D.C.I.T C.C - VII,Kolkata, Kolkata V. Dr Vijay Kumar Kejriwal, Kolkata

ITSSA 78/KOL/2013

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3420 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 11-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBASH AGARWALA
• Assessee Lawyers: ARINDAM BHATTACHARYA
• Keywords: Opportunity of being heard
• Section: 143(3); 133(6)

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1383/KOL/2014 ASSESSMENT YEAR:2007-08 MANMOHAN LAL MOHATA 55, EZRA STREET, 5 TH FLOOR, KOLKATA-700 001 [ PAN NO.ADXPM 7330 F ] / V/S . INCOME TAX OFFICER, WARD-35(4), KOLKATA /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI SUBASH AGARWALA, ADVOCATE /BY RESPONDENT SHRI ARINDAM BHATTACHARYA, ADDL. CIT-DR ! /DATE OF HEARING 28-06-2017 ! /DATE OF PRONOUNCEMENT 30-08-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XX, KOLKATA DATED 07.03.2014. ASSESSMENT WAS FRAMED BY ITO WARD-35(4), KOLKATA U/S 143(3) OF THE INCOME TA X ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 29.1 2.2009 FOR ASSESSMENT YEAR 2007-08. THE GROUNDS RAISED BY THE ASSESSEE PER ITS APPEAL A RE AS UNDER:- 1) FOR THAT THE LD. CIT(APPEALS) WAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.2,57,739/- BEING CLOSING BALANCE OF SUNDRY CREDI TORS, AS UNGENUINE TREATING THE SAME AS INCOME CHARGEABLE U/S 41(1) OF THE INCOME T AX ACT, 1961, WHEN ALL THE RELEVANT DOCUMENTS WERE SUBMITTED BEFORE HIM AND WE RE DULY AVAILABLE BEFORE LD. A.O IN REMAND PROCEEDINGS. 2. FOR THAT THE LD. CIT(APPEALS) WAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.1,21,443/- AS BOGUS SUNDRY CREDITORS FOR ALLEGED DIFFERENCE IN CLOSING BALANCES WHEN APPELLANT DULY RECONCILED THE DIFFERENCE IN TH E LEDGER AND SAME WERE DULY MADE AVAILABLE TO LD. A.O IN REMAND PROCEEDINGS. 3. FOR THAT THE LD. CIT(APPEALS) WAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.1,46,864/- AS BOGUS SUNDRY CREDITORS FOR ALLEGED DIFFERENCE IN CLOSING BALANCES ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 2 WHEN APPELLANT DULY RECONCILED THE DIFFERENCE IN TH E LEDGER AND SAME WERE DULY MADE AVAILABLE TO LD. A.O IN REMAND PROCEEDINGS. 4. I CRAVE LEAVE TO ADD, ALTER, AMEND OR WITHDRAW A NY GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. SHRI SUBASH AGARWAL, LD ADVOCATE APPEARED ON BEHALF OF ASSESSEE AND SHRI ARINDAM BHATTACHARYA, LD. DEPARTMENTAL REPRESENTATIVE REPRE SENTED ON BEHALF OF REVENUE. 2. THE FIRST ISSUE RAISED BY ASSESSEE IN GROUND NO .1 IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY SUSTAI NING THE ADDITION OF RS.2,57,739/- UNDER THE PROVISIONS OF SECTION 41(1) OF THE ACT ON ACCOUNT OF NON-GENUINENESS OF SUNDRY CREDITORS. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND ENGAGED IN THE BUSINESS OF ELECTRICAL GOODS. THE ASSESSEE IN THE Y EAR UNDER CONSIDERATION HAS SHOWN CERTAIN SUNDRY CREDITORS IN HIS BALANCE-SHEET. OUT OF THE SUNDRY CREDITORS, THE ASSESSEE FAILED TO FURNISH THE DETAILS AS DESIRED BY THE AO IN RESPECT OF FOLLOWING PARTIES: EASTERN ELECTRIC CORPORATION RS.18,227/- ELECTRONICS INDIA RS.49,930/- JHAWAR TRADING AGENCY RS.49,450/- KG ELECTRO-POWER(P) LTD. RS.23,688/- S. V. ENTERPRISE RS.71,694/- VASCO TRADING CO. RS.44,750/- RS.2,57,739/- 5. THE AO DURING ASSESSMENT PROCEEDINGS DIRECTED TH E ASSESSEE TO FURNISH THE COPIES OF THE LEDGERS IN RESPECT OF THE AFORESAID PARTIES FOR THE YEAR ENDING ON 31 ST MARCH 2007, 31 ST MARCH 2008 AND 31 ST MARCH 2009 IN ORDER TO ASCERTAIN THE GENUINENESS O F THE PARTIES. THE AO WAS OF THE VIEW THAT IN CASE TH E ASSESSEE HAS MADE PAYMENT TO THESE PARTIES IN THE SUBSEQUENT YEARS THEN THE GENU INENESS OF THE PARTIES WOULD GET ESTABLISHED BUT THE ASSESSEE FAILED TO FURNISH THE SAME TO THE AO. THEREFORE, IN THE ABSENCE OF DOCUMENTARY EVIDENCE, THE AO TREATED THE AMOUNT OF SUNDRY CREDITORS OF RS.257739/- AS INCOME CHARGEABLE U/S 41(1) OF THE A CT. ACCORDINGLY, THE AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME O F THE ASSESSEE. 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO LD. C IT(A). THE ASSESSEE BEFORE THE LD. CIT(A) MADE SUBMISSIONS WHICH CAN BE SUMMARISED AS UNDER: ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 3 I) THE ASSESSEE AT THE TIME OF ASSESSMENT FURNISHED THE LIST OF ALL THE SUNDRY CREDITORS BUT IN RESPECT OF AFORESAID SIX PARTIES, THE ADDRESS WAS MISSING. ACCORDINGLY, THE AO IN HIS LETTER DATED 10 TH DECEMBER 2009 DEMANDED FROM THE ASSESSEE TO FURNISH THE ADDRESSES IN RESPECT OF SIX AND FIXED THE DATE OF HEARING ON 15.11.2009. ON THE DATE OF HEARING, THE ASSESSEE PERSONALLY APPEARED AND FORWARDED THE ADDRESSES IN RESPECT OF AFORESAID SIX PARTIES WHICH WERE DULY NOTED BY THE AO IN SOME PAPERS. II) THE ASSESSEE AT THE TIME OF ASSESSMENT FURNISHE D THE DETAILS OF PURCHASES EXCEEDING RS.50,000/- TO THE AO. IN THE CASE OF S. P. ENTERPRISES, ONE OF THE PARTY AS DISCUSSED ABOVE, THE NECESSARY DETAILS OF PURCHASES AND PAYMENTS WERE DULY FURNISHED BUT THE AO HAS TREATED THE SAME AS I N-GENUINE SUNDRY CREDITOR AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE AO HAS MADE THE ADDITION IN MECHANICAL MANNER WITHOUT REFERRING NECESSARY MATER IALS AVAILABLE ON RECORD. III) THE ASSESSEE ALSO FURNISHED THE COPIES OF THE LEDGERS IN RESPECT OF AFORESAID SIX PARTIES FOR THE YEAR ENDED ON 31 ST MARCH 2007, 31 ST MARCH 2008 AND 31 ST MARCH 2009 ALONG WITH THE COPIES OF PURCHASE BILLS FOR THE YEAR ENDED AS ON 31 ST MARCH 2007. IV) THE REGISTRATION NUMBERS SUCH AS VAT, CST WERE DULY MENTIONED ON THE BILLS OF THE PARTIES. THEREFORE, THE IDENTITY O F SUNDRY CREDITORS CANNOT BE DOUBTED. V) ALL THE PAYMENTS WERE MADE TO THE AFORESAID SIX PARTIES THROUGH BANKING CHANNEL IN SUBSEQUENT YEARS. HOWEVER, THE LD. CIT(A) DISREGARDED THE CONTENTIONS OF THE AO BY OBSERVING AS UNDER: 5. GROUND NO. (I) RELATES TO CONTENTION OF THE APPE LLANT AGAINST ADDITION MADE BY THE AO U/S. 41(1) OF THE I.T. ACT. THE FACT OF THE CASE IS THAT THE AO TO VERIFY THE GENUINENESS OF THE SUNDRY CREDITORS ASKED THE APPEL LANT TO GIVE PRESENT WHEREABOUTS OF THOSE 6 PERSONS WHO HAD BEEN SHOWN AS SUNDRY CREDIT ORS. HOWEVER, NO SUCH DETAILS OR OTHER RELEVANT DETAILS WERE FILED EVEN DURING THE R EMAND PROCEEDINGS; NONE OF THE PARTIES WERE PRODUCED FOR VERIFICATION TO SUBSTANTI ATE THE APPELLANTS CLAIM. EVEN THE APPELLANT COULD NOT EXPLAIN THE RELEVANT TRANSACTIO NS WITH THE SUPPORTING DETAILS/DOCUMENTS. UNDER THESE CIRCUMSTANCES, I FIN D THAT PRIMARY ONUS WAS ON THE APPELLANT TO SUBSTANTIATE HIS CLAIM WITH THE SUPPOR TING DOCUMENTS AND TO GET VERIFIED THE TRANSACTION BY PRODUCING THE RELEVANT PARTIES. SINCE, THE APPELLANT FAILED TO DO SO AND THEREBY, FAILED TO PROVE THAT THE LIABILITY SHO WN IN HIS BOOKS OF ACCOUNT WAS ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 4 GENUINE AND FURTHER THE LIABILITY WAS STILL EXISTED . THERE WAS NO PRESENT WHEREABOUTS OF THE SO-CALLED CREDITORS AVAILABLE WITH THE APPEL LANT. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE A.O., HENCE, APPEAL ON THIS GROUND IS DISMIS SED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E IS IN SECOND APPEAL BEFORE US. 7. THE LD. AR BEFORE US FILED A PAPER BOOK COMPRISI NG OF PAGES FROM 1 TO 113 AND REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). THE LD. AR ALSO DREW OUR ATTENTION ON THE COPIES OF THE LEDGERS IN RESPECT O F AFORESAID SIX PARTIES WHICH ARE PLACED ON PAGES 29 TO 59 OF THE PAPER BOOK. THE LD. AR FURTHER SUBMITTED THAT ALL PAYMENTS TO THE AFORESAID SIX PARTIES WERE MADE THR OUGH BANKING CHANNEL IN THE SUBSEQUENT YEARS. 7.1 THE LD. AR ALSO SUBMITTED THAT A NOTICE WAS SEN T BY THE AO TO ALL THE SIX PARTIES TO FURNISH THE NECESSARY DETAILS VIDE LETTE R DATED 04.09.2012 WHEREIN IT WAS REQUESTED TO SUBMIT THE NECESSARY DETAILS BY 14.09. 2012. THUS, IT IS CLEAR THAT ONLY 10 DAYS TIME WAS GIVEN TO RESPOND TO THE QUERIES OF T HE AO. OUT OF THE 10 DAYS TIME, SOME TIME WILL DEFINITELY BE USED IN THE NOTICE GIV EN TO THE PARTIES, THEREFORE, REASONABLE OPPORTUNITY WAS NOT PROVIDED BY THE AO A T THE TIME OF REMAND PROCEEDINGS. THEREFORE, THE ALLEGATION OF THE AO IN THE REMAND PROCEEDINGS THAT NONE OF THE PARTY REPLIED TO THE QUERIES RAISED IN CONNE CTION WITH THE PROCEEDINGS IS NOT CORRECT. THE COPIES OF THE NOTICES ARE PLACED ON PA GES 91 TO 95 OF THE PAPER BOOK. 7.2. THE LD. CIT(A) ALSO SUBMITTED THAT THE LIABIL ITY IN RESPECT OF AFORESAID SIX PARTIES IS VERY MUCH REFLECTED IN THE BALANCE SHEET AND THE SAME IS NOT CEASED TO EXIST. THEREFORE, THE SAME CANNOT BE TREATED AS INCOME OF THE ASSESSEE UNDER THE PROVISIONS OF SECTION 41(1) OF THE ACT UNTIL AND UNLESS IT IS WRITTEN BACK IN THE BOOKS OF ACCOUNTS. IN THIS CONNECTION, THE LD. AR RELIED ON THE ORDER OF THIS CO-ORDINATE BENCH IN THE CASE OF OPTO AUDIO ELECTRONICS PRODUCTS PVT. LTD. VS. ITO IN ITA NO.592/KOL/2008 FOR THE A.Y 2002-03 VIDE ORDER DATED 25.05.2012 WHE REIN IT WAS HELD AS UNDER: 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSEE HAS DISCLOSED SUNDR Y CREDITORS TO THE EXTENT OF RS.15,34,818/- AS ON 31.03.2002. THE AO REQUIRED AS SESSEE TO FILE COMPLETE NAME AND ADDRESSES AND ON THE GIVEN ADDRESS NOTICE ISSUED BY AO U/S 133(6) OF THE ACT RETURNED UNSERVED. ACCORDING TO AO, AS ASSESSEE IS UNABLE TO PROVE THE LIABILITY HE ADDED A SUM ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 5 OF RS.2,78,261/- AS BOGUS LIABILITY ON ACCOUNT OF C ESSATION OF LIABILITY WITHOUT MENTIONING PROVISION OF SECTION 41(1) OF THE ACT. A GGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. WE FIND THAT IT IS NOT THE CASE O F REVENUE THAT IT IS A CASE OF EXISTING LIABILITY AND ASSESSEE HAS NOT MADE ANY WRITE OFF O F ALL LIABILITIES IN ITS BOOKS OF ACCOUNTS AND IT IS A FACT THAT THE SUNDRY CREDITORS ARE CARRIED FORWARD FROM EARLIER YEARS AND NOT ARISING OR ACCRUED DURING THE RELEVAN T ASSESSMENT YEAR. IN SUCH CIRCUMSTANCES WHETHER AO CAN MAKE ADDITION ON ACCOU NT OF CESSATION OF LIABILITY WHETHER THE SAME EXISTS OR NOT AS PER THE BOOKS OF ACCOUNTS OF ACCOUNTS THE LIABILITY EXISTS AND HE HAS NOT MADE ANY WRITE OFF OF THE SAM E. ONCE THE LIABILITY EXISTS IN THE BOOKS OF ASSESSEE AND THE CREDITOR HAS RIGHT TO CLA IM OVER THE SAME AS PER LAW, AO COULD NOT MAKE ADDITION ON ACCOUNT OF CESSATION OF LIABILITY BY INVOKING PROVISION OF SECTION 41(1) OF THE ACT. THIS ISSUE HAS BEEN SETTL ED BY THE HON'BLE APEX COURT IN THE CASE OF CCIT VS. KESARIA TEA CO. LTD. (2002) 254 ITR 434 (SC), WHEREIN IT IS HELD THAT PROVISION MADE TOWARDS PURCHASE TAX LIABILITY WAS ALLOWED IN EARLIER YEARS AND SUCH PROVISION WAS WRITTEN BACK IN A SUBSEQUENT YEA R UNDER THE IMPRESSION THAT THE DISPUTE AS TO PURCHASE TAX LIABILITY WAS FINALLY SE TTLED WITH THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN SOME OTHER CASE, EVEN THOUGH OTHE R ISSUES BEARING ON THE ELIGIBILITY OF PURCHASE TAX STILL REMAINED. ON THESE FACTS, IT HAS BEEN HELD THAT THE UNILATERAL ACT ON THE PART OF THE ASSESSEE BY WAY OF WRITING OFF THE LIABILITY IN ITS ACCOUNTS DID NOT NECESSARILY MEAN THAT THE LIABILITY CEASED IN THE E YE OF LAW. HENCE, THE PROVISIONS OF SECTION 41(1) WERE NOT ATTRACTED. HENCE, RESPECTFUL LY FOLLOWING THE JUDGMENT OF HON'BLE APEX COURT AND GOING THROUGH THE FACTS OF T HE PRESENT CASE, WE ARE OF THE VIEW THAT ONCE THE ASSESSEE HAS NOT MADE ANY WRITE OFF OF CREDITORS IN ITS BOOKS OF ACCOUNTS, THE AMOUNTS CANNOT BE TREATED AS CESSATIO N OF LIABILITY U/S.41(L) OF THE ACT. HENCE, WE ALLOW THIS ISSUE OF ASSESSEE'S APPEAL. 5. SIMILAR ARE THE CIRCUMSTANCES IN THE CASE OF CES SATION OF LIABILITY OF M/S. ARC INFOTECH PRIVATE LIMITED AMOUNTING TO RS.95,610/-. AS THE ASSESSEE COULD NOT SUBSTANTIATE THE SUNDRY CREDITOR ARC INFOTECH PRIVA TE LIMITED WHICH WAS OUTSTANDING AS ON 31.03.2002 THE AO MADE THE ADDITION BUT ASSES SEE HAS NEVER MADE ANY WRITE OFF OF THIS LIABILITY IN ITS BOOKS OF ACCOUNT. SIMILAR ARE THE FACTS IN THE PRESENT ISSUE AS IN THE ABOVE ISSUE OF SUNDRY CREDITORS, HENCE TAKING A CONSISTENT VIEW WE DELETE THIS ADDITION. 6. AS REGARDS TO THE LIABILITY OF RS.54,918/- ON AC COUNT OF COMMISSION PAYABLE TO SHRI NARENDRA KUMAR DUGGAR, IT IS ALSO A FACT THAT THIS LIABILITY IS OUTSTANDING AND IT PERTAINS TO FINANCIAL YEAR 1997-98 RELEVANT TO A.Y. 1998-99 AND THIS LIABILITY DOES NOT PERTAIN TO THE RELEVANT ASSESSMENT YEAR 2002-03. TH E FACTS ARE EXACTLY IDENTICAL TO THE FACTS OF THE FIRST ISSUE OF SUNDRY CREDITORS. HENCE TAKING A CONSISTENT VIEW, WE DELETE THIS ADDITION. 7.2 IT IS UNDISPUTED FACT THAT THE CORRESPONDING PU RCHASES MADE FROM THE AFORESAID SIX PARTIES HAVE BEEN DULY ACCEPTED BY THE AO IN TH E ASSESSMENT PROCEEDINGS AND, THEREFORE, THERE CAN BE NO ADDITION ON ACCOUNT OF T HESE CREDITORS WITHOUT REJECTING THE CORRESPONDING PURCHASES FROM THE PARTIES. ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 6 8. SIMILARLY, THE LD. AR ALSO RELIED ON THE ORDER OF HONBLE ITAT, KOLKATA BENCH IN THE CASE OF ITO VS. TARUN KUMAR DEY IN ITA NO.226/KOL/2010 FOR THE A.Y 2006- 07 WHEREIN IT WAS HELD AS UNDER: 8. AFTER HEARING THE RIVAL SUBMISSIONS, ON CAREFUL PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE ASSESSEE HAS BEEN CONTINUOUSLY SHOWING THE AMOUNTS AS LIABILITY IN THE BALANCE SHEET AND THE A SSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT PAYMENTS WERE A CTUALLY MADE TO THE CREDITORS IN THE SUBSEQUENT YEARS. THESE PAYMENTS WERE FOUND REC ORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT PR OVISIONS OF SECTION 41(1) ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THUS, WE FIND NO INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER. WE UPHOLD THE ORDER OF THE L EARNED COMMISSIONER OF INCOME- TAX(APPEALS). ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE AO IN ITS REMAND REPORT HAS GIVEN VERY CLEAR FINDING THAT NONE OF THE PARTY HAS APPEA RED IN RESPONSE TO THE NOTICE ISSUED FOR THE VERIFICATION OF SUNDRY CREDITORS. THE LD. D R SUBMITTED THAT IT IS NOT CLEAR WHETHER THE REQUISITE DETAILS AS FILED BY THE ASSES SEE IN THE FORM OF PAPER BOOK WERE FURNISHED BEFORE THE AO AT THE TIME OF REMAND PROCE EDINGS. THEREFORE, IT WAS SUBMITTED THAT THE ISSUE NEEDS TO BE VERIFIED BY TH E AO AND, ACCORDINGLY, REQUESTED TO RESTORE THE ISSUE TO THE FILE OF AO FOR FRESH ADJUD ICATION. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE IN THE PRESENT CASE REVOLVES TO T HE TREATMENT MADE BY THE AO FOR SUNDRY CREDITORS AS INCOME OF THE ASSESSEE UNDER TH E PROVISIONS OF SECTION 41(1) OF THE ACT. THE AO WAS OF THE VIEW THAT NONE OF THE PARTY HAS APPEARED TO PROVE THE GENUINENESS. THEREFORE, THE ADDITION WAS MADE. THE VIEW TAKEN BY THE AO WAS ALSO CONFIRMED BY THE LD. CIT(A). 9.1 NOW THE ISSUE BEFORE US ARISES FOR ADJUDICATIO N SO AS TO WHETHER THE AMOUNT OF SUNDRY CREDITORS CAN BE TREATED AS INCOME UNDER THE PROVISIONS OF SECTION 41(1) OF THE ACT. AT THE OUTSET, WE FIND THAT THE LIABILITIES IN RESPECT OF SIX PARTIES ARE VERY MUCH REFLECTING IN THE BALANCE-SHEET OF THE ASSESSEE AND , THE SAME CANNOT BE DISTURBED WITHOUT DISALLOWING THE CORRESPONDING PURCHASES. TH E PROVISIONS OF SECTION 41(1) OF THE ACT CAN ONLY BE INVOKED WHEN THE LIABILITY IN R ESPECT OF SUNDRY CREDITORS HAS BEEN WRITTEN BACK BY THE ASSESSEE IN ITS BOOKS OF ACCOUN TS. NONE OF THE AUTHORITY BELOW HAS RECORDED THE FINDING THAT THE AMOUNT OF SUNDRY CRED ITORS HAS BEEN WRITTEN BACK BY THE ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 7 ASSESSEE. THEREFORE, WE CONCLUDE THAT THE LIABILITY HAS NOT BEEN WRITTEN BACK BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. THUS, THE ORDER OF HONBLE ITAT IN THE CASE OF OPTO AUDIO ELECTRONICS PRODUCTS PVT. LTD . (SUPRA) AND TARUN KR. DEY (SUPRA) ARE SQUARELY APPLICABLE TO THE INSTANT FACTS OF THE CASE. AFTER HAVING RELIANCE ON THE AFORESAID ORDERS, WE ARE OF THE VIEW THAT NO ADDITION ON ACCO UNT OF SUNDRY CREDITORS IN THE INSTANT CASE CAN BE MADE UNDER THE PROVISIONS OF SE CTION 41(1) OF THE ACT. 9.2 WE ALSO FIND THAT THE LD. CIT(A) HAS CLEARLY RE CORDED ALL THE SUBMISSIONS MADE BY THE ASSESSEE AT THE TIME OF HEARING IN HIS ORDER BUT HE HAS NOT COMMENTED ON HIS SUBMISSIONS MADE BY THE ASSESSEE. THE LD. CIT(A) HA S CONFIRMED THE ORDER OF AO WITHOUT REFERRING THE MATERIALS SUBMITTED BY THE AS SESSEE AT THE TIME OF HEARING AND NO DEFECT OF WHATSOEVER HAS BEEN POINTED OUT BY HIM IN THE SUBMISSION MADE BY THE ASSESSEE. 9.3 WE ALSO FIND THAT THE AO AT THE TIME OF REMAND REPORT HAS NOT CONSIDERED ALL THE MATERIALS FURNISHED TO HIM SUCH AS COPIES OF THE PU RCHASE BILLS, LEDGERS OF THE PARTIES, DETAILS OF PAYMENTS ETC. THUS, WE CONCLUDE THAT THE REMAND REPORT IS NOT BASED ON THE MATERIALS AVAILABLE ON RECORD AND JUST CONFIRMED TH E DISALLOWANCE ON ACCOUNT OF NON- APPEARANCE OF THE PARTIES. IN OUR CONSIDERED VIEW, THE AO IN ITS REMAND REPORT SHOULD HAVE GIVEN SUFFICIENT OPPORTUNITIES TO THE ASSESSEE AND SHOULD HAVE CONSIDERED ALL THE MATERIALS SUBMITTED BY THE ASSESSEE. 9.4 IN VIEW OF ABOVE, WE HAVE NO HESITATION IN DEL ETING THE ADDITION MADE BY THE LOWER AUTHORITIES AS DISCUSSED ABOVE. THUS, THE GRO UNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 10. THE SECOND ISSUE RAISED BY ASSESSEE IN THIS AP PEAL IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY SUSTAINING THE DIS ALLOWANCE OF RS.1,21,443/- ON ACCOUNT OF DIFFERENCE IN THE CLOSING BALANCE OF THE SUNDRY CREDITORS. 11. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HA S SHOWN OUTSTANDING AMOUNT AS CREDIT BALANCE AS ON 31.03.2007 AS DETAILED UNDER: SL. NO. NAME OF THE PARTY AMOUNT (IN RS.) 1. M/S. BENGAL ENGINEERING INDUSTRIES 86,762/- 2. M/S. INDUSTRIAL SWITCH GEAR & CABLE 56,156/- ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 8 THE INSPECTOR OF INCOME TAX WAS DEPUTED TO VERIFY T HE AFORESAID CREDIT BALANCE SHOWN BY THE ASSESSEE WHO IN-TURN SUBMITTED AS UNDER: SL. NO. NAME OF THE PARTY AMOUNT (IN RS.) 1. M/S. BENGAL ENGINEERING INDUSTRIES NIL 2. M/S. INDUSTRIAL SWITCH GEAR & CABLE 21475/- FROM THE ABOVE, THE AO OBSERVED THE DIFFERENCE OF R S.1,21,443/- AND ACCORDINGLY TREATED AS BOGUS SUNDRY CREDITORS. THE AO DISALLOWE D THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 12. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED AS UNDER: I) IT IS NOWHERE MENTIONED IN THE ORDER SHEET MAINT AINED BY THE AO FOR THE DEPUTATION OF THE INSPECTOR TO VERIFY THE AFORESAID SUNDRY CREDITORS. II) THE INFORMATION OBTAINED BY THE INSPECTOR OF TH E INCOME TAX WAS NOT CONFRONTED TO THE ASSESSEE AND, THEREFORE, THE ADDI TION CANNOT BE SUSTAINED. THE ASSESSEE FURTHER SUBMITTED THAT THE DIFFERENCE IS ARISING BETWEEN THE AMOUNT SHOWN BY THE ASSESSEE AND SHOWN BY THE PARTY IN ITS BOOKS OF ACCOUNTS IS ON ACCOUNT OF OPENING BALANCE IN CASE BENGAL ENGINEERING INDUS TRIES. AS PER THE ASSESSEE, THE OPENING BALANCE WAS SHOWN FOR RS.1,52,783.84/- WHER EAS THE DEBIT BALANCE SHOWN BY THE PARTY IS OF RS.68,311.92/- THUS THE DIFFERENCE OF RS.84,471.92/- WAS OBSERVED BY THE AO. 12.1 SIMILARLY, THE ASSESSEE SUBMITTED THE CASH RE CEIPT SHOWN BY THE PARTY FOR RS.2,290/- IS A UNILATERAL ACCOUNT SHOWN BY THE PAR TY. AS SUCH, THE ASSESSEE HAS NOT PAID ANY AMOUNT OF CASH FOR RS.2,290/-. THUS THE TO TAL DIFFERENCE OF RS.86,792/- (OPENING BALANCE DIFFERENCE OF RS.84,472/- + CASH P AYMENT DIFFERENCE OF RS.2,290/-) IS LIABLE TO BE DELETED. 12.2 SIMILARLY, THE ASSESSEE SUBMITTED IN RESPECT OF M/S. INDUSTRIAL SWITCH GEAR & CABLE THAT THE DIFFERENCE OF RS.29,681/- WAS ARISIN G ON ACCOUNT OF DIFFERENCE TO THE OPENING BALANCE. IT WAS ALSO SUBMITTED THAT NO PAYM ENT HAS BEEN MADE BY THE ASSESSEE TO THE PARTY FOR RS.5,000/- WHEREAS THE PARTY HAS S HOWN RECEIPT OF RS.5,000/- FROM THE ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 9 ASSESSEE. IN VIEW OF ABOVE, THE ASSESSEE SUBMITTED TO THE LD. CIT(A) THAT THE ADDITION MADE BY THE AO IS LIABLE TO BE DELETED. HOWEVER, TH E LD. CIT(A) HAS DISREGARDED THE CONTENTION OF THE ASSESSEE BY OBSERVING AS UNDER: 6. GROUND NO. (II) RELATES TO ADDITION OF RS.1,21,4 43/- MADE BY THE AO. THE FACT OF THE CASE IS THAT THE AO FOUND THAT THE APPELLANT SH OWED M/S. BENGAL ENGINEERING INDUSTRIES AND M/S. INDUSTRIAL SWITCH GEAR AND CABL E AS SUNDRY CREDITORS WITH THE BALANCES OF RS.86,762/- AND 56,156/- RESPECTIVELY. ON VERIFICATION, IT WAS FOUND THAT M/S. INDUSTRIAL SWITCH GEAR AND CABLE HAD SHOWN AN AMOUNT OF RS.21,475/- RECEIVABLE FROM THE APPELLANT AND M/S. BENGAL ENGIN EERING INDUSTRIES HAD SHOWN NIL. THE APPELLANT FILED HIS SUBMISSION/REJOINDER. AFTER GOING THROUGH THE SAME, I FIND THAT HE SUBMITTED THAT THE DIFFERENCE WAS COMING FROM OP ENING BALANCES AND EVEN OTHERWISE THE BALANCES WERE GOD CLEARED IN THE SUBS EQUENT YEAR. IN VIEW OF THE FACT THAT THE APPELLANT ALSO AGREED TO CERTAIN EXTENT TH AT THERE WAS DIFFERENCE IN BALANCES SHOWN BY THE APPELLANT AS WELL AS THE ABOVE PARTIES . THE FACTS CLEARLY SHOW THAT THE LIABILITY TO THE EXTENT OF RS.1,21,443/- WAS NO LON GER EXISTED DURING THE YEAR, THEREFORE, THE AO WAS JUSTIFIED TO MAKE SUCH ADDITION. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A), ASSESS EE CAME IN SECOND APPEAL BEFORE US. 13. THE LD. AR BEFORE US SUBMITTED THAT THE ASSESSE E IS NEVER MADE PAYMENT IN CASH TO THE PARTY. THE LD. AR FURTHER SUBMITTED THA T THE INFORMATION OBTAINED BY THE AO FROM THE PARTIES WAS NEVER CONFRONTED FOR THE EX AMINATION. IN THIS REGARD, THE LD. AR HAS SUBMITTED THE COPY OF THE ORDER SHEET MAINTA INED BY THE AO WHICH IS PLACED ON PAGES 25 TO 27 OF THE PAPER BOOK. THE LD. AR IN SUPPORT OF HIS CLAIM SUBMITTED THAT ALL THE PAYMENTS WERE MADE THROUGH BANKING CHA NNELS. THE LD. AR HAS SUBMITTED THE COPIES OF THE LETTER OF THE PARTY WHEREIN THE P AYMENT THROUGH BANK REFLECTED. THE COPIES OF THE LEDGERS WERE PLACED ON PAGES 60 TO 62 OF THE PAPER BOOK. THE LD. AR IN RESPECT OF M/S. INDUSTRIAL SWITCH GEA R AND CABLE CO. HAS SUBMITTED THAT THE LEDGER COPY MAINTAINED BY THE PARTY FOR TH E ASSESSEE IS NOT LEGIBLE AND REQUESTED TO RESTORE THE MATTER TO THE FILE OF AO F OR FRESH ADJUDICATION. ON THE OTHER HAND, THE LD. DR REQUESTED THE BENCH T O RESTORE THE GROUNDS OF APPEAL TO THE FILE OF AO FOR FRESH ADJUDICATION. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO TH E AMOUNT OF DIFFERENCE SHOWN BY THE ASSESSEE AND THE PARTIES. THE DIFFERENCE WAS OBSERV ED BY THE AO IN RESPONSE TO TWO PARTIES AS DETAILS UNDER: ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 10 SL. NO. NAME OF THE PARTY 1. M/S. BENGAL ENGINEERING INDUSTRIES 2. M/S. INDUSTRIAL SWITCH GEAR & CABLE THE DIFFERENCE WAS OBSERVED BY THE AO FROM THE REPO RT OF INSPECTOR DEPUTED TO VERIFY THE BALANCES OF THE AFORESAID PARTIES. THE VIEW TAK EN BY THE AO WAS UPHELD BY THE LD. CIT(A). 15. NOW, THE ISSUE FOR OVER ADJUDICATION BEFORE US ARISES SO AS TO WHETHER THE DIFFERENCE AS OBSERVED BY THE LOWER AUTHORITIES AMO UNTS TO BOGUS SUNDRY CREDITORS. IN THIS REGARD, WE FIND THAT THE SUNDRY CREDITORS HAVE BEEN SHOWN BY THE ASSESSEE AGAINST THE PURCHASES OF THE GOODS. THE ORDER OF LOWER AUTH ORITIES IS SILENT ABOUT THE PURCHASES MADE BY THE ASSESSEE CORRESPONDING TO THE DIFFERENC E IN THE AMOUNT OF SUNDRY CREDITORS AS DISCUSSED ABOVE. IT TRANSPIRES THAT TH E LOWER AUTHORITIES HAD ACCEPTED THE PURCHASE OF THE GOODS AND NO DEFECTS HAS BEEN POINT ED OUT IN THE PURCHASES CLAIMED BY THE ASSESSEE. 15.1 FROM THE COPIES OF THE LEDGER OF M/S. BENGAL E NGINEERING INDUSTRIES, WE FIND THAT THE ENTIRE PAYMENT WAS PAID THROUGH BANKING CH ANNEL AS EVIDENT FROM THE COPIES OF THE LEDGER WHICH ARE PLACED ON PAGES 60 TO 62 OF THE PAPER BOOK. THE LD. DR HAS NOT BROUGHT ANYTHING CONTRARY TO THE ARGUMENTS ADVA NCED BY THE LD. AR. THEREFORE, WE DO NOT FIND ANY REASON TO UPHOLD THE ORDER OF LO WER AUTHORITIES. HOWEVER, FROM THE COPY OF THE LEDGER FURNISHED BY M /S. BENGAL ENGINEERING INDUSTRIES, WE FIND THAT AN AMOUNT OF RS.2,289.60/- WAS PAID THROUGH CASH BUT FROM THE RECORDS OF THE ASSESSEE, WE FIND THAT NO SUCH C ASH PAYMENT HAS BEEN MADE TO THE PARTY. THUS, IT IS CLEAR THAT THE ADDITION WAS MADE BY THE AO ON THE BASIS OF THIRD PARTY INFORMATION WHICH WAS NOT CROSS-VERIFIED BY THE AO TO THE ASSESSEE. THIS ACT OF THE AO IS AGAINST THE PRINCIPLE LAID DOWN BY THE HONBL E APEX COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. CCE, CA NO. 4228 OF 2006 (SC) (2015)127 DTR (SC) 241 WHEREIN IT WAS HELD: NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WITN ESS BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW WHICH MAKES THE OR DER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUST ICE BECAUSE OF WHICH THE ASSESSEE ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 11 WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND T HAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEMENTS GIVEN BY THE AFORESAI D TWO WITNESSES. EVEN WHEN THE ASSESSEE DISPUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJUDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNI TY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY THE AWE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID P LEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS C ONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TRIBUNAL HAS SI MPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAVE BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT THEMSELVES TO EXPLAIN A S TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS NOT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WANTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WANTED FROM THEM. WE RELY IN THE JUDGMENT OF HON'BLE JURISDICTIONAL H IGH COURT IN THE CASE OF BANGODAYA COTTON MILLS LTD. VS. CIT (2009) 21 DTR 200 (CAL). IN THE SAID CASE THE HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER:- AO HAVING MADE THE IMPUGNED ADDITION SIMPLY ON THE BASIS OF SOME LETTERS SEIZED FROM A THIRD PARTY IN THE ABSENCE OF ANY CORROBORAT IVE EVIDENCE AND WITHOUT ISSUING SUMMONS TO THE CONCERNED PERSON OR MAKING HIM AVAIL ABLE FOR CROSS-EXAMINATION, THE ORDER PASSED BY THE TRIBUNAL UPHOLDING THE ADDITION IS SET ASIDE AND THE MATTER IS REMANDED BACK TO THE AO TO CONSIDER THE MATTER AFRE SH. AGAIN THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF EASTERN COMMERCIAL ENTERPRISE (1994) 210 ITR 103 (CAL) AT PAGE 111:- CROSS-EXAMINATION IS THE SINE QUA NON OF DUE PROCES S OF TAKING EVIDENCE AND NO ADVERSE INFERENCE CAN BE DRAWN AGAINST A PARTY UNLE SS THE PARTY IS PUT ON NOTICE OF THE CASE MADE OUT AGAINST HIM. HE MUST BE SUPPLIED THE CONTENTS OF ALL SUCH EVIDENCE, BOTH ORAL AND DOCUMENTARY, SO THAT HE CAN PREPARE T O MEET THE CASE AGAINST HIM. THIS NECESSARILY ALSO POSTULATES THAT HE SHOULD CROSS-EX AMINE THE WITNESS HOSTILE TO HIM. IN VIEW OF ABOVE, THE ADDITION MADE BY THE LOWER AU THORITIES IN RESPECT OF M/S. BENGAL ENGINEERING INDUSTRIES IS HEREBY DELETED. 15.2 NOW, COMING TO THE ADDITION MADE BY THE AO IN RESPECT OF INDUSTRIAL SWITCH, GEAR AND CABLE. AT THE OUTSET, WE FIND THAT THE COP ES OF LEDGER WAS NOT LEGIBLE. THEREFORE, IT WAS REQUESTED TO RESTORE BACK TO THE FILE OF THE AO. THE LD. DR RAISED NO OBJECTION IF THE MATTER RESTORED BACK TO THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. HENCE, WE RESTORE THE ADDITION MADE BY TH E AO IN RESPECT OF INDUSTRIAL SWITCH, GEAR AND CABLE FOR FRESH ADJUDICATION IN AC CORDANCE WITH LAW AFTER GIVING ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 12 REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. IT IS PERTINENT TO NOTE THAT THE ASSESSEE SHOULD COOPERATE IN THE ASSESSMENT PROCEED INGS AS DISCUSSED ABOVE. HENCE, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES . 16. THE LAST ISSUE RAISED BY ASSESSEE IN GROUND NO .3 IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF AO BY SUSTAINING THE ADDITI ON OF RS.1,46,894/- ON ACCOUNT OF DIFFERENCE IN THE CLOSING BALANCE OF SUNDRY CREDITO RS. THE ASSESSEE HAS SHOWN FOLLOWING CREDIT BALANCES AS ON 31 ST MARCH 2007: SL. NO. NAME OF THE PARTY AMOUNT (IN RS.) 1. DHIRAJ TRADING CO. 95,210/- 2. ARKAY ENTERPRISES 53,326/- ON CONFIRMATION U/S 133(6) OF THE ACT IT WAS REVEAL ED THAT M/S. DHIRAJ TRADING CO. HAS SHOWN CREDIT BALANCE OF RS.1642/- ONLY AND R. K . ENTERPRISES HAS SHOWN NIL BALANCE. THEREFORE, THE AO TREATED THIS SUM OF RS.1 46894/- (95210 1642 + 53326) AS BOGUS SUNDRY CREDITORS AND ACCORDINGLY, THE AO D ISALLOWED THE SAME BY ADDING TO THE TOTAL INCOME OF THE ASSESSEE. 17. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A). THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED IN RESPECT OF DHIRA J TRADING CO. SUBMITTED THE RECONCILIATION STATEMENT WHICH IS AS UNDER: DIFFERENCE IS OPENING BALANCE 55,911.80 CHEQUE PAYMENT MADE BY APPELLANT WRONGLY DEBITED ON OTHER PARTIES A/C 35,000.00 CASH RECEIPT SHOWN BY PARTY ON 10.08.06 BUT NOT SHOWN BY THE APPELLANT. 2,6 56.68 AMOUNT ADDED BY LD. A.O 93,568.48 THUS, THE ASSESSEE SUBMITTED THAT THE DIFFERENCE AS OBSERVED BY THE AO CANNOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE IN RESPEC T OF DHIRAJ TRADING CO. SIMILARLY THE ASSESSEE BEFORE THE LD. CIT(A) IN RES PECT OF ARKAY ENTERPRISES SUBMITTED THE RECONCILIATION STATEMENT WHICH IS AS UNDER: ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 13 DIFFERENCE IS OPENING BALANCE 55,911.80 CHEQUE PAYMENT MADE BY APPELLANT WRONGLY DEBITED IN OTHER PARTIES A/C 35,000.00 CASH RECEIPT SHOWN BY PARTY ON 10.08.06 BUT NOT SHOWN BY THE APPELLANT. 2,656.68 AMOUNT ADDED BY LD. AO 93,568.48 THE ASSESSEE FURTHER SUBMITTED THAT HE WAS MAINTAIN ING THE THREE DIFFERENT LEDGERS OF ARKAY ENTERPRISES. IF ALL THE LEDGERS RECONCILED TH AN A DIFFERENCE OF RS.767.31 IS ARISING WHICH IS ON ACCOUNT OF OPENING BALANCE. THU S THE ASSESSEE SUBMITTED THAT THE DIFFERENCE AS OBSERVED BY THE AO CANNOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE IN RESPECT OF ARKAY ENTERPRISES. HOWEVER, THE LD. CIT(A) HAS DISREGARDED THE CONTENTION OF THE ASSESSEE BY OBSERVING AS UNDER: 7- GROUND NO. (III) RELATES TO ADDITION OF RS.1,46, 894/-. THE FACT OF THE CASE IS THAT THE AO FURTHER FOUND ON VERIFICATION THAT M/S DHIRA J TRADING CO. HAD SHOWN AN AMOUNT OF RS.1,642/- RECEIVABLE FROM THE APPELLANT WHEREAS M/S ARKAY ENTERPRISES HAD SHOWN NIL BALANCE TO BE RECEIVABLE. I FIND FROM THE FACTS AND COPIES OF LEDGER ACCOUNTS FILED BY THE APPELLANT IN BOTH THE CASES T HAT THE AO WAS JUSTIFIED TO MAKE SUCH ADDITION AS THE LIABILITY TO THAT EXTENT WAS C EASED TO EXIST, HENCE, APPEAL ON THIS GROUND IS DISMISSED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A), ASSESS EE IS IN SECOND APPEAL BEFORE US. 18. THE LD. AR BEFORE US REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). THE LD. AR STATED THAT IN CASE OF DHIRAJ TRADING CO MPANY DREW OUR ATTENTION ON PAGES 68 AND 69 OF THE PAPER BOOK WHERE THE LEDGER COPY O F THE PARTY IN THE BOOKS OF THE ASSESSEE AND LEDGER OF THE ASSESSEE IN THE BOOKS OF THE PARTY WERE PLACED. SIMILARLY THE LD. AR IN CASE OF ARKAY ENTERPRISES D REW OUR ATTENTION ON PAGES 72 TO 74 OF THE PAPER BOOK WHERE ALL THE THREE COPIES OF THE LEDGERS WERE PLACED. ON THE OTHER HAND, THE LD. DR REQUESTED THE BENCH T O RESTORE THE GROUNDS OF APPEAL TO THE FILE OF AO FOR FRESH ADJUDICATION. 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO TH E AMOUNT OF DIFFERENCE SHOWN BY THE ASSESSEE AND THE PARTIES AS DISCUSSED ABOVE. AT THE OUTSET, WE FIND THAT THE LD AR HAS ITA NO.1383/KOL/2014 A.Y. 2007-08 M.L. MOHATA VS. ITO WD-35(4) KOL. PAGE 14 RECONCILED THE FIGURES OF BOTH THE PARTIES AS DISCU SSED ABOVE EXCEPT A MINOR DIFFERENCE OF RS. 767.31 IN CASE OF ARKAY ENTERPRISES. ALL THE RECONCILIATION STATEMENTS ARE PLACED IN THE PAPER BOOK ON PAGES 68 TO 78 OF THE P APER BOOK. THE LD DR HAS NOT BROUGHT ANYTHING ON RECORD AGAINST THE ARGUMENTS AD VANCED BY THE LD AR. THEREFORE, WE ARE INCLINED TO DELETE THE ADDITION MADE BY THE LOWER AUTHORITIES EXCEPT FOR A SUM OF RS.767.00 WHICH HAS NOT BEEN RECONCILED BY THE A R. HENCE THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 20. IN THE RESULT, APPEAL OF ASSESSEE STANDS PARTLY ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 30/08/2017 SD/- SD/- (%&') (!&') (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP-SR.PS )&*+ - 30/08/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-MANMOHAN LAL MOHATA, 455, EZRA STREET, 5 TH FL, KOLKATA-01 2. /RESPONDENT-ITO, WARD-35(4), AAYAKAR BHAWAN, POORVA , 110, SHANTI PALLY, KOLKATA-107 3. **, - / CONCERNED CIT 4. - - / CIT (A) 5. ./0 %%, , , / DR, ITAT, KOLKATA 6. 012 / GUARD FILE. BY ORD ER/ & , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO , ,