ITO, Panipat v. M/s Anand International, Panipat

ITA 193/DEL/2009 | 2005-2006
Pronouncement Date: 15-07-2011 | Result: Dismissed

Appeal Details

RSA Number 19320114 RSA 2009
Assessee PAN AACFA9533G
Bench Delhi
Appeal Number ITA 193/DEL/2009
Duration Of Justice 2 year(s) 5 month(s) 30 day(s)
Appellant ITO, Panipat
Respondent M/s Anand International, Panipat
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 15-07-2011
Date Of Final Hearing 24-05-2011
Next Hearing Date 24-05-2011
Assessment Year 2005-2006
Appeal Filed On 16-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : A NEW DELHI) BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI K.D. RANJAN ACCOUNTANT MEMBER I.T.A. NO. 193/DEL./2 009 (ASSESSMENT YEAR : 2005-06) ITO WARD 4 VS. M/S ANAND INTERNATIONAL PANIPAT. NEAR MALIK PETROL PUMP SANOLI ROAD PANIPAT. (PAN/GIR NO.AACFA9533G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN & MS. RANO JAIN CAS REVENUE BY : MS. GEETMALA MOHNANEY CIT(DR) ORDER PER K.D. RAJNAN AM THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 200 5-06 ARISES OUT OF THE ORDER OF CIT(A) KARNAL. 2. THE FIRST ISSUE FOR CONSIDERATION RELATES TO REJ ECTION OF BOOKS OF ACCOUNT AND APPLYING OF GROSS PROFIT RATE OF LAST YEAR FOR THE PURPOSES OF ESTIMATING INCOME. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOUND THAT THERE WAS A DIFFERENCE OF RS 2 03 19 446/- IN CLOSING STOCK AS PER STOCK STATEMENT GIVEN TO THE BANK AND AS RECORDED I N THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER VIDE HIS LETTER DATED 13.12.2007 ASKED THE ASSESSEE TO FURNISH QUANTITY AND AMOUNT WITH RESPECT TO THE DETAILS OF OPENING STOCK PURCHASES THE SALES AND CLOSING STOCK IN THE PRO-FORMA MENTIONED IN THE ASSESSMENT ORDER. THE ASSESSEE HAD NEITHER FURNISHED THE DETAILS SOUGHT FOR NOR OFFERED ANY EXPLANATION FOR FURNISHING THE INFORMATION AS DESIRED BY THE ASSESSING OFFICER. THE ASSESSING OFF ICER ALSO NOTED THAT THE ASSESSEE FAILED TO PRODUCE STOCK RESISTER FOR VERIFICATION. THE ASSESSING OFFICER RELYING ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CAS E OF RAJASTHAN WINE AGENCY VS. CIT I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 2 AND ANOTHER 292 ITR 577 AND HONBLE PUNJAB & HARY ANA HIGH COURT IN THE CASE OF M/S ASIA ENGINEERING WORKS VS. CIT 204 CTR 467 REJECT ED THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER FURTHER NOTED THAT GROSS PROFIT R ATE DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS AT 32.9% AS COMPARED TO 42. 01% OF PRECEDING YEAR. THE ASSESSING OFFICER THEREFORE APPLIED GROSS PROFIT RATE OF 42.01% WHICH RESULTED IN ADDITION OF RS 75 81 022/-. 3. ON APPEAL BEFORE CIT(A) IT WAS SUBMITTED THAT T HE ASSESSING OFFICER HAD REJECTED BOOKS OF ACCOUNT ON THE GROUND THAT THE ASSESSEE DI D NOT PRODUCE STOCK DETAILS. HE REFERRED TO PAGE 6 SECOND PARAGRAPH OF ASSESSMENT ORDER WHERE THE ASSESSING OFFICER HIMSELF MENTIONED THAT HOWEVER THE ASSESSEE VIDE HIS REPLY DATED 26.12.07 FILED THE DETAILS OF CLOSING STOCK OF RAW MATERIAL AND FINISH ED GOODS. THEREFORE ASSESSING OFFICER CONTRADICTED HIS OWN STATEMENT WHEN HE MENT IONED THAT THE ASSESSEE DID NOT PRODUCE ANY STOCK RECORD AND ON OTHER PLACES HE SPE CIFICALLY MENTIONED THE DATE ON WHICH SAME WERE SUBMITTED BEFORE HIM. THE ASSESSEE PRODU CED STOCK REGISTER BEFORE ASSESSING OFFICER BUT HE HAD CONVENIENTLY IGNORED THE DOCUME NTS PRODUCED BEFORE HIM. IT WAS ALSO SUBMITTED THAT BOOKS OF ACCOUNT WERE AUDITED U/S 44 AB OF THE I.T. ACT 1961. THE ASSESSEE IS SUBJECTED TO EXCISE DUTY AND WAS MAINTA INING COMPLETE EXCISE STOCK RECORDS RELATING TO PURCHASE CONSUMPTION ETC. THE BOOKS O F ACCOUNT WERE PRODUCED AND NO DISCREPANCY WAS POINTED OUT BY THE ASSESSING OFFICE R WHILE REJECTING THE BOOKS OF ACCOUNT. THEREFORE THE OBSERVATIONS MADE BY THE AS SESSING OFFICER IN THE ASSESSMENT ORDER ARE FACTUALLY INCORRECT. THE ASSESSEE VIDE L ETTER DATED 20.12.07 PRODUCED COMPLETE BILLS/VOUCHERS OF ALL TRADING EXPENSES. THE ASSESS EE FILED MONTH-WISE DETAILS OF PURCHASES AND SALES VALUATION OF CLOSING STOCK AND ALSO FILE D QUANTITATIVE DETAILS OF STOCK. THE ASSESSING OFFICER HIMSELF ADMITTED PRODUCTION OF RE CORDS ON PAGE 5 OF THE ASSESSMENT ORDER WHERE HE HAS QUOTED ASSESSEES REPLY REGARDIN G MAINTENANCE OF RECORDS FOR EXCISE PURPOSES. 4. THE CIT(A) CONSIDERED THE SUBMISSIONS OF THE ASS ESSEE. HE REJECTED THE CONTENTION OF THE ASSESSING OFFICER ON THE GROUND T HAT BOOKS OF ACCOUNT WERE TO BE REJECTED BY OBSERVING AS UNDER: I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 3 REJECTION OF BOOKS OF ACCOUNT IS ALLOWED AS PER SE CTION 145(3) ONLY WHERE ASSESSING OFFICER IS NOT SATISFIED ABOUT THE CORREC TNESS AND COMPLETENESS OF ACCOUNTS OF THE ASSESSEE OR WHERE THE ACCOUNTING ME THOD OR ACCOUNTING STANDARDS HAVE NOT BEEN REGULARLY FOLLOWED. IN THE CASE OF T HE ASSESSEE THE ASSESSING OFFICER HAS NOT FOUND ANY IRREGULARITY W.R.T. THE A CCOUNTING METHOD OR W.E.T. THE ACCOUNTING STANDARD. ASSESSING OFFICER HAS ONLY PO INTED OUT 3 ITEMS NAMELY DIFFERENCE IN STOCK TWO AMOUNTS ON ACCOUNT OF DEBT OR AND CREDITOR AND ABSENCE OF STOCK REGISTER WHEREAS ALL THE THREE HAVE BEEN RE FUTED BY THE ASSESSEE. THE ISSUES RELATING TO DIFFERENCE IN STOCK AND AMOUNTS RELATIN G TO DEBTOR AND CREDITOR HAVE BEEN SEPARATELY DISCUSSED IN THIS ORDER AND DECIDED AND THE ADDITIONS MADE ON THESE ISSUES HAVE BEEN DELETED. THE ASSESSING OFFI CER HAS CLAIMED THAT STOCK REGISTER WAS NOT PRODUCED AND RELYING ON CERTAIN CA SE LAWS THE BOOKS OF ACCOUNT WERE REJECTED WHEREAS AS SUBMITTED BY THE ASSESSE E COMPLETE BOOKS OF ACCOUNT WERE PRODUCED BEFORE THE ASSESSING OFFICER AND NO O THER DEFECT WAS FOUND. COMPLETE DETAILS OF SALE AND PURCHASE WERE AVAILABL E BEFORE THE ASSESSING OFFICER AND AS ACCEPTED BY THE ASSESSING OFFICER AT PAGE 6 PARA 2 OF THE ORDER. HOWEVER THE ASSESSEE VIDE ITS REPLY DT.26.12.2007 FILED THE DETAILS OF CLOSING STOCK OF RAW MATERIAL AND FINISHED GOODS. THEREFORE THE COMPL ETE DTAIL WERE AVAILABLE TO THE ASSESSING OFFICER ON THE BASIS OF WHICH THE CLOSING STOCK CAN BE CALCULATED AND COMPARED THEREFORE IN VIEW OF THESE FACTS AND DIS CUSSION IT CANNOT BE SAID THAT IT WAS NOT POSSIBLE FOR THE ASSESSING OFFICER TO COMP UTE THE INCOME OF THE ASSESSEE ON THE BASIS OF THE BOOKS OF ACCOUNT AND FINAL ACCO UNTS FILED/PRODUCED BEFORE THE ASSESSING OFFICER. AT THE SAME TIME ASSESSING OFF ICER HAS NOT BEEN ABLE TO GIVE PATENT REASON WHICH RENDERS THE BOOKS OF ACCOUNTS I NCAPABLE OF GIVING THE CORRECT RESULTS. THE POINTS OF DISCREPANCIES MENTIONED BY THE ASSESSING OFFICER DOES NOT HOLD GOOD IN VIEW OF THE DISCUSSIONS RELATING TO TH EM SEPARATELY FOR EACH ISSUE/ADDITION THEREFORE IT IS WRONG TO HOLD THAT THE BOOKS OF ACCOUNT WERE NOT CORRECT OR COMPLETE HENCE THE DECISION OF THE ASSE SSING OFFICER FOR REJECTION OF BOOKS OF ACCOUNT IS AGAINST THE LAW AND FACTS AND D OES NOT FIND SUPPORT FROM ANY CASE LAW CITED BY THE ASSESSING OFFICER UNDER THE F ACTS AND CIRCUMSTANCES OF THE CASE. 5. THE CIT(A) DISTINGUISHED THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF RAJASTHAN WINE AGENCY(SUPRA) AND HONBLE PU NJAB & HARYANA HIGH COURT IN THE CASE OF AXIA ENGINEERING WORKS (SUPRA). THE CIT(A) RELIED ON SEVERAL DECISIONS TO ARRIVE AT THE CONCLUSION THAT THE DECISION OF ASSES SING OFFICER TO REJECT BOOKS OF ACCOUNT WAS NOT JUSTIFIED. HE THEREFORE ALLOWED THE GROU ND IN FAVOUR OF THE ASSESSEE. 6. BEFORE US LD. SR. D.R. SUBMITTED THAT THERE WAS DIFFERENCE IN THE VALUATION OF CLOSING STOCK AS PER STOCK HYPOTHECATED WITH THE BA NK AND AS PER BOOKS OF ACCOUNT AND THE ASSESSEE HAD NOT BEEN ABLE TO GIVE SATISFACTORY REASONS. THEREFORE THE ASSESSING I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 4 OFFICER WAS JUSTIFIED IN REJECTING THE BOOKS OF ACC OUNT. SHE PLACED RELIANCE ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF AXIA ENGINEERING WORKS (SUPRA) 292 ITR 577. 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE ORDER OF THE CIT(A) IT IS CLEAR THAT THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNT WHICH HAVE BEEN AUDITED U/S 44AB OF THE AC T. THE ASSESSEE FILED BALANCE SHEET P&L A/C DULY AUDITED ALONG WITH THE RETURN OF INCOM E. THE ASSESSEE IS SUBJECTED TO EXCISE DUTY AND HAD MAINTAINED COMPLETE EXCISE STOC K RECORDS REGARDING PURCHASES CONSUMPTION PRODUCTION ETC. THE ASSESSEE HAD PROD UCED BOOKS OF ACCOUNT BEFORE ASSESSING OFFICER. THE ASSESSING OFFICER HAD REJEC TED THE BOOKS OF ACCOUNT MERELY ON THE GROUND THAT THERE WAS DIFFERENCE IN THE STOCK A S PER STATEMENT GIVEN TO THE BANK AND RECORDED IN THE BOOKS OF ACCOUNT. THE ASSESSING OF FICER HAD RELIED ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF AXIA ENGINEERING WORKS (SUPRA). IN THIS CASE FOR ASSESSMENT YEAR 1991-92 THE ASSE SSING OFFICER FOUND THAT THE ASSESSEE WAS NOT MAINTAINING ANY QUANTITATIVE TALLY OR DETAI LS OF VARIOUS ITEMS AND NOTICING DISCREPANCIES IN THE STOCK FOUND AT THE TIME OF SUR VEY CONDUCTED AT THE PREMISES OF THE ASSESSEE THE BOOKS OF ACCOUNT WERE REJECTED BY INV OKING PROVISIONS OF SECTION 145(2) OF THE ACT. THE ORDER OF THE ASSESSING OFFICER REJECT ING THE BOOKS OF ACCOUNT WAS AFFIRMED BY THE CIT(A) AND THE TRIBUNAL WHICH WAS ALSO UPHEL D BY HONBLE HIGH COURT. IN THE CASE OF THE ASSESSEE THE FACTS ARE DISTINGUISHABLE . IN THIS CASE THE ASSESSEE HAD MAINTAINED COMPLETE AUDITED BOOKS OF ACCOUNT WITH Q UANTITATIVE DETAILS. THE ASSESSING OFFICER HAD NOT POINTED OUT ANY DISCREPANCY IN THE QUANTITY OF STOCK FILED BEFORE HIM AND SUBMITTED TO THE BANK. THE ONLY DIFFERENCE WAS WIT H RESPECT TO THE PRICES AS PER BOOKS OF ACCOUNT AND THE STATEMENT SUBMITTED TO THE BANK. T HEREFORE THE FACTS OF THE CASE ARE ENTIRELY DIFFERENT FORM THE FACTS OF AXIA ENGINEERI NG WORKS (SUPRA). IN THE CASE OF RAJASTHAN WINE AGENCY (SUPRA) THE ASSESSEE FAILED TO PRODUCE STOCK REGISTER AS WELL AS SALE AND PURCHASE VOUCHERS WHEREAS IN THE CASE OF T HE ASSESSEE THE COMPLETE BOOKS OF ACCOUNT ALONG WITH THE SALE AND PURCHASE VOUCHERS W ERE AVAILABLE WITH THE ASSESSING OFFICER AND NO DEFECT IN THE SALE AND PURCHASE VOUC HERS WAS FOUND BY THE ASSESSING I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 5 OFFICER. THEREFORE THE FACTS OF THE ASSESSEES CA SE ARE ENTIRELY DIFFERENT FROM THE FACTS OF THE CASE OF THE RAJASTHAN WINE AGENCY (SUPRA). 8. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY DE FECT OR DISCREPANCY IN THE PURCHASES AND SALES MADE BY THE ASSESSEE. THE ASSE SSEE IS SUBJECTED TO EXCISE RULES AND REGULATIONS AND HAD MAINTAINED STOCK REGISTER WHICH WAS PRODUCED BEFORE ASSESSING OFFICER. THERE IS NO DIFFERENCE IN THE QUANTITATIV E DETAILS OF THE STOCK. THERE IS DIFFERENCE IN THE RATE SHOWN IN THE BOOKS OF ACCOUNT AND SHO WN IN THE STATEMENT SUBMITTED TO THE BANK FOR HYPOTHECATION OF THE STOCK. MERELY BECAUSE THERE IS DIFFERENCE IN THE VALUATION FOR OBTAINING HIGHER LIMIT OF CREDIT FACILITIES BO OKS OF ACCOUNT OF THE ASSESSEE CANNOT BE REJECTED AND GROSS PROFIT RATE OF LAST YEAR CANNOT BE APPLIED. IN THE ABSENCE OF ANY DISCREPANCY POINTED OUT IN THE PURCHASES OR SALES NO ADDITION CAN BE MADE ON ACCOUNT OF GROSS PROFIT RATE. THE CIT(A) WAS THEREFORE JUST IFIED IN DELETING THE ADDITION. IN VIEW OF ABOVE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED TO REJECT THE B OOKS OF ACCOUNT. 9. AS REGARDS THE ESTIMATION OF G.P. RATE OF 42.01% AS AGAINST 32.9% DECLARED BY THE ASSESSEE IT WAS SUBMITTED BY THE ASSESSEE BEFORE T HE CIT(A) THAT THE ASSESSING OFFICER HAS NEITHER GIVEN ANY REASON FOR REJECTING ITS EXPL ANATION NOR JUSTIFIED THE G.P. RATE APPLIED BY HIM. THEREFORE IT WAS CLAIMED THAT ADDITION HAS BEEN MADE IN THE MOST ARBITRARY MANNER WITHOUT ANY BASIS OR LOGIC. IT WAS ALSO SUB MITTED THAT ASSESSEE IS NOT EXPECTED TO EARN THE SAME GROSS PROFIT EVERY YEAR. THE GROSS P ROFIT RATE DEPENDS ON VARIOUS FACTORS. THE ASSESSING OFFICER REJECTED THE EXPLANATION OF T HE ASSESSEE RELYING ON THE FACT THAT BOOKS OF ACCOUNT HAD BEEN REJECTED. 10. THE CIT(A) AFTER CONSIDERATION OF THE ARGUMENTS ADVANCED BY THE ASSESSEE OBSERVED THAT ASSESSING OFFICER HAD NOT FOUND ANY D EFECT IN THE BOOKS OF ACCOUNT AND THERE WAS NO DEFECT NOTICED BY HIM WITH RESPECT TO TURNOVER OF THE ASSESSEE. THE EXPLANATION OF THE ASSESSEE HAD BEEN REJECTED SUMMA RILY WITHOUT GIVING ANY REASON OR LOGIC FOR REJECTION OF THE EXPLANATION. THE ASSESS ING OFFICER HAD NOT EVEN MADE ANY COMPARISON OF THE ASSESSEES CASE AND ITS G.P. RATE WITH ANY OTHER CASE OR OTHER ASSESSMENT I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 6 YEARS OF THE ASSESSEE. MERELY BECAUSE G.P. RATE WAS 42.01% IN THE PRECEDING YEAR THAT WOULD NOT NECESSARILY MEAN THAT G.P. RATE WILL REMA IN THE SAME. THE CIT(A) THEREFORE HELD THAT ASSESSING OFFICER WAS WRONG TO MECHANICAL LY APPLY THE SAME G.P. RATE OF THE ASSESSEE DECLARED IN PREVIOUS YEAR. 11. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. AS DISCUSSED BY THE CIT(A) IN HIS ORDER THAT THE AS SESSING OFFICER HAD NOT POINTED OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT OR TRADING RESU LTS. HE HAD MADE ADDITION WITHOUT COMPARING THE G.P. EARNED BY THE ASSESSEE IN THE YE AR CONSIDERATION WITH THE G.P. RATE OF OTHER ASSESSEES IN THE SAME TRADE AND IN THE SAME A REA AND THE YEAR. THE CIT(A) IN OUR CONSIDERED OPINION WAS JUSTIFIED IN DELETING THE A DDITION MADE ON ACCOUNT OF G.P. RATE. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE OR DER PASSED BY THE CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF G.P. RATE. 12. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE ADDITION ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK AS PER BOOKS OF ACCOUNT AND DECLARED TO THE BANK. AS MENTIONED ABOVE THE ASSESSING OFFICER MADE ADDITION OF RS 1 24 16 646/- BEING THE DIFFERENCE IN THE CLOSING STOCK AS PER BOOKS OF ACC OUNT AND DECLARED TO THE BANK. BEFORE ASSESSING OFFICER IT WAS SUBMITTED THAT THE SAID S TATEMENT WAS GIVEN TO THE BANK ONLY TO OBTAIN WORKING CAPITAL FACILITY. THE RATES TAKEN I N THE STOCK INVENTORY GIVEN TO THE BANK WERE ARBITRARY AND HAD NO LINK WITH THE BOOKS OF AC COUNT. THE RATES WERE NEITHER ON COST BASIS NOR ON MARKET VALUE BASIS. THE RATES WERE GI VEN ONLY FOR TAKING DP FROM THE BANKS. SINCE THERE WAS NO DIFFERENCE IN THE QUANTITATIVE D ETAILS OF STOCK AS PER BOOKS OF ACCOUNT AND GOODS HYPOTHECATED WITH THE BANK NO ADDITION C OULD BE MADE. THIS CONTENTION OF THE ASSESSEE WAS REJECTED AND ASSESSING OFFICER ADD ED THE DIFFERENCE OF STOCK AS PER BOOKS OF ACCOUNT AND SHOWN TO THE BANK. 13. ON APPEAL BEFORE CIT(A) IT WAS SUBMITTED THAT THERE WAS NO DIFFERENCE IN THE QUANTITY OF STOCK AS PER TWO STATEMENTS. THE ONLY DIFFERENCE WAS IN VALUE OF SUCH STOCK. ITEM-WISE DETAILS OF SAID STOCK TOGETHER WITH BILLS WERE PRODUCED BEFORE ASSESSING OFFICER. THE ASSESSEE EXPLAINED THE DIFFERENCE IN STOCK VIDE LETTER DATED 26.12.07 WHICH I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 7 IS PLACED IN PAPER BOOK AT PAGES 195-200. EACH AND EVERY PURCHASE INVOICES WAS SUBMITTED TO THE VALUATION OFFICER. NO DISCREPANCY WAS POINTED OUT IN ANY OF THE EVIDENCES FILED. THE ASSESSEE HAD MAINTAINED EXCIS E REGISTER. THEREFORE THERE WAS NO JUSTIFICATION FOR MAKING ADDITION BASED ON DIFFEREN CE IN VALUATION. THE ASSESSING OFFICER HAD NOT BROUGHT ON RECORD ANY OTHER MATERIAL OR EVI DENCE ACCORDING TO WHICH THE STOCK WAS OF HIGHER VALUE THAN WHAT WAS DECLARED AS ON 31 .3.2005 AS PER BOOKS OF ACCOUNT. 14. THE CIT(A) ON CONSIDERATION OF THE ABOVE FACTS OBSERVED THAT ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK GIVEN TO THE BANK AND AS PER BOOKS OF ACCOUNT MIGHT BE MADE WHEN IT WAS CLEAR ON THE BASIS OF THE FACTS OF THE CASE THAT THE QUANTITY OF THE STOCK GIVEN TO THE BANK WAS HIGHER THAN THE QUANTITY AS PER BOOKS OF A CCOUNT AND THE STOCK WAS EITHER PLEDGED OR COUNTED AND VERIFIED BY THE BANK OFFICIA LS. IN THE CASE OF THE ASSESSEE WHERE THE DIFFERENCE IN THE QUANTITY OF STOCK DID NOT EXI ST AND STOCK WAS NEITHER PLEDGED NOR VERIFIED BY THE BANK OFFICIALS THEN NO ADDITION CO ULD BE MADE. IN THE CASE OF THE ASSESSEE THE STOCK WAS NOT PLEDGED BUT IT WAS MER ELY HYPOTHECATED AND QUANTITATIVE DETAILS OF STOCK GIVEN TO THE BANK TALLIED WITH THE DETAILS FILED BEFORE ASSESSING OFFICER AND THE STOCK WAS NOT VERIFIED BY THE BANK OFFICIAL S. THE ASSESSING OFFICER HAD NOT BEEN ABLE TO BRING ON RECORD ANY EVIDENCES OR FACTS TO S HOW THAT THERE WAS DIFFERENCE IN THE QUANTITY OF STOCK GIVEN TO THE BANK AND SHOWN IN TH E BOOKS OF ACCOUNT OF THE ASSESSEE BY A LARGER QUANTITY OF STOCK THAN DECLARED IN THE INC OME-TAX RETURNS. THEREFORE THE CIT(A) DELETED THE ADDITION. 15. BEFORE US LD.SR.DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. SHE PLACED RELIANCE ON THE DECISION OF THE HONBLE GAUHATI HIG H COURT IN THE CASE OF DHANSI RAM AGGARWAL VS. CIT 201 ITR192 AND COIMBATORE SPINNIN G & WEAVING CO. LTD. VS. CIT 95 ITR 375. 16. ON THE OTHER HAND LD.AR OF THE ASSESSEE SUBMIT TED THAT THERE IS DISTINCTION IN HYPOTHECATION AND PLEDGE OF STOCK CASH CREDIT OR O VERDRAFT FACILITIES WHICH TAKEN BY A BUSINESSMAN FROM BANK BY PLEDGING OR HYPOTHECATING STOCK IN TRADE. UNDER PLEDGE THE GOODS ARE KEPT IN THE CUSTODY OF THE BANK AND AS SU CH THE STOCK IS VERIFIABLE PHYSICALLY I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 8 WHILE HYPOTHECATED GOODS REMAIN IN THE PHYSICAL CUS TODY OF THE ASSESSEE AND ASSESSEE HAS TO FILE THE PERIODIC STOCK STATEMENT TO THE BANK CE RTIFYING THE VALUE OF STOCK. IN THE CASE OF THE ASSESSEE THERE WAS NO DIFFERENCE IN THE QUA NTITATIVE DETAILS. THE ASSESSEE INFLATED THE VALUE OF STOCK SO AS TO GET HIGHER OVERDRAFT FA CILITY LIMIT. THE ASSESSING OFFICER HAD NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT AS SESSEE HAD STOCK MORE THAN HIGHER VALUE OF AMOUNT AS DECLARED IN THE BOOKS OF ACCOUNT . THE ASSESSEE HAD FILED PURCHASE INVOICES TO SUPPORT THE VALUATION OF STOCK AS PER B OOKS OF ACCOUNT. NO DISCREPANCY HAS BEEN POINTED OUT BY THE ASSESSEE AND THEREFORE NO ADDITION CAN BE MADE ON ACCOUNT OF DIFFERENCE IN VALUATION OF STOCK AS PER BOOKS OF AC COUNT AND DECLARED TO THE BANK. HE PLACED RELIANCE ON SEVERAL DECISIONS INCLUDING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PREM SINGH & CO. 163 ITR 43 4. 17. WE HAVE HARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE ABOUT THE FACT THAT THERE WAS N O DIFFERENCE IN THE QUANTITY AS PER BOOKS OF ACCOUNT AND DECLARED TO THE BANK. THE ASSESSEE HAD HYPOTHECATED THE STOCK FOR THE PURPOSE OF OBTAINING OVERDRAFT LIMITS. THE ASSESSI NG OFFICER HAD NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE ASSESSEE WAS H AVING STOCK MORE THAN WHAT WAS DECLARED TO THE BANK. 18. IN THE CASE OF CIT VS. PREM SINGH & CO.(SUPRA) THE ITO MADE ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK AS DISCLOSED IN THE BOOKS OF ACCOUNT AND SHOWN IN THE ACCOUNT OF STOCK HYPOTHECATED WITH THE BANK. ITAT DELETED THE ADDITION AFTER REFERRING TO THE PRACTICE OF FILING INFLATED BILLS FOR THE PURPO SE OF GETTING A LOAN AND ALSO REFERRING TO THE FACT THAT FOR PURPOSE OF A LOAN STOCK WOULD BE VALUED AT MARKET PRICE WHEREAS IN THE BOOKS IT WOULD BE VALUED AT COST. ITAT ACCEPTED T HE STOCK AS PER BOOKS OF ACCOUNT. ON APPEAL THE HONBLE DELHI HIGH COURT HELD THAT NO Q UESTION OF LAW AROSE OUT OF THE ORDER PASSED BY ITAT. 19. IN THE CASE OF COIMBATORE SPINNING & WEAVING CO . (SUPRA) RELIED BY THE LD. SR. D.R. THE ASSESSEE IN ORDER TO OBTAIN HIGHER LOAN F ACILITY INFLATED HIS STOCK FIGURES IN THE STATEMENT GIVEN TO THE BANK. FOR THIS REASON AS AL SO FOR CERTAIN OTHER DEFECTS IN THE I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 9 ACCOUNTS THE ASSESSING OFFICER REJECTED THE BOOKS RESULTS AND ESTIMATED THE G.P. RATE. THE AAC ON APPEAL HELD THAT THE CIRCUMSTANCES OF TH E CASE WARRANTED THE REJECTION OF BOOK RESULTS AND ESTIMATION OF INCOME BUT HE MADE ADDITION FOR SPECIFIC DEFECTS INSTEAD OF OVERALL ESTIMATE SO THAT THE TOTAL ADDITION MADE BY THE OFFICER WAS REDUCED. THE TRIBUNAL IN FURTHER APPEAL REDUCED THE ADDITION ON ONE ITEM OF DEFECT AND CONFIRMED OTHER ADDITIONS. ON REFERENCE REJECTION OF BOOKS OF ACC OUNT AND ESTIMATING OF INCOME WAS UPHELD. THE FACTS OF THE CASE OF THE ASSESSEE ARE DIFFERENT. THERE ARE NO OTHER DEFECTS OR DISCREPANCY POINTED OUT BY THE ASSESSING OFFICER IN THE BOOKS OF ACCOUNTS. THEREFORE THE FACTS IN THE CASE OF COIMBATORE SPINNING & WEAV ING CO. (SUPRA) ARE ENTIRELY DIFFERENT FROM THE FACTS OF THE CASE OF THE ASSESSEE. 20. IN VIEW OF ABOVE WE ARE OF THE CONSIDERED OPIN ION THAT LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF DIFFERENCE IN STOCK. 21. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE ADDITION OF RS.19 LAKHS AND RS.60 03 000/- ON ACCOUNT OF ADVANCE RECEIVABLE AND INCENTIVE RECEIVABLE BEING NOT DISCLOSED IN THE BOOKS OF ACCOUNT. THE ASSESSING O FFICER NOTED THAT ASSESSEE HAD MADE ADVANCE OF RS.19 LAKHS TO SUPPLIERS WHICH WAS RECEI VABLE ON 31.3.2005 BUT THE SAME WAS NOT REFLECTED AS ASSET IN THE BALANCE SHEET. THERE FORE HE MADE ADDITION OF RS 19 LAKHS. AS REGARDS THE AMOUNT OF RS 60 03 000/- WHICH WAS R ECEIVABLE BY THE ASSESSEE ON ACCOUNT OF INCENTIVE BUT WAS NOT CREDITED IN THE MA NUFACTURING TRADING AND PROFIT AND LOSS ACCOUNT. THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE HAD UNDERSTATED HIS INCOME OF RS. 60 03 000/- ON ACCOUNT OF INCENTIVES. THE ASSESSING OFFICER ADDED THE SAME TOWARDS TAXABLE INCOME OF THE ASSESSEE. 22. BEFORE CIT(A) IT WAS SUBMITTED BY THE ASSESSEE THAT ASSESSING OFFICER HAD NEGLIGENTLY IGNORED THE PAPERS BY THE ASSESSEE. HE REFERRED TO SCHEDULE G OF THE BALANCE SHEET WHICH GIVES THE DETAILS OF LOANS AND ADVANCES TOTALING TO RS. 19 40 000/-. IT WAS THEREFORE SUBMITTED THAT SCHEDULE G GAVE FU LL DETAILS OF ADVANCES MADE BY THE ASSESSEE AND HAS BEEN DISCLOSED IN THE BALANCE SHEE T. THEREFORE THE CONTENTION OF THE ASSESSING OFFICER WAS FALSE. IT WAS ALSO SUBMITTED THAT ONLY ISSUE WAS REGARDING I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 10 ROUNDING OFF THE ITEM TO THE NEAREST LAKHS IN THE S TATEMENT GIVEN TO THE BANK. THE DETAILS GIVEN TO THE BANK WERE GENERALLY BASED ON ESTIMATE D VALUE OF ITEMS AND SUCH KIND OF VARIANCE WAS ACCEPTABLE LOOKING INTO NATURE AND SCA LE OF BUSINESS OF THE ASSESSEE. AS REGARDS NON-DISCLOSURE OF AMOUNT OF RS.60 03 000/- THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE CONTENTION OF THE ASSESSING OFFICER WAS FA LSE AS THE SAME WAS REFLECTED IN SCHEDULE F OF THE BALANCE SHEET. THE SCHEDULE WA S UNDER HEAD OF CURRENT ASSET AND INCLUDED OF ACCOUNTS IN WHICH EITHER THE ADVANCES H AVE BEEN MADE OR SOME SECURITY HAS BEEN GIVEN. AGAIN ROUNDED OFF THE FIGURES WERE GI VEN TO THE BANK IN ORDER TO GET THE MAXIMUM CREDIT FACILITY. 23. THE CIT(A) ON CONSIDERATION OF THE REPLY AND FA CTS OF THE CASE OBSERVED THAT THE ASSESSING OFFICER SEEMED TO HAVE NOT PROPERLY UNDER STOOD THE ITEMS OF ADVANCES RECEIVABLE AND INCENTIVES RECEIVABLE. BOTH THE ITEM S WERE ON ACCOUNT OF CURRENT ASSETS WHICH WERE NOT REQUIRED TO BE CREDITED TO THE TRADI NG AND PROFIT AND LOSS ACCOUNT BUT WERE SHOWN UNDER THE HEAD LOANS ADVANCES IN THE BALANCE SHEET. SCHEDULE F OF CURRENT ASSETS PLACED AT SERIAL NOS.1-13 AND THE VALUE OF S UCH ASSETS WAS AT RS.53 80 143 WHICH INCLUDED DUTY DRAWBACK EXCISE DUTY RECEIVABLE SER VICE TAX RECEIVABLE VAT RECEIVABLE ETC. AND HAVE BEEN MENTIONED AS INCENTIVES RECEIVAB LE BY THE ASSESSEE IN THE STOCK STATEMENT SUBMITTED TO THE BANK BY WAY OF GROSS FIG URES OF RS 60 03 000/-. THEREFORE THE ITEMS RELATING TO INCENTIVE RECEIVABLE HAVE BEE N PROPERLY SHOWN AND NO ADDITION WAS REQUIRED TO BE MADE ON THIS BASIS BECAUSE IT WAS PR OPERLY REFLECTED IN THE BOOKS OF ACCOUNTS AND IT WAS NOT AN ITEM OF INCOME. SIMILAR LY IN SCHEDULE G OF ADVANCES RECEIVABLE FROM PERSONS PLACED FROM 1 TO 14 TOTALED TO RS. 19 40 000/- AND HAD BEEN SHOWN AT RS.19 LAKHS IN THE STATEMENT SUBMITTED T O THE BANK. THEREFORE THESE ADVANCES WERE PROPERLY REFLECTED IN THE BALANCE SHEET AND TH ERE WAS NO BASIS FOR MAKING ANY ADDITION. HE FURTHER NOTED THAT ASSESSING OFFICER HAD NOT BROUGHT ON RECORD ANY OTHER EVIDENCE TO PROVE THAT THE ASSESSEE POSSESSED ANY A DDITIONAL ADVANCES RECEIVABLE OR INCENTIVES RECEIVABLE WHICH HAVE NOT BEEN INCLUDED IN THE BALANCE SHEET AND THEREFORE THE CIT(A) DELETED THE ADDITION OF RS.19 LAKHS AND RS. 60 03 000/-. I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 11 24. BEFORE US LD.CIT(DR) SUPPORTED THE ORDER OF TH E ASSESSING OFFICER. ON THE OTHER HAND LD.AR. OF THE ASSESSEE SUBMITTED THAT I N THE BANK STATEMENT ASSESSEE HAD TAKEN THE FIGURES ON ESTIMATED BASIS. THEREFORE N O ADDITION COULD BE MADE ON THE BASIS OF BANK STATEMENT. 25. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE BALANCE SHEET FOR THE YEAR UNDER CONSIDERATION. AS PER SCHEDULE F THE OTHER CURRENT ASSETS ARE SHOWN AT RS.53 80 143/- AND LOANS AND ADVANCES REFLECTED IN SCHEDULE G ARE AT RS.19 40 000/-. THE ASSESSEE HAS FILED BANK STATEMENT ON ESTIMATED BASIS. THE ASSESSING OFFICER HAD NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT THE AD VANCES SHOWN TO THE BANK OR INCENTIVES CONTAINED IN BANK STATEMENT WERE IN ADDI TION TO WHAT HAVE BEEN REFLECTED IN THE BOOKS OF ACCOUNT. IN THE ABSENCE OF ANY SUCH FINDIN G IN OUR CONSIDERED OPINION LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. ACC ORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A) IN ALLOWING THE R ELIEF TO THE ASSESSEE. 26. THE NEXT ISSUE FOR CONSIDERATION RELATES TO THE DELETING THE ADDITION OF RS 35 36 000/- MADE ON ACCOUNT OF INVESTMENTS MADE BY THE PARTNERS OF THE ASSESSEE FIRM IN THEIR RESPECTIVE CAPITAL ACCOUNTS. THE FACTS OF TH E CASE ARE THAT PARTNERS OF THE ASSESSEE FIRM MADE ADDITION IN THEIR CAPITAL ACCOUNT DURING THE YEAR. SHRI SURESH GARG MADE ADDITION OF RS 43 35 111 SHRI RAKESH GARG MADE ADD ITION OF RS 53 02 931 AND SMT. KOMAL GARG MADE ADDITION OF RS10 LAKHS. THE ASSES SING OFFICER THEREFORE ASKED FOR THE DETAILS OF SUCH FRESH CAPITAL INTRODUCED. THE ASSESSEE FURNISHED THE DETAILS BUT THE ASSESSING OFFICER HELD THAT THE FOLLOWING PAYMENTS FROM THE BANK STATEMENTS OF PARTNERS WERE NOT EXPLAINED: NAME BANK A/C NO. DATE AMOUNT 1. SHRI SURESH GARG CD 828 24.06.2005 RS.5 36 000 07.02.2005 RS.5 00 000 16.02.2005 RS.5 00 000 21.02.2005 RS.10 00 000 RS.25 36 000 2. SMT. KOMAL GARG SB22669 RS.10 00 000 I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 12 THE ASSESSING OFFICER HELD THAT ADDITION IN THE CAP ITAL ACCOUNT HAVE COME FROM SAVINGS ACCOUNT BUT FURTHER HELD THAT DEPOSITS IN THE BA NK ACCOUNTS OF SHRI SURESH GARG TO THE EXTENT OF RS.35 36 000/- AND IN THE CASE OF SMT. KO MAL GARG AT RS. 10 LAKHS WERE NOT PROPERLY EXPLAINED AND THEREFORE HE MADE ADDITION OF RS.35 36 000 (25 36 000 + 10 00 000) TO THE INCOME OF THE ASSESSEE FIRM ON AC COUNT OF DEPOSITS MADE IN THE BANK ACCOUNT OF PARTNERS. 27. BEFORE CIT(A) IT WAS SUBMITTED THAT MONEY HAD COME TO THE ACCOUNT OF THE ASSESSEE FIRM VIA PROPER BANKING CHANNEL. THE PART NERS HAVE ALSO ACCEPTED THAT THE AMOUNTS HAVE BEEN CONTRIBUTED TO THE CAPITAL BY THE M. THEREFORE NO ADDITION COULD BE MADE IN THE HANDS OF THE FIRM. THE CIT(A) INVITED THE COMMENTS OF THE ASSESSING OFFICER. IT WAS SUBMITTED BY THE ASSESSING OFFICER THAT THE CREDIT ENTRIES HAVE BEEN MADE IN THE BOOKS OF THE FIRM. THEREFORE ONUS TO PROVE GENUINENESS OF CASH CREDIT ENTRIES WAS ON THE FIRM. MOREOVER THE PARTNERS HAVE FAILED TO PROVE THE SOURCE OF INVESTMENT MADE IN THEIR CAPITAL ACCOUNT. THEREFORE ADDITION OF R S.35 36 000/- HAD RIGHTLY BEEN MADE. THE CIT(A) ON CONSIDERATION OF ABOVE FACTS AND SUBM ISSIONS MADE BY THE ASSESSEE OBSERVED THAT UNDISPUTEDLY THE MONEY HAD BEEN INTR ODUCED BY THE PARTNERS BY WAY OF CHEQUE FROM THE BANK ACCOUNTS. THEREFORE THIS IS NOT A CASE OF A CASH CREDIT. THE ASSESSEE HAD ALSO EXPLAINED THE SOURCE OF DEPOSITS IN THEIR RESPECTIVE BANK ACCOUNTS AS CLAIMED BUT IT HAD NOT BEEN DISCUSSED BY THE ASSES SING OFFICER AT ALL. THEREFORE THERE WAS NO BASIS FOR MAKING ADDITION ON ACCOUNT OF CASH CREDIT. AT THE SAME TIME THE CLAIM OF THE ASSESSEE THAT ADDITION COULD NOT BE MADE IN THE HANDS OF THE ASSESSEE FIRM WAS ALSO ACCEPTABLE BECAUSE MONEY HAD COME THROUGH BANKING C HANNELS AND ASSESSEE ALSO GOT SUPPORT ON THIS ISSUE FORM CASE LAWS REFERRED TO BY THE ASSESSEE. THE CIT(A) FURTHER NOTED THAT THE ASSESSING OFFICER HAD NOT BROUGHT AN Y EVIDENCE ON RECORD THAT THE AMOUNT CREDITED IN THE PARTNERS ACCOUNT WAS OUT OF INCOME OR PROFITS OF THE FIRM. THEREFORE NO ADDITION COULD BE MADE IN THE HANDS OF THE ASSESSEE . 28. BEFORE US LD.AR OF THE ASSESSEE EXPLAINED THA T BOTH THE PARTNERS WERE ASSESSED WITH THE SAME ASSESSING OFFICER AND COMPLETE EVIDEN CE EXPLAINING THE CREDITS WAS I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 13 SUBMITTED BEFORE ASSESSING OFFICER WHICIH IS AVAILA BLE AT PAGES 450-532. THE ASSESSING OFFICER HAD TREATED RS 35 36 000 AS UNEXPLAINED CRE DIT IN THE ACCOUNT OF SHRI SURESH GARG DESPITE THE FACTS THAT THE SAME REPRESENTED CHEQUE ISSUED BY THE FIRM TO THE PARTNERS. THE CREDIT OF RS. 5 LAKHS ON 05.02.2005 IS DULY DEBITE D IN PARTNERS ACCOUNT. THE SOURCE OF CREDIT IN THIS BANK ACCOUNT WAS FROM BANK ACCOUNT FROM ICICI BANK. THE CREDIT OF RS 10 LAKHS ON 21.02.2005 WAS FROM BANK ACCOUNT AND SO URCE OF CREDIT IN THE BANK ACCOUNT WAS WITHDRAWAL FROM HANDLOOM INDUSTRIES IN WHICH SH RI SURESH GARG WAS A PARTNER. AS REGARDS CREDIT IN THE ACCOUNT OF SMT. KOMAL GARG I T WAS SUBMITTED THAT THE AMOUNT WAS RECEIVED BY HER FROM SHRI RAM KUMAR. THE BANK ACCO UNT OF SHRI RAM KUMAR WAS SUBMITTED. SHRI RAM KUMAR RECEIVED THE AMOUNT FROM THE ASSESSEE FIRM. ON THE BASIS OF ABOVE IT WAS SUBMITTED THE ASSESSING OFFICER HAD C OMPLETELY IGNORED THE EXPLANATION OFFERED BY THE ASSESSEE. ON THE OTHER HAND LD. CIT( DR) SUPPORTED THE ORDER OF ASSESSING OFFICER. 29. WE HAVE HEARD BOTH THE PARTIES. WE FIND THERE IS NO DISPUTE ABOUT THE FACT THAT THE CREDIT IN THE PARTNERS ACCOUNT HAD BEEN ACCEPTED BY THE PARTNERS THEMSELVES. BOTH THE PARTNERS ARE ASSESSED WITH THE SAME ASSESSING OFFIC ER. THE ASSESSING OFFICER HAD NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE THAT EXPLAN ATION OFFERED BY THE PARTNERS WAS NOT CORRECT. THE ASSESSING OFFICER HAD ALSO NOT BROUGH T ON RECORD ANY MATERIAL FACTS TO SHOW THAT DEPOSITS IN THE BANK ACCOUNTS OF THE PARTNERS HAD COME FROM COFFERS OF THE FIRM. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAMESHWAR DAS SURESH PAL CHIKA 208 CTR 459 HELD THAT ONCE A PARTNER OF FIRM HAD ACCEPTED HAVING ADVANCED AMOUNT TO THE FIRM NO ADDITION COULD BE MADE IN TH E HANDS OF HE ASSESSEE U/S 68 OF THE ACT. IN THE CASE OF CIT VS. JAISWAL MOTOR FINANCE 141 ITR 706 (ALLAH.) IT HAS BEEN HELD THAT WHERE CASH WAS RECEIVABLE FROM THE PARTNERS TH EN IN THE ABSENCE OF ANY MATERIAL TO INDICATE THAT THEY WERE PROFITS OF THE FIRM IT COU LD NOT BE ASSESSED IN THE HANDS OF THE FIRM. IN THE CASE OF THE ASSESSEE BOTH THE PARTNER S HAVE ACCEPTED THE FACT THAT MONEY HAD BEEN INTRODUCED BY THEM. BOTH THE PARTNERS ARE ASS ESSED WITH THE SAME ASSESSING OFFICER. THERE IS NOTHING ON RECORD TO SHOW THAT T HE AMOUNT INTRODUCED IN THE CAPITAL ACCOUNTS OF THE FIRM HAVE EMANATED FROM THE ASSESSE E. IN THE ABSENCE OF ANY SUCH FINDING NO ADDITION IN THE HANDS OF THE ASSESSEE CAN BE MAD E. THE ASSESSING OFFICER COULD HAVE I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 14 TAKEN THE ACTION IN THE HANDS OF THE PARTNERS IF TH E SOURCE OF THE SAME WAS NOT EXPLAINED BY THEM. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A) DELETING THE ADDITION. 30. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE ADDITION OF RS. 1 81 333/- MADE ON ACCOUNT OF DIFFERENCE IN JOB WORK CHARGES. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD CLAIMED TDS CREDIT ON ACCOUNT OF TDS C ERTIFICATE RELATING TO JOB WORK CARRIED OUT BY THE ASSESSEE. AS PER TDS CERTIFICAT E JOB WORK DONE BY THE ASSESSEE WAS AT RS.41 31 697/- WHEREAS THE ASSESSEE HAD CREDITED RE CEIPT OF RS.39 59 364/- ONLY ON ACCOUNT OF JOB WORK. THE ASSESSING OFFICER MADE AD DITION OF RS.1 81 333/-. 31. BEFORE THE CIT(A) IT WAS SUBMITTED THAT ASSESS EE HAD DONE JOB WORK FOR SOME PARTIES AND THE PAYMENT HAD BEEN RECEIVED FOR THE S AME. THE ASSESSEE PRODUCED HUNDRED OF DOCUMENTS BEFORE ASSESSING OFFICER. HOWEVER TH E ASSESSING OFFICER HAD OVERSEEN DEBIT NOTES RECEIVED BY THE PARTIES WHICH WERE PROD UCED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAD NOT GIVEN THE CREDIT TO T HE DEBIT NOTES RAISED BY THE PARTIES. THE ASSESSEE FILED DETAILS OF DEBIT NOTES ALLOWED T O THE PARTIES BY THE ASSESSEE ON WHICH COMMENTS OF THE ASSESSING OFFICER WERE INVITED. TH E CIT(A) ON VERIFICATION OF FIGURES NOTED THAT THE CORRECT FIGURE OF JOB WORK WAS AT RS .41 23 267/- AS MENTIONED IN THE COPY OF ACCOUNT GIVEN BY THE ASSESSEE AND REPRODUCED IN THE APPELLATE ORDER. OUT OF THIS THE ASSESSEE HAD REDUCED RS.1 72 903/- ON ACCOUNT OF DE BIT NOTES RECEIVED FROM PARTIES FOR WHOM JOB WORK WAS DONE AND THE BALANCE AMOUNT WAS D EBITED TO THE PROFIT AND LOSS ACCOUNT. THE CIT(A) FURTHER OBSERVED THAT PARTIES FOR WHOM JOB WORK WAS DONE DEDUCTED TDS ON GROSS AMOUNT OF JOB WORK BEFORE MAK ING ANY ADJUSTMENT FOR THE DEBIT NOTES AND THEREFORE THE JOB WORK AMOUNT WAS CORRE CTLY REFLECTED BY THE ASSESSEE. THE CIT(A) ACCORDINGLY HELD THAT ASSESSEE HAD RIGHTLY R EFLECTED THE JOB WORK CHARGES IN THE BOOKS OF ACCOUNT. HE THEREFORE DELETED THE ADDITI ON. 32. WE HAVE HEARD BOTH THE PARTIES. WE HAVE GONE T HROUGH THE RECONCILIATION FILED BY THE ASSESSEE WHICH IS PLACED AT PAGE 435 OF THE PAP ER BOOK. WE HAVE ALSO GONE THROUGH THE REPLY SUBMITTED BEFORE THE ASSESSING OFFICER. BEFORE THE ASSESSING OFFICER IT WAS I.T.A. NO.193/DEL./2009 (A.Y. : 2005-06) 15 SUBMITTED THAT TOTAL JOB WORK FOR RS.41 23 267 WAS DONE. THE PARTIES HAVE DEBITED A SUM OF RS.1 72 903/- ON ACCOUNT OF RATE DIFFERENCE. TH E ASSESSING OFFICER HAD COMPLETELY IGNORED THE DEBIT NOTES RAISED BY PARTIES FOR WHOM JOB WORK WAS DONE. THEREFORE NO ADDITION ON ACCOUNT OF JOB WORK CHARGES CAN BE MADE IN THE HANDS OF THE ASSESSEE. ACCORDINGLY CIT(A) HAS RIGHTLY DELETED THE ADDITIO N. 33. THE LAST ISSUE FOR CONSIDERATION RELATES TO DEL ETING THE ADDITION OF RS5 LAKHS MADE BY THE ASSESSING OFFICER OUT OF ADMINISTRATIVE EXPE NSES. AT THE TIME OF HEARING IT WAS POINTED OUT BY THE LD.AR OF THE ASSESSEE THAT CIT( A) HAS CONFIRMED THE DISALLOWANCE OF RS. 5 LAKHS AND THEREFORE THE ASSESSING OFFICER S HOULD NOT BE AGGRIEVED BY THE ORDER OF THE CIT(A). 34. WE HAVE HEARD BOTH THE PARTIES AND WE FIND THAT HE CIT(A) HAS CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WITH RES PECT TO ADMINISTRATIVE EXPENSES SELLING AND DISTRIBUTION EXPENSES. SINCE THE DISAL LOWANCE HAS BEEN CONFIRMED BY CIT(A) THE ASSESSING OFFICER SHOULD NOT HAVE ANY GRIEVANCE AGAINST THE ORDER OF CIT(A). IT IS THEREFORE HELD THAT THIS GROUND OF APPEAL DOES NOT ARISE FROM THE ORDER OF CIT(A) AND DISMISSED AS SUCH. 35. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON : 15/07/2011. SD/- SD/- (R.P. TOLANI) (K.D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15 TH JULY 2011. SKB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) KARNAL. 5. DR DEPUTY REGISTRAR