Arbuda Transport, Ahmedabad v. The ACIT., Circle-9,, Ahmedabad

CO 95/AHD/2005 | 2001-2002
Pronouncement Date: 22-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 9520523 RSA 2005
Assessee PAN AAGFA3156M
Bench Ahmedabad
Appeal Number CO 95/AHD/2005
Duration Of Justice 4 year(s) 10 month(s) 10 day(s)
Appellant Arbuda Transport, Ahmedabad
Respondent The ACIT., Circle-9,, Ahmedabad
Appeal Type Cross Objection
Pronouncement Date 22-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 22-02-2010
Date Of Final Hearing 19-01-2010
Next Hearing Date 19-01-2010
Assessment Year 2001-2002
Appeal Filed On 11-04-2005
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD. BEFORE: HON'BLE SHRI T.K. SHARMA JUDICIA L MEMBER AND HON'BLE SHRI D.C. AGRAWAL ACCOUNTANT MEMBER ITA NO. 761/AHD/2005 ASSESSMENT YEAR : 2001-2002 ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-9 AHMEDABAD VERSUS M/S. ARBUDA TRANSPORT AHMEDABAD PAN: AAGFA 3156 M (APPELLANT) (RESPONDENT) -A N D- C.O. NO. 95/AHD/2005 (ARISING OUT OF I.T.A. NO. 761/AHD/2005) ASSESSMENT YEAR : 2001-2002 M/S. ARBUDA TRANSPORT AHMEDABAD - VERSUS- ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-9 AHMEDABAD (CROSS OBJECTOR) (RESPONDENT) FOR THE ASSESSEE : S/SHRI S.N. SOPARKAR AND P.M. MEHTA FOR THE DEPARTMENT : SHRI M.C. PANDIT SR. D.R. ORDER PER T K SHARMA JUDICIAL MEMBER :- THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE IS AGAINST THE ORDER DATE D 07.12.2004 OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-XV AHMEDABAD FOR THE ASSESS MENT YEAR 2001-02. 2. WE FIRST TAKE UP THE APPEAL OF THE REVENUE I.E. ITA NO. 761/AHD/2005. 3. GROUND NO. 1 OF THIS APPEAL READS AS UNDER :- THE LD. C.I.T.(A) HAS ERRED IN LAW AD ON FACTS IN DELETING THE ADDITION OF RS.55 23 657/- MADE BY THE A.O. ON ACCO UNT OF TRANSPORTATION EXPENSES. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A FI RM DEALING IN TRANSPORTATION OF BULK GOODS I.E. FERTILIZER ON CONTRACT BASIS. IN TH E ASSESSMENT ORDER THE A.O. DISALLOWED THE TRANSPORTATION EXPENSES OF RS.55 23 657/-. THE DETAILED REASON WAS GIVEN BY THE A.O. IN PARA 6 OF THE ASSESSMENT ORDER . THE A.O. QUANTIFIED THE DISALLOWANCE AS UNDER :- 2 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 (A) DEBITED IN THE NAME OF PERSONS COVERED U/S. 40A(2)(B) RS. 3 94 650/- (B) DEBITED IN THE NAME OF PERSONS MENTIONED IN TABLE 2 RS.32 13 299/- (C) DEBITED IN UNPAID TRANSPORTATION A/C. RS.19 15 708/- TOTAL RS.55 23 657/- 5. ON APPEAL IN THE IMPUGNED ORDER THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION FOR THE DETAILED REASONS GIVEN IN PARA 3.6 AT PAGE 10 WHICH READS AS UNDER :- 3.6. I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHO RIZED REPRESENTATIVE CAREFULLY AND HAVE ALSO GONE THROUGH THE DETAILS FI LED BY THE AUTHORISED REPRESENTATIVE. I HAVE ALSO CONSIDERED THE OBSERVAT IONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE REMAND REPO RT. I FIND THAT THE ASSESSING OFFICER HAS DISALLOWED RS.55CIT(A)23 657/- FOR THE TRANSPORTATION EXPENSES UNDER THREE HEADS - I) APPLYING SECTION 40A(2)(B) IN RESPECT OF PAYMENTS TO RELATED PERSONS RS 3 94 650/- II) TRANSPORTATION EXPENSES CREDITED TO RES PECTIVE PARTIES BUT REMAINED UNPAID RS. 32 13 299/- III) TRANSPORTATION EXPENSES BEING UNPAID AMO UNT FOR WHICH PROVISION WAS MADE RS. 19 15 708/- RS.55 23 657/- THE ABOVE EXPENSES HAVE BEEN MAINLY DISALLOWED ON THE GROUND THAT THE APPELLANT DID NOT PRODUCE BOOKS OF ACCOUNT NOR PROD UCED THE PERSONS TO WHOM THE PAYMENTS HAVE BEEN MADE. IT IS THE GRIEVANCE O F THE ASSESSING OFFICER THAT THE APPELLANT WAS REQUESTED A NUMBER OF TIMES TO G IVE DETAILS OF THE ABOVE EXPENSES IN SUCH A WAY SO THAT INFLATED AMOUNT IF ANY CAN BE DETECTED. IT IS STATED BY HIM THAT HOWEVER THE APPELLANT AVOIDE D TO PROVIDE SUCH DETAILS AND PRODUCE THE BOOKS OF ACCOUNT OR THE PERSONS TO WHOM THE PAYMENTS HAVE BEEN MADE. 1 FIND THAT THE APPELLANT HAD FURNISHED ADDR ESSES AND ACCOUNT COPIES OF THE PARTIES TO WHOM TRANSPORTATION EXPENSES HAVE BE EN CREDITED. THE ASSESSING OFFICER HAS MADE HUGE ADDITION OF RS.32 13 299/- WITHOUT CALLING FOR THE DETAILS OF SUBSEQUENT PAYMENTS MADE TO THOSE PARTIES FROM T HE APPELLANT NOR BY SUMMONING THE PARTIES NOR BY VERIFYING FROM THE PAR TIES THOUGH THE APPELLANT HAD GIVEN THE ADDRESSES OF THE PARTIES AND ACCOUNT COPIES OF THE PARTIES . I ALSO FIND THAT THE ASSESSING OFFICER HAS REFUSED TO EXAM INE THE DETAILS FILED BY THE APPELLANT AT THE APPEAL STAGE WHEN THE DETAILS WERE FORWARDED TO HIM SAYING THAT THE SCOPE OF THE ASSESSMENT IS ALWAYS KEPT RESTRICT ED TO THE PERIOD UNDER CONSIDERATION AND THAT THE DETAILS FILED NOW SHOULD NOT BE TAKEN ON ITS FACE VALUE AS THE STATEMENT OF THE APPELLANT IS NOT ALWAYS COR RECT AND CANNOT BE ACCEPTED WITHOUT VERIFICATION AND FURTHER FOR THE EVENTS TAK ING PLACE IN THE SUBSEQUENT YEAR THE EFFECT SHOULD BE GIVEN IN THAT YEAR WITHOUT DIS TURBING THE CURRENT YEAR. THIS VIEW OF THE ASSESSING OFFICER IS NOT CORRECT AS THE APPELLANT HAS FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING THE TRANSPORTATION EXPENSES HAVE BEEN CLAIMED ON ACCRUAL BASIS AS PER THE METHOD OF ACCOUNTING FO LLOWED BY THE APPELLANT 3 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 CONSISTENTLY OVER THE YEARS . FROM THE CHART SUBMIT TED BY THE AUTHORISED REPRESENTATIVE AS PER PAGE 32 AND ENCLOSURE C-2 OF THE PAPER BOOK . IT IS NOTICED THAT THE RATES OF TRANSPORTATION CHARGES PAID TO RE LATED PERSONS ARC COMPARABLE TO RATES OF TRANSPORTATION CHARGES PAID TO OUTSIDER S. THE APPELLANT HAS ALSO FURNISHED DETAILS OF CORRESPONDING TRANSPORTATION I NCOME RECEIVED FROM THE VARIOUS ORGANIZATIONS AS PER ENCLOSURE C-3 AT PAGE 107 OF THE PAPER BOOK WHICH SHOW THAT AS AGAINST SUCH TRANSPORTATION PAYMENTS T HE APPELLANT HAS EARNED HIGHER INCOME. AS FOR THE AMOUNTS OF TRANSPORTATION EXPENSES CREDITED TO THE PARTIES AND REMAINING OUTSTANDING THE APPELLANT HAS FURNISHED NAMES AND ADDRESSES OF SUCH PERSONS AND FOR THE SAID OUTSTAND ING AMOUNTS AND ALSO THE PROVISION MADE FOR EXPENSES ON TRANSPORTATION THE APPELLANT HAS FURNISHED DETAILS OF PAYMENTS MADE TO THEM IN THE SUBSEQUENT YEAR. AS THE APPELLANT HAS BEEN ACCOUNTING FOR ITS INCOME AND EXPENSES ON MERC ANTILE BASIS IT WAS JUSTIFIED IN MAKING DEBIT FOR SUCH EXPENSES IN THE ACCOUNTS I N THE RELEVANT PERIOD. WHEN THESE DETAILED WERE FORWARDED TO THE ASSESSING OFFI CER HE HAS OBJECTED TO SUCH DETAILS MAINLY STATING THAT IT IS AN ADDITIONAL EVI DENCE. HOWEVER THESE DETAILS ARE BASED ON THE BOOKS OF ACCOUNT WHICH ARE STATED HAVE BEEN PRODUCED BY THE APPELLANT BEFORE THE ASSESSING OFFICER AT THE TIME OF PROCEEDINGS HENCE IT SHOULD NOT HAVE BEEN OBJECTED AS ADDITIONAL EVI DENCE. AS REGARDS THE OBJECTION THAT THE APPELLANT DID NOT PRODUCE BOOK S THE HAS FILED AN AFFIDAVIT TO THE EFFECT THAT THE BOOKS AND DETAILS WERE PRODUCED . THAT PART BOOKS ARE AUDITED U/S. 44AB OF THE I.T. ACT. LOOKING FROM ANOTHER ANG LE IT IS SEEN THAT THE APPELLANT HAD ALSO FURNISHED NAMES AND ADDRESSES OF THE PERSO NS COVERED U/S.40A(2)(B) AND CREDITORS FOR PAYMENT OF TRANSPORTATION EXPENSE S. COPIES OF ACCOUNTS OF THE SAID PARTIES WERE ALSO FURNISHED. THE ASSESSING OFF ICER COULD HAVE MADE INQUIRIES AND COLLECTED EVIDENCE BEFORE MAKING DI SALLOWANCE BUT HE HAS NOT BROUGHT ON RECORD ANY MATERIAL OR EVIDENCE BEFORE M AKING SUCH DISALLOWANCE. THAT APART IT IS ALSO SEEN THAT THE GROSS PROFIT FR OM THE BUSINESS OF THE APPELLANT IS MORE OR LESS THE SAME AS IN EARLIER YEARS WHICH CAN BE SEEN FROM THE FOLLOWING DETAILS FURNISHED TO THE ASSESSING OFFICER VIDE LET TER DATED 20 TH JANUARY 2004. ASST. YEAR TURNOVER IN RS. GROSS PROFIT IN AMOUNT (RS.) GROSS PROFIT (%) 1999-2000 43007599 3909270 9.09% 2000-2001 25291155 2401934 9.49% 2001-2002 21230401 2058639 9.70% THUS IT IS FOUND THAT THE G.P. IS HIGHER IN THE YEA R IN APPEAL AS COMPARED TO THE EARLIER YEARS. FURTHER THE TOTAL TRANSPORTATION EXP ENSES DURING THE YEAR ARC OF RS.1.87 CRORES WHICH CONSTITUTE 88.32% OF THE TRANS PORTATION INCOME AND LABOUR CHARGES RECEIVED AND IN THE PRECEDING YEAR I.E. A.Y . 2000-01 THE TRANSPORTATION EXPENSES WERE OF RS. 2.21 CRORES AS AGAINST THE TOT AL RECEIPT OF RS.2.52 CRORES WHICH CONSTITUTE 87.72% OF THE RECEIPTS WHEREAS IN THE A.Y. 1999-2000 THE TRANSPORTATION EXPENSES WERE OF RS 3.85 CRORES ON T OTAL RECEIPT OF RS.4.30 CRORES WHICH COMES TO 89.74% OF THE TOTAL RECEIPTS. THUS T HE TRANSPORTATION EXPENSES CLAIMED BY THE APPELLANT FOR THE YEAR IN APPEAL ARE MORE OR LESS COMPARABLE TO THE PROPORTION OF EXPENSES; CLAIMED IN THE EARLIER YEARS FURTHER THE OUTSTANDING PAYMENTS WHICH ARE APPEARING ON 31.3.01 IN RESPECT OF THE PARTIES TO WHOM THE TRANSPORTATION EXPENSES HAVE BEEN CREDITED HAVE B EEN PAID IN THE SUBSEQUENT YEAR AS PER THE DETAILS OF PAYMENTS FILED BY THE AU THORISED REPRESENTATIVE IN THE PAPER BOOK AS PER ENCLOSURE D-2 AT PAGES 130 TO 193 OF THE PAPER BOOK FOR E.G. FOR THE PARTY JAYSUKHBHAI M. JOTANGIA THE OUTSTANDI NG TRANSPORTATION CHARGES 4 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 ARE OF RS.5.45.414/- AND OUTSTANDING COMMISSION IS RS.1 09 350/- . THE TOTAL AMOUNT COMES TO RS 6 54 764/- AND THE PAYMENTS HAVE BEEN MADE TO HIM IN THE MONTH JULY AND AUGUST 2001 AS PER PAGE 137 OF THE P APER BOOK. THE SAID ACCOUNT HAS ALSO BEEN CONFIRMED BY THE PARTY./ SIMILAR SUCH DETAILS HAVE BEEN FILED BY THE AUTHORIZED REPRESENTATIVE FOR THE OTHER PARTIES. A COMPARATIVE CHART OF DETAILS OF THE INCOME AND EXPENSES ON TRANSPORTATION LABOUR AND COMMISSION FOR IN APPEAL AND FOR THY TWO PRECEDING YEARS HAVE BEEN FI LED BY THE AUTHORISED REPRESENTATIVE WHICH SHOWS THAT SIMILAR EXPENS ES HAVE BEEN INCURRED ON TRANSPORTATION IN THE PAST . THUS THE PAYMENT OF TRANSPORTATION CHARGES IS AS PER THE PRACTICE IN THE PAST. CONSIDERING THE ABOVE FACTS I AM OF THE OPINION THAT THERE IS NO JUSTIFICATION FOR DISALLOWANCE OUT OF T RANSPORTATION EXPENSES WITHOUT ANY MATERIAL HAVING BEEN BROUGHT ON RECORD BY THE A SSESSING OFFICER TO SHOW THAT THE APPELLANT HAS HOT INCURRED THE SAID EXPENS ES WHEN IN FACT IT IS FOUND THAT THE APPELLANT HAS INCURRED SIMILAR EXPENSES IN THE PAST YEARS AND THE PROPORTION OF EXPENSES ARE COMPARABLE WITH THAT OF PRECEDING Y EARS AND THE G.P. DISCLOSED IS BETTER THIS YEAR. THEREFORE DISALLOWANCE OF RS. 55 23 657/- MADE BY THE ASSESSING OFFICER IS DELETED. 6. AT THE TIME OF HEARING ON BEHALF OF REVENUE SHR I M.C. PANDIT SR. D.R. APPEARED AND CONTENDED THAT THE ASSESSEE HAS DECLAR ED TOTAL INCOME OF RS.500 900/- ON TOTAL TURNOVER OF RS.2 12 30 401/-. THE NET PROF IT DECLARED WORKS OUT TO 1.85% WHICH WAS CONSIDERED BY THE A.O. DISPROPORTIONATELY LOW. THE ASSESSING OFFICER MADE DETAILS SCRUTINY ALLOWED ENOUGH OPPORTUNITY T O THE ASSESSEE BUT THE ASSESSEE HAS NOT FURNISHED THE COMPLETE DETAILS. THE ASSESSEE FU RNISHED THE DETAILS BEFORE THE A.O. AND IN REMAND PROCEEDINGS THE ASSESSING OFFICER RI GHTLY REFUSED TO EXAMINE THE VARIOUS DETAILS WHICH WERE NOT FURNISHED AT THE TIM E OF ASSESSMENT. THE LD. D.R. FURTHER SUBMITTED THAT SCOPE OF ASSESSMENT IS ALWAY S KEPT RESTRICTED TO THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL A ND THE DETAILS WHICH WERE FILED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) CANNOT BE ACCEPTED BECAUSE EVEN TAKING PLACE IN SUBSEQUENT YEARS. HE F URTHER SUBMITTED THAT BEFORE THE A.O. THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNT S BEFORE THE A.O.. THE ASSESSEE FILED AN AFFIDAVIT TO THE EFFECT THAT BOOKS AND DET AILS WERE PRODUCED BEFORE THE A.O. WHEREAS SAME ARE NOT PRODUCED. THE PAYMENTS WERE MA DE TO FEW PERSONS WHO ARE COVERED UNDER SECTION 40A(3). THEIR COMPLETE ADDRES SES WERE NOT FURNISHED BEFORE THE A.O. THE LD. D.R. FINALLY SUBMITTED THAT MERELY GRO SS PROFIT IS BETTER IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL I S NO GROUND TO HOLD THAT NO ASSESSMENT IN THE ASSESSMENT YEAR UNDER APPEAL SHOU LD BE MADE DESPITE THE VARIOUS DEFECTS AND DISCREPANCIES POINTED OUT IN THE ASSESS MENT ORDER. 5 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 7. ON THE OTHER HAND SHRI S.N. SOPARKAR APPEARED O N BEHALF OF THE ASSESSEE AND CONTENDED THAT THE A.O. DID NOT MAKE VERIFICATION. HE FURTHER SUBMITTED THAT WHATEVER DETAILS WERE LEFT TO BE FILED BEFORE THE A.O. THES E WERE FILED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) CALLED THE REMAND REPORT ASKED THE AS SESSEE TO CONDUCT THE ENQUIRY. INSTEAD OF CONDUCTING THE ENQUIRY THE ASSESSING OF FICER REFUSED TO EXAMINE THE DETAILS ON THE GROUND THAT SCOPE OF ASSESSMENT IS A LWAYS KEPT RESTRICTED TO THE PERIOD UNDER CONSIDERATION AND THE DETAILS FILED NOW SHOUL D NOT BE TAKEN ON ITS FACE VALUE. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE NEVER ASKED THE A.O. TO ACCEPT THE DETAILS. ON THE FACTS AS DIRECTED BY TH E LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE A.O. OUGHT TO HAVE CONDUCTED THE ENQUIRY VERIFY THE DETAILS I.E. THE PAYMENT MADE IN SUBSEQUENT YEAR BECAUSE THE ASSESSE E IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. HE SUBMITTED THAT ON THE FACTS AND C IRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) RIGHTLY DELETED THE ADDITION OF RS.55 23 657/-. THEREFORE THE VIEW TAKEN BY THE LE ARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 8. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS TRUE THAT COMPLETE DETAILS WERE NOT FURNISHED BEFORE THE ASSESSING OFFICER. SOME FRESH DETAILS WERE ALSO FUR NISHED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE POWERS OF C.I.T.(A) ARE CO-TERMINUS WITH THAT OF ASSESSING OFFICER. FOLLOWING THIS PRIN CIPLE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FORWARDED ALL THE DETAILS TO A. O. HE ASKED HIM TO EXAMINE THE DETAILS CONDUCT ENQUIRY AND SUBMIT THE REMAND REPO RT. AFTER CONSIDERING THE REMAND REPORT INCLUDING THE COMMENTS OF A.O. THAT DETAILS FILED NOW BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CANNOT BE CONS IDERED THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) PASSED THE IMPU GNED ORDER. AFTER CAREFULLY GOING THROUGH THE ORDER OF CIT(A) WHICH IS RE-PROD UCED BY US HEREIN ABOVE WE ARE CONVINCED THAT THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) HAS GIVEN COGENT REASON FOR DELETING THE ADDITION OF RS.55 23 657/-. WE THEREFORE INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS ). THIS GROUND OF APPEAL IS REJECTED. 6 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 9. GROUND OF 2 OF THE REVENUES APPEAL READS AS UND ER :- THE LD. LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) HAS ERRED IN LAW ON FACTS IN DELETING THE ADDITION OF R S.7 63 065/- MADE BY THE A.O. ON ACCOUNT OF COMMISSION EXPENSES . 10. IN THE ASSESSMENT ORDER THE A.O. DISALLOWED RS .7 63 065/- BEING COMMISSION EXPENSES ON THE GROUND THAT THE EXPENSES HAVE NOT B EEN INCURRED AS REGULAR FEATURE OF BUSINESS. THE A.O. ALSO OBSERVED THAT THE SAID EXPE NSES HAVE ONLY INCURRED IN THE MONTH OF JUNE 2000 SEPTEMBER 2000 DECEMBER 200 0 AND MARCH 2001 AND THE ASSESSEE HAS NOT MADE ANY PAYMENT TO THE PERSONS IN WHOSE NAMES COMMISSION EXPENSES HAVE BEEN CREDITED. THE A.O. ASKED THE ASS ESSEE TO PRODUCE THESE PERSONS AS ITS WITNESS IN SUPPORT OF ITS CLAIM OF COMMISSION E XPENSES ALONGWITH ITS COPY OF ACCOUNT APPEARING IN THEIR BOOKS OF ACCOUNTS AND TH E DETAILS OF COMMUNICATIONS TAKEN BETWEEN THEM AND PRODUCE EVIDENCES TO SHOW THAT SER VICES HAVE BEEN RENDERED FOR WHICH COMMISSION HAS BEEN PAID. BEFORE THE A.O. TH E ASSESSEE PRODUCED SOME COPIES OF ACCOUNTS OF PERSONS BUT DID NOT PRODUCE THE SAID PERSONS BEFORE THE ASSESSING OFFICER NOR SUBMITTED ANY DETAILS OR WORKING FOR JU STIFICATION OF COMMISSION EXPENSES. HE ACCORDINGLY MADE A DISALLOWANCE OF RS.7 63 065/- . BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DISPUTING THE AFORESAID DISALLOWANCE THE ASSESSEE SUBMITTED AS UNDER :- AS STATED EARLIER THE APPELLANT THOUGH HAS UNDERT AKEN THE TRANSPORTATION WORK OF KRIBHCO GNFC IFFCO AND MARADIA CHEMICALS LTD. OUT OF WHICH THE APPELLANT H AS EARNED TOTAL TRANSPORTATION RECEIPTS OF RS.2 12 38 086/-. THE APPELLANT DOES NOT OWN A SINGLE TRUCK AND THE PARTIES COVERED U/S. 40A(2)(B) DO NOT HAVE ENOUGH NUMBER OF TRUCKS TO EX ECUTE TRANSPORT WORK WHICH COULD FETCH THE GROSS INCOME O F RS.2 12 38 086. THE APPELLANT HAD TO HIRE THE TRUCK S OF OUTSIDE PARTIES. FOR THIS PURPOSE THE APPELLANT HAS APPOIN TED THE AGENTS AT VARIOUS PLACES FROM WHERE THE TRANSPORT O F GOODS ON BEHALF OF THE PARTIES WERE TO BE EXECUTED. SUCH COM MISSION AGENT ARRANGED FOR SUCH TRUCKS AND THEY HAVE BEEN P AID COMMISSION CHARGES FOR RENDERING SUCH SERVICES. IT MAY BE PERUSED FROM THEIR ACCOUNTS (COPIES ENCLOSED) (ENCL OSURE D-2) THAT SUCH COMMISSION AGENTS SENT THE BILLS FOR COMM ISSION ONLY ONCE OR TWICE AS IT SUITS THEM. NECESSARY COPIES OF ACCOUNTS OF THE COMMISSION AGENTS ALONGWITH THEIR ADDRESSES WER E FURNISHED TO THE ASSESSING OFFICER VIDE LETTER DATE D 2.3.2004. HOWEVER COPIES OF SUCH CONFIRMATION AND BILLS ARE ENCLOSED FOR READY REFERENCE (ENCLOSURE D-2).HERE ALSO NEED LESS TO 7 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 POINT OUT THAT SIMPLY BECAUSE THE AMOUNTS ARE PAID IN THE SUBSEQUENT YEAR AND THE ENTIRES ARE PASSED DURING T HE ACCOUNTING YEAR FOR THE COMMISSION EXPENSES AND THA T THE APPELLANT FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING T HERE IS NO JUSTIFICATION IN DISALLOWING RS.7 63 065/-. IN VIEW OF WHAT IS STATED HEREINABOVE AND THE EVIDENCE ALREADY PRODUCE D THREE IS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO PROCE ED TO DISALLOW THE AMOUNT WITHOUT ANY FURTHER EVIDENCE HAVING BEEN BROUGHT ON RECORD SIMPLY ON THE BASIS OF SUSPICION. IT DESE RVES TO BE DELETED. AFTER CONSIDERING THE AFORESAID SUBMISSIONS IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADD ITION FOR THE DETAILED REASONS GIVEN IN PARA 4.2. WHICH READS AS UNDER :- 4.2. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE AUTHORIZED REPRESENTATIVE AND ALSO THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. APART FR OM MY OBSERVATIONS IN THE PREVIOUS PARA REGARDING TRANSPO RTATION EXPENSES I FIND THAT THE ASSESSING OFFICER HAS DIS ALLOWED COMMISSION PAYMENT ON THE GROUND THAT THE SAME HAS NOT BEEN INCURRED AS A REGULAR FEATURE OF THE BUSINESS. I FI ND FROM THE DETAILS FILED BY THE AUTHORIZED REPRESENTATIVE THAT THE APPELLANT HAS PAID COMMISSION IN EARLIER YEARS ALSO. IN AY 20 00-01 THE APPELLANT HAS PAID COMMISSION OF RS.9 09 328/- WHIC H CONSTITUTE 3.59% OF THE TOTAL RECEIPTS AND IN AY 19 99-2000 THE APPELLANT HAD PAID COMMISSION OF RS.15 94 147/- WHI CH CONSTITUTES 3.70% OF THE RECEIPTS WHEREAS IN THE C URRENT YEAR THE COMMISSION AMOUNT COMES TO 3.59% OF THE TOTAL R ECEIPTS THUS SIMILAR COMMISSION EXPENSES HAVE BEEN INCURR4E D IN THE PART ALSO AND THE FIGURE OF EXPENSES OF THE YEAR IN APPEAL ARE COMPARABLE WITH THAT OF EARLIER TWO YEARS. FURTHER FROM THE ASSESSMENT RECORDS OF THE APPELLANT I FIND THAT TH E APPELLANT HAS FILED ADDRESSES OF THE PERSONS AND COPIES OF AC COUNTS OF THE PARTIES TO WHOM COMMISSION HAS BEEN PAID AND THE BA SIS OF COMMISSION PAYMENT HAS BEEN STATED TO BE PER TON IN CASE OF SOME PARTIES AND PER TRUCK IN CASE OF OTHER PARTIES . THE APPELLANT HAS ALSO FURNISHED AT THE TIME OF APPEAL PROCEEDINGS THE DETAILS OF PAYMENTS MADE TO THE PARTIES IN THE SUBSEQUENT YEAR OUT OF THE OUTSTANDING PAYMENTS ALONGWITH CONF IRMATION FROM THE PARTIES. THESE DETAILS WERE FORWARDED TO T HE ASSESSING OFFICER FOR VERIFICATION AND COMMENTS BUT AS STATE D EARLIER IN THIS ORDER THE ASSESSING OFFICER HAS OBJECTED TO T HE SAME EVEN THOUGH HE HAD NOT CALLED FOR DETAILS OF SUBSEQUENT PAYMENTS AT THE TIME OF ASSESSMENT PROCEEDINGS. THEREFORE FOR THE REASONS DISCUSSED IN PARA 3.6 ABOVE IN RESPECT OF THE SECON D GROUND AND CONSIDERING THAT SIMILAR EXPENSES HAVE BEEN INC URRED IN THE PAST AND THE FIGURE OF EXPENSES ARE COMPARABLE WITH THAT OF 8 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 THE EARLIER YEARS THE DISALLOWANCE MADE BY THE ASS ESSING OFFICER OF ENTIRE COMMISSION OF RS.7 63 065/- IS HE LD TO BE NOT JUSTIFIED IN ABSENCE OF ANY MATERIALS. ACCORDINGLY THE DISALLOWANCE IS DELETED. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) THE REVENUE IS IN APPEAL BEFORE US. 11. THE LD. D.R. POINTED OUT THAT THE ASSESSEE HAS PAID COMMISSION TO SIX PARTIES. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THOSE PERSONS AS ITS WITNESS IN SUPPORT OF ITS CLAIM FOR COMMISSION EXPENSES ALONGW ITH ITS COPY OF ACCOUNTS COPY OF BANK ACCOUNT WHEREIN THE AMOUNT PAID BY CHEQUE IS CREDITED OR WHATEVER COMMUNICATION HAD BEEN TAKEN BETWEEN THEM ON 3.3.20 04 AT 2030 P M. OR AT LEAST THOSE THINGS FROM WHICH IT CAN BE TRANSPIRED THAT I N FACT CERTAIN SERVICES HAS BEEN RENDERED FOR WHICH COMMISSION HAS BEEN PAID. BEFORE THE A.O. THE ASSESSEE NEITHER PRODUCED THE PERSONS NOR PRODUCED THE EVIDENCE ON S ERVICES RENDERED. THEREFORE THE A.O. MADE THE ADDITION. WHILE DELETING THE ADDITION IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ENTIRE ADDITION IGNORING THAT BEFORE THE A.O. THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE FOR SERVICES RENDERED. THE LD. D.R. POINTED OUT THAT COMMISSION CANNOT BE ALLOWED UNLESS THE ASSESSEE PRODUCED THE EVIDENCE OF SERVICES RENDERED. SINCE T HIS WAS NOT PRODUCED THE ADDITION WAS RIGHTLY MADE AND THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS) IS NOT JUSTIFIED IN DELETING THE SAME. 12. ON THE OTHER HAND SHRI S.N. SOPARKAR LD. COUN SEL OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APP EALS). 13. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . IT IS PERTINENT TO NOTE THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION WITHOUT CONSIDERING THAT NEITHER BEFORE THE ASSESSING OFFIC ER NOR BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE HA S PRODUCED THE EVIDENCE OF SERVICES RENDERED. IT IS WELL SETTLED LAW THAT COMM ISSION CANNOT BE ALLOWED UNLESS THE ASSESSING OFFICER IS SATISFIED THAT PERSONS TO WHOM THE COMMISSION PAID HAS RENDERED 9 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 SERVICES. UNDER MERCANTILE SYSTEM OF ACCOUNTING IF AN ASSESSEE HAS INCURRED EXPENSES ON COMMISSION IT CAN BE ALLOWED WHETHER IT IS PAID IN THE PREVIOUS YEAR OR IN SUBSEQUENT YEARS. THE MERE FACT THAT COMMISSION EXP ENSE IS COMPARABLE WITH THAT OF EARLIER YEAR IS ALSO NO GROUND TO ALLOW THE COMMISS ION. WE FOUND CONSIDERABLE FORCE IN THE SUBMISSION MADE BY THE LD. D.R. HON'BLE SUPR EME COURT IN THE CASE OF LACHMINARAYAN MADAN LAL VS.- CIT [86 ITR 439 (SC) HELD THAT A.O. CAN EXAMINE WHETHER COMMISSION IS PROPERLY DEDUCTIBLE. HOWEVER KEEPING IN VIEW THE TOTALITY OF THE FACTS IN OUR OPINION IT WILL MEET THE END OF JUSTICE IF THIS ISSUE IS RESTORED TO THE FILE OF A.O. WITH THE DIRECTION THAT THE ASSESSEE S HOULD PRODUCE THE EVIDENCE ON SERVICES RENDERED THE A.O. MAY EXAMINE THE SAME AN D RE-ADJUDICATE THE ADDITION OF RS.7 63 065/- AFRESH IN ACCORDANCE WITH LAW. 14. GROUND NO. 3 OF REVENUES APPEAL READS AS UNDER :- THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3 02 945/- MADE BY THE A.O. ON ACCOU NT OF UNPAID LABOUR EXPENSES. 15. IN THE ASSESSMENT ORDER THE A.O. DISALLOWED UN PAID LABOUR EXPENSES TO THE EXTENT OF RS.3 02 945/- OUT OF TOTAL LABOUR EXPENSE S OF RS.4 13 519/- DEBITED IN THE PROFIT & LOSS A/C. DURING THE YEAR IN APPEAL. THE A .O. OBSERVED THAT THE ASSESSEE MADE CASH PAYMENT FOR LABOUR CHARGES WHICH WERE MOS TLY IN HUNDREDS IN FEW CASES I.E. AROUND RS.2 000/- AND FROM 15 TH DECEMBER 2000 ONWARDS EXPENSES WERE CREDITED IN THE NAMES OF PERSONS AS PER TABLE 5 PRESENTED BY THE ASSESSING OFFICER IN PAGE 7 OF THE ASSESSMENT ORDER. BEFORE THE A.O. THE ASSESSEE DID NOT PRODUCE THE COPIES OF ACCOUNTS AS APPEARING IN THE BOOKS OF ACCOUNTS OF T HE PERSONS IN WHOSE NAMES IT HAS CREDITED THE EXPENSES NOR PRODUCED THE PERSONS AS I TS WITNESS. THE A.O. DISALLOWED THE OUTSTANDING LABOUR EXPENSES OF RS.3 02 945/-. B EFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DISPUTING THE AFORESAID DISA LLOWANCE THE ASSESSEE CONTENDED AS UNDER :- THE ASSESSING OFFICER HAS DISALLOWED A SUM OF RS.3 02 945/- BEING THE UNPAID LABOUR EXPENSES REFL ECTED IN THE BALANCE SHEET. AS ALREADY STATED HEREINABOVE SINCE THE APPELLANT FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING THE APPELLA NT HAS MADE PROVISION FOR THE EXPENSES PERTAINING TO THIS YEAR. SUCH PROVISION IS MADE ON THE BASIS OF BILLS RECEIVED COPIES OF TH E SAME ARE ENCLOSED (ENCLOSURE F-1). ALL THESE PARTIES WERE PA ID TO THE SUBSEQUENT YEARS CONFIRMATION IN RESPECT OF SUCH PA YMENTS ARE ENCLOSED (ENCLOSURE F-2). 10 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 IN VIEW OF WHAT IS STATED HEREINABOVE AND THE EVIDE NCE ALREADY PRODUCED THERE IS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO PROCEED TO DISALLOW THE AMOUNT WITHOUT ANY FURTH ER EVIDENCE HAVING BEEN BROUGHT ON RECORD SIMPLY ON THE BAIS OF SUSPICION. IT DESERVES TO BE DELETED. AFTER CONSIDERING THE AFORESAID SUBMISSIONS IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADD ITION FOR THE DETAILED REASONS GIVEN IN PARA 5.2 WHICH READS AS UNDER :- 5.2. I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTH ORIZED REPRESENTATIVE CAREFULLY AND HAVE ALSO GONE THROUGH THE DETAILS FILED BY THE AUTHORIZED REPRESENTATIVE. I HAVE ALSO CONSIDERED THE OBSERVATIONS MADE BY THE ASSESSING OFFICER IN T HE ASSESSMENT ORDER. THE APPELLANT HAD FILED DETAILS OF LABOUR CH ARGES BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 23.12.2002. THE APPELLANT HAS FILED DETAILS OF PAYMENTS MADE TO THE LABOURERS AND CONFIRMATIONS OF THE PARTIES AS PER ENCLOSURE F-2 T HAT IS APPEARING IN PAGES FROM 203 TO 221 OF THE PAPER BOO K. FOR E.G. PAYMENTS MADE TO LABOUR CONTRACTOR PANDURANG MALADI APPEAR ON PAGE 203 OF THE PAPER BOOK AND THE PAYMENTS MADE TO LABOUR CONTRACTOR CHOTUSINH RAMCHANDRASINH MADE IN THE SUB SEQUENT YEAR HAVE BEEN COMPILED AT PAGE 209 AND CONFIRMATIO N OF THE PARTY HAS BEEN COMPILED ON PAGE 207 OF THE PAPER BO OK. SIMILAR DETAILS HAVE BEEN FILED FOR ALL THE LABOUR CONTRACT ORS. THEREFORE FOR THE REASONS DISCUSSED IN PAA 3.6 ABOVE IN RESPE CT OF THE SECOND GROUND AND CONSIDERING THAT SIMILAR EXPENSES HAVE BEEN INCURRED IN THE PAST AND THE FIGURE OF EXPENSES ARE COMPARABLE WITH THAT OF THE EARLIER YEARS THE DISALLOWANCE MA DE BY THE ASSESSING OFFICER OUT OF LABOUR CHARGES OF RS.3 02 945/- IS HELD TO BE NOT JUSTIFIED IN ABSENCE OF ANY MATERIALS. AC CORDINGLY THE DISALLOWANCE IS DELETED. 16. WE HAVE HEARD BOTH THE SIDES. IN THE ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE DEBITED LABOUR EXPENSES OF RS.4 13 515/-. THE ASSESSING OFFICER OBSERVED THAT IN FEW CASES LABOUR CHARGES ARE IN ROUND FIGU RE I.E. AROUND RS.2 000/-. ON THIS BASIS THE ASSESSING OFFICER DOUBTED THE CORRECTNES S OF LABOUR EXPENSES AND DISALLOWED RS.3 02 945/-. IN THE IMPUGNED ORDER TH E LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE SAME ON THE GROUND THAT EXPENSES INCURRED ARE COMPARABLE WITH EXPENSES INCURRED IN LAST YEAR. IN OUR OPINION THE LABOUR EXPENSES INCURRED ARE NEITHER EXCESSIVE NOR UNREASONABLE. TH EREFORE IN OUR OPINION THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS GIV EN COGENT REASON FOR DELETING THE ADDITION OF RS.3 02 945/-. WE THEREFORE DECLI NE TO INTERFERE. 11 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 17. THE LAST GROUND OF REVENUES APPEAL READS AS UN DER :- THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.5 81 798/- MADE BY THE A.O. ON ACCOU NT OF UNEXPLAINED CASH CREDIT AND INTEREST. 18. IN THE ASSESSMENT ORDER THE A.O. DISALLOWED IN TEREST OF RS.81 798/- WHICH WAS CLAIMED AS PAYABLE TO INDO COMPUTER SOFTWARE HA RDWARE AND UNEXPLAINED CREDIT OF RS.5 00 000/- IN THE NAME OF M/S. SHREENATH ENTE RPRISE. IN RESPECT OF THESE TWO ADDITIONS BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE CONTENDED AS UNDER :- 'REGARDING THE DISALLOWANCE OFRS.81 798/- BEING INT EREST PAID TO INDO COMPUTER SOFTWARE AND HARDWARE IT MAY BE POINTED O UT THAT NECESSARY COPY OF ACCOUNT OF THE SAID PARTY INDO CO MPUTER SOFTWARE AND HARDWARE AS APPEARING IN THE APPELLANTS BOOKS O F ACCOUNT AS CONFIRMED BY THE OPPOSITE PARTY IS ENCLOSED (ENCLOS URE G-1) IT MAY BE PERUSED FROM THESE COPIES THAT THE APPELLANT REC EIVED THE LOAN FROM THE SAID PARTY THROUGH BANKING CHANNEL ON 24.3.2000 . DURING THE FINANCIAL YEAR 1999-2000 THE APPELLANT PAID INTERES T OF RS.1 635/- AND THEREFORE THE BALANCE BROUGHT FORWARD TO THIS YEAR AS ON 1.4.2000 WAS RS.4 76 635/-. IT IS ON THIS ACCOUNT T HAT THE INTEREST OF RS.81 798/- IS CREDITED BY THE APPELLANT TO THE AC COUNT OF THE SAID INDO COMPUTER SOFTWARE AND HARDWARE. OUT OF THE INT EREST SO CREDITED THE APPELLANT HAS ALREADY DEDUCTED TDS AMO UNTING TO RS.8 998/- WHICH HAS BEEN CREDITED IN THE GOVT. ACC OUNT ON 27-4- 2001. IN VIEW OF THE ABOVE FACTUAL POSITION SINCE T HE CREDIT ARC HELD TO BE GENUINE AND AS AND WHEN RECEIVED (IN ANY CASE NO T ESTABLISHED IN HE NO! GENUINE) AND SINCE THE INTEREST PAID EARLIER HAS BEEN ALLOWED BY THE DEPARTMENT (IN ANY CASE NO DISALLOWANCE HA S BEEN MADE) THAT THE TDS HAS ALSO BEEN DEDUCTED AND PAID BY THE APPE LLANT AND ABOVE ALL THE PARTY HAS CONFIRMED TO HAVE GIVEN THE LOAN (BY WAY OF CONFIRMATION OF THE ACCOUNT) THERE IS NO JUSTIFICAT ION IN MAKING THE DISALLOWANCE OF RS.81 789/-DURING THE ACCOUNTING YE AR WITHOUT ESTABLISHING THAT THE LOAN TAKEN BY THE APPELLANT F ROM INDO COMPUTER SOFTWARE AND HARDWARE WAS NOT GENUINE. THE DISALLOW ANCE OF RS.81 789/- SIMPLY DESERVES TO BE DELETED. REGARDING THE ADDITION OF RS.5 00 000/- FOR THE AL LEGED UNEXPLAINED DEPOSITS BY SHREENATH ENTERPRISE:- THE ASSESSING OFFICER HAS ADDED THE SUM OF RS. 5 LA CS AS UNEXPLAINED CREDIT. THE ASSESSING OFFICER HAS ADDED THE SAID AM OUNT FOR THE REASON THAT THE APPELLANT HAS GIVEN SPECIFIC OPPORT UNITY TO PRODUCE SHREENATH ENTERPRISES WITH THEIR BOOKS OF ACCOUNT BANK STATEMENTS ETC. BUT IS NOT PRODUCED. NEEDLESS TO POINT OUT THA T NO SUCH OPPORTUNITY WAS GIVEN TO THE APPELLANT AS SLATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. COPY OF ACCOUNT IS ENCLOSED (ENCLOSURE G-2). A PERUSAL OF THE ACCOUNT WOULD SHO W THAT THE SAID 12 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 SHREENATH ENTERPRISES DEPOSITED THE AMOUNT IN QUEST ION ON 27.3 2001 BY A CHEQUE WHICH WAS CLEARED THROUGH THE APPELLANT S BANK VIZ. MAHILA UTKARSH BANK LTD. THE APPELLANT HAS ALSO OBT AINED THE CONFIRMATION ALONGWITH PAN FROM THE SAID SHREENATH ENTERPRISES. COPY OF SUCH CONFIRMATION IS ENCLOSED FOR READY REF ERENCE (ENCLOSURE G-2). PERHAPS THE ASSESSING OFFICER WAS PROMPTED TO ADD THE AMOUNT ON THE SUSPICION THAT THE APPELLANT DID NOT PAY ANY INTEREST TO SHREENATH ENTERPRISES. NO SUCH INTEREST WAS PAID AS THE AMOUNT WAS RECEIVED BY THE APPELLANT ON 27.3.2001 AT THE FAG E ND OF THE ACCOUNTING PERIOD. IN THE SUBSEQUENT YEAR INTEREST HAS BEEN PAID AND THE TAX DUE TO BE DEDUCTED AT SOURCE HAS BEEN DEDUC TED. THIS IS VERY CLEAR FROM THE COPY OF THE ACCOUNT OF THE SAID SHRE ENATH ENTERPRISES AS APPEARING IN THE APPELLANTS BOOKS OF ACCOUNT WH ICH HAS ALSO BEEN CONFIRMED BY THE OPPOSITE PARTY. IN VIEW OF THE EVI DENCE PRODUCED VIZ. THE AMOUNT WAS RECEIVED THROUGH BANKING CHANNELS TH E PAN OF THE DEPOSITOR IS FURNISHED ALONG WITH THE CONFIRMATION BY THE DEPOSITOR THE APPELLANT HAS DISCHARGED THE BURDEN CAST UPON H IM THEREFORE NO ADDITION WAS CALLED FOR. IN VIEW OF WHAT IS STATED HEREINABOVE THE ENTIRE AD DITION OF RS.81 798/- FOR INTEREST AND RS.5 00 000/- FOR THE DEPOSIT DESERVES TO BE DELETED.' AFTER CONSIDERING THE AFORESAID SUBMISSIONS IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED BOTH TH E AFORESAID ADDITIONS FOR THE DETAILED REASONS GIVEN IN PARA 6.2 WHICH READS AS UNDER :- 6.2. I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTH ORISED REPRESENTATIVE CAREFULLY AND HAVE ALSO GONE THROUGH THE DETAILS FI LED BY THE AUTHORISED REPRESENTATIVE. 1 HAVE ALSO CONSIDERED THE OBSERVAT IONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE REMAND REPO RT . INTEREST OF RS.81 798/- HAS BEEN CLAIMED BY THE APPELLANT IN RESPECT OF THE BALANCE AMOUNT DUE TO INDO COMPUTER SOFTWARE AND HARDWARE . ON PERUSAL OF THE ASSESSMENT RECORDS I FIND THAT THE APPELLANT HAS FILED COPY OF ACCOUNT PAN A ND ASSESSMENT PARTICULARS OF THE PARTY BEFORE THE ASSESSING OFFICER FROM WHICH H E CAN BE SEEN THAT THE LOAN WAS TAKEN IN THE EARLIER YEAR FROM THE ACCOUNT CO PY FILED BEFORE ME I FIND THAT IN THE EARLIER YEAR I.E. A Y. 2000-01 THE AMOUNT WA S BORROWED FROM THE SAID PARTY AND INTEREST OFRS.1 635/- WAS CREDITED. THE B ALANCE WAS BROUGHT FORWARD FROM THAT YEAR AND FURTHER CREDIT OF INTEREST OF RS .81 798/- WAS MADE DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAS ALSO D EDUCTED TAX AT SOURCE FROM THE SAID PAYMENT. THE ASSESSING OFFICER HAS ALLOWED THE CLAIM OF INTEREST PAID TO THE SAID PARTY IN THE PRECEDING YEAR .CONSIDERIN G ALL THESE FACTS I DO NOT FIND ANY JUSTIFICATION FOR HOLDING THAT THE GENUINENESS OF THE PAYMENT IS DOUBTFUL. THE DISALLOWANCE OF INTEREST PAYMENT MADE BY THE ASSESS ING OFFICER IS THEREFORE DELETED. IN RESPECT OF THE CREDIT OF RS.5 LAKH IN THE ACCOUN T OF SHREENATH ENTERPRISE I FIND FROM THE ASSESSMENT RECORDS THAT THE APPELLANT HAS FURNISHED BEFORE THE ASSESSING OFFICER COPY OF ACCOUNT OF THE SAID PARTY ALONG WITH CONFIRMATION AND PAN. IT IS ALSO SEEN THAT THE AMOU NT HAS BEEN RECEIVED BY THE APPELLANT BY ACCOUNT PAYEE CHEQUE. IN THE FINANCIAL YEAR 2002-03 THE SAID 13 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 AMOUNT HAS BEEN REPAID ALONGWITH INTEREST BY THE AP PELLANT. THE APPELLANT HAS ALSO DEDUCTED TAX AT SOURCE FROM PAYMENT OF SUCH IN TEREST THE APPELLANT ALSO FURNISHED COPY OF CONTRA ACCOUNT FROM THE BOOKS OF SHREENATH ENTERPRISE. THE PARTY HAS ALSO FURNISHED ITS PERMANENT ACCOUNT NUMB ER. THE ASSESSING OFFICER HAS OBJECTED TO THE CONFIRMATION LETTER OF THE DEPO SITOR IN HIS REMAND REPORT DATED 20.10.2004 STATING THAT FILING OF CONFIRMATIO N LETTER WITH PAN DOES NOT AUTOMATICALLY PROVE THE TRANSACTION AN GENUINE AND THAT THE APPELLANT WAS GIVEN SUFFICIENT OPPORTUNITIES AT THE TIME OF ASSESSMENT PROCEEDINGS WHICH HE DID NOT AVAIL OF. HE HAS OBJECTED TO THE ADMISSION OF THE A DDITIONAL EVIDENCE. HOWEVER I FIND THAT CONFIRMATION LETTER FROM SHREENATH ENTE RPRISES ALONG WITH PAN HAD BEEN FILED AT THE TIME OF ASSESSMENT PROCEEDINGS BE FORE THE ASSESSING OFFICER SO NO FRESH OR ADDITIONAL EVIDENCE HAS BEEN FILED B Y THE APPELLANT BEFORE ME . WHEN THE CONFIRMATION WAS FURNISHED ALONGWITH PERMA NENT ACCOUNT NUMBER OF THE PARTY IT COULD HAVE BEEN VERIFIED BY THE ASSE SSING OFFICER WITH THE CONCERNED ASSESSING OFFICER OF THE SAID PARTY THE A PPELLANT HAS DISCHARGED ITS BURDEN OF PROVING THE GENUINENESS OF THE CREDIT .TH E ASSESSING OFFICER HAS NOT MADE ANY INQUIRY NOR HAS BROUGHT ANY MATERIAL TO COME TO A CONCLUSION THAT THE CREDIT WAS NOT GENUINE . THE RECEIPT OF CREDIT AND THE REPAYMENT HAS BEEN MADE BY CHEQUE. THE ONLY EXTRA EVIDENCE THE AUTHORI SED REPRESENTATIVE HAS FILED ARE COPIES OF THE I.T. RETURNS FILED THE SAID CONCERN FOR A.Y. 2001-02 AND 2002-03 WHICH SHOWS THAT THE SAID PARTY IS BEING AS SESSED IN RANGE 4. AHMEDABAD IN THE NAME OF ISHAAN MARKETING PVT LTD. CONSIDERING THE ABOVE FACTS I DO NOT FIND ANY JUSTIFICATION FOR HOLDING THE SAID AMOUNT OF RS.5 LAKH AS UNEXPLAINED CASH CREDIT. THE ADDITION IS ACCORDINGL Y DIRECTED TO BE DELETED. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE REVENUE IS IN APPEAL BEFORE US. 19. WE HAVE HEARD BOTH THE SIDES. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE CONVINCED THAT THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) HAS GIVEN COGENT REASON FOR DELETING THE ADDITION OF RS.81 798/-. WE THEREFORE DECLINE TO INTERFERE. THE ADDITION OF RS.5 00 000/- IS ALSO RIGHTLY DELETED B Y THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BECAUSE THE ASSESSEE HAS DISCHA RGED ITS BURDEN OF PROVING THE GENUINENESS OF CREDIT. AS A MATTER OF FACT NEITHER THE A.O. MADE ANY ENQUIRY NOR HAS BROUGHT ANY MATERIAL WHICH INDICATE THAT CREDIT WAS NOT GENUINE. IN THIS VIEW OF THE MATTER IN OUR OPINION THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) RIGHTLY DELETED THE ADDITION OF RS.5 00 000/- ALSO. WE THE REFORE DECLINE TO INTERFERE. 20. THE GROUNDS OF CROSS OBJECTION FILED BY THE ASS ESSEE ARE AS UNDER :- (1) IN LAW AND IN THE FACTS AS WELL AS CIRCUMSTANCE S OF THE RESPONDENTS CASE THE LD. CIT.(A) HAS GROSSLY ERRED IN NOT ADJUDICATING UPON THE GROUND THAT THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE I.T. ACT IS BA D IN LAW WHEN 14 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 HE OUGHT TO HAVE ADJUDICATED UPON THE SAME AND HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS BAD IN LAW AND DIRECTED TO CANCEL THE ORDER OF ASSESSMENT. THE HON'BLE TRIBUNAL MAY THEREFORE BE PLEASED TO SO HOLD AND DIRECT THE CANCELLATION THEREOF. 2. IN LAW AND IN THE FACTS AS WELL AS CIRCUMSTANCES OF THE RESPONDENTS CASE THE LD. CIT.(A) HAS GROSSLY ERRED IN UPHOLDING THE PART OF THE DISALLOWANCE OF RS.14 000 /- OUT OF THE TOTAL DISALLOWANCE OF RS.17 623/- OUT OF ALLEGE D UNSUPPORTED EXPENSES ON VEHICLES TRAVELLING ETC. WHEN HE OUGHT TO HAVE DELETED THE ENTIRE DISALLOWANCE. THIS HON'BLE TRIBUNAL MAY THEREFORE BE PLEASED TO HOLD THAT THREE IS NO JUSTIFICATION FOR UPHOLDING T HE IMPUGNED DISALLOWANCE OF RS.14 000/- AND DIRECT THE DELETION THEREOF. 3. IN LAW AND IN THE FACTS AS WELL AS CIRCUMSTANCES OF THE RESPONDENTS CASE THE LD. CIT.(A) HAS GROSSLY ERRED IN HOLDING THAT THE LEVY OF INTEREST U/S. 234B OF THE I.T. ACT IS CONSEQUENTIAL WHEN THE RESPONDENT OBJECTED TO THE V ERY LEVY OF SUCH INTEREST WHICH OUGHT TO HAVE BEEN DELETED AS N OT LEVIABLE. THIS HON'BLE TRIBUNAL MAY THEREFORE BE PLEASED TO SO HOLD AND DIRECT THE DECISION OF INTEREST LEVIED U/S . 234B OF THE I.T. ACT. 21. GROUND NO. 1 OF CROSS OBJECTION IS DISMISSED BE ING NOT PRESSED. 22. IN RESPECT OF GROUND NO. 2 WE HAVE HEARD BOTH THE SIDES. THE A.O. DISALLOWED RS.17 623/- OUT OF ALLEGED UNSUPPORTED E XPENSES OF VEHICLES TRAVELLING ETC. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) CONFIRMED THE DISALLOWANCE TO THE EXTENT OF RS.14 000/- ON THE GROUND THAT THE ASSESSEE HAS NOT DISPUTED THE FACT THAT SOME OF THE VOUCHERS WERE NOT AVAILABLE. HOWEV ER IT WAS SUBMITTED THAT VOUCHERS FOR SMALL PETTY EXPENSES WERE PREPARED BY THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) RESTRICTED THE DISALLOWANCE TO 20% OF SUCH EXPENSES I.E. RS.14 000 /-. 23. AFTER HEARING BOTH THE SIDES WE FIND THAT THE DISALLOWANCE MADE BY THE A.O. IS FAIR AND REASONABLE. WE THEREFORE DECLINE TO INTE RFERE. 15 ITA NO. 761/AHD/2005 & CO NO.95/AHD/2005 24. GROUND NO. 3 OF CROSS OBJECTION IS AGAINST LEVY OF INTEREST UNDER SECTION 234B. THE A.O. IS DIRECTED TO ALLOW CONSEQUENTIAL R ELIEF FOR LEVYING INTEREST UNDER SECTION 234B OF THE INCOME TAX ACT 1961. 25. IN THE RESULT THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE ARE PARTLY ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 22 ND FEBRUARY 2010. SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA) ACCOUNTANT MEMBER JUD ICIAL MEMBER DATED: 22/02/2010 COPY OF THE ORDER IS FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER // TRUE COPY // ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT AHMEDABAD BENCHES AHMEDABAD. LAHA/SR. P.S.