Smt. Sangita Yogeshkumar shah, U T OF D & NH V. The Income tax Officer,Vapi Ward-3, Vapi

ITA 2179/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6350 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALBINUS TIRKEY
• Assessee Lawyers: S N L AGARWAL
• Keywords: Principle of natural justice; Opportunity of cross examination

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND BHAVNESH SAINI , JM) ITA NO.2179/AHD/2009 A. Y.: 2006-07 SMT. SANGITA YOGESHKUMAR SHAH, PROPRIETOR NAKIDA TRADERS, NAVA FALIA ROAD, NAROLI (D. & N.H.) VS THE INCOME TAX OFFICER, VAPI, WARD - 3, VAPI PA NO. AMUPS 4615 E (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. N. L. AGARWAL, AR RESPONDENT BY SHRI ALBINUS TIRKEY, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A), V ALSAD DATED 30 TH APRIL,2009, FOR ASSESSMENT YEAR 2006-07 CHALLENGING CONFIRMING OF ADDITION OF RS.24,35,716/- ON ACCOUNT OF DIFFERENTI AL GROSS PROFIT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS TRADING IN ITEMS LIKE CLOTH, HARDWARE, ETC. THE ASSESSEE HAD RETURNE D INCOME OF RS.1,36,720/- AND THE TURNOVER AND GROSS PROFIT REF LECTED IN THE ACCOUNTS IS RS.25,18,457/- AND RS.1,82,019/- RESPEC TIVELY. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOUND T HAT THE ASSESSEE HAD FILED TENDER FOR SUPPLY OF MATERIALS T O DISTRICT PANCHAYAT, DADRA NAGAR HAVELI (UT). THE ASSESSEE HA D FILED HER AUDITED ACCOUNTS FOR THE YEAR UNDER REFERENCE ALONG WITH THE TENDER IN ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 2 WHICH DIFFERENT FIGURES OF SALES AND PROFITS WERE R EFLECTED. THE SAME REVEALED THAT THE ASSESSEE HAD MAINTAINED TWO SETS OF BOOKS OF ACCOUNTS VIZ. ONE FOR SHOWING LOWER PROFITS TO THE INCOME TAX DEPARTMENT AND THE OTHER SET IN WHICH THE ACTUAL RE SULTS WERE REFLECTED WHICH WERE AUDITED BY A FIRM OF CHARTERED ACCOUNTANT BASED ON EVIDENCES PRODUCED. THE AO, THEREFORE, REJ ECTED THE BOOK RESULT AS IT WAS PROVED THAT THE BOOK RESULT IS CON COCTED AND HE MADE ADDITION OF RS.24,35,716/- AFTER ESTIMATING THE GRO SS PROFIT. THE RELEVANT OBSERVATIONS OF THE AO IN THE ASSESSMENT O RDER ARE AS UNDER: 'DURING THE YEAR UNDER ACCOUNT, DISTRICT PANCHAYAT, DADRA & NAGAR HAVELI (UT), HAS INVITED TENDERS OF SUPPLY OF MATERIALS FOR STUDENTS OF PRIMARY SCHOOLS. ACCORDIN GLY THE ASSESSEE HAS FURNISHED TENDER WITH AUDITED ACCOUNTS . ACCORDING TO THE AUDITED ACCOUNTS FURNISHED BEFORE THE DISTRICT PANCHAYAT, DADRA & NAGAR HAVELI(UT), THE TURNOVER OF THE ASSESSEE COMES TO RS. 3,25,18,457/- AND AGAINST WHICH THE PURCHASES COMES TO 3,23,29,131/-. THIS GIVES A HUGE DIFFERENCE IN PURCHASE AND SALES SHOWN IN PROFIT AND LOSS ACCOUNTS FILED WITH THE RETURN OF I NCOME. AS PER PROFIT AND LOSS ACCOUNT FILED WITH THE RETURN O F INCOME, AGAINST SALES OF RS. 25,18,451/-, THE ASSESSEE HAS MADE PURCHASES WORTH RS. 23,29,131/-. THIS GIVES DIFFERE NCE IN PURCHASE AMOUNT OF RS. 3,00,00,OOO/-. SINCE THE TENDER FILED WITH THE DISTRICT PANCHAYAT, DADRA & NAGAR HAVELI (UT), ACCOMPANIED WITH AUDITED BALANCE SHEET AND TAX AUDIT REPORT U/S. 44AB OF THE INCOME- TAX ACT, THERE IS NOTHING TO DISBELIEF THE TURNOVER SHO WN IN THE AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT. HOWEVER, AS A MATTER OF APPROPRIATE EVIDENCE AND FO R NATURAL JUSTICE THE STATEMENT OF OATH OF SHRI RANJI T I. GALLEDHAR, C.A. WHO HAD AUDITED AND CERTIFIED BOOKS OF ACCOUNTS OF THE ASSESSEE FOR A.Y. 2006-07,WAS TAKEN U/S. 131 OF THE ACT ON 07.10.2008, AND ACCORDING TO HIS ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 3 STATEMENT THE BALANCE SHEET AND PROFIT AND LOSS ACC OUNT WERE PREPARED AS PER THE REQUISITE DETAILS FURNISHE D BY THE ASSESSEE AND AFTER DUE AUDIT BY HIM. THUS ACCOR DING TO THE STATEMENT RECORDED ON OATH OF SHRI RANJIT I. GALLEDHAR, C.A., THE PURCHASE AND SALES SHOWN IN TH E AUDIT REPORT IS TRUE AND CORRECT. HENCE IN ORDER TO DO NATURAL JUSTICE ASSESSEE WAS GIVEN SHOW CAUSE NOTIC E DATED 28.11.2008 AND WAS ASKED TO EXPLAIN. IN REPLY TO SHOW CAUSE NOTICE ASSESSEE HAS STATED T HAT SHE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS FOR TH E A. Y. 2006-07. MOREOVER SHE HAS CONFESSED THAT THE AUD ITED BALANCE SHEET TURNOVER OF RS. 3,25,18,457/- WAS PRE PARED UNDER HER INSTRUCTION THOUGH THE TURNOVER MENTIONED IN THE PROFIT AND LOSS ACCOUNT ATTACHED WITH RETURN OF INCOME IS TRUE. FROM THE ABOVE DISCUSSION IT IS CLEAR THAT ASSESSEE MAINTAIN TWO SETS OF BOOKS OF ACCOUNT. ONE SET OF T HE BOOKS OF ACCOUNT WHEREIN TURN OVER TO THE TUNE OF RS. 3,25,18,457/- WAS SHOWN AND THESE FIGURES WERE DULY SUPPORTED BY VOUCHERS. THESE SETS OF A/C. WAS PRODU CED BEFORE SHRI GALLERDAR FOR AUDIT PURPOSES. SHRI GALL EDAR AFTER CONDUCTING PROPER AUDIT CERTIFIED THE TURNOVE R AT RS. 3,25,18,457/-AND PURCHASED TO EXTENT OF RS. 3,23,29,131/-. THIS AUDIT REPORT AFTER DULY AUTHENTICATED BY THE C.A. SHRI GALLEDAR WAS SUBMITT ED BEFORE THE DADRA AND N.H. PANCHAYAT. BEFORE SUBMITT ING THE SAME ASSESSEE DECLARED THE BONAFIDE OF THIS DAT A. THE SECOND SET OF BOOKS OF A/C. WAS MAINTAIN FOR TH E INCOME-TAX PURPOSES WHEREIN TURNOVER IN TERMS OF SA LES AS WELL AS PURCHASES WAS REDUCED BY 600%. THUS ONLY A PETTY SUM WAS SHOWN BY THE ASSESSEE IN THE BOOKS OF A/C. WHILE THE SUBSTANTIAL TURNOVER WAS KEPT AWAY F ROM THE BOOKS OF ACCOUNT. AT THIS JUNCTURE, THE ONLY OPTION LEFT WITH THE UND ERSIGNED WAS TO REQUEST THE ASSESSEE TO PRODUCE THESE BOOKS OF A/C. HAVE BEEN MAINTAINED FOR F.Y. 2005-06. THIS WA S ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 4 SURPRISING AS THE BOOKS OF A/C. ALONG WITH VOUCHERS WERE PRODUCED BEFORE THEIR AUDITORS. CLEARLY THE ASSESSE E HAS INTENTIONALLY CHOSEN NOT TO PRODUCE BOOKS OF ACCOUN T A/C. AND VOUCHERS WHICH CONTAIN THE ACTUAL TRANSACTION UNDERTAKEN BY THE ASSESSEE DURING F.Y. 2005-06.THUS , THE DATA IN TERMS OF SALES PURCHASE GIVEN BY THE ASSESSEE ALONG WITH RETURN OF INCOME CANNOT BE RELIED UPON AND HENCE THE SAME IS NOT CONSIDERED FOR COMPUTING THE INCOME OF ASSESSEE FOR A.Y, 2006-07. COMING BACK TO THE ISSUE OF COMPUTATION OF INCOME VIS-A-VIS DETAILED AUDIT REPORT OBTAINED BY THE ASS ESSEE FROM SHRI GALLEDAR SHOWING A TURN OVER OF RS. 3,25,18,457/-CLEARLY, THE ASSESSEE HAS MADE PURCHASES WORTH RS. 3.23 CRORES AS WELL AS MADE SAL ES TO THE EXTEND OF 3.25 CRORES. THUS ASSESSEE WAS HAV ING A FUND FLOW TO THE EXTENT OF 3.23 CRORES. IN ABSENC E OF STOCK TURN OVER RATIO IT IS NOT CLEAR HOW MANY BUSI NESS CYCLE ASSESSEE HAS UNDERTAKEN TO ACHIEVE THE TURN O VER OF'3.25 CRORES AND HENCE A TRADITIONAL CYCLE OF 90 DAYS IS ADOPTED TO COMPUTE THE DESIRED TURN OVER CYCLE. THU S ASSESSEE SHOULD HAVE A FUND FLOW OF RS. 18 LACS FOR ACHIEVING THE TURN ' AS PER THE 'AUDITED REPORT OF SHRI GALLEDAR. TILL THE DATE OF COMPUTING THE ASSESSMENT, THE ASSE SSEE HAS NOT COME OUT CLEAN ON THIS ISSUE AND HENCE I HA VE NO ALTERNATIVE BUT TO PROCEED WITH THE FOLLOWING;- BOOKS OF A/C. ARE HEREBY REJECTED AND INCOME OF THE ASSESSEE. A FUND FLOW AMOUNTING RS. 18 LACS IS ADOPTED IN VIE W OF THE CIRCUMSTANCES REFERRED ABOVE. ALSO AFTER GIVING REASONABLE OPPORTUNITIES TO THE ASSESSEE, SHE WAS UNABLE TO JUSTIFY THE TURNOVER AS MENTIONED IN THE PROFIT AND LOSS ACCOUNT ATTACHED W ITH RETURN OF INCOME I.E. OF RS. 25,28,457/-. THEREFORE , IT IS CLEAR THAT THE ASSESSEE HAS SUPPRESSED SALES AMOUNT OFRS. 3,00,00,000/-. THE AVERAGE RATE OF GROSS PROF IT OF ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 5 PAST TWO YEARS COMES TO 8.05% HENCE THE GROSS PROFI T IS CALCULATED AS UNDER. YOUR G.P. IN THE LAST TWO RETURNS REFLECTED FOR F. Y. 2005-06 7.22% FOR F. Y. 2004-05 8.89% AVERAGE G.P. 8.05% WORKING OF G.P. SUPPRESSED IN THE TAX RETURN 8.05% OF THE TURNOVER OF RS. 3,25,18,4511- I.E. RS. 26,17,7 3 5/- (RS. 26,17,735/-MINUS RS. 4,83,019/-I.E. G.P. REFLE CTED IN THE P/L ACCOUNT FILED WITH RETURN OF INCOME = RS. 21,35,716/-) WITH THE ABOVE COMMENT THE INCOME OF THE ASSESSEE I S COMPUTED AS UNDER: TURNOVER OF RS. 3,25,18,457/- @ 8.05% = RS. 26,17,7 35/- GROSS PROFIT REFLECTED AS PER P&L ATTACHED WITH ROI = RS. 1,82,019/- THEREFORE AN AMOUNT OF DIFFERENCE OF RS. 24,35,716/ - BEING DIFFERENT GROSS PROFIT ADDED BACK. SUBJECT TO THE ABOVE REMARKS AND FROM THE DATA MADE AVAILABLE, TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS FOLLOWS: TOTAL INCOME AS PER RETURN OF INCOME RS. 1,36,270/- ADD: AS DISCUSSED ABOVE 1) GROSS PROFIT RS. 24,35,716/- TOTAL INCOME ASSESSED RS, 25,71,986/-. 3. THE ADDITION WAS CHALLENGED BEFORE THE LEARNED C IT(A). THE ASSESSEE FILED WRITTEN SUBMISSION WHICH IS REPRODUC ED IN THE IMPUGNED ORDER IN WHICH THE ASSESSEE MOSTLY REPEATE D THE ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 6 ARGUMENTS. IT WAS ALSO BRIEFLY EXPLAINED THAT IT IS COMMON PRACTICE FOR THE TRADERS TO FILE INFLATED FIGURES OF TURNOVER I. E. SALES AND PURCHASES FOR THE PURPOSE OF TENDER OR OF STOCK FOR THE PURPO SE OF OBTAINING LOON FROM THE BANK. THEREFORE, ON SUCH INFLATED FIGURES ADDITIONS SHOULD NOT HAVE BEEN MADE. IT WAS ALSO SUBMITTED THAT THE AO RELIED UPON THE AUDITORS REPORT AND ITS STATEMENT WITHOUT GIVIN G OPPORTUNITY OF CROSS EXAMINATION. IT WAS ALSO SUBMITTED THAT IF TH E AUDIT REPORT IS TO BE RELIED UPON THEN THE AO MUST HAVE RELIED UPON IT IN ITS ENTIRETY. THE LEARNED CIT(A) CONSIDERING THE SUBMISSION OF TH E ASSESSEE CONFIRMED THE ADDITION. HIS FINDINGS IN PARA 5.4 AR E REPRODUCED AS UNDER: 5.4 I HAVE CONSIDERED THE CONTENTION OF THE APPELLANT AS WELL AS THE OBSERVATION OF THE AO IN T HE ASSESSMENT ORDER. I FIND MERIT IN THE ESTIMATE MADE BY THE AO AS THE FACT FINDING ON RECORD IS SUCH THAT T HE BOOKS OF ACCOUNTS OF THE APPELLANT WERE CONCOCTED. SINCE THE PROVISIONS OF SEC. 145(2) AND 145(3) ENABLES THE AO TO REJECT THE BOOK RESULT IN THE CIRCUMSTANCES WHEN TH E ACCOUNTS ARE NOT REFLECTING TRUE AND CORRECT PICTUR E AND THERE ARE GLARING DEFECTS IN THE ACCOUNTS. IN THE I NSTANT CASE THE BOOKS OF ACCOUNTS PRODUCED BY THE APPELLAN T BEFORE THE DEPARTMENT ARE WHITEWASHED ACCOUNTS AND THEREFORE THE ACTION OF THE AO IN ESTIMATING THE PR OFITS OF RS.24,35,716/- AND MAKING ADDITION BASED ON THE AUD ITED ACCOUNTS FILED BY THE APPELLANT BEFORE THE DISTRICT PANCHAYAT, DADARA NAGAR HAVELI (UT), IS QUITE JUSTI FIED AND FAIR. SINCE THE APPELLANT HAS FILED CONCOCTED B OOK RESULT BEFORE THE AO, THE AO IS JUSTIFIED IN MAKING A FAIR ESTIMATE ON THE BASIS OF THE APPELLANT'S OWN G.P. R ATE REFLECTED IN THE BOOKS OF ACCOUNTS PRODUCED BY HER BEFORE THE AO. THE ADDITION OF RS.24,35,716/- IS CONFIRMED. THUS, THE APPELLANT'S GROUND NO.2 IS DISMISSED. ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 7 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE AUDIT REPORT IN QUESTION WAS OBTAINED FOR THE PURPOSE OF OBTAINING TENDER. THEREFORE, FIGURES CONTAINED THEREON SHOULD NOT HAV E BEEN RELIED UPON BY THE AO FOR THE PURPOSE OF ESTIMATING THE GR OSS PROFIT. HE HAS RELIED UPON THE ORDER OF ITAT BANGALORE BENCH IN TH E CASE OF IBRAHIM VITTAL VS ITO, 119 ITD 71 AND THE DECISION OF THE H ONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS VEERDIP ROLLERS P. LTD., 323 ITR 341. THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER A DMITTED THAT THE ASSESSEE HAS NOT TAKEN ANY ACTION AGAINST THE C HARTERED ACCOUNTANT FOR PREPARING THE AUDIT REPORT IN QUESTI ON, COPY OF WHICH IS FILED AT PAGE 16 OF THE PAPER BOOK. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE IS NOT WILLING TO TAKE ANY ACTION AGAINST THE CHARTERED ACCOUNTANT IN FUTURE AS WELL BECAUSE THE AUDIT REPO RT WAS PREPARED AT THE INSTANCE OF THE ASSESSEE. 5. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE DECISIONS RELIED UPON BY THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THIS CA SE. THE LEARNED DR SUBMITTED THAT ASSESSEE PREPARED CONCOCTED TWO SETS OF BOOKS OF ACCOUNTS AND ONE WAS CONCEALED FROM THE REVENUE DEP ARTMENT. THEREFORE, ADDITION WAS RIGHTLY MADE ON THE BASIS O F MATERIAL ON RECORD. THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS NOT DISPUTED THE AUDIT REPORT IN QUESTION WHICH WAS PREPARED AT HER INSTANCE AND ALSO STATEMENT OF THE CHARTERED ACCOUNTANT DESPITE GIVING SPECIFIC SHOW CAUSE NOTICE TO THE ASSESSEE AND THE ASSESSEE NEVER ASKED FOR CROSS EXAMINATION. THE LEARNED DR SUBMITTED THAT SI NCE THE AUDIT REPORT AND THE STATEMENT OF THE CHARTERED ACCOUNTAN T HAVE NOT BEEN ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 8 DISPUTED, THERE WAS NO PURPOSE OF GIVING ANY FURTHE R OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. THE LEARNED DR S UBMITTED THAT SINCE MAINTENANCE OF TWO SETS OF ACCOUNTS BY THE AS SESSEE HAS NOT BEEN DISPUTED, THEREFORE, AUTHORITIES BELOW HAVE RI GHTLY MADE THE ADDITION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. THE AO NOTED THAT DURING THE Y EAR THE DISTRICT PANCHAYAT DADRA AND NAGAR HAVELI HAS INVITED TENDER S FOR SUPPLY OF MATERIAL FOR STUDENTS OF PRIMARY SCHOOLS. THE ASSES SEE HAS FILED TENDER WITH AUDITED ACCOUNTS WHICH SHOWED THE TURNO VER OF THE ASSESSEE AT RS.3,25,18,457/-. THEREFORE, DIFFERENCE WAS FOUND IN THE SALE SHOWN TO THE REVENUE DEPARTMENT IN THE ACCOUNT S FILED WITH THE RETURN OF INCOME AND THE AUDITED ACCOUNTS FILED WIT H DISTRICT PANCHAYAT DADRA AND NAGAR HAVELI. COPY OF THE AUDIT REPORT FILED WITH THE TENDER IS FILED AT PAGE 16 OF THE PAPER BO OK. THE STATEMENT OF THE CHARTERED ACCOUNTANT WHO PREPARED THE SAID AUDI T REPORT WAS RECORDED ON OATH U/S 131 OF THE IT ACT WHO HAD AUDI TED AND CERTIFIED THE BOOKS OF ACCOUNTS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND ACCORDING TO HIS STATEMENT THE BA LANCE SHEET AND PROFIT & LOSS ACCOUNTS WERE PREPARED AS PER THE REQ UISITE DETAILS FURNISHED BY THE ASSESSEE. THUS, ACCORDING TO HIS S TATEMENT RECORDED ON OATH, THE PURCHASES AND SALES SHOWN IN THE AUDIT REPORT WERE FOUND TO BE TRUE AND CORRECT. THE AO ON THE BASIS O F THE STATEMENT OF THE CHARTERED ACCOUNTANT RECORDED ON OATH ISSUED A SPECIFIC SHOW CAUSE NOTICE TO THE ASSESSEE DATED 28-11-2008(PB 31 ) EXPLAINING THE ABOVE ISSUE AND IT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE THAT ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 9 THE ASSESSEE HAS MAINTAINED TWO DIFFERENT SETS OF A CCOUNTS. THE STATEMENT OF THE CHARTERED ACCOUNTANT IS ALSO REFER RED TO IN THE SAID NOTICE AND EXPLANATION OF THE ASSESSEE WAS CALLED F OR. THE GROSS PROFIT RATE FOR ASSESSMENT YEAR UNDER APPEAL WAS FO UND TO BE 7.22% AND FOR PRECEDING ASSESSMENT YEAR IT WAS FOUND AT 8 .89% WITH AVERAGE GROSS PROFIT RATE OF 8.05%. THE EXPLANATION OF THE ASSESSEE WAS CALLED FOR WHY THE TURNOVER SHOWN IN THE AUDITE D ACCOUNTS BE NOT ACCEPTED FOR THE PURPOSE OF ESTIMATING THE PROFIT B Y APPLYING AVERAGE GROSS PROFIT RATE OF 8.05%. THE ASSESSEE FILED HER REPLY BEFORE THE AO IN WHICH THE ASSESSEE DENIED TO HAVE MAINTAINED RE GULAR BOOKS OF ACCOUNTS BUT ADMITTED THAT BALANCE SHEET WAS PREPAR ED AT HER INSTANCE BY SHOWING TURNOVER OF RS.3,25,18,457/- FO R THE PURPOSE OF FILING TENDER. IT WAS ALSO ADMITTED THAT THE SAME A UDIT REPORT WAS PREPARED FROM THE CHARTERED ACCOUNTANT, SHRI RANJIT I. GALLEDHAR. BUT IT WAS NOT ACCORDING TO RULES. THE ASSESSEE IN THIS REPLY DID NOT DISPUTE MAINTENANCE OF TWO SETS OF ACCOUNTS BY THE ASSESSEE AND EVEN THE REJECTION OF THE BOOKS OF ACCOUNTS WAS NOT CHALLENGED. EVEN IN THE GROUNDS OF APPEAL BEFORE US, THE ASSESSEE HA S NOT CHALLENGED THE REJECTION OF THE BOOK RESULTS. THUS, THE ASSESS EE DID NOT DISPUTE THE CORRECTNESS OF THE AUDIT REPORT IN QUESTION PRE PARED AT HER INSTANCE BY THE CONCERNED CHARTERED ACCOUNTANT. THE STATEMENT OF THE CHARTERED ACCOUNTANT RECORDED BY THE AO ON OATH IS ALSO NOT DISPUTED. WE MAY NOW REFER TO SOME CONTENTS REFERRE D IN THE AUDIT REPORT (PB-16) PREPARED AT THE INSTANCE OF THE ASSE SSEE. IN THE SAID AUDIT REPORT THE CHARTERED ACCOUNTANT HAS NOTED THA T ALL INFORMATION HAVE BEEN OBTAINED AND EXPLANATION WHICH TO HIS BES T OF THEIR KNOWLEDGE WERE NECESSARY FOR THE PURPOSE OF AUDIT. IN THE OPINION OF ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 10 THE CHARTERED ACCOUNTANT BOOKS OF ACCOUNTS HAVE BEE N KEPT BY THE HEAD OFFICE OF THE ASSESSEE SO FAR IT APPEARS FROM HIS EXAMINATION OF BOOKS. THE CHARTERED ACCOUNTANTS HAS PREPARED THE P ROFIT & LOSS ACCOUNTS OF THE ASSESSEE FOR THE YEAR UNDER CONSIDE RATION AND IT IS CERTIFIED THAT THE BALANCE SHEET AND PROFIT & LOSS ACCOUNTS ARE IN AGREEMENT WITH THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. IT IS ALSO NOTED IN THE AUDIT REPORT THAT THE ASSESSEE MAINTAINED CASH BOOK, LEDGER, BANK ACCOUNT, SALES REGISTER, PURCHAS ES REGISTER AND JV BOOKS. IT IS ALSO NOTED IN THE AUDIT REPORT THAT VA LUATION OF CLOSING STOCK AND OPENING AND CLOSING STOCK ARE STATED TO B E VERIFIED BY THE MANAGEMENT I.E. THE ASSESSEE. THE AUDIT REPORT IS A LSO SIGNED BY THE ASSESSEE. THESE FACTS WOULD SUPPORT THE FINDINGS OF THE AUTHORITIES BELOW THAT THE ASSESSEE MAINTAINED TWO SETS OF BOOK S OF ACCOUNTS OUT OF WHICH ONE WAS CONCEALED FROM THE CONSIDERATI ON OF THE REVENUE DEPARTMENT. IN THE REPLY OF THE ASSESSEE TO THE SHOW CAUSE NOTICE ISSUED BY THE AO, THE ASSESSEE NEVER ASKED F OR CROSS EXAMINATION TO THE STATEMENT OF THE CHARTERED ACCOU NTANT. IN THE REPLY ALSO THE ASSESSEE ADMITTED PROFIT & LOSS AC COUNTS, BALANCE SHEET AND AUDIT REPORT PREPARED BY THE CHARTERED AC COUNTANT AT HER INSTANCE. SINCE THE STATEMENT OF THE CHARTERED ACCO UNTANT AND THE AUDIT REPORT WERE NEVER DISPUTED AT ANY POINT OF TI ME, THEREFORE, IT WOULD AMOUNT TO ADMISSION ON THE PART OF THE ASSESS EE TO ADMIT THE CONTENTS OF THE AUDIT REPORT PREPARED BY THE CHARTE RED ACCOUNTANT AND THE STATEMENT RECORDED ON OATH BY THE AO. SINCE , THESE VITAL EVIDENCES I.E. AUDIT REPORT AND THE STATEMENT OF TH E CHARTERED ACCOUNTANT HAVE NOT BEEN DISPUTED BY THE ASSESSEE A T ANY STAGE EITHER BEFORE THE AUTHORITIES BELOW OR BEFORE US, W E DO NOT FIND ANY ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 11 VIOLATION OF ANY PRINCIPLE OF NATURAL JUSTICE. THE LEARNED COUNSEL FOR THE ASSESSEE DURING THE COURSE OF ARGUMENTS ADMITTE D THAT THE ASSESSEE HAS NOT TAKEN ANY ACTION AGAINST THE CHART ERED ACCOUNTANT IF THE AUDIT REPORT WAS PREPARED AGAINST RULES. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE I S NOT WILLING TO TAKE ANY ACTION AGAINST THE CHARTERED ACCOUNTANT IN FUTURE AS WELL. THESE FACTS WOULD SHOW THAT THE ASSESSEE GOT THE AU DIT REPORT PREPARED VOLUNTARILY ON THE BASIS OF THE BOOKS OF A CCOUNTS AND OTHER EVIDENCES/MATERIALS PRODUCED BEFORE THE CHARTERED A CCOUNTANTS, OTHERWISE, THERE WAS NO REASON FOR THE CHARTERED AC COUNTANT TO GIVE A CERTIFICATE IN THE AUDIT REPORT THAT THE PROFIT & LOSS AND BALANCE SHEET ARE IN AGREEMENT WITH THE BOOKS OF ACCOUNTS PRODUCE D BY THE ASSESSEE. THE CONDUCT OF THE ASSESSEE IN NOT TAKING ANY ACTION AGAINST THE CHARTERED ACCOUNTANT IN THE PAST AS WELL AS IN FUTU RE WOULD ALSO SHOW THAT THE CHARTERED ACCOUNTANT PREPARED TR UE AND CORRECT AUDIT REPORT BASED UPON THE BOOKS OF ACCOUNTS AND O THER SUPPORTING DOCUMENTS PRODUCED BY THE ASSESSEE BEFORE THE CHART ERED ACCOUNTANT. IN THIS REGARD, WE MAY REFER TO THE DEC ISION OF THE HONBLE CHHATTISGARH HIGH COURT IN THE CASE OF CIT VS D. R. BANSAL, 327 ITR 44. IN THIS CASE, SEARCH WAS CONDUCTED IN T HE RESIDENTIAL PREMISES OF THE ASSESSEES GROUP IN WHICH VARIOUS D OCUMENTS, BOOKS OF ACCOUNTS RELATING TO BB AND ITS SISTER CONCERNS INCLUDING THE BUSINESS TRANSACTION AND INCOME WHICH WAS NOT DISCL OSED BY THE ASSESSEE IN THEIR RETURN OF INCOME, WERE SEIZED. TH E ASSESSEE SOUGHT TO PLEAD THAT THE PAPERS CONTAINING SOME ACC OUNTS WERE FICTITIOUS, FALSE AND UNRELIABLE AND NON-GENUINE BE ING IRRELEVANT TO THE TRANSACTIONS OF THE ASSESSEE. SUBSEQUENTLY, COPIES OF AFFIDAVITS OF THE ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 12 ACCOUNTANTS WERE FILED CONFIRMING ON OATH THAT THEY HAD PLANTED THESE FABRICATED DOCUMENTS AT THE RESIDENCE OF KKB WHEN HE HAD GONE TO DELHI. THE AO DID NOT BELIEVED THE EXPLANAT ION OF THE ASSESSEE AND IT WAS FOUND THAT THE ACCOUNTANTS WERE EXPERIENCED AND EDUCATED PERSONS AND REPRESENTED THE PARTIES BE FORE THE INCOME TAX AND SALES TAX AUTHORITIES. INSTEAD OF PLACING T HE ORIGINAL DOCUMENTS IN THE ALMIRAH, THEY WOULD HAVE PLACED PH OTOCOPIES AND KEPT THE ORIGINALS WITH THEM, IF THEIR INTENTION WA S TO BLACKMAIL THE ASSESSEE ON THE BASIS OF FABRICATED DOCUMENTS. IT W AS ALSO TAKEN NOTE OF THE FACT THAT THE ACCOUNTANTS ARE STILL IN SERVICE AND NO POLICE ACTION HAS BEEN LAUNCHED AGAINST THEM. THEREFORE, T HE AFFIDAVITS OF THE ACCOUNTANTS WERE NOT BELIEVED AND ADDITION WAS ACCORDINGLY MADE. THE LEARNED CIT(A) AND THE TRIBUNAL REVERSED THE ORDER OF THE AO BUT THE HONBLE HIGH COURT DID NOT APPROVE THEIR ORDERS AND REMANDED THE MATTE TO THE TRIBUNAL BY ANSWERING QUE STION OF LAW IN FAVUOR OF THE REVENUE. 6.1 IN THE CASE OF THE ASSESSEE, SINCE THE AUDIT RE PORT OF THE CHARTERED ACCOUNTANT IS NOT DISPUTED AND USED BY TH E ASSESSEE FOR BUSINESS PURPOSES, THEREFORE, IT WAS INCRIMINATING EVIDENCE AGAINST THE ASSESSEE. THE FACTS NOTED ABOVE WOULD PROVE THA T THE AUDIT REPORT OF THE CHARTERED ACCOUNTANT IS GENUINE BASED ON THE INFORMATION SUPPLIED TO HIM BY THE ASSESSEE AND BAS ED ON THE BOOKS OF ACCOUNTS AND DOCUMENTS PRODUCED BY THE ASSESSEE BEFORE THE CHARTERED ACCOUNTANT. THE CONDUCT OF THE ASSESSEE I N NOT TAKING ANY ACTION AGAINST THE CHARTERED ACCOUNTANT WOULD SUPPO RT THE FINDINGS OF THE AUTHORITIES BELOW. IN VIEW OF THESE FACTS, THE BOOKS OF ACCOUNTS OF ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 13 THE ASSESSEE HAVE BEEN RIGHTLY REJECTED BY THE AUTH ORITIES BELOW AND INCOME OF THE ASSESSEE HAS BEEN RIGHTLY ESTIMATED O N THE BASIS OF THE MATERIAL AND EVIDENCES BROUGHT ON RECORD. THE L EARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE ITAT BANGALORE BENCH IN THE CASE OF IBRAHIM VITTAL (SUPRA) IN WHICH IT W AS FOUND THAT THE ASSESSEE HAS RECEIVED THE AMOUNT IN CASH WHICH WAS EXPLAINED TO HAVE RECEIVED FROM HIS BROTHER AND BROTHER-IN-LAW F OR CONSTRUCTION OF THEIR HOUSE. THE EXPLANATION OF THE ASSESSEE WAS RE JECTED UNDER FEMA. HOWEVER, IN THE INCOME TAX PROCEEDINGS IT WAS FOUND BY THE TRIBUNAL THAT SINCE THE AMOUNT WAS RECEIVED BY THE ASSESSEE ON BEHALF OF HIS BROTHER AND BROTHER-IN-LAW, THEREFORE , THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN BRINGING THE SAID AMOUN T TO TAX U/S 69A OF THE IT ACT. THE LEARNED COUNSEL FOR THE ASSESSEE AL SO RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF VEERDIP ROLLERS P. LTD. (SUPRA) IN WHICH VALUATION OF THE S TOCK WAS INFLATED ON ESTIMATE BASIS FOR THE PURPOSE OF AVAILING CREDIT F ACILITIES FROM THE BANK. THE TRIBUNAL DELETED THE ADDITION ON THE GROU ND THAT THE STATEMENT SUBMITTED TO THE BANK WAS ON ESTIMATE BAS IS. DEPARTMENTAL APPEAL WAS DISMISSED BY THE HONBLE HI GH COURT. THE LEARNED DR, THEREFORE, RIGHTLY CONTENDED THAT THE F ACTS OF BOTH THE CASES ARE CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE PRESENT ASSESSEE, BECAUSE IN THIS CASE THE INCRIMINATING EV IDENCES HAVE NOT BEEN DISPUTED BY THE ASSESSEE AND THE ASSESSEE NEVE R DISPUTED ABOUT MAINTENANCE OF TWO SETS OF ACCOUNTS AS NOTED BY THE AUTHORITIES BELOW. EVERY CASE DEPENDS UPON THEIR OW N FACTS AND EVIDENCES ON RECORD. IN THE CASE OF THE ASSESSEE SU FFICIENT AND COGENT EVIDENCES/MATERIALS ARE AVAILABLE AGAINST TH E ASSESSEE ON ITA NO.2179/AHD/2009 SMT. SANGITA YOGESHKUMAR SHAH VS ITO, VAPI, WARD -3 , VAPI 14 RECORD TO PROVE ASSESSEE MAINTAINED TWO SETS OF ACC OUNTS AND CONCOCTED THE ACCOUNTS, THEREFORE, AUTHORITIES BELO W RIGHTLY ESTIMATED THE INCOME OF THE ASSESSEE. CONSIDERING THE FACTS A ND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE AUTHORITIE S BELOW RIGHTLY MADE AND CONFIRMED THE ADDITION. WE DO NOT FIND ANY INFI RMITY IN THE ORDERS OF THE AUTHORITIES BELOW. WE CONFIRM THEIR FINDINGS AND DISMISS THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01-07-2011 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 01-07-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD