Shri Sunit Shah, New Delhi V. ITO, New Delhi

ITA 198/DEL/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7487 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 08-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S MOHANTHY
• Assessee Lawyers: G R AGNIHOTRI
• Keywords: Unexplained expenditure
• Section: 133A; 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI A.N. PAHUJA ITA NO. 849/DEL/2010 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, VS. SH.SUNIT SHAH, PROP. M/S. SHAH WARD 36(2), NAMKEEN, 188 GOPAL PARK, NEW DELHI. CHANDER NAGAR, DELHI-51 (PAN: AANPS7190J) (APPELLANT) (RESPONDENT) ITA NO. 198/DEL/2010 ASSESSMENT YEAR: 2006-07 SH.SUNIT SHAH, PROP. M/S. SHAH VS. INCOME-TAX OFFI CER, NAMKEEN, 188 GOPAL PARK, WARD 36(2), CHANDER NAGAR, DELHI-51 NEW DELHI. (PAN: AANPS7190J) (APPELLANT) (RESPONDENT) DEPARTMENT BY: SMT. S. MOHA NTHY, SR.DR ASSESSEE BY: SHRI GR AGN IHOTRI, ADV. DATE OF HEARING : 08.12.2011 DATE OF PRONOUNCEMENT : 20.01.2012 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE AND REVENUE ARE IN CROSS APPEALS AGAIN ST THE ORDER OF LEARNED CIT(APPEALS) DATED 19.11.2009 PASSED FOR ASSESSMENT YEAR 2006-07. THE SOLITARY GRIEVANCE OF THE REVENUE IN ITS APPEAL RELATES TO D ELETION OF RS.42,76,673 WHICH WAS ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF SUPPRE SSED GROSS PROFITS. 2 2. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RULES, THEY ARE DESCRIPTIVE AND ARG UMENTATIVE IN NATURE. IT HAS FILED ABBREVIATED GROUNDS OF APPEAL ALSO BUT AGAIN THEY A RE NOT VERY SPECIFIC. IN BRIEF, THE GRIEVANCE OF THE ASSESSEE IS THAT LEARNED CIT(APPEA LS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.9,26,438 WHICH WAS ADDED BY THE ASSE SSING OFFICER ON THE BASIS OF ANNEXURE A-56 ALLEGED TO BE SALARY AND WAGES PAID B Y THE ASSESSEE AND NOT ACCOUNTED IN THE BOOKS. IN THE NEXT GROUND OF APPEA L, ASSESSEE HAS CHALLENGED DISALLOWANCE OF 20% OUT OF ELECTRICITY AND TELEPHON E EXPENSES. SINCE THE ISSUES IN BOTH THE APPEALS ARE INTER-CONNECTED, THEREFORE, WE TAKE BOTH THE APPEALS TOGETHER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E AT THE RELEVANT TIME WAS RUNNING A PROPRIETARYSHIP CONCERN IN THE NAME AND S TYLE OF M/S.SHAH NAMKEEN AT 188-GOPAL PARK, CHANDER NAGAR, DELHI. HE HAS FILED HIS RETURN OF INCOME ON 30 TH OCTOBER 2006 DECLARING AN INCOME OF RS.4,55,809. TH E CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE UNDER SEC. 143(2) OF THE ACT DATED 26.10.2007 WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO THE NOTICE, SHRI GR AGNIHOTRI, ADV. APPEARED BEFORE THE ASSESSING OF FICER. DURING THE PENDENCY OF SCRUTINY ASSESSMENT, A SURVEY UNDER SEC. 133A OF TH E ACT WAS CARRIED OUT UPON THE BUSINESS PREMISES OF THE ASSESSEE ON 19.3.2008. DUR ING THE COURSE OF SURVEY, A DIARY CONTAINING LIST OF WAGES PAID BY THE ASSESSEE WAS F OUND. IT WAS INVENTORIZED AS ANNEXURE A-56. LEARNED ASSESSING OFFICER HAS OBSERV ED THAT ASSESSEE HAS NOT BEEN MAINTAINING DAY TO DAY STOCK REGISTER EXHIBITING TH E AVAILABILITY OF RAW-MATERIAL, FINISHED PRODUCTS AND SEMI-FINISHED MATERIAL WITH H IM. ACCORDING TO THE ASSESSING 3 OFFICER, ASSESSEE HAS BEEN MANUFACTURING NAMKIN FRO M THE LAST 25 YEARS AS ALLEGED BY HIM. THE AUDITORS IN THE AUDIT REPORT ARE REQUIR ED TO GIVE THE QUANTITATIVE DETAILS OF THE PRINCIPAL ITEMS OF RAW-MATERIAL, FINISHED PR ODUCTS AND BYE PRODUCTS IN THE CASE OF MANUFACTURING CONCERN, BUT IN THE CASE OF A SSESSEE THE AUDITORS HAVE REPORTED IN COLUMN NO.28(B) AS NOT APPLICABLE. ASSE SSING OFFICER CONSTRUED FROM THIS INFORMATION THAT ASSESSEE IS NOT ENGAGED IN AN Y MANUFACTURING ACTIVITY. HE CONFRONTED THE ASSESSEE TO SUBMIT THE DETAILS OF PU RCHASE, SALES AND HOW HE HAS COMPUTED THE STOCK AT THE END. ACCORDING TO THE ASS ESSEE, HE HAS PRODUCED ALL THESE DETAILS AND POINTED OUT THAT STOCK AT THE END OF TH E YEAR IS DETERMINED ON THE BASIS OF PHYSICAL VERIFICATION. ASSESSING OFFICER OBSERVED T HAT OPENING STOCK SHOWN BY THE ASSESSEE WAS OF RS.23,56,197. HE HAS MADE PURCHASES OF RS.86,90,845, SALES HAVE BEEN SHOWN AT RS.85,37,514 AND THE CLOSING STOCK HA S BEEN SHOWN AT RS.46,14,161. ON THE BASIS OF NON-MAINTENANCE OF DAY TO DAY STOCK REGISTER, LEARNED ASSESSING OFFICER HAS REJECTED THE BOOK RESULTS OF THE ASSESS EE. ASSESSING OFFICER HAS COMPUTED UNDISCLOSED PROFIT OF RS.42,76,673. IN HIS WORKING, HE OBSERVED THAT ASSESSEE HAS INCURRED EXPENSES OF RS.2,44,210 TOWARDS WAGES WHIC H GENERATE A TURNOVER OF RS.85,37,514. THE WAGES MENTIONED IN THE DIARY FOUN D AT THE TIME OF SURVEY IS OF RS.9,26,438 WHICH INDICATES THAT THE TURNOVER MUST BE OF RS.3,23,438. ON THIS ESTIMATED TURNOVER, HE HAS APPLIED G.P. RATE OF 17. 93% WHICH HAS BEEN DISCLOSED BY THE ASSESSEE ON THE SALES OF RS.85,37,514. IN THIS WAY, ASSESSING OFFICER HAS WORKED OUT UNDISCLOSED G.P. OF RS.42,76,673. HE MADE THE A DDITION OF THIS AMOUNT. 4 4. ON APPEAL, LEARNED FIRST APPELLATE AUTHORITY HAS MODIFIED THE ORDER OF THE ASSESSING OFFICER. HE OBSERVED THAT THERE IS NO EVI DENCE INDICATING THE TURNOVER ACHIEVED BY THE ASSESSEE AS ESTIMATED BY THE ASSESS ING OFFICER. ACCORDING TO THE LEARNED FIRST APPELLATE AUTHORITY AT THE MOST THE E XPENSES PERTAINING TO WAGES MENTIONED IN THE DIARY IF NOT ACCOUNTED, CAN BE DIS ALLOWED. ACCORDINGLY, LEARNED CIT(APPEALS) HAS DISALLOWED THE EXPENSES SHOWN IN T HE DIARY AT RS.9,26,438. 5. THE REVENUE IN ITS APPEAL, IS IMPUGNING DELETION OF RS.42,76,673 WHEREAS ASSESSEE IN HIS APPEAL IS IMPUGNING THE CONFIRMATIO N OF ADDITION AT RS.9,26,438. 6. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPUG NING THE ORDER OF THE LEARNED CIT(APPEALS) SUBMITTED THAT LEARNED CIT(APP EALS) HAS ERRED IN TAKING UP THE EXPENSES AT RS.9,26,438 MENTIONED IN THE DIARY. HE POINTED OUT THAT THE DETAILS IN A TABULAR FORM WERE PRODUCED BEFORE THE LEARNED CIT (APPEALS) IN THE CHAT. THE ASSESSEE HAS POINTED OUT THAT THE LEARNED ASSESSING OFFICER HAS WORKED OUT THE WAGES AND SALARY AMOUNT ON THE BASIS OF ANNEXURE A- 56 AT RS.9,26,438 WHEREAS EXPENSE ACCORDING TO THE ASSESSEE IS OF RS.7,88,586 . THE CHART HAS BEEN PLACED ON PAGE 15 OF THE PAPER BOOK BEFORE US. HE FURTHER CON TENDED THAT THE ASSESSEE WAS CONFRONTED WITH THIS ANNEXURE ON 29.12.2008. THERE WAS ONLY ONE DAY GIVEN BY THE ASSESSING OFFICER TO EXPLAIN THE POSITION. THE STAN D OF THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) WAS THAT ASSESSEE ON THE DATE OF SURVEY WAS PRESENT AT LUCKNOW TO ATTEND HIS AILING SISTER. THE SURVEY WAS CONDUCTED IN THE PRESENCE OF HIS SON SHRI ANKIT SHAH AND HIS FRIEND SHRI JS TYAGI WH O IS A RETIRED GOVERNMENT 5 OFFICER. THE SURVEY TEAM HAS PUT PRESSURE UPON HIS SON TO MAKE A DECLARATION OF INCOME AT RS.8 CRORES WHICH WAS SCALE DOWN TO RS. 2 CRORES BUT HIS SON DID NOT AGREE TO ANY KIND OF ADDITION OF ALLEGED INCOME. HE WAS N OT VERY FAMILIAR WITH THE ACCOUNTS. ASSESSING OFFICER HAS MADE THE ADDITION I N THIS BACKGROUND. WITH REGARD TO THE ENTRIES AVAILABLE IN ANNEXURE 56, THE ASSESS EE SUBMITTED THAT THIS DIARY IS IN RESPECT OF TWO BUSINESS UNITS, NAMELY, THE PROPRIET ARY BUSINESS IN THE NAME OF SHAH NAMKINS AND THE BUSINESS OF HUF IN THE NAME OF SHRI SUMIT SHAH & SONS, PROPRIETOR OF SHAH DAL & BESAN. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE HAS MADE SALARY PAYMENT OF RS.1,72,370 AND WAGES OF RS.2,44,210 IN THE ACCOUNTING YEAR. SIMILARLY, HUF HAD PAID WAGES AND SALARY OF RS.1,52,498 AND RS.1,18,501 RESPECTIVELY. THUS, ACCORDING TO THE AS SESSEE, THE TOTAL WAGES AND SALARY PAID IN THESE TWO CONCERNS IS OF RS.6,87,579. THE D IFFERENCE BETWEEN THE WAGES RECORDED IN THE DIARY AND DEBITED BY THE ASSESSEE I N THE ACCOUNTS IS ON ACCOUNT OF MONEY OF CERTAIN EMPLOYEES LYING WITH THE ASSESSEE. THE ASSESSEE HAD FILED AFFIDAVITS OF SOME OF THE WORKERS AT PAGE NOS. 16 TO 23 OF THE PAPER BOOK. THEY HAVE ALLEGED THAT THEY DID NOT HAVE ANY BANK ACCOUNT, THEY KEPT THE MONEY OF THEIR SALARIES OUT OF THEIR SAVINGS WITH SHRI SUNIT SHAH. THUS, ACCORDING TO THE ASSESSEE, THERE WAS NO DISCREPANCIES IN THE SALARY AND WAGES DEBITED IN TH E ACCOUNTS, VIS--VIS, THE ONE FOUND RECORDED IN THE DIARY. 7. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT NO DOUBT ASSESSEE WAS NOT MAINTAINING THE DAY TO DAY STOCK REGISTER B UT THAT DOES NOT MEAN THAT HE WAS NOT MAINTAINING PROPER BOOKS OF ACCOUNT. ASSESS EE HAS PRODUCED ALL THE 6 RELEVANT ACCOUNT BEFORE THE ASSESSING OFFICER AND H E HAS CHECKED THEM ON TEST-CHECK BASIS. HE DREW OUR ATTENTION TOWARDS PAGE NOS. 12 T O 14 OF THE PAPER BOOK WHEREIN COPIES OF THE ORDER SHEET ENTRIES ARE PLACED ON REC ORD. THERE WAS NO EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER WHICH CAN SUGG EST THAT ASSESSEE HAS MADE PURCHASES OUT OF BOOKS OR MADE SALES OUT OF BOOKS. LEARNED CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON ESTIMATE BASIS WITH REGARD TO SUPPRESSED G.P. HE PRAYED THAT THE ORDER OF THE LEARNED CIT(APPEALS) TO THAT EXTENT BE UPHELD BUT ORDER OF THE LEARNED CIT( APPEALS) BE MODIFIED QUA THE ADDITION CONFIRMED FOR A SUM OF RS.9,26,438. THIS A DDITION BE DELETED. 8. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE TAKIN G UP SECOND FOLD OF HIS GRIEVANCE SUBMITTED THAT ASSESSEE HAS CLAIMED ELECT RICITY EXPENSES OF RS.1,04,571 AND TELEPHONE EXPENSES OF RS.33,242. THE ASSESSEE I S RESIDING ON THE FIRST FLOOR OF THE ALLEGED BUSINESS PREMISES, THEREFORE, ASSESSING OFF ICER HAS MADE DISALLOWANCE AT 20% OF THE ELECTRICITY BILL AS WELL AS OF THE TELEP HONE EXPENSES. HE SUBMITTED THAT DISALLOWANCE IS ON THE HIGHER SIDE. 9. LEARNED DR ON THE OTHER HAND SUBMITTED THAT DURI NG THE COURSE OF SURVEY, A DIARY WAS FOUND WHICH EXHIBITS THE WAGES PAID BY TH E ASSESSEE TO VARIOUS PERSONS DURING DIFFERENT PERIOD OF THE YEAR. THESE CHANGES HAVE NOT BEEN ENTERED PROPERLY IN THE BOOKS OF ACCOUNTS. THE ASSESSEE WAS UNABLE TO E XPLAIN AS TO WHY THE WAGES HAVE BEEN PAID BY HIM. THE ASSESSEE FAILED TO DEMONSTRAT E THE BENEFIT DERIVED BY HIM ON THE PAYMENT OF SUCH CHANGES. THE ASSESSEE HAS NOT B EEN MAINTAINING DAY TO DAY 7 STOCK REGISTER, THEREFORE, IT WAS DIFFICULT FOR THE ASSESSING OFFICER TO DEDUCE THE TRUE RESULTS FROM HIS ACCOUNTS. HE HAS RIGHTLY REJECTED THE BOOK RESULTS AND HAS RIGHTLY ESTIMATED THE TURNOVER. LEARNED FIRST APPELLATE AUT HORITY HAS ERRED IN CONSTRUING THAT ONLY THE UNEXPLAINED EXPENDITURE OUGHT TO HAVE BEEN DISALLOWED. 10. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH THE RECORD CAREFULLY. SECTION 145 OF THE INCOME-TAX ACT, 1961 CONTEMPLATES THAT INCOME CHARGEABLE UNDER THE HEAD PROFIT AND GAINS OF BUSI NESS SHALL BE COMPUTED IN ACCORDANCE WITH ACCOUNTING SYSTEM REGULARLY EMPLOYE D BY THE ASSESSEE. HOWEVER, SUCH ACCOUNTING SYSTEM SHOULD BE INCONSONANCE WITH THE ACCOUNTING STANDARD NOTIFIED BY THE CENTRAL GOVERNMENT IN THE OFFICIAL GAZETTEE FROM TIME TO TIME. IF THE ASSESSING OFFICER IS NOT SATISFIED ABOUT THE CORREC TNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR HIS METHOD AND ARRIVED AT A CONCLUSION THAT IT IS DIFFICULT FOR HIM TO DEDUCE THE TRUE INCOME OF AN ASSESSEE FR OM THOSE ACCOUNTS THEN HE MAY REJECT THE BOOK RESULTS AND ASSESS INCOME OF THE AS SESSEE ACCORDING TO HIS BEST JUDGMENT AND THE MANNER PROVIDED IN SECTION 144 OF THE ACT. IN THE PRESENT CASE, ASSESSING OFFICER HAS OBSERVED THAT ASSESSEE WAS NO T MAINTAINING DAY TO DAY STOCK REGISTER, THEREFORE, IT WAS DIFFICULT FOR HIM TO DE DUCE THE TRUE INCOME. HE REJECTED THE BOOK RESULTS AND ESTIMATED THE TURNOVER OF THE ASSESSEE ON THE BASIS OF ALLEGED SALARY AND WAGES RECORDED IN THE DIARY FOUND AT THE TIME OF SURVEY. IT WAS BROUGHT TO OUR NOTICE THAT DURING THE ASSESSMENT PROCEEDING S, ASSESSEE HAS PRODUCED THE CASH BOOK AND LEDGER ACCOUNT. IT HAS PRODUCED PURCHASE B ILLS IN ORDER TO DEMONSTRATE THE PURCHASES AND SALES MADE BY HIM. THE RELEVANT ORDER SHEET ENTRIES PLACED ON RECORD 8 BY THE LEARNED COUNSEL FOR THE ASSESSEE IN THIS CON NECTION ARE WORTH TO NOTE AND THEY READ AS UNDER: A PORTION 11. A PERUSAL OF THESE ENTRIES WOULD REVEAL THAT DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE HAS PRODUCED CASH BOOK, LEDGE R ACCOUNT, SALES BOOKS, PURCHASE BILLS ETC. THE ASSESSING OFFICER HAS NEVER SOUGHT T HE EXPLANATION OF THE ASSESSEE AS TO WHY HIS BOOKS OF ACCOUNT SHOULD NOT BE REJECTED AND THE PROFIT SHOULD NOT BE ESTIMATED. HE HAS EXAMINED THE CASH BOOK, LEDGER AC COUNT AND THE SALES BOOKS ON TEXT-CHECK BASIS. FROM THE VERY BEGINNING, ASSESSEE HAS BEEN POINTING OUT THAT IN HIS LINE OF BUSINESS, IT IS NOT PRACTICABLY POSSIBLE TO MAINTAIN QUALITYWISE AND QUANTITYWISE DETAILS IN RESPECT OF RAW-MATERIAL AND FINISHED PRODUCTS ON DAY TO DAY BASIS. HE HAS INFORMED THE ASSESSING OFFICER THAT H E IS NOT MAINTAINING SUCH REGISTER BUT WORKED OUT THE CLOSING STOCK ON PHYSICAL VERIFI CATION. THE NON-MAINTENANCE OF STOCK REGISTER CAN BE A ONE FACTOR FOR EXAMINING TH E COMPLETENESS OF THE BOOKS OF AN ASSESSEE. BUT IN THIS PARTICULAR LINE OF BUSINESS, IT MAY NOT BE A SOLE CRITERIA TO REJECT THE OTHER BOOKS IN THE ABSENCE OF SUCH REGISTER. TH ERE WAS A SURVEY BUT DEPARTMENT WAS NOT ABLE TO LAY ITS HANDS ON ANY MATERIAL WHICH CAN DEMONSTRATE THAT PURCHASES WERE OUT OF BOOKS OR SALES WERE NOT RECORDED. ASSES SING OFFICER WAS UNABLE TO REFER ANY MATERIAL WHICH INDICATES THE ALLEGED STOCK OF R AW MATERIAL ON THE DATE OF SURVEY WAS MORE THAN THE QUANTITY AVAILABLE IN THE PURCHAS E BILLS. THESE COULD HAVE 9 INDICATED THAT BOOKS OF ACCOUNT DO NOT DISCLOSE THE TRUE AFFAIRS. THERE IS NO SHARP DECLINE IN THE PROFIT RATIO OF THE ASSESSEE, THEREF ORE, LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY OBSERVED THAT SURVEY TEAM HAS NOT DETECTED UNDISCLOSED TURNOVER AT THE TIME OF SURVEY. THE BOOK RESULTS OF THE ASSESSEE, THUS, OUGHT TO HAVE NOT BEEN REJECTED. LEARNED FIRST APPELLATE AUTHORIT Y HAS NOTICED THE SUBMISSIONS MADE BY THE ASSESSEE IN DETAIL THOUGH HE HAS NOT RE CORDED A DETAILED FINDING BUT CONCUR WITH THE FACTUAL SUBMISSIONS MADE BY THE ASS ESSEE. ON THE OTHER HAND, ASSESSING OFFICER HAS NOT REFERRED ANY SPECIFIC MAT ERIAL. HE HAS TRIED TO BUILT HIS CASE ON PERIPHERAL TECHNICALITY I.E. IN COL.NO.28B OF THE AUDITED REPORT, THE AUDITOR HAS MENTIONED THAT IT IS NOT APPLICABLE IN THE CASE OF ASSESSEE TO REPORT THE QUANTITATIVE DETAILS OF THE PRINCIPAL ITEMS OF RAW- MATERIAL AND FINISHED PRODUCTS. ON THE STRENGTH OF THIS REFERENCE, ASSESSING OFFICER C ONCLUDED THAT IT INDICATES THAT ASSESSEE WAS NOT ENGAGED IN MANUFACTURING. HE POINT ED OUT THAT SUBMISSIONS OF THE ASSESSEE IS IN CONTRADICTION OF THE REPORT SUBMITTE D BY THE AUDITOR. TO OUR MIND, THESE ARE THE ASPECT WHICH CAN RAISE SOME SUSPICIOU S AND CAN PURSUED THE ASSESSING OFFICER TO INVESTIGATE THE ISSUE. BUT THEY ARE NOT SUCH A GLARING DEFECTS WHICH MAY ENABLE THE ASSESSING OFFICER TO DEDUCE THE TRUE INC OME OF THE ASSESSEE FROM THE ACCOUNTS PRODUCED BY HIM. AT THE COST OF REPETITION , WE WOULD LIKE TO OBSERVE THAT INSPITE OF SURVEY, THE REVENUE WAS UNABLE TO LAY IT S HANDS ON ANY INFORMATION RELEVANT TO THIS ASSESSMENT YEAR EXHIBITING THE FA CT THAT SALES HAVE BEEN MADE OUT OF THE BOOKS OR PURCHASES HAVE BEEN MADE OUT OF THE BO OKS. THE QUANTITY OF RAW MATERIAL AVAILABLE AT THE TIME OF SURVEY WAS MORE T HAN THE PURCHASE BILLS AVAILABLE WITH THE ASSESSEE. IN SUCH SITUATION, THE TURNOVER OF THE ASSESSEE CANNOT BE ESTIMATED 10 THREE TIMES ON THE BASIS OF ALLEGED DIARY EXHIBITIN G THE PAYMENT MADE TO THE WORKERS IN THE SHAPE OF WAGES OR SALARY. THEREFORE, WE DO N OT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. IT IS DISMISSED. 12. AS FAR AS THE ADDITION OF RS.9,26,438 MADE BY T HE LEARNED CIT(APPEALS) IS CONCERNED, THE CASE OF THE ASSESSING OFFICER IS THA T THIS WAS AN UNEXPLAINED EXPENDITURE BY THE ASSESSEE TOWARDS PAYMENTS OF SAL ARY AND WAGES. ASSESSING OFFICER DID NOT MAKE SPECIFIC ADDITION OF THIS AMOU NT BECAUSE HE HAS REJECTED THE BOOK RESULTS AND ESTIMATED THE TURNOVER WHICH CAN T AKE CARE OF THESE UNEXPLAINED EXPENDITURE. THE CASE OF THE ASSESSEE IS THAT IN TH IS DIARY, THE SALARY EXPENSES AND THE WAGES EXPENSES OF TWO CONCERNS HAVE BEEN NOTICE D. THE SALARY EXPENSES OF RS.1,72,370 AND WAGES OF RS.2,44,210 PERTAIN TO THE ASSESSEE. SIMILARLY, SALARY OF RS.1,52,498 AND RS.1,18,501 PERTAINED TO THE HUF. A CCORDING TO THE ASSESSEE, THE TOTAL SALARY AND WAGES OF RS.6,87,579 IS RECORDED I N THIS DIARY WHICH REPRESENTS THE SALARY AND WAGES DEBITED IN THE TWO CONCERNS. THE R EMAINING AMOUNT REPRESENTS THE SALARIES OF CERTAIN WORKERS KEPT WITH THE ASSESSEE BECAUSE THEY DO NOT HAVE ANY BANK ACCOUNT AND WHENEVER THEY WILL VISIT THEIR HOME TOW N, THEY WILL TAKE THE MONEY. ACCORDING TO THE ASSESSEE, THIS ASPECT HAS NOT BEEN LOOKED INTO BY THE ASSESSING OFFICER AND A VERY SHORT TIME WAS GRANTED BY THE AS SESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING DREW OUR ATTENT ION TOWARDS PAGE NO.13 OF THE PAPER BOOK WHEREIN ORDER SHEET ENTRY DATED 29.12.20 08 (EXTRACTED SUPRA) IS AVAILABLE. HE POINTED OUT THAT FOR ANNEXURE A-56, A SSESSEE WAS CONFRONTED FOR THE FIRST TIME AND ASSESSMENT ORDER WAS PASSED ON 31.12 .2008. THUS, ACCORDING TO THE 11 ASSESSEE, THE AMOUNTS MENTIONED IN THE DIARY ARE NO T UNEXPLAINED EXPENDITURE. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTANCES, W E ARE OF THE VIEW THAT SINCE ASSESSING OFFICER HAS NOT DELIBERATED UPON THIS ISS UE BECAUSE HE HAS REJECTED THE BOOK RESULTS AND WAS UNDER THE IMPRESSION THAT THE ADDITION MADE BY HIM ON ACCOUNT OF UNDISCLOSED G.P. WOULD TAKE CARE THE ALL EGED UNEXPLAINED EXPENDITURE. IT ALSO EMERGES OUT FROM THE RECORD THAT TIME GIVEN BY THE ASSESSING OFFICER TO THE ASSESSEE FOR EXPLAINING THE NATURE OF THESE ENTRIES WAS TOO SHORT. THEREFORE, WE ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE AND REMIT THI S ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION. ASSESSING OFFICER SHALL EXAMINE THE NATURE OF THESE EXPENSES AND WHETHER A SUM OF RS.6,87,579 ALLEGED T O HAVE BEEN PAID BY THE ASSESSEE TOWARDS WAGES AND SALARIES IN THE TWO CONCERNS IS F ORMING PART OF THIS TOTAL AMOUNT. AFTER EXAMINING THIS ASPECT, ASSESSING OFFICER SHAL L DECIDE THE ALLOWABLE OR DISALLOWABILITY OF THE ALLEGED UNEXPLAINED EXPENDIT URE. HE SHALL DECIDE THIS ISSUE IN ACCORDANCE WITH LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING. 13. AS FAR AS DISALLOWANCE OF 20% OUT OF TELEPHONE EXPENSES AND ELECTRICITY EXPENSES ARE CONCERNED, WE ARE OF THE VIEW THAT ASS ESSEE HAS BEEN OCCUPYING FIRST FLOOR OF THE PREMISES FOR RESIDENTIAL PURPOSES. THE POSSIBILITY OF USING OF ELECTRICITY AND TELEPHONE FACILITY FOR PERSONAL PURPOSES CANNOT BE RULED OUT. THE ASSESSEE HAS NOT DEMONSTRATED THAT FOR THE FIRST FLOOR HE IS HAV ING SEPARATE ELECTRICITY METER. THEREFORE, LEARNED ASSESSING OFFICER HAS RIGHTLY MA DE THE DISALLOWANCE. THIS GROUND OF APPEAL IS REJECTED. 12 14. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND THAT OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 20.01.2012 SD/- SD/- ( A.N. PAHUJA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 /01/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR