Indra Prakash Agarwal, Prop: Ram Prasad & Sons, Hyderabad V. ACIT, Central Circle-6, Hyderabad

ITA 151/HYD/2013

• Counselvise Citation: 15122514 RSA 2013
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 11-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: K L RATHI
• Keywords: Unexplained investment; Unexplained expenditure; Business expenditure; Search and seizure; Additional evidence
• Section: 143(3); 153A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NOS. 75, 76, 77, 78, 151 & 152/HYD/2013 ASSESSMENT YEARS : 2004-05, 2005-06, 2006-07 , 2007-08, 2008-09 AND 2009-10 INDRA PRAKASH AGARWAL, HYDERABAD. PAN: ACMPA2706P THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 6, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY S/SHRI K.L. RATHI & SIDDHARTH TOSHNIVAL REVENUE BY SHRI P. SOMA SEKHAR REDDY DATE OF HEARING 30-12-2013 DATE OF PRONOUNCEMENT 08-01-2014 O R D E R PER B. RAMAKOTAIAH, A.M.: THESE SIX APPEALS ARE BY ASSESSEE FOR ASSESSMENT Y EARS 2004-05 TO 2009-10 AGAINST A COMMON ORDER OF CIT(A) -I, HYDERABAD DATED 26-11-2012. ASSESSEE HAS RAISED VARIOUS GROUN DS BOTH ON JURISDICTION OF AO IN PASSING ORDERS U/S 153A AND W ITHOUT PREJUDICE ON MERITS OF VARIOUS ADDITIONS MADE. SINCE COMMON ISSU ES ARE INVOLVED IN ALL THE APPEALS AND COMMON GROUNDS ARE RAISED, T HESE ARE DECIDED BY THIS ORDER FOR THE SAKE OF CONVENIENCE. 2. EVEN THOUGH ASSESSEE HAS RAISED VARIOUS GROUNDS ON JURISDICTION, MORE SO GROUND NOS. 2 & 3 IN SOME YEA RS AND IN SOME 2 ITA NO. 75/HYD/2013 AND OTHERS INDRA PRAKASH AGARWAL YEARS GROUND NOS. 2, 3 & 4. IN THE COURSE OF ARGUME NTS, GROUNDS ON JURISDICTION HAVE NOT BEEN PRESSED AND, ACCORDINGLY , THE SAME HAVE BEEN TREATED AS WITHDRAWN. 3. WE HAVE HEARD THE LEARNED COUNSEL S/SHRI K.L. RA THI AND SIDDHARTH TOSHNIVAL AND THE LEARNED CIT-DR SHRI P. SOMASEKHAR REDDY AND PERUSED PAPER BOOK PLACED ON RECORD BY AS SESSEE. 4. ASSESSEE IS IN THE BUSINESS OF PEARLS AND JEWELL ERY. SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED AT THE RESIDENTIA L PREMISES OF ASSESSEE ON 29-04-2008. IN RESPONSE TO THE NOTICE I SSUED U/S 153A, ASSESSEE FILED RETURNS OF INCOME FOR AYS 2004-05 TO 2006-07 AS WAS ORIGINALLY FILED AT THE RELEVANT POINT OF TIME. HOW EVER, FOR AY 2007-08 AND 2008-09, ASSESSEE HAS DISCLOSED ADDITIONAL INCO MES AND RETURNS WERE FILED ACCORDINGLY. FOR AY 2009-10, SINCE FY HA S NOT COMPLETED, ASSESSEE ADMITTED AN AMOUNT OF RS. 8,40,000/- AS IN COME OUT OF CASH FOUND AT THE TIME OF SEARCH AND FILED RETURN WHICH WAS ASSESSED U/S 143(3) OF THE IT ACT. IN ALL THE YEARS, THERE WAS A COMMON ADDITION MADE BY THE AO TOWARDS UNACCOUNTED EXPENDITURE ON A CCOUNT OF FOREIGN TRAVEL. IN AY 2008-09, AO MADE AN ADDITION OF UNACCOUNTED STOCK FOUND IN THE COURSE OF SEARCH, WHICH LD. CIT( A) DIRECTED TO BE ASSESSED IN AY 2009-10 WHILE CONFIRMING THE ADDITIO N MADE. IN AY 2009-10, AO MADE ADDITION ONLY ON THE UNACCOUNTED C ASH FOUND DURING THE YEAR. ONLY THESE THREE ISSUES ARE CONTES TED BY ASSESSEE IN THESE APPEALS. 5. AS REGARDS THE ISSUE OF UNACCOUNTED EXPENDITURE ON ACCOUNT OF FOREIGN TRAVEL, THE FACTS ARE AS UNDER: 5.1 IT WAS NOTICED BY AO THAT ASSESSEE HAS VISITED CHINA AND HONG KONG FREQUENTLY FOR BUSINESS PURPOSES AND IN THE IM PUGNED PERIOD, AO NOTICED ON 39 OCCASIONS ASSESSEE HAD TRAVELLED T O THESE COUNTRIES. IT WAS SUBMITTED BY ASSESSEE, ON BEING A SKED FOR SOURCE OF 3 ITA NO. 75/HYD/2013 AND OTHERS INDRA PRAKASH AGARWAL EXPENDITURE, THAT HE HAD VISITED THESE PLACES ON BE HALF OF OTHER BUSINESS PERSONS, WHO WANTED TO IMPORT PEARLS AND T HEY HAD SPONSORED HIS TRIPS INCLUDING INCIDENTAL EXPENSES. ASSESSEE SUBMITTED THAT HE HAD ONLY RECEIVED COMMISSION IN T HOSE TRANSACTIONS ON PER TRIP BASIS OR CONSOLIDATED AMOUNT ON PER YEA R BASIS, WHICH WAS DISCLOSED IN THE RETURNS AS HIS INCOME WITHOUT ANY CLAIM OF EXPENDITURE. ASSESSEE FURNISHED CONFIRMATION FROM M /S PEARLS CENTRE, JAIPUR, WHICH HAD CONFIRMED THAT ASSESSEE WAS PURCH ASING GOODS ON THEIR BEHALF AND WAS PAID COMMISSION. THEY ALSO CER TIFIED THAT ENTIRE TRAVEL EXPENDITURE WAS INCURRED BY THEM BY WAY OF C HEQUES AND THE SAME WAS CLAIMED IN THEIR BOOKS OF ACCOUNT. WITH RE FERENCE TO INCIDENTAL EXPENDITURE, THE CERTIFICATE INDICATED T HAT THESE WERE MET BY M/S FRESH JEWELLERY CO. LTD. AND M/S MULTY STONE HOUSE (HK) RESPECTIVELY. AO, HOWEVER, DID NOT ACCEPT THE CERTI FICATE AND HELD THAT ASSESSEE HAS RECEIVED ONLY THE COMMISSION WHEREAS T HE EXPENDITURE ON FOREIGN TRAVEL INCURRED BY HIM STOOD UNEXPLAINED IN THE ABSENCE OF ANY EVIDENCE OF SUCH EXPENDITURE WAS MADE THIRD PAR TY. HE CONCLUDED THAT ASSESSEE HIMSELF HAS INCURRED OF SUCH EXPENDIT URE AND DID NOT HAVE ANY EXPLAINABLE SOURCE TO MEET THE SAME. ACCOR DINGLY, HE PROCEEDED TO ESTIMATE THE EXPENDITURE ON FOREIGN VI SITS IN EACH YEAR AND MADE THE FOLLOWING ADDITION: (AMOUNTS IN RS.) AY EXPENDITURE ESTIMATED ON TRAVEL ESTIMATE FOR INCIDENTAL EXPENSES TOTAL 2004-05 1,52,000 1,76,000 3,28,000 2005-06 2,47,000 3,70,000 6,17,000 2006-07 2,65,000 3,62,000 6,25,000 2007-08 3,10,000 4,91,000 8,01,000 2008-09 2,80,000 3,50,000 6,30,000 2009-10 1,05,000 1,39,000 2,44,000 5.2 BEFORE THE LD. CIT(A), ASSESSEES COUNSEL NOT O NLY FILED CONFIRMATION, WHICH WAS ALSO FILED BEFORE THE AO ON BEHALF OF M/S PEARLS CENTRE BUT ALSO FURNISHED ADDITIONAL EVIDENC ES WITH REFERENCE TO INCIDENTAL EXPENSES WHICH WERE MET BY M/S FRESH JEWELLERY CO. 4 ITA NO. 75/HYD/2013 AND OTHERS INDRA PRAKASH AGARWAL LTD. AND M/S MULTY STONE HOUSE (HK), WHICH ARE FORE IGN ENTITIES. IT WAS ARGUED THAT HUGE FOREIGN TRAVEL EXPENDITURE TOT ALING TO RS. 32,45,000/- ESTIMATED BY AO WAS NOT SPENT BY HIM A ND IF HE HAS SPENT, THE SAME COULD HAVE BEEN CLAIMED AS BUSINESS EXPENDITURE OUT OF THE COMMISSION EARNED. LD. CIT(A), HOWEVER, DID NOT ACCEPT EITHER OF THE CONTENTIONS AND ALSO REJECTED THE ADD ITIONAL EVIDENCE FILED BEFORE HIM ON THE INCIDENTAL EXPENDITURE. THU S, ASSESSEE IS AGGRIEVED ON THIS ISSUE AND IS IN APPEAL BEFORE US. 5.3 REFERRING TO THE CONFIRMATION OBTAINED FROM M/S PEARLS CENTRE, WHICH CONFIRMED NOT ONLY THE TRIPS BUT ALSO PAYMENT S MADE TO VARIOUS TRAVEL AGENTS, IT WAS THE SUBMISSION THAT AS FAR AS TRAVEL EXPENDITURE IS CONCERNED, THIS WAS MET BY M/S PEARLS CENTRE. WI TH REFERENCE TO INCIDENTAL EXPENDITURE, IT WAS SUBMITTED THAT EXPEN DITURE WAS INCURRED BY THE LOCAL PARTIES I.E. M/S FRESH JEWELLERY CO. L TD. AND M/S MULTY STONE HOUSE (HK) AND THESE CONFIRMATIONS FROM THOSE PARTIES WERE REJECTED BY CIT(A). IT WAS SUBMITTED THAT ASSESSEE WAS BEING PAID PER TRIP BASIS, WHICH WAS RECORDED BY THE AO IN PAR A 3.3 IN ASSESSMENT ORDER AND ENTIRE COMMISSION EARNED WAS O FFERED AS INCOME AND ASSESSEE HAS NOT INCURRED ANY EXPENDITUR E. 5.4 THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS O F THE AUTHORITIES. 5.5 HAVING CONSIDERED RIVAL CONTENTIONS AND EXAMINI NG THE RECORD, WE ARE OF THE OPINION THAT BOTH THE AO AND LD. CIT( A) MISUNDERSTOOD ASSESSEES NATURE OF BUSINESS. ADMITTEDLY ASSESSEE IS ACTING AS A PURCHASE AGENT ON BEHALF OF VARIOUS BUSINESS PERSON S FOR PURCHASE OF PEARLS AND HE WAS BEING PAID COMMISSION AT RS. 9,00 0/- PER FOREIGN TOUR UP TO 31-03-2005, RS. 13,000/- PER TRIP UP TO 31-03-2006 AND RS. 2,00,000/- PER YEAR SUBSEQUENTLY. ALL THE TRAVEL AN D INCIDENTAL EXPENDITURE WAS NOT ON ACCOUNT OF ASSESSEE BUT ON A CCOUNT OF THOSE 5 ITA NO. 75/HYD/2013 AND OTHERS INDRA PRAKASH AGARWAL PERSONS. AS SEEN FROM THE CONFIRMATION FILED ON REC ORD FROM M/S PEARLS CENTRE, THEY HAVE CONFIRMED AS UNDER: SHRI INDRA PRAKASH AGARWAL S/O LATE SHRI RAM PRASAD AGARWAL RESIDENT OF 21-1-920 GHASI BAZAR, HYDERABAD HOLDING PAN NO. ACMPA2706P WAS ENGAGED BY OUR CONCERN FOR PURCHASE OF PEARLS FROM CHINA & HONG KONG FOR THIS PURPOSE SHRI INDRA PRAKASH AGARWAL IS DEPUTED TO CHINA AND HONG KONG A S OUR AGENT FOR PURCHASE OF THE PEARLS. DURING THE FINANC IAL YEARS 2002-2003 TO 2008-09 & ALSO TILL NOW, HE HAS BEEN V ISITING CHINA & HONG KONG FOR THE SAID PURPOSE. FOR UNDERTAKING THE ABOVE WORK FOR OUR CONCERN SHRI INDRA PRAKASH AGARWAL IS PAID COMMISSION. THE TRAVEL TICK ET FARE TO CHINA & HONG KONG FROM INDIA AND BACK IS MET BY US. THE FARES FOR THE TICKETS WERE MET BY M/S PEARLS CENTRE THROU GH CHEQUES OF BANK ACCOUNTS OF PEARLS CENTRE WHICH ARE REFLECT ED IN THE BOOKS OF ACCOUNT. THE STATEMENT SHOWING THE DETAILS OF TICKET AMOUNT AND BANK DETAILS IS ENCLOSED. THIS IS FURTHE R SUPPORTED BY THE BILLS ISSUED BY VARIOUS TRAVEL AGENCIES. THE INCIDENTAL EXPENSES FOR LOCAL TRAVEL, STAY & FO OD IN CHINA & HONG KONG WERE MET BY FRESH JEWELLERY CO. LTD. AND MULTY STONE HOUSE (HK) RESPECTIVELY. 5.6 THUS, M/S PEARLS CENTRE ENCLOSED TRIP DETAILS A ND CHEQUE NOS. BANK NAME AND DATE OF PAYMENT ALONG WITH CONFIRMATI ON LETTER, EXCEPT IN FEW INSTANCES, WHICH WERE ACCEPTED BY M/S PEARLS CENTRE THAT THE SAME WERE ENTERED IN THEIR BOOKS OF ACCOUNT. IN THE LIGHT OF THE ABOVE CONFIRMATION, WHICH WAS NOT CONTRADICTED BY REVENUE AT ALL, WE ARE OF THE OPINION THAT THERE IS NO BASIS FOR ESTIMATING T RAVEL EXPENDITURE AS UNCOUNTED, WHEN ASSESSEE ADMITTED THAT THE TRAVEL W AS UNDERTAKEN ON BEHALF OF THIRD PARTIES, WHO HAVE BORNE THE EXPE NDITURE. SINCE ASSESSEES COMMISSION WAS ACCEPTED AS SUCH WITHOUT ANY CLAIM OF THIS EXPENDITURE, THE CONTENTION OF ASSESSEE IS ACC EPTABLE AND ACCORDINGLY, THE ADDITION IS NOT REQUIRED TO BE MAD E ON THIS COUNT. 5.7 WITH REFERENCE TO THE INCIDENTAL EXPENDITURE EV EN THOUGH LOCAL PARTY HAS CERTIFIED ON BEHALF OF THE FOREIGN COMPAN IES, AO DID NOT ACCEPT THE SAME IN THE ABSENCE OF CONFIRMATION FROM THOSE PEOPLE. AS SEEN FROM THE ASSESSMENT ORDER, ASSESSEE HAS ASKED FOR SOME TIME 6 ITA NO. 75/HYD/2013 AND OTHERS INDRA PRAKASH AGARWAL EVEN TO FURNISH CONFIRMATION FROM M/S PEARLS CENTRE AND AT THE TIME OF ASSESSMENT ONLY THAT CONFIRMATION WAS FILED WHO HAV E ALSO CERTIFIED THE INCIDENTAL EXPENSES. AS STATED ABOVE, SINCE AO MADE BOTH THE ADDITIONS ON TRAVEL AS WELL AS INCIDENTAL EXPENDITU RE, ASSESSEE FURTHER GOT CONFIRMATIONS FROM M/S FRESH JEWELLERY CO. LTD. AND M/S MULTY STONE HOUSE (HK), WHICH WERE FILED BEFORE THE CIT(A ) AS ADDITIONAL EVIDENCE. WITHOUT ADMITTING AND EXAMINING THE SAME, LD. CIT(A) REJECTED THE SAME. IN OUR OPINION, THE ACTION OF CI T(A) IS NOT CORRECT WHEN ASSESSEE SUBMITS THAT HE HAS NOT INCURRED ANY EXPENDITURE AND THE SAME WAS BORNE BY THIRD PARTIES,IN THE LINE OF BUSINESS OF ASSESSEE. IT IS FOR REVENUE TO PROVE THAT ASSESSEE HAS INDEED SPENT THE AMOUNTS, WHICH WAS NOT DON., THEREFORE, THE ADD ITION DOES NOT DESERVE TO BE MADE AT ALL. HOWEVER, SINCE AO HAS NO T EXAMINED THE PART OF INCIDENTAL EXPENDITURE, WE ARE OF THE OPINI ON THAT TO THAT EXTENT THE MATTER CAN BE REFERRED TO AO FOR EXAMINING THE CONFIRMATIONS FILED BY THE SAID PARTIES. IN OUR OPINION, THERE IS NO NE ED TO MAKE ANY ADDITION IF THE AO EXAMINES THE NATURE OF BUSINESS BEING UNDERTAKEN BY ASSESSEE IN THIS REGARD. ACCORDINGLY, WHILE DEL ETING THE ADDITION MADE ON ACCOUNT OF TRAVEL EXPENDITURE, WE RESTORE T HE ISSUE OF INCIDENTAL EXPENSES TO THE FILE OF AO FOR VERIFICAT ION. SINCE IT IS SEARCH AND SEIZURE CASE, NO INCRIMINATING MATERIAL WAS FOU ND, THE AO IS DIRECTED TO EXAMINE THE SAID CERTIFICATES, THEN, AC CORDINGLY DECIDE THE ISSUE OF ADDITION ON ACCOUNT OF INCIDENTAL EXPENDIT URE. INCIDENTALLY, IT MAY BE MENTIONED THAT LD. CIT(A) HAS REDUCED THE ES TIMATION AND IN CASE ANY ADDITION IS REQUIRED TO BE MADE, THEN, THE INCIDENTAL EXPENDITURE CAN ONLY BE MADE TO THE EXTENT LD. CIT( A) CONFIRMED. WITH THESE OBSERVATIONS, THE ADDITION TO THE EXTENT OF INCIDENTAL EXPENDITURE WAS RESTORED TO THE FILE OF AO FOR VERI FICATION. GROUNDS RAISED ON THIS ISSUE IN ALL THE YEARS UNDER CONSIDE RATION ARE ALLOWED. 6. NEXT ADDITION MADE BY THE AO IN AY 2008-09 IS WI TH REFERENCE TO THE UNEXPLAINED INVESTMENT IN STOCK. 7 ITA NO. 75/HYD/2013 AND OTHERS INDRA PRAKASH AGARWAL 6.1 IN THE COURSE OF SEARCH, STOCK AVAILABLE IN THE PREMISES OF THE ASSESSEE WAS VALUED BY AN APPROVED VALUER ON 23-05- 2008 AND 13- 06-2008 (NOT ON THE DATE OF SEARCH) AT RS. 49,47,62 2/- WHEREAS THE STOCK RECORDED IN THE BOOKS WAS RS. 24,52,530/-,WHI CH RESULTED IN EXCESS STOCK OF RS. 24,95,092 IDENTIFIED IN THE COU RSE OF SEARCH. IN STATEMENT GIVEN ON 13-06-2008 WHEN ASKED ABOUT THE EXCESS STOCK OF RS. 24,95,092/-, ASSESSEE ADMITTED THAT THIS WAS UN ACCOUNTED INVESTMENT IN STOCK AND OFFERED THE SAME AS UNDISCL OSED INCOME. IT WAS THE CONTENTION OF ASSESSEE THAT RECONCILIATION OF THE STOCK AS PER THE BOOKS ON THE DATE OF SEARCH RESULTED IN UNACCO UNTED STOCK VALUE AT RS. 22,57,441/-, WHICH WAS OFFERED FOR THE AY 20 09-10. THE AO, HOWEVER, WAS OF THE VIEW THAT SINCE SEARCH OCCURRED IN THE FIRST MONTH OF THE YEAR, EXCESS STOCK PERTAINED TO AY 2008-09 O NLY. IGNORING THE ACTUAL STOCK DIFFERENCE ADMITTED BY ASSESSEE ON REC ONCILIATION OF THE BOOKS, AO MADE ADDITION ARRIVED IN THE COURSE OF SE ARCH OF RS. 24,95,092/- IN AY 2008-09. 6.2 BEFORE THE LD. CIT(A), IT WAS CONTENDED THAT AS SESSEE HAS RECONCILED THE STOCK AND FILED THE STATEMENT IN SUP PORT, WHICH WAS FILED BEFORE AO ALSO. IT WAS SUBMITTED THAT THE ACT UAL STOCK AVAILABLE ON THE DATE OF SEARCH AS PER THE APPROVAL VALUERS REPORT WAS AT RS. 54,28,830/- AND THE ACTUAL STOCK AS PER THE BOOKS O F ACCOUNT IN M/S RAMPRASAD & SONS AND M/S IP GEMS AND JEWELLERS, BEI NG PROPRIETARY CONCERNS WAS AT RS. 31,71,389/- AND THE DIFFERENCE BEING RS. 22,57,441/- WAS OFFERED TO TAX IN AY 2009-10. IT WA S FURTHER CONTENDED THAT THE YEAR OF ADDITION ALSO WAS NOT CO RRECT AS THE UNACCOUNTED STOCK WAS FOUND IN AY 2009-10 ONLY AND NOT IN AY 2008- 09. WHILE ACCEPTING THE YEAR OF ASSESSABILITY AS AY 2009-10, LD. CIT(A) HOWEVER REJECTED THE RECONCILIATION MADE BY ASSESSEE AND CONFIRMED THE ADDITION MADE BY AO AT RS. 24,95,092/ -. HENCE, ASSESSEE IS CONTESTING THE DIFFERENCE AMOUNT OF THE SAME BEFORE US. 8 ITA NO. 75/HYD/2013 AND OTHERS INDRA PRAKASH AGARWAL 6.3 IT WAS EXPLAINED BY THE LEARNED COUNSEL THAT AO HAS TAKEN THE VALUE AS PER THE DEPARTMENTAL VALUERS REPORT AT RS . 49,47,622/- WHEREAS THE VALUATION AS PER THE VALUERS REPORT WA S AT RS. 54,28,830/-. IT WAS FURTHER SUBMITTED THAT STOCK RE CORDED IN THE BOOKS OF ACCOUNT FOUND IN THE COURSE OF SEARCH WAS TAKEN AT RS. 24,95,092/- WHEREAS THE SAME AS PER THE BOOKS WAS AT RS. 31,71, 389/-. SINCE AO HAS GONE BY VALUATION ON THE DATE OF SEARCH, WHICH WAS ROUGH ESTIMATION ON THAT DAY, IT WAS SUBMITTED THE CORREC T RECONCILIATION AFTER EXAMINING THE BOOKS OF ACCOUNT AND ACCOUNTING THE SAME WAS AT RS. 22,57,441/-, WHICH WAS OFFERED TO TAX BY ASSESS EE, AS PER THE STATEMENTS MADE IN THE COURSE OF SEARCH. IT WAS FUR THER SUBMITTED THAT AO DID NOT DISTURB THE STOCK ENTERED IN THE BOOKS O F ACCOUNT NOR MADE ANY ADDITION ON ACCOUNT OF STOCK REPORTED IN THE BO OKS OF ACCOUNT, THEREFORE, THE ACTUAL DISCREPANCY OF RS. 22,57,441/ - CAN ONLY BE BROUGHT TO TAX. 6.4 WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE R ECORD. AS SEEN FROM THE ORDER OF AO, HE HAS SIMPLY GONE BY TH E STATEMENT RECORDED IN THE COURSE OF SEARCH, THAT TOO AFTER 2 MONTHS OF SEARCH. AS SEEN FROM THE ORDERS OF AUTHORITIES, THE APPROVE D VALUER HAS VALUED THE STOCK ON 23-05-2008 AND 13-06-2008 AND A S PER ASSESSEE THE STOCK VALUED WAS TO THE EXTENT OF RS. 54,28,830 /- WHEREAS THE AO HAS TAKEN THE VALUE ONLY AT RS. 49,47,622/-. THIS I NDICATES THAT AO HAS NOT APPLIED HIS MIND EVEN TO THE ACTUAL VALUATI ON UNDERTAKEN BY THE VALUER. NOT ONLY THAT THE STOCK RECORDED IN THE BOOKS OF ACCOUNT AS PER THE AO WAS AT RS. 24,52,530/- WHEREAS ASSESS EE HAS ACCOUNTED THE SAME AT RS. 31,71,389/-. THIS INDICAT ES THAT AO HAS NOT RECONCILED THE STOCK DURING THE COURSE OF ASSES SMENT PROCEEDINGS. SINCE ASSESSEE HAS ADMITTED ACTUAL STO CK AS PER THE VALUERS REPORT AND AS PER THE BOOKS OF ACCOUNT, AN D FURTHER THERE IS NO DISPUTE WITH REFERENCE TO THE ENTRIES IN THE BOO KS OF ACCOUNT MADE, WE ARE UNABLE TO SUSTAIN THE ORDER OF AO WHO MADE ADDITION WITHOUT ANY VERIFICATION OR RECONCILIATION OF THE ACTUAL AM OUNTS. CONSIDERING 9 ITA NO. 75/HYD/2013 AND OTHERS INDRA PRAKASH AGARWAL THE DETAILED EXPLANATION GIVEN BY ASSESSEE, WE ACCE PT ASSESSEES CONTENTIONS THAT THE UNACCOUNTED INVESTMENT IN STOC K HAS TO BE TAKEN AT RS. 22,57,441/- TO BE ASSESSED FOR AY 2009-10, W HICH ASSESSEE HAS ALREADY ADMITTED, THEREFORE, ASSESSEE GETS RELI EF TO THE DIFFERENCE IN THE AMOUNT BEING BROUGHT TO TAX . THE ACTUAL ADD ITION MADE IN AY 2008-09 WAS ALREADY DELETED BY LD CIT(A), THEREFORE , THERE IS NO NEED TO MAKE ANY ADDITION IN AY 2009-10 AS ASSESSEE ADMITTED IN THE RETURN OF INCOME. IN CASE AO EXCLUDED THE SAME IN A Y 2009-10 WHILE COMPLETING THE ASSESSMENT, THEN HE CAN ADD THE AMOU NT TO THE EXTENT IN AY 2009-10. ASSESSEES GROUND IS ALLOWED. 7. THE LAST ISSUE CONTESTED BY ASSESSEE IS WITH REF ERENCE TO THE UNACCOUNTED CASH BROUGHT TO TAX IN AY 2009-10. 7.1 IN THE COURSE OF SEARCH, AN AMOUNT OF RS. 11,72 ,690/- WAS FOUND AND ASSESSEE HAS STATED IN THE COURSE OF SEAR CH ITSELF THAT THE AMOUNT OF RS. 2,50,000/- BELONGS TO M/S RAM PRASAD AND SONS WHILE RS. 50,000/- BELONGS TO M/S IP GEMS AND JEWELLERS. OUT OF THE BALANCE RS. 97,890/-, WAS STATED AS GODS MONEY A ND BALANCE BELONGING TO FAMILY MEMBERS. HOWEVER, VIDE LETTER D ATED 18-07-2008, ASSESSEE IN HIS WRITTEN SUBMISSIONS ADMITTED AN AMO UNT OF RS. 8,40,000/- AS UNEXPLAINED CASH AND CLAIMED THAT AN AMOUNT OF RS. 3,32,690/- WAS REFLECTED IN THE BOOKS OF ACCOUNT. O N THE REASON THAT BOOKS OF ACCOUNT WERE NOT UPDATED ON THE DATE OF SE ARCH, AO TREATED THE ENTIRE CASH OF RS. 11,72,690/- AS UNEXPLAINED. LD. CIT(A) CONFIRMED THE SAME. 7.2 IT WAS CONTENDED BEFORE US THAT ASSESSEE WAS HA VING BOOKS OF ACCOUNT IN TWO PROPRIETARY CONCERNS AND THE CASH BA LANCE AS PER THE BOOKS OF ACCOUNT EVEN ON THE DATE OF SEARCH WAS EXP LAINED AT RS. 3,00,000/- AS CAN BE SEEN FROM THE ORDER OF AO ITSE LF. EVEN THE AMOUNT OF RS. 97,890/- WAS STATED TO BE GODS MONEY , THE ACTUAL CASH BALANCE AS AVAILABLE ON THE DATE OF SEARCH WAS TO THE TUNE OF 10 ITA NO. 75/HYD/2013 AND OTHERS INDRA PRAKASH AGARWAL RS. 3,32,690/- AND ASSESSEE ADMITTED RS. 8,40,000/- AS UNACCOUNTED CASH, EVEN THOUGH BALANCE FAMILY MEMBERS MAY HAVE T HEIR CASH BALANCES. IN SUPPORT OF THE CLAIM, ASSESSEE HAS FIL ED THE BALANCE SHEETS OF EARLIER YEARS, PARTICULARLY, ON 31-03-200 8 WHERE THERE WAS CASH IN HAND TO THE EXTENT OF RS. 2,29,200/-. FURTH ER, ASSESSEE ALSO UPDATED THE CASH BOOK BY SHOWING VARIOUS SALES AND EXPENDITURE TO SUPPORT THAT THERE WAS A CASH BALANCE OF RS. 3,32,6 90/- ON THE DATE OF SEARCH. 7.3 THE LEARNED DR, HOWEVER, RELIED ON THE ORDERS O F THE AO. 7.4 HAVING CONSIDERED RIVAL CONTENTIONS AND EVIDENC E PLACED ON RECORD, WE ARE OF THE OPINION THAT ADDITION MADE BY AO CANNOT BE SUSTAINED AS SUCH. EVEN IN THE COURSE OF SEARCH, AS SESSEE ADMITTED CASH BALANCE AS STATED IN THE COURSE OF SEARCH WHER EAS THE ACTUAL CASH BALANCE ON RECONCILIATION OF THE ACCOUNTS HAS COME TO RS. 3,32,690/-. EVEN IN THE COURSE OF SEARCH, ASSESSEE EXPLAINED THAT BALANCE OF CASH WAS BELONGING TO FAMILY MEMBERS BUT NO SUCH CLAIM WAS MADE AND ASSESSEE ADMITTED AN AMOUNT OF RS. 8, 40,000/- IN THE RETURN FILED AS UNEXPLAINED CASH. IN VIEW OF THE CO NDUCT OF ASSESSEE IN RECONCILING VARIOUS AMOUNTS AND DECLARING UNACCO UNTED STOCK AND UNACCOUNTED CASH, WE DO NOT SEE ANY REASON TO UPHOL D THE ADDITION MADE BY AO OF EVEN THE ACTUAL CASH BALANCE AVAILABL E IN THE BOOKS OF RS. 3,32,690/-. THERE IS NO DISPUTE WITH REFERENCE TO THE AVAILABILITY OF CASH BALANCE AS ASSESSEE IS MAINTAINING AN OPENING CASH BALANCE OF RS. 2,29,200/- AS PER THE BALANCE SHEET FILED FOR T HE YEAR ENDED ON 31-03-2008, WHICH WAS DULY CERTIFIED BY THE AUDITOR S AND FILED BEFORE THE AO. IT WAS ALSO NOT DISPUTED THAT THE STATEMENT S FILED DO INDICATE THAT ASSESSEE IS HAVING MORE THAN RS. 3 LAKHS CASH ON VARIOUS DATES GIVING CREDIT TO THE AMOUNT ASSESSEE ADMITTED THE B ALANCE AMOUNT AS UNEXPLAINED. FOR THESE REASONS, WE DO NOT SEE ANY R EASON TO MAKE ADDITION TOWARDS CASH BALANCE AS WAS DONE BY AO. TH E ORDER OF AO INDICATES THAT HE HAS NOT APPLIED HIS MIND TO ANY O F THE ADDITIONS 11 ITA NO. 75/HYD/2013 AND OTHERS INDRA PRAKASH AGARWAL MADE IN RESPECT OF THE ASSESSMENT YEARS UNDER CONSI DERATION. THEREFORE, WE HAVE NO HESITATION IN DELETING THE AD DITION SO MADE BY THE AO AS UNEXPLAINED CASH. GROUND RAISED ON THIS I SSUE IS ALLOWED. 8. IN THE RESULT, ALL THE APPEALS ARE CONSIDERED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 8 TH JANUARY, 2014 SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUN TANT MEMBER HYDERABAD, DATED: 8 TH JANUARY, 2014 KV COPY TO:- 1) INDRA PRAKASH AGARWAL, C/O SRI K.L. RATHI, ADVOC ATE, 3-5-144/5, EDEN GARDEN, HYDERABAD 500 001 2) ACIT, CENTRAL CIRCLE 6, HYDERABAD. 3) CIT(A)-I, HYDERABAD. 4) CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.