THE DCIT, CIRCLE - 2(1), Vijayawada V. Smt. Heera Devi Nemichandji, Tenali

ITA 213/VIZ/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6590 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 03-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R GOVINDARAJAN
• Keywords: Unexplained investment; Validity of assessment; Revised return
• Section: 143(3); 153A; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 2 13 /VIZ/ 201 3 ( / ASSESSMENT YEAR: 2008 - 09 ) THE DCIT, CIRCLE - 2(1) CENTRAL REVENUES BUILDING M.G.ROAD VIJAYAWADA - 520 002 SMT. HEERA DEVI NEMICHANDJI W/O NEMICHANDJI PROP.HEERA BUILLION CORPORATION 6 - 2 - 24, TUMULURI VARI STREET GANGANAMMAPET TENALI 522 201 [PAN :AENPN2332R] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI R .GOVINDARAJAN, DR / RESPONDENT BY : S HRI G.V.N.HARI , A R / DATE OF HEARING : 21 .0 9 .2017 / DATE OF PRONOUNCEMENT : 18 . 10 .2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)], VIJAYAWADA VIDE ITA 2 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI NO.318/CIT(A)/VJA/11 - 12 DATED 07.01.2013 FOR THE ASSESSMENT YEAR 2008 - 09. THE REVENUE HAS FI LED THE FOLLOWING GROUNDS OF APPEAL : 1. THE L D . CIT(A) ERRED BOTH IN LAW AND ON FACTS OF THE CASE. 2. THE L D. CIT(A) ERRED IN DELETING ALL THE THREE ADDITIONS HOLDING THAT THE ADDITIONS AR E NOT BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AS THERE IS NO SUCH REQUIREMENT AS PER THE PROVISIONS OF SECTION 153A OF THE ACT. 3. THE L D. CI T(A) FAILED TO CONSIDER THAT THE A. O . IS WELL WITHIN HIS POWERS TO COMPUTE THE TAX ABLE INCOME ON THE BASIS OF THE MATERIAL ON RECORD EVEN THOUGH SUCH MATERIAL WAS NOT FO UND DURING THE COURSE OF SEARCH OPERATION. 4. RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: A. VISHNU AGARWAL VS. ASSTT.CIT (2011)37(11) ITCL 85 (ITAT, HYDERABAD) B. SHIVNATH RAO HARNARAIN (INDIA) LTD. VS. DCIT (ITAT, DELHI) 304 ITR (AT) 271; 117 ITD 74. C. SHYAMLATA KAUSHIK VS ACIT (ITAT, DEL) 114 LTD 305 5. THE L D. CIT(A) OUGHT TO HAVE CONSIDERED THAT AS PER THE PROVISIONS OF SECTION 153A OF THE IT. ACT, ONCE A SEARCH OPERATION IS CONDUCTED, THE A.D. SHALL BOUND TO CALL FOR THE RETURNS AND ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTE D. 6. THE L D. CIT (A) ERRED IN DELETING THE ADDITION OF RS.84,24 ,000/ - TOWARDS VARIATION IN CLOSING STOCK AS THE VARIATION WAS QUANTIFIED BASING ON THE QUANTITATIVE DETAILS OF 3 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI THE STOCK TRADED DURING THE FINANCIAL YEAR 2007 - 08 GATHERED FROM THE SEIZED MAT ERIAL I.E. SALE INVOICE BOOKS SEIZED DURING THE COURSE OF SEARCH. 7. THE LD . CIT(A) ERRED IN NOT CONSIDERING THE FACTS BROUGHT ON BY THE A.O. IN THE ASSESSMENT ORDER REGARDING THE FABRICATED TAX INVO IC E BOOK 1 WHICH WAS NOT PRODUCED / LISTED DURING THE COURSE OF SEARCH. 8. THE L D. CIT(A) ERRED IN DELETING THE ADDITIONS OF SUPPRESSION OF SALES OF RS.7, 3 1,878/ - AND UNEXPLAINED INVESTMENT IN PURCHASES OF RS.10 1 84,161/ - AS THE ADDITIONS ARE BASED ON THE INFORMATION OBTAINED FROM THE COMMERCIAL TAXES DEPARTMENT. 9. THE L D. CI T(A) FAILED TO CONSIDER THAT THE ASSESSEE HAS NOT EXPLAINED THE DIFFERENCE I N SALES AND PURCHASES AS PER PRINTED BOOKS AND AS PER VAT RETURNS, TO THE SATISFACTION OF THE A .O. 10. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. GROUND N O.1 AND 10 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 3. GROUND N OS. 3,4 AND 5 ARE RELATED TO THE ASSESSMENT S MADE U/S 153A ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH. LD.DR ARGUED THAT THE ASSESSMENTS WERE MADE ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH, HENCE , LD.CIT ( A) SHOULD NOT HAVE TAKEN 4 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI THE VIEW THAT THE ASSESSMENTS WERE N OT BASED ON THE SEIZED MATERIAL. THE LD.DR FURTHER ARGUED THAT NO SUCH GROUND WAS RAISED BY THE ASSESS E E IN THE GROUNDS OF APPEAL AND THE LD.CIT(A) TRAVELLED BEYOND THE SCOPE OF APPEAL FILED BY THE ASSESS E E WITHOUT AFFORDING THE OPPORTUNITY TO THE ASSESSIN G OFFICER ( AO ). THE LD.DR FURTHER ARGUED THAT THE CIT(A) DECIDED THE ISSUE ON LEGAL GROUND THAT THE ASSESSMENTS WERE COMP LE TED U/S 153A WITHOUT THE SEIZED MATERIAL AND NOT CONSIDERED THE MERITS OF THE CASE. THE LD.DR ARGUED THAT THERE WAS MATERIAL SEIZED DURING THE COURSE OF SEARCH AND THE ASSESSMENTS FRAMED U/S 153A ARE VALID, HENCE THE CASE SHOULD BE REMITTED BACK TO FILE OF THE LD.CIT(A) TO DECIDE ON MERITS. 4. THE LD.AR ARGUED THAT LD.CIT(A) NOT ONLY DECIDED THE ISSUE ON LEGAL GROUNDS BUT ALSO DECIDED THE ISSUE ON MERITS. THE L D.AR FURTHER SUBMITTED THAT THOUGH THERE WAS GOOD CASE FOR THE ASSESSE E WITH REGARD TO THE JURISDICTION U/S 153A , THE ASSESSE E HAD NOT RAIS ED THE GROUND BEFORE THE CIT(A) SINCE THE ASSESSE E HAS VERY GOOD CASE ON MERITS ALSO . THE LD. AR H AS REFERRED THE GROUNDS RAISED BEFORE THE LD.CIT(A) WHICH READS AS UNDER: I . THE ORDER OF THE LEARNED ACIT, CIRCLE - 2(1), VIJAYAWADA IS BAD, ERRONEOUS, UNJUST IFIED AND AGAINST THE FACTS OF THE CASE 5 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI II . THE ADDITIONS TO THE INCOME DECLARED ARE MADE FOR THE SAKE OF ADDITIONS ONLY IN TOTAL DEFIANCE OF LAW AND FACTS. III . THE LEARNED ASSESSING OFFICER FAILED TO APPLY HIS MIND TO THE EVIDENCES AND MATERIAL FILED ALONG WITH THE SUBMISSION DT. 25 - 11 - 11 AND PASSED THE ASSESSMENT ORDER U/S 143 (3) R W 5 153A DT. 29.12.11 BASING ENTIRELY ON THE APPRAISAL REPORT OF THE AUTHORIZED OFFICER IV . THE LEARNED ASSESSING OFFICER HAS FAILED TO APPLY HIS MIND TO THE FACTS, EVIDENCES AND MATERIAL FILED ALONG WITH SUBMISSIONS DT 25 - L1 - 11 AND 28 - 11 - 11 REGARDING 52 BARS OF GOLD BULLION SOLD TO VAT DEALERS, ISSUED TAX INVOICES AND RECEIVED THE SALE CONSIDERATION THROUGH BANKS AND DECLARED IN THE VAT RETURNS FILED BEFORE THE COMMERCIAL TAX OFFICER. THE ENTIRE SALE CONSIDERATIONS OF 52 GOLD BARS ARE REFLECTED IN THE BANK STATEMENTS AND BOOKS OF ACCOUNT SEIZED BY THE DEPARTMENT ASSUMPTIONS AS TO FABRICATION OF TAX INVOICE BOOK/S IS NOT BONAFIDE. 52 BARS OF GOLD BULLION RELATES TO THE FY2007 - 08 WHEREAS THE RATE OF PS 1,62,000/ - PER BAR AS ON 24.09.09 IS ADOPTED RELIEF PRAYED FOR - RS 84,24,000/ - V . THE LEARNED ASSESSING OFFICER FAILED TO CONSIDER THE FACTS OF PURCHASES/SALES IN ORIGINAL / REVISED VAT RETURNS, COP IES OF WHICH WERE SUBMITTED ON 25.11.11 REGARDING THE PURCHASES/SALES PARTICULARS FILED BEFORE THE COMMERCIAL TAX OFFICER. MONTH JANUARY - PURCHASES - ORIGINAL 5 , 52,63,140/ - 15.02.2008 REVISED 5 , 41,78,981/ - 19.04.2008 ALLEGED DIFFERENCE 10,84,161/ - FEBRUARY - SALES ORIGINAL 8 , 86,07,080/ - 15.03.2008 - REVISED 8 , 78,75,198/ - 19.04.2008 ALLEGED DIFFERENCE 7,31,878/ - 6 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI IT IS PERTINENT TO NOTE THAT THE SOURCE OF INFORMATION IN THE VAT RETURNS IS FROM THE BOOKS OF ACCOUNT AND ANY ERRORS, OMISSIONS OR COMMISSIONS IN THE VAT RETURNS CAN BE SET RIGHT BY FILING THE REVISED VAT RETURNS. ONCE A REVISED RETURN IS FILED THE ORIGINAL RETURN STANDS SUBSTITUTED BY TILE REVISE D RETURN. [CHIEF CIT VS MACHINE TOOL CORP, OF INDIA LTD (1992)180 CTR (KAR) 110 ITRJ VI ASSUMING WHILE DYING THAT THERE IS DIFFERENCE IN THE SALES. GROSS PROFIT IS TO BE ASSESSED AS INCOME AND NOT THE SALES AS DONE BY THE ASSESSING OFFICER. FOR THESE GROUNDS AND OTHER GROUNDS WHICH MAY BE URGED AT THE TIME OF HEARING OF THIS APPEAL, IT IS PRAYED TO DELETE THE ADDITIONS MADE TOWARDS - 1) ALLEGED CLOSING STOCK OF 52 GOLD BARS - RS. 84,24,000/ - 2) ALLEGED DIFFERENCE IN PURCHASES - RS . 10,84,161/ - 3) ALLEGED DIFFERENCE IN SALES - R S. 7,31,878/ - 4.1. THE L D.AR FURTHER ARGUED THAT D URING THE APPEAL HEARING BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE ARGUED THE CASE ON MERITS BUT NOT ON LEGAL GROUND AND THE SAME IS EVIDENT FROM THE WRITTEN SUBMISSION EXTRACTED BY THE LD.CIT(A) IN HIS ORDER . BOTH THE GROUNDS OF APPEAL AND ARGUMENTS BEFORE LD.CIT(A) MADE BY THE ASSESSEE WAS ONLY ON MERITS BUT NOWHERE THE ASSESSEE HAS TAKEN GROUND OF IL LEGAL ASSUMPTION OF JURISDICTION U/S 153A AND VALIDITY OF ASSESSMENT. LD.CIT(A) WHILE DECIDING THE ISSUE CONSIDERED THE GROUND S OF APPEAL OF THE ASSESSEE , SUBMISSIONS MADE BY THE ASSESSEE AND DECIDED THE APPEAL BOTH ON 7 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI MERITS AS WELL AS TECHNICAL LY AN D ACCORDINGLY DELETED THE ADDITION. THE L D.AR FURTHER SUBMITTED THAT IT IS EVIDENCED FROM THE GROUNDS OF APPEAL FILED BY THE DEPARTMENT IN GROUND N O S . 6 AND 8, THAT THE LD.CIT(A) HAS DECIDED THE ISSUE ON MERITS , HENCE THE DEPARTMENT HAS AGITATED THE DELETION OF QUANTUM ADDITION I.E. IN GROUND NO.6, THE DEPARTMENT CHALLENGED THE DELETION OF ADDITION OF RS.84,24,000/ - ON ACCOUNT OF CLOSING STOCK AND IN GROUND N O.8, THE DEPARTMENT HAS CHALLENGED THE ADDITION OF RS.7,31,878/ - RELATING TO SUPP RESSION OF SALES AND RS.10,84,161/ - RELATING TO UNEXPLAINED INVESTMENT AND PURCHASES MADE. THE LD AR FURTHER ARGUED THAT THE LD.CIT(A) WHILE CONSIDERING THE INCRIMINATING MATERIAL, HELD THAT THE ASSESSING OFFICER HAS DRAWN THE WRONG CONCLUSION ON THE BASIS OF SEIZED MATERIAL AS WELL AS REGULAR BOOKS OF ACCOUNTS. THEREFORE, LD.AR VEHEMENTLY OPPOSED TO REMIT THE MATTER BACK TO THE FILE OF THE CIT(A) AND ARGUED THAT SINCE THE FACT S ESTABLISH THAT THE CIT(A) HAS CONSIDERED THE GROUNDS OF APPEAL AS WELL AS THE SUBMISSIONS OF THE ASSESSEE WHICH WERE PURELY ON MERITS, IT IS INCORRECT TO HO LD THAT CIT(A) HAS NOT CONSIDERED T HE MERITS AND THERE IS NO CASE TO REMIT THE MATTER BACK TO THE FILE OF THE CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIA L PLACED ON RECORD. THE ASSESSING OFFICER MADE THE ADDITION ON THE BASIS OF INVOICES SEIZED 8 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI DURING THE COURSE OF SEARCH RELATING TO NON TAX INVOICES ISSUED WITHOUT COLLECTION OF VAT TO THE DEALERS OF GOLD / BULLION . ACCORDING TO THE LD. A R, THE INVOICES R AISED ON SALES MADE TO DEALERS (TAX INVOICES) WERE NOT SEIZED BY THE DEPARTMENT, HENCE THERE WAS A DIFFERENCE. DURING THE APPEAL HEARING, THE ASSESSEE HAD SUBMITTED ALL THE DETAILS OF SALES MADE IN PAPER BOOK AND THE SAME WERE PLACED BEFORE THE AO AT THE TIME OF HEARING . THE ASSESSEE HAS SUBMITTED THE COMPLETE DETAILS ON THE SALES MADE WITH REGARD TO TAX INVOICES I.E. DEALERS WITH ADDRESS AND AMOUNT WHICH IS ENCLOSED IN PAGE NO.51 OF PAPER BOOK. FROM THE GROUNDS OF APPEAL AND THE SUBMISSIONS MADE BEFORE THE LD.CIT(A), IT IS EVIDENT THAT THE ASSESSEE HAS CANVASSED THE CASE ON MERITS BUT NOT ON LEGAL GROUNDS. THEREFORE, WE HAVE NO HESITATION TO HOLD THAT THE LD.CIT(A) WHILE DECIDING THE APPEAL HAS CONSIDERED THE ISSUE BOTH ON LEGAL GROUNDS AS WELL AS ON M ERITS. HENCE, WE HOLD THAT THE CASE NEED NOT BE REMITTED BACK TO THE FILE OF THE LD.CIT(A) . 6 . GROUND NOS. 6 AND 7 ARE RELATED TO THE DELETION OF ADDITION MADE BY THE LD.CIT(A) AMOUNTING TO RS.84,24,000/ - TOWARDS VALUATION IN CLOSING STOCK. IN TH IS CASE, SEARCH U/S 132 OF THE A CT WAS CONDUCTED ON 25.09.2009 AND THE ASSESSMENTS WERE COMPLETED U/S 143(3) R.W.S. 153A OF THE I.T.ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER 9 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI OBSERVED THAT THERE WAS SHORTAGE OF ST OCK AS PER THE STOCK BOOK AND THE PURCHASE A ND SALES BOOK . AS PER THE SALES INVOICE AND BOOKS FOUND DURING THE COURSE OF SEARCH, THE PURCHASES WERE 2068 BARS AND THE SALES WERE 2016 BARS AND THE CLOSING STOCK AS PER INVOICES SHOULD HAVE BEEN 52 BARS. WHEREAS THE ASSESS EE HAD DECLARED THE NIL STOCK AS PER THE BOOKS OF ACCOUNTS. THE ASSESSEE EXPLAINED THAT 52 GOLD BARS WERE SOLD TO REGISTERED DEALERS WHICH WAS ENTERED IN TAX INVOICE BOOK DURING THE PERIOD 27.11.2007 TO 29.03.2008 AND THE ASSESSEE FURNISHED THE RECONCILIA TION OF CLOSING STOCK ON SALE OF GOLD BULLION AS UNDER : 1. TAX INVOICE BOOK 1 THESE SALES ARE MADE TO THE REGD. DEALERS ENTITLED TO INPUT CREDIT 27/11/07 TO 29/03/08 53 BARS 2. INVOICE BOOK NO. 1 30/11/07 TO 17/01/08 298 BARS 3. INVOICE BOOK NO. 2 17/01/08 TO 01/02/08 358 BARS 4. INVOICE BOOK NO. 3 02/02/08 TO 13/02/08 335 BARS 5. INVOICE BOOK NO. 4 14/02/08 TO 29/02/08 343 BARS 6. INVOICE BOOK NO.5 01/03/08 TO 20/03/08 332 BARS 7. INVOICE BOOK NO.6 25/03/08 TO 31/03/08 349 BARS TOTAL BARS 2068 6.1. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT PRODUCE THE TAX INVOICE B OOK BEFORE THE DDIT (INV.) AND WAS NOT FOUND DURING THE COURSE OF SEARCH AND THE ASSESS E E EVEN FAILED TO PRODUCE DURING THE POST SEARCH ENQUIRIES . THEREFOR E, THE ASSESSING OFFICER HELD THAT THE TAX 10 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI INVOICE BOOK N O.1 WAS FABRICATED EVIDENCE TO TALLY STOCK AT NIL. ACCORDING TO THE ASSESSING OFFICER, THERE SHOULD HAVE BEEN STOCK OF 52 GOLD BARS WITH THE ASSESSEE WHICH WERE NOT DECLARED BY THE ASSESSEE. ACCOR DINGLY, THE ASSESSING OFFICER VALUED THE GOLD BARS AT RS.1,62,000/ - PER BAR AND BROUGHT TO TAX A SUM OF RS.84,20,000/ - AS UNEXPLAINED INVESTMENT. 7 . AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND T HE LD.CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER HOLDING THAT THE ADDITION WAS NOT BASED ON ANY INCRIMINATING MATERIAL FOUND. 8 . AGGRIEVED BY THE ORDER OF THE LD . CIT (A), THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING THE LD.DR ARGUED THAT DURING THE ASSESSMENT PROCEEDINGS AND THE SEARCH PROCEEDINGS, THE INCOME TAX AUTHORITIES ASKED TO EXPLAIN THE CLOSING STOCK DIFFERENCE FOUND AS PER THE BOOKS AND THE INVOICES BUT THE ASSESSEE DID NOT EXPLAIN OR FURNISH THE QUANTITATIVE DETAILS OF THE STOCK TRADED DURING THE FINANCIAL YEAR 2007 - 08. THE ASSESSEE DID NOT PRODUCE THE TAX INVOICES BEFORE THE 11 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI DDIT (INV.). SINCE THE ASSESSEE FAILED TO RECONCILE THE STOCK POSITION IN THE BOOKS OF ACCOUNTS AND THE TA X INVOICE BOOKS WERE NEVER PRODUCED BEFORE DDIT, THERE WAS A CLOSING STOCK AS WORKED OUT FROM THE PURCHASE BILLS AND SALES INVOICE S WHICH WAS NOT DECLARED BY THE ASSESSEE AND REQUIRED TO BE BROUGHT TO TAX. THE LD.DR ARGUED THAT THE ASSESSING OFFICER HAS R IGHTLY ASSESSED THE CLOSING STOCK AS PER THE BOOKS AS UNEXPLAINED INVESTMENT WHICH REQUIRED TO BE UPHELD. 9 . A PPEARING FOR THE ASSESSEE, LD. AR ARGUED THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF BULLION TRADING I.E. PURCHASE AND SALE OF GOLD BARS. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMEN T YEAR 2008 - 09, THE ASSESSEE HAD PURCHASED 2068 GOLD BARS AND SOLD 2016 BARS TO THE RETAILERS AND NON VAT DEALERS. THE REMAINING 52 GOLD BARS WERE SOLD TO VAT DEALERS FOR WHICH VAT IS EXEMPT. THE T AX INVOICE W AS ISSUED TO VAT DEALER WHICH CONTAIN THE DETAILS AS PRESCRIBED AND ISSUED BY VAT DEALER TO ANOTHER VAT DEALER. FOR RETAILERS, THE INVOICE ISSUED IS INVOICE / SALE BILL WHICH CONTAIN THE DETAILS AS PRESCRIBED AND ISSUED BY A VAT DEALER TO AN OTHER RETAIL DEALER OR CONSUMER. DURING THE COURSE OF SEARCH, THE INCOME TAX DEPARTMENT HAS SEIZED THE REGULAR INVOICES, BUT 12 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI NEITHER SEIZED THE TAX INVOICE / SALES BOOKS NOR THE INVOICE BOOKS. THEREFORE, THE LD.AR ARGUE D THAT THE ASSESSEE HAS NOT MAIN TAINED THE TWO SEPARATE SETS OF BOOKS OF ACCOUNTS AS ALLEGED BY THE AO AND IS MAINTAINING ONLY ONE SET OF BOOKS OF ACCOUNTS AND ISSUI NG THE TWO DIFFERENT INVOICES AS PRESCRIBED BY THE VAT RULES. THE ASSESSEE HAS PURCHASED 2068 BARS WHICH ARE SUPPORTED BY T HE PURCHASE BILLS AND SOLD THE SAME TO RETAILERS OR THE DEALERS AND ISSUED THE BILL AS PER VAT R ULES. DURING THE COURSE OF SEARCH, INVESTIGATION WING DID NOT FIND ANY EXCESS STOCK OR SHORTAGE OF STOCK. THERE WERE NO UNACCOUNTED PURCHASES OR UNACCOUNTED S ALES FOUND BY THE INVESTIGATION WING. THE PURCHASES AND THE SALES WERE ALSO DULY ACCOUNTED IN THE BOOKS OF ACCOUNT . LD.AR FURTHER SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED ALL THE BILL BOOKS BOTH SALES INVOICE AND TAX I NVOICE AS WELL AS THE BOOKS OF ACCOUNTS. THE ASSESSING OFFICER DID NOT FIND ANY DEFECT IN THE BOOKS OF ACCOUNTS. THEREFORE, LD.AR ARGUED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION ON PRESUMPTIONS AND SURMISES WHICH NEEDS TO BE DELETED. 9 .1 THE LD. AR FURTHER ARGUED THAT A SEARCH U/S 132 WAS CONDUCTED IN THE ASSESSEES CASE BY THE INCOME TAX DEPARTMENT. THE DEPARTMENT 13 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI HAS SEIZED SOME BOOKS AND PAPERS AND DID NOT SEIZE SOME BOOKS. THE ASSESSEE WAS IN CONFUSED STATE OF AFFAIRS AND HE COULD NOT MAKE OUT WHETHER THE BOOKS WERE SEIZED OR NOT AND HE COULD NOT LOCATE THE TAX INVOICES / BOOKS IMMEDIATELY, HENCE, THE TAX INVOICE BOOK COULD NOT BE PRODUCED BEFORE THE DDIT. HOWEVER , THE ASSESS E E HAS FURNISHED TH E ENTIRE DETAILS AND THE TAX INVOICES BEFORE THE AO WHICH WAS BRUSHED ASIDE BY THE AO. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. WE HAVE GONE THROUGH THE PAPER BOOK FILED BY THE ASSESSEE. A SEARCH U/S 132 W AS CARRIED OUT IN THIS CASE ON 25.09.2009. THERE IS NO EVIDENCE / DISCUSSION IN THE ASSESSMENT ORDER WITH REGARD TO INCRIMINATING MATERIAL FOUND BY THE DEPARTMENT EVIDENCING THE UNACCOUNTED PURCHASES OR UNACC OUNTED SALES. THERE WAS NO INDICATION OF EXCES S STOCK OR EXCESS CASH FOUND DURING THE COURSE OF SEARCH. ONLY THE DIFFERENCE WAS STOCKS DIFFERENCE COMPARED TO THE PURCHASE AND SALES INVOICES AND THE STOCK B OOK. THE ASSESSEE EXPLAINED THE DIFFERENCE IN STOCK WITH REFERENCE TO THE BILL BOOKS AND INVOIC ES WAS DUE TO NON CONSIDERATION OF SALES MADE TO VAT DEALERS. FOR WHICH THE BILL BOOKS 14 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI WERE ISSUED IN TAX INVOICE BILL BOOK N O.1. THE ASSESSEE HAS PRODUCED BOTH THE BILL BOOKS BEFORE THE ASSESSING OFFICER ALONG WITH BOOKS OF ACCOUNTS, BUT THE ASSESSING O FFICER DID NOT FIND ANY DEFECT IN THE BOOKS OF ACCOUNTS. AS PER THE INVOICES, T HE PURCHASES AND SALES ARE TALLIED AND THERE WAS NO DIFFERENCE. THE ASSESSEE HAS ALSO FURNISHED THE DETAILS OF GOLD TRADED DURING THE YEAR WITH INVOICES . REGARDING 62 GOLD BAR S THE ASSESSEE SUBMITTED COMPLETE DETAILS BEFORE THE AO AT THE TIME OF ASSESSMENT. THE ASSESSING OFFICER HAVING VERIFIED BOOKS OF ACCOUNTS WITH THE BILL BOOKS, NO DEFECT WAS FOUND BY THE ASSESSING OFFICER. A LL THE PURCHASES AND SALES ARE ACCOUNTED AND THERE WAS NO DISCREPANCY IN THE STOCK. THERE WAS NO DISPUTE WITH REGARD TO THE PURCHASES. THE ASSESS E E HAD DECLARED THE SALES INCLUSIVE OF 62 BARS IN SALES ACCOUNT AND FURNISHED THE DETAILS WITH ADDRESS TO THE AO. THE AO DID NOT MAKE ANY ENQUIRY WITH REGAR D TO THE SALES AND NO DIFFERENCE WAS FOUND. THEREFORE W E HOLD THAT THERE IS NO CASE FOR MAKING THE ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT. THE ASSESSING OFFICER MADE THE ADDITION AS UNEXPLAINED INVESTMENT BUT THE ASSESSING OFFICER DID NOT MAKE OUT A CASE THAT THE PURCHASES WERE MADE FROM THE UNACCOUNTED SOURCES. WHEN THE PURCHASES WERE MADE FROM THE BUSINESS FUNDS AND DULY 15 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI ACCOUNTED IN THE BOOKS OF ACCOUNTS, THERE IS NO CASE FOR MAKING ADDITION AS UNEXPLAINED INVESTMENT. HENCE, WE DELETE THE ADDI TION MADE BY THE ASSESSING OFFICER AND ALLOW THE APPEAL OF THE ASSESSEE. 11 . GROUND NOS. 8 AND 9 ARE RELATED TO THE ADDITIONS OF SUPPRESSION OF SALES OF RS.7,31,878/ - DUE TO A DIFFERENCE IN VAT RETURN AND THE INCOME TAX RETURNS . SIMILAR ADDITION WAS MADE BY AO WITH REGARD TO DIFFERENCE IN PURCHASE AMOUNTING TO RS.10,84,161/ - DUE TO MISMATCH IN VAT RETURNS. THE LD.CIT(A) DELETED THE ADDITION. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. THE LD.DR SUPPORTED THE ORDER O F THE AO. 12. APPEARING FOR THE ASSESSEE, THE LD.AR ARGUED THAT THOUGH THERE WAS SOME DIFFERENCE IN THE VAT RETURN , SUBSEQUENTLY, THE ASSESSEE HAD FILED THE REVISED VAT RETURNS WHICH WERE NOT CONSIDERED BY THE ASSESSING OFFICER. LD.AR FURTHER STATED THAT THE ASSESSEE HAS PRODUCED THE REVISED VAT RETURN BEFORE THE ASSESSIN G OFFICER. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSING OFFICER DRAWN HIS CONCLUSION BASED ON 16 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI ORIGINAL VAT RETURN FILED BY THE ASSESSEE. THE ASSESSING OFFICER DID NOT CONSIDER THE REVISED VAT RETURN THOUGH IT WAS FILED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS . THEREFORE, WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER , DIRECTING THE ASSESSING OFFICER TO CONSIDER THE REVISED VAT RETURN AND DECIDE THE ISSUE AFRESH ON MERITS. THUS GROUND N O.8 AND 9 ARE ALLOWED FOR STATISTICAL PURPOSE. 1 4 . IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED . T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18 TH OCT 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / VISAKHAPATNAM / DATED : 18 . 10 .2017 L. RAMA, SPS 17 ITA NO. 2 13 /VIZ/2016 SMT.HEERA DEVI NEMICHANDJI , TENALI / COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT THE DCIT, CIRCLE - 2(1), CENTRAL REVENUES BUILDING, M.G.ROAD, VIJAYAWADA - 520 002 2 . / THE RESPONDENT SMT. HEERA DEVI NEMICHANDJI, W/O NEMICHANDJI PROP.HEERA BUILLION CORPORATION, 6 - 2 - 24, TUMULURIVARI STREET , GANGANAMMAPET, TENALI 522 201 3 . THE CIT, VIJAYAWADA 4. THE CIT(APPEALS), VIJAYAWADA 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM