The ACIT, Circle-5, Ahmedabad V. M/s. Rajesh Malleables Ltd., Ahmedabad

ITA 802/AHD/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8473 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 01-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Keywords: Unexplained cash credit; Source of fund; Additional evidence; Assessment record; Commercial expediency; Set aside
• Section: 201; 208; 64; 43; 72; 13; 68; 69; 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ITA NO. 802/AHD/2016 ( /ASSESSMENT YEAR: 2003-04 ) THE DCIT CIRCLE-3(1) AHMEDABAD / VS. M/S.RAJESH MALLEABLES LTD. C/O. ANUJ MEHTA NANDANVAN OPP. SHAPATH-IV, NR. KARNAVATI CLUB SG HIGH WAY AHMEDABAD - 380 051 ./ ./PAN/GIR NO. : AABCR 0270 K ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI L.P. JAIN, SR.DR / RESPONDENT BY: SHRI ANIL KSHATRIYA / DATE OF HEARING 24/10/2019 / DATE OF PRONOUNCEMENT 20/01/2020 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS)9, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-9 /93/ITAT/10-11 DATED 04/01/2016 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.144 OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'TH E ACT') DATED 17/02/2006 RELEVANT TO ASSESSMENT YEAR (AY) 2003-04. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 2 - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.4,48,03,196/- MADE ON ACCOUNT OF UNEXPLAINED LOA NS U/S.68 OF THE ACT. 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THE FACTS THAT AS PER THE TAX AUDIT REPORT, LOAN OF RS.1,CRORE FROM R AMPION EYETECH PVT.LTD., RS.18,54,000/- FROM SHRI SUNIL K JAIN, HUF, RS.1,27 ,626/- FROM SHRI ANUJ R MEHTA WERE SHOWN TO HAVE BEEN RECEIVED OTHERWISE TH AN BY ACCOUNT PAYEE CHEQUES/DRAFTS AND THE ASSESSEE HAD FAILED TO PRODU CE BANK ACCOUNTS TO ENABLE THE A.O. TO VERIFY THE GENUINENESS OF THE TRANSACTI ONS. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THAT THE LOANS AMOUNTING TO RS.1,21,00,000/- WERE SQUIRED UP DURIN G THE YEAR AND THE ASSESSEE HAS FAILED TO FURNISH DOCUMENTARY EVIDENCE S TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE LEN DERS. 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT CONSIDERING THE FACTS THAT THE ASSESSEE FAILED TO FURNISH RELEVANT EVIDENCES IN SU PPORT OF LOAN AMOUNTING TO RS.10,00,000/- SHOWN IN THE NAME OF VISHAL AGENCIES IN TAX AUDIT REPORT. 5. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.11,23,686/- MADE U/S.36(1)(III) ON ACCOUNT OF DI SALLOWANCE OF INTEREST EXPENSES. 6. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS BY NOT APPRECIATING THAT WHEN THE ASSESSEE ITSELF HAD BECOME SICK, THERE CANNOT BE AN Y EXPEDIENCY IN GIVING INTEREST FREE LOAN TO SUBSIDIARY. 7. THE LD.CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.2,21,082/- MADE ON ACCOUNT OF FOREIGN TRAVEL EXPENSES WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE COULD NOT ESTABLISH THE BUSINESS PURPOSE OF THE VISIT. 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 9. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD.C OMMISSIONER OF INCOME TAX (A) MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. THE INTERCONNECTED ISSUE RAISED BY THE REVENU E IN GROUND NOS. 1 TO 4 IS THAT THE LEARNED CIT (A) ERRED IN DELETING THE ADDI TION MADE BY THE AO FOR RS. 4,48,03,196/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN T HE PRESENT CASE IS A LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF MANUFACTURIN G & DEALING IN GIP PIPES FITTING, PLASTIC PLANTER, TRADING IN BARREL N IPPLE AND PVC RESIN. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS SHOWN UNSECURED LOAN AMOUNTING TO RS. 4,48,03,196/- IN ITS FINANCIAL STA TEMENT AS ON 31 MARCH 2003. THE AO DURING THE ASSESSMENT PROCEEDINGS REQU IRED THE ASSESSEE TO ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 3 - FURNISH THE NECESSARY DETAILS ABOUT SUCH UNSECURED LOAN FOR THE PURPOSE OF VERIFICATION. BUT THE ASSESSEE FAILED TO DO SO. ACC ORDINGLY THE AO TREATED THE SAME AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARN ED CIT (A). 3.2. THE ASSESSEE BEFORE THE LEARNED CIT (A) SUBM ITTED THAT IT HAS RECEIVED FRESH UNSECURED LOAN IN THE YEAR UNDER CONSIDERATIO N AMOUNTING TO RS. 2,41,28,949/- ONLY. THE ASSESSEE FURTHER FILED THE DETAILS OF THE PARTIES FROM WHOM IT HAS TAKEN THE UNSECURED LOAN AS DETAILED UN DER: S.NO . PARTY NAME UNSECURED LOAN AMOUNT A) M/S RAMPION EYETCH PVT LTD. 2,00,00,000 /- B) SUNIL KUMAR K JAIN HUF 9, 84,000/- C) SHRI ANUJ R MEHTA 31,44,949/- 3.3. THE ASSESSEE IN SUPPORT OF ABOVE LOAN HAS FU RNISHED THE FOLLOWING DETAILS: I. IN THE CASE OF RAMPION EYETECH PVT.LTD. A) ASSESSMENT ORDER OF THE SAME AY OF RAMPION EYETECH PVT LTD. B) LEDGER COPY OF THE ASSESSEE IN BOOKS OF ACCOUNT OF THE RAMPION EYETECH PVT. LTD. C) CONFIRMATION ALONG WITH PAN AND ADDRESS OF THE PART Y. D) COPY OF ITR OF RAMPION EYETECH PVT. LTD. II. SUNIL KUMAR K JAIN HUF A) CONFIRMATION ALONG WITH PAN AND ADDRESS OF THE PART Y. B) LEDGER COPY OF THE ASSESSEE IN THE BOOKS OF ACCOUNT OF PARTY. ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 4 - C) COPY OF THE ITR OF SHRI SUNIL KUMAR K JAIN HUF III. ANUJ R. MEHTA A) CONFIRMATION ALONG WITH PAN AND ADDRESS OF THE PART Y. B) COPY OF THE ITR OF SHRI R. MEHTA 3.4 THE LD.CIT (A) CALLED FOR THE REMAND REPORT O N THE SUBMISSIONS/DETAILS FILED BY THE ASSESSEE FROM THE AO WHO SUBMITTED AS UNDER: I. THE ASSESSEE HAS TAKEN LOAN IN THE YEAR UNDER CONSI DERATION AMOUNTING TO RS. 3,89,81,726/- AS EVIDENT FROM THE TAX AUDIT REPORT. OUT OF SUCH LOAN, THE ASSESSEE HAS SQUARED UP THE LOAN FOR RS. 1,21,00,000/- IN THE YEAR UNDER CONSIDERATI ON. THUS THE FRESH LOAN WHICH REMAINED OUTSTANDING AS ON 31 ST 2003 IS OF RS. 2,68,81,726/-. II. THE ASSESSEE HAS TAKEN A LOAN OF RS. 10 LAKHS FROM M/S VISHAL AGENCIES WHICH WAS NOT SQUARED UP IN THE YEAR UNDER CONSIDERATION. BUT THE ASSESSEE FAILED TO FURNISH T HE DETAILS OF SUCH LOAN DURING THE REMAND PROCEEDINGS. III. THE ASSESSEE HAS NOT FURNISHED THE COPIES OF THE LE DGER WITH RESPECT TO THE LOANS FOR RS. 1,21,00,000.00 SQUARED UP DURING THE YEAR UNDER CONSIDERATION. IV. THE CREDITWORTHINESS OF THE PARTIES WHO EXTENDED LO AN TO THE ASSESSEE AS PER SUBMISSION NAMELY RAMPION EYETECH P VT LTD. SUNIL KUMAR K JAIN AND ANUJ R MEHTA WAS NOT COMMENS URATE WITH THE INCOME DECLARED BY THE PARTIES. SIMILARLY, THE RESERVE AND SURPLUS OF RAMPION EYETECH PVT LTD. STANDS AT R S. 1.60 CRORES ONLY WHEREAS THE LOAN EXTENDED TO THE ASSESS EE OF RS. 2.00 CRORES. 3.5. IN VIEW OF THE ABOVE, THE AO REQUESTED IN HI S REMAND REPORT FOR CONFIRMING THE IMPUGNED AMOUNT OF UNSECURED LOAN WH ICH WERE ACCEPTED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 5 - 3.6. HOWEVER, THE LD. CIT (A) AFTER CONSIDERING T HE SUBMISSION OF THE ASSESSEE AND THE REMAND REPORT OF THE AO DELETED TH E ADDITION MADE BY THE AO BY OBSERVING AS UNDER: 1.2. I HAVE PERUSED THE OBSERVATIONS OF THE A.O. A ND THE APPELLANT. THE A.O. HAS MADE AN ADDITION OF RS.4,48,03,196/- U/S.6 8 OF THE ACT. ACCORDING TO THE A.O. THE APPELLANT HAS FAILED TO SUBSTANTIAT E ITS CLAIM WITH REGARD TO UNSECURED LOAN. THE THEN CIT(A)-XI, AHMEDABAD VIDE ITS ORDER DATED 19/2/2007 HAS DELETED THE SAID ADDITION. DURING TH E FIRST APPELLATE PROCEEDINGS, THE APPELLANT HAS TAKEN A STAND THAT M AJOR PART OF THE UNSECURED LOANS OF RS.4.48 CRORES IS THE BROUGHT FO RWARD COMPONENT. IT HAD PLACED ITS RELIANCE ON THE JUDGMENT OF KARNATAKA HI GH COURT IN THE CASE OF SHREEDEV ENTERPRISE 193 ITR 165. AS THE HONBLE IT AT HAS SET ASIDE THE ORDER OF THE CIT(A) ON THE GROUND THAT THE A.O. SHO ULD HAVE GIVEN THE OPPORTUNITY TO GOT THROUGH THE ADDITIONAL EVIDENCES AND COMMENT UPON THE SAME. ACCORDINGLY, THE ADDITIONAL EVIDENCES SUBMIT TED BY THE APPELLANT WERE SENT TO THE A.O. FOR COMMENTS. ACCORDING TO THE A. O. THE ASSESSEE HAS CONTENDED THAT OUT OF THE UNSECURED LOAN OF RS.4.48 CRORES ONLY THREE LOANS FROM RAMPION EYETECH PVT.LTD. (RS.2 CRORES) WHICH I S SISTER CONCERN OF THE APPELLANT. RS.9.84 LACSN FROM SUNILKUMAR K. JAIN H UF AND SHRI ANUJ R. MEHTA RS.31,44,949/- ARE THE NEW LOANS. THE A.O. H AS ACCEPTED THE FACTS THAT SOME OF THE LOANS PRE-EXISTED AND WERE NOT NEW LOANS. FROM THE SUBMISSIONS MADE DURING THE APPELLATE PROCEEDINGS W HICH WERE FORWARDED TO THE A.O. FOR REMAND REPORT, IT IS OBSERVED THAT THE RE ARE FOUR LOANS OBTAINED BY THE APPELLANT WHICH WERE NEW AND WERE PART OF RS .4.48 CRORES. THESE FOUR NEW LOANS PERTAIN TO RAMPION EYETECH PVT.LTD. FOR AN AMOUNT OF RS.2 CRORES, FROM VISHAL AGENCIES FOR AN AMOUNT OF RS.10 LACS. SUNILKUMAR K.JAIN HUF FOR AN AMOUNT OF RS.9.84 LACS AND FROM ANUJ R.M EHTA FOR AN AMOUNT OF RS.31,22,726/-. THE ADDITIONAL EVIDENCES HAS BEEN FILED BY THE APPELLANT IN RESPECT OF THREE LOANS EXCEPT FOR VISHAL AGENCIES A S MENTIONED ABOVE. RAMPION EYETECH PVT.LTD. AND ANUJ R. MEHTA WERE ASS ESSED BY THE SAME A.O. HENCE, ALL THE DETAILS IN RESPECT OF THE TWO WERE ALREADY AVAILABLE WITH THE A.O. IN RESPECT OF SUNILKUMAR K. JAIN HUF, THE APPELLANT AS FILED THE COPY OF RETURN OF INCOME ALONG WITH PAN FOR THE SAI D PERSON. AS FAR AS VISHAL AGENCIES IS CONCERNED IT IS MENTIONED BY THE APPELL ANT THAT THE OPENING BALANCE OF UNSECURED LOAN WAS OF RS.30,41,308/-. D URING THE YEAR UNDER CONSIDERATION AN ADDITION OF RS.10 LACS WAS MADE TO THIS UNSECURED LOAN. DURING THE YEAR THERE WAS A REPAYMENT OF RS.9,41,30 8/- LEAVING BEHIND THE BLANCE OF RS.21 LACS. HENCE, THE UNSECURED LOAN FR OM VISHAL AGENCIES WAS THE BROUGHT FORWARD LOAN AND RS.21 LAC IS THE PART OF TOTAL UNSECURED LOAN OF RS.4.48 CRORES. THE A.O. IN HIS REMAND REPORT HAS MENTIONED THAT THE APPELLANT HAS NOT FURNISHED THE BANK STATEMENTS OR THE LEDGERS FROM THE PERSONS FROM WHOM NEW LOANS WERE TAKEN. THE APPELL ANT IN ITS REPLY TO THE ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 6 - REMAND REPORT HAS STATED THAT THE A.O. HAS SUBMITTE D HIS REMAND REPORT (1) EITHER HAVING A LOOK AS TO WHAT IS QUANTITY OF ADDI TIONAL MATERIAL AND TO CROSS VERIFY WITH RECORDS (2) OR WITHOUT BOOKS OF ACCOUNT S BEING REQUISITION OR EXAMINATION (3) WITHOUT SPECIFYING OTHER DOCUMENTS FOR CONDUCTING FURTHER INVESTIGATION. IN THIS CONTEXT IT MAY BE MENTIONED HERE THAT AT THE TIME OF CALLING OF REMAND REPORT THE A.O. WAS CATEGORICALLY ASKED TO CONFRONT THE ADDITIONAL EVIDENCES WITH THE APPELLANT, TO REQUISI TE BOOKS OF ACCOUNTS OR BOOKS OF ACCOUNTS FOR EXAMINATION OR ANY OTHER DOCU MENTS FOR FURTHER INVESTIGATION. THE A.O. HAS SUBMITTED ITS REPORT A CCORDINGLY. WHEN THE CIT(A) HAS CATEGORICALLY ASKED THE A.O. TO CONDUCT THE NECESSARY INVESTIGATION OR REQUISITION THE BOOKS OF ACCOUNTS ETC, IF THE A.O. HAS NOT UNDERTAKEN THE SAID EXERCISE THEN THE A.O. CANNOT T AKE THE PLEA THAT NECESSARY BANK STATEMENT, LEDGER ETC. HAVE NOT BEEN FURNISHED BY THE APPELLANT. OUT OF THE FOUR NEW LOANS THE ASSESSMEN T RECORDS OF THE TWO OF THEM MAINLY RAMPION EYETECH PVT.LTD. AND ANUJ R. ME HTA ARE AVAILABLE WITH THE A.O. HIMSELF. THE LOAN FROM VISHAL AGENCIES WA S A BROUGHT FORWARD LOAN AND DURING THE EARLIER ASSESSMENT YEAR I.E. A.Y. 20 02-03. THE REVENUE HAS ACCEPTED THE SAID LOAN IN THE ORDER U/S.143(3). FU RTHER, NO ADDITIONS WERE MADE U/S.68 OF THE ACT DURING ASSESSMENT PROCEEDING S FOR A.Y. 2002-03. THE ONLY LOAN REMAIN WAS THAT OF RS.9,34,000/- FROM SHRI SUNILKUMAR K.JAIN HUF FOR WHICH THE PAN AND THE COPY OF RETURN OF INC OME WAS SUBMITTED BY THE A.O. IN LIGHT OF THE ABOVE DISCUSSION AND AFTER CONFRONT ING THE ADDITIONAL EVIDENCE WITH THE A.O. AND ALSO FOLLOWING THE DECISION OF KA RNATAKA HIGH COURT IN THE CASE OF SHREEDEV ENTERPRISE 193 ITR 165, I AM OF TH E VIEW THAT AO IS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.4,48,3,196/- ON ACCOUNT OF UNSECURED LOANS U/S.68 OF THE ACT. THEREFORE, THE ADDITION O F RS.4,48,03,196/- IS DIRECTED TO BE DELETED. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DR BEFORE US FILED 8 PAPER BOOKS RUN NING FROM PAGES 1 TO 7, 1 TO 159, 1 TO 12, 1 TO 14, 1 TO 6, 1 TO 18, 1 TO 149 AND 1 TO 85 RESPECTIVELY AND SUBMITTED THAT THE ORIGINAL ASSESSMENT RECORDS ARE NOT TRACEABLE. IN THIS REGARD, THE LD. AR DREW OUR ATTENTION ON THE LETTER FURNISHED BY THE AO DATED 11-10-2019 WHICH IS PLACED ON RECORD. ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 7 - 5. ON THE CONTRARY, THE LEARNED AR BEFORE US FIL ED A PAPER BOOK RUNNING FROM PAGES 1 TO 85 AND SUBMITTED THAT THE ASSESSEE HAS REPAID THE LOAN AMOUNT IN SUBSEQUENT YEAR. THE ASSESSEE TO SUBSTANT IATE ITS CLAIM SUBMITTED THE FOLLOWING DETAILS: 1) A CHART DEPICTING THE PAYMENT AND THE BALANCE OF AL L UNSECURED LOAN DETAILS FROM AY 2003-04 TO AY 2011-12 WITH RESPECT TO ALL THE PARTIES. (PAGES NOS. 42 AND 43 OF PAPER NOOK) 2) LEDGER ACCOUNT OF VISHAL AGENCIES SHOWING THE PAYME NT FROM AY 2004-05 TO AY 2005-06. (PAGES NOS. 62 AND 63 OF PAP ER BOOK ) 3) LEDGER ACCOUNT OF SUNIL KUMAR K JAIN HUF SHOWING TH E PAYMENT FROM AY 2003-04 TO AY 2010-11. (PAGES NOS. 64 TO 71 OF P APER BOOK) 4) LEDGER ACCOUNT OF RAMPION EYETECH PVT LTD. FROM AY 2003-04 TO AY 2010-11. (PAGES NOS. 72 TO 79 OF PAPER BOOK) 5) LEDGER ACCOUNT OF ANUJ R MEHTA SHOWING THE PAYMENT FROM AY 2003- 04 TO AY 2005-06. (PAGES NOS. 80 TO 85OF PAPER BOOK ) 5.1. THE LD. AR REGARDING THE LOANS WHICH WERE SQU ARED UP DURING THE YEAR SUBMITTED THAT THE AO NEITHER THE ASSESSMENT PROCEE DINGS NOR THE REMAND PROCEEDINGS REQUIRED THE ASSESSEE TO FURNISH THE DE TAILS ABOUT SUCH LOANS. SIMILARLY, THE LEARNED AR ALSO SUBMITTED THAT THE M ATTER WAS REMANDED BY THE LEARNED CIT (A) TO THE AO FOR FURNISHING THE RE PORT ON THE LOANS WHICH WERE APPEARING IN THE BALANCE SHEET AS ON 31 MARCH 2003. AS SUCH, THE LOANS WHICH WERE SQUARED UP DURING THE YEAR WERE NOT APPE ARING IN THE BALANCE SHEET AS ON 31 ST MARCH 2003. AS SUCH, THE AO EXCEEDED HIS JURISDICT ION IN THE REMAND PROCEEDINGS BY SUBMITTING THAT THE ASSESSEE HAS NOT FURNISHED THE ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 8 - DETAILS ABOUT THE LOANS WHICH WERE SQUARED UP IN TH E YEAR UNDER CONSIDERATION. BOTH THE LD. DR AND AR BEFORE US RELIED ON THE ORDE R OF AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE DISPUTE IN THE INSTANT CAS E RELATES TO THE UNSECURED LOAN RECEIVED BY THE ASSESSEE IN THE YEAR UNDER CON SIDERATION FROM CERTAIN PARTIES WHICH WAS TREATED AS UNEXPLAINED CASH CREDI T UNDER SECTION 68 OF THE ACT BY THE AO. HOWEVER, THE LEARNED CIT (A) SUBSEQU ENTLY DELETED THE ADDITION MADE BY THE AO. 6.1. THE PROVISION OF SECTION 68 OF THE ACT FASTE NS THE LIABILITY ON THE ASSESSEE TO PROVIDE THE IDENTITY OF THE LENDERS, ES TABLISH THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIE S. THESE LIABILITIES ON THE ASSESSEE WERE IMPOSED TO JUSTIFY THE CASH CREDIT EN TRIES UNDER SECTION 68 OF THE ACT BY THE HONBLE CALCUTTA HIGH COURT IN THE C ASE OF CIT VS. PRECISION FINANCE (P) LTD REPORTED IN 208 ITR 465 WHEREIN IT WAS HELD AS UNDER: IT WAS FOR THE ASSESSEE TO PROVE THE IDENTITY OF T HE CREDITORS, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS. ON THE FAC TS OF THIS CASE, THE TRIBUNAL DID NOT TAKE INTO ACCOUNT ALL THESE INGREDIENTS WHICH H AD TO BE SATISFIED BY THE ASSESSEE. MERE FURNISHING OF THE PARTICULARS WAS NOT ENOUGH. THE ENQUIRY OF THE ITO REVEALED THAT EITHER THE ASSESSEE WAS NOT TRACEABLE OR THERE WAS NO SUCH FILE AND, ACCORDINGLY, THE FIRST INGREDIENT AS TO THE IDENTITY OF THE CRED ITORS HAD NOT BEEN ESTABLISHED. IF THE IDENTITY OF THE CREDITORS HAD NOT BEEN ESTABLISHED, CONSEQUENTLY, THE QUESTION OF ESTABLISHMENT OF THE GENUINENESS OF THE TRANSACTION S OR THE CREDITWORTHINESS OF THE CREDITORS DID NOT AND COULD NOT ARISE. THE TRIBUNAL DID NOT APPLY ITS MIND TO THE FACTS OF THIS PARTICULAR CASE AND PROCEEDED ON THE FOOTIN G THAT SINCE THE TRANSACTIONS WERE THROUGH THE BANK ACCOUNT, IT WAS TO BE PRESUMED THA T THE TRANSACTIONS WERE GENUINE. IT WAS NOT FOR THE ITO TO FIND OUT BY MAKI NG INVESTIGATION FROM THE BANK ACCOUNTS UNLESS THE ASSESSEE PROVED THE IDENTITY OF THE CREDITORS AND THEIR CREDITWORTHINESS. MERE PAYMENT BY ACCOUNT PAYEE CHE QUE WAS NOT SACROSANCT NOR COULD IT MAKE A NON-GENUINE TRANSACTION GENUINE. ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 9 - 6.2. THE AO IN THE ASSESSMENT PROCEEDINGS HAS TRE ATED THE ENTIRE AMOUNT OF LOAN SHOWN BY THE ASSESSEE IN ITS BALANCE SHEET FOR RS. 4,48,03,196/- AS UNEXPLAINED CASH CREDIT. BUT THE AO IN HIS REMAND R EPORT HAS GIVEN A FINDING THAT THE ASSESSEE HAS TAKEN FRESH LOAN OF RS. 3,89, 81,726/- ONLY DURING THE YEAR. THUS THE ASSESSEE IN EFFECT GETS THE RELIEF F OR THE AMOUNT OF RS. 58,21,470/-. 7. NOW TAKING UP THE MATTER FURTHER, WE NOTE THAT THE ASSESSEE HAS TAKEN THE LOAN THROUGH THE BANKING CHANNEL AS WELL AS IN CASH FROM THE PARTIES DETAILED AS UNDER: S.NO . LENDER NAME TOTAL FRESH LOAN AMOUNT CASH ELEMENT I. RAMPION EVETECH 2,00,00,000/- 1,00,00,000/- II. SUNIL KUMAR K HUF 20,54,000/- 18,54,000/ - III. ANUJ R MEHTA 3827726/- 1,27,726/- 7.1. REGARDING THE LOAN TAKEN FROM REMPION EYETEC H PVT LTD, WE NOTE THAT THE ASSESSEE HAS FILED THE CONFIRMATION ALONG WITH THE PAN, COPY OF THE ITR, LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF REMP ION EYETECH PVT LTD. LEDGER ACCOUNT IN THE ASSESSEES BOOK WHICH ARE PLA CED ON PAGES 82, 90 AND 88 OF THE PAPER BOOK. 7.2. SIMILARLY, WE ALSO NOTE THAT THE AO IN THE A SSESSMENT OF REMPION EYETECH PVT LTD. HAS ADMITTED THE FACT THAT REMPION EYETECH PVT PTD. HAS ADVANCED LOAN OF RS. 2 CRORES TO THE ASSESSEE VIDE ORDER DATE17/02/2006. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: ON PERUSAL OF THE FINANCIAL STATEMENTS APPENDED WI TH THE RETURN OF INCOME IT HAS BEEN OBSERVED THAT DURING THE YEAR UNDER QUESTION T HE ASSESSEE COMPANY HAS ADVANCED INTEREST FREE ADVANCES TO AN ASSOCIATE CON CERN NAMED RAJESH MALLEABLES. ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 10 - VIDE ISSUE OF QUESTIONNAIRE AND DURING THE COURSE O F HEARING TOO THE SAID ISSUE WAS RAISED AND COUNTERED AS TO WHY CORRESPONDING INTERE ST ON BORROWED FUNDS SHOULD NOT BE DISALLOWED U/S.36(1)(III) OF THE I.T. ACT, IF IN TEREST ON SUCH ADVANCES HAVE NOT BEEN CHARGED OR CHARGED AT A LOWER RATE OF INTEREST . WITH RESPECT TO THE SAME THE REPRESENTATIVE OF THE ASSESSEE COMPANY WAS ASKED TO FURNISH THE PARTIES FROM WHOM UNSECURED LOANS/DEPOSITS WERE ACCEPTED DURING THE Y EAR. THE ASSESSEE COMPANY VIDE ITS SUBMISSION DATED 30/1 /16 HAS SUBMITTED ITS DETAILS AS PER POINT NO.8 AT 2, WITH RESPECT TO LOANS AND ADVA NCES ABOVE RS.1 LAC, ALONG-WITH THE DETAILS OF INTEREST RECEIPT AND INTEREST PAID D URING THE YEAR UNDER CONSIDERATION. IT IS SUBMITTED VIDE A TABULAR CHART THE AMOUNT OF LOANS AND ADVANCES PASSED ON DURING THE YEAR AT REGULAR INTERVALS TO RAJESH MELL EABLES IN ALL AMOUNTING TO RS.2,00,00,000/-. DATE CHEQUE NO. AMOUNT RS. 26/9/02 526501 50,00,000 27/12/02 399714 25,00,000 31/12/02 599739 25,00,000 28/3/03 125879 1,00,00,000 ---------------- 2,00,00,000 ========= NO INTEREST HAS BEEN CHARGED BY THE ASSESSEE ON THE FUNDS ADVANCED TO RAJESH MALLEABLES. DURING THE YEAR INTEREST HAS BEEN RECE IPTED FROM ONLY BANKING INSTITUTIONS SUCH AS HDFC BANK LTD., CO-OP. BANK OF INDIA AND BANK OF INDIA IN ALL AMOUNTING TO RS.5,07,677.53/-. AS AGAINST THIS THE AMOUNT OF INTEREST EXPENSES BORNE BY THE COMPANY ON ITS LOANS AND DEPOSITS DURI NG THE YEAR UNDER CONSIDERATION IS TO THE TUNE OF RS.35,05,817/-. DURING THE YEAR ASSESSEE COMPANY IS PAYING INTEREST @ 12# ON UNSECURED LOANS AND DEPOSITS ACCE PTED BY IT. ITS A KNOWN FACT THAT NO PRUDENT ASSESSEE WOULD RESORT TO SUCH TYPE OF ACCOUNTING PRINCIPLES WHEREIN IT INCURS INTEREST EXPENSES ON THE FUNDS BORROWED F ROM OUTSIDE AGENCIES BUT DOESNT CHARGE INTEREST ON ITS OWN FUNDS PASSED ON TO OUTSI DE AGENCIES OR BE IT, TO ONES OWN ASSOCIATE CONCERN. ACCORDINGLY, FOR THE REASONS AS AFORESAID AND THE STAND ADOPTED BY THE ASSESSEE IN NOT FURNISHING THE DETAILS/REASO NING FOR HAVING NOT CHARGED INTEREST ON SUCH LOANS AND ADVANCES PASSED ON TO AN ASSOCIATE CONCERN, AS AMOUNT EQUAL TO 12% OUT OF SUCH LOANS AND ADVANCES ADVANCE D IS DISALLOWED U/S.36(1)(III), TREATING THE SAME AS BEING INCURRED FOR NON-BUSINES S PURPOSES. 7.3. NOW COMING TO THE LOAN ACCEPTED FROM SUNIL K UMAR K JAIN HUF, WE NOTE THAT THE ASSESSEE HAS FILED THE CONFIRMATION A LONG WITH THE PAN, COPY OF THE ITR, LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOK S OF SUNIL KUMAR K JAIN HUF AND LEDGER COPY OF ASSESSEES BOOKS WHICH ARE P LACED ON PAGES 87,94, AND 89 OF THE PAPER BOOK. ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 11 - 7.4. NOW COMING TO THE LOAN ACCEPTED FROM ANUJ R MEHTA, WE NOTE THAT THE ASSESSEE HAS FILED THE CONFIRMATION ALONG WITH THE PAN, COPY OF THE ITR, AND LEDGER COPY OF ASSESSEES BOOK WHICH ARE PLACED ON PAGES 86 AND 95 OF THE PAPER BOOK. 7.5. SIMILARLY, WE ALSO NOTE THAT THE ASSESSEE IN RESPECT OF SOURCE OF FUND IN THE HANDS OF THE ABOVE MENTION LENDER I.E. REMPION EYETECH PVT PTD, SUNIL KUMAR K JAIN HUF, AND ANUJ R MEHTA HAS FURNISHED TH E SUFFICIENT DOCUMENTARY PIECES OF EVIDENCE SUCH AS, LEDGER COPY OF OF THE LENDERS, CONFIRMATION, ADDRESS, DETAIL THE INCOME OF ALL THE LENDER WHICH HAS BEEN ELABORATED IN THE PRECEDING PARAGRAPH. FURTHER WE N OTE THAT AS PER THE AUDIT REPORT THERE IS CLEARLY MENTION ABOUT THE LOAN WHET HER IT WAS RECEIVED IN CASH OR THROUGH THE BANKING CHANNELS. THEREFORE IN OUR C ONSIDERED VIEW, THE ASSESSEE HAS DISCHARGED ITS ONUS IMPOSED UNDER SECT ION 68 OF THE ACT. 7.6. WE FURTHER NOTE THAT THE ASSESSMENT OF THE RAMPION EYETECH PRIVATE LIMITED WAS DONE BY THE SAME AO WHO WAS ALSO ASSESS ING THE INCOME OF THE ASSESSEE. 7.7. FURTHERMORE, THE AO ADMITTED THE FACT THAT THE REMPION EYETECH PVT LTD GIVEN A LOAN OF RS. 2 CRORES TO THE ASSESSEE. 7.8. THE ASSESSEE IN THE PRESENT CASE HAS DULY EX PLAINED THE SOURCE OF MONEY RECEIVED IN ITS HANDS. THE ASSESSEE IS NOT AN SWERABLE TO JUSTIFY THE SOURCE OF THE SOURCE OF THE MONEY RECEIVED BY IT. I N THIS CONNECTION, WE PLACE OUR RELIANCE ON THE JUDGMENT OF HONBLE GUJARAT HIG H COURT IN THE CASE OF ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 12 - DCIT VS. ROHINI BUILDERS REPORTED IN 256 ITR 360 WH EREIN IT WAS HELD AS UNDER: IT HAS ALSO PROVED THE CAPACITY OF THE CREDITORS B Y SHOWING THAT THE AMOUNTS WERE RECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES D RAWN FROM BANK ACCOUNTS OF THE CREDITORS AND THE ASSESSEE IS NOT EXPECTED TO P ROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS B ECAUSE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT THE SOURCE OF THE SOURCE AS HELD BY THE BOMBAY HIGH COU RT IN THE CASE OF ORIENT TRADING CO. LTD. V. CIT [1963] 49 ITR 723. THE GENUINENESS OF THE TRANSACT ION IS PROVED BY THE FACT THAT THE PAYMENT TO THE ASSESSEE AS WELL A S REPAYMENT OF THE LOAN BY THE ASSESSEE TO THE DEPOSITORS IS MADE BY ACCOUNT PAYEE CHEQUES AND THE INTEREST IS ALSO PAID BY THE ASSESSEE TO THE CREDITORS BY ACCOU NT PAYEE CHEQUES. 7.9. WE ALSO CONSCIOUS TO THE FACT THAT THE ASSES SEE HAS FURNISHED THE BASIC DETAILS ABOUT THE LOAN TAKEN FROM ALL THE PARTIES A S DISCUSSED ABOVE SUCH AS, CONFIRMATION ALONG WITH ADDRESS, LEDGER COPY OF ITR , BUT THE AO HAS NOT MADE ANY VERIFICATION FROM SUCH PARTIES AND ARRIVED AT THE CONCLUSION THAT THE IMPUGNED AMOUNT REPRESENTS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 7.10. WE ALSO NOTE THAT THERE IS NO PROHIBITION T O ACCEPT THE LOAN IN CASH UNDER THE PROVISIONS OF SECTION 68 OF THE ACT. AS S UCH THE PROVISION OF SECTION 68 OF THE ACT HAS NOT DIFFERENTIATED THE AMOUNT OF CASH CREDIT ACCEPTED BY THE ASSESSEE THROUGH THE CASH AND CHEQUE. IT MEANS THE TEST LAID DOWN TO JUSTIFY THE CASH CREDIT UNDER SECTION 68 OF THE ACT IS SAME WHEN THE LOAN IS TAKEN IN CASH AND THROUGH BANKING CHANNEL. 7.11. IN OUR CONSIDERED VIEW, ONCE THE ASSESSEE H AS DISCHARGED PRIMARY ONUS BY PROVING THE IDENTITY OF LENDER, GENUINENESS OF TRANSACTION AND CAPACITY TO ADVANCE THE LOAN THEN IT IS THE BURDEN OF THE REVENUE TO PROVE IT OTHERWISE. IN THIS REGARDS WE DREW GUIDANCE AND SUP PORT FROM DECISION OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CI T VS. METACHEN INDUSTRIES REPORTED IN 116 TAXMAN 572 WHERE IT WAS HELD AS UNDER; ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 13 - ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN IN VESTED BY A PARTICULAR PERSON, BE HE A PARTNER OR AN INDIVIDUAL, THEN THE RESPONSIBIL ITY OF THE ASSESSEE-FIRM IS OVER. THE ASSESSEE-FIRM CANNOT ASK THAT PERSON WHO MAKES INVE STMENT, WHETHER THE MONEY INVESTED IS PROPERLY TAXED OR NOT. THE ASSESSEE IS ONLY TO EXPLAIN THAT THE INVESTMENT HAS BEEN MADE BY THE PARTICULAR INDIVIDUAL AND IT I S THE RESPONSIBILITY OF THAT INDIVIDUAL TO ACCOUNT FOR THE INVESTMENT MADE BY HI M. IF THAT PERSON OWNS THAT ENTRY, THEN THE BURDEN OF THE ASSESSEE-FIRM IS DISC HARGED. IT IS OPEN FOR THE ASSESSING OFFICER TO UNDERTAKE FURTHER INVESTIGATIO N WITH REGARD TO THAT INDIVIDUAL WHO HAS DEPOSITED THIS AMOUNT. SO FAR AS THE RESPON SIBILITY OF THE ASSESSEE IS CONCERNED, IT IS SATISFACTORILY DISCHARGED. WHETHER THAT PERSON IS AN INCOME-TAX PAYER OR NOT OR FROM WHERE HE HAD BROUGHT THIS MONEY, IS NOT THE RESPONSIBILITY OF THE FIRM. THE MOMENT THE FIRM HAS GIVEN A SATISFACTORY EXPLAN ATION AND PRODUCED THE PERSON WHO HAS DEPOSITED THE AMOUNT, THEN THE BURDEN OF TH E FIRM IS DISCHARGED AND IN THAT CASE THAT CREDIT ENTRY CANNOT BE TREATED TO BE THE INCOME OF THE FIRM FOR THE PURPOSES OF INCOME-TAX. IT IS OPEN FOR THE ASSESSIN G OFFICER TO TAKE APPROPRIATE ACTION UNDER SECTION 69 AGAINST THE PERSON WHO HAS NOT BEEN ABLE TO EXPLAIN THE INVESTMENT. 7.12. IN THIS RESPECT WE ALSO FIND SUPPORT AND GUI DANCE FROM THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF PCIT VS. NRA IR ON STEEL (P.) LTD. REPORTED IN 103 TAXMANN.COM 48. THE RELEVANT EXTRAC T OF THE JUDGMENT ARE AS UNDER; 8.2 AS PER SETTLED LAW, THE INITIAL ONUS IS ON THE ASSESSEE TO ESTABLISH BY COGENT EVIDENCE THE GENUINENESS OF THE TRANSACTION, AND CR EDIT-WORTHINESS OF THE INVESTORS UNDER SECTION 68 OF THE ACT. THE ASSESSEE IS EXPECTED TO ESTABLISH TO THE SATISF ACTION OF THE ASSESSING OFFICER CIT V. PRECISION FINANCE (P.) LTD. [1995] 82 TAXMAN 31/ [1994] 208 ITR 465 (CAL.): PROOF OF IDENTITY OF THE CREDITORS; CAPACITY OF CREDITORS TO ADVANCE MONEY; AND GENUINENESS OF TRANSACTION THIS COURT IN THE LAND MARK CASE OF KALE KHAN MOHAM MED HANIF V. CIT [1963] 50 ITR 1 (SC) AND ROSHAN DI HATTI V. CIT [1977] 107 IT R 938 (SC) LAID DOWN THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONEY FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE, IS ON THE ASSESSEE. ONCE THE ASSESSEE HAS SUBMITTED THE DOCUMENTS RELATING TO IDENTITY, GENUINENESS OF THE TRANSACTIO N, AND CREDIT-WORTHINESS, THEN THE AO MUST CONDUCT AN INQUIRY, AND CALL FOR MORE DETAI LS BEFORE INVOKING SECTION 68. ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 14 - 7.13. THUS, IN THE PRESENT FACTS AND CIRCUMSTANCES , ALL INFORMATIONS WERE AVAILABLE ABOUT THE LOANS BUT AO DID NOT MAKE FURTH ER INQUIRY. IF HE HAS ANY DOUBT ON UNSECURED LOAN OF ALL ABOVE MENTION PARTIE S, THE AO COULD HAVE CONDUCTED NECESSARY ENQUIRIES. BUT THE AO FAILED TO DO SO. HOWEVER ASSESSEE HAS DISCHARGED ITS ONUS BY PROVIDING THE DOCUMENTS SUCH AS CONFIRMATION, ITR, ADDRESS OF THE LENDER, LEDGER COPY OF THE LEND ER. THE AO HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN DOCUMENTS FURNISHED BY T HE ASSESSEE. IN VIEW OF THE ABOVE, WE FIND NO REASON TO INTERFERE IN THE OR DER OF LD. CIT (A) TO THE EXTENT OF THE LOAN FROM THE PARTIES AS DISCUSSED AB OVE. 7.14 NOW, COMING TO THE AMOUNTS OF LOANS FOR RS. 1 ,31,00,000/- WHICH WERE ACCEPTED BY THE ASSESSEE DURING THE YEAR FROM THE P ARTIES AND SQUARED UP IN THE YEAR UNDER CONSIDERATION. THE DETAILS OF SUCH P ARTIES STAND AS UNDER: S.NO. LENDER NAME AMOUNT (RS.) 1. SHREE MANGAL FINANCE 99,00,000/- 2. VISHAL AGENCIES 10,00,000/- 3. BABUL BHAI R PATEL 22,00,000/- 7.15. REGARDING THE LOAN ACCOUNTS SQUARED UP IN TH E YEAR UNDER CONSIDERATION, WE FIND THAT SUCH LOAN ACCOUNST WERE NEVER SUBJECT TO THE ADDITION IN THE ORIGINAL ASSESSMENT PROCEEDINGS WHI CH WAS FRAMED UNDER SECTION 144 OF THE ACT. 7.16. SIMILARLY, WE ALSO NOTE THAT THE LEARNED CI T (A) HAS CALLED FOR THE REMAND REPORT FROM THE AO ON THE AMOUNT OF LOAN APP EARING IN THE BALANCE SHEET OF THE ASSESSEE AS ON 31 MARCH 2003 WHICH WER E ADDED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. THIS FACT CAN BE VERIFIED FROM THE LETTER ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 15 - ISSUED BY THE LEARNED CIT (A) DATED 26-12-2012 TO T HE AO IN THE REMAND PROCEEDINGS ON THE ITEMS AS REPRODUCED BELOW: 2. ASSESSMETN IN THE ABOVE MENTIONED CASE WAS FR AMED U/S.143(3) OF THE I.T.ACT VIDE ASSESSMENT ORDER DATED 17/2/2006. IN THIS ASSESSMENT ORDER THE FOLLOWING ADDITIONS WERE MADE:- I. ADDITION U/S.68 RS.4,48,03,196/- II. DISALLOWANCE OF INTEREST EXPENDITURE RS. 11,23,686/- III. DISALLWOANCE OUT OF FOREIGN TRAVEL EXP. RS. 2,21 ,082/- IV. DISALLOWANCE AGAINST LATE PAYMENT OF ESI, PF RS. 10,41,768/- IN THE FIRST APPEAL THE LD.CIT(A) VIDE HIS ORDER DA TED 19/2/2007 HAD DELETED THESE ADDITIONS AFTER ACCEPTING THE ADDITIONAL EVID ECES. THE HONBLE ITAT IN ITA NO.1900/AHD/2007 DATED 29/3/2010 HAD RESTORED B ACK THESE ADDITIONS TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION. IN T HE ABOVE MENTIONED APPEAL, THE HONBLE ITAT HAS DIRECTED THE CIT(A) TO CONFRON T THE ADDITIONAL EVIDENCES ADMITTED DURING FIRST ROUND OF APPELLATE PROCEEDING S TO THE ASSESSING OFFICER. IN THE COURSE OF EXAMINATION, YOU ARE FREE TO REQUI SITION OF BOOKS OF ACCOUNTS OR ANY OTHER DOCUMENTS AND CONDUCT FURTHER INVETIGA TION AS DEEMED FIT. AFTER VERIFICATION, DETAILED REMAND REPORT TO RESPE CT OF ABOVE MENTIONED ADDITIONS SHOULD REACH THIS OFFICE WITHIN 15 DAYS O F RECEIPT OF THIS LETTER. 7.17. THE AMOUNT OF LOAN FOR RS. 4,48,03,196.00 REPRESENTS THE LOAN WHICH WERE OUTSTANDING IN THE BOOKS OF THE ASSESSEE AS ON 31 MARCH 2003. THIS FACT CAN BE VERIFIED FROM THE FINANCIAL STATEMENTS OF THE ASSESSEE AVAILABLE ON RECORD. THUS THE LOANS WHICH WERE SQUARED UP IN THE YEAR UNDER CONSIDERATION WERE NOT PART OF THE AMOUNT OF LOAN A PPEARING IN THE FINANCIAL STATEMENTS OF THE ASSESSEE AS ON 31 MARCH 2003. IT IS ALSO A FACT ON RECORDS THAT THE ASSESSEE HAS DULY FURNISHED THE DETAILS OF THE LOANS WHICH WERE SQUARED UP IN THE YEAR UNDER CONSIDERATION IN ITS T AX AUDIT REPORT AVAILABLE ON RECORD. BUT THE AO EITHER IN THE ASSESSMENT PROCEED INGS OR REMAND PROCEEDINGS REQUIRED THE ASSESSEE TO FURNISH DETAIL SOF SUCH LOANS SQUARED UP DURING THE YEAR. THUS THE ASSESSEE NEVER GOT THE OC CASION TO FURNISH THE DETAILS ABOUT SUCH SQUARED UP LOANS. ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 16 - 7.18. FROM THE ABOVE LETTER DATED 26 OCTOBER 201 2, IT IS TRANSPIRED THAT THE LEARNED CIT (A) NEVER ENQUIRED ABOUT THE LOANS WHIC H WERE SQUARED UP IN THE YEAR UNDER CONSIDERATION. THUS, THE CONTROVERSY ARI SES WHETHER THE AO CAN EXTEND THE SCOPE OF DISPUTE BEYOND THE DIRECTION PR OVIDED BY THE LEARNED CIT (A). THE ANSWER STAND NEGATIVE IN VIEW OF THE JUDGE MENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SAHELI SYNTHETICS PVT. LT D VS. CIT REPORTED IN 302 ITR126 WHEREIN IT WAS HELD AS UNDER: SIMILARLY EVEN WHERE AN ASSESSMENT IS SET ASIDE SI MPLICITER, WITHOUT ANY ENHANCEMENT PROPOSAL, IT IS ALWAYS IN THE CONTEXT O F THE APPEAL AGAINST AN ORDER OF ASSESSMENT AND CANNOT BE READ TO MEAN THAT THE APPELLATE AUTHORITY GRANTED POWERS TO THE ASSESSING OFFICER IN RELATION TO ITEMS OF ASSESSMENT WHICH WERE NEVER FORMING PART OF THE APPEAL BEFORE THE APPELLATE AUTHORITY. AT THE COST OF REPETITION IT IS REQUIRED TO BE NOTED T HAT PROCESSING A NEW SOURCE OF INCOME WHICH WAS ON THE RECORD BEFORE THE ASSESSING OFFICER BUT IS NOT FORMING PART OF SUBJECT-MATTER OF APPEAL BEFORE THE APPELLATE AUTHORITY CAN BE UNDERTAKEN BY THE APPELLATE AUTHORITY ONLY IN THE C OURSE OF ENHANCEMENT OF THE ASSESSMENT AND, THEREFORE, ANY SET ASIDE, WHICH DOES NOT INVOLVE A PROPOSAL FOR ENHANCEMENT, CANNOT BE USED FOR THE PU RPOSE OF EXPANDING THE SCOPE OF THE POWERS AVAILABLE TO THE ASSESSING OFFI CER WHILE MAKING A FRESH ASSESSMENT PURSUANT TO A SET ASIDE. 7.19. THUS, WE HOLD THAT THE ALLEGATION OF THE AO IN THE REMAND PROCEEDINGS THAT THE ASSESSEE FAILED TO FURNISH THE DETAILS OF THE LOANS WHICH WERE SQUARED UP IN THE YEAR UNDER CONSIDERATION IS NOT S USTAINABLE IN THE PRESENT FACTS AND CIRCUMSTANCES. ACCORDINGLY, WE DO NOT FIN D ANY RESENTMENT AFFAIR IN THE ORDER OF THE LEARNED CIT (A). HENCE THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 8. THE SECOND ISSUE RAISED BY ASSESSEE IN THIS APPE AL IS THAT LD CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY SUSTAINING T HE DISALLOWANCE OF INTEREST EXPENSES ON ACCOUNT OF DIVERSION OF BORROWED FUND. ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 17 - 9. THE AO DURING THE ASSESSMENT PROCEEDINGS OBSERVE D THAT THE ASSESSEE HAS INCURRED INTEREST EXPENDITURE OF RS. 30,67,057/- ON THE BORROWED FUND OF RS. 4,04,89,542/- ONLY. THE AO FUR THER OBSERVED THAT THE ASSESSEE HAS GIVEN INTEREST FREE LOANS AND ADVANCES OF RS. 74,91,240/- TO ITS SUBSIDIARY NAMELY M/S RAMPRASAD TRADING AND INVESTM ENT (P) LTD. WITHOUT CHARGING ANY INTEREST. ACCORDINGLY, THE AO PROPOSED TO MAKE THE DISALLOWANCE OF RS. 11,23,686/- U/S 36(1)(III) OF T HE ACT ON ACCOUNT OF DIVERSION OF FUND. ACCORDINGLY, THE AO SOUGHT AN EX PLANATION FROM THE ASSESSEE ON THE ISSUE AS DISCUSSED ABOVE. BUT THE ASSESSEE FAILED TO MAKE ANY REPLY. ACCORDINGLY THE AO DISALLOWED THE SUM OF RS. 11,23,686.00 BEING 15% OF THE LOAN AMOUNT U/S 36(1)(III) OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD. CIT( A). 10. THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED T HAT IT HAS MADE ADVANCE OF RS. 61,81,016/- FOR THE PURPOSE OF BUSINESS IN T HE YEAR 1997-98 TO ITS SUBSIDIARY. THE CASH FLOW STATEMENT FOR THAT YEAR W AS ALSO SUBMITTED BY IT TO SUBSTANTIATE ITS CLAIM. HOWEVER, THE LOAN TO THE S UBSIDIARY INCREASED OVER THE PERIOD OF TIME TO RS. 71,64,664/- 10.1. THE ASSESSEE FURTHER SUBMITTED THAT THE SUB SIDIARY HAS INCURRED LOSS IN THE AY 2001-02. THEREFORE IT IS NOT POSSIBLE EVEN T O RECOVER THE PRINCIPAL AMOUNT FROM THE SUBSIDIARY. ACCORDINGLY THE ASSESSE E HAS NOT MADE PROVISION FOR THE INTEREST. 10.2. THE LD. CIT(A) AFTER CONSIDERING THE SUBMIS SION OF THE ASSESSEE DELETED THE ADDITION MADE BY HIM BY OBSERVING AS UN DER: ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 18 - 2.2. I HAVE PERUSED THE OBSERVATIONS AND CONTENTI ONS OF THE A.O. AS WELL AS THE APPELLANT. THE DISALLOWANCE OF INTEREST OF RS.11,2 3,686/- HAS BEEN MADE U/S.36(1)(III) ON ACCOUNT OF INTEREST FREE LOANS O F RS.74,91,240/- GIVEN TO ITS SISTER CONCERN/SUBSIDIARY COMPANY NAMELY M/S.RAMPRASAD TRA DING AND INVESTMENT PVT.LTD. THE A.O. IN THE REMAND REPORT HAS ALLEGED THAT THE APPELLANT HAS NOT BEEN ABLE TO FURNISH ANY EVIDENCE TO ESTABLISH THE BUSINESS PURP OSE AS WELL AS NO EVIDENCE OF THE SAID COMPANY ACTING AS DISTRIBUTOR HAVE BEEN FURNIS HED. IT IS POINTED OUT BY THE APPELLANT THAT THE SAME ISSUE HAD ARISEN DURING THE A.Y. 2002-03. ON PERUSAL OF THE ASSESSMENT ORDER FOR A.Y.2002-03. IT IS NOTICED AN D ACCEPTED BY THE THEN A.O. THAT ORIGINALLY THE LOAN TO THE SUBSIDIARY COMPANY WAS G IVEN IN 1997-98 WAS TO THE TUNE OF RS.61.81 LACS AND OVER A PERIOD OF TIME IT HAS I NCREASED TO RS.71.64 LACS. AS PER THE SAID ASSESSMENT ORDER THE AMOUNT OF LOAN ADVANC ED IS CHANGING EVERY YEAR. THE A.O. IN THE SAID ORDER HAS CONCLUDED AS FOLLOWS: SINCE THE COMPANY TO WHOM ASSESSEE COMPANY HAS ADV ANCED INTEREST FREE LOAN IS A PERSON SPECIFIED U/S.40A(2)(B). IT IS CO NCLUDED THAT ON THE FACT OF THE CASE OF THE ASSESSEE COMPANY PROVISION OF SEC.4 0A(2)(A) IS CLEARLY ATTRACTED AND THEREFORE INTEREST TO THE EXTENT OF R S.18,67,089/- RELATABLE TO THE INTEREST FREE FUND AT THE RATE OF 18% IS DISALL OWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. HENCE IT IS SEEN THAT THE ADDITION DURING THE A.Y. 2002-03 IS MADE U/S.40A OF THE ACT. THE LOAN WHICH WAS GIVEN IN 1997-98 TO THE SU BSIDIARY COMPANY. IT IS CLEAR THAT IT WAS GIVEN FOR BUSINESS PURPOSES SINCE THE S AID COMPANY WAS WORKING AS DISTRIBUTOR OF THE APPELLANT COMPANY. AS THE APPEL LANT COMPANY CAME TO BE DECLARED AS SICK AND BECAUSE OF STRATEGIC DECISION TO REVIVE THE COMPANY, THE APPELLANT COMPANY HAD CHANGED ITS DISTRIBUTION NETWORK AFFECT ING THE BUSINESS OF THE SUBSIDIARY COMPANY. THIS HAS RESULTED IN LOSS TO T HE SUBSIDIARY COMPANY RESULTING IN UNCERTAINLY OVER CHANCES OF RECOVERY OF LOAN GIVEN. AS RIGHTLY POINTED OUT BY THE APPELLANT, IT HAS RELIED UPON THE JUDGMENT OF HONB LE APEX COURT IN THE CASE OF S.A. BUILDERS LTD. VS. CIT 288 ITR 1 (SC). I AM OF THE CONSIDERED OPINION THAT THE LOAN WAS GIVEN TO THE SUBSIDIARY COMPANY FROM 1997-98 AS A MEASURE OF COMMERCIAL EXPEDIENCY. THEREFORE, NO DISALLOWANCE CAN BE MADE ON THIS ACCOUNT U/S.36(1)(III). THE ADDITION OF RS.11,23,686/- IS HEREBY DELETED. BEING AGGRIEVED BY THE ORDER OF LD. CIT(A) ASSESSEE IS IN APPEAL BEFORE US. 10.3. THE LD. DR BEFORE US VEHEMENTLY SUPPORTED T HE ORDER OF THE AO. 10.4. ON THE OTHER HAND, THE LD. AR BEFORE US DEMO NSTRATED THAT ITS OWN FUND EXCEEDS THE AMOUNT OF LOANS AND ADVANCES. ACCO RDINGLY, THE LD. AR CLAIMED THAT THERE CANNOT BE ANY DISALLOWANCE OF IN TEREST EXPENSE FOR THE ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 19 - DIVERSION OF FUNDS. THE LD. AR IN SUPPORT HIS CONTE NTION DREW OUR ATTENTION ON BALANCE SHEET AS ON 31 ST MARCH, 2003, WHICH IS PLACED ON PAGE 11 OF THE PAPER BOOK. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE AO M ADE THE DISALLOWANCES OF THE INTEREST EXPENSES ON THE GROUND THAT THE BORROW ED FUND HAS BEEN DIVERTED TO THE INTEREST FREE LOANS AND ADVANCES. H OWEVER, ON PERUSAL OF THE BALANCE SHEET, WE NOTE THAT OWN FUND INCLUDING NON- INTEREST BEARING FUND EXCEEDS THE AMOUNT OF LOANS AND ADVANCES AS DETAILE D UNDER: SOURCES OF FUNDS SCHEDULE 31-3-2002 RS. RS. RS. SHAREHOLDERS FUNDS : SHARE CAPITAL I 29 ,998,500 29,998.500 RESERVES & SURPLUS II 65,471.667 70,630,921 95,470,157 100,62 9,421 LOAN FUNDS : SECURED LOANS III 40,050.236 57,774.375 DEFERRED PAYMENTS CREDITS (GUARANTEED TO VIJAYA BANK AGAINST HYPOTHECATION OF SPECIFIC MACHINERY AND THIRD CHARGE OVER EXISTING PLANT & MACHINERIES AND OTHER ASSETS OF THE COMPANY) 4,391,306 4,285,506 UNSECURED LOANS IV 44,803,196 26,096,221 DEFERRED TAX LIABILITY 1,633,117 665,493 (SEE NOTE NO.17 OF SCHEDULE XX) ------------------------------------ TOT AL 186,348,022 189,451,016 ================ 11.1. FROM THE ABOVE, IT IS CLEAR THAT THE OWN FU ND OF THE ASSESSEE EXCEEDS THE INTEREST FREE LOANS AND ADVANCES AS DISCUSSED I N THE ASSESSMENT ORDER. IN ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 20 - SUCH FACTS AND CIRCUMSTANCES, A PRESUMPTION CAN BE DRAWN THAT THE LOANS HAS BEEN PROVIDED OUT OF THE OWNED FUNDS OF THE ASSESSE E. IN HOLDING SO, WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HONBLE B OMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. REPORTED IN 313 ITR 340 WHEREIN IT WAS HELD AS UNDER:- THE PRINCIPLE THEREFORE WOULD BE THAT IF THERE ARE FUNDS AVAILABLE BOTH INTEREST-FREE AND OVERDRAFT AND/OR LOANS TAKEN, THE N A PRESUMPTION WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF THE INTEREST -FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INTEREST-FREE FU NDS WERE SUFFICIENT TO MEET THE INVESTMENTS. IN THIS CASE THIS PRESUMPTION IS E STABLISHED CONSIDERING THE FINDING OF FACT BOTH BY THE CIT(A) AND TRIBUNAL 11.2. IN VIEW OF ABOVE PROPOSITION, WE HOLD THAT N O DISALLOWANCE OF INTEREST EXPENSE CLAIMED BY THE ASSESSEE CAN BE MADE UNDER T HE PROVISION OF SECTION 36(1)(III) OF THE ACT ON ACCOUNT OF DIVERSION OF IN TEREST BEARING FUND. HENCE, WE CONFIRM THE ORDER OF LD. CIT-A. ACCORDINGLY, THE AO IS DIRECTED TO DELETE THE ADDITION MADE BY HIM. HENCE THE GROUND OF APPEA L OF THE REVENUE IS DISMISSED. 12. THE NEXT ISSUE RAISED BY THE REVENUE IS THAT T HE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR RS. RS. 2, 21,082/- ON ACCOUNT OF FOREIGN TRAVELLING EXPENSES. 12.1. THE ASSESSEE IN THE YEAR UNDER CONSIDERATIO N HAS CLAIMED FOREIGN TRAVELLING EXPENSES AMOUNTING TO RS. 2,21,082/- IN ITS FINANCIAL STATEMENT AS ON 31 MARCH 2003. THE AO DURING THE ASSESSMENT PROC EEDINGS REQUIRED THE ASSESSEE TO FURNISH THE NECESSARY DETAILS ABOUT SUC H EXPENSES FOR THE PURPOSE OF VERIFICATION. BUT THE ASSESSEE FAILED TO DO SO. ACCORDINGLY THE AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME O F THE ASSESSEE. ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 21 - THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A). 12.2. THE ASSESSEE BEFORE THE LD. CIT(A) FILED THE BILLS AND LEDGER ACCOUNT RELATED TO FOREIGN EXPENSES. THE ASSESSEE FURTHER SUBMITTED THAT THIS EXPENSE HAS BEEN INCURRED FOR THE BUSINESS PURPOSES . 12.3. THE LD. CIT(A) AFTER CONSIDERING THE SUBMIS SION OF THE ASSESSEE DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER: 3.2. I HAVE PERUSED THE OBSERVATIONS AND CONTENTI ONS OF THE A.O. AS WELL AS THE APPELLANT. IT CAN BE SEEN FROM THE REMAND REPO RT THAT DURING THE VISIT OF THE CONCERNED PERSON ABROAD CERTAIN PERSONAL EXPENS ES CANNOT BE RULED OUT. THE APPELLANT HAD SUBMITTED THE RELEVANT DOCUMENTS FOR THE FOREIGN TOUR UNDERTAKEN BY SHRI ANUJ R.MEHTA, DIRECTOR OF THE AP PELLANT COMPANY. NOTHING HAS BEEN BROUGHT ON RECORD BY THE A.O. TO S UBSTANTIATE THAT FOREIGN TRAVEL WAS FOR PERSONAL USE. HENCE THE ADDITION OF RS.2,21,082/- IS HEREBY DELETED. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REVENUE IS AN APPEAL BEFORE US. 13. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 14. THE LD. AR DREW OUR ATTENTION ON THE DETAILS F ILED IN SUPPORT OF THE EXPENSES SUCH STATEMENT OF FOREIGN TRAVELLING EXPEN SES, JK INDUSTRIES BILL REGARDING PURCHASE OF FOREIGN EXCHANGE, RECEIPT OF LKP FINANCE MERCHANT FINANCING LTD. WHICH ARE AVAILABLE ON RECORD. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE AO MADE THE DI SALLOWANCES OF THE FOREIGN TRAVELLING EXPENSES ON THE GROUND THAT THE PERSONAL NATURE CANNOT BE ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 22 - OVERRULED. SUBSEQUENTLY THE LD. CIT(A) DELETED THE ADDITION MADE BY THE AO BY OBSERVING THAT THE AO HAS NOT BROUGHT ON RECORD FROM WHICH IT CAN BE PROVED THAT THE EXPENSES ARE PERSONAL IN NATURE. TH EREFORE THE REVENUE IS IN APPEAL BEFORE US. AT THE OUTSET, WE NOTE THAT THE A SSESSEE HAS NOT PROVIDED ANY DOCUMENTARY EVIDENCES TO PROVE THAT THE EXPENDI TURE ON FOREIGN TRAVELLING WAS FOR THE BUSINESS PURPOSE. ADMITTEDLY THERE IS NO DOUBT THAT THE EXPENSE HAS BEEN INCURRED ON FOREIGN TRAVELLING. B UT SUCH EXPENSES INCURRED FOR THE BUSINESS NEEDS TO BE JUSTIFIED BY FURNISHIN G THE DETAILS OF THE PERSON TRAVELLED, EMAIL CORRESPONDENCE, ANY BUSINESS EXPAN SION FROM SUCH FOREIGN TOUR. HOWEVER WE NOTE THAT THE LD. AR FOR THE ASSES SEE HAS FURNISHED BEFORE US DETAIL OF FOREIGN EXCHANGE, TICKET BUT THESE ARE NOT SUFFICIENT TO ESTABLISH THE BUSINESS PURPOSE OF SUCH EXPENSES. THEREFORE WE ARE OF THE VIEW THAT THE EXPENDITURE ON FOREIGN TOUR WAS NOT FOR BUSINES S PURPOSE. IN THIS REGARD WE DRAW SUPPORT & GUIDANCE FROM THE JUDGMENT OF HON BLE ITAT AHMEDABAD IN CASE OF GENESIS ORGANIC (P) LTD. VS. REPORTED IN 52 TAXMANN.COM 74 WHEREIN IT WAS HELD AS UNDER: WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME-TA X (APPEALS) AND VARIOUS DETAILS OF FOREIGN TRAVELLING EXPENSES FILED BY THE ASSESSEE IN THE COMPILATION BEFORE US. WE FIND THAT THE ASSESSEE COULD NOT PROV E THE BUSINESS PURPOSE OF THE SAID EXPENDITURE ON FOREIGN TRAVEL. IN ANNEXURE II COPY FILED AT PAGE 129 OF THE COMPILATION BEFORE US, THE LAST COLUMN 'BENE FIT DERIVED', THE ASSESSEE COULD NOT GIVE ANY DETAILS OF THE BUSINESS PURPOSE OF THE FOREIGN TRIPS. THE SO-CALLED DETAILS OF THE FOREIGN TRAVEL EXPENSES FI LED BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES AND COPY FILED IN THE COMPI LATION BEFORE US, SHOWS THAT THE DETAILS CONSISTED OF AMOUNT SPENT ON AIR-T ICKET, MEDI-CLAIM CHARGES, HOTEL, TAXI AND OTHER EXPENSES HAVE BEEN MENTIONED. THERE IS NO DETAIL OF PLACES OR NAME OF CITIES VISITED BY THE DIRECTOR OF THE ASSESSEE-COMPANY, NOR ANY DETAIL OF THE PERSONS OR BUSINESS CONCERNS VISI TED, WAS GIVEN. THE ONUS TO ESTABLISH THAT THE FOREIGN TRIP WAS UNDERTAKEN F OR BUSINESS PURPOSE IS WITH THE ASSESSEE, WHICH THE ASSESSEE HAS FAILED TO DISC HARGE IN THIS CASE. MERE MENTIONING THE NAME OF THE COUNTRY VISITED ALONG WI TH MENTIONING OF THE TOTAL AMOUNT OF EXPENDITURE UNDER VARIOUS HEADS OF THE EXPENSES LIKE, HOTEL ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 23 - BILLS, AIR-TICKET, ETC., DOES NOT INDICATE OR ESTAB LISH THE BUSINESS PURPOSE OF THE FOREIGN TRAVEL EXPENSES INCURRED BY THE ASSESSE E-COMPANY. IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE, WE H OLD THAT IN THE ABSENCE OF EVEN ELEMENTARY EVIDENCE TO PROVE THE BUSINESS P URPOSE OF THE FOREIGN TRAVEL UNDERTAKEN BY THE DIRECTORS OF THE ASSESSEE PRIVATE LIMITED COMPANY, THE EXPENDITURE WAS RIGHTLY DISALLOWED BY THE LEARN ED COMMISSIONER OF INCOME-TAX (APPEALS), AND ACCORDINGLY, THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ISSUE IS CONFIRMED AND THE GROUND NO. 2 OF THE ASSESSEE IS DISMISSED. 16. THUS, IN VIEW OF THE ABOVE, WE REVERSE THE OR DER OF THE LD. CIT(A). ACCORDINGLY WE CONFIRM THE ADDITION MADE BY THE AO. HENCE, THE GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS P ARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 20/01/2020 SD/- SD/- (MAHAVIR PRASAD) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 20/01/2020 # . . , . $ . . / T.C. NAIR, SR. PS ITA NO.802/AHD/2016 DCIT VS. RAJESH MALLEABLES LTD. ASST.YEAR - 2003 -04 - 24 - !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. %&' ( / CONCERNED CIT 4. ( ( ) / THE CIT(A)-9, AHMEDABAD 5. )*+ $$&' , &' , % / DR, ITAT, AHMEDABAD 6. +./ / GUARD FILE. / BY ORDER, ) $ //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION 13.1.2020 ( WORD PROCESSED BY HONBLE AM IN HIS COMPUTER BY DRA GON ) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.1.2020 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.20.1.2020 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20.1.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER