Shri Shriram Toshniwal, Burhanpur V. ACIT, Khandwa

ITA 02/Ind/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7576 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 03-01-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K C SELVAMANI
• Assessee Lawyers: PREETI PATWA CAS
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Question of law; Retraction; Set aside
• Section: 143(3); 133A; 14A; 250; 131

Judgement Text

SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.02/IND/2019 ASSESSMENT YEAR 2014-15 REVENUE BY SHRI K.C. SELVAMANI, SR.DR ASSESSEE BY S HRI MAN EE SH VAIDYA & MS. PR EETI PATWA, CAS DATE OF HEARING 1 8 .03 . 201 9 DATE OF PRONOUNCEMENT 11 .0 4 . 201 9 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL IS FILED AT THE INSTANCE OF ASSESSEE PERTAINING TO ASSESSMENT YEAR 2014-15 AND IS DIRECT ED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-II (IN SHORT LD.CIT(A)], INDORE DATED 17.10.2018 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 2 5.11.2016 FRAMED BY ACIT-KHANDWA. SH RI SHRIRAM TOSHNIWAL, PROP. M/S. GAYATRI ENTERPRISES, UDYOG NAGAR, BURHANPUR VS. ASSTT. COMMISSIONER OF INCOME TAX, KHANDWA ( APPELLANT ) (RESPONDENT ) PAN A BXPT0602K SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 2 2 . ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL; 1. THE LD. CIT(A) ERRED IN DISMISSING THE ASSESSEE'S P LEA CHALLENGING THE VALIDITY OF SUMMONS ISSUED U/S 131 AS CONSEQUENTIAL IN NATURE. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE SUMMONS ISSUED U/S 1 31 ON 22.01.2014 AND SUBSEQUENTLY ON 24.01.2014 ARE INVALID AND IN EXCES S OF JURISDICTION VESTED IN THE AO BY THE I.T. ACT AND ARE THUS BAD IN LAW AND MAY VERY KINDLY BE QUASHED. 2. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTI ON OF THE AO IN REJECTING THE PARTIAL RETRACTION OF STATEMENT MADE BY THE ASSESSE E DURING THE COURSE OF SURVEY U/S 133A. THAT UNDER THE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE SAID PARTIAL RETRACTION OF STATEMENT MADE BY THE ASSESSE E UNDER 133A PROCEEDINGS IS BASED ON FACTS AND MAY VERY KINDLY BE ACCEPTED. 3. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTI ON OF THE AO IN MAKING AN ADDITION OF RS. 2,09,44,333/-: (I) ON ACCOUNT OF EXCESS STOCK BEING THE DIFFERE NCE OF AMOUNT SURRENDERED DURING THE COURSE OF SURVEY AND THE AMOUNT OFFERED IN THE RETURN OF INCOME FILED; (II) BASED SOLELY ON THE STATEMENT OF THE ASSESSE E MADE ULS 133A PROCEEDINGS HAVING NO EVIDENTIARY VALUE WHICH IS BAD IN LAW, UN JUSTIFIED AND UNCALLED FOR AND IT IS PRAYED THAT THE SAID ADDITION MAY VERY KINDLY BE DELETED. 4. THAT THE LEARNED CIT(A) ERRED IN GIVING A RELIEF OF 5 ON ACCOUNT OF DEFECTIVE STOCK OUT OF TOTAL STOCK INSTEAD OF DELETING THE ENTIRE A DDITION MADE BY THE AO ON ACCOUNT OF EXCESS STOCK OF RS. 2,09,44,333/- WHICH WAS VALUED AT AN EXORBITANT FIGURE. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, A MEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 3 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECORD S ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND RUNS BUSINESS OF TRAD ING AND MANUFACTURING OF CLOTH UNDER SOLE PROPRIETARY CONCE RN M/S. GAYATRI ENTERPRISES. SURVEY U/S 133A OF THE ACT CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 22.01.2014. DURING THE COURSE OF S URVEY EXCESS CASH OF RS.9,45,500/- AND EXCESS STOCK OF RS.3,91,60,110/- WAS FOUND. AFTER SURVEY A RETRACTION LETTER WAS FILED ON 28.4.2014 A ND THE SURRENDER MADE ON AMOUNT OF EXCESS STOCK WAS REVISED TO RS.1,82,15 ,777/- INSTEAD OF RS.3,91,60,110/-. A RETURN WAS FILED ON 28.9.2014 DECLARING A TOTAL INCOME OF RS.1,95,58,830/-. THE ASSESSMENT WAS COM PLETED U/S 143(3) OF THE ACT AT A TOTAL INCOME OF RS.4,07,27,240/- AF TER MAKING FOLLOWING ADDITIONS; RETURNED INCOME 1,95,58,830 ADD: 1 . DIFFERENCE OF AMOUNT SURRENDERED IN SU RVEY 2,09,44,333 2 . DISALLOWANCE U/S 14A 1,24,074 3 . TOTAL INCOME ASSESSED 4,07,27,237 4 . ROUNDED OFF R S.4 ,07,27,240 AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND PARTLY SUCCEEDED. 4 . NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL . SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 4 5. LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE DETA ILED WRITTEN SUBMISSION CHALLENGED THE VALIDITY OF SUMMONS ISSUE D U/S 131 OF THE ACT DATED 22.1.2014 SUBMITTED THAT THE SURVEY PROCE EDINGS SHOULD BE DECLARED INVALID AND IN ABSENCE OF JURISDICTION AS THERE WAS NO COMPELLING CIRCUMSTANCES TO ISSUE THE NOTICE ON THE VERY SAME DAY WHEN SURVEY PROCEEDINGS U/S 133A OF THE ACT WERE GO ING ON. IT WAS ALSO SUBMITTED THAT BOTH THE LOWER AUTHORITIES ERRE D IN NOT ACCEPTING THE RETRACTION STATEMENT DATED 28.4.2014 FILED BY T HE ASSESSEE EVEN WHEN PROPER CORROBORATION OF THE MATERIAL FOUND DUR ING THE COURSE OF SURVEY WAS MADE BY THE ASSESSEE WITH THE REVISED AM OUNT OF SURRENDERED INCOME TOWARDS EXCESS STOCK OF GREY CLO TH. 6 . HE ALSO SUBMITTED THAT BOTH THE LOWER AUTHORITIES FAILED TO APPRECIATE THAT THE ACTUAL AMOUNT TO BE SURRENDERED WAS RS.1,82,15,777/- AND NOT RS, 3,96,01,100/- WHICH IN ADVERTENTLY MADE BY THE ASSESSEE DURING THE SURVEY PROCEEDINGS UNDER STRESS. 7. FURTHER REFERRING TO VARIOUS JUDGMENTS MENTIONED I N THE WRITTEN SYNOPSIS EXTRACTED BELOW, IT WAS CONTENDED THAT IT IS WELL ESTABLISHED THAT THE ADDITIONS DURING THE SURVEY PROCEEDINGS U/ S 133A OF THE ACT CANNOT BE MADE SOLELY ON THE BASIS OF STATEMENT TAK EN DURING SURVEY SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 5 AND REVENUE AUTHORITIES SHOULD CORROBORATE THE MATE RIAL AVAILABLE ON RECORD WITH THE AMOUNT MENTIONED IN THE STATEMENT A ND TO THE EXTENT NEXUS IS ESTABLISHED, THE ADDITION SHOULD BE MADE. WRITTEN SUBMISSION GIVEN BY LD. COUNSEL FOR THE ASSESSEE RE ADS AS FOLLOWS; GROUND NO. 1 THE FIRST GROUND OF APPEAL IS CHALLENGING THE VALID ITY OF SUMMONS ISSUED U/S 131 ON 22.01.2014 REQUIRING THE ASSESSEE'S PRESENCE ON 22.01.2014 ITSELF AND THEN SUBSEQUENTLY ON 24.01.2014 WHICH ARE IN EXCESS OF JURISDICTION VESTED IN THE AO BY THE LT. ACT AND THUS BAD IN LAW AND MAY V ERY KINDLY BE QUASHED. - SURVEY PROCEEDINGS U/S 133A WERE CONDUCTED ON 22 .01.2014. ~ THE SURVEY PARTY IMMEDIATELY ISSUED TWO SUMMONS B OTH DATED 22.01.2014 REQUIRING THE ASSESSEE'S PRESENCE AT 01:00PM ON 22. 01.2014 I.E. DURING THE COURSE OF SURVEY ITSELF (COPY AT PAGE 15) AND THE O THER FOR 24.01.2014 AT 11:30AM AT THE AO'S OFFICE. (COPY AT PAGE 16). ~ THESE SUMMONS U/S 131 HAVE BEEN ISSUED IN A ROUTINE MANNER WITHOUT APPLICATION OF MIND. THIS FACT IS SUPPORTED BY THE FIELDS IN THE LETTER OF SUMMONS NOT BEING SCORED OFF AND ONLY THE FIELDS OF DATE, TIME AND PLACE BEING FILLED IN. ~ WHAT IS SEEN IN PRACTICE IS, IN MORE OR LESS IN E VERY SURVEY, THE AO ISSUES SUMMON U/S 131 DURING THE COURSE OF SURVEY ITSELF. THE PURPOSE OF ISSUING SUCH A NOTICE IS THAT THE DEPARTMENT CAN CALL THE A SSESSEE AFTER THE SURVEY IS OVER BUT THEY CANNOT CALL THE ASSESSEE BECAUSE NO P ROCEEDING REMAINS PENDING AFTER THE SURVEY IS CONCLUDED AND HENCE AS A MERE P RACTICE, SUMMON U/S 131 IS ISSUED DURING THE COURSE OF SURVEY. IN THE INSTANT CASE ALSO THE AO SLAPPED SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 6 NOTICES U/S 131 MERELY TO GIVE LEGAL SANCTITY TO THE STATEMENT RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS. ~ SUMMONS U/S 131 IS A VERY IMPORTANT NOTICE AND THE INCOME TAX A UTHORITIES ARE EXPECTED TO BE WELL AWARE OF ITS SCOPE, POWER, MISUSE AND CONSEQUENCES. THE INCOME TAX AUTHORITY MAY USE THIS SECTION AS A WEAPON IN THEIR HANDS WHICH IS NOT PERMISSIBLE BECAUSE VARIOUS COURTS HAV E ALSO IMPOSED CERTAIN LIMITATIONS ON IT. ~ THERE ARE NUMBER OF COURT DECISIONS WHICH SAY THA T NOTICE U/S 131 DURING THE COURSE OF SURVEY SHOULD NOT BE ISSUED BY THE IN COME TAX AUTHORITY UNLESS THE ASSESSEE DOES NOT COOPERATE WITH THE SURVEY TEA M. ~ SO, WHETHER THE AO WAS JUSTIFIED IN ISSUING NOTIC ES U/S 131 DURING THE SURVEY PROCEEDINGS ITSELF? ARE SUCH SUMMONS ISSUED U/S 131 DURING THE COURSE OF SURVEY PROCEEDINGS VALID AND CARRY A LEGAL SANCT ITY? ~ SUMMON U/S 131(1) CANNOT BE ISSUED DURING COURSE OF SURVEY U/S 133A BARRING SURVEY U//S 133A(6) AND ONLY WHEN THE CIRCUMSTANCES ARE COMPELL ING. IF THE ASSESSEE DURING COURSE OF SURVEY HAS NOT COO PERATED WITH THE SURVEY TEAM, NOTICE U/S 131(1) CAN BE ISSUED, BUT IF THE ASSESSEE HAS AFFOR DED ALL THE FACILITIES TO THE SURVEY PARTY FOR CONDUCTING SURVE Y AND ALSO FOR RECORDING OF STATEMENT, NO NOTICE U/S 131 CAN BE ISSUED. - IN THE INSTANT CASE, THE ASSESSEE HAD AFFORDED AL L POSSIBLE COOPERATION DURING THE SURVEY PROCEEDINGS U/S 133A RIGHT FROM VERIFICA TION OF CASH AND STOCK TO RECORDING OF STATEMENT. THERE IS NO SHRED OF EVIDEN CE TO SUGGEST THAT THE ASSESSEE DID NOT COOPERATE IN THE SURVEY PROCEEDING S U/S 133A. EVEN THERE CAME NO NEED TO IMPOUND THE BOOKS OF ACCOUNTS AND T HEREFORE PROVISIONS OF SECTION 133A(6) WERE NOT APPLICABLE IN THIS CASE. S O THE QUESTION OF ISSUING SUMMONS U/S 131 NEVER AROSE AND THE SUMMONS THUS IS SUED ON 22.01.2014 REQUIRING COMPLIANCE ON 22.01.2014 ITSELF AT 01:00P M LOSES ITS LEGAL VALIDITY, IS SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 7 IN EXCESS OF THE JURISDICTION AND POWERS VESTED AND IN CONSEQUENCE THE STATEMENT PURPORTED TO BE RECORDED OF THE ASSESSEE LOSES ITS VALIDITY AND CANNOT FORM THE BASIS OF ADDITION MADE IN THE ASSESSMENT O RDER. - SO FAR AS THE SECOND SUMMONS DATED 22.01.2014 IS CONCERNED REQUIRING COMPLIANCE ON 24.01.2014 AT 1L:30AM (COPY AT PAGE 1 6), IT IS SUBMITTED THAT THE INCOME TAX AUTHORITIES HAVE NO POWER TO ISSUE NOTIC E IF PROCEEDING IS NOT PENDING. THUS, THE SECOND SUMMONS HAS STILL NO LEGA L SANCTITY AS NO PROCEEDINGS WERE PENDING AS ON 24.01.2014 AS THERE WAS A CONCLUDING STATEMENT RECORDED ON 22.01.2014 AND THE SURVEY PRO CEEDINGS HAD CONCLUDED (COPY AT PAGES 25 TO 27). SO THE STATEMENT RECORDED ON 24.01.2014 (COPY AT PAGES 37 TO 39) IS INVALID AS THE SUMMONS ISSUED ON 22.01.2014 TO MAKE COMPLIANCE ON 24.01.2014 WAS ITSELF INVALID. - SO IF THESE TWO SUMMONS U/S 131 ARE EXPUNGED FRO M THE SURVEY PROCEEDINGS DECLARING THEM INVALID AND IN EXCESS OF JURISDICTIO N VESTED UPON THE AO BY THE INCOME TAX ACT 1961 WHAT REMAINS IS A STATEMENT REC ORDED U/S 133A DURING THE COURSE OF SURVEY PROCEEDINGS WHICH HAS NO EVIDE NTIARY VALUE AS HAS BEEN DECIDED BY VARIOUS APPELLATE AUTHORITIES. SOLE RELI ANCE HAS BEEN PLACED BY THE REVENUE WHILE UPHOLDING THE ADDITION OF RS. 2.09 CR ORES WHICH HAS BEEN SEPARATELY CHALLENGED IN GROUND NO. 3(II) AND DELIB ERATED THERE. - - THE CONTENTIONS OF THE ASSESSEE FINDS SUPPORT FROM THE FOLLOWING CASE LAWS :- 1. GHERU LAL BAL CHAND V. ITO (P & H HIGH COURT )[1982 ] 137 ITR 190 (COPY AT PAGES 01 TO 03 OF CASE LAWS PB) 'THE ITO CAN, HOWEVER, RESORT TO POWERS UNDER SUB-S ECTIONS (1) AND (2) OF SECTION 131 OF THE ACT, IN CASE THE ASSESSEE REFUSES OR EVADES TO CO-OPERATE IN TERMS OF SUB-SECTION (6) OF SECTION 133A. IT IS UNDISPUTED THAT THE PETITION ER NEITHER REFUSED NOR EVADED TO CO-OPERATE ON 11TH AP RIL, 1978. UNDER THESE CIRCUMSTANCES, THE ITO HAD NO JURISDICTION TO RESOR T TO THE POWERS UNDER SUB- SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 8 SECTIONS (1) AND (2) OF SECTION 131 OF THE ACT WHILE SURVEYING THE ACCOUNTS OF THE PETITIONER UNDER SECTION 133A ON 11TH APRIL, 19 78. IT IS OBVIOUS THAT THE ITO ISSUED NOTICES (ANNEXS. P-1 TO P- 4) UNDER SECT ION 131 OF THE ACT TO THE PETITIONER IN EXCESS OF THE JURISDICTION VESTED IN HIM. THESE NOTICES ARE, CONSEQUENTLY, LIABLE TO BE QUASHED.' 2. THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF DR. VIJAY PAHWA V. SAMIR MUKHOPADHYAY, DEPUTY CIT [2001] 250 ITR 354 CONSIDE RED THE CASE WHERE THE SURVEY WAS CONDUCTED ON APRIL 17, 1995, THE SUM MONS UNDER SECTION 131 (1) WERE SERVED UPON HIM ON THE SPOT AND THE SA ME WERE EXECUTED WITHIN THIRTY MINUTES OR SO. THE BOOKS AND OTHER DO CUMENTS, WHEN PRODUCED BEFORE THE AUTHORITY IN THE I NCOME TAX OFFICE, WERE IMPOUNDED IMMEDIATELY. (COPY AT PAGES 04 TO 05 OF CASE LAWS PB) 3. KALPANA BIDI MFG CO PVT LTD VS ACIT (ITAT KOLKA TTA) (COPY AT PAGES 18 TO 35 OF CASE LAWS PB) 'THEREFORE, WE HOLD THAT REVENUE HAS NO JURISDICTIO N TO RESORT THE POWERS UNDER SUBSECTION (1) & (2) OF SECTION 131 OF THE ACT WHILE SURVEYING THE ACCOUNTS OF ASSESSEE U/S. 133A OF THE ACT. IT IS BE CAUSE, IN THE INSTANT CASE THE ASSESSEE NEITHER REFUSED NOR EVADED WITH THE CO MPETENT AUTHORITY. IN THIS REGARD, WE FIND SUPPORT AND GUIDANCE FROM THE HON 'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DR. VIJAY PAHWA VS. DCIT REPORTED IN 250 ITR 354.' - THE LD. CIT(A) IN HIS ORDER HAS DISMISSED THIS GROU ND OF APPEAL STATING IT AS CONSEQUENTIAL IN NATURE. - THE ELABORATE SUBMISSION MADE ABOVE AND THE JUDICIA L PRONOUNCEMENTS VINDICATE THE ASSESSEE'S STAND THAT THE AD WAS NOT EMPOWERED TO ISSUE SUMMONS AND BY ISSUING SUMMONS U/ S 131 DURING THE SURVEY PROCEEDINGS U/S 133A EXCEEDED HIS JURISDICTION AND THE POWERS VESTE D IN SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 9 HIM BY THE INCOME TAX ACT 1961 AND THUS VITIATING T HE PROCEDURE ADOPTED BY HIM. IT IS THEREFORE PRAYED THAT THE SUMMONS ISSUED U/S 131 BEING INVALID AND HAVING NO LEGAL SANCTITY ARE THUS HAD IN LAW AND MA Y VERY KINDLY BE QUASHED. IN TURN THE STATEMENTS RECORDED ON 22.01.2014 AND 24.0 1.2014 HAVE NO EVIDENTIARY VALUE, RENDERING THE ENTIRE ASSESSMENT PROCEEDINGS AS INVALID AS THE ASSESSMENT ORDER IS BASED SOLELY ON THE STATEMENTS RECORDED AND MAY VERY KINDLY BE QUASHED. GROUND NO. 2 THE SECOND GROUND OF APPEAL IS CHALLENGING THE ORDE R OF THE LD. CIT(A) IN UPHOLDING THE AO'S ACTION IN REJECTING THE RETRACTI ON OF THE STATEMENT MADE BY THE ASSESSEE DURING THE COURSE OF SURVEY U/S 133A RELYI NG SOLELY ON THE STATEMENT RECORDED DURING SURVEY PROCEEDINGS U/S 133A ON 22.0 1.2014. AND GROUND NO. 3(I) THIS GROUND OF APPEAL IS CHALLENGING THE AO'S ACTIO N IN MAKING AN ADDITION OF RS. 2,09,44,333/- ON ACCOUNT OF EXCESS STOCK BEING THE DIFFERENCE OF AMOUNT SURRENDERED DURING THE COURSE OF SURVEY I.E. RS. 3,91,60,110/- AND THE AMOUNT OFFERED IN THE RETURN OF INCOME FILED I.E. RS. 1,82,15,777/-. SINCE BOTH THESE GROUNDS ARE INTER RELATED, THE SAM E ARE DEALT WITH TOGETHER FOR THE SAKE OF BREVITY. IN ADDITION TO THE FACTS ENUMERATED IN GROUND NO. 1 , IT IS FURTHER STATED THAT: 1. IN THE STATEMENT RECORDED ON 22.01.2014 THE ASSESSE E HAD EXPRESSED HIS SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 10 INABILITY TO EXPLAIN THE DIFFERENCE OF CASH AND STO CK FOUND AT THAT POINT OF TIME. (REF PAGE 26-27) STILL WITHOUT TAKING COGNIZANCE OF THE ASSESSEE'S INABILITY TO EXPLAIN THE DIFFERENCE ON ACCOUNT OF STOCK FOUND A SEPARATE DECLARATION WAS TAKEN ON THE LETTER HEAD OF GAYATRI ENTERPRISE ON 2 2.01.2014 ITSELF WHERE THE ASSESSEE ALLEGEDLY SURRENDERED RS. 3,91,60,110/- ON ACCOUNT OF EXCESS STOCK. (COPY AT PAGES 32 TO 33) 2. IT WAS UNDER A STATE OF ACUTE PRESSURE, TO AVOID AN Y LITIGATION AND A DESIRE THAT THE SURVEY ACTION BE COMPLETED AT THE EARLIEST THE ASSESSEE WAS LEFT WITH NO CHOICE BUT TO CO-OPERATE WITH THE DEPARTMEN T AND MAKE A SURRENDER OF RS. 3,91,60,110/- BY ACCEPTING THE VALUATIONS OF THE STOCK AS MADE BY THE SURVEY PARTY. 3. AFTER THE COMPLETION OF SURVEY PROCEEDINGS THE ASSE SSEE CAME TO KNOW OF THE DISCREPANCIES IN THE STOCK VALUED BY THE SURVEY PARTY WHEN HE ACTUALLY SOLD THE STOCK IN THE MARKET AND CAME TO KNOW OF TH E ACTUAL VALUATION OF STOCK. 4. AFTER THE SURVEY PROCEEDINGS THE ASSESSEE FILED A R ETRACTION LETTER WITH THE ITO, BURHANPUR ON 28.04.2014.(COPY AT PAGES 46 TO 5 3) THE BASIS OF RETRACTION WAS TWO FOLD I) STOCK OF SISTER CONCERN GAYATRI COATING PVT. LTD WAS LYING IN THE SAME PREMISES AND II) VALUATION OF STOCK OF THE ASSESSEE APPELLANT WAS MADE AT AN EXORBITANT PRICE. 5. AS PER THIS LETTER THE ASSESSEE REVISED THE SURREND ER MADE ON ACCOUNT OF EXCESS STOCK TO RS. 1,82,15,777/- INSTEAD OF RS. 3,91,60,110/- MADE EARLIER AT THE TIME OF SURVEY U/S 133A. 6. IN THE RETRACTION LETTER THE ASSESSEE SPECIFICAL LY STATED THAT A) THREE ENTERPRISES ARE RUN FROM THE SAME PREMISES I. E. UDHYOG NAGAR, BURHANPUR VIZ I. M/S. GAYATRI ENTERPRISES (THE ASSESSEE IS PROPRIETOR) II. M/S. GAYATRI PROCESSING INDUSTRIES (PROPRIETOR HARISH KU MAR SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 11 TOSHNIWAL (ASSESSEE'S SON) III. M/S GAYATRI COATING P. LTD., A COMPANY IN WHIC H THE ASSESSEE'S SON SHRI MAHESH TOSHNIWAL & THE ASSESSEE ARE DIRECTORS.( COPY AT PAGES 48 TO 49) THE SAID FACT WAS ALSO STATED IN REPLY TO Q. NO.3 OF THE PRELIMINARY STATEMENT OF THE ASSESSEE PLACED AT PAGE 18 OF PB. B) DURING THE COURSE OF SURVEY, STOCK OF M/S. GAYATRI PROCESSING INDUSTRIES WAS SEPARATELY MARKED. A SEPARATE INVENTORY OF THE SAME WAS PREPARED. (COPY AT PAGE 153) THIS STOCK WAS CONSIDE RED IN THE CASE OF HARISH KUMAR TOSHNIWAL WHO IS THE PROPRIETOR OF M/S . GAYATRI PROCESSING INDUSTRIES WHERE SEPARATE SURVEY OPERATI ONS WERE CARRIED OUT. C) SO FAR AS STOCK OF M/S GAYATRI ENTERPRISES AND M/S. GAYATRI COATING PVT. LTD. WAS CONCERNED, THE STOCK WAS NOT SEPARATE LY IDENTIFIED AND MARKED. THE ENTIRE INVENTORY WAS PREPARED IN THE NA ME OF M/S. GAYATRI ENTERPRISES. THUS, IT IS SUBMITTED THAT THE INVENTO RY WHICH WAS PREPARED BY THE SURVEY PARTY INCLUDED THE STOCK OF M/S. GAYA TRI COATING PVT. LTD. TO THE TUNE OF RS. 51,15,200/-. THIS WAS VERIFIABLE FROM THE RECORDS OF M/S. GAYATRI COATING PVT. LTD. THIS STOCK WAS PURCH ASED BY M/S. GAYATRI COATING PVT. LTD. OUT OF ITS OWN FUNDS. THE PURCHASES ARE DULY REFLECTED IN THE BOOKS OF M/S. GAYATRI COATING PVT. LTD. THE ASSESSEE EVEN STATED THAT THESE PURCHASES COULD BE DULY VERI FIED BY THE DEPARTMENT AT THE ASSESSEE'S COST FROM VARIOUS SUPP LIERS. D) IT WOULD BE ILLOGICAL IF THE STAND OF THE SURVEY PA RTY IS ACCEPTED THAT THE STOCK OF M/S. GAYATRI COATING PVT. LTD. AT THE TIME OF SURVEY WAS NIL BECAUSE EVEN ON 31.03.2013 AS PER THE AUDITED ACCOU NTS THE STOCK OF GAYATRI COATING AS PER AUDITED ACCOUNTS AS ON 31.03 .2013 (RS. 46,67,240/- (REFER RETRACTION LETTER, RELEVANT PAGE AT 49 OF PB) IS REASONABLE AND COMING OUT OF RECORDS AS ON 22.01.20 14 IT STOOD AT RS. 51,15,200/- AND WAS IN PARITY. DETAIL OF STOCK OF G AYATRI COATING PVT. SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 12 LTD. SHOWING VALUATION ALONG WITH SUPPORTING IS ENC LOSED AT PAGES 57 TO 63. A COPY OF TRADING ACCOUNT AS ON 22.01.2014 OF G AYATRI COATING AND AN AFFIDAVIT OF THE DIRECTOR OF GAYATRI COATING PVT . LTD. ARE ENCLOSED AT PAGES 56 AND 54-55 RESPECTIVELY. THE SAME WAS NOT R EBUTTED BY THE AO AND THE LD CIT(A). E) THE AO AND THE LD CIT(A) HAVE RELIED ON THE REPLY GIVE BY THE ASSESSEE TO Q. NO, 15 (COPY AT PAGE 21) WHERE THE ASSESSEE UNDER A BONA FIDE BELIEF HAD STATED THAT THE STOCK OF ANY OTHER PERSO N OR ORGANIZATION WAS NOT KEPT IN THIS PREMISES. THE ASSESSEE AT THAT MOM ENT THOUGHT THAT THE QUESTION WAS FOR OUTSIDERS OR NON RELATED PARTIES. IN FACT STOCK OF ALL THREE CONCERNS VIZ. M/S GAYATRI ENTERPRISES (ASSESS EE'S PROPRIETORSHIP) M/S GAYATRI PROCESSING INDUSTRIES (ASSESSEE'S SON'S PROPRIETARY CONCERN) AND GAYATRI COATING PVT. LTD. WAS LYING IN THE SAME PREMISES. SO MISTAKENLY HE DID NOT NAME THE OTHER TWO CONCERN S WHOSE STOCK WAS ALSO LYING THERE. F) THE SURVEY PARTY PREPARED A SEPARATE INVENTORY OF G AYATRI PROCESSING INDUSTRIES WHICH IS ON RECORD OF THE DEPARTMENT AND CONSIDERED IN THE HANDS OF SHRI HARISH TOSHNIWAL PROPRIETOR OF GAYATR I PROCESSING INDUSTRIES. THIS PROVES THAT ITS STOCK ALSO LAY THE RE BUT THE ASSESSEE IN HIS REPLY TO Q. NO. 15 HAD NOT MENTIONED M/S GAYATRI PROCESSING INDUSTRIES. G) ON THE SAME PREMISE, THE ASSESSEE DID NOT CONSIDER GAYATRI COATING PVT. LTD. AS AN OUTSIDE ENTITY AND HENCE DID NOT NA ME IT ALSO IN THE REPLY TO THE QUERY WHEREAS ITS STOCK WAS ALSO LYING THERE . THIS CONFUSION HAPPENED DUE TO ACUTE MENTAL PRESSURE/STRESS WHICH THE ASSESSEE WAS UNDERGOING DURING SURVEY AND MORE IMPORTANTLY THE HEARING IMPAIRMENT. H) THE STOCK OF THE ASSESSEE WAS VALUED BY THE SURVEY TEAM AT AN EXORBITANT PRICE. EVEN SOME OF THE DEFECTIVE STOCK WAS TAKEN AS FRESH SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 13 STOCK AND VALUED ACCORDINGLY. I) THE ASSESSEE SOLD THE STOCK FOUND DURING THE COURSE OF SURVEY TO UNRELATED PARTIES AT MARKET RATES WHICH WERE MUCH L OWER THAN THE RATES ADOPTED BY THE SURVEY PARTY. A LIST OF SALE OF STOC K FOUND DURING SURVEY TO DIFFERENT PARTIES IS ENCLOSED AT PAGES 64 TO 67 AND COPY OF SALE BILLS IN SUPPORT OF THE SAME IS ENCLOSED AT PAGES 68 TO 142. ALL THESE TRANSACTIONS WERE MADE WITH UNRELATED PERSONS AND W ERE DONE THROUGH BANKING CHANNELS. THE ASSESSEE EVEN WENT ON TO STAT E TO THE LD. AO THAT THESE SALE TRANSACTIONS COULD BE VERIFIED AND THE A SSESSEE WAS WILLING TO BEAR THE COST. THE AO AND FOR THAT MATTER THE LD CI T(A) DID NOT MAKE ANY EFFORTS TO CONTROVERT THE ASSESSEE'S SUBMISSION AND MAKE INDEPENDENT INVESTIGATION. J) THE ASSESSEE EVEN OBTAINED QUOTATIONS OF THE SALE P RICE FROM INDEPENDENT PARTIES (COPY AT PAGES 143 TO 152). THE DEFECTIVE ITEMS WERE SEPARATELY MARKED AND SOLD. THE ASSESSEE EVEN ASKED THE AO TO INDEPENDENTLY VERIFY IT AT HIS COST. (COPY AT PAGE 51) K) ENTRIES OF ALL THE DEFECTIVE ITEMS WAS SEPARATELY M ARKED AS DAMAGED IN ANNEXURE B, A SEPARATE LIST FOR THE SALE OF DEFECTI VE ITEMS WAS ALSO PREPARED AND IS ALSO ENCLOSED AT PAGES 64 TO 67. AL L THE DEFECTIVE ITEMS WERE SOLD TO UNRELATED PARTIES AND THROUGH BANKING CHANNELS. THE ASSESSEE EVEN ASKED THE LD. AO TO VERIFY ALL THESE TRANSACTIONS FROM THE RESPECTIVE PARTIES AND THE ASSESSEE WAS WILLING TO BEAR THE COST. 1) THE TOTAL SALE OF THE STOCK BELONGING TO GAYATRI EN TERPRISES CAME TO RS. 2,03,85,207/-. A GROSS PROFIT RATE OF 6 WAS APPLIED ON THIS SALE WHICH WAS THE RATE APPLIED BY THE SURVEY PARTY. AFTER DED UCTING THE STOCK AS PER BOOKS OF RS.I0,15,550/- THE AMOUNT COMES TO RS. 1,82,15,577/- WHICH WAS THE REVISED SURRENDERED AMOUNT. A CHART S HOWING THE SAME CALCULATION IS ENCLOSED AT PAGE 52 OF PB). THIS AMO UNT WAS DULY RETURNED SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 14 IN THE INCOME TAX RETURN AND TAX WAS DULY PAID. M) THE AO WHILE DEALING IN THE ASSESSMENT ORDER IN RES PONSE TO THE RETRACTION LETTER FILED BY THE ASSESSEE HAS SIMPLY BRUSHED ASIDE THE RETRACTION LETTER BY STATING IT MERELY AS BASELESS, AN AFTERTHOUGHT AND A COOKED UP STORY TO AVOID THE PAYMENT OF TAX ON THE AMOUNT SURRENDERED DURING THE COURSE OF SURVEY. (REFER PAGE 8 OF ASSES SMENT ORDER) N) THE AO HAS CHOSEN TO PLACE TOTAL RELIANCE ON THE ST ATEMENT RECORDED DURING THE COURSE OF SURVEY TOTALLY DENYING THE ASS ESSEE HIS RIGHT TO RETRACT FROM HIS STATEMENT MADE UNDER PRESSURE DURI NG THE COURSE OF SURVEY. MORE IMPORTANTLY THE RETRACTION WAS BACKED BY DOCUMENTARY EVIDENCE WHICH THE AO & THE LD CII(A) BOTH FAILED T O CONTROVERT. 0) THE MOOT POINT ARISES AGAIN IS WHETHER THE ASSESSEE WAS RIGHT IN RETRACTING FROM THE STATEMENT MADE BY HIM DURING TH E COURSE OF SURVEY PROCEEDINGS U/S 133A? P) IT IS AN ESTABLISHED POSITION OF LAW THAT IF A DISC LOSURE IS MADE BY THE ASSESSEE EITHER UNDER MISTAKEN BELIEF OF FACTS AND LAW DUE TO MENTAL PRESSURE FROM THE SURVEY PARTY OR UNDER COERCION CA N RETRACT THE STATEMENT AND THE ADMISSION SO MADE. Q) IN THE PRESENT CASE WHEN THE ASSESSEE HAS FURNISHED ALL THE SUPPORTING DOCUMENTS LEADING TO THE CORRECT VALUATION OF STOCK IN THE POST SURVEY PROCEEDINGS AND SCRUTINY ASSESSMENT PROCEEDINGS WHI CH WAS VALUED AT A HIGHER PRICE BY THE SURVEY PARTY ON THE DATE OF S URVEY, THE CASE OF MISTAKEN BELIEF OF FACTS IS ALSO MADE OUT. R) THE ASSESSEE IN THE POST SURVEY PROCEEDINGS WITHIN A SPAN OF ALMOST THREE MONTHS FILED A RETRACTION LETTER BEFORE THE A O ON 28.04.2014 AS TO WHAT WERE THE CORRECT FACTS AND FILED EVIDENCES THA T SUPPORTED HIS CLAIM. SURPRISINGLY THE AO WAS UNABLE TO BRING ANY MATERIA L OR EVIDENCE TO THE CONTRARY. HE HAS JUST RELIED ON THE STATEMENT MADE DURING THE COURSE OF SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 15 SURVEY ULS 133A WHICH HAS NO EVIDENTIARY YALUE AS D ISCUSSED IN DETAIL IN GROUND NO. 3(II) AND NOT CONTROVERTED THE ASSESSEEE 'S RETRACTION ON FACTS. EVEN THE LD. CIT(A) FAILED TO CONTROVERT THE SUBMIS SION WHEN ALL DOCUMENTARY EVIDENCES WERE THERE BEFORE HIM. S) IN SUPPORT OF THE RETRACTION OF STATEMENT MADE ULS 133A THE ASSESSEE WISHES TO PLACE RELIANCE ON SOME OF THE FOLLOWING J UDGMENTS :- 1. PULLANGODE RUBBER PRODUCTS CO. LTD. VIS STATE OF KERALA 91 ITR 18 (SC) (COPY AT PAGES 06 TO 08 OF CASE LAWS PB) AN ADMISSI ON IN A STATEMENT RECORDED ON OATH IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS ALWAYS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. 2. KRISHNAN VIS KURUKSHETRA UNIVERSITY AIR 1976 SC 376 (COPY AT PAG ES 09 TO 17 OF CASE LAWS PB) HELD THAT ANY ADMISSION MADE IN IGNORANCE OF LEGAL RIGHTS OR UNDER DURESS CANNOT BIND THE MAKER OF ADMISSION. EXPLAINING FURTHER, THE HON 'BLE APEX COURT OBSERVE D THAT MERE ADMISSION CANNOT BE BEDROCK OR FOUNDATION OF AN ASSESSMENT AN D IT IS ALWAYS OPEN TO THE ASSESSEE WHO MADE THE ADMISSION TO SHOW THAT WHAT HE ADMITTED WAS NOT CORRECT. T) EVEN THE LD. CIT(A) HAS DISMISSED THIS GROUND OF T HE ASSESSEE STATING IT AS CONSEQUENTIAL IN NATURE. U) IT IS REITERATED THAT ELABORATE SUBMISSIONS WERE F ILED BEFORE THE LD. AO VIA THE RETRACTION LETTER ON 28.04.2014. THE ASSESSEE S UBMITTED EVIDENCE IN SUPPORT OF HIS RETRACTION APROPOS SALE OF STOCK FOU ND DURING THE COURSE OF SURVEY AND ALSO SALE OF DEFECTIVE/DAMAGED STOCK WIT H SUPPORTING. THE ASSESSEE EVEN ASKED THE LD. AO TO VERIFY THE SALE, THE RATES AT WHICH THE SALE WAS MADE AS WELL AS THE QUOTATIONS OF RATES SU BMITTED BEFORE HIM. THE RETRACTION LETTER WAS FILED ON 28.04.2014 AND THE A SSESSMENT ORDER WAS PASSED BY THE LD. AO ON 25.11.2016. SO AFTER THE FI LING OF RETRACTION LETTER SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 16 AND ALL THROUGHOUT THE ASSESSMENT PROCEEDINGS TILL THE PASSING OF ASSESSMENT ORDER ON 25.11.2016, THE LD AO HAD AMPLE TIME ALMOST 26 MONTHS TO REFUTE THE CLAIM MADE BY THE ASSESSEE BUT THERE WAS FAILURE ON HIS PART TO REBUT THE ASSESSEE'S CLAIMS FACTUALLY. INSTEAD THE LD AO HARPED ONLY ON THE STATEMENT OF THE ASSESSEE RECORDED DURI NG THE COURSE OF SURVEY PROCEEDINGS AND BRUSHED ASIDE THE RETRACTION LETTER STATING IT TO BE AN AFTERTHOUGHT, COOKED UP STORY AND ONLY TO AVOID PAY MENT OF TAX ON THE SURRENDERED AMOUNT AND WENT ON TO ADD THE DIFFERENC E BETWEEN THE AMOUNT SURRENDERED I.E. RS 4,01,05,610/- AND THAT F ILED IN THE RETURN OF INCOME I.E. RS. 1,91,61,277/- AMOUNTING TO RS. 2,09 ,44,333/-. V) THE FINDINGS OF THE LD CIT(A) ARE ON PAGE 38-39 OF THE APPELLATE ORDER. THE LD. CIT(A) HAS OVERLOOKED THE SUBMISSION AND THE EV IDENCES FILED BY THE ASSESSEE. THE LD. CIT(A) HAVING COTERMINOUS POWERS FAILED TO CONTROVERT THE DOCUMENTS AND MERELY RELIED ON THE STATEMENT U/S 13 3A. W) THE ASSESSEE WITH THE HELP OF DOCUMENTS SUCCESSFULL Y PROVED THAT THE VALUATION DONE BY THE SURVEY PARTY WAS AT A HIGHER PRICE AND THE ONUS HAD SHIFTED ON THE DEPARTMENT BUT THE DEPARTMENT HAS FA ILED TO CONTROVERT THE EVIDENCES FILED BY THE ASSESSEE WHICH MEANS THAT TH E ASSESSEE WAS RIGHT IN HIS CONTENTION SO FAR AS REVISED VALUATION OF ST OCK WAS CONCERNED AND FAILED TO BRING ANY EVIDENCE WHATSOEVER TO REBUT TH E CLAIM OF THE ASSESSEE. SINCE THE AO AND THE LD. CIT( A) HAVE FAILED TO CONTROVERT THE RETRACTION LETTER ON FACTS AND IN VIEW OF THE JUDICIAL PRONOUN CEMENTS CITED ABOVE, IT IS PRAYED THAT THE RETRACTION LETTER BEING BASED ON FA CTS AND VALID, THE SAME MAY VERY KINDLY BE ACCEPTED AND THE ADDITION OF RS, 2,09,44,333/- MAY VERY KINDLY BE DELETED. GROUND NO. 3 (II) THIS GROUND OF APPEAL IS CHALLENGING THE ACTION OF LD. CIT(A) IN UPHOLDING THE ACTION OF THE AO IN MAKING AN ADDITION OF RS. 2,09, 44,333/- BASED SOLELY ON THE SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 17 STATEMENT OF THE ASSESSEE MADE U/S 133A PROCEEDINGS HAVING NO EVIDENTIARY VALUE WHICH IS BAD IN LAW, UNJUSTIFIED AND UNCALLED FOR AND IT IS PRAYED THAT THE SAID ADDITION MAY VERY KINDLY BE DELETED. 1. AS DELIBERATED IN GROUND NO. 1 IF THE SUMMONS ISSUE D U/S 131(1) WERE INVALID AND IN EXCESS OF JURISDICTION CONFERRED ON THE AO D URING THE COURSE OF SURVEY PROCEEDINGS U/S 133A WHAT REMAINED WAS ONLY THE STA TEMENT RECORDED U/S 133A(3)(III) HAVING NO EVIDENTIARY VALUE. 2. SO FAR AS THE STATEMENT RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A IS CONCERNED IT IS REITERATED ONCE AGAIN THAT THE AO EXCEEDED HIS POWERS BY ISSUING SUMMONS U/S 131 WHEN THE ASSESSEE HAD FU LLY COOPERATED DURING THE SURVEY PROCEEDINGS AND WAS NOT COVERED U/S 133A (6). 3. SO THE STATEMENT WHICH IS HEAVILY RELIED ON BY THE AO WHILE REJECTING THE RETRACTION LETTER IS NOTHING BUT A STATEMENT RECORD ED U/S 133A(3)(III). IT WOULD BE APT TO DRAW YOUR HONOUR'S KIND ATTENTION TO SECT ION 133A(3)(III) WHICH READS AS UNDER: 3. AN INCOME-TAX AUTHORITY ACTING UNDER THIS SECTION MAY,- (III) RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THIS ACT 4. NOW THE SECTION ITSELF MAKES IT AMPLY CLEAR THAT TH E INCOME TAX AUTHORITY 'MAY' RECORD A STATEMENT WHICH MAY BE USEFUL FOR OR RELEV ANT TO ANY SURVEY PROCEEDINGS. THERE IS NO AMBIGUITY IN LAW THAT THE AO HAS NO POWER TO RECORD ANY STATEMENT ON OATH U/S 133A(3)(III) AS CONTRARY TO POWER ENVISAGED U/S 132(4) WHICH GIVES A POWER TO THE AO TO EXAMINE ANY PERSON ON OATH DURING SEARCH AND SEIZURE OPERATIONS AND RECORD ANY STATEMENT WHICH C AN BE USED AS AN EVIDENCE IN SEARCH AND SEIZURE PROCEEDINGS. 5. YOUR HONOUR'S KIND ATTENTION IS ALSO DRAWN TO BOARD CIRCULAR F. NO. SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 18 286/2/2003/IT (INV) DATED 10.03.2003 WHICH IS FURTHER REITERATED BY CBDT INSTRUCTION F. NO. 286/98/2013-IT (INV.II) DATED 18.L2.2014. (COPY AT PAGES 154 TO 155). THE BOARD DIRECTED THAT THE ASSESSMENT SHOULD BE MADE ON THE BASIS OF EVIDENCE/MATERIAL COLLECTED IN THE COURSE OF SURVEY OPERATION OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT ORDER. TACITLY, THE BOARD ALSO AGREED THAT NO ADDITION SHOULD BE MADE SIMPLY ON THE BASIS OF STAT EMENT RECORDED DURING THE COURSE OF SURVEY. 6. FURTHER, THE LEGAL POSITION AS TO THE EVIDENTIARY VALUE OF STATEMENT RECORDED U/S 133A(3)(III) IS ALSO CLEAR. STRONG RELIANCE IS PLAC ED ON THE FOLLOWING DECISIONS': 1. CIT VS. S. KHADER KHAN SON, 352 ITR 0480 (SUPREME COURT) HAS HELD: 'SURVEY-POWERS OF ITO U/S 133A-EXAMINATION OF PERSON ON OATH-HELD, ADMISSION MADE U/S 133A HAS NO EVIDENTIARY VALUE-APPEAL DISMISSED (COPY AT PAGES 36 TO 45 OF CASE LAWS PB) 2. DIT VIS POORANMALL & SONS 96 ITR 390 (SC) (COPY AT PAGES 46 TO 59 OF CASE LAWS PB) CONFESSION CANNOT BE MADE FOUNDATION OF ASSESSMENT. 3. CIT VS. DHINGRA METAL WORKS (DELHI HIGH COURT) 328 ITR 384 HELD THAT: 'INCOME FROM UNDISCLOSED SOURCES-ADDITION-ADDITION ON THE BASIS OF STATEMENT RECORDED DURING SURVEY-ASSESSEE'S STATEMENT DURING THE COURSE OF SURVEY IS NOT BINDING AS EVIDENCE.' (COPY AT PAGES 60 TO 66 OF CA SE LAWS PB) 4. ASHOK MANILAL THAKKAR VIS ACIT(ITAT, AHMADABAD) 279 ITR 145 (AT) (COPY AT PAGES 67 TO 79 OF CASE LAWS PB) HELD THAT THE STATEMENT OF THE ASSESSEE RECORDED U/S 133A(3)(III) COULD BE SAID TO BE USEFUL OR RELEVANT TO THE ASSESSMENT PROCEEDINGS ON LY WHEN THERE WAS MATERIAL ON SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 19 RECORD TO PROVE THE EXISTENCE OF ANY OF THE FOUR AC TIVITIES ON THE BASIS OF WHICH THE DISCLOSURE WAS STATED TO BE MADE. THE STATEMENT REC ORDED U/S 133A CANNOT BE GIVEN EVIDENTIARY VALUE AS SUCH EVIDENTIARY VALUE W AS NOT ATTACHED TO IT BY THE PROVISIONS OF SECTION 133A. THUS, IT COULD NOT BE S AID SOLELY ON THE BASIS OF THE STATEMENT GIVEN BY THE ASSESSEE THAT THE DISCLOSED INCOME WAS ASSESSABLE AS LAWFUL INCOME OF THE ASSESSEE. 5. SATISH CHAND AGARWAL VS. ITO (ITAT JAIPUR) (COPY AT PAGES 115 TO 126 OF CASE LAWS PB) SECTION 133A, HOWEVER, ENABLES THE INCOME TAX AUTHO RITY ONLY TO RECORD ANY STATEMENT OF ANY PERSON WHICH MAY BE USEFUL, BUT DO ES NOT AUTHORIZE TAKING ANY SWORN STATEMENT. THUS, IT IS TRITE LAW THAT SECTION 133A DOES NOT EMPOWER ANY INCOME TAX AUTHORITY TO EXAMINE ANY PERSON ON OATH AND THEN USE IT AS EVIDENCE TO MAKE ADDITION. IN SUCH A SITUATION, NO ADDITION CAN BE MADE OR SUSTAINED ONLY ON THE BASIS OF THE STATEMENT RECORDED DURING THE SURVEY V IS 133A OF THE ACT. ONCE THE ASSESSEE HAS RETRACTED FROM THE STATEMENT THEN IT W AS ON THE A.O. TO ESTABLISH BEYOND ANY DOUBT THE ISSUES ON WHICH THE ADDITION H AS BEEN MADE. CONSIDERING ALL THESE ASPECTS, WE FIND NO MERIT IN SUSTAINING THE A DDITION ONLY BASED ON THE STATEMENT RECORDED DURING THE COURSE OF SURVEY. HEN CE GROUNDS NO. 1 TO 5 OF THE APPEAL ARE ALLOWED. 6. ACIT VS SUDEEP MAHESHWARI (ITAT INDORE) (COPY AT PA GES 80 TO 92 OF CASE LAWS PB) 'IT IS ALSO A SETTLED POSITION OF LAW THAT THE ADDI TION CANNOT BE SUSTAINED MERELY ON THE BASIS OF THE STATEMENT. THERE HAS TO BE SOME MA TERIAL CORROBORATING THE CONTENTS OF THE STATEMENT. ' 7. ASHOK WANI VS ITO RATLAM (ITAT INDORE) (COPY AT PAG ES 93 TO 105 OF CASE LAWS PB) SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 20 ADDITIONS WHICH WERE SOLELY MADE ON THE BASIS OF TH E STATEMENT RECORDED DURING THE COURSE OF SURVEY WERE DELETED. 8. ACIT VS PARSHWA ENTERPRISES (ITAT AHMEDABAD) (COPY AT PAGES 106 TO 111 OF CASE LAWS PB) 'WE PUT A SPECIFIC QUERY TO THE LEARNED DEPARTMENTA L REPRESENTATIVE TO PLACE ON RECORD ANY EVIDENCE OR MATERIAL OTHER THAN STATEMEN TS OF ASSESSEE'S PARTNERS SUPPORTIVE OF THE IMPUGNED ADDITION. HE REPLIED IN NEGATIVE. WE ARE OF THE OPINION IN THESE PECULIAR FACTS AND CIRCUMSTANCES THAT THE IMP UGNED ADDITION BASED ON MERE SURVEY STATEMENT IS NOT SUSTAINABLE. A CATENA OF CA SE LAW AS DISCUSSED HEREINABOVE SUPPORTS THE SAME VIEW. THE REVENUE FAILS TO POINT OUT ANY DISTINCTION ON FACTS OR LAW THEREIN. WE AFFIRMS CIT(A) 'S FINDINGS UNDER CH ALLENGE ACCORDINGLY. 5. THIS REVENUE'S APPEAL IS DISMISSED. ' 9. PR CIT-2 VS PARSHWA ENTERPRISES (GUJARAT HIGH COURT ) (COPY AT PAGES 112 TO 114 OF CASE LAWS PB) 'IN APPEAL, THE CIT(A) DELETED THE ADDITION PRIMARI LY ON THE GROUND THAT NO ADDITION CAN BE MADE SOLELY ON THE BASIS OF A RETRACTED STAT EMENT MADE DURING THE SURVEY OPERATION, PARTICULARLY, WHEN PROPER JUSTIFICATION FOR RETRACTION WAS ALSO OFFERED. IT IS THIS VIEW, WHICH THE TRIBUNAL CONFIRMED IN THE IMPU GNED JUDGEMENT. WE SEE NO ERROR. NO QUESTION OF LAW ARISES. TAX APPEAL IS DISMISSED. ' SO IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENTS IT IS CLEAR THAT THE STATEMENT RECORDED U/S 133A(3)(III) HAVING NO EVIDENTIARY VAL UE CANNOT FORM THE BASIS OF REJECTING THE RETRACTION LETTER AND MAKING AN ADDIT ION OF RS.2,09,44,333/-. THE CHARGE OF THE LD. AO THAT THE RETRACTION MADE W AS TO EVADE PAYMENT OF TAXES ON THE SURRENDERED AMOUNT IS ILL FOUNDED AS THE ASSESS EE HAS MADE ONLY A PARTIAL RETRACTION BASED ON PROPER WORKING OF STOCK VALUATI ON AND ABIDED BY THE PAYMENT OF TAXES ALL THROUGHOUT THE PROCEEDINGS. SO THE CONDUC T OF THE ASSESSEE HAS ALSO TO BE SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 21 TAKEN INTO CONSIDERATION. THE LD CIT(A) HAS DISMISSED THIS PLEA OF THE ASSESS EE STATING IT BE CONSEQUENTIAL. IN VIEW OF THE DETAILED SUBMISSION AND THE VARIOUS JUD ICIAL PRONOUNCEMENTS, CBDT INSTRUCTIONS, IT IS MOST HUMBLY PRAYED THAT THE ADD ITION OF RS, 2,09,44,333/- MADE ON ACCOUNT OF DIFFERENCE OF AMOUNT SURRENDERED ON A CCOUNT OF VALUATION OF STOCK SOLELY BASED ON THE STATEMENT RECORDED DURING THE C OURSE OF SURVEY ON 22.01.2014 WHICH HAS NO EVIDENTIARY VALUE MAY VERY KINDLY BE D ELETED. CASES RELIED: 1. GHERU LAL BAL CHAND VS. ITO (PUNJAB HC) (1982) 137 ITR 190 2. VIJAY PAHWA VS. SAMIR UKHOPADHYAY, DEPUTY CIT (CALC UTTA HC) (2001) 250 ITR 354. 3. PULLANGODE RUBBER PRODUCE CO. VS. STATE OF KERALA A ND ANR (HON'BLE SUPREME COURT) (1973) 91 ITR 18. 4. SHRI KRISHAN VS. THE KURUKSHETRA UNIVERSITY (HON'BL E SUPREME COURT) (1976) 1976 AIR 376 5. KALPANA BIRI MFG. CO. PVT. LTD VS. ACIT (KOLKATTA T RIBUNAL) (2017) INCOME-TAX ACT, 1961,/1020/KOL/2014 6. CIT VS. CIT VS. KHADER KHAN ( MADRAS HC) (2007) 352 ITR 0480 7. CIT VS. CIT VS. KHADER KHAN (SC) (2012) 352 ITR 048 0 8. DIT (INVESTMENT) & ANR. VS. POORAN MAL & SONS & ANR (HON'BLE SUPREME COURT) (1974) 96 ITR 0390 9. CIT VS. DHINGRA METAL WORKS (DELHI HC) (2010) 328 I TR 384 10. ASHOK MANILAL THAKKAR VS. ACIT (AHMEDABAD TRIBUNAL) (2005) 279 ITR 143 SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 22 11. ACIT VS. SUDEEP MAHESHWARI (INDORE TRIBUNAL) (2019) INCOME-TAX ACT, 1961,/524/IND/2013 12. SHRI ASHOK VANI VS. ITO (INDORE TRIBUNAL)(2018) INC OME-TAX ACT, 1961,/303/IND/2017 13. ACIT VS. PARSHWA ENTERPRISES (AHMEDABAD TRIBUNAL) ( 2016) INCOME-TAX ACT, 1961,/1663/AHD/2011 14. PR. CIT VS. PARSHWA ENTERPRISES (GUJARAT HC) (2017) APPEAL NO.372 OF 2017 15. SATISH CHAND AGRAWAL VS. ITO (JAIPUR TRIBUNAL) (20 18) 64 ITR 0713 8. PER CONTRA DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF LOWER AUTHORITIES AND SUBM ITTED THAT THE ASSESSEE HAS HIMSELF OFFERED THE UNDISCLOSED INCOME IN THE SURVEY PROCEEDINGS AND REVISED SURRENDERED AMOUNT IS MEREL Y AN AFTER THOUGHT COOKED STORY AND THEREFORE THE FINDINGS OF LD. CIT(A) SHOULD BE CONFIRMED. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE R ECORDS PLACED BEFORE US AND ALSO GONE THROUGH VARIOUS JUDGMENTS R EFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSESSEE. 10. THE ISSUES RAISED IN VARIOUS GROUNDS OF APPEAL AR ISE OUT OF THE FACT THAT SURVEY PROCEEDINGS U/S 133A OF THE ACT WA S CONDUCTED AT THE ASSESSEES PREMISES ON 22.1.2014. EXCESS CASH OF RS .9,45,500/- AND SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 23 UNACCOUNTED STOCK OF RS.3,91,61,110/- WAS ALLEGEDLY FOUND OUT OF BOOKS AND THE SAME WAS SURRENDERED BY THE ASSESSEE THROUGH A STATEMENT TAKEN BY THE SURVEY TEAM. SUBSEQUENTLY O N 28.4.2014 RETRACTION LETTER WAS FILED BY THE ASSESSEE REVISIN G THE VALUE OF SURRENDERED STOCK TO RS.1,82,15,577/- MENTIONING TH AT REVENUE AUTHORITIES HAVE VALUED THE UNACCOUNTED QUANTITY OF STOCK AT 30 TO 40% HIGHER THAN THE MARKET PRICE, NO REBATE GIVEN FOR DISCOUNT AND DAMAGED STOCK AND ALSO NO DEDUCTION WAS GIVEN FOR THE STOCK OF ANOTHER PARTY NAMELY GAYATRI COATING PVT. LTD VALUI NG AT RS.51,15,200/- WRONGLY INCLUDED IN THE PHYSICAL STO CK TAKEN BY THE SURVEY TEAM. DURING THE COURSE OF ASSESSMENT PROCE EDINGS THROUGH WRITTEN SUBMISSIONS ASSESSEE GAVE NECESSARY DETAILS IN SUPPORT OF VALUE OF SURRENDERED STOCK MENTIONED IN THE RETRACT ION STATEMENT DATED 28.4.14 VALUING AT RS.1,82,15,577/-, HOWEVER LD. A.O WAS NOT CONVINCED AND JUST TOOK THE BASIS OF THE STATEMENT GIVEN DURING THE COURSE OF SURVEY PROCEEDINGS AND ADOPTED THE VALUE OF EXCESS STOCK AT RS.3,91,60,100/- THEREBY MAKING THE ADDITION FOR TH E DIFFERENCE OF RS. 2,09,44,333/-. AGAINST THIS ADDITION LD. CIT(A) GAV E A PART RELIEF BY DIRECTING THE LD. A.O TO REDUCE THE VALUE OF UNACCO UNTED STOCK BY 5% TOWARDS DEFECTIVE STOCK. ASSESSEE IS NOW IN APPEA L BEFORE US RAISING SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 24 VARIOUS ISSUES THROUGH GROUND NO. 1 TO 5. 11. APROPOS GROUND NO.1 VALIDITY OF THE SURVEY PROCE EDINGS HAVE BEEN CHALLENGED BY PLEADING THAT DURING THE COURSE OF SURVEY PROCEEDINGS ITSELF WITHOUT THERE BEING ANY COMPELLI NG CIRCUMSTANTIAL EVIDENCE REVENUE HAS ISSUED SUMMON U/S 131(1) OF TH E ACT EVEN WHEN THE ASSESSEE COOPERATED WITH THE SURVEY TEAM. WE H OWEVER ARE OF THE CONSIDERED VIEW THAT GROUND NO.1 HAS NO MERIT BECAU SE THE SURVEY TEAM AND THE JURISDICTIONAL ASSESSING OFFICER ARE W ELL WITHIN THEIR POWERS TO ISSUE THE SUMMON U/S 131 OF THE ACT IN OR DER TO COMPLETE THE SURVEY PROCEEDINGS IN THE INTEREST OF REVENUE. THEREFORE GROUND NO.1 OF THE ASSESSEES APPEAL IS DISMISSED. 12. APROPOS GROUND NO.2 THROUGH WHICH THE ASSESSEE HA S CHALLENGED THE ORDER OF LD. CIT(A) UPHOLDING THE AC TION OF LD. A.O REJECTING THE RETRACTION OF THE STATEMENT MADE BY T HE ASSESSEE FILED ON 28.4.2014, WE FIND THAT THE ORIGINAL STATEMENT DURI NG THE COURSE OF SURVEY PROCEEDINGS U/S 133A OF THE ACT THE ASSESSEE ACCEPTED THE VALUATION OF UNACCOUNTED STOCK AT RS.3,91,61,110/-. THEREAFTER AS MENTIONED IN THE RETRACTION STATEMENT DATED 28.4.14 WHICH IS APPROXIMATELY 3 MONTHS FROM THE DATE OF SURVEY I.E. 22.1.2014, THE SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 25 ASSESSEE WITH THE HELP OF NECESSARY DOCUMENTS PREPA RED THE BASIS OF VALUE OF INVESTMENT IN UNACCOUNTED STOCK AT RS. 1,8 2,15,777/- THEREBY REDUCING THE SURRENDERED INCOME OF UNACCOUN TED STOCK BY RS.2,09,44,333/-. NOW BEFORE US THE ISSUE IS THAT WHETHER BOTH THE LOWER AUTHORITIES WERE JUSTIFIED IN REJECTING THE R ETRACTION STATEMENT FILED ON 28.4.14. 13. HONBLE APEX COURT IN THE CASE OF CIT V/S KHADER KHAN SON (SUPRA) HAS LAID DOWN THE RATIO THAT THE STATEMENTS GIVEN DURING THE COURSE OF SURVEY U/S 133A OF THE ACT HAVE NO EVIDEN TIARY VALUE AND ANY ADMISSION MADE DURING SUCH STATEMENT CANNOT, BY ITSELF, BE MADE THE BASIS FOR ADDITION. SIMILARLY IN ANOTHER JUDGMENT HONBLE APEX COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. V/S STATE OF KERALA (SUPRA) HELD THAT AN ADMISSION IN A STATEMENT RECORDED ON OATH IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS ALWAYS OPEN TO THE PERSON WHO MADE THE ADDITION TO SHOW THAT IT IS INCORRECT. HONBLE APEX COURT FURTHER IN THE CASE OF SHRI KRISHAN V/S THE KURUKSHETREA UNIVERSITY(SUPRA) HELD THAT ANY ADMISSION MADE IN IGNORANCE OF LEGAL RIGHTS OR UNDE R DURESS CANNOT BIND THE MAKER OF ADMISSION. EXPLAINING FURTHER HONBLE COURT OBSERVED THAT MERE ADMISSION CANNOT BE BEDROCK OR FOUNDATION OF AN SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 26 ASSESSMENT AND IT IS ALWAYS OPEN TO THE ASSESSEE WH O MADE THE ADMISSION TO SHOW THAT WHAT HE ADMITTED WAS NOT COR RECT. 14. CO-ORDINATE BENCH IN THE CASE OF ACIT VS. SUDEEP MAHESHWARI (SUPRA) HELD THAT IT IS ALSO A SETTLED POSITION OF LAW THAT THE ADDI TION CANNOT BE SUSTAINED MERELY ON THE BASIS OF STATEMEN T. THERE HAS TO BE SOME MATERIAL CORROBORATING THE CONTENTS OF THE STA TEMENT. 15. IN THE LIGHT OF THE ABOVE JUDGMENTS AND DECISION S AS WELL AS ON EXAMINING ALL THE FACTS OF THE INSTANT APPEAL, WE F IND THAT THE ASSESSEE HAS WITHIN A REASONABLE PERIOD OF 3 MONTHS, AFTER A NALYSING VARIOUS DOCUMENTS RELATING TO PURCHASE AND SALE OF THE STO CK, MARKET PRICE VIS-A-VIS THE COST PRICE OF THE PRODUCTS, DEDUCTION FOR DEFECTIVE GOODS AND ALSO ON OBSERVING THE STOCK OF ANOTHER SISTER C ONCERN M/S. GAYATRI COATING PVT. LTD WHICH WAS LYING IN THE SAM E PREMISES AND WAS WRONGLY INCLUDED BY THE SURVEY TEAM IN THE UNAC COUNTED STOCK EVEN WHEN THE STOCK OF THE SISTER CONCERN M/S. GAYA TRI COATING PVT. LTD WAS DULY DISCLOSED IN THEIR REGULAR BOOKS OF AC COUNTS FILED A RETRACTION STATEMENT ON 28.4.2014. IT IS ALWAYS OP EN FOR THE REVENUE AUTHORITIES TO EXAMINE THE CORRECTION OF THE RETRAC TION STATEMENT AND SHOULD POINT OUT THE ERRORS IN SUCH RETRACTION STAT EMENT (IF ANY). THEREFORE THE ACTION OF LD. A.O OF OUTRIGHTLY REJEC TING THE ASSESSEES SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 27 RETRACTION STATEMENT WITHOUT POINTING OUT ANY MISTA KE IN SUCH RETRACTION STATEMENT IS DEVOID OF MERIT AND IS UNCA LLED FOR. WE THEREFORE ALLOW GROUND NO.2 RAISED BY THE ASSESSEE AND HOLD THAT THE REVENUE AUTHORITIES SHOULD HAVE NOT REJECTED THE RE TRACTION STATEMENT FILED BY THE ASSESSEE ON 28.4.2014. 16. APROPOS GROUND NO.3 RAISED ON MERITS OF THE CAS E, THE ASSESSEE HAS PLEADED THAT LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE LD. A.O OF MAKING THE ADDITION OF RS.2,09,44,333/- EXCE PT FOR GIVING MINOR RELIEF OF 5% FOR THE DEFECTIVE STOCK. 17. WE OBSERVE THAT THE ASSESSEE IS IN THE BUSINESS O F PURCHASE AND SALE OF GREY CLOTH AND MANUFACTURING OF PRINTED FAB RICS. SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 28.3.2014. UNACCO UNTED STOCK OF GREY CLOTHES WAS RECORDED BY THE SURVEY TEAM AS PER THE DETAILS AT PAGE 29,30,31 OF THE PAPER BOOK DATED 11.3.2019. V ALUE WAS ASSIGNED TO THE TYPE THE GREY CLOTH FOUND UNACCOUNT ED IN PHYSICAL FORM AND THE SAME WAS VALUED AT RS.3,91,61,110/-. ASSESSEE ALSO SIGNED THE INVENTORY VALUATION SHEET. THEREAFTER O N 28.4.14 ASSESSEE FILED A RETRACTION STATEMENT REVISING THE SURRENDER ED AMOUNT AT RS. 1,82,15,577/-. FOLLOWING REASONS WERE GIVEN FOR TH E REVISED VALUE OF SURRENDERED AMOUNT OF STOCK. SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 28 (I) QUANTITY OF STOCK BELONGING TO GAYATRI COATING PVT. LTD VALUING AT RS.51,15,200/- WAS WRONGLY INCLUDED IN THE UNACCOUN TED STOCK VALUED BY THE SURVEY TEAM. (II) VALUE ASSIGNED TO UNACCOUNTED QUANTITY IS 30 TO 40% HIGHER THAN THE MARKET PRICE. (III) NO REBATE/DEDUCTION FOR DEFECTIVE STOCK WAS GIVEN. (IV) GROSS PROFIT ELEMENT HAS NOT BEEN REDUCED TO ARRIVE AT THE COST OF THE UNACCOUNTED STOCK. 18. IT IS WELL ESTABLISHED RULE OF LAW THAT IF THE AS SESSEE IS FOUND TO POSSESS UNACCOUNTED STOCK, THEN THE ADDITION TOWARD S THE INVESTMENT IN SUCH UNACCOUNTED STOCK NEEDS TO BE TA XED. INVESTMENT HERE MEANS THE PRICE PAID BY THE ASSESSEE FOR PURCH ASE OF SUCH UNACCOUNTED STOCK IN OTHER WORDS THE COST PRICE. P RICE FETCHED BY THE ASSESSEE OVER AND ABOVE SUCH COST PRICE COULD BE TA XED ONLY WHEN THE GOODS ARE ULTIMATELY SOLD. THEREFORE WE ARE OF THE CONSIDERED OPINION THAT ONLY THE ELEMENT OF PRICE PAID BY THE ASSESSEE FOR THE PURCHASE OF UNACCOUNTED STOCK COMES UNDER TAX AMBIT FOR UNACCOU NTED/ UNEXPLAINED INVESTMENT MADE IN EXCESS STOCK. SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 29 19. AS FAR AS THE ASSESSEES PLEA THAT STOCK OF ANOT HER SISTER CONCERN M/S. GYATRI COATING PVT. LTD HAS BEEN INCLUDED IN T HE PHYSICAL STOCK FOUND BY THE SURVEY TEAM, WE AFTER GOING THROUGH TH E STATEMENTS GIVEN DURING THE COURSE OF SURVEY AFFIRM THE ASSES SEES PLEA AND HOLD THAT THE STOCK OF RS.51,15,200/- BELONGING TO M/S. GAYATRI COATING PVT. LTD HAVE BEEN WRONGLY INCLUDED IN THE ALLEGED UNACCOUNTED STOCK OF RS.3,91,60,110/- AND THE ASSESSEE DESERVES TO TH E DEDUCTION OF RS.51,15,200/-. FURTHER IN THE SUPPORT OF THE REVI SED VALUE OF STOCK FOLLOWING STATEMENT HAVE BEEN FILED IN WHICH ASSESS EE HAS ADOPTED THE SALE PROCEED FIGURE OF THE STOCK (INCLUDING EXCESS STOCK) SOLD AFTER THE SURVEY DATE AND MADE NECESSARY DEDUCTIONS TO ARRIVE AT THE COST PRICE OF THE UNACCOUNTED STOCK:- SALE PROCEEDS OF STOCK FOUND DURING SURVEY 2,03,85,207 LESS: GROSS PROFIT @6% (20385207 X 6/106) (11,53,880) COST OF STOCK FOUND DURING SURVEY 1,92,31,327 LESS: STOCK OF CLOTH AS PER BOOKS (10,15,550) REVISED SURRENDERED AMOUNT OF STOCK 1 , 82,15,777 20. THE VALUE OF SALE PROCEEDS OF THE STOCK LYING WIT H THE ASSESSEE AS ON THE DATE OF SURVEY I.E. AMOUNT OF UNACCOUNTED ST OCK IS DULY SUPPORTED BY THE INVOICES PLACED ON RECORD AND THE PARTICULARS OF GREY CLOTH MENTIONED THEREIN ARE THE SAME WHICH ARE APPE ARING IN THE INVENTORY SHEET MADE DURING THE COURSE OF SURVEY. DEDUCTION OF GROSS SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 30 PROFIT OF 6% IS ALSO RIGHTLY CLAIMED AS THE ASSESSE E SHOWS SAME GROSS PROFIT CONSISTENTLY. THEREAFTER THERE IS A DEDUCTIO N OF STOCK OF CLOTH AS PER BOOKS WHICH IS NOT DISPUTED AND THE REMAINING A MOUNT WHICH THE VALUE OF SURRENDERED STOCK I.E RS.1,82,15,577/-. S ALES REALISATION OF THE STOCK HAS ALREADY TAKEN CARE OF THE REDUCED RA TES FOR SALE OF DEFECTIVE STOCK (IF ANY) MADE BY THE ASSESSEE. REV ENUE AUTHORITIES HAVE NOT POINTED OUT ANY MISTAKE OR ERROR IN THE AB OVE MENTIONED COMPUTATION. 21. WE HAVE ALSO GONE THROUGH THE QUOTATION OF THE P URCHASES OF THE GREY CLOTHES PLACED BY THE ASSESSEE AT PAGE 143 TO 152 OF THE PAPER BOOK AND OBSERVE THAT THE PRICE ASSIGNED BY THE SUR VEY TEAM IS MUCH HIGHER TO THE ACTUAL COST PRICE. FOR INSTANCE THE G REY CLOTH OF THE TYPE 40X40 26 X 24 45 OF THE QUANTITY OF 1122858 ME TRES HAS BEEN VALUED AT RS. 15 PER METRE BY SURVEY TEAM WHEREAS A S PER THE QUOTATION OF M.L. TEXTILES DATED 25.01.2014 THE SAM E TYPE OF GOODS ARE COSTING AT RS. 8.65 PER METRE. SIMILARLY FOR T HE GREY CLOTH OF DESCRIPTION 40X60-50X60 46 WHICH IS MEASURING 15 2622 METRES SURVEY TEAM HAS ADOPTED RATE OF RS.25 PER METRE WH EREAS AS PER THE QUOTATION OF BRAHMA SHAKTI UDYOG DATED 28.01.14 THE SAME ITEM HAS BEEN OFFERED FOR SALE AT RS.16.45 PER METRE. IT CL EARLY SHOWS THAT THE SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 31 PRICE ADOPTED BY THE SURVEY TEAM ARE 30 TO 40% HIGH ER THAN THE COST PRICE AS PREVAILING IN THE MARKET. 22. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WHERE LD. COUNSEL FOR THE ASSESSEE HAS SUCCESSFULLY DEMONSTRA TED WITH THE HELP OF VARIOUS DOCUMENTARY EVIDENCE IN THE FORM OF THE INVOICES FOR SELLING OF GOODS POST SURVEY, QUOTATIONS OF GREY CLOTH REGU LARLY PURCHASED BY THE ASSESSEE, FINANCIAL STATEMENT SHOWING THE GROSS PROFIT RATE, PROOF OF THE STOCK BELONGING TO MS/ GAYATRI COATING PVT. LTD WRONGLY INCLUDED IN THE UNACCOUNTED STOCK OF THE ASSESSEE A ND THE FACT THAT NO OTHER DISCREPANCY HAS BEEN POINTED OUT IN THE RE GULAR BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE, WE ARE THEREFO RE INCLINED TO HOLD THAT THE ASSESSEE HAS RIGHTLY VALUED THE UNACC OUNTED STOCK AT RS.1,82,15,777/- WHICH HAS BEEN OFFERED TO TAX AND LD. A.O ERRED IN MAKING THE ADDITION FOR RS. 2,09,44,333/- AND THE S AME DESERVES TO BE DELETED. WE THEREFORE SET ASIDE THE FINDINGS OF BOTH THE LOWER AUTHORITIES AND ALLOW THE ASSESSEES GROUND NO.3 OF THE INSTANT APPEAL. 23. APROPOS GROUND NO.4 CHALLENGING THE PART RELIEF GIVEN BY LD. CIT(A) FOR DEFECTIVE STOCK AT 5%, IN OUR VIEW NEEDS NO ADJUDICATION AS THE SAME BECOMES MERELY ACADEMIC IN NATURE BECAUSE WE HAVE SHRIRAM TOSHINIWAL ITA NO.02/IND/2019 32 ALREADY DELETED THE ADDITION OF RS.2,09,44,333/- AN D THUS GROUND NO.4 OF THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 24. GROUND NO.5 OF THE ASSESSEE IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 25. IN THE RESULT APPEAL THE ASSESSEE IS PARTLY ALLO WED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 11.04.20 19. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 11 APRIL, 2019 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE