M/s. Sai Industries, Bhopal V. DCIT (Central)-2, Bhopal

CO 10/Ind/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3644 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 2 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-10-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-03-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 27-07-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GIRISH AGRAWAL; S.S. MANTRI
• Keywords: Bogus purchase; Principle of natural justice; Onus to prove; Documents seized; Bogus
• Section: 37; 132; 11; 143(3); 142(1); 69B; 143(2); 13; 153C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE RAJPAL YADAV, VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING IT(SS)A NO.248/IND/2019 ASSESSMENT YEAR: 2016-17 DCIT-CENTRAL-2 BHOPAL : APPELLANT V/S SAI INDUSTRIES BHOPAL : RESPONDENT PAN:ACUFS2583E CO NO.10/IND/2020 (ARISING OUT OF IT(SS)A NO.248/IND/2019) ASSESSMENT YEAR: 2016-17 SAI INDUSTRIES BHOPAL PAN:ACUFS2583E : APPELLANT V/S DCIT-CENTRAL-2 BHOPAL : RESPONDENT REVENUE BY SHRI S.S. MANTRI, CIT-DR RESPONDENT BY SHRI GIRISH AGRAWAL & MS. NISHA LAHOTI, ARS DATE OF HEARING 04.08.2021 DATE OF PRONOUNCEMENT 13.10.2021 SAI INDUSTRIES BHOPAL 2 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE O F THE REVENUE & CROSS OBJECTION BY THE ASSESSEE FOR ASSE SSMENT YEAR 2016-17 ARE DIRECTED AGAINST THE ORDERS OF LD. COMM ISSIONER OF INCOME TAX(APPEALS) (IN SHORT LD. CIT], BHOPAL DAT ED 06.09.2019 WHICH ARE ARISING OUT OF THE ORDER U/S 143(3) OF TH E INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 27.12.2017 FRAME D BY ACIT(CENTRAL)-2, BHOPAL. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN IT(SS)ANO.246/IND/2019: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.75,66,2 50/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS STOCK OF GRAM PULSES NOT RECORDED IN THE BOOKS OF ACCOUNT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,14,30 ,211/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES OF STOCK RECORDED IN BOOKS OF ACCOUNT AND DISALLOWED U/S 37 OF THE INCOME TAX ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.52,01,4 96/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED STO CK FOUND AT NARMADA VALLEY WAREHOUSE. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL IN CONO.10/IND/2020: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. AO ERRED IN PASSING THE IMPUGNED ASSESSMENT ORDER U /S 143(3) WHICH OUGHT TO HAVE BEEN PASSED BY APPLYING PROVISI ONS OF SECTION SAI INDUSTRIES BHOPAL 3 153C CONSIDERING PROVISO TO SECTION 153C(1) READ WI TH SECOND PROVISO TO SECTION 153A(1) OF THE INCOME TAX ACT 19 61. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, LD. AO ERRED IN MAKING THE ADDITION AND PASSING THE IMP UGNED ASSESSMENT ORDER UNDER 143(3) WHICH OUGHT TO HAVE P ASSED UNDER SECTION 153C R.W.S. 143(3) MORE PARTICULARLY WITHOU T REFERENCE TO SATISFACTION RECORDED BY THE ASSESSING OFFICER OF T HE SEARCHED PERSON AND WITHOUT SUPPLYING A COPY OF THE SAID SATISFACTI ON TO THE APPELLANT FROM THE FILE OF SEARCHED PERSONS I WHOSE CASE ASSESSMENTS WERE COMPLETED UNDER SECTION 153A. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, LD. AO ERRED IN MAKING THE ADDITION AND PASSING THE IMP UGNED ASSESSMENT ORDER UNDER SECTION 143(3) WHICH OUGHT T O HAVE BEEN PASSED UNDER SECTION 153C R.W.S. 143(3) MORE PARTIC ULARLY WITHOUT REFERENCE TO ANY INCRIMINATING MATERIAL FOUND THE S EIZED FROM THE SEARCHED PERSONS DURING THE CONDUCT OF THEIR SEARCH . 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, LD. AO ERRED IN MAKING THE ADDITION AND PASSING THE IMP UGNED ASSESSMENT ORDER UNDER SECTION 143(3) WHICH OUGHT T O HAVE BEEN PASSED UNDER SECTION 153C R.W.S. 143(3), MORE PARTI CULARLY WHEN PROVISIONS OF SECTION 292C APPLIES ON PERSON FROM W HOM THE SEIZED MATERIAL IS FOUND IN THE POSSESSION OR CONTROL OF, IN THE COURSE OF A SEARCH UNDER SECTION 132 OR SURVEY UNDER SECTION 13 3A AND NOT THE OTHER PERSON. 5. THE APPELLANT FURTHER CRAVES LEAVE TO ADD, AMEND OR MODIFY ANY OF THE GROUNDS OF APPEAL. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REQU ESTED FOR NOT PRESSING C.O.NO.10/IND/2020. THE REVENUE DI D NOT OPPOSED THIS REQUEST. THEREFORE, CROSS OBJECTION NO.10/IND/2020 RAISED BY THE ASSESSEE ARE DISMISSED AS NOT PRESSED. NOW WE TAKE UP REVENUES APPEAL IN IT(SS)ANO.248/IND/2019. 3. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE B USINESS OF SAI INDUSTRIES BHOPAL 4 TRADING IN FOOD GRAINS AND PULSES. THE FIRM CAME IN TO EXISTENCE ON 26.12.2014. SEARCH/SURVEY OPERATION WERE CARRIED OUT ON 05.10.2015 AT BUSINESS PREMISES OF THE ASSESSEE FIR M AS WELL AS ON THE PREMISES OF OTHER CONCERNS/BUSINESS ASSOCIAT ES. STATEMENT OF THE KEY PERSON RELATED TO THE GROUP MR . MANOHARLAL DUDANI WERE RECORDED WHICH WERE JOINTLY GIVEN FOR T HE ASSESSEE FIRM M/S. SAI INDUSTRIES AS WELL AS M/S. MAHESH TRA DERS. FOR THE INSTANT APPEAL WHICH RELATES TO A.Y. 2016-17 RETUR N OF INCOME WAS FILED FOR THE FIRST TIME ON 28.03.2017, DECLARI NG TOTAL INCOME OF RS.29,51,680/-. NOTICES U/S 143(2) & 142(1) OF T HE ACT WERE SERVED UPON THE ASSESSEE. LD. AO CONTROVERTED THE A SSESSE WITH THE STATEMENT GIVEN BY PARTNERS WITH REGARD TO THE DISCREPANCIES FOUND IN THE STOCK RECORDS. ON BEHALF OF THE ASSESS EE IT WAS SUBMITTED THAT THE STOCK TAKING WAS NOT DONE EITHER IN THE PRESENCE OF THE ASSESSEE OR HIS AUTHORIZED REPRESEN TATIVE. THE ASSESSEE ALSO SUBMITTED THAT THE BASIS OF CALCULATI ON OF EXCESS STOCK AND SHORT STOCK AND THE INVENTORY SHEET PREPA RED DURING THE COURSE OF SURVEY SHOULD BE PROVIDED. IT WAS ALS O SUBMITTED THAT SOME OF THE STOCK HAS BEEN WRONGLY NAMED BY TH E REVENUE AUTHORITIES AS CHANNI WHEREAS ACTUALLY IT IS CHANA AND DULY RECORDED IN THE BOOKS. HOWEVER, LD. AO WAS NOT SATI SFIED WITH THE SAI INDUSTRIES BHOPAL 5 VARIOUS SUBMISSIONS MADE BY THE ASSESSEE AND MADE V ARIOUS TOTAL TO RS.3,41,97,957/- THEREBY ASSESSING THE INC OME AT RS.3,71,49,637/- IN THE FOLLOWING MANNER: A.Y. 2016-17 INCOME SHOWN IN THE RETURN RS. 29,51,680/- ADD: EXCESS STOCK OF GRAM PULSE NOT RECORDED IN BOOKS OF ACCOUNTS RS. 75,66,250/- ADD: BOGUS PURCHASES OF STOCK RECORDED IN BOOKS OF ACCOUNTS AS SHORT STOCK WAS FOUND DURING SURVEY DISALLOWED U/S 37 RS. 2,14,30,211/- ADD: UNDISCLOSED STOCK OF CHANNI FOUND AT NARMADA VALLEY WAREHOUSE NOT RECORDED IN BOOKS OF ACCOUNTS RS. 52,01,496/- TOTAL INCOME ASSESSED RS. 3,71,49,637/- 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A) CHALLENGING VARIOUS ADDITIONS MADE BY THE ASSESSEE AND WAS ABLE TO SUCCEED ON ALL THE GROUNDS, AS LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, REMAND REPORT OF THE L D. AO DATED 29.04.2019 AND THE REPLY OF THE ASSESSEE TO THE REM AND REPORT, CAME TO A CONCLUSION THAT THE ADDITIONS MADE BY THE LD. AO WERE UNDER DEEM FICTION WITHOUT HAVING ANY COGENT/POSITIVE/INCRIMINATING EVIDENCE ON RECORD. SAI INDUSTRIES BHOPAL 6 5. NOW REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. L D. DR VEHEMENTLY ARGUED SUPPORTING THE ORDER OF LD. AO AN D ALSO FILED A PAPER BOOK DATED 01.04.2021 CONTAINING PAGES 1 TO 47. 6. PER CONTRA LD. COUNSEL FOR THE ASSESSEE APART FR OM PLACING RELIANCE ON THE FINDING OF LD. CIT(A) ALSO REFERRED TO THE FOLLOWING WRITTEN SUBMISSION PLACED BEFORE US: 1. ASSESSEE IS A PARTNERSHIP FIRM AND IS ONE OF THE GR OUP CONCERNS OF DUDANI GROUP AT PIPARIYA (MP). ASSESSEE IS ENGAGED IN THE BUSINESS OF FOOD GRAINS SINCE 26.12.2014. AY 2015-16 IS THE FIRST YEAR OF THE ASSESSEE WHEREI N RETURNED INCOME HAS BEEN ACCEPTED AS ASSESSED U/S 143(3) RWS 153C. SECOND YEAR IS AY 2016-17 WHICH IS UNDER APPEAL BEFORE YOUR HONOUR S. 2. A SEARCH WAS CONDUCTED U/S 132 ON THE DUDANI GROUP ON 05.10.2015. A SURVEY ACTION WAS ALSO CONDUCTED ON T HE PREMISES OF THE ASSESSEE DURING THE SAME TIME. STATEMENT OF SHR I MANOHARLAL DUDANI WAS RECORDED ON 07.10.2015 U/S 132(4) AT THE OFFICE PREMISES OF M/S. MAHESH TRADERS OF WHICH HE IS A PA RTNER. SHRI MANOHARLAL DUDANI DID NOT ADMIT ABOUT EXCESS OR SHO RTAGE OF STOCK. [PB 62] 3. SMT. SANDHYA DUDANI, SMT. CHANDNI DUDANI AND SHRI R AM ASWANI ARE THE PARTNERS IN THE ASSESSEE FIRM. THIS IS A FACT STATED BY SHRI MANOHARLAL DUDANI IN HIS STATEMENT U/S 132(4). [PB 64] 4. NOTICES U/S 153C WAS ISSUED BY THE LD. AO ON 15.11. 2016. IT IS SUBMITTED THAT THE ASSESSMENT FRAMED U/S 153C R.W.S 143(3) IS ERRONEOUS AS THERE WAS NO SATISFACTION RECORDED BY THE LD. AO AS MANDATED BY SECTION 153C. 5. ALSO THERE WAS NO INCRIMINATING MATERIAL FOUND AND SEIZED FROM THE SEARCHED PERSONS IN REGARD TO THE PRESENT ASSES SEE ON THE BASIS OF WHICH ANY NOTICE U/S 153C COULD BE ISSUED. ACCOR DINGLY, ASSUMPTION OF JURISDICTION BY THE LD. AO IS ERRONEO US. CROSS OBJECTION IN REGARD TO THIS POINT HAS BEEN FILED BEFORE YOUR HONOURS AND FIXED FOR HEARING ALONG WITH THE APPEAL BY DEPARTMENT. 6. ADDITIONS WERE MADE BY THE LD. AO ON THE BASIS OF I NVENTORIES OF STOCK AND TRADING ACCOUNTS PREPARED BY THE SURVEY T EAM DURING THE SAI INDUSTRIES BHOPAL 7 COURSE OF SURVEY PROCEEDINGS WHICH WERE ALLEGEDLY A T DIFFERENCE FROM THE AMOUNTS AS PER BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. 7. IT IS A CATEGORICAL FINDING OF LD. CIT(A) AFTER DUL Y CALLING REMAND REPORT FROM THE LD. AO THAT NO PROPER INVENTORY OF STOCK WAS PREPARED BY THE DEPARTMENT DURING THE COURSE OF SURVEY AND T HERE IS NO RECORD OF ANY TRADING ACCOUNT PREPARED BY THE DEPARTMENT. [PB 58 AND PAGE 16-17 OF CIT(A)] 8. ON THE BASIS OF FACTS NOTED BY THE LD. AO IN HIS RE MAND REPORT, LD. CIT(A) DELETED THE ENTIRE ADDITIONS MADE BY THE LD. AO BY STATING THAT SUCH ADDITIONS WERE MADE UNDER DEEMED FICTION AND WITHOUT ANY COGENT/POSITIVE/INCRIMINATING EVIDENCES ON RECO RD. [PB 58 AND PAGE 18 OF CIT(A)] 9. FOLLOWING ADDITIONS WERE MADE BY THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS TABULATED AT PAGE 13 O F HIS ORDER: GROUND NO. PARTICULARS AMOUNT (RS.) 1. ALLEGED EXCESS STOCK OF CHANA DAL TREATED AS UNDISCLOSED INVESTMENT BY THE LD. AO U/S 69B 75,66,250 2. ALLEGED LESS STOCK OF VARIOUS ITEMS TREATED AS BOGU S PURCHASE BY THE LD. AO U/S 37 2,14,30,211 3. ALLEGED EXCESS STOCK OF CHANNI TREATED AS UNDISCLOSED INVESTMENT BY THE LD. AO U/S 69B 52,01,496 10. SUMMARY OF STOCK AS ON DATE OF SURVEY 05.10.2015 AS PER BOOKS OF ACCOUNTS OF THE ASSESSEE AND ALLEGED STOCK INVEN TORIES PREPARED BY THE SURVEY TEAM DURING THE COURSE OF SURVEY IS A S FOLLOWS:- SR. NO. PARTICULARS STOCK AS PER BOOKS OF ACCOUNTS (RS.) PHYSICAL STOCK CLAIMED BY DEPARTMENT (RS.) DIFFERENCE (RS.) 1.A BARDANA 6,81,135 1,36,000 (5,45,135) 1.B CHANA 2,29,12,223 36,98,200 (1,92,14,023) 1.C DHAAN 6,19,375 - (6,19,375) 1.D MOONG 9,15,678 - (9,15,678) TOTAL # 2,51,28,411 38,34,200 (2,12,94,211) 2. CHANA DAL 3,51,29,555 4,26,95,804 75,66,249 3. CHAANI/CHUNNI - 52,01,496 52,01,496 # LD. AO WRONGLY TOOK THE FIGURE OF 2,14,30,211 INS TEAD OF 2,12,94,211 SAI INDUSTRIES BHOPAL 8 11. DURING ASSESSMENT, VERY SPECIFIC SUBMISSION WAS MAD E TO THE LD. AO VIDE LETTER DATED 01.12.2017 FILED UNDER ACKNOWL EDGEMENT ON 04.12.2017 THAT [PB 74] A. STOCK WAS NOT TAKEN IN THE PRESENCE OF THE ASSESSEE OR ITS AUTHORIZED REPRESENTATIVE. B. COPY OF INVENTORY SHEETS OF THE STOCK TAKING HAS NO T BEEN SUPPLIED. C. BASIS OF CALCULATION OF EXCESS STOCK AND SHORT STOC K IN TERMS OF QUANTITY AND VALUE BE COMMUNICATED SO AS TO ENABLE THE ASSESSEE TO SUBMIT THE CORRECT DETAILS. ANOTHER REQUEST LETTER WAS FILED AS A REMINDER ON 2 7.12.2017 UNDER SEALED ACKNOWLEDGMENT. [PB 75] 12. A VERY SPECIFIC REQUEST WAS MADE BEFORE LD. CIT(A) ALSO TO GIVE APPROPRIATE DIRECTIONS TO THE LD. AO TO MAKE AVAILA BLE ALL THE RELEVANT DOCUMENTS AND MATERIAL WHICH WILL ENABLE THE ASSESS EE TO MAKE ITS COMPREHENSIVE SUBMISSION. [PB 73] 13. EVEN ON SEVERAL AND REPEATED REQUESTS BY THE ASSESS EE AND DIRECTION BY LD. CIT(A) DURING REMAND PROCEEDINGS, THE BASIS OF VALUATION OF STOCK HAS NOT BEEN PRESENTED BY THE LD . AO BY MAKING AVAILABLE COPIES OF INVENTORY SHEETS FOR RECORDING OF EACH ITEM OF STOCK PHYSICALLY VERIFIED AT ALL THE LOCATIONS RELATING T O BUSINESS OF THE ASSESSEE. PREMISES-WISE INVENTORY SHEETS PREPARED D URING THE COURSE OF SURVEY HAVE NOT BEEN SUPPLIED BY THE LD. AO. [AO PA RA 7.12 AND PB 73- 75] 14. IN THE REMAND REPORT, LD. AO MAKES FACTUAL STATEMEN T THAT IN SURVEY ONE STOCK TAKING INVENTORY SHEET OF THE STOC K WAS PREPARED AT MILL, SHOBHAPUR ROAD, NEAR HANUMAN MANDIR, PIPARIYA . LD. AO STATES THAT NO OTHER DOCUMENT RELATED TO THE INVENTORY OF STOCK IS AVAILABLE IN THIS OFFICE. [PB 58 PARA 2(I)] LD. AO HAS NOT PRODUCED ANY TRADING ACCOUNT CLAIMED TO HAVE BEEN PREPARED BY THEM DURING THE COURSE OF SURVEY PROCEE DINGS FACT OF WHICH HAS BEEN AFFIRMED IN THE REMAND REPORT IN PARA 2(II ). [PB 58] LD. AO STATES THAT THERE ARE NO SEPARATE ANNEXURE A VAILABLE WITH HIM EXCEPT FOR WHAT IS STATED IN THE QUESTION 10 OF THE STATEMENT OF SHRI MANOHARLAL DUDANI. [PB 58, PARA 2(III)] 15. LD. AO IN HIS REMAND REPORT HAS STATED THAT THERE A RE NO DOCUMENTS RELATED TO VALUATION OF THE STOCK OR ANY TRADING ACCOUNT AVAILABLE ON RECORD. [PB 58 AND PAGE 15 OF CIT(A)] 16. IT IS A CATEGORICAL FINDING OF LD. CIT(A) THAT THE HAND WRITTEN STOCK INVENTORY PREPARED BY THE DEPARTMENT IS ERRONEOUS. BARE PERUSAL OF THIS SAI INDUSTRIES BHOPAL 9 HAND WRITTEN STOCK INVENTORY SHEET SHOWS THAT THE C OLUMNS WITH HEADING RATE AND TOTAL VALUE ARE LEFT BLANK. AL SO, THERE IS NO TOTALLING FOR ANY OF THE COLUMN TO GIVE THE OVERALL QUANTIFICATION. [ PB 59 - 61 AND PAGE 16, LAST LINE OF CIT(A)] 17. BOOKS OF ACCOUNT OF ASSESSEE ARE AUDITED AND THE SA ME HAVE NOT BEEN REJECTED BY THE LD. AO. [CIT(A) PAGE 9, TOP 3 LINES] 18. TRADING ACCOUNTS OF THE ASSESSEE CONTAIN QUANTITATI VE DETAILS OF EACH GRAIN TYPE (JIN). EACH ITEM OF STOCK CATEGORY AS PER BOOKS IS VERIFIABLE FROM THE DAILY STOCK REGISTERS MAINTAINE D BY THE ASSESSEE AS WELL AS FROM THE SALE AND PURCHASE REGISTERS MAINTA INED BY THE ASSESSEE. ALL THESE WERE FURNISHED BEFORE THE LD. A O AND ARE ON RECORD. [PB 10-11, 14-20, 21-32 AND 33-54] 19. BASIS OF STOCK VALUATION ON 06.10.2015 WAS FURNISHE D CONTAINING THE QUANTITATIVE DETAILS AND THE AVERAGE PRICE ARRI VED AT FOR VALUATION. [PB 13] 20. IT HAS BEEN ALLEGED THAT THERE IS DEFICIENCY OF VAR IOUS STOCK ITEMS AS MENTIONED IN THE TABLE ABOVE. LD. AO TREATED THE SAME AS UNACCOUNTED PURCHASES AND MADE ADDITIONS OF RS. 2,1 4,30,211. 21. IT WAS STATED CLEARLY STATED DURING THE SURVEY THAT SOME STOCK OF ASSESSEE WAS KEPT AT PRAGATI WAREHOUSE WHICH WAS NO T TAKEN INTO CONSIDERATION AT THE TIME OF PHYSICAL VERIFICATION DURING SURVEY PROCEEDINGS. ACCORDINGLY, INVENTORY PREPARED BY THE SURVEY TEAM IS ERRONEOUS. [AO PAGE 9, ANS. TO Q. NO. 10] 22. IN REGARD TO ALLEGED EXCESS STOCK OF CHANNI FOR R S. 52,01,496 FOUND DURING THE SURVEY PROCEEDINGS, IT IS ALLEGED BY THE LD. AO THAT THERE WAS SOME STOCK OF CHANNI FOUND IN THE NAME OF THE ASSESSEE AT NARMADA VALLEY WAREHOUSE AND THE SAME WAS NOT RECOR DED IN ITS BOOKS. CONSEQUENTLY ADDITION OF RS. 52,01,496 HAS B EEN MADE. 23. IT WAS STATED CLEARLY STATED DURING THE SURVEY THAT THE SAME IS ACTUALLY STOCK OF CHANNA AND HAS BEEN INCLUDED IN THE STOCK OF CHANNA IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. [AO PAGE 10 ANS. TO Q. NO. 12] 24. LD. CIT(A) VERIFIED THE SAME AND HAS DELETED THE EN TIRE ADDITION OF RS. 52,01,496. [PAGE 17 OF CIT(A)] 25. IN RESPECT OF ADDITION MADE TOWARDS UNDISCLOSED INV ESTMENT IN THE STOCK OF CHANNA DAL BY THE ASSESSE OF RS. 75, 66,249, THE BASIS OF VALUATION OF SUCH AMOUNT WAS NOT PROVIDED TO THE AS SESSEE BY THE LD. AO EVEN AFTER REPEATED REQUESTS AND ALSO WAS NOT MA DE AVAILABLE BEFORE THE LD. CIT(A) DURING THE REMAND PROCEEDINGS . [PB 58] 26. ADDITIONS MADE ON THE BASIS OF MATERIAL NOT CONFRON TED TO THE ASSESSEE ARE AGAINST THE PRINCIPLES OF NATURAL JUST ICE AND THEREFORE DESERVE TO BE DELETED IN FULL. IT WAS SUBMITTED THA T: A. NO PHYSICAL VERIFICATION OF STOCK WAS DONE DURING T HE COURSE OF SURVEY FOR ALL THE LOCATIONS B. FIGURES ADOPTED BY THE LD. AO ARE PURELY IMAGINATIV E, C. NO INVENTORY SHEETS WERE PREPARED FOR THE STOCK ITE MS LYING IN THE WAREHOUSE AND MANDI GODOWN [CIT(A) PAGE 14, PARA 4. 1.1 AND PAGE 15] SAI INDUSTRIES BHOPAL 10 27. LD. CIT(A) HAS ALSO ACCEDED TO THE SAME IN HIS ORDE R AND HAS DELETED THE ENTIRE ERRONEOUS ADDITION MADE BY THE L D. AO BY GIVING FACT BASED FINDING THAT: A. NO TRADING ACCOUNT STATEMENT IS ON RECORD OF THE AO ON THE BASIS OF WHICH ALLEGED ADDITIONS HAVE BEEN MADE. [PAGE 17 PARA 4.1.3 OF CIT(A)] B. IT IS TRUTH THAT NO SPECIFIC ENQUIRY WAS CARRIED OU T BY AO FROM MANDI PARISHAD AND OTHER SELLERS FROM WHOM THE APPE LLANT HAS PURCHASED THE GRAINS AND OTHER JINS. [PAGE 17 PARA 4.1.4 OF CIT(A)] C. AO AS FAILED TO BRING IN LIGHT ANY OF THE INSTANCE SHOWING BOGUS PURCHASE MADE BY THE APPELLANT. [PAGE 17 PARA 4.1.4 OF CIT(A)] D. ADDITIONS MADE BY THE AO ARE SIMPLY ON GUESS WORK A ND IMAGINATION. [PAGE 17 PARA 4.1.5 OF CIT(A)] E. SHRI MANOHARLAL DUDANI IN HIS SWORN STATEMENT RECOR DED ON OATH HAS CLEARLY STATED THE DIFFERENCE IN STOCK IS ON AC COUNT OF STOCK KEPT AT OTHER GODOWNS, HOWEVER, THE SEARCH PARTY DID NOT CO NSIDER HIS WORDS WORTHY AND THE AO ALSO RELIED SOLELY TO THE FINDING S OF THE SEARCH PARTY WITHOUT GIVING A SINGLE THOUGHT TO THE FACT THAT SH RI MANOHARLAL DUDANI HAS EXPLAINED THE REASONS FOR DIFFERENCE IN STOCK. [PAGE 17 PARA 4.1.5 OF CIT(A)] 28. LD. CIT(A) HELD THAT THE AO WAS NOT JUSTIFIED IN MA KING ADDITIONS ON HIS WHIMS AND FANCIES. [PAGE 17 PARA 4.1.6 OF CI T(A)] 29. AO BEING QUASI-JUDICIAL AUTHORITY MUST NOT BASE HIS FINDINGS ON NO-MATERIAL OR NO-EVIDENCE. THIS IS A FUNDAMENTAL R ULE OF JUSTICE AND ESTABLISHED LEGAL PROPOSITION THAT THERE MAY BE SOM ETHING MORE THAN BARE SUSPICION, TO SUPPORT THE FINDINGS, IN THE ASS ESSMENT ORDER, AS HELD BY THE HON'BLE SUPREME COURT, IN THE CASE OF A. DHIRAJLAL GIRDHARILAL V. CIT [1954] 26 ITR 736 (SC) B. OMAR SALAY MD. SAIT V. CIT [1959] 37 ITR 151 (SC) C. DHAKESWARI COTTON MILLS LTD. V. CIT [1954] 26 ITR 7 75 (SC) D. LAL CHAND BHAGAT AMBICA V. CIT [1959] 37 ITR 288 (S C) CONSIDERING THE ABOVE FACTS, CIRCUMSTANCES OF THE C ASE, SUBMISSIONS MADE, DOCUMENTS ON RECORD, FACTUAL STATEMENTS IN TH E REMAND REPORT ABOUT NON-AVAILABILITY OF MATERIAL DOCUMENTS AND JU DICIAL PRECEDENTS, APPEAL OF THE DEPARTMENT OUGHT TO BE DISMISSED. 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE DEC ISIONS REFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSE SSEE. WE OBSERVE THAT THE SEARCH WAS CONDUCTED ON DUDANI GRO UP ON SAI INDUSTRIES BHOPAL 11 05.10.2015 U/S 132 OF THE ACT. A SURVEY ACTION WAS ALSO CONDUCTED ON THE ASSESSEE FIRM PREMISES. PHYSICAL S TOCK WAS DONE BY THE SURVEY TEAM. ADDITIONS WERE MADE BY THE LD. AO ON THE BASIS OF INVENTORIES OF STOCK AND TRADING ACCOU NT PREPARED BY SURVEY TEAM WHICH WERE ALLEGEDLY DIFFERENT FROM THE AMOUNTS AS PER BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. L D. AO MADE FOLLOWING ADDITIONS WHICH WERE ALL CONNECTED TO THE STOCK ITEMS: GROUND NO. PARTICULARS AMOUNT (RS.) 1. ALLEGED EXCESS STOCK OF CHANA DAL TREATED AS UNDISCLOSED INVESTMENT BY THE LD. AO U/S 69B 75,66,250 2. ALLEGED LESS STOCK OF VARIOUS ITEMS TREATED AS BOGU S PURCHASE BY THE LD. AO U/S 37 2,14,30,211 3. ALLEGED EXCESS STOCK OF CHANNI TREATED AS UNDISCLOSED INVESTMENT BY THE LD. AO U/S 69B 52,01,496 8. WE FURTHER FIND THAT LD. COUNSEL FOR THE ASSESSE E HAS SUBMITTED A SUMMARY OF STOCK AS ON THE DATE OF SURVEY I.E. 05 .10.2015, AS PER BOOKS OF ACCOUNT OF THE ASSESSEE AND ALLEGED ST OCK INVENTORIES PREPARED BY THE SURVEY TEAM AND THE SAM E IS FOLLOWS: SR. NO. PARTICULARS STOCK AS PER BOOKS OF ACCOUNTS (RS.) PHYSICAL STOCK CLAIMED BY DEPARTMENT (RS.) DIFFERENCE (RS.) 1.A BARDANA 6,81,135 1,36,000 (5,45,135) 1.B CHANA 2,29,12,223 36,98,200 (1,92,14,023) SAI INDUSTRIES BHOPAL 12 1.C DHAAN 6,19,375 - (6,19,375) 1.D MOONG 9,15,678 - (9,15,678) TOTAL # 2,51,28,411 38,34,200 (2,12,94,211) 2. CHANA DAL 3,51,29,555 4,26,95,804 75,66,249 3. CHAANI/CHUNNI - 52,01,496 52,01,496 9. WE FURTHER FIND THAT LD. CIT(A) AFTER CAREFULLY CONSIDERING OF THE SUBMISSION MADE BY THE ASSESSEE, REMAND REPORT CALLED FROM THE LD. AO AND COUNTER REPLY GIVEN BY THE ASSESSEE AND AFTER ANALYZING THE FACTS OF THE CASE DELETED THE ADDITIO N OBSERVING AS FOLLOWS: 4.1 GROUND NO.1 TO 7: THROUGH THESE GROUNDS OF APPE AL, THE APPELLANT HAS CHALLENGED ADDITION OF RS.75,66,250/- ON ACCOUN T OF EXCESS STOCK OF GRAM PULSE, RS.2,14,30,211/- ON ACCOUNT OF BUGUS PU RCHASE OF STOCK AND RS. 52,01,496/- ON ACCOUNT OF UNDISCLOSED STOCK OF CHANNI, FOUND DURING THE COURSE OF SEARCH. DURING THE COURSE OF S EARCH, AT THE BUSINESS PREMISES OF MIS SAI INDUSTRIES (ASSESSEE) EXCESS STOCK OF GRAM PULSE WAS FOUND AMOUNTING TO RS. 75,66,250/- A ND LESS STOCK OF ALL OTHER JINS WAS FOUND AMOUNTING TO RS. 2,14,30,2 11/-. FURTHER, STOCK OF GRAM PULSE OF RS. 52,01,496/- WAS FOUND AT NARMA DA VALLY WAREHOUSE IN THE NAME OF MIS SAI INDUSTRIES, HOWEVE R, SUCH CLOSING STOCK WAS NOT FOUND IN TRADING ACCOUNT OF THAT FIRM . THEREFORE; THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRE D SHRI MANOHAR DUDANI TO EXPLAIN EXCESS STOCK AND SHORTAGE OF STOC K. HOWEVER, SHRI MANOHAR DUDANI FAILED TO RECONCILE THE DIFFERENCE I N STOCK. THE AO AFTER CONSIDERING ENTIRE FACTS MADE ADDITIONS TO THE INCO ME OF THE ASSESSEE. 4.1.1 THE APPELLANT DURING THE COURSE OF APPELLATE PROCEE DINGS HAS CHALLENGED THE ADDITIONS MADE BY THE AO BY STATING THAT NO PHYSICAL VERIFICATION OF STOCK WAS DONE DURING THE COURSE OF SURVEY/SEARCH AND THE FIGURES ADOPTED BY THE AO ARE PURELY IMAGINATIV E. FURTHER, THE APPELLANT IN SUPPORT OF ITS CLAIM HAS STATED THAT N O INVENTORY WAS PREPARED FOR THE ITEMS LYING IN THE WAREHOUSE AND M ANDI GODOWNS AND THEREFORE, ALLEGATIONS OF THE AO ARE INCORRECT AND WITHOUT ANY SUPPORTIVE COGENT MATERIAL OR POSITIVE EVIDENCE. SAI INDUSTRIES BHOPAL 13 4.1.2 I HAVE CONSIDERED THE FACTS OF THE CASE, PLEA RAISE D BY THE APPELLANT AND FINDINGS OF THE AO. THE APPELLANT DUR ING THE COURSE OF APPELLATE PROCEEDINGS REQUESTED TO PROVIDE COPIES O F INVENTORY SHEETS, TRADING ACCOUNTS, STATEMENT OF SHRI MANOHAR DUDANI AND DOCUMENTS COLLECTED FROM KRISHI UPAJ MANDI, PIPARIYA ON THE B ASIS OF WHICH ADDITIONS WERE MADE BY THE AO. THEREFORE, THE AO VI DE LETTER DATED 05.03.2019 WAS SPECIFICALLY REQUIRED TO PROVIDE PHO TOCOPIES OF THE DESIRED DOCUMENTS(AS MENTIONED ABOVE) ON THE BASIS OF WHICH VARIOUS ADDITIONS HAVE BEEN MADE TO THE INCOME OF THE APPEL LANT. THE AO VIDE LETTER DATED 29.04.2019 HAS STATED AS UNDER:- 2. IN THIS CASE, THE AO OF THE APPELLANT HAS CALLED FOR THE FOLLOWING DOCUMENTS THROUGH CIT(A)-IJL BHOPAL FROM THIS OFFIC E RELATED TO AY 2016-17 IN ABOVE MENTIONED CASE. THE CIT(A)-IJL BHO PAL HAS ASKED FOLLOWING INFORMATION'S, POINT WISE REPLY OF WHICH IS AS UNDER:- I) COPY OF THE INVENTORY SHEETS (HANDWRITTEN) OF ST OCK TAKING PREPARED DURING SURVEY ISA TTACHED WITH THIS LETTER. NO OTHE R DOCUMENTS RELATED TO THE INVENTORY OF STOCK IS AVAILABLE IN THIS OFFI CE. II) THERE IS NO COPY OF THE TRADING ACCOUNT FROM 01 10412015 TO 06/10/2015 AVAILABLE IN THE SEIZED MATERIAL IMPOUND ED FROM THE PREMISES OF ASSESSEE FIRM. HOWEVER, QUESTION NO 10 ITSELF MENTIONS THAT 'THE TRADING ACCOUNT FOR THE PERIOD OF 0110412 015 TO 06/10/2015 WAS PREPARED ON THE BASIS OF FIRM'S BOOKS OF ACCOUN T AND BEING PRESENTED BEFORE YOU AS ANNEXURE '?SF' AND 'TF AND SAME IS PART OF THE STATEMENT ITSELF III) IN REGARD TO THE ANNEXURE '?SF' AND 'TF IT IS TO INFORM THAT THESE ANNEXURE ARE PART OF QUESTION NO 10 ITSELF THERE ARE NO SEPA RATE ANNEXURE '?SF' AND '7(' ARE AVAILABLE IN THIS OFFICE AS MENTIONED IN QUESTI ON NUMBER 10 OF THE STATEMENT (COPY OF THE STATEMENT IS ANNEX ED) IV) ANNEXURE 'C{I' REFERRED IN QUESTION NO 9 OF STATEMENT ARE THE DOCUMENTS SEIZED/IMPOUNDED FROM THE PREMISES OF MIS MAHESH TRADERS, PIPARIYA AND INVENTORIED AS ANNEXURE 'A '. A COPY OF ANNEXURE 'A' AS MENTIONED ABOVE IS BEING PROVIDED WITH THIS LETTER FOR YOUR KIND PERUSAL. 3. IN THIS REGARD, THE DOCUMENTS AS MENTIONED ABOV E ARE BEING FORWARDED FOR KIND PERUSAL AND NECESSARY ACTION. ON PLAIN READING OF THE REMAND REPORT SUBMITTED BY THE AO IT IS VERY CLEAR THAT THERE IS NO COPY OF TRADING ACCOUNT I.E. FROM 01.04.2015 TO 06.10.2015 ON THE BASIS OF WHICH ADDITIONS HAVE BEE N MADE, NO PHYSICAL VERIFICATION OF STOCK WAS TAKEN OF WAREHOU SE AND STOCK AT MANDI GODOWN. BEFORE EMBARKING UPON THE DISCUSSION AND DECISION OF SAI INDUSTRIES BHOPAL 14 ISSUE AT HAND, I FIND IT APPROPRIATE TO DISCUSS THE MATTER IN DEPTH AND WIDE. 4.1.3 DURING THE COURSE OF SURVEY, STATEMENT OF SHRI MANO HAR DUDANI WAS RECORDED ON OATH ON 07.10.2015, WHEREIN, VIDE Q UESTION NO 10 HE WAS SHOWN TRADING ACCOUNT OF MIS MAHESH INDUSTRIES AND MIS SAI INDUSTRIES FROM 01.04.2015 TO 06.10.2015 AND ON THE BASIS OF THIS TRADING ACCOUNT THE FOLLOWING PICTURE EMERGES OUT W HICH IS AS UNDER: M/S SAI INDUSTRIES (AS ON 06.10.2015) JINS ST OC PHYSICAL STOCK DIFFERENCE BO OK ACCOU NTS BARDANA 68 11 136000 (-) 545135 CHANA 22912 223 3698200 (- ) 19214023 DHAAN 61 93 NIL 619375 CHANA DAAL 35129 555 42695804 7566249 MO ON 91 56 N I (-) 915678 SHRI MANOHAR DUDANI WAS REQUIRED TO EXPLAIN THE DIF FERENCE IN STOCK AND WAS ALSO REQUIRED TO EXPLAIN WHY THE DIFFERENCE IN STOCK SHOULD NOT BE TREATED AS HIS UNDISCLOSED INVESTMENT IN HIS FIR M. SHRI DUDANI IN REPLY TO Q.NO 10 HAS CLEARLY STATED THAT HIS STOCK OF 'CHANA', 'TIWDA', 'SOYABEAN', 'DHAAN' AND 'CHANA DAAL' ARE ALSO KEPT AT PRAGATI WAREHOUSE AND THIS IS THE MAIN REASON FOR SHORTAGE OF STOCK. FURTHER, VIDE QUESTION NO 12, HE WAS REQUIRED TO EXPLAIN THA T A STOCK OFRS. 52,01,496/- OF 'CHUNNI ' WAS FOUND IN NARMADA VALLY WAREHOUSE IN THE NAME OF MIS SAI INDUSTRIES, HOWEVER, NO SUCH STOCK IS FOUND IN BOOKS OF ACCOUNTS OF FIRM. IN REPLY SHRI MANOHAR DUDANI STAT ED THAT 'CHUNNI' IS A FORM OF 'CHANNA' AND IS INCLUDED IN STOCK OF CHANNA IN BOOKS OF FIRM. ON PERUSAL OF STATEMENT OF SHRI MANOHAR DUDANI IT I S EVIDENTLY CLEAR THAT THE SEARCH PARTY WERE AWARE OF DETAILS OF PRAG ATI WAREHOUSE WHERE STOCK OF APPELLANT FIRM WAS STORED, HOWEVER, THE AO ALSO OVERLOOKED THIS VITAL FACT DURING THE COURSE OF ASS ESSMENT PROCEEDINGS. IF THE STOCK KEPT AT PRAGATI WAREHOUSE AND MANDI WA REHOUSE WAS PHYSICALLY EXAMINED, THE ACTUAL POSITION OF STOCK O F THE APPELLANT FIRM WOULD COME TO LIGHT AND ONLY THEN ANY JUSTIFIED ADD ITION COULD HAVE BEEN MADE. NEVERTHELESS, NO PROPER INVENTORY OF STO CK WAS PREPARED DURING THE COURSE OF SURVEY/SEARCH. THE AO MADE ADD ITIONS ON ACCOUNT OF DIFFERENT STOCKS (BARDANA, CHANA, DHAAN, MOONG, CHANA DAAL & CHUNNI), HOWEVER, INVENTORY OF ONLY 'CHANA DAAL ' A ND 'CHANA' WAS PREPARED. IT IS UTMOST IMPORTANT TO MENTION THAT TH E HAND WRITTEN INVENTORY PREPARED DURING SURVEY OF 'CHANA DAAL' AN D 'CHANA' HAS MENTIONS OF 'CHUNNI LOOSE' (AT SR NO. 15) AND 'CHAN I' (AT SR NO 19) WHICH CLEARLY SHOWS THAT THE REPLY GIVEN BY SHRI MANOHAR DUDANI TO Q.NO 12 SAI INDUSTRIES BHOPAL 15 IS TRUE AND CORRECT. NONETHELESS, THE ENTIRE ADDITI ONS HAVE BEEN MADE ON THE BASIS OF TRADING ACCOUNT STATEMENT AS HELD B Y THE AO IN PARA 7.4 OF THE ASSESSMENT ORDER, HOWEVER, NO SUCH TRADING A CCOUNT STATEMENT IS ON RECORD OF THE AO. 4.1.4 ANOTHER, ALLEGATION WAS MADE BY THE AO ON ACC OUNT OF SHORTAGE OF STOCK AMOUNTING TO RS. 2,14,30,2111- FOUND DURING T HE COURSE OF SEARCH. THE AO VIDE PARA 7.17 OF THE ASSESSMENT ORD ER HAS HELD THAT NO PURCHASE OF STOCK WAS MADE BY THE ASSESSEE AND DISA LLOWED THE SHORTAGE OF STOCK TREATING THE SAME AS BOGUS PURCHA SE ULS 37 OF THE ACT. ON THE CONTRARY, IT IS BARE TRUTH THAT NO SPECIFIC ENQUIRY WAS CARRIED OUT BY AO FROM MANDI PARISHAD AND OTHER SELLERS FROM WH OM THE APPELLANT HAS PURCHASED THE GRAINS AND OTHER JINS. ALSO, APPE LLANT BEFORE ME HAS FILED COPIES OF PURCHASE REGISTER OF MANDI, WHEREIN IT HAS BEEN CLEARLY MENTIONED THAT APPELLANT HAS PURCHASED GRAM, 23542 BAGS (20930 QUINTAL), MASOOR DAAL 253 BAGS (251.80 QUINTALS), M OONG 27276 BAGS (17282.90 QUINTALS), TOUR 1333 BAGS (1320.80 QUINTA LS), BARDANA 140142 QUINTALS DURING FY 2015-16 FROM MANDI. ALSO, APPELLANT HAS FILED COPIES OF SALES ACCOUNT ALONG WITH DETAILS OF TAXES PAID ON PURCHASE OF PULSES AND OTHER JINS. THESE FACTS CLEA RLY SHOWS THAT THERE IS A SERIOUS FLAW IN THE FINDINGS OF THE AO. FURTHE R, THE AO FAILED TO BRING IN LIGHT ANY OF THE INSTANCE SHOWING BOGUS PU RCHASE MADE BY THE APPELLANT. IT IS SETTLED LEGAL POSITION THAT ONUS O F PROOF IS ON THE PERSON WHO MAKES ANY ALLEGATION AND NOT ON THE PERSON WHO HAS TO DEFEND. AS PER LEGAL MAXIM 'AFFAIRMANTI NON NEGANTI INCUMBIT P ROBATION JJ MEANS BURDEN OF PROOF LIES UPON HIM WHO AFFIRMS AND NOT U PON HIM WHO DENIES. SIMILARLY AS PER DOCTRINE OF COMMON LAW 'IN CUMBIT PROBATION QUI DIGIT NON QUI NEGAT' I.E. BURDEN LIES UPON ONE WHO AVENGES AND NOT UPON ONE WHO DENY THE EXISTENCE OF THE FACT. THE AO HAS FAILED TO DISCHARGE HIS ONUS OF PROOF ESPECIALLY WHEN ADDITIO N HAS BEEN MADE UNDER 'DEEMING FICTION'. IN VIEW OF THIS LACUNA ON THE PART OF AO, IMPUGNED ADDITION IS LEGALLY NOT SUSTAINABLE. 4.1.5 APART FROM THE ABOVE, THE ADDITIONS MADE BY T HE AO ARE SIMPLY ON GUESS WORK AND IMAGINATION. IT IS ALSO SETTLED LAW THAT AO CANNOT MAKE ANY ADDITION MERELY ON BASIS OF SUSPICION, HOW EVER STRONG IT MAY BE. THE AO IS NOT JUSTIFIED IN PRESUMING CERTAIN FA CTS WITHOUT HAVING ANYTHING TO CORROBORATE. HON'BLE SUPREME COURT IN T HE CASE OF DHAKESHWARI COTTON MILLS LTD. VIS CIT (1954) 26 ITR 775 (SC) HAS HELD THAT ALTHOUGH STRICT RULES OF EVIDENCE ACT DO NOT APPLY TO INCOME TAX PROCEEDINGS, STILL ASSESSMENT CANNOT BE MADE ON THE BASIS OF IMAGINATION AND GUESS WORK. IT HAS BEEN HELD IN THE CASE OF UMACHARAN SAHA & BROS CO. VIS CIT 37 ITR 21 (SC) THAT SUSPICION, HOWEVER STRONG CANNOT TAKE PLACE OF EVIDENCE. SIMIL AR VIEWS HAVE BEEN EXPRESSED BY APEX COURT IN THE CASE OF DHIRAJ LAL GIRDHARILAL VIS CIT (1954) 26 ITR 736 (SC). SHRI MANOHAR DUDANI IN HIS SWORN STATEMENT RECORDED ON OATH HAS CLEARLY STATED THAT THE DIFFER ENCE IN STOCK IS ON ACCOUNT OF STOCK KEPT AT OTHER GODOWNS, HOWEVER, TH E SEARCH PARTY DID NOT CONSIDER HIS WORD WORTHY AND THE AO ALSO RELIED SOLELY TO THE SAI INDUSTRIES BHOPAL 16 FINDINGS OF THE SEARCH PARTY WITHOUT GIVING A SINGL E THOUGHT TO THE FACT THAT SHRI MANOHAR DUDANI HAS EXPLAINED THE REASONS FOR DIFFERENCE IN STOCK. 4.1.6 IN VIEW OF THE ABOVE DISCUSSION, I AM OF THE CONSIDERED OPINION THAT THE ADDITIONS MADE BY THE AO ARE UNDER DEEMED FICTION AND WITHOUT HAVING ANY COGENT/POSITIVE/INCRIMINATING EV IDENCE ON RECORD. THUS, THE AO WAS NOT JUSTIFIED IN MAKING ADDITIONS ON HIS WHIMS AND FANCIES. THEREFORE, ADDITIONS MADE BY THE AO AMOUNT ING TO RS. 75,66,250/- ON ACCOUNT OF EXCESS STOCK OF GRAM PULS E, RS. 2,14,30,2111- ON ACCOUNT OF BOGUS PURCHASE OF STOCK AND RS. 52,01,496/- ON ACCOUNT OF UNDISCLOSED STOCK OF CHAN NI ARE DELETED. THEREFORE, APPEAL ON THESE GROUND IS ALLOWED. 10. FROM PERUSAL OF THE ABOVE FINDING OF LD. CIT(A) AND LD. CIT- DR BEING UNABLE TO FILE ANY CONTRARY MATERIAL/EVIDE NCE IN ITS SUPPORT TO CONTROVERT THE FINDING OF LD. CIT(A), WE FIND THAT LD. CIT(A) DELETED THE IMPUGNED ADDITIONS ON APPRECIAT ING THE FOLLOWING FACTS: I). SURVEY TEAM DID NOT CONSIDER THE STOCK KEPT AT PRAGATI WAREHOUSE II). SURVEY TEAM WRONGLY ANALYZED THE STOCK OF CHA NNA AS STOCK OF CHANNI WHICH WAS ACTUALLY RECORDED IN THE REGULAR BOOKS OF ACCOUNT AS STOCK OF CHANNA WHICH WAS KEP T AT NARMADA VALLEY WAREHOUSE. III). REVENUE AUTHORITIES NOT PROVIDING THE BASIS O F VALUATION OF PHYSICAL STOCK TO THE ASSESSEE, THUS DENYING THE PRINCIPLES OF NATURAL JUSTICE. IV). REVENUE FAILED TO BRING ANY INSTANCE OF BOGUS PURCHASE MADE BY THE ASSESSEE. SAI INDUSTRIES BHOPAL 17 V). NO COGENT/POSITIVE/INCRIMINATING MATERIAL WAS F OUND DURING SEARCH/SURVEY TO SUPPORT THE ALLEGED ADDITIO N. 11. WE, THEREFORE, UNDER THE GIVEN FACTS AND CIRCUM STANCES OF THE CASE, FIND NO INFIRMITY IN THE FINDING OF LD. CIT(A ) AND THE SAME STANDS CONFIRMED. ACCORDINGLY ALL THE GROUNDS RAISE D BY THE REVENUE ARE DISMISSED. 12. IN THE RESULT, REVENUES APPEAL IN IT(SS)ANO.248/IND/2019 AND CROSS OBJECTION NO.10/IND/2020 ARE DISMISSED. THE ORDER PRONOUNCED AS PER RULE 34 OF ITAT RULES, 1963 ON 13.10.2021. SD/- SD/- (RAJPAL YADAV) (MANISH BORAD) VICE PRESIDENT ACCOUNTANT ME MBER / DATED : 13.10. 2021 PATEL/PS COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE