THEN NO OTHER ADDITION IS R EQUIRED TO BE MADE ON ACCOUNT OF ANY OTHER TRADING ITEMS INCLU DING THE TRADE CREDITORS OR ANY OTHER DIRECT EXPENSES AS WEL L AS TRADING LIABILITIES SHOWN IN THE ACCOUNTS. THE REAS ON BEING THAT, WHEN THE BOOKS OF ACCOUNTS ARE REJECTED AND I NCOME IS ASSESSED ON THE PRINCIPLE OF BEST JUDGMENT ASSESSM ENT, THEN ENTRIES OF THE AMOUNTS SHOWN IN THE BOOKS OF A CCOUNTS CANNOT BE HELD TO BE RELIABLE. ONCE BUSINESS INCOME OF THE ASSESSEE FROM THE CONTRACT RECEIPT BUSINESS HAS BEE N ITA NO. 6198/DEL/ 14 AND ITA NO.6609/DEL/14SHRINET AND SHANDILYA CONSTRUCTION VS DCIT 11 ASSESSED AT 8%, THEN IT TAKE CARES OF ALL OTHER ADD ITIONS MADE ON ACCOUNT OF TRADING ACCOUNT AND ANY LIABILITY INC LUDING OUTSTANDING AMOUNT OF TRADE CREDITORS. THUS, WE AGR EE WITH THE CONTENTION OF THE LD. COUNSEL THAT IF THE INCOM E HAS BEEN ASSESSED AFTER REJECTING THE BOOKS OF ACCOUNTS AND NET PROFIT RATE HAS BEEN APPLIED, THEN NO SEPARATE ADDITION ON ACCOUNT OF TRADE CREDITORS SHOULD BE MADE. ACCORDINGLY, WE DIRECT THE AO TO MAKE ADDITION OF RS. 35,25,490/- AS HAS BEEN WORKED OUT BY THE LD. CIT(A). 8. IN VIEW OF THIS FINDING, THE ADDITIONS ON AC COUNT OF SUNDRY CREDITORS RAISED IN BOTH THE APPEALS ARE DIS MISSED. THE GROUNDS RAISED BY THE ASSESSEE ON ACCOUNT OF SU NDRY CREDITORS IS TREATED AS ALLOWED ONLY TO THE EXTENT THAT ADDITION ON ACCOUNT OF NET PROFIT RATE WILL GET SUS TAINED; AND CONSEQUENTLY REVENUES GROUND NO. 1 IS TREATED AS D ISMISSED. 9. LASTLY, COMING TO THE ADDITION ON ACCOUNT OF UNEXPLAINED LOAN AS RAISED BY THE REVENUE IN GROUND NO. 2, WE FIND THAT LD. CIT (A) HAS NOTED THAT THE PARTY W AS OLD LENDER AND ASSESSEE HAS FILED HIS PAN DETAILS WHICH HAS BEEN VERIFIED BY THE AO; COPY OF RETURN OF INCOME FOR TH E CURRENT YEAR OF THE SAID CREDITORS WHICH REFLECTS HIS CREDI TWORTHINESS FROM THE QUANTUM OF INCOME SHOWN BY HIM; AND THE GENUINENESS OF THE TRANSACTION IS ALSO PROVED AS TH E TRANSACTION IS THROUGH BANKING CHANNEL. NOT ONLY TH AT, HE HAS ALREADY DIRECTED THE ASSESSING OFFICERS OF THE SAID ITA NO. 6198/DEL/ 14 AND ITA NO.6609/DEL/14SHRINET AND SHANDILYA CONSTRUCTION VS DCIT 12 CREDITORS TO INITIATE THAT THE SCRUTINY PROCEEDINGS IN THEIR CASES. THE OBSERVATION AND THE FINDING OF THE LD. C IT(A) AS INCORPORATED ABOVE DOES NOT CALL FOR ANY INTERFEREN CE WHICH IS BASED ON CORRECT APPRECIATION OF LAW AND FACTS AND CONSEQUENTLY, THE GROUND RAISED BY THE REVENUE IS D ISMISSED 9. IN THE RESULT APPEAL OF THE ASSESSEE IS PART LY ALLOWED WHEREAS APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MARCH, 2018. SD/- SD/- (PRASHANT MAHARISHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13-03-2018 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI