M/s. KHAYATI FOODS PVT. LTD., Bhopal V. The ACIT Circle 3(1), Bhopal

ITSSA 105/IND/2014

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6041 (ITAT-INDORE)
• Duration Of Justice: 10 year(s) 3 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-05-2024
• Assessment Year: 2009-2010
• Appeal Filed On: 03-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KUMAR YADAV
• Keywords: Search and seizure; Additional evidence; Corroborative evidences; Block assessment; Onus to prove
• Section: 68; 132; 271(1)(c); 143(3); 153A; 143(2); 113; 13; 153

Judgement Text

आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER IT(SS)A No.104 & 105/Ind/2014 (Assessment Years: 2008-09 & 2009-10) M/s. Khayati Foods Pvt. Ltd. 188, Pul Bogda Jinsi Jahangirbad Bhopal Vs. ACIT -3(1) Bhopal (Appellant / Assessee) (Respondent/ Revenue) PAN: AACCK3915B Assessee by Shri Sumit Nema, Sr. Adv. Shri Gagan Tiwari, Adv. Revenue by Shri Ram Kumar Yadav, CIT- DR Date of Hearing 15.05.2024 Date of Pronouncement 04.07.2024 O R D E R Per Bench : These two appeals by the assessee are directed against the order dated 23.01.2014 of the Commissioner of Income Tax (Appeal)-II, Bhopal for A.Ys.2008-09 & 2009-10 respectively. For A.Y. 2008-09 the assesse has raised following grounds of appeal: IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 2 of 20 “01.On the facts and in the circumstances of the case, the Id. CIT(A) was not justified in confirming the addition of Rs. 4,50,000/- made towards the transfer entry to the unsecured loan a/c from the a/c of sundry creditors appearing in the balance sheet as on 31-03-2007 for the credit obtained through cheque at Rs. 4,50,000/- on 02-12-2006 from Birla Road Lines. 02. On the facts and in the circumstances of the case, the Id. CIT(A) was not justified in confirming the disallowance of Rs. 1,28,649/- at 20% as against the expenses incurred on Telephone at Rs. 47,215/- and travelling at Rs. 5,96,032/- totaling to Rs. 6,43,247/-. 03. The appellant craves leave to add, to alter and/or to modify the grounds of appeal on or before the date of hearing.” 2. The assesse has also raised an additional ground vide application filed under Rule 11 of ITAT, Rules 1963. The additional ground raised by the assesse reads as under: “1.That there was no justification for the Ld. CIT (A) to confirm the impugned addition amounting to Rs 4,50,000 on account of unsecured loan & addition of Rs 6,43,247 on account of disallowance of expenditure since the said additions were made by the AO merely on the basis of balance sheet and profit and loss of the assessee without there been any incriminating evidence found in search since the assessment for A.Y 2008-09 stood completed on the date of Search i.e. 04/02/2010.” 3. Ld. Sr. counsel has submitted that the additional ground raised by the assesse is purely legal in nature and goes to the root of the matter. He has further submitted that the additional ground can be adjudicated on the basis of the facts and material already available on record and no new fact or record is required to be verified or to be considered for adjudication of the additional ground. Therefore, the Ld. Sr. counsel has submitted that the IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 3 of 20 additional ground raised by the assesse be admitted for adjudication in view of the judgment of Hon’ble Supreme Court in case of NTPC vs. CIT 229 ITR 383 (SC). 4. On the other hand, ld. DR has objected to the admission of the additional ground and submitted that the assesse has not explained the reasonable cause for not raising issue before the authorities below. 5. We have considered the rival submissions as well as relevant material on record. There is no dispute that the additional ground raised by the assesse is purely legal in nature and also goes to the root of the matter. We further note that for adjudication of the additional ground no new facts or record is required to be verified or investigated but it can be decided by considering facts and material already on record of the AO. Therefore, in view of the judgment of Hon’ble Supreme Court in case of NTPC vs. CIT(supra) the additional ground raised by the assesse admitted for adjudication. Adjudication of Additional ground 6. Ld. Sr. counsel has submitted that there was a search and seizure action u/s 132 of the Act on 04.02.2010 pursuant to which the AO initiated the proceedings u/s 153A and made two additions for A.Y.2008-09; (i) on account of unsecured loan and (ii)disallowance of expenditure which was restricted by the CIT(A) at 20%. Ld. Sr. Counsel has further submitted that the assessment for IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 4 of 20 A.Y.2008-09 was not pending as on the date of search and seizure operation and therefore, it has not got abated by virtue of search and seizure action. He has referred to para 5 as well as 7 of the assessment order and submitted while making these two addition the AO has not made any reference to any incriminating material found or seized during the course of search and seizure action but the additions were made on the basis of the entries in the books of account of the assesse. Thus, the Ld. Sr. counsel has submitted that the additions made by the AO are not sustainable in law and liable to be deleted in absence of any incriminating material. He has relied upon judgment of Hon’ble Supreme Court in case of Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. 454 ITR 212. 7. On the other hand, Ld. DR has submitted that the assesse has failed to discharge its onus to prove the identity, creditworthiness of the creditors and genuineness of the transactions so far as the unsecured loans are concerned. Further the assesse also failed to produce the evidence to substantiate the claim of expenditure and consequently the AO has disallowed the claim of assesse on account of unsecured loan as well as expenses. Ld. DR has relied upon the orders of the authorities below. 8. We have considered the rival submissions as well as relevant material on record. The details of the original return of income as well as the return of income filed by the assesse in response to notice u/s 153A are given by the AO in para 3 of the assessment order as under: IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 5 of 20 A.Y. Date of filing of original return Returned income (loss) Date of filing return u/s 153A Returned income u/s 153A Income surrendered 2004-05 Not in existence -- -- -- -- 2005-06 27.10.2005 NIL 03.06.2011 NIL NIL 2006-07 18.11.2006 67652 03.06.2011 67650 NIL 2007-08 07.11.2007 19611 03.06.2011 19610 NIL 2008-09 30.09.2008 402210 03.06.2011 456660 NIL 2009-10 24.09.2009 2444470 03.06.2011 2515150 NIL 9. Thus, it is clear that the assesse filed the return of income u/s 139 for A.Y.2008-09 on 30 th September 2008 and the limitation to issue the notice u/s 143(2) expired on 30.09.2009 therefore, the assessment for A.Y.2008-09 was not pending on the date of search and seizure operation carried out on 04.02.2010. The AO has made these two additions in para 5 & 7 of the assessment order as under: “(5) UNSECURED LOANS TAKEN BY THE COMPANY During the assessment proceedings the assessee was asked to provide the details of Loans taken and repaid including details of squared up accounts. The assessee has taken loans of Rs. IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 6 of 20 1220770/- from various persons during A.Y 2005-06 including Shri Ishaan Joshi from whom Rs. 750000/- was taken. Incomplete confirmations statements were submitted by the lenders except that of Shri Ishaan Joshi whose confirmation along with required PAN, address, income tax returns and bank accounts was not provided. Also an unsecured loan of Rs.450000/- is claimed to be taken from Birla Road Lines in the A.Y 08-09. However on revealing the records it was found that an expenditure was recorded in the books of accounts in the name of Birla Road Lines where an outstanding of Rs.450000/- was due as on 31.03.2007. The said amount was converted into unsecured loan. Confirmations along with ITR's, PAN, address, identity and intension for giving such loan by Birla Road Lines was asked to be provided by the assessee. The assessee submitted vide its reply that it will submit required information relating to bank accounts, ITR etc. of lenders but failed to do so. Thus the credit worthiness and identification and genuineness of the lenders could not be established. Therefore loans so received are added to income of the assessee A.Y. Amount 2006-07 1202770 2008-09 450000 Penalty u/s 271(1)(c) is initiated separately. (7) DISALLOWANCE OF EXPENSES: The assessee was assessed u/s 143(3) for the A.Y 2007-08 where administrative expenses were disallowed by the then assessing officer. During the course of assessment proceedings the assessee was asked to provide bills vouchers ete. for support of expenses IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 7 of 20 debited to trading and profit and loss account. The assessee failed to do so despite various reminders hence the disallowance of expenses cannot be ruled out in the period covered under present scrutiny Also use of company's assets cannot be ruled out for personal purposes. A huge variation was found in the expenditure booked under the head freight on sales. Bills booked in the name of M/s Birla Roadlines were newer paid off.Similarly in A.Y 06-07 travelling expenses are debited and Dollors in land is appearing in Final Accounts indicating foreign tour incurred by the promoters. Details were not provided by the assessee. Accordingly a lump sum disallowance is made under the heads of repairs & maintenance, telephone & travelling, salary & wages, freight on sales etc. in following assessment years. A.Y. Amount 2006-07 175000 2007-08 205000 2008-09 225000 2009-10 246000 2010-11 450000 Penalty u/s 271(1)(c) and u/s 271AAA are initiated separately. 10. It is evident from the assessment order that these two additions were made by the AO on the basis of the entries in the books of accounts of the assesse. The AO has neither referred to nor relied upon any material much less incriminating material IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 8 of 20 found or seized during the course of search and seizure operation in the case of the assesse. Therefore, unabated assessment cannot be interfered by the AO while making assessment u/s 153A until and unless some incriminating material unearth during the course of search u/s 132 or requisition u/s 132A or undisclosed income or property discovered in the course of search which were not already disclosed or recorded in the books of accounts. Thus, in the case of assesse in absence of any incriminating material found during the course of search indicating or disclosing any fact to show that the claim of unsecured loan as well as expenditure recorded in the books of account are not genuine and the same are bogus entries the AO is not permitted to make addition in respect of unsecured loan as well as the expenditure duly recorded in the books of account while framing the assessment u/s 153A of the Act. This issue is now covered by the judgment of Hon’ble Supreme Court in case of Pr. CIT vs. Abhisar Buildwell Pvt. Ltd.(supra) wherein the Hon’ble Apex Court has held in para 9 to 14 as under: “9. While considering the issue involved, one has to consider the object and purpose of insertion of Section 153A in the Act, 1961 and when there shall be a block assessment under Section 153A of the Act, 1961. 9.1 That prior to insertion of Section 153A in the statute, the relevant provision for block assessment was under Section 158BA of the Act, 1961. The erstwhile scheme of block assessment under Section 158BA envisaged assessment of ‘undisclosed income’ for two reasons, firstly that there were two parallel assessments envisaged under the erstwhile regime, i.e., (i) block assessment under section 158BA to assess the ‘undisclosed income’ and (ii) regular assessment in accordance with the provisions of the Act to make assessment qua income other than undisclosed income. Secondly, that the ‘undisclosed income’ was chargeable to tax at a special rate of 60% under section 113 whereas income other than ‘undisclosed income’ was required to be assessed IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 9 of 20 under regular assessment procedure and was taxable at normal rate. Therefore, section 153A came to be inserted and brought on the statute. Under Section 153A regime, the intention of the legislation was to do away with the scheme of two parallel assessments and tax the ‘undisclosed’ income too at the normal rate of tax as against any special rate. Thus, after introduction of Section 153A and in case of search, there shall be block assessment for six years. Search assessments/block assessments under Section 153A are triggered by conducting of a valid search under Section 132 of the Act, 1961. The very purpose of search, which is a prerequisite/trigger for invoking the provisions of sections 153A/153C is detection of undisclosed income by undertaking extraordinary power of search and seizure, i.e., the income which cannot be detected in ordinary course of regular assessment. Thus, the foundation for making search assessments under Sections 153A/153C can be said to be the existence of incriminating material showing undisclosed income detected as a result of search. 10. On a plain reading of Section 153A of the Act, 1961, it is evident that once search or requisition is made, a mandate is cast upon the AO to issue notice under Section 153 of the Act to the person, requiring him to furnish the return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and assess or reassess the same. Section 153A of the Act reads as under: “153A. Assessment in case of search or requisition - (1) Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132-A after the 31st day of May, 2003, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 10 of 20 to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132-A, as the case may be, shall abate. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub- section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside Explanation.—For the removal of doubts, it is hereby declared that,— (i) save as otherwise provided in this section, Section 153- B and Section 153-C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year.” 11. As per the provisions of Section 153A, in case of a search under Section 132 or requisition under Section 132A, the AO gets the jurisdiction to assess or reassess the ‘total income’ in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or re- assessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under Section 132 or making of requisition under Section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to subsection (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the ‘total income’ for the entire six years period/block assessment period. The intention does not seem to be to re-open the completed/unabated assessments, unless any incriminating material is found with respect to concerned assessment year falling within last six years preceding the search. Therefore, on true interpretation of Section 153A of the Act, 1961, in case of a search under Section 132 or requisition under Section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material collected IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 11 of 20 during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. 12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated assessments. It does not provide that all completed/unabated assessments shall abate. If the submission on behalf of the Revenue is accepted, in that case, second proviso to section 153A and subsection (2) of Section 153A would be redundant and/or rewriting the said provisions, which is not permissible under the law. 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 12 of 20 Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ii) all pending assessments/reassessments shall stand abated; iii) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs.” 11. Accordingly by following the judgment of Hon’ble Supreme Court we hold that the addition made by the AO on account of unsecured creditors as well as disallowance of expenditure in absence of any incriminating material for A.Y.2008-09 not pending on the date of search are not sustainable in law and liable to be deleted. We order accordingly. 12. Since the addition made by the AO has been deleted due to absence of any incriminating material therefore, we do not propose to go into the merits of the issue raised in ground no.1 & 2. 13. For A.Y.2009-10 the assesse has raised following grounds of appeal: IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 13 of 20 “01.On the facts and in the circumstances of the case, the Id. CIT(A) was not justified in confirming the addition of Rs. 30,00,000/- towards the share application money received from 30 farmers residing in different villages. 02. On the facts and in the circumstances of the case, the Id. CIT(A) was not justified in confirming the disallowance of Rs. 1,63,268/- at 20% as against the expenses incurred on Telephone at Rs. 59,605/- and travelling at Rs. 7,56,733/- totaling to Rs. 8,16,338/. 03. The appellant craves leave to add, to alter and/ or to modify the grounds of appeal on or before the date of hearing.” 14. Ground no.1 is regarding addition made by the AO on account of share application money received from 30 shareholders. Ld. Sr. counsel has submitted that the AO has made the addition u/s 68 of the Act for want of supporting evidence to establish the identity and creditworthiness of the shareholders as well as genuineness of the transactions. He has further submitted that since this amount of Rs.30 lacs received towards share application money from farmers in different villages therefore, the assesse could not immediately gathered requisite details and evidences. He has submitted that the assesse has now filed an application for admission of the additional evidence along with additional evidences in the shape of affidavits of all 30 shareholders along with their proof of identity and address. Ld. Sr. counsel has submitted that the list of shareholders along with their addresses were submitted before the AO however, in absence of documentary evidences the AO made addition which was also confirmed by the CIT(A) and therefore, the assessee has now filed the additional evidence which goes to prove the identity IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 14 of 20 and confirmation of the shareholders. It was 3 rd party information and relevant to discharge the onus to prove the identity, creditworthiness as well as the genuineness of the transactions. Thus, the Ld. Counsel has submitted that the additional evidence be admitted for deciding the issue as it goes to the very root of the matter. In support of his contention he has relied upon following decisions: (i)Rajmoti Industries vs. ITO 52 ITD 286 (ii) Abhay Kumar Shroff vs. ITO 63 ITD 144 (TM) 15. Thus, Ld. Sr. counsel has prayed that the additional evidences be admitted in terms of Rule 29 of ITAT, Rules,1963. 16. On the other hand, Ld. DR has objected to the admission of the additional evidence and submitted that despite sufficient opportunity given by the AO as well as the CIT(A) the assesse did not produce any evidence in support of the claim of share application money received from 30 persons. He has relied upon orders of the authorities below. 17.We have considered the rival submissions as well as relevant material on record. The AO has made the addition on account of application money in para 6 as under: “(6) UNEXPLAINED SHARE APPLICATION MONEY IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 15 of 20 During the assessment proceedings the assessee was asked to provide details of additions to the share capital/share application money in the A.Y 2008-09 for Rs.300000/- and Rs.3000000/- in A.Y 2009-10 in a tabular form in which name, address, PAN, bank account of the persons applying for such shares. No details of any kind were provided for Rs.3300000/- taken as share application money by the assessee company. It was stated in reply that the money is taken from various farmers and also bonus shares are issued to them in A.Y 2010- 11. No further details were provided by the assessee despite various reminders. Accordingly as per provisions of section 68 of Income Tax Act, 1961 such additions are added to the total income of the assessee in following assessment years: A.Y. Amount 2008-09 300000 2009-10 3000000 Penalty u/s 271(1)© is initiate separately.” 17.1 It is manifest from the order of the AO that the addition was made for want of requisite details and evidences. The CIT(A) has confirmed the addition made by the AO in para 5.4 of the impugned order as under: “5.4 However, the appellant has failed miserably in respect of share application money of Rs.30,00,000/- stated to be received from 30 farmers during the A.Y. 2009-10 and to whom further bonus shares allotted during A.Y. 2010-11 also. The appellant has merely given list of 30 names giving incomplete address as Kasravad, Mogawan/Kogawan, Gopalpura, Sameda, Mirjapur and Balsamnd. From each person mentioned in the list, amount of Rs.1,00,000/- IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 16 of 20 been received in cash without giving any date-wise details. No other details, whatsoever, has been given by the appellant even at appeal stage in form of confirmations, affidavits, bank statements, copy of accounts, income tax returns, source of amount etc of these 30 alleged farmers. Even their complete address not been given by the appellant despite being asked for and given sufficient opportunities at each stage of both the proceedings i.e. assessment as well as appeal. The appellant has totally failed to prove any of the criteria u/s 68 in respect of shure application money of Rs.30,00,000/- i.e. identity and creditworthiness of the lenders along with genuineness of the transaction. The onus to prove these three factum is on the appellant as the facts are within the appellant's knowledge alone. After perusal of records and appellant's submissions, addition of Rs.30,00,000/- for A.Y. 2009-10 made for share application money received from 30 farmers is, hereby, confirmed.” 17.2 Therefore, due to non-production of the complete address and other supporting evidence the CIT(A) has confirmed the addition while passing impugned order. Now the assesse has filed confirmation of the shareholders by producing their affidavits along with proof of identity and address to satisfy the conditions as provided u/s 68 of the Act. Even otherwise this additional evidence now filed by the assesse is a compliance as required by the AO as well as CIT(A). Therefore, in the facts and circumstances of the case and in the interest of justice we admit the additional evidence filed by the assessee. Since the additional evidence is required to be verified and examined at the level of the AO therefore, this issue is remanded to the record of the AO for fresh adjudication after considering additional evidence filed by the assesse. Needless to say the assessee be given an appropriate opportunity of hearing before passing fresh order IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 17 of 20 18. Ground no.2 is regarding disallowance of expenditure which was restricted by the CIT(A) @ 20%. Ld. Sr. counsel has submitted that the AO has disallowed the claim of expenses for want of bills and vouchers which was challenged before the CIT(A). Ld. Sr. counsel has submitted that for A.Y.2009-10 turnover of the assesse was Rs.69,803,742/- and total expenditure claimed in the profit and loss account of Rs.53,87,255/- including repair and maintenance of Rs.3,78,173/-, telephone of Rs.59,605/- and freight on sales of Rs.31,79,340/-, travels of Rs. 7,56,733/- and salary & wages of Rs. 10,13,404/-. The details of the expenses were also furnished before the AO as well as the CIT(A) and therefore, ad hoc disallowance made by the AO as well as the CIT(A) is not permissible. Ld. Sr. counsel has submitted that when the assesse has produced all the details and the expenditure is duly recorded in the books of account and not found to be abnormal or excessive but the same was incurred for the purpose of business of the assesse then the disallowance confirmed by the CIT(A) is not justified. 19. On the other hand, Ld. DR has submitted that the AO asked the assessee to provide bills in support of the expenses debited to the trading and profit & loss account however, the assesse failed to submit any supporting evidence and consequently the AO has made lump sum disallowance of expenditure on account of travel expenses, repair and maintenance, telephone, traveling, salary & wages, freight etc. He has relied upon the order of the AO. IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 18 of 20 20. We have considered the rival submissions as well as relevant material on record. The AO has made lump sum disallowance which is an ad hoc disallowance of Rs.2,46,000/- out of the total expenditure for the year under consideration of Rs.53,87,255/-. If this expenditure is considered in the light of the turnover of the assesse for the year under consideration which is Rs.69,803,742/- including export sales of Rs.6,61,40,765/- then it is clear that the expenditure claimed by the assesse is not excessive. The AO has also not doubted the expenditure incurred for the business of the assesse but has made only lump sum disallowance of Rs.2,46,000/-. The CIT(A) has observed in para 6.4 as under: “6.4 Out of above, A.O. has made adhoc addition in respect of repair and maintenance, telephone, freight on sales, salary/wages and travelling expenses claimed by the appellant. A.O. has not specified the details, as asked for by him and not provided by the appellant. Nothing has been brought on record to show that these expenses have been found incurred for non-business purposes or that their payments made outside appellant's books of accounts or are unverifiable. The very concept of token disallowance is bad in law because it is inherently based on surmises and conjectures and devoid of a legally sustainable foundation. It is a case where A.O. accepts all the contentions (sales/ purchases etc.) but not the consequences flowing from accepting the same which is not found persmissible [Asstt.CIT vs Arthur Anderson & Co. (2005) 94 TTJ 736 (Mumbai)].” 20.1 Thus, it was noted that the AO has made adhoc addition in respect of expenditure incurred under various heads. Once the assesse has shown export sales of more than 6.61 crores out of the total sale of 6.98 crores then the traveling expenses cannot be held IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 19 of 20 to be bogus or excessive. The CIT(A) has further observed that the AO has not specified the details as asked by him and not provided by the assesse and nothing has been brought on record to show that these expenses have been found incorrect for non-business purpose or that payment made outside the books of account or unverifiable. Despite these fact the CIT(A) has sustained the addition to extent of Rs.1,63,268/- out of the disallowance of Rs.2,46,000/-. Therefore, sustaining the addition by the CIT(A) appears to be only for the sake of addition without giving any reason or basis. Hence, in the facts and circumstances of the case when the claim of expenses is neither found excessive nor the correctness of the expenses is doubted then the adhoc disallowance made by the AO and sustained by the CIT(A) is not justified the same is deleted. 21. In the result, appeal of the assesse for A.Y.2008-09 is allowed & appeal of the assesse for A.Y.2009-10 is partly allowed for statistical purposes. Order pronounced in the open court on 04 .07.2024. Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore,_ 04.07.2024 Patel/Sr. PS IT(SS)ANo.104 & 105/Ind/2014 Khayati Foods Pvt. Ltd. Page 20 of 20 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore