ACIT 22(3), NAVI MUMBAI V. HIRALAL CHOUDHARY, NAVI MUMBAI

ITA 1829/MUM/2013

• Counselvise Citation: 182919914 RSA 2013
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Bench Allotted: H
• Next Hearing Date: 11-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2013
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Business income; Business expenditure; Income from undisclosed sources; Audit objection; Capital expenditure
• Section: 69C; 142(1); 133A; 131; 145

Judgement Text

, H IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 1829 /M/ 201 3 ( / ASSESSMENT YEAR ; 200 9 - 1 0 ) ACIT 22(3) 3 RD FLOOR, TOWER NO.6, VASHI RLY STD. COMPLEX VASHI NAVI MUMBAI / VS. M/S. HIRALAL CHAUDHARY, SHOP NO.54, PRABHAT CENTRE, SECTOR, 1A, CBD BELAPUR, NAVI MUMBAI - 400614 PAN: A EWPD9528G ( / APPELLANT) ( / RESPONDENT) REVENUE B Y : SHRI , JITENDRA KUMAR (DR) RESPONDENT BY : SHRI . RAKESH JOSHI (AR) / DATE OF HEARING : 11 . 0 2 .201 5 / DATE OF PRONOUNCEMENT : 31.03. 201 5 / O R D E R P ER R . C.SHARMA , A.M . : TH I S APPEAL S FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) DATED 11 . 1 2 .201 2 FOR THE ASSESSMENT YEAR 200 9 - 1 0, WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE; 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN REDUCING THE ESTIMATED PROFIT OF RS.28,84,038/ - AT 12.5% ON A TURNOVER OF RS.2,30,72,304/ - TO 5% ON TURNOVER OF RS.2,14,74,304/ - TO RS.10,63,715/ - AND TO TAKE WORKING CAPITAL AT RS.2,50,000/ - AND ADDITION REDUCED TO RS.19,95,196/ - WHICH INCLUDES UNEXPLAINED EXPENDITURE OF RS.7,21,233/ - BEING PROFIT FROM BUSINESS. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND PERUSED MATERIAL ON RECORD. THE FACTS IN BRIEF FOR THAT ASSESSEE IS HAVING SHOP OF SWEETS & NAMKEEN. DURING THE YEAR THE ASSESSEE HAS HAVING A PROPRIETARY CONCERN IN THE NAME & STYLE OF M/S. BIKANER SWEETS & NAMKEE N AND ALSO DERIVED INCOME AS A PARTNER OF M/S. ITA NO. 1829 /M /201 3 2 BIKANER SWEETS & NAMKEEN. THE ASSESSEE MANUFACTURES SWEETS AND SOME EATABLES IN HIS SHOPS AT CBD BELAPUR AND AT THANE. A SURVEY ACTION U/S.133A OF THE INCOME TAX ACT 1961 WAS CARRIED OUT AT THE ASSESSEES PREM ISES ON 18/10/2010. DURING THE COURSE OF SURVEY, IT WAS OBSERVED BY THE SURVEY TEAM THAT THE ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNTS. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FILED TAX AUDIT REPORT IN FORM 3CB & 3CD ALONE WITH BALANCE SHEET AND P&L ACCOUNT. AS PER AO, T HE ASSESSEE HAD STARTED BUSINESS FROM ONE MORE SHOP FROM OCTOBER 2008, SITUATED AT SHOP NO.1 TO 5, SOHAM PLAZA, GHODBUNDER ROAD, THANE (WEST) AND HAS NOT INCORPORATED BUSINESS TRANSACTIONS IN THE AUDITED BOOKS OF ACCOUNT. THE AO OBSERVED THAT O NLY A LUMP SUM AMOUNT OF RS.1,47,990/ - IS SHOWN AS INCOME FROM THIS SHOP UNDER THE HEAD, INCOME FROM OTHER SOURCES. 3 . IN ITS ORDER AO OBSERVE D THAT T HE ASSESSEE HAD NOT DECLARED THREE BANK ACCOUNTS; NAMELY (A) ACCOUNT NUMBER 610569287 89 WITH STATE BANK OF BIKANER & JAIPUR (SBBJ), GB ROAD, THANE BRANCH, (B) ACCOUNT NUMBER 11245 WITH NKGS BANK (NKGSB), BELAPUR BRANCH AND (C) ACCOUNT NUMBER 18/4356 WITH PARSIK JANTA SAHKARI BANK LTD. (PJSB), SANPADA BRANCH. IN THESE ACCOUNTS SUBSTANTIAL A MOUNTS OF CASH DEPOS I T S HAVE BEEN MADE. 4 . THE AO REJECTED BOOKS OF ACCOUNT AND ESTIMATED INCOME BY APPL YING NET PROFIT RATE AT 12.5% O N TURNOVER OF RS.2,30,72,304/ - . ACCORDINGLY AN ADDITION OF RS.28,84,038/ - WAS MADE. 5 . THE AO ALSO MADE AN ADDITION OF RS. 4,75,616/ - AFTER HAVING THE FOLLOWING OBSERVATIONS; THE ASSESSEE ALONG WITH HIS TWO BROTHERS HAS TAKEN A LOAN OF RS.80,00,000/ - FROM INDIA BULLS TO FINANCE THE ABOVE MENTIONED PROPERTY AND DURING THE YEAR INSTALLMENTS AMOUNTING TO RS.14,26,848/ - ARE REPAID AGAINST HIS LOAN. THE ASSESSEES SHARE OF THIS REPAYMENT WORKS OUT TO RS.4,75,616/ - . THE ASSESSEE STATED THAT THE LOAN IS SQUARED OFF IN AY 2010 - 11 BY TAKING THREE FRESH LOANS BY EACH BROTHER FROM NKGSB COOPERATIVE BANK LTD. AND HE HAS DESTROYED ALL ITA NO. 1829 /M /201 3 3 THE DOCUMENTS. HE FURTHER INFORMED THAT HE USED TO PAY THE LOAN IN CASH AS MOST OF THE TIME HIS CHEQUES USED TO BOUNCE. THIS MEANS THAT THE ASSESSEE HAS DEBITED THIS AMOUNT IN THE FIRMS BUSINESS EXPENSES OR USED THE UNRECORDED SALES/INCOME OF THE BUSINES S FOR REPAYING THE SAID LOAN. AS THE ASSESSEE IS NOT COOPERATING IN GIVING DETAILS EITHER TO THE DEPARTMENT OR TO THE AUTHORIZED REPRESENTATIVE, I HAVE NO ALTERNATIVE BUT TO ADD THE AMOUNT AS INCOME OF THE ASSESSEE. 6 . THE ADDITION OF RS.2,45,617/ - WAS AL SO MADE AFTER HAVING FOLLOWING OBSERVATIONS; THE ASSESSEE HAS MADE CREDIT CARD PAYMENTS OF RS.2,45,617/ - IN CASH. THIS CASH IS SIPHONED OFF FROM BUSINESS FROM UNRECORDED SALES. THE ASSESSEE HAS NOT FILED ANY DETAILS AS TO FROM WHERE THE PAYMENTS MADE AGA INST CREDIT CARD HAVE COME AND ALSO THE PURPOSE OF THE EXPENSES. A PERUSAL OF THE CREDIT CARD STATEMENT SHOW THAT MOST ARE FOR TRAVEL OUT OF MUMBAI OR FOR PURCHASE OF GOLD ETC, HENCE IT IS SEEN THAT THE CREDIT CARD EXPENSES ARE USED FOR PERSONAL PURPOSES A ND NOT FOR BUSINESS. THUS THE EXPENSES ARE ADDED TO THE TOTAL INCOME FOR THE ASSESSEE AS UNEXPLAINED EXPENSE. 7 . BY THE IMPUGNED ORDER, THE LD. CIT(A) GAVE A PART RELIEF AFTER HAVING THE FOLLOWING OBSERVATIONS; POUNDED DIARY MARKED AS ANNEXURE A - 3 11, D URING THE COURSE OF SURVEY PROCEEDINGS U/S 133A AT CBD SHOP OF THE ASSESSEE, A RED COLOURED DIARY, MARKED 'COLLEGE' WAS IMPOUNDED AND WAS NUMBERED AS NO A - 3 OF THE LIST OF IMPOUNDED BOOKS/DOCUMENTS CONTAINING PAGES FROM 1 TO 188. A COPY OF THIS DIARY WAS P ROVIDED TO THE ASSESSEE AND HE WAS ASKED TO GIVE DETAILS OF ENTRIES ON EACH PAGE. THE ASSESSEE DID NOT FILE ANY DETAILS SO HE WAS AGAIN ASKED TO GIVE THE DETAILS WHEN HIS STATEMENT WAS RECORDED U/S 131 ON 06/12/2011, THE RELEVANT QUESTION & ANSWER ARE AS U NDER: Q.1 DURING THE COURSE OF SURVEY ON 1811012010 A 'COLLEGE' MARKED RED COLOUR DIARY BEARING ANNEXURE NO. 3 WAS IMPOUNDED FROM THE SHOP PREMISES AT 5A, PRABHAT CENTRE, CBD BELAPUR, SECTOR - 1, NOVI MUMBAI. A PHOTO COPY OF THIS SEIZED DIARY WAS PROVIDED TO , - YOU AND YOU WERE ASKED TO EXPLAIN THE CONTENTS OF PAGE WISE ENTRY WRITTEN. TILL DATE YOU HAVE NEITHER GIVEN ME ANY EXPLANATION NOR SUBMITTED ANY DETAILS IN RESPECT OF ENTRIES MODE THEREIN. ON GOING THROUGH THE DIARY IT IS SEEN THAT IT RECORDS WAGES PAI D TO VARIOUS WORKERS ON VARIOUS DATES PERTAINING TO A. Y. 2009 - 10. IT ALSO CONTAINS CERTAIN ENTRIES OF LARGE AMOUNT WHICH YOU HAVE NOT EXPLAINED TILL DATE. THE TOTAL OF ALL THESE ENTRIES INCLUDING WAGES WORKS OUT TO RS.41,00 LACS. IN THE ABSENCE OF ANY PLA USIBLE OR LOGICAL EXPLANATION GIVEN BY YOU, PLEASE EXPLAIN WHY THIS AMOUNT OF RS.41 LACS SHOULD ITA NO. 1829 /M /201 3 4 NOT BE ADDED IN YOUR TOTAL INCOME. YOU MAY CONSULT SHRI J. D. SACHDEV, C.A. AND YOUR AUTHORIZED REPRESENTATIVE BEFORE ANSWERING ALL THE QUESTIONS BEING RECORDED HERE IN TODAY? ANS.1 PARE - WISE EXPLANATION WILL BE GIVEN BY ME ON FRIDAY 911212011 AT 11:30 AM. IF I DON'T SUBMIT, ADVERSE VIEW MAY BE TAKEN BY YOU. 11.2 THE ASSESSEE DID NOT FILE ANY DETAILS EVEN AFTER REMINDING HIM ON EACH HEARING THEREAFTER. SO THE ENT RIES ON EACH PAGE ARE DECIPHERED AS PER THE WRITINGS, WHICH ARE SELF - EXPLANATORY AND IN CASE THEY ARE NOT SELF EXPLANATORY INFERENCE HAS BEEN DRAWN AS PER CIRCUMSTANCES AND UNDERSTANDING OF THE CASE. ALSO THE AMOUNTS ARE TAKEN AS PER ACTUAL WORKING BASED ON THE SEIZED DIARY INSTEAD OF THE AMOUNT ESTIMATED IN QUESTION 1 REPRODUCED ABOVE. 11.3 ALMOST ALL THE PAGES CONTAIN DETAILS OF WAGES/SALARY PAID TO WORKERS. ON THE TOP LEFT CORNER OF EACH PAGE CONTAINS NAME OF WORKER, DATE OF JOINING AND RATE OF MONTHLY WAGES. THEN IN THE PAGE THE PAYMENT OF AMOUNTS ON VARIOUS DATES ARE MENTIONED. IN SOME OF THE PAGES DATE OF LEAVING THE JOB BY WORKER IS MENTIONED AND FINAL PAYMENT SETTLING HIS ACCOUNT IS CLEARLY WRITTEN AND THEN THE PAGE IS CROSS MARKED. IN OTHERS THE LA ST DAY OF THE WORK IS WRITTEN AND THE PAGE IS SIMPLY CROSSED MEANING THE WORKER HAS LEFT AND HIS ACCOUNT IS SETTLED. THUS FROM THIS DATA THE WAGES PAYABLE BY THE ASSESSEE DURING AY 2009 - 10 IS WORKED OUT TO RS.12,43,302/ - AND THE ACTUAL AMOUNT PAID IS RS.7, 87,446/ - . PAGE WISE DETAILS OF SUCH ENTRIES ARE MENTIONED IN ANNEXURE - I TO THIS ORDER. OUT OF THIS THE ASSESSEE HAS SHOWN IN HIS BOOKS, PAYMENTS TOWARDS LABOUR CHARGES OF RS.3,20,523/ AND SALARY OF RS.1,65,500/ - TOTALING TO RS.4,86,023/ - . THEREFORE, THE DI FFERENCE OF RS.12,43,302/ - AND RS.4,86,023/ - BEING RS.7,57,279/ - IS ADDED AS UNEXPLAINED AND UNRECORDED EXPENDITURE AND ADDED TO THE TOTAL INCOME. 11.4 ON PAGE NO. 6 OF THIS DIARY (COPY ENCLOSED AS ANNEXURE 'II' TO THIS ORDER), VARIOUS FIGURES ARE WRITTEN AND TOTALLED. THE TOTAL HAS BEEN WORKED OUT AT RS.16,51,000/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE, WHEN ASKED TO EXPLAIN THESE ENTRIES, FAILED TO GIVE ANY EXPLANATION IN THIS REGARD. APPARENTLY, THE AMOUNTS REPRESENT UNACCOUNTED LOA NS ADVANCED TO SOME PARTY FROM TIME TO TIME AND IN SOME INSTANCES, THE SOURCE FROM WHICH THE AMOUNT ADVANCED HAS BEEN ARRANGED IS ALSO SPECIFIED. ACCORDINGLY, IN THE ABSENCE OF ANY INFORMATION, THE AMOUNT OF RS.16,51,000/ - IS TREATED AS UNEXPLAINED AND UNR ECORDED EXPENDITURE OUT OF THE UNACCOUNTED INCOME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME. 11.5 ON PAGE NO. 4 (COPY ENCLOSED AS ANNEXURE 'III' TO THIS ORDER), AN AMOUNT OF RS.7,19,600/ - HAS BEEN WRITTEN AND AFTER SUBTRACTING AN AMOUNT OF RS.1,40,00 0/ - FROM THIS IS, THE NET FIGURE OF RS.5,79,000/ - HAS BEEN ARRIVED AT. THE ASSESSEE, WHEN ASKED TO EXPLAIN THESE ENTRIES, FAILED TO GIVE ANY EXPLANATION IN THIS REGARD ALSO. THESE FIGURES APPARENTLY REPRESENT THE WORKING OF BALANCE LOAN AMOUNT RECEIVABLE O UT OF A TOTAL LOAN AMOUNT OF RS.7,19,600/ - AFTER ADJUSTING REPAYMENT OF RS.1,40,000/ - . IN THE ABSENCE OF ANY INFORMATION, THE AMOUNT OF RS.7,19,600/ - IS TREATED AS UNEXPLAINED AND S \ ITA NO. 1829 /M /201 3 5 UNRECORDED EXPENDITURE OUT OF THE UNACCOUNTED INCOME OF THE ASSESSEE AND ADD ED TO THE TOTAL INCOME. 11.6 ON THE SAME PAGE - 4 THERE ARE TWO ENTRIES OF AMOUNTS OF RS.1,60,000/ - AND RS.13,000/ - . THE ASSESSEE, WHEN ASKED TO EXPLAIN THESE ENTRIES, FAILED TO GIVE ANY EXPLANATION FOR THESE ENTRIES. APPARENTLY, THESE AMOUNTS ARE PAYMENTS M ADE TOWARDS BUSINESS AT VASHI. IN THE ABSENCE OF ANY INFORMATION, THE AMOUNT OF RS.1,73,000/ (1,60,000 + 13,000) IS TREATED AS EXPENDITURE MADE OUT OF UNACCOUNTED INCOME OF THE ASSESSEE AND ADD ED TO THE TOTAL INCOME. 11.7 TO SUM UP THE ADDITIONS FROM PAGE 11.3 TO 11.6 WHICH ARE PERTAINING TO IMPOUNDED DIARY WORKS OUT TO RS.33,00,879/ - (ADDITION RS.33,00,879/ - ] 12. IN ORDER TO DO JUSTICE TO THE CASE AND TO ELIMINATE THE DOUBLE ADDITIONS ON SAME ISSUES, THE INCOME ESTIMATED IS MATCHED WITH ASSETS ACQUIRED B Y THE ASSESSEE, WHICH ARE AS UNDER; INCOME AS PER PARA I ABOVE ESTIMATED; SR. NO. BASIS OF ESTIMATION OF INCOME AMOUNT 1. DECLARED INCOME IN THE RETURN OF INCOME 5,15,368 2. ON ACCOUNT OF UNRECORDED SALES AS DISCUSSED ABOVE 28,84,038 TOTAL 33,99,406 INCOME ESTIMATED AS PER PARA II ABOVE. SR. NO. DESCRIPTION AMOUNT 1. INDIA BULL LOAN REPAYMENT 4,75,616 2. CREDIT CARD PAYMENTS 2,45,617 3. PAYMENT TO LABOURERS 33,00,879 TOTAL 40,22,112 FROM THE ABOVE TABLE IT CAN BE SEEN THAT THE INCOME ESTIMA TED IS RS.33,99,406/ - WHEREAS INCOME WORKED OUT ON THE BASIS OF ASSETS ACQUIRED/LIABILITIES SQUARED OFF/INVESTMENTS MADE BY THE ASSESSEE IS RS.40,22,112/ - . KEEPING ALL THE FACTS IN VIEW AND ALSO THE FACT THAT THE ASSESSEE HAS NOT KEPT BOOKS OF ACCOUNTS, TH E INCOME OF THE ASSESSEE IS ESTIMATED AT RS,40,22,112/ - . AFTER REDUCING THE DECLARED INCOME OF RS.5,15,368/ - FROM ABOVE, THE BALANCE, AMOUNTING TO RS. 35,06,744/ - IS ADDED TO THE TOTAL INCOME. PENALTY PROCEEDINGS U/S 271(1)(C) IS ALSO INITIATED HEREWITH FO R CONCEALING THE PARTICULARS OF INCOME.[ADDITION RS.35,06,744/ - ] 4.1 DURING THE APPELLATE PROCEEDING THE APPELLANT HAS SUBMITTED AS UNDER : 'UNDER THE INSTRUCTIONS AND FOR AND ON BEHALF OF OUR CLIENT ABOVE NAMED, AND WITH REFERENCE TO THE CAPTIONED APPEAL, WE HAVE TO PUT OUR SUBMISSIONS, IN BRIEF, AS UNDER: THE APPELLANT IS AN INDIVIDUAL HAVING A PROPRIETARY CONCERN IN THE NAME & STYLE OF M/S BIKANER SWEETS & NAMKEEN AND ALSO DERIVED INCOME AS A ITA NO. 1829 /M /201 3 6 PARTNER OF M/S BIKANER SWEETS & NAMKEEN. THE ASSESSEE FILED IT S RETURN OF INCOME ON 25.09.2009, DECLARING TOTAL INCOME OF RS.6,15,150/ - . INITIALLY, RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961. A SURVEY ACTION U/S 133A OF THE INCOME TAX ACT, WAS CARRIED OUT AT THE ASSESSEE'S PREMISES ON 18.10.2010. NO TICE U/S 143(2) AND U/S 142(1) WERE ISSUED AND SERVED UPON THE ASSESSING REQUIRING HIM TO FILE DETAILS AS CALLED FOR. THE LEARNED ASSESSING OFFICER REJECTED BOOKS OF ACCOUNTS OF THE ASSESSEE ON THE THAT G.P. & INCOME DECLARING BY THE ASSESSEE IS VERY LOW AND ESTIMATED NET PROFIT OF ,RS .28,84,034/ - (PARA 7.3 PAGE 9 - 11) THE LD. A.O ALSO ESTIMATE INCOME ON THE BASIS OF UTILIZATION OF FUNDS AND DETERMINED INCOME OF RS.40,22,112/ - AND COMPARED BOTH THE ESTIMATES AND MADE ADDITION OF RS.35,06,744/ - OVER AND ABOV E THE RETURNED INCOME OF RS.5,15,068/ - . BEING AGGRIEVED BY THE ACTION OF LEARNED ASSESSING OFFICER THE APPELLANT IS IN APPEAL BEFORE YOUR HONOUR: - 1)THE LEARNED ASSESSING OFFICER HAS ERRED IN REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE U/S 145 OF THE INCOME TAX, 1961 AND BY TREATING THE BUSINESS OF THE ASSESSEE AS MANUFACTURE WITHOUT CONSIDERING THE FACTS & CIRCUMSTANCES OF THE CASE AS WELL AS LAW. 2)THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING ADDITIONS OF RS.40,22,112/ - TO BUSINESS INCOME ON ACC OUNT OF ALLEGED: INIA BULL LOAN REPAYMENT RS.4,75,616/ - CREDIT CARD PAYMENTS RS.2,45,617/ - PAYMENT TO LABOURERS RS.33,00,879/ - MERELY ON ASSUMPTIONS AND ESTIMATES WITHOUT CONSIDERING THE FACTS & CIRCUMSTANCES OF THE CASE AS WELL AS LAW. THE LEARNED A SSESSING OFFICER HAS ERRED IN DRAWING PRESUMPTIVE ALLEGED SUPPRESSED SALES & REDUCED N.P. OF RS.3399,406/ - , FOR COMPARISON PURPOSES WITH THE ALLEGED ADDITIONS MADE ABOVE TO BUSINESS INCOME MERELY ON ASSUMPTIONS AND ESTIMATES, WITHOUT CONSIDERING THE FACTS & CIRCUMSTANCES OF THE CASE AS WELL AS LAW. SINCE ALL THE GROUNDS RELATES TO EACH OTHER HENCE COMBINED SUBMISSION FOR THE SAME IS AS UNDER - THE LD.A.O. HAS NOTICED THAT THE ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNTS ON REGULAR BASIS AND SOME OF THE BAN K ACCOUNTS ARE NOT INCORPATED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND HE HAS REJECTED BOOKS OF ACCOUNTS OF THE APPELLANT. REGARDING ASH DEPOSIT IN BANK ACCOUNTS, WE HAVE TO SUBMIT THAT THE ASSESSEE HAS TWO SHOPS, ONE AT VASHI AND OTHER AT T HANE. THE ASSESSEE HA S MAINTAINED BOOKS OF ACCOUNTS FOR THE VASHI SHOP AND ACCOUNTS WERE AUDITED BUT FOR THANE SHOP ASSESSEE HAS TAKEN NET INCOME OF RS.147,990/ - . AS PER A.O. ASSESSEE HAS DEPOSITED CASH IN FOLLOWING UNDISCLOSED ACCOUNTS WITH BANKS: STATE BANK OF BIKANER & JAIPUR, ACCOUNT MAINTAINED RS.30,06,264/ - ITA NO. 1829 /M /201 3 7 FOR THANE SHOP NKGSB CO - OP. BANK, SAVING ACCOUNT IN THE NAME RS.20,29,000/ - OF ASSESSEE PARSHIP JANTA SAHAKARI BANK, SAVING ACCOUNT IN RS.14,60,000/ - NAME OF ASSESSEE - ------------------------------------ TOTAL RS.64,95,265/ - =================== FORM THE ABOVE ACCOUNT IT IS CLEAR THAT FOR ACCOUNT IN SBBJ, THANE DULY ACCOUNTED THE DEPOSITS PERTAINS TO SHOP AT THAN E FOR WHICH THE ASSESSEE OFFERED INCOME INCOME OF RS.1,47,990/ - WHICH WORKS OUT TO BE APPROX. 5% OF THE TOTAL DEPOSITS. THEREFORE SAI BANK ACCOUNT CAN NOT BE TREATED AS UNDISCLOSED BANK ACCOUNT. SECONDLY ACCOUNTS IN NKGSB, THESE ACCOUNTS ARE SAVING ACCOUNT S IN PERSONAL CAPACITY. SINCE THESE ACCOUNTS DID NOT BELONGS TO THE BUSINESS OF THE APPELLANT HENCE THE SAME IS NOT INCORPORATED IN THE BOOKS OF THE PROPRIETARY CONCERN OF THE ASSESSEE. THEREFORE THERE IS NO BANK ACCOUNT WHICH IS UNDISCLOSED TO THE DEPARTM ENT. THE LD. A.O. FURTHER INCREASED THE ASSUMED TURNOVER OF RS.2.12 CRORE BY RS.1800,000/ - ASSUMING THE PAYMENT TO SUPPLIER OUT OF SALE PROCEEDS. THE LD.A.O. HAS NOT CONSIDERED THE WITHDRAWALS MADE FROM THESE ACCOUNTS. TOTAL WITHDRAWAL FROM THESE BANK ACCO UNT IS MORE THAN RS.18,00,000/ - DURING THE YEAR, HENCE THE PAYMENT TO SUPPLIER BEFORE DEPOSITING THE NET AMOUNT IN THE BANK ACCOUNT CAN NOT CONSIDERED AGAINST SUCH PAYMENT. THEREFORE THERE IS NO NEED TO FURTHER INCREASE THE TURNOVER. FURTHER THE LD.A.O. HA S ASSUMED NET PROFIT @ 12.5% OF THE TOTAL TURNOVER WITHOUT ANY BASIS. NO COMPARATIVE DATA OF OTHER ASSESSEE ENGAGED IN THE SAME BUSINESS WERE PROVIDED BY THE LD. AD. BEFORE TAKING SUCH HIGH NP RATE. FURTHER THE ASSESSEE IS OFFERING NET PROFIT OF 3% OF ITS TOTAL TURNOVER, THEREFORE RATE OF 12.5 % IS ON VERY HIGHER SIDE. THERE YOUR HONOUR IS REQUESTED TO KINDLY RESTRICT THE ESTIMATION TO N.P. ONLY TO 5% OF THE TOTAL TURNOVER AS ESTIMATED BY THE LD. AD. WHICH WORKS OUT TO RS.10,63,615/ - (5% RS. 2,12,72,304) IN CLUDING NET PROFIT OFFERED BY THE APPE LLANT IN THE RETURN OF INCOME OF RS.5,15,368/ - , THEREFORE NET ADDITION SHOULD BE RESTRICTED TO RS.5,48,247/ - . LD. A.O. H AS ALSO ESTIMATED INCOME ON THE BASIS OF INVESTMENTS MADE/ASSETS ACQUIRED /IIABILITIES SQUARED OFF AND ESTIMATED FOLLOWING INCOME: - 1. PAYMENT FOR REPAYMENT OF LOAN RS. 4,75,616/ - 2. PAYMENT OF CREDIT CARD DUES RS. 2,45,617/ - 3. PAYMENT OF WAGES TO LABOURERS RS.33,00,879/ - TOTAL RS.40,22,112/ - IN THE ABOVE ESTIMATION THE LD. A.O. FAILED TO N OTE THAT PAYMENT ON ACCOUNT OF ABOVE EXPENSES/LIABILITY ALREADY CONSIDERED FOR WHILE ARRIVING ESTIMATION OF NET PROFIT. THESE ALL PAYMENT PERTAINS TO BUSINESS EXPENSES. HENCE WHEN THE A.O. IS ESTIMATING NET PROFIT @ 12.5% THEN IN BALANCE 87.5% IS EXPENSES WHICH THE A.O. HAS ALREADY CONSIDERED IN THE ABOVE ADDITION. THESE PAYMENTS OF SHOP LOAN. THE INCOME OFFERED BY THE ASSESSEE IS ITA NO. 1829 /M /201 3 8 SUFFICIENT TO COVER THE LOAN REPAYMENT. THEREFORE THE ESTIMATION MADE BY THE LD. A.O. IS TOTALLY WRONG. FURTHER AS PER ALTERNATE PLEA OF THE ASSESSEE BEFORE YOUR HONOUR THAT THE ADDITIONAL OF NET PROFIT OF RS.5,48,247/ - WHICH MAY BE CONFIRMED BY YOUR HONOUR IS SUFFICIENT TAX IN THE ABOVE ADDITION AND CONFIRMATION OF THE SAME WILL AMOUNT TO DOUBLE ADDITION. THEREFORE YOUR HONOUR IS REQUESTED TO KINDLY RESTRICT THE ADDITION TO ONLY RS.5,48,247/ - AS AGAINST RS.35,06,744/ - MADE BY THE LD. A.O. THIS BEING OUR INTERIM SUBMISSION, WE SHALL PLEASE TO SUBMIT FURTHER DETAILS E VIDENCES, IF ANY, REQUIRED TO YOUR HONOUR IN DECIDING THE APPEAL.' 4.2 I HAVE CONSIDERED THE SUBMISSION AND ALSO FINDINGS MADE AT THE TIME OF SURVEY. IT IS ADMITTED FACT THAT DEPOSITS MADE IN THESE ACCOUNTS MAINTAINED INCLUDING THE ONES MAINTAINED IN PERSONAL CAPACITY ALSO ARE FROM THE BUSINESS ONLY AS APPELLANT DOES NOT HAVE ANY OTHER SOURCE OF INCOME. THUS THE A.O'S CONTENTION THAT IT IS ONLY PART OF THE BUSINESS RECEIPTS IS WELL TAKEN. ON THE OTHER HAND THE APPELLANT HAS ALSO FAIRLY ADMITTED THAT THE TURN OVER AND OTHER DETAILS FOR THE THANE BRANCH OF SHOPPING WERE NOT TAKEN INTO CONSIDERATION. THE APPELLANT HAS THEN PLEADED THAT THE DEPOSITS MADE IN THE BANK STATE CO. OF. BIKANER & JAIPUR ARE THE BUSINESS RECEIPTS. THE APPELLANT HAS THEN PLEADED THAT PROFIT APPLICABLE TO HIM @3% AS NET PROFIT OR MAXIMUM AT 5% SHOULD BE TAKEN TO ESTIMATE INCOME FROM THANE SHOP. 4.3. AS DISCUSSED ABOVE BOOKS OF ACCOUNT BEING MAINTAINED ONLY FOR BELAPUR BRANCH FOR WHICH NO DEFECTS WERE FOUND BY THE A.O. , I AM OF THE VIEW THAT SAME CANNOT BE REJECTED. SIMULTANEOUSLY THE TRANSACTIONS PERT AINING TO THANE SHOP ADMITTEDLY REMAINED UNDISCLOSED WHERE PURCHASE AND SALES ARE NOT RECORDED, A.O. HAS RIGHTLY OPTED TO TREAT THE DEPOSITS AS TURNOVER OF APPELLANT'S BUSINESS FROM THE SAME BUSINESS. HOWEVER, FOR E R 1 E SAME REFLECTS SURPLUS AMOUNT AVAIL ABLE AFTER DEDUCTING EXPENSES INCURRED IN CASH LIKE WAGE LABOUR WHICH IS SUPPORTED BY IMPOUNDED ENTRIES IN DIARY ALSO ; WILL REDUCE THE PROFIT IF ACCOUNTED FOR BY DRAWING A TENTATIVE TRADING CUM PROFIT AND LOSS ACCOUNT. IT HAS TO BE APPRECIATED THAT UNACCO UNTED RECEIPTS ARE TO BE ADDED SIMULTANEOUSLY THE UNACCOUNTED EXPENSES ALSO HAVE TO BE GIVEN EFFECT TO ;AS RECEIPTS AND EXPENSES GO TOGETHER. AS IT HAS BEEN DISCOVERED FROM THE IMPOUNDED MATERIAL ALSO THAT THESE EXPENSES WERE UNRECORDED THOUGH FOUND INCURR ED FROM ENTRIES IN THE IMPOUNDED DIARIES, IT IS NOT THE CASE THAT THEY WERE NOT INCURRED. THE, IT IS ALSO NOTED FROM THE BANK ACCOUNT STATEMENT THAT THERE ARE WITHDRAWALS ALSO. HENCE I AM OF THE CONSIDERED OPINION THAT ENTIRE DEPOSITS CANNOT BE ADDED AS IN COME OF THE APPELLANT WITHOUT GIVING EFFECT TO SUCH EXPENSES INCURRED FOR THAT VERY BUSINESS .SINCE SOURCE OF DEPOSITS IN THE BANK ACCOUNTS MAINTAINED AS SAVING ACCOUNTS AS WELL THE UNDISCLOSED CURRENT ACCOUNT ; ARE FROM RECEIPTS OF BUSINESS ONLY ;I AM OF THE VIEW THAT ESTIMATION OF G.P. AS PERCENTAGE OVER VOLUME IN APPELLANT'S OWN CASE FROM AUDITED BOOKS OF ACCOUNTS MAINTAINED AND NO DEFECTS FOUND IN THEM, EXCEPT THAT THEY WERE STATED AS NOT MAINTAINED BUT ACTUALLY AUDIT REPORT WITH P& 1 ACCOUNT WITH BALAN CE SHEET WERE PRODUCED DURING THE ASSESSMENT PROCEEDINGS, SHOULD ITA NO. 1829 /M /201 3 9 BE TAKEN, IN ABSENCE OF ANY COMPARABLE CASE CITED. THE APPELLANT HAS PLEADED THAT IN ABSENCE OF ANY DETAILS MAINTAINED IT CAN BE TAKEN AT @5% . I HAVE GONE THROUGH THE TURNOVER ESTIMATED AND SEEN THAT A.O. HAS MADE ESTIMATE TO WORKOUT UNRECORDED SALES AT RS. 1,00,000/PER MONTH PER SHOP WHICH IS WITHOUT ANY BASIS. 4.4. 4.6 I HAVE GONE THROUGH ASSESSMENT FOLDER AND IT IS NOTED THAT AN AUDIT OBJECTION HAS BEEN RAISED IN THE CASE OVER WRONG ESTIM ATION OF TURNOVER TO THE EXTENT OF RS.43,07,200/ - . THE AUDITOR HAS RAISED THE OBJECTION THAT A.O. HAS TAKEN CASH DEPOSIT OF RS.20,29,000/ - ONLY IN NKGSB BANK WHEREAS AS PER THE ITS DETAILS CASH DEPOSIT IN THIS ACCOUNT ARE TO THE TUNE OF RS.63,36,200/ - AND THUS AN AMOUNT OF RS.43,07,200/ - HAS BEEN LEFT OUT. IN VIEW OF THIS, AS THERE IS AN OBJECTION RAISED REGARDING ESTIMATION OF TURNOVER WHICH A.O AS WELL AS ASSESSEE BOTH WORKED OUT IN THE COURSE OF ASSESSMENT PROCEEDINGS ONLY AT RS.2, 10,26,687/ - WHILE TAKI NG CASH DEPOSIT FIGURE OF RS.64,95,265/ - . THE TOTAL CASH DEPOSIT IN THE CASE HAS BEEN TAKEN AT RS.30,06,265/ - WHICH ARE MAJOR PART OF SALES OF THANE SHOP. THEN CASH DEPOSITS IN OTHER TWO UNDISCLOSED ACCOUNTS ARE RS.20,29,000/ - IN NKGSB BANK AND RS.14,60,00 0/ - IN PJSB BANK. IN VIEW OF THIS, APPELLANT WAS ASKED TO RECONCILE THE FIGURE OF TURNOVER BY TAKING CASH DEPOSITS MADE IN THE UNDISCLOSED BANK ACCOUNT VIDE LETTER NO.CIT(A) 33/REMAND REPORT/2012 - 13 DATED 21.11.2012, REPRODUCED AS UNDER: - DURING THE COURSE OF APPELLATE PROCEEDING YOU HAVE SUBMITTED THAT TOTAL TURNOVER INCLUDING CASH DEPOSIT MADE DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2009 10 IS 2,12,72,304/ - . SAME IS COMING OUT OF THE ASSESSMENT ORDER ALSO. HOWEVER, AFTER GOING THROUGH THE ASS ESSMENT FOLDER IT IS NOTED THAT AUDIT HAS RAISED AN OBJECTION STATING THAT THE CASH DEPOSIT IN ALL THE THREE ACCOUNTS, INCLUDING DEPOSITS IN TWO UNDISCLOSED ACCOUNT IS TOTALING TO RUPEES HIGHER BY AN AMOUNT OF RS,43,07,200/ - AS THE CASH DEPOSIT IS IN NKGSB BANK IS ACTUALLY RS.43,36,200/ - WHEREAS SAME HAS BEEN TAKEN AT 20,29,000/ - ONLY. IN VIEW OF THE SAME YOU ARE ASKED TO RECONCILE THE CASH DEPOSIT MADE IN NKGSB BANK AND CONSEQUENTLY TURN OVER.' 4.7 IN RESPONSE, APPELLANT HAS FILED REPLY GIVING NAME OF THE BANK, ACCOUNT NUMBER, TOTAL CASH DEPOSIT ALONG WITH COPY OF BANK ACCOUNT STATEMENT AS GIVEN BY THE BANK. APPELLANT HAS SUBMITTED THAT THE FIGURES HAVE RIGHTLY BEEN TAKEN BY THEM AS WELL AS A.O FOR THE ACCOUNT MAINTAINED WITH BANK PJSB, STATE BANK OF BIKAN ER, NKGSB CO - OP BANK CD/5437. AS REGARDS NKGSB SAVINGS BANK ACCOUNT NO. SB/ 11245 IS CONCERNED, APPELLANT HAS SUBMITTED THAT ACTUAL TOTAL CASH DEPOSIT ARE RS.20,31,000/ - FOR WHICH DATE WISE DEPOSIT DETAILS HAVE ALSO BEEN GIVEN BY THE APPELLANT. THE APPELLA NT HAS THEN SUBMITTED THAT A.O HAS TAKEN THE FIGURE OF RS.20,29,000/ - AS CASH DEPOSIT DURING THE YEAR AND THUS THE GAP IS ONLY OF 1 1 %S.2,0001 - IN THE ASSESSMENT ORDER. IN VIEW OF THIS REPLY SUPPORTED BY BANK STATEMENT FURNISHED BY THE APPELLANT, THE TURNOV ER REFLECTED BY THE A.O. AT RS. ITA NO. 1829 /M /201 3 10 2,12,72,304/ - IS TAKEN AT RS.2,14,74,304/ - . ACCORDINGLY, ADDITION ON THIS COUNT WHICH INCLUDES THE ESTIMATED PROFIT AT 5% ON THE TURNOVER IS WORKED OUT TO RS. 10,63,715/. 4.8. FURTHER, AS THIS BRANCH WAS OPENED AT THANE DUR ING THE YEAR ONLY AND AFTER LAPSE OF SIX MONTHS OF THE PREVIOUS YEAR, AN ADDITION FOR THE AMOUNT REQUIRED AS WORKING CAPITAL TO BE MADE. IT IS NOTED THAT A.O. HAS NOT TAKEN INTO ACCOUNT THE WORKING CAPITAL REQUIREMENT FOR THE BUSINESS OF THE APPELLANT. SIN CE IT IS AN ADMITTED FACT THAT THE SHOP WAS OPENED DURING THE YEAR ONLY THE WORKING CAPITAL FUND REQUIRED TO MAKE INITIALLY INVESTMENT IN THE BUSINESS HAS ALSO TO BE WORKED OUT, TO BE ADDED. THE APPELLANT WAS ASKED TO PROVIDE WORKING CAPITAL REQUIREMENT WH ICH WAS SUBMITTED AS UNDER - 1 AMOUNT RECEIVED TO START THE BUSINESS AT THANE (APPROX. COST OF RAW MATERIAL FOR 15 DAYS) 2,50,000 2 AMOUNT DEPOSITED IN STATE BANK OF BIKANER & JAIPUR OUT OF SALE AT THANE SHOP 30,06,264 3 NKGSB CO - OP. BANK, SAVI NG ACCOUNT IN THE NAME OF ASSESSEE 20,29,000 4 PARSHIP JANTA SAHAKARI BANK, SAVING ACCOUNT IN THE NAME OF ASSESSEE 14,60,000 5 TURNOVER DECLARED BY THE ASSESSEE 1,47,77,039 TOTAL TURNOVER 2,15,22,303 NET PROFIT (5%) OF THE TOTAL TURNOVER) 10,76,115 LESS: - INCOME ALREADY OFFERED BY THE APPELLANT 5,15,368 5,60,474 4.9. I HAVE GONE THROUGH THE SAME. THE APPELLANT HAS SHOWN TOTAL TURNOVER OF RS.2,15,22,303/ - OUT OF WHICH AMOUNT INVESTED TO START THE BUSINESS AT T HANE HAS BEEN TAKEN AS COST OF INVESTMENT IN RAW MATERIAL FOR 15 DAYS HAS BEEN WORKED OUT BY THE APPELLANT AT RS.2,50,000/ - . LOOKING INTO NATURE OF BUSINESS OF APPELLANT WHO DEALS IN EATABLES BEING PERISHABLE COMMODITY, 15 DAYS WORKING CAPITAL REQUIREMENT IS CONSIDERED REASONABLE AND HENCE ACCEPTED. IN VIEW OF THIS, THE AMOUNT OF WORKING CAPITAL OF RS.2,50,000/ - ALONGWITH IS ESTIMATED PROFIT AT THE RATE OF 5% ON THE TURNOVER WHICH WAS WORKED OUT BY THE A.O. AT RS.2,12,72,304/ - HAS TO BE ADDED. THUS ADDITION THIS COUNT WHICH INCLUDES THE ESTIMATED PROFIT AT 5% ON THE TURNOVER WORKED OUT, WHICH COMES TO RS .10,63,615 A LONG WITH WORKING CAPITAL OF RS.2,50 ,000/ - AN AMOUNT RS.13,13,715/ - HAS TO BE MADE. 4.10 FURTHER AS THERE IS A FINDING IN SURVEY THAT EXPENSES DI D INCLUDE SOME EXPENSES FOR NON BUSINESS PURPOSE ONLY, SAME HAVE TO BE LOOKED INTO, WHICH THE APPELLANT SAYS HAVE ALL BEEN TAKEN INTO ACCOUNT WHILE OFFERING 5% PROFIT. I AM NOT IN AGREEMENT WITH APPELLANT ON THIS ISSUE FOR THE REASON THAT THE PROFIT IS ES TIMATED ON TURNOVER WITH ACCEPTED PRINCIPLE THAT ESTIMATION TAKES CARE OF DEDUCTION OF BUSINESS EXPENSES AS PER THE PROVISIONS OF ACT ONLY. HENCE ITA NO. 1829 /M /201 3 11 LOOKING INTO THE NATURE OF EXPENSES WHICH WERE FOUND TO BE CAPITAL AND/OR PERSONAL IN NATURE AND ADMITTED SO ALSO BY THE APPELLANT HAVE OBVIOUSLY TO BE DISALLOWED BEING NOT FOR THE PURPOSE OF BUSINESS, OR ALTERNATIVELY PERCENTAGE OF PROFIT HAS TO BE ENHANCED. IN SUCH CASE COMPARISON WITH REGULARLY DISCLOSED CANNOT BE MADE. HERE IN THE CASE DURING SURVEY ITSELF, I T WAS FOUND THAT THERE WERE NON - BUSINESS EXPENSES ALSO INCURRED BY THE APPELLANT THOUGHT NOT RECORDED AND EXACT AMOUNT WITH SPECIFIC DETAILS OF THESE TWO EXPENSES ARE AVAILABLE ALSO, I AM OF THE OPINION THAT SAME SHOULD BE DISALLOWED STRAIGHTWAY INSTEAD O F ENHANCING THE PERCENTAGE OF PROFIT; ESPECIALLY WHEN NO COMPARABLES HAVE BEEN MADE AVAILABLE. IN VIEW OF THIS, THE PAYMENT FOUND TO HAVE BEEN MADE TO INDIA BULL AN AMOUNT OF RS.4,75,616/ - BEING CAPITAL EXPENDITURE AND CREDIT CARED PAYMENTS MADE FOR TRAVEL , PERSONAL AND PURCHASE OF GOLD, TOTALING TO RS.7,21,233/ - WHICH WERE FOUND TO BE UNRECORDED EXPENDITURE HAVE TO BE ADDED U/S 69C OF THE ACT. THE APPELLANTS PLEA THAT THESE EXPENSES ARE NOT SEPARATE BUT COVERED BY ESTIMATION IS NOT TENABLE AS THEY ARE UNR ECORDED BUT COMING OUT OF UNRECORDED SALES, A FACT ADMITTED BY APPELLANT IN SURVEY PROCEEDING HOWEVER COULD NOT BE QUANTIFIED. HENCE WITH THE SAME LOGIC THAT A.OS ESTIMATE TO WORKOUT UNRECORDED SALES AT RS.1,00,000/ - PER MONTH PER SHOP IS NOT TENABLE, ON THE OTHER HAND HAVING FOUND THAT SUCH EXPENSES ARE DONE FORM SUCH UNRECORDED SALES AND BALANCE ONLY IS DEPOSITED IN THESE BANK ACCOUNTS, I AM OF THE CONSIDERED OPINION THAT SAME BEING NOT FORMING CASH DEPOSITED IN THESE ACCOUNTS AND HENCE FORMING PART OF T HE TURNOVER ON WHICH ESTIMATE HAS BEEN MADE, CANNOT COVER THESE UNRECORDED EXPENSES AND SO THEY HAVE TO BE ADDED U/S. 69C OF THE ACT SEPARATELY. AS A RESULT OF ADDITION OF THESE TWO UNEXPLAINED EXPENSES, TOTAL AMOUNT OF ADDITION COMES TO RS.13,13,715/ - PLU S RS.4,75,616/ - PLUS RS.7,21,233; TOTAL RS.25,19,564/ - . AS AGAINST THIS THE INCOME ALREADY OFFERED BY THE APPELLANT IS RS.5,15,368/ - , NET AMOUNT OF ADDITION OF RS. 19,95,196/ - IS UPHELD AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER AT RS.36,06,744/ - . F OR THE BALANCE ASSESSEE GETS RELIEF. ACCORDINGLY THE GROUND NO.3 IS TREATED PARTLY ALLOWED. 8 . WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT ASSESSEE WAS CARRYING ON BUSINESS OF SWEET AND NAMKEEN. DURING THE YEAR UNDER CONSIDERATION THERE WAS SURVEY AT THE BUSINESS PREMISES OF THE ASSESSEE IN WHICH IT WAS FOUND THAT ASSESSEE WAS NOT MAINTAINING PROPER BOOKS OF ACCOUNT. IT WAS FOUND THAT ASSESSEE WAS HAVING BANK ACCOUNT WHICH W ERE NOT DISCLOSED IN THE RETURN OF INCOME. IT WAS ALSO FOUND THAT THE ASSESSEE HAS TAKEN SOME LOAN WHICH WAS REPAID, HOWEVER, THE AMOUNT REPAID WAS NOT DISCLOSED IN THE BOOKS OF ACCOUNT IN THE RETURN FILED WITH THE DEPARTMENT. ACCORDINGLY, BY REJECTING BOO KS OF ITA NO. 1829 /M /201 3 12 ACCOUNT, THE AO COMPUTED THE INCOME BY APPLYING ESTIMATED NET PROFIT RATE AS WELL AS MADE ADDITION IN RESPECT OF AMOUNT DEPOSITED IN BANK AS WELL AS REPAYMENT OF LOAN EFFECTED DURING THE YEAR. THE CIT(A) APPRECIATED EACH OBSERVATION OF THE AO AND AFT ER GIVING DETAILED FINDING CONFIRMED THE ACTION OF THE AO FOR REJECTION OF THE ACCOUNT. ON THE BASIS OF OBSERVATION MADE BY THE AO IN ITS ORDER VIS - - VIS DETAILS OF ACCOUNT SUBMITTED ALONG WITH THE RETURN OF INCOME THE CIT(A) FOUND THAT TOTAL SALE OF THE A SSESSEE WAS RS.2,12,72,304/ - . AFTER APPLYING NET PROFIT RATE ON TOTAL SALES, THE NET PROFIT WAS WORKED OUT AT RS.10,63,615/ - . THE CIT(A) ALSO WORKED OUT WORKING CAPITAL REQUIREMENT AT THANE SHOP AT RS.2,50,000/ - ON THE BASIS OF 15 DAYS CYCLE IN PROCUREMENT OF RAW MATERIAL AND SALE OF PRODUCTS. THE CIT(A) ALSO MADE SEPARATE ADDITION OF RS.4,75,616/ - IN RESPECT OF PAYMENT MADE TO INDIA BULLS FROM WHOM ASSESSEE HAS TAKEN LOAN. THE ADDITION WAS ALSO CONFIRMED ON ACCOUNT OF PAYMENT MADE TOWARDS THE CREDIT CARD. THUS, THE TOTAL ADDITION OF RS.7,21,233/ - WAS MADE U/S.69C . I N SUM AND SUBSTANCE, OUT OF TOTAL ADDITION OF RS.36,06,744/ - MADE BY THE AO, THE CIT(A) UPHELD THE ADDITION OF RS.19,95,196/ - . DETAILED FINDINGS RECORDED BY CIT(A) HAVE NOT BEEN CONTROVERTED BY D EPARTMENT BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDING RECORDED BY CIT(A) RESULTING INTO PART DELETION OF ADDITION MADE BY AO. 9. UNDER RULE 27 OF ITAT RULES, LD. AR RAISED A GROUND TO THE EFFECT THAT AMOUNT PAID TO INDIA BULLS LOAN AMOUNTING TO RS.4,75,616/ - WAS OUT OF SALE PROCEEDS ON WHICH PROFIT HAS ALREADY BEEN ESTIMATED AND ADDITION HAS BEEN MADE, THEREFORE, THE CIT(A) WAS NOT JUSTIFIED FOR MAKING SEPARATE ADDITION OF RS.4,75,616/ - ON ACCOUNT OF UNEXPLAINED PAYMENTS. WE FOUND THAT NEITHER THE ASSESSEE FILED ANY APPEAL NOR ANY CROSS OBJECTION AND UNDER RULE 27, ASSESSEE CAN RAISE A PLEA WHICH IS IN SUPPORT OF CIT(A)S ACTION. THE GROUND TAKEN BY THE ASSESSEE IS NOT IN SUPPORT OF CIT(A) S ACTION BUT AMOUNTS TO SEPARATE ITA NO. 1829 /M /201 3 13 GROUND FOR WHICH NEITHER ASSESSEE HAS FILED ANY APPEAL NOR ANY CROSS OBJECTION. ACCORDINGLY, WE REFRAIN FROM ENTERTAINING THIS GROUND AND CONFIRM THE ACTION OF CIT(A) FOR MAKING ADDITION OF RS.4,75,616/ - ON ACCOUNT OF UNEXP LAINED EXPENDITURE/PAYMENT. 10 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/03 / 201 5 . 31/03 / 2015 SD/ - SD/ - (SANJAY GARG) ( R.C. SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER / MUMBAI ; / DATED 31/03 / 201 5 * PATEL /PKM / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / THE DR CONCERNED BENCH , 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI