The ACIT, Bhopal V. M/s. Mechmen Motors Pvt.Ltd., Bhopal

ITSSA 74/IND/2009

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9125 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 14-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Keywords: Bad and doubtful debts
• Section: 69C; 132

Judgement Text

PAGE 1 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IND /2009 M/S. MECHMEN MOTORS, BHOPAL. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : AACCM6803C I.T.(SS)A.NOS. 68 TO 72 /IND/2009 A.Y. : 2002-03 TO 2006-07 M/S.MECHMEN MOTORS PVT.LTD., ACIT, 1(2), NH-12, HOSHANGABAD ROAD, VS BHOPAL. NEAR HOTEL MARK, BHOPAL. APPELLANT RESPONDENT PAN NO. : AACCM6803C I.T.(SS)A.NOS. 73 TO 76 AND 79/IND/2009 A.Y. : 2002-03 TO 2005-06 AND 2006-07 ACIT, 1(2), M/S.MECHMEN MOTORS PVT.LTD., BHOPAL. VS NH-12, HOSHANGABAD ROAD, NEAR HOTEL MARK, BHOPAL. APPELLANT RESPONDENT ASSESSEE BY : SHRI PRAKASH JAIN, C. A. DEPARTMENT BY : SHRI K.K. SINGH, CIT DR DATE OF HEARING : 15.6.2010, 22.06.2010 PAGE 2 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IND /2009 M/S. MECHMEN MOTORS, BHOPAL. O R D E R PER BENCH THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE A ND REVENUE FOR ASSESSMENT YEARS 2002-03 TO 2005-06. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. FIRST, WE SHALL TAKE UP ASSESSEES APPEALS IN I.T(S S).A.NOS. 68 TO 71/IND/2009, WHEREIN COMMON GROUNDS ARE INVOLVED , AND FOR THE SAKE OF READY REFERENCE, WE REPRODUCE GROUNDS RAISED IN ASSESSEES APPEAL IN ASSESSMENT YEAR 2002-03 AS UNDER :- 1. THAT IMPUGNED ORDER PASSED BY THE CIT(A) IS BAD IN LAW AS WELL AS ON THE FACTS. IT IS BASED ON INCORRECT INTE RPRETATION OF LAW AND THE FACTS HAVE ALSO BEEN INCORRECTLY CONSTR UED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE ORDER PASSED BY THE LD. AO U/S 153A/143(3) OF THE INCOME- TAX ACT,1961, IS WITHOUT JURISDICTION AS THERE WAS NO SEARCH WARRANT IN THE NAME OF THE ASSESSEE NOR BEFORE INVO KING PROVISION U/S 153C THE AO HAS RECORDED ANY SATISFAC TION THAT DURING THE COURSE OF SEARCH U/S 132 ANY PAPER/DOCUM ENT AND PAGE 3 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IND /2009 M/S. MECHMEN MOTORS, BHOPAL. OTHER ASSETS BELONGS TO THE ASSESSEE HAVE BEEN FOUN D FROM THE PREMISES OF PERSON SEARCHED. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD.CIT(A) ERRED IN UPHOLDING THE AO ACTION IN RESPE CT OF ADDITION OF RS. 2,00,000/- ON ACCOUNT OF ALLEGED UN EXPLAINED STOCK OF SPARES AND LUBRICANTS U/S 69C WITHOUT APPR ECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HI M AND MORE SO WITHOUT HAVING ANY BASIS OF MAKING THE SAID ADDITION IN THE YEAR UNDER CONSIDERATION. 4. GROUND NO.1 IS OF GENERAL NATURE, HENCE, NO DECIS ION IS REQUIRED THEREON. 5. GROUND NO.2 WAS NOT PRESSED, HENCE, DISMISSED, AS NOT PRESSED. 6. IN RESPECT OF ISSUE RAISED IN GROUND NO.3, THE LD. COUNSEL FOR THE ASSESSEE INITIALLY SUBMITTED THAT NO EVIDENCE WAS F OUND DURING THE COURSE OF SEARCH. HENCE, THE ADDITION SO MADE WAS NOT CORR ECT IN LAW AND FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE TRIBU NAL IN THE CASE OF S.K.JAIN VS. ACIT, AS REPORTED IN 14 ITJ 434 (INDOR E) AND A FEW OTHER JUDICIAL DECISIONS. THE LD. CIT DR, AT THIS STAGE, SUBMITTED THAT DURING THE COURSE OF SEARCH, THE ASSESSEE MADE A SURRENDER OF RS. 15 LAKHS ON ACCOUNT OF UNEXPLAINED STOCK IN ASSESSMENT YEAR 200 6-07. HOWEVER, THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS ALSO MAD E ADDITIONS IN ALL PAGE 4 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IND /2009 M/S. MECHMEN MOTORS, BHOPAL. THESE YEARS ON THE SAME ACCOUNT AND THE LD.CIT(A) C ONFIRMED THIS ACTION OF THE AO. HOWEVER, THE LD.CIT(A) GAVE A CREDIT OF THESE ADDITIONS AGAINST THE TOTAL ADDITION MADE IN ASSESSMENT YEAR 2006-07. HE FURTHER CLARIFIED THAT THE ADDITION OF RS. 15,00,000/- BEIN G THE AMOUNT SURRENDERED BY THE ASSESSEE, IN ASSESSMENT YEAR 20 06-07 WAS RESTRICTED TO RS. 5 LAKHS BY GIVING CREDIT FOR IMPUGNED ADDITIONS MADE IN ALL THE FOUR IMPUGNED ASSESSMENT YEARS. HENCE, IF THE ADDITION W AS DELETED IN THESE YEARS, THEN, CONSEQUENTLY, THE QUANTUM OF ADDITION IN ASSESSMENT YEAR 2006-07 WOULD HAVE TO BE INCREASED TO RS. 15 LAKHS AS IN THAT YEAR, THE ADDITION COULD BE MADE WITHOUT ANY MATERIAL AND, IN THIS CASE, THERE WAS NO REQUIREMENT ALSO FOR MATERIAL AS THE ASSESSEE HA D HIMSELF SURRENDERED THE SAID AMOUNT. AT THIS STAGE, THE QUESTION WAS PU T BEFORE THE LD. COUNSEL AS TO HOW HIS CLAIM FOR DELETION OF SUCH ADDITIONS WAS JUSTIFIED ? THE LD. COUNSEL IN VIEW OF THESE FACTS PREFERRED TO NOT TO PRESS THIS GROUND IN ALL THE YEARS. ACCORDINGLY, GROUND NO.3 IN ALL THE YEA RS IS DISMISSED. 7. IN THE RESULT, ALL THE APPEALS IN I.T(SS).A.NOS.68 TO 71/IND/2009 FILED BY THE ASSESSEE ARE DISMISSED. 8. NOW, WE SHALL TAKE UP ASSESSEES APPEAL IN I.T(SS). A.NO. 72/IND/2009. 9. THE ISSUE RAISED IN GROUND NOS. 1 & 2 IS IDENTICAL TO ISSUE RAISED IN EARLIER APPEALS AS ABOVE, HENCE, DISMISSED, AS N OT PRESSED. PAGE 5 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IND /2009 M/S. MECHMEN MOTORS, BHOPAL. 10. GROUND NO. 3 READS AS UNDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) ERRED IN UPHOLDING THE AO ACTION IN RESPE CT OF ADDITION OF RS. 5,00,000/- ON ACCOUNT OF ALLEGED UN EXPLAINED STOCK OF SPARES AND LUBRICANTS U/S 69C OUT OF ADDIT ION MADE BY THE ASSESSING OFFICER OF RS. 15,00,000/- WITHOUT APPRECIATING THE FACTS OF THE CASE AND SUBMISSION M ADE BEFORE HIM AND MORE SO WITHOUT HAVING ANY BASIS OF MAKING THE SAID ADDITION IN THE YEAR UNDER CONSIDERATION. 11. THIS ISSUE IS ALSO CONSEQUENTIAL TO ISSUE RAISED I N GROUND NO.3 OF EARLIER APPEALS, HENCE, FOR THE REASONS GIVEN TH EREIN, THIS GROUND OF THE ASSESSEE IS DISMISSED AS THE BALANCE AMOUNT OF THE ADDITION PERTAINS TO THE YEAR UNDER CONSIDERATION ONLY. 12. GROUND NO.4 READS AS UNDER :- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN UPHOLDING THE AO ACTION IN RESPE CT OF ADDITION OF RS. 8,67,084/- ON ACCOUNT OF ALLEGED EX CESS CASH FOUND WITHOUT APPRECIATING THE FACTS OF THE CASE AN D SUBMISSION MADE BEFORE HIM. 13. THE FACTS, IN BRIEF, ARE THAT DURING THE COURSE OF SEARCH, CASH WORTH RS. 9,25,552/- WAS PHYSICALLY FOUND. THE CASH BALANCE IN THE BOOKS PAGE 6 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IND /2009 M/S. MECHMEN MOTORS, BHOPAL. FOUND DURING THE COURSE OF SEARCH STOOD AT RS.1,06, 087.50. THE ASSESSEE, PRIMA FACIE, COULD NOT EXPLAIN THE DIFFERENCE OF RS .8,19,465/-, HENCE, IT WAS OBSERVED THAT THE SAME HAD TO BE EXAMINED. THE SEARCH PARTY, HOWEVER, SEIZED A SUM OF RS. 8,67,084/-. IN THE COU RSE OF ASSESSMENT PROCEEDINGS, THE AO FORMED AN OPINION THAT SINCE TH E ASSESSEE DID NOT FURNISH COMPLETE CASH BOOK AND AT THE TIME OF SEARC H COULD NOT FURNISH THE SOURCE OF CASH AMOUNTING TO RS. 9,25,552/-, WHICH R ESULTED INTO SEIZURE OF RS. 8,67,084/- AFTER LEAVING CERTAIN SUM WITH THE A SSESSEE TO MEET OUT ITS DAILY EXPENSES, HENCE, THE SAME WAS TO BE TREATED A S AN UNEXPLAINED CASH AND, THUS, THE AO ADDED THE SAME TO THE TOTAL INCOM E OF THE ASSESSEE. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO ALSO CONFIRMED THE ACTION OF THE AO MAINLY FOR THE REASON THAT IF THE ASSESSEE WOULD HAVE EXPLAINED SOURCE OF CASH PROPER LY AT THE TIME OF SEARCH, THEN, NO SEIZURE COULD HAVE BEEN MADE AND T HIS FACT WAS IN ITSELF INDICATIVE OF THE FACT THAT THE ASSESSEE HAD NO EXP LANATION TO OFFER. THE LD.CIT(A) FURTHER HELD THAT SUBMISSION OF BOOKS OF ACCOUNT WAS AN AFTER THOUGHT. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 14. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS HAVING HEAD OFFICE AT 11-C, INDUSTRIAL AREA, GOVIND PURA, BHOPAL, WHEREAS THERE WERE OTHER BUSINESS LOCATIONS ALSO E. G. SHOW ROOM WAS AT 32, INDIRA PRESS COMPLEX, M.P. NAGAR, BHOPAL. IT WA S ALSO CONTENDED THAT PAGE 7 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IND /2009 M/S. MECHMEN MOTORS, BHOPAL. THE CASH AS AVAILABLE IN THAT LOCATION WAS ALSO TAK EN INTO CONSIDERATION, THEN THE BALANCE ON THE DATE OF SEARCH WOULD HAVE B EEN AT RS. 10,26,095/- . FOR THIS, HE REFERRED TO PAGE 2 & 3 OF THE PAPER BOOK. THEREAFTER, HE REFERRED TO PAGE 27 OF THE PAPER BOOK TO SHOW THAT DURING THE COURSE OF SEARCH ONLY A VIEW HAD BEEN EXPRESSED THAT THE MATT ER NEEDED EXAMINATION FURTHER. THE LD.COUNSEL FOR THE ASSESSE E FURTHER REFERRED TO PAGES 31, 32, 33 OF THE PAPER BOOK CONTAINING COPY OF STATEMENT OF SHRI RISHIKESH TRIPATHI, ACCOUNTANT OF THE ASSESSEE, WHI CH WAS RECORDED DURING THE COURSE OF SEARCH ON 16.9.1995 AT 11-C, I NDUSTRIAL AREA, GOVINDPURA, BHOPAL, WHEREIN SUCH PERSON HAD STATED THAT CASH WORTH RS. 7,86,450/- HAD BEEN HANDED OVER TO HIM BY SHRI COLL IN MATHEW, FINANCE MANAGER OF THE ASSESSEE COMPANY AND THE SOURCE OF T HE SAME HAD BEEN TOLD AS COMING FROM THE CUSTOMER VEHICLES SHOW ROOM . THE LD. COUNSEL ON THE BASIS OF THESE TWO DOCUMENTS SUBMITTED THAT EVE N AT THE TIME OF SEARCH WHATEVER PLAUSIBLE EXPLANATIONS WERE POSSIBLE WERE GIVEN AND THE AO DID NOT MAKE ANY COMMENT/OBSERVATION OF THESE TWO DOCUM ENTS IN THE COURSE OF ASSESSMENT PROCEEDINGS. HE FURTHER CONTENDED THA T THE LD.CIT(A) ALSO CONFIRMED THE ADDITION ON THE ASSUMPTION THAT SEIZU RE AMOUNTED TO NON EXPLANATION, WHICH WAS NOT A PROPER VIEW IN LAW AS BOTH THESE DOCUMENTS WERE NOT CONSIDERED AND THE BOOKS OF ACCOUNT PRODUC ED SUBSEQUENTLY WERE ALSO REJECTED TREATING THE SAME AS AN AFTER TH OUGHT. PAGE 8 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IND /2009 M/S. MECHMEN MOTORS, BHOPAL. 15. THE LD. SENIOR D.R. ,ON THE OTHER HAND, PLACED STRO NG RELIANCE ON THE ORDER OF THE LD.CIT(A). 16. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 17. IT IS NOTED THAT THE SOURCE OF CASH FOUND DURING TH E COURSE OF SEARCH HAS BEEN EXPLAINED AS PERTAINING TO SHOW ROO M OF THE ASSESSEE AT 32, INDIRA PRESS COMPLEX, BHOPAL. THE ASSESSEES AC COUNTANT HAS ALSO GIVEN STATEMENT EXPLAINING THE SOURCE OF THE CASH. IN THE COURSE OF SEARCH PROCEEDINGS, THE DEPARTMENT HAS ALSO COMPILED THE C ASH BALANCE AND IN THAT REPORT, IT HAS BEEN OBSERVED THAT THE ISSUE RE QUIRED FURTHER VERIFICATION/EXAMINATION. HENCE, SUCH OBSERVATION O F THE DEPARTMENT SHOW THAT THE CASH FOUND DURING THE COURSE OF SURVE Y WAS NOT TREATED AS UNEXPLAINED. WE ARE FURTHER OF THE VIEW THAT MERELY BECAUSE THE CASH WAS SEIZED, IT CANNOT BE TREATED AS UNEXPLAINED INSPITE OF SUITABLE DOCUMENTARY EVIDENCES TO SUPPORT THE CLAIM SUBMITTE D SUBSEQUENTLY. WE ARE FURTHER OF THE VIEW THAT BOOKS OF ACCOUNT (CASH BOOK) CANNOT BE REJECTED AS AN AFTER THOUGHT WITH ASCERTAINING THE CORRECTNESS THEREOF FROM CASH RECEIPTS, VOUCHERS, WITHDRAWALS, DEPOSITS ETC. THUS, IN OUR VIEW, THE FINDINGS OF THE LD.CIT(A) ARE NOT CORRECT IN LAW. H ENCE, WE DIRECT THE AO TO DELETE THE ADDITION. THUS, THIS GROUND OF THE A SSESSEE STANDS ALLOWED. PAGE 9 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IND /2009 M/S. MECHMEN MOTORS, BHOPAL. 18. IN THE RESULT, THE APPEAL FILED IN I.T(SS).A.NO.72/ IND/2009 STANDS PARTLY ALLOWED. 19. NOW, WE SHALL TAKE UP REVENUES APPEALS IN I.T(SS). A.NOS. 73 TO 77/IND/2009. 20. THE REVENUE HAS RAISED COMMON GROUNDS IN THESE APPE ALS EXCEPT ONE GROUND IN I.T(SS).A.NO. 76/IND/2009 AND FOR THE SAKE OF READY REFERENCE, WE REPRODUCE GROUNDS RAISED BY THE REVENUE IN I.T(SS).A.NO. 73/IND/2009 AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 10,400/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF RETENTI ON OF EXCISE REFUND & MISC. CREDITS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 2,39,612/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLA INED BOGUS SALARY EXPENSES U/S 69C OF THE INCOME-TAX ACT ,1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 29,073/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLA INED TOURS & TRAVEL EXPENSES. PAGE 10 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IN D/2009 M/S. MECHMEN MOTORS, BHOPAL. 21. AS REGARD TO GROUND NO.1, THE FACTS, IN BRIEF, ARE THAT THE AO FOUND THAT THE ASSESSEE HAD RECEIVED EXCISE REFUND AND MISC. CREDIT IN RESPECT OF VEHICLES SOLD UNDER TAXI QUOTA, WHICH HA D NOT BEEN REFUNDED TO TAXI OWNERS AND ,HENCE, IT WAS TO BE TREATED AS ASSESSEES INCOME. ACCORDINGLY, HE MADE THE IMPUGNED ADDITION. IN APPE AL BEFORE THE LD.CIT(A), THE ASSESSEE SUBMITTED THE DETAILS OF TH E AMOUNT RECEIVED AS WELL AS AMOUNT PAID/REFUNDED TO THE CONCERNED PERS ONS IN SUBSEQUENT YEARS AND THE AMOUNT NOT SO REFUNDED BEING TREATED AS INCOME BY THE ASSESSEE IN ASSESSMENT YEAR 2005-06. SUCH DETAILS A RE AS UNDER :- ITEM A.Y.2002-03 A.Y.2003-04 A.Y.2004-05 TAXI REFUND RS.10,400/- RS.9,61,176/- RS.16,61,449 /- REFUND DURING THE SUBSEQUENT YEAR RS. 10,400/- RS. 8,51,929/- RS. 2,55,092/- TREATED AS INCOME DURING ASSESSMENT YEAR 2005-06 NIL RS. 1,09,247/- RS.14,10,357/- 22. THE LD.CIT(A) CONSIDERING THESE FACTS HELD THAT MER ELY BECAUSE THE AMOUNTS RECEIVED AT THE FAG END OF THE YEAR COU LD NOT BE REFUNDED IN THE VERY SAME YEAR, THE SAME COULD NOT BE TREATED A S INCOME, PARTICULARLY WHEN THE ASSESSEE HAD REFUNDED THE SAME IN SUBSEQUE NT YEARS AND AMOUNT NOT REFUNDED HAD ALREADY BEEN OFFERED AS INCOME IN ASSESSMENT YEAR 2005-06. AGGRIEVED BY THIS, THE REVENUE IS IN APPEA L BEFORE US. PAGE 11 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IN D/2009 M/S. MECHMEN MOTORS, BHOPAL. 23. THE LD. SR. DR PLACED STRONG RELIANCE ON THE ORDER OF THE A.O., WHEREAS THE LD. COUNSEL FOR THE ASSESSEE PLACED STR ONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 24. ON DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES, WE HOLD THAT THE AOS ACTION IS BASED ON MIS-APPRECIATION OF FAC TS AND IN CASE OF INCOME ALREADY OFFERED IN SUBSEQUENT ASSESSMENT YEA R, THE ADDITION MADE AMOUNTS TO DOUBLE TAXATION OF THE SAME INCOME, HENC E, WE FIND NO MERIT IN THIS GROUND OF THE REVENUE. THE SAME IS, THEREF ORE, DISMISSED IN ALL THE YEARS. 25. BRIEF FACTS, RELATED TO GROUND NO.2, ARE THAT THE ASSESSEE HIRED ONE FIRM, NAMELY, M/S. PALIWAL ENTERPRISES, ENGAGED IN PROVIDING LABOUR/MAN POWER, FOR PROVIDING SUCH MAN POWER TO T HE ASSESSEE AND MADE PAYMENTS TO SUCH FIRM THROUGH CHEQUES. THE AO, HOWEVER, HELD THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM REGARDING GENUINENESS OF THIS PAYMENT FOR BUSINESS PURPOSES, HENCE, DISALLOW ED 20 % THEREOF IN ALL THESE FOUR YEARS. IN APPEAL BEFORE THE LD.CIT(A), T HE ASSESSEE SUBMITTED THE CORRECT FACTS AS REGARD TO NATURE OF SERVICES R ENDERED BY THIS FIRM, MODUS OPERANDI OF MAKING PAYMENTS AND PERCENTAGE OF SALARY AS TO THE SALES IN ALL THE YEARS TO JUSTIFY ITS CLAIM. THE AS SESSEE ALSO SUBMITTED THAT AT THE ASSESSMENT STAGE THE AO NEVER ASKED THE ASSE SSEE TO PRODUCE THE REQUIRED DOCUMENTARY EVIDENCES, WHICH PREVENTED THE ASSESSEE TO CLARIFY PAGE 12 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IN D/2009 M/S. MECHMEN MOTORS, BHOPAL. THE ISSUE AT THAT STAGE ITSELF. THE ASSESSEE ALSO S UBMITTED THAT THE PROVISIONS OF SECTION 69C COULD NOT BE APPLIED AS S OURCE OF MAKING SUCH PAYMENTS WAS NOT AT ALL IN DISPUTE, AS THESE EXPENS ES WERE DULY RECORDED IN THE BOOKS OF ACCOUNT. THE LD.CIT(A) AFTER CONSID ERING THESE SUBMISSIONS OF THE ASSESSEE HELD THAT AOS ACTION W AS CONTRADICTORY IN AS MUCH AS ON ONE HAND THE AO CONSIDERED 20 % OF THE S ALARY EXPENSES AS BOGUS AND ,ON THE OTHER HAND, HE MADE THE ADDITION OF SAME AMOUNT U/S 69C. HE FURTHER HELD THAT SUCH ACTION OF THE AO WAS AN APPARENT CASE OF NON-APPLICATION OF MIND. ACCORDINGLY, HE DELETED TH E IMPUGNED ADDITION. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 26. THE LD. SR. DR PLACED STRONG RELIANCE ON THE O RDER OF THE A.O., WHEREAS THE LD. COUNSEL FOR THE ASSESSEE PLAC ED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 27. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 28. IT IS NOTED THAT THE TOTAL EXPENDITURE IS RECORDED IN THE BOOKS OF ACCOUNT AND SOURCE THEREOF DULY EXISTS. HENCE, PROV ISIONS OF SECTION 69C CANNOT BE INVOLVED AT ALL. AS REGARD TO ASPECT OF B OGUS EXPENDITURE, WE FIND THAT THERE IS NO BASIS FOR ARRIVING AT THE FIG URE OF 20 % OF SUCH EXPENSES BEING TREATED AS BOGUS AND, THEREFORE, THE DISALLOWANCE SO MADE PAGE 13 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IN D/2009 M/S. MECHMEN MOTORS, BHOPAL. DOES NOT HAVE ANY MERIT ON THIS COUNT ALSO. ACCORDI NGLY, THIS GROUND OF THE REVENUE IS DISMISSED IN ALL THE YEARS. 29. THE FACTS, RELATING TO GROUND NO. 3, ARE THAT THE AO DISALLOWED 20 % OF TOUR AND TRAVEL EXPENSES FOR THE REASON THA T MOST OF THE EXPENSES WERE INCURRED IN CASH AND THAT TOO BY THE DIRECTOR S. THE ASSESSEE, IN APPEAL BEFORE THE LD.CIT(A), SUBMITTED THAT THE ASS ESSEE WAS HAVING A DEALERSHIP IN 12 DISTRICTS OF STATE OF MADHYA PRADE SH, HENCE, LOT OF TRAVELING WAS INVOLVED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE COMPANY. IT WAS ALSO SUBMITTED THAT ALL THE EXPENSE S WERE INCURRED IN CASH MAINLY FOR THE REASON THAT THESE WERE GIVEN IN ADVANCE IN CASH TO SUCH EMPLOYEES. IT WAS ALSO CONTENDED THAT NO MATER IAL WAS FOUND IN THE COURSE OF SEARCH TO SUGGEST THAT THE ASSESSEE HAD I NFLATED SUCH EXPENSES. THE LD.CIT(A) FOUND THAT NO MATERIAL HAD BEEN BROUG HT ON RECORD TO SHOW THAT THE ASSESSEE HAD CLAIMED BOGUS EXPENSES OR EXP ENSES INCURRED BY THE ASSESSEE COMPANYS DIRECTORS WERE NOT FOR THE PURPO SE OF BUSINESS OF THE ASSESSEE COMPANY. HENCE, THE AOS ACTION WAS ARBITR ARY AND SUCH DISALLOWANCES WERE MADE FOR THE SAKE OF MAKING THE DISALLOWANCE. ACCORDINGLY, HE DELETED THE ADDITION. 30. THE LD. SR. DR PLACED STRONG RELIANCE ON THE ORDER OF THE A.O., WHEREAS THE LD. COUNSEL FOR THE ASSESSEE PLACED STR ONG RELIANCE ON THE ORDER OF THE LD. CIT(A). PAGE 14 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IN D/2009 M/S. MECHMEN MOTORS, BHOPAL. 31. ON DUE CONSIDERATION OF FACTS AND CIRCUMSTANCES, WE FIND THAT THE IMPUGNED ADDITION IS NOT AT ALL JUSTIFIED IN TH E ABSENCE OF ANY SPECIFIC EVIDENCE FOUND TO SUPPORT THE VIEW OF THE AO. THUS, THIS GROUND OF THE REVENUE IS DISMISSED. 32. NOW, WE SHALL TAKE UP GROUND NO.1 OF THE REVENUES APPEAL IN I.T(SS).A.NO. 76/IND/2009, WHEREIN THE REVENUE IS A GGRIEVED BY THE DECISION OF THE LD.CIT(A) IN DELETING THE ADDITION OF RS. 20 LAKHS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BAD DEBTS CLAIM ED BY THE ASSESSEE. THE AO FOUND THAT THE ASSESSEE CLAIMED BAD DEBTS AT RS. 25,29,609/- WHICH WERE MUCH HIGHER THAN THE NORMAL BAD DEBTS CL AIMED BY THE ASSESSEE IN EARLIER YEARS. THE AO FURTHER HELD THAT NO DETAILS WERE FILED TO JUSTIFY ITS CLAIM OF WROTE OFF OF BAD DEBTS AT RS. 28,76,424/-. THE AO, THEREFORE, ACCEPTED THE CLAIM OF THE ASSESSEE ONLY TO THE EXTENT OF RS. 8,76,424/- AND REJECTED THE REMAINING BAD DEBTS OF RS. 20 LAKHS. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHEREIN THE ASSESSEE SUBMITTED THE DETAILS OF TOTAL TURNOVER OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION AND SUBMIT TED THAT HAVING REGARD TO THE NATURE OF BUSINESS WHERE ASSESSEE HAD TO DEA L WITH THE SMALL PARTIES AND THE PERCENTAGE OF SUCH BAD DEBTS WAS ONLY 0.22 % OF TOTAL CREDIT SALES/SERVICES. HENCE, THE ASSESSEES CLAIM COULD N OT BE REJECTED. IT WAS ALSO CONTENDED THAT THE ASSESSEE HAD WRITTEN OFF SU CH BAD DEBTS IN THE PAGE 15 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IN D/2009 M/S. MECHMEN MOTORS, BHOPAL. BOOKS OF ACCOUNT AND AS PER THE AMENDED PROVISIONS OF LAW, THE ASSESSEE WAS NOT REQUIRED TO GIVE INFALLIBLE PROOF THAT HAD BECOME BAD. HENCE, THE ASSESSEES ACTION WAS ALSO JUSTIFIED IN LAW. THE LD .CIT(A) HAVING REGARD TO THE PROVISIONS OF LAW HELD THAT ASSESSEES ACTIO N WAS CORRECT IN LAW AND NO SUCH ADDITION WAS JUSTIFIED. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 33. THE LD. SR. DR PLACED STRONG RELIANCE ON THE ORDER OF THE A.O., WHEREAS THE LD. COUNSEL FOR THE ASSESSEE PLACED STR ONG RELIANCE ON THE ORDER OF THE LD. CIT(A). 34. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 35. IT IS NOTED THAT THE ASSESSEE HAD ENGAGED IN BUSINE SS OF RETAILS ALES OF VEHICLES AND ALSO PROVIDED SALES AND SERVIC ES AND THE AMOUNTS SO WRITTEN OFF REPRESENT THE MONEY NOT RECOVERED FROM ITS CUSTOMERS, WHICH HAS DULY BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT A S BAD DEBT AND, THEREFORE, IN VIEW OF AMENDED PROVISIONS OF LAW, TH E CLAIM OF THE ASSESSEE CANNOT BE REJECTED. ACCORDINGLY, THIS GROUND OF TH E REVENUE IS ALSO DISMISSED. 36. IN THE RESULT, ALL THE APPEALS IN I.T(SS).A.NOS. 73 TO 76/IND/2009 ARE DISMISSED. PAGE 16 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IN D/2009 M/S. MECHMEN MOTORS, BHOPAL. 37. NOW, WE SHALL TAKE UP REVENUES APPEAL IN I.T(SS).A .NO. 79/IND/2009. 38. THE GROUNDS RAISED IN REVENUES APPEAL READ AS UN DER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN RESTRICTING THE ADDITION TO RS. 5 LAKHS AS AGAINST THE ADDITION OF RS. 15,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE UNEXPLAINED STO CK OF SPARES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS. 9,5 9,588/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLA INED BOGUS SALARY EXPENSES U/S 69C OF THE INCOME-TAX ACT ,1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,1 7,058/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLA INED TOUR & TRAVEL EXPENSES. 39. THE ISSUE RAISED IN GROUND NO.1 IS LIABLE TO BE DISMISSED, IN VIEW OF OUR DECISION IN RESPECT OF CONNECTED GROUND S IN ASSESSEES APPEALS IN I.T(SS).A.NOS. 68 TO 72/IND/2009. THUS, THIS GROUND OF THE REVENUE IS DISMISSED. PAGE 17 OF 17 - I.T.(SS)A.NOS. 68 TO 71 AND 73/ IN D/2009 M/S. MECHMEN MOTORS, BHOPAL. 40. SIMILARLY, THE ISSUE RAISED IN GROUND NOS. 2 & 3 A RE ALSO LIABLE TO BE DISMISSED, IN VIEW OF OUR DECISION ON THE REL EVANT GROUND IN EARLIER YEARS. THUS, THESE GROUNDS ARE ALSO DISMISSED. 41. TO SUM UP, ASSESSEES APPEALS IN I.T(SS).A.NOS. 68 TO 71/IND/2009 STAND DISMISSED, ASSESSEES APPEAL IN I .T(SS).A.NOS. 72/IND/2009 STANDS PARTLY ALLOWED AND ALL THE APPEA LS OF THE REVENUE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 24 TH JUNE, 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24 TH JUNE, 2010. CPU* 22236