Gudwala & Sons, Delhi V. ACIT, Central Circle- 4, New Delhi

ITA 1919/DEL/2018

AI Insights

M/s. Gudwala & Sons, a partnership firm engaged in the trading of bullion and jewelry, faced scrutiny from the Income Tax Department following a survey and subsequent search operation at their premises. The search, which was converted from a survey, led to the discovery of unaccounted cash and bullion, prompting the Assessing Officer to make additions to the firm's income for the Assessment Year 2015-16. The firm contested these additions, arguing that the purchases were genuine and the cash was from recorded sales. The Commissioner of Income Tax (Appeals) upheld the Assessing Officer's decision, leading to the firm's appeal to the Income Tax Appellate Tribunal. The Tribunal, after a detailed examination of the evidence and arguments, found in favor of the firm, setting aside the additions made.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121568 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 18-03-2018
• Other Referred Cases: AC IT vs. Hanu man Agarwal, Mother & Platt (India) Ltd. vs. CIT, Kai lashben Manharlal Chokshi vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus
• Section: 131; 69; 133(6); 69A; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.1919/DEL/2018 Assessment Year 2015-16 M/s. Gudwala & Sons 1165, 3 rd Floor Kucha Mahajani Delhi-110006 Vs. Assistant Commissioner of Income Tax, Central Circle-04, New Delhi. TAN/PAN: AAIFG7585N (Appellant) (Respondent) Appellant by: Shri Vishal Kalra, Adv. Respondent by: Shri Anuj Garg, Sr.DR Date of hearing: 12 08 2023 Date of pronouncement: 06 10 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The capt ioned appeal has been fi led b y t he assessee agai nst t he order of t he ld. Commi ssioner of I nco me Tax (Appeal s) - XX II I, New Delhi ( ‘C IT( A) ’ i n s hort ) dat ed 22. 01. 2018 a ri sing f r o m t he assessme nt or der dat ed 30. 12. 2016 passed b y t he As sessi ng Of fi cer ( AO) under Secti on 143( 3) of the Inc o me Tax A ct , 1961 (t he Act ) concer nin g AY 2015-16. 2. The r evi sed gr ounds of appe al ra ised b y t he assessee seeking t o chal lenge t he f ir st appel l ate order rea d as unde r: “ 1 . G r ou n ds of A p pe a l N o . 1 A d di t i o n on a c c ou nt of pu r c ha s e s t r e at e d a s b o gu s fo r R s . 1 1 , 2 1 , 9 20 / - I.T.A. No.1919/Del/2018 2 T he H o n 'b le C I T (A ) ha s e r r e d i n l aw a nd on f a c t s i n c o n f i r m i n g t he a b ov e a dd i t i on . T h e o r d e r p as s e d b y t h e H o n ' bl e C IT( A ) i s a r b i t r ar y , u nl a w fu l , un j u s ti f i e d a nd no t f o un d e d o n fa c t s o f t he c a s e a nd i s p r a y e d t o be d e l e t e d . 2 . G r ou nd s o f A p p e a l N o . 2 A d di t i o n o n a c c o u nt o f u ne x p l a i n e d c a s h a m o un t i n g to R s . 3 , 0 0 , 0 0 , 00 0 /- T he H o n ' b l e C I T (A ) h as s i m pl y c o n c ur r e d w i t h t h e f ind i ng s of t he L d . D C I T i n c o n f ir m i ng t h e a bo v e a dd i t i on w i th o ut an al y z i n g f ul l f a c t s a n d c i r c u m s t a n c e s o f t he c as e . T he c o nf i r m at io n o f t h e a b ov e a d di t i on b y t h e H o n ' bl e C I T (A ) i s a r b i t r a r y , u nl a w fu l , u nj u s t i f i e d a n d i s p r a y e d t o be d e l e t e d . 3 . G r ou nd s o f A p p e a l N o . 3 E n ha n c e m e nt o f i n c o m e b y R s . 3 , 1 3, 4 4 , 0 0 2/ - o n a c c ou nt of u n r e c or d e d s t oc k T he H o n' bl e C I T ( A ) h a s e r r e d in l aw a n d on f ac t s i n e n h an c i n g t he a s s e s s e d in c o m e o f as s e s s e e b y R s . 3 , 13 , 4 4, 0 02 / - u/ s 69 A o n a c c ou n t o f s t o c k ( G ol d & S il v e r b ul l i on ) w hi c h w a s d ul y ac c e p t e d b y t he L d . D C I T a s g e nu i ne s t o c k d ul y r e f l e c t e d i n B o o k s o f t he a s s e s s e e d u l y au d it e d b y t h e C ha r t e r e d A c c o u nt a nt . ” 3. Br iefl y stat ed, t he assessee, a part nership fi r m, i s e ngag ed in the t radi ng o f bul li on and j ew el l er y. T he part nership fi r m co mpri ses of key part ners na me l y, S hri Kai lash Chandr a Varshne y and S hr i Kaus hal Gupt a. A sur ve y acti on in the case of the assessee fi rm w as carri ed out at i ts branch of fi ce l ocat ed at 1167, Fi rst Flo or, New B uil di ng, Kuc ha Ma haj ani, Chandni Chow k, Del hi -11 0006 [hereaft er ref er red as ‘br anc h off ice’] on 20. 09. 2014. Duri n g t he c ourse o f sur ve y, a cas h of Rs. 3 cror e and ce rtai n gol d bul li on ba rs and sil ver bars were inter ali a found. The sur ve y was c onvert ed i nto search proc ed ings unde r Secti on 132 of t he Act w hic h co mme nce d on 20. 09. 2014 a nd con cl uded on 21. 09. 2014. Su bsequent t o searc h, t he assessee fi led it s r et ur n of inco me on 30. 09.2 015 under Section 139( 1) of I.T.A. No.1919/Del/2018 3 the Act decl ari ng t ot al inco me at Rs. 33, 24, 770/ - for t he Assess ment Year 2015-16 i n quest ion. The r et ur n f iled was subj ecte d t o scruti n y and the ass ess ment was fra me d under Secti on 143( 3) of the Act. 3. 1 I n t he co urse of t he assess me nt pr oceedi ngs, t he Ass essi ng Of fi cer inter ali a ma de i nqui ri es t owar ds p urchase t r ansacti ons report ed b y t he as sessee. Noti ces under sect ion 133( 6) and also summons under Sect ion 131 of t he Act wer e i ssued to several par ti es as l ist ed in the assessment or der. The Assessi ng O ffi cer eve nt ual l y obser ved that that one of t he par ti es name l y, S hr i Ar un Yadav has not responded t o noti ce under Sect i on 133( 6) of the Act whic h wa s returned unserved. Li ke wi se, another part y na mel y, Ms. Ni sha Shar ma al s o di d not respond t o t he not ice under Sect ion 133(6) of t he A ct . Dissati sfi ed wi th t he doc u ment ar y evi dences f il ed t o support the purchases ma de f ro m these t wo part ies, t he Assessing Offi cer hel d th at purchases ma de f r o m t hese part i es are not ge nui ne. T he Assessi ng Offi cer thus held t hat t he purchases ma de aggregat i ng t o Rs. 11, 21, 920/ - (Rs. 4, 26, 620/ -+Rs. 6, 95, 300/ -) ar e bogus and conse quentl y di sall owed t he expen dit ur e i ncurre d b y wa y of purc hases f ro m these t wo part ies. 3. 2 The Assessi ng O ffi cer furt her observe d t hat duri ng the cou rse of searc h and seiz ure at t he bra nch offi ce of busi ness pre mi ses of t he assessee- fi r m under Secti on 132 of t he Act, una ccounted c ash a mount i ng t o R s.3 cr ore were f ound a nd sei zed. O n being i nqui red about t he sourc e of cash found i n t he cou rse of searc h, t he assessee pointe d out t hat the af or esaid cash I.T.A. No.1919/Del/2018 4 of Rs. 3 cr ore was accu mul at ed out of cash sales affect ed duri ng the i mme diatel y preceedi ng peri od bet ween 05. 09. 2014 t o 21. 09. 2014 pr i or t o searc h. The cash sale bil l s and cash books were pr od uce d. It was also sub mi t t ed t hat all pur chases wer e ma de t hr ough banki ng cha nnel. The sales were made bot h i n che que as wel l as i n cash. Th e V AT ret ur ns, bank state ment reflect i ng the sale and purc hase wer e pr oduced befor e the AO t o support the asser ti ons. The Assessing O ffi cer how ever did not fi nd the expl anat i on off er ed b y t he assessee to be convi nci ng. The Assessi ng O ffi cer anal yzed mont h- wi se cash sal es and obser ved t hat t he cash sal es show n t o ha ve been ma de a re not con gr uent wi th cash sales report ed for other mont hs and al so does not r esonat e wi t h the cash in hand hel d in previ ous qua rters. I t was obser ve d b y t he Assessing O ffi cer t hat the books of acc ount were not pr oduce d i n t he co urse of search but however i n t he post search i nquir y, t he assessee fil ed books of account be for e t he ADI T (I nv. ) on 27. 10.20 14. The AO mainl y reli ed on t he st at ement of the par t ne r depose d under S. 132( 4) of the Act i n t he course of search on 20- 21/ 09/ 2014 t hat the par t ner of the Assessee has averre d t hat th e books are not kept; bi l ls evi de nci ng pur chases of materi al ar e not readi l y avail abl e; bul li on are purc hased i n ka ccha account i . e. cash; mat eri al found i n t he c ourse of sea rch wor th Rs. 3, 13, 44, 002/ - was purchase d i n cash etc. I n t he l i ght of deposit ion ma de, t he Assessi ng Offi ce r thus i nvoked pr ovisi ons of Secti on 69A r. w. Secti on 11 5BB E of t he Act and hel d t hat cash found and sei zed amount ing t o Rs. 3 crore i s unexpl ained mone y of the assessee and t heref ore, li able t o be ta xe d accor din gl y. T he ret urned I.T.A. No.1919/Del/2018 5 inco me was t hus i ncreased on account of al l eged bogus purchases and una ccount ed cas h. The inco me was t hus assessed at Rs. 3, 44, 46, 700/ - as agai nst t he retur ned inc o me of Rs. 33, 24, 770/ - 4. Aggri eved b y t he addit io ns a nd disall owances, the assessee prefer red appeal bef ore the CIT (A ). The CI T( A), i n t he fir st app eal, per used t he st at ement of par tner Shri K ail as h C handra Varshney recor de d under Sect ion 131 dat ed 20/ 09/ 2014 & anot her st at e ment under s. 132(4 ) of t he Act dt . 21/09/ 2014 at 12. 30 i n the mi dni ght . A refe ren ce t o st at eme nt of another par tner Shri K aushal Gupta obt ai ned i n t he cour se of sear ch under s. 1 32( 4) on 21. 09. 2014 at 4. 30 a m mor ni ng whi ch end orsed t he cont ent s of st at ement of Sh. Kail ash. 4. 1 I t was poi nt ed out bef ore t he CIT (A) t hat th e assessee fi r m has bra nch off ice of business pr e mi ses at 1167 Kuc ha Mahaj ani, Chandi C how k, Delhi where the sur ve y and search t ook pl ace. Howe ver, the assessee has a not her busi ness pr e mi ses at 1165 Kucha Mahajani, Chandni Chowk, Del hi w hich i s t he mai n est abl i sh ment of the pa rt ner ship fi r m as per par t ner shi p deed dat ed 9/ 4/ 2009 as wel l as PAN r ecor ds. The R OI al so has been fi led as per mai n offi ce ad dr ess. The mai n offi ce or est abl i sh ment was however not cover ed under sur ve y and sear ch ope rat io ns b y t he reve nue aut ho rit i es. It was also brought to t he not ice of the CIT (A) t hat t he PA N addr ess of t he assessee is al so that of 1 165 Kuc ha Mahaj ani , Cha ndni C howk, Del hi a nd the retur ns of i nco me ar e also fi l ed f r o m t he af ores ai d address and t he pr e mi ses at 1167 Kuc ha Mahaja ni , Chandni Chowk, I.T.A. No.1919/Del/2018 6 Del hi is onl y a bra nch offi ce wher e del iver y o f sales and purchases are mai nl y execut ed. 4. 2 The assessee assert ed bef ore the CIT( A) t hat t he sear ch was unaut hori zed and wi thout searc h war rant a nd unauthor izedl y con vert ed/c o mme nce d at mi d ni ght at about 11. 45 p m and pan chna ma was dr awn at 5. 30 a m i n t he mo r ni ng of 21/ 09/ 2014. The books of ac count of t he assessee we re clai med to be dul y ma i nt ai ne d since i ncept i on of t he fi r m i n F Y 2009- 10 and such books are kept at 1165 Kucha Maha jani , Chandni Chowk, Delhi [ mai n offi ce ] and such books wer e dul y pr oduce d before the ADI T soon aft er t he search on 27/ 10/ 2014. Another co mmuni cati on let ter dat ed 9/ 3/ 2015 was f urni s hed to concer ned ADI T(I nv. ) t o asser t t hat cash and bul li on f ound i n the cour se of search wer e dul y r ecor de d in t he books of acco unt mai ntained b y the assessee. 4. 3 The assessee also poi nt ed out that t he st at ement of par tners in t he course of s ear ch under Sect i on 132( 4) w er e recor ded at odd hours i n t he mi d-ni ght a nd the part ner s of the fi r m dep osed under fear an d str ess of t he sear ch t eam. The cop y of st ate ment so recor ded was al so not provi ded despit e s peci fi c request vide let ter dated 22/ 09/ 2014 i mmedi a tel y aft er t he s earch and mul ti pl e t i mes the reaft er . 4. 5 As per t he fir st appell at e or der, it was al so poi nted out t o CIT( A) vi de l et ter dat ed 5/ 11/2 0214, t he I nvest igati ng team was app rai sed t hat the state me nt of part ners were give n unde r fear and e xhausti on and wer e not volu nta r y. I.T.A. No.1919/Del/2018 7 4. 6 The l egal it y of t he search was al so quest i oned be for e the CIT( A) . 4. 7 Wi de ran ging su bmi ssi ons ma de on beh al f of t he ass essee on law and f acts as recor de d b y t he CI T( A) i n paragraphs no. 3. 3 to 3. 6 of t he f ir st app el late order. 4. 8 The CI T(A ) how ever di d not see an y pot enc y i n the ar gu ments advanc ed on be hal f of t he assessee. 4. 9 As rega rds t he addit io n of Rs. 11, 21, 920/ - t owards bogus purchases c ont est ed on mer it s, t he CIT( A) not e d t he obser vati on of AO that t he not ice to all eged suppli er Shr i Ar un Y adav coul d not be ser ved w hereas not ice t o other suppl i er Ms. Ni sha Shar ma was ser ve d but no conf ir mat ion was r ecei ved fr o m t he par t y. The CI T( A) ref er red t o t he defect s p oi nt ed out b y Assessi ng Of ficer such as no I D pro of of t he suppl ier par ti es al ong wi th conf ir mat i on fi le d, confi r mati on undat ed, mode of pa yment not speci fi ed, part i es not f ound at the addre ss et c. and con cl uded t hat t he assessee has f ai le d to di schar ge t he onus cast upon i t b y l aw to affi r m t he ge nui neness of t he purchases. 4. 10 The CI T( A) accor dingl y endorsed t he act i on of the Assessi ng Offi cer and decl i ned an y r el i ef on t he point . 4. 11 As regar ds a ddit i ons of Rs. 3 cror e t owards cash f ound i n the cour se of sear ch pr ocee din gs, t he CI T( A) als o decli ne d t o bel i eve t he expl anat ion of t he assessee t owa rds t he source of cash de posi ts ema nat es out of cash sal es of bull io n. The CI T(A) pl aced hea v y reli ance on the st at ement of t he pa rt ner s in the cou rse of search and opined t hat such st ate ment recorded I.T.A. No.1919/Del/2018 8 adv erse to t he as sessee are testi mon y to l ac k of e xpl anati on towar d s our ce of cash a nd suc h st at ement ar e enti tled t o a great wei ght. It was essent i al l y note d that nei ther t he books wer e found nor cash sale bil ls were found i n the cour se of search. The Part ners ha d also admi t ted t o t he non-e xi st ence of books and expla nat io n t owar ds cash sales i s merel y an af ter t hought t o just i f y t he unaccount ed cash. The C IT( A) t hus i nvoke d doct ri ne of pre ponder ance of pr obabi l it ies of nor mal hu ma n behavi or and di sr egar de d the cont ent i ons rai sed on behal f of t he assessee. The CIT( A) t hus endorsed t he act i on of t he Assessi ng Offi cer and refused t o gra nt an y rel i ef t o the assessee. 4. 12 The CI T( A) al so i ssued show ca use not ice i n t erms of Secti on 2 51(2) of the Act t o enha nce t he assessed inco me on account of bul li on f ound a nd i nve ntor ised at t he time of sear ch amount ing t o Rs. 3, 13, 44, 002/- i n aggr egate. For t his p urposes, the CIT(A) yet again reli ed upon t he stat eme nt of the par tner recor ded at the ti me of search. T he CIT( A) o bserve d that ; the stock f o und i n t he cour se of search were unaccounted and wer e offshoot of unac counte d cash pur chases as de posed by t he par tner of t he assessee; that the r el iance pl aced by t he assessee on the books of account and t he st ock r egi ster does not have muc h credence a nd a n aft er thou ght. The CIT( A) negated the pl ea of t he assessee that t he Assessing Of fi cer has exa mi ned t he sourc e of st oc k as wel l i n t he course of t he assessment pr ocee din gs. The CIT( A) i nt er al ia observe d t hat no bi l ls evi de nci ng t he pur chase of mat eri al / stock was produc ed befor e the search part y and concl uded t hat t he assessee has fai led t o di schar ge t he onus t o support t he genui neness of source of I.T.A. No.1919/Del/2018 9 purchase of st ock f ound. The CI T( A) t hus i nvoked t he pr ovi sio ns of S ecti on 69A and e nhanced t he inco me towards t he val ue of bull i on stock b y Rs.3,13,44 ,002/- . 5. I n s u mma t ion, t he CIT( A) en dorsed the a ddi ti ons ma de on account of all eged b ogus pur chases as wel l as all eged una ccounted cash and al so enha nced t he assessed i nco me towar ds al leged unaccount ed st oc k found i n the course of search. 6. Aggri eved b y t he deni al of reli ef a nd f ur t her e nhance men t of assessed i ncome, the assessee pr ef err ed ap peal before the Tri bunal. 7. When t he matt er was cal l ed for hearing, the l d. counsel assai l ed the act i on of t he CI T( A) bot h t owar ds sustaining the addit ion as wel l as towar ds enha nce me nt on mult i ple poi nts, na mel y placi ng undue r el iance on t he cr ypt i c state ment of t he par tners obt ai ned un der dur ess and misi nter pr et at ion of such state ment; all egat ions not c orr obor at ed; seri ous fact ual er r ors co mmi tt ed whil e dra wi ng ad verse conclusi on; assessmen t and the f ir st appell at e order based on pure guess wo rk wi thout refer ence t o an y cr edi bl e materi al ; crucial materi al over look ed et c. The Ld. Cou nsel cont en ded t hat t he act ion of the Re venue Aut hor it ies is squarel y o pposed t o t he pr ovi sions of the Act as understoo d b y t he judicial for u m; t he i nfer enc e draw n are mer e ipsi dixit and not obj ecti vel y just i fiabl e. The l d. cou nsel fur ther al leged t hat bot h t he Aut hor it ies have overl ooke d the vit al evi de nces s uch as cash book, stock regist er , purchas e and sal e bi ll s, t ransact i ons recorde d i n t he bank st at e ment , audi t r eport I.T.A. No.1919/Del/2018 10 and so on. Th e ld. Counsel c ont end ed t hat ma kin g addit i ons a nd di sall owances sol el y on t he basis of retr acted stateme nt of par tners recor de d at ver y od d h ours in t he drasti c pr oceedi ngs of search and t reati ng such st ate ments as gospel tr uth di sr egar di ng the tell -t al e evi de nces i s i ntr insi cal ly oppose d t o t he posi ti on of law e nunciate d i n long l i ne of j udi ci al prece dents as pl aced i n the paper book. It was poi nt ed out that all evi dences, bot h direct and cir cu mst anti al , have been pur posel y br ushed aside a nd t he addit ions and di sal lowa nces have been c arr ied out on t he basis of unw ort h y oral st at ement of par t ners whi ch were resil ed a nd retract ed i mmedi at el y aft er sear ch cit ing coerci on and fear . N o exa mi nat i on of the part ner s were carr ie d out b y t he Investi gat i on wi ng or b y t he A O after s uch ret r action of state ment de posed i n the course of s earch. 7. 1 The l d. counsel next sub mi tt ed t ha t t he bogus pur chases al leged o n account of suppl iers na mel y, S hri Ar un Yadav towar ds pur chase wort h Rs. 4, 26, 620/ - and f r o m s upplier Ms. Ni sha S har ma at Rs.6, 95,300/- have bee n l eveled as bogus and non genui ne me r el y on the gr ound that noti ce under Secti on 133( 6) coul d not be serve d on one part y and not r esponded b y the other par t y. The l d. counsel submi tt ed i n t hi s regar d t hat the Assessi ng Of ficer has t ot al l y ove rl ooked t he fact that con fir mat i ons of bot h the part i es were place d on recor d i n t he cou rse of heari ng bef or e t he Assessi ng Off icer. The ld. counsel al so sub mi t te d t hat t he A O has f u rther overl ooked the dir ect evi de nces of pur chases suc h as pu rchase bil ls as wel l as the pa yment thr ough banking channel agai nst suc h purchases mont hs bef or e t he search was conduct ed. The s ur r oundi ng I.T.A. No.1919/Del/2018 11 evi de nces o f conduct of assessee such as, not i ces issued t o about 122 par ti es seeking con fir mat i ons a nd all ot her parti es appear ed and c onfi r med t he tra nsact ion. S uch near t otal c o mpl i ance speaks l oud on t he bona fi des of purchases. In suc h bac kdr op, non a ppeara nce by j ust 2 part i es t hus c annot l ead to a dverse con cl usion wher e t he assessee has no contr o l over the whereabouts of t he suppli er s. When seen i n t he context, the pa yment s t hr ough cheque and re port i ng t he purchases i n the stock re gist er over whel ms such c onsi derati ons. The ld. cou nsel poi nte d out t hat bot h t he concur rent aut hori t ies have pr ocee ded i n ot her perf un ct or y ma nner i gnori ng t el l-tell evi de nces and t he pa ymen ts. It was conte nded that the pl ea of the assessee that no excess st ock was f ound was decl ar ed ir rel evant wi th out me et i ng t he plea on mer it s. The l d. counsel thus urged t hat t he di sal lowa nce t owa rds bogus pur chases so ma de i s whol l y unsust aina bl e i n the facts of t he case and t hus requir es to be reversed. 6. 2 Advert ing t o t he addit i ons of Rs. 3 cro re on account of al leged une xplain ed cash f o und i n the co urse of sear ch, t he ld. cou nsel poi nt ed out t hat t he a ddit i ons ha ve been mad e solel y on the basis o f t he st at ement of t he part ner taken on odd hours whic h cannot be consi der ed as vol unt ar y st at ement . The assessee made al l ef fort s to seek t he cop y of stat eme nt a nd audit ed i mmedi at el y aft er t he c onclusi on of t he sear ch a nd repeate d t hi s re quest b y several l ett ers however t he r equest was not accede d. The state ment was al so ret racted howe ver real i zi ng const antl y f acing the i nfri nge ment of nat ural j ustice. The par tner of t he assessee is educat ed onl y upt o 4 t h cl ass and h ad I.T.A. No.1919/Del/2018 12 ver y li mi t ed i de a about account i ng a nd i nco me t ax. T he state ment was gi ven unknowi ngl y as per hi s l i mi t ed acu men. The pur chases made wer e dul y reco rded i n t he books of account whil e sal es made t o banki ng channel as well as i n cash wer e also dul y rec or de d in t he books of a ccount s mai ntai ned and kept at the i mpugned off ice at 1165 Kuc ha Mahaj ani w hich was t he add ress for the i nco me t ax purposes . The Revenue cannot f ast en the onus on t he assessee for not cover i ng the mai n off ice pre mi ses and for search pur poses and rest ri ct i ng i ts act i on onl y to br anc h offi ce. The l d. cou nsel sub mit t ed t hat t he cash book cl earl y di scl osed the source of cash a nd t he sal es s o made ar e inconf or mi t y wi t h t he stock regi st er t he purchases fou nd thr ough ban ki ng channel and t he st ock was req uir ed t o have been sol d out in par t in cash. The stoc k t hus stands t al l ied onl y w hen the cash sales are exc luded fr o m t he stock. Parado xicall y, whil e th e CIT( A) has decl ined t o appreciat e t he vit al evi dences, has al so enh anced t he assessed i nco me b y u naccounte d st ock if the cash sal es are reject ed t hen t he st ock posi ti on woul d go up t o the same e xtent . The CIT( A) on t he one hand r eject ed the cash a nd on the other hand al so seeks t o inclu de stock f ound i n the cour se of searc h as unac cou nte d st ock. The st and taken b y t he CI T(A ) is t hus apparent l y contr ar y and ref l ect s total non appli cat ion of mi nd. The ld. counsel i nsist ed t hat t he st at e ment recor ded under Secti on 132(4) i s not an i ncri mi nat ing mat erial per se and cannot be used as evi dence wi t hout confr ont ing t he sa me to the assessee. It was insi sted t hat bul l ion st oc k f oun d at t he ti me of search w as out of purchases dul y recor ded in t he books of account. The dat e-wi se st ock regi ster place d i n t he paper book, I.T.A. No.1919/Del/2018 13 ban k acc ount state me nt, compl et e detail s of purc hases and purchase i nvoi ce, cop y of cash book, cop y of VAT ret ur ns, cash sal e bil ls and vouchers as sub mi tt ed bef ore the Revenue Aut hor it ies as wel l as bef ore the Tri bunal dul y j ust ifi es and cor r obor at es t he st and of the assessee. I t was poi nte d out t hat the books of acc ount i ncl udi ng bank b ook, cash boo k and stock regist er were dul y a udi te d b y an i nde pen dent audi tor and t he stock t al l y was f ound mat ched. The bul li on stock as found and invent ori ed on the dat e o f sear ch w ere req uir ed prior t o purchase and t he pa ymen ts were also ma de t hr oug h banki ng cha nnel pri or to search. The o riginal purc hase bi l ls for the relevant pe ri od wer e al so pr oduced bef ore the Revenue Aut hor it ies. The book of account dul y audit ed b y the indepe ndent au dit or has not bee n reject ed b y t he l ower aut hor it ies. The st ock f ound at t he t i me of search an d cash sal es thus cannot be di sregar de d on t he f ace of such exter nal evi de nces s uch as VAT r et ur ns pa yment thr ough banking cha nnel, st oc k t al l y, etc. The case f ound was t hus out of cas h i n han d avai lable on the date of sear ch as recor ded in the cash book. The l d. counsel cont ended that t he Reve nue Aut hori ti es hav e sou ght to t ax bot h t he cas h sales as wel l as cash generat ed fro m sales as unexpl ai ned cash w hich is not hi ng but doubl e taxati on. It was al so poi nte d out t hat cash sal es made in t he prece ding assessme nt ye ars ha ve not been quest ioned even the cash sal es ma de bet ween 01. 04. 2014 t o 04. 09. 2014 aggr egati ng to Rs. 88, 39, 415/- and for the period su bseque nt t o s earch, i. e. , fro m 20. 02. 2014 to 31. 03. 2015 a mounti ng t o Rs. 3, 09,46, 197/ - has been dul y ac cepted. The l d. counsel v ehe mentl y asserted I.T.A. No.1919/Del/2018 14 that where the pur chases ar e t hro ugh ba nki ng channel and dul y accept ed then t he stock f ound at t he t i me of search cannot b y an y me ans be r e gar ded as unaccount ed as no exce ssi ve stock was found at the t i me o f search. The l d. counsel t hus sub mit ted in concl usion t hat the act i on of t he Assessi ng Officer and CIT( A) are marr ed b y gr oss non appl icat ion of mi n d a nd mi sconst ructi on of f actual mat r ix. The CI T(A) whi l e maki ng the enh ance me nt has taken self cont radictor y posi ti on and r ej ected the fact u m of cash sales and furt her treat ed the stoc k found as una ccounted whi ch i s appar ent l y a self contr adi ct ory posi ti on. The l d. counsel thus sub mi tt ed that the assessee has d ischarged onus w hi ch la y up on i t to explain th e avail abi l it y of c ash f ound at t he ti me of sear ch as wel l as t he bul li on st oc k so f ound. The purchases are als o support ed b y i nvoi ces, V AT ret u rn and t he pa yment t hr ough banki ng c hannel . The ld. counsel thus urged that the addi ti ons/ enha nce me nt on vari ous counts may be reverse d and quashed. 7. Per cont ra, t he l d. Sr. DR for the Reve nue support ed the acti on of the Assessi ng Off icer and CI T( A). T he ld. Sr .DR poi nted out t hat bot h t he a uth ori ti es have r et urne d t he f indi ngs in det ai l towa rds t he cir cu mst a nces exi sti ng i n t he pr esent case whic h ma ke t he clai m of t he assessee whol l y i mpr obabl e a nd unbeli evabl e. 7. 1 As r egar ds bo gus pur chases, t he l d. DR poi nt ed out t hat the onus was upon t he assessee to prod uce t he s upplier t o support the bona f ides whi ch has not been do ne. 7. 2 As r egar ds unacc ount ed cash f ound i n t he course o f sear ch, I.T.A. No.1919/Del/2018 15 the l d. DR poi nt ed out that no sale bi ll s we re f ound at t he pre mi ses of t he a ssessee. Li kewi se, no bo oks of account wer e found at t he premi ses cover ed under searc h. The Revenue Aut hor it ies have de monst rat ed that cash b ook i s unrel i abl e and the cash sales de cl ared does not e voke an y c onfi dence on the gen ui neness of the t ransacti on and is an af tert hought . The l d. DR al so suppor te d t he e nha nce men t act i on ha vin g re gar d t o t he fail ure of t he assessee t o di schar ge onus t o su pport t he bona fi des of t he st ock found. The l d. DR t hus sub mit t ed t hat no infer ence wi t h t he or der of t he C IT( A) is call ed f or in t he ci rcu mstances nar rat ed i n t he fi rst appell at e or der. 8. We have car eful l y consi dered t he ri val s ub mi ssions and per used t he fi rst a ppel l at e or der as well as the assessme nt or der. The mat eri al s pl a ced b y wa y o f volu minous paper book ref err ed to and reli ed upo n have been peruse d. 9. Thr ee i ssues ar e ident i fi ed for adj udi cati on i n t he pr esent case. Al l t he i ssues are essent i al l y f actual i n nature . We shal l del ve i nt o mer it s of each i ssue her eunder. 9. 1 The fi rst i ssue concerns addi t ions of Rs. 11, 21,920/ - on account of al l ege d bo gus purchases ident if ia ble t o two par ti es na mel y, Ar un Yadav at Rs. 4, 26, 620/ - and Ms. Nis ha Shar ma at Rs.6,95,3 00/- . As noted above, t he assessee cont ends that the al legati on towar ds bog us pur chases i s whol l y mi s conceive d i n law. To pr o p up i ts case, the assessee contends t hat the Assessi ng Offi cer has ignore d the overw hel mi ng factual evi de nces. T he c onfi r mati ons of bot h t he part ies are place d on recor d. The pur chases made fr o m t hese part ies have ent ered i n I.T.A. No.1919/Del/2018 16 the st ock r egi ster and t he c orrespondi ng sales have not been di sputed b y t he Revenue Aut hori ti es. The pa yment s for such purchases have been carri ed out t hr ou gh banki ng c han nel . A refer ence was made to t he j udg me nt of H on’ble Pa tna Hi gh Court in t he case of AC IT vs. Hanu man A garwal, (1985 ) 151 IT R 150 (P at ) and M ather & Pl att (I ndia) Lt d. vs. CI T (19 87) 168 ITR 493 (Pat ) t o sub mi t that purc hases coul d not be d isbeli eved in such circ u mst ances. It is also t he cont e nti on of t he assessee that bot h t he part ies fro m w hom t he assessee has made purchases a re exi st i ng par ti es and such par ti es have indepe ndentl y fi l ed t hei r c onfi r mati on wi th r egar d t o t he suppl ies made b y such par ti es t o the assessee and mer e non at tenda nce per se af ter a l apse of ti me coul d not be vie wed adv ersel y. 9. 1. 1 Havi ng regar d t o t he nat ure of busi ness, i. e. tr ade i n bul li on, wher e st ocks are ide nt ifi able a nd t he pri ce i s also gover ned b y mar k et f orces wi t h li tt l e scope f or mani pul at ions; the purc hases dul y account ed f or; t he t ransact i on of onl y 2 par ti es doubt ed de spit e ext ensi ve e nqui r y on 122 part i es et c. we fi nd pot enc y in t he pl ea of bonafi des. Ther e ca n be vari et y of reasons for non-a t tendence b y unre l at ed t hir d part ies and it is not al wa ys wi thi n t he do mai n of assessee to enf or ce att endence of t hi r d p art i es. Not hi ng a dverse nee d t o be i mput ed i n such ci rcu mstances, mor e s o, w her e t he pa yment s ha ve been made through banki ng channel . 9. 1. 2 In the l ight of the fact ual cont ext an d bal ance of pr oba bi li ti es, we see a great er degree of plausibi lit y i n t he I.T.A. No.1919/Del/2018 17 ver sion of t he ass essee. The i ssue i s thus adj udi cate d i n favour of the assessee. Hence, t he acti on of the CI T( A) is set aside and the addit ions / disall owances ma de on t hi s count are cancell ed. 9. 2 The second issue concer ns addit ions of Rs. 3 cr or e as une xplained mone y under Secti on 69A o f the Act. 9. 2. 1 The pr opr iet y of source of cash f ound at t he branch offi ce ( 1167 K uc ha Mahaj ani . Chandani C howk, Delhi -6) in t he cou rse of sur ve y ( and l at er con vert ed t o searc h) is i n questi on. It i s t he case of reve nue t hat the assessee could not coge ntl y explai n the sour ce of cash so found in the course of sear ch. N o books of acc ount , cash sal e bi ll s et c. were f ound in the cour se of search to suppor t t he source. The i nt egri t y of purchase and sal e qua nti t y data as ext ract ed i n the st ock regist er i s unknow n. The par tner of t he assessee on t he othe r hand, has rat her conf essed that t he source i s una ccount ed. Per cont r a, t he assessee sub mi ts that the AO ma de poi nt ed enqui ri es qua nt it y wise and val ue wi se cash sales for t wo ye ars and obt ai ned det ail s of cash i n han d f or ever y qu art er . Qua nt it y wi se and val ue wise det ai l s of cl osing stock wer e al so obt aine d by t he AO. The balance sheet and pr ofi t a nd l os s account f or pr e- sear ch an d p ost search peri od were al so fl e d bef ore t he A O in the course of assess ment pr ocee din gs. It is the case of the as sessee t hat bot h the reven ue aut hor it ies have pr oceeded square l y on sus pi ci on, conj ect ur e and sur mi ses on the basis of co mpar at ive r es ul ts of di fferent qua rters coupl ed wi t h a sel f incri mi nat ing st at e me nt of assessee ext ract ed in t he cour se of searc h w hich w as pr o mpt ly r et racted on t he gr o unds of dur ess and c oer ci on bef ore the investi gati on I.T.A. No.1919/Del/2018 18 team i tsel f. T he assessee t hus cont ends t hat whe n the st at e ment of part ner s looses it s cr edi bi li t y in the e yes of law, what remai ns i s a bal d and bare i nf ere nc e i n t he real m of conj ect ures wi t hout an y d efi ni ti ve mat er ial i n possessi on t o disprove the stance of the assessee. 9. 2. 2 On a pprai sal of mat eri al pl ac ed on recor d and l ong draw n def ense propagate d on behal f of t he assessee, ke y point s t hat emerges are br oa dl y s u mmari zed as; (a) t he assessee oper at es through t he mai n busi ness pre mises si t uat ed at 11 65, 3 r d fl oor, Kuchha Mahaja ni , Chand ni C how k Del hi an d als o havi ng a subser vient bra nch of f ice no. 1 167 si t uat ed i n t he same bui l di ng (b) t he sur ve y whi ch was eventual l y c onverted i nt o sear ch was carri ed out at the branch off ice of t he assessee at 1167, 1 s t fl oor, Kucha Ma haja ni, Delhi - 6 on 21/ 09/ 2014. The mai n offi ce no. 1165 was not neit her covered under sur ve y nor under search (c) books of acc ount , bil l s, vouc her s et c. are cl ai med t o be ma i nt ai ne d b y the assessee at the mai n busi ness premi ses no. 1165 and thus not found in t he br anc h of fi ce co ver ed b y t he search act io n ( d) the addr ess of t he mai n o ffi ce no. 1165 was wel l wi t hi n t he knowledge of t he Reve nue obt ai ni ng fr o m t he fact t hat the PA N addr ess i s t hat of mai n offi ce a nd t he ROI fi led i s al so t agged t o mai n offi ce addr ess (e) t he st at ement of the part ners have no rati onal pr obat ive val ue in as mu ch as such state ments were demo nstra bl y recor ded i n t he odd h ours i n mi d ni ght and wee hours wh ere t he assessee was kept under seri ous pressure, fear a nd exhausti on; ref ere nce made to t he j udg me nt i n the case of Kai l ashben M anharl al Choks hi vs. CIT 328 ITR 411(G uj ) (f) t he st at ement was t hus ostensibl y i nvol untar y i s not I.T.A. No.1919/Del/2018 19 capable of deter mi ni ng the c ul pabi l it y (g) the st ate ment given on 2 1- 09-20 14 w as ret ract ed s oon vide l et t er dat e d 5/ 11/ 2014 bef ore AD IT( I nv. ) i n the post i nvest i gat i on pr ocee din gs t hus unw ort h y of a n y evi denci ar y value( h) the l i tt le gap in retr acti on is owi ng non avai l abi l it y of cop y o f state ment despi te repeat ed request s t o de ptt . begi nning wi t h 22/ 09/ 2014 ( i) no cr oss of t he par tners wer e r ec orde d ei ther b y the invest igat ion t ea m or b y t he AO p ost ret ract i on and t hus such bel eaguered stat ement i s of no conse quence ( j) w hen seen de horse such fal l ibl e stat eme nt s, t he revenue i s not l ef t wi t h an y c oncr et e adverse mat erial except resorti ng t o sur m ises and conj ect ures ( k) t he i nf or ma ti on not yi el ded o n the e xist ence of main offi ce b y part ners, ma y, at worst be re gar ded as so mewhat i mmor al but la w i s different fro m moral i t y a nd out weighs suc h consi der at ions; the assessee is not expect ed t o advert t he f acts whi ch were ot her wi se conspicuousl y pr esent on t he recor d of t he dept t. (l ) the assessee can not be fault ed f or the re missness and abj ect fai l ure of t he deptt . t o c over t he mai n of fi ce t o g ai n acc ess t o the bank recor ds, bo oks & r ecor ds and t o ascert ain the ga mut of tr ansact ions ther efro m ( m ) as per the books of accou nts regularl y mai nt ai ned b y t he assessee, there was a total cash bal ance of Rs. 3, 74, 51, 297/ - as on 20.0 9.2014 i. e. , on the dat e of search, i n res pect of cas h sales affe ct ed b y th e assessee and this cash i n hand expl ains the so urce o f t he cash found in t he course of sear ch ( n) t he st at ement of par tners was neve r seen to be cl inchi ng evide nce b y t he AO as t he A O hi msel f re qui si t ioned the quanti t at ive t al l y a nd detail s of pur chases and sales etc. toget her wi th books of account s vi de noti ces under s. 142( 1) and I.T.A. No.1919/Del/2018 20 based it s adverse f i ndi ngs. 9. 2. 3 We obse rve t hat the mai n pl ank of assessee is that the cash f o und at t he branch offi ce under search was sou rced o ut of cash sal es. The cash sal es has t he eff ect on t he reduct i on of stock in hand and thus t he expl anati on off er ed cannot be regar ded as lacki ng i n bonafi des i n an y re motest manner . The Assessee clai ms that the cash book a nd t he st ock r egi ster ma i nt ai ne d b y t he assessee affi r m it s cont ent io ns. Signi fi cant l y, as per books, whi le a part of t otal sal es have bee n ma de i n cash gi vi ng rise to cash bal ance of Rs.3 .74 cr or e, t he cor respondi ng purchases have b een sho wn t o be ma de t hrough acc ount pa ye e che ques. Thus, t he source of cash i n hand at t he time of sear ch stands bol stered b y t he re duct i on of t he cor respondi ng stock fro m s uch pur cha ses made t hr ough accou nt pa yee cheques. I n the eve nt, where t he st ock so purch ased a nd c orr es pondi ng sal es were dul y recor ded in the st ock book and st oc k stand tall ied wi t hout a n y per cepti bl e discre panc y i n stock qua cash sal es ma de, t he source of cas h f ound is t o be regar de d as s uffi cientl y explai ne d a nd hence cannot t reat ed as unexplaine d mone y under S. 69A of t he Act . 9. 2. 4 At t his j unct ure , we si mul tane ousl y obser ve t ha t the assessee has co mpletel y di sassoci at ed it sel f wit h the concedi ng state ment recor de d at the t i me sear ch, clai mi ng it as vul nera bl e and unr el iabl e on the st rengt h of gr ounds of duress, coercion, fragi li t y a nd e xhausti on. Si gni ficantl y, t he Assessee has not bee n call ed i n cr oss exa mi nat i on b y t he i nvest i gat ion t ea m or b y the AO to di scr edi t such ret ra ct ion. Whe n the stat ement, as I.T.A. No.1919/Del/2018 21 ext ract ed in the assessment or der, i s per used i n a st andalo ne basi s, we are cons trai nt to obser ve t hat the st at e ment have be en ostensibl y r ec or ded i n a lacka daisi cal ma nner. So me rhet ori c que ries appear t o have be en put wi th an unst at ed object t o obt ai n a de cl ar at ion. Further more, it was not di fficul t for t he invest igat ing t ea m t o check the r ecord of al l addr esses avai labl e and ma ke e nqui ri es in t his regar d. It does not st and t o reas on that t he i nvesti gat i on t ea m i n a search act ion of col os sal natur e wo uld r eadi l y a gree t o a co mpl et e no n exi stence of books wi t hout e xerti ng hi msel f on t he fact u m of t ur nove r re port ed over yea rs, audi ti ng of books i n t he precedi ng ye ars. A bare gl ance at the st at e ment gi ves an i mpr ession t hat t he searc h tea m has cl osed t he st at ement aft er ext ract ing confessi on of decl ar at ion i n gr oss breach of CBDT I nst ruct i on F. No.2 86/2/ 2003-I T (In) dat ed 10. 03. 2003 whi ch bars a ddi ti on on t he basi s of co nfessi on. I t ma nif est t hat so me gene ri c and half baked questi ons were put t o the de pone nt whi ch render s such st at ement hi ghl y f ragi l e not wi thst andin g t he all egat ion of duress etc. The state ment of ot her par t ner Mr. Kaus hal Gupt a, o btained i n si mi lar ci rcu mstances, i s mer el y i n t he nat ure of e ndorse men t of t he earl ier st at ement of ke y part ner Kai l ash Cha nd Varshne y wi t hout t races of i nde pen dent i nqui r i es. The underlyi n g pur pose i mpli cit l y was t o obt ai n the declarat i on in t he garb of st at ement . 9. 2. 5 Coupl ed wi t h thi s , it i s also t he cas e of t he assessee that mer el y because the deptt . fai l ed t o la y i ts hands on books whic h were kept i n t he mai n of fice, the init ial onus could not be wr ongl y s hif ted on t he assessee. To esca pe t he w r ath of t he deptt . , the part ner of t he assessee-fi r m deposed i n t he co urse of I.T.A. No.1919/Del/2018 22 search under f ear and duress that he does not mai ntain books of account c ont rar y t o fact ual posi ti on. The i nco me off er ed i n t he earl ier ye ar s based on t ax audi t rep ort et c. i s t esta me nt to such fact s of exi st ence of bo oks of part nership fi r m. Per ti nent l y, th e a pa rt ners hi p fi r m i s essent iall y based on pri nci ples of mut ual age nc y and account i ng recor ds are i ntr insi c t o t he edi fi ce of such f or mal mut ual arr ange ment. The t ot al absence of bo oks a nd recor ds at t he br anch off ice ought t o have t rig gered e le mentar y quest i ons of i t s whereabout s i n the mi nd of in vest igat i on tea m. The revenue al on e i s possi bl y res ponsi bl e f or i nsurmo unta bl e lapse on the part of t ea m. I t is the pri mar y c ontent ion of t he assessee fi r m t hat i t dul y ma i nt ai ns it s books of acc ount si nce incepti on, t o account f or ba nki n g and cash tr ansactions as wel l as to ascer tai n i ts assets and l ia bil i ties and deduce the pr ofi ts of the part ne rshi p. Thi s apa rt, assessment ha ve al so been f ra med af ter exa mi nati on of books of account et c. Besi des, i n t he post search proceedi ngs, the books of account were dul y pr oduce d eve n bef ore t he I nvest igat ion Wing f or t heir enqui ri es and exa mi nat i ons. T he books of account were st at ed t o be kept i n the ma i n of fi ce i n it s or dinar y cou rse whi ch pr e mi se was o mi t ted t o be cover ed i n search wi t hout any di scer ni bl e reasons. The audit ed books of acco unt were thus present ed and n o di scerni bl e inade quac y or de fect has been poi nt ed out i n such books of account ei ther b y t he t ax audi t or or b y t he Assessing O ffi cer whil e fra mi ng t he assessment . T he Assessi ng Off icer has also ado pte d t he i nc ome ret ur ned b y t he assessee based on such books of a ccount whi le maki ng separate addi t i ons under chal lenge. T he assessee al so conte nds that the stateme nt of t he I.T.A. No.1919/Del/2018 23 par tner na mel y, Shr i Kai lash Chandr a Va rshne y is the ove rri di ng basis of the Reven ue to cl ai m t hat t he asse ssee i s not ma i nt ai ni ng books of account fail i ng t o ap preci at e t hat afor esai d state ment of the part ner was give n u nder fe ar an d dur ess and repeate d retr acti on w er e made soon aft er, on 05. 11.2014, 09. 03. 2015 and 17. 10. 2016 w her ei n i t was disow ned on the gr ounds of fact ual i naccur acies and wron g assert i ons. The books of acc ount s o pr oduced i n t he cour se of t he assessment refl ects gen erati on of cas h f r o m s al e of st ock acqui red fr om purchases carri ed out thr ough banki ng c hann el . To aug me nt i ts case, the assessee also cont ends t hat total sales made b y t he assessee i n the inst ant assessment ye ar was Rs. 792. 10 cr ore out of whi ch total cash sal es stands onl y at Rs. 7. 61 crore. The l d. counsel conte nds t hat a dver se i nference dra wn b y t he Assessi ng Offi ce r that cash sal es pri or to S ept e mber, 2014 w as merel y Rs.88,3 9, 145/ - whereas i n th e mont h of Se pt e mber, 2014 tot al cash sal es recor ded was Rs. 3, 64, 39, 043/ - a nd t hus such cas h sal es appears t o be n on genuine is whol l y mi sconceived a nd contr ar y t o t he f acts. The total sale ma de b y t he assessee fr o m 1 s t Apri l , 2014 to 4 t h Sept e mber, 2014 i s Rs.362. 16 cr ore w hich incl udes Rs.88. 39 l akh cas h sal es. The assumpt i on of th e Assessi ng Of ficer t hat pri or t o 4 t h Sept e mber, 2014 there was total sal e of Rs. 88. 39 lakh is t hus cont r ar y to t he recor d. The VA T ret ur n f il ed b y t he assessee t owar ds refl ecti ng s ales made al so suppor ts t he case of t he asse ssee. The VA T Authori ti es hav e d ul y ad mit t ed the f i gur es of pur chases and sales car ri ed out . 9. 2. 6 Whe n t he f acts deli neat ed above are seen i n per spe ct i ve, I.T.A. No.1919/Del/2018 24 the adver se i nfe r ence drawn towar ds unacc ount ed c ash at the ti me of sear ch re sult i ng fr o m cas h sal es appears unsust ainabl e on f acts and l aw i n t he abse nce of an y c ogent basis. On car ef ul app rai sal of t he f act ual mat ri x prese nt ed i n t he mat t er, we noti ce few overw hel mi ng facts to appr eciat e t he mat t er in per specti ve; (i ) t he pur chases ha ve been st at ed to be carr ie d out thr ough ban ki ng cha nnel onl y wher eas a par t of sal es have be en car ri ed out i n cash and maj ori t y of sal es ha ve bee n carri ed out i n che que. The sal es ma de have t he c orr espondi ng eff ect of reduci ng the cl osing sto ck. The st ock re gist er has be en pr epar ed af ter gi vin g ef fec t t o all pur chases and sal es. The re mai ni ng stock on account of sal es incl uding cash sal es was not found at the pre mi ses of the assessee cover ed under sur ve y and sear ch. The r educt ion i n st ock w oul d mean exi stence of sal es as cl ai me d. Thus, once the exi stence of cash sal es are reckoned, the source of cas h f ound at t he ti me of pre mi ses of t he assessee stands rec ogni ze d. T he mi s mat ch a ppears t o have r esult ed o wi ng to par ti al coverage of al l pre mi ses under s. 132 of t he Act . The assessee cannot be bl a med for t ow eri ng f ai lu re of the sear ch team t o keep t he mai n of fi ce out of pur view of search acti on. I t is rather i nex pli cabl e t hat onl y a bra nch of fice was covere d under searc h and a st ate ment of par tner was regar ded as gospel tr uth des pi te visi bl e l ac k of busi ness act ivi t ies, att endant w or k force, books, recor ds et c. The clai m of assessee t hat t he state ment of partners ar e nei ther vol unt ar y nor reli a ble a nd is thus beref t of a n y pr obat i ve val ue, is not wi t hout an y subst anc e as not ed i n the pr eceding para gra phs. The be nef it of doubt , i n the pecul i ar cir cumst ances, t hus ne ed t o go i n favour of t he I.T.A. No.1919/Del/2018 25 subj ect assessee. The assessee cannot be held accounta bl e f or the l apses or re mi ssness on t he part of t he Revenue A ut hori ti es. The expl anat i on off ered b y t he assessee in t he course of t he post search i nvest iga ti on and t her eaft er in t he assessment pr ocee din gs t hat books of accounts were ke pt at t he ma i n off ice of the assessee appear s reas ona ble a nd c onsist ent havi ng r ega rd to t he mul ti pl e fa ct s such as t he as sess ment i n t he past on the basi s of books, t he ac cou nts bei ng s ubject t o t ax audit under Secti on 4 4AB of t he Act , VAT ret ur ns etc. The r educt i on i n t he stock on account of such sal es also vouc hes the clai m of the assessee. 9. 2. 7 We are t hus of the view t hat the acti on of t he revenue aut hor it ies to make addit ions t ow ards u nexpl ai ned cash sal es under s. 69A i s wit hout an y s ound basi s and henc e cannot be cou nte nanced i n l aw. 9. 3 Ground No. 3 c oncer ns t he al legat i on of t he CI T(A ) towar ds bul li on st ock found at t he branc h pr e mi ses of the assessee i n t he course of sea r ch t o be acqui r ed out of une xplained s ource an d co nseque nt enhance me nt of Rs.3,13,4 4,0 02/- t o this ef fect carr ied out b y t he CI T( A). 9. 3. 1 In t he fi rst appea l b y t he assessee a gai nst t he order of the Assessi ng Off icer , the CI T(A), i n exerci se of i t s power under s. 251( 1)(a) i ssued show cause noti ce to t he assessee seeking t o enh ance t he asses sed i nco me b y Rs. 3, 13, 44, 002/- under Secti on 69A of t he Act t owar ds st ock ( gol d and sil ver bul l ion) found at the pr e mi ses of t he assessee at the t i me of sea rch on i ts branch offi ce at 1167 Kucha Mahajani , Chandni Chowk, Del hi-6 I.T.A. No.1919/Del/2018 26 al legi ng that such st ock re maine d unrecor ded i n the stock regist er and is i n the nat ure of unexplained stock. 9. 5 On per usal of t he f ir st appel late or der i n t his regard, we not ice t hat af ores ai d act ion of t he CI T( A) i s heavil y depe ndent upon th e discredi t ed state me nt of t he par t ners r ec or ded at t he ti me of searc h. As not ed i n t he prec edi ng par agra phs, t he books of acco unt expl ai ni ng the source of cash and st ock, wer e cl ai me d t o be kept i n t he mai n of fi ce and t hus cou ld n ot be found i n the branch off ice at t he t ime of search. The assessee cl ai ms t hat t he af or esaid st ock found i n t he course of search is dul y accounte d for in the books of account and has e ntere d the stock regist er w hi le det er mi ning t he closi ng stock. 9. 5. 1 On perusal , we not e that t he A O di d make enquir y wit h refer ence to st ock of G ol d bull i on and si lver bar s wei ghi ng 8998. 39 g ms. and 178501 g ms r espect ivel y va lui ng Rs. 31344002 i n agg r egat e si zed on 21-09- 2014 as per poi nt no. 28 of not ice dat ed 23. 08. 2016 i ssued under s. 142( 1) of the Act. The Assessee in i ts response dat ed 05/ 10/ 2016 has explained t he sourc e t o be out of past purc hases as refl ected i n st ock records whic h was also pr oduce d bef ore hi m. 9. 5. 2 The issue raked up b y the CI T( A) is t owar ds une xplained nat ur e of stock f o und i n search. The case of the assessee is buil t on the si mi lar foot i ng as expl aine d i n t he i ssue con cer nin g sour ce of cash f ound. The obser vat i ons thus made i n that i ssue woul d appl y m ut ati s mut andi s. The boo ks of accounts and st ock records have nowher e be en r eject ed pe r se. For the reasons ment i oned i n ear li er par agr aphs, i n t he matt er whe re the I.T.A. No.1919/Del/2018 27 stock f ound in sea rch e manat es f r o m the st oc k re gi st er det ai li ng the pat ter n of i nwar d & out ward stock a nd r esul ta nt stock i n han d at a gi ven poi nt of t i me, ther e i s no just i fiabl e reason t o tr eat such st ock f ound to be u nexpl ai ned. As noted earl ier, he state ment of t he part ner s st ood discredit ed and render ed unreli able b y the chai n of event s s uch as r ecorde d i n odd hours and wit hout an y books and wi t hout t aki ng cognizance of ba nk ent ri es; retr acti on of such stateme nt wi thout much del a y, pr oduct ion of books bef ore i nvest i gat i on t ea m, no cross exa mi nat i on of ret ract ion, gap of a bout 45 da ys i n retr acti on at tr ibutabl e t o state me nt r ecor ded not made avail able despi t e request on t he ve r y ne xt of search et c. The stock foun d bei ng out of st oc k i n ha nd as reflect ed i n stock recor ds, we thus har dl y see an y j usti fi cati on i n the enha nce me nt act ion o f the CIT(A). 9. 5. 3 We ma y al so si mul taneo usl y not i ce a para doxical sit uat i on t hat whi l e, on one hand, the r evenue see ks t o questi on the pr opri et y of cash sal es and ne gat i on of it s exist ence, w hi ch if taken at face val ue, such excl usi on of cash sal es woul d bear reci pr ocal effect on t he st ock i n hand and such posi ti oni ng wo uld rat her en hance t he stoc k i n hand i n t ande m. The al legati on of stoc k bei ng unexpl ained t hus s o mewhat mi li t at es agai nst l ogic and appears to be based on mis pl aced e xposi ti on of fact s. Wit hout del ving f urt her, i n t otali t y, t he case made out b y the CIT( A) towar ds enhance me nt i s beref t of mer it and t hus cannot be countenance d. 9. 5. 4 As fur ther not iced, t he enhance me nt acti on of the CIT( A) is qui te cr ypt ic a nd mere rei t er at ion of t he ob servati ons I.T.A. No.1919/Del/2018 28 such as no detail s of purc hases, absence of books, etc whi ch aspect s have al r ead y been deal t wit h i n t he pr eceding par agr aphs. 9. 5. 5 We t hus set asi de t he act ion of t he CIT( A) an d del et e the enhanc e ment c ar ried out . 10. I n t he resul t, t he appeal of t he assessee is all owed. Order pronounced in the open Court on 06/10/2023 Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /09/2023 Prabhat