M/s. Suyog Sales & Marketing, Mehsana v. The Income tax Officer, Ward-2,, Mehsana

ITA 1401/AHD/2008 | 2005-2006
Pronouncement Date: 24-09-2010 | Result: Partly Allowed

Appeal Details

RSA Number 140120514 RSA 2008
Assessee PAN AAMFS5867N
Bench Ahmedabad
Appeal Number ITA 1401/AHD/2008
Duration Of Justice 2 year(s) 5 month(s) 2 day(s)
Appellant M/s. Suyog Sales & Marketing, Mehsana
Respondent The Income tax Officer, Ward-2,, Mehsana
Appeal Type Income Tax Appeal
Pronouncement Date 24-09-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 24-09-2010
Date Of Final Hearing 09-08-2010
Next Hearing Date 09-08-2010
Assessment Year 2005-2006
Appeal Filed On 22-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABA D (BEFORE HON'BLE SHRI T.K. SHARMA J.M. & HONBLE S HRI A.N. PAHUJA A.M.) I.T.A. NO. 1401/AHD./2008 ASSESSMENT YEAR : 2005-2006 M/S. SUYOG SALES & MARKETING -VS.- INCOME TAX OFFICER WARD-2 MEHSANA MEHSANA (PAN : AAMFS 5867 N) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.C. SHAH RESPONDENT BY : SHRI BHUVNESH KUISHRESTH A D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 14.02.2008 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GANDHINAGAR F OR THE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A FIRM. FOR THE ASSESSMENT YEAR UNDER APPEAL IT FILED THE RETURN OF INCOME DECLARING TOT AL INCOME OF RS.77 180/-. THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 29.10 .2007 AT TOTAL INCOME OF RS.24 05 505/-. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DISALLO WED THE INTEREST OF RS.6 42 842/- PERTAINING TO DEBIT BALANCE OF PARTNERS IN THEIR CAPITAL A/CS. F URTHER THE ASSESSING OFFICER DISALLOWED THE INTEREST AMOUNTING TO RS.15 06 779/-UNDER SECTION 3 6(1)(III) OF THE ACT. WHILE MAKING THIS DISALLOWANCE THE ASSESSING OFFICER OBSERVED THAT T HE ASSESSEE HAS NOT DEBITED THE INTEREST OF RS.34 00 961/- PAYABLE TO THE BANK FOR THE REASONS BEST KNOWN TO IT. HOWEVER IN A LATER STAGE IF THE ASSESSEE PUTS UP A CLAIM FOR SUCH INTEREST PAYM ENT THE SAME WILL NOT BE ALLOWABLE TO THE EXTENT OF DISALLOWABLE WORKED OUT ABOVE I.E. RS.18 94 182/- [RS.34 00 961 MINUS RS.15 06 779]. FURTHER THE ASSESSING OFFICER DISALLOWED BAD DEBTS OF RS.6 121/- AND REJECTED THE BOOKS OF ACCOUNTS UNDER SECTION 145 OF THE INCOME TAX ACT AN D MADE THE ADDITION OF RS.1 58 941/-. 3. ON APPEAL IN THE IMPUGNED ORDER THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION OF RS.6 42 842/- ON THE GROUND THAT RELEVANT CLAUSE OF PARTNERSHIP DEED PROVIDES ALLOWANCE OF INTEREST TO THE PARTNERS FROM THE INCOME OF THE FIRM. WHEN IT IS ALLOWABLE PER SE THE MATTER IS SUBJECT OF DEBATE BECAUSE THE RE DOES NOT EXIST ANY CORRESPONDING PROVISION IN 2 ITA NO. 1401/AHD/2008 THE ACT TO BRING AMBIT OF SUCH NOTIONAL INCOME. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALSO CONFIRMED THE DISALLOWANCE OF INT EREST TO THE EXTENT OF RS.15 00 000/- OUT OF TOTAL DISALLOWANCE OF RS.15 06 779/-. THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS CONTAINED IN PARA 3.4 WHICH IS AS UNDER :- 3.4. THE MATTER HAS BEEN GIVEN DUE CONSIDERATION. AS FAR AS THE ISSUE OF THE ASSEESEE'S ACCOUNT WITH MEHSANA URBAN CO-OPERATIVE BANK LID TERMING NPA IS CONCERNED ASSESSING OFFICER HAS CONSIDERED THE SAM E WHILE ANALYZING THE SITUATION AND IN FACT HAS THE INTEREST OF RS.34 0 0 96L/- FROM THE AMBIT OF DISALLOWANCE ON THE GROUND THAT THE SAME HAS NOT BE EN CHARGED BY THE BANK. HOWEVER IT NEEDS TO BE SEEN THAT THIS INTEREST IS NOT A CONTINGENT LIABILITY BUT IS ONLY AN ACCOUNTING TREATMENT IN THE BANKS BOOKS. TH E TREATMENT THAT THE BANK GIVES TO THE ASSESSEES LOAN CANNOT CHANGE THE BASI C CHARACTER OF THE FUNDS I.E. THESE WERE INTEREST BEARING FUNDS SIMILARLY THE AR GUMENT THAT THE ASSESSEE HAD CREDITORS TO THE TUNE OF RS. 1 44 90 821/- WOULD AL SO NOT BE OF MUCH CONSEQUENCE IN THE CONTEXT BECAUSE THE BALANCE SHEET SHOWS DEBT ORS OF RS.25 57 745/- AND THE PARTNERS' DEBIT BALANCE OF RS.35 65 788/-. THE FACT UAL SITUATION AS EMERGING IS THAT THE APPELLANT HAS HARDLY ANY FUNDS OF ITS OWN. IT I S PAYING INTEREST ON CERTAIN FUNDS OBTAINED FROM BANK AND CERTAIN FUNDS OBTAINED FROM PRIVATE PARTIES. IT HAS ALSO BORROWED FUNDS FROM THE BANKS ON WHICH BY ITS CONTR ACTUAL OBLIGATION IT IS LIABLE TO PAY INTEREST NOTWITHSTANDING WHETHER THE ASSESSE E HAS ACCOUNTED FOR INTEREST IN ITS BOOKS OF ACCOUNTS OR WHETHER THE BANK HAS TREAT ED IT AS NPA OR OTHERWISE. THE APPELLANT'S ASSERTION THAT THE INTEREST OF RS 6 18 399/- PAID ON LOAN AGAINST BOOK DEBTS CANNOT BE CONSIDERED FOR THE PURPOSE DOES NO T APPEARS TO BE CORRECT BECAUSE ALTHOUGH THE LOAN HAS BEEN TAKEN AGAINST BO OK DEBTS THE SAME GETS MERGED IN THE OVERALL CASH FLOW OF THE COMPANY AND SUCH FUNDS CAN BE UTILIZED IN THE MANNER THE APPELLANT WISHES TO DO. ALTHOUGH TH E BORROWED FUNDS AND THE TRADE FUNDS HAVE MERGED IT CANNOT BE STATED THAT T HE ASSESSEE HAS HAD IN ITS POSSESSION INTEREST-FREE FUNDS WHICH COULD HAVE BEE N ADVANCED AS INTEREST-FREE FUNDS. AS PER THE DETAILS PROVIDED BY THE APPELLANT OUT OF A TOTAL ADVANCES OF RS.4 49 30 249/- A SUM OF RS. 1 00 99 174/- ARE TH E SUCH CLEAR ADVANCES ON WHICH NO INTEREST HAS BEEN CHARGED. FROM THE DETAILS OF B ALANCE SHEET FURNISHED BEFORE ME THIS APPEARS TO BE CORRECT AS PER THE INFORMATIO N IN ITS SCHEDULE-8. THEREFORE THE ACTION OF DISALLOWANCE WILL HAVE TO BE RESTRICT ED UPTO THIS AMOUNT. THE ASSESSING OFFICER HAS WORKED OUT THE DISALLOWANCE @ 15%. ON THIS AMOUNT THE DISALLOWANCES WILL THEREFORE COME TO RS.15 00 000 /- AND THEREFORE THE APPELLANT WILL GET THE RELIEF OF RS.6 779/-. 4. IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALSO RESTRICTED THE ADDITION OF RS.1 00 000/- MADE BY TH E ASSESSING OFFICER BY ESTIMATING THE GROSS PROFIT AFTER REJECTING THE BOOKS OF ACCOUNTS TO RS. 50 000/-. THE REASONING GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOR RESTRICTING THE SAID ADDITION TO RS.50 000/- IS CONTAINED IN PARA 5.3 WHICH READS AS UNDER :- 5.3. THE MATER HAS BEEN GIVEN DUE CONSIDERATION. THERE COULD BE NO DOUBT THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCO UNTS OF THE SUPPORTING 3 ITA NO. 1401/AHD/2008 DOCUMENTS TO SUPPORT THE RESULTS WHEN SPECIFICALLY ASKED BY THE ASSESSING OFFICER TO DO SO. PRODUCING THE SAME BEFORE ME WILL NOT BE ADMISSIBLE AT THIS STAGE BEING A NEW EVIDENCE AND THERE BEING NO REAS ONS FOR NOT BEING ABLE TO PRODUCE TO THE ASSESSING OFFICER. I DO NOT CONSIDE R THE DISPUTE BETWEEN THE PARTNERS AS ANY HINDERING FACTOR BECAUSE THE BUSINE SS WAS RUNNING AND THE PARTY WAS ATTENDING THE ASSESSMENT PROCEEDINGS. THEREFORE THE ASSESSING OFFICER WAS WELL JUSTIFIED IN REJECTING THE BOOKS O F ACCOUNTS. HOWEVER HAVING DONE SO THE ISSUE OF ESTIMATION DOES CROP UP. NORM ALLY GROSS PROFIT RATE IS A GOOD INDICATOR OF THE RESULT DECLARED WHICH INCIDEN TALLY IN THIS CASE IS HIGHER THAN THE PRECEDING YEAR. FURTHER THE APPLICATION O F GROSS PROFIT RATE @ 15% BY THE ASSESSING OFFICER IS NOT SUPPORTED BY ANY COMPA RATIVE CASES OR ANY SPECIFIC DEFECTS OTHERWISE FOUND FROM THE BOOKS OF ACCOUNTS. SINCE HIS ESTIMATION IS PRIMARILY BASED ON THE APPREHENSION OF LEAKAGE AND IMPROPER VALUATION I THINK THE ENDS OF THE JUSTICE CAN BE MET IF THE ADDITION IS RESTRICTED TO RS.50 000/-. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS :- 1. THE LD. CIT(A.) ERRED IN CONFIRMING THE INTEREST OF RS.15 00 000/- OUT OF TOTAL INTEREST PAID OF RS.15 06 779/- IN AS MUCH AS THE BORROWING HAS NOT BEEN UTILIZED IN GIVING THE INTEREST FREE A DVANCES DURING THE YEAR. 1.1.THE APPELLANT SAYS AND SUBMITS THAT THERE IS A DISCREPANCY IN BANK STATEMENT SUPPLIED BY THE BANK TO THE DEPARTMENT AN D TO THE ASSESSEE BUT IN ANY CASE THE INTEREST IS NOT CLAIMED AS DEDU CTION BY THE ASSESSEE. 1.2. THE APPELLANT SAYS AND SUBMITS THAT THE INTERE ST PAID TO THE BANK ACCOUNT NO. 25/65 IS FOR THE BORROWINGS MADE AGAINS T THE BOOK DEBTS MEANING BY THE FUNDS HAS NOT BEEN UTILIZED IN GIVIN G INTEREST FREE ADVANCES. 1.3.THE INTEREST PAID ON OTHER UNSECURED LOAN IS SE T OFF AGAINST THE INTEREST RECEIVED FROM OTHERS. 1.4. THE APPELLANT SAYS AND SUBMITS THAT EVEN IF IT IS PRESUMED THAT THERE IS A INTEREST FREE ADVANCE OF RS.1.00 CRORE T HERE A INTEREST FREE CREDITORS OF RS.1.19 CRORE AND THAT THE LEARNE D A.O. HAS ALREADY GIVEN A CREDIT OF THAT AMOUNT WHILE DISALLO WING THE INTEREST. THEREFORE IF THE CREDIT IS GIVEN AGAINST INTEREST FREE ADVANCE OF RS.1.00 CRORE NOTHING IS LEFT AND THEREF ORE THE QUESTION OF DISALLOWING ANY INTEREST DOES NOT ARISE. 1.5.THE APPELLANT SAYS AND SUBMITS THAT AFTER TAKIN G INTO ACCOUNT THE TOTALITY OF CIRCUMSTANCES THE QUESTION OF DISALLOWI NG INTEREST DOES NOT ARISE AT ALL. 2.THE LEARNED CIT(A.) HAS ERRED IN CONFIRMING DISAL LOWANCE OF RS.50 000/- ON ACCOUNT OF NOT FURNISHING THE QUANTI TY DETAILS IN AS 4 ITA NO. 1401/AHD/2008 MUCH AS THE GP DISCLOSED IN THE CURRENT YEAR IS BET TER THAN THAT OF PREVIOUS YEAR AND THEREFORE THE DISALLOWANCE CONFI RMED IS NOT PROPER. 5. AT THE TIME OF HEARING BEFORE US ON BEHALF OF A SSESSEE SHRI A.C. SHAH LD. COUNSEL APPEARED AND STATED THAT IN THE ASSESSMENT ORDER T HE ASSESSING OFFICER WORKED OUT THE DISALLOWANCE AT RS.38 76 852/- AS UNDER:- ADVANCES AS PER PARA 4.3 OF ASST. ORDER RS.4 49 30 249/- LESS : INTEREST BEARING LOANS RS. 71 49 063/- RS.3 77 81 186/- LESS : INTEREST FREE FUNDS :- SUNDRY CREDITORS RS.1 44 90 821/- LESS : SUNDRY DEBTORS - RS. 25 55 745/- RS.1 19 35 507/- RS.2 58 45 679/- INTEREST OF RS.38 76 852/- @ 15% DISALLOWABLE HOWEVER SINCE THE INTEREST OF RS.15 06 789/- IS DE BITED TO PROFIT & LOSS A/C. THE ASSESSING OFFICER RESTRICTED THE DISALLOWANCE TO RS.15 06 789 /-. 6. IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT INTEREST CANNOT BE CHARGED FOR ADVANCES FOR GOODS AND ADVANCE FOR OFFICE. THE BREAK-UP OF ADVANCES IS AS UNDER :- ADVANCES FOR GOODS RS.3 08 66 211/- ADVANCE FOR OFFICE M/S. DESAI & PATEL DEVL. RS. 1 31 733/- RS.3 09 97 944/- VINAY N. PATEL (INTEREST FREE) RS.75 04 462/- BABUBHAI P. PATEL RS.25 94 712/- RS.1 00 99 174/- RS.4 10 97 118/- THE LD. COUNSEL OF THE ASSESSEE EXPLAINED THAT IN T HE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CALCULATED THE INTEREST @ 15 % ON INTEREST-FREE ADVANCE OF RS.1 CRORE AND THEREFORE THE DISALLOWANCE OF INTEREST TO THE EXTENT OF RS.15 00 000/- IS CONFIRMED AND BALANCE AMOUNT OF RS.6 789/- IS DELETED. HE ALSO PO INTED OUT THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN NOT GIVING THE CREDIT OF INTEREST-FREE FUNDS OF RS.1 19 35 507/- WHICH WAS GIVEN BY THE ASSESSING OFFICER. IF SUCH C REDIT IS GIVEN THEN INTEREST-FREE FUNDS IS UTILIZED IN GIVING INTEREST-FREE ADVANCE. THEREFORE THE QUESTION OF DISALLOWING ANY INTEREST DOES 5 ITA NO. 1401/AHD/2008 NOT ARISE IN VIEW OF THE HON'BLE SUPREME COURT JUDG MENT IN THE CASE OF MUNJAL SALES CORPORATION VS.- CIT REPORTED IN 298 ITR 298. THE LD. COUNSEL OF THE ASSESSEE FURTHER CONTENDED T HAT THE INTEREST FREE ADVANCE WAS GIVEN IN EARLIER YEARS AND NOT DURING THE ASSESSMENT YEAR UN DER APPEAL AND THE INTEREST PAID AMOUNTING TO RS.6 18 399/- TO MEHSANA URBAN BANK ON BOOK DEBIT L IMIT. THE CLOSING BALANCE OF THAT ACCOUNT IS RS.20 55 833/- AS AGAINST OPENING BALANCE OF RS.20 59 047/-. THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT SINCE THE ACCOUNT IS AGAINST BOOK DEBTS THEREFORE THE LOAN CANNOT BE UTILIZED IN GIVING INTEREST FREE ADVANCE AND IT WAS UTILIZED ON LY FOR BOOK DEBTS. HE ALSO CONTENDED THAT THE ASSESSEE HAS RECOVERED THE INTEREST OF RS.8 89 849/ - AS AGAINST THAT INTEREST PAID RS.8 88 380/- AND THEREFORE THE INTEREST RECEIVED AND PAID WAS PRACTICALLY SET OFF AND THEREFORE THE QUESTION OF DISALLOWANCE DOES NOT ARISE. HE FURTHER CONTENDE D THAT THE INTEREST OF RS.6 18 399/- PAID TO MEHSANA URBAN BANK WAS FOR THE PURPOSE OF BOOK DEBT S AND THAT THE BORROWING WAS ONLY FOR THE PURPOSE OF BOOK DEBT AND ONLY FOR THE PURPOSE OF BU SINESS AS COULD BE SEEN FROM THE TURNOVER OF RS.1.20 CRORES DURING THE YEAR UNDER APPEAL THEREF ORE NO PORTION THEREOF COULD BE DISALLOWED. 7. ON THE OTHER HAND SHRI BHUVNESH KUISHRESTHA LD . D.R. APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF LEARNED C OMMISSIONER OF INCOME TAX(APPEALS). HE POINTED OUT THAT IN PARA 3.4 OF THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS CATEGORICALLY MENTIONED THAT THE A SSESSEE HAS HARDLY ANY FUND OF ITS OWN. SINCE THE ASSESSEE WAS NOT HAVING ANY INTEREST-FREE FUNDS WHICH COULD HAVE BEEN ADVANCED AS INTEREST- FREE FUNDS THE DISALLOWANCE TO THE EXTENT OF RS.15 00 000/- WAS RIGHTLY CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THE LD. D.R. THEREFORE CONTENDED THAT THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 8. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE LEARNED COM MISSIONER OF INCOME TAX(APPEALS) AFTER EXAMINING THE BALANCE-SHEET HAS MENTIONED THAT THE ASSESSEE HAD HARDLY ANY FUNDS OF ITS OWN. AS AGAINST THIS THE MAIN CONTENTION OF THE ASSESSEES LD. COUNSEL IS THAT IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS HIMSELF ALLOWED THE BENEFIT O F RS.1 19 35 507/-. IN OUR OPINION THIS CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED BECAU SE IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS WORKED OUT THE TOTAL DISALLOWANCE OF IN TEREST AT RS.38 76 852/-. HOWEVER THE ACTUAL 6 ITA NO. 1401/AHD/2008 DISALLOWANCE WAS RESTRICTED TO RS.15 06 779/-. HON' BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS.- RELIANCE UTILITY & POWER LIMITED [2009] 314 IT R 340 (BOM.) HELD THAT IF THERE WAS FUNDS AVAILABLE FOR INTER-FREE AND OVERDRAFT AND/OR LOANS TAKEN THEN A PRESUMPTION WOULD ARISE THAT INVESTMENT WOULD BE OUT OF INTEREST-FREE FUNDS GENE RATED OR AVAILABLE WITH THE COMPANY IF THE INTEREST-FREE FUNDS WERE SUFFICIENT TO MEET THE INV ESTMENT. KEEPING IN VIEW THE FINDING OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THAT TH ERE IS HARDLY ANY INTEREST-FREE FUNDS AVAILABLE WE SET ASIDE THE ORDER OF LEARNED COMMIS SIONER OF INCOME TAX(APPEALS) AND RESTORE THIS MATTER TO THE FILE OF ASSESSING OFFICER WITH T HE DIRECTION THAT THE ASSESSEE SHALL FURNISH DETAIL S OF ALL THE INTEREST-FREE FUNDS AVAILABLE WHEN THE I NVESTMENT OF ALLEGED RS.1 CRORE WAS MADE. THE ASSESSING OFFICER WILL VERIFY THE SAME AND RE-ADJUD ICATE THE DISALLOWANCE TO THE EXTENT OF RS.15 00 000/- AFRESH AFTER GIVING OPPORTUNITY OF B EING HEARD TO THE ASSESSEE. 9. WITH REGARD TO THE GROUND NO. 2 OF THIS APPEAL THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THE PERCENTAGE OF GROSS PROFIT DISCLOSED IN THE PRE CEDING YEARS WHICH IS AS UNDER :- AY 2002-03 11.40% AY 2003-04 4.03% AY 2004-05 3.00% [LOSS] AY 2005-06 13.68% 9.1. THE LD. COUNSEL OF THE ASSESSEE POINTED OUT TH AT THE GROSS PROFIT DISCLOSED DURING THE ASSESSMENT YEAR UNDER APPEAL IS BETTER THAN THAT OF EARLIER YEARS. IN SUPPORT OF THIS THE LD. COUNSEL OF THE ASSESSEE FURNISHED THE QUANTITATIVE DETAILS AND CONTENDED THAT THE SAME COULD NOT BE FURNISHED AT THE TIME OF ASSESSMENT BECAUSE OF NON- AVAILABILITY OF COMPETENT STAFF. THE FIRM IS PASSING THROUGH SEVERE FINANCIAL CRISIS AND SINCE T HE GROSS PROFIT IS BETTER THAN THAT OF EARLIER YEARS THEREFORE THE ADDITION OF RS.50 000/- RETAI NED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE DELETED. 10. ON THE OTHER HAND THE LD. D.R. APPEARING ON BE HALF OF THE REVENUE SUPPORTED THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). HE POI NTED OUT THAT FRESH EVIDENCE CANNOT BE ACCEPTED AT THIS STAGE. HE FURTHER POINTED OUT THAT BOOKS OF ACCOUNTS WERE NEITHER PRODUCED BEFORE THE ASSESSING OFFICER NOR THE ASSESSEE HAS F URNISHED THE QUANTITATIVE DETAILS. THEREFORE 7 ITA NO. 1401/AHD/2008 THE ADDITION TO THE EXTENT OF RS.50 000/- SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 11. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT IN THE ASSESSME NT ORDER THE ASSESSING OFFICER MENTIONED THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS TO SUPPORT THE TRADING RESULT. THESE ARE PRODUCED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) TOO K THE VIEW THAT BOOKS OF ACCOUNTS BEING NEW EVIDENCE CANNOT BE PRODUCED BEFORE HIM. IT IS A N WELL SETTLED LAW THAT POWER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS CO-TERMINUS WITH THAT OF ASSESSING OFFICER AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS.- KANPUR COAL SYNDICATE REPORTED IN 56 ITR 356 (SC). AS A MATTER OF FACT RULE 46A STATUTORILY RECOGNIZES THE ADMISSIBILITY OF ADDITIONAL EVIDENCES SUBJECT TO CERTAIN CONDITIONS. IT APPEARS THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE IN PRODUCING BOOKS OF ACCOUNTS BEFORE THE ASS ESSING OFFICER. WE THEREFORE RESTORE THE CONTROVERSY INVOLVED IN THIS GROUND OF APPEAL TO TH E FILE OF ASSESSING OFFICER WITH THE DIRECTION THAT THE ASSESSEE SHOULD PRODUCE BOOKS OF ACCOUNTS BEFORE HIM. THE ASSESSING OFFICER WILL EXAMINE THE SAME AND AFTER VERIFICATION OF BOOKS OF ACCOUNTS AND QUANTITATIVE DETAILS WHICH ARE FURNISHED FOR THE FIRST TIME BEFORE US THE ASSESSI NG OFFICER WILL RE-DECIDE THE ISSUE INVOLVED IN THIS GROUND OF APPEAL. 12. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 24.09.201 0 SD/- SD/- (A.N. PAHUJA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24/ 09 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A.) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGIS TRAR ITAT AHMEDABAD LAHA/SR.P.S.