- (1.) This order shall dispose of ITA Nos. 775 and 784 of 2010 as according to the learned counsel, an identical question of law is involved therein. For brevity, the facts are being taken from ITA No. 775 of 2010.
(2.) This appeal has been preferred by the revenue under section 260A of the Income-tax Act, 1961 (in short ''the Act'') against the order dated 4-12-2009 passed by the Income-tax Appellate Tribunal, Delhi Bench ''D'', New Delhi (hereinafter referred to as ''the Tribunal'') in ITA No. 3804/Delhi/2009, for the assessment year 2007-08, claiming the following substantial questions of law:- Whether, on the facts and circumstances of the case, the Hon'ble ITAT was right in law in deleting the addition of Rs. 14,33,132 made by the Assessing Officer on account of the salary paid by the assessee to his employees and thereafter having received the said salary back from them?
(3.) Briefly stated, the facts necessary for adjudication as narrated in the appeal are that a search and seizure operation was carried out on 24-8-2006 at the premises of the assessee and during the search, certain incriminating documents were found and seized. The books of account, i.e. cash books, ledger etc., were not found up-to-date. The assessee filed its return in Form ITR-7 on 28-3-2008 declaring nil income. The case was taken up for scrutiny and the Assessing Officer vide order dated 20-11-2008 made the following additions:- (i) Rs. 18,87,000 on account of capitation fees received outside the books of account. (ii) Rs. 14,33,132 on account of inflation of expenditure under the head 'salary to staff. (iii) Rs. 11,92,806 on account of cash found during search as per books of account.;