M/s. Jalaram Textiles, Anand V. The Income tax Officer, Ward-2, Anand

ITA 1413/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9072 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 27-08-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 13-05-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: M G PATEL
• Keywords: Unexplained investment; Principle of natural justice; Set aside
• Section: 201; 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 27/08/09 DRAFTED ON: 04/09/0 9 1. ITA NO.1413/AHD/2005 2. ITA NO.1551/AHD/2005 ASSESSMENT YEAR : 2001-02 1. M/S.JALARAM TEXTILES STATION ROAD KARAMSAD ROAD ANAND 2. THE ITO,WARD-2,ANAND VS. 1.THE ITO, WARD-2 ANAND 2. M/S.JALARAM TEXTILES, ANAND PAN/GIR NO. : AABFJ 9348 R (APPELLANTS) .. (RESPONDENTS) ASSESSEE BY : SHRI M.G. PATEL, AR REVENUE BY : SHRI C.K. MISHRA, DR O R D E R PER D.C.AGRAWAL , ACCOUNTANT MEMBER :- THESE ARE THE CROSS APPEALS; ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE AGAINST THE COMMON ORDER OF THE LD.CIT( APPEALS)-V, BARODA DATED 07/03/2005 PASSED FOR ASSESSMENT YEAR 2001 -02. SINCE THESE TWO APPEALS INVOLVE SOME COMMON ISSUES, THEY ARE TAKEN UP TOGETHER FOR THE SAKE OF CONVENIENCE. 2. THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE R ESPECTIVE PARTIES IN THEIR APPEALS:- ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 2 - (A) ASSESSEES APPEAL, ITA NO.1413/AHD/2005 FOR A.Y . 2001-02 1. THE LEARNED CIT (APPEALS) V, BARODA ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITIONS OF RS.41,39,130/- MADE BY ITO WARD 2, ANAND ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S.6 9. 2. THE LEANED CIT(APPEALS) V, BARODA ERRED IN L AW AND ON FACTS IN CONFIRMING DISALLOWANCE OF RS.3,44,385/- BY ITO WARD 2, ANAND OUT OF INTEREST ON FUND DIVERTED FOR NON BUSI NESS PURPOSE. 3. THE LEARNED CIT(APPEALS) V, BARODA ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE OF RS.7,29,818/- BY ITO WARD-2, ANAND BOGUS EXPENSES CLAIMED AS CREDIT FOR EXPENSES. 4. THE LEARNED CIT(APPEALS) V, BARODA ERRED IN L AW AND ON FACTS IN CONFIRMING DISALLOWANCE OF RS.1,31,488/- BY ITO WARD-2, ANAND OUT OF VEHICLE EXPENSES AND PETROL EXPENSES. 5. THE LEARNED CIT(APPEALS) V, BARODA ERRED IN L AW AND ON FACTS IN CONFIRMING INTEREST CHARGED U/S.234B OF RS.9,99, 861/- BY ITO WARD-2, ANAND. THE APPELLANT CRAVES LIBERTY TO ADD, ALTER, DELETE, AMEND OR MODIFY AND OF THE GROUNDS MENTIONED HEREINABOVE. (B) REVENUES APPEAL, ITA NO.1551/AHD/2005, A.Y. 20 01-02 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED; 1. IN DELETING ADDITION OF RS.7,85,192/- MADE ON A CCOUNT OF UNRECORDED PROFIT ON THE SALES OF RS.41,39,130/- BE ING UNEXPLAINED EXCESS STOCK DECLARED TO THE BANK. 2. IN HOLDING THAT UNEXPLAINED EXCESS STOCK OF RS. 41,39,130/- DECLARED TO THE BANK WAS ON THE BASIS OF MARKET PRI CE INSPITE OF THE FACT THAT THE RELEVANT BANK STATEMENT INDICATED STO CK STATEMENT SHOWED VALUATION OF STOCK AS ON 28.02.2001 ON THE B ASIS OF COST PRICE AND ERRED FURTHER IN COMING TO THE AFORESAID CONCLUSION WITHOUT ANY EVIDENCE ON THE RECORD. ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 3 - 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF TH E ASSESSING OFFICER. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LEAR NED CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF MANUFACTURING KNITTED CLOTH. DURING T HE COURSE OF EXAMINATION OF ACCOUNTS, THE ASSESSING OFFICER FOUN D THAT THERE IS A DIFFERENCE BETWEEN STOCK RECORDED IN THE BOOKS AS PER STATEMENT SUBMITTED TO THE ASSESSING OFFICER AND THE STOCK ST ATEMENT SUBMITTED TO THE BANK. THE DIFFERENCE IS WORKED OUT BY THE ASSESSIN G OFFICER AS UNDER:- MONTH 28 TH FEB 2001 AS PER SUBMISSION AS PER BANK DIFFERENCE QTY AMT QTY AMT QTY AMOUNT YARN NIL NIL 19030 1903000 (-)19030 (-)1903000 CLOTH 3892 505960 21093 2742090 (-)17201 (-)2236130 4. THE ASSESSEE HAS HYPOTHECATION ACCOUNT NO.HP673 WITH THE CHAROTAR NAGRIK SAHAKARI BANK LTD. (IN SHORT CNSB) . THE ASSESSEE IS ALLOWED OVER-DRAFT FACILITIES AGAINST HYPOTHECATIO N OF STOCK AND RECEIVABLES. THE ASSESSEE HAD FURNISHED STOCK DET AILS TO THE BANK AS ON 28/02/2001. ON NOTICING OF THE DISCREPANCY, THE AS SESSING OFFICER ISSUED SHOW-CAUSE NOTICE TO THE ASSESSEE IN RESPONSE TO WH ICH THE ASSESSEE SUBMITTED THAT STOCK STATEMENT GIVEN TO THE BANK W AS AT INFLATED FIGURES. ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 4 - THE ASSESSING OFFICER DID NOT ACCEPT THE ABOVE EXPL ANATION ON THE GROUND THAT STOCK STATEMENT IS GIVEN ACCORDING TO PARAGRAP H NO.12 OF THE INSTRUMENT OF HYPOTHETICAL OF GOODS AND SAID INSTRU MENT IS DULY SIGNED BY THE ASSESSEE, WHEREBY THE ASSESSEE IS BOUND TO FURN ISH FULL AND CORRECT STATEMENT OF GOODS TO THE BANK. THE ASSESSING OFFI CER REFERRED TO THE DECISION OF HON'BLE GAUHATI HIGH COURT IN THE CASE OF DHANSIRAM AGRAWAL VS. CIT 201 ITR 192 (GAUHATI) AND DECISIONS OF HO N'BLE ALLAHABAD HIGH COURT IN THE CASE OF SWADESHI COTTON MILLS LTD. V S. CIT 180 ITR 651(ALLA.), OF HON'BLE KERALA HIGH COURT IN THE CA SE OF S.MURUGAPLPA CHETTIAR VS. CIT 175 ITR 245 AND OF HON'BLE ALLAHA BAD HIGH COURT IN THE CASE OF KAILA SWEET AND SUPPLIER VS. CIT 163 CTR 3 02 (ALLA.) AND HELD THAT : (I) NO JUDICIAL COGNIZANCE OF SUB-STANDARD MORALIT Y IN RESPECT OF DECLARING LARGER STOCK TO THE BANK, PARTICULARLY FO R THE PURPOSE OF GETTING HIGHER LOANS OR OVERDRAFT FACILITIES SHOULD BE TAKEN. (II) ONUS IS ON THE ASSESSEE TO JUSTIFY AND EXPLAI N THE DISCREPANCY IN A STOCK STATEMENT GIVEN TO THE BANK AND WHAT IS APP EARING IN THE BOOKS OF ACCOUNT. (III) THE BURDEN IS ON THE ASSESSEE TO SHOW WHAT IS APPARENT IS NOT REAL, AND ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 5 - (IV) SELF SERVING EXPLANATION SHOULD NOT BE EASILY ACCEPTED. 5. THE ASSESSING OFFICER, THEREAFTER WORKED OUT THE VALUE OF THE DIFFERENCE OF THE STOCK AT RS.41,39,130/- BEING THE TOTAL OF 5 TH COLUMN IN THE CHART REFERRED ABOVE. 6. THE LEARNED CIT(APPEALS) EXAMINED THE ISSUE, CON SIDERED THE EXPLANATION OF THE ASSESSEE AND CONFIRMED THE ADDIT ION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER:- 5.3. I HAVE CONSIDERED THE ARGUMENT OF THE APPELLA NT AND ALSO PERUSED THE ASSESSMENT ORDER. IN VIEW OF THE DETA ILED DISCUSSION MADE WHILE DECIDING THE GROUND RELATED TO ADDITION OF UNEXPLAINED INVESTMENT IN EXCESS STOCK, THE ADDITION ON ACCOUNT OF THE VALUE OF EXCESS STOCK SO GIVEN TO THE BANK HAS BEEN UPHELD. THIS VALUE OF STOCK WILL NOT BE THE COST PRICE BUT WILL BE THE MA RKET VALUE. ACCORDINGLY, THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING FURTHER ADDITION OF PROFIT ELEMENT OVER AND ABOVE THE VALUE OF STOCK SO SHOWN TO THE BANK AUTHORITIES. IN VIEW OF THESE FA CTS, THE ADDITION SO MADE BY THE ASSESSING OFFICER IS HEREBY DELETED. 7. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT EXCESS STOCK SO DECLARED TO THE BANK DOES NOT EXACTLY PERTAIN TO THIS YEAR. IT IS ACCUMULATED STOCK OF SEVERAL YEARS. HE SUBMITTED THAT SECURED LOANS AS ON 31/03/1999 RELEVANT TO ASSESSME NT YEAR 1999-2000 WAS RS.41,40,849/- AND THAT ON 31/03/2000 RELEVANT TO ASSESSMENT YEAR 2000-01 WAS RS.54,64,495/- INDICATING THAT THE ASSE SSEE HAD OBTAINED OVERDRAFT FACILITIES FROM THE BANK IN THESE TWO YEA RS ALSO AGAINST ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 6 - HYPOTHECATION OF STOCK WHICH COULD NOT HAVE BEEN PO SSIBLE UNLESS HIGH VALUE/QUANTITY OF STOCK IS HYPOTHECATED BECAUSE INVENTORY FOR THESE TWO YEARS WERE RS.13,850/- AND RS.1,36,812/- RESPECTIVE LY. THIS CLEARLY INDICATES THAT STOCK STATEMENT SUBMITTED TO THE BAN K WERE INFLATED. IN OTHER WORDS, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE EMPHASIZED THAT INFLATION OF STOCK AS PER STATEMENT SUBMITTED TO THE BANK WERE EXISTING EVEN IN ASSESSMENT YEARS 1999-2000 AND 2000-2001. THEREFORE, CREDIT SHOULD BE GIVEN TO THOSE YEARS ALSO. IT SHOULD NOT BE A CASE THAT ENTIRE ADDITION SHOULD BE MADE IN THE PRESENT YEAR ONLY. 8. THE LD.DR ON THE OTHER HAND, SUBMITTED THAT THIS ARGUMENT WAS NOT RAISED EITHER BEFORE THE ASSESSING OFFICER OR LD.CI T(A) AND NO SUCH MATERIAL WAS SHOWN TO THEM. NOTWITHSTANDING, THE L D.DR SUBMITTED THAT ASSESSMENT OF THE ASSESSEE FOR THESE TWO YEARS, I.E . 1999-2000 & 2000-01 SHOULD BE RE-OPENED, IN CASE, ANY DISCOUNT IS ALLOW ED TO THE ASSESSEE ON THE BASIS OF EXCESS STOCK AVAILABLE IN EARLIER YEARS. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. A PERUSAL OF THE STATEMENT SUBMITTED TO THE BANK BY THE ASSESSEE AND STOCK AS PER BOOKS CLEARLY REVEALED THAT THERE IS A QUANTITATIVE DIFFE RENCE WHICH HAS NOT BEEN SATISFACTORILY EXPLAINED EXCEPT SUBMITTING THAT PA RT OF IT MAY RELATE TO ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 7 - EARLIER YEARS. THEREFORE, ADDITION MADE BY THE AUT HORITIES BELOW IS JUSTIFIED. HOWEVER, BEFORE CONFIRMING THE ADDITION , IT HAS TO BE EXAMINED WHETHER SUCH DISCREPANCY EXISTED IN SOME EARLIER YE ARS, I.E. ASSESSMENT YEARS 1999-2000 & 2000-01 AS SUBMITTED BY THE LD.AR . NO STOCK STATEMENT SUBMITTED TO THE BANK HAS BEEN FURNISHED TO US FOR EITHER OF THE TWO YEARS, BUT FOR THE SAKE OF NATURAL JUSTICE, WE WOULD LIKE THE ASSESSING OFFICER TO ASK THE ASSESSEE TO SUBMIT THE STOCK STA TEMENT FURNISHED TO THE BANK AS ON THE END OF THE ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEARS 1999-2000 & 2000-01 AND WORK OUT THE ALLEGED DISCR EPANCY EXISTING IN THOSE YEARS AND AS CLAIMED BY HIM BEFORE US. IF ANY QUANTITATIVE DIFFERENCE IS DISCOVERED IN THESE TWO EARLIER YEARS , THEN ASSESSMENT FOR THESE TWO ASSESSMENT YEARS WILL BE REOPENED BY THE ASSESSING OFFICER FOR TAXING THE DISCREPANCY PERTAINING TO THESE YEARS. IF NO SUCH DISCREPANCY IN QUANTITY IS FOUND IN THOSE TWO YEARS, THEN NO DISCO UNT IS TO BE GIVEN FROM THE DISCREPANCY OF THE PRESENT YEAR AND ADDITIONS AS PROPOSED BY THE ASSESSING OFFICER FOR RS.41,39,130/- IS CONFIRMED. IN CAE, RE-OPENING OF THE TWO YEARS IS WARRANTED ON THE BASIS OF QUANTITA TIVE DIFFERENCE FOUND IN THOSE TWO YEARS, THEN ASSESSING OFFICER WILL BE FRE E TO TAKE ACTION AND PROCEED ACCORDING TO LAW WITHOUT ANY FETTERS ON THE QUANTUM IN THOSE YEARS. THIS WILL BE TREATED AS OUR DIRECTIONS WITH IN THE MEANING OF SECTION 153(3) OF THE I.T. ACT, 1961. ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 8 - 10. AS A RESULT, THIS GROUND OF APPEAL OF THE ASSE SSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 11. GROUND NO.2 OF ASSESSEES APPEAL RELATES TO DIS ALLOWANCE OF RS.3,44,385/- OUT OF INTEREST PAID, BUT FUNDS ALLEG EDLY DIVERTED FOR NON- BUSINESS PURPOSES. 12. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE A SSESSEE ADVANCED THE LOAN TO FOLLOWING PERSONS FOR OTHER THAN BUSINESS P URPOSE AND NO INTEREST HAS BEEN CHARGED: (I) SHRI NISHITBHAI C.PATEL RS. 51,830/- (II) M/S.ADITYA MINES RS.1,00,810/- 13. IN ADDITION TO ABOVE, THE ASSESSING OFFICER FOU ND DEBIT BALANCE OF RS.18,73,159/- IN THE CAPITAL ACCOUNT OF PARTNER S HRI D.M.PATEL. NO INTEREST WAS CHARGED FROM HIM. THE ASSESSEE HAD C LAIMED INTEREST EXPENDITURE OF RS.15,87,154/- AND PAID INTEREST @ 17% TO THE BANK. IT WAS EXPLAINED TO THE ASSESSING OFFICER THAT THE ASS ESSEE HAD SUFFICIENT INTEREST-FREE FUNDS IN THE FORM OF CAPITAL BUT THE ASSESSING OFFICER WAS NOT SATISFIED AND HE CALCULATED INTEREST @ 17% ON INTER EST-FREE ADVANCES TO THE PARTIES AND PARTNER AND WORKED OUT THE ADDITION AT RS.3,44,385/-. THE LEARNED CIT(APPEALS) HELD THAT MONEY GIVEN TO THE P ARTNERS AND OTHERS ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 9 - WERE NOT FOR BUSINESS PURPOSES AND, THEREFORE, DIS ALLOWANCE IS JUSTIFIED. THE LEARNED CIT(APPEALS) RELIED ON SEVERAL AUTHORIT IES AS MENTIONED BY HIM AT PAGE NOS.12, 13 & 14 OF HIS ORDER. 14. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIV E OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOT PAID ANY INTER EST ON THE CREDIT BALANCE OF OTHER PARTNERS. THE BALANCE IN THE CASE OF SH RI NISHITBAHI C.PATEL IS OLD ONE. IN THE CASE OF M/S.ADITYA MINES, IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT ASSE SSEE HAD SUFFICIENT INTEREST-FREE FUNDS. FINALLY, HE DREW OUR ATTENT ION TO THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RE LIANCE UTILITIES AND POWER LTD. (2009) 313 ITR 340 (BOM.) FOR THE PROPOS ITION THAT IF THE ASSESSEE HAS INTEREST-FREE FUNDS AVAILABLE, THEN PR ESUMPTION IS THAT INTEREST- FREE ADVANCES WERE GIVEN OUT OF SUCH INTEREST-FREE FUNDS AVAILABLE WITH THE ASSESSEE. 15. AGAINST THIS, THE LD.DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. WE HAVE EXAMINED THE BALANCE-SHEET OF THE ASSESSEE WHICH IS ANNEXED AT PAGE NO.59 OF THE PAPER-BOOK WHICH SHOWS PARTNERS CAPITAL ACCOUNT RS.1,32,259/- AND LOAN FUNDS AT RS.60,95,219/-. THUS, THE BALANCE-SHEET DID NOT SHOW ANY CAPITAL ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 10 - OR RESERVES OR ANY INTEREST-FREE FUNDS. THEREFORE, IT IS DIFFICULT TO BELIEVE THAT ADVANCES TO PARTNERS AND OTHER TWO PERSONS WER E OUT OF ANY INTEREST FREE-FUNDS AVAILABLE WITH THE ASSESSEE. HAVING NO T DISCHARGED THE INITIAL ONUS, WE ARE UNABLE TO APPLY THE AUTHORITY OF HON'B LE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES & POWER LTD. 313 ITR 340 (SUPRA). ACCORDINGLY, THE LEARNED CIT(APPEALS) WAS JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. THEREFORE, THIS G ROUND OF ASSESSEES APPEAL IS REJECTED. 17. GROUND NO.3 OF THE ASSESSEES APPEAL RELATES T O ADDITION ON ACCOUNT OF DISALLOWANCE OF RS.7,29,818/- AS BOGUS EXPENSES . 18. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN M/S.SHRI T.KHANNA & CO. AS CREDITOR FOR EXPENSES AM OUNTING TO RS.7,29,818/-. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH COMPLETE ADDRESS, COPY OF LEDGER ACCOUNT AND NATURE OF TRANSACTION, BUT THE ASSESSEE FAILED TO SUBMIT THE DETAILS. THE ASSESS EE ALSO FAILED TO FURNISH THE RELEVANT BILL. THE AMOUNT WAS FOUND OUTSTANDI NG AS ON 19/01/2004. THE ASSESSING OFFICER ACCORDINGLY TREATED THE CLAIM OF EXPENSES AS NON- GENUINE AND MADE THE ADDITION. THE LEARNED CIT(APP EALS) CONFIRMED THE ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 11 - ADDITION FOR WANT OF EVIDENCE, BUT IN ADDITION, HE INVOKED SECTION 41(1) OF THE I.T. ACT, 1961. 19. BEFORE US, LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THIS ITEM OF EXPENDITURE PERTAINED T O EARLIER YEARS AND NOT TO THIS YEAR. THEREFORE, EVEN IF THE AMOUNT IS TREA TED AS BOGUS, ADDITION CANNOT BE MADE IN THIS YEAR. 20. THE LD.DR, ON THE OTHER HAND, RELIED ON THE OR DERS OF THE AUTHORITIES BELOW. 21. AFTER HEARING THE RIVAL SUBMISSIONS, WE RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO FIND OUT WHETHER T HIS CLAIM OF EXPENDITURE WAS MADE IN THE CURRENT YEAR. IF IT IS SO, THE AD DITION IS CONFIRMED. IN CASE, THE CLAIM OF EXPENDITURE WAS MADE IN SOME OTH ER YEAR, THEN THE ASSESSING OFFICER IS FREE TO CONSIDER TO TAKE THE A CTION IN THAT YEAR, BUT ADDITION CANNOT BE SUSTAINED IN THE CURRENT YEAR. ACCORDINGLY, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 22. GROUND NO.4 OF THE ASSESSEES APPEAL RELATES TO CONFIRMING THE DISALLOWANCE OF RS.1,31,488/- OUT OF VEHICLE EXPENS ES AND PETROL EXPENSES. 23. WE HAVE HEARD BOTH THE PARTIES. THE LEARNED A UTHORISED REPRESENTATIVE OF THE ASSESSEE COULD NOT DENY THAT VEHICLES WERE USED FOR ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 12 - PERSONAL PURPOSES AS WELL. ACCORDINGLY, THE DISAL LOWANCE IS WARRANTED. THE ASSESSING OFFICER HAS MADE DISALLOWANCE UPTO 1/ 10 TH WHICH IS REASONABLE AND, HENCE, CONFIRMED. THEREFORE, THIS GROUND IS ALSO REJECTED. 24. GROUND NO.5 OF THE ASSESSEES APPEAL RELATES TO CHARGING OF INTEREST U/S.234-B OF THE I.T. ACT, 1961. IT IS CONSEQUENT IAL AND, HENCE, THIS GROUND IS DISPOSED OF ACCORDINGLY. REVENUES APPEAL, ITA NO.1551/AHD/2005 25. GROUND NO.1 OF REVENUES APPEAL RELATES TO DELE TION OF ADDITION OF RS.7,85,192/- MADE ON ACCOUNT OF ALLEGED PROFIT EAR NED BY THE ASSESSEE ON THE SALE OF RS.41,39,130/-. THIS GROUND RELATES TO GROUND NO.1 IN ASSESSEES APPEAL (SUPRA). 26. AFTER HEARING BOTH THE PARTIES, WE RESTORE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER. THE ASSESSING OFFICER WILL F IND OUT WHETHER ANY EXCESS STOCK SURVIVED AT THE END OF THE ACCOUNTING YEAR. THIS CAN BE DONE BY COMPARING STOCK STATEMENT GIVEN TO THE BANK AS O N 31/03/2001. THE ASSESSING OFFICER WILL COMPARE THIS STATEMENT WITH THE STOCK RECORDED IN THE BOOKS ON THAT DATE AND FIND OUT THE DIFFERENCE AT THE END OF THE ASSESSMENT YEAR 2001-02. IF ON COMPARISON, CERTAIN QUANTITY OF STOCK DISCOVERED IS CARRIED FORWARD TO THE SUBSEQUENT YEA R, THEN TO THAT EXTENT ITA NOS.1413 & 1551/AHD/2005 M/S.JALARAM TEXTILES VS. ITO (CROSS) ASST.YEAR - 2001-2002 - 13 - SALES WILL NOT BE PRESUMED. ON THE BALANCE PRESUMP TION OF THE SALES OUTSIDE THE BOOKS IS CONFIRMED. THE ASSESSING OFF ICER WILL APPLY GROSS PROFIT RATE AS DECLARED BY THE ASSESSEE IN HIS BOOK S AND WORK OUT THE PROFIT THEREON. THIS GROUND OF THE REVENUE IS, THEREFORE, TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 27. GROUND NO.2 IN REVENUES APPEAL RELATES TO GRO UND NO.1 OF ASSESSEES APPEAL (SUPRA). THIS GROUND IS ACCORDIN GLY RESTORED TO THE FILE OF ASSESSING OFFICER. 28. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS T REATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES., WHEREAS THE APPEAL OF TH E REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 11/09/2009. SD/- SD/- ( MAHAVIR SINGH ) ( D.C .AGRAWAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 11 / 09 /2009 T.C. NAIR COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPO NDENT 3. THE CIT CONCERNED. 4. THE LD. CIT(AP PEALS)-V, BARODA 5. THE DR, AHMEDABAD BENCH.6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD