Prathmesh Agencies, U.T. of Dadra & Nagar Haveli V. The ACIT.,Vapi Circle, Vapi

ITA 171/AHD/2009

• Counselvise Citation: 17120514 RSA 2009
• Duration Of Justice: 6 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 23-07-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 19-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J P SHAH
• Keywords: Unexplained investment; Unexplained expenditure; Salary income; Deemed to accrue or arise in india; Non passing of speaking order; Retraction
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR ACCOUNTANT MEMBER AND SHRI S.S. GODARA JUDICIAL MEMBER ITA NO . 1 71 / AHD/ 20 09 A. Y .20 0 5 - 0 6 PRATHMESH AGENCIES, SURVEY NO.693/2/2/2 VADFALIA, NAROLI, BHILAD ROAD, CHECK PO ST U.T. OF DADRA & NAGAR HAVELI . VS ACIT, VAPI CIRCLE, VAPI, (GUJARAT) PAN: AAHFP 4565G (APPELLANT) (RESPONDENT) REVENUE BY : S HRI KAMLESH MAKWANA, SR. D.R. , ASSESSEE(S) BY : SHRI J.P. SHAH , A.R. / DATE OF HEARING : 23 / 0 7 /201 5 / DATE OF PRONOUNCEMENT: 05 / 0 8 /201 5 / O R D E R PER S.S. GODARA , JUDICIAL MEMBER THIS ASSESSEE S APPEAL FOR A.Y .200 5 - 0 6 , ARISE S FROM ORDER OF TH E CIT(A) , VALSAD , DATED 30.10.2008 PASSED I N CASE NO . CIT(A)/VLS/419/07 - 08 , CONFIRMING ADDITIONS OF UNACCOUNT ED EXPENDITURE IN THE FORM OF LAND DEVELOPMENT, EXCESS CASH AND SUPPRESSED SALE S OF RS.15 LACS, RS.59,80,320/ - AND RS.13,85,774/ - ; RESPECTIVELY , IN PROCEEDINGS UNDER SECTION 143(3 ) OF THE INCOME TAX ACT , 1961, IN SHORT THE ACT . ITA NO. 171 /AHD/ 2009 PRATHMESH AGENCIES. FOR A.Y. 200 5 - 0 6 - 2 - 2. THE ASSESSEE FIRM RUNS A PETROL PUMP AS AN HPCL DEALER. THE DEPARTMENT CONDUCTED A SURVEY IN ITS GROUP OF CONCERNS ON 9.3.2005. IT RECORDED STATEMENT OF ASSESSEE S PARTN ER SHRI NITIN V. KOPIKAR INTER ALIA ADMITTING NET PROFITS OF RS.53 LACS, UNACCOUNTED LAND DEVELOPMENT EXPENSES OF RS.15 LACS AND UNACCOUNTED CASH OF RS.12,47,403/ - ; RESPECTIVELY. THE ASSESSEE FILED ITS RETURN ON 25.10.2005 ADMITTING INCOME OF RS.29,46,227/ - . THE ASSESSING OFFICER COMPLETED A REGULAR ASSESSMENT ON 24.12.2007 INTER ALIA ADDING THE IMPUGNED SUM S OF RS.15 LACS AS UNACCOUNTED LAND DEVELOPMENT EXPENDITURE OF RS.59,80,320/ - ARISING FROM DIFFERENCE IN CASH BALANCE IN BOOKS OF RS.24,29,360/ - AS AGAI NST THE ACTUAL ONE FOUND IN COURSE OF SURVEY OF RS.84,09,680/ - . HE REFERRED TO THE ASSESSEE S PARTNER S STATEMENT (SUPRA) AND HELD ITS RETRACTION ON 21.11.2007 TO BE LACKING ANY SUBSTANCE . THE ASSESSING OFFICER OBSERVED THAT THE LAND DEVELOPMENT EXPENDITUR E PERTAINED TO THE LAND APPURTENANT TO ITS PETROL STATION SINCE THERE WAS NO EVIDENCE OF ANY SUCH ACTIVITY BEING CARRIED OUT AT THE HPCL S BEHEST. THEREAFTER, HE DEALT WITH THE ISSUE OF SUPPRESSED DIESEL SALES . THE ASSESSEE PLEADED TO HAVE COMPUTED ITS SAL ES AS PER THE DISTRICT CIVIL SUPPLIES D EPARTMENT R ECORD. THE ASSESSING OFFICER REFERRED TO ITS COMPUTER GENERATED DAILY SALES REPORT FOUND IN THE COURSE OF SURVEY AND THE DIFFERENTIAL FIGURES APPEARING IN THE BOOKS OF ITA NO. 171 /AHD/ 2009 PRATHMESH AGENCIES. FOR A.Y. 200 5 - 0 6 - 3 - ACCOUNT. HE WENT BY THE FORMER ONE AND ADDED THE IMPUGNED SUM OF RS.13,85,474/ - . 3. THE ASSESSEE PREFERRED APPEAL. IT FILED DETAILED WORKINGS OF THE LAND DEVELOPMENT CARRIED OUT BY THE HPCL WITH NECESSARY AGREEMENT EXECUTED , RECONCILIATION OF THE CASH BALANCE ADDED AND THE ONE RELATING TO EX CESS SALE S I.E. ALL THE THREE ISSUES IN QUESTION. THE CIT(A) HAS REJECTED ALL THREE AGREEMENTS BY PASSING A TOTALLY NON SPEAKING ORDER AS UNDER: 4.1 APPELLANTS SUBMISSIONS TO EACH O F THE ADDITIONS MADE BY THE ACIT ARE BRIEFLY DISCUSSED AS FOLLOWS: - 1. A DDITION OF RS. 15,00,000 / - AS UNACCOUNTED LAND DEVELOPMENT EXPENSES: - A. THE AR HAS CHALLENGED THE DECLARATION AS WELL AS THE LOOSE LEAF SHEET AT SERIAL NO. 11 OF ANNEXURE BF - 1 SUBMITTING THAT THE DECARATION WAS UNDER COERCION AND THE LOOSE LEAF WAS A LSO PREPARED UNDER THE DIRECTIONS AND COERCION OF THE SURVEY TEAM. IT IS FURTHER SUBMITTED THAT SAME IS PREPARED UNDER SAME HAND WRITING ON THE SAME DAY AND SAME INK. ALONG WITH THE SAID LOOSE LEAF, NEITHER ANY VOUCHER NOR INVOICES WERE FOUND TO SUPPORT TH E TRANSACTIONS MENTIONED THEREIN NOR ANY DETAILS AS TO THE PAYEE OR NATURE OF EXPENDITURES MENTIONED THEREIN WAS DISCOVERED NOR ANY THIRD PARTY CORROBORATION WAS DISCOVERED DURING SURVEY OR AT ANY TIME DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THIS LOOS E LEAF TOO IS PART OF THE PURPORTED STATEMENT AND DECLARATION OBTAINED BY THE SURVEY TEAM IN THE MANNER HEREINBEFORE MENTIONED. SUCH A DOCUMENT DOES NOT GIVE ANY CORROBORATIVE EVIDENCE. B. THE LAND WAS LEASED BY THE APPELLANT FIRM TO M/S. HINDUSTAN PETROLEUM CORPORATION LTD. VIDE LEASE DEED DATED 28 TH SEPTEMBER, 2004 AND EFFECTIVE FROM 1 ST OCTOBER, 2004. THE SAID HPCL ACCORDINGLY TOOK POSSESSION OF THE LAND ON 1 ST OCTOBER, 2004. THE SAID HPCL DEVELOPED THE SAID LAND AND ITA NO. 171 /AHD/ 2009 PRATHMESH AGENCIES. FOR A.Y. 200 5 - 0 6 - 4 - ALSO CONSTRUCTED / SET UP THE FULL PETROL PUMP AND LICENSED THE SAME TO THE APPELLANT FIRM AS DEALER. THIS IS THE USUAL PRACTICE OF ALL PUBLIC SECTOR UNDERTAKINGS. A STATEMENT SHOWING NATURE OF EXPENSES INCLUDING CIVIL, INCURRED AND BORNE BY THE SAID HPCL WAS ALSO SUBMITTED BY THE APP ELLANT FIRM IN APPEAL PROCEEDINGS. C. IT IS ALSO SUBMITTED THAT THE AS PER THE LOOSE LEAF FOUND DURING SURVEY THE DEVELOPMENT EXPENDITURES COMMENCED FROM 2 ND SEPTEMBER, 04 AND CONTINUED TILL 25 TH DECEMBER, 2004. WHEREAS, THE SAID LAND WAS LEASED TO HPCL AND HPCL WAS IN EXCLUSIVE USE AND POSSESSION OF THE SAME SINCE 1 ST OCTOBER, 2004. THERE IS NO MENTION OF ANY OBLIGATION RELATING TO DEVELOPMENT OR ANY DEFICIENCY IN LAND CONTOURS WHICH THE ASSESSEE FIRM HAD TO CARRY OUT. NO PUBLIC SECTOR UNDERTAKING WILL SIGN AND EXECUTE ANY DOCUMENT IF AN OBLIGATION AS LARGE AS RS. 15.00 IS NOT INCORPORATED IN THE DOCUMENT. HENCE, ANY EXPENSES BY THE ASSESSEE FIRM FOR DEVELOPMENT OF SA ID LAND IS UNTHINKABLE. THIS IT SELF IS ENOUGH TO ESTABLISH THAT THE SAID LOOSE LEAF IS NOT GENUINE AND WAS PREPARED UNDER COERCION OF THE SURVEY TEAM AS STATED ABOVE. D. THE ASSESSEE FIRM WAS APPOINTED A DEALER FOR THE RETAIL OUTLET OF HPCL AND WAS LICENSED THE USE OF THE LAND, PREMISES AND THE OUTFIT VIDE MEMORANDUM OF AGREEMENT DATED 20 TH OCTOBER, 2004. THE PLAIN READING OF THE RECITALS AND CLAUSE NOS. 13 TO 16 ELOQUENTLY SHOWS THAT THE HPCL IS THE LESSEE OF THE LAND AND OWNER OF ALL THE PREMISES AND OUTFIT AND ALL REPAIRS AND MAINTENANCE IS THE RESPONSIBILITY OF THE SAID HPCL. BEING S O, NO MAN WILL INCUR HEAVY EXPENDITURES RUNNING INTO 15.00 LAKHS AS ALLEGED WHICH IS THE OBLIGATION OF OTHER PARTY. MOREOVER, THE CLAIM OF THE ACIT THAT THE LAND DEVELOPMENT EXPENSES INCURRED BY THE ASSESSEE FIRM TILL 25 TH DECEMBER, 2004 ALSO GETS BELIED F ROM THE CONTENTS OF THE AGREEMENT DATED 20 TH OCTOBER, 2004 WHEREIN ALL RESPONSIBILITIES FOR SETTING UP AND MAINTAINING PREMISES AND OUTFIT IS WITH SAID HPCL. E. IT IS ALSO POINTED OUT BY THE APPELLANT THAT THE ACIT HAS HIMSELF NOT RELIED UPON THE DEC LARAT ION GIVEN DURING SURVEY IN TOTO. 4.2 THE APPELLANT FIRM ALSO DISPUTED THE INCLUSION OF THE UNACCOUNTED LAND DEVELOPMENT EXPENSES UNDER THE HEAD ITA NO. 171 /AHD/ 2009 PRATHMESH AGENCIES. FOR A.Y. 200 5 - 0 6 - 5 - PROFITS AND GAINS OF BUSINESS OR PROFESSION AND SUBMITTED AS UNDER: - (I) THE SCHEME OF THE ACT REQUIRES AN D HAS LAID DOWN THE MANNER OF COMPUTATION OF TOTAL INCOME AND CHARGE OF TAX. SECTION 2(45) DEFINES THE TOTAL INCOME AS: - 'TOTAL INCOME' MEANS THE TOTAL AMOUNT OF INCOME REFERRED TO IN SECTION 5, COMPUTED IN THE MANNER LAID DOWN IN THIS ACT; (II) SECTI ON 14 OF THE ACT PROVIDES - 'SAVE AS OTHERWISE PROVIDED BY THIS ACT, ALL INCOME SHALL, FOR THE PURPOSES OF CHARGE OF INCOME TAX AND COMPUTATION OF TOTAL INCOME, BE CLASSIFIED UNDER THE FOLLOWING HEADS OF INCOME: - ... (III) SECTION 14 THUS PROVIDES OF EXCEPTION FOR TAXING OF CERTAIN INCOME OUTSIDE THE FIVE HEADS OF INCOME MENTIONED THEREIN. INCOMES OF THE NATURE MENTIONED IN SECTION 69C IS THUS REQUIRED TO BE INCLUDED IN TOTAL INCOME SEPARATELY AND NOT AS INCOME FROM OTHER SOURCES; (IV) THE LD. AC IT HAS ASSESSED A SUM OF RS. 15,00,000 / - BEING 'UN - ACCOU N TED LAND DEVELOPMENT EXPENSES' WITHOUT MENTIONING ANY HEAD OR SECTION.; (V) THE LD. ACIT HAS RI6T ASSESSED A SUM OF RS. 12,47,403 / - BEING 'EXCESS CASH FOUND' AT ALL. THIS SHOWS THAT HE HIMSELF HAS CHOOSE TO IGNORE THE ALLEGED DECLARATION; (VI) THE HONORABLE GUJARAT HIGH COURT IN FAKIR MOHAMED HAJI HASAN VS. CIT (2001) 247 ITR 290 (RELIED UPON BY THE LD. ITO) HAS HELD 'THE SCHEME OF SS.69, 69A, 69B AND 69C WOULD SHOW THAT IN CASES WHERE TH E NATURE AND SOURCE OF INVESTMENTS MADE BY THE ASSESSEE OR THE NATURE AND SOURCE OF ACQUISITION OF MONEY, BULLION ETC. OWNED BY THE ASSESSEE OR THE SOURCE OF EXPENDITURE INCURRED BY THE ASSESSEE ARE NOT EXPLAINED AT ALL, OR NOT SATISFACTORILY EXPLAINED, TH EN, THE VALUE OF SUCH INVESTMENTS AND MONEY, OR VALUE OF ARTICLES NOT RECORDED IN THE BOOKS OF ACCOUNTS OR THE UNEXPLAINED EXPENDITURE MAY BE DEEMED TO BE THE INCOME OF SUCH ASSESSEE. IT FOLLOWS THAT THE MOMENT A SATISFACTORY EXPLANATION IS GIVEN ABOUT SUC H NATURE AND SOURCE BY THE ASSESSEE, THEN THE SOURCE WOULD STAND DISCLOSED AND WILL, THEREFORE, BE KNOWN AND THE INCOME WOULD BE TREATED UNDER THE APPROPRIATE HEAD OF INCOME FOR ASSESSMENT AS PER THE PROVISIONS OF THE ACT. HOWEVER, WHEN THESE PROVISIONS AP PLY ITA NO. 171 /AHD/ 2009 PRATHMESH AGENCIES. FOR A.Y. 200 5 - 0 6 - 6 - BECAUSE NO SOURCE IS DISCLOSED AT ALL ON THE BASIS OF WHICH THE INCOME CAN BE CLASSIFIED UNDER ONE OF THE HEADS OF INCOME UNDER S. 14, IT WOULD NOT BE POSSIBLE TO CLASSIFY SUCH DEEMED INCOME UNDER ANY OF THESE HEADS INCLUDING INCOME FROM 'OTHER SOURCES ' WHICH HAVE TO BE SOURCES KNOWN OR EXPLAINED. WHEN THE INCOME CANNOT BE SO CLASSIFIED UNDER ANY ONE OF THE HEADS OF INCOME UNDER S.14, IT FOLLOWS THAT THE QUESTION OF GIVING ANY DEDUCTIONS UNDER THE PROVISIONS WHICH CORRESPOND TO SUCH HEADS OF INCOME WILL NOT ARISE. IF IT IS POSSIBLE TO PEG THE INCOME UNDER ANY ONE OF THOSE HEADS BY VIRTUE OF A SATISFACTORY EXPLANATION BEING GIVEN, THEN THESE PROVISIONS OF SS.69, 69A, 69B AND 69C WILL NOT APPLY, IN WHICH EVENT, THE PROVISIONS REGARDING DEDUCTION, ETC. APPL ICABLE TO THE RELEVANT HEAD OF INCOME UNDER WHICH SUCH INCOME FALLS WILL AUTOMATICALLY BE ATTRACTED. THE OPENING WORLDS OF S . 14 'SAVE AS OTHERWISE PROVIDED BY THIS ACT' CLEARLY LEAVE SCOPE FOR 'DEEMED INCOME' OF THE NATURE COVERED UNDER THE SCHEME OF SS. 6 9. 69A, 69B AND 69C BEING TREATED SEPARATELY, BECAUSE SUCH DEEMED INCOME IS NOT INCOME FROM SALARY, HOUSE PROPERTY, PROFIT OR GAINS OF BUSINESS OR PROFESSIONS, OR CAPITAL GAINS, NOR IT IS INCOME FROM 'OTHER SOURCES' BECAUSE THE PROVISIONS OF SS.69, 69A, 69 B AND 69C TREAT UNEXPLAINED INVESTMENTS, U NEXPLAINED MONEY, BULLION ETC. AND UNEXPLAINED EXPENDITURE AS DEEMED INCOME WHERE THE NATURE AND SOURCE OF INVESTMENT, ACQUISITION OR EXPENDITURE, AS THE CASE MAY BE, HAVE NOT BEEN EXPLAINED OR SATISFACTORILY EXPL AINED. THEREFORE, IN THESE CASES, THE SOURCE NOT BEING KNOWN, SUCH DEEMED INCOME WILL NOT FALL EVEN UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. THEREFORE, THE CORRESPONDING DEDUCTION, WHICH ARE APPLICABLE TO THE INCOMES UNDER ANY OF THESE VARIOUS HEADS, WI LL NOT BE ATTRACTED IN CASE OF DEEMED INCOMES WHICH ARE COVERED UNDER THE PROVISIONS OF SS.69, 69A, 69B AND 69C IN VIEW OF THE SCHEME OF THOSE PROVISIONS. IT IS, THEREFORE, CLEAR THAT, WHEN THE INVESTMENT IN OR ACQUISITION OF GOLD, W HICH WAS RECOVERED FROM THE ASSESSEE WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE OFFERED NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH INVESTMENT OR ACQUISITION AND THE VALUE OF SUCH GOLD WAS NOT RECORDED IN THE BOOKS OF ACCOUNT NOR THE NATURE & SOURCE OF ITS ACQUISITION EXPLAINED, THERE COULD ARISE NO QUESTION OF TREATING THE VALUE OF SUCH GOLD, WHICH WAS DEEMED TO BE THE INCOME OF THE ASSESSEE, AS A DEDUCTIBLE TRADING LOSS ON ITS CONFISCATION, BECAUSE, SUCH DEEMED INCOME DID NOT FALL UNDER THE HEAD OF INCOME 'PROFITS AND GAINS OF BUSINESS OR PROFESSION '. ITA NO. 171 /AHD/ 2009 PRATHMESH AGENCIES. FOR A.Y. 200 5 - 0 6 - 7 - (VII) FROM THE OBSERVATION OF GUJARAT HIGH COURT YOUR HONOUR WILL APPRECIATE THAT THERE ARE SEPARATE CODE FOR TAXATION OF UNDISCLOSED INCOMES UNDER SECTION 68, 69, 69A, 69B, 69C AND 69D AND THE SUCH IN COMES HAVE TO BE INCLUDED IN TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF THESE SECTIONS. THERE ARE NO PROVISIONS FOR TAXING UNDISCLOSED INCOME, THE SOURCE FOR WHICH IS UNEXPLAINED, UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. UNACCOUNTED LAND DEVELOPM ENT EXPENSES ARE NOT THE INCOME OF THE APPELLANT FIRM EITHER UNDER THE HEAD 'INCOME FROM OTHER SOURCES' OR SECTION 69C OF THE ACT AS AND IN THE MANNER STATED BY THE LD. A.O. IF AT ALL WHAT IS TAXABLE IS THE UNDISCLOSED SOURCE OF THE MONEY SPENT AS UNACCOUN TED LAND DEVELOPMENT EXPENSES. THE UNACCOUNTED EXPENSES IN ITSELF IS NOT AN ITEM OF INCOME AS TAKEN BY THE LD. A.O.; (VIII) THE HONOURABLE CALCUTTA HIGH COURT IN HAMILTON & CO. P. LTD. VS. CIT (1992) 194 ITR 391 HELD THAT - '.... THE EXPRESSION 'TOTAL IN COME IN S. 4 HAS TO BE UNDERSTOOD AS DEFINED IN U/S, 2(45). UNDER THE DEFINITION , THE EXPRESSION 'TOTAL INCOME MEANS THE TOTAL AMOUNT OF INCOME REFERRED TO IN S. 5 COMPUTED IN THE MANNER LAID DOWN IN THIS ACT, THAT IS TO SAY COMPUTED UNDER APPROPRIATE S ECTIONS VIZ., FROM SS. 15 TO 59. ' 4.3 SINCE THE DECLARATION WAS MADE BY THE PARTNER OF THE APPELLANT FIRM VOLUNTARILY AND WITH APPLICATION OF HIS MIND AFTER HAVING LOOKED AT THE NOTINGS ON THE LOOSE LEAFS AND THE DECLARATION UNDER A SPECIFIC HEAD DE VELOPMENT EXPENSES WAS MADE AND THAT ANY RETRACTION AFTER 21 MONTHS FROM WHAT HAS BEEN STATED ON OATH IS AN AFTERTHOUGHT AND SAME IS NOT JUSTIFIED. SECONDLY, IT HAS NOT BEEN ESTABLISHED BY THE ASSESSEE THAT THE STATEMENT WAS RECORDED UNDER DURESS AT THE TI ME OF SURVEY AND THE SAME IS REJECTED. THE PARTNER OF THE APPELLANT HAD GIVEN THE DECLARATION AND HE CANNOT BE ALLOWED TO TAKE BENEFIT OF RETRACTION WITHOUT VALID REASONS, AND HENCE THIS GROUND OF APPEAL IS DISMISSED. 5.1 ON THE SECOND ADDITIO N THE APPELLANT HAS SUBMITTED AS UNDER: - 'ADDITION ON ACCOUN T OF EXCESS CASH OF R S .59,80,320 AS DISCUSSED: - A. THE LD. ACIT HAS FALSELY STATED ON PA G E 2 OF THE ORDER THAT 'THE ASSESSES HAD ITSELF COMPUTED THE CASH BALANCE AT RS. 71,62,277/ - AS PER BOOKS. . TH E PAPER UNDER REFERENCE IS NOT PART OF ACCOUNT BOOKS BUT A WORKING PAPER PREPARED ON ESTIMATE BASIS AT THE TIME OF SURVEY. ITA NO. 171 /AHD/ 2009 PRATHMESH AGENCIES. FOR A.Y. 200 5 - 0 6 - 8 - B. THE LD. ACIT HAS LABOURED HARD TO WORK OUT CASH ON HAND ON THE DATE OF SURVEY TO ARRIVED AT CASH ON HAND AS ON THE MORNING OF THE 9 TH MARCH, 2005 I.E. THE DATE OF SURVEY. IN HIS ZEAL FOR HIGH PITCHED ORDER WHILE WORKING OUT THE AMOUNTS DEPOSITED IN THE BANK ON THE 9 TH MARCH, 2005 ARE ALSO INCLUDED IN HIS STATEMENT. A SUM OF RS. 73,99,680 / - WAS DEPOSITED INTO THE BANK AFTER THE C ASH WAS COUNTED BY THE SURVEY TEAM. TAKING HIS OWN ARGUMENTS AND METHOD WE REWORK THE CASH ON HAND AT THE TIME OF SURVEY I.E. ABOUT 12 NOON ON THE 9 TH MARCH, 2005: - AMOUNT TAKEN BY THE LD. ACIT (A) AMOUNTS AS PER ACCOUNTS (B) DIFFERENCE (A - B ) CASH SALES UPTO 8 - 3 - 05 38,65,84,490 38,64,64,188 1,20,302 CASH WITHDRAWLS UPTO 8 - 3 - 05 6,82,000 6,82,000 CASH DEPOSIT INTO BANK UPTO 8 - 3 - 05 37,97,12,155 37,10,65,475 86,46,680 SALES TAX PAYMENT IN CASH UPTO 8 - 3 - 05 68,17,267 68,17,267 -- CASH EXPENSES FROM PETTY CASH 3,53,963 3,52,442 1,521 OTHER EXPENSES THROUGH CASH BOOK 12,648 22,648 - 10,000 C. THE AMOUNT OF RS. 73,99,680 / - WAS DEPOSITED INTO BANKS ON THE 9 TH MARCH, 2005 AFTER THE COUNTING WAS OVE R TO FACILITATE THE PAYMENTS TO HPCL. COPIES OF BANK ACCOUNTS ENCLOSED AT ARMEXURE - D. THUS THE CASH BALANCE UPTO THE TIME OF COUNTING AT ABOUT 12.00 NOON AND BEFORE SENDING THE CASH FOR DEPOSITS ON 9 TH MARCH 2005 WAS AS UNDER: - ITA NO. 171 /AHD/ 2009 PRATHMESH AGENCIES. FOR A.Y. 200 5 - 0 6 - 9 - CASH SALES RECORDED UPTO 8 TH MARCH, 2005 COVERING PERIOD 8.00AM ON 8 TH MARCH TO 8.00AM ON 9 TH MARCH 2005 38,64,64,188 CASH SALES FOR THE PERIOD 8.00 AM ON 9 FFI MARCH TO 12.00 NOON ON 9 TH MARCH, 2005 (TOTAL SALES RECORDED ON 9 TH MARCH, 2005 AT RS. 41,18,7067 - DIVIDED BY 24 AND MU LTIPLIED BY 4) 6,86,451 CASH WITHDRAWLS UPTO 8 - 3 - 05 6,82,000 TOTAL (A) 38,78,32,639 CASH DEPOSIT INTO BANK UPTO 8 - 3 - 05 37,10,65,475 SALES TAX PAYMENT IN CASH UPTO 8 - 3 - 05 68,17,267 CASH EXPENSES FROM PETTY CASH 3,52,447 OTHER EXPENSES TH ROUGH CASH BOOK 22,648 TOTAL (B) 37,82,57,837 BALANCE CASH AT THE TIME OF COUNTING OF CASH BY SURVEY TEAM 95,74,802 D. AS AGAINST THE CASH COUNTED AND FOUND BY THE SURVEY TEAM WAS RS. 84,09,6807 - THE CASH ON HAND AS PER BOOKS OF ACCOUNTS IS A T RS. 95,74,8027 - . IN VIEW OF THE ABOVE SUBMISSIONS AND THE WORKING IT IS CLEAR THAT THE LD. ACIT HAS BEEN BIASED AND ARBITRARY IN HIS WORKING TO ARRIVE AT CASH ON HAND. HE COMPLETELY OVERLOOKED THE CASH DEPOSITED IN THE BANK BY THE ASSESSEE ON 9 TH MARCH, 2005 AND INCLUDED THE SAME IN CASH DEPOSITED UPTO 8 TH MARCH, 2005 AS IS APPARENT FROM THE WORKING AND THE DESCRIPTIONS GIVEN BY HIM IN THE WORKING. I AM NOT SATISFIED WITH THE SUBMISSION OF THE APPELLANT. THE ACIT HAS WORKED OUT THE EXCESS CASH PROPERTY A FTER DEU VERIFICATION OF ALL THE RELEVANT CASH TRANSACTION. EVEN IN THE REVISED CALCULATION FOR CASH BALANCE PREPARED BY THE ASSESSEE HIMSELF IT DOES MATCH WITH THE CASH FOUND AT THE TIME OF SURVEY. THUS THE GROUND OF APPEAL IS DISMISSED. 6.1 NEXT THE AP PELLANT HAS SUBMITTED AS FOLLOWS IN SUPPORT OF THEIR PRAYER FOR THE DELETION OF ADDITION ON ACCOUNT OF SUPPRESSED SALES OF RS 13,85,774 / - : - ITA NO. 171 /AHD/ 2009 PRATHMESH AGENCIES. FOR A.Y. 200 5 - 0 6 - 10 - A. THE ASSESSEE FIRM TAKES ACCOUNT FROM VARIOUS ATTENDANTS FROM TIME TO TIME AND SALES FOR THE PAST 24 HOURS IS RE CORDED IN A REGISTER REQUIRED TO BE MAINTAINED UNDER THE LOCAL ADMINISTRATION RULES CALLED DSO REGISTER. THE LD. ACIT HAS COMPARED THE DATA OF SALES REPORT AND DSO REGISTER. IT WAS SUBMITTED THAT THE DSO REGISTER DATA ARE CORRECT AND THE SAME IS THE BASIS FOR MAKING FINANCIAL ACCOUNTS. IT IS NOT THE ALLEGATION OF THE LD. ACIT THAT THE FINANCIAL ACCOUNTS ARE AT VARIANCE WITH THE DSO REGISTER. DSO REGISTER IS MANUALLY MAINTAINED. THE SUPERVISOR TOTALS UP THE TOTAL SALES, PURCHASES, TAKES ACTUAL STOCK IN THE TANKS AND WORK OUT DAILY WASTAGE AND ENTER THE FIGURES IN THE REGISTER. THE OFFICE CLERK THAN ENTERS THESE DATA IN AN EXCEL SHEET CALLED 'SALES REPORT'. THE FINANCIAL ACCOUNTS ARE MAINTAINED BASED ON THE DSO REGISTER BY THE ACCOUNTANT AND THEY ARE IN CONS ONANCE WITH EACH OTHER. THE SALES REPORT HAS NO RELEVANCE. B. THE LD. ACIT HAD ASKED FOR THE DISCREPANCY IN THE ENTRIES DATED 6 TH MARCH, 2005 ONLY AND HENCE REPLY WAS LIMITED TO THE SAME. THE STOCK AS ON 9 TH MARCH, 2005 AND ALSO ON 31 ST MARCH, 2005 IS A S PER DSO REGISTER AND FINANCIAL ACCOUNTS MAINTAINED BY THE ASSESSEE. IT IS PERTINENT TO NOTE THAT ON THE DATE OF SURVEY THE QUANTITY AS PER DSO AND ACTUAL QUANTITY OF STOCK WAS FOUND MATCHING BY THE SURVEY TEAM. THE SALES REPORT IN EXCEL SHEET IS NOT PART OF THE FINANCIAL ACCOUNTS AND ANY DISCREPANCY THEREWITH IS OF NO CONSEQUENCE. C. FURTHER, ASSUMING WITHOUT ADMITTING THAT THE SALES HAD TAKEN PLACE AS PER SALES REPORT, IT WILL HAVE TO RESULT IN REDUCTION OF STOCK AND THAN THE RESULTANT EFFECT WILL BE 4 3 PAISE OF REVENUE PER LITRE. IF THIS ARGUMENT OF SUPPRESSED SALES IS ACCEPTED THAN THE STOCK OF DIESEL ON 31 ST MARCH, 2005 WOULD BE 9952 LITRES (60814 - 50862), WHICH WILL BARELY BE 1.5 TO 2 HOURS OF INVENTORY ON WHICH NO ORGANIZATION CAN WORK AND FURTHER T HE SAME WILL RESULT IN NEGATIVE STOCK ON. 31 ST MARCH, 2006. D. THE LD. ACIT'S ATTEMPT TO FIND DIFFERENCE IN SALES REPORT AND DSO REGISTER IS OF NO CONSEQUENCE AS THE FINANCIAL BOOKS OF ACCOUNTS ARE NOT DOUBTED NOR COMPARED BY HIM WITH DSO REGISTER. AS A M ATTER OF FACT THE RESULT OF THE STOCK ARID SALES AS PER FINANCIAL ACCOUNTS MAINTAINED UNDER 'TALLY' PROGRAMME ARE IN CONFORMITY WITH THE DSO REGISTER. ITA NO. 171 /AHD/ 2009 PRATHMESH AGENCIES. FOR A.Y. 200 5 - 0 6 - 11 - 6.2 I AM NOT CONVINCED WITH THE ARGUMENT ADVANCED BY THE APPELLANT. THE AO HAS RIGHTLY WORKED OUT THE SUPRESSED SALE AT RS. 13,85,7747 - . THIS GROUND OF APPEAL IS DISMISSED. 7. AFTER CAREFUL CONSIDERING ALL THE FACTS AND SUBMISSIONS IN THE CASE, THE APPEAL IS DISMISSED. THEREFORE , THE ASSESSEE IS IN APPEAL. 4. WE HAVE HEARD BOTH THE PARTIES AND GONE TH ROUGH THE CASE FILE. WE ARE DEALING WITH ALL THE THREE ISSUES TOGETHER SINCE THE LOWER APPELLATE FINDINGS ARE NOT SUPPORTED BY ANY REASON MUCH LESS THAN DETAILED ONES. THE CASE FILE REVEALS THAT THE ASSESSEE FILED ITS AGREEMENT EXECUTED WITH HPCL, LIST OF DEVELOPMENT ACTIVITIES CARRIED OUT AT THE LATTER S BEHEST . THE CIT(A) DOES NOT EVEN DISCUSS CONTENTS THEREOF IN THE LOWER APPELLATE ORDER. THE SAME POSITION CONTINUES WITH SECOND ADDITION OF EXCESS CASH SUM OF RS.59,80,320/ - . THE ASSESSEE SUBMITTED WORKING THEREOF EXPLAINING THE CASH SUM OF RS.37,10,65,475/ - AS PER ITS ACCOUNTS WHICH WAS ADOPTED AS RS.37,97,12,155/ - BY THE ASSESSING AUTHORITY RESULTING IN DIFFERENCE OF RS.86,46,680/ - . THIS WORKING HAS NOWHERE BEEN CONSIDERED IN LOWER APPELLATE FINDINGS UNDE R CHALLENGE. THE SAME FACTUAL POSITION CONTINUES WITH THE THIRD ISSUE OF SUPPRESSED SALES OF RS.13,85,479/ - AS WELL. WE HAVE ALREADY EXTRACTED THE CIT(A) FINDINGS HEREINABOVE WITHOUT ANY DISCUSSION. HE HAS SIMPLY AFFIRMED THE ASSESSING OFFICER S ACTION WIT H A NON SPEAKING ORDER. THE REVENUE IS UNABLE TO ITA NO. 171 /AHD/ 2009 PRATHMESH AGENCIES. FOR A.Y. 200 5 - 0 6 - 12 - DISPUTE THIS FACTUAL POSITION. WE OBSERVE IN THESE FACTS THAT INTEREST OF JUSTICE WOULD BE MET IN CASE ALL TH REE ISSUES ARE REMITTED BACK TO THE CIT(A) FOR A FRESH DECISION AS PER LAW. WE ORDER ACCORDINGLY. WE REITERATE THAT THE IMPUGNED ASSESSMENT YEAR IS 2005 - 06 AND MUCH WATER HAS FLOWN DOWN THE STREAM. IT WOULD BE APPRECIATED IF THE LD. CIT(A) TAKES INTO ACCOUNT THE SAME AND DECIDES THE MATTER AS EXPEDITIOUSLY AS POSSIBLE. 5. THIS ASSESSEE S APPEAL IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 5TH AUGUST , 201 5 AT AHMEDABAD . SD/ - SD/ - ( PRAMOD KUMAR ) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD; DATED 05 / 0 8 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REG ISTRAR) , / ITAT, AHMEDABAD