TMI Blog2015 (10) TMI 2656X X X X Extracts X X X X X X X X Extracts X X X X ..... , he confirmed the addition as per Explanation 3 of Section 147 of the Act. We therefore, dismiss assessee's Ground Case reopened by applying explanation 3 of Section 147 - non affording any opportunity to the appellant regarding the applicability of this Explanation - Held that:- Hon'ble Rajasthan High Court in the case of CIT vs. Shri Ram Singh (2008 (5) TMI 200 - RAJASTHAN HIGH COUR ) held that if case is reopened on reason to believe of the AO but on that reason to believe no addition is made by the AO. The explanation 3 of Section 147 cannot be applied. Hon'ble Karnataka High Court in the case of N. Govindaraju vs. ITO and Another (2015 (8) TMI 271 - KARNATAKA HIGH COURT) has considered the issue of explanation 3 of Section 147 of the Act dissented view and held that even there is no addition on account of reason to believe, even addition can be made as per explanation 3 of Section 147 on other items. When there are two views on same issue, the issue favouable to the assessee should be considered in view of the decision in the case of CIT vs. Vegetable Products Ltd. (1973 (1) TMI 1 - SUPREME Court). Thus Ground of the assessee is allowed. Addition on account of sundry c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bombay, Rajasthan and other Courts. Therefore, all the additions confirmed may kindly be deleted on this ground also. (ii) That, the ld. CIT(A) quite erroneously confirmed the following additions in the business of M/s. Kailadevi Trading Com. Which may kindly be deleted. (a) Trading addition of ₹ 29,646/- (b)Disallowance out of sundry expenses ₹ 6,219/- out of salary expenses ₹ 36,000/- (iii) Addition of ₹ 3,75,748/-(including Intt. ₹ 44,480/-) on account of Sundry Creditors (treating cash credits), which are in fact old balance as well outstanding on account of purchases made from them. Further addition of ₹ 44,480/- on account of interest amounts to double addition. Therefore, all the additions being illegal, unjustified, unwarranted and may kindly be deleted. (3.) That the ld. CIT(A) without at all considering the detailed submissions, upheld the charging of interest u/s 234B which is not justified and warranted. This may kindly be directed according to applicable law at the relevant time. (4) That, in substance, considering the facts, circumstances and settled legal position, whole proceedings initiated, notice issued u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Thereafter the AO scrutinized the case of the assessee u/s 143(2) of the Act. The AO gave various notices to the assessee but the response of the assessee was very poor. Therefore, the AO decided assessee's case u 144 of the Act. The AO further observed that from financial year 2001-02 relevant to assessment year 2002-03, the assessee was claiming deduction u/s 80IB of the Act which was at ₹ 1,62,695/-. The AO found that the assessee has not complied with the conditions prescribed u/s 80IB of the Act. The assessee was not manufacturing the goods as per Section 80IB of the Act. The AO again reiterated the manufacturing process of slate in his assessment order and held that the assessee is not entitled to deduction u/s 80IB of the Act. The AO relied on following case laws:- (i) Lucky Minmat (P) Ltd. vs. CIT (2000) 245 ITR 830 (SC) (ii) CIT vs. Gem India Ltd., 249 ITR 307 (SC) (iii) CIT vs. Hindustan Metal Refining Works (P) Ltd. (1981) 128 ITR 472 (Cal) Accordingly, the disallowed deduction u/s 80-IB of the Act at ₹ 1,62,695/-. 2.2 Now the assessee did not challenge the reopening of assessment made u/s 148 of the Act before ld. CIT(A), however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratories Ltd. vs. CIT 336 ITR 136 (Del.) (v) ACIT vs. Major Deepak Mehta, 344 ITR 641 (Chhatisgarh) (v) CIT vs. Shri Ram Singh, 306itr 343 (Raj.) (vi) CIT vs. Atlas Cycle Industries, 180 ITR 319 (P H) 2.5 At the outset, the ld. DR supported the order of the AO. 2.6 We have heard the rival contentions and perused the materials available on record. The assessee raised the technical ground which can be raised at the level of ITAT as held by various Hon'ble High Court including Hon'ble Supreme Court. The assessee referred to various case laws as under: (j) CIT vs. Mohd Juned Dadani, 355 ITR 172 (Guj.) (ii) S.Sundaram Pillai vs. V.R. Pattabiraman, AIR 1985 SC 582 (Para 28) (iii) CIT vs. Jet Airways (I) Ltd., 331 ITR 236 (Bom.) In the case of Ranbaxy Laboratory (supra), the Hon'ble High Court held that addition is not made by the AO on the ground of re-opening of assessment. As per explanation 3, no addition can be made. However, assessee's case is that the AO made addition u/s 80IB which has been allowed by the ld. CIT(A). However, he confirmed the addition by considering the explanation 3 of Section 147 of the Act. No such case laws were broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee did not produce relevant vouchers before the AO. Therefore, he disallowed 20% out of total expenses of ₹ 31,593/- i.e. 63,19/- out of these expenses which was confirmed by the ld. CIT(A) by observing that no details were furnished before the AO alongwith evidence. In these circumstances, he confirmed the addition, 3.6 Similar arguments were made as made for other issues. In case of addition not confirmed by the ld. CIT(A) on the basis of case was reopened, the explanation 3 of Section 147 cannot be applied. The AO disallowed out of salary payment of ₹ 36,000/- on the ground that the assessee had debited salary expenses of ₹ 1.44 lacs in M/s. Ankur Industries. The assessee could not submit the details of the salary and services rendered by him for the business purposes. On repeated opportunities, the assessee could not advance any evidence for debiting the expenses under the head Salary. Therefore, he disallowed 25% out of salary expenses debited at ₹ 1.44 lacs i.e. ₹ 36,000/-. 3.7 The ld. CIT(A) had confirmed the addition by observing that the AO provided sufficient opportunities to the assessee to furnish details alongwith books of account bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 3,75,748/-. 4.3 Being aggrieved by the order of the AO, the assessee carried the matter before the ld. CIT(A) who had confirmed the addition by observing that there is no reason as to why details were not produced before the during assessment proceedings even though sufficient opportunity was provided. Moreover, even during remand proceedings, the assessee did not furnish the books of account of earlier years, thereby opening balance in the name of various persons. The earlier year case has not been scrutinized by the AO. He further held that in such a situation the claim of the assessee regarding this credit balance mainly on the basis of statements prepared by him is not acceptable. 4.4 Now the assessee is before us. The ld. AR of the assessee reiterated the arguments as made before the ld. CIT(A) that these are old balances and these are trade creditors and not creditors. The purchases were made through regular bills from the registered dealers. There was a credit on account of interest accrued on certain accounts. The ld. CIT(A) had sent these evidences and called for remand report from the AO. The AO even in remand report also reiterated the findings as given in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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