A.C.I.T., Circle-4(1), Agra V. M/s Gurukul Technologies Ltd., Agra

ITA 7/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0442 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 4 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-05-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 06-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Unexplained cash credit; Business income; Source of fund; Accommodation entries; Assessment record; Set aside
• Section: 44AD; 133A; 195; 68; 145; 12; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.07/AGRA/2012 ASSESSMENT YEARS: 2002-03 ASSTT. COMMISSIONER OF INCOME TAX, VS. M/S. GURU KUL TECHNOLOGIES LTD., CIRCLE-4(1), AGRA. (FORMERLY KNOWN AS M/S. COSM OS COMPUTRACS PVT. LTD.), 38-4B/1F, FRIENDS CENTRE, SANJAY PLACE, AGRA. (PAN : AAACC 6566 C). C.O. NO.24/AGRA/2012 (IN ITA NO.07//AGRA/2012 ASSESSMENT YEARS: 2002-03 M/S. GURUKUL TECHNOLOGIES LTD., VS. ASSTT. COMMISSI ONER OF INCOME TAX, (FORMERLY KNOWN AS M/S. COSMOS CIRCLE-4(1), AGRA . COMPUTRACS PVT. LTD.), 38-4B/1F, FRIENDS CENTRE, SANJAY PLACE, AGRA. (PAN : AAACC 6566 C). (APPELLANTS) (RESPONDENTS) REVENUE BY : SHRI WASEEM ARSHAD, SR. D.R. ASSESSEE BY : DR. RAKESH GUPTA, ADVOCATE DATE OF HEARING : 20.05.2013 DATE OF PRONOUNCEMENT : 31.05.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: 2 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 THE APPEAL BY THE REVENUE AND CROSS-OBJECTION BY TH E ASSESSEE HAVE BEEN FILED AGAINST THE ORDER DATED 30.05.2011 OF THE LD. CIT(A)-I, AGRA FOR THE ASSESSMENT YEAR 2002-03. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE LD. CIT(A) HAS ERRED N LAW AND ON FACT S IN REDUCING THE INCOME FROM BUSINESS FROM RS.25,16,460/- ESTIMA TED BY THE AO @10% OF GROSS RECEIPTS AFTER REJECTING THE BOOKS OF ACCOUNT TO RS.14,42,617/- @ 8% OF RECEIPT WITHOUT APPRECIATING THE FACTS OF THE CASE THAT THE ASSESSEE HAS NOT FURNISHED EVIDENCES TO JUSTIFY THE EXPENSES CLAIMED AGAINST THE BUSINESS RECEIPTS AND BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN REJECTED U/S 145(3). THE WORK OF THE ASSESSEE IS MAINLY JOB WORK ON CONTRACT BASIS AND A SSESSEE HAS DECLARED N.P. @ 10%. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.14,54,000/- MADE BY THE AO ON ACCOUN T OF UNEXPLAINED CASH RECEIPTS IGNORING THE FACT THAT THE ASSESSEE H AS FAILED TO PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS A ND GENUINENESS OF THE RECEIPT OF CASH FROM THEM. FURTHER, LD. CIT(A) HAS ERRED IN HOLDING THAT THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH OF RS.10,07,500/- IS COVERED BY THE ADDITION ON ACCOUNT OF EXTRA PROFIT CONFIRMED BY LD. CIT(A). 3. THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION OF RS.59,42,783/- OUT OF ADDITION OF RS.60 ,57,483/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED CREDITORS AS UNE XPLAINED LIABILITY IGNORING THE FACTS THAT THE ASSESSEE HAS NOT FURNIS HED ANY EVIDENCE TO JUSTIFY THE CREDIT BALANCES IN THEIR NAMES. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.14,50,000/- MADE BY THE AO ON ACCOUN T OF UNEXPLAINED 3 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 SHARE APPLICATION MONEY WITHOUT PROPERLY APPRECIATI NG THE FACTS OF THE CASE AND THAT THE ASSESSEE HAS NOT FURNISHED AN Y EVIDENCES TO JUSTIFY THE RECEIPT OF SHARE APPLICATION MONEY. 5. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.6,43,000/- MADE BY THE A.O. AS ENTRY CHARGES ON PROVIDING ACCOMMODATION ENTRIES OF SHARE APPLICATIO N MONEY AND ENTRIES OF INVESTMENT IN SHARES WITHOUT PROPERLY AP PRECIATING THE FACT OF THE CASE THAT THE REAL NATURE OF THE BUSINESS OF THE ASSESSEE IS PROVIDING ENTRIES FOR PREMIUM AND RATE OF ENTRY CHA RGES AT 3% HAS BEEN HELD REASONABLE IN THE CASE OF ASSESSEES SIST ER CONCERN M/S AYUSHI STOCK BROKERS (P) LTD. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS CROSS OBJECTION :- 1. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE JURISDICTION OF THE ASSESSEE LIES WITH ACIT 4(1), AGRA. THUS HE HAS ERRED IN HOLDING THAT THE ASSESSMENT OR DER PASSED BY THE LEARNED A.O. IS WELL WITHIN JURISDICTION. 2. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE HAS NOT MADE ANY VALID OB JECTION CHALLENGING THE JURISDICTION OF ACIT 4(1). THUS, T HE LEARNED CIT(A) HAS ERRED IN NOT DECLARING THE ASST. ORDER AS NULL & VOID. 3. BECAUSE THE LD. CIT(A) HAS ERRED IN LAW AND ON F ACTS IN ESTIMATING THE NET PROFIT @ 8% OF GROSS RECEIPTS WI THOUT CONSIDERING THE FACTS OF THE CASE. THUS THE ADDITIONS CONFIRME D BY THE CIT(A) ARE HIGH, EXCESSIVE AND ARBITRARY. 4. BECAUSE THE REASONS LD CIT(A) HAS ERRED IN LAW A ND ON FACTS IN CONFIRMING THE ADDITION OF RS.1,14,700.00 BEING CRE DIT BALANCE OF TRADE CREDITOR M/S VASCO TRADERS IGNORING THE FACT THAT THE CONFIRMATION OF SAME FROM THE CREDITOR IS ON RECORD . AND AFTER ESTIMATING THE INCOME THE ADDITION OF TRADE CREDITO R TENDS TO DOUBLE ADDITION. 4 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 THE ASSESSEE CRAVES LAVE TO ADD OR ALTER ANY OR MOR E GROUND OR GROUNDS OF APPEAL AS MAY BE DEEMED FIT AND WITH THE PERMISSION OF COURT AT THE TIME OF HEARING. ITA NO.07/AGRA/2012 BY THE REVENUE 4. THE FIRST GROUND OF REVENUES APPEAL AND THIRD G ROUND OF ASSESSEES CROSS OBJECTION PERTAIN TO ESTIMATION OF NET PROFIT IS CO MMON GROUND BASED ON IDENTICAL SET OF FACTS. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE NATURE OF ASSESSEES BUSINESS NOTICED BY THE A.O. AT PAGE NO.17 OF HIS ORDER IS MAINLY AN D BASICALLY TO DO JOB WORK AND THAT TOO ON CONTRACT BASIS. THE ASSESSEE EARNED IN COME FROM BUSINESS OF JOB WORK ON CONTRACT BASIS. THE ASSESSEE HAS SHOWN GROSS RE CEIPTS FROM BUSINESS OF SOFTWARE DEVELOPMENT WORK ETC. A SURVEY UNDER SECT ION 133A OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) WAS CARRIED OUT O N 24.04.2001. THE A.O. NOTICED THAT THE ASSESSEE DID NOT FURNISH THE EVIDENCE TO J USTIFY THE EXPENSES CLAIMED. THE A.O. REJECTED THE BOOKS OF ACCOUNT INVOKING SECTION 145(3) OF THE ACT. THE A.O. APPLIED 10% NET PROFIT RATE ON GROSS RECEIPT OF RS. 2,51,64,608/- AND CALCULATED NET INCOME OF RS.25,16,460/-. THE CIT(A) CONFIRMED THE ACTION OF THE A.O. IN REJECTING THE BOOKS OF ACCOUNT AND INVOKING SECTION 145(3) OF THE ACT. HOWEVER, 5 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 THE CIT(A) DIRECTED THE A.O. TO APPLY 8% PROFIT RAT E INSTEAD OF 10%. THE RELEVANT FINDINGS OF CIT(A) ARE REPRODUCED AS UNDER :- (PAGE NOS.30, 31 & 32) 7.7 AFTER REJECTION OF BOOKS OF ACCOUNT, THE INCOM E OF THE APPELLANT CAN BE COMPUTED BY ESTIMATING ITS INCOME IN A REASO NABLE MANNER. THE APPELLANT HAS RAISED OBJECTION IN GROUND NO.5 T HAT AFTER REJECTION OF BOOKS OF ACCOUNT U/S 145(3), THE ASSESSMENT SHOU LD HAVE BEEN COMPLETED U/S 144 ONLY, HOWEVER, AS POINTED OUT BY HIM THE ASSESSMENT HAS BEEN COMPLETED BY THE AO U/S 143(3). AS PER THE PROVISIONS OF SECTION 145(3), I FIND THAT AFTER REJ ECTION OF BOOKS OF ACCOUNT U/S 145(3), THE AO MAY MAKE AN ASSESSMENT I N THE MANNER PROVIDED IN SECTION 144, NOWHERE IN THIS PROVISION, IT HAS BEEN STATED THAT THE ASSESSMENT ORDER SHOULD BE PASSED U/S 144. IT IS ONLY FOR THE PURPOSE OF COMPUTATION OF INCOME, THE MANNER OF COM PUTATION OF INCOME SHOULD BE AS PER THE PROVISION OF SECTION 14 4 I.E. THE INCOME SHOULD BE ESTIMATED TO THE BEST OF THE JUDGEMENT OF THE AO. IN THE ASSESSMENT ORDER, THE AO HAS GIVEN THE JUSTIFICATIO N FOR ESTIMATION OF THE PROFIT AT THE RATE OF 10% TO THE BEST OF HIS JU DGEMENT AFTER GIVING HIS FINDING THAT ASSESSEES ENGAGED IN THE BUSINESS OF JOB WORK ON CONTRACT BASIS ARE SHOWING NP RATE OF 10%, AND THER EFORE, THIS RATE WAS APPLIED IN CASE OF THE APPELLANT ALSO. IT IS D IFFERENT MATTER THAT THE A.O. COULD NOT PRODUCE ANY COMPARABLE CASE TO J USTIFY THE BASIS OF HIS BEST JUDGEMENT TAKING NP RATE OF 10%. THEREFOR E, THOUGH THE MANNER ADOPTED BY THE AO FOR ESTIMATION OF THE PROF IT IS NOT ERRONEOUS, HOWEVER, THE BASIS TAKEN FOR ESTIMATION OF THE PROFIT COULD NOT BE ESTABLISHED BY HIM DUE TO NOT BEING ABLE TO PRODUCE ANY COMPARABLE CASE AND JUST BECAUSE OF THIS INFIRMITY, THE WHOLE ESTIMATION OF INCOME MADE BY THE AO CANNOT BE CANCE LLED. THEREFORE, AFTER CONSIDERING ALL THE DETAILS FURNISHED BEFORE ME AND TAKING INTO ACCOUNT THE ENTIRE FACT OF THE CASE, I FIND THAT A REASONABLE RATE OF THE PROFIT SHOULD BE APPLIED ON THE TURNOVER OF THE APP ELLANT RELATING TO ITS SOFTWARE BUSINESS. 7.8 THE FIGURE OF RS.2,51,64,608/- TAKEN BY THE AO AS TURNOVER OF THE APPELLANT BEFORE APPLYING A PROFIT RATE HAS ALS O BE EXAMINED. AS PER THE DETAILS OF GROSS RECEIPT OF RS.2,51,64,608/ - FURNISHED BY THE 6 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 LD. AR IN HIS WRITTEN SUBMISSION DATED 17.11.2005, THE TOTAL AMOUNT OF BUSINESS RECEIPTS FROM SOFTWARE BUSINESS IS FOUN D TO BE RS.1,34,72,442/-. THEREFORE, FOR COMPUTING THE INC OME FROM SOFTWARE BUSINESS, PROFIT RATE SHOULD BE APPLIED ONLY ON RS. 1,34,72,442/- BEING TOTAL AMOUNT OF BUSINESS RECEIPT FROM SOFTWARE BUSI NESS. AS FAR AS, OTHER PART OF TOTAL AMOUNT OF RS.2,51,64,608/- IS C ONCERNED, I FIND THAT THE APPELLANT IS JUSTIFIED IN HIS CLAIM THAT RS.36, 19,897/- PERTAIN TO SALE OF SHARES AND RS.77,54,597/- PERTAINS TO CLOSI NG STOCK OF SHARES AND THESE TWO AMOUNTS CANNOT BE PART OF TURNOVER FO R ESTIMATING THE PROFIT FROM SOFTWARE BUSINESS. THESE DETAILS WERE FILED BY THE APPELLANT BEFORE THE AO VIDE HIS LETTER DATED 28.03 .2005 WHICH WAS NOT CONSIDERED BY THE AO WHILE ESTIMATING THE PROFI T. THE PROFIT EARNED FROM THE SHARE TRANSACTION HAS BEEN SHOWN AS RS.47,151/- WHICH SHOULD BE TAXED ALONG WITH THE INCOME FROM SO FTWARE BUSINESS. IT HAS ALSO BEEN FOUND THAT RS.3,15,082/- AND RS.2, 589/- INCLUDED IN RS.2,51,64,608/- ARE INTEREST AMOUNT ON WHICH PROFI T RATE CANNOT BE APPLIED AND LD. AR IS CORRECT IN SAYING THAT THE EN TIRE INTEREST RECEIPT IS THE INCOME OF THE APPELLANT. 7.9 AS THE A.O. COULD NOT JUSTIFY THE NET PROFIT RA TE OF 10% BY FURNISHING ANY COMPARABLE CASE AND THE APPELLANT AL SO COULD NOT JUSTIFY SOFTWARE BUSINESS LOSS INCURRED BY IT AS SH OWN IN THE P&L A/C., I HAVE DECIDED TO ESTIMATE THE INCOME OF THE APPELL ANT BASED ON THE DETAILS AVAILABLE IN THE ASSESSMENT RECORD. FROM T HE ASSESSMENT RECORD, I FIND THAT THE APPELLANT HAS SHOWN RECEIPT OF CASH OF RS.10,07,500/- AS BRANCH A/C BUT NEITHER ANY BOOK S OF ACCOUNT COULD BE PRODUCED, NOR ANY DETAILS COULD BE FURNISH ED SHOWING AS TO FROM WHICH BRANCH OF THE APPELLANT COMPANY, THIS AM OUNT WAS RECEIVED AND THEREFORE, THE AO HELD THIS AMOUNT AS UNEXPLAINED CASH OF THE APPELLANT AND ADDED IN ITS INCOME. DURING T HE APPEAL PROCEEDING ALSO, GENUINENESS OF SOURCE OF RECEIPT O F THIS CASH AMOUNT COULD NOT BE ESTABLISHED BY THE APPELLANT AS DISCUS SED IN SUBSEQUENT PARA OF THIS ORDER AND THEREFORE, THIS CASH RECEIPT REMAINED UNEXPLAINED IN THE HAND OF THE APPELLANT. TAKING T HE ENTIRE FACTS OF THE CASE OF THE APPELLANT INTO COCOANUT ABOUT NOT M AINTAINING ITS BOOKS OF ACCOUNT PROPERLY AND NOT EXPLAINING THE GE NUINE SOURCE OF RECEIPT OF THIS CASH AMOUNT, THE NATURAL CONCLUSION WHICH I CAN DRAW IS THAT THIS UNEXPLAINED CASH MUST HAVE BEEN GENERA TED OUT OF THE INCOME EARNED FROM SOFTWARE BUSINESS BUT THE SAME W AS NOT 7 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 ACCOUNTED FOR BY THE APPELLANT COMPANY AS BUSINESS PROFIT DUE TO ITS BOOKS OF ACCOUNT NOT BEING MAINTAINED PROPERLY. IF THE AMOUNT OF RS.10,07,500/- IS TAKEN AS THE BUSINESS INCOME OF T HE APPELLANT FROM SOFTWARE BUSINESS RECEIPT OF RS.1,34,72,442/-, I FI ND THAT A NET PROFIT OF RATE 7.47% WOULD BE WORKED OUT, WHICH IS VERY NEAR TO THE PROFIT RATE OF 8% AS APPLICABLE FOR THE PROVISIONS OF SECTION 4 4AD FOR COMPUTING THE PROFITS AND GAINS OF BUSINESS ON PRESUMPTIVE BA SIS. THEREFORE, IN MY OPINION, IT WOULD BE QUITE REASONABLE TO COMPUTE THE INCOME OF THE APPELLANT FROM SOFTWARE BUSINESS BY TAKING PROFIT R ATE AT 8% AND HENCE, THE A.O. IS DIRECTED TO COMPUTE THE BUSINESS INCOME OF THE APPELLANT FROM SOFTWARE BUSINESS BY APPLYING THE NE T PROFIT RATE OF 8% ON THE TOTAL BUSINESS RECEIPT FROM SOFTWARE BUSINES S AT RS.1,34,72,442/- WHICH COMES TO 10,77,795/-. IN TH IS INCOME OF SOFTWARE BUSINESS, THE A.O. SHALL FURTHER ADD PROFI T ON TRADING OF SHARES COMPUTED AT RS.47,151/- AS DECLARED BY THE A PPELLANT AND THEREFORE, THE TOTAL BUSINESS INCOME OF THE APPELLA NT SHALL BE COMPUTED TO RS.11,24,946/- (47,151+10,77,795/-). 6. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THERE IS NO DISPUTE ABOUT THE REJECTION OF BOOKS OF ACCOUNT AND INVOKING SECTION 145(3) OF THE ACT BY THE A.O. THE QUESTION TO BE E XAMINED BY US IS ONLY IN RESPECT OF ESTIMATION OF PROFIT. 7. SECTION 145 OF THE ACT PROVIDES THAT IF ASSESSEE DOES NOT SATISFY THE CONDITION OF SECTION 145 OF THE ACT, THE A.O. MAY MAKE ASSESS MENT IN THE MANNER PROVIDED UNDER SECTION 144 OF THE ACT. IN THE CASE UNDER CO NSIDERATION, IT IS NO DOUBT THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT; THEREFORE, THE A.O. IS TO MAKE ASSESSMENT UNDER SECTION 144 OF THE ACT. THE SCOPE OF BEST JUDGMENT HAS BEEN 8 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 EXAMINED BY THE APEX COURT IN THE CASE OF STATE OF KERALA VS. C. VELUKUTTY, 60 ITR 239 (SC), AS UNDER :- WHAT IS THE SCOPE OF SECTION 12(2)(B) OF THE ACT ? THE EXPRESSION 'TO THE BEST OF HIS JUDGMENT' IN THE SAID CLAUSE IS PRE SUMABLY BORROWED FROM SECTION 23(4) OF THE INCOME-TAX ACT. THE SAID EXPRE SSION IN THE INCOME-TAX ACT WAS THE SUBJECT OF JUDICIAL SCRUTINY. THE PRIVY COUNCIL IN COMMISSIONER OF INCOME-TAX V. LAXMINARAYAN BADRIDAS HAS CONSIDER ED THOSE WORDS. THEREIN IT OBSERVED: 'HE (THE ASSESSING AUTHORITY) MUST NOT ACT DISHONES TLY, OR VINDICTIVELY OR CAPRICIOUSLY BECAUSE HE MUST EXERCISE JUDGMENT I N THE MATTER. HE MUST MAKE WHAT HE HONESTLY BELIEVES TO BE A FAIR ESTIMAT E OF THE PROPER FIGURE OF ASSESSMENT, AND FOR THIS PURPOSE HE MUST, THEIR LOR DSHIPS THINK, BE ABLE TO TAKE INTO CONSIDERATION LOCAL KNOWLEDGE AND REPUTE IN REGARD TO THE ASSESSEE'S CIRCUMSTANCES, AND HIS OWN KNOWLEDGE OF PREVIOUS RETURNS BY AND ASSESSMENTS OF THE ASSESSEE, AND ALL OTHER MATTERS WHICH HE THINKS WILL ASSIST HIM IN ARRIVING AT A FAIR AND PROPER ESTIMATE; AND THOUGH THERE MUST NECESSARILY BE GUESS-WORK IN THE MATTER, IT MUST BE HONEST GUESS-WORK. IN THAT SENSE, TOO, THE ASSESSMENT MUST BE TO SOME EXT ENT ARBITRARY. ' THE PRIVY COUNCIL, WHILE RECOGNIZING THAT AN ASSESS MENT MADE BY AN OFFICER TO THE BEST OF HIS JUDGMENT INVOLVED SOME GUESS-WOR K, EMPHASIZED THAT HE MUST EXERCISE HIS JUDGMENT AFTER TAKING INTO CONSID ERATION THE RELEVANT MATERIAL. THE VIEW EXPRESSED BY THE PRIVY COUNCIL I N THE CONTEXT OF THE INCOME-TAX ACT WAS FOLLOWED WHEN A SIMILAR QUESTION AROSE UNDER THE SALES TAX ACT. A DIVISION BENCH OF THE CALCUTTA HIGH COUR T IN JAGADISH PROSAD PANNALAL V. MEMBER, BOARD OF REVENUE, WEST BENGAL, CONFIRMED THE ASSESSMENT MADE BY THE SALES TAX AUTHORITIES, AS IN MAKING THE BEST JUDGMENT ASSESSMENT THE SAID AUTHORITIES CONSIDERED ALL THE AVAILABLE MATERIALS AND APPLIED THEIR MIND AND TRIED THEIR BEST TO COME TO A CORRECT CONCLUSION. SO TOO, A DIVISION BENCH OF THE PATNA HIGH COURT IN DO MA SAHU KISHUN LAL SAO V. STATE OF BIHAR REFUSED TO INTERFERE WITH THE BEST JUDGMENT ASSESSMENT OF A SALES TAX OFFICER AS HE TOOK EVERY RELEVANT MA TERIAL INTO CONSIDERATION, NAMELY, THE SITUATION OF THE SHOP, THE RUSH OF THE CUSTOMERS AND THE STOCK IN THE SHOP AND ALSO THE ESTIMATE MADE BY THE ASSISTAN T COMMISSIONERS IN THE PREVIOUS QUARTERS. 9 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 UNDER SECTION 12(2)(B) OF THE ACT, POWER IS CONFERR ED ON THE ASSESSING AUTHORITY IN THE CIRCUMSTANCES MENTIONED THERE UNDE R TO ASSESS THE DEALER TO THE BEST OF HIS JUDGMENT. THE LIMITS OF THE POWER A RE IMPLICIT IN THE EXPRESSION 'BEST OF HIS JUDGMENT'. JUDGMENT IS A FA CULTY TO DECIDE MATTERS WITH WISDOM TRULY AND LEGALLY. JUDGMENT DOES NOT DE PEND UPON THE ARBITRARY CAPRICE OF A JUDGE, BUT ON SETTLED AND INVARIABLE P RINCIPLES OF JUSTICE. THOUGH THERE IS AN ELEMENT OF GUESS-WORK IN A 'BEST JUDGMENT ASSESSMENT', IT SHALL NOT BE A WILD ONE, BUT SHALL HAVE A REASON ABLE NEXUS TO THE AVAILABLE MATERIAL AND THE CIRCUMSTANCES OF EACH CASE. THOUGH SUBSECTION (2) OF SECTION 12 OF THE ACT PROVIDES FOR A SUMMARY METHOD BECAUSE OF THE DEFAULT OF THE ASSESSEE, IT DOES NOT ENABLE THE ASSESSING A UTHORITY TO FUNCTION CAPRICIOUSLY WITHOUT REGARD FOR THE AVAILABLE MATER IAL. CAN IT BE SAID THAT IN THE INSTANT CASE THE IMPUGNE D ASSESSMENT SATISFIED THE SAID TESTS ? FROM THE DISCOVERY OF SE CRET ACCOUNTS IN THE HEAD OFFICE, IT DOES NOT NECESSARILY FOLLOW THAT A CORRE SPONDING SET OF SECRET ACCOUNTS WERE MAINTAINED IN THE BRANCH OFFICE, THOU GH IT IS PROBABLE THAT SUCH ACCOUNTS WERE MAINTAINED. BUT, AS THE ACCOUNTS WERE SECRET, IT IS ALSO NOT IMPROBABLE THAT THE BRANCH OFFICE MIGHT NOT HAV E KEPT PARALLEL ACCOUNTS, AS DUPLICATION OF FALSE ACCOUNTS WOULD FACILITATE D ISCOVERY OF FRAUD AND IT WOULD HAVE BEEN THOUGHT ADVISABLE TO MAINTAIN ONLY ONE SET OF FALSE ACCOUNTS IN THE HEAD OFFICE. BE THAT AS IT MAY, THE MAINTENANCE OF SECRET ACCOUNTS IN THE BRANCH OFFICE CANNOT BE ASSUMED IN THE CIRCUMSTANCES OF THE CASE. THAT APART, THE MAINTENANCE OF SECRET ACCOUNT S IN THE BRANCH OFFICE MIGHT LEAD TO AN INFERENCE THAT THE ACCOUNTS DISCLO SED DID NOT COMPREHEND ALL THE TRANSACTIONS OF THE BRANCH OFFICE. BUT THAT DOES NOT ESTABLISH OR EVEN PROBABILIZE THE FINDING THAT 135% OR 200% OR 500% O F THE DISCLOSED TURNOVER WAS SUPPRESSED. THAT COULD HAVE BEEN ASCER TAINED FROM OTHER MATERIALS. THE BRANCH OFFICE HAD DEALINGS WITH OTHE R CUSTOMERS. THEIR NAMES WERE DISCLOSED IN THE ACCOUNTS. THE ACC OUNTS OF THOSE CUSTOMERS OR THEIR STATEMENTS COULD HAVE AFFORDED A BASIS FOR THE BEST JUDGMENT ASSESSMENT. THERE MUST ALSO HAVE BEEN OTHE R SURROUNDING CIRCUMSTANCES, SUCH AS THOSE MENTIONED IN THE PRIVY COUNCIL'S DECISION CITED SUPRA. BUT IN THIS CASE THERE WAS NO MATERIAL BEFOR E THE ASSESSING AUTHORITY RELEVANT TO THE ASSESSMENT AND THE IMPUGNED ASSESSM ENTS WERE ARBITRARILY MADE BY APPLYING A RATIO BETWEEN DISCLOSED AND CONC EALED TURNOVER IN ONE SHOP TO ANOTHER SHOP OF THE ASSESSEE. IT WAS ONLY A CAPRICIOUS SURMISE 10 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 UNSUPPORTED BY ANY RELEVANT MATERIAL. THE HIGH COUR T, THEREFORE, RIGHTLY SET ASIDE THE ORDERS OF THE TRIBUNAL. 8. FROM ABOVE DISCUSSIONS, IT IS RELEVANT TO NOTE T HAT WHILE MAKING A BEST JUDGEMENT ASSESSMENT THE A.O. DOES NOT POSSESSES AB SOLUTE ARBITRARY AUTHORITY TO ASSESS ANY FIGURE HE LIKES AND ALTHOUGH HE IS NOT F OUND BY STRICT JUDICIAL PRINCIPLE HE SHOULD BE GUIDED BY RULES OF JUSTICE, EQUITY AND GOOD CONSCIENCE. THE LIMITS OF POWER IS AN ELEMENT OF GUESS WORK IN A BEST JUDGEME NT, IT SHALL NOT BE A WILD ONE BUT SHALL HAVE REASONABLE NEXUS TO THE AVAILABLE MA TERIAL AND THE CIRCUMSTANCES OF EACH CASE. IT IS SETTLED LAW THAT THERE IS CERTAIN DEGREE OF GUESS WORK IN BEST JUDGEMENT ASSESSMENT VIDE GANGA PRASAD SHARMA VS. C IT, 127 ITR 271 (M.P.), CIT VS. BADRADAS RAMRAI SHOP, AIR 1937 P.C. 133, AN D BRIJ BHUSHAN LAL PARDUMAN KUMAR VS. CIT, AIR (1979) SC 209. 9. IN THE LIGHT OF ABOVE DISCUSSION, IF WE CONSIDER THE FACTS OF THE CASE UNDER CONSIDERATION, WE NOTICE THAT THE CIT(A) FOUND THAT THE A.O. WAS NOT CORRECT IN TAKING FIGURE OF TURNOVER OF RS.2,51,64,608/- FROM SOFTWARE BUSINESS. THE CIT(A) FOUND THAT THE TOTAL BUSINESS RECEIPTS OF SOFTWARE BUSINESS WAS RS.1,34,72,442/-. THE CIT(A) FOUND THAT THE ASSESSEE HAS JUSTIFIED IN HIS CLAIM THAT RS.36,19,897/- PERTAINED TO SALE OF SHARES AND RS.77,54,597/- PERT AINED TO CLOSING STOCK OF SHARES AND THESE TWO AMOUNTS CANNOT BE PART OF TURNOVER FO R ESTIMATING PROFIT FROM 11 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 SOFTWARE BUSINESS. THE CIT(A) OBSERVED THAT THESE DETAILS WERE FILED BY THE ASSESSEE BEFORE THE A.O. VIDE LETTER DATED 28.03.20 05. THE CIT(A) FURTHER NOTICED THAT THE ASSESSEE HAS SHOWN RECEIPT OF CASH OF RS.1 0,07,500/- AS BRANCH ACCOUNT BUT NEITHER ANY BOOKS OF ACCOUNT NOR ANY DETAILS CO ULD BE FURNISHED SHOWING AS TO FROM WHICH BRANCH OF THE ASSESSEE COMPANY THIS AMOU NT WAS RECEIVED. THIS AMOUNT WAS ADDED AS ASSESSEES UNDISCLOSED CASH. T HE CIT(A) NOTICED THAT THIS AMOUNT OF RS.10,07,500/- IS TAKEN AS THE BUSINESS I NCOME OF THE ASSESSEE FROM SOFTWARE BUSINESS RECEIPT OF RS.1,34,72,442/-, THE CALCULATION OF NET PROFIT RATE COMES TO 7.47%. THE CIT(A) FOUND THAT THE PROFIT R ATE OF 8% IS REASONABLE AS THE SAME IS SUPPORTED BY THE PROVISIONS OF SECTION 44AD OF THE ACT. THE CIT(A) WAS OF THE VIEW THAT 8% N.P. RATE MADE IS QUITE REASONA BLE FOR COMPUTING INCOME OF THE ASSESSEE FROM SOFTWARE BUSINESS. THE REVENUE HAS F AILED TO POINT OUT ANY CONTRARY MATERIAL TO THE FINDING OF THE CIT(A). IN THE LIGH T OF THE FACT, ORDER OF THE CIT(A) IS CONFIRMED. 10. THE SECOND GROUND OF REVENUES APPEAL IS IN RES PECT OF ADDITION OF RS.14,54,500/- MADE BY THE A.O. ON ACCOUNT OF UNEXP LAINED CASH RECEIPT. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT T HE ASSESSEE RECEIVED CASH FROM FOLLOWING PERSONS: (PAGE NO.33 CIT(A)) 12 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 S.NO. NAME AMOUNT (RS.) 1. M/S. BRINDAVAN AGRO (P) LTD 1,99,000/- 2. M/S. G.K. CONSULTANT LTD. 75,000/- 3. BRANCH A/C 10,07,500/- 4. AGRA SALES AND MARKETING 1,42,500/- 5. GK RESORTS 30,000/- TOTAL 14,54,000/- 11. THE ASSESSEE HAS FAILED TO FURNISH THE DETAILS. THEREFORE, THE A.O. MADE THE ADDITION UNDER SECTION 68 OF THE ACT. THE CIT(A) A LLOWED PART RELIEF. 12. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE NOTICE THAT THE CIT(A) NOTED THE FACT THAT RECEI PT FROM M/S. BRINDAVAN AGRO (P) LTD. AND M/S. G.K. CONSULTANT LIMITED WERE THE CASH RECEIPTS FROM SERVICES RENDERED BY THE ASSESSEE TO THOSE PARTIES. THE CIT (A) FURTHER NOTICED THAT IN RESPECT OF RECEIPT OF RS.75,000/- FROM M/S. G.K. CO NSULTANT LIMITED THE ASSESSEE HAS EXPLAINED ABOUT THE MAINTENANCE OF TWO ACCOUNTS BY M/S. G.K. CONSULTANT LIMITED, ONE FOR RECEIVING SERVICES FROM THE ASSESS EE AND ANOTHER FOR RENDERING SERVICES TO THE ASSESSEE. THIS EXPLANATION HAS BEE N DISCUSSED BY THE A.O. IN HIS REMAND REPORT DATED 24.03.2011. THE A.O. DID NOT R AISE ANY OBJECTION ON THE EXPLANATION OF THE ASSESSEE. THE CIT(A) FOUND THAT THE ASSESSEE WAS ABLE TO EXPLAIN THE SOURCE OF CASH RECEIPT FROM THESE PARTI ES BY FURNISHING LEDGER ACCOUNT 13 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 OF THESE PARTIES AND SHOWING THAT IT RENDERED SERVI CES TO THESE PARTIES FOR WHICH CERTAIN PAYMENTS WERE MADE IN CASH. THEREFORE, THE CIT(A) FOUND THAT THERE IS NO JUSTIFICATION IN MAKING ADDITION ON ACCOUNT OF RECE IPT OF CASH FROM FOUR PARTIES I.E. M/S BRINDAVAN AGRO (P) LIMITED, M/S G.K. CONSULTANT LIMITED, AGRA SALES & MARKETING AND G.K. RESORTS. AS REGARDS THE RECEIPT FROM BRANCH RS.10,07,500/-, THE CIT(A) CONFIRMED THE ORDER OF A.O. AS UNDER:- ( PARAGRAPH NO.8.9 PAGE NOS.36 & 37) 8.9 AS REGARDS TO CASH RECEIPT OF RS.10,07,500/- S HOWN FROM BRANCH ACCOUNT, DESPITE ASKING SPECIFICALLY TO TH E LD. AR IN THE HEARING HELD ON 01.02.2011 TO PRODUCE THE NECESSARY EVIDENCE TO SHOW AS TO FROM WHICH BRANCH OF THE APPELLANT COMPA NY, THIS CASH WAS RECEIVED, NO BRANCH ACCOUNT WAS FURNISHED BY HE LD. AR BEFORE ME OR BEFORE THE AO. HE HAS ONLY SUBMITTED THAT TH E MATTER BEING TOO OLD AND SINCE LONG TIME THE BUSINESS AND THE ACTIVI TIES OF THE COMPANY ARE SUSPENDED, IT IS TAKING SOME TIME TO SEARCH THE BRANCH ACCOUNT. HE TRIED TO JUSTIFY THE RECEIPT OF THIS AMOUNT FROM BRANCH ACCOUNT SUBMITTING THAT BRANCH ACCOUNT ARE THE ACCOUNTS OF THE COMPANY ITSELF FOR OPERATIONS AT DIFFERENT LOCATIONS. THUS ALL TH E OPERATIONS OF THE BRANCH HAD FINALLY BEEN EMERGED INTO THE BALANCE SH EET OF THE COMPANY AND THEREFORE, CASH RECEIVED FROM BRANCH IS MERELY BUSINESS COLLECTION, COLLECTED AT BRANCH FROM BUSINESS OPERA TION. THE AO HAS COMMENTED IN HIS REMAND REPORT DATED 24.04.2011 ON THIS SUBMISSION MADE BY THE LD. AR AND CONTENDED AND EXPRESSED HIS OBJECTION THAT SINCE THE ASSESSEE HAS NOT FURNISHED ANY INFORMATIO N TO SUBSTANTIATE THE SOURCE OF FUND AVAILABLE AT BRANCH OFFICE, HENC E THE SAME CANNOT BE VERIFIED. I HAVE ALSO GONE THROUGH TO THE SUBMI SSION OF THE APPELLANT ABOUT THE MATTER BEING OLD AND IT IS TAKI NG TIME FOR HIM TO SEARCH THE BRANCH ACCOUNT. HOWEVER, I FIND THAT SU CH EXCUSE OF THE APPELLANT IS NOT TENABLE. DURING THE ASSESSMENT ST AGE ALSO, HE WAS PROVIDED SUFFICIENT OPPORTUNITY BY THE AO TO JUSTIF Y THE RECEIPT OF VARIOUS CASH AMOUNT SHOWN BY HIM INCLUDING THE AMOU NT OF RS.10,07,500/- SHOWN AS BRANCH ACCOUNT BUT THE APPE LLANT FAILED TO 14 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 EXPLAIN THE SOURCE OF RS.10,07,500/- SHOWN AS RECEI PT OF CASH FROM BRANCH ACCOUNT. THIS APPEAL IS PENDING SINCE THE Y EAR 2005 FOR MORE THAN 6 YEARS BUT DURING THE ENTIRE PERIOD, THE APPE LLANT WAS NOT ABLE TO PRODUCE ITS BRUNCH ACCOUNT TO JUSTIFY THE RECEIP T OF CASH OF RS.10,07,500/- FROM ITS BRANCHES, THOUGH HE COULD E XPLAIN RECEIPT OF OTHER CASH FROM VARIOUS PARTIES TO WHOM HE RENDERED SERVICES. IN THE LIGHT OF THESE FACTS AND CIRCUMSTANCES, I FIND THAT THE APPELLANT FAILED TO EXPLAIN THE SOURCE OF RECEIPT OF CASH OF RS.10,0 7,500/- IN THE NAME OF THE BRANCH ACCOUNT AND THIS CASH RECEIPT REMAINE D TO BE UNEXPLAINED EVEN AT THE APPELLATE STAGE. THEREFORE , I DO NOT FIND ANY FAULT WITH THE DECISION OF THE AO TREATING THIS CAS H RECEIPT AS UNEXPLAINED AND ADDED U/S 68. 13. HOWEVER, WHILE SUSTAINING THE ADDITION, THE CIT (A) HELD THAT NO SEPARATE ADDITION OF RS.10,07,500/- FOR UNACCOUNTED CASH SHO WN IN THE NAME OF BRANCH ACCOUNT IS REQUIRED TO BE MADE. THE CIT(A) NOTED THAT THIS UNEXPLAINED CASH IS HELD TO BE RESPECT OUT OF THE UNDISCLOSED PROFIT OF RS.10,77,795/- EARNED BY THE ASSESSEE AND NOT DISCLOSED IN THE BOOKS OF ACCOUNT WHICH HAS ALREADY BEEN CONFIRMED BY THE CIT(A) WHILE ESTIMATING THE INCOME . THE CIT(A) ALLOWED THE TELESCOPING TOWARDS THE ADDITION OF RS.10,77,795/- ON ACCOUNT OF PROFIT. THE RELEVANT FINDING OF CIT(A) IS REPRODUCED AS UNDER: (PARAGRAPH NO.8.10, PAGE NOS.37 &38) 8.10 IN HIS WRITTEN SUBMISSION DATED 17.11.2005, T HE LD. AR HAS ALSO ARGUED THAT ON THE ONE HAND, THE AO IS ESTIMATING T HE INCOME FROM BUSINESS BY APPLYING THE NET PROFIT RATE ON RECEIPT AND ON ANOTHER HAND, THE AO IS ADDING THE SAME RECEIPTS AS UNEXPLA INED RECEIPT AND THUS, IN VIEW OF THE LD. AR, THE ADDITION MADE BY T HE A.O. ON ACCOUNT OF THE UNEXPLAINED CASH IS CONTRADICTORY TO HIS OWN FINDING. I HAVE CONSIDERED THIS ARGUMENT OF THE LD. AR AND I FIND F ORCE IN HIS 15 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 ARGUMENT BECAUSE IF ANY PROFIT WHICH HAS BEEN EARNE D BY APPELLANT IS NOT RECORDED IN THE BOOKS OF ACCOUNT AND COMPUTED O N ESTIMATE BASIS AFTER REJECTING THE BOOKS OF ACCOUNT, THE EXTRA PRO FIT EARNED BY THE APPELLANT COULD HAVE BEEN BROUGHT IN THE BOOKS OF A CCOUNT IN FORM OF UNEXPLAINED CASH RECEIPT. SINCE THE SOURCE OF SUCH CASH RECEIPT WAS NOT EXPLAINABLE AND HENCE, THE APPELLANT CHOSE A VA GUE TERM AS BRANCH ACCOUNT TO SHOW THE RECEIPT OF CASH OF RS. 10,07,500/-, IT IS QUITE OBVIOUS THAT THIS UNEXPLAINED CASH WAS RECEIV ED BY THE APPELLANT OUT OF PROFIT EARNED BY IT FROM SOFTWARE DEVELOPMEN T BUSINESS. SINCE WHILE DECIDING THE GROUND NO.5, I HAVE ALREADY ESTI MATED THE PROFIT OF THE APPELLANT FROM SOFTWARE DEVELOPMENT BUSINESS AT RS.10,77,795/-, NO SEPARATE ADDITION FOR UNACCOUNTED CASH SHOWN IN THE NAME OF BRANCH ACCOUNT AT RS.10,07,500/- IS REQUIRED TO B E MADE. HOWEVER, AGAINST THE GROUND NO.6, IT IS CONFIRMED B Y ME THAT THE AMOUNT OF RS.10,07,500/- IS UNEXPLAINED CASH. THER EFORE, GROUND NO.6 IS PARTLY ALLOWED BUT SINCE THIS UNEXPLAINED C ASH IS HELD TO BE RECEIPT OUT OF THE UNDISCLOSED PROFIT OF RS.10,77,7 95/- EARNED BY THE APPELLANT AND NOT DISCLOSED IN THE BOOKS OF ACCOUNT , WHICH HAS ALREADY BEEN CONFIRMED BY ME TO BE ADDED IN THE INC OME OF THE APPELLANT ON THE ESTIMATE BASIS, NO SEPARATE ADDITI ON OF RS.10,07,500/- AS UNEXPLAINED CASH IS REQUIRED TO B E MADE AND ADDITION OF RS.10,07,500/- AS UNEXPLAINED CASH IS T ELESCOPED WITH THE ADDITION OF RS.10,77,795/- AS UNDISCLOSED PROFIT OF THE APPELLANT. THEREFORE, GROUND NO.6 IS PARTLY ALLOWED. 14. IN THE LIGHT OF DETAILED DISCUSSIONS MADE BY TH E CIT(A) AS ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A), BECAUSE IN PRINCIPLE THE CIT(A) HELD THAT ADDITION OF RS.10,07,500/- IS WARRANTED BUT IT WAS CONSIDERED FAIR AND REASONABLE TO GIVE SET OFF AGAINST INCOME ESTIMATED ON ACCOUNT OF PROFIT. THE REVENUE HAS FAILED TO POINT OUT ANY REASON WHY SET OFF OF RS.10,07,500 /- IS NOT ALLOWED AGAINST RS.10,77,795/-, ADDITION SUSTAINED ON ACCOUNT OF PR OFIT. THEREFORE, ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 16 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 15. THE THIRD GROUND IS IN RESPECT OF ADDITION SUST AINED BY THE CIT(A) OF RS.59,42,783/- ON ACCOUNT OF UNEXPLAINED CREDITORS. THE A.O. MADE THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT OF FOLLOWING PARTIES:- (PAGE NO.38 CIT(A)) NAME AMOUNT (RS.) KEDIA INFOTECH LTD. (GRIVS HOTELS LTD.) 4442222 SUBHODH GUPTA &ASSOCIATES 17000 GAURAV DISTRIBUTORS 59415 KHANDELWAL TRADERS 126520 TRANS IMAGE CORPORATION 898243 VASCO TRADERS 114700 G.K. CONSULTANTS LIMITED 399383 TOTAL 60,57,483 16. THE CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF RS.1,14,700/- AND DELETED THE BALANCE AMOUNT AS UNDER :- (PARAGRAPH N O.9.4, PAGE NOS.39 & 40) 9.4 ON GOING THROUGH THE ABOVE REPORT OF THE AO, I FIND THAT HE MADE VERIFICATION WITH REGARD TO ALL THE CREDITORS AND NO OBJECTION HAS BEEN RAISED BY HIM ABOUT THE NON GENUINE NATURE OF ANY CREDITORS EXCEPTED VASCO TRADERS. WITH RESPECT TO THIS CREDI TOR, HE HAD REPORTED THAT THE ASSESSEE HAS NOT COMMENTED ON THE ADDITION OF RS.1,14,700/- MADE BY THE AO FOR UNEXPLAINED CREDIT SHOWN TO HAVE BEEN RECEIVED FROM VASCO TRADERS. 9.5 SINCE THE APPELLANT FAILED TO GET THE CREDIT BA LANCE AT RS.1,14,700/- VERIFIED FROM THE AO SHOWN IN THE NAM E OF VASCO TRADERS, I FIND THAT THIS CREDIT BALANCE REMAINED U NEXPLAINED AND THEREFORE, ADDITION OF RS.1,14,700/- IS CONFIRMED A ND BALANCE ADDITION OF RS.59,42,783/- IS DELETED BECAUSE THESE AMOUNTS APPEARING IN NAME OF DIFFERENT CREDITORS HAVE BEEN VERIFIED BY THE AO DURING THE REMAND STAGE. ACCORDINGLY, GROUND NO.7 IS PARTLY A LLOWED. 17 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 17. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE NOTICE THAT THE CIT(A) HAS DELETED THE SAID ADDI TION OF R.59,42,783/- AS THE AMOUNTS APPEARING IN THE NAME OF DIFFERENT CREDITOR S HAVE BEEN VERIFIED BY THE A.O. DURING THE REMAND STAGE. WHEN THE A.O. HIMSEL F HAS VERIFIED THE FACTS, THE REVENUE SHOULD NOT HAVE CHALLENGED THE ORDER OF CIT (A). SINCE THE SAME HAS BEEN ACCEPTED BEFORE THE CIT(A) IN THE REMAND PROCEEDING , THEREFORE, IN THE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) IN DELETING THE ADDITION OF RS.59,42,783/-. HOWEVER, WE FIND THAT THE CIT(A) HAS RIGHTLY SUSTAINED THE ADDITION TO THE EXTENT OF RS.1,14,700/- AS THE ASSESSEE HAS FAILED TO EXPLAIN THE SAID AMOUNT OF RS.1,14,700/-. IN THE LIGHT OF THE FACTS, THE ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 18. GROUND NO.4 IS IN RESPECT OF DELETION OF ADDITI ON OF RS.14,50,000/-. THE A.O. MADE THE ADDITION OF RS.14,50,000/- ON ACCOUNT OF UNEXPLAINED SHARE APPLICATION MONEY. THE CIT(A) DELETED THE SAID ADD ITION AS UNDER :- (PARAGRAPH NO.10.3, PAGE NOS.41 & 42) 10.3 ON THE ABOVE REPORT OF THE AO, THE LD. AR HAS FURTHER SUBMITTED IN HIS LETTER DATED 01.02.2011 THAT WITH REGARD TO SHARE APPLICATION MONEY OF RS.14,50,000/-, THE CONFIRMATI ON OF BOTH THE SHARE APPLICANTS WAS DULY FILED BEFORE THE AO ALONG WITH THEIR PAN. HE HAS ALSO CLARIFIED REGARDING DIFFERENCE IN NAME OF PRASH PRINTING AND PUBLISHING PVT. LTD. ON THE LETTER HEAD OF THE CONFIRMATION LETTER THAT PREVIOUSLY, NAME OF THE COMPANY WAS PRASH FINL EASE PVT. LTD. 18 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 AND SUBSEQUENTLY, NAME OF THE COMPANY WAS CHANGED T O PRAS PRINTING AND PUBLISHING PVT. LTD. AND THEREFORE, HE ARGUED T HAT THE PLEA OF THE LD. AO TO DOUBT ABOUT THE CONFIRMATION LETTER FILED FROM PRAS FINLEASE PVT. LTD. IS WRONG AND BASELESS. HE HAS ALSO RELIE D ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. (2008) 216 CTR (SC) 195 WHEREIN IT HAS BEEN HELD TH AT IF THE SHARE APPLICATION MONEY HAD BEEN RECEIVED FROM BOGUS SHA RE HOLDERS, THEN THE AMOUNT CAN BE ADDED IN THE HANDS OF SUCH INDIVI DUAL AND THE AMOUNT CANNOT BE ADDED IN THE HANDS OF COMPANY. CI TING THIS CASE LAW ALSO, THE LD. AR PLEADED TO DELETE THE SHARE AP PLICATION MONEY IN THE CASE OF THE ASSESSEE (APPELLANT). 10.4 AS THERE WAS SOME CONFUSION IN THE NAME OF PRA S PRINTING & PUBLISHING PVT. LTD. AND SINCE THE LD. AR CLAIMED T HAT THE NAME OF THIS COMPANY WAS EARLIER PRAS FINLEASE PVT. LTD. TH AT WAS SUBSEQUENTLY GOT CHANGED TO PRAS PRINTING AND PUBLI SHING PVT. LTD., THEREFORE, THE AO WAS DIRECTED TO VERIFY THIS FACT AND REPORT WHETHER THE CONTENTION OF THE LD. AR IS CORRECT OR NOT. IN THIS REGARD, THE AO REPORTED VIDE HIS LETTER DATED 24.03.2011 THAT IN O RDER TO PROVE THAT THE PRAS PRINTING & PUBLISHING PVT. LTD. AND PRAS F INLEASE PVT. LTD. ARE THE SAME COMPANY, THE ASSESSEE (APPELLANT) HAS FURNISHED THE COPY OF FRESH CERTIFICATE OF INCORPORATION DATED 15 .06.2001 ISSUED BY ROC, DELHI AND HARYANA. I HAVE ALSO EXAMINED THE S AID LETTER OF ROC AND I FIND THAT THE CONTENTION OF THE LD. AR IS CORRECT THAT THE NAME OF THE COMPANY WAS EARLIER PRAS FIUNLEASE PVT. LTD. AND SUBSEQUENTLY, IT GOT CHANGED TO PRAS PRINTING AND P UBLISHING PVT. LTD. THEREFORE, I FIND THAT THE CONFIRMATION LETTER FILE D BY THE APPELLANT IN THE NAME OF PRAS FINLEASE PVT. LTD. INVESTING RS.5, 00,000/- WITH THE APPELLANT COMPANY IS CORRECT. SIMILARLY, I FIND TH AT THE APPELLANT HAS FURNISHED A CONFIRMATION LETTER ROAM V.B. COLD STOR AGE PVT. LTD. CONFIRMING THE INVESTMENT OF RS.9,50,000/- WITH HE APPELLANT COMPANY. BOTH THESE COMPANIES ARE ASSESSED TO TAX HAVING PAN AND THE SAME ARE MENTIONED IN THE CONFIRMATION LETTER. THEREFORE, I FIND THAT THE CASE OF THE APPELLANT IS COVERED BY THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. (SUPRA) IN WHICH IT HAS BEEN HELD THAT IF SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHARE HO LDERS, WHOSE NAMES ARE GIVEN TO AO, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE W ITH LAW BUT THIS 19 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 AMOUNT OF SHARE MONEY CANNOT BE REGARDED AS UNDISCL OSED INCOME U/S 68 OF THE ASSESSEE COMPANY. IN CASE OF THE APPELLA NT COMPANY, IT HAS GIVEN NAME OF BOTH THE APPLICANTS WITH HEIR PAN, TH EREFORE, NO ADDITION CAN BE MADE IN THE HAND OF THE APPELLANT C OMPANY ON ACCOUNT OF THE INVESTMENT MADE BY THESE TWO APPLICA NTS IN FORM OF SHARE APPLICATION MONEY. THE CORRECT COURSE OF ACT ION FOR THE AO SHOULD HAVE BEEN TO INTIMATE THE CONCERNED AO OF TH ESE TWO COMPANIES TO TAKE NECESSARY ACTION AFTER ENQUIRING INTO THE SOURCE OF PAYMENT OF THE ABOVE MENTIONED SHARE APPLICATION MO NEY. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. (SUPRA ), I HEREBY DELETE THE ADDITION OF RS.14,50,000/- MADE BY THE AO ON AC COUNT OF UNEXPLAINED SHARE APPLICATION MONEY. ACCORDINGLY, GROUND NO.8 IS ALLOWED. 19. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE FIND THAT WHILE DELETING THE ADDITION, THE CIT(A ) HAS FOLLOWED THE JUDGEMENT OF HONBLE APEX COURT IN THE CASE OF CIT VS. LOVELY EX PORTS PVT. LTD. (2008) 216 CTR 195 (SC). AFTER DETAILED EXAMINATION OF THE FA CTS OF THE CASE UNDER CONSIDERATION, THE CIT(A) HAS FOLLOWED THE JUDGMENT OF THE HONBLE APEX COURT. THE REVENUE HAS FAILED TO POINT ANY CONTRARY MATERI AL TO THE FINDING OF THE CIT(A). IN THE LIGHT OF THE FACT, WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF CIT(A). ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 20. GROUND NO.5 IS IN RESPECT OF ADDITION OF RS.6,4 3,000/- ON ACCOUNT OF ENTRY CHARGES. THE A.O. MADE ADDITION OF RS.6,43,000/- A S INCOME ON ACCOUNT OF 20 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 ACCOMMODATION ENTRIES. THE CIT(A) DELETED THE SAID ADDITION AS UNDER :- (PAGE NOS.45, 46, 47, 48 & 49) 11.7 I HAVE CONSIDERED ALL THE SUBMISSION MADE BEF ORE ME BY THE LD. A.R. AS WELL AS THE A.O DURING THE APPEAL PROCEEDIN G AND ALSO CONSIDERED THE DISCUSSION MADE BY THE AO IN THE ASS ESSMENT ORDER WITH REGARD TO ENTRY BUSINESS OF THE APPELLANT COMP ANY AND PERUSED THE DOCUMENTS AVAILABLE IN THE ASSESSMENT RECORD. ON GOING THROUGH THE ENTIRE ASSESSMENT ORDER, I FIND THAT THE A.O. H AS NOT BROUGHT ANY EVIDENCE ON RECORD TO SHOW THAT THE APPELLANT COMPA NY WAS IN ENTRY BUSINESS. INITIALLY, HE HAS CONSIDERED THE APPELLA NT COMPANY BEING IN THE BUSINESS OF DOING SOFTWARE DEVELOPMENT FOR DIFF ERENT CLIENTS AND SINCE THE APPELLANT COMPANY FAILED TO JUSTIFY THE V ARIOUS EXPENSES CLAIMED BY IT IN THE P & L A/C, HE EVEN REJECTED TH E BOOKS OF ACCOUNT OF THE APPELLANT COMPANY, INVOKING THE PROVISIONS O F SECTION 145(3) AND ESTIMATED THE INCOME OF THE APPELLANT FROM ITS BUSINESS OF SOFTWARE DEVELOPMENT. THEREAFTER, VARIOUS ADDITION S WERE MADE BY THE A.O ON ACCOUNT OF UNEXPLAINED CASH RECEIPT, UNE XPLAINED CREDITS TREATING THE APPELLANT COMPANY AS NORMAL BUSINESS E NTITY. HOWEVER, IN THE END OF THE ASSESSMENT ORDER, HE HAS SIMPLY W RITTEN THAT FROM THE PERUSAL OF BALANCE SHEET OF THE ASSESSEE COMPANY, I T IS SEEN THAT THE ASSESSEE HAS GIVEN ENTRY OF SHARE APPLICATION MONEY TO THE TUNE OF RS.24,00,000/- TO FOUR COMPANIES AND FURTHER, IT IS MENTIONED BY THE A.O THAT THE APPELLANT COMPANY HAS GIVEN ENTRIES OF INVESTMENT IN SHARES AMOUNTING TO RS.1,90,40,000/- TO 17 PERSONS. NO DETAILS HAVE BEEN DISCUSSED IN THE ASSESSMENT ORDER BY THE AO WI TH REGARD TO AMOUNT OF RS.24,00,000/- AND RS.1,90,40,000/- SHOWN BY THE APPELLANT AS TO HOW THESE AMOUNTS ARE NOT ACTUAL INVESTMENT O F THE APPELLANT BUT THEY ARE MERELY ENTRIES FOR WHICH THE APPELLANT COM PANY WAS CHARGING THE ENTRY CHARGES. IN THE BEGINNING OF THE ASSESSM ENT ORDER, FROM PAGE NO.3 TO PAGE NO.16, THE A.O HAS ONLY DISCUSSED ABOUT CERTAIN FINDINGS RELATING TO THE BUSINESS OF THE SISTER CON CERN OF THE APPELLANT COMPANY I.E. M/S AYUSHI STOCK BROKERS PVT. LTD., GI VING THE DETAILS OF VARIOUS BANK ACCOUNTS OF DIFFERENT COMPANIES FOUND IN ITS PREMISES AND ON THE BASIS OF THESE FINDINGS, HE CONCLUDED TH AT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN TOTALITY, IT IS HELD THAT THE ASSESSEE COMPANY WAS ALSO DUMMY COMPANY CREATED BY SHRI. R.K. AGARWAL FOR THE PURPOSE OF PROVIDING ACCOMMODATION ENTRY. NOWHERE 21 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 ANY DETAILS HAVE BEEN DISCUSSED BY THE A.O IN THE A SSESSMENT ORDER SHOWING THAT THE BUSINESS OF SOFTWARE DEVELOPMENT S HOWN BY THE APPELLANT COMPANY WAS NOT IN EXISTENCE AND THIS COM PANY WAS BEING USED BY ITS DIRECTOR, SHRI R.K. AGARWAL FOR THE PUR POSE OF PROVIDING ENTRIES TO HIS CLIENTS. EVEN THE A.O. HAS NOT ESTA BLISHED THAT THE INVESTMENT SHOWN BY THE APPELLANT COMPANY AMOUNTING TO RS.1,90,40,000/- WITH 17 PERSONS WERE NOT THE ACTUA L INVESTMENT BUT ONLY ENTRIES. ON GOING THROUGH THE DETAILS OF INVE STMENTS AS AVAILABLE IN SCHEDULED-D OF THE BALANCE SHEET OF THE APPELL ANT COMPANY, I FIND THAT ALL THESE 17 PERSONS ARE IN FACT COMPANIE S WHOSE SHARES HAVE BEEN PURCHASED BY THE APPELLANT COMPANY. THEREFORE , I FIND FORCE IN THE ARGUMENT OF THE LD. A.R. THAT AS PER THE LEGAL SITUATION ONLY THE DULY ALLOTTED SHARES CAN BE TREATED AS INVESTMENT B Y THE COMPANY IN ITS BALANCE SHEET AND THEREFORE, THIS AMOUNT IS ONLY DU LY ALLOTTED SHARES OWNED BY THE ASSESSEE (APPELLANT) COMPANY. FROM TH E ASSESSMENT RECORDS, I ALSO FIND THAT ADDRESSES OF MOST OF THES E COMPANIES WERE ALSO PROVIDED TO THE A.O. IF THE A.O WANTED, HE CO ULD HAVE MADE DIRECT ENQUIRIES FROM THESE COMPANIES OR EVEN FROM ROC WITH WHOM THESE COMPANIES ARE REGISTERED TO FIND OUT WHETHER THE INVESTMENT SHOWN BY THE APPELLANT COMPANY WITH THESE 17 COMPAN IES ARE ACTUAL INVESTMENT OR ONLY ENTRIES. HOWEVER, I FIND FROM T HE ASSESSMENT RECORD THAT NO ATTEMPT WAS MADE BY THE A.O TO MAKE SUCH ENQUIRES AND EVEN DURING REMAND STAGE, THE A.O HAS ONLY TAKE N EXCUSE FOR NOT MAKING SUCH ENQUIRES TAKING THE PLEA THAT THE APPEL LANT WAS REQUIRED TO FURNISH THE COPIES OF INCOME TAX RETURNS FOR A.Y . 2002-03 OF THESE 17 PERSONS WHOM ENTRIES TOTALING TO RS.1,90,40,000/ - WAS GIVEN BY THE APPELLANT COMPANY. 11.8 SINCE, IT IS THE CASE OF THE AO THAT APPELLANT COMPANY WAS IN THE BUSINESS OF PROVIDING ENTRIES, THEREFORE, IT IS FOR THE AO TO ESTABLISH AS TO THE INVESTMENT SHOWN TO HAVE BEEN M ADE WITH THESE 17 PERSONS ARE NOT ACTUAL INVESTMENT BUT ONLY ENTRIES. BUT I FIND THAT NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD AND EVEN I DO NOT FIND ANY ENQUIRY WHATSOEVER WAS STARTED BY THE AO DURING THE ASSESSMENT PROCEEDING TO ESTABLISH THAT THESE INVESTMENTS ARE ONLY ENTRY. HE HAS SIMPLY WRITTEN IN THE END OF THE ASSESSMENT ORDER T HAT ALL THESE INVESTMENTS ARE ONLY ENTRY AND COMPUTED THE ENTRY C HARGES OF RS.6,43,200/- PRESUMING THAT THESE INVESTMENTS SHOW N BY THE 22 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 APPELLANT COMPANY IN ITS BALANCE SHEET ARE NOT ACTU AL INVESTMENT BUT ONLY ENTRIES. SINCE, THE AO WAS NOT IN POSSESSION OF ANY EVIDENCE TO SHOW THAT THESE INVESTMENTS WERE ONLY ENTRIES, HE H AS FURTHER DISCUSSED THAT AS ALREADY HELD IN THE FOREGOING PAG ES THAT SINCE SHRI R.K. AGARWAL WAS ONLY ACTIVE DIRECTOR AND THE MAIN PERSON WHO WAS OPERATING ALL THE ACTIVITIES OF THE COMPANY FOR THE PURPOSE OF PROVIDING ACCOMMODATION ENTRIES AND HE WAS REAL BEN EFICIARY AND COMPANY WAS NOTHING BUT A TOOL CREATED BY HIM FOR P ROVIDING ENTRIES, SO IT IS HELD THAT THERE WAS NO GENUINE COMPANY IN THE NAME AND STYLE OF THE ASSESSEE COMPANY AND THEREFORE, ASSESSMENT I N THE HAND OF THE APPELLANT WAS MADE ON THE PROTECTIVE BASIS AND SUBS TANTIVE ASSESSMENT WOULD BE MADE IN THE HAND OF SHRI RAVIND RA KUMAR AGARWAL. 11.9 IN VIEW OF THIS COMMENT OF THE AO IN ASSESSMEN T ORDER, HE WAS ASKED TO ENQUIRE FROM THE AO OF SHRI R.K. AGARWAL T O FIND OUT AS TO WHAT ACTION WAS TAKEN AGAINST HIM FOR ASSESSING INC OME EARNED BY HIM FROM HIS ENTRY BUSINESS ON SUBSTANTIVE BASIS. ON MY DIRECTION, AFTER MAKING NECESSARY ENQUIRY, THE AO SHRI SAMPOOR NANAND WHO HAS PASSED THE IMPUGNED ASSESSMENT ORDER, REPORTED VID E HIS LETTER DATED 12.01.2011 THAT THOUGH, AS REGARDS TO MAKING OF SUB STANTIVE ASSESSMENT IN THE CASE OF SHRI R.K. AGARWAL, DIRECT OR OF THE ASSESSEE COMPANY, IT IS SUBMITTED THAT AS PER INFORMATION RE CEIVED FROM DCIT 4(1), AGRA, SHRI MANU TENTIWAL UNDER WHOSE JURISD ICTION THE CASE OF THE ASSESSEE (APPELLANT) LIES, NO SUBSTANTIVE ASSE SSMENT CONSEQUENT TO THE PROTECTIVE ASSESSMENT IN THE CASE OF ASSESSEE ( APPELLANT) HAS BEEN MADE BY THE AO OF SHRI R.K. AGARWAL AT DELHI. ON T HIS REPORT OF THE AO (SHRI SAMPOORNANAND), THE LD. AR VIDE HIS LETTE R DATED 01.02.2011 HAS FURTHER SUBMITTED THAT IT IS TO BE B ROUGHT TO MY NOTICE THAT IT IS FROM THE PERSONAL KNOWLEDGE OF THE APPEL LANT COMPANY THAT THE AO HAS SENT THE COPY OF THE ORDER AND SO MANY O THER INFORMATION AND REMINDERS THEREON TO THE AO OF SHRI R.K. AGARWA L BUT AFTER LOOKING TO ALL THE FACTS AND ORDER OF THE LD. AO, T HE AO OF SHRI R.K. AGARWAL AT DELHI MIGHT HAVE TAKEN A DECISION THAT T HERE IS NO MATERIAL SUBSTANCE AND FORCE IN THE ASSESSMENT ORDER PASSED BY THE AO IN THE CASE OF THE APPELLANT AND THEREFORE, HE HAS NOT TA KEN ANY STEP TO MAKE THE REASSESSMENT IN CASE OF SHRI R.K. AGARWAL. 23 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 11.10 IRRESPECTIVE OF ALL THE FACTS WHETHER THE AO OF SHRI R.K. AGARWAL FOUND MATERIAL SUBSTANCE AND FORCE IN THE A SSESSMENT ORDER PASSED BY THE AO IN CASE OF THE APPELLANT WITH REGA RD TO ENTRY BUSINESS OF SHRI R.K. AGARWAL, THE FACT OF THE MAT TER IS THAT NO SUBSTANTIVE ASSESSMENT ORDER HAS BEEN PASSED IN THE CASE OF SHRI R.K. AGARWAL AS REPORTED BY THE AO SHRI SAMPOORNANAND HI MSELF AND THEREFORE, I FIND THAT SO FAR NO MATERIAL HAS BEEN BROUGHT BEFORE ME, ESTABLISHING THAT EITHER THE APPELLANT COMPANY OR S HRI R.K. AGARWAL WAS IN THE BUSINESS OF PROVIDING ENTRIES TO JUSTIFY ANY PROTECTIVE ADDITION EVEN IN CASE OF THE APPELLANT COMPANY WITH REGARD TO THE ENTRY BUSINESS. I ALSO FIND FORCE IN THE ARGUMENT OF THE LD. AR AS SUBMITTED IN HIS WRITTEN SUBMISSION DATED 17.11.200 5 THAT THE FINDINGS OF LD. AO (REGARDING ENTRY BUSINESS AS DISCUSSED IN THE ASSESSMENT ORDER), IS CONTRADICTORY TO HIS OWN FINDINGS IN TH E ASSESSMENT ORDER. ON ONE HAND, HE HAS ESTIMATED THE INCOME OF THE APP ELLANT SO HIGH PITCH AND ON OTHER HAND, HE HAS GIVEN THE FINDINGS THAT ALL THE ASSETS OF THE COMPANY ARE BOGUS. I HAVE CONSIDERED THIS A RGUMENT OF THE LD. AR AND I ALSO FIND THAT THE TOTAL SOURCE OF FUND OF THE APPELLANT AS PER THE BALANCE SHEET HAS BEEN SHOWN TO BE RS.3,05,55,0 10/- WHICH INCLUDES SHARE CAPITAL OF RS.2,87,05,010/- AND LOAN FUND OF RS.18,50,000/-. IN THE ASSESSMENT ORDER, EXCEPT DO UBTING THE GENUINENESS OF SHARE APPLICATION MONEY OF RS.14,50, 000 /-, THE AO HAS NOT QUESTIONED THE GENUINENESS OF REMAINING SOU RCE OF FUND SHOWN BY THE APPELLANT IN ITS BALANCE SHEET. IF OUT OF R S.3,05,55,010/-, THE AMOUNT OF RS.14,50,000/- IS REMOVED, EVEN THEN IT C ANNOT BE SAID THAT INVESTMENT OF RS.1,90,40,000/- SHOWN BY THE APPELLA NT WAS A BOGUS INVESTMENT BECAUSE THE APPELLANT COMPANY WAS HAVING SUFFICIENT FUND WITH IT AS PER ITS AUDITED BALANCE SHEET AND IT COU LD HAVE VERY WELL INVESTED THESE FUNDS IN LEGITIMATE MANNER. PRIMA F ACIE ON THE BASIS OF THE BALANCE SHEET FILED BY THE APPELLANT, WHICH IS A AUDITED BALANCE SHEET, IT CANNOT BE SAID THAT ON THE PERUSAL OF BAL ANCE SHEET OF THE ASSESSEE (APPELLANT) THAT IT HAS GIVEN ENTRIES OF S HARE APPLICATION MONEY AND INVESTMENT IN SHARES ARE ONLY ENTRIES AS OBSERVED BY THE AO IN THE ASSESSMENT ORDER WITHOUT DISCUSSING ANY E VIDENCE WITH REGARD TO HIS CONCLUSION. SINCE NO EVIDENCE WAS IN POSSESSION OF THE AO ABOUT THE INVOLVEMENT OF THE ASSESSEE (APPELLANT ) COMPANY IN ENTRY BUSINESS, HE ULTIMATELY CONCLUDED THAT SUBSTA NTIVE ADDITION WITH REGARD TO ENTRY BUSINESS WOULD BE MADE IN THE HAND OF ITS DIRECTOR SHRI R.K. AGARWAL, AND ONLY PROTECTIVE ADDITION WAS MADE IN THE HAND 24 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 OF THE APPELLANT COMPANY WITH REGARD TO ALLEGED ENT RY BUSINESS. HOWEVER, THE FACT AS NOW REPORTED BY THE AO IS THAT NO SUBSTANTIVE ASSESSMENT HAS BEEN MADE IN THE HAND OF SHRI R.K. A GARWAL. THEREFORE, I DO NOT FIND ANY JUSTIFICATION FOR MAKI NG ANY ADDITION EVEN ON PROTECTIVE BASIS RELATING TO ALLEGED ENTRY BUSIN ESS IN THE HAND OF THE APPELLANT COMPANY AND HENCE, THE ENTRY CHARGES OF RS.6,43,200/- COMPUTED BY THE AO IN THIS REGARD IS HEREBY DELETED AND GROUND NO.9 IS ALLOWED. 21. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE NOTICE THAT THE CIT(A) BEFORE DELETING THE ADDIT ION CALLED FOR REMAND REPORT FROM THE A.O. THE CIT(A) HAS ALSO MADE DETAILED DI SCUSSION IN RESPECT OF EACH AND EVERY ASPECT OF THE MATTER AND VARIOUS AMOUNTS. THE CIT(A) NOTED THAT NO EVIDENCE WAS IN POSSESSION OF THE A.O. ABOUT THE IN VOLVEMENT OF THE ASSESSEE COMPANY IN ENTRY BUSINESS. THE A.O. AGREED BEFORE THE CIT(A) THAT SUBSTANTIVE ADDITION WITH REGARD TO ENTRY BUSINESS WOULD BE MAD E IN THE HANDS OF DIRECTOR SHRI R.K. AGARWAL AND ONLY PROTECTIVE ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE COMPANY WITH REGARD TO ALLEGED ENTRY BUSINESS. THE CIT(A) FOUND THAT HE DID NOT FIND ANY JUSTIFICATION IN MAKING ANY ADDITION EVEN ON PROTECTIVE BASIS RELATING TO ALLEGED ENTRY BUSINESS IN THE HANDS OF THE ASSESS EE COMPANY. THE FINDING OF THE CIT(A) IS BASED ON ANALYSIS OF FACTS AND FIGURES AN D THE REVENUE HAS FAILED TO POINT ANY CONTRARY MATERIAL TO THE FINDING OF CIT(A ). IN THE LIGHT OF THE FACT, WE DO NOT FIND A INFIRMITY IN THE ORDER OF CIT(A). ORDER OF CIT(A) IS CONFIRMED ON THE ISSUE. 25 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 C.O. NO 24/AGRA/2012 BY THE ASSESSEE 22. GROUND NOS.1 & 2 OF THE CROSS OBJECTION HAVE NO T BEEN PRESSED BY THE LD. AUTHORISED REPRESENTATIVE. THEREFORE, THE SAME ARE DISMISSED AS NOT PRESSED. 23. GROUND NO.3 IS A COMMON GROUND AS TAKEN IN GROU ND NOS.1 & 2 OF REVENUES APPEAL WHICH HAS BEEN DECIDED AFTER A DETAILED DISC USSION IN PARAGRAPH NOS.6 TO 9 OF THIS ORDER. ORDER OF CIT(A) HAS BEEN CONFIRMED WHILE DECIDING REVENUES APPEAL IN GROUND NOS. 1 & 2. IN THE LIGHT OF THAT FACT, WE DO NOT FIND ANY SUBSTANCE IN THIS GROUND OF ASSESSEES CROSS OBJECTION. THER EFORE, THIS GROUND NO.3 OF THE ASSESSEE IN ITS CROSS OBJECTION IN RESPECT OF APPL YING G.P. RATE OF 8% WHICH IS EXCESSIVE AS PER THE ASSESSEE, IS REJECTED. 24. GROUND NO 4 IS ALSO A COMMON GROUND TO THE GROU ND NO.3 OF REVENUES APPEAL. GROUND NO.3 OF REVENUES APPEAL HAS BEEN D ECIDED AFTER A DETAILED DISCUSSION IN PARAGRAPH NOS. 15 TO 17 OF THIS ORDER AND WHILE DECIDING THE SAID GROUND OF THE APPEAL WE CONFIRMED THE ORDER OF CIT( A). IN THE LIGHT OF THE FACT, THIS GROUND OF ASSESSEES CROSS OBJECTION IS ALSO D ISMISSED. 25. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS OBJECTION THE ASSESSEE BOTH ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER 26 ITA NO.07/AGRA/2012 & C.O. NO.24/AGRA/2012 A.YS. 2002-03 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY