M/s Uday Bhagwan Industries, Gwalior V. Asstt. C.I.T., Circle-3, Gwalior

CO 45/AGR/2010

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0361 (ITAT-AGRA)
• Duration Of Justice: 8 year(s) 10 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 12-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: NAVIN GARGH
• Keywords: Reopening of assessment; Bogus purchase; Business income; Period of limitation; Retraction; Revised return; Set aside
• Section: 271(1)(c); 143(3); 142(1); 133A; 133(6); 147; 131; 68; 27; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 131/AGRA/2010 ASSTT. YEAR : 2006-07 A.C.I.T., CIRCLE-3, VS. M/S. UDAY BHAGWAN INDUS TRIES, CIRCLE-III, GWALIOR. A-5, MAHARAJPURA, INDL. AR EA, GWALIOR (PAN : AAAFV 6544 M) C.O. NO. 45/AGRA/2010 (IN ITA NO. 131/AGRA/2010) ASSTT. YEAR : 2006-07 M/S. UDAY BHAGWAN INDUSTRIES, VS. A.C.I.T., CIRCL E-3, A-5, MAHARAJPURA, INDL. AREA, CIRCLE-III, GWALIO R. GWALIOR (APPELLANT) (RESPONDENT) REVENUE BY : SHRI WASEEM ARSHAD, SR. D.R. ASSESSEE BY : SHRI NAVIN GARGH, ADVOCATE DATE OF HEARING : 24.05.2012 DATE OF PRONOUNCEMENT OF ORDER : 31.05.2012 ORDER PER BHAVNESH SAINI, J.M.: THE DEPARTMENTAL APPEAL AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A), GWALIOR DATED 24.0 2.2010 FOR THE ASSESSMENT YEAR 2006-07. ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 2 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MA TERIAL AVAILABLE ON RECORD. 3. THE REVENUE IN ITS SOLE GROUND OF APPEAL CHALLEN GED THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.36,39,710/- M ADE ON ACCOUNT OF SUPPRESSION OF PROFIT OF BOGUS PURCHASES SHOWN FROM M/S. SATNAM TRADING CO. THE ASSESSEE ON GROUND NO. 1 OF THE CROSS-OBJECTION CHALLENGED THE UPHOLDING OF THE ADDITION OF RS. 28,20,240/- (RS.1,98,600 AND RS.26,21,640 IN THE NA MES OF M/S. RIDHI SIDHI CONTAINERS AND M/S. SATNAM TRADING COMPANY) OF CRED ITS SURRENDERED DURING THE COURSE OF SURVEY MENTIONING THAT NO PENALTY SHALL B E LEVIED U/S. 271(1)(C) OF THE IT ACT. SINCE BOTH THE ISSUES ARE COMMON, THEREFORE, B OTH THESE GROUNDS OF THE REVENUE AND THE ASSESSEE ARE TAKEN UP TOGETHER FOR THE PURPOSE OF DISPOSAL. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF TRADING OF GHEE, VANASPATI AND REFINED OIL ETC. ON WHOLESALE BASIS. RETURN DECLARING NIL INCOME HAS BEEN FILED ON 30.10.2006. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO F URNISH REPLIES TO THE QUERIES RAISED AND DETAILS FURNISHED BY IT. SINCE NO BOOKS OF ACCOUNT AND PURCHASE/SALE BILLS AND BILLS/VOUCHERS FOR EXPENSES WERE BEING PRODUCED EXCEPT COPIES OF PURCHASE BILLS IN RESPECT OF TRANSACTIONS WITH M/S. SATNAM T RADING CO., SURVEY U/S. 133A HAS ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 3 BEEN CARRIED OUT ON 26.12.2008 AT THE BUSINESS AND FACTORY PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSEE VOLUNTARILY DISCLOSED THE CREDIT OF RS.1,98,600/- IN THE NAME O F M/S. RIDHI SIDHI CONTAINERS AND RS.26,21,640/- IN THE NAME OF M/S. SATNAM TRADI NG CO. SIMILARLY, AMOUNT OF RS.13,09,283/- SHOWN AS OUTSTANDING LIABILITY IN TH E NAME OF M/S. KOTHARI & SONS, VYAWAR HAS BEEN SURRENDERED FOR A.Y. 2003-04. ACCOR DINGLY, REVISED RETURNS FOR A.Y. 2003-04 AND FOR THE ASSESSMENT YEAR UNDER CONS IDERATION HAVE BEEN FILED BY THE APPELLANT ON 29.12.2008 WHICH HAVE BEEN REGULAR IZED BY ISSUE OF NOTICE U/S. 148 ON 30.12.08. SUBSEQUENTLY, ASSESSMENT WAS COMPL ETED U/S. 143(3)/147 ON 31.12.2008 BY MAKING FOLLOWING ADDITIONS : I). SUPPRESSION OF PROFIT ON ACCOUNT OF BOGUS PURCHASES FROM M/S. SATNAM TRADING CO. (PARA 4.3 OF ASSESSMENT ORDER) RS.36,39,710/- II). CREDIT SURRENDERED IN THE NAME OF (A) M/S. RIDHI SIDHI CONTAINERS RS. 1,98,60 0/- (B) M/S. SATNAM TRADING CO. RS.26,21,640/- RS.28,20,240/- 4.1 WHILE MAKING THE ABOVE ADDITIONS, THE AO HAS ME NTIONED AS UNDER : FROM SCHEDULE B OF BALANCE SHEET ENCLOSED WITH T HE RETURN OF INCOME FILED FOR A.Y. 2006-07 ON 30.10.2006 IT W AS NOTICED THAT THERE WAS A LIABILITY OF RS.26,71,640/- IN THE NAME OF M/S. SATNAM TRADING CO., AS SUNDRY CREDITOR. VIDE LETTER ENCLOS ED WITH THE NOTICE U/S. 142(1) DATED 10.06.2008 ASSESSEE WAS ASKED TO FURNISH COMPLETE ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 4 ADDRESS AND COPY OF ACCOUNT OF M/S. SATNAM TRADING CO. IN WHOSE NAME CREDIT OF RS.26,21,640/- WAS OUTSTANDING AS ON 31.03.2006. IN COMPLIANCE TO THIS QUERY ASSESSEE SUBMITTED COPY OF ACCOUNT OF M/S. SATNAM TRADING CO., APPEARING IN HIS BOOKS OF ACCOU NTS FOR F.Y. 2005-06 IN WHICH TOTAL PURCHASES OF GHEE OF RS.62,6 1,350/- HAS BEEN SHOWN AND CREDIT BALANCE OF RS. 26,21,640/- HAS BEE N SHOWN AS ON 31.03.2006. IN ORDER TO VERIFY THE GENUINENESS OF T RANSACTIONS MADE WITH M/S SATNAM TRADING CO., LETTER U/S. 133(6) WAS ISSUED TO THE ABOVE FIRM ON 12.09.2008 BY REGISTERED POST AND IN COMPLIANCE TO THIS LETTER REPLY WAS RECEIVED ON 06.10.2008 THROUGH SPE ED POST ENCLOSING THEREWITH A COPY OF LEDGER ACCOUNT OF ASSESSEE'S FI RM APPEARING IN HIS BOOKS OF ACCOUNTS FOR F.Y. 2005-06 IN WHICH TOTAL S ALES OF GHEE OF RS. 62,61,350/- AND DEBIT BALANCE OF RS. 26,21,640/- HA S BEEN SHOWN AS ON 31.03.2006. SUMMONS U/S 131 WERE ISSUED IN THE N AME OF SHRI HUKUM CHAND AHUJA PROPRIETOR OF M/S. SATNAM TRADING CO., HOWEVER THE SAME COULD ONLY BE SERVED ON HIM ON 19.12.2008. IN THE REPORT SUBMITTED BY THE INSPECTOR ON 19.12.2008 IT HAS BEE N STATED THAT HE IS A MAN OF NO MEANS AND IS HAND TO MOUTH AND SUFFERIN G FROM CANCER. LOOKING TO HIS ECONOMIC CONDITION AND STANDARD OF L IVING HE CAN NOT MAKE SUCH HUGE SALES TO M/S UDAY BHAGWAN INDUSTRIES . THE ASSESSEE WAS CONFRONTED WITH THESE FACTS VIDE THIS OFFICE LE TTER DATED 22.12.2008, HOWEVER, NO ANY EXPLANATION HAS BEEN FU RNISHED BY HIM. IN COMPLIANCE TO SUMMONS A WRITTEN REPLY WAS RECEIV ED ON 24.12.2008 BY SPEED POST THROUGH HIS WIFE IN WHICH IT HAS BEEN STATED THAT HER HUSBAND SHRI HUKUM CHAND AHUJA IS SUFFERING FROM CA NCER AND DIABETES AND IS MENTALLY SICK AND HAS GONE TO ALWAR FOR TREATMENT. ASSESSEE WAS ALSO ASKED TO PRODUCE SHRI HUKUM CHAND AHUJA FOR EXAMINATION ON OATH BUT HE EXPRESSED HIS INABILITY TO PRODUCE HIM SINCE HE IS SUFFERING FROM CANCER AND HAS GONE OUT OF GWALIOR FOR TREATMENT. IN VIEW OF ABOVE FACTS THE ENTIRE PURCHA SES OF RS. 62,61,350/- SHOWN FROM M/S SATNAM TRADING CO., APPE ARS TO BE BOGUS PURCHASES SINCE THE SAME ARE NOT PROVED. THE CREDIT OF RS. 26,21,640/- STANDING IN THE NAME OF M/S SATNAM TRADING CO., ALS O APPEARS TO BE FICTITIOUS LIABILITY CREATED BY THE FIRM BY INTRODU CING HIS OWN MONEY. IN ORDER TO VERIFY THE GENUINENESS OF BANK TRANSACT IONS MADE WITH M/S SATNAM TRADING CO., INFORMATION U/S 133(6) WAS CALLED FOR FROM THE BRANCH MANAGER, INDUS IND BANK, CITY CENTR E GWALIOR VIDE LETTER DATED 05.12.2008 ASKING HIM TO SUPPLY COPY O F BANK ACCOUNT OF M/S. SATNAM TRADING CO., GWALIOR FOR THE PERIOD 01. 04.2005 TO ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 5 31.03.2006 ALONGWITH COPY OF BANK ACCOUNT OPENING F ORM AND PHOTOCOPIES OF FOLLOWING CHEQUES ENCASHED / CREATED IN HIS ACCOUNT ISSUED BY THE ASSESSEE IN THE NAME OF M/S. SATNAM T RADING CO. : S. NO. DATE PARTICULARS AMOUNT 1 30.11.2005 CH. NO. 614 RS.2,00,000/- 2 17.01.2006 CH. NO. 624 RS.2,00,000/- 3 30.01.2006 CH. NO. 748251 RS.4,00,000/- 4. 10.02.2006 CH. NO. 748253 RS.2,00,000/- 5 11.02.2006 CH. NO. 748254 RS.2,00,000/- 6 15.02.2006 CH. NO. 748255 RS.3,00,000/- 7. 16.02.2006 CH. NO. 748257 RS.1,40,000/- 8 21.02.2006 CH. NO. 748258 RS.2,00,000/- 9. 23.02.2006 CH. NO. 748259 RS.10,00,000/- 10 28.02.2006 CH. NO. 748261 RS.2,50,000/- 11 02.03.2006 CH. NO. 748262 RS.2,00,000/- 12 20.03.2006 CH. NO. 748264 RS.1,00,000/- 13 22.03.2006 CH. NO. 748266 RS.2,00,000/- IN RESPONSE TO LETTER DATED 05.12.2008 THE BRANCH M ANAGER, INDUS IND BANK GWALIOR SUPPLIED THE REQUIRED INFORM ATION VIDE LETTER DATED 12.12.2008. IN THE SAID LETTER IT HAS BEEN ME NTIONED THAT PAYMENT OF CHEQUES MENTIONED AT S.NO. 1 TO 8 TOTALI NG RS. 18,40,000/- HAS BEEN MADE IN CASH AND CHEQUES MENTIONED AT S.NO . 9 TO 13 TOTALING RS. 17,50,000/- HAS BEEN CREDITED IN THE B ANK ACCOUNT OF M/S SATNAM TRADING CO. FROM THE INFORMATION GATHERED FROM BANK, IT IS SEEN THAT ASSESSEE HAS MADE CASH PAYMENT OF RS.18,40,000/- TO M/S. SATNAM TRADING CO. ON DIFFERENT DATES AS MENTIONED ABOVE. FROM THE PHOTOCOPIES OF CHEQUES IT IS SEEN THAT THE CHEQUES DOES NOT CONTAIN SIGNATURE OF SHRI HUKUM CHAND AHUJA, PROPRIETOR OF M/S. SATNAM TRADING CO. AND IN HIS PLACE CONTAINS SIGNATURE OF SOME OTHER PERSON AND ALSO CONTAIN SIGNATURE OF SHRI RAJESH AGRAWAL, PARTNER OF M/S. UDAY BHAGWAN INDUSTRIES. FROM THIS, IT IS IMPLIED T HAT THE CHEQUES ARE ISSUED BY THE FIRM IN THE NAME OF M/S. SATNAM T RADING CO., AND PAYMENT OF THESE CHEQUES HAS BEEN RECEIVED BY SHRI RAJESH AGRAWAL ONE OF THE PARTNER OF THE FIRM. FROM THE ABOVE, IT IS CLEAR THAT NO ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 6 ACTUAL PURCHASE HAS BEEN MADE BY THE ASSESSEE FIRM FROM M/S. SATNAM TRADING CO. AND ONLY ENTRIES OF PURCHASES HAS BEEN TAKEN FROM THE SAID FIRM. IN VIEW OF ABOVE FACTS OUT OF TOTAL PURCHASES OF RS .62,61,350/- SHOWN FROM M/S. SATNAM TRADING CO., PURCHASES OF RS .36,39,710/- IN RESPECT OF WHICH PAYMENT HAS BEEN SHOWN TO M/S. SAT NAM TRADING CO. ARE TREATED AS BOGUS PURCHASES AND IT IS HELD THAT PROFIT TO THIS EXTENT HAS BEEN SUPPRESSED. THEREFORE, PROFIT OF RS.3639,7 10/- SUPPRESSED BY THE ASSESSEE ON ACCOUNT OF BOGUS PURCHASES FROM M/S . SATNAM TRADING CO. IS ADDED TO THE TOTAL INCOME OF THE ASS ESSEE. THE ASSESSEE HAS SHOWN LIABILITY OF RS.26,21,640/- IN THE NAME O F M/S. SATNAM TRADING CO. AS ON 31.3.2006 AGAINST PURCHASE OF GOO DS THE SAME IS TREATED AS FICTITIOUS LIABILITY CREATED BY THE FIRM BY INTRODUCING ITS OWN MONEY AS DISCUSSED ABOVE. THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE I.T. ACT, 1961. 4.2 THE ADDITIONS WERE CHALLENGED BEFORE THE LD. CI T(A) AND THE WRITTEN SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED IN THE I MPUGNED ORDER, IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT ITS BOOKS OF ACCOUN T ARE MAINTAINED REGULARLY AND ARE AUDITED. THE BOOKS COULD NOT BE PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BECAUSE THE ACCOUNTANT WAS NOT AVAILABL E AND THE BOOKS WERE LYING WITH HIM. THE ACCOUNTANT EXPIRED LATER ON. THIS FAC T WAS MENTIONED DURING THE SURVEY PROCEEDINGS ALSO. HOWEVER, THE PURCHASE BILL S IN RESPECT OF PURCHASE OF GHEE FROM M/S. SATNAM TRADING CO. WERE PRODUCED DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE MADE DISCLOSUR E OF RS.1,98,600/- AND RS.26,21,640/- OF CREDIT APPEARING IN THE BALANCE S HEET IN THE NAMES OF M/S. RIDHI SIDHI CONTAINERS AND M/S. SATNAM TRADING CO. DURING THE COURSE OF SURVEY CONDUCTED ON 26.12.2008 NOT BECAUSE OF FICTITIOUS L IABILITY, BUT TO BUY MENTAL PEACE ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 7 FOR NOT PRODUCING SHRI HUKUM CHAND AHUJA BECAUSE OF HIS ILLNESS AND REMAINED OUT OF STATION FOR TREATMENT. THIS OFFER WAS MADE S URRENDERING THE AMOUNT SUBJECT TO NO PENALTY. THE ASSESSEE HAD MADE CONDITIONAL DI SCLOSURE AND FULFILLED IT BY DISCLOSING THIS INCOME IN REVISED RETURN AND PAID T AXES BUT THE AO DID NOT FOLLOW HIS OFFER AND INITIATED PENALTY PROCEEDINGS U/S. 27 1(1)(C) OF THE IT ACT. IT WAS SUBMITTED THAT THE QUERY LETTERS U/S. 133(6) WERE I SSUED TO M/S. SATNAM TRADING COMPANY FOR VERIFICATION OF THE TRANSACTION AND THE SAID PARTY REPLIED THE LETTER BY POST AND CONFIRMED THE TOTAL SALES AND BALANCE AMOU NT. THE WRITTEN REPLY OF WIFE OF THE CONCERNED PARTY WAS ALSO RECEIVED MENTIONING TH AT SHRI HUKUM CHAND AHUJA IS SUFFERING FROM CANCER AND DIABETES AND MENTALLY SIC K AND HAS GONE FOR TREATMENT. SINCE THE ASSESSEE FURNISHED COMPLETE DETAILS AND T HE PARTY ALSO FURNISHED CONFIRMATION, THEREFORE, NO ADDITION SHOULD BE MADE AGAINST THE ASSESSEE OF THE ENTIRE AMOUNT IN CASE OF M/S. SATNAM TRADING CO. I T WAS SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN TREATING THE TRANSACTIONS AS B OGUS FOR NOT PRODUCING THE SUPPLIER FOR EXAMINATION. SINCE THE SALES HAVE BEEN ACCEPTED , THE PURCHASES SHOULD NOT BE TREATED AS BOGUS. THE REPORT OF THE INSPECTOR WAS N OT CONFRONTED TO THE ASSESSEE AND THE SAME WAS NOT SUPPLIED TO THE ASSESSEE AND THE R EPORT OF THE INSPECTOR WAS SUBMITTED ON 19.12.2008 GIVING FACTS AND CIRCUMSTAN CES OF THE CASE WHICH PERTAINS TO F.Y. 2008-09 RELEVANT TO ASSESSMENT YEAR 2009-10 . THEREFORE, HIS REPORT IS NOT RELEVANT FOR ASSESSMENT YEAR 2006-07 UNDER APPEAL. IT WAS ALSO SUBMITTED THAT ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 8 CHEQUES WERE ISSUED TO M/S. SATNAM TRADING CO. AND CASH DEALINGS WERE MADE FOR RS.18,40,000/- ONLY AND NO EVIDENCE HAS BEEN BROUGH T ON RECORD THAT CHEQUE AMOUNTS HAVE BEEN RECEIVED BACK BY THE ASSESSEE OR NO ACTUAL PURCHASES HAVE BEEN MADE. IT WAS SUBMITTED THAT THE CHEQUES WERE SIGNED BY ONE OF THE PARTNERS OF THE ASSESSEE FIRM FOR PAYMENTS OF THE BEARER CHEQUES. N O EVIDENCE HAS BEEN BROUGHT ON RECORD THAT THE BEARER CHEQUES WHEN ENCASHED, TH E AMOUNT RECEIVED THEREON HAVE BEEN RETURNED TO THE ASSESSEE. ONCE THE SALES HAVE BEEN ACCEPTED AS GENUINE, THE PURCHASES CANNOT BE HELD TO BE BOGUS. COPIES OF THE ACCOUNTS WERE PRODUCED IN SUPPORT OF THE CONTENTION. IT WAS, THEREFORE, PLEAD ED THAT THE ADDITION OF RS.36,39,710/- AS BOGUS PURCHASES IS NOT JUSTIFIED AND THE SAME MAY BE DELETED. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE AND THE MATERIAL ON RECORD, DELETED THE ADDITION OF RS.36,39,710/-. HE, HOWEVER, MAINTAINED THE ADDITION OF RS.28,20,240/- ON ACCOUNT OF SURRENDERE D AMOUNT IN THE REVISED RETURN. HIS FINDINGS IN PARA 6.2 AND 6.3 OF THE APPELLATE O RDER ARE REPRODUCED AS UNDER : 6.2. APPELLANTS SUBMISSIONS ALONGWITH THE ASSESSM ENT ORDER HAVE BEEN CONSIDERED CAREFULLY. ASSESSING RECORDS AND SU RVEY FOLDERS HAVE ALSO BEEN PERUSED. THERE IS NO DENYING THE FACT THA T M/S. SATNAM TRADING CO WITH WHOM THE TRANSACTIONS OF PURCHASES MADE BY THE APPELLANT HAVE BEEN FOUND TO BE BOGUS BY THE AO. IS VERY MUCH IN- EXISTENCE AS IS EVIDENT FROM THE REPLY IN RESPONSE TO SUMMONS. INSPECTORS REPORT AND CONFIRMED COPY OF ACCOUNT GI VEN BY IT TO THE AO VIDE LETTER DT. 4.10.08 IN RESPONSE TO AOS LET TER DOTED 12.09.08 ISSUED TO IT. THE A.O HAS MADE THE ADDITION ON THE GROUND THAT SOME CHEQUES FOR RS.18,40,000/- HAVE BEEN ENCASHED, BEIN G BEARER CHEQUES AND THE FAILURE OF THE APPELLANT TO PRODUCE PROPRIE TOR OF M/S. SATNAM TRADING CO., VIZ. SHRI HUKUM CHAND AHUJA. THE INSPE CTOR'S REPORT ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 9 DATED 19.12.2008 HAS ALSO BEEN MADE THE BASIS FOR T HE ADDITION AS SHRI HUKUM CHAND AHUJA IS FOUND TO BE PERSON OF INA DEQUATE MEANS. 6.3 HOWEVER, ON THE BASIS OF SUBMISSIONS OF THE APP ELLANT AND PERUSAL OF RECORDS, I TEND TO AGREE WITH THE APPELL ANT THAT FIRST OF ALL, THE A.O. COULD NOT HAVE TRATED THE ENTIRE AMOUNT OF PURCHASES WITH SATNAM TRADING CO. AS BOGUS WHEN THE SALES OF THE A PPELLANT ALONG WITH CLOSING STOCK AND OTHER DETAILS HAVE BEEN ACCE PTED BY THE A.O.. THE APPELLANT HAS ALSO PRODUCED COPY OF INCOME TAX RETURN OF SHRI KUKUM CHAND AHUJA FOR THE ASSTT. YEAR UNDER CONSIDE RATION WHICH HAS BEEN FILED ON 11.05.2007 DECLARING INCOME OF RS .94,000/-. AS PER TRADING ACCOUNT OF M/S. SATNAM TRADING CO., SALES O F RS.73,52,835/- HAVE BEEN DECLARED. ALSO THE INSPECTORS REPORT WHI CH HAS NOT BEEN MADE AVAILABLE TO THE APPELLANT FOR CROSS EXAMINATI ON, CANNOT BE RELIED IN TOTO, AS THE TRANSACTIONS HAVE TAKEN PLAC E DURING THE FINANCIAL YEAR 2005-06 WHEREAS THE INSPECTOR HAS GI VEN HIS COMMENTS IN THE REPORT ON 19.12.08. FURTHER, THE MERE FACT T HAT SOME BEARER CHEQUES CONTAINED THE SIGNATURE OF THE PARTNER OF T HE FIRM DOES NOT AUTOMATICALLY MEAN THAT THE SAME HAVE BEEN ENCASHED BY THE APPELLANT, SINCE THE SAME CHEQUES ALSO CARRY THE ST AMP AND SIGNATURE OF M/S. SATNAM TRADING CO. ON BEARER CHEQUES SIGNAT URE OF THE CHEQUE ISSUING PERSON ARE NORMALLY TO FACILITATE TH EIR ENCASHMENT. IT MAY BE AT THE INSTANCES OF BANK AUTHORITY OR THE RE CEIVER OF THE AMOUNT ALSO. IN THE ABSENCE OF ANY MATERIAL ON RECO RD TO INDICATE THAT THE SAID CHEQUES HAVE INDEED BEEN ENCASHED BY THE A PPELLANT DESPITE EXTENSIVE SURVEY U/S. 133A BEING CARRIED OUT BY THE A.O. DOES NOT JUSTIFY THE TREATMENT OF ENTIRE PURCHASES AS BOGUS. THE FACT THAT THE A.O. HAS ACCEPTED THE REVISED RETURN AND REGULARIZE D IT AND HAS MADE THE ADDITION OF' OUTSTANDING LIABILITY AT RS.26,21, 6401- ON THE BASIS OF STATEMENT OF THE PARTNER OF THE APPELLANT FIRM AND SUBSEQUENT DISCLOSURE OF IT IN THE REVISED RETURN, THE A.O. WA S NOT JUSTIFIED IN TREATING THE ENTIRE TRANSACTION OF PURCHASES WITH M /S. SATNAM TRADING CO. AS BOGUS AND WORK OUT THE SUPPRESSION OF PROFIT ON THE SAME. ACCORDINGLY, ADDITION OF RS. 36,39,710/- IS DELETED . THE ADDITION OF RS.28,20,240/- ON ACCOUNT OF CREDITS SURRENDERED IN THE NAME OF M/S. RIDHI SIDHI CONTAINERS AND M/S. SATNAM TRADING CO. AND DISCLOSED IN THE REVISED RETURN/ RETURNS FILED IN RESPONSE TO NO TICE U/S. 148 IS CONFIRMED. ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 10 5. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT THE ASSESSEE MADE VOLUNTARY SURRENDER OF RS.28,20,240/- BECAUSE THE ASSESSEE IN STATEMENT WAS UNABLE TO EXPLAIN THE BOGUS LIABILITIES AND THE REV ISED RETURN WAS ALSO FILED SURRENDERING THE ABOVE AMOUNT, ON WHICH TAXES HAVE ALSO BEEN PAID. THEREFORE, THE AO WAS JUSTIFIED IN MAKING THE ADDITION. HE HAS SUB MITTED THAT THERE IS NO ESTOPPEL AGAINST THE STATUTE. ON THE OTHER HAND, THE LD. COU NSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MAD BEFORE THE AUTHORITIES BELOW AND RE FERRED TO PAGE 94 OF THE PAPER BOOK, WHICH IS GHEE ACCOUNT TO SHOW THAT OPENING ST OCK WAS RS.9,42,425/- AND PURCHASES WERE MADE OF RS.83,70,850/- AND OUT OF TH E SAME, SALES OF RS.99,14,385/- HAVE BEEN MADE. HE HAS SUBMITTED THA T THE AO CALLED FOR ENQUIRY FROM M/S. SATNAM TRADING CO. U/S. 133(6) IN RESPONS E TO WHICH ALL FACTS WERE EXPLAINED AND INSPECTORS REPORT WAS NOT CONFRONTED TO THE ASSESSEE. SINCE THE REPORT OF THE INSPECTOR WAS NOT CONFRONTED, THEREFO RE, IT CANNOT BE USED AGAINST THE ASSESSEE IN EVIDENCE AND RELIED UPON THE DECISION I N THE CASE OF KANHAIYA LAL (HUF) VS. CIT, 247 ITR 686 (ALL), IN WHICH IT WAS H ELD THAT COPIES OF DOCUMENTS PROPOSED TO BE USED AGAINST THE ASSESSEE NOT SUPPLI ED - ASSESSEE NOT GIVEN AN OPPORTUNITY TO EXPLAIN OR REBUT IT - ORDER LIABLE T O BE SET ASIDE. HE HAS SUBMITTED THAT SINCE THE SALE HAS NOT BEEN DISPUTED, THEREFOR E, PURCHASES CANNOT BE DISPUTED. HE HAS, THEREFORE, SUBMITTED THAT THE LD. CIT(A) RI GHTLY DELETED THE ADDITION OF RS.36,39,710/-. AS REGARDS THE ADDITION OF RS.28,20 ,240/-, HE HAS SUBMITTED THAT ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 11 THOUGH THE ASSESSEE MADE SURRENDER OF THESE AMOUNTS IN STATEMENT RECORDED DURING THE COURSE OF SURVEY ON 26.12.2008 (PB-31), BUT THE RE WAS NO MATERIAL AGAINST THE ASSESSEE FOR MAKING THE SURRENDER. HE HAS REFERRED PAGE 44 AND 45 OF THE PB, WHICH IS STATEMENT OF ASSESSEE TO EXPLAIN THE ABOVE ISSUE. HE HAS SUBMITTED THAT THOUGH THE ASSESSEE MADE SURRENDER OF AFORESAID AMO UNT IN THE REVISED RETURN FILED ON 29.12.2008 (PB-48), BUT IT WAS CONDITIONAL SURRE NDER THAT THE AO WOULD NOT LEVY PENALTY, BUT THE AO LATER ON INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE. THEREFORE, THE ASSESSEE RETRACTED FROM STATEMENT BY FILING AFFIDAVIT BEFORE THE LD. CIT(A) ON 07.01.2010. HE HAS, THEREFORE, SUBMITTED THAT FURTHER ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) SHOULD ALSO BE DELETED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. AS REGARDS THE DEPARTMENTAL APPEAL, ON WHICH THE LD. C IT(A) DELETED THE ADDITION OF RS.36,39,710/-, THE AO MADE ENQUIRIES FROM THE CONC ERNED PARTY WHO HAVE REPLIED BEFORE THE AO DIRECTLY AND CONFIRMED THE MAKING OF THE PURCHASES BY ASSESSEE. IT WAS ALSO EXPLAINED BY HIS WIFE THAT SINCE HUKUM CHA ND AHUJA WAS SUFFERING FROM CANCER AND DIABETES AND GONE OUT OF STATION FOR TRE ATMENT, THEREFORE, CANNOT BE PRODUCED FOR EXAMINATION BEFORE THE AO. SUCH FACTS ARE SUPPORTED BY BILLS AND VOUCHERS. THEREFORE, THE INITIAL BURDEN STOOD DISCH ARGED TO PROVE THAT THE ASSESSEE ENTERED INTO GENUINE TRANSACTIONS. THE INSPECTOR, H OWEVER, GAVE A REPORT AGAINST ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 12 THE ASSESSEE TO SHOW THAT M/S. SATNAM TRADING CO. W AS NOT MAN OF MEANS AND HIS REPORT WAS SUBMITTED ON 19.12.2008, WHICH PERTAINS TO THE SUBSEQUENT YEAR AND THE SAME WAS ALSO NOT CONFRONTED TO THE ASSESSEE. THERE FORE, SUCH REPORT HAS RIGHTLY BEEN EXCLUDED FROM CONSIDERATION. FURTHER, THE ASSE SSEE HAS MADE CASH TRANSACTIONS OF RS.18,40,000/- ONLY. THEREFORE, ENTIRE ADDITION AGAINST THE ASSESSEE WAS UNJUSTIFIED. FURTHER, NO EVIDENCE HAS BEEN BROUGHT ON RECORD THAT EVEN IF ONE OF THE PARTNER OF THE ASSESSEE FIRM SIGNED ON THE BACK SID E OF BEARER CHEQUE GIVEN TO M/S. SATNAM TRADING CO., THE AMOUNT OF CHEQUES HAVE RETU RNED TO THE ASSESSEE. IN THE ABSENCE OF ANY MATERIAL INCRIMINATING IN NATURE AGA INST THE ASSESSEE, THE LD. CIT(A) ON PROPER APPRECIATION OF FACTS AND EVIDENCE ON REC ORD, RIGHTLY DELETED THE ADDITION OF RS.36,39,710/-. FURTHER WHEN THE SALES HAVE BEEN ACCEPTED, THERE IS NO QUESTION OF DISPUTING THE PURCHASES BECAUSE NO SALES COULD B E MADE WITHOUT PURCHASES. SINCE THE PARTY HAS CONFIRMED THE PURCHASES AND THE PURCHASES HAVE BEEN SUPPORTED BY BILLS AND VOUCHERS, THEREFORE, THE EXP LANATION OF THE ASSESSEE HAS BEEN RIGHTLY ACCEPTED BY THE LD. CIT(A) FOR THE PURPOSE OF DELETING THE ADDITION. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES , WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN DE LETING THE ADDITION OF RS.36,39,710/-. IN THE RESULT, THE DEPARTMENTAL APP EAL HAS NO MERIT AND IS DISMISSED. ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 13 6.1 AS REGARDS ADDITION OF RS.28,20,240/- IN RESPEC T OF M/S. SATNAM TRADING COMPANY AND RIDHI SIDHI CONTAINERS PVT. LTD., AT TH E TIME OF SURVEY THE STATEMENT OF THE ASSESSEE WAS RECORDED IN WHICH HE HAS STATED THAT HE IS UNABLE TO EXPLAIN THE TRANSACTIONS WITH THESE PARTIES AND IN ORDER TO BUY PEACE, HE AGREED TO SURRENDER THE AMOUNT IN QUESTION IN RESPECT OF THESE PARTIES. IT IS, THEREFORE, CLEAR THAT AT THE TIME OF SURVEY THE ASSESSEE WAS NOT IN A POSITION TO EXP LAIN THE TRANSACTIONS WITH THESE PARTIES OF THE AFORESAID AMOUNT AND HAD NOT PRODUCE D ANY SUFFICIENT EVIDENCE BEFORE THE AO IN THIS REGARD. FURTHER, THESE AMOUNT S WERE STANDING AGAINST THESE PARTIES, WHICH ARE CONSIDERED AS FICTITIOUS LIABILI TIES CREATED BY THE ASSESSEE FIRM BY INTRODUCING HIS OWN MONEY. THE AO ON VERIFICATION O F THE ACCOUNTS OF M/S. RIDHI SIDHI CONTAINERS PVT. LTD. ALSO FOUND THAT THERE WA S A DIFFERENCE IN THE AMOUNTS AND THEREFORE, THE ASSESSEE WAS ASKED TO EXPLAIN TH E AMOUNT IN QUESTION. THE ASSESSEE HAS, HOWEVER, FAILED TO EXPLAIN THE SAME. THEREFORE, THE LIABILITIES STANDING THE NAMES OF THESE TWO PARTIES IN THE BOOKS OF ASSE SSEE WERE TREATED AS FICTITIOUS LIABILITY. THE SAME WERE NOT EXPLAINED DURING THE S TATEMENT RECORDED IN THE SURVEY PROCEEDINGS ALSO. THEREFORE, THE ASSESSEE VOLUNTARI LY AGREED TO SURRENDER THE ENTIRE AMOUNT FOR THE PURPOSE OF TAXATION AND THE ASSESSEE IMMEDIATELY AFTER RECORDING OF THE STATEMENT DURING THE SURVEY ALSO FILED REVISED RETURN ON 29.10.2008 AND SURRENDERED THE ENTIRE AMOUNT OF RS.28,20,240/- FOR THE PURPOSE OF TAXATION AND PAID TAXES ALSO. THE LD. COUNSEL FOR THE ASSESSEE, HOWEVER, SUBMITTED THAT SUCH ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 14 SURRENDER WAS CONDITIONAL SO THAT THE AO WOULD NOT LEVY PENALTY U/S. 271(1)(C) OF THE IT ACT, BUT NO SUCH COMMITMENT IS MADE BY THE A O FOR NOT LEVYING THE PENALTY. IT WAS ONLY THE ASSESSEE WHO STATED IN HIS STATEMEN T THAT ON THE SURRENDERED AMOUNT, PENALTY MAY NOT BE IMPOSED. THE LD. COUNSEL IS UNABLE TO SHOW IF ANY SUCH CONDITION HAS BEEN ACCEPTED BY THE AO OR THE REVENU E DEPARTMENT. THE LD. DR ALSO CONTENDED THAT THE PENALTY IS INDEPENDENT PROC EEDINGS AND THERE IS NO ESTOPPEL AGAINST THE STATUTE FOR LEVY OF PENALTY. IN CASE IN GREDIENTS OF SECTION 271(1)(C) ARE SATISFIED, THE CONTENTION OF THE LD. COUNSEL FOR TH E ASSESSEE CANNOT BE ACCEPTED. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE RETRACTED FROM STATEMENT BY FILING THE AFFIDAVIT BEFORE THE LD. CI T(A) ON 07.01.2010 (PB-95). IN THE AFORESAID AFFIDAVIT, THE ASSESSEE STATED THAT T HE COPY OF HIS STATEMENT WAS NOT GIVEN TO HIM AND THAT THE ASSESSEE MADE THE SURREND ER SUBJECT TO NO PENALTY. HOWEVER, WE DO NOT AGREE WITH THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE BECAUSE SUCH AN AFFIDAVIT WAS FILED AFTER COMPLETIO N OF ASSESSMENT. THE SURVEY IS CONDUCTED ON 26.12.2008 AND STATEMENT OF ASSESSEE W AS RECORDED VOLUNTARILY AT THE TIME OF SURVEY, IN WHICH THE ASSESSEE WAS UNABLE TO EXPLAIN FICTITIOUS LIABILITY STANDING IN THE NAME OF THESE TWO PARTIES. THEREFOR E, THE ASSESSEE MADE VOLUNTARY SURRENDER OF THE AFORESAID AMOUNT FOR THE PURPOSE O F TAXATION. THEREFORE, THE CONTENTION OF THE ASSESSEE IN THE AFFIDAVIT CANNOT BE ACCEPTED BECAUSE THE ASSESSEE IMMEDIATELY AFTER SURRENDER OF AMOUNT IN THE STATEM ENT ALSO FILED REVISED RETURN ON ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 15 29.12.2008 WITHOUT MENTIONING ANYTHING THEREIN AND SURRENDERED THE AMOUNT OF RS.28,20,240/- FOR THE PURPOSE OF TAXATION. THERE I S NO MENTION OF ANY CONDITION IN THE REVISED RETURN AND NO NOTE HAS BEEN GIVEN IN TH E SAME. THE ASSESSEE NEVER DISPUTED HIS VOLUNTARY STATEMENT EITHER AT THE TIME OF SURVEY OR AT THE ASSESSMENT STAGE. EVEN BEFORE THE CIT(A), THE AFFIDAVIT HAS BE EN FILED BELATEDLY BECAUSE THE APPEAL WAS INSTITUTED BEFORE THE LD. CIT(A) ON 29.0 1.2009 AND AFFIDAVIT HAS BEEN FILED ON 07.01.2010 AT THE TIME OF FAG END OF DISPO SAL OF APPEAL BY THE LD. CIT(A). SUCH A RETRACTION IS, THEREFORE, NOT VALID AND THE ASSESSEE CANNOT BE PERMITTED TO DENY THE STATEMENT MADE IN THE COURSE OF SURVEY. FU RTHER, THE ASSESSEE HAS ALREADY MADE SURRENDER OF AMOUNT AND PAID TAXES VOLUNTARILY AND THE ASSESSEE CANNOT BE ALLOWED TO WITHDRAW THE AMOUNT, ON WHICH TAXES HAVE ALREADY BEEN PAID VOLUNTARILY. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF TH E LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.28,20,240/-. AS A RESULT, GROUND NO. 1 OF CROSS-OBJECTION OF THE ASSESSEE IS DISMISSED. 7. THE ASSESSEE, ON GROUND NO. 2 OF THE CROSS OBJEC TION, CHALLENGED THE ORDER OF THE LD. CIT(A) IN UPHOLDING THE ASSESSMENT PROCEEDI NGS WITHOUT ISSUE OF NOTICE U/S. 143(2) OF THE IT ACT. IN THIS CASE, THE RETURN OF I NCOME HAS BEEN FILED BY THE ASSESSEE ON 30.12.2006 AND NOTICE U/S. 143(2) WAS I SSUED ON 14.09.2007, WHICH ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 16 WAS SERVED UPON THE ASSESSEE ON 11.10.2007. THEREFO RE, THE NOTICE U/S. 143(2) WAS VALIDLY ISSUED AND SERVED ON THE ASSESSEE WITHIN TH E PERIOD OF LIMITATION. THE ASSESSMENT PROCEEDINGS WERE GOING BEFORE THE AO SIN CE 14.09.2007, WHICH IS ALSO NOTED IN THE ORDER SHEET, COPIES OF THE ENTIRE ORDE R SHEETS HAVE BEEN FILED AT PAGES 100 TO 104 OF THE PAPER BOOK. IN THE ENTIRE ORDER S HEETS, THE ASSESSEE PARTICIPATED THE PROCEEDINGS BEFORE THE AO AND ULTIMATELY, THE C ASE WAS FINALLY DISCUSSED ON 31.12.2008 AND ON THAT DATE THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED. THE LD. COUNSEL FOR THE ASSESSEE, HOWEVER, SUBMITTED TH AT THE ASSESSEE FILED REVISED RETURN ON 29.10.2008 AND THE AO RECORDED REASONS FO R REOPENING OF ASSESSMENT ON 30.12.2008 AND SINCE NO NOTICE U/S. 143(2) HAS BEEN ISSUED, THEREFORE, THE ASSESSMENT IS NULL AND VOID. IN SUPPORT OF THE CONT ENTION, HE HAS RELIED UPON THE ORDER OF ITAT, AGRA BENCH IN THE CASE OF ACIT VS. B AIKUNTH NATH SINGHAL, 89 ITD 109 (AGRA), IN WHICH IT WAS HELD THAT ONCE VALID RE TURN U/S. 148 IS FILED BY THE ASSESSEE, THE PROVISIONS OF SECTION 143(2) BEING MA NDATORY IN NATURE, NON-ISSUE OF NOTICE UNDER THIS SUB-SECTION WITHIN TIME PRESCRIBE D, WILL RENDER THE ORDER PASSED U/S. 143(3) INVALID. IT WAS, THEREFORE, SUBMITTED T HAT IN ABSENCE OF NOTICE U/S. 143(2), THE ASSESSMENT ORDER IS NULL AND VOID, WHIC H WAS PASSED U/S. 143(3)/147 OF THE IT ACT. ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 17 8. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE NOTICE U/S. 143(2) WAS ISSUED ON 14.09.2007 WITHIN THE PERIOD PRESCRIBED U NDER LAW AND THAT WHEN THE ASSESSMENT PROCEEDINGS WERE GOING ON BEFORE THE AO, SURVEY U/S. 133A WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE ON 26.12. 2008 IN WHICH THE ASSESSEE MADE SURRENDER OF RS.28,20,240/- IN RESPECT OF FICT ITIOUS LIABILITIES IN THE NAMES OF M/S. RIDHI SIDHI CONTAINERS AND M/S. SATNAM TRADING COMPANY. THE ASSESSEE IMMEDIATELY FILED BELATED INVALID RETURN OF INCOME ON 29.12.2008 SURRENDERING THE AMOUNT OF RS.28,20,240/- AND PAID TAXES ALSO. THE L D. DR SUBMITTED THAT SINCE THE REVISED RETURN WAS NOT VALID AND THE ASSESSEE MADE SURRENDER OF THE AMOUNT IN QUESTION FOR THE PURPOSE OF TAXATION, THEREFORE, IN ORDER TO REGULARIZE THE SAID BELATED RETURN, THE AO RECORDED REASONS FOR REOPENI NG ON 30.12.2008. THEREFORE, IT IS STRICTLY NOT A CASE OF REOPENING OF ASSESSMENT, BUT A SURRENDER OF ADDITIONAL INCOME, WHICH WAS ONLY REGULARIZED THROUGH THE ABOV E MODES AND MEANS AND AS SUCH, THERE WAS NO NEED TO ISSUE FURTHER NOTICE U/S . 143(2) IN THE CASE OF THE ASSESSEE, WHICH WAS ALREADY VALIDLY ISSUED IN THE C ASE OF THE ASSESSEE AND THE ASSESSEE PARTICIPATED IN THE PROCEEDINGS BEFORE THE AO. THE LD. DR, THEREFORE, SUBMITTED THAT THE LD. CIT(A) RIGHTLY REJECTED THE CLAIM OF ASSESSEE BECAUSE THERE WAS A DISTINCTION IN THE PROCEEDINGS U/S. 143 AND 1 47 OF THE IT ACT. IN SUCH CIRCUMSTANCES, THERE IS NO NEED OF ANY INTERFERENCE . ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 18 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE FILED ORIGINAL RET URN OF INCOME ON 30.10.2006 DECLARING NIL INCOME. THE NOTICE U/S. 143(2) WAS IS SUED ON 14.09.2007 WHICH WAS SERVED UPON THE ASSESSEE ON 11.10.2007 AND ALSO PAR TICIPATED THE PROCEEDINGS BEFORE THE AO WITHIN THE TIME PRESCRIBED. IT IS, TH EREFORE, NOT IN DISPUTE THAT THE AO VALIDLY ISSUED NOTICE U/S. 143(2) AND VALIDLY PR OCEEDED TO FRAME THE ASSESSMENT IN THE CASE OF THE ASSESSEE. COPIES OF ORDER SHEET ARE FILED IN THE PAPER BOOK AT PAGES 100 TO 104 IN WHICH THE AO CONDUCTED ASSESSME NT PROCEEDINGS ON VARIOUS DATES AND ULTIMATELY COMPUTED INCOME OF THE ASSESSE E BY CLOSING THE ENQUIRIES AND INVESTIGATION ON 31.12.2008. THE AO ALSO PASSED CO NSEQUENT ASSESSMENT ORDER ON 31.12.2008 AND DETERMINED THE INCOME OF ASSESSEE AT RS.63,36,406/- AND STARTED THE COMPUTATION OF INCOME WITH NET PROFIT DECLARED AS PER PROFIT & LOSS ACCOUNT AT NIL AND AFTER MAKING ADDITIONS, SUBJECT MATTER IN A PPEAL ABOVE AND AFTER GIVING SET OFF OF BROUGHT FORWARD LOSSES FOR THE EARLIER YEAR , THE INCOME IS COMPUTED. IT IS, THEREFORE, CLEAR THAT THE AO FRAMED THE ASSESSMENT ORDER ON THE BASIS OF ORIGINAL RETURN OF INCOME FILED ON 30.10.2006 AT NIL INCOME. COPIES OF THE ORDER SHEETS FILED ON RECORD ALSO SUPPORT THAT THE AO DETERMINED THE I NCOME OF THE ASSESSEE ON THE BASIS OF ORIGINAL RETURN FILED ON 30.10.2006. IN FA CT, THE AO BY ISSUING NOTICE U/S. 148 OF THE IT ACT DID NOTHING EXCEPT REGULARIZATION OF BELATED REVISED RETURN FILED BY THE ASSESSEE. WE CLARIFY THAT WHILE COMPUTING TH E DEMAND AGAINST THE ASSESSEE, ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 19 THE AO SHALL TAKE INTO CONSIDERATION THE TAXES PAID BY THE ASSESSEE ON THE SURRENDERED INCOME DURING THE COURSE OF SURVEY. IF THE AO WOULD HAVE CONSIDERED THE REVISED RETURN FOR THE PURPOSE OF MAKING THE AS SESSMENT, HE WOULD HAVE TAKEN THE FIGURE OF 26,96,700/- IN THE COMPUTATION OF INC OME INSTEAD OF NIL INCOME MENTIONED IN THE ASSESSMENT ORDER. SINCE THE AMOUNT OF RS.28,20,240/- HAS BEEN DISCLOSED IN THE REVISED RETURN (PB-48), THEREFORE, IF THE AO WOULD HAVE ACTED ON THE RETURN U/S. 148, THE COMPUTATION OF INCOME SHOU LD HAVE STARTED FROM THIS FIGURE INSTEAD OF NIL AND THERE WOULD BE NO NEED TO MAKE F URTHER ADDITIONS OF RS.28,20,240/- IN THE COMPUTATION OF INCOME. IT IS, THEREFORE, CLEAR THAT THE AO ACTED AND FRAMED THE ASSESSMENT ORDER ON THE BASIS OF ORIGINAL RETURN OF INCOME FILED ON 30.10.2006. THIS IS ALSO SUPPORTED BY THE FACT THAT THE ASSESSEE FILED INVALID AND BELATED REVISED RETURN ON 29.12.2008 MA KING SURRENDER OF RS.28,20,240/- AND THE AO IN ORDER TO REGULARIZE SU CH BELATED RETURN, RECORDED THE REASONS FOR REOPENING OF ASSESSMENT ON 30.12.2008 S UBSEQUENT TO FILING OF REVISED RETURN. THE AO IN THE REASONS FOR REGULARIZING THE BELATED RETURN SPECIFICALLY MENTIONED THAT SINCE THE REVISED RETURN IS FILED BE YOND THE PERIOD OF LIMITATION U/S. 139(5), THEREFORE, IN ORDER TO REGULARIZE THE SAME, NOTICE U/S. 148 HAS BEEN ISSUED. IT IS, THEREFORE, STRICTLY NOT A CASE OF ESCAPEMENT OF INCOME FOR REOPENING OF ASSESSMENT, BUT BECAUSE OF THE FACT THAT WHEN REGUL AR ASSESSMENT PROCEEDINGS WERE GOING ON BEFORE THE AO AND AT THAT STAGE SURVEY WAS CONDUCTED IN THE CASE OF ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 20 ASSESSEE ON 26.12.2008 AND THE ASSESSEE MADE SURREN DER OF RS.28,20,240/- IN THE STATEMENT. THEREFORE, THE ASSESSEE SURRENDERED THE SAME BY FILING A INVALID RETURN OF INCOME ON 29.12.2008 AND AFTER 29.12.2008, THE A O COMPLETED THE ASSESSMENT ORDER ONLY ON 31 ST DECEMBER, 2008. THEREFORE, THE SURRENDER WAS REGUL ARIZED FOR THE BENEFIT OF REVENUE DEPARTMENT, AS IT IS WELL SE TTLED LAW THAT THE PROCEEDINGS U/S. 148 ARE FOR THE BENEFIT OF THE REVENUE AND NOT THE ASSESSEE. THEREFORE, SUCH SURRENDER OF INCOME ADDITIONALLY WOULD HAVE NO IMPA CT ON THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE. SINCE THE ENTIRE ORDE R SHEETS DID NOT CONTAIN TAKING OF THE COGNIZANCE BY THE AO OF THE INVALID RETURN, WE ARE OF THE VIEW THAT THE AO RIGHTLY COMPUTED THE INCOME OF THE ASSESSEE AS PER ORIGINAL RETURN IN WHICH NOTICE U/S. 143(2) HAS BEEN VALIDLY ISSUED AND AS SUCH, TH ERE WAS NO NEED TO ISSUE ANY FURTHER NOTICE U/S. 143(2) ON THE INVALID REVISED R ETURN FILED ON 29.12.2008 WHICH WAS ALSO NOT TAKEN INTO CONSIDERATION BY THE AO WHI LE FRAMING THE ASSESSMENT IN THE MATTER. CONSIDERING THE TOTALITY OF FACTS AND C IRCUMSTANCES, WE ARE OF THE VIEW THAT THE NOTICE U/S. 143(2) HAS BEEN CORRECTLY ISSU ED IN THIS CASE ON THE ORIGINAL RETURN OF INCOME, ON THE BASIS OF WHICH THE ASSESSM ENT ORDER HAS BEEN FRAMED BY THE AO. MAY BE, THE AO HAS WRONGLY MENTIONED SECTIO N 147 IN THE BODY OF ORDER WOULD NOT MAKE THE ASSESSMENT ORDER U/S. 143(3) AS INVALID. THEREFORE, WE DO NOT FIND ANY MERIT IN GROUND NO. 2 OF THE CROSS-OBJECTI ON. THE SAME IS ACCORDINGLY DISMISSED. NO OTHER POINT IS ARGUED OR PRESSED. ITA NO. 131/AGRA/2010 & C.O. NO. 45/AGRA/2010 21 10. IN THE RESULT, THE DEPARTMENTAL APPEAL AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY