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TMI Blog2018 (2) TMI 1917X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of Rs. 5,52,719/- on account of payment made to RSEB. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the said disallowance of Rs. 5,52,719/-. 3. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the ld. AO in rejecting the books of accounts by invoking the provisions of section of 145(3) of I.T. Act, 1961 and making trading addition of Rs. 30,62,100/- by applying a G.P. rate of 1.84% on the estimated turnover of Rs. 4.50 crores. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by accepting the book results and deleting the said trading addition of Rs. 30,62,100/-." 2. Regarding Ground No. 1, the facts of the case are that during year under consideration, the assessee received share capital of Rs. 33,01,600/- and share premium of Rs. 1,48,82,799/- totaling to Rs. 1,81,84,399. During the course of assessment proceedings, the assessee was required to furnish the necessary details to verify the genuineness of investment made by them. In response, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmations from the shareholders which have since been obtained by the assessee company. A remand report from the AO was called by the ld CIT(A). The AO in his remand report stated that the additional evidence so furnished by the assessee in respect of 9 persons by way of confirmation letter do not contain any date on them. Hence the additional evidence so submitted by the assessee may not be relied upon. In his rejoinder, the assessee submitted that the confirmation letters states clearly cheque no. and the date of cheque cleared from the respective shares holder's bank account, therefore, it cannot be said that assessee has not mentioned the dates in the confirmation. It was submitted that merely because the date of signing on conformation is not mentioned, the same does not affect the genuineness of the transactions. 5. The ld. CIT(A) after considering the remand report and the rejoinder filed by the assessee observed that none of the share holders have discharged their respective obligation and the assessee has furnished scanty details after period of 5-6 years and the AO was handicapped on account of few details available with regard to the share holders. Accordingly, the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital of the assessee company. It was submitted that the AO has not brought on record any contrary evidence to the confirmation so filed by the assessee. 6. The ld CIT(A) confirmed the addition so made by the AO and his relevant findings are reproduced as under:- "4.9 Having considered the material placed on record, I find that in this case the appellate proceedings have been fixed a number of times in the last about six years and only a few scanty details were filed to substantiate the sources of funds. Despite providing a number of opportunities to the appellant no evidence in the form of copy of bank account of the appellant, copy of their ITR filed, proof of identity of the share applicant in the form of voter card/passport etc. could be filed. The appellant was given another opportunity before the AO in the course of remand proceedings to produce the share applicants but the result remained the same. The appellant has rather justified the furnishing of few details to substantiate its contentions. 4.10 On examination of record, I find that no detail could be filed by the appellant to substantiate the identity of the applicant, creditworthiness of the share applicants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived, in respect of which no addition was made by ld. AO, the shareholders did not appear before him during the assessment proceedings. The contradictory stand taken by ld. CIT(A) deserves to be quashed. Particulars Share Capital Securities Premium Total Total Capital Issued during the year 33,01,600 1,48,82,799 1,81,84,399 Fresh issue accepted by ld. AO 20,00,000 80,00,000 1,00,00,000 % of fresh issue accepted by ld. AO 55% Fresh issue not accepted by ld. AO 1 3,01,600 68,82,799 81,84,399 % of fresh issue not accepted by ld. AO 45% 7.4 It is submitted that section 68 of the IT Act, 1961 has been amended w.e.f. 01.04.2013. Prior to amendment the only onus contained in section 68 was proving the identity, genuineness and creditworthiness of the entities from whom share application money was received. The present case of the assessee Company falls in the pre-amendment period and, therefore, placing on record name, address, PAN, confirmations and providing that the money was received through banking channel will lead to sufficient compliance with regard to section 68. Thus, addition made and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larly in view of the concurrent finding of fact arrived at by the CIT(A) and the Tribunal, the proposed question of law does not give rise to any substantial question of law." 7.5 Applying the ratio as laid down above, under the law, the assessee Company was not required to know the source of source and, thus, the onus required u/s 68 got duly discharged. Delivery of notices issued by ld. AO during remand proceedings u/s 133(6) to all the 9 parties further adds to the fact that identity stands established. 7.6 Attention is drawn on the table below, from which it is evident that the assessee has discharged its onus with regard to section 68 in establishing identity, creditworthiness and genuineness of the share applicants. Name of Party Address PAN Confirmation Delivery of notice u/s 133(6) Reply to 133(6) Mode Of receipt PB Aravali Enterprises * - * * - Bank 3 Hari Om Trading * * * * - Bank 8 Ravi Trading * * * * - Bank 9- 10 Tauraus International * * * * - Bank 13- 15 Asha Iron Trading Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AO was duty bound to allow cross examination of Mr. Devendra Kumar Grover whose statement was used against the assessee Company because it is a pragmatic requirement of fair play in action. Reliance is placed on the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries, CIVIL APPEAL NO. 4228 OF 2006, dated 2nd Sept 2015, wherein it was held that where opportunity for cross examination is not given, it is violation of principles of natural justice. Relevant extract is set out here for the sake of convenience: "..that - not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity in as much as it amounted to violation of principles of natural justice because of which the assessee was adversely affected...". 7.11 Without prejudice to above it is submitted the inspite of making a specific request for the copy of the notice as well as reply of Mr. Devendra Kumar Grover, the same was not provided to the assessee Company. In such a situation it shall be apt to hold that Mr. Devendra Kumar never denied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. AO rejected the books of account of the assessee Company and the said rejection is also affirmed by ld. CIT(A). It is settled legal proposition that once books are rejected no disallowance is permissible under the law by referring the same set of rejected books of account. Hence, the disallowance made is bad in law. Reliance is placed on the following judicial pronouncements. Relevant extracts have been set out here for the sake of convenience: CIT vs. G.K. Contractor [2009] 19 DTR 305 (Raj) Nardev Kumar Gupta [2013] 142 ITD 303 (Jaipur - Trib.) Cosmopolitan Trading Corporation (ITA No. 298/JP/2013) In view of the above the assessee Company discharged its onus and since nothing contrary has been brought on record by the Id. AO, transactions should be accepted as genuine and entire addition deserves to be deleted by allowing this ground of appeal. 8. The ld DR is heard who has vehemently argued the matter and relied upon the findings of the lower authorities. 9. We have heard the rival contention and purused the material available on record. During the year under consideration an amount of Rs. 1,48,82,799 has been received by the assessee towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets of judgments and cases, but these judgments and cases proceed on their own facts. In one set of cases, the assessee produced necessary documents/evidence to show and establish identity of the shareholders, bank account from which payment was made, the fact that payments were received thorough banking channels, filed necessary affidavits of the shareholders or confirmations of the directors of the shareholder companies, but thereafter no further inquiries were conducted. The second set of cases are those where there was evidence and material to show that the shareholder company was only a paper company having no source of income, but had made substantial and huge investments in the form of share application money. The assessing officer has referred to the bank statement, financial position of the recipient and beneficiary assessee and surrounding circumstances. The primary requirements, which should be satisfied in such cases is, identification of the creditors/shareholder, creditworthiness of creditors/shareholder and genuineness of the transaction. These three requirements have to be tested not superficially but in depth having regard to the human probabilities and normal cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be pragmatic and practical, which takes into account holistic view of the entire evidence including the difficulties, which the assessee may face to unimpeachably establish creditworthiness of the shareholders. 20. Now, when we go to the order of the tribunal in the present case, we notice that the tribunal has merely reproduced the order of the Commissioner of Income Tax (Appeals) and upheld the deletion of the addition. In fact, they substantially relied upon and quoted the decision of its coordinate bench in the case of MAF Academy (P.) Ltd., (supra) a decision which has been overturned by the Delhi High Court vide its judgment in MAF Academy (P.) Ltd (supra). In the impugned order it is accepted that the assessee was unable to produce directors and principal officers of the six shareholder companies and also the fact that as per the information and details collected by the Assessing Officer from the concerned bank, the Assessing Officer has observed that there were genuine concerns about identity, creditworthiness of shareholders as well as genuineness of the transactions. 21. In view of the aforesaid discussion, we feel that the matter requires an order of remit to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence. This approach as accorded approval by the Supreme Court in these words : "In this case, the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises." (p. 84) This reasoning must apply a fortiori to large scale subscriptions to the shares of a public compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinions on the aspect that the pernicious practice of conversion of unaccounted money through the masquerade or channel of investment in the share capital of a company must be firmly excoriated by the revenue. Equally, where the preponderance of evidence indicates absence of culpability and complexity of the assessee it should not be harassed by the Revenue's insistence that it should prove the negative. In the case of a public issue, the Company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The Company must, however, maintain and make available to the Assessing Officer for his perusal, all the information contained in the statutory share application documents. In the case of private placement the legal regime would not be the same. A delicate balance must be maintained while walking the tightrope of sections 68 and 69 of the IT Act. The burden of proof can seldom be discharged to the hilt by the assessee; if the Assessing Officer harbours doubts of the legitimacy of any subscription he is empowered, nay duty-bound, to carry out thorough investigations. But if the Assessing Officer fails to uneart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e false and cannot be acted upon, then no addition can be made in the hands of the company under sec. 68 and the remedy open to the revenue is to go after the share applicants in accordance with law. We are afraid that we cannot apply the ratio to a case, such as the present one, where the Assessing Officer is in possession of material that discredits and impeaches the particulars furnished by the assessee and also establishes the link between self-confessed "accommodation entry providers", whose business it is to help assessees bring into their books of account their unaccounted monies through the medium of share subscription, and the assessee. The ratio is inapplicable to a case, again such as the present one, where the involvement of the assessee in such modus operandi is clearly indicated by valid material made available to the Assessing Officer as a result of investigations carried out by the revenue authorities into the activities of such "entry providers". The existence with the Assessing Officer of material showing that the share subscriptions were collected as part of a pre-meditated plan - a smokescreen - conceived and executed with the connivance or involvement of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 19. On the question of creditworthiness and genuineness, it was highlighted that the money no doubt was received through banking channels, but did not reflect actual genuine business activity. The share subscribers did not have their own profit making apparatus and were not involved in business activity. They merely rotated money, which was coming through the bank accounts, which means deposits by way of cash and issue of cheques. The bank accounts, therefore, did not reflect their creditworthiness or even genuineness of the transaction. The beneficiaries, including the respondent-assessee, did not give any share-dividend or interest to the said entry operators/subscribers. The profit motive normal in case of investment, was entirely absent. In the present case, no profit or dividend was declared on the shares. Any person, who would invest money or give loan would certainly seek return or income as consideration. These facts are not adverted to and as noticed below are true and correct. They are undoubtedly relevant and material facts for ascertaining creditworthiness and genuineness of the transactions 29. In CIT v. Nipun Builders & Developers (P.) Ltd. [2013] 350 ITR 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive. Companies no doubt are artificial or juristic persons but they are soulless and are dependent upon the individuals behind them who run and manage the said companies. It is the persons behind the company who take the decisions, controls and manage them." 31. The respondent herein is a Private Limited Company. It is not the case of the respondent that the Directors or persons behind the companies making the investment in their shares were related or known to them. It is highly implausible that an unknown person had made substantial investment in a private limited company to the tune of Rs. 63,80,100/- and Rs. 75,60,200/- in two consecutive assessment years 2002-03 and 2003-04 respectively without adequately protecting the investment and ensuring appropriate returns. Other than the share application forms, no other agreement between the respondent and third companies had been placed on record. The persons behind these companies were not produced by the respondent. On the other hand responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department to pursue the enquiry thereafter which, notwithstanding the remark about shifting of addresses, prima facie established genuineness of such companies as existing persons. It had come on record that another company did exist and was under liquidation, the existence of which at relevant time could not be doubted. Likewise, in the case of individual investors, the Tribunal had reached the finding that their identities had been established by the assessee. [Para 10] Applying the principle enunciated by the Supreme Court in CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 78/25 Taxman 80F, the irresistible conclusion was that the conclusion of the Tribunal that the assessee had discharged his initial burden in respect of 6 companies and 9 individual investors, was based on evidence and additions made by the Assessing Officer were enquired into without pursuing correctness of material placed before it by the assessee. No question of law could be said to be arising in such circumstances in respect of finding arrived at by the Tribunal, which was essentially a finding of fact and did not stand vitiated in law. [Para 11]" 3.7 In case of Riddhi Promoters (P) Ltd (supra), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e included in the income of the assessee in the absence of explanation, or in the event of explanation being not satisfactory, it naturally follows that the material submitted by the assessee with his explanation must itself be wholesome or not untrue. It is only when the explanation and the material offered by the assessee at this stage passes this muster that the initial onus placed on him would shift leaving it to the Assessing Officer to start inquiring into the affairs of the third party. [Para 39] The Commissioner (Appeals) and consequently the Tribunal were right to the extent of their conclusion that the assessee had come up with some proof of identity of some of the entries in question. But, from this inference, or from the fact that the transactions were through banking channels, it does not necessarily follow that satisfaction as to the creditworthiness of the parties or the genuineness of the transactions in question would also have been established. [Para 41] The Assessing Officer here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But the Commissioner (Appeals), having noticed want of proper inqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... close the addresses or identities of the individuals concerned. The other way of looking at the matter is that having given the addresses, the inability of the noticees who are approached by the Assessing Officer to afford any reasonable explanation as to how they got the amounts given the nature of their income which was disproportionally less than what they subscribed as share capital would also amount to the revenue having discharged the onus if at all which fell upon it. The assessee in this case was incorporated barely few months before the commencement of the assessment year, and there is no further information, or anything to indicate why its mark up of the share premium thousand fold in respect of the shares which were of the face value of Rs. 10 lakhs was justified. [Para 8]" 3.11 In the case of Ultra Modern Export(P) Ltd (supra), the Hon'ble Delhi High Court has held as under: "9. As noticed previously, the CIT (A) was of the opinion that the assessee had discharged the basic onus which was cast upon it after considering the ruling in Lovely Exports (P.) Ltd.'s case (supra). The material and the records in this case show that notice issued to the 5 of the share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Moderate Credit Corporation ltd., a listed company. It is not disputed before this court that the investment made was received by account payee cheque and the same was refunded by an account payee cheque when the company dropped its project. In the considered opinion of this court, in absence of any cogent evidence on record establishing that the money shown to have received as share application money, was as a matter of fact, unaccounted money belonging to the assessee company, the finding arrived at by the AO, which is based on suspicion, has rightly been held not sustainable in the eyes of law. Suffice it to say that the finding arrived at by the CIT(A), affirmed by the ITAT, which remains a finding of fact, cannot be said to be capricious or perverse." 3.13 In case of Softline Creations Pvt Ltd 387 ITR 636 (Del), the Hon'ble Delhi High Court has held as under: "(4) This court has considered the concurrent order of the CIT(A) as well as the ITAT. Both these authorities primarily went by the fact that the assessee had provided sufficient indication by way of PAN numbers, to highlight the identity of the share applicants, as well as produced the affidavits of Directors. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial onus stands discharged would depend upon facts and circumstances of each case. 4.5 The degree of burden of proof on the assessee will vary from assessee to assessee. In case of private limited companies where shares are allotted through private placement to persons generally known to directors or shareholders, directly or indirectly, burden of proof is on higher pedestal as compared to public limited companies where the large scale subscription are offered through public issue and shares are subscribed by general public. In case of private limited companies, the Courts have laid down a strict approach in terms of satisfying such burden of proof. 4.6 In case of private limited companies, generally persons known to directors or shareholders, directly or indirectly buy or subscribe to shares. Upon receipt of money, the share subscribers do not lose touch and become incommunicado. Call money, dividends, warrants, etc. have to be sent and the relationship remains a continuing one. Therefore, an assessee cannot simply furnish some details and remain quiet when summons issued to shareholders remain un-served and uncomplied. As a general proposition, it would be improper to unive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction and creditworthiness of the shareholder, it would be incorrect to state that the onus to prove the same stands discharged in all cases if payment is made through banking channels. Whether or not onus is discharged depends upon facts of each case. It depends on whether the two parties are related or known to each other; the manner or mode by which the parties approached each other, whether the transaction was entered into through written documentation and due diligence to protect the investment and the pay back on such investment, whether the investor professes and was an angel investor, the object and purpose (profit motive) behind the investment and whether any dividend declared and distributed in the past or not. Whether share subscribers have their own profit making apparatus and were involved in any tangible business activity or were they merely rotated money, which was coming through the bank accounts, which means deposits by way of cash and issue of cheques. Creditworthiness and genuineness of the transaction is therefore not proved by showing merely issue and receipt of a cheque or by furnishing a copy of statement of bank account of share subscriber, when circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares have been issued by the assessee company and the necessary filings have been made with the Registrar of Companies. It is also a fact that the said shares have since been transferred to the third persons. The confirmation from the said shareholders as well the new shareholders who have bought these shares are on record. The name and address of these shareholders are on record and notices issued by the AO u/s 133(6) at the said addresses though remain unanswered have not been returned by the postal authorities undelivered. Therefore, identity of the shareholders and genuineness of issuance of share capital by the assessee company is established in the present case. At the same time, we find it very unusual that investment in shares of the assessee company having face value of Rs. 10 per share have been made at a premium which varies between Rs. 15 to Rs. 151 in individual cases during the same financial year. For instance, Taurus International has been issued 34000 shares at a face value of Rs. 10 each carrying a premium of Rs. 15 per share and Youdhivir Chouhan has been issued 14000 shares at a face value of Rs. 10 each carrying a premium of Rs. 151 per share. The same clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and their PAN details, he should reach out to these shareholders directly as well as to the jurisdictional AO to seek the necessary information/documentation. In the instant case, the assessee company has furnished the name and address of all these shareholders for all nine persons and PAN detail in respect of six out of nine persons to the AO. Further, we note that during the appellate proceedings, the ld CIT(A) has called for a remand report from the AO and the latter has been specifically asked by the ld CIT(A) to conduct detail enquiries and submit its remand report not once but twice during the appellate proceedings. All that the AO has done is that he has issued the letters seeking confirmation from these persons under section 133(6) of the Act. It is true that except one person, rest all persons have not responded to 133(6) notice, however, the assessee cannot be held responsible for non-response by these persons especially where the notices have not been returned undelivered by the postal authorities and the fact that these are no existing shareholders in the assessee company. In such circumstances, the question is what has stopped the AO in writing a similar communicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of 55% of the share transaction on the basis of confirmation obtained from the shareholders and filed during the assessment proceedings. There is no discussion regarding confirmation being filed by these shareholders representing 55% of the share transaction in the assessment order. Notwithstanding the same, nothing has been brought to our notice which demonstrates that these confirmations were filed by the assessee company and accepted by AO during the course of assessment proceedings. Further, we donot agree with the contentions of the ld AR that the addition has been made by the AO merely for want of confirmation from these nine persons. As we have noted above, the AO has stated clearly in his findings that even though the assessee has furnished details of share capital and share premium, it has not furnished the confirmation and other details with regard to investment made in share capital and premium receipts from nine specified persons amounting to Rs. 81,84,399/-. It was further held by the AO that it is necessary for the assessee to prove prima facie the transaction which resulted in share application and share premium by submitting proof which includes proof of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack and he also denied having made any investment in the shares of the company. The appellant on being confronted with the remand report has made only bald statements and could not furnish any evidence to prove its contentions. Therefore, in the absence of any evidence to substantiate, I hold that AO was justified in invoking the provisions of section 68 of the IT Act. Accordingly, I confirm the addition of Rs. 81,84,399 made by the AO under this head." 18. In light of above discussions and in the entirety of facts and circumstances of the case, we deem it appropriate to set aside the matter to the file of the AO to examine the same afresh taking into consideration the above discussions. In the result, ground of assessee's appeal is allowed for statistical purposes. 19. Regarding Ground No. 2 of the assessee's appeal, the facts of the case are that during the course of assessment proceedings, the AO observed that assessee has claimed power charges of Rs. 1,71,05,655/- and out of which, a sum of Rs. 552,719/- has been shown as paid on 1.4.2004. The AO accordingly held that the said sum of Rs. 552,719/- relates to preceding year and the same was disallowed and added to the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee company has declared sales of Rs. 4,34,02,675/- on which gross loss of Rs. 22,34,097/- has been claimed. It was further observed by the AO that the assessee has declared sale price of Rs. 18821/- per ton as against cost price of Rs. 31,235/- per ton. It was further observed by the AO that there was fluctuatation in the power consumption vis-a-vis production of finished goods in different months wherein the assessee has shown consumption of power which ranges from 827 to 2293 units per ton. In absence of proper records with regard to the manufacturing and trading activities and in absence of any satisfactory explanation furnished by the assessee regarding the reasons for loss claimed and the difference between the cost price and sale price of finished goods and the fluctuation in consumption of electricity vis-a-vis production of finished goods, the AO rejected the books of accounts u/s 145(3) of the Act. The AO estimated sales of Rs. 4.50 crore and G.P rate was estimated at 1.84 % relying on the case of M/s Seth Alloys Pvt. Ltd., Bhiwadi and trading addition of Rs. 40,62,100/- was made to the total income of the assessee. 24. Being aggrieved, the assessee carried the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the estimation for enhancing the returned income of the assessee was made. In the present case, ld. AO has straight away applied the GP rate of M/s Seth Alloys Pvt. Ltd. Bhiwadi. The reason provided by ld. AO was just that it has the same business than that of the assessee. Ld. AO did not provide the basic details of M/s Seth Alloys Pvt. Ltd to allow opportunity of rebuttal, by the assessee Company on the point whether the cases was comparable or not. Therefore, ld. AO frustrated the provisions of law by not providing the opportunity of rebuttal and by making arbitrary estimate by vaguely holding that the declared results are not reasonable. Ld. AO without disclosing the basis for arriving at the conclusion or providing any opportunity to rebut made the trading addition which is bad in law. In support, reliance is placed on the following judgments: Dhakeshwari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC) S. Sarbhaiah Setty & Sons v. CIT [1967] 64 ITR 175 (AP)" 27. The ld DR has vehemently argued the matter and relied upon the order of the lower authorities. 28. We have heard the rival contentions and perused the material available on record. Pursuant to r ..... 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