Sh. Ashok Kumar Agarwal, Datia v. I.T.O., Gwalior

ITA 415/AGR/2010 | 2007-2008
Pronouncement Date: 25-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 41520314 RSA 2010
Assessee PAN ABHPA1463F
Bench Agra
Appeal Number ITA 415/AGR/2010
Duration Of Justice 1 year(s) 1 month(s) 21 day(s)
Appellant Sh. Ashok Kumar Agarwal, Datia
Respondent I.T.O., Gwalior
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 25-11-2011
Date Of Final Hearing 24-11-2011
Next Hearing Date 24-11-2011
Assessment Year 2007-2008
Appeal Filed On 04-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI H.S. SIDHU JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER ITA NO.415/AGR/2010 ASSESSMENT YEAR: 2007-08 SHRI ASHOK KUMAR AGARWAL VS. INCOME TAX OFFICER (TECH) PROP. M/S. AGRASEN METAL INDUSTRIES GWALIOR BADA BAZAR DATIA. (PAN: ABHPA 1463 F) ITA NO.417/AGR/2010 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER VS. SHRI ASHOK KUMAR AGARWAL WARD 1 (2) GWALIOR PROP. M/S. AGRASEN METAL INDUSTRIES BADA BAZAR DATIA. (PAN: ABHPA 1463 F) (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI MRADUL PATHAK C.A. RESPONDENT BY : SHRI A.K.SHARMA JR. D.R. DATE OF HEARING : 24.11.2011 DATE OF PRONOUNCEMENT : 25.11.2011 ORDER PER BENCH : THESE CROSS APPEALS OF THE ASSESSEE AND THE REVENUE ARISE FROM THE ORDER OF THE LD. CIT(A) GWALIOR DATED 28.07.2010 FOR THE AS SESSMENT YEAR 2007-08. ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL :- 1. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF ` 7 32 500/- MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 68 OF THE INCOME TAX ACT 196 1 ON ACCOUNT OF ADDITION MADE TO THE CAPITAL ACCOUNT WITHOUT CONSID ERING THE FACT THAT THE ADDITIONS MADE WERE FULLY EXPLAINED. 2. BECAUSE THE LEARNED CIT(A) WAS WRONG IN CONFIRMI NG THE ADDITION OF RS.5 56 399/- MADE BY THE LEARNED ASSES SING OFFICER UNDER SECTION 69 OF THE INCOME TAX ACT 1961 IN RESPECT O F EXPENDITURE MADE ON BUILDING CONSTRUCTION. 3. BECAUSE THE LEARNED CIT(A) WAS WRONG IN CONFIRMI NG THE DISALLOWANCE OF ` 97 060/- MADE BY THE LEARNED ASSESSING OFFICER IN RESPECT OF PAYMENTS MADE TO LABOUR AGAINST BUILDING CONSTRUCTION. 4. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF ` 1 15 220/- MADE BY THE LEARNED ASSESSING OFFICER UNDER SECTION 40A(3) OF THE INCO ME TAX ACT 1961 IN RESPECT OF PAYMENTS MADE FOR PURCHASES. 5. BECAUSE THE LEANED CIT(A) HAS ERRED IN LAW AND O N FACTS IN CONFIRMING ADDITION OF ` 15 000/- MADE BY THE LEARNED ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT 1961 ON ACCO UNT OF CASH RECEIVED WITHOUT CONSIDERING THE FACT THAT THE TRAN SACTION WAS FULLY EXPLAINED. 6. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.85 000/- MADE BY THE LEAR NED ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT 1961 ON ACCOU NT OF DEPOSITS IN BANK ACCOUNT WITHOUT CONSIDERING THE FACT THAT THE TRANSACTION WAS FULLY EXPLAINED. 7. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF ` 14 000/- MADE BY THE LEARNED ASSESSING OFFICER U/S 68 OF THE INCOME TAX ACT 1961 ON ACCOU NT OF CASH RECEIVED WITHOUT CONSIDERING THE FACT THAT THE TRAN SACTION WAS FULLY EXPLAINED. ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 3 8. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF ` 2 300/- IN RESPECT OF INTEREST FREE ADVANCES. 9. BECAUSE THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF ` 11 00 000/- ON ACCOUNT OF MARGIN MONEY PROVIDED BY THE ASSESSEE FOR BANK LOAN TREATING TH E SAME TO BE UNEXPLAINED U/S 69 OF THE INCOME TAX ACT 1961 THE APPELLANT CRAVES LEAVE TO ADD ALTER AMEND OR WITHDRAW ANY OF THE ABOVE GROUND(S) OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDINGS. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 20 68 000/- ON ACCOUNT OF INCREASE IN CAPITAL AND ADMITTING FRESH PROOF IN THE AMBIT OF RULE 46A FOR WHICH NO OPPORTUNITY HAS BEEN ALLOWED TO TH E ASSESSING OFFICER OF BEING HEARD. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 10 50 000/- ON ACCOUNT OF UNSECURED LOANS AND ADMITTING FRESH PROOF IN THE AMBIT OF RULE 46A FOR WHICH NO OPPORTUNITY HAS BEEN ALLOWED TO THE AS SESSING OFFICER OF BEING HEAD. 4. THE ASSESSEE HAS NOT PRESSED THE GROUND NOS.3 & 8 AND THEREFORE THE SAME ARE DISMISSED AS NOT PRESSED. 5. GROUND NO.1 OF THE ASSESSEE AND GROUND NOS.1 & 2 OF THE REVENUE ARE WITH RESPECT TO THE ADDITION OF RS.28 00 500/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 4 OF INTRODUCTION OF CAPITAL BY THE ASSESSEE DURING T HE YEAR. THE ASSESSEE DID NOT PRODUCE THE DOCUMENTARY EVIDENCES TO SUBSTANTIATE H IS CLAIM. THE ASSESSING OFFICER THEREFORE TREATED THE SAID AMOUNT AS UNEXPL AINED UNDER SECTION 68 OF THE ACT AND ADDED TO THE INCOME OF THE ASSESSEE. LD. C IT(A) REQUIRED THE ASSESSEE TO SUBMIT DETAILS TO SUBSTANTIATE HIS CLAIM AND ACCORD INGLY THE ASSESSEE SUBMITTED THE DETAILS VIDE LETTER DATED 15.06.2009. AFTER SATISF YING WITH THE EXPLANATION OF THE ASSESSEE AND THE DOCUMENTARY EVIDENCES THE LD. CIT (A) CONSIDERED THE CAPITAL INTRODUCED TO THE EXTENT OF RS.20 68 000/- AND DELE TED THE ADDITION MADE BY THE ASSESSING OFFICER BUT CONFIRMED THE ADDITION OF RS. 10 50 000/- FOR THE REASONS MENTIONED IN HER ORDER VIDE PARAGRAPH NOS. 2 2.1 & 2.2. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE ALLEGATION BY THE REVENUE THAT THE LD. CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCE UNDER RULE 46A FOR WHICH NO OPP ORTUNITY HAS BEEN ALLOWED TO THE ASSESSING OFFICER. IT WAS ARGUED BY THE LD. CO UNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS NOT SUBMITTED ANY ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES 1962. THE LD. CIT(A) IN EXERCISE OF HER POWERS UNDER SECTION 250(4) OF THE ACT ISSUED LETTER TO THE ASSESSEE AND THE ASSES SEE HAS FURNISHED THE REQUIRED EVIDENCES AND THE DETAILS TO THE LD. CIT(A) DURING THE COURSE OF APPELLATE PROCEEDING VIDE LETTER DATED15.06.2009 AVAILABLE ON RECORD. UNDER SECTION 250(4) THE LD. CIT(A) MAY BEFORE DISPOSING OF ANY APPEAL M AKES SUCH FURTHER ENQUIRY AS ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 5 SHE THINKS FIT OR MAY DIRECT THE A.O. TO MAKE FURTH ER ENQUIRY AND SUBMIT REPORT TO THE LD. CIT(A). THE ARGUMENTS MADE BY THE LD. COUN SEL FOR THE ASSESSEE APPEARS TO BE CONVINCING THAT THE LD. CIT(A) IN THE EXERCISE O F HER POWERS UNDER SECTION 250(4) FOR DISPOSING OF THE PRESENT APPEAL HAD MADE FURTHER ENQUIRY AS SHE THOUGHT FIT BY ASKING FOR THE EVIDENCES AND DETAILS TO SUBS TANTIATE THE CLAIM OF THE ASSESSEE. THE EVIDENCES DOCUMENTS AND THE EXPLANATION GIVEN BY THE ASSESSEE WAS FOUND SATISFACTORY AND THEREFORE AS A RESULT OF SUCH ENQ UIRY UNDER SECTION 250(4) THE LD. CIT(A) HAS DISPOSED OF THE APPEAL. EVEN HER POWER IT HAS BEEN DECIDED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT. PRABH AVATI S. SHAH VS. CIT (1998) 231 ITR 1 THAT ON A CONJOINT READING OF SECTION 250 OF THE ACT AND RULE 46A OF THE RULES IT IS CLEAR THAT THE RESTRICTIONS PLACED ON THE APPELLANT TO PRODUCE EVIDENCE DO NOT AFFECT THE POWERS OF THE APPELLATE ASSISTANT CO MMISSIONER UNDER 250(4) OF THE ACT. THE PURPOSE OF RULE 46A APPEARS TO BE TO ENSU RE THAT EVIDENCE IS PRIMARILY LED BEFORE THE INCOME TAX OFFICER. THE HONBLE ORI SSA HIGH COURT IN THE CASE OF B.L. CHOUDHURY VS. CIT (1976) 105 ITR 371 HAS HELD AT PAGE 376 THAT RECEIVING NEW MATERIAL BY THE AAC CANNOT BE EQUATED WITH RECE IPT OF ADDITIONAL EVIDENCE AS CONTEMPLATED IN ORDER 41 RULE 27 OF THE CODE OF CI VIL PROCEDURE OR EVEN AT THE STAGE OF SECOND APPEAL BY THE TRIBUNAL. IT WAS ALS O HELD BY THE HONBLE COURT THAT THE APPELLATE AUTHORITY HIMSELF IS THE DEPARTMENTAL AUTHORITY REPRESENTING THE REVENUE. THEREFORE HE HAS BEEN INVESTED WITH THE POWER OF MAKING FURTHER ENQUIRY. HE DOES NOT EXCEED HIS JURISDICTION IF HE ASKS OR ALLOWS THE ASSESSEE TO ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 6 PRODUCE OR FILE ADDITIONAL PAPERS OR ADDITIONAL EVI DENCE IN THE MANNER HE THINKS FIT. THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF RAJ KUMAR SRIMAL VS. CIT (1976) 102 ITR 525 AND IN THE CASE OF ITO (EXEMPTIONS) VS. BAJORIA FOUNDATION (2002) 254 ITR 65 ALSO SUPPORTED THE VIEWS AS MENTIONED HE REINABOVE. THEREFORE IN THE CIRCUMSTANCES AND FACTS OF THE CASE AND VARIOUS JUD ICIAL PRONOUNCEMENTS MENTIONED HEREINABOVE THE LD. CIT(A) WAS WELL WITH IN HER JURISDICTION UNDER SECTION 250(4) OF THE ACT TO MAKE FURTHER ENQUIRY A ND THEREFORE THE LD. CIT(A) CANNOT BE SAID TO HAVE VIOLATED ANY PROVISIONS OF T HE INCOME TAX ACT OR RULE 56A OF THE INCOME TAX RULES 1962. 7. AS REGARDS THE ISSUE ON MERIT THE SUM OF RS.8 5 0 000/- HAS BEEN RECEIVED AS AN ADVANCE AGAINST AGREEMENT FOR SALE OF SHOP FROM SHRI MANOJ KUMAR AGARWAL DURING THE YEAR. THE ASSESSEE ENTERED INTO AN AGRE EMENT WITH SHRI MANOJ KUMAR AGARWAL AND THE NET CONSIDERATION FOR THE SHOP WAS FIXED AT ` 9 00 000/- OUT OF WHICH ` 8 50 000/- WAS RECEIVED AS AN ADVANCE. COPY OF THE AGREEMENT IS AVAILABLE AT PAGE NOS.6 & 7 OF THE PAPER BOOK. BOTH THE PART IES AGREED TO QUASH THIS AGREEMENT AND THE ASSESSEE AGREED TO RETURN THE TOT AL AMOUNT OF ` 8 50 000/- RECEIVED AS ADVANCE. THE AMOUNT WAS RETURNED BY CH EQUE AND THE COMPLETE DETAILS OF CHEQUES THROUGH WHICH THE AMOUNT WAS REFUNDED AR E AVAILABLE ON RECORD. SHRI MANOJ KUMAR WAS SEPARATELY ASSESSED TO TAX AND HIS INCOME TAX RETURN PERSONAL BALANCE SHEET FOR THE CORRESPONDING YEAR AND CONFIR MED COPY OF ACCOUNT IS ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 7 AVAILABLE AT PAGE NOS.1 - 5 OF PAPER BOOK. THEREFO RE THE GENUINENESS OF THE TRANSACTION IDENTITY AND CREDITWORTHINESS OF THE P ARTY CANNOT BE DOUBTED. 8. AS REGARDS ` 1 00 000/- RECEIVED FROM SMT. VIBHA DEVI AGARWAL A ND ` 1 00 000/- FROM M/S MOHAN AGARWAL & SONS THESE ADV ANCES WERE RECEIVED AGAINST AGREEMENT FOR SALE OF SHOPS COPY OF AGREEM ENT IS AVAILABLE AT PAGES NOS.13 AND 14 OF THE PAPER BOOK. OUT OF THE TOTAL CONSIDE RATION OF ` 25 00 000/- FIXED FOR TWO SHOPS AN AMOUNT OF ` 10 00 000/- EACH HAS BEEN RECEIVED FROM THE TWO PAR TIES TO THE AGREEMENT. BOTH THE PARTIES ARE ASSESSED TO TAX SEPARATELY AND COPY OF INCOME TAX RETURN AND PERSONAL BALANCE SHEET AND CO NFIRMED COPY OF ACCOUNT ARE AVAILABLE ON RECORD. 9. AS REGARDS RS.10 18 000/- WHICH HAS BEEN RECEIVE D AGAINST THE AGRICULTURAL LAND MEASURING 6.02 HECTARES OF M/S SURAJ VINIYOG P VT. LTD. THROUGH SHRI RAJESH BANSAL COPY OF REGISTERED SALE DEED FOR SALE OF LA ND IS AVAILABLE A PAGE NOS 21 TO 27 OF THE PAPER BOOK 10. AS REGARDS RS.7 32 500/- IT WAS INTRODUCED OUT OF THE PERSONAL CAPITAL ACCOUNT OF THE ASSESSEE. THE ASSESSEE IS HAVING CA PITAL OF RS.15 74 178/- WHICH IS A MATTER OF RECORD PLACED AT PAGE NOS.28 & 29 OF TH E PAPER BOOK. ALL THESE DOCUMENTS WERE PLACED BEFORE THE A.O. BUT AFTER EXA MINING THE SAME BY THE LD. ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 8 CIT(A) HE HAS RIGHTLY DELETED THE ADDITION. WE FI ND NO INFIRMITY IN HER ORDER SINCE THE ASSESSEE HAD SUBMITTED THE EXPLANATION TO THE S ATISFACTION OF THE LD. CIT(A) HAVING THE CONCURRENT JURISDICTION. IN THE CIRCUMS TANCES AND FACTS OF THE CASE GROUND NO.1 OF THE ASSESSEE IS ALLOWED AND GROUND N OS. 1 & 2 OF THE REVENUE ARE DISMISSED. 11. AS REGARDS GROUND NO.2 THE ASSESSEE HAS MADE C ASH PAYMENT FOR PURCHASE OF BUILDING MATERIAL AND TO LABOUR ON VARIOUS DATES ON ACCOUNT OF CONSTRUCTION OF BUILDING. THE ASSESSING OFFICER OBSERVED THAT THE CASH BOOK OF THE ASSESSEE DID NOT SHOW ANY WITHDRAWAL ON THESE DATES AND ACCORDIN GLY MADE AN ADDITION OF ` 5 56 399/-. THE LD CIT(A) WITHIN HER POWERS UNDER SECTION 250(4) VERIFIED THE BOOKS OF ACCOUNT WHERE THE AMOUNT HAD BEEN PAID. I T WAS ARGUED THAT THE STATEMENT OF ACCOUNT ALONGWITH BILLS WERE DULY PROD UCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH IS MENTIONED AS PER PA RA 5 OF THE REPLY FURNISHED BEFORE THE ASSESSING OFFICER WHICH IS AVAILABLE AT PAGES 55 TO 59 OF THE PAPER BOOK. ALL THE PAYMENTS MADE ARE DULY REFLECTED IN THE BOOKS OF ACCOUNT AND THE ASSESSEE HAD PRODUCED ALL THE DETAILS BEFORE THE AS SESSING OFFICER. THEREFORE IN THE CIRCUMSTANCES OF THE CASE WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) THAT ALL THE EXPENDITURE HAS BEEN DULY RECORDED IN THE BOOKS OF ACCOUNTS AND THE SAME HAS NOT BEEN REJECTED. THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 9 ADDITION AND THEREFORE THE ASSESSING OFFICER IS DI RECTED TO DELETE THE SAID ADDITION. THUS THIS GROUND IS ALLOWED. 12. AS REGARDS GROUND NO.4 OF THE ASSESSEE THE ASS ESSEE HAS MADE CASH PAYMENT OF ` 20 000/- AND MORE AGGREGATING TO ` 5 76 100/- ON ACCOUNT OF PURCHASES. THE A.O. DISALLOWED 20% AT 1 15 220/-. THE LD CIT(A) C ONFIRMED THE ACTION OF THE ASSESSING OFFICER . 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE THAT PRE SENT CASE IS COVERED UNDER RULE 6DD(G) WHERE THE VENDERS DO NOT HAVE ANY BANK ACCOU NT AND NO BANKING FACILITY IS AVAILABLE. IT WAS ARGUED THAT AT TIMES PURCHASES A RE MADE FROM PETTY VENDORS CALLED KABADIS WHO COLLECT SCRAP FROM DOOR TO DOOR AND S ELL IT TO THE PRODUCER. THEY ARE ILLITERATE PEOPLE AND MAINLY HAIL FROM RURAL AREAS WHERE BANKING FACILITIES ARE NOT AVAILABLE. 14. LD. D.R. ON THE OTHER HAND RELIED UPON THE BOTH THE AUTHORITIES BELOW. 15. WE ARE CONVINCED WITH THE ARGUMENTS MADE BY THE LD. AUTHORISED REPRESENTATIVE THAT THE ASSESSEE HAS PURCHASED THE MATERIAL FROM PETTY VENDORS LIVING NEARBY RURAL AREAS. THOUGH NO DETAILS WERE SUBMITTED BY THE ASSESSEE BUT AT ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 10 THE SAME TIME THERE IS NOTHING ON RECORD THAT SUCH PERSON ARE BOGUS OR FICTITIOUS AND NO BOOKS OF ACCOUNT HAD BEEN REJECTED BY THE AS SESSING OFFICER OR BY THE LD. CIT(A). THEREFORE IN THE CIRCUMSTANCES OF THE CAS E PAYMENT HAVING BEEN MADE IN CASH ARE COVERED UNDER RULE 6DD(G) OF THE ACT. THE A.O. IS NOT JUSTIFIED IN DISALLOWING THE EXPENDITURE. THE ORDER OF THE LD. CIT(A) IS REVERSED ACCORDINGLY. THUS GROUND NO.4 OF THE ASSESSEE IS ALLOWED. 16. AS REGARDS GROUND NO.5 THE ASSESSING OFFICER M ADE AN ADDITION OF ` 15 000/- UNDER SECTION 68 OF THE ACT ON ACCOUNT OF UNEXPLAIN ED CREDIT AND THE LD. CIT(A) CONFIRMED THE SAME. 17. WE HAVE HEAD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO PAGE 36 OF THE PAPER BOOK WHICH IS COPY OF ACCOUNT OF RAJ KUMAR PRINTER TO WH OM THE ASSESSEE HAD GIVEN ADVANCE OF ` 15 000/- VIDE CHEQUE NO.8119 DATED 11.10.2006 WHICH WAS RECEIVED BACK IN CASH ON 31.03.2007. AS A MATTER OF FACT TH E SAID AMOUNT IS NOT A FRESH LOAN OR ADVANCE RECEIVED BY THE ASSESSEE BUT A REFUND OF THE ADVANCE GIVEN WHICH CANNOT BECOME A SUBJECT MATTER OF ADDITION U/S. 68 OF THE ACT. THEREFORE IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE ASSESSING O FFICER IS NOT JUSTIFIED IN MAKING THE ADDITION AND THE ORDER OF THE LD. CIT(A) IS REV ERSED ACCORDINGLY. GROUND NO.5 OF THE ASSESSEE IS ALLOWED. ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 11 18. AS REGARDS GROUND NO.6 OF HE ASSESSEE THE ASSE SSING OFFICER MADE AN ADDITION OF ` 4 60 500/- ON ACCOUNT OF UNEXPLAINED BANK DEPOSITS WHICH WAS CONFIRMED BY THE LD. CIT(A). IT WAS EXPLAINED BEFO RE THE LD. CIT(A) WHO HAD VERIFIED FROM THE BOOKS OF ACCOUNT UNDER HER POWER UNDER SECTION 250(4) OF THE ACT THAT THESE AMOUNTS OF ` 75 000/- ` 10 500/- AND ` 75 000/- WERE CREDITED ON 19.01.2007 02.02.2007 AND 31.03.2007 RESPECTIVELY WHICH WERE ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE RECEIVED ` 3 00 000/- VIDE CHEQUE NO.8838 FROM SHRI AGRASEN METAL INDUSTRIES O N 26.12.2006. THE SAID TRANSACTION IS DULY ACCOUNTED FOR IN THE BOOKS OF A CCOUNT. COPY OF SB ACCOUNT WITH PNB CONTAINING THESE ENTRIES WITH PNB DATIA BO OK AND RELEVANT PAGES OF ASSESSEES CASH BOOK ARE AVAILABLE PAGE NOS.37 TO 4 2 OF THE PAPER BOOK. IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE ADDITION. THE ORDER OF THE LD. CIT(A) IS REVER SED ACCORDINGLY. THUS GROUND NO.6 OF THE ASSESSEE IS ALLOWED. 19. IN REGARD TO GROUND NO.7 THE ASSESSING OFFICER MAD ADDITION OF ` 14 000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT WHICH WAS CO NFIRMED BY THE LD. CIT(A). THE ASSESSEE HAD MADE ADVANCE OF ` 5 000/- AND ` 10 000/- DURING THE YEAR FOR CERTAIN WORK WHICH ACCORDING TO THE BOOKS OF ACCOUN TS WAS RECEIVED BACK BY THE ASSESSEE. THIS FACT HAS BEEN VERIFIED BY THE LD. C IT(A) UNDER HER POWER UNDER SECTION 250(4) OF THE ACT. IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 12 ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE AD DITION AND THEREFORE THE ORDER OF THE LD. CIT(A) IS REVERSED ON THE ISSUE. THUS GRO UND NO.7 OF THE ASSESSEE IS ALLOWED. 20. AS REGARDS GROUND NO.9 THE ASSESSING OFFICER M ADE AN ADDITION OF ` 11 00 000/- ON ACCOUNT OF MARGIN MONEY FOR BANK LOA N WHICH WAS CONFIRMED BY THE LD. CIT(A). IT WAS EXPLAINED BEFORE THE LD. CI T(A) AND WHICH WAS VERIFIED BY THE LD. CIT(A) WITHIN HER POWER THAT THE ASSESSEE W AS SANCTIONED CREDIT FACILITIES VIDE CENTRAL BANKS SANCTION LETTER WHICH IS AVAIL ABLE AT PAGE NOS.45 TO 47 OF THE PAPER BOOK. THE MARGIN MONEY REFERS TO THE CONTRIB UTION OF THE PROMOTERS. IT MAY NOT BE NECESSARILY INCURRED IN THE FORM OF CASH. I T MAY BE CONTRIBUTED IN THE FORM OF PAYMENTS MADE BY THE BORROWER FROM TIME TO TIME FOR ACQUIRING CURRENT ASSETS.. THE CONTENTION OF THE ASSESSING OFFICER THAT THE MA RGIN WAS REQUIRED TO BE BROUGHT IN CASH IS WITHOUT ANY PRACTICAL BASIS. THE LIMIT OF ` 44 00 000/- WAS SANCTIONED O THE ASSESSEE WAS NOT UTILISED FULLY DURING ANYTIME OF THE YEAR. COPY OF THE OD ACCOUNT IS PLACED AT PAGE NO 48 TO 54 OF THE PAPER BOOK. SINCE THE CREDIT WAS NOT UTILISED TO THE FULLEST DURING THE YEAR SO IN THAT CASE THE MARGIN IS EVEN REDUCED PROPORTIONATELY. EVEN IF THERE IS ANY SHORTFALL IN MARGIN CONTRIBUTION MAY BE A BREACH OF CONDITION BETWEEN THE BANK AND THE ASSESS EE AND THE SAME HAS NO REVENUE IMPLICATIONS. IN THIS REGARD THE ASSESSIN G OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT AND THEREFORE IN THE CIRCUMSTANCE AND FACTS OF THE CASE SIMPLY THE ITA NO.415 & 417/AGR/2010 A.Y. 2007-08 13 ASSESSEE HAS TO CONTRIBUTE MARGIN MONEY IS A CONDIT ION OF THE SANCTIONED LETTER CANNOT MAKE THE ASSESSING OFFICER TO ADD INCOME OF THE SAID MARGIN MONEY TO THE INCOME OF THE ASSESSEE. ORDER OF THE LD. CIT(A) IS THEREFORE REVERSED. THUS GROUND NO.9 OF THE ASSESSEE IS ALLOWED. 21. IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO .415/AGR/2010 IS PARTLY ALLOWED AND APPEAL OF THE REVENUE IN ITA NO.417/AGR /2010 IS DISMISSED (ORDER PRONOUNCED IN THE OPEN COURT ON 25.11.2011). SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 25 TH NOVEMBER 2011 PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT CONCERNED/CIT(APPEALS) CO NCERNED/D.R. ITAT AGRA BENCH AGRA/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY