ACIT, Alwar v. DHARMENDRA PANDEY, Jaipur

ITA 1452/JPR/2010 | 2007-2008
Pronouncement Date: 28-07-2011 | Result: Dismissed

Appeal Details

RSA Number 145223114 RSA 2010
Assessee PAN AGIPM0171E
Bench Jaipur
Appeal Number ITA 1452/JPR/2010
Duration Of Justice 6 month(s) 30 day(s)
Appellant ACIT, Alwar
Respondent DHARMENDRA PANDEY, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 28-07-2011
Assessment Year 2007-2008
Appeal Filed On 29-12-2010
Judgment Text
1 ITA 1452(2)-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 1452 & 1453/JP/2010 ASSTT. YEAR : 2007-08 & 08-09. THE ACIT CENTRAL CIRCLE VS. SHRI DHARMENDRA PAN DEY ALWAR. 1996-A-1 KHEJRO KA RASTA CHANDPOLE BAZAR JAIPUR. (APPELLANT) (RESPONDENT) C.O. NOS. 46 & 47/JP/2011 ( ARISING OUT OF ITA NOS. 1452 & 1453/JP/2010 ) ASSTT. YEARS : 2007-08 & 2008-09. SHRI DHARMENDRA PANDEY VS. THE ACIT CENTRAL CI RCLE JAIPUR. ALWAR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHARI & SHRI SUBHA SH CHANDRA RESPONDENT BY : SHRI S.L. PODDAR. ORDER DATE OF ORDER : 28/07/2011. PER R.K. GUPTA J.M. THESE ARE TWO APPEALS BY DEPARTMENT AND CROSS OBJE CTIONS BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEARS 2 007-08 AND 08-09. 2. SIMILAR ISSUES ARE INVOLVED IN BOTH THE APPEALS THEREFORE THEY ARE DISPOSED OFF TOGETHER. 3. THE LD. D/R HAS PLACED RELIANCE ON THE ORDER OF THE AO FOR BOTH THE YEARS. 4. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE P LACED RELIANCE ON THE ORDER OF LD. CIT (A) TO THE EXTENT TO WHICH THE ADDITIONS ARE DE LETED. HE FURTHER PLACED RELIANCE ON 2 THE WRITTEN SUBMISSIONS FILED DURING THE COURSE OF HEARING OF THE APPEALS FOR BOTH THE YEARS. 5. NOW THE APPEALS OF THE DEPARTMENT AND CROSS OBJE CTIONS OF THE ASSESSEE ARE BEING DISPOSED OFF IN THE FOLLOWING MANNER. 6. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S ART AVENUE 1996-A-1 KHEJRON KA RASTA CHANDPOLE BAZAR JAIPUR. THE ASSE SSEE IS ENGAGED IN THE BUSINESS OF MAKING OF MARBLE IDOLS AND STATUES. RETURN WAS FILE D ON 06.03.2009 DECLARING TOTAL INCOME AT RS. 7 81 640/-. THE LEARNED ASSESSING OFF ICER HAS COMPLETED THE ASSESSMENT U/S 144 R.W.S. 153A OF THE INCOME TAX ACT 1961 DET ERMINING TOTAL INCOME AT ` 35 38 003/- INTER-ALIA MAKING THE FOLLOWING ADDITIO NS/DISALLOWANCES (I) DISALLOWANCE ON ACCOUNT OF TRADING EXPENSES 84209 (II) DISALLOWANCE OF EXPENSES FROM PROFIT AND LOSS ACCOU NT 102610 (III) DISALLOWANCE OF DEDUCTION U/S 24(B) 83289 (IV) ADDITION ON ACCOUNT OF UNSECURED LOAN AND SUNDRY CR EDITORS TREATED AS UNEXPLAINED 630250 (V) DISALLOWANCE OF DEDUCTION U/S 80C 100000 (VI) ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HO USE AND FURNITURE 1756005 AGGRIEVED WITH THE ORDER OF THE LEARNED AO THE ASSE SSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) WHO HAS SUSTAINED THE FOLLOWING ADDI TIONS (I) DISALLOWANCE OF EXPENSES FROM PROFIT AND LOSS ACCOU NT 50000 (II) ADDITION ON ACCOUNT OF UNSECURED LOAN AND SUNDRY CR EDITORS TREATED AS UNEXPLAINED 88000 (III) ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HO USE ON FURNITURE 56005 AGGRIEVED WITH THE ORDER OF THE LEARNED CIT (A) THE REVENUE HAS PREFERRED APPEAL BEFORE THE HONBLE ITAT AS WELL AS THE ASSESSEE HAS ALSO F ILED CROSS OBJECTIONS. 3 7. FOR ASSESSMENT YEAR 2007-08 IN APPEAL OF THE DEP ARTMENT GROUND NOS. 1 TO 3 RELATE TO ADMITTING ADDITIONAL EVIDENCES BY THE LD. CIT (A ). 8. ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECT ION 144 READ WITH SECTION 153 OF THE ACT. NO DETAILS COULD BE FILED BEFORE AO AS AS SESSEE WAS SERIOUSLY ILL AND IN ABSENCE OF VARIOUS DETAILS THE AO PASSED ASSESSMENT ORDER UNDER SECTION 144/153A AND MADE CERTAIN ADDITIONS. THEREAFTER BEFORE LD. CIT (A) VARIOUS DETAILS WHICH COULD NOT BE FILED BEFORE THE AO WERE FILED. ALL THOSE DETAILS GO TO THE ROOT OF THE CASE. THE ADDITIONAL EVIDENCE FILED BEFORE LD. CIT (A) ALONG WITH APPLIC ATION UNDER RULE 46A WERE SENT TO THE AO FOR GRANTING HIM OPPORTUNITY AND TAKING HIS OBJE CTION IN RESPECT TO ADMITTING THE ADDITIONAL EVIDENCE. THE AO OBJECTED FOR ADMISSION OF ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AND STATED THAT ASSESSEE WAS ALLOWED FULL OPPORTUNITY TO PREPARE HIS CASE BUT HAS NOT AVAILED THE OPPORTUNITIES PROVIDED TO HIM. THER EAFTER THE LD. CIT (A) SUPPLIED COPY OF OBJECTION SENT BY THE AO TO THE ASSESSEE FOR HIS RE PLY. A DETAILED REPLY WAS FILED BEFORE LD. CIT (A) IN RESPECT TO THE OBJECTION RAISED BY T HE AO. THE CHART INDICATING ILLNESS OF THE ASSESSEE WAS FILED ALONG WITH MEDICAL CERTIFICA TE. AFTER CONSIDERING THE DETAILS AND MEDICAL CERTIFICATE ISSUED BY FORTIS ESCORTS HOSPIT AL THE LD. CIT (A) HELD THAT THERE WAS A REASONABLE CAUSE IN NOT FILING THE DETAILS BEFORE T HE AO. ACCORDINGLY THE ADDITIONAL EVIDENCE FILED BEFORE HIM WERE ADMITTED BY LD. CIT (A) AS THESE DETAILS GOES TO THE ROOT OF THE CASE. WHILE ADMITTING ADDITIONAL EVIDENCE THE LD. CIT (A) HAS MENTIONED THAT AO WAS GIVEN OPPORTUNITY TO COMMENT ON MERITS ON THE C ASE ALSO WHICH HE HAS ALREADY GIVEN. 9. AFTER CONSIDERING THE ORDER OF LD. CIT (A) IN RE SPECT TO ADMITTING ADDITIONAL EVIDENCE WE FIND NO UNREASONABLENESS OR INFIRMITY I N THE ORDER OF LD. CIT (A) WHO ADMITTED THE ADDITIONAL EVIDENCE. THE ADDITIONAL E VIDENCES FILED BEFORE HIM GOES TO THE 4 ROOT OF THE CASE AND THERE WAS A REASONABLE CAUSE I N NOT FILING THE DETAILS BEFORE AO AS THE ASSESSEE WAS SERIOUSLY ILL. EVEN AND OTHERWISE IF ANY DETAIL COULD NOT BE FILED BEFORE THE AO AND SAME HAS BEEN FILED BEFORE LD. CIT (A) THE SAME SHOULD BE ADMITTED AS HELD BY VARIOUS HIGH COURTS AS WELL AS APEX COURT. THE LD. CIT (A) HAS CO-TERMINOUS POWER AS HE IS EMPOWERED FOR ENHANCEMENT ALSO. THEREFORE I N OUR VIEW THE LD. CIT (A) WAS CORRECT IN ADMITTING THE ADDITIONAL EVIDENCE. THE AO WAS ALLOWED AMPLE OPPORTUNITY IN RESPECT TO ADMITTING THE ADDITIONAL EVIDENCES AND T O COMMENT ON MERIT ALSO AND HE HAS SENT HIS COMMENTS BEFORE LD. CIT (A) WHICH WERE TAK EN INTO CONSIDERATION. IN VIEW OF THESE FACTS AND CIRCUMSTANCES THE GROUNDS OF THE D EPARTMENT AGAINST ADMITTING ADDITIONAL EVIDENCE ARE REJECTED. 10. NEXT ISSUE RELATES TO DELETING THE ADDITION OF RS. 17 00 000/- MADE BY AO ON ACCOUNT OF UNVERIFIABLE EXPENSES AS NO DETAILS WERE FURNISHED BEFORE THE AO. 11. THE ASSESSEE THROUGH GROUND NO. 4 OF HIS CROSS OBJECTION HAS CHALLENGED THE CONFIRMATION OF ADDITION OF RS. 56 005/- OUT OF TOT AL ADDITION OF RS. 17 56 005/- ON ACCOUNT OF EXPENDITURE. 12. SINCE BOTH THESE GROUNDS ARE CO-RELATED THEREF ORE THEY ARE DISPOSED OFF TOGETHER. 13. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. ART AVENUE WHICH IS ENGAGED IN THE BUSINESS OF STATUES OF MARBLE STONE. A SEAR CH OPERATION WAS CONDUCTED ON 10.01.2008 IN PANDEY AND SHARMA GROUP. THE CASE OF THE ASSESSEE WAS ALSO TAKEN UP FOR SCRUTINY IN VIEW OF PROVISIONS OF SECTION 153A OF T HE ACT. DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAS PURCH ASED A FLAT FROM M/S. PARADISE BUILDERS FOR RS. 17 00 000/- AND HAS ALSO PURCHASED FURNITURE WORTH RS. 56 005/-. THE ASSESSEE WAS REQUIRED TO FILE COPY OF DEED OF PROPE RTY AND RECEIPT FOR FURNITURE PURCHASED 5 DURING THE YEAR. THE ASSESSEE FAILED TO FILE ANY P ROOF OF PAYMENT MADE FOR PURCHASE OF PROPERTY OR FURNITURE HENCE THE AMOUNT OF RS. 17 5 6 005/- CLAIMED TO BE INVESTED IN HIS BOOKS OF ACCOUNT FOR WHICH NO SATISFACTORY EXPLANAT ION AS PER AO WAS PROVIDED. THEREFORE THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT THIS IS IN RELATION TO ADDITION OF RS. 17 56 005/- FOR PURCHASES OF HOUSE. IN THIS REGARD HE HAS ALREADY SUBMITTED THAT THE ASSES SEE HAS OBTAINED LOAN FROM IDBI BANK. THE LOAN WAS DISBURSED BY IDBI BANK AS UNDER RS. 11 62 000/- ON 23.05.2006 RS. 2 38 000/- ON 26.02.2007 RS. 1 00 000/- ON 26.02.2007 RS. 15 00 000/- TOTAL 14. REGARDING REMAINING PAYMENT THERE IS OPENING BA LANCE OF RS. 9 00 000/- IN THE ACCOUNT OF PARADISE BUILDERS WHICH WAS PAID IN EARL IER YEAR AND THE ASSESSEE HAS MADE ENTRY OF RS. 17 00 000/- AGAINST THE BANK LOAN AND OPENING BALANCE OF RS. 9 00 000/-. THEREFORE THERE IS NO ADDITIONAL OR EXTRA PAYMENT O VER AND ABOVE OPENING BALANCE AND BANK LOAN WAS MADE TO THE PARADISE BUILDERS. THEREF ORE THE WHOLE ADDITION DESERVES TO BE DELETED. THE PAYMENT OF RS. 56 005/- WAS MADE OUT O F REGULAR CASH BOOK AND BUSINESS TRANSACTIONS. THE COPIES OF ACCOUNT OF M/S PARADISE BUILDER WERE ALSO FILED BEFORE THE UNDERSIGNED I.E. 01.04.06 TO 30.09.06 AND 01.10.06 TO 31.03.2007 WHICH REFLECTED THE DISBURSEMENT ON THE AFORESAID DATES APART FROM THE INSTALLMENT REPAYMENT DETAILS. COPY OF SALE DEED FOR PURCHASE OF FLAT NO. 402 PARADISE APARTMENT WAS ALSO FILED BEFORE ME INDICATING PURCHASE PAID AS RS. 1700000/-. 6 15. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD THE LD. CIT (A) GAVE FOLLOWING FINDINGS :- I HAVE CONSIDERED THE SUBMISSION OF AR OF THE APPE LLANT AND HAVE PERUSED THE ASSESSMENT ORDER AND RELEVANT RECORD. F ROM THE PERUSAL OF COPY OF LOAN ACCOUNT STATUS OF IDBI BANK OF THE AFO RESAID PERIOD WITH CUSTOMER ID NO. 3087759 OF THE APPELLANT DISBURSEM ENT OF RS. 1162000/- RS. 228000/- AND RS. 100000/- RESPECTIVELY WERE NOT ICED ON 23.05.06 26.02.07 AND 26.02.07.FURTHER FROM PERUSAL OF COPY OF ACCOUNT OF M/S PARADISE BUILDER IN THE BOOKS OF ACCOUNTS THE OPEN ING BALANCE OF RS. 9 LACS WAS NOTICED. ON 31.03.07 JOURNAL ENTRY FOR PU RCHASE OF FLAT OF RS. 17 LACS WAS PASSED. ACCORDINGLY AS OUT OF RS. 17 LAKH S RS. 15 LAKH HAVE BEEN RECEIVED AS LOAN FROM IDBI BANK FOR THE PURCHA SE OF FLAT DURING THE YEAR AND THE PAYMENT OF RS. 9 LACKH WAS MADE BY THE APPELLANT IN EARLIER YEARS ADDITION TO THE EXTENT OF RS. 17 LAKH IS HERE BY DELETLED. HOWEVER IT IS SEEN THAT THE AMOUNT OF RS. 56005/- HAS NOT BEEN REFLECTED IN THE COPY OF ACCOUNT OF M/S PARADISE BUILDERS MAINTAINED IN THE BOOKS OF APPELLANT THE SAME IS HEREBY CONFIRMED. 16. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A) AND THE WRITTEN SUBMISSIONS WE FIND THAT THERE IS NO SUBSTANCE IN THE GROUND RAISED BY THE DEPARTMENT. HOWEVER THE ASSESSEE DESERVES TO SUCCEED IN HIS GR OUND. THE LD. CIT (A) DELETED THE ADDITION OF RS. 17 00 000/- AFTER ASCERTAINING THE FACTUAL POSITION AND TAKING INTO CONSIDERATION THE COPY OF LOAN ACCOUNT AND COPY OF ACCOUNT OF M/S. PARADISE BUILDERS. IT WAS FOUND THAT THE FLAT WAS PURCHASED FROM M/S. PAR ADISE BUILDERS. HOWEVER AS THE ASSESSMENT WAS COMPLETED UNDER SECTION 144 THE REQ UIRED DETAILS COULD NOT BE FILED BUT THEY WERE FILED BEFORE LD. CIT (A) WHO AFTER CONSID ERING ALL THOSE DETAILS AND AFFORDING OPPORTUNITY TO THE AO FOUND THAT THE ADDITION MADE BY THE AO WAS NOT JUSTIFIED. 7 ACCORDINGLY HE DELETED THE ADDITION OF RS. 17 00 00 0/-. FINDING OF LD. CIT (A) ARE FINDING OF FACT ON THIS POINT AND THEY COULD NOT BE CONTROVERTED BY LD. D/R WHO HAS SIMPLY RELIED ON THE ORDER OF THE AO. IN VIEW OF T HESE FACTS THE ORDER OF LD. CIT (A) IN DELETING THE ADDITION OF RS. 17 00 000/- IS CONFIRM ED. 16.1. THE LD. CIT (A) CONFIRMED THE REMAINING AMOUN T OF RS. 56 005/- FOR THE REASON THAT IN THE ACCOUNT OF M/S. PARADISE BUILDERS MAINT AINED IN THE BOOKS OF ACCOUNT THE FURNITURE HAS NOT BEEN SHOWN. THE LD. CIT (A) HAS NOT TAKEN INTO CONSIDERATION THE FACT THAT THE FURNITURE FOR OFFICE WAS SEPARATELY PURCHA SED BY THE ASSESSEE. PURCHASE VOUCHERS WERE PRODUCED BEFORE LD. CIT (A) COPY OF WHICH ARE PLACED IN THE PAPER BOOK AT PAGES 56 TO 58. THIS FACT HAS BEEN SHOWN IN THE BALANCE SHEET ALSO WHICH IS AUDITED UNDER SECTION 44AB. THE DETAILS OF FURNITURE HAS BEEN SH OWN IN THE BOOKS OF ACCOUNT AUDITED COPY OF ACCOUNT ARE PLACED IN THE PAPER BOOK AT PAG ES 1 TO 25. IF ALL THESE DETAILS ARE TAKEN INTO CONSIDERATION THEN IT IS SEEN THAT THIS ADDITION SUSTAINED BY LD. CIT (A) WAS NOT JUSTIFIED. ACCORDINGLY WE DELETE THE ADDITION OF RS . 56 005/-. 17. NEXT GROUND IN THE APPEAL OF THE DEPARTMENT IS AGAINST ALLOWING DEDUCTION OF RS. 1 00 000/- WHICH WAS DISALLOWED BY THE AO AS ASSESS EE HAD NOT FURNISHED ANY DETAILS IN RESPECT OF LIC PREMIUM AND REPAYMENT OF HOUSING LOA N. 18. THIS ISSUE HAS BEEN DISCUSSED BY LD. CIT (A) IN PARA 8.1 TO 8.3 AT PAGES 13 AND 14 OF HIS ORDER. THE AO MADE ADDITION OF RS. 1 00 000 /- BY OBSERVING THAT - THE ASSESSEE HAS CLAIMED DEDUCTION OF RS. 73 22 1/- ON ACCOUNT OF PAYMENT OF PREMIUM FOR LIC INSURANCE AND RS. 85 911 /- ON ACCOUNT OF REPAYMENT OF HOUSING LOAN U/S 80C (CHAPTER VI-A OF THE ACT). IN VIEW OF IT THE ASSESSEE WAS ASKED AS PER PARA 8 OF QUESTIO NNAIRE DATED 27.10.209 TO FILE PROOF OF PAYMENT FOR DEDUCTION CLAIMED UNDER T HE CHAPTER VI-A OF THE ACT. THE ASSESSEE HAS FAILED TO FILE ANY PROOF FOR THE SAME. 8 19. IT WAS CONTENDED BEFORE LD. CIT (A) THAT AO DIS ALLOWED THE AMOUNT OF RS. 1 00 000/- ON ACCOUNT OF CLAIM OF DEDUCTION UNDER S ECTION 80C. THE ASSESSEE PAID PRINCIPAL OF RS. 93 965/- FOR HOUSING LOAN AND LIC OF RS. 73 221/- COPIES OF RECEIPTS WERE FILED BEFORE LD. CIT (A) WHICH WERE SENT TO TH E AO FOR COMMENTS. THEREAFTER LD. CIT (A) BY OBSERVING THE FOLLOWING OBSERVATIONS DEL ETED THE ADDITION OF RS. 1 00 000/- :- I HAVE CONSIDERED THE SUBMISSION OF A.R. OF THE APP ELLANT AND HAVE PERUSED THE ASSESSMENT ORDER AND RELEVANT RECORD . FROM PERUSAL OF COPY OF IDBI BANK LOAN FINAL CERTIFICATE DATED 12.4.07 F URNISHED BEFORE THE UNDERSIGNED IT IS SEEN THAT THE APPELLANT HAS PAID RS.92361/- AS PRINCIPAL AMOUNT OF THE LOAN (RS. 93965/- SHOWN IN PROVISIONA L CERTIFICATE). REGARDING LIC PAYMENT THE CERTIFICATE INDICATED THE PAYMENT OF RS. 50322/- AS PREMIUM DURING THE YEAR. FOR THE REMAINI NG AMOUNT NO EVIDENCE WAS FURNISHED. HOWEVER CONSIDERING THAT T HE CLAIM OF DEDUCTION U/S 80C IS RESTRICTED TO RS. 1 LACS AND THE EVIDENC E AS ABOVE IS FOR MORE THAN RS. 1 LAKH THE DISALLOWANCE U/S 80C OF RS. 1 LAKH SO MADE BY THE AO IS HEREBY DELETED. 20. THESE FINDINGS OF LD. CIT (A) ARE SELF EXPLANAT ORY WHICH DO NOT REQUIRE DISCUSSION FURTHER. THEREFORE WE SEE NO REASON TO INTERFERE WITH THE FINDINGS OF LD. CIT (A). ACCORDINGLY WE CONFIRM THESE FINDINGS. 21. NEXT ISSUE IN APPEAL OF THE DEPARTMENT IS AGAIN ST DELETING THE ADDITION OF RS. 5 42 250/- MADE BY AO ON ACCOUNT OF UNSECURED LOANS AND SUNDRY CREDITORS. 22. THE ASSESSEE THROUGH GROUND NO. 3 OF CROSS OBJE CTION HAS CHALLENGED THE CONFIRMING OF ADDITION OF RS. 88 000/- OUT OF TOTAL ADDITION MADE BY AO AT RS. 6 30 250/-. SINCE THESE GROUNDS ARE CO-RELATED THEREFORE THEY ARE DISPOSED OFF TOGETHER. 23. THIS ISSUE HAS BEEN DISCUSSED BY LD. CIT (A) IN PARAS 7 TO 7.4 AT PAGES 10 TO 13. THE AO MADE AN ADDITION OF RS. 6 30 250/- BY OBSERV ING THE FOLLOWING OBSERVATIONS :- 9 THE ASSESSEE HAS FAILED TO ATTEND THE ASSESSMENT P ROCEEDING AND FILE THE CONFIRMATIONS AS ASKED FOR THEREFORE SAM E ARE CONSIDERED TO BE BOGUS. IN ORDER TO PROVE THE GENUINENESS OF UNSECUR ED LOAN OR SUNDRY CREDITORS THE ASSESSEE HAS TO PROVE IDENTITY AND C REDITWORTHINESS OF THE LOANER OR THE CREDITORS AND GENUINENESS IF THE TRAN SACTION. THE ASSESSEE HAS FAILED ON THIS COUNT. SINCE THE ASSESSEE HAS FAILED TO FILE CONFIRMATION OR ANY SATISFACTORY EXPLANATION FOR THE AMOUNTS OF RS 6 30 250/- SHOWN TOWARDS UNSECURED CREDITORS THESE ARE DEEMED TO B E INVESTMENT IN HIS BOOK OF ACCOUNT FOR WHICH NO SATISFACTORY EXPLANATI ON HAS BEEN PROVIDED BY THE ASSESSEE. 24. IT WAS SUBMITTED AGAINST THE ADDITION OF RS. 6 30 250/- ON ACCOUNT OF LOAN CREDITORS THAT HE HAS ALREADY SUBMITTED THE DETAILS OF LOAN CREDITORS AND CONFIRMATIONS WERE ALSO FILED BEFORE YOUR GOOD SELF. THE REQUIRE D DETAILS ARE AS UNDER :- 1. SHRI DHARMENDRA PANDEYHUF THERE IS OPENING BALANCE OF RS. 1 70 000/-. NO TRANSACTION DURING THE YEAR. CONFIRMATION ALREADY F ILED. 2. SMT. SHANTI DEVI RS. 1 00 000/- RECEIVED BY CHEQUE NO. 767364 DRA WN ON KANERA BANK JAIPUR ON 22.08.2006. THE ASSESSEE'S P AN IS AGIPM0171E AND SHE IS ASSESSED IN WARD 5(2) JAIPUR. 3. SMT. KUSUM KANSAL RS. 50000/- RECEIVED BY CHEQUE NO. 089604 DRAWN O N SBBJ ON 23.03.2007. THE ASSESSEE'S PAN IS ADOPG9166G AND SHE IS ASSESSED IN WARD 6(1) JAIPUR. 4. REGARDING ADDITION OF CREDIT BALANCE OF BOBBY AR TS OUT OF RS. 1 58 000/- RS. 1 38 000/- AND THERE ARE PAYMENTS AND CREDIT FOR GH ADAI EXPENSES DURING THE YEAR. COPY OF ACCOUNT IS ENCLOSED. 10 5. REGARDING ADDITION OF BHUNESHWARI MOOTRI ART FOR RS. 85 000/-. THERE IS OPENING BALANCE OF RS. 94 000/- AND OTHER TRANSACTIONS ARE ALSO DURING THE YEAR. COPY OF ACCOUNT IS ENCLOSED. 6. REGARDING ADDITION OF KALA KRITI MARBLE ART FOR RS. 55 000/-. THERE IS PURCHASE OF STATUE BY BILL NO. 25 DATED 25.02.2007. THE PAYMENT OF WHICH IS OUTSTANDING. COPY OF ACCOUNT IS ENCLOSED. 7. REGARDING ADDITION OF RAHEEM MARBLE HANDICRAFT F OR RS. 13 000/-. THERE ARE PURCHASE OF RS. 53 000/- AND THE BALANCE OUTSTANDIN G WAS RS. 13 000/- ONLY. COPY OF ACCOUNT IS ENCLOSED. ALL THE TRADE CREDITORS ARE DURING THE REGULAR COUR SE OF BUSINESS. THE LEARNED ASSESSING OFFICER HAS NOT DOUBTED ON THE PURCHASES/EXPENDITUR E DEBITED ON THIS ACCOUNT. THEREFORE THE AMOUNT OUTSTANDING CANNOT BE ADDED AS INCOME. 25. AFTER CONSIDERING THE SUBMISSIONS AND TAKING IN TO CONSIDERATION THE REMAND REPORT AS WELL AS OTHER MATERIAL ON RECORD THE LD. CIT (A ) GAVE FOLLOWING FINDING IN PARA 7.3 AND 7.4 :- I HAVE CONSIDERED THE SUBMISSION OF A.R. OF THE APP ELLANT ANDS HAVE PERUSED THE ASSESSMENT ORDER AND RELEVANT RECORD .IT IS NOTICED BY THE UNDERSIGNED THAT CASH CREDIT IN THE NAME OF SH. DHARMENDRA PANDEY HUF IS ALREADY APPEARING IN THE OPENING BALANCE AND A.O. HAS ALREADY ADDED IN A.Y.2 006-07. ACCORDINGLY ADDITION IS HEREBY DELETED. (II) IN RESPECT OF CREDIT IN THE NAME OF SMT.SHANTI DEVI AND SMT. KUSUM KANSAL THE CONFIRMATION WITH PAN NO WERE FILED BEFORE ME AND I N THE SUBSEQUENT HEARING CHEQUE NO. NAME OF THE BANK AND WARD OF THE CREDI TORS WHERE SHE IS ASSESSED WERE ALSO FILED . THE COPIES OF THE CONFIRMATION AN D OTHER DETAILS WERE SENT TO THE A.O. WHO HAS OBJECTED ON ADMISSION OF THE ADDITION AL EVIDENCE AND HAS NOT GIVEN ANY SPECIFIC ADVERSE COMMENTS ABOUT THESE CONFIRMAT IONS. CONSIDERING THESE 11 FACTS THE ADDITION OF CASH CREDITS IN THE NAME OF SMT. SHANTI DEVI OF RS. 1 00 000/- AND SMT. KUSUM KANSAL OF RS 49 250/- IS HEREBY DELETED. 7.4 IN RESPECT OF TRADE CREDITORS IT IS SEEN THAT IN THE CASE OF M/S BOBBY ARTS THERE WAS OPENING BALANCE OF RS. 1 38 000/- WHICH HAS BE EN ALREADY ADDED IN A.Y.2006-07. THERE IS INCREASE IN CREDIT BALANCE BY ONLY RS. 20 000/- DURING THE YEAR. HENCE THE A.O. WAS NOT JUSTIFIED IN MAKING ADDITION OF RS . 1 585 000/- IN A.Y. 2007-08 .IT IS SEEN THAT APPELLANT HAS NOT FIL ED PROPER CONFIRMATION NOT ONLY BEFORE THE A.O. BUT EVEN BEFORE THE UNDERSIGNED ; I NSPITE OF OPPORTUNITY BY WAY OF ADMISSION OF ADDITIONAL DOCUMENT BEING GIVEN BY THE UNDERSIGNED. CONSIDERING THESE FACT ADDITION OF FURTHER INCREASE IN THE CRE DIT OF RS.20 000/- DURING THE YEAR IS CONFIRMED. THE ARGUMENT OF THE APPELLANT THAT TH E A.O. HAS NOT DOUBTED ON THE PURCHASE /EXPENDITURE DEBITED ON THIS ACCOUNT IS I RRELEVANT AS EVEN ON BEING SPECIFICALLY ASKED BY THE A.O. TO FURNISH THE CONFI RMATIONS THE APPELLANT HAS FAILED TO DO SO . (II) IN RESPECT OF M/S BHUNBNESHWARI MOORTI ART A S THE OPENING BALANCE OF RS. 94 000/- IS MORE THEN THE CLOSING BALANCE BEING RS. 85 000/- AND RS. 94 000/- BEING ALREADY ADDED IN A.Y. 2006-07 THE ADDITION O F RS.85000/- IN A.Y. 2007-08 IS UNJUSTIFIED AND DELETED. (III) IN RESPECT OF M/S. KALA KIRTI MARBLE AND M/S RAHIM MARBLE AS THE APPELLANT HAS FAILED TO FURNISH THE CONFIRMATION EVEN INSPITE OF SPECIFICALLY ASKED BY THE A.O. AND HAS ALSO FURTHER FAILED TO FURNISH ANY CONFIRMA TION EVEN BEFORE THE UNDERSIGNED ADDITION SO MADE BY THE A.O. AMOUNTIN G TO RS.55 000/- AND RS.13000/- IS HEREBY CONFIRMED. 26. AFTER CONSIDERING THE ORDERS OF THE AUTHORITIES BELOW AND THE WRITTEN SUBMISSIONS OF THE ASSESSEE WE FIND THAT LD. CIT (A) WAS JUSTI FIED IN DELETING THE ADDITION OF RS. 5 42 250/-. THE LD. CIT (A) FOUND THAT SMT. SHANTI DEVI AND SMT. KUSUM KANSAL HAVE GIVEN THEIR CONFIRMATION ALONG WITH THEIR PAN AND T HEY WERE SENT TO THE AO. THOUGH HE WAS HAVING OBJECTION FOR ADMITTING THE ADDITIONAL E VIDENCE. HOWEVER NO ADVERSE 12 COMMENTS WERE GIVEN ON MERIT BY THE AO. THEREFORE THE LD. CIT (A) FOUND THAT ADDITION OF RS. 1 49 250/- ON ACCOUNT OF LOAN FROM THE ABOVE TWO LADIES WERE NOT JUSTIFIED. ACCORDINGLY THIS ADDITION WAS DELETED. 27. IN RESPECT OF TRADE CREDITORS THE LD. CIT (A) NOTED THAT IN CASE OF M/S. BOBBY ARTS THERE WAS OPENING BALANCE OF RS. 1 38 000/- W HICH HAS ALREADY BEEN ADDED IN THE ASSESSMENT YEAR 2006-07. THERE IS AN INCREASE IN C REDIT BALANCE OF RS. 20 000/-. THE LD. CIT (A) NOTED THAT SINCE ADDITION OF RS. 1 38 000/- HAVE ALREADY BEEN MADE IN EARLIER YEAR THEREFORE HE DELETED THE ADDITION OF RS. 1 3 8 000/-. HOWEVER HE CONFIRMED THE REMAINING ADDITION OF RS. 20 000/-. 28. AFTER CONSIDERING THESE FINDINGS OF LD. CIT (A) WE FIND THAT THERE IS NO DISPUTE THAT THESE ARE TRADE CREDITORS AND PURCHASE HAS ALR EADY BEEN ACCEPTED BY THE AO. PAYMENT HAS BEEN MADE IN SUBSEQUENT YEAR THEREFORE THERE WAS NO QUESTION OF MAKING ANY ADDITION ON ACCOUNT OF TRADE CREDITORS. THEREF ORE WE CONFIRM THE DELETION OF ADDITION AND ALSO DELETE THE ADDITION OF REMAINING AMOUNT OF RS.20 000/- ON ACCOUNT OF TRADE CREDITORS. 29. IN RESPECT OF TRADE CREDITOR M/S. BHUBNESHWARI MOORTI ART THERE WAS OPENING BALANCE OF RS. 94 000/- WHICH WAS MORE THAN THE CLO SING BALANCE OF RS. 85 000/-. THE LD. CIT (A) BY OBSERVING THAT RS. 94 000/- HAS ALREADY BEEN ADDED IN THE EARLIER YEAR. THEREFORE THE ADDITION OF RS.85 000/- WAS DELETED BY LD. CIT (A). 30. THIS IS A SIMILAR TRADE CREDIT AND WE HAVE GIVE N FINDING THAT ONCE IT IS PROVED THAT THIS IS A TRADE CREDIT AND PURCHASE HAS ALREADY BEE N ADMITTED THEREFORE THERE WAS NO REASON TO MAKE ANY ADDITION. HOWEVER ON THE FINDI NG OF LD. CIT (A) WE CONFIRM HIS ORDER. 13 31. IN RESPECT OF TRADE CREDITOR M/S. KALA KIRTI MA RBLE AND M/S. RAHIM MARBLE NO DETAIL WHATSOEVER WAS GIVEN BY THE ASSESSEE EVEN UP TO THE STAGE OF LD. CIT (A). THEREFORE LD. CIT (A) CONFIRMED THE ADDITION OF RS . 55 000/- AND RS. 13 000/- RESPECTIVELY IN CASE OF ABOVE TWO TRADE CREDITORS. 32. AFTER CONSIDERING THE SUBMISSIONS WE FIND THAT IT HAS BEEN ESTABLISHED THAT THEY ARE TRADE CREDITORS AND PURCHASES HAVE ALREADY BEEN ACCEPTED BY THE DEPARTMENT THEREFORE IN OUR VIEW NO ADDITION SHOULD HAVE BEE N MADE IN RESPECT OF TRADE CREDITORS. TRADE CREDITS ARE TOTALLY DIFFERENT FROM THE LOANS. IN CASE OF LOANS HEAVY ONUS LAY ON THE ASSESSEE. HOWEVER IN CASE OF TRADE CREDITOR NO S UCH ONUS IS ON THE ASSESSEE AS PURCHASES WERE ADDED IN THE STOCK AND THE SAME HAS BEEN ACCEP TED. IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE ARE OF THE VIEW THAT ADDITIONS OF RS. 55 000/- AND RS. 13 000/- IN RESPECT OF M/S. KALA KIRTI MARBLE AND IN RESPECT OF M/S. RAHIM MARBLE ARE LIABLE TO BE DELETED. ACCORDINGLY WE DELETE THE ADDITION. IN THIS WAY GROUND OF THE DEPARTMENT FAILS AND THE GROUND OF THE ASSESSEE IS ALLOWED. 33. NEXT ISSUE IN APPEAL OF THE DEPARTMENT IS AGAIN ST ALLOWING DEDUCTION OF RS. 83 289/- WHICH WAS NOT ALLOWED BY THE AO FOR WANT O F DETAILS. 34. THE FINDINGS OF THE LD. CIT (A) IN THIS RESPECT HAVE BEEN GIVEN IN PARAS 6.1 TO 6.3 IN HIS ORDER AT PAGES 9 AND 10. THE AO MADE THIS AD DITION BY OBSERVING AS UNDER :- DURING THE YEAR THE ASSESSEE HAS CLAIMED DEDUCTION OF RS. 83 289/- ON ACCOUNT OF PAYMENT OF INTEREST ON HOUSI NG LOAN U/S 24(B) INCOME TAX ACT 1961. THE ASSESSSEE HAS DECLARED ANN UAL OF THE PROPERTY AT RS. NIL. AS PER PARA 16 OF QUESTIONNAIRE DATED 2 7.10.2009 FURNISHED TO THE A.R. OF THE ASSESSEE ON 29.10.2009 WHEN HE LAST ATTENDED THE ASSESSMENT PROCEEDING ALONG WITH SMT. SHIVANI PANDE Y W/O THE ASSESSEE THE ASSESSAEE HAS BEEN REQUIED TO FILE CERTIFICATE AS REQUIRED UNDER THE PROVISION OF SECTION 24 FROM THE PERSON TO WHOM INT EREST IS PAYABLE ON THE 14 CAPITAL BORROWED FOR THE PROPERTY UNDER CONSIDERATI ON . THE ASSESSEE HAS FAILED TO FILE THE REQUISITE CERTIFICATE. 35. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT DISALL OWANCE U/S 24(B)OF RS. 83 289/- ON ACCOUNT OF INTEREST PAYMENT ON HOUSING LOAN FOR WH ICH THE CERTIFICATE REGARDING PAYMENT OF HOUSING LOAN FROM IDBI HAS ALREADY BEEN SUBMITTE D VIDE SUBMISSION DATED 02.03.10. THE COPY OF AGREEMENT TO SALE DATED 05.05.2006 FOR PURCHASE OF FLAT NO. 402 HAS ALSO BEEN SUBMITTED ON PAPER BOOK PAGE NO. 33 TO 45. THEREFOR E THIS DISALLOWANCE DESERVES TO BE DELETED. 36. AFTER CONSIDERING THE SUBMISSIONS THE LD. CIT (A) GAVE THE FOLLOWING FINDING IN PARA 6.3 :- I HAVE CONSIDERED THE SUBMISSION OF A.R. OF THE AP PELLANT AND HAVE PERUSED THE ASSESSMENT ORDER AND RELEVANT RECO RDED. ON PERUSAL OF THE COPY OF CERTIFICATE FROM IDBI BANK IT IS SEEN THAT INTEREST CHARGES ON THE LOAN FOR F.Y. 2006-07 IS TOTALING RS. 91 353/- OUT OF WHICH THE CLAIMED RS. 83 289/- AS THE LOAN IS FROM IDBI BANK TAKEN FO R THE PURCHASE OF HOUSING PROPERTY DEDUCTION OF INTEREST U/S 24(B) IS ALLOWABLE AND ACCORDINGLY DISALLOWANCE OF RS. 83 289/- SO MADE B Y THE A.O. IS DELETED 37. THE ABOVE FINDINGS OF LD. CIT (A) ARE FINDINGS OF FACT WHICH NEITHER COULD BE CONTROVERTED NOR ANY OTHER MATERIAL BROUGHT ON RECO RD. THEREFORE WE CONFIRM THE FINDINGS OF LD. CIT (A) IN THIS RESPECT ALSO. 38. REMAINING ISSUE IN APPEAL OF THE DEPARTMENT IS AGAINST DELETING THE ADDITION OF RS. 52 610/- OUT OF TOTAL ADDITION OF RS. 1 02 610/- WH ICH WAS MADE BY AO ON ACCOUNT OF EXPENSES CLAIMED IN PROFIT & LOSS ACCOUNT. 15 39. THE ASSESSEE HAS CHALLENGED THROUGH GROUND NO. 2 OF HIS CROSS OBJECTION IN CONFIRMING THE REMAINING DISALLOWANCE OF RS. 50 000 /-. 40. THIS ISSUE HAS BEEN DISCUSSED BY LD. CIT (A) IN HIS ORDER IN PARA 5 TO 5.3 AT PAGES 7 TO 9. THE AO MADE THE ADDITION BY OBSERVING AS F OLLOWS :- THE ASSESSEE HAS CLAIMED P&L EXPENSES AMOUNTING TO RS. 10 26 100/-. THE ASSESSEE HAS FAILED TO ATTEND TO A SSESSMENT PROCEEDINGS AND PRODUCE ANY EVIDENCE IN SUPPORT OF THE EXPENSES CLA IMED. THOUGH IT CANNOT BE DENIED THAT THE ASSESSEE MUST HAVE INCURRED EXPENSE S FOR HIS BUSINESS ACTIVITIES BUT HIS FAILURE TO ATTEND ASSESSMENT PROCEEDINGS DE SPITE HAVING BEEN ALLOWED ENOUGH OPPORTUNITY BEFORE FINALIZATION OF THIS ORDE R I AM CONSTRAINED TO DISALLOW 10% OF P&L EXPENSES WHICH AMOUNTS TO RS. 1 02 610/- ' 41. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT DISALL OWANCE OF 1 02 610/- @ 10% OF EXPENSES DEBITED IN PROFIT & LOSS ACCOUNT. THE A SSESSEE DEBITED ADMINISTRATOR SELLING FINANCIAL AND DEPRECATION EXPENSES. THE DE TAILS OF WHICH ARE GIVEN IN SCHEDULE 18 TO 20 WHICH INCLUDES BANK INTEREST AUD IT FEES INSURANCE SALARY TRAVELING CARRIAGE AND OTHER EXPENSES. THIS ALSO I NCLUDES DEPRECIATION OF RS. 1 70 225/- ON PLANT AND MACHINERY AND OTHER EQUIPME NTS. THE LEARNED ASSESSING OFFICER HAS MADE ADHOC DISALLOWANCE @ 10% WITHOUT A NY BASIS SPECIALLY WHEN THE BOOKS OF ACCOUNTS ARE AUDITED AND THE AUDITOR HAS N OT MADE ANY ADVERSE REMARK ON THE MAINTENANCE OF THE BOOKS OF ACCOUNTS. THE NP RA TE IS 7.7% WHICH IS MORE HIGHER IN COMPARISON TO EARLIER YEARS AND OTHER TRA DERS OF THE SAME LINE. SO THE ENTIRE ADDITION OF RS. 1 02 610/- DESERVES TO BE DE LETED. 16 42. AFTER CONSIDERING THE SUBMISSIONS THE LD. CIT (A) GAVE FOLLOWING FINDING AT PARA 5.3 :- I HAVE CONSIDERED THE SUBMISSION OF A.R. OF THE AP PELLANT AND HAVE PERUSED THE ASSESSMENT ORDER AND RELEVANT. THE A.O. HAS DISALLOWED 10%OUT OF ALL THE EXPENSES WHICH INCLUDES DEPRECATI ON ON PLANT AND MACHINERY AND OTHER EQUIPMENT ALSO AS WELL AS BANK INTEREST AUDIT FEES INSURANCE ETC .THE DEPRECIATION ON PLANT AND MACHI NERY AND WILL NOT HAVE ANY NON-BUSINESS ELEMENT THOUGH THE DEPRECIATION O N VEHICLE IS PARTLY DISALLOWABLE ON ACCOUNT OF NON-BUSINESS/PERSONAL US E OF VEHICLE AS ALSO OUT OF VEHICLE RUNNING AND MAINTENANCE . SIMILARLY NON BUSINESS /PERSONAL USE OF FACILITIES LIKE TELEPHONE AS ALSO IN TRAVELI NG CANNOT BE RULED OUT .IN VIEW OF THE ABOVE AND IN ABSENCE OF ITEM WISE DETA ILS CONSIDERING THE TOTALITY THE DISALLOWANCE OF RS. 50 000/- IS SUSTA INED AND BALANCE IS DELETED. 43. AFTER CONSIDERING THE ORDERS OF AO AND LD. CIT (A) AND ALSO THE WRITTEN SUBMISSIONS WE FIND THAT THE AO DISALLOWED ON ADHO C BASIS 10% OF THE EXPENSES CLAIMED IN PROFIT & LOSS ACCOUNT. THE LD. CIT (A) ALLOWED THE ISSUE PARTLY IN FAVOUR OF THE ASSESSEE. THE LD. CIT (A) HAS CONFIRMED THE SUM OF RS. 50 000/- BY OBSERVING THAT TELEPHONE AND VEHICLES WERE USED FOR PERSONAL USE A LSO AND THEREFORE HE SUSTAINED THE ADDITION OF RS. 50 000/-. WE ARE OF THE VIEW THAT DISALLOWANCE CONFIRMED BY LD. CIT (A) IS ON HIGHER SIDE. IF THIS DISALLOWANCE IS RESTRIC TED TO RS. 10 000/- THEN IN OUR VIEW IT WILL MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGL Y. IN THIS WAY THE GROUND OF THE DEPARTMENT IS DISMISSED AND THE GROUND OF THE ASSES SEE IS ALLOWED IN PART. 44. THERE IS NO OTHER GROUND IN THE APPEAL OF THE D EPARTMENT. HOWEVER THE REMAINING GROUND IN THE CROSS OBJECTION OF THE ASSESSEE IS GR OUND NO. 1 BY WHICH ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS. 84 209/- ON ACCO UNT OF TRADING EXPENSES. 17 45. THIS ISSUE HAS BEEN DISCUSSED BY LD. CIT (A) IN PARAS 4 TO 4.3 AT PAGES 6 & 7 OF HIS ORDER. THE AO MADE THE DISALLOWANCE OF RS.84 2 09/- BY OBSERVING AS UNDER :- 'AS PER TRADING AND PROFIT AND LOSS ACCOUNT THE A SSESSEE HAS MADE SALES OF RS. 42 68 468/- DURING THE YEAR RELEVANT T O ASSESSMENT YEAR 2007- 08. THE ASSESSEE HAS CLAIMED EXPENSES WHICH INCLUDE S EXPENSES FOR GHADAI GHISAI AND PAINTING OF STATUS AMOUNTING TO RS. 8 42 089/-. THE ASSESSEE HAS FAILED TO ATTEND THE ASSESSMENT PROCEE DING AS BROUGHT OUT IN PARA 1 IT IS NOT POSSIBLE TO ASCERTAIN THE GENUINE NESS OF EXPENSES CLAIMED. SINCE GHADAI GHISAI AND PAINTING ARE THE KIND OF E XPENSES WHICH INVOLVE LOT OF CASH PAYMENT I DISALLOW 10% OF THESE EXPENS ES WHICH AMOUNTS TO RS. 84 209/- TO PLUG ANY LEAKAGE IN TRADING RESULT. ' 46. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT HE HAS DEBITED TOTAL EXPENDITURE OF RS. 8 42 089/- ON ACCOUNT OF GHADIA GHISAI AND PAI NTING EXPENSES AND OTHER DIRECT EXPENSES RELATED TO MANUFACTURING OF MOORTIES. THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM ARE AUDITED U/S 44AB OF THE INCOME TA X ACT 1961. THE AUDITOR HAS NOT MADE ANY ADVERSE REMARK. THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING DIRECT EXPENSES WITHOUT ANY COGENT REAS ON WHEN HE IS SATISFIED FOR THE TRADING RESULTS DECLARED BY THE ASSESSEE. THE GP RA TE SHOWN BY THE ASSESSEE IS 30.60% WHICH IS ON VERY HIGHER SIDE IN COMPARISON T O OTHER BUSINESSMAN IN THE SAME LINE. SO THIS ADDITION OF RS. 84 209/- DESERVE S TO BE DELETED. 47. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD THE LD. CIT (A) HELD THAT SINCE THE EXPENSES HAVE BEEN CLAIMED FOR GHADAI GHISAI AND PAINTING OF STATUES AND MOST OF THESE EXPENSES ARE IN CASH THE REFORE DISALLOWANCE @ 10% IS JUSTIFIED. 18 48. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A) AND THE WRITTEN SUBMISSIONS WE ARE OF THE VIEW THAT SINCE BOOKS OF ACCOUNTS ARE AUDITED AND AUDIT REPORT ALONG WITH ALL DETAILS WERE FILED BEFORE LD. CIT (A ) WHICH WERE SENT TO THE AO FOR HIS COMMENTS AND NO ADVERSE MATERIAL WAS FOUND IN RESPE CT THAT THE CLAIM OF THE ASSESSEE IS NOT CORRECT. NEITHER ANY BASIS HAS BEEN GIVEN BY T HE AO THAT WHY ADHOC DISALLOWANCE OF 10% IS MADE NOR THE LD. CIT (A) HAS GIVEN ANY REASO NABLE REASONING THEREFORE WE ARE OF THE VIEW THAT DISALLOWANCE MADE BY AO AND CONFIRMED BY LD. CIT (A) IS NOT JUSTIFIED. ACCORDINGLY WE DELETE THE ENTIRE DISALLOWANCE CONFI RMED BY LD. CIT (A). 49. IN APPEAL FOR A.Y. 2008-09 GROUND NOS. 1 TO 3 A RE AGAINST ADMITTING THE ADDITIONAL EVIDENCE. 50. SIMILAR GROUNDS WERE TAKEN FOR ASSESSMENT YEAR 2007-08 ALSO. WE HAVE ALREADY DISPOSED OFF THESE GROUNDS BY REJECTING THE GROUNDS . ON THE SAME REASONING THESE GROUNDS OF THE DEPARTMENT ARE ALSO REJECTED. 51. NEXT ISSUE RELATES TO DELETION OF ADDITION OF R S. 58 71 000/- MADE BY THE AO ON ACCOUNT OF UNVERIFIABLE EXPENSES AS THE ASSESSEE H AS NOT FURNISHED ANY DETAILS. 52. SIMILAR ADDITION WAS MADE FOR ASSESSMENT YEAR 2 007-08 ALSO. THE LD. CIT (A) DELETED THE ADDITION AND WE HAVE CONFIRMED THE ORDE R OF LD. CIT (A) WHILE DISPOSING THE GROUND RAISED FOR ASSESSMENT YEAR 2007-08. SINCE FA CTS AND NATURE OF ADDITION IS SIMILAR THEREFORE ON THE REASONING GIVEN WHILE DISPOSING T HE GROUND FOR A.Y. 2007-08 WE CONFIRM THE ORDER OF LD. CIT (A) HERE ALSO. THIS GR OUND OF THE DEPARTMENT FAILS. 53. NEXT ISSUE RELATES TO DELETION OF ADDITION OF R S. 1 00 000/- WHICH WAS DISALLOWED BY AO AS ASSESSEE HAS NOT FURNISHED ANY DETAILS OF LIP AND REPAYMENT OF HOUSING LOAN. 19 54. AN ADDITION OF RS. 1 00 000/- WAS MADE FOR EARL IER YEAR I.E. A.Y. 2007-08 ALSO AND WE HAVE CONFIRMED THE DELETION MADE BY LD. CIT (A) WHILE DISPOSING OFF THE GROUND FOR A.Y. 2007-08. SINCE FACTS ARE IDENTICAL THEREFORE ON THE SAME REASONING WE CONFIRM THIS DELETION ALSO. 55. NEXT ISSUE RELATES TO DELETION OF ADDITION OF R S. 5 61 250/- OUT OF TOTAL ADDITION OF RS. 25 02 250/- WHICH WAS MADE BY AO ON ACCOUNT OF UNSECURED LOANS AND SUNDRY CREDITORS AS THE ASSESSEE HAD NOT FURNISHED ANY DET AILS/CONFIRMATION FOR THE SAME. 56. IN RESPECT TO DELETION OF RS. 5 61 250/- IT IS SEEN THAT ON SIMILAR FACTS AND CIRCUMSTANCES AN ADDITION OF RS. 5 42 250/- WAS MAD E FOR A.Y. 2007-08 ALSO. THE LD. CIT (A) DELETED THE ADDITION OF RS. 5 42 250/- ON ACCOU NT OF CREDITS AND LOANS AS ASSESSEE HAS FILED CONFIRMATIONS OF THESE PARTIES. HERE ALSO THE LD. CIT (A) HAS DELETED THE ADDITION OF RS. 561 250/- AS THE ASSESSEE HAS FILED CONFIRMATIO N AND OTHER EVIDENCES. FACTS ARE SIMILAR HERE WITH THE FACTS OF ADDITION DELETED OF RS. 5 42 250/- BY LD. CIT (A) FOR A.Y. 2007-08. THEREFORE ON THE SAME REASONING WE CONFIRM THIS D ELETION OF RS. 5 61 250/- FOR THE YEAR UNDER CONSIDERATION ALSO. 57. NEXT ISSUE RELATES TO DELETION OF ADDITION OF R S. 54 481/- OUT OF TOTAL DEDUCTION OF RS. 89 866/- WHICH WAS NOT ALLOWED BY THE AO AS THE ASSESSEE HAS NOT FURNISHED ANY DETAILS IN RESPECT OF INTEREST PAYMENT ON HOUSING L OAN. 58. SIMILAR ADDITION WAS MADE FOR ASSESSMENT YEAR 2 007-08. THE LD. CIT (A) ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE TRIBUNA L HAS CONFIRMED THE FINDING OF LD. CIT (A) FOR A.Y. 2007-08. SINCE FACTS ARE SIMILAR THER EFORE ON THE SAME REASONING WE CONFIRM THIS DELETION ALSO. 20 59. REMAINING ISSUE RELATES TO DELETION OF ADDITION OF RS. 35 293/- OUT OF TOTAL ADDITION OF RS. 70 293/- WHICH WAS MADE BY AO ON AC COUNT OF EXPENSES CLAIMED BY THE ASSESSEE IN PROFIT & LOSS ACCOUNT AS THE ASSESSEE H AS NOT FILED ANY DETAIL DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 60. ON SIMILAR FACTS AN ADDITION OF RS. 1 02 610/- WAS MADE FOR A.Y. 2007-08. THE LD. CIT (A) DELETED THE ADDITION OF RS. 52 610/-. R EMAINING ADDITION WAS CHALLENGED BY THE ASSESSEE THROUGH HIS CROSS OBJECTION. HERE ALS O THE ASSESSEE HAS CHALLENGED THE REMAINING ADDITION SUSTAINED BY LD. CIT (A) AT RS. 35 000/- THROUGH HIS CROSS OBJECTION AT GROUND NO. 2. 61. SINCE BOTH THESE GROUNDS ARE CO-RELATED THEREF ORE THEY ARE DISPOSED OFF TOGETHER. 62. WHILE DISPOSING OFF THE APPEAL FOR A.Y. 2007-08 THE TRIBUNAL HAS SUSTAINED AN ADDITION OF RS. 10 000/- ON ACCOUNT OF EXPENSES CLA IMED IN PROFIT & LOSS ACCOUNT. ON SIMILAR BASIS WE CONFIRM THE DISALLOWANCE OF RS.10 000/- OUT OF TOTAL ADDITION MADE BY AO AT RS. 70 293/-. THE REMAINING ADDITION IS DELE TED. IN THIS WAY THE GROUND OF THE DEPARTMENT IS DISMISSED AND THE GROUND OF THE ASSES SEE IS ALLOWED IN PART. 63. THERE IS NO OTHER GROUND IN THE APPEAL OF THE D EPARTMENT. 64. NOW WE WILL TAKE UP THE REMAINING GROUND RAISED IN THE CROSS OBJECTION OF THE ASSESSEE. 65. FIRST GROUND RELATES TO CONFIRMING DISALLOWANCE OF RS. 39 462/- ON ACCOUNT OF TRADING EXPENSES. 66. THE AO DISALLOWED 10% OF THE TOTAL EXPENSES CLA IMED BY THE ASSESSEE AT RS. 8 42 089/-. THE LD. CIT (A) HAS ALSO SUSTAINED THI S ADDITION. 21 67. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A) AND SUBMISSIONS OF THE ASSESSEE WE FIND THAT IF ADHOC DISALLOWANCE MADE B Y THE AO WHICH IS CONFIRMED BY LD. CIT (A) IS SUSTAINED AT RS. 10 000/- THAT WILL MEET THE ENDS OF JUSTICE. WE ORDER ACCORDINGLY. 68. GROUND NO. 2 WE HAVE ALREADY DISPOSED OFF. 69. GROUND NO. 3 RELATES TO CONFIRMING THE ADDITION OF RS. 19 41 100/- OUT OF TOTAL ADDITION MADE BY AO AT RS. 25 02 250/-. 70. IN THIS REGARD THE GROUND TAKEN BY THE DEPARTME NT WE HAVE ALREADY DISPOSED OFF. 71. DURING THE ASSESSMENT PROCEEDINGS THE AO NOTIC ED THAT ASSESSEE HAS SHOWN ADVANCES OF RS. 10 00 000/- FROM JYOTSNA MEHTA AND RS. 9 00 000/- IN THE NAME OF MEHTA FILM EXCHANGE. THE ASSESSEE HAS SHOWN THE ADEVANCE S FROM JYOTSNA MEHTA AND IN THE NAME OF MEHTA FILM EXCHANGE AGAINST SALE OF PROPERT Y FLAT NO. 402 PARADISE BUILDING MOTI DOONGRI ROAD JAIPUR. SUBSEQUENTLY THIS PROPE RTY WAS SOLD TO THEM AND PRESENTLY SMT. JYOTSNA MEHTA IS RESIDING THERE. COPY OF ACCOU NT WAS ALSO FILED. THE HUSBAND OF SMT. JYOTSNA MEHTA IS ALSO RESIDING THERE FROM WHOM THE AMOUNT OF RS. 9 00 000/- WAS TAKEN AS LOAN IN THE NAME OF MEHTA FILM EXCHANGE C OPY OF ACCOUNT WAS ALSO FILED. HOWEVER THE ASSESSEE COULD NOT PRODUCE THE COPY OF SALE AGREEMENT AND THEREFORE THE ADVANCES TAKEN BY THE ASSESSEE FROM SMT. JYOTSNA ME HTA AND IN THE NAME OF MEHTA FILM EXCHANGE WAS TREATED AS UNEXPLAINED DEPOSIT AND WER E ADDED UNDER SECTION 68 BY THE AO. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT ASSESS EE WAS SERIOUSLY ILL AND IS NOT BLE TO PERFORM DAY TO DAY WORK AND THEREFORE COULD NOT G ET REGISTRATION PAPER FROM THE PARTY WHO ARE NOT COOPERATING. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS SHOWN CAPITAL GAIN ON ACCOUNT OF SALE OF SAID PROPERTY AND HAVE P AID TAX ALSO. COMPUTATION OF CAPITAL 22 GAIN HAS BEEN ACCEPTED BY THE AO AND THEREFORE THE RE IS NO JUSTIFICATION TREATING THE AMOUNT TAKEN AS ADVANCE AS UNEXPLAINED CASH CREDIT. THE LD. CIT (A) WAS ALSO NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE SINC E NO POSITIVE EVIDENCE COULD BE FILED BEFORE HIM. THEREFORE HE CONFIRMED THE ACTION OF T HE AO. 72. SIMILAR ARGUMENTS WERE ADVANCED HERE BEFORE THE TRIBUNAL. IT WAS FURTHER SUBMITTED THAT WITH GREAT EFFORTS THE WIFE OF THE A SSESSEE IS ABLE TO GET THE COPY OF REGISTERED SALE DEED FROM THE OFFICE OF SUB REGISTR AR AND THIS COPY COULD NOT BE OBTAINED DURING THE ASSESSMENT PROCEEDINGS AND DURING APPELL ATE PROCEEDINGS BEFORE LD. CIT (A). THEREFORE THE SAME COULD NOT BE FILED. ON ASKING BY THE BENCH THE COPY OF SALE DEED WAS PRODUCED AND FILED BY LD. A/R ON BEHALF OF THE ASSESSEE WHICH IS PLACED ON RECORD. 73. ON THE OTHER HAND LD. D/R HAS PLACED RELIANCE ON THE ORDERS OF AO AND LD. CIT (A). 74. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD WE FIND THAT ASSESSEE DESERVES TO SUCCEED ON THIS ISSUE. IT IS SEEN THAT ASSESSEE SOLD FLAT NO. 402 SITUATED AT PARADISE BUILDING MOTI DOONGRI ROAD JAIPUR AND AN ADVANCE OF RS. 10 00 000/- WAS TAKEN FROM SMT. JYOTSNA MEHTA AND RS. 9 00 000/- FROM SHRI DINESH MEHTA TOTALING TO RS. 19 00 000/- AND THE SA ME WAS SHOWN AS ADVANCE AS THE REGISTRATION WAS NOT GOT DONE. THE REGISTRATION WAS COMPLETED DURING THE SUBSEQUENT YEAR AND ASSESSEE HAS SHOWN CAPITAL GAIN ON ACCOUNT OF SALE OF FLAT WHICH HAS BEEN ACCEPTED BY THE AO ALSO. THEREFORE IN OUR CONSI DERED VIEW THE ASSESSING OFFICER SHOULD NOT HAVE DOUBTED THE SALE CONSIDERATION TAKE N AS ADVANCE IN THE YEAR UNDER CONSIDERATION. THE AMOUNT WAS TAKEN THROU GH ACCOUNT PAYEE CHEQUE AND COPY OF ACCOUNT HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 29 & 30. NOW ON BEHALF OF THE 23 ASSESSEE THE SALE DEED EXECUTED BETWEEN ASSESSEE AN D THE PURCHASER I.E. SMT. JYOTSNA MEHTA AND SHRI DINESHGH MEHTA HAS BEEN OBTAINED BY THE WIFE OF THE ASSESSEE FROM THE OFFICE OF SUB REGISTRAR. COPY IS PLACED ON RECORD A ND AFTER EXAMINING THE COPY OF SALE DEED IT IS CLEARLY SEEN THAT AN AMOUNT OF RS. 19 00 000/- WAS TAKEN BY THE ASSESSEE AS ADVANCE FROM THE BUYERS AND AS PER STATEMENT OF THE LD. COUNSEL OF THE ASSESSEE THAT CAPITAL GAIN HAS ALREADY BEEN SHOWN IN THE YEAR WHE N THE SALE DEED GOT REGISTERED AND THE AO HAS ACCEPTED THE CAPITAL GAIN ALSO. IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE FIND THAT THERE IS NO JUSTIFICATION AT THE END OF THE AO IN TREATING THE AMOUNT OF ADVANCED AS FROM UNEXPLAINED SOURCES. THEREFORE THE LD. CIT ( A) WAS ALSO NOT JUSTIFIED IN NOT ACCEPTING THE EXPLANATION OF THE ASSESSEE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES WE HOLD THAT AMOUNT OF RS. 19 00 000/- WAS TAKEN AS ADVANCE AGAINST THE SALE OF FLAT IN PARADISE BUILDING MOTI DOONGRI ROAD JAIPUR AND CA NNOT BE TREATED AS ADVANCE FROM UNDISCLOSED SOURCES. EVEN THE NAME OF THE BUYER ALO NG WITH COMPLETE ADDRESS WAS GIVEN BY THE ASSESSEE. HOWEVER NO EFFECTS WERE MADE TO ENQUIRE FROM THE PARTY DIRECTLY BY SUMMONING THEM UNDER SECTION 131. ACCORDINGLY WE DELETE THE ADDITION OF RS. 19 00 000/-. 75. REGARDING THE REMAINING ADDITION OF RS. 41 000/ - IT IS SEEN THAT THIS WAS TAKEN ON ACCOUNT OF PURCHASE OF MARBLE FROM M/S. RAHIM MARBL E HANDICRAFT. HOWEVER THE AO WAS NOT SATISFIED AS ASSESSEE COULD NOT FILE ANY CO NFIRMATION AND THEREFORE THE AMOUNT OUTSTANDING IN THE NAME OF RAHIM MARBLE HANDICRAFT WAS ADDED BY THE AO. THE LD. CIT (A) HAS CONFIRMED THE ACTION OF THE AO. 76. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD IT IS SEEN THAT THERE WAS A OPENING BALANCE OF RS. 13 000/- AS ON 1.4.2007 AND DURING THE YEAR 24 ASSESSEE HAS PURCHASED MATERIAL OF RS. 1 26 100/-. THE ASSESSEE HAS MADE PAYMENT OF RS. 85 000/- AND THE REMAINING WAS OUTSTANDING. PURCHA SES OF THE ASSESSEE HAS BEEN ACCEPTED THEREFORE WE ARE NOT ABLE TO UNDERSTAND THAT WHY THE AMOUNT OUTSTANDING PAYABLE BY THE ASSESSEE IS TREATED AS NOT PAYABLE B Y THE ASSESSEE WHEREAS PURCHASES SHOWN BY ASSESSEE HAS BEEN ACCEPTED. IT WAS STATED THAT IN SUBSEQUENT YEAR THE AMOUNT HAS BEEN PAID BY THE ASSESSEE. THEREFORE IN OUR C ONSIDERED VIEW THE ADDITION MADE AND SUSTAINED BY LOWER AUTHORITIES WAS NOT JUSTIFIED. A CCORDINGLY WE DELETE THE ADDITION OF RS. 41 000/- SUSTAINED BY LD. CIT (A). 77. REMAINING GROUND IS AGAINST CONFIRMING ADDITION OF RS. 9 710/- MADE BY AO DISALLOWING CLAIM UNDER SECTION 24(B) OF THE ACT FO R INTEREST PAYMENT ON HOUSING LOAN. 78. AN ADDITION OF RS. 89 866/- ON ACCOUNT OF PAYME NT OF INTEREST ON HOUSING LOAN UNDER SECTION 24(B) OF THE ACT WAS MADE BY THE AO. 79. IT WAS SUBMITTED BEFORE LD. CIT (A) THAT DISALL OWANCE UNDER SECTION 24(B) OF RS.89 866/- ON ACCOUNT OF INTEREST PAYMENT ON HOUSI NG LOAN IS NOT JUSTIFIED. DETAILS OF THE SAME WAS ALSO FILED. 80. AFTER CONSIDERING THE SUBMISSIONS THE LD. CIT (A) ALLOWED THE GROUND PARTLY IN FAVOUR OF THE ASSESSEE. AN AMOUNT OF RS.9 710/- WAS SUSTAINED BY OBSERVING THAT THIS IS A RECOVERY OF LOAN AND NOT THE INTEREST PAYMENT PAID BY THE ASSESSEE. ACCORDINGLY THE ADDITION OF RS. 9 710/- WAS SUSTAINED AND REMAINING ADDITION WAS DELETED. 81. THE ASSESSEE COULD NOT CONTROVERT THE FINDING O F LD. CIT (A). THEREFORE WE SEE NO REASON TO INTERFERE WITH THE FINDING OF LD. CIT (A) . 82. IN THE RESULT APPEALS OF THE DEPARTMENT ARE DI SMISSED AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED IN PART FOR BOTH THE YEARS . 25 83. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 .7.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR D/- COPY FORWARDED TO :- THE ACIT CENTRAL CIRCLE ALWAR. SHRI DHARMENDRA PANDEY JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1452(2)/JP/2010) BY ORDER AR ITAT JAIPUR.