ACIT, Kota v. RAJENDRA KUMAR CHOPRA, JHALAWAR

ITA 1115/JPR/2010 | 2007-2008
Pronouncement Date: 04-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 111523114 RSA 2010
Assessee PAN AAUPC1701A
Bench Jaipur
Appeal Number ITA 1115/JPR/2010
Duration Of Justice 1 year(s) 2 month(s) 1 day(s)
Appellant ACIT, Kota
Respondent RAJENDRA KUMAR CHOPRA, JHALAWAR
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 04-11-2011
Date Of Final Hearing 31-10-2011
Next Hearing Date 31-10-2011
Assessment Year 2007-2008
Appeal Filed On 03-09-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO. 1115/ JP/2010 ASSESSMENT YEAR 2007-08 PAN: AAUPC 1701 A THE ACIT VS. SHRI RAJENDRA KUMAR CHOPRA CIRCLE- 1 PROP. M/S. K CHOPRA CONSTRUCTION CO KOTA PATAN ROAD JHALAWAR (APPELLANT ) (RESPONDENT) DEPARTMENT BY :SHRI VINOD JOHRI ASSESSEE BY: SHRI MAHENDRA GARGIEYA DATE OF HEARING: 31-10-2011 DATE OF PRONOUNCEMENT: 04-1-2011 ORDER PER N.L. KALRA AM:- THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER O F THE LD. CIT(A) KOTA DATED 31-05-2010 FOR THE ASSESSMENT YEAR 20 07-08. 2.1 THE FIRST GROUND OF APPEAL RAISED BY THE REVENU E IS AS UNDER:- (I) THE LD. CIT(A) HAS ERRED IN DELETING DISALLOWAN CE OF DIFFERENT EXPENSES:- (A) DIFFERENT BUSINESS EXPENSES OF RS. 2 83 625/- (B) RS. 40 000/- AND RS. 7400/- U/S 40A(3) (C) LABOUR WAGES RS. 14 92 580/- (D) WORK EXPENSES OF RS. 2 29 863/- (E) LABOUR CHARGES OF RS. 13 96 599/- (F) MATERIAL DIESEL AND PETROL EXPENSES OF RS.4 65 863/- 2 2.2 THE ASSESSEE IS A CONTRACTOR. THE AO IN HIS ORD ER HAS MENTIONED THAT HE PROVIDED NUMBER OF OPPORTUNITIES TO THE ASS ESSEE TO PRODUCE THE BOOKS OF ACCOUNTS AND VOUCHERS. THE ASSESSEE VIDE L ETTER DATED 4 TH DEC.2009 STATED THAT THE VOUCHERS FOR EXPENSES ARE NOT TRACEABLE AS VOUCHERS WERE KEPT BY THE ACCOUNTANT AND THE ACCOU NTANT HAS LEFT THE SERVICE. SINCE THE INFORMATION AS DESIRED BY THE AO WERE NOT FILED THEREFORE THE AO IMPOUNDED THE BOOKS OF ACCOUNTS O F THE ASSESSEE U/S 131(3) OF THE ACT ON 4 TH DEC. 2009. IN ABSENCE OF THE DETAILS NOT FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCE EDINGS THE AO INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT AND FOR THIS PROPOSITION THE AO RELIED UPON THE FOLLOWING DECIS IONS. 1. AWADHESH PRATAP SINGH ABDUL REHMAN & BROS VS. CIT 210 ITR 406 (ALL.) 2. CST VS. H.M. ESUFALI H.M. ABDULALI 90 ITR 271 (SC) 3. MOTOR GENERAL FINANCE VS. CIT 254 ITR 449 (DEL.) 2.3 AFTER REJECTING THE BOOKS OF ACCOUNTS THE AO H AS DISALLOWED CERTAIN EXPENSES DISALLOWANCE OF RS. 2 83 625/- UNDER DIFFERENT HE ADS 3 2.4 THE ASSESSEE HAS DEBITED A SUM OF RS. 14 18 128 /- UNDER DIFFERENT HEADS LIKE CONVEYANCE TRAVELING MISC. EXPENSES E NTERTAINMENT EXPENSES SALARY REPAIRS & MAINTENANCE AND ADVANCE WAGES. AC CORDING TO THE AO ALL THESE EXPENSES HAVE BEEN INCURRED IN CASH AND T HE CASH BOOK DOES NOT CONTAIN THE NAMES AND ADDRESSES OF THE PERSONS TO W HOM PAYMENTS HAVE BEEN MADE. SINCE THE VOUCHERS WERE NOT PRODUCED TH EREFORE THE AO DISALLOWED A SUM OF RS. 2 83 625/- WHICH REPRESENTE D 20% OF THE EXPENSES OF RS. 14 18 128/- DISALLOWANCE OF RS. 40 000/- 2.5 THE AO DISALLOWED A SUM OF RS. 40 000/- U/S 40A (3) OF THE ACT AS THE ASSESSEE HAS MADE THE PAYMENTS EXCEEDING RS. 20 000/- DISALLOWANCE OF RS. 7 400/- 2.6 THE AO HAS DISALLOWED A SUM OF RS. 7 400/- U/S 40A(3) IN RESPECT OF CASH PAYMENT OF RS. 37 000/-. LABOUR & WAGES 2.7 THE ASSESSEE HAS DEBITED A SUM OF RS. 46 94 738 /- UNDER THE HEAD LABOUR AND WAGES. A SUM OF RS. 27 68 500/- WAS PA ID UPTO 31 ST DEC. 2006. IN RESPECT OF WAGES FOR THE PERIOD FROM 01-0 1-2007 TO 31-03-2007 THE ASSESSEE HAS SHOWN THE AMOUNT PAYABLE AT RS. 19 26 238/-. THE ASSESSEE HAS NOT PRODUCED THE LABOUR AND WAGES REGI STER. NO EVIDENCE WAS 4 FILED TO GET THE PAYMENT VERIFIED. NO SITE-WISE DET AILS OF PAYMENTS WERE FILED. THE ASSESSEE PRODUCED THE MUSTER ROLL AND AC CORDING TO THE AO THE MUSTER ROLL APPEARS TO HAVE BEEN PREPARED ON A SING LE DAY. IT APPEARS THAT SIGNATURES HAVE BEEN MADE BY ONE PERSON. FOR CERTAI N PERIODS THE LABOUR HAS SIGNED IN RESPECT OF RECEIPT OF PAYMENTS WHILE FOR THE SUBSEQUENT PERIOD THEY HAVE PUT THEIR THUMB IMPRESSION. THE A O THEREFORE DISALLOWED 10% OF THE LABOUR WAGES PAID UPTO 31 ST DEC. 2006. IN RESPECT OF THE LABOUR WAGES SHOWN AS PAYABLE THE AO DISAL LOWED THE LABOUR WAGES FOR THE MONTH OF JAN. AND FEB. 2007. ONLY THE WAGES PERTAINING TO THE PERIOD MARCH 07 WERE HELD AS ALLOWABLE. ACCORDI NGLY A SUM OF S 14 92 580/- WAS DISALLOWED. WORK EXPENSES 2.8 THE ASSESSEE HAS DEBITED WORK EXPENSES TO THE E XTENT OF RS. 45 97 270/-. NO DETAILS WERE FILED BEFORE THE AO. T HE ACCORDINGLY DISALLOWED 5% OF THE EXPENSES AND THUS MADE AN ADDI TION OF RS. 2 29 863/-. LABOUR CHARGES PAYABLE 2.9 THE ASSESSEE SHOWED LABOUR CHARGES PAYABLE AT T HE BEGINNING OF THE YEAR AT RS. 18 46 599/-. THESE AMOUNTS HAVE BEEN PA ID ON DIFFERENT DATES AS UNDER:- 5 17-05-2006 RS. 4 50 000/- 03-11-2006 RS. 3 00 000/- 23-11-2006 RS. 3 00 000/- 16-01-2007 RS. 7 96 599/- TOTAL RS.18 46 599/- ACCORDING TO THE AO SUCH PAYMENTS SHOULD NOT HAVE BEEN OUTSTANDING FOR A PERIOD OF 10 MONTHS AS LABOURERS ARE NOT MEN OF MEANS. THUS THE AO ADDED A SUM OF RS. 13 96 599/- MATERIAL DIESEL AND PETROL EXPENSES 2.10 THE ASSESSEE HAS DEBITED A SUM OF RS.93 12 271 /- UNDER THIS HEAD. THE ASSESSEE WAS NOT ABLE TO PRODUCE THE VOUCHERS . THE AO ACCORDINGLY DISALLOWED 5% OF THE EXPENSES I.E. TO THE EXTENT OF RS. 4 65 863/- 2.11 THE LD. CIT(A) DELETED THE DISALLOWANCES AND D IRECTED THE AO TO APPLY THE NET PROFIT RATE OF 9.5% SUBJECT TO DEPREC IATION AFTER OBSERVING AS UNDER:- IT IS PERTINENT TO MENTION THAT THE LAW STIPULA TES THAT AFTER INVOKING SECTION 145(3) OF THE IT ACT 1961 THE ASSESSING OFFICER IS REQUIRED TO MAKE THE ASSESSMENT IN THE MANNER PROVIDED UNDER SECTION 144. FURTHER A BEST JUDGMENT ASSESS MENT UNDER SECTION 144 HAS TO BE BASED ON RELEVANT MATERIAL G ATHERS BY THE ASSESSING OFFICER AND OPPORTUNITY TO THE APPELLANT IS MANDATORY BEFORE MAKING SUCH ASSESSMENT. 6 THE ASSESSING OFFICER HOWEVER DID NOT BRING ANY M ATERIAL ON RECORD TO JUSTIFY ADHOC DISALLOWANCES FROM EXPENSES UNDER VARIOUS HEADS. MOST DISALLOWANCES ARE ADHOC WITHOUT ANY BA SIS EVEN FOR THE PERCENTAGE FIGURES USED FOR RESPECTIVE DISALLOWANCE . THE ASSESSING OFFICER DID NOT BRING ANY EVIDENCE ON RECORD THAT T HE APPELLANT DID HAVE CASH INCOME FROM UNDISCLOSED SOURCES AND THAT HE USED SUCH CASH TO PAY FOR EXPENSES TO THE EXTENT ALLEGED BY T HE ASSESSING OFFICER. HE COMPLETELY IGNORED HISTORY OF THE CASE AND DID NOT BRING ANY OTHER RELEVANT MATERIAL FROM COMPARABLE CASES T O SUPPORT HIS BEST JUDGMENT ASSESSMENT. AS MENTIONED ALREADY T OTAL DISALLOWANCES UNDER VARIOUS HEADS ARE MORE THAN FOR TY PERCENT OF THE TOTAL TURNOVER THIS YEAR AN UNUSUALLY HIGH DIS ALLOWANCE. THERE IS NO EVIDENCE THAT THE APPELLANT WAS GIVEN AN OPPO RTUNITY BEFORE MAKING VARIOUS DISALLOWANCES IN THE PROCESS OF MAKI NG THE BEST JUDGMENT ASSESSMENT. IN THE RESULT THE DISALLOWANC ES MENTIONED IN VARIOUS GROUNDS ABOVE ARE NOT CONFIRMED. TO SUM UP WHILE THE DECISION OF THE ASSESSING OFFI CER TO INVOKE SECTION 145(3) OF THE IT ACT 1961 IS IN ORD ER; HIS DECISION OF ADHOC DISALLOWANCES FROM VARIOUS EXPENSES COVERED I N THE ABOVE MENTIONED GROUNDS IS NOT CONFIRMED. IN COURSE OF AP PEAL PROCEEDINGS THE APPELLANT SUBMITTED (REITERATED TH ROUGH LETTER DATE 28/05/10 (PB 18-19) IN THE CASE OF CONTRACTOR GEN ERALLY NET PROFIT RATE IS APPLIED A PROPOSITION ACCEPTABLE EVEN TO T HE ASSESSING OFFICER. IT IS ALSO SEEN THAT IN CASE OF THE APPELL ANT IN APPEAL # 344/05-06 FOR AY 03-04 NP OF 8.75% SUBJECT TO DEP RECIATION AND SALARY AND INTEREST TO PARTNERS WAS CONFIRMED AND I AM GIVEN TO UNDERSTAND THAT NEITHER THE DEPARTMENT NOR THE APPE LLANT DISPUTED THIS DECISION ANY FURTHER. THE ONE CHANGE IN PROFIL E OF THE APPELLANT SINCE THEN IS THAT NOW IT IS A PROPRIETOR-SHIP CONC ERN OF THE APPELLANT WHILE THEN IT WAS A PARTNERSHIP FIRM. IN THIS BACKDROP USING Y 03- 04 AS A BENCHMARK IN MY VIEW NP OF 9 .5% SUBJECT TO DEPRECIATION WILL BE APPROPRIATE FOR THIS YEAR. GRO UNDS 1 2 3 4 5 7 AND 10 ARE PARTLY ACCEPTED. 2.12 BEFORE US THE LD. DR HAS SUBMITTED THAT THE L D. CIT(A) HAS UPHELD THE REJECTION OF THE BOOKS OF ACCOUNTS. THE ASSESSE E FOR THE REASONS BEST 7 KNOWN TO HIM HAS NOT PRODUCED THE VOUCHERS BEFORE T HE AO. UNDER SUCH CIRCUMSTANCES THE AO WAS LEFT WITH NO ALTERNATIVE BUT TO ESTIMATE THE DISALLOWANCE OUT OF THE EXPENSES DEBITED.. 2.13 THE LD. AR SUBMITTED THAT IN CASE THE BOOKS OF ACCOUNTS HAVE BEEN REJECTED THEN NO DISALLOWANCE U/S 40A(3) CAN BE MAD E. FOR THIS PURPOSE THE LD. AR HAS RELIED UPON THE FOLLOWING DECISIONS: - 1. CIT VS. BANWARI LAL BANSIDHAR 229 ITR 232 (ALL.) 2. CIT VS. G.K. CONTRACTOR (2009) 19 DTR 305 (RAJ.) 2.14 THE LD. AR SUBMITTED THAT THE AO HAS MADE ADH OC DISALLOWANCES ON THE BASIS OF MERE SUSPICION SURMISES AND CONJE CTURES. THE ASSESSEE CAN MAKE PAYMENTS TO THE LABOURERS AS AND WHEN THE AMOUNT IS RECEIVED FROM THE PWD DEPARTMENT. 2.15 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE H AS DISCLOSED THE NET PROFIT RATE AFTER ALLOWING DEPRECIATION AT 6.9%. TH IS HAS BEEN MENTIONED BY THE ASSESSEE IN HIS LETTER DATED 16-03-10 BEFORE THE LD. CIT(A). THE LD. CIT(A) DIRECTED THE AO TO APPLY THE NET PROFIT RATE OF 9.5% AFTER DEPRECIATION. IT MEANS THAT THE ADDITION OF RS. 5 9 3 000/- STANDS CONFIRMED. 8 2.16 WE HAVE NOTICED THAT SECTION 40A(3) HAS BEEN A MENDED BY THE FINANCE ACT 2008 W.E.F. 01-04-2009. AS PER AMENDED PROVISIONS DISALLOWANCE IS TO BE MADE IN CASE THE AGGREGATE P AYMENT IN ONE DAY EXCEEDS RS. 20 000/-. THE ASSESSEE HAS NOT MADE A S INGLE PAYMENT EXCEEDING RS. 20 000/- ON A PARTICULAR DATE THOUGH AGGREGATE CASH PAYMENT EXCEEDS RS. 20 000/- . THE AMENDED PROVISIO NS BEING SUBSTANTIVE CANNOT BE APPLIED RETROSPECTIVELY. HENCE THERE WAS NO CASE OF MAKING ANY DISALLOWANCE U/S 40A(3) OF THE ACT AS ALL THE SINGL E PAYMENTS DO NOT EXCEED RS. 20 000/-. THE OUTSTANDING LABOUR WAGES AT THE END OF THE PRECEDING YEAR I.E. AT THE BEGINNING OF THE YEAR UN DER REFERENCE WERE TO THE EXTENT OF RS. 18 46 599/-. AT THE END OF THE YEAR THE OUTSTANDING LABOUR WAGES WERE TO THE EXTENT OF RS. 19 26 238/-. IT IS TRUE THAT LABOUR EXPENSES ARE NOT AT ALL VERIFIABLE. A SIMILAR ISSUE HAS BEEN CONSIDERED BY THIS BENCH IN THE CASE OF ACIT VS. VADUDEV GUPTA CONTRACTOR (I TA NO. 202/ JP/2010 DATED 31-08-2010). IT WILL BE USEFUL TO REP RODUCE THE FOLLOWING PARAS FROM THAT ORDER OF THE TRIBUNAL. 25. WE HAVE HEARD BOTH THE PARTIES. WE HAD ALREADY DECIDED THAT BOOKS OF ACCOUNT ARE NOT TO BE REJECTED U/S 14 5(3). THE PAPER BOOK CONTAINS COPIES OF TWO CONTRACTS WHICH WERE AWARDED ON 30.01.2004. CONTRACTS WERE TO THE EXTENT OF THE RS.50.17 LAKH A ND 104.6 LAKHS. THE UNPAID LABOUR CHARGES OF RS.21 06 653 AS ON 31.3.20 04 HAVE BEEN PAID AS UNDER :- 02.04.2004 11 54 320 9 05.04.2004 01 29 480 06.04.2004 01 08 540 08.04.2004 90 360 10.04.2004 01 40 300 22.06.2004 01 86 200 28.06.2004 02 97 453 26. MAKING OF PAYMENT IN SUBSEQUENT YEAR WERE FILED BEFORE THE LD.CIT(A) AS THE ORDER OF A.O. DO NOT SHOW THAT SUCH DETAILS WERE FILED. THE A.O. IN HIS ORDER HAS MENTIONED THAT VER IFICATION SHOWED THAT THE PERSONS WHOSE NAMES WERE INCLUDED IN PAYABLE A CCOUNT WERE NOT RESIDING IN THE VILLAGE MENTIONED BY THE ASSESSEE I N THE LIST. THE A.O. ALSO FOUND OTHER DISCREPENCIES AND THERE IS NO EXPL ANATION IN RESPECT OF SUCH DISCREPENCIES EITHER BEFORE LD.CIT(A) OR BEFOR E US. IT IS REALLY UNBELIEVABLE THAT LABOUR CHARGES WERE PAYABLE FOR M ORE THAN ONE YEAR AS THESE PAYABLE PERTAIN FOR F.Y. 2002-03. WHEN SUC H PAYMENTS ARE OUTSTANDING THEN THE ASSESSEE MUST HAVE SATISFIED T HE A.O. AS TO HOW SUCH PAYMENTS WILL BE MADE AND HOW IDENTIFICATION O F RECIPIENT WILL BE THERE. KEEPING SUCH LABOURCHARGES RECEIVABLE LEFT WITH THE ASSESSEE BY THE LABOURERS FOR MORE THAN A YEAR IS NOT ACCEPTABL E AS PER HUMAN PROBABILITY. WE RELY ON THE FOLLOWING DECISIONS : - CIT V DURGA PRASAD MORE 82 ITR 540 (S.C.) SUMATI DAYAL V CIT 214 ITR 80 (S.C.) SOM NATH MAINI V CIT 306 ITR 414 (P&H) UPLAKESH METAL INDUSTRIES V CIT 177 TAXMAN 298 27. ON THE PRINCIPLE OF SECTION 114 OF THE EVIDENCE ACT THE A.O. CAN PRESUME EXISTENCE OF ANY FACT WHICH HE THI NKS LIKELY TO HAVE HAPPENED REGARD BEING HAD TO COMMON COURSE OF NATU RAL EVENTS HUMAN CONDUCT AND PUBLIC AND PRIVATE BUSINESS IN THEIR RE LATION TO THE FACTS OF A 10 PARTICULAR CASE. IF ANY SUCH PRESUMPTION IS JUSTIFI ABLY RAISED THEN THE ASSESSEE MAY BE REQUIRED TO REBUT THE SAME. 28. HOWEVER A.O. HAS BLOWN HOT AND COLD. IF THERE WERE PAYABLES TO THE EXTENT OF 10% LABOUR CHARGES OF THE YEAR THERE LABOUR CHARGES OF LAST YEAR ARE ALSO TO BE ESTIMATED. WE HAVE NOT BEEN PROVIDED OUTSTANDING LABOUR CHARGES AS ON 31.3.2003 . HENCE WE ESTIMATE THE PAYABLE OF LAST YEAR AS ON 31.3.2003 W ILL BE AROUND RS.91 447/-. HENCE THE DIFFERENCE OF UNDISCLOSED OF RS.9 14 770- RS.91 477 I.E. RS. 8 23 293 WAS AVAILABLE WITH ASSE SSEE FROM LAST YEAR TO MAKE PAYMENT OF 90% LABOURWAGES PAYABLE. HENCE T HE AMOUNT WHICH WAS REQUIRED TO BE ADDED WILL BE RS.10 72 695 MINUS 8 23 293 I.E. RS.2 49 402. THE LABOUR CHARGES PAYABLE AS ON 31.3.2004 HAS BEEN SHOWN TO HAVE BEEN PAID IN JUNE 2004 TO THE EXTENT OF RS.4.83 LAKH. THIS SHOWS LABOUR PAYMENTS ARE NOT WITHHELD FOR A L ONGER PERIOD. HENCE WE HOLD THAT LD.CIT(A) WAS NOT JUSTIFIED IN H OLDING THAT LABOUR CHARGES PAYABLE SHOWN WERE CORRECT. HOWEVER THE ADD ITION TO THE EXTENT OF RS.2 49 402 IS CONFIRMED IN RESPECT OF LABOUR CH ARGES PAID FROM THE UNDISCLOSED SOURCES. 2.17 CONSIDERING OUR FINDINGS IN THE CASE OF ACIT V S. M/S. VASUDEV GUPTA CONTRACTOR (SUPRA) WE FEEL THAT THE ABOVE OU TSTANDING WAGES OF RS. 12 15 730/- INCLUDED IN THE FIGURE OF ADDITION OF R S. 14 92 580/- AND LABOUR CHARGES SHOWN PAYABLE AT THE END OF THE PREC EDING YEAR TO THE EXTENT OF RS. 13 96 599/- ARE TO BE REDUCED AND 10% OF THE DIFFERENCE OF RS.19 26 238/- (-) RS. 18 46 599 = RS. 79 639 WILL BE RS. 8 000/- AND ADDITION TO THIS EXTENT WAS TO BE MADE. 11 2.18 AFTER CONSIDERING THE ABOVE FACTUAL POSITION A ND KEEPING IN VIEW THE EXPENSES DISALLOWED ARE TO REDUCED AS PER DISCU SSION ABOVE. WE THEREFORE FEEL THAT THE LD. CIT(A) WAS JUSTIFIED I N DIRECTING THE AO TO APPLY THE NET PROFIT RATE OF 9.5% AFTER ALLOWING DE PRECIATION. THE ADDITION SO CONFIRMED BY THE LD. CIT(A) WILL TAKE INTO ACCO UNT THE DISALLOWANCE UNDER DIFFERENT HEAD OF THE EXPENSES AND HENCE NO S EPARATE ADDITION IN RESPECT OF EXPENSES UNDER DIFFERENT HEADS MENTIONE D ABOVE. HENCE GROUND NO. 1 IS ALLOWED AS PER OUR OBSERVATION STAT ED ABOVE. 3.1 THE SECOND GROUND OF APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF SUNDRY CR EDITORS OF RS. 24 69 369/-. 3.2 THE AO NOTICED THAT THE ASSESSEE HAS SHOWN THE CREDITS OF RS. 43 95 607/- IN THE NAME OF 125 PERSONS. THE AMOUNT SO PAYABLE IS THE SAME AS IN THE PRECEDING YEAR WHICH MEANS THAT NO T RANSACTION HAS BEEN DONE DURING THE YEAR UNDER REFERENCE. THE AO REQUIR ED THE ASSESSEE TO FURNISH THE CONFIRMATION BUT NO SUCH CONFIRMATIONS WERE FILED. AFTER REDUCING THE OUTSTANDING LABOUR WAGES THE AO MADE THE ADDITION OF RS. 24 69 369/-. 3.3 BEFORE THE LD. CIT(A) IT WAS SUBMITTED BY THE ASSESSEE THAT ALL THE CREDITORS ARE GENUINE AND JUSTIFIED AND RELATED TO BUSINESS ONLY. THE 12 ASSESSEE WAS VERY MUCH FINANCIALLY TIGHT AND WAS UN ABLE TO PAY THE AMOUNT TO MATERIAL SUPPLIERS LABOUR TRANSPORTERS AND OTHER BUSINESS PERSONS IN TIME. IT WAS CLARIFIED THAT THE OUTSTAND ING AMOUNTS LYING AS ON 31-03-2007 HAS BEEN PAID DURING THE NEXT YEAR. THE COPY OF THE LEDGER ACCOUNTS OF THE OUTSTANDING CREDITORS WERE ALSO FIL ED BEFORE THE LD. CIT(A). 3.4 SUCH SUBMISSIONS WERE MADE AVAILABLE TO THE AO. THE AO NOTICED THAT ALL THE PAYMENTS HAVE BEEN MADE IN CASH. THE A O WAS OF THE VIEW THAT CREDITS ARE NOT GENUINE. THE TRANSACTIONS HAVE BEEN MADE ONLY TO REDUCE THE PROFIT. 3.5 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND THE REPLY OF THE AO DELETED THE ADDITION AFTER OBSERVING AS UNDER:- A PERUSAL OF BALANCE SHEET FOR THE YEAR ENDING 31-03-07 DOES SHOW THAT THERE IS MERIT IN CLAIM OF THE APPELLANT OF A FINANCIALLY TIGHT POSITION THE ST ATED CAUSE FOR NOT MAKING PAYMENTS TO SUNDRY CREDITORS. THE CLAIM THAT THE SUNDRY CREDITORS WERE PAID OFF I N THE FOLLOWING YEAR IS SUPPORTED WITH COPIES OF RELEVANT ACCOUNTS. AS AGAINST THIS THE AO HAD MADE THE DISALLOWANCE ON THE PRESUMPTION THAT SUNDRY CREDITO RS COULD NOT REMAIN OUTSTANDING FOR SUCH LONG PERIODS A PRESUMPTION WITHOUT BASIS AND SHOWN TO BE UNTRUE BY CIRCUMSTANCES FOR NON-PAYMENT EXPLAINED BY THE APPELLANT. THE DISALLOWANCE IS ALSO BASED ON BELIEF OF 13 THE ASSESSING OFFICER THAT THE APPELLANT HAD USED H IS INCOME FORM UNDISCLOSED SOURCES TO PAY OFF THE SUND RY CREDITORS A BELIEF FORMED WITHOUT ANY EVIDENCE TO SHOW THAT DURING THE PERIOD UNDER CONSIDERATION THE APPELLANT IN FACT HAD CASH INCOME FROM UNDISCLOSED SOURCES AND THAT IN THIS YEAR SUCH SOURCES WERE USE D TO PAY OFF THE SUNDRY CREDITORS. IN HIS REPLY-DATED 25.05.10 THE ASSESSING OFFICER ESSENTIALLY REITERA TED HIS VIEWS CONTAINED IN THE ASSESSMENT ORDER. HE ONLY OBSERVED THAT PAYMENTS WERE MADE IN CASH WITHOUT POINTING OUT EVEN ONE PAYMENT OF MORE THAN RS.20 000/- IN VIOLATION OF RELEVANT LAW. THE FACT THAT THE PAYMENT TO SUNDRY CREDITORS WAS IN FACT MADE IN ACCOUNTING PERIOD RELEVANT TO AY 08-09 FURTHER RUL ES OUT THE ASSUMPTION OF THE ASSESSING OFFICER OF SUCH PAYMENT IN THE PERIOD UNDER CONSIDERATION. IN GIVEN FACTS AND CIRCUMSTANCES THE ADDITION OF RS.24 69 369/- HOLDING THAT THESE SUNDRY CREDITORS WERE PAID OFF DURING THE YEAR USING INCOME FROM UNDISCLOSED SOURCES IS NOT CONFIRMED. GROUND 6 OF T HE APPEAL IS ACCEPTED. 3.6 WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE HA S FILED THE LEDGER ACCOUNT OF THE CREDITORS FOR SUBSEQUENT FINANCIAL Y EAR AND THESE WERE MADE AVAILABLE TO THE AO. IT IS NOT THE CASE OF THE AO T HAT THE ASSESSEE HAS NOT FILED THE ADDRESSES OF SUCH CREDITORS AND WAS NOT R EQUIRED TO PRODUCE SUCH 14 CREDITORS BEFORE THE AO IN THE REMAND PROCEEDINGS. ONCE THE ASSESSEE HAS DISCHARGED THE ONUS OF SHOWING THE PAYMENTS AS PER ITS BOOKS OF ACCOUNTS THEN THE BURDEN SHIFTED ON THE REVENUE TO ESTABLISH THAT SUCH ENTRIES IN THE BOOKS OF ACCOUNTS ARE NON-GENUINE. SIMPLY ON THE BA SIS OF SUSPICION OR SURMISES THE ADDITION CANNOT BE MADE. HENCE THE L D. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF SUNDRY CREDITORS TO THE EXTENT OF RS. 24 69 369/-. 4.1 THE THIRD GROUND OF APPEAL OF THE REVENUE IS T HAT THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF LOAN PAYABLE AMOUNT OF RS. 15 78 485/-. 4.2 THE AO NOTICED FROM THE LEDGER ACCOUNT PAGE NO. 25 THAT THE ASSESSEE HAS TO PAY A SUM OF RS. 1 89 196/- AT THE BEGINNING OF THE YEAR. THE SUM OF RS. 1.80 LACS WAS DEBITED IN THE ACCOUNT OF SHRI HARISH KUMAR BY CREDITING THE WORK EXPENSES ACCOUNT. NO CONFIRMA TION OF SHRI HARISH KUMAR WAS FILED. THE AO ISSUED THE SUMMON U/S 131 OF THE ACT TO SHRI HARISH KUMAR. NONE ATTENDED THE PROCEEDINGS IN RESP ONSE TO THE SUMMON ISSUED. THE AO HAS SEEN THE INCOME TAX RETURN OF SH RI HARISH KUMAR IN WHICH SHRI HARISH KUMAR HAS NOT SHOWN THE DEBIT IN THE NAME OF THE ASSESSEE. THE AO ACCORDINGLY ADDED A SUM OF RS. 1 8 9 196/-. 15 4.3 THE LEDGER ACCOUNT OF M/S. CHOPRA & CO. SHOWED THAT THE ASSESSEE WAS TO PAY A SUM OF RS. 8 22 071/-. A SUM OF RS. 4. 64 LACS WAS REPAID AND OUTSTANDING CREDITORS WERE TO THE EXTENT OF RS. 3 5 8 071/-. NO DETAILS WERE FILED BY THE ASSESSEE. THE AO ISSUED THE SUMMON U/S 131 OF THE ACT TO M/S. CHOPRA & CO.. THE AO ALSO SCRUTINIZED THE INCO ME TAX RETURN OF M/S. CHOPRA & CO. SINCE THE ENTRIES WERE NOT VERIFIABLE THEREFORE THE CREDIT OF RS. 8 22 071/- WAS ADDED TO THE INCOME OF THE ASSES SEE. 4.4 THE ASSESSEE HAS SHOWN THE CREDIT BALANCE OF RS . 1 89 196/- IN THE CASE OF SHRI RAJENDER KUMAR SACHHAR AT LEDGER FOILI O NO. 55. NO CONFIRMATION OF SHRI RAJENDER KUMAR SACHHAR HAS BEE N FILED. THE AO ISSUED THE SUMMON U/S 131 OF THE ACT BUT NO COMPLIA NCE HAS BEEN MADE TO THIS SUMMON. HENCE THE AMOUNT WAS ADDED BACK. 4.5 THE LEDGER ACCOUNT OF SHRI ASHWANI KUMAR AS APP EARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE SHOWED THE CREDIT BALANCE OF RS. 1 99 630/-. A SUM OF RS. 1.00 LAC WAS TRANSFERRED I N THE ACCOUNT OF SMT. BHARTI CHOPRA. THE SUMMON WAS ISSUED BUT NO COMPLIA NCE WAS MADE. ACCORDING TO THE AO THE CREDIT ENTRIES IS NON-GEN UINE. THEREFORE A SUM OF RS. 99 630/- WAS ADDED TO THE INCOME OF THE ASSE SSEE. 4.6 SIMILAR IS THE POSITION IN THE ACCOUNT OF SHRI MAHENDRA KUMAR IN WHICH THE OPENING BALANCE WAS RS. 1 89 196/- AND TH E SUM OF RS. 1.00 LAC 16 WAS TRANSFERRED IN THE ACCOUNT OF SMT. BHARTI CHOPR A. THUS A SUM OF RS. 1 89 196/- WAS ADDED TO THE INCOME OF THE ASSESSEE. 4.7 THE LEDGER ACCOUNT OF SHRI SUNIL KUMAR SHOWED A N OPENING CREDIT BALANCE OF RS. 1 89 196/-. THE CLOSING BALANCE IS ALSO THE SAME. NO INFORMATION HAS BEEN GIVEN. THE AO ACCORDINGLY CONS IDERED THE CREDIT ENTRIES AS NON-GENUINE. 4.8 BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT TH E ASSESSEE WAS REQUIRED TO FILE THE DETAILS AND DOCUMENTS VIDE NOT ICE DATED 4 TH DEC. 2009 WHICH WAS SERVED UPON 07 TH DEC. 09. THE COMPLIANCE WAS TO BE MADE BY 09 TH DEC. 09. SIMILARLY THE NOTICES WERE ISSUED U/S 13 1 OF THE ACT ON 16 TH DEC. 09/ 17 TH DEC. 09 AND THE ASSESSMENT HAS BEEN MADE ON 30TH D EC. 09. 4.9 THE LD. CIT(A) IN HIS ORDER HAS MENTIONED THAT THE ASSESSEE HAS NOT BEEN PROVIDED ADEQUATE OPPORTUNITY. THE LD. CIT(A) HAS RECORDED THE FOLLOWING FINDING IN MY CONSIDERED OPINION DECISION OF THE ASSESSIN G OFFICER TO TREAT OUTSTANDING IN ACCOUNTS OF RAJENDR A KUMAR SACHER (OPENING BALANCE - RS.1 89 196/- CLOSING BA LANCE - RS1 89 196/-) ASHWINI KUMAR (OPENING BALANCE - RS.1 99 630/- CLOSING BALANCE 31.03.2007- RS.99 630 /-) MAHENDRA KUMAR (OPENING BALANCE -RS.1 89 196/- CLO SING BALANCE - RS.89 196/- AND SUNIL KUMAR (OPENING BALA NCE - RS.1 89 196/- CLOSING BALANCE - RS.1 89 196/-) A S INCOME OF 17 THE APPELLANT WITHOUT BRINGING ANY EVIDENCE ON RE CORD AND WITHOUT GIVING ADEQUATE OPPORTUNITY TO THE APPELLAN T IS NOT CORRECT AND CORRESPONDING ADDITIONS ARE DELETED. A STUDY OF ACCOUNT OF HARISH KUMAR (HK) IN BOOKS OF THE APPELLANT SHOWS THAT ON FIRST DAY OF THE ACCOU NTING YEAR RS. 1L 89 196/- WAS DUE TO HK BUT CLOSING BALANCE I N THIS ACCOUNT WAS ONLY RS. 9 196/-. FROM ASSESSMENT RECOR DS OF HARISH KUMAR AVAILABLE IN THE DEPARTMENT THE ASSES SING OFFICER HOWEVER DISCOVERED THAT HK DID NOT SHOW A NY DUES FROM THE APPELLANT ON THE SAID CLOSING DATE. IN SHO RT ON THE LAT DAY OF THE ACCOUNTING PERIOD ACCORDING TO THE BOOK S OF THE APPELLANT RS. 9 196/- WAS DUE TO HK WHEREAS IN BOO KS OF HK BALANCE DUE FROM THE APPELLANT WAS NIL. IN THIS VIEW OF THINGS IN MY VIEW THERE WAS NO JUSTIFICATION TO ADD THE ENTIRE OPENING BALANCE OF RS. 1 89 196/-. AT BEST THE DIFFERENCE OF IN CLOSING BA LANCE IN BOOKS OF THE APPELLANT AND THOSE OF HK OF RS. 9 196 /- SHOULD HAVE BEEN ADDED ACCORDINGLY THE ADDITION OF RS. 9 1 96/- ONLY IS CONFIRMED. SIMILARLY IN BOOKS OF THE APPELLANT THE OPENING BALANCE IN THE ACCOUNT OF CHOPRA & CO. WAS RS. 8 22 071/- AND THE CLOSING BALANCE WAS RS. 3 58 071/-. AS AGAI NST THIS THE ASSESSMENT RECORDS OF CHOPRA & CO. FOR ASSESSME NT YEAR 07-08 DID NOT SHOWN ANY RECEIVABLE FROM THE APPELLA NT ON THE LAST DAY. WITHOUT GIVING GOODS REASONS THE ASSESSI NG OFFICER DISMISSED THE ENTRY OF RS. 4 64 000/- IN ACCOUNT OF CHOPRA & CO. DURING THE YEAR AND ADDED THE OPENING BALANCE OF RS. 18 8 22 071/- TO ASSESSED INCOME OF THE APPELLANT. IN MY CONSIDERED VIEW THE ADDITION OF ONLY THE DIFFERENC E IN CLOSING BALANCE IN BOOKS OF THE APPELLANT AND THOSE OF CHOPRA & CO. IS JUSTIFIED. ACCORDINGLY THE ADDITION OF RS . 3 58 071/- ONLY IS CONFIRMED. TO SUM UP OUT OF VARIOUS ADDITIONS ON ACCOUNT OF UNSECURED LOANS ONLY THE UN-RESOLVED DIFFERENCES O F RS.9 169/- AND RS.3 58 071/- IN ACCOUNTS OF HARISH KUMAR AND CHOPRA & CO ARE CONFIRMED AND REMAINING ADDITIO NS [ RAJENDRA KUMAR SACHER (RS.1 89 196/-) ASHWINI KUMA R (RS.99 630/-) MAHENDRA KUMAR (RS.89 196/-) AND SUN IL KUMAR (RS1 89 196/-) HARISH KUMAR (RS.1 80 000/-) AND CHOPRA & CO (RS.4 64 000/-)] ARE DELETED. GROUND 8 OF THE APPEAL IS PARTLY ACCEPTED. 4.10 WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) HAS ALL THE POWERS WHICH ARE AVAILABLE WITH THE AO. IN CASE THE AO HAS NOT GIVEN ADEQUATE OPPORTUNITY TO THE ASSESSEE THEN THE LD. CIT(A) SHO ULD HAVE DIRECTED THE AO TO PROVIDE THE OPPORTUNITY TO THE AO SO AS TO DE CIDE THE ISSUE. WE THEREFORE CONFIRM THE FINDINGS OF THE LD. CIT(A) I N RESPECT OF THE ADDITIONS CONFIRMED. HOWEVER FOR BALANCE ADDITIONS THE ISSUE IS RESTORED BACK ON THE FILE OF THE AO TO PROVIDE THE OPPORTUNI TY TO THE ASSESSEE. WE ARE NOT AWARE AS TO WHETHER THE CREDITORS ARE CASH CREDITORS OR THE TRADE CREDITORS. IN RESPECT OF TRADE CREDITORS THE ASSE SSEE WAS ABLE TO FILE THE 19 LEDGER ACCOUNT OF THE CREDITORS FOR MAKING PAYMENTS IN THE SUBSEQUENT FINANCIAL YEAR. HOWEVER IN RESPECT OF SUCH CREDIT ORS NO SUCH INFORMATION WAS MADE AVAILABLE TO THE LD. CIT(A) SO AS TO ENABL E HIM TO GET THE REPORT FROM THE AO. HENCE THE GROUND NO. 3 OF THE REVENUE IS RESTORED BACK TO THE FILE OF THE AO TO THE EXTENT OF RELIED ALLOWED BY THE LD. CIT(A). 5.1 THE FOURTH GROUND OF APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF UNSECURED LOANS OF RS. 19 82 000/- RECEIVED FROM FAMILY MEMBERS. 5.2 THE AO HELD THAT UNSECURED LOANS OF `19 82 000/ - RECEIVED FROM SIX FAMILY MEMBERS DURING THE YEAR WERE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AND THE SAID AMOUNTS WERE ADDED IN THE TOTAL INCOME OF THE OF THE ASSESSEE FROM UNDISCLOSED SOURCES A ND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE . IN THE ASSESS MENT ORDER THE AO MENTIONED THAT IN SPITE OF REPEATED REQUESTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO SUP PLY REQUIRED PARTICULARS SUCH AS PAN ASSESSING OFFICER DETAILS ADDRESS AND CONFIRMATIONS FROM THESE SIX PERSONS. THE ASSESSING OFFICER FURTHER OB SERVED THAT SIX PERSONS DID NOT EVEN RESPOND TO NOTICES U/S 131 OF THE IT A CT 1961 DATED 16.12.09 AND 17.12.09 WHICH WERE SERVED ON 18.12.0 9. 20 5.3 THE AO HAS ACCEPTED THAT THESE SIX PERSONS WERE FAMILY MEMBERS OF THE ASSESSEE AND THAT IN THE EARLIER YEARS ALSO THE ASSESSEE HAD RECEIVED UNSECURED LOANS FROM THEM. BECAUSE TILL DATE NON OF THESE PERSONS HAD SOUGHT ANY WITHDRAWAL FROM THESE ACCOUNTS. THE ASSE SSING OFFICER WAS CURIOUS AS TO HAW THESE 6 PERSONS MANAGED THEIR HOU SE HOLD EXPENSES WITHOUT ANY WITHDRAWALS FROM THE ASSESSEE. HE ALSO NOTICED THAT EVEN THOUGH THESE SIX PERSONS HAD MADE DEPOSITS BEYOND T HE MAXIMUM AMOUNT BEYOND WHICH INCOME IS CHARGEABLE TO TAX. NO RETURN S HAVE BEEN FILED BY THESE CREDITORS 5.4 THE AO NOTICED THAT DURING THE PERIOD UNDER CON SIDERATION BALANCES IN UNSECURED LOAN ACCOUNTS OF THREE PERSONS NAMELY ASWANI KUMAR MAHENDRA KUMAR AND KASHMIRI LAL CHOPRA WERE TRANSFE RRED TO THE ACCOUNTS OF BHARTI CHOPRA LALITA CHOPRA SUNITA CH OPRA AND PREM DEVI CHOPRA. FROM THIS THE AO INFERRED THAT THESE TRANS FER ENTRIES REPRESENTED UNACCOUNTED MONIES OF BHARTI CHOPRA LALITA CHOPRA SUNITA CHOPRA AND PREM DEVI CHOPRA THAT WERE LYING WITH ASWANI KUMAR MAHENDRA KUMAR AND KASHMIRI LAL CHOPRA. 5.5 IN THIS BACKDROP THE AO CONCLUDED THAT TO THE EXTENT OF RS.19 82 000/- RECEIVED FROM THESE SIX PERSONS THE APPELLANT HAD 21 INTRODUCED HIS OWN INCOME FROM UNDISCLOSED SOURCES THROUGH A CYCLE OF ENTRIES 5.6 IN THE FIRST APPEAL THE LD. CIT(A) HELD AS UND ER: THERE IS CERTAIN AMBIVALENCE IN THE INFERENCE OF T HE ASSESSING OFFICER REGARDING UNSECURED LOANS FROM TH ESE SIX PERSONS. IF THE SAID AMOUNT OF RS.19 82 000/- IS IN COME UNDISCLOSED SOURCES OF THE SIX PERSONS UNDER WHAT CIRCUMSTANCE IT WOULD BECOME INCOME UNDISCLOSED SOU RCES OF THE APPELLANT. THERE IS NO EVIDENCE TO SHOW THAT TH E INCOME FROM UNDISCLOSED SOURCES OF THE APPELLANT WAS INFAC T ROUTED INTO THE BOOKS OF THE APPELLANT IN THE NAME OF THE SIX FAMILY MEMBERS. TO SUM UP I BELIEVE IDENTITY OF SIX PERSONS FROM WHOM UNSECURED LOANS WERE RECEIVED DURING THE PERIO D UNDER CONSIDERATION IS ESTABLISHED AND THE FACT THAT LOAN S FROM ALL SIX PERSONS AMOUNTING TO RS.19 82 000/- WERE IN F ACT TRANSFER ENTRIES IN MY VIEW DEMONSTRATED GENUINEN ESS OF THE TRANSACTIONS. WHILE THERE IS NO EVIDENCE THAT UNACC OUNTED MONEY OF THE APPELLANT WAS INTRODUCED IN THE BOOKS THROUGH THE SIX PERSONS AND BY NOW APPROPRIATE ACTION OUGHT TO HAVE BEEN TAKEN IN THESE SIX CASES FOR FAILURE TO FILE R ETURNS AS DUE AND TO EXAMINE RESPECTIVE SOURCES OF FUNDS THE ADD ITION OF RS.19 82 000/-TO INCOME OF THE APPELLANT IS DELETED . GROUND 9 OF THE APPEAL IS ACCEPTED. 22 5.7 WE HAVE HEARD BOTH THE PARTIES. THE LEDGER ACCO UNTS OF THE CREDITORS ARE AVAILABLE AT PAGES 237 TO 241 OF THE PAPER BOOK . EXCEPT FOLLOWING ENTRIES THE CREDIT ENTRIES IN THE ACCOUNT OF DIFFE RENT CREDITORS HAVE BEEN PASSED THROUGH JOURNAL ENTRY WHICH MEANS THAT THESE REPRESENT THE TRANSACTION OF ENTRY FROM ONE PERSON TO ANOTHER. SO FAR AS CREDITORS ARE CONCERNED THE AMOUNT CREDITED IN THEIR ACCOUNT STA NDS EXPLAINED. THE AO HAS TO MAKE ENQUIRIES IN RESPECT OF THE CREDIT ENTR IES FROM THE ACCOUNTS OF PARTIES FROM WHOM THE AMOUNTS WERE TRANSFERRED IN T HE ACCOUNT OF THE CREDITORS. HENCE TO THE EXTENT OF JOURNAL ENTRIES THERE WAS NO CASE OF MAKING ANY ADDITION. THE ENTRIES WHICH ARE NOT JOUR NAL ENTRIES ARE AS UNDER:- NAME DATE AMOUNT 1. SMT. SUNITA CHOPRA 24-05-06 2.00 LACS 2. SMT. BHARTI CHOPA 24-05-06 2.50 LACS 3. SMT. LALITA CHOPRA 24-05-06 1.00 LAC 4. SMT. PREM DEVI CHOPRA 24-05-06 2.00 LACS 7.50 LACS THE AO IN HIS ORDER HAS MENTIONED THAT THE CREDITOR S ARE NOT FILING THE INCOME TAX RETURN THOUGH THE AMOUNT BEING CREDITED IN THE BOOKS OF THE ASSESSEE EXCEEDS MAXIMUM LIMIT CHARGEABLE TO INCOME TAX. THE ONUS IS ON THE ASSESSEE TO ESTABLISH THE CREDITWORTHINESS OF T HE CREDITORS . THE CREDITORS ARE NOT TRADE CREDITORS AS THE ADDITION C ANNOT BE MADE AFTER 23 REJECTING THE BOOKS OF ACCOUNTS. THE HON'BLE JURISD ICTIONAL HIGH COURT IN THE CASE OF RAJENDRA PRASAD SUBHASH CHAND VS. UNION OF INDIA & ORS. 237 CTR 382 HAS HELD THAT SECTION 69 69A 69B AND 89C CAN BE APPLIED EVEN IF BEST JUDGEMENT ASSESSMENT IS MADE. THE HON' BLE JURISDICTIONAL HIGH COURT IN THE CIT VS. GK CONTRACTOR 19 DTR 305 HELD THAT NO ADDITION CAN BE MADE IN RESPECT OF THE CREDITS U/S 68 OF THE BOOKS OF ACCOUNTS ARE REJECTED BUT IN THAT CASE THE CASE TH E CREDITORS WERE TRADE CREDITORS. IT MEANS HAT ADDITION U/S 68 OF THE ACT CAN BE MADE EVEN IF THE BOOKS OF ACCOUNTS ARE REJECTED. THE JOURNAL ENTRIES IN THE ACCOUNT OF THE ABOVE CREDITORS ARE FROM THE ACCOUNT OF SHRI KASHMI RI LAL CHOPRA MAHENDRA KUMAR AND AHSWANI KUMAR. NO FRESH CREDITS ARE IN THESE ACCOUNTS AND HENCE TRANSFER ENTRIES ARE FROM THE OP ENING BALANCE. HENCE THE AMOUNTS CREDITED THROUGH JOURNAL ENTRIES ARE FR OM OPENING BALANCE AND HENCE NO ADDITION CAN BE MADE IN THIS YEAR U/S 68 OF THE ACT. HENCE ADDITION TO THE EXTENT OF RS. 7.50 LACS IS CONFIRME D AS THE ASSESSEE HAS FAILED TO EXPLAIN SATISFACTORILY THE CREDITWORTHINE SS OF SUCH CREDITORS. 24 4. IN THE RESULT THE APPEAL OF THE REVENUE IS PART LY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04-11 -2011. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 04 /11/2011 *MISHRA COPY FORWARDED TO :- 1. THE ACIT CIRCLE- 1 KOTA 2. SHRI RAJENDRA KUMAR CHOPRA JHALAWAR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5. THE LD.DR 6. THE GUARD FILE (ITA NO.1115/JP /10) A.R ITAT JAIPUR