ITO, Cuttack V. Ashok Kumar, Cuttack

ITA 210/CTK/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7838 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 28-06-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 02-04-2012
• Court: TRIBUNAL
• Department Lawyers: PN A
• Keywords: Unexplained investment; Unexplained expenditure; Deemed to accrue or arise in india
• Section: 40A(3); 142(1); 133(6); 69; 10

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 210/CTK/2012 AND C.O.NO.24/CTK/2012 (FILED BY THE ASSESSEE) (ASSESSMENT YEAR 2008 - 09) INCOME - TAX OFFICER, WARD 2(1),CUTTAC K. VERSUS ASHOK KUMAR NAYAK, PROP.M/S.ASHOK WOOD INDUSTRIES, LINK ROAD, BADAMBADI,CUTTACK. PAN: ABYPN 4250 A (APPELLANT) (RESPONDENT) ITA NO. 287/CTK/2012 (ASSESSMENT YEAR 2008 - 09) ASHOK KUMAR NAYAK, PROP.M/S.ASHOK WOOD INDUSTRIES, LINK ROAD, BADAMBAD I,CUTTACK. PAN: ABYPN 4250 A VERSUS INCOME - TAX OFFICER, WARD 2(1),CUTTACK. (APPELLANT) (RESPONDENT) FOR THE A SSESSEE : SHRI J.M.PATTNAIK, AR FOR THE DEPARTMENT: SHRI A.BHATTACHARJEE, DR DATE OF HEARING : 28.06.2012 DATE OF PRONOUNCEMEN T : 29.06.2012 ORDER SHRI K.K.GUPTA, AM : CROSS APPEALS BY THE REVENUE AND THE ASSESSEE ARISE FROM THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DT.31.1.2012. A CROSS OBJECTION HAS BEEN PREFERRED BY THE ASSESSEE SUPPORTING THE ORDER OF THE LEARNE D CIT(A) ON THE ISSUE RAISED BY THE REVENUE BEFORE THE TRIBUNAL. WE PROPOSE TO DISPOSE OF THE APPEALS AND THE C.O. TOGETHER HAVING CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES, AS COMMON ISSUES WERE ARGUED BEING PART RELIEF GRANTED AND SUSTAINED BY THE LEARNED CIT(A). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND IN ITS APPEAL. ADDITION OF 21,05,008 ON ESTIMATION : FOR THAT THE AFORESAID ADDITION IS NOT SUSTAINABLE ON ITS ENTIRETY AS PER THE FACTS AND CIRCUMSTANCES OF THE CASE . 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL. 2 01. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD, FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN DELETING THE QUANTUM OF ADDITION/DISALLOWANCES MADE BY THE AO UNDER THE DIFFERENT HEADS SUCH AS I) INVESTMENT IN PURCHASES CORRESPONDING TO UNACCOUNTED SALES 12,25,245, II) VALUATION OF CLOSING STOCK RS ,6,18,000, III) BOGUS LIABILITY (EXISTING SUNDRY CREDITORS) 7,37,566, IV) BOGUS LIABILITY (NON EXISTING S/CREDITORS 14,53,129, V) DISALLOWANCE U/S.40A(3) 3,58,74 WITH A WRONG OPINION THAT THE AO HAS DETERMINED THE TAXABLE INCOME BY RESORTING TO ESTIMATI ON AND THERE IS NO SCOPE FOR THE AO FOR ANY DISALLOWANCE UNDER OTHER SECTIONS. WHERE AS THE AO HAS NOT ESTIMATED THE PROFIT ON REJECTION OF THE BOOKS OF A/C, RATHER HE HAS CALCULATED GP RATE AT L3% ONLY ON UNACCOUNTED SALES DETECTED OUTSIDE THE BOOKS INS TEAD OF 12% OF GP SHOWN BY THE ASSESSEE IN HIS P&L A/C. 02. WHETHER THE LD.CIT(A) IS JUSTIFIED TO HOLD THAT THERE CANNOT BE ANY INVESTMENT OUTSIDE THE BOOKS OF A/C IN RESPECT OF PURCHASES MADE OUTSIDE THE BOOKS AND ALSO SALES MADE OUTSIDE THE BOOKS, WHERE THE LD. APPELLATE AUTHORITY HAS CONFIRMED THE FINDINGS OF THE A.O. THAT THE ASSESSEE HAD NOT DISCLOSED THE UNACCOUNTED SALES AMOUNTING TO 1,61,92,373AND ALSO FOR SUCH UN - RECORDED SALES THE CORRESPONDING PURCHASES WOULD BE 1,40,87,365. EVIDENTLY FOR SUC H PURCHASES NOT DISCLOSED IN THE REGULAR BOOKS OF A/C, THERE HAS TO BE A CERTAIN CAPITAL INVESTMENT OUTSIDE THE BOOKS WHICH THE A.O. HAS DETERMINED AT REASONABLE FIGURE AT 12,25,245 BY ANALYZING THE CAPITAL PURCHASE RATIO AND HAS TREATED SUCH UNEXPLAINED INVESTMENT RELATABLE TO UNRECORDED PURCHASES OF 40,87,365 AS DEEMED INCOME U/S.69 OF THE I,T.ACT. TO THIS EXTENT, THE FINDING OF THE LD. AUTHORITY IN DELETING SUCH UNEXPLAINED INVESTMENT IS GROSSLY ERRONEOUS. 03. WHETHER THE LD. FIRST APPELLATE AUTHORITY WAS JUSTIFIED TO IGNORE THE APPLICATION OF STATUTORY PROVISIONS OF SECTION 40A(3) FOR CASH PAYMENT FOR 3,58,474 TO THE DIFFERENT PARTIES IN RESPECT OF PURCHASE OF VARIOUS GOODS BY THE ASSESSEE. 4. THE ASSESSEE HAS FILED CROSS OBJECTION O N THE APPEAL FIL ED BY THE REVENUE, SUPPORTING THE IMPUGNED ORDER OF THE LEARNED CIT(A) TO THE EXTENT HE DELETED THE ADDITIONS. 5 . THE BRIEF FACTS AS BROUGHT ON RECORD AS SUPPORTED BY THE CONTENTIONS OF THE RIVAL PARTIES HERETO ON THE RESPECTIVE SUBMISSIONS ARE THAT THE A SSESSEE IS 3 A PROPRIETORSHIP CONCERN DEALT WITH RETAIL SALE OF WOODEN FURNITURE BY DIRECTLY PURCHASING FROM WOODEN FURNITURE HOUSES ON WHOLESALE BASIS AND ALSO PURCHASE WOODEN FURNITURES FROM CARPENTERS. THE ASSESSEE HAS ALSO A WORKSHOP FOR REPAIRING OF FU RNITURES. THE APPELLANT HAS TWO SHOP ROOMS I.E. 1) A.D. MARKET, LINK ROAD, CUTTACK 2) DHABALGIRI, JAJPUR AND ONE WORK SHOP AT KALYANINAGAR, CUTTACK. THE ASSESSEE HAS FILED HIS INCOME TAX RETURN IN INDIVIDUAL STATUS BY DISCLOSING NET INCOME AT 2,20,030 FOR THE ASST. YEAR 2008 - 09. A SURVEY OPERATION WAS CONDUCTED ON 18.02.2009 IN BOTH THE SHOP ROOMS AND WORKSHOP. IN COURSE OF SURVEY OPERATION, THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE BEEN IMPOU NDED RELATING TO THE ASST. YEAR 2008 - 09 UNDER THE IDENTIFIC ATION MARK AWI - 1 TO AWI - 29 AND 5 NOS. OF BANK A/CS. NAMELY: - 1 ) ANDHRA BANK, MALGODOWN, CUTTACK, S.B. A/C. NO - 4100000573 2 ) BANK OF INDIA, MAHANADIVHIAR, CUTTACK C/C. NO. - 51103010000044 3 ) HDFC BANK, BAJRAKABATI ROAD, CUTTACK, A/C. NO. - 02362000002775 4 ) ING VYSYA BANK, LINK ROAD, CUTTACK - A/C. NO.545010060488. 5 ) ING VYSYA BANK, LINK ROAD, CUTTACK A/C. NO.54501100. IN COURSE OF SURVEY OPERATION, IT HAS ASCERTAINED BY THE DEPARTMENT, THE ASSESSEE HAS MAINTAINED TWO SETS OF SALES ACCOUNT VI Z. 1) ORDER KHATA - CUM - SALES REGISTERS ON DAY TO DAY BASIS (AWI - 19), 2) GENERAL SALES REGISTER (AWI - 19) . THE PRIMA FACIE VIEW OF THE DEPARTMENT, THE ASSESSEE HAS MADE SUPPRESSION OF HUGE SALES AS NOT DISCLOSING THE ENTRIES MADE IN ORDER KHATA - CUM - SALES RE GISTER IN THE GENERAL SALES REGISTER. EVEN THOUGH, IT HAS SUBSEQUENTLY ESTABLISHED MOST OF THE ENTRIES HAVE ENTERED IN THE GENERAL 4 SALES REGISTER, THEREBY THE TRANSACTIONS REFLECTED IN ORDER KHATA ARE PART AND PARCEL AT THE GENERAL SALES REGISTER BUT NOT ENTIRELY. DUE TO THE ABOVE ENSUING REASONS THIS CASE HAS BEEN APPROVED BY THE CCIT, BHUBANESWAR FOR SCRUTINY VIDE LETTER NO. CCIT/TECH./SCRUTINY/2009 - 10/9056 ON DT.02/09/2010. THE A.O. HAS ACCORDINGLY ISSUED THE NOTICE U/S. 143(2) AND U/S. 142(1) OF IT A CT. THE ASSESSEE HAS C O - OPERATED IN ASSESSMENT PROCEEDINGS BY PRODUCING THE BOOKS OF ACCOUNTS AND OTHER RELEVANT DOCUMENTS. THE A.O. HAS MADE AN EXORBITANT ASSESSMENT BY DET ERMINING THE TOTAL INCOME AT 67,62,250 AS AGAINST THE RETURN INCOME DISCLOSED A T 2,20,030 . THE DETAILS OF SUCH EXORBITANT DEMAND ON DIFFERENT GROUNDS ARE NARRATED BELOW: - ( I ) SUPPRESSION OF SALE AT 1,61,92,373 LEADS TO ESTIMATION OF NET PROFIT @ 12% 21,05,008.00 ( II ) ADDITION U/S. 69 DUE TO DIFERNATION IN CAPITAL DISCLOSED AND CAPITA L REQUIRED TO PURCHASE OF GOODS IN ORDER TO MAKE UNACCOUNTED SALE ( 33,30,253.00 - 21,05,008.00) 12,25,245.00 ( III ) NON - PRODUCTION OF STOCK REGISTER LEADS TO UNDER VALUATION OF STOCK 6,18,100.00 ( IV ) EXCESS ASSETS OVER LIABILITY BOGUS LIABILITY (S UNDRY CREDITOR) BY INVOKING SEC - 133(6) OF IT ACT 7,37,566.00 ( V ) BOGUS LIABILITY (SUNDRY CREDITOR) BY INVOKING SEC - 133(6) OF THE IT ACT 14,53,129.00 ( VI ) DISALLOWANCE U/S. 40A(3) OF THE IT ACT PAYMENT IN SHAPE OF CASH BY VIOLATING RULE - 6 DD OF THE IT RUL E. 3,58,474.00 ( VII ) NOT DISCLOSING INTEREST INCOME ON FIXED DEPOSITS AND INTEREST ON REFUND AMOUNT 49,218.00 65,46,640.00 5 5.1. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE COMMISSIONER OF INCOME - TAX. AFTER CONSIDERING THE FACTS AND CIRCUMS TANCES OF THE CASE, DELETED THE ADDITION TO THE EXTENT OF 12,25,245 (INVESTMENT IN PURCHASES CORRESPONDING TO UNACCOUNTED SALES), 6,18,000 (VIOLATION OF CLOSING STOCK), 7,37,566 (BOGUS LIABILITY) 14,53,129(BOGUS LIABILITY) & 3,58,474 (DISALLOWANCE U/ S. 40A(3) AND CONFIRMED THE ADDITION IN RESPECT OF NON - DISCLOSURE OF INTEREST, THEREBY ALLOWING THE APPEAL PARTLY. BUT, HE UPHELD THE RATE OF GROSS PROFIT ADOPTED BY THE A.O. 5.2. THE LEARNED AR OF THE ASSESSEE SUBMITTED BEFORE US THAT THE LEARNED CIT(A) HAS UPHELD THE RATE OF GROSS PROFIT ADOPTED BY THE ASSESSING OFFICER WITHOUT APPLYING HIS JUDICIOUS MIND AS SUCH ADOPTION OF GROSS PROFIT IS WITHOUT ANY BASIS. THE FACT REMAINS IN PREVIOUS YEARS THE RATE OF NET PROFIT DISCLOSED BY THE APPELLANT IS WITHIN THE RANGE OF 5% TO 6%. THE A.O. HAS ACCEPTED THE RATE OF NET PROFIT AS PER THE AUDIT REPORT SO FAR AS THE TURNOVER DISCLOSED AT 42,84,667 AND AT THE SAME TIME ADOPTED RATE OF GROSS PROFIT @ 13% ON UNACCOUNTED SALE TURNOVER AT 1,83,32,575 (THE PART OF T HE TURNOVER HAS ALSO REFLECTED IN THE GENERAL SALES REGISTER COVERING THE TRANSACTIONS AT 42,84,667. HENCE, THE RATE OF GROSS PROFIT OUGHT TO BE REASONABLY REDUCED AS PER THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LEARNED AR OF THE ASSESSEE POINTED OUT THAT THE A.O. HAS TAKEN INTO CONSIDERATION OF THE TRANSACTIONS OF THE UNDISCLOSED BANK A/CS. SO FAR AS DEPOSITS (INCOMING) AND WITHDRAWALS (OUTGOING) WHILE CONSIDERING THE UNACCOUNTED SALE, PURCHASE AND RELEVANT EXPENSES DEBITED IN THE BANK ACCOUNTS WHICH ENTIRELY COVERS UNACCOUNTED SALES, UNACCOUNTED PURCHASES AND UNACCOUNTED EXPENDITURES. THEREFORE, THE A.O. OUGHT TO HAVE CONSIDERED THE AVERAGE NET PROFIT OF LAST 5 YEARS IN TO CONSIDERATION WHILE DETERMINING THE ESTIMATED PROFIT AS THE A.O. WHILE 6 ADOPT ING THE ESTIMATION BY REJECTING THE BOOKS OF ACCOUNTS HAS MADE ADDITION ON DIFFERENT ANGLES SO FAR AS INVESTMENT IN PURCHASES CORRESPONDING TO UNACCOUNTED SALES, VALUATION OF CLOSING STOCK, BOGUS LIABILITY AND DISALLOWANCE U/S. 40(A)(3) OF I.T. ACT RELATIN G TO TRANSACTIONS BOTH AUDITED ACCOUNTS AND SUPPRESSED TURNOVE R HENCE, THE DETERMINATION OF ESTIMATED NET INCOME SHOULD BE AVERAGE RATE OF NET PROFIT OF PROCEEDING ASSESSMENT YEARS INSTEAD OF RATE OF GROSS PROFIT. 5.3. THE LEARNED DR SUPPORTED THE IMPUGNE D ORDER OF THE LEARNED CIT(A) INSOFAR AS THE ESTIMATION OF GROSS NET PROFIT @13% ON THE SUPPRESSED SALES. 6 . THE LEARNED DR, HOWEVER, PERUS ED THE REVENUE APPEAL SUBMITTING THAT THE VERY FACT THAT THE LEARNED CIT(A) SOUGHT TO TAX 13% OF THE PURPORTED SALES NOT ACCOUNTED FOR ON THE FACTS AND CIRCUMSTANCES AS HAVE BEEN BROUGHT ON RECORD DURING THE SURVEY PROCEEDING OUGHT NOT TO HAVE DELETED THE OTHER EXPENDITURES SPECIFICALLY DISALLOWED BY THE ASSESSING OFFICER ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE A SSESSEE HAD FAILED TO DISCLOSE THE SALES IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT WAS CONFIRMED AT THE PERCENTAGE OF THE GROSS PROFIT RATE WHICH THE LEARNED CIT(A) HAS CONFIRMED THEREFORE, HE OUGHT TO HAVE GIVEN REASON FOR DELETION OF THE OTHER EXP ENSES DISALLOWED BY HOLDING THAT ESTIMATION ON THE BASIS OF SALES SUPPRESSED FOUND AT THE TIME OF SURVEY OUGHT TO HAVE BEEN INCURRED BY CLAIMING THESE EXPENSES. HE, THEREFORE, PRAYED THAT AS PER THE GROUNDS RAISED BY THE ASSESSING OFFICER BEFORE THE TRIBUN AL MAY BE CONSIDERED IN ITS ENTIRETY. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO AGREE WITH THE FINDINGS OF THE LEARNED CIT(A) TO THE EXTENT THAT IT WAS THE SURVEY OPERATION WHICH RESULTED IN FINDING BY THE LEARNED CIT(A) THAT THE SUPPRESSED SALES ARE NOT UNDISCLOSED INCOME OF THE 7 ASSESSEE. THE TECHNICAL ACCOUNTING OF THE CLOSING STOCK AND THE ADVANCES RECEIVED FROM THE PROSPECTIV E BUYERS WHETHER COULD BE SHOWN IN THE CLOSING STOCK WHEN THE PERIOD FOR PURCHASE AND SALES EXCEEDED ONE YEAR WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE LEARNED CIT(A) THEREFORE THOUGHT IT FIT ON THE BASIS OF FACTS BROUGHT ON RECORD IN HIS ORDER IN PUR SUANT TO THE SURVEY OPERATION CARRIED OUT THAT THE PURPORTED CLOSING STOCK WHICH MAY HAVE BEEN IN THE HANDS OF THE BUYERS ALREADY OR WERE TO BE BOOKED AS SALES TO BE SHOWN AGAINST THE PURCHASES H AS ALREADY BEEN PART OF THE BOOKS OF ACCOUNT WOULD AT BEST RE SULT INTO BRINGING INTO TAX THE PURPORTED MARGIN ON THE GROSS IN THE SALES WHEN THE MAIN INGREDIENT LEADING TO COMPUTATION OF GROSS RATE OF MARGIN IS PURCHASE, SALES AND STOCK. THE SPECIFICATION OF A CUSTOMER BUYING PARTICULAR FURNITURE AND THE AMOUNT OF C OST OF SALES HAS NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER. IT WAS THE SURVEY OPERATION ON 18.2.2009 FOR THE FY BEING ENDED ON 31.3.2008. PRACTICALLY 11 MONTHS HAD ELAPSED ON THE BASIS OF NOTING REGARDING ADVANCES RECEIVED FROM THE CUSTOMERS FOR THE P ARTICULAR FURNITURE RECORDING FOR SELLING PRICE FIXED IN THE ADVANCE REGISTER , THE NATURE OF FURNITURE WHETHER WOULD REQUIRE ITS MAKING MORE THAN 6 MONTHS OR A YEAR WHICH ALL TECHNICALITIES HAVE BEEN TAKEN CARE OF BY THE LEARNED CIT(A) IN VIEW OF THE FACT THAT THE AS SESSING OFFICER DID NOT PROPOSE TO HOLD THE AMOUNT AS REMAINING WITH THE ASSESSEE WHICH CLOSING STOCK HAS BEEN ACCEPTED, VALUED AT CONSISTENT SYSTEM OF ACCOUNTING NAMELY , AT LOWER OF COST OR MARKET VALUE. IN OTHER WORDS, THE EFFORT OF THE ASSESS ING OFFICER HAS TO IMPOUND THE BOOKS AND THE SUBSIDIARY RECORDS OF THE ORDERS OF THE CUSTOMERS ADVANCES RECEIVED WAS AN EFFORT TO MAKE THE ACCOUNT OF THE IMPUGNED FY AFTER A GAP OF 11 MONTHS WAS CONSIDERED BY THE LEARNED CIT(A) JUDICIOUSLY WITHIN THE FRAME WORK OF LAW FOR HOLDING THAT THE PURPORTED SUPPRESSED SALES AS COMPUTED BY THE ASSESSING OFFICER AT 1.62 CRORES 8 CANNOT BE TAXED AS OUT OF BOOKS OF ACCOUNT AND THAT IS A REASON HE APPLIED 13% BUT ON THE SPECIFIC FINDING BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD RETURNED 12% BUT ADOPTING 13% IN VIEW OF THE FACTS AND CIRCUMSTANCES. THE LEARNED CIT(A) HOWEVER DELETED THE OTHER ADDITIONS ON ACCOUNT OF VALUATION OF CLOSING STOCK, BOGUS LIABILITIES, DISALLOWANCE U/S.40A(3) AND INVESTMENT IN PURCHASE CORRESPONDING TO UNACCOUNTED SALES. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO BASIS E ITHER BEFORE THE ASSESSING OFFICER OR THE LEARNED CIT(A) TO ENHANCE THE GROSS MARGIN RATE FOR THE IMPUGNED ASSESSMENT YEAR INSOFAR AS MISTAKES COMMITTED BY THE ASSESSING OFFICER FOR HOLDING A VIEW THAT THE SALES COULD PERTAIN TO THIS YEAR BUT SHOULD BE ENH ANCED AFTER A GAP OF AN YEAR IS WITHOUT ANY BASIS SHOULD BE CONFIRMED AT THE RETURNED INCOME AND ACCEPTED BY THE ASSESSING OFFICER AND LEARNED CIT(A) AT 13 %. WE DO NOT FIND ANY INFIRMITY IN THE CONTENTION THEREOF INSOFAR AS WHEN THE FACTS HAVE BEEN DELIBER ATED UPON BY THE RESPECTIVE AUTHORITIES AT LENGTH, THERE WAS NO REASON ASSIGNED TO ENHANCE THE RATE OF GROSS PROFIT MARGIN SPECIFICALLY WHEN THE LEARNED CIT(A) WAS LIBERAL ENOUGH TO DELETE THE OTHER ADDITIONS ON THE VERY FACTS AND CIRCUMSTANCES WHICH THE A O HAD CONSIDERED FOR ENHANCING THE RATE ONLY FOR THESE SALES AND NOT FOR THE OTHE RS. WE CONSIDER IT FAIR THAT THE RATE OF GROSS PROFIT MARGIN AT 13 % ON THE PURPORTED SUPPRESSED SALES AS HAVE BEEN COMPUTED AND CONFIRMED BY THE LEARNED CIT(A) TO BE RESTRICT ED AT 12% TO MEET THE ENDS OF JUSTICE. WE DIRECT ACCORDINGLY. IN THIS VIEW OF THE MATTER, THE LEARNED DR WHO HAS TRIED TO CORRELATE THE EXPENDITURES DELETED AFTER HAVING ESTIMATED THE INCOME BECOMES AN EXERCISE IN FUTILITY INSOFAR AS THE EXPENDITURES WERE DISALLOWED FOR THE IMPUGNED ASSESSMENT YEAR AND THE SALES WERE COMPUTED SUPPRESSED AFTER A GAP OF 11 MONTHS. THERE IS NO LINK BETWEEN THE TWO THEREFORE CANNOT BE CONSIDERED IN ISOLATION TO THE EXTENT THAT THE INCOME ON THE BASIS OF 9 ESTIMATION HAS BEEN TAXE D IN THE IMPUGNED ASSESSMENT YEAR ONLY. WE DO NOT FIND MERIT IN THE ASSESSING OFFICER TRYING TO CONSIDER VALUATION, BOGUS LIABILITY AND INVESTMENT IN PURCHASES AS NOT RELATING TO THE SALES SO COMPUTED BY HIM AT A LATER STAGE. THE BOOKS OF ACCOUNT COULD NOT BE CHANGED AS PER THE FINDING OF THE ASSESSING OFFICER HAS BEEN RIGHTLY CONSIDERED BY THE LEARNED CIT(A). BRINGING TO TAX INCOME THERE FROM ON THE BASIS OF GROSS PROFIT MARGIN FOR THAT YEAR HAS RIGHTLY BEEN CONSIDERED BY THE LEARNED CIT(A). 8. IN THE RESU LT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE DEPARTMENT IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED TO THE EXTENT IT SUPPORTED THE ORDER OF THE LEARNED CIT(A). S D/ - S D/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 29.06.2012 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE A SSESSEE : ASHOK KUMAR NAYAK, PROP.M/S.ASHOK WOOD INDUSTRIES, LINK ROAD, BADAMBADI,CUTTACK. 2. THE DEPARTMENT : INCOME - TAX OFFICER, WARD 2(1),CUTTACK. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY. 10 APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. A FTER DICTATION IS GIVEN 1. DATE OF DICTATION 28.06,2012 .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.06.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO T HE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 29.06.2012 . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..