The ACIT,OSD-1,AR-4,, Ahmedabad v. M/s. Frontline Corporation Ltd.,, Ahmedabad

ITA 4258/AHD/2007 | 2004-2005
Pronouncement Date: 12-03-2010 | Result: Dismissed

Appeal Details

RSA Number 425820514 RSA 2007
Assessee PAN AAACF2403M
Bench Ahmedabad
Appeal Number ITA 4258/AHD/2007
Duration Of Justice 2 year(s) 3 month(s) 9 day(s)
Appellant The ACIT,OSD-1,AR-4,, Ahmedabad
Respondent M/s. Frontline Corporation Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 12-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 12-03-2010
Date Of Final Hearing 08-03-2010
Next Hearing Date 08-03-2010
Assessment Year 2004-2005
Appeal Filed On 03-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI BHAVNESH SAINI JM & SHRI A.N. PAHUJA A M ITA NO.1091/AHD/2005 - AY 2001-02 ITA NO.4329/AHD/2007 - AY 2004-05 M/S FRONTLINE CORPORATION LTD VS ACIT CIRCLE-4 4 TH FLOOR SHALIN BUILDING 1 ST FLOOR NAVJIVAN TRUST NEHRU BRIDGE CORNER BUILDING OFF ASHRAM ROAD ASHRAM ROAD AHMEDABAD AHMEDABAD [PAN : AAACF2403M] (APPELLANT) (RESPONDENT) ITA NO.3451/AHD/2007 - AY 2001-02 ITA NO.4258/AHD/2007 - AY 2004-05 ACIT OSD-1 VS FRONTLINE CORPORATION LTD AR-4 AHMEDABAD AHMEDABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PF JAIN AR REVENUE BY : SHRI GOVIND SINGHAL DR O R D E R A.N. PAHUJA : THESE FOUR APPEALS- CROSS APPEALS FOR THE AY 2004- 05 DIRECTED AGAINST AN ORDER DATED 27.9.2007 AND APPEAL OF THE ASSESSEE FOR THE AY 2001- 02 AGAINST AN ORDER DATED 16.2.2005 OF THE LD.CIT (A)-VIII AHMEDABAD RAISE SIMILAR ISSUES WHILE THE APPEAL OF THE REVENUE FOR THE AY 2001-02 IS DIRECTED AGAINST AN ORDER DATED 29.5.2007 OF THE LD.CIT(A)- VI AHMEDABAD CANCELLING PENALTY OF RS. LEVIED U/S 271(1)(C) OF THE INCOME-T AX ACT 1961[HEREINAFTER REFERRED TO AS THE ACT]. SINCE THESE APPEALS RELA TE TO THE SAME ASSESSEE THESE WERE HEARD TOGETHER FOR THE SAKE OF CONVENIENCE AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER. ITA NO.1091/AHD/2005[ASSESSEE] 2. IN THIS APPEAL THE ASSESSEE RAISED THE FOLLOW ING GROUNDS : 1. THE LD.CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ADDITION OF RS.26079/- RELATING TO BA D-DEBTS WITHOUT PROPERLY APPRECIATING THE FACTS OF THE APPE LLANT. ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 2 2. THE LD.CIT(APPEALS) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE DISALLOWANCE OF RS.100000/- FROM THE EXPENSES INCURRED FOR STAFF WELFARE. 3. THE LD.CIT (APPEALS) HAS ERRED IN LAW AND ON FAC TS IN CONFIRMING THE DISALLOWANCE OF RS.200000/- FROM THE EXPENSES INCURRED FOR DIESEL. 4. THE LD.CIT(APPEALS) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE DISALLOWANCES OF RS.944717/- FROM TH E EXPENSES INCURRED FOR TRIP & BHATTHA IN REGULAR COU RSE OF BUSINESS. 5. ON THE FACTS NO INTEREST U/S 234B 234C AND 234D OUGHT TO HAVE BEEN LEVIED. 6. THE APPELLANT CRAVES LEAVE TO ADD ALTER AND/OR MODIFY ANY GROUND OF APPEAL. 3. ADVERTING FIRST TO GROUND NO.1 FACTS IN BRI EF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.51 36 860/- FILED ON 31-12-2001 BY THE ASSESSEE ENGAGED IN THE BUSINESS OF TRANSPORTATION AND TRADI NG IN AUTO PARTS AFTER BEING PROCESSED ON 15-04-2002 U/S 143(1) OF THE INCOME-TA X ACT 1961[HEREINAFTER REFERRED TO AS THE ACT] WAS TAKEN UP FOR SCRUTIN Y WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 28-10-2002. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE BAD DEBTS WRITTEN OFF INCLUDED AN AMOUNT OF RS.26 079/- ON ACCOUNT OF SUNDRY ADVAN CES WRITTEN OFF. SINCE THE ASSESSEE FAILED TO ESTABLISH THAT THESE ADVANCES WE RE EARLIER CONSIDERED AS REVENUE RECEIPTS THE AO DISALLOWED THE AMOUNT. 3. 1 ON APPEAL THE LD. CIT(A) UPHELD THE DI SALLOWANCE ON THE GROUND THAT IN THE ABSENCE OF ANY EVIDENCE THE CONDITIONS STIPUL ATED U/S 36(1)(VII) READ WITH SEC. 36(2) OF THE ACT WERE NOT FULFILLED. . 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US. THE LD. AR ON BEHALF OF THE ASSESSEE WITHOUT REFERRING US TO ANY EVIDENCE THAT THE AMOUNT WAS REFLECTED AS INCOME IN THE EARLIER YEARS CONTENDED THAT THE AMO UNT OF RS. 26 079/- COMPRISED ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 3 LOANS AND ADVANCES TO EMPLOYEES AND WAS THEREFORE ALLOWABLE. ON THE OTHER HAND THE LD. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE T HROUGH THE FACTS OF THE CASE. WE FIND THAT NEITHER BEFORE THE AO NOR BEFORE THE L D. CIT(A) THE ASSESSEE SUBMITTED ANY EVIDENCE THAT IT FULFILLED THE CONDIT IONS STIPULATED U/S 36(1)(VII) READ WITH SEC. 36(2) OF THE ACT . EVEN BEFORE US SI TUATION IS NO BETTER. THEREFORE THERE IS NO MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER. THE LD. AR ON BEHALF OF THE ASSESSEE PLEAD ED THAT THE AFORESAID AMOUNT WAS BY WAY OF LOANS/ADVANCES TO EMPLOYEES AND SINCE IT COULD NOT BE RECOVERED IT WAS WRITTEN OFF. EVEN IF THAT BE SO WRITE OFF OF LOANS/ADVANCES TO EMPLOYEES IS NOT ALLOWABLE UNDER THE AFORESAID PROVISIONS OF SE C. 36(1)(VII) OF THE ACT AS HELD IN THE CASE OF V RAMASWAMY AYYANGAR &ANOTHER VS. C IT 18 ITR 150(MAD.) AND IN PALANI ANDAVAR MILLS LTD. VS. CIT 110 ITR 742(MA D.). THEREFORE GROUND NO.1 IS DISMISSED. 6. GROUND NO.2 IN THE APPEAL OF THE ASSESSEE FOR TH E AY 2001-02 RELATES TO DISALLOWANCE OUT OF STAFF WELFARE EXPENSES. THE AO NOTICED THAT THE ASSESSEE CLAIMED AN AMOUNT OF RS.6 59 369/- ON ACCOUNT OF ST AFF WELFARE EXPENSES AS AGAINST RS.1 66 576/- IN THE PRECEDING YEAR. SINCE THE ASSESSEE DID NOT EXPLAIN THE DISPROPORTIONATE INCREASE IN EXPENDITURE NOR TH E RELEVANT DETAILS OF THE EXPENDITURE OR HEADWISE BREAKUP WERE FURNISHED NOR EVEN DETAILS OF ADDITIONAL AMENITIES PROVIDED TO STAFF AND EVIDENCE IN SUPPOR T OF THEREOF THE AO DISALLOWED 50% OF THE INCREASE RESULTING IN ADDITI ON OF RS. 2 46 396/-. ON APPEAL THE LD.CIT(A) CONSIDERING THE TOTAL FREIGHT RECEIPTS OF RS.26.80 CRORES RESTRICTED THE DISALLOWANCE TO RS.1 LAKH . 7. THE ASSESSEE IS NOW IN APPEAL BEFORE US. THE LD. AR MERELY REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A) WHILE THE L D. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A). ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 4 8. WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS OF THE CASE. IF AN ASSESSEE CLAIMS THE EXPENDITURE THE ONUS SQUARE LY RESTED UPON HIM TO SATISFY THE REVENUE AUTHORITIES IN RESPECT OF THE PURPOSE FOR WHICH THE EXPENDITURE CONCERNED WAS INCURRED. IN THE INSTANT CASE THE ASSESSEE DID NOT FURNISH THE RELEVANT DETAILS OR BREAKUP AND NATURE OF EXPENDITURE BEFORE THE AO NOR ANY EVIDENCE IN SUPPORT THEREOF EVEN BEFORE THE LD. CIT(A).HOWEVER THE LD. CIT(A) REDUCED THE DISALLOWANCE TO RS. 1 LAC KEEPI NG IN VIEW THE FREIGHT RECEIPTS OF THE ASSESSEE. WE FIND FROM PAGE 47 TO 54 OF T HE PAPER BOOK STATIONWISE BREAK UP OF EXPENDITURE OF RS.4 25 437/- . THE NATU RE OF EXPENDITURE OR THE REASONS FOR INCREASE VIS--VIS EXPENDITURE IS NOWH ERE EVIDENT FROM THE STATIONWISE BREAK UP. BESIDES A COPY OF LEDGER ACCO UNT REVEALS DETAILS OF EXPENDITURE OF RS. 74 860/-. STILL THE ASSESSEE HAS NOT CARED TO FURNISH EVEN THE DETAILS AND NATURE OR EVEN BREAK UP OF REMAIN ING AMOUNT OF RS.1 59 072[6 59 369-4 25 437-74 860] WHILE NO JUS TIFICATION HAS BEEN FURNISHED BEFORE THE LOWER AUTHORITIES AND EVEN BEFORE US FO R DISPROPORTIONATE INCREASE IN EXPENDITURE VIS--VIS EXPENDITURE INCURRED IN THE P RECEDING YEAR. IN THESE CIRCUMSTANCES ESPECIALLY WHEN THERE IS NO MATERIAL BEFORE US TO TAKE A DIFFERENT VIEW IN THE MATTER WE ARE NOT INCLINED TO INTERFER E. THUS GROUND NO.2 IS DISMISSED. 9. GROUND NO.3 RELATES TO CONFIRMATION OF DISALL OWANCE OF RS.2 LAKHS OUT OF DIESEL EXPENSES. THE AO NOTICED THAT THE ASSESSEE C LAIMED DIESEL EXPENSES OF RS.57 69 840 AS AGAINST RS.23 76 494/- IN THE PRECE DING ASSESSMENT YEAR. TO A QUERY BY THE AO THE ASSESSEE SUBMITTED THAT THE DI ESEL EXPENSES VARY ON THE BASIS OF KILOMETERS OF TRAVEL MADE BY THE TRUCK HI KE IN DIESEL PRICE ETC BESIDES AGE OF THE TRUCK. THE DIESEL EXPENSES INCREASED S INCE CORRESPONDING FREIGHT INCOME INCREASED FROM RS.117.31 LAKHS TO RS.334.05 LAKHS THE ASSESSEE ARGUED. HOWEVER THE AO DID NOT ACCEPT THESE SUBMIS SIONS SINCE THE ASSESSEE DID NOT PRODUCE TRUCK-WISE INCOME AND EXPENSES ACCO UNT NOR THE TRIP-REGISTER LOGBOOK OR TRIP-WISE ACCOUNT OF THE SAID TRUCKS. IN THE ABSENCE THESE DETAILS THE AO CONCLUDED THAT IT WAS NOT POSSIBLE TO VERIFY TH E TOTAL KILOMETER TRAVELLED BY A ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 5 PARTICULAR TRUCK AND THE CONSUMPTION OF DIESEL FOR THAT PURPOSE. THEREFORE APPLYING THE RATIO OF EXPENSES FOR THE 12 TRUCKS PL IED BY THE ASSESSEE IN THE PRECEDING YEAR THE EXPENDITURE FOR 27 TRUCKS USED BY THE ASSESSEE WAS WORKED OUT TO RS.53.26 LAKHS. THE AO ALSO OBSERVED THAT D URING THE YEAR THE ASSESSEE HAS USED 15 NEW TRUCKS THE EFFICIENCY OF WHICH IS M ORE THAN THAT OF THE OLD TRUCKS. IN THIS MANNER THE AO DISALLOWED A SUM OF RS.4 00 044/- (RS.57.70 (-) 53.26 LAKHS). 10. ON APPEAL THE ASSESSEE CONTENDED THAT EXPE NDITURE ON DIESEL WAS 17.27 % OF THE FREIGHT INCOME IN THE YEAR UNDER CONSIDERA TION AS AGAINST 19.40% IN THE PRECEDING ASSESSMENT YEAR. IT WAS POINTED OUT THAT DUE TO INCREASE IN PRICES OF DIESEL AND PERIOD OF USE OF TRUCK CONTRIBUTED TOWAR DS INCREASE IN EXPENSES OF DIESEL. IN THESE CIRCUMSTANCES THOUGH THE LD. CIT (A) OBSERVED THAT IN THE ABSENCE OF LOG BOOK& TRIPWISE REGISTER IT WAS NOT POSSIBLE TO VERIFY THE MILEAGE OF TRUCKS IN THE YEAR HOWEVER HE CONSIDERED THE ADDI TION TO RS. 2 LACS AS REASONABLE AND FAIR. 11. THE ASSESSEE IS NOW IN APPEAL BEFORE U S. THE LD. AR MERELY REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A) .ON THE OTH ER HAND THE LD. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A) AND PLEADED THAT TH E ONUS HAVING NOT BEEN DISCHARGED THERE IS NO GROUND FOR ANY RELIEF. 12. WE HAVE HEARD BOTH THE PARTIES AND GONE THR OUGH THE FACTS OF THE CASE. AS ALREADY POINTED OUT IF AN ASSESSEE CLAIMS THE EX PENDITURE THE ONUS SQUARELY RESTED UPON HIM TO SATISFY THE REVENUE AUTHORITIES IN RESPECT OF THE PURPOSE FOR WHICH THE EXPENDITURE CONCERNED WAS INCURRED. IN TH E INSTANT CASE THE ASSESSEE DID NOT PRODUCE TRUCK-WISE INCOME AND EXPE NSES ACCOUNT NOR THE TRIP- REGISTER LOGBOOK OR TRIP-WISE ACCOUNT OF THE SAID TRUCKS EITHER BEFORE THE AO /LD. CIT(A) AND EVEN BEFORE US WHILE THERE IS NO JUST IFICATION FOR DISPROPORTIONATE INCREASE IN EXPENDITURE VIS--VIS EXPENDITURE INCUR RED IN THE PRECEDING YEAR. WE FIND THAT THE LD. CIT(A) RESTRICTED THE DISALLOWA NCE TO RS. 2 LACS OUT OF TOTAL OF ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 6 RS. 4 00 044/-CONSIDERING THE FACTS OF THE CASE. IN THESE CIRCUMSTANCES ESPECIALLY WHEN THERE IS NO MATERIAL BEFORE US TO T AKE A DIFFERENT VIEW IN THE MATTER WE ARE NOT INCLINED TO INTERFERE. ACCORDING LY GROUND NO.3 IS DISMISSED. 13. NEXT GROUND NO.4 RELATES TO DISALLOWANCE OF RS .9 44 717/- OUT OF TRIP & BHATTHA EXPENSES. THE AO NOTICED THAT THE ASSESSEE INCURRED EXPENDITURE OF RS.94 47 171/-. IN THE YEAR UNDER CONSIDERATION AS AGAINST RS.44 50 733/- IN THE THE PRECEDING YEAR. WHEN CONFRONTED TO EXPLAIN THE DISPROPORTIONATE INCREASE THE ASSESSEE SUBMITTED THAT IN THE PRECEDING YEAR I T HAD 12 TRUCKS WHEREAS IN THE YEAR OF ACCOUNTING IT ADDED 15 MORE TRUCKS AND THE EXPENDITURE WAS REASONABLE. DESPITE SPECIFIC REQUEST MADE TO PRODUCE TRUCK WISE TRIP REGISTER AND RELATED RECORDS IN SUPPORT OF THEIR CLAIM THE ASSESSEE ST ATED THAT NO SUCH REGISTER IS MAINTAINED AND INSTEAD PRODUCED FEW VOUCHERS FOR P AYMENT OF BHATTHA CHARGES. IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TRUC K-WISE TRIP REGISTER AND LOG BOOKS OF TRUCKS THE AO DISALLOWED 10% OF THE TOTAL EXPENDITURE AMOUNTING TO RS.9 44 717/-. 14. ON APPEAL THE LD. CIT(A) UPHELD THE DISALL OWANCE ON THE GROUND THAT THE LOG BOOK / TRIP REGISTER WAS NOT MAINTAINED BY THE ASSESSEE AND THUS THE NATURE OF EXPENSES WAS NOT VERIFIABLE. 15. THE ASSESSEE IS NOW IN APPEAL BEFORE US. TH E LD. AR MERELY REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A) WHILE RELY ING UPON THE DECISION IN THE CASE OF 77TTJ(AHD.)TM 490. ON THE OTHER HAND THE L D. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A). 16. WE HAVE HEARD BOTH THE PARTIES AND GONE THR OUGH THE FACTS OF THE CASE. AS ALREADY MENTIONED ABOVE THE ONUS SQUARELY RESTE D UPON THE ASSESSEE TO SATISFY THE REVENUE AUTHORITIES IN RESPECT OF THE PURPOSE FOR WHICH THE EXPENDITURE CONCERNED WAS INCURRED. IN THE INSTANT CASE THE ASSESSEE DID NOT PRODUCE LOG BOOK / TRIP REGISTER OR ANY CORROBORAT IVE EVIDENCE IN SUPPORT OF THEIR ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 7 CLAIM EITHER BEFORE THE AO /LD. CIT(A) AND EVEN BE FORE US WHILE THERE IS NO JUSTIFICATION FOR DISPROPORTIONATE INCREASE IN EX PENDITURE VIS--VIS EXPENDITURE INCURRED IN THE PRECEDING YEAR. THEREFORE THE LD. CIT(A) FOUND THE DISALLOWANCE REASONABLE. THOUGH THE LD. AR RELIED UPON A DECISIO N IN THE CASE OF 77TTJ(AHD.)TM490 IT HAS NOT BEEN DEMONSTRATED AS T O HOW THE FACTS OF THE CITED CASE WERE PARALLEL TO THE FACTS AND CIRCUMSTANCES I N THE INSTANT CASE ESPECIALLY WHEN THE ASSESSEE DID NOT DISCHARGE ONUS LAID DOWN UPON THEM BEFORE ANY OF THE AUTHORITIES AND EVEN BEFORE US. IN THESE CIRCUM STANCES ESPECIALLY WHEN THE LD. AR DID NOT REFER US TO ANY MATERIAL SO AS TO E NABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER WE ARE NOT INCLINED TO INTERFERE. TH EREFORE GROUND NO.4 IS ALSO DISMISSED. ITA NO.4329/AHD/2007[ASSESSEE] & ITA NO.4258/AHD/2007[REVENUE] 17. IN THIS APPEAL THE ASSESSEE RAISED THE FOLLOWIN G GROUNDS : 1. THE LD.CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS I N UPHOLDING THE ADDITION ON ADHOC BASIS TO THE EXTENT OF 1/3 RD OF THE TOTAL DISALLOWANCE OF TRIP AND BHATTA EXPENS E AMOUNTING TO RS.18 84 000/- WITHOUT APPRECIATING TH E FACTS OF THE APPELLANT. 2. THE LD.CIT(APPEALS) HAS ERRED IN LAW AND ON FACT S IN UPHOLDING THE ADDITION ON ADHOC BASIS TO THE EXTENT OF OF THE TOTAL DISALLOWANCE OF RTO PENALTY EXPENSES AMOU NTING TO RS.1 00 000/- WITHOUT APPRECIATING THE FACTS OF THE APPELLANT. 3. THE LD.CIT(APPEALS) HAS ERRED IN LAW AND ON FACT S IN UPHOLDING THE ADDITION PERTAINING TO WRITE OFF OF A DVANCE GIVEN TO SUPPLIER OF MACHINE UNDER THE HEAD BAD DEB TS WRITTEN OFF AMOUNTING TO RS.1 50 000/- WITHOUT APPR ECIATING THE FACTS OF THE APPELLANT. 4. ON THE FACTS INTEREST U/S 234B 234C AND 234D OU GHT NOT TO HAVE BEEN LEVIED. ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 8 THE REVENUE IN THEIR APPEAL HAVE RAISED THE FOLLOW ING GROUNDS; 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS I N DIRECTING THE AO TO RESTRICT THE DISALLOWANCE OF RS. 56 71 750/-[BEI NG 10% OF THE DIESEL EXPENSES AND TRIP & BHATTA EXPENSES TOTA LING RS.5 65 17 506/-) TO RS.18.84 LACS AND DELETING THE BALANCE OF RS. 37.68 LACS. 2. THE LD. CIT(A) ERRED IN LAW AND ON FACTS O F THE CASE IN DIRECTING THE AO TO DELETE THE DISALLOWANCE OF RS. 1 78 682/- BEING INTEREST ON CAPITAL ADVANCES FOR NON-BUSINESS PURPOSES. 3. THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DIRECTING THE AO TO DELETE THE DISALLOWANCE OF RS. 1 LAC BEING FINE PENALTY ETC. LEVIED BY THE TRANSPORT AUT HORITY OUT OF TOTAL DISALLOWANCE OF RS. 2 LACS. 4. THE LD.CIT(A) ERRED IN LAW AND ON FACTS OF THE C ASE IN DIRECTING THE AO TO DELETE THE DISALLOWANCE OF RS. 14 92 359/- OUT OF TOTAL DISALLOWANCE OF RS. 16 42 359/- MADE ON ACCOUNT OF BAD DEBTS.THE CIT(A) HAS NOT APPRECIATED THE RATIO OF DECISION OF THE HONBLE GU JRAT HIGH COURT IN THE CASE OF DHALL ENTERPRISES & ENGINEERS PVT. LTD. 207 ITR 729. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 6. IT IS THEREFORE PRAYED THAT THE ORDER OF THE L D. CIT(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EFFECT. 18. AT THE OUTSET THE LD. AR ON BEHALF OF THE ASS ESSEE DID NOT PRESS GROUND NOS. 3 & 4 IN THEIR APPEAL. THEREFORE THESE TWO G ROUNDS ARE DISMISSED. 19. GROUND NO.1 IN THE APPEAL OF THE ASSESSEE & ALSO IN THE APPEAL OF THE REVENUE RELATE TO DISALLOWANCE OUT OF DIESEL AS ALS O TRIP AND BHATTA EXPENSES. THE ASSESSEE CLAIMED DIESEL EXPENSES OF RS.66 97 01 2/-[LY- RS. 1 37 53 333/-] AND TRIP & BHATTA EXPENSES OF RS. 4 98 20 494/- [LY - RS.2 33 15 315/-] TO A QUERY BY THE AO THE ASSESSEE SUBMITTED THAT THEIR GP HAS INCREASED BY 0.96% VIS--VIS FY 2002-03. AND TRIP AND BHATTA AND DIES EL EXPENSES CAN NOT BE LOOKED ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 9 IN ISOLATION. BESIDES THEIR ACCOUNTS WERE AUDITED A ND ALL THESE EXPENSES HAD BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOS E OF BUSINESS. THEREFORE NO DISALLOWANCE CAN BE MADE THE ASSESSEE ARGUED. HOWE VER SINCE THE ASSESSEE DID NOT PRODUCE RELEVANT FUEL BILLS WHILE TRIP AND BHATTA EXPENSES WERE ON SELF VOUCHERS FOLLOWING HIS OWN ORDER FOR THE AY 2001-0 2 THE AO DISALLOWED 10% OF THE TOTAL EXPENDITURE OF RS.5 65 17 506/- AMOUNTING TO RS.56 51 750. 20. ON APPEAL THE ASSESSEE REITERATED THEIR SUB MISSIONS BEFORE THE AO. ACCORDINGLY THE LD. CIT(A) RESTRICTED THE DISALLOW ANCE TO RS. 18.84 LAKHS BEING 1/3 OF THE TOTAL DISALLOWANCE IN THE FOLLOWING TE RMS: 4.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE LD.A.R . CAREFULLY. I HAVE PERUSED THE RELEVANT PORTION OF THE ASSESSMENT ORDER AND ALSO CONSIDERED THE WRITTEN EXPLANATIONS OF THE APPELLAN T. THE AO AFTER CONSIDERING THE INCREASE IN FUEL COST AND MIXED NAT URE OF ACCOUNTS DISALLOWED 10% OF TOTAL EXPENSES CLAIMED ON TRIP AN D BHATTA CHARGES AND DIESEL EXPENSES THEREBY MAKING TOTAL AD DITION OF RS.56 51 750/-. ADMITTEDLY THERE WERE MORE TRUCK OPERATIONS DURING THE YEAR AND DIESEL PRICE ALSO SHOT UP SUBST ANTIALLY. IN THE PRECEDING ASSESSMENT YEAR SIMILAR DISALLOWANCES WER E MADE. HOWEVER THE FACTS REMAIN THAT THE TRIP EXPENSES AN D DIESEL EXPENSES WERE ON THE BASIS OF SELF-VOUCHERS SIGNED BY THE DRIVERS AND CLEANERS. IN A BUSINESS LIKE THIS WHERE OTHER EXPENSES ARE NOT VERIFIABLE IT IS ONLY A REASONABLE APPRECIATION OF OVER ALL FACTS THAT CAN DECIDE THE ISSUE. THE DISALLOWANCE MADE BY THE AO IS 10% OF TOTAL CLAIM WHICH IS ON THE HIGHER SIDE. TAKING I NTO ACCOUNT THE FACT THAT INPUT COST HAS GONE UP DUE TO RISE IN DIESEL P RICES AND OTHER INFLATION COST CURRENT YEAR OPERATIONAL RESULTS AR E FOUND TO BE DIFFERENT FROM THE PRECEDING YEAR. ALSO THE CLAIM OF THE APPELLANT THAT FREIGHT RATES MOST OF WHICH ARE ON RATE CONTR ACT BASIS CANNOT BE INCREASED INSTANTLY COMMENSURATE WITH DIESEL EXP ENSES CANNOT BE IGNORED FULLY. TAKING AN OVER ALL PERSPECTIVE I DEEM IT FIT TO RESTRICT THE DISALLOWANCE TO THE 1/3 RD OF THE TOTAL DISALLOWANCE OF RS.56.52 LACS WHICH COMES TO RS.18.84 LACS TOWARDS DIESEL TRIP AND BHATTA EXPENSES. THE BALANCE OF RSX.37.68 LACS IS DIRECTED TO BE DELETED. 21. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINS T THE FINDINGS OF THE LD. CIT(A) IN UPHOLDING DISALLOWANCE TO THE EXTENT OF RS. 18 84 000/- WHILE THE REVENUE IS IN APPEAL FOR REDUCING THE DISALLOWANCE . THE LD. AR MERELY ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 10 REITERATED THEIR SUBMISSIONS BEFORE THE LD. CIT(A) WHILE RELYING UPON THE DECISION IN THE CASE OF 77TTJ(AHD.)TM490.ON THE OTHER HAND THE LD. DR SUPPORTED THE ORDER OF THE AO. 22. WE HAVE HEARD BOTH THE PARTIES AND GONE THR OUGH THE FACTS OF THE CASE. AS ALREADY MENTIONED THE ONUS SQUARELY RESTED UP ON THE ASSESSEE TO SATISFY THE REVENUE AUTHORITIES IN RESPECT OF THE PURPOSE FOR WHICH THE EXPENDITURE CONCERNED WAS INCURRED. IN THE INSTANT CASE THE ASSESSEE DID NOT PRODUCE LOG BOOK / TRIP REGISTER OR ANY CORROBORATIVE EVIDENCE IN SUPPORT OF THEIR CLAIM EITHER BEFORE THE AO /LD. CIT(A) AND EVEN BEFORE US WHIL E THERE IS NO JUSTIFICATION FOR DISPROPORTIONATE INCREASE IN EXPENDITURE VIS--VIS EXPENDITURE INCURRED IN THE PRECEDING YEAR. THEREFORE THE LD. CIT(A) CONSIDE RING THE FACT THAT INPUT COST HAS GONE UP DUE TO RISE IN DIESEL PRICES AND OTHER INFLATION COST OBSERVED THAT CURRENT YEAR OPERATIONAL RESULTS ARE FOUND TO BE DI FFERENT FROM THE PRECEDING YEAR. TAKING IN TO CONSIDERING THE FACT THAT MOST OF T HE FREIGHT RATES WERE ON RATE CONTRACT BASIS WHICH COULD NOT BE INCREASED COMM ENSURATE WITH DIESEL EXPENSES THE LD. CIT(A) RESTRICTED THE DISALLOWAN CE TO THE 1/3 RD OF THE TOTAL DISALLOWANCE OF RS.56.52 LACS . THOUGH THE LD. AR RELIED UPON A DECISION IN THE CASE OF 77TTJ(AHD.)TM490 IT HAS NOT BEEN DEMONSTRA TED AS TO HOW THE FACTS OF THE CITED CASE WERE PARALLEL TO THE FACTS AND CIRCU MSTANCES IN THE INSTANT CASE ESPECIALLY WHEN THE ASSESSEE DID NOT DISCHARGE ONUS LAID DOWN UPON THEM BEFORE ANY OF THE AUTHORITIES AND EVEN BEFORE US. I N THESE CIRCUMSTANCES ESPECIALLY WHEN NEITHER THE LD. AR NOR LD. DR REFE RRED US TO ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER WHILE UNDISPUTEDLY FACTS RELATING TO THE YEAR UNDER CONSIDERATION ARE DIFFERENT FROM THE FACTS OBTAINING IN THE PRECEDING YEARS AS NOTED BY THE LD. CIT(A) WE ARE NOT INCLINED TO INTERFERE. THUS GROUND NO.1 IN THE APPEAL OF THE ASSESSEE & GROUN D NO 1 IN THE APPEAL OF THE REVENUE ARE DISMISSED 23. NEXT GROUND NO.2 IN THE APPEAL OF THE ASSE SSEE AND GROUND NO. 3 IN THE APPEAL OF THE REVENUE RELATE TO DISALLOWANCE OF PE NALTY OR FINE IMPOSED BY ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 11 TRANSPORT REGULATORY AUTHORITY. THE AO ASKED THE A SSESSEE TO FURNISH THE DETAILS OF ANY PENALTY OR FINE IMPOSED BY TRANSPORT REGULAT ORY AUTHORITY. IN RESPONSE THE ASSESSEE REPLIED AS UNDER: .. IN VIEW OF THE VOLUMINOUS TRANSACTION OF THE TRANSPORT BUSINESS IT IS NOT POSSIBLE FOR THE ASSESSEE COMPANY TO FIND OUT T HE EXACT AMOUNT OF PENALTY OR FINE PAID TO RTO AUTHORITIES. . IN THE LIGHT OF THIS REPLY OF THE ASSESSEE AND COMM ENTS OF THE AUDITOR UNDER CLAUSE 17(C) OF THE TAX AUDIT REPORT THE AO MADE A N ADHOC ADDITION OF RS.2 LAKHS. 24. ON APPEAL THE ASSESSEE REITERATED THAT EXP ENSES RELATING TO TRUCKS BEING VOLUMINOUS THE ASSESSEE COULD NOT EXTRACT THE SPEC IFC DETAILS ASKED FOR BY THE AO AND ACCORDINGLY ADHOC DISALLOWANCE SHOULD BE DE LETED. IN THE LIGHT OF THESE SUBMISSIONS THE LD. CIT(A) SUSTAINED THE ADDITION TO THE EXTENT OF RS.1 LAKH IN THE FOLLOWING TERMS: 6.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHO RISED REPRESENTATIVE CAREFULLY. CONSIDERING THE NATURE O F THE APPELLANTS BUSINESS FINES AND PENALTIES FOR VIOLATION OF LAW CANNOT BE RULED OUT. THE APPELLANT ALSO DID NOT SPECIFICALLY PROVE THAT NO SUCH FINES OR PENALTY WERE DEBITED. IN THE ABSENCE OF SPECIFI C DETAILS AS TO THE QUANTIFICATION AND IN AGREEMENT WITH MY PREDECESSOR I CONSIDER IT REASONABLE TO SUSTAIN THE DISALLOWANCE OF RS.1 00 0 00/- AS NOT ALLOWABLE AS PER EXPLANATION TO SECTION 37(1) OF TH E I.T. ACT AND THE BALANCE ADDITION OF RS.1 00 000/- IS DIRECTED TO BE DELETED. THIS GROUND IS PARTLY ALLOWED. 25. BOTH THE ASSESSEE AND THE REVENUE ARE IN A PPEAL BEFORE US. THE LD. AR ON BEHALF OF THE ASSESSEE REITERATED THEIR SUBMISS IONS BEFORE THE LOWER AUTHORITIES WHILE THE LD. DR SUPPORTED THE ORDER O F THE AO. 26. WE HAVE HEARD BOTH THE PARTIES AND GONE THR OUGH THE FACTS OF THE CASE. UNDISPUTEDLY THE ASSESSEE DID NOT FURNISH THE REL EVANT DETAILS IN PURSUANCE TO A QUERY BY THE AO IN THE LIGHT OF COMMENTS OF THE A UDITOR UNDER CLAUSE 17(C) OF THE TAX AUDIT REPORT. AS A RESULT THE AO ADDED AN ADHOC AMOUNT OF RS. 2 LACS ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 12 WHILE THE LD. CIT(A) CONSIDERED IT REASONABLE TO SUSTAIN THE DISALLOWANC E TO THE EXTENT OF RS.1 00 000/- ON THE GROUND THAT IN THE NATURE OF THE ASSESSEES BUSINESS FINES AND PENALTIES FOR VIOLATION OF LAW CANNOT BE RULED OUT. BEFORE US THE LD. AR DID NOT DENY THAT NO SUCH FINES OR PENALTY WERE DEBITED TO THE ACCOUN TS IN THE YEAR UNDER CONSIDERATION WHILE THE LD. CIT(A ) UPHELD THE DISALLOWANCE IN THE ABSENCE OF SPECIFIC DETAILS AS TO THE QUANTIFIC ATION OF PENALTY AND IN AGREEMENT WITH THE VIEWS OF HIS PREDECESSOR. IN THE SE CIRCUMSTANCES ESPECIALLY WHEN THE REVENUE HAVE NOT STATED AS TO WHETHER OR NOT THE ORDER OF THE LD. CIT(A) ON A SIMILAR ISSUE IN THE PRECEDING YEAR IS DISPUTED IN FURTHER APPEAL NOR ANY MATERIAL HAS BEEN PLACED BEFORE US EITHER ON BE HALF OF THE ASSESSEE OR THE REVENUE FOR TAKING A DIFFERENT VIEW IN THE MATTER WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A) IN UPHOLDING DISALLO WANCE TO THE EXTENT OF RS. 1 LAC IN TERMS OF EXPLANATION TO SECTION 37(1) OF THE AC T. THEREFORE GROUND NO.2 IN THE APPEAL OF THE ASSESSEE AND GROUND NO. 3 IN THE APPE AL OF THE REVENUE ARE DISMISSED. 27. NEXT GROUND NO. 2 IN THE APPEAL OF THE REV ENUE RELATES TO DISALLOWANCE OF RS.1 78 682/- ON ACCOUNT OF INTEREST ON CAPITAL ADV ANCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE MADE INTEREST FREE ADVANCES TO THE FOLLOWING PARTIES: (IN R S.) INDIA TELECOM LTD. 10 00 000/- WGF FINANCIAL SERVICES 14 25 000/- GORDHANBHAI MANOHARE 32 500/- IFFCO 84 200/- COD 10 000/- . ACCORDING TO THE AO SINCE INTEREST BEARING FUN DS HAD BEEN UTILIZED FOR GIVING AFORESAID INTEREST FREE ADVANCES WHILE THESE HAD NOT BEEN GIVEN DURING THE COURSE OF NORMAL BUSINESS ACTIVITY AND THE ASSESSEE WAS NOT REGISTERED AS A NBFC NOR WAS IN THE BUSINESS OF MONEY LENDING THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION OF INTEREST ON BORROWED FUNDS UTILI ZED FOR AFORESAID ADVANCES. THE ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 13 AO FURTHER NOTICED THAT THE ASSESSEE PAID INTEREST OF RS. 1 73 89 717/- ON THE LOANS OF RS. 24 83 35 637/- AS ON 31.3.2004. ACCORD INGLY THE AO DISALLOWED PROPORTIONATE INTEREST OF RS.1 78 682/- RELYING I NTER ALIA ON THE DECISION IN THE CASE OF PRMS RAMNATHAN CHETTIAR VS. CIT 72 ITR 534( MAD.) AND MSP RAJA VS. CIT 105 ITR 295(MAD.) 28. ON APPEAL THE ASSESSEE CONTENDED THAT THER E WAS NO NEXUS BETWEEN BORROWED FUNDS AND AFORESAID ADVANCES WHILE SIMILA R DISALLOWANCE IN THE AY 2001-02 & 2003-04 HAD BEEN DELETED. ACCORDINGLY TH E LD. CIT(A) DELETED THE DISALLOWANCE IN THE FOLLOWING TERMS: 5.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHO RISED REPRESENTATIVE CAREFULLY. ADVANCES ARE OUTSTANDING IN THE NAMES OF SOME PARTIES WHICH WERE CONSIDERED FOR MAKING DI SALLOWANCE IN THE PRECEDING YEAR AS WELL. IN FACT THE OUTSTANDIN G BALANCE HAS COME DOWN FROM RS.49.57 LACS TO RS.25.52 LACS. FOL LOWING THE ORDERS OF CIT(A)-VIII FOR THE EARLIER YEARS I HOLD THAT THE DISALLOWANCE U/S 36(1)(III) IS NOT SUSTAINABLE IN T HE ABSENCE OF FINDING TO THE CONTRARY. THE ADVANCES WERE ALSO NO T FOR NON- BUSINESS PURPOSE. IN THAT VIEW OF THE MATTER THE A DDITION IS DIRECTED TO BE DELETED. 29. THE REVENUE IS NOW IN APPEAL BEFORE US AGA INST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR SUPPORTED THE ORDER OF T HE AO WITHOUT INFORMING THE FATE OF EARLIER ORDER RELIED ON BY THE LD. CIT(A) I N FURTHER APPEAL. ON THE OTHER HAND THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTE D THE FINDINGS OF THE LD. CIT(A) WHILE RELYING UPON THE DECISION IN THE CASE OF SA BUILDERS 288 ITR 1 (SC). 30 WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS OF THE CASE. UNDISPUTEDLY THE LD. CIT(A) RELIED UPON ORDERS OF HIS PREDECESSOR FOR THE EARLIER YEARS. REVENUE HAVE NOT PLACED BEFORE US ANY MATERI AL THAT THE SAID ORDERS RELIED UPON BY THE LD. CIT(A) HAVE BEEN REVERSED IN FURTHER APPEAL. EVEN OTHERWISE THE LD. CIT(A) FOUND THAT ADVANCES WERE NOT FOR NONBUSINESS PURPOSES. IN THIS CONNECTION HONBLE APEX COURT IN SA BUILDERS 288 ITR 1 (SC) ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 14 HAVE HELD THAT THE EXPENDITURE MAY NOT HAVE BEEN INCURRED UNDER ANY LEGAL OBLIGATION BUT YET IT IS ALLOWABLE AS A BUSINESS E XPENDITURE IF IT WAS INCURRED ON GROUNDS OF COMMERCIAL EXPEDIENCY. IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DECISION BY THE HONBLE APEX COURT ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL CONTRARY TO THE FINDI NGS OF THE LD. CIT(A) THAT THE ADVANCES WERE FOR BUSINESS PURPOSES WE DO NOT FI ND ANY MERIT IN THE GROUND RAISED BY THE REVENUE. THEREFORE GROUND NO.2 IN TH E APPEAL OF THE REVENUE IS DISMISSED. 31. GROUND NO.4 IN THE APPEAL OF THE REVENUE RELAT ES TO DELETION OF DISALLOWANCE OF BAD DEBTS . THE AO NOTICED THAT TH E ASSESSEE CLAIMED DEDUCTION OF RS. 16 42 359/- ON ACCOUNT OF BAD DEBT S . TO A QUERY BY THE AO THE ASSESSEE REPLIED THAT THE AMOUNT HAD BEEN REFLECTE D AS INCOME OR SALES IN THE PRECEDING YEARS WHILE THESE AMOUNTS HAD BEEN WRITTE N OFF IN THE BOOKS OF ACCOUNTS. HOWEVER THE AO DID NOT ACCEPT THE CONTE NTIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE DID NOT MENTION ABOUT RECOVERY MEASURES TAKEN AGAINST THE PARTIES AND THUS IT COULD NOT BE SAID THAT DEBTS HAVE BECOME ACTUALLY BAD RELYING INTER ALIA ON THE DECISIONS IN THE CA SE OF CIT VS. KHEM CHAND BAHADUR CHAND 134 ITR 65(PUNJ) TSPLP CHIDAMBRAM CHE TTIAR VS. CIT 64 ITR 181(MAD) RB CHAMPALAL RAMSARUP VS. CIT 52 ITR 194(A LL) AFFIRMED BY HONBLE APEX COURT IN 68 ITR 181(SC) AND CHETTINAD COMPANY P LTD. VS. CIT 147 ITR 724(MAD.) . 32. ON APPEAL THE LD. CIT(A) REDUCED THE DISAL LOWANCE TO RS. 1 50 000/- HOLDING THAT THOUGH THE ASSESSEE PURSUED THE RECOV ERY ULTIMATELY IT WAS WRITTEN OF AS BAD DEBT IN THE YEAR UNDER CONSIDERATION. HOW EVER THE ADVANCE OF RS.1 50 000/- TO SUR IRON & STEEL CO. (P) LTD FOR P URCHASE OF MACHINERY BEING CAPITAL ADVANCE WAS NOT ALLOWED AS DEDUCTION. 33. THE REVENUE IS NOW IN APPEAL BEFORE US AGAI NST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. DR SUPPORTED THE ORDER OF TH E AO RELYING INTER ALIA ON THE ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 15 DECISION IN THE CASE OF DHALL ENTERPRISED AND ENGI NEERS P. LTD. V. CIT 295 ITR 481 (GUJ) . ON THE OTHER HAND THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A) . 34 WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. WE ARE OF THE OPINI ON THAT THE ONUS IS ON THE ASSESSEE TO ESTABLISH THAT HIS CLAIM FALLS WITHIN T HE PROVISIONS OF SEC. 36(1)(VII) READ WITH SEC. 36(2) OF THE ACT. IN THIS CASE THE LD. CIT(A) FOUND THOUGH THE ASSESSEE PURSUED THE RECOVERY ULTIMATELY IT WAS WR ITTEN OF AS BAD DEBT IN THE YEAR UNDER CONSIDERATION . THE REVENUE HAVE NOT PLA CED BEFORE US ANY MATERIAL CONTRARY TO THESE FINDINGS OF THE LD. CIT(A) EXCEPT RELYING ON DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF D HALL ENTERPRISED AND ENGINEERS P. LTD.(SUPRA) WHEREIN IT WAS HELD THAT EVEN IF WE GO BY THE PLAIN READING OF CLAUSE (VII) THE REQUIREMENT FOR ALLOWING DEDUCTION ON ACCOUNT OF BA D DEBT IS THAT THE BAD DEBT SHOULD BE WRITTEN OFF AS IRRECOVERABLE . MERE DEBITING THE AMOUNT IS NOT SUFFICIENT. THE REQUIREMENT IS TH AT THE ASSESSEE SHOULD ALSO PROVE THAT THE DEBT HAS BECOME BAD IN T HAT PARTICULAR YEAR. AS POINTED OUT RIGHTLY BY THE TRIBUNAL THERE WAS CORRESPONDENCE REGARDING THE AMOUNT IN QUESTION THA T DUE TO SOME DIFFERENCES THE AMOUNT WAS NOT PAID IN THAT PARTICU LAR YEAR. BUT WHEN CORRESPONDENCE WAS THERE TO THE EFFECT THAT TH E ASSESSEE WAS INSISTING FOR PAYMENT FOR RECOVERY OF THE DEBT IT CANNOT BE SAID THAT THE DEBT HAS BECOME BAD IN THE RELEVANT ASSESSMENT YEAR. WE THEREFORE SEE NO INFIRMITY IN THE ORDER OF THE TRI BUNAL AND WE ANSWER THE FIRST QUESTION AGAINST THE ASSESSEE. 34.1. HOWEVER WE FIND THAT RECENTLY HONBLE SU PREME COURT IN THEIR DECISION DATED 9.2.2010 IN THE CASE OF TRF LTD. VS. CIT IN CIVIL APPEAL NO.5293 OF 2003 HELD THAT THIS POSITION IN LAW IS WELL-SETTLED. AFTER 1 ST APRIL 1989 IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT IN FAC T HAS BECOME IRRECOVERABLE. IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERA BLE IN THE ACCOUNTS OF THE ASSESSEE. HOWEVER IN THE PRESENT CASE THE ASSESSI NG OFFICER HAS NOT EXAMINED WHETHER THE DEBT HAS IN FACT BEEN WRITTEN OFF IN ACCOUNTS OF THE ASSESSEE. WHEN BAD DEBT OCCURS THE BAD DEBT ACCOUNT IS DEBITED AN D THE CUSTOMER'S ACCOUNT IS CREDITED THUS CLOSING THE ACCOUNT OF THE CUSTOMER . IN THE CASE OF COMPANIES ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 16 THE PROVISION IS DEDUCTED FROM SUNDRY DEBTORS. AS S TATED ABOVE THE ASSESSING OFFICER HAS NOT EXAMINED WHETHER IN FACT THE BAD DEBT OR PART THEREOF IS WRITTEN OFF IN THE ACCOUNTS OF THE ASSESSEE. THIS EXERCISE HAS NOT BEEN UNDERTAKEN BY THE ASSESSING OFFICER. HENCE THE MATTER IS REMITTE D TO THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION OF THE ABOVE-MENTIONED ASPECT ONLY AND THAT TOO ONLY TO THE EXTENT OF THE WRITE OFF. 34.2 IN THE LIGHT OF AFORESAID DECISION OF THE HONBLE APEX COURT IN TRF LTD.(SUPRA) WE HAVE NO OPTION BUT TO UPHOLD THE FINDINGS OF THE LD. CIT(A). THEREFORE GROUND NO. 4 IN THE APPEAL OF THE REVEN UE IS DISMISSED. 35. AS REGARDS GROUND NO. 5 IN THE APPEAL BY THE A SSESSEE FOR THE AY 2001- 02 AND GROUND NO.4 IN THEIR APPEAL FOR THE AY 2004- 05 RELATING TO LEVY OF INTEREST U/S 234B AND 234C OF THE ACT THE LD. AR ON BEHALF OF THE ASSESSEE ADMITTED THAT THESE ARE CONSEQUENTIAL IN NATURE. THE LEVY OF INT EREST U/S 234B & 234C OF THE ACT BEING MANDATORY [COMMISSIONER OF INCOME TAX.VS ANJUM M. H. GHASWALA AND OTHERS 252 ITR 1(SC) AFFIRMED BY HON'BLE APEX COURT IN THE CASE OF CIT V. HINDUSTAN BULK CARRIERS [2003] 259 ITR 449 (SC) AND IN THE CASE OF CIT V. SANT RAM MANGAT RAM JEWELLERS [2003] 264 ITR 564 (SC) ] THESE GROUNDS ARE DISMISSED. HOWEVER THE AO MAY ALLOW CONSEQUENTIAL RELIEF IF ANY WHILE GIVING EFFECT TO THIS ORDER. 35.1 AS REGARDS GROUND RELATING TO LEVY OF INTE REST U/S 234D OF THE ACT FOR THE AY 2001-02 IN THE APPEAL OF THE ASSESSEE BOTH THE PARTIES AGREED THAT ISSUE IS SQUARELY COVERED BY THE DECISION OF SPECIAL BENCH IN THE CASE OF ITO VS. EKTA PROMOTERS(P) LTD. 113 ITD 719 WHEREIN IT HAS BEEN HELD THAT SECTION 234D HAVING BEEN BROUGHT ON THE STATUTE FROM 1-6-2003 C ANNOT BE APPLIED TO ASSESSMENT YEAR 2003-04 OR EARLIER YEARS AND IT WIL L HAVE APPLICATION ONLY WITH EFFECT FROM ASSESSMENT YEAR 2004-05. IN THE LIGHT OF THE SAID DECISION THE FINDINGS OF THE LD. CIT(A) SO FAR AS LEVY OF INTERE ST U/S 234D OF THE ACT FOR THE AY 2001-02 IS CONCERNED ARE REVERSED AND THE AO IS DI RECTED TO DELETE THE INTEREST CHARGED U/S 234D OF THE ACT ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 17 35.2. REGARDING GROUND RELATING TO LEVY OF INT EREST U/S 234D OF THE ACT FOR THE AY 2004-05 THE LD.AR AGREED THAT SUCH LEVY BEING M ANDATORY THEREFORE THIS GROUND HAS TO BE DISMISSED. 35.3 IN VIEW OF THE FOREGOING GROUND NO. 5 IN THE APPEAL OF THE ASSESSEE FOR THE AY 2001-02 SO FAR AS LEVY OF INTEREST U/S 234D IS CONCERNED IS ALLOWED WHILE GROUND NO. 4 IN THE APPEAL OF THE ASSESSEE FOR THE AY 2004-05 FOR SUCH LEVY IS DISMISSED. 36. GROUND NOS. 5 & 6 IN THE APPEAL OF THE REVENUE FOR THE AY 2004-05 BEING GENERAL IN NATURE DO NOT REQUIRE ANY SEPARATE ADJ UDICATION WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERMS OF RESIDUARY GRO UND NO. 6 IN THE APPEAL OF THE ASSESSEE FOR THE AY 2001-02 ACCORDINGLY THESE GR OUNDS ARE DISMISSED. ITA NO.3451/AHD/2007[REVENUE] 37. ADVERTING NOW TO THE APPEAL OF THE REVENUE FOR THE AY 2001-02 AGAINST AN ORDER DATED 29.5.2007 OF THE LD. CIT(A)-VI AHME DABAD CANCELLING THE PENALTY OF RS. 5 02 599/- LEVIED U/S 271(1)(C) OF THE ACT FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT THE AO IN THE ASSESSMENT PROCEEDI NGS DISALLOWED CLAIM OF THE ASSESSEE FOR DEDUCTION OF I) SUNDRY BALANCES WRITTE N OFF RS.26 079/-; (II) STAFF WELFARE EXPENSES RS.1 00 000/-; (III) DIESEL EXPENS ES RS.2 00 000/- AND (IV) TRIP & BHATTHA EXPENSES RS.9 44 717/-.INTER ALIA PENALT Y PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE ALSO INITIATED. ON APPEAL THESE A DDITIONS WERE UPHELD BY THE LD. CIT(A) VIDE HIS ORDER DATED 16.2.2005. ON FURTHER APPEAL BY THE ASSESSE WE HAVE ALSO UPHELD THESE ADDITIONS. THEREAFTER IN RE SPONSE TO A SHOWCAUSE NOTICE BEFORE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT TH E ASSESSEE INTER ALIA REPLIED THAT DISALLOWANCE OF EXPENSES PER SE DID NOT AMOUN T TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AND RELIED UPON DECISIONS IN THE CASE OF CIT VS. AJAIB SINGH & CO 253 ITR 630 (PUNJAB & HARYANA) GURU HOME INDUSTRIES V. CIT(2003)SOT 50(AHD.) RAVAIL SINGH & CO. 122 TAXMAN 831(PUNJAB & HARYANA) BIPIN V MISTRY VS. ITO 23 TAXATION 108(AHD.) AND A FEW MORE DECISIONS ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 18 MENTIONED IN THE PENALTY ORDER. HOWEVER THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND IMPOSED PENALTY OF RS. 5 02 599 /- @100% OF TAX SOUGHT TO BE EVADED ON THE GROUND THAT THE CONCEALMENT IS DEL IBERATE AND WILLFUL WHILE THE ASSESSEE COMMITTED THE DEFAULT OF CONCEALMENT OF IT S INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME RELYING INTER A LIA ON THE DECISIONS IN THE CASE OF BANARAS TEXTORIUM VS. CIT 169 ITR 782(ALL) ZEE KOO SHOE FACTORY VS. CIT 127 ITR 837(ALL) MOTOR GENERAL FINANCE VS. CIT 254 ITR 449(DEL) AND JAMNADAS & CO VS. CIT 210 ITR 218(GUJ). 38. ON APPEAL THE LD. CIT(A) AFTER ANALYZING TH E FACTS IN DETAIL CANCELLED THE PENALTY HOLDING AS UNDER: 4.6..IN A PENALTY PROCEEDINGS IT HAS TO BE EST ABLISHED THAT THERE IS A CASE OF EITHER INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOME. IN THE PRESE NT CASE THOUGH THE DEDUCTIONS HAVE BEEN DISALLOWED THERE IS NO FI NDING BY THE AO THAT A PARTICULAR EXPENDITURE HAS BEEN FALSELY OR W RONGLY CLAIMED. IN ABSENCE OF SUCH SPECIFIC FINDING THE CASE OF CO NCEALMENT OF INCOME OR INACCURATE PARTICULARS OF INCOME BY THE A SSESSEE IS NOT ESTABLISHED. FURTHER ALL DISALLOWANCES HAVE ALSO BEEN MADE ON THE BASIS OF ESTIMATE. 5. IT HAS BEEN HELD BY COURTS THAT DISALLOWANCE ON THE BASIS OF ESTIMATION WILL NOT GIVE RISE TO CASE OF CONCEALMEN T OF INCOME: (A) MERELY BECAUSE ADDITIONS ARE MADE IN THE ASSES SMENT REJECTING THE ASSESSEES EXPLANATION AS UNACCEPTABL E OR EVEN FALSE IT DOES NOT FOLLOW THAT PENALTY IS LEVI ABLE UNLESS THERE IS SOME POSITIVE MATERIAL ADDUCED BY THE REVE NUE ON WHOM THE BURDEN LIES TO SHOW THAT THE ASSESSEE WILL FULLY SUPPRESSED THE SAME. SUCH ADDITIONS SHOULD FURTHER BE SHOWN TO REPRESENT THE INCOME OF THE YEAR IN QUESTI ON. THIS IS SO WHETHER THE ADDITION IS MADE ON THE BASIS OF IMPUGNED CASH CREDITS OR ON THE BASIS OF AN ESTIMATE OR ON T HE BASIS OF ACCRETION OF WEALTH-VIDE BOMBAY HARDWARE SYNDICATE VS. CIT (1978) 114 ITR 586 (MAD). CIT VS BHURMAL MANICKECHAND 130 ITR 129 (CAL) AND MEHESSA HEGDE V . CIT 95 ITR 316 (MYS.) (B) THE PROVISIONS OF SECTION 271(1)(C) ARE NOT ATT RACTED TO CASES WHERE INCOME OF THE ASSESSEE IS ASSED ON ESTIMATE B ASIS AND ADDITIONS ARE MADE ON THAT BASIS ONLY VIDE HA RIGOPAL ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 19 SINGH VS. CIT (2003) 32 DTC 626 (P&H-HC)(2002 258 I TR 85. (C) IT WAS HELD IN LAXMI PETROL PUMP VS. DCIT 19 D TC 220 (JOD-TRIB) NO PENALTY CAN BE VALIDLY LEVIED IN REL ATION TO AN ESTIMATED ADDITION MADE ON ACCOUNT OF ALLEGED EXCES SIVE SHORTAGE CLAIMED IN PETROL AND DIESEL ACCOUNT THER EFORE SAME WAS CANCELLED. (D) IT WAS HELD THAT CIT VS. K.R. CHINNI KRISHNA CH ETTY (2001) 19 DTC 457 (MAD-HC) 246 ITR 121 (MAD) THAT MERE REVI SION OF THE INCOME TO A HIGHER FIGURE BY ASSESSING AUTHO RITY DOES NOT AUTOMATICALLY WARRANT ON INFERENCE OF CONCEALME NT OF THE EXPENDITURE ON THE CONSTRUCTION THEREFORE CANCELL ATION OF PENALTY WAS JUSTIFIED AS THE ADDITION TO THE INCOME OF THE ASSESSEE BASED ON THE REPORT OF VALUER WAS RIGHTLY REGARDED BY THE TRIBUNAL AS BEING INSUFFICIENT FOR RECORDING A FINDING OF CONCEALMENT OF INCOME. (E) IN CIT VS. M.M. RICE MILLS (2002) 26 DTC 1065 ( P&H-HC): 253 ITR 17 (P&H) IT WAS HELD THAT MERELY BECAUSE AD DITION HAD BEEN MADE ON ESTIMATE BASIS UNDER SECTION 145(1 ) AND ASSESSING OFFICER HAD NOT BROUGHT ON RECORD ANY DOC UMENT OR MATERIAL TO SHOW THAT ASSESSEE WAS GUILTY OF CONCEA LING PARTICULARS OF INCOME ADDITION COULD NOT BE MADE T HE BASIS FOR IMPOSING PENALTY UNDER SECTION 271(1)(C). 5. ON CONSIDERATION OF THE FACTS OF THE CASE AND RE ASONS STATED ABOVE AND RESPECTFULLY FOLLOWING THE ABOVE DECISION S I HOLD THAT THERE IS NO CASE OF CONCEALMENT OF INCOME OR F ILING OF INACCURATE PARTICULARS OF INCOME TO THE EXTENT OF DISALLOWANCES CONFIRMED BY THE LD.CIT(A). ACCORDIN GLY THE PENALTY ORDER PASSED BY THE AO U/S 271(1)(C) LEVYIN G PENALTY OF RS.5 02 599/- IS HEREBY CANCELLED. 39. THE REVENUE IS NOW IN APPEAL BEFORE US AGAI NST THE AFORESAID FINDINGS OF THE LD. DR SUPPORTED THE ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A) . 40. WE HAVE HEARD BOTH THE PARTIES AND GONE THR OUGH THE FACTS OF THE CASE. WE FIND FROM THE IMPUGNED ORDER THAT THE AO IMPOSED PENALTY U/S 271(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSEE COMMITTED T HE DEFAULT OF CONCEALING THE INCOME TO THE EXTENT OF RS. 12 70 796/- COMPRISING DISALLOWANCE ON ACCOUNT OF SUNDRY BALANCES WRITTEN OFF STAFF WELFARE DIESEL AND TRIP & BHATTHA EXPENSES. THE LD. CIT(A) CANCELLED THE PENALTY HOLDING THA T THE ASSESSEE NEITHER ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 20 CONCEALED PARTICULARS OF INCOME NOR FURNISHED INACC URATE PARTICULARS THEREOF. THE EXPRESSION 'HAS CONCEALED THE PARTICULARS OF INCOME ' AND 'HAS FURNISHED INACCURATE PARTICULARS OF INCOME' HAVE NOT BEEN DEF INED EITHER IN SECTION 271 OR ELSEWHERE IN THE ACT. HOWEVER NOTWITHSTANDING THE DIFFERENCE IN THE TWO CIRCUMSTANCES IT IS NOW WELL ESTABLISHED THAT THEY LEAD TO THE SAME EFFECT NAMELY KEEPING OFF A CERTAIN PORTION OF THE INCOME FROM THE RETURN. ACCORDING TO LAW LEXICON THE WORD 'CONCEAL' MEANS: 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS C ON+CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION; TO C OVER OR KEEP FROM SIGHT; TO PREVENT THE DISCOVERY OF ; TO WITHHOLD KNOWLEDGE OF . THE OFFENCE OF CONCEALMENT IS THUS A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOM E OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHORITIES.' IN WEBSTER'S DICTIONARY 'INACCURATE' HAS BEEN DEFI NED AS : 'NOT ACCURATE NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS ; AS AN INACCURATE STATEMENT COPY OR TRANSCRIPT.' 40.1 IF THE DISCLOSURE OF FACTS IS INCORRECT OR FALSE TO THE KNOWLEDGE OF THE ASSESSEE AND IT IS ESTABLISHED THEN SUCH DISCLOSUR E CANNOT TAKE IT OUT FROM THE PURVIEW OF THE ACT OF CONCEALMENT OF PARTICULARS FO R THE PURPOSE OF LEVY OF PENALTY. THE PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE IF THE AO IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS UNDER TH IS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. IT IS WELL S ETTLED THAT ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AN D DISTINCT AND AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF ANANTHRAMAN VE ERASINGHAIAH & CO. VS. CIT - 123 ITR 457; THE FINDING IN THE ASSESSMENT PR OCEEDINGS CANNOT BE REGARDED AS CONCLUSIVE FOR THE PURPOSES OF THE PENA LTY PROCEEDINGS. IT IS THEREFORE NECESSARY TO REAPPRECIATE AND RECONSIDER THE MATTER SO AS TO FIND OUT AS TO WHETHER THE ADDITION MADE IN THE QUANTUM PROC EEDINGS ACTUALLY REPRESENTS ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 21 THE CONCEALMENT ON THE PART OF THE ASSESSEE AS ENVI SAGED IN SEC. 271(1 )(C) OF THE ACT AND WHETHER IT IS A FIT CASE TO IMPOSE THE PENALTY BY INVOKING THE SAID PROVISIONS. EXPLANATION 1 TO SECTION 271(1)(C) IN R ESPECT OF ANY FACT RELATING TO THE COMPUTATION OF TOTAL INCOME STATES THAT THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O F AN ASSESSEE SHALL BE DEEMED TO BE THE INCOME IN RESPECT OF WHIC H PARTICULARS HAVE BEEN CONCEALED. THIS DEEMING PROVISION FOR CON CEALMENT IS NOT ABSOLUTE ONE. THE PRESUMPTION UNDER THE EXPLANATION 1 IS REBUTTABLE AND NOT CONCLUSIVE. THE ASSESSEE CAN SUBMIT THE EXP LANATION AS THE ONUS SHIFTS ON TO THE ASSESSEE TO PROVE THAT HE HAS NOT CONCEALED THE PARTICULARS OF THE INCOME. THE ASSESSEE IN THI S CASE HAS DULY SUBMITTED THE RELEVANT EXPLANATION AND THE LD. CIT( A) FOUND THAT THOUGH THE DEDUCTIONS HAVE BEEN DISALLOWED THERE I S NO FINDING BY THE AO THAT A PARTICULAR EXPENDITURE HAS BEEN FALSELY OR WRONGLY CLAIMED . NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR NOTICE WHI CH MAY PROVE THAT THE REVENUE DETECTED THE CONCEALMENT OR THE EX PLANATION SUBMITTED BY THE ASSESSEE WAS FALSE ONE. IT IS WELL SETTLED THAT THE CRITERION AND YARDSTICKS FOR THE PURPOSE OF IMPOSIN G PENALTY U/S 271(1)(C) OF THE ACT ARE DIFFERENT THAN THOSE APPLIED FOR MAKING OR CONFIRMING THE ADDITIONS. WHEN THE ASSESSEE HAS MADE A PARTICULAR CLAIM IN THE RET URN OF INCOME AND HAS ALSO FURNISHED ALL THE MATERIAL FACTS RELEVANT THERETO THE DISALLOWANCE OF SUCH CLAIM CANNOT AUTOMATICALLY LEAD TO THE CONCLUSION THAT TH ERE WAS CONCEALMENT OF PARTICULARS OF HIS INCOME BY THE ASSESSEE OR FURNIS HING OF INACCURATE PARTICULARS THEREOF . WHAT IS TO BE SEEN IS WHETHER THE SAID CL AIM MADE BY THE ASSESSEE WAS BONA-FIDE AND WHETHER ALL THE MATERIAL FACTS RELEVA NT THERETO HAVE BEEN FURNISHED AND ONCE IT IS SO ESTABLISHED THE ASSESSEE CANNOT BE HELD LIABLE FOR CONCEALMENT PENALTY U/S 271(L)(C) OF THE ACT. SINCE ALL THE MAT ERIAL FACTS RELEVANT TO THE AFORESAID CLAIMS HAD BEEN FURNISHED BY THE ASSESSEE IN OUR OPINION IT IS NOT A FIT CASE TO ATTRACT THE LEVY OF PENALTY U/S 271(L)( C) OF THE ACT. A MERE REJECTION OF THE CLAIM OF THE ASSESSEE DOES NOT AMOUNT TO CONCEA LMENT OF THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME BY THE ASSESSEE. WHEN TWO ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 22 VIEWS ARE POSSIBLE NO PENALTY CAN BE IMPOSED IS A PRINCIPLE THAT HAS BEEN ENUNCIATED IN THE DECISION IN THE CASE OF CIT V. P.K. NARAYANAN [1999] 238 ITR 905 (KER). HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. AJAIB SINGH & CO. (2001) 170 CTR (P&H) 489 : (2002) 253 ITR 630 (P&H) HAVE OBSERVED THAT MERELY BECAUSE CERTAIN EXPENSES CLAI MED BY THE ASSESSEE ARE DISALLOWED BY AN AUTHORITY IT CANNOT MEAN THAT PAR TICULARS FURNISHED BY THE ASSESSEE WERE WRONG. IT WAS HELD THAT MERE DISALLOWANCE OF EXPENSES PER SE CANNOT MEAN THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME. IN CIT VS. HARSHVARDHAN CHEMICALS & MINERALS LTD. (259 ITR 212) (RAJ) HONBLE RAJASTHAN HIGH COURT UPHELD THE FINDING OF THE TRIB UNAL THAT WHEN THE ASSESSEE HAS CLAIMED SOME AMOUNT THOUGH THAT IS DEBATABLE I N SUCH CASES IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED ANY INCOME OR FURNISHED INACCURATE PARTICULARS FOR EVASION OF THE TAX. 40.2 IN VIEW OF THE FOREGOING AND HAVING REGARD TO THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE AS MENTIONED ABOVE WE ARE OF VIEW THAT THE REVENUE WAS UNABLE TO MAKE OUT A CASE ON WHICH IT COULD BE HELD THAT THE OMISSION TO ADD BACK THE AFORESAID AMOUNTS ON ACCO UNT OF SUNDRY BALANCES WRITTEN OFF STAFF WELFARE DIESEL AND TRIP & BHATTH A EXPENSES WAS A DESIGN ON THE PART OF THE ASSESSEE TO CONCEAL THE PARTICULARS OF INCOME OR FURNISH INACCURATE PARTICULARS THEREOF. IN VIEW THEREOF WE UPHOLD THE FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE HAD NOT CONCEALED THE PARTICULARS OF I NCOME NOR FURNISHED INACCURATE PARTICULARS THEREOF. THEREFORE GROUND N O.1 IN THE APPEAL IS DISMISSED . 41. GROUND NOS.2 & 3 IN THE APPEAL OF THE R EVENUE FOR THE AY 2001-02 BEING GENERAL IN NATURE DO NOT REQUIRE ANY SEPARAT E ADJUDICATION AND ARE THEREFORE DISMISSED 42. IN THE RESULT APPEAL OF THE ASSESSEE FOR TH E AY 2001-02 IS PARTLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED WHILE THE APPE ALS OF THE REVENUE AND ITA NO.1091/AHD/2005& ITA NO.4329 3451&4258/AHD/2007 23 THE ASSESSEE FOR THE AY 2004-05 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12TH D AY OF MARCH 2010. SD/- SD/- (BHAVNESH SAINI) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED :12 TH MARCH 2010 COPY TO: 1. THE ASSESSEE 2. ACIT CIRCLE-4 AHMEDABAD 3. CIT(A)-VIII AHMEDABAD 4. CIT-CONCERNED AHMEDABAD BY ORDER 5. DR A BENCH DEPUTY REGISTRAR ITAT AHMEDABAD