Shri Sachin Verma, Palampur V. ITO, Palampur

ITA 650/CHANDI/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4255 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-06-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 06-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Keywords: Gross profit estimation; Capital asset converted into stock in trade; Commercial expediency; Set aside
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI R.L NEGI, JUDICIAL MEMBER ./ ITA NOS. 650 & 651/CHD/2019 / ASSESSMENT YEARS : 2012-13 & 2013-14 SH. SACHIN VERMA PROP. BALDEV RAJ & SONS, PALAMPUR DISTT. KANGRA ITO, PALAMPUR ./PAN NO: ACOPV4357M / APPELLANT /RESPONDENT HEARING THROUGH VIDEO CONFERENCING /ASSESSEE BY : SH. ANIL VASUDEVA, C.A. / REVENUE BY : SH. ASHOK KHANNA, ADDL. CIT % /DATE OF HEARING : 28.06.2021 % / DATE OF PRONOUNCEMENT : 23.09.2021 / ORDER PER R.L. NEGI, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE CAPTIONED APPEALS AGAIN ST THE TWO ORDERS EACH DATED 12.2.2019 PASSED BY COMMISSIONER OF INCOME TAX (APPEALS), PALAMPUR [FOR SHORT CIT(A)] FOR THE AS SESSMENT YEARS 2012- 13 & 2013-14 RESPECTIVELY, WHEREBY THE LD. CIT(A) H AS DISMISSED THE APPEALS FILED BY THE ASSESSEE AGAINST THE ASSESSMEN T ORDERS PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 [FOR SHORT THE ACT]. 2. SINCE, BOTH THE APPEALS PERTAIN TO THE SAME ASSE SSEE FOR DIFFERENT ASSESSMENT YEARS, THESE WERE CLUBBED, HEARD TOGETHE R AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. ITA NOS.650 & 651-CHD-2019- SH. SACHIN VERMA, PALAMPUR 2 ITA NO. 650/CHD/2019 AY 2012-13 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AN AUTHORIZED DEALER OF TWO WHEELERS, FILED HIS RETURN OF INCOME FOR THE AS SESSMENT YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME OF RS. 13,72,8 45/-. SINCE THE CASE WAS SELECTED FOR SCRUTINY, AO PASSED ASSESSMENT ORD ER U/S 143(3) OF ACT AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.22,27,598/- AFTER MAKING ADDITION OF RS.3,30,305/- ON ACCOUNT OF LOW GP RATE, RS. 2,36,452/- ON ACCOUNT OF DISALLOWANCE OF INTEREST, RS.2,46,150/- ON ACCOUNT OF INTEREST ON CAPITAL CONTRIBUTION AND INT EREST FREE LOAN ADVANCED AND RS. 41,347/- ON ACCOUNT OF DISALLOWANC E OF EXPENSES CLAIMED. IN THE FIRST APPEAL, THE LD. CIT(A) RESTRI CTED THE ADDITION MADE ON ACCOUNT OF LOW GP RATE TO RS. 1,50,000/-, RESTRI CTED THE DISALLOWANCE TO 10% FROM 1/5 TH OF THE TOTAL EXPENSES, HOWEVER, CONFIRMED THE REMAINING ADDITIONS. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 4. ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASS ED BY THE CIT(A) ON THE FOLLOWING GROUNDS: - L. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAI NING ADDITION OF RS. 1,50,000/-, RS. 2,36,452/- AND RS. 2,46,150/- WHICH IS ABSOLUTELY ILLEGAL, UNCALLED FO R AND LEGALLY NOT SUSTAINABLE AS THE LD. CIT(A) HAD NO MATERIAL IN HIS POSSESSION TO SUSTAIN SUCH ADDITION S. 2 THAT THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAIN ING ADDITION OF RS. 1,50,000/- OUT OF TOTAL ADDITION OF RS. 3,30,305/- ON ACCOUNT OF LOW G.P. ON ESTIMATED BASI S, WHEREAS, THE ASSESSEE HAS PROVIDED COMPLETE QUANTITATIVE RECORDS AND AUDITED RESULTS. SUSTAINI NG ADDITION ON ESTIMATED BASIS BASED MERELY ON ITA NOS.650 & 651-CHD-2019- SH. SACHIN VERMA, PALAMPUR 3 CONJECTURES, WITHOUT ANY COGENT REASONS AND WITHOUT POINTING OUT ANY DEFECT IS TOTALLY UNCALLED FOR AND LEGALLY NOT SUSTAINABLE. 3. THAT THE LD. CIT(A) HAS WRONGLY SUSTAINED ADDITION OF RS. 2,36,452/- ON ACCOUNT OF DISALLOWAN CE OF INTEREST ON THE OPENING DEBIT BALANCE OF THE PRO P. CAPITAL ACCOUNT BY TOTALLY DISREGARDING THE FACT REGARDING UTILIZATION OF ENTIRE BANK LIMIT FOR THE ASSESSEES BUSINESS. 4. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAINING ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST OF RS. 2,46,150/- ON ACCOUNT OF INTEREST F REE ADVANCES TO M/S ORCHID RESORTS, THE SAME HAVING BEE N MADE OUT OF COST-FREE FUNDS AND INTERNAL ACCRUALS A S THE LD. CIT(A) HAS NO MATERIAL IN HIS POSSESSION TO SUSTAIN THE SAID ADDITION. 5. THAT THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT THE ADVANCES HAVE BEEN MADE TO THE SISTER CONC ERN M/S ORCHID RESORTS, WHERE THE ASSESSEE BEING ONE OF THE PARTNERS. THE ADVANCES HAVE BEEN MADE OUT OF COMMERCIAL EXPEDIENCY AND EARN INCOME. 6. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE ENTRE BANK LIMIT HAS BEEN UTILIZED FO R THE FIRMS BUSINESS AND THE ENTIRE INTEREST OUTGO IS ALLOWABLE IN ACCORDANCE WITH PROVISIONS OF THE INCO ME TAX ACT. 7. THAT IT IS PRAYED THAT THE SUSTAINED ADDITION OF RS 6,62,907/- MAY PLEASE BE DELETED. 5. GROUND NO. 1 AND 7 OF THE APPEAL ARE OF GENERAL NATURE HENCE DO NOT REQUIRE SPECIFIC ADJUDICATION. 6. VIDE GROUND NO 2 THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN SUSTAINING ADDITION OF RS. 1,50,000/- OUT OF TOTAL ADDITION OF RS. 3,30305/- MADE BY THE AO ON ACCOUNT OF LOW GP O N ESTIMATION BASIS. THE LD. COUNSEL SUBMITTED BEFORE US THAT THE ASSESSEE HAS ITA NOS.650 & 651-CHD-2019- SH. SACHIN VERMA, PALAMPUR 4 SUBMITTED THE COMPLETE QUANTITATIVE TALLY OF TWO WH EELERS WHICH IS AVAILABLE ON RECORD. COMPARATIVE CHART PLACED ON R ECORD SHOWS THAT THE ASSESSEES GROSS PROFIT IS PROGRESSIVE. THE ASSESS EES SALES AND PURCHASES ARE COMPLETELY VOUCHED AND THE ENTIRE PAY MENTS TO HERO HONDA AND SUPPLIERS WERE MADE THROUGH BANKING CHANN EL. THE LD. COUNSEL FURTHER POINTED OUT THAT IN THE PAST MUCH L OWER GROSS PROFITS HAVE BEEN ACCEPTED IN SCRUTINY ASSESSMENT. THE LD. COUNSEL FURTHER CONTENDED THAT SINCE AO HAD MADE ADDITION ON ESTIMA TION BASIS WITHOUT POINTING OUT ANY DEFECT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE LD. CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADDITION MA DE BY THE AO. THE LD. COUNSEL PLACING RELIANCE ON THE JUDGMENT OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF PR. CIT VS. BHIWANI SILICATE INDUSTRIES 268 TAXMAN 0596 , SUBMITTED THAT THE ACTION OF THE LD. CIT(A) IS CO NTRARY TO THE LAW LAID DOWN BY THE HON'BLE HIGH COURT, THEREF ORE LIABLE TO BE SET ASIDE. 7. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) SUPPORTING THE FINDINGS OF THE LD. CIT(A) SUBMITTED THAT SINCE THE LD. CIT(A) HAS CONSIDERABLY REDUCED THE ADDITION, THERE IS NO INFIRMITY IN THE SAID ORDER TO INTERFERE WITH. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE CASE LAW RELIED UPON BY THE LD . COUNSEL. AS POINTED OUT BY THE LD. COUNSEL, IN THE ASSESSMENT YEAR 2011 -12 GP RATIO SHOWN BY THE ASSESSEE WAS 2.02%. AO PASSED THE ASSESSMENT ORDER U/S 143(3) ITA NOS.650 & 651-CHD-2019- SH. SACHIN VERMA, PALAMPUR 5 OF THE ACT AND NO TRADING ADDITION WAS MADE. HOWEVE R, IN THE ASSESSMENT YEAR UNDER CONSIDERATION DESPITE THE FAC T THAT THE ASSESSEE HAS SHOWN GP RATE OF 2.06%, THE LD. CIT(A) SUSTAINE D TRADING ADDITION OF RS. 1,50,000/- ON ACCOUNT OF LOW RATE. WE FURTHE R NOTICE THAT THE ASSESSEE HAS SUBMITTED QUANTITY WISE STOCK OF TWO W HEELERS AND ALSO EXPLAINED THE REASONS FOR LOW GP RATE. THE LD. CIT( A) IN HIS FINDINGS HAS OBSERVED THAT AO HAS NOT MADE ANY ENQUIRY TO AS CERTAIN THE MARGIN ON SALE OF VEHICLES. HE HAS FURTHER OBSERVED THAT E STIMATION OF GP RATE ON THE BASIS OF MARGIN ON SALE OF SPARES AND ACCESS ORIES CANNOT BE THE YARD STICK FOR APPLYING PROFIT RATE ON TOTAL SALE. SINCE, THE AUTHORITIES BELOW HAVE NOT CONDUCTED ANY ENQUIRY TO ASCERTAIN T HE MARGIN ON SALE OF VEHICLES, THE ADDITION MADE ON ESTIMATION BASIS IS NOT SUSTAINABLE IN LAW. MOREOVER, THE AUTHORITIES BELOW HAVE NOT ASSIGNED A NY COGENT REASON FOR MAKING ADDITION IN IN THIS AY, WHEREAS NO SUCH ADDI TION WAS MADE IN THE AY 2011-12 IN WHICH THE ASSESSEE HAD SHOWN GP R ATE OF 2.02%. FURTHER IN THE CASE OF PR. CIT VS. BHIWANI SILICATE INDUSTRIES (SUPRA), THE HON'BLE RAJASTHAN HIGH COURT HAS HELD THAT ONCE STOCK REGISTER HAD BEEN FOUND TO BE PROPERLY MAINTAINED NO TRADING ADD ITION COULD HAVE BEEN MADE. IN THE PRESENT CASE, SINCE THE AUTHORITI ES BELOW HAVE NOT REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE ACTION OF SUSTAINING TRADING ADDITION IS CONTRARY TO THE RATIO LAID DOWN BY THE HON'BLE HIGH COURT IN THE CASE DISCUSSED ABOVE. HENCE, WE ALLOW THIS GROUND OF APPEAL AND DIRECT THE AO TO DELETE THE ADDITION. ITA NOS.650 & 651-CHD-2019- SH. SACHIN VERMA, PALAMPUR 6 9. VIDE GROUND NO 3 THE APPELLANT/ASSESSEE HAS CHAL LENGED THE ACTION OF THE LD. CIT(A) IN SUSTAINING ADDITION OF RS. 2,3 6,452/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF INTEREST ON THE OP ENING DEBIT BALANCE OF RS. 19,70,432.16/- THE LD. COUNSEL SUBMITTED THA T THE CLOSING BALANCE OF CAPITAL AS ON 31.03.2011 IS THE OPENING BALANCE OF ASSESSMENT YEAR 2012-13, THEREFORE, NO ADDITION IS WARRANTED ON THE SAID AMOUNT. THE LD. COUNSEL FURTHER POINTED OUT THAT IN THE ASSESSMENT YEAR 2011-12, LD. CIT(A) DELETED THE ADDITION MADE BY AO ON THE BASIS OF DEBIT BALANCE IN ASSESSEES OWN CASE. IT WAS FURTHER POINTED OUT THA T IN THE ASSESSMENT YEAR 2017-18 ASSESSMENT ORDER WAS PASSED U/S 143(3) OF THE ACT AND NO SUCH ADDITION WAS MADE. THE LD. COUNSEL RELIED ON F OLLOWING CASES TO SUBSTANTIATE HIS CONTENTION. 1. CIT VS.DD INDUSTRIES LTD. 231 TAXMAN 0784 (DELHI ), 2. ITO VS. USHA COMMERCIAL PVT. LTD. ITA NO 1469/KO L/2008 AY 2005- 06 ITAT KOLKATA, 2. ITO VS. USHA COMMERCIAL PVT. LTD. ITA NO 1469/KO L/2008 AY 2005- 06 ITAT KOLKATA AND 3.ITO BHATINDA VS. EURO INFRASTRUCTURE & POWER LIMI TED ITA NO 457/ASR/2013 (AMRITSAR). 10. ON THE OTHER HAND, THE LD. DR SUPPORTING THE OR DER OF THE LD. CIT(A) SUBMITTED THAT SINCE THE ASSESSEE HAD CLAIME D A SUBSTANTIAL AMOUNT AS INTEREST EXPENDITURE, THE LD. CIT(A) HAS RIGHTLY SUSTAINED THE DISALLOWANCE MADE BY AO HOLDING THAT THESE FUNDS WE RE NOT UTILIZED BY THE ASSESSEE FOR THE PURPOSE OF BUSINESS. ITA NOS.650 & 651-CHD-2019- SH. SACHIN VERMA, PALAMPUR 7 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE. AS POINTED OUT BY THE LD. COUNSEL THE LD. CIT(A) HAS DELETED THE IDENTICAL ADDITION IN ASSESSEES APPEAL AGAINST THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2011-12 FOLLOWING THE DECISION OF THE AMRITSAR BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. EURO INFRASTRUCTURE & POWER LTD. (SUPRA). THE DEPARTMENT HAS NOT CHALLENGED THE FINDINGS OF THE LD. CIT(A). SINCE, THE AUTHORIT IES BELOW HAVE NOT ASSIGNED ANY COGENT REASON FOR MAKING ADDITION IN T HE ASSESSMENT YEAR UNDER CONSIDERATION, WE FIND MERIT IN THE CONTENTIO N OF THE LD. COUNSEL FOR THE ASSESSEE. HENCE, WE ALLOW THIS GROUND OF AP PEAL AND SET ASIDE THE FINDINGS OF THE LD. CIT(A). 12. VIDE GROUND NO 4,5&6 THE ASSESSEE HAS CHALLENGE D THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 2, 46,150/- ON ACCOUNT OF INTEREST DISALLOWANCE ON ADVANCES MADE TO M/S OR CHID RESORTS. THE LD. COUNSEL SUBMITTED BEFORE US THAT THE LD. CIT(A) HAS MADE ADDITION OF THE SAID AMOUNT WITHOUT APPRECIATING THE FACT TH AT ADVANCES HAVE BEEN MADE TO THE SISTER CONCERN M/S ORCHID RESORTS, IN W HICH THE ASSESSEE WAS A PARTNER AND THAT THE ADVANCES HAVE BEEN MADE OUT OF COMMERCIAL EXPEDIENCY. THE LD. COUNSEL FURTHER CONTENDED THAT THE ASSESSEE IS A PARTNER IN ORCHID RESORTS AND THE INVESTMENT WAS MA DE FOR THE PURPOSE OF BUSINESS AND NO WITHDRAWAL WAS MADE FROM CAPITAL ACCOUNT FOR NON- BUSINESS PURPOSES. SINCE THE CAPITAL ACCOUNT WAS DE BITED OUT OF THE ITA NOS.650 & 651-CHD-2019- SH. SACHIN VERMA, PALAMPUR 8 COMMERCIAL EXPEDIENCY, THE LD. CIT(A) HAS WRONGLY C ONFIRMED THE INTEREST EXPENDITURE DISALLOWANCE MADE BY THE AO. T HE AUTHORITIES BELOW HAVE NOT POINTED OUT ANY MATERIAL ON RECORD T O REBUT THE CONTENTION OF THE ASSESSEE. FURTHER, AS POINTED OUT BY THE LD. COUNSEL, AO DID NOT MAKE ANY ADDITION IN ASSESSEES CASE HAV ING THE IDENTICAL SET OF FACTS IN THE ASSESSMENT YEAR 2017-18. THE LD. DR DID NOT POINT OUT ANY VALID REASONS FOR MAKING INTEREST DISALLOWANCE @ 12% OF THE TOTAL ADVANCE MADE DURING THE YEAR RELEVANT TO THE ASSESS MENT YEAR UNDER CONSIDERATION. HENCE, WE DO NOT FIND ANY REASON TO SUSTAIN THE ADDITION ON ACCOUNT OF INTEREST DISALLOWANCE. WE ACCORDINGLY , ALLOW THIS GROUND OF APPEAL AND SET ASIDE THE FINDINGS OF THE LD. CIT (A). ITA NO.651/CHD/2019 AY 2013-14 13. IN THE ASSESSMENT YEAR UNDER CONSIDERATION, AO DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 43,58,160/- AS AGAINST THE RETURNED INCOME OF RS. 22,06,890/- AFTER MAKING ADDITION OF RS.1,12,434/- ON ACCOUNT OF BOGUS ENTRIES, RS.1,02,811/-ON ACCOUNT O F UNACCOUNTED SALE, RS.17,91,520/-ON ACCOUNT OF DISALLOWANCE OF INTERES T ON OPENING DEBIT BALANCE OF PROP. CAPITAL ACCOUNT AND DISALLOWANCE O F RS. 10,96,758/- ON ACCOUNT OF INTEREST FREE ADVANCES TO M/S ORCHID RES ORTS AND OF RS.1,44,507/-ON ACCOUNT OF MISCELLANEOUS EXPENDITUR E DISALLOWANCE. THE ASSESSEE CHALLENGED ADDITION OF RS. 6,94,761/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF INTEREST ON DEBIT OPENIN G BALANCE OF PROPRIETORS CAPITAL, ADDITION OF RS. 10 ,96,758/- ON ACCOUNT OF ITA NOS.650 & 651-CHD-2019- SH. SACHIN VERMA, PALAMPUR 9 DISALLOWANCE OF INTEREST ON ADVANCES GIVEN TO M/S O RCHID RESORTS AND ADDITION OF RS. 1,44,507/- MADE ON ACCOUNT OF DISAL LOWANCE OF STAFF WELFARE EXPENSES, TELEPHONE EXPENSES, CAR AND TRAVE LLING EXPENSES, MISCELLANEOUS EXPENSES, REPAIR AND MAINTENANCE AND DEPRESCRIPTION EXPENSES. THE LD. CIT(A) AFTER HEARING THE ASSESSEE CONFIRMED THE ADDITION OF RS. 6,94,761/- ON THE OPENING DEBIT BAL ANCE OF CAPITAL ACCOUNT, CONFIRMED THE ADDITION OF RS. 10,96,758 ON ACCOUNT OF INTEREST U/S 36(1)(III) OF THE ACT, HOWEVER, RESTRICTED THE DISALLOWANCE TO 10% OF THE TOTAL AMOUNT OF THE EXPENSES CLAIMED BY THE ASS ESSEE. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS TR IBUNAL. 14. ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PAS SED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2013-14 ON THE FOLLO WING GROUNDS: - L. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAI NING ADDITIONS OF RS.18,63,772/- WHICH IS ABSOLUTELY ILLEGAL, UNCALLE D FOR AND LEGALLY NOT SUSTAINABLE. 2. THAT THE LD. CIT(A) HAS WRONGLY SUSTAINED ADDITI ON OF RS.6,94,761/- ON ACCOUNT OF DISALLOWANCE OF INTEREST ON THE OPENI NG DEBIT BALANCE OF PROP. CAPITAL ACCOUNT BY TOTALLY DISREGARDING THE F ACT REGARDING UTILIZATION OF ENTIRE BANK LIMIT FOR ASSESSEE'S BUS INESS. 3. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAIN ING ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST OF RS.10,96,758 /- ON ACCOUNT OF INTEREST FREE ADVANCES TO M/S ORCHID RESORTS, THE S AME HAVING BEEN MADE OUT OF COST FREE FUNDS AND INTERNAL ACCRUALS A S THE LD. CIT(A) HAD NO MATERIAL IN HIS POSSESSION TO SUSTAIN THE SA ID ADDITION. 4 THAT THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT THE ADVANCES HAVE BEEN MADE TO THE SISTER CONCERN M/S ORCHID RES ORTS, ASSESSEE BEING ONE OF THE PARTNERS. THE ADVANCES HAVE BEEN M ADE OUT OF COMMERCIAL EXPEDIENCY AND EARN INCOME. ITA NOS.650 & 651-CHD-2019- SH. SACHIN VERMA, PALAMPUR 10 5. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE F ACT THAT THE ENTIRE BANK LIMIT HAS BEEN UTILIZED FOR THE FIRM'S BUSINESS AND THE ENTIRE INTEREST OUTGO IS ALLOWABLE IN ACCORDANCE WI TH THE PROVISIONS OF THE INCOME TAX ACT. 6. THAT SUSTAINING DISALLOWANCE OF 10% AMOUNTING TO RS . 72,253/- OUT OF THE CERTAIN EXPENSES CLAIMED IN THE PROFIT & LOSS IS ABSOLUTELY ARBITRARY, BASED ON CONJECTURES AND IS WITHOUT POIN TING OUT ANY DEFECT, WHEN THE EXPENSES ARE COMPLETELY VOUCHED AND ACCOUN TS ARE AUDITED. 7. THAT IT IS PRAYED THAT THE SUSTAINED ADDITION OF RS. 18,63,772/- MAY PLEASE BE DELETED. 15. GROUND NO 1&7 OF APPEAL ARE OF GENERAL NATURE T HEREFORE, DO NOT REQUIRE SPECIFIC ADJUDICATION. 16. GROUND NO 2 OF THIS APPEAL IS IDENTICAL TO GROU ND NO.3 OF THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2012-13 A LREADY DISCUSSED AND DECIDED. SINCE WE HAVE ALLOWED THE IDENTICAL GROUND IN ASSESSEES APPEAL AFORESAID, CONSISTENT WITH OUR FINDINGS WE A LLOW THIS GROUND OF APPEAL OF THE ASSESSEE FOR THE SAME REASONS AND DEL ETE THE ADDITION. 17. GROUND NO 3,4&5 ARE IDENTICAL TO THE GROUND NO 4,5&6 OF THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 DECID ED ABOVE. SINCE WE HAVE DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE I N ASSESSEES APPEAL AFORESAID, WE ALLOW THESE GROUNDS OF APPEAL OF THE ASSESSEE FOR THE SAME REASONS AND DIRECT THE AO TO DELETE THE ADDITION. 18. VIDE GROUND NO 6 THE ASSESSEE HAS CHALLENGED TH E ACTION OF THE LD. CIT(A) IN SUSTAINING DISALLOWANCE OF 10% AMOUNT ING TO RS. 72,253 OUT OF THE TOTAL ADDITION OF RS.1,44,507/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF MISCELLANEOUS EXPENSES CLAIMED BY T HE ASSESSEE. THE ITA NOS.650 & 651-CHD-2019- SH. SACHIN VERMA, PALAMPUR 11 LD. COUNSEL SUBMITTED THAT THE EXPENSES WERE RELATI NG TO STAFF WELFARE EXPENSES, TELEPHONE EXPENSES CAR EXPENSES DEPRECIAT ION MISE. EXPENSES CAR AND TRAVELLING EXPENSES REPAIR AND MAINTENANCE EXPENSES AMOUNTING TO RS. 7,22,540/- THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE ALL THE EXPENSES HAVE BEEN INCURRED IN CONNECTION WITH BUSI NESS OF THE ASSESSEE AND THE ASSESSEE HAS FURNISHED THE AUDITED ACCOUNTS , THE LD. CIT(A) HAS WRONGLY SUSTAINED THE ADDITION IN QUESTION WITHOUT ANY BASIS. 19. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT SI NCE THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CLAIM ON THE BASIS O F EVIDENCE, THE LD. CIT(A) HAS RIGHTLY SUSTAINED A REASONABLE DISALLOWA NCE. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. THE AUTHORITIES BELOW HAVE MADE DISALLOWANCE/ SUSTAINED THE ADDITION IN QUESTION FOR THE REASON T HAT THE ASSESSEE HAS FAILED TO PRODUCE EVIDENCE TO SUBSTANTIATE ITS CLAI M. AS POINTED OUT BY THE LD. COUNSEL, THE LD. CIT(A) HAS SUSTAINED THE A DDITION IN QUESTION ON ESTIMATION BASIS WITHOUT POINTING OUT ANY MATERI AL DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THE CO NTENTION OF THE LD. COUNSEL IS THAT SINCE THESE EXPENSES WERE INCURRED IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE, THE LD. CIT(A) HAS WR ONGLY SUSTAINED THE DISALLOWANCE. THE LD. CIT(A) HAS NOT DENIED THE CON TENTION OF THE ASSESSEE THAT THE EXPENSES WERE INCURRED FOR THE PU RPOSES OF BUSINESS, HOWEVER, SUSTAINED THE ADDITION TO THE EXTENT OF 10 % OF THE TOTAL AMOUNT OF EXPENSES CLAIMED HOLDING THAT THE DISALLOWANCE M ADE BY AO IS ON ITA NOS.650 & 651-CHD-2019- SH. SACHIN VERMA, PALAMPUR 12 HIGHER SIDE. SO, IN OUR CONSIDERED VIEW, THE ACTION OF THE LD. CIT(A) IN SUSTAINING 10% DISALLOWANCE WITHOUT ANY COGENT REAS ON IS ARBITRARY, THEREFORE BAD IN LAW. HENCE, WE ALLOW THIS GROUND O F APPEAL OF THE ASSESSEE AND SET ASIDE THE FINDINGS OF THE LD. CIT( A). ACCORDINGLY, WE DIRECT THE AO TO DELETE THE ADDITION. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE A RE ALLOWED. ORDER PRONOUNCED ON 23 RD SEPT., 2021. SD/- SD/- ( N.K. SAINI) (R.L.NEGI) / VICE PRESIDENT / JUDICIAL MEMBER DATED : 23.09.2021 .. ,-.- / COPY OF ORDER FORWARDED TO : 1. / APPELLANT 2. / RESPONDENT 3. / / CIT 4. / ( )/ CIT(A) 5. - 2 , %2 , 4 / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR .