ITO 8(3)4, MUMBAI V. WESTERN INDIA PACKAGING P. LTD, MUMBAI

ITA 6809/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3687 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 21-03-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 07-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Unexplained investment
• Section: 69C; 40A(3); 69

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENC H, MUMBAI , !' , # . $ ' , % & BEFORE SHRI R.K. GUPTA, JM AND SHRI D. KARUNAKARA R AO, AM /. ITA NO.6784/M/2011 ( ' ( ')( / ASSESSMENT YEAR :2007-2008) WESTERN INDIA PACKAGING PRIVATE LIMITED, 305-B, ARENA, LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI 400 053. ' / VS. THE INCOME TAX OFFICER, WD-8(3)(4), MUMBAI. * % ./PAN :AAACW 4258 R ( *+ /APPELLANT) .. ( ,-*+ / RESPONDENT) /. ITA NO.6809/M/2011 (AY: 2007-2008) THE INCOME TAX OFFICER, WD-8(3)(4), MUMBAI. ' / VS. WESTERN INDIA PACKAGING PRIVATE LIMITED, 305-B, ARENA, LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI 400 053. * % ./PAN :AAACW 4258 R ( *+ /APPELLANT) .. ( ,-*+ / RESPONDENT) *+ . / / ASSESSEE BY : SHRI VIJAY KOTHARI ,-*+ . / / REVENUE BY : SHRI JAVED AKHTAR '' . 0% /DATE OF HEARING :21.3.13 12) . 0% /DATE OF PRONOUNCEMENT :08.05.2013 3 3 3 3 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION AND THEY ARE CROSS APPEALS. BOTH THESE APPEALS ARE FILED AGAINST THE ORDER OF C IT (A)-18, MUMBAI DATED 20.7.2011 FOR THE ASSESSMENT YEAR 2007-2008. AS A RULE, THESE TWO APPEALS ARE BEING CLUBBED AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRA PHS. 2 ITA NO.6784/M/2011 ASSESSEES APPEAL 2. FIRSTLY, WE SHALL TAKE UP APPEAL ITA NO.6784/M/2 011, WHICH IS FILED BY THE ASSESSEE ON 7.10.2011 AGAINST THE ORDER OF CIT (A)- 18, MUMBAI AND THE GROUNDS RAISED BY THE IN THIS APPEALS READ AS UNDER: 1.THE LD CIT (A) HAS GROSSLY ERRED IN NOT ALLOWING THE EXPENDITURES OF RS. 13,50,000/- ON ACCOUNT OF UN-ACCOUNTED PURCHASE , HAVING TREATED THE SAME UNDER UNEXPLAINED INVESTMENTS U/S 69C OF THE ACT. 2. THE LD CIT (A) OUGHT TO HAVE OBSERVED THAT ADDIT ION OF RS. 13,50,000/- HAS BEEN MADE WRONGLY UNDER NON-ACCOUNTING OF PARTIAL EXPENDITURE, THOUGH THE ASSESSEE HAD RECORDED THE SAID TRANSACTION I HIS PU RCHASE REGISTERS, AND FURTHER ALSO ACCOUNTED IN HIS DAY BOOKS PARTIALLY, THUS, THE SAI D AMOUNT OUGHT TO HAVE BEEN ADDED UNDER THE PROVISIONS OF SECTION 69A. 3. THE LD CIT (A) OUGHT TO HAVE OBSERVED AND RECOGN IZED THE FACT THAT THE SAID AMOUNT OF RS. 13,50,000/- WERE TAKEN OUT OF THE PUR CHASE RECORDS MAINTAINED BY THE ASSESSEE, THEREBY ESTABLISHING THE PARTIAL ACCOUNTI NG OF TRANSACTION AND HENCE THE PROVISIONS OF SECTION 69 C WERE NOT APPLICABLE TO T HE SAID ISSUE. 4. THE LD CIT (A) OUGHT TO HAVE OBSERVED THE FACT T HAT THE AO HAS APPLIED THE PROVISIONS OF SECTION 69A, INITIALLY IN THE ASSESSM ENT ORDER AND ONLY AT THE END CHANGED THE SAME TO SECTION 69C WHICH GOES TO ESTABLISH THE FACT THAT THE PROVISIONS OF SECTION 69C WERE NOT APPLICABLE TO THE SAID INSTANCE ADDITI ON. 5. THE LD CIT (A) OUGHT TO HAVE OBSERVED THE FACT T HAT THE PROVISIONS OF SECTION 69C WERE ATTRACTED ONLY IN THE CASE OF NON-ACCOUNTI NG OF AN EXPENDITURE AND IS NOT APPLICABLE TO CASES WHERE PART OF THE TRANSACTIONS WERE ALREADY ACCOUNTED. THE LD CIT (A) OUGHT TO HAVE RECOGNIZED AND OBSERVED THE FACT THAT THE PURCHASE REGISTERS, PURCHASE DOCUMENTS ETC FORM PART OF ACCOUNTING AND HENCE SUCH DOCUMENTS AND RELEVANT RECORDING IN SUCH DOCUMENTS ALSO AMOUNTS T O ACCOUNTING AND IN SUCH EVENT THE PROVISIONS OF SECTION 69C COULD NOT BE APPLIED. 3. THE ABOVE GROUNDS ARE ARGUMENTATIVE IN NATURE AN D THESE ARGUMENTS REVOLVE AROUND THE ADDITION OF RS. 13.5 LACS ON ACCOUNT OF ALLEGED UNACCOUNTED PURCHASES. IT IS ARGUED IN THE GROUNDS THAT THE SAID TRANSACTIO NS ARE ACTUALLY RECORDED IN OTHER SUPPLEMENTARY BOOKS AND MAY NOT BE IN THE FINAL ACC OUNTS. THEREFORE, THE ADDITION MADE UNDER SECTION 69A AND 69C OF THE ACT IS IMPROP ER AS THEY DO NOT CONSTITUTES UNACCOUNTED PURCHASES IN LITERAL SENSE. IT IS ALSO ARGUED THAT REGARDING THE SAID ACCOUNTING TRANSACTION IN PART, THE AO ERRED IN INV OKING THE PROVISIONS OF SECTION 69A AND 69C. 4. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND MARKETING OF WOODEN PACKAGING BAGS AND CONTAINERS OF ALL 3 TYPES, MAINLY SUPPLYING TO M/S. SAINT GOBAIN LTD, A GLASSWARE MANUFACTURING COMPANY. FOR THE SAME PURPOSE, ASSESSEE PURCHASED T IMBERS. DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT THE ASSESSE E MADE HUGE CASH PAYMENTS OF RS. 13.5 LACS INVOLVING 19 TRANSACTIONS WITH AMBIKA SAW MILL AND ASHOK TIMBER . DETAILS ARE GIVEN IN PAGE 3 OF THE ASSESSMENT ORDER IN A TABULAR FORM. FURTHER, HE NOTICED THAT THE AMOUNT REFLECTED IN THE INVOICE BI LLS IS LESSER THAN THE ACTUAL VALUE OF TIMBER PURCHASED. THE DIFFERENCE OF AMOUNT WAS S AID TO HAVE BEEN PAID THROUGH CASH. AO CAME TO THE CONCLUSION THAT THE CASH PORTI ON IS UNACCOUNTED AND THEREFORE, THE AMOUNT OF RS. 13.5 LACS IS ADDED TO THE TOTAL I NCOME OF THE ASSESSEE AS UNACCOUNTED CASH TRANSACTIONS U/S 69A OF THE ACT. A GGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, ASSESSEE MADE ELABORATED SUBMISSIONS WHICH ARE REPRODUCED IN PARA 2 OF THE IMPUGNED ORDER. ASSESSEE SUBMITTED THAT THE SAID AMOUNTS SHOULD NOT BE DEEMED AS UNACCOUNTED CASH TRANSACTIONS AS THEY WERE ALREADY SHOWN IN THE SUPPLEMENTARY BOOKS SUCH AS DAY BOOK. IT IS ALSO ARGUED ALTERNATIVELY THAT CONS IDERING THE CASH PAYMENTS ON THE VIOLATION OF PROVISIONS OF SECTION 40A (3) OF THE A CT, 80% OF THE EXPENDITURE SHOULD BE ALLOWED LEAVING ONLY 20% FOR SUSTAINING THE ADDI TION BY THE CIT (A). IT WAS MENTIONED THAT THE ASSESSEE WAS DIRECTED THE ACCOUN TANT TO MAKE A PROPER NOTICE IN THE BOOKS OF ACCOUNTS BUT HE HAS FAILED TO DO SO. FURTHER, HE MENTIONED THAT AO ERRONEOUSLY INVOKED THE PROVISIONS OF SECTION 69A I N RESPECT OF THE TRANSACTIONS WHICH WERE ACCOUNTED IN THE BOOKS OF ACCOUNT. THUS, FINALLY ASSESSEE PRAYED AS UNDER: HONBLE SIR, THE APPELLANT HUMBLY PRAYS FOR ALLOWIN G THE DEDUCTION OF RS. 10,80,000/- TOWARDS THE ADDITION OF RS. 13,50,000/- THEREBY RESULTING IN NET ADDITIONAL INCOME BROUGHT TO TAX WOULD BE RS. 2,70, 000/-. 6. ON CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSE SSEE, CIT (A) DISMISSED THE APPEAL OF THE ASSESSEE FOR THE REASONS GIVEN BELOW. 2.1. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED COUNSEL BUT IN VIEW OF THE EXPRESS PROVISIONS OF SECTION 69C OF IT ACT AND THE PROVISO INSERTED W.E.F 1.4.1999 THE SAME CANNOT BE ALLOWED AS THE SECTION (BY AME NDMENT) HAS BEEN SPECIFICALLY BROUGHT ON THE STATUTE TO COUNTER SUCH PLEAS AND TO ALLOW IT WOULD AMOUNT TO NEGATING 4 THE EXPRESS PROVISIONS OF SECTION 69C HENCE, THIS PLEA OF THE ASSESSEE IS DISMISSED AND THE GROUND OF APPEAL IS DISMISSED. 2.2. THE OTHER PLEA OF THE ASSESSEE THAT IN THE ASS ESSMENT ORDER AO HAS MENTIONED THE ADDITION TO BE UNDER SECTION 69A AND NOT SECTIO N 69C IS OF NO AVAIL AS IT IS SETTLED LAW THAT FAILURE TO MENTION THE SECTION OR TO MENTI ON THE CORRECT SECTION IS NOT FATAL AND THE ADDITION / DISALLOWANCE IS TO BE SUSTAINED WITH REFERENCE TO THE PROPER SECTION WHICH IN THIS CASE IS SECTION 69C. HENCE, THIS ALT ERNATE PLEA TOO IS REJECTED. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 6.1. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TR IBUNAL WITH THE ABOVE MENTIONED GROUNDS. 7. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE NARRATED THE FACTS AND MENTIONED THAT ADDING THE ENTIRE SUM OF RS. 13.5 LACS IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. FURTHER, HE MENTIONED THAT ONLY THE PROFIT SEGMENT RELATABLE TO THE IMPUGNED UNACCOUNTED PURCHASES CA N ONLY BE THE ADDITION SUSTAINABLE BY THE CIT(A). OTHERWISE, IT IS AN ADMITTED FACT THAT THE SAID PORTION OF THE CASH PURCHASES HAS NOT BEEN ENTERED IN THE FINAL BOOKS OF ACCOUNTS ALTHOUGH THEY WERE AVAILABLE IN THE BOOKS OF ACCOUN T MAINTAINED BY THE ASSESSEE. HE IS CRITICAL OF THE ADDITION MADE BY THE AO UNDE R THE WRONG SECTION OF THE ACT. 8. ON THE OTHER HAND, LD DR HEAVILY RELIED ON THE O RDERS OF THE REVENUE AUTHORITIES AND MENTIONED THAT WRONGING INVOKING OF SECTION 69A DOES NOT CONTRIBUTE TO FATALITY OF THE ORDER OR DELETION OF THE ADDITIO NS. IN THIS REGARD, LD DR RELIED ON VARIOUS DECISIONS AS DISCUSSED BY THE CIT (A) IN PA RA 2.2 ABOVE. 9. WE HAVE HEARD THE LD REPRESENTATIVES OF BOTH THE PARTIES ON THIS LIMITED ISSUE IE IF THE AO / CIT (A) WERE JUSTIFIED IN CONFIRMING THE TOTAL ADDITION OF RS. 13.5 LACS WHEN THE SAID AMOUNT IS UNDISPUTEDLY SPENT FOR PURC HASING OF THE TIMBER FOR BUSINESS PURPOSES AND ALTERNATIVELY, WHEN THE PROVI SIONS OF SECTION 40A(3) OF THE ACT ALSO COVERS THE SAID SUM OF RS 13.50 LAKHS. ON EXAMINING THE FACTS AND AFTER THE PARTIES, WE FIND IT IS A SETTLED LAW THAT THE I NVOKING OF A WRONG SECTION FOR MAKING OF ADDITIONS DOES NOT MAKE THE ADDITION FATA L. THEREFORE, THE SAID ARGUMENTS OF THE LD COUNSEL FOR THE ASSESSEE ARE NOT ENTERTAI NED. FURTHER, THE REVENUES ARGUMENT THAT THE SAID ADDITION OF RS. 13.5 LACS SH OULD BE FULLY CONFIRMED, DOES NOT APPEAR PROPER CONSIDERING THE FACT THAT THE SAME IS UNDISPUTEDLY A TRADING 5 EXPENDITURE AND THE SAID TRANSACTIONS ARE PRIMA FACIE COVERED BY THE PROVISIONS OF SECTION OF 40A (3) OF THE ACT. UNFORTUNATELY, IN T HE IMPUGNED ORDER, THE CIT (A) HAS NOT CONTRIBUTED FOR THIS PART OF THE ARGUMENT OF TH E ASSESSEE WHICH REVOLVES AROUND CONFIRMING THE 20% OF THE IMPUGNED AMOUNT OF RS. 13 .5 LACS. IT IS UNFORTUNATE THAT THE FIRST APPELLATE AUTHORITY HAS IGNORED THE VITAL ARGUMENTS WHICH SHOULD HAVE BEEN PROPERLY CONSIDERED. THEREFORE, WE ARE OF THE OPINI ON THAT AS PER THE SAID PROVISIONS OF SECTION 40A(3), 20% IS DEEMED AS PROFIT PORTION OF TEH ALLEGED CASH TRANSACTIONS AND BALANCE OF 80% OF THE CASH PAYMENT CONTRIBUTES TO THE COST OF THE PURCHASES OF THE TIMBER. IT IS NOT KNOWN IN THIS PRESENT CASE T HAT WHAT IS THE GP AND NP PORTION OF THE TIMBER PURCHASED IN THIS REGARD. NO FIGURE S ARE AVAILABLE IN THE RECORD PLACED BEFORE US DECIPHERING IF THE SAID PROFITS AS PER TH E BOOKS EXCEEDS 20% ENVISAGED BY THE PROVISIONS OF SECTION 40A(3) OF THE ACT. TO E RR ON THE SIDE OF THE ASSESSEE, WE ARE OF THE OPINION THAT AS OFFERED BY THE ASSESSEE, CONFIRMING THE ADDITION OF RS. 2.7 LACS SHOULD MEET THE BOTH ENDS OF THE JUSTICE. ACC ORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED . 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO:6809/M/2011 (BY REVENUE) 11. THIS APPEAL FILED BY THE REVENUE ON 07.10.2011 IS AGAINST THE ORDER OF CIT (A)- 18, MUMBAI DATED 29.01.2010 FOR THE ASSESSMENT YEAR 2007-08. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) ERRED IN DELETING THE ADDITION OF RS. 14,48,438/- ON ACCOUNT OF ESTIMATED UNACCOUNTED SALES WITHOUT CONSIDERING THE DEFICIENCIES POINTED OUT B Y THE AO IS REMAND REPORT DATED 13.3.2011. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT (A) ERRED IN DELETING THE ADDITION OF RS. 28,12,237/- ON ACCOUNT OF FREIGHT A ND TRANSPORTATION EXPENSES WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HA D INCURRED EXPENDITURE IN CASH AND HAD ALSO NOT PROVIDED THE DETAILS OF TDS I N THIS REGARD. 12. GROUND NO.1 RELATES TO THE ADDITION OF RS. 14,4 8,438/- WHICH WAS MADE BY THE ON ACCOUNT OF ESTIMATED UNACCOUNTED SALES. DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT THERE IS DIFFERENCE IN THE QUANTITATIVE FIGURES QUA THE SALES AS PER THE RETURNS AND THE NOTES IN THE ANNUAL REPORT . AO NOTICED THAT THE 6 DIFFERENCE BETWEEN THESE TWO FIGURES WORKS OUT TO 5 936.22 C.FT. (163887.40 157951.18) OF TIMBER. APPLYING THE SALE PRICE PER C .FT. OF RS. 244/-, AO WORKED OUT THE UNACCOUNTED SALES AT RS. 14,48,438/-. AGGRIEVE D WITH THE SAME, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 13. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLA TE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) GRANTED RELIEF MENTIONING THAT THE SAID DISCREPANCY OF 5936.22 C.FT. STANDS UNEXPLAINED NOW BY THE CLAIM OF WASTAGES OF DETAILS, WHICH WERE FILED BY THE ASSESSEE BEFORE TH E CIT (A) AND ACCEPTED BY THE AO IN THE REMAND REPORT. CIT (A) GAVE RELIEF IN THIS REGARD FULLY AND PARA 3.1 OF THE IMPUGNED ORDER IS RELEVANT IN THIS REGARD WHICH IS AS FOLLOWS: 3.1. I HAVE CONSIDERED THE ABOVE FACTS AND SUBMISSI ONS BROUGHT ON RECORD AND AOS COMMENTS IN THE REMAND REPORT STATING THAT THE APPE LLANT HAS NOW TRIED TO BALANCE THE FIGURES BY GIVING DETAILS OF WASTAGES WHICH NOW COM ES TO 9470.73 CUBIC FEET INSTEAD OF 5936.22 CUBIC FEET AND THEREFORE, THE SAME SHOULD BE ENHANCED. ALSO, THE OTHER PLEA OF THE APPELLANT DESERVES TO BE REJECTED THAT NO OT HER DEPARTMENT HAS FOUND ANY VIOLATIONS ETC. 14. THUS, IF THE WASTAGE FIGURES ARE CONSIDERED, TH ERE IS NO DIFFERENCE IN THE FIGURES SO NOTICED BY THE AO. CONSIDERING THE ABOVE RECONCILIATION GIVEN BY THE ASSESSEE BEFORE THE AO / CIT (A) AND ALSO THE FINDI NGS GIVEN BY THE AO IN THE REMAND REPORT, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT (A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.1 IS DISMISSED . 15. GROUND NO.2 RELATES TO THE ADDITION OF RS. 28,1 2,237/- ON ACCOUNT OF FREIGHT AND TRANSPORTATION EXPENSES. DURING THE ASSESSMENT PROCEEDINGS, AO MADE ABOVE ADDITION FOR WANT OF EVIDENCE AND DETAILS. ASSESSE E DEBITED THE SAID EXPENSES ON ACCOUNT OF FREIGHT AND TRANSPORTATION EXPENSES. WHE N THE AO EXAMINED THE EVIDENCES FURNISHED BY THE ASSESSEE, IT WAS NOTICED THAT THE ASSESSEE SUBMITTED SELF-GENERATED RECEIPTS IN RESPECT OF THE PAYMENT OF FREIGHT CHARGES AND T HE SAID PAYMENTS MADE IN CASH WHERE THE INDEPENDENT VERIFICATION IS NOT POSSIBLE . AO CAME TO THE CONCLUSION THAT THE ASSESSEE GENERATED INCOME IN CASH AND USED THE SAME FOR RUNNING THE BUSINESS IN CASH. AO ALSO NOT ICED THAT THE ASSESSEE HAS NOT SUBMITTED THE DETAILS OF EXHAUSTIVELY FOR ALL THE C LAIMS. THUS, HE CAME TO THE CONCLUSION THAT THE CLAIMS OF EXPENDITURE ARE INFLA TED. THEREFORE, AO DISALLOWED THE 7 WHOLE OF THE CLAIM AND MADE ADDITION OF RS. 28,12,2 37/-, HOLDING THAT THE SAME IS UNVERIFIABLE. 16. DURING THE FIRST APPELLATE PROCEEDINGS BEFORE T HE CIT (A), ASSESSEE SUBMITTED THAT THE TOTAL CLAIM OF EXPENDITURE OF RS. 28,12,23 7/- INCLUDES TWO SUB-ACCOUNTS MAINLY (A) COST OF TIMBER LOGS PURCHASED FROM THE F ARMERS DIRECTLY (INCLUSIVE OF LOADING, UNLOADING AND TRANSPORTATION CHARGES PAID TO THE FARMERS) WHICH AMOUNTS TO RS. 14,09,156/-. THE OTHER SUB-ACCOUNT IS (B) IE ON ACCOUNT OF FREIG HT AND TRANSPORTATION CHARGES, WHICH WERE PAID TO C & F AG ENTS STORAGE HOUSE, AMOUNTS TO RS. 14,03,081/-. ASSESSEE SUBMITTED THAT THEY WANTED SOME MORE TIM E FOR SUBMISSION OF THE VOUCHERS IN RESPECT OF THE WHOLE OF THE CLAIM. AS PER THE ASSESSEE, THE DELAY IN SUBMISSION IS ON ACCOUNT OF EXIT OF THE OLD EMPLOYEES WHO WERE FAMILIAR WITH THE MAINTAINING OF THE VOUCH ERS. HOWEVER, ASSESSEE SUBMITTED FULL DETAILS IN RESPECT OF TRANSPORTATION CHARGES (RS. 14,09,156/-) GIVING THE VEHICLE NUMBERS ETC ALONG WITH THE WRITTEN ARGU MENTS FILED BEFORE THE CIT (A). ASSESSEE ALSO ARGUED THAT THE GENUINENESS OF THE SA ID EXPENDITURE IS UNDISPUTED AND THE CASH PAYMENT IS IN THE FORMAL COURSE OF BUS INESS ACTIVITIES. CONSIDERING THE BUSINESS PRACTICES, THE ASSESSEE PRAYED FOR DELETIO N OF THE ADDITIONS. CIT (A) CONSIDERED THE ABOVE SUBMISSIONS OF THE ASSESSEE AN D GRANTED RELIEF STATING THAT THE DISALLOWANCE OF ENTIRE EXPENSES WHICH CONSTITUT ES PURCHASE OF TIMBER LOGS, LOADING AND UNLOADING CHARGES, TRANSPORTATION CHARG ES ETC CANNOT BE DISALLOWED. HE CONSIDERED THE FACT THAT THESE EXPENDITURE IS ESSEN TIAL FOR MANUFACTURING THE WOODEN PACKAGING BAGS AND CONTAINERS. THIS FACT IS UNDISPUTED. IT IS ALSO MENTIONED THAT PARA 4.1 OF THE IMPUGNED ORDER, ASSE SSEE HAS FINALLY FURNISHED THE REQUISITE DETAILS AS REGARDS TRANSPORTATION CHARGES AND WITHOUT THESE TRANSPORTATION CHARGES, ASSESSEE COULD NOT HAVE CARRIED ON THE BUS INESS AND AFFECTED THE SALES. WE FIND THAT PARA 4.1 IS RELEVANT IN THIS REGARD AN D THE SAME IS REPRODUCED HERE UNDER: 4.1. I HAVE CONSIDERED THE FACTS OF THE ABOVE AND S UBMISSIONS THEREON AND AOS COMMENTS IN THE REMAND REPORT IN THIS CASE THE AP PELLANT HAS BEEN ABLE TO GIVE THE REQUISITE DETAILS AS REGARDS TRANSPORTATION DURIN G THE COURSE OF REMAND PROCEEDINGS AND THE FACT THAT WITHOUT TRANSPORTATION APPELLANT COULD NOT HAVE BEEN CARRIED OUT THE BUSINESS AND BOOKED THE SALES ETC SHOWS THAT THIS EXPENDITURE DESERVES TO BE 8 ALLOWED. HENCE, AO IS DIRECTED TO DELETE THIS DISAL LOWANCE / ADDITION AND THIS GROUND OF APPEAL IS ALLOWED. 17. ON CONSIDERING THE ABOVE AND ON HEARING THE PAR TIES, IT IS NOTICED THAT THE DISALLOWING THE ENTIRE CLAIM OF EXPENDITURE IS ARBI TRARY. AO HAS NOT DISPUTED THE EXISTENCE OF THE PURCHASES OF TIMBER. INCURRING OF EXPENDITURE ON TRANSPORT AND PAYMENTS TO C & F AGENTS STORAGE HOUSE ARE PART OF THE BUSINESS AND THEY ARE ESSENTIAL FOR CONDUCTING THE BUSINESS. WE FIND MERI T IN THE LOGIC RELIED UPON BY THE CIT (A) WHILE GRANTING RELIEF TO THE ASSESSEE. ACC ORDINGLY, THE ORDER PASSED BY THE CIT (A) DOES NOT CALL FOR ANY INTERFERENCE AND GROU ND NO.2 RAISED BY THE REVENUE ARE DISMISSED . 18. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED . 4 05 6 ' . %46 . 60 78 ORDER PRONOUNCED IN THE OPEN COURT ON 08/05/2013. . 3 . 12) % 9'5 08/05/2013 2 . SD/- SD/- (R.K. GUPTA) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 9' DATED 08/05/2013 ' . ' . ./ OKK , SR. PS 3 3 3 3 . .. . ,0:; ,0:; ,0:; ,0:; <;)0 <;)0 <;)0 <;)0 / COPY OF THE ORDER FORWARDED TO : 1. *+ / THE APPELLANT 2. ,-*+ / THE RESPONDENT. 3. = ( ) / THE CIT(A)- 4. = / CIT 5. ;'> ,0' , , / DR, ITAT, MUMBAI 6. #( ? / GUARD FILE. 9 -;0 ,0 //TRUE COPY// 3' 3' 3' 3' / BY ORDER, @ @@ @ / 7 7 7 7 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI