Commissioner Of Income Tax, Faridabad v. Appe

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.336 of 2009 (O&M)Date of decision: 17.9.2014 Commissioner of Income Tax, Faridabad Vs. .....- Appe Smt. Renu Mukherjee .... Responde CORAM: HON BLE MR. JUSTICE AJAY KUMAR MITITIHON BLE MR. JUSTICE FATEH DEEP SINGH Present: Mr. Tejinder K.Joshi, Advocate for the appellant. Dr. Rakesh Gupta, Advocate for the respondent. Ajay Kumar Mittal,J, l.This order shall dispose of ITA Nos.303, 309, 336 and 340 of2009 as according to the learned counsel for the parties, all the appeals ariseout of one consolidated order dated 29.8.2008, Annexure A.III passed by theIncome Tax Appellate Tribunal, Delhi Bench 'F', New Delhi (in short, “theTribunal’) relating to the assessment years from 2000-01 to 2003-04 and theissues involved therein are similar. However, the facts are being extracted fromITA No .336 of 2009. oD|ITA No.336 of 2009 has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short, “the Act’) against theorder dated 29.8.2008, Annexure A.III passed by the Tribunal in ITANo.3211/DEL./2007 for the assessment year 2000-01. All the appeals wereadmitted on 4.3.2010 to consider following substantial questions of law:- **1. Whether on the facts and in the circumstances of the case,the learneITAT misdirected itself in deleting the addition of “42,83,261/- under thehead wages without recording its own independent findings being thefinal fact finding authority ignoring the fact that the assessee failed toprove the genuineness of the claim with documentary evidence and theAssessing Officer rightly made the addition on the basis of return filedwith the ESI authorities” 2. Whether on the facts and 1n the circumstances of the case,the learnedITAT 1s right in law in confirming the order of the CIT(A) on the issueof payment of bonus ofan75,168/- 1n absence of any documentaryevidence of payment 1.e. Salary register, bonus register and confirmationfrom the employees working with the assessee at the time of assessmentproceedings and ignoring the fact that the confirmation furnished by theex employer which too are not available for reconfirmation? 3. Whether on the facts and in the circumstances of the case,the learnedITAT 1s right 1n confirming the order of the CII(A) without recording itsown independent finding being the final fact finding authorities to theeffect that the assessee did not cooperate during the assessmentproceedings leaving no option to the Assessing Officer but to make theaddition on estimate having rational to the raw material consumptionand manufacturing expenses? 4. Whether on the facts and in the circumstances of the case,the learnedITAT is right in law in deleting the addition on account of SundryCreditors to the tune ofL13,74,048/- as the assessee failed to dischargethe onus to prove the genuineness of the sundry creditors inspite ofcalling information under section 133(6) of the Income Jax Act, 1961and the admission of the assessee that the parties are not available noraddresses are available that further ignoring the report of the Inspectordeputed for the specific purposes? 5. Whether on the facts and in the circumstances of the case,the additionotzy3,00,000/- on account of expenses debited to P&L account as theassessee did not furnish any explanation, documentary evidences, booksof account, bills and vouchers despite numerous opportunities resultinginto recording of perverse findings? 6. Whether on the facts and in the circumstances of the case,the learnedITAT was right in law in confirming the order of the learned CII(A) indeleting the various additions even though the assessee had producedthe books of account before the Sales Jax authorities and had not doneso before the Income [ax authorities? 7. Whether the findings recorded by the learned ITAT are perverse andcontrary to the evidence available on record and legally sustainable inthe eyes of law? 5. Whether on the facts and in the circumstances of the case,the additionotzy3,00,000/- on account of expenses debited to P&L account as theassessee did not furnish any explanation, documentary evidences, booksof account, bills and vouchers despite numerous opportunities resultinginto recording of perverse findings? 6. Whether on the facts and in the circumstances of the case,the learnedITAT was right in law in confirming the order of the learned CII(A) indeleting the various additions even though the assessee had producedthe books of account before the Sales Jax authorities and had not doneso before the Income [ax authorities? 7. Whether the findings recorded by the learned ITAT are perverse andcontrary to the evidence available on record and legally sustainable inthe eyes of law? ceA few facts relevant for the decision of the controversy involved,as narrated in ITA No.336 of 2009 may be noticed. The respondent assesseefiled her original return on 25.10.2000 declaring total income ofzy4,19,620/-which was processed under Section 143(1) of the Act. Later on, on the basis ofinformation received in the shape of tax evasion petition in the said case, theproceedings under section 147 of the Act were initiated. The assessee filedreturn in response to the notice under Section 148 of the Act on 28.4.2005showing the same income as declared 1n the original return. In the proceedingsunder sections 143(3)/147 of the Act, the assessee did not produce the books ofaccount despite giving adequate opportunities. The Assessing Officer framedassessment to the best of his judgment on the basis of material/informationavailable on record. Assessment was completed vide order dated 27.3.2006,Annexure A.! under sections 143(3)/147 of the Act at an income ofLV51,40,250/- effecting various additions. The assessee filed appeal before theCommissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 30.4.2007,Annexure A.II, the CIT(A) partly allowed the appeal. Not satisfied with theorder, the revenue filed appeal before the Tribunal whereas the assessee filedCross Objection. Vide order dated 29.8.2008, Annexure A.III, the Tribunaldismissed the appeal of the revenue and also the Cross Objection filed by the assessee. Hence the instant appeals by the revenue. 4We have heard learned counsel for the parties and perused the record. 4_|A perusal of the findings recorded by the authorities below showsthat in all the appeals, there were a total of five issues on which the Assessingofficer had made additions with varying amounts 1n each assessment year. TheCIT(A) had deleted the same and the Tribunal had sustained the order of CIT(A). The additions were on following counts in assessment year 2000-0 1:- (1) Addition of|a3,20,391/- under the head wages. (11) Addition of|=a52,741/- on account of bonus expenses. (111)Addition ofLV15,50,151/- on account of manufacturingand trading expenses.and trading expenses. (iv)Addition of=a26,15,349/- on account of sundry creditors. (v)Addition ofLV2,00,000 on account of expenses debited toprofit and loss account.profit and loss account. 6.In order to effectively adjudicate the controversy raised 1n theseappeals, it would be advantageous to notice the findings of the AssessingOfficer making the additions and the CIT(A) deleting the same on eachaddition separately. However, the findings of the CIT(A) deleting the additionshave been affirmed by the Tribunal. (1) A.Addition of|“3.20.391/>under the head wages The Assessing Officer made disallowance ofL3,02,391/- out ofwages atL6,15,902/- on the ground that the assessee had failed to prove thegenuineness of the claim with documentary evidence. On appeal, the CIT(A)deleted the said addition holding that the Assessing Officer had not proved hiscase and disallowance was made simply because he had not understood thenature of expenditure of wages and also not examined the expenditure 6.In order to effectively adjudicate the controversy raised 1n theseappeals, it would be advantageous to notice the findings of the AssessingOfficer making the additions and the CIT(A) deleting the same on eachaddition separately. However, the findings of the CIT(A) deleting the additionshave been affirmed by the Tribunal. (1) A.Addition of|“3.20.391/>under the head wages The Assessing Officer made disallowance ofL3,02,391/- out ofwages atL6,15,902/- on the ground that the assessee had failed to prove thegenuineness of the claim with documentary evidence. On appeal, the CIT(A)deleted the said addition holding that the Assessing Officer had not proved hiscase and disallowance was made simply because he had not understood thenature of expenditure of wages and also not examined the expenditure properly. It was further held that the assessee has proved the expenditure bydocumentary evidences and comparative figures. The relevant finding recordedby the Assessing Officer on this addition reads thus:- “In the manufacturing/trading account the assessee has claimedexpenditure amounting to Rs.615902/- under the head wages but as perphotocopy of Form No.6 available on record and as also obtained fromESIC Sector 16, vide letter dated 6.3.2006, the total wages were shownto have been paid at Rs.313511/-. Thus, there was an excess payment ofwages to the extent of Rs.302291/-. This discrepancy was confronted tothe assessee through show cause notice in response to which theassessee has explained that the details of only those employees who arecovered under ESI are given in form No.6 filed with the ESIC. It hasalso been stated by the assessee that the employees who are drawingwages above certain amount are not covered under ESI and the details ofthose employees are not mentioned in form No.6. The assessee has alsogiven a chart of wages separately for the employees who are coveredunder ESI and the wages relating to employees not covered under ESI asunder:- In support of her above contention the assessee has not furnishedany documentary evidence. Further, the assessee vide letter dated16.3.2006 received in this office on 20.3.2006, has reiterated the samereasons as explained in her reply dated 09.03.2006. The wages claimedby the assessee is not verifiable as the assessee failed to produce thebooks of account inspite of repeated opportunities. Any claim of theassessee must be proved with documentary evidence. Unless and untilthe A.Q. is satisfied that the claim of the assessee is genuine, theexpenditure claimed by the assessee under a particular head cannot beallowed in full. Here the assessee neither produced the books of account To| nor the detail of the employees who are claimed to be not covered underESI. Therefore, I have no other alternate in the absence of books ofaccounts/documents but to resort to the information available onrecord/obtained from ESIC, Faridabad. Accordingly I disallow a sum ofRs.302391/- (Rs.615902/- claimed by the assessee minus Rs.313511 asper form No.6). In view of the above facts, I am of the opinion that theassessee has furnished inaccurate particulars of her income whichresulted into a concealment of Rs.302391/-.Therefore, penaltyproceedings u/s 271(1)(c) for furnishing inaccurate particulars of incomehave been initiated.’ The CIT(A) while deleting the addition observed as under:- To| nor the detail of the employees who are claimed to be not covered underESI. Therefore, I have no other alternate in the absence of books ofaccounts/documents but to resort to the information available onrecord/obtained from ESIC, Faridabad. Accordingly I disallow a sum ofRs.302391/- (Rs.615902/- claimed by the assessee minus Rs.313511 asper form No.6). In view of the above facts, I am of the opinion that theassessee has furnished inaccurate particulars of her income whichresulted into a concealment of Rs.302391/-.Therefore, penaltyproceedings u/s 271(1)(c) for furnishing inaccurate particulars of incomehave been initiated.’ The CIT(A) while deleting the addition observed as under:- “7.3 | have carefully considered the submissions of the Ld. ARsand find that the Ld. ARs had during the course of assessmentproceedings on their own had submitted the affidavit from one ofthe employees, Mr. Sazid Ali to prove the point that the wagesmentioned in the form No.6 are covered only of those personswho are covered under ESI and this is quite understandablethrough the common sense. The Ld. ARs have given the exampleof earlier year 1.e. A.Y. 98-99 which shows from the form No.6that total wages paid were more than the wages covered underESI. Since the appellant had no books of account, the Ld. ARshave resorted to the instance of allowance of wages 1n the earlieryears where they constituted 7% of the job receipts and whichhave been accepted by the Department, whereas during the yearthe claim was only to the extent of 6.83% as admitted by the AOin the assessment order. But for the disallowance made by him theclaim will be reduced to 3.48% of job receipts, which is notjustifiable in the case of the appellant compared to the earlieryears. The Id. ARs have submitted form No.6 at pages 39-42 ofthe paper book for the A.Y. 98-99 in support of their contentions,which shows that the actual claim of wages was more 1.e. wageswere always higher than the wages reported to ESI and this factwas accepted by the Department. In my view and finding, the AOhas not proved his case and made the disallowance simply because he has not understood the nature of expenditure of wagesand also not examined the expenditure properly, which the Id.ARs have substantially established by documentary evidences andcomparative figures 1n the appellant's own case. Therefore, thedisallowance of Rs. 3,02,391/- made by the AO 1s not justifiedand hence, 1s deleted.” (11) B.Addtion ot=52.,/41>on account of bonus expenses. & |The assessee claimed to have paid bonus amounting to =a52,74 1/to her employees during the year for which she was required to furnish proofof payment of bonus to the employees. The Assessing Officer disallowed theclaim as the assessee had failed to adduce to establish payment of bonus to theemployees. The CII(A) on appeal deleted the addition holding that 1n case theAssessing Officer had any doubt about the workers, he could have examinedthem under Section 131 of the Act. The relevant finding recorded by theAssessing Officer on this issue reads thus:- (11) B.Addtion ot=52.,/41>on account of bonus expenses. & |The assessee claimed to have paid bonus amounting to =a52,74 1/to her employees during the year for which she was required to furnish proofof payment of bonus to the employees. The Assessing Officer disallowed theclaim as the assessee had failed to adduce to establish payment of bonus to theemployees. The CII(A) on appeal deleted the addition holding that 1n case theAssessing Officer had any doubt about the workers, he could have examinedthem under Section 131 of the Act. The relevant finding recorded by theAssessing Officer on this issue reads thus:- “The assessee has claimed to have paid bonus amounting toRs.52741/- to -her employees during the year for which she wasrequired to furnish proof of payment of bonus to the employees.In response to show cause notice the assessee has stated that shehas been regularly paying bonus to all the employees rangingbetween 8.33% to 10% as per statutory requirement and normalpractice. The assessee did not produce salary register/bonusregister on the plea that the register 1s not 1n her, possession as thesame has not been handed over to her by Sh. R.C. Garg, Advocate(Previous Counsel). However, the assessee has _ furnishconfirmations from four persons stating that they have workedwith M/s BGM Engineers during the F.Y. 1999-2000 to 2002-03and the firm was paying one month's salary as bonus.From theperusal of confirmations filed by the assessee, it 1s noticed thatthey are not presently working with the assessee. The assessee hasnot produced any worker before me for cross examination. Q Moreover, the workers who have given confirmations have notmentioned the exact amount of bonus received by them year toyear and all the four persons are not working with assessee. It 1svery Strange to note that the assessee has not furnished theconfirmation of any of the workers who 1s presently working withassessee. An assessee who claims any expenditure incurred forbusiness expediency should prove the same with documentaryevidence which she failed to adduce to establish payment ofbonus to the employees. In these circumstances | am of theopinion that the assessee has not incurred any expenditure onaccount of bonus. Therefore, the claim of Rs.52741/- 1s notallowed and the same 1s added to the income of the assessee bytreating the same as bogus expenditure as the assessee has failedto prove the genuineness of the claim of bonus with documentaryevidence. In the absence of account books, document/vouchersthe claim of the assessee is unverifiable and hence the same 1sdisallowed. Since the assessee tried to evade tax by furnishinginaccurate particulars of her income to the extent of Rs.52741/-,penalty proceedings u/s 271(1)(c) have been initiated.” The CIT(A) while deleting the addition recorded as under:- "8.3 I have carefully considered the submissions of the Ld. ARs andperused the order of assessment. In the absence of the books of accountor documentary evidences, the AO should have gone by the statutoryrequirements of the bonus expenditure which the Ld. ARs have broughtabout as above and according to which the expenditure comes to Rs,48,786/-. Moreover, if the AO had any doubt about the confirmations ofworkers, he could have examined them u/s 131(1), which 1s not evidentfrom the assessment order itself. Moreover, all the objections of the AOare properly met by the Ld. ARs in their written submissions asabove.As in the case of wages, the AO has not been able to prove hiscase and rather the Ld. ARs have all the way been able to justify theexpenditure of bonus. Therefore, the action of the AO in disallowing thebonus at Rs. 52,741/- on flimsy ground is also not justified andtherefore, 1s deleted.” (111) C. Addition of<15,50,151/>on account of manufacturing and tradingCXpenses. (111) C. Addition of<15,50,151/>on account of manufacturing and tradingCXpenses. 10. |The Assessing Officer allowed under the head manufacturing andconsumption of raw material at the rate of 50% on gross receipts of|90,11,834/- Le. |=a45,05,917/ as against total expenses claimed at,=a60,56,068/-.The excess expenditure of=a15,50,151/- was disallowed by the AssessingOfficer. On appeal, the CIT(A) deleted the addition. 11.The finding recorded by the Assessing Officer hereunder reads thus:- “11. From the perusal of Mfg. & Trading account for three years,it 18 seen that there is huge variation in the various expensedebited to P&L A/c. Assessee did not offer any explanation forthe said variation under various heads. The analysis of expensesshows that assessee claimed the total expenses on uniform basis.In absence of books of accounts and other documents, | adopt theminimum ratio percentage of Mfg. Expenses and consumptionexpenses to determine the concealment of income. On the basis ofratio analysis of expenses for four years the allowable expenditureunder the head manufacturing expenses & consumption of rawmaterial was worked out at 48.33% by adopting the leastpercentage of different years as under:- Mtg. Expenses 11.58% (for the A.Y.2001-02) Consumption 36.75% (for the A.Y.2002-03) Total 48.33% However, to be fair & judicious, | adopt the percentage ofallowable expenditure @ 50% under these two heads as theassessee failed to establish the genuineness of the expensesclaimed by the assessee. In response to show cause notice dated2.03.2006, it was contended by the assessee that consumption ofraw material and manufacturing expenses are complementary to 12. each other and the percentage of variation in any particular headOver a period of years cannot be looked in isolation. The assesseehas given the chart of percentage under the above two headswhich was prepared by me while issuing show cause notice. Insupport of her contentions no satisfactory explanation has beenoffered by the assessee to prove the genuineness of theseexpenses. Ihe onus to establish/prove the genuineness ofexpenditure claimed 1s entirely on the assessee. Since the assesseehas not discharged her onus, the claim of the assessee cannot beaccepted in-toto because inspite of spate of opportunitiesprovided the assessee, no documentary evidence 1.e. books ofaccounts/vouchers have been produced for_ verificationTherefore, I have no other option but to allow the expenditure onthe basis of ratio analysis @ 50%. Accordingly the expensesunder the head manufacturing & consumption of raw material 1sallowed at 50% on total gross receipts of Rs.9011834/- whichcomes to Rs. 4505917/- as against total expenses claimed atRs.6056068/- (4376825 + 1679243). Thus, the assessee hasclaimed excess expenses amounting to Rs. 1550151/- (6056068-4505917) which is added to the income of the assessee. Since theassessee has furnished inaccurate particulars of her income,penalty proceedings u/s 271(1)(c) have been initiated.” The CIT(A) while deleting the addition noticed as under:- “| have carefully considered the submissions of the Ld. AR and those ofthe AO. The AO's contentions are based only on suspicions and falsenotions and assumptions. He forgets that the appellant is doing thisbusiness from the last many years and that her books of account werenot with her but with the complainant and therefore, the ratio analysis ofexpenses itself shows that the expenditure was incurred by the appellantbut the AO allowed the expenditure according to his own yardsticks andwhims. I have gone through the chart of comparative manufacturing thetrading expenses as reproduced by the AO in his assessment order itself,which shows that the AO has taken the minimum percentage of suchcreditors which do not pertain to the year under appeal, could not be “| have carefully considered the submissions of the Ld. AR and those ofthe AO. The AO's contentions are based only on suspicions and falsenotions and assumptions. He forgets that the appellant is doing thisbusiness from the last many years and that her books of account werenot with her but with the complainant and therefore, the ratio analysis ofexpenses itself shows that the expenditure was incurred by the appellantbut the AO allowed the expenditure according to his own yardsticks andwhims. I have gone through the chart of comparative manufacturing thetrading expenses as reproduced by the AO in his assessment order itself,which shows that the AO has taken the minimum percentage of suchcreditors which do not pertain to the year under appeal, could not be added in the year under appeal under any circumstances. The action ofLd. A.O. disallowing various expenses and yet making addition onaccount of creditors again 1s nothing but double and duplicate addition", (iv) D Addtiion of |=a26,15.349/>on account of sundry creditors. 13.The assessee showed sundry creditors amounting to=a29,25,704/-in her balance sheet as on 31.3.2000 relevant to the assessment year 2000-01.The Assessing Officer made addition of |-26,15,349/- as income fromundisclosed sources. The CIT(A) deleted the said addition holding that all thecreditors were old creditors relating to earlier years which had been accepted inthose years, which was confirmed by the Tribunal. The finding recorded by theAssessing Officer on this issue reads thus:- “12. The perusal of balance sheet as on 31.3.2000 relevant toassessment year 2000-01 reveals that the assessee has shownsundry creditors amounting to Rs.29,25,704/-. During the courseof assessment proceedings letters calling information undersection 133(6) were issued to from various creditors which werereceived back with the remarks "not traceable or incompleteaddress’. The Inspector of this office was also deputed to makespot inquiries in respect of some sundry creditors who aftermaking inquiries stated that the parties mentioned in show causenotice did not exist at the given addresses or could not be tracedout inspite of his best efforts. 12.1 The assessee was duly confronted with these facts and shewas required to furnish complete addresses with telephonenumbers vide showcause notice dated 2.3.2006. In response toshow cause notice, it has been stated by the assessee as under:- "In connection with the sundry creditors, the assessee 1s tryinghard to obtain the confirmations from the creditors since the sameare old and the parties are small and it is becoming difficult tocollect the same. In some of the cases, the parties have shifted 12.1 The assessee was duly confronted with these facts and shewas required to furnish complete addresses with telephonenumbers vide showcause notice dated 2.3.2006. In response toshow cause notice, it has been stated by the assessee as under:- "In connection with the sundry creditors, the assessee 1s tryinghard to obtain the confirmations from the creditors since the sameare old and the parties are small and it is becoming difficult tocollect the same. In some of the cases, the parties have shifted their business premises and the latest address and telephonenumbers are not available with the assessee. We are trying to getthe latest addresses and telephone numbers of the parties throughour contacts and knowledge which will be submitted soon afterthat. [The confirmations collected by the assessee are beingsubmitted to your goodself. Moreover the addresses andtelephone numbers available in the records with the assessee arealso being submitted. In the list of creditors, it 1s seen that Sh. R.CGarg and M/s Machine Age India, the firm belonging to the sonSh. R.C. Garg are also appearing. Since we are not at goodrelation with Sh. R.C. Garg as your good self is aware, theconfirmation in this regard, may kindly be obtained by your goodself directly.As already mentioned that there 1s a lapse of 2-3years and the suppliers who were in most of the cases are smallparties having small workshop might be shifted theiroffice/premises. We are enclosing the confirmations receivedsome of the creditors and also enclosing the list of creditors withaddresses and telephone no. which are available with the assesseeand the addresses be kindly verified whether inquiries have beenmade at the right place. Moreover the list of parties and addressesmentioned by your good Self in the notice are not complete onlythe area and the city is mentioned. Therefore, it could be possiblethat it was difficult for the Inspector to locate the party in thatparticular area. However, we are making efforts to get the latestaddresses and location and shall inform your good self as soon asthe same 1s available." 12.2 Vide letter dated 16.03.2006 received in this office on20.03.2006 the assessee filed a list of 163 creditors whichcontains incomplete addresses 1n most of the cases. In this list, theassessee has not mention the telephone numbers of the parties. Insome of the cases the assessee has mention the name of the cityonly, e.g. in the case Aasthana Steel Industries the address of theparty has been shown as "DELHI" the whereabouts of the partycannot be located. Further in the cases of G.N.Casting and SLRFinlease Ltd., no address thereof has been shown in the list. In 14, one case mentioned at serial No.135 1.e. U.P IndustrialCorporation, the address has been shown, as "LUCKNOW (U.P.)"which also cannot be traced out. No copies of accounts of theparties mentioned 1n the list except 1n few cases have been furnishby the assessee. Ihe assessee has filed copies of account 1n somecases which have been placed on record and have been verifiedfrom the list of creditors available on record. However, on perusalof these accounts it is noticed that the sundry creditors appearingat serial No.9, 13, 14, 25, 28, 29,32, 33, 35, 36, 37, 40, 41, 46 &A of show cause notice dated 02.03.2006 which has beenreproduced above, appear to be genuine. The total amount ofabove mentioned creditors comes to Rs.3,09,/712/-. As per lissundry creditors the assessee has claim total amount ofRs.2925061/- under the head sundry creditors out of which a sumof Rs.309712/- seems to be genuine. For the remaining amount ofRs.2615349/- the assessee failed to establish the genuineness ofthese sundry creditors. 12.3. The assessee has not discharged her onus to furnish thecomplete details in respect of sundry creditors amounting toRs.2615349/- (2925061 - 309712).Furnishing part informationthat too incomplete about the creditors does not absolve theassessee from discharging of her onus inspite of the fact thatsufficient opportunity was provided to the assessee to prove hercase with documentary evidence.Iherefore, [| am of theconsidered view that the sundry creditors to the extent ofRs 2615349/- are of dubious nature and the same are added to theincome of the assessee by treating the same as bogus liabilities inthe garb of sundry creditors because the assessee failed todischarge her onus to prove the genuineness of the remainingsundry creditors. Accordingly an addition of Rs.2615349/- 1smade as Income from undisclosed sources. The assessee hasconcealed her income by furnishing inaccurate particulars of herincome, penalty proceedings u/s 271(1)(c) are being initiated.” The CIT(A) while deleting the addition held as under:- “T have carefully considered the submissions of the Ld. ARs andthose of the AO. | have also gone through the details of sundrycreditors for the year under consideration with their openingbalances and the names of all those creditors, which show that theopening balances of all those creditors are more or less the sameand the AO was thus not justified in making the disallowance outof the old creditors balances which have been accepted 1n earlieryears. Moreover, the AO himself has disallowed the expenditureout of raw material in ground No. 4(c),which 1s on account ofpurchases and therefore, it relates to creditors. Therefore, therecannot be a double or duplicate addition. Hence, the AO was notjustified to make such a disallowance without understanding thefacts and circumstances of the case. Hence, it is deleted.” (v) E. Addition of=2.00,.000 on account of expenses debited to profit anloss account 15. |thus:- The finding recorded by the Assessing Officer on this issue reads “13 The assessee has not furnished any explanation regarding thedisallowances of Rs.2,00,000/- proposed out of the expenses|debited to profit and loss a/c at Rs.705315/- vide show causedated 02.03.2006. Therefore, a disallowance of Rs.2,00,000/- 1smade to the income as the assessee failed to substantiate the claimof expenses debited to P&L A/c with documentary evidence. 14. With these observations, the income of the assessee 1scomputed as under:- Income shown in the return filed in response to notice u/s 1484,19,620/- 1. Addition under the head wages as discussed in para 93,02,391/- 2. Bonus as discussed above in para 10. 52,741/- 3. Disallowance of expenses as discussed in para 11 under thehead ratio nalysis/mig. & trading expenses. 15,50,151/-4. Sundry creditors treated as bogus liabilities as discussed in para12.) 26,15,349/- 5. Inadmissible expenses debited to P&L accounts as discussed inpara 13 2,00,000/-.47 ,20,632/ Total income 51,40,252/- R.O. 51,40,250/-” 16.The CIT(A) deleted the addition in the following terms:- 7I have carefully considered the submissions of the Ld. AR andperused the order of assessment and comments of the AO. First ofall, the AO has made an adhoc disallowance without any basis.Secondly, | have gone through the chart of expenses debited to P& | account in earlier years of the appellant and their percentagewith turnover, which show that the percentage more or less 1s thesame. Hence, there 1s no basis for disallowing them on this countalso. Further, the AO has already made a disallowance of bonusand which 1s included in such disallowance. Keeping in view allthese factors, such disallowance made by the AO 1s quite baselessand hence, it is deleted.” 17. |While upholding the findings recorded by the CIT(A) on all theissues, the Tribunal vide order dated 29.8.2008, Annexure A.III recorded thus:- 7I have carefully considered the submissions of the Ld. AR andperused the order of assessment and comments of the AO. First ofall, the AO has made an adhoc disallowance without any basis.Secondly, | have gone through the chart of expenses debited to P& | account in earlier years of the appellant and their percentagewith turnover, which show that the percentage more or less 1s thesame. Hence, there 1s no basis for disallowing them on this countalso. Further, the AO has already made a disallowance of bonusand which 1s included in such disallowance. Keeping in view allthese factors, such disallowance made by the AO 1s quite baselessand hence, it is deleted.” 17. |While upholding the findings recorded by the CIT(A) on all theissues, the Tribunal vide order dated 29.8.2008, Annexure A.III recorded thus:- 78.3 Therefore,on facts and circumstances of the case, we do notsee any good ground to restore the disallowances under variousheads made by the A.O. All the disallowances were arbitrarilymade without any basis and were rightly deleted by the learnedCIT(Appeals). It was open to the revenue authorities to plead andshow that higher net profit rate should have been applied in thiscase having regard to material available on record. But no such ground is raised and relevant observation of learned CIT(Appeals) had not been challenged in the grounds of appeal. Weare, therefore, not called upon to consider whether net profit rateapplied in this case 1s reasonable or not. We therefore, do not findany error 1n the approach of the learned CIT(Appeals) in deletingvarious disallowances/additions made by the AO. The action oflearned CI T(Appeals) 1s confirmed 1n all the four years. 1S.The findings recorded by the CII(A) and upheld by the Tribunalon all the issues are based on appreciation of evidence on record which havenot been shown to be illegal or perverse in any manner. The findings and theapproach of CIT(A) and the Tribunal are plausible one. Only an effort has beenmade to reappraise and reappreciate the evidence which is not permissibleunder Section 260A of the Act. As a result, the first five substantial questionsof law are answered against the revenue and consequently, questions No. (6)and (7) do not arise for consideration. Thus, the appeals being devoid of anymerit stand dismissed. (Ajay Kumar Mittal)JudgeSeptember 17, 2014(Fateh Deep Singh)Judge