SHRI SURESH KUMAR GUPTA, Hindaun City V. ITO, Sawai Madhopur

ITA 646/JPR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99447 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 27-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAILASH MANGAL JCIT DHK
• Assessee Lawyers: G C JAIN TAX PRACTITIONER
• Keywords: Additional evidence; Reason to believe
• Section: 234B; 80IB; 147; 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T; IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 646/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2002-03 SHRI SURESH KUMAR GUPTA PROP. KAILADEVI TRADING CO., ANKUR INDUSTRIES, INDUSTRIAL AREA, HINDAUNCITY CUKE VS. THE ITO WARD- 3 SAWAI MADHOPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABNPG 3179 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.C. JAIN, (TAX PRACTITIONER) JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL, JCIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12/10/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 30/10/2015 VKNS'K@ ORDER PER T.R. MEENA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), AJMER DATED 30-03-2012 FOR THE ASSESSMENT Y EAR 2002-03 WHEREIN THE ASSESSEE RAISED FOLLOWING GROUNDS. (1) THAT THE LD. CIT(A) GROSSLY ERRED IN INITIALLY IN NOT DECIDING THE GROUND CHALLENGING THE VALIDITY AND LE GALITY OF INITIATION OF THE PROCEEDINGS U/S 147 AND SUBSEQUEN TLY DURING THE PROCEEDINGS U/S 154 BEFORE HIM, REJECTED THIS GROUN D BY HOLDING SUMMARILY THAT ASSESSMENT U/S 147 WAS PROPERLY REOP ENED. THIS IS CONTRARY TO THE MATERIAL ON RECORD, QUITE ILLEGAL A ND UNJUSTIFIED. THEREFORE, PROCEEDINGS INITIATED U/S 147 AND NOTICE 148 MAY KINDLY BE QUASHED. ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 2 (2) THAT, WITHOUT PREJUDICE TO THE ABOVE, THE LD. C IT(A) GROSSLY ERRED WHEN NO ADDITION WAS CONFIRMED ON ACC OUNT OF THE REASONS RECORDED U/S 148 IN CONFIRMING THE FOLLOWIN G ADDITIONS. (I) BY RELYING UPON EXPLANATION 3 APPENDED TO SECTION 147 OF THE ACT EVEN WITHOUT AFFORDING ANY OPPORTUNITY TO THE APPELLANT REGARDING THE APPLICAB ILITY OF THIS EXPLANATION.3 APPENDED TO SECTION 147, CONFIRM ED OTHER ADDITIONS WHICH IS QUITE ILLEGAL, UNJUSTIFIED IN TH E LIGHT OF SETTLED LAW THROUGH PLETHORA OF JUDGEMENTS OF HON'B LE DELHI, BOMBAY, RAJASTHAN AND OTHER COURTS. THEREFOR E, ALL THE ADDITIONS CONFIRMED MAY KINDLY BE DELETED ON TH IS GROUND ALSO. (II) THAT, THE LD. CIT(A) QUITE ERRONEOUSLY CONFIRM ED THE FOLLOWING ADDITIONS IN THE BUSINESS OF M/S. KAILADE VI TRADING COM. WHICH MAY KINDLY BE DELETED. (A) TRADING ADDITION OF RS. 29,646/- (B)DISALLOWANCE OUT OF SUNDRY EXPENSES RS. 6,219/- OUT OF SALARY EXPENSES RS. 36,000/- (III) ADDITION OF RS. 3,75,748/-(INCLUDING INTT. RS .44,480/-) ON ACCOUNT OF SUNDRY CREDITORS (TREATING CASH CRED ITS), WHICH ARE IN FACT OLD BALANCE AS WELL OUTSTANDING O N ACCOUNT OF PURCHASES MADE FROM THEM. FURTHER ADDITION OF R S. 44,480/- ON ACCOUNT OF INTEREST AMOUNTS TO DOUBLE ADDITION. THEREFORE, ALL THE ADDITIONS BEING ILLEGAL, UNJUSTI FIED, UNWARRANTED AND MAY KINDLY BE DELETED. (3.) THAT THE LD. CIT(A) WITHOUT AT ALL CONSIDERING THE DETAILED SUBMISSIONS, UPHELD THE CHARGING OF INTERE ST U/S 234B WHICH IS NOT JUSTIFIED AND WARRANTED. THIS MAY KINDLY BE DIRECTED ACCORDING TO APPLICABLE LAW AT THE RELE VANT TIME. (4) THAT, IN SUBSTANCE, CONSIDERING THE FACTS, CIRCUMSTANCES AND SETTLED LEGAL POSITION, WHOLE PRO CEEDINGS INITIATED, NOTICE ISSUED U/S 148 AND CONSEQUENT ASS ESSMENT ORDER PASSED, AND CONFIRMED BY THE LD. CIT(A) MAY K INDLY BE QUASHED. ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 3 2.1 WITH REGARD TO GROUND NO. 1 AND 4 THE ASSESSEE IS AGAIN CHALLENGING THE VALIDITY AND LEGALITY OF THE INITIA TION OF PROCEEDINGS U/S 147 AND 148 OF THE ACT. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DERIVES INCOME FROM MANUFACTURING OF SLATES AND AGR ICULTURAL CROPS TRADING. THE ASSESSEE FILED THE RETURN FOR THE ASSE SSMENT YEAR 2002-03 ON 31-03-2003 AT RS. 1,26,240/-. THE ASSESSEE CLAIMED DEDUCTION U/S 81IB OF THE ACT AT RS. 1,62,695/-. THE ASSESSEE IS MANUFACT URING THE SLATE AND CLAIMED MANUFACTURING ACTIVITIES FOR THE PURPOSE OF SECTION 80IB. THE AO OBSERVED THAT THE ASSESSEE USED THE HARD-BOARD ( GATTA) FOR MANUFACTURING THE SLATE. THE RAW MATERIAL IS PURCH ASED FROM THE MARKET WHICH IS NOT MANUFACTURED BY THE ASSESSEE. THE ASSE SSEE USED HARD-BOARD (GATTA) AND POLISHED THEM THROUGH A PROCESS OF USIN G MTO, CNCL , DRY POWDER AND OTHER CHEMICALS IN THE DRUMS. THE LIQUID PREPARED BY THE ASSESSEE IS PASTED ON HARD-BOARD (GATTA) TO MANUFAC TURE SLATE. THEREAFTER, THE ASSESSEE CUTS IT IN REQUIRED SIZES AND ALSO FRA MES IT BY TIN-MATERIAL. THE TIN-MATERIAL IS ALSO PURCHASED FROM THE MARKET AND ONLY FRAME IS PREPARED. THE REPIT (SCREW) AND CORNER IS ALSO PURC HASED FROM THE MARKET. AS PER AO, THE MANUFACTURING OF SLATE DOES NOT COME UNDER THE PURVIEW OF MANUFACTURING OR PRODUCTION AND WHATEVER PROCESS IS ADOPTED BY THE ASSESSEE IS ONLY A PROCEDURE AND NOT MANUFACTURING OR PRODUCTION. THE ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 4 HARD-BOARD (GATTA) IS CUT IN SMALL SIZES FOR MANUFA CTURING OF SLATE. THEREFORE, THE NATURE OF HARD-BOARD (GATTA) IS NEVE R CHANGED. THERE IS NO HEAVY PLANT AND MACHINERY IN MANUFACTURING THE SLAT E. THEREFORE, THE AO HELD THAT THE ASSESSEE IS NOT QUALIFIED TO CLAIM DE DUCTION U/S 80IB (III) OF THE ACT. HE FURTHER RELIED ON THE DECISION IN THE C ASE OF M/S. LUCKY MINMAT VS. CIT, 245 ITR 830 (SC) WHEREIN MARBLE CU TTING AND SIZING HAS NOT BEEN ACCEPTED MANUFACTURING ACTIVITY. THE A SSESSEE ALSO USED TO CUT HARD-BOARD (GATTA) AND POLISH IT TO GIVE FORM A S SLATE WHICH DOES NOT COME UNDER THE PURVIEW OF SECTION 80IB OF THE ACT. THEREFORE, THE AO AFTER RECORDING THE REASONS ABOUT THE NOTICE U/S 14 8 OF THE ACT DATED 9-03- 2007 WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 16-03-2007 AND REQUESTED TO TREAT THE ORIGINAL RETURN FILED ON 31- 03-2003 IN RESPONSE TO NOTICE U/S 148 OF THE ACT. THEREAFTER THE AO SCRUTI NIZED THE CASE OF THE ASSESSEE U/S 143(2) OF THE ACT. THE AO GAVE VARIOUS NOTICES TO THE ASSESSEE BUT THE RESPONSE OF THE ASSESSEE WAS VERY POOR. THEREFORE, THE AO DECIDED ASSESSEE'S CASE U 144 OF THE ACT. THE AO FURTHER OBSERVED THAT FROM FINANCIAL YEAR 2001-02 RELEVANT TO ASSESS MENT YEAR 2002-03, THE ASSESSEE WAS CLAIMING DEDUCTION U/S 80IB OF THE ACT WHICH WAS AT RS. 1,62,695/-. THE AO FOUND THAT THE ASSESSEE HAS NOT COMPLIED WITH THE CONDITIONS PRESCRIBED U/S 80IB OF THE ACT. THE ASSE SSEE WAS NOT MANUFACTURING THE GOODS AS PER SECTION 80IB OF THE ACT. THE AO AGAIN ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 5 REITERATED THE MANUFACTURING PROCESS OF SLATE IN HI S ASSESSMENT ORDER AND HELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80IB OF THE ACT. THE AO RELIED ON FOLLOWING CASE LAWS:- (I) LUCKY MINMAT (P) LTD. VS. CIT (2000) 245 ITR 830 (S C) (II) CIT VS. GEM INDIA LTD. ,249 ITR 307 (SC) (III) CIT VS. HINDUSTAN METAL REFINING WORKS (P) LT D. (1981) 128 ITR 472 (CAL) ACCORDINGLY, THE DISALLOWED DEDUCTION U/S 80-IB OF THE ACT AT RS. 1,62,695/-. 2.2 NOW THE ASSESSEE DID NOT CHALLENGE THE REOPENIN G OF ASSESSMENT MADE U/S 148 OF THE ACT BEFORE LD. CIT(A), HOWEVER, IT BEING A TECHNICAL GROUND, HE RAISED BEFORE US. 2.3 THE LD. AR SUBMITTED THAT THE AO REOPENED THE A SSESSEE'S CASE U/S 148 ON THE BASIS OF DEDUCTION CLAIMED U/S 80IB OF T HE ACT AT RS. 1,62,695/- WHICH WAS LEGALLY AND CORRECTLY MADE. TH E AO DISALLOWED THE CLAIM BUT LD. CIT(A) ALLOWED THE CLAIM IN ACCORDANC E WITH LAW. THUS WHEN THE BASIS ON WHICH PROCEEDINGS U/S 148 OF THE ACT WERE INITIATED HAS GONE, THERE WAS HARDLY ANY CASE FOR CONFIRMING THE ACTION OF THE AO FOR COMPLETING THE ASSESSMENT U/S 144 AND UPHOLDING THE ABOVE SAID THREE ADDITIONS. HE FURTHER ARGUED THAT LD. CIT(A) RELIAN CE ON EXPLANATION 3 TO SECTION 147 INSERTED W.E.F. 1-04-1989 IS MISPLACED INASMUCH AS THERE IS ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 6 NO MATERIAL ON RECORD TO SUGGEST THAT CASH CREDITS WERE BOGUS. THE REOPENING WAS DONE ONLY ON THE BASIS OF RETURN ALRE ADY FILED WHICH CONTAINED EVERY INFORMATION INCLUDING THE FACT THAT CASH CREDITS WERE OLD, IS BAD IN LAW AND AB-INITIO VOID. RELIANCE IS PLACE D IN THE CASE OF RANBAXY LABORATORIES LTD. VS. CIT (2011) 242 CTR 13 WHICH R EADS AS UNDER:- RE-ASSESSMENT SCOPE ISSUE NOT SUBJECT MATTER OF N OTICE U/S 148A AS PER EXPLANATION 3 TO SECTION 147. 2. ACIT VS. MAJOR DEEPAK MEHTA (2012) 646 CTR PAGE 45-55 (CHHATTISGARH HC) 3. CIT VS. SHRI RAMSINGH (2008) 217 CTR 345-354 (RAJ.) 4. CIT VS. DR. DEVENDRA GUPTA (2008) 220 CTR 629 5. ACIT VS. SUNIL KUMAR JAIN (2007) 110 TTJ 731 (JP ) AO NOT COMPETENT TO MAKE ADDITION UNDER THE HEADS UNCONNECTED WITH THE ISSUE FOR WHICH REOPENING WAS INITIATED. NO ADDITION IN TRADING ADDITION AND HOUS E HOLD NOT PERMITTED WHERE ASSESSMENT REOPENED FOR ON MONEY PAID FOR PURCHASE OF PLOT. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)S ORDER CONFIRMING THE ORDER OF THE ITO U/S 144 AND THE 3 ADDITION IS UNJUSTIFIED AND DESERVES TO BE REJECTED AND ADDITION DELETED. 2.4 THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED TH AT EXPLANATION 3 TO SECTION 147 DOES NOT IN ANY MANNER PURPORT TO EXPAN D THE POWERS OF THE AO U/S 147 NOR DOES IT EXTENT THE SCOPE OF THE MAIN BODY OF THE STATUTORY ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 7 PROVISION. IT IS ONLY CLARIFICATORY IN NATURE. THE LD. AR OF THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS. (I) CIT VS. MOHD JUNED DADANI, 355 ITR 172 (GUJ.) (II) S.SUNDARAM PILLAI VS. V.R. PATTABIRAMAN , AIR 1985 P 585 (III) CIT VS. JET AIRWAYS (I) LTD., 331 ITR 236 (BO M.) (IV) RANBAXY LABORATORIES LTD. VS. CIT 336 ITR 136 (DEL. ) (V) ACIT VS. MAJOR DEEPAK MEHTA, 344 ITR 641 (CHHATISGARH) (V) CIT VS. SHRI RAM SINGH, 306ITR 343 (RAJ.) (VI) CIT VS. ATLAS CYCLE INDUSTRIES, 180 ITR 319 (P &H) 2.5 AT THE OUTSET, THE LD. DR SUPPORTED THE ORDER O F THE AO . 2.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE RAISED THE TECHNI CAL GROUND WHICH CAN BE RAISED AT THE LEVEL OF ITAT AS HELD BY VARIOUS H ON'BLE HIGH COURT INCLUDING HON'BLE SUPREME COURT. THE ASSESSEE REFE RRED TO VARIOUS CASE LAWS AS UNDER: (J) CIT VS. MOHD JUNED DADANI, 355 ITR 172 (GUJ.) (II) S.SUNDARAM PILLAI VS. V.R. PATTABIRAMAN , AIR 1985 SC 582 (PARA 28) (III) CIT VS. JET AIRWAYS (I) LTD., 331 ITR 236 (BO M.) ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 8 IN THE CASE OF RANBAXY LABORATORY (SUPRA), THE HON' BLE HIGH COURT HELD THAT ADDITION IS NOT MADE BY THE AO ON THE GROUND O F RE-OPENING OF ASSESSMENT. AS PER EXPLANATION 3, NO ADDITION CAN B E MADE. HOWEVER, ASSESSEE'S CASE IS THAT THE AO MADE ADDITION U/S 80 IB WHICH HAS BEEN ALLOWED BY THE LD. CIT(A). HOWEVER, HE CONFIRMED TH E ADDITION BY CONSIDERING THE EXPLANATION 3 OF SECTION 147 OF THE ACT. NO SUCH CASE LAWS WERE BROUGHT TO THE NOTICE OF THE BENCH WHERE REOPENING WAS MADE BY THE AO ON CERTAIN ISSUE WHICH HAS BEEN CONSIDERE D FOR ADDITION AND ALSO EXPLANATION 3 WAS APPLIED. THEREAFTER, THE LD. CIT(A) DELETED THE ADDITION ON REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT . HOWEVER, HE CONFIRMED THE ADDITION AS PER EXPLANATION 3 OF SECT ION 147 OF THE ACT. WE THEREFORE, DISMISS ASSESSEE'S GROUND NOS. 1 AND 4. 3.1 GROUND NO. 2 OF THE ASSESSEE IS AGAINST CONFIRM ING THE TRADING ADDITION OF RS. 29,646/-, DISALLOWANCE OUT OF SUNDR Y EXPENSES OF RS. 6,219/- AND OUT OF SALARY EXPENSES OF RS. 36,000/-. EVEN THE LD. CIT(A) DELETED THE ADDITION ON WHICH, CASE WAS REOPENED B Y APPLYING EXPLANATION 3 OF SECTION 147 OF THE ACT. BRIEF FACT S OF THIS GROUND ARE THAT THE AO OBSERVED THAT THE ASSESSEE IN HIS SECOND FI RM NAMELY M/S. KAILA DEVI TRADING COMPANY HAD SHOWN SALE OF MUSTARD AT R S. 15,49,866/- ON WHICH GROSS PROFIT OF RS. 1,23,354/- HAD BEEN DISCL OSED AND THE GROSS PROFIT RATE WAS WORKED OUT AT 7.95%. THE AO ASKED T HE ASSESSEE TO ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 9 PRODUCE THE PURCHASE AND SALE BILLS WHICH WERE NOT PRODUCED BY THE ASSESSEE BEFORE THE AO. THE AO THEREFORE, REJECTED THE BOOK RESULTS OF THE U/S 145(3) OF THE ACT. THE OPENING AND CLOSING STOCK ALSO WAS NOT DISCLOSED BY THE ASSESSEE BEFORE THE AO. THEREFORE, THE AO MADE TRADING ADDITION OF RS. 29,646/- IN TRADING ACCOUNT. 3.2 BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASS ESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO HAD CONFIRMED THE ADDITION BY OBSERVING THAT THE ASSESSEE HAS NOT FURNISHED THE D ETAILS BEFORE THE AO DESPITE BEING GIVEN REPEATED OPPORTUNITIES. THEREFO RE, THE AO WAS JUSTIFIED IN INVOKING THE PROVISION OF SECTION 145( 3) OF THE ACT. THE TRADING ADDITION OF RS. 29,646/- WAS FOUND REASONAB LE AND THE SAME HAS BEEN CONFIRMED. 3.3 THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) HAD DELETED THE ADDITION ON THE BASIS OF REASONS RECORDED BY THE AO. THEREFO RE, EXPLANATION 3 CANNOT BE APPLIED IN THIS CASE. 3.4 AT THE OUTSET, THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 3.5 THE AO OBSERVED THAT THE ASSESSEE HAS DEBITED V ARIOUS EXPENSES IN THE PROFIT AND LOSS ACCOUNT OF M/S. KAILA DEVI TRA DING COMPANY UNDER THE HEAD SALARY EXPENSES, DALALI (COMMISSION AGENT) , TRANSPORTATION. LABOUR PAYMENT AND SHOP EXPENSES. THE AO GAVE REASO NABLE OPPORTUNITY ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 10 OF BEING HEARD ON THIS ISSUE TO THE ASSESSEE BUT TH E ASSESSEE DID NOT PRODUCE RELEVANT VOUCHERS BEFORE THE AO. THEREFORE, HE DISALLOWED 20% OUT OF TOTAL EXPENSES OF RS. 31,593/- I.E. 63,19/- OUT OF THESE EXPENSES WHICH WAS CONFIRMED BY THE LD. CIT(A) BY OBSERVING THAT NO DETAILS WERE FURNISHED BEFORE THE AO ALONGWITH EVIDENCE. IN THE SE CIRCUMSTANCES, HE CONFIRMED THE ADDITION, 3.6 SIMILAR ARGUMENTS WERE MADE AS MADE FOR OTHER I SSUES. IN CASE OF ADDITION NOT CONFIRMED BY THE LD. CIT(A) ON THE BAS IS OF CASE WAS REOPENED, THE EXPLANATION 3 OF SECTION 147 CANNOT B E APPLIED. THE AO DISALLOWED OUT OF SALARY PAYMENT OF RS. 36,000/- ON THE GROUND THAT THE ASSESSEE HAD DEBITED SALARY EXPENSES OF RS. 1.44 LA CS IN M/S. ANKUR INDUSTRIES. THE ASSESSEE COULD NOT SUBMIT THE DETAI LS OF THE SALARY AND SERVICES RENDERED BY HIM FOR THE BUSINESS PURPOSES. ON REPEATED OPPORTUNITIES, THE ASSESSEE COULD NOT ADVANCE ANY E VIDENCE FOR DEBITING THE EXPENSES UNDER THE HEAD SALARY. THEREFORE, HE D ISALLOWED 25% OUT OF SALARY EXPENSES DEBITED AT RS. 1.44 LACS I.E. RS. 3 6,000/-. 3.7 THE LD. CIT(A) HAD CONFIRMED THE ADDITION BY OB SERVING THAT THE AO PROVIDED SUFFICIENT OPPORTUNITIES TO THE ASSESSE E TO FURNISH DETAILS ALONGWITH BOOKS OF ACCOUNT BUT THERE WAS NO COMPLIA NCE FROM THE SIDE OF THE ASSESSEE. IN SUCH A SITUATION, THE DISALLOWANCE OF RS. 36,000/- MADE BY THE AO IS JUSTIFIED AND CONFIRMED. ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 11 3.8 THE LD. AR SUBMITTED THAT ALL THESE ADDITIONS DESERVES TO BE DELETED. 3.9 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND FROM THE RECORDS THAT THE CASE LAWS REFERRED BY THE LD. CIT(A) ARE NOT CLEARLY APPLICABLE ON THI S ISSUE. THE CASE LAWS REFERRED BY THE ASSESSEE ARE WHERE AO REOPENED THE CASE ON SUCH GROUND AND NOT MADE ADDITION IN THE ASSESSMENT ORDER ON TH E BASIS OF REOPENING BUT ADDITION IS MADE BY APPLYING EXPLANATION 3 OF S ECTION 147 OF THE ACT. HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS . SHRI RAM SINGH (2008) 305 ITR 343 (RAJ.) HELD THAT IF CASE IS REOP ENED ON REASON TO BELIEVE OF THE AO BUT ON THAT REASON TO BELIEVE NO ADDITION IS MADE BY THE AO . THE EXPLANATION 3 OF SECTION 147 CANNOT BE APP LIED. HON'BLE KARNATAKA HIGH COURT IN THE CASE OF N. GOVINDARAJU VS. ITO AND ANOTHER (2015) 377 ITR 243 HAS CONSIDERED THE ISSUE OF EXPL ANATION 3 OF SECTION 147 OF THE ACT BY CONSIDERING THE DECISION OF CIT V S. JET AIRWAYS (I) LTD., 331 ITR 236 (BOM.), RANBAXY LABORATORIES LTD. VS. C IT , 336 ITR 136 (DEL.) AND DISSENTED VIEW AND HELD THAT EVEN THERE IS NO ADDITION ON ACCOUNT OF REASON TO BELIEVE, EVEN ADDITION CAN BE MADE AS PER EXPLANATION 3 OF SECTION 147 ON OTHER ITEMS. WHEN T HERE ARE TWO VIEWS ON SAME ISSUE, THE ISSUE FAVOUABLE TO THE ASSESSEE SHO ULD BE CONSIDERED IN VIEW OF THE DECISION OF HON'BLE APEX COURT IN THE C ASE OF CIT VS. ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 12 VEGETABLE PRODUCTS LTD. (1973), 88 ITR 192 (SC). TH US GROUND NO. 2 (II) OF THE ASSESSEE IS ALLOWED. 4.1 THE GROUND NO. 2 (III) OF THE ASSESSEE IS AGAIN ST CONFIRMATION OF ADDITION OF RS. 3,75,748/- ON ACCOUNT OF SUNDRY CR EDITORS TREATING AS CASH CREDITORS. 4.2 BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVE D THAT THE ASSESSEE IN THE NAME OF M/S. KAILA DEVI TRADING COMPANY HAS SH OWN VARIOUS LOANS FOR WHICH THE AO GAVE SHOW CAUSE NOTICE TO THE ASSE SSEE ON 3-12-2007 FOR RS. 3,75,748/-. IT WAS PROPOSED THAT IN CASE OF ASSESSEE DID NOT SUBMIT THE REQUIRED CONFIRMATION ON FIXED DATE, THE CASH C REDITORS OF RS. 3,75,748/- WOULD BE THE INCOME OF THE ASSESSEE. THE ASSESSEE HAD NOT SUBMITTED ANY EVIDENCE INCLUDING CONFIRMATION AGAIN ST QUERY RAISED BY THE AO. THEREFORE, HE MADE THE ADDITION OF RS. 3,75 ,748/-. 4.3 BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASS ESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO HAD CONFIRMED THE ADDITION BY OBSERVING THAT THERE IS NO REASON AS TO WHY DETAILS WERE NOT PRODUCED BEFORE THE DURING ASSESSMENT PROCEEDINGS EVEN THOUG H SUFFICIENT OPPORTUNITY WAS PROVIDED. MOREOVER, EVEN DURING REM AND PROCEEDINGS, THE ASSESSEE DID NOT FURNISH THE BOOKS OF ACCOUNT O F EARLIER YEARS, THEREBY OPENING BALANCE IN THE NAME OF VARIOUS PERSONS. THE EARLIER YEAR CASE HAS NOT BEEN SCRUTINIZED BY THE AO. HE FURTHER HELD THA T IN SUCH A SITUATION ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 13 THE CLAIM OF THE ASSESSEE REGARDING THIS CREDIT BAL ANCE MAINLY ON THE BASIS OF STATEMENTS PREPARED BY HIM IS NOT ACCEPTABLE. 4.4 NOW THE ASSESSEE IS BEFORE US. THE LD. AR OF TH E ASSESSEE REITERATED THE ARGUMENTS AS MADE BEFORE THE LD. CIT(A) THAT TH ESE ARE OLD BALANCES AND THESE ARE TRADE CREDITORS AND NOT CREDITORS. TH E PURCHASES WERE MADE THROUGH REGULAR BILLS FROM THE REGISTERED DEALERS. THERE WAS A CREDIT ON ACCOUNT OF INTEREST ACCRUED ON CERTAIN ACCOUNTS. T HE LD. CIT(A) HAD SENT THESE EVIDENCES AND CALLED FOR REMAND REPORT FROM T HE AO. THE AO EVEN IN REMAND REPORT ALSO REITERATED THE FINDINGS AS GI VEN IN THE ASSESSMENT ORDER. THE ASSESSEE FILED THE ADDITIONAL EVIDENCE R EGARDING THE ADDITION MADE ON ACCOUNT OF CASH CREDITORS AND EXPENSES. TH E LD. AR ARGUED THAT THESE EVIDENCES WERE FURNISHED BEFORE THE LD. CIT(A ) WHICH CAN BE VERIFIED FROM THE ORDER OF THE LD. CIT(A) FROM PAG ES 7 AND 8 OF THE LD. CIT(A)S ORDER BUT THE LD. CIT(A) HAS NOT ADJUDICAT ED UPON AFTER BEING FURNISHED BEFORE HIM. THE LD. AR OF THE ASSESSEE SU BMITTED THAT THE LD. CIT(A) HAS NOT CONSIDERED THE EVIDENCE FURNISH BY T HE ASSESSEE AND HE FURTHER DREW OUR ATTENTION TO THE PAPER BOOK AND TR IED TO SHOW THAT THESE ARE OLD TRADE BALANCES AND NOT LOAN CREDITORS. THER EFORE, THE ADDITION CONFIRMED BY THE LD. CIT(A) IS NOT JUSTIFIED AND TH E SAME DESERVES TO BE DELETED. THEREFORE, THE LD. AR OF THE ASSESSEE REQU ESTED THIS BENCH TO CONSIDER THESE EVIDENCES AND DECIDE THE SAME ON MER ITS. ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 14 4.5 AT THE OUTSET, THE LD. DR VEHEMENTLY OPPOSED TH E ARGUMENTS OF THE LD. AR OF THE ASSESSEE THAT THE ASSESSEE WAS NOT CO OPERATING AT THE TIME OF SCRUTINY ASSESSMENT MADE BY THE AO AND WHATEVER EVI DENCES WERE FURNISHED BEFORE THE LD. CIT(A) THE SAME WERE CONSI DERED THROUGH REMAND REPORT AT THE TIME OF DECIDING THE APPEAL. 4.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND FROM THE RECORDS THAT THE ADDITIONAL EVIDENCES WERE PRODUCED BY THE ASSESSEE BEFORE THE LD. CIT(A) AT THE TIME OF APPEAL HEARING WHICH CAN BE VERIFIED FROM PAGE 7 OF THE LD. CIT(A)S ORDER. FURTHER THE AO GAVE ONLY ONE DATE I.E. 3-12- 2007 AND ORDER WAS PASSED ON 13-12-2007. THEREFORE, IN THE INTEREST OF JUSTICE, WE ADMIT ADDITIONAL EVIDENCE FURNISHED BY THE PARTY FOR DISP OSAL OF THIS APPEAL. IT IS UNDISPUTED FACT THAT THESE ARE OLD TRADE CREDITORS EXCEPT IN ONCE CASE THE PURCHASES DURING THE YEAR WERE MADE BY THE ASSESSEE . THESE ARE NOT THE LOANS AT ALL. THE AO GAVE ONLY ONE DATE TO FURNISH THE CONFIRMATION AS TO GENUINENESS, CREDITWORTHINESS AND IDENTITY OF THE C REDITORS WHICH IS NOT POSSIBLE WITHIN A WEEKS TIME. THE LD. CIT(A) WAS N OT RIGHT TO HOLD THAT NUMBER OF OPPORTUNITIES WERE PROVIDED TO THE ASSESS EE. IN SUCH A SITUATION AND FACTS OF THE CASE, WE DELETE THE ADDITION CONFI RMED BY THE LD. CIT(A). ITA NO. 646//JP/2012 SHRI SURESH KUMAR GUPTA VS. ITO, WARD- 3, SAWAI MAD HOPUR , . 15 5.1 AS REGARDS GROUND NO. 3 OF THE ASSESSEE FOR CHA RGING OF INTEREST U/S 234B, THE INTEREST IS MANDATORY AND THE ASSESSEE WI LL GET THE CONSEQUENTIAL RELIEF, IF ANY. 6.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 30 /10/2 015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 /10/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI SURESH KUMAR GUPTA, HINDAUN CIT Y 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 3, SAWAI MADHOPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), JAIPUR 3. VK;DJ VK;QDR@ CIT, JAIPUR 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 5. XKMZ QKBZY@ GUARD FILE (ITA NO.646/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR