M/s. Nirmala Overseas, New Delhi v. ACIT, New Delhi

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 2996/DEL/2009 ASSESSMENT YEAR: 2005-06 ACIT CIRCLE 22(1) NEW DELHI VS. NIRMALA OVERSEAS B-77 FLATTED FACTORY COMPLEX OKHLA NEW DELHI PAN : AAAFN 6358 G ITA NO. 3014/DEL/2009 ASSESSMENT YEAR: 2005-06 NIRMALA OVERSEAS B-77 FLATTED FACTORY COMPLEX OKHLA NEW DELHI VS. ACIT CIRCLE 22(1) NEW DELHI (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI H.K. LAL SR. DR ASSESSEE BY : SHRI RAMESH GOYAL CA O R D E R PER: C.L. SETHI J.M. BOTH THE ASSESSEE AS WELL AS REVENUE ARE IN APPEA L AGAINST THE ORDER DATED 27.04.2009 PASSED BY THE LD. CIT(A) IN THE MA TTER OF AN ASSESSMENT MADE BY THE AO U/S. 143(3) OF THE INCOME TAX ACT 1 961 (THE ACT) FOR THE A.Y. 2005-06. ITA NO. 2996/DEL/2009 ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 2 OF 21 2. WE SHALL FIRST TAKE THE APPEAL FILED BY THE REVE NUE. IN THIS APPEAL THE REVENUE HAS DISPUTED THE ORDER OF THE CIT(A) IN DELETING THE FOLLOWING ADDITIONS:- (I) RS. 8 LACS ON ACCOUNT OF UNEXPLAINED CASH CREDI T. (II) RS. 26 39 294/- ON ACCOUNT OF BOGUS PURCHASES. (III) RS. 9 46 579/- ON ACCOUNT OF ADVANCES WRITTEN OFF. 3. WITH REGARD TO THE ADDITION OF RS.8 LACS MADE BY THE AO IT WAS NOTICED BY THE AO THAT IN RESPECT OF THE FOLLOWING CASH CREDIT THE ASSESSEE DID NOT SUBMIT ANY DOCUMENTARY EVIDENCES:- (I) CASH OF RS. 1 LACS RECEIVED IN THE BUSINESS ON 20.05.2004. (II) CASH OF RS. 2 LACS RECEIVED IN THE BUSINESS ON 06.08.2004. (III) CASH OF RS. 5 LACS RECEIVED IN THE BUSINESS O N 05.03.2005. 4. THESE DEPOSITS WERE MADE IN THE CAPITAL ACCOUNT OF ONE OF THE PARTNER NAMELY SHRI GOPAL BHASIN. THE ASSESSEE S UBMITTED BEFORE THE AO THAT PARTNER SHRI GOPAL BHASIN HAD WITHDRAWN C ERTAIN CASH AMOUNT FROM HIS PERSONAL ACCOUNT IN HIS PROPRIETORSHIP FIR M WHICH MONEY WAS INTRODUCED TOWARDS THE CAPITAL IN THE PRESENT ASSE SSEE FIRM. THE ASSESSEE FURNISHED THE COPY OF BANK PASSBOOK ETC. IN SUPPORT OF HIS CONTENTIONS. HOWEVER THE AO HAS TREATED THESE DEPOSITS AS UNDIS CLOSED CASH CREDIT OF THE ASSESSEE FIRM. 5. ON AN APPEAL BEFORE THE CIT(A) THE ASSESSEE SU BMITTED THAT MR. GOPAL BHASIN PARTNER OF THE PRESENT ASSESSEE FIRM WAS ALSO RUNNING A PROPRIETARY CONCERN IN THE NAME AND STYLE OF B2B CO NNECTORS WHERE ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 3 OF 21 FROM HE HAD WITHDRAWN CASH AMOUNTS AND DEPOSITED TH E SAME IN THE PRESENT PARTNERSHIP FIRM. RELEVANT EXTRACT OF THE CASH-BOOK OF PROPRIETARY CONCERN NAMELY B2B CONNECTORS ALONGWITH OTHER PAPE RS WERE FURNISHED BEFORE THE CIT(A) WHERE FROM IT WAS CLEAR THAT AMO UNTS OF RS. 1 LAC RS. 2 LACS AND 5 LACS WERE INTRODUCED BY THE ASSESSEE IN THE CAPITAL ACCOUNT WITH THE ASSESSEE FIRM OUT OF THE WITHDRAWAL MADE B Y HIM FROM HIS PROPRIETARY FIRM VIZ. B2B CONNECTORS. THE CIT(A) THEN REFERRED THE MATTER TO THE AO FOR HIS REPORT VIDE LETTER DATED 1 4.11.2008. THE AO VIDE LETTER DATED 05.02.2009 SUBMITTED HER REPORT WHICH HAS BEEN REPRODUCED BY THE CIT(A) IN HIS ORDER. IN THE REMAND REPORT THE AO OBJECTED TO THE ADMISSION OF VARIOUS EVIDENCES FILED BY THE ASSESSE E BEFORE THE CIT(A) BY SAYING THAT ASSESSEE WAS GIVEN SUFFICIENT OPPORT UNITIES BY HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO FILE EVIDEN CES IN SUPPORT OF THE ASSESSEES CASE. HOWEVER THE AO HAS NOT POINTED O UT ANY DISCREPANCY WITH REGARD TO THE EVIDENCES FILED BY THE ASSESSEE WHEREBY IT WAS PROVED AND ESTABLISHED THAT THE AMOUNT OF RS. 1 LAC RS. 2 LACS AND RS. 5 LACS WAS INTRODUCED IN THE ASSESSEES FIRM OUT OF THE WITHDR AWAL MADE BY MR. GOPAL BHASIN FROM HIS PROPRIETARY FIRM VIZ. B2B CO NNECTORS. THE COPY OF REMAND REPORT WAS GIVEN TO THE ASSESSEE BY THE C IT(A) VIDE HIS LETTER DATED 06.03.2009. THEREAFTER THE ASSESSEE SUBMITT ED ITS REPLY WHICH HAS BEEN REPRODUCED BY THE CIT(A) IN PARA 7 OF HIS OR DER. ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 4 OF 21 6. THE CIT(A) THEN PROCEEDED TO CONSIDER THE ISSUE ABOUT THE ADMISSIBILITY OF ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE HIM DURING APPELLATE PROCEEDINGS. THE CIT(A) MADE A RE FERENCE TO THE DECISION OF THE TRIBUNAL IN THE CASE OF ITO VS. MIT TAL INTERNATIONAL INDIA PVT. LTD. (ITA NO. 1671/D/2004 D BENCH) WHERE THE POWERS OF THE CIT(A) TO ADMIT THE ADDITIONAL EVIDENCES HAVE BEEN CONSIDERED. THE CIT(A) ALSO MADE A REFERENCE TO THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF MOSER BAER & OTHERS VS. ADDL. CIT & ANR (2009) 17 DTR (DEL) 98 WHERE THE POWERS OF THE CIT(A) IN ADMITTING THE FRESH EVIDENCES AT THE APPELLATE STAGE HAVE BEEN DISCUSSE D. THE CIT(A) THEN HAD TAKEN A NOTE OF THE FACT THAT THE ASSESSEE WAS ASKED BY THE AO VIDE LETTER DATED 14.11.2007 TO SUBMIT DETAILS ON 20.11. 2007 THOUGH THE AO FINALIZED THE ORDER U/S. 143(3) ON 14.11.2007 ITSEL F. THE CIT(A) THEREFORE FOUND THAT THE ASSESSEE WAS NOT GIVEN S UFFICIENT OPPORTUNITIES AND HE WAS PREVENTED BY SUFFICIENT CAUSE TO ADDUCE EVIDENCES OR EXPLANATION. THE CIT(A) THEREFORE HAS TAKEN A VI EW THAT THE ASSESSEES CASE IS COVERED BY THE EXCEPTION PROVIDED UNDER RUL E 46A(1) TO ADMIT THE ADDITIONAL EVIDENCES FILED BEFORE THE CIT(A). HE THEREFORE ADMITTED THE ADDITIONAL EVIDENCES WHICH WERE ADDUCED BY THE ASS ESSEE AT THE APPELLATE STAGE AND CONSIDERED THEM FOR DECIDING VARIOUS ADD ITIONS MADE BY THE AO. ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 5 OF 21 7. AFTER CONSIDERING THE ASSESSEES EXPLANATION AND THE REMAND REPORT THE CIT(A) FOUND THAT THE ASSESSEE HAS BEEN ABLE TO GIVE SATISFACTORY AND REASONABLE EXPLANATION AS TO THE SOURCE OF DEPOSIT MADE BY THE PARTNER SHRI GOPAL BHASIN. THE CIT(A)S OPERATIVE ORDER ON THIS ISSUE RUNS AS UNDER:- I MAY REVERT TO THE ISSUE OF ADDITION MADE UNDER SECTION 68 TO THE TUNE OF RS. 8 LACS. I HAVE GONE THROUGH THE ORDER OF THE LD. A.O. THE SUBMISSIONS MADE BY THE ASSESSEE AS WELL AS THE REMAND REPORT FILED BY THE LD. AO. THE STAND OF ASSESSEE IS THAT THE PARTNER OF THE ASSESSEE HAS INTRODUCED THE AMOUNT OF RS.8 00 000/- . THE PARTNER SHRI BHASIN WAS ALSO RUNNING A PROPRIET ARY CONCERN IS THE NAME AND STYLE OF B2B CONNECTORS FRO M WHERE HE HAD DRAWN CASH AMOUNT AND INTRODUCED THE SAME IN THE APPELLATE FIRM. FROM THE BOOKS OF M/S. B2B CONNECTORS IT IS OBSERVED THAT THE FOLLOWING AMOUN TS HAVE BEEN DISALLOWED IN CASH BY SHRI GOPAL BHASIN THE PROPRIETOR:- SL. NO. DATE AMOUNT (RS.) 1. 20.4.04 1 00 000 2. 06.8.04 2 00 000 3. 05.3.05 5 00 000 THE ABOVE WITHDRAWALS HAVE BEEN DEPOSITED IN THE PARTNERSHIP FIRM ON 20.5.04 (RS 1 00 000) 6.8. 04 (RS. 2 00 000) & 5.3.05 (RS.5 00 000). THERE CAN B E NO DOUBT THAT ALL THE THREE DEPOSITS HAVE BEEN MADE ON THE SAME DATES AS ON THE DATE WHEN THE PARTNER OF THE FIRM SHRI GOPAL BHASIN HAS WITHDRAWN THE AMOUNT FROM THE PROPRIETARY CONCERN B2B CONNECTORS. THUS THE EXPLANATION OF THE ASSESSEE APPEARS TO BE GENUINE WHICH HAS NOT BEEN DISPUTED BY THE LD. AO IN HER RE PORT DT. 5.2.09 EXTRACTS OF WHICH HAVE ALREADY BEEN REPRODUCED ABOVE. THUS THE ADDITION OF RS. 8 LACS. U/S ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 6 OF 21 68 IS DELETED. THE ASSESSEE SUCCEEDS IN GROUND OF APPEAL NO. 2(1). 8. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 9. IN THE LIGHT OF THE CATEGORICAL FINDINGS GIVEN B Y THE CIT(A) WE ARE IN AGREEMENT WITH THE VIEW OF THE CIT(A) TO ADMIT T HE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE HIM IN AS MU CH AS THE ASSESSEE WAS NOT GIVEN SUFFICIENT TIME TO PRODUCE EVIDENCES AND EXPLANATIONS AND THE ASSESSEE WAS ALSO PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING DETAILS BEFORE THE AO. WE ARE IN AGREEMENT WITH TH E VIEW OF THE CIT(A) THAT THE ASSESSEES CASE IS COVERED BY THE SITUATIO N PROVIDED UNDER RULE 46A FOR THE PURPOSE OF ADMISSION OF ADDITIONAL EVID ENCES FILED BY THE ASSESSEE. WE THEREFORE HOLD THAT THE ASSESSEE H AS BEEN ABLE TO MAKE OUT A CASE FOR ADMISSION OF ADDITIONAL EVIDENCES FILED BEFORE THE CIT(A) AS LAID DOWN IN THE PROVISIONS CONTAINED IN RULE 46A O F INCOME TAX RULES. THEREFORE THE CONTENTION OF THE DEPARTMENT THAT TH E CIT(A) HAS ERRED IN LAW IN ADMITTING THE ADDITIONAL EVIDENCES DURING TH E COURSE OF APPELLATE PROCEEDINGS IS REJECTED. 10. COMING TO THE MERIT OF THE ISSUE WE FIND THAT THE ASSESSEE HAS PRODUCED SUFFICIENT EVIDENCES TO PROVE AND ESTABLIS H THE GENUINENESS OF THE DEPOSITS AS WELL AS THE SOURCE THEREOF. THE AS SESSEE HAD WITHDRAWN CERTAIN CASH AMOUNT FROM HIS PROPRIETARY CONCERN VI Z. B2B CONNECTORS AND THEN DEPOSITED THE SAME WITH THE PRESENT ASSESS EE FIRM WHEREIN SHRI ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 7 OF 21 GOPAL BHASIN IS A PARTNER. SHRI GOPAL BHASIN PART NER OF THE ASSESSEE FIRM HAS WITHDRAWN THE SUM OF RS. 1 LAC RS. 2 LACS AND RS. 8 LACS ON 20.04.2004 06.08.2004 AND 05.03.2005 FROM HIS PROP RIETARY CONCERN AND DEPOSITED THE SAME IN THE PARTNERSHIP FIRM ON 20.05 .2004 06.08.2004 AND 05.03.2005 RESPECTIVELY. IT IS NOT THE CASE OF THE AO THAT THE AMOUNT WITHDRAWN BY THE ASSESSEE FROM THE PROPRIETARY CONC ERN HAS BEEN OTHERWISE USED AND UTILIZED FOR SOME OTHER PURPOSES . WE ARE THEREFORE INCLINED TO UPHOLD THE ORDER OF THE CIT(A) IN DELET ING THE ADDITION OF RS. 8 LACS ON ACCOUNT OF DEPOSITS MADE BY SHRI GOPAL BH ASIN PARTNER OF THE ASSESSEE FIRM. THUS THIS GROUND RAISED BY THE RE VENUE IS REJECTED. 11. NEXT ISSUE IS WITH REGARD TO THE ADDITION OF RS . 26 39 294/- MADE BY THE AO ON ACCOUNT OF BOGUS PURCHASES. 12. FROM THE EXAMINATION OF THE BOOKS OF ACCOUNTS P RODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERV ED BY THE AO THAT IN RESPECT OF FEW PARTIES MOST OF THE PAYMENTS ON ACC OUNT OF PURCHASES MADE BY THE ASSESSEE WERE MADE IN CASH. ACCORDING TO THE AO THIS SYSTEM WAS NOT IN CONFORMITY WITH THE NORMAL PRACTI CE FOLLOWED BY THE ASSESSEE WHEN MOST OF THE PAYMENT WERE MADE THROUG H BANKING CHANNELS. THE AO THEREFORE ASKED THE ASSESSEE TO FURNISH THE LEDGER ACCOUNT OF THE FOLLOWING PARTIES AND ALSO THEIR CON FIRMATIONS. THE ASSESSEE WAS ALSO ASKED TO FURNISH COPIES OF BILLS RAISED BY THESE PARTIES:- I. AJIT KUMAR ANGURALIA (PURCHASES) ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 8 OF 21 II. SUJATA HANDLOOM (PURCHASES) III. M/S B.H.P. INDUSTRIES (ADVANCE RECD.) IV. BIMLA ANGURALIA V. MAMTA TEXTILES 13. THE AO FURTHER STATED THAT NEITHER THE CONFIRMA TION NOR DETAILS AS CALLED FOR BY THE ASSESSEE WERE FURNISHED. HE THE REFORE TREATED THE PURCHASES AMOUNTING TO RS. 26 39 294/- MADE FROM TH ESE PARTIES AS BOGUS AND DISALLOWED THE SAME WHILE DETERMINING THE TOTAL INCOME OF THE ASSESSEE. 14. BEING AGGRIEVED THE ASSESSEE WENT IN APPEAL BE FORE THE CIT(A). 15. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT THE AO HAS MADE THE ADDITIONS FOR NON-SUBMISSION OF THE CONFIRMATIO N AT THE TIME OF ASSESSMENT WHICH WAS MADE IN ANXIETY TO COMPLETE T HE ASSESSMENT BEFORE THE LIMITATION PERIOD WITHOUT GIVING ASSESSE E SUFFICIENT TIME TO FILE THE CONFIRMATION LETTERS FROM THE PARTIES. THE ASS ESSEE THEREFORE POINTED OUT BEFORE THE CIT(A) THAT THE CONFIRMATIONS WHICH COULD NOT BE FILED AT THE TIME OF THE ASSESSMENT HAS NOW BEEN FILED BEFO RE HIM AND ON PERUSAL OF THE CONFIRMATIONS IT WOULD CLEAR THAT IDENTITY AND GENUINENESS OF THE PARTIES HAVE BEEN DULY ESTABLISHED. THE ASSESSEE A LSO SUBMITTED BEFORE THE CIT(A) THAT EVEN IN THE CASE OF ONE OF THE PART Y VIZ. MS. BIMLA ANGURALIA THE CONCERNED PARTY CONFIRMED TRANSACTIO N IN REPLY TO THE AOS REQUISITION SOUGHT FOR U/S. 133(6) WHICH WAS NOT T AKEN INTO CONSIDERATION BY THE AO. ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 9 OF 21 16. AFTER CONSIDERING THE ASSESSEES EXPLANATION T HE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO WHO IN HER REMAND REPO RT DATED 05.02.2009 HAD RAISED AGAIN A QUESTION OF ADMISSIBILITY OF ADD ITIONAL EVIDENCES AND ALSO SUBMITTED THAT THE ADDITIONS WAS MADE DUE TO N ON-SUBMISSION OF THE DETAILS AND CONFIRMATIONS FROM THE RESPECTIVE PARTI ES. COPY OF REMAND REPORT WAS GIVEN TO THE ASSESSEE. A REJOINDER WAS THEN FILED BY THE ASSESSEE ON 09.03.2009. 17. AFTER CONSIDERING THE ASSESSEES EXPLANATION AN D SUBMISSION THE AOS REMAND REPORT AS WELL AS REJOINDER FILED BY TH E ASSESSEE THE CIT(A) DELETED THE ADDITION BY OBSERVING THAT THE QUESTION OF ADMISSION OF ADDITIONAL EVIDENCES HAS ALREADY BEEN CONSIDERED BY HIM WHILE DECIDING THE APPEAL AND IN THE REMAND REPORT THE AO HAS NOT COMMENTED ADVERSELY IN RESPECT OF THE VARIOUS LETTERS AND CO NFIRMATIONS FILED BY THE ASSESSEE. 18. THE CIT(A)S ORDER ON THIS ISSUE RUNS AS UNDER: - 32. IN THE REMAND REPORT DT. 5.2.2009 IT HAS BEEN SUBMITTED BY THE LD. AO AS UNDER:- ADDITION OF RS. 26 39 294/- ON ACCOUNT OF BOGUS PURCHASES: THE AO MADE THIS ADDITION DUE TO NON SUBMISSION OF DETAILS AND CONFIRMATION IN SPITE OF SPECIFIC REQUEST AND ALSO OBSERVING THAT PAYMENTS FOR PURCHASE MADE IN CASH ARE BELOW RS. 20 000/- TO AVOID PEAL PROVISIONS OF SEC. 40A(3). THE ISSUE OF ADMISSIBILITY OF ADDITIONAL EVIDENCES HAS ALREADY BEEN DISCUSSED ABOVE ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 10 OF 21 IN THE REJOINDER FILED ON 9.3.2009 THE ASSESSEE HAS STATED THAT AS THE AO HAS CONCEDED ON THE ISSUE THE ADDITION SHOULD BE DELETED. I HAVE CAREFULLY G ONE THROUGH THE ORDER OF THE LD. AO AND THE SUBMISSION FILED IN THE REMAND REPORT DATED 5.2.2009 BY HER A S ALSO THE SUBMISSIONS MADE BY THE ASSESSEE IN SO FA R ADMISSION OF ADDITIONAL EVIDENCES IS CONCERNED I HAVE CAREFULLY TAKEN THE SAME ON RECORD FOR THE REASON S CITED IN PARA 9 ABOVE. PERUSAL OF THE IMPUGNED ASSESSMENT ORDER ALSO REVEALS THAT ALLEGATIONS HAVE BEEN MADE WITHOUT SUPPORTING EVIDENCE THAT AN ENDEAVOUR HAS BEEN MADE BY THE ASSESSEE TO CIRCUMVENT THE PROVISIONS OF SEC. 40A(3 ) OF THE ACT. IT IS SETTLED LAW THAT FOR INVOKING THE PROVISIONS OF SEC. 40A(3) THE ONUS IS ON THE REVEN UE TO PROVE THE SAME. FURTHER THE LD. AO IN HER REMA ND REPORT HAS NOT COMMENTED ADVERSELY ON THIS ISSUE. AS SUCH I AM INCLINED TO ACCEPT THE SUBMISSION OF THE ASSESSEE AND THEREFORE THE ADDITION OF RS. 26 39 29 4/- IS DELETED. THE ASSESSEE SUCCEEDS IN GROUND OF APP EAL NO. 2(6). 19. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 20. IN THE LIGHT OF OUR DISCUSSIONS MADE ABOVE WHIL E DECIDING THE FIRST ISSUE WE ARE IN AGREEMENT WITH THE CIT(A) IN ADMIT TING THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE HIM. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS NOW SUBMITTED ALL THE CONFIRMATION FRO M THE RESPECTIVE PARTIES. THE CASH PAYMENTS MADE BY THE ASSESSEE AR E BELOW PRESCRIBED LIMIT PROVIDED U/S. 40A(3) OF THE ACT. THE PAYMENT EXCEEDING THE LIMIT PROVIDED U/S. 40A(3) HAS BEEN PAID THROUGH BANKING CHANNELS. ALL THE TRANSACTIONS HAVE BEEN CONFIRMED BY THE PARTIES. W E THEREFORE DO NOT FIND ANY BASIS TO INTERFERE WITH THE ORDER OF THE C IT(A) IN DELETING THE ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 11 OF 21 ADDITION ON ACCOUNT OF PURCHASES MADE FROM THE CONC ERN PARTIES IN RESPECT OF WHICH THE ASSESSEE HAD FILED CONFIRMATIO N LETTERS WITH ALL THE DETAILS OF TRANSACTION. THEREFORE THIS GROUND RAI SED BY THE REVENUE IS ALSO REJECTED. 21. NEXT ISSUE RAISED BY THE REVENUE IS WITH REGARD TO THE ADDITION OF RS. 9 46 579/- MADE BY THE AO ON ACCOUNT OF ADVANCE S WRITTEN OFF. IN THE ASSESSMENT THE AO HAS MADE THIS ADDITION FOR WANT OF DETAILS. THE ASSESSEE HAD SHOWN ADVANCES RECEIVED FROM M/S. BHP INDUSTRIES LTD. AS ON 31.03.2005 AT RS. 9 46 579/-. THE LEDGER ACCOUN T OF THE AFORESAID PARTY M/S. BHP INDUSTRIES LTD. RUNS AS UNDER:- PARTICULARS OPENING BALANCE DEBIT CREDIT BALANCE 9 15 916.94 APRIL 9 15 916.94 MAY 9 15 916.94 JUNE 9 15 916.94 JULY 9 15 916.94 AUGUST 9 15 916.94 SEPTEMBER 9 15 916.94 OCTOBER 9 15 916.94 NOV. 9 15 916.94 DEC. 9 15 916.94 JANUARY 9 15 916.94 FEBRUARY 30 662.25 9 46 579.19 MARCH 9 46 579.19 ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 12 OF 21 22. THE AO HAS TAKEN A VIEW THAT THESE ADVANCE AMOU NT RECEIVED BY THE ASSESSEE HAS NEITHER BEEN RETURNED NOR ANY GOO DS SUPPLIED. THE AO THEREFORE TREATED THE SAME AS LIABILITY NO LONGER REQUIRED TO BE PAID BY THE ASSESSEE. THE AO THEREFORE MADE THE ADDITION OF RS. 9 46 579/-. 23. ON AN APPEAL THE CIT(A) DELETED THE ADDITION. 24. THE CIT(A) OBSERVED THAT THERE WAS AN OPENING B ALANCE IN RESPECT OF THE SAID PARTY AS ON 01.04.2004 AMOUNTING TO RS. 9 15 916.94 AND IN THE MONTH OF FEBRUARY 2005 THE ASSESSEE RECEIVED FURTHER SUM OF RS. 30 662.25 TAKING THE AGGREGATE AMOUNT OF ADVANCE T O RS. 9 46 579/-. THE CIT(A) HAS MADE A REFERENCE TO THE DECISION OF INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF SHRI VARDHMAN OV ERSEAS LTD. VS. ACIT [2008] 24 SOT 393 (DELHI) WHERE IT WAS HELD THAT T HE GENUINENESS OF THE ADVANCES CAN ONLY BE EXAMINED IN THE YEAR IN WHICH THEY WERE CREDITED IN THE ACCOUNTS OF THE ASSESSEE. THE FOLLOWING OBS ERVATION OF THE TRIBUNAL WAS TAKEN INTO CONSIDERATION BY THE CIT(A) : 13. ACCORDING TO THE ABOVE DECISION THE REQUIREMENTS FOR APPLICATION OF SEC. 41(1) ARE THAT THE ASSESSEE HIMSELF SHOULD ACQUIRE THE BENEFIT BY WAY OF REMISSION CESSATION OF THAT TRADE LIABILITY DURING THE YEAR IN WHICH SUCH EVENT OCCURRED AND SUCH VALUE OF BENEFIT IS MADE CHARGEABLE TO INCOME TAX AS THE INCOME OF THE PREVIOUS YEAR WHEREIN SUCH BENEFIT W AS OBTAINED AND SEC. 41(1) WILL BE APPLICABLE ONLY IF SUCH LIABILITY OF THE ASSESSEE CAN BE SAID TO HAVE CEAS ED FINALLY WITHOUT THE POSSIBILITY OF REVIVING IT. 14. IF THE FACTS OF THE PRESENT CASE ARE CONSIDERED IN THE LIGHT TO THE ABOVE MENTIONED ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 13 OF 21 OBSERVATIONS OF THEIR LORDSHIPS IT WILL BE INFERRE D THAT IT HAS NOT BEEN SHOWN BY LD. CIT(A) THAT THE ASSESS EE HAS ACQUIRED ANY BENEFIT FROM THIS PARTICULAR LIABILITIES WHICH ARE STILL OUTSTANDING IN THE BALA NCE SHEET OF THE ASSESSEE AND IT HAS ALSO NOT BEEN SHO WN THAT THESE LIABILITIES HAVE CEASED FINALLY WITHOUT THE POSSIBILITY OF REVIVAL . IN OUR OPINION THE ONUS HAS WRONGLY BEEN SHIFTED BY THE REVENUE ON THE ASSESSEE . THE ASSESSEE HAS SHOWN THESE LIABILITIES OUTSTANDI NG IN ITS BALANCE SHEET. THEREFORE THERE WAS NO OCCA SION TO TREAT THE SAID AMOUNT AS TAXABLE UNDER SEC. 41(1 ) OF THE ACT AND IF DEPARTMENT INTENDS TO ASSESS THE SAM E BY APPLYING THE PROVISIONS OF SEC. 41(1) THEN THE ONUS WILL BE ON THE REVENUE TO SHOW THAT THE LIABILITY W HICH IS APPEARING IN THE BALANCE SHEET HAS CEASED FINALL Y AND THERE IS NO POSSIBILITY OF THE REVIVAL OF THE LIABILITY. 25. AFTER CONSIDERING THE AFORESAID DECISION AND TH E FACTS OF THE CASE THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UND ER:- 37. IN VIEW OF THE BINDING DECISION OF THE HONBLE DELHI TRIBUNAL THE ONUS THAT THE LIABILITY HAD CEASED WAS ON THE REVENUE FOR MAKING ADDITION U/S. 41(1). THERE IS NO EVIDENCE ON RECORD THAT THERE WAS INDEE D A CESSATION OF LIABILITY AS ENVISAGED U/S. 41(1) TO THE TUNE OF RS.9 15 916.94. AS SUCH THIS AMOUNT CANNOT BE ADD ED TO THE INCOME OF THE ASSESSEE. THE ONLY AMOUNT THAT I S LEFT IS RS. 30 662 .25. WHILE THE LD. AO HAS STATED THAT T HIS AMOUNT WAS TRANSFERRED ON 19.2.2005 FROM THE ACCOU NTS OF ANOTHER PARTY NOTHING HAS BEEN ELABORATED ON THIS ISSUE. AS SUCH THIS ALSO CANNOT BE BROUGHT WITHIN THE PRO VISION OF SEC. 41(1) DUE TO THE NON-SPEAKING NATURE OF THE CONCLUSION. FURTHER O THE BASIS OF THE CONFIRMATI ON FILED WHICH HAS BEEN ADMITTED AS AN ADDITIONAL EVIDENCE FOR THE REASON GIVEN IN PARA 9 ABOVE AND THAT THE LD. AO IN THE REMAND REPORT HAS ALSO NOT DISAGREED OR OBJECTED TO THE ASSESSEES VERSION THE ADDITION TO TUNE OF RS.9 46 579/- IS DELETED. THE ASSESSEE SUCCEEDS IN GROUND OF APPEAL NO. 2(7). ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 14 OF 21 26. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 27. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS SHO WN THE AMOUNT OF RS.9 46 579/- IN THE BALANCE SHEET BEING THE AMOU NT PAYABLE BY THE ASSESSEE AGAINST THE ADVANCES RECEIVED FROM THE CON CERNED PARTY VIZ. BHP INDUSTRIES LTD. THE ASSESSEE HAS NOT WRITTEN O FF THIS AMOUNT IN THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS ACKNOWLEDGED T HE LIABILITY BY SHOWING SAME IN THE BALANCE SHEET. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE LIABILITY WHICH IS APPE ARED IN THE BALANCE SHEET HAS ACTUALLY BEEN CEASED AND IT IS NO LONGER PAYABLE BY THE ASSESSEE. MERE BECAUSE NO CONFIRMATION HAS BEEN FI LED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS BY ITSELF C ANNOT BE A BASIS THAT THIS LIABILITY IS NO LONGER PAYABLE BY THE ASSESSEE. WE THEREFORE UPHOLD THE ORDER OF THE CIT(A) IN DELETING THE ADDITION. HENC E THIS GROUND RAISED BY THE REVENUE IS ALSO REJECTED. ITA NO. 3014/DEL/2009 38. WE SHALL NOW COME TO APPEAL FILED BY THE ASSESS EE. 29. THE EFFECTIVE GROUND RAISED BY THE ASSESSEE IS AS UNDER:- THAT THE LD. AO AS WELL AS CIT(A) WAS NOT JUSTIFIE D IN MAKING THE FOLLOWING ADDITIONS/DISALLOWANCES:- A) DUTY DRAW BACK INCOME RS. 6 97 440/- B) UNDER SECTION 40A(3) RS. 30 363/- C) UNDER SECTION 40(A) RS. 4 80 891/- ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 15 OF 21 D) UNDISCLOSED INCOME OF RS. 30 000/-. 30. COMING TO THE ADDITION OF RS. 6 97 440/- ON ACC OUNT OF DUTY DRAWBACK IT IS SEEN THAT THE AO HAS MADE THIS ADDI TION ON THE GROUND THAT THE ASSESSEE HAS FAILED TO ACCOUNTED FOR DUTY DRAWBACK INCOME WHICH HAD ACCRUED TO THE ASSESSEE. THE ASSESSEES CASE BEFORE THE AO WAS THAT INCOME OF DUTY DRAWBACK HAS BEEN RECOGNIZE D IN THE ACCOUNTS ON CASH BASIS WHICH WAS NOT ACCEPTED BY THE AO. 31. ON AN APPEAL THE CIT(A) DECIDED THIS ISSUE AGA INST HE ASSESSEE BY OBSERVING AS UNDER:- IT IS EVIDENT THAT THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING. IT IS ALSO UNDISP UTED THAT FOR THE PURPOSES OF ACCOUNTING OF THE DUTY DRAWBACK IT IS ACCOUNTED FOR ON CASH BASIS. SEC. 145(1) WHICH WAS AMENDED BY THE FINANCE ACT 1995 W.E.F. 1.4.1997 PROVIDES AN OPTION TO THE ASSE SSEE TO FOLLOW EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING. THE HYBRID SYSTEM OF ACCOUNTING AS IT STOOD PRIOR TO THE AMENDMENT CANNOT BE FOLLOWED AFT ER 31.03.1997. IN THE CASE IN HAND IT IS UNDOUBTED T HAT THE DUTY DRAWBACK HAS ACCRUED TO THE ASSESSEE IN T HE ASSESSMENT YEAR AS IT IS FOLLOWING THE MERCANTILE S YSTEM OF ACCOUNTING AND THEREFORE HAS TO BE ACCOUNTED FOR IN THE ASSESSMENT YEAR ITSELF AND NOT ON CASH BASIS. THIS IS NOT PERMISSIBLE AS PER LAW. THE ASSESSEE HAS TAKE N THE STAND THAT IT HAS CONSISTENTLY BEEN FOLLOWING THIS PRACTICE. EVEN ASSUMING FOR A MOMENT THAT EARLIER THIS PRACTICE HAD INDEED BEEN ACCEPTED BY THE DEPARTMENT (EVEN THOUGH ANY EVIDENCE OF EARLIER YEARS WERE NOT SUBMITTED) IT IS NOT NECESSARY THAT IN SUBSEQUENT YEARS ALSO THE BLATANT MISTAKE SHOULD BE ALLOWED TO BE PERPETUATED. THIS MISTAKE SHOULD BE RECTIFIED AS E ARLY AS POSSIBLE AS HELD IN CIT VS. FOSS ELECTRONIC 263 ITR 125 (RAJ.). MOREOVER THE AMENDMENT IN THE ACT W.E .F. 1.4.1997 HAS BEEN DELIBERATED IN A NUMBER OF DECIS ION OF THE DELHI HIGH COURT AND THE DELHI TRIBUNAL AND ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 16 OF 21 THEREFORE THE EXCEPTION TO THE PRINCIPLE OF CONSIS TENCY WOULD HAVE TO BE FOLLOWED AS HELD IN DABUR INDIA LT D. VS. CIT [2008] 13 ITR (DEL); [2008] 219 CTR (DEL) 152. THUS THE ASSESSEE FAILS IN GROUND OF APPEAL NO. 2(5). THE ADDITION OF RS. 6 97 440/- IS UPHELD. 32. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 33. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS BEEN FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. SECTION 145(1) AS AMENDED BY THE FINANCE ACT 1995 W.E.F. 01.04.1997 PROVIDES THAT IT IS UPON TH E ASSESSEE TO FOLLOW EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING. IN OTHER WORDS MIXED OR HYBRID SYSTEM OF ACCOUNTING AS STOOD PRIOR TO THE A MENDMENT HAS NOT BEEN RECOGNIZED FOR THE PURPOSE OF ASSESSMENT UNDER THE INCOME TAX ACT AFTER 31.03.1997. IT IS THEREFORE CLEAR THAT IF ANY INCOME IS ACCRUED TO THE ASSESSEE IN ANY ASSESSMENT YEAR AS PER THE METH OD OF MERCANTILE SYSTEM OF ACCOUNTING REGULARLY FOLLOWED BY THE ASSE SSEE THE ASSESSEE IS BOUND TO ACCOUNT FOR SAME IN THE RETURN OF INCOME A ND CANNOT EMBARK UPON THE REASONS THAT IT IS TO BE INCLUDED ONLY ON CASH BASIS. FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING IN RESPECT OF ONE I TEM OF BUSINESS AND FOLLOWING CASH SYSTEM OF ACCOUNTING IN RESPECT OF A NY OTHER ITEM IS NO MORE PERMISSIBLE AFTER 01.04.1997 AS SO EXPRESSLY PROVIDED U/S. 145(1). HOWEVER WITH REGARD TO THE QUANTIFICATION OF DUTY DRAWBACK ACCRUED TO THE ASSESSEE WE FIND THAT THE AO HAS DETERMINED TH E AMOUNT ON ESTIMATE BASIS WITHOUT EXAMINING THE CORRECT AMOUNT OF DUTY DRAWBACK WHICH ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 17 OF 21 COULD BE SAID TO HAVE ACCRUED TO THE ASSESSEE DURIN G THE YEAR UNDER CONSIDERATION AS PER THE RULES AND SCHEMES CONTAIN ED IN THAT BEHALF. WE THEREFORE RESTORE THIS ISSUE BACK TO THE FILE OF T HE AO FOR A LIMITED PURPOSE TO QUANTIFY THE AMOUNT OF DUTY DRAWBACK WH ICH HAVE ACCRUED TO THE ASSESSEE AND THEN MADE THE ADDITION ACCORDINGLY . THE ASSESSEE SHALL BE GIVEN OPPORTUNITY WITH REGARD TO THE QUANTIFICAT ION OF DUTY DRAWBACK ACCRUED IN THE YEAR UNDER CONSIDERATION. 34. NEXT ISSUE IS WITH REGARD TO THE ADDITION OF RS . 30 363/- U/S. 40A(3) OF THE ACT WHICH ADDITION HAS BEEN MADE BY THE AO BEING 20% OF THE EXPENSES ABOVE RS. 20 000/- IN RESPECT OF W HICH THE PAYMENT WAS MADE IN CASH. 35. AS PER CASH BOOK PRODUCED BY THE ASSESSEE THE ASSESSEE MADE FOLLOWING CASH PAYMENTS IN EXCESS OF RS.20 000/- IN CONTRAVENTION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT:- DATE AMOUNT NATURE OF EXPENSE 16/03/2005 22 773/- BUSINESS PROMOTION 24/03/2005 79 043/- TOUR & TRAVELLING TOTAL 1 01 816/- 36. ON AN APPEAL THE CIT(A) CONFIRMED THE ADDITION BY SAYING THAT THE ASSESSEES CASE IS NOT COVERED BY ANY OF THE EXCLUS ION CLAUSES OF RULE 6 DD. 37. AFTER HEARING BOTH THE PARTIES AND IN THE ABSEN CE OF ANY EXPLANATIONS BY THE ASSESSEE AND HAVING FOUND THAT THE CASE IS NOT ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 18 OF 21 COVERED BY EXCLUSION CLAUSE OF RULE 6 DD WE ARE IN CLINED TO UPHOLD THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF R S. 20 363/- BEING 20% OF THE TOTAL PAYMENT OF EXPENSES MADE IN CASH IN EX CESS OF RS. 20 000/- IN CONTRAVENTION OF THE PROVISION OF THE SECTION 40 A(3) OF THE ACT. THUS THIS GROUND RAISED BY THE ASSESSEE IS REJECTED. 38. NEXT GROUND IS WITH REGARD TO THE ADDITION OF R S. 4 80 891/- BEING DISALLOWANCE OF EXPENSES BY INVOKING PROVISIONS OF SECTION 40(A) OF THE ACT. 39. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT ASSESSEE HAS NOT DEDUCTED TDS ON FREIGH T AND CARTAGE EXPENSES OF RS.4 80 981/- PAID TO M/S. COMMITTED CA RGO CARE P. LTD. WHILE AS PER PROVISIONS OF SECTION 194C OF THE ACT THE ASSESSEE WAS REQUIRED TO DEDUCT THE TDS ON THE PAYMENT PAID TO T HE ABOVE NAMED FREIGHT CONTRACTOR. THE AO STATED THAT SINCE THE A SSESSEE HAS FAILED TO DEDUCT THE TDS ON THE PAYMENT MADE TO THE CONTRACTO R U/S. 194C OF THE ACT THE CORRESPONDING EXPENDITURE IS NOT LIABLE TO BE ALLOWED AS DEDUCTION AS PER THE PROVISIONS CONTAINED IN SECTIO N 40(A) (IA) OF THE ACT. 40. ON AN APPEAL THE CIT(A) CONFIRMED THE AOS ACT ION BY OBSERVING AS UNDER:- 25. TURNING TO THE FACTS OF THE CASE IT IS UNDISP UTED THAT THE ASSESSEE HAS MADE PAYMENT TO M/S. COMMITT ED CARGO CARE (P) LTD. THE PAYMENT WAS OF RS. 4 80 98 1/-. IT IS ALSO UNDISPUTED THAT THE ASSESSEE HAD TO DEDUCT TA X U/S. 194C. ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 19 OF 21 THE ASSESSEE HAD NOT DEDUCTED TAX U/S. 194C DURING THE FINANCIAL YEAR. ON 9.3.2009 THE ASSESSEE HAS STAT ED THAT TAX HAS BEEN DEDUCTED AND PAYMENT HAS BEEN MADE TO THE GOVT. EXCHEQUER. A PERUSAL OF THE COUNTER FOIL SUBMITTED ON 9.9.2009 IT REVEALS THAT A SUM OF RS. 10 899/- HAS BEEN TENDERED ON 3.3.2009 (F.Y. 2009-10) AND NOT DURING THE F.Y. 2004-05. FURTHER THE ASSESSEE HAD TAKEN THE STAN D THAT M/S. COMMITTED CARGO CARE (P) LTD. HAS OFFERED THE SUM F OR TAXATION. I AM NOT GOING INTO THE MERITS OF THIS A GREEMENT AS NOT PROOF OF THE SAME HAD BEEN PRODUCED BEFORE ME. THE ASSESSEE HAD ALSO NOT PRESSED THIS ISSUE DURING TH E REMAND PROCEEDINGS BEFORE THE LD. AO. AS SUCH ON THE BA SIS OF THE PROVISIONS OF SEC. 194C R.W.S. 40(A)(IA) THE ADDIT ION MADE BY THE LD. AO TO THE TUNE OF RS. 4 80 981/- IS UPHELD. THE ASSESSEE FAILS IN GROUND OF APPEAL NO. 2(4). THE ASSESSEE ALSO CANNOT TAKE THE PLEA THAT PRINCIPLES OF NATURA L JUSTICE HAD BEEN DENIED AS ADEQUATE OPPORTUNITY WAS GIVEN BY ME BY REMANDING THE MATTER TO THE LD. AO. THE LD. AO WH ILE GIVING APPEAL EFFECT TOT HIS ORDER MAY CONSIDER INTER-ALI A TO BRING THIS ISSUE TO THE NOTICE OF AO (TDS) FOR APPROPRIA TE ACTION AS DEEMED FIT. 41. IN THE COURSE OF HEARING OF THIS APPEAL THE LD . COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO POINT OUT THAT AS TO WHY THIS ISSUE SHOULD BE REMANDED BACK TO THE AO WHEN IT IS EVIDENT THAT NO TAX WAS DEDUCTED AT SOURCE FROM THE PAYMENT PAID TO FREIGHT CONTRACTOR M/S. COMMITTED CARGO CARE P. LTD. IT IS NOT THE CASE OF THE ASSES SEE THAT THE PROVISIONS OF SECTION 194C READ WITH SECTION 40(A) ARE NOT AP PLICABLE TO THE ASSESSEES CASE. WE THEREFORE DO NOT FIND ANY ME RIT IN THIS GROUND RAISED BY THE ASSESSEE WHICH IS ACCORDINGLY REJECT ED. 42. LAST ISSUE INVOLVED IN THE ASSESSEES APPEAL IS WITH REGARD TO THE ADDITION OF RS. 30 000/- AS UNDISCLOSED INCOME. ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 20 OF 21 43. IN THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT THERE WAS A NEGATIVE CASH BALANCE TO THE EXTEN T OF RS. 20 888/- IN RESPECT OF WHICH NO SATISFACTORY EXPLANATION WAS GI VEN BY THE ASSESSEE. THE AO THEREFORE TREATED THE SUM OF RS. 30 000/- AS UNDISCLOSED INCOME OF THE ASSESSEE OUT OF WHICH NEGATIVE BALANCES WER E MET OUT. 44. ON AN APPEAL THE CIT(A) CONFIRMED THE ADDITION FOR THE SIMILAR REASONS AS GIVEN BY THE AO. 45. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFUL LY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 46. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS INCU RRED EXPENSES IN CASH OF RS.20 888/- WHICH IS NOT COVERED BY THE CASH AV AILABLE WITH THE ASSESSEE IN BETWEEN THE DATES FROM 03.03.2005 TO 0 5.03.2005. THE ASSESSEES EXPLANATION IS NOT SATISFACTORY AS SO PO INTED OUT BY THE AO AS WELL AS BY THE CIT(A). NO EVIDENCE HAS BEEN PRODUC ED BY THE ASSESSEE THAT THE ENTRY IN THE BOOKS OF ACCOUNTS WERE WRONGL Y ENTERED. WE THEREFORE REJECT THE ASSESSEES EXPLANATION WITH R EGARD TO THE SHORT FALL OF THE CASH AVAILABLE WITH THE ASSESSEE TO MEET VARIO US EXPENSES INCURRED IN BETWEEN 03.03.2005 TO 05.03.2005. HOWEVER DIFFERE NCE WAS TO THE EXTENT OF RS. 20 888/- AGAINST WHICH THE AO HAS MAD E THE ADDITION OF HIGHER AMOUNT OF RS. 30 000/- WHICH HAS ALSO BEEN CONFIRMED BY THE CIT(A). THERE IS NO BASIS POINT OUT BY THE ASSESSE E AS WELL AS BY THE CIT(A) TO INCREASE THE AMOUNT OF ADDITION FROM RS. 20 888/- TO RS. ITA NO. 2996/DEL/2009 ITA NO. 3014/DEL/2009 PAGE 21 OF 21 30 000/-. IN THE LIGHT OF THE FACTS OF THE CASE T HE ADDITION WHICH IS CALLED FOR IS ONLY TO THE EXTENT OF RS. 20 888/- AS SO RE VEALED FROM THE CASH BOOK MAINTAINED BY THE ASSESSEE. WE THEREFORE SU STAIN THE ADDITION ONLY TO THE EXTENT OF RS. 20 888/- AS AGAINST RS. 30 000 /- SUSTAINED BY THE CIT(A). THEREFORE THE ADDITION OF RS. 30 000/- IS REDUCED TO RS. 20 888/-. THE ASSESSEE SHALL GET A RELIEF OF RS. 9 112/- ON THIS ACCOUNT. WE ORDER ACCORDINGLY. 49. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 50. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 29 TH JANUARY 2010. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER SD/- (C.L. SETHI) JUDICIAL MEMBER DATED: 29 TH JANUARY 2010 *NITASHA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. BY ORDER DEPUTY REGISTRAR