DEPUTY COMMISSIONER OF INCOME TAX, AURANGABAD vs. JHAVERI FLEXO INDIA PVT LTD, AURANGABAD

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND SHRI VINAY BHAMORE, JUDICIAL MEMBER Sl. ITA No./C.O. Name of Appellant Name of Respondent Asst. No. No. Year 1 1172/PUN/2023 DCIT, Aurangabad. Jhaveri Flexo India Pvt. 2015-16 Ltd., Gut No.74, Farola, Paithan Road, Chitegaon, Aurangabad- 431005. PAN : AAACF4037F 2 14/PUN/2024 Jhaveri Flexo India Pvt. DCIT, Aurangabad. 2015-16 Ltd., Gut No.74, Farola, Paithan Road, Chitegaon, Aurangabad- 431005. PAN : AAACF4037F Assessee by : Shri Deepak Shah Revenue by : Shri Sourabh Nayak Date of hearing 26.06.2024 : Date of pronouncement 06.08.2024 : आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the Revenue is directed against the order dated 09.08.2023 passed by Ld CIT(A)-12, Pune for the assessment year 2015-16. The assessee is also in Cross Objection bearing C.O. No.14/PUN/2024 against the appeal of the Revenue.

2 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 2. The Revenue has raised the following grounds of appeal :- “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and in facts by deleting disallowance of expenses of Rs 4,00.000 - on account of unverifiable expenses without verifying the nature of expenses. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in law and in facts by deleting the addition of Rs. 74,48,000 - as unexplained expenditure under section 69C made on account of unexplained purchases. 3. Whether on the facts and in the circumstances of the case and in law, the Ld CIT (A) has erred in law and in facts by deleting the addition of Rs. 3,45,68,794/- made on account of additional income declared during the search action. 4. The appellant craves leave to add, alter, modify, delete and amend any of the grounds, as per the circumstances of the case.” 3. The facts of the case, in brief, are that the assessee is a public limited company engaged in the business of Flexible Food Packaging Products & Real Estate business. A search and seizure action u/s 132 of IT Act was carried out in the Jhaveri Group of cases on 20.08.2014, wherein, the assessee being the main company of this group was covered by search action u/s 132 of the IT Act, conducted at Mumbai/Aurangabad. In response to the notice dated 21.08.2015 issued u/s 153A of the IT Act, the assessee furnished return of income on 30.09.2015 declaring loss of Rs.10,88,65,440/-. During the course of assessment proceedings, the Assessing Officer made following additions :-

3 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 1. Out of total expenses of Rs.12,75,38,073/- debited towards various expenses, an Adhoc addition of Rs.4,00,000/- was made on the basis that some of the expenses are made on self made vouchers, hence are not fully verifiable & out of above expenses personal use of directors cannot be ruled out. 2 An amount of Rs.74,48,000/- was added to the income of the assessee being unexplained expenditure u/s 69C of the IT Act. This addition was made on the basis of statement given by Managing Director of the company at Mumbai Shri Sandeep Jhaveri in reply to question recorded u/s 132(4) of the IT Act on 22-08-2014 during the course of search. Wherein Shri Sandeep Jhaveri has offered Rs.1 crore towards discrepancies in the expenses claimed by various concerns, supporting vouchers / bills are not fully verifiable, stating that this income be treated in the hands of respective companies. Out of Rs.1 crore, Rs.25,52,000/- was already considered in the Asstt Years 2009-10 & 2010-11 therefore addition of remaining amount of Rs.74,48,000/- was made in this year. 3 An amount of Rs.3,45,68,794/- was added to the income of the assessee being unexplained income earned by the assessee. This addition was made on the basis of statement given by Managing Director of the

4 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 company at Mumbai Shri Sandeep Jhaveri in reply to question recorded u/s 132(4) of the IT Act on 22-08- 2014 during the course of search. Wherein Shri Sandeep Jhaveri, to cover the discrepancies relating to scrap sale & stock & other items, offered Rs.7 crore as income of the company in order to buy peace of mind. Out of Rs.7 crore, Rs.3,54,31,206/- was already considered in the Asstt Years 2009-10 to 2015-16 therefore addition of remaining amount of Rs.3,45,68,794/- was made in this year. 4. After making above additions, the Assessing Officer passed the assessment order u/s 143(3) r.w.s. 153A on 29.12.2016, reducing the loss to Rs.6,64,48,650/- as against loss declared by the assessee at Rs.10,88,65,440/- 5. Being aggrieved with the above assessment order dated 29.12.2016, an appeal was filed before the Ld. CIT(A), who vide impugned order dated 09.08.2023 allowed the appeal of the assessee. 6. Being aggrieved with the above first appeal order, Revenue is in appeal before this Tribunal. 7. LD DR submitted before us that LD CIT(A) erred in allowing the appeal of the assessee. LD DR argued at length &

5 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 furnished a paperbook in support of his contention & requested to set-aside the order passed by LD CIT(A) & further requested to sustain the additions made by the AO. 8. LD AR submitted before us that the order passed by LD CIT(A) is correct & requested to confirm the same & consequently requested to dismiss the appeal of the revenue. In addition LD AR also furnished copy of decision in the case of Contech Transport Services (P) Ltd. vs. ACIT, IT(SS)A No.213/MUM/2006 order dated 28-11-2008 & First Global Stock Broking (P) Ltd. in IT(SS)A No.338/MUM/2004 order dated 14-11-2007, wherein under identical situation, the addition was deleted by LD CIT(A) & the order of LD CIT(A) was confirmed by the coordinate bench of this Tribunal. 9. We have heard LD counsels from both the sides & perused the material available on record. We find that a search was conducted at the premises of the assessee on 20-08-2014 at the factory premises at Auangabad & the office at Mumbai as also at the residence of the MD Mr. Sandeep Jhaveri. The statement of the MD was recorded u/s 132(4) at his residence wherein he

6 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 admitted certain discrepancy shown to him. The relevant question & answers are as under :- “Q. No.8 As per FIR filed by Company M/s Jhavheri Flexo India Ltd, Mr. K. K. Sadani, has not deposited alleged amount of Rs.5 to Rs.7 Crores in the company. Please explain the same. Ans.: I have been shown as well as received certain evidences including verbal / written confirmation from various people who have paid monies at different times in cash to Mr. K. K. Sadani, which he was supposed to deposit in company M/s. Jhaveri Flexo India Limited, but has not done so. He has been suspended by the Board of Directors of said company from 6th of August 2014. In order to regularize the stock and books of the company 1 as Managing Director of the company on behalf of majority of the Board of Directors willingly declare Rs.7 Crores as the amount to cover the discrepancies relating to scrap, stock and other items. This amount of Rs.7 Crores is offered as income of the company in order to buy peace of mind. xxxxx Q. No.39 During the course of search and seizure action on your various offices, residence, factory premises it has been observed that there are apparent discrepancies in the expenses claimed by various concerns, supporting vouchers/bills for the same are not fully verifiable. Please comment on this thing. Ans.: Expenses are claimed on the basis of information of the staff concerned; I do agree that there may be some expenses for which all required documents may not have been kept. Therefore to cover such discrepancies and to avoid litigation and buy peace of mind, I offer a lumpsum amount of rupees one crore over and above regular income and admitted unaccounted income as stated by me in reply to earlier questions of my statements. I would like to qualify my statement by saying that this income be treated in the hands of respective companies.”

7 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 10. Based on the above statement of MD recorded at his residence, the AO made impugned additions which were deleted by LD CIT(A) by giving specific finding for granting relief and are subject matter of present appeal. 11. As regards to the ground no.1, we find that the LD CIT(A) has deleted the disallowance of Rs.4,00,000/- as per the discussion given in para 17 of the impugned order, the relevant discussion is reproduced as under :- “17. Vide this ground of appeal, the appellant challenged the ad-hoc disallowance made of Rs. 4,00,000/- on account of expenses incurred involving personal use. The disallowance of Rs. 4,00,000/- was made by the AO out of various expenses incurred by the appellant for the purpose of business. It is noted in the impugned order that the AO has disallowed part of the expenses claimed under the heads of Miscellaneous and Other Expenses, Power & Fuel, Motor Car Expenses and; Travelling & Conveyance all totalling to Rs. 12.75 crores. The appellant has contended that the AO has gone on the notion that since the above expenses are made on self-made vouchers, they are not fully verifiable and some of the expenses would be pertaining to personal use by the directors of the appellant company. He has also not bifurcated as to which expenses amongst the above are not verifiable especially when the books of accounts have been certified by the auditor. It is also submitted by the appellant that it is a public limited company wherein all the accounts are subject to internal control as well as internal and statutory audit. The company has proper procedure for paying various expenses only after satisfying that the same are for legitimate business expenses. If the nature of expenses like conveyance and miscellaneous expenses are paid on the basis of self-certified vouchers by the employees, it does not lose the character to be genuine business expenses allowable under section 37 of the Act. Even if the expenses are for the directors of the company, so far as the appellant is concerned the same is legitimate business expenses.

8 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 In view of the above reasons, this ground of appeal is allowed and the disallowance of expenses of Rs. 4,00,000/- stands deleted.” 12. As regards disallowance of Rs.4,00,000/- out of various expenses the only reason given by the AO is that some of the vouchers are self-made vouchers and therefore, not fully verifiable. As against the same, the CIT(A) has held that no specific instance is shown as to which expense out of various expenses is not fully verifiable. The nature of expenses itself suggest that such expenses can be only on self-made vouchers of the staff duly approved by higher officers and also a director. Thus there is no chance of leakage of revenue. The major expense is power and fuel which are all on proper vouchers and paid by cheques. As regards car expenses, the AO noted that the same is for benefit of the directors. Even when the vehicle expense is for benefit of director, the same is allowable so far as the company is concerned as held by Gujarat High Court in the case of Sayaji Iron & Engineering Co Ltd. (253 ITR 749). In absence of specific finding that particular expense is not for the purpose of business, no disallowance is called for. The scheme of the act does not recognize lumpsum / ad-hoc disallowance. Therefore in our

9 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 considered opinion LD CIT(A) has rightly deleted the addition of Rs.4,00,000/- & hence the ground of appeal no.1 raised by Revenue in this regard is dismissed. 13. As regards to the ground no.2, we find that LD CIT(A) has deleted the addition of Rs.74,48,000/- as per the discussion given in para 18.2 of the impugned order, the relevant discussion is reproduced as under :- “18.2 Ground Nos. 2 and 3 are against addition of Rs.74,48,000/- as unexplained expenditure under section 69C of the act, not on the basis of any evidence but merely on the basis of statement recorded during the course of search. As seen from the facts, the statement of Sandeep Jhaveri was recorded u/s 132(4) during the course of search pertaining to certain discrepancies relating to expenses incurred by the appellant company. It was stated by Mr. Jhaveri that an additional income of Rs. 1 crore is admitted as undisclosed income for various years and group companies to cover such discrepancies and end litigation. However, the AO held in his order that since during the course of search an admission was made and the appellant being the core company did not stick-up to the statement of its M.D., the appellant only offered a sum of Rs.25,52,000/- for A.Ys. 2010-11 and 2011-12, the differential addition of Rs.74,48,000/- was made u/s 69C of the act. The AO has based the entire addition on S. 69C of the act which provides that where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, the amount covered by such expenditure may be deemed to be the income of the assessee for such financial year. Thus the prerequisite for making addition under section 69C is that the expenditure should have been incurred and which are out of unexplained sources. Therefore, if the AO wanted to invoke S. 69C, he had to first of all come to a conclusion that the expenditure has been incurred and source thereof is not explained. Once the expenditure is recorded in the books of accounts, it goes without saying that the source thereof stands explained. As can be seen from the submissions of the appellant, the AO has simply relied upon the statement of its managing director Mr. Jhaveri and has not found any particular

10 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 expenditure which has been incurred and is not wholly and excessively for the purpose of its business. Moreover, at the time of recording statement during course of search, even the financial year had not ended. Therefore when the final accounts were prepared, only those expenses were claimed which were fully verifiable by vouchers/bills. Thus, not a single expenditure has been claimed which is not wholly and exclusively for the purpose of business. Since the entire addition is based on the statement of Mr. Jhaveri, it is once again pertinent to reproduce the relevant answer given to Q- 39 which reads as under. “Expenses are claimed on the basis of information of the staff concerned. I do agree that there may be some expenses for which all required documents may not have been kept. Therefore, to cover up such discrepancies and to avoid litigation and buy peace of mind, I offer a lumpsum amount of rupees one crore over and above regular income and admitted unaccounted income as stated by me in reply to earlier questions of my statements. I would like to qualify my statement by saying that this income be treated in the hands of respective companies. ” Reading the above answer, it is nowhere stated that the expenses are incurred for which no source is available so as to make addition u/s 69C of the Act. What was stated is that in respect of some of the expenses, the vouchers may not be complete. Therefore, the AO without fulfilling the fundamental requisite of S. 69C regarding the source of the expenditure remaining unexplained, went ahead to make the impugned addition merely on the surmise that the appellant disclosed only Rs. 25,20,000/- and not the entire amount of Rs. 1 crore as admitted by Shri Jhaveri in his statement recorded u/s 132(4) of the act. It is also pertinent to note that in the statement of Mr. Jhaveri, no reference is made to the appellant or the year for which such admission is made. The AO has not mentioned as to how and in what circumstances, the entire addition is presumed for the year under appeal. No exercise has been made by the AO to link the admission under the statement u/s 132(4) vis a vis the year for such admission since each year is separate and distinct for the purpose of assessment. Under Section 132, the authorized officer may during the course of search, examine on oath any person who is found to be in possession or control of any books of accounts, documents, money, bullion, jewellery or other valuable article or thing. And any such statement may thereafter be used in evidence in any proceedings under the act. However, during the course of assessment proceedings, though a statement u/s 132(4) can be relied upon or used in evidence under the act, the same is not final. The AO must thereafter apply his

11 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 mind on the basis of thorough enquiry and evidence before him and thereafter frame assessment. In the present case, the AO has merely relied upon the statement of Mr. Jhaveri u/s 132(4) and not at all applied his mind regarding incurring of expenditure which is not recorded in books of accounts so as to make addition under section 69C of the act as unexplained expenditure. In my opinion, the AO has failed to follow the due procedure of not only assessment pursuant to search but has also failed to fulfil the conditions of S. 69C of the act. In view of the reasons above, the addition of Rs. 74,48,000/- u/s 69C of the act is deleted.” 14. As regards addition of Rs.74,48,000/- u/s 69 C, the same is purely made on the basis of statement by holding that since the MD admitted in Q No 39 a sum of Rs.1 crore, and as per the returns of Asstt Yr 2010-11 & 2011-12, only sum of Rs.25,52,000/- has been declared, balance sum of Rs.74,48,000/- is required to be added u/s 69C of the IT Act. It is submitted that the only basis of addition is admission of the MD. Except the statement there is no evidence for addition u/s 69C. LD Counsel of the assessee further relied on the decision passed by coordinate bench of this Tribunal in the case of Contech Transport Services (P) Ltd. vs. ACIT, IT(SS)A No.213/MUM/2006 order dated 28-11-2008 & First Global Stock Broking (P) Ltd. in IT(SS)A No.338/MUM/2004 order dated 14-11-2007, wherein identical addition was not held to be valid by observing as under :-

12 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 “8.10 This brings us to the question as to what should be the quantum of addition. The Assessing Officer has not furnished any basis whatsoever to come to the conclusion and to the quantum except relying on the general statement made by the managing director. To certain extent, the assessee has made certain analysis of unvouched expenditure and has produced some records before the Assessing Officer, which give a particular percentage of expenditure as unsupported. The summary of the random selection of vouchers is part of the paper book and is at pp. 33 to 43 of die assessee's paper book in the case of All Trans Logistics (P.) Ltd. 9. In view of the above discussion, the only question that would require a decision is the sustenance of the addition made by the Assessing Officer. The assessee has returned a particular amount. For the Assessing Officer to make an addition to this returned income, he would require to base the addition on proper legal evidence. In this case, the Assessing Officer has not made any enquiry, investigation to unearth evidence in support of the additions made by him to the returned income. The entire addition is made solely on the basis of a general statement made by Shri Sasi Kiran Janardhan Shetty. In fact, Shri Shetty had qualified his statement recorded on 27-12-2001 with a rider that he had no access to the records, books of account and other documents as there were prohibitory orders at various premises and the materials were seized and not given to him and that on verification of these records, he would offer income in the block return and pay taxes thereon. This statement is not an unqualified statement. Moreover, while filing the return of income, he retracted from the statement and he cannot be pinned on the same. The Assessing Officer does not have any material whatsoever, other than harping on the statement to make an addition on ad hoc basis and prorate basis in each of the assessee company's assessments. Though we have held that there is no basis for the assessee to have returned a particular income as undisclosed income, except loose calculations by way of summary of random selection vouchers, this by itself does not give revenue the licence to make an addition. In a block assessment no addition can be made unless material is found during the course of search. In other words, the addition should be based on material found during the course of search. As the Assessing Officer has failed to bring out any evidence in support of the addition, we have no other alternative but to delete the additions made to the returned income. Thus, we delete all the additions made to the, returned income in all the companies before us.” 14.1 We therefore are of considered opinion that there is no infirmity in the order passed by LD CIT(A) & therefore the same is

13 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 confirmed by us. Consequently the 2nd ground of appeal raised by Revenue in this regard is dismissed. 15. As regard to the ground no.3, we find that the LD CIT(A) has deleted the addition of Rs.3,45,68,794/- as per the discussion given in para 19.2 of the impugned order, the relevant discussion is reproduced as under :- “19.2 Ground nos. 4, 5, and 6 are against addition of Rs.3,45,68,794/- being considered as sale of scrap only on the basis of admission during search and not on the basis of evidence found. Since this issue stems from the statement of Shri Jhaveri, it is important to reproduce the relevant portion of the said statement Q.No.8 As per FIR filed by company M/s Jhaveri Flexo India Ltd, Mr K K Sadani has not deposited alleged amount of Rs. 5 to 7 crores in the company. Please explain the same. Ans: I have been shown as well as received certain evidences including verbal/written confirmation from various people who have paid money is a different times in cash to Mr K K Sadani, which he was supposed to deposit in company Mrs Jhaveri Flexo India Ltd, but has not done so. He has been suspended by the board of directors of said company from 6th of August 2014. In order to regularise the stock and books of the company I as managing director of the company on behalf of majority of the board of directors willingly declared Rs.7 crores as the amount to cover up the discrepancies related to scrap, stock and other items. This amount of Rs. 7 crores is offered as income of the company in order to buy peace of mind. Q. No.9 I am showing you page No. 101 of annexure A-13 seized from your office premises at 9th and 10th floor, Gold crest which contains noting of sum received by Shri Alay S. Jhaveri during the period 02-12-2013 to 27-01-2014. Similar receipts by him are mentioned as follows in page number 102 to 108 of annexure A-13. Also page No. 104 and 105 of bundle number A-1 of seized documents found in your residential premises at 5th floor, Crest Building, JVPD scheme, Mumbai. Also page No. 03 and 59 of bundle No. 1 of documents found in your factory premises at Gut No. 74, Jhaveri Flexo India Ltd,

14 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 Farola, Aurangabad. From the notings on all these papers it is evident that scrap has been sold in cash. Kindly reconcile it with your books of accounts. Ans: I have gone through the papers and confirm the same. The declaration of Rs. 7 crores mentioned in the above answer covers this issue. It is seen from the above statement that cash of Rs. 5-7 crores approximately was received from sale of scrap by Mr. K.K. Sadani, one of the directors at the relevant time, who was supposed to deposit the said amount in the bank a/c of the appellant company. However, he defrauded the appellant and as a result he was suspended from the board of directors and an FIR was also filed against him. Moreover, it was also mentioned in the statement that there were certain discrepancies regarding the amount received by Mr. Alay Jhaveri during the period 02-12-2013 to 27-01-2014 for sale of scrap. In order to regularize all such discrepancies, Mr. Jhaveri had offered the said amount of Rs. 7 crores in his statement. However, while filing ROI, the appellant disclosed only an amount of Rs. 3,54,31,206/- and the remaining amount of Rs. 3,45,68,974/- was added by the AO in the impugned order merely on the basis that the appellant did not adhere to the entire amount as disclosed in his statement. The AO has not mentioned as to how and in what circumstances, the entire addition is presumed for the year under appeal. No exercise has been made by the AO to link the admission under the statement u/s 132(4) vis- a-vis the year for such admission since each year is separate and distinct for the purpose of assessment. Under Section 132, the authorized officer may during the course of search, examine on oath any person who is found to be in possession or control of any books of accounts, documents, money, bullion, jewellery or other valuable article or thing. And any such statement may thereafter be used in evidence in any proceedings under the act. However, during the course of assessment proceedings, though a statement u/s 132(4) can be relied upon or used in evidence under the act, the same is not final. The AO must thereafter apply his mind on the basis of thorough enquiry and evidence before him and thereafter frame assessment. In the present case, the AO has merely relied upon the statement of Shri Jhaveri u/s 132(4) and not at all applied his mind regarding the fact that the undisclosed income of Rs. 3,54,31,206/- offered was not sufficient to cover the unaccounted sale of scrap and no further amount was required to be disclosed. The sole basis of addition is the admission by the appellant during the course of search. At the time of recording of the statement, the managing director Shri Jhaveri was at his residence whereas admittedly the relevant documents were found at various places like residence of the

15 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 managing director, office of the company and the factory premises at Aurangabad. Thus the admission was solely an imaginary figure being the highest sum misappropriated by Shri K K Sadani. What the appellant admitted in his statement was only an estimated amount but on proper working, the papers show sale of scrap to be Rs. 3.54 crores only. Even as per the authorized officer conducting search and recording statement of the MD of the appellant company noticed that the discrepancy is app. Rs.5 to 7 crores. Thus even the rough calculation was never final figure of misappropriation by Shri Sadani. However, the assessing officer has not undertaken any exercise to work out the exact amount of scrap sold before making the addition. It is also relevant that while admitting the amount of Rs.7 crores it was not for the year under appeal only but for 7 years i.e. A.Ys. 2009-10 to 2015-16. There is no finding that Rs. 7 crores pertain to the year under appeal only. Whatever was disclosed in earlier years has been accepted as such without any doubt. Thus even for the year under appeal what has been disclosed is based on the documents examined and to that extent it was receivable, has been offered for taxation. The AO has without any reference to any of the seized material held that the balance sum of difference between amount admitted and amount declared in various years pertain to the year under appeal and made addition. The order of the AO suffers from serious flaws and therefore in view of the reasons above, the addition of Rs. 3,45,68,974/- is deleted.” 16. As regards addition of Rs.3,45,68,794/-, the addition is solely on the basis of statement by holding that since the MD admitted in question No 8 a sum of Rs 7 crore, and as per returns filed, only sum of Rs.3,54,31,206/- has been declared, balance sum of Rs.3,45,68,794/- is required to be added. The contention raised before LD CIT(A) are reiterated before us. Although, the LD DR has produced certain pages of the receipt of sale of scrap, however, we find the same pertain to A.Y. 2014-15 & not for the year under appeal. Even the sum total of such amounts shown is also less than

16 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 Rs.1 crore & the assessee has already disclosed more than Rs.3 crore in various years. Therefore, in absence of any specific evidence and since the addition is solely on the basis of the statement given during the search, therefore, in view of above already cited decisions of ITAT Bombay, the addition, in our considered opinion has rightly been deleted by LD CIT(A). Therefore, in our opinion there is no infirmity in the order passed by LD CIT(A) on this issue which requires our interference, & therefore the same is confirmed by us. Consequently the 3nd ground of appeal raised by Revenue in this regard is also dismissed. 17. In the result, the appeal filed by the Revenue stands dismissed. C.O. No.14/PUN/2024 : 18. In the cross objection, it is the contention of the assessee that if the addition is confirmed on the basis of the statement of MD of the company then on the basis of same statement, corresponding deduction of loss of Rs.5 to 7 crore on account of sale of scrap, which was misappropriated by Mr Sadani, be also allowed as the same is loss arising out of carrying on business. But now that the

17 ITA No.1172/PUN/2023 C.O. No.14/PUN/2024 order passed by LD CIT(A) is confirmed by us & no addition is sustained on the basis of the statement of the MD therefore, the Cross Objection filed by the assessee being infructuous is dismissed. 19. In the result, the Cross Objection filed by the assessee stands dismissed. 20. To sum up, the appeal filed by the Revenue as well as Cross Objection filed by the assessee stand dismissed, as above. Order pronounced in the open Court on 06th August, 2024. Sd/- Sd/- (R. K. PANDA) (VINAY BHAMORE) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 06th August, 2024. Sujeet आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-12, Pune. 4. The Pr. CIT/CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.