ITO, Patiala V. M/s Shiv Kumar & Sons (HUF), Rajpura

ITA 854/CHANDI/2009

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7792 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 27-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 20-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: D K GOYAL
• Keywords: Bogus purchase; Income from undisclosed sources; Commercial expediency
• Section: 68; 145; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 854/CHD/2009 ASSESSMENT YEAR: 2006-07 ITO, WARD 2, V M/S SHIV KUMAR & SONS (HUF), PATIALA. CHANDIGARH ROAD, RAJPURA. PAN: AAJHS-5329F & CO NO. 64/CHD/2009 IN ITA 854/CHD/2009 M/S SHIV KUMAR & SONS (HUF), V ITO, WARD-2, CHANDIGARH ROAD, PATIALA. RAJPURA. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SMT.JAISHREE SHARMA ASSESSEE BY : SHRI D.K.GOYAL DATE OF HEARING : 27.03.2012 DATE OF PRONOUNCEMENT : 19.04.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE AND THE CO FILED BY THE ASSESSEE, ARE DIRECTED AGAINST THE ORDER DAT ED 23.06.2009 PASSED BY THE LD. CIT(A) U/S 250(6) OF T HE INCOME- TAX ACT,1961 (IN SHORT 'THE ACT'). 2. IN APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION ON A/C OF BOGUS PURCHASES OF GAS CYLINDER VALVES, IGNORING THAT THE 2 ASSESSEE HAD FAILED TO IDENTIFY THE RECIPIENT OF PA YMENT ON THIS A/C, WHICH WAS IN ITS EXCLUSIVE KNOWLEDGE, DESPITE REASONABLE OPPORTUNITY, AND AS SUCH THE AO WAS JUSTIFIED IN TAKING AN ADVERSE VIEW. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION ON A/C OF BOGUS PURCHASES OF GAS CYLINDER VALVES, IGNORING THAT THE ASSESSEE HAD FAILED TO DISCHARGE THE BURDEN OF PROV ING THAT THE EXPENDITURE CLAIMED TO HAVE BEEN PAID ON T HIS A/C WERE, IN FACT, PAID AS SUCH BECAUSE CORRECT PARTICULARS OF THE PARTY TO WHOM THE SAME WAS ALLEGEDLY PAID WERE NOT FURNISHED. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION ON A/C OF BOGUS PURCHASES OF GAS CYLINDER VALVES, WITHOUT APPRECIAT ING THAT IN THE ABSENCE OF CORRECT PARTICULARS OF THE A LLEGED RECIPIENT OF PAYMENT ON THIS A/C, THE AMOUNT HAD NO T ONLY ESCAPED TAX IN THE HANDS OF THE ASSESSEE BUT I T ALSO ESCAPED TAX IN THE HANDS OF THE ALLEGED RECIPI ENT. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION ON A/C OF DISALLOWANCE OF LOADING & UNLOADING CHARGES, IGNORI NG THAT THE CONCERNS NAMELY M/S NR & CO. AND M/S DS & CO., TO WHOM PAYMENTS HAD ALLEGEDLY BEEN MADE, HAD RENDERED THE SAID SERVICES AND THAT THE EXPENSES WE RE WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF ASSESSEE'S BUSINESS. 5. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ALSO ERRED IN DELETING THE ADDITION ON A/C OF DISALLOWANCE OF LOADING & UNLOADING CHARGES, IGNORI NG THAT THE ALLEGED RECIPIENTS OF THE PAYMENT HAD FAIL ED TO SUBSTANTIATE THAT THEY WERE, IN FACT, CARRYING O N THE BUSINESS OF LOADING & UNLOADING. 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CLT (A) 3 HAS ERRED IN DELETING THE ADDITION OF RS.2,01,120/ - ON A/C OF UNEXPLAINED SUNDRY CREDITORS, BECAUSE THE ASSESSEE HAD FAILED TO DISCHARGE ITS ON US OF PROVING THE IDENTITY AND CREDITWORTHINESS O F THE CREDITOR AND THE GENUINENESS OF THE TRANSACTION. 7. IT IS PRAYED THAT THE ORDER OF THE CIT(A) BE SET AS IDE AND THAT OF THE AO RESTORED. 8. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED O F. 3. THE FIRST THREE GROUNDS OF APPEAL ARE RELATED TO SINGLE ISSUE PERTAINING TO THE ADDITION MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES OF GAS CYLINDER VALVES, WHICH WAS D ELETED BY THE LD. CIT(A). 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A HINDU UNDIVIDED FAMILY, DERIVING INCOME FROM THE BUSINESS OF TRADING INDUSTRIAL GASES. THE ASSESSEE, FILED ITS RETURN O F INCOME ON 27.10.2006, DECLARING INCOME OF RS.4,55,200/-. 5. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, LD. 'DR' CONTENDED THAT THE ASSESSEE, HAD EFFECTED PURCHASES OF VALVES FOR GAS CYLINDERS, AMOUNTING TO RS.4,14,000/- FROM M/S DEEP & CO., WHICH WAS FOUND NON-EXISTENT AT THE ADDRESS GI VEN ON THE BILLS. IT WAS, FURTHER, CONTENDED BY THE LD. 'DR' THAT ADDRESS GIVEN ON THE SALE BILLS WAS VAGUE, AS THE SAME DID NOT CONTAIN SCO NUMBER/BOOTH/SHOP NUMBER. LD. 'DR' REFERRED TO THE ASSESSMENT ORDER AND CONTENDED THAT TELEPHONE NO. 632071 MENTIONED IN THESE BILLS BELONG TO MR. B.K.MEHTA, H OUSE NO. 36, YOUNG DWELLERS SOCIETY, SECTOR 49A, CHANDIGARH. 4 SUBSEQUENTLY, THE ASSESSEE FURNISHED ANOTHER ADDRES S AS HOUSE NO.1214, PHASE-II, RAMDARBAR, CHANDIGARH. LD. 'DR' STRESSED THAT THIS AFTER-THOUGHT ADDRESS WAS FOUND TO BE NOT GENUINE AS IS EVIDENT FROM THE PERUSAL OF THE ASSESSMENT ORDER . ENQUIRIES WERE GOT CONDUCTED THROUGH INSPECTOR, WHO REPORTED THAT M/S DEEP & CO. NEVER EXISTED IN THE MARKET OF SECTOR 7 OR AT HOUSE NO.1214, RAMDARBAR, CHANDIGARH. THE ASSESSEE WAS P ROVIDED AN OPPORTUNITY TO PRODUCE THE PERSONS FROM WHOM ALL EGED PURCHASES HAD BEEN MADE. WITH A VIEW TO ASCERTAINI NG THE GENUINENESS OF PURCHASES AND THE PERSON ISSUING SUC H BILLS, AND IDENTITY OF THE PERSONS FROM WHOM SUCH PURCHASE S WERE MADE. IT IS MENTIONED THAT AS PER PARA 5.1 OF THE ASSESSMENT ORDER, A CREDIT BALANCE OF RS.4,14,000/- HAS BEEN SHOWN AS OUTSTANDING IN THE BALANCE SHEET, IN THE NAME OF M/S DEEP & CO., RAJPURA. THE ASSESSEE FAILED TO PRODUCE THAT PERSON, DESPITE OPPORTUNITIES GIVEN AN D FILED MERELY AN AFFIDAVIT, SIGNED BY A PERSON NAMELY NAND KISHORE SHARMA. LD. 'DR' VEHEMENTLY CONTENDED THAT THE CIT (A)S APPELLATE ORDER IS PASSED PURELY ON HYPOTHETICAL PR ESUMPTIONS AND ASSUMPTIONS, WITHOUT BRINGING ANY MATERIAL ON R ECORD. THE LD. 'DR', REFERRED TO AFFIDAVIT DATED 29.12.2008, A T PAGE 12 OF THE PAPER BOOK. WHICH DO NOT CONTAIN THE ADDRESS, AS ME NTIONED IN THE SALE BILLS, AS SUPPLIED BY THE ASSESSEE. IT IS DEPOSED IN THE SAID AFFIDAVIT THAT THE DEPONENT WAS LIVING IN CHAN DIGARH, ALONGWITH HIS FRIEND IN HOUSE NO.1214, PHASE-II, RA MDARBAR, ON RENTAL BASIS. IT IS MENTIONED THEREIN THAT THE LANDLORD, WHERE THE DEPONENT LIVED WITH HIS FRIEND, DID NOT I SSUE ANY 5 RECEIPT. IN VIEW OF THIS, LD. 'DR' CONTENDED THAT THE FIND INGS OF THE LD. AO BE UPHELD AND THAT OF THE CIT(A), BE SET ASIDE. 6. LD. 'AR' SUPPORTED THE FINDINGS OF THE CIT(A), A ND REFERRED TO VARIOUS PAGES OF THE PAPER BOOK, AS CONTAINED IN HIS SUBMISSION DATED 20.04.2010. LD. 'AR' PLACED RELIA NCE ON THE FOLLOWING DECISIONS: I) CIT V LEADER VALUES PVT. LTD. 285 ITR 435 (P&H) II) JCIT V MATHURA DAS ASHOK KUMAR (2006) 10 1 TTJ 810 (ALL) 7. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND THE CASE-LAWS REFERRED TO BY THE PARTI ES. IT IS A LEGALLY SETTLED PROPOSITION THAT IT IS INCUMBENT UP ON THE ASSESSEE TO ADDUCE REQUISITE EVIDENCE, IN SUPPORT O F HIS RETURN OF INCOME, AS CONTEMPLATED U/S 143(3), SUB-CLAUSE ( II) OF THE ACT. THIS LEGAL PROPOSITION IS, FURTHER, STRENGTHE NED IN A NUMBER OF JUDICIAL PRONOUNCEMENTS OF VARIOUS HIGH C OURTS AND SUPREME COURT. IN THE PRESENT CASE, THE ASSESSEE H AS MERELY FILED PURCHASE BILLS, PURPORTEDLY ISSUED BY M/S DEE P & CO., BEARING PARTICULARS OF ADDRESS AS SECTOR 7, MADHYA MARG, CHANDIGARH WITH TELEPHONE NUMBER OF A PERSON, WHO I S RESIDENT OF SECTOR 49A, CHANDIGARH. ON ENQUIRY, MADE BY THE AO, THE ASSESSEE CHOSE TO FURNISH ANOTHER ADDRESS OF RAMDAR BAR, CHANDIGARH. ENQUIRIES GOT CONDUCTED BY THE AO, EST ABLISHED THAT NONE EXISTED AT THIS ADDRESS, PROVIDED BY THE ASSESSEE. THIS FACTUM WAS CONFRONTED TO THE ASSESSEE AND THE ASSESSEE FAILED TO PRODUCE THE PROPRIETOR OF THE SAID CONCER N, WHO INSTEAD CHOSE TO FILE AFFIDAVIT DATED 29.12.2008. THE AFFIDAVIT FILED BY 6 THE ASSESSEE CANNOT BE ACCEPTED AS EVIDENCE, UNLESS CORROBORATED BY INDEPENDENT EVIDENCE. IT IS STATED IN THAT AFFIDAVIT THAT PROPRIETOR OF THE SAID CONCERN WAS S TAYING IN FINANCIAL YEAR 2005-06 IN RAMDARBAR IN A RENTAL HOU SE, ALONGWITH HIS FRIEND, AND FAILED TO ADDUCE ANY EVID ENCE, TO SUPPORT HIS ASSERTION, IN THIS MATTER. 8. FINDINGS OF THE AO, AS CONTAINED IN PARA 5.1 TO 5.4 ARE REPRODUCED HEREUNDER : 5.1 DISALLOWANCE ON ACCOUNT OF PURCHASES OF V ALVES FOR GAS CYLINDERS: DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE CLA IMED THAT PURCHASES OF VALVES; FOR GAS CYLINDERS HAVE BE EN MADE FROM M/S DEEP & COMPANY FOR A SUM OF RS.2,48,000 + RS.1,66,000 = RS.4,14,000/-. A CREDIT BALANCE OF RS.4,14,000/- HAS BEEN SHOWN AS OUTSTANDING IN THE BALANCE SHEET IN THE NAME OF M/S DEEP & CO, RAJPURA. THE AS SESSEE PHOTO COPIES OF TWO BILLS ISSUED BY M/S DEEP & CO, IT WAS NOTICED THAT THE ADDRESSES MENTIONED IN THESE BILLS IS M/S DEEP & CO, SECTOR-7, MADHYA MARG, CHANDIGARH. THERE IS NO MENTION OF SCO NO. BOOTH NO. OR SHOP NO. IN THESE B ILLS. ENQUIRIES REVEALED THAT THE TELEPHONE NO.632071 MENTIONED IN THESE BILLS BELONGED TO MR. V.K. MEHTA, HOUSE NO.36, YOUNG DEWELLERS SOCIETY, SECTOR-49A, CHANDIGARH. THE ASSE SSEE WAS REQUIRED TO FURNISH ADDRESS OF M/S DEEP & CO VIDE ORDER SHEET ENTRY DATED 10.04.08. AS PER LETTER DATED 06.05.200 8 FILED BY ASSESSEE THE ADDRESS WAS STATED AS H. NO.1214, PHAS E-II, RAMDARBAR, CHANDIGARH. 5.2 THE INSPECTOR OF THE OFFICE OF THE ITO, RAJPURA WAS DEPUTED TO MAKE ENQUIRIES REGARDING WHEREABOUTS OF M/S DEEP & CO AT SECTOR-7, MADHYA MARG, CHANDIGARH AND HOUSE NO.1214, PHASE-II, RAMDARBAR, CHANDIGARH. THE INSPE CTOR DEPUTED TO MAKE ENQUIRES REPORTED THAT M/S DEEP & CO NEVER EXISTED IN THE MARKET OF SECTOR-7, MADHYA MARG, CHA NDIGARH NOR AT HOUSE NO.1214, RAMDARBAR, CHANDIGARH. THE ASSESSEE WAS PROVIDED AN OPPORTUNITY TO PRODUCE THE PERSON F ROM 7 WHOM THE ALLEGED PURCHASES HAVE BEEN MADE AND WHO H AS ISSUED THE BILLS IN THE NAME OF M/S DEEP & CO. FOR FURTHER EXAMINATION / VERIFICATION ALONG WITH HIS BOOKS OF ACCOUNT OR ANY OTHER DOCUMENTS TO SUBSTANTIATE HIS CASE VID E LETTER DATED 12.06.2008 SERVED ON ASSESSEE ON 13.06.2008. THE ASSESSEE VIDE LETTER DATED 01.11.08 REITERATED THAT PRESENT ADDRESS OF M/S DEEP & CO IS HOUSE NO.1214, PHASE-II, RAMDARBAR, CHANDIGARH AND ITS PROPRIETOR SH. N.K. SHARMA IS AWAY TO UP AND HE WILL BE PRODUCED ON HIS CORNING B ACK FROM UP. A FINAL OPPORTUNITY WAS PROVIDED TO THE ASSESSE E VIDE ORDER SHEET ENTRY DATED 23.12.08. THE ASSESSEE COULD NOT PRODUCE THE PERSON AGAIN STATING THAT SH.NAND KISHORE SHARM A IS ON BED REST DUE TO FEVER ON ACCOUNT OF COLD WEATHER. T HE ASSESSEE MERELY FILED AN AFFIDAVIT SIGNED BY A PERS ON NAMED SH. NAND KISHORE SHARMA. 5.3 THE ASSESSEE PRODUCED ONE WITNESS SH. NAGESH KUMAR S/O SH.DAULAT RAM IN SUPPORT OF HIS CLAIM OF LOADIN G AND UNLOADING EXPENSES. INCIDENTALLY, MR. NAGESH KUMAR COULD NEITHER PRODUCE ANY EVIDENCE IN RESPECT OF E ITHER LOADING AND UNLOADING BUSINESS NOR COULD HE PRODUCE ANY EVI DENCE REGARDING HIS ASSOCIATION WITH M/S N R & CO. SH. NA GESH KUMAR HAS BEEN STATED TO BE THE PROPRIETOR OF M/S N R & CO. WHOSE ADDRESS WAS GIVEN EARLIER AS H.NO.2665B, SECT OR-28C, CHANDIGARH. IT WAS NOTICED THAT SH. NAGESH KUMAR IS RESIDING AT H. NO.L214-PHASSE-II, RAMDARBAR, CHANDIGARH AND HE IS AN EMPLOYEE OF THE ASSESSEE. ON THE BASIS OF THE INFOR MATION PROVIDED BY THE ASSESSEE CURLIER, THE INSPECTOR OF O/O THE ITO, RAJPURA DEPUTED TO MAKE ENQUIRIES IN THE CASE OF M/S N R & CO REPORTED THAT SH. NARESH KUMAR WORKING AS ACCOUNTAN T WITH M/S CHANDIGARH GASES AND DRAWING SALARY THERE FROM WAN RESIDING IN 11. NO,2GG6B, SECTOR-28C, CHANDIGARH AND WHO HAS STATED THAT HE NEVER DID LOADING AND UNLOADING BUSINESS WI TH THE FIRM AND THAT HE HAS NO BUSINESS DEALINGS WITH M/S CHAND IGARH CASES EXCEPT DRAWING SALARY FROM THE SAID FIRM AS A N EMPLOYEE 5.4 IT IS APPARENT FROM THE ABOVE DISCUSSION THAT THER E IS NO CONSISTENCY IN THE STATEMENTS / INFORMATION P ROVIDED BY THE ASSESSEE AND THERE ARE INHERENT CONTR ADICTION IN THE CLAIMS OF THE ASSESSEE. THE ASSESSEE HAS QUOTED THE ADDRESS OF ONE OF HIS EMPLOYEES AS THE PLACE OF THE BUSINES S, WHENEVER IT SUITED HIM. IN VIEW OF THESE FACTS NARRATED ABO VE, IT IS 8 APPARENT THAT THE EXPLANATION GIVEN BY THE ASSESSEE IN RESPECT OF PURCHASES OF GAS CYLINDER CAN NOT BE ACCEPTED. AN AMOUNT OF RS.4,14,000/- IS THEREFORE ADDED BAC K TO THE INCOME OF ASSESSEE ON ACCOUNT OF INADMISSIBLE EXPEN SES. PENALTY PROCEEDING U/S 271(1) (C) OF THE INCOME TAX ARE BEING INITIATED SEPARATELY W.R.T. ADDITIONS MENTIONED AB OVE, FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 9. A PERUSAL OF THE FINDINGS OF THE LD. CIT(A), REV EALS CIT(A) HAS IGNORED THE CARDINAL EVIDENCE AND MATERIAL BROU GHT ON RECORD BY THE AO AND PROCEEDED TO DRAW INFERENCES, BASED ON IRRELEVANT MATERIAL. THE LD. CIT(A) MADE AN OBSERVATION THAT CONTENTION OF THE APPELLANT, THAT THERE CANNOT BE A NY SALE WITHOUT CORRESPONDING PURCHASE, HAS ALSO NO SUBSTAN TIAL FORCE, LOOKING TO THE TOTALITY OF THE CIRCUMSTANCES . SUCH OBSERVATION OF THE LD. CIT(A), CONTRADICTS THE BASI S OF THE FINDINGS OF THE CIT(A), TREATING SUCH PURCHASES AS GENUINE. LD. CIT(A), DISCUSSED THE PROVISION OF SECTION 28 AND 2 9, AND JUSTIFIED THE SAID TRANSACTIONS BY WAY OF ALLOWANCE S ADMISSIBLE U/S 30 TO 43D. SUCH OBSERVATION OF THE CIT(A) IS R EQUIRED TO BE CONTEXTUALIZED, TO THE FACTS OF THE PRESENT CASE. A NY CLAIM MADE BY THE ASSESSEE, CANNOT BE ALLOWED ON THE BASIS OF BARE ASSERTIONS, OR STATEMENT OF RELEVANT PROVISIONS OF THE ACT, UNLESS DULY SUPPORTED BY RELEVANT, COGENT AND CORRO BORATIVE EVIDENCES AND SQUARELY FALLS UNDER THE RELEVANT PRO VISIONS OF THE ACT. IT WOULD BE IN THE FITNESS OF THINGS TO R EPRODUCE RELEVANT FINDINGS OF THE CIT(A), AS CONTAINED IN PA RA 3.7 OF THE ORDER : 3.7 I HAVE GONE THROUGH THE ASSESSMENT ORDER, WRIT TEN AS WELL AS ORAL ARGUMENTS OF THE ID. COUNSEL FOR THE ASSESS EE AND THE REMAND REPORT FILED BY THE ASSESSING OFFICER AND TH E JUDGMENTS 9 OF THE TRIBUNAL AND HIGH COURT AND FIND THAT THE RA TIO LAID DOWN BY THE JUDGEMENT OF THE SHIVNATH HARNARYAN 'B' BENC H DELHI DATE 13 SEPT. 1991 I.E. EVEN IF THE NAME OF THE PER SON FROM WHOM THE PURCHASES HAVE BEEN MADE IS STATED INCORRE CTLY STILL THE DEDUCTION IS TO BE ALLOWED IS SQUARELY APPLICAB LE TO THE ASSESSEE'S CASE I.E. PHONE NUMBER IS OF SOME OTHER PERSON AND THE ADDRESSES IS NOT COMPLETE. THE TRANSACTION OF P URCHASE OF VALVE AMOUNTING TO RS. 4,14,000/- IS A GENUINE TRAN SACTION AS SUPPORTED BY SUFFICIENT MATERIAL PLACED ON RECORD I .E. PHOTOCOPY OF THE PURCHASE BILLS, COPY OF ACCOUNT, AFFIDAVIT DATED 29.11.2008 OF NAND KISHORE PROP, OF COMPANY AND PA YMENT VOUCHERS FOR WHICH THERE HAS NOT BEEN SUBMISSION AN D THE MATERIAL BY THE ASSESSING OFFICER IN THE REMAND REP ORT TO DENY THE CATEGORICAL STAND OF THE ASSESSEE. ASSESSEE ON HIS OWN VOLITION ON 17.6.2009 PRODUCED SHRI NAND KISHORE PR OP. DEEP & CO. WHO HAS CONFIRMED THE FACT OF SUPPLYING VALVES FOR RS.414000/- IN F.Y. 2005-06 AND HAS SUPPORTED HIS S TAND WITH COPY OF STATEMENT OF TOTAL INCOME FOR A.Y. 2006-07 AND PAN CARD. THE CONTENTION OF THE APPELLANT THAT THERE CO ULD NOT BE ANY SALE WITHOUT CORRESPONDING PURCHASE HAS ALSO NOT SU BSTANTIAL FORCE LOOKING TO THE TOTALITY OF CIRCUMSTANCES. EVE N AO HAS NOT TAKEN HIS INQUIRY TO ANY LOGICAL CONCLUSION. THE PR OVISION OF SECTION 29 OF THE ACT HAVE THE UNDERSTATED WORDS T HE INCOME REFERRED TO IN SECTION 28 SHALL BE COMPUTED IN ACCO RDANCE WITH THE PROVISIONS CONTAINED IN SECTION 30 TO 43D. WHE REIN WHILE ARRIVING AT THE CHARGEABLE INCOME ALL EXPENSES ARE TO BE ALLOWED, THEREFORE, THE ORDER IS ERRONEOUS ON THIS GROUND WHEREBY INITIALLY THE STAND OF THE AO WITH REGARD T O THE GENUINENESS OF THE TRANSACTION HAVE BEEN SUFFICIENT LY PROVED WHICH HAS WRONGLY BEEN TAKEN BY THE AO AND THEREFOR E EVEN ON MERITS THE CLAIM OF THE EXPENSES IS AN ALLOWABLE DE DUCTION FOR THE CARRYING AND CONDUCT OF THE BUSINESS BY ARRIVIN G AT THE CHARGEABLE INCOME, THEREFORE, THE ADDITION MADE BY THE AO IS NOT SUSTAINABLE AND DIRECTED TO BE DELETED. HOWEVER , AO IS DIRECTED TO INTIMATE TO THE RESPECTIVE AOS FOR VER IFICATION. (RELIEF RS.4,14,000/-.) 10 9(I) THE HON'BLE ALLAHABAD HIGH COURT IN THE CAS E OF SRI KRISHNA V CIT & OTHERS 142 ITR 618 HAS HELD THAT DE POSITION MADE IN THE AFFIDAVIT WITHOUT CORROBORATION, CANNOT BE TREATED AS A SACROSANCT EVIDENCE. IT WAS FURTHER HELD BY TH E HON'BLE HIGH COURT THAT IT IS NEITHER A RULE OF PRUDENCE, N OR A RULE OF LAW THAT INVARIABLY BE ACCEPTED AS TRUE AND RELIABL E. ORDINARILY, IN THE ABSENCE OF DENIAL, THE STATEMENTS MAY BE ACC EPTED AS TRUE TO HAVE THEIR CIRCUMSTANCES, WHICH SUGGEST THA T THE STATEMENTS OF AFFIDAVIT SHOULD NOT BE ACCEPTED AS T RUE. THE ABSENCE OF DENIAL BY THE OTHER SIDE, WOULD NOT BY I TSELF BE SUFFICIENT TO CLOTHE THE STATEMENTS OF AFFIDAVIT WI TH TRUTHFULNESS AND RELIABILITY. IN VIEW OF THIS, DEPOSITION MADE I N THE SAID AFFIDAVIT CANNOT BE ACCEPTED, HAVING INFALLIBLE EVI DENTIARY VALUE. 9(II) IT IS, FURTHER, ADDED THAT PRIMARILY, ONUS IS ALWAYS ON A PERSON WHO ASSERTS A PROPOSITION OR FACT, WHICH IS NOT SELF- EVIDENT. THE ONUS MAY BE HEAVY OR LIGHT, DEPENDING UPON THE FACTS OF A PARTICULAR CASE. THE TEST OF HUMAN PROB ABILITY AND SURROUNDING CIRCUMSTANCES, AS LAID DOWN BY THE HON' BLE SUPREME COURT IN THE CASE OF CIT V DURGA PARSAD MOR E 82 ITR 540 IS APPLICABLE TO THE INCOME TAX PROCEEDINGS. I N THE PRESENT CASE, THE ASSESSEE HAS MERELY FILED AN AFFIDAVIT, W HICH IS VAGUE IN DEPOSITION AND WITHOUT ANY INDEPENDENT CORROBORA TION. HENCE, HAVING REGARD TO THE PECULIAR FACTS AND CIRC UMSTANCES OF THE CASE, SAID AFFIDAVIT CANNOT BE ACCEPTED AS SACR OSANCT EVIDENCE, JUSTIFYING THE GENUINENESS OF PURCHASES M ADE BY THE ASSESSEE. IT IS INCUMBENT UPON THE ASSESSEE TO PRO DUCE COGENT AND CORROBORATIVE EVIDENCE TO JUSTIFY THE SAID PURC HASES FROM AN EXISTING PARTY, HAVING GENUINENESS OF THE TRANSACTI ONS. 11 10. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V L A MEDICA 250 ITR 575 HAS HELD THAT PURCHASES FROM NON -EXISTENT PARTY IS TO BE TREATED AS INCOME FROM UNDISCLOSED S OURCES. THE HEAD-NOTE OF THE DECISION IS REPRODUCED HEREUNDER : INCOME FROM UNDISCLOSED SOURCES-RAW MATERIAL PURCH ASED BY ASSESSEE-AO FINDING SELLER NON-EXISTENT AND T REATING AMOUNT OF PURCHASE PRICE AS INCOME FROM UNDISCLOSED SOURCES-TRIBUNAL HOLDING THAT NOTWITHSTANDING SUSPICIOUS CIRCUMSTANCES PURCHASES WERE MADE AND PAYMENTS NOT TO BE DOUBTED-TRIBUNAL ACTING PARTLY O N RELEVANT AND PARTLY ON IRRELEVANT MATERIALS-NO MATERIAL TO CONCLUDE THAT SUM NOT TO BE TREATED AS INCOME FROM UNDISCLOSED SOURCE-FINDING OF TRIBUNAL VITIATED-INCOME-TAX ACT,1961. IN THE PRESENT CASE, THE ALLEGED PURCHASES WERE MAD E BUT NO PAYMENT HAS SINCE BEEN MADE, AS OBSERVED BY THE AO. 10(I) SIMILARLY, THE HON'BLE ITAT, AHMEDABAD IN T HE CASE OF VIJAY PROTEINS LTD. V ACIT HELD THAT BOGUS PURCHASE S ARE NON- GENUINE PURCHASES, HAS TO BE TREATED AS INCOME OF T HE SE FROM UNDISCLOSED SOURCES. THE RELEVANT PORTION OF THE D ECISION IS REPRODUCED HEREUNDER : SECTION 145 OF THE INCOME-TAX ACT,1961-METHOD OF ACCOUNTING-ADDITIONS TO INCOME-ASSESSMENT YEAR 1991 -92- WHETHER ASSESSEE-COMPANY HAVING FAILED TO PROVE GENUINENESS OF TRANSACTIONS WITH 33 SUPPLIERS OF OI L CAKES EITHER BY PRODUCING THEM OR BROKERS OR TRANSPORTERS , AOS FINDING THAT SALES INVOICES, VOUCHERS FOR FREIGHT P AYMENTS IN RESPECT OF PURCHASES WERE ALL FICTITIOUS ONES, W ERE JUSTIFIED-HELD, YES - WHETHER ASSESSEE HAVING FAILE D TO PROVE THAT SUCH OIL CAKES WERE RECEIVED FROM OUTSID E GUJARAT STATE, AS SHOWN IN AFORESAID INVOICES, DISALLOWANCE BY AO OF ENTIRE FREIGHT CHARGES IN REL ATION TO AFORESAID PURCHASES HAD TO BE CONFIRMED- HELD, YES WHETHER ADDITION MADE ON ACCOUNT OF ADEQUATELY COVE R UNEXPLAINED PEAK AMOUNT OF INVESTMENT MADE IN PURCH ASE OF SUCH OIL CAKES, AND NO SEPARATE ADDITION COULD B E MADE 12 IN RESPECT OF CLOSING CREDIT BALANCES FOUND AGAINST SOME OF THOSE BOGUS SUPPLIERS HELD, YES WHETHER DETECTI ON BY AO OF SERIOUS MISTAKES FOUND IN VOUCHERS PRODUCED B Y SE AND THAT TOO, OF A LARGE AMOUNT JUSTIFIED REJECTION OF ASSESSEE'S BOOKS OF ACCOUNT AND CONSEQUENTLY LUMP S UM ADDITION, BASED ON RESULTS OF PERCENTAGE OF YIELD O F OIL AND OIL CAKES DECLARED BY ASSESSEE ITSELF IN PRECEDING AND SUBSEQUENT YEARS, WAS JUSTIFIED AND HAD TO BE CONFI RMED HELD, YES.' 11. THE ASSESSEE FAILED TO DISCHARGE EVEN THE PRIM A-FACIE ONUS CAST ON HIM TO PROVE THE GENUINENESS OF SUCH P URCHASE. PECULIAR FACTS OF THE CASE AND CONDUCT OF THE ASSES SEE DONT LEND ANY CREDIBILITY TO THE BARE ASSERTIONS MADE BY THE ASSESSEE IN THE PRESENT CASE. THE PLACE OF BUSINESS OF THE SELLER IS STILL A MYSTERY, WHICH THE ASSESSEE ALONE CAN LIFT THE VE IL OF SECRECY AND SUSPICION. THE EXPLANATION TENDERED BY THE ASS ESSEE IS NOT PLAUSIBLE, AND SHIFTING IN CHARACTER. IN VIEW OF T HE ABOVE LEGAL AND FACTUAL DISCUSSIONS, THE FINDINGS OF THE CIT(A) ARE SET ASIDE AND THAT OF THE AO ARE RESTORED. THUS, THE REVENUE SUCCEEDS IN RESPECT OF SUCH GROUNDS OF APPEAL. 12. GROUND NOS. 4 & 5 ARE INTER-LINKED AND RELATED TO SINGLE ISSUE OF DISALLOWANCE OF LOADING AND UNLOADING CHAR GES. LD. 'DR' SUPPORTED THE ORDER PASSED BY THE AO AND REFERRED T O PARA 4.2 AT PAGE 2 OF THE CIT(A)S ORDER. LD. 'AR', ON THE O THER HAND, REFERRED TO LEDGER ACCOUNT, ON SUCH LOADING & UNLOA DING CHARGES, AT PAGE 105, 106, 107-119 OF THE PAPER BOO K. LD. 'AR' FURTHER REFERRED TO THE TURNOVER OF THE ASSESSEE AT RS.2,01,91,331/- WITH A VIEW TO JUSTIFY EXPENSES IN CURRED ON LOADING/UNLOADING. 13 13. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSION S AND FACTS OF THE CASE. THE FACTS ARE, THAT THE ASSESSEE HAD CLAIMED A AMOUNT OF RS.9,68,606/- AS LOADING/UNLOADING EXPENS ES, PAYABLE TO GUPTA & CO., RAJPURA, N.R. & CO., CHANDI GARH AND D & S CO., RAJPURA, OUT OF WHICH N.R. & CO., CHANDIGA RH AND D & S CO., RAJPURA ARE SHOWN AS SUNDRY CREDITORS IN THE BALANCE SHEET. THE ASSESSEE PRODUCED BEFORE THE AO NAGESH KUMAR, PROPRIETOR OF N.R. & CO. AND SHRI DES RAJ OF D & S CO., TO SUBSTANTIATE THE CLAIM. BOTH THESE PERSONS WERE EXA MINED ON 30.12.2008. THE AO MADE AN ADDITION OF RS.6,69,173 /- BY DISALLOWING THE EXPENSES, PAYABLE TO N.R. & CO. AND D & S CO., ON THE FOLLOWING GROUNDS : 4.2 THE ASSESSING OFFICER MADE AN ADDITION OF RS. 6,69,173/- BY DISALLOWING THE EXPENSES PAYABLE TO N R & CO. AND D&S CO. ON THE FOLLOWING GROUNDS: I) NAGESH KUMAR IS AN EMPLOYEE OF THE ASSESSEE AND DES RAJ IS AN EMPLOYEE OF JALAN SALES, RAJPURA THE SISTER CONCERN OF THE ASSESSEE. II) NONE OF THEM IS ASSESSED TO INCOME TAX AND NO EVIDENCE PRODUCED REGARDING THE PROPRIETORSHIP OF THE RESPECTIVE CONCERNS. III) THEY HAVE NOT FILED THE RETURN OF INCOME DURING THE RELEVANT FINANCIAL YEAR THOUGH THE ASSESSEE HAS ISSUED TDS CERTIFICATE TO THEM. IV) THEY HAVE NOT PREPARED THE BILLS OF LOADING AND UNLOADING ISSUED. V) BILLS HAVE BEEN ISSUED BY THESE CONCERNS ON COMMON STATIONERY AVAILABLE IN THE MARKET. VI) TDS CERTIFICATE ISSUED BY THE ASSE SSEE DO NOT BEAR ANY PAN NO. 14. THE CIT(A) DELETED THE IMPUGNED ADDITION ON APP RECIATION OF THE SUBMISSIONS FILED BEFORE HIM. THE FINDINGS OF THE LD. 14 CIT(A), AS CONTAINED IN PARA 5.2 OF THE ORDER, ARE REPRODUCED HEREUNDER : 5.2 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STATEMENTS OF FACTS, WRITTEN AS WELL AS ORAL ARGUME NTS OF THE ID. COUNSEL FOR THE ASSESSEE AND THE REMAND REPORT FILED BY THE ASSESSING OFFICER AND FIND THAT IDENTITY AND CREDITWORTHINESS OF SUCH CREDITORS IS PROVED BY THE ASSESSEE BY PLACING ON RECORD THE COP Y OF PAN, COPY OF RENT CERTIFICATE AND GENUINENESS TRANSACTION IS PROVED BY THE ASSESSEE BY PLACING ON RECORD THE COPY OF BILL OF LEDGER ACCOUNT AND JOURN AL, COPY OF TDS CERTIFICATE, & COPY OF. RETURNS FOR A.Y . 2006-07FILED VIDE LETTER DATED 11.06.2009 AND FURTH ER THE AO HIMSELF HAS ALLOWED THE EXPENSES IN PART WHI CH IS EVIDENT FROM THE ASSESSMENT ORDER AND PARA 6 OF THE STATEMENT OF FACTS HENCE THE ACTION OF THE AO IS ERRONEOUS AND UNSUSTAINABLE. FURTHER SINCE AS PARA 6.5 (SUPRA) OF THIS ORDER, I HAVE DELETED THE ADDIT ION ON SUCH EXPENSES BY ACCEPTING THE EXPLANATION AND EVIDENCE BEING THE MATERIAL ON RECORD THEREFORE THE ADDITION MADE BY THE AO IS NOT SUSTAINABLE AND DIRECTED TO BE DELETED. HOWEVER, AO IS AT LIBERTY T O INTIMATE TO RESPECTIVE AO. 15. WE HAVE ALSO PERUSED SUBMISSIONS FILED BY THE A SSESSEE BEFORE CIT(A) AND FOUND THAT SAID EXPENSES WERE DUL Y RECORDED IN THE BOOKS OF ACCOUNT AND SUPPORTED BY WAY OF REL EVANT PAGES OF THE PAPER BOOK, TDS HAS BEEN DEDUCTED AND DEPOSI TED TO THE DEPARTMENT AND EVIDENCE HAS BEEN PLACED AT PAGES 12 0 TO 128 OF THE PAPER BOOK. PAN CARD OF SHRI NAGESH KUMAR I S AT PAGE 39-40, COPY OF BILLS OF LOADING AND UNLOADING ARE A NNEXED AT PAGE 96-104, AS MENTIONED BY THE CIT(A) ARE ON RECO RD. PHOTO COPY OF INCOME TAX RETURN OF NAGESH KUMAR, PROPRIET OR OF 15 N.R.& CO. AS WELL AS DES RAJ, PROPRIETOR OF D & S C O. CLAIMING CREDIT/TDS HAS BEEN FILED. 16. HAVING REGARD TO THE FACT-SITUATION AND THE LEG AL POSITION, THESE TWO GROUNDS ARE DISMISSED. 17. IN GROUND NO.6, THE REVENUE CONTENDED THAT CIT( A) ERRED IN DELETING ADDITION OF RS.2,01,120/- ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS, AS THE ASSESSEE HAD FAILED TO DIS CHARGE ITS ONUS FOR PROVING THE IDENTITY AND CREDIT-WORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. LD. 'DR' CONTENDED THAT NO CONFIRMATION HAD BEEN FILED AND R EFERRED TO PARA 7 OF THE ASSESSMENT ORDER AND PARA 6.5 OF THE CIT(A) ORDER. 18. THE AO, IN THE COURSE OF ASSESSMENT PROCEEDINGS , SOUGHT DETAILS OF POSTAL ADDRESSES OF M/S SANDEEP GASES PV T. LTD., MANDI GOBINDGARH AND M/S VIKAS TRADING CO., GT ROAD , LUDHIANA. THE ASSESSEE FAILED TO FURNISH ANY POSTA L ADDRESS IN RESPECT OF THESE PARTIES. THESE PARTIES WERE SHOWN AS SUNDRY CREDITORS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. M/S SANDEEP GASES PVT. LTD. HAS BEEN SHOWN TO BE SUNDRY CREDITO RS FOR RS.84,185/-, M/S VIKAS TRADING CO. LTD. AS SUNDRY C REDITOR FOR RS.1,53,880/-. THE AO, OBSERVED THAT M/S VIKAS TRA DING CO. HAD BEEN PAID AN AMOUNT OF RS.2,01,120/- IN CASH FR OM THE IMPREST ACCOUNT OF KARTA SHRI S.K.JALAN. THE AO, I N THE LIGHT OF NON-FILING OF CONFIRMATIONS AND REQUISITE DETAILS F OR VERIFICATION OF THE CLAIM OF THE ASSESSEE, IN RESPECT OF SUNDRY CREDITORS, MADE AN ADDITION OF RS.4,39,185/-. 16 19. LD. CIT(A), IN PARA 6.5 RECORDED THE FINDING THAT SUCH LIABILITIES ARE TRADE LIABILITIES AND NOT SUCH WHIC H ARE MENTIONED IN SECTION 68 OF THE ACT. . A BARE PERUSAL OF THE RELEVANT PROVISION OF SECTION 68 OF THE ACT REVEALS THAT ANY SUM FOUND CREDITED IN THE BOOKS OF THE ASSESSEE, MAINTAINED F OR ANY PREVIOUS YEARS AND THE ASSESSEE OFFERS ANY EXPLANAT ION ABOUT THE NATURE AND SOURCE THEREOF, OR THE EXPLANATION O FFERED BY HIM, IS NOT, IN THE OPINION OF THE AO, SATISFACTORY , THE SUM SO CREDITED, MAY BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THESE OBSERVATIONS OF THE AO, ARE CONTRARY TO THE EXPRESS PROVISIONS OF THE ACT. IN SECTION 68 OF THE ACT, ALL LIABILITIES ARE COVERED. LD. CIT(A ), FURTHER OBSERVED THAT, CONSIDERING A WRONG OUTSTANDING CRED ITOR AND ENTIRETY OF FACTS AND CIRCUMSTANCES, THE ADDITION O F THE BALANCE AMOUNT OF RS.1,53,880/- OUTSTANDING AS ON 31.03.200 6 IS HEREBY CONFIRMED AND THE BALANCE ADDITION OF RS.2,0 1,120/- FOR PAYMENTS MADE IN FINANCIAL YEAR 2005-06 IS UNSUSTAI NABLE. THEREFORE, THE SAID ADDITION IS DIRECTED TO BE DELE TED. 20. RELEVANT FINDINGS OF THE CIT(A), AS CONTAINED I N PARA 6.5 AND 6.6 ARE REPRODUCED HEREUNDER : 6.5 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STA TEMENTS OF FACTS, WRITTEN AS WELL AS ORAL ARGUMENTS OF THE ID. COUNSEL FOR THE ASSESSEE AND THE REMAND REPORT FILED BY THE ASS ESSING OFFICER AND FIND THAT SUCH LIABILITIES ARE TRADE LI ABILITIES AND NOT SUCH WHICH ARE MENTIONED IN THE SECTION 68 OF T HE ACT. ASSESSING OFFICER IS WRONG BY SAYING THAT THE ASSES SEE FAILED TO PROVIDE THE POSTAL ADDRESS OF SANDEEP GASES PVT. LT D. WHEREAS SUCH ADDRESS HAS BEEN PROVIDED BY THE ASSESSEE VIDE SUBMISSIONS DATED 01.11.2008 PARA 3 APPEARING AT PA GE 54 AND 17 FURTHER THE SUCH ADDRESS HAS BEEN CORROBORATED BY A DDRESS MENTION IN THE LIST OF PARTIES TO WHOM SANCTION OF INVESTMENT INCENTIVES WAS GRANTED BY THE OFFICE OF THE DIRECTO R OF INDUSTRIES AND COMMERCE. EVEN IT IS A REGISTERED COMPANY AND A.O. COULD WELL VERIFY THIS FACT FROM OFFICE OF REGISTRAR OF COMPANIES I.E. R.O.C. EVEN ALL THE PAYMENTS HAVE BE EN MADE IN NEXT YEAR. MOREOVER APPELLANT IS MAINTAINING QUA NTITATIVE RECORDS OF GAS CYLINDER PURCHASED AND SOLD AND NO D EFECT HAS BEEN POINTED OUT IN THE SAID RECORDS, HENCE THE FI NDING OF THE ASSESSING OFFICER IS ERRONEOUS AND UNSUSTAINABLE. A S SUCH THE ADDITION OF RS.84185/-IS DIRECTED TO BE DELETED. AS FAR AS THE ISSUE IN REGARD TO VIKAS TRADING COMPANY IS CONCERN ED, THE ASSESSEE PRODUCED THE PAYMENT VOUCHERS AND FROM PAR A 7 OF THE IMPUGNED ORDER IT IS PROVED THAT DEALING WITH S UCH COMPANY IS A TRADING ACTIVITY AND ANY LIABILITY EME RGING THEREFROM IS A TRADING LIABILITY WHICH IS EVIDENT F ROM THE OPENING BALANCE, CLOSING BALANCE AND PAYMENT DURING THE YEAR HENCE THE ACTION OF THE ASSESSING OFFICER IS ERRONE OUS. 6.6 THEREFORE, CONSIDERING THE LONG OUTSTANDING CREDITO R AND ENTIRETY OF FACTS AND CIRCUMSTANCES, THE ADD ITION OF BALANCE AMOUNT OF RS.153880/- OUTSTANDING ON 31.03. 2006 IS HEREBY CONFIRMED AND BALANCE ADDITION OF RS. 2,01,1 20/- FOR PAYMENTS MADE IN F.Y. 2005-06 IS UNSUSTAINABLE, THE REFORE, THE ADDITION OF RS. 2,01,120/- IS DIRECTED TO BE D ELETED. (CONFIRM RS. 1,53,88O/-) (RELIEF RS. 2,01,120/-) 21. HAVING REGARD TO THE FACT-SITUATION OF THE CASE AND THE FINDINGS OF THE LD. CIT(A) AS ALSO THE RIVAL SUBMIS SIONS, WE UPHOLD THE FINDINGS OF THE CIT(A), TO THE EXTENT OF DELETION OF RS.2,01,120/-. HOWEVER, THE ISSUE OF CONFIRMATION OF RS.1,53,880/- IS DEALT WITH AND ADJUDICATED WHILE D EALING WITH 18 GROUND NO. 1 RAISED IN THE CO BY THE ASSESSEE, UNDE R PARA 25 TO 26 OF THIS ORDER. 22. GROUND NOS. 7 & 8 ARE GENERAL IN NATURE, AND, H ENCE NEED NO SEPARATE ADJUDICATION. ACCORDINGLY, THESE GROUN DS ARE DISMISSED. 23. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED. C.O. NO.64 IN ITA 854/CHD/2009 24. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF AP PEAL IN THE CROSS OBJECTIONS : 1. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACT S AND LAW FOR ADDITION OF RS. 1,53,880/- FOR SUNDRY CREDITORS WHERE BY HAVING ACCEPTED THE SUBSTANCE OF THE TRANSACTION IN ACCORDANCE WITH THE REQUIREMENTS OF SECTION 68 {DEEMING PROVIS ION} OF THE ACT WHICH ITSELF IS A PERVERSITY. 2. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS A ND LAW FOR ADDITION OF RS.94,424/- (1/4 TH OF RS.3,76,696/-) BEING COMMISSION EXPENSES PAID TO RELIABLE ELECTRODES (SI STER CONCERN) SINCE NOT CONSIDERING THE BUSINESS EXIGENC Y AND COMMERCIAL EXPEDIENCY. ALTERNATIVELY THE QUANTUM OF DISALLOWANCE IS BEING CHALLENGED. 3. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS AND LAW FOR THE DISALLOWANCE OF EXPENSES RS. 61,227/-(L/6 TH OF 3,76,360/-) TREATING THE SAME CONTAINING ELEMENT OF PERSONAL NA TURE. ALTERNATIVELY THE QUANTUM OF DISALLOWANCE IS BEING CHALLENGED SINCE NOT IN ACCORDANCE WITH THE DIVISIONAL BENCH { CHANDIGARH} DECISION. 25. IN GROUND NO.1, AS RAISED IN CO, THE APPELLANT HAS CHALLENGED THE CONFIRMATION OF ADDITION OF RS.1,53, 880/- FOR 19 SUNDRY CREDITORS IN THE LIGHT OF THE EXPRESS PROVIS IONS OF SECTION 68 OF THE ACT. 26. HAVING GONE THROUGH THE FINDINGS OF THE LD. CIT (A), AS CONTAINED IN PARA 6.6, WHEREBY AN OBSERVATION HAS B EEN MADE BY THE CIT(A) THAT CONSIDERING THE LONG OUTSTANDING CREDITOR AND ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ADDITION OF BALANCE AMOUNT OF RS.1,53,880/- OUTSTANDING AS O N 31.3.2006, IS HEREBY CONFIRMED, CONTENTION OF THE A PPELLANT APPEARS TO BE CORRECT, AS LONG OUTSTANDING CREDITOR CAN ONLY BE ADDED U/S 68 OF THE ACT, IN THE YEAR, IN WHICH IT A PPEARS FOR THE FIRST TIME. THE LANGUAGE OF THE PROVISIONS OF SECT ION 68 OF THE ACT IS EXPRESSLY CLEAR AND NO LONG OUTSTANDING CREDITORS CAN BE ADDED TO THE YEAR IN WHICH THE SAME APPEAR FOR T HE FIRST TIME. THE PROVISIONS OF SECTION 68 COMMENCE WHEREIN A SUM IS FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE AS SESSEE FOR ANY PREVIOUS YEAR.., THE SUMS SO CREDITED MAY BE CHARGED TO INCOME TAX AS INCOME OF THE ASSESSEE OF THAT PRE VIOUS YEAR. IN VIEW OF THIS, CONTENTION OF THE ASSESSEE RAISED IN CO IS ACCEPTED AND ADDITION CONFIRMED BY THE CIT(A), I S DELETED, IN THE LIGHT OF THE PROVISIONS OF SECTION 68 OF THE AC T. 27. GROUND NOS. 2 & 3 IN CO PERTAIN TO AGREED ADDIT ION, AS CONTENDED BY LD. 'DR'. A PERUSAL OF PARA 8 OF THE A SSESSMENT ORDER REVEALS THAT THE ASSESSEE ACCEPTED A DISALLOW ANCE OF 1% OUT OF COMMISSION PAID @ 4%. CONSEQUENTLY, AO MADE ADDITION OF RS.94,424/-, BEING 1/4 TH OF THE TOTAL COMMISSION OF RS.3,77,696/-. SIMILARLY, ADDITION OF RS.61,227/- BEING 1/6 TH OF 20 RS.3,67,360/- ON ACCOUNT OF CAR AND TELEPHONE EXPEN DITURE, AS AGREED BY THE ASSESSEE, THE ADDITION HAS BEEN MADE BY THE AO. 28. IN VIEW OF THE CONSENT GIVEN BY THE ASSESSEE, I N THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE REASONS BEST KNOW N TO HIM, THE SAME CANNOT BE BACK-TRACKED. THIS VIEW IS SUPPO RTED BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF BANTA SINGH KARTAR SINGH 125 ITR 239 (P&H). THEREF ORE, THESE GROUNDS OF APPEAL, RAISED IN THE CO, ARE DISMISSED AND CO OF THE ASSESSEE IS PARTLY ALLOWED. 29. IN THE RESULT, APPEAL OF THE REVENUE AND CO OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH APRIL,2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19 TH APRIL,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH