Sevakram Gabra, Gwalior V. I.T.O.-1(1), Gwalior

CO 44/AGR/2010

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8279 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 8 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-03-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 12-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: NAVIN GARGH
• Keywords: Unexplained investment; Business income; Loose papers; Document seized; Retraction; Documents seized
• Section: 40A(3); 133A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 130/AGRA/ 2010 ASSESSMENT YEAR 2005-06 INCOME TAX OFFICER WARD 1-(1), VS. SHRI SEWAK RAM GABRA, GWALIOR PROP, M/S SUNIL KUMAR SANJAY KUMAR KAMPOO ROAD, LASHKAR, GWALIOR (PAN AJDPG3760D) C.O. NO. 44/AGRA/2010 (IN ITA NO. 130/AGRA/ 2010) ASSESSMENT YEAR 2005-06 SHRI SEWAK RAM GABRA, VS. INCOME TAX OFFICER WAR D 1-(1), PROP, M/S SUNIL KUMAR GWALIOR SANJAY KUMAR KAMPOO ROAD, LASHKAR, GWALIOR (PAN AJDPG3760D) ITA NO. 380/AGRA/ 2012 ASSESSMENT YEAR 2006-07 SHRI SEWAK RAM GABRA, VS. INCOME TAX OFFICER WAR D 1-(1), PROP, M/S SUNIL KUMAR GWALIOR SANJAY KUMAR KAMPOO ROAD, LASHKAR, GWALIOR (PAN AJDPG3760D) (APPELLANTS) (RESPONDENTS) ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 2 REVENUE BY : SHRI K.K. MISHRA, JR. D.R. ASSESSEE BY : SHRI NAVIN GARGH, ADVOCATE DATE OF HEARING : 07.03.2013 DATE OF PRONOUNCEMENT : 15.03.2013 ORDER PER A.L. GEHLOT,ACCOUNTANT MEMBER: ITA NO. 130/AGRA/2010 BY THE REVENUE AND C.O. N O. 44/AGRA/2010 BY THE ASSESSEE HAVE BEEN FILED AGAINS T THE ORDER DATED 11.02.2010 PASSED BY THE LEARNED CIT(A) GWALIOR FOR A.Y. 2005-06 AND ITA NO. 380/AGRA/2012 IS FILED BY THE ASSESSEE AGAI NST THE ORDER DATED 25.05.2012 PASSED BY THE CIT(A) GWALIOR FOR THE A.Y . 2006-07. 2. THE GROUNDS RAISED IN THESE APPEALS AND C.O. ARE REPRODUCED AS BELOW:- ITA NO. 130/AGRA/2010 BY THE REVENUE:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 1,28,050/- MADE ON ACCOUNT OF ESTIMATION OF NET PROFIT. ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 3 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 7,60,000/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 1,05,511/- MADE ON ACCOUNT OF CASH PURCHASE U/S. 40A(3). C.O. NO. 44/AGRA/2010 BY THE ASSESSEE :- 1. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN UPHOLDING THE ADDITION OF RS.54,823/- OUT OF ADDITI ON OF RS.1,82,873/- MADE BY THE LD. ASSESSING OFFICER. 2. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AUTHORITIES BELOW HAVE ERRED IN MAKING AND UPHOLDING THE ADDITION OF RS.10,00,000/- AS ALLEGED INCOME BASED UPON THE STATEMENT RECORDED WITHOUT SUPPORTING ANY COGENT MA TERIAL AND EVIDENCES. ITA NO. 380/AGRA/2012 BY THE ASSESSEE :- 1. THAT, IN ANY VIEW OF THE MATTER, ON THE FACTS A ND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AUTHO RITIES BELOW HAVE ERRED IN APPLYING AND UPHOLDING THE NET PROFIT RATE OF 6.5% AS AGAINST 4.56% DECLARED BY THE APPELLANT ON THE TOTAL SALES OF RS.43,29,137/- RESULTING INTO UPHOLDING OF ADDITION OF RS.79,393/- (NET PROFIT OF RS.2,81,393/- COMPUTED @ 6.%% OF TOTAL SALE RS. 43, 29,137/- BY THE LD. CIT(A) MINUS RS. 2,02,000/- DECLARED BY THE ASS ESSEE). 2. THAT, IN ANY VIEW OF THE MATTER, ON THE FACTS AN D CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AUTHO RITIES BELOW HAVE ERRED IN MAKING AND UPHOLDING THE ADDITION OF RS.10 ,00,000/- MERELY ON BASIS OF THE STATEMENT OF THE ASSESSEE RECORDED DURING SURVEY PROCEEDINGS. ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 4 3. THE BRIEF FACTS OF THE CASE ARE THAT SURVEY UND ER SECTION 133A OF THE ACT WAS CARRIED OUT ON 28.09.2005. DURING TH E COURSE OF SURVEY SOME IRREGULARITIES WERE FOUND FOR A.Y. 2005-06 AND 2006 -07. THE A.O. NOTICED THAT THE ASSESSEE HAS SURRENDERED RS.20 LAKHS FOR T WO YEARS, RS.10 LAKHS EACH. 4. THE A.O. FURTHER NOTICED THAT THE ASSESSEE WAS NOT MAINTAINING REGULAR BOOKS OF ACCOUNT, CAPITAL ACCOUNT AND BALAN CE-SHEET WERE NOT PREPARED. ON THE BASIS OF INFORMATION AND MATERIAL NOTICED AT THE TIME OF SURVEY, LETTERS WERE ISSUED TO 16 PARTIES WHO SUPPL Y THE GOODS TO THE ASSESSEE. SUCH SUPPLY OF GOODS FOR A.Y. 2005-06 WAS RS.28,76,409/- AND A.Y. 2006-07 IT WAS RS.36,52,043/. THE A.O. FURTHER NOTICED THAT THE LETTERS SENT TO SOME OF THE PARTIES COULD NOT BE SERVED AS THOSE CONCERNS WERE CLOSED. SOME LOOSE PAPERS, WERE ALSO FOUND PERTAINI NG TO AMOUNT OF RS.78,659/- IN A.Y. 2005-06 AND RS.13,996/- IN A.Y. 2006-07. ON THE BASIS OF INFORMATION AND LOOSE PAPERS, THE A.O. NOTICED T HAT THE TOTAL PURCHASES ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 5 FOR A.Y. 2005-06 WAS RS.43,76,409/. THE A.O. APPLIE D 15% G.P. IN THE SAID PURCHASES TO DETERMINE THE SALE AMOUNT AND ACCORDIN GLY CALCULATED AMOUNT OF SALE AT RS.50,32,870/-. 5. THE A.O. APPLIED NET PROFIT RATE OF 7.22% AND C ALCULATED NET PROFIT OF RS.3,63,373/- FOR A.Y. 2005-06. THE ASSES SEE DISCLOSED PROFIT OF RS.1,80,500/-. THE A.O. MADE THE ADDITION OF RS.1,8 2,873/- IN A.Y. 2005- 06. IN A.Y. 2006-07 THE A.O. APPLIED 6.51% RATE OF PROFIT ON TOTAL SALE OF RS.53,49,850/- AND CALCULATED PROFIT AT RS.3,48,275 /- AS AGAINST THE PROFIT DECLARED BY THE ASSESSEE AT RS.2,02,000/-. THUS, TH E A.O. MADE ADDITION OF RS.1,46,275/- FOR A.Y. 2006-07. THE A.O. ALSO MADE ADDITION OF RS.7,60,000/-IN A.Y. 2005-06 UNDER SECTION 69 OF TH E ACT ON ACCOUNT OF INVESTMENT IN THE BUSINESS. THE A.O. CALCULATED THE AMOUNT OF ADDITION ON ACCOUNT OF INVESTMENT ON THE BASIS OF 15% OF THE TU RNOVER (50,32,870X15/100) IN A.Y. 2005-06. THE A.O. ALSO M ADE ADDITION OF RS.1,05,511/- INVOKING SECTION 40A(3) OF THE ACT IN A.Y. 2005-06 . THE A.O. ALSO MADE ADDITION OF RS.10 LAKHS AS SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SURVEY. THUS, TOTAL ADDITION M ADE BY THE A.O. IN A.Y. 2005-06 IS AS UNDER : ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 6 (I) ON ACCOUNT OF ESTIMATED NET PROFIT RS.1,82,8 73/- (II) UNEXPLAINED INVESTMENT U/S 69 RS. 7,60,000 /- (III) DISALLOWANCE U/S. 40A(3) RS.1,05,511/- (IV) UNDISCLOSED INCOME SURRENDERED DURING SURVEY RS. 10,00,000/- 6. IN A.Y. 2006-07 A.O. MADE ADDITION OF RS. 1,58 ,281/- INVOKING SECTION 40A(3) OF THE ACT. THE A.O. ALSO MADE ADDIT ION OF RS.10 LACS ON ACCOUNT OF SURRENDER DURING THE COURSE OF SURVEY FO R A.Y. 2006-07. THUS, THE TOTAL ADDITION MADE BY THE A.O. IN A.Y. 2006-07 IS AS UNDER :- ( I) ON ACCOUNT OF ESTIMATED NET PROFIT RS.1,46,275/- (II) DISALLOWANCE U/S 40A(3) RS.1,58,2 81/- (III) UNDISCLOSED INCOME SURRENDERED DURING SURVEY RS. 10,00,000/- 7. THE GROUNDS RAISED IN BOTH THESE APPEALS AND CR OSS OBJECTION ARE BASED ON IDENTICAL SET OF FACTS AND THE LEARNED REPRESENTATIVES OF THE PARTIES HAVE ARGUED APPEALS ACCORDINGLY. WE, THEREF ORE, FOR THE SAKE OF CONVENIENCE DECIDES BOTH THESE APPEALS AND CROSS OB JECTION BY THIS COMMON ORDER. ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 7 8. FIRST WE WOULD LIKE TO TAKE UP A COMMON GROUN D, GROUND NO.2 IN ASSESSEE APPEAL FOR A.Y.2006-07 AND GROUND NO.2 OF C.O. PERTAINING TO ADDITION OF RS.10 LAKHS EACH FOR A.Y. 2005-06 AND 2 006-07. 9. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTE D THAT DURING THE COURSE OF SURVEY THE ASSESSEE DID NOT MAKE SURR ENDER. HE FURTHER SUBMITTED THAT THE A.O. RECORDED THE STATEMENT DATE D 30.09.2005 OF THE ASSESSEE WHICH IS NOT PART OF THE ASSESSMENT PROCEE DING. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT TH E ASSESSEE HAS RETRACTED FROM THE DISCLOSURE MADE IN THE STATEMENT DATED 30. 09.2005 BY FILING AN AFFIDAVIT CONTENDING THAT THE ASSESSEE WAS DOING BU SINESS SINCE LAST 15 YEARS AND HIS INCOME WAS NEVER RS.20 LAKHS. IT IS FURTHER SUBMITTED THAT THERE MAY BE A POSSIBLE THAT HE STATED RS.2 LAKHS AND IN THE STATEMENT IT HAS BEEN RETURNED AT RS.20 LAKHS. 10. THE LEARNED AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT THE A.O. HAS RELIED UPON TWO DECISIONS OF THE HIGH COURT WHICH ARE NOT APPLICABLE TO THE FACTS OF THE CASE UNDER CONSIDERA TION AS THOSE JUDGMENTS ARE ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 8 DISTINGUISHABLE ON FACT. THE LEARNED AUTHORISED REP RESENTATIVE SUBMITTED THAT SO FAR RETRACTION IS CONCERNED, IT CAN BE MADE . ADMISSION BY THE ASSESSEE IS NOT CONCLUSIVE. 11. THE LEARNED AUTHORISED REPRESENTATIVE RELIED UPON FOLLOWING JUDGMENTS:- (1) PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE O F KERALA AND ANOTHER (1973) 91 ITR 18 (SC) (2) A.A. PATHAN VS. ACIT (1996)54 TTJ (AHD.) (TM)10 7 (3) ACIT VS. JORAWAR SINGH M. RATHOD (2005) 94 TTJ (AHD.) 867 12. THE LEARNED D.R. ON THE OTHER HAND, RELIED UPO N THE ORDER OF CIT(A) AND SUBMITTED THAT THE SURRENDER MADE BY STA TEMENT IS ACCEPTABLE, UNLESS IT IS PROVED THAT THE STATEMENT WAS RECORDED UNDER PRESSURE. THE LEARNED D.R. IN SUPPORT OF HIS CONTENTION RELIED UP ON THE DECISION OF BANGALORE BENCH IN THE CASE OF CARPENTERS CLASSICS (EXIM) (P) LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX, 108 ITD 142 (BANG.). 13. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PA RTIES AND RECORD PERUSED. WE NOTICE THAT THE CIT(A) HAS C ONFIRMED THE SAID ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 9 ADDITION OBSERVING THAT THE ASSESSEE WAS CHANGING H IS STAND REGARDING THE SURRENDER MADE DURING THE COURSE OF SURVEY PROCEEDI NG. ON ONE HAND, HE HAS SUBMITTED THAT HE DOES NOT REMEMBER THE FACT OF SUR RENDER, WHILE ON THE OTHER HAND, HE IS STATING THAT HE MIGHT HAVE SURREN DERED RS.2 LAKHS. THE CIT(A) FURTHER OBSERVED THAT THE RETRACTION HAS BEE N MADE AFTER MORE THAN THREE YEARS IN 2008 FROM THE DATE OF SURVEY IN 2005 . 14. THE CIT(A) HELD THAT SUCH STATEMENT THOUGH NOT CONCLUSIVE BUT IS DECISIVE ON THE MATTER UNLESS SUCCESSFULLY WITHD RAWN OR PROVED ERRONEOUS. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE SURR ENDER MADE EARLIER WAS NOT VOLUNTARY OR HAS BEEN MADE IN DURESS, PRESSURE AND COERCION. THE CIT(A) FURTHER NOTED THAT REFERENCE TO DISCUSSION MADE BY THE A.O. THAT DURING THE COURSE OF SURVEY MATERIALS WERE FOUND IN THE FORM O F LOOSE PAPERS AND DOCUMENTS WHICH WERE NOT EXPLAINED BY THE ASSESSEE. IT IS ALSO RELEVANT TO NOTE THAT SECTION 292C OF THE ACT PROVIDES THAT WHE RE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS ARE OR IS FOUND IN THE POSSESSION OR CONTRO L OF ANY PERSON IN THE COURSE OF A SEARCH UNDER SECTION 132 [ OR SURVEY UN DER SECTION 133A], IT MAY, IN ANY PROCEEDING UNDER THIS ACT, BE PRESUMED THAT SUCH BOOKS OF ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 10 ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON. THE SAID SECTION 292C AND SECTION 133A HAS BEEN INSERTED W.E.F. 01.06.2002. T HE LOOSE PAPERS AND OTHER DOCUMENTS FOUND AT THE TIME OF SURVEY A PRESU MPTION UNDER SECTION 292C IS THAT THOSE LOOSE PAPERS AND OTHER MATERIALS ARE OF THE ASSESSEE AND ANY STATEMENT GIVEN AT THE TIME OF SURVEY REGARDING THOSE LOOSE PAPERS FOUND, THERE WILL BE A PRESUMPTION THAT STATEMENT G IVEN BY THE ASSESSEE AND SAME TO BE TREATED AS BELONG TO THE ASSESSEE AS OTH ER BOOKS OF ACCOUNT OTHER DOCUMENTS, MONEY, JEWELLERY ETC. WERE FOUND. IT IS ALSO RELEVANT TO NOTE THAT THE ASSESSEE IS NEITHER MAINTAINING REGULAR BOOKS O R ACCOUNT NOR ANY FINANCIAL STATEMENT INCLUDING PROFIT AND LOSS ACCOU NT AND BALANCE SHEET WERE PREPARING EVEN THOUGH THE ASSESSEE WAS DOING BUSINE SS FOR THE LAST 15 YEARS. 15. AFTER CONSIDERING THE TOTALITY OF THE FACTS O F THE CASE, WE ARE OF THE VIEW THAT MERELY FILING AN AFFIDAVIT AFTER ELAP SE OF PERIOD FOR REITERATING THE STATEMENT GIVEN IS NOT SUFFICIENT UNLESS IT IS PROVED THAT THE STATEMENT RECORDED ON OATH WAS TAKEN UNDER PRESSURE OR COERCI ON. WE ALSO FIND THAT THE ASSESSEE HAS NOT POINTED OUT ANY CONTRARY MATERIAL TO THE FINDING OF THE CIT(A) ON THE ISSUE. IN THE LIGHT OF THE FACT, WE A RE OF THE VIEW THAT THE ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 11 ADDITION IS WARRANTED FOR RS.10 LAKHS EACH IN 2005- 06 AND IN 2006-07 RESPECTIVELY. 16. THE SECOND COMMON GROUND NO.1 OF THE REVENUE APPEALS AND GROUND NO.1 OF THE CROSS OBJECTION OF THE ASSESSEE FOR A.Y. 2005-06 AND GROUND NO.1 OF THE ASSESSEES APPEAL FO R A.Y. 2006-07 IS IN RESPECT OF ESTIMATION OF NET PROFIT. 17. THE A.O. MADE ADDITION AFTER REJECTING THE B OOKS OF ACCOUNT AND CIT(A) ALLOWED THE PART RELIEF TO THE A SSESSEE IN BOTH THE YEARS THEREFORE BOTH REVENUE AND THE ASSESSEE ARE IN APPE AL AND THE ASSESSEE FILED C.O. FOR A.Y. 2005-06. THE RELEVANT FINDING OF CIT( A) FOR A.Y. 2005-06 IS REPRODUCED AS BELOW :- THERE IS ALWAYS ON ELEMENT OF SUBJECTIVITY IN ESTIM ATION. ONLY WHEN IT CAN BE MADE OUT THAT ESTIMATION OF THE APPE LLANT IS WITHOUT BASIS OR TOTALLY LACKING THE BONA-FIDES, THEN THE A .O. WOULD BE JUSTIFIED IN SUBSTITUTING HIS ESTIMATE IN PLACE OF APPELLANT S ESTIMATE WHICH MUST BE BASED ON MATERIAL AVAILABLE ON RECORD. THE A.O. CANNOT ESTIMATE EXORBITANTLY WITHOUT ANY BASIS. SINCE THE APPELLANT HAS NOT MAINTAINED BOOKS OF ACCOUNTS, SOME ESTIMATE HAS TO BE MADE. TH EREFORE, IF THE TOTAL PURCHASES ARE TAKEN AT RS.32,58,330/-, THEN APPLYIN G 10% MARGIN AS GROSS PROFIT, TOTAL SALES WOULD WORK OUT TO RS.36,2 0,366/-. IN THE ABSENCE OF BOOKS OF ACCOUNT AND ANY EARLIER RETURN, NET PROFIT RATE OF 6.5% IS TO BE APPLIED IN VIEW OF THE SALE BILLS PRO DUCED BY THE APPELLANT WHERE GROSS PROFIT MARGIN IS BETWEEN 7-10% AND ACCO RDINGLY AFTER ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 12 ALLOWING FOR EXPENSES, NET PROFIT RATE 6.% IS ESTIM ATED. ACCORDINGLY, BUSINESS INCOME IS ESTIMATED AT RS. 2,35,323/-. SIN CE THE APPELLANT HAS DECLARED INCOME OF RS.1,80,500/- ADDITION ON THIS G ROUND COMES TO RS.54,823/-. THUS, THE APPELLANT GETS RELIEF OF RS. 1,28,050/-ON THE GROUND OF ESTIMATION OF NET PROFIT. 18. THE RELEVANT FINDINGS OF THE CIT(A) IN 2006-07 READS AS UNDER:- THERE IS ALWAYS ON ELEMENT OF SUBJECTIVITY IN ESTIM ATION. ONLY WHEN IT CAN BE MADE OUT THAT ESTIMATION OF THE APPE LLANT IS WITHOUT BASIS OR TOTALLY LACKING THE BONA-FIDES, THEN THE A .O. WOULD BE JUSTIFIED IN SUBSTITUTING HIS ESTIMATE IN PLACE OF APPELLANT S ESTIMATE WHICH MUST BE BASED ON MATERIAL AVAILABLE ON RECORD. A.O. CANN OT ESTIMATE EXORBITANTLY WITHOUT ANY BASIS NOR ANY COMPARABLE C ASE MENTIONED. AO HAS MADE ESTIMATES IN STAGES WHICH TANTAMOUNT TO RE WRITING THE SEIZED/IMPOUNDED MATERIAL AND DISCLOSURE MADE. HOWE VER, SINCE THE APPELLANT HAS NOT MAINTAINED BOOKS OF ACCOUNTS, SOM E ESTIMATE HAS TO BE MADE. THEREFORE, IF THE TOTAL PURCHASES ARE TAKE N AT RS.39,35,580/0, (ON BASIS OF SEIZED DOCUMENTS) THEN APPLYING 10% MA RGIN AS GROSS PROFIT, TOTAL SALES WOULD WORK OUT TO RS.43,29,137/ -. IN THE ABSENCE OF BOOKS OF ACCOUNT AND ANY EARLIER RETURN, NET PROFIT RATE OF 6.5% (SAME AS APPLIED FOR A.Y.2005-06) IS APPLIED IN VIEW OF T HE SALE BILLS PRODUCED BY THE APPELLANT WHERE GROSS PROFIT MARGIN IS BETWE EN 7-10% AND ACCORDINGLY AFTER ALLOWING FOR EXPENSES, NET PROFIT RATE OF 6.5% IS ESTIMATED. ACCORDINGLY, BUSINESS INCOME IS ESTIMATE D AT RS.2,81,393/-. SINCE THE APPELLANT HAS DECLARED INCOME OF RS.2,02, 100/-, ADDITION ON THIS GROUND COMES TO RS.79,393/-. THUS, THE APPELLA NT GETS RELIEF OF RS.66,882/- ON THE GROUND OF ESTIMATION OF NET PROF IT. 19. AFTER CONSIDERING THE FACTS OF THE CASE, WE NOTICE THAT IN A.Y.2005-06 THE CIT(A) REDUCED THE PROFIT RATE TO 7 .10% AND AFTER ALLOWING EXPENSES, NET PROFIT RATE OF 6.5% WAS FOUND REASONA BLE. THE CIT(A) ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 13 CONSIDERED IT AS ESTIMATING THE BUSINESS INCOME AT RS.2,35,323/- AND ALLOWED RELIEF OF RS.1,28,050/-. IN A.Y. 2006-07 AFTER ALLO WING THE EXPENSES THE CIT(A) ALLOWED THE RELIEF OF RS.66,882/- 20. IT IS RELEVANT TO NOTE THAT THE ASSESSEE IN H IS STATEMENT RECORDED ON 30.09.2005 WHILE REPLYING THE QUESTION NO.3 ADMI TTED A DISCLOSURE OF RS.20 LAKHS FOR A.Y. 2005-06 AND 2006-07, UPTO 28.0 9.2005. AFTER THE DETAILED DISCUSSIONS MADE IN PARAS 13 TO 15 OF THIS ORDER, WE CONFIRM THE INCOME OF RS.10 LAKHS IN A.Y. 2005-06. THE ADDITION OF SAID DISCLOSURE HAS BEEN CONFIRMED AS THE SAID DISCLOSURE WAS MADE AFTE R CONSIDERING THE IRREGULARITIES AND LOOSE PAPERS FOUND AT THE TIME O F SEARCH. ONCE THE DEPARTMENT CAME TO THE CONCLUSION WITH THE CONSULTA TION OF THE ASSESSEE FOR DETERMINING THE PARTICULAR AMOUNT OF ADDITION, UNDE R THAT CIRCUMSTANCES, WE ARE OF THE VIEW THAT FURTHER SEPARATE ADDITION IS N OT WARRANTED OTHER WISE THERE WILL BE A DOUBLE ADDITION OF THE SAME INCOME. THUS, THE SEPARATE ADDITION ON ACCOUNT OF ESTIMATION OF PROFIT BY APPL YING RATE OF PROFIT IS NOT WARRANTED. 21. NOW, WE ARE TAKING REMAINING GROUNDS OF REVEN UES APPEAL. ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 14 22. THE SECOND GROUND OF REVENUES APPEAL IS IN RESPECT OF ADDITION OF RS.7,60,000/- MADE ON ACCOUNT OF UNEXPL AINED INVESTMENT UNDER SECTION 69 OF THE ACT. THE A.O. MADE AN ADDITION CO NSIDERING THE INVESTMENT IN THE BUSINESS AS THE ASSESSEE WAS NOT MAINTAINING REGULAR BOOKS OF ACCOUNT. THE CIT(A) DELETED THE SAID ADDITION ON THE GROUND THAT HE CONFIRMED THE ADDITION OF RS.10 LAKHS, THEREFORE, T HIS ADDITION COVERS BY THAT RS.10 LAKHS IN THE LIGHT OF DETAILED DISCUSSION MAD E IN PARAS 13 TO 15 OF THIS ORDER, WE ARE OF THE VIEW THAT NO SEPARATE ADDITION IS WARRANTED ON THE BASIS OF WHICH THE A.O. MADE ADDITION AS THE SOME IS COVE RED BY THE ADDITION OF RS.10 LAKHS CONFIRMED BY US. 23. THE GROUND NO.3 IS IN RESPECT OF ADDITION OF RS.5,27,557/-. THE ADDITION MADE BY A.O. HAS BEEN DELETED BY THE CIT(A ) ON THE GROUND THAT THE BOOKS OF ACCOUNT HAS BEEN REJECTED AND THE PROF IT HAS BEEN ESTIMATED, THEREFORE, SECTION 40A(3) IS NOT APPLICABLE. IN PRI NCIPLE, WE ARE WITH THE ASSESSEE THAT ONCE THE INCOME HAS BEEN ESTIMATED BY APPLYING NET PROFIT RATE SUCH ADDITION IS NOT WARRANTED. ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 15 24. IN THE LIGHT OF ABOVE DISCUSSION AND AS NOTE D ABOVE THAT THE AMOUNT SURRENDERED BY THE ASSESSEE IS RS.10 LAK HS EACH FOR A.Y. 2005- 06 AND 2006-07 WHICH HAS BEEN CONFIRMED BY US. 25. AFTER CONSIDERING THE TOTALITY OF THE FACTS O F THE CASE, THE A.O. IS DIRECTED TO COMPUTE TOTAL INCOME AS UNDER:- A.Y. AS PER RETURN ADDITION CONFIRMED TOTAL 2006-07 2,02,000/- 10,00,000/- 12,02,000/- 2005-06 1,80,500/- 10,00,000/- 11,80,500/ 26. IN THE RESULT, THE APPEAL OF REVENUE IS DISMIS SED AND APPEAL AND C.O. OF THE ASSESSEE ARE PARTLY ALLOWED AS INDICATE D ABOVE. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER AMIT/ ITA NO.130/AGRA/2010, 380/AGRA/2012 & C.O. 44/AGRA/2010 A.YS. 2005-06 & 2006-07 16 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY