ITO, CHENNAI V. M/s. Santhosh metal Corporation, CHENNAI

ITA 1974/CHNY/2012

• Counselvise Citation: 197421714 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 05-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: S SRIDHAR
• Keywords: Business income
• Section: 143(3); 148; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . , . . , ! ' [BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMB ER AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NOS.1973 & 1974/MDS/2012 / ASSESSMENT YEARS : 2008-09 & 2009-10 THE INCOME TAX OFFICER BUSINESS WARD XIV(2) CHENNAI VS. M/S SANTOSH METAL CORPORATION 829/830 MTH ROAD PADI, CHENNAI - 50 [PAN AASFS 0325 E] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : SHRI GURU BHASHYAM, JCIT /RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE / DATE OF HEARING : 18-06-2014 ! / DATE OF PRONOUNCEMENT : 26-06-2014 ' / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THESE REVENUES APPEALS FOR ASSESSMENT YEARS 2008 -09 AND 2009-10, ARE DIRECTED AGAINST SEPARATE ORDERS OF TH E COMMISSIONER OF INCOME-TAX(APPEALS)-XII CHENNAI, BOTH DATED 3.7.201 2, PASSED IN I.T.A.NOS.365/2011-12 AND 370/11-12 RESPECTIVELY, I N PROCEEDINGS I.T.A.NOS.1973 & 1974/12 :- 2 -: UNDER SECTION 143(3) READ WITH SECTION 147OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. IN I.T.A.NO.1973/MDS/2012 FOR ASSESSMENT YEAR 2008- 09, THE REVENUE RAISES TWO SUBSTANTIAL GROUNDS CHALLENG ING THE CIT(A)S ORDER DELETING ADDITIONS OF ` 19,18,280/- QUA SUPPRESSION OF SALES AND THAT OF ` 25 LAKHS PERTAINING TO ESTIMATED UNACCOUNTED SAL ES. 3. THE ASSESSEE; A FIRM, TRADES IN UTENSILS. ON 15 .10.2008, IT HAD RETURNED INCOME OF ` 1,82,550/-. ON 29.7.2009, THE DEPARTMENT HAD CONDUCTED A SURVEY IN ASSESSEES PREMISES ALL EGEDLY NOTICING SUPPRESSION AND NON-ACCOUNTING OF SALES. IN VIEW T HEREOF, A SECTION 148 NOTICE STOOD ISSUED. IN RESPONSE, THE ASSESSEE REITERATED ITS INCOME ALREADY ADMITTED. THEREAFTER, THE ASSESSING OFFICER PASSED ASSESSMENT ORDER DATED 31.12.2011 MAKING IMPUGNED ADDITIONS OF ` 19,18,280/- AND ` 25 LAKHS UNDER THE HEADS SUPPRESSION AND NON- ACCOUNTING OF SALES.. 4. IN LOWER APPELLATE ORDER, THE CIT(A) HAS DELETED BO TH THE ADDITIONS. THEREFORE, THE REVENUE IS IN APPEAL. I.T.A.NOS.1973 & 1974/12 :- 3 -: 5. NOW, WE COME TO THE REVENUES FIRST GROUND RELATING TO ADDITION OF ` 19,18,280/- ON SALES SUPPRESSION. DURING SURVEY , THE ASSESSING OFFICER FOUND DIFFERENCE IN SALES TOTALLI NG TO ` 52,000/- AS ON 1 ST AND 2 ND APRIL 2008 IN COMPUTER (TALLY) AND MANUAL REGIST ER AS RECORDED BY THE ASSESSEE. HE OBSERVED IN ASSESSME NT ORDER THAT THESE TWO DATES FELL IN IMMEDIATE PROXIMITY RELEVAN T TO PREVIOUS YEAR I.E 1.4.2007 TO 31.3.2008 AND PRESUMED THAT SIMILAR SALES WOULD ALSO HAVE BEEN SUPPRESSED FOR THE AFORESAID ACCOUNTING P ERIOD AS WELL. AFTER CONSIDERING ALLEGED NON-PRODUCTION OF BILLS, VOUCHERS AND BY PLACING RELIANCE ON STATEMENT RECORDED DURING SURV EY, THE ASSESSING OFFICER COMPUTED THESE SUPPRESSED SALES FOR 350 DAY S AFTER EXCLUDING 15 DAYS FOR NATIONAL AND OTHER HOLIDAYS; ARRIVED AT TOTAL SALES OF ` 1,82,00,000/- AND APPLIED GROSS PROFITS @ 10.54% RE SULTING IN IMPUGNED ADDITION OF ` 19,18,280/-. 6. IN ASSESSEES APPEAL, THE CIT(A) HAS DELETED THIS ADDITION BY OBSERVING AS UNDER: I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE ASS ESSEE CAREFULLY. AS COULD BE SEEN FROM THE ASSESSMENT OR DER AND THE DETAILS FILED BY THE ASSESSEE THE ABOVE ADDITION OF RS.19,18,280/- IS PURELY BASED THE SUPPRESSION OF SALES ON 01.04.2008 AND 02.04.2008 AS OBSERVED BY THE SURVEY TEAM DURING THE COURSE OF SURVEY ON 29.07.2009. THE ASSESSING OFFICER OR THE SURVEY TEA M HAS NOT NOTICED ANY OTHER DISCREPANCY IN THE SALES MADE AND RECORDE D EITHER IN THE COMPUTERS OR IN THE MANUAL REGISTERS, EITHER IN THE F.Y.2007 -08 OR F.Y.2008-09. THEREFORE, THE SAID SUPPRESSION OF SAL ES, IF TO BE TAKEN IN TO ACCOUNT FOR DETERMINING ANY SUPPRESSED PROFIT , SHOULD BE FOR THE FINANCIAL YEAR 2008-09 ONLY, AS THE SAID DIFFERENCE IN SALES PERTAINS TO I.T.A.NOS.1973 & 1974/12 :- 4 -: THE F.Y. 2008-09 ONLY. FURTHER, THE ESTIMATION OF T HE SUPPRESSED SALES / PROFIT BY EXTRAPOLATION OF THE FACTS, IF ANY, HAS TO BE FIRST MADE IN THE FINANCIAL YEAR IN WHICH SUCH SUPPRESSION OF SALES W ERE NOTICED, BEFORE EXTENDING THE SAME LOGIC TO OTHER FINANCIAL YEARS. WHEREAS, IN THE INSTANT CASE, THE SO-CALLED S UPPRESSION OF SALES WERE ON 01.04.2008 AND 02.04.2008 I.E. PERTAINS TO THE FINANCIAL YEAR 2008-09 RELEVANT TO THE A. Y. 2009-10. NO DISCREPAN CY IN THE SALES WAS NOTICED BY THE ASSESSING OFFICER/SURVEY TEAM FO R THE PERIOD 01.04.2007 TO 31.03.2008 (I.E. F.Y.2007-08). FURTHE R, VERIFICATION OF RECORDS/ ASSESSMENT ORDER OF A.Y.2009-10 SHOWS THAT THE ASSESSING OFFICER HAS NOT MADE ANY ADDITION ON ACCOUNT OF SUP PRESSION OF SALES BASED ON THE SO-CALLED SUPPRESSED SALES ON 01.04.20 08 AND 02.04.2008 NOTICED BY THE SURVEY TEAM/ ASSESSING OF FICER. THUS, WHEN THE ASSESSING OFFICER ACCEPTS THE ACCOUNTS AND THE STATEMENTS OF THE ASSESSEE FOR THE F.Y.2008-09 (REL EVANT TO THE A.Y.2009-10), THE YEAR IN WHICH THE SAID DISCREPANC IES ARE NOTICED, AND COMPLETES THE ASSESSMENT, I! IS HIGHLY UNJUSTIF IED TO ADOPT THE SAID DISCREPANCIES IN TO ANOTHER FINANCIAL YEAR AND ESTIMATE THE INCOME THAT TOO ON EXTRAPOLATION. THEREFORE, THE AS SESSING OFFICER'S ACTION IN ADOPTING THE FINDINGS OF .F:Y.2008-09 FOR THE PURPOSE OF ESTIMATING THE SUPPRESSED SALE/PROFIT OF F.Y.2007-0 8 (RELEVANT TO THE A.Y.2008-09) IS NOT JUSTIFIED AND NEEDS TO BE DELET ED. IN ANY CASE, THE ASSESSEE BEFORE THE UNDERSI GNED FURNISHED THE DETAILS OF SALES EFFECTED DURING THE FINANCIAL YEAR 2008-09. ON VERIFICATION OF THE SAID DETAILS IT IS SEEN THAT TH E ACTUAL SALES INCLUDED IN THE ANNUAL ACCOUNTS ARE RS. 79,038 /- AND R S.77,561/-, RESPECTIVELY ON 01.04.2008 AND 02.04.2008. THIS CLEARLY PROVES THAT THE ASSESSEE'S SALES REFLECTED IN THE P&L ACCOUNT A RE BASED ON THE SALES ACCOUNTED IN THE MANUAL REGISTERS AND NOT BAS ED ON THE COMPUTER SYSTEM. THUS, WHEN THE ACTUAL SALES ARE IN CLUDED IN THE ACCOUNTS, BASED ON WHICH THE P&L ACCOUNT ARE PREPAR ED AND DECLARED TO THE DEPARTMENT, THE SALES OF LOWER FIGU RES CONTAINED IN THE COMPUTER SYSTEM (THAT TOO ONLY ON 2 DAYS) HAVE NO R ELEVANCE. IN ANY CASE, THE SAME CAN NOT CONSIDERED AS SUPPRESSION OF SALES EITHER IN THE CONCERNED FMANCIAL YEAR (2008-09) OR FOR ANY OT HER FINANCIAL YEAR. IN VIEW OF THE ABOVE, ASSESSING OFFICER IS N OT JUSTIFIED IN MAKING THE ABOVE ADDITION OF RS.19,18,280/- ON ACCOUNT OF SUPPRESSED SALES AND HENCE THE SAME STANDS DELETED. THE ASSESSEE SUC CEEDS IN ITS APPEALS ON THIS ISSUE. I.T.A.NOS.1973 & 1974/12 :- 5 -: 7. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE CAS E FILE. IT IS MADE CLEAR THAT THIS ISSUE AS TO WHETHER THE ASSESSEE HAD SUPPRESSED SALES OR NOT IS A FACTUAL ONE. THE REVE NUE HAS NOT FILED ANY COGENT EVIDENCE OR PAPER BOOK SO AS TO CONTROV ERT THE FINDINGS UNDER CHALLENGE. THE FACT ALSO REMAINS THAT IN TH E COURSE OF SURVEY, THE ALLEGED TWO DAYS I.E 1 ST AND 2 ND APRIL 2008 RELEVANT FOR BRINGING INTO LIGHT SUPPRESSED SALES DO NOT FALL WITHIN RELEVA NT ACCOUNTING PERIOD OF THE IMPUGNED ASSESSMENT YEAR. FURTHER, THE ASSE SSING OFFICER HAD NOWHERE REJECTED THE ASSESSEES BOOKS MAINTAINED F OR THIS ACCOUNTING PERIOD. IN THESE CIRCUMSTANCES, WE HOLD THAT THE C IT(A) HAS RIGHTLY DELETED IMPUGNED ADDITION MADE BY THE ASSESSING OFF ICER. SO, WE REJECT THE REVENUES CORRESPONDING GROUNDS. 8. NOW, WE COME TO THE SECOND ISSUE OF UNACCOUNTED S ALES ADDITION OF ` 25 LAKHS. 9. DURING SURVEY, THE DEPARTMENTAL AUTHORITIES HAD F OUND THE ASSESSEE TO BE SELLING UTENSILS WITHOUT ANY BILLS A ND ALSO THAT THEY WERE NOT ACCOUNTED IN BOOKS. THE ASSESSEE HAD ALLEGEDLY FAILED IN RECONCILING THE SAID SALES WITH ITS BOOKS. SO, THE ASSESSING OFFICER MADE AN ESTIMATED ADDITION OF ` 25 LAKHS. I.T.A.NOS.1973 & 1974/12 :- 6 -: 10. IN APPEAL, THE CIT(A) HAS DELETED THIS ADDITION BY OBSERVING AS BELOW: FIRST OF ALL I FAIL TO UNDERSTAND THE UNDERSTANDIN G OF THE ASSESSING OFFICER REGARDING THE MEANING OF THE WORD S 'SUPPRESSED SALES' AND 'UNACCOUNTED SALES'. IN BUSI NESS PARLANCE BOTH ARE THE SAME. EVEN FOR THE PURPOSE OF ACCOUNTANCY OR INCOME TAX BOTH OF THEM CONVEY THE S AME MEANING. IN THE ASSESSMENT ORDER OF THE INSTANT CASE, THE ASSESSING OFFICER, ON ONE HAND, BASED ON THE OBSERV ATIONS THAT THERE WAS A DIFFERENCE OF RS.52,000/- PER DAY (ON 0 1.04.2008 AND 02.04.2008) IN THE SALES ENTERED IN THE COMPUTE R SYSTEM AND THE MANUAL REGISTERS, ESTIMATED THE INCOME ON A CCOUNT OF SUCH SUPPRESSED SALES BY EXTRAPOLATION FOR THE ENTI RE FINANCIAL YEAR 2007-08 AT RS.19, 18,280/ - (AS DETAILED IN TH E PARA(A) ABOVE). ON THE OTHER HAND, THE ASSESSING OFFICER BASED ON THE ASSESSEE'S EXPLANATION THAT IT HAD NOT ISSUED THE S ALES BILLS ON THE SALES MADE ON 28.07.2009, CAME TO THE CONCLUSIO N THAT THE ASSESSEE IS INDULGING IN UNACCOUNTED SALES AND THE INCOME EARNED BY SUCH UNACCOUNTED SALES, DURING THE F.Y.20 07-08 IS ESTIMATED AT RS.25,00,000/- AND BROUGHT TO TAX. AS EXPLAINED ABOVE, BOTH UNACCOUNTED SALES AND SUPP RESSED SALES ARE ONE AND THE SAME. HENCE, THE ASSESSING OF FICER'S ACTION OF MAKING ADDITIONS SEPARATELY UNDER THESE H EADS AMOUNTS TO DOUBLE ADDITIONS OF THE SAME INCOME/SOUR CE. IN ANY CASE, ON MERITS ALSO, THE ASSESSING OFFICER' S ACTION IS NOT JUSTIFIABLE FOR THE FOLLOWING REASONS . (I) THERE ARE NO UNACCOUNTED SALES IDENTIFIED OR FO UND BY THE ASSESSING OFFICER / SURVEY TEAR EITHER AT THE T IME OF SURVEY PROCEEDINGS OR DURING THE COURSE OF ASSESSME NT PROCEEDINGS, PERTAINING THE F.Y.2007 -08 . (II) THE ONLY BASIS FOR COMING TO THE CONCLUSION THAT T HE ASSESSEE INDULGING IN UNACCOUNTED SALES IS AN ISOLA TED TRANSACTION OF UNACCOUNTED SALE ON 28.07.2009, FOR WHICH THE ASSESSEE ADMITTED THAT IT HAD NOT ISSUED THE SALES BILL. THIS TRANSACTION BELONGS TO THE F.Y.200 9-10 RELEVANT TO THE A.Y.20 10-11 AND NOT TO THE ASSESSM ENT YEAR (A.Y. 2008-09) UNDER CONSIDERATION . I.T.A.NOS.1973 & 1974/12 :- 7 -: III) FURTHER, THERE WAS NO DECLARATION OR STATEMENT BY THE ASSESSEE THAT IT WAS INDULGING IN SIMILAR UNACCOUNT ED SALES IN THE EARLIER YEARS ALSO. HENCE SUCH FINDING OF ISOLATED UNACCOUNTED SALE TRANSACTION OF 28.07.2009 (I.E. F.Y. 2009-10) CAN NOT BE GROUND TO PRESUME THAT THERE WERE SIMILAR UNACCOUNTED SALES IN THE EARLIER FINANCIAL YEARS ALSO. IV) AS FAR THE FINANCIAL YEAR 2007-08 (RELEVANT TO THE A.Y.2008-09 UNDER CONSIDERATION), NEITHER THE SURVE Y TEAM NOR THE ASSESSING OFFICER FOUND ANY EVIDENCE O R INFORMATION, OF WHATSOEVER, TO PROVE OR INDICATE TH AT THERE ARE UNACCOUNTED SALES DURING THE FINANCIAL YE AR 2007-08. THEREFORE, THE ASSESSING OFFICER'S CONCLUS ION THAT THERE WERE UNACCOUNTED SALES DURING THE F.Y.20 07- 08 IS WITHOUT ANY EVIDENCE/ INFORMATION ON RECORD. V) ALSO, THERE IS NO BASIS OR SCIENTIFIC RAT IONALE IN ARRIVING AT THE INCOME OF RS.25,00,000/- FROM UNACCOUNTED SALES DURING THE F.Y.2007-08, BY THE ASSESSING OFFICER. T HE ASSESSING OFFICER SIMPLY PRESUMED THE INCOME AT RS.25,00,000/-. THE ASSESSING OFFICER HAS NOT DISCUSSED OR GIVEN THE BASIS OR CALCULATION AS HOW HE WAS ARRIVING AT THE SAID INCOME FROM UNACCOUNTED SALES. ANY PRESUMPTIONS OR ASSUMPTIONS AND ESTIMATI NG THE INCOME WITHOUT ANY BASIS OR REASONS CAN NOT BE SUSTAINED. IN VIEW OF THE ABOVE REASONS, THE ASSESSING OFFICER IS NOT JUSTIFIED IN COMING TO THE CONCLUSION THAT THE INDU LGED IN UNACCOUNTED SALE IN THE F.Y.2007 -08 AND ESTIMATING THE INCOME FROM SUCH UNACCOUNTED SALES AT RS.25,00,00/- . HENCE THE ADDITION MADE BY THE ASSESSING OFFICER IS DELET ED. THE ASSESSEE SUCCEEDS IN ITS APPEALS. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO THE R ELEVANT CONTENTIONS OF THE PARTIES, IT IS FOUND THAT THE AS SESSING OFFICER HAD FAILED TO LINK ALLEGED UNACCOUNTED SALES NOTICED O N THE DATE OF SURVEY TO THE RELEVANT ACCOUNTING PERIOD. WE REITERATE TH AT THE RELEVANT ACCOUNTING PERIOD IS FROM 1.4.2007 TO 31.3.2008 WHE REAS THE SURVEY I.T.A.NOS.1973 & 1974/12 :- 8 -: HAD BEEN CONDUCTED ON 29.7.2009 I.E IN PREVIOUS YEA R RELEVANT TO ASSESSMENT YEAR 2010-11. THE ASSESSING OFFICER H AS NOT RELIED UPON ANY SUPPORTIVE MATERIAL OR BOOKS MAINTAINED I N MAKING THIS ESTIMATED ADDITION. THERE IS ALSO NO EVIDENCE PLAC ED ON RECORD TO CONTROVERT THE CIT(A)S FINDINGS ON FACTS. IN THESE CIRCUMSTANCES, WE REJECT THE REVENUES CONTENTIONS. THUS, CASE I.T.A .NO.1973/MDS/2012 IS DISMISSED. 11. NOW WE COME TO REVENUES APPEAL I.T.A.NO. 1974/MDS/ 2012 FOR ASSESSMENT YEAR 2009-10. 12. IN THIS APPEAL, THE REVENUES SOLE SUBSTANTIVE GROU ND IS THAT THE CIT(A) OUGHT TO HAVE AFFIRMED THE ADDITION OF ` 30 LAKHS OF ESTIMATED UNACCOUNTED SALES. 13. IT IS TO BE SEEN FROM THE ASSESSMENT ORDER DATED 31 .12.2011 THAT IN THIS ASSESSMENT YEAR AS WELL, THE ASSESSING OFFICER HAD MADE ADDITION OF ` 30 LAKHS MERELY ON ESTIMATION OF UNACCOUNTED SAL ES BY ADOPTING REASONING ADOPTED IN THE PRECEDING ASSESSM ENT YEAR(SUPRA). 14. IN LOWER APPELLATE ORDER, THE CIT(A)S OBSERVATIONS AND FINDINGS IN DELETING THIS ADDITION ARE REPRODUCED A S FOLLOWS: I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE ASS ESSEE. AS EXPLAINED BY THE ASSESSEE, THE ASSESSING OFFICER, B ASED ON THE ASSESSEE'S EXPLANATION DURING THE COURSE OF SURVEY PROCEEDINGS THAT IT I.T.A.NOS.1973 & 1974/12 :- 9 -: HAD NOT ISSUED THE SALES BILLS ON THE SALES MADE ON 28.07.2009, CAME TO THE CONCLUSION THAT THE ASSESSEE IS INDULGING IN UNACCOUNTED SALES AND THE INCOME EARNED BY SUCH UNACCOUNTED SALES, DU RING THE F.Y.2008-09 IS ESTIMATED AT RS.30,00,000 / - AND BR OUGHT TO TAX. THE ABOVE ACTION OF THE ASSESSING OFFICER IS NOT JUSTIFIABLE FOR THE FOLLOWING REASONS: I) THERE ARE NO UNACCOUNTED SALES IDENTIFIED OR FOUND BY THE ASSESSING OFFICER / SURVEY TEAR EITHER AT THE TIME OF SURVEY PROCEEDINGS OR DURING THE COURSE OF ASSESSMENT PROC EEDINGS, PERTAINING THE F.Y.2008-09. II) THE ONLY BASIS FOR COMING TO THE CONCLUSION T HAT THE ASSESSEE INDULGING IN UNACCOUNTED SALES IS AN ISOLATED TRANS ACTION OF UNACCOUNTED SALE ON 28.07.2009, FOR WHICH THE ASSES SEE ADMITTED THAT IT HAD NOT ISSUED THE SALES BILL. THI S TRANSACTION BELONGS TO THE F.Y.2009-10 RELEVANT TO THE A.Y.2010 -11 AND NOT TO THE ASSESSMENT YEAR (A.Y. 2009-10) UNDER CONSIDERATION. III) FURTHER, THERE WAS NO DECLARATION OR STATE MENT BY THE ASSESSEE THAT IT WAS INDULGING IN SIMILAR UNACCOUNTED SALES IN THE EARLIER YEARS ALSO. HENCE SUCH FINDING OF ISOLATED UNACCOUN TED SALE TRANSACTION OF 28.07.2009 (I.E. F.Y. 2009-10) CAN N OT BE GROUND TO PRESUME THAT THERE WERE SIMILAR UNACCOUNTED SALE S IN THE EARLIER FINANCIAL YEARS ALSO. IV) AS FAR THE FINANCIAL YEAR 2008-09 (RELEVANT TO THE A.Y.2008-09 UNDER CONSIDERATION) IS CONCERNED, NEITHER THE SURV EY TEAM NOR THE ASSESSING OFFICER FOUND ANY EVIDENCE OR INFORMA TION, OF WHATSOEVER, TO PROVE OR INDICATE THAT THERE ARE UNA CCOUNTED SALES DURING THE FINANCIAL YEAR 2008-09. THEREFORE, THE ASSESSING OFFICER'S CONCLUSION THAT THERE WERE UNAC COUNTED SALES DURING THE F.Y.2008-09 IS WITHOUT ANY EVIDENC E/ INFORMATION ON RECORD. V) ALSO, THERE IS NO BASIS OR SCIENTIFIC RATIONALE IN ARRIVING AT THE INCOME OF RS.30,00,000 / - FROM UNACCOUNTED SALES D URING THE F.Y.2008-09, BY THE ASSESSING OFFICER. THE ASSESSIN G OFFICER SIMPLY PRESUMED THE INCOME AT RS.30,00,000/-. THE A SSESSING OFFICER HAS NOT DISCUSSED OR GIVEN THE BASIS OR CAL CULATION AS HOW HE WAS ARRIVING AT THE SAID INCOME FROM UNACCOU NTED SALES. ANY PRESUMPTIONS OR ASSUMPTIONS AND ESTIMATI NG THE INCOME WITHOUT ANY BASIS OR REASONS CAN NOT BE SUST AINED. I.T.A.NOS.1973 & 1974/12 :- 10 -: IN VIEW OF THE ABOVE REASONS, THE ASSESSING OF FICER IS NOT JUSTIFIED IN COMING TO THE CONCLUSION THAT THE ASS ESSEE INDULGED IN UNACCOUNTED SALE IN THE F.Y 2008-09 AND ESTIMATI NG THE INCOME AT RS.30,00,000/-. HENCE THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED. THE ASSESSEE SUCCEEDS IN ITS APPEALS. ENHANCEMENT OF ASSESSMENT AND INCOME : THE ASSESSING OFFICER AT THE TIME OF SURVEY NOTICED THAT THERE WA S A DIFFERENCE OF RS.52,000/- IN THE SALES ENTERED IN THE COMPUTER (TALLY) AND THE SALES ENTERED IN THE MANUAL REGISTER ON 01.04.2 008 AND ALSO ON 02.04.2008. HOWEVER THE ASSESSING OFFICER HAS NOT EXAMINED THIS ISSUE IN THE ASSESSMENT ORDER OF THE A.Y.2009-10. INSTEAD, T HE ASSESSING OFFICER, WHILE COMPLETING THE ASSESSMENT OF A.Y.2008-09, OPINED THAT THE SAID DIFFERENCE OF RS. 52,000/ - IS THE SUPPRESSION OF SALES PER DAY AND EXTRAPOLATED T O 350 DAYS (AFTER EXCLUDING 15 DAYS ON ACCOUNT OF HOLIDAYS) AN D ARRIVED AT THE PROFIT OF RS.19,18,280/- BY APPLYING THE GROSS PROFIT MARGINS OF 10.54%, AND BROUGHT TO TAX AS PRO FIT ON SUPPRESSED SALES, FOR A.Y.2008-09. FOR THE REASONS NARRATED IN THE APPEALS ORDER OF TH E A.Y.2008- 09 (ITA NO.365/2011-12 DATED 18.06.2012) I HAVE DEL ETED THE SAID ADDITION AS IT WAS NOT SUPPORTED BY ANY MATERI AL FACTS/EVIDENCES RELEVANT TO THE FINANCIAL YEAR 2007 -08. THE ASSESSEE BEFORE THE UNDERSIGNED FURNISHED THE D ETAILS OF SALES EFFECTED DURING THE FINANCIAL YEAR 2008-09. O N VERIFICATION OF THE SAID DETAILS IT IS SEEN THAT THE ACTUAL SALE S INCLUDED IN THE ANNUAL ACCOUNTS ARE RS.79,038/- AND RS.77,561/-, RE SPECTIVELY ON 01.04.2008 AND 02.04.2008. THIS CLEARLY PROVES T HAT THE ASSESSEE'S SALES REFLECTED IN THE P&L ACCOUNT ARE B ASED ON THE SALES ACCOUNTED IN THE MANUAL REGISTERS AND NOT BAS ED ON THE COMPUTER SYSTEM. THUS, WHEN THE ACTUAL SALES, AS CO NTAINED IN THE MANUAL REGISTERS, ARE INCLUDED IN THE ACCOUNTS, BASED ON WHICH THE P&L ACCOUNT ARE PREPARED AND DECLARED TO THE DEPARTMENT, THE SALES OF LOWER FIGURES CONTAINED IN THE COMPUTER SYSTEM (THAT TOO ONLY ON 2 DAYS) HAVE NO RELEVANCE. HOWEVER, DURING THE COURSE OF APPELLATE PROCEEDINGS , THE PARTNER OF THE ASSESSEE FIRM SHRI S. SELVARAJ, VIDE ORDER SHEET NOTING DATED 18.06.2012, ADMITTED AND OFFERED A SUM OF RS.5,00,000/- (RUPEES FIVE 1AKHS ONLY) AS ADDITIONA L INCOME FOR A.Y.2009-10, IN ORDER TO COVER UP ANY POSSIBLE MIST AKES/ OMISSIONS ETC AND ALSO TO BUY PEACE OF MIND. THIS I S IN ADDITION I.T.A.NOS.1973 & 1974/12 :- 11 -: TO THE INCOME ALREADY ADMITTED IN THE RETURN OF INC OME OF RS.94,838/-. HENCE, I DIRECT THE ASSESSING OFFICER TO ASSESS THE INCOME OF ASSESSEE FOR A.Y 2009-10 AS UNDER: INCOME AS PER THE RETURN OF INCOME FILED BY THE AS SESSEE RS. 94,838/- ADD: ADDITIONAL INCOME OFFERED AT THE TIME OF APPELLATE PROCEEDINGS, AS DISCUSSED ABOVE RS. 5,00,000/- TOTAL TAXABLE INCOME FOR A.Y 2009-10 RS. 5,94,838/- IN VIEW OF THE ABOVE, THE ASSESSMENT IS ENHANCED AND THE ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED. AFTER ARGUING FOR SOME TIME, THE PARTIES ARE FAIR ENOUGH TO POINT OUT THAT THIS ISSUE IS SQUARELY COVERED BY OU R FINDINGS QUA GROUND NO.2 DECIDED IN PRECEDING ASSESSMENT YEAR HEREINAB OVE. IT IS EVIDENT TO US THAT IN LOWER APPELLATE PROCEEDINGS, THE ASSESSEE HAS DECLARED ADDITIONAL INCOME OF ` 5 LAKHS TO COVER UP IRREGULARITIES, IF ANY. THE CIT(A) HAS ALSO PLACED RELIANCE UPON ACT UAL SALES RECORDED IN BOOKS DULY MAINTAINED BY THE ASSESSEE. HEREIN AS WELL, WE OBSERVE THAT THE DATE OF SURVEY DOES NOT FALL IN RELEVANT P REVIOUS YEAR FROM 1.4.2008 TO 31.3.2009. MOREOVER, THE PARTIES ALSO ADMIT THAT THIS ISSUE AND RELEVANT FACTS ARE SIMILAR TO THOSE INVOLVED IN PRECEDING ASSESSMENT YEAR. THUS, WE ADOPT THE SAME REASONING AND AGREE WITH THE CIT(A)S ORDER. I.T.A.NOS.1973 & 1974/12 :- 12 -: I.T.A.NO.1974/MDS/2012 IS DISMISSED. 15. TO SUM UP, THE REVENUES BOTH APPEALS I.T.A.NO.1973 AND 1974/ MDS/2012 ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 26 TH OF JUNE, 2014, AT CHENNAI. SD/- SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER ( . . ) (S. S. GODARA) ! / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 26 TH JUNE, 2014 RD %& '()( / COPY TO : 1 . / APPELLANT 2 . / RESPONDENT 3. *+, / CIT(A) 4. * / CIT 5. (-. / / DR 6. .01 / GF