Shri Jagdish Mohanlal Patel, Ahmedabad V. The Dy.CIT.,Cent.Circle-1(3), Ahmedabad

CO 337/AHD/2010

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9649 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 6 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-06-2014
• Assessment Year: misc
• Appeal Filed On: 21-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: D S KALYAN
• Keywords: Business income; Income from undisclosed sources; Search and seizure; Share purchase agreement; Block assessment
• Section: 69C; 133A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI & SHRI ANIL CHATURVEDI, A.M. & SHRI KU L BHARAT, J.M.) I.T(SS) A. NO. 782 /AHD/2010 & CO NO. 337/AHD/2010 (BLOCK PERIOD: 01-04-1996 TO 11.09.2002) THE DCIT, C.C-1(3), AHMEDABAD V/S SHRI JAGDISH MOHANBHAI PATEL 87-88 GUJARAT INDUSTIEAL ESTATE, RAKHIAL, NR. GUJARAT BOTTLING, AHMEDABAD (APPELLANT) (RESPONDENT) SHRI JAGDISH MOHANBHAI PATEL 87-88 GUJARAT INDUSTIEAL ESTATE, RAKHIAL, NR. GUJARAT BOTTLING, AHMEDABAD V/S THE DCIT, C.C-1(3), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ABBPP 5361P APPELLANT BY : SHRI D.S. KALYAN. CIT. D.R. RESPONDENT BY : SHRI S.N. SOPARKAR WITH SHRI P. M . MEHTA ( )/ ORDER DATE OF HEARING : 12-06-201 4 DATE OF PRONOUNCEMENT : 27 -06-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-III, AHMEDABAD DATED 16.08.2010 FOR B.P. 1.04.1996 TO 11 .09.2002 AND ASSESSEE HAS ALSO FILED A C.O . ITA NO 782/A/2010 & CO NO.337/A/2010 . B.P. 1/04/19 96 TO 11/09/2002 2 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. SEARCH OPERATION UNDER SECTION 132 OF THE ACT WAS C ARRIED OUT ON 25.07.2002 IN THE CASE OF ARVIND PATEL GROUP, BROTH ER OF SHRI JAGDISHBHAI PATEL THE ASSESSEE. THE ASSESSEE WAS R ESIDING WITH HIS BROTHER. AT THE TIME OF SEARCH SINCE SHRI ARVINDBHA I WAS NOT AVAILABLE AT THE RESIDENCE, STATEMENT OF ASSESSEE WAS RECORDED U NDER SECTION 132(4) ON 25.07.2002 WHEREIN HE ADMITTED THAT HE WAS RUNNI NG PROPRIETORY CONCERN IN THE NAME OF ELECTRON ENGINEERING. DURING THE COURSE OF SEARCH, A CHEQUE OF RS. ONE LAC WHICH DID NOT HAVE THE NAME TO WHOM IT WAS ISSUED BY SHRI MANSUKHBHAI PATEL WAS ALSO FOUND AND SEIZED. IN THE STATEMENT, THE ASSESSEE SUBMITTED THAT THE CHEQUE W AS GIVEN TO HIM BY SHRI MANSUKHBHAI PATEL, PROPRIETOR OF ANKUR INDUSTR IES, TO BE HANDED OVER TO SOME THIRD PERSON WHOSE NAME WAS NOT TOLD B Y SHRI MANSUKHBHAI TO THE ASSESSEE. CONSEQUENTLY SURVEY WA S CARRIED OUT AT THE BUSINESS PREMISES OF ELECTRON ENGINEERING, THE PROPRIETORY CONCERN OF THE ASSESSEE. DURING THE COURSE OF SURVEY, SHORT FALL IN STOCK TO THE TUNE OF RS. 66,890/- WAS DETECTED AND WAS ALSO ACCE PTED BY SHRI BANKIM BHAGAT ONE OF THE EMPLOYEE OF THE ASSESSEE. FURTHER BACK UP OF DATA ON THE COMPUTER INSTALLED IN THE OFFICE PREMISES OF E LECTRON ENGINEERING WAS TAKEN ON C.D AND SEIZED. FROM THE DETAILS OF TH E DATA OF THE COMPUTER, A.O NOTED THAT THE TOTAL SALES FOR THE BL OCK PERIOD WHICH WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS WAS R S. 1,40,66,398/-. TO BRING TO TAX THE ESCAPED SALES, PROCEEDINGS UNDER S ECTION 158BD WERE INITIATED AND NOTICE UNDER SECTION 158BD OF THE ACT WAS ISSUED ON 12.05.2005 AND SERVED UPON THE ASSESSEE ON 20.06.20 05 DIRECTING THE ASSESSEE TO FILE THE RETURN FOR THE BLOCK PERIOD. A SSESSEE FILED RETURN OF ITA NO 782/A/2010 & CO NO.337/A/2010 . B.P. 1/04/19 96 TO 11/09/2002 3 INCOME ON05.04.2007 SHOWING UNDISCLOSED INCOME OF R S. 20,000/-. THEREAFTER ASSESSMENT WAS FRAMED UNDER SECTION 158B D READ WITH SECTION 158BC OF THE ACT VIDE ORDER DATED 04.05.200 7 AND THE TOTAL INCOME WAS DETERMINED AT RS. 1,41,86,398/-. AGGRIE VED BY THE ORDER OF A.O ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT( A) VIDE ORDER DATED 16.08.2010 GRANTED SUBSTANTIAL RELIEF TO THE ASSESS EE. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE PROCEEDINGS U/S. 158BD WERE NOT INITIATED IN ACCORDANCE WITH PROVISIONS OF LAW. 2. THE LD.CIT(A) ERRED IN LAW ON FACTS IN IGNORING THE FINDING OF AO THAT CERTAIN SHARE CERTIFICATES BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED DUR ING SEARCH AT RESIDENTIAL PREMISES OF BROTHER OF ASSESSEE SHRI ARVINDBHAI PATEL, WHICH WERE ALSO THE BASIS FOR INITIATION OF PROCEEDINGS U/S. 158BD. 3. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS.1,17,06,0089/- OUT OF TOTAL ADDITION OF RS.1,40,00,000/- ON ACCOUNT OF UNACCOUN TED SALES. 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.1,00,000/- MADE ON ACCOUNT OF BEARER CHEQUE ISSUED BY SHRI MANSHUKHBHA I PATEL 4. ASSESSEE HAS ALSO FILED C.O AND THE GROUNDS RAISED IN THE C.O READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS RIGHTLY HELD THAT THE PROCEEDINGS INITIATED U/S. 158BD WERE BAD IN LAW. THE SAME NEED S TO BE UPHELD. 2. WITHOUT PREJUDICE TO ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THOUGH THE CIT(A) HAS HELD THE ISSUE OF NOTICE U/S. 158BD IS NOT PROP ER, HE HAS ERRED IN NOT DEALING WITH THE CONTENTION OF THE ASSESSEE THAT THE BLOCK PERIOD ME NTIONED IN THE NOTICE U/S. 158BD IS WRONG AND THEREFORE, THE SAID NOTICE IS ILLEGAL AND DEFECTIVE . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 16,17,635/- ON ACCOUNT OF PROFIT FROM THE AL LEGED UNACCOUNTED SALES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN ESTIMATING AND MAKING THE ADDITION ON ACCOUNT OF INITIAL INVESTMENT AND ENHANCING THE INCOME OF THE ASSESSEE BY RS. 6,76,356/-. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE HAD RECEIVED CHEQUE OF RS. 1,00,000/- AGAI NST ALLEGED UNACCOUNTED SALES, EVEN THOUGH HE HAS NOT MADE ANY SEPARATE ADDITION ON THIS ISSUE. WE FIRST TAKE UP REVENUES APPEAL (ITA NO. 792/AHD/ 2010) ITA NO 782/A/2010 & CO NO.337/A/2010 . B.P. 1/04/19 96 TO 11/09/2002 4 5. GROUND NO. 1 AND 2 ARE INTERCONNECTED AND THEREFORE CONSIDERED TOGETHER. GROUND NO. 1 IS IN CONNECTION WITH HOLDING THAT THE PROCEEDINGS UNDER SECTION 158BD WERE NOT INITIATED IN ACCORDANCE WITH THE PROVISIONS OF LAW AND THE DELETION OF ADDITIONS MADE THEREUNDER. 6. BEFORE US, LD. D.R. TOOK US THROUGH THE FINDINGS OF A.O AND SUPPORTED HIS ORDER AND FURTHER RELIED ON THE DECISION OF HON BLE ALLAHABAD HIGH COURT IN THE CASE OF 42 TAXMAN. COM. 441 (ALLAHABAD ). THE LD. A.R. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFO RE CIT(A) AND SUPPORTED THE ORDER OF CIT(A). HE FURTHER SUBMITTED THAT IN THE CASE OF ARVIND PATEL, THE BROTHER OF ASSESSEE, SEARCH WAS CARRIED OUT ON 25.07.2002 AND THE ORDER WAS PASSED ON 30.07.2004 W HEREAS THE NOTICE UNDER SECTION 158BD WAS ISSUED IN THE CASE OF ASSES SEE ON 12.05.2005 THAT IS AFTER MORE THAN 10 MONTHS FROM THE DATE OF COMPLETION OF ASSESSMENT UNDER SECTION 153BC IN THE CASE OF SHRI ARVIND PATEL. HE FURTHER SUBMITTED THAT THE PROCEEDINGS UNDER SECTIO N158BD HAS NOT BEEN INITIATED ON THE BASIS OF INCRIMINATING DOCUMENT/AS SETS FOUND AT THE TIME OF SEARCH IN THE CASE OF ANOTHER ASSESSEE BUT WAS O N THE BASIS OF SAME DATA COPIED IN THE CDS AT THE TIME OF SURVEY AT THE BUSINESS PREMISES OF ASSESSEE. HE FURTHER SUBMITTED THAT PROVISIONS OF S ECTION 158BD INDICATES THAT FOR ASSESSING THE UNDISCLOSED INCOME OF ANY OTHER PERSON I.E. OTHER THAN THE PERSON WITH RESPECT TO WHOM SEA RCH WAS MADE U/S. 132, THE A.O MUST BE SATISFIED THAT THE UNDISCLOSED INCOME BELONGS TO SUCH PERSON I.E. PERSON OTHER THAN THE SEARCH PERSO N. HE FURTHER PLACED RELIANCE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEARS CIVIL APPEAL NO. 3958/AHD/2014. HE ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF DCIT VS. LALIT KR. P ATEL (2013) 36 ITA NO 782/A/2010 & CO NO.337/A/2010 . B.P. 1/04/19 96 TO 11/09/2002 5 TAXMAN. COM 554 (GUJ) FOR THE PROPOSITION THAT NO A DDITION CAN BE MADE ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SURVEY. HE ALSO RELIED ON THE DECISION IN THE CASE OF DCIT VS. DR. LALIT V ERMA (2014) 42 TAXMAN. COM. 136 (ALLAHABAD). 7. THE LD. D.R. IN THE REJOINDER SUBMITTED THAT THE FA CTS OF THE CASE IN THE CASE OF CALCUTTA KNITWEARS ARE DISTINGUISHABLE AND CANNOT BE APPLIED TO THE PRESENT CASE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE HOLDING THE INITIATION OF PROCEEDINGS 158BD TO BE NOT IN ACCORDANCE WITH LAW HAS NOTED THAT THE BACK UP OF COMPUTER DATA AND SHORTAGE OF STOCK WHICH WAS THE SUBJECT MA TTER OF SATISFACTION NOTE WAS FOUND FROM THE BUSINESS PREMISES OF THE AS SESSEE DURING SURVEY PROCEEDINGS UNDER SECTION 133A AND NO OTHER DOCUMENTS AND VALUABLES WERE FOUND DURING THE COURSE OF SEARCH IN THE CASE OF ARVIND PATEL, BROTHER OF THE ASSESSEE. HE HAS FURTHER NOTE D THAT THE SEIZURE OF BLANK BEARER CHEQUE OF RS. ONE LAC FOUND IN THE POS SESSION OF THE ASSESSEE DURING SEARCH PROCEEDINGS IN THE CASE OF A RVIND PATEL DID NOT FIND MENTION IN THE SATISFACTION NOTE. HE HAS FURT HER NOTED THAT IN THE BLOCK ASSESSMENT ORDER, THERE IS NO FINDING IN RESP ECT OF DOCUMENTS/VALUABLES BELONGING TO THE ASSESSEE. HE H AS ALSO NOTED THAT THE ASSESSMENT UNDER SECTION 158BC IN THE CASE OF S HRI ARVIND PATEL WAS PASSED ON 30.07.2004 BUT THE NOTICE UNDER SECTION 1 58BD WAS ISSUED TO THE ASSESSEE ON 12.05.2005 ALMOST 10 MONTHS AFTER T HE DATE ORDER PASSED UNDER SECTION 158BC. ITA NO 782/A/2010 & CO NO.337/A/2010 . B.P. 1/04/19 96 TO 11/09/2002 6 9. BEFORE US REVENUE COULD NOT BRING ANY MATERIAL ON R ECORD TO CONTROVERT THE FINDINGS OF CIT(A). WE FURTHER FIND THAT THE HO NBLE APEX COURT IN THE CASE OF CIT VS. CALCUTTA KNITWEAR (SUPRA) HAS H ELD THAT FOR THE PURPOSE OF SECTION 158BD OF THE ACT, SATISFACTION N OTE IS SINE QUA NON AND THE SAME MUST BE PREPARED BY THE A.O BEFORE HE TRANSMITS THE RECORDS TO THE OTHER ASSESSING OFFICER WHO HAS JURI SDICTION OVER SUCH OTHER PERSON. THE SATISFACTION NOTE COULD BE PREPAR ED EITHER AT THE TIME OF OR ALONG WITH THE INITIATION OF PROCEEDINGS AGAINST THE SEARCHED PERSON UNDER SECTION 158 BC OF THE ACT OR ALONG WITH THE A SSESSMENT PROCEEDINGS U/S. 158BC OF THE ACT OR IMMEDIATELY AF TER THE ASSESSMENT PROCEEDINGS ARE COMPLETED UNDER SECTION 158BC OF TH E ACT OF THE SEARCHED PERSON. SEEN IN THE LIGHT OF THE DECISION OF APEX COURT CITED HEREIN ABOVE, IN THE PRESENT CASE IT IS SEEN THAT T HE ASSESSMENT ORDER U/S. 158BC IN THE CASE OF ARVIND PATEL WAS PASSED ON 30. 07.2004 AND THE NOTICE UNDER SECTION 158BD WAS ISSUED ON ASSESSEE O N 12.05.2005 I.E. ALMOST 10 MONTHS AFTER THE DATE OF ORDER UNDER SECT ION 158BC AND THUS THE ISSUANCE OF NOTICE WAS NOT IMMEDIATELY AFTER TH E COMPLETION OF ASSESSMENT PROCEEDINGS U/S. 158BC. 10. IN THE CASE OF DCIT VS. DR. LALIT VERMA THE HONB LE ALLAHABAD HIGH COURT HAS CONCLUDED THAT IN THE COURSE OF BLOCK ASS ESSMENT PROCEEDINGS. A.O COULD NOT MAKE ADDITION TO ASSESSEES TAXABLE I NCOME ON THE BASIS OF MATERIAL COLLECTED DURING SURVEY CONDUCTED PRIOR TO SEARCH PROCEEDINGS. 11. IN THE PRESENT CASE, THE ADDITION HAS BEEN MADE ON THE BASIS OF MATERIAL FOUND DURING SURVEY U/S. 133A AND NOT ON THE BASIS OF MATERIAL FOUND AT ITA NO 782/A/2010 & CO NO.337/A/2010 . B.P. 1/04/19 96 TO 11/09/2002 7 THE TIME OF SEARCH. IN VIEW OF THE AFORESAID FACTS , WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) AND THUS THESE GROUNDS OF REVEN UE ARE DISMISSED. 3 RD GROUND IS WITH RESPECT TO DELETION OF ADDITION MAD E ON ACCOUNT OF UNACCOUNTED SALES. 12. ON THE BASIS OF DATA FOUND FROM THE COMPUTER OF THE ASSESSEE, A.O NOTICED THAT THE DATA REVEALED TOTAL SALES OF RS. 1 ,40,66,398/-WHICH WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. A.O WAS OF THE VIEW THAT SINCE THE DATA WAS FOUND ON THE ASSESSEES COMPUTER IN THE BUSINESS PREMISES BELONGING TO THE ASSESSEE THE DATA HAS TO BE TRUE MORE SO WHEN THE COMPUTER WAS INSTALLED IN THE ASSESSEES BUSINE SS PREMISES AND ACCORDING TO THE A.O, THE ASSESSEE WAS IN TOTAL CON TROL OF THE BUSINESS PREMISES. A.O WAS OF THE VIEW THAT THE AMOUNT OF RS . 1,40,66,398/- REPRESENTING UNRECORDED SALES WAS THE UNACCOUNTED I NCOME OF THE ASSESSEE AND HE ACCORDINGLY ADDED THE ENTIRE TO THE INCOME OF ASSESSEE. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) GRANTED SUBSTANTIAL RELIEF TO ASSESS EE BY HOLDING AS UNDER:- 8. ON MERIT, THE AO MADE ADDITION OF TOTAL SALES OF RS. 1,40,66,398/- U/S. 69C OF THE ACT ON THE BASIS OF THE BACK UP OF COMPUTER DATA. I HAVE SEEN THE LI ST OF THE SALES PARTIES AS PER THIS DATA FOR TWO MONTHS I.E. APRIL & MAY, 1999. TOTAL SALES AS PER T HIS DATA IS RS.3,95,781/- FOR THE MONTH OF APRIL AN D RS.3,68,4637- FOR THE MONTH OF MAY, 1999. IT WAS AD MITTED BY THE AR THAT THE NAME OF THE PARTIES IS COMMON IN THE REGULAR BOOKS OF ACCOUNTS AS WELL AS IN THE BACK UP DATA. THE 'FIGURES SHOWN IN THE DATA APPEARS TO BE ACTUAL TRANSACTION AND NOT HYPOT HETICAL FIGURES. THE SALES FOR APRIL.* 1999 AND MAY, 1999 ARE ENCLOSED AS ANNEXURE-I TO THIS ORDER. ON THE PERUSAL OF THIS ANNEXURE IT IS SEEN THAT THE FIGURES SHOWN ARE RS.2630 ; 1976 ; 2250 ; 1200 ; 78 00 ; 430-; 2900 ETC. ALL SUCH FIGURES APPEAR TO BE ACTUAL FIGURES OF SALES AND NOT THE CONCOCTED FIGUR ES AS STATED BY THE APPELLANT IN HIS STATEMENT ON 4/12/2002. IN MY VIEW THE FIGURES SHOWN IN THE BACK UP COMPUTER DATA REPRESENT UNACCOUNTED SALES OF THE APPELLANT FOR THE PERIOD 1/4/1999 TO 30/12/2000 . BUT THE WHOLE SALE PROCEEDS CANNOT BE CONSIDERED AS UNACCOUNTED INCOME OF THE APPELLANT. THE APPELLANT HAS ARGUED THAT AT THE MOST G.P. ADDITION SHOULD HAVE BEEN MADE BY THE AO. IF THE AP PELLANT HAS BEEN DOING UNACCOUNTED SALES, IT CLEARLY MEANS THAT HE HAS ALSO MADE UNACCOUNTED PUR CHASES ALSO. EVEN IF IT IS PRESUMED THAT THE APPELLANT PURCHASED THE STAMPINGS OUT OF THE SALE P ROCEEDS, THEN ALSO IT IS TO BE ASCERTAINED AS TO HO W MUCH INITIAL INVESTMENT WAS MADE BY THE APPELLANT I N UNACCOUNTED PURCHASE TO GENERATE THE SALES OF ITA NO 782/A/2010 & CO NO.337/A/2010 . B.P. 1/04/19 96 TO 11/09/2002 8 RS. 1,40,66,398/-. IN MY VIEW, IT WOULD BE FAIR TO EXPECT THAT THE APPELLANT WAS ABLE TO REINVEST THE SALE PROCEEDS AFTER 60 DAYS OF ITS PURCHASE. IN OTHER WO RDS, THE INITIAL INVESTMENT WOULD BE ESTIMATED AS THE 60 DAYS PURCHASES FROM 1-4-1999 TO 31-5-1999 WH ICH IS EQUAL TO (3,95,781 + 3,68,463) LESS G.P. @ 11.5% (AVERAGE OF THE GP OF TWO YEARS) = RS.6,76, 356/-. THE GP ON THE TOTAL ALES OF RS. 1,40,66,398/- @ 11.5% COMES TO RS. 16,17,635/-. IN OTHER WORDS, AT THE MOST, TOTAL ADDITION OF INITIAL INVESTMENT + GP TOTAL AMOUNTING TO RS.22,93,991/- C AN ONLY BE SUSTAINED OUT OF THE TOTAL ADDITION OF RS. 1,40,66,398/-. IN ANY CASE, THE ADDITION CANNOT BE MADE U/S. 69C OF THE ACT. 13. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. SUPPORTED THE ORDER OF CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE HAS GIVEN A FINDING THAT THE FIGURES SHOWN IN THE B ACK UP COMPUTER DATA REPRESENTED UNACCOUNTED SALES FOR THE PERIOD 1.04.1 999 TO 30.12.2000. HE HAS HELD THAT WHOLE SALE PROCEEDS CANNOT BE CONS IDERED AS UNACCOUNTED INCOME OF THE ASSESSEE FOR THE REASON T HAT FOR MAKING THE UNACCOUNTED SALES, THE ASSESSEE WOULD HAVE ALSO MAD E UNACCOUNTED PURCHASES. CIT(A) AFTER CONSIDERING THE TURNOVER CY CLE AND THE INITIAL INVESTMENT AND CONSIDERING THE AVERAGE GROSS PROFIT RATE OF THE ASSESSEE WORKED OUT THE ADDITION ON ACCOUNT OF INITIAL INVES TMENT AND GROSS PROFIT AND UPHELD THE ADDITION OF RS. 22,93,991/-. BEFORE US, REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO CONTROVERT THE FI NDINGS OF CIT(A). IN VIEW OF THE AFORESAID FACTS WE FIND NO REASON TO IN TERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMIS SED. 4 TH GROUND IS WITH RESPECT TO DELETION OF ADDITION OF RS. ONE LAC MADE ON ACCOUNT OF BEARER CHEQUE ISSUED TO SHRI MAN SUKHBHAI PATEL. 15. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, CHEQUE OF RS. ONE LAC ISSUED BY MANSUKHBHAI PATEL WAS FOUND IN THE POSSES SION OF THE ITA NO 782/A/2010 & CO NO.337/A/2010 . B.P. 1/04/19 96 TO 11/09/2002 9 ASSESSEE. A.O WAS OF THE VIEW THAT SINCE THE ASSESS EE COULD NOT SATISFACTORILY EXPLAIN REGARDING THE PERSON TO WHOM THE CHEQUE WAS REQUIRED TO BE GIVEN, THE AMOUNT REPRESENTED UNACCO UNTED TRANSACTION. A.O THEREFORE HELD THE CHEQUE TO BE AN UNACCOUNTED TRANSACTION OF THE ASSESSEE AND ADDED THE SAME TO THE INCOME. AGGRIEVE D BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT (A) DELETED THE ADDITION BY HOLDING AS UNDER:- 9. AS REGARDS THE ADDITION OF RS. 1,00,000/- ON ACC OUNT OF BLANK BEARER CHEQUE, IT IS TO BE STATED THA T THE AO MADE ADDITION THEREOF ON THE GROUND THAT THE BEARER CHEQUE WAS FOUND IN THE POSSESSION OF THE APPELLANT AT THE TIME OF SEARCH IN THE PREMISES OF SHRI ARVIND PATEL. IN THE STATEMENT THE APPELLANT STATED THAT THE CHEQUE WAS GIVEN TO HIM BY SHRI MAN SUKHBHAI PATEL TO BE GIVEN TO A THIRD PARTY (WHOSE NAME WAS NOT DISCLOSED BY HIM). THE RELEVANT PORTIO N OF THE STATEMENT RECORDED ON 25/7/2002 IS REPRODUCED AS UNDER: 'Q.. 9 DURING THE SEARCH AT YOUR HOUSE, ONE BEARER CHEQUE NO. 586950 ISSUED BY THE PROPRIETOR OF ANKUR INDUSTRIES SHRI MANSUKHBHAI JASMATBHAI PATEL, ACCOUNT NO. 5603 OF SAURASHTRA COOPERATIVE BANK LTD., OPP. BHIDHANJAN HANUMAN, NIKOL ROAD, AHM EDABAD HAS BEEN FOUND, IN WHICH THE FIGURE IS WRITTEN OF RS. 1,00,000 AND IN WORDS AS ONE LAC ONL Y- BUT IN THIS CHEQUE, THE DATE AND PAY TO ARE NOT WRITTEN. GIVE YOUR EXPLANATION AS TO HOW AND WHY TH IS CHEQUE HAS COME TO YOU ? A.9 THIS CHEQUE HAS BEEN GIVEN TO ME BEFORE ABOUT 4 -5 DAYS BY THE OWNER OF ANKUR INDUSTRIES, SHRI MANSUKHBHAI. THIS CHEQUE IS GIVEN TO ME FOR GIVING IT TO A THIRD PARTY. TODAY I AM NOT HAVING THE NAME, ADDRESS AND DETAILS THAT THIRD PARTY. MANUKHB HAI HAS TOLD ME THAT HE WILL INTIMATE ME ON TELEPHONE, THE ADDRESS OF THE THIRD PARTY AND THERE AFTER, I HAVE TO DELIVER THIS CHEQUE TO THAT THIRD PARTY. Q.10. PLEASE GIVE THE ADDRESS OF ANKUR INDUSTRIES, PROPRIETOR MANSUKHBHAI J. PATEL AND ALSO CLARIFY - WHAT IS YOUR RELATION WITH MANSUKHBHAI ? A. 10 THE ADDRESS OF ANKUR INDUSTRIES, PROPRIETOR M ANSUKHBHAI J. PATEL IS MARGHA FARM, NATIONAL HIGHWAY NO.8, ODHAV. MANSUKHBHAI J PATEL IS STAYING AT BAPUNAGAR BUT I AM NOT HAVING THE COMPLETE ADDRESS OF HIS RESIDENCE. MYSELF AND MANSU KHBHAI ARE HAVING BUSINESS RELATIONS. HE PURCHASES GOODS FROM ME. SAVE AND EXCEPT THIS, THER E IS NO OTHER MONEY TRANSACTION BETWEEN US. Q.I I DO YOU KEEP BOOKS OF ACCOUNT ? IF YES, THEN I S THERE ANY ACCOUNT OF MANSUKHBHAI J. PATEL, PROPRIETOR ANKUR INDUSTRIES IN THE LEDGER OF YOUR. BOOKS OF ACCOUNTS ? IF YES, THEN OF WHAT TYPE IS I T ? AND AS PER THE SAME, HOW MUCH MONEY HE HA TO GIVE Y OU AND HOW MUCH MONEY YOU HAVE TO GIVE HIM ? TILL WHAT DATE, ARE YOUR BOOKS OF ACCOUNTS COMPLETE D? A. 11 WE DO KEEP BOOKS OF ACCOUNTS FOR OUR BUSINESS TRANSACTIONS. I DO NOT KNOW TILL WHAT DATE OUR BOOKS OF ACCOUNTS ARE COMPLETED. AS PER MY MEMORY, THERE IS AN ACCOUNT OF ANKUR INDUSTRIES, PROPRIETOR MANSUKHBHAI J. PATEL, IN OUR LAST LEDGER ACCOUNT AND WE ARE HIS CREDITOR. I DO NOT KNOW HOW MUCH MONEY WE HAVE TO RECEIVE FROM HIM. MY CURR ENT YEAR BOOKS OF ACCOUNTS ARE KEPT AT MY RAKHIAL OFFICE I.E. FOR THE YEAR 1987-88 ARE KEPT A T GAJANAND INDUSTRIAL ESTATE, NEAR GUJARAT BOTTLING PLANT, RAKHIAL, AHMEDABAD-23. THE BO OKS OF ACCOUNTS OF THE PREVIOUS YEAR I.E. ACCOUNTING YEAR 2001-02 ARE KEPT AT THE PREMISES OF MY ADVOCATE MADHUSUDAN PATEL, KABIR CHAMBERS, NEAR BHID BHANJAN HANUMAN, BAPUNAGAR, AHM EDABAD. FROM THE ABOVE, IT IS CLEAR THAT THE CHEQUE WAS REC EIVED BY THE APPELLANT FROM ANKUR INDUSTRIES TO WHOM GOODS ARE SOLD BY THE APPELLANT. AS, HELD IN P REVIOUS PARA THAT THE BACK UP COMPUTER DATA REPRESENTS UNACCOUNTED SALES OF THE APPELLANT, I HO LD THAT THE CHEQUE OF RS. 1 LAKH WAS RECEIVED BY TH E APPELLANT AGAINST THE UNACCOUNTED SALES TO THIS PAR TY. SINCE THE SALES ARE TAXED SEPARATELY BY THE AO, RECEIPT OF SALE PROCEEDS CANNOT BE AGAIN TAXED. ON THIS GROUND, THE ADDITION OF RS. 1,00,000/- WILL BE TREATED AS EXPLAINED OUT OF THE UNACCOUNTED INCOME OF THE APPELLANT ESTIMATED AT RS.22,93,991/-. ITA NO 782/A/2010 & CO NO.337/A/2010 . B.P. 1/04/19 96 TO 11/09/2002 10 16. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 17. BEFORE US, LD. D.R. RELIED ON THE ORDER OF A.O. ON THE OTHER HAND LD. A.R. SUPPORTED THE ORDER OF CIT(A). 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CIT(A) WHILE GRANTING THE RELIEF TO TH E ASSESSEE HAS NOTED THAT THE CHEQUE WAS RECEIVED BY ASSESSEE FROM ANKUR INDUSTIRES TO WHOM GOODS WERE SOLD BY THE ASSESSEE AND THE CHEQUE OF RS. ONE LAC RECEIVED BY THE ASSESSEE WAS AGAINST THE UNACCOUNTE D SALE TO IT. SINCE THE UNACCOUNTED SALE WAS ALREADY ESTIMATED AT RS. 2 2,93,991, RS. ONE LAC WAS TREATED AS OUT OF THE SAME AND THEREFORE THE AD DITION WAS DELETED. BEFORE US, REVENUE COULD NOT BRING ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF CIT(A). IN VIEW OF THE AFORESAID FA CTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 19. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. CO. NO. 337/AHD/2010 (ASSESSEES APPEAL) 20. BEFORE US, LD. A.R. SUBMITTED THAT IN CASE THE APPE AL OF THE REVENUE IS DECIDED AGAINST REVENUE, THE C.O. OF THE ASSESSEE W ILL NOT SURVIVE. 21. SINCE THE APPEAL OF THE REVENUE IS DISMISSED HEREIN ABOVE, THE C.O OF THE ASSESSEE DOES NOT SURVIVE AND THE SAME IS DISMISSED . ITA NO 782/A/2010 & CO NO.337/A/2010 . B.P. 1/04/19 96 TO 11/09/2002 11 22. IN THE RESULT, THE APPEAL OF THE REVENUE AND C.O OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27 - 06 - 2014. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD