DCIT, Faridabad v. Sh. Pawan Kumar Malhotra, Faridabad

ITA 3684/DEL/2008 | 2005-2006
Pronouncement Date: 08-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 368420114 RSA 2008
Bench Delhi
Appeal Number ITA 3684/DEL/2008
Duration Of Justice 1 year(s) 23 day(s)
Appellant DCIT, Faridabad
Respondent Sh. Pawan Kumar Malhotra, Faridabad
Appeal Type Income Tax Appeal
Pronouncement Date 08-01-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 08-01-2010
Date Of Final Hearing 13-08-2009
Next Hearing Date 13-08-2009
Assessment Year 2005-2006
Appeal Filed On 15-12-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `F: NEW DELHI BEFORE SH G.E. VEERABHADRAPPA VP & SH R.P.TOLANI JM I.T.A. NO.3684/DEL OF 2008 ASSESSMENT YEAR: 2005-06 DY. COMMISSIONER OF INCOME-TAX SHRI PAWAN KUMAR MALHOTRA FARIDABAD. VS H.NO.1506 SECTOR-15 FARIDABAD. APPELLANT RESPONDENT APPELLANT BY: SHRI H.K. LAL DEPARTMENT BY: S/SHRI S.C. JAIN & S.K. JAIN ORDER PER R.P. TOLANI JM: THIS IS REVENUE APPEAL. FOLLOWING GROUNDS ARE RAIS ED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS.81 72 340/- AND RS.4 08 615/- MADE BY THE AO ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES AND COMMISSION PAID THEREON EVEN THOUGH THE ASSESSEE FAILED TO JUSTIFY THE TRANSACTIONS OF SALE AND PURCHASE OF SHARES AS GENUINE TRANSACTIONS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN RESTRICTING THE ADDITION MADE ON ACCOUNT OF VEHICLE RUNNING EXPENSES OF RS.1 87 063/- I.E. 1/5 TH OF RS.9 15 314/- TO RS.70 099/- AND ALLOWING RELIEF OF RS.1 16 964/- EVEN WHEN THE LD. CIT(A) HAS 2 HIMSELF ACCEPTED THE ELEMENT OF PERSONAL USE OF CAR FOR NON-BUSINESS PURPOSES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN RESTRICTING DISALLOWANCE OF RS.90 295/- I.E. 1/5 TH OF TELEPHONE EXPENSES CLAIMED AT RS.4 51 473/- TO 1/8 TH OF SUCH EXPENSES AND ALLOWING RELIEF OF RS.33 861/- EVEN WHEN THE LD. CIT(A) HAS HIMSELF ACCEPTED THE ELEMENT OF PERSONAL USE OF TELEPHONE FOR NON BUSINESS PURPOSES. 2. BRIEF FACTS ARE ASSESSEE IS IN THE BUSINESS OF M ANUFACTURING OF SHEET METAL COMPONENTS. IN THE YEAR IN QUESTION ASSESSE E CLAIMED LONG TERM CAPITAL GAINS OF RS.80 31 540/- ON SALE OF 50 000 S HARES OF M/S QUALITY SYNTHETIC INDUSTRIES LTD. (FOR SHORT QSIL) FOR RS .81 72 340/-. AO WAS CURIOUS THAT THE SHARES ORIGINALLY PURCHASED IN FIN ANCIAL YEAR 2003-04 FOR RS.1 40 800/- WERE SOLD IN THE MONTH OF MARCH 2005 FOR A PRICE OF RS.81 72 340/-. IN ORDER TO ASCERTAIN THE CORRECT TRANSACTION AO ISSUED COMMISSION U/S 131(1)(D) TO CONCERNED ADIT KOLKATA WHO REPORTED AS UNDER: SUBJECT: ENQUIRY IN THE CASE OF SH. PAWAN KUMAR MALHOTRA FOR THE AY 2005-06 ISSUANCE OF COMMISSION U/S 131(1)(D) OF THE I.T. ACT. PLEASE REFER TO THE ABOVE. I HAD RECEIVED YOUR COMMUNICATION VIDE WHICH YOU HAVE REQUESTED TO MAKE ENQUIRY IN RESPECT OF ABOVE MENTIONED ASSESSEE. SUMMONS U/S 131 WERE ISSUED BY THE ADIT/U-1(1) KOL TO SH. SUNIL KUMAR JHUNJHUNWALA THE BROKER TO PRODUCE/FILE : 3 BOOKS OF ACCOUNTS OR DOCUMENT OR EXPLANATION TO BE PRODUCED. 1. SH. MALHOTRA HAS CLAIMED THAT HE HAD PURCHASED 50 000 SHARES OF M.S QUALITY SYNTHETIC INDUSTRIAL LTD. ON 123.11.2003 AND 14.11.2003 FOR RS.1 40 800/- DURING THE MONTH OF MARCH 2005. PLEASE PROVE THE GENUINENESS OF THE TRANSACTION. 2. HOW DID YOU PURCHASE THE SHARES OF SH. MALHOTRA? 3. PLEASE GIVE NAME AND ADDRESS OF THE BUYER(S) WHO HAS PURCHASED THESE SHARES AT THE RATE RANGING FROM RS.144.60 TO RS.177/-. MODE OF RECEIPT OF PAYMENT ALSO TO BE PRODUCED. 4. PLEASE STATE WHO WAS THE CUSTODIAN OF THESE SHARES TILL CREDIT OF THE SAME IN THE ACCOUNT OF SHRI MALHOTRA. DISTINCTIVE NUMBERS OF THE SHARES TO BE SUBMITTED IT THESE WERE IN THE PHYSICAL FORM PRIOR TO THE SAID DEAL. 5. COMPLETE COPY OF ACCOUNT OF SHRI MALHOTRA FOR THE FINANCIAL YEAR 2003-04 AND 2004-05 IN YOUR BOOKS. 6. PHOTOCOPIES OF CONTRACT NOTES IN RESPECT OF THE SAID DEALS OF 50 000 SHARES OF M/S QUALITY SYNTHETIC INDUSTRIAL LTD. DURING THE MONTH OF MARCH 2005. SHRI JHUNJHUNWALA APPEARED AND FILED LEDGER COPY OF THE PARTIES - 1. MATANGI COMMODITIES P. LTD.; 2 . TITANIC NETWORK MARKETING P. LTD.; 3. SPANDAN VINIMAY PVT. LTD. AND 4. SOUMAYA COMMODITIES P. LTD. WHO HAD PURCHASED THE SHARES OF M/S QUALITY SYNTHETIC INDUSTRIAL LTD. (SALE OF MR. MALHOTRA). HE STATED THAT 50 000 SHARES OUT OF 50 000 SHARES OF M/S QSIL WERE SOLD THROUGH C- STAR (TERMINAL OF CALCUATTA STOCK EXCHANGE) AND HE IS UNABLE TO GIVE NAME AND ADDRESS OF THE 4 PURCHASERS OF THESE 50 000 SHARES OF M/S QUALITY SYNTHETIC INDUSTRIAL LTD. SUMMONS WERE SENT TO THESE FOUR PARTIES TO COMPLY IN THIS WAY: 1. THE BANK STATEMENT FOR THE FY 2003-04 AND 2004-05. 2. MODE OF PAYMENT AND SOURCE THEREOF FOR THE PURCHASE OF SHARES OF M/S QUALITY SYNTHETICS @ RS.144/- TO RS.177/- PER SHARE DURING THE FY 2004-05. 3. YOUR REGULAR BOOKS OF ACCOUNTS FOR THE FY 2004-05. YOUR PERSONAL ATTENDANCE IS REQUIRED ON THE HEARING DATE. ALL EXCEPTING TITANIC NETWORK MARKETING P. LTD. SUMMONS RETUNED BACK WITH NOT FOUND/NOT KNOWN REMARKS FROM POSTAL AUTHORITIES. BUT TILL DATE TITANIC NETWORK MARKETING P. LTD. HAS MADE NO COMPLIANCE. BANK STATEMENT OF THESE FOUR CONCERNS WAS OBTAINED THROUGH 131. BANK STATEMENTS SHOW CASH DEPOSITS/TRANSFER IN ALL THEE FOUR CONCERNS. NO FURTHER ENQUIRY REGARDING SOURCE OF THE CASH DEPOSIT/TRANSFERS COULD BE MADE DUE TO NON- EXISTENCE/NON-COMPLIANCE. PURCHASE OF SHARES (SALE OF MR. MALHOTRA) AT THE EXORBITANT PRICE OF RS.144/- TO RS.177/- PER SHARE BY NON-EXISTENT CONCERNS SUGGEST THAT THIS TRANSACTION IS NOTHING ELSE BUT A SHAM TRANSACTION. I AM ENCLOSING ENTIRE DOCUMENTS IN ORIGINAL GATHERED AT THIS END FOR YOUR NECESSARY ACTION AT YOUR END. REPLY FROM CALCUTTA STOCK EXCHANGE AND BANKS REGARDING COPY OF ACCOUNT OPENING FORM AND STATEMENT HAVE NOT BEEN RECEIVED TILL DATE AS THEY HAVE ASKED FOR SOME MORE TIME. THE SAME WILL BE 5 SENT TO YOU AS AND WHEN THEY ARE RECEIVED AT THIS END. THIS GOES WITH PRIOR DISCUSSION WITH MY ADDL. DIT. THANKING YOU YOURS FAITHFULLY SD/- (RAMAN KUMAR VERMA) ITO/INV/UNIT-1(I)/KOLKATA ON RECEIVING THIS REPORT AO FORWARDED COPY OF LETTE R TO ASSESSEE TO COMMENT ON THE SAME EXPLANATION THEREON. ASSESSEE REPLIED T HAT THESE TRANSACTIONS WERE EFFECT THROUGH CONTRACT NOTE OF THE BROKER SHR I SUNIL KUMAR JHUNJHULWALA AND THEY CHARGED SECURITY TRANSACTION TAX. THE SALES OF SHARES TAKE PLACE AT KOLKATA STOCK EXCHANGE AT THE PREVAIL ING MARKET PRICE ON THE DATE OF SALE. COPY OF LETTER FROM KOLKATA STOCK EX CHANGE FOR HIGHER AND LOW OF THE SHARES IN QUESTION FROM 1.4.2004 TO 31.3.200 5 WAS SUBMITTED. THE SHARES WERE TRANSFERRED UNDER DEMAT MODE AND THEY C ANNOT BE TRANSFERRED TO NON-EXISTENT ENTITIES. AO HOWEVER WAS NOT SATISF IED WITH THE REPLY AND MADE THE ADDITIONS HOLDING SALES TO BE A SHAM TRANS ACTION AND INDEED AS MONEYLAUNDERING/COLOURABLE DEVISE RELYING ON HONBL E SUPREME COURT JUDGMENT IN THE CASE OF MCDOWELL & CO. 154 ITR 148 BY FOLLOWING OBSERVATIONS: 6 AS HELD IN PARA 3(I)(A) THAT THE PURCHASE OF THE SHARES BY THE ASSESSEE IN CASH IS NOT A GENUINE TRANSACTION. THE PAPERS AND DETAILS FILED ARE ONLY COOKED UP BY THE ASSESSEE TO GARB HIS INCOME EARNED FROM UNDISCLOSED SOURCES. NO SUCH DETAILS OF THE PURCHASE OF SHARE HAS BEEN SHOWN BY THE ASSESSEE IN HIS RETURN FOR THE AY 2004-05 AS PER THE DRAWING ACCOUNT FILED BY THE ASSESSEE WITH HIS SUBMISSION DATED 19.10.2007 FOR THE PERIOD 1.4.2003 TO 31.3.2004. HE HAS SHOWN THAT THESE AMOUNTS WERE WITHDRAWN CASH FROM HER CAPITAL ACCOUNT I.E. RS.84 600/- ON 12.11.2003 AND RS.56 200/- ON 14.11.2003. THIS DRAWING ACCOUNT OF THE ASSESSEE CANNOT BE HELD AS GENUINE ONE AS IT WAS NOT FILED WITH THE INCOME TAX RETURN FOR THE AY 2004-05 FILED BY THE ASSESSEE. THE ASSESSEE APPEARS TO HAVE PREPARED THIS DRAWING ACCOUNT STATEMENT BY CHANGING THE FIGURES IN HIS COMPUTER TO GIVE COLOR OF GENUINE TRANSACTION TO THE FAKE TRANSACTIONS. THEREFORE IT IS HELD THAT ASSESSEE HAD INDEED TRIED TO COLOR HIS NON-GENUINE TRANSACTION T O A GENUINE ONE. THE SALE OF SHARES AS STATED BY HIM THAT THESE HAVE BEEN SOLD THROUGH A DE-MAT ACCOUNT AND THROUGH A SHARE BROKER AT KOLKATA THE STT ON THESE TRANSACTIONS STATED TO HAVE BEEN PAID CANT MAKE A SHAM TRANSACTION INTO A GENUINE ONE. THE ASSESSEES REPLY SUBMITTED ON 10.12.2007 WHICH HAS BEEN INCORPORATED ABOVE FAILED TO JUSTIFY THE TRANSACTION OF SALE PURCHASE OF SHARES A GENUINE TRANSACTION. THE ITO (INV.) UNIT-1 KOLKATA WHICH HAS BEEN VETTED BY THE ADIT(INV) UNIT-1 KOLKATA AND THE ASSESSEES REPLY DATED 10.12.2007 IT IS HELD THAT THE TRANSACTION OF PURCHASE AND SALE OF SHARES ARE SHAM TRANSACTIONS. THESE TRANSACTIONS INDEED ARE COLORABLE DEVICE USED BY THE ASSESSEE TO GARB HIS INCOME FROM UNDISCLOSED SOURCES. HONBLE SUPREME COURT DECISION IN THE CASE OF MCDOWELL & CO. VS CTO (1985) 154 ITR 148 IS SQUARELY APPLICABLE IN THE CASE. ACCORDINGLY AN ADDITION OF RS.81 72 340/- 7 IS MADE TO THE RETURNED INCOME U/S 68 OF THE I.T. ACT AS ASSESSEES INCOME EARNED FROM UNDISCLOSED SOURCES AS AGAINST CLAIMED BY THE ASSESSEE AS EXEMPT LONG TERM CAPITAL GAIN. THEREFORE I HAVE REASON TO INFER THAT THE ASSESSEE HAS DELIBERATELY CONCEALED THE PARTICULARS OF INCOME AND AS SUCH FURNISHED INACCURATE PARTICULARS OF INCOME FOR WHICH PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT ARE BEING INITIATED SEPARATELY. 3(1)(E) IT IS AN OPEN SECRET THAT WHILE ENTERING I NTO SUCH SHAM TRANSACTIONS AND AMOUNT OF 5% IS NORMALLY SPENT BY THE PERSONS WHO PAID FOR SUCH TRANSACTIONS TO BRING IT TO THE LEVEL OF COLOUR DEVICE. SINCE AS HELD ABOVE IN PARA 3(I)(D) THAT TH E ASSESSEE HAS USED COLORABLE DEVICE FOR LAUNDERING HIS MONEY AMOUNTING TO RS.81 72 340/-. I FURTHER MAKE AN ADDITION OF RS.4 08 615/- (5% OF RS.81 72 340/-) U/S 69C ON ACCOUNT OF UNEXPLAINED EXPENDITURE INCURRED BY THE ASSESSEE FOR MAKING SHAM TRANSACTIONS. THEREFORE I HAVE REASON TO INFER THAT THE ASSESSEE HAS DELIBERATELY CONCEALED THE PARTICULARS OF INCOME AND AS SUCH FURNISHED INACCURATE PARTICULARS OF INCOME FOR WHICH PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT ARE BEING INITIATED SEPARATELY. THE REMAINING EXPENSES ARE ROUTINE DISALLOWANCES OU T OF VEHICLE RUNNING AND TELEPHONE EXPENSES. 3. AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL WHERE ASSESSEE MADE FOLLOWING SUBMISSIONS: IN THIS CASE THE SALE OF EQUITY SHARES OF QUALITY SYNTHETIC INDUSTRIES LTD. HAD TAKEN PLACE DURING THE PERIOD 9.3.2005 TO 31.3.2005 WHICH WERE PURCHASED BETWEEN 12.11.2003 TO 14.11.2003 AND ON SALE OF THESE EQUITY SHARES SECURITIES TRANSACTI ON 8 TAX HAS BEEN CHARGED WHICH IS CLEAR FROM BROKER CONTRACT NOTES OF BROKER SUNIL KUMAR JHUJHUNWALA (THE DETAILS OF PURCHASE SALE PHOTOCOPIES OF PAYMENTS MADE FOR PURCHASE OF SHARES AND PHOTOCOPIES OF SALE OF BROKER NOTE (10 NOS. ENCLOSED). ALL THESE DETAILS WERE GIVEN AT THE TIME OF FILING THE I.T. RETURN WHICH WAS FILED ON 27.10.2006. THUS THE OBSERVATION OF THE AO IN THE LAST LINE OF PARA 3(1)(A) IS MALICIOUS AND WRONG TH AT IT WAS AFTER THOUGH OF ASSESSMENT PROCEEDINGS/INVESTIGATION. WE ARE ENCLOSING THE PHOTOCOPIES OF THE SHARE CERTIFICATES WHICH CLEARL Y INDICATE THAT THE SHARES WERE TRANSFERRED IN THE NAME OF PAWAN KUMAR MALHOTRA ON 27.11.2003 BY M/S QUALITY SYNTHETIC INDUSTRIES LTD. WHICH WERE PURCHASED FROM RAJA RAM AND DAL BAHADUR. IN ADDITION WE ARE ENCLOSING HEREWITH THE PHOTOCOPY OF LETTER OF M/S QUALITY SYNTHETIC INDUSTRIES LTD. WHICH WAS RECEIVED BY AO UNDER 133(6) OF THE I.T. ACT 1961. THE AO NOTED IN HIS ORDER THAT THE SHARES WERE PURCHASED BY RAJA RAM IN CASH IS WRONG AS IS CLEAR FROM THE BANK STATEMENT OF RAJA RAM AND FROM HIS STATEMENT RECORDED BY AO. IT IS ALSO WRONG TO SAY THAT CASH WAS HANDED OVER TO THE SHARE BROKER FOR PURCHASE OF SHARES WHEREAS THE CHEQUE WAS GIVEN TO PRAKASH NAHTA BROKER. THE PARA 3(1)(B) DEALT BY THE AO IS DEPARTMENTAL ENQUIRY BETWEEN ONE INCOME-TAX DEPARTMENT TO ANOTHER INCOME-TAX DEPARTMENT AS REPORT HAS BEEN DISTORTED BY AO IN HIS ORDER. AS FAR AS ASSESSEE IS CONCERNED HE HAS SOLD THE SHARE UNDER DEMAT ACCOUNT TO SHARE BROKER SUNIL KUMAR JHUNJHUNWALA AT THE PREVAILING PRICES AT CALCUTTA STOCK EXCHANGE AND RECEIVED THE PAYMENT THROUGH PAYEE A/C CHEQUES AFTER DEDUCTION OF STT. PHOTOCOPY OF THE DEMAT ACCOUNT PHOTOCOPY OF LETTER FROM CALCUTTA STOCK EXCHANGE REGARDING HIGHEST AND LOWEST RATES DURING THE PERIOD 1.4.2004 9 TO 31.3.2005 AND PHOTOCOPIES OF CHEQUE RECEIVED ALONG WITH BANK STATEMENTS WHERE THESE CHEQUES WERE CREDITED ENCLOSED. IT IS NOT UNDERSTANDABLE HOW THE SHARES UNDER DEMAT A/C BE TRANSFERRED TO THE NON-EXISTENT CONCERN EVEN THE ITO INVESTIGATION IS SAYING THAT THE BANK ACCOUNT OF TH E CONCERN TO WHOM THE SHARES WERE SOLD BY THE BROKER WERE OBTAINED U/S 131 OF THE INCOME-TAX ACT 1961. FURTHER MORE THE ASSESSEE HAD DRAWN THESE AMOUNTS IN CASH OF RS.84 600/- ON 12.11.2003 AND RS.56 200/- ON 14.11.2003 FOR PURCHASE OF SHARES FROM RAJA RAM AND DAL BAHADUR AND THE SAME HAS BEEN SHOWN IN HIS DRAWING ACCOUNT. THE TOTAL AMOUNT DRAWN IS RS.8 04 299/- WHICH HAS BEEN REFLECTED IN THE BALANCE SHEET FOR THE YEAR 31.3.2004. THE ASSESSEE IS FILING HIS INCOME TAX RETURN FOR MORE THAN 15 YEARS REGULARLY AND THERE I S NO QUESTION OF WITHHOLDING ANY INFORMATION. THUS ALL THE OBSERVATIONS OF THE AO IN THIS REGARD ARE BASED ON ESTIMATES SURMISES AND CONJECTURES ETC. THE ADDITION OF RS.4 08 615/- IS PURELY BASED IN ESTIMATES SURMISES CONJUNCTIONS AND WITH NO FACTS AND THE AO HAS ASSUMED THAT THE EXPENSES MIGHT HAVE BEEN INCURRED. NO COMMISSION HAS BEEN PAID AS ALLEGED BY AO. ALL THE TRANSACTIONS ARE GENUINE AND THEREFORE THE QUESTION OF COMMISSION PAID DOES NOT ARISE. IT IS SETTLED PRINCIPLE OF LAW AND JUSTICE THAT WRO NG ADDITION AS STATED ABOVE CANNOT BE TREATED AS PART OF INCOME AND THE WRONG ADDITION MAY PLEASE BE DELETED. CIT(A) HELD THAT ASSESSEE HAS FURNISHED ALL THE DOC UMENTS AND AO HAS PROCEEDED ON THE BASIS OF SUSPICIONS AND CONJECTURE S WHILE MAKING THE ADDITIONS. THE FACT ABOUT THE IMPUGNED SHARE TRANS ACTION HAS NOT BEEN 10 DISPUTED BY AO. THE IDENTITY OF M/S QSL AND MAURYA UDYOG LTD. HAS NOT BEEN DOUBTED OR CHALLENGED BY AO. SHRI RAJA RAM A ND SHRI DAL BAHADUR HAD CONFIRMED SELLING THESE SHARES WHICH WERE ASSE SSED TO INCOME-TAX ACT AND RETURNS FOR ASSTT. YEAR 2004-05 WAS FILED BY TH EM. AOS ALLEGATION THAT THESE SALE TRANSACTIONS TO ASSESSEE WERE NOT SHOWN BY THEM IN RETURN WAS COUNTERED ON THE OBSERVATION THAT SINCE THERE WAS N O TAXABLE CAPITAL GAIN ARISING TO THEM THE INFORMATION DECLARATION WAS NO T OBLIGATORY FOR THEM. SHRI RAJA RAM WAS PRODUCED HIS STATEMENT WAS RECOR DED WHO AGAIN CONFIRMED THE SALE OF THESE SHARES AND EXPLAINED SO URCE OF HIS PURCHASES. THESE SHARES BEING LOCKED SHARES THEY WERE SOLD TO THE ASSESSEE WITH DELIVERY THEREOF. CIT(A) HELD THAT FROM THE STATEM ENT OF SHRI RAJA RAM THE TRANSACTIONS WERE QUITE VERIFIABLE. THOUGH SHRI DA L BAHADUR COULD NOT BE PRODUCED BUT THE CASE IS SIMILAR TO THAT OF SHRI RA JA RAM AND THOUGH BOTH OF THEM WERE LABOUR PROVIDERS IN THE PREMISES OF SAME FACTORY I.E. MAURYA UDYOG THE FINDINGS OF AO WERE MERELY BASED ON SUSP ICION INASMUCH AS THE ASSESSEE HAD EXPLAINED ALL THE RELEVANT ASPECTS OF THE TRANSACTIONS AND PRODUCED ONE OF THE PERSONS WHO SOLD SHARES TO ASS ESSEE. CIT(A) CONSIDERING ALL THE RELEVANT EVIDENCE HELD THAT TH E TRANSACTION IN QUESTION CANNOT BE HELD TO BE SHAM OR COLOURABLE SINCE THEY WERE TRANSACTED THROUGH KOLKATA STOCK EXCHANGE AND FURTHER HELD THE ASSESSE E TO BE ELIGIBLE TO 11 CAPITAL GAINS AND THE ADDITION ON ACCOUNT OF COMMIS SION WAS DELETED BY FOLLOWING OBSERVATIONS: THE PRESENT APPELLANT SATISFIES THESE TWO REQUIREMENTS FOR THE EXEMPTION U/S 10(38) AND THE AO HAS NOT DWELT UPON OR CHALLENGED THEM FUNDAMENTALLY. THEREFORE THE ADDITION OF RS.81 72 340/- EFFECTED U/S 68 OF THE INCOME-TAX ACT 1961 BEING UNJUSTIFIED STANDS DELETED. SIMILARLY THE AOS ADMISSION IN PARA 3(1)(E) THAT IT IS AN OPEN SECRET THAT WHILE ENTERING INTO SUCH SHAM TRANSACTIONS AN AMOUNT OF 5% IS NORMALLY SPENT BY THE PERSONS WHO PAID FOR SUCH TRANSACTIONS TO BRING IT TO THE LEVEL OF COLOURABLE DEVICE SHOWS THAT HE HAS PROCEEDED ON MERE SUSPICION OR CONJECTURE WITHOUT BRINGING ANY MATERIAL OR EVIDENCE AGAINST THE APPELLANT ON RECORD FOR HIS SUCH OPINION. THEREFORE HIS ATTEMP T TO EFFECT THE ADDITION OF RS.4 08 615/- (5% OF RS.81 72 340/-) U/S 69C WITHOUT ANY DOCUMENTARY EVIDENCE FOR ITS JUSTIFICATION AND ESPECIALLY WHEN THE ADDITION OF RS.81 72 340/- AS SHAM TRANSACTION HAS BEEN DELETED AS ABOVE IS WITHOUT MERITS AND HENCE THE ADDITION OF RS.4 08 615/- STANDS DELETED ALSO. REASONS FOR DELETING ADDITION ON ACCOUNT OF VEHICLE RUNNING AND TELEPHONE EXPENSES ARE GIVEN AS UNDER: I HAVE CONSIDERED THE ISSUE AND I FIND THAT THE EXPENSES INCURRED AT RS.41 478/- AND INTEREST ON CAR LOAN AT RS.72 120/- AND ALSO DEPRECIATION ON CA R AT RS.4 71 220/- DO NOT IN ANY CASE WARRANT ANY DISALLOWANCE AS SUCH BECAUSE THESE EXPENSES HAVE TO BE INCURRED IN ANY CASE IRRESPECTIVE OF THE FAC T WHETHER THEY ARE USED FOR BUSINESS OR NON-BUSINESS PURPOSE. THE AO HAD ADMITTED THE NATURE OF THESE EXPENSES AS BEING BASICALLY IN THE BUSINESS INTERES T 12 BUT HE HAS DISALLOWED SOME PORTION OF IT FOR THE PERSONAL USE. THIS HALF WAY APPROACH IN RESPECT OF THESE EXPENSES IS ILLOGICAL AND UNTENABLE. THEREFORE NO DISALLOWANCE IS MADE OUT OF THESE EXPENSES. AS FAR AS THE DISALLOWANCE OUT OF VEHICLE MAINTENANCE AT RS.3 50 496/- IS CONCERNED THEY REFER TO PETROL REPAIR ETC IN WHICH THE USE O F THE PERSONAL NATURE CANNOT BE RULED OUT. THEREFORE THE AOS ACTION IN DISALLOWING 1/5 TH OUT OF THESE EXPENSES IS UPHELD. THUS THE DISALLOWANCE WILL WORK OUT TO BE RS.70 099/- (ONE FIFTH OF RS.3 50 496/-). THUS THE TOTAL RELIEF UNDER THIS HEAD COMES TO RS.1 16 964/- (RS.1 87 063/- - RS.70 099/-). DISALLOWANCE OUT OF TELEPHONE EXPENSES AT RS.90 295/-: THIS DISALLOWANCE TO THE EXTENT OF ONE FIFTH OUT OF THE TOTAL TELEPHONE EXPENSES AT RS.4 51 473/- HAS BEEN MADE IN PARA 3(III) OF THE AOS ORDER. LD. AR HAS CLAIMED THAT ALL THE EXPENSES HAVE BEEN INCURRED ON THE OFFICE. YET THE PERSONAL ELEMENT CANNOT BE RULED OUT OF SUCH EXPENSES. KEEPING IN VIEW THE TURNOVER AND THE BUSINESS RESULTS OF THE APPELLANT THE DISALLOWANCE IS RESTRICTED TO 1/8 TH OF SUCH EXPENSES WHICH WOULD AMOUNT TO RS.56 434. THE RELIEF UNDER THE HEAD WILL WORK OUT AT RS.33 861/- (RS.90 295/- - RS.56 434/-). AGGRIEVED REVENUE IS BEFORE US. 4. LEARNED DR CONTENDS THAT THE CASE IN QUESTION HA S SO MANY UNPROVED FACTS. ASSESSEE FOR ASSTT. YEAR 2004-05 DID NOT FIL E ANY ACCOUNT SHOWING PURCHASE OF 50 000 SHARES OF QSIL FOR RS.1 40 800/- WHICH WORKS OUT TO A COST OF AROUND RS.2.82 PER SHARE THE ASSESSEE CLAI MS TO HAVE PURCHASED THESE 13 SHARES IN CASH FROM ONE SHRI RAJA RAM AND SHRI DAL BAHADUR BOTH WORKING IN UNIMPORTANT CAPACITIES IN MAURYA UDYOG LTD. SEC TOR 25 FARIDABAD. THERE IS NO INDICATION OF THESE PURCHASES IN ASSESS EES RETURN FOR ASSTT. YEAR 2004-05. IN THE IMPUGNED ORDER I.E. 2005-06 ASSESS EE SOLD THESE SHARES FOR AN EXORBITANT AMOUNT OF RS.81 72 340/-. THE SAID C OMPANY QSIL IS NOT A RENOWNED COMPANY AND HOW COULD ITS SHARES OF RS.1 4 0 800/- COMMAND THE SHARE PRICE OF RS.80 31 540/- WITHIN A SHORT SPAN O F ONE YEAR WITHOUT ANY FINANCIAL CREDENTIAL. THERE IS NOTHING ON RECORD T O SUGGEST THAT THIS COMPANY WAS A POTENTIAL COMPANY AND ITS AREA OF ACTIVITY IS NOT KNOWN. THEREFORE THE ASSESSEES CASE DESERVE TO BE LOOKED WITH SUSPI CION AND IN THE REALM OF PREPONDERANCE OF PROBABILITIES AS EXPOUNDED BY HON BLE SUPREME COURT IN THE CASE OF SUMITI DAYAL 214 ITR 801. AO THEREAF TER CONDUCTED THE ENQUIRIES AND FOUND FROM RETURN FOR ASSTT. YEAR 200 4-05 THAT NO SUCH PURCHASES WERE APPEARING IN THE ASSESSMENT RECORD F ILED WITH THE DEPARTMENT. ASSESSEE THEN FURNISHED A COMPUTERIZED CAPITAL ACCOUNT PURPORTING TO BE FOR FINANCIAL YEAR 2003-04 IN WHIC H CONTAINED SOME CASH ENTRIES ABOUT PURCHASE OF SHARES FROM THE ABOVE TWO PERSONS I.E. DAL BAHADUR AND RAJA RAM. AO THEREAFTER ISSUED A COM MISSION U/S 131(1)(D) TO ITO CONCERNED IN KOLKATA WHO ALSO INVESTIGATED THE MATTER AT HIS END AND 14 SENT REGISTERED NOTICES U/S 131 TO FOLLOWING FOUR C ONCERNS WHO ARE ALLEGED PURCHASERS FROM ASSESSEE: (I) MATANGI COMMODITIES P. LTD.; (II) TITANIC NETWORK MARKETING P. LTD. (III) SPANDAN VINIMAY P. LTD. (IV) SOUMAYA COMMODITIES P. LTD. NONE OF THE CONCERNS RESPONDED TO THE NOTICES INASM UCH AS THREE NOTICES CAME BACK WITH REMARKS NOT FOUND/NOT KNOWN AND IN THE CASE OF M/S TITANIC NETWORK MARKETING P. LTD. THOUGH NOTICE DID NOT COME BACK NO COMPLIANCE WAS MADE. AO INFERRED THAT THESE ENTITI ES WERE PAPER ENTITIES AND CREATED WITH A MOTIVE OF DUBIOUS TRANSACTIONS F OR ACCOMMODATION PURPOSES. AO FURTHER FOUND THAT THOUGH THESE CONCE RNS HAD BANK ACCOUNTS THERE WERE NO REGULAR ENTRIES THEREIN ON ONE DAY CA SH WAS DEPOSITED AND WITHIN TWO-THREE DAYS THE SHARES WERE PURCHASED. IF THE ABOVE FOUR COMPANIES WERE FINANCIALLY SOUND AND CARRYING ON RE GULAR ACTIVITY THEIR BANK ACCOUNTS WOULD REFLECT THAT. THE NET EFFECT OF ENQU IRY WAS FACTUAL EXISTENCE OF NONE OF THE PURCHASER COULD EVER BE DEMONSTRATED BY THE SHARE BROKER OR ASSESSEE AO AFTER GREAT EFFORTS COULD LAY HANDS ON THEIR BANK ACCOUNTS WHICH WERE RUDIMENTARY DID NOT HAVE ANY BUSINESS T RANSACTIONS AND THESE SUSPICIOUS PURCHASES WERE MADE BY DEPOSITING THE CA SH AND PURCHASING THE SHARES WITHIN A DAY OR TWO. AO THEN ISSUED NOTICES U/S 131 TO SHRI DAL 15 BAHADUR AND SHRI RAJA RAM. SHRI DAL BAHADUR NEVER APPEARED BEFORE AO AND SHRI RAJA RAM THOUGH APPEARED HE DID NOT REMEMB ER THE NAME OF THE COMPANY AND OTHER DETAILS IN SATISFACTORY MANNER. SHRI RAJA RAM WAS WORKING IN AN INSIGNIFICANT CAPACITY PURCHASED IN CASH THE SHARES OF QSIL WHOSE NAME HE DID NOT REMEMBER. HE SAID THAT THE S HARES WERE NEVER TRANSFERRED IN HIS NAME AND HE SOLD THE SHARES BY R ECEIVING CASH OF RS.84 600/- FROM ASSESSEE AND HAD NO DEMAT ACCOUNT. HE FURTHER ACCEPTED THAT THIS PURCHASE AND SALE OF SHARES WERE NEVER SH OWN IN HIS INCOME-TAX RETURN. WITH ALL THIS INFORMATION ON RECORD AO CA ME TO THE CONCLUSION THAT ASSESSEE WAS GIVING A FABRICATED VERSION OF PURCHAS E AND SALE OF SHARES AND ALL THE TRANSACTIONS WERE EITHER IN CASH OR NOT SUP PORTED BY RELIABLE DOCUMENTS DAL BAHADUR COULD NEVER APPEAR AND RAJA R AM STATEMENT WAS NOT CREDITWORTHY AS IT LACKED IN MANY RELEVANT DETAILS. EXCEPT SOME GENERAL ASSERTIONS HE COULD NOT ESTABLISH ANYTHING SUBSTAN TIAL AND WORTHWHILE. AO AFTER METICULOUS ENQUIRIES ESTABLISHED THAT THIS WA S A CASE OF SHAM TRANSACTION AND MODUS OPERANDI FITTED INTO THE SCHE ME OF DUBIOUS TRANSACTION IN SUCH TYPE OF ACCOMMODATION SHARE TRADING. CIT(A ) HAS ERRONEOUSLY HELD THAT AO MADE THE ADDITIONS ON THE BASIS OF SURMISES AND CONJECTURES WITHOUT CONSIDERING THE ENQUIRIES OF AO SUSPICIOUS SURROUN DING CIRCUMSTANCES AND 16 HUMAN PROBABILITIES LAID DOWN BY HONBLE SUPREME CO URT IN THE CASE OF SUMITI DAYAL (SUPRA). ORDER OF AO WAS RELIED ON. 5. LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER H AND VEHEMENTLY ARGUES THAT QSIL WAS A LISTED COMPANY AT KOLKATA EX CHANGE THE BROKER THROUGH WHOM THE SALE TRANSACTIONS WERE CARRIED OUT CONFIRMED THE SAME AND PRODUCED THE PROOF OF PAYMENT OF STT TAX. IN SHARE TRADING ASSESSEE DOES NOT KNOW THE IDENTITY AND WHEREABOUTS OF THE PURCHA SER; HE IS INTERESTED IN REALIZATION OF PROCEEDS. IN THIS CASE THE SHARE T RADING TRANSACTION HAVING TAKEN THROUGH SHRI JHUNJHUNWALA A CALCUTTA STOCK B ROKER WHO CONFIRMED THE SALE AND GAVE THE NAME OF THE PARTIES. THE PAYM ENT BEING THROUGH CHEQUES ASSESSEE DOES NOT HAVE TO GIVE FURTHER EXP LANATION. ASSESSEE THOUGH DID NOT FILE HIS CAPITAL ACCOUNT IN RETURN F OR ASSTT. YEAR 2004-05 THERE IS NO SUCH STATUTORY REQUIREMENT AND IN ANY C ASE THE CAPITAL AND CASH WITHDRAWAL FOR PURCHASE OF QSIL SHARE HAS BEEN RECO NCILED BY FILING THE NECESSARY CAPITAL ACCOUNT. THE PURCHASE OF SHARES WAS IN PHYSICAL FORM WHICH WAS DEMATISED BY ASSESSEE AND SALE IS THROUGH DEMAT ACCOUNT. CIT(A) RIGHTLY HELD THAT THE SHARES HAVE BEEN RIGHT LY SOLD AND AO MADE THE ADDITIONS ON THE BASIS OF SURMISES AND CONJECTURES. 17 6. APROPOS OTHER DISALLOWANCES IT WAS CONTENDED TH AT AO DISALLOWED THE EXPENSES ON ESTIMATE BASIS WHICH WAS RIGHTLY RE DUCED BY CIT(A) BY GIVING PART RELIEF. ORDER OF CIT(A) WAS RELIED ON. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FEEL IT IMPERATIVE TO DEAL WITH THE ISS UES ABOUT SUSPICIOUS CIRCUMSTANCES AND THEIR EFFECTS. HONBLE SUPREME C OURT IN THE CASE OF SUMITI DAYAL (SUPRA) HAS HELD THAT THE GENUINENESS OF THE TRANSACTIONS IS TO BE CONSIDERED ON THE BASIS OF SURROUNDING CIRCUMSTA NCES HUMAN PROBABILITIES AND CONDUCT OF THE CONNECTED PARTIES. A TRANSACTION DOES NOT BECOME GENUINE MERELY BECAUSE A PAPER TRAIL HAS BEE N CREATED. THE AO WHILE EXERCISING HIS POWERS AS AN INVESTIGATING OFF ICER HAS A RIGHT TO GO BEYOND WHAT IS APPARENT. IT SHALL BE WORTHWHILE TO REPRODUCE THE OBSERVATIONS OF HONBLE SUPREME COURT IN THIS CASE: 12. THIS IN OUR OPINION IS A SUPERFICIAL APPROACH TO THE PROBLEM. THE MATTER HAS TO BE CONSIDERED IN THE LIGHT OF HUMAN PROBABILITIES. THE CHAIRMAN OF THE SETTLEMENT COMMISSION HAS EMPHASIZED THAT THE APPELLANT DID POSSESS THE WINNING TICKET WHICH WAS SURRENDERED TO THE RACE CLUB AND IN RETURN A CROSSED CHEQUE WAS OBTAINED. IT IS IN OUR VIEW A NEUTRAL CIRCUMSTANCE BECAUSE IF THE APPELLANT HAD PURCHASED THE WINNING TICKET AFTER THE EVENT SHE WOULD BE HAVING THE WINNING TICKET WITH HER WHICH SHE COULD SURRENDER TO THE RACE CLUB. THE OBSERVATION BY THE CHAIRMAN OF THE SETTLEMENT COMMISSION THAT 'FRAUDULENT SALE OF WINNING 18 TICKET IS NOT AN USUAL PRACTICE BUT IS VERY MUCH OF AN UNUSUAL PRACTICE' IGNORES THE PREVALENT MALPRACTICE THAT WAS NOTICED BY THE DISTRICT TAXES ENQUIRY COMMITTEE AND THE RECOMMENDATIONS MADE BY THE SAID COMMITTEE WHICH LED TO THE AMENDMENT OF THE ACT BY THE FINANCE ACT 1972 WHEREBY THE EXEMPTION FROM TAX THAT WAS AVAILABLE IN RESPECT OF WINNINGS FROM LOTTERIES CROSSWORD PUZZLES RACES ETC. WAS WITHDRAWN. SIMILARLY THE OBSERVATION BY THE CHAIRMAN THAT IF IT IS ALLEGED THAT THESE TICKETS WERE OBTAINED THROUGH FRAUDULENT MEANS IT IS UPON THE ALLEGER TO PROVE THAT IT IS S O IGNORES THE REALITY. THE TRANSACTION ABOUT PURCHASE OF WINNING TICKET TAKES PLACE IN SECRET AND DIRECT EVIDENCE ABOUT SUCH PURCHASE WOULD BE RARELY AVAILABLE. AN INFERENCE ABOUT SUCH A PURCHASE HAS TO BE DRAWN ON THE BASIS OF THE CIRCUMSTANCES AVAILABLE ON THE RECORD. HAVING REGARD TO THE CONDUCT OF THE APPELLANT AS DISCLOSED IN HER SWORN STATEMENT AS WELL AS OTHER MATERIAL ON THE RECORD A N INFERENCE COULD REASONABLY BE DRAWN THAT THE WINNING TICKETS WERE PURCHASED BY THE APPELLANT AFTER THE EVENT. WE ARE THEREFORE UNABLE TO AGREE WITH THE VIEW OF THE CHAIRMAN IN HIS DISSENTING OPINION. IN OUR OPINION THE MAJORITY OPINION AFTER CONSIDERING SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAS RIGHTL Y CONCLUDED THAT THE APPELLANT'S CLAIM ABOUT THE AMOUNT BEING HER WINNING FROM RACES IS NOT GENUINE. IT CANNOT BE SAID THAT THE EXPLANATION OFFERED BY THE APPELLANT IN RESPECT OF THE SAID AMOUNTS HAS BEEN REJECTED UNREASONABLY AND THAT THE FINDING THAT THE SAID AMOUNTS ARE INCOME OF THE APPELLANT FROM OTHER SOURCES IS NOT BASED ON EVIDENCE. IN VIEW OF THESE OBSERVATIONS IT IS NECESSARY TO G O INTO SURROUNDING CIRCUMSTANCES HUMAN PROBABILITIES AND DECIDE THE I SSUE ON THE BASIS OF TOTALITY OF FACTS CIRCUMSTANCES AND RECORD. ASSES SEE FILED HIS RETURN OF 19 INCOME FOR ASSTT. YEAR 2004-05 IN WHICH NO DETAILS ABOUT CASH PURCHASES OF SHARES WERE FURNISHED BY THE ASSESSEE. THE PURCHAS E OF SHARES IS FROM TWO ORDINARY PERSONS ONE OF WHICH DID NOT APPEAR AND O NE SHRI RAJA RAM THOUGH APPEARED BUT COULD NOT GIVE SATISFACTORY REP LY. IN BOTH THESE CASES THEY ALSO DID NOT FILE ANY PARTICULARS ABOUT THE PU RCHASE AND SALE OF SHARES IN THEIR RETURNS. PERTINENTLY ALL THESE TRANSACTIONS ARE IN CASH AND SHRI RAJA RAM COULD NOT EVEN RELATE BACK THE DETAILS OF TRANS ACTIONS TRANSFER OF SHARES IN HIS NAME ETC. SHARES PURCHASED AT A COST OF RS.2 .42 HAS BEEN SOLD IN A RANGE OF RS.144 TO 147 WITHIN A YEAR NOBODY KNOWS THE POTENTIAL AND CREDENTIALS OF THE QSIL. A LOGICAL QUESTION ARISES WHY SHARE PRICE OF A COMPANY WHOSE POTENTIAL CREDENTIAL ACTIVITIES ARE NEITHER KNOWN NOR REPORTED WILL INCREASE ABOUT MORE THAN 70 TIMES IN ONE YEAR. THESE SHARES ARE NEITHER QUOTED NOR LISTED AND CASH. AT THE TIM E OF PURCHASE BY ASSESSEE CONSIDERATION CHANGED HANDS WITHOUT FURNISHING DETA ILS ABOUT THE DISTINCTIVE NUMBERS OR TRANSFER OF SHARES ETC. UNDER THESE CIR CUMSTANCES QSIL SHARES ATTAINING A VERY HIGH MARKET VALUE ITSELF BECOME MY STERIOUS WHICH IS THICKENED BY THE FACT THAT THERE IS NO CORROBORATIV E FACTOR FOR INCREASE IN VALUATION. HONBLE SUPREME COURT IN THE CASE OF SU MITI DAYAL (SUPRA) SIGNIFIES THAT WHAT IS APPARENT MUST BE EXAMINED ON THE TOUCHSTONE OF SURROUNDING CIRCUMSTANCES AND HUMAN PROBABILITIES. MERELY BECAUSE A 20 PAPER TRAIL IS CREATED WILL NOT BY ITSELF MAKE THE TRANSACTION GENUINE. IN THIS CASE COMPANIES TO WHOM QSIL SHARES WEE SOLD COULD NOT BE TRACED ULTIMATELY. LEARNED COUNSEL CONTENDS THAT THEIR BA NK ACCOUNTS SUGGEST THAT THE ENTITIES EXISTED IN OUR VIEW OPENING OF A BAN K ACCOUNT BY ITSELF DOES NOT PROVE FUNCTIONAL AND FACTUAL EXISTENCE OF ENTITIES. THE SAGA OF PAPER OR BRIEFCASE COMPANIES IS WELL KNOWN TO THE CORPORATE CIRCLES. THE AO AS AN INVESTIGATING OFFICER HAS AN OBLIGATION TO ENQUIRE ALL THE RELEVANT ASPECTS OF THE MATTER BEFORE HIM. DESPITE DILIGENT ENQUIRES BY AO THE PURCHASER OF THESE SHARES COULD NOT BE TRACED AND SALE PRICE IS EXORBITANT AND LOGICALLY ABSURD MERELY PAYMENT OF STT WILL ALSO NOT MAKE THE TRANSACTION GENUINE INASMUCH AS IT IS A VOLUNTARY PAYMENT BY THE BROKER . IN VIEW OF THE FACTS AND CIRCUMSTANCES WE ARE UNABLE TO ACCEPT CIT(A)S FIN DING THAT THE AO HAS ACTED ON THE BASIS OF SURMISES AND CONJECTURES. IN OUR VIEW AO HAS CARRIED OUT METICULOUS ENQUIRIES NON AVAILABILITY OF RELEV ANT SUPPORTING MATERIAL CLEARLY QUESTIONS THE VERACITY OF PURCHASE AND SALE TRANSACTION OF SHARES BY ASSESSEE. THE SAME IS FURTHER STRENGTHENED BY THE F ACT THAT THE ASSESSEE IN HIS RETURN FOR ASSTT. YEAR 2004-05 DID NOT REPORT THE C ASH PURCHASES OF SHARES. ON THE SALE FRONT ALSO EXCEPT CHEQUE PAYMENTS NOT HING WORTHWHILE IS FORTHCOMING. STRENGTH OF SHARES OF QSIL ITS TRADI NG ACTIVITIES STILL REMAIN MYSTERIES AND EXORBITANT SHARE PRICE IS UNBELIEVABL E ON THE FACTS MERELY ON 21 THE BROKERS NOTE IT CANNOT BE HELD THAT THE TRANS ACTION WAS INFALLIBLE. THE TOTALITY OF FACTS SURROUNDING CIRCUMSTANCES AND HU MAN PROBABILITIES MILITATE AGAINST THE STAND OF THE ASSESSEE. IN VIEW THEREOF WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE ORDER OF AO CONFIRMING ADDIT IONS ON THIS ACCOUNT. THIS GROUND OF REVENUE IS ALLOWED. 8. APROPOS GROUND NOS. 2 & 3 IN RESPECT OF PART RET ENTION OF DISALLOWANCES WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) AO DISALLOWED THE EXPENSES ON THE BASIS OF ESTIMATE WHICH HAS BE EN REDUCED BY CIT(A) LD. DR HAS NOT POINTED OUT HIS ESTIMATE IS UNREASON ABLE. CIT(A)S ORDER ON GROUND NOS. 2 & 3 IS UPHELD AND REVENUE GROUNDS IN THIS BEHALF ARE DISMISSED. 9. IN THE RESULT REVENUE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JAN UARY 2010. (G.E. VEERABHADRAPPA) (R.P. TOLANI) VICE PRESIDENT JUDICIAL MEMBER DATED: JANUARY 2010 VIJAY 22 COPY TO: 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT(A) FARIDABAD 5. DR ASSISTANT REGISTRAR