DCIT, Central Circle-6, Hyderabad V. Shri Abhay Chandrakant Shah, Hyderabad

ITA 1322/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61923 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 14-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K GNANAPRAKASH
• Assessee Lawyers: KRISHNA REDDY
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Peak credit; Additional evidence
• Section: 143(3); 153A; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER. ITA NOS. 1320, 1321, 1322, 1323 & 1324/HYD/2011 (ASSESSMENT YEARS: 2005-06, 2006-07, 2007-08, 2008 -09 & 2009-10) DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 6, HYDERABAD. V/S SHRI ABHAY CHANDRAKANT SHAH, HYDERABAD. (PAN AJEPS4418D) (APPELLANT) (RESPONDENT) AND C.O. NO. 67/HYD/2011 (IN ITA NO. 1323/HYD/2011) SHRI ABHAY CHANDRAKANT SHAH, HYDERABAD. (PAN AJEPS4418D) V/S DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 6, HYDERABAD. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI K. GNANA PRAKASH ASSESSEE BY : SHRI KRISHNA REDDY DATE OF HEARING 19 /0 6 /2012 DATE OF PRONOUNCEMENT 22/06/2012 O R D E R PER VIJAY PAL RAO, J.M.: THESE FIVE APPEALS BY THE REVENUE AND ONE C.O. BY THE ASSESSEE ARE DIRECTED AGAINST THE RESPECTIVE ORDERS OF CIT(A) ALL DATED 06/05/2011 ARISING FROM THE ASSESSMENT ORDERS PASSED U/S 143(3) READ WITH SECTION 153A OF THE ACT, FOR THE A SSESSMENT YEARS 2005-06 TO 2009-10. 2. THE REVENUE HAS RAISED COMMON GROUNDS IN ALL THE APPEALS AS UNDER:- ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 2 1. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAS NOT PRODUCED ANY ADDITIONAL EVIDENCE T O PROVE THAT WITHDRAWALS FROM THE UN-ACCOUNTED ACCOUNT WERE USED FOR MAKING UNACCOUNTED PURCHASES AND FURTHER ASSESS EE FAILED TO PROVE THAT THE PURCHASES CORRESPONDING TO THE UNACCOUNTED SALE RECEIPTS IN THE ACCOUNT ARE NOT DE BITED IN HIS REGULAR BOOKS. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAD ADMITTED THAT ENTIRE ICICI ACCOUNT IS UNACCOUNT ED AND DEPOSITS IN THE ACCOUNT REPRESENT THE UN-ACCOUNTED SALE PROCEEDS DIRECTLY DEPOSITED BY THE CUSTOMERS. THE A SSESSEE NEITHER PRODUCED ANY EVIDENCE NOR MADE ANY CLAIM DU RING SEARCH THAT UNACCOUNTED PURCHASES WERE MADE FROM TH E WITHDRAWALS OF SAID ACCOUNT. OTHERWISE ALSO, THE ME AGER WITHDRAWALS MADE FROM THE ACCOUNT CANNOT BE COMMENSURATE WITH THE UNACCOUNTED SALES NOTICED. 3. THE CLAIM OF THE LEARNED CIT(A) THAT 5% OF THE R ECEIPTS ARE ALONE UNACCOUNTED IS NOT BACKED BY THE ANY FACTS/EVIDENCES. THE LEARNED CIT(A) TRIED TO GENERA LIZE THE SPECIFIC FACTS OF THE CASE, AND THE CASE LAWS QUOTE D BY HIM ARE DISTINGUISHABLE FROM THE FACTS OF THE CASE. 3. THERE WAS A SEARCH AND SEIZURE OPERATION UNDER S ECTION 132 OF THE INCOME TAX ACT AT THE BUSINESS AND RESIDENTI AL PREMISES OF THE ASSESSEE ON 29/04/2008. DURING THE COURSE OF SE ARCH APART FROM OTHER INCRIMINATING MATERIAL, THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH ICICI BANK NOT DISCLOSED TO TH E DEPARTMENT AS WELL AS A DIARY CONTAINING CERTAIN RECEIPTS AND PAYMENTS WERE FOUND AND SEIZED AS ANNEXURE A/PS/RES/3. WHEN THE A SSESSEE WAS ASKED TO EXPLAIN THE CONTENTS OF THE DIARY, SHR I ABHAY SHAH STATED IN HIS STATEMENT ON THE DATE OF SEARCH THAT THE DIARY CONTAINS THE DETAILS OF HIS SALE AND EXPENDITURE WH ICH ARE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT. A SMALL P OCKET DIARY WAS ALSO SEIZED AS ANNEXURE A/AS/RES/1, WHICH ALSO CONTAINED DETAILS OF SALES MADE TO A PARTY NAMELY M/S K.R. PE ARLS, VIJAYAWADA. IN RESPONSE TO NOTICE UNDER SECTION 153 A, THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEARS UNDER ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 3 CONSIDERATION. THE ASSESSEE DECLARED INCOME IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 15 3A INCLUDING THE DIFFERENCE OF SALE AND PURCHASE AS PER THE ANNE XURE BEING THE DIARIES SEIZED DURING THE SEARCH AND THE DEPOSITS I N THE BANK ACCOUNT. THE ASSESSEE ADMITTED THAT THE DEPOSITS IN THE ICICI BANK ACCOUNT REPRESENTS UNACCOUNTED SALES AND THER EFORE THE SAID AMOUNT WAS INCLUDED IN THE UNACCOUNTED SALES W HILE OFFERING THE UNDISCLOSED INCOME ON THIS ACCOUNT. THE ASSESSE E OFFERED UNDISCLOSED INCOME ON ACCOUNT OF UNACCOUNTED SALES BY TAKING THE PROFIT AT 5% ON SALES OR 5.26% ON PURCHASE. THE ASSESSING OFFICER APART FROM THE INCOME OFFERED BY THE ASSESS EE, ALSO MADE THE ADDITION ON ACCOUNT OF PEAK CREDIT AS PER THE DIARY SEIZED AS WELL AS AS PER THE BANK ACCOUNT AND TREATED THE SAM E AS UNEXPLAINED MONEY AND TAXED IN THE HANDS OF THE ASS ESSEE. FOR THE ASSESSMENT YEAR 2008 2009, THE AO ALSO MADE AN ADDITION TOWARDS UNEXPLAINED INVESTMENT IN PURCHASE OF STOCK AMOUNTING TO RS. 31,85,555/-. THE ASSESSEE CHALLENGED THE ACT ION OF THE AO BEFORE CIT(APPEALS). THE CIT(APPEALS) HAS DIRECTED THE AO TO GIVE CREDIT FOR UNACCOUNTED INCOME WHICH HAS ALREAD Y BEEN ARRIVED AT AND OFFERED BY THE ASSESSEE AS ALSO ADD ED BY THE AO IN THE ASSESSMENT ORDER WHILE WORK OUT THE UNEXPLAI NED MONEY ON THE BASIS OF PEAK CREDIT. AS REGARDS THE DEPOSIT S IN THE BANK ACCOUNT THE CIT(APPEALS) DIRECTED THE AO TO TREAT 5 % OF THE TOTAL DEPOSIT IN ICICI BANK AS UNACCOUNTED INCOME OR UNDI SCLOSED INCOME FOR THE RELEVANT ASSESSMENT YEARS. THE DEPAR TMENT IS AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) WHEREBY THE CREDIT OF UNDISCLOSED INCOME ON ACCOUNT OF UNACCOUNTED SALE W AS GIVEN WHILE MAKING THE ADDITION ON ACCOUNT OF UNDISCLOSED MONEY BEING PEAK CREDIT AS WELL AS TAKING ONLY 5% OF THE TOTAL DEPOSIT IN THE ICICI BANK AS UNACCOUNTED INCOME FOR THE RESPECTIVE ASSESSMENT YEARS. THE ASSESSEE, ON THE OTHER HAND, IS AGGRIEVE D BY THE ORDER ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 4 OF CIT(APPEALS) ONLY FOR THE ASSESSMENT YEAR 2008-0 9 WHERE THE ADDITION OF RS. 31,85,555/ TOWARDS UNEXPLAINED INV ESTMENT IN PURCHASE OF STOCK WAS UPHELD. 4. BEFORE US, THE LEARNED THE DR HAS SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SHOW THAT THE WITHDRAWALS FROM THE UN-ACCOUNTED ACCOUNT WAS USE D FOR MAKING UNACCOUNTED PURCHASES AND, THEREFORE, THE AS SESSEE HAS FAILED TO PROVE THAT THE PURCHASES CORRESPONDING TO THE UNACCOUNTED SALE RECEIPTS, WHICH WERE NOT DEBITED I N THE REGULAR BOOKS OF ACCOUNT. THE LEARNED D.R. HAS FURTHER SUBM ITTED THAT WHEN THE ASSESSEE HAS BOOKED ALL THE EXPENDITURE IN THE REGULAR BOOKS OF ACCOUNT, THEN IN THE ABSENCE OF ANY MATERI AL IT CANNOT BE SAID THAT THE UNACCOUNTED PURCHASES ARE MADE FRO M THE RECEIPTS OF UNACCOUNTED SALES. IT HAS BEEN FURTHER SUBMITTED THAT THE ASSESSEE HAD ADMITTED THE ENTIRE ICICI BANK ACC OUNT AS UNACCOUNTED DEPOSITS REPRESENT THE UNACCOUNTED SALE PROCEEDS DIRECTLY DEPOSITED BY THE CUSTOMERS BUT NO RECORD O R EVIDENCE HAS BEEN PRODUCED TO PROVE THAT THE UNACCOUNTED PURCHAS ES WERE MADE FROM THE WITHDRAWALS OF SAID ACCOUNT. THEREFOR E, THE TOTAL DEPOSITS IN THE ICICI BANK ACCOUNT ARE REQUIRED TO BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE LEARNED D.R . HAS SUBMITTED THAT THE CIT(APPEALS) HAS COMMITTED AN ER ROR BY TAKING ONLY 5% OF THE RECEIPTS AS INCOME FROM THE U NACCOUNTED SALE PROCEEDS DEPOSITED IN THE BANK. HE HAS RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 5. ON THE OTHER HAND, THE LEARNED AR OF THE ASSESS EE HAS SUBMITTED THAT THE DETAILS CONTAINED IN THE DIARY S EIZED DURING THE SEARCH REPRESENT THE UNACCOUNTED SALES AND PURC HASE MADE BY THE ASSESSEE. THE ASSESSEE HAS OFFERED UNDISCLOS ED INCOME ON ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 5 ACCOUNT OF UNACCOUNTED SALE BEING THE DIFFERENCE BE TWEEN THE SALES AND THE EXPENDITURE AS RECORDED IN THE DIARY. HE HAS POINTED OUT THAT FOR THE ASSESSMENT YEAR 2007-08 TH E ASSESSING OFFICER HAS ACCEPTED THE DIFFERENCE OF SALES AND PU RCHASE AS PER THE DIARY AND DEPOSITS IN THE BANK ACCOUNT AT RS. 2 5,45,500/-AS UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF UN ACCOUNTED SALES AND PURCHASES. THE LEARNED AR HAS FURTHER SUB MITTED THAT THE SAID UNDISCLOSED INCOME HAS BEEN OFFERED BY THE ASSESSEE BEING PROFIT AT 5% OF SALES OR 5.26% ON PURCHASES. THE LEARNED A.R. HAS FORCEFULLY CONTENDED THAT ONCE THE ASSESSI NG OFFICER HAS ACCEPTED THE UNDISCLOSED INCOME OFFERED BY THE ASSE SSEE BEING THE DIFFERENCE OF SALE AND PURCHASE, THEN, WHILE MA KING THE ADDITION ON ACCOUNT OF PEAK CREDIT, THE ADJUSTMENT OF THE INCOME OFFERED BY THE ASSESSEE IS REQUIRED TO BE GIVEN BEC AUSE THE DEPOSITS IN THE ACCOUNT AS WELL AS THE AMOUNTS RECO RDED IN THE DIARY REPRESENTING THE SAME TRANSACTION OF SALE AND PURCHASE. THUS, THE LEARNED AR HAS SUBMITTED THAT DOUBLE ADDI TION CANNOT BE MADE OUT OF THE SAME TRANSACTIONS. THE LEARNED A R OF THE ASSESSEE HAS FURTHER SUBMITTED THAT THE UNEXPLAINED MONEY CANNOT BE TREATED AS INCOME FOR THE CURRENT YEAR WH EN THE ASSESSEE HAS EXPLAINED THE SOURCE OF THE SAME BEING THE INCOME FROM UNACCOUNTED SALES AND PURCHASES. AS REGARDS TH E ESTIMATION OF INCOME AT 5% OF SALES, THE LEARNED AR HAS SUBMIT TED THAT THE ASSESSEES PROFIT RATIO IS ONLY 2 TO 3% , THEREFORE, THE INCOME ESTIMATED AT 5% OF THE SALE ON ACCOUNT OF UNACCOUNT ED SALES IS JUSTIFIED AND PROPER. TO THE EXTENT OF THE ISSUE AR ISING IN THE REVENUES APPEAL THE LEARNED AR OF THE ASSESSEE HAS SUPPORTED THE ORDER OF THE CIT(APPEALS). 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THOUGH THE SEIZED MATERIAL IS C OMMON FOR ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 6 ASSESSING THE UNDISCLOSED INCOME FOR ALL THE ASSESS MENT YEARS, HOWEVER, THE ADDITION HAS BEEN MADE FOR THE RESPEC TIVE AMOUNTS BEING DEPOSITED IN THE BANK ACCOUNT AS WELL AS RECO RDED IN THE DIARY FOUND AND SEIZED DURING THE SEARCH ACTION. TH EREFORE WE WOULD DISCUSS THESE ADDITIONS YEAR WISE AS UNDER: I. ASSESSMENT YEAR 2005 06: 7. DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEA R 2005-06 AN AMOUNT OF RS. 3,04,500/- WAS FOUND DEPOSITED IN THE BANK ACCOUNT. THE ASSESSEE ADOPTED THE RATE OF 5% OF THE TOTAL DEPOSIT AS INCOME FROM UNACCOUNTED SALES AND OFFERED THE IN COME ON UNACCOUNTED SALES AT RS. 84,700/-. THE AO DID NOT A CCEPT THE EXPLANATION OF THE ASSESSEE AND TREATED THE ENTIRE AMOUNT OF RS. 3,04,500/- DEPOSITED IN THE ICICI BANK AS UNACCOUNT ED SALE FOR THE YEAR UNDER CONSIDERATION AND ASSESSED AS UNDISC LOSED INCOME. THE CIT(APPEALS) WAS OF THE VIEW THAT THE A O WAS NOT JUSTIFIED IN TREATING THE ENTIRE DEPOSITS IN ICICI BANK AS UNACCOUNTED INCOME OF THE ASSESSEE. HE HAS HELD THA T THE ENTIRE UNDISCLOSED SALES CANNOT BE TREATED AS PROFIT OF TH E ASSESSEE AND, ACCORDINGLY, DIRECTED THE AO TO TREAT 5% OF THE TOT AL DEPOSIT IN THE ICICI BANK AS UNACCOUNTED INCOME OR UNDISCLOSED INCOME FOR THE RELEVANT ASSESSMENT YEARS. IT IS TO BE NOTED TH AT ONCE THE DEPOSIT IN THE ICICI BANK HAS BEEN ACCEPTED BY THE AO AS UNACCOUNTED SALES PROCEEDS, THEN, THE ENTIRE AMOUNT CANNOT BE TREATED AS UNDISCLOSED INCOME. HOWEVER, THE ESTIMAT ION OF THE PROFIT ON ACCOUNT OF UNACCOUNTED SALES CANNOT BE MA DE ON THE LINE OF PROFIT ON ACCOUNTED SALES. SINCE THE ASSESS EE HAS ALREADY BOOKED ALL INDIRECT EXPENSES IN THE BOOKS OF ACCOUN T, THEREFORE, THE PROFIT FROM THE UNACCOUNTED SALES IS REQUIRED T O BE WORKED OUT BY REDUCING THE DIRECT EXPENDITURE RELATING TO THE UNACCOUNTED SALES. THEREFORE, FOR COMPUTING THE PRO FIT ON ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 7 UNACCOUNTED SALE, THE GROSS PROFIT RATIO ON THE ACC OUNTED SALE IS A RELEVANT FACTOR. FURTHER, WHEN THE ADDITION ON ACCO UNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF STOCK HAS BEE N CONFIRMED BY THE CIT(APPEALS), THEN, THE SAID AMOUNT IS ALSO TO BE TAKEN INTO CONSIDERATION FOR COMPUTING THE PROFIT RATIO O F THE UNACCOUNTED SALES. IN VIEW OF THE FACTS AND CIRCUMS TANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE GP RATIO ADMITTED BY THE ASSESSEE ON ACCOUNTED SALES HAS TO BE TAKEN AS PROFIT RATIO FOR UNACCOUNTED SALES. THE AO IS, ACCORDINGLY, DIRE CTED TO COMPUTE THE PROFIT ON DEPOSITS IN THE ICICI BANK BY TAKING THE RATE EQUIVALENT TO THE GP RATE DECLARED BY THE ASSE SSEE. II. ASSESSMENT YEAR 2006 07: 8. THE ISSUE INVOLVED IN THE REVENUE'S APPEAL FOR T HIS ASSESSMENT YEAR IS IDENTICAL AS FOR THE ASSESSMENT YEAR 200506 AND THE ONLY DIFFERENCE IS THE AMOUNT INVOLVED BEIN G FOUND IN THE ICICI BANK ACCOUNT IS RS. 21,92,984/-. IN VIEW OF O UR FINDING FOR THE ASSESSMENT YEAR 200506 THE PROFIT ON THIS AMOU NT IS TO BE CALCULATED BY ADOPTING THE RATE EQUIVALENT TO THE G P RATE DECLARED BY THE ASSESSEE. III. ASSESSMENT YEAR 2007 08: 9. AS PER THE SEIZED DIARY THE TOTAL AMOUNT RECEIVE D RECORDED AT RS. 4,89,87,699/-. APART FROM THE AMOUNT RECORDE D IN THE DIARY A SUM OF RS.19,18,900/- WAS FOUND DEPOSITED I N THE UNDISCLOSED ICICI BANK ACCOUNT DURING THE YEAR 2006 -07. THE TOTAL PAYMENT AS RECORDED IN THE DIARY IS RS.4,83, 61,099/-. THE ASSESSEE ADMITTED THE DEPOSITS IN THE ICICI BANK AC COUNT AS REPRESENTING UNACCOUNTED SALES PROCEEDS AND, ACCORD INGLY, WORKED OUT THE TOTAL UNACCOUNTED INCOME AT RS. 25,4 5,500/-BEING THE DIFFERENCE OF TOTAL UNACCOUNTED SALES INCLUDING THE DEPOSITS ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 8 MADE IN THE BANK ACCOUNT AND THE EXPENDITURE AS REC ORDED IN THE SEIZED DIARY. THE AO APART FROM ACCEPTING THE ADMIT TED INCOME OFFERED BY THE ASSESSEE MADE AN ADDITION OF RS. 30 ,40,477/- BEING THE PEAK CREDIT AND TREATED THE SAME AS UNEXP LAINED MONEY. THE CIT(APPEALS) DIRECTED THE AO TO GIVE CRE DIT FOR UNDISCLOSED INCOME OF RS. 25,45,500/-ALREADY ARRIVE D AT AND ADDED TO THE INCOME OF THE ASSESSEE WHILE MAKING TH E ADDITION ON ACCOUNT OF PEAK CREDIT. ACCORDINGLY, THE CIT(APPEAL S) HAD GIVEN THE RELIEF TO THE EXTENT OF RS. 25,45,500/-AND CONF IRMED THE ADDITION TO THE EXTENT OF RS. 4,94,977/-. AS WE HAV E DISCUSSED IN THE FOREGOING PARAGRAPHS WHILE DECIDING THE ISSUE I NVOLVED FOR THE ASSESSMENT YEAR 2005-06 WHEN THE ASSESSING OFFICER HAS ACCEPTED THE AMOUNT RECORDED IN THE SEIZED DIARY R EPRESENTING THE UNACCOUNTED SALES, THEN, THE UNACCOUNTED INCOME ALREADY OFFERED BY THE ASSESSEE TO THE EXTENT OF RS. 25,45, 500/- IS REQUIRED TO BE ADJUSTED AGAINST THE PEAK CREDITS. T HUS, THE SAME AMOUNT CANNOT BE TAXED TWICE ONCE AS OFFERED BY THE ASSESSEE BEING PROFIT ON UNACCOUNTED SALES AND AGAIN BEING P ART OF PEAK CREDIT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCE S OF THE CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF CIT(APPEALS) ON THIS ISSUE. IV. ASSESSMENT YEAR 2008-09: 10. THE GRIEVANCE OF THE REVENUE IS REGARDING THE D ELETION OF ADDITION OF RS. 17,55,842/-MADE BY THE AO ON ACCOUN T OF UNEXPLAINED MONEY BY TAKING PEAK CASH CREDIT/BALANC E AS ON 30/12/2007 IN THE SEIZED DOCUMENT BEING THE DIARY. THE CIT(APPEALS) DELETED THE SAID ADDITION ON THE GROUN D THAT WHEN THE AO HAD ALREADY CONSIDERED THE PEAK CREDIT ARISI NG OUT OF UNDISCLOSED SALES RECORDED IN THE DIARY FOR THE ASS ESSMENT YEAR 200708, THEN, THE CASH BALANCE OF RS. 17,55,842/-I S PART OF THE ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 9 DIARY WHICH IS ALREADY CONSIDERED WHILE WORKING OUT THE PEAK UNEXPLAINED MONEY AND ADDED IN THE ASSESSMENT YEAR 200708. AS IT IS CLEAR FROM THE RECORD THAT THE AO MADE AN ADDITION OF RS. 30,40,477/-BEING THE PEAK CREDIT FOR THE ASSESSMENT YEAR 2007- 08. THE PEAK CREDIT TAKEN BY THE AO FOR THE ASSESSM ENT YEAR 200708 WAS THE HIGHEST CREDIT BALANCE AS PER THE S EIZED DIARY AND, THEREFORE, THE CASH BALANCE OF RS. 17,55,842/- AS ON 30/12/2007 IS PART AND ARISING FROM THE RUNNING ENT RIES IN THE SEIZED DIARY. FURTHER FOR THE ASSESSMENT YEAR 2007 08 THE DIFFERENCE OF UNACCOUNTED SALES AND EXPENDITURE HAS ALREADY BEEN ASSESSED AS PROFIT FROM THE UNACCOUNTED SALES, THER EFORE, WHEN THE ENTIRE TRANSACTIONS RECORDED IN THE SEIZED DIAR Y WERE TAKEN INTO ACCOUNT WHILE COMPUTING THE PROFIT FROM UNACC OUNTED SALES AS WELL AS PEAK CREDIT, THEN, A FURTHER ADDITION ON ACCOUNT OF PEAK CREDIT, WHICH IS VERY MUCH PART OF THE ENTRIES OF T HE DIARY ALREADY CONSIDERED CANNOT BE PERMITTED. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT (APPE ALS) ON THIS ISSUE. 11. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION NO. 67/HYD/2011 AND RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED CIT(A), TO THE EXTENT P REJUDICIAL TO THE RESPONDENT, IS ERRONEOUS BOTH ON FACTS AND I N LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED BY NOT ADJUDICATING O N THE ADDITIONAL GROUND, RAISED BY THE RESPONDENT VIDE SUBMISSIONS FILED DURING THE APPELLATE PROCEEDINGS, WITH REGARD TO THE ADDITION MADE TOWARDS UNEXPLAINED INV ESTMENT IN PURCHASE OF STOCK. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED BY UPHOLDING THE ADDI TION OF RS. 31,85,555/- TOWARDS UNEXPLAINED INVESTMENT IN PURCHASE OF STOCK, AS AGAINST RS. 6,39,500/- DISCLO SED BY THE RESPONDENT IN THE RETURN OF INCOME FILED. HE FA ILED TO ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 10 APPRECIATE THAT A SUM OF RS. 25,45,500/- WAS OFFERE D AS ADDITIONAL INCOME FOR AY 2007-08, ON ACCOUNT OF INC OME FROM UNACCOUNTED TRANSACTIONS AND SUCH INCOME WAS AVAILABLE FOR THE RESPONDENT FOR INVESTMENT IN PURC HASE OF STOCK. 12. DURING THE COURSE OF SEARCH AT THE BUSINESS PRE MISES OF M/S K.R. PEARLS, THE STOCK-IN-TRADE AT RS. 1,05,46,738/ -WAS FOUND WHEREAS THE STOCK IN TRADE RECORDED IN THE BOOKS OF ACCOUNT WAS RS. 89,49,451/-ONLY. THE ASSESSEE WAS ASKED TO EXPL AIN THE DIFFERENCE OF STOCK-IN-TRADE FOUND AT THE TIME OF S EARCH AND RECORDED IN THE BOOKS OF ACCOUNT. IN HIS STATEMENT SHRI ABHAY SHAH ADMITTED THE DIFFERENCE OF RS. 15,97,287/-AS H IS UNACCOUNTED INVESTMENT IN STOCK-IN-TRADE. APART FRO M THE DISCREPANCY AS FOUND IN THE STOCK-IN-TRADE SOME LOO SE SHEETS WERE ALSO SEIZED FROM THE BUSINESS PREMISES DURING THE SEARCH. THESE SHEETS CONTAINS DETAILS LIKE RATE, QUANTITY, DISCOUNT, TOTAL VALUE, ETC., RELATING TO STOCK-IN-TRADE. THE ASSESS EE ADMITTED THAT THE DETAILS IN THE SEIZED LOOSE SHEETS ARE REGARDIN G THE PURCHASES MADE BY HIM DURING THE YEAR 200708 AS INDICATED IN THE PURCHASES. THE TOTAL VALUE OF PURCHASES MADE AS REC ORDED IN THESE LOOSE SHEET IS RS. 31,85,555/-. DURING THE AS SESSMENT PROCEEDINGS THE AO ASKED THE ASSESSEE AS TO WHY THE VALUE OF UNACCOUNTED PURCHASES SHOULD NOT BE TREATED AS UNAC COUNTED INVESTMENT OF THE ASSESSEE. IN REPLY, THE ASSESSEE SUBMITTED THAT THE INVESTMENT IN STOCK OF RS. 31,85,000/-IS MADE O UT OF INCOME EARNED IN THE ASSESSMENT YEAR 2007-08 BEING OFFERED BY THE ASSESSEE AT RS. 25,45,500/-. THE BALANCE OF RS. 6,3 9,500/- DISCLOSED AS THE INCOME TOWARDS UNEXPLAINED INVEST MENT IN STOCK. IT WAS ALSO EXPLAINED THAT THE EXCESS STOCK FOUND DURING THE SEARCH OF RS. 15,97,287/- IS PART OF THE STOCK PURCHASED IN 200708 OF RS. 31,85,000/-AND, THEREFORE, THE SAME MAY BE ACCEPTED AS EXPLAINED. THE ASSESSING OFFICER DID NO T ACCEPT THE ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 11 CONTENTION OF THE ASSESSEE THAT THE UNACCOUNTED PUR CHASE OF THE EXCESS STOCK WAS FROM THE INCOME EARNED OUT OF UNAC COUNTED SALES AS OFFERED IN THE ASSESSMENT YEAR 200708. TH E ASSESSING OFFICER EXAMINED THE DETAILS OF WITHDRAWAL OF CASH AND FOUND THAT ALL AMOUNTS ARE WITHDRAWN IN CASH AND PAID TO SELF AND 3 PERSONS IN CASH. THE AO HELD THAT AT ANY STRETCH OF IMAGINA TION THESE CASH WITHDRAWALS ARE NOT AVAILABLE TO THE ASSESSEE TO MAKE ANY PURCHASE OF STOCK AS CLAIMED BY THE ASSESSEE. SINCE THE ASSESSEE DID NOT RAISE ANY GROUND AGAINST THIS ADDITION OF U NEXPLAINED INVESTMENT IN PURCHASE OF STOCK OF RS. 31,85,555/-B EFORE THE CIT(APPEALS), IT HAS NOT BEEN CONSIDERED AND ADJUDI CATED WHILE DECIDING THE APPEAL OF THE ASSESSEE BY THE CIT(APPE ALS). 13. BEFORE US THE LEARNED AR OF THE ASSESSEE HAS SU BMITTED THAT THE ASSESSEE RAISED AN ADDITIONAL GROUND IN THE SUB MISSIONS FILED DURING THE APPELLATE PROCEEDINGS WITH REGARD TO THE ADDITION MADE TOWARDS UNEXPLAINED INVESTMENT IN PURCHASE OF STOCK, HOWEVER, THE LEARNED CIT(APPEALS) HAS NOT ADJUDICAT ED THE ADDITIONAL ISSUE RAISED BY THE ASSESSEE. 14. ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTE D THAT WHEN THE ASSESSEE HAS NOT RAISED ANY GROUND IN THE APPEA L FILED BEFORE THE CIT(APPEALS), THEN, THE PLEA RAISED IN THE SUBM ISSIONS MADE BY THE ASSESSEE CANNOT BE CONSIDERED AS AN ADDITION AL GROUND RAISED BY THE ASSESSEE. HE HAS RELIED UPON THE ORDE R OF THE ASSESSING OFFICER ON THIS ISSUE. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THOUGH NOTHING HAS BEE N PLACED BEFORE US TO SHOW THAT THE ASSESSEE HAS RAISED THIS GROUND AS AN ADDITIONAL GROUND BEFORE THE CIT(APPEALS),HOWEVER, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ISSUE RAISED BY THE ASSESSEE ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 12 IN THE CROSS OBJECTION TO THE RECORD OF CIT(APPEALS ) FOR CONSIDERATION AND ADJUDICATION AS PER LAW. ACCORDIN GLY, THE C.O. FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PU RPOSE. V. ASSESSMENT YEAR 200910: - 16. THE ONLY ISSUE RAISED BY THE REVENUE IN THE APP EAL FOR THE ASSESSMENT YEAR 200910 IS REGARDING THE ADDITION M ADE BY THE AO BY TREATING THE ENTIRE SALE OF RS. 16,60,837/-AS UNDISCLOSED INCOME OF THE ASSESSEE AGAINST THE INCOME DECLARED BY THE ASSESSEE AT 5% OF THE SALE AMOUNTING TO RS. 83,000/-. THIS ISSUE IS COMMON AS IN THE ASSESSMENT YEARS 200506 AND 20 0607. ACCORDINGLY, THIS ISSUE IS DECIDED IN THE SAME TERM S AND THE AO IS DIRECTED TO TAKE THE PROFIT FROM UNACCOUNTED SALES AT THE RATE EQUIVALENT TO THE GP DECLARED BY THE ASSESSEE. 17. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE PARTLY ALLOWED AND THE C.O. FILED BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 22/06/2012. SD/- SD/- ( CHANDRA POOJARI ) ( VIJAY PAL RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT/- 22 ND JUNE, 2012. KV ITA NOS. 1320 TO 1324/HYD/11 AND C.O. 67/HYD/ 11 SHRI ABHAY CHANDRAKANT SHAH 13 COPY FORWARDED TO: 1. DY. COMMISSIONER OF INCOME-TAX (CENTRAL CIRCLE- 6), 7 TH FLOOR, AAYAKAR BHAVAN, L.B. STADIUM ROAD, BASHEERBAGH, HYDERABAD 500 004. 2. SHRI ABHAY CHANDRAKANT SHAH, 3 - 4 - 181, CHEGOOR APARTMENTS, LINGAMPALLY, HYDERABAD. 3. COMMISSIONER OF INCOME-TAX(APPEALS)-I, HYDERABAD 4. COMMISSIONER OF INCOME - TAX (CENTRAL) , HYDERABAD 5. THE D.R., ITAT, HYDERABAD.