M/s. Infomagic Solutions, New Delhi v. ITO, Noida

ITA 3005/DEL/2009 | 2005-2006
Pronouncement Date: 29-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 300520114 RSA 2009
Assessee PAN AABFI6387F
Bench Delhi
Appeal Number ITA 3005/DEL/2009
Duration Of Justice 7 month(s) 2 day(s)
Appellant M/s. Infomagic Solutions, New Delhi
Respondent ITO, Noida
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 29-01-2010
Date Of Final Hearing 14-12-2009
Next Hearing Date 14-12-2009
Assessment Year 2005-2006
Appeal Filed On 26-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : C NEW DELHI) BEFORE SHRI D.R. SINGH J UDICIAL MEMBER AND SHRI K.D. RANJAN ACCOUNTANT MEMBER I.T.A. NO.3005/DEL./2009 (ASSESSMENT YEAR : 2005-06) M/S INFO MAGIC SOLUTIONS VS. ITO WARD 2 RAJIV SAXENA & CO. ADVOCATES & SOLICITORS NEW DE LHI. 318 POCKET D MAYUR VIHAR-II NEW DELHI. (PAN -AABFI6387F) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI RAJIV SAXENA & MADAN JHA REVENUE BY : SHRI N.J. ANSARI ORDER PER K.D. RANJAN AM THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 200 5-06 ARISES OUT OF ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) GHAZIABAD . 2. THE FIRST ISSUE FOR CONSIDERATION RELATES TO CO NFIRMING THE DISALLOWANCE OF RS.50 000 ON ACCOUNT OF AD HOC EXPENDITURE ALLEGED TO HAVE BEEN AGREED BY THE PARTNER AND THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO ON THE BASIS OF ORDER SHEET ENT RY OBSERVED THAT ON 31.3.207 SHRI MADAN JHA ATTENDED ALONG WITH PARTNER SHRI ADESH KA TIYAR WHO HAVE AGREED THAT SOME OF THE EXPENDITURE WERE UNVERIFIABLE AND AN ADDITION O F RS.50 00/- WAS AGREED TO BE MADE. 3. ON APPEAL IT WAS CONTENDED THAT THE AO WAS NOT CORRECT IN OBSERVING THAT THE ASSESSEE HAD AGREED FOR THE SAID DISALLOWANCE. IT HAS BEEN SUBMITTED THAT WHEN SHRI ADESH KATIYAR PARTNER OF THE FIRM ATTENDED ALONG W ITH HIS CA TOOK SIGNATURE ON BLANK ORDER SHEET AND THEREFORE THEY WERE NOT AWARE OF THE ENTRIES MADE BY THE AO IN THE ORDER SHEET DATED 31.3.2007. THE ASSESSEE FILED AFFIDAVI T OF THE PARTNER AS WELL AS OF SHRI MADAN JHA IN SUPPORT OF HIS CONTENTION THAT THEY WE RE NOT AWARE OF THE ENTRIES MADE IN THE ORDER SHEET AS THEY HAD SINGED THE ORDER SHEET I.E. BEFORE MAKING ANY ENTRIES. HOWEVER THE LD.CIT(A) WAS OF THE VIEW THAT THE AFF IDAVITS FURNISHED DURING THE I.T.A. NO.3005/DEL./2009 (A.Y. : 2005-06) 2 APPELLATE PROCEEDINGS COULD NOT BE ACCEPTED AS THE SAME APPEARED TO BE AN AFTERTHOUGHT. THE CIT(A) ACCORDINGLY UPHELD THE DISALLOWANCE. 4. BEFORE US LD.AR OF THE ASSESSED REITERATED THE SIMILAR ARGUMENTS. HE SUBMITTED THAT ASSESSEE AND HIS LD.AR HAD PUT SIGNATURES ON B LANK ORDER SHEET IN GOOD FAITH AS THE MATTER WAS GOING TO BE TIME BARRED ON 31.3.207. HE REFERRED TO THE AFFIDAVIT FILED BY THE PARTNER SHRI ADESH KATIYAR AND THE AFFIDAVIT FROM S HRI MADAN JHA WHEREIN THEY HAVE STATED THAT SIGNATURES HAVE BEEN PUT ON BLANK ORDER SHEET. IT HAS ALSO BEEN SUBMITTED THAT ON ORDER SHEET THE AO HAD TAKEN SIGNATURES ON LEFT HAND SIDE OF THE ORDER SHEET AND HAD SUBSEQUENTLY RECORDED NOTING TO THE EFFECT THAT AMO UNT OF RS.50 000/- HAS BEEN SURRENDERED ON ACCOUNT OF UNVOUCHED EXPENSES. HE F URTHER SUBMITTED THAT THE AO IN THE SAID ORDER SHEET NOTING HAD ALSO RECORDED THAT BOOK S OF ACCOUNT PRODUCED WERE TEST CHECKED. HOWEVER HE HAD NOT IDENTIFIED ANY EXPEND ITURE WHICH WAS NOT VERIFIABLE. THEREFORE THE ADDITION MADE BY THE AO AND UPHELD B Y THE CIT(A) IS CONTRARY TO THE FACT AND CANNOT BE SUSTAINED. ON THE OTHER HAND LD.SR. DR SUBMITTED THAT THE ADDITION HAS BEEN MADE ON AGREED BASIS AND THEREFORE THE CIT(A ) WAS JUSTIFIED CONFIRMING THE ADDITION. 5. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THR OUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS STATED ABOVE IT IS CLEAR T HAT THE AO HAD NOT POINTED OUT ANY PARTICULAR VOUCHER OF EXPENSE WHICH WAS NOT PROPERL Y VOUCHED. IN THE REMAND REPORT DATED 17.12.208 THE AO HAD ONLY SUBMITTED THAT IN SPITE OF HAVING GIVEN SUFFICIENT OPPORTUNITY OF BEING HEARD THE ASSESSEE COULD NOT PROVIDE THE COMPLETE INFORMATION AND KEPT ON CHANGING ITS STAND AND FINALLY THE PARTNER S SHRI ADESH KATIYAR AND SHRI MADAN JHA CAS AGREED FOR ADDITION OF RS.50 000/-. THE A O HAD NOT GIVEN ANY COMMENTS ABOUT THE CONTENTION OF THE ASSESSEE THAT THEY HAVE SINGE D THE BLANK ORDER SHEET EXCEPT BY SAYING THAT CONTENTION OF THE ASSESSEE IS NOT CORRE CT. FROM THE ORDER OF ASSESSMENT IT IS CLEAR THAT THE AO HAD NOT POINTED OUT ANY PARTICULA R VOUCHER RESULTING IN DISALLOWANCE. HE HAD ALSO NOT GIVEN ANY DETAILS IN THE ASSESSMENT ORDER SO AS TO SAY THAT THE ASSESSEE WAS CHANGING HIS STAND FROM TIME TO TIME. IN THE A BSENCE OF ANY MATERIAL HAVING BEEN BROUGHT ON RECORD IN OUR CONSIDERED OPINION THE C IT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE. THE CIT(A) SHOULD HAVE HIMSELF E XAMINED THE EXPENSES FOR WHICH THE BILLS WERE NOT AVAILABLE IF HE WAS OF THE OPINION T HAT THE AO WAS JUSTIFIED IN MAKING THE I.T.A. NO.3005/DEL./2009 (A.Y. : 2005-06) 3 ADDITION. IN THE ABSENCE OF ANY MATERIAL BROUGHT O N RECORD TO JUSTIFY THAT CERTAIN DISALLOWANCE IN OUR CONSIDERED OPINION THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE. WE ACCORDINGLY DELETE THE ADDITION A ND DIRECT THE AO TO ALLOW THE RELIEF TO THE ASSESSEE. 6. THE NEXT ISSUE FOR CONSIDERATION RELATES TO CONF IRMING THE ADDITION OF RS.2 86 000/- ON ACCOUNT OF FRESH CAPITAL BROUGHT I N BY THE PARTNERS. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE AO DURING THE COU RSE OF ASSESSMENT PROCEEDINGS NOTED THAT CAPITAL OF RS.3.92 LAKHS WAS INTRODUCED BY THE PARTNERS IN THEIR CAPITAL ACCOUNT. THE ASSESSEE ON A QUERY RAISED EXPLAINED THE SOURCE OF ADDITIONS MADE IN THE CAPITAL ACCOUNT. THE AO PARTLY ACCEPTED THE CONTENTION OF THE ASSESS EE AND ADDED THE FOLLOWING AMOUNTS ON ACCOUNT OF CAPITAL INTRODUCED IN THE CAPITAL ACC OUNT OF THE PARTNERS: NAME AMOUNT INTRODUCED ACCEPTED BY THE AO ADDITION MADE ADESH RS. 6 000 RS. 6 000 NIL AMIT RS. 50 000 RS.14 000 RS. 36 000 SHAILENDER SOLANKI RS. 2 11 000 RS.61 000 RS.1 50 000 JITENDER SOLANKI RS. 1 25 000 RS.25 000 RS.1 0 0 000 RS.2 86 000/- 7. ON APPEAL IT WAS SUBMITTED THAT THE PARTNERS OF THE FIRM WERE MEN OF MEANS. ALL THE PARTNERS ARE PROFESSIONALLY QUALIFIED WITH TECH NICAL EDUCATION AND WERE WELL VERSED IN THEIR PROFESSION IN ELECTRONICS ENGINEERING. ALL T HE PARTNERS WERE CLASS FELLOW AND WELL- KNOWN TO ONE ANOTHER. THEY WERE SUFFICIENTLY QUALI FIED TO EARN INCOME SINCE 1999 AFTER PASSING OUT ENGINEERING. IN THE CASE OF SHRI JITEN DER SOLANKI HE GOT MARRIED IN 2000 AND GOT GIFTS OF RS.4 LAKH FROM HIS FATHER-IN-LAW WHICH WAS NOT IN DISPUTE. SHRI SHAILENDER SOLANKI IS ALSO ASSESSED TO TAX. THE COPY OF INCOM E-TAX RETURN FOR AY 2002-03 WAS FILED. IT WAS ALSO SUBMITTED THAT OUT OF RS.1 50 000/- TH E BALANCE AMOUNT OF RS.75 000/- WAS RECEIVED FROM HIS FATHER SHRI PHOOL SINGH WHO FUR NISHED CONFIRMATION BY DECLARATION OF GIFT WHICH HAS BEEN DULY FILED BEFORE THE AO. SIM ILARLY IN CASE OF AMIT AGGARWAL THE AO HAD ACCEPTED THE AMOUNT OF RS.14 000/- AND BALAN CE AMOUNT OF RS.36 000/- HAS BEEN ADDED. HOWEVER IN CASE OF ADESH KUMAR CASH INTRO DUCED AT RS.6 000/- HAS BEEN ACCEPTED. THE CIT(A) AFTER CONSIDERING THE FACTS CONFIRMED THE ADDITION OF RS.2 86 000/-. I.T.A. NO.3005/DEL./2009 (A.Y. : 2005-06) 4 8. BEFORE US LD.AR OF THE ASSESSEE SUBMITTED THE P ARTNERS ARE ASSESSED TO TAX. ALL THE PARTNERS ARE MEN OF MEANS. THE ASSESSEE HAS FI LED EVIDENCE BEFORE CIT(A) UNDER RULE 46A OF THE I.T. RULES COMMENTS OF THE AO THER EON WERE OBTAINED BY THE CIT(A). IT HAS ALSO BEEN SUBMITTED THAT ALL THE PARTNERS WERE TECHNICALLY QUALIFIED AND WERE CLASS- FELLOWS WHEN THEY COMPLETED THEIR EDUCATION FROM KH ARKIV POLYTECHNIC UNIVERSITY IN 1995-99. THE PARTNERS HAVE EXPLAINED THE SOURCES O F INVESTMENT. HE PLACED RELIANCE IN THE CASE OF INDIA RICE MILLS VS. CIT 218 ITR 508(A LL.) FOR THE PROPOSITION THAT WHERE ALL THE DEPOSITS CAME TO BE MADE DURING THE ACCOUNTING YEAR IN THE BOOKS OF THE ASSESSEE FIRM BEFORE IT STARTED ITS BUSINESS AND DEPOSIT REPRESEN TED THE CAPITAL CONTRIBUTION OF PARTNERS IT WAS FOR THE PARTNERS TO EXPLAIN THE SOURCES OF DEPO SIT AND IF THEY FAIL TO DISCHARGE THE ONUS THEN SUCH DEPOSIT COULD BE ADDED IN THE HANDS OF TH E PARTNERS ONLY. IT WAS SUBMITTED THAT THE AMOUNT ADDED REPRESENTED THE OPENING BALANCE I N THE CAPITAL ACCOUNT. THE FIRM CANNOT MAKE ANY INCOME FROM UNDISCLOSED SOURCES ON THE VERY FIRST DAY OF THE ACCOUNTING YEAR. LD.AR OF THE ASSESSEE RELIED IN THE CASE OF SURENDER MAHAN SETHI VS. CIT 221 ITR 239(ALL.) FOR THE PROPOSITION THAT WHERE PARTNERS M ADE INVESTMENT ON THE VERY FIRST DAY THE DEPOSITS COULD NOT BE TREATED OF THE FIRM FROM UNDISCLOSED SOURCES. RELYING ON THE DECISION OF ITAT IN THE CASE OF CHEMINOR DRUGS LTD. VS. DCIT (HYD.) BENCH 105 ITD 613 LD.AR OF THE ASSESSEE SUBMITTED THAT THE CIT(A ) SHOULD HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN VIEW OF ADDITIONAL EVIDEN CE FILED BEFORE HIM. LD.AR OF THE ASSESSEE ALSO SUBMITTED THAT PARTNERS HAVE FILED AF FIDAVITS IN SUPPORT OF INVESTMENTS MADE BY THEM. THE CIT(A) HAS NOT COMMENTED ANYTHING ABO UT THE CONTENTS OF THE AFFIDAVITS. THEREFORE THE CIT(A) IS NOT JUSTIFIED CONFIRMING T HE ADDITION IGNORING THE CONTENTS OF THE AFFIDAVITS FILED BY THE PARTNERS. HE PLACED RELIAN CE ON THE DECISION OF HONBLE ALLABAHAD HIGH COURT IN THE CASE OF L. SOHAN LAL GUPTA VS. CI T (SUPRA). HE ALSO PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F MEHTA PARIKH & CO. VS. CIT 30 ITR 181 FOR THE PROPOSITION THAT WHERE PERSONS HAVE GIVEN AFFIDAVITS IT WAS NOT OPEN TO THE REVENUE TO CHALLENGE THE CORRECTNESS OF STATEME NTS MADE IN THE AFFIDAVITS. ON THE OTHER HAND LD.SR.DR SUPPORTED THE ORDER OF THE CIT (A). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE HAVE GONE THROUGH THE CAPITAL ACCOUNTS OF THE PA RTNERS. WE FIND THAT SHRI SHAILENDER SINGH IN THE HIS AFFIDAVIT HAS ADMITTED TO HAVE INT RODUCED CAPITAL OF RS.2 11 000/- DURING I.T.A. NO.3005/DEL./2009 (A.Y. : 2005-06) 5 THE PERIOD 1.4.2004 TO 31.3.2005. OUT OF THIS RS .1 50 000/- HAS BEEN EXPLAINED FROM GIFT FORM HIS FATHER AND BALANCE RS.61 000/- FROM HIS PA ST SAVING. SHRI JITENDER SOLANKI IN HIS AFFIDAVIT ADMITTED TO HAVE INTRODUCED A CAPITAL OF RS.1 25 000/-. OUT OF THIS RS.50 000/- HAS BEEN EXPLAINED TO HAVE COME FORM PAST SAVING AN D RS.75 000/- FROM GIFT FORM HIS FATHER. LD.CIT(A) HAS ADMITTED THE ADDITIONAL EVID ENCE IN THE FORM OF AFFIDAVITS BUT HAS NOT ADJUDICATED ABOUT THE CORRECTNESS OF THE STATEM ENTS CONTAINED THE AFFIDAVITS. THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF L. SOHA N LAL GUPTA (SUPRA) HAS HELD THAT TRIBUNAL WAS NOT ENTITLED TO REJECT THE AFFIDAVITS FILED BY THE ASSESSEE ON THE MERE GROUND THAT HE HAD NOT PRODUCED ANY DOCUMENTARY EVIDENCE; IF IT WAS NOT ACCEPTED AS SUFFICIENT PROOF THE ASSESSEE SHOULD HAVE BEEN CALLED UPON TO PRODUCE DOCUMENTARY EVIDENCE OR HE SHOULD HAVE BEEN CROSS-EXAMINED TO FIND OUT THAT HO W FAR THE ASSERTION IN THE AFFIDAVITS WERE CORRECT. IN THE CASE BEFORE US THE AO IN THE REMAND REPORT HAS CHALLENGED THE CONTENTS OF THE AFFIDAVITS ON THE GROUND THAT THEY WERE AFTERTHOUGHT. THE CIT(A) HAS ALSO NOT ADJUDICATED UPON THE CONTENTS OF THE AFFID AVITS. THE ASSESSEE HAD NOT BEEN ASKED TO FILE DOCUMENTARY EVIDENCE TO SUPPORT THE CONTENT S NOR HAVE BEEN CROSS-EXAMINED TO FIND OUT THE CORRECTNESS OF ASSERTIONS MADE IN THE AFFIDAVITS. THE PARTNERS HAVE ADMITTED IN THE AFFIDAVITS THAT THEY HAVE INTRODUCED THE CAP ITAL FROM THEIR SOURCES IN THEIR CAPITAL ACCOUNT. ACCORDINGLY IN OUR CONSIDERED OPINION SINCE NEITHER THE AO NOR THE CIT(A) HAVE EXAMINED THE CONTENTS OF THE AFFIDAVITS FILED BY THE PARTNERS WE FEEL IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE AO WITH THE DI RECTIONS TO VERIFY THE CONTENTS OF THE AFFIDAVITS AND DECIDE THE ISSUE ON MERIT AFTER GIVI NG PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10. THE NEXT ISSUE FOR CONSIDERATION RELATES TO CON FIRMING THE ADDITION OF RS.2 04 000/- ON ACCOUNT OF SALARY PAID TO THE PART NERS OUTSIDE THE BOOKS OF ACCOUNT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT SALARY OF RS.2 04 000/- WAS PAID TO SHRI JITENDER SOLANKI AND SHRI ADESH KA TIYAR. THE AO HAD NOTED THAT IT HAS BEEN CONFESSED THAT SALARY HAS BEEN PAID OUT OF BOO KS. THE AO THEREFORE ADDED THE AMOUNT OF RS.2 04 000/- U/S 69 OF THE ACT. BEFORE CIT(A) IT WAS SUBMITTED THAT NO SALARY BY SHRI JITENDER SOLANKI AND SHRI ADESH KATI YAR WAS RECEIVED FROM THE FIRM M/S INFOMAGIC SOLUTIONS. IT WAS EXPLAINED THAT THE INF ORMATION WAS GIVEN ON THE BASIS OF MISTAKE COMMITTED BY THE ACCOUNTANT WHO ASSUMED THA T SALARY PROVISIONS HAVE BEEN I.T.A. NO.3005/DEL./2009 (A.Y. : 2005-06) 6 MADE AND BASED ON THESE ASSUMPTIONS RETURNS WERE F ILED SHOWING SALARY FORM M/S INFOMAGIC SOLUTIONS. IT WAS INFORMED THAT SUBMISSI ONS WOULD BE MADE AFTER OBTAINING THE EVIDENCE FORM THE PARTNERS BUT SINCE TIME WAS NOT AVAILABLE WITH THE AO HE ALLOWED OPPORTUNITY FOR TWO DAYS DURING WHICH THE LD.COUNSE L FOR THE ASSESSEE COULD NOT GATHER EVIDENCE FORM THE PARTNERS AS SHRI SHAILENDER SINGH WAS OUT OF TOWN. THE ASSESSEE FILED VARIOUS DOCUMENTS WHICH CONSTITUTED FRESH EVIDENCE UNDER RULE 46A OF THE I.T. RULES 1962. THE CIT(A) OBTAINED THE COMMENTS OF THE AO O N ADDITIONAL EVIDENCE LFILED. BEFORE CIT(A) IT WAS ALSO STATED THAT SHRI ADESH K ATIYAR AND SHRI JITENDER SOLANKI HAVE ADMITTED IN THEIR RETURN OF INCOME SALARY OF RS.1 0 2 000/- EACH. IT WAS SUBMITTED THAT SALARY WAS RECEIVED BY THE PARTNERS FROM M/S ROGTRA N CONTROL SYSTEM DURGAPURI CHOWK DELHI AS THEY WERE WORKING AS PART TIME EMPLOYEE @ RS.8 500/- P.M. IN CASH DURING THE FY 2004-05. THIS INCOME WAS DISCLOSED BY BOTH THE PARTNERS IN INCOME TAX RETURNS. IT WAS THEREFORE CONTENDED THAT SALARY OF RS.2 04 00 0/- WAS NOT PAID BY M/S INFOMAGIC SOLUTIONS BUT BY ANOTHER FIRM. THE CIT(A) HOWEVE R ON THE BASIS OF REPLY DATED 21.3.2007 UPHELD THE ADDITION ON THE GROUND THAT AS SESSEE HAD ADMITTED THE SALARY TO HAVE BEEN RECEIVED FROM M/S INFOMAGIC SOLUTIONS. 11. BEFORE US LD.AR OF THE ASSESSEE SUBMITTED THAT SALARY HAS NOT BEEN DEBITED TO P&L A/C AND THEREFORE NO ADDITION COULD BE MADE. THE REPLY WAS GIVEN DUE TO THE MISTAKE OF THE ACCOUNTANT. THE PARTNER SHRI JITEN DER SOLANKI FILED AFFIDAVIT WHEREIN IT HAS BEEN STATED THAT RS.8 500/- P.M. WAS RECEIVED A S SALARY AS PART TIME EMPLOYEE DURING THE PERIOD FROM ROGTRAN CONTROL SYSTEM DURGAPURI C HOWK DELHI. THE MISTAKE WAS COMMITTED BY NEWLY APPOINTED ACCOUNTANT WHO HAD SH OWN THE INCOME FORM M/S INFOMAGIC SOLUTIONS. LIKEWISE SHRI ADESH KATIYAR HAS ALSO GIVEN AFFIDAVIT TO THIS EFFECT THAT THE SALARY WAS RECEIVED FROM M/S ROGTRAN CONTR OL SYSTEM. IT HAS ALSO BEEN STATED THAT THE CONTENTS OF AFFIDAVIT HAVE NOT BEEN GONE T HROUGH AND ADDITION HAS BEEN MADE MERELY ON THE BASIS OF A WRONG INFORMATION GIVEN BY THE ACCOUNTANT. IT HAS ALSO BEEN SUBMITTED THAT THE AO HAD NOT MADE ANY VERIFICATION . ON THE OTHER HAND LD.SR.DR SUBMITTED THAT SALARY CERTIFICATES HAVE BEEN ISSUED ACCORDING TO WHICH SALARY OUTSIDE THE BOOKS OF HAS BEEN PAID. THEREFORE THE CIT(A) HA S RIGHTLY UPHELD THE ADDITION. I.T.A. NO.3005/DEL./2009 (A.Y. : 2005-06) 7 12. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE AFFIDAVIT OF SHRI ADESH KATIYAR IT IS SEE N THAT HE HAS WORKED AS PART TIME EMPLOYEE DURING THE PERIOD 1.4.2002 TO 31.3.2005 AN D HAD RECEIVED SALARY @ 8 500/- P.M. AS PART TIME EMPLOYEE. SIMILARLY IN THE CASE OF SHRI JITENDER SOLANKI HAS ALSO FILED AFFIDAVIT STATING THEREIN THAT HE HAD RECEIVED SALA RY FROM M/S ROGTRAN CONTROL SYSTEM. THE MISTAKE HAS BEEN COMMITTED BY THE ACCOUNTANT OF THE FIRM WHO HAD BY MISTAKE HAD GIVEN INFORMATION THAT THE FIRM HAS PAID SALARY WHE REAS THE PARTNERS HAD RECEIVED SALARY FROM OTHER FORM. THE AFFIDAVITS FILED BY THE PARTN ERS HAVE NOT BEEN FOUND TO BE FALSE BY BRINGING ANY MATERIAL TO THE CONTRARY. THEREFORE THE ADDITION IN THE HANDS OF THE FIRM CANNOT BE MADE. LD.AR OF THE ASSESSEE HAS ALSO PLA CED RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF L. SOHAN LAL GUPTA VS. CIT 53 ITR 787 WHEREIN IT HAS BEEN HELD THAT AFFIDAVIT FILED BY TH E ASSESSEE COULD NOT BE REJECTED ON THE GROUND THAT HE HAD PRODUCED NO DOCUMENTARY EVIDENCE . HONBLE ALLAHABAD HIGH COURT HAS HELD THAT IF THE CONTENTS OF THE AFFIDAVIT HAS BEEN ACCEPTED AS FRESH PROOF THE ASSESSEE SHOULD HAVE BEEN CALLED UPON TO PRODUCE DOCUMENTARY EVIDENCE OR HE SHOULD HAVE BEEN CROSS-EXAMINED TO FIND OUT HOW FAR HIS ASSERTIONS I N THE AFFIDAVITS WERE CORRECT. SINCE NEITHER THE CIT(A) NOR THE AO IN THE REMAND PROCEED INGS HAVE CALLED UPON THE ASSESSEE TO PRODUCE DOCUMENTARY EVIDENCE NOR THE ASSESSEE HA D BEEN CROSS-EXAMINED IN ORDER TO FIND OUT THEIR ASSERTION IN THE AFFIDAVITS. IN OUR CONSIDERED OPINION THE AFFIDAVITS FILED BY THE PARTNERS COULD NOT BE REJECTED STRAIGHTAWAY. W E THEREFORE RESTORE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTIONS THAT HE WILL EX AMINE THE CORRECTNESS OF THE CONTENTS OF THE AFFIDAVITS SUBMITTED BY THE PARTNERS. THE AO W ILL PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 13. THE NEXT ISSUE FOR CONSIDERATION RELATES TO CON FIRMING THE ADDITION OF RS.15 000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT IN THE BANK IN THE NAME OF SHRI UPENDRA AS THE SAME AMOUNT WAS REFUNDED BACK IN SUBSEQUENT FINANCI AL YEAR. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE AO FOUND CASH DEPOSIT OF RS.15 000/- IN THE BANK THROUGH CASH BOOK. IT WAS EXPLAINED BY THE ASSESSEE THAT RS.15 000/- WAS RECEIVED FROM SHRI UPENDRA FOR PURCHASE OF COMPUTERS. SINCE THE COMPUTER WAS NOT SUPPLIED THE AMOUNT WAS REFUNDED THROUGH BANKING CHANNELS. THIS EXPLANATIO N OF THE ASSESSEE DID NOT FIND FAVOUR I.T.A. NO.3005/DEL./2009 (A.Y. : 2005-06) 8 WITH CIT(A) ON THE GROUND THAT THERE WAS NO SUCH EV IDENCE TO PROVE THAT AMOUNT WAS GIVEN BY SHRI UPENDRA. 14. BEFORE US THE ASSESSEE HAS REITERATED THE SAME ARGUMENTS. HE PLACED RELIANCE ON THE COPY OF BANK ACCOUNT PLACED AT PAGE 122 OF THE PAPER BOOK WHEREIN THE AMOUNT OF RS.32 000/- WAS REFUNDED WHICH INCLUDED THE OPENING BALANCE OF RS.15 000/- AS ON 1.4.2005. ON THE OTHER HAND LD.SR.DR SUBMITTED TH AT NO EVIDENCE WAS GIVEN FOR DEPOSIT WHICH IS EVIDENT FORM THE ORDER OF THE CIT(A). 15. WE HAVE HEARD BOTH THE PARTIES AND GONE THOUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE COPY OF ACCOUNT APPEARING IN THE NAME OF SHRI UPENDRA WE FIND THAT THERE IS OPENING BALANCE OF RS.15 000/- AND ASSESSEE HAD REC EIVED RS.17 000/- THROUGH CITIZEN COOPERATIVE BANK LTD. ON 12.1.2006. THEREAFTER TH E PAYMENTS HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUE. AN AMOUNT OF RS.4066.40 HAS BEEN DEBITED TO THE ACCOUNT ON ACCOUNT OF SALES MADE TO HIM BY THE INVOICE NO.74. THE AO HAS NOT CHALLENGED THE AMOUNTS PAID BACK BY THE ASSESSEE. THE CIT(A) HAS ALSO NOT COMMENTED ANYTHING ABOUT THE GENUINENESS OF THE AMOUNT RECEIVED IN THE ACCOU NTING YEAR 1.4.2005 TO 31.3.2006 WHEREIN RS.17 000/- WAS RECEIVED THROUGH SHRI UPEND RA. THE ASSESSEE HAD REPAID THE AMOUNT OF RS.26 000/- ON THREE DIFFERENT DATES THRO UGH BANK AND RS.4066.40 HAS BEEN ADJUSTED ON ACCOUNT OF SALES MADE TO HIM. THEREFOR E IT IS NOT A CASE WHERE THE CASH HAS BEEN INTRODUCED IN THE NAME OF SHRI UPENDRA. THE A SSESSEE HAD RECEIVED PAYMENT ON ACCOUNT OF PURCHASE FORM SHRI UPENDRA WHICH HAS BE EN REFUNDED IN THE NEXT YEAR THROUGH ACCOUNT PAYEE CHEQUE. THEREFORE IN OUR CO NSIDERED OPINION ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. WE THEREFORE DELETE THE ADDITION. 16. THE NEXT ISSUE FOR CONSIDERATION RELATES TO WRO NGLY COMPUTATION OF INCOME AT RS.5 86 266/- IN PLACE OF RS.5 76 266/-. FROM THE ORDER OF CIT(A) WE FIND THAT NO SUCH GROUND WAS TAKEN BEFORE THE CIT(A) BY THE ASSESSEE. THIS GROUND IS THEREFORE REJECTED AS NOT ARISING OUT OF ORDER OF CIT(A). I.T.A. NO.3005/DEL./2009 (A.Y. : 2005-06) 9 17. THE LAST GROUND IS DIRECTED AGAINST THE PENALTY PROCEEDINGS U/S 271(1)(C) AND 271B OF THE I.T. ACT. DURING THE COURSE OF HEARING OF THE APPEAL THIS GROUND WAS NOT PRESSED BY THE ASSESSEE AND THEREFORE THE SAME IS DISMISSED AS SUCH. 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. 19. ORDER PRONOUNCED IN OPEN COURT ON 29.01.2010. SD/- SD/- (D.R. SINGH) (K.D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: JAN. 2010. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) GHAZIABAD. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. AR/ITAT