The ACIT, Vapi Circle, Vapi v. Shri Jehangir Manekshaw Contractor, Vapi

ITA 2877/AHD/2004 | 2001-2002
Pronouncement Date: 09-02-2012 | Result: Dismissed

Appeal Details

RSA Number 287720514 RSA 2004
Bench Ahmedabad
Appeal Number ITA 2877/AHD/2004
Duration Of Justice 7 year(s) 4 month(s) 16 day(s)
Appellant The ACIT, Vapi Circle, Vapi
Respondent Shri Jehangir Manekshaw Contractor, Vapi
Appeal Type Income Tax Appeal
Pronouncement Date 09-02-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 09-02-2012
Date Of Final Hearing 16-01-2012
Next Hearing Date 16-01-2012
Assessment Year 2001-2002
Appeal Filed On 23-09-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.2877 / AHD/2004 (ASSESSMENT YEAR 2001-02.) ACIT VAPI CIRCLE VAPI VS. JAHANGIR MANEKSHAW CONTRACTOR PROP. OF M/S. POLYMER PRINTING INKS 634 GIDC VAPI PAN/GIR NO. : (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI B L YADAV DR RESPONDENT BY: SHRI SAKAR SHARMA AR DATE OF HEARING: 16.01.2012 DATE OF PRONOUNCEMENT: 09.02.2012 O R D E R PER SHRI A. K. GARODIA AM:- THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) VALSAD DATED 12.07.2004 FOR THE ASSESSMENT Y EAR 2001-02. 1. GROUND NO.1 IS GENERAL. 2. GROUND NO.2 IS AS UNDER: 2. ON THE FACTS AND CIRCUMSTANCES OF THE AND IN LAW THE ID CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.21 585/- MADE OUT OF STAFF WELFARE EXPENSES IGNORING THE FACT THAT T HE EXPENDITURE NOT INCURRED WHOLLY NECESSARILY AND EXCLUSIVELY FO R THE BUSINESS PURPOSE. 2.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND THE LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 2.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSED T HE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND I.T.A.NO.2887 /AHD/2004 2 THAT THIS ISSUE HAS BEEN DECIDED BY LD. CIT(A) AS P ER PARA 6 OF HIS ORDER WHICH IS REPRODUCED BELOW: 6. THE FIRST GROUND OF APPEAL IS REGARDING DISALLO WANCES OF RS.21 585/- OUT OF STAFF WELFARE EXPENSES AS TREATE D PERSONAL IN NATURE. IT WAS SUBMITTED THAT THE DISALLOWANCES WER E MADE FOR WANT OF DETAILS BUT THE ASSESSING OFFICER HIMSELF STATED IN HIS ORDER THAT 'IT IS OBSERVED FROM THE DETAILS SUBMITTED BY THE ASSESSEE ' WHICH INDICATE THAT THE DETAILS WERE FILED . ON SCR UTINY OF ASSESSMENT RECORD IT WAS NOTICED THAT COMPLETE DET AILS OF THE STAFF WELFARE EXPENSES WERE FILED WHICH ARE RELATING TO T EA MILK AND REFRESHMENTS PROVIDED TO THE STAFF AND WORKERS. CER TAIN EXPENSES HAVE BEEN INCURRED ON SWEETS AND POOJA ETC. EXPENDI TURE ON PURCHASE OF BRIEF CASE WAS MADE FOR THE MARKING STA FF. THE ASSESSING OFFICER IN HER REPORT HAS STATED THAT AN AMOUNT OF RS. 10 825/- HAS BEEN PAID TO MAHARANA JEWELLERS FOR PU RCHASE OF DIWALI GIFTS. LIKEWISE NARRATION FOR ENTRY ON 12.1 1 .00 MENTIONS AMOUNT PAID TO MAHAVIR PRINTERS WHICH IN HER VIEW W AS THE GIFT FOR PURCHASE OF SUITE CASES. SINCE SUCH AMOUNT WAS NOT FOUND AVAILABLE IN THE DETAILS OF THE STAFF WELFARE EXPEN SES SUBMITTED BEFORE THE ASSESSING OFFICER I CALLED UPON THE ASS ESSING OFFICER TO EXPLAIN FROM WHERE THE AMOUNT WAS TAKEN FOR RS. 10 825/-. ON EXAMINATION IT WAS NOTICED THAT SHE REFERRED TO TH E DETAILS OF GIFTS GIVEN AND NOT REFERRED TO THE STAFF WELFARE EXPENS ES. CONSIDERING THE DETAILS FILED 1 COULD NOT SEE ANY EXPENSES DISALLOWABLE. THE ASSESSING OFFICER HAS MADE THE DISALLOWANCES WITHOU T ANY BASIS AND THEREFORE THE DISALLOWANCES OF RS.21 585/- ARE DELETED. 2.3 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A) WE FIND THAT THE DISALLOWANCE MADE BY THE A.O. HAS BEEN DELETED BY L D. CIT(A) AFTER EXAMINING ALL THE ASPECTS OF THE MATTER AND WE DO N OT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. WE THEREFORE DECLINE TO INTERFERE. THIS GROUND OF THE REVENUE IS REJECT ED. 3. GROUND NO.3 IS AS UNDER:- 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.6 6 50/- MADE OUT OF GENERAL EXPENSES IGNORING THE FACT THAT NO COMPLET E DETAILS ALONG WITH SUPPORTIVE EVIDENCES WERE FILED BY THE FOR SUC H EXPENDITURE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. I.T.A.NO.2887 /AHD/2004 3 3.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND THE LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 3.2 THIS ISSUE HAS BEEN DECIDED BY LD. CIT(A) PARA 8 & 9 OF HIS ORDER WHICH ARE REPRODUCED BELOW: 8. THE THIRD GROUND OF APPEAL IS REGARDING DISALLO WANCES OF RS.6 650/- OUT OF GENERAL EXPENSES FOR WANT OF DETA ILS AND SUPPORTING EVIDENCES. IT WAS SUBMITTED BY THE LEA RNED COUNSEL THAT COMPLETE DETAILS WERE GIVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE DETAIL CONTAINS NARRATION OF EACH AND EVERY ENTRY OF EXPENSES. ALL THE SUPPORTING EVIDENCES ARE IN PO SSESSION OF THE APPELLANT. 9. THE SCRUTINY OF ASSESSMENT RECORDS INDICATE THAT THE DETAILS OF GENERAL EXPENSES WERE FILED DURING THE COURSE OF A SSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS NOT PIN POIN TED ANY SPECIFIC ITEM OF EXPENDITURE FOR DISALLOWANC E. HIS ACTION WAS TOTALLY UNJUST AND ON SURMISES. THE DISALLOWANCES W ERE NOT WARRANTED AND ARE ACCORDINGLY DELETED. 3.3 FROM THE ABOVE TWO PARA OF THE ORDER OF LD. CIT (A) WE FIND THAT THIS DISALLOWANCE HAS BEEN DELETED BY LD. CIT(A) AF TER EXAMINING ALL THE FACTS AND HENCE ON THIS ISSUE ALSO NO INTERFERENC E IS CALLED FOR. THIS GROUND OF THE REVENUE IS ALSO REJECTED. 4. GROUND NO.4 IS AS UNDER:- 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE ID CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.84 000/- MADE OUT OF LEGAL 4 PROFESSIONAL CHARGES RELYING UPON THE S UBMISSION OF THE ASSESSEE WITHOUT CONSIDERING THE FACT THAT NO SUCH DETAILS WERE FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSME NT PROCEEDINGS. 4.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND THE LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 4.2 THIS ISSUE HAS BEEN DECIDED BY LD. CIT(A) PARA 10 & 11 OF HIS ORDER WHICH ARE REPRODUCED BELOW: 10. THE FOURTH GROUND OF APPEAL IS REGARDING DISAL LOWANCES OF RS.84 000/- OUT OF LEGAL AND PROFESSIONAL FEES. THE LEARNED COUNSEL HAS SUBMITTED THAT THE PROFESSIONAL FEES WAS PAID TO SHRI T.S. I.T.A.NO.2887 /AHD/2004 4 SAWANT FOR RS.54 000/- AND RS. 30 000/- WAS PAID TO GROWTH CHOICE QUALITY CONSULTANTS FOR OBTAINING ISO 9001-2 000 CERTIFICATE. SHRI T.S. SAWANT IS A MATCHING MASTER. HIS SERVICES WERE HIRED BY THE ASSESSEE FOR MATCHING THE COLOUR OF THE INK PRODUCED EXACTLY WITH THE SAMPLE PROVIDED BY THE CU STOMERS SO THAT THERE WOULD NOT BE ANY CHANCES OF REJECTION. T HERE ARE NUMEROUS SHADES AND COLOURS OF INK AND THE ASSESSEE IS REQUIRED TO SUPPLY THE INK OF THE SHADE AND COLOUR ORDERED B Y THE CUSTOMERS EXACTLY. SLIGHTEST VARIATION IN THE SHADE WOULD RESULT IN REJECTION. SO THIS TECHNICAL CONSULTANT WAS EXTR EMELY IMPORTANT FOR THE ASSESSEE. THE APPOINTMENT LETTER AND CERTAIN COLOURED XEROX COPIES OF FEW OF THE WORKING PAPERS OF MR. SAWANT WERE PRODUCED. LIKEWISE COPY OF RECEIPTS IS SUED BY THE CONSULTANTS AND COPY OF CERTIFICATE OF ISO 9001-200 0 ISSUED TO THE ASSESSEE IN THE SUBSEQUENT YEAR WAS ALSO SUBMIT TED. 11. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSIO N OF THE LEARNED COUNSEL. THE ASSESSING OFFICER HAS MADE THE ADDITION FOR WANT OF BILL AND THE PURPOSE FOR PAYMENT. HE DISPUT ED THE GENUINENESS OF THE EXPENDITURE. CONSIDERING THE FAC TS OF THE CASE I SEE NO JUSTIFICATION IN DISALLOWING THE PAY MENTS ACTUALLY MADE BY THE ASSESSEE. THE SERVICES OF THE TECHNICAL PERSON WAS ESSENTIAL TO WHOM THE PAYMENTS AT THE RATE OF RS.45 00/- PER MONTH WAS MADE. LIKEWISE THE PAYMENTS MADE FOR THE ISO CERTIFICATE IS ACTUALLY MADE FOR THE BUSINESS NECES SITY. THERE WAS NO GROUND FOR DISALLOWING THE SAID PROFESSIONAL EXP ENSES AND THE SAME ARE ACCORDINGLY DELETED. 4.3 FROM THE ABOVE TWO PARAS OF THE ORDER OF LD. CI T(A) WE FIND THAT LD. CIT(A) HAS DELETED THE DISALLOWANCE ON REA SONABLE BASIS AND HENCE NO INTERFERENCE IS CALLED FOR IN HIS ORDER O N THIS ISSUE ALSO. THIS GROUND IS ALSO REJECTED. 5. GROUND NO.5 IS AS UNDER:- 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LA CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.1 27 556/- MADE OUT OF REPAIRS TO BUILDING RELYING UPON THE SUBMIS SION OF THE ASSESSEE WITHOUT CONSIDERING THE FACT THAT EXPENDI TURE INCURRED TOWARDS REPLACEMENT OF FLOORS IS CAPITAL IN NATURE AND NOT REVENUE AS IT GIVING ENDURING BENEFIT TO THE ASSESSEE. I.T.A.NO.2887 /AHD/2004 5 5.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND THE LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 5.2 THIS ISSUE HAS BEEN DECIDED BY LD. CIT(A) PARA 12 OF HIS ORDER WHICH ARE REPRODUCED BELOW: 12. THE FIFTH GROUND OF APPEAL IS REGARDING DISALLO WANCES OF RS. 1 27 556/- OUT OF REPAIRS TO BUILDING CONSIDERING T HEM AS CAPITAL IN NATURE. THE ASSESSING OFFICER HAS NOTICED THAT A N AMOUNT OF RS. 1 27 556/-WAS SPENT FOR FLOORING CHARGES WHICH BEING CAPITAL IN NATURE AND THE SAME WERE DISALLOWED BY THE ASSES SING OFFICER. THE LEARNED COUNSEL HAS STATED THAT RCC FLOORING WA S REPLACED IN THE FACTORY PREMISES. THE REPLACEMENT COST IS REVEN UE IN NATURE AND CAN NOT BE CAPITALIZED. I HAVE CONSIDERED THE R EPLY OF THE ASSESSEE'S COUNSEL. THE CHARGES FOR DISMANTLING OF RCC FLOORING WERE INCURRED WHICH INDICATE THAT THE EXPENDITURE W AS IN THE NATURE OF REPLACEMENT COST. THOUGH THE ASSESSING O FFICER HAS CAPITALIZED THE EXPENSES BUT DID NOT ALLOWED DEPREC IATION ON THE EXPENDITURE DISALLOWED CONSIDERING THEM CAPITAL IN NATURE. I AGREE WITH THE LEARNED COUNSEL THAT THE EXPENSES WE RE MADE FOR REPLACEMENT OF THE FLOORING AND THE SAME ARE REVENU E IN NATURE. THE DISALLOWANCES WERE NOT AS PER LAW AND THE SAME ARE DELETED. 5.3 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A) WE FIND THAT A CLEAR FINDING HAS BEEN GIVEN BY LD. CIT(A) THAT THE EXPENDITURE INCURRED WAS TOWARDS REPAIRING COST OF THE ASSESSEE S FACTORY PREMISES AND HENCE IT IS NOT A CAPITAL EXPENDITURE. ON THI S ISSUE ALSO WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CI T(A). THIS GROUND OF THE REVENUE IS ALSO REJECTED. 6. GROUND NO.6 IS AS UNDER:- 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ID CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.50 6007- MADE OUT OF SALES COMMISSION RELYING UPON THE SUBMISSION OF THE ASSESSEE IGNORING THE FACT THAT THE FAILED TO SUBSTANTIATE H IS IN TERMS OF NATURE OF SERVICES RENDERED BY PERSON TO WHOM SO-CA LLED COMMISSION STATED TO HAVE BEEN PAID IN ADDITION TO HIS REGULAR SALARY AND EMOLUMENTS. I.T.A.NO.2887 /AHD/2004 6 6.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND THE LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 6.2 THIS ISSUE HAS BEEN DECIDED BY LD. CIT(A) PARA 14 OF HIS ORDER WHICH IS REPRODUCED BELOW: 14. ON GOING THROUGH THE DETAILS SO SUBMITTED I N OTICED THAT NEITHER THE COMMISSION PAID TO SHRI K.S. LYER FOR R S. 50 600/- WAD DISALLOWABLE NOR THE COMMISSION PAID TO OTHERS. THE ASSESSING OFFICER HAS NOT GIVEN ANY REASON FOR DISA LLOWANCES EXCEPT OF REQUIRED EVIDENCE WHICH IS CERTAINLY AVAILABLE WITH THE ASSESSEE. THE DISALLOWANCES WERE NOT WARRANTED AND THE . SAME ARE DELETED. 6.3 CONSIDERING THE FACTS OF THE PRESENT CASE WE F EEL THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT( A) ON THIS ISSUE ALSO. THIS GROUND OF THE REVENUE IS REJECTED. 7. GROUND NO.7 IS AS UNDER: 7. ON THE AND CIRCUMSTANCES OF THE AND IN LAW T HE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2 52 536/- ON ACCOUNT BAD DEBT RELYING UPON THE SUBMISSION OF THE ASSESSEE WITHOU T CONSIDERING THE FACT THAT NO COMPLETE DETAILS WERE FILED BY THE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 7.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND THE LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 7.2 WE FIND THAT THIS ISSUE IS NOW COVERED IN FAVOU R OF THE ASSESSEE BY THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TRF LTD. VS. CIT AS REPORTED IN 323 ITR 397 (S.C.). WE FIND THAT THERE IS NO DISPUTE THAT THE BAD DEBTS WERE ACTUALLY WRITTEN OF BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. BY RESPECTFULLY FOLLOWING THIS J UDGEMENT OF HONBLE APEX COURT WE DECIDE THIS ISSUE IN FAVOUR OF THE A SSESSEE. THIS GROUND IS ALSO REJECTED. 8. GROUND NO.8 IS AS UNDER:- 8. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN SAW THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.26. 610/- MADE ON I.T.A.NO.2887 /AHD/2004 7 ACCOUNT OF FOREIGN TRAVEL EXPENSES RELYING UPON TH E SUBMISSION OF THE ASSESSEE WITHOUT CONSIDERING THE FACT THAT NO COMPLETE DETAILS WERE FILED BY THE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS AND WAS NOWHERE ENGAGED IN THE EXPORT B USINESS. 8.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND THE LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 8.2 WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LD. CIT(A) AS PER PARA 18 & 19 OF HIS ORDER WHICH ARE REPRODUCED BELOW:- 18. THE EIGHTH GROUND OF APPEAL IS REGARDING DISAL LOWANCES OF RS. 26 610/- OUT OF FOREIGN TRAVEL EXPENSES FOR WANT OF DETAILS. IT WAS SUBMITTED BY THE LEARNED COUNSEL THAT THE APPELLANT TRAVELED TO GERMANY TO ATTEND THE DRUPA 2000- TRADE FAIR AND PA ID RS. 45 050/- IN INDIAN RUPEES TO ORBIT WHO SPECIALIZED IN ARRANGING CONDUCTED TOURS FOR ATTENDING TRADE FAIR AND EXHIBI TIONS ABROAD. AN AMOUNT OF RS. 88 800/- WAS PAID TO LKP MERCHANT FINANCIAL LTD. FOR OBTAINING FOREIGN EXCHANGE WHICH WAS TAKEN BY THE ASSESSEE AND SPENT ON THE TOUR. THE ASSESSEE HAS TA KEN THIS TOUR WITH THE PURPOSE OF UPDATING HIMSELF WITH RECENT BU SINESS TRENDS. NO FAMILY MEMBER HAS ACCOMPANIED HIM. THE ENTIRE EX PENDITURE IS FOR THE DEVELOPMENT OF THE BUSINESS. 19. THE ASSESSING OFFICER DISALLOWED 1/5 TH OF THE EXPENSES FOR WANT OF EVIDENCE IN SUPPORT OF THE CLAIM. HE COULD NOT E STABLISH THAT THE FOREIGN TRAVEL WAS FOR A PLEASURE TRIP BY THE ASSES SEE. THE EXPENSES WERE INCURRED ONLY FOR THE BUSINESS PURPOSE AND CAN NOT BE DISALLOWED IN SUCH A SUMMARY MANNER WHERE THE ASSES SEE IS HAVING ALL THE DETAILS FOR SUCH TRAVEL EXPENSES. THE DISAL LOWANCES IN A SUMMARY MANNER WERE WARRANTED AND THE SAME ARE DELE TED. 8.3 WHEN WE GO THROUGH THESE TWO PARAS OF THE ORDER OF LED. CIT(A) WE FIND THAT VALID REASONS HAVE BEEN GIVEN BY LD. C IT(A) FOR DELETING THIS DISALLOWANCE AND HENCE ON THIS ISSUE ALSO WE CONFIRM THE ORDER OF LD. CIT(A). THIS GROUND OF THE REVENUE IS ALSO REJ ECTED. 9. GROUND NO.9 IS AS UNDER:- 9. ON THE FACTS AND CIRCUMSTANCES OF THE AND IN LAW THE ID CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.33 32 610/- MADE ON ACCOUNT OF BALANCE SHEET DIFFERENCE RELYING UPO N THE SUBMISSION OF THE ASSESSEE WITHOUT CONSIDERING THE FACT THE ENTRIES I.T.A.NO.2887 /AHD/2004 8 APPEARING IN THE ACCOUNTS WERE NOT EXPLAINED BY THE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 9.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND THE LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 9.2 WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LD. CIT(A) AS PER PARA 21 OF HIS ORDER WHICH IS REPRODUCED BELOW:- 21. THE TENTH GROUND OF APPEAL IS REGARDING ADDITIO N OF RS. 3332.610/- ON ACCOUNT OF BALANCE SHEET DIFFERENCE. IT WAS SUBMITTED BY THE LD. COUNSEL THAT TWO ACCOUNTS OF M /S. 21 ST CENTURY PRINTERS PVT. LTD. WERE MAINTAINED. IN ONE OF THE ACCOUNT A DEBIT BALANCE OF RS. 9 45 034/-WAS AVAIL ABLE AND IN ANOTHER ACCOUNT A CREDIT BALANCE OF RS. 42 37 644/ -WAS AVAILABLE. THE ASSESSEE HAS RECEIVED THE AFORESAID ADVANCE FOR PURCHASE OF GOODS AND HENCE IT WAS REFLECTED IN SE PARATE ACCOUNT. THE ASSESSING OFFICER HAS TRIED TO MATCH T HE DEBIT BALANCE IN ONE LEDGER ACCOUNT WITH THE CREDIT BALAN CE OF THE SECOND ACCOUNT. HE HAS NOT TAKEN NOTICE FOR THE FAC T THAT TWO ACCOUNTS OF THIS PARTY ARE AVAILABLE IN THE BALANCE SHEET. I COULD NOT UNDERSTAND HOW THE DIFFERENCE OF TWO ACCOUNTS H AVING DEBIT AND CREDIT ENTRY BECOME THE INCOME OF THE ASSESSEE. THE COMPANY 21 ST CENTURY PRINTERS PVT. LTD. IS A CUSTOMER OF THE ASSESSEE AND USED TO PURCHASE GOODS FROM THE ASSESS EE. IN THE LEDGER ACCOUNT THE DEBIT BALANCE OF RS.9 05 034/- WAS AVAILABLE AT THE END OF THE YEAR. AN ADVANCE OF RS.42 37 644/ - WAS TAKEN BY THE APPELLANT BY CHEQUE OF RS. 35 00 000/- AND R S. 7 37 644/-. THE DIFFERENCE OF BOTH THESE ACCOUNTS CANNOT BE ADD ED AS INCOME OF THE ASSESSEE. THE ACTION OF THE ASSESSING OFFICE R WAS TOTALLY UNJUST AND AGAINST THE PROVISIONS OF LAW. THE ADDIT ION WAS NOT WARRANTED AND THE SAME IS ACCORDINGLY DELETED. 9.3 BEFORE US LD. A.R. OF THE ASSESSEE SUBMITTED T HAT SUNDRY DEBTORS AS ON 31.03.2001 WAS OF TOTAL AMOUNT OF RS.1 50 48 810/- WHICH INCLUDES THE AMOUNT OF RS.9 05 034.28 OUTSTANDING FROM 21 ST CENTURY PRINTERS LTD. SILVASA. LD. CIT(A) IN PARA 21 OF HIS ORDER REPROD UCED ABOVE HAS OBSERVED THAT THERE IS OUTSTANDING CREDIT BALANCE O F RS.42 37 644/- IN THE NAME OF M/S. 21 ST CENTURY PRINTERS LTD. AND ON THIS BASIS THE A.O. CAME TO THE CONCLUSION THAT THERE IS DIFFERENCE IN THE B ALANCE SHEET BUT MERELY I.T.A.NO.2887 /AHD/2004 9 BECAUSE CREDIT BALANCE OF ONE PARTY WAS NOT NETTED OF IT CANNOT BE SAID THAT THERE IS DIFFERENCE IN THE BALANCE SHEET. THI S ADDITION WAS DELETED BY LD. CIT(A) AND WE DO NOT FIND ANY REASON TO INTERFE RE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. HENCE THIS GROUND OF T HE REVENUE IS ALSO REJECTED. 10. GROUND NO.10 IS AS UNDER:- 10. ON THE AND CIRCUMSTANCES OF THE CASE AND IN SA W THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.51 673/- MADE ON ACCOUNT OF BANK HYPOTHECATION DIFFERENCE RELYING U PON THE SUBMISSION OF THE ASSESSEE WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 10.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND TH E LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 10.2 WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LD . CIT(A) AS PER PARA 22 OF HIS ORDER WHICH IS REPRODUCED BELOW:- 22. THE ELEVENTH GROUND OF APPEAL IS REGARDING ADD ITION OF RS. 51 673/- ON ACCOUNT OF DIFFERENCE IN BALANCE AS PER BANK BOOK AND AS PER BANK STATEMENT WITHOUT GOING THROUGH THE RECONCILIATION STATEMENT SO SUBMITTED. IT WAS SUBMI TTED BY THE LEARNED COUNSEL THAT THE BALANCE AS PER BOOKS RAREL Y MATCHES WITH THE BALANCES IN THE BANK STATEMENT. IT HAS TO BE MA TCHED BY A RECONCILIATION STATEMENT. THE COPY OF THE BANK RECO NCILIATION STATEMENT WAS SUBMITTED. AFTER CONSIDERING THE TANK RECONCILIATION STATEMENT I CAME TO KNOW THAT THIS ADDITION WAS MADE ONLY FOR THE SAKE OF ADDITION AND THE ASSESSI NG OFFICER WAS NOT HAVING ANY BASIS FOR IT. THE ADDITION MADE ON WHIMS IS DIRECTED TO BE DELETED. 10.3 CONSIDERING THE FACTS OF THE PRESENT CASE AS S TATED IN ABOVE PARA OF THE ORDER OF LD. CIT(A) WE FEEL THAT NO INTERFE RENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. THIS G ROUND OF THE REVENUE IS REJECTED. 11. GROUND NO.11 IS AS UNDER: I.T.A.NO.2887 /AHD/2004 10 11. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ID CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.25. 000/- MADE ON ACCOUNT OF DONATION RELYING UPON THE SUBMISSION OF THE ASSESSEE WITHOUT CONSIDERING THE FACT THAT SUCH DONATION WAS NOT DEBITED IN THE PROFIT AND LOSS ACCOUNT OF THE PROPRIETARY CONC ERN OF THE ASSESSEE. 11.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND TH E LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 11.2 WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LD . CIT(A) AS PER PARA 24 OF HIS ORDER WHICH IS REPRODUCED BELOW:- 4. THE THIRTEENTH GROUND OF APPEAL IS REGARDING ADD ITION OF RS. 25 0007- BEING DONATION GIVEN TO EARTHQUAKE RELIEF FUND. IT WAS SUBMITTED BY THE LEARNED COUNSEL THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80G OF THE ACT FOR THE AMOUNT SO REF ERRED TO ABOVE. THE DONATION WAS GIVEN FROM THE BUSINESS FUN D AND DEBITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE. THE CONTENTION OF THE ASSESSING OFFICER THAT THE DONATION HAS BEEN GI VEN OUT OF PERSONAL ACCOUNT IS WRONG. I HAVE GONE THROUGH THE COPY OF LEDGER ACCOUNT OF CAPITAL ACCOUNT AND NOTICED THAT THE DONATION WAS GIVEN BY THE APPELLANT AND THE SAME IS DEBITED TO THE CAPITAL ACCOUNT OF THE PROPRIETOR. THE ACTION OF THE ASSESS ING OFFICER TREATING THE DONATION GIVEN AS INCOME WAS UNJUST AN D INCORRECT AND THE ADDITION IS HEREBY DELETED. HE IS FURTHER D IRECTED TO ALLOW THE DEDUCTION U/S 80G OF THE ACT AFTER VERIFYING TH E RECEIPT OF THE DONATION. 11.3 CONSIDERING THE FACTS OF THE PRESENT CASE AS S TATED IN ABOVE PARA OF THE ORDER OF LD. CIT(A) WE FEEL THAT NO INTERFE RENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. THIS G ROUND OF THE REVENUE IS REJECTED. 12. GROUND NO.12 IS AS UNDER:- 12. ON THE FACTS AND CIRCUMSTANCES OF THE AND IN L AW THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.42 00 000/- MADE BY THE AO ? RELYING UPON THE SUBMISSION OF THE ASSESSEE IGNORI NG' THE FACT THAT THE ASSESSEE TO PROVE THE SOURCE OF S OURCE OF CREDIT OF RS 42 LACS APPEARING IN HIS ACCOUNTS. I.T.A.NO.2887 /AHD/2004 11 12.1 LD. D.R. SUPPORTED THE ASSESSMENT ORDER AND TH E LD. A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 12.2 WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LD . CIT(A) AS PER PARA 25 & 26 OF HIS ORDER WHICH ARE REPRODUCED BELOW:- 25. THE FOURTEENTH GROUND OF APPEAL IS REGARDING A DDITION OF RS. 42 00 000/- BY TREATING ADVANCE GIVEN FOR PURCHASE OF RAW MATERIAL AS INCOME EVEN AFTER GIVING ALL THE NECESSARY EVID ENCES SUPPORTING THE CONTENTION. IT WAS SUBMITTED BY THE LEARNED COU NSEL THAT AN ADVANCE OF RS. 42 00 000/- WAS GIVEN TO ACCURAFORM PVT LTD. FOR PROCURING IMPORTED RAW MATERIALS AT A CHEAPER PRICE . SINCE THE MATERIALS WERE TO BE PURCHASED ON CASH BASIS THE A SSESSEE WAS REQUIRED TO GIVE THIS ADVANCE. FOR ARRANGING THE AD VANCE AN AMOUNT OF RS. 35 00 000/- WAS TAKEN FROM ITS REGULA R CUSTOMER 21 ST CENTURY PVT. LTD. ALL THESE TRANSACTIONS ARE BY CHE QUE AND COPIES OF CORRESPONDENCE BETWEEN THE PARTIES RELATING TO T HIS MATTER WERE PRODUCED BEFORE THE ASSESSING OFFICER DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. ACCURAFORM PVT. LTD. COULD NOT SUPPLY THIS MATERIAL AS PER THE PROMISED TIME SCHEDULE AND SO IT HAD TO RETURN THIS AMOUNT THE ADVANCE AMOUNT WAS RETURNED TO THE APPELLANT BY CHEQUE IN THE SUBSEQUENT YEAR. WHEN TH E AMOUNT OF ADVANCE IS REFLECTED IN THE BALANCE SHEET AND HAS N OT BEEN DEBITED TO PROFIT AND LOSS ACCOUNT THERE WAS NO QUESTION F OR TREATING THE ADVANCE AS AN INCOME OF THE APPELLANT. 26. THE ASSESSING OFFICER HAS STATED IN HIS ORDER THAT THERE WAS NO NEXUS BETWEEN THE ASSESSEE AND ACCURAFORM PVT. L TD. BUT IT IS ADJUSTMENT OF FUNDS BY LENDING MONEY AND RECEIVING IT BACK AFTER SOME TIMES TO ADJUST THE ACCOUNTS IN THE LAST MONTH OF THE FINANCIAL YEAR FROM ONE PARTY TO ANOTHER. IN ABSENCE OF SATIS FACTORY EXPLANATION IT WAS ADDED BACK IN THE TOTAL INCOME OF THE ASSESSEE. I AM PITY ON THE KNOWLEDGE OF LAW OF THE ASSESSING OF FICER. ALL THE TRANSACTIONS ARE THROUGH CHEQUES AND NECESSARY CORR ESPONDENCE HAVE BEEN SUBMITTED BEFORE THE ASSESSING OFFICER. I COULD NOT UNDERSTAND HOW AN ADVANCE GIVEN BECOMES AN INCOME O F THE ASSESSEE WHETHER IT IS GIVEN TO A OLD CUSTOMER OR T O A NEW PARTY. THE ACTION OF THE ASSESSING OFFICER TREATING THE A DVANCES GIVEN AS INCOME IS BEYOND THE PROVISIONS OF LAW. BY ANY STR ETCH OF IMAGINATION THE ADVANCES GIVEN CAN NOT BE TREATED AS INCOME. THE ADDITION WAS UNJUST AND WAS NOT WARRANTED. THE SAME IS ACCORDINGLY DELETED. I.T.A.NO.2887 /AHD/2004 12 12.3 CONSIDERING THE FACTS OF THE PRESENT CASE AS STATED IN ABOVE PARA OF THE ORDER OF LD. CIT(A) WE FEEL THAT NO INTERFE RENCE IS CALLED FOR IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. THIS G ROUND OF THE REVENUE IS REJECTED. 13. GROUNDS NO.13 & 14 ARE GENERAL. 14. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED. 15. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (BHAVNESH SAINI) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD 1. DATE OF DICTATION 2/2/12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3/2/12.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 9/2 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.9/2 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09/02/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .