VISHNU PRAKASH SHARMA, Jaipur V. ACIT, Alwar

ITA 197/JPR/2011

• Counselvise Citation: 19723114 RSA 2011
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-10-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: O P AGARWAL
• Keywords: Unexplained investment; Loose papers; Initiation of penalty proceedings; Competent authority; Right to appeal; Retraction; Documents seized
• Section: 153A; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR ( BEFORE SHRI HARI OM MARATHA AND SHRI N.K. SAINI ) ITA NO.197/JP/2011 ASSESSMENT YEAR: 2008-09 PAN: AGMPS 4689P SHRI VISHNU PRAKASH SHARMA VS. THE ACIT PROP. M/S. SHYAM MURTI EMPORIUM CENTRAL CIRCLE 1994, SHYAM BHAWAN, ALWAR IV CROSSING, KHEJARO KA RASTA CHANDOLE BAZAR, JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MANISH AGARWAL & SHRI O.P. AGARWAL DEPARTMENT BY : SHRI D.C. SHARMA DATE OF HEARING : 23.01.2014. DATE OF PRONOUNCEMENT : 07.03..2014 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL OF THE ASSESSEE FOR THE A.Y. 2008-09 I S DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-CENTRAL, JAIPUR DATED 07.02.2011 WH EREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 1,03,44,198/- ARBITRA RILY WITHOUT PROPERLY APPRECIATING THE SUBMISSIONS MADE THUS THE RESULTANT ADDITION DE SERVES TO BE DELETED. 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN RELYIN G UPON THE SO CALLED SURRENDER MADE VIDE LETTER DATED 22.12.2009 AS BASIS OF THE ADDITI ON WHEN THE SAME WAS CONDITIONAL OFFER AND THE LD. AO HAS NOT ACCEPTED THE CONDITION S OF THE ASSESSEE, THUS THE OFFER OF THE ASSESSEE IS NOT ACCEPTED IN TOTAL THEREFORE THE ALLEGED SURRENDER DESERVES TO BE IGNORED AND EXCLUDED AND THE RESULTANT ADDITION DES ERVES TO BE DELETED. 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS FURTHER ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS DEC LARED STOCK AS ON DATE OF SEARCH AT RS. 1,20,49,893/- AS AGAINST THE STOCK VALUED BY SE ARCH PARTY AT RS. 1,18,49,498/- THUS THE ADDITION AS CONTINUED BY LD. CIT(A) ON ACC OUNT OF ALLEGED EXCESS STOCK DESERVES TO BE DELETED. 2.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN HOLDIN G THE BOOKS COMPLETED BY ASSESSEE AFTER SEARCH AS AN AFTER THOUGH WHEN THE SAME WERE DULY INCORPORATED ALL THE PURCHASES AND SALES AND BACKED BY RELEVANT BILLS AN D VOUCHERS, THUS SUCH OBSERVATIONS OF LD. CIT(A) DESERVES TO BE EXCLUDED AND IGNORED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 1,19,030/- MADE ON A CCOUNT OF VALUE OF STOCK FOUND AT IV CROSSING, KHAJANEWALON KA RASTA, JAIPUR WHEN THE SAME WAS DULY ACCOUNTED FOR BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS, THUS THE ADDITION OF RS. 1,19,030/- DESERVES TO BE DELETED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 28,76,050/- BY ALLEG ING THE SAME AS UNEXPLAINED BY IGNORING THE FACT THAT THE ASSESSEE IN HIS STATEMEN T STATED THAT THE ASSESSEES SHARE IN UNEXPLAINED CASH INVESTMENT WAS RS. 15 LACS (APP.) AND THE BALANCE UNEXPLAINED INVESTMENT WAS THAT OF SHRI SHANKAR LAL WHICH STAND S COVERED AGAINST INCOME SURRENDERED WHILE FILING THE RETURN OF INCOME. A.Y. 2005-06 3,10,000/- A.Y. 2007-08 4,55,000/- A.Y. 2008-09 10,30,000/- 17,95,000/- THUS THE ADDITION OF RS. 28,76,050/- AS UPHOLD BY THE LD. CIT(A) ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN AXIS MALL DESERVE S TO BE DELETED. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) ERRED IN UPHOLDING THE CHARGING OF INTEREST U/S 234-A AMOUNTING TO RS. 1,12,558/- AND INTEREST U/S 234-B AMOUNTING TO RS. 7,87,907/- BY IGNORING THE FACT TH AT THE DELAY IN FILING THE RETURN OF INCOME IS NOT ATTRIBUTABLE TO THE ASSESSEE BUT WAS DUE TO DELAY IN PROVIDING PHOTOCOPIES OF THE SEIZED MATERIAL BY THE DEPARTMEN T, THUS THE LEVY OF INTEREST TO THE PERIOD OF DELAY NOT ATTRIBUTABLE TO ASSESSEE DESERV ES TO BE EXCLUDED AND REDUCED FOR CHARGING OF INTEREST U/S 234-A AND 234-B OF THE INC OME TAX ACT, 1961. 2.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE RECORD. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SEARCH OPERATION U/S 132 OF THE INCOME-TAX ACT, 1961 (THE ACT FOR SHORT) WAS CARRIED OUT AT THE BUSINESS AND RESIDENTIAL PREMISES ON 3 10-01-2008, THE ASSESSEE GROUP, CALLED AS A PANDEY GROUP. THEREAFTER, THE ASSESSEE FILED HIS RETURN OF INCOME [ROI] , DECLARING TOTAL INCOME OF RS. RS. 16,60,210/- ON 18.11.2009 AFTER INCLUDING AN INCOME OF RS. 10,30,0 00/- AS ADDITIONAL INCOME AS A RESULT OF SEARCH. HOWEVER, THE INCOME WAS ASSESSED AT RS. 1,20,04,808/- BY MAKING AN ADDITION OF RS. 1,03,44,198/- BEING THE AMOUNT OF EXCESS STO CK FOUND DURING THE COURSE OF SEARCH AND INVESTMENT MADE OUT OF BOOKS OF ACCOUNTS IN THE IMMOVABLE PROPERTY. 2.2 AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A, ) WHICH HAS BEEN DISMISSED. 2.3 NOW THE ASSESSEE IS BEFORE US .. 2.4 GROUND NOS. 1 TO 3 PERTAIN TO THE ADDITION MADE ON ACCOUNT OF EXCESS STOCK BY TREATING IT AS UNEXPLAINED. IN FACT THE SEARCH WAS CONDUCTED U/S 132 OF THE ACT AND DURING THE SEARCH PROCEEDINGS THE STOCK AS AVAILABL E WAS PHYSICALLY QUANTIFIED AND VALUED. BESIDES, CERTAIN LOOSE PAPERS WERE ALSO FO UND AND SEIZED. THE STATEMENTS OF THE ASSESSEE AND HIS FAMILY MEMBERS WERE RECORDED U/S 1 32(4) OF THE ACT. IN THE STATEMENTS RECORDED THE ASSESSEE ADMITTED CERTAIN INCOME ON ACCOUNT OF ALLEGED EXCESS STOCK AND INVESTMENT IN THE IMMOVABLE PROPERTIES. HOWEVER, I N THE RETURN OF INCOME FILED, THE ASSESSEE DID NOT DISCLOSE THE INCOME ADMITTED ON AC COUNT OF ALLEGED EXCESS STOCK. THE AO WHILE COMPLETING THE ASSESSMENT HAS MADE THE ADD ITION ON ACCOUNT OF EXCESS STOCK AT RS. 92,63,148/- BY HOLDING THAT THE ASSESSEE HAS AG AIN ACCEPTED THE SAME DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE LETTER DATED 22.12.2009 IN THE PRESENCE OF HIS AR WHERE HE REPRESENTS THAT THE OFFER OF ADDITIONAL IN COME IS SUBJECT TO THE CONDITION THAT NO PENALTY PROCEEDNG MAY BE INITIATED AND IMPOSED AND NO FURTHER ADDITION ON ACCOUNT OF LOOSE PAPER MAY BE MADE. IT IS NOTED THAT THE ASSES SEE, HOWEVER, FURTHER SUBMITTED THAT 4 THE RECONCILIATION STATEMENT PREPARED AFTER THE COM PLETION OF THE BOOKS OF ACCOUNTS, WHICH WERE FOUND INCOMPLETE AT THE TIME OF SEARCH, ACCORDING TO WHICH THE STOCK AS PER BOOKS OF ACCOUNTS IS MATCHING WITH THE STOCK PHYSIC ALLY QUANTIFIED BY THE SEARCH TEAM AND THE ASSESSEE ALSO POINTED OUT CERTAIN FURTHER D ISCREPANCIES IN STOCK AS FOUND AND VALUED DURING THE SEARCH. THE AO HAS NOT CONSIDERED THE REQUEST OF THE ASSESSEE OF NON INITIATION OF PENALTY PROCEEDINGS AND ALSO WITHOUT VERIFYING THE RECONCILIATION SUBMITTED BY THE ASSESSEE HAS COMPLETED THE ASSESSMENT BY MAK ING ADDITION AS OFFERED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S AND HAS ALSO INITIATED THE PENALTY PROCEEDINGS BY STATING THAT THE PENALTY PROCEEDINGS ARE MANDATORY. THE LD. CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME DURING THE COURSE OF SEARCH AND IF THERE WAS ANY DISCREPANCY IN THE STOCK INVENTORY PREPARED DURING THE COURSE OF SEARCH AND HE WAS SO SURE ABOUT THE CORRECTNESS ABOUT THE STOCK LIST PREPARED AND FILED BASED ON THE BOOKS OF ACCOUNTS DURING THE ASSESSMENT PROCEED INGS, THEN, WHY HE ADMITTED AGAIN THE EXCESS STOCK.. THE LD. CIT(A) FURTHER HELD THAT THE REQUEST OF NON INITIATION OF THE PENALTY MADE IN ASSESSMENT PROCEEDINGS ALONGWITH TH E OFFER OF ADDITIONAL INCOME MADE BY THE ASSESSEE IS LAWFULLY INVALID CONDITION WHICH CANNOT BE ACCEPTED AND IN THE ABSENCE OF DAY TO DAY QUANTITATIVE RECORDS. THEREFORE, HE HAS CONFIRMED THE ADDITION MADE ON ACCOUNT OF EXCESS STOCK. 2.5 THE LD. AR OF THE ASSESSEE SUBMITS THAT THE SEA RCH U/S 132 OF THE ACT COMMENCED IN THE EARLY MORNING AT AROUND 7.00 A.M. ON 10.01.2008, AND CONCLUDED IN THE LATE NIGHT OF 11.01.2008 AFTER THE EXPIRY OF MO RE THAN 42 HOURS DURING WHICH THE STATEMENTS OF THE ASSESSEE WERE RECORDED AT SEVERAL TIMES. THE SEQUENCE OF THE EVENTS AND SERIATIM OF THE STATEMENTS FURTHER REVEAL THAT THE CONTINUA TION OF STATEMENTS WAS WITH THE 5 MOTIVE OF MAKING PRESSURE ON THE ASSESSEE FOR ADMIT TING ADDITIONAL INCOME WHICH IS A MOST TORTUROUS ACT AND SUCH STATEMENTS COULD NOT BE SAID TO BE FREE AND VOLUNTARILY GIVEN STATEMENTS. IN THIS REGARD, HE PLACED RELIANCE ON THE DECISION OF HONBLE PATNA HIGH COURT RENDERED IN THE CASE OF CIT VS. RAJENDRA SIN GH WHERE THE HONBLE COURT HAS ACCEPTED THE ORDER OF HUMAN RIGHT COMMISSION, BIHAR WHO UNDER THE SIMILAR CIRCUMSTANCES HAS HELD THE ACT OF THE DEPARTMENT IN CONTINUING THE SEARCH FOR MORE THAN 36 HOURS IN VIOLATION OF HUMAN RIGHTS. IT HAS BEEN FURTHER CONTENDED THAT SINCE DURING THE SEARCH BOOKS OF ACCOUNTS OF THE ASSESSEE WERE INCOM PLETE WHICH IS AN ADMITTED POSITION BY THE DEPARTMENT, THERE WAS NO MECHANISM AVAILABLE TO DETERMINE THE UNDISCLOSED STOCK. THE LD. AR VEHEMENTLY PLEADED THAT THE RECORDING OF STATEMENTS CANNOT BE MADE A LAUNCHING PAD FOR MAKING ADDITIONS UNLESS THE STATE MENTS RECORDED ARE CORROBORATED WITH THE COGENT MATERIAL TO PROVE THE EXISTENCE OF UNDIS CLOSED INCOME. IT IS ALSO THE CASE OF THE ASSESSEE THAT IN SPITE OF REPEATED REQUESTS THE DEP ARTMENT DID NOT SUPPLY THE INVENTORY SHEETS TILL THE FAG-END OF THE ASSESSMENT PROCEEDIN GS THEREBY LEAVING NO OPPORTUNITY WITH THE ASSESSEE TO RECONCILE THE DIFFERENCE IN THE STO CK ALLEGED TO HAVE BEEN FOUND IN EXCESS. 2.6 PER CONTRA THE LD. DR HAS SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND HAS SUBMITTED THAT THE ASSESSEE HIMSELF HAS MADE SURREN DER ON ACCOUNT OF EXCESS STOCK IN THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH PRO CEEDINGS AND ALSO BEFORE THE ASSESSING AUTHORITY DURING THE COURSE OF ASSESSMENT PROCEEDI NGS AND IT IS A CALCULATED ATTEMPT TO ESCAPE THE TAX LIABILITY WITHOUT IN ANY MANNER PROV ING THAT THE STATEMENTS WERE GIVEN UNDER DURESS OR THEY WERE OBTAINED BY COERCION. TH EREFORE, AS PER LD DR THE STAND TAKEN BY THE ASSESSEE SHOULD NOT BE ACCEPTED AND SHOULD B E REJECTED. 6 2.7 AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSIO NS ON THE ISSUE AND HAVING GONE THROUGH THE RECORDS AND THE PRECEDENTS RELIED UPON, WE FIND FORCE IN THE ARGUMENT OF THE LD. AR THAT AT THE TIME OF SEARCH THE CONFESSIONAL STATEMENTS RECORDED OF THE ASSESSEE CANNOT BE SAID TO BE FREE AND INDEPENDENT STATEMENT S. ANY ADMISSION MADE IN IGNORANCE OF LEGAL RIGHTS OR UNDER DURESS CANNOT BIND THE MAK ER OF ADMISSION AND MERE ADMISSION CANNOT BE BEDROCK OR FOUNDATION OF AN ASSESSMENT AN D IT IS ALWAYS OPEN TO THE ASSESSEE WHO MADE THE ADMISSION TO SHOW THAT WHAT HE ADMITTE D WAS NOT CORRECT. THE NAGPUR BENCH OF THE ITAT IN THE CASE OF DCIT VS. SADHURAM WADHAWANI REPORTED IN 81 TTJ 839 HAS HELD THAT THE ADDITION MADE BY THE AO WAS M ERELY BASED ON THE STATEMENT OF THE ASSESSEE RECORDED UNDER S. 132(4) AND THE SEARCH CO NTINUED FOR A LONG TIME WITHOUT ANY REAL PURPOSE INDICATES THAT THE INTENTION WAS TO OB TAIN DISCLOSURE OF INCOME, THE DISCLOSURE CANNOT BE CONSIDERED AS A VOLUNTARY DISCLOSURE. ASS ESSEE HAVING RETRACTED THE STATEMENT SUCCESSFULLY BY ADDUCING SUFFICIENT CORROBORATING E VIDENCE TO SHOW THAT THE SAID STATEMENT WAS NOT VOLUNTARY AND THAT THE ADMISSION MADE THEREIN WAS INCORRECT. THE IMPUGNED ADDITION MADE BY THE AO ON THAT COUNT IS NOT SUSTAINABLE. THE JODHPUR BENCH OF ITAT IN THE CASE OF ASHOK KUMAR SONI VS. ACIT RE PORTED IN 26 TW 135 HAS HELD THAT THE ADMISSION MADE IN THE STATEMENT RECORDED U/S 13 2(4) CANNOT BE SAID TO HAVE THE SAME VALUE AS AN ADMISSION WHEN IT STANDS RETRACTED WITH EVIDENCE LATER ON. THE HONBLE SUPREME COURT IN THE CASE OF DIT VS. POORANMAL AND SONS REPORTED IN 96 ITR 390 HAS HELD THAT CONFESSION CANNOT BE MADE FOUNDATION OF T HE ASSESSMENT. THE HONBLE APEX COURT IN THE CASE OF PULLANGODE RUBBER PRODUCTS CO. LTD. V/S STATE OF KERALA & ANR. 1972 CTR (SC) 253 = (1973) 91 ITR 18 (SC), HAS HEL D THAT AN ADMISSION IN A STATEMENT RECORDED ON OATH IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT 7 IS CONCLUSIVE AND IT IS ALWAYS OPEN TO THE PERSON W HO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. IN THE PRESENT CASE THE ASSESSEE THOU GH HAD ACCEPTED THE EXCESS STOCK IN THE STATEMENTS RECORDED U/S 132(4) OF THE ACT AT THE TI ME OF SEARCH HOWEVER WHILE FILING THE RETURN OF INCOME HE DID NOT INCLUDE THAT AMOUNT IN THE INCOME DECLARED WHICH BY ITSELF IS A RETRACTION TO THE STATEMENTS AND WHEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS HE WAS ONCE AGAIN COMPELLED BY THE ASSESSING AUTHORITY THEN A CONDITIONAL OFFER WAS MADE WHERE HE OFFERED THE ADDITIONAL INCOME ON ACCOUNT O F EXCESS STOCK TO PURCHASE THE PEACE OF MIND WITH A FURTHER CONDITION THAT PENALTY SHO ULD NOT BE LEVIED ON SUCH ADDITIONAL INCOME AND THE AO DID NOT ACCEPT HIS OFFER, THE AS SESSEE ON THE NEXT VERY DAY, SUBMITTED THE NECESSARY RECONCILIATION AND OTHER RELEVANT DET AILS ALONGWITH THE BOOKS OF ACCOUNTS TO THE AO FOR VERIFICATION AND CLAIMED THAT THERE WAS NO DISCREPANCY IN THE STOCK AS AT THE TIME OF SEARCH THE BOOKS OF ACCOUNTS WERE INCOMPLET E AND AFTER COMPLETION OF THE SAME THE INVENTORY SHEET HAS BEEN PREPARED AND FILED. T HE JAIPUR BENCH OF ITAT IN THE CASE OF KALINDEE RAIL NIRMAL ENGG. LTD. VS. DCIT REPORTED I N 28 TW PAGE 280 HAS HELD THAT COUNTER PROPOSAL GIVEN BY THE ASSESSEE IS NOT BINDI NG ON IT SINCE IT WAS NOT ACTED UPON BY THE AO IN ITS ENTIRETY AND HENCE THE ASSESSMENT IS NOT AN AGREED ASSESSMENT. THUS, BY RESPECTFULLY FOLLOWING THE ABOVE LEGAL POSITION IN THE LIGHT OF THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT THE ASSESSEE HAS DULY RETRACTED THE ADMISSION MADE IN THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH ON ACCOUNT OF EXCESS STOCK WITH THE HELP OF THE SUFFICIENT EVIDENCE AND THEREFORE, NO ADDITION COU LD BE MADE SOLELY ON THE BASIS OF SUCH ADMISSION. ACCORDINGLY, WE DIRECT TO EXCLUDE THE A DMISSION MADE IN THE STATEMENTS FOR SUPPORTING THE IMPUGNED ADDITION. MORE SPECIFICALLY WHEN THE RECONCILIATION OFFERED BY THE ASSESSEE HAS NOT BEEN FOUND TO BE FALSE, WE HA VE TO SEE AS TO WHETHER DEHORS THE 8 CONFESSIONAL STATEMENTS CAN ANY ADDITION BE MADE OR SUSTAINED ON MERITS OF THE CASE. IT WAS STATED BY THE LD. AR THAT THERE IS NO DISCREPAN CY IN THE STOCK FOUND DURING THE COURSE OF SEARCH AND TO SUPPORT THIS ASSERTION A WRITTEN S UBMISSION HAS BEEN FILED, THE RELEVANT PORTION THEREFROM IS BEING REPRODUCED AS UNDER: THESE GROUNDS RELATES TO THE CONFIRMATION OF ADDIT IONS OF RS. 1,03,44,198/- [1,02,25,168 + 1,19,030] MADE TO THE TOTAL INCOME OF ASSESSEE ON ACCOUNT OF ALLEGED EXCESS STOCK OF RS. 92,63,148/- STATED FOUND DURING THE COURSE OF S EARCH AND THE PAYMENT OF RS. 28,76,050/- MADE TOWARDS THE PURCHASE OF PROPERTY, AS REDUCED BY THE AMOUNT OF ADDITIONAL INCOME OF RS. 17,95,000/- DECLARED BY TH E ASSESSEE IN ITS RETURN OF INCOME FILED FOR VARIOUS PREVIOUS ASSESSMENT YEARS. IN THE MATTER IT IS SUBMITTED THAT DURING THE COURS E OF SEARCH OPERATION CONDUCTED ON 10- 11.01.2008 AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE AND HIS FAMILY MEMBERS, THEIR STATEMENTS WERE RECORDED. AT THE TIM E OF SEARCH TOTAL FIVE (5) CONCERNS WERE RUN BY THE ASSESSEE AND HIS FAMILY MEMBERS IN THEIR PROPRIETORSHIP WHO ALL WERE DEALING IN MOORTIES AND STOCK OF ALL THESE FIRMS WA S KEPT AT PREMISES SITUATED AT 1994, KHEJDON KA RASTA, CHANDPOLE BAZAAR, JAIPUR AND HOUS E AT NEW COLONY IN MIXED FORM. DURING THE COURSE OF SEARCH THE STOCK PHYSICALLY AV AILABLE AT ABOVE TWO PREMISES WAS INVENTORIZED AND WAS VALUED AT RS. 1,17,30,918/- IN TERMS OF THE INVENTORY SHEETS PREPARED (APB 148 TO 236). SINCE THE ASSESSEES REG ULAR BOOKS OF ACCOUNTS WERE INCOMPLETE AT THE TIME OF SEARCH, ON THE BASIS OF S UCH INCOMPLETE BOOKS OF ACCOUNTS THE STOCK AS PER BOOKS WAS TAKEN AT RS. 25,86,800/- AND ACCORDINGLY THE EXCESS STOCK OF RS. 91,44,118/- (BEING 1,17,30,918 25,86,800) WAS WOR KED OUT BY THE DEPARTMENT. BESIDES, THIS CERTAIN OTHER ENTRIES OF UNEXPLAINED INVESTMEN T IN THE ACQUISITION OF PROPERTY AT AXIS MALL FOR RS. 28,76,050/- WAS ALSO FOUND AND WAS ADM ITTED BY ASSESSEE. HOWEVER, IN THE RETURN OF INCOME FILED ASSESSEE HAS ADMITTED AND DI SCLOSED ADDITIONAL INCOME OF RS. 10,30,000/- IN ADDITION TO RS. 3,10,000/- DECLARED IN A.Y. 2005-06, RS. 4,55,000/- DECLARED IN A.Y. 2007-08 BEING THE INVESTMENT MADE IN THE ACQUISITION OF THE PROPERTY AT AXIS MALL AND HAD NOT DECLARED ANY ADDITIONAL INCOM E ON ACCOUNT OF THE ALLEGED EXCESS STOCK ADMITTED DURING THE COURSE OF SEARCH. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS CONTENDED THAT THE BOOKS OF ACCOUNTS WERE INCOMPLETE AT THE TIME OF SEARCH AND THEREAFTE R THE SAME WERE COMPLETED ON THE BASIS OF THE PURCHASE AND SALES VOUCHERS AVAILABLE WITH THE ASSESSEE AND THE STOCK AVAILABLE AS PER BOOKS OF ACCOUNTS WAS WORKED OUT B ASED ON THAT THERE REMAINED NO DIFFERENCE IN THE PHYSICALLY FOUND STOCK AND THE ST OCK AS PER BOOKS OF ACCOUNTS. ASSESSEE ALSO FILED THE NECESSARY EXPLANATIONS / EVIDENCES I N SUPPORT OF THE CONTENTIONS BUT THE LD. AO (APB 30-79) WITHOUT IN ANY MANNER CONSIDERING AND APPLYING HIS MIND OPT ED TO SIMPLY HARP UPON THE SHEER CONTENTION THAT SINCE TH E SURRENDER WAS MADE THE ADDITION ARE BOUND TO BE MADE. THEREFORE UNDER THE EXTREME PRESS URE OF THE LD. AO, THE ASSESSEE AT THE FAG-END OF THE ASSESSMENT PROCEEDINGS MADE A CO NDITIONAL SURRENDER VIDE LETTER DATED 22.12.2009 WHEREIN THE ASSESSEE WHEREIN THE ASSESSE E HAS AGREED TO ACCEPT AND PAY THE 9 TAXES ON THE ADDITIONAL INCOME AS ADMITTED DURING T HE COURSE OF SEARCH TO PURCHASE THE PEACE WITH CLEAR STIPULATION THAT NO PENALTY PROCEE DINGS SHOULD BE INITIATED IN CASE THE ADMISSION IS ACCEPTED OTHERWISE THE MATTER MAY BE D ECIDED ON MERIT ON THE BASIS OF THE CONTENTION RAISED AND THE EVIDENCES PRODUCED WHICH IS VERY MUCH CLEAR FROM THE OPENING PART OF THE SO CALLED ADMISSION LETTER SUBMITTED BY THE ASSESSEE WHEREIN ASSESSEE HAS CATEGORICALLY STATED THAT (AO PAGE 5) WITHOUT PREJ UDICE TO THE SUBMISSION MADE EARLIER AND THE MATERIAL AVAILABLE ON RECORD THE FOLLOWING FACTS ARE SUBMITTED FOR YOUR KIND PERUSAL AND RECORD. THUS THE ONLY COURSE WHICH WAS LEGALLY PERMISSIBLE FOR THE LD. AO WAS EITHER TO ACCEPT THE SO CALLED ADMISSION IN THE TERMS INDICATED BY THE ASSESSEE IN SUCH LETTER OR TO DECIDE THE MATTER ON MERITS IN CASE TH E ADMISSION GIVEN BY THE ASSESSEE IS NOT ACCEPTABLE IN TOTO. HOWEVER, THE LD. AO FULLY REJEC TING THE SAME INSISTED UPON THE LEVY OF PENALTY THEREFORE THE ASSESSEE FINALLY FILED LETTER GIVING ENTIRE DETAILS ON 24.12.2009 I.E. A DAY AFTER THE LETTER DATED 22.12.2009 ADMITTING UND ISCLOSED INCOME (APB 30). IT MAY KINDLY BE SEEN THAT THE LD. AO DID NOT ACCEP T THE OFFER MADE BY THE ASSESSEE BY STATING THAT THE ASSESSEE IS LIABLE TO PAY THE PENA LTY U/S 271AAA ON SUCH ADDITIONAL INCOME AND WITHOUT CONSIDERING THE MERITS IN THE RE CONCILIATION AND THE EVIDENCES SUBMITTED BY THE ASSESSEE IN RESPECT TO THE STOCK A VAILABLE WITH HIM AS PER BOOKS OF ACCOUNTS PROCEEDED TO COMPLETE THE ASSESSMENT BY MA KING TOTAL ADDITION OF RS. 1,03,44,198/- AS AGAINST THE ADMISSION OF RS. 1,02, 25,168/- OFFERED BY THE ASSESSEE. THE LD. AO HAD MADE ASSESSMENT BY ACCEPTING PART OFFER OF THE ASSESSEE WHICH IS FAVORABLE TO HIM AND REJECTED THE CONDITIONS ATTACHED TO IT THUS ASSESSMENT CANNOT BE HELD AS AN AGREED ASSESSMENT MORE PARTICULARLY WHEN IT WAS NOT CONSIS TENT WITH ALL THE TERMS AND CONDITIONS OF THE OFFER MADE BY THE ASSESSEE, THEREFORE THE AS SESSEE PREFERRED APPEAL BEFORE THE COMPETENT AUTHORITY I.E. THE LD. CIT(A), CENTRAL, J AIPUR WHO SUMMARILY REJECTED THE APPEAL OF THE ASSESSEE BY MAKING VARIOUS OBSERVATIO NS AT PAGES 14 TO 19 OF HIS ORDER WHICH ARE SUMMARIZED AS UNDER: 1. IN THE STATEMENT RECORDED U/S 132(4) DURING THE COU RSE OF SEARCH THE ASSESSEE HAS ACCEPTED EXCESS STOCK OF RS. 1,17,30,918/- IN REPLY TO QUESTION NO. 25 OF HIS STATEMENT. 2. THE APPELLANT FAILED TO FURNISH THE BOOKS OF ACCOUN TS AND MORE PARTICULARLY PURCHASE VOUCHERS BEFORE THE AO. THE APPELLANT IN P RESENCE OF HIS ARS FILED LETTER OF SURRENDER DATED 22.12.2009 AND OFFERED RS . 1,02,25,168/- FOR TAX. 3. IT IS A CLEAR CUT CASE WHERE THE EXCESS STOCK WAS N OT ONLY FOUND BUT SURRENDERED DURING THE COURSE OF SEARCH AND LATER ON THE APPELL ANT TRIED HIS BEST TO ESCAPE FROM THE TAX LIABILITY. 4. THE CONDITION OF NOT IMPOSING THE PENALTY SO PUT BY THE APPELLANT IS JUST A PLOY TO TRY TO AVOID FURTHER FINANCIAL BURDEN AND SUCH COND ITION IS LAWFULLY INVALID CONDITION. 5. IN ANSWER TO QUESTION NO. 10 IN HIS STATEMENTS RECO RDED DURING THE COURSE OF SEARCH, THE APPELLANT HAD STATED THAT NO PHYSICAL I NVENTORY OF STOCK IS PREPARED AND ONLY ON THE BASIS OF ESTIMATE, DETAILS OF STOCK AS ON 31 ST MARCH IS PREPARED. FURTHER THE AUDITORS HAVE ALSO MENTIONED THAT REGULAR STOCK REGISTER IS NOT MAINTAINED HENCE IT IS NOT POSSIBLE FOR US TO PROVIDE QUANTITA TIVE DETAILS. ACCORDINGLY THE 10 PHYSICALLY INVENTORY AS PER THE BOOKS PREPARED BY T HE ASSESSEE AFTER THE SEARCH AND SUBMITTED BEFORE THE AO HAS BEEN RIGHTLY REJECT ED BY THE AO. ALL THE AFORESAID ALLEGATION MADE BY LD. CIT(A) DO NOT FIND FORCE IN THE LIGHT OF THE SUBMISSIONS MADE HEREIN AFTER. IN THE CASE OF THE ASSESSEE THE SEARCH U/S 132 HAD COMMENCED AT THE BUSINESS AND RESIDENTIAL PREMISES AT AROUND 7.00 A.M. ON 10 TH JANUARY, 2008 AND IT WAS CONCLUDED IN LATE NIGHT OF 11 TH JANUARY I.E. AFTER ABOUT 42 HOURS WHEN THE CONFESS IONAL STATEMENTS WERE RECORDED AND CONCLUDED. DURING THE COURSE OF SEARCH THE STATEMENTS OF ASSESSEE WERE RECORDED SEVERAL TIMES FIRSTLY AT THE TIME OF INITI ATION OF SEARCH ON 10.01.2008 AND LASTLY IN THE LATE EVENING OF 11.01.2008 WHEN THE SEARCH W AS CONCLUDED AFTER REPEATED PHYSICAL SEARCH AND VERIFICATION BY RANSACKING THE ENTIRE HO USE AND BUSINESS PLACES OF THE ASSESSEE. FROM THE SEQUENCE OF THE EVENTS AND SERIATIM OF THE STATEMENTS RECORDED, IT IS QUITE CLEAR THAT THEY WERE CONTINUAL STATEMENTS RECORDED AFTER KEEPING ASSESSEE AWAKE TILL THE CONCLUSION OF SEARCH FROM ITS INITIATION WHICH IS A MOST TORTUROUS ACT AND UNDER THESE CIRCUMSTANCES THE STATEMENTS OF A NORMAL HUMAN BEIN G LIKE ASSESSEE COULD NOT BE SAID TO BE FREE AND VOLUNTARILY GIVEN STATEMENTS AND IT IS A SERIOUS EFFORT OF SEIZING THE HUMAN RIGHT OF A REPUTED CITIZEN OF THIS COUNTRY. THE HUM AN RIGHT COMMISSION OF STATE OF BIHAR IN THE CASE OF RAJENDRA SINGH VIDE ITS ORDER IN FILE N O/ COMP 2665/10 HAS EXPRESSED THIS VIEW WHICH HAS BEEN AFFIRMED BY HONBLE PATNA HIGH COURT, COPIES OF BOTH THE ORDERS ARE ENCLOSED WITH SUBMISSIONS. WITH THE ABOVE BACKGROUND, IT IS FURTHER SUBMITTED AS UNDER: 1. THAT THE REPLY TO QUESTION NO. 25 CANNOT BE SEEN IN ISOLATION ONLY, AS HAS BEEN DONE IN THE PRESENT CASE. REPLY TO QUESTION NO. 6, 7, 24 AND 25 (APB 10-23) SHOULD BE READ TOGETHER BEFORE DRAWING ANY CONCLUSI ON - (APB-13). (APB-22). FROM THE PERUSAL OF THE STATEMENTS IT IS CLEAR T HAT AT THE TIME OF SEARCH THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE WERE INCOMPLETE ON THE BASIS OF WHICH THE STOCK INVENTORY AS PER BOOKS OF ACCOUNTS WERE TAKEN BY THE DEPARTMENT. ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAS SUB MITTED THE COMPLETE LIST OF INVENTORY ALONGWITH THE DETAILS OF PURCHASES ETC. S O AS TO PROVE THAT THE STOCK AVAILABLE IS DULY RECORDED IN THE BOOKS OF ACCOUNTS (APB 31 TO 79) . IT IS AN ESTABLISHED LAW THAT CONFESSION CANNOT BE MADE FOUNDATION OF THE ASSESSMENT AND THE HONBLE SUPREME COURT IN THE CAS E OF PULLANGODE RUBBER PRODUCTS CO . LTD. V/S STATE OF KERALA REPORTED IN 91 ITR 18 HAS HELD THAT IF THE PERSON MAKING THE CONFESSIONAL STATEMENT HAS REBUTT ED THE SAME WITH EVIDENCES SUCH CONFESSION COULD NOT BE MADE BASIS FOR MAKING THE ADDITIONS, THEREFORE THE STATEMENTS GIVEN BY THE ASSESSEE CANNOT BE MADE SOL E BASIS FOR MAKING A HUGE ADDITION. 11 2. THAT WITH REGARD TO FAILURE TO FURNISH BOOKS OF ACC OUNTS AND PURCHASE BILLS ARE CONCERNED, IT IS SUBMITTED THAT THE ASSESSEE HAD MA INTAINED ALL THE REQUIRED DETAILS AND BOOKS OF ACCOUNTS WERE ALSO AUDITED AS PER THE REQUIREMENT OF THE I.T. ACT, 1961. THE BOOKS OF ACCOUNTS SO MAINTAINED IN THE NO RMAL COURSE OF BUSINESS WERE ALSO TENDERED FOR VERIFICATION BEFORE THE AO AS AND WHEN DESIRED WHICH IS ALSO CLEAR FROM THE REPLY DATED 24.12.2009 (APB 30) . FURTHER THE CONFIRMATION AND OTHER DETAILS AS DESIRED BY THE LD. AO VIDE LETTERS DATED 18.12.2009 WERE SUBMITTED VIDE LETTER DATED 22.12.2009 (APB 81). IN FACT THE ASSESSEE HAS TENDERED THE BOOKS OF ACCOUNTS BEFORE THE LD. AO WHO HAS WRO NGLY OBSERVED IN THE ASSESSMENT ORDER THAT NO BOOKS OF ACCOUNTS WERE PRO DUCED FOR EXAMINATION. 3. WITH REGARD TO FILING OF LETTER OF OFFER OF ADDITIO NAL INCOME DATED 22.12.2009 AS SUBMITTED ABOVE, THE LD. AO HAS NOT ACCEPTED SUCH O FFER IN TOTO THEREFORE, IT DESERVES NO CREDENCE. IN THIS REGARD RELIANCE WAS P LACED BY THE ASSESSEE ON THE DECISION OF JAIPUR BENCH OF ITAT IN THE CASE OF KAL INDEE RAIL NIRMAN ENGG. LTD. VS. JCIT REPORTED IN 28 TW 280 WHEREIN IT HAS BEEN HELD AS UNDER: THAT COUNTER PROPOSAL GIVEN BY THE ASSESSEE IS NOT BINDING ON IT SINCE IT WAS NOT ACTED UPON BY THE AO IN ITS ENTIRETY AND HE NCE THE ASSESSMENT IS NOT AN AGREED ASSESSMENT - FURTHER AN ASSESSMENT CANNOT BE TERMED AS AN AGREED ASSESSMENT SINCE IT WAS NOT CONSISTENT WITH ALL THE TERMS AND CONDITIONS OF THE OFFER MADE BY THE ASSESSEE - THE INSTRUMENT CANNOT BE ACCEPTED AND REJECTED SIMULTANEOUSLY WH ETHER THE PRINCIPLE OF ESTOPPEL CAN BE APPLIED TO STATUTORY RIGHT TO AP PEAL PROVIDED TO ASSESSEE ? HELD NO. FURTHER HELD THAT ESTOPPEL CA NNOT IMPEDE THE RIGHT OF APPEAL OF AN ASSESSEE. 4. THAT WITH REGARD TO EXCESS STOCK FOUND, IT IS SUBMI TTED THAT AT THE TIME OF SEARCH THE BOOKS OF THE PROPRIETORSHIP CONCERNS BELONGING TO ASSESSEE AND HIS FAMILY MEMBERS WERE INCOMPLETE. AFTER THE SEARCH THE ASSES SEE CALCULATED ITS ACTUAL STOCK POSITION AFTER DULY INCORPORATING ALL THE FINANCIAL AFFAIRS AND TAKING INTO ACCOUNT ALL THE ENTRIES AND THEN STOCK AS PER BOOKS OF ACCO UNTS WAS WORKED OUT AT RS. 1,20,49,893/- AS AGAINST THE TOTAL STOCK PHYSICALLY FOUND WITH THE ASSESSEE AT RS. 1,17,30,918/-. THE LD. AO DID NOT ACCEPTED THE STOCK DETAILS OF RS. 1,20,49,893/- AS CLAIMED BY THE ASSESSEE BY OBSERVING IN PARA 2 AT PAGE 4 OF TH E ORDER THAT THE STOCK ITEMS AS PER ASSESSEES WORKING SHEET ARE 781 AND AS PER STO CK SHEET PREPARED BY THE INCOME TAX DEPARTMENT DURING THE COURSE OF SEARCH A RE 1402. WHILE OBSERVING SO, THE LD. AO HAS MADE A SERIOUS ERROR OF COUNTING THE QUANTITY FOUND DURING SEARCH AT 1402 BY MAKING TOTAL OF THE S.NO. MENTI ONED AND NOT COUNTED THE QUANTITY MENTIONED IN EACH SINGLE S.NO. THE ACTUAL QUANTITY AS SUBMITTED BY THE ASSESSEE AND AS QUANTIFY BY THE DEPARTMENT DURING T HE COURSE OF SEARCH ARE AS UNDER: 12 AS PER ASSESSEE: S.NO. NAME OF THE FIRM NO. OF ITEMS TOTAL VALUE OF STOCK APB 1. SHYAM MOORTI EMPORIUM 275 1436550.00 31-34 2. SHYAM EXPORTS 402 5364550.00 39-43 3. SHYAM MOORTI KALA 688 2429800.00 49-54 4. SHYAM MOORTI MUSEUM 484 367658.00 64-65 5. SHYAM MOORTI PALACE 390 2451335.00 66-72 TOTAL 2239 12049893.00 AS PER INCOME TAX DEPARTMENT: S.NO. NAME OF THE FIRM NO. OF ITEMS APB 1. SFA 626 148-170 2. SFB 344 187-194 3. SFC 220 201-206 4. SFD 251 211-218 5. A 441 225-226 6. SMK 113 230-236 TOTAL 1995 FROM THE PERUSAL OF THE ABOVE TABLES YOUR HONOURS W OULD APPRECIATES THE FACT THAT THE TOTAL QUANTITY OF THE ITEMS AVAILABLE WITH THE ASSESSEE AS ON THE DATE OF SEARCH ARE MORE THAN THE PHYSICALLY COUNTED BY THE SEARCH TEAM AND SUCH DIFFERENCE IS ONLY DUE TO THE REASON THAT FOR EG. RAM MANDIR (APB 41 S. NO. 111 AND APB 169 S. NO. 577) WAS COUNTED AS 1 ITEM BY THE SEARCH TEAM HOWEVER IT HAS BEEN COUNTED AS 3 ITEMS IN THE SHEET SUBMITTED BY THE AS SESSEE. FURTHER IN THE STOCK SHEETS SUBMITTED BY THE ASSESSEE IT HAS ALSO INCLUD ED A COLUMN CONTAINING THE RELEVANT REFERENCE OF THE ITEMS REFERRED IN THE LIS T PREPARED BY THE SEARCH PARTY, THEREFORE, CREDIT OF THE SAME SHOULD BE ALLOWED FRO M THE ALLEGED EXCESS STOCK WORK OUT BY THE DEPARTMENT. 5. THE CONDITION OF NOT IMPOSING THE PENALTY WAS NOT P UT TO AVOID ANY FURTHER FINANCIAL BURDEN BY THE ASSESSEE. THE CONDITION OF NON LEVY OF PENALTY IS NOT A LAWFULLY INVALID CONDITION AS THE ASSESSEE HAS DULY COMPLIED WITH ALL THE CONDITIONS LAID DOWN U/S 271AAA. HOWEVER THE OFFER WAS NOT ACCEPTED BY THE LD. AO IN TOTALITY AND THEREFORE THE ASSESSEE WAS NOT U NDER OBLIGATION TO HONOUR THE OFFER SO MADE. 6. WITH REGARD TO THE OBSERVATIONS THAT NO PHYSICAL IN VENTORY OF STOCK HAS EVER BEEN PREPARED BY THE ASSESSEE AND CERTIFICATE GIVEN BY T HE AUDITORS THAT STOCK AT THE YEAR-END HAS BEEN PHYSICALLY TAKEN BY THE ASSESSEE AND VALUED AT LOWER OF COST OR NET REALIZABLE VALUE, IT IS SUBMITTED THAT THE ASSE SSEE CONSISTENTLY IN PRACTICE OF PHYSICALLY INVENTORIED THE STOCK AT END OF THE EVER Y FINANCIAL YEAR AND VALUED THE SAME AT LOWER OF COST OR NET REALIZABLE VALUE WHICH FACT IS ALSO VERIFIED FROM AUDIT REPORT. IN FACT, THE BOOKS OF ACCOUNTS SO MAINTAINE D IS NORMAL COURSE OF BUSINESS WERE ALSO TENDERED FOR VERIFICATION, BUT THE LD. AO HAS FAILED TO VERIFY THE STOCK 13 DETAILS SUBMITTED BY THE ASSESSEE WITH THE BOOKS OF ACCOUNTS AND PURCHASE BILLS SUBMITTED BY THE ASSESSEE AND HAS NOT POINTED OUT A NY SINGLE INSTANCE WHERE ANY SINGLE ITEM OR QUANTITY WAS NOT MATCHING WITH BOOKS OF ACCOUNTS OR WITH RELEVANT PURCHASE BILLS. THE RESULTS DECLARED IN THE BOOKS O F ACCOUNTS HAVE BEEN ACCEPTED AND THE PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961 WERE NOT INVOKED IN THE CASE OF THE ASSESSEE. FURTHER THE OP ENING STOCK AS DECLARED BY ASSESSEE WAS ALSO NOT DOUBTED BY THE LD. AO. FURTHE R NEITHER LD. CIT(A) NOR LD. AO GIVES SPECIFIC COMMENT ON THE REASONS OF DIFFERE NCE OF STOCK OF 781 COUNTED BY THE ASSESSEE AND 1402 COUNTED BY THE REVENUE AS POINTED OUT BY THE ASSESSEE. FURTHER, FROM PERUSAL OF STOCK DETAILS (APB 31-79) IT IS CLEAR THAT QUANTITY OF STOCK DECLARED BY THE ASSESSEE IS MORE THAN THAT PHYSICAL LY COUNTED BY THE SEARCH TEAM. THE BOOKS OF ACCOUNTS MAINTAINED BY THE GROUP WERE NOT COMPLETED AT THE TIME OF SEARCH AND AFTER DULY INCORPORATION ALL THE FINANCI AL AFFAIRS AND TAKING INTO ACCOUNT ALL THE ENTRIES THE STOCK COUNTED WAS EXCESS. IT IS AN ESTABLISHED LAW THAT THE ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO COMPLETE THE BOOKS OF ACCOUNTS FOUND INCOMPLETE AT THE TIME OF SEARCH. IT IS THUS SUBMIT TED THAT THE STOCK DECLARED BY THE ASSESSEE DESERVES TO BE ACCEPTED AND OBSERVATION OF LD. CIT(A) REGARDING NON- MAINTENANCE OF STOCK DETAILS DESERVES TO BE IGNORED . WITH THE ABOVE BACK-GROUND, IT IS SUBMITTED THAT TH E NO STOCK WAS FOUND AS IN EXCESS AND THE ADMISSION OF THE ASSESSEE BEING MADE WITH STIPU LATION OF NO PENALTY PROCEEDINGS BE INITIATED WAS NOT ACCEPTED BY THE DEPARTMENT IN TOT O AND EXCEPT THE SO CALLED ADMISSION NO MATERIAL HAS BEEN BROUGHT ON RECORD TO HOLD THE STOCK INVENTORY AS ON THE DATE OF SEARCH AS SUBMITTED BY THE ASSESSEE IN TERMS OF THE LETTER DATED 24.12.2009 AS MANIPULATED OR FABRICATED OR DEFECTIVE IN ANY MANNER THUS IN TH ESE CIRCUMSTANCES, THE ADDITION MADE DESERVES TO BE DELETED IN TOTO. 2.8 AFTER CAREFULLY CONSIDERING THE SUBMISSION IN T HIS REGARD AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE CONSIDERED OPINI ON THAT THE ASSESSEE HAS BEEN ABLE TO EXPLAIN THE DIFFERENCE IN STOCK WITH SUFFICIENT EVI DENCES AND DIFFERENCE AS FOUND DURING THE COURSE OF SEARCH IS NOT REAL. AT THE TIME OF SE ARCH IN THE STATEMENTS RECORDED, THE ASSESSEE HAS CATEGORICALLY STATED THAT THE BOOKS OF ACCOUNTS OF ALL THE FIRMS OF THE FAMILY WERE INCOMPLETE AND THE STOCK WAS LYING MIXED IN TH E GODOWN. THE INVENTORY SHEETS PREPARED DURING THE COURSE OF SEARCH ARE ENCLOSED A T PAGES 148 TO 236 OF THE ASSESSEES PAPER BOOK. THE DETAILED WORKING OF STOCK REGISTER MAINTAINED ON DAY-TO-DAY BASIS ALONGWITH POSITION OF STOCK IN ALL THE PROPRIETARY CONCERN OF THE ASSESSEE GROUP AS ON THE DATE OF SEARCH AS PER BOOKS OF ACCOUNTS WERE SUBMI TTED BEFORE THE AO VIDE LETTER DATED 14 24.12.09 AND ALSO TENDERED THE COMPLETE BOOKS OF AC COUNTS CONTAINING CASH BOOK, BANK BOOK, LEDGER FOR NECESSARY VERIFICATION. SUCH A CO PY OF THE LETTER AND SHEETS ARE ENCLOSED AT PAGES 30 TO 79 OF ASSESSEES PAPER BOOK. THE AO AS WELL AS THE LD. CIT(A) HAVE FAILED TO APPRECIATE THESE EVIDENCES WHERE THE TOTAL STOCK IN DIFFERENT PROPRIETARY CONCERNS OF THE ASSESSEE GROUP COMES TO RS. 1,20,49,893/- CONSISTIN G OF TOTAL 2239 ITEMS IN STOCK AS AGAINST THE TOTAL STOCK PHYSICALLY QUANTIFIED AND V ALUED BY THE SEARCH PARTY AT RS. 1,17,30,918/- CONSISTING OF TOTAL 1995 ITEMS. THE D ISCREPANCY AS REFERRED BY THE LD. CIT(A) WHICH WAS POINTED OUT IN THE REMAND REPORT S UBMITTED BY THE AO REGARDING THE TOTAL QUANTITY OF THE ITEMS AS APPEARING IN THE INV ENTORY SHEETS PREPARED BY THE ASSESSEE AND AS APPEARING IN THE INVENTORY SHEET PREPARED BY THE SEARCH PARTY WAS DUE TO THE FACT THAT CERTAIN ITEMS HAVING GROUP NOMENCLATURE SUCH A S RAM MANDIR IS COUNTED AS 1 ITEM BY THE SEARCH TEAM HOWEVER IT HAS BEEN COUNTED AS 3 ITEM IN THE SHEET SUBMITTED BY ASSESSEE. OUR ATTENTION HAS ALSO BEEN DRAWN TO FEW OF SUCH EXAMPLES WHICH AFTER VERIFICATION WE FIND THAT THE CONTENTION OF THE ASS ESSEE IS CORRECT. THE BOOKS OF ACCOUNTS TENDERED BY THE ASSESSEE WERE ALSO NOT DOUBTED NOR ANY ADVERSE MATERIAL HAVE BEEN BROUGHT ON RECORD TO HOLD THAT THE DETAILS SUBMITTE D BY THE ASSESSEE WERE INCORRECT. FROM THE PERUSAL OF THE INVENTORY SHEET PREPARED BY THE ASSESSEE, WE FURTHER FIND THAT SUCH SHEETS CONTAINED CROSS REFERENCE OF THE QUANTITY FO UND AND INVENTORIED BY THE SEARCH PARTY THEREFORE, IT CAN BE SAFELY INFERRED THAT THE STOCK FOUND DURING THE COURSE OF SEARCH STOOD CONSIDERED IN THE STOCK INVENTORY AVAILABLE WITH TH E PROPRIETARY CONCERN OF ASSESSEE GROUP AS ON THE DATE OF SEARCH. THUS IN THESE CIRCUMSTANC ES, THE SUSTAINED ADDITION OF RS. 91,44,118/- IS DIRECTED TO BE DELETED. ACCORDINGLY THE IMPUGNED ADDITION ON MERIT IS ALSO NOT SUSTAINABLE. THUS THE GROUND NOS. 1 TO 3 OF THE ASSESSEE ARE ALLOWED. 15 3.1 GROUND NO. 4 OF ASSESSEES APPEAL IS IN RELATI ON TO THE ADDITION OF RS. 28,76,050/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PU RCHASE OF PROPERTY AT AXIS MALL, JAIPUR. 3.2 BRIEFLY STATED, THE FACTS GIVING RISE TO THIS G ROUND ARE THAT DURING THE COURSE OF SEARCH A LOOSE PAPER WAS FOUND CONTAINING CERTAIN J OTTINGS OF CASH PAYMENTS MADE TOWARDS THE PURCHASE OF A COMMERCIAL SHOP IN AXIS M ALL, JAIPUR. IN THE STATEMENTS RECORDED DURING THE COURSE OF SEARCH THE ASSESSEE A DMITTED THAT HE ALONGWITH HIS FAMILY MEMBERS HAVE PURCHASED SHOP NO. 6 IN AXIS MALL, JAI PUR FOR A TOTAL CONSIDERATION OF RS. 1,50,00,000/- OUT OF WHICH RS. 1,07,38,727/- WERE P AID THROUGH CHEQUE AND THE BALANCE AMOUNT OF RS. 57,52,100/- WERE PAID IN CASH OUT OF WHICH RS. 15,00,000/- WERE PAID BY THE ASSESSEE AND BALANCE WERE GIVEN BY SHANKAR LAL PANDEY IN WHOSE COMPANY SUCH PROPERTY WAS PURCHASED. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ADMITTED ADDITIONAL INCOME OF RS. 15.00 LACS TOWARD S THE UNDISCLOSED INVESTMENT IN THE ACQUISITION OF THE ABOVE STATED PROPERTY AND AGAINS T WHICH A SUM OF RS. 17,95,000/- HAVE BEEN DECLARED AS ADDITIONAL INCOME AS A RESULT OF S EARCH IN DIFFERENT ASSESSMENT YEARS ON THIS ACCOUNT, THEREFORE, THERE REMAINED NO UNEXPLAI NED INVESTMENT. THE LD. AR HAS MADE WRITTEN SUBMISSION THE EXTRACT OF WHICH IS VERBATIM AS UNDER: AS SUBMITTED ABOVE IN GROUNDS OF APPEAL NOS. 1 TO 3 THAT DURING THE SEARCH TOTAL UNDISCLOSED INCOME WORKED OUT BY THE DEPARTMENT WAS RS. 1,20,20,168/- INCLUDING A SUM OF RS. 28,76,050/- ON ACCOUNT OF ALLEGED UNDISCLOSED INVE STMENT IN THE PROPERTY SITUATED AT AXIS MALL IN THE HANDS OF THE ASSESSEE. THE RELE VANT STATEMENT OF THE ASSESSEE IN THIS REGARD IS MENTIONED AT PAGE 9 OF WRITTEN SUBMISSIO N OF THE ASSESSEE .. (APB-15). FROM THE READING OF ABOVE STATEMENT IT IS QUITE CLE AR THAT IN THE SAID PROPERTY THE SHARE OF THE ASSESSEE AND HIS FAMILY MEMBERS WAS 50% ONLY IN CLUDING 20% SHARE OF THE ASSESSEE 16 IN WHOLE PROPERTY. A SUM OF RS. 57,52,100/- WAS TO BE PAID IN CASH OUT OF THE BOOKS AND ASSESSEE HAS PAID RS. 15,00,000/- IN CASH AS ACCEPT ED BY HIM IN REPLY TO QUESTION NO. 15 AND REMAINING IS PAID BY SH. SHANKAR LAL PANDEY. THE ASSESSEE WHILE FILING HIS RETURN OF INCOME FOR VARIOUS ASSESSMENT YEARS FALLING UNDER THE PERIOD AS PRESCRIBED U/S 153A OF THE INCOME TAX ACT, 1961 HAS ALREADY INCLUDED ADDITIONAL INCOME OF RS. 17,95,000/- MADE ON ACCOUN T OF THE ACTUAL PAYMENT MADE TOWARDS THE ACQUISITION OF THE ABOVE STATED PROPERT Y WHICH IS AS UNDER: ADDITIONAL INCOME SURRENDERED IN RETURN- A.Y. 2005-06 = 3,10,000/- A.Y. 2007-08 = 4,55,000/- A.Y. 2008-09 = 10,30,000/- TOTAL = 17,95,000/- FROM THE ABOVE FACTS IT IS QUITE APPARENT THAT THE ASSESSEE HAS ALREADY SURRENDERED THE AMOUNT IN PRECEDING YEARS. LD. CIT(A) OBSERVATION IN PARA 5.1 PAGE 19 OF HIS O RDER THAT, AS ALREADY MENTIONED, THE APPELLANT HAS HIMSELF SURRENDERED UNDISCLOSED INVES TMENT IN AXIS MALL BEING 50% OF HIS SHARE AMOUNTING TO RS. 28,76,050/- IN HIS LETTER DA TED 22.12.2009. MOREOVER, THE OTHER 50% OWNER SH. SHANKAR LAL PANDEY IN HIS STATEMENT R ECORDED U/S 132(4) HAS ADMITTED 50% AMOUNT OF HIS SHARE BEING RS. 28,76,050/- HAS B EEN PAID BY HIM FROM UNDISCLOSED SOURCES AND THE SAME WAS OFFERED FOR TAXATION BY HI M. MOREVER SAME IS SUPPORTED BY SEIZED DOCUMENT AT PAGE 2 OF ANN. A-1, SEIZED FROM 1994, KHEJARON KA RASTA. ACCORDINGLY THIS ADDITION INCLUDED IN TOTAL ADDITIO N OF RS. 1,03,44,198/- IS ALSO SUSTAINED AND THIS GROUND IS ALSO REJECTED., IS TOTALLY DEVOI D FROM THE FACT OF THE CASE. AS SUBMITTED IN GROUNDS OF APPEAL NO. 1 TO 3 ABOVE, THE OFFER WA S BASED ON THE FIGURES INFORMED TO THE ASSESSEE AND ULTIMATELY NOT BINDING ON THE ASSESSEE . MOREOVER ASSESSEE HIMSELF HAS ACCEPTED RS. 15,00,000/- AS UNDISCLOSED INCOME AND SURRENDERED RS. 17,95,000/- IN HIS RETURN I.E. MORE THAN WHAT SURRENDERED. FURTHER COP Y OF STATEMENT OF SH. SHANKAR LAL PANDEY WAS NOT MADE AVAILABLE TO THE ASSESSEE, WHIC H HAS BEEN MADE AS BASIS OF 50% ADDITION IN THE HANDS OF THE ASSESSEE. EVEN STATEME NTS RECORDED OF THE ASSESSEE DO NOT SUPPORT THE CONTENTION RAISED BY THE REVENUE. 3.3 PER CONTRA, THE LD. DR HAS SUPPORTED THE ORDER S OF THE LOWER AUTHORITIES. 3.4 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HAV E FOUND THAT THE IMPUGNED ADDITION DESERVES TO BE DELETED. BOTH THE AUTHORITI ES BELOW HAVE IGNORED THE FACT THAT THE ASSESSEE HAS ALREADY DECLARED THE ADDITIONAL INCOME OF RS. 17,95,000/- IN THREE DIFFERENT ASSESSMENT YEARS AS DETAILED ABOVE IN ASSESSEES SU BMISSION WHICH INCLUDE A SUM OF RS. 10,30,000/- IN THE ASSESSMENT YEAR 2008-09. THE AMO UNT OF ADDITIONAL INCOME DECLARED 17 BY THE ASSESSEE HAS BEEN ACCEPTED BY THE AO AND NO ADVERSE COMMENT WAS MADE IN THE ASSESSMENT ORDER. THE ASSESSEE AGAINST THE ADMISSIO N OF UNDISCLOSED INVESTMENT OF RS. 15,00,000/- IN THE STATEMENTS HAS DECLARED INCOME O F RS. 17,95,000/-, THEREFORE, THERE IS NO OCCASION TO MAKE ANY FURTHER ADDITION MORE PARTI CULARLY WHEN THE AMOUNT OF RS. 28,76,050/- STATED TO HAVE BEEN ACCEPTED BY THE OTH ER PARTY I.E. SHANKAR LAL PANDEY IN HIS STATEMENTS RECORDED U/S 132(4) ON 10-11.01.2008 DUR ING THE COURSE OF SEARCH BUT NO SUCH STATEMENTS WERE EVER CONFRONTED TO THE ASSESSEE. SI NCE THE ASSESSEE HAS ADMITTED THE UNDISCLOSED INVESTMENT OF RS. 15,00,000/- IN HIS ST ATEMENTS WHICH HAS BEEN ACCEPTED AND DUE TAX THEREUPON HAS BEEN PAID, IN THE CIRCUMSTANC ES WE DIRECT TO DELETE THE ADDITION OF RS. 28,76,050/- MADE SEPARATELY IN THE HANDS OF THE ASSESSEE OVER AND ABOVE THE AMOUNT ALREADY DECLARED. ACCORDINGLY WE ORDER TO DELETE TH E ENTIRE ADDITION. THUS GROUND NO. 4 OF THE ASSESSEES APPEAL IS ALLOWED. 4.1 THE GROUND NO. 5 IS REGARDING CHARGING OF INTE REST U/S 234-A AND 234-B OF THE ACT. SINCE THE LEVY OF INTEREST U/S 234-A AND 234-B IS STATUTORY LEVY IN VIEW OF THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF C IT VS. ANJUM M. H. GHASWALA REPORTED IN 252 ITR PAGE 1, WE HOLD THAT THE INTERE ST U/S 234-A AND 234-B SHOULD BE CHARGED, HOWEVER THE PERIOD FOR CHARGING OF INTERES T IS TO BE COUNTED FROM THE DATE WHEN THE LAST COPIES OF THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH WERE AVAILABLE TO THE ASSESSEE. ACCORDINGLY WE DIRECT THE AO TO VERIFY FR OM THE RECORDS THE EXACT DATE WHEN THE COPIES WERE LASTLY SUPPLIED TO THE ASSESSEE AND CHARGED INTEREST U/S 234-A AND 234-B FROM SUCH DATE AS PER LAW. THUS THE GROUND NO. 5 OF THE ASSESSEE IS SET ASIDE WITH THE DIRECTION THAT THE MATTER BE DECIDED AS PER THE DIR ECTIONS GIVEN ABOVE AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. 18 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 07-03 -2014. SD/- SD/- ( N.K. SAINI ) (HARI OM MARATHA ) ACCOUNTANT MEMBER JUDICIAL MEMBER *MISHRA COPY FORWARDED TO :- 1. SHRI VISHNU PRAKASH SHARMA, JAIPUR 2. THE ACIT, CENTRAL CIRCLE, ALWAR 3. THE LD.CIT(A) 4. THE LD CIT 5. THE D/R 6. GUARD FILE (ITA NO.197/JP/2011) BY ORDER, AR ITAT, JAIPUR 19 20