ITO, New Delhi V. M/s. Neelkanth Enterprises, Delhi

ITA 6203/DEL/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1221 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 13-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Source of fund; Additional evidence; Corroborative evidences; Notional interest
• Section: 143(3); 143(1); 131; 68; 144

Judgement Text

ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 5593/DEL/2014 AY: 2010-11 NEELKANTH ENTERPRISES, VS INCOME TAX OFFICER, G-249, WARD-29(3), PREET VIHAR, NEW DELHI. DELHI-110092 (PAN: AADFN2071M) (APPELLANT) (RESPONDENT) ITA NO. 6203/DEL/2014 AY: 2010-11 INCOME TAX OFFICER, VS NEELKANTH ENTERPRISES, WARD-29(3), G-249, NEW DELHI. PREET VIHAR, DELHI-110092 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GAUTAM JAIN, ADV. DEPARTMENT BY : MS RINKU SINGH SR. DR DATE OF HEARING: 26.02.2019 DATE OF PRONOUNCEMENT: 19.03.2019 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER : ITA NO. 6203/DEL/2014 HAS BEEN PREFERRED BY THE DEPARTMENT AGAINST THE ORDER DATED 29.8.2014 PASSED BY THE LEARNED CIT (APPEALS)-XXV, NEW DELHI {LD. CIT (A)} FOR ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 2 ASSESSEMENT YEAR (AY) 2010-11, WHEREAS ITA NO. 5593 /DEL/2014 IS THE CROSS APPEAL FILED BY THE ASSESSEE FOR THE S AME YEAR. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT ARE THAT ASSESSEE IS A PARTNERSHIP FIRM. THE PARTNERS OF THE ASSESSEE FIR M ARE TWO VIZ. SHRI VINOD KUMAR SHARMA AND SMT. USHA SHARMA, (SPOU SE OF SHRI VINOD SHARMA). THE ASSESSEE FIRM IS STATED TO BE ENGAGED IN THE BUSINESS OF TRADING OF POULTRY FEED, GRAINS. T HE TWO PARTNERS AND THREE OTHER INDEPENDENT FAMILY MEMBERS ALSO CAR RIED ON IDENTICAL BUSINESS UNDER THEIR INDEPENDENT PROPRIET ORSHIP CONCERNS NAMELY; I) USHA SHARMA M/S S.J. TRADERS II) VINOD KUMAR SHARMA M/S BALAJI TRADERS DAUGHTERS OF THE PARTNERS: III) NEERJA SHARMA M/S GINNI ENTERPRISES IV) HEENA SHARMA M/S HEENA TRADERS V) PREETI SHARMA M/S GEETANJALI FEEDS 2.1 THE RETURN OF INCOME WAS FILED DECLARING AN IN COME OF RS 8,49,646/- . THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS. 5,43,8 3,410/- U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) AFTER MAKING THE FOLLOWING ADDITIONS/DISALLOW ANCES:- ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 3 1. FINANCIAL CHARGES AND INTEREST ON LOAN RS. 12, 97,479/-; 2. INTEREST CHARGED ON DEBIT BALANCE IN CAPITAL ACC OUNT OF THE PARTNER SHRI VINOD SHARMA RS. 9,00,000/-; 3. ALLEGED UNEXPLAINED CASH DEPOSIT IN BANK ACCOUNT S OF THE FIRM RS. 2,45,40,167/-; 4. DISALLOWANCE OUT OF CAR AND TELEPHONE EXPENSES @ 10% RS. 24,655/- 5. DISALLOWANCE OUT OF OTHER EXPENSES @ 10% - RS. 5 6,544/-; 6. NOTIONAL INTEREST ON INTEREST FREE LOANS GIVEN RS. 33,000/-; 7. ADDITION ON ACCOUNT OF LOANS GIVEN TO THE PARTNE RS AND THEIR DAUGHTERS WHICH WERE ALLEGEDLY NOT GENUINE RS. 2, 66,81,915/-. 2.2 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. CI T (A) WHO PARTLY ALLOWED THE ASSESSEES APPEAL AND NOW BO TH THE ASSESSEE AS WELL AS THE DEPARTMENT IS BEFORE US CHA LLENGING THE CONFIRMATION AND DELETION OF THE ADDITIONS BY THE L D. CIT (A) RESPECTIVELY. 2.3 THE ASSESSEE IN ITA NO. 5593/DEL/2014 HAS RAIS ED THE FOLLOWING GROUNDS OF APPEAL: 1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) XXV, NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS I N UPHOLDING THE DISALLOWANCE OF RS. 12,50,229/- REPRE SENTING INTEREST PAID ON LOANS UTILIZED FOR THE PURPOSE OF THE BUSINESS BY THE APPELLANT. ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 4 1.1 THAT FINDING OF THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) THAT THE LOAN MONEY ON WHICH INTERES T WAS PAID BY THE APPELLANT WAS NOT FOR THE PURPOSES OF B USINESS AS THE APPELLANT COULD NOT DEMONSTRATE WITH EVIDENC E THE USE OF SUCH LOAN FOR BUSINESS PURPOSES OF THE APPEL LANT FIRM IS FACTUALLY INCORRECT, CONTRARY TO RECORD AN D THUS UNSUSTAINABLE. 2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACT S IN UPHOLDING DISALLOWANCE OF SUM OF RS. 47,250/- REPRESENTING ALLEGED EXCESSIVE INTEREST PAID TO MS. PRIYANKA GUPTA BY THE APPELLANT FIRM. 3 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO ERRED BOTH IN MAKING AN ARBITRAR Y, AD HOC, NOTIONAL AND HYPOTHETICAL ADDITION BY CONCLUDI NG THAT HOWEVER THE USE OF SUCH WITHDRAWN CASH FOR EARNING INCOME CANNOT BE ABSOLUTELY RULED OUT. ACCORDINGLY I HOLD UPON CONSIDERATION INTEREST CHARGEABLE @ 12.5% PER ANNUM ON THE AMOUNT OF SUCH WITHDRAWN CASH CLAIMED TO HAV E BEEN RE-DEPOSITED IN CASH IN THE BANK ACCOUNTS OF W HICH NO PROOFS OR FINDING TO THE CONTRARY COULD BE BROUGHT ON RECORD BY THE AO, FOR THE INTERREGNUM PERIOD AS INCOME FRO M OTHER SOURCES I.E. FROM THE DATE OF WITHDRAWAL OF CASH TI LL ITS REDEPOSIT IN CASH. THE AO SHALL CALCULATE THE INTE REST INCOME AS ABOVE. TO THIS EXTENT THE ADDITION STAND S CONFIRMED. 3.1 THAT THE ENTIRE ADDITION IS BASED ON WHIMSICAL AND FANCIFUL ASSUMPTION AND THAT TOO WITHOUT GRANTING A NY OPPORTUNITY THAT CASH WITHDRAWN HAS BEEN UTILIZED F OR EARNING INCOME. THE ASSUMPTION IS ENTIRELY UNSUSTA INABLE AND THUS, UNTENABLE. 3.2 THAT ONCE CASH WITHDRAWALS FROM THE BANK AND CA SH SALE SUPPORTED BY CASH FLOW STATEMENT HAD BEEN PLAC ED ON RECORD ALONGWITH BOOKS OF ACCOUNTS WHICH HAVE BEEN ACCEPTED AS SUCH, THE ADDITION CONFIRMED IS LEGALLY UNTENABLE. 4 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPH OLDING THE DISALLOWANCE OF RS. 56,544/- BEING 10% OF THE E XPENSES CLAIMED BY THE APPELLANT. 5 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACT S IN ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 5 UPHOLDING THE DISALLOWANCE OF RS. 24,655/- BEING 10 % OF THE EXPENSES CLAIMED BY THE APPELLANT ON ACCOUNT OF ALLEGED PERSONAL USE. 2.4 THE REVENUE IN ITA NO. 6203/D/2014 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT (A) WAS NOT JUSTIFIED IN DELETING THE INTEREST OF RS. 9,00,000/- ON THE DEBIT BALANCE OF THE CAPITAL ACCO UNT OF THE PARTNER SH. VINOD SHARMA. 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) HAS ERRED IN DELETING THE INTEREST OF RS. 9, 00,000/- IGNORING THE FACT THAT AS PER THE PARTNERSHIP DEED INTEREST @ 12% WAS TO BE CHARGED. 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) HAS ERRED IN DELETING THE INTEREST OF RS. 9, 00,000/- ON THE GROUND THAT THE ASSESSEE WAS HAVING INTEREST FREE LOANS WITHOUT THE ASSESSEE ESTABLISHING THE CASH FL OW OF THE FUNDS GIVEN TO SH. VINOD SHARMA. 4 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) WAS NOT JUSTIFIED IN DELETING THE NOTIONAL I NTEREST OF RS. 33,000/- CHARGED ON THE INTEREST FREE LOANS GIV NE TO SO CALLED SUPPLIERS. 5 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) VIOLATED THE PROVISIONS OF RULE 46A BY ENTER TAINING THE AFFIDAVIT AND THE PAPER BOOK WITHOUT CONFRONTIN G THE ASSESSING OFFICER WITH THEM 6 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) WAS NOT JUSTIFIED IN DELETING THE AMOUNT OF CASH OF RS. 2,66,81,915/- DEPOSITED IN THE BANK BY THE CLOS E RELATIVE OF THE ASSESSEE. 7 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) WAS NOT JUSTIFIED IN ACCEPTING THE THEORY OF THE ASSESSEE THAT THE AMOUNT OF RS. 2,38,56,526/- DEPOS ITED IN BANKS IS OUT OF CASH WITHDRAWALS MADE BY THE ASSESSEE. 8 ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE OR DER OF LD. CIT (A) BE MODIFIED AND THE ORDER OF THE ASS ESSING OFFICER BE RESTORED. ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 6 9 THE APPELLANTS CRAVES FOR LEAVE RESERVING THE RI GHT TO AMEND, MODIFY, ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS SP ECIAL. 3.0 AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ASSESSEES CROSS APPEAL FILED IS NOT BEING PRESSED. ACCORDINGLY, THE SAME IS DISMISSED AS WITH DRAWN. 4.0 WE NOW TAKE UP THE DEPARTMENTS APPEAL IN ITA NO. 5593/DEL/2014. GROUNDS 1 TO 4 RELATE TO ADDITION OF RS. 9,00,000/- AND RS. 33,000/- BY WAY OF INTEREST ON THE DEBIT BALANCE OF THE CAPITAL ACCOUNT OF ONE OF THE PARTNE RS NAMELY SHRI VINOD SHARMA AND ON ACCOUNTS OF M/S NISTHA INFOTEC H AND SHRI SUMIT MAHAJAN WHO WERE THE SUPPLIERS OF THE ASSESSE E FIRM. THE ASSESSING OFFICER (AO) HELD THAT THE ASSESSEE FIRM, THOUGH, PAID INTEREST OF RS. 4,24,823/- TO SMT. USHA SHARMA BUT NO INTEREST WAS CHARGED ON THE DEBIT BALANCE OF SHRI VINOD SHAR MA. HE, THEREFORE, HELD THAT SINCE THE DEBIT BALANCE AS ON 31.3.2010 WAS RS. 70,63,646/- AND PROFIT OF RS. 4,24,823/- FROM T HE FIRM WAS CREDITED ON 31.3.2010, THE TOTAL DEBIT BALANCE IS T AKEN AT RS. 75,00,000/- AND ACCORDINGLY HE CALCULATED ADDITION AT RS. 9,00,000/- BY APPLYING THE RATE OF 12% ON THE AFORE SAID BALANCE. LIKEWISE, HE ALSO MADE AN ADDITION OF RS. 33,000/- BY APPLYING INTEREST OF 12% ON THE ADVANCE/S TO THE SUPPLIERS M /S NISTHA ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 7 INFOTECH AND SHRI SUMIT MAHAJAN. THE LD. CIT (A) H ELD THAT THESE TWO ADDITIONS MADE WERE NOTIONAL ADDITION AND , THEREFORE, NOT TENABLE. 4.0.1 BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIVE (LD. DR) RELIED ON THE FINDINGS IN T HE ORDER OF ASSESSMENT. 4.0.2 THE LEARNED COUNSEL, ON THE OTHER HAND, SUB MITTED THAT THE ASSESSEE HAD CLAIMED EXPENDITURE ON INTERE ST OF RS. 12,50,229/- WHICH HAD BEEN SEPARATELY DISALLOWED AN D SUSTAINED BY THE LD. CIT (A) AND THAT SUCH SUSTENANCE WAS NOT BEING PRESSED. IT WAS FURTHER SUBMITTED THAT APART FROM THIS, ANOTHER DISALLOWANCE MADE OF RS. 47,250/- U/S 40A (2)(B) OF THE ACT HAD ALSO BEEN SUSTAINED IN APPEAL AND IS NOT BEING CHAL LENGED BY THE ASSESSEE. IT WAS SUBMITTED THAT IN SUCH CIRCUMSTANC ES THESE NOTIONAL ADDITIONS WERE UNCALLED FOR. 4.1.0 GROUND NO 5 RELATES TO THE CONTENTION OF THE DEPARTMENT THAT THE LD. CIT (A) VIOLATED THE PROVIS IONS OF RULE 46A OF THE INCOME TAX RULES, 1962 (HEREINAFTER CALL ED THE RULES) BY ENTERTAINING THE AFFIDAVIT AND THE PAPER BOOK WI THOUT CONFRONTING THE ASSESSING OFFICER WITH THEM. ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 8 4.1.1 THE LEARNED DR CONTENDED THAT THE LD. CIT (A ) HAD NOT CONFRONTED THE AO WITH THE PAPER BOOK FILED BY THE ASSESSEE AND THE AFFIDAVIT FILED DURING THE COURSE OF FIRST APPE LLATE PROCEEDINGS AND, THEREFORE, THERE WAS A VIOLATION OF RULE 46A. 4.1.2 THE LEARNED AUTHORISED REPRESENTATIVE (LD. AR), ON THE OTHER HAND, SUBMITTED THAT THE ASSESSEE HAD SUB MITTED BEFORE THE LD. CIT (A) THAT THE ASSESSEE WAS DENIED A VALID AND PROPER OPPORTUNITY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THIS GROUND WAS REJECTED BY THE LD. CIT (A) BY OBSERVING THAT THE ENCLOSURES AND ANNEXURE CONSISTING OF LETTERS O F VARIOUS DATES ADDRESSED TO THE AO, WITH THE PAPER BOOK BY THE ASS ESSEE DURING THE APPELLATE PROCEEDING, MAKE IT AMPLY CLEAR THAT THE ASSESSEE WAS ABLE TO PRODUCE VARIOUS DETAILS BEFORE THE AO I N RESPONSE TO SEVERAL OPPORTUNITIES/NOTICES ISSUED IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS, THEREFORE, SUBMITTED BY THE L D. AR THAT ALL DOCUMENTS FORMING PART OF PAPER BOOK WERE FILED ALO NG WITH THE REPLIES AND NO ADDITIONAL/FRESH EVIDENCE/S HAD BEEN RELIED UPON BY THE LD. CIT (A) TO GRANT RELIEF TO THE ASSESSEE WHICH COULD BE TERMED AS ADDITIONAL EVIDENCE. 4.2.0 GROUND NO. 6 RELATES TO ADDITION OF RS. 2,66 ,81,915/- BEING CASH DEPOSITED IN THE BANK BY CLOSE RELATIVE OF THE ASSESSEE. ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 9 THE RELEVANT FACTS ARE THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS THE AO NOTED THAT THE PARTNERS OF THE A SSESSEE FIRM AND THEIR DAUGHTERS HAD CASH DEPOSITS IN THEIR INDE PENDENT BANK ACCOUNTS USED FOR CARRYING ON THEIR BUSINESSES WHIC H SUMS WERE, THEREAFTER, TRANSFERRED TO THE ASSESSEE FIRM AND, T HEREFORE, IT WAS HELD THAT THE SUMS TRANSFERRED REPRESENTED INCOME F ROM UNDISCLOSED SOURCES OF THE ASSESSEE FIRM. THE ADDI TION/S MADE COMPRISED OF FOLLOWING SUMS: SR. NO. NAME OF THE PERSON NAME OF THE PROPRIETORSHIP CONCERN AMOUNT TRANSFERRED TO THE ASSESSEE FIRM AND DEPOSITS IN THE BANK ACCOUNT OF THE SAID PERSON (RS.) I) SHRI VINOD KUMAR SHARMA M/S BALAJI TRADERS 47,69,500 II) SMT. USHA SHARMA M/S S.J. TRADERS 49,75,000 SUB TOTAL (A) 97,44,500 III) MS. NEERJA SHARMA (DAUGHTER OF THE PARTNERS) M/S GINNI ENTERPRISES 39,96,015 IV) MS. PREETI SHARMA (DAUGHTER OF THE PARTNERS) M/S GEETANJALI FEEDS 72,55,950 V) MS. HEENA SHARMA (DAUGHTER OF THE PARTNERS) M/S HEENA TRADERS 56,85,450 SUB TOTAL (A) 1,69,37,415 TOTAL 2,66,81,915 4.2.1 THE LD. CIT (A), ON APPEAL, DELETED THE ADDI TION. 4.2.3 THE LEARNED SR. DR CONTENDED THAT THE DEPOSI TS WERE UNEXPLAINED DEPOSITS AND, THEREFORE, LEGITIMATELY B ROUGHT TO TAX AS INCOME. IT WAS STATED THAT THE PARTNERS AS WELL AS THE ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 10 DAUGHTERS OF PARTIES DID NOT HAVE ANY INDEPENDENT S OURCE/S OF INCOME AND THAT THEY ALL HAD INTRODUCED THE FIRMS CASH FIRST IN THEIR BOOKS THROUGH THE SO CALLED SALES OF THEIR SO CALLED BUSINESSES AND THEN THE MONEY WAS TRANSFERRED BACK TO THEM. IT WAS ALSO SUBMITTED THAT THE SALES IN ALL THE CASES WERE BELOW RS. 40,00,000/-. IT WAS SUBMITTED THAT THIS HAD BEEN S O DONE SO THAT THE BOOKS MAY NOT BE REQUIRED TO GET AUDITED. IT WAS STATED THAT THE PURCHASES WERE FROM THE ASSESSEE FIRM WHIL E THE SALES HAD BEEN MADE IN CASH FOR WHICH NO VOUCHERS/BILLS/C ASH MEMOS HAD BEEN PRODUCED. IT WAS SUBMITTED THAT AS REGARD S THE PARTNERS, THEY HAVE, ALTHOUGH, CLAIMED TO HAVE DONE BUSINESS OF POULTRY FEEDS BUT THE FACTS OF BUSINESS HAVE NOT BE EN SHOWN IN THEIR RETURNS ON THE GROUND THAT THEY DID NOT HAVE ANY INCOME. IT WAS FURTHER SUBMITTED THAT IT WAS SURPRISING THAT T HE PARTNERS WHO WERE IN THIS LINE DID NOT EARN ANY PROFITS FROM THEIR SO CALLED BUSINESSES WHEREAS THE DAUGHTERS HAVE EARNED THE PR OFITS FROM THE SO CALLED BUSINESS. IT WAS POINTED OUT THAT TH E DAUGHTERS HAVE PURCHASED THE GOODS AND SOLD IN CASH AND THEN THE AMOUNT WAS TRANSFERRED TO THE ASSESSEE FIRM. 4.2.4 THE LD. AR RELIED ON THE FINDINGS OF THE LD. CIT (A) AND SUBMITTED THAT THE ADDITION WAS VALIDLY DELETED. ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 11 4.3.0 GROUND NO. 7 RELATES TO THE DELETION OF ADDI TION OF RS. 2,38,56,526/- BEING THE ADDITION DELETED ON ACCOUNT OF CASH DEPOSITED BY ACCEPTING THE ASSESSEES EXPLANATION T HAT THE SAME WERE OUT OF CASH WITHDRAWALS. IN THIS REGARD THE FA CTS IN BRIEF ARE THAT AN ADDITION WAS MADE OF RS. 2,45,40,167/- AS U NEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNTS BEARING ACCOUNT NUMBERS 1399002100040391 AND 1399008700001396 WITH PUNJAB NATIONAL BANK, E-19, VIKAS MARG, PREET VIHAR, DELHI -92. THE CIT LD. (A) DELETED THE ADDITION TO THE EXTENT OF RS. 2 ,38,56,526/- AND SUSTAINED THE ADDITION OF RS. 6,83,641/-. 4.3.1 THE LD. SR. DR RELIED ON THE FINDINGS OF THE ORDER OF ASSESSMENT AND CONTENDED THAT MERE CASH WITHDRAWALS ALONE COULD NOT BE A BASIS TO SUPPORT THE EXPLANATION TEN DERED BY THE ASSESSEE. 4.3.2 THE LD. AR RELIED ON THE FINDINGS OF THE L D. CIT (A) AND SUBMITTED THAT THE ADDITION WAS VALIDLY DELETED. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WITH RESPECT TO GROUND NOS. 1 TO 4, IT IS SEEN THAT THE LEARNED CIT (A) HAS DELET ED THE ADDITION OF RS. 9,00,000/- PERTAINING TO INTEREST CHARGED ON TH E DEBIT BALANCE OF THE PARTNER SHRI VINOD SHARMA BY HOLDING AS UNDER: ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 12 THE ABOVE NARRATED FACTS WERE DULY CONSIDERED BY M E. HAVING BESTOWED MY THOUGHTFUL CONSIDERATION ON THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE EVIDENCE ON RECORD, I AM OF THE FIRM BELIEF THAT TH E AO WAS ALTOGETHER UNJUSTIFIED IN MAKING THE ADDITION OF RS . 9,00,000/- AS NO INTEREST WAS PAID BY THE APPELLANT FIRM TO SMT. USHA SHARMA @ 12% ON HER CAPITAL BALANCE AS AL LEGED BY HIM. THE AUDITED P&L ACCOUNT TOGETHER WITH THE COMPUTATION OF INCOME FILED BEFORE THE CONCERNED AO CLEARLY REVEALED THAT THE APPELLANT DID NOT PAY ANY INTERES T TO ANY OF ITS PARTNERS ON ITS CREDIT BALANCES. AT THE SAM E TIMES, THE OVER DRAWAL BY THE PARTNER SH. VINOD SHARMA, FROM T HE FIRMS CAPITAL WAS NOT MADE OUT OF INTEREST BEARING FUNDS OF THE FIRM. IN SUCH CIRCUMSTANCES ANY INTEREST FREE ADVANCES GIVEN TO ITS PARTNERS BY THE APPELLANT FIRM COULD N OT BE MADE THE SUBJECT MATTER OF ADDITION ON THE GROUND O F NOTIONAL RECEIPT IN THE FORM OF INTEREST. TO CAP IT ALL IT WAS OBSERVED BY ME THAT THE AMOUNT OF RS. 4,24,823/- SHOWN AS INTEREST PAID TO USHA SHARMA BY THE AO IN HIS ORDER IN FACT REPRESENTED THE SHARE OF PR OFIT AND NOT INTEREST PAYABLE TO HER AS WRONGLY UNDERSTOOD B Y THE AO. AS A RESULT OF SUCH A MISTAKE IN READING THE P &L ACCOUNT OF THE APPELLANT AN INCORRECT INFERENCE THA T THE APPELLANT FIRM OUGHT TO HAVE CHARGED INTEREST ON TH E DEBIT BALANCE OF VINOD SHARMA LEADING TO THE ADDITION OF RS. 9,00,000/- IN THE HANDS OF THE FIRM ON ACCOUNT OF D EBIT BALANCE OF RS. 75,00,000/- IN THE BOOKS OF THE APPE LLANT FIRM WHICH WAS CALCULATED @ 12% ON RS. 75,00,000/- WAS DRAWN. 5.0.1 LIKEWISE, THE LD. CIT (A) DELETED THE ADDITI ON OF RS. 33,000/- BEING NOTIONAL INTEREST ON INTEREST FREE A DVANCES TO THE SUPPLIERS BY HOLDING AS UNDER: CONTRARY TO THE ABOVE VERSION OF THE AO THE APPELL ANT CONTENDED THAT IT WAS NOT ITS TRADE PRACTICE TO REC OVER INTEREST FROM ADVANCES GIVEN TO ITS SUPPLIERS. SIM ILARLY IT DID NOT PAY ANY INTEREST ON ADVANCES RECEIVED FROM ITS CUSTOMERS OR SUPPLIERS. ERGO IT WAS VEHEMENTLY ARG UED ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 13 THAT THE ADDITION MADE BY THE AO ON THE BASIS OF IT S AND BUTS WAS UNSUSTAINABLE IN EYE OF LAW. THE ABOVE FACTS WERE GIVEN A CAREFUL CONSIDERATION BY ME. HAVING WEIGHED THE PROS AND CONS, I AM OF THE CONSI DERED VIEW THAT THE ADDITION SO MADE HAS NO LEG TO STAND ON AS THE FACTS POINTED OUT BY THE APPELLANT ACCORDED WIT H THE CLAIM PRESSED BY IT IN THE APPELLATE PROCEEDINGS TH AT IT WAS NOT LIABLE TO RECEIVE ANY INTEREST ON ADVANCES GIVE N TO SUPPLIERS AS IT DID NOT PAY ANY SUCH INTEREST TO IT S SUPPLIERS. CONCURRING WITH THE VIEW OF THE AR FOR THE REASONS CITED HEREINABOVE THE ADDITION OF RS. 33,00 0/- IS DELETED HOLDING THE SAME AS OF NOTIONAL CHARACTER. ACCORDINGLY, GROUNDS 4 & 5 ARE ALLOWED. 5.0.2 THE LD. DR HAS NOT BEEN ABLE TO ESTABLISH ANY FACTUAL INACCURACY IN THE ABOVE CONCLUSION. ALSO, IT IS WE LL SETTLED LAW THAT NOTIONAL ADDITIONS ARE NOT TENABLE IN LAW AS H ELD BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. EXCEL IND USTRIES LTD REPORTED IN 358 ITR 295. IT WAS HELD THEREIN AS U NDER: 27 APPLYING THE THREE TESTS LAID DOWN BY VARIOUS D ECISION OF THIS COURT, NAMELY WHETHER THE INCOME ACCRUED TO THE ASSESSEE IS REAL OR HYPOTHETICAL; WHETHER THERE IS A CORRESPONDING LIABILITY OF THE OTHER PARTY TO PASS ON THE BENEFITS OF DUTY FREE IMPORT TO THE ASSESSEE EVEN W ITHOUT ANY IMPORTS HAVING BEEN MADE; AND THE PROBABILITY OR IMPROBABILITY OF REALIZATION OF THE BENEFITS BY THE ASSESSEE CONSIDERED FROM A REALISTIC AND PRACTICAL POINT OF VIEW (THE ASSESSEE MAY NOT HAVE MADE IMPORTS), IT IS QUITE CL EAR THAT IN FACT NO REAL INCOME BUT ONLY HYPOTHETICAL INCOME HA D ACCRUED TO THE ASSESSEE AND SECTION 28(IV) OF THE ACT WOULD BE INAPPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. ESSENTIALLY, THE ASSESSING OFFICER IS REQUIRED TO B E PRAGMATIC AND NOT PEDANTIC. ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 14 5.0.3 IN VIEW OF THE AFORESAID, WE FIND NO REASON TO INTERFERE WITH THE CATEGORICAL FINDING RECORDED BY THE LD. CIT (A) AND GROUND NOS. 1 TO 4 RAISED BY THE REVENUE ARE REJECTED. 5.1.0 WITH RESPECT TO GROUND NO. 5 PERTAINING TO THE CONTENTION OF THE REVENUE THAT THE LD. CIT (A) HAD VIOLATED TH E PROVISIONS OF RULE 46A OF THE RULES, HAVING HEARD BOTH THE PARTIE S AND ALSO AFTER HAVING PERUSED THE MATERIAL AVAILABLE ON RECO RD, WE FIND THAT, ADMITTEDLY, NO EVIDENCE HAS BEEN SPECIFICALLY HIGHLIGHTED BY THE REVENUE WHICH COULD BE TERMED AS ADDITIONAL EV IDENCE AND WHICH WAS RELIED UPON TO GRANT RELIEF AS TO THE ASS ESSEE. ON THE CONTRARY, THE LD. CIT(A) ON CONSIDERATION OF THE RE PLIES FILED AND EXAMINATION OF THE ENCLOSURES FILED ALONG WITH THE REPLIES FILED ARRIVED AT THE FOLLOWING CONCLUSION: RELATING TO OBJECTION RAISED BY THE APPELLANT UNDE R GROUND NO. 10 IT WAS NOTICED UPON A PERUSAL AND ANALYSIS O F THE ASSESSMENT ORDER THAT THE APPELLANT WAS CONSIDERED TO BE GUILTY BY THE AO OF NOT PRODUCING THE BOOKS OF ACCOUNT SPE CIFICALLY ASKED FOR BY HIM VIDE ORDER SHEET NOTE DATED 6.3.2013 DUR ING THE HEARING. IN THE APPELLATE PROCEEDINGS IT WAS ARGUED PER CONT RA BY THE APPELLANT THAT THE BOOKS OF ACCOUNT WERE PRODUCED B EFORE THE AO WHICH STOOD CORROBORATED ON THE STRENGTH OF THE TAB LE CONSISTING INTER ALIA THE DETAILS/INFORMATION ADMITTEDLY PRODU CED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS AS REPRODUCED BELOW. ON AN ANALOGOUS CONSIDERATION OF THE ARGUMENTS, I A M OF THE CONSIDERED VIEW THAT THE IMPUGNED ASSESSMENT ORDER WAS NOT ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 15 FRAMED WITHOUT GRANTING ADEQUATE OPPORTUNITIES BY T HE AO AS AGITATED BY THE APPELLANT. ON A REFERENCE TO THE S UBMISSIONS AND THE EVIDENCE WITH RELEVANT ENCLOSURES AND ANNEXURES FILED PRIMARILY CONSISTING OF LETTERS OF VARIOUS DATES AD DRESSED TO THE AO, WITH THE PAPER BOOK BY THE APPELLANT DURING THE APPELLATE PROCEEDINGS IT WAS AMPLY CLEAR THAT THE LATTER WAS IN A POSITION TO FILE THE FOLLOWING DOCUMENTS AS POINTED OUT BY THE COUNSEL IN HIS SUBMISSION ONLY AS A RESULT OF VARIOUS OPPORTUNITIE S AFFORDED TO HIM BY THE AO. THE TABLE BELOW PROVES THIS FACT TO THE HILT:- SR. NO. DATE OF REPLY PAGE(S) OF PAPER BOOK ENCLOSURE(S) FURNISHED WITH THE REPLY(S) (PAGES OF PAPER BOOK) 1 03.10.2012 22 FINANCIAL STATEMENT AND TAX AUDIT REPORT FURNISHED ALONG WITH RETURN OF INCOME (3-21) 2 13.12.2012 23 TO 25 I) COPY OF BANK STATEMENT ALONG WITH COPY OF BANK BOOK OF THE BANK OF BOTH OVERDRAFT ACCOUNT AND CASH CREDIT ACCOUNT MAINTAINED WITH PUNJAB NATIONAL BANK . II) DETAILED LEDGER ACCOUNT REPRESENTING CHRONOLOGI CAL TRANSACTIONS IN PARTNER(S) CAPITAL ACCOUNT(S) DURIN G THE YEAR UNDER CONSIDERATION. LEDGER ACCOUNT OF SALES. III) LEDGER ACCOUNT OF VARIOUS EXPENSES. IV) LEDGER ACCOUNT OF VARIOUS UNSECURED LOANS AND INTEREST ON UNSECURED LOANS ALONG WITH CONFIRMATION S OF PARTIES WITH PAN NO(S) V) PARTY-WISE CONFIRMATIONS OF ADVANCES MADE TO SUPPLIERS. VI) PARTY-WISE CONFIRMATIONS OF SUNDRY DEBTORS. VII) PARTY-WISE CONFIRMATIONS OF SUNDRY DEBTORS. 3 24.12.2012 29 TO 30 I) DETAILED CAPITAL ACCOUNT(S) OF BOTH THE PARTNERS ALONG WITH LEDGER ACCOUNT(S) OF DRAWINGS (102-106 AND 121-124) II) PERSONAL BANK STATEMENTS OF PARTNERS. III) QUANTITATIVE AND VALUE-WISE DETAIL OF OPENING STOCK AND CLOSING STOCK. IV) CONFIRMATION OF SMT. PREETI SHARMA ALONGWITH HE R PAN NO. AND PERSONAL LEDGER ACCOUNT. V) CONFIRMATIONS OF PARTIES WITH COMPLETE ADDRESS A ND THEIR PAN NO(S). 4 20.01.2013 27 TO 28 I) LEDGER ACCOUNT OF FINANCIAL CHARGES II) LEDGER ACCOUNT OF PURCHASE OF INVERTER III) LEDGER ACCOUNT OF UNSECURED LOANS IV) LEDGER ACCOUNT OF COMMISSION CHARGES V) LEDGER ACCOUNT OF PURCHASE VI) LEDGER ACCOUNT OF THE FOLLOWING PARTIES: I) VINOD SHARMA (UNSECURED LOANS) II) PANKAJ DUA (UNSECURED LOANS) III) PREETI SHARMA (UNSECURED LOANS) IV) PRIYANKA GUPTA (UNSECURED LOANS) ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 16 V) NISHTA INFOTECH (ADVANCES TO SUPPLIERS) VI) SUMIT MAHAJAN (ADVANCES TO SUPPLIERS) 5 28.01.2013 31 32 I) COPY OF LOAN ACCOUNT FROM RELIANCE CAPITAL AND FROM M/S. BAJAJ FINANCE (81-91) II) COPY OF ACCOUNT WITH MOHAN TRADERS (194-195) III) COPY OF ACCOUNTS OF THE FOLLOWING PARTIES: M/S GINNI ENTERPRISES M/S S.J TRADERS M/S BALAJI OVERSEAS M/S. KUMAR POULTRY M/S. MUKESH KUMAR & SONS M/S. GANGA ASSOCIATES M/S. ASHTHA POULTRY FEEDS M/S. SHYAMJEE TRADERS IV) CASH FLOW STATEMENT ALONG WITH CASH RECONCILIATION OF PUNJAB NATIONAL BANK 6 06.03.13 33 - 34 I) SANCTION LETTER OF UNSECURED LOAN. II) SANCTION LETTER OF SECURED LOAN FROM PUNJAB NATIONAL BANK. III) DETAILS OF BANK ACCOUNT. THE RELEVANT PAGES OF THE PAPER BOOK WHICH BEAR TES TIMONY TO THE FACT THAT THE APPELLANT WAS ABLE TO PRODUCE VAR IOUS DETAILS BEFORE THE AO ONLY IN RESPONSE TO SEVERAL OPPORTUNITIES ARE PAGES 22 TO 34. FROM THE DETAILS THE FOLLOWING OTHER FACTS WERE ALSO CLEAR:- I) THAT THE APPELLANT FIRM COMPLETE BOOKS OF ACCOUNT W HICH WERE DULY PRODUCED IN THE COURSE OF ASSESSMENT PROC EEDINGS BUT THE APPELLANT AS A RESULT OF OPPORTUNITIES GRAN TED TO IT. II) THAT THE LD. AO NEITHER REJECTED THE BOOKS OF ACCOU NT NOR RECORDED ANY ADVERSE FINDINGS IN RESPECT OF SUCH BO OKS OF ACCOUNT. III) THUS ONCE COMPLETE DETAILS IN RESPECT OF BOOKS OF ACCOUNT AS ABOVE WERE PRODUCED AND ACCEPTED, THERE REMAINED NO VALID JUSTIFICATION FOR THE AO TO ALLEG E THAT BOOKS OF ACCOUNT WERE NOT PRODUCED BY THE APPELLANT FIRM. IV) THE AFFIDAVIT OF SH. KAPIL AGGARWAL, CA FOR THE APPELLANT, ATTESTED THE FACT THAT THE APPELLANT, WH O ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 17 MAINTAINED BOOKS OF ACCOUNT WHICH HAD DULY BEEN AUD ITED AND FROM WHICH ALL THE LEDGER ACCOUNTS WERE FURNISH ED AND ACCEPTED BY THE AO IN THE IMPUGNED ORDER OF ASSESSM ENT, COULD NOT HAVE REFRAINED FROM PRODUCING BOOKS OF AC COUNT IN THE COURSE OF ASSESSMENT PROCEEDINGS. V) THAT THE AO FRAMED THE IMPUGNED ASSESSMENT ORDER U/S 143(3) OF THE ACT AND NOT IN THE MANNER PROVIDE D U/S 144 OF THE ACT. VI) THE DECLARED NET PROFIT IN THE BOOKS OF ACCOUNT WAS ACCEPTED IN THE ORDER OF ASSESSMENT. VII) INHERENT CONTRADICTIONS AND ASSUMPTIONS AND OVERLOOKING OF THE VOLUMINOUS EVIDENCES PLACED ON R ECORD BY THE APPELLANT. 5.1.1 NO SPECIFIC ERROR OR MISTAKE HAS BEEN HIGHL IGHTED BY THE LD. DR IN THE AFORESAID FACTUAL INFERENCE OTHER THA N TO SUGGEST THAT THE BOOKS OF ACCOUNTS WERE NOT PRODUCED ON 6.3 .2013. HOWEVER, HAVING REGARD TO THE VOLUMINOUS EVIDENCE E NCLOSED WITH THE REPLIES AND PLACED AS PART OF PAPER BOOK, WE FI ND NO INFIRMITY IN THE CONCLUSION OF THE LD. CIT (A) THAT ONCE COMP LETE DETAILS IN RESPECT OF BOOKS OF ACCOUNT AS ABOVE WERE PRODUCED AND ACCEPTED THERE REMAINED NO VALID JUSTIFICATION FOR THE AO TO ALLEGE THAT BOOKS OF ACCOUNT WERE NOT PRODUCED BY THE ASSESSEE FIRM, PARTICULARLY WHEN THE TRADING RESULTS AS DECLARED H AVE BEEN ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 18 ACCEPTED AS SUCH. ACCORDINGLY, WE ARE UNABLE TO TAK E A VIEW DIFFERENT FROM THAT OF THE LD. CIT (A) AND DISMISS GROUND NO. 5. 5.2.0 GROUND NO. 6 CHALLENGES THE ACTION OF THE LD . CIT (A) IN DELETING AN AMOUNT OF RS. 2,66,81,915/- BEING CA SH DEPOSITED IN BANK ACCOUNTS BY THE RELATIVES OF THE ASSESSEE W HICH HAD BEEN ADDED TO THE INCOME OF THE ASSESSEE FIRM ON THE GRO UND THAT IT REPRESENTED UNACCOUNTED MONEY OF THE ASSESSEE FIRM. IN THIS REGARD, IT IS NOTED THAT THE SUM BROUGHT TO TAX COM PRISES OF SUM/S TRANSFERRED FROM THE BANK ACCOUNTS OF THE PAR TNERS OF THE ASSESSEE FIRM OR THEIR DAUGHTERS. IT IS NOT IN DIS PUTE THAT ALL THE AFORESAID PERSONS, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HAD FILED THEIR CONFIRMATIONS, COPIES OF ACCOUNT, S TATEMENT OF AFFAIRS OF THE BANKS, RETURNS OF INCOME AND CASH FL OW STATEMENTS DULY SUPPORTED BY THE CERTIFICATES FROM THE BANKS. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE FIRM HAD MADE SALES TO THE PROPRIETARY CONCERNS BEING OPERATED AND MANAGED BY THE MEMBERS OF THE FAMILY OF THE ASSESSEE WHICH FACTS S TAND ACCEPTED. ALSO, THE AFORESAID PERSONS HAD DEPOSED THAT THE SUMS OF MONEY/S STANDING TO THEIR CREDITS IN THE BOOKS O F THE ASSESSEE FIRM AT THE END OF THE IMPUGNED FINANCIAL YEAR WERE GENUINE AND ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 19 WERE THE PRODUCT OF GENUINE RUNNING TRANSACTIONS. IN SUCH CIRCUMSTANCES, THE LD. CIT (A) HAD CONCLUDED AND H ELD AS UNDER: THE ABOVE STATEMENTS RECORDED BY THE AO IN THE COU RSE OF ASSESSMENT PROCEEDINGS WERE CAREFULLY CONSIDERED. A LL THE DEPONENTS WHO HAD GIVEN LOANS AND ADVANCES OR HAD RUNNING TRANSACTIONS TO THE APPELLANT FIRM CONFIRME D THROUGH THEIR STATEMENTS THE FACTS OF INDEPENDENTLY RUNNING THEIR BUSINESSES AS DISCERNIBLE FROM ANSWERS 2 TO 8 & 17, GIVING LOANS AND ADVANCES TO THE APPELLANT AS EVIDENT FROM ANSWERS 11 & 12, THEIR CREDITWORTHINESS VIS--VIS THE CASH DEPOSITS IN THEIR BANKS ACCOUNT WITH THE HELP OF STATEMENTS OF AFFAIRS OF BANKS, CASH, LEDGER ACCOUNTS OF THE RESPECTIVE PROP RIETORSHIP CONCERNS AS APPEARING IN THE BOOKS OF THE APPELLANT , COPY OF ITR-IV & COMPUTATION OF INCOME THEREWITH VIDE ANSWE R NO. 13 AND HAVING DECLARED THEIR INCOMES IN THEIR RETURNS OF INCOME AS MANIFEST FROM ANSWER NO. 16 OF THEIR STATEMENTS. NONE OF THE ABOVE REPLIES OF THE DEPONENTS PURPORTEDLY EXTE NDING THE LOANS AND ADVANCES TO THE APPELLANT FIRM BY ACCOUNT PAYEE CHEQUES OVER A PERIOD OF TIME IN THE FY WERE FOUND BY THE AO TO BE FALSE OR INCORRECT. IN OTHER WORDS THE APPELL ANTS CLAIM THAT RS. 2,66,81,915/- WAS RECEIVED FROM EXPLICABLE SOURCES WAS NOT DISLODGED BY THE AO IN ANY MANNER WHATSOEVE R. MEANING THEREBY THAT THE EXPLANATION OF THE APPELLA NT WAS NOT FOUND TO BE FALSE BUT UNSATISFACTORY AND UNACCE PTABLE BY THE AO. (I) THAT THE APPELLANT FIRM RECEIVED THE MONEY TRANSFER RED TO ITS BANK ACCOUNT BY ACCOUNT PAYEE CHEQUES FROM T HE THREE DAUGHTERS OF THE PARTNERS NAMELY MS NEERJA SHARMA, PREETI SHARMA AND HEENA SHARMA AND THE TWO PARTNERS OF TH E APPELLANT FIRM, SH VINOD SHARMA AND USHA SHARMA; (II) THAT ALL THE ABOVE FIVE PERSONS GIVING THE LOANS WE RE INCOME TAX ASSESSEES. (III) THAT ALL THE LENDERS APPEARING IN RESPONSE TO SUMMO NS U/S 131 OF THE ACT CONFIRMED THE TRANSACTIONS WITH THE APPELLANT FIRM ALONG WITH THE SOURCES OF DEPOSITS I N CASH IN THEIR BANK ACCOUNT. THE RELEVANT EVIDENCE PRODUCES BEFORE THE AO BY ALL OF THEM ARE DEPICTED BELOW:- ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 20 S. NO. NAME OF THE PARTNERS AND THEIR DAUGHTERS AMOUNT ADDED AS INCOME EVIDENCE ON RECORD (PAGES OF PAPER BOOK) I) SHRI VINOD KUMAR SHARMA (PARTNER) 47,69,500 I) COPY OF STATEMENTS OF AFFAIRS OF PNB AS ON 31.03.2010 II) COPY OF STATEMENT OF CASH III) COPY OF LEDGER ACCOUNT OF BALAJI TRADERS IN THE BOOKS OF APPELLANT IV) COPY OF CONFIRMATION DATED 27.02.2013 FROM PUNJAB NATIONAL BANK V) COPY OF STATEMENT RECORDED DATED 26.2.2013 VI) COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME ALONGWITH COMPUTATION OF INCOME FOR AY 2010-11 II) SMT. USHA SHARMA (PARTNER) 49,75,000 I) COPY OF STATEMENT OF AFFAIRS OF PNB AS ON 31.03.2010 II) COPY OF STATEMENT OF CASH III) COPY OF LEDGER ACCOUNT OF S. J. TRADERS IN THE BOOKS OF APPELLANT. IV) COPY OF CONFIRMATION DATED 27.2.2013 FROM PUNJAB NATIONAL BANK V) COPY OF STATEMENT RECORDED DATED 04.03.2013 VI) COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME ALONGWITH COMPUTATION OF INCOME FOR AY 2010-11 III) MS. NEERJA SHARMA (DAUGHTER) 39,96,015 I) COPY OF LEDGER ACCOUNT OF NEERJA SHARMA IN THE BOOKS OF APPELLANT II) COPY OF BANK STATEMENT OF M/S GINNI ENTERPRISES III) COPY OF STATEMENT OF CASH IV) COPY OF STATEMENT OF AFFAIRS OF PNB AS ON 31.3.2010 V) COPY OF AFFIRMATION DATED 27.2.2013 FROM PUNJAB NATIONAL BANK VI) COPY OF LEDGER ACCOUNT OF GINI ENTERPRISES IN THE BOOKS OF APPELLANT VII) COPY OF STATEMENT RECORDED DATED 11.3.2013 VIII) COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME ALONGWITH COMPUTATION OF INCOME FOR AY 2010-11 IV) MS. PREETI SHARMA (DAUGHTER) 72,55 ,950 I) COPY OF LEDGER ACCOUNT OF PREETI SHARMA IN THE BOOKS OF APPELLANT II) COPY OF BANK STATEMENT OF M/S GEETANJALI FEEDS III) COPY OF STATEMENT OF AFFAIRS OF PNB AS ON 31.3.2010 IV) COPY OF STATEMENT OF CASH V) COPY OF CONFIRMATION DATED 27.2.2013 FROM PUNJAB NATIONAL BANK VI) COPY OF LEDGER ACCOUNT OF GEETANJALI FEEDS IN THE BOOKS OF APPELLANT VII) COPY OF STATEMENT RECORDED DATED 1.3.2013 VIII) COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME ALONGWITH COMPUTATION OF ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 21 INCOME FOR AY 2010 - 11 V) MS. HEENA SHARMA (DAUGHTER) 56,85,450 I) COPY OF BANK STATEMENT OF M/S HEENA TRADERS II) COPY OF STATEMENT OF AFFAIRS OF PNB AS ON 31.3.2010 III) COPY OF STATEMENT OF CASH IV) COPY OF LEDGER ACCOUNT OF HEENA TRADERS IN THE BOOKS OF APPELLANT V) COPY OF CONFIRMATION DATED 27.2.2013 FROM PUNJAB NATIONAL BANK VI) COPY OF STATEMENT RECORDED DATED 4.3.2013 VII) COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME ALONGWITH COMPUTATION OF INCOME FOR THE AY 2007-08 TO AY 2010-11 TOTAL 2,66,81,815 IV) THAT THE AO DID NOT HAVE ANY BASIS OR CONCRETE , SOUND AND CLINCHING EVIDENCE TO REBUT THE CLAIM OF THE LE NDERS FROM WHOSE ACCOUNTS THE MONEY WAS RECEIVED BY ACCOUNT PA YEE CHEQUES BY THE APPELLANT FIRM. THUS, THE ALLEGATION OF THE AO THAT CASH DEPOSITED IN THE PROPRIETORSHIP CONCERNS OF PARTNERS AND THEIR DAUGHTERS WAS THE CASH OF THE APPELLANT F IRM WAS MERELY A STRONG SUSPICION, EMANATING FROM CONJECTUR ES, SURMISES, ASSUMPTIONS AND EXTRA-POLATIONS. V) THAT THE AO COULD NOT ESTABLISH CONCLUSIVELY THA T THE THREE DAUGHTERS OF THE PARTNERS AND THE PARTNERS OF THE APPELLANT FIRM WERE NOT ENGAGED IN THE BUSINESS OF POULTRY SEEDS. RATHER CONTRARY TO SUCH AN ALLEGATION THE RE SPECTIVE LENDERS IN THEIR STATEMENTS U/S 131 OF THE ACT CONV INCINGLY DEPOSED IN SUPPORT OF THEIR CLAIM OF RUNNING THEIR OWN BUSINESSES. THE RETURNS FURNISHED BY THEM BEFORE TH E AO NOT ONLY FOR THE INSTANT ASSESSMENT YEAR BUT FOR THE PR ECEDING ASSESSMENT YEARS COULD NOT BE ASSAILED BY THE AO IN THE LEAST. VI) THAT BUSINESS TRANSACTIONS UNDER TAKEN BY THE A PPELLANT FIRM WITH ALL THE FIVE CONCERNS ESTABLISHED BY THE PARTNERS AND THEIR DAUGHTERS STOOD ACCEPTED AS THE PROFIT AR RIVED AT ON THE BASIS OF SALES MADE TO SUCH CONCERNS WERE ACCEP TED. VII) THAT TOTAL SALES OF RS. 4,14,18,454/- ON WHICH PROFIT OF RS. 8,49,646/- WAS DECLARED BY THE APPELLANT FIRM W AS ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 22 ACCEPTED (PAGE 19 OF THE ORDER OF ASSESSMENT) BY TH E AO. ONCE PROFIT, WHICH WAS DISCLOSED INCLUDING SALES MA DE BY THE FIRM TO PROPRIETORSHIP CONCERNS WAS ACCEPTED, ANY C ONCLUSION THAT SUCH CONCERNS WERE NOT ENGAGED IN THE BUSINESS WAS SELF-CONTRADICTORY. IN A NUTSHELL THE POSITION EMERGING FROM THE FACTS AND EVIDENCE ON RECORD IS AS UNDER:- A) THAT ALL DEPOSITS IN THE BANK ACCOUNT OF THE APPELL ANT WERE BY ACCOUNT PAYEE CHEQUES; B) THAT EACH PERSON WHO ADVANCED SUCH MONEY TO THE APPELLANT WAS AN INCOME TAX ASSESSEE; C) THAT EACH PERSON WHO ADVANCED SUCH MONEY IN ITS STATEMENT RECORDED BEFORE THE LEARNED ASSESSING OFF ICER CONFIRMED THE SOURCE OF SUCH ADVANCES TO THE APPELL ANT WHICH COULD NOT BE FALSIFIED BY THE AO ON THE STRENGTH OF EVIDENCE; D) THAT SUCH ADVANCES IN COURSE OF BUSINESS TRANSACTIO N STOOD REPAID DURING THE YEAR AS WAS EVIDENT FROM CO PIES OF ACCOUNTS REFLECTING REPAYMENTS; E) THAT THERE WAS NO EVIDENCE TO HOLD THAT CASH DEPOSI TS IN THE ACCOUNT OF THE PARTNERS/DAUGHTERS WAS THE CASH OF THE APPELLANT FIRM. THAT SUCH CASH WAS OTHERWISE DULY E XPLAINED BY THE PARTNERS AND DAUGHTERS IN THEIR STATEMENT AN D DOCUMENTARY EVIDENCE INCLUDING CASH FLOW STATEMENT WHICH COULD NOT BE CONTRADICTED BY THE AO; F) THAT THE AO ALSO FAILED TO POINT OUT ANY DEFECT IN THE BOOKS OF ACCOUNT PRODUCED BEFORE HIM BY THE APPELLA NT IN THE COURSE OF ASSESSMENT PROCEEDINGS; G) THAT THERE WAS NO REASON FOR THE AO TO MAKE THE ADDITION AS ABOVE WITHOUT REJECTING THE BOOKS OF AC COUNT WHICH ONLY SHOWS THAT THERE WERE INHERENT CONTRADIC TIONS IN THE ORDER OF THE AO. ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 23 H) THE INFERENCES DRAWN BY THE AO FROM THE STATEMENTS OF THE LENDERS WERE ONLY ARGUMENTS BASED ON LOGICAL RE ASONING BUT BEREFT OF SUPPORTING EVIDENCE. I) IF AT ALL ANY ACTION WAS WARRANTED IN THIS RESPECT, IT WAS IN THE CASE OF THE SOURCE OF THE SOURCE. THEREFORE IN THE AFORESAID PREMISES THE ADDITION OF RS. 2,66,81,913/- IS DELETED AND THE GROUND NO. 7(I) TO (IV) ARE ALLOWED. 5.2.1 THE LD. SR. DR HAS BEEN UNABLE TO PERSUADE U S TO FORM A DIFFERENT OPINION. ONCE THE ASSESSEE FIRM HAS RE CEIVED MONEY THROUGH BANKING CHANNELS FROM ITS PARTNERS/THEIR DA UGHTERS WHO HAVE DULY DEPOSED AND CONFIRMED THE TRANSACTION/S A ND HAVE ALSO SUPPORTED THE SAME WITH DOCUMENTARY EVIDENCE/S THEN THE ADDITION, WITHOUT ANY EVIDENCE/S TO THE CONTRARY, I S ABSOLUTELY WITHOUT ANY FORCE OF LAW AND UNSUSTAINABLE. IT IS WELL SETTLED LAW THAT SURMISES, CONJECTURE AND SUSPICION CAN NEVER B E RESORTED TO MAKE ADDITION U/S 68 OF THE ACT. THE AO HAS PROCEE DED TO MAKE THE ADDITION ON AN ASSUMPTION THAT THE CASH DEPOSIT ED IN THE PROPRIETORSHIP CONCERN OF THE PARTNERS AND THEIR DA UGHTER IS THE CASH OF THE ASSESSEE. NO BASIS WHATSOEVER HAS BEEN STATED IN THE ORDER OF ASSESSMENT FOR SUCH A FARFETCHED ASSUMPTIO N. IN FACT, IT IS PERTINENT TO NOTE THAT THE LD. CIT (A) HAS ALSO OBSERVED AS UNDER: ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 24 IT WAS NOTICED THAT THE AO TOOK INCONSISTENT STAND S IN AS MUCH AS HE ADMITTED AS WELL AS DISPUTED AT THE SAME TIME THAT THE LENDERS, ALL MEMBERS OF THE FAMILY I.E. VI NOD SHARMA, USHA SHARMA, NEERJA SHARMA, HEENA SHARMA AND PREETI SHARMA HAD THEIR OWN SOURCES OF INCOME FROM INDEPEN DENT BUSINESSES RUN BY THEM. IT WAS ALSO NOTICED THAT THE ASSESSMENTS IN THE CAS E OF ALL THE LENDERS HAD BEEN FINALIZED U/S 143(1) OF THE ACT FO R THE SAME AY AS IS IN DISPUTE IN THE CASE OF THE APPELLANT FI RM. ALTHOUGH THE LENDER WERE ASSESSED BY DIFFERENT AOS IN DELHI ITSELF, A CASE WAS NEVER MADE OUT AGAINST ANY OF TH E LENDERS ON THE GROUNDS OF BOGUS RETURNS OF INCOME OR UNEXPL AINED CASH CREDITS OR DEPOSITS IN THEIR BANKS ACCOUNT IN ANY OF THE EARLIER AYS ESPECIALLY SINCE 2002-03. IT WAS ALSO S EEN ON A PERUSAL OF THE ASSESSMENT ORDER THAT THE RESPECTIVE LENDERS HAD FILED THEIR CONFIRMATIONS, COPIES OF ACCOUNT, S TATEMENTS OF AFFAIRS OF THE BANKS, RETURNS OF INCOME AND CASH FL OW STATEMENTS DULY SUPPORTED BY THE CERTIFICATE FROM T HE BANKS WHICH CLEARLY DEMONSTRATED THAT THE LENDERS HAD THE IR OWN SOURCES OF INCOME AND THEREBY THEIR IDENTITY, GENUI NENESS AND CREDITWORTHINESS WERE DULY PROVED. IT WAS ALSO NOTED WITH INTEREST THAT THE APPELLANT FIRM MADE SALES TO THE PROPRIETARY CONCERNS RUN AND MANAGED B Y THE MEMBERS OF THE FAMILY OF THE APPELLANT, A FACT WHIC H WAS NOT DISPUTED BY THE AO ALSO. SIMILARLY THEIR CREDIT BAL ANCES AT THE END OF THE YEAR IN THE BOOKS OF APPELLANT FIRM WERE ALSO NOT IMPUGNED BY THE AO. NO INFORMATION ADVERSE TO THE L ENDERS WAS ALSO PASSED ON BY THE CONCERNED AOS OF SUCH LEN DERS TO THE AO OF THE APPELLANT FIRM ALSO. LIKEWISE NO INFORMATION ADVERSE TO THE LENDERS ACCO RDING TO THE AO WERE PASSED ON TO AOS OF SUCH LENDERS FOR A CONCERNED AND FOCUSED APPROACH BY THE APPELLANTS A O. IN A NUTSHELL THE INCOME TAX RETURNS OF ALL SUCH LE NDERS WERE NEITHER DISPUTED NOR ASSAILED UNDER ANY PROCEEDINGS OF THE ACT. ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 25 5.2.2 ACCORDINGLY, FOR THE REASONS STATED ABOVE, T HE ADDITION MADE OF RS. 2,66,81,915/- IS HELD TO BE VALIDLY DEL ETED AND, THEREFORE, GROUND NO 6 RAISED BY THE REVENUE IS REJ ECTED. 5.3.0 GROUND NO. 7 AGITATES THE ACTION OF THE LD. CIT (A) IN ACCEPTING THE ASSESSEES CONTENTION THAT THE IMPUGN ED AMOUNT OF RS. 2,38,56,526/- DEPOSITED IN THE TWO BANK ACCOUNT S WAS OUT OF THE CASH WITHDRAWALS MADE BY THE ASSESSEE FIRM. ON THIS ISSUE, THE LEARNED CIT (A), WHILE DELETING THE ADDITION, H AS HELD AS UNDER: HAVING CONSIDERED THE SUBMISSIONS, THE RELEVANT MA TERIAL EVIDENCE ON RECORD AND VARIOUS ASPECTS OF THE MATTE R ON THIS ISSUE, IT WAS NOTICED THAT THE LD. AO MADE THE ADDITIONS M ERELY ON THE GROUND:- HOWEVER, THE ASSESSE HAS DENIED TO HAVE MADE ANY P URCHASES IN CASH. THE ASSESSEE HAS FILED THE CASH FLOW STATEMEN T SUBMITTED VIDE THEIR LETTER DATED 28.01.2013 WHERE IN THE ASS ESSEE HAS CLAIMED BENEFIT OF CERTAIN EXPENSES AMOUNTING TO RS . 11,49,833/- DEBITED TO P & L A/C WHICH HAVE BEEN CLAIMED IN CAS H. THE CLAIMED PUT FORTH BY THE ASSESSEE IS ACCEPTED AND THE ASSES SEE WILL BE GIVEN THE BENEFIT OF THE BALANCE AMOUNT OF RS. 2,45 ,40,167/- (RS. 2,56,90,000/- - RS. 11,49,833/-) WILL BE ADDED AS I NCOME OF THE ASSESSEE U/S 68 OF THE I.T. ACT, 1961 AS THE ASSESS EE HAS FAILED TO EXPLAIN THE SOURCE OF CASH DEPOSITS MADE THEIR BANK ACCOUNTS. REGARD WAS HAD TO SUBMISSION OF THE APPELLANT IN TH E ABOVE CONNECTION. THE SOLE GROUND BEHIND THE ADDITION WAS THE ALLEGED FAILURE OF THE APPELLANT TO PROVE THE SOURCES OF CA SH DEPOSITS IN THE ABOVE DISCLOSED REGULAR BANKS ACCOUNTS OF THE APPE LLANT. THE APPELLANT REFUTED THE ABOVE ALLEGATION OF THE AO DU RING THE APPELLATE PROCEEDINGS STATING THAT SH VINOD SHARMA (Q. NO. 18) PARTNER IN THE APPELLANT FIRM, DEPOSED DURING THEIR EXAMINATION U/S 131 OF THE ACT BY THE AO THAT THE CASH DEPOSITS IN THE ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 26 AFORESAID BANK ACCOUNTS WERE MADE OF THE SAME CASH WITHDRAWN FROM THE BANKS FOR PURCHASE OF GOODS. THE WITHDRAWN CASH WAS ENTERED INTO THE FIRMS CASH BOOK FIRST. THEREAFTER , MONEY WHENEVER REQUIRED IN CASH FOR PURCHASE OF GOODS WAS WITHDRAW N FROM THE CASH BOOK FOR BEING PAID TO THE SELLERS OF THE POUL TRY FEEDS. WHENEVER THE DEALS DID NOT MATERIALIZE THE MONEY LY ING IN CASH IN THE FIRMS ACCOUNT WAS RE-DEPOSITED IN BANK IN CASH . THE AR FOR THE APPELLANT SUMMED UP THE WHOLE TRANSACTION AS A SIMP LE CASE OF RE- DEPOSIT OF CASH WITHDRAWN FROM THE ABOVE BANK INTO THE SAME BANK AGAIN ON THERE BEING NO NEED OF CASH. THE ABOVE ARGUMENTS WERE CONSIDERED. IT IS OBSERVED BY ME THAT NONE OF THE ABOVE FACTS NARRATED SUPRA WERE DISPUTE D BY THE AO. JUST BY A STROKE OF PEN HE DREW THE CONCLUSION THAT THE ENTIRE CASH DEPOSITS WERE UNEXPLAINED. THE NEXUS BETWEEN THE DE BITS AND THE CREDITS IN CASH IN THE SAID BANKS ACCOUNTS AS ESTA BLISHED BY THE APPELLANT WAS NOT AT ALL UPSET BY THE AO. HAVING CO NSIDERED AND DULY APPRECIATED THE FACTS OF THE CASE AS PRESENTED BEFORE THE AO, I AM OF THE FIRM OPINION THAT THE ENTIRE CASH DEPOS ITS WERE NOT UNEXPLAINED. IN THIS CONTEXT THE ROUTE OF THE CASH WITHDRAWN AS SHOWN TO THE AO IS WORTH REPRODUCING:- 3) IN OTHER WORDS, EVEN AS PER THE FINDINGS OF THE LEARNED ASSESSING OFFICER THE CASH AVAILABLE WAS OF RS. 2,5 0,06,359/- FROM THE FOLLOWING TWO SOURCES: A) CASH WITHDRAWALS EVIDENCE: I) COPY OF BANK STATEMENT OF CURRENT ACCOUNT NO. 1399002100040391 II) DETAIL OF CASH WITHDRAWAL OF CURRENT ACCOUNT NO . 1399002100040391 III) COPY OF BANK STATEMENT OF OVERDRAFT ACCOUNT NO . 1399008700001396 IV) DETAIL OF CASH WITHDRAWAL OF OVERDRAFT ACCOUNT NO. 1399008700001396 V) COPY OF CASH BOOK VI) COPY OF BANK BOOK RS. 2,18,20,000/ - B) CASH SALES EVIDENCE: I) COPY OF LEDGER ACCOUNT OF SALES RS. 31,86,359/ - (FIGURE OF RS. 31,90,359/- INCORRECTLY ADOPTED) C) TOTAL RS. 2,50,06,359/ - .. .. .. .. . MOREOVER, IT IS SUBMITTED T HAT ALL THE CASH DEPOSITS IN THE BANK ACCOUNT ARE EXPLAINED THR OUGH THE CASH BOOKS WHICH IS PART OF THE BOOKS OF ACCOUNT MA INTAINED BY THE APPELLANT FIRM. THE BOOKS OF ACCOUNT OF THE APP ELLANT FIRM HAVE NOT BEEN REJECTED UNDER SECTION 145(3) OF THE ACT. IN ANY ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 27 CASE, NO DEFECT HAS BEEN FOUND IN THE CASH BOOK MAI NTAINED BY THE APPELLANT. IN FACT, THE PROFIT DECLARED ON THE BASIS OF SUCH BOOKS OF ACCOUNT HAS BEEN ACCEPTED AS SUCH. 9) FURTHERMORE, THE APPELLANT DURING THE CASE OF AS SESSMENT PROCEEDINGS HAD FURNISHED A CASH FLOW STATEMENT EXP LAINING THE DEPOSITS IN THE BANK ACCOUNT OF THE APPELLANT. A CO PY OF THE CASH FLOW STATEMENT FOR CONVENIENCE EXTRACTED HEREUNDER: AMOUNT (IN RS.) OPENING BALANCE OF CASH AS ON 31.03.2009 3,00,451 ADD: CAPITAL INTRODUCED BY SHRI VINOD SHARMA 10,00,000 ADD: AMOUNT RECEIVED FROM GEETANJALI FEEDS 2,15,300 ADD: AMOUNT RECEIVED FROM GINNI ENTERPRISES 2.14.600 ADD: AMOUNT RECEIVED FROM HEENA TRADERS 4,35,100 ADD: CASH WITHDRAWN FROM PNB 1396 49,10,000 ADD: CASH WITHDRAWN FROM PNB 40391 1,68,40,000 ADD: CASH SALES 31,86,359 2,71,01,810 LESS: EXPENSES INCURRED DIWALI EXPENSES 21,600 ELECTRICITY EXP. 1,06,520 LOADING UNLOADING 2,59,501 PRINTING & STATIONERY 16,520 REPAIR & MAINTENANCE 95,192 SALARY 4,49,000 PURCHASES 17,450 STAFF WELFARE 32,541 TELEPHONE EXPENSES 37,247 TRAVELLING CONVEYANCE 1,05,012 CAR REPAIR 5,250 LESS: CASH DEPOSITED INTO PNB 1396 31,35,000 LESS: CASH DEPOSITED INTO PNB 40391 2,26,41,000 1,79,977 THE EXPLAINED AMOUNTS WHICH WERE RE-DEPOSITED INTO THE BANK IN CASH AFTER BEING WITHDRAWN IN CASH FROM THE SAME BANK FOR PURCHASE OF POULTRY FEEDS AMOUNTING TO RS. 2,18,20,000/- IDENTIFIED BY THE AO DURING THE ASSES SMENT PROCEEDINGS AS CASH WITHDRAWALS OUT OF RS. 2,56,90, 000/- ARE DELETED, BEING A CASE OF INCORRECT APPRECIATION OF FACTS. REGARDING THE REMAINING RS. 38,70,000/- OUT OF RS. 2,56,90,000/- DEPOSITS IN CASH IN THE SAID BANK ACC OUNT THE AO VIDE PAGE NO. 4 PARA-3 OF THE ASSESSMENT ORDER M ENTIONED THAT THERE WERE CASH SALES OF RS. 31,86,359/-. HAVI NG GIVEN SUCH A FINDING OF FACT IN THE BODY OF THE ORDER THE AO WAS PRECLUDED FROM ADDING THIS AMOUNT AS UNEXPLAINED CA SH ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 28 DEPOSITS. THE APPELLANT THEREFORE UPON DUE CONSIDER ATION AS ALLOWED THE BENEFIT OF TELESCOPING. UNDER THE CIRCU MSTANCES, I AM OF THE CONSIDERED VIEW THAT RS. 31,86,359/- DEPO SITED IN CASH WERE CASH SALES AS ADMITTED BY THE AO HIMSELF ARE DELETED. REGARDING THE BALANCE CASH DEPOSITS OF RS. 6,83,641 /-, THE APPELLANTS EXPLANATION WAS NOT FOUND TO BE SUSTAIN ABLE HENCE CONFIRMED. THUS, GROUNDS 6 TO 6.3 ARE PARTLY ALLOWED. HOWEVER, THE USE OF SUCH WITHDRAWN CASH FOR EARNING INCOME CANNOT BE ABSOLUTELY RULED OUT. ACCORDINGLY, I HOLD UPON CONSIDERATION INTEREST CHARGEABLE @ 2.5 % PER ANNUM ON THE AMOUNT OF SUCH WITHDRAWN CASH CLAIMED TO HAVE BEEN RE- DEPOSITED IN CASH IN THE BANK ACCOUNTS OF WHICH NO PROOFS OR FINDINGS TO THE CONTRARY COULD BE BROUGHT ON RECORD BY THE AO, FOR THE INTERREGNUM PERIOD AS INCOME FROM OTHER SOU RCES I.E. FROM THE DATE OF WITHDRAWAL OF CASH TILL ITS REDEPO SIT IN CASH. THE AO SHALL CALCULATE THE INTEREST INCOME AS ABOVE . TO THIS EXTENT THE ADDITION STAND CONFIRMED. 5.3.1 ON CAREFUL CONSIDERATION OF THE AFORESAID FA CTUAL MATRIX, WHAT IS CERTAINLY NOT DISPUTED IS THAT THER E WERE CASH WITHDRAWALS FROM THE BANK TO THE EXTENT OF RS. 2,18 ,20,000/- AND ALSO CASH SALES TO THE EXTENT OF RS. 31,86,359/-. UNDER SUCH CIRCUMSTANCES, ONCE THE TRADING RESULTS AND THE CAS H FLOW STATEMENT FILED DURING THE ASSESSMENT PROCEEDINGS H AVE BEEN ACCEPTED, WE FIND NO ERROR IN THE ACTION OF THE LD. CIT (A) IN DELETING THE ADDITION TO THE EXTENT TO THE SUM WITH DRAWN IN CASH FROM THE BANK AND CASH SALES DULY DECLARED AND ACCE PTED IN THE ORDER OF ASSESSMENT. GROUND NO. 7 RAISED BY THE RE VENUE IS DISMISSED. ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 29 5.4 GROUNDS 8 AND 9 ARE GENERAL AND DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. THEY ARE, THEREFORE, REJECTE D. 6.0 IN THE RESULT, THE APPEAL OF THE REVENUE STAN DS DISMISSED. 7.0 IN THE FINAL RESULT, BOTH THE APPEALS ARE DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH, 2019. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER DATED: 19 TH MARCH, 2019 GS COPY FORWARDED TO: - 1) APPELLANT 2) RESPONDENT 3) CIT(A) 4) CIT 5) DR BY ORDER ASSTT. REGISTRAR DATE OF DICTATION ITA 5593/D/2014 ITA 6203/D/2014 ASSESSMENT YEAR 2010-11 30 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER