ITO, New Delhi V. Shri Janak Raj Arora, New Delhi

ITA 642/DEL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2742 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 26-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P K MISHRA
• Keywords: Presumptive income; Business income; Business expenditure; Opportunity of being heard
• Section: 142(1); 131; 69; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D , NEW DELHI) BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A. NO. 642/DEL/2013 (ASSESSMENT YEAR : 2009-10) ITO, WARD 25(3), VS SHRI JANAK RAJ ARORA, NEW DELHI PROP. KWALITY TEXTILES, H-75, 1 ST FLOOR, SHIVAJI PARK, NEW DELHI. GIR / PAN:AGIPA5783E I.T.A. NO.6234/DEL/ 2013 (ASSESSMENT YEAR 2009-10) ITO, WARD 25(3), VS. SIKANDER LAL KUMAR. NEW DELHI PROP. M/S. SIKANDER LAL RAKESH KUMAR & CO., 20/C/52, PUNJABI BAGH, NEW DELHI PAN / GIR NO.AASPK0847R (APPELLANT) (RESPONDENTS) APPELLANT BY : MS. RISHPAL BEDI, SR. DR RESPONDENT BY : SHRI P. K. MISHRA AND SHRI NEERAJ KUMAR, CA DATE OF HEARING : 19.11.2015 DATE OF PRONOUNCEMENT : 08.01.2016 ORDER PER KULDIP SINGH, JM: BOTH THE AFORESAID APPEALS ARE BEING DISPOSED OF B Y WAY OF CONSOLIDATED ORDER ON THE GROUND THAT THE ASSESSEES ARE FATHER AND SON AND ITA NO.642,6234/DEL/2013 2 COMMON GROUNDS OF APPEALS EXCEPT THE AMOUNTS INVOLV ED, HAVE BEEN RAISED THEREIN. 2. THE APPELLANT, ITO, CIRCLE 25(3), NEW DELHI (HER EINAFTER REFERRED AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDERS DATED 27.11.2012 & 13.09.2013 PASSED BY LD. CIT(A) XXIV, NEW DELHI QUA THE ASSESSMENT YEAR 2009-10 ON THE GROUND INTER ALIA THAT: A. ITA NO.642/DEL/2013: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, CIT(A) HAS ERRED IN:- 1. DELETING THE ADDITION OF RS.43,71,521/- MADE ON ACC OUNT OF UNDISCLOSED INVESTMENT IN STOCK U/S 69 OF THE I.T. ACT. 2. DELETING THE ADDITION OF RS. 6,56, 675/- MADE BY ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF 50% OF INTERE ST PAID ON PERSONAL LOANS. 3. RESTRICTING THE ADDITION OF RS.4,22,500/- AGAINS T RS.12,37.250/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCL OSED INCOME BY WAY OF CASH DEPOSIT IN THE CHIT FUND. ' B. I.T.A.NO. 6234/DEL/2013: '1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW CIT(A) HAS ERRED IN- DELETING THE ADDITION OF RS.15 ,81,693/- MADE BY ASSESSING OFFICER ON ACCOUNT OF PROFIT ON SALE OUT OF BOOKS. 2) DELETING THE ADDITION OF RS.3,24,423/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF INTEREST PAID ON PERSONAL LOA N. 3) RESTRICTING THE ADDITION AT 10% INSTEAD OF 20% M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF PERSONAL ELEMENT IN BUSINESS EXPENSES. ' 3. BRIEF FACTS OF I.T.A.NO. 642/DEL/2013: DURING THE PROCESSING OF RETURN OF INCOME FILED B Y BOTH THE ASSESSEES QUA THE ASSESSMENT YEAR 2009-10, THE CASES WERE SUB JECTED TO SCRUTINY AND ITA NO.642,6234/DEL/2013 3 CONSEQUENTLY, NOTICES U/S 143(2) AND 142(1) WERE SE RVED UPON THE ASSESSEE AND IN RESPONSE THERETO SHRI RAKESH GAMBHIR, CA/AR APPEARED, FILED REQUISITE DETAILS AND ATTENDED THE PROCEEDINGS FROM TIME TO TIME. DURING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSEE HAS FAIL ED TO PRODUCE BOOKS OF ACCOUNTS DESPITE ISSUANCE OF SUMMONS U/S 131 OF THE ACT. HOWEVER, DURING ASSESSMENT PROCEEDINGS, LD. A.R. FURNISHED THE REAS ONS FOR NOT PRODUCING THE BOOKS OF ACCOUNT. ASSESSING OFFICER CAME TO T HE CONCLUSION THAT EITHER THE ASSESSEE WAS NOT MAINTAINING BOOKS OF ACCOUNT O R HE WAS INTENTIONALLY AVOIDING TO PRODUCE BOOKS OF ACCOUNTS TO MISLEAD TH E DEPARTMENT ABOUT ACTUAL PROFITS EARNED BY THE ASSESSEE. HE HAS FAI LED TO PLACE ON RECORD ANY EVIDENCE FOR RECTIFICATION OF TECHNICAL FAULT IN TH E COMPUTER OR IT WAS GOT FORMATTED. THE ASSESSEE HOWEVER PRODUCED THE RECAS TED BOOKS OF ACCOUNTS ALONG WITH RELEVANT BILLS AND VOUCHERS DURING THE A SSESSMENT PROCEEDINGS WHICH WERE SCRUTINIZED ON TEST CHECK BASIS. 4. THE ASSESSEE WAS CALLED UPON TO EXPLAIN AS TO T HE EXCESS STOCK AVAILABLE AT RS.43,72,521/- AS WELL AS TO EXPLAIN T HE DIFFERENCE IN STOCK IN KWALITY TEXTILE OWNED BY HIM AND M/S. SIKANDAR LAL RAKESH RAKESH KUMAR (SLRK), A PROPRIETORSHIP CONCERN OWNED BY HIS F ATHER. FINDING THE EXPLANATION FURNISHED BY THE ASSESSEE, BEING NOT SA TISFACTORY, THE EXCESS STOCK OF RS.43, 72,521/- HAS BEEN ADDED TO THE INCO ME OF THE ASSESSEE U/S 69 OF THE ACT AS INVESTMENT MADE BY HIM FROM UNDISCLOS ED SOURCES. 5. FROM THE AUDITED ACCOUNTS BROUGHT ON RECORD ALO NG WITH RETURN FILED BY THE ASSESSEE, TAX AUDIT REPORT, IT IS TRANSPIRED THAT GROSS PROFIT OF RS.51,43,027/- HAS BEEN DECLARED ON THE TOTAL SALE OF RS.5,98,62,812/- YIELDING G.P. RATE OF 8.59% AND NET PROFIT OF RS.4, 36,491/- I.E. 0.729%, WHICH IS VERY LOW. IT HAS BEEN NOTED THAT THE MAJOR EXPENSES IN P & L ITA NO.642,6234/DEL/2013 4 ACCOUNT ARE BECAUSE OF INTEREST (CC) I.E. RS.L,09,9 7,888/-, INTEREST ON PERSONAL LOAN RS.13,13,349/-. THE ASSESSEE HAS NOT UTILIZED THE LOAN PROPERLY FOR BUSINESS PURPOSE AS THE MOST OF THEM ARE FOUND TO H AVE BEEN USED FOR INVESTMENT IN THE PROPERTY BY THE ASSESSEE IN HIS I NDIVIDUAL NAME AND NO BUSINESS NEXUS HAS BEEN PROVED DURING THE ASSESSMEN T PROCEEDINGS. SO, ASSUMING 50% OF THE PROPERTY LOAN HAS BEEN UTILIZED FOR THE BUSINESS PURPOSE, THE REMAINING 50%, I.E. 6,56,675/- ARE DIS ALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE, OTHERWISE SHOWN AS EXPENSE FOR TELEPHONE, STAFF WELFARE, TRAVEL ETC. THE ASSESSING OFFICER BY INVOK ING THE PROVISIONS OF SECTION 37 OF THE ACT, DISALLOWED 1/51H OF THE AFOR ESAID EXPENSES OF RS.5,69,836/-. 6. FROM THE PERUSAL OF THE HAND WRITTEN CASH BOOK FOR FINANCIAL YEAR 2008-09 RELEVANT TO ASSESSMENT YEAR 2009-10 IMPOUND ED DURING SURVEY PROCEEDINGS, IT HAS BEEN NOTICED THAT ASSESSEE PAID RS.12,37,250/- ON ACCOUNT OF (MAMA COMMITTEE). ON QUERY, ASSESSEE S TATED THAT HE IS MEMBER OF THE COMMITTEE BEING RUN BY MAMAJI AND THE ASSESS EE HAS TWO MEMBERSHIPS OF RS.6,00,000/-/- EACH. THE ASSESSEE C LAIMED THAT MONTHLY CONTRIBUTION MADE TOWARDS COMMITTEE HAVE BEEN DEBIT ED TO THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE BOOKS OF ACCOUNTS MA INTAINED. FINDING THE EXPLANATION OF THE ASSESSEE BEING UNSATISFACTORY, A N AMOUNT OF RS.72,37,250/- WAS ADDED TO HIS INCOME BEING PERSON AL INVESTMENT OF THE ASSESSEE. 7. BRIEF FACTS OF I.T.A.NO. 6234/DEL/2013: DURING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESS EE HAS FAILED TO PRODUCE BOOKS OF ACCOUNTS DESPITE ISSUANCE OF SUMMO NS U/S 131 OF THE ACT. HOWEVER, DURING ASSESSMENT PROCEEDINGS, LD. A.R. FU RNISHED THE REASONS FOR ITA NO.642,6234/DEL/2013 5 NOT PRODUCING THE BOOKS OF ACCOUNT. ASSESSING OFF ICER CAME TO THE CONCLUSION THAT EITHER THE ASSESSEE WAS NOT MAINTAI NING BOOKS OF ACCOUNT OR HE WAS INTENTIONALLY AVOIDING TO PRODUCE BOOKS OF A CCOUNTS TO MISLEAD THE DEPARTMENT ABOUT ACTUAL PROFITS EARNED BY THE ASSES SEE. AS PER PHYSICAL INVENTORY PREPARED DURING SURVEY, PRODUCED BY THE A SSESSEE DURING ASSESSMENT PROCEEDINGS ON TEST CHECK BASIS, THE ASS ESSING OFFICER NOTICED THAT THE VALUE OF CLOSING STOCK WAS AT RS.34,47,264 /- AS AGAINST CLOSING STOCK OF RS.2,32,18,422/- AS PER TRADING ACCOUNT LEAVING NEGATIVE STOCK OF RS.L,97,71,158/-. FINDING THE EXPLANATION FURNISHE D BY THE ASSESSEE NOT ACCEPTABLE, THE ASSESSING OFFICER RETURNED THE FIND ING THAT NEGATIVE STOCK OF RS.1,97,71,158/. FOUND RECORDED IN THE BOOKS REMAIN ED UNEXPLAINED WHICH INDICATES THAT THE ASSESSEE WAS MAKING SALES WITHOU T ISSUING BILLS AND RECORDING THE SAME IN HIS BOOKS OF ACCOUNTS AND THE TOTAL SALE AMOUNTING TO RS.L,97,71,158/- WAS MADE UP TO THE DATE OF SURVEY OUT OF BOOKS. SINCE, THE ASSESSEE HAS DECLARED GROSS PROFIT OF RS.24,56,471/ - @ 7.48% ON TOTAL SALE OF RS.3,28,54,578/- AND DEBITED ALL THE BUSINESS EXPEN SE TO HIS P & L ACCOUNT PERTAINING TO THE SALE MADE OUT OF THE BOOKS, THERE FORE, NO BENEFIT OF FURTHER EXPENSES IS ALLOWABLE AND PROFIT ON UNRECORDED SALE IS TAKEN @ 8% OF RS.1,97,71,158/- WHICH COMES OUT TO BE RS.15,81,693 /- AND CONSEQUENTLY, MADE ADDITION OFRS.15,81,693/-. 7.1 THE ASSESSEE IN HIS AUDITED ACCOUNTS DECLARED G ROSS PROFIT OF RS.24,56,471/- ON TOTAL SALE OF RS.3,28,54,578/- YI ELDING G.P. RATE OF 7.48% AND NET PROFIT OF RS.4,15,043/- I.E. @1.26%, FOUND TO BE VERY LOW BY THE A.O. SCRUTINY OF P & L ACCOUNT SHOWS THAT THE ASSE SSEE PAID THE BANK INTEREST TO THE TUNE OF RS.9,54,056/-, INTEREST ON PERSONAL LOAN TO THE TUNE OF RS.6,48,056/-, WHICH HAS BEEN MOSTLY USED FOR INVES TMENT IN THE PROPERTY ITA NO.642,6234/DEL/2013 6 AND HE HAS FAILED TO ESTABLISH THE BUSINESS NEXUS B ETWEEN THE INTEREST PAID AND THE BUSINESS. A.O. DISALLOWED THE INTEREST TO THE TUNE OF 50% ON PERSONAL LOAN AND ADDED THE SAME TO THE INCOME OF T HE ASSESSEE TO THE TUNE OF RS.3,24,423/- 7.2 IN THE P & L ACCOUNT, ASSESSEE HAS DEBITED RS.5 6,488/- AS PERSONAL EXPENSES, BUT THE ASSESSING OFFICER, FINDING THE SA ME BEING OF PERSONAL NATURE OBSERVED THAT THE ASSESSEE BEING INDIVIDUAL, IS NOT SUBJECTED TO TAX ON PRESUMPTIVE BASIS AS REQUIRED IN VARIOUS PROVISIONS OF FBD AND BY INVOKING THE PROVISIONS OF SECTION 70 OF THE ACT, DISALLOWED THE AFORESAID EXPENSE TO THE EXTENT OF 1/5TH I.E. RS.11,298/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 8. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO HAS PARTLY ALLOWED THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF CHALLENGING THE PRESENT APPEALS. 9. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE S OF BOTH THE PARTIES, GONE THROUGH MATERIAL PLACED ON RECORD IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ORDERS OF TAX AUTHORI TIES BELOW. 10. LD. D.R. CHALLENGING THE IMPUGNED ORDERS, CONT ENDED INTER ALIA THAT SINCE THE ASSESSEES HAVE FAILED TO PRODUCE ANY EVID ENCE AS TO THE ACTUAL MOVEMENT OF GOODS DESPITE NUMEROUS OPPORTUNITY, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.43,72,521/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN STOCK U/S 69 OF THE ACT; THAT LD. CIT(A) HAS ACC EPTED THE STATEMENT OF THE ASSESSEE AS TO THE MOVEMENT OF GOODS WITHOUT TAKING ANY EVIDENCE ON RECORD NOR HE HAS CONDUCTED ANY INQUIRY U/S 254 OF THE ACT AND NO BILL IS WERE RAISED BY SLRK. ITA NO.642,6234/DEL/2013 7 11. ON THE OTHER HAND, LD. A.R. FOR ASSESSEE REPEL LED THE ARGUMENTS ADDRESSED BY LD. D.R. BY CONTENDING INTER ALIA THAT SINCE STOCK PERTAINING TO THE PROPRIETORSHIP CONCERN NAMELY SLRK OWNED BY FAT HER OF THE ASSESSEE HAS BEEN SHIFTED TO THE PREMISES OF ASSESSEE DUE TO SICKNESS OF HIS FATHER; THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION ON ACCOUNT OF MONEY PAID TOWARDS COMMITTEE (CHIT FUND), WHICH WAS TO BE RECE IVED BACK AND HAS BEEN DULY REFLECTED IN THE BALANCE SHEET. 12. GROUND NO.1: I.T.A.NO. 642/DEL/2013: THE ASSESSING OFFICER DURING THE SURVEY PROCEEDINGS RECORDED COMPREHENSIVE STATEMENT OF THE ASSESSEE IN QUESTION /ANSWER FORM AS TO THE UNDISCLOSED INVESTMENT. UNDISPUTEDLY ASSESSEE HAD F AILED TO PRODUCE BOOKS OF ACCOUNTS. HOWEVER, DURING ASSESSMENT PROCEEDINGS , LD. A.R. PRODUCED THE BOOKS OF ACCOUNTS WITH REASON FOR NOT PRODUCING THE BOOKS OF ACCOUNTS I.E. VIRUS IN THE COMPUTER WITH WHICH THE ENTIRE RE CORD INCLUDING BOOKS OF ACCOUNTS WERE CORRUPTED AND DURING THE TIME OF SURV EY, THE ACCOUNTANT OF THE FIRM WAS IN THE PROCESS OF REWRITING OF BOOKS O F ACCOUNTS. 11. THE ASSESSING OFFICER AT THE TIME OF SURVEY, C OMPARED THE TRADING ACCOUNT FROM THE DOCUMENTS IMPOUNDED DURING SURVEY PROCEEDINGS WHICH IS AS UNDER: OPENING STOCK 1,57,80,350 SALES 2,72,38,729 PURCHASES 1,55,95,789 SALES NOT RECORDED IN BOOKS 3,81,164 PURCHASES NOT RECORDED IN BOOKS 15,83,579 CLOSING STOCK 69,96,418 GROSS PROFIT 16,57,193 TOTAL 3,46,16,311 TOTAL 3,46,16,311 ITA NO.642,6234/DEL/2013 8 13. THE ASSESSING OFFICER FORTIFIED THE ASSESSMENT ORDER ON THE STRENGTH THAT THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT AND WAS DELIBERATELY AVOIDING THE PRODUCTION OF BOOKS TO CO NCEAL HIS INCOME AS HE HAS FAILED TO PRODUCE ANY EVIDENCE REGARDING REPAIR OF TECHNICAL FAULT IN THE COMPUTER FOR ITS REPAIR OR FORMATTING DURING ASSESS MENT PROCEEDINGS BUT SUBSEQUENTLY RECASTED THE BOOKS OF ACCOUNTS ALONG W ITH RELEVANT BILLS / VOUCHERS AS PER HIS CONVENIENCE. 14. THE ASSESSING OFFICER THEN CAME TO THE CONCLUS ION THAT AS PER THE FIXED INVENTORY PREPARED BY THE SURVEY TEAM ON THE BASIS OR RATES PROVIDED BY THE ASSESSEE, THE VALUE OF CLOSING STOCK WAS AT RS.L.13.68.939/- AS AGAINST CLOSING STOCK OF RS.69,96,418/- AS PER TRADING ACCO UNT AND THUS, THERE WAS EXCESS STOCK AVAILABLE OF RS.43, 72,521/-, HENCE, A DDED THE UNRECORDED STOCK OF RS.43,72,521/- TO THE INCOME OF THE ASSESSEE U/S 69 OF THE ACT. 15. ON THE OTHER HAND, LD. CIT(A) BY TAKING THE SU BMISSIONS OF THE ASSESSEE AT FACE VALUE, WITHOUT CONDUCTING ANY INQU IRY OR CALLING THE REMAND REPORT INTER ALIA THAT IF THE ASSESSEE CONCERN NAME LY M/S. KWALITY TEXTILE (KTI), DEALING IN TRADING OF FABRIC AND CLOTH AND M /S. SLRK A PROPRIETORSHIP CONCERN OWNED BY HIS FATHER SIKARDER LAL RAKESH KUM AR (SLRK) ARE SITUATED IN CLOSE VICINITY; THAT IF THE COMPUTER OF THE ASSESSEE GOT EVER CORRUPTED AND THE SAME WAS FORMATTED AND ITS COMPLE TE RECORD INCLUDING BOOKS OF ACCOUNTS WERE NOT RETRIEVABLE. 16. DURING THE SURVEY PROCEEDINGS THE SURVEY PARTY COLLECTED THE FIGURES OF SALES AND PURCHASE FROM THE INCOMPLETE BOOKS OF ACCOUNTS AND PREPARED A TRADING ACCOUNT TAKING G.P. RATIO @ 6% AND ARRIVED AT THE CONCLUSION THAT EXCESS STOCK OF RS.43,72,521/- WAS THERE. LD. CIT( A) RETURNED THE FINDINGS IN FAVOUR OF THE ASSESSEE BY TAKING THE EXPLANATI ON GIVEN BY THE ASSESSEE ITA NO.642,6234/DEL/2013 9 WAS INDEED NOT AFTERTHOUGHT AS HE HAS GIVEN THE SAM E EXPLANATION DURING SURVEY PROCEEDINGS ALSO AND TAKEN THE FACTS STATED BY ASSESSEE THAT BOTH THE CONCERNS NAMELY KTI AND SLRK ARE AT CLOSE PROXIMITY , AS A GOSPEL TRUTH WITHOUT ENTERTAINING ANY EVIDENCE. CIT(A) PROCEED ED TO DECIDE AS UNDER: 'IN THE ABSENCE OF THE FATHER OF THE APPELLANT, SH. SIKANDAR LAL DUE TO ILLNESS, THE STOCK AVAILABLE AT SLRK WAS BEING SOLD BY THE APPELLANT FROM KTI. THE AD HAS NOT REBUTTED THIS FACT. CONSEQ UENTLY, THE STOCK AT SLRK IS FOUND IN NEGATIVE WHILE THE STOCK IN KTI IS FOUND IN EXCESS. UNDER THESE CIRCUMSTANCES, AND ALSO IN THE LIGHT OF THE STATEMENT GIVEN BY THE APPELLANT AT THE TIME OF SURVEY THAT T HE SALE IN SLRK AND PURCHASE IN 'KTJ HAVE NOT BEEN EXECUTED THROUGH BIL LS AND HAVE ALSO NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS, ALTHOUG H, THE PHYSICAL STOCK HAS MOVED FROM ONE TO ANOTHER, IT IS CLEARLY NOT JUSTIFIED TO MAKE AN ADDITION IN THE HANDS OF THE APPELLANT ON THE GR OUNDS THAT EXCESS STOCK WAS FOUND. THE FACT REMAINS THAT EXCESS STOCK OF RS. 43,72,521/- WAS FOUND IN KTI WHILE DEFICIENT STOCK OF RS.L,97,7 1,158/- WAS FOUND IN SLRK. UNDER THESE CIRCUMSTANCES, THE ADDITION OF RS.43,72,521/- CANNOT BE UPHELD IN THE HANDS OF KTI AND THE APPELL ANT. THE ADDITION IS THEREFORE, DELETED. ' 17. ALL THE AFORESAID FINDINGS HAVE NOT ONLY BEEN RETURNED BY LD. CIT(A) ON THE BASIS OF CONJECTURES AND SURMISES AND WITHOU T ENTERTAINING ANY EVIDENCE AND WITHOUT CALLING UPON REMAND REPORT FRO M THE ASSESSING OFFICER RATHER THERE IS NOT AN IOTA OF EVIDENCE ON RECORD T HAT AT ANY POINT OF TIME DATA STORED AS TO THE BUSINESS TRANSACTION OF THE ASSESS EE STORED IN THE COMPUTER GOT CORRUPTED OR THAT AT ANY POINT OF TIME HE HAS G OT HIS COMPUTER REPAIRED OR REFORMATTED. DURING SURVEY PROCEEDINGS, ASSESSEE HAS NOT EVEN PROVIDED THE TELEPHONE NUMBER OF THE ACCOUNTANT WHO HAS RECASTED THE BOOKS OF ACCOUNTS NOR HE HAS PRODUCED HIS ACCOUNTANT BEFORE THE ASSES SING OFFICER AND THIS FACT GOES TO PROVE THAT THE ASSESSEE HAS CONCOCTED THE FACTS AS PER HIS CONVENIENCE BY WAY OF RECASTING OF BOOKS OF ACCOUNT S. IN ANY CASE, ALL ITA NO.642,6234/DEL/2013 10 THESE FACTS WERE REQUIRED TO BE THOROUGHLY EXAMINED BY LD. CIT(A) BEFORE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF COGENT EVIDENCE. LD. CIT(A) WAS EMPOWERED TO PROBE ALL THE SE FACTS BY CALLING UPON EVIDENCE AND BY CALLING FOR AA REMAND REPORT F ROM THE ASSESSING OFFICER BUT HE HAS SUMMARILY DECIDED THE MATTER ON THE BASIS OF FALSE STATEMENT OF THE ASSESSEE. SO, WE ARE OF THE CONSID ERED VIEW THAT THE MATTER IS REQUIRED TO BE RESTORED BACK TO LD. A.O. TO DECI DE AFRESH AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE PARTIES. CONSEQUE NTLY, GROUND NO.1 IS DETERMINED IN FAVOUR OF APPELLANT (REVENUE). 18. GROUND NO.1 OF I.T.A.NO. 6234/DE/2013: UNDISPUTEDLY, DURING THE SURVEY PROCEEDINGS, NEGATI VE STOCK OF RS.1,97,71,158/- DULY DESCRIBED BY THE A.O. IN PARA 3 OF THE ASSESSMENT ORDER, WAS NOTICED AND ASSESSEE WAS CALLED UPON TO EXPLAIN THE DISPARITY IN ITS ACCOUNTS. THE ASSESSEE EXPLAINED THE DIFFERENC E AS UNDER: 50. WHAT IS THE STOCK IN HAND AS PER STOCK REGISTE R OR AS PER BOOKS OF ACCOUNT. AS PER TRADING ACCOUNT FOR THE PERIOD 01.04.2008 TO 04.03.2009 IN THE CASE OF GOODS FOUND IN YOUR PREMI SES HAVE BEEN INVENTORIED AND VALUED ACCORDING TO VALUES COST PRO VIDED BY YOURSELF THE POSITION FOUND AS ON DALE IS AS UNDER: NAME OF CONCERN AS PER TRADING A/C AS PER PHYSICA L INVENTORY DIFFERENCE SLRK. 66 B D. FATEHPURI 2,32,18,422 34,47,264 (-)1 ,97,71,158 KWALITY TEXTILE 69,96,418 1,13,68,939 (+)43,72,5 21 FROM PERUSAL OF LAST PAGE (PAGE I 4) IN DO STOCK PO RT ION, IT IS NOTICED THAT THERE IS SHORT FALL OF STOCK FOR RS. 1,97,71,1 58/- IN THE FIRM M/S SIKANDAR LAL RAKESH KUMAR AND EXCESS STOCK FOUND IN RESPECT OF M/S KWALITY TEXTILE (INDIA). PLEASE EXPLAIN THE DISCREP ANCY IN RESPECT OF ABOVE. MY SUBMISSION IN R/O ABOVE IS AS UNDER: MY FATHER SH. SIKANDAR LAL JI IS SICK SINCE LAST SI X MONTHS, WHO LOOKS AFTER THE AFFAIRS OF M/S S'LRK ITA NO.642,6234/DEL/2013 11 THE GOODS OF M/S SLRK HAS BEEN SOLD FROM THE PREMIS ES OF MILL KT(I) AND NO SALE HILLS WERE ISSUED FROM M/S SLRK TO KTJ. HOWEVER KTI HAD ISSUED SALE BILLS OF SUCH GOODS TO THE CUSTOMER THE GOODS OF M/S SLRK \,VAS ALSO SENT TO MELA RAM J ANAK RAJ, HOWEVER, NO SALE BILL WAS ISSUED BY M/S. SLRK TO MR JR AND NO PURCHASE WAS ACCOUNTED BY MIUR IN THEIR BOOKS OF AC COUNTS. THE GOODS WERE SOLD BY MIL' MIUR AS SOON AS THEY WERE R ECEIVED FROM M/S SLRK' THE EXPLANATION GIVEN BY THE ASSESSEE IS FAR FROM S ATISFACTORY. FURTHER THE A.R. DURING THE COURSE OF ASSESSMENT PROCEEDINGS WA S ASKED TO SHOW CAUSE AS TO WHY THE DIFFERENCE IN STOCK MAY NOT BE ADDED TO HIS TAXABLE INCOME. IN RESPONSE, THE A.R. VIDE LETTER DATED 7/12/2011 STAT ED AS UNDER:- THERE WAS VIRUS IN THE COMPUTE OF THE ASSESSEE AND THE SAME WAS REQUIRED TO BE FORMATTED. AS A RESULT, COMPLETE REC ORD IN THE COMPUTER INCLUDING HOOKS OF ACCOUNTS WAS WASHED AWAY AT THE TIME OF SURVEY, THE ACCOUNTANT OF THE FIRM WAS IN THE PROCESS OF RE -WRITING THE BOOKS OF ACCOUNTS HENCE THE SAME COULD NOT BE PRODUCED 01 THE LIME OJ SURVEY. HENCE, THE STOCK PHYSICALLY TAKEN BY THE SU RVEY TEAM AND STOCK AS PER TRADING ACCOUNT DID NOT MACH. NO EVIDENCE EITHER AT THE TIME OF SURVEYOR DURING T HE COURSE OF ASSESSMENT PROCEEDINGS COULD BE FILED FOR ANY TECHNICAL FAULT IN THE COMPUTER. THE EXPLANATION GIVEN BY THE AR AS ABOVE, APPEARS TO BE A CONCOCTED STORY AND IS AFTER THOUGHT. THEREFORE, THE SAME IS NOT ACCEPT ABLE FACTS AND CIRCUMSTANCES OF THE CASE INDICATE THAT THE BOOKS H AVE BEEN RE-CASTED BY THE ASSESSEE AS BEST SUITED OF RS.1,97,71, L58/- FOUND FROM THAT RECORDED IN THE BOOKS REMAINED UNEXPLAINED. THE NEGATIVE STOCK OF R S.L,97,71, I58/- INDICATE AND AFFIRM THAT THE ASSESSEE WAS MAKING SALES WITHO UT ISSUING BILLS AND RECORDING THE SAME IN HIS BOOKS AND THE TOTAL SALES AMOUNTING TO RS.L,97,71,L58/- WAS MADE UP TO THE DATE OF SURVEY OUT OF THE BOOKS. HOWEVER, IT WILL NOT BE PROPER TO ADD WHOLE OF THE NEGATIVE AMOUNT OF STOCK. IT IS SEEN THAT DURING THE YEAR, THE ASSESSEE HAS D ECLARED GROSS PROFIT OF RS.24,56,471/- @ 7.48% ON TOTAL SALE OF RS.3,28,54, 578/-. THE ASSESSEE HAS DEBITED ALL BUSINESS EXPENSES TO HIS PROFIT & LOSS ACCOUNT PERTAINING TO THE SALE MADE OUT OF THE BOOKS, THEREFORE, NO BENEFIT O F FURTHER EXPENSES IS ITA NO.642,6234/DEL/2013 12 ALLOWABLE AND PROFIT ON UNRECORDED SALES IS TAKEN @ 8% OF RS.L,97,71,L58/- WHICH COMES TO RS.15,81,693/-. THE SAME ADDED TO TH E INCOME OF THE ASSESSEE AS HIS UNEXPLAINED INCOME. PENALTY PROCEED INGS U/S 271 (1)(C) ARE SEPARATELY INITIATED FOR CONCEALMENT OF PARTICULARS OF HIS INCOME. 19 THE A.O. HAS DECLINED TO ENTERTAIN THE EXPLANATI ON GIVEN BY THE ASSESSEE AND PROCEEDED WITH ADDITION OF RS.15,81,69 3/- AS UNEXPLAINED INCOME. 20. THE A.O. AT THE TIME OF SURVEY, COMPARED THE TR ADING ACCOUNT FROM THE DOCUMENTS IMPOUNDED DURING SURVEY PROCEEDING WHICH IS AS UNDER: 21. THE ASSESSING OFFICER FORTIFIED THE ASSESSMENT ORDER ON THE STRENGTH THAT THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT AND WAS DELIBERATELY AVOIDING THE PRODUCTION OF BOOKS TO CO NCEAL HIS INCOME AS HE HAS FAILED TO PRODUCE ANY EVIDENCE REGARDING REPAIR OF TECHNICAL FAULT IN THE COMPUTER FOR ITS REPAIR OR FORMATTING DURING ASSESS MENT PROCEEDINGS BUT SUBSEQUENTLY RECASTED THE BOOKS OF ACCOUNTS ALONG W ITH RELEVANT BILLS / VOUCHERS AS PER HIS CONVENIENCE. 22. ON THE OTHER HAND, LD. CIT(A) BY TAKING THE SU BMISSIONS OF THE ASSESSEE AT FACE VALUE, WITHOUT CONDUCTING ANY INQU IRY OR CALLING THE REMAND REPORT RETURNED THE FINDINGS INTER ALIA THAT IF THE ASSESSEE CONCERN NAMELY M/S. KWALITY TEXTILE (KTI), DEALING IN TRADING OF F ABRIC AND CLOTH AND M/S. SLRK A PROPRIETORSHIP CONCERN OWNED BY HIS FATHER S IKARDER LAL RAKESH OPENING TOCK 1,60,46,790 SALES 1,08,21,109 PURCHASES 1,50,98,437 SALES NOT RECORDED IN BOOKS 3,81,164 PURCHASES NOT RECORDED IN BOOKS 26,21,612 CLOSING STOCK 2,32,18,422 GROSS PROFIT 2.72.692 TOTAL 3,49,39,531 TOTAL 3,40,39,531 ITA NO.642,6234/DEL/2013 13 KUMAR (SLRK) ARE SITUATED IN CLOSE VICINITY; THAT I F THE COMPUTER OF THE ASSESSEE GOT EVER CORRUPTED AND THE SAME WAS FORMAT TED AND ITS COMPLETE RECORD INCLUDING BOOKS OF ACCOUNTS WERE NOT RETRIEV ABLE, WHICH ARE NOT SUSTAINABLE IN THE EYES OF LAW. 23. A.O. ON THE BASIS OF GROSS PROFIT DECLARED BY T HE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AT RS.24,56,471/- @ 7.48% ON TOTAL SALE OF RS.3,28,54,578/- AFTER AVAILING DEDUCTION OF ALL BU SINESS EXPENSES CALCULATED THE PROFIT ON UNRECORDED SALES AT RS.15,81,693/- @ 8% AND UNRECORDED SALES OF RS.1,97,71,158/-. MOREOVER, LD. CIT(A) RETURNED THE FINDINGS IN FAVOUR OF THE ASSESSEE BY RECORDING THAT THE EXPLANATION GIVEN BY THE ASSESSEE WAS INDEED NOT AFTERTHOUGHT AS HE HAS GIVEN THE SAM E EXPLANATION DURING SURVEY PROCEEDINGS ALSO AND TAKEN THE FACTS STATED BY ASSESSEE THAT BOTH THE CONCERNS NAMELY KTI AND SLRK ARE AT CLOSE PROXIMITY , AS A GOSPEL TRUTH WITHOUT ENTERTAINING ANY EVIDENCE. CIT(A) PROCEED ED TO DECIDE AS UNDER: 'IN THE ABSENCE OF THE FATHER OF THE APPELLANT, SH. SIKANDAR LAL DUE TO ILLNESS, THE STOCK AVAILABLE AT SLRK WAS BEING SOLD BY THE APPELLANT FROM KTI. THE AD HAS NOT REBUTTED THIS FACT. CONSEQ UENTLY, THE STOCK AT SLRK IS FOUND IN NEGATIVE WHILE THE STOCK IN KTI IS FOUND IN EXCESS. UNDER THESE CIRCUMSTANCES, AND ALSO IN THE LIGHT OF THE STATEMENT GIVEN BY THE APPELLANT AT THE TIME OF SURVEY THAT T HE SALE IN SLRK AND PURCHASE IN 'KTJ HAVE NOT BEEN EXECUTED THROUGH BIL LS AND HAVE ALSO NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS, ALTHOUG H, THE PHYSICAL STOCK HAS MOVED FROM ONE TO ANOTHER, IT IS CLEARLY NOT JUSTIFIED TO MAKE AN ADDITION IN THE HANDS OF THE APPELLANT ON THE GR OUNDS THAT EXCESS STOCK WAS FOUND. THE FACT REMAINS THAT EXCESS STOCK WAS FOUND IN KTI WHILE DEFICIENT STOCK OF RS.L,97,71,158/- WAS FOUND IN SLRK. UNDER THESE CIRCUMSTANCES, THE ADDITION OF RS.43,72,521/- CANNOT BE UPHELD IN THE HANDS OF KTI AND THE APPELLANT. THE ADDITION IS THEREFORE, DELETED. ' 24. ALL THE AFORESAID FINDINGS HAVE NOT ONLY BEEN RETURNED BY LD. CIT(A) ON THE BASIS OF CONJECTURES AND SURMISES AND WITHOU T ENTERTAINING ANY ITA NO.642,6234/DEL/2013 14 EVIDENCE AND WITHOUT CALLING UPON REMAND REPORT FRO M THE ASSESSING OFFICER RATHER THERE IS NOT AN IOTA OF EVIDENCE ON RECORD T HAT AT ANY POINT OF TIME DATA STORED AS TO THE BUSINESS TRANSACTION OF THE ASSESS EE STORED IN THE COMPUTER GOT CORRUPTED OR THAT AT ANY POINT OF TIME HE HAS G OT HIS COMPUTER REPAIRED OR REFORMATTED. DURING SURVEY PROCEEDINGS, ASSESSEE HAS NOT EVEN PROVIDED THE TELEPHONE NUMBER OF THE ACCOUNTANT WHO HAS RECASTED THE BOOKS OF ACCOUNTS NOR HE HAS PRODUCED HIS ACCOUNTANT BEFORE THE ASSES SING OFFICER AND THIS FACT GOES TO PROVE THAT THE ASSESSEE HAS CONCOCTED THE FACTS AS PER HIS CONVENIENCE BY WAY OF RECASTING OF BOOKS OF ACCOUNT S. IN ANY CASE, ALL THESE FACTS WERE REQUIRED TO BE THOROUGHLY EXAMINED BY LD. CIT(A) BEFORE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON THE BASIS OF COGENT EVIDENCE. LD. CIT(A) WAS EMPOWERED TO PROBE ALL THE SE FACTS BY CALLING UPON EVIDENCE AND BY CALLING FOR A REMAND REPORT FR OM THE ASSESSING OFFICER BUT HE HAS SUMMARILY DECIDED THE MATTER ON THE BASI S OF FALSE STATEMENT OF THE ASSESSEE. SO, WE ARE OF THE CONSIDERED VIEW THA T THE MATTER IS REQUIRED TO BE RESTORED BACK TO LD. A.O. TO DECIDE AFRESH AFTER PROVIDING OPPORTUNITY OF BEING HEARD TO THE PARTIES. CONSEQUENTLY, GROUND NO .1 IS DETERMINED IN FAVOUR OF APPELLANT (REVENUE). 25. GROUND NO.2: OF I.T.A.NO. 642/DEL/2013: UNDISPUTEDLY, IN THE P & L ACCOUNT, INTEREST ON TH E PERSONAL LOAN OF RS.13,13,349/- HAS BEEN SHOWN BY THE ASSESSEE AND A SSESSING OFFICER DECIDED THAT SINCE THE PERSONAL LOANS HAVE NOT BEEN UTILIZED FOR BUSINESS PURPOSES AND MOST OF THEM HAVE BEEN USED FOR INVEST MENT IN THE PROPERTY BY THE ASSESSEE IN HIS INDIVIDUAL NAME AND NO BUSINESS NEXUS HAS BEEN PROVED DURING ASSESSMENT PROCEEDINGS, HE HAS ADDED 50% OF THE PERSONAL LOAN I.E. RS.6,56,675/- TO THE INCOME OF THE ASSESSEE. ITA NO.642,6234/DEL/2013 15 26. LD. CIT(A) HAS AGAIN DECIDED THE ADDITION OF R S.6,56,675/- MADE BY THE ASSESSING OFFICER ON THE BASIS OF ASSUMPTION TH AT THE PROPERTY PURCHASED BY THE ASSESSEE WITH THE PERSONAL LOAN ON WHICH HE HAS PAID THE INTEREST TO THE TUNE OF RS.13,13,349/- WAS INDUSTRIAL PROPERTY, WITHOUT CALLING ANY REPORT FROM THE ASSESSING OFFICER IN THIS REGARD AND WITHO UT ENTERTAINING ANY EVIDENCE AT THE ENDS OF THE ASSESSEE. LD. CIT(A) RA THER TAKEN THE STATEMENT OF ASSESSEE AS A GOSPEL TRUTH. LD. CIT(A) HAS AL SO NOT PREFERRED ,TO FIND OUT ANY NEXUS BETWEEN THE PROPERTY PURCHASED BY THE AS SESSEE BY INVESTING THE LOAN WITH THE BUSINESS BEING CARRIED OUT BY HIM RAT HER THERE IS NOT AN IOTA OF EVIDENCE ON RECORD IF ANY SUCH INDUSTRIAL PROPERTY NECESSARY FOR THE PRESENT BUSINESS OR THE ASSESSEE, HAS BEEN PURCHASED DURING THE YEAR UNDER ASSESSMENT. SO, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE IS ALSO REQUIRED TO BE DECIDED AFRESH BY LD. A.O. BY PROVIDING OPPOR TUNITY OF BEING HEARD TO THE PARTIES. SO, GROUND NO.2 IS ALSO DETERMINED I N FAVOUR OF APPELLANT (REVENUE). 27. GROUND NO.2 OF I.T.A.NO. 6234/DEL/2013: LD. CIT(A) HAS AGAIN DELETED THE ADDITION OF RS.3,2 4,423/- MADE BY THE ASSESSING OFFICER ON THE BASIS OF ASSUMPTION TH AT THE PROPERTY PURCHASED BY THE ASSESSEE WITH THE PERSONAL LOAN ON WHICH HE HAS PAID THE INTEREST TO THE TUNE OF RS.6,48,846/- WAS INDUSTRIAL PROPERTY, WITHOUT CALLING ANY REPORT FROM THE ASSESSING OFFICER IN THIS REGARD AND WITHO UT ENTERTAINING ANY EVIDENCE AT THE ENDS OF THE ASSESSEE. LD. CIT(A) RA THER TAKEN THE STATEMENT OF ASSESSEE AS A GOSPEL TRUTH. LD. CIT(A) HAS ALSO NOT PREFERRED ,TO FIND OUT ANY NEXUS BETWEEN THE PROPERTY PURCHASED BY THE ASS ESSEE BY INVESTING THE LOAN WITH THE BUSINESS BEING CARRIED OUT BY HIM RAT HER THERE IS NOT AN IOTA OF EVIDENCE ON RECORD IF ANY SUCH INDUSTRIAL PROPERTY NECESSARY FOR THE PRESENT ITA NO.642,6234/DEL/2013 16 BUSINESS OF THE ASSESSEE, HAS BEEN PURCHASED DURING THE YEAR UNDER ASSESSMENT. SO, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE IS ALSO REQUIRED TO BE DECIDED AFRESH BY LD. CIT(A) BY PROVIDING OPP ORTUNITY OF BEING HEARD TO THE PARTIES. SO, GROUND NO.2 IS ALSO DETERMINED IN FAVOUR OF APPELLANT (REVENUE). 38. GROUND NO.3: OF I.T.A.NO. 642/DEL/2013: FROM THE WRITTEN CASH BOOK FOR FINANCIAL YEAR 2008- O9, IMPOUNDED DURING SURVEY PROCEEDINGS, THE ASSESSING OFFICER FO UND THAT THE ASSESSEE HAS MADE CLAIM OF RS.12,3 7,2501- ON ACCOUNT OF MAMA CO MMITTEE. THE ASSESSEE CATEGORIC ADMITTED THAT THIS AMOUNT HAS NOT BEEN SH OWN BY HIM IN THE REGULAR BOOKS OF ACCOUNTS NOR HE HAS DISCLOSED THE SAME IN THE BOOKS. ASSESSEE HAS ADMITTED THAT SOURCE OF MAKING THE PAYMENT FOR COMM ITTEE OF RS.72,600/- PER MONTH SHOWN IN THE ROKAD ON 22.08.2007 IS OUT O F UNDISCLOSED SALE OUT OF THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER ADD ED THIS AMOUNT OF RS.12,3 7,2501- AS UNDISCLOSED INCOME. LD. CIT(A), WHILE DEALING WITH THIS ISSUE IN THE IMPUGNED ORDER, IN PARA 4.4, DECIDED T HE ISSUE IN FAVOUR OF THE ASSESSEE BY MAKING FOLLOWING OBSERVATION: 'I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE B Y THE APPELLANT AND I AM NOT CONVINCED BY THEM. THE EXPLANATIONS PR EPARED BY HIM ARE CLEARLY AN AFTER-THOUGHT. DURING THE COURSE O F SURVEY OPERATION, WHEN HIS STATEMENT WAS RECORDED UNDER OATH, HE ACCE PTED THAT THE CHIT FUND TRANSACTIONS WERE OUTSIDE THE BOOKS OF ACCOUNT S, FROM UNDISCLOSED SOURCES. THE APPELLANT MADE A CASH FLOW CHART OF THE TOTAL INVESTMENT MADE IN BOTH THE CHITS AND ACCORDING TO THIS DATE-WISE CHART, THE PEAK INVESTMENT COMES TO RS.4,22,500/- A S ON 26.06.2008, BEFORE THE APPELLANT PICKED UP THE FIRST CHIT AT RS .4,69,600/-. THEREFORE, THE ADDITION MADE TO THE INCOME OF THE A PPELLANT ON ACCOUNT OF UNDISCLOSED INVESTMENT IN TWO CHIT FUNDS OF 'MAMAJI' IS HEREBY RESTRICTED TO THE PEAK AMOUNT OF RS.4,22,500 /-. ITA NO.642,6234/DEL/2013 17 39. NOW, THE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS, 'AS TO WHETHER THE PEAK INVESTMENT IN THIS CASE COMES OUT TO RS.4,22.500/- AS ON 26.06.2008 BUT THE APPELLANT PICKED UP THE FIRST CR EDIT AT RS.4,69,600/- AS DETERMINED BY LD. CIT(A). 40. LD. D.R. CONTENDED THAT SINCE ASSESSEE HAS HIM SELF ADMITTED THE AMOUNT OF RS.12,37,450/- AS UNACCOUNTED MONEY 1 INV ESTMENT, 'PEAK' IS NOT ATTRACTED IN THIS CASE. 4L. FROM THE QUESTION NO.33,34 & 35 LYING AT PAGE 40 OF THE PAPER BOOK, IT HAS BECOME APPARENTLY CLEAR THAT REGARDING THE I NVESTMENT OF RS.12,37,450/-, NO BOOKS OF ACCOUNT HAVE BEEN MAINT AINED BY THE ASSESSEE RATHER ASSESSEE HAS MADE CATEGORIC ADMISSION THAT N EITHER THE SAID AMOUNT HAS BEEN SHOWN IN THE REGULAR BOOKS OF ACCOUNTS NOR DISCLOSED IN THE BOOKS. SO, IN THESE CIRCUMSTANCES, IT IS SURPRISING AS TO HOW THE LD. CIT(A) HAS TAKEN THE CONCEPT OF PEAK INVESTMENT AS REFERRED TO IN PARA 4.4 OF THE IMPUGNED ORDER TO DELETE THE ADDITION OF RS.12,37,4 50/-. MOREOVER, ROKAD/DAY BOOK CANNOT BE TAKEN AS SUBSTANTIVE PIECE OF EVIDENCE WITHOUT HAVING CORROBORATING ENTRIES IN THE BOOKS OF ACCOUN TS. SO, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS DELETED THE ADD ITION OF RS.12,37,450/- ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS AND AS SUCH, THE IMPUGNED ORDER IS NOT SUSTAINABLE IN THE EYES OF LAW. SO, TH E GROUND NO.3 IS DETERMINED IN FAVOUR OF REVENUE. 42 GROUND NO.3 OF I.T.A.NO. 6234/DEL/2013: THE ASSESSEE DEBITED AN AMOUNT OF RS.56,488/- IN HI S P & L ACCOUNT BEING THE EXPENSE LIKE CAR INSURANCE, BUSINESS PROM OTION EXPENSE NEW DELHI TELEPHONE EXPENSES. BUT THE ASSESSING OFFICER NOTIC ED PERSONAL ELEMENT IN THE AFORESAID EXPENSES AND DISALLOWED 1/5TH OF THE AFORESAID EXPENSES AND ITA NO.642,6234/DEL/2013 18 MADE ADDITION OF RS.11,298/-. HOWEVER, LD. CIT(A) D EALT WITH THIS ISSUE IN PARA 6 OF THE IMPUGNED ORDER AND RETURNED THE FOLLO WING FINDING: 'THE APPELLANT HAS SUBMITTED THAT ALL BILLS AND VOU CHES ALONG WITH BOOKS OF ACCOUNTS WERE PRODUCED FOR INSPECTION OF T HE ASSESSING OFFICER WHO DID NOT FIND ANYTHING WRONG THEREIN. TH EREFORE, THE AD- HOC DISALLOWANCE OF J/51H OF SUCH EXPENSES IS NOT J USTIFIED. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY APPELL ANT. I AM OF THE OPINION THAT PERSONAL USAGE OF SUCH EXPENSES SHOULD BE RESTRICTED TO 10%. THE ASSESSING OFFICER IS DIRECTED TO TAKE ACTI ON ACCORDINGLY. 43. HOWEVER, WE ARE OF THE CONSIDERED VIEW THAT WHE N THE ASSESSEE HAS CLAIMED THE AFORESAID EXPENSES AS BUSINESS EXPENDIT URE UNDER PARTICULAR HEAD I.E. CAR INSURANCE, BUSINESS PROMOTION EXPENSES AND TELEPHONE EXPENSES AND PRODUCED THE ACCOUNTS BOOKS BEFORE THE ASSESSING OF FICER, WHO HAS NOT DISPUTED THE SAME, LD. CIT(A) HAS RIGHTLY RESTRICTE D THE PERSONAL USAGE OF SUCH EXPENSES TO 10%. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE ORDER OF LD. CIT(A), GROUND NO.3 IS DETERMINED AGAINST THE R EVENUE. 44. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE H EREBY' PARTLY ALLOW BOTH THE APPEALS SO FAR AS ISSUES NO.1 & 2 (OF BOTH THE APPEALS) ARE CONCERNED, FOR STATISTICAL PURPOSE AND THE FILE IS ORDERED TO BE RESTORED TO THE LD. CIT(A) TO DECIDE AFRESH WHEREAS, I.T.A. NO. 642 /DEL/2013 QUA GROUND NO.3 IS ALLOWED IN FAVOUR OF REVENUE HOWEVER, I.T.A .NO. 6234/DEL/2013 SO FAR AS GROUND NO.3 IS CONCERNED, IS HEREBY DISMISSE D. 45. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH JAN.,2016. SD./- SD./- ( J. S. REDDY) (KULDIP SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 08.01. 2016 SP ITA NO.642,6234/DEL/2013 19 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 9,10,13,16,17/12,5,6,7 /1 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 8/1/16 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 8/1 SR. PS/PS 7 FILE SENT TO BENCH CLERK 8/1 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER