Income Tax Appellate Tribunal - Lucknow
Parabhjot Sidhu Through L/H Mrs. ... vs Income Tax Officer-2(2), Lucknow on 19 March, 2018
I.T.A. No.160/Lkw/2017
1
Assessment Year:2012-13
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH 'A', LUCKNOW
BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND
SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER
ITA No.160/Lkw/2017
Assessment Year:2012-13
Shri Parabhjot Sidhu, Vs. Income Tax Officer-2(2),
Through L/h Mrs Jatinder Lucknow.
C/o M/s Allpa (India)
Pharmaceuticals,
48/2 Prag Narain Road,
Lucknow.
PAN:AJWPS 7105 B
(Appellant) (Respondent)
Appellant by Shri Dharmendra Kumar, C.A.
Respondent by Chaudhary Arun Kumar Singh, D.R.
Date of hearing 15/03/2018
Date of pronouncement 19/03/2018
ORDER
PER T. S. KAPOOR, A.M.
This is an appeal filed by the assessee against the order of CIT(A), Lucknow dated 30/11/2016 relating to assessment year 2012-13 taking the following grounds of appeal:
"1. That Ld. Commissioner (Appeals) failed to consider the fact and submission of appellant correctly and in right perspective.
2. That Ld. Lower authorities estimated gross profit of the appellant without rejecting books of account, hence I.T.A. No.160/Lkw/2017 2 Assessment Year:2012-13 assessment made by him is illegal and without jurisdiction.
3. That on hand, Ld. Lower authorities estimated gross profit of appellant, whereas, on other hand, he made disallowances of expenses, hence the assessment made him is illegal, unjustified and without jurisdiction.
4. That Learned Lower authorities estimated gross profit of appellant on the basis of alleged discrepancies in filling columns of Balance Sheet, since the basis of estimation is incorrect and insufficient and further aforesaid authorities failed to point out single defect in books of account maintained by appellant, hence addition of Rs.7,24,774/- for low gross profit is illegal, against the facts and baseless.
5. That in spite of gross profit ratio reduced in comparison to immediately preceding assessment year, the net profit ratio has increased in comparison to immediately preceding assessment year, which resulted declaration of higher income, hence, the addition for low gross profit, while rejecting the reasons given by appellant is unjustified, arbitrary and without jurisdiction.
6. That Ld. Lower authorities failed to observe that expenses incurred for sample medicines given to Doctors and box and ketch cover for sample is a regular feature of business of appellant and appellant has been consistently incurring the aforesaid expenses in past years and in a.y.2013-14 also, further, ratio of aforesaid expenditure is much lower than average ratio of last three years and much lower than immediate preceding assessment year, hence, disallowance of entire expenditure of Rs.13,68,582/-, while rejecting the facts, past history, nature of business, evidences produced and explanations furnished before them him are arbitrary, unjustified, against the facts and without jurisdiction.
7. That Ld. Lower authorities arbitrarily disallowed expenditure incurred by appellant in respect of marketing and business promotion expenses to the extent of I.T.A. No.160/Lkw/2017 3 Assessment Year:2012-13 Rs.19,73,241/-, whereas, the total expenses claimed by appellant was Rs.19,38,190/-, hence, he made excess disallowance of expenditure by Rs.35,051/-.
8. That Ld. Lower authorities failed to consider that marketing and business promotion expenses is a regular feature of appellant's business and he has been consistently incurring the aforesaid expenditure in past years also, further, ratio of aforesaid expenditure is much lower than average ratio of last three years and much lower than immediate preceding assessment year, hence, additions for disallowing the alleged expenditure of Rs.19,73,241/-, while rejecting the facts, past history, nature of business, evidences produced and explanations furnished before them are arbitrary, unjustified, against the facts and without jurisdiction.
9. That Learned Lower authorities failed to observe that expenses incurred for advertisement is a regular feature of business of appellant and appellant has been consistently incurring the aforesaid expenses in past years also, hence, disallowance of entire expenditure of Rs.94,464/-, while rejecting the facts, past history, nature of business, evidences produced and explanations furnished before him are arbitrary, unjustified, against the facts and without jurisdiction.
10. That Ld. Lower authorities failed to understand; the real nature of transaction incurred between appellant and M/s Allpa (India) Medicines (P) Ltd and wrongly added Rs.7,80,000/- under section 68 income tax act, 1961, while ignoring the facts that aforesaid temporary loan was taken through banking channels and the same was repaid on the same day through banking channels.
11. That appellant proved the identity and creditworthiness of M/s Allpa (India) Medicines (P) Ltd and genuineness of transaction hence the addition of Rs.780,000/- is against the facts, arbitrary and without jurisdiction."
2. At the outset, Learned A. R. inviting our attention to grounds of appeal from 1 to 5, submitted that vide these grounds of appeal the I.T.A. No.160/Lkw/2017 4 Assessment Year:2012-13 assessee is aggrieved with the application of higher gross profit rate against the declared gross profit rate. It was submitted that Assessing Officer, without rejection of books of account, has made an addition on account of gross profit by holding that in earlier year the gross profit rate was more than the gross profit declared during this year. It was submitted that Assessing Officer did not point out any mistake in the books of account except that certain columns in the return of income were inadvertently wrongly filled. He submitted that mere wrong filling of columns of I.T. return does not mean that the assessee had suppressed his gross profit rate and therefore, the action of the authorities below is not justified. Learned A. R. in this respect placed reliance on the judgment of Hon'ble Madras High Court in the case of Principal Commissioner of Income Tax vs. Marg Limited wherein vide order dated 20th July, 2017 Hon'ble court had held that without rejection of books of account the Assessing Officer is not entitled to estimate the profits of the assessee. He submitted that it is an undisputed fact that the books of account in this case were never rejected and therefore, it was prayed that the addition sustained by learned CIT(A) be deleted.
2.1 Arguing ground No. 6 Learned A. R. submitted that Assessing Officer has disallowed the entire expenditure of Rs.13,68,582/- which the assessee had incurred for the purpose of distributing samples. It was submitted that the assessee is a pharmaceutical company and is manufacturing medicines and for the purpose of development of its business the assessee used to give samples by marking them as "physician's sample not for sale". It was submitted that it is a general practice in the trade to distribute samples. He submitted that the authorities below have made disallowance by holding that the assessee was not able to furnish list of doctors to whom samples were given and further the authorities have held that medical samples to I.T.A. No.160/Lkw/2017 5 Assessment Year:2012-13 doctors violates law as same was in violation of regulations issued by Medical Council of India. Learned A. R. submitted that these expenses on samples were not gifts and freebees which have been prohibited by Medical Council of India and further by CBDT Circular No. 5 of 2012. He submitted that in a recent order Hon'ble Delhi Tribunal in the case of Eli Lilly & Co. (India) Ltd. vs. ACIT has examined the provisions of Medical Council of India and after analyzing the same Hon'ble Tribunal has held that there is a clear distinction between the free samples, gifts, travel facilities, hospitality and cash or monetary grants. In view of the above, it was submitted that the disallowance made by the authorities below should be deleted.
2.3 Arguing ground No. 7 & 8, Learned A. R. submitted that the assessee had incurred an expenditure of Rs.19,38,190/- as marketing and business promotion expenses out of which the Assessing Officer has made disallowance of Rs.19,73,317/- which was more than the expenditure incurred. It was submitted that the authorities below have failed to consider that marketing and business promotion expenses are regular feature of appellant's business and he has been consistently incurring the aforesaid expenses in past years also. It was submitted that the ratio of aforesaid expenditure to turnover is much lower than average ratio of last three years and much lower than immediate preceding assessment year. It was submitted that while disallowing the genuine expenses the authorities below have rejected the facts, past history, nature of business, evidences and explanations filed before them. Learned A. R. in this respect invited our attention to copies of ledger account of marketing and business promotion expenses for the assessment years 2009-10 to 2011-12 placed at pages 145 to 190 of the paper book. It was submitted that in none of the earlier years any disallowance was made on account of these expenses. Learned A. R. invited out attention to page No. 3 of the paper book where a chart showing I.T.A. No.160/Lkw/2017 6 Assessment Year:2012-13 the percentage of expenses to turnover for the last three years was placed and submitted that the percentage of marketing and business promotion expenses was in line with the percentage of such expenses incurred in the earlier years. He further argued that these expenses were arbitrarily disallowed without pointing out any defect in the books of account.
2.4 Arguing ground No. 9, Learned A. R. submitted that the amount of Rs.94,464/- has been disallowed which the assessee had incurred towards advertisement for organizing camps for doctors. Learned A. R. invited our attention to pages 191 to 218 of the paper book where the entire vouchers supporting the claim of expenses on advertisement was placed. Learned A. R. submitted that it is a regular feature of assessee's business to incur expenditure on advertisement and should have been allowed as business expenditure.
2.5 Arguing ground No. 10 & 11, Learned A. R. submitted that the assessee had purchased medicines from his sister concern and had received payment in its bank account in the form of cash which the authorities below have not accepted and have held that the cash deposits were not verifiable and therefore, they had made addition u/s 68 of the Act. Learned A. R. in this respect invited our attention to copy of account of sister concern placed at pages 220 to 226 of the paper book where a copy of account of sister concern of the assessee was placed and in which there were regular transactions of sale and purchase and receipt of money from it. Learned A. R. submitted that the sister concern of the assessee is a private limited company which is duly incorporated under the Companies Act having separate PAN and the accounts are duly audited and therefore, identity and creditworthiness of the sister concern was proved and the said receipts were not hit by the provisions of section 68 of the Act. Learned A. R. also filed a I.T.A. No.160/Lkw/2017 7 Assessment Year:2012-13 copy of income tax return filed by the sister company wherein PAN of the sister company was mentioned. In view of the above facts and circumstances, Learned A. R. argued that additions made by the Assessing Officer are arbitrary and need to be deleted.
3. Learned D. R., on the other hand, heavily placed his reliance on the orders of the authorities below.
4. We have heard the rival parties and have gone through the material placed on record. We find that the assessee deals in the business of trading and marketing of medicines. During the year under consideration the assessee declared a gross profit rate of 68.61% and the Assessing Officer observed that in the earlier year the assessee had declared 71.62% as gross profit rate and therefore, he held that the gross profit declared by the assessee was lower by 3.01%. He further held that there was difference in the figures as per the audit report and as per the return filed by the assessee and therefore, he held that the gross profit rate declared during the year is not acceptable and therefore, he worked out an average of gross profit rate of three earlier years and applied the same and made the addition to the extent of Rs.7,24,774/-. We find that nowhere in the assessment order the Assessing Officer has rejected the books of account and rather he has confirmed that books of account were produced and were test checked and the balance sheet was tallied. This observation has been made by the Assessing Officer at page No. 1 of his order. Therefore, without rejecting books of account and without observing any discrepancy in the books of account, the action of the Assessing Officer in applying higher gross profit rate is not justified. The Assessing Officer has also not rejected books of account and merely on the basis of lower gross profit rate and on the basis of some discrepancies in the figures filed in the return of income I.T.A. No.160/Lkw/2017 8 Assessment Year:2012-13 and as per audit report, has made this addition. Hon'ble Madras High Court in the case of Marg Limited (supra), under the similar facts and circumstances, has held that the Assessing Officer needs to reject books of account before making his own assessment. Hon'ble Court has held that it is sine qua non that while estimating the income the Assessing Officer has to come to a conclusion that the books of account maintained by the assessee are incorrect. The findings of Hon'ble Court, as contained from para 4 onwards, are reproduced below:
"4. We now proceed to merits of the matter under the caption DISCUSSION 4(3) As stated supra, the Assessee is a Public Limited Company engaged in the business of civil construction and related services.
4(b) AO had made addition to the income returned by the Assessee by estimating gross profit. The power to make such addition on estimate basis is available to the AO under Section 144 of the IT Act. Section 145 enables the AO to invoke the power under Section 144 when certain conditions adumbrated in Sub-section (3) of Section 145 are satisfied. Therefore, it becomes necessaiy and useful to extract Section 145(3) of the IT Act, which reads as follows:
145(3)Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (i) has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2), the Assessing Officer may make an assessment in the manner provided in Section 144.H 4(c) Therefore, it is sine qua non that the AO to come to a conclusion that the Books of Accounts maintained by the Assessee are incorrect, incomplete or unreliable and reject the Books of Accounts before the proceeding to make his own assessment. In the instant case, there is no reference in the Assessment Order of the AO regarding rejection of Books of Accounts.
I.T.A. No.160/Lkw/2017 9 Assessment Year:2012-13 4(d) Therefore, there is nothing on record to show that the AO came to the conclusion that the Books of Accounts maintained by the Assessee are incorrect, incomplete, unreliable and as a consequence rejected the Books of Accounts.
4(e)Therefore, after setting out the plethora of case laws on this point, CIT (A) held that the accounts of the Assessee cannot be rejected merely based on the perception of the AO that the Assessee has declared low profit margin for certain projects when Books of Accounts have not been rejected. Considering the factual position that there is no reference in the Assessment Order made by the AO regarding the Books of Accounts (this has been fairly admitted by the Revenue before ITAT.), we are not, therefore, labouring through the labyrinth of case laws relied on by CIT(A)."
4.1 Respectfully following the judicial precedents and the facts and circumstances, we delete the addition which the Assessing Officer had made on account of low gross profit rate and therefore, ground NO. 1 to 5 are allowed.
4.2 As regards the addition on account of disallowance of expenses on samples, we find that the authorities below have sustained the disallowance by heavily placing reliance on the regulations of Medical Council of India and also by placing reliance on CBDT Circular No. 5 of 2012 dated 01/08/2012. We find that Hon'ble Delhi Tribunal in the case of Eli Lilly & Co. (India) Ltd. (supra) has held that gifts and samples are two different things. The Tribunal has held that samples are not hit by the regulations of Medical Council of India. The findings of the Tribunal, as contained from para 13 to 16, are reproduced below:
"13. Having considered the rival submissions we find that in the immediately preceding assessment year DRP by an order dated I.T.A. No.160/Lkw/2017 10 Assessment Year:2012-13
5.9.2013 had deleted the identical disallowance by observing as under :
"6.11.3 The Panel has carefully considered the submissions made by the assessee and also gone through the relevant Act/Rules/Guidelines. For understanding the intent of the government on this issue, it would be relevant to refer to the UCPMP and reproduce the relevant provisions.
This is a voluntary code of marketing practices for Indian Pharmaceutical Industry for the present and its implementation will be reviewed after a period of implemented effectively by the Pharma Association/companies, the Government would consider making it a statutory code.
1. ...
2. ...
4. ...
5. Samples 5.1 Free sample of drugs shall not be supplied to any person who is not qualified to prescribe such product.
5.2 Where sample of products re-distributed by a medical representative, the sample must be handed directly to a person qualified to prescribe such product or to a person authorized to receive the sample on their behalf.
5.3 The following conditions shall be observed in the provisions of samples to a person qualified to prescribe such product.
(i) Such samples are provided on an exceptional basis only (see
(ii) to (vii) below) and for the purpose of acquiring experience in dealing with such a product.
(ii) Such sample packs shall be limited to prescribed dosages for three patients for required course of treatment.
(iii) Any supply of such sample must be in response to a signed and dated request for the recipient.
(iv) An adequate system of control and accountability must be maintained in respect of the supply of such samples.
I.T.A. No.160/Lkw/2017 11 Assessment Year:2012-13
(v) Each sample pack shall not be larger than the smallest pack present in the market.
(vi) Each sample shall be marked "free medical sample-not for sale" or bear another legend of analogous meaning.
(vii) Each sample shall be accompanied by a copy of the most up to date version of the product information (As required in Drug and Cosmetic Act, 1940) relating to that product.
6. Gifts 6.1 No gifts, pecuniary advantages or benefits. In kind may be supplied offered or supplied drugs by a pharmaceutical company or any of its agents i.e. distributors, wholesalers, retailers etc. 6.2 Gifts for the personal benefit of healthcare professionals and family members (both immediately and extended) (such as tickets to entertainment events) also are not be offered or provided.
7. Relationship with Healthcare professionals 7.1 Travel facilities ...
7.2 Hospitality ...
7.3 Cash or monetary grants ...
where there is any item missing, the code of MCI as per "Indian Medical Council (professional conduct, etiquette and ethics) Regulation, 2002 as amended time to time will prevail".
6.11.4 Thus it is evident from the above that a clear distinction has been made between the free samples, gifts, travel facilities, hospitality and cash or monetary grants. It would accordingly be incorrect to put samples In the definition of gifts being separately categorized in Para 5 & 6 of the UCPMP respectively. It is noticed from the CBDT Circular No.5/2012 that it refers IMC Regulations 2002 which imposed a provision on the I.T.A. No.160/Lkw/2017 12 Assessment Year:2012-13 medical practitioner for taking any gift, travel facility, hospitality, cash and medical grant from the pharma sector. The Government of India has clearly demarcated the operation nature of each term in the UCPMP, which has been discussed above and therefore, it cannot be said that the term 'Gift' covers free samples also.
6.11.5 Moreover a medical practitioner is bound by the IMC Regulations 2002. Para 7.8 of the said regulations read as under :
7.8 A registered medical practitioner shall not contravene the provisions of the Drugs and Cosmetics Act and regulations made there under. Accordingly -
"1. Prescribing steroids/psychotropic drugs when there is no absolute medical indications;
2. Selling schedule "H" and "L" drugs and poisons to the public except to his patient".
In contravention of the above provisions shall constitute gross professional misconduct on the part of the physician."
6.11.6 It is noticed from the above that the medical practitioner is to adhere to the provisions of the, Drugs and "Cosmetics Act and regulations made there under. The relevant regulations 65(18) applicable to the license/distributor and regulation 95 regards as under :
"65(18) No drug intended for distribution to the medical profession as free sample which bears a label on the container as specified clause (viii) of sub-rule (1) of rule 96 and no drug meant for consumption by the Employees State Insurance Corporation. The Central Government Health Scheme, the Government Medical Stores Depots, the Armed Forces Medical Stores or other Government institutions, which bears a distinguishing mark or any inscription on the drug or on the label affixed to the container thereof indicating this purpose shall be sold or stocked by the licensee on his premises".
"95. Prohibition of sale or distribution unless labeled-subject to the other provisions of these Rules, no person shall sell or I.T.A. No.160/Lkw/2017 13 Assessment Year:2012-13 distribute any drug (including a patent or proprietary) unless it is labeled in accordance with these Rules."
Thus, it becomes evident that even the Drugs and Cosmetics Act and regulations made there under do not prohibited the licensee or a medical practitioner to distribute the free samples, albeit following prescribed conditions. On this account also, the Panel observes that the free samples cannot be said to have been covered by a wider definition of 'Gift'.
6.11.7 Moreover, as held by the Hon'ble Supreme Court in the case of Eskaye Pharmaceuticals (245 ITR 116), "the object of distribution of the samples of the drugs to the doctors is to make them aware that such drugs are available in the market in relation to the cure of a particular affliction and therefore, to persuade them to prescribe the same in appropriate cases and this is tantamount to publicity and sales promotion." Accordingly such expenditure cannot be said to be disallowable u/s. 37(1) of the Income-tax Act in the hands of the Pharma companies distributing such free samples to doctors.
6.11.8 In the light of the details discussion made above, the Panel holds that the free samples are not covered by the IMC regulations of 2002(as amended in 2009) read with CBDT circular no. 5/2012, UCPMP and the Drugs and Cosmetic Act and regulations made there under. Accordingly the is directed to delete the proposed addition on this account.
Accordingly the AO is directed to delete the proposed addition on this account.
14. The above order has acquired finality and no appeal there from has been preferred by the revenue. In light of the above and in accordance with principle of consistency the disallowance is held to be legally untenable. In support of the above conclusion reliance is placed on the judgment of Apex Court in the case of CIT vs. Excel Industries 358 ITR 295 wherein it has been held as under :
"29. In Radhasoami Satsang Saomi Bagh v. Commissioner of Income Tax, [1992] 193 ITR 321 (SC) this Court did not think it appropriate to allow the reconsideration of an issue for a I.T.A. No.160/Lkw/2017 14 Assessment Year:2012-13 subsequent assessment year if the same "fundamental aspect"
permeates in different assessment years. In arriving at this conclusion, this Court referred to an interesting passage from Hoystead v. Commissioner of Taxation, 1926 AC 155 (PC) wherein it was said :
"Parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted and there is abundant authority reiterating that principle. Thirdly, the same principle, namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken."
16. For the aforesaid reasons stated above the disallowance made are deleted and grounds raised are allowed."
4.2.1 In view of the above facts and circumstances and judicial precedents, we delete the disallowance made on account of disallowance of sample expenses and therefore, ground No. 6 is allowed.
4.3 Arguing upon ground No. 7, Learned A. R. submitted that the assessee had incurred an expenditure of Rs.19,38,190/- on business promotion expenses and Assessing Officer has disallowed an amount of Rs.19,73,241/- which is more than the expenses incurred by Rs.35,051/-. Learned A. R. submitted that the amount of Rs.19,75,241/- consisted of two items of Rs.18,45,317/- and Rs.1,27,924/-. We find that assessee had incurred an expenditure of Rs.19,38,190/- as marketing and business I.T.A. No.160/Lkw/2017 15 Assessment Year:2012-13 promotion expenses and out of that the majority of expenses have been disallowed. We find that assessee has been incurring such expenditure for the last so many years and the percentage of expenses to total turnover during the last three years ranges from 6.86% to 7.33%. The average of these percentage comes out at 7.02%. The expenses incurred during the year are 6.86% which is well below the average of last three years. We further find that the Revenue was not able to demonstrate that in earlier years also similar expenses were disallowed. We further find that out of expenses of Rs.19,75,241/-, the amount of Rs.1,27,924/- relates to repayment of loan which the assessee had debited under the head marketing and business promotion expenses. The rest of the expenses amounting to Rs.18,45,317/- are marketing and business promotion expenses. The vouchers for such expenses are placed at pages 161 to 187 of the paper book. The authorities below have not found anything wrong in such vouchers. They have disallowed the claim of expenses by holding that the assessee must have paid these expenses to doctors. While holding so the contention of the assessee that the expenses were incurred for stockists and dealers has not been accepted whereas we find that in earlier year also the assessee had incurred such expenses. The copies of vouchers and bills placed at pages 161 to 187 of the paper book also substantiate the claim of the assessee regarding incurrence of expenditure. In view of the above facts and circumstances we delete the addition of Rs.18,45,317/- whereas we sustain the disallowance of Rs.1,27,924/- which the assessee has debited under the head marketing and business promotion expenses but which in fact are installments for repayment of loan. In view of the above, ground No. 8 is partly allowed.
4.4 As regards ground No. 9 relating to disallowance of advertisement expenses, we find that the Assessing Officer has rejected the entire I.T.A. No.160/Lkw/2017 16 Assessment Year:2012-13 advertisement expenses ignoring the nature of business, business practice, past history, books of account and vouchers produced by the assessee. The Assessing Officer has made disallowance by holding that the assessee could not furnish any evidence to show that the camps for doctors were actually held whereas the assessee had claimed that expenditure was incurred towards advertisement for organizing camps for doctors. The copy of account of advertisement expenses is placed at pages 181 to 190 of the paper book. From the ledger account of such expenses, it is apparent that all the payments have been made through cheques and not even a single payment has been made in cash. Therefore, the findings of the Assessing Officer that the expenses were not genuine, are not correct and in view of the above, we allow ground No. 9 taken by the assessee.
4.5 Now coming to ground No. 10 regarding addition made u/s 68 of the Act, we find that the assessee had received an amount of Rs.7,80,000/- from its sister concern namely Allpa (India) Medicines (P) Ltd. A copy of account of the above said company is placed at pages 227 to 233 of the paper book. The company is an income tax assessee and is regularly filing income tax return. The PAN of the sister concern of the assessee is mentioned on the copy of acknowledgement of return. The Assessing Officer had made the addition only because of the fact that notice u/s 133(6) issued to the sister concern of the assessee was not complied with and therefore, he has held the receipts as ingenuine and unexplained. We further find that the payments noted by the Assessing Officer in his assessment order as not being substantiated has been found to have been entered in the books of the sister concern of the assessee. For example, the entry dated 08/10/2011 finds mention in the account of the sister concern, a copy of ledger account is placed at page No. 223 of the paper book. Simiarly, entry of Rs.80,000/- dated 25/10/2011 is reflected in the I.T.A. No.160/Lkw/2017 17 Assessment Year:2012-13 account in the ledger page No. 224. Similar is the position with regard to entry dated 14/11/2011, 22/11/2011, 13/12/2011, 29.12.2011, 30,12,2011 and 28/01/2012. Therefore, such payments received from sister concern which have been credited in the assessee's account and similarly debited in the books of account of the sister concern, cannot be said to be ingenuine and unexplained credits. Therefore, the addition u/s 68 is not at all justified and therefore, is deleted. Therefore, ground No. 10 is allowed.
5. In the result, the appeal of the assessee is partly allowed.
(Order pronounced in the open court on 19/03/2018) Sd/. Sd/.
(PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR )
Judicial Member Accountant Member
Dated:19/03/2018
*Singh
Copy of the order forwarded to :
1. The Appellant
2. The Respondent.
3. Concerned CIT
4. The CIT(A)
5. D.R., I.T.A.T., Lucknow