ACIT, Noida V. M/s Indo Wide Com International Ltd., Noida

ITA 856/DEL/2011

• Counselvise Citation: 85620114 RSA 2011
• Duration Of Justice: 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 11-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Income from undisclosed sources; Additional evidence; Non compliance
• Section: 142(1); 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI R.P. TOLANI, JM & SHRI A.N. PAHUJA, AM ITA NOS.856 & 857/DEL/2011 AYS:2005-06 & 2007-08 ASSTT. C.I.T.,CIRCLE,NOIDA G BLOCK SHOPPING COMPLEX,SECTOR-20,NOIDA V/S . M/S INDO WIDECOM. INTERNATIONAL LTD., SDF, D- 7, NSEZ, NOIDA ITA NO.1013/DEL/2011 ASSESSMENT YEAR:2005-06 M/S INDO WIDECOM. INTERNATIONAL LTD., SDF, D- 7, NSEZ, NOIDA V/S . D.C.I.T.,CIRCLE,NOIDA G BLOCK SHOPPING COMPLEX,SECTOR-20,NOIDA [PAN NO.: AAACI 6995 D] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI AJAY WADHWA, ADVOCATE REVENUE BY SHRI SALIL MISHRA, SR. DR DATE OF HEARING 03-01-2012 DATE OF PRONOUNCEMENT 03-01-2012 O R D E R PER BENCH:- THESE APPEALS FILED ON 11.2.2011 BY THE REVENUE FOR THE AYS 2005-06 & 2007-08 AND THE APPEAL FILED ON 24.2.2011 BY ASSESSEE FOR THE AY2007-08 AGAINST TWO SEPARATE ORDERS DATED 26.11.2 010 OF THE LD. CIT(A)- GHAZIABAD, RAISE THE FOLLOWING GROUNDS:- I.T.A. NO.856/D/2011[REVENUE]-AY:2005-06 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN LAW AS RELIEF GIVEN BY CIT(A) IS BASED ON SOME ADDITIONAL EVIDENCES ON WHICH COMMENTS OF ASSESSING OFFICER WE RE NOT TAKEN AND HENCE THE REQUIREMENT OF RULE 46A WERE NOT FULFILLE D. ITANOS.856-857&1013/DEL./2011 2 2. THAT THE ORDER OF THE LEARNED CIT(A) BEING ERRON EOUS IN LAW AND ON THE FACTS DESERVES TO BE SET-ASIDE AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. I.T.A. NO.1013/D/2011[ASSESSEE] -AY:2005-06 1.THE ORDER OF THE LEARNED CIT(A) DATED 26.11.201 0 IS BAD IN LAW AND ON FACTS. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE TRADING ADDITION OF ` `3,83,761/- WITHOUT APPRECIATING THE FACT THAT ADDITION WAS MADE WITHOU T POINTING OUT ANY DEFICIENCY IN THE AUDITED STATEMENT OF PROFIT AND L OSS ACCOUNT, BALANCE SHEET AND WITHOUT ALLOWING ADEQUATE OPPORTUNITY TO THE APPELLANT TO SUBSTANTIATE THE TRADING RESULTS SHOWN IN THE AUDIT ED ACCOUNTS. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE DISALLOWAN CE OF 15% OF ` `1,52,172/- OUT OF CONVEYANCE, TRAVELING, RENT AND TELEPHONE EX PENSES TOTALING TO ` ` 12,14,481/- CLAIMED IN THE PROFIT AND LOSS ACCOUNT. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN TREATING 30% OF THE SUNDRY CREDITORS I.E. ` ` 5,89,84,383/- AS NON-GENUINE WITHOUT GIVING ANY VALID REASONS. 4.1 THAT THE ABOVE ADDITION SUSTAINED BY THE LEAR NED CIT(A) IS ILLEGAL AS NO ADEQUATE OPPORTUNITY WAS ALLOWED TO THE APPELLAN T TO PROVE GENUINENESS OF THESE SUNDRY CREDITORS. 5.THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN TREATING THE ADVANCE AMOUNTING TO ` ` 56,65,589/- RECEIVED FROM THE CUSTOMERS AGAINST SALE AS NON-GENUINE WITHOUT GIVIN G ANY VALID REASONS. 5.1 THAT THE ABOVE ADDITION SUSTAINED BY THE LE ARNED CIT(A) IS ILLEGAL AS NO ADEQUATE OPPORTUNITY WAS ALLOWED TO THE APPELLAN T TO PROVE GENUINENESS OF THESE SUNDRY CREDITORS. 6. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT(A) SHOULD HAVE CANCELLED THE ASSESSMENT PASSED BY THE ASSESSING OFFICER AS THE SAME WAS PASSED WITHOUT SERVING ANY SHOW CAUSE NOTICE AS REQUIRED UNDER THE 1 ST PROVISO TO SECTION 144 OF THE INCOME-TAX ACT, 1961 . ITANOS.856-857&1013/DEL./2011 3 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, REMO VE AND MODIFY ANY GROUND (S) OF APPEAL BEFORE OR AT THE TIME OF HEARI NG OF THIS APPEAL. I.T.A. NO. 857/D/2011[REVENUE]- AY:2007-08 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) HAS ERRED IN OBSERVING THAT TRANSFER OF AMOUNT OF S HARE APPLICATION MONEY FROM SHARE APPLICATION MONEY ACCOUNT TO GENERAL ACC OUNT CANNOT BE CATEGORIZED AS CESSATION OF LIABILITY WITHOUT APP RECIATING ALL THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) HAS ERRED IN OBSERVING THAT THE ASSESSING OFFICER A DMITS THAT THIS AMOUNT HAS BEEN RECEIVED IN 1999-2000 AS SHARE APPLICATION MONEY WITHOUT APPRECIATING THAT THE ASSESSEE HAS NOT FURNISHED AN Y DETAILS TOWARDS GENUINENESS OF SUCH TRANSACTIONS AT ANY POINT OF TI ME AND HENCE THE TRANSFER OF NON-GENUINE SHARE APPLICATION MONEY INT O GENERAL ACCOUNT CANNOT BE HELD AS RECEIPT OF GENUINE SHARE APPLICAT ION MONEY AND HENCE FURTHER TRANSFER OF SUCH NON GENUINE LIABILITY INTO GENERAL ACCOUNT WOULD AMOUNT TO CESSATION OF LIABILITY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) HAS ERRED IN LAW AS RELIEF GIVEN BY CIT(A) IS BASED ON SOME ADDITIONAL EVIDENCES ON WHICH COMMENTS OF ASSESSING OFFICER WE RE NOT TAKEN AND HENCE THE REQUIREMENTS OF RULE 46A WERE NOT FULFILL ED. 4. THAT THE ORDER OF THE LEARNED CIT(A) BEING ERR ONEOUS IN LAW AND ON THE FACTS DESERVES TO BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 2. ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL OF THE REVENUE AND GROUND NOS. 2 TO 6 IN THE APPEAL OF THE ASSESSEE, FOR THE AY 2005-06, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECL ARING LOSS OF ` ` 7,13,004/- FILED ON 31.3.2006 BY THE ASSESSEE, MANUFACTURING SCANNERS &PLOTTERS , WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ISSUED ON 26 TH OCTOBER, 2006. THOUGH ON THE REQUEST OF THE ASSESSEE ADJOURNMENT WAS GRANTED FOR 15.11.2006, THE ASSESSEE DID NOT RESPOND ON THE ADJOURNED DATE OF HEARING NOR TO SUBSEQUENT NOTICES ITANOS.856-857&1013/DEL./2011 4 DATED 17.01.2007, 27.06.2007, 29.10.2007 AND 21.11. 2007 ISSUED U/S 142(1) OF THE ACT . SINCE THE ASSESSEE DID NOT COMPLY WITH T HE TERMS OF THE NOTICES ISSUED U/S 143(2) AND 142(1) OF THE ACT NOR PRODUCED THE R ELEVANT BOOKS AND VOUCHERS, THE ASSESSING OFFICER[AO IN SHORT] PROCEEDED TO COM PLETE THE BEST JUDGMENT ASSESSMENT U/S 144 OF THE ACT ON THE BASIS OF MATER IAL ON RECORD. 2.1 ON PERUSAL OF DETAILS ENCLOSED WITH THE RETURN , THE AO NOTICED THAT THE ASSESSEE RAISED LOANS FROM THE DIRECTORS FOR AN AMOUNT OF ` ` 7,44,674/- AND FROM OTHER COMPANIES -` ` 33,79,947/-. SINCE THE ASSESSEE DID NOT ESTABLISH IDENTITY OR CREDITWORTHINESS OF THE AFORESAID CREDI TORS NOR GENUINENESS OF THE TRANSACTIONS, THE AO ADDED THE AMOUNT OF ` `41,24,621/- U/S 68 OF THE ACT. 2.2 THE AO FURTHER NOTICED THAT THE ASSESSEE REFLE CTED GROSS PROFIT OF ` `16,16,239/- ON TOTAL TURNOVER OF ` ` 71,69,680/-, YIELDING GROSS PROFIT RATE OF 22.5%. SINCE THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT AND RELEVANT VOUCHERS, THE AO REJECTED THE BOOK RESULTS HAVING R ECOURSE TO PROVISIONS OF S. 145 OF THE ACT, AND ADDED AN AMOUNT OF ` 3,83,761/- ,ADOPTING GROSS PROFIT @ 25% ON THE ESTIMATED SALES OF ` `80,00,000/-. 2.3 SINCE THE ASSESSEE DID NOT PRODUCE BOOKS OF AC COUNT AND RELEVANT VOUCHERS, THE AO ALSO DISALLOWED 25% OF THE EXPEND ITURE RELATING TO CONVEYANCE AND TRAVELING RENT, TELEPHONE, AND PROFESSIONAL CH ARGES, RESULTING IN DISALLOWANCE OF ` ` 3,03,620/-. 2.4 THE AO FURTHER NOTICED THAT THE ASSESSEE CLAIM ED EXPENDITURE OF ` `4,90,487/- ON ACCOUNT OF INVENTORY WRITTEN OFF IN R&D. IN THE ABSENCE OF ANY EVIDENCE, THE AO DISALLOWED THE AMOUNT. 2.5 BESIDES, THE ASSESSEE HAD SHOWN AN AMOUNT OF ` 56,65,589/- ON ACCOUNT OF ADVANCES FROM CUSTOMERS WHILE SALES DURING THE Y EAR AMOUNTED TO ` 71,69,680/-.IN THE ABSENCE OF ANY EVIDENCE THAT THE AMOUNT WAS RECEIVED TOWARDS ADVANCE, THE AO ADDED THE ENTIRE AMOUNT OF ADVANCES AS INCOME FROM UNDISCLOSED SOURCES. ITANOS.856-857&1013/DEL./2011 5 2.6 THE AO ALSO NOTICED THAT THE ASSESSEE HAD SHOW N CREDITORS OF ` `8,42,63,346/- AS AGAINST SUNDRY CREDITORS AMOUNTIN G TO ` `8,76,70,747/- AND SALES OF ` ` 60,41,782/- IN THE PRECEDING YEAR. IN THE ABSENCE OF ANY EVIDENCE IN SUPPORT OF GENUINENESS OF SUNDRY CREDITORS AND CONS IDERING THE VOLUME OF SALES, THE AO ALLOWED ONLY 30% OF THE CREDITORS AND DISALL OWED THE REMAINING AMOUNT OF ` ` 5,89,84,343/-. 2.7 IN THE ABSENCE OF ANY EVIDENCE IN SUPPORT OF C LAIM FOR DEDUCTION U/S 10A OF THE ACT, THE AO DISALLOWED THE SAME. 2.8 IN VIEW OF THE FOREGOING, ASSESSMENT WAS COMP LETED ON AN INCOME OF ` 12,10,720/- AFTER SET OFF OF BROUGHT FORWARD LOSS O F ` 6,80,28,693/- 3. ON APPEAL, THE ASSESSEE FILED WRITTEN SUBMISSIO NS AS MENTIONED IN PARA 4 OF THE IMPUGNED ORDER. ACCORDINGLY, THE LD. CIT(A) SOUGHT REMAND REPORT FROM THE AO VIDE LETTER DATED 19 TH OCTOBER, 2010 IN THE FOLLOWING TERMS:- CONSIDERING THE AFFIDAVIT EXPLAINING THE CIRCUMSTA NCES IN WHICH THERE WAS NO COMPLIANCE RESULTING INTO ASSESSMENT U /S 144; I TEND TO TAKE A VIEW THAT THE ASSESSEE DESERVES ANOTHER C HANCE TO FURNISH SUBMISSION/DETAILS/EVIDENCES. DURING APPELL ATE PROCEEDINGS THE APPELLANT HAS FILED VARIOUS DOCUMENTARY EVIDENC E AND DETAILS IN DUPLICATE; ONE COPY OF THE SAME IS BEING FORWARDED TO YOU AS PER RULE 46A. KINDLY PERUSE THE ABOVE DETAILS/EVIDENCES CAREFULLY AND SEND YOUR COMMENTS LATEST BY 8 TH NOVEMBER, 2010. YOU ARE PERMITTED TO CONDUCT ENQUIRIES FOR THIS PURPOSE. 4. SINCE THE AO DID NOT SUBMIT ANY REMAND REPORT D ESPITE SEVERAL REMINDERS, THE CIT(A) DISPOSED OF THE APPEAL IN THE FOLLOWING TERMS:- 8. AFTER HAVING CAREFULLY CONSIDERED ALL RELEVANT FACTS AND CIRCUMSTANCES OF THE CASE, MY CONCLUSIONS/OBSERVATI ONS ARE AS UNDER:- 1. REGARDING GROUND OF APPEAL NO.1, THE APPELLANT H AS NOT MADE ANY FURTHER SUBMISSION OR PRODUCED ANY DETAILS OR EVIDENCES. IT IS CLEARLY MENTIONED IN T HE ITANOS.856-857&1013/DEL./2011 6 ASSESSMENT ORDER THAT NOTICE U/S 143(2) WAS ISSUED ON 26.10.2006. THIS IS VERY MUCH WITHIN ONE YEAR O F FILING OF RETURN, THEREFORE, 143(2) NOTICE IS HELD TO BE VALID. 2. REGARDING GROUNDS OF APPEAL NO.2, 3 & 4, IN VIE W OF CIRCUMSTANCES ALONG WITH AFFIDAVIT EXPLAINING THE R EASON FOR NON COMPLIANCE OF AFFIDAVIT OF NON RESIDENT DIR ECTOR OF THE ASSESSEES COMPANY,I AM OF THE VIEW THAT THE ASSESSEE DESERVES ANOTHER OPPORTUNITY. 3. THE ITEMS OF THE ADDITIONS ARE ADJUDICATED AS U NDER: A) AS LOAN CONFIRMATION OF SH. L.S. TULI, OF WIDECO M INC. AND OF WIDECOM R&D INC. HAVE BEEN FURNISHED, THEREFORE, ADDITION OF ` `41,24,621/- IS DELETED. SHRI L.S. TULI IS NON-RESIDENT DIRECTOR OF THE GROUP COMPANY AND HE HAS SUBMITTED AFFIDAVIT. M/S WIDECOM R&D INC IS A GROUP OF COMPANY. THEIR IDENTITY AND CREDITWORTHIN ESS ARE NOW BEYOND DOUBT, WHILE THE TRANSACTIONS, BEING INTRA GROUP FUND MOVEMENTS, ALSO APPEAR TO BE GENUINE. THUS, THE LOAN BALANCES ARE HELD TO BE EXPLAINED. (RELIEF: ` `41,24,621/-) B) ASSESSEES BOOKS OF ACCOUNT AND VOUCHERS ARE STI LL NOT PRODUCED EVEN DURING APPEAL PROCEEDINGS; HENCE, THE ASSESSING OFFICERS ACTION OF INVOKING SECTION 145 IS UPHELD. ASSESSING OFFICERS REASONING AND COMPUTAT ION OF EXTRA PROFIT IS ALSO CONFIRMED. THUS, ADDITION OF ` ` 3,83,761/- IS UPHELD. C) OUT OF VARIOUS EXPENSES, ASSESSING OFFICER MADE DISALLOWANCE TO THE EXTENT OF 25%. THESE EXPENSES REMAIN UNVERIFIED. HOWEVER, ON ESTIMATE BASIS, I R EDUCE THE DISALLOWANCE TO 15% OF ` ` 12,14,481/- I.E. ` `1,82,172/- . D) IN VIEW OF ABSENCE OF DETAILS AND EVIDENCES, ALL OTHER ADDITIONS ARE UPHELD. IN OTHER WORD ADDITION OF ` ` 4,90,487/- ADDITION OF ` `56,65,589/- AND ADDITION OF ` ` 5,89,84,343/- ARE ALL CONFIRMED. 5. BOTH THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US. THE LD. DR SUBMITTED THAT THE LD. CIT(A) ADMITTED THE ADDIT IONAL EVIDENCE IN CONTRAVENTION OF RULE 46A OF THE INCOME-TAX ACT, 19 62 AND ALLOWED RELIEF OF ITANOS.856-857&1013/DEL./2011 7 ` `41,24,621/- AND REDUCE THE DISALLOWANCE OF VARIOUS EXPENSES TO 15% WHILE THE LEARNED AR CONTENDED THAT THE LD. CIT(A) WAS NOT JU STIFIED IN UPHOLDING THE VARIOUS ADDITIONS . AFTER DISCUSSION, BOTH THE PAR TIES AGREED THAT THE MATTER REQUIRED RECONSIDERATION BY THE AO ESPECIALLY WHEN THE ASSESSEE DID NOT HAVE SUFFICIENT OPPORTUNITY TO PRODUCE RELEVANT BOOKS OF ACCOUNTS AND VOUCHERS AS ALSO THE NECESSARY EVIDENCE BEFORE THE AO NOR THE L ATTER SUBMITTED ANY REMAND REPORT BEFORE THE LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY ASSESSMENT IN THIS CASE ASSESSM ENT WAS COMPLETED U/S 144 OF THE ACT, THE ASSESSEE HAVING FAILED TO COMPLY WITH ANY OF THE AFORESAID NOTICES DATED., 26.10.2006, 17.01.2007, 27.06.2007 , 29.10.2007 AND 21.11.2007 ISSUED U/S 143(2)/142(1) OF THE ACT NOR PRODUCED TH E RELEVANT BOOKS OF ACCOUNTS AND VOUCHERS BEFORE HIM. THE LD. CIT(A),ON THE BASI S OF AFFIDAVIT FILED BY THE DIRECTOR OF THE COMPANY OBSERVED THAT THE ASSESSEE DESERVED ANOTHER OPPORTUNITY. DESPITE SUFFICIENT OPPORTUNITY GIVEN B Y THE LD. CIT(A), THE AO DID NOT SUBMIT ANY REMAND REPORT .MOREOVER, THERE IS NOTHIN G TO SUGGEST AS TO WHY RELEVANT BOOKS OF ACCOUNTS AND VOUCHERS WERE NOT P RODUCED EVEN BEFORE THE LD. CIT(A) NOR ANY REASONS HAVE BEEN ADDUCED BEFORE US FOR NOT DOING SO. THE LD. AR NOW CONTENDED BEFORE US THAT SUFFICIENT OPPORTUN ITY WAS NOT ALLOWED BY THE LD. CIT(A). EVEN OTHERWISE, THE LD.CIT(A) DID NOT ANALYSE THE FACTS OF THE CASE OR ISSUES BEFORE HIM IN THE PROPER PERSPECTIVE IN THE LIGHT OF SUBMISSIONS MADE BY THE ASSESSEE BEFORE HIM . A MERE GLANCE AT THE IMPU GNED ORDER REVEALS THAT THE ORDER PASSED BY THE LD. CIT(A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATU RAL JUSTICE, NAMELY, THAT EVERY JUDICIAL/QUASI-JUDICIAL BODY/AUTHORITY M UST PASS REASONED ORDER, WHICH SHOULD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO THE ISSUES/POINTS RAISED BEFORE IT. TH E APPLICATION OF MIND TO THE MATERIAL FACTS AND THE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250(6) OF THE ACT MANDATES THAT THE ORDER OF THE CIT(A) WHILE DISPOSING OF THE APPEAL SHALL BE I N WRITING AND SHALL ITANOS.856-857&1013/DEL./2011 8 STATE THE POINTS FOR DETERMINATION, THE DECISION TH EREON AND THE REASONS FOR THE DECISION. THE REQUIREMENT OF RECORD ING OF REASONS AND COMMUNICATION THEREOF BY THE QUASI-JUDICIAL AUT HORITIES HAS BEEN READ AS AN INTEGRAL PART OF THE CONCEPT OF FAI R PROCEDURE AND IS AN IMPORTANT SAFEGUARD TO ENSURE OBSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTR ANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINE SS IN THE DECISION-MAKING PROCESS. HONBLE JURISDICTIONAL HIG H COURT IN THEIR DECISION IN VODAFONE ESSAR LTD. VS. DRP,196 TAXMAN423(DELHI) HELD THAT WHEN A QUASI JUDICIAL AUTHORITY DEALS WITH A LIS, IT IS OBLIGATORY ON IT S PART TO ASCRIBE COGENT AND GERMANE REASONS AS THE SAME IS THE HEART AND SOUL O F THE MATTER AND FURTHER, THE SAME ALSO FACILITATES APPRECIATION WHEN THE ORDER I S CALLED IN QUESTION BEFORE THE SUPERIOR FORUM. WE MAY POINT OUT THAT A DECISION DOES NOT MERELY MEAN THE CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASONS FORMING BASIS FOR THE CONCLUSION.[MUKHTIAR SINGH VS . STATE OF PUNJAB,(1995)1SCC 760(SC)]. IN VIEW OF THE FOREGOIN G ,ESPECIALLY WHEN THE RELEVANT BOOKS OF ACCOUNTS/VOUCHERS HAVE N OT BEEN PRODUCED BEFORE THE AO OR THE LD. CIT(A) NOR THE R ELEVANT EVIDENCE HAS BEEN EXAMINED BY THESE AUTHORITIES, WE CONSIDER IT FAIR AND APPROPRIATE TO VACATE THE FINDINGS OF THE LD. CIT(A ) AND RESTORE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTIONS TO COMPLETE THE ASSESSMENT DENOVO, IN ACCORDANCE WITH LAW, AFTER AL LOWING SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO PRODUCE RELEVANT BO OKS OF ACCOUNTS AND VOUCHERS AS ALSO NECESSARY EVIDENCE. THE ASSES SEE IS ALSO DIRECTED TO PLACE ALL THE RELEVANT FACTS AND EVIDEN CE BEFORE THE AO AND CO- OPERATE IN EXPEDITIOUS COMPLETION OF ASSESSMENT. TH E AO IS FREE TO UNDERTAKE ANY INDEPENDENT ENQUIRES, IF FOUND NECESSARY . WI TH THESE OBSERVATIONS, GROUND NO. 1 IN THE APPEAL OF THE REVENUE AND GROUND NOS. 2 TO 6 IN THE APPEAL OF THE ASSESSEE ARE DISPOSED OF. ITANOS.856-857&1013/DEL./2011 9 7. ADVERTING NOW TO GROUND NOS..1 TO 3 IN THE APPE AL OF THE REVENUE FOR ASSESSMENT YEAR 2007-08. THE AO NOTICED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE DISCLOSED LOSS SIN CE 1997-98 AND ACCUMULATED LOSS AS ON 31.03.2007 WAS ` `8,15,14,476 WHILE M/S WIDECOM GROUP INC, HOLDING COMPANY OF THE ASSESSEE, WAS SHOWN AS SUNDR Y CREDITOR FOR ` `8,74,43,228/-. THE HOLDING COMPANY AND ITS NOMINE ES WERE THE PURCHASER OF THE PRODUCTS MANUFACTURED BY ASSESSEE COMPANY @3,00 0/- PER PIECE AS DECIDED IN THE YEAR 2001. ACCORDING TO THE AO THI S PRICE WAS SUPPRESSED. THE AO FURTHER OBSERVED THAT AS PER ACCOUNT PROVIDED B Y THE ASSESSEE FROM THE A.Y. 1996-97, OPENING BALANCE HAD BEEN SHOWN AT ` `3,75,05,347/- WHILE ACCUMULATED FUNDING HAD BEEN SHOWN AT ` ` 8,83,23,825/- IN F.Y. 2003-04 BY MAKING AMOUNTS CREDITED IN THE ACCOUNTS OF M/S WIDE COM GROUP INC. UNDER THE HEAD PAYMENT RECEIVED/OTHER TRANSACTION AND NO PA YMENT HAS BEEN MADE TO M/S WIDECOM GROUP INC. DURING THE YEARS 1996-97 TO 2003-04. DURING THE FINANCIAL YEAR 2004-05, THE ASSESSEE MADE SALES TO M/S WIDECOM GROUP INC. AND RECEIVED ` `1 CRORE ON 1.4.2005 UNDER THE NARRATION OF SHARE APPLICATION MONEY TRANSFER FROM SHARE APPLICATION MONEY TO WIDE COM GROUP INC., WHICH THE ASSESSEE HAD MENTIONED TO HAVE RECEIVED IN 1999-200 0 . IN THE LIGHT OF THESE FACTS AND CIRCUMSTANCES, THE AO WAS OF THE OPINION THAT THAT THE ASSESSEE OBTAINED IN CASH ,THE AMOUNTS IN RESPECT OF SUCH LO SS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION. TO A QUERY BY THE AO, SEEKING TO INVOKE PROVISIONS OF S.41(1) OF THE ACT, THE ASSESSEE FURNISHED FOLLOWING REPLY AS MENTIONED IN THE ASSESSMENT ORDE R:- (I) THE LIABILITY OF ` `33,73,006/- IN THE NAME OF M/S PATEL WIDECOM INDIA LIMITED, SUNDRY CREDITORS, HAS BEEN RETURNED/EXTINGUISHED IN THE SUBSEQUENT PREVIOUS YE AR 2008- 09. (II) THE LIABILITY OF ` `3,34,975/- IN THE NAME OF M/S WIDECOM FAX AND PLOTTERS LIMITED, SUNDRY CREDITORS, HAS BEEN RETURNED/EXTINGUISHED IN THE SUBSEQUENT PREVIOUS YE AR 2008- 09. ITANOS.856-857&1013/DEL./2011 10 (III) LIABILITY OF ` `8,74,43,228/- IN THE NAME OF M/S WIDECOM GROUP INC. SUNDRY CREDITORS ASSESSEE HAS STATED T HE CREDITOR IS ALSO THE HOLDING COMPANY OF THE ASSESSE E. DURING THE EXISTENCE OF THE COMPANY, THEY HAVE SUPP LIED MACHINES, RAW MATERIAL SOFTWARES AND FUNDS TO THE A SSESSEE FOR ITS DAILY NEEDS. (IV) THE LIABILITY OF ` `19,02,626/- IN THE NAME OF M/S TECHNOLOGY NOV. IMAGE, SUNDRY CREDITORS, THE CREDITOR IS A SOF TWARE SUPPLIER TO THE ASSESSEE. THE SOFTWARE WERE SOLD W ITH THE SCANNERS. THE AMOUNT IS PAYABLE TO THE CREDITORS. IT HAS BEEN WRONGLY CLASSIFIED AS ADVANCE FROM CUSTOMER IN THE BALANCE SHEET. (V) LIABILITY OF ` ` 17,15,602/- IN THE NAME OF M/S WIDECOMINC.COM, SUNDRY CREDITOR ASSESSEE HAS STATED ASSESSEE HAS BEEN SUPPLYING SCANNERS TO THIS CREDITOR AND THE ADVANCE IS GENUINE. 7.1 HOWEVER, THE AO DID NOT ACCEPT THE EXPLANATIO N OF THE ASSESSEE AND ADDED A SUM OF ` `1 CRORE TO THE INCOME OF ASSESSEE U/S 41 OF THE AC T. 8. ON APPEAL, THE LEARNED CIT(A) DELETED THE AFORE SAID ADDITION IN THE FOLLOWING TERMS:- 5. THE MATTER WAS REMANDED TO ASSESSING OFFICER AL SO BUT IN SPITE OF SEVERAL REMINDERS NO REPORT HAS COME. IN ANY CASE THERE IS NO CASE OF ADDITIONAL EVIDENCE AND HENCE REMAND REPORT IS NOT SO RELEVANT IN THIS CASE . 5.1 THEREFORE, MATTER IS DECIDED ON MERITS ON THE B ASIS OF FACTS AND EVIDENCES ON RECORD. 6. AFTER HAVING CAREFULLY CONSIDERED ALL RELEVANT F ACTS AND CIRCUMSTANCES OF THE CASE, MY CONCLUSIONS/OBSERVATI ONS ARE AS UNDER:- 1) THE APPELLANTS CONTENTION REGARDING GROUND OF A PPEAL NO.1, IS ACCEPTED. FROM THE DETAILS OF EVIDENCES, ESPECIALL Y CONFIRMATION/AFFIDAVIT OF SH. L.S. TULI FURNISHED W HICH IS RELEVANT FOR BOTH A.Y. 2005-06 AND R2007-08; THIS IS OBSERVE D AND HELD THAT THE LIABILITY TOWARDS M/S WIDECOM GROUP INC (W HICH IS HOLDING COMPANY BY ASSESSEE) IS CONFIRMED. DURING THE PRESENT ITANOS.856-857&1013/DEL./2011 11 F.Y., THERE IS NO TRANSACTION EXCEPT THAT ` ` 1 CRORE HAS BEEN TRANSFERRED FROM SHARE APPLICATION MONEY ACCOUNT TO GENERAL ACCOUNT. EVEN AO ADMITS THAT THIS AMOUNT HAD BEEN RECEIVED IN 1999-2000. SUCH TRANSACTION CANNOT BE CATOGNISE D AS CESSATION OF LIABILITY. OTHERWISE ALSO, SECTION 41 IS NOT APPLICABLE BECAUSE THIS AMOUNT HAD NEVER BEEN DEBIT ED TO P&L ACCOUNT. THUS, ADDITION OF ` ` 1 CRORE IS UNTENABLE IN LAW AS WELL AS ON MERITS, ADDITION OF ` ` 1 CRORE IS DELETED. 9. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF LEARNED CIT(A). THE LD. DR MERELY SUPPO RTED THE ORDER OF THE AO. TO A QUERY BY THE BENCH, THE LEARNED DR COULD NOT PIN POINT ANY DOCUMENT WHICH WAS ADMITTED BY THE LEARNED CIT(A) BY WAY OF ADDITI ONAL EVIDENCE NOR ADDUCED ANY REASONS AS TO WHY THE AO DID NOT SUBMIT REMAND REPORT ON THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE LEARNE D CIT(A) DESPITE SEVERAL REMINDERS, AS MENTIONED IN PARA 5 OF THE IMPUGNED O RDER. ON THE OTHER HAND, THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FIND INGS IN THE IMPUGNED ORDER. 10. WE HAVE HEARD BOTH THE PARTIES AND GONE TH ROUGH THE FACTS OF THE CASE.AS IS APPARENT FROM THE FINDINGS OF THE LD. CIT(A), TH E LIABILITY TOWARDS M/S WIDECOM GROUP INC., HOLDING COMPANY OF THE ASSESSEE, IS CON FIRMED IN THE YEAR UNDER CONSIDERATION WHILE THERE IS NO OTHER TRANSACTION EXCEPT TRANSFER OF ` ` 1 CRORE FROM SHARE APPLICATION MONEY RECEIVED IN 1999-2000 TO GE NERAL ACCOUNT. APPARENTLY, SUCH TRANSACTION COULD NOT BE CATEGORIZED AS CESSAT ION OF LIABILITY IN TERMS OF PROVISIONS OF S.41(1) OF THE ACT. SINCE THE REVENU E HAVE NOT PLACED BEFORE US ANY MATERIAL, ,CONTROVERTING THE AFORESAID FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER NOR THE LD. DR PIN POINTED ANY DOCUMENT WHICH WAS ADMITTED BY THE LEAR NED CIT(A) BY WAY OF ADDITIONAL EVIDENCE, WE ARE NOT INCLINED TO INTERFE RE . THEREFORE, GROUND NOS. 1 TO 3 IN THE APPEAL OF THE REVENUE ARE DISMISSED. 11. GROUND NO.2 IN THE APPEAL OF THE REVENUE FOR THE AY 2005-06 AND GROUND NO.4 IN THEIR APPEAL FOR THE AY 2007-08 AS A LSO GROUND NO.1 IN THE APPEAL ITANOS.856-857&1013/DEL./2011 12 OF THE ASSESSEE FOR THE AY 2005-06 ,BEING GENERAL I N NATURE NOR ANY SEPARATE SUBMISSIONS HAVING BEEN MADE BEFORE US ON THESE GRO UNDS, DO NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HA VING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.7 IN THE APPEAL OF TH E ASSESSEE FOR THE AY2005-06, ALL THESE GROUNDS ARE DISMISSED. 12. NO OTHER SUBMISSION OR ARGUMENT WAS MADE BEF ORE US. 13.. IN THE RESULT, APPEALS OF REVENUE AND THE ASSE SSEE FOR THE AY 2005-06 ARE ALLOWED FOR STATISTICAL PURPOSES WHILE APPEAL O F THE REVENUE FOR THE AY 2007- 08 IS DISMISSED. SD/- SD/- (R.P. TOLANI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSTT. C.I.T., CIRCLE NOIDA, G-BLOCK, SHOPPING C OMPLEX, SECTOR-20, NOIDA. 2. M/S INDO WIDE COM. INTERNATIONAL LTD., SDF, D-7, NSEZ, NOIDA 3. CIT(A), GHAZIABAD. 4. CIT CONCERNED. 5. DR, ITAT,C BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT