Satishkumar Vishnudas Bhutada, Latur V. Income-tax Officer, Nashik

ITA 1522/PUN/2011

• Counselvise Citation: 152224514 RSA 2011
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 29-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Section: 40A(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NO.1522, 1619 AND 1620/PN/2011 (ASSESSMENT YEARS 2005-06 TO 2007-08) SATISHKUMAR VISHNUDAS BHUTADA, 7-C, MARKET YARD, KAVA ROAD, LATUR 413512 .. APPELLANT PAN NO.AERPB 1452Q VS. INCOME TAX OFFICER, CENTRAL-1, NASHIK. .. RESPONDENT ITA.NO.57/PN/2012 (ASSESSMENT YEAR 2005-06) INCOME TAX OFFICER, CENTRAL-1, NASHIK. .. APPELLANT VS. SATISHKUMAR VISHNUDAS BHUTADA, 7-C, MARKET YARD, KAVA ROAD, LATUR 413512 .. RESPONDENT PAN NO.AERPB 1452Q ITA.NO.58, 59 AND 60/PN/2012 (ASSESSMENT YEARS 2005-06 TO 2007-08) INCOME TAX OFFICER, CENTRAL-1, NASHIK. .. APPELLANT VS. ANAND SATISHKUMAR BHUTADA, 7-C, MARKET YARD, LATUR 413512. .. RESPONDENT PAN NO.AIQPB 0400M ITA.NO.1523/PN/2011 (ASSESSMENT YEAR 2007-08) ANAND SATISHKUMAR BHUTADA, 7-C, MARKET YARD, LATUR 413512. .. APPELLANT PAN NO.AIQPB 0400M VS. INCOME TAX OFFICER, CENTRAL-1, NASHIK. .. RESPONDENT ASSESSEE BY : SRI NIKHIL PATHAK REVENUE BY : SHRI S.K. SINGH DATE OF HEARING : 08-04-2013 DATE OF PRONOUNCEMENT : 19-04-2013 2 ORDER PER R.K. PANDA, AM : ITA NO.1522/PN/2011, 1619/PN/2011 AND 1620/PN/2011 FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS DT. 25-10- 2011 OF THE CIT(A)-I, NASHIK RELATING TO ASSESSMENT YEARS 2005-06 TO 2007-08 RESPECTIVELY . ITA NO.57/PN/2012 FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 25-10-2 011 OF THE CIT(A)-I, NASHIK RELATING TO ASSESSMENT YEAR 2005-06. ITA NO.1523/PN/2011 & 60/PN/2012 ARE CROSS APPEALS AND ARE DIRECTED AGAINST THE ORDER DATED 25-10-2011 OF THE CIT(A)-I, NASHIK RELATING TO ASSESSMENT YEAR 2007- 08. ITA NO.58/PN/2012 AND ITA NO.59/PN/2012 FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS DT. 25-10-2011 OF THE CIT(A)-I, NASHIK RELATING TO ASSESSMENT YEARS 2005-06 TO 2006-07 RESPECTIVELY. SINCE COMMON ISSU ES ARE INVOLVED IN ALL THESE APPEALS, THEREFORE, THESE WERE HEARD TOGETHER AND A RE BEING DISPOSED OF BY THIS COMMON ORDER. 2. FIRST WE TAKE UP ITA NO.1522/PN/2011 AND ITA NO. 57/PN/2012 FOR A.Y. 2005- 06. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND HAD FILED HIS ORIGINAL RETURN OF INCOME ON 28-10-2005 DECLARING T OTAL INCOME OF RS.2,52,330/-. IN THIS CASE A SEARCH ACTION U/S.132(1) OF THE INCOME TAX A CT, 1961 WAS CARRIED OUT BY THE DEPARTMENT ON 28-08-2008 IN THE BHUTADA GROUP OF CA SES OF LATUR. THE RESIDENTIAL PREMISES AND BUSINESS PREMISES OF THE ASSESSEE OF T HE GROUP WERE COVERED DURING THE SAID ACTION. IN RESPONSE TO NOTICE U/S.153A THE AS SESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.2,81,030/- BY DISCLOSING ADDITIONAL IN COME OF RS.28,700/-. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBTAINED INFORMATION U/S.133(6) FROM VARIOUS BANKS. IT WAS GATHERED THAT THE ASSES SEE HOLDS BANK ACCOUNTS WITH JANATA SAHAKARI BANK, LATUR AND SOLAPUR JANATA SAHAKARI BA NK, LATUR IN THE NAME OF M/S.KIRTI PROTEINS PROP. SHRI SATISHKUMAR BHUTADA. TOTAL DEP OSITS INTO BOTH THESE ACCOUNTS AMOUNTED TO RS.24,29,30,414/-. HE NOTED THAT SIMUL TANEOUSLY THERE WERE WITHDRAWALS 3 LIKE-WISE IN THE TWO ACCOUNTS. THE ASSESSING OFFIC ER NOTED THAT IN THE A.Y. 2004-05 THE ASSESSEE HAD SHOWN INCOME FROM THE ABOVE BUSINESS A ND THE ACCOUNTS WERE AUDITED IN THAT YEAR. HOWEVER, FOR THE IMPUGNED ASSESSMENT YE AR HE NOTED THAT THE ASSESSEE HAS NOT OFFERED FOR TAXATION INCOME FROM THE ABOVE CONCERN DESPITE THERE BEING SUBSTANTIAL CASH DEPOSITS INTO THE BANK ACCOUNT OF THE ABOVE CONCERN . HE THEREFORE ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNTS CREDITED INTO THE ABO VE BANK ACCOUNTS SHOULD NOT BE ADDED TO THE TOTAL INCOME BEING DEPOSITS MADE OUT O F UNEXPLAINED SOURCE OF INCOME. 3. IT WAS SUBMITTED THAT THESE DEPOSITS AND WITHDRA WALS REPRESENT TURNOVER ON ACCOUNT OF TRADING IN OIL SEEDS. THE ASSESSING OFF ICER NOTED THAT THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS FOR THE IMPUGNED ASSES SMENT YEAR AND FOR SUBSEQUENT YEARS. THEREFORE, HE WAS OF THE OPINION THAT ITS T URNOVER CANNOT BE ASCERTAINED EXCEPT ON THE BASIS OF BANK DEPOSITS. IT WAS SUBMITTED BY TH E ASSESSEE THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE GP @ 0.33% AND THE N ET PROFIT @0.16% ON TURNOVER MAY BE ACCEPTED IN THE LINE OF ORDER FOR A.Y. 2004- 05. IT WAS ALSO REQUESTED THAT THE ASSESSEE HAS SHOWN AN AMOUNT OF RS.1,61,300/- AND O FFERED INCOME FOR A.Y. 2005-06 WHICH SHOULD BE REDUCED FROM THE PROFIT WORKED OUT AS ABOVE. 4. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE REFERRED TO THE STATEMENT GIVEN B Y BROTHER OF THE ASSESSEE SHRI ASHOKKUMAR BHUTADA RECORDED ON 23-04-2008 WHEREIN H E HAD STATED THAT PROFIT IN THE SAID BUSINESS IS IN THE RANGE OF 1.5% OF THE TURNOV ER. HE FURTHER NOTED THAT IN THE CASE OF SHRI ANAND BHUTADA, SON OF THE ASSESSEE 1.5% OF THE TURNOVER AS REPRESENTED BY BANK DEPOSITS HAS BEEN OFFERED FOR TAXATION IN THE COURS E OF SEARCH. THE ASSESSEE HAS NOT FILED ANY DETAILS TO CLAIM THAT HIS PROFIT IS ON THE LOWE R SIDE. HE, THEREFORE, PROCEEDED TO ESTIMATE THE INCOME OF THE ASSESSEE BY ADOPTING PRO FIT @1.5% ON THE TOTAL DEPOSITS MADE INTO THE BANK ACCOUNTS AND DETERMINED THE PROFIT FR OM THE BUSINESS ACTIVITY AT RS.36,43,956/-. AFTER DEDUCTING THE DECLARED INCOM E OF RS.1,61,300/- AS INCOME FROM OTHER SOURCES, THE AO MADE ADDITION OF RS.34,82,656 /-. 5. BEFORE THE CIT(A) THE ASSESSEE STRONGLY CHALLENG ED THE ADOPTION OF PROFIT RATE OF 1.5%. IT WAS SUBMITTED THAT THE STATEMENT OF SHRI ASHOKKUMAR BHUTADA WAS RELIED ON BY 4 THE ASSESSING OFFICER IN A MECHANICAL MANNER. IT W AS SUBMITTED THAT THE SAID STATEMENT WAS RECORDED IN A PRESSURISED ENVIRONMENT WITH CONS TANT FLOW OF COMMANDS BY THE PERSONNEL OF THE INCOME TAX DEPARTMENT. IT WAS SUB MITTED THAT THE ASSESSEE AT NO STAGE OF THE ASSESSMENT PROCEEDINGS OR DURING SEARCH PROC EEDINGS HAS STATED THAT HIS NET PROFIT WAS 1.5%. IT WAS SUBMITTED THAT THE STATEMENT OF T HE ASSESSEE WAS NEVER RECORDED AT ANY STAGE. REFERRING TO THE ASSESSMENT ORDER FOR A.Y. 2004-05 IT WAS SUBMITTED THAT THE GROSS PROFIT SHOWN AT 0.33% AND NET PROFIT 0.16% WE RE ACCEPTED BY THE ASSESSING OFFICER IN THE ORDER PASSED U/S.143(3)/153A. IT WA S FURTHER SUBMITTED THAT IN REPLY TO QUESTION NO.2 OF THE STATEMENT ON OATH DATED 26-11- 2008, THE BROTHER OF THE ASSESSEE SHRI ASHOKKUMAR BHUTADA HAS STATED THAT THE GROSS P ROFIT IN THE BUSINESS OF CATTLE FEEDS IS IN THE RANGE OF 0.5% TO 1.50% AND THAT TO BUY PE ACE OF MIND AND COOPERATION WITH THE DEPARTMENT HE HAD VOLUNTARILY DISCLOSED HIS GROSS P ROFIT @ 1.50% ON TURNOVER MADE BY HIM. 6. IT WAS SUBMITTED THAT SHRI ASHOKKUMAR BHUTADA IN HIS REPLY HAD GIVEN INFORMATION ABOUT GROSS PROFIT AND NOT NET PROFIT. THEREFORE, ADOPTION OF 1.5% NET PROFIT BY THE ASSESSING OFFICER WAS VERY MUCH ON TH E HIGHER SIDE. IT WAS FURTHER SUBMITTED THAT NEITHER DURING THE COURSE OF SEARCH NOR IN SUBSEQUENT PROCEEDINGS ANY CORROBORATIVE EVIDENCE WAS FOUND OR WAS BROUGHT ON RECORD TO SUPPORT THE RANGE OF GROSS PROFIT INFORMED BY SHRI ASHOKKUMAR BHUTADA OR TO SU PPORT PERCENTAGE OF NET PROFIT OF 1.50% ADOPTED BY THE ASSESSING OFFICER. VARIOUS DE CISIONS WERE ALSO BROUGHT TO THE NOTICE OF THE CIT(A) TO THE PROPOSITION THAT CONFES SIONAL STATEMENT SHOULD BE CORROBORATED WITH SOME MATERIAL TO SHOW THAT ASSESS MENT MADE IS JUST AND FAIR AND THAT IF ASSESSMENT COULD BE SOLELY BASED ON CONFESSIONAL ST ATEMENT PROCURED BY THE REVENUE AUTHORITIES THEN THERE WAS NO NEED TO HAVE ELABORAT E PROVISION IN THE STATUTE. 6.1 IT WAS FURTHER STATED THAT DISREGARDING THE SUN DRY DEBTORS SHOWN AT RS.5,25,27,882/- IN THE BALANCE SHEET AS ON 31-03-2 004 THE AO HAD CONSIDERED THE ENTIRE AMOUNT OF DEPOSITS INTO THE BANK ACCOUNT AS THE TUR NOVER OF THE ASSESSEE. THE SUNDRY DEBTORS SHOWN AS ON 31-03-2004 WERE REALISED IN A.Y . 2005-06 ALTHOUGH THE ASSESSEE BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER. HO WEVER, THE AO DISREGARDED THE SAME 5 AND ADOPTED EXCESS TURNOVER OF RS.5,25,27,882/-. I T WAS ACCORDINGLY REQUESTED TO THE CIT(A) TO DIRECT THE AO TO ADOPT REASONABLE PROFIT RATE OR GP RATE OF 0.50% ON TURNOVER IN SUCH TYPE OF BUSINESS. 7. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LEARNED CIT(A) DIRECTED THE AO TO ADOPT PROFIT RATE OF 0.53% OF THE TURNOV ER. WHILE DOING SO, HE REJECTED THE CLAIM OF REDUCTION OF TURNOVER TO THE EXTENT OF OUT STANDING DEBTORS OF RS.5,25,27,882/- IN ABSENCE OF ANY SUBSTANTIAL EVIDENCE. HE, HOWEVER, HELD THAT THE STATEMENT OF THE ASSESSEE WAS NOT RECORDED AND THE AO HAS UTILISED T HE STATEMENT OF THE BROTHER OF THE ASSESSEE WHO HAD STATED THAT THE PROFIT MARGIN IN T HIS LINE OF BUSINESS, I.E. TRADE IN POULTRY FEEDS RANGES FROM 0.50 TO 1.5%. HE REFERRE D TO THE CBDT INSTRUCTION NO.F.286 DATED 10-03-2003 WHICH SPEAKS OF CONFESSIONAL STAT EMENT RECORDED DURING THE COURSE OF SEARCH AND SURVEY DECLARING ADDITIONAL INCOME AND C ORROBORATIVE EVIDENCE FOR MAKING ADDITION. HE NOTED THAT THE AO IN HIS ORDER FOR A. Y. 2004-05 IN ASSESSEES OWN CASE HAS ACCEPTED THE GP RATE OF 0.33%. CONSIDERING THE TOT ALITY OF THE FACTS OF THE CASE AND TO MEET THE ENDS OF JUSTICE HE DIRECTED THE AO TO ADOP T THE PROFIT RATE OF 0.53% ON THE TURNOVER. 8. BASED ON SUCH PART RELIEF GIVEN BY THE CIT(A) TH E ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : GROUNDS BY ASSESSEE (ITA NO.1522/PN/2011) : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. HONBLE CIT(A)-I, NASHIK HAS PARTLY GRANTED RELIEF TO THE A SSESSEE. THE LD. AO HAS MADE ADDITION OF RS.34,82,656/- AND OUT OF WHICH HONBLE CIT(A)-I, NASHIK HAS GRANTED RELIEF TO THE EXTENT OF RS.21,95,124/- AND CONFIRMED THE BALANCE ADDITION ON ACCOUNT OF ESTIMATED GROSS PROFIT AT RS.12,87,53 2/-. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, OR MOD IFY ANY OF THE GROUNDS OF THE APPEAL AT OR BEFORE HEARING OF THE CASE. GROUNDS BY REVENUE (ITA NO.57/PN/2012) : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.21,95,124/- MADE ON ACC OUNT OF GROSS PROFIT ON TURNOVER OF RS.24,29,30,414/-@1.5%. 6 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT GROSS PROFIT @ 1. 5% WAS ALSO DECLARED BY ASSESSEE'S BROTHER, DURING THE COURSE OF SEARCH. FO LLOWING THE SAME PRINCIPLE, THE ASSESSING OFFICER WAS RIGHT IN ADOPTING THE SAME RA TE OF GROSS PROFIT AT THE HANDS OF THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ASSESSEE'S BROTHE R SHRI ASHOKKUMAR BHUTADA, BEING A KEY FIGURE AND MANAGING DIRECTOR OF GROUP C OMPANIES, HAD DECLARED THE UNDISCLOSED INCOME @ 1.5% IN RESPECT OF HIS COMPANI ES, HIS BROTHER AND THE ASSESSEE. THE DISCLOSURE WAS MADE WITHOUT ANY COERCION, OR AN Y UNDUE INFERENCE DURING COURSE OF SEARCH, AS CAN BE SEEN FROM STATEMENTS RE CORDED AND ADMITTANCE PUT FORTH BY SHRI ASHOKUMAR BHUTADA. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT ASSESSING OFFICER SHOULD HAVE CALCULAT ED GROSS PROFIT ON THE BASIS OF ASSESSEE'S TRADING RESULT FOR ASSESSMENT YEAR 2004- 05 WHEN BOOKS FOR THAT YEAR WERE AUDITED UNDER SECTION 44AB OF THE ACT AND THAT THE TURNOVER FOR YEAR UNDER CONSIDERATION WAS DETECTED TO BE OUT OF BOOKS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED C1T(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ASSESSING OFFICER 'S FINDING THAT GROSS PROFIT @ 1.5% WAS BASED ON THE MATERIAL GATHERED DURING THE COURS E OF SEARCH AND IN THE SAME LINE OF BUSINESS AND THAT STATEMENT TAKEN ON OATH CAN BE TREATED AS HAVING EVIDENTIARY VALUE. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN NOT NOTICING THE FACT THAT CBDT INSTRUCTION NO. 286 DATED 28.03.2003 WAS FOLLOWED IN VIEW OF THE FACT THAT ENOUGH EVIDENCE WAS AVAILA BLE WITH THE ASSESSING OFFICER, IN TERM OF BANK STATEMENTS DETECTED DURING THE SEARCH/ ASSESSMENT PROCEEDINGS TO JUSTIFY THE ADDITION MAD AND THAT IN ABSENCE OF ANY EVIDENCE /BOOKS OF ACCOUNTS, THE ASSESSING OFFICER HAS CORRECTLY ESTIMATED THE INCOM E TO THAT EXTENT THE LEARNED CIT(A) HAS NOT ONLY MISPLACED HIS RELIANCE ON BOARD INSTRUCTION, BUT HAS ALSO PERVERSELY INTERPRETED THE SAME . 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS NOT APPRECIATED THE FACT THAT IN ABSENCE OF ANY BOOKS O F ACCOUNTS, ANY EXPENSES VOUCHERS, I.E. AN ABSENCE OF ANY EVIDENCE, THE ASSESSING OFFI CER WAS CORRECT IN MAKING ADDITION ON GROSS PROFIT PERCENTAGE BASED ON TURNOVER 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE DECLARATION WAS MADE AS A RESULT OF SEARCH ACTION AND NOT ON ANY VOLUNTARY ACTION ON THE PART OF THE ASSESSEE . THE ASSESSEES ARGUMENT THAT THIS WAS DONE TO BUY PEACE OF MIND DOES NOT HOLD GOOD AS IN THE ASSESSMENT PROCEEDING, THE ASSESSEE NEVER RAISED ANY QUERY REGARDING THIS INSP ITE OF GIVING AMPLE OPPORTUNITIES. 9. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SAME ARGUMENTS AS MADE BEFORE THE AO AND THE CIT(A). HE SUBMITTED THAT AD MITTEDLY THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS FOR THE IMPUGNED A SSESSMENT YEAR AND SUBSEQUENT YEARS. HOWEVER, THE RETURN FILED IN RESPONSE TO N OTICE U/S.153A FOR THE A.Y. 2004-05 CANNOT BE BRUSHED ASIDE WHEREIN THE AO IN THE SCRUT INY ASSESSMENT HAS ACCEPTED THE GP RATE OF 0.33% AND NP RATE 0.16% FOR THE SAID ASSESS MENT YEAR. 7 9.1 REFERRING TO THE STATEMENT ON OATH OF SHRI ASHO KKUMAR VISHNUDAS BHUTADA HE SUBMITTED THAT THE BROTHER OF THE ASSESSEE HAS ADMI TTED THAT THE GROSS PROFIT IN THIS KIND OF TRADE RANGES FROM 0.50% TO 1.50% AND HE HAS NEVE R STATED THAT THE NET PROFIT IS IN THE RANGE OF 0.5% TO 1.5%. HE SUBMITTED THAT GROSS PRO FIT RATE IS DIFFERENT FROM NET PROFIT. REFERRING TO THE COPY OF THE ASSESSMENT ORDER HE SU BMITTED THAT AT NO POINT OF TIME EITHER DURING THE COURSE OF SEARCH OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE STATEMENT OF THE ASSESSEE WAS RECORDED AND THE AO HAS PROCEED ED TO MAKE THE ASSESSMENT ON THE BASIS OF THE STATEMENT RECORDED U/S.131(1) OF THE I .T. ACT FROM SHRI ASHOKKUMAR VISHNUDAS BHUTADA, BROTHER OF THE ASSESSEE. 9.2 REFERRING TO THE PROFIT AND LOSS ACCOUNT FOR A. Y. 2004-05 HE SUBMITTED THAT THE ASSESSEE DURING A.Y. 2004-05 HAD CLAIMED SALES AND ADMINISTRATIVE EXPENSES OF RS.4,56,360/-. HE SUBMITTED THAT WHEN THE AO IN TH E ASSESSEES OWN CASE FOR A.Y. 2004-05 HAS ACCEPTED THE NET PROFIT RATE OF 0.16% A ND GROSS PROFIT OF 0.33%, THEREFORE, THE LD. CIT(A) IS NOT JUSTIFIED IN DIRECTING THE AO TO ESTIMATE THE NET PROFIT AT 0.53%. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT( A) BE MODIFIED AND THAT THE NET PROFIT OF THE ASSESSEE BE DETERMINED AT 0.16% OR AT THE MO ST @ 0.33%. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE AO. HE SUBMITTED THAT WHEN THE ASSESS EE IS NOT MAINTAINING ANY BOOKS OF ACCOUNTS AND WHEN THE BROTHER OF THE ASSESSEE WHO I S MANAGING THE AFFAIRS OF THE GROUP HAS VOLUNTARILY DISCLOSED THE PROFIT RATE AT 1.5% O F THE TURNOVER WHICH IS THE PROFIT MARGIN IN THIS KIND OF BUSINESS, THEREFORE, THE CIT (A) WAS NOT JUSTIFIED IN REDUCING SUCH PROFIT TO 0.53% AS AGAINST 1.5% ESTIMATED BY THE AO . 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED O N BY BOTH THE SIDES. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE IN THE INSTAN T CASE HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNTS. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSESSING OFFICER, BASED ON THE STATEMENT GIVEN BY THE BROTHER OF THE ASSESSEE WHER EIN HE HAD STATED THAT THE GROSS PROFIT 8 IN SUCH TYPE OF BUSINESS RANGED FROM 0.5% TO 1.5% H AS ADOPTED THE NET PROFIT RATE OF 1.5% ON A TURNOVER OF RS.24,29,30,414/- WHICH IS TH E TOTAL DEPOSIT IN THE TWO BANK ACCOUNTS MAINTAINED BY THE ASSESSEE. WE FIND THE L D. CIT(A), KEEPING IN MIND THE ASSESSMENT ORDER FOR A.Y.2004-05 IN THE CASE OF THE ASSESSEE, BROUGHT DOWN THE PROFIT RATE TO 0.53% FOR WHICH BOTH THE ASSESSEE AS WELL A S THE REVENUE ARE IN APPEAL BEFORE US. IT IS A FACT THAT IN THE INSTANT CASE ALTHOUGH A SE ARCH HAS TAKEN PLACE, THE STATEMENT OF THE ASSESSEE WAS NEVER RECORDED EITHER DURING THE COURS E OF SEARCH OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE ASSESSMENT WAS COMPL ETED ON THE BASIS OF THE STATEMENT RECORDED FROM THE BROTHER OF THE ASSESSEE MR.ASHOKK UMAR VISHNUDAS BHUTADA U/S.131(1) ON 31-08-2008. THE RELEVANT QUESTION AS KED TO MR.ASHOKKUMAR VISHNUDAS BHUTADA AND HIS REPLY IS REPRODUCED BELOW FOR THE SAKE OF CLARITY : Q.2 YOU HAVE EXPLAINED THAT ANAND TRADING CO. AND ARJUN TRADING CO. BOTH ARE PROPRIETARY CONCERNS ANANDKUMAR SATISHKUMAR BHU TADA VIDE Q.NO.4 OF THE STATEMENT RECORDED ON 15/11/2008. YOU HAVE ALSO EX PLAINED THAT THESE CONCERNS WERE ENGAGED IN THE BUSINESS OF TRADING OF CATTLE F EEDS AND DOC, THESE CONCERNS ALSO ACTED AS COMMISSION AGENT/BROKER IN THE MARKET FOR CATTLE FEEDS, POULTRY FEEDS AND NO BOOKS OF ACCOUNTS MAINTAINED FOR THE P URPOSE OF INCOME TAX. YOU FURTHER CLARIFIED THAT YOU WISH TO VERIFY YOUR BOOK S OF ACCOUNTS TO ANSWER THE DETAILS OF THE INCOME EARNED FROM THESE CONCERN. P LEASE COMMENT ? ANS. I DO CONFIRM MY STATEMENT GIVEN ON 15-11-2008. I HAVE VERIFIED MY BOOKS OF ACCOUNTS. AFTER THE MARKET INFORMATION OBTAINED BY ME, I RECKON THAT THE MARGIN, I.E. GROSS PROFIT IN THESE KIND OF TRADE RA NGES FROM 0.50% TO 1.5%. TO BUY PEACE OF MIND AND COOPERATIVE WITH THE DEPARTME NT I VOLUNTARILY DISCLOSED MY G.P. @ 1.5% OF TURNOVER MADE BY ME IN THESE CONC ERN. 12. A PERUSAL OF THE ANSWER TO THE SAID QUESTION RE VEALS THAT THE BROTHER OF THE ASSESSEE HAS DECLARED THAT THE GROSS PROFIT IN THIS KIND OF TRADE RANGES FROM 0.50% T0 1.5% AND TO BUY PEACE OF MIND HE HAS VOLUNTARILY DI SCLOSED GROSS PROFIT OF 1.5% OF THE TURNOVER FOR ALL THESE CONCERNS. 13. WE FIND MERIT IN THE SUBMISSION OF THE LD. COUN SEL FOR THE ASSESSEE THAT THE GROSS PROFIT RATE IS DIFFERENT FROM THE NET PROFIT RATE A ND THE AO HAS ADOPTED THE NET PROFIT RATE OF 1.5% WHEREAS A.V. BHUTADA HAD STATED THAT THE GR OSS PROFIT RATE RANGES FROM 0.5% TO 1.5% IN THIS TYPE OF BUSINESS. WE ALSO FIND SOME F ORCE IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHEN THE AO IN ASSESS EES OWN CASE FOR A.Y. 2004-05 IN THE ORDER PASSED U/S.143(3)/153A HAS ACCEPTED THE G ROSS PROFIT RATE OF 0.33% AND NET 9 PROFIT RATE OF 1.6% INSPITE OF ALL THESE EVIDENCES BEFORE HIM, THEREFORE, ADOPTION OF SUCH HIGHER RATE FOR THE IMPUGNED ASSESSMENT YEAR IS NOT JUSTIFIED. EVEN THE LD. CIT(A), ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, IS N OT JUSTIFIED IN ADOPTING THE NET PROFIT RATE OF 0.53% AS AGAINST 0.16% ACCEPTED BY THE AO I N ASSESSEES OWN CASE FOR A.Y. 2004-05. IT IS A FACT THAT FOR THE A.Y. 2004-05 TH E ASSESSEE HAD MAINTAINED REGULAR BOOKS OF ACCOUNTS AND THE ACCOUNTS WERE AUDITED WHEREAS F OR THE A.Y. 2005-06 AND SUBSEQUENT ASSESSMENT YEARS THE ASSESSEE HAS NOT MAINTAINED AN Y BOOKS OF ACCOUNTS NOR THESE WERE AUDITED. THEREFORE, THE RATE OF GROSS PROFIT AND N ET PROFIT FOR A.Y. 2004-05 CANNOT BE APPLIED IN A.Y. 2005-06 AND SUBSEQUENT YEARS. WE, THEREFORE, DO NOT FIND MUCH FORCE IN THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE TH AT THE SAME RATE AS ACCEPTED BY THE AO IN A.Y. 2004-05 SHOULD BE APPLIED FOR A.Y. 2005-06. HOWEVER, THE SAME IN OUR OPINION CAN BE A BASIS FOR ESTIMATING THE PROFIT FOR SUBSEQ UENT YEARS ESPECIALLY WHEN THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS AND THE PROF IT IS BEING ESTIMATED. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND KEEPING I N MIND THE ASSESSMENT COMPLETED U/S.153A/143(3) FOR A.Y. 2004-05 AND ALSO IN ABSENC E OF RECORDING OF THE STATEMENT OF THE ASSESSEE AT ANY POINT BEFORE THE COMPLETION OF THE ASSESSMENT, ADOPTION OF 0.45% NET PROFIT IN THE INSTANT CASE IN OUR OPINION WILL MEET THE ENDS OF JUSTICE. WE, THEREFORE, DIRECT THE AO TO ADOPT THE PROFIT RATE OF 0.45% AS AGAINST 0.53% DETERMINED BY THE LD. CIT(A) AND RECOMPUTE THE ADDITION. WE HOLD AND DIR ECT ACCORDINGLY. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED AND THE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO.1619/PN/2011, ITA NO.1620/PN/2011 (A.Y. 2006 -07 & 2007-08) : 14. AFTER HEARING BOTH THE SIDES, WE FIND THE GROUN DS RAISED BY THE ASSESSEE ARE IDENTICAL TO THE GROUNDS RAISED IN ITA NO.1522/PN/2 011. WE HAVE ALREADY DECIDED THE ISSUE AND DIRECTED THE AO TO ADOPT THE PROFIT RATE OF 0.45% AS AGAINST 0.53% DETERMINED BY THE CIT(A). FOLLOWING THE SAME RATIO, WE DIRECT THE AO TO ADOPT THE PROFIT RATE OF 0.45% IN THESE YEARS ALSO. THE GROUNDS RAISED BY T HE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 10 ITA NO.58/PN/2012 (A.Y. 2005-06) (BY REVENUE) : 15. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.40,26,914/- MA DE ON ACCOUNT OF GROSS PROFIT ON TURNOVER OF RS.66,84,60,953/- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT GP @ 1.5% W AS ALSO DECLARED BY ASSESSEE'S UNCLE, DURING THE COURSE OF SEARCH. FOLLOWING THE S AME PRINCIPLE, THE ASSESSING OFFICER WAS RIGHT IN ADOPTING THE SAME RATE OF GP A T THE HANDS OF THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ASSESSEE'S UNCLE SHRI ASHOKKUMAR BHUTADA, BEING A KEY FIGURE AND MANAGING DIRECTOR OF GROUP C OMPANIES, HAD DECLARED THE UNDISCLOSED INCOME @ 1.5% IN RESPECT OF HIS COMPANI ES, HIS BROTHER AND THE ASSESSEE. THE DISCLOSURE WAS MADE WITHOUT ANY COERC ION, OR ANY UNDUE INFERENCE DURING COURSE OF SEARCH, AS CAN BE SEEN FROM STATEM ENTS RECORDED AND ADMITTANCE PUT FORTH BY SHRI ASHOKUMAR BHUTADA. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSING OFFICER SHOULD HAVE CALCULATED GROSS PROFIT ON THE BASIS OF HIS FATHER'S TRADING RESULT EVEN WHEN BOTH THE BUSINESS ARE NOT COMPARABLE AND THAT ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNT WHEREAS HIS FATHER'S BOOKS WERE AUDITED U/S. 44AB OF THE ACT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ASSESSING O FFICER'S FINDING THAT GROSS PROFIT @ 1.5% WAS BASED ON THE MATERIAL GATHERED DURING TH E COURSE OF SEARCH AND IN THE SAME LINE OF BUSINESS AND THAT STATEMENT TAKEN ON O ATH CAN TREATED AS HAVING EVIDENTIARY VALUE. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT IN THE ABSE NCE OF ANY BOOKS OF ACCOUNTS, AND IN THE ABSENCE OF ANY COGENT EVIDENCE THE ASSESSING OFFICER WAS RIGHT IN MAKING ADDITION ON THE BASIS OF PERCENTAGE OF GROSS PROFIT BASED ON TURNOVER. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT INSTRUCTION NO 286, DATED 28.03.203 OF CBDT WAS FOLLOWED BY THE ASSESSING OFFICER, AS THERE WAS ENOUGH EVIDENCE IN THE SHAPE OF BANK STATEMENT, ETC. DETECTED DURING SEARCH/ASSE SSMENT PROCEEDINGS, AVAILABLE WITH ASSESSING OFFICER, TO JUSTIFY THE ESTIMATED AD DITION IN THIS CASE, IN THE ABSENCE OF ANY BOOKS OF ACCOUNT AND COGENT EVIDENCE WITH TH E ASSESSEE. TO THAT EXTENT THE LD. CIT(A) HAS NOT ONLY IS PLACED HIS RELIANCE ON B OARD INSTRUCTION BUT HAS ALSO PERVERSELY INTERPRETED THE SAME. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE DECLARA TION WAS MADE AS A RESULT OF SEARCH ACTION AND NOT ON ANY VOLUNTARY ACTION ON TH E PART OF THE ASSESSEE. THE ASSESSEES ARGUMENT THAT THIS WAS DONE TO BUY PEACE OF MIND DOES NOT HOLD GOOD AS IN THE ASSESSMENT PROCEEDING, THE ASSESSEE NEVER RAISED ANY QUERY REGARDING THIS INSPITE OF GIVING AMPLE OPPORTUNITIES. 16. FACTS OF THE CASE IN BRIEF, ARE THAT THE AO ADO PTED THE NET PROFIT RATE OF 1.5% ON A TURNOVER OF RS.66,84,60,953/- AND MADE ADDITION OF RS.40,26,914/- TO THE RETURNED INCOME OF RS.77,52,300/-. IN APPEAL, THE LD. CIT(A ) BROUGHT DOWN THE PROFIT RATE TO 11 0.53% WHICH WORKS OUT TO RS.35,42,843/-. SINCE THE ASSESSEE HAD OFFERED ADDITIONAL INCOME OF RS.60 LAKHS WHICH WAS CONSIDERED BY THE A O WHILE MAKING THE ADDITION OF RS.40,26,914/-, THEREFORE, THE CIT(A) HELD THAT NO FURTHER ADDITION IS CALLED FOR AND DELETED THE ADDITION. 16.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE RE VENUE IS IN APPEAL BEFORE US. 17. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE AO AND CIT(A). WE FIND THE GROUNDS R AISED BY THE REVENUE ARE IDENTICAL TO THE GROUNDS IN ITA NO.57/PN/2012 IN THE CASE OF SAT ISHKUMAR VISHNUDAS BHUTADA. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAIS ED BY THE REVENUE HAVE BEEN DISMISSED. SINCE IN THE INSTANT CASE THE ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS.60 LAKHS FOR THE IMPUGNED ASSESSMENT YEAR WHICH HAS BEEN CONSIDERED BY THE AO AND DUE CREDIT HAS BEEN GIVEN FOR THE SAME WHILE CONSID ERING THE ADDITION, THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) DELETING TH E ADDITION. SINCE THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE CIT(A), T HEREFORE, FOLLOWING OUR ORDER IN ITA NO.1522/PN/2011 AND ITA NO.57/PN/2012 IN THE CASE O F SHRI SATISHKUMAR VISHNUDAS BHUTADA WE DISMISS THE GROUNDS RAISED BY THE REVENU E. ITA NO.59/PN/2012 (A.Y. 2006-07) : 18. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.37,86,339/- MADE ON AC COUNT OF GROSS PROFIT ON TURNOVER OF RS.39,03,44,294/- @1.5%. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT GP @ 1.5% WAS ALS O DECLARED BY ASSESSEE'S UNCLE, DURING THE COURSE OF SEARCH. FOLLOWING THE SAME PRI NCIPLE, THE ASSESSING OFFICER WAS RIGHT IN ADOPTING THE SAME RATE OF GP AT THE HANDS OF THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ASSESSEES UNCLE SHRI ASHOKKUMAR BHUTADA, BEING A KEY FIGURE AND MANAGING DIRECTOR OF GROUP COMPANIES , HAD DECLARED THE UNDISCLOSED INCOME @ 1.5% IN RESPECT OF HIS COMPANIES, HIS BROT HER AND THE ASSESSEE. THE DISCLOSURE WAS MADE WITHOUT ANY COERCION, OR ANY UN DUE INFERENCE DURING COURSE OF SEARCH, AS CAN BE SEEN FROM STATEMENTS RECORDED AND ADMITTANCE PUT FORTH BY SHRI ASHOKUMAR BHUTADA. 12 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSING OFFICER SHOULD HAVE CALC ULATED GROSS PROFIT ON THE BASIS OF HIS FATHER'S TRADING RESULT EVEN WHEN BOTH THE BUSI NESS ARE NOT COMPARABLE AND THAT ASSESSEE DID NOT MAINTAIN BOOKS OF ACCOUNT WHEREAS HIS FATHER'S BOOKS WERE AUDITED U/S. 44AB OF THE ACT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED C1T(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT ASSESSING OFFICER 'S FINDING THAT GROSS PROFIT @ 1.5% WAS BASED ON THE MATERIAL GATHERED DURING THE COURS E OF SEARCH AND IN THE SAME LINE OF BUSINESS AND THAT STATEMENT TAKEN ON OATH CAN TR EATED AS HAVING EVIDENTIARY VALUE. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT IN THE ABSENCE OF ANY BOOKS OF ACCOUNTS, AND IN THE ABSENCE OF ANY COGENT EVIDENCE THE ASSESSING OFFICE R WAS RIGHT IN MAKING ADDITION ON THE BASIS OF PERCENTAGE OF GROSS PROFIT BASED ON TU RNOVER. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT INSTRUCTION NO 28 6, DATED 28.03.203 OF CBDT WAS FOLLOWED BY THE ASSESSING OFFICER , AS THERE WAS EN OUGH EVIDENCE IN THE SHAPE OF BANK STATEMENT, ETC. DETECTED DURING SEARCH/ASSESSM ENT PROCEEDINGS, AVAILABLE WITH ASSESSING OFFICER, TO JUSTIFY THE ESTIMATED ADDITIO N IN THIS CASE, IN THE ABSENCE OF ANY BOOKS OF ACCOUNT AND COGENT EVIDENCE WITH THE ASSES SEE. TO THAT EXTENT THE LD. CIT(A) HAS NOT ONLY MISPLACED HIS RELIANCE ON BOARD INSTRUCTION BUT HAS ALSO PERVERSELY INTERPRETED THE SAME. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE DECLARATION W AS MADE AS A RESULT OF SEARCH ACTION AND NOT ON ANY VOLUNTARY ACTION ON THE PART OF THE ASSESSEE. THE ASSESSEES ARGUMENT THAT THIS WAS DONE TO BUY PEACE OF MIND DOES NOT HO LD GOOD AS IN THE ASSESSMENT PROCEEDING, THE ASSESSEE NEVER RAISED ANY QUERY REG ARDING THIS INSPITE OF GIVING AMPLE OPPORTUNITIES. 19. FACTS OF THE CASE, IN BRIEF, ARE THAT IN ABSENC E OF MAINTENANCE OF REGULAR BOOKS OF ACCOUNTS THE AO ESTIMATED PROFIT @1.5% ON A TURNOVE R OF RS.39,03,44,294/- AND DETERMINED THE PROFIT AT RS.58,55,164/-. AFTER DED UCTING THE ADDITIONAL INCOME OF RS.18 LAKHS DECLARED BY THE ASSESSEE THE AO MADE ADDITION OF RS.40,55,164/-. IN APPEAL THE LD. CIT(A) REDUCED THE RATE OF PROFIT TO 0.53% ON A TUR NOVER OF RS.39,03,44,294/- AND DETERMINED THE GROSS PROFIT AT RS.20,68,825/-. AF TER DEDUCTING THE ADDITIONAL INCOME OF RS.18 LAKHS OFFERED BY THE ASSESSEE HE SUSTAINED AN ADDITION OF RS.2,68,825/- FOR WHICH THE REVENUE IS IN APPEAL. 20. AFTER HEARING BOTH THE SIDES WE FIND THE GROUND S RAISED BY THE REVENUE ARE IDENTICAL TO THE GROUNDS IN ITA NO.57/PN/2012 IN THE CASE OF SHRI SATISHKUMAR VISHNUDAS BHUTADA. IN THAT CASE WE HAVE DIRECTED THE AO ADOPT THE PROF IT RATE OF 0.45% . SINCE FACTS IN THE INSTANT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF SHRI SATISHKUMAR VISHNUDAS BHUTADA, THEREFORE, WE DIRECT THE AO TO COMPUTE THE PROFIT @ 0.45% ON A TURNOVER OF RS.39,03,44,294/-. SINCE THE AO IN PARA 7 OF THE O RDER HAS MENTIONED THAT THE ASSESSEE HAS 13 DISCLOSED ADDITIONAL INCOME OF RS.17 LAKHS AND THE CIT(A) HAS MENTIONED THE ADDITIONAL INCOME DECLARED BY THE ASSESSEE AT RS.18LAKHS, THER EFORE, WE RESTORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE CORRECT ADDIT IONAL INCOME DECLARED BY THE ASSESSEE. IN CASE THE ADDITIONAL INCOME DECLARED IS RS.17 LAK HS THEN THERE WILL BE ADDITION OF RS.56,549/-. IN CASE THE ADDITIONAL INCOME DECLARE D IS RS.18 LAKHS THEN IN THAT CASE THE ORDER OF THE CIT(A) WILL BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE WILL BE DISMISSED. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1523/PN/2011 (A.Y. 2007-08) AND ITA NO.60/PN /2012 (A.Y. 2007-08) : 22. FIRST GROUND RAISED BY THE ASSESSEE AND THE GRO UNDS RAISED BY THE REVENUE RELATE TO THE ORDER OF THE CIT(A) IN DIRECTING THE AO TO E STIMATE THE PROFIT @ 0.53% OF THE TURNOVER. 23. FACTS OF THE CASE, IN BRIEF, ARE THAT IN ABSENC E OF MAINTENANCE OF PROPER BOOKS OF ACCOUNTS THE AO DETERMINED THE PROFIT OF THE ASSESS EE AT 1.5% ON A TURNOVER OF RS.17,43,17,972/- AND DETERMINED THE PROFIT AT RS.2 6,14,770/-. AFTER DEDUCTING THE ADDITIONAL INCOME SHOWN AT RS.9 LAKHS THE AO MADE A DDITION OF RS.17,14,770/- TO THE RETURNED INCOME OF RS.12,30,500/-. IN APPEAL THE L D. CIT(A) DIRECTED THE AO TO COMPUTE THE PROFIT AT 0.53% ON THE TURNOVER WHICH W ORKED OUT TO RS.9,23,885/-. SINCE THE ASSESSEE HAS DECLARED ADDITIONAL INCOME OF RS.9 LAKHS, HE DIRECTED THE AO TO SUSTAIN AN ADDITION OF RS.23,885/-. AGGRIEVED WITH SUCH PA RT RELIEF BY THE CIT(A) THE REVENUE AND THE ASSESSEE ARE IN APPEAL BEFORE US. 24. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND FIND THAT THE GROUNDS IN THE IMPUGNED APPEAL ARE IDENTICAL TO THE GROUNDS IN ITA NO.1522/PN/2011 AND ITA NO.57/PN/2012 IN THE CASE OF SHRI SATISH KU MAR V. BHUTADA. WE HAVE ALREADY HELD IN THAT CASE THAT ADOPTION OF 0.45% PROFIT ON THE TURNOVER WILL BE JUST AND PROPER. IN VIEW OF THE SAME AND CONSIDERING THE ADDITIONAL INCOME OF RS.9 LAKHS OFFERED BY THE 14 ASSESSEE NO ADDITION IS CALLED FOR IN THE IMPUGNED CASE. ACCORDINGLY THE GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED AND THE GROUNDS R AISED BY THE REVENUE ARE DISMISSED. 25. THE SECOND GROUND RAISED BY THE ASSESSEE IN THE IMPUGNED APPEAL RELATES TO THE ADDITION OF RS.6,08,222/- MADE BY THE AO U/S.40A(3) WHICH HAS BEEN CONFIRMED BY THE CIT(A). 26. FACTS OF THE CASE IN BRIEF, ARE THAT, DURING TH E COURSE OF SEARCH AT THE ASSESSEES PREMISES SIMULTANEOUS SURVEY ACTION U/S.133A WAS CA RRIED OUT IN THE BUSINESS PREMISES OF M/S. LAXMI MONEY LENDERS LOCATED AT MARKET YARD, LATUR. DURING THE COURSE OF THE SURVEY IT WAS NOTICED THAT A LARGE NUMBER OF CHEQUE S ISSUED BY THE BUSINESS CONCERNS BELONGING TO THE BHUTADA GROUP, LATUR HAD BEEN NEGO TIATED/DISCOUNTED BY M/S. LAXMI MONEY LENDERS. THE DOCUMENTS IMPOUNDED CLEARLY REV EALED THAT CHEQUES ISSUED IN FAVOUR OF VARIOUS PARTIES FROM WHOM OIL SEEDS WERE PURCHASED HAD ACTUALLY BEEN DEPOSITED IN THE BANK ACCOUNT OF M/S. LAXMI MONEY L ENDERS AND CORRESPONDING CASH WAS WITHDRAWN. THIS CLEARLY INDICATED THAT THE CHE QUES ISSUED FOR PURCHASE OF GOODS BY BUSINESS ENTITIES SUCH AS M/S. KIRTI AGROTECH LTD. M/S. KIRTI DAL MILLS LTD. M/S. KIRTI FOODS LTD., KIRTI SOLVEX LTD. M/S. KIRTI UDYOG AND M/S. KAMAL AGRO ETC. HAD BEEN ISSUING CROSSED CHEQUES WHICH ALLOWED THE SAME TO B E NEGOTIATED AND DEPOSITED IN THE ACCOUNT OF A PERSON OTHER THAN THE FIRST PAYEE. 27. THE ASSESSING OFFICER CONFRONTED THE SAME TO TH E ASSESSEE WHO SUBMITTED THAT THE PURCHASES WERE MADE FROM UNREGISTERED DEALERS W HO ARE NOTHING BUT AGRICULTURISTS THEMSELVES. THEY ARE REPRESENTATIVES OF SMALL AGRIC ULTURISTS OF THEIR VILLAGE AND NEARBY VILLAGES. HOWEVER, THE ASSESSING OFFICER WAS NOT C ONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND INVOKING THE PROVISIONS OF SECT ION 40A(3) MADE AN ADDITION OF RS.6,08,222/- BEING 20% OF THE PAYMENT OF RS.30,14, 109/-. 28. IN APPEAL THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER : 6.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE ASSESSMENT ORDER AND THE RIVAL SUBMISSIONS. IN THIS CASE, THE APPEL LANT HAS MADE PURCHASED BY ISSUING CROSSED CHEQUES IN THE NAME OF THE TRADERS AGAINST THE PURCHASERS. HOWEVER, IT WAS FOUND DURING THE SURVEY ACTION U/S. 133A IN THE CASE OF M/S. 15 LAXMI LENDERS, LATUR AND SHRI DHANRAJ PALOD THAT TH E APPELLANT HAS GOT THESE CHEQUES DISCOUNTED BY THEM. ON THESE FACTS, THE AO INVOKED SECTION 40A(3) AND MADE THE IMPUGNED DISALLOWANCE AND THE CIRCUMSTANCE S OF THE CASE, THE ARGUMENTS MADE BY THE LD. AR DO NOT HAVE ANY MERITS AND CANNOT BE ACCEPTED IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 40A(3). THE APPELLANT IS, THEREFORE, FOUND TO HAVE INCURRED EXPENDITURE IN RESPECT OF WH ICH PAYMENT HAS BEEN MADE EXCEEDING RS.20,000/- OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, 20% OF SUCH PAYME NTS IS DISALLOWABLE AND THE AOS ACTION IN MAKING THE IMPUGNED DISALLOWANCE IS A S PER LAW AND THE SAME IS CONFIRMED. CONSEQUENTLY, THE DISALLOWANCE OF RS.6, 08,222/- IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 28.1 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE AS SESSEE IS IN APPEAL BEFORE US. 29. THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY OPPOSED THE ADDITION SUSTAINED BY THE CIT(A). HE SUBMITTED THAT WHEN THE ASSESSEE DOES NOT MAINTAIN BOOKS OF ACCOUNTS AND ALL TRANSACTIONS ARE UNACCOUNTED FOR W HICH THE ASSESSING OFFICER HAS ESTIMATED THE PROFIT THEN IN THAT CASE ADDITION U/S .40A(3) IS NOT WARRANTED. 29.1 REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KIRTIKUMAR VISHNUDAS BHUTADA, (A COPY OF WHICH WAS FILED IN THE PAPER BOOK) HE SUBMITTED THAT UNDER IDENTICAL FACTS AND CIRCUMSTAN CES THE TRIBUNAL HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER U/S.40A(3). HE ALSO REFERRED TO THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSHIDHAR REPORTED IN 229 ITR 229 AND SUBMITTED THAT WHEN THE GROSS PR OFIT RATE IS APPLIED THAT WOULD TAKE CARE OF EVERYTHING AND THERE WAS NO NEED FOR MAKING ADDITION U/S.40A(3). HE ACCORDINGLY SUBMITTED THAT UNDER THE FACTS AND CIRC UMSTANCES OF THE CASE NO ADDITION U/S.40A(3) IS CALLED FOR. 30. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDER OF THE HONBLE SUPREME COURT IN THE CASE OF ATTAR SIN GH GURMUKH SINGH VS. ITO REPORTED IN 191 ITR 667 AND SUBMITTED THAT THE PURPOSE OF IN TRODUCTION OF SECTION 40A(3) WAS TO CURB BLACK MONEY AND TO REGULATE THE BUSINESS TRANS ACTION. THEREFORE, THE LD. CIT(A) WAS FULLY JUSTIFIED IN UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER U/S.40A(3) OF THE ACT FOR VIOLATION OF THE PROVISIONS OF THE S AID SECTION. REFERRING TO THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SAI METAL WORKS REPORTED 16 IN 241 CTR 377 HE SUBMITTED THAT EVEN IN CASES OF E STIMATION OF PROFIT PROVISIONS OF SECTION 40A(3) WOULD BE APPLICABLE. 31. THE LEARNED COUNSEL FOR THE ASSESSEE IN HIS REJ OINDER SUBMITTED THAT THE TRIBUNAL IN THE CASE OF KIRTIKUMAR VISHNUDAS BHUTADA (SUPRA) HAS CONSIDERED THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SAI METAL WORKS (SUPRA) AND APPLIED THE RATIO LAID DOWN BY THE HONBLE SUPR EME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS REPORTED IN 88 ITR 1 (SC) AND AC CEPTED THE VIEW FAVOURABLE TO THE ASSESSEE. SINCE THE PROFIT HAS BEEN ESTIMATED IN A BSENCE OF MAINTENANCE OF REGULAR BOOKS OF ACCOUNTS, THEREFORE, NO DISALLOWANCE U/S. 40A(3) IS CALLED FOR. 32. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BY BOTH THE SIDES. THERE IS NO DISPUTE TO THE FACT THAT IT IS A CASE OF NON-MAINTENANCE OF AC COUNTS AND PROFIT HAS BEEN ESTIMATED BY REJECTING THE BOOK RESULTS. THERE IS ALSO NO DISPU TE TO THE FACT THAT DISALLOWANCE OF RS.6,08,222/- HAS BEEN MADE ON ACCOUNT OF VIOLATION OF PROVISIONS OF SECTION 40A(3). IT IS THE CASE OF THE ASSESSEE THAT SINCE PROFIT HAS B EEN ESTIMATED AND ASSESSEE DOES NOT MAINTAIN ANY ACCOUNTS, THEREFORE, NO ADDITION CAN B E MADE U/S.40A(3) IN VIEW OF THE VARIOUS DECISIONS. IT IS THE CASE OF THE REVENUE T HAT EVEN IN CASE WHERE PROFIT IS ESTIMATED DISALLOWANCE U/S.40A(3) CAN BE MADE. 33. WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF KIRTIKUMAR VISHNUDAS BHUTADA (SUPRA) UNDER SOMEWHAT SIMILAR CIRCUMSTANCE S HAS DELETED THE DISALLOWANCE MADE U/S.40A(3) BY HOLDING AS UNDER : 19. HAVING GONE THROUGH THE ABOVE CITED DECISIONS BY THE PARTIES, WE FIND THAT IN VIEW OF SEVERAL DECISIONS INCLUDING THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S. SAI METAL WORKS (SUPRA), THE PUNE BENCH OF THE TRIBUNAL IN ITS RECENT DECISION IN THE CASE OF ACIT VS. M/S. RUSHIR AJ BUILDERS & DEVELOPERS (SUPRA) HAS COME TO THE FOLLOWING CONCLUSION ON THE ISSUE : 9. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE LEARNED CIT(A) HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWI NG THE DECISION OF NAGPUR BENCH OF THE TRIBUNAL IN THE CASE OF SADHURAM WADHW ANI (SUPRA) HOLDING THAT THE DISALLOWANCE U/S. 40A(3) IN THE BLOCK ASSE SSMENT WAS OUTSIDE THE AMBIT OF CHAPTER XIV B OF THE I.T. ACT. THE LD CIT( A) HAS DISCUSSED SEVERAL 17 DECISIONS RELIED UPON BEFORE HIM INCLUDING THE DECI SIONS OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF JANATA TILES, 66 TTJ 69 5 (PUNE) AND SHARMA ASSOCIATES, 55 ITD 171 (PUNE) HOLDING THAT ONCE THE TRANSACTIONS ARE UNRECORDED AND UNDISCLOSED FROM THE REGULAR BOOKS O F ACCOUNT, THERE CAN'T BE FURTHER DISALLOWANCE U/S. 40A(3) OF THE ACT. RELIAN CE HAS ALSO BEEN PLACED ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF WESTERN INDIA BAKERS (P) LTD. VS. DCIT (2004) 84 TTJ (MUM) 223 EX PRESSING THE SIMILAR VIEW WITH THIS OBSERVATION THAT HEADING OF CHAPTER XIV B IS SPECIAL PROCEDURE FOR ASSESSMENT OF SEARCH CASES. SECTION 158BA DEALS ASS ESSMENT OF UNDISCLOSED INCOME AS A RESULT OF SEARCH. THIS SECTION OPENS WI TH A NON-OBSTINATE CLAUSE AND THIS ENACTS PROVISIONS OF OVERRIDING NATURE SO AS T O PREVAIL OVER ANY OTHER PROVISIONS OF THE ACT. THE ASSESSED UNDISCLOSED INC OME IS ASSESSED AT THE HIGHER RATE OF 60% U/S. 113 OF THE ACT, OBSERVED TH E TRIBUNAL. WE, HOWEVER, FIND THAT DIFFERENT VIEWS HAVE BEEN EXPRESSED BY DI FFERENT HIGH COURTS ON THE ISSUE AND NO DECISION OF HON'BLE JURISDICTIONAL HIG H COURT ON THE ISSUE HAS BEEN BROUGHT TO OUR NOTICE BY THE PARTIES. UNDER TH ESE CIRCUMSTANCES, IN VIEW OF THE DECISIONS OF HON'BLE SUPREME COURT IN THE CA SES OF CIT VS. VEGETABLE PRODUCTS (SUPRA) AND CIT VS. PODAR CEMENT PVT. LTD. (SUPRA), WE ADOPT THE JUDGMENT ON THE ISSUE WHICH IS FAVOURABLE TO THE AS SESSEE. WE THUS RESPECTFULLY ARE FOLLOWING THE DECISION OF CARGO CLEARING AGENCY (GUJ.) VS. JCIT (SUPRA) & OTHERS RELIED UPON BY THE LD. A.R. HOLD THAT THE LD CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE U/S. 40A(3) OF THE ACT MADE BY THE A.O WITH DIRECTION TO DELETE THE SAME INVOLVING AMOUNT OF RS.24,15,160/-. THE SAME I S UPHELD. GROUND NO.3 TO 5 INVOLVING THIS ISSUE IS THUS REJECTED.' IN VIEW OF THE ABOVE DECISION OF THE PUNE BENCH IN THE CASE OF ACIT VS. M/S.RUSHIRAJ BUILDERS & DEVELOPER (SUPRA), WE THUS HOLD THAT ONCE THE TRANSACTIONS ARE UNRECORDED AND UNDISCLOSED FROM TH E REGULAR BOOKS OF ACCOUNT, THERE CANNOT BE FURTHER DISALLOWANCE U/S. 40A(3) OF THE ACT. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW DIRECT THE A. O. TO DELETE THE DISALLOWANCE OF RS.2,27,978/- MADE U/S. 40 A(3) OF THE ACT. THE GRO UND NO. 4 IS THUS ALLOWED. 34. RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH OF THE TRIBUNAL WE SET-ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AS SESSING OFFICER TO DELETE THE ADDITION MADE U/S.40A(3) IN THE INSTANT CASE WHERE ADMITTEDL Y PROFIT HAS BEEN ESTIMATED IN ABSENCE OF MAINTENANCE OF BOOKS OF ACCOUNTS. GROUN DS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 35. THE APPEALS FIELD BY THE ASSESSEE AND REVENUE A RE DISPOSED OF IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 19 TH OF APRIL, 2013. SD/- SD/- (SHAILENDRA KUMAR YADAV ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED THE 19 TH APRIL 2013. 18 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, NASHIK 4. THE CIT CENTRAL, NAGPUR 5. THE DR B BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.