TaxTMI 
TaxTMI 
2024 (12) TMI 490
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....ing of general purpose machinery parts/bearings. Notices under section 143(2) & 142 (1) of the Income-tax Act, 1961 (for short 'the Act') along with questionnaire were served on the assessee. After issue of several notices u/s 142(1) of the Act, assessee filed the relevant information along with confirmation of unsecured loan, ledger copy of expenses and reconciliation of sale/turnover shown in ITR and VAT return. With regard to cash deposits during demonetization period, assessee submitted that out of cash of Rs. 2,01,53,000/-, cash of Rs. 29,00,000/- was deposited in new currency. He further submitted that entire cash deposited during the year was out of cash in hand appearing in cash book as on 08.11.2016. The Assessing Officer observed that no cash book was submitted by the assessee. 4. Further, directions under section 144A of the act were sought from the Addl.CIT, Range 22, New Delhi. The Addl.CIT sought further information from the assessee by issue of show-cause notice dated 11.12.2019 to the assessee to explain the abnormal higher cash sales for October and November, 2016 and consequently, deposit of Rs. 2,01,53,000/- during the demonetization period shall be treated as....
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.... been revised. 3. Because the Ld. Lower Authorities has erred in alleging that the reply is devoid of any evidences whereas the appellant has submitted documentary evidences such as VAT returns, quantitative details of purchase and sales etc. to substantiate the sales made during the year out of which cash were deposited in bank accounts. 4. Because the CIT(A) NFAC has erred in alleging that no cash book was submitted without considering the fact that the appellant had requested the Ld. AO vide reply dated 17.12.2019 to produce cash book during physical hearing because of being vary voluminous, however, the Ld.- AO proceeded to pass the order on 20.12.2019 without providing any opportunity to present the same which shows that the Ld. AO has passed the order without providing reasonable opportunity of being heard and made the addition u/s 68 of the Act based on his whims and fancies. 5. Because the CIT(A) NFAC has erred in doubting the cash sales made as the books of account of the appellant is duly audited by Independent Chartered Accountant and quantitative details were also given in audited report. 6. Because the Ld. AO has erred in making addi....
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.... evident from the audited balance sheet, Note 2.30, there was a balance of SBN for Rs. l,72,53,000/- as on 8th November 2016, which was deposited in bank during the demonetization period and the source of such cash in hand was cash sales made by the assessee duly recorded in the audited books. 8. Further, it was submitted that proceedings U/S 144A of the Act was initiated by the learned JCIT, Range 22, Delhi vide issue of notice dated 11-12-2019 wherein it was proposed to reject the books of accounts of the assessee u/s 145 of the Act for difference in turnover reported in the audited accounts and turnover submitted based upon the replies made during assessment proceedings. In reply during assessment dated 17.12.2019, wherein the assessee submitted the reconciliation of turnover and no discrepancies were found by the AO and the trading results of the assessee as per the audited accounts was accepted and the books of accounts were not rejected by the AO U/S 145(3) of the Act. The original and revised VAT returns were also accepted by the AO. The purchases, sales, opening stock, closing stock and financials of the assessee company was accepted as such and no discrepancy was report....
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....dition is made u/s 68 of the IT Act to tax the amounts credited by the appellant as sales and for which no satisfactory explanation was given. However, the books of accounts are not found to be reliable in so far as unexplained sums have been credited as sales and a percentage of such unexplained amount is offered as profits. In a nut shell neither are the Purchases duly substantiated nor were the Sales substantiated with Sale Bills/Cash Receipts or names and addresses of the customers. In the background the Books of the appellant are not found to be reliable and do not reflect the correct picture of the affairs of the business. Hence, the books of accounts are rejected u/s 145 (3) of the Act by exercise of powers of the Commissioner of Income Tax (Appeals) which are co-terminus with the powers of the Assessing Officer. In the background of the rejection of the books of accounts, the addition made U/S 68 of the IT Act is found to be inconsistent with the facts. In the present case the finding is that the appellant was found to be in possession of unexplained cash of Rs 1,62,46,533/- which was deposited in the bank accounts. hence, since, the possession of cash precedes its credit i....
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....vised return under sub-section (4) or sub-section (5) [or an updated return under sub-section (8 A)] of that section, or (b) fails to comply with all the terms of a notice issued under sub-section (1) of Section 142 or fails to comply with a direction issued under sub-section (2-A) of that section, or (c) having made a return, fails to comply with all the terms of a notice issued under subsection (2) of Section 143, the Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered, shall, after giving the assessee an opportunity of being heard, make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment: Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment: Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of Section 142 has been issue....
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....of rejection of books of accounts u/s 145(3) of the Act. 5. Here, it may kindly be noted that at no point of time, during the course of appellate proceedings, the assessee was called upon to explain as to why the books of accounts should not be rejected. The same is evident from the notices issued by the learned CIT(A), enclosed at page 202-233 of the paper book. On the other hand, it was duly submitted before the learned CIT(A) that proceedings u/s 144A of the Act was initiated on the assessee by the JCIT vide letter dated 11-12-2019, refer page 53-55 of the paper book, and a proposal was made to reject the books of accounts of the assessee on account of difference in turnover reported in ITR and turnover reported in the VAT return. The JCIT also questioned about the revised VAT returns filed by the assessee in the said letter. 6. In reply to the said letter, refer page 106-109a, the assessee satisfactorily explained the reconciliation of turnover. At page 107 of the paper book, the assessee has clearly reconciled the quarter wise turnover as per the VAT return and audited accounts. W.r.t the query that the VAT return has been revised for the first three quarters....
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.... conditions are met. There is no deviation in the accounting policies followed by the assessee in the current year vis a vis the preceding years. The trading results of the current year was more or less the same as that of the last year. In this regard, your kind attention is invited to page 39 of the paper book. In the Tax Audit Report, the Gross profit percentage on turnover for the current year was reported at 7.1% and for the immediately preceding year, the same was reported at 7.14%. Similarly, the net profit percentage on turnover for the current year was reported at 0.32% and for the immediately preceding year, the same was reported at 0.4%. Details of GP and NP ratio of the last 3 years is tabulated below: AY GP Ratio NP Ratio 2015-16 7.10% 0.35% 2016-17 7.14% 0.40% 2017-18 7.27% 0.31% Thus, there is no deviation in the financial results of the current year as compared to the immediately two preceding years. Same accounting policies is followed by the assessee consistently year after year. The appellant is a private limited company and is required to maintain its books of account as per Companies Act' 2013 and the same was audite....
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....e judgment of the Hon'ble SC in the case of CIT v. Woodward Governor [2009] 312 ITR 254/179 Taxman 326 wherein provisions of section 145 of the Act was discussed in length and it was held that, "The provisions of section 145 recognise the rights of a trader to adopt either the cash system or the mercantile system of accounting. The quantum of allowances permitted to be deducted under diverse heads under sections 30 to 43C from the income, profits and gains of a business would differ according to the system adopted. This is made clear by defining the word 'paid' in section 43(2), which is used in several sections from sections 30 to 43C, as meaning actually paid or incurred according to the method of accounting upon the basis of which profits or gains are computed under section 28/29. That is why, in deciding the question, as to whether the word 'expenditure' in section 37(1) includes the word 'loss', one has to read section 37(1) with sections 28, 29 and 145(1). Accounts regularly maintained in the course of business are to be taken as correct, unless there are strong and sufficient reasons to indicate that they are unreliable. Under section 28(i), ....
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....ken by the assessee continuously is supreme. In the instant case, there was no finding given by the Assessing Officer on the correctness or completeness of the accounts of the assessee. Equally, there was no finding given by the Assessing Officer stating that the assessee had not complied with the Accounting Standards. [Para 14]" * Here, reliance is also placed on the judgment of the Hon'ble jurisdictional Delhi High Court in the case of PCIT vs Forum Sales (P.) Ltd [2024] 160 taxmann.com 93 (Delhi)pronounced on 01-03-2024 wherein detailed discussion was made w.r.t rejection of books of accounts u/s 145(3). Relying on the judgment of the Hon'ble High Court of Delhi in the case of Pr. CIT v. Swananda Properties (P.) Ltd. [2019] 111 taxmann.com 94/267 Taxman 429/2019 SCC, the Hon'ble HC held that, "19. A plain reading of the aforementioned provisions would indicate that the AO wields an authority to make additions on the basis of estimation of income upon fulfillment of the conditions mentioned in Section 145(3) of the Act. Once the AO is satisfied about the existence of irregularities in the books of account as per Section 145(3) of the Act, it shall proceed in the....
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....ct lays down that the Assessing Officer can proceed to make assessment to the best of his judgment under section 144 of the Act only in the event of not being satisfied with the correctness of the accounts produced by the assessee. In the instant case the Assessing Officer has not rejected the books of account of the assessee. To put it differently the Assessing Officer has not made out a case that conditions laid down in section 145(3) of the Act are satisfied for rejection of the books of account. Thus, when the books of account are maintained by the assessee in accordance with the system of accounting, in the regular course of his business, the same would form the basis for computation of income. In the instant case it is noticed that neither the Assessing Officer nor the Commissioner of Income-tax (Appeals) have rejected the books of account maintained by the assessee in the course of the business. As such the Tribunal has rightly rejected or set aside the partial addition made by the Assessing Officer for arriving at gross profit and sustained by the Commissioner of Income-tax (Appeals) and rightly held that the entire addition made by the Assessing Officer was liable to be de....
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...., "As the ITO's power to substitute a system of accounting for the one followed by the assessee, flows from section 145, it is, therefore, imperative that, before rejecting the system of accounting followed by the assessee, the ITO must refer to the inherent defect in the system and record a clear finding that the system of accounting followed by the assessee is such that correct profits cannot be deduced from the books of account. The ITO's view that there could be a better system of accounting is no answer to the application of the provisions of section 145, especially if a particular system has been followed by the assessee uniformly and regularly for the past several years, and was accepted by the department. It is not open to the ITO to intervene and substitute a different system of accounting on the ground that the system which commends to the ITO, is better. In the instant case, the assessee had been following a consistent system of accounting and regularly employing the same system of accounting for declaring its income from year to year. It was also not in dispute that this system of accounting was not found to be defective by the ITO in the past ....
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....es in respect of certain transactions are altogether omitted or incorrect or where the accounts show an abnormally low rate of profit or where there is an inherent lacuna in the system of accounting. [Para 18.7] However, the Assessing Officer cannot use this power as a tool to reject the books of account merely due to non-maintenance of the stock register, variation in gross profit and non-furnishing of certain vouchers or its explanation or non-confirmation of sundry creditors. Anyway, before rejecting the books of account, the Assessing Officer must record the specific reason for rejecting the books of account. Such satisfaction has to be established and substantiated based on facts and figures, which further depends on the circumstances of each case. Mere minor mistakes/typological errors/absence of stock registers/lower GP may not ipso facto amount to incorrectness/incompleteness of accounts in terms of section 145(3) of the Act. But the case would be different where the above-mentioned mistakes are coupled with other findings. [Para 18.8] In the given case, the Assessing Officer has rejected the book results of the assessee based on the finding that there was....
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....t in agreement with the Revenue that the non-maintenance of stock register was sufficient for exercising the power of rejecting the books of the assessee. It is not unusual for businesses dealing in large number of small items and operating at a small or medium scale to do away with the maintenance of any stock register since it is not feasible maintaining movement of stock of every such item. Such businesses usually verify physically their stock at the end of the year and all wastages, pilferages and other losses therefore get automatically accounted for in the process, reflecting thus the true profits earned by the assessees. In the present case the assessee has been doing the same consistently, following the method of determining its stock at the end of the year by physically verifying the same and not maintaining any stock register since it was dealing in a large number of small items. We fail to understand how the non-maintenance of stock register has affected the determination of true and correct profits of the assessee in the circumstance. The Revenue has found no other defect in the books of the assessee. All purchase and sale vouchers and other records have been found to b....
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.... Rs. 20,000/- In this regard, reliance is placed on the judgment of the Hon'ble Bombay High Court in the case of R.B. Jessaram Fatehchand vs CIT [1970] 75 ITR 33 (Bombay) wherein it was held that, "The ITO had scrutinised closely the account books of the assessee and had found no fault with them excepting that the addresses of the customers for the cash sales of sugar had not been entered. It was not found by him that there were any other reasons for not accepting the said cash sales, such as, for instance, the sales being at lower rates than what were prevailing in the market or that they were not comparable with the other verified sales, which the assessee had made during the material time. In these circumstances, the reason given by the ITO for rejecting the book results shown by the assessee's accounts or for not accepting the cash transactions as genuine could not be accepted as good and sufficient unless there was an obligation on the part of the assessee to keep a record of the addresses of the cash customers. It could not, therefore, be said that the failure on his part to maintain the addresses was a suspicious circumstance giving rise to a doubt abou....
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.... the Act as unexplained money. At this juncture, it is relevant to quote section 68 of the Act of the Act which reads as follows: "68. Cash credits.--Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The following provisos shall be inserted in section 68 by the Finance Act, 2012, w.e.f. 1.4.2013: Provided that where the assessee is a company, (not being a company in which the public are substantially interested) and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited ; and ....
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....he Act. The said section read as follows: 69A. UNEXPLAINED MONEY, ETC "Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." On a plain reading of the above section, it would be evident that the following conditions must be fulfilled for applicability of section 69A: 1. Assessee is found to be owner of any money, bullion, jewellery etc, and 2. Such money, bullion, jewellery is not recorded in the books of accounts for any source of income, and 3. The assessee either offers no explanation or explanation is found not satisfactory by AO....
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....asis of the said inquiry made u/s 142(3) of the Act and which is proposed to be utilized for the purposes of the assessment, the Assessing Officer has to give the Assessee an opportunity of being heard on the same. However, in the present case, as evident from the facts of the case, no independent enquires was conducted by the learned CIT(A) and no adverse material against the assessee was provided to us which even remotely suggest that the cash deposits was unexplained money of the assessee. Before making the impugned addition u/s 69A of the Act, no opportunity of being heard was given to the assessee. Here, reliance is placed on the judgment of the Hon'ble ITAT, Kolkata in the case of M/s SPML Infra Ltd vs DCIT (ITA No.1228/Kol/2018) pronounced on 17/01/2020 wherein on identical facts it was held that, "14. To conclude: We note that none of the statements were recorded by the assessing officer of the assessee company, and no opportunity for cross examination has been provided to the assessee company. The mandate of law to conduct enquiry by the Assessing Officer on due information coming to him to verify authenticity of information was not done as per section 14....
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....nst the assessee. This is because section 142(2) mandates any such material adverse to the facts of assessee collected by AO u/s 142(1) has to be necessarily put to the assessee u/s 142(3) before utilizing the same for assessment so as to constitute as reliable material evidence through the process of assessment u/s 143(3) of the Act." 7.12 We also draw support from the judgment of the Hon'ble Apex Court in Swadeshi Cotton Mills v. Union of India, AIR 1981 SC 818, where the Hon'ble Supreme Court has clearly held that "Where authority functions under a statute and the statute provides for the observance of the principles of natural justice in a particular manner, natural justice will have to be observed in that manner and no other. No wider right than that provided by the statute can be claimed nor can the right be narrowed. It was further held that, 7.14 Since the results of the enquiries conducted by the A.O. u/s 142(2) of the Act have not been confronted to the assessees, we are inclined to agree with the Ld. A.R. that there has been a violation of the Principle(s) of Natural Justice implied within Section142 (2) of the Act and such statutory non-compliance viti....
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....r hand rejected the availability of cash as on 08.11.2016 which is illogical and absurd. The trading results of the assessee was also accepted by the Ld. AO as it is and no specific defect was pointed out during the assessment proceeding. The appellant begs to further submit that on what basis the Ld. AO has observed that the cash was deposited out of unexplained source when entire cash deposits are duly recorded in books of account. The same was duly substantiated by submitting VAT returns, monthly purchase and sales, daily summary of cash sales which was in agreement with the Audited Financial Statements. 19. As evident from the assessment order and the appellate order, purchases, sales, closing stock and financial results of the assessee were not disputed by the lower authorities. For the mere sake of making addition, the cash deposits during demonetization period was added. In doing so, the lower authorities lost sight of the fact that the source of such cash deposits was cash sales which was duly credited to the Profit and Loss A/c and accordingly offered to taxation. Thus, adding the same again tantamount to double addition of the same amount. In the present case, ad....
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....there was a minor variation in the cash sales during the alleged period compared to previous year would not mean that the assessee has inflated its sales to cover up demonetized currency. [Para 22] During the year under consideration, Diwali was on 31-10-2016 and it is common knowledge that in our society, festival runs 15 days after Diwali and it is also a common fact that once the demonization was declared by the Prime Minister, there was frenzy in the market and people were purchasing goods they never intended to purchase just to get rid of demonetized currency. [Para 23] For the sake of repetition, the assessee had furnished month-wise purchases, month-wise details, stock register, valuation of closing stock, month wise details of cash sales, copies of VAT returns and not a single defect has been pointed out by the Assessing Officer in these clinching evidences. [Para 24] The most important fact is that since the cash sales have already been offered as income, the same cannot be taxed in the garb of inflation sales to cover up demonetization currency. [Para 25] In so far as the allegation of non-mentioning of names of the purchasers is concer....
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.... 10. The issue involved is essentially a question of fact and depends on appraisal of all relevant evidences on record on cumulative basis. As contended, it is a matter of record that cash sales giving rise to cash deposits have been duly recorded in the 'statement of profit and loss' and the resultant profits have been admittedly declared in the return of income. The income thus arising from cash sales has been duly subjected to taxation. The cash sales under cloud are also declared in the VAT returns filed before the concerned Govt. agencies. The cash and other sales are inseparable from imported purchases. No aspersions have been cast on purchases reported in the books for which the payments have been made through banking channel and custom duty have also been paid. Similar is the pattern in the earlier years as well as the subsequent years. Thus, where the propriety of purchase and stocks have been endorsed, casting aspersion on a minuscule cash sale gives infallible impression that the action of the AO is driven by suspicion, conjecture and surmises. 10.1 Needless to say, sale of goods has corresponding effect on the closing stock as well as the profitability. T....
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....the judgment of the Hon'ble ITAT, Delhi in the case of J. R. Rice India (P.) Ltd vs ACIT [2023] 157 taxmann.com 337 (Delhi - Trib.) wherein it was held that, "At the cost of repetition, to the extent of sales made, the stock position is also correspondingly reduced by the assessee which goes to prove the genuineness of the claim of the assessee. On examination of the cash book of the assessee, it is found that the assessee had cash balance of Rs. 55.94 lakhs as on 8-11-2016, i.e., the date on which demonetization was announced, which sufficiently explains the source of deposit of Rs. 52.60 lakhs in specified bank notes. Apart from this, the assessee had duly furnished the month wise details of sales, month wise details of purchase, corresponding freight charges incurred month wise, month wise power and fuel expenses and month wise selling expenses in the form of rebate and discount. The assessee also furnished the quantitative details of goods month wise for rice, sugar, chana dal and wheat flour before the Assessing Officer. All these facts clearly go to prove the genuineness claim made by the assessee that cash deposits of Rs. 52.60 lakhs has been made out of cash balanc....
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....ddition was made solely on suspicion, conjecture, and unsubstantiated assumptions which is clearly not unsustainable not as per law. It has been repeatedly held by the Hon'ble Apex Court and other High Courts that additions cannot be made on mere surmises, suspicions and conjectures Here, reliance is placed on the judgment of the Hon'ble Apex Court in the case of Omar Salay Mohamed Sait vs CIT reported in [1959] 37 ITR 151 (SC) wherein it was held that, "The Tribunal had not applied its mind to the evidence which was there on the file of the appellant in the shape of information gathered subsequently and it had improperly rejected that evidence. That being the position the revenue could not very well resist the order which the Supreme Court proposed to made, setting aside the order of the Tribunal and remanding the matter back to it for dealing with the same in accordance with law, after taking into consideration all the circumstances, the whole evidence which was available in the file of the appellant and such further evidence as the parties might be advised to lead before it. The Tribunal is a fact finding Tribunal and if it arrives at its own conclusions of fact after d....
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.... such cash deposits was cash sales made by the assessee which forms part of total sales and was accordingly offered to tax. Therefore; the order passed by the Ld. CIT(A) is totally unsustainable in law. In view of the above, it is humbly requested before Your Honours to direct the lower authorities to delete the addition made of Rs. 1,62,46,533/- u/s 69A of the Act." 11. On the other hand, Ld DR submitted that the assessee has made cash deposits specially during the Demonetization period by manipulating the cash sales declared in the books of account, he brought to our notice page 68 of the Paper book and submitted that the cash sales has increased only during Oct'2016 to Dec'2016. He also brought to our notice findings of AO at para 7 of the Order and relied on the same. Further submitted that the assessee has inflated the cash sales. In this regard, he brought to our notice page 77 of the Paper book to submit that the daily cash sales were increased only during the demonetization period. He fully relied on the findings of Ld CIT(A) and on the submissions of the Ld AR, he submitted that the discrepancies highlighted are rectifiable and can be sent back to CIT(A) to rec....
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..... As submitted by the assessee that it reconciles the stock movement at the end of each month with the physical quantity. It cannot be denied based on the nature of industry it is into. What is important and relevant, is the stock reconciliation of each items and whether the same is certified by the statutory auditor before finalizing the accounts. In this case, we observed that the same was submitted before the authorities below. Ld CIT(A) has not found anything suspicious in the method of accounting in the recording of sales nor stock keeping but merely expressed his view on the contrary but failed to appreciate the nature of business and how difficult to maintain the several stock keeping units(sku) involved in this industry. If we consider the bearing itself, it may run into several hundred sku's. Therefore, the observation of the Ld CIT(A) is impractical. 15. Coming to the other issue of non-substantiation of sale bills with the names and address of the customers, we observed from the sale bills and cash register submitted by the assessee that each cash bills are with the value varies from Rs. 5000 to 18000. When the value is less than Rs. 20,000/- there is no requirement f....
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....not abnormal. 20. Whether the recording of cash sales which is already declared in the books of account will attract the deeming provisions of sec.68 or 69A of Act. We observed that the assessee has declared all the cash transactions in its books of account and merely because the cash deposits are more during the demonetization period, whether the CIT(A) can invoke the provisions of section 69A of the Act. As per provisions of the section, it is necessary that the assessee be found with the money, the same is not recorded in the books accounts maintained by it for any source and not offers any explanation or such explanations are not found to be satisfactory to the AO. In this case, the assessee has already declared the cash sales in its books of account and offers the explanation as cash sales, which the lower authorities has accepted it as regular business transactions because they have not rejected the book results and brought to tax the total sales declared by the assessee in its books. Since the cash were already recorded and explanation is already part of the book results, there is no avenue for the CIT(A) to reject such explanations. This expression "explanation is found ....
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....ine transaction. 5The evidence brought on record by the Assessing Officer are not enough to hold that sales were not genuine. More so, the other wing of the Govt has already accepted the sale transaction under VAT, hence, the Assessing Officer is precluded from making contrary findings on the issue when the sales are not doubted. The other contention of the ld DR is that the assessee has not maintaining stock register properly and date wise stock position are not given. The Assessing Officer made the said observation without rejecting the books of account form which true profit and loss accounts could be ascertained and there is no quarrel on this issue. The lower authorities cannot place reliance on the circumstantial evidence which is only conjectures and surmises and the said approach of the ld CIT(A) is devoid of merit it deserves to be rejected. Further, the income of the assessee has to be computed by the Assessing Officer on the basis of available material on record and it is very important to have a direct evidence to make an addition rather than circumstantial evidence. When the assessee gives any reply or submission or any documents to the Assessing Officer, it is duty of....