Assistnat Commissioner of Income-tax -1, BHILAI(CG) V. Shri Mithilesh Mishra, DURG(CG)

ITA 68/BIL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2421 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 25-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit; Unexplained investment; Peak credit; Wrong claim
• Section: 40A(3); 68

Judgement Text

, RA IPUR IN THE INCOME TA X A PPELLA TE TRIBUNA L, RA IPUR BEFORE S/SHRI MUKUL SHRAW AT (JM) SHAMIM YAHYA (AM) , , ./ I.T.A. NO.68/BIL/2012 ( / ASSESSMENT YEAR :2006 - 07 ) ACIT, 32/32, BUNGLOWS, BHILAI. / VS. MITHILESH MISHRA, AZAD CHOWK, KASARDIH, DURG ./ ./ PAN/GIR NO. : AIOPM 8639 D ( / AP PELLANT ) .. ( / RESPONDENT ) C.O.NO.10/BIL/2012(ARISING OUT OF ./ I.T.A. NO.68/BIL/2012 ( / ASSESSMENT YEAR :2006 - 07 ) MITHILESH MISHRA, AZAD CHOWK, KASARDIH, DURG . / VS. ACIT, 32/32, BUNGLOWS, BHILAI. ./ ./ PAN/GIR NO. : AIOPM 8639 D CROSS OBJECTOR .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.K.BARWA / RESPONDENT/CROSS OBJECTOR BY : SHRI R.B.DOSHI / DATE OF HEARING : 10 - 02 - 2016 / DATE OF PRONOUNCEMENT : - 02 - 2016 / O R D E R PER MUKUL SHRAWAT, JM THIS IS AN APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION B Y THE RESPONDENT - ASSESSEE, BOTH EMANATING FROM THE ORDER OF LD CIT(A), RAIPUR DATED 30.3.2012 FOR THE ASSESSMENT 2006 - 07. GROUNDS ARE HEREBY DECIDED AS FOLLOWS: 2 I.T.A. NO.68/BIL/20 12 C.O.NO.10 OF 2012 ASSESSMENT YEAR :2006 - 07 2. GROUND NO.1 IS AS UNDER: W HETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADD ITION OF RS.60,15,897/ - MADE BY T HE AO U /S.68 OF THE I.T.ACT, 1961 ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) OF THE I.T.ACT, 1961 DATED 30.12.200 8 WERE THAT THE ASSESSEE IN INDIVIDUAL CAPACITY IS WORKING AS A CIV IL CONTRACTOR . THE AO HAS MENTIONED THAT THE ASSESSEE HAD UNDERTAKEN THE CONSTRUCTION WORK OF RAILWAY DEPARTMENT AND P. W. D. I N RESPECT OF THE ABOVE GROUND, THE OBSERVATION OF THE AO WA S THAT THE ASSESSEE HAD SHOWN AN AMOUNT OF RS.63,23,855/ - AS SUNDRY CREDITORS. T HE AO HAS MENTIONED THAT THE ACCOUNTS OF THE ASSESSEE WERE AUDITED UNDER SECTION 44AB OF THE ACT AND THE SAID FIGURE WAS REPORTED AS PER SCHEDULE - 3 OF THE AUDIT REPORT BY TH E AUDITORS. T HE AO HAS THEREAFTER MENTIONED THE NAMES OF THE PARTIES AS UNDER: SL. NO . NAME OF THE PARTIES OUTSTANDING AMOUNT IN THE BOOKS OF THE ASSESSEE OUTSTANDING AMOUNT IN THE BOOKS OF THE PARTIES REMARKS 1. M/S. ANCHAL STEELS 8,32,484/ - NIL COPY OF ACCOUNT/AUDIT REPORT FILED 2. M/S.JAI BHAWANI TRADERS 10,57,687/ - NIL NO SUCH PARTY EXISTS 3. M/S. PRAKASH TRADERS 1,90,530/ - - NO SUCH PARTY EXISTS 4. M/S. SANJAY STEEL TRADERS 13,76,170/ - NIL COPY OF A/C FILED 3 I.T.A. NO.68/BIL/20 12 C.O.NO.10 OF 2012 ASSESSMENT YEAR :2006 - 07 5. M/S. NATIONAL STEELS 8,64,821/ - NIL COPY O F ACCOUNT/AUDIT REPORT FILED 6. M/S. S.B.SHARMA 4,37,419/ - NIL COPY OF ACCOUNT FILED 7. M/S. KANHAIYA TRADERS 4,85,442/ - - NO SUCH PARTY EXISTS 8. M/S. AGARWAL TRADERS 4,22,874/ - - NO SUCH PARTY EXISTS 9. M/S. SAMIKSHA TRADING CO. 3,48,470/ - - NO SUCH PARTY EXISTS TOTAL: 60,15,897/ - 4. FURTHER, AN OBSERVATION WAS ALSO MADE BY TH E AO THAT IN THE RESPECTIVE BOOKS OF ACCOUNT OF THOSE PARTIES, NO AMOUNT WAS SHOWN AS AN OUTSTANDING BALANCE OF THE ASSESSEE. O N THE OTHER HAND, THE ASSESSEE HAD SHOWN THE OUTSTANDING BALANCE IN RESPECT OF THOSE PARTIES IN HIS BOOKS OF ACCOUNT. A S PER THE AO, THE ASSESSEE COULD NOT EXPLAIN SATISFACTORILY THE SAID DISCREPANCY. T HE AO HAS INVOKED THE PROVISIONS OF SECTION 68 OF THE I.T.ACT, AND TAXED AN AMOUNT OF RS.60,15,897/ - . B EING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 4.1 BEFORE L D CIT(A), IT W AS SUBMITTED THAT THE AO HIMSELF HAD MADE AN OBSERVATION THAT THE BOOK RESULTS WERE BETTER THAN THE PAST YEAR, HENCE NOT TO BE DISTURBED. B ECAUSE OF THE SAID REASONS, THE ARGUMENT OF THE ASSESSEE WAS THAT THE PARTIES WHO WERE QUESTIONED BY THE AO WERE CON NECTED WITH THE TRADING - ACCOUNT OF THE ASSESSEE AND, THEREFORE, NO ADDITION SHOULD HAVE BEEN MADE BY DISTURBING THE BOOK RESULTS OF THE ASSESSEE. I T HAS ALSO BEEN PLEADED THAT RECONCILIATION OF THE ACCOUNTS WERE MADE AND ON THAT BASIS THERE WAS NO FAUL T OF 4 I.T.A. NO.68/BIL/20 12 C.O.NO.10 OF 2012 ASSESSMENT YEAR :2006 - 07 THE ASSESSEE. T HE SAID PARTIES HAVE WRONGLY MADE CREDIT ENTRIES AS WELL AS INCORRECTLY BROUGHT FORWARD THE OPENING BALANCE WHICH HA D RESULTED INTO A DIFFERENCE BETWEEN THE ACCOUNTS , BUT OTHERWISE THERE WAS NO FAULT OF THE ASSESSEE. I T HAS ALSO BEEN PLEADED THAT THE CREDIT APPEARING IN THE ACCOUNTS IN THE SUNDRY CREDITORS WERE DULLY SUPPORTED BY THE BILLS. T HE FAA HA D PARTLY ACCEPTED THE EXPLANATION OF THE ASSESSEE. L D CIT(A) HAS BIFURCATED THE SAID AMOUNT AND THEREAFTER HELD THAT A SUM OF RS.25,05 ,,003/ - REPRESENTED THE OUTSTANDING BALANCE O F 5 CREDITORS TO WHOM THE LETTERS WERE ISSUED BY THE AO BUT REMAINED UN - SERVED. H OWEVER, THE VIEW OF LD CIT(A) WA S THAT WHEN PURCHASES HAVE BEEN ACCEPTED BY THE AO THEN THE TRANSACTION SHOULD NOT HAVE BEEN DOU BTED. H E HAS HELD THAT OUT OF TOTAL ADDITION OF RS.60,15,897/ - , AN ADDITION OF RS.25,05,003/ - IS NOT SUSTAINABLE DUE TO THE MAIN REASON THAT THE PURCHASES HAVE NOT BEEN DOUBTED AND THE TRANSACTION WAS NOT FOUND TO BE OF BOGUS PURCHASES AND, THEREFORE, OUTSTANDING BALANCE WAS WRONGLY ADDED BY THE AO. IN RESPECT OF BALANCE AMOUNT OF RS.35,10,894/ - , OUT OF TOTAL ADDITION OF RS.60,15,897/ - , THE FAA HAS DISCUSSED THE PARTY - WISE TRANSACTION. H E HAS EXPRESSED AN OPINION THAT THE ADDITION U/S.68 COULD ONLY BE MADE WHEN THE CONDITIONS OF THE SAID SECTION ARE NOT SATISFIED. L D CIT(A) HAS THEREAFTER ARRIVED AT A CONCLUSION THAT SINCE THE ISSUE WAS NOT OF A CASH CREDITOR , BUT THE ISSUE PERTAINED TO THE SUNDRY CR EDITORS , THEREFORE, A REASONABLE ADDITION WAS REQUIRED TO BE MADE CONSIDERING THE BOOK RESULTS OF THE ASSESSEE. A CCORDING TO HIM, NET 5 I.T.A. NO.68/BIL/20 12 C.O.NO.10 OF 2012 ASSESSMENT YEAR :2006 - 07 PROFIT RATE OF 5% WAS ACCEPTED IN THE PAST BY TH E REVENUE DEPARTMENT. HENCE , ON THE BALANCE AMOUNT, HE HAS COMPUTED THE NET PROFIT @5% THUS ARRIVING AT THE FIGURE OF RS.3,83,088/ - AS PER THE FOLLOWING PARAGRAPH: HAVING CONCLUDED THAT THE ACTION OF THE AO IN MAKING ADDITION OF THE AMOUNT OF DIFF ERENCE IS NOT JUSTIFIED, THE OTHER ASPECT OF THE CASE ABOUT THE UNVERIFIABILIT Y OF THE CREDITORS ALSO DESERVES TO BE CONSIDERED. ALTHOUGH THE DIFFICULTY ON THE PART OF THE APPELLANT TO GET THE AMOUNT OF OUTSIDE PARTIES VERIFIED CANNOT BE IGNORED, IT IS THE BOUNDEN DUTY OF THE APPELLANT TO PROVE THE TRANSACTIONS UNDERTAKEN BY HIM. 1 HAVE ALSO TAKEN NOTE OF THE FACT THAT THE ENQUIRY LETTERS ADDRESSED BY THE AO TO 5 CREDITORS REMAINED UN - SERVED. THIS CALLS FOR AT LEAST SOME ADVERSITY TO THE APPELLANT. AS ALTERNATIVELY REQUESTED BY THE APPELLANT, WHILE I DISAPPROVE THE ACT OF THE AO, 1 DEEM IT FI T AND PROPER TO REJECT THE BOOKS AND TO ESTIMATE THE PROFIT. THE APPELLANT HAS SUBMITTED BEFORE ME COPY OF HIS ASSESSMENT ORDER FOR AY 2007/08, PASSED U/S 143(3). IN THAT YEAR, THE SAME AO REJECTED THE N.P. RATE OF 2.14% DECLARED BY THE APPELLANT AND ESTIMATED THE SAME AT 5%. THE APPELLANT HAS NOT FILED ANY APPEAL AGAINST THIS ORDER. KEEPING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE IN VIEW, I DIRECT THAT FOR THE YEAR UNDER CONSIDERATION & ALSO NP. RATE OF 5% MAY BE ADOPTED. THIS ESTIMATION WILL ALSO TAKE CARE OF A PART OF ADDITION ' HELD TO BE SUSTAINABLE BY ME IN THE PRECEDING PARAGRAPH. THE AO IS DIRECTED TO ASSESS E OF THE APPELLANT FROM HIS BUSINESS AT 5% OF THE TURNOVER, WHICH COMES TO RS. 7,85,800/ - , AGAINST THE NET PROFIT OF RS. 4,02,712/ - . AS A RESULT OF THIS, THERE WILL BE AN ADDITION OF RS. 3,83,088/ - TO THE RETURNED INCOME AND CONSEQUENTLY, THE ADDITION OF RS..60,15,897/ - / - MADE BY THE AO WOULD STAND REDUCED TO RS. 3,83,088/ - . THE APPELLANT GETS RELIEF OF RS.56,32,809/ - IN RESPECT OF TH IS GROUND OF APPEAL. 5 . WI TH THIS BRIEF FACTUAL BACKGROUND, WE HAVE HEARD BOTH THE SIDES. F ROM THE SIDE OF THE REVENUE SHRI S.K.BARWA, , LD D.R. APPEARED AND SUPPORTED THE ACTION OF THE ASSESSING OFFICER, ON T HE OTHER HAND, FROM THE SIDE OF THE RESPONDE NT - ASSESSEE, SHRI R.B.DOSHI, LD A.R. APPEARED AND PLEADED THAT THE ASSESSEE IS ENTITLED FOR TOTAL RELIEF BECAUSE OF THE REASON THAT THE AO ON ONE HAND HAD HELD THAT THE OUTSTANDING BALANCE REPRESENTED THE SUNDRY TRADE 6 I.T.A. NO.68/BIL/20 12 C.O.NO.10 OF 2012 ASSESSMENT YEAR :2006 - 07 CREDITORS , BUT AMAZINGLY APPLIED THE PROVISIONS OF SECTION 68 AS IF CASH WAS INTRODUCED BY THE ASSESSEE IN THE NAME OF CERTAIN BOGUS PARTIES. THIS BASIC LEGAL OBJECTION APPEARS TO BE CORRECT. ON THE BASIS OF THE F ACTS OF THE CASE AS WELL AS THE MATERIAL PLACED BEFORE US, THE ADMIT TED FACTUAL POSITION WAS THAT THE OUTSTANDING BALANCES WERE NOT IN THE NATURE OF CASH CREDITS BUT IN THE NATURE OF SUNDRY CREDITS. O N THIS POINT, OUR FOR EMOST OBSERVATION IS THAT THE AO WAS NOT CLEAR IN HIS MIND WHETHER THE ADDITION WAS REQUIRED TO BE MADE UNDER SECTION 68 OF THE I.T.ACT , 1961 OR UNDER THOSE PROVISIONS WHERE THE WRONG CLAIM OF LIABILITY IS TO BE DISALLOWED OF THE I.T.ACT.. THE COMPILATION FILED BEFORE US HAS FURTHER REVEALED THAT THE AO HAS NOT CROSS EXAMINED THE ENTRIES PASSED BY THO SE PARTIES RESPECTIVELY IN THEIR BOOKS OF ACCOUNT. THE DIFFERENCE WAS STATED TO BE DUE TO WRONG MENTION OF OPENING AND CLOSING BALANCE. O THERWISE, THE TRANSACTIONS RECORDED IN THE RESPECTIVE ACCOUNTS WERE DULY MATCHED WITH THE ACCOUNTS OF THE ASSESSEE. WE H AVE ALSO BEEN INFORMED THAT THE RESPECTIVE RECONCILIATION S SUBMITTED HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER. T HE ASSESSEE HAS ALSO FUR NISHED BILLS OF THE PURCHASES MADE BY THOSE PARTIES AND IN SUPPORT, PHOTOCOPIES OF BILLS HAVE ALSO BEEN FILED. THE TRANSACTIONS CARRIED OUT DURING THE FINANCIAL YEAR AND RECORDED IN THE RESPECTIVE ACCOUNTS HAVE MATCHED WITH EACH OTHER. IN THE LIGHT OF ABOVE FACTUAL BACKGROUND, WE HAVE MADE AN OBSERVATION IN THE COURT T HAT THE AO WAS UNDER CONFUSION WHETHER THE N ATURE OF TRANSACTION WAS TO BE ADDED U/S.68 OF I.T.ACT OR NOT. W HEN THE AO WAS AWARE THAT THE PARTIES WERE SUPPLYING MATERIAL AND PURCHASES HAVE BEEN MADE THEN 7 I.T.A. NO.68/BIL/20 12 C.O.NO.10 OF 2012 ASSESSMENT YEAR :2006 - 07 THERE WAS NO REASON AS TO WHY HE HA D INVOKED THE PROVISIONS OF SECTION 68 OF THE I.T.ACT. T HIS QUESTION REMAINED UN - ANSWERED EVEN BY THE REPRESENTATIVE OF THE REVENUE DEPARTMENT. H ENCE, WE ARE OF THE VIEW THAT THE VERY BASIS ON WHICH THE ADDITION IN DISPUTE WAS MADE BY THE AO WAS INCORRECT , RATHER QUESTIONABLE AS WELL . W E, THEREFORE, DISMISS THIS GROUND OF THE REVENUE. 6 . GROUND NO.2 IS AS UNDER: W HETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.41,000/ - MADE BY THE AO BY APP LYING THE PROVISIONS OF SECTION 40A(3) OF THE I.T.ACT, 1961 ON ACCOUNT OF CASH PAYMENTS OF RS.,2,05,000/ - AGAINST PURCHASES. 7 . THE OBJECTION OF THE ASSESSING OFFICER WA S THAT IN RESPECT OF CERTAIN PARTIES, BEARER CHEQUES WERE ISSUED AND THOSE PARTIES HAV E WITHDRAWN CASH FROM THE CURRENT ACCOUNT OF CANARA BANK, HENCE, INFRINGED THE PROVISIONS OF SECTION 40A(3) OF THE I.T.ACT, 1961. T HE AO HAS COMPUTED THAT THE INFRINGEMENT WAS IN RESPECT OF THE AMOUNT OF RS.2,05,000/ - , HENCE, BY APPLYING THE RATE OF DISAL LOWANCE OF 20%, A SUM OF RS.41,000/ - WAS TAXED. 8 . WH EN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LD CIT(A) HAS EXAMINED THE FACTS AND THEREUPON MADE THE OBSERVATION THAT THE PARTIES IN QUESTION NAMELY, SANJAY STEELS AND S.B.SHARMA HAD S UPPLIED THE COPIES OF ACCOUNTS AND CONFIRMED THE TRANSACTION. H OWE VER, BY APPLYING RATIO OF DECISION IN THE CASE OF ATTAR SINGH GURUMUKH SINGH VS ITO (1991) 191 ITR 667(SC), HE HAS HELD THAT THE IMPUGNED ADDITION WAS WRONGLY MADE. 9 . ON THIS TRIFLE ISSUE, WE HAVE HEARD BOTH THE SIDES. W E FIND THAT THE REASONING GIVEN BY THE LD CIT(A) WAS NOT ON LEGALLY SOUND BASIS. A GENERAL VIEW 8 I.T.A. NO.68/BIL/20 12 C.O.NO.10 OF 2012 ASSESSMENT YEAR :2006 - 07 IS NOT PERMISSIBLE IF A S PECIFIC PROVISION IS ENACTED THAT IN THE CASES OF CASH PURCHASES CERTAIN PERCENTAGE IS TO BE DISALLOW ED. THUS THE QUESTION OF GENUINENESS OF THE TRANSACTION DOES NOT ARISE. EXCLUSIVELY ON THAT PREMISE OR PRINCIPLE THIS ISSUE CAN NOT BE SETTLED. WE T HEREFORE HOLD THAT THE VIEW TAKEN BY LD CIT(A) IS NOT PERMISSIBLE IN THE EYES OF LAW. THE SAME IS HEREBY REV ERSED AND THIS GROUND OF THE REVENUE IS ALLOWED. 10 . GROUND NO.3 READS AS UNDER: W HETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.4,67,600/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT BY INVOKING THE PROVISIONS OF SECTION 69B OF THE I.,T.ACT, 1961. 1 1 . IT WAS NOTICED BY THE AO THAT THERE WAS CASH DEPOSIT IN THE CAPITAL ACCOUNT OF THE ASSESSEE AMOUNTING TO RS.4,67,600/ - . THE ASSESSEE HAS FURNISHED THE CAPITAL ACCOUNT AND ON THAT BASIS, THE AO HAS FOUND THAT THERE WAS A PEAK CREDIT AS ON 20.3.2006 AMOUNTING TO RS.4,67,600/ - , WHICH WAS HELD AS UNEXPLAINED INVESTMENT BY THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 69B OF THE I.T. ACT, 1961. 12 . WH EN THE MATTER WAS CARRIED BEFORE THE F IRST APPELLATE AUTHORITY, THE LD CIT(A) HAS GRANTED RELIEF AS FOLLOWS: I HAVE CONSIDERED THE WRITTEN SUBMISSION OF THE APPELLANT. THE APPELLANT CONTENDED THAT THERE WAS DIFFERENCE OF RS. 15,000/ - IN CALCULATION OF PEAK INVESTMENT OF 20.03.2006, WHICH IS C LEARLY VERIFIABLE FROM THE PEAK INVESTMENT CHART PREPARED BY THE AO IN PARA 4 OF THE ASSESSMENT ORDER. THE CLAIM OF THE APPELLANT IS FOUND TO BE ACCEPTABLE. IN SUPPORT OF THE OPENING CASH BALANCE OF RS. 86,325/ - , THE APPELLANT SUBMITTED BEFORE ME A COPY OF HIS BALANCE SHEET AS ON 31.03.2005, WHICH IS ALSO STATED TO BE FILED BEFORE THE AO. THE BALANCE SHEET OF 31.03.2005 SUBMITTED BY THE APPELLANT IS AN EVIDENCE OF THE OPENING CASH BALANCE AND I DO NOT SEE ANY 9 I.T.A. NO.68/BIL/20 12 C.O.NO.10 OF 2012 ASSESSMENT YEAR :2006 - 07 REASON TO REJECT THE SAME. IN VIEW OF THIS, THE CLAIM OF THE APPELLANT DESERVES TO BE ACCEPTED. THEREFORE, OUT OF THE ADDITION OF RS. 4,67,600/ - MADE BY THE AO, THE ADDITION OF RS. 1,01,325/ - (RS. 15,000/ - + RS. 86,325/ - ) DOES NOT SURVIVE AND IS, HEREBY, DELETED. REGARDING THE BALANCE ADDITION OF RS. 3, 66,275/ - , I HAVE ALREADY SUSTAINED, VIDE PARA NO. 3.4 OF THIS ORDER, A PART OF THE ADDITION (I.E. RS. 3,83,088/ - ) MADE BY THE AO BY ESTIMATING THE NET PROFIT. THE ADDITION SO SUSTAINED WOULD ALSO BE AVAILABLE AS A SET OFF AGAINST THE ADDITION MADE BY THE A O ON ACCOUNT OF CASH INTRODUCED IN CAPITAL ACCOUNT AS PER THE PRINCIPLE LAID DOWN BY HON'BLE SUPREME COURT IN 123 ITR 457 (SC). FROM THE ASSESSMENT ORDER, I FIND THAT MAJOR PART OF THE PEAK INVESTMENT ADDED BY THE AO ARISES IN THE MONTH OF FEBRUARY & MARCH 2006. THERE CAN BE A REASONABLE & LOGICAL INFERENCE THAT OUT OF THE ADDITION OF RS. 3,83,088/ - SUSTAINED BY ME, RS. 3,00,000/ - CAN SAFELY BE PRESUMED TO HAVE BEEN AVAILABLE WITH THE APPELLANT BY THE END JANUARY 2006 AND, THEREFORE, THIS AMOUNT WAS ALSO AV AILABLE WITH THE APPELLANT TO BE INTRODUCED IN HIS CAPITAL. THEREFORE, THE ADDITION TO THIS EXTENT IS ALSO COVERED BY THE ADDITION SUSTAINED BY ME IN RESPECT OF GROUND NO. 1. ACCORDINGLY, I HOLD THAT OUT OF THE TOTAL ADDITION OF RS 4,67,600/ - MADE BY THE A O, ADDITION OF RS. 4,01,325/ - (RS. 15,000/ - + RS. 86,325/ - + RS.3,00,000/ - ) IS HEREBY DELETED. THE APPELLANT GETS RELIEF OF RS. 4,01,325/ - AND THE BALANC E ADDITION OF RS. 66,275/ - IS CONFIRMED . 1 3 . HEARD BOTH THE SIDES. O N PERUSAL OF THE IMPUGNED CAPITAL ACCOUNT, IT IS EVIDENT THAT WITHDRAWAL AND DEPOSITS HAVE REGULARLY BEEN MADE. T HERE WAS NO DISPUTE THAT THE TRANSACTIONS WERE NOT RELIABLE. O NCE THE ASSESSEE IS DOING BUSINESS THEN THE AMOUNTS ARE SOMETIMES DEPOSITED IN THE CAPITAL ACCOUNT AND SOMETIMES WITHDRAWN FROM THE CAPITAL ACCOUNT. I N SUCH A SITUATION, WHEN THE BOOKS OF ACCOUNT WERE VERY MUCH BEFORE THE AO AND THOSE WERE FOUND TO BE CORRECT, BEING AUDITED U/S.44AB OF THE ACT, IT IS NOT JUST IF IABLE ON THE PART OF THE AO TO HOLD THAT THE PEAK CREDIT IN THE SAID ACCOUNT WAS AN UNEXPLAINED CREDIT. THIS IS NOT THE CASE OF THE REVENUE THAT CORRESPONDING AVAILABILITY OF FUNDS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT RELATED TO THE BUSINESS TRANSACTION OF THE ASSESSEE OR REMAINED UNSUPPORTED. BE THAT AS IT WAS , THE ISSUE IS VERY TRIVIAL AND INSIGNIFICANT HENCE NEED NO FURTHER ELABORATION. AS PER FAA TO SOME EXTENT 10 I.T.A. NO.68/BIL/20 12 C.O.NO.10 OF 2012 ASSESSMENT YEAR :2006 - 07 THE FUNDS WERE AVAILABLE WITH THE ASSESSEE WHICH WERE CREDITED IN THE CAPITAL ACCOUNT. W E FEEL THAT AT THIS STAGE NO INTERFERENCE IS NEEDED. WE , THEREFORE, HOLD THAT THE RELIEF TO THE EXTENT GIVEN BY THE LD CIT(A) IS REASONABLE AND REQUIRED TO BE CONFIRMED. THIS GROUND IS DISMISSED. 14 . IN THE RESULT, APPEAL FILED BY THE REVENUE I S DISMISSED. 15 . NOW, WE SHALL TAKE UP THE CROSS OBJECTION FI LED BY THE ASSESSEE. 16 . GROUND NO.1 OF CROSS OBJECTION IS AS UNDER: IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A)_ ERRED IN CONFIRMING ADDITION OF RS.3,83,088/ - OUT OF THE ADDITION OF RS.60,15,897/ - MADE BY THE AO INVOKING THE PROVISIONS OF SEC.68. THE ADDITION SUSTAINED BY CIT(A) IS NOT JUSTIFIED. 17 . WH ILE DECIDING THE APPEAL OF THE REVENUE DEPARTMENT, WE HAVE HELD THAT THE ADDITION MADE U/S.68 OF THE I.T.ACT ITSELF WAS ON WRONG FOOTING , HENCE, PART RELIEF GIVEN BY THE LD CIT(A) WAS NOT JUSTIFIABLE. ONCE A VIEW HAS BEEN EXPRESSED IN FOREGOING PARAGRAPH, THEREFORE, WE HEREBY HOLD THAT THE AMOUNT SUSTAINED TO THE EXTENT OF RS.3,83,088/ - WAS NOT ACCORDING TO THE LAW. AS A RESULT, T HIS GROUND TAKEN IN THE CROSS OBJECTION DESERVES TO BE ALLOWED. WE HEREBY HOLD ACCORDINGLY. 18 . GROUND NO.2 OF CROSS OBJECTION IS AS UNDER: LD CIT(A) ERRED IN CONFIRMING ADDITION OF RS.66,275/ - OUT OF THE ADDITION OF RS.4,67,600/ - MADE BY THE AO ON ACCOUN T OF UNEXPLAINED CAPITAL INTRODUCED BY THE ASSESSEE. 19 . THIS GROUND OF CROSS OBJECTION HAS NOT BEEN PRESSED BY THE LD A.R., AS WELL AS WE HAVE ALREADY CONFIRMED THE VIEW TAKEN BY THE LD CIT(A) WHILE DECIDING ONE OF THE GROUND OF THE REVENUE (SUPRA). A S A RESULT, THIS GROUND OF CROSS OBJECTION IS HEREBY DISMISSED. 20 . IN THE RESULT, CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALLOWED. 11 I.T.A. NO.68/BIL/20 12 C.O.NO.10 OF 2012 ASSESSMENT YEAR :2006 - 07 21. TO CONCLUDE, APPEAL FI LED BY THE REVENUE AS WELL AS THE C ROSS OBJECTION FILED BY THE ASSESSEE, BOTH ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 /2/2016 . S D/ - SD/ - ( , ) ( , ) SHAMIM Y AHY A , ACCOUNT ANT MEMBER MUKUL SHRA WA T , JUDICIAL M EM BER RAIPUR , DATED 17 / 02/2016 . . ./ PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : ACIT, 32/32, BUNGLOWS, BHILAI. 2. THE RESPONDENT/CROSS OBJECTOR: MITHILESH MISHRA, AZAD CHOWK, KASARDIH, DURG 3. ( ) / THE CIT(A) - RAIPUR 4. / CIT, RAIPUR 5. , , / DR, ITAT, RAIPUR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR. PS, ITAT, CAMP: RAIPUR