Suresh Chand & Sons (HUF), Muzaffarnagar v. ITO, Muzaffarnagar

ITA 33/DEL/2011 | 2007-2008
Pronouncement Date: 21-11-2014 | Result: Allowed

Appeal Details

RSA Number 3320114 RSA 2011
Assessee PAN AAJHS9873E
Bench Delhi
Appeal Number ITA 33/DEL/2011
Duration Of Justice 3 year(s) 10 month(s) 15 day(s)
Appellant Suresh Chand & Sons (HUF), Muzaffarnagar
Respondent ITO, Muzaffarnagar
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 21-11-2014
Date Of Final Hearing 17-09-2014
Next Hearing Date 17-09-2014
Assessment Year 2007-2008
Appeal Filed On 05-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I. C. SUDHIR JUDICIAL MEMBER AND SHRI T.S. KAPOOR ACCOUNTANT MEMBER I.T.A. NO.33 /DEL/2011 ASSESSMENT YEAR :2007-08 SURESH CHAND & SONS (HUF) VS. ITO WARD 2(1) 40 ABUPURA MUZAFFARNAGAR MUZAFFARNAGAR GIR / PAN:AAJHS9873E I.T.A.NO. 5546/DEL/2010 (A.Y.2007-08) ITO WARD 2(1) VS. SURESH CHAND & SONS (HUF) MUZAFFARNAGAR 40 ABUPURA MUZAFFARNAGAR (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C. S. AGARWAL SR.ADV. RESPONDENT BY : SHRI BRR KUMAR SR. DR ORDER PER T.S. KAPOOR AM: THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AS W ELL AS BY REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 27.09.2010. THE GROUNDS OF APPEAL TAKEN BY ASSESSEE AS WELL AS BY REVENUE ARE AS UNDE R: I.T.A.NO. 33/DEL/2011: 1. THAT THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF ASSESSMENT SUSTAINING THE A DDITION MADE BY RS. 54 39 223/- REPRESENTING THE VALUE OF PURCHASES MADE ON CREDIT. 2. THAT THE CITCA) HAS FAILED TO APPRECIATE THAT T HE ASSESSEE HAD DISCHARGED ITS BURDEN OF ESTABLISHING SUCH PURCHASE S MADE WERE ON CREDIT DESPITE THE FACT THE ASSESSEE HAD DISCHARGE D ITS ONUS BY ESTABLISHING SUCH UNPAID SUMS HAD BEEN PAID BY ACCO UNT PAYEE CHEQUES AND WERE DULY RECEIVED BY THE SUPPLIER ON 1 6.02.2009 AND 2 ITA NO.5546/DEL/2010 I.T.A.NO. 33/DEL/2011 19.03.2009 AND WAS DULY RECORDED IN THE BOOKS OF AC COUNTS OF M/S KEY DEE TRADERS THE SUPPLIER FROM WHOM THE ASSESS EE HAD PURCHASED THE STOCKS. 3. THAT THE ORDER OF THE CITCA) IS BASED IN DISREGA RD OF THE FACTS ON RECORD AND THE LEARNED CIT(A) HAS FURTHER ERRED WHI LE SUSTAINING THE ADDITION ON SUCH EVIDENCE WHICH HAD NOT PROVIDED T O THE ASSESSEE FOR ITS REBUTTAL. 4. THAT THE LEARNED CITCA) HAS FAILED TO 'APPRECIAT E THAT IT IS NOT FOR THE ASSESSEE TO EXPLAIN THE SOURCE OF CREDIT IN THE BOOKS OF ITS SUPPLIERS AND THAT NO ADDITION COULD HAVE BEEN SUST AINED ON THE BASIS OF EXTRANEOUS CONSIDERATIONS. 5. THAT IN ANY CASE AND WITHOUT PREJUDICE THE LEARN ED CITCA) HAS ERRED IN CONFIRMING THE ORDER WITHOUT TO PROVIDING TO THE ASSESSEE A VALID AND PROPER OPPORTUNITY AND HAS THUS ERRED IN PLACING RELIANCE ON THE UNTESTED TESTIMONY AND THE EVIDENCE WHICH HA D NOT CONFRONTED TO THE ASSESSEE FOR ITS REBUTTAL. 6. THAT THE LD. CIT(A) HAS FURTHER ERRED IN SUSTAIN ING THE INTEREST LEVIED U/S 234B AND 234C OF THE ACT WHICH INTEREST WAS NOT LEVIABLE. IT IS THEREFORE PRAYED THAT THE ORDER OF ASSESSMENT AND THE ORDER OF CIT(A) BE KINDLY SET ASIDE AND THE ADDITION MADE AN D SUSTAINED OF RS.54 39 223/- BE DIRECTED TO BE DELETED. I.T.A.NO. 5546/DEL/2010: 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED IN LAW BY DELETING THE DISALLOWANCE OF RS .10 87 844/- MADE BY THE A.O. UNDER SECTION 40A(3) OF HT I. T. ACT 1 961 1961 ON ACCOUNT OF CASH PURCHASE WITHOUT APPRECIATING FULL FACTS OF THE CASE. 2) THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF A.O. BE RESTORED. 2. THOUGH THE ASSESSEE HAS TAKEN 5 GROUNDS OF APPEA L BUT THE CRUX OF GRIEVANCE OF THE ASSESSEE IS THE ACTION OF LD. CIT( A) BY WHICH HE HAD CONFIRMED THE ADDITION OF RS.54.39 223/- MADE BY TH E A.O. ON ACCOUNT OF VALUE OF PURCHASES MADE ON CREDIT. THE ASSESSEE VI DE GROUND NO.6 HAS ALSO 3 ITA NO.5546/DEL/2010 I.T.A.NO. 33/DEL/2011 CHALLENGED THE SUSTENANCE OF INTEREST LEVIED U/S 23 4B AND 234C OF THE ACT ON THE BASIS THAT INTEREST WAS NOT LEVIABLE. 3. THE REVENUE HAS CHALLENGED THE ORDER OF LD. CIT( A) BY WHICH IT IS AGGRIEVED WITH THE ACTION OF CIT(A) BY WHICH HE HAD DELETED DISALLOWANCE OF RS.10 87 844 MADE BY A.O. U/S 40A(3) OF THE ACT. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED HIS RETURN OF INCOME AS HUF AND THE CASE OF THE ASSESSEE WAS SELECTED FO R SCRUTINY. DURING ASSESSMENT PROCEEDINGS THE A.O. OBSERVED THAT THE ASSESSEE HAD REFLECTED IN HIS BALANCE SHEET A CREDIT BALANCE OF RS.54 39 222/ - IN FAOVURE OF M/S. KAY DEE TRADERS WHICH WAS ON ACCOUNTS OF CREDIT PURCHAS ES MADE FROM IT. THEREFORE THE A.O. ISSUED NOTICE U/S 133(6) TO M/S . KAY DEE TRADERS MUZAFFARNAGAR TO CONFIRM THE CREDIT BALANCE OF RS.5 4 39 222/- WHICH WAS APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. M/S. KAY DEE TRADERS INTIMATED THAT THERE IS NO SUCH DEBIT IN ITS BOOKS OF ACCOUNTS AND THEREFORE THE A.O. WROTE A LETTER TO ITO WARD 2(3) MUZAFFAR NAGAR HAVING JURISDICTION ON M/S. KAY DEE TRADERS WHO ALSO INFORMED THAT THER E WAS NO DEBIT IN THE NAME OF SURESH CHAND AGARWAL IN THE BALANCE SHEET O F THE ASSESSEE NAMELY M/S. KAY DEE TRADERS. IN SUPPORT THE A.O. ALSO SE NT A COPY OF THE AUDIT REPORT FILED BY M/S. KAY DEE TRADERS MUSAFFARNAGAR . THE A.O. FURTHER OBSERVED THAT CASH BOOK OF M/S. KAY DEE TRADERS MU ZAFFARNAGAR HAD REFLECTED THE AMOUNT OF PAYMENT BY ASSESSEE IN CAS H WHEREAS ASSESSEE HAD DISCLOSED THE SAME AS CREDIT BALANCE ON THE BASIS T HAT SUCH GOODS WERE PURCHASED ON CREDIT. THEREFORE THE A.O. MADE ADDI TION OF RS.54 39 222/-. THE A.O. FURTHER MADE AN ADDITION OF RS.10 87 844/- BEING 20% OF CASH PURCHASES FOR VIOLATION OF PROVISIONS OF SECTION 40 A(3) OF THE ACT. THE ABOVE ADDITIONS WERE MADE BY HOLDING AS UNDER: 4 ITA NO.5546/DEL/2010 I.T.A.NO. 33/DEL/2011 THUS THE AMOUNT OF RS 54 39 222/- IS THE UNEXPLAIN ED INVESTMENT IN THE PURCHASES OF GOODS WHICH IS NOT RECORDED IN TH E BOOKS OF ACCOUNT AND LIABLE TO BE ADDED UNDER SECTION 69 OF THE INCO ME TAX ACT IN CASE NO EXPLANATION IS OFFERED OR EXPLANATION OFFERED BY THE ASSESSEE IS UNSATISFACTORY . THE ASSESSEE WAS REQUIRED TO EXPLA IN WHY THIS AMOUNT IS NOT TO BE ADDED. THE ASSESSEE HAS STATED THAT HE HAS MADE NO PAYMENT TO M/S KEY DEE TRADERS MZR AND TOTAL AMOUN T WAS OUTSTANDING AS ON THE DATE OF THE YEAR ENDING ON 31 .03.2007. THE ASSESSEE FURTHER STATED THAT PAYMENTS OF RS. 46 00 000/- WERE MADE IN THE MONTH OF MARCH 2009 BY CHEQUES. BUT THE CONTEN TION PUT FORTH BY THE ASSESSEE APPEARS TO BE AN AFTERTHOUGHT TACTICS IN ORDER TO AVOID CONSEQUENTIAL ACTION ENUMERATED IN THE LT. ACT. IT IS UNREASONABLE TO THINK THAT M/S KEY DEE TRADERS MZR HAS A DEBTOR ( ASSESSEE) WITH BALANCE OF RS. 54 39 222/- AND IT FORGOT TO INCLUDE THE NAME OF SUCH DEBTOR IN IT'S AUDIT REPORT. THE TRUTH IS THAT ONLY AFTER IT RECEIVED THE PAYMENTS THE A/C OF THE ASSESSEE HAS BEEN SQUARED UP. THEREFORE IN THE ABSENCE OF SATISFACTORY REPLY THE AMOUNT OF RS 54 39 222/- IS ADDED TO THE INCOME. (ADDITION- RS. 54 39 222/-) T HE ASSESSEE HAS MADE CASH PAYMENT TO M/S KEY DEE TRADERS MZR TO LI QUIDATE THE CREDIT BALANCE OF RS 54 39 222/-. VIDE NOTICE UNDER SECTION 142(1) DATED 11.11.2009 THE ASSESSEE WAS REQUIRED TO EXP LAIN WHY THE 20% OF THE PAYMENT MADE TO M/S KEY DEE TRADERS MZR MAY NOT BE ADDED TO THE INCOME UNDER SECTION 40 A(3) OF THE INCOME TAX ACT. THE ASSESSEE HAS REITERATED THAT NO PAYMENTS WERE MADE IN CASH. THE FACT THAT CASH PAYMENT HAS BEEN MADE BY THE ASSESSEE AGA INST THE PURCHASES HAS BEEN ESTABLISHED BEYOND ANY DOUBT. AC CORDINGLY 20% OF RS 54 39 222/- I.E. RS 10 87 844/- IS ADDED TO T HE INCOME OF THE ASSESSEE. IN RESULT INCOME IS COMPUTED AS UNDER:- INCOME SHOWN 2 30 450/- ADD:- ADDITION AS DISCUSSED ABOVE 54 39 222/- TOTAL INCOME 56 69 672/- ASSESSED ACCORDINGLY. CHARGE INTEREST U/S 234A 234 B 234C & 2340 OF THE I.T. ACT. ISSUE D/N & CHALLAN. PENALTY NOTIC E UNDER SECTION 271(1)(C) IS BEING IS BEING ISSUED SEPARATELY. 5 ITA NO.5546/DEL/2010 I.T.A.NO. 33/DEL/2011 5. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD. C IT(A). LD. CIT(A) DELETED ADDITION ON ACCOUNT OF VIOLATION OF PROVISI ONS OF SECTION 40A(3) BUT HE UPHELD THE ADDITION OF RS.54 39 222/- WHICH HE CONFIRMED BY HOLDING AS UNDER: THE FACTS OF THE CASE AND SUBMISSIONS MADE BY THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THAT THE ISSUE UNDER DISPUTE IS THAT AS PER THE APPELLANT THE PAYMENTS AGAINST P URCHASES WERE NOT MADE TO KAY DEE TRADERS DURING THE YEAR BUT WERE MA DE SUBSEQUENTLY THROUGH CHEQUES AT RS~19 00 000/- AND RS.27 00 000/- IN THE MONTH OF MARCH 2009. ON THE OTHER AND M/S K AY DEE TRADERS HAS STATED THAT IT HAD RECEIVED THE PAYMENT THE REL EVANT PERIOD THEREFORE THE APPELLANT WAS NOT ITS DEBTOR. THE RE MAND REPORT OF THE A.O. IS OF CRUCIAL IMPORTANCE WHO HAD EXAMINED THE BOOKS OF M/S KAY DEE TRADERS TO DETERMINE THE NATURE OF CHEQUES ISSU ED AT S.19 LAC AND RS.27 LAC BY THE APPELLANT TO THE AFORESAID CONCERN . IT HAS CLEARLY SPELLS OUT THAT THE ALLEGED PAYMENTS WERE RECEIVED BY M/S KAY DEE TRADERS ON ACCOUNT OF GOODS SOLD DURING 16-08-2008 TO 20-08- 2008 TO M/S SANDEEP AGARWAL & SONS (HUF). IT IS NOTEWORT HY THAT M/S SANDEEP AGRAWAL & SONS (HUF) IS ANOTHER FAMILY CONC ERN (HUF OF SON OF SH. SURESH CHAND AGRAWAL KARTA OF THE APPEL LANT FIRM). DURING THIS PERIOD M/S KAY DEE TRADERS SOLD GOODS TO AFORE SAID HUF AT RS.64 31 232/- AND IN LIEU OF SALES EFFECTED IT R ECEIVED CHEQUES AMOUNTING TO RS.19 LAC AND RS.27 LAC. THUS IT IS CL EAR THAT THE CHEQUES WERE ISSUED ON BEHALF OF SANDEEP AGARWAL & SONS BY THE APPELLANT AND THESE CHEQUES HAD NOTHING TO DO WITH THE PAYMEN TS AS ALLEGED BY THE APPELLANT AGAINST PURCHASES MADE BY IT. THUS TH ERE IS NO DOUBT THAT THE CONTENTION OF THE APPELLANT REGARDING PAYM ENTS MADE IN THE MONTH OF MARCH 2009 IS NOTHING BUT A COOKED UP STO RY AND THE PAYMENT AGAINST PURCHASES WERE APPARENTLY MADE OUTS IDE THE BOOKS OF ACCOUNT. REGARDING THE APPELLANT'S ARGUMENT THAT THE ADDITIO N MADE BY THE A.O. IS NOT COVERED U/S 69 OF THE I.T. ACT AS THE P URCHASES ARE NOT 'INVESTMENT' IT IS OBSERVED THAT MERELY BY NOT QUO TING THE APPROPRIATE SECTION THE A.O'S ACTION DOES NOT GET NULLIFIED. I T IS PRIMARY ONUS OF THE APPELLANT TO ESTABLISH THE GENUINENESS AND AUTH ENTICITY OF ITS TRANSACTION WITH ITS SUNDRY DEBTORS AND SUNDRY CRED ITORS. IT WAS THE 6 ITA NO.5546/DEL/2010 I.T.A.NO. 33/DEL/2011 BASIC REQUIREMENT TO GET THE BALANCES OF THE PARTIE S VERIFIED AT THE TIME OF AUDIT. THE APPELLANT HAD NOT CARRIED OUT TH E DESIRED EXERCISE UNDER THE LAW. SECONDLY WHEN DISCREPANCY WAS POINT ED OUT BY THE A.O. IN RESPECT OF ITS ACCOUNTS IN THE BOOKS OF KAY DE TRADERS IT WAS THE DUTY OF THE APPELLANT TO GET THE ACCOUNTS RECON CILED WITH PROPER EXPLANATIONS. THE SAME HAS NOT BEEN DONE. THIRDLY NORMAL HUMAN PROBABILITIES SUGGEST THAT THE PERSON WHO WAS TO RE CEIVE THE AMOUNTS FROM ANOTHER PERSON WOULD NEVER FORFEIT ITS RIGHT U NLESS IT IS DULY COMPENSATED. AS HELD BY THE HON'BLE APEX COURT IN T HE CASE OF SUMATI DAYAL VS. CIT 214 ITR 801 THE APPELLANT'S VIEW POI NT HAS NO FORCE. FOURTHLY THERE IS LARGE CASH TRANSACTION IN THE TR ADE OF FERRO ALLOYS SPONGE IRON IRON & STEEL SCRAP ETC. IN VIEW OF PRE VAILING PRACTICES OF THE TRADE THERE IS NO DOUBT THAT APPELLANT WOULD H AVE MADE CASH PAYMENTS IN RESPECT OF PURCHASES. TO RECEIVE THE AM OUNTS FROM ANOTHER IT WOULD BE JUSTIFIED IF THE ADDITION IS MA DE U/S 28(IV) READ WITH SECTION 41(1) OF THE ACT. LASTLY REGARDING THE AFTERTHOUGHT STORY OF MAKING PAYMENTS OF RS.46 LAC IN MARCH 2009 THERE IS NOTHING UNUSUAL ON THE PART OF M/S. KAY DEE TRADERS TO ACCEPT PAYMENTS FROM THE APPELLANT O N BEHALF OF ITS FAMILY CONCERN SINCE SUCH PRACTICE HAS BEEN ADMITTE D IN APPELLANTS CASE WHEN MR. AMIT AGRAWAL HAS RECEIVED PAYMENTS ON BEHALF OF OTHER TWO PARTIES. THEREFORE THE APPELLANT'S CONTE NTIONS ARE NOT ACCEPTABLE FROM AN ANGLE. IT WOULD BE JUSTIFIED IF THE ADDITION IS MADE U/S 28(IV) READ WITH SECTION 41 (1) OF THE ACT. INT ERESTINGLY THE APPELLANT OF ITS OWN HAS REFERRED TO THE DECISION O F HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. CHETAN CHEMICAL ( P) LTD.(2004) 188 CTR 572 IN ITS SUBMISSIONS. HOWEVER THIS DECISION IS NOT APPLICABLE IN APPELLANT'S CASE AS PURCHASES ARE DEBITED IN TRA DING ACCOUNT AND THEREFORE THE LIABILITY IN RESPECT OF PURCHASES AR E COVERED U/S 28(IV) READ WITH SECTION 41 (1) OF THE LT. ACT. HOWEVER I N THE QUOTED CASE THE UNSECURED LOANS NOT BEING THE ITEMS OF TRADING & PROFIT & LOSS ACCOUNT WERE FOUND TO BE NOT COVERED BY THIS SECTI ON. ADDITION OF RS54 39 222/- IS CONFIRMED. GROUND NOS.L 2 & 3 ARE REJECTED. 6. HOWEVER THE LD. CIT(A) ALLOWED RELIEF ON VIOLAT ION OF PROVISION OF SECTION 40A(3) BY HOLDING AS UNDER: 7 ITA NO.5546/DEL/2010 I.T.A.NO. 33/DEL/2011 10. GROUND NO.4 IS AGAINST DISALLOWANCE U/S 40A(3) AT RS.L 0 87 844/-. THE APPELLANT HAS FILED WRITTEN SUBMISS IONS WHICH ARE REPRODUCED AS UNDER :- 'THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MEN TIONING SEPARATE ADDITION U/S 40-A (3) OF THE INCOME TAX ACT 1961 WHEREAS THE ADDITION OF RS.5439222.00 HAS ALREADY BEEN MADE U/S 69 OF THE OF THE INCOME TAX ACT 1961 WHICH RELATED TO DOUBLE TAXAT ION. BEFORE THE ASSESSING OFFICER THE EVIDENCES WHICH WERE PLACED BEFORE HIM THAT NO PAYMENT IN CASH HAS BEEN MADE DURING THE YEAR UN DER CONSIDERATION. THE WRITTEN SUBMISSIONS WERE ALSO FI LED BEFORE THE ASSESSING OFFICER ON 26TH NOVEMBER 2009 WHICH ARE AS HEREUNDER: 'REGARDING QUERY NO. 4 FOR ADDITION U/S 40A(3) 20% OF CASH PAYMENT AGAINST THE LIABILITY OF M/S. KAY DEE TRADERS BECAU SE NO PAYMENTS WERE MADE TO HIM IN CASH AS MENTIONED IN REPLY TO Y OUR QUERY NO. 3. ' THE FACTS OF THE CASE AND SUBMISSIONS MADE BY THE A PPELLANT HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THAT IN T HE PRECEDING PARAS IT HAS BEEN HELD THE PAYMENT AGAINST PURCHASES WERE IN FACT MADE OUTSIDE THE BOOKS WHICH WERE APPARENTLY CASH TRANSA CTIONS. HOWEVER SUCH CASH PAYMENTS HAVE BEEN MADE COMPLETELY OUTSID E THE BOOKS OF ACCOUNT AND HENCE THE ADDITIONS IN RESPECT OF COMPL ETE UNACCOUNTED PAYMENT IS BEING SUSTAINED THERE REMAINS NO VALID GROUND FOR MAKING THE DISALLOWANCE U/S 40A(3) OF THE ACT. THE A.O. IS NOT JUSTIFIED IN MAKING ADDITION OF RS.10 87 844/- AND THE SAME IS D IRECTED TO BE DELETED. GROUND NO.4 IS ALLOWED. 6.1 AGGRIEVED BOTH PARTIES ARE UNDER APPEAL BEFORE US. 7. AT THE OUTSET LD. SENIOR COUNSEL SUBMITTED THAT THE PROVISION OF SECTION 69 AND SECTION 69A WERE NOT APPLICABLE TO T HE FACTS OF THE PRESENT CASE AND IT WAS SUBMITTED THAT PAYMENT AGAINST PURC HASES WERE MADE BY ASSESSEE IN SUBSEQUENT YEAR ON 16.03.2009 AND 19.03 .2009 IN THE FORM OF A/C PAYEE CHEQUES WHICH WERE DEBITED IN THE BANK STATEM ENT OF THE ASSESSEE ALSO AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO P APER BOOK PAGE 39 WHERE A 8 ITA NO.5546/DEL/2010 I.T.A.NO. 33/DEL/2011 COPY OF BANK STATEMENT EVIDENCING THE TWO PAYMENTS OF RS.19 LACS AND RS.27 LACS WERE PLACED. OUR ATTENTION WAS ALSO INV ITED TO PAPER BOOK PAGE 38 WHERE A COPY OF BANK CERTIFICATE CERTIFYING THAT TWO PAYMENTS WERE MADE BY THE ASSESSEE TO M/S. KAY DEE TRADERS WAS PLACED. IT WAS FURTHER SUBMITTED THAT ADDITION WAS MADE ON THE BASIS OF ST ATEMENT OF ANOTHER PERSON WHICH WAS RECORDED AT THE BACK OF THE ASSESSEE AND THEREFORE ADDITION WAS NOT SUSTAINABLE. INVITING OUR ATTENTION TO PAPER B OOK PAGE 93 WHERE A COPY OF ACCOUNT OF M/S. KAY DEE TRADERS NEW DELHI ACKNOW LEDGED BY IT WAS PLACED AND IN VIEW OF THE STATEMENT IT WAS SUBMITT ED THAT THE AUTHORITIES BELOW WITHOUT INDICATING ANYTHING WRONG WITH THE GE NUINENESS OF THIS CONFIRMATION HAS MADE THE ADDITION. CONTINUING HIS ARGUMENTS LD. SR. COUNSEL SUBMITTED THAT FINDING OF LD. CIT(A) THAT P AYMENT OF RS.46 LACS WAS RECEIVED BY M/S. KAY DEE TRADERS WERE ON ACCOUN T OF SUPPLY MADE TO M/S. SANDEEP AGARWAL (HUF) IS MISPLACED AS NO PURC HASES WERE MADE BY THIS FIRM. THE SR. COUNSEL SUBMITTED THAT THE A.O. HAD MADE ADDITION U/S 69 WHEREAS LD. CIT(A) HAD CONFIRMED THE ADDITION U/S 2 8(IV) READ WITH SECTION 41(1) OF THE ACT WHICH IMPLIES THAT LD. CIT(A) WAS NOT SATISFIED WITH THE ASSESSMENT ORDER TO THE EXTENT OF ADDITION U/S 69 A ND REVENUE HAS NOT FILED ANY APPEAL AGAINST SUCH FINDINGS. INVITING OUR ATT ENTION TO THE PROVISIONS OF SECTION 28(IV) READ WITH SECTION 41(1) OF THE ACT IT WAS SUBMITTED THAT ABOVE SECTION WAS NOT APPLICABLE TO THE FACTS AND C IRCUMSTANCES OF THE PRESENT APPEAL AND REFERENCE IN THIS RESPECT WAS PL ACED ON THE FOLLOWING CASE LAWS: I) 78 ITR 55 TIRUNELVELI MOTOR BUS SERVICE CO. (P) LTD. VS CIT II) 277 ITR 426 NARAYANAN CHETTIAR INDUSTRIES VS IT O III) 267 ITR 770 CIT VS CHETAN CHEMICALS (P) LTD. 9 ITA NO.5546/DEL/2010 I.T.A.NO. 33/DEL/2011 8. REFERRING FROM LD. CIT(A)S ORDER LD. A.R. SUBM ITTED THAT LD. CIT(A) HAD IN FACT ACCEPTED THE ARGUMENT OF THE ASS ESSEE THAT THESE WERE NOT CASH PURCHASES AND THAT IS WHY HE HAS DELETED THE D ISALLOWANCE U/S 40A(3) OF THE ACT. 9. LD. D.R. ON THE OTHER HAND SUBMITTED THAT DURING ASSESSMENT PROCEEDINGS PURCHASES WERE EXAMINED BY THE A.O. AND SELLER OF GOODS WAS ALSO EXAMINED AND ON EXAMINATION OF BOOKS OF ACCOUN T OF M/S. KAY DEE TRADERS THE SELLER THE A.O. HAD FOUND THAT M/S. KA Y DEE TRADERS HAD SHOWN THE SALES MADE TO ASSESSEE AS CASH SALES. IT WAS S UBMITTED THAT A.O. IN HIS REMAND REPORT HAS CLEARLY HELD THAT THESE PAYMENTS RELATE TO SALE MADE BY M/S. KAY DEE TRADERS TO M/S. SANDEEP AGARWAL AND SO NS (HUF) AND THEREFORE HE ARGUED THAT AFTER THOROUGHLY EXAMININ G THE FACTS AND CIRCUMSTANCES LD. CIT(A) HAS CONFIRMED THE ADDITIO N. ARGUING UPON REVENUES APPEAL LD.D.R. HEAVILY RELIED UPON THE O RDER OF A.O. WHEREAS LD. SR. COUNSEL RELIED UPON THE ORDER OF LD. CIT(A). 10. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROU GH THE MATERIAL PLACED ON RECORD. WE FIND THAT LD. CIT(A) HAS CONFIRMED T HE ADDITION ON THE BASIS OF REMAND REPORT SUBMITTED BY A.O. AND LD. CIT(A) H ELD THAT PAYMENT OF RS.46 LACS IN THE FORM OF TWO CHEQUES OF RS.19 LACS AND RS.27 LACS WERE ISSUED BY ASSESSEE ON BEHALF OF M/S. SANDEEP AGARWA L & SONS (HUF)/ THE PAYMENTS WERE HELD TO BE AGAINST SALES MADE BY M/S. KAY DEE TRADERS TO M/S. SANDEEP AGARWAL & SONS (HUF). HOWEVER FROM T HE BANK CERTIFICATE FILED BY THE ASSESSEE AS PLACED AT PAPER BOOK 38 W E FIND THAT TWO CHEQUES OF RS.27 LACS AND RS.19 LACS WERE ISSUED BY ASSESSEE A ND THESE WERE A/C PAYEE CHEQUES AND THESE WERE CREDITED TO THE ACCOUNT OF M /S. KAY DEE TRADERS. THIS FACT IS FURTHER CONFIRMED FROM PAPER BOOK PAGE 39 WHERE A COPY OF 10 ITA NO.5546/DEL/2010 I.T.A.NO. 33/DEL/2011 BANK STATEMENT OF ASSESSEE IS PLACED AND WHERE THES E TWO CHEQUES HAVE BEEN DEBITED. THEREFORE THERE IS NO DOUBT ABOUT THE FAC T THAT CHEQUES WERE ISSUED BY THE ASSESSEE WERE DEBITED TO ITS BANK ACCOUNT AN D FURTHER THE CHEQUES WERE CREDITED IN THE ACCOUNT OF M/S. KAY DEE TRADER S. THE DOCUMENTARY EVIDENCE PLACED BY THE ASSESSEE IN THE FORM OF BANK STATEMENT AND BANK CERTIFICATE WAS COMMUNICATED TO LD. CIT(A) ALSO IN THE FORM OF REJOINDER TO REMAND REPORT. LD. CIT(A) HAS REPRODUCED THE REMAN D REPORT AND REJOINDER TO REMAND REPORT WHICH FINDS PLACE IN THE ORDER OF LD. CIT(A) AT PAGES 3 4 AND 5. AT PAGE 5 OF LD. CIT(A)S ORDER HE HIMSELF HAS NOTED AS UNDER: EACH ALLEGATIONS OF THE A.O. AND M/S. KAY DEE TRAD ERS ARE AGAINST THE DOCUMENTARY EVIDENCES ON RECORD AND IN POSSESSI ON OF ASSESSEE AND ARE RELIED HEREUNDER: THAT THE ASSESSEE HAD MADE PURCHASES FORM M/S. KAY DEE TRADES ON CREDIT AS IS EVIDENT FORM INVOICES ISSUED BY CRE DITORS AND COPIES ENCLOSED AS ANNEXURE B-1 TO B-12 AS ABOVE AND THE A SSESSEE HAD MADE PAYMENTS TO THE CREDITOR IN THE FINANCIAL YEAR 2008-09 AS IS EVIDENT FROM THE COPY OF BANK ACCOUNT AND CERTIFICA TE ISSUED BY THE BANK ENCLOSED AS ANNEXURE C AND D ABOVE. 11. THE ABOVE SUBMISSIONS OF THE ASSESSEE IN HIS RE JOINDER REPORT HAS NOT BEEN COMMENTED UPON BY LD. CIT(A). HE HAS NOT EVEN MENTIONED ABOUT THE FACT THAT THESE CHEQUES HAVE BEEN ISSUED AND DEBITE D IN THE BANK ACCOUNT OF ASSESSEE. HE SIMPLY RELIED UPON THE STATEMENT OF M /S. KAY DEE TRADERS THAT THESE PAYMENTS WERE RECEIVED BY THEM ON BEHALF OF S ANDEEP AGGARWAL & SONS (HUF). ON THE CONTRARY HE DID NOT CONSIDER T HE DOCUMENTARY EVIDENCE IN THE POSSESSION OF ASSESSEE. THEREFORE WE HOLD THAT SECTION 28(IV) READ WITH SECTION 41(1) AS APPLIED BY LD. CIT(A) ARE NOT APPLICABLE TO THE ASSESSEE AS THERE IS SUFFICIENT EVIDENCE OF MAKING THE PAYMENTS AGAINST CREDIT BALANCE. 11 ITA NO.5546/DEL/2010 I.T.A.NO. 33/DEL/2011 12. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES WE HO LD THAT LD. CIT(A) HAS WRONGLY UPHELD THE ADDITION AND THEREFORE GRO UNDS NO.1 TO 5 RELATING TO GRIEVANCE FOR ADDITION OF RS.54 39 223/- ARE ALLOWE D. 13. GROUND NO.6 RELATES TO CHARGING OF INTEREST U/S . 234B AND 234C OF THE ACT WHICH DOES NOT REQUIRE ANY ADJUDICATION. 14. IN VIEW OF ABOVE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 15. AS REGARDS REVENUES APPEAL WE FIND THAT LD. C IT(A) HAS PASSED A SPEAKING AND WELL REASONED ORDER AND WE DO NOT INTE ND TO INTERFERE WITH THE SAME AND THEREFORE APPEAL FILED BY THE REVENUE S D ISMISSED. 16. IN NUTSHELL APPEAL FILED BY ASSESSEE IS ALLOWE D AND THAT OF THE REVENUE IS DISMISSED. 17. ORDER PRONOUNCED IN THE OPEN COURT ON 21STS NOV . 2014. SD./- SD./- ( I. C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 21 ST NOV. 2014 SP COPY FORWARDED TO:- THE APPELLANT THE RESPONDENT THE CIT THE CIT (A)- NEW DELHI. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DEL HI. TRUE COPY. BY ORDER(ITAT NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER