M/s D.S.Purbhudas & Co., Mumbai V. The DCIT Cent Cir - 38, Mumbai

ITA 7810/MUM/2003

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49308 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-12-2009
• Assessment Year: misc
• Appeal Filed On: 09-12-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATTE
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS. 7809 & 7810/MUM/2003 (ASSESSMENT YEARS: 1998-99 & 1999-2000) M/S. D.S. PURBHOODAS & CO. DCIT, CENTRAL CIRCLE 38 1103, STOCK EXCHANGE TOWER C-10, 6TH FLOOR, PRATYKS HAKAR DALAL STREET, MUMBAI 400001 VS. BHAVAN, BANDRA-KURLA COMPLEX PAN - AAAFD 26711 K BANDRA (E), MUMBAI 400051 APPELLANT RESPONDENT APPELLANT BY: SHRI NIRAJ SHETH RESPONDENT BY: SHRI D. SONGATTE O R D E R PER R.S. PADVEKAR, J.M. IN THESE APPEALS ASSESSEE HAS CHALLENGED RESPECTIVE IMPUGNED ORDERS OF THE CIT(A), CENTRAL VI, MUMBAI DATED 08.09.2003 FOR ASSESSMENT YEARS 1998-99 & 1999-2000. 2. WE FIRST TAKE UP THE APPEAL FOR A.Y. 1998-99. ASSES SEE HAS FILED CONCISE GROUNDS AS FOLLOWS: - 1 ` `` ` 30,63,270/- ADDITION IN RESPECT OF BAD DELIVERY, ET C. AS UNEXPLAINED CREDIT . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOL DING THE ADDITION OF ` 30,63,270/- BY TREATING THE LIABILITY TOWARDS SUNDR Y CREDITORS AS UNEXPLAINED CREDIT UNDER SECTION 68. WITHOUT PREJUDICE HE OUGHT TO HAVE GIVEN RELIEF IN RESPECT OF CREDITS OF EARLIER YEARS. 2. ` `` ` 7,77,248/0 ADDITION IN RESPECT OF SUNDERY CREDITORS ON REVERSAL OF UNENCASHED CHEQUES AS UNEXPLAINED CREDIT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOL DING AN ADDITION OF ` 7,7,248/- BY TREATING THE LIABILITY TOWARDS SUNDRY CREDITORS RESULTING ON ACCOUNT OF REVERSAL OF UNENC AHSED CHEQUES ISSUED TO PARTIES AS UNEXPLAINED CREDIT. WITHOUT PREJUDICE, HE OUGHT TO HAVE GIVEN RELIEF I N RESPECT OF CREDITS OF EARLIER YEARS. ITA NOS. 7809 & 7810/MUM/2003 M/S. D.S. PURBHOODAS & CO. 2 3. ` `` ` 28528/- INTEREST LEVIED U/S 234A ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOL DING LEVY OF INTEREST UNDER SECTION 234A OF THE ACT AMOUNTING TO ` 28,528/-. 3. THE FIRST ISSUE IS IN RESPECT OF ADDITION OF ` 30,63,270/- TOWARDS BAD DELIVERY. BRIEFLY STATED FACTS REVEALED FROM THE RE CORD ARE THAT ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF SHARE AND FOREIGN EXC HANGE BROKING. RETURN FILED BY THE ASSESSEE FIRM WAS SELECTED FOR SCRUTIN Y AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. THE A.O. FOUND THAT IN THE BALANCE SHEET AND AMOUNT OF ` 69,02,823/- WAS SHOWN AS SUNDRY CREDITORS UNDER THE HEAD CURRENT LIABILITIES. ASSESSEE STAT ED THAT A SUM OF ` 22,61,246/- WAS TOWARDS BAD DELIVERIES, ` 10,02,024/- WAS ON ACCOUNT OF BAD DELIVERY OF SALES AND OTHER CREDITS OF VARIOUS PARTIES INCLUDING BROKERS BAD DELIVERY, ETC. ASSESSEE ALSO EXPLAINED REASONS FOR BAD DELIVERIES. THE EXPLANATION OF THE ASSESSEE IS REPRODUCED BY THE A. O. AS UNDER: - THE FIRM DOES NOT CARRY OUT ANY OF ITS OWN TRADING ACTIVITY BUT ONLY PURCHASES AND SELLS ON BEHALF OF ITS CLIENT. DURIN G THE STOCK EXCHANGE TRANSACTION IT MAY SO HAPPEN THAT FULL QUA NTITY OF THE SECURITIES PURCHASED ON BEHALF OF THE CLIENT MAY NO T BE DELIVERED BY THE EXCHANGE TO THE PURCHASING BROKER AS THE SELLIN G/DELIVERING BROKER MIGHT HAVE DEFAULTED ON THE RELEVANT SETTLEM ENT DATE. IN SUCH CASES THE PURCHASING BROKER WOULD END UP WITH SHORT AGE WHICH IS TO BE MET BY THE BROKER BY PURCHASING IN AUCTION. THE AUCTION RATES ARE GENERALLY HIGHER THAN THE NORMAL RATES AND HENCE TH E PURCHASING BROKER HAS TO INCUR THE ADDITIONAL EXPENDITURE WHIC H BECOMES PAYABLE TO HIM BY THE SELLING BROKER WHO HAS DEFAUL TED BY GIVING THE SECURITIES SHORT. IN SOME OTHER CASES SOME OF THE S HARES DELIVERED MAY BECOME A BAD DELIVERY DUE TO VARIOUS REASONS WH ICH HAVE TO BE RECTIFIED AND FRESH SHARES TO BE GIVEN TO THE CLIEN T. HOWEVER A SITUATION WILL ARISE WHEN A BROKER CANNOT RECTIFY T HE DEFECT BY HIM ON THE EXCHANGE WHICH HAVE BEEN RETURNED TO HIM BY THE BUYER AS BAD DELIVERY. IF REQUI8RED SHARES CANNOT BE PURCHASED I N AUCTION THEN THE DELIVERY IN RESPECT OF SUCH SHARES IS CLOSED OUT BY THE EXCHANGE. IN SUCH AN EVENT THE DELIVERY IN RESPECT OF SUCH SHARE S IS CLOSED OUT AT APPROXIMATELY 20% MORE THAN THE STANDARD RATE. IN C ASE OF SUCH CLOSING OUT, THE PURCHASING BROKER WOULD, INSTEAD O F RECEIVING THE SHARES OR SECURITIES, RECEIVE AN AMOUNT EQUIVALENT TO THE CLOSING OUT PRICE AND, IN TURN, SUCH CLOSING OUT PRICE WOULD BE PAID BY THE BROKER TO HIS CLIENT IN LIEU OF THE PURCHASED SECURITIES. SOMETIMES THE CLIENTS WONT ACCEPT THE MONEY BUT WO ULD INSIST ON THE DELIVERY OF THE SHARES AS PER THE CONTRACT RATE . IN CASE OF SUCH CONTINGENCY THE BROKER HAS TO PURCHASE THE SHARES F ROM THE MARKET AND DELIVER THE SAME TO THE CLIENT. IN SUCH A SITUA TION AS FAR AS THE ITA NOS. 7809 & 7810/MUM/2003 M/S. D.S. PURBHOODAS & CO. 3 CLIENT IS CONCERNED HIS CONTRACT HAS BEEN FULFILLED ON RECEIVING THE SHARES. CONSEQUENTLY THE FIRM EITHER RETAINS THE BA D DELIVERY SHARES WHICH ARE MADE GOOD OR THE DIFFERENCE AMOUNT OF AUC TION AND THE CONTRACTED PRICE. SOMETIMES SOME OF THE RIGHTS, DIV IDENDS DECLARED DURING THE INTERMITTENT PERIOD ARE GIVEN TO THE BRO KERS. ORDINARILY THE LOSS OF PROFIT ON THESE DEALS IS ON ACCOUNT OF THE CLIENT. SINCE THE AMOUNTS RECEIVED FROM THE EXCHANGE ON CLOSED OUT DE ALS ARE RECEIVED IN RELATION TO THE PURCHASES OF THE CLIENT IN THE F IRMS ACCOUNT, THEY ARE CREDITED TO THE BAD DELIVERY ACCOUNT TO BE PAID TO RESPECTIVE CLIENTS AS AND WHEN CLAIMED . 4. IN SUM & SUBSTANCE OF ASSESSEES CONTENTION WAS THA T THE BROKERS GIVE BAD DELIVERY SHARES TO THE SELLING BROKERS WHO IN T URN MAKE THE SHARES GOOD AFTER GETTING THE DEFICIENCY REMOVED BY THE SELLING CLIENTS. IF THE DEFICIENCY IS NOT REMOVED, THE RESPONSIBILITY OF MAKING GOOD DELI VERY IS THAT OF THE SELLING CLIENT AND NOT OF THE BROKER. THE A.O. WAS NOT IMPR ESSED WITH THE EXPLANATION OF ASSESSEE. IN THE OPINION OF THE A.O. , THOUGH THE ASSESSEE WAS DEBITING ADDITIONAL AMOUNTS, IF NOT, PAID DURING TH E YEAR BY WAY OF REFLECTING THE SAME IN THE PURCHASE PRICE OF THE STOCK BUT HE WAS NOT CREDITING THE DIFFERENCE TO THE P & L ACCOUNT. INSTEAD HE WAS TAK ING IT TO THE SUNDRY CREDITORS ACCOUNT BY STATING THAT THE AMOUNTS ARE T O BE PAID TO THE RESPECTIVE CLIENTS AS AND WHEN THEY ARE ACCRUED BUT IS NOT CREDITING THE PROFITS RELATING TO THE BACK DATES. THE A.O., THERE FORE, REJECTED THE METHOD FOLLOWED BY THE ASSESSEE AS IN HIS VIEW THE SAID ME THOD WAS WRONG. THE A.O. MADE AN ADDITION OF ` 30,63,270/- ( ` 10,02,024 + ` 20,61,246) ON THE REASON THAT ASSESSEE COULD NOT GIVE THE DETAILS OF SUNDRY CREDITORS OF BAD DELIVERY CELLS AND BAD DELIVERY SUNDRY CREDITORS. ASSESSEE C HALLENGED THE ADDITION BEFORE THE LEARNED CIT(A) BUT WITHOUT SUCCESS AS TH E ADDITION WAS CONFIRMED BY THE LEARNED CIT(A). THE LEARNED CIT(A) HAS OBSER VED THAT THE ASSESSEE ALSO PREFERRED THE THEORETICAL APPROACH BUT DID NOT PROVE THE ACTUAL LIABILITY. IN THE OPINION OF THE LEARNED CIT(A) THE FOLLOWING ASPECTS WERE NEED TO BE CONSIDERED: - A) WHAT HAPPENS WHEN SELLING BROKER COMPENSATES TH E ASSESSEE EITHER BY DELIVERING GOOD SHARES OR MAKING PAYMENT, THROUGH THE STOCK EXCHANGE, TO THE BUYING BROKER WHICH IN THE P RESENT CASE IS THE APPELLANT? THIS IS IMPORTANT PARTICULARLY WHEN IT I S CLAIMED BY THE APPELLANT THAT HE SATISFIED HIS CLIENTS BY PURCHASI NG SHARES FROM THE MARKET AND GIVING DELIVERY OF THE SAME TO THE CLIEN T IN PERFORMANCE OF THE CONTRACT ENTERED WITH THEM. AS THE CLIENT HAS A LREADY BEEN SATISFIED, THE SHARES OR COMPENSATION RECEIVED FROM THE SELLING BROKER ITA NOS. 7809 & 7810/MUM/2003 M/S. D.S. PURBHOODAS & CO. 4 REMAINS WITH THE APPELLANT. IT IS ALSO IMPORTANT TO APPRECIATE THAT WHATEVER SHARES THE APPELLANT BUYS FROM THE OPEN MA RKET TO SATISFY ITS CLIENTS, IN ACCORDANCE WITH THE CONTRACT NOTE, SUCH EXPENSES ARE DEBITED IN THE PROFIT AND LOSS ACCOUNT. IN SUCH SIT UATION, THE RECTIFIED SHARES RECEIVED FROM THE SELLING BROKER OR THE PRIC E RECEIVED FROM THE SELLING BROKER SHOULD BE CREDITED TO THE PROFIT AND LOSS ACCOUNT. THE APPELLANT HAS NOT DONE SO, AS IT APPEARS FROM THE I NFORMATION FURNISHED BY THE APPELLANT. B) IT IS NOT EXPLAINED BY THE APPELLANT AS HOW CLO SING OUT PRICES ARE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. C) WHAT HAPPENS WHEN THERE IS A PRICE DIFFERENCE AS ON THE DATE OF CONTRACT WITH THE CLIENT AND WHEN THE RECTIFIED SHARES ARE RECEIVED BY THE APPELLANT FROM THE SELLING BROKER THROUGH TH E STOCK EXCHANGE AND HOW THAT DIFFERENCE IS ACCOUNTED FOR? D) IT IS AN ADMITTED FACT THAT WHEN THE APPELLANT G ETS RECTIFIED GOOD SHARES FROM THE SELLING BROKER, THE EXPENSES A RE DEBITED IN THE PROFIT AND LOSS ACCOUNT BUT WHEN SUCH SHARES ARE SO LD THE APPELLANT EITHER EARNS PROFIT OR INCURS LOSS. THIS IS BEING A LREADY TAKEN CARE OF BY THE APPELLANT. THERE REMAINS NO JUSTIFICATION TO NOT TO ACCOUNT FOR THE VALUE OF CREDITS APPEARING IN THE ACCOUNTS MAIN TAINED UNDER THE CAPTION, BAD DELIVERY CELL. SUCH CREDIT IS OBVIOU SLY TAXABLE AS IT IS A GAIN TO THE APPELLANT PARTICULARLY WHEN THE CLIENT HAS ALREADY BEEN SATISFIED AND WHATEVER THE EXPENSES INCURRED IN THE PROCESS ARE SEPARATELY ACCOUNTED FOR. E) MONEY RECEIVED OR VALUE OF THE SHARES RECEIVED I S INCOME OF THE APPELLANT UNLESS THE MONEY IS PAID TO THE CLIEN TS OR THE VERY SAME SHARES ARE DELIVERED TO THE CLIENTS. PROVISIONS OF SECTION 28(I) OF THE I.T. ACT ARE APPLICABLE IN SUCH CASE. F) IT IS REPEATEDLY SUBMITTED BY THE COUNSEL OF T HE APPELLANT THAT ORDINARILY THE LOSS OR PROFIT IN THE CASE OF BAD DE LIVERY WOULD BE TO THE ACCOUNT OF THE CLIENT. IF THIS IS THE POSITION, THE N, IT IS FOR THE APPELLANT TO EXPLAIN THAT HOW THE AMOUNTS RECEIVED FROM THE S ELLING BROKER/ STOCK EXCHANGE WERE NOT IMMEDIATELY SENT OR DELIVER ED TO THE CLIENTS. IT IS SEEN THAT THE AMOUNTS ARE LYING WITH THE APPE LLANT FOR QUITE A LONG TIME AND THERE IS NO REASON WHY THE SAME ARE N OT REMITTED TO THE CLIENTS. DURING THE COURSE OF THE HEARING OF THE AP PEAL, AT ONE STAGE, IT WAS SUBMITTED THAT THE MONIES WERE REMITTED TO THE CLIENTS IF THE CLIENTS ASKED FOR THE SAME. IF IT IS THE POSITION, THEN, CLEARLY IT IS THE INCOME OF THE APPELLANT. THE APPELLANT HAS ALSO ADM ITTED THIS FACT BY SUBMITTING THAT IN THE SUBSEQUENT YEARS, SUCH OUTST ANDING CREDITS PAYABLE TO THE CLIENTS HAVE BEEN OFFERED FOR TAXATI ON. G) IT IS ALSO RELEVANT TO NOTE THAT DURING THE COUR SE OF HEARING OF THE APPEAL, THE APPELLANT COULD NOT FURNISH THE ITE MS OF CREDITS WHICH TOTALLED TO THE AMOUNT OF ` 30,63,270/- SHOWN AS SUNDRY CREDITORS IN THE BALANCE SHEET. ITA NOS. 7809 & 7810/MUM/2003 M/S. D.S. PURBHOODAS & CO. 5 5. FINALLY THE LEARNED CIT(A) CONCLUDED THAT IN THE LI GHT OF THE ABOVE ASPECTS, ANY LOSS INCURRED IN THE PROCESS OF MAKING THE DELIVERY GOOD TO THE CLIENTS IS A LOSS TO THE ASSESSEE AND SUCH INCOME A ND LOSS SHOULD BE ADJUSTED EACH YEAR AND THAT SHOULD BE TAXED AS INCO ME OF THE ASSESSEE EVERY YEAR. IN HIS OPINION THE A.O. HAS EXACTLY DONE THE SAME AND HENCE THE ADDITION WAS JUSTIFIED. 6. WE HAVE HEARD THE PARTIES. WE ALSO PERUSED THE RECO RD BEFORE US. 7. THE LEARNED COUNSEL REFERRED TO THE PAPER BOOK AND SUBMITS THAT EACH AND EVERY DETAILS OF THE BAD DELIVERY ARE GIVEN TO THE A.O. HE FURTHER SUBMITS THAT BOTH THE AUTHORITIES BELOW HAVE NOT PR OPERTY APPRECIATED THE METHOD ADOPTED BY THE ASSESSEE IN RESPECT OF BAD DE LIVERY CELLS AND BAD DELIVERY SUNDRY CREDITORS. THE LEARNED COUNSEL ALSO VEHEMENTLY ASSERTED THE ORDER OF THE A.O. AS WELL AS LEARNED CIT(A) AND SUB MITS THAT THOUGH EACH AND EVERY DETAILS WERE FILED BEFORE BOTH THE AUTHOR ITIES BUT THEY HAVE PREFERRED TO BE SILENT ON THE IMPORTANT DETAILS AND PASSED THE ORDERS. HE FURTHER SUBMITS THAT BOTH THE AUTHORITIES HAVE NOT DISPUTED THAT WHILE DEALING WITH THE SHARE TRANSACTIONS THERE ARE BAD D ELIVERIES AND THE METHOD FOLLOWED BY THE ASSESSEE IS APPROPRIATE METHOD. HE FURTHER SUBMITS THAT THE ADDITION IS MADE IN RESPECT OF THE OPENING BALANCE AND THAT IS NOT PERMISSIBLE UNDER SECTION 68. HE FURTHER SUBMITS TH AT THE MATTER MAY GO BACK TO THE A.O. FOR FRESH ADJUDICATION AFTER CONSI DERING THE DETAILS FILED BY THE ASSESSEE AND ALSO THE A.O. SHOULD CONSIDER WHET HER THE ADDITION CAN BE MADE UNDER SECTION 68 IN RESPECT OF OPENING BALANCE . 8. WE FIND THAT ASSESSEE IS IN THE BUSINESS OF SHARE B ROKING. WE FURTHER FIND THAT THERE IS AN OPENING BALANCE OF ` 9,44,354/- IN BAD DELIVERY CELL ACCOUNT (8002). WE FURTHER FIND THAT THE FACT OF BA D DELIVERY HAS NOT BEEN DENIED BY BOTH THE AUTHORITIES IN THE BUSINESS OF S HARE BROKING. THE ONLY RESERVATION BY THE AUTHORITIES BELOW IS THAT ASSESS EE FAILED TO PROVE THE FACTUM OF BAD DELIVERY. WE, THEREFORE, CONSIDER IT FIT, AS REQUESTED BY THE LEARNED COUNSEL, TO RESTORE THE MATTER TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION. ASSESSEE HAS ALSO FILED SOME ADDITION AL EVIDENCES. WE DO NOT MAKE ANY COMMENTS ON THE SAME. WE DIRECT THE A.O. T O CONSIDER THE SAME. ACCORDINGLY GROUND NO. 1 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 7809 & 7810/MUM/2003 M/S. D.S. PURBHOODAS & CO. 6 9. GROUND NO. 2 IS IN RESPECT OF ADDITION OF ` 7,77,248/-. 10. WE HAVE HEARD BOTH THE PARTIES. 11. IT WAS NOTICED BY THE A.O. THAT ASSESSEE HAS SHOWN AN AMOUNT OF ` 7,77,248/- AS ENCASHED CHEQUES. THE A.O. SOUGHT EXP LANATION OF THE ASSESSEE. ASSESSEE EXPLAINED THAT VARIOUS AMOUNTS P AYABLE TO THE CLIENTS ON ACCOUNT OF DIFFERENCE BETWEEN THE STANDARD PRICE AN D BUYING PRICE, ON ACCOUNT OF DIVIDEND, ETC. WAS PASSED ON TO THE CLIE NTS BY CHEQUES WHICH WERE NOT ENCASHED BY THEM. IT APPEARS THAT THE ASSE SSEE COULD GIVE DETAILS OF ENCASHED CHEQUES TO THE EXTENT OF ` 2,66,027/- IN RESPECT OF THE CHEQUES ISSUED ABOVE ` 10,000/-. THE A.O. HAS ALSO NOTED THAT THE CHEQUES ISSUES EVEN IN F.Y. 1994-95 WERE NOT ENCASHED BY THE PARTI ES. THE A.O. WAS OF THE VIEW THAT THE NATURE OF THE SAID LIABILITY WAS ON T HE SAME LINE AS THAT OF BAD DELIVERIES AND GENUINENESS OF THE LIABILITIES WAS Q UESTIONABLE. HE THEREFORE MADE ADDITION OF ` 7,77,248/-. THE LEARNED CIT(A) CONFIRMED THE ADDITI ON. 12. THE LEARNED COUNSEL SUBMITS THAT THIS ISSUE ALSO MA Y GO BACK TO THE A.O. HE FURTHER SUBMITS THAT THE A.O. HAS NOT CONSI DERED THE IMPORTANT ASPECT THAT THE AMOUNT OF ` 7,77,248/- REPRESENT THE AMOUNT OF CHEQUES ISSUED TO THE PARTIES PRIOR TO MORE THAN SIX MONTHS IN CONNECTION WITH HIS BUSINESS, WHICH WAS REVERSED AND REFLECTED AS SUNDR Y CREDITORS. 13. WE ALSO HEARD THE LEARNED D.R. 14. IN OUR OPINION PROPER FACTS ARE NOT BROUGHT ON RECO RD BY BOTH THE AUTHORITIES. WE, THEREFORE, CONSIDER IT FIT TO REST ORE THE ISSUE TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION. ACCORDINGLY THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE IS SET ASIDE. GROUND NO. 2 IS RESTORED T O THE FILE OF THE A.O. FOR FRESH ADJUDICATION TO BRING ALL THE FACTS ON RECORD AND ACCORDINGLY DECIDE THE SAME. 15. GROUND NO. 3 IS IN RESPECT OF INTEREST CHARGED UNDE R SECTION 234A. THE LEARNED COUNSEL SUBMITS THAT IT IS CONSEQUENTIA L. 16. NOW WE TAKE UP THE APPEAL FOR A.Y. 1999-2000. ASSES SEE HAS FILED THE FOLLOWING CONCISE GROUND IN THE APPEAL: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOL DING THE ITA NOS. 7809 & 7810/MUM/2003 M/S. D.S. PURBHOODAS & CO. 7 ADDITION OF ` 15,87,666/- BY TREATING THE LIABILITY TOWARDS SUNDR Y CREDITORS AS UNEXPLAINED CREDIT UNDER SECTION 68. 2. THE APPELLANT SUBMITS THAT THE LEARNED DEPUTY CO MMISSIONER OF INCOME-TAX BE DIRECTED: (A) TO BE DELETE THE ADDITION OF A SUM OF RS.15,87, 666/- IN RESPECT OF BAD DELIVERY, ETC. AS UNEXPLAINED CREDITS. (B) WITHOUT PREJUDICE TO (I)(A) ABOVE, TO RESTRICT THE ADDITION TO A SUM OF RS.5,85,642/-. 17. WE HAVE HEARD THE PARTIES. 18. THE LEARNED COUNSEL SUBMITS THAT THIS YEAR ALSO THE FACTS ARE IDENTICAL AS IN A.Y. 1998-99 AND THE ISSUE OF ADDITION OF ` 15,87,666/- MAY BE REMITTED BACK TO THE FILE OF THE A.O. FOR FRESH ADJ UDICATION. 19. WE ALSO HEARD THE LEARNED D.R. 20. WE FIND THAT THE FACTS PERTAINING TO THE GROUND TAK EN BY THE ASSESSEE IN RESPECT OF ADDITION OF ` 15,87,666/- IS IDENTICAL AS IN A.Y. 1998-99. THE CLAIM OF THE ASSESSEE IN RESPECT OF BAD DELIVERY HA S BEEN REJECTED BY THE A.O. AS WELL AS THE LEARNED CIT(A) ON REASONS THAT REQUI SITE DETAILS NOT FILED. WHILE DECIDING THE APPEAL FOR A.Y. 1998-99 WE HAVE RESTORED THE IDENTICAL ISSUE TO THE FILE OF THE A.O. FOR FRESH ADJUDICATIO N. WE ACCORDINGLY, IN THIS YEAR ALSO, RESTORE THIS ISSUE TO THE FILE OF THE A. O. FOR FRESH ADJUDICATION IN THE LIGHT OF THE DIRECTION GIVEN IN A.Y. 1998-99. 21. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE 2011. SD/- SD/- (S.V. MEHROTRA) (R.S. PADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30 TH JUNE 2011 ITA NOS. 7809 & 7810/MUM/2003 M/S. D.S. PURBHOODAS & CO. 8 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CENTRAL VI, MUMBAI 4. THE CIT CENTRAL III, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.