M/s Mishrilall Jain & Sons., West Singhbhum V. ACIT, Ranchi

ITA 87/RAN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0040 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 12-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHAY KUMAR
• Assessee Lawyers: S S. K. PODDAR
• Keywords: Unexplained cash credit; Depreciation; Business expenditure; Principle of natural justice; Question of law; Corroborative evidences; TDS; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 43B; 40A(3); 271(1)(b); 139; 143(3); 92; 234B; 40(a)(ia); 133(6); 37(1); 194C; 13; 22

Judgement Text

1 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL: RANCHI BENCH, RANCHI [BEFORE SHRI N. V. VASUDEVAN, JM & SHRI M. BALAGAN ESH, AM] I.T.A NOS. 87 TO 91/RAN/2015 ASSESSMENT YEARS: 2005-06 TO 2009-10 M/S. MISHRILALL JAIN & SONS VS. ASSISTANT C OMMISSIONER OF INCOME-TAX, M.D. HOUSE, CHAIBASA, SINGHBHUM CIRCLE-2, RANCHI (WEST)-833201, JHARKHAND (PAN: AABFM2851Q) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 05.09.2016 DATE OF PRONOUNCEMENT: 09.09.2016 FOR THE APPELLANT: S/SHRI S. K. PODDAR & DEVES H PODDAR, ADVOCATES FOR THE RESPONDENT: SHRI ABHAY KUMAR, DR ORDER PER SHRI M. BALAGANESH, AM: ALL THESE APPEALS BY ASSESSEE ARE ARISING OUT OF SE PARATE ORDERS OF CIT(A), RANCHI VIDE DATED 24.02.2014 (FOR AY 2005-06 AND 24 .02.2015 (FOR AYS.2006-07 TO 2009-10). ASSESSMENTS WAS FRAMED BY ADDL. CIT, R ANGE-2, RANCHI U/S. 143(3) R.W.S. 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS SEPARATE ORDERS DATED 30.12.2008 (FOR AY 2005-06), DATED NIL (FOR AY 2006-07), DATED 20.03.2009 (FOR AY 2007-08), DATED 21.07.2010 (FOR AY 2008-09) AND DATED 30.12.2011 (FOR AY 2009-10). SINCE MOST OF THE GRO UNDS ARE COMMON AND FACTS ARE IDENTICAL, WE DISPOSE OF ALL THESE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. GENERAL GROUNDS: THE GROUND NOS. 1,2, 17, 18, 20 FOR AY 2005-06; GR OUND NOS. 1, 2, 15, 16 AND 18 FOR AY 2006-07; GROUND NO. 6 FOR AY 2007-08; GRO UND NOS. 5 AND 7 FOR AY 2008-09 AND GROUND NOS. 6 AND 8 FOR AY 2009-10 ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 2 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 3. DISALLOWANCE IN RESPECT OF DEPRECIATION ON CAR VIDE GROUND NO. 3 FOR AYS 2005-06 AND 2006-07. 3.1. THE ASSESSEE IS A PARTNERSHIP FIRM DERIVING IN COME FROM MINING OPERATION OF IRON ORE AND MANGANESE ORE. THE AO OBSERVED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAD CLAIMED DEPRECIAT ION ON CAR AMOUNTING TO RS.1,90,787/-. HE OBSERVED THAT SINCE THE USAGE OF THE CAR FOR NON-BUSINESS PURPOSES AND FOR PERSONAL USE COULD NOT BE DENIED A ND HENCE, DISALLOWANCE AT 25% FOR THE DEPRECIATION CLAIMED AS ABOVE NEEDS TO BE D ISALLOWED. ACCORDINGLY, HE MADE DISALLOWANCE OF RS. 47,747/- TOWARDS DEPRECIAT ION ON CAR FOR AY 2005-06. SIMILAR DISALLOWANCE WAS MADE BY THE AO FOR AY 2006 -07 ON THE SAME GROUND WITH VARIANCE IN FIGURES. IT WAS SUBMITTED BY THE A SSESSEE BEFORE THE LD. CIT(A) THAT THREE PARTNERS WERE ALREADY OWNING THEIR PERSONAL C ARS AND USAGE OF THE VEHICLES FOR PERSONAL PURPOSES WERE BEING DONE FROM THAT CARS AN D THE DEPRECIATION ON THE CARS DEBITED IN THE P&L ACCOUNT OF THE PARTNERSHIP FIRM HAS BEEN MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ASSESSEES BUSINESS ONLY AND HENCE, THERE IS NO NEED TO MAKE ANY DISALLOWANCE TOWARDS THE SAME. THE LD. CIT(A) OBSERVED THAT THOUGH THE ASSESSEE HAD MAINTAINED BOOKS OF ACCOUNT TOGETH ER WITH BILLS AND VOUCHERS BUT NO LOG BOOK WAS PRODUCED BY THE ASSESSEE EITHER BEF ORE THE AO OR BEFORE THE LD. CIT(A) TO ASCERTAIN THE PERSONAL USAGE OF THE CAR A ND ACCORDINGLY, THE BUSINESS EXPEDIENCY THEREON WAS NOT PROVED BY THE ASSESSEE A ND ACCORDINGLY, LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE AO. AGGRIEV ED, THE ASSESSEE IS IN APPEAL BEFORE US. 3.2. THE LD. AR SUBMITTED THAT THE CARS HAVE BEEN U SED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, WHICH SUBMISSIONS WERE ALSO MADE BEFORE THE LOWER AUTHORITIES. HE ALSO SUBMITTED THAT THE PAST HISTO RY OF THE ASSESSEE WHEREIN 10% DISALLOWANCE OF DEPRECIATION ON CAR WAS MADE BY THE AUTHORITIES BELOW IN THE EARLIER YEARS AND ACCORDINGLY, HE PRAYED FOR ADOPTION OF TH E SAME. 3 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 3.3. IN RESPONSE TO THIS, THE LD. DR VEHEMENTLY REL IED ON THE ORDERS OF THE LOWER AUTHORITIES AND FURTHER ARGUED THAT NO EVIDENCE WER E FILED BY THE ASSESSEE. HENCE, HE SUBMITTED BEFORE THE BENCH TO CONFIRM THE ACTION OF THE LD. CIT(A). 3.4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND IN THE FACTS AND CIRCUMSTANCE S OF THE CASE, THE DISALLOWANCE @ 10% OF DEPRECIATION ON CAR WOULD MEET THE ENDS OF J USTICE AS HAS BEEN DONE IN THE EARLIER YEARS AND WE DIRECT THE AO TO DISALLOW THE DEPRECIATION ACCORDINGLY. HENCE, GROUND NO. 3 RAISED BY THE ASSESSEE FOR AYS 2005-06 AND 2006-07 IS PARTLY ALLOWED. 4. DISALLOWANCE OF TRAVELLING EXPENSES GROUND NO. 4 FOR AYS 2005-06 AND 2006-07 AND GROUND NO. 3 FOR AY 2008-09. 4.1. THE LD. AO OBSERVED THAT THE ASSESSEE HAD CLAI MED TRAVELLING AND CONVEYANCE EXPENSES OF RS.6,95,663/- FOR AY 2005-06 , WHICH COULD NOT BE CORROBORATED WITH PROPER BILLS AND VOUCHERS EXPLAIN ING THE PURPOSES OF JOURNEY AS EXCLUSIVELY INCIDENTAL TO THE BUSINESS. HE FURTHER OBSERVED THAT THE PERSONAL ELEMENTS THEREON COULD NOT BE DENIED. ACCORDINGLY, HE DISALLOWED 25% OF THE TOTAL EXPENSES IN THE ASSESSMENT. SIMILAR DISALLOWANCE W AS ALSO MADE FOR AY 2006-07. THE AO ALSO MADE AD HOC DISALLOWANCE OF RS.1 LAC FO R THE AY 2008-09 FOR THE SAME REASON. THE SAID DISALLOWANCE WAS UPHELD BY T HE LD. CIT(A) IN FIRST APPEAL. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 4.2. THE LD. AR BEFORE US ARGUED THAT THE ENTIRE BO OKS OF ACCOUNT WERE PRODUCED BEFORE THE AO, THE SAME WAS DULY SUBJECTED TO AUDIT AND THE TRADING RESULTS WERE DULY ACCEPTED BY THE AO. HE FURTHER SUBMITTED THAT NO PAST HISTORY OF DISALLOWANCE ON THIS ACCOUNT WAS MADE BY THE AO IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, HE PRAYED FOR COMPLETE DELETION OF THE DISALLOWANCE. IN RESPONSE TO THIS, THE LD. DR VEHEMENTLY RELIED ON THE ORDERS OF THE LOWER AUTHOR ITIES. 4.3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE DISALLOWANCE WAS MAD E ONLY ON AD HOC BASIS AND FROM THE PAST HISTORY, WE FIND NO SUCH DISALLOWANCE WAS MADE ON THIS ACCOUNT. HENCE, WE 4 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 FIND NO JUSTIFIABLE REASON FOR THE AO TO MAKE A SEP ARATE DISALLOWANCE TOWARDS TRAVELLING AND CONVEYANCE EXPENSES FOR THESE YEARS WITHOUT BRINGING ANY EVIDENCE ON RECORD FOR USAGE OF PERSONAL ELEMENT THEREON. HE NCE, THE DISALLOWANCE MADE BY AO AND CONFIRMED BY CIT(A) IS HEREBY DELETED. THER EFORE, GROUND NO. 4 FOR AYS 2005-06 AND 2006-07 AND GROUND NO. 3 FOR AY 2008-09 OF ASSESSEES APPEAL ARE ALLOWED. 5. DISALLOWANCE OF MINES FENCING AND CLEANING EXPENDIT URE GROUND NO. 6 FOR AYS 2005-06 & 2006-07. 5.1. THE AO OBSERVED THAT THE ASSESSEE HAS DEBITED IN ITS P&L ACCOUNT A SUM OF RS.3,02,82,554/- TOWARDS MINES FENCING AND CLEANING EXPENDITURE FOR WHICH THE FULL DETAILS TOGETHER WITH THE POSTAL ADDRESSES OF THE P ARTIES TO WHOM THE SAID AMOUNT WAS PAID AND MODE OF PAYMENT THEREON WERE CALLED FO R. THE ASSESSEE PRODUCED THE LEDGER COPIES OF THE SAID ACCOUNT BUT DID NOT PRODU CE THE DETAILED ADDRESSES OF THE PARTIES AND ACCORDINGLY, THE AO OBSERVED THAT SINCE THE ENTIRE DETAIL COULD NOT BE VERIFIED WITH CONCRETE EVIDENCE AD HOC DISALLOWANCE OF RS.11 LACS FOR AY 2005-06 WAS WARRANTED. ACCORDINGLY, DISALLOWANCE WAS MADE IN THE ASSESSMENT. SIMILAR DISALLOWANCE WAS ALSO MADE FOR AY 2006-07 WITH VARI ANCE IN FIGURES. BEFORE THE LD. CIT(A) THE ASSESSEE CLAIMED THAT THE ENTIRE EXP ENDITURE WAS DULY VERIFIABLE AND THE GENUINENESS OF THE TRANSACTION WAS NEVER DISPUT ED BY THE AO AND IN ANY CASE, THE ADDITION MADE WAS ONLY ON AN AD HOC BASIS WHICH HAS GOT NO LEGS TO STAND. THE ADDITION MADE BY THE AO WAS UPHELD BY THE LD. CIT(A ) AS HE FELT NO EVIDENCE WERE SUBMITTED BY THE ASSESSEE TO SUBSTANTIATE ITS CLAIM . AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 5.2. THE LD. AR REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE LOWER AUTHORITIES. IN RESPONSE TO THIS, THE LD. DR VEHEM ENTLY RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 5.3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ADDITION HAS BEEN MA DE ON AD HOC BASIS BY THE AO. 5 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 WE ALSO FIND FROM THE COMPARATIVE CHART OF NET PROF IT SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE HAS BEEN CONSISTENTLY DECLARING 45% AS ITS NET PROFIT OUT OF ITS TOTAL TURNOVER OF RS.32.37 CR. FOR AY 2005-06 AND RS.29. 89 CR. FOR AY 2006-07. WE ALSO FIND THAT THE EXPENDITURE INCURRED TOWARDS MIN ES FENCING AND CLEANING IS WHOLLY RELATABLE TO THE BUSINESS OF THE ASSESSEE. WE ALSO FIND LOT OF FORCE IN THE ARGUMENT OF THE LD. AR THAT THE ASSESSEE FIRM IS MA NAGED BY THREE PARTNERS AND THE MINING SITE IS LOCATED AT A DISTANT LOCATION IN CHA IBASA WHICH ARE MANNED ADMITTEDLY ONLY BY THE EMPLOYEES OF THE FIRM AND ONE PARTNER I S LOCATED IN CHAIBASA AND TWO PARTNERS ARE LOCATED IN KOLKATA. IT IS NOT FREE FR OM DOUBT THAT THE PARTNER RESIDING AT CHAIBASA IS ANSWERABLE TO ITS OTHER PARTNERS RESIDI NG IN KOLKATA FOR THE VERACITY OF THE EXPENDITURE INCURRED. IN THIS SCENARIO, THE EMP LOYEES WHO WERE MANNING THE ENTIRE OPERATION WOULD BE WHOLLY RESPONSIBLE FOR EA CH AND EVERY EXPENDITURE INCURRED AT THE SITE TO THEIR RESPECTIVE BOSSES I.E . (THE PARTNERS OF THE FIRM). HENCE, IT WOULD BE JUST AND FAIR TO BELIEVE THAT THE EMPLOYEE S WOULD BE MAINTAINING PROPER RECORDS WITH SUPPORTING EVIDENCE FOR EACH AND EVERY EXPENDITURE INCURRED IN THE SITE. IT IS NOT IN DISPUTE THAT THE EXPENDITURE INC URRED TOWARDS FENCING AND CLEANING CHARGES WERE INCURRED ONLY IN THE SITE AND NOT ELSE WHERE. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE AD DITION HAD BEEN MADE ONLY ON AD HOC BASIS, WE HAVE NO HESITATION IN DIRECTING THE A O TO DELETE THE DISALLOWANCE MADE IN THE SUMS OF RS.11 LACS AND RS. 6 LACS FOR A YS. 2005-06 AND 2006-07 RESPECTIVELY. ACCORDINGLY, GROUND NO. 6 FOR AYS 2 005-06 & 2006-07 OF ASSESSEES APPEALS ARE ALLOWED. 6. DISALLOWANCE ON ACCOUNT OF MISC. EXPENSES GROUND NOS. 7 TO 9 FOR AY 2005-06, GROUND NOS. 7 TO 10 FOR AY 2006-07 AND GRO UND NO. 4 FOR AY 2009-10. 6.1. THE AO OBSERVED THAT THE ASSESSEE HAD DEBITED A SUM OF RS.1,02,57,366/- FOR AY 2005-06 UNDER THE HEAD MISC . EXPENSES WHICH, IN TER ALIA, INCLUDED EXPENDITURE ON ACCOUNT OF SURVEY AND PLANNING, PLAN MAKING CHAR GES, TOOLS, IMPLEMENTS AND ACCESSORIES, SAMPLING AND ANALYSIS, PLANTATION CHAR GES, DEMURRAGE AND GENERAL EXPENSES, INDENT MONEY FORFEITURE AND SUNDRY BALANC ES WRITTEN OFF. THE AO OBSERVED THAT THE ASSESSEE HAD NOT EXPLAINED THE NA TURE OF EVERY ITEM WITH PROPER 6 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 BILLS AND VOUCHERS EXCEPT PRODUCING INTERNAL VOUCHE RS FOR THE AFORESAID EXPENSES AND ACCORDINGLY, HE PROCEEDED TO DISALLOW 25% OF TH E SPECIFIC EXPENDITURE AND DISALLOWED THE SAME IN THE ASSESSMENT. SIMILAR DIS ALLOWANCES WERE MADE FOR AY 2006-07 WITH VARIANCE IN FIGURES. FOR AY 2009-10 A D HOC DISALLOWANCE OF RS. 2 LACS WAS MADE BY THE AO ON THIS ACCOUNT. THE LD. C IT(A) OBSERVED THAT THE ASSESSEE HAD NOT FURNISHED ANY DETAILS AS TO WHAT T YPE OF SURVEY AND PLANNING, TOOLS, IMPLEMENTS AND ACCESSORIES, SAMPLING ANALYSIS, PLAN TATION CHARGES HAVE BEEN UTILIZED. HE FURTHER HELD THAT THE SAME ARE CAPITAL IN NATURE AND ACCORDINGLY, CONFIRMED THE DISALLOWANCE MADE TOWARDS THE SAME, A S ACCORDING TO HIM, THE INCURRENCE OF AFORESAID EXPENDITURE HAD GIVEN ENDUR ING BENEFIT TO THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 6.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE LD. AR FURNISHED THE BREAK UP OF MISC. EXPENSES THAT WERE DISALLOWED FOR EACH OF THE YEARS AS BELOW: AY : 2005-06 I. SURVEY & PLAN MAKING - RS. 800/- II. TOOLS, IMPLEMENTS & ACCESSORIES - RS.25,995/- III. SAMPLING ANALYSIS - RS.13,380/- IV. PLANTATION CHARGES - RS.72,120/- V. INDENT MONEY FORFEITED IS ALSO NOT ALLOWABLE BEI NG OF THE NATURE OF PENALTY - RS.15,000/- VI. SUNDRY BALANCE WRITTEN OFF IS ALSO NOT ALLOWABL E - RS.3,02,707/- VII. THE MISC. EXPENSES ALSO INCLUDES GENERAL EXPEN SES OF RS.2,12,348/- (RS.1,03,323/- + RS.527/- + RS.1,08,4 98/-) NATURE OF EVERY ITEM COULD NOT BE EXPLAINED. NO PR OPER BILLS/VOUCHER ALSO PRODUCED, WHATEVER PRODUCED ARE INTERNAL VOUCHER NOT AMENABLE TO BE GIVEN FULL CREDENCE. HE NCE, 1/4 TH OF THE CLAIM IS DISALLOWED. - RS.53,887/- ADD BACK - RS.4,83,889/- AY: 2006-07 I. SURVEY & PLAN MAKING - RS. 377/- II. TOOLS, IMPLEMENTS & ACCESSORIES - RS.94,731/- III. SAMPLING ANALYSIS - RS.1,448/- 7 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 IV. PLANTATION CHARGES - RS.17,972/- V. DEMURRAGE NOT ALLOWABLE BEING IN THE NATURE OF P ENALTY - RS.23,200/- VI. SUBSCRIPTION & DONATION IS ALSO NOT ALLOWABLE - RS.47,850/- VII. THE MISC. EXPENSES INCLUDES GENERAL EXPENSES O F RS.4,16,178/- (RS.2,03,351/- + RS.6,470/- + RS.2,06 ,457/-) NATURE OF EVERY ITEM COULD NOT BE EXPLAINED. EVEN PROPER BILLS/VOUCHER COULD NOT BE PRODUCED AND WHATEVER PR ODUCED WERE INTERNAL VOUCHER NOT AMENABLE TO BE GIVEN FULL CREDENCE. HENCE, 1/4 TH OF THE CLAIM IS DISALLOWED. - RS.1,04,045/- FROM THE ABOVE TABLE IT COULD BE INFERRED THAT MOST OF THE EXPENDITURE WERE MADE BY THE ASSESSEE AT THE MINING SITE AND HENCE, DETAILS FOR THE SAME SHOULD BE AVAILABLE WITH THE ASSESSEE. WE ALSO FIND THAT CERTAIN EXPEN SES INCURRED IN THE FORM OF GENERAL EXPENSES AND NOT SUPPORTED BY PROPER EVIDEN CE AS FOUND BY THE LOWER AUTHORITIES. HENCE, A PORTION OF THE ABOVE EXPENDIT URE REQUIRES TO BE DISALLOWED. IN THIS REGARD WE PLACE RELIANCE ON THE ORDER OF THE C OORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2004-05 IN ITA NO. 134/R AN/2014 DATED 03.12.2014 WHEREIN DISALLOWANCE OF MISC. GENERAL EXPENSES WERE RESTRICTED TO 50% AS FOUND IN THE AFORESAID TABLE AND ACCORDINGLY, WE DIRECT THE AO TO DISALLOW ONLY 50% OF THE DISALLOWANCE I.E. RS.26,943 (50% OF RS.53,887/-) FO R AY 2005-06 AND RS.52,022 (50% OF RS.1,04,045/-) FOR AY 2006-07. WITH REGARD TO THE OTHER EXPENSES INCURRED TOWARDS SURVEY AND PLAN MAKING, TOOLS, IMPLEMENTS A ND ACCESSORIES, SAMPLING ANALYSIS, PLANTATION CHARGES ETC., WE FIND THAT THE SAME ARE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS IN RECURRIN G NATURE AND HENCE, CANNOT BE CONSIDERED AS HAVING CONFERRED ANY ENDURING BENEFIT IN THE CAPITAL FIELD TO THE ASSESSEE. ACCORDINGLY, THE SAME ARE ALLOWABLE AS R EVENUE EXPENDITURE. WITH REGARD TO THE DEMURRAGE CHARGES PAID FOR VARIOUS YEARS, TH E SAME WOULD NOT FALL UNDER THE CATEGORY OF PENALTY FOR VIOLATION OF ANY LAW FOR TH E TIME BEING IN FORCE AND HENCE, WOULD AUTOMATICALLY BE OUTSIDE THE SCOPE OF EXPLANA TION TO SECTION 37(1) OF THE ACT. ACCORDINGLY, THE EXPENDITURE INCURRED TOWARDS DEMUR RAGE CHARGES IS ALLOWED AS DEDUCTION. 6.3. WITH REGARD TO SUNDRY BALANCES WRITTEN OFF IN THE BOOKS FOR THE SUM OF RS.3,02,707/- BY THE ASSESSEE FOR AY 2005-06, WE FI ND THAT THE LD. AR ONLY ARGUED THAT THE SAME WERE DULY WRITTEN OFF IN THE BOOKS OF ACCOUNT AND ACCORDINGLY, ELIGIBLE 8 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 FOR CLAIMING AS DEDUCTION. BUT WE FIND THAT THE LD . AR COULD NOT PRODUCE ANY DETAILS TO PROVE WHETHER THE SAID BALANCES WHEN ORI GINALLY PAID WERE INCURRED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE AND THE COMPELLING CIRCUMSTANCES FOR THE ASSESSEE TO COME TO A CONSCIOUS CONCLUSION TO WRITE OFF THE SAME BY TREATING THEM AS IRRECOVERABLE. IN THE ABSENCE OF THIS EVIDENCE ON RECORD, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON TH IS COUNT. ACCORDINGLY, THE DISALLOWANCE MADE TOWARDS SUNDRY BALANCES WRITTEN O FF IS UPHELD. 6.4. WITH REGARD TO THE DISALLOWANCE OF MISC. EXPEN SES MADE IN THE SUM OF RS. 2 LACS FOR AY 2009-10 ON AN AD HOC BASIS, WE RESPECTF ULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2004-05, SUPRA DIRECT THE AO TO DISALLOW 50% OF THE SAME. W E DIRECT THE AO ACCORDINGLY. THEREFORE, GROUND NOS. 7 TO 9 FOR AY 2005-06, GROU ND NO. 7 TO 10 FOR AY 2006-07 AND GROUND NO. 4 FOR AY 2009-10 ARE PARTLY ALLOWED. 7. DISALLOWANCE ON ACCOUNT OF REPAIRS AND MAINTENANCE GROUND NO. 10 FOR AY 2005-06, GROUND NO. 11 FOR AY 2006-07, GROUND NO . 3 FOR AY 2007-08 AND GROUND NO. 2 FOR AY 2009-10. 7.1. THE LD. AO DURING THE COURSE OF ASSESSMENT PRO CEEDINGS OBSERVED THAT THE ASSESSEE HAD DEBITED RS.1,02,57,366/- UNDER THE HEA D REPAIRS AND MAINTENANCE FOR AY 2005-06 WHICH INCLUDED EXPENSES TOWARDS REPAIRS AND MAINTENANCE OF MACHINERY, VEHICLES, ROADS, BUILDING AND OTHERS. T HE LD. AO OBSERVED THAT THE DETAILS OF REPAIRS AND MAINTENANCE AND OTHERS INCLU DED A SUM OF RS.7,11,182/- (RS.56,737/- + 11,400/- + 6,43,045/-) WHICH WERE NO T SUPPORTED BY PROPER BILLS AND VOUCHERS AND ACCORDINGLY PROCEEDED TO DISALLOW 25% OF THE SAME AMOUNTING TO RS.1,77,795/- FOR AY 2005-06. THE LD. AO FURTHER O BSERVED THAT THE ASSESSEE COULD NOT PRODUCE PARTY WISE DETAILS WITH FULL IDEN TITY OF PARTIES THROUGH WHOM ROADS AND BUILDING REPAIRING MATERIALS WERE PURCHAS ED AND PARTIES FROM WHOM MACHINERY REPAIRS WERE DONE. ACCORDINGLY, IN THE A BSENCE OF THOSE PROPER BILLS AND VOUCHERS, HE PROCEEDED TO MAKE AN AD HOC DISALLOWAN CE OF RS.3,50,000/- 9 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 (RS.2,50,000/- + RS.1,00,000/-). ACCORDINGLY, TOTA L DISALLOWANCE OF RS.5,27,795/- WAS MADE BY THE LD. AO. SIMILAR DISALLOWANCES WERE MADE BY THE AO FOR AY 2006-07 WITH VARIANCE IN FIGURES. FOR THE AY 2007- 08 THE LD. AO MADE AN ESTIMATED DISALLOWANCE OF 20% FOR THE SAME REASON. FOR AY 2009-10 THE LD. AO ALSO MADE ESTIMATED DISALLOWANCE OF 10% FOR THE SIM ILAR REASON. THE SAME WERE CONFIRMED BY THE LD. CIT(A) ON FIRST APPEAL. AGGRI EVED, ASSESSEE IS IN APPEALS BEFORE US. 7.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ENTIRE DISALLOWANCE OF EXPENSES WAS MADE ONLY ON ESTIMATE BASIS. WE ALSO FIND THAT THE EXPENDITURE I NCURRED TOWARDS REPAIRS AND MAINTENANCE WERE INCURRED ONLY IN THE MINING SITE W HICH WERE MANNED BY THE EMPLOYEES OF THE PARTNERSHIP FIRM AS STATED SUPRA W HO ARE RESPONSIBLE FOR MAINTAINING THE VERACITY OF THE EXPENDITURE INCURRE D THEREON. UNDER THESE CIRCUMSTANCES, IT WOULD BE IMPOSSIBLE FOR THE EMPLO YEES OF THE FIRM WORKING IN THE SITE TO HAVE INCURRED NON-BUSINESS EXPENDITURE AND GOT APPROVAL OF THE SAME FROM THE PARTNERS OF THE FIRM. WE FIND THAT THE ENTIRE DISALLOWANCE WAS MADE WITHOUT ANY BASIS AND WE ALSO FIND NO SUCH DISALLOWANCE WAS MAD E ON THIS ACCOUNT IN THE EARLIER ASSESSMENT YEAR 2004-05. IT IS NOT THE CASE OF THE AO THAT THE REPAIRS AND MAINTENANCE EXPENDITURE WERE INCURRED BY THE ASSESS EE IN THE PLACE OTHER THAN THE MINING SITE. HENCE, WE FIND NO JUSTIFIABLE REASONS TO CONFIRM THE ORDERS OF THE LOWER AUTHORITIES ON THIS COUNT. ACCORDINGLY, GROU ND NO. 10 FOR AY 2005-06, GROUND NO. 11 FOR AY 2006-07, GROUND NO. 3 FOR AY 2007-08 AND GROUND NO. 2 FOR AY 2009-10 OF ASSESSEES APPEALS ARE ALLOWED. 8. DISALLOWANCE OF MACHINERY AND VEHICLE HIRE CHARGES GROUND NO. 11 FOR AY 2005-06, GROUND NO. 12 FOR AY 2006-07, GROUND NO . 4 FOR AY 2008-09 AND GROUND NO. 5 FOR AY 2009-10. 8.1. THE AO DURING THE COURSE OF ASSESSMENT PROCEED INGS FOR AY 2005-06 OBSERVED THAT THE ASSESSEE HAD DEBITED RS.29,84,695 /- UNDER THE HEAD MACHINERY HIRE CHARGES. THE ASSESSEE EXPLAINED THAT THE EXP ENDITURE PERTAINS MAINLY TO HIRING 10 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 OF DUMPER, VEHICLES, TRACTORS, COMPRESSOR AND LOADE R. THE AO CALLED FOR VEHICLE WISE DETAILS FOR INTERNAL SHIFTING OF BLASTED ORE A ND MINERAL OF MINING REJECTS AND FACE CLEANING. IN RESPONSE TO THIS, THE LD. AR SUB MITTED THAT IT IS NOT POSSIBLE AND PRACTICAL TO PREPARE SUCH DETAILS. THE LD. AO NOT CONVINCED WITH THIS REPLY PROCEEDED TO DISALLOW 10% OF THE TOTAL CLAIM AMOUNT ING TO RS.2,98,470/- FOR AY 2005-06. THE LD. AO MADE SIMILAR DISALLOWANCE FOR AY 2006-07 @ 5% OF THE TOTAL MACHINERY HIRE CHARGES. FOR AY 2008-09 THE A O MADE AN AD HOC DISALLOWANCE OF RS. 2 LACS TOWARDS VEHICLE HIRE CHA RGES ON THE GROUND THAT PERSONAL ELEMENT OF EXPENDITURE ON THIS ACCOUNT CANNOT BE RU LED OUT. THE LD. AO MADE AN ADDITION OF RS. 3 LACS TOWARDS HIRE CHARGES FOR VIO LATION OF TDS PROVISIONS AND MADE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. ALL T HESE ADDITIONS WERE CONFIRMED BY THE LD. CIT(A) ON FIRST APPEAL. AGGRIEVED, ASSESSE E IS IN APPEALS BEFORE US. 8.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE MACHINERY HIRE CHARG ES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS WERE DULY I NCURRED AT THE MINING SITE WHICH WERE MANNED ONLY BY THE EMPLOYEES OF THE FIRM WHO A RE ANSWERABLE FOR VERACITY OF EACH AND EVERY EXPENDITURE INCURRED THEREON AS STAT ED SUPRA. UNDER THESE CIRCUMSTANCES, THERE IS NO QUESTION OF ANY ESTIMATE D DISALLOWANCE @ 10% OR 5% OF THE AD HOC DISALLOWANCE OF A LUMPSUM AMOUNT, AS THE CASE MAY BE. WE FIND THAT THE ADDITION MADE BY THE AO IS ONLY BASED ON MERE SURMI SES AND SUSPICION AND NOT ON ANY MATERIAL EVIDENCE BROUGHT ON RECORD. HENCE, WE DIRECT THE AO TO DELETE THE DISALLOWANCE MADE ON THIS ACCOUNT FOR AYS. 2005-06, 2006-07 AND 2008-09. 8.3. WITH REGARD TO THE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT OF RS.3 LACS FOR AY 2009-10, WE FIND THAT A SUM OF RS.1,20,000/- HAS BE EN PAID TOWARDS JEEP HIRING CHARGES FOR WHICH THE PROVISION OF SECTION 194-I OF THE ACT WOULD NOT BE APPLICABLE AS ADMITTEDLY THE SAME WERE APPLICABLE ONLY IF THE PAYMENT EXCEEDS RS.1,20,000/-. HENCE, THERE IS NO NEED TO DEDUCT TAX AT SOURCE ON THE PART OF THE ASSESSEE FOR THE SAME. WITH REGARD TO THE BALANCE SUM OF RS.1,80,00 0/- INCURRED TOWARDS ELECTRIC AND LIGHTING CHARGES, THE LD. AR ARGUED THAT THE SA ME WERE INCURRED FOR PLACING LIGHTS ALL AROUND THE MINING SITE FOR WHICH ADMITTE DLY NO TDS PROVISION COULD BE 11 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 MADE APPLICABLE. HOWEVER, WE FIND NO DOCUMENTARY E VIDENCE FOR THE SAME WERE PRODUCED BY THE LD. AR BEFORE US TO JUSTIFY HIS CLA IM. HENCE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, IN THE FACTS AND CIRCUMSTANC ES, WE DEEM IT FIT AND PROPER TO SET ASIDE THIS ISSUE WITH REGARD TO THE SUM OF RS.1,80, 000/- ALONE TOWARDS ELECTRIC AND LIGHTING CHARGES TO THE FILE OF THE LD. AO TO DECID E THE SAME AFTER VERIFYING THE EVIDENCE IN THIS REGARD SUBMITTED BY THE ASSESSEE. IF THE CLAIM OF THE ASSESSEE IS FOUND TO BE CORRECT, THE LD. AO IS DIRECTED TO ALLO W THE CLAIM OF THE ASSESSEE. ACCORDINGLY, GROUND NO. 11 FOR AY 2005-06, GROUND N O. 12 FOR AY 2006-07, GROUND NO. 4 FOR AY 2008-09 OF ASSESSEES APPEALS A RE ALLOWED AND GROUND NO. 5 FOR AY 2009-10 OF ASSESSEES APPEAL IS PARTLY ALLOWED F OR STATISTICAL PURPOSES. 9. DISALLOWANCE OF RAISING CHARGES GROUND NO. 12 FOR AY 2005-06 AND GROUND NO. 13 FOR AY 2006-07. 9.1. THE LD. AO IN THE ASSESSMENT PROCEEDINGS FOR A Y 2005-06 OBSERVED THAT THE ASSESSEE HAD INCURRED EXPENDITURE TOWARDS RAISING C HARGES FOR RAISING THE MINERALS FROM THE SITE. THE SAID SUMS WERE INCURRED TO THE TUNE OF RS.1,44,81,741/-. THE LD. AO OBSERVED THAT IN RESPECT OF RAISING CHARGES INCU RRED THROUGH CONTRACTORS, THE SAME WERE SUPPORTED BY BILLS AND PAYMENTS WERE MADE THROUGH BANK ACCOUNT AFTER DEDUCTING DUE TAXES AT SOURCE. BUT WITH REGARD TO INCURRENCE OF RAISING CHARGES THROUGH OWN MAN POWER I.E. FROM OWN LABOUR, THE PA YMENTS WERE MADE BY WAY OF CASH SUPPORTED BY WAGE SHEETS CONTAINING MOSTLY THU MB IMPRESSIONS WHICH WERE NOT CLEARLY VISIBLE. THE LD. AO ALSO OBSERVED THAT IN SOME CASES, THE REVENUE STAMPS WERE AFFIXED BUT THE SAME WERE NOT SIGNED BY THE RECIPIENTS. ACCORDINGLY, HE DISALLOWED A SUM OF RS.1,81,929/- OUT OF RS.7,27 ,715/- (BEING 25% OF THE EXPENDITURE THEREON) AND IN RESPECT OF THE BALANCE EXPENDITURE HE MADE AN AD HOC DISALLOWANCE OF RS.50,000/- THEREBY TOTALING THE DI SALLOWANCE FIGURE TO RS.2,31,929/- FOR AY 2005-06. SIMILARLY, THE LD. A O MADE AN AD HOC DISALLOWANCE OF RS. 11 LACS FOR AY 2006-07. THE ADDITION MADE O N THIS ACCOUNT FOR BOTH THE YEARS WERE CONFIRMED BY THE LD. CIT(A) IN FIRST APP EAL. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 12 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 9.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROU GH FACTS AND CIRCUMSTANCES OF THE CASE. AS STATED ABOVE WITH REGARD TO OTHER GROUNDS, WE FIND THAT THE EXPENDITURE INCURRED TOWARDS RAISING CHARGES WERE ADMITTEDLY INCURRED ONLY IN THE MINING SITE AND NOT ELSEWHERE. AS STATED ABOVE, TH E EMPLOYEES ARE SQUARELY RESPONSIBLE FOR MAINTAINING ADEQUATE RECORDS TO PRO VE THE VERACITY OF THE CLAIM. IN THE INSTANT CASE, THE LD. AO ADMITTED THAT WAGE SHE ETS WERE INDEED MAINTAINED BY THE ASSESSEE BUT THE SAME CONTAINS CERTAIN DEFICIEN CIES BY WAY OF NON SIGNATURE IN THE REVENUE STAMP OR NON AFFIXING THUMB IMPRESSION, AS THE CASE MAY BE. WE ALSO FIND THAT THIS ISSUE WAS ALSO SUBJECT MATTER OF ADJ UDICATION IN ASSESSEES OWN CASE FOR AY 2004-05, SUPRA WHEREIN THE COORDINATE BENCH OF THIS TRIBUNAL HAD DIRECTED THE AO TO RESTRICT THE DISALLOWANCE TO 50% ON THIS ACCOUNT TOWARDS THE DISPUTED AMOUNT. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE AT 50% OF RS.2,31,929/- FOR AY 2005-06 AND 50% OF RS.11 LACS FOR AY 2006-07. ACCORDINGLY, GROUND NO. 12 FOR AY 2005 -06 AND GROUND NO. 13 FOR AY 2006-07 BY THE ASSESSEE ARE PARTLY ALLOWED. 10. DISALLOWANCE OF WAGON LOADING CHARGES GROUND NO. 13 FOR AY 2005-06 AND GROUND NO. 14 FOR AY 2006-07. 10.1. THE LD. AO OBSERVED THAT THE ASSESSEE HAD CLA IMED A SUM OF RS.16,89,040/- UNDER THE HEAD WAGON LOADING EXPENSES FOR THE AY 20 05-06. THE ASSESSEE WAS ASKED TO SPECIFY THE RATE OF WAGON LOADING CHARGES, QUANTITY LOADED, CHARGES PAID, MODE OF PAYMENT WITH PROPER EVIDENCE IN THIS REGARD . THE ASSESSEE COULD NOT FURNISH ANY EXPENDITURE TOWARDS THE SAME EXCEPT PRO VIDING INTERNAL VOUCHERS. ACCORDINGLY, THE LD. AO PROCEEDED TO DISALLOW 10% O F THE TOTAL CLAIM AND MADE ADDITION OF RS.1,68,904/- FOR AY 2005-06. SIMILAR DISALLOWANCE WAS ALSO MADE IN AY 2006-07 WITH VARIANCE IN FIGURES. THE LD. CIT(A ) ON FIRST APPEAL CONFIRMED THE DISALLOWANCE FOR BOTH THE YEARS. AGGRIEVED, ASSESS EE IS IN APPEALS BEFORE US. 10.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THIS EXPENDITURE HAS BEE N INCURRED ONLY IN THE MINING SITE WHICH ARE SUBJECT MATTER OF PRODUCTION AND MAINTENA NCE OF EVIDENCE THAT COULD 13 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 POSSIBLY BE MAINTAINED IN THE NORMAL COURSE OF MINI NG BUSINESS AT THE MINING SITE BY THE EMPLOYEES, WHO WERE ADMITTEDLY MANNING THE S HOW. WE HAVE ALREADY HELD THAT THE EMPLOYEES ARE SQUARELY RESPONSIBLE FOR EXP LAINING THE VERACITY OF THE EXPENSES INCURRED AT THE SITE TO THEIR EMPLOYERS. UNDER THESE CIRCUMSTANCES, THERE IS NO SCOPE FOR MAKING ANY ESTIMATED DISALLOWANCE @ 10 % AS MADE BY THE LD. AO. HENCE, WE HAVE NO HESITATION TO DELETE THE DISALLOW ANCE MADE BY THE LD. AO ON THIS ACCOUNT. ACCORDINGLY, GROUND NO. 13 FOR AY 2005-06 AND GROUND NO. 14 FOR AY 2006-07 ARE ALLOWED IN FAVOUR OF THE ASSESSEE. 11. DISALLOWANCE OF INCOME TAX PAID OF RS.50,000/- FOR AY 2005-06 11.1. BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESS EE MADE PAYMENT OF INCOME TAX OF SHRI K. P. H. PANDYA, WHO IS ONE OF THE CONTRACTORS OF THE ASSESSEE IN THE SUM OF RS.50,000/- IN CASH. THE LD. AO FOUND THAT SINCE T HIS PAYMENT WAS MADE IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE AC T HE MADE DISALLOWANCE OF RS.10,000/- BEING 20% OF RS.50,000/- THEREON IN THE ASSESSMENT. LD. CIT(A) CONFIRMED THE SAID DISALLOWANCE. AGGRIEVED, ASSESS EE IS IN APPEAL BEFORE US. 11.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE LD. CIT(A)S ORDER TH AT A CASH PAYMENT OF RS.50,000/- WAS MADE ON 01.04.2004 TOWARDS TAX LIAB ILITY OF SHRI K. P. H. PANDYA. WE FIND THAT THE AO HAD DISALLOWED THE SAME FOR WAN T OF ANY EVIDENCE. EVEN BEFORE US, THE LD. AR WAS NOT ABLE TO PRODUCE THE T AX PAID CHALLAN. HOWEVER, WE FIND THAT THE GENUINITY OF THIS EXPENSES HAS NOT B EEN QUESTIONED AND THE REVENUE HAD NOT BROUGHT ON RECORD ANY CONTRARY EVIDENCE THA T THE SAID EXPENDITURE WAS INCURRED FOR ANY OTHER PURPOSE OTHER THAN THE ONE S TATED THEREIN. IT IS ALSO NOT BROUGHT ON RECORD AS TO WHY THE ASSESSEE HAS COME F ORWARD TO MAKE PAYMENT OF TAX LIABILITY OF SHRI K. P. H. PANDYA THEREBY PROVING T HE BUSINESS EXPEDIENCY THEREON. UNDER THESE CIRCUMSTANCES, WE DEEM IT FIT AND PROPE R, IN THE INTEREST OF NATURAL JUSTICE AND FAIR PLAY, TO SET ASIDE THIS ISSUE TO T HE FILE OF THE LD. AO TO DECIDE THIS ISSUE BASED ON THE EVIDENCE TO BE FILED BY THE ASSE SSEE TO THIS EXTENT TO EXPLAIN THE 14 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 VERACITY OF ITS CLAIM. THE LD. AO IS DIRECTED ACCO RDINGLY. ACCORDINGLY, GROUND NO. 14 OF AY 2005-06 IS ALLOWED FOR STATISTICAL PURPOSE S. 12. ADDITION TOWARDS SUNDRY CREDITORS GROUND NO. 15 F OR AY 2005-06. 12.1. THE LD. AO OBSERVED DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THAT 22 SUNDRY CREDITORS WERE REFLECTED BY THE ASSESSEE IN ITS BALANCE SHEET AND ACCORDINGLY SOUGHT TO VERIFY THE VERACITY OF THE SAME BY CALLIN G FOR INFORMATION U/S. 133(6) OF THE ACT WHEREIN HE NOTICED THAT THE OUTSTANDING BAL ANCES IN RESPECT OF 11 PARTIES DID NOT MATCH AND ACCORDINGLY THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY THE SAME SHOULD NOT BE TREATED AS UNEXPLAINED CREDIT OF THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASSESSEE SUBMITTED A DETAILED REPLY POINTING OU T THE DIFFERENCE TOGETHER WITH ITS REASONS IN RESPECT OF EACH PARTY AS BELOW: SL. NAME OF CREDITOR DIFFERENCE (RS.) REASONS FOR D IFFERENCE 1. GAYTRI H PANDYA 200/- THERE IS NO DIFFERENCE IN THE CLOSING BALANCE. BALANCE AS PER OUR BOOKS IS RS.3352/- NOT RS.3552/-. 2. D. K. GHOSH 43,567/- THE CREDIT BALANCE LYING SI NCE LONG AS THERE ARE SOME DISPUTES WITH THE PARTY AS REGARD SOME BILLS. 3. SINOD KUMAR SINGH 1,51,352/- WE DEDUCT SECURITY DEPOSITS AGAINST THEIR BILLS AND PAID THEM BALANCE AMOUNT. THE AMOUNT SO DEDUCTED STANDS CREDITED IN OUR BOOKS IN THEIR NAMES, WHICH SHALL BE REFUNDED WHEN THEY DISCONTINUE OR STOP WORKING WITH US. 4. SUNIL KR. PRASAD 18,088/- THIS IS HIRE CHARGES FOR THE MONTH OF MARCH, BOOKED BY US IN OUR BOOKS ON ACCRUAL BASIS, PAID BY US IN THE NEXT YEAR. WHEREAS IT APPEARS THAT THE PARTY HAS BOOKED THE HIRE CHARGES ON CASH BASIS RESULTING IN THE DIFFERENCE OF RS.18,088/- BEING THE HIRE CHARGES FOR THE MONTH OF MARCH. 5. MISHRILAL DHARMA CHAND P. LTD. 40,139/- WE HAVE SHOWN THE LIABILITY OF MISHRILAL DHARAM CHAND P. LTD. IN OUR BOOKS UNDER TWO HEADS FOR TWO DIFFERENT UNITS, RS.2,934/- FOR KIM UNITS AND RS.43,073/- FOR JAJANG UNIT. BALANCE SHOWN BY THE PARTY RS.43,073/- TALLY WITH THE BALANCE APPEAR IN OUR BOOKS FOR JAJANG UNIT. 6. SECURITY CONSULTANTS & 44,060/- THE PARTY HAS SH OWN THE BALANCE OF 15 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 DEVELOPMENTS SERVICES RS.62,517/- IN OUR NAME. WE HAVE PAID THE SAID AMOUNT IN THE MONTH OF MARCH ITSELF WHEREAS THE PARTY HAS NOT SHOWN THE SAME AS RECEIVED DURING THE YEAR. IT SEEMS THE PARTY HAS BOOKED THE SAID AMOUNT ON CASH BASIS IN THE YEAR OF RECEIPT. THE BALANCE OF RS.18,457/- AS SHOWN IN OUR BOOKS REPRESENTS BILL OF SOMEONE ELSE BOOKED IN THE NAME OF PARTY BY MISTAKE 7. SECURITY CONSULTANTS & DEVELOPMENTS SERVICES (KIM) 26,933/- WE HAVE PAID THE SAID AMOUNT IN THE MONTH OF MARCH ITSELF WHEREAS THE PARTY HAS NOT SHOWN THE SAME AS RECEIVED DURING THE YEAR. IT SEEMS THE PARTY HAS BOOKED THE SAID AMOUNT ON CASH BASIS IN THE YEAR OF RECEIPT. 8. SSP ENTERPRISES 3,16,874/- WE HAVE SHOWN THE LI ABILITY OF THE PARTY IN OUR BOOKS UNDER TWO HEADS FOR TWO DIFFERENT UNITS. RS.3,17,882/- FOR KIM UNITS AND RS.1,008/- FOR JAJANG UNIT. BALANCE SHOWN BY THE PARTY RS.3,17,882/- TALLY WITH THE BALANCE APPEAR IN OUR BOOKS FOR KIM UNIT. 9. MINERALS TRADE CORPORATION 5,00,000/- PAYMENT FR OM THE PARTY AMOUNTING TO RS.5,00,000/- WAS RECEIVED BY US IN THE NEXT FINANCIAL YEAR AND CREDITED ACCORDINGLY. WHEREAS THE PARTY HAS DEBITED OUR ACCOUNT ON THE DATE OF MAKING PAYMENT. THE LD. AO DID NOT GET INTO THE DETAILS FILED BY TH E ASSESSEE IN THIS REGARD AND PROCEEDED TO TAX THE DIFFERENCE OF PARTY BALANCES I N THE SUM OF RS.8,11,040/- AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. THE SA ID ADDITION WAS DULY CONFIRMED BY THE LD. CIT(A) ON FIRST APPEAL. AGGRIEVED, THE ASS ESSEE IS IN APPEAL BEFORE US. 12.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THR OUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAD DULY EXP LAINED THE REASONS FOR THE DIFFERENCE IN PARTY BALANCES IN RESPECT OF EACH PAR TY. WE ALSO FIND THAT THE TRADING RESULTS DECLARED BY THE ASSESSEE HAVE BEEN DULY ACC EPTED BY THE AO. WHILE THAT IS SO, THE TRADE CREDITORS EMANATING OUT OF SUCH TRADI NG TRANSACTIONS CANNOT BE DOUBTED WITH, MERELY BECAUSE THERE ARE UNRECONCILED PARTY BALANCES. WE ARE ALSO CONVINCED BY THE REASON GIVEN BY THE ASSESSEE FOR THE MAJOR P ARTIES SUCH AS MINERAL TRADING CORPORATION (RS. 5 LACS), SSP ENTERPRISES (RS.3,16, 874/-), SINOD KR. SINGH (RS.1,51,352/-) AMONG OTHERS. UNDER THESE CIRCUMST ANCES, WE HOLD THAT THERE IS NO 16 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 REASON FOR MAKING ANY ADDITION TOWARDS SUNDRY CREDI TORS AS THE SAME STANDS CLEARLY EXPLAINED. WE FIND THAT THE LD. AO HAD NOT MADE AN Y ENQUIRY WITH REGARD TO THE EXPLANATION OFFERED BY THE ASSESSEE AND MERELY PROC EEDED TO TREAT THE DIFFERENCE AS UNEXPLAINED CASH CREDIT. WE FIND THAT HAD HE MADE ANY ENQUIRY, HE COULD HAVE UNDERSTOOD THE REASONS FOR THE DIFFERENCE IN THE PA RTY BALANCES DUE TO CERTAIN RECONCILIATION AND DIFFERENCES IN BALANCES ARISING DUE TO TIMING DIFFERENCE. HENCE, THE ADDITION MADE BY THE AO IS HEREBY DELETED. GROU ND NO. 15 FOR AY 2005-06 IS ALLOWED. 13. DISALLOWANCE OF DRIVERS SALARY, INSURANCE AND FUEL AND CAR UPKEEP EXPENSES GROUND NO. 16 FOR AY 2005-06, GROUND NO. 4 FOR AY 2007-08 AND GROUND NO. 3 FOR AY 2009-10. 13.1. THE LD. AO MADE A DISALLOWANCE ON ACCOUNT OF DRIVERS SALARY, INSURANCE AND FUEL ON THE GROUND THAT THE CAR COULD HAVE BEEN USED FOR PERSONAL ELEMENT AND HENCE, THE PROPORTIONATE DRIVERS SALARY AND INSURA NCE AND FUEL SHOULD ALSO BE SUBJECTED TO DISALLOWANCE. ACCORDINGLY, HE MADE AN AD HOC DISALLOWANCE OF RS.50,000/- FOR AY 2005-06. HE MADE ESTIMATED DISA LLOWANCE OF 10% OF CAR MAINTENANCE EXPENSES AMOUNTING TO RS.37,017/- FOR A Y 2007-08 AND MADE ESTIMATED DISALLOWANCE OF 5% TOWARDS DRIVERS SALAR Y, INSURANCE AND FUEL CONSUMPTION ON CAR ON THE SAME GROUND AMOUNTING TO RS.8,53,000/- FOR AY 2009- 10. ALL THESE ADDITIONS WERE CONFIRMED BY THE LD. CIT(A) IN FIRST APPEAL. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 13.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ENTIRE DISALLOWANCE H AS BEEN MADE ONLY ON AD HOC AND ESTIMATED BASIS. WE HAD ALREADY HELD IN RESPECT OF GROUND RAISED ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON CAR, THAT THE DISAL LOWANCE THEREON SHOULD BE RESTRICTED TO 10%. RESPECTFULLY FOLLOWING THE SAME CONSISTENTLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE DISALLO WANCE MADE SHALL BE RESTRICTED TO 10% IN EACH YEAR WHICH WOULD MEET THE ENDS OF JUSTI CE. ACCORDINGLY, GROUND NO. 17 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 16 FOR AY 2005-06, GROUND NO. 4 FOR AY 2007-08 AND GROUND NO. 3 FOR AY 2009 RAISED BY THE ASSESSEE IN THIS REGARD ARE PARTLY AL LOWED. 14. THE NEXT ISSUE IS WITH REGARD TO THE CHARGING OF IN TEREST U/S. 234A & 234B OF THE ACT GROUND NO. 19 FOR AY 2005-06, GRO UND NO. 17 FOR AY 2006-07, GROUND NO. 5 FOR AY 2007-08, GROUND NO. 6 FOR AY 20 08-09 AND GROUND NO. 7 FOR AY 2009-10. 14.1. THE ISSUE THAT ARISES FOR OUR CONSIDERATION I S WHETHER INTEREST U/S. 234A AND 234B OF THE ACT IS TO BE CHARGED ON THE RETURNED IN COME OR ON THE ASSESSED INCOME. THE LD. AR DREW OUR ATTENTION TO THE DECISION OF TH E HONBLE JURISDICTIONAL HIGH COURT IN TA NO. 38 OF 2010 DATED 25.07.2012 IN THE CASE OF AJAY PRAKASH VERMA VS. ITO, WHEREIN THEIR LORDSHIPS HAD HELD AS BELOW: 23.LEARNED COUNSEL FOR THE APPELLANT SUBMITTED TH AT IT HAS BEEN ORDERED BY THE AO THAT INTEREST BE CHARGED AS PER RULE. INTER EST CAN BE LEVIED UNDER SECTIONS 234A AND 234B OF THE ACT. IT IS SUBMITTED THAT IN VIEW OF THE JUDGMENT OF FULL BENCH OF RANCHI BENCH OF PATNA HIGH COURT DELIVERED IN TH E CASE OF SMT. TEJ KUMARI VRS. COMMISSIONER OF INCOME-TAX REPORTED IN (2001) 114 T AXMAN 404 (PAT) (FB), THE INTEREST CANNOT BE LEVIED OVER THE ASSESSED INCOME AND IT CAN BE LEVIED ONLY ON THE INCOME DECLARED IN THE RETURN. THE REVENUE PREFERR ED SLP BEFORE HONBLE SUPREME COURT AGAINST THE SAID JUDGMENT OF THE FULL BENCH O F PATNA HIGH COURT, WHICH WAS DISMISSED BY THE HONBLE SUPREME COURT ON MERITS VI DE ORDER DATED 01.08.2000 BY SAYING THAT THERE IS NO MERIT IN THE APPEAL. 24. LEARNED COUNSEL FOR THE REVENUE COULD NOT DISP UTE THIS LEGAL POSITION. THEREFORE, SO FAR AS QUESTION OF LAW INVOLVED IN TH IS APPEAL THAT WHETHER THE INTEREST COULD HAVE BEEN LEVIED AGAINST THE ASSESSED INCOME OF THE ASSESSEE UNDER SECTIONS 234A AND 234B IS CONCERNED, IN VIEW OF THE FULL BEN CH JUDGMENT OF RANCHI BENCH OF PATNA HIGH COURT DELIVERED IN THE CASE OF SMT. TEJ KUMARI, THE REVENUE CAN LEVY THE INTEREST ONLY ON THE TOTAL INCOME DECLARED IN THE R ETURNS AND NOT ON THE INCOME ASSESSED AND DETERMINED BY THE AO TO THAT EXTENT. THE ORDERS PASSED BY THE AUTHORITIES BELOW ARE ACCORDINGLY MODIFIED AND INTE REST SHALL BE CHARGEABLE IN THE LIGHT OF THE FULL BENCH JUDGMENT, REFERRED ABOVE. 14.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FA CTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ISSUE IS SQUARELY COVERE D BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT, SUPRA AND RESPECTFULLY F OLLOWING THE SAME, WE DIRECT THE AO TO CHARGE INTEREST U/S. 234A AND 234B OF THE ACT ONLY ON THE RETURNED INCOME. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE VIDE GROUND NO. 19 FOR AY 2005-06, 18 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 GROUND NO. 17 FOR AY 2006-07, GROUND NO. 5 FOR AY 2 007-08, GROUND NO. 6 FOR AY 2008-09 AND GROUND NO. 7 FOR AY 2009-10 ARE ALLOWED . 15. DISALLOWANCE OF STACKING AND SHIFTING CHARGES GRO UND NO. 1 FOR AY 2007-08. 15.1 THE LD. AO DURING THE COURSE OF ASSESSMENT PRO CEEDINGS FOR AY 2007-08 OBSERVED THAT THE ASSESSEE HAD MADE PAYMENTS IN CAS H AMOUNTING TO RS.1,39,685/- TOWARDS STACKING AND SHIFTING CHARGES WHICH WERE NO T SUPPORTED BY ANY EVIDENCE EXCEPT INTERNAL VOUCHERS PREPARED BY THE ASSESSEE. ACCORDINGLY, HE PROCEEDED TO DISALLOW 25% OF THE SAME AMOUNTING TO RS.34,921/-. THIS DISALLOWANCE WAS CONFIRMED BY LD. CIT(A) IN FIRST APPEAL. AGGRIEVED , THE ASSESSEE IS IN APPEAL BEFORE US. 15.2. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE RECORDS AND FROM THE ARG UMENTS ADVANCED BY THE LD. AR THAT NO DISALLOWANCE WAS MADE ON THIS ACCOUNT BY TH E LD. AO EITHER IN THE PAST OR IN THE FUTURE ASSESSMENTS OF THE ASSESSEE. MOREOVER, W E FIND THAT THIS ADDITION HAS BEEN MADE ONLY IN ONE YEAR ON ESTIMATE BASIS. ADMITTEDL Y, THESE EXPENSES WERE INCURRED ONLY IN THE MINING SITE AND FOR THE REASONS STATED HEREINABOVE WITH REGARD TO THE VERACITY OF THE EXPENSES INCURRED IN THE MINING SIT E WHICH ARE MANNED BY EMPLOYEES OF THE ASSESSEE, WE DO NOT FIND ANY JUSTIFIABLE REA SON FOR MAKING THIS ADDITION ON ESTIMATE BASIS. HENCE, THE DISALLOWANCE MADE BY TH E AO AND CONFIRMED BY THE LD. CIT(A) IS HEREBY DIRECTED TO BE DELETED. GROUND NO. 1 FOR AY 2007-08 IS ALLOWED IN FAVOUR OF THE ASSESSEE. 16. DISALLOWANCE OF PERIPHERAL EXPENSES- GROUND NO. 2 F OR AY 2007-08 AND GROUND NO. 2 FOR AY 2008-09. 16.1. THE LD. AO DURING THE COURSE OF ASSESSMENT PR OCEEDINGS OBSERVED THAT PAYMENTS WERE MADE IN CASH TOWARDS PERIPHERAL EXPEN SES FOR WHICH NO EVIDENCE AS TO PAYMENT OR ACKNOWLEDGMENT THEREOF COULD BE PRODU CED BY THE ASSESSEE TO VERIFY THE GENUINENESS OF THE EXPENDITURE CLAIMED AND ACCO RDINGLY, SOUGHT TO MAKE 19 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 DISALLOWANCE OF 25% OF THE EXPENDITURE AMOUNTING TO RS.23,814/- IN THE ASSESSMENT FOR AY 2007-08. 16.2. WITH REGARD TO AY 2008-09 THE LD. AO OBSERVED THAT THE ASSESSEE HAD INCURRED A SUM OF RS.88,54,957/- TOWARDS PERIPHERAL DEVELOPMENT EXPENSES. THE LD. AO ALSO OBSERVED THAT THE ASSESSEE OUT OF THE S AME HAD PAID RS.76,11,004/- ON 01.09.2008 AND THE BALANCE SUM OF RS.8,89,842/- WAS PAID ON 04.03.2009 I.E. IN THE NEXT ASSESSMENT YEAR. THE LD. AO INVOKED THE PROVI SIONS OF SECTION 43B OF THE ACT IN RESPECT OF SUBJECT MENTIONED PAYMENT AND ACCORDI NGLY SOUGHT TO DISALLOW THE SAME U/S. 43B OF THE ACT AS IT WAS NOT REMITTED BEF ORE THE DUE DATE OF FILING THE RETURN OF INCOME FOR AY 2008-09. BOTH THE ABOVE ADDITIONS WERE CONFIRMED BY THE LD. CIT(A) IN FIRST APPEAL. AGGRIEVED, THE ASSESSEE IS IN APPEALS BEFORE US. 16.3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE GENUINITY OF THE EXPENDI TURE TOWARDS PERIPHERAL DEVELOPMENT EXPENSES HAVE NOT BEEN DOUBTED BY THE L D. AO FOR THE AY 2008-09. WE FIND THAT THE SAME HAS BEEN DULY PAID ON 04.03.2 009, WHICH HAS ALSO BEEN ACCEPTED BY THE AO. ADMITTEDLY, THE PERIPHERAL DEV ELOPMENT EXPENSES WAS INCURRED IN THE MINING SITE OF THE ASSESSEE. WE FIND THAT T HE LOWER AUTHORITIES HAD NOT BROUGHT ON RECORD ANY EVIDENCE AS TO WHETHER THE PAYMENT OF THIS PERIPHERAL DEVELOPMENT EXPENSES WERE TO BE MADE IN ACCORDANCE WITH ANY LAW FOR THE TIME BEING IN FORCE AS MANDATED IN SECTION 43B OF THE ACT. IN THE ABSENCE OF SUCH FINDING, INVOCATION OF PROVISIONS OF SECTION 43B OF THE ACT WOULD NOT STAN D JUSTIFIED. HENCE, IN THESE FACTS AND CIRCUMSTANCES, WE DEEM IT FIT AND PROPER, IN TH E INTEREST OF NATURAL JUSTICE AND FAIR PLAY, TO SET ASIDE THIS ISSUE TO THE FILE OF T HE LD. AO TO GIVE A FINDING AS TO WHETHER THESE PAYMENTS WOULD FALL UNDER ANY LAW FOR THE TIME BEING IN FORCE AND ACCORDINGLY, INVOKE THE PROVISIONS OF SECTION 43B O F THE ACT THEREON. WE ALSO DIRECT THE LD. AO THAT IN CASE THE SUBJECT MENTIONED PAYM ENTS ARE NOT MANDATED AS PER ANY LAW FOR THE TIME BEING IN FORCE, IT SHOULD BE ALLOW ED AS A DEDUCTION FOR THE AY 2008- 09. IN VIEW OF THIS FINDING THE ALTERNATIVE ARGUME NT ADVANCED BY THE LD. AR THAT IN 20 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 ANY CASE, THE SUBJECT MENTIONED PAYMENT HAS BEEN MA DE ON 04.03.2009 AND HENCE, DEDUCTION SHOULD BE ALLOWED ON PAYMENT BASIS U/S. 4 3B OF THE ACT IN AY 2009-10 BECOMES INFRUCTUOUS. ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE ASSESSEE FOR AY 2008-09 IS ALLOWED FOR STATISTICAL PURPOSES. 16.4. WITH REGARD TO THE DISALLOWANCE MADE IN THE SUM OF RS.23,814/- FOR AY 2007- 08, WE FIND THE DISALLOWANCE HAS BEEN MADE ONLY ON ESTIMATE BASIS, WHICH HAS GOT NO LEGS TO STAND IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND HENCE, WE DIRECT THE AO TO DELETE THE SAME. ACCORDINGLY, THE GROUND NO. 2 FOR AY 2007-08 RAISED BY THE ASSESSEE IS ALLOWED. 17. ADDITION MADE TOWARDS COMPENSATION PREMIUM ACCOUNT OF RS.1,62,70,000/- - GROUND NO. 1 FOR AY 2008-09. 17.1. THE LD. AO DURING THE COURSE OF ASSESSMENT PR OCEEDINGS FOR THE AY 2008-09 OBSERVED THAT THE ASSESSEE HAD CLAIMED DEDUCTION TO WARDS FOREST LAND COMPENSATION PREMIUM ACCOUNT IN THE SUM OF RS.1,62,70,000/- WHIC H HAD REMAINED AS A LIABILITY AS AT THE END OF THE PREVIOUS YEAR. THE LD. AO ON PER USAL OF THE SUPPORTING EVIDENCE OF PAYMENT OF THE ABOVE EXPENSES SUBMITTED BY THE ASSE SSEE HAD OBSERVED THAT THE EXPENDITURE UNDER THE HEAD WAS ACTUALLY COMPENSATIO N ON ACCOUNT OF DESTRUCTION OF FOREST LAND DUE TO MINING ACTIVITIES CONDUCTED BY T HE ASSESSEE WHICH IS PAID TO THE GOVERNMENT THROUGH TAHSILDAR, BARBIL. ACCORDINGLY, HE FOUND THAT SINCE THE PAYMENT WAS NOT MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME FOR AY 2008-09, HE INVOKED THE PROVISIONS OF SECTION 43B O F THE ACT AND ACCORDINGLY, MADE DISALLOWANCE OF THE SAME FOR AY 2008-09. THE SAME WAS CONFIRMED BY THE LD. CIT(A) IN FIRST APPEAL. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 17.2. THE LD. AR ARGUED THAT THE SAID PAYMENT OF FO REST LAND COMPENSATION PREMIUM ACCOUNT CANNOT BE TERMED AS TAX, ROYALTY, C ESS, DUTY OR FEE LEVIED BY THE GOVERNMENT UNDER ANY LAW FOR THE TIME BEING IN FOR CE AS PER SECTION 43B OF THE ACT. IT IS PURELY VESTED WITH THE DISCRETION OF THE TAHS ILDAR FOR USAGE OF THE FOREST OCCUPIED LAND FOR CARRYING OUT MINING ACTIVITIES BY THE ASSESSEE. IN OTHER WORDS, THIS 21 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 PAYMENT IS CHARGED BY THE TAHSILDAR FOR USING THE F OREST OCCUPIED LAND BY THE ASSESSEE AND THIS PAYMENT WOULD IN TURN BE USED BY THE TAHSILDAR FOR PROCURING LANDS ELSEWHERE AND DEVELOP FOREST IN THAT LOCATION. HE ARGUED THAT THERE IS ADMITTEDLY NO LAW PREVAILING ON THIS SUBJECT AND THE ENTIRE MODUS OPERENDI OF THE PAYMENTS WERE DIRECTED TO BE MADE BASED ON THE DISCRETION OF THE TAHSILDAR AND WITHOUT MAKING PAYMENT OF THIS COMPENSATION, THE ASSESSEE WOULD NO T BE ENTITLED FOR GETTING PERMISSION TO CARRY ON MINING BUSINESS. HENCE, THE BUSINESS EXPEDIENCY OF THE SAME IS PROVED BEYOND DOUBT. ACCORDINGLY, HE PRAYED FOR DIRECTION TO ALLOW THE SAID CLAIM OF EXPENDITURE AS A GENUINE BUSINESS EXPENDIT URE. IN RESPONSE TO THIS, THE LD. DR ARGUED THAT NO DOCUMENTARY EVIDENCE WERE PROVIDE D BY THE ASSESSEE IN THIS REGARD AND HE VEHEMENTLY RELIED ON THE ORDERS OF TH E LOWER AUTHORITIES. 17.3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE SHORT POINT THAT ARISES FOR OUR CONSIDERATION WITH REGARD TO THE GROUND IS WHETHER THE SUBJECT MENTIONED EXPEND ITURE OF FOREST LAND COMPENSATION PREMIUM ACCOUNT PAYABLE TO TAHSILDAR W OULD FALL UNDER THE AMBIT OF PROVISION OF SECTION 43B OF THE ACT. ADMITTEDLY, W E FIND FROM THE ORDERS OF THE LOWER AUTHORITIES THAT NO FINDING HAS BEEN GIVEN AS TO UNDER WHICH LAW THIS PAYMENT WAS MANDATED TO BE MADE BY THE ASSESSEE. WITHOUT S UCH CLEAR FINDING WE HOLD THAT THE PROVISIONS OF SECTION 43B OF THE ACT CANNOT AUT OMATICALLY BE INVOKED. HENCE, IN THE FACTS AND CIRCUMSTANCES, WE DEEM IT FIT AND PRO PER, IN THE INTEREST OF NATURAL JUSTICE AND FAIR PLAY, TO SET ASIDE THIS ISSUE TO T HE FILE OF THE AO TO GIVE A PROPER FINDING AS TO THE APPLICABILITY OF PROVISIONS OF SE CTION 43B OF THE ACT IN RESPECT OF THE SUBJECT MENTIONED EXPENDITURE BY MAKING PROPER ENQUIRIES. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE NECESSARY EVIDENCE IN THIS REGA RD FOR SMOOTH DISPOSAL OF THIS SUBJECT MENTIONED ISSUE. ACCORDINGLY, THE GROUND N O. 1 FOR AY 2008-09 IS ALLOWED FOR STATISTICAL PURPOSES. 18. DISALLOWANCE OF RAISING CHARGES U/S. 40(A)(IA) OF T HE ACT OF RS.8,67,430/- - GROUND NO. 1 FOR AY 2009-10. 22 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 18.1. THE LD. AO OBSERVED DURING THE COURSE OF ASSE SSMENT PROCEEDINGS FOR AY 2009-10 THAT THE ASSESSEE HAD MADE PAYMENTS EXCEEDI NG RS.20,000/- FROM 05.05.2008 TO 31.03.2009 AMOUNTING TO RS.8,67,430/- UNDER THE HEAD RAISING CHARGE. THE AO INVOKED THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT AS ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN THIS REGARD FOR C OMPLIANCE OF TDS PROVISION. THE LD. AO PREPARED A CHART TOWARDS PAYMENT OF RAISING CHARGES FROM 05.05.2008 TO 31.03.2009 AS UNDER: DATE AMOUNT (RS.) 05.05.2008 06.06.2008 06.07.2008 04.08.2008 06.09.2008 06.10.2008 06.11.2008 06.12.2008 05.01.2009 19.01.2009 06.02.2009 06.03.2009 31.03.2009 TOTAL : 70,483/- 79,252/- 40,640/- 51,232/- 47,820/- 38,600/- 54,540/- 55,692/- 76,502/- 1,37,392/- 80,465/- 58,473/- 75,339/- 8,67,430/- ACCORDINGLY, HE OBSERVED THAT PROVISIONS OF SECTION S 40(A)(IA) AND 40A(3) OF THE ACT WERE VIOLATED BY THE ASSESSEE AND HENCE, HE MADE TH E DISALLOWANCE, WHICH WAS DULY CONFIRMED BY THE LD. CIT(A) IN FIRST APPEAL. AGGRI EVED, ASSESSEE IS IN APPEAL BEFORE US. 18.2. THE LD. AR ARGUED THAT RAISING CHARGES ARE ADMITTEDLY INCURRED FOR RAISING THE MINERALS FROM THE MINING SITE. MOST OF THESE E XPENDITURE ARE INCURRED THROUGH CONTRACTORS, WHICH WERE DULY SUBJECTED TO DEDUCTION OF TAX AT SOURCE ON WHICH POINT, THERE IS ALSO NO DISPUTE. APART FROM THIS WORK BEI NG CARRIED OUT WITH THE ASSISTANCE OF CONTRACTORS, THE ASSESSEE HAD GOT ITS OWN EMPLOY EES IN THE MINING SITE WHO WOULD ALSO DO THE SAME JOB THROUGH WHOM PAYMENTS WERE MAD E TOWARDS DAILY WAGES AND THE SAME WERE PAID TO VARIOUS LABOURERS WORKING IN THE MINING SITE. HE ALSO DREW OUR ATTENTION THAT FOR THE PERIOD OF ELEVEN MONTHS THESE PAYMENTS WERE MADE IN THE FIRST WEEK OF THE MONTH TO VARIOUS LABOURERS. THES E PAYMENTS WERE ALSO DULY 23 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 SUPPORTED BY MUSTER ROLL MAINTAINED IN THE MINING S ITE. HENCE, HE ARGUED THAT THE PROVISIONS OF SECTION 194C OF THE ACT WOULD NOT BE APPLICABLE AND ACCORDINGLY, NO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT COULD BE IN VOKED. HE ALSO PRAYED FOR SETTING ASIDE THIS ISSUE TO THE FILE OF THE AO IN ORDER TO VERIFY THE MUSTER ROLL MAINTAINED IN THE SITE TO UNDERSTAND THE VERACITY OF THE CLAIM OF THE ASSESSEE. IN RESPONSE TO THIS, THE LD. DR FAIRLY CONCEDED THAT THE ISSUE REQUIRES VERIFICATION BY THE AO AND ACCORDINGLY, HE AGREED FOR SETTING ASIDE THIS ISSUE TO THE FILE OF AO. 18.3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THIS ISSUE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, REQUIRES TO BE SET ASIDE TO THE FILE OF THE AO FOR VERIFICAT ION AFRESH OF THE MUSTER ROLL TO ENSURE WHETHER THE PAYMENTS WERE MADE TO THE LABOURERS ENG AGED BY THE ASSESSEE IN ITS MINING SITE AND BASED ON THAT FINDING, DECISION NEE DS TO BE TAKEN BY THE AO AS TO WHETHER PROVISIONS OF SECTION 194C OF THE ACT READ WITH SECTION 40(A)(IA) OF THE ACT WOULD INDEED BECOME APPLICABLE. WE DIRECT ACCORDIN GLY. GROUND NO. 1 FOR AY 2009-10 IS ALLOWED FOR STATISTICAL PURPOSES. 19. THE NEXT GROUND IN RESPECT OF DISALLOWANCE OF TELEP HONE EXPENSES GROUND NO. 5 IN AYS. 2005-06 AND 2006-07. 19.1. THE LD. AO OBSERVED THAT THE ASSESSEE HAD CLA IMED RS. 26,161/- UNDER THE HEAD TELEPHONE EXPENSES FOR AY 2005-06. HE OBSERVE D THAT THE PERSONAL USAGE OF THE SAME AND NON BUSINESS PURPOSES CANNOT BE RULED OUT, THEREFORE, HE PROCEEDED TO DISALLOW 25% OF THE SAME AMOUNTING TO RS.6540/- IN THE ASSESSMENT. SIMILAR DISALLOWANCE WAS ALSO MADE FOR AY 2006-07 ON THE SA ME GROUND WITH VARIANCE IN FIGURES. THE LD. CIT(A) CONFIRMED THE DISALLOWANCE AS MADE BY THE AO. 19.2. THE LD. AR SUBMITTED THAT THE TELEPHONE HAS B EEN USED ONLY FOR THE PURPOSE OF BUSINESS AND THERE WAS NO PAST HISTORY FOR DISAL LOWANCE OF THIS EXPENDITURE IN ASSESSEES OWN CASE AND ACCORDINGLY, HE PRAYED FOR ADOPTION OF THE SAME. 24 ITA NOS. 87-91/RAN/2015 MISHRILALL JAIN & SONS AYS 2005-06 2009-10 19.3. IN RESPONSE TO THIS, THE LD. DR VEHEMENTLY RE LIED ON THE ORDERS OF THE LOWER AUTHORITIES AND FURTHER ARGUED THAT NO EVIDENCE WER E FILED BY THE ASSESSEE. HENCE, HE SUBMITTED BEFORE THE BENCH TO CONFIRM THE ACTION OF THE LD. CIT(A). 19.4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THRO UGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE DISALLOWANCE WAS MADE O NLY ON AD HOC BASIS AND FROM THE PAST HISTORY WE FIND NO SUCH DISALLOWANCE WAS MADE ON THIS ACCOUNT. HENCE, WE FIND NO JUSTIFIABLE REASON FOR THE AO TO MAKE A SEPARATE DISALLOWANCE TOWARDS TELEPHONE EXPENSES FOR THESE YEARS WITHOUT BRINGING OUT ANY E VIDENCE ON RECORD FOR USAGE OF PERSONAL ELEMENT THEREON. HENCE, THE DISALLOWANCE MADE BY AO AND CONFIRMED BY CIT(A) IS HEREBY DELETED. THEREFORE, GROUND NO. 5 FOR AYS 2005-06 AND 2006-07 IS ALLOWED. 20. IN THE RESULT, ALL THE APPEALS OF ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 09.09.2016 SD/- SD/- (N. V. VASUDEVAN) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED :9 TH SEPTEMBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT 2 RESPONDENT 3 . THE CIT(A), 4. 5. CIT DR, ITAT, RANCHI / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .