M/s. Asha Dairy, Karnal V. ITO, Karnal

ITA 1445/DEL/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4247 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-08-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 27-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVI KANT
• Keywords: Unexplained investment; Depreciation; Income from undisclosed sources; Opportunity of being heard; Rule of consistency; Period of limitation; Additional evidence; Tangible material; Block assessment; Time period of passing order
• Section: 40A(3); 142(1); 133A; 69; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A , NEW DELHI BEFORE SH. O.P. KANT , ACCOUNTANT M EMBER AND SH. K.N. CHARY, JUDICIAL MEMBER ITA NO. 1445 /DE L/ 2012 ASSESSMENT YEAR: 2004 - 05 M/S. ASHA DAIRY, C/O - GIRISH ANEJA, CA, 796, SECTOR - 13, U.E. KARNAL VS. INCOME TAX OFFICER, WARD - 3, SECTOR - 13, AAYAKAR BHAWAN, KARNAL PAN : AAIFA7927J ( APPELLANT ) (RESPONDENT) APPELLANT BY SH. GIRISH ANEJA, CA RESPONDENT BY SH. RAVI KANT, SR. DR DATE OF HEARING 21.12.2017 DATE OF PRONOUNCEMENT 05.01.2018 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 23/12/2011 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX( APPEALS), KARNAL [IN SHORT THE LD. CIT - (A)] FOR ASSESSMENT YEAR 2004 - 05 RAISING FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE A.O HAS ERRED IN TREATING RS 10,32,171/ - AS UNEXPLAINED INVESTMENT OF THE ASSESSEE U/S 69 OF THE ACT BY ERRONEOUSLY AND ARBITRARILY RELYING ON CERTAIN LOOSE DOCUMENTS WHOSE CONTENTS WERE NOT EVEN VAGUELY ATTEMPTED BY THE A.O TO VERIFY INDEPENDENTLY AND FURTHER IN VIEW OF THE FACT THAT THE ASSESSEE DENIED ANY FACTUAL CORRELATION WITH THOSE LOOSE DOCUMENTS AND THE LD. C IT(APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE A.O. 2 ITA NO. 1445/DEL/2012 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE A.O HAS ERRED IN TREATING RS 4,17,000/ - AS UNEXPLA INED INVESTMENT OF THE ASSESSEE U/ 69 OF THE ACT BY ERRONEOUSLY AND ARBITRARILY RELYING ON CERT AIN STATEMENT MADE UNDER STRESS WHOSE CONTENTS WERE NOT EVEN VAGUELY ATTEMPTED BY THE A.O TO VERIFY INDEPENDENTLY AND THE LD. CIT(APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE A.O. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE A.O HA S ERRED IN ESTIMATING RS . 1,20,882/ - AS GROSS PROFIT ON AN IMAGINARY SALES FIGURE OF RS . 47,96,926/ - BY ERRONEOUSLY AND ARBITRARILY RELYING ON CERTAIN LOOSE DOCUMENTS RECOVERED FROM THIRD PARTY PREMISES WHO WERE NEVER PRODUCED FOR VERIFICATION OR CROSS EXAMI NATION BEFORE THE ASSESSEE AND THE LD. CIT(APPEALS) HAS ERRED IN PARTLY CONFIRMING THE ACTION OF THE A.O. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE A.O HAS ERRED IN ESTIMATING RS 19,278/ - AS GROSS PROFIT ON AN IMAGINARY SALES FIGURE OF RS 7 ,65,013/ - BY ERRONEOUSLY AND ARBITRARILY RELYING ON CERTAIN LOOSE AND UNRELATED DOCUMENTS AND THE LD. CIT(APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE A.O. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE A.O HAS ERRED IN DISALLOWING 1/5 CAR EXPENSES TO THE TUNE OF RS 24,830/ - WITHOUT ANY CONCRETE BASIS TO SUPPORT THE DISALLOWANCE AND THE LD. CIT(APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE A.O. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE A.O HAS ERRED IN ADDING RS 71,650/ - TO THE INCOME OF THE ASSESSEE AS SHORTAGE IN MILK A/C WITHOUT ANY CONCRETE MATERIAL TO SUPPORT SUCH ARBITRARY ACTION AND THE LD. CIT(APPEALS) HAS ERRED IN CONFIRMIN G THE ACTION OF THE A.O. 7. THAT THE APPELLANT CRAVES TO ADD, AMEND OR DELETE ANY GROUND(S) OF APPEAL BEFORE OR DURING THE HEARING OF THE APPEAL. 2. T HE BRIEFLY STATED FACTS OF THE CASE ARE THAT : ( I ) T HE ASSESSEE FIRM WAS ENGAGED IN THE BUSINESS OF MILK DI STRIBUTION. IT COLLECTED MILK FROM VILLAGERS AND , THEREAFTER , DISTRIBUTED THE SAME THROUGH ITS TANKERS TO USERS , MAINLY, M/S PARUL FOODS/ MARKANDESHWAR FOODS ETC. 3 ITA NO. 1445/DEL/2012 ( II ) R ETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 30/ 11/2004 DECLARING INCOME OF RS.67, 320/ - . THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 30/11/2004 . ( III ) A SURVEY ACTION UNDER SECTION 133A OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT ) WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 04/12/2003 ALONGWITH THE SEARCH ACTION UNDER SECTION 132 OF THE AC T AT THE PREMISES OF M/S PARUL F OODS. IN THE SURVEY ACTION CERTAIN DOCUMENTS INCLUDING A DIARY WERE IMPOUNDED FROM THE PREMISES OF THE ASSESSEE. DURING THE SURVEY ACTION, STATEMENT OF ONE OF THE PARTNER, SH . NA RESH KUMAR WAS ALSO RECORDED . ( IV ) I N VIEW OF THE SURVEY ACTION , THE CASE WAS SELECTED FOR COMPULSORY SCRUTINY AND NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED BUT DUE TO NON - COMPLIANCE OF THE VARIOUS NOTICES BY THE ASSESSEE , THE LD. ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE ACT , WHEREIN , HE ESTIMATED THE INCOME REJECTING BOOKS OF ACCOUNTS UNDER SECTION 145(3) OF THE ACT, DISALLOWANCE FOR CASH PAYMENT UNDER SECTION 40A(3) OF THE ACT AND DISALLOWANCE OF INTEREST ON SALE TO PARTNERS AND SALARY. THE LD. CIT - ( A ) DELETE D THE ADDITION UNDER SECTION 40 A(3) OF THE ACT, HOWEVER HE SUSTAINED THE ADDITION FOR ESTIMATION OF THE INCOME AND DISALLOWANCE OF SALARY AND INTEREST PAID. ON FURTHER APPEAL , BY BOTH THE ASSESSEE AND THE R EVENUE , THE TRIBUNAL IN ITA NO. 2207/DEL/2008 AND 2098/DEL/2008 RESPECTIVELY, RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH. 4 ITA NO. 1445/DEL/2012 ( V ) IN COMPLIANCE, THE ASSESSING OFFICER COMMENCED ASSESSMENT PROCEEDING AND PROVIDED VARIOUS OPPOR TUNITIES TO THE ASSESSEE AND ITS AUTHORIZED REPRESENTATIVE. THE ASSESSING OFFICER HAS NOTED IN THE IMPUGNED ORDER THAT DESPITE MANY OPPORTUNITIES PROVIDED , INFORMATIONS CALLED FOR WERE EITHER NOT FILED OR FILED PART L Y ONLY AT THE FAG END OF THE LIMITATION PERIOD. THE ASSESSING OFFICER COMPLETED ASSESSMENT ON 22/12/2010 AFTER MAKING FOLLOWING ADDITIONS/DISALLOWANCES: ( A ) UNEXPLAINED INVESTMENT AS NOTED IN DIARY (A - 5) RS. 10, 32,171 ( B ) UNEXPLAINED INVESTMENT AS PER THE STATEMENT OF SH. NARESH KUMAR, PARTNER RS. 4,17,000 ( C ) UNACCOUNTED INCOME FOR SALE OF MILK ( 216455 LITRES+ 297685 LITRES) RS. 1,20,882 ( D ) UNACCOUNTED INCOME FOR SALE OF MILK (81995 KGS) RS. 19,728 ( E ) PERSONAL USE OF CAR RS. 24,830 ( F ) SHORTAGE OF MILK RS. 71,650 TOTAL RS.16,86,261 ( VI ) ON FURTHER APPEAL, THE LEARNED CIT - A SUSTAINED MAJORITY OF THE ADDITIONS//DISALLOWANCES AND ALLOWED PART RELIEF TO THE ASSESSEE. AGGRIEVED , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. THE GROUND NO. 1 RELATES TO UNEXPLAINED INVESTMENT OF RS.10,32,171/ - . THE FACTS QUA THE ADDITION ARE THAT A DIARY WAS IMPOUNDED DURING THE COURSE OF SURVEY PROCEEDING FROM THE PREMISES OF THE ASSESSEE , WHICH WAS INVENTORIZ ED AS ANNEXURE A - 5. THIS DIARY CONTAINED CASH PAYMENTS TO VARIOUS PERSONS , TOTALLING TO RS.12,41,825/ - . 5 ITA NO. 1445/DEL/2012 THE ASSESSING OFFICER HAS PRODUCED A COMPL ETE LIST OF THE NAME OF PERSONS , ALONG WITH AMOUNT AND DATE O F PAYMENT RECORDED IN THE DIARY . THE ASSESSING OFFICER CALLED FOR EXPLANATION FROM THE ASSESSE E , WHETHER THE CASH PAYMENTS WERE RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. THE ASSESSING OFFICER NOTED THAT NO COMPLIANCE OF SHOW CAUSE NOTICE DATED 26/11/2010 AND 03/ 12/2010 WAS MADE. ON 09/12/2010 , THOUGH THE AR OF THE ASSESSEE ATTENDED BUT DID NOT FUR NISH ANY EXPLANATION AND CASE WAS FURTHER ADJOURNED ON HIS REQUEST TO 13/12/2010. AGAIN ON 13/12/2010 AND 14/12/2010, THE AR OF THE ASSESSEE ATTENDED BUT DID NOT SUBMIT ANY REPLY. PROCEEDINGS WERE AGAIN ATTENDED BY THE AR AND ACCOUNTANT OF THE ASSESSEE, BUT NO REPLY OR EXPLANATION WAS FILED. THE ASSESSING OFFICER ALSO NOTED AMOUNTS TOTALLING TO RS.2,01,059/ - IN THE DIARY AS RECEIVED FROM VARIOUS PERSONS. HE HAS PRODUCED A LIST OF NAME OF SUCH PERSONS ALONGWITH DATE AND AMOUNT IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER ALLOWE D CREDIT OF CASH RECEIPT OF RS. 2,01,059/ - AGAINS T THE CAS H PAYMENT OF RS.12,33,230/ - RECORDED IN THE DIARY AND PROPOSED NET UNEXPLAINED CASH PAYMENT OF RS.10,32,171/ - FOR ADDITION. IN VIEW OF THE CONTINUOUS FAILURE OF THE ASSESSEE TO RECONCILE THE BOOKS OF ACCOUNTS AND SUBMIT ANY EXPLANATION, THE LD. AS SESSING OFFICER TREATED THE SUM OF RS.10,32,171/ - AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. THE LD. ASSESSING O FFICER WHILE MAKING THE ADDITION RELIED ON THE DECISIONS IN THE CASE OF CIT VS. PR METRANI (HUF) (2001) 251 ITR 244 (KAR), (2002) 12 0 TAXMAN 612 (KAR) & (2006) 287 I TR 209 (SC), CIT V/S. SURAJMAL NAGAR MAL (1990) 18 ITR 340 (RAJ), RC LODHA V/S CIT 221 ITR 24 (RAJ). 3.1 BEFORE THE LD. CIT - A, THE ASSESSEE CONTENDED THAT IT EXPLAINED TO THE ASSESSING OFFICER VIDE LETTER DATED 20/12/2010 T HAT THE DIARY PERTAIN TO FINANCIAL YEAR 1993 AND BELONGED TO SH. OM PRAKASH, FATHER OF SH. NARESH KUMAR A ND ALL THE ENTRIES APPEARING IN SAID DIARY, WERE DULY 6 ITA NO. 1445/DEL/2012 REFLECTED IN THE ACCOUNT BOOKS OF SH. OM PARKASH, WHO HAD A BUSINESS ENTERPRISE UNDER THE NAME AN D STYLE OF RAVI DAI RY ENGAGED IN PURCHASE OF MILK , GHEE AND ALLIED PRODUCT. THE ASSESSEE FURTHER SUBMITTED THAT IT IS NOTHING TO DO WITH THOSE TRANSACTIONS AND IF REQUIRED BOOKS OF ACCOUNTS OF SRI OM PRAKASH COULD BE PRESENTED FOR VERIFICATION OF THE ENT RIES SHOWN IN THE DIARY. THE ABOVE SUBMISSION OF THE ASSESSEE WAS FORWARDED BY THE LD. CIT - (A) TO THE ASSESSING OFFICER FOR HIS COMMENTS. THE ASSESSING OFFICER IN HIS REMAND REPORT SUBMITTED THAT NUMEROUS OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE IN ASSE SSMENT PROCEEDING BUT NO EXPLANATION WAS FURNISHED, AND ABOVE CONTENTION WAS ONLY MADE AT THE FAG END OF THE ASSESSMENT PROCEEDING. THEREFORE, ACCORDING TO HIM, THE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING THE CONTENTION OF THE ASSESSEE. THE LD. CIT - ( A ) AFTER TAKING INTO ACCOUNT THE SUBMISSION OF THE ASSESSEE AND THE REMAND REPORT OF THE ASSESSING OFFICER, HELD AS UNDER: 1.10 DURING THE APPEAL PROCEEDINGS, THE COUNSEL OF THE APPELLANT FILED WRITTEN SUBMISSIONS, WHEREIN IT IS CLAIMED THAT THE DAIRY IS AN OLD DIARY WHICH BELONGS TO SH. OM PRAKASH, FATHER OF SH. NARESH KUMAR AND PERTAINS TO THE FINANCIAL YEAR 1993. THE APPELLANT AS SUCH CLAIMED THAT IT HAS NOTHING TO DO WITH THE TRANSACTIONS RECORDED IN THIS DIARY. 1.11 DURING THE APPEAL PROCEEDINGS, THE AO PRODUCED THE SAME DIARY. ON EXAMINATION THEREOF, IT WAS NOTED THAT SPECIFIC DATES OF PAYMENT MADE IN CASH WAS SPECIFIED IN THIS DIA RY, WHICH IS OF THE F.Y. 2003 - 04. THE AO FURTHER REFERRED TO THE STATEMENT OF THE PARTNER RECORDED DURING SURVEY, WHEREIN HE ADMITTED THAT THE DIARY CONTAINED THE PAYMENTS MADE BY THE FIRM. THE COUNSEL OF THE APPELLANT COULD NOT REBUT THESE FACTS. IN VIEW OF THESE FACTS, IT IS HELD THAT THE TRANSACTIONS RECORDED IN THIS DAIRY PERTAINS TO THE APPELLANT FIRM AND FURTHER THE SAME WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AND HENCE ADDITION OF NET OF PAYMENT MADE AND PAYMENT RECEIVED, WHICH WORKS OUT TO RS.10,32 ,171/ - , MADE BY THE A.O. IS HEREBY, CONFIRMED. 7 ITA NO. 1445/DEL/2012 3.2 BEFORE US, THE LD. COUNSEL FILED A PAPER BOOK CONTAINING PAGES 1 TO 153 AND COPY OF STATEMENT OF SH. NARESH KUMAR (PARTNER) ALONGWITH A TYPED VERSION. HE RELIED ON THE SUBMISSION MADE BEFORE THE LD. CIT - ( A ) ON THE ISSUE IN DISPUTE. THE LD. COUNSEL FURTHER SUBMITTED THAT THE DIARY PERTAINS TO FINANCIAL YEAR 1993 AND THE ASSESSING OFFICER HAS NOT MADE ANY INDEPENDENT ATTEMPT TO VERIFY THE CONTENTS OF THE DIARY TO ESTABLISH THAT THE AMOUNT RECORDED IN THE D IARY PERTAIN TO UNEXPLAINED INVESTMENT OF THE ASSESSEE. HE FURTHER REFERR ED TO PAGE 35 OF THE PAPER BOOK , WHICH IS OFFICE NOTE RECODED BY THE ASSESSING OFF ICER BELOW THE ASSESSMENT ORDER , AND SUBMITTED THAT ASSESSING OFFICER HAS DULY VERIFIED AUDITED BOOKS OF ACCOUNTS AND FOUND NO INFIRMITY IN THOSE BOOKS OF ACCOUNTS. HE FURTHER SUBMITTED THAT ON PAGE 23 OF THE PAPER BOOK, AT SERIAL NO. 4 OF THE LIST, THE AMOUNT REFERRED TO IS RS. 50,000/ - PERTAINING TO THE TAKHVINDER SINGH DATED 11/11/2003, HOWEVER ON CORRELATION OF THE SAME WITH PAGE 106 OF THE PAPER BOOK, IT IS FOUND THAT ENTRY IS ONLY OF RS. 5,000/ - . IN VIEW OF THE ABOVE, OBSERVATION THE LD. COUNSEL SUBMITTED THAT THE ASSESSING OFFI CER HAS MADE ADDITION IN BIASED AND PERVERSE MANNER. 3.3 THE LEARNED CIT ( DR ), ON THE OTHER HAND , REFUTING THE ARGUMENTS OF THE LD. COUNSEL , SUBMITTED THAT ENTRIES IN THE DIARY CLEARLY SHOWS THE DATES FOR THE MONTH OF NOVEMBER AND DECEMBER 2003 AND THUS EN TRIES CANNOT BE ACCEPTED AS BELONGING TO 1993. SHE FURTHER SUBMITTED THAT SH. NARESH KUMAR PARTNER IN HIS STATEMENT DATED 04/12/2003 DURING THE COURSE OF SURVEY HIMSELF STATED THAT THE DIARY CONTAINED DETAILS OF ADVANCE GIVEN TO SUPPLIERS. SHE SUBMITTED TH AT IN ORIGINAL ASSESSMENT PROCEEDINGS , THE ASSESSEE MADE NO COMPLIANCE AND AFTER A PERIOD OF ALMOST 7 YEARS , THE CLAIM OF THE ASSESSEE THAT THE D IARY BELONGS TO ANOTHER PERSON, CANNOT BE ACCEPTED AS RELIABLE AND , THEREFORE , CANNOT BE ADMITTED. 8 ITA NO. 1445/DEL/2012 3.4 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. COUNSEL HAS STATED THAT THE ENTRIES IN THE DIARY (A - 5) PERTAIN TO YEAR 1993 AND SAID ENTRIES ARE ENTERED IN THE BOOKS OF M/S. RAVI DAIRY PROP. OM PRAKASH. THE MEANING OF THE C ONTENTION THAT SAID ENTRIES ARE ENTERED IN THE BOOKS OF ACCOUNT OF M/S. RAVI DAIRY FOR THE PERIOD FROM 1993 - 94. A PHOTOCOPY OF THE DIARY (A - 5) HAS BEEN ENCLOSED FROM PAGES 102 TO 153 OF THE PAPER BOOK OF THE ASSESSEE. ON PERUSAL OF PAGE 103, WE FIND THAT 1993 IS PREPRINTED ON THE SAID PAGE. IN OUR VIEW, THIS IS THE ONLY BASIS , ON WHICH THE ASSESSEE IS CLAIMING THAT DIARY BELONG TO PERIOD 1993 BUT IT IS AMPLY CLEAR FROM THE DIARY THAT ENTRIES RECORDED PERTAIN TO THE YEAR 2003. WE FIND THAT ON PAGE 107 OF ASSESSEE S PAPER BOOK , DATE OF 11.11.2003 HAS BEEN RECORDED. ON PAGE 109 ALSO THE DATE OF 11.11.2003 IS RECORDED. ON PAGE 111 OF ASSESSEE S PAPER BOOK, DATE OF 12.11.203 IS RECORDED. THERE ARE MANY OTHER PAGES ON WHICH DATE S OF MONTH OF NOVEMBER/DECEMBER, 2003 ARE WRITTE N . IN OUR OPINION, IT WAS NOT RELEVANT WHEN THE DIARY WAS PRINTED. WHAT IS RELEVANT IN THE PRESENT ISSUE IN DISPUTE , IS WHEN THE ENTRIES HAVE BEEN RECORDED IN THE SAID DIARY . THUS, CONTENTION OF THE L D. COUNSEL THAT THE ENTRIES IN THE DIARY PERTAIN TO THE YEAR 1993 IS REJECTED. 3.5 THE ANOTHER CONTENTION OF THE LD. COUNSEL IS THAT THE DIARY DID NOT PERTAIN TO THE ASSESSEE A ND IT PERTAINS TO SH. OMPRAKASH, FATHER OF SRI NARESH KUMAR ( PARTNER OF THE ASSESSEE FIRM). FIRST OF ALL, DURING THE COURSE OF SURVEY PROCEEDING SH . NARESH KUMAR WAS SHOWN ALL THE DOCUMENTS IMPOUNDED. IN HIS STATEMENT RECORDED ON THE DATE OF SURVEY I.E. 04/12/2003 , VIDE QUESTION NO. 19, HE WAS SHOWN THE IMPOUNDED DOCUMENTS AND ASKED TO EXPLAIN THE NATURE OF ENTRIES IN TH OSE DOCUMENTS. IN RESPONSE, HE SUBMITTED THAT HE HAD SEEN ALL THE DOCUMENTS AND EXPLAINED CONTENT S OF EACH ANNEXURE FROM A - 1 TO A - 22. WITH REFERENCE TO ANNEXURE A - 5, HE STATED THAT IN THE DIARY DETAIL OF ADVANCE GIVEN BY THE FIRM TO SUPPLIERS WAS WRITTEN. THEREAFTER , DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, WHICH WERE 9 ITA NO. 1445/DEL/2012 COMPLETED UNDER SECTION 144 OF THE ACT , THE ASSESSEE DID NOT MAKE ANY CLAIM THAT THE DIARY DID NOT BELONG TO THE FIRM. IN SECOND ROUND OF THE ASSESSMENT PROCEEDINGS, ALSO THE ASSESSING OFFI CER PROVIDED NUMEROUS OPPORTUNITIES FROM 26/11/2010 TO 20/12/2010 TO EXPLAIN THE ENTRIES RECORDED IN THE DIARY , HOWEVER, THE ASSESSEE MADE CLAIM JUST TWO DAYS PRIOR TO COMPLETION OF THE ASSESSMENT THAT THE DIARY DID NOT BELONG TO IT. THE ASSESSEE DID NOT P RODUCE BOOKS OF ACCOUNTS AND VOUCHERS OF RAVI DAIRY BEFORE THE ASSESSING OFFICER IN SUPPORT OF HIS CLAIM. THE ASSESSING OFFICER HAD ALREADY PROVIDED MORE THAN SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO ESTABLISH WHETHER THOSE ENTRIES WERE ENTERED IN THE R EGULAR BOOKS OF ACCOUNTS OF THE FIRM BUT THE ASSESSEE DID NOT COMPLY WITH THE OPPORTUNITIES. MOREOVER , THE ASSESSEE MADE THE CLAIM OF ENTRIES BELONGING TO SH . OMPRAKASH, WITHOUT SUPPORTED BY DOCUMENTARY EVIDENCES . WE OBSERVE THAT THE ASSESSEE NEITHER FILED THOSE DOCUMENTARY EVIDENCES BEFORE THE LD. CIT - ( A ) AS ADDITIONAL EVIDENCES NOR BEFORE US. EVEN DURING THE REMAND PROCEEDI NG BEFORE THE ASSESSING OFFICER , THE ASSESSEE DID NOT PRODUCE THOSE BOO KS OF ACCOUNTS AND VOUCHERS OF R AVI DAIRY TO SUPPORT ITS CLA IM . IT IS THE BURDEN OF THE ASSESSEE TO SUBSTANTIATE ITS CLAIM OF DIARY NOT BELONGING TO THE FIRM AND THE ASSESSEE HAS SQUARELY FAILED IN DISCHARGING ITS BURDEN, PARTICULARLY WHEN DURING SURVEY PROCEEDING ADMITTED THAT THE DIARY BELONGED TO THE FIRM . THE ISSUE IS BEFORE US IN SECOND ROUND OF PROCEEDING AND MORE THAN 14 YEARS HAVE ALREADY ELAPSED SINCE THE SURVEY PROCEEDINGS I N WHICH THE DIARY WAS IMPOUNDED. FURTHER, THE ASSESSEE SUBMITTED THAT CASH PAYMENTS RECORDED IN THE DIARY (A - 5) ARE ENTERED IN THE BO OKS OF ACCOUNT OF M/S. RAVI DAIRY FOR THE YEAR 1993. IN OUR OPINION, WHEN WE HAVE ALREADY HELD THAT CASH PAYMENTS IN THE DIARY (A - 5) WHICH PERTAIN TO THE YEAR, 2003, THEN CONTENTION OF THE ASSESSEE THAT SAID CASH PAYMENT ARE ENTERED IN BOOKS OF M/S. RA VI DAIRY FOR THE YEAR, 1993, FAILS TO EXPLAIN THE SOURCE OF CASH PAYMENTS BELONGING TO THE YEAR, 2003. THUS, THE BOOKS OF M/S. RAVI DAIRY FOR THE YEAR, 1993, CANNOT EXPLAIN THE SAID CASH PAYMENTS RECORDED 10 ITA NO. 1445/DEL/2012 IN SEIZED DIARY (A - 5) WHICH PERTAIN TO THE YEAR, 2003. T HUS , IN SUCH CIRCUMSTANCES WE DO NOT FIND IT APPROPRIATE TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION OF THE CLAIM OF THE ASSESSEE TH AT THE ENTRIES PERTAIN TO RAVI D AIRY . MOREOVER, THE ASSESSEE HAS NOT BROUGHT O N RECORD THAT BOOKS OF ACCOUNTS OR VOUC HERS OF RAVI D AIRY FOR THE YEAR, 1993 WERE FOUND OR IMPOUNDED DURING THE COURSE OF SURVEY AND THUS IT IS DIFFICULT TO ESTABLISH AUTHENTICITY OF THE BOOKS OF ACCOUNTS OF RAVI DAIRY ALSO. 3.6 FURTHER, WE MAY LIKE TO MENTION THAT THE CLAIM OF THE ASSESSEE THAT BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE BEEN TEST CHECKED AND NOTHING ADV ERSE CAME TO NOTICE, IS NOT RELEVANT PARTICULARLY IN RESPECT OF THE ADDITION IN DISPUTE. HERE THE ISSUE IS WHETHER THOSE CASH PAYMENTS RECOR DED IN DIARY A - 5 , ARE APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE OR NOT AND THE ASSESSEE HAS FAILED IN DISCHARGING THIS ONUS . IN VIEW OF FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE FINDING OF THE LD. CIT - ( A ) IN HOLDING THAT THE PAY MENTS RECORDED IN THE DIARY ARE U N - EXPLAI NED INVESTMENT. 3.7 HOWEVER, THE CONTENTION OF THE LD. COUNSEL REGARDING THE ENTRY OF TAKHVINDER SINGH IS PRIMA FACIE FOUND TO BE CORRECT. IN THE ASSESSMENT ORDER , AMOUNT OF CASH PAYMENT AGAINST NAME OF SH . TAKH VINDER SINGH IS RECORDED AS RS. 50,000/ - , WHEREAS ON PERUSAL OF THE PAGE 106 OF THE PAPER BOOK, WHICH IS A PAGE OF THE DIARY (A - 5) , THE AMOUNT NOTED IS ONLY RS.5000/ - . IN VIEW OF THE APPARENT INCONSISTENCY IN THE ADDITION MADE AGAINST THE NAME OF SH . TAKHVINDER SINGH, WE FEEL IT APPROPRIATE TO RESTORE THIS ISSUE FOR VERIFICATION TO THE FILE OF THE ASSESSING OFFICER AND DETERMINE THE CORRECT AMOUNT OF ADDITION AGAINST CASH PAYMENTS, WHICH COULD BE MADE ON THE BASIS OF THE DIARY (A - 5). THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THE GROUND NO.1 OF THE APPEAL IS ALLOWED PARTLY FOR STATISTICAL PURPOSES. 11 ITA NO. 1445/DEL/2012 4. THE GROUND N O. 2 RELATES TO ADDITION OF RS. 4,17,000/ - AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT RELYING ON THE STATEMENT OF SH. NARESH KUMAR, PARTNER OF THE ASSESSEE FIRM. 4.1 THE FACTS QUA THE ADDITION ARE THAT SH . NARESH KUMAR, PARTNER OF THE ASSESSEE FIRM IN HIS STATEMENT DATED 04/12/2003 ACCEPTED TO HAVE MADE PAYMENTS OF RS.4,17,000 / - TO VARIOUS PERSON S, A LIST OF WHICH WAS PROVIDED BY HIM IN THE STATEMENT. THE S AID LIST OF PERSONS ALONGWITH THE AMOUNT HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER. FOR READY REFERENCE, THE SAID LIST IS EXTRACTED AS UNDER : I SH. ISHWAR SINGH, MILK CENTRE/SAFIDON RS.1 ,00,000/ - 02.12.2003 I I M/S. GABA DAIRY, NILOKHERI RS. 40,000/ - 03.12.2003 III SH. NARENDER KUMAR, MILK CENTRE, ASSANDH RS. 40,000/ - 03.12.2003 IV SH. RAJ KUMAR, MILK CENTRE ASSANDH. RS. 3 5,000/ - V SH. KARAM SINGH, MILK CENTRED, LADWA RS. 50,000/ - VI SH. NIRDOSH, MILK CENTRES RS. 15,000/ - VII SH. KASTURI LAL, MILK CENTRED RS. 12,000/ - VII SH YASH PAL, MILK CENTRE, JHANSA RS. 25,000/ - IX SH. ARUN KUMAR MILK CENTRED GHARI NEEL (KNL) RS.1,00,000/ - TOTAL RS. 4,17,000 4.2 DURING THE COURSE OF SECOND ROUND OF ASSESSMENT PROCEEDING, THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF PAYMENT. THE ASSESSEE WAS PROVIDED VARIOUS OPPORTUNITIES BETWEEN THE PERIODS FROM 25/11/2010 TO 20/12/2010, BUT NO REPLY WAS FURNISHED ON BEHALF OF THE ASSESSEE. ON 20/12/2010 , IT WAS SUBMITTED BY THE ASSESSEE THAT STATEMENT OF SH. NARESH KUMAR, PARTNER COULD NOT BE RELIED UPON AS HE WAS UNDER GREAT MENTAL PRESSURE AND STRESS AND HENCE WAS NOT IN THE RIGHT FRAME OF MIND 12 ITA NO. 1445/DEL/2012 OF MAKING THE STATEMENT. THIS PLEA OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER OBSERVING AS UNDER: ..THE PLEA OF THE ASSESSEE IS TOTALLY UNTENABLE AND WITHOUT ANY BASIS AS SH. NARESH KUMAR PARTNER HAS MADE A VERY EXHAUSTIVE AND DETAILED STATEMENT WHEREIN HE HAS DELINEATED THE VARIOUS ASPECTS OF BUSINESS IN DETAIL AND ALSO IDENTIFIES THE VARIOUS DOCUMENTS IMPOUNDED FROM THE PREMISES AND GAVE A BRIEF OVERVIEW OF THEM. ALSO, HE HAS CLEAR LY AND FIRMLY TOLD ABOUT THE PARTNERS, THEIR SHARES, OTHER SISTER CONCERNS AND EVEN TRUCK NO. OF 6 MILK TA NKERS OWNED BY ASSESSEE CONCERN . IN REPLY TO A SPECIFIC QUESTION, HE HAD CLEARLY AND SPECIFICALLY TOLD ABOUT THE OTHER SISTER CONCERN, M/S DASHMESH IC E FACTORY AND THEIR PARTNERS . IN REPLY TO OTHER QUESTION, HE HAS CLEARLY AND SPECIFICALLY TOLD ABOUT 6 MILK TANKERS OWNED BY ASSESSEE S CONCERN AND EVEN THEIR REQN. N O. IN REPLY TO ANOTHER QUESTION , HE HAS CLEARLY TOLD ABOUT THE BANK ACCOUNTS OF ASSESSEE C ONCERN, M/S DASHMESH ICE FACTORY AND OF SELF. ALSO, HE HAS CLEARLY IDENTIFIED ALL THE 22 IMPO UNDED DOCUMENTS AND ALSO TOLD AB OUT THE NATURE OF TRANSACTION THEREIN SO IN VIEW OF ALL THESE FACTS, ASSESSEE S CONTENTIONS ARE JUST AN PLOY TO DIVERT THE ISSUE AS ALL THE PAYMENTS ARE CLEARLY MADE OUT OF THE BOOKS AND ARE NOT RECORDED IN THE BOOKS SO THE SUM OF RS.417000/ - PAID IN CASH TO ABOVE NOTED PERSONS IS TREATED AS THE UNEXPLAINED INVESTMENT OF THE ASSESSEE CONCERN AND IS HEREBY ADDED BACK TO THE INCOME OF A SSESSEE U/S 69 OF THE I.T. ACT, 1961 4.3 BEFORE THE LEARNED CIT - ( A ) , THE ASSESSEE REPEATED THE SAME ARGUMENTS, WHICH WERE MADE BEFORE THE ASSESSING OFFICER ON 20/12/2010. THE LD. CIT - ( A ) REJECTED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ADDITION WITH FOLLOWING OBSERVATIONS: 1.13 THE APPELLANT IN THE WRITTEN SUBMISSIONS REITERATED THE SUBMISSIONS MADE DURING THE ASSESSMENT PROCEEDINGS THAT SH. NARESH KUMAR, PARTNER WAS UNDER GRE AT MENTAL PRESSURE AND STRESS AT THE TIME OF SURVEY AND HENCE HIS STATEMENT CANNOT BE CONSIDERED. THE PLEA OF THE APPELLANT IS NOT TENABLE IN VIEW OF 13 ITA NO. 1445/DEL/2012 THE FACTS DISCUSSED BY THE AO IN THE ASSESSMENT ORDER THAT SH. NARESH KUMAR MADE A DETAILED STATEMENT AND EVEN GAVE MINOR DETAILS OF BUSINESS. THE COUNSEL OF THE APPELLANT COULD NOT MAKE ANY FURTHER SUBMISSIONS TO EXPLAIN THE SOURCE OF THESE PAYMENTS AND HENCE ADDITION THEREOF, MADE BY THE AO IS HEREBY CONFIRMED. GROUND NO.1 & 2 OF APPEAL ARE AS SUCH REJECTED. 4.4 BEFORE US , THE LD. COUNSEL SUBMITTED THAT ADDITION HAS BEEN MADE RELYING ON MERELY THE STATEMENT OF THE PARTNER AND NO CORROBORATIVE MATERIAL WAS FOUND TO SUPPORT THE ADDITION. ACCORDING TO THE LD. COUNSE L , THE STATEMENT HAD NO EVIDENTIARY VALUE IN VIEW OF THE JUDGMENT OF HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. S . KHADER KHAN S ON , (2008) 300 ITR 157. 4.5 HE FURTHER REFERRED TO PAGE 101 OF THE PAPER BOOK AND SUBMITTED THAT DURING OR IGINAL ASSESSMENT PROCEEDINGS, SH. NARESH KUMAR SUBMITTED AN AFFIDAVIT DATED 19/12/2007 WHEREIN HE DEPOSED THAT HIS STATEMENT DATED 04/12/2003 DURING SURVEY PROCEEDING WAS UNDER GREAT MENTAL TENSION, STRESS AND UNDER COERCION AND INFLUENCE AND HE WAS NOT DEALING WITH ACCOUNTS OF THE FIRM AND OFFE RED TO GIVE FRESH STATEMENT. THE LD. COUNSEL FURTHER REFERRED TO PAGE 102 OF THE PAPER BOOK, WHICH IS CLAIMED TO BE A COPY OF STATEMENT OF SH. NARESH KUMAR RECORDED ON 20/12/2007. THE LD. COUNSEL SUBMITTED THAT IN SECOND ROUND OF PROCEEDINGS , THE ASSESSEE REITERATED THAT A STATEMENT GIVEN DURING THE SURVEY WAS UNDER STRESS AND DENIED PAYMENTS M ADE FOR RS.4, 17,000/ - . THE LD. COUNSEL SUBMITTED THAT NO ATTEMPT WAS MADE INDEPENDENTLY BY THE ASSESSING OFFICER TO SEEK MATERIAL TO REBUT THE DENIAL OF THE AS S ESSE E' S STATEMENT RECORDED DURING THE COURSE OF SURVEY. 4.6 THE LD. CIT ( DR ), ON THE OTHER HAND , RELIED ON THE FINDING OF THE LD. CIT - ( A ) AND SUBMITTED TH AT IN THE SURVEY PROCEEDING SH. NARESH KUMAR HIMSELF IN RESPONSE TO QUESTION NO. 15 PROVIDED THE LIST OF THE PARTIES TO 14 ITA NO. 1445/DEL/2012 WHOM CASH PAYMENT WAS MADE AND IN RESPONSE TO QUESTION NO. 16 , HE HIMSELF ADMITTED THAT THAT LIST OF DEBTORS/ CREDITORS RECORDED IN THE BOOKS OF ACCOUNTS WAS NOT RELIABLE. S HE FURTHER SUBMITTED THAT IT WAS THE ONUS OF THE ASSESSEE TO ESTABLISH THAT THE STATEMENT RECORDED DURING THE COURSE OF SURVEY WAS UNDER MENTAL STRESS OR ANY COERCION OR INFLUENCE. IN VIEW OF THE FAILURE OF THE ASSESSEE IN DISCHARGING ITS ONUS, THE LOWER AUTHORITIES WERE CORRECT IN HOLDING THE CASH PAYMENTS AS UNEXPLAINED IN ABSENCE OF VERIFICATION OF SOURCE OF PAYMENT FROM THE BOOKS OF ACCOUNTS. 4.7 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE NOTE THAT HON BLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. S . KHADER KHAN SON (SUPRA) HAS CONCLUDED THAT STATEMENT RECORDED UNDER SECTION 133A (I.E. SURVEY) OF THE ACT IS NOT GIVEN ANY EVIDENTIARY VALUE FOR THE REASON THAT OFFICER IS NOT AUTHORIZED TO ADMINISTER OATH AND TO T AKE ANY SWORN STATEMENT. THE RELEVANT FINDING OF THE HON BLE HIGH COURT IS REPRODUCED AS UNDER: 7. FROM THE FOREGOING DISCUSSION, THE FOLLOWI NG PRINCIPLES CAN BE CULLED OUT: (I) AN ADMISSION IS EXTREMELY AN IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THAT THE ASSESSEE SHOULD BE GIVEN A PROPER OPPORTUNITY TO SHOW THAT TH E BOOKS OF ACCOUNTS DO NOT CORRECTLY DISCLOSE THE CORRECT STATE OF FACTS, VIDE DECISION OF THE APEX COURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA (SUPRA); (II) IN CONTRADISTINCTION TO THE POWER UNDER S. 133A, S. 132(4) OF THE IT ACT ENA BLES THE AUTHORISED OFFICER TO EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION CAN ALSO BE USED IN EVIDENCE UNDER THE IT ACT. ON THE OTHER HAND, WHATEVER STATEMENT IS RECORDED UNDER S. 133A OF THE IT ACT IT IS NOT GIV EN ANY EVIDENTIARY VALUE OBVIOUSLY FOR THE REASON THAT THE OFFICER IS NOT AUTHORISED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVIDENTIARY 15 ITA NO. 1445/DEL/2012 VALUE AS CONTEMPLATED UNDER LAW, VIDE PAUL MATHEWS & SONS VS. CIT (SUPRA); (III) THE EXPRESSION 'SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE AO' CONTAINED IN S. 158BB OF THE IT ACT, 1961, WOULD (NOT) INCLUDE THE MATERIALS GATHERED DURING THE SURVEY OPERATION UNDER S. 133A, VIDE CIT VS. G.K. SENNIAPPAN (SUPRA); (IV) THE MATERIAL OR INFORMATION FOUND IN THE COURSE OF SURVEY PROCEEDING COULD NOT BE A BASIS FOR MAKING ANY ADDITION IN THE BLOCK ASSESSMENT, VIDE DECISION OF THIS COURT IN TAX CASE (APPEAL) NO.2620 OF 2006 (BETWEEN CIT VS. S. AJIT KUMAR); (V) FINALLY, THE W ORD MAY USED IN S. 133A(3)(III) OF THE ACT, VIZ., RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THIS ACT , AS ALREADY EXTRACTED ABOVE, MAKES IT CLEAR THAT THE MATERIALS COLLECTED AND THE STATEMENT RECOR DED DURING THE SURVEY UNDER S. 133A ARE NOT CONCLUSIVE PIECE OF EVIDENCE BY ITSELF. 4.8 THE FACT THAT , SURVEY WAS CONDUCTED ON 04/12/2013 AT THE PREMISES OF THE ASSESSEE AND IN THE STATEMENT RECORDED DURING SURVEY PROCEEDINGS, SH . NARESH KUMAR (PARTNER OF THE ASSESSEE FIRM) , IN RESPONSE TO Q UESTION NO. 15 PROVIDED THE LIST OF THE PARTIES TO WHOM PAYMENT WAS MADE IN A WEEK PRIOR TO THE DATE OF SURVEY. A L IST OF SUCH PARTIES HAS ALREADY BEEN REPRODUCED IN EARLIER PARAGRAPH OF THIS ORDER. IN THE STATEMENT , HE ALSO ACCEPTED THAT THESE PAYMENTS ARE MADE OUT OF CASH RECEIVED FROM PARUL FOODS . IT IS UNDISPUTED THAT THIS STATEMENT HAS NOT BEEN CORROBORATED WITH ANY MATERIAL IMPOUNDED DURING THE COURSE OF SURVEY AT THE PREMISES OF THE ASSESSEE OR ANY OTHER MATE RIAL GATHERED BY THE ASSESSING OFFICER IN POST - SURVEY PROCEEDINGS. THUS , IN VIEW OF THE DECISION OF THE HON BLE MADRAS HIGH COURT IN THE C ASE OF S . KHAER KHAN S ON (SUPRA) , WE ARE OF THE CONSIDERED OPINION THAT NO ADDITION COULD HAVE BEEN MADE MERELY ON THE BASIS OF A STATEMENT WITHOUT ANY CORROBORATIVE MATERIAL. WE ALSO NOTE THAT THE ASSESSING OFFICER HAS 16 ITA NO. 1445/DEL/2012 ALREADY MADE ADDITION OF RS. 10,32,171/ - FOR CASH PAYMENTS GIVEN B Y THE ASSESSEE ON THE BASIS OF T HE DIARY (A - 5). 4.9 FURTHER , WE FIND THAT THE SOURCE OF THE SAID PAYMENT HAS BEEN EXPLAINED BY SH. NARESH KUMAR IN HIS STATEMENT AS OUT OF THE CASH RECEIVED FROM PARUL FOODS . HE HAS STATED THAT PAYMENT OF B ILL NO. 454 DATED 02/12/2003 WAS RECEIVED IN CASH FROM M/S PARUL F OODS AND THE PAYMENTS OF RS. 4,17,000/ - WERE MADE OUT OF SAID CASH RECEIPT. IN OUR OPINION , WHEN THE PARTNER HAS ALREADY EXPLAINED THE SOURCE OF SAID P AYMENT AS RECEIVED FROM PARUL F OODS , FINDING OF THE ASSESSING OFFICER IN HOLDING THE CASH PAYMENT AS UNEXPLAINED , IS NOT JUSTIFIED. 4.10 IN VIEW OF ABOVE DISCUSSION, THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED AND WE SET ASIDE THE FINDING OF THE LD. CIT(A) AND DIRECT THE LD. A . O . TO DELETE THE SAME. THE GROUND NO. 2 OF THE APPEAL IS ACCORDINGLY ALLOWED. 5. THE G ROUND NO. 3 OF T HE APPEAL RELATES TO GROSS PROFIT OF RS.1,20,882/ - ON SALES FIGURE OF RS.47,96,926/ - ADDED BY THE ASSESSING OFFICER. 5.1 FACTS QUA THE ADDITION ARE THAT THE ASSESSING OFFICER OBTAINED INFORMATION FROM THE SEIZED RECORD OF M/S . PARUL FOODS AND MANKENDESHWAR F OODS OF SUPPLY OF MILK BY THE ASSESSEE AS UNDER: A ) 2,16,455 LITRES OF MILK AMOUNTING TO RS. 19,57, 118/ - SOLD TO PARUL F OODS AND MANKENDESHWAR FOODS V IDE BILL NO. 411 DATED 12/11/2003. B ) 9,89,590 LITRES OF MILK SUPPLIED TO PARUL FOODS & MANKENDESHWAR FOODS DUR ING THE PERIOD FROM 09/10/2003 TO 02/12/2003. (THE DETAIL OF TANKER NUMBER, DATE OF SALE AND QUANTITY OF MILK CORRESPONDING TO THE S UPPLY OF 9,89,950 LITRE OF MILK HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER.) 17 ITA NO. 1445/DEL/2012 5.2 DURING ASSESSMENT PROCEEDING THE ASSESSING OFFICER AFTER TAKING INTO ACCOUNT EXPLANATION OF TH E ASSESSEE , OUT OF THE 9,89,590 L ITRE S OF MILK, FOUND ONLY AMOUNT OF 2,97,685 LITRES AS SOLD OUT OF BOOKS OF ACCOUNTS. THE QUANTITY OF 2,16,455 LITRES OF MILK WAS ALSO F OUND NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. ACCORDINGLY , THE LD. ASSESSING OFFICER H ELD 5,14,190 (216455 + 297685) LITRES OF MILK A S SOLD OUTSIDE THE REGULAR BOOKS OF ACCOUNTS AND AFTER VALU ING IT AT THE RATE OF RS. 9.33 P ER L ITRE ( RELYING ON SALE PRICE OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION) , HE VALUED THE SALES AT RS. 47,96,926/ - AND AFTER APPLYING GROSS PROFIT RATE OF 2.52% AS SHOWN BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, HE WOR KED OUT THE GROSS PROFIT OF RS. 1,20,882/ - ON SUC H UNACCOUNTED SALE OF MILK. BEFORE THE LEARNED CIT - ( A ) , THE ASSESSEE CONTENDED THAT IT WAS NOT POSSIBLE TO TRANSPORT MILK OF 2, 16,455 L ITRES V IDE BILL NO. 411 AS IT WOULD REQUIRE AT LEAST 20 TRUCKS / VESSEL FOR ITS TRANSPORTATION . THE LEARNED CIT - ( A ) CONSIDERED THIS ARGUMENT OF THE ASSESSEE AND DIRECTED TO EXCLUDE THE SALE OF THE MILK OF 2,16,455 LITRES AS PER THE BILL NO. 411 FROM THE UNACCOUNTED SALE OF MILK FOR WORK ING OUT THE GROSS PROFIT . 5.3 THUS , THE ONLY UNACCOUNTED SALE OF MILK WHICH WAS SUST AINED BY THE LD. CIT - ( A ) IS 2,97,685 L ITRE AND SALE VALUE OF WHICH AT THE RATE OF RS. 9.33 PER LITRE ADOPTED BY THE ASSESSIN G OFFICER, WOULD WORK OUT TO RS. 27,77,401/ - AND APPLYING THE GROSS PROFIT RATE OF 2.52% DECLARED BY THE ASSESSEE, THE NET ADDITION SUSTAINED BY THE LD. CIT - ( A ) WOULD BE LIMITED TO RS.69,990/ - AS AGAINST ADDITION OF RS. 1, 20,882/ - MADE BY THE ASSESSING OFFICER. 5.4 THE GROUND NO. 5 RELATES TO ADDITIO N OF RS.19,278/ - AS UNACCOUNTED INCO ME FROM SALE OF 81,995 L ITRE S OF MILK. THE ASSESSING OFFICER HAS RECORDED THAT ON PERUSAL OF THE PHOTOCOPY OF THE IMPOUNDED DOCUMENTS FROM THE PREMISES OF THE ASSESSEE, DETAIL OF SALE OF MILK ON 18 ITA NO. 1445/DEL/2012 VARIOUS DATES FROM 24/11/ 2003 TO 12/12/2003 TOTALLING TO 81,99 5 L ITRE OF MILK IS NOTED. IN VIEW OF THE FAILURE OF THE ASSESSEE TO RECONCILE THE SALES IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE, THE ASSESSING OFFICER HELD THE QUAN TITY OF 81,995 LITRES OF MILK A S SOLD OUTSIDE THE BOOKS OF ACCOUNTS AND VALUING TH E SAME AT RS. 9.33 KG., I.E , AVERAGE SALE PRICE OF THE ASSESSEE FOR THE YEAR, THE UNACCOU NTED SALE WAS WORKED OUT TO RS.7, 65,013/ - AND AFTER APPLYING THE GROSS PROFIT RATE OF 2.52%, HE WOR KED OUT THE UNACCOUNTED INCOME OF RS.19,278/ - . THE ADDITION MADE BY THE ASSESSING OFFICER WAS UPHELD BY THE LD. CIT - ( A ) . 5.5 THE PLEA OF THE ASSESSEE BOTH IN RESPECT OF GROUND NO. 3 AND 4, FOR APPLYING NET PROFIT RATE INSTEAD OF GROSS PROFIT RATE WAS ALSO REJECTED BY THE LD. CIT - (A) ON THE GROUND THAT EXPENSES HAD ALREADY BEEN BOOKED/CLAIMED IN THE PROFIT AND LOSS ACCOUNT AND NO EVIDENCE WAS FOUND DURING THE SURVEY OF INCURRING ANY EXPENSES FOR MAKING THE ABOVE UNACCOUNTED SALES. 5.6 BEFORE US , LEARNED COUNSEL , IN RESPECT OF GROUND NO. 3 AND 4 SUBMITTED THAT THE ADDITIONS HAVE BEEN MADE WITHOUT POSSESSION OF ANY COGENT MATERIAL AND MERELY ON THE BASIS OF THE ESTIMATION AND IN COMPLETE IGNORANCE OF THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THE LEARNED COUNSEL SUBMITTED THAT TH E ASSESSING OFFICER HAS ACCEPTED THE BOOK RESULTS OF THE ASSESSEE AND THUS HE WAS NOT JUSTIFIED I N MAKING ADDITION FOR UNACCOUNTED SALES WITHOUT REJECTING BOOKS OF ACCOUNTS OF THE ASSESSEE. 5.7 ON THE OTHER HAND, LD. SR. DR RELIED ON THE ORDER OF THE LOWE R AUTHORITIES AND SUBMITTED THAT ADDITION SUSTAINED BY THE LD. CIT - ( A ) MIGHT BE UPHELD. 5.8 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LD. ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS MENTIONED THAT THE RELEVANT SE IZED OR IMPOUNDED MATERIAL IN RESPECT 19 ITA NO. 1445/DEL/2012 OF THE UNACCOUNTED SALE WAS DULY CONFRONTED TO THE ASSESSEE AND SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE TO EXPLAIN WHETHER THOSE SALES ARE RECORDED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE . BUT IN VIEW OF THE FAILURE OF THE ASSESSEE , THE SAID ADDITION WAS MADE. BEFORE US , THE LEARNED COUNSEL SUBMITTED THAT THE RELEVANT SEIZED MATERIAL/IMPOUNDED MATERIAL WAS NOT CONFRONTED TO THE ASSESSEE BUT HE DID NOT SUBMIT ANY EVIDENCE IN THIS REGARD. THE ASSESSING OFFIC ER HAS DULY MENTIONED IN THE IMPUGNED ASSESSMENT ORDER THE FACT OF PROVIDING COPY OF THE SEIZED/IMPOUNDED MATERIAL. WE NOTE THAT THE ASSESSING OFFICER IN PARA - 6(I) OF THE ASSESSMENT ORDER HAS MENTIONED THE LIST OF TRUCK NUMBER, DATE OF SALE OF MILK AND QU ANTITY OF SALE OF MILK SUPPLIED BY THE ASSESSEE DURING THE PERIOD FROM 09/10/2003 TO 02/12/2003. THE ASSESSING OFFICER TAKEN INTO ACCOUNT THE EXPLANATION OF THE ASSESSEE AND THEN OUT OF 9,89, 59 0 LITRES, FOUND QUANTITY OF 2,97, 685 LITRES A S NOT RECORDED IN THE BOOKS OF ACCOUNTS. IN SUCH CIRCUMSTANCES, WE REJECT THE CONTENTION OF THE LD. COUNSEL THAT RELEVANT MATERIAL WAS NOT CONFRONTED TO THE ASSESSEE. THE ANOTHER CONTENTION OF THE LD. COUNSEL THAT THE ADDITION HAS BEEN MADE WITHOUT REJECTI NG BOOKS OF ACCOUNT IS ALSO NOT TENABLE. IN THE INSTANT CASE, THE GROSS PROFIT ON SALES FOUND OUT OF BOOKS OF ACCOUNT HAS BEEN ADDED TO THE GROSS PROFIT OR INCOME DECLARED BY THE ASSESSEE ON THE BASIS OF BOOKS OF ACCOUNT. IN OUR OPINION, THE GROSS PROFIT O N UNACCOUNTED SALES HAS BEEN ADDED TO THE BOOK RESULTS ALREADY DECLARED, THERE WAS NOTHING WRONG IN THE ADDITION MADE BY THE LD. ASSESSING OFFICER. AS THE ASSESSEE FAILED TO RECONCILE THE SALES RECORDED IN SEIZED/IMPOUNDED DOCUMENTS, THE ACTION OF THE ASSE SSING OFFICER IN HOLDING THE SAME AS UNACCOUNTED WAS JUSTIFIED. 5.9 HOWEVER, IN THE CASE OF THE ASSESSEE, WE FIND THAT THE ASSESSING OFFICER HAS MADE ADDITION BOTH FOR THE UNACCOUNTED INCOME AS WELL AS UNEXPLAINED INVESTMENT IN CASH PAYMENT. IN GROUND NO. 1 AND 2 THE 20 ITA NO. 1445/DEL/2012 ASSESSEE CHALLENGED ADDITION OF UNEXPLAINED INVESTMENT AND IN GROUND NO. 3 AND 4, THE ASSESSEE CHALLENGED ADDITI ON OF UNACCOUNTED PROFIT/INCOME . WE FIND THAT, THE ASSESSEE HAS NOT BEEN GIVEN ANY BENEFIT OF TELESCOPING OF THE UNACCOUNTED INCOME AGAINST THE UNEXPLAINED INVESTMENT. IF ADDITION FOR THE UNACCOUNTED PROFIT IS MADE THAN THE BENEFIT OF THE APPLICATION OF THE SAID PROFIT AGAINST UNEXPLAINED CASH PAYMENT WAS REQUIRED TO BE GIVEN, WHICH THE ASSESSING OFFICER HAS NOT GIVEN. WE HAVE OBSERVE D THAT BOTH THE UNACCOUNTED PROFIT AND UNEXPLAINED INVESTMENT ARE IN RESPECT OF THE SAME PERIOD FOR THE MONTH OF OCTOBER TO DECEMBER , 2003. IF SUCH AN TELESCOPING OF UNACCOUNTED INCOME AGAINST THE UNEXPLAINED INVESTMENT, IS ALLOWED, NO ADDITION WOULD BE R EQUIRED TO MAKE ON THE ACCOUNT O F UNACCOUNTED PROFIT OF RS. 69,990/ - AND RS. 19,278/ - AS CHALLENGED BY THE ASSESSEE IN GROUND NO. 3 AND 4 RESPECTIVELY. THE UN EXPLAINED INVESTMENT CHALLENGED IN GROUND NO. 1 HAS ALREADY BEEN SUSTAINED IN PRINCIPLE BY US. ACCO RDINGLY , WE DIRECT THE ASSESSING OFFICER TO CONSIDER FOR GIVING BENEFIT OF TELESCOPING OF THE SAID UNACCOUNTED PROFIT AGAINST THE ADDITION OF UNEXPLAINED INVESTMENT. THUS, BOTH THE GROUND OF THE APPEAL ARE SET ASIDE AND MATTER IS RESTORED TO THE FILE OF TH E ASSESSING OFFICER FOR COMPLYING THE ABOVE DIRECTION. THE ASSESSEE SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD. THE GROUND NO. 3 AND 4 OF THE APPEAL ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 6. THE GROUND NO. 5, RELATES TO DISALLOWANCE O F RS.24,830 / - AGAINST 1/5 TH CAR EXPENSES FOR PERSONAL USE. THE ASSESSING OFFICER OBSERVED THAT PERSONAL USE OF THE CAR BY THE PARTNERS AND FAMILY MEMBERS COULD NOT BE RULED OUT AND , THEREFORE , HE DISALLOWED 1/5 TH OF THE TOTAL EXPENSES OF CAR MAINTENANCE ( RS.34,962/ - ) AND DEPRECIATION (RS.89, 163/ - ) , WHICH WORKED OUT TO RS. 24,830/ - . THE LD. CIT - ( A ) HELD THAT ASSESSEE COULD NOT BRING ON RECORD LOGBOOK ETC . OF THE CAR, WHICH COULD ESTABLISH THAT CAR WAS USED 21 ITA NO. 1445/DEL/2012 SOLELY FOR BUSINESS PURPOSE AND IN VIEW OF THIS FACT , HE SUSTAINED THE DISALLOWANCE. 6.1 BEFORE US , THE LEARNED COUNSEL REITERATED THE SUBMISSION MADE BEFORE THE LEARNED CIT - ( A ) . 6.2 ON THE CONTRARY , LEARNED SR. DR RELIED ON THE FINDING OF THE LD. CIT - ( A ) . 6.3 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CLAIM WITH DOCUMENTARY EVIDENCE THAT CAR WAS USED SOLELY FOR BUSINESS PURPOSE. THE ASSESSEE HAS NOT FURNISHED LOGBOOK REC ORD OF THE CAR FOR JUSTIFYING ITS CLAIM. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE UPHOLD THE FINDING OF THE LD. CIT - ( A ) ON TH E ISSUE IN DISPUTE, ACCORDINGLY, THE GROUND NO. 5 OF THE APPEAL IS DISMISSED. 7. THE GROUND NO. 6 RELATES TO ADDITION OF RS . 71, 650/ - ON ACCOUNT OF SHORTAGE OF MILK. THE ASSESSING O FFICER OBSERVED SHORTAGE OF 24, 111 KGS. OF THE MILK COLLECTED/PURCHASED AND MILK SOLD IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, WHICH WORKED OUT TO 0.28% OF PURCHASE OF MILK. THE ASSESSING OFFICER NO TED THAT IN IMMEDIATELY PRECEDING ASSESSMENT YEAR 2002 - 03 THE ASSESSEE CLAIMED SHORTAGE O F 0.29 %, WHICH AMOUNTED TO 31, 048 LITRES OF MILK. THE ASSESSING OFFICER IN ASSESSMENT YEAR 2000 - 03 ALLOWED THE SHORTAGE OF 20,000 KGS. WHICH CONSTITUTES 64.41 % OF SH ORTAGE SHOWN BY THE ASSESSEE AND DISALLOWED THE BALANCE 35.59%. THIS DISALLOWANCE WAS ACCEPTED BY THE ASSESSEE AND NO FURTHER APPEAL WAS FILED IN ASSESSMENT YEAR 2002 - 03. KEEPING IN VIEW THE DISALLOWANCE MADE IN ASSESSMENT YEAR 2002 - 03 BY THE ASSESSING OFF ICER , 35% OF THE QUANTITY OF 24, 111 KGS. OF MILK SHORTAGE, WHICH WAS WORKED OUT TO 8439 KGS. VALUED AT RS. 71, 650( 8439 X 8.49) WAS ADDED IN THE YEAR UNDER CONSIDERATION. 22 ITA NO. 1445/DEL/2012 7.1 BEFORE THE LD. CIT - ( A ), THE ASSESSEE EXPLAINED THAT SHORTAGE OCCURS DURING HANDLING, TRANSPORTATION AND EV EN IN SOME TIME MILK TURNS SOUR. THE LEARNED CIT - ( A ) , HOWEVER , UPHELD THE FINDING OF THE ASSESSING OFFICER ON THE GROUND THAT ASSESSEE COULD NOT REBUT THOSE FINDING WITH EVI DENCES. 7.2 BEFORE US , THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT BOOKS OF ACCOUNTS OF THE ASSESSEE ARE DULY AUDITED AND QUANTITATIVE DETAILS FORMS PART OF THE AUDITED ACCOUNTS. THE LD. COUNSEL REITERATED SUBMISSIONS MADE BEFORE THE LEARNED CIT - ( A ) ON THE ISSUE IN DISPUTE AND SUBMITTED THAT LD. CIT - ( A ) HAS SUSTAINED THE ADDITION WITHOUT ANY TANGIBLE MATERIAL. HE SUBMITTED THAT THERE WAS NO MATERIAL IN THE POSSESSION OF THE ASSESSING OFFICER TO HOLD THAT THERE WAS A SHORTAGE AND IT WAS MERELY ON THE BASI S OF ESTIMATE. 7.3 ON THE CONTRARY, LEARNED SR. DR RELIED ON THE FINDING OF THE LD. CIT - ( A ) . 7.4 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2002 - 03 THE ASSESSING OFFICER MADE DISALLOWANCE FOR SHORTAGE OF THE MILK. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS NOT CHALLENGED BY THE ASSESSEE, WHICH MEANS THE SHORTAGE OF MILK COMPUTED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2002 - 03 WAS ACCEPTED BY T HE ASSESSEE. WE NOTE THAT IN THE CASE OF RADHASOAMI SATSANG VS CIT , REPORTED IN 193 ITR 321, HON BLE SUPREME COURT HELD AS UNDER: 9. WE ARE AWARE OF THE FACT THAT, STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO IT PROCEEDINGS. AGAIN, EACH ASSESSMENT Y EAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT 23 ITA NO. 1445/DEL/2012 POSITION TO BE SU STAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. (EMPHASIS SUPPLIED EXTERNALLY) 7.5 IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS NOT BROUGHT ON RECORD THAT THERE IS A NY CHANGE IN THE PROCESS OF MILK TRANSPORTATION OR ANY OTHER PROCESS EMPLOYED BY THE ASSESSEE, THUS FOLLOWING THE RULE OF CONSISTENCY AS OBSERVED BY THE HON BLE SUPREME COU RT IN THE CASE OF RADHASOAMI S ATSANG (SUPTRA), THE ADDITION FOR SHORTAGE OF THE MILK IN THE YEAR UNDER CONSIDERATION SUSTAINED BY THE LD. CIT - (A) IS FOUND TO BE JUSTIFIED. 7.6 IN VIEW OF THE ABOVE , WE DO NOT FIND ANY ERROR IN THE FINDING OF THE LD. CIT - ( A ) ON THE ISSUE IN DISPUTE AND ACCORDINGLY , WE UPHOLD THE SAME. THE GROUND OF THE APPEAL OF THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED PARTLY FOR STATISTICAL PURPOSE. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 5 T H JAN . , 201 8 . S D / - S D / - ( K.N. CHARY ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 5 T H JANUARY , 201 8 . RK / - (D.T.D) COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI