ACIT-9(1), Hyderabad V. M/s.Shanti Fire Works, Hyderabad

ITA 1274/HYD/2013

• Counselvise Citation: 127422514 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-04-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 17-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Business income; Search and seizure
• Section: 32

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1274/HYD/2013 ASSESSMENT YEAR: 2010-11 ASST. COMMISSIONER OF INCOME-TAX 9(1), HYDERABAD. VS. M/S SHANTI FIRE WORKS, HYDERABAD. PAN ABBFSO977N (APPELLANT) (RESPONDENT) REVENUE BY : SMT. G. APARNA RAO ASSESSEE BY : SHRI S. RAMA RAO DATE OF HEARING 23-04-2015 DATE OF PRONOUNCEMENT 08-05-2015 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER DATED 18/06/2013 PASSED BY LD. CIT(A)-V, HYDERABAD FOR AY 2010- 11. 2. DEPARTMENT HAS RAISED EIGHT GROUNDS. GROUND NOS. 1 & 8 BEING GENERAL IN NATURE, DO NOT REQUIRE ANY SPECIFI C ADJUDICATION. 3. IN GROUND NOS. 2 TO 5, DEPARTMENT HAS CHALLENGED THE DECISION OF LD. CIT(A) IN RESTRICTING ADDITION MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN STOCK TO RS. 6,49,486 AS AGAINST THE ADDITION OF RS. 3,23,07,009 MADE BY AO. 4. BRIEFLY THE FACTS RELATING TO THIS ISSUE ARE, AS SESSEE A PARTNERSHIP FIRM IS ENGAGED IN THE BUSINESS OF WHOL ESALE TRADING OF 2 ITA NO. 1274 /HYD/2013 M/S SHANTI FIRE WORKS CROCKERIES. A SEARCH AND SEIZURE OPERATION U/S 32 O F THE ACT WAS CONDUCTED IN CASE OF ASSESSEE ON 15/10/09. DURING T HE COURSE OF SEARCH AND SEIZURE OPERATION, APART FROM UNEXPLAINE D CASH OF RS. 37,71,050, EXCESS STOCK WORTH RS. 3,23,07,009 WAS A LSO DETECTED. WHEN CONFRONTED WITH THE AVAILABILITY OF EXCESS STO CK AS STATED BY AO, ONE OF THE PARTNER SHRI SANJAY KUMAR BHOPE VOLU NTARILY ADMITTED ADDITIONAL INCOME OF RS. 2 CRORES TO BE SH OWN AS INCOME OF THE FIRM IN THE RETURN TO BE FILED FOR THE AY 20 10-11. HOWEVER, ASSESSEE FILED RETURN OF INCOME ON 15/10/2010 DECLA RING TOTAL INCOME OF RS. 1,41,630. IN COURSE OF ASSESSMENT PRO CEEDING, AO CALLED UPON ASSESSEE TO PRODUCE DETAILS OF SALE AND PURCHASES ALONG WITH SALE BILLS, PURCHASE INVOICES, SUPPORTIN G LEDGERS, REGISTERS AND AUDIT REPORTS AND COMPLETE ADDRESS OF THE CONCERNED PARTIES FROM WHOM PURCHASES WERE MADE AND SALES WER E EFFECTED. AO ALSO CALLED UPON ASSESSEE TO EXPLAIN THE REASON FOR NOT SHOWING ADDITIONAL INCOME OF RS. 2 CRORES AS ADMITT ED AT THE TIME OF SEARCH AND SEIZURE OPERATION. IN RESPONSE TO THE QUERY RAISED BY AO, ASSESSEE SUBMITTED THAT THE ADDRESSES OF THE CO NCERNED PARTIES FROM WHOM PURCHASES WERE MADE AND TO WHOM S ALES WERE EFFECTED ARE NOT AVAILABLE. FURTHER, IT WAS SUBMITT ED THAT THOUGH ASSESSEE AT THE TIME OF SEARCH AND SEIZURE OPERATIO N WAS FORCED TO ADMIT ADDITIONAL INCOME OF RS. 2 CRORES, BUT, ACTUA LLY ASSESSEE HAS NOT EARNED THAT MUCH ADDITIONAL INCOME. IT WAS SUBM ITTED, THE TURNOVER FOR THE YEAR UP TO THE DATE OF SEARCH WAS ONLY RS. 60 LAKHS AND THERE WAS OPENING STOCK OF ABOUT RS. 35 LAKHS. DEPARTMENT AT THE TIME OF SEARCH ALSO DID NOT FIND ANY UNDISCLOSE D INVESTMENT. THERE WAS ALSO NO BOOKS OF ACCOUNT TO HOLD THAT TRA NSACTIONS OUTSIDE THE BOOKS OF ACCOUNT HAVE BEEN MADE. ONLY F OR THE REASON THAT PURCHASES ARE NOT RECORDED AND STOCK FOUND ON PHYSICAL VERIFICATION WAS MORE, ASSESSEE WAS FORCED TO DECLA RE ADDITIONAL INCOME OF RS. 2 CRORES. HOWEVER, THERE BEING NO MAT ERIAL FOUND BY 3 ITA NO. 1274 /HYD/2013 M/S SHANTI FIRE WORKS THE DEPARTMENT TO PROVE SUCH ADDITIONAL INCOME, THE RE IS NO REASON TO DECLARE SUCH INCOME IN THE RETURN FILED. 4.1 AO ON GOING THROUGH THE SEIZED MATERIAL FOUND T HAT AT THE TIME OF SEARCH AND SEIZURE OPERATION WHILE TAKING I NVENTORY OF PHYSICAL STOCK VALUE OF SUCH STOCK STOOD AT RS. 22, 88,59,690 AS PER THE MRP. AO OBSERVED THAT IN THE STATEMENT RECORDED FROM ASSESSEE ON 15/10/09 AT THE TIME OF SEARCH AND SEIZ URE OPERATION, WHEN ASSESSEE WAS ASKED TO EXPLAIN ABOUT THE STOCK FOUND, HE ADMITTED THAT THE INVENTORY OF STOCK WAS CORRECT. T HEREFORE, THE EXPLANATION OF ASSESSEE SUBSEQUENTLY THAT THERE IS NO REASON FOR DECLARING SUCH ADDITIONAL INCOME IS NOT ACCEPTABLE. HOWEVER, AO REFERRING TO THE STATEMENT RECORDED FROM ASSESSEE O N 27/01/10 FOUND THAT ASSESSEE ADMITTED THAT THE TOTAL STOCK P URCHASED FROM 01/04/09 TO 15/10/09 AS PER THE PURCHASE BILLS AMOU NTED TO RS. 43,05,800 WHEREAS TOTAL SALES MADE BETWEEN 01/04/09 TO 15/10/09 AMOUNTED TO RS. 54,54,894. AO OBSERVED, OPENING STO CK AS ON 01/04/2009 AS PER THE RETURN OF INCOME FILED FOR TH E AY 2009-10 BEING RS. 35,62,466, PHYSICAL STOCK TO BE AVAILABL E AS ON 15/10/09 TO ASSESSEE SHOULD HAVE BEEN RS. 24,13,372. HOWEVER , AS PER THE INVENTORY OF PHYSICAL STOCK TAKEN DURING SEARCH AND SEIZURE OPERATION, TOTAL STOCK FOUND WAS RS. 22,88,59,690 A S ON 15/01/09. THOUGH, THE PARTNER OF ASSESSEE FIRM AT THE TIME OF SEARCH AND SEIZURE OPERATION HAD STATED THAT ACTUALLY COST OF STOCK PURCHASED BY ASSESSEE IS 7.5% OF MRP, BUT, AO REFUSED TO BELI EVE THE SAME IN ABSENCE OF ANY SUPPORTING WORKING/PROOF. AFTER V ERIFYING PURCHASE BILLS AS PER THE SEIZED MATERIAL, AO FOUND THAT AFTER DISCOUNT, ITEM-WISE COST PRICE VARIES BETWEEN 2.7% TO 25.1% AND THE AVERAGE COST PRICE COMES TO ABOUT 15.97%. FURTH ER, AO OBSERVED THAT CORRECT PHYSICAL STOCK TO BE AVAILABL E HAS TO BE WORKED OUT ON THE BASIS OF THE GROSS PROFIT RETURNE D BY ASSESSEE FOR THE LAST THREE YEARS AND THE AVERAGE OF WHICH W AS WORKED OUT TO 4 ITA NO. 1274 /HYD/2013 M/S SHANTI FIRE WORKS 17.56%. BY APPLYING THE SAID GP RATE TO THE TOTAL S TOCK AVAILABLE AS PER THE BOOKS UPTO 15/10/09 AND DEDUCTING THEREFROM SALES EFFECTED BETWEEN 01/04/09 TO 15/10/09, THE STOCK AV AILABLE AS PER BOOKS AS ON 15/10/09, WAS WORKED OUT TO RS. 33,71,2 51. AO BY APPLYING THE AVERAGE COST PRICE OF 15.97% TO THE PH YSICAL STOCK INVENTORISED AS PER THE MRP AMOUNTING TO RS. 1,22,3 4,080 WORKED OUT THE COST PRICE OF THE AVAILABLE STOCK AT RS. 3, 56,78,260. BY REDUCING PHYSICAL STOCK AS PER THE BOOKS AMOUNTING TO RS. 33,71,251, THE COST PRICE OF EXCESS STOCK HAS FOUND TO BE RS. 3,23,07,009, WHICH WAS TREATED AS UNDISCLOSED INVES TMENT IN STOCK AND ADDED TO INCOME OF ASSESSEE. BEING AGGRIEVED OF SUCH ADDITION, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT( A). 5. BEFORE LD. CIT(A), ASSESSEE REITERATING WHAT WAS SUBMITTED AT THE TIME OF SEARCH AND SEIZURE OPERATION AS WELL AS IN COURSE OF ASSESSMENT PROCEEDING, SUBMITTED THAT THE INVENTORY OF PHYSICAL STOCK TAKEN AT RS. 22,88,59,660 AT THE TIME OF SEAR CH AND SEIZURE OPERATION WAS ON THE BASIS OF MRP WHEREAS THE ACTUA L COST PRICE TO ASSESSEE OF THE PHYSICAL STOCK INVENTORISED IS 7.5% OF THE MRP. AS EVIDENT FROM THE ORDER OF LD. CIT(A), WHEN LD. CIT( A) ASKED TO RECONCILE THE VALUE OF STOCK AS ARRIVED AT DURING SEARCH, IT WAS SUBMITTED BY ASSESSEE THAT ALL PURCHASE BILLS FOR T HE ITEMS OF STOCK PURCHASED BY ASSESSEE ARE AVAILABLE WITH AO AS PART OF THE SEIZED MATERIAL AND THE RATE AS PER THE PURCHASE BILLS MAY BE APPLIED TO THE QUANTITY OF STOCK FOUND AT THE TIME OF SEARCH. ASSESSEE SUBMITTED THAT IF SUCH CALCULATION IS MADE THERE WO ULD HARDLY BE ANY DIFFERENCE IN THE VALUE AS PER THE BOOKS OF ACC OUNT. ASSESSEE SUBMITTED, AO TOOK INTO ACCOUNT THE RATE PER UNIT A S PER BILL AND UNIT RATE OF MRP AS PER THE INVENTORY. AO ARRIVED AT THE AVERAGE RATE OF PURCHASE AT 15.97% OF THE MRP CONSIDERING O NLY ELEVEN ITEMS OF STOCK FOUND AT THE TIME OF SEARCH. TO SUBS TANTIATE ITS CLAIM THAT IF VALUE OF THE STOCK IS WORKED AS PER THE UNI T PRICE MENTIONED 5 ITA NO. 1274 /HYD/2013 M/S SHANTI FIRE WORKS IN PURCHASE INVOICES THE TOTAL COST OF STOCK AVAILA BLE WOULD BE MUCH LESS, ASSESSEE ALSO FURNISHED WORKING AS PER W HICH THE TOTAL COST OF STOCK AVAILABLE WAS WORKED OUT TO RS. 46,9 9,328. LD. CIT(A) AFTER VERIFYING THE SAME, WAS OF THE VIEW TH AT WORKING GIVEN BY ASSESSEE OF THE TOTAL COST OF PHYSICAL STOCK AVA ILABLE IS ACCEPTABLE. HE FURTHER OBSERVED THAT THOUGH WHILE WORKING OUT THE COST OF THE STOCK SOLD, AO ADOPTED THE AVERAGE GP RATE OF 17.56%, BUT, GP RATE FOR THE IMPUGNED ASSESSMENT YEAR AS PE R THE P&L A/C WAS SHOWN BY ASSESSEE AT 30%. LD. CIT(A) ON THE BAS IS OF THE AFORESAID FIGURES COMPUTED THE STOCK AVAILABLE AS P ER THE BOOKS AS UNDER: OPENING STOCK AS ON 31/03/2009 RS. 35,62,466 STOCK PURCHASED RS. 43,05,800 COST OF SALE MADE RS. 38,18,426 (RS. 54,54,894/- WITH GROSS PROFIT OF 30%) STOCK AS PER BOOKS RS. 40,49,840 THUS, ON THE BASIS OF THE AFORESAID COMPUTATION EXC ESS STOCK AS PER THE WORKING FURNISHED BY ASSESSEE WAS FOUND TO BE RS. 6,49,486, WHICH LD. CIT(A) DIRECTED AO TO ADD AS AG AINST THE AMOUNT OF RS. 3,23,07,009. BEING AGGRIEVED, THE DE PARTMENT IS BEFORE US. 6. LD. DR SUBMITTED BEFORE US, AT THE TIME OF SURVE Y, ASSESSEE NOT ONLY ADMITTED OF UNDISCLOSED INVESTMENT IN STOC K BUT ALSO VOLUNTARILY DECLARED ADDITIONAL INCOME OF RS. 2 CRO RES. HOWEVER, IN THE RETURN OF INCOME FILED ADDITIONAL INCOME WAS NO T ADMITTED. LD. DR SUBMITTED, WHEN THE INVENTORY OF PHYSICAL STOCK WAS TAKEN ASSESSEE HAVING AGREED THAT THEY WERE CORRECTLY INV ENTORISED, SUBSEQUENTLY HE CANNOT DISPUTE THE VALUATION OF PHY SICAL STOCK. LD. DR SUBMITTED, AO ALSO IN THE ASSESSMENT PROCEEDING AFTER THOROUGHLY VERIFYING THE SEIZED MATERIAL HAS ARRIVE D AT THE UNDISCLOSED INVESTMENT IN CLOSING STOCK. HOWEVER, B EFORE THE LD. 6 ITA NO. 1274 /HYD/2013 M/S SHANTI FIRE WORKS CIT()A), ASSESSEE SUBMITTED SOME WORKING OF THE PHY SICAL STOCK FOR THE FIRST TIME AND SOLELY RELYING UPON THE SAME AND WITHOUT GIVING ANY OPPORTUNITY TO AO TO VERIFY HOW ASSESSEE HAS WO RKED OUT THE VALUE OF THE STOCK FOUND AT THE TIME OF SEARCH, LD. CIT(A) DELETED THE ADDITION. LD. DR SUBMITTED, EVEN IN THE ORDER O F LD. CIT(A) ALSO, THE WORKING OF PHYSICAL STOCK FURNISHED BY ASSESSEE IS NOT AVAILABLE. THUS, LD. DR SUBMITTED, DELETION MADE BY LD. CIT(A) ON THE BASIS OF WORKING FURNISHED BY ASSESSEE WITHOUT GIVING OPPORTUNITY TO AO TO VERIFY THE SAME CANNOT BE ACCE PTED. FURTHER, LD. DR SUBMITTED, LD. CIT(A) ALSO WAS NOT JUSTIFIED IN ADOPTING GP RATE OF 30% INSTEAD OF GP RATE ADOPTED BY AO BY TAK ING INTO ACCOUNT THE AVERAGE OF PRECEDING THREE YEARS GP RAT E. LD. DR SUBMITTED, SINCE LD. CIT(A) HAS ACCEPTED THE ASSESS EES CLAIM WITHOUT GIVING OPPORTUNITY TO AO TO VERIFY THE SAME , THE MATTER MAY BE REMITTED BACK TO THE FILE OF AO. 7. LD. AR, ON THE OTHER HAND, STRONGLY SUPPORTING T HE FINDING OF LD. CIT(A) SUBMITTED BEFORE US, ONLY ON THE BASIS O F MRP VALUATION OF PHYSICAL STOCK WAS MADE BY SEARCH PARTY, WHICH A O ALSO ADOPTED WITHOUT PROPERLY APPRECIATING ASSESSEES CO NTENTION. LD. AR SUBMITTED, RIGHT FROM THE DATE OF SEARCH, THOUGH , ASSESSEE HAS SPECIFICALLY STATED THAT COST PRICE OF STOCK TO ASS ESSEE ON AN AVERAGE IS 7.5% OF THE MRP, BUT, AO HAS IGNORED SUC H CONTENTION WITHOUT ANY RHYME OR REASON AND ADOPTED THE AVERAGE COST PRICE OF 15.97% IN A PERFUNCTORY MANNER. LD. AR SUBMITTED, A LL PURCHASE INVOICES ARE AVAILABLE INDICATING UNITWISE PRICE WH ICH ARE ALSO PART OF SEIZED MATERIAL, AO WITHOUT REFERRING TO THEM HA S ARRIVED AT THE EXCESS UNDISCLOSED STOCK WITHOUT ANY REASONABLE BAS IS. LD. AR SUBMITTED, BEFORE LD. CIT(A) ASSESSEE ON THE BASIS OF PURCHASE BILLS HAS WORKED OUT THE UNIT-WISE PRICE OF EACH IT EM PURCHASED BY ASSESSEE AND WORKED OUT THE ACTUAL PHYSICAL STOCK A T RS. 46,99,328 AND LD. CIT(A) AFTER VERIFYING THE SAME, HAVING FOUND 7 ITA NO. 1274 /HYD/2013 M/S SHANTI FIRE WORKS THEM TO BE CORRECT, ACCEPTED ASSESSEES CLAIM. IN T HIS CONTEXT, LD. AR DREW OUR ATTENTION TO THE WORKING SUBMITTED BEFO RE LD. CIT(A) AS CONTAINED IN THE PAPER BOOK. THUS, LD. AR SUBMITTED , SINCE THE CONCLUSION DRAWN BY LD. CIT(A) IS ON THE BASIS OF M ATERIALS AVAILABLE ON RECORD, THERE IS NO NEED TO DISTURB TH E SAME. AS FAR AS ADOPTION OF GP RATE AT 30% IS CONCERNED, LD. AR SUB MITTED SINCE ASSESSEE HAS DECLARED THE SAID GP RATE IN THE IMPUG NED AY, LD. CIT(A) HAS CORRECTLY ADOPTED THE SAME. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD AS WELL AS THE ORDE RS OF REVENUE AUTHORITIES. AS IT APPEARS FROM THE FACTS AND MATE RIALS ON RECORD, AT THE TIME OF SEARCH AND SEIZURE OPERATION, PHYSIC AL STOCK WAS INVENTORISED ON THE BASIS OF MRP AT RS. 22.88 CRORE S. IN THE STATEMENT RECORDED IN COURSE OF SEARCH AND SEIZURE OPERATION, ASSESSEE FOR WHATEVER MAY BE THE REASON, ACCEPTED T HE INVENTORY OF PHYSICAL STOCK TO BE CORRECT. IT IS ALSO A FACT ON RECORD THAT IN COURSE OF SEARCH AND SEIZURE OPERATION PARTNER OF A SSESSEE FIRM OFFERED TO DECLARE ADDITIONAL INCOME OF RS. 2 CRORE S AT THE HANDS OF THE FIRM FOR THE EXCESS INVESTMENT IN STOCK THOUGH, IN THE RETURN OF INCOME FILED NO SUCH INCOME WAS DECLARED. IT ALSO N EEDS TO BE MENTIONED NOT ONLY DURING SEARCH AND SEIZURE OPERAT ION AND POST SURVEY PROCEEDING BUT ALSO IN COURSE OF ASSESSMENT PROCEEDING, ASSESSEE TOOK A CONSISTENT STAND THAT THE ACTUAL CO ST PRICE TO ASSESSEE IS 7.5% OF THE MRP. PERUSAL OF THE ASSESSM ENT ORDER WOULD REVEAL THAT AO ACCEPTS THE FACT THAT MRP IS N OT THE ACTUAL COST PRICE PAID BY ASSESSEE FOR THE YEAR UNDER CONS IDERATION. HOWEVER, HE HAS ADOPTED THE AVERAGE COST OF STOCK A T 15.97% AS AGAINST 7.5% CLAIMED BY ASSESSEE FOR WORKING OUT T HE EXCESS STOCK AT RS. 3,23,07,009. BEFORE LD. CIT(A) ON THE BASIS OF PURCHASE INVOICES, ASSESSEE HAS WORKED OUT THE ACTU AL COST OF STOCK AVAILABLE ON THE DATE OF SEARCH AT RS. 46,99, 328, WHICH HAS 8 ITA NO. 1274 /HYD/2013 M/S SHANTI FIRE WORKS BEEN ACCEPTED BY LD. CIT(A). HOWEVER, THE GRIEVANCE OF THE DEPARTMENT IS WORKING SUBMITTED BY ASSESSEE WAS NEV ER ALLOWED TO BE VERIFIED BY AO. THOUGH, WE ACCEPT THE CONTENTIO N OF LD. DR THAT LD. CIT(A) SHOULD HAVE GIVEN OPPORTUNITY TO AO TO V ERIFY THE WORKING OF THE VALUE OF PHYSICAL STOCK AVAILABLE ON THE DAT E OF SEARCH BEFORE ACCEPTING THE SAME, AT THE SAME TIME IT NEED S TO BE OBSERVED THAT EXCESS STOCK COMPUTED BY AO ALSO CANN OT BE ACCEPTED. WHEN PURCHASE INVOICES ARE AVAILABLE IN T HE SEIZED MATERIAL, AS CLAIMED BY ASSESSEE, AND WHICH ALSO AP PEARS TO CERTAIN EXTENT TO BE CORRECT, IN OUR VIEW, AO SHOUL D HAVE COMPUTED PHYSICAL STOCK AVAILABLE ON THE DATE OF SEARCH ON T HE BASIS OF PURCHASE INVOICES AND NOT ON PRESUMPTIVE BASIS. FRO M THE WORKING SUBMITTED BY ASSESSEE BEFORE LD. CIT(A), COPIES OF WHICH HAVE BEEN SUBMITTED IN THE PAPER BOOK, AS IT APPEARS, AS SESSEE HAS ARRIVED AT THE ACTUAL PHYSICAL STOCK ON THE BASIS O F THE PURCHASE INVOICES. HOWEVER, SINCE THE SAID WORKING WAS NOT F URNISHED BEFORE AO AND WAS FOR THE FIRST TIME FURNISHED BEFORE LD. CIT(A), FOR AFFORDING FAIR OPPORTUNITY TO THE DEPARTMENT, WE AR E INCLINED TO REMIT THE MATTER BACK TO THE FILE OF AO TO VERIFY A SSESSEES CLAIM OF ACTUAL COST PRICE OF PHYSICAL STOCK AVAILABLE ON T HE DATE OF SEARCH ON THE BASIS OF THESE WORKINGS VIS--VIS THE PURCHA SE INVOICES, WHICH ARE PART OF THE SEIZED MATERIAL AND THEREAFTE R MAKE ADDITION, IF ANY, ON ACCOUNT OF EXCESS STOCK. AS FAR AS ADOP TION OF GP RATE IS CONCERNED, WE ARE OF THE VIEW THAT IF IN THE IMPUGN ED AY ASSESSEE HAS SHOWN A GP OF 30%, THEN, THE SAME HAS TO BE APP LIED FOR WORKING OUT THE VALUE OF STOCK. WITH THE AFORESAID OBSERVATIONS, THE MATTER IS REMITTED BACK TO THE FILE OF THE AO FOR N ECESSARY VERIFICATION AND DECIDING THE ISSUE AFTER DUE OPPOR TUNITY OF BEING HEARD TO ASSESSEE. 9 ITA NO. 1274 /HYD/2013 M/S SHANTI FIRE WORKS 9. THE NEXT ISSUE AS RAISED IN GROUND NOS. 6 & 7 AR E IN RESPECT DIRECTION OF LD. CIT(A) IN DELETING THE ADDITION OF RS. 37,70,150 BEING UNEXPLAINED CASH FOUND AT THE TIME OF SEARCH. 10. BRIEFLY THE FACTS RELATING TO THIS ISSUE ARE, A T THE TIME OF SEARCH AND SEIZURE OPERATION, CASH OF RS. 37,70,150 WAS FOUND IN THE BUSINESS PREMISES OF ASSESSEE. AS APPEARS FROM THE FACTS MENTIONED IN THE ASSESSMENT ORDER, AT THE TIME OF SEARCH OPERATION WHEN THE PARTNER OF THE ASSESSEE FIRM WAS ASKED TO EXPLAIN THE SOURCE OF SUCH CASH FOUND, HE COULD NOT EXPLAIN THE SAME. THEREFORE, IN THE ABSENCE OF ANY REGULAR CAS H BOOK MAINTAINED BY ASSESSEE AND IN THE ABSENCE OF EXPLAN ATION EXPLAINING THE SOURCE OF CASH, AO WHILE COMPLETING THE ASSESSMENT ADDED THE AMOUNT OF RS. 37,70,150 TO INCOME OF ASSE SSEE. BEFORE THE LD. CIT(A), ASSESSEE TOOK A PLEA THAT CASH FOUN D AND SEIZED AT THE TIME OF SEARCH AND SEIZURE OPERATION RELATES TO THE RECEIPTS FROM SALES EFFECTED, HENCE, CANNOT BE TREATED AS UN EXPLAINED. LD. CIT(A) ACCEPTING ASSESSEES CONTENTION, DELETED THE ADDITION OF RS. 37,70,150. 11. LD. DR SUBMITTED BEFORE US, WHEN ASSESSEE DOES NOT MAINTAIN ANY CASH BOOK NOR HE OFFERED ANY EXPLANATI ON EITHER AT THE TIME OF SEARCH OR IN COURSE OF ASSESSMENT PROCEEDIN G EXPLAINING THE SOURCE OF SUCH CASH, LD. CIT(A) WAS NOT JUSTIFI ED ACCEPTING ASESSSEES CLAIM THAT CASH REPRESENTS RECEIPTS FROM SALES WITHOUT ANY CORROBORATIVE EVIDENCE. 12. LD. AR, ON THE OTHER HAND, REITERATING THE SUBM ISSIONS MADE BEFORE LD. CIT(A) STATED THAT CASH FOUND AT THE TIM E OF SEARCH ARE RECEIPTS FROM SALES. 13. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD. AS SEEN FROM THE F ACTS ON RECORD, NEITHER AT THE TIME OF SEARCH OPERATION NOR DURING THE ASSESSMENT 10 ITA NO. 1274 /HYD/2013 M/S SHANTI FIRE WORKS PROCEEDING, ASSESSEE HAS OFFERED ANY REASONABLE EXP LANATION WITH REGARD TO THE SOURCE OF CASH FOUND AT THE TIME OF S EARCH. HOWEVER, BEFORE THE LD. CIT(A), ASSESSEE PLEADED THAT CASH F OUND REPRESENTS SALES EFFECTED TILL THE DATE OF SEARCH. WHEN ASSES SEE DOES NOT MAINTAIN ANY CASH BOOK, ONUS IS ON ASSESSEE TO ESTA BLISH LINK BETWEEN THE CASH FOUND AND RECEIPTS FROM SALES BY P RODUCING CORROBORATIVE EVIDENCE. ASSESSEES EXPLANATION CANN OT BE ACCEPTED ON THE FACE OF IT. AS IT APPEARS, LD. CIT( A) HAS DELETED THE ADDITION WITHOUT ANALYZING THESE ASPECTS. IN VIEW O F THE ABOVE, WE ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) A ND REMIT THE MATTER BACK TO THE FILE OF AO FOR DECIDING AFRESH. IT IS O PEN TO ASSESSEE TO ESTABLISH BEFORE AO THAT CASH FOUND ARE FROM RECEIP TS OF SALES OR ANY OTHER EXPLAINABLE SOURCE. IF ASSESSEE IS ABLE TO DO SO WITH CORROBORATIVE EVIDENCE, THEN, THERE WILL BE NO NEED FOR ADDITION OF THE CASH FOUND. AO SHALL AFFORD REASONABLE OPPORTUN ITY TO ASSESSEE TO ESTABLISH ITS CLAIM. GROUND NOS. 6 & 7 ARE ALL OWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, DEPARTMENTS APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 8 TH MAY, 2015. SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 8 TH MAY, 2015 KV 11 ITA NO. 1274 /HYD/2013 M/S SHANTI FIRE WORKS COPY TO:- 1) ACIT, ROOM NO. 245, 2D, SECOND FLOOR, IT TOWERS, AC GUARDS, MASAB TANK, HYDERABAD 2) M/S SHANTI FIRE WORKS, 16-2-674/4, MALAKPET, HY DERABAD 3 CIT(A)-V, HYDERABAD 4) CIT-VI, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.