M/s. Periasamy Moopanar & Sons, Kumbakonam V. ACIT, Kumbakonam

CO 171/CHNY/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8501 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-04-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 26-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N DEVANATHAN
• Assessee Lawyers: DR S MOHARANA
• Keywords: Rejection of books of accounts; Unexplained investment; Unexplained expenditure; Business income; Condonation of delay
• Section: 69C; 143(3); 133A; 69; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 1580 /MDS/201 2 & C.O.NO.171 /MDS/2012 (IN ITA NO.1580/MDS/2012) (ASSESSMENT YEAR: 2008-09) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, GANDHI NAGAR, KUMBAKONAM. VS. M/S.S.PERIASAMY MOOPANAR & SONS 106, NAGESWARAN NORTH STREET, KUMBAKONAM. PAN: AAKFM1930B (APPELLANT) (RESPONDENT/CROSS OBJECTOR) APPELLANT BY : DR. S.MOHARANA, CIT & MR. GURU BASHYAM, JCIT RESPONDENT BY : MR. N.DEVANATHAN, ADVOCATE DATE OF HEARING : 18 TH APRIL, 2013 DATE OF PRONOUNCEMENT : 15 TH MAY, 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), TIRUCH IRAPALLI DATED 16.05.2012 IN ITA NO.431/2010-11 FOR THE ASSE SSMENT YEAR 2008-09. ITA NO.1580/MDS/2012 2 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS GR OUNDS OF APPEAL, BUT THE EFFECTIVE GROUNDS ARE ON THREE I SSUES WHICH ARE AS UNDER:- 2. THE LEARNED CIT (APPEALS) ERRED IN DELETING THE ADDITION OF ` 46,40,742/- MADE TOWARDS EXCESS STOCK FOUND ON THE DATE OF SURVEY. 3. THE LEARNED CIT (APPEALS) ERRED IN DELETING THE ADDITION OF ` 3,55,06,618/- MADE TOWARDS UNACCOUNTED PURCHASES ADDED U/S.69C OF THE INCOME TAX ACT, 1961 . 4. THE LEARNED CIT (APPEALS) ERRED IN DELETING THE ADDITION OF ` 10,05,439/- MADE TOWARDS GROSS PROFIT ON UNACCOUNTED SALES. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF DEALING IN TEXTILE GOODS AND READY- MADE GARMENTS FILED ITS RETURN OF INCOME ON 29.09.2 008 FOR THE ASSESSMENT YEAR 2008-09 ADMITTING TOTAL INCOME AT ` 98,70,650/-. THE ASSESSMENT WAS COMPLETED UNDER SE CTION 143(3) ON 29.12.2010 DETERMINING THE INCOME OF THE ASSESSEE AT ` 5,14,24,610/-. WHILE COMPLETING THE ITA NO.1580/MDS/2012 3 ASSESSMENT, THE ASSESSING OFFICER MADE ADDITIONS OF ` 46,40,742/- AS EXCESS STOCK FOUND ON THE DATE OF S URVEY, ` 3,55,06,618/- AS UNACCOUNTED PURCHASES TREATING IT AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C AND ` 10,05,439/- TOWARDS GROSS PROFIT ON UNACCOUNTED SA LES AND TWO OTHER SMALL ADDITIONS WERE ALSO MADE. THERE W AS A SURVEY UNDER SECTION 133A OF THE ACT ON 26.10.2007 IN THE CASE OF THE ASSESSEE AND IN THE COURSE OF SURVEY TH E MANAGING PARTNER OF THE ASSESSEE FIRM IN HIS STATEM ENT AGREED THAT THERE IS EXCESS STOCK OF ` 46,40,742/-, AS PER BOOKS AND AS PER PHYSICAL STOCK VERIFIED ON THE DAT E OF SURVEY AND AGREED FOR PAYMENT OF TAX ON THE EXCESS STOCK F OUND. HOWEVER, IN THE RETURN FILED BY THE ASSESSEE SINCE THE ASSESSEE DID NOT ADMIT THE STOCK AND DID NOT PAY T AXES AS AGREED IN THE STATEMENT, THE ASSESSING OFFICER ADDE D THE SAME WHILE COMPLETING THE ASSESSMENT. THE ASSESSI NG OFFICER WHILE COMPLETING THE ASSESSMENT MADE ADDITI ON OF ` 3,55,06,618/- TOWARDS UNACCOUNTED PURCHASES UNDER S ECTION 69C OF THE ACT BASED ON THE DETAILS AVAILABLE IN TH E PEN DRIVE IMPOUNDED DURING THE COURSE OF SURVEY AND THE SALES ITA NO.1580/MDS/2012 4 REFLECTED IN THE BOOKS OF ACCOUNTS AS ON THE DATE O F SURVEY. THE ASSESSING OFFICER ALSO ARRIVED GROSS PROFIT OF ` 66,05,939/- @ 14.35% ON UNACCOUNTED SALES OF ` 4,60,34,421/-. HOWEVER, SINCE THE ASSESSEE HAS ADMI TTED COMMISSION INCOME OF ` 56,00,500/- ON SALES, THE ASSESSING OFFICER RESTRICTED THE ADDITION TO ` 10,05,439/- ON UNACCOUNTED SALES, IGNORING THE SUBMISSIONS OF THE ASSESSEE THAT THERE IS NO EXCESS STOCK, THERE ARE NO UNACCOU NTED PURCHASES AND UNACCOUNTED SALES AND NO ADDITIONS A RE WARRANTED. ON APPEAL, THE COMMISSIONER OF INCOME T AX (APPEALS) CONSIDERING THE DETAILED SUBMISSIONS MADE BY THE ASSESSEE DELETED ALL THESE THREE ADDITIONS AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 4. THE DEPARTMENTAL REPRESENTATIVE IN RESPECT OF DIFFERENCE IN STOCK OF ` 46,40,742/- REFERRING TO THE STATEMENT DATED 2.11.2007 OF THE MANAGING PARTNER OF THE AS SESSEE FIRM SUBMITS THAT THE MANAGING PARTNER ACCEPTED T HAT THERE IS EXCESS STOCK OF ` 48.04 LAKHS AS PER BOOKS AND THE PHYSICAL STOCK FOUND AS ON THE DATE OF SURVEY AND A GREED THAT ITA NO.1580/MDS/2012 5 HE WOULD PAY THE TAXES ON SUCH EXCESS STOCK. THEREF ORE, THE ASSESSING OFFICER IS JUSTIFIED IN MAKING ADDITION O F ` 46,40,742/- AS EXCESS STOCK AS THE MANAGING PARTNER OF ASSESSEE ADMITTED THE EXCESS STOCK IN THE COURSE O F SURVEY. THE DEPARTMENTAL REPRESENTATIVE RELYING ON THE GROU NDS OF APPEAL SUBMITS THAT THE ASSESSEE ADMITTED DURING T HE COURSE OF SURVEY PROCEEDINGS THAT NO STOCK REGISTER WAS MA INTAINED BY IT, NO INVENTORY OF STOCK WAS TAKEN AT ANY POINT OF TIME. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE AS SESSEE HAD DECLARED IN THE AUDIT REPORT IN FORM NO.3CB FUR NISHED TO THE DEPARTMENT UNDER SECTION 44AB THAT IT DID NOT M AINTAIN DAILY STOCK RECORDS AND DID NOT FURNISH QUANTITATIV E DETAILS OF THE STOCK. THEREFORE, HE SUBMITS THAT THE ADDITION MADE TOWARDS EXCESS STOCK IS JUSTIFIED. 5. THE DEPARTMENTAL REPRESENTATIVE IN RESPECT OF A DDITION MADE TOWARDS UNACCOUNTED PURCHASES OF ` 3.55 CRORES SUBMITS THAT THIS DIFFERENCE WAS POINTED OUT BY THE ASSESSING OFFICER BY TAKING THE PURCHASES AS RECORDED IN THE PEN DRIVE WHICH WAS IMPOUNDED IN THE COURSE OF SURVEY. AS PER THE PEN ITA NO.1580/MDS/2012 6 DRIVE, THE PURCHASES WERE ` 7,78,24,787/- AND PURCHASES AS PER BOOKS WERE ` 4,23,18,169/-, THEREFORE THE DIFFERENCE WAS ARRIVED AT ` 3,55,06,618/-. SINCE THESE PURCHASES WERE NOT REFLECTED IN THE BOOKS OF ACCOUNTS, THE ASSESSING O FFICER IS VERY MUCH JUSTIFIED IN MAKING ADDITION TOWARDS UNEX PLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT. THE DEPA RTMENTAL REPRESENTATIVE FURTHER SUBMITS THAT THE ASSESSEE S UBMITTED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THA T THERE WERE CONSIGNMENT SALES AND THE PURCHASES RELATED T O THE CONSIGNMENT SALES. THIS PLEA OF THE ASSESSEE WAS AC CEPTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND THI S PLEA WAS TAKEN FOR THE FIRST TIME BEFORE THE COMMISSIONE R OF INCOME TAX (APPEALS) THAT THERE WAS CONSIGNMENT SAL ES. THEREFORE, HE SUBMITS THAT THE COMMISSIONER OF INCO ME TAX (APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDITION WITHOUT PROVIDING AN OPPORTUNITY TO THE ASSESSING OFFICER T O VERIFY THE VERACITY OF THE STATEMENT MADE BY THE ASSESSEE. I N RESPECT OF GROSS PROFIT ADDITION ON UNACCOUNTED SALES, HE S UPPORTS THE ORDER OF THE ASSESSING OFFICER AND RELIED ON THE GR OUNDS OF APPEAL. ITA NO.1580/MDS/2012 7 6. THE COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTS T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) A ND SUBMITS THAT IN THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSEE HAS FILED ALL THE CONCILIATION STATEMENTS EXPLAINING THAT THERE IS NO DIFFERENCE IN THE STOCK AND THERE ARE NO UNACCOUNTED PURCHASES, THERE ARE NO UNACCOUNTED SAL ES AND THEREFORE, NO ADDITION IS WARRANTED. 7. HEARD BOTH SIDES. PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS PLACED BEFORE US. THE ASS ESSEE IN THE COURSE OF PROCEEDINGS BEFORE THE COMMISSIONER O F INCOME TAX (APPEALS) HAS FILED DETAILED SUBMISSION S ALONG WITH STATEMENTS RECONCILING DIFFERENCES IN RESPECT OF STOCK, PURCHASES AND SALES AND CONTENDED THAT THERE IS NO EXCESS STOCK, THERE ARE NO UNACCOUNTED PURCHASES AND SALES . IT WAS THE SUBMISSION OF THE ASSESSEE BEFORE THE COMMISSIO NER OF INCOME TAX (APPEALS) THAT THE SURVEY HAS TAKEN PLAC E DURING DIWALI PERIOD WHERE HUGE STOCKS WERE RECEIVED BY TH E ASSESSEE FOR THE PURPOSE OF ITS BUSINESS AND AS ON THE DATE OF SURVEY THERE WERE SOME INVOICES WHICH WERE NOT R ECORDED ITA NO.1580/MDS/2012 8 IN THE BOOKS OF ACCOUNTS AS THERE WAS NO TIME FOR R ECORDING THE BOOKS ON DAY TO DAY BASIS. IT WAS THE SUBMISSIO N OF THE ASSESSEE THAT THIS FACT WAS ALSO STATED BY THE MANA GING PARTNER IN HIS STATEMENT THAT SOME OF THE INVOICES WERE NOT RECORDED IN THE BOOKS AS ON THE DATE OF SURVEY. IT WAS THE SUBMISSION OF THE ASSESSEE THAT TAKING INTO ACCOUNT ALL THE INVOICES A STATEMENT WAS PREPARED AND FILED BEFORE THE ASSESSING OFFICER EXPLAINING THAT THERE WAS NO EXC ESS STOCK, THERE WERE NO UNACCOUNTED PURCHASES AS WELL AS SALE S. IT WAS ALSO THE SUBMISSION OF THE ASSESSEE THAT THE ASSESS EE HAD CONSIGNMENT SALES OF ` 2,11,07,515/- AS PER RECORDS AND THEREFORE THERE WERE NO UNACCOUNTED PURCHASES AND UNACCOUNTED SALES. IT WAS THE SUBMISSION OF THE A SSESSEE THAT THE PURCHASES ADOPTED BY THE ASSESSING OFFICER AS PER BOOKS AT ` 4,23,18,169/- IS AS ON THE DATE OF SURVEY WITHOUT TAKING INTO ACCOUNT THE UNACCOUNTED INVOICES AND IF THE UNACCOUNTED INVOICES ARE ALSO CONSIDERED, THE PURCH ASES AS PER BOOKS WOULD BE ` 5,96,29,177/-. IT WAS ALSO THE SUBMISSION OF THE ASSESSEE THAT THE DATA AVAILABLE IN THE PEN DRIVE BELONGS TO ENTIRE GROUP OF THE ASSESSEE AND N OT THE ITA NO.1580/MDS/2012 9 ASSESSEE ALONE. IT WAS ALSO THE SUBMISSION OF THE A SSESSEE THAT SOME OF THE SALES RELATES TO SISTER CONCERN AY YA KADAI. IT WAS ALSO THE SUBMISSION OF THE ASSESSEE THAT THIS P OSITION OF RECORDING GROUP SALES WAS ALSO ACCEPTED IN THE YEAR 2006-07 BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND ALS O CONFIRMED BY THE TRIBUNAL. 8. IN THE COURSE OF PROCEEDINGS BEFORE THE COMMISS IONER OF INCOME TAX (APPEALS), THE ASSESSEE SUBMITTED THA T THE ASSESSEE MAINTAINED RECORDS FOR GOODS RECEIVED ON CONSIGNMENT AND THE COMMISSION RECEIVED ON SUCH SAL ES, THE DETAILS OF CONSIGNMENT SALES AND COMMISSION RECEIVE D FROM WEAVERS DURING THE FINANCIAL YEAR 2007-08 UP TO THE DATE OF SURVEY WERE ALSO FURNISHED. COPIES OF BILLS RELATIN G TO COMMISSION RECEIVED FROM WEAVERS WERE ALSO PRODUCED FOR VERIFICATION. IT WAS ALSO THE SUBMISSION OF THE ASS ESSEE THAT THE ASSESSEE HAS ADMITTED COMMISSION INCOME OF ` 56,00,500/- ON CONSIGNMENT SALES MADE BY IT WHICH WAS ALSO TAKEN NOTE OF BY THE ASSESSING OFFICER. IT WAS SUBM ITTED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THA T THE ITA NO.1580/MDS/2012 10 ASSESSEE FIRM EARNS COMMISSION @ 15% ON CONSIGNMENT SALES, THE ASSESSING OFFICER HAD CONSIDERED THE TOT AL SALES AS PER THE PEN DRIVE UP TO THE DATE OF SURVEY, BUT HAD IGNORED TO CONSIDER THE SALES MADE ON ACCOUNT OF CONSIGNMENT G OODS. THUS, IT WAS THE SUBMISSION THAT THE ASSESSING OFFI CER ARRIVED AT DIFFERENCE IN SALES BETWEEN THE FIGURE AS PER TH E PEN DRIVE AND SALES AS PER BOOKS UP TO THE DATE OF SURVEY TO BE ACCOUNTED AS SALES ON THE DATE OF SURVEY. THE ASSES SING OFFICER FAILED TO CONSIDER CONSIGNMENT SALES UP TO THE DATE OF SURVEY. THEREFORE, IT WAS SUBMITTED THAT THERE WAS NO SHORTFALL IN SALES AND ALL THESE DETAILS HAVE BEEN SUBMITTED BEFORE THE ASSESSING OFFICER WHO IGNORING THE DETAILED EXPLANA TION REGARDING VARIATION IN SALES AND CONTEMPLATED THE U NJUSTIFIED ADDITION UNDER SECTION 69C AT ` 3,55,06,618/-, UNACCOUNTED STOCK AT ` 46,40,742/- AND GROSS PROFIT ADDITION AT ` 10,05,439/- WITHOUT ANY BASIS AND PURELY ON SURMISE S. CONSIDERING ALL THESE SUBMISSIONS OF THE ASSESSEE, THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE AD DITIONS MADE TOWARDS EXCESS STOCK, UNACCOUNTED PURCHASES AS UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE AC T AND ITA NO.1580/MDS/2012 11 GROSS PROFIT ADDITION MADE ON ACCOUNTED SALES HOLDI NG AS UNDER:- 15 . 1 GROUND 1 IS GENERAL IN NATURE. GROUND 2 DISCUSSES ABOUT THE EXCESS STOCK ARRIVED A T BY THE ASSESSING OFFICER AT ` 46 , 40 , 742/-. THIS IS BASED ON THE STATEMENT RECORDED ON 2 . L1 . 2007 (DURING THE SURVEY OPERATIONS) FROM THE PARTNER . THIS FIGURE IS BASED ON THE DIFFERENCE B E T W E E N THE ACTUAL STOCK AND THE STOCK AS ARRI V ED AT FROM TH E BOOKS FOUND A T T HE TIME OF SURVE Y . THE ASSESSING OFFICER IN HIS ORDER STATES: ' WHEN QUESTIONED ABOUT THE EXCESS STOCK FOUND , THE ASSESSEE HAS ADMITTED THE E X ISTENCE OF EXCESS STOCK AND HE WILL PAY TAX ON THE SAME TREATING THE SAME A S UNACCOUNTED INVESTMENT . AFTER DEMONSTRATING THE REALIT Y OF E X CESS STOCK FOUND IN THE PREMISES AND THE COST BEING WORKED OUT WITH THE HELP AND THE SHOP EMPLOYEES THE ASSESSEE HAS ADMITTED THE EXCESS STOCK. AGAIN ON 02.11.2007 A SWORN STATEMENT WAS RECORDED FROM THE MANAGING PARTNER (SHRI . P PAKIANATHAN) ON WHICH DAY ALSO , HE HAS CONFIRMED THE EXISTENCE OF STOCK DIFFERENCE AS A B O V E . THE MANAGING PARTNER AG A IN HAS UNDERT A KEN TO P AY THE APPROPRIATE TA X , TREATING THE ABOVE STOCK DIFFERENCE AS UNDISCLOSED INVESTMENT . ' 15 . 2 THE REPRESENTATIVE SUBMITTED THAT THE STOCK INVENTORY TAKEN FROM VARIOUS PL A CES INCLUDES THE STOCK ITA NO.1580/MDS/2012 12 RELATING TO AYYA KADAI, NO . 47, NAGESWARAN SANNATHI STREET, KUMBAKONAM WHICH HAD STOCK TO THE EXTENT OF T. 39,39 , 249/=. THE PARTNER DID AGREE TO VALUE THE EXCESS STOCK AND OFFER IT TO TAX. THE RECONCILIATION STATE MENT SUBMITTED CLEARLY RE F LECTS THE FACT THAT THERE IS NO E X CESS STOCK . 1 5 .3 IN T HE SAME SWORN STATEMENT THE PARTNER HAS ANSWERED TO QUESTION IN PAGE 6 ; THE QUESTION WAS THAT BILLS FOR PURCHASES HAVE BEEN FOUND AT THE TIME OF SURVEY WHICH, HAVE NOT BEEN ACCOUNTED . TO THIS QUESTION THE PARTNER HAS REPLIED THAT BIL L S ONCE RECEIVED ARE VERIFIED WITH THE STOCKS RECEIVED AND ONLY AFTE R VERIFICATION THE SAME IS RECORDED IN THE BOOKS. THE SURVEY TOOK PLACE DURIN G THE DEEPAVALI SEASON AND HUGE STOCKS WERE RECEIVED DURING THE PERIOD AND ALL THE BILLS WERE VERIFIED AND RECORDED ONLY LATER. TH IS FACT WAS NOT CONSIDERED B Y THE ASSESSING OFFICER . 1 5 . 4 ANAL Y ZING THE ABOVE FACTS AND FIGURES IT IS FOUND THAT THE REPRESENTATIVE HAS SUBMITTED A RECONCILIAT ION STATEMENT WITH THE ACCOUNTED FIGURES TALLYING TO TH E STOCK FOUND AT THE TIME OF SURVEY. THIS HAS NOT BEE N TAKEN NOTE OF BY THE ASSESSING OFFICER. THE RECONCI LIATION CHART WAS SUBMITTED TO THE ASSESSING OFFICER BY THE REPRESENTATIVE ALONG WITH THEIR LETTER DATED 15.12. 2010 (COPY OF WHICH HAS BEEN F URNISHED). ACCORDING TO THE SAID STATEMENT THERE IS NO VARIATION IN THE STOCK F OUND AT THE TIME OF SURVEY. THIS EXPLANATION IS FOUND TO BE CORRECT AND THE FACT THAT THERE IS NO VARIATION IN STOCK IS ACCEPTED. 16 GROUND NO . 3 AND 5 T HE ISSUE RELATES TO THE VARIATION IN THE PURCHASE F IGURES ITA NO.1580/MDS/2012 13 AS COMPARED TO THE F IGURES IN THE PEN DRIVE AND THAT REFLECTED IN THE BOOKS O F ACCOUNTS. T HE D I FFERENCE HAS BEEN WORKED OUT BY THE ASSESSING OFFICER AT ` 3,55 , 06 , 618 1 = AND A DDED TO THE INCOME AS UNACCOUNTED PURCHASES U L S 69C . THE ASSESSING OFFICER HAS WORKED OUT THE FIGURE AS UNDER : PURCHASES AS PER PEN DRIVE ` 7,78,24 , 787 PURCHASES AS PER BOOKS ` 4,23 , 18 , 169 PURCHASES NOT REFLECTED IN BOOKS ` 3,55 , 06,618 16.1 THERE IS A VARIATION IN THE FIGURES. THE BOOKS REFLECT PURCHASES UP TO THE DATE OF SURVEY AS ` 5,96 , 29 , 177.54. THIS IS DISCLOSED IN THE CHART FURNISHED TO THE ASSESSING OFFICER FOR RECONCILING THE STOCK FOUND AT THE TIME OF S URVE Y . HENCE THE DIFFERENCE WORKS OUT ASUNDER . PURCHASES AS PER PEN DRIVE ` 7,78,24 , 787 PURCHASES AS PER BOOKS ` 4,23 , 18 , 169 PURCHASES NOT REFLECTED IN BOOKS ` 3,55 , 06,618 16.2 THE FIGURE OF PURCHASES AS PER BOOKS SEEMS TO BE WRONG. THE FIGURE HAS BEEN TAKEN AS REFLECTED IN TH E BOOKS ON THE DATE OF SURVEY. EVEN THE SWORN STATEME NT SAYS THAT THERE WERE BILLS NOT RECORDED IN THE BOOK S . THE REPRESENTATIVE SUBMIT S THAT THAT BEING DEEPAVALI SALES PERIOD ALL BILLS COULD NOT BE RECORDED THEN A ND THERE . AFTER RECORDING ALL THE BILLS THE PURCHASE AS PER B OOKS RELATING TO THE APPELLANT STOOD AT ` 5,96,29,177/-. 16.3 THE PEN-DRIVE RE F LECTING THE ACCOUNTS CONSIST OF INFORMATION OF THE GROUP AND NOT EXCLUSIVE OF THE ITA NO.1580/MDS/2012 14 APPELLANT F IRM . THE VARIATION IS EXPLAINED AS RELATIN G TO THE PURCHASES OF THE SISTER CONCERNS (AYYA KADAI) AND THAT OF THE CONSIGNMENT GOODS. THE SALES RELATING TO THE AYYA KADAI ( ` 53 , 60,369.47) HAS BEEN O F FER E D TO TAX BY THE FAMILY MEMBERS IN THE RETURNS OF INCOME FILED BEFORE ITO WARD 1(1) KUMBAKONAM AND THE SALES WHICH DID NOT REL A TE TO TH A T OF THE A PP E LL A N T (AYYA KADAI) AMOUNTED TO R.53, 60,369.47 DURING THE YEAR UNDER CONSIDERATION. THE SIMILAR STAND WAS ACCEPTED FOR THE ASSESSMENT YEAR 2006-07 BY THE ITA T, CHENNAI CONFIRMING MY PREDECESSOR'S ORDER IN ITA NO. 248 / MD S / 2 010 DT . 19 . 07.2011 . AS FAR AS CONSIGNMENT SALES ( ` 2 , 11 , 07,515.00) ARE CONCERNED THE APPELLANT MAINTAINED A RECORD FOR GOODS RECEIVED ON CONSIGNMENT AND THE COMMISSION EARNED ON SUCH SALES. THE DETAILS OF CONSIGNMENT SALES AND THE COMMISSION ON SUCH SALE RECEIVED FROM WEAVERS DURING THE YEAR UNDER CONSIDERATION , UP TO THE DATE OF SURVEY ARE ENCLOSED IN ANNEXURE 'A' . THE COPIES OF THE BILLS RELATING TO CONSIGNMENT SALES AS WELL AS COMMISSION RECEIVED FROM THE WEAVERS HAVE BEEN PRODUCED FOR VERIFICATION . THE DETAIL S HAVE BEEN FILED EVEN BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT THE ASSESSING OFFICER HAS CONSIDERED TOTAL SALES A S PER PEN-DRIVE UPTO THE DATE OF SURVEY AND IGNORED THE SALES MADE ON ACCOUNT OF CONSIGNMENT GOODS. ITA NO.1580/MDS/2012 15 THUS THE ASSESSING OFFICER HAS ARRIVED AT A DI F F E RENC E IN SALES BETWEEN THE FIGURE AS PER THE PEN-DRIVE AND THE SALES AS PER BOOKS . THE ASSESSING OFFICER HAS FAILED TO CONSIDER THE CONSIGNMENT SALES UP TO THE DATE OF SURVEY . ON VERIFYING THE DETAILS OF COMMISSION RECEIVED ON CONSIGNMENT SALES AS PER ANNEXURE ' A ', FILED BEFORE THE UNDERSIGNED , THE ASSESSING OFFICER HAS NOT TAKEN THESE CONSIGNMENT SALES AND ARRIVED AT THE DIFFERENCE IN SALES UP TO THE DATE OF SURVEY FROM T HE INCOMPLETE BOOKS OF ACCOUNTS AND ARRIVED AT THE DIFFERENCES IN BOTH PURCHASES AS WELL AS SALE S AND MADE AD D I TION IN UN A CCOUNT E D PURCHASES AT ` 3 , 55 , 06 , 618 / - AND E XC ESS S TO C K FO U ND ON THE DATE O F SUR V E Y AT ` 46 , 40 , 742 / - , AND A LSO O N G RO S S PRO FI T O N U NA CCOUNTED SALES AT ` 10 , 05 , 439 . THESE DIFFERENCES HAVE BEEN ARRI V ED AT B Y TH E ASSESSING OFFICER ON ACCOUNT OF INCOMPLETE BOOKS AS ON THE DATE OF SU RVEY AS AL S O I G NORING THE RECONCILED STATEMENT RELATING TO PURCHA S E S / SALE S / ST O CK DURING THE YEAR UNDER CONSIDERATION UP THE DATE OF SURVEY A S WELL A S YE AR E NDING 31 . 03.2008 . 16 . 4 T HE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INVESTMENT IN U NACCOUNTED PURCHASES AND PACKING MATERIALS , THE ISSUE HA S NOT BE E N E XAMINED BY THE ASSES S ING OFFICER DURING THE COURSE OF ASSESSM E NT P ROC EE DING S ON THE PURCHA S E RECONCILIATION S T A T E M E NT SUBMITT E D B Y TH E ITA NO.1580/MDS/2012 16 AUTHORIZED REPRESENTATIVE OF THE APPELLANT . THE AUTHORIZED REPRE S ENTATI VE OF THE APPELLANT IN HIS SUBMISSION STATED THAT THE APPELLANT OPERATES MOSTL Y ON CREDIT PURCHASES AND THE STOCK IS SOLD IN A MATTER OF 15 DAYS ON RECEIPT OF TH E STOCK . THE SUPPLIER IS PAID ON 60 DAYS CREDIT AND THERE IS NO INITIAL INVESTMENT BY THE APPELLANT ON THE PURCHASES. ALL THE PURCHASES ARE ON CREDIT BASIS AND NO CASH PURCHASES ARE MADE EXCEPTING IN VERY FEW LOCAL PURCHASES. WHILE INVOKING THE PROVISIONS OF SEC. 69C OR FOR THAT MATTER SECS. 69 , 69A & 69B THE PHRASEOLOGY USED GOES TO SHOW THAT BEFORE AN Y THESE SECTION S CAN BE INVOKED , THE CONDITIONS PRECEDENT TO THE EXISTENCE OF INVESTMENT, EXPENDITU R E , OMISSION TO STATE ARE MAKING UNDERSTATEMENT OF THE VALUE ETC . , MUST B E CONCLUSIVELY ESTABLISHED BY EVIDENCE L MATERIAL ON RECORD. THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT HAS FURTHER STATED THAT THE ASSESSING O F FICER HAS FAILED TO PROVE BEFORE INVOKING THE SEC . 69C , IGNORING THE E X PLANATIONS / RECONCILIATION STATEMENTS FILED ARE WRONG DURING THE COURSE OF ASSESSMENT PROCEEDIN G S AND THEREBY THE ASSESSING OFFICER CANNOT ASSUME THAT HE I S S AT IS F IED WITHOUT CONSIDERING THE EXP L ANATIONS OFFERED BY THE APPELLANT AND AL S O W ITHOUT MAKIN G A N Y F UR T H E R E NQUIR Y IN ARRI V IN G AT THE UNE X PL A INED E XP E NDI T UR E A ND ADDIN G AN A M O UNT O F ` 3,5 5 , 06 , 6L 8 . 0 0 UND E R S EC. 69C OF TH E IN CO M E T AX ITA NO.1580/MDS/2012 17 A C T . THE ASSESSING O FF ICER HAS FORMED THIS OPINION BASED ON THE INCOMPL E T E B OOKS AS ON THE DATE OF SURVEY AND ARRIVED AT THIS FIGURE AS PURCHASES NOT REFLECTED IN BOOKS. THE OPINION FORMED BY THE ASSESSING O FF ICER IS BA S ED ON HIS SUBJECTIVE SATISFACTION AN D NOT BASED ON MATERIAL ON RECORD OR ANY RESULT O F POST SURVEY ENQUIRIES OR ANY ENQ U IRY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AUT H ORIZE D REPRESE N TATIVE OF THE APPELLA N T RE L IED ON THE L EGAL POSITION AS STATED IN KHANDELKWAL CONS T RUCT I ONS V CL T (GUWAHAT I ) [ 227 L TR 90 0 ] . 16.5 THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT FURTHER STATED THAT THERE I S NO FRESH MATERIAL AND THERE IS NO INFORMATI O N WARRANTING APPLICATION OF SEC . 69C AND STATED FURTHER WHAT CANNOT BE DIRECTLY CANNOT BE DONE INDIRECTLY AS HAS BEEN CONFIRMED CHOIC E AQUA CU L T U R E [ 1 0 0 LI D 1 4 3]. THE SIMILAR ISSUE H AS BEEN SPELT OUT IN THE APEX COURT DECISION REPORTED IN AIR 2000 (SC) 1 997 . THE ASSESSING OFFICER DURING THE COU R SE OF ASSESSMENT PROCEEDINGS HAS NEITHER REJECTED BY THE BOOKS OF ACCOUNTS U /S 145 OF THE INCOME TAX ACT WH I CH WERE DULY AUDITED STATUTORILY U/S. 44 A B OF THE INCOME TAX ACT A N D WITHOUT DISTURBING BOOK RESU L TS , THE ASSESSI N G OFFICER CANNOT INVOKE PROVISIONS OF SEC.69C WITHOUT ANY BASIS OR MATERIAL ON RECORD. WHEN THE ASSESSING O F FICER HAS NOT CHALLENGED THE TRANSACTIONS AND BOOK RESULTS SHOWN BY THE ITA NO.1580/MDS/2012 18 APPELLANT HE CANNOT COME TO THE FOREGONE CONCLUSION THAT APPELLANT MADE UNACCOUNT E D I NVESTMENT IN THE PURCHASE OF THE STOCK AND ARRIVED AT UNE X PLAINED EXPENDITUR E U / S . 69C IGNORING THE REAL STATE OF AFFAIRS. THE BASIC PRINCIPLE IS THE S AME IN THE LA W RELATING TO INCOM E TAX AS W ELL IN CIVIL LA W A S DECIDED IN CIT V AMIT BAI GUNWWANT BAI (1981) [129 ITR 573,580 (GUJ.)] . 16 . 6 THE AUTHORIZED REPRESENTATIVE REITERATED F URTHER WHEN A RETURN IS F URNI S H E D A N D BOOK S OF ACCOUNT S STATUTORIL Y A UDITED A ND F IL E D B E FORE TH E A S S ESSI N G OFFI C E R IN S UPPORT OF THE RETURN , THE BOOKS O F A CC O UN TS S HOULD B E T A KEN AS B ASIS FO R THE A S S E SSMEN T . T HE Y SHOULD NOT BE O VE RLOOKED AND SET A S ID E B Y T H E AS S ESSING OFFICER ON F LIMSY GROUNDS . IF THE EVIDENCE PRODUCED B Y THE APPELLAN T IN SUPPORT OF HIS RETURN , IT SHOULD BE ACCEPTED UNLESS IT IS REBUTTED BY OTHER A DMISSIBLE EVIDENCE OR MATERIAL ON RECORD AND NOT BY MERE HEARSA Y AND RELIED ON DUNICHAND DHANIRAM V CIT AIR 1926 (LAB.) 161=2 ITC 188 AND ALSO C I TE D GEORGE OOMMEN V CAGIT 1963 52 ITR 977(CAL . )] IN FAVOUR OF HIS A R G UMENT . IN THE ABSENCE OF REJECTION OF BOOKS OF ACCOUNTS B Y THE AS S E SS IN G OFFICER IN TERMS O F SECTION 145 OF THE INCOME TAX ACT . NO ADDITION COULD B E MADE BY THE ASSESSING OFFICER U / S 69C . ITA NO.1580/MDS/2012 19 1 6 . 7 ON VERIFYING THE SUBMISSIONS MADE BY THE AUTHORIZED REPRESENTATIVE OF THE APPELL A NT AND ALSO R E L Y ING ON THE JUDICIAL CITATIONS MENTIONED ABO V E THE IS S UE S AR E DECIDED ON MERITS . THE ISSUES RELATED TO THE VARIATION IN THE PURCHAS E FIGURES AS COMPARED TO THE FIGURES IN THE PEN DRIVE AND THAT OF FIGURES REFLECTED IN THE BOOKS OF ACCOUNTS , THE DIFFERENCE HAS BEEN WORKED OUT B Y THE ASSESSING OFFICER AT ` 3 , 55 , 06 , 618 AND ADDED TO THE INCOME AS UNACCOUNTED PURCHASE S U / S 69C . THE ASSESSING OFFICER HAS WORKED OUT THE FIGURE AS UNDER: PURCHASE S AS PER PEN DRI V E ` 7 , 7 8, 24 , 7 8 7 PURCHASES AS PER BOOKS ` 4,2 3 , 18 , 169 PURCH AS ES N OT R E FLECT E D IN BOOKS ` 3,55 , 06 , 6 18 16.8 TH E AUTHORIZED R E PRESENTATIVE OR THE APPELLANT HAS EXPLAINED THE V ARIATION I N F I G URES AND UPDATED INCOMPLETE BOOKS AS ON THE DATE OF SUR V E Y AND ARRI V ED THE P U RC HA S ES AS PER BOOK S AT T5 , 9 6 , 29 , 177. T HI S FIG URE H AS B EE N A RRI VE D IN TH E C H A RT F URNISHED TO THE ASSESSING O F FICER A F TER RECONCILING THE STOCK FOUND AT THE TI ME OF SUR V E Y . HENCE THE DIFFERENCE WORKED OUT AS UNDER: PURCHASES AS PER PEN DRIVE ` 7 , 78 , 24 , 787 PURCHASES AS PER BOOKS ` 5,96,29,177 PURCHASES NOT REFLECTED IN BOOKS ` L , 8L , 95,610 ITA NO.1580/MDS/2012 20 16. 9 THE APPELLANT FIRM HAS RECONCILED THE PURCHASES AFTER UPDATING BILLS WHICH WE RE NOT RECORDED AS ON THE DATE OF SURVEY. ONE OF THE PAR T NER ' S OF THE APP E LLANT SHRI PACKIYANATHAN, HAS ADMITTED IN HIS STATEMENT RECORDED DURING TH E COURSE OF SURVE Y THAT SOME PURCHASE BILLS HAVE NOT BEEN RECORDED. DUE TO H E A VY WORK LOAD , I.E ., DIWALI SALES , ALL THE SALES COULD NOT BE RECORDED AND AFTER RE C ORDING ALL THE BILLS THE PURCHASES AS PER BOOKS RELATING TO THE APPELLANT STOOD AT ` 5 , 96 , 29 , 177 . 16. 10 THE PEN-DRIVE RE F LECTING THE ACCOUNTS CONSISTING OF INFORMATION OF THE ENTIRE APPELLANT GROUP AND NOT EXCLUSIVELY OF APPELLANT FI R M. THE VARIATION I S E X PLAIN E D AS RELATING TO THE PURCHA S E S O F THE SI S TER CONC E RNS (A YY A K A D A I ) AND THAT OF CONSIGNMENT GOODS . THE SALES RELATING TO AYYA KADAI HAVE BEEN OFFERED TO TA X B Y THE FAMILY MEMBERS AND THAT OF THE CONSIGNMENT SALES B Y THE APPELLANT AS COMMISSION RECEIPTS. THE RECONCILIATION OF STOCK FOUND AT THE TIME OF SURVE Y WITH THE PURCHASE AND SALES FI G URES AS R E FLECTED IN THE BOOKS CLEARLY EXPLAINS THE FACT THAT THERE IS N O UNACCOUNTED PURCHASES TO BE TAXED U / S 69C. THE PURCHASES NOT REFLECTED IN BOOKS ARRI V ED AT ` L , 81 , 95 , 610 AFTER RECONCILIATION ARRIVED AT B Y THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT FURTHER STATED ARE NOT UNACCOUNTED PURCHASES A S THEY ARE RELATED TO CONSIGNMENT STOCK AND NOT BELONGING TO ITA NO.1580/MDS/2012 21 THE APPELLANT FIRM. THE TOTAL CONSIGNMENT T URNOVER AS ON THE DATE OF S UR V E Y IS IN FACT MOR E TH A N TH E DI F FERENCE A S C A TE G ORIZ E D IN THE A BO V E AN A L Y SI S AS PURCHA S ES NOT REFLECT E D IN TH E BOOKS AT ` 1 , 81 , 95,610. THE CON S IGNM E NT TURNOVER AS ON THE D A T E OF SUR V E Y AS PER THE RECORDED EVIDENCE IN THE HANDS OF THE APPELLANT IS AT ` 2 , 11 , 07 , 515 WHICH IS MORE THAN THE PURCHASES NOT RE F LECTED IN THE BOOK S AS A R RIVED IN THE ABOVE ANALOG Y AT ` 1 , 81 , 95 , 610. SINCE THE ASSESSING O FF IC E R HAS IGNORED THE STOCK RECONCILIATION STATEMENT RELATING TO PURCHASES / SALE S FILED BEFORE HIM AND ARRIVED THE UN- RECONCILED PURCHASES NOT REFLECTED IN THE BOOKS AT ` 3,55,06,618 AND WRONG L Y ADDED TO THE INCOME OF THE APPELLANT U / S 69 C OF THE INCOME TAX ACT AND REQUESTED FOR DELETION OF THE SAME. NO R E MAND REPORT HAS BEEN C A LLED FOR AS THE A PPELL A NT HAS NOT RAI S ED AN Y N EW GROUND OR ADDITIONAL GROUND AND ALL THE DETAILS OF AY Y AKADAI PURCHASES / SALES OF FAMILY MEMBERS ALONG WITH COMMISSION SALES HA V E BEEN FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 17. GROUND NO. 4 & 6: THIS GROUND RELATES TO THE ADDITION OF GROSS PROFIT ON UNACCOUNTED SALE . THI S HAS BEEN WORKED OUT BY THE ASSESSING OFFICER AS UNDER: SALES AS PER PEN-DRIVE ` 8,82,31,617 SALES AS PER BOOKS ` 4,21 , 97 , 196 SA LES NOT RE F LECTED IN ACCOUNTS ` 4 , 6 0 , 3 4 , 4 2 1 ITA NO.1580/MDS/2012 22 17 .1 THERE IS A VARI A TION IN THE FI G URES TAKEN B Y THE A S S ESS ING O FF IC E R. AS PER BO O K S WHICH REFLECT SALES UP TO THE DATE OF SURVEY AT ` 7,00 , 79 , 123. THIS IS DISCLOSED IN THE CHART FURNISHED TO THE ASSESSING OFFICER FOR RECONCILING THE STOCK STATEMENT FOUND AT THE TIME OF SURVEY . HENCE THE DIFFERENCE WORKS OUT AS UNDER . SALE S AS P E R P E N-DRI V E ` 8,83,26,761 SA L ES AS P E R B O O K S ` 7,00,79.123 SA L ES N OT R EF L E CT E D I N ACCO UNT S ` 1,82,47,634 17. 2 T H E P E N DRIVE R EF L E CTING TH E ACCOUNTS CON S IST O F IN F ORM A TION ON TH E SA L E S OF TH E E NTIRE APPELLANT GROUP AND NOT E X CLUSIV E L Y O F THE A PPELL A NT FIRM. TH E V AR IA TI O N I S E X PLAINED AS RELATING TO THE S A LES OF THE SI S TER CONCERNS (A YY A KADAI ) AS P E R A NNEXURE ' B ' AND THAT OF THE CONSIGNMENT SALES AS PER ANN EX URE ' A ', F IL E D BEFORE THE UNDERSIGNED. THE SALES RELATING TO THE AY Y A KADAI HAS BEEN O F FERED T O TAX BY THE FAMILY MEMBERS AND THAT OF THE CONSIGNMENT BY THE APPELLANT AS COMMISSION RECEIPTS AS PER THE RECORDS MAINTAINED BY THE APPELLANT FOR CONSIGNMENT TURNOVER . THE RECONCILIATION OF STOCK FOUND AT THE TIME OF SUR VEY W ITH THE PURCHASE AND SALES F IGURES AS REFLECTED IN THE BOOKS CLEARL Y E X PL A IN S THAT THERE IS NO SALES WHICH HAS NOT BEEN OFFERED TO TA X AS CAN BE SEEN F ROM TH E FOLLO W ING ANAL Y SIS GIVEN AS UND E R : ITA NO.1580/MDS/2012 23 AT THE TIME OF SURVEY THE Y VALUED THE SALES UP TO THE SAID DATE TO 8 , 83 , 26 , 761 . 47 THE SALES UP TO THE D A TE OF SUR V E Y AS ACCOUNTED IN THE BOOKS 7 , 00 , 79 , 1 2 3 . 50 DI FFE R E N CE IN SA L ES 1,82 , 47 , 637.97 S ALE S NOT RELATIN G TO THE A SS ESSEE ( A YY A KAD A I) 5 3 , 60 , 36 9 . 47 (AS PER ANNEXURE'B') ACTUAL DIFFERENCE 1 , 28 , 87 , 268 . 50 CON S IGNMENT SALES AS PER RECORDS 2 , 11 , 07 , 515.00 (AS PER ANNEXURE ' A) SHORTFALL I N SA L ES NI L 17 . 3 ON VERIFYING THE DETAILED SUBMISSION FILED BY THE APPELLANT FOR THE VARIATION IN SALES THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT HAS EXPLAINED THAT THE APPELLANT FIRM PURCHASED GOODS F ROM VARIOUS SUPPLIERS ON CREDIT . SOME O F THE S M A LL QU A NTIT Y OF S TOCK R E C E IVED ON CONSI G NM E NT A RE S UPPLIED B Y LOC A L WEAVERS . OTHERWISE EVERY PURCHASE IS SUPPORTED BY B I LLS AND DULY ACCOUNTED BY THE APPELLANT . THE APPELLANT FIRM AFTER EXECUTING CONSIGNMENT SALES PAYS THE LOCAL WEAVERS AS WELL AS SURAT AND NORTH INDIAN SUPPLIERS AFTER DEDUCTING COMMISSION DUE TO THEM ON S UCH SALES. THIS COMMI SS ION IS A CCOUNT E D B Y TH E A PP E LLANT AS COMMISSION REC E IPTS . SINCE THE APPELLANT HAS MAINTAINED R E CORD F OR THE GOODS RECEIVED ON CONSIGNMENT AND COMMIS S ION RECEI V ED ON S UCH S A L E, T HE DETAILS OF SUCH SALE AND COMMISSION REC E IVED HA S B EE N UPDATED UP T O TH E DATE OF SURVE Y ALONG WITH COPIES OF THE BILL S RELATING TO THE COMMIS S ION RECEIVED FROM THE WEAVERS ARE PRODUCED FOR VERIFICATION AND THE SAME HA V E BEEN VERIFIED AND FOUND TO BE IN ORDER . THE APPELLANT ITA NO.1580/MDS/2012 24 FIRM EARNS A COMMIS S ION OF 14.35 % ON CONSIGNMENT SALES. THE ASSESSING OFFICER HAD CONSIDERED THE TOTAL SALES AS PER PEN DRIVE UPTO TH E DATE OF SURV E Y, BUT IGNORED TO CONSID E R TH E SALES MADE ON ACCOUNT OF CONSIGNMENT SALES. THUS THE ASSESSING OFFICER HAS WRONGLY ARRIVED AT A DIFFERENCE IN SALE BETWEEN THE SALES FIGURE AS PER PEN DRIVE AND THE SALES FIGURE AS PER INCOMPLETE BOOKS UP THE DATE OF SURVE Y AS UNACCOUNTED SALES ON THE DATE OF SURVEY. HE HAS FAILED TO CONSIDER TH E CONSIGNMENT SALES UP TO THE DATE OF SURVE Y. THE APPELLANT HAD IN FACT , MAINTAIN E D AND A CCOUNTED CON S I G NMENT S ALES RECORD E D A T ` 2 , 11 , 07 , 515 AS CONSIGNMENT S A LE S TILL THE DATE OF SURVE Y AND SHO W ED MORE S ALES TURNO V ER TH A N THE DIFFERENCE WORKED OUT AS PER BOOKS , AT T 1 ,28 , 87 , 268 AFTER CONSIDERING THE AYYA KADAI SALES AT ` 53,60,369 AS ON THE DATE OF SURVEY. THIS ANALOGY HAS BEEN ACCEPTED IN THE EARLIER YEAR FOR THE AY 06-07 B Y M Y PREDECESSOR VIDE HI S ORDER DATED 14.05.2010 IN ITA NO . 336/08-09 AND CONFIRMED BY THE HON ' BLE ITAT 'A' BENCH, CHENNAI VIDE ITS ORDER DATED 19.07.2011 IN ITA NO. 1248/MDS/2010 . THUS THE DECISION OF ARRIVING AT THE STOCK DIFFERENCE B Y TH E ASSESSING OFFICER AS EXCESS AT ` 46 , 40 , 742 BASED ON THE DIFFERENCE BET W EEN ACTUAL STOCK AND THE STOCK AS ARRIVED AT FROM THE BOOKS FOUND AT THE TIM E OF THE SURVE Y AS WELL AS GROSS PRO F IT WORKED OUT B Y THE A SS ESSIN G O FF I C ER AT ` 1 0 , 05 , 439 BEING THE ITA NO.1580/MDS/2012 25 DIFFERENCE BETWEEN THE G ROSS PRO F IT W ORKED OUT AT T66 , 05 , 939 ( 14 . 35 % ON ` 4 , 60 , 34 , 421) AS UNACCOUNTED SALES AS PER PEN DRI V E ) AND THE COM MISSIO N ADMITTED B Y THE APPELLANT AT ` 56 , 00 , 500 W ITH O U T CO N SI DERIN G TH E R EC ONC I LI A TION S T A T E MENT S A ND CON S I G NM E NT S A L E S M A D E B Y TH E A PPELLANT TILL TH E DATE OF SUR V E Y ARE NOT SUPPORTED B Y AN Y EVIDENCE IN HIS HAND S AND THEREFORE SUCH ADDITIONS ARE UNWARRANTED. IN FACT THE APPELLANT HA S SHO W N CONSI G NMENT SALE TURNOVER AT ` 3 , 03 , 49 , 983 AND CORRE S PONDIN G COMMIS S ION AT ` 45 , 52 , 327 TILL THE END OF THE FINANCIAL YEAR DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE AUTHORISED REPRESENTATIVE O F THE APPELLANT IN HIS S UBMISSIONS STATED THAT THE COMMIS S ION EARNED ON THE CONSIGNMENT SALES FOR THE YEAR END AMOUNTED TO ` 45 , 52 , 327 . DURING THE COURSE OF SUR V EY OPERATION THE APPELLANT HIMSELF HAD AGREED TO OFFER A N ADDITIONAL INCOME IN THE FORM OF COMMISSION RECEIPT ON CONSIGNMENT SALES AT ` 50 , 00 , 000. HOWEVER, TAKING INTO ACCOUNT AN Y OMISSION AND COMMISSION WHICH MIGHT HA V E TAKEN PLACE , THE APPELLANT HAS OFFERED ` 56 , 00 , 500 A S COMMISSION RECEIPT AND EARNED FOR THE YEAR AND F ILED RETURN OF INCOME REFLECTING THE COMMISSION RECEIPT ON THE CONSIGNMENT SALES. KEEPING IN VI EW OF THE EXPLANATION FILED B Y THE AUTHORI S ED REPRESENTATIVE OF THE APPELLANT A ND ALSO AT NO POINT OF TIME EITHER DURING THE COURSE OF SURVEYOR POST ITA NO.1580/MDS/2012 26 SUR V E Y ENQUIRIES OR EVEN DURING THE COURSE O F ASSESSMENT PROCEEDIN G S THE ASSES S IN G OFFICER COULD NOT ESTABLISH THAT THERE WERE CASH PURCHASES WHICH WE R E UNACCOUNTED. ON GOING THROUGH THE ANNEXURE FOR CONSIGNMENT SALES THE APPELLANT COULD ESTABLISH THAT THE CONSIGNMENT SALES HAS BEEN CARRIED OUT ON BEHALF OF SEVERAL PARTIES , RECEIVING THE STOCK ON CREDIT BASIS AND THE SAME CONSIGNMENT IS SOLD WITHIN A PERIOD OF 15 TO 20 DAYS AND AFTER DEDUCTING HIS COMMISSION AT 14 TO 15 % BALANCE AMOUNT IS REMITTED BACK TO THE ORIGINAL OWNERS OF T HE CONSIGNMENT . ON VERIFYING THE DETAILS OF CONSIGNMENT SALES AND COMMISS I ON RECEIPT AS WELL A S THE E X PLANATION F ILED B Y THE AUTHORI S ED REPRESENTATIVE OF THE APPELLANT THE CONTENTION OF T HE APPELLANT IS ACCEPTED . 18. THE ASSESSING OF F ICER HAS NEITHER TAKEN INTO ACCOUNT THE CONSIGNMENT SALE S T ILL THE DATE OF SUR V E Y I.E. 26.10 . 2007 AT ` 2,11 , 07,515 NOR THE CONSI G NM E NT SA L E S TURN OVER TI LL T H E END O F TH E F I N A N C I A L Y EA R, I. E. 3 1 . 0 3 . 20 0 8 SHO W N AT ` 3, 03 , 49 , 983. THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT HAS SUBMITTED A DETAILED LIST OF CONSIGNMENT SALES TURNOVER FROM 01 . 04.2007 TILL THE DATE OF SURVEY , I.E.26 . 10.2007 AS WELL TILL END OF THE FINANCIAL YEAR, I.E. 31 . 03.2008 AS PER ANNEXURE 'A ' SUBMITTED BEFORE THE ASSESSING OFFICER AS WELL BEFORE THE UNDERSIGNED , IN WHICH THE APPELLANT HAS ITA NO.1580/MDS/2012 27 SHOWN PARTY-WISE CONSIGNMENT SALES ALONG WITH COMMISSION EARNED ON EACH SUCH SALE. THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT HAS AR G UED THAT THE SAME DETAILS HAVE BEEN S UBMITTED EVEN BEFORE THE ASSESSING OFFICER ALONG WITH RECONCILIATIONS STATEMENTS / CHARTS AND CONSIGNMENT SALES TURNOVER TILL THE DATE OF SUR VEY, I .E 26 . L0.2007. AS THE APPELLANT MAINTAINED RECORD OF GOODS RECEIVED ON CONSIGNMENT AND THE COMMISSION EARNED ON SUCH SALES THE ACTUAL DIFFERENCE OF PURCHASES AFTER RECONCILING THE STOC K STATEMENTS AS PER PEN DRIVE WHICH WORKED OUT TO ` L , 28 , 87 , 268/- IS FAR LESS THAN THE CONSIGNMENT SALES TURNOVER ACCOUNTED BY THE APPELLANT AT ` 2 , 11 ,07,515. IF THE CONSIGNMENT SALES TURNOVER IS TAKEN INTO ACCOUNT, EVEN AFTER ADDING SALES MARGIN AT 14 . 35% ON THESE SALES WHICH WORKS OUT TO (1,28,87,268 X 14 . 35% ) ` 18,49,322.96, TAKEN TOGETHER THE SALES TURNOVER UNACCOUNTED WORKS OUT TO ` 1,47 , 36 , 590 . 96 ( ` 1 , 28 , 87 , 268 + 18,49 , 322.96) ONLY. SINCE THE APPELLANT HAS SHOWN MORE CONSIGNMENT SALES AT ` 2,11,07,515 , THE DIFFERENTIAL UNACCOUNTED SALES WORKS OUT TO ` 1 , 47 , 36 , 590 . 96 WHICH IS FAR LESS THAN THE CONSIGNMENT TURNOVER REPORTED BY THE APPELLANT AT ` 2 , 11 , 07 , 515. ON THIS CONSIGNMENT SALES TURNOVER THE APPELLANT ADMITTED COMMISSION AT ` 56 , OO , 500 TILL THE END OF THE FINANCIAL YEAR I.E. 31.03.2008 REPORTED CONSIGNMENT SALE AT ` 3,03 , 49 , 983 WHICH ITA NO.1580/MDS/2012 28 COVERS ANY OTHER DEFECT S N OTICED IN TH E ACC O UNT S AND OTHER OMI S SIONS AND COMMISSION S . T H E AUTHORI ZE D R EP R ESE N TAT I VE OF THE APPEL L A N T F UR T H E R A R G UED TH A T I F TH E CO N S I GN M E N T SA L ES T URNO V ER IS T AK EN INTO ACCOUNT , TH E RE CANNOT BE AN Y E X CE S S S TOCK OR GRO SS PR OFIT A S W ORKED OUT B Y THE A S SESSING O FF IC E R W ARRANTING AN ADDITION O F ` 46 , 40 , 74 2 A ND ` L0 , 05 , 439 SE PARATEL Y. T HE AUTHORIZ E D REPR ES ENTATI VE OF THE A PP E L LA N T HA S ARGUED THAT THE APPELLANT HAS O F FERED T 56 , 00 , 500 A S COMMISSION R E CEIPT S O N ACCOUNT OF CONSIGNMENT SALES AND HENCE REQUESTED FOR DELETION O F ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS STOCK AS ON THE DATE O F SURVEY AT ` 46 , 40 , 742 / - AND THE DIFFERENTIAL GROSS PROFIT AT ` 10 , 05 , 439 ( ` 6605939 - 5600500) . KEEPING IN VIEW OF THE CONSIGNMENT SALES TURNO V ER S HO W N B Y THE APPELLANT AT ` 3 , 03 , 49 , 983 AND CORRE S PONDING ADMISSION O F COMMISSION AT T56 , 00 , 500 , WHICH THE ASSESSING O FF ICER HAS NOT CONSIDERED IN HI S ASS ES S MENT ORDER AND MADE AN ADDITION UNDER SEC . 69C A T ` 3, 55 , 06 , 6 18 AS UNE X PLAINED EXPENDITURE ALONG WITH EXCESS STOCK AT ` 46 , 40 , 742 AS WE LL GP DIFFERENCE AT T 10 , 05 , 439 . ONCE THE CONSIGNMENT SALES TURNOVER IS CONS I D E RED AS PER THE E X PLANATION AND A DETAILED CHART PART Y- WISE CONSIGNMENT SALES A ND CORRESPONDING COMMISSION EARNED AS FURNISHED B Y THE APPELLANT IN ANNE X URE-A IS ASSESSING OFFICER IS NOT JUSTIFIED IN ITA NO.1580/MDS/2012 29 ADDITION U / S 69C AS UNEXPLAINED EXPENDITURE WHICH IS NOT JUSTIFIABLE AND THEREFORE THE ASSESSING OFFI CER IS DIRECTED TO DELETE THE ADDITIONS MADE U / S 69C AS WELL AS EXCESS STOCK AND DIFFERENTIAL GROSS PROFIT . 18 . 1 CONSIDERING THE DETAILED WRITTEN SUBMISSIONS , ALONG W ITH RECONCILIATION STATEMENT AND A LSO DETAILS OF CONSIGNMENT SALES F ILED B Y THE AUTHORIZ E D REPRE S ENTATIVE OF THE APPELLANT AND ALSO E X AMININ G THE I SS UE O F ADDITION MAD E U/S. 69C RELYING ON THE APEX COURT DECISION IN CIT V SMT . P K NOORJAHAN [237 ITR 570] , THE ASSESSING OFFICER SHOULD HA V E SATI SF IED HIMSELF BEFOR E ARRIVING AT UNE X PLAINED INVESTMENT IN PURCHASES A FT ER GIVING SUFFICIEN T OPPOR T UNI TY T O TH E A PPELLANT AND E X AMINING STATEMENTS FILED A F T E R R E CONCILI AT I O N O F PURCH ASE S 1 SA L ES . THE A DDITION MADE B Y THE A SS E SS IN G O FF ICER O N ACCO U NT OF UNEXPLAINED E X PENDITURE U/S 69C AT ` 3 , 55 , 06 , 618 AND E X CESS STOCK A T ` 46 , 40 , 742 AS WE LL AS GROSS PROFIT DIFFERENCE A T ` 1 0 , 05 , 439 AR E DELETED. 9. AS COULD BE SEEN FROM THE ABOVE OBSERVATIONS OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSES SING OFFICER MADE ADDITION OF ` 46,40,742/- TOWARDS EXCESS STOCK BASED SOLELY ON THE STATEMENT OF THE MANAGING PARTN ER THAT THERE IS DIFFERENCE IN STOCK AS PER THE BOOKS AND P HYSICAL ITA NO.1580/MDS/2012 30 STOCK FOUND AS ON THE DATE OF SURVEY. IT WAS THE FI NDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT SOME PART OF THE STOCK TO THE EXTENT OF ` 39,39,246/- RELATES TO AYYA KADAI. IT WAS THE FINDING OF THE COMMISSIONER OF INCOME TAX ( APPEALS) THAT THE ASSESSEE HAS SUBMITTED THE RECONCILIATION STATEMENT WITH ACCOUNTED FIGURES TALLYING THE STOCK FOUND AT THE TIME OF SURVEY AND THIS HAS NOT TAKEN NOTE BY THE ASSESSING OFFICER THOUGH THE RECONCILIATION CHART WAS SUBMITTED TO TH E ASSESSING OFFICER BY THE ASSESSEE BY LETTER DATED 15.12.2010. ACCORDING TO THE STATEMENT, THERE IS NO VARIATION IN STOCK FOUND AT THE TIME OF SURVEY. THEREFORE, HE ACCEPTED THE RECONCILIATION STATEMENT FURNISHED BY THE ASSES SEE AS CORRECT AND THERE IS NO VARIATION IN STOCK. WE ALSO FIND THAT EXCEPT THE STATEMENT OF THE MANAGING PARTNER AT THE TIME OF SURVEY THAT THERE IS DIFFERENCE IN STOCK, THERE IS NO OTHER EVIDENCE ON RECORD TO SUGGEST THAT THERE REALLY EXI STS EXCESS STOCK WHEN COMPARED WITH BOOKS AS ON THE DATE OF SU RVEY, ESPECIALLY WHEN THE ASSESSEE DID NOT RECORD PURCHAS ES AND INVOICES ON DAY TO DAY BASIS DURING THE DIWALI PERI OD DUE TO ITA NO.1580/MDS/2012 31 INSUFFICIENT TIME BUT RECORDED LATER ON DULY RECONC ILING THE DIFFERENCE NOTICED ON THE DATE OF SURVEY. 10. IN RESPECT OF ADDITION MADE TOWARDS UNACCOUNTED PURCHASES OF ` 3,55,06,618/-, IT WAS THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE PURCH ASES AS PER PEN DRIVE REFLECTS THE ACCOUNTS CONSISTING OF I NFORMATION OF THE GROUP AND NOT EXCLUSIVELY OF THE ASSESSEE FIRM. THE VARIATION IS EXPLAINED AS RELATING TO THE PURCHASES OF SISTER CONCERN AYYA KADAI AND THAT OF THE CONSIGNMENT GOO DS. THE SALES RELATING TO AYYA KADAI I.E. ` 53,60,369.47 HAS BEEN OFFERED TO TAX BY THE FAMILY MEMBERS IN THE RETURNS FILED BEFORE THE INCOME TAX OFFICER, WARD-I, KUMBAKONAM AND THER EFORE SUCH SALES DID NOT RELATE TO THE ASSESSEE. SIMILAR STAND WAS ACCEPTED IN THE ASSESSMENT YEAR 2006-07 BY THE THEN COMMISSIONER OF INCOME TAX (APPEALS) AND ALSO THE T RIBUNAL IN ITA NO.1248/MDS/2010 BY ITS ORDER DATED 19.7.201 1. AS FAR AS THE CONSIGNMENT SALES ARE CONCERNED, IT WAS THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS), THAT THE ASSESSEE MAINTAINED RECORDS FOR GOODS RECEIVED ON ITA NO.1580/MDS/2012 32 CONSIGNMENT AND COMMISSION EARNED ON SUCH SALES, TH E DETAILS OF CONSIGNMENT SALES AND THE COMMISSION ON SUCH SALES DURING THE YEAR UNDER CONSIDERATION UP TO THE DATE OF SURVEY WERE FURNISHED, COPIES OF BILLS RELATING TO CONSIGNMENT SALES AS WELL AS COMMISSION RECEIVED FROM WEAVERS H AVE BEEN PRODUCED FOR VERIFICATION. IT WAS THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THESE DET AILS HAVE BEEN FILED EVEN BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT THE ASSESSING OFFICER HAS CONSIDERED TOTAL SALES AS PER THE PEN DRIVE UP TO THE DATE OF SURVEY AND IGNORED THE SALES MADE ON ACCOUNT OF CONSIGNMENT OF GOODS, THUS THE ASSESSING OFFICER HA S ARRIVED AT DIFFERENCE IN SALES BETWEEN THE FIGURE AS PER PE N DRIVE AND SALES AS PER THE BOOKS AND IN FACT, THERE IS NO SUC H DIFFERENCE AS POINTED OUT BY THE ASSESSING OFFICER. IT WAS TH E FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THESE DIFFERENCES HAVE BEEN ARRIVED AT BY THE ASSESSING O FFICER ON ACCOUNT OF INCOMPLETE BOOKS AS ON THE DATE OF SURVE Y AS ALSO IGNORING THE RECONCILED STATEMENT RELATING TO PURCH ASES/SALES /STOCK DURING THE YEAR UNDER CONSIDERATION UP TO TH E DATE OF ITA NO.1580/MDS/2012 33 SURVEY AS WELL AS YEAR ENDING I.E. 31.3.2008. IT W AS ALSO THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT NO REMAND REPORT HAS BEEN CALLED FOR AS THE ASSESSEE H AS NOT RAISED ANY NEW GROUND OR ADDITIONAL GROUND AND ALL THE DETAILS OF AYYA KADAI PURCHASES/SALES OF FAMILY MEMBERS ALO NG WITH COMMISSION SALES HAVE BEEN FILED BEFORE THE ASSESSI NG OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS . 11. IN RESPECT OF ADDITION MADE TOWARDS GROSS PROFI T ON UNACCOUNTED SALES, IT WAS THE FINDING OF THE COMMIS SIONER OF INCOME TAX (APPEALS) THAT THERE ARE NO UNACCOUNTED SALES AS THE ASSESSING OFFICER DID NOT CONSIDER THE CONSIGNM ENT SALES AS RECORDED BY THE ASSESSEE IN ITS BOOKS, THEREFORE , HE HAS CONCLUDED THAT THERE IS NO QUESTION OF MAKING GROSS PROFIT ADDITION ON UNACCOUNTED SALES. IT WAS THE FINDING O F THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSES SEE HAS SHOWN CONSIGNMENT SALES TURNOVER ` 3,03,49,983/- AND CORRESPONDING COMMISSION AT ` 45,52,327/- TILL THE END OF THE FINANCIAL YEAR DURING THE PERIOD RELEVANT TO THE AS SESSMENT YEAR UNDER CONSIDERATION. IT WAS THE SUBMISSION BEF ORE THE ITA NO.1580/MDS/2012 34 COMMISSIONER OF INCOME TAX (APPEALS) THAT IN THE CO URSE OF SURVEY, THE ASSESSEE HIMSELF HAD AGREED TO OFFER TH E ADDITIONAL INCOME IN THE FORM OF COMMISSION RECEIVE D ON CONSIGNMENT SALES AT ` 50,00,000/-. HOWEVER, TAKING INTO ACCOUNT ANY OMISSION AND COMMISSION WHICH MIGHT HAV E TAKEN PLACE, THE ASSESSEE HAS OFFERED ` 56,00,500/- AS COMMISSION RECEIPT EARNED FOR THE YEAR AND FILED RE TURN OF INCOME REFLECTING THE COMMISSION RECEIPT ON CONSIGN MENT SALES. 12. BEFORE US THE REVENUE HAS NOT REBUTTED WITH EV IDENCE ANY OF THESE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). ON READING FROM THE ASSESSMENT ORDER, WE FIND THAT THE ASSESSING OFFICER HAS NOT CONSIDERED ANY O F THESE RECONCILIATION STATEMENTS OR DETAILS OR SUBMISSIONS SAID TO HAVE BEEN FILED BY THE ASSESSEE AND HE HAS MADE ADD ITIONS BASED ONLY ON THE STATEMENT OF THE MANAGING PARTNER MADE DURING THE SURVEY IN RESPECT OF EXCESS STOCK AND TH E ADDITION TOWARDS UNACCOUNTED PURCHASES AND SALES BASED ON TH E PEN DRIVE IMPOUNDED IN THE COURSE OF SURVEY WITHOUT CO NSIDERING ITA NO.1580/MDS/2012 35 ANY OF THE SUBMISSIONS OF THE ASSESSEE WHICH IN OUR OPINION IS TOTALLY UNJUSTIFIED. THE SUBMISSION OF THE DEPAR TMENTAL REPRESENTATIVE THAT THE ASSESSEE HAS SUBMITTED FOR THE FIRST TIME BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS ) THAT IT HAD CONSIGNMENT SALES AND THEREFORE, IF THE CONSIGN MENT SALE IS TAKEN INTO ACCOUNT, THERE IS NO UNACCOUNTED PUR CHASES OR ON ACCOUNTED SALES MAY NOT BE CORRECT, IN VIEW OF T HE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT TH E ASSESSEE HAS RECORDED IN ITS BOOKS THE CONSIGNMENT SALES OF ` 3,03,49,983/- AND CORRESPONDING COMMISSION AT ` 42,52,327/- TILL THE END OF THE FINANCIAL YEAR DURING THE PERIO D RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IN ANY CAS E THE ASSESSING OFFICER HAS TO EXAMINE THIS ASPECT WITH R EFERENCE TO BOOKS OF ACCOUNT. IT WAS ALSO THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSES SEE HAD IN FACT MAINTAINED AND ACCOUNTED THE CONSIGNMEN T SALES RECORDED AT ` 2,11,07,515/- AS CONSIGNMENT SALES TILL THE DATE OF SURVEY AND SHOWED MORE SALES THAN THE DIFFERENCE WORKED OUT AS PER BOOKS AT ` 1,28,87,268/- AFTER CONSIDERING THE AYYA KADAI SALES AT ` 53,60,369/- AS ON THE DATE OF SURVEY. ITA NO.1580/MDS/2012 36 13. HOWEVER, IN RESPECT OF ADDITION MADE TOWARDS EX CESS STOCK WE FIND FROM THE GROUNDS OF REVENUE THAT IT W AS STATED THAT THE ASSESSEE ADMITTED DURING THE COURSE OF SUR VEY PROCEEDINGS THAT NO STOCK REGISTER WAS MAINTAINED B Y IT, NO INVENTORY OF STOCK WAS TAKEN BY THE ASSESSEE AT ANY POINT OF TIME. IT WAS ALSO STATED THAT THE ASSESSEE HAD DECL ARED IN THE AUDIT REPORT IN FORM NO.3CB FURNISHED TO THE DEPART MENT UNDER SECTION 44AB THAT IT DID NOT MAINTAIN DAILY S TOCK RECORDS AND DID NOT FURNISH QUANTITATIVE DETAILS OF THE STO CK. IT WAS ALSO STATED THAT THE ASSESSEE HAD OFFERED ` 50,00,000/- AS INCOME FOR ASSESSMENT YEAR 2008-09 TO COVER THE DEFICIENCI ES DETECTED DURING THE SURVEY PROCEEDINGS SUCH AS DIFF ERENCE IN STOCK, UNACCOUNTED PURCHASES, SUPPRESSION IN SALES ETC. AND NOT AS COMMISSION ON CONSIGNMENT SALES. 14. IN RESPECT OF ADDITION MADE TOWARDS UNACCOUNTED PURCHASES, WE FIND FROM THE GROUNDS OF REVENUE THAT THE ASSESSING OFFICER HAS STATED THAT THE ASSESSEE HAD NOT SUBMITTED THE RECONCILIATION FOR THE DIFFERENCE IN PURCHASES BEFORE THE ASSESSING OFFICER. IT WAS ALSO STATED TH AT THE ITA NO.1580/MDS/2012 37 ASSESSEE ADMITTED FOR THE FIRST TIME BEFORE THE COM MISSIONER OF INCOME TAX (APPEALS) THAT PURCHASES NOT REFLECTE D IN THE BOOKS AMOUNTED TO ` 1,81,95,610/- AND THIS WAS NEVER DISCLOSED BEFORE THE ASSESSING OFFICER. IT WAS ALSO STATED THAT FOR THE FIRST TIME, IT WAS CONTENDED BEFORE THE COM MISSIONER OF INCOME TAX (APPEALS) THAT SUCH UNACCOUNTED PURCHASE S OF ` 1,81,95,610/- RELATED TO CONSIGNMENT STOCK AND NOT BELONGING TO THE ASSESSEE. 15. IN RESPECT OF ADDITION MADE TOWARDS UNACCOUNTE D SALES, WE FIND FROM THE GROUNDS THAT IT WAS STATED BY THE ASSESSING OFFICER THAT THE ASSESSEE BY ITS LETTER D ATED 14.11.2012 HAD SUBMITTED BEFORE ASSESSING OFFICER T HAT THE SALES IN THE PEN DRIVE INCLUDED THE SALES OF THE L ADY MEMBERS OF THE FAMILY AMOUNTING TO ` 1,82,47,837/-, WHEREAS IT HAD ADMITTED BY ITS LETTER DATED 15.12.2010 BEFORE COMM ISSIONER OF INCOME TAX (APPEALS) THAT THE SALES IN THE PEN D RIVE INCLUDED THE SALES OF AYYA KADAI AMOUNTING TO ` 53,60,369/- AND CONSIGNMENT SALES AMOUNTING TO ` 1,28,87,268/- AND THUS ITA NO.1580/MDS/2012 38 THE ASSESSEE HAD TAKEN TWO DIFFERENT STANDS ON THE SAME ISSUE. 16. EVEN THOUGH THE ASSESSEES COUNSEL SUBMITS THAT THE ASSESSEE HAD FILED ALL THE DETAILS BEFORE THE ASSES SING OFFICER WITH REGARD TO STOCK, PURCHASES AND SALES INCLUDING CONSIGNMENT SALES ALONG WITH RECONCILIATION STATEME NTS, COPIES OF INVOICES ETC. IN THE ABSENCE OF ANY MATER IAL PLACED BEFORE US TO SUGGEST THAT ALL THESE DETAILS WERE FI LED BEFORE THE ASSESSING OFFICER, WE ARE NOT INCLINED TO ACCEP T THE SUBMISSION ESPECIALLY WHEN THE ASSESSING OFFICER IN THE GROUNDS OF APPEAL IS QUESTIONING THE FURNISHING OF DETAILS, RECONCILIATION STATEMENTS ETC. BEFORE HIM. BUT IT WAS THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSEE FURNISHED THE INFORMATION BEFORE HIM AND B EFORE ASSESSING OFFICER. IT WAS ALSO THE GROUND OF THE AS SESSING OFFICER THAT COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN NOT FOLLOWING RULE 46A AS NO OPPORTUNITY WAS GIVE N TO ASSESSING OFFICER FOR FURNISHING HIS COMMENTS ON TH E ITA NO.1580/MDS/2012 39 EVIDENCES FURNISHED BEFORE THE COMMISSIONER OF INCO ME TAX (APPEALS). 17. IN VIEW OF OUR ABOVE OBSERVATIONS AND THOUGH THE ASSESSEE HAS EXPLAINED THAT THERE IS NO EXCESS STOC K, UNACCOUNTED PURCHASES AND SALES WITH RECONCILIATION STATEMENTS, EVIDENCES, COPIES OF INVOICES ETC. BEF ORE THE COMMISSIONER OF INCOME TAX (APPEALS), IN THE ABSENC E OF ANY SUCH INFORMATION, STATEMENTS, INVOICES ETC. PLA CED BEFORE US TO SUGGEST THAT THEY WERE PLACED BEFORE THE ASSE SSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS, WE FEEL THAT THIS MATTER SHOULD GO BACK TO THE FILE OF ASSESSING OFFICER FOR EXAMINING ALL THE THREE ISSUES AFRESH IN ACCORDANCE WITH LAW. THEREFORE, WE SET ASIDE THE ORDER OF THE COMMISSION ER OF INCOME TAX (APPEALS) AND RESTORE ALL THE THREE ADDI TIONS TO THE ASSESSING OFFICER TO DECIDE AFRESH IN ACCORDANC E WITH LAW AFTER PROVIDING SUFFICIENT OPPORTUNITY TO THE ASSES SEE. 18. THE ASSESSEE HAS FILED CROSS OBJECTION RAISING SEVERAL GROUNDS WHICH ARE ALL SUPPORTING THE ORDER OF THE ITA NO.1580/MDS/2012 40 COMMISSIONER OF INCOME TAX (APPEALS). HOWEVER, WE F IND THAT THE CROSS OBJECTION IS FILED WITH DELAY OF 41 DAYS AND PETITION FOR CONDONATION OF DELAY IS NOT FILED EXPL AINING THE REASONS FOR SUCH DELAY. IN SUCH CIRCUMSTANCES, THE CROSS OBJECTION IS DISMISSED IN LIMINE AS NOT MAINTAINABLE. 19. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY, TH E 15 TH DAY OF MAY, 2013 AT CHENNAI. SD/- SD/- ( N.S. SAINI ) (CHALLA NAGENDRA PRASAD) ACCOUNTANT MEMBER J UDICIAL MEMBER CHENNAI, DATED THE 15 TH MAY, 2013. SOMU COPY TO: (1) ASSESSEE (4) CIT( A) (2) A.O. (5) D.R. (3) CIT (6) G.F.