ACIT, New Delhi V. Sh. Lachman Dass Bhatia, New Delhi

ITA 1692/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2120 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-09-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 24-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B L GUPTA ITP
• Keywords: Gross profit estimation; Set aside

Judgement Text

ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA : VICE PRESIDENT AN D SHRI C.L. SETHI : JUDICIAL MEMBER ITA NO. 1143/DEL/09 ASST. YR: 2000-01 M/S LACHMAN DAS BHATIA, VS. ACIT CENTRAL CIRCLE-1 7, 31-B, RAJPUR ROAD, NEW DELHI. DELHI. ITA NOS. 1690, 1691, 1692& 1693/DEL/09 ASSTT. YR: 2000-01, 02-03, 03-04 & 04-05 ACIT CENTRAL CIRCLE 17(1), VS. M/S LACHMAN DAS BHAT IA, NEW DELHI. 31-B, RAJPUR ROAD, DELHI. PAN/ GIR NO. AAFPB3770K ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI B.L. GUPTA ITP REVENUE BY : SMT. KAVITA BHATNAGAR CIT (DR) O R D E R PER G.E. VEERABHADRAPPA, V.P: CROSS APPEALS FOR THE ASSESSMENT YEAR 2000-01 AND T HE OTHER APPEALS BY THE DEPARTMENT FOR A.Y. 2002-03, 2003-04 AND 200 4-05 ARISE OUT IDENTICAL ORDERS DATED 25-2-2009 OF THE CIT(APPEALS ). WE HAVE HEARD THESE APPEALS TOGETHER AND FIND IT CONVENIENT TO DISPOSE OF THE SAME BY THIS ORDER. 2. IN THE ASSESSEES APPEAL FOR A.Y. 2000-01 THE FI RST GROUND RELATES TO THE SUSTENANCE OF ADDITION OF RS. 70,000/- OUT OF A DDITION OF RS. 3,00,000/- ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOU NTED BANK ENTRIES. THE ASSESSEE IS AN INDIVIDUAL, DEALING IN SALE AND PURC HASE OF HING AND OTHER ITEMS, SUCH AS ZEERA ETC. HE WAS SUBJECTED TO SEARC H OPERATION ON 13-12- 2005. IN THE COURSE OF ASSESSMENT PROCEEDINGS, QUES TIONS WERE RAISED AS TO THE BANK TRANSACTIONS OF THE ASSESSEE. IT APPEARS THAT THE ASSESSEE HAD NOT ENCLOSED COPIES OF BANK ACCOUNT, ALTHOUGH HE HAD BA NK ACCOUNTS. THE ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE AS SESSEE HAD NOT FILED THE BANK ACCOUNT, THOUGH CLAIMED TO HAVE BEEN FILED, TH E ASSESSEE WOULD HAVE UNDISCLOSED RECEIPT IN THE BANK ACCOUNT TO THE EXTE NT OF RS. 3,00,000/- AND THUS ADDITION WAS MADE. 3. WHEN THIS ADDITION WAS QUESTIONED BEFORE THE CIT (APPEALS), THE CIT(A) WAS OF THE VIEW THAT THE ADDITION HAD BEEN M ADE ON HYPOTHETICAL BASIS RATHER THAN ON SUBSTANTIVE BASIS. SIMILAR ADD ITIONS WERE MADE IN EARLIER YEARS WITHOUT REFERRING TO ANY PARTICULAR ENTRY IN THE BANK ACCOUNT. TO VERIFY THE TRUTH OF THE MATTER BANK ACCOUNTS WERE CALLED A ND EXAMINED TO FIND OUT WHETHER THERE WAS ANY CASH DEPOSIT DURING THE YEAR AND IT WAS FOUND THAT IN BANK OF MADURA LTD. THERE WAS A DEPOSIT OF RS. 70,0 00/- ON 30-11-1999. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF SUCH DE POSITS. HE CONTENDED THAT THERE WERE WITHDRAWALS ABOUT 4-5 MONTHS BACK AND TH E SAME WERE THE SOURCE FOR DEPOSIT OF THE DISPUTED AMOUNT. THE CIT(A) DID NOT ACCEPT THIS ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA CONTENTION WITH REFERENCE TO THIS ENTRY AND MAINTAI NED THIS ADDITION AND DELETED THE REST OF THE ADDITIONS. IN THE ASSESSEE S APPEAL, THIS ADDITION OF RS. 70,000/- HAS BEEN CHALLENGED. ACCORDING TO ASSESSEE , IN THE ABSENCE OF ANY MATERIAL IN SUPPORT OF THE ADDITION, THE CIT(APPEAL S) OUGHT TO HAVE ACCEPTED THE ASSESSEES EXPLANATION THAT THE SOURCE OF THESE DEPOSITS IS WITHDRAWALS EARLIER MADE FROM THE SAME BANK ACCOUNT, IN THE LIG HT OF THE DECISION OF THE MUMBAI BENCH OF THE ITAT IN THE CASE OF AISHWARYA R AI 104 ITD 166 (T.M). THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALS O FILED COPIES OF THE BANK ACCOUNTS IN THE PAPER BOOK. 4. THE LEARNED DR, ON THE OTHER HAND STRONGLY JUSTI FIED THE ADDITION. 5. WE HAVE GONE THROUGH THE DETAILS PLACED AT PAGES 46 TO 49 OF THE PAPER BOOK. HERE THE DRAWINGS WERE ALMOST 4-5 MONTH S BEFORE THE DATE OF DEPOSIT AND THE ASSESSEE, IN OUR VIEW, HAS NOT PRO PERLY EXPLAINED THE SOURCE OF CASH AVAILABLE ON THE DATE OF DEPOSIT. HE COULD HAVE EASILY FURNISHED THE CASH FLOW STATEMENT TO JUSTIFY THE AVAILABILITY OF CASH. THE ADDITION SUSTAINED BY THE CIT(APPEALS) IS NOT WITH REFERENCE TO ANY ES TIMATE OR ON HYPOTHETICAL BASIS BUT WITH REFERENCE TO A PARTICULAR DEPOSIT IN THE BANK ACCOUNT MADE ON 30-11-1999. THE CIT(APPEALS), IN OUR VIEW IS JUSTIF IED IN SUSTAINING THE ADDITION, HAVING REGARD TO THE FACTS AND CIRCUMSTAN CES OF THE CASE. ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA 6. THE NEXT DISPUTE IN THE ASSESSEES APPEAL RELATE S TO AN ADDITION OF RS. 39,96,951/- MADE ON THE GROUND OF ALLEGED BOGUS LIA BILITIES. THE ASSESSING OFFICER FOUND THAT OLD BALANCE OF RS. 39,96,951/- W AS COMING FROM THE LAST NUMBER OF YEARS. THE ASSESSING OFFICER DISCUSSED TH E ISSUE ON PAGE 2 OF THE ASSESSMENT ORDER. ACCORDING TO HIM, THE AMOUNTS IN QUESTION ARE BOGUS. IT MIGHT BE THAT THE ASSESSEE WAS SETTLING ACCOUNTS OF CREDITORS IN CASH OR THROUGH SOME OTHER ILLEGAL MEANS AND KEPT ON SHOWIN G THESE AS OUTSTANDING CREDITORS. ACCORDING TO HIM, IT IS DOUBTFUL WHETHER THERE WERE ACTUAL CREDITORS TO THIS EXTENT FOR LACK OF CONFIRMATION. THE CIT(APPEALS) ALSO SUSTAINED THE ADDITION ON THE GROUND THAT THE ASSES SEE IS DUTY BOUND TO EXPLAIN THE NATURE WITH CORROBORATIVE CONFIRMATION FROM RESPECTIVE PARTIES AS TO THE EXISTENCE OF SUCH LIABILITIES. IF SUCH LI ABILITIES ARE REPAID SUBSEQUENTLY AND EVIDENCE IN SUPPORT THEREOF MIGHT BE FURNISHED, THEN ONLY SUCH LIABILITIES CAN BE REGARD AS GENUINE AND NO ADVERSE VIEW COULD BE DRAWN. ON THE CONTRARY THESE LIABILITIES WERE WRIT TEN BACK IN SUBSEQUENT YEARS WHEN THE ASSESSEE SUFFERED A LOSS. ACCORDING TO THE LEARNED CIT(A), THE ASSESSEE CHOSE TO WRITE BACK IN THE YEAR IN WHI CH HE DISCLOSED LOSSES AND BY DOING SO CONVENIENTLY AVOIDED THE PAYMENT OF TAX ON THE BALANCES WRITTEN BACK. THE AMOUNT OF OUTSTANDING CREDIT BALANCES REP RESENTED PURCHASES MADE IN EARLIER YEARS AND CLAIMED AS DEDUCTION IN T HE P&L A/C. ACCORDING ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA TO THE CIT(APPEALS), ANY REMISSION ON THIS ACCOUNT COULD ONLY BE ON THE REVENUE ACCOUNT IN THE ABSENCE OF ANY CONFIRMATION . THE CONCLUSION OF THE ASSESSING OFFICER THAT IT WAS BOGUS CREDIT, FINDS AMPLE SUPPORT IN ABSENCE OF THE SAME. THE ADDITION WAS SUSTAINED BY THE CIT( APPEALS). 7. THE PLEA OF THE ASSESSEE BEFORE US IS THAT AMOU NTS IN QUESTION WERE WRITTEN BACK TO THE P&L A/C AND OFFERED AS INCOME I N A.Y. 2003-04. THE LIABILITY APPEARING IN THE BALANCE SHEET CANNOT BE TREATED AS INCOME FOR THE YEAR IN QUESTION. THE LEARNED COUNSEL FOR THE ASSES SEE PLEADED THAT THE ADDITION BE DELETED IN THIS ASSESSMENT YEAR. 8. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUP PORTED THE FINDING OF THE CIT(A) AND THAT OF THE ASSESSING OFFICER. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND GONE THROUGH THE RECORDS. THE LIABILITIES THAT EXIST IN THE BAL ANCE SHEET HAVE TO BE PROVED BY THE ASSESSEE. ALTHOUGH IN THE EARLIER YEARS, THE SE LIABILITIES WERE SHOWN TO BE EXISTING, IT IS SEEN FROM THE RECORD, WHAT SORT OF EVIDENCE HE PRODUCED IN SUPPORT OF THE CLAIM OF THESE LIABILITIES IS NOT CL EAR. THERE WAS NOT EVEN A CONFIRMATION LETTER COMING IN SUPPORT OF THE LIABIL ITIES. APART FROM THIS, THE CONDUCT OF THE ASSESSEE HAS TO BE SEEN. HE WRITES O FF IN A SUBSEQUENT YEAR WHERE THE DEPARTMENT SAYS, IT WAS THE YEAR OF LOSS AND THE ASSESSING OFFICER HAS MADE A SPECIFIC COMMENT THAT THE WRITE OFF HAS BEEN MADE ONLY IN THE ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA YEAR OF LOSS SO THAT IT DOES NOT HAVE ANY TAX IMPLI CATION. IT IS IN THIS BACKGROUND THAT WE HAVE TO EXAMINE THE ISSUE AND SI NCE THE ASSESSEE HAS FAILED TO ESTABLISH THE EXISTENCE OF THE GENUINENES S OF THE LIABILITIES AS AT THE END OF THE PREVIOUS YEAR AND HAS IN FACT WRITTEN BA CK THE LIABILITY TO THE P&L A/C, CLEARLY JUSTICES THE STAND OF THE ASSESSING OF FICER THAT THE LIABILITIES WERE NON-EXISTING FROM A PERIOD EARLIER TO THE ASSESSMEN T YEAR 2003-04. THE ADDITION SUSTAINED BY THE CIT(A), HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE IS THEREFORE SUSTAINED. 10. THE NEXT GROUND OF APPEAL IN THE ASSESSEES AP PEAL WAS NOT PRESSED. REVENUES APPEALS : 11. THE FIRST COMMON GROUND IN DEPARTMENTAL APPEALS FOR ALL THE ASSESSMENT YEARS RELATES TO THE DELETION OF ADDITI ON OF RS. 2,30,000/- OUT OF RS. 3,00,000/- MADE ON ACCOUNT OF UNEXPLAINED BANK ENTRIES, WHICH IS THE SUBJECT MATTER OF THE ASSESSEES APPEAL. WHILE DEAL ING WITH THE ASSESSEES APPEAL, WE HAVE ALREADY CONFIRMED THE FINDING OF T HE CIT(APPEALS) IN SUSTAINING THE ADDITION OF RS. 70,000/- OUT OF RS. 3,00,000/-. IN OUR VIEW THE ADDITION MADE BY THE ASSESSING OFFICER WAS ON HYPOT HETICAL BASIS WITHOUT THERE BEING ANY MATERIAL IN THIS REGARD AND NOT BAS ED ON ANY MATERIAL OF ANY SUBSTANTIVE NATURE. THE CIT(APPEALS), AFTER GOING T HROUGH THE RECORDS FOUND THAT THERE WAS ONLY ONE ENTRY ON 30-11-1999 IN THE ACCOUNT OF BANK OF ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA MADURA. THERE WAS A CASH DEPOSIT AND THE ADDITION I S WITH REFERENCE TO THAT. THAT ADDITION IS ALREADY CONFIRMED BY US. AS REGAR DS RS. 2,30,000/-, WE AGREE WITH THE CIT(APPEALS) THAT THERE IS NO BASIS FOR THE ASSESSING OFFICER TO MAKE THE ADDITION. SO, THERE IS NO REASON WHY TH E REVENUE SHOULD BE AGGRIEVED BY THIS ORDER OF THE CIT(A) ON THIS ISSUE . ACCORDINGLY, THE ORDER OF THE CIT(A) IN RESPECT OF THIS PORTION OF THE MAT TER IS CONFIRMED. THE REVENUES COMMON GROUND IN ALL THE YEARS IS THEREFO RE STANDS DISMISSED. 12. THE SECOND COMMON GROUND IN ALL THE APPEALS, EX CEPT FOR A.Y. 2002- 03 RELATES TO ADDITION ON ACCOUNT OF LOW GROSS PROF IT. THE ADDITION IN THESE YEARS ARE MADE ON ACCOUNT OF LOW GROSS PROFIT ON TH E REASONING THAT ON THE BASIS OF CERTAIN PAPERS RELATING TO THE FINANCIAL Y EAR 2005-06, THE ASSESSEE WAS ENGAGED IN UNDER INVOICING. IT IS A FACT THAT T HE ASSESSING OFFICER DID NOT NOTICE ANY DEFECT OR DISCREPANCY IN THE MAINTENANCE OF THE BOOKS OF ACCOUNT. THE PAPERS RELATED TO A.Y. 2006-07 AND THEREFORE CA NNOT BE CONSIDERED AS A BASIS FOR MAKING THESE ADDITIONS IN THESE YEARS. IN THIS VIEW OF THE MATTER, THE LEARNED CIT(A) FURTHER FELT THAT ON THE GROUND THAT THE BOOKS OF ACCOUNT ARE AUDITED AND NO DISCREPANCIES HAVE BEEN FOUND IN THE BOOK RESULTS, THERE IS NO BASIS FOR THE ASSESSING OFFICER TO ESTIMATE G.P. AT ABOUT 10% WITHOUT ANY MATERIAL. ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA 13. WE HAVE HEARD BOTH SIDES AND GONE THROUGH THE R ECORDS AND ARE IN FULL AGREEMENT WITH THE FINDINGS OF THE CIT(APPEALS). TH E ADDITION MADE BY THE ASSESSING OFFICER ITSELF IS BASED WITHOUT ANY MATER IAL RELEVANT FOR THOSE YEARS. ALTHOUGH THE ASSESSEE WAS SUBJECTED TO SEARCH ON 13 -11-2005, NO INCRIMINATING MATERIAL WAS FOUND SO AS TO SUGGEST T HAT THE PROFITS DISCLOSED IN THE BOOKS OF ACCOUNT WERE INCORRECT OR THERE HA S BEEN UNDER INVOICING OF SALES AS THERE WERE NO MATERIAL FOUND FOR THESE YEA RS AND WHAT WAS FOUND IN ASSESSMENT YEAR 2005-06, CANNOT BE THE BASIS FOR MA KING THE ESTIMATED ADDITIONS IN THE ASSESSMENT YEARS 2000-01, 2003-04 AND 2004-05. ACCORDINGLY, THE ORDER OF THE CIT(APPEALS) IS CONFI RMED. 14. THAT LEAVES US TO ONE GROUND IN A.Y. 2000-01 RE LATING TO ADDITION OF RS. 1,94,64,000/- IN RESPECT OF HAWALA TRANSACTION. 15. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS RESORTED TO HAWALA PAYMENTS NOT RECORDED IN THE BOOKS. IN THE C OURSE OF SEARCH IN ONE OF THE FAMILY MEMBERS PREMISES, SOME PAPERS WERE FOUN D AND RECOVERED POINTING OUT THAT ASSESSEE AMONG OTHERS ALSO VIOLAT ED FERA RULES BY MAKING PAYMENTS THROUGH HAWALA BUSINESS. ADJUDICATING OFFI CER OF ENFORCEMENT DIRECTORATE HAD PASSED AN ORDER INDICTING ASSESSEE AS WELL AS OTHER FAMILY MEMBERS, WHEREIN HE HAS LEVIED PENALTY FOR VIOLATI NG FERA. THE SAID ORDER WAS APPEALED AGAINST AND THE CONCERNED APPELLATE A UTHORITY I.E. APPELLATE ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA TRIBUNAL FOR FOREIGN EXCHANGE HAVE SET ASIDE THE OR DER TO REFRAME THE SAME AFTER GIVING THE RELEVANT DOCUMENTS TO THE PERSONS INVOLVED WITHIN 8 MONTHS FROM 7-4-2008. IT IS REPORTED THAT SO FAR NO CONSE QUENTIAL ORDER HAVE BEEN PASSED BY THE ADJUDICATING AUTHORITY WHICH FACT HAS BEEN CONFIRMED BY THE ASSESSING OFFICER. IT WAS ALSO FURTHER CONFIRMED TH AT THE ASSESSING OFFICER HAD NOT PROCESSED ANY MATERIAL INDEPENDENT OF THAT ORDE R INDICTING THE ASSESSEE FOR UNACCOUNTED PAYMENTS. WHEN THE ADDITION IS SOL ELY ON THE BASIS OF AN ORDER OF THE AFORESAID AUTHORITY UNDER FERA, THE SA ME DO NOT STAND CONSEQUENT TO NON-EXISTENCE OF THE SAID ORDER. UNLE SS THE ADJUDICATING AUTHORITY REFRAMES AS PER DIRECTIONS GIVEN, NO RELI ANCE CAN BE MADE TO SUCH ORDER. IT IS WITH THESE OBSERVATIONS, THE CIT(APPE ALS) GAVE THE FOLLOWING DIRECTION: CONSIDERING ALL FACTS AND CIRCUMSTANCES, I AM OF T HE VIEW THAT THE ADDITION SO MADE ON ASSUMPTIONS COULD NOT BE SUSTAI NED. HOWEVER THE AO IS DIRECTED TO MAKE FRESH ASSESSMENT CONSEQUENT TO THE ORDER OF ADJUDICATING OFFICER, AS DIRECTED BY APPELLATE TRIB UNAL, IN THE RELEVANT ASSESSMENT YEAR TO WHICH THOSE PAYMENTS RELATES TO. TO FRAME SUCH ASSESSMENT THE AO GETS FURTHER TIME AS CONTEMPLATED U/S 150 OF IT ACT. ACCORDINGLY HE IS DIRECTED TO DELETE THE ADDITION A ND PASS NECESSARY CONSEQUENTIAL ORDER IN THE RELEVANT YEAR AS PER LAW AFTER OBTAINING THE ORDER OF ADJUDICATING AUTHORITY OF ENFORCEMENT DIRE CTORATE AGAINST THE ASSESSEE. HENCE ADDITION OF RS. 1,94,64,000/- IS DE LETED FOR THE CURRENT YEAR SUBJECT TO ABOVE DIRECTIONS. 16. IDENTICAL ORDER WAS PASSED BY ITAT DELHI BENCH I IN THE CASE OF ACIT VS. OM PRAKASH BHATIA IN ITA NO. 1688/DEL/09 W HEREIN THE TRIBUNAL ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA VIDE DATED 11-8-2009 HAS CONFIRMED THE AFORESAID OR DER IN THAT CASE. THE FINDINGS OF THE ITAT IN PARA 5 READ AS UNDER: FROM THE ABOVE, WE FIND THAT LD. CIT(A) HAS DIRECT ED THE ASSESSING OFFICER TO MAKE FRESH ASSESSMENT CONSEQUENT TO THE ORDER OF ADJUDICATING AUTHORITY IN THE RELEVANT ASSESSMENT YEAR TO WHICH, THOSE PAYMENTS RELATES TO. IT IS ALSO NOTED BY LD. CIT(A) THAT TO FRAME SU CH ASSESSMENT, THE ASSESSING OFFICER GETS FURTHER TIME AS CONTEMPLATED U/S 150 OF THE IT ACT. CONSIDERING ALL THESE FACTS, WE FIND NO REASON TO I NTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE BECAUSE THE ADDITION WAS MADE BY THE ASSESSING OFFICER ONLY ON THE BASIS OF ORDER OF ADJUDICATING OFFICER WHICH HAS BEEN SET ASIDE BY THE APPELLATE TRIBUNAL FOR FOREIGN EXC HANGE AND THE ASSESSING OFFICER CAN MAKE FRESH ASSESSEE AS PER LAW IN THE R ELEVANT YEAR IF ANY ADDITION ON THIS ACCOUNT IS MADE BY THE ADJUDICATIN G OFFICER. 17. IN THE LIGHT OF THE SAME, THE ORDER OF THE CIT( A) ON THE ISSUE IN QUESTION IS ALSO CONFIRMED. 18. THAT LEAVES US TO ONLY ONE GROUND FOR A.Y. 200 2-03, RELATING TO DELETION OF ADDITION OF RS. 25,59,394/- MADE ON ACC OUNT BOGUS ASSETS/ CLOSING STOCK ON THE BASIS OF FRESH EVIDENCE FILED DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT(A). THE ASSESSING OFFICE R MADE THE ADDITION IN THE FOLLOWING MANNER: CLOSING STOCK/ OPENING STOCK: FROM THE AUDITED ACC OUNTS OF A.Y. 2001- 02, IT IS SEEN THAT WHATEVER STOCK ASSESSEE HAD, IT WAS SOLD DURING THE YEAR ITSELF AND THERE WAS NO CLOSING STOCK LEFT WITH THE ASSESSEE AS ON 31-3- 2001. HOWEVER, WHILE STUDYING THE BALANCE SHEET FOR FINANCIAL YEAR ENDING 31-3-2002, ASSESSEE HAS SURPRISEDLY SHOWN AN OPENING BALANCE OF HING AS ON 01-0402001 FOR RS. 25,59,394/-. THIS AMO UNT HAS BEEN SHOWN AS CLOSING STOCK ALSO AS ON 31-3-2002 AS NO SALE HA S BEEN SHOWN FOR HING DURING A.Y. 2002-03. THIS AMOUNT OF OPENING STOCK O F HING WHICH NEVER EXISTED AS CLOSING STOCK AS ON 31-03-2001, IS NOTHI NG BUT CONCEALED INCOME OF THE ASSESSEE. HENCE ADDITION WILL BE MADE IN A.Y. 2002-03 FOR THIS ACCOUNT. ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA 19. IT WAS CONTENDED BY THE ASSESSEE BEFORE THE CIT (APPEALS) AS UNDER: SO FAR AS THE ADDITION OF RS. 25,59,394/- ON ACCOU NT OF OPENING STOCK. THIS IS AN ARBITRARY ADDITION BASED ON IDEAS, SUSPI CION, SURMISES, AND CONJECTURES. THE AMOUNT OF RS. 25,59,394/- IS INADV ERTENTLY SHOWN AS OPENING STOCK WHEREAS THESE ARE THE PURCHASES MADE DURING THE YEAR. THERE ARE NO SALES AFFECTED AND THE ENTIRE STOCK VA LUE IS SHOWN AS CLOSING STOCK. WITHOUT APPRECIATING THE TRUE FACTS OF THE C ASE THE AO PROCEEDED ON PRESUMPTIONS AND MADE ADDITION. NO DEFECT OR DISCRE PANCY FOUND. THERE IS NO SALE FOUND OUT SIDE THE BOOKS. THERE IS NO UNDE R INVOICING EXCEPT THE IDEAS AND SUSPICION. COPIES OF THE AUDITED RECORDS WERE FILED ALONG WITH A COPY OF FORM NUMBER 3CD. NO DISCREPANCY FOUND AND H ENCE THE ADDITION MADE ON SURMISES MAY BE DELETED. 20. THE LEARNED CIT(APPEALS) WAS OF THE VIEW THAT T HERE WAS NO CLOSING STOCK IN THE IMMEDIATELY PRECEDING YEAR, MEANING TH EREBY THERE COULD NOT BE OPENING STOCK IN THE CURRENT YEAR. DURING THE YEAR THE ASSESSEE PURCHASED HING BY IMPORTING THE SAME ON 24-11-2001 FOR RS. 8, 41,204/- AND ON 3-1- 2002 FOR RS. 6,89,347/- AND 27-3-02 FOR RS. 10,28,8 43/-, THUS TOTALING IN ALL RS. 25,59,394/-, WHICH IS INCLUSIVE OF DUTY, FREIGH T, INSURANCE ETC. IN ABSENCE OF THE SALES DURING THE YEAR THE SAME REMAINED AS C LOSING STOCK AT THE END OF THE YEAR. HENCE, THERE IS NO DISCREPANCY EXCEPT MI STAKENLY TAKEN AS OPENING STOCK INSTEAD OF PURCHASES. THE CIT(APPEALS) AFTER VERIFYING THESE DETAILS, DELETED THE ADDITION AS TOTALLY UNCALLED FOR. 21. WE HAVE HEARD BOTH SIDES AND GONE THROUGH THE R ECORDS INCLUDING THE PAPER BOOK FILED BEFORE US AND ARE CONVINCED THAT T HE DIRECTIONS OF THE ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA CIT(A) GIVEN IN THIS REGARD ARE WELL SUPPORTED BY T HE MATERIAL ON RECORD. WE CONFIRM HIS ORDER, IN ABSENCE OF ANY SUPPORTING MAT ERIAL TO THE CONTRARY. 22. IN THE RESULT, ALL THE APPEALS, FILED BY THE AS SESSEE AS WELL AS THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON -12-2009. ( C.L. SETHI ) (G.E.VEERA BHADRAPPA) JUDICIAL MEMBER VICE PRESIDENT DATED: ______ DECEMBER 2009. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 1143/D/09 & 1690 TO 1693/D/09 M/S LACHMAN DAS BHATIA