M/s. Shruti Fastners Ltd., New Delhi V. DCIT, New Delhi

ITA 1944/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96911 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 14-07-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 04-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK JASWAL
• Assessee Lawyers: DR RAKESH GUPTA SH A ANAND
• Keywords: Opportunity of being heard; Accommodation entries
• Section: 143(3); 133A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : G NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, A CCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NO: 194 4 /DEL/20 1 3 A.Y.: 200 1 - 02 SHRUTI FASTENERS LTD. VS. DCIT, CIRCLE 8(1) 1666 - B, GOVINDPURI EXTENSION NEW DELHI MALL ROAD, KALKAJI NEW DELHI 19 PAN: AAACS 2175 H (APPELLANT) (RESPONDENT) A SSESSEE BY : DR.RAKESH GUPTA, SH.A.ANAND AND SH.SOMIL AGGARWAL, ADV. REVENUE BY : SH. KK JASWAL, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE O RDER OF THE LD.CIT(APPEALS) - XI , NEW DELHI DATED 04.01 .201 3 PERTAINING TO THE A.Y. 200 1 - 02. 2. FACTS IN BRIEF : - THE ASSESSEE IS A COMPANY AND FILED ITS RETURN OF INCOME ON 31.10.2001 DECLARING TOTAL INCOME OF RS.19,95,187/ - . THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 147 OF THE ACT ON 26.12.2008 COMPUTING THE INCOME AT RS.6,07,69,457/ - . ON APPEAL THE FIRST APPELLATE AUTHORITY VIDE ORDER DT. 19 .2.2010 ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED THE REVENUE CARRIED THE MATTER IN APPEAL AND THE ITAT , IN ITA NO.2461/DEL/2010 VIDE ORDER DT. 22.9.2010, RESTORED THE MATTER TO THE FILE OF THE A.O. BY OBSERVING AS FOLLOWS. ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 19 6. WE HAVE HEARD THE RIVA L SUBMISSIONS AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENTS CITED BY LD.A.R. OF THE ASSESSEE. WE ARE NOT IN AGREEMENT WITH LD.AR OF THE ASSESSEE THAT SINCE THE ASSESSMENT WAS COMPLETED BY THE AO ON 26.12.2008 AND COPY OF THE IMP OUNDED DOCUMENTS WERE ALSO PROVIDED TO THE ASSESSEE ON THE SAME DATE, IT HAS TO BE ACCEPTED THAT SINCE OPPORTUNITY WAS NOT PROVIDED TO THE ASSESSEE, ASSESSMENT ORDER HAS TO BE QUASHED. WE FEEL THAT THIS ORDER OF LD.CIT(A) CANNOT BE UPHELD AND THE MATTER H AS TO GO BACK TO THE FILE OF THE AO FOR A FRESH DECISION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD BECAUSE ON THIS BASIS, THE ASSESSMENT CANNOT BE ANNULLED AS HAS BEEN DONE BY LD.CIT(A). REGARDING JUDGEMENTS CITED BY THE LD.AR OF THE ASSESSEE, W E FIND THAT THE JUDGMENT OF HON BLE KERALA HIGH COURT RENDERED IN THE CASE OF MS JEWELLERY (SUPRA) IN FACT, DOES NOT SUPPORT THE CONTENTION OF THE LD.AR OF THE ASSESSMENT THAT THE ASSESSEE HAS TO BE ANNULLED ON THIS BASIS BECAUSE IN THIS CASE, IT WAS HELD BY HON BLE KERALA HIGH COURT THAT THE ASSESSMENT ORDER PASSED BY THE AO IN THAT CASE IS VOID BUT IT WAS ALSO HELD BY HON BLE KERALA HIGH COURT THAT THE ASSESSMENT CAN BE REDONE AFTER AFFORDING PROPER OPPORTUNITY TO THE ASSESSEE. HENCE, AS PER THIS JUDGEME NT OF HON BLE KERALA HIGH COURT, ONLY THE PRESENT ASSESSMENT ORDER HAS TO BE HELD TO BE VOID BUT THE ASSESSMENT CAN BE REDONE AFTER AFFORDING PROPER OPPORTUNITY TO THE ASSESSEE AND THE ASSESSMENT CANNOT B ANNULLED FOR ALL TIME TO COME. 7. SIMILARLY, THE SE COND JUDGMENT CITED BY LD.AR OF THE ASSESSEE BEING THE JUDGEMENT OF HON BLE DELHI HIGH COURT RENDERED IN THE CASE OF SMART PVT.LTD. (SUPRA) IS ALSO OF NO HELP TO THE ASSESSEE IN THE PRESENT CASE. IN THIS CASE ALSO THE TRIBUNAL ORDER PASSED ON 6 TH DEC.1988 WAS QUASHED ON THIS BASIS THAT THE PETITIONER WAS NOT AFFORDED ANY OPPORTUNITY OF BEING HEARD BUT AT THE SAME TIME, THE TRIBUNAL WAS DIRECTED BY HON BLE DELHI HIGH COURT TO DECIDE THE APPLICATION FILED BY THE ASSESSEE U/S 254(2) IN ACCORDANCE WITH LAW AFT ER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE PETITIONER. HENCE, AS PER THIS JUDGEMENT OF HON BLE DELHI HIGH COURT ALSO, THE ASSESSMENT ORDER IN THE PRESENT CASE CANNOT BE QUASHED BUT IT HAS TO BE SET ASIDE FOR A FRESH DECISION AFTER PROVIDING A DEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN VIEW OF OUR ABOVE DISCUSSION, WE SET ASIDE THE ORDER OF LD.CIT(A) AND RESTORE THE ENTIRE MATTER BACK TO THE FILE OF AO FOR FRESH DECISION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE WANT TO MAKE IT CLEAR THAT ALL THE ISSUES SHALL REMAIN OPEN FOR BOTH SIDES AND WE ARE NOT DECIDING ANY ASPECT OF THE MATTER ON MERIT. 3. THEREAFTER THE AO PASSED AN ORDER U/S 254 R.W.S.14 3(3) OF THE ACT ON 2.1.2013 ASSESSING THE TOTAL INCOME AT RS.3,26,86,5 4 3/ - , INTER ALIA MAKING ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 20 AN ADDITION OF RS.3,06,91,536/ - , BEING NET PROFIT FIGURE ADOPTED FROM THE PRINT OUT SHEET , TAKEN OUT FROM THE CPU OF THE ASSESSEE COMPANY S COMPUTER, FOUND DURING TH E COURSE OF SURVEY U/S 133A OF THE ACT, ON THE PREMISES OF THE ASSESSEE COMPANY ON 7.9.2006. THE CPU AND HARD DISK WERE IMPOUNDED DURING THE COURSE OF SURVEY AND THE SAME WERE OPERATED ON 18.1.2007 IN THE PRESENCE OF TWO INDEPENDENT WITNESSES. WHILE OPE RATING THE HARD DISK AND CPU, IT WAS FOUND THAT IT CONTAINED THE FINAL ACCOUNTS OF THE ASSESSEE COMPANY FROM THE F.Y. 2000 - 2001 TO 2005 - 06. THERE WAS A VARIATION IN THE FIGURES FOUND IN THE FINAL ACCOUNTS IN THE CPU AND HARD DISK, WHEN COMPARED WITH THE F INAL ACCOUNTS FILED ALONG WITH THE RETURN OF INCOME FILED BY THE ASSESSEE. THE FIRST APPELLATE AUTHORITY AT PAGE 3 GAVE THE FOLLOWING TABLE OF THE VARIATIONS. A.Y. 2001 - 02 PROFIT AND CLOSING STOCK AS PER RETURN FILED (IN RS.) PROFIT & CLOSING STOCK AS PE R RECORDS OF IMPOUNDED CPU AND HARD DISK (IN RS.) PROFIT BEFORE TAX 18,39,826/ - CLOSING STOCK AS ON 31.3.2001 84,14,376/ - ADDITION IN SHARE CAPITAL 45,00,000/ - NET PROFIT RS. 3,25,31,182/ - CLOSING STOCK RS. 3,54,96,490/ - THE A.O. CAME TO A CONCLUSION THAT THE ASSESSEE HAS UNDERVALUED ITS STOCK AND THAT IT HAS UNDERDECLARED THE NET PROFIT EARNED BY IT. THE UNDER STATEMENT OF INCOME WAS ESTIMATED AT RS.3,06,91,356/ - ( RS.3,25,31,182 ( - ) 18,39,826 ) AND THAT STOCK HAS BEEN UNDER VALUED AT RS.2,70,82,114/ - ( RS.3,54,96,490 ( - ) 84,14,376 ) . THE ASSESSEE CONTENDED THAT THERE WILL BE DOUBLE ADDITION, IF BOTH THESE FIGURES ARE TAKEN TOGETHER. CERTAIN TECHNICAL CONTENTIONS WERE ALSO RAISED SUCH AS THAT , THE CPU WAS NOT OPENED IN THE ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 21 PRESENCE OF THE ASSESSEE , ETC. THE ASSESSEE ALSO PRODUCED A LIST OF PURCHASE INVOICES, SALES , AS WELL AS BILL WISE AND ITEM WISE BREAK - UP OF PURCHASE S AND SALES. THE AO ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND DID NOT MAKE ANY ADDITION ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK. ONLY THE NET PROFIT FI GURE TAKEN FROM THE FIGURES FOUND IN THE FINAL ACCOUNTS STATEMENTS IN THE HARD DISK AND CPU WAS ADDED. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE FIRST APPELLATE AUTHORITY CONSIDERED THE VARIOUS SUBMISSIONS OF THE ASSESSEE AND ALSO CALLED F OR THE REMAND REPORT . HE HELD AS FOLLOWS: ( A ) THOUGH THE ASSESSEE HAS GIVEN DETAILED SUBMISSIONS, SINCE THERE IS EVIDENCE IN THE FORM OF HARD DISK WHICH WAS FOUND DURING THE COURSE OF SURVEY PROCEEDINGS, THE LD.CIT(A) WAS INCLINED TO GO BY THE STAND TAKEN BY THE AO THAT , THE NET PROFIT OF THE ASSESSEE HAD TO BE TAKEN AS PER THE FIGURES APPEARING IN THE HARD DISK. ( B ) IN THE REMAND REPORT, THE AO HAS STATED THAT THE BOOKS OF ACCOUNTS WERE CALLED FOR AND IT IS NOTICED, THAT ALL THE FIGURES TAKEN FROM THE IMPOUNDED HARD DISK AND THE CPU, TALLIED WITH THE FIGURES APPEARING IN THE BOOKS, EXCEPT THE FIGURE OF NET PROFIT AND CLOSING STOCK AND HENCE THE IMPOUNDED HARD DISK REVEALED THE CORRECT FIGURES. ( C ) ON A SUBMISSION THAT THE C LOSING STOCK OF RS.3,06,91,356/ - , HAS NOT BEEN MADE PART OF THE OPENING STOCK OF THE SUBSEQUENT A.Y. , HE HELD THAT THIS MEANS THAT THE STOCK HAS BEEN PURCHASED OUT OF THE BOOKS FROM UNEXPLAINED SOURCES AND THAT THE SALES HAVE ALSO TAKEN PLACE DURING THE YEAR WHICH REMAINED OUT OF BOOKS AND HENCE THE GROSS PROFIT ON THE SALES SHOULD ALSO BE MADE PART OF THE INCOME ASSESSED ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 22 PRESUMING GROSS PROFIT AS THE NET PROFIT. THE GROSS PROFIT PERCENTAGE WAS ADOPTED AT 10.03%. THEREAFTER THE ASSESSEE WAS CONFRONTED WITH ENHANCEMENT NOTICE BY THE FIRST APPELLATE AUTHORITY ON THE SUGGESTION OF THE A.O. IN HIS REMAND REPORT AND AFTER CONSIDERING THE REPL Y, THE ENHANCEMENT WAS DROPPED. 4. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. THAT THE LD.CIT(A) WAS NOT AT ALL JUSTIFIED IN UPHOLDING THE ASSESSMENT ORDER AS PASSED BY THE LD.AO BECAUSE THE SAME HAD BEEN PASSED WITHOUT GIV ING PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE APPELLANT. IT IS ADMITTED FACT ON RECORD THAT THE ASSESSMENT ORDER WAS PASSED ON THE SAME DAY ON WHICH THE SEIZED CPU/HARD DISC WAS UNSEALED/OPERATED ON 26/29 TH DECEMBER,2008 BEHIND THE BACK OF THE ASSESSEE. 2. THAT THE LD.AO HAD ERRED ON FACTS AND UNDER LAW IN MAKING AN ADDITION OF RS.3,06,91,356/ - ON ACCOUNT OF ALLEGED UNDISCLOSED INCOME TO THE RETURNED INCOME OF THE APPELLANT AND SIMILARLY THE LD.CIT(A) WAS UNJUSTIFIED IN CONFIRMING THE SAID ADDIT ION. VARIOUS OBSERVATIONS MADE BY THE AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS ARE EITHER INCORRECT OR UNTENABLE. DETAILED WRITTEN SUBMISSIONS ALONG WITH THE PAPER BOOK AS FILED BEFORE THE LD.CIT(A) AND THE ARGUMENTS ADVANCED BY THE COUNSEL HAD NOT BE EN APPRECIATED PROPERLY OR HAD BEEN IGNORED. 3. THAT WITHOUT PREJUDICE TO GROUND NO.2 ABOVE, THE ADDITION OF RS.3,06,91,356/ - AS MADE TOWARDS THE ASSESSABLE INCOME OF THE APPELLANT ON ACCOUNT OF ALLEGED UNDISCLOSED NET PROFIT WAS VERY EXCESSIVE. 4. THAT TH E INTEREST AS LEVIED U/S 234 IS ILLEGAL AND AT ANY RATE, WITHOUT PREJUDICE VERY EXCESSIVE. 5. THAT THE APPELLANT RESERVES ITS RIGHT TO ADD, AMEND, MODIFY THE GROUNDS OF APPEAL. 5 . HEARD DR.RAKESH GUPTA, LD.COUNSEL FOR THE ASSESSEE AND SH.KK JASWAL, SR. D.R. ON BEHALF OF THE REVENUE. 6. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SOLE BASIS OF ADDITION IS ONLY ONE FIGURE , OUT OF THE MANY FIGURES FOUND IN A ROUGH DOCUMENT CONTAINED IN THE CPU , WHICH IS AT PAGE 90 OF THE PAPER BOOK. HE ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 23 SUBMITTED THAT THE AO DID NOT REFER TO THE OTHER MATERIAL FOUND DURING THE COURSE OF SURVEY, WHICH INCLUDES STOCK IN HAND MONTH WISE, WHICH IS AT PAGE 88 OF THE PAPER BOOK AND A STOCK SUMMARY WHICH IS AT PAGE 89 OF THE PAPER BOOK. REFERRING TO THE MONTH W ISE STOCK STATEMENT, HE SUBMITTED THAT THE STOCK VALUE SUDDENLY JUMPED FROM RS.1,07,56,233/ - AS ON 20 TH FEB.,2001 ABNORMALLY TO RS.3,54,96,490/ - AS ON 31.3.2001, WHICH IS ABNORMAL AND ABSURD FIGURE. HE SUBMITTED THAT IF THIS PROFIT FIGURE IN THE ROUGH DOC UMENT IN THE C.P.U. IS TAKEN, THE GROSS PROFIT RATIO WOULD BE 160% OF THE SALES AND SUBMITTED THAT THIS IS AN IMPOSSIBILITY AS THE REVENUE CAN REALISE BY EXAMINING THE DATE OF THE COMPETITION OF THE ASSESSEE. HE POINTED OUT THAT THE AO AGREES THAT ALL THE OTHER FIGURES I.E. OPENING STOCK, PURCHASES, SALES ETC. TALLY WITH REGULAR BOOKS AND ACCOUNTS AND HENCE CORRECT. IT IS ONLY THE CLOSING STOCK AND PROFIT ADJUSTMENT WHICH DO NOT TALLY. UNDER SUCH CIRCUMSTANCES IT CAN BE SAFELY CONCLUDED THAT THERE IS AN ERROR IN THE CLOSING STOCK FIGURE. HE FURTHER ARGUED THAT THIS CLOSING STOCK FIGURE WAS NOT TAKEN OR CARRIED FORWARD AS OPENING STOCK FOR THE NEXT YEAR , AND HENCE THE OPENING STOCK OF 1.4.2011 WAS TO BE TAKEN AS CLOSING STOCK AS ON 31.3.2001. HE RELIED ON THE JUDGEMENT OF HON BLE SUPREME COURT IN THE CASE OF V.K.J.BUKDLERS & CONTRACTORS (P) LTD. VS. CIT (2009) REPORTED IN 318 ITR 204 . HE REFERRED TO PAGES 94 TO 179 OF THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE HAS UNDERTAKEN A DETAILED EXERCISE A ND RECONCILED THE STATEMENT OF STOCK, A COPY OF WHICH IS PLACED AT PAGE 93 OF THE PAPER BOOK. ITEM WISE STOCK WITH VALUES AND QUANTITIES HAVE BEEN LISTED OUT AND RECONCILED . HE ARGUED THAT THE AO AS WELL AS THE FIRST APPELLATE AUTHORITY ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 24 HAD NOT FOUND FAULT WITH THIS STOCK MOVEMENT DETAILS AND THE RECONCILIATIONS. 6.1. HE FURTHER SUBMITTED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE NOT REJECTED , AS S.145 (3) WAS NOT INVOKED AND UNDER THESE CIRCUMSTANCES , ADOPTION OF A FIGURE OF NET PROFIT FROM SOME ROUGH DOCUMENT IS WRONG. HE TOOK THIS BENCH THROUGH PAGE S 182 TO 210 OF THE PAPER BOOK AND SUBMITTED THAT THE BILL WISE STATEMENT OF PURCHASES IS GIVEN AND THE A.O. ACCEPTED THE SAME. HE POINTED OUT THAT MAJOR PURCHASES MADE BY THE ASSESSEE DURING THE YEAR ARE ONLY FROM TWO DOMESTIC COMPANIES AND A LEDGER COPY OF PURCHASES FROM THESE COMPANIES WERE ENCLOSED AT PAGES 211 TO 240 OF THE PAPER BOOK. HE MADE A COMPARISON OF PURCHASES AND SALES AND THE GROSS PROFITS THAT WERE EARNED ON EACH OF THOSE TRANSACTIONS, A SUMMARY OF WHICH IS AT PAGE 274 OF THE PAPER BOOK AND SUBMITTED THAT THE MAXIMUM GROSS PROFIT WAS ABOUT 15% AND THE AVERAGE GROSS PROFIT IS AROUND 10.38% AND ARGUED THAT 160% G.P. IS AN IMPOSSIBILITY. HE VEHEMENTLY CONTENDED THAT THERE IS NO CORROBORATIVE MATERIAL AVAILABLE NOR ANY EVIDENCE FOR THE REVENUE TO COME TO A CONCLUSION THAT THE ASSESSEE HAD EARNED THE INCOME AS REFLECTED BY THE FIGURE IN THE C.P.U. HE RELIED ON THE DECISION OF HON BLE PATNA HIGH COURT IN THE CASE OF 101 ITR 525 FOR THE PROPOSITION THAT ABNORMAL PROFITS WOULD BE CONSIDERED AS AN IMPROBABILITY. HE REFERRED TO THE LAST FOUR LINES OF THE LD.CIT(A) S ORDER AND SUBMITTED THAT IF A CLOSING STOCK IS ADOPTED AT THE ORIGINAL FIGURE, THE NET PROFIT HA S TO BE COMPUTED AS PER TH AT FIGURE OF SUCH CLOSING STOCK AS NET PROFIT IS ONLY A BALANCING FIGURE . ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 25 HE VEHEMENTLY CONTENDED THAT THE ASSESSMENT SHOULD BE FAIR AND OBJECTIVE AND CANNOT BE BASED ON UNREALISTIC FIGURES. 6.2. MR.KK JASWAL, THE LD.SR.D.R. O N THE OTHER HAND OPPOSED THE CONTENTIONS OF THE ASSESSEE AND SUBMITTED THAT THE ASSESSEE HAS INDULG ED IN PURCHASE AND SALE OUTSIDE THE BOOKS OF ACCOUNTS AND THE PROFIT FIGURE FOUND IN THE COMPUTER ONLY REFLECTED THE RESULT OF SUCH OUT OF BOOK S TRANSACTIO NS. HE SUBMITTED THAT DATA WAS OBTAINED FROM THE PREMISES OF THE ASSESSEE AND HENCE THE AUTHENTICITY OF THE SAME CANNOT BE DENIED . HE ARGUED THAT AT TIMES , CLOSING STOCK IS VALUED AT MARKET VALUE FOR THE PURPOSE OF OBTAINING BANK LOANS AND THAT THIS MA Y BE ONE SUCH CASE AND HENCE THE CLOSING STOCK FIGURE , AS FOUND IN THE COMPUTER, WAS NOT ADOPTED BY THE REVENUE BY GIVING THE BENEFIT TO THE ASSESSEE. HE SUBMITTED THAT ONLY THE PROFIT FIGURE IS ADOPTED. THEREAFTER THE LD.SR.D.R. ARGUED THAT THIS IS A C ASE WHERE THE ASSESSEE IS MAKING PROFIT OUT OF THE TRANSACTIONS NOT RECORDED IN THE BOOKS OF ACCOUNTS AND REINTRODUCING THE PROFITS SO EARNED INTO THE COMPANY THROUGH ACCOMMODATION ENTRIES IN THE SUBSEQUENT ASSESSMENT YEARS. WHEN IT WAS POINTED OUT THA T THIS IS NOT THE ISSUE BEFORE THE TRIBUNAL IN THE IMPUGNED A.YS, THE LD.SR.D.R. SUBMITTED THAT ALL THE FIGURES AT PAGE 224 OF THE PAPER BOOK, WHICH IS PART OF THE ANNUAL ACCOUNTS ARE COOKED UP FIGURES AND ARE HIGHLY UNRELIABLE. THE SUM AND SUBSTANCE OF HIS SUBMISSIONS IS THAT HE RELIE S ON THE ORDER OF THE FIRST APPELLATE AUTHORITY , AS WELL AS THE ORDER OF THE A.O. IN REPLY, THE LD.COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE KOLKATA A BENCH OF THE TRIBUNAL IN VIMAL KUMAR VS. DCIT (2006) 1 00 TTJ 0790. ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 26 7. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF PAPERS ON RECORD AS WELL AS CASE LAWS CITED, WE HOLD AS FOLLOWS. 8. A ROUGH DOCUMENT WAS FOUND IN THE HARD DISK AND C.P.U. IN THE COMPUTER FOUND DURING THE SURVEY OPERATIONS IN THE PREMISES OF THE ASSESSEE COMPANY. THE PROFIT AND LOSS FROM 1 ST APRIL, 2000 TO 31 ST MARCH, 2001 AND THE BALANCE SHEET AS AT 31 ST MARCH, 2001 AS FOUND IN THE HARD DISK AND CPU OF THE COMPUTER , HAVE BEEN EXTRACTED IN THE ORIGINAL ASSESSMENT ORDER AT PAGES 3 TO 6 OF THAT ORDER. A N EXAMINATION OF THE DOCUMENTS FROM THE C.P.U. DEMONSTRATES THAT THE STOCK SUMMARY AS ON 31.3.2001 , AS FOUND IN THE HARD DISK/CPU IMPOUNDED DURING THE COURSE OF SURVEY , I S DIFFERENT FROM THE CLOSING STOCK FIGURE DEPICTED IN THE PROFIT AND LOSS A/C AND THE BALANCE SHEET IN THE PRINT OUT FROM THE VERY SAME CPU/HARD DISK. IN THE STOCK SUMMARY SHEET FOUND IN THE HARD DISK/CPU, THE STOCK FIGURE AS ON 31.3.2001 IS RS.1 ,93,21 ,968 AND WHEREAS THE CLOSING STOCK IN THE PROFIT AND LOSS A/C IN THE HARD DISK/CPU SHOWED RS.3,54,96,4 90 . IN OTHER WORDS, IN THE VARIOUS ROUGH DOCUMENTS FOUND IN THE C.P.U. /HARD DISK, THE STOCK FIGURE IN THE STOCK SUMMARY SHEET AND STOCK FIGURE IN THE P ROFIT AND LOSS A/C AND BALANCE SHEET ARE SUBSTANTIALLY DIFFERENT. IN THE REMAND PROCEEDINGS THE AO HAD HELD AS FOLLOWS. ACCORDINGLY THE SCRUTINY PROCEEDS WERE STARTED BY THE THEN A.O. BY WAY OF NOTICE U/S 143(2), FOR WHICH THE ASSESSEE COMPANY HA S NEVER OBJECTED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS BOOKS OF ACCOUNTS WERE CALLED FOR AND IT WAS NOTICED THAT ALMOST ALL THE FIGURES REFLECTED IN THE PRINT OUTS TAKEN FROM THE IMPOUNDED HARD DISC AND CPU TALLIED EXCEPT THE FIGURES OF NET ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 27 PROFIT A ND CLOSING STOCK. REST OF THE FIGURES IN THE BOOKS OF ACCOUNTS WERE THE SAME AS SHOWN IN THE P&L ACCOUNT AND THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME. IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT WHEN ALMOST ALL THE OTHER FIGURES IN THE PRINT OUTS TAKEN FROM THE HARD DISC/CPU TALLY WITH THE NORMAL BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE BEFORE A.O. WHICH WAS EXAMINED, THEN THERE IS NO REASON AS TO WHY THE NET PROFIT AND CLOSING STOCK SHOWN IN THE PRINT OUT TAKEN FROM THE HARD DISC/CPU, AS MENTIONED ABOVE, BE NOT HELD AS THE TRUE FIGURES IN RESPECT OF CLOSING STOCK AND THE NET PROFIT. TO THIS EFFECT THE ASSESSEE HAS NOT FILED ANY EXPLANATION, THEREFORE , IT IS CLEAR THAT THE ASSESSEE HAS NO EXPLANATIONS TO OFFER ABOUT IT. FURTHER, THE CONCLUSION DRAWN BY THE THEN AO AFTER DISCUSSION AND SCRUTINY OF BOOKS OF ACCOUNTS AND OTHER DOCUMENTS ETC. BY WAY OF HARD COPIES AND STATEMENTS TAKEN FROM THE HARD DISC/CP U. THE INCOME OF THE ASSESSEE COMPANY WAS FINALLY COMPUTED AS UNDER: INCOME AS ORIGINALLY ASSESSED U/S 143(3) DT. 31.10.2002 RS.19,95,187/ - ADD: (I) UNDISCLOSED PROFIT AS DISCUSSED RS. 3,06,91,356/ - (II) INCOME FROM UNDISCLOSE D SOURCES AS PER ACCOMMODATION ENTRY TAKEN BY THE ASSESSEE COMPANY RS. 2,70,82,114/ - (III) CLOSING STOCK ORIGINALLY TAKEN RS. 10,00,800/ - -------------------- ------------- RS. 5,87,74,270/ - ------------------------------- TOTAL INCOME WAS ASSESSED. RS. 6,07,69,457/ - ================ (EMPHASIS SUPPLIED). 8.1. A PERUSAL OF THE ABOVE DEMONSTRATES THAT ALL THE FIGURES IN THE PROFIT AND LOSS A/C AND THE BALANCE SHEET IN THE PRINTS OUT FROM THE CPU/HARD DISK TALLY WITH THE FIGURES DISCLOSED BY THE ASSESSEE IN HIS ANNUAL ACCOUNTS FILED ALONG WITH THE RETURN OF INC OME EXCEPT FIGURE OF CLOSING STOCK AND NET PROFIT. THE PRINT OUT TALLY WITH THE NORMAL BOOKS OF ACCOUNTS. HENCE THIS IS ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 28 NOT A CASE OF MAINTAINING DUPLICATE BOOKS OF ACCOUNTS. WHEN THE OPENING STOCK, PURCHASES AND SALES FIGURES TALLY, THE CLOSING STOCK H AS TO NECESSARILY BE THE BALANCING FIGURE. THE CLOSING STOCK FIGURE CANNOT BE INCREASED, UNLESS THERE ARE PURCHASES. IT IS NOT THE CASE OF REVENUE THAT THERE ARE PURCHASE S OUTSIDE BOOKS OF ACCOUNTS. NO IOTA OF EVIDENCE WAS FOUND TO SUPPORT PURCHASES OR SALES OUTSIDE THE BOOKS OF ACCOUNTS. WHEN THE ASSESSEE HAS FURNISHED ITEM WISE DETAILS OF PURCHASES AND SALES AND THERE AFTER PREPARE S THE STOCK RECONCILIATION STATEMENT AS ON 31.3.2001 AND WHEN THESE DOCUMENTARY EVIDENCES ARE NOT FOUND WRONG BY THE A.O. OR BY THE LD.CIT(A), THEN THE ONLY CONCLUSION IS THAT THE CLOSING STOCK FIGURE AS APPEARING IN THE P&L ACCOUNT AND BALANCE SHEET OBTAINED FROM CPU/HARD DISK IS A WRONG FIGURE. THE A.O. DOES NOT GIVE ANY REASON AS TO WHY , THE STOCK FIGURE FROM THE PRINT OUT OF CPU/HARD DISK , OF THE STOCK SUMMARY SHEET, IS NOT CONSIDERED AS THE CORRECT FIGURE OF STOCK. IN FACT THIS FIGURE TALLIES WITH ALL OTHER TRANSACTIONS RECORDED IN THE NORMAL BOOK S AS WELL AS IN THE COMPUTER PRINTS OUT FROM THE CPU/HARD DISK. WHEN TWO DOCUMENTS ARE FOUND IN THE CPU/HARD DISC , OF THE ONE WHICH IS THE TRUE AND REALISTIC FIGURE , IS TO BE ADOPTED. THE STOCK RECONCILIATION IS AT PAGE 93 OF THE PAPER BOOK AND THE ITEM WISE PURCHASES AND SALES DETAILS ARE AT PAGES 94 TO 240 OF THE PAPER BOOK. DURING THE COURSE OF SURVEY AS WELL AS , ON THE EXAMINATION OF CPU/HARD DISK DURING THE COURSE OF SURVEY , NO EVIDENCE WAS FOUND, WHICH COULD TAKE US TO A CONCLUSION THAT THE RE WERE EITHER PURCHASES OUT OF THE BOOKS OF ACCOUNTS OR SALES OUT OF THE BOOKS OF ACCOUNTS. THERE IS NO EVIDENCE OR SUGGESTION THAT THE ASSESSEE HAS MAINTAINED PARALLEL SETS OF BOOKS OF ACCOUNTS. THE ALLEGATION OF THE LD.D.R. IS THAT, THE DIFFERENCE ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 29 BETWEEN STOCK AS ON 31 ST MARCH, 2011 AND 1 ST APRIL,2001 IS BECAUSE OF UNACCOUNTED SALES . THIS ARGUMENT IS ABSURD. T HE CLOSING STOCK OF THE PREVIOUS YEAR WOULD BE THE OPENING STOCK OF THE SUB SEQUENT YEAR. JUST ONE UNREALISTIC AND ABSURD FIGURE OF NET PROFIT IS TAKEN OUT FROM THE PRINT OUT OF THE ROUGH DOCUMENT FROM THE CPU/HARD DISK AND ADOPTED FOR ASSESSMENT OF TOTAL INCOME. SUCH AN APPROACH CANNOT BE APPROVED. 8.2. THE KOLKATA A BENCH OF THE TRIBUNAL IN THE CASE OF B IMAL KUMAR SINGHANIA VS. DY.CI T (SUPRA) 100 TTJ 0790, HAS HELD AS FOLLOWS. 13. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. WE HAVE ALSO CAREFULLY CONSIDERED THE VARIOUS DOCUMENTS PLACED ON RECORD. THE CRUX OF THE VARIOUS REASON S ASSIGNED BY THE AO FOR TREATING THE IMPUGNED BOOKS AND TRIAL BALANCE SEIZED IN COURSE OF SEARCH AS GENUINE IS THAT BANK TRANSACTIONS NOTED THEREIN TALLIES WITH THE ACCOUNT STATEMENTS RECEIVED FROM BANKS AND THE CORRESPONDING ENTRIES IN THE REGULAR BOOKS OF ACCOUNT OF THE RESPECTIVE ASSESSEES. THE SAME SHOULD NOT HOWEVER, HAVE ANY DETERRENT EFFECT ON THE ASSESSEE'S CASE. IT MAY BE POINTED OUT THAT THE ASSESSEE HAS BEEN CONSISTENTLY MAINTAINING RIGHT FROM THE VERY INCEPTION THAT THE IMPUGNED BOOKS HAD BEEN PREPARED FOR PRESENTATION BEFORE THE BANK IN ORDER TO RAISE LOANS. ALL THE BANK TRANSACTIONS WERE DULY INCORPORATED THEREIN WITH THE APPREHENSION THAT THE BANK MAY VERIFY THE SAID TRANSACTIONS. AS SUCH, THE FACT THAT THE BANK TRANSACTIONS, RECORDED IN THE IMPUGNED BOOKS WERE FOUND TO BE GENUINE DOES NOT AUTOMATICALLY LEAD TO THE CONCLUSION THAT ALL THE OTHER TRANSACTIONS RECORDED THEREIN ARE ALSO AUTHENTIC. NO INCRIMINATING DOCUMENTS SUPPORTING THE ENTRIES MADE IN THE IMPUGNED FABRICATED BOOKS OF ACCOUNT WE RE FOUND IN COURSE OF SEARCH IN ANY OF THE PREMISES OF THE SINGHANIA GROUP. THIS CORROBORATES THE CONTENTION OF THE ASSESSEE THAT THE ENTRIES IN THE SAID BOOKS DO NOT REPRESENT THE REAL TRANSACTIONS OF M/S TRADE FRIENDS OR ANY OF THE MEMBERS OF THE SINGHAN IA GROUP EXCEPT TO THE EXTENT DISCUSSED ABOVE. SINCE ALL THE PREMISES BELONGING TO THE SINGHANIA GROUP WERE COVERED UNDER THE SEARCH OPERATION, IF AT ALL THE ASSESSEE INDULGED IN ANY UNACCOUNTED TRANSACTION TO THE EXTENT APPARENT FROM THE SEIZED BOOKS, AT LEAST SOME EVIDENCE IN THE FORM OF PURCHASE CHALLAN, PURCHASE BILLS, SALES CHALLAN, SALES BILLS OR ANY CORRESPONDENCE WITH SUPPLIERS WOULD HAVE BEEN FOUND IN THE COURSE OF SEARCH. FURTHER, WE FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE ASSESSEE THAT IF THE ASSESSEE HAD INDULGED IN UNACCOUNTED TRANSACTIONS TO THE EXTENT APPARENT FROM THE FABRICATED BOOKS AND TRIAL BALANCE, THE VALUE OF STOCK FOUND IN COURSE OF SEARCH WOULD HAVE CORRESPONDED APPROXIMATELY TO THE FIGURES APPEARING IN THE FABRICATED ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 30 BOOKS A ND NOT TO THE STOCK AS PER REGULAR BOOKS OF ACCOUNT. AS SUCH, THE ODDS CLEARLY WEIGH IN FAVOUR OF THE ASSESSEE'S EXPLANATIONS AS AGAINST THE AO.'S ALLEGATIONS. IT IS ALSO AN ADMITTED FACT THAT EXPECTED RATE OF PROFIT IN CASE OF A WHOLESALER IS GENERALLY LO W. IN THIS CASE, UNREALISTIC RESULTS HAVE BEEN REFLECTED IN THE SEIZED BOOKS AND THIS PROVES THAT THE PROFIT HAS BEEN ARRIVED AT ON THE BASIS OF FABRICATED BOOKS SAID TO HAVE BEEN PREPARED FOR OBTAINING LOAN FROM THE BANKS. 13.1 THE ASSESSEE'S CONTENTION I S FURTHER CORROBORATED BY THE FACT THAT THE IMPUGNED FABRICATED BOOKS WERE WRITTEN ONLY UPTO 31ST DEC., 2001 WHEREAS THE SEARCH WAS CONDUCTED ON 30TH JAN., 2002. THEREFORE, PRESUMPTION CAN SAFELY BE DRAWN THAT IF THE BOOKS HAD BEEN MAINTAINED IN REGULAR CO URSE OF BUSINESS, THE SAME WOULD HAVE BEEN WRITTEN UPTO THE DATE OF SEARCH, I.E., TILL 29TH JAN., 2002. IN THE ALTERNATIVE, IF AT ALL IT IS ASSUMED FOR ARGUMENT SAKE THAT THE SAID BOOKS HAD BEEN MAINTAINED IN THE NORMAL COURSE OF BUSINESS, THE BILLS AND VO UCHERS PERTAINING TO THE UNDISCLOSED TRANSACTIONS OF THE ASSESSES FOR BALANCE PERIOD, I.E., FOR THE MONTH OF JANUARY, 2002 TILL THE DATE OF SEARCH, WOULD HAVE BEEN FOUND IN THE COURSE OF SEARCH; WHICH UNDER THE CIRCUMSTANCES WOULD HAVE BEEN DEFINITELY MAIN TAINED BY THE ASSESSEE SO AS TO ENABLE HIM TO INCORPORATE THE SAME INTO THE ALLEGED KACCHA BOOKS. HOWEVER, ADMITTEDLY IN THE PRESENT CASE, ALTHOUGH ALL THE BILLS AND VOUCHERS SUPPORTING ENTRIES IN THE REGULAR BOOKS OF ACCOUNT UPTO THE DATE OF SEARCH WERE F OUND AND SEIZED, NO IOTA OF EVIDENCE CORROBORATING THE ALLEGED UNDISCLOSED TRANSACTIONS FOR THE BALANCE PERIOD (SUPRA) WAS FOUND IN THE COURSE OF SEARCH. FURTHERMORE, IT IS ALSO PERTINENT TO MENTION THAT EVEN A TRIAL BALANCE HAD BEEN DRAWN UP ON THE BASIS OF ENTRIES IN SUCH FABRICATED BOOKS AS ON 31ST DEC., 2001. THIS ALSO FORTIFIES THE REPEATED, CONTENTION OF THE ASSESSEE THAT THE FABRICATED BOOKS WERE PREPARED ONLY FOR PRODUCING BEFORE THE BANK. IF AT ALL THE SAID BOOKS HAD BEEN MAINTAINED IN NORMAL COURS E OF BUSINESS DRAWING UP OF A TRIAL BALANCE IN THE MID OF THE FINANCIAL YEAR COULD CONCEIVABLY SERVE NO LOGICAL PURPOSE. 13.2 ON THE ABOVE PREMISES, TO SUM UP, THE RELEVANT FACTS REVEAL THAT IN COURSE OF SEARCH IN THE VARIOUS PREMISES OF THE SINGHANIA GROU P, NO UNACCOUNTED ASSETS OR PROPERTIES WERE FOUND. DETAILS OF ASSETS FOUND AND SEIZED IN COURSE OF SEARCH IN THE PREMISES OF SRI KAMAL KUMAR SINGHANIA, SRI BIMAL KUMAR SINGHANIA AND SRI JAI PRAKASH SINGHANIA HAVE BEEN MENTIONED IN THE ASSESSMENT ORDER AND ALSO RECORDED ABOVE. THE CASH FOUND IN THE RESIDENTIAL PREMISES OF SRI KAMAL KUMAR SINGHANIA WAS PART OF REGULAR CASH OF M/S TRADE FRIENDS AND THE SAME WAS ACCEPTED AS SUCH BY THE AO. THE JEWELLERIES FOUND AT HIS RESIDENCE WERE EXPLAINED AS BELONGING TO SM T. RACHNA SINGHANIA AND SMT. MINAKSHI SINGHANIA AND DULY DISCLOSED IN THEIR REGULAR BALANCE SHEETS. THE SAID EXPLANATION WAS VERIFIED AND FOUND TO BE CORRECT BY THE AO. SIMILARLY, THE CASH SEIZED FROM THE PREMISES OF SRI JAI PRAKASH SINGHANIA WAS EXPLAINED AS PART OF REGULAR CASH OF M/S TRADE WINGS. THE SAME WAS ALSO VERIFIED AND FOUND TO BE CORRECT BY THE AO. LIKEWISE, THE JEWELLERY FOUND AT HIS RESIDENCE WAS DULY DISCLOSED IN THE BALANCE SHEET OF SMT. SHANTI DEVI SINGHANIA. ACCORDINGLY, THE SAID JEWELLERY WAS NOT SEIZED BY THE SEARCH PARTY. THE STOCKS INVENTORISED IN COURSE OF SEARCH IN THE PREMISES OF M/S TRADE FRIENDS AND M/S ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 31 TRADE WINGS WERE ALSO FOUND TO THE PART OF REGULAR STOCK OF THE SAID CONCERNS. AS SUCH, NO UNACCOUNTED ASSETS OR PROPERTIES WERE F OUND IN COURSE OF SEARCH IN CASE OF SINGHANIA GROUP. 13.3 THAT APART, FEW BOOKS WERE FOUND AND SEIZED IN COURSE OF SEARCH IN THE PREMISES OF SRI JAI PRAKASH SINGHANIA, THE ASSESSEE EXPLAINED ALL ALONG THAT THE SAID BOOKS HAD BEEN FABRICATED ON THE BASIS OF REGULAR BANK TRANSACTIONS FOR THE PURPOSE OF AVAILING LOAN FROM BANK. THIS EXPLANATION WAS CORROBORATED BY THE FACT THAT NO CORRESPONDING VOUCHERS OR BILLS SUPPORTING THE ENTRIES RECORDED :.N THE FABRICATED BOOKS WERE FOUND IN COURSE OF SEARCH ALTHOUGH AL L SUPPORTING DOCUMENTS, BILLS, ETC. RELATING TO REGULAR TRANSACTIONS WERE FOUND AND SEIZED IN COURSE OF SEARCH. THE STOCK INVENTORISED BY THE SEARCH PARTY ALSO CORRESPONDED TO THE STOCK AS PER REGULAR BOOKS OF ACCOUNT AND DID NOT COMMENSURATE WITH THE FIGU RES SHOWN IN THE FABRICATED BOOKS. FURTHER, THE FABRICATED BOOKS DEPICTED IMPRACTICABLE FINANCIAL RESULTS WHICH WERE CLEARLY FAR FROM REALITY AND ACTUAL STATE OF AFFAIRS OF ASSESSEE'S BUSINESS. THE SAID BOOKS WERE WRITTEN ONLY UPTO 31ST DEC., 2001 AND NOT UPTO THE DATE OF SEARCH, ONCE AGAIN INDICATES THAT THEY HAD NOT BEEN MAINTAINED IN THE REGULAR COURSE OF BUSINESS. AS SUCH, THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE HIGHLIGHTS THE ASSESSEE'S CONTENTION THAT HE HAD NOT INDULGED IN ANY UNACCOUNTED TRANSACTION AND THAT THE SAID BOOKS WERE FABRICATED. IN VIEW OF THE ABOVE, THE ASSESSEE HAS DISCHARGED THE INITIAL ONUS OF PROVING THAT WHAT WAS APPARENT FROM THE SEIZED BOOKS WAS NOT REAL. IT WAS THE DUTY OF THE AO TO CONSIDER THE EXPLANATION OF THE ASSE SSEE VIS - A - VIS THE SURROUNDING CIRCUMSTANCES AND IN THE LIGHT OF ASSETS FOUND IN COURSE OF SEARCH. SINCE THE ASSESSEE HAD DISCHARGED THE PRIMARY ONUS OF PROVING HIS STAND, IT WAS FOR THE AO TO DISPROVE THE SAME BY BRINGING ON RECORD SOME POSITIVE MATERIAL TO ESTABLISH THAT THE IMPUGNED BOOKS RECORDED REAL TRANSACTIONS OF THE ASSESSEE, THIS WAS POSSIBLE ONLY IF THE AO CAME ACROSS SOME EVIDENCE, IN THE FORM OF EXCESS PHYSICAL STOCKS, UNACCOUNTED BILLS, VOUCHERS ETC. SUPPORTING THE ENTRIES IN THE FABRICATED BO OKS IN THE COURSE OF SEARCH. CLEARLY, IN THE PRESENT CASE, THE AO HAS FAILED TO DISCHARGE THE SAID ONUS. UNDER THE CIRCUMSTANCES, THE EXPLANATIONS OF THE ASSESSEE CANNOT BE OVERLOOKED WITHOUT BRINGING ON RECORD SOME CONCLUSIVE EVIDENCE TO THE CONTRARY. FOR OUR ABOVE CONCLUSION, WE DERIVE SUPPORT FROM THE DECISION OF TRIBUNAL, KOLKATA BENCH IN THE CASE OF ASSTT. CIT V. SRI RADHESHYAM PODDAR (1992) 41 ITD 449 (CAL), WHICH, TO QUOTE, IS AS UNDER: A READING OF SECTION 132(4A) . REVEALS THAT THE WORDS USED THEREIN ARE 'MAY BE PRESUMED'. IT IS THUS CLEAR THAT THE DRAWING OF PRESUMPTION IN SUCH CASES DEPENDS UPON PARTICULAR FACTS AND CIRCUMSTANCES OF EACH CASE. THE O FFICER IS NOT JUSTIFIED TO DRAW SUCH PRESUMPTION IN ALL CASES WITHOUT APPLICATION OF MIND JUDICIOUSLY TO THE FACTS OF A PARTICULAR CASE. EVEN IF SUCH PRESUMPTION IS DRAWN AGAINST AN. ASSESSEE THE SAME IS REBUTTABLE AND THE PERSON AGAINST WHOM SUCH PRESUMPT ION IS DRAWN IS FREE TO LEAD EVIDENCE TO REBUT SUCH PRESUMPTION AND WHEN THAT IS DONE, THE OFFICER OR AUTHORITY SHALL CONSIDER ALL THE EVIDENCE AND FACTS JUDICIOUSLY, NOW THE QUESTION IS ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 32 WHAT QUANTUM OF EVIDENCE IS REQUIRED TO REBUT SUCH PRESUMPTION IN A G IVEN CASE OR SET OF FACTS ? IN OUR OPINION, NO HARD OR FAST RULE CAN BE LAID DOWN NOR HAS BEEN LAID DOWN BY ANY COURTS. THE EVIDENCE FOR REBUTTING PRESUMPTION MAY BE EITHER DIRECT OR INDIRECT OR MAY BE BOTH. AND IN SOME CASES PERHAPS EVEN THE STATEMENT OF THE ASSESSEE MAY BE ENOUGH TO REBUT SUCH PRESUMPTION DRAWN BY THE OFFICER OR AUTHORITY.. TO SAY SO WE DRAW SUPPORT 'FROM THE 'DECISION OF THE RAJASTHAN HIGH COURT IN THE CASE OF ADDL CIT V. THAHMYAMMAL BALCHAND .... APPARENTLY NO CAUSE OF ACTION CAN LIE BE TWEEN THE ASSESSEE AND NAIHATI JUTE MILLS CO. ON THE BASIS OF SUCH UNSIGNED MOU AND, THEREFORE, THERE IS NO OBLIGATION OR LIABILITY ON THE PART OF THE COMPANY TO PAY TO THE ASSESSEE ALL THOSE AMOUNTS MENTIONED IN THE UNSIGNED MOU NOR THE ASSESSEE IS ENTITL ED TO CLAIM FROM THE COMPANY ALL THOSE AMOUNTS MENTIONED IN THAT UNSIGNED MOU. WE ARE ALSO INCLINED TO AGREE WITH THE ASSESSEE'S COUNSEL THAT WHEN NO INCOME HAS RESULTED AT ALL ON THE BASIS OF UNSIGNED MOU THEN THERE IS NEITHER ACCRUAL NOR RECEIPT OF INCOM E. UNDER THE PROVISIONS OF THE IT ACT IT IS THE REAL INCOME WHICH HAS TO BE TAXED AND NOT HYPOTHETICAL INCOME. IN THIS; CONNECTION WE DRAW SUPPORT FROM THE DECISION OF THE HON'BLE SUPREME COURT IN CIT V. SHOORJI VALLABHDAS & CO . . THE SUPREME COURT HAS ALSO LAID DOWN IN THE CASE OF STATE BANK OF TRAVANCORE V. CIT THAT THE CONCEPT OF REAL INCOME ITS CERTAINLY APPLICABLE IN JUDGING WHETHER THERE HAS BEEN INCOME OR NOT. THE HON'BLE SUPREME COURT AGAIN IN THE CASE OF K.P. VARGHESE V. ITO HAS CLEARLY STATED THAT IT WOULD INDEED BE MOST HARSH AND INEQUITABLE TO TAX A N ASSESSEE ON INCOME WHICH HAS NEITHER ARISEN TO HIM NOR IS RECEIVED BY HIM, APART FROM THE UNSIGNED MOU THE AQ HAS NOT LED ANY COGENT AND RELIABLE EVIDENCE TO ESTABLISH THAT THE ASSESSEE EARNED OR RECEIVED THE AMOUNTS MENTIONED IN THE SAID UNSIGNED MOU. A S HELD BY US EARLIER THE ASSESSEE HAS REBUTTED THE PRESUMPTION BY WAY OF AMPLE EVIDENCE WHICH IS ON RECORD.... WE ARE, THEREFORE, OF THE VIEW THAT THE CIT(A) WAS PERFECTLY JUSTIFIED IN DELETING THE ADDITION OF RS. 4,93,000 MADE BY THE AO ON THE BASIS OF UN SIGNED MOU, WE, THEREFORE, AFFIRM THE FINDING OF THE CIT(A) IN THIS REGARD. 13.4 IN THE INSTANT CASE ALSO, AS STATED ABOVE, SRI JAI PRAKASH SINGHANIA HAS LED AMPLE EVIDENCE TO REBUT THE PRESUMPTION UNDER SE CTION 132(4A) OF THE ACT AND TO PROVE THAT WHAT WAS APPARENT FROM THE SEIZED BOOKS WAS NOT TRUE. OUR ATTENTION WAS ALSO DRAWN TO THE JUDGMENT OF THE TRIBUNAL, LUCKNOW BENCH IN THE CASE OF SATNAM SINGH CHHA BRA V. DY. CIT (2002) 74 TTJ (LUCKNOW) 976 WHEREIN IT WAS HELD AS UNDER [AT PARA 30(6) AND (7)] : IN ANY CASE, THE LOOSE PAPER AND ENTRIES CONTAINED THEREIN DO NOT GO TO PROVE THAT THESE RELATE TO UNDISCLOSED INCOME OF THE ASSESSEE. IN VIEW OF THE PECULIAR FACTS OF THIS MATTER AND PARTICULARLY AFTER THE DISCHARGE OF ONUS BY THE ASSESSEE WHICH LAY UPON HIM TO EXPLAIN THE CONTENTS OF THESE DOCUMENTS, THE AO WAS UNDER A LEGAL OBLIGATION EITHER TO CORROBORATE THE CONTENTS OF THESE DOCUMENTS WITH TRANSACTIONS OF THE ASSESSEE BY INDEPENDENT MATERIAL OR BY OCULAR OR DOCUMENTARY TESTIMONY OR CONNECT THIS PAPER WITH THE PROPRIETOR OF BSC. ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 33 (EMPHASIS, ITALICISED IN PRINT, SUPPLIED) 13.5 IN VIEW OF OUR ABOVE DISCUSSIONS AND DELIBERATIONS, WE HOLD THAT THE IMPUGNED ADDIT IONS BEING BASED ON UNCORROBORATED ENTRIES IN THE FABRICATED BOOKS IN THE HANDS OF SRI KAMAL KUMAR SINGHANIA AND SRI JAI PRAKASH SINGHANIA, THE SAME ARE DIRECTED TO BE DELETED. WE ORDER ACCORDINGLY. 8. 3 . A PPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THIS ORDER , TO THE FACTS OF THE PRESENT CASE, WE HOLD THAT JUST ONE FIGURE IN THE PRINT OUT TAKEN FROM THE CPU/HARD DISK I.E. NET PROFIT FIGURE , CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE FOR THE FOLLOWING REASONS. (1) THERE IS NO CORROBORATIVE EVIDE NCE TO SUPPORT THIS FIGURE OF NET PROFIT ; (2) THE OTHER DOCUMENTS FOUND IN THE CPU PROVE THAT THIS FIGURE IS WRONG. ALL THE TRANSACTIONS ARE ACCEPTED AS CORRECT. THEN THE QUESTION OF NOT ACCEPTING THE RESULT OF SUCH TRANSACTIONS FOR ASSESSING TOTAL INCOM E DOES NOT ARISE. (3) THE G.P. RATE ARRIVED AT BY TAKING THIS FIGURE OF NE T PROFIT IS ABSURD AND ABNORMAL. IT IS AN IMPROBABLE FIGURE. (4) ONLY REAL INCOME CAN BE TAXED AND NOT HYPOTHETICAL INCOMES; (5) THE BURDEN IS ON THE REVENUE TO PROVE THAT A PARTI CULAR FIGURE IS INCOME AND THIS BURDEN IS NOT DISCHARGED IN THE PRESENT CASE. (6) THE STOCKS FOUND DURING SURVEY DO NOT SUPPORT THE STOCK FIGURE IN THE P&L ACCOUNT AND BALANCE SHEET FOUND IN THE CPU/PRINT OUT. THE RECONCILIATIONS OF ALL THE PURCHASES AND SALES ARE NOT FOUND FAULT WITH BY THE A.O. WHEN THE QUANTITATIVE DETAILS OF OPENING STOCK, PURCHASES, SALES ARE ACCEPTED THEN THE CLOSING STOCK SHOULD B ARRIVED AT FROM THE FIGURES ONLY. (7) THERE IS NO ALLEGATION OF FABRICATION OF BOOKS. THE RESULTS DE RIVED FROM THE BOOKS OF ACCOUNTS SHOULD FORM THE BASIS OF ASSESSING TOTAL INCOME. (8) STRAY AND RANDOM FIGURES CANNOT FROM THE BASIS OF DETERMINING INCOME WHEN THESE ARE PROVED TO BE WRONG FIGURES. 8.4. IN THE CASE ON HAND THE BOOKS OF ACCOUNTS HAVE NOT B EEN REJECTED. UNDER THOSE CIRCUMSTANCES SUBSTITUTING THE BOOK RESULTS WITH A RANDOM ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 34 FIGURES OBTAINED FROM THE DOCUMENT FOUND I.E. P&L ACCOUNT IN THE CPU IS INCORRECT . THERE ARE A CATENA OF JUDGEMENTS WHICH LAY DOWN THAT WHEN BOOKS OF ACCOUNTS ARE NOT RE JECTED, THE QUESTION OF ESTIMATING INCOME DOES NOT ARISE. HERE THE FIGURE OF PROFIT CANNOT BE REPLACED WITHOUT REJECTING THE BOOKS OF ACCOUNTS. 8. 5 . IN VIEW OF THE ABOVE DISCUSSION WE DELETE THE IMPUGNED ADDITION OF RS.3,06,91,356/ - MADE BY THE AO A S CONFIRMED BY THE FIRST APPELLATE AUTHORITY. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH AUGUST, 2015 . SD/ - SD/ - ( A.T. VARKEY ) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 05 TH AUGUST , 2015 *MANGA ITA NO.1944/DEL/2013 A.Y. 2001 - 02 SHRUTI FASTENERS LTD. 35 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR