M/s. Maheshwari Logistics Private Limited, Vapi V. Assistant Commissioner of Income Tax, Vapi Circle, Vapi

CO 4/SRT/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0579 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-10-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-08-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 08-04-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: GOPALA KRISHNAN AIYER
• Keywords: Unexplained investment; Unexplained expenditure; Capital asset; Depreciation; Income from undisclosed sources; Corroborative evidences; Capital expenditure; TDS
• Section: 131; 69; 10; 69C; 143(3); 133A; 143(1); 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ITA Nos.170 & 174/SRT/2018 (Ǔनधा[रणवष[ / Assessment Year: (2013-14) (Physical Court Hearing) Masheshwari Logistics Limited, (Formerly known as Maheshwari Logistics Pvt. Ltd.), MLL House, Opp. UPL, 1 st Phase, GIDC, Vapi, Gujarat State. Vs. The ACIT, Vapi Circle, Vapi. The ACIT, Vapi Circle, Vapi Vs. Masheshwari Logistics Limited, (Formerly known as Maheshwari Logistics Pvt. Ltd.), MLL House, Opp. UPL, 1 st Phase, GIDC, Vapi, Gujarat State. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAECM8332N (Assessee)/(Assessee) (Respondent)/(Revenue) Cross Objection No. 04/SRT/2021 [Arising in ITA No. 174/SRT/2018 for AY.2013-14] (Ǔनधा[रणवष[ / Assessment Year: (2013-14) Masheshwari Logistics Limited, (Formerly known as Maheshwari Logistics Pvt. Ltd.), MLL House, Opp. UPL, 1 st Phase, GIDC, Vapi, Gujarat State. Vs. The ACIT, Vapi Circle, Vapi. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAECM8332N (Assessee)/(Assessee) (Respondent)/(Revenue) Assessee by Shri Gopalakrishnan Aiyer, CA Respondent by Shri H. P. Meena, CIT(DR) Date of Hearing 29/08/2022 Date of Pronouncement 17/10/2022 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned cross appeals filed by the Assessee and Revenue for Assessment Year (AY) 2013-14 and Cross-Objection filed by the Assessee for Assessment Year (AY) 2013-14, are directed against the order passed by the Learned Commissioner of Income Tax (Appeals), Valsad [in short “the ld. CIT(A)”], which in turn arise out Page | 2 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) dated 31.03.2016. 2. Since, the issues involved in all the appeals of Assessee and Revenue are common and identical, therefore these appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. The grounds as well as the facts narrated in ITA No. 174/SRT/2018, for AY.2013-14, have been taken into consideration for deciding the above appeals en masse. 3. Grounds of the appeal filed by Assessee are as follows: “1. The order of assessment is contrary to the facts and prejudicial to the assessee. 2. On appreciation of the facts and circumstances of the case and law, the additions made by the Learned Assessing Officer and confirmed by the Learned Commissioner of Income Tax (Appeals) are contrary to law and based on erroneous understanding of the facts. 3. On appreciation of the facts and circumstances of the case and law the Learned Commissioner of Income Tax (Appeals) has erred in confirming the findings made by the Learned Assessing Officer while making the addition to the tune of Rs. 8,05,00,000/- by considering existence of unaccounted stock of waste paper and treating the same as unexplained expenditure u/s 69C of the Act. The addition was made solely based on the statement recorded during the course of survey proceedings without any independent and tangible supporting evidence and deserves to be deleted. 4. On appreciation of the facts and circumstances of the case and law the Learned Commissioner of Income Tax (Appeals) has erred in confirming the findings made by the Learned Assessing Officer while making the addition to the tune of Rs.1,01,00,000/- by considering the expenses incurred towards construction /renovation purposes to that extent as unexplained investment u/s 69 of the Act. The addition was made solely based on the statement recorded during the course of survey proceedings without any independent and tangible supporting evidence and deserves to be deleted. 5. On appreciation of the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the findings made by the Learned Assessing Officer while making the addition as stated above in ground no. 3 & 4 without considering the statement recorded during the course of survey proceedings and the clarification letter dated 14.03.2013 along with the affidavit thereon together in its correct perspective. 6. On appreciation of the facts and circumstances of the case and law the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition made by the Learned Assessing Officer to the tune of Rs.1,04,000/- treating the same as unaccounted rent income. The action of the Learned Commissioner of Income Tax (Appeals) is contrary to the facts and law and deserves to be deleted. Page | 3 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. 7. The assessee craves to add, amend, modify or alter the above grounds of appeal at any stage of appellate proceedings. 8. The assessee humbly prays that the appeal be allowed in toto.” 4. Grounds of appeal filed by the Revenue are as follows: “i) On the facts and in circumstances of the case, the order of the Ld. CIT(A) is perverse as the Ld. CIT(A) erred in deleting the additions of Rs.8.00 Cr and Rs.1.01 Cr made on account of unaccounted purchase of waste paper and unaccounted investment u/s 69C respectively, on the premise that there cannot be addition of both income and expenditure as the same will amount to double taxation ignoring the fact that the income of Rs.6 Cr from freight and addition of income of Rs.5 Cr in the hands of the directors of the company has no co-relation with the expenditure made on account of purchase of waste paper of Rs.8.05 Cr and unaccounted expenditure pertaining to unaccounted investment of Rs.1.01 Cr in office construction and furnishing. ii) On the facts and in circumstances of the case, the Ld. CIT(A) erred in entertaining the additional ground of the assessee during the course of appellate proceedings and adjudicating the case on the basis of the additional ground without remanding back the same to the assessing officer which is in clear violation of the Rule 46A of IT Rules, 1962. iii) The assessee craves to add, modify or alter any grounds during the course of appeal proceedings.” 5. Grounds of appeal raised by the assessee in Cross Objection No. 04/SRT/2018 are as follows: “1. On appreciation of facts and circumstances of the case and law, the Learned Commissioner of Income Tax (Appeals) has rightly deleted the additions of Rs.8.05 crore and 1.01 crores made on account of unaccounted purchase of waste paper and unaccounted investment u/s. 69C respectively, on the premise that there cannot be addition of both income and expenditure as the same amounts to double taxation. 2. On appreciation of facts and circumstances of the case and law, the Learned Commissioner of Income tax (Appeals) has rightly entertained the alternate pleading made by the respondent company during the course of appellate proceedings without violating Rule 46A of the Income Tax Rules, 1962. 3. On appreciation of facts and circumstances of the case and law, the Learned Commissioner of Income Tax (Appeals) has rightly adjudicated the grounds of appeal raised by the respondent company without violating Rule 46A of the Income Tax Rules, 1962. The respondent company has not raised any additional grounds of appeal during the course of appellate proceedings. 4. On appreciation of facts and circumstances of the case and law, the Learned Commissioner of Income Tax (Appeals) has rightly allowed the claims of the respondent company and /or deleted the additions made by the Learned Assessing Officer after considering all submissions/ material produced before him or the learned assessing officer during the course of assessment proceedings. It is Page | 4 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. therefore prayed that the order of the Learned Commissioner of Income tax (Appeals) be upheld. 5. The respondent craves to add, amend, modify or alter the above grounds of cross objections at any stage of appellate proceedings. 6. The respondent humbly prays that the cross objections be accepted in toto and the appeal filed by the petitioner be dismissed.” 6. The facts necessary for disposal of the appeals are stated in brief. The assessee before us is a Private Limited company and engaged in the business of carriers / transporter, trading of M.G. Kraft paper board and all other papers and also trading in coal etc. The assessee has filed its Return of income on 29.11.2013 declaring total Income to the tune of Rs.7,85,13,598/-under normal provisions of Income Tax Act, 1961. The return was processed u/s 143(1) of the Act by CPC Bangalore. Later on, the assessee`s case was selected for scrutiny through Survey. Accordingly, a statutory notice u/s 143(2) of Act was issued on 12.06.2014 and duly served upon the assessee. The assessing officer also issued a letter dated 18.05.2015 and duly served to the assessee calling for a paper book containing the audit report in Form No. 3CD, 3CB, etc., financial statements such as balance sheet, profit and loss account, computation of total income etc. 7. In response to the show cause notice of the assessing officer, the assessee filed paper book, along with audit report, financial statements such as balance sheet, profit and loss account, computation of total income etc. 8. During the course of survey proceedings u/s 133A, statement of Shri Neeraj Maheshwari, the director of the assessee company were recorded on oath wherein the following disclosures were made: Page | 5 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. The assessee company filed an affidavit alongwith a letter on 14.03.2013 and stated that the disclosures made by the assessee company either reflected in the Books of Accounts of assessee Company or there is typographical mistake in the said statement taken during the survey proceedings. The Assessing Officer gone through the affidavit and observed that it is an afterthought to retract the statement. 9. A survey action under section 133A of the Income Tax Act was conducted by DDIT (Inv.), Valsad, in case of M/s Maheshwari Logistics Pvt., Ltd, on 20.10.2012, During the survey proceedings, the directors of the company had voluntarily surrendered unaccounted income of Rs.20 crores out of which income of Rs.8,05,00,000/- was surrendered on basis of unaccounted stock of waste paper found from the godown premise of the company i.e. at A/2-14, Phase-1, GIDC, Vapi. Then after, the assessee filed a letter and an affidavit on 14.03.2013, retracting the voluntarily made disclosure of Rs.20 crores which included disclosure made on basis of unaccounted stock of Rs.8,05,00,000/-. The plea taken by assessee in this letter with regard to unaccounted stock was that due to clerical error by the accountant, stock of 70,000 kgs was written as 7000 ton as the said godown does not have capacity of storing 7000 ton of waste paper stated in the inventory sheet. Therefore, assessing officer conducted the spot verification of the godown. After spot verification of Godown, the Inspector reported that plot is big enough to easily store 7000 tons of waste paper if utilized in a proper way. Therefore, assessing officer issued a notice to the assessee, to explain the contents of the verification report. 10. In response, the assessee submitted written submission before the assessing officer. The relevant portion of the written submission is reproduced below: “Unaccounted Stock of Waste Paper: Rs. 8,05,00,000/- During the survey proceeding, the survey team has stated that a Stock of Waste Paper amounting to Rs.8,05,00,000/- were tying at our godown premises situated at Shed No. A/2- 14, 1 st Phase, Opp. UPL, GIDC Vapi. With respect to the said point of Survey, we would like to state that there was a clerical error by the accountant of the company while mentioning the quantity of waste paper in the inventory sheet prepared by the Investigation team during course of survey. Personally we were not allowed to visit the premises alongwith the Survey team to explain the correct fact of the quantum of the actual stock of waste paper at the said site which were held by the Company, The accountant who was present there instead of 70,000 Kgs of stock Inadvertently wrote 7,000 ton which is absolutely incorrect as the said godown does not have the capacity to store stock of 7,000 ton of waste paper at any given Page | 6 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. point of time. The said godown has three sections. One Section has Diesel Pump and the Second Section is used as a Coal Yard. The Third Section is used to stock Waste Paper. The size of the Third Section is 10 ft. x 140 ft. making the total area of 1,400 Sq. ft. and hence it is not at all possible to accommodate or store 7,000 ton of waste paper in the said space. Report of surveyor has been enclosed in support of the same. The amount of Rs.8,05,000/- was actually incurred by us on purchase of waste paper for which separate details were kept but the transfer entry of which was not made in the main cash book of the Company till the date of survey. Hence, in our humble submission, the Value of stock of Rs.8,05,00,000/- as recorded in the statement recorded u/s. 131 need to be substituted to Rs.8,05,000/-. We further submit that even this amount of Rs.8,05,000/- is not a undisclosed income as relevant vouchers etc. were available at the time of survey at the premises and only the cash book was not updated by making entry of such vouchers till the time of survey. The said vouchers have since been incorporated in the books of M/s Maheshwari Logistics Pvt. Ltd. We are enclosing the following in the support of this and Marked as Annexure # 4 to this submission. a. Purchase details b. Ledger A/c showing the purchase of Waste Paper of Rs.8,05,000/- which is incorporated in the Books of Accounts. Sir, in this matter we would also like to further state that there was a fire in the leasehold godown located at Shed no. A/2-14, Phase, GIDC, Vapi on 15/11/2012 at 1:10 am destroying all the waste paper stock available. The stock of Rs.8,05,000/- was also burned in fire. Detailed police report has been prepared by the Police Sub Inspector Vapi Police Station after evidencing the said event and the news about the fire was reported in the Local Newspaper "Divya Bhaskar" News Paper in its edition dated 17/11/2012. An application was made to the Notified Area Office and a certificate is obtained from them about the date and time of fire-insurance claim was made but the same was rejected by the Oriental insurance Co, Ltd as the insurance policy only covered stock of coal in open and not any other stock.Copy of the all the above have already been submitted at your goodself’s office by way of total entry dated 14/03/2013. The entire value of loss of waste paper stock is hence given effect in the books of accounts of the company on the date of receipt intimation from the insurance company about rejection of insurance claim. 11. However, assessing officer rejected the contention of the assessee and observed that assessee has concealed the income by way of unaccounted closing stock. During the assessment proceedings, the assessing officer also observed that assessee has made unaccounted payment on account of construction, renovation of office, building and furniture to the tune of Rs. 1,01,00,000/-. The assessing officer also noted that assessee has received unaccounted rent of Rs.1,04,000/-. Therefore, assessing officer asked the assessee to explain the expenditure and rent income to the tune of Rs. 1,01,00,000/- and Rs. 1,04,000/-. In response, the assessee submitted the following written submission, before the assessing officer, the relevant portion of the written submission is reproduced below: Page | 7 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. “3) Expenses at Construction/Renovation: Rs.1,01,00,000/- The Survey was conducted on the premises of the Assesses Company at Vapi Location. The location of the Office Premises where the survey was conducted by the income Tax Personal was a newly constructed premises which were put to use on 11/01/2013 in the Books of Accounts for the purpose of claiming depreciation on such capital Assets. However, we would like to state that the construction of the said Office Building has begun during the mid of erstwhile financial year i.e. FY 2010- 2011. The Company has made at the accounting entries pertaining to Construction of the said Office Building under the head "Capital Work in Progress" and the cumulated balances of such capital expenditure has been debited in the said account from time to time. The same can be evident from the Audited Financial Statement of proceeding year i.e. as at 31.03.2012, wherein the cumulated cost of Expenditure under the head “Capital Work in Progress" was amounting to Rs.2,68,88,527/- and the details of the same is disclosed in Note No, 12 of the financial Statement. Such disclosures shown in the Financial Statement evidences the fact of Expenses capitalised on account of new Office Building Construction, Cost of Lift, Cost of Furnishing & Electrical Installations incurred by the Company and accounted at time to time in its Books of Amounts. We are attaching herewith the Account of Capital Work in Progress of the relevant year for the details of Expenditure so incurred by the Company. Please find the same enclosed herewith and marked as Annexure 6A to this submission. The construction work of the Office Building were mainly done by a civil contractor M/s. Kamlesh Enterprises having PAN BEFPK3267R. The Company had made payment to said contractor from time to time based on the progress of the construction work on the basis of Running Bills, Finally Bill of the Construction work done by M/s. Kamlesh Enterprises for construction and renovation of Vapi and jamnagar office respectively were submitted by the party. All the 'payments from time to time was made through A/c payee cheques, TDS was also deducted in time. Running bills have been received and are accounted for in the books of M/s Maheshwari Logistics Pvt. Ltd from time to time. The said Assets alongwith furnishing forms part of the fixed assets of the company and have been properly accounted for from time to time in the Books of Accounts of the Company. Since, the some were properly and regularly accounted for in the Books of Accounts the said amount of disclosure made at the time of Survey an account of Construction and Renovation cost of Vapi and Jamnagar Office respectively, cannot form part of undisclosed income as referred to the statements recorded u/s 132 of the Act Relevant Copies of bills and ledgers reflecting payment to the contractor are enclosed herewith and marked as Annexure # 6B to this submission.” 12. However, the assessing officer rejected the contention of the assessee and made the following addition: (a) Unaccounted purchase of waste paper Rs.8,05,00,000 (b) Unaccounted Investment Rs. 1,01,00,000 (c) Unaccounted Rental Income Rs. 1,04,000 13. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has deleted the addition made by the Assessing Officer. The ld CIT(A) noted that no excess cash over Rs.11,00,00,000/- was found during the survey. Out of Rs.11,00,00,000/- unaccounted cash, the Page | 8 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. assessee has incurred unaccounted expenses on closing stock of Rs.8,05,00,000/- and unaccounted construction expenses of Rs.1,01,00,000/-. That is, assessee has incurred unaccounted expenditure, and unaccounted expenses on purchase of stock, out of unaccounted cash income of Rs.11,00,00,000/-, thus there cannot be addition of both income and expenses, as the same will amount to double taxation. This way, ld CIT(A) deleted the addition. However, ld CIT(A) confirmed the addition of Rs.1,04,000/- on account of rent receipt. 14. Aggrieved, by the order of ld CIT(A), the Revenue, as well as, assessee both are in appeal before us. 15. Learned Departmental Representative (ld.DR) for the Revenue submitted that ld. CIT(A) allowed the appeal of the assessee and granted relief of Rs. 8,05,00,000/- by relying on the submission dated 25/09/2017 of the assessee during the appellate proceedings, wherein, the assessee had argued that survey action led to findings of Rs. 6 crores as unaccounted income under the head "return freight trip income" and Rs. 5 crores under the head "income from real estate activities". The survey action also led to the findings of unaccounted stock of waste paper worth Rs. 8.05 crores and unaccounted expenses on construction of Rs. 1.01 crores. Based on this category of undisclosed income found vis-a-vis undisclosed expenditure, the assessee claimed that there could not be addition of both income and expenditure as the same will amount to double taxation. The statements recorded as well as findings of the survey do not bring out any specific facts of earning additional freight trip income of Rs. 6 crores or expenditures on purchases of unaccounted stock of Rs. 8.05 crores worth of waste paper and renovation expenses of Rs. 1.01 crores. The ld. CIT(A) relied upon the submission of the assessee and the fact that no excess cash to the tune of Rs. 11 crores could be found during survey and whatever found was unaccounted stock of Rs. 8.05 crores and unaccounted expenses of 1.01 crores. Further, the Id. CIT(A) stated that addition to the extent of additional undisclosed income of Rs. 11 crores could be taxed and this will justify the unaccounted expenses on unaccounted waste paper stock and construction/renovation of offices and deleted the additions of Rs. 8.05 crores on account of unaccounted stock of waste paper and Rs. 1.01 crores on account of Page | 9 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. unexplained investment in the form of office construction and furnishing expenses, as the assessee had already shown unaccounted income of Rs. 6 crores and Rs. 5 crores as additional income. The ld DR contended that there is no proof that unaccounted expenses of Rs. 8.05 crores and Rs. 1.01 crores were incurred out of unaccounted income of Rs.11Crores, hence, ld CIT(A) deleted the addition on wrong presumption. 16. On the other hand, ld Counsel for the assessee submitted that in respect of construction expenses of Rs. 1.01 Crores, the assessing officer simply made an observation without any reason that employee`s statement does not prove the work done at Rs. 1.01 Crores. The ld Counsel pointed out that Shri Neeraj Maheshwari, Director, has given the correct facts of the case and given clarification that entire payments for office construction has been given by way of cheques and TDS has been deducted on such payments, vide paper book page no. 34 & 35. He further clarified that the Bills of the same have been transferred to fixed assets account. This is evident from the Schedule of Fixed Assets PB Page 233 wherein the assessee has duly disclosed the additions to the office building as under: Particulars Opening Balance as at 1 st April,2012 Addition during the year Assets put to use during the year Closing Balance as at 31 st March, 2013 Shed at Vapi A2/2-3 Vapi 1,89,59,257 1,12,41,900 3,02,01,157 - Lift 10,44,000 7,000 10,51000 - Shed at Jamnagar 29,13,490 45,16,026 - 74,29,516 Office Furniture A2/2-3 25,31,935 20,21,016 45,52,951 - Office Electrical Fitting A2/2-3 14,39,845 5,69,871 20,09,716 - Total 2,68,88,527 1,83,55,813 3,78,14,824 74,29,516 Thus, ld Counsel pointed out that neither the assessing officer nor the survey team has specifically pointed out whether any specific item of office construction has not been recorded in the books of accounts. 17. Learned Counsel further pointed out that addition has been made based on the statement of the CEO and employees of the assessee recorded on oath during the course of the survey without any independent and tangible supporting evidence. It is settled law that the assessing authority shall consider entire records or statements available on record in totality as a whole and cannot pick and choose the one Page | 10 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. favourable to him for making additions to total income as held by the Honorable SC in the case of Indore Malwa United Mills Limited reported in 60 ITR 41. Learned Counsel stated that Statement recorded U/s 133A has no evidentiary value and for that he relied on the decision of Hon’ble Madras High Court in the case of S Khader Khan reported in 214 CTR 589 and subsequently affirmed by Hon’ble Apex Court reported in 352 ITR 0480. An admission made is not conclusive and it is open to the person who made the admission to show that it is incorrect. 18. Regarding stock of waste paper and addition at Rs.8,05,00,000/-, the ld Counsel submits that first of all the godown does not have capacity to store 7000 tonne waste. Besides, there was fire in the godown and due to fire whole stock of waste paper including coal was burnt. A clarification letter was submitted by the assessee within one week from date of statement recorded during survey and explained that godown does not have capacity to store 7000 tonne, it was only 70000 kg of waste. The ledger account is showing purchase worth Rs. 8,05,000/- instead of Rs.8,05,00,000/-. Regarding capacity of godown, the assessee submitted a certificate from the Government Approved Surveyor certifying the storage capacity, in his certificate he stated that godown does not have capacity to store 7000 tonne of waste. (vide paper book page no.43 to 45). The assessee submitted plan of the godown which is placed at paper book page no.166. The said plan of the godown, clearly says that godown does not have capacity to store 7000 tonne. The assessee also submitted photographs of the godown which is placed at paper book page no.166. The photographs of the godown clearly shows that it does not have capacity to store 7000 tonne waste. During the assessing proceedings, an Inspector was appointed to inspect the godown. The Inspector submitted a report stating that godown is big enough to store 7000 tonne of waste paper, if utilized in proper way. The ld Counsel submits that Inspector report cannot be believed, as the Inspector does not specify the height and width, size and distance etc, of the godown, thus inspector report is general statement. Moreover, inspector does not measure the godown physically. The Inspector report was based on eye observation, which is not sustainable in law.The fact that entire stock was destroyed by fire, has not been disputed by the assessing Page | 11 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. officer. The relevant papers were also produced before the assessing officer showing that there was fire in the godown. 19. Without prejudice, ld Counsel also submitted that undisclosed income of Rs. 11 Crores was utilized to purchase unaccounted stock of Rs. 8,05,00,000/- and unaccounted construction expenses to the tune of Rs. 1,01,00,000/-. The telescoping benefit should be given to the assessee. The ld CIT(A) has rightly allowed the appeal of the assessee and granted relief of Rs. 8,05,00,000/- stock and Rs.1,01,00,000/- construction expenses. The ld Counsel had argued that survey action led to findings of Rs. 6 crores as unaccounted income under the head "return freight trip income" and Rs. 5 crores under the head "income from real estate activities". The survey action also led to the findings of unaccounted stock of waste paper worth Rs. 8.05 crores and unaccounted expenses on construction of Rs. 1.01 crores. Based on this category of undisclosed income found vis-a-vis undisclosed expenditure, the assessee claimed that there could not be addition of both income and expenditure as the same will amount to double taxation. This way, ld Counsel relied on the findings of ld CIT(A). 20. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. Though facts have been discussed in detail in the foregoing paragraphs, however in the succinct manner, the relevant facts and background are reiterated in order to appreciate the controversy and the issue for adjudication. As a result of survey action u/s 133A of the Act, the assessee company had disclosed additional income of Rs.20,06,00,000/- which comprised of Rs.8,05,00,000/- on account of unaccounted stock of waste paper, Rs.6,00,00,000/- on account of return freight trip income not recorded in the books of account, Rs.1,01,00,000/- on account of expenses on renovation of offices and Rs.5,00,00,000/- on account of income from real estate business (to be disclosed in individual capacity by directors Neeraj Maheshwari and Vinay Maheshwari). In the return of income filed for current assessment year, the assessee included in the total income on account of Rs.6,00,00,000/- disclosed as unaccounted return freight Page | 12 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. income but did not include the other two amounts of Rs.8,05,00,000/- and Rs.1,01,00,000/-. In the individual returns of incomes of directors Neeraj Maheshwari and Vinay Maheshwari also, the undisclosed income of Rs.2.5 Crores each was not included. In the assessment order, the assessing officer has discussed in detail the assessee's claim of no possibility of existence of waste paper stock of 7000 ton in the godown premises of the company at A/2 -14, Phase-I, GIDC, Vapi. 21. In the submission dated 25.09.2017, the assessee has made an alternative plea before the ld CIT(A) that on the issue of disclosure made during the survey and taxability of the amounts under various heads. The assessee has argued that the survey action led to findings of Rs.6,00,00,000/- as unaccounted income under the head 'return freight trip income' and Rs.5,00,00,000/- under the head income from real estate activities. The survey action also led to the findings of unaccounted of stock of waste paper worth Rs.8.05 Crores and unaccounted expenses on construction of Rs.1.01 Crores. Based on this category of undisclosed income found vis-a-vis undisclosed expenditure, the assessee claimed that there cannot be addition of both income and expenditure as the same will amount to double taxation. The statements recorded as well as findings of the survey do not bring out any specific facts of earning additional freight trip income of Rs. 6 Crores or expenditures on purchase of unaccounted stock of Rs.8.05 Crores worth of waste paper and renovation expenses of Rs.1.01 Crores. Considering these submission of the assessee and the fact that no excess cash to the tune of Rs.11,00,00,000/- could be found during survey and whatever found was unaccounted stock of Rs.8.05 Crores and unaccounted expenses of 1.01 Crores. Therefore, ld CIT(A) was of the view that only addition to the extent of additional undisclosed income of Rs.11,00,00,000/- could be taxed and this will justify the unaccounted expenses on unaccounted waste paper stock and construction/renovation of offices. As the assessee had already shown unaccounted income of Rs.6,00,00,000/- and Rs.5,00,00,000/- additional income was to be disclosed in the cases of individuals Neeraj Maheshwari and Vinay Maheshwari. The ld Counsel, at this juncture submitted that in the individual returns of incomes of Directors, Viz: Shri Neraj Maheshwari and Shri Vinay Maheshwari included income of Rs.2.50 crores each Page | 13 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. and opted the Vivad-Se-Viswas Scheme and paid the taxes. Thus, out of Rs.11,00,00,000/-, the assessee has paid the taxes on Rs.5,00,00,000/- by opting Vivad-Se-Viswas Scheme. Hence, ld CIT(A) noted that there is no reason for two additions of Rs.8.05 Crores and Rs.1.01 Crores in the case of assessee. This way, ld CIT(A) provided the telescoping benefit. Thus, we note that ld CIT(A) has passed a reasoned and speaking order, hence there is no any infirmity in the order of ld CIT(A). 22. As regards ground pertaining to addition of Rs.1,04,000/- on account of godown rent, the ld CIT(A) noted that assessee has not controverted the finding of the assessing officer in the assessment order that the godown was rented with effect from 08.08.2012, hence, ld CIT(A) has confirmed the addition of Rs.1,04,000/-. We shall deal this issue separately with assessee`s aappeal in ITA No.170/SRT/2018. 23. We also note that main grievance of the assessee is that addition has been made based on the statement of the CEO and employees of the assessee recorded on oath during the course of the survey without any independent and tangible supporting evidence. It is settled law that assessing authority shall consider entire records or statements available on record in totality as a whole and cannot pick and choose the one favourable to him for making additions to total income of the assessee. For that ld Counsel relied on the judgment of the Hon’ble Supreme Court in the case of Indore Malwa United Mills Limited reported in 60 ITR 41. Learned Counsel stated that Statement recorded under section 133A has no evidentiary value and for that he relied on the decision of Hon’ble Madras High Court in the case of S. Khader Khan reported in 214 CTR 589 and subsequently affirmed by Hon’ble Apex Court reported in 352 ITR 0480. An admission made is not conclusive and it is open to the person who made the admission to show that it is incorrect. We note that section 133A of the Act does not empower the assessing officer to take statement on oath. However, we note that assessee has explained the discrepancy in stock therefore addition cannot be made based on the statement recorded during survey. For that reliance can be placed on the judgment of Hon`ble Delhi High Court in the case of Dhingra Metal Works 328 ITR 384. Based on these facts and circumstances, we do not find any infirmity in the order passed by the ld Page | 14 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 24. In the result, appeal of the Revenue is dismissed. 25. Ground Nos. 1 to 5 raised by the assessee in ITA No.170/SRT/2018 (assessee`s appeal) are supportive to the order of ld CIT(A). Since, we have confirmed the order of ld CIT(A) therefore, ground nos. 1 to 5 raised by the assessee in ITA No.170/SRT/2018, become infructuous and hence do not require adjudication. 26. In cross objection no.04/SRT/2021, the grounds raised by the assessee are supportive to the order of ld CIT(A) therefore all grounds raised by the assessee in cross objection become infructuous and hence do not require adjudication, as we have confirmed the order of ld CIT(A) and dismissed the appeal of the Revenue. 27. So far ground No.6 in assessee`s appeal in ITA No.170/SRT/2018 is concerned, we note that it is pertaining to addition of Rs.1,04,000/- on account of godown rent. We note that during the year under consideration, the assessee company has rented out one of their premises at a monthly rental of Rs.52,000/- w.e.f. October 2012 and the assessee company has disclosed rental income of Rs. 3,12,000/- for 6 Months. The assessing officer held that the premises has been rented w.e.f. 8 th August 2012 and accordingly assessing officer worked out the rental income for a period of 8 Months amounting to Rs.4,16,000/- and added the differential amount of Rs.1,04,000/-, as unaccounted rental income of the assessee company. We note that assessee company has computed the rental income for the income actually received and disclosed in the accounts. The assessing officer has assumed an extended period of 2 Months and added the differential amount of Rs. Rs.1,04,000/- ( Rs.4,16,000- Rs. 3,12,000) as unaccounted rental income, which is not acceptable. Hence we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence this ground no.6 raised by the assessee in ITA No.170/SRT/2018 is allowed. Page | 15 ITA.170 & 174/SRT/2018 & CO. 04/SRT/2021 Assessment Year. 2013-14 Maheshwari Logistics Ltd. 28. In the Combined result, appeals filed by the assessee (in ITA No. 170/SRT/2018) is partly allowed. Appeal filed by Revenue (in ITA No. 174/SRT/2018) is dismissed. Cross objections filed by assessee (in CO No. 04/SRT/2021) become infructuous and hence dismissed. Registry is directed to place one copy of this order in all appeals folder(s) / case files. Order is pronounced in the open court on 17/10/2022 by placing the result on the Notice Board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 17/10/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat