DCIT,, Chandigarh v. Sh. Mukesh Sharma,, Chandigarh

ITA 197/CHANDI/2010 | 2006-2007
Pronouncement Date: 30-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 19721514 RSA 2010
Assessee PAN AMDPS4613G
Bench Chandigarh
Appeal Number ITA 197/CHANDI/2010
Duration Of Justice 1 year(s) 1 month(s) 11 day(s)
Appellant DCIT,, Chandigarh
Respondent Sh. Mukesh Sharma,, Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 30-03-2011
Date Of Final Hearing 25-10-2010
Next Hearing Date 25-10-2010
Assessment Year 2006-2007
Appeal Filed On 17-02-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI N. BARATHVAJA SANKAR VICE PRESIDENT AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NO.80/CHD/2010 ASSESSMENT YEAR: 2006-07 SHRI MUKESH SHARMA VS. THE ACIT CIRCLE 5(1) PROP M/S M.K. ENTERPRISES CHANDIGARH CHANDIGARH PAN NO. AMDPS4613G & ITA NO.197/CHD/2010 ASSESSMENT YEAR: 2006-07 THE DCIT VS. SHRI MUKESH SHARMA CIRCLE 5(1) PROP M/S M.K. ENTERPRISES CHANDIGARH CHANDIGARH PAN NO. AMDPS4613G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MUKHI & MS. JYOTI RESPONDENT BY: SHRI N.K.SAINI ORDER PER SUSHMA CHOWLA JM BOTH THE APPEALS BY THE ASSESSEE AND REVENUE ARE AGAINST THE ORDER OF CIT(A) CHANDIGARH DATED 16.11.2009 RELATING TO ASSESSMENT YEAR 2006- 07 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT 1961. 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONCURRING WITH THE ORDERS UNDER SCRUTINY PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT 1961 AND THEREBY CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IN INVOKING THE PROVISIONS OF SECTION 145(2 ) SO THAT THE ORDERS OF THE FIRST APPELLATE AUTHORITY IS BAD IN LAW AND NEEDS TO BE QUASHED. 2. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONCURRING WITH THE ORDERS UNDER SCRUTINY PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT 1961 AND THEREBY CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IN INVOKING THE PROVISIONS OF SECTION 145(2 ) AND ALSO CONFIRMING THE APPLICATION NET PROFIT RATE OF 10% WHERE AS IN EARLIER YEARS RATE OF 8% WAS ACCEPTED BY THE ASSESSING OFFICER. SO THAT SO THE ORDERS OF THE FIRST APPELLATE AUTHORITY IS BAD IN L AW AND NEEDS TO BE QUASHED. 3. THE LD. CIT(A) IS NOT JUSTIFIED IN CONCURRING WITH THE ORDERS UNDER SCRUTINY PASSED BY THE ASSESSING OFFIC ER U/S 143(3) OF THE INCOME TAX ACT 1961 AND THEREBY CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IN ALLOWING ONLY A PARTIAL RELIEF ON ACCOUNT OF OPENIN G BALANCE OF SUNDRY CREDITORS AND THAT TOO BY DIRECTI NG THE LD. ASSESSING OFFICER TO VERIFY THE SAME THOUGH ACCEPTED BY THE REVENUE IN EARLIER YEARS WHICH ACTI ON OF THE AUTHORITIES BELOW IS ERRONEOUS PERVERSE SO THAT SO THE ORDERS OF THE FIRST APPELLATE AUTHORITY IS B AD IN LAW AND NEEDS TO BE QUASHED. 4. THE LD. CIT(A) IS NOT JUSTIFIED IN CONCURRING WITH THE ORDERS UNDER SCRUTINY PASSED BY THE ASSESSING OFFIC ER U/S 143(3) OF THE INCOME TAX ACT 1961 AND THEREBY CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IN 3 TREATING THE SUNDRY CREDITORS OF THE YEAR UNDER APP EAL TO THE EXTENT OF RS. 22 58 571/- WITHOUT APPRECIATI NG THE FACTS AND CIRCUMSTANCES AND THE OFFER BY THE APPELLANT FOR VERIFICATION OF THE SAME ON RANDOM BA SIS THERE BEING MORE THAN ONE THOUSAND SUNDRY CREDITORS AND ALSO BY IGNORING THE FACT THAT PROPER BOOKS WER E PRODUCED BEFORE THE FIRST APPELLATE AUTHORITY WHERE IN EVEN THE ASSESSING OFFICER WAS PRESENT REPRESENTING THE REVENUE DEPARTMENT AND ALSO THE SAME THOUGH ACCEPTED BY THE REVENUE IN EARLIER YEARS WHICH ACTI ON OF THE AUTHORITIES BELOW IS ERRONEOUS PERVERSE SO THAT SO THE ORDERS OF THE FIRST APPELLATE AUTHORITY IS B AD IN LAW AND NEEDS TO BE QUASHED. 5. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPE AL THE APPELLANT DISPUTES THE QUANTUM OF RELIEF ALLOWE D AND ADDITION CONFIRMED BY THE FIRST APPELLATE AUTHO RITY. 6. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPE AL THE APPELLANT DISPUTES THE CHARGING OF INTEREST U/S 234B OF THE INCOME TAX ACT 1961 AND ALSO IN HOLDIN G THE SAME BEING MANDATORY AND CONSEQUENTIAL. 3. THE REVENUE IN ITS APPEAL NO. 197/CHANDI/2010 HA S RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) VIDE HER ORDER DATED 16.11.2009 IN APPEAL NO. 349/P/2008-09 FOR THE ASSESSMENT YEAR 2006-07 HAS ERRED IN GIVING RELIEF TO THE ASSESSEE ON ACCOUNT OF SUNDRY CREDITORS GENUINENESS OF WHICH THE 4 ASSESSEE FAILED TO PROVE DURING ASSESSMENT PROCEEDI NGS IN SPITE OF HAVING BEEN GIVEN ENOUGH OPPORTUNITIES. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SE T ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE ISSUE IN GROUND NOS. 1 & 2 RAISED BY THE AS SESSEE ARE AGAINST THE REJECTION OF BOOKS OF ACCOUNT AND INVOKING THE PROVISIONS OF SECTION 145(2) OF THE ACT AND APPLYING NET PROFIT RATE OF 1 0% AS AGAINST 8% ACCEPTED IN THE EARLIER YEARS. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS CARRYING ON THE BUSINESS OF SOLE PROPRIETOR UNDER THE NAME AND STYL E OF M/S M.K. ENTERPRISES. THE ASSESSEE IS ENGAGED IN THE BUSINE SS OF TRANSPORTATION OF DEFENCE GOODS WHICH ARE CARRIED ON BY HIRED TRUCKS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO F URNISH THE BOOKS OF ACCOUNT ALONG WITH BILLS AND VOUCHERS. SEVERAL OPPO RTUNITIES WERE PROVIDED TO THE ASSESSEE BUT THE ASSESSEE FAILED TO PRODUCE THE BOOKS OF ACCOUNT NOR ANY BILLS AND VOUCHERS WERE FURNISHED D URING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE ABSENCE OF THE SAME THE ASSESSING OFFICER INVOKING THE PROVISIONS OF SECTION 145 OF T HE ACT AND CONSIDERING THE NATURE OF WORK APPLIED THE RATE OF 10% ON THE T OTAL WORK DONE RESULTING IN AN ADDITION OF RS. 6 48 410/-. 6. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER FOR THE UNDERMENTIONED REASONS:- I) THE ASSESSMENT RECORD REVEALS THAT THERE WERE AT LE AST 15 OCCASIONS OF DEFAULT ON THE PART OF THE ASSESSEE IN 5 THE FORM OF NON-ATTENDANCE OR SEEKING ADJOURNMENTS WHILE THE ASSESSING OFFICER CONTINUED TO REQUEST / DIRECT THE ASSESSEE TO PRODUCE BOOKS OF ACCOUNT BI LLS & VOUCHERS. II) A MERE STATEMENT BEFORE ME THAT THE BOOKS WERE WITH A DISTANT RELATIVE AND STILL NOT RETRIEVABLE CAN IN N O WAS CONTROVERT THE FINDING OF THE ASSESSING OFFICER. I T RATHER PROVES THAT THE BOOKS WERE NEVER MAINTAINED. III) APPLICATION OF 10% RATE OF PROFIT HAS ALSO BEEN DON E KEEPING IN VIEW THE CASES OF SIMILAR TRADE. 7. THE LD. AR FOR THE ASSESSEE FAIRLY ADMITTED THAT NO BOOKS OF ACCOUNT WERE PRODUCED EITHER BEFORE THE ASSESSING O FFICER OR THE CIT(A). FURTHER IT WAS POINTED OUT THAT THE BOOKS OF ACCOU NT WERE AUDITED AND THE AUDIT REPORT OF THE CA WAS FURNISHED ALONGWITH RETU RN OF INCOME. IN RESPECT OF UPHOLDING AND REJECTION OF BOOKS OF ACCO UNT NO FURTHER PLEA WAS RAISED BY THE LD. AR FOR THE ASSESSEE. HOWEVER IT WAS STRESSED THAT WHERE BOOKS OF ACCOUNT ARE REJECTED A FAIR ESTIMATI ON HAS TO BE MADE AS PER THE PAST HISTORY OF THE CASE. THE LD. AR POINT ED OUT THAT DURING THE YEAR THE ASSESSEE HAD SHOWN PROGRESSIVE NP RATE OF 8.18%. THE LD. AR FURTHER PLACED RELIANCE ON THE VARIOUS CASE LAWS FO R THE PROPOSITION THAT THE APPLICATION OF GP RATE SHOULD BE BASED ON THE P AST HISTORY OF THE CASE. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON THE O RDERS OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE IS CARRYING ON THE BUSINESS AS SOLE PROPRI ETOR OF THE CONCERN UNDER THE NAME AND STYLE OF M/S M.K. ENTERPRISES. T HE ASSESSEE FURNISHED RETURN OF INCOME SHOWING INCOME FROM BUSINESS AT RS . 29 09 840/-. THE 6 BOOKS OF ACCOUNT WERE AUDITED AND THE AUDIT REPORT IN RESPECT THEREOF HAS BEEN FURNISHED. THOUGH IN THE AUDIT IT IS MENTION ED THAT THE ASSESSEE HAS MAINTAINED LEDGER CASH BOOK AND SUPPORTING VOUCHER S BUT THE SAME WERE NOT PRODUCED EITHER DURING THE ASSESSMENT OF APPELL ATE PROCEEDINGS. NO ATTEMPT HAS BEEN MADE BY THE LD. AR FOR THE ASSESSE E FOR THE PRODUCTION OF THE SAID BOOKS OF ACCOUNT BEFORE US. IN THE ABSE NCE OF THE SAME WE ARE IN CONFORMITY WITH THE ORDER OF THE ASSESSING OFFIC ER THAT WHERE THE ASSESSEE HAS FAILED TO FURNISH THE BOOKS OF ACCOUNT OR THE RELEVANT VOUCHERS IN SUPPORT OF BOTH ITS INCOME AND EXPENDIT URE THE PROVISIONS OF SECTION 145(2) OF THE ACT ARE ATTRACTED AND A FAIR ESTIMATE OF THE INCOME EARNED BY THE ASSESSEE IS TO BE MADE. UPHOLDING T HE ORDER OF ASSESSING OFFICER IN THIS REGARD WE DISMISS THE GROUND NO.1 RAISED BY THE ASSESSEE. 9. AFTER REJECTION OF BOOKS OF ACCOUNT THE SECOND STEP IS THE APPLICATION OF NET PROFIT RATE. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SHOWN A NP RATE OF 8.18% AS AGAIN ST 8.07% SHOWN IN ASSESSMENT YEAR 2005-06 AND 8.06% IN ASSESSMENT YEA R 2004-05. THE LD. AR FOR THE ASSESSEE HAD PLACED RELIANCE ON A SERIES OF JUDGMENTS/DECISIONS OF VARIOUS COURTS AND TRIBUNALS FOR THE PROPOSITION THAT WHERE THE BOOKS OF ACCOUNT WERE REJECTED AND THE GP RATE SHOWN BY THE ASSESSEE IS BETTER THAN GP RATE SHOWN IN THE EARLIER YEARS NO LUMP SU M ADDITION WAS CALLED FOR. 10. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. MANGAL ENGINEERING WORKS 272 ITR 318 (P&H) HAD LAID DOWN THE PROPOSITION THAT THERE WAS JUSTIFICATION IN APPLICATION OF GROS S PROFIT RATE BASED ON THE PAST HISTORY OF THE CASE INSTEAD OF APPLICATION OF NET PROFIT RATE FOR WHICH THERE WAS NO BASIS WHERE THE BOOKS OF ACCOUNT HAD B EEN REJECTED. THE 7 REASON FOR APPLICATION OF THE NET PROFIT RATE ON RE JECTION OF BOOKS OF ACCOUNT IN THE AFORESAID CASE WAS BECAUSE OF A DECL ARATION MADE UNDER VOLUNTARY DISCLOSURE SCHEME 1997 ON ACCOUNT OF PRO FITS ON UNDECLARED SALES MADE THROUGH ONE PARTY. THE TRIBUNAL IN THE AFORESAID CASE HAD OBSERVED THE ASSESSEE TO HAVE MAINTAINED THE BOOKS OF ACCOUNT AND DEBITED VARIOUS EXPENSES IN THE PROFIT & LOSS ACCOU NT. IT WAS ALSO NOTED BY THE TRIBUNAL IN THE SAID CASE THAT NOWHERE IN TH E ASSESSMENT ORDER THE ASSESSING OFFICER HAD POINTED OUT ANY DEFECT IN THE VARIOUS EXPENSES DEBITED TO THE PROFIT & LOSS ACCOUNT. IN THE ABOV E SAID CIRCUMSTANCES THE HON'BLE HIGH COURT HAD UPHELD THE APPLICATION OF N ET PROFIT RATE DECLARED BY THE ASSESSEE. 11. WE FIND NO MERIT IN THE RELIANCE OF THE ASSESSE E ON THE ABOVE SAID RATIO AS IN THE PRESENT CASE THE ASSESSEE HAD FAIL ED TO PRODUCE ANY BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER NOR ANY VOU CHER IN SUPPORT OF THE INCOME/EXPENSES WERE FURNISHED BEFORE THE ASSESSING OFFICER. THE BOOKS OF ACCOUNT BEING NOT PRODUCED BY THE ASSESSEE NOR T HE VOUCHERS BEING PRODUCED AND IN THE ABSENCE OF THE SAME THE ASSES SING OFFICER WAS CONSTRAINED TO APPLY NP RATE TO DETERMINE THE INCO ME OF THE ASSESSEE. THE ONUS IS UPON THE ASSESSEE TO PROVE THAT THE BOO K RESULTS SHOWN BY IT ARE CORRECT AND WHERE THE ASSESSEE HAS FAILED TO DI SCHARGE ITS ONUS AS IN THE PRESENT CASE THE ASSESSING OFFICER IS LEFT WIT H NO OTHER COURSE BUT TO ESTIMATE THE NP RATE TO DETERMINE THE INCOME OF THE YEAR. THE ESTIMATE IN SUCH CIRCUMSTANCES IS TO BE MADE TO PLUG ANY LEAKAG E OF REVENUE. IN THE CIRCUMSTANCES THERE IS NO JUSTIFICATION IN UPHOLDI NG THE NP RATE DECLARED BY THE ASSESSEE. IN THE TOTALITY OF FACTS AND CI RCUMSTANCES OF THE CASE WE ARE IN CONFORMITY WITH THE ORDER OF CIT(A) IN UP HOLDING THE APPLICATION OF NET PROFIT RATE OF 10% IN THE ABSENC E OF THE ASSESSEE 8 PRODUCING THE BOOKS OF ACCOUNT AND ALSO FAILING TO PRODUCE THE SUPPORTING BILLS AND VOUCHERS. THE GROUND NO.2 RAISED BY THE ASSESSEE IS THUS DISMISSED. 12. THE ISSUE IN GROUND NOS. 3 & 4 IS IN RESPECT O F ADDITION ON ACCOUNT OF SUNDRY CREDITORS. THE ASSESSING OFFICER ON THE P ERUSAL OF THE BALANCE SHEET HAD FOUND TOTAL SUNDRY CREDITS OF RS. 56 57 5 25/- AS ON THE CLOSE OF THE YEAR. THE ASSESSEE WAS ASKED TO FURNISH THE DET AILS OF SUNDRY CREDITORS ALONG WITH NAMES AND ADDRESSES AMOUNTS AND CONFIRM ATION. DESPITE NUMBER OF OPPORTUNITIES NO DETAILS WERE FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. THE ASSESSEE DID FURNISH A L IST OF TRUCKS AND AMOUNT OUTSTANDING BUT COMPLETE NAMES AND ADDRESSES WERE N OT FURNISHED. ACCORDING TO THE ASSESSEE THE PAYMENT WERE MADE IN THE NEXT YEAR BUT NO EVIDENCE IN THIS RESPECT WAS FILED BEFORE THE ASSES SING OFFICER. AS PER THE LIST THE PAYMENT WAS TO BE MADE TO 1011 PARTIE S AND IN THE ABSENCE OF ANY EVIDENCE ADDITION OF RS. 56 57 525/- WAS MADE T O THE INCOME OF THE ASSESSEE. 13. BEFORE THE CIT(A) THE PLEA OF THE LD. AR FOR TH E ASSESSEE WAS THAT THERE WAS OPENING CREDIT BALANCE OF RS. 33 98 955/- WHICH WAS NOT CONSIDERED BY THE ASSESSING OFFICER. THE CIT(A) ON PERUSAL OF THE RECORD OBSERVED AS UNDER;- I) BEFORE THE ASSESSING OFFICER DESPITE REPEATED OPPORTUNITIES ONLY THE TRUCK NOS. AND AMOUNTS WERE GIVEN. NO NAMES ADDRESSES & CONFIRMATIONS WERE EVE R FURNISHED TILL THE LAST HEARING. II) BEFORE ME AGAIN IT IS A LONG LIST OF 1011 TRUCK NO S. WITH NO NAMES & VERY FEW ADDRESSES SEEMINGLY 9 INCOMPLETE AND COMPARED TO THE DOCUMENTS SUBMITTED BEFORE THE ASSESSING OFFICER THIS WAS ALSO ADDITIO NAL EVIDENCE FOR WHICH NO PROPER APPLICATION HAS BEEN SUBMITTED. III) THE ASSESSEE DID NOT DISCHARGE THE ONUS OF PROVIDIN G SUFFICIENT INFORMATION TO THE ASSESSING OFFICER OR TO THE APPELLATE AUTHORITY FOR VERIFYING THE SUNDRY CREDIT ORS. IV) THE ASSESSEES SUBMISSION THAT THERE WERE OPENING CREDITORS AMOUNTING TO RS. 33 98 955/- AND CREDITOR S DURING THE YEAR WERE 1 80 33 020/- AND PAYMENT OF R S. 1 57 74 450/- WAS MADE TO SET OFF THE CREDITORS AND THE BALANCE OF RS. 56 57 525/- REMAINED AS UNPAID AS ON 31.3.2006 AS DETAILED IN PARA 10 ABOVE SEEMS VALID & LOGICAL. 12. SINCE THE ASSESSING OFFICER HAS ADDED THE AMOUN T OF RS. 56 57 525/- WITHOUT ALLOWING THE BENEFIT OF OPENING CREDITOR BALANCE OF RS. 33 98 955/- WHICH STANDS ACCEPTED A S PER INCOME TAX RETURN OF THE PREVIOUS YEAR THERE IS NO JUSTIFICATION TO ADD ALL THE CREDITORS AS UNEXPLAIN ED INCOME. BENEFIT OF OPENING BALANCE OF RS.33 98 955/- IS THE REFORE ALLOWED AND THE BALANCE ADDITION OF RS. 22 58 571/- IS SUSTAINED. THE ASSESSING OFFICER SHOULD VERIFY THE OPENING CREDITORS SHOWN AND ACCEPTED BY THE DEPARTMENT FROM PREVIOUS YEARS ACCOUNTS AND IN CASE OF DISCREPANCY TAKE ACTI ON IN THE PREVIOUS YEAR. 14. THE ASSESSEE IS IN APPEAL AGAINST THE ADDITION OF RS. 22 58 571/- VIDE GROUND NOS. 3 & 4 AND THE REVENUE IS IN APPEA L AGAINST THE DELETION OF ADDITION OF RS. 33 98 955/-. 10 15. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE ASSESSING OFFICER HAD MADE THE ADDITION ON ACCOUNT OF CLOSING BALANCE S WHICH DO NOT INCLUDE THE OPENING BALANCES OF THE PARTIES. OUR A TTENTION WAS DRAWN TO THE LIST OF PARTIES PLACED AT PAGE 19 TO 32 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT IN COLUMN 2 THE DATE IS MENTIONED WHICH RELATES TO THE FINANCIAL YEAR 2005-06. THE HEADING OF THE LIST IS CREDITORS OF 2005-06 PAID IN 2006-07. THE LD. DR FOR THE REVENUE FURTHE R POINTED OUT THAT THE EVIDENCE OF THE PAYMENT WAS NOT FURNISHED BEFORE TH E ASSESSING OFFICER AND WAS FURNISHED BEFORE THE CIT(A) AND AS OBSERVE D IN PARA 11 AT PAGE 5 OF THE APPELLATE ORDER CLAUSE(II) THE CIT(A) NOTE D THAT THE LONG LIST WAS NOT IN COMPARISON TO DOCUMENTS SUBMITTED BEFORE THE ASSESSING OFFICER. HOWEVER THE CIT(A) ERRED IN GIVING BENEFIT OF THE OPENING CREDITORS WHICH WERE NOT PART OF THIS LIST. IT WAS FURTHER P OINTED OUT THAT SEPARATE ADDITION COULD BE MADE IN RESPECT OF SUNDRY CREDITO RS WHICH ARE NOT PROVED BY THE ASSESSEE THOUGH NO DISALLOWANCE COUL D BE MADE U/S 40A(3) OF THE ACT. THE LD. AR FOR THE ASSESSEE STRESSED THAT ONCE NET PROFIT RATE IS APPLIED NO FURTHER ADDITION COULD BE MADE WHIC H IS A TRITE LAW. ON THE MERITS OF THE DELETION OF ADDITION RELIANCE WAS PLA CED ON THE OBSERVATIONS OF CIT(A) 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SH OWN SUNDRY CREDITORS OF RS.56 57 525/-. THE ASSESSEE BEFORE THE ASSESSI NG OFFICER FURNISHED ONLY THE TRUCK NUMBERS AND AMOUNT GIVEN AS PER THE LIST OF 1011 PARTIES. THE ASSESSEE FAILED TO FURNISH THE NAMES ADDRESSES OR CONFIRMATION FROM THE SAID PARTIES. EVEN BEFORE THE CIT(A) NO NAMES AND VERY FEW ADDRESSES WERE FURNISHED AND THE ASSESSEE IN ADDITI ON ENLISTED THE DATE OF PAYMENT OF THE SAID AMOUNT. THE ASSESSING OFFICER IN THE ABSENCE OF THE 11 DETAILS BEING FURNISHED BY THE ASSESSEE HAD MADE AN ADDITION OF RS.56 57 525/-. BEFORE THE CIT(A) THE PLEA OF THE ASSESSEE WAS THAT THERE WAS OPENING CREDIT BALANCE OF RS.3398955/- AND CRED ITORS DURING THE YEAR WERE RS.1 80 33 020/- TOTALING RS.2 14 31 975/- A ND PAYMENT OF RS.15774450/- AND BALANCE OF RS.56 57 525/- REMAINE D UNPAID ON 31.3.2006. THE ASSESSEE HAD FURNISHED THE LIST OF CREDITORS OF 2005-06 PAID IN 2006-07 AT PAGES 19 TO 32 OF THE PAPER BOOK . THE ASSESSEE HAS ENLISTED DATE-WISE TRUCK-WISE AMOUNT PAYABLE ALON GWITH THE LIST OF NAME OF TRANSPORTER AND ITS ADDRESS IN SOME OF THE CASES AND FURTHER HAS ENLISTED THE DATE OF PAYMENT OF THE SAID AMOUNT. THE PERUS AL OF THE LIST REVEALS THAT THE AMOUNTS DUE TO THE CREDITORS TOTALING RS.5 6 57 525/- RELATE TO THE FINANCIAL YEARS BEGINNING FROM 4.4.2005 TO 21.3.200 6 WHICH HAVE BEEN PAID FROM APRIL 2006 ONWARDS. THE TOTAL OF RS.56 5 7 525/- PAYABLE AS ON 31.3.2006 DO NOT INCLUDE THE OPENING BALANCE OF RS. 33 98 955/- AS THE TOTAL AMOUNTS REFLECTED IN THE SAID ACCOUNT RELATE TO THE FINANCIAL YEAR 2005-06 ITSELF AND NO OPENING BALANCE AMOUNTS ARE I NCLUDED IN THIS LIST. IN THE ABOVE SAID CIRCUMSTANCES THERE IS NO MERITS IN THE ORDER OF CIT(A) IN ALLOWING THE CREDIT OF OPENING BALANCE OF RS.33 98 955/-. HOWEVER WE FIND THAT THE NECESSARY DETAILS IN THIS REGARD W ERE NOT FURNISHED BEFORE THE ASSESSING OFFICER. THE CIT(A) ALSO VIDE PARA 1 1(II) OBSERVED THE SAID DETAILS FURNISHED BY THE ASSESSEE DO NOT TALLY WITH THE DETAILS FURNISHED BEFORE THE ASSESSING OFFICER AND SEEM TO BE ADDITIO NAL EVIDENCE. HOWEVER NO ADJUDICATION WAS MADE BY THE CIT(A) WIT H REGARD TO THE ADMISSION OF THE SAID ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. THE PROCEDURE FOR THE ADMISSION OF ADDITIONAL EVIDENCE IS PRESCRIBED IN THE ACT AND THE ASSESSEE IN CASE WANTS TO RELY ON ANY E VIDENCE WHICH IS NOT FURNISHED BEFORE THE ASSESSING OFFICER AND IS BEIN G FURNISHED BEFORE THE CIT(A) FOR ADJUDICATION OF THE ISSUE RAISED AN APP LICATION FOR THE SAME IS 12 TO BE MOVED FOR ITS ADMISSION AND UNDER RULE 46A OF INCOME-TAX RULES THE CIT(A) AFTER CONFRONTING THE SAME TO THE ASSESS ING OFFICER HAS TO DECIDE WHETHER THE SAME MERITS TO BE ADMITTED AND T HEREAFTER DECIDE THE ISSUE ON ITS MERITS. WE FIND THAT BOTH THE ASSESSE E AND CIT(A) HAVE FAILED TO FOLLOW THE PROCEDURE PROVIDED UNDER THE ACT. HO WEVER IN THE INTEREST OF JUSTICE WE REMIT THE ISSUE BACK TO THE CIT(A) T O DECIDE THE ADMISSION OF THE SAID EVIDENCE RELIED UPON BY THE ASSESSEE AN D DECIDE BOTH THE MERITS OF ADMISSION OF ADDITIONAL EVIDENCE AND ALSO THE MERITS OF ADDITION IN THE CASE. THE GROUND NOS. 3 & 4 RAISED BY THE A SSESSEE AND THE GROUND NO.2 RAISED BY THE REVENUE ARE ALLOWED FOR STATISTI CAL PURPOSES. 17. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF MARCH 2010. SD/- SD/- (N.BARATHVAJA SANKAR) (SUSHMA CHOWLA) VICE PRESIDENT JUDICIAL MEMBER DATED : 30 TH MARCH 2010 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR