P.Anbazhagan, Komarapalayam V. DCIT, Salem

ITA 2179/CHNY/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7828 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 30-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Business income; Block assessment
• Section: 69C; 143(3); 153A; 68; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ./ ITA NOS. 2174 TO 2178/MDS/2013 / ASSESSMENT YEARS :2002-03, 2003-04,2004-05,2005-06 & 2006-07 SMT. A. JOTHIMANI, NO.11-D-2, SIVASAKTHI NAGAR, BYE-PASS ROAD, KOMARAPALAYAM PAN : ADOPJ2834Q V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM. ( ! /APPELLANT) ( '# ! /RESPONDENT) ./ ITA NO. 2183/MDS/2013 / ASSESSMENT YEAR : 2001-02 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM. V. SHRI P. ANBAZHAGAN NO.11-D-2, SIVASAKTHI NAGAR, BYE-PASS ROAD, KOMARAPALAYAM-638183 PAN : AAVPA7006J ( ! /APPELLANT) ( '# ! /RESPONDENT) ./ ITA NOS. 2172 & 2173/MDS/2013 / ASSESSMENT YEARS : 2005-06 & 2006-07 M/S. ANBURAJ EXPORTS, NO.11-D, SIVASAKTHI NAGAR, BYE-PASS ROAD, KOMARAPALAYAM PAN : ADOPJ2834Q V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM. ( ! /APPELLANT) ( '# ! /RESPONDENT) 2 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 ./ ITA NO. 2179/MDS/2013 / ASSESSMENT YEAR : 2006-07 SHRI P. ANBAZHAGAN NO.11-D-2, SIVASAKTHI NAGAR, BYE-PASS ROAD, KOMARAPALAYAM-638183 PAN : AAVPA7006J V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM. ( ! /APPELLANT) ( '# ! /RESPONDENT) /ASSESSEES BY : SHRI S. SRIDHAR, ADVOCATE $ /REVENUE BY : SHRI A.V. SHREEKANTH, JCIT $ /DATE OF HEARING : 30.11.2016 $ /DATE OF PRONOUNCEMENT : 31.01.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : ALL THE APPEALS OF THE ASSESSEES AND THE REVENUE A RE DIRECTED AGAINST THE RESPECTIVE ORDERS OF COMMISSIO NER OF INCOME TAX (APPEALS), SALEM IN RESPECT OF THREE INDEPENDEN T ASSESSES. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THESE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOSING OF TH E SAME BY THIS COMMON ORDER. 3 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 2. LET US FIRST TAKE ITA NO.2174 OF 2013 FOR THE AS SESSMENT YEAR 2002-03 IN RESPECT OF SMT. A. JOTHIMANI. 3. SHRI S. SRIDHAR, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERATION IS ADDITION OF 1,50,000/- UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (IN SH ORT THE ACT). SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THERE WAS A SEARCH OPERATION UNDER SECTION 132 OF T HE ACT ON 10.11.2005 IN THE CASE OF ASSESSEES HUSBAND SHRI P . ANBAZHAGAN. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE FILED TH E INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2002-03 IN REGULAR C OURSE ON 12.03.2003 BEFORE THE SEARCH OPERATION, DISCLOSING THE TOTAL INCOME AS 1,27,710/-. CONSEQUENT TO THE NOTICE UNDER SECTION 153C OF THE ACT, THE ASSESSEE HAS FILED A RETURN ON 23.07.2 007 DISCLOSING THE VERY SAME AMOUNT OF 1,27,710/-. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE WAS ENGAGED IN THE BUSINESS O F MANUFACTURING CLOTH BY NAME M/S. SRI VISHNU DURGAAD EVI TEXTILES. ON PERUSAL OF THE ACCOUNTS, THE ASSESSING OFFICER F OUND THAT AN AMOUNT OF ` 1,00,000/- WAS CREDITED IN THE PERSONAL CAPITAL ACC OUNT ON 01.02.2002. SIMILARLY ANOTHER AMOUNT OF ` 25,000/- WAS CREDITED 4 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 ON 07.03.2002. THE ASSESSING OFFICER ALSO FOUND TH AT ` 25,000/- WAS CREDITED IN THE PERSONAL CAPITAL ACCOUNT ON 18. 03.2002. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THA T THE AMOUNT WAS CREDITED ON TRANSFER FROM HER CAPITAL ACCOUNT I N THE PROPRIETARY CONCERN. THE ASSESSING OFFICER AFTER VERIFICATION FOUND THAT THERE WAS NO SUCH TRANSFER FROM HER CAPITAL ACCOUNT IN TH E PROPRIETARY CONCERN AS CLAIMED BY THE ASSESSEE. THEREFORE THE A SSESSING OFFICER MADE AN ADDITION OF ` 1,50,000/- UNDER SECTION 68 OF THE ACT FOR THE ASSESSMENT YEAR 2002-03. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE IS A PERSON OTHER THAN THE SEARCH PERS ON. THE ADDITION WAS ADMITTEDLY MADE UNDER SECTION 153C OF THE ACT. THEREFORE THE ASSESSING OFFICER CANNOT MAKE ANY ADD ITION IN THE ABSENCE OF THE SEARCHED MATERIAL. NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION. THE ADDITION WAS M ADE ON THE BASIS OF THE ACCOUNTS FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. IN FACT, THE RETURN OF INCOME WAS FILED O N 12.03.2003 IN THE REGULAR COURSE BEFORE THE DATE OF SEARCH OPERATION. THEREFORE, ACCORDING TO THE LD. COUNSEL, IN THE ABSENCE OF ANY SEARCH MATERIAL THERE CANNOT BE ANY ADDITION FOR THE BLOCK PERIOD U NDER SECTION 153C OF THE ACT. 5 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 4. ON THE CONTRARY, SHRI A.V. SHREEKANTH, THE LD. D EPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEES PERSONAL CAPITAL ACCOUNT WAS CREDITED WI TH ` 1,50,000/-. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER T HAT THE CREDIT WAS MADE ON TRANSFER FROM HER CAPITAL ACCOUNT IN TH E PROPRIETORSHIP CONCERN. ON VERIFICATION, THE ASSESSING OFFICER FO UND THAT THERE WAS NO SUCH TRANSFER. THEREFORE THE ASSESSING OFFICER RIGHTLY FOUND THAT THE CASH CREDIT REMAIN UNEXPLAINED. ACCORDINGLY A N ADDITION WAS MADE UNDER SECTION 68 OF THE ACT. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NO T IN DISPUTE THAT THERE WAS A SEARCH OPERATION UNDER SECTION 132 OF T HE ACT ON 10.11.2005 IN THE CASE OF ASSESSEES HUSBAND SHRI P . ANBAZHAGAN. THE ASSESSMENT WAS MADE AGAINST THE ASSESSEE UNDER SECTION 153C OF THE ACT. THEREFORE IT IS OBVIOUS THAT THE ASSES SEE IS A PERSON OTHER THAN THE SEARCH PERSON. WE HAVE CAREF ULLY GONE THROUGH THE SECTION 153C OF THE ACT. IN RESPECT OF THE PERSON OTHER THAN THE SEARCH PERSON, THE ASSESSING OFFICER CANNO T INITIATE THE PROCEEDING FOR ASSESSMENT OR THE ASSESSING OFFICER CAN ASSESS THE 6 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 INCOME ON THE BASIS OF THE MATERIAL FOUND DURING TH E SEARCH OPERATION. IN THE CASE BEFORE US, ADMITTEDLY NO MA TERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION. THE ASSESS EE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2002-03 ON 12.03.200 3 IN THE REGULAR COURSE BEFORE THE DATE OF SEARCH OPERATION. THEREFORE THIS TRIBUNAL HAS CONSIDERABLE OPINION THAT IN THE ABSEN CE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N, THERE CANNOT BE ANY ADDITION UNDER SECTION 158BC. THEREFORE WE ARE UNABLE TO UPHOLD THE ORDER OF THE LOWER AUTHORITIES. ACCORD INGLY, THE ORDER OF THE LOWER AUTHORITIES IS SET ASIDE AND THE ADDITION OF ` 1,50,000/- IS DELETED. 6. IN THE RESULT, THE ITA NO.2174/MDS/2013 STAND AL LOWED. 7. NOW COMING TO ASSESSMENT YEAR 2003-04, THE FIRST ISSUE ARISES FOR CONSIDERATION IS ADDITION OF 3,50,000/- UNDER SECTION 68 OF THE ACT. 8. SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEA RCH OPERATION FOR THE ASSESSMENT YEAR 2003-04. THE ASSESSING OFFICER FOUND CREDIT 7 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 IN THE CAPITAL ACCOUNT IN THE BOOKS OF ACCOUNTS DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE CLAIMED BEFOR E THE ASSESSING OFFICER THAT IT WAS ONLY A TRANSFER FROM HER CAPITAL ACCOUNT FROM THE PROPRIETORSHIP CONCERN. ACCORDING TO THE LD. COUNSEL IN THE ABSENCE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION, THERE CANNOT BE ANY ADDITION FOR THE BLO CK PERIOD. THE LD. COUNSEL ALSO SUBMITTED THAT FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSEE HAS FILED RETURN OF INCOME IN THE REGU LAR COURSE ON 31.10.2003 BEFORE THE DATE OF SEARCH, DISCLOSING TH E TOTAL INCOME OF 2,40,900/-. THEREFORE THERE WAS NO JUSTIFICATION I N MAKING ADDITION IN THE HANDS OF THE ASSESSEE. 9. ON THE CONTRARY, SHRI A.V. SHREEKANTH, THE LD. D EPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER FOUND SEVERAL CREDITS IN THE BOOKS OF ACCOUNTS. THE ASSESSEE EXP LAINED THE TWO CREDITS OF 50,000/- EACH WAS RECEIVED BY WAY OF GIFT FROM FATH ER AND MOTHER. HOWEVER, NO SATISFACTORY MATERIAL WAS FILED TO CONFIRM THE SO CALLED CREDIT. THE ASSESSEE HAS ALSO CLAIME D BEFORE THE ASSESSING OFFICER THAT THE AMOUNT WAS CREDITED FROM HER CAPITAL ACCOUNT IN THE PROPRIETORSHIP CONCERNED BUSINESS. THE ASSESSING 8 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 OFFICER FOUND IT IS ALSO NOT CORRECT. THEREFORE, T HE ADDITION UNDER SECTION 68 OF THE ACT WAS MADE TO THE EXTENT OF 3,50,000/-. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING T HE COURSE OF SEARCH OPERATION, NO MATERIAL WAS FOUND IN RESPECT OF CREDIT IN THE PERSONAL CAPITAL ACCOUNT OF THE ASSESSEE. FOR THE PURPOSE OF MAKING ADDITION UNDER SECTION 153C ESPECIALLY WHEN THE ASSESSEE FILED THE RETURN OF INCOME BEFORE THE DATE OF SEARC H OPERATION, THE ASSESSING OFFICER HAS TO PLACE HIS RELIANCE ON THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. IN CASE, N O MATERIAL WAS FOUND DURING THE SEARCH OPERATION, IN RESPECT OF CR EDIT FOUND IN THE BOOKS OF ACCOUNTS WHICH IS PRODUCED DURING THE COUR SE OF PROCEEDINGS, THIS TRIBUNAL IS OF THE CONSIDERED OPI NION THAT THERE CANNOT BE ANY ADDITION UNDER SECTION 153C OF THE AC T. IN THIS CASE, ADMITTEDLY NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPERATION IN RESPECT OF THE ADDITION MADE BY THE AS SESSING OFFICER TO THE EXTENT OF 3,50,000/- UNDER SECTION 68 OF THE ACT. THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER CANNOT B E SUSTAINED. ACCORDINGLY, THE SAME IS DELETED. 9 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 11. THE NEXT ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF 1,00,000/-. 12. SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS UNDER STATED THE GROSS PROFIT FOR THE ASSESSMENT YEARS 2004-05 & 2005-06. WHILE CONSIDERING THE ASSESSMENT OF THE ASSESSEES HUSBAND SHRI P. ANBAZHAGAN WHO IS ALSO ENGAGED IN THE SIMIL AR BUSINESS AS OF THE ASSESSEE, THE NET PROFIT WAS NEVER BELOW 1%. IN THE CASE OF THE ASSESSEE, ACCORDING TO ASSESSING OFFICER THE NE T PROFIT SHALL BE MORE THAN 1%. THE ASSESSING OFFICER FURTHER FOUND THAT THE NET PROFIT DISCLOSED BY THE ASSESSEE WAS LESS THAN 1%. ACCORDINGLY, THE ASSESSING OFFICER FOUND THAT THERE SHALL BE ADD ITION TOWARDS NET PROFIT. THE ASSESSEE EXPLAINED BEFORE THE ASSESSIN G OFFICER THAT DISCOUNTS WERE GIVEN TO THE CUSTOMERS MORE THAN WHA T WAS GIVEN BY SHRI P. ANBAZHAGAN. THE ASSESSING OFFICER HAS E STIMATED THE NET PROFIT AT 1,00,000/- FOR THE ASSESSMENT YEAR 2003-04 AND FOR THE ASSESSMENT YEAR 2005-06. THE ASSESSING OFFICER HAS ALSO ESTIMATED THE UNDERSTATEMENT, THE NET INCOME AT 50,000/- FOR THE ASSESSMENT YEAR 2004-05. IN THE ABSENCE OF ANY SEAR CH MATERIAL, 10 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 ACCORDING TO THE LD. COUNSEL THERE CANNOT BE ANY ES TIMATION OF NET PROFIT BY COMPARING THE NET PROFIT DISCLOSED BY THE ASSESSEES HUSBAND SHRI P. ANBAZHAGAN. THIS BEING A BLOCK PER IOD, UNDER SECTION 153C OF THE ACT, FOR THE PURPOSE OF ESTIMAT ING THE PROFIT THERE SHALL BE A MATERIAL FOUND DURING THE COURSE O F SEARCH OPERATION IN THE HANDS OF THE ASSESSEE. COMPARISON OF THE NET PROFIT WITH SIMILARLY PLACED TRADERS CANNOT BE MADE IN THE BLOCK ASSESSMENT. OFCOURSE, THE ASSESSING OFFICER CAN CO MPARE THE PROFIT RATIO OF THE OTHER SIMILARLY PLACED TRADERS IN THE COURSE OF REGULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT. BLOCK ASSESSMENT UNDER SECTION 153C OF THE ACT BEING A SP ECIAL PROVISION FOR COMPUTING THE UNDISCLOSED INCOME, THE ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY TO THE MATERIAL FOUND DURING T HE COURSE OF SEARCH OPERATION. IN THE ABSENCE OF ANY MATERIAL F OUND DURING THE COURSE OF SEARCH OPERATION, THE ASSESSING OFFICER C ANNOT MAKE ANY ADDITION FOR THE BLOCK PERIOD. THEREFORE THE CIT (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. 13. ON THE CONTRARY, SHRI A.V. SHREEKANTH, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ON VERIFICATION OF TH E DETAILS FURNISHED 11 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 BY THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT T HE DISCOUNTS PROVIDED BY THE ASSESSEE ARE HIGHLY EXCESSIVE COMPA RED TO THE DISCOUNTS OF SHRI P. ANBAZHAGAN. THE ASSESSEE CLA IMED BEFORE THE ASSESSING OFFICER THAT HEAVY DISCOUNTS WERE GIV EN SINCE SPOT PAYMENT WAS MADE. THE ASSESSING OFFICER FURTHER F OUND THAT THE EXPENSES CLAIMED BY THE ASSESSEE WERE NOT PROPERLY VOUCHERED AND THE PAYMENTS MADE BY THE ASSESSEE ARE NOT VERIF IABLE. THEREFORE THE ASSESSING OFFICER MADE AN ADDITION OF 1,00,000/- FOR THE ASSESSMENT YEAR 2003-04, 50,000/- FOR THE ASSESSMENT YEAR 2004-05 AND ANOTHER 1,00,000/- FOR THE ASSESSMENT YEAR 2005-06. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THE ASSESSMENT WAS FRAMED FOR UNDERSTATING THE NET PROF IT FOR THE BLOCK PERIOD UNDER SECTION 153C OF THE ACT. IT IS NOT I N DISPUTE THAT THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD HAS TO BE C OMPUTED ONLY ON THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPER ATION IN RESPECT OF THE PERSON OTHER THAN THE SEARCH PERSON UNDER SE CTION 153C OF THE ACT. IN THE CASE BEFORE US, THE ASSESSING OFF ICER HAS NOT REFERRED ANY SEARCH MATERIAL IN THE IMPUGNED ASSESS MENT ORDER. THE ASSESSING OFFICER SIMPLY COMPARED THE NET PROFI T OF THE 12 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 ASSESSEES HUSBAND SHRI P. ANBAZHALAGAN WITH THAT O F THE ASSESSEE AND FOUND THAT THE NET PROFIT DISCLOSED B Y THE ASSESSEE IS LESS THAN 1% CANNOT BE SUSTAINED. THE FACT REMAIN S IS THAT NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPER ATION IN RESPECT OF BUSINESS OF THE ASSESSEE. THEREFORE, THE COMPAR ISON MADE BY THE ASSESSING OFFICER WITH THAT OF THE NET PROFIT O F THE ASSESSEES HUSBAND SHRI P. ANBAZHALAGAN IN THE ABSENCE OF ANY SEARCH MATERIAL FOR THE BLOCK PERIOD CANNOT BE SUSTAINED. THE MATTER WOULD STAND DIFFERENTLY IN CASE REVENUE AUTHORITIES FOUND MATERIALS DURING THE COURSE OF SEARCH OPERATION FOR UNDERSTAT EMENT OF THE PROFIT. NO SUCH EVIDENCE WAS FOUND DURING THE COU RSE OF SEARCH OPERATION. THEREFORE THIS TRIBUNAL IS UNABLE TO UP HOLD THE ORDER OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ADDITION M ADE BY THE ASSESSING OFFICER FOR SHORTFALL OF NET PROFIT FOR T HE ASSESSMENT YEARS 2003-04, 2004-05 & 2005-06 ARE SET ASIDE AND THE AD DITION MADE BY THE ASSESSING OFFICER FOR THE RESPECTIVE ASSESSM ENT YEARS ARE DELETED. 13 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 15. NOW COMING TO ASSESSMENT YEAR 2004-05, THE ONLY DISALLOWANCE MADE BY THE ASSESSING OFFICER IS 50,000/- TOWARDS EXPENSES. 16. WE HEARD SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESSEE AND SHRI A.V. SHREEKANTH, THE LD. DEPARTMENTAL REPR ESENTATIVE. WHILE DISCLOSING OF IDENTICAL ISSUE FOR THE ASSESSM ENT YEAR 2003-04, THIS TRIBUNAL FOUND THAT THERE WAS NO MATERIAL FOUN D DURING THE COURSE OF SEARCH OPERATION FOR DISALLOWANCE OF 50,000/- FOR THE ASSESSMENT YEAR 2004-05. IN VIEW OF THE ABOVE FIND ING RECORDED BY THIS TRIBUNAL IN THE EARLIER PARAGRAPH, THE ADDITIO N OF 50,000/- CANNOT BE SUSTAINED. ACCORDINGLY, THE ADDITION MAD E BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2004-05 T O THE EXTENT OF 50,000/- IS DELETED. 17. SIMILARLY FOR THE ASSESSMENT YEAR 2005-06 ALSO, THIS TRIBUNAL FOUND THAT IN THE EARLIER PARA OF THE ORDER THERE W AS NO MATERIAL FOUND DURING THE SEARCH OPERATION, FOR THE SAME REA SON THE ADDITION MADE BY THE ASSESSING OFFICER TO THE EXTENT OF 1,00,000/- IS DELETED. 14 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 18. NOW COMING TO THE ASSESSMENT YEAR 2006-07, THE ASSESSING OFFICER MADE AN ADDITION OF 1,25,000/- TOWARDS SUPPRESSION OF NET PROFIT ON ESTIMATION BASIS. 19. SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE ASSESSEE DISCLOSED TURNOVER OF 2,34,76,885/- FOR THE ASSESSMENT YEAR 2006-07 AND ESTIMATED THE NET PROFI T AT 0.75%. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE OUGHT TO HAVE MAINTAINED THE BOOKS OF ACCOUNTS AND OBTAINED THE A UDIT REPORT AS REQUIRED UNDER SECTION 44AB OF THE ACT. ACCORDING TO THE LD. COUNSEL, THE ASSESSING OFFICER REJECTED THE PROFIT RATIO ESTIMATED BY THE ASSESSEE AT 0.75% AND COMPARED THE PROFIT OF AS SESSEES HUSBAND SHRI P. ANBAZHAGAN AND ESTIMATED THE NET PR OFIT AT 1,25,000/- OVER AND ABOVE WHICH WAS DECLARED BY THE ASSESSEE. ACCORDING TO THE LD. COUNSEL THIS BEING A BLOCK ASS ESSMENT UNDER SECTION 153C OF THE ACT, THE ASSESSMENT HAS TO BE M ADE ONLY ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE O F SEARCH OPERATION. IN THE ABSENCE OF ANY MATERIAL FOUND D URING THE COURSE OF SEARCH OPERATION, ACCORDING TO THE LD. COUNSEL T HERE CANNOT BE ANY ADDITION ON ESTIMATION BASIS. 15 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 20. ON THE CONTRARY, SHRI A.V. SHREEKANTH, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE ADMITTED LY HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS. THE TURNOVER OF THE ASSESSEE EXCEEDED THE PRESCRIBED LIMIT UNDER SECTION 44AB OF THE ACT. THEREFORE, IT IS A CLEAR CASE OF SUPPRESSION OF THE INCOME, BY NOT MAINTAINING THE BOOKS OF ACCOUNTS. THEREFORE, THE ASSESSING OFFICER FOUND THAT ESTIMATION OF NET PROFIT AT 0.75 % BY THE ASSESSEE WAS NOT SUPPORTED BY ANY RECORDS. ACCORDINGLY, TH E ASSESSING OFFICER REJECTED THE ESTIMATION MADE BY THE ASSESSE E AND THE NET PROFIT WAS ESTIMATED AT 1.325% ON THE BASIS OF THE PROFIT DECLARED BY THE ASSESSEES HUSBAND SHRI P. ANBAZHAGAN. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE BLOC K ASSESSMENT UNDER SECTION 153C WAS FRAMED CONSEQUENT TO THE SEA RCH OPERATION MADE IN THE CASE OF SHRI P. ANBAZHAGAN. THEREFORE THE ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY TO TH E MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. COMPARISON OF THE NET PROFIT WITH THAT OF THE SIMILARLY PLACED TRADERS CAN BE MA DE IN THE REGULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT. WHEN T HE ASSESSMENT 16 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 WAS FRAMED UNDER SECTION 153C OF THE ACT, COMPARING THE PROFIT RATIO OF THE SIMILARLY PLACED TRADERS CANNOT BE MAD E IN THE ABSENCE OF ANY SEARCH MATERIAL. THE MATTER WOULD STAND DI FFERENTLY IN CASE THE REVENUE AUTHORITIES FOUND SOME MATERIAL REGARDI NG THE SUPPRESSION OF SALE BY THE ASSESSEE. MERE NON-MAIN TENANCE OF BOOKS OF ACCOUNTS AND FAILURE OF THE ASSESSEE TO GE T THE BOOKS OF ACCOUNTS AUDITED CANNOT BE A REASON FOR ESTIMATING THE NET PROFIT BY COMPARING THE SAME WITH THAT OF THE SIMILARLY PLACE D TRADERS. THEREFORE THIS TRIBUNAL IS UNABLE TO UPHOLD THE ORD ERS OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ADDITION MADE BY THE ASSESSING OFFICE R IS DELETED. 22. NOW COMING TO THE CASE OF SHRI P. ANBAZHAGAN, T HE REVENUE FILED THE APPEAL FOR THE ASSESSMENT YEAR 20 01-02 IN ITA NO.2183 OF 2013. 23. SHRI A.V. SHREEKANTH, THE LD. DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT THE ASSESSEE HAS RECEIVED 20,00,000/- IN CASH AND KIND, CONSEQUENT TO THE RETIREMENT FROM PARTNERSHIP FIRM M/S. ANBURAJ TEXTILES. THE ASSESSEE WAS EXAMINED U NDER SECTION 17 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 132(4) OF THE ACT ON 10.11.2005 IN THE COURSE OF SE ARCH OPERATION. IN RESPONSE TO QUERY NOS.23 & 24, THE ASSESSEE EXPL AINED THAT HE RECEIVED A SUM OF 20,00,000/- ON RETIREMENT FROM THE PARTNERSHIP FIRM M/S. ANBURAJ TEXTILES BY CHEQUE, CASH AND IN K IND. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSEE DENIE D THE STATEMENT MADE DURING THE COURSE OF SEARCH OPERATIO N. THE ASSESSING OFFICER FOUND THAT THE STATEMENT MADE DUR ING THE COURSE OF SEARCH OPERATION REMAINS AS EVIDENCE. ACCORDING LY, THE ASSESSING OFFICER MADE AN ADDITION OF 16,92,483/- AS A BENEFIT ARISING TO THE ASSESSEE UNDER SECTION 28(I)(IV) OF THE ACT. FURTHER THE CIT (APPEALS) BY PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHRI S. SELVARAJ IN ITA NOS.1258 TO 126 4 DELETED THE ADDITION. PLACING THE RELIANCE ON THE JUDGMENT OF THE HIMACHAL PRADESH HIGH COURT IN HIRASING AND CO. VS. CIT (HP) 230 ITR 791, THE LD. D.R., SUBMITTED THAT ADDITION CAN BE MADE O N THE BASIS OF THE ADMISSION MADE BY THE ASSESSEE, WHEN THE ASSESS EE MADE A CONFESSION DURING THE COURSE OF SEARCH OPERATION. THE CIT (APPEALS) CAN STILL RETAIN THE ADDITION MADE BY THE ASSESSING OFFICER. REFERRING TO THE JUDGMENT OF THE KERALA H IGH COURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KER ALA 91 ITR 18, 18 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 THE LD. D.R., SUBMITTED THAT ADMISSION IS A PIECE O F EVIDENCE WHICH CANNOT BE IGNORED AT ALL. THEREFORE THE CIT (APPEA LS) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFI CER, BY PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHRI S. SELVARAJ. 24. THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFI CER THAT HE RECEIVED 20,00,000/- ON RETIRING FROM PARTNERSHIP FIRM M/S. ANBURAJ TEXTILES. THE CIT (APPEALS) FOUND THAT THIS TRIBUN AL EXAMINED AN IDENTICAL ISSUE IN THE CASE OF SHRI S. SELVARAJ. T HE ABOVE SAID SHRI S. SELVARAJ IS NONE OTHER THAN THE PERSON WHO TOOK OVER THE BUSINESS OF M/S. ANBURAJ TEXTILES AFTER PAYING 20,00,000/- TO EACH OF THE PARTNERS. THIS TRIBUNAL FOUND THAT THE ADDI TION MADE BY THE ASSESSING OFFICER WAS WITHOUT ANY BASIS. REFERRING TO THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHRI S. SELVARAJ, THE LD. REPRESENTATIVE FOR THE REVENUE SUBMITTED THAT THERE WAS NO MATERIA L OTHER THAN THE STATEMENT RECORDED FROM ONE OF THE PARTNER SHRI P. EASWARAN. THIS TRIBUNAL FURTHER FOUND THAT ALL THE PAYMENTS MADE B Y THE SAID SHRI S. SELVARAJ REFLECTS IN THE RESPECTIVE CAPITAL ACC OUNTS. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER TO THE E XTENT OF 40,00,000/- WAS DELETED IN THE CASE OF SHRI S. SELV ARAJ. 19 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 25. IN THIS CASE BEFORE US, THE ASSESSEE ADMITTED T HAT HE RECEIVED 20,00,000/- ON HIS RETIREMENT FROM M/S. ANBURAJ TEX TILES. THEREFORE IT IS A BENEFIT ARISING UNDER SECTION 28( I)(IV) OF THE ACT. HENCE THE CIT (APPEALS) IS NOT JUSTIFIED IN ALLOWIN G THE CLAIM OF THE ASSESSEE. 26. ON THE CONTRARY SHRI S. SRIDHAR, THE LD. COUN SEL FOR THE ASSESSEE SUBMITTED THAT IN THE CASE OF SHRI S. SELV ARAJ IN FACT WHO TOOK OVER THE BUSINESS OF M/S. ANBURAJ TEXTILES, TH IS TRIBUNAL FOUND THAT THERE WAS NO EVIDENCE OTHER THAN THE STATEMENT MADE BY ONE OF THE PARTNER SHRI P. EASWARAN. IN THIS CASE ALS O, THE ENTIRE ADDITION WAS MADE ONLY ON THE BASIS OF THE STATEMEN T SAID TO BE MADE BY THE ASSESSEE. IN THE ABSENCE OF ANY OTHER EVIDENCE, ACCORDING TO LD. COUNSEL THERE CANNOT BE ANY ADDITI ON FOR THE ASSESSMENT YEAR ON THE BASIS OF THE STATEMENT ALONE . 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THERE WAS A SEARCH OPERATION IN THE PREMISES OF THE ASSESSEE ON 10.11.2005. 20 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 FROM THE ORDER OF THE ASSESSING OFFICER, IT APPEARS THAT A SUM OF 37,03,851/- WAS FOUND AND SEIZED BY THE AUTHORITIES . THE ASSESSEE HAD ALREADY FILED RETURN ON 30.10.2001 BEF ORE THE DATE OF SEARCH, DISCLOSING A TOTAL OF 3,10,740/- WHICH INCLUDES AGRICULTURAL INCOME OF 50,600/-. THE SAME INCOME WAS RETURNED BY THE ASSESSEE CONSEQUENT TO THE NOTICE ISSUED BY THE ASS ESSING OFFICER UNDER SECTION 153A OF THE ACT. ACCORDING TO THE L D. COUNSEL, WHEN THE ASSESSEE FILED THE RETURN OF INCOME ON 30.10.20 01 IN THE REGULAR COURSE AND TIME LIMIT FOR ISSUE OF NOTICE UNDER SEC TION 143(2) OF THE ACT, EXPIRED, THE ASSESSMENT PROCEEDINGS WAS TERMIN ATED BY OPERATION OF LAW. IN OTHER WORDS, THE REGULAR ASSE SSMENT PROCEEDING IS NOT PENDING ON THE DATE OF THE SEARCH OPERATION. THEREFORE IT WOULD NOT ABATE. SINCE, THE REGULAR A SSESSMENT PROCEEDINGS ON THE RETURN OF INCOME FILED ON 30.10. 2001 CAME TO AN END BY OPERATION OF LAW, THE ASSESSING OFFICER HAS TO CONFINE HIMSELF ONLY TO THE MATERIAL FOUND DURING THE COURS E OF SEARCH OPERATION. IN THE CASE BEFORE US, ACCORDING TO LD. COUNSEL NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OPER ATION OTHER THAN THE SO CALLED STATEMENT SAID TO BE MADE BY THE ASSE SSEE IN THE COURSE OF EXAMINATION UNDER SECTION 132 (4) OF THE ACT. THE 21 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 QUESTION NOW ARISES FOR CONSIDERATION IS WHETHER TH ERE CAN BE AN ASSESSMENT UNDER SECTION 153A OF THE ACT FOR THE BL OCK PERIOD ON THE BASIS OF THE STATEMENT RECORDED DURING THE COUR SE OF SEARCH OPERATION UNDER SECTION 132 (4) OF THE ACT. IN TH E ABSENCE OF ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N, THE CIT (APPEALS) BY PLACING RELIANCE ON THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHRI S. SELVARAJ FOUND THAT THERE CANNOT BE ANY ADDITION ON THE BASIS OF THE STATEMENT ALL ALONE. IN FACT, FRO M THE ORDER OF THE CIT (APPEALS) IT APPEARS THAT THE ADDITION WAS MADE IN THE HANDS OF SHRI S. SELVARAJ UNDER SECTION 69C OF THE ACT, FOR UNDISCLOSED INVESTMENT. FROM THE ORDER OF THIS TRIBUNAL WHICH WAS REPRODUCED BY CIT (APPEALS), IT APPEARS THAT NO STATEMENT WAS RECORDED FROM THE SAID SHRI S. SELVARAJ, THE ADDITION WAS MADE ON LY ON THE BASIS OF THE STATEMENT MADE BY SHRI P. EASWARAN. THEREFORE THIS TRIBUNAL FOUND THAT THERE CANNOT BE ANY ADDITION ON THE BASI S OF THE STATEMENT RECORDED FROM THE SAID SHRI P. EASWARAN. 28. IN THE CASE BEFORE US, ADMITTEDLY THE STATEMEN T WAS RECORDED FROM THE ASSESSEE UNDER SECTION 132(4) OF THE ACT DURING THE COURSE OF SEARCH OPERATION. WHEN THE ASSESSEE ADMITS IN THE 22 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 COURSE OF SEARCH PROCEEDING WHILE EXAMINING UNDER S ECTION 132(4) OF THE ACT, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION, THE DECISION OF THIS BENCH OF THE TRIBUNAL IN SHRI S. SELVARAJ CANN OT COME TO RESCUE OF THE ASSESSEE. THE ASSESSEE HIMSELF ADMITTED DU RING THE COURSE OF EXAMINATION UNDER SECTION 132(4) OF THE ACT. T HEREFORE THE STATEMENT MADE BY THE ASSESSEE UNDER SECTION 132(4) HAS AN EVIDENTIARY VALUE. THE MATTER WOULD STAND DIFFERE NTLY IN CASE THE ADDITION WAS MADE ON THE BASIS OF THE STATEMENT MAD E BY THE THIRD PARTY. SINCE, THE ASSESSEE HIMSELF MADE THE STATEM ENT AND THERE IS NO REASON WHY SUCH STATEMENT MADE UNDER SECTION 132 (4) WAS DENIED SUBSEQUENTLY, THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT THE CIT (APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. ACCORDINGLY THE ORDER OF TH E CIT (APPEALS) IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS REST ORED. 29. NOW COMING TO THE ASSESSMENT YEAR 2005-06 IN T HE CASE OF M/S. ANBURAJ EXPORTS, THE ASSESSEE FILED THE APPEAL AGAINST THE ORDER OF CIT (APPEALS). 23 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 30. SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE ASSESSING OFFICER HAS ESTIMATED SUPPRESSIO N OF INCOME TO THE EXTENT OF 76,804/- WITHOUT ANY MATERIAL FOUND DURING THE COUR SE OF SEARCH OPERATION. ADMITTEDLY, THE SEARCH TOOK P LACE ON 10.11.2005. THE TIME LIMIT FOR FILING THE RETURN O F INCOME EXPIRED ON 31.07.2005. THE ASSESSEE APPARENTLY NOT FILED THE RETURN OF INCOME. THEREFORE THE ASSESSING OFFICER ESTIMATED THE PROFIT AT 1.18% AS WAS DONE FOR THE ASSESSMENT YEAR 2006-07. ACCORDING TO THE LD. COUNSEL, THE ADDITION MADE BY THE ASSESSING OFFICER IN THE ABSENCE OF ANY MATERIAL CANNOT BE SUSTAINED. 31. SHRI A.V. SHREEKANTH, THE LD. DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT THE ADDITION WAS ONLY IN RESPECT OF NET PROFIT TO THE EXTENT OF 74,870/-. ACCORDING TO THE LD. D.R.,, THE ASSESSEE ALL THE TIME DISCLOSED A LOW PROFIT OF 4.91%. FOR THE ASSE SSMENT YEAR 2005-06, ACCORDING TO THE LD. D.R., THE EARLIER AVE RAGE PROFIT WAS 6.03%. THE ASSESSING OFFICER HAS FOUND THAT THE AS SESSEE HAS INFLATED THE PURCHASE. THEREFORE THE ASSESSING OFF ICER ESTIMATED THE NET AVERAGE INCOME AT 1.18% AND WORKED OUT THE SUPPRESSION 24 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 OF INCOME AT 76,804/-. ACCORDING TO THE LD. D.R.,, THE ASSESSIN G OFFICER HAS RIGHTLY ESTIMATED THE SUPPRESSION OF IN COME. 32. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY THE SEARCH TOOK PLACE ON 10.11.2005. THE ESTIMATION OF INCOM E IS FOR THE ASSESSMENT YEAR 2005-06. THE TIME LIMIT FOR FILING THE RETURN OF INCOME EXPIRED ON 30.07.2005. FROM THE ORDER OF TH E ASSESSING OFFICER, IT APPEARS THAT THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06. THE ASSESS EE FILED THE RETURNS ON 23.07.2007, CONSEQUENT TO THE NOTICE ISS UED UNDER SECTION 153C OF THE ACT, DISCLOSING AGRICULTURAL IN COME OF 96,110/-. SINCE, THE ASSESSEE HAS NOT DISCLOSED THE INCOME IN THE REGULAR COURSE BY FILING A RETURN OF INCOME AND TIME LIMIT TO COMPLETE THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT HAS NOT EXPIRED, THIS TRIBUNAL IS OF THE CONSIDERED OPINION, THE ASSESSIN G OFFICER HAS RIGHTLY COMPARED THE AVERAGE PROFIT FOR THE ASSESSM ENT YEAR 2006- 07 AND ESTIMATED THE NET INCOME AT 1.18% FOR THE YE AR UNDER CONSIDERATION. THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER WAS RIGHTLY SUSTAINED BY THE CIT (APPEALS). THIS TRIBUNAL DID 25 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIES. ACCORDINGLY, THE SAME IS CONFIRMED. 33. NOW COMING TO ASSESSMENT YEAR 2006-07, IN THE C ASE OF M/S. ANBURAJ EXPORTS, THE ONLY ISSUE IS ADDITION OF 76,800/- MADE BY THE ASSESSING OFFICER. 34. SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE ASSESSING OFFICER ESTIMATED THE ADDITION A T 1.19% OF THE TOTAL TURNOVER OF 2,57,56,197/-. AFTER REDUCING THE NET PROFIT DISCLOSED BY THE ASSESSEE AT 0.89%, THE ASSESSING O FFICER ESTIMATED THE SUPPRESSION OF INCOME AT 76,800/-. ACCORDING TO THE LD. COUNSEL THERE IS NO MATERIAL AVAILABLE ON RECOR D FOR MAKING SUCH ESTIMATION. IN THE ABSENCE OF ANY MATERIAL, THE AS SESSING OFFICER OUGHT TO HAVE ACCEPTED THE NET PROFIT DISCLOSED BY THE ASSESSEE. 35. ON THE CONTRARY, SHRI A.V. SHREEKANTH, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSMENT YEAR U NDER CONSIDERATION IS 2006-07. THE SEARCH ADMITTEDLY TO OK PLACE ON 10.11.2005 AND TIME LIMIT FOR FILING RETURN OF INCO ME WAS NOT EXPIRED. 26 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 THEREFORE THE ASSESSING OFFICER HAS EXAMINED THE MA TTER ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. SINCE, THE COMPARISON OF PROFIT WAS MADE IN RESPECT OF THE ASSESSEES NET PR OFIT SHOWN IN THE EARLIER ASSESSMENT YEARS, THE CIT (APPEALS) HAS RIG HTLY CONFIRMED THE ASSESSMENT MADE BY THE ASSESSING OFFICER. 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CIT (APPEALS) COMPARED THE PROFIT RATIO OF THE ASSESSEE RIGHT FRO M THE ASSESSMENT YEARS 2001-02 TO 2006-07 AND FOUND THAT THERE WAS A MARGINAL DIFFERENCE BETWEEN THE PROFIT RATIO DISCLOSED IN TH E EARLIER ASSESSMENT YEAR AND FOR THE ASSESSMENT YEAR 2006-07 . ACCORDINGLY, THE ASSESSING OFFICER ESTIMATED THE PR OFIT AT 1.19% BEING THE AVERAGE FOR THE ASSESSMENT YEAR 2005-06. THE ASSESSING OFFICER HAS TAKEN THE PROFIT AT 1.18% WHI CH WAS CONFIRMED BY THE CIT (APPEALS). THIS TRIBUNAL HAS ALSO CONFIRMED THE ORDER OF THE CIT (APPEALS). THEREFORE FOR THE SAKE OF CONSISTENCY THE ORDER OF THE LOWER AUTHORITIES IS M ODIFIED AND THE ASSESSING OFFICER IS DIRECTED TO ESTIMATE THE PROFI T AT 1.18% INSTEAD OF 1.19%. 27 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 37. NOW COMING TO THE APPEAL OF SHRI P. ANBAZHAGAN FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO.2179/2013, THE FI RST ISSUE IS WITH REGARD TO SUPPRESSION OF NET PROFIT TO THE EXT ENT OF 1,50,000/-. 38. SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE ASSESSEE FILED THE RETURN OF INCOME FOR TH E ASSESSMENT YEAR 2006-07 ON 23.07.2007 DISCLOSING THE TOTAL INCOME O F 34,38,214/- INCLUDING AGRICULTURAL INCOME OF 61,500/-. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE DISCLOSED THE NET PROFIT AT 0 .75%. THE ASSESSING OFFICER WITHOUT ANY BASIS ESTIMATED THE P ROFIT AT 1.18% AND MADE AN ADDITION OF 1,50,000/-, IN THE ABSENCE OF ANY SEARCH MATERIAL. ACCORDING TO THE LD. COUNSEL THERE CANN OT BE ANY ADDITION. 39. ON THE CONTRARY, SHRI A.V. SHREEKANTH, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSMENT YEAR U NDER CONSIDERATION IS 2006-07 AND THE ADDITION MADE BY T HE ASSESSMENT YEAR WAS ON THE BASIS OF THE PROFIT RATIO DISCLOSED BY THE ASSESSEE IN THE EARLIER ASSESSMENT YEARS. FOR THE EARLIER SIX ASSESSMENT YEARS, 28 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 THE AVERAGE INCOME DISCLOSED BY THE ASSESSEE WAS 1. 18%. THE ASSESSING OFFICER HAS FOUND THAT THE ASSESSEE HAS D ISCLOSED ONLY 0.75% OF THE PROFIT DURING THE YEAR UNDER CONSIDERA TION. ACCORDINGLY, ESTIMATED THE PROFIT AT 1.18% AND DETE RMINED THE SUPPRESSION AT 1,50,000/-. THEREFORE THE CIT (APPEALS) HAS RIGHTL Y CONFIRMED THE APPEAL MADE BY THE ASSESSING OFFICER. 40. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AVERA GE INCOME FOR EARLIER SIX YEARS COMES TO 1.18%. THIS IS NOT IN D ISPUTE. THE LAST THREE YEARS AVERAGE COMES TO 1.11%. THIS IS ALSO N OT IN DISPUTE. THE ASSESSEE HAS DISCLOSED ONLY 0.71%. THE ASSESSI NG OFFICER HAS COMPUTED THE SUPPRESSION OF INCOME BY TAKING TH E DIFFERENCE OF AVERAGE INCOME OF EARLIER YEARS AND THE INCOME DISC LOSED DURING THE YEAR UNDER CONSIDERATION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER COMPUTED THE AVE RAGE INCOME OF THE ASSESSEE BY COMPARING THE PROFIT RATIO DISCLOSE D BY THE ASSESSEE HIMSELF. THEREFORE THERE CANNOT BE ANY RE ASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIES, ESPECIALLY WHEN THE 29 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 ASSESSEE HAS NOT MAINTAINED THE BOOKS OF INCOME. T HEREFORE THIS TRIBUNAL SUSTAINS THE ORDER OF THE LOWER AUTHORITIE S. 41. NEXT ROUND OF APPEAL IS WITH REGARD TO ADDITION OF 36,16,950/-. 42. SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE CASH BALANCE AS ON 31.09.1999 WAS 36,16,950/-. THE DEPOSIT OF 55,00,000/- WAS MADE ON 16.09.2005. ACCORDING TO T HE LD. COUNSEL, THE ASSESSING OFFICER FOUND THAT THE A SSESSEE CANNOT EXPLAIN THE OPENING BALANCE. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE WAS ENGAGED IN UNREGISTERED AND UNACCOUNTE D MONEY LENDING BUSINESS WHICH HAS EVIDENCE BY THE DIARY FO UND DURING THE SEARCH OPERATION. THIS DIARY WAS NOT CONSIDERED B Y THE ASSESSING OFFICER ON THE GROUND THAT, IT DOES NOT RELATE TO A NY BUSINESS TRANSACTION. ACCORDING TO THE LD. COUNSEL, WHEN T HE DIARY WAS FOUND DURING THE COURSE OF SEARCH OPERATION, THE CR EDIT FOUND IN THE DIARY CANNOT BE IGNORED BY THE AUTHORITIES BELOW. ACCORDING TO THE LD. COUNSEL, THE UNACCOUNTED MONEY LENDING BUSINESS CARRIED OUT BY THE ASSESSEE WAS UNRECOGNIZED BY THE AUTHORITIES BELOW. SINCE 30 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 THE DIARY WAS FOUND DURING THE SEARCH OPERATION, AC CORDING TO THE LD. COUNSEL THE SAME CANNOT BE IGNORED. 43. ON THE CONTRARY, THE LD. DEPARTMENTAL REPRESENT ATIVE SUBMITTED THAT EVEN THOUGH THE ASSESSEE CLAIMED THA T THE ASSESSEE HAD CARRIED OUT UNRECOGNIZED MONEY LENDING BUSINESS , THE DIARY DOES NOT DISCLOSE ANYTHING. THE DIARY DOESNT REF LECT THE BUSINESS ACTIVITY CARRIED OUT BY THE ASSESSEE. THE DIARY D OESNT EXPLAIN THE OPENING BALANCE REFERRED THEREIN, EVEN THOUGH THE C LOSING BALANCE WAS REPEATED THREE TIMES. IN THE ABSENCE OF ANY M ATERIAL FOR THE OPENING BALANCE, THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE AND FOUND THAT THE CASH BALANCE AS ON 31.0 9.1999 HAS TO BE TAKEN AS UNDISCLOSED INCOME OF THE ASSESSEE. TH EREFORE CIT (APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION MADE B Y THE ASSESSING OFFICER. 44. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT THAT THE DIARY WAS FOUND DURING THE COURSE OF SEARCH OPERATION IS NOT IN DISPUTE. FROM THE ORDER OF THE ASSESSING OFFICER THERE WAS S OME REFERENCE 31 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 ABOUT THE BUSINESS ACTIVITY FOR THE PERIOD FROM 02. 12.1997 TO 21.07.1998. THIS IS APPARENT FROM THE OBSERVATION MADE BY THE ASSESSING OFFICER AT PAGE 5 OF THE IMPUGNED ORDER THE ASSESSEE CLAIMS THAT THEY WERE DOING UNREGISTER ED AND UNACCOUNTED MONEY LENDING AS EVIDENCED BY THE DIARY . BUT THE DIARY DOES NOT PROVE ANYTHING. IT CANNOT BE REGARD ED AS AN ACCOUNT BOOK. THERE IS NO PROOF THAT IT RELATES TO ANY BUS INESS DONE BY THE ASSESSEE. AND IF AT ALL ANY BUSINESS IS DONE, IT DOES NOT EXPLAIN WHY IT IS RESTRICTED TO THE PERIOD 02/12/97 TO 29/0 7/98 ONLY AND WHY IT IS RECORDED IN A 1997 DIARY AND THAT TOO IN THE MON THS OF APRIL & MAY 1997. IT ALSO DOES NOT EXPLAIN WHY NO OPENING BALANCE IS MENTIONED NOTWITHSTANDING THAT THE CLOSING BALANCE IS REPEATED THREE TIMES 45. IN VIEW OF THE ABOVE OBSERVATION, IT MAY NOT BE CORRECT TO SAY THAT THE ASSESSEE WAS NOT CARRYING ANY UNACCOUNTED BUSINESS. THERE IS A PRIMA FACIE EVIDENCE TO INDICATE THAT THE ASSESSEE IS CARRYING ON SOME ACTIVITY FOR THE PERIOD 02.12.1997 TO 21.07.1998. WHAT ACTUALLY WAS DONE BY THE ASSESSEE WAS TO BE EX AMINED BY THE ASSESSING OFFICER AFTER GIVING OPPORTUNITY TO T HE ASSESSEE. 32 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 ACCORDINGLY THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE-EXAMINATION IN THE LIGHT OF THE MATERIAL AVAILAB LE ON RECORD AND THEREAFTER DECIDE IN ACCORDANCE WITH LAW AFTER GIVI NG REASONABLE OPPORTUNITY TO THE ASSESSEE. 46. THE NEXT GROUND OF APPEAL IS ADDITION OF 4,00,000/- UNDER SECTION 68 OF THE ACT. 47. SHRI S. SRIDHAR, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT IN FACT THE CAPITAL ACCOUNT WAS CREDITED ON TR ANSFER FROM M/S. SRI DURGA TEXTILES WHICH IS A PROPRIETORSHIP C ONCERN OF THE ASSESSEE. THERE WAS A JOURNAL ENTRY FOR SUCH TRANS ACTION. THEREFORE THE CIT (APPEALS) IS NOT JUSTIFIED IN CON FIRMING THE ORDER OF THE ASSESSING OFFICER. THE LD. COUNSEL FURTHER SUB MITTED THAT THE CIT (APPEALS) OUGHT TO HAVE ALLOWED TELESCOPING SIN CE IT IS AN INVESTMENT MADE BY THE ASSESSEE. 48. ON THE CONTRARY, SHRI A.V. SHREEKANTH, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THERE WAS A CREDIT OF 4,00,000/- IN 33 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 THE CAPITAL ACCOUNT OF THE ASSESSEE. THE ASSESSEE EXPLAINED THAT A SUM OF 4,00,000/- WAS TRANSFERRED FROM HIS CAPITAL ACCOUNT IN M/S. SRI DURGA TEXTILES. ON VERIFICATION, THE ASSE SSING OFFICER FOUND THAT THERE WAS NO DEBIT IN THE ACCOUNT OF M/S. SRI DURGA TEXTILES. THE ASSESSING OFFICER FURTHER FOUND THAT THERE NO M ATCHING ENTRY IN THE BOOKS OF ACCOUNTS. ACCORDINGLY A SUM OF 4,00,000/- WAS TREATED AS UNEXPLAINED INCOME UNDER SECTION 68 OF T HE ACT. 49. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS SEEN FROM THE ASSESSMENT ORDER, IT APPEARS THAT THE CREDIT WAS MA DE BY CASH. EVEN THOUGH, THE ASSESSEE CLAIMS THAT IT WAS A TRAN SFER FROM M/S. SRI DURGA TEXTILES, THERE WAS NO DEBIT ENTRY I N THE BOOKS OF ACCOUNTS OF M/S.SRI DURGA TEXTILES. THE ASSESSEE APPEARS TO HAVE PROPOSED AN ARITHMETICAL TALLY INSIDE THE ACCOUNT B Y RELYING ON JOURNAL ENTRIES. WHEN THE CAPITAL ACCOUNT DISCLOS ED THE INVESTMENT BY CASH, THIS TRIBUNAL IS OF THE CONSIDERABLE OPINI ON THAT THE CLAIM MADE BY THE ASSESSEE THAT IT WAS TRANSFERRED FROM M /S. SRI DURGA TEXTILES IS AN AFTERTHOUGHT. THEREFORE THE CIT (A PPEALS) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 34 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 50. THE NEXT ISSUE ARISES FOR CONSIDERATION IS ADDI TION OF 31,91,834/- TOWARDS EXCESS STOCK. 51. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AT THE TIME OF SEARCH, THE PHYSICAL STOCK WAS QUANTIFIED AT 57,24,397/-. HOWEVER BOOKS OF ACCOUNTS DISCLOSES THE STOCK AT 25,32,563/-. THE DIFFERENCE OF STOCK TO THE EXTENT OF 31,91,834/- WAS TAKEN AS EXCESS STOCK BY THE ASSESSING OFFICER. ACCORDING TO THE LD. COUNSEL, THE CREDIT PURCHASE WERE NOT TAKEN IN TO C ONSIDERATION. THEREFORE THE CIT (APPEALS) IS NOT JUSTIFIED IN CON FIRMING THE ORDER OF THE ASSESSING OFFICER. 52. ON THE CONTRARY, SHRI A.V. SHREEKANTH, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ADMITTEDLY THERE WAS A DIFFERENCE BETWEEN THE PHYSICAL STOCK VERIFIED BY THE DEPARTME NT AND THE STOCK DISCLOSED IN THE BOOKS OF ACCOUNTS. THE ASSESSEE APPEARS TO HAVE EXPLAINED BEFORE THE ASSESSING OFFICER THAT TH E CLOSING STOCK WAS AN AGGREGATE STOCK OF 4 CONCERNS. IF THE STOC KS OF ALL THE 4 CONCERNS WERE TAKEN IN TO CONSIDERATION THERE MAY N OT BE ANY 35 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 EXCESS OF STOCK. THE ASSESSEE CANNOT PRESUME THAT THE SOCK OF 52,66,344/- AS ON 31.03.2005 CONTINUE TO EXIST FOR ALL THE YEARS UNDER CONSIDERATION. THE CLOSING STOCK AS ON 31.0 3.2005 MAY NOT HAVE ANY IMPACT ON THE EXCESS STOCK FOUND BY THE AU THORITIES DURING THE COURSE OF SEARCH OPERATION. THE CIT (APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 53. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING T HE COURSE OF SEARCH OPERATION, THE PHYSICAL STOCK OF THE ASSESSE E WAS QUANTIFIED AND IT WAS FOUND THAT THERE WAS EXCESS STOCK. IT I S NOT IN DISPUTE THAT THE EXCESS STOCK WAS COMPUTED AFTER CONSIDERIN G THE OPENING BALANCE, PURCHASES AND OVERHEAD EXPENDITURE FURNISH ED BY THE ASSESSEE. THEREFORE THE CLAIM OF THE ASSESSEE THA T THE AGGREGATE CLOSING STOCK OF ALL THE 4 CONCERNS WERE PUT TOGETH ER, THERE MAY NOT BE ANY DIFFERENCE IS MISCONSTRUED. SINCE, THE ASS ESSING OFFICER HAS TAKEN THE OPENING STOCK, PURCHASES, OVERHEAD EX PENDITURE FOR ALL THE 4 CONCERNS, THIS TRIBUNAL IS OF THE CONSIDE RED OPINION THAT THE EXCESS STOCK OF 31,91,834 WAS RIGHTLY TAKEN AS BUSINESS INCOME OF 36 I.T.A. NOS.2174 TO 2178/MDS/2013 I.T.A. NO.2183/MDS/2013 I.T.A. NOS.2172 & 2173/MDS/2013 I.T.A. NO.2179/MDS/2013 THE ASSESSEE. THEREFORE THIS TRIBUNAL HAS NO REAS ON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIES. THE SAME IS CONFIRMED. 54. TO SUM UP THE RESULT, THE ASSESSES APPEALS IN I TA NOS. 2174 TO 2178 OF 2013 ARE ALLOWED, ITA NOS. 2172 & 2173 O F 2013 ARE DISMISSED, ITA NO.2179 OF 2013 IS PARTLY ALLOWED AN D THE REVENUES APPEAL IN ITA NO.2183 OF 2013 IS ALLOWED. ORDER PRONOUNCED ON 31 ST JANUARY, 2017 AT CHENNAI. SD/- SD/- ( . ) ( . . . ) (ABRAHAM P. GEORGE) (N .R.S. GANESAN) / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, /DATED, THE 31 ST JANUARY, 2017. JR. $ ' % & % /COPY TO: 1. '% $ /ASSESSEES 2. ASSESSING OFFICER 3. ()* ( )/CIT(A) 4. ()* /CIT, 5. ' % /DR 6. +, /GF.