Digamber Kumar Jain(HUF), Jabalpur V. ACIT, Jabalpur

CO 3/JAB/2011

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8936 (ITAT-JABALPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 21-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Loose papers; Document seized; Assessment record; Documents seized
• Section: 143(3); 133A; 131; 68; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BENCH, JABALPUR BEFORE SHRI JOGINDER SINGH (JM) AND SHRI R.C. SHAR MA (AM) I.T.A. NO.04/JAB/2011 ASSESSMENT YEAR: 20 06-07 ACIT, CIRCLE 1(1), JABALPUR VS. DIGAMBER KUMAR JAIN (HUF), PROP. M/S. HARISH UMBRELLA, 704, KAMANIA GATE, SARAFA WARD, JABALPUR, M.P PAN/GIR NO. : APPELLANT ) .. RESPONDENT ) C.O. NO.03/JAB/2011 (ARISING OUT OF I.T.A. NO.04/JAB/2011) DIGAMBER KUMAR JAIN (HUF), PROP. M/S. HARISH UMBRELLA, 704, KAMANIA GATE, SARAFA WARD, JABALPUR, M.P VS. ACIT, CIRCLE 1(1), JABALPUR PAN/GIR NO. : APPELLANT ) .. RESPONDENT ) APPELLANT BY : SHRI ABHISHEK SHUKLA, SR DR CROSS OBJECTOR BY: SHRI G.N.P UROHIT, ADV., SHRI ABHISHEK OSWAL, ADV. DATE OF HEARING : 17/9/20 13 DATE OF PRONOUNCEMENT : 29/09/2013 2 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 O R D E R PER R.C.SHARMA, AM: THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER DATED 13.10.2010 OF LD COMMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESSMENT YEAR 2006-0 7, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE, AS EMERGED OUT OF T HE ORDERS OF THE LOWER AUTHORITIES ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF UMBRELLA CARRIED OUT I N THE NAME AND STYLE OF M/S HARISH UMBRELLA WHOSE PROPRIETOR IS SHRI DIGAMB AR KUMAR JAIN, KARTA OF THE ASSESSEE HUF. RETURN OF INCOME ALONGWITH AU DITED REPORT, ETC HAS BEEN FILED ON 31.3.2008 DECLARING INCOME OF RS.2,87 ,324/- ON TURNOVER OF RS 49,21,800/-; CLOSING STOCK OF RS 90,61,914/- HAS ALSO BEEN DECLARED. GROSS PROFIT OF RS 7,39,270/- WHICH COMES TO 15.02% HAS ALSO BEEN SHOWN AS COMPARED TO 19.9% IN THE IMMEDIATE PRECEDING YEA R. HOWEVER THE APPELLANT HAS DECLARED NET PROFIT OF RS 2,04,029/- FROM HIS BUSINESS @4.15% AS COMPARED TO LOSS IN LAST THREE YEARS. SUR VEY U/S 133A HAS BEEN 3 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 CARRIED OUT ON 20 TH AND 21.09.2006 AT THE BUSINESS PREMISES OF THE ASSESEE. DURING THE COURSE OF SURVEY PROCEEDINGS SH RI DIGAMBAR KUMAR JAIN HAS SURRENDERED A SUM OF RS 25,00,000/- AS UND ISCLOSED INCOME. THE SAME CONSISTS OF RS 10,00,000/- ON ACCOUNT OF CONST RUCTION CARRIED OUT AT RESIDENTIAL PREMISES NO.601 DAYA NAGAR, JABALPUR WH EREAS RS 15,00,000/- PERTAINS TO BUSINESS INCOME OF THE ASSESSEE HUF MAD E ON THE BASIS OF DIARIES AND OTHER INCRIMINATING DOCUMENTS FOUND DUR ING THE COURSE OF SURVEY. SINCE THE ASSESSEE HAS DECLARED INCOME OF R S 2,87,324/- AS PER ITS RETURN WHEREBY BUSINESS INCOME OF RS 2,04,030/- FRO M M/S HARISH UMBRELLA HAS BEEN SHOWN, AO HAS MADE ADDITION OF RS 25,00,000/- OF THE AMOUNT SURRENDERED DURING SURVEY BUT NOT INCORPORAT ED IN THE RETURN. THE SAID ADDITION IS MAINLY BEEN BASED ON THE STATEMENT RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS WHICH HAS BEEN DISCUSS ED IN DETAIL BY THE AO FROM PAGE 2 TO 8 OF THE ASSESSMENT ORDER. ASSESSING OFFICER ALSO MADE ADDITION OF RS.52,81,630 IN RESPECT OF ADVANCES REC EIVED AGAINST SALES AS FOUND RECORDED IN THE SEIZED DIARY. 3. BY THE IMPUGNED ORDER, LD COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION OF RS.10,00,000/- IN RESPECT OF INVESTMENT IN 4 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 CONSTRUCTION OF HOUSE PROPERTY, WHEREAS DELETED ADD ITION OF RS.15,00,000 MADE WITH RESPECT TO SEIZED DIARY AFTER HAVING THE FOLLOWING OBSERVATION: THE APPELLANTS SUBMISSIONS ALONGWITH ASSESSMENT O RDER HAS BEEN CONSIDERED CAREFULLY. ASSESSMENT RECORDS ALONGWITH SURVEY FOLDER, STATEMENT OF SHRI DIGAMBAR KUMAR JAIN HAVE ALSO BEE N PERUSED. IT IS SEEN THAT THE APPELLANT HAS DECLARED RS.10 LAKHS AS UNDISCLOSED INCOME FOR F.Y. 20005-06 ON THE GROUND THAT HE HAS CONSTRUC TED SECOND FLOOR OF HIS HOUSE AT 601 DAYANAGAR ALONGWITH REPAIR AND REN OVATION ON GROUND AND FIRST FLOOR. ANOTHER AMOUNT OF RS 15,00,000/- H AS BEEN ADMITTED AS UNDISCLOSED INCOME ON THE BASIS OF IMPOUNDED DIARY/ NOTE BOOK AS UNDISCLOSED BUSINESS INCOME FOR THE FINANCIAL YEAR UNDER CONSIDERATION. SIMILARLY RS 40,00,000/- HAS BEEN DECLARED AS UNDIS CLOSED BUSINESS INCOME FOR THE ASSESSMENT YEAR 2007-08. HOWEVER THE APPELLANT HAS CATEGORICALLY STATED THAT THE RETURN FILED FOR THES E TWO YEARS SHALL INCORPORATE THE DEFICIENCIES AND DISCREPANCIES FOUN D DURING THE COURSE OF SURVEY PROCEEDINGS. ACCORDINGLY THE APPELLANT HAS F ILED ITS RETURNS ON 31.3.2008 FOR A.Y. 2006-07 AND ON 2.6.2008 FOR A.Y. 2 007-08. THE APPELLANT HAS PRODUCED DOCUMENTARY EVIDENCES AND EX PLANATIONS REGARDING ADJUSTMENTS SO MADE IN ITS BOOKS OF ACCOU NTS WHICH HAVE BEEN INCORPORATED IN THE RETURN SO FILED SUBSEQUENTLY BY DECLARING TURNOVER, CLOSING STOCK ACCORDINGLY. AO HAS MADE ADDITION OF RS 25,00,000/- SOLELY RELYING ON THE STATEMENT OF THE APPELLANT RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS. HOWEVER IT IS A WELL SETTLED LE GAL POSITION THAT SECTION 133A, WHILE AUTHORIZING, RECORDING OF STATEMENTS BY THE AUTHORIZED OFFICER, DOES NOT GIVE THE SAME STATUS OF 'EVIDENCE' TO SUCH RECORDED STATEMENTS. DIFFERENCE BETWEEN STATEMENT RECORDED U/S 133A AND U/S 132(4) AS RECORDED DURING THE COURSE OF SEARCH PROCEEDINGS AN D THEIR RELIANCE AS TO EVIDENCIARY VALUE HAS BEEN DISCUSSED BY HON'BLE KE RALA HIGH COURT IN THE 5 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 CASE OF PAUL MATHEW & SONS VS CIT(2003) 263 ITR 101 . IT IS, THEREFORE, OPEN TO THE APPELLANT TO EXPLAIN THE STATEMENT RECO RDED DURING SURVEY AND FOR THE AO TO CONSIDER SUCH EXPLANATION. AO IS BOUN D TO MAKE AN ASSESSMENT ON THE INCOME WITH REFERENCE TO ALL THE MATERIALS INCLUDING THE STATEMENT RECORDED DURING SURVEY. AO HAS MADE SEPAR ATE ADDITION OF RS 52,81,630/- ON THE BASIS OF IMPOUNDED DIARY/NOTE BO OK WHICH HAS ALSO BEEN DELETED AS DISCUSSED IN SUCCEEDING PARAS OF TH IS ORDER. HOWEVER THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE SATISFA CTORILY ITS ADMITTANCE OF UNDISCLOSED INCOME ON ACCOUNT OF CONSTRUCTION, REPA IR AND RENOVATION. IT HAS MERELY STATED THAT THE SAME HAS TAKEN PLACE IN THIS FINANCIAL YEAR AND IS COVERED BY THE AVAILABLE FUNDS WITH IT. IT IS FU RTHER SUBMITTED THAT THE SAID INVESTMENT IS COVERED BY THE AMOUNT SURRENDERE D FOR A.Y.2006-07. ACCORDINGLY ADDITION OF RS 10,00,000/- IS CONFIRMED OUT OF RS 25,00,000/- MADE BY THE AO. THE APPELLANT GETS RELIEF OF RS 15, 00,000/-. IT IS ALSO SEEN FROM THE RECORDS THAT THE THEN CIT(A)-I JABALP UR VIDE ORDER DATED 8.7.2010 HAS DELETED THE ADDITION OF RS 40,00,000/- MADE BY THE AO ON THE SAME BASIS FOR THE A.Y.2007-08. 4. IN RESPECT OF ROYAL NOTE BOOK FOUND DURING THE C OURSE OF SURVEY, THE ASSESSING OFFICER MADE AN ADDITION OF RS.52,81,630/ -. WHILE MAKING THE SAID ADDITION, ASSESSING OFFICER HAS MENTIONED AS U NDER: DURING THE SURVEY PROCEEDINGS U/S.133A ON 20.9.2006 , IN THE CASE OF ASSESSE, A ROYAL NOTE BOOK WAS FOUND AND IMPOUNDE D FROM OFFICE OF M/S. HARISH UMBRELLA INDUSTRIES AT 601, DAYANAGAR, JABALPUR PAGE-WISE SUMMARY OF WHICH IS AS FOLLOW: 6 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 IN THIS CONNECTION ASSESSEE HAS NOT FURNISHED ANY E XPLANATION DESPITE GIVING AMPLE OPPORTUNITIES DURING ASSESSMENT PROCEE DINGS OTHER THAN THE SHEET NO TOTAL OF AMOUNTS RECEIVED TOTAL OF SALES 1 2628764 2658042 2 3817595 3748579 3 2978589 3002447 4 1874997 1902012 5 1981492 1946856 6 656749 633643 7 1292608 1275015 8 355243 361015 9 518422 500606 10 810473 816885 11 298929 298694 12 102257 78082 TOTAL 17316118 17221876 7 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 CLAIM THAT THE AMOUNTS SHOWN THEREIN ARE RELATED TO OUT OF BOOKS BUSINESS OF THE ASSESSEE WHICH HAS BEEN ENTERED IN BOOKS AND THE PROFIT OUT OF SUCH WORKING HAS BEEN OFFERED IN RETURN OF INCOME. BUT IN THE CASE OF ASSESSEE THERE HAS NOT BEEN FOUND ANY REGULAR BOOKS OF ACCOUNTS RELATED TO AY 2006-07 DURING SURVEY PROCEEDINGS U/S 133A ON 20/09/2006. REGARDING THIS IT HAS BEEN SPECIFICALLY NOTED ON OR DER SHEET DATED 12/11/2008 AND BOOKS HAVE BEEN REJECTED U/S 145. IN VIEW OF ALL THE ABOVE INFORMATION THE 'ROYAL NOTE BOOK' HAS BEEN AN ALYZED AND IT IS FOUND THAT ASSESSEE HAD RECEIVED FOLLOWING AMOUNTS DURING THE PERIOD PERTAINING TO AY 2006-07:- AMOUNT DATE AMOUNT DATE 79750 2.3.06 86500 9.3.06 80000 11.3.06 100000 9.3.06 32350 1.3.06 150000 13.3.06 34600 1.3.06 200000 29.3.06 82680 27.3.06 35000 13.3.03 50000 2.3.06 15000 19.3.06 50000 6.3.06 15500 13.3,06 299400 1.3.06 35000 13.3.06 81000 4.3.06 50000 16.3.06 9000 29.3.06 25000 16.3.06 500 4.3.06 20000 29.3.06 160000 3.3.06 100000 20.3.06 150000 19.3.06 200000 29.3.06 8 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 150000 22.3,06 31500 19.3.06 100000 6.3.06 200000 20.3.06 260000 5.3.06 100000 31,3.06 60000 6.3.06 118000 21.3.06 40000 12.3.06 41000 22.3.06 25000 6,3.06 17040 23.3.06 300000 6.3.06 20000 25.3.06 400000 6.3.03 20000 25.3.06 34750 6.3.06 500000 26.3.06 34000 8.3.06 40000 30.3.06 10500 8.3.06 200000 31.3.06 50000 8.3.06 79760 30.3.06 15000 3.3.06 5281630 199300 8.3.06 REGARDING ABOVE RECEIPTS OF MONEY ASSESSEE HAS FILE D AN EXPLANATION IN FORM OF CONFIRMATIONS BY TEN PERSONS AS BELOW: SR NO PAGE NO. NAME & ADDRESS OF PERSON AMT.OF ALLEGED PURCHASE ORDER AMT . OF ALLEGED SALE 1 315 BHARAT BOOK HOUSE, MAIN ROAD, PIPARIYA, HOSHANGABAD, (MP) 100848 25548 2 316 BASANT BIHAR VASTRALAYA, GHANTAGHAR, DAMOH (M. P) 71180 65860 9 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 3 317 ROOPCHAND NATHURAM, CLOTH MARKET KATNI(MP) 43650 24673 4 318 AMAR STORES, MAIN ROAD, MAIHAR(MP) 37040 20000 5 319 SANTOSH CLOTHS STORES, MAIN ROAD, MAIHAR(MP) 68000 53376 6 320 DEEPCHAND RAKESH KUMAR,MAIN ROAD,NIWAS, MANDLA(MP) 50000 7 321 KUSUMCHAND RAJESH KUMAR JAIN,MAIN ROAD, BARELA (MP) 20000 8 322 RAMKARAN GUPTA,MAIN ROAD, SHAHPURA, DINDORI(MP) 40150 9 323 SHOBHARAM GULABCHAND GOLGANJ, CHHINDWARA(MP) 160000 84560 10 324 SHRI SUNIL JAIN, MAIN ROAD, BREALA, JABALPUR 109000 THAT THE ABOVE LIST IS SELF EXPLANATORY IN NATURE T HAT THE LETTERS FILED BY ASSESSEE DOES NOT HAVE ANY EVIDENTIARY VALUE TO DIS CHARGE THE PRIMARY ONUS LYING UPON THE ASSESSEE TO PROVE IDENTITY AND CREDITWORTHINESS OF SUCH PERSONS AND GENUINENESS OF TRANSACTIONS. THAT ABOVE MENTIONED LETTERS DOES NOT EVEN INDICATE THE DATE ON WHICH TH E PERSONS NAMED ABOVE HAVE EVER ENTERED INTO THE TRANSACTIONS SHOWN IN THE 'ROYAL NOTE BOOK'. IT IS BEYOND MY REASONING THAT HOW THE ABOVE TRANSACTIONS WHICH ARE STILL NOT VERIFIED ARE CONNECTED WITH THE ENTRI ES IN THE 'ROYAL NOTE BOOK' EVEN IS ABOVE TRANSACTIONS HAVE EVER HAPPENED AT ALL. HENCE THE 10 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 LETTER SO SUBMITTED DOES NOT AFFECT THE UNEXPLAINED NATURE OF ENTRIES IN THE 'ROYAL NOTE BOOK'. IN THIS REGARD SHRI AVIHASH MISHRA, ADVOCATE HAS AL SO FURNISHED AN AFFIDAVIT SWORN IN BY 'KARTA' SHRI DIGAMBAR KUMAR J AIN DATED 01/12/2008 STATING AT POINT 11 AS BELOW: 'THAT, I SOLEMNLY AFFIRM THAT TRANSACTIONS OF ADVAN CES AND SALES AS NOTED IN THE DIARY ARE REAL TRANSACTIONS. THE SALES HAVE BEEN MADE AGAINST ADVANCES RECEIVED FROM THE RESPECTIVE PARTIES AS NO TED IN THE SEIZED DOCUMENTS'. ALL THE ABOVE SUBMISSIONS ALONG WITH THE 'AFFIDAVIT ' HAS BEEN CONSIDERED CAREFULLY IN THE LIGHT OF THE 'STATEMENT OF ASSESSE E U/S 133A(1) OF 20/09/2006' AS DISCUSSED ABOVE AND THE FIGURES AS W RITTEN IN 'ROYAL NOTE BOOK'. OUT OF SUCH CONSIDERATION IT IS CONCLUDED TH AT ASSESSEE HAS CLEAR CUT 'MENSREA' TO CONCEAL THE INCOME DULY DISCLOSED BY HIM DURING THE SURVEY U/S 133A ON 20/09/2006. THAT THE AMOUNTS REC EIVED TILL 31/03/2006 TOTALING TO RS 52,81,6340/- (AS LISTED A BOVE DATE-WISE) ARE NOT AT ALL EXPLAINED BY THE AFFIDAVIT OR THE LETTER S OF CONFIRMATIONS FILED BY ASSESSEE. IT IS WORTH MENTIONING THAT IT IS BEYOND DOUBT THAT THE TRANSACTIONS ARE BUSINESS TRANSACTIONS ONLY AND NOB ODY CAN STATE THAT SUCH ENTRIES HAVE BEEN MADE WITHOUT ANY REASON BUT THE ONUS TO EXPLAIN THE ENTRIES LAYS UPON THE PERSON I.E. THE ASSESSEEE ONLY AND IF HE IS NOT ABLE TO EXPLAIN SUCH ENTRIES THAN THE AMOUNTS SHOWN TO HAVE RECEIVED ARE NOTHING BUT THE MONEY OF THE ASSESSEE OUT OF UNDISC LOSED AND UNEXPLAINED SOURCES. DURING THE WHOLE ASSESSMENT PR OCEEDINGS ASSESSEE HAD TRIED TO PLACE ONUS TO VERIFY THE ENTRIES OF 'R OYAL NOTE BOOK' UPON THE DEPARTMENT, WHICH IS JUST IMPOSSIBLE DUE TO THE FAC T THAT SUCH DIARY/NOTE BOOK HAS BEEN FOUND AT THE BUSINESS PREMISES OF THE ASSESSEE AND HE IS ONLY HAVING THE PERSONAL KNOWLEDGE ABOUT THE TRUE N ATURE OF SUCH ENTRIES. 11 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 MERELY BY STATING THAT THE PERSONS WHOSE NAMES HAS BEEN WRITTEN ON VARIOUS PAGES OF THE 'ROYAL NOTE BOOK' ARE REAL IS ONLY A ANALYTICAL STATEMENT I.E. NOT PROVIDING ANY NEW INFORMATION TO HELP IN DECIDING THE OWNERSHIP OF SUCH AMOUNTS OF MONEY. IT IS THE RESPO NSIBILITY OF THE ASSESSEE TO PROVE IDENTITY, CREDITWORTHINESS OF THE PERSONS WHOM HE IS CLAIMING TO BE CREDITORS AND OVER AND ABOVE ALL HE HAS TO PROVE GENUINENESS OF THE TRANSACTION. THE ASSESSEE HAS NO T DONE ANYTHING TO PROVE ANY OF THE THREE ASPECTS/PARAMETERS OF THE CR EDIT ENTRIES SHOWN IN THE 'ROYAL NOTE BOOK'. THE LETTERS FILED BY ASSESSE E ARE JUST CONFIRMATION OF SOME TRANSACTIONS WHICH HAVE BEEN DONE BY THOSE PERSONS WITH THE ASSESSEE WHICH MAY BE AN INDEPENDENT FACT VERIFIABL E OR OTHERWISE BUT SAME DOES NOT IN ANY WAY DISCHARGE THE ONUS LYING T HE ASSESSEE TO PROVE THAT THE AMOUNT SHOWN TO HAVE RECEIVED IN THE 'ROYA L NOTE BOOK' IS NOT HIS INCOME. THAT BY DEPOSITING DIET MONEY OF RS 1,5 00/- ASSESSEE CANNOT PLACE ONUS UPON THE REVENUE TO FIND OUT THE PERSONS WHO MAY HAVE OR MAY HAVE NOT GIVEN THE ALLEGED SUMS OF MONEY TO THE ASSESSEE. THERE IS NOTHING ON RECORD TO PROVE THAT SUCH PERSONS ARE ID ENTIFIABLE, CREDITWORTHY AND HAVE ALSO ENTERED IN TO ALLEGED TRANSACTIONS WI TH THE ASSESSEE. HAD THERE BEEN A PERSON WHO IS CREDITWORTHY ENOUGH, THE PERSON COULD HAVE COME FORWARD TO OWN UP THE SUMS TILL DATE I.E. AFTE R ELAPSING OF MORE THAN TWO YEARS SINCE SURVEY U/S 133A ON 20/09/2006. 5. BEFORE LD COMMISSIONER OF INCOME TAX (APPEALS), CO NTENTION OF THE LD A.R. WITH RESPECT TO ADDITION OF RS.52,81,630/- WAS AS UNDER: IN GROUNDS NO. 2 AND 3 OF THE APPEAL THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 5,81,630/- AS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADVANCES RECEIVED FROM THE PURCHASERS DULY RECORDED IN ROYAL NOTEBOOK 12 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 AND SHOWN BY THE ASSESSEE IN THE FINAL BALANCE SHEE T SUBMITTED BEFORE THE ASSESSING OFFICER, THE BASIS FOR THIS ADDITION HAS BEEN SPELT OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER STARTING FROM PARA 3 ON PAGE NO. 8 AND CONCLUDED ON PAGE NO. 12. THE BASIS FOR T HIS ADDITION IS THAT ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE HAD NOT PROVED THE DEPOSITS SHOWN IN THE ROYAL NOTEBOOK. HE IS OF THE OPINION THAT BURDEN LIES ON THE ASSESSEE TO PROVE THE GENUINENESS OF TH E TRANSACTION, IDENTITY OF THE PARTIES AND ITS CREDITWORTHINESS. IT IS NOTH ING BUT APPLICATION OF SECTION 68 BY IMPLICATION. IT IS TRUE THAT REQUIREM ENT OF SECTION 68 IS THAT ASSESSEE HAS TO ESTABLISH THREE INGREDIENTS THAT IS IDENTITY OF THE PARTIES, ITS CREDITWORTHINESS AND GENUINENESS OF THE TRANSAC TION. IN THE INSTANT CASE THE ENTRIES ARE FOUND RECORDED IN ROYAL NOTEBO OK. THE ROYAL NOTEBOOK INCORPORATES THE TRANSACTIONS FOR RECEIPT OF ADVANCES, SALE OF GOODS TO THOSE PARTIES AND OTHER ENTRIES; THOSE WER E FULLY INCORPORATED IN THE COMPUTERIZED ACCOUNTS PREPARED BY THE ASSESSEE. THE DEPARTMENT HAS NOT DOUBTED THE SALE PART OF THE TRANSACTIONS RECOR DED IN THE DIARY. THE ASSESSING OFFICER IS SUSPECTING ONLY THE RECEIPT PA RT. IN THIS RESPECT IT WAS EXPLAINED BEFORE THE ASSESSING OFFICER THAT CONSTIT UTES ARE NOT COMING FORWARD EITHER TO GIVE CONFIRMATION OR TO APPEAR BE FORE THE ASSESSING OFFICER FOR RECORDING STATEMENTS. THE ASSESSEE HAD FURNISHED COMPLETE LIST WITH ADDRESSES OF ALL THE PARTIES. HE HAD ALSO DEPO SITED A SUM OF RS 1500/- FOR DIET MONEY AND REQUESTED THE ASSESSING O FFICER FOR ISSUANCE OF SUMMONS UNDER SECTION 131 OF THE ACT. THE ASSESSE E ALSO FILED AN AFFIDAVIT BEFORE THE ASSESSING OFFICER TO CONFIRM T HE FACT THAT TRANSACTIONS RECORDED IN THE DIARY ARE GENUINE. THE ATTENTION OF THE ASSESSING OFFICER WAS DRAWN TO CERTAIN DEPOSITS THOSE WERE MADE BY DR AFT COMMISSION WAS ALSO SHOWN SEPARATELY IN THE ROYAL NOTEBOOK. THESE DRAFTS WERE PREPARED BY THE PURCHASERS OF UMBRELLA FOR GIVING ADVANCE TO THE ASSESSEE IN THE 13 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 NAME OF RAW MATERIAL SUPPLIES ON THE REQUEST OF ASS ESSEE TO SAVE THE DRAFT COMMISSION. CERTAIN PHOTOCOPIES OF DRAFTS AND LETTERS WERE ALSO FOUND DURING THE COURSE OF SURVEY AND IMPOUNDED BY THE DEPARTMENT. IT IS SUFFICIENT TO SHOW THAT SUCH ADVANCES WERE ACTUALLY RECEIVED AND INCORPORATED IN THE DIARY. THESE EXAMPLES ARE PO INTER TO THE FACTS THAT TRANSACTIONS RECORDED IN THE DIARY ARE UNDOUBTEDLY GENUINE TRANSACTIONS AND THE ASSESSING OFFICER IS NOT EMPOWERED TO ACCEP T THE EVIDENCE IN PART AND REJECT THE SAME IN PART. THE EVIDENCE HAS TO BE CONSIDERED AS A WHOLE. SINCE THE SALE PART OF THE ROYAL NOTEBOOK IS NOT DISPUTED, THE RECEIPT PART ALSO CANNOT BE CHALLENGED OR DISPUTED. MORE SO, WHEN THE ASSESSEE COULD OBTAIN CONFIRMATION FROM 10 PARTIES THOSE WERE SUBMITTED BEFORE THE ASSESSING OFFICER. THE ATTENTION OF Y OUR GOODSELF IS INVITED TO SECTION 292C OF THE INCOME TAX ACT WHICH HAS BEEN R ECENTLY INCORPORATED IN THE STATUTE BOOK BY THE FINANCE ACT, 2008 AND IT PROVIDES THAT ALL NOTING IN THE BOOKS OF ACCOUNT AND DIARIES FOUND DURING TH E COURSE OF SEARCH AND SURVEY SHALL BE PRESUMED TO BE TRUE. NOW IN VIEW OF THIS SECTION ALSO THE LEARNED ASSESSING OFFICER CANNOT DENY THE TRANSACT IONS THOSE ARE RECORDED IN THE DIARY UNLESS HE BRINGS ON RECORD SO ME COGENT MATERIAL TO ESTABLISH THAT TRANSACTIONS RECORDED IN ROYAL NOTEB OOK ARE EITHER FICTITIOUS OR THEY ARE FALSE TRANSACTIONS. EVEN THIS COURSE I S NOT AVAILABLE TO THE ASSESSING OFFICER AS HE IS ACCEPTING THE SALE PART OF THE DIARIES IN TOTO. WHEN SALES PART ARE ACCEPTED, THERE CAN BE NO REAS ON TO DISBELIEVE THE RECEIPT OF SALE PROCEEDS EITHER AS AN ADVANCE OR ON SUBSEQUENT PAYMENT RECEIVED FROM THE AMOUNTS RECEIVED AS ADVAN CE, SINCE INCORPORATED IN THE COMPUTERIZED ACCOUNT, ARE R EFLECTED BY THE ASSESSEE IN THE BALANCE SHEET I.E. SUBMITTED IN THE YEAR 2006-2007. THE UMBRELLA SEASON STARTS FROM THE MONTH OF JUNE THAT IS ADVENT OF THE RAINY SEASON BUT THE MANUFACTURING OF UMBRELLA AND BOOKIN G FOR PURCHASE BY 14 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 THE CONSTITUENTS BEGINS FROM THE MONTH OF JANUARY ONWARDS, THEREFORE, ADVANCES ARE RECEIVED BY THE PARTIES FOR PURCHASE OF UMBRELLAS AND IT IS FOR THIS REASON THEY MAKE ADVANCES FOR PURCHASE. A S ALL THE TRANSACTIONS WERE INCORPORATED, THE DEPOSITS ARE REFLECTED IN THE BALANCE SHEET AND GOODS HAVE BEEN SUPPLIED IN SUBSEQUENT YEAR BY THE ASSESSEE THAT IS ALSO RECORDED IN THE ROYAL NOTEBOOK AS WELL AS THE FINAL ACCOUNT PREPARED BY THE ASSESSEE FOR ASSESSMENT YEAR 2007-2008. THE B OOKS OF ACCOUNTS FOR ASSESSMENT YEAR 2007-2008 ARE ALSO PRODUCED BEFORE YOUR HONOUR FOR KIND PERUSAL TO ESTABLISH THE ABOVE STATEMENT OF TH E ASSESSEE. AS THESE TRANSACTIONS ARE FULLY INCORPORATED AND ARE DULY SU PPORTED BY THE ENTRIES RECORDED IN THE ROYAL NOTEBOOK THEY CANNOT BE DENIE D BY THE ASSESSING OFFICER. THE ASSESSEE HAS DISCHARGED HIS PRIMARY BU RDEN OF PROVIDING THESE ENTRIES BY FILLING CONFIRMATION LETTERS FROM 10 PARTIES AND SUBMITTING AN AFFIDAVIT AS ALSO DEPOSITING DIET MONEY FOR ISSU ING OF SUMMONS UNDER SECTION 131 OF THE INCOME TAX ACT. THE LEARNED ASS ESSING OFFICER SHOULD NOT AND CANNOT HAVE TAKEN THE ABOVE EVIDENCES LIGHT LY AND BY BRUSHING ASIDE THE SAME MAKE AN ADDITION OF RS 52,81,630/- I N THE ASSESSMENT. IT IS, THEREFORE, RESPECTFULLY SUBMITTED THAT THE ABOV E ADDITION MAY KINDLY BE DELETED'. 3.2 THE APPELLANT HAS FURTHER SUBMITTED THE TRANSAC TIONS REFLECTED IN THE IMPOUNDED DOCUMENTS HAVE BEEN INCORPORATED IN ITS R EGULAR BOOKS OF ACCOUNTS AND RETURN HAS BEEN SUBMITTED ACCORDINGLY. BOOKS OF ACCOUNT HAVE BEEN REJECTED BY THE AO U/S 145 AND ADDITION H AS BEEN BASED ON THE IMPOUNDED DIARY. ALSO PROVISIONS OF SECTION 69A ARE NOT APPLICABLE AND THERE IS NO CASE FOR MAKING ADDITION IN RESPECT OF ADVANCES RECEIVED FOR SALE OF UMBRELLA FROM DIFFERENT PARTIES WHOSE NAMES AND ADDRESSES ARE ALSO RECORDED IN THE IMPOUNDED DIARY. 15 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 6. AFTER CONSIDERING THE ASSESSEES CONTENTION, LD CIT (A) DELETED THE ADDITION AFTER HAVING THE FOLLOWING OBSERVATION: THE APPELLANT SUBMISSIONS ALONG WITH ASSESSMENT O RDER AND RECORDS HAVE BEEN CONSIDERED CAREFULLY.. THE IMPOUNDED DIAR IES/ROYAL NOTE BOOK HAVE ALSO BEEN PERUSED AND APPELLANT'S SUBMISSIONS ARE FOUND TO BE ACCEPTABLE. THE PRIMARY EVIDENCES ARE THE DIARIES O N WHICH AO HAS RELIED TO MAKE THE SAID ADDITION. HOWEVER THE SAID EVIDENC ES HAVE TO BE ACCEPTED AS A WHOLE. AO HAS NOT DOUBTED THE SALES DECLARED BY THE APPELLANT IN ITS RETURN COMPUTED ON THE BASIS OF SA ID DIARIES ONLY THOUGH BOOKS OF ACCOUNT HAVE BEEN REJECTED. HOWEVER ADVANC ES PERTAINING TO SAME SALES HAVE BEEN REJECTED BY THE AO ON THE GROU ND THAT THE SAME HAVE NOT BEEN EXPLAINED/CONFIRMED BY THE APPELLANT. THERE IS NO DENYING THE FACT THE PROVISIONS OF SECTION 292C ARE APPLICA BLE IN CASE OF THE APPELLANT AS MENTIONED BY AO IN HIS REMAND REPORT D ATED 02.02.2010 BUT THE FACT IS THAT THE APPELLANT HAS NOWHERE DENIED T HE TRANSACTIONS CARRIED OUT AS PER THE SAID IMPOUNDED DIARIES. THERE IS NO MATERIAL ON RECORD NEITHER ANY ADVERSE COMMENT HAS BEEN MADE BY THE AO IN HIS REMAND REPORT WHEN HE HAS BEEN SPECIFICALLY ASKED BY THE T HEN CIT(A) TO VERIFY THE ENTRIES RECORDED IN THE IMPOUNDED DOCUMENTS. SU BMISSIONS OF THE APPELLANT ALONG WITH CONFIRMATIONS HAVE BEEN REJECT ED BY THE AO WITHOUT MAKING ANY INDEPENDENT THIRD PARTY ENQUIRIES WHEN H E IS VESTED WITH SUCH POWER U/S 131 OF THE IT ACT AND AS REQUESTED BY THE APPELLANT HIMSELF. ALSO PROVISIONS OF SECTION 69A OF THE IT ACT UNDER WHICH ADDITION HAS BEEN MADE BY THE AO ARE NOT FOUND APPLICABLE TO THE APPE LLANT'S CASE AS THE SAME IS APPLICABLE ONLY IN RESPECT OF CASH, JEWELRY OR OTHER VALUABLE ARTICLES ETC NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE IMPOUNDED DOCUMENT/DIARY IS PART OF BOOKS OF ACCOUNT OF THE A PPELLANT CONTAINING THE 16 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 RECORD OF TRANSACTIONS ENTERED INTO B Y THE APPELLA NT IN RESPECT OF SALE OF UMBRELLAS. THUS, THE AO WAS NOT JUSTIFIED IN MAKIN G FURTHER ADDITION OF RS.52,81,630/- AS UNEXPLAINED MONEY IN THE APPELLAN TS HANDS. THE SAME IS HEREBY DELETED. 7. AGGRIEVED BY THIS ORDER OF LD COMMISSIONER OF IN COME TAX (APPEALS), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOL LOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING AN AMOUN T OF RS.15,00,000/- OUT OF TOTAL ADDITION OF RS.25,00,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INCOME SURRENDERED AT THE TIME OF SURVEY U/S.133A. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDI TION OF RS.52,81,630/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLA INED MONEY U/S.69A. 8. ASSESSEE HAS FILED CROSS OBJECTIONS ON THE FOLLO WING GROUNDS: 1. THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN M AKING ADDITION OF RS.10,00,000/- ON ACCOUNT OF INCOME SURRENDERED AT THE TIME OF SURVEY U/S.133A. 2. THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY DELETED THE ADDITION OF RS.52,81,630/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF UNEXPLAINED MONEY U/S.69A. 9. RIVAL CONTENTIONS HAVE BEEN CONSIDERED AND RECOR DS PERUSED. THERE WAS SURVEY UNDER SECTION 133A AT THE BUSINESS PREMI SES OF THE ASSESSEE ON 20 & 21.9.2006. DURING THE COURSE OF SURVEY, A DIARY IN THE NAME OF ROYAL NOTE BOOK WAS FOUND AND IMPOUNDED RECORDIN G THE COMMERCIAL 17 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 DEALINGS OF THE ASSESSEE WITH RESPECT TO THE ADVANC ES RECEIVED ON SALES AS WELL AS SALES MADE TO THE CONSTITUENTS. A STATEMEN T OF THE ASSESSEE WAS RECORDED, WHEREIN, HE SURRENDERED A SUM OF RS.10 LA KHS ON ACCOUNT OF INVESTMENT IN HOUSE CONSTRUCTION AND RENOVATION AND RS.15 LAKHS IN RESPECT OF NOTINGS IN SEIZED DIARY. AS PER PROVISI ONS OF SECTION 292C, RECORDING OF LOOSE PAPERS AND DIARIES FOUND AND SEI ZED DURING THE COURSE OF SURVEY IS PRESUMED TO BE CORRECT. IN THE INSTANT CASE BEFORE US NOTINGS IN THE DIARY CLEARLY INDICATED THE AMOUNT RECEIVED AGA INST SALES. THE DIARY ALSO INDICATED THAT ASSESSEE HAS EFFECTED SALES AGA INST ADVANCES SO RECEIVED, HOWEVER, ASSESSING OFFICER HAS ACCEPTED T HAT ENTRIES INDICATE ADVANCES RECEIVED BUT NOT ACCEPTED THE CONTENTION T HAT IT WAS AGAINST SALES. SINCE THE SALES PART IS ACCEPTED THEN RECEI PT PART CANNOT BE DENIED. ACCORDINGLY, WE DO NOT FIND ANY JUSTIFICATION FOR R EJECTING THE FACT OF ADVANCE RECEIVED FROM THE PARTIES. CONTENTION OF TH E ASSESSEE WAS THAT THE SALES ATTRIBUTABLE TO SUCH ADVANCE WERE EFFECTED IN THE NEXT YEAR , THEREFORE, SALES WERE ALSO RECORDED BY THE ASSESSEE IN THE NEXT YEAR. SUCH SALE WAS MADE IN THE FINANCIAL YEAR 2006-07 RELEVAN T TO ASSESSMENT YEAR 2007-08. WE HAD ALSO GONE THROUGH THE AUDIT REPORT FOR THE FINANCIAL YEAR 18 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 2005-06, WHEREIN, AUDITORS HAVE ALSO MADE A NOTE IN THE AUDIT REPORT THAT IT IS BASED ON THE ACCOUNTS PREPARED BY THE ASSESSE E AFTER SUPPLY OF THE PHOTOCOPY OF THE SEIZED DOCUMENTS. WE FOUND THAT A SSESSEE HAS DULY INCORPORATED TRANSACTIONS RECORDED IN THE DIARY, IN ITS REGULAR BOOKS OF ACCOUNT AND RETURN HAS BEEN FILED ACCORDINGLY. THE BOOKS OF ACCOUNT HAVE BEEN REJECTED BY THE ASSESSING OFFICER U/S.145 AND ADDITION WAS MADE BY THE ASSESSING OFFICER IN RESPECT OF AMOUNT SHOWN AS RECEIPT FROM CUSTOMERS. BY THE IMPUGNED ORDER, LD COMMISSIONER OF INCOME TAX (APPEALS) AFTER CALLING THE REMAND REPORT FROM THE ASSESSING OFFICER DELETED THE ADDITION. LD COMMISSIONER OF INCOME TA X (APPEALS) OBSERVED THAT THERE IS NO MATERIAL ON RECORD NEITHER ANY ADV ERSE COMMENT HAS BEEN MADE BY THE ASSESSING OFFICER IN HIS REMAND REPORT, WHEN HE HAS BEEN SPECIFICALLY ASKED BY LD COMMISSIONER OF INCOME TAX (APPEALS) TO VERIFY THE ENTRIES RECORDED IN THE IMPOUNDED DOCUMENTS. LD CO MMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT CONFIRMA TIONS FILED BY THE ASSESSEE WERE REJECTED BY THE ASSESSING OFFICER WIT HOUT MAKING ANY INDEPENDENT AND THIRD PARTY ENQUIRIES WHEN HE WAS V ESTED WITH SUCH POWERS U/S.131 OF THE ACT AND AS REQUESTED BY THE A SSESSEE HIMSELF. LD 19 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 COMMISSIONER OF INCOME TAX (APPEALS) FURTHER RECORD ED THE FINDING TO THE EFFECT THAT PROVISIONS OF SECTION 69A UNDER WHICH, ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ARE NOT FOUND APPLICABLE T O THE ASSESSEES CASE AS THE SAME IS APPLICABLE ONLY IN RESPECT OF CASH, JEW ELLERY AND OTHER VALUABLE ARTICLES ETC NOT RECORDED IN THE BOOKS OF ACCOUNT. AS PER THE OBSERVATION OF LD COMMISSIONER OF INCOME TAX (APPEALS), IMPOUNDED DOCUMENTS/DIARIES ARE PART OF BOOKS OF ACCOUNT OF THE ASSESSEE CONTAI NING THE RECORD OF TRANSACTIONS ENTERED INTO BY THE ASSESSEE IN RESPEC T OF SALE OF UMBRELLAS. AS PER LD COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE HAS ALREADY INCORPORATED SALES RELATING TO SUCH ADVANCE IN THE SUBSEQUENT YEAR AND PROFIT THEREON HAS BEEN DULY DISCLOSED AS PER AUDIT ED ACCOUNT. 10. FROM THE RECORDS, WE FOUND THAT ADVANCES ARE MA DE BY PURCHASERS BY DEMAND DRAFTS PREPARED IN THE NAME OF SUPPLIERS OF RAW MATERIAL. IT WAS EXPLAINED BEFORE THE ASSESSING OFFICER THAT THI S PRACTICE IS ADOPTED BY THE ASSESSEE AND THIS FACT WAS VERIFIABLE FROM THE DIARIES ITSELF WHERE COMMISSIONS WERE SEPARATELY NOTED IN A FEW CASES. PHOTOCOPY OF THE SOME OF THE DDS RECEIVED FROM OTHER CITIES WERE FOUND AN D IMPOUNDED IN SURVEY SUPPORT THE CASE OF THE ASSESSEE THAT AMOUNTS SO RE CEIVED IN THE FORM OF 20 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 ADVANCE AGAINST SALES. SIMILARLY, PAYMENTS WERE MA DE TO DEALERS BY DDS FROM WHOM RAW MATERIALS WERE PURCHASED. 11. WITH RESPECT TO THE AMOUNT OF RS.25 LAKHS ADDED BY THE AO, WE FOUND THAT ADDITION WAS ON THE BASIS OF STATEMENT R ECORDED DURING THE COURSE OF SURVEY. OUT OF THE INCOME SO SURRENDERED , ASSESSEE HAD UTILIZED AMOUNT OF RS.10 LAKHS FOR CONSTRUCTION OF HOUSE, WH ICH HAS BEEN CORRECTLY UPHELD BY LD COMMISSIONER OF INCOME TAX (APPEALS). HOWEVER, PROFIT OF RS.15 LAKHS SURRENDERED WITH RESPECT TO DIARY WAS D ELETED BY LD COMMISSIONER OF INCOME TAX (APPEALS) BY OBSERVING T HAT MERELY THE STATEMENT U/S.133A CANNOT BE MADE THE BASIS FOR MAK ING THE ADDITION UNLESS PLAUSIBLE MATERIAL IS FOUND TO SUPPORT THE S TATEMENT SO RECORDED. 12. THE CONTENTION OF THE ASSESSEE THAT SALES ATTRI BUTABLE TO THE ADVANCES HAS BEEN DISCLOSED IN THE SUBSEQUENT YEAR AND PROFIT THEREON HAS ALSO BEEN OFFERED FOR TAX IN THE SUBSEQUENT YEAR, I S NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE PLACED ON RECORD. LD COMMISSI ONER OF INCOME TAX (APPEALS) HAS DELETED THE ADDITION MADE WITH RESPEC T TO ADVANCES RECEIVED FROM CUSTOMERS AS WELL PROFIT OF RS.15 LAKHS SURREN DERED BY THE ASSESSEE 21 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 WITH RESPECT TO SEIZED DIARY. AS PER NOTINGS FOUND RECORDED IN SEIZED DIARY, IT IS DULY PROVED THAT ADVANCES WERE RECEIVED AGAIN ST SALES AND THESE WERE BUSINESS TRANSACTIONS WHICH WERE FOUND RECORDED IN THE SEIZED DIARY, HOWEVER, THE CONTENTION OF THE ASSESSEE THAT SALES WERE RECORDED IN THE SUBSEQUENT YEAR ARE NOT BEING PROVED. ACCORDINGLY, WE MODIFY THE ORDERS OF BOTH LOWER AUTHORITIES AND TREAT THE ADVANCES RE CEIVED AGAINST SALES AS SALES HAVING BEEN EFFECTED DURING THE YEAR UNDER CO NSIDERATION ONLY. THE ENTIRE RECEIPT ON SALES CANNOT BE BROUGHT TO TAX AN D ONLY PROFIT ATTRIBUTABLE TO SUCH SALES IS REQUIRED TO BE ADDED IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO MAK E ADDITION WITH RESPECT TO THE PROFIT EARNED BY THE ASSESSEE ON THE SALES A MOUNT OF RS.52,81,630/- RECEIVED BY THE ASSESSEE ALLEGED TO BE ADVANCED AGA INST SALES. FROM THE RECORD, WE FOUND THAT AS PER AUDITED ACCOUNTS FILED DURING THE YEAR, ASSESSEE HAD SHOWN SALES OF RS.49,21,800/- AND NET PROFIT OF RS.2,04,029/- . ASSESSING OFFICER IS DIRECTED TO COMPUTE THE RAT E OF NET PROFIT EARNED BY THE ASSESSEE AS PER THIS AUDITED ACCOUNTS BY TAKING THE FIGURE OF SALES & NET PROFIT AS WORKED OUT IN THE AUDITED PROFIT AND LOSS ACCOUNT AS ON 31.3.2006 FILED BY ASSESSEE WITH DEPARTMENT. SUCH RATE OF NET PROFIT IS TO 22 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 BE APPLIED ON THE ADVANCES RECEIVED AGAINST SALES A MOUNTING TO RS.52,81,630/-. ACCORDINGLY, ADDITION DELETED BY L D COMMISSIONER OF INCOME TAX (APPEALS) IS TO BE REDUCED BY THE AMOUNT OF PROFIT TO BE WORKED OUT IN THE MANNER DISCUSSED ABOVE. WE DIREC T ACCORDINGLY. 13. IN THE RESULT, APPEAL FILED BY REVENUE IS ALLOW ED IN PART WHEREAS CROSS OBJECTION FILED BY ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH SEPTEMBER, 2013. SD/- SD/- (JOGINDER SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER JABALPUR DATED 19 / 09/2013 B.K.PARIDA, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT : ACIT, CIRCLE 1(1), JABALPUR 2. THE RESPONDENT /CROSS OBJECTOR: DIGAMBER KUMAR JAIN (HUF), PROP. M/S. HARISH UMBRFELLA, 704, KAMANIA GATE, SARAFA WARD, JABALPUR, M.P 3. THE COMMISSIONER OF INCOME TAX (APPEALS), JABALPUR 4. CIT 23 I.T.A. NO.04/JAB/2011 C.O. NO.03/JAB/2011 ASSESSMENT YEAR: 20 06-07 5. DR, ITAT, JABALPUR 6. GUARD FILE. BY ORDER, //TRUE COPY// SR.PRIVATE SECRETARY,ITAT CAMP AT JABALPUR