Appeal details
Counselvise Citation
[2009] 115 COUNSELVISE.COM (IT) 2558 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-12-2009
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
DB
Next Hearing Date
08-12-2009
Assessment Year
misc
Appeal Filed On
11-12-2006
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM, AND SHRI V.K. GUPTA , AM ITA NO.434/IND/2004 A.Y. 2000-01 ACIT-1(2), BHOPAL .....APPELLANT V/S. SOM DISTILLERIES & BREWERIES LTD., 23, ZONE-II, M.P. NAGAR, BHOPAL (PAN AABCS 3374 B) ....RESPONDENT CO NO. 79/IND/2004 (ARISING OUT OF ITA NO.434/IND/2004) A.Y. 2000-01 SOM DISTILLERIES & BREWERIES LTD., 23, ZONE-II, M.P. NAGAR, BHOPAL (PAN AABCS 3374 B) .....APPELLANT V/S. ACIT-1(2), BHOPAL ....RESPONDENT ITA NOS.720 & 721/IND/2006 A.YS. 2002-03 & 2003-04 ACIT-1(1), BHOPAL .....APPELLANT V/S. 2 SOM DISTILLERIES & BREWERIES LTD., 23, ZONE-II, M.P. NAGAR, BHOPAL (PAN AABCS 3374 B) ....RESPONDENT ITA NO.433/IND/2004 A.Y. 1999-00 ACIT-1(2), BHOPAL .....APPELLANT V/S. SOM DISTILLERIES & BREWERIES LTD., 23, ZONE-II, M.P. NAGAR, BHOPAL (PAN AABCS 3374 B) ....RESPONDENT CO NO. 78/IND/2004 (ARISING OUT OF ITA NO.433/IND/2004) A.Y. 1999-00 SOM DISTILLERIES & BREWERIES LTD., 23, ZONE-II, M.P. NAGAR, BHOPAL (PAN AABCS 3374 B) .....APPELLANT V/S. ACIT-1(2), BHOPAL ....RESPONDENT ITA NOS.722 & 723/IND/2006 A.YS. 2003-04 & 2002-03 ACIT-1(1), BHOPAL .....APPELLANT 3 V/S. M/S. SOM DISTILLERIES PVT. LTD., 23, ZONE-II, M.P. NAGAR, BHOPAL (PAN AACCS 0397 P) ....RESPONDENT CO NOS. 4 & 5/IND/2007 (ARISING OUT OF ITA NOS.722 & 723/IND/2006) A.YS. 2003-04 & 2002-03 M/S. SOM DISTILLERIES PVT. LTD., 23, ZONE-II, M.P. NAGAR, BHOPAL (PAN AACCS 0397 P) .....APPELLANT V/S. ACIT-1(1), BHOPAL ....RESPONDENT DEPARTMENT BY : SHRI R.K. CHAUDHARY, CIT, DR & SMT . APARNA KARAN, SR. DR ASSESSEE BY : SHRI R.N. GUPTA, CA ORDER PER JOGINDER SINGH, JM THE REVENUE HAS PREFERRED THESE APPEALS AND CROSS- OBJECTIONS BY THE ASSESSEE AGAINST THE RESPECTIVE O RDER OF THE LD. CIT(A). DURING THE HEARING OF THESE APPEALS/CRO SS- OBJECTIONS, WE HAVE HEARD SHRI R.K. CHAUDHARY, LD. CIT, DR 4 ALONG WITH SMT. APARNA KARAN, LD. SR. DR AND SHRI R .N. GUPTA, LD. COUNSEL FOR THE ASSESSEE. 2. FIRST, WE SHALL TAKE UP APPEAL IN ITA NO.434/IND /2004, WHEREIN, THE FIRST GROUND RAISED IS THAT THE LD. FI RST APPELLATE AUTHORITY ERRED IN DELETING THE DISALLOWANCE OF RS. 3,54,761/- MADE U/S 37 OF THE ACT, BEING UNAPPROVED TRAVELING EXPENSES. THE CONTENTION RAISED BY LD. CIT, DR IS IN SUPPORT TO THE ASSESSMENT ORDER BY CONTENDING THAT THE NECESSARY D ETAILS WERE NOT FURNISHED BY THE ASSESSEE, THEREFORE, THE IMPUGNED DISALLOWANCE WAS STRONGLY DEFENDED. PLEA WAS ALSO R AISED THAT THE LD. FIRST APPELLATE AUTHORITY REACHED TO A PART ICULAR CONCLUSION WITHOUT ASSIGNING ANY REASONS AND RELEVA NT FACTS HAVE NOT BEEN PROPERLY CONSIDERED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT NECESSARY DETAILS WERE DULY FURNISHED BY THE ASSESS EE DURING ASSESSMENT PROCEEDINGS ITSELF, FOR WHICH, OUR ATTEN TION WAS INVITED TO VARIOUS PAGES OF PAPER BOOK. IT WAS PLEA DED THAT SUFFICIENT EVIDENCES WERE FURNISHED BY THE ASSESSEE . 5 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON THE FILE. 4.BRIEF FACTS ARE THAT THE ASSESSEE COMPANY IS ENGA GED IN MANUFACTURING OF BEER AND BOTTLING OF INDIAN MADE F OREIGN LIQUORS, DECLARED THE TOTAL TURNOVER AT RS.47,20,35 ,536/- AS COMPARED TO RS.49,11,55,767/- IN THE IMMEDIATE PREC EDING YEAR 1998-99. THE ASSESSEE CLAIMED EXPENDITURE OF RS.3,54,761/- IN FOREIGN CURRENCY BY CLAIMING THAT THE EXPENSES WERE INCURRED FOR BUSINESS PURPOSES INCLUD ING THE TRIP OF SHRI VIKAS GUPTA TO MIDDLE EAST. THE ASSESS EE WAS ASKED TO PRODUCE SHRI VIKAS GUPTA FOR VERIFICATION/ EXAMINATION. THE LD. ASSESSING OFFICER WAS OF THE V IEW THAT THE IMPUGNED EXPENSES WERE NOT INCURRED FOR BUSINES S PURPOSES, CONSEQUENTLY, WERE HELD TO BE NOT ALLOWAB LE U/S 37 OF THE ACT, THEREFORE, ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, IT WAS EXPLAINED BY THE ASSESS EE THAT THE IMPUGNED EXPENSES PERTAINS TO FOREIGN TRIP OF T HREE PERSON AND NOT SHRI VIKAS GUPTA ALONE. IT WAS PLEAD ED THAT SINCE SHRI VIKAS GUPTA RESIGNED ON 28.2.2001, THERE FORE, IT WAS NOT POSSIBLE TO PRODUCE HIM BEFORE THE ASSESSIN G OFFICER. THE BREAK-UP OF THE EXPENDITURE WAS EXPLAINED AS UN DER: 6 NAME OF THE EMPLOYEE DESIGNATION FOREIGN CURRENCY PURCHASED PURPOSE OF VISIT MR. VIKAS GUPTA EXPORT MANAGER 2,46,709 SALES PROMOTION TO MIDDLE EAST COUNTRIES MR. S. LAL DIRECTOR (TECH.) 71,992 VISITED U.K. TO INSPECT CANNING LINE MACHINE MR. A.K. TRIPATHI MECHANICAL ENGINEER 36,060 VISITED U.K. TO INSPECT CANNING LINE MACHINE TOTAL 3,54,761 5. BEFORE THE LD. FIRST APPELLATE AUTHORITY, IT WAS DULY EXPLAINED BY THE ASSESSEE THAT MR. GUPTA WAS WELL V ERSED WITH INTERNATIONAL TRADE AND USED TO CONDUCT FREQUE NT TOURS TO DUBAI FOR WHICH THE RELEVANT DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER FOR INCURRING THE EXPENDITURE OF RS.2,46,709/-. TO SUBSTANTIATE THE CLAIM, THE ASSES SEE ALSO FURNISHED THE COPY OF COMMUNICATION EVIDENCING THE INVOLVEMENT OF SHRI GUPTA AND THE DATES OF VISITS, COPY OF REPORT DATED 27.8.2009 EVIDENCING SHIPMENT OF CONSI GNMENT 7 TO AJMAN FROM DUBAI. THERE IS A FACTUAL FINDING IN THE IMPUGNED ORDER THAT THE CORRESPONDENCE CLEARLY INDI CATES THAT THE FOREIGN TRIPS WERE IN CONNECTION WITH SALES AND PROMOTION OF PRODUCTS OF THE ASSESSEE. BEFORE THE LD. FIRST A PPELLATE AUTHORITY, IT WAS ALSO CLAIMED THAT THE TDS/PF OF S HRI GUPTA WAS DULY DEDUCTED BY THE ASSESSEE. FOR THE VISIT OF SHRI S. LAL AND SHRI A.K. TRIPATHI, THE DIRECTOR TECHNICAL AND MECHANICAL ENGINEER RESPECTIVELY, IT WAS EXPLAINED THAT BOTH T HESE PERSONS USED TO GO FOR SELECTING AND INSPECTING THE MACHINERY FOR BUSINESS PURPOSES AS THE ASSESSEE WANTED TO AUG MENT THE SALES OF THE BEER AND WAS PLANNING TO INTRODUCE THE CANNED BEER IN THE MARKET. THE ASSESSEE DULY FURNISHED THE COPY OF LETTER DATED 4.12.99, ADDRESSED TO SHRI GERRY BARNE S, SR. PRODUCE MANAGER, U.K. FOR TRAINING PERIOD. IT IS SE EN THAT THE LD. ASSESSING OFFICER DISALLOWED THE EXPENSES WITHO UT MAKING ANY VERIFICATION AND IGNORING THE DOCUMENTS/CORRESP ONDENCE PRODUCED BEFORE HIM BY THE ASSESSEE. THE ASSESSEE A LSO FURNISHED THE VOUCHERS AND BILLS OF TRAVEL AGENCY ( PB 11 & 22) AND CORRESPONDENCE ETC. IN RELATION TO EXPORT ACTIV ITIES (PB 23 TO 33) AND EXPLANATION OF THE ASSESSEE BEFORE THE A SSESSING OFFICER (PB PAGE 6, PARA 16 AND PAGE 8 PARA 8), CON SEQUENTLY, WE HAVE FOUND NO INFIRMITY IN THE IMPUGNED ORDER, T HEREFORE, 8 ON THE IMPUGNED ISSUE, THERE IS NO MERIT IN THE STA ND OF THE REVENUE. 6. THE NEXT GROUND RAISED IS THAT THE LD. FIRST APP ELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF RS.2,63 ,10,781/- MADE ON ACCOUNT OF EXCESS CLAIM OF POWER AND FUEL. THE STAND OF THE REVENUE IS THAT THE EXCESS CLAIM DOES NOT COMMENSURATE WITH THE SALE OF THE ASSESSEE. IT WAS PLEADED THAT NECESSARY DETAILS WERE NOT FURNISHED BY THE AS SESSEE. THE IMPUGNED ADDITION WAS STRONGLY DEFENDED BY THE LD. CIT, DR. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE INVITED OUR ATTENTION TO VARIOUS PAGES OF THE PAPER BOOK CONTAINING LEDGER ACCOUNT, CONFIRMATION BY THE PART IES, CORRESPONDENCE AND NOTE BEFORE THE LD. FIRST APPELL ATE AUTHORITY. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON THE FILE. THE LD. ASSESSING OFFICER FO UND THE BALANCE SHEET (SCHEDULE 1) THAT THE ASSESSEE DEBITE D AN AMOUNT OF RS.4,72,92,139/- UNDER THE HEAD POWER AN D FUEL EXPENSES AND THE TURNOVER OF THE ASSESSEE WAS RS.49,15,22,326/- AS COMPARED TO RS.49,11,55,767/- IN THE 9 IMMEDIATE PRECEDING YEAR, CONSEQUENTLY, THE EXPENSE S WERE 2.3 TIMES AGAINST THE INCREASE OF TURNOVER TO THE E XTENT OF .07% ONLY. THE ASSESSEE WAS ASKED TO FURNISH ITS E XPLANATION BY 28.2.2003 WHICH WAS FURNISHED ON 25.2.2003. HOWE VER, THE ASSESSING OFFICER AGAIN ASKED THE ASSESSEE TO JUSTI FY ITS CLAIM. THE LD. ASSESSING OFFICER WAS OF THE VIEW TH AT THE NECESSARY DETAILS WERE NOT FURNISHED FOR THE SUDDEN INCREASE IN THE EXPENSES, CONSEQUENTLY, THE CLAIM OF RS.2,63 ,10,781/- WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSES SEE. ON APPEAL, THE ASSESSEE FILED APPLICATION UNDER RULE 4 6A AND FURNISHED THE CIRCULAR/LETTER OF MPEB FOR DECLARATI ON OF SCHEDULED POWER CUT. IT WAS SUBMITTED BEFORE THE LD . CIT(A) AND REITERATED BEFORE US THAT THE ASSESSEE FURNISHE D THE FOLLOWING DOCUMENTS FOR THE CLAIM OF IMPUGNED EXPEN SES: (I) BREAK UP OF POWER AND FUEL EXPENSES ACCOUNT. (II) COPY OF ACCOUNT OF ELECTRICITY AND POWER CHAR GES ACCOUNT. (III) COPY OF ACCOUNT OF DIESEL FOR D.G. SET ACCO UNT. (IV) COPY OF ACCOUNT OF FURNACE OIL PURCHASE ACCO UNT. (V) COPY OF ACCOUNT OF FREIGHT ON FURNACE OIL ACC OUNT. 10 (VI) COPY OF ACCOUNT OF FREIGHT ON DIESEL ACCOUNT . 8. BEFORE THE LD. FIRST APPELLATE AUTHORITY AND ALS O BEFORE US, IT WAS EXPLAINED BY THE ASSESSEE THAT THE EXPEN SES OF POWER AND FUEL PERTAIN TO ELECTRICITY AND POWER CHA RGES, FREIGHT ON DIESEL, FREIGHT ON FURNACE OIL, PURCHASE OF DIESEL FOR DG SET, PURCHASE OF FURNACE OIL ETC. ADMITTEDLY, DU RING POWER CUTS/NON-SUPPLY OF ELECTRICITY BY THE MPEB, THE PLA NT WAS REQUIRED TO RUN BY USING DIESEL. THERE IS NO DISPUT E TO THE FACT THAT DURING THE RELEVANT PERIOD, POWER CUTS WA S IMPOSED ON INDUSTRIAL UNITS, INCLUDING OF THE ASSESSEE, FOR WHICH, CIRCULAR NO.601/98-99/2082 DATED 26.10.98 AS PER WH ICH, THE ASSESSEE UNIT HAS TO FACE POWER CUT ON EVERY MONDAY AND DAILY POWER CUT FROM 5PM TO 9PM APART FROM UNSCHEDU LED POWER CUT, WHICH RESULTED INTO INCREASE IN CONSUMPT ION OF DIESEL. THERE IS A FACTUAL FINDING THAT DURING THE RELEVANT PERIOD TO ASSESSMENT YEAR 2000-01, THERE WAS CONSUM PTION OF DIESEL TO THE TUNE OF 1087300 LTRS, WHEREAS, IN THE PRECEDING ACCOUNTING YEAR, IT WAS ONLY 142352 LTRS ONLY. THE DIESEL WAS PURCHASED FROM HPCL AND IBP COMPANIES, THE DETAILS OF WHICH WERE DULY FURNISHED BY THE ASSESSEE. IT WAS ALSO EX PLAINED THAT THE ASSESSEE WAS HAVING TWO DG SETS HAVING CON SUMPTION OF 182 LTRS PER HOUR (500 KVA) AND 87 LTRS PER HOUR (160 KVA) 11 TOTAL 269 LTRS PER HOUR. IT WAS ALSO PLEADED THAT T HE DIESEL WAS ALSO USED AS A SUBSTITUTE FOR FURNACE OIL TO RU N OIL FIRED BOILER. IT IS ALSO AN ADMITTED FACT THAT RELEVANT BILLS/VOUCHERS/ACCOUNTS WERE DULY FURNISHED BY THE ASSESSEE. THE LD. ASSESSING OFFICER WITHOUT EXAMINING THE AUT HENTICITY OF THESE EXPENSES MERELY MADE A DISALLOWANCE. THE A SSESSING OFFICER HAS NEITHER CONTROVERTED THE CLAIM OF THE A SSESSEE FOR POWER CUTS NOR DENIED THAT THE FUEL/DIESEL WAS PURC HASED BY THE ASSESSEE. EVEN OTHERWISE, THERE IS A FACTUAL FI NDING IN THE IMPUGNED ORDER THAT THERE WAS DRASTIC INCREASE IN T HE PRICE OF FURNACE OIL WHICH HAS BEEN SUMMARIZED AS UNDER: MONTH AY 1999- 2000 RATE PER LITER (RS.) AY 2000- 2001 RATE PER LITER (RS.) APRIL 5.74 5.62 MAY 5.74 6.88 JUNE 5.74 6.64 JULY 5.74 7.27 AUGUST 5.58 8.28 SEPTEMBER 5.58 9.17 OCTOBER 6.04 9.19 NOVEMBER 6.04 10.17 DECEMBER 6.4 10.66 12 JANUARY 6.04 10.56 FEBRUARY 5.11 10.5 MARCH 4.88 11.23 AVERAGE OF YEAR 5.72 8.85 9. IT IS SEEN THAT WHILE COMING TO A PARTICULAR CON CLUSION, THE LD. FIRST APPELLATE AUTHORITY ASKED FOR THE REM AND REPORT FROM THE LD. ASSESSING OFFICER, WHEREIN, NOTHING AD VERSE WAS COMMENTED UPON BY HIM, WHEREAS, THE ASSESSEE HAS SUBMITTED A COMPREHENSIVE EXPLANATION AND THE CONTR IBUTORY FACTORS FOR UNUSUAL RISE IN POWER AND FUEL EXPENSES . IT SEEMS THAT DUE TO LACK OF TIME, THE LD. ASSESSING OFFICER COULD NOT VERIFY/EXAMINE THE DETAILS FURNISHED BY THE ASSESSE E. EVEN OTHERWISE, THE ASSESSING OFFICER NEITHER PINPOINTED ANY DEFECT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE NOR BROUGH T ANY MATERIAL ON RECORD INDICATING THAT EXPENSES WERE BOGUS/INFLATED AND EVEN WHILE SENDING THE REMAND RE PORT, HE HAS NOT CONTROVERTED THE ASSERTION OF THE ASSESSEE. UNDER THESE FACTS, THE RATIO LAID DOWN BY THE HONBLE JUR ISDICTIONAL HIGH COURT IN CIT VS. RAMESH CHANDRA SHUKLA (SUPRA) FOR MAKING THE ADDITION AND FOR NON-SUMMONING BY THE AS SESSING OFFICER, THE DECISION IN PRAKASH CHANDRA NAHTA VS. CIT (SUPRA) 13 SUPPORTS THE CASE OF THE ASSESSEE, CONSEQUENTLY, TH ERE IS NO INFIRMITY IN THE STAND OF THE LD. CIT(A), THEREFORE , IT IS UPHELD. 10. THE NEXT GROUND RAISED IS THAT THE LD. CIT(A) E RRED IN REDUCING THE ADDITION OF RS.6,14,986/- TO RS.2,40,9 80/- FOR NOT DEPOSITING THE PF COLLECTED WITHOUT ASSIGNING A NY REASON. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS I N SUPPORT TO THE ASSESSMENT ORDER, WHEREAS, THE LD. COUNSEL F OR THE ASSESSEE DEFENDED THE IMPUGNED ORDER BY INVITING OU R ATTENTION TO PAGE 14 TO 16 OF THE IMPUGNED ORDER AN D PARA 6 OF THE ASSESSMENT ORDER. FURTHER ATTENTION WAS INVI TED TO NOTES ON ADDITION BEFORE THE LD. FIRST APPELLATE AU THORITY (PB PAGES J TO L). 11. ON CONSIDERATION OF RIVAL SUBMISSIONS AND PERUS AL OF RECORD, IT IS SEEN THAT THE ASSESSEE COMPANY DEDUCT ED PROVIDENT FUND FROM THE SALARY PAID/PAYABLE TO ITS EMPLOYEES BUT AS PER THE REVENUE, THE FOLLOWING AMOUNTS WERE NOT DEPOSITED IN TIME: TABLE A - AMOUNT IN RS. AMOUNT DEDUCTED DUE DATE OF PAYMENT ACTUAL DATE OF PAYMENT 14 1,12,572 15.5.1999 5.6.1999 1,21,582 15.7.1999 16.7.1999 1,21,552 15.8.1999 27.8.1999 1,28,248 15.12.1999 16.12.1999 1,24,238 15.4.2000 17.4.2000 6,08,192 (TOTAL) AS PER THE REVENUE, THE FOLLOWING AMOUNTS WERE NOT DEPOSITED FROM THE PF DEDUCTED FROM ITS EMPLOYEES: TABLE B AMOUNT DEDUCTED AMOUNT PAID LESS PAID 1,26,726 (AUGUST 1999) 1,20,988 5,738 1,31,104 (DECEMBER 1999) 1,30,048 1,056 TOTAL 6,794 THE LD. ASSESSING OFFICER ADDED RS.6,08,192/- (TAB LE A) AND RS. 6,794/- (TABLE B) (TOTAL RS.6,14,986/-) TO THE TOTAL INCOME OF THE ASSESSEE, U/S 2(24)(X) OF THE ACT. ON APPEAL, THE LD. FIRST APPELLATE AUTHORITY DELETED THE ADDIT ION ON THE GROUND THAT THE PAYMENTS WERE MADE WITHIN THE ACCOU NTING YEAR ITSELF WHICH RELATES TO MONTH OF JUNE AND NOVE MBER, 15 1999 AND MARCH, 2000, THAT TOO, WITHIN THE GRACE PE RIOD BY FOLLOWING THE DECISION IN HUNSUR PLYWOOD WORKS LTD. (54 ITD 394), MADRAS RADIATORS AND PRESSING LTD. (59 ITD 51 5) AND THE DECISION FROM THE HONBLE CALCUTTA HIGH COURT I N KANOI PAPER AND INDUSTRIES LTD. (74 TTJ 448). THE FINDING OF THE LD. FIRST APPELLATE AUTHORITY IS AS UNDER: 11.7 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND SO FAR AS THE MONTHS OF JUNE99, NOVEMBER 99 AND MARCH, 2000 ARE CONCERNED THE DISALLOWANCE WAS NOT JUSTIFIED AS THE SAME WERE PAID WITHIN A AVAILABLE GRACE PERIOD OF 5 DAYS AS HELD BY HONBLE ITAT BANGLORE IN THE CASE OF HUNSUR PLYWOOD WORKS LTD. VS. CIT (1995) 54 ITD 394. CORRESPONDINGLY DISALLOWANCE OF RS.3,74,068/- (RS.121582 + RS.128248 + RS.124238) IS REMOVED. HOWEVER I DO NOT AGREE WITH THE OTHER INTERPRETATION GIVEN BY THE LD. AR THAT PROVISION OF EMPLOYEES PROVIDENT FUND ACT, 1952 ALLOWED THE DEPOSIT OF THE CONTRIBUTION IN THE FOLLOWING MONTH TO WHICH THE SALARY WAS DISBURSED AS THIS WOULD HAVE DEPRIVED THE LEGITIMATE PRINCIPAL AND INTEREST AMOUNT TO THE EMPLOYEE ON THE SALARY WHICH WAS DUE TO BE PAID TO HIM 16 ON THE LAST DAY OF THE WORKING MONTH. ACCEPTING THE LD. ARS CONTENTION MAY MEAN THAT THE EMPLOYER CAN BE ALLOWED TO PAY THE SALARY IN ARREARS AND IN THE PROCESS RETAIN THE PROVIDENT FUND AMOUNT FOR A LONGER PERIOD AS SALARY WAS NOT DISBURSED. WITH RESPECT TO THE RULING OF HONBLE ITAT, CALCUTTA, I AM OF THE OPINION THAT THE INTERPRETATION SOUGHT TO BE GIVEN BY THE LD. AR GOES AGAINST THE INTEREST OF THE WORKERS AND THIS CANNOT BE THE INTENTION OF THE LEGISLATURE. SO I CONFIRM THE REMAINING DISALLOWANCE OF RS.2,40,918/- (614986 374068). SAME IS SUSTAINED. APPELLANT WILL HOWEVER GET A RELIEF OF RS.3,74,068/-. 12. IN THE AFORESAID CONCLUSION, THERE IS A FINDING THAT FOR THE MONTH OF JUNE 99, NOVEMBER 99 AND MARCH 2000, T HE PAYMENTS WERE PAID WITHIN THE GRACE PERIOD, CONSEQU ENTLY, THERE IS NO INFIRMITY IN THE ORDER. IT IS NOT THE C ASE THAT THE CONTENTION OF THE ASSESSEE HAS BEEN BLINDLY FOLLOWE D RATHER ISSUE HAS BEEN DEALT WITH IN A REQUIRED MANNER AND OUT OF THE TOTAL DISALLOWANCE OF RS.6,14,986/-, THE AMOUNT OF RS.2,40,918/ WAS CONFIRMED. THIS GROUND OF THE REVE NUE IS, THEREFORE, HAVING NO MERIT. 17 THIS APPEAL OF THE REVENUE IS, THEREFORE, DISMISSE D. 13. THE ASSESSEE HAS ALSO PREFERRED CROSS-OBJECTION S (CO NO.79/IND/2004), WHEREIN, THE FIRST CROSS-OBJECTION IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN SUSTAINING THE ADDITION OF RS.15 LAKHS APPEARING IN THE ACCOUNT OF M/S. HI SPIRIT BEVERAGES P. LTD. AND MAA KALI ENTERPRISES. THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE IS THAT M/S. HI SPIRIT BEVERAGES P. LTD. AND MAA KALI ENTER PRISES WERE C & F AGENTS FOR THE PRODUCTS OF THE ASSESSEE. THES E AGENTS DEPOSITED THE AMOUNT OF RS.10 LACS & RS.5 LACS RESP ECTIVELY BY WAY OF SECURITY DEPOSIT WHICH WERE WRONGLY ADDED AS INCOME U/S 68 OF THE ASSESSEE. IT WAS ALSO PLEADED THAT THE MODE OF RECEIPT OF IMPUGNED DEPOSITS ARE BY WAY OF CHEQUES/DEMAND DRAFTS. IN RESPECT OF DEPOSIT OF M/S . HI SPIRIT BEVERAGES P. LTD., OUR ATTENTION WAS INVITED TO THE EXPLANATION FILED BY THE ASSESSEE BEFORE THE ASSESS ING OFFICER, LEDGER ACCOUNT OF THE PARTY, CONFIRMATION BY THE PARTIES, PAN NOS., NOTE BEFORE THE LD. CIT(A), AND THE COVERING LETTER OF THE PARTY, DEMAND DRAFT OF THE A MOUNT OF 18 RS.10 LACS, PHOTOCOPY OF BANK STATEMENT. DURING HEA RING, THE LD. COUNSEL INVITED OUR ATTENTION TO VARIOUS PAGES CONTAINING THE AFORESAID ASSERTION FOR THE AMOUNT OF RS.5 LACS , OUR ATTENTION WAS INVITED TO VARIOUS PAGES OF THE PAPER BOOK BY CONTENDING THAT THE ASSESSEE HAS FULLY ESTABLISHED THE IDENTITY OF THE PARTIES. RELIANCE WAS PLACED UPON THE DECISI ON IN ASHOK PAL DAGA VS. CIT (220 ITR 452) (MP) AND CIT VS. RAM ESH CHANDRA SHUKLA (2008) (10 ITJ 286) (MP) BY CONTENDI NG THAT EVEN REQUEST WAS MADE TO THE LD. ASSESSING OFFICER FOR ISSUANCE OF SUMMONS TO THE CONCERNED PERSONS/PARTIE S. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON THE FILE. BRIEF FACTS ARE THAT M/S. HI SPIRIT BEVERAGES P. LTD. AND MAA KALI ENTERPRISES WERE ENG AGED AS C & F AGENTS FOR THE PRODUCTS OF THE ASSESSEE, WHO DE POSITED RS.15 LACS (RS.10 LACS + RS.5 LACS, RESPECTIVELY) B Y WAY OF SECURITY DEPOSITS. M/S. HI SPIRIT BEVERAGES P. LTD. PAID THE AMOUNT BY WAY OF CHEQUE NO.1355 DATED 8.3.2000 DRAW N ON STATE BANK OF INDIA AND M/S. MAA KALI ENTERPRISES D EPOSITED RS.5 LACS BY WAY OF DD NO.66578 DATED 11.11.1999 DR AWN ON STATE BANK OF INDIA. TO SUBSTANTIATE ITS CLAIM, THE ASSESSEE FURNISHED THE EXPLANATION DURING ASSESSMENT PROCEED INGS VIDE 19 LETTER DATED 27.3.2003 (PB PAGE 7) BY CONTENDING TH AT SUMMONS U/S 131OF THE ACT MAY BE ISSUED TO THESE PA RTIES FOR WHICH THEIR ADDRESSES WERE FURNISHED BY THE ASSESSE E. THE ASSESSEE ALSO ENCLOSED THE COPY OF THE BANK PASS BO OK, WHEREIN, THE AMOUNTS WERE RECEIVED THOUGH CHEQUES/D EMAND DRAFT AND THE SAME HAVE BEEN DULY REFLECTED. EVEN T HE AMOUNT OF DEPOSIT BY M/S. MAA KALI ENTERPRISES WAS REFUNDE D IN SUBSEQUENT YEAR. AT PAGE 34 OF THE PAPER BOOK IN TH E ACCOUNT OF M/S. HI SPIRIT BEVERAGES P. LTD. (PAGES 34 TO 37 OF THE PAPER BOOK), THE ASSESSEE HAS SHOWED THE RECEIPT OF THE IMPUGNED AMOUNT. M/S. HI SPIRIT BEVERAGES P. LTD. C ONFIRMED (PAGE 38 OF THE PAPER BOOK) THAT THE IMPUGNED AMOUN T WAS PAID AS SECURITY DEPOSIT ON 31.3.2000 VIDE CHEQUE N O.13555 BY MENTIONING PAN NO. AABCH 2485 C. THE ASSESSEE AL SO FURNISHED THE PHOTOCOPY OF VOUCHERS AND BANK STATEM ENT (PAGES 87 TO 89 OF THE PAPER BOOK). AT PAGE 89, THE ASSESSEE HAS FURNISHED THE STATEMENT OF ACCOUNT OF MONTH OF MARCH OF THE ASSESSEE, WHEREIN, THE IMPUGNED AMOUNT HAS BEEN SHOWN TO HAVE BEEN DEPOSITED BY CHEQUE. THE LD. COUNSEL F OR THE ASSESSEE ALSO INVITED OUR ATTENTION TO NOTE ON ADDI TION PREFERRED BEFORE THE LD. FIRST APPELLATE AUTHORITY [PAGES D, E & F OF THE PAPER BOOK-PARA 2(B)]. 20 15. FOR THE AMOUNT OF RS.5 LACS BY M/S. MAA KALI EN TERPRISES, THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENT ION TO PAGE NO.7 PARA 2 OF THE PAPER BOOK AND FOR THE LEDGER A/ C OF THE PARTY, PAGE NO.39 WAS SHOWN. THE CONCERNED PARTY AL SO FILED ITS CONFIRMATION (PAGE 40 OF PAPER BOOK), WHEREIN, IT HAS BEEN CONFIRMED THAT THE AMOUNT OF RS.5 LACS WAS DEPOSITE D FOR TAKING C & F OF THE PRODUCTS FOR THE STATE OF ORISS A BY FURTHER MENTIONING THAT THE ASSESSEE WAS NOT IN POSITION TO RUN THE C & F IN ORISSA, THEREFORE, REQUESTED TO RETURN THE I MPUGNED AMOUNT. AT PAGE 90 OF THE PAPER BOOK, CONFIRMATION OF SENDING THE DEMAND DRAFT VIDE LETTER DATED 11.9.99 WITH A FURTHER REQUEST TO PREPARE THE AGREEMENT DOCUMENT. THE LEDGER A/C OF THE PARTY (PAGE 81), PHOTOCOPY OF BAN K STATEMENT (PAGES 92 & 93 OF THE PAPER BOOK) WERE AL SO SHOWED TO THE BENCH. THE INTERNAL CORRESPONDENCE FO R THE REFUND OF THE DEPOSIT (PAGES 41, 43, 44 & 91 OF THE PAPER BOOK) WERE ALSO POINTED OUT TO US. IF ALL THESE FAC TS ARE ANALYSED AND KEPT IN JUXTAPOSITION WITH THE ARGUMEN TS ADVANCED BY THE LD. RESPECTIVE COUNSEL AND THE FACT AVAILABLE ON RECORD, WE ARE OF THE CONSIDERED OPINION THAT NO ADDITION CAN BE MADE U/S 68 OF THE ACT BECAUSE THE ASSESSEE HAS DULY OFFERED ITS EXPLANATION, NATURE AND SOURCE OF SUCH CREDIT 21 FOUND IN ITS BOOK. IN THE PRESENT APPEAL, EVEN THE ASSESSEE ASKED THE LD. ASSESSING OFFICER TO ISSUE SUMMONS U/ S 131 TO THESE PARTIES BUT THAT WAS NOT DONE, THEREFORE, THE DECISION FROM THE HONBLE JURISDICTIONAL HIGH COURT IN CIT V S. RAMESH CHANDRA SHUKLA (2008) (10 ITJ 286) (MP), WHEREIN, T HE ASSESSEE FURNISHED THE NAMES, ADDRESSES AND AFFIDAV ITS OF CREDITORS, THE ASSESSING OFFICER WAS REQUESTED TO I SSUE SUMMONS TO THE CREDITORS TO ESTABLISH THE GENUINENE SS AND CREDITWORTHINESS, IT WAS HELD THAT IT IS THE DUTY O F THE ASSESSING OFFICER TO ENFORCE ATTENDANCE AND IF THE AO CHOOSES NOT TO ISSUE SUMMONS, HE CANNOT TREAT THE CREDITS T O BE NON- GENUINE. IT WAS HELD THAT NO ADDITION CAN BE MADE U /S 68 OF THE ACT. WHILE COMING TO THIS CONCLUSION, THE HONB LE COURT ALSO CONSIDERED THE DECISION IN NATTHURAM PREMCHAND VS. CIT (49 ITR 561) (PARA 12) AND R.S. SETH GOPIKISHAN AGR AWAL VS. ASSISTANT COMMISSIONER ST (171 TAX LR 355) (PARA 12 ). IDENTICAL RATIO WAS LAID DOWN IN THE CASE OF PRAKAS H CHAND NAHTA VS. CIT (2008) (301 ITR 134) (MP). IN THE LIG HT OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, WE HAVE FO UND THAT THE ASSESSEE HAS FULLY ESTABLISHED THE IDENTITY OF THE IMPUGNED PARTIES BY BRINGING NECESSARY EVIDENCE ON RECORD, THEREFORE, CANNOT BE SAID TO BE FICTITIOUS. THE RAT IO LAID DOWN 22 BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF ASHOK PAL DAGA (HUF) V. CIT; 220 ITR 452 (M.P.), ORIENT T RADING COMPANY LTD. V. CIT; 49 ITR 723 (BOM) SUPPORTS OUR VIEW, CONSEQUENTLY THIS CROSS OBJECTION OF THE ASSESSEE I S ALLOWED. 16. THE NEXT GROUND TAKEN IN THE CROSS OBJECTION I S THAT THE LEARNED CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 2,40,918/- U/S.43B OF THE ACT. THIS CROSS OBJECTION WAS NOT PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE, CO NSEQUENTLY IT IS DISMISSED AS NOT PRESSED. 17. THE LAST CROSS OBJECTION PERTAINS TO CHALLENGIN G THE LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT. THE LEARNED COUNSEL ARGUED IT TO BE CONSEQUENTIAL WHERE AS THE LEARNED DR CONTENDED THAT IT IS MANDATORY IN NATURE . AFTER CONSIDERING THE RIVAL SUBMISSIONS, SINCE WE HAVE DI SMISSED THE APPEAL OF THE REVENUE AND PARTLY ALLOWED THE CR OSS OBJECTIONS OF THE ASSESSEE, THEREFORE, LEVY OF INTE REST U/S 234B AND 234C IS CONSEQUENTIAL IN NATURE. IN THE RESULT, THE CROSS OBJECTION IS PARTLY ALLOW ED. 18. NOW WE SHALL TAKE UP APPEAL IN ITA NO. 720 & 721/IND/06 FOR THE ASSESSMENT YEARS 2002-03 AND 200 3- 23 04.DURING HEARING OF THESE APPEALS IT WAS POINTED O UT THAT FACTS AND ISSUES ARE IDENTICAL, THEREFORE, BOTH THE SE APPEALS CAN BE HEARD AND DISPOSED OF TOGETHER. THE FIRST GR OUND RAISED IN BOTH THE APPEALS IS THAT THE LEARNED FIRS T APPELLATE AUTHORITY ERRED IN GRANTING RELIEF TO THE TUNE OF RS.14,52,452/- AND RS.13,19,180/-, RESPECTIVELY, ON ACCOUNT OF DISALLOWANCE MADE U/S 43B OF THE ACT UNDER THE H EAD PAYMENT OF EMPLOYEES AND EMPLOYEES CONTRIBUTION. THE LEARNED CIT DR SUPPORTED THE ASSESSMENT ORDER WHERE AS THE LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUG NED ORDER. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS ARE TH AT FOR A.Y.2002-03 THE AO MADE ADDITION OF RS. 14,54,442/- AND FOR THE ASSESSMENT YEAR 2003-04 OF RS.13,19,180/- ON TH E GROUND THAT THE ASSESSEE DID NOT DEPOSIT THE AMOUNT OF RS. 7,26,221/- , BEING EMPLOYEES CONTRIBUTION TO PROVIDENT FUND I N TIME, THEREFORE, HE DISALLOWED THE IMPUGNED AMOUNTS AS UN DER :- MONTH EMPLOYEES CONTRIBUTION EMPLOYERS CONTRIBUTION ADMINIST RATION CHARGES AND EDLIC TOTAL AMOUNT DEPOSITED DATE OF DEPOSIT 24 MAY-01 78753 78753 10884 168390 173126 16.6.01 JULY-01 76150 76150 10375 162675 165019 17.8.01 AUG-01 76692 76692 10290 163674 163668 19.9.01 SEPT-01 74857 74857 10183 159897 161967 22.10.01 NOV-01 74855 74855 10006 159716 159172 20.12.01 DEC-01 73192 73192 9768 156152 155352 15.1.02 JAN-02 72501 72501 9878 154880 157108 19.2.02 FEB-02 75305 75305 10104 160714 160714 18.3.02 MAR-02 74658 74685 10041 159411 159705 19.4.02 TOTAL 676990 676990 91529 1445509 EXCESS DEPOSIT ED 6932 TOTAL 1452441 20. IDENTICALLY, THE PAYMENTS ARE SUMMARIZED FOR TH E ASSESSMENT YEAR 2003-04 AS UNDER :- MONTH EMPLOYEES CONTRIBUTION EMPLOYERS CONTRIBUTION ADMINISTRATION CHARGES AND EDLIC TOTAL DATE OF DEPOSIT APRIL-02 74678 74678 10052 159408 16..5.02 JUNE-02 70571 70571 9292 150434 18.07.02 JULY-02 57640 57640 7750 120030 07.09.02 AUG-02 58402 58402 7863 124667 05.10.02 SEPT-02 60416 60416 8108 128940 18.10.02 25 OCT-02 65981 65981 8810 140772 20.11.02 NOV-02 59354 59354 8107 126815 19.12.02 JAN-03 56936 56936 7625 121497 28.02.03 FEB-03 57357 57357 7704 122418 18.03.03 MAR-03 56817 56817 7564 121198 25.04.03 TOTAL 518152 618152 82875 1319179 21. ON APPEAL BEFORE THE LEARNED CIT(A) THE STAND O F THE ASSESSEE WAS THAT THESE CONTRIBUTIONS WERE DEPOSITED BEFORE THE DUE D ATE, THEREFORE, NO DISALLOWANCE U/S 43B WAS ARGUED TO BE JUSTIFIED. ID ENTICAL PLEA WAS RAISED BEFORE US. 22. WE FIND THAT THE CIT(A) HAS RELIED UPON VARIOU S JUDICIAL DECISIONS WHEREIN IT HAS BEEN HELD THAT EMPLOYERS CONTRIBUTI ON DEPOSITED BEFORE THE DUE DATE OF FILING OF THE RETURN CAN BE ALLOWED U/S 43B OF THE ACT. ACCORDINGLY, WE UPHOLD THE DECISION OF THE CIT(A) IN THIS REGARD . HOWEVER, WE ARE OF THE VIEW THAT EMPLOYEES CONTRIBUTION TOWARDS PF/ESIC I S NOT GOVERNED BY THE PROVISIONS OF SECTION 43B AS CONSISTENTLY HELD BY V ARIOUS BENCHES OF THE TRIBUNAL AND THE SAME HAS TO BE SEEN IN THE LIGHT O F THE PROVISIONS OF SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE ACT. IN THE PRESENT APPEAL, IN BOTH THE YEARS, THERE ARE INSTANCES WHERE EMPLOYEES CON TRIBUTION HAS BEEN DEPOSITED BEYOND THE DUE DATE AS PRESCRIBED U/S 36( 1)(VA) OF THE ACT INCLUDING THE GRACE PERIOD. HENCE, THE SAME IS NOT ALLOWABLE. THUS, THE 26 ORDER OF THE CIT(A) STANDS MODIFIED TO THIS EXTENT. ACCORDINGLY, WE DIRECT THE AO TO REWORK OUT THE DISALLOWANCE MADE U/S 43B OF T HE ACT. THUS, THIS GROUND OF THE REVENUE STANDS PARTLY ALLOWED. 23. THE NEXT GROUND RAISED IS THAT THE LEARNED CIT( A) ERRED IN GRANTING RELIEF OF RS. 1,48,70,693/- AND RS.64, 09,910/-, RESPECTIVELY, OUT OF THE ADDITION MADE UNDER THE HE AD SALES PROMOTION, ADVERTISEMENT AND PUBLICITY EXPENSES. THE LEARNED CIT DR SUPPORTED THE ASSESSMENT ORDER WHERE AS THE LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUG NED ORDER. 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE IN THE FILE. BRIEF FACTS ARE THAT FOR THE ASSESSMENT YEAR 2002-03 THE ASSESSEE INCURRED EXPEN SES OF RS.1,85,25,879/- ON SALES PROMOTION, ADVERTISEMENT AND PUBLICITY OUT OF WHICH 1/5 TH OF THE TOTAL EXPENDITURE WORKED OUT TO RS.37,05,176/- WAS ALLOWED AND THE AMOUNT OF RS.1,48,20,703/- WAS DISALLOWED ON THE GROUND THAT THESE EXPENSES ARE CAPITAL IN NATURE, THEREFORE, THE ENTI RE DEDUCTION IS NOT AVAILABLE IN ONE YEAR AND HAS TO BE AMORTIZE D FOR FIVE YEARS, THEREFORE, THE 1/5 TH OF THE EXPENSES WAS ALLOWED. FOR THE ASSESSMENT YEAR 2003-04 THE ASSESSEE INCURRED I DENTICAL 27 EXPENDITURE TO THE TUNE OF RS.80,12,388/- OUT OF WH ICH 1/5 TH I.E. RS. 16,02,478/- WAS ALLOWED AND THE REMAINING AMOUNT OF RS.64,09,910/- WAS DISALLOWED ON THE SAME PLEA. HOW EVER, THE LEARNED CIT(A) AS DISCUSSED AT PAGES 8 AND 9 (ASSESSMENT YEAR 2002-03) AND 6 & 7 (ASSESSMENT YEA R 2003- 04) HELD THAT THESE ARE REVENUE EXPENSES, THEREFORE , FULLY ALLOWABLE IN THE YEAR IN WHICH INCURRED. DURING HEA RING OF THE APPEALS THE LEARNED COUNSEL FOR THE ASSESSEE CONTEN DED THAT NO SUCH DISALLOWANCE WAS MADE FOR EARLIER YEARS, TH EREFORE, WE ARE REPRODUCING HEREUNDER THE POSITION OF EARLIE R YEARS :- A.Y. EXPENDITURE INCURRED FOR WHICH DEDUCTION CLAIMED DISALLOWANCE BY AO 1995-96 RS. 43,64,217 NIL 1999-2000 RS.49,23,082 NIL 2000-01 RS. 94,97,453 NIL 2001-02 RS.92,63,523 RS.92,63,523 CIT(A) DELETED 2002-03 RS. NIL RS. 1,48,20,703 CIT(A) DELETED 25. IF THE ASSESSMENT ORDER, REASONS FOR DISALLOWA NCE THEREIN, FINDING OF THE LEARNED CIT(A) AND THE ARG UMENTS ADVANCED BY THE RESPECTIVE COUNSELS ARE ANALYSED, O NE FACTS IS OOZING OUT THAT EVEN THE LEARNED AO HAS NOT DOUB TED THE 28 INCURRING OF SUCH EXPENSES. EVEN OTHERWISE, THE SAL ES PROMOTION, PUBLICITY AND ADVERTISEMENT EXPENSES ARE OF REVENUE IN NATURE FOR WHICH WE ARE FORTIFIED BY THE DECISION OF THE HONBLE APEX COURT IN EMPIRE JUTE COMPANY V. CI T; 124 ITR 1, AMAR RAJA BATTERIES LIMITED V. ACIT; 91 ITD 280 (HYDRABAD), JCIT V. DEVASINGH SHYAMSINGH; 95 ITD 23 5/237. EVEN OTHERWISE, THE NATURE OF ADVANTAGES IN COMMERC IAL SENSE HAS TO BE CONSIDERED. IN THE PRESENT FACTS, THE IN CURRING OF SUCH EXPENSES IS MERELY TO FACILITATE THE TRADING O PERATION AND TO CONDUCT THE BUSINESS OF THE ASSESSEE MORE EF FICIENTLY, MORE PROFITABLY, THEREFORE, THE EXPENSES ARE CLEARL Y OF REVENUE IN NATURE. EVEN OTHERWISE THESE EXPENSES WE RE INCURRED IN THE FINANCIAL YEAR RELEVANT TO THE ASSE SSMENT YEAR UNDER REFERENCE. EVEN OTHERWISE, AS DISCUSSED ABOVE , SINCE THE IDENTICAL EXPENDITURE WAS NOT DISALLOWED AND DE LETED BY THE LEARNED CIT(A) IN THE IMPUGNED ASSESSMENT YEARS , THEREFORE, UNTIL AND UNTIL CONTRARY FACTS ARE BROUG HT ON RECORD, THE DEPARTMENT IS NOT PERMITTED TO PURSUE T HESE APPEALS FOR THE SAKE OF CONSISTENCY. ON THE ISSUE O F CONSISTENCY, THE ASSESSEE IS FORTIFIED BY THE DECIS IONS IN UNION OF INDIA V. KAUMUDINI NARAYAN DALAL; 249 ITR 219 (SC); CIT V. SHIVSAGAR ESTATE; 257 ITR 59 (SC); CIT V. NA RENDRA 29 DOSHI; 254 ITR 606 (SC); DCIT V. UNITED VANASPATI L IMITED; 275 ITR 124 (AT) (CHD) AND CIT V. ALLIED FINANCE P. LIMITED; 289 ITR 318 (DEL). IN VIEW OF THESE FACTS AND JUDIC IAL PRONOUNCEMENTS, WE HAVE FOUND NO INFIRMITY IN THE I MPUGNED ORDER, THEREFORE, THERE IS ALSO NO MERIT IN THIS GR OUND OF THE REVENUE. THE SAME IS, THEREFORE, DISMISSED. 26. NOW WE SHALL TAKE UP APPEAL IN ITA NO. 433/IND/ 04 (ASSESSMENT YEAR 1999-00) WHEREIN THE ONLY GROUND R AISED IS THAT THE LEARNED FIRST APPELLATE AUTHORITY ERRED IN REDUCING THE ADDITION FROM RS. 48 LACS TO RS. 28 LACS MADE U/S. 68 OF THE ACT. THE CONTENTION RAISED ON BEHALF OF THE REVENUE IS IN SUPPORT TO THE ASSESSMENT ORDER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. BRIEF FACTS ARE T HAT THE ASSESSEE IS ENGAGED IN MANUFACTURE OF LIQUOR AND BE ER, ACCEPTED FRESH DEPOSITS AMOUNTING TO RS.48 LACS FRO M FOUR PARTIES, NAMELY, HARSH TRADING COMPANY, M/S PAVAN ENTERPRISES, MR. SURESH SHARMA AND M/S SANDEEP TRAD ERS. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER DIRECTED THE ASSESSEE TO FURNISH CONFIRMATION FROM THESE 30 PARTIES. THE STAND OF THE ASSESSEE WAS THAT SINCE SUCH DIRECTION WAS MADE DURING THE LAST DAYS OF LIMITATI ON PERIOD, THEREFORE, THE ASSESSING OFFICER WAS REQUIRED TO IS SUE SUMMONS U/S 131 OF THE ACT TO THESE PARTIES. HOWEVE R, THE LEARNED ASSESSING OFFICER MADE THE IMPUGNED ADDITIO N U/S 68 OF THE ACT ON THE GROUND THAT THE ASSESSEE COULD NO T FURNISH THE DETAILS AND THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION WAS NOT PROVED. HOW EVER, ON APPEAL BEFORE THE LEARNED CIT(A), THE ASSESSEE FIL ED APPLICATION UNDER RULE 46A WHICH WAS ALLOWED AND TH E DOCUMENTS FURNISHED BY THE ASSESSEE WERE SENT TO TH E ASSESSING OFFICER FOR HIS COMMENTS. THE CLAIM OF TH E ASSESSEE WAS THAT THE AMOUNT OF RS.48 LACS REPRESENTS THE DE ALERSHIP DEPOSIT FROM THE FOLLOWING PARTIES :- SL. NO. NAME & ADDRESS OF THE PARTY AMOUNT (IN RS.) 1. M/S HARSH TRADING COMPANY, C/O SHRI KARNAIL SINGH, SARAIPALI, DISTT. MAHASAMUND, CHHATISGARH 50,000 2. M/S PAVAN ENTERPRISES, B- 5/133, BEHIND SATYA MANDIR, INDIRA NAGAR, LUCKNOW 15,00,000 3. M/S SANDEEP TRADERS C/O SHRI AMARJEET SING H, CHUGANI BUILDING,SHAILENDRANAGAR,RAIPUR 28,00,000 31 4. MR. SURESH SHARMA, PLOT NO. 16, VAISHALI ENCLAVE, OPPOSITE BRIGHT LAND SCHOOL, VAISHALI NAGAR, JAIPUR 4,50,000/- 28. WE HAVE FOUND THAT THE LEARNED FIRST APPELLATE AUTHORITY DELETED THE ADDITION FOR THE AMOUNTS RECEIVED FROM M/S HARSH TRADING COMPANY, M/S PAVAN ENTERPRISES AND MR. SURE SH SHARMA, HOWEVER, SUSTAINED THE ADDITION/AMOUNT RECE IVED FROM M/S SANDEEP TRADERS. THE GRUDGE OF THE REVENUE IS THAT THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIF IED IN REDUCING THE ADDITION TO RS. 28 LACS OUT OF RS. 48 LACS MADE BY THE LEARNED AO U/S 68 OF THE ACT. IT IS SEEN TH AT FOR THE AMOUNT OF RS.50,000/- FROM HARSH TRADING WHICH IS W HOLESALE DEALER OF ASSESSEE COMPANYS PRODUCTS FOR THE AREA OF SARAIPALI, DISTT. MAHASAMUND, THE BOOKS AND THE LED GER ACCOUNTS WERE FURNISHED BY THE ASSESSEE. IN ONE AC COUNT THE AMOUNT WAS RECEIVED THROUGH DEALERSHIP DEPOSIT WAS CREDITED AND IN THE OTHER ACCOUNT THE ENTRIES RELATING TO SA LES MADE TO AND THE PAYMENTS RECEIVED FROM THE SAID PARTY WERE ENTERED. ALL THE SALES MADE TO THE SAID PARTY WERE AGAINST T HE EXCISE PERMIT. THE TOTAL PAYMENT RECEIVED AGAINST THE SAL E WERE RS.7,94,245/-, CREDITED TO THE RUNNING ACCOUNT. IN ADDITION TO THE SALES COLLECTION, THE ASSESSEE RECEIVED DEALERS HIP DEPOSITS 32 AMOUNTING TO RS.50,000/- ON DIFFERENT DATES AND WER E REFLECTED AS DEALERSHIP DEPOSITS. THE STAND OF THE ASSESSEE IS THAT THE APPELLANT IS HAVING REGULAR BUSINESS DEALI NG WITH HARSH TRADING COMPANY WHICH ISSUED CHEQUES AND ONE SUCH CHEQUE WAS ISSUED ON 19.12.1998 FOR RS. 49,000/- (C HEQUE NO. 29003) AND WAS DEPOSITED IN THE ACCOUNT OF THE ASSESSEE AS A SECURITY DEPOSIT. THERE IS A FINDING IN THE IM PUGNED ORDER, WHICH WAS NOT CONTROVERTED BY THE REVENUE, T HAT THE AO DID NOT ALLOW ADEQUATE TIME TO THE ASSESSEE TO F URNISH NECESSARY EVIDENCE OR CONFIRMATION IN RESPECT OF DE ALERSHIP DEPOSIT AS THE LETTER WAS ISSUED ON 6.3.2002 FOR CO MPLIANCE FOR 13.3.2002 AND THE ORDER WAS PASSED ON 27.3.2002 . M/S PAVAN ENTERPRISES WAS HAVING PERMANENT ACCOUNT NO. AACFP 8790N AND ITS ADDRESS WAS FURNISHED. THE TRA NSACTION WITH THIS PARTY WAS THROUGH BANKING CHANNEL. IT WAS FOUND THAT SHRI SHARMA AFTER MAKING RECOVERY FROM THE ASS ESSEES CUSTOMERS DID NOT REMIT THE AMOUNT, THEREFORE, THE ASSESSEE ASKED THE ASSESSING OFFICER TO ISSUE SUMMONS TO THI S PARTY WHICH WAS NOT ACCEPTED BY THE AO. THE CLAIM OF THE ASSESSEE WAS THAT IT WAS THE DUTY OF THE CONCERNED AO TO ISS UE SUCH SUMMONS UNDER THE PECULIAR SITUATION. SHRI SURESH SHARMA WAS C&F AGENT (DISTRIBUTOR) FOR RAJASTHAN AND WAS E ARNING 33 COMMISSION ON SELLING THE PRODUCTS OF THE ASSESSEE COMPANY. THE PARTIES CONFIRMED THAT THE PAYMENT WAS MADE IN CASH TO SHRI SHARMA AND NO AMOUNT WAS OUTSTANDING TO THE AS SESSEE AS SHRI SHARMA HAS ALREADY COLLECTED. BEFORE THE LE ARNED CIT(A) COPIES OF COMMUNICATION FROM RAJASTHAN WINES , M/S BABUDEEP & PARTY, JAISALMER AND M/S SHYAM WINES WER E FURNISHED. AN FIR WAS ALSO LODGED WITH THE POLICE S TATION ON 6.6.2002 INFORMING THE MISDEEDS OF SHRI SHARMA. AS PER FIR SHRI SHARMA COLLECTED RS. 48 LACS ON BEHALF OF THE ASSESSEE. THEREAFTER THE ASSESSEE COMPANY APPROPRIATED THE SE CURITY AMOUNT AGAINST THE AMOUNT PAYABLE BY SHRI SHARMA WH ICH WAS RS.5.22,306/- AND AFTER THIS ADJUSTMENT SHRI SHARMA WAS DEBTOR FOR RS. 72,306/-. FOR M/S SANDEEP TRADERS CONFIRMATION FROM ASSISTANT COMMISSIONER, STATE EXC ISE WAS CLAIMED TO BE FILED INDICATING THAT M/S SANDEEP TRA DERS WERE DEALING IN INDIAN MADE FOREIGN LIQUOR FOR THE FINAN CIAL YEAR 1998-99. THE LEARNED CIT(A) WAS SATISFIED ABOUT THR EE PARTIES. WE HAVE ALSO CONSIDERED THE FACTS AS NARRA TED IN THE SUBMISSIONS/SYNOPSIS FURNISHED BY THE ASSESSEE AND THE RELEVANT PAGES OF THE PAPER BOOK, ORDER OF THE CIT( A) AND ALSO THE ASSESSMENT ORDER INCLUDING THE COPY OF FIR AND THE CORRESPONDENCE MADE BETWEEN THE PARTIES. THEREFORE, THE 34 CIT(A) IS QUITE JUSTIFIED IN DELETING THE ADDITION OF RS. 50,000/-, RS. 15 LACS AND RS. 4.5 LACS. 29. THE ASSESSEE HAS ALSO FILED A CROSS OBJECTION (CO NO. 78/IND/04) AGAINST THE SUSTAINING OF RS. 28 LACS BY CONTENDING THAT IDENTICAL FACTS WERE DECIDED BY THE TRIBUNAL I N THE CASE OF THE ASSESSEE VIDE ORDER IN ITA NO. 523/IND/04. H OWEVER, WHILE DEALING WITH ITA NO. 433/IND/04 )SUPRA), THE FACTS HAVE ALREADY BEEN NARRATED, HENCE, NOT REPEATED. THE LEA RNED COUNSEL FOR THE ASSESSEE HAS REITERATED THE SUBMISS IONS MADE BEFORE THE LEARNED CIT(A). THE LEARNED CIT DR, ON T HE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE ORDER OF TH E CIT(A). WE FIND THAT FOR M/S SANDEEP TRADERS THE ASSESSEE W AS ASKED TO FURNISH INDEPENDENT EVIDENCE ABOUT REPAYMENT OR CORRESPONDENCE ABOUT OUTSTANDING AMOUNT OF RS.28 LA CS AS NO CONFIRMATION, PAN WAS FURNISHED BY THE ASSESSEE. E VEN THE ASSESSEE COULD NOT FURNISH CORRECT ADDRESS. IN VIE W OF THESE FACTS, WE ARE IN AGREEMENT WITH THE LEARNED CIT(A) THAT IN THE ABSENCE OF CORRECT ADDRESS, EVEN SUMMONS COULD NOT BE SENT, THEREFORE, EVEN THE REQUEST OF THE ASSESSEE TO ISSU E SUMMONS WAS NOT JUSTIFIED. THE IMPUGNED AMOUNT WAS OUTSTAN DING SINCE 31.3.1999 AND SINCE THEN THERE WAS NO CORRESP ONDENCE FOR NON-PAYMENT OF AMOUNT BY THE ASSESSEE. IN VIEW OF THESE 35 FACTS, THE FACT REMAINS THAT THE ADDRESS OF M/S SAN DEEP TRADERS WAS NOT AVAILABLE WITH THE APPELLANT, THERE IS NO CORRESPONDENCE BETWEEN THE PARTIES, INCOME TAX PART ICULARS OF THE PARTY WERE NOT AVAILABLE WITH THE ASSESSEE AND EVEN THE ASSESSEE WAS NOT IN A POSITION TO GET CONFIRMATION FROM THE SAID PARTY. EVEN THE ASSESSEE DID NOT BOTHER TO REC OVER THE AMOUNT IN THE LAST FIVE YEARS. ALTERNATIVELY, THE ASSESSEE WAS AT LIBERTY TO SHOW RS. 28 LACS AS IRRECOVERABLE IN THE BALANCE SHEET. THE LEARNED CIT(A) HAS ALREADY PLACED RELILA NCE ON SOME JUDICIAL PRONOUNCEMENTS WHICH ARE NOT BEING RE PEATED FOR THE SAKE OF REPETITION BEING A MATTER OF RECORD . IN VIEW OF THESE FACTS, WE HAVE NOT FOUND ANY INFIRMITY IN THE IMPUGNED ORDER, THEREFORE, DISMISSED. 30. NOW WE SHALL TAKE UP APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2003-04 AND 2002-03 (ITA NO. 722/IN D/06) AND 723/IND/06, RESPECTIVELY) WHEREIN FOLLOWING GRO UNDS HAVE BEEN RAISED :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED CIT(A) ERRED IN GRANTING RELIEF TO THE TUNE OF RS.45,94,363/- AND RS.4,34,300/- RESPECTIVELY ON ACCOUNT OF DISALLOWANCE MADE U/S 43B OF THE ACT UNDER THE HEAD PAYMENT OF EMPLOYEES AND EMPLOYEES CONTRIBUTION. 2. FURTHER ERRED IN GRANTING RELIEF OF RS.54,50,174 /- AND RS.23,44,094/-, RESPECTIVELY,OUT OF THE HEADS 36 SALES PROMOTION, ADVERTISEMENT AND PUBLICITY EXPENSES. DURING HEARING OF THESE APPEALS, THE LEARNED RESPEC TIVE COUNSELS CONTENDED THAT THE FACTS AND THE ARGUMENTS ARE IDENTICAL TO ITA NO. 720 & 721/IND/06. SINCE THE FA CTS ARE IDENTICAL, AS CANVASSED BY BOTH THE PARTIES ALSO, T HEREFORE, OUR AFORESAID ORDER/REASONING WILL BE APPLICABLE TO THESE APPEALS ALSO, THEREFORE, BOTH THESE GROUNDS OF THE REVENUE ARE PARTLY ALLOWED. THUS, THESE APPEALS ARE PARTLY ALLOWED. 31. NOW WE SHALL TAKE UP CROSS OBJECTION NOS. 4 AN D 5/IND/07 ARISING OUT OF ITA NOS. 722 AND 723/IND/06 . THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE FINDING I N THE IMPUGNED ORDER IS INCORRECT, CONSEQUENTLY, UPHOLDIN G THE ASSESSMENT ORDER IN MAKING THE ADDITION OF RS.3,97, 150/- AND RS.9,66,580/- RESPECTIVELY ON ACCOUNT OF DONATION P AID AND CLAIMED U/S 37 OF THE ACT WAS UNJUSTIFIED AS THE SA ME WERE INCURRED FOR BUSINESS PURPOSES. IT WAS POINTED OUT THAT THE IMPUGNED ISSUE IS COVERED BY ITA NO. 478/IND/05. O N THE OTHER HAND, THE LEARNED CIT DR POINTED OUT THAT THE ISSUES ARE COVERED AGAINST THE ASSESSEE BY THE ORDER IN CO NO. 29/IND/06. 37 32. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON FILE. KEEPING IN VIEW THE ARGUMENTS ADVANCED BY THE LEARNED RESPECTIVE COUNSELS ON THE IMPUGNED ISSUE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION OF ORDER DATED 15 TH MAY, 2009 IN CO NO. 29/IND/06 (ARISING OUT OF ITA NO. 129/IND/06) FOR THE ASSESSMENT YEAR 2001 -02 :- C.O. NO. 29/IND/2006 12. GROUND NOS. 1 TO 3 AND 6 HAVE NOT BEEN PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THEREFORE, THE SAME ARE DISMISSED. 13. GROUND NOS. 4 & 5 ARE INTER-LINKED, WHICH READ AS UNDER :- 4) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND THE LAW THE LEARNED LOWER AUTHORITIES ERRED AND WERE NOT JUSTIFIED IN MAKING/SUSTAINING ADDITION OF RS.4,34,642/- ON ACCOUNT OF DONATION PAID AND CLAIMED U/S 37 AS THE SAME WERE INCURRED OF BUSINESS PURPOSES. THE SAID ADDITION BEING ARBITRARY, UNLAWFUL AND BAD IN LAW REQUIRES TO BE DELETED. 5) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND THE LAW THE LEARNED LOWER AUTHORITIES ERRED AND WERE NOT JUSTIFIED IN ALLOWING PROPER DEDUCTION U/S 80-G FOR DONATION PAID TO INSTITUTION S HAVING EXEMPTION UNDER THE SAID SECTION. 14. BOTH THE GROUND OF APPEAL HAVE BEEN DECIDED WH ILE DEALING WITH GROUND NO. 2 OF THE REVENUES APPEAL. AS NO FURTHER DETAILS WERE FURNISHED EXCEPT THE CLAIM OF RS.4,34,642/- MADE AT PAGE 1 OF THE PAPER BOOK. SINCE LEARNED AUTHORISED REPRESENTATIVE COULD NOT POINT OUT THAT HOW THE ORDER OF THE CIT(A) IS ERRONEOUS TO THE EXTENT CLAIMED BY IT AS ALLOWABLE DEDUCTION U/S 37 OF THE INCOMETAX ACT, 1961. SINCE 38 NO SUBMISSION HAS BEEN MADE IN THIS REGARD, THEREFORE,BOTH THE GROUND OF APPEAL ARE DISMISSED. 15. IN THE RESULT, THE CROSS OBJECTION IS DISMISSE D. THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY SUBMITT ED THAT THE ISSUES RAISED IN THESE CROSS OBJECTIONS WERE COVERED AGAIN ST THE ASSESSEE VIDE ORDER DATED 15.5.2009 OF THE TRIBUNAL IN THE ASSESS EES OWN CASE FOR THE ASSESSMENT YEAR 2001-02 IN CROSS OBJECTION NO. 29 ARISING OUT OF ITA NO.129/IND/06, THEREFORE, THESE CROSS 0BJECTIONS AR E DISMISSED. IN THE RESULT, APPEAL IN ITA NO. 434/IND/04 IS DISMISSED CO NO. 79/IND/04 IS PARTLY ALLOWED. APPEALS IN ITA NOS. 720 & 721/IND/06 ARE PARTLY ALL OWED. APPEAL IN ITA NO. 433/IND/04 IS DISMISSED. CO NO. 78/IND/04 IS DISMISSED. APPEALS IN ITA NOS. 722 & 723/IND/06 ARE PARTLY ALL OWED. C.O. NOS. 4 & 5/IND/07 ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29 TH DECEMBER, 2009. SD SD (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29.12.2009 39 {VYAS} COPY TO: APPELLANTS/RESPONDENTS/CIT/ CIT(A)/DR
