The DCIT, Circle-9, Surat V. M/s. Krishna Corporation, Surat

ITA 2200/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0327 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 02-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Revised return
• Section: 133A; 145; 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA.NO.2200/AHD/2011 / ASSTT. YEAR: 2008-2009 DCIT, CIR.9 SURAT. VS M/S.KRISHNA CORPORATION 7, MANINAGAR SOCIETY A.K. RPAD, SURAT. PAN : AAHFK 8021 C ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI JAMES KURIAN, SR.DR ASSESSEE BY : NONE / DATE OF HEARING : 24/08/2016 / DATE OF PRONOUNCEMENT: 07/10/2016 $%/ O R D E R PER RAJPAL YADAV, ACCOUNTANT MEMBER REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-V, SURAT DATED 10.5.2011 PASSED FOR THE A SSTT.YEAR 2008-09. 2. THIS APPEAL WAS LISTED ON THE BOARD FOR THE FIRS T TIME ON 13.2.2015. A NOTICE OF HEARING WAS ISSUED TO BOTH THE PARTIES FI XING THE DATE OF HEARING AS 27.3.2015. THEREAFTER, THE APPEAL WAS LISTED ON TE N DIFFERENT OCCASIONS. OUT OF THESE TEN OCCASIONS, ON ONE OCCASION, BENCH DID NOT FUNCTION I.E. ON 11.5.2015. ON REST OF THE OCCASIONS, HEARING WAS A DJOURNED ON ACCOUNT OF NON-APPEARANCE OF THE ASSESSEE. PERUSAL OF RECORD WOULD INDICATE THAT NOTICES WERE NOT ONLY ISSUED BY REGISTERED POST, RATHER, TH E NOTICES HAVE BEEN SERVED ITA NO.2200/AHD/2011 2 THROUGH THE DEPARTMENT. COMPLETE MATERIAL, EFFECTI NG THE SERVICES OF NOTICES UPON THE ASSESSEE IS AVAILABLE ON RECORD. ON THE L AST OCCASION, THE APPEAL WAS LISTED ON 4.7.2016. SHRI ASHWIN PARIKH WHO WAS PRO SECUTING THE PROCEEDINGS BEFORE THE LD.REVENUE AUTHORITIES BELOW, APPLIED FO R AN ADJOURNMENT. THE APPLICATION OF THE TAX CONSULTANT READ AS UNDER: DATE : 04.07.2016 TO, THE MEMBERS OF THE INCOME-TAX APPELLATE TRIBUNAL BENCH-B AHMEDABAD. REG: M/S.KRISHAN CORPORATION C/O.M/S.ASHWIN PAREIKH & CO. CHARTERED ACCOUNTANT 401-404, BONISTA RAJHANS B/GH. RAM CHOW TEMPLE GHOD-DOD ROAD, SURAT. APPEAL: ITA-2200/AHD/2011 SUB: HEARING OF APPEAL AS ON 04.07.2016 BEFORE B BENCH-REQUEST FOR ADJOURNMENT. A.Y. 2008/09 HONBLE SIR, HEARING IN THE ABOVE CASES ARE FIXED ON TODAY BEFO RE B BENCH. SINCE OFFICE OF THE ASSESSEE IS CLOSED, PREPARATION OF NECESSARY DETAILS REQUIRES SOMETIME. I REGRET TO REQUEST YOUR HONOUR TO KINDLY ALLOW A TIME OF 15 DAYS AND OBLIGE. THANKING YOU YOURS FAITHFULLY FOR ASHIWN PAREIKH & CO. CHARTERED ACCOUNTANTS SD/ ITA NO.2200/AHD/2011 3 3. ON THE REQUEST OF THE ASSESSEE, HEARING WAS ADJO URNED FOR 24.8.2016. BUT AGAIN ON 24.8.2016 NONE HAS APPEARED. FACED WI TH THIS SITUATION, WE HAVE HEARD THE APPEAL EX PARTE QUA THE ASSESSEE WITH THE ASSISTANCE OF THE LD.DR. 4. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN ACCEPTING THE BOOK RESULT OF THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 69,90,011/- ON ACCOUNT OF SUPPRESSION OF INCOME ON SHOP SALES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 4. IT IS, THEREFORE, PRAYED THAT THE APPELLATE ORDE R OF THE LD.CIT(A) MAY BE CANCELLED AND THE ORDER OF THE AO MAY BE UPH ELD. 5. OUT OF THE ABOVE GROUNDS, GROUND NO.3 AND 4 ARE GENERAL GROUNDS OF APPEAL, WHICH DO NOT CALL FOR RECORDING OF ANY SPEC IFIC FINDING. THE GROUND NOS.1 AND 2 ARE INTER-CONNECTED WITH EACH OTHER. UNDER GROUND NO.1, IT HAS TO BE DECIDED WHETHER BOOKS OF ACCOUNTS OF THE ASSESSE E WERE RELIABLE AND OUGHT NOT TO HAVE BEEN REJECTED BY THE LD.AO. IF THE BOO KS ARE TO BE REJECTED, THEN WHAT ADDITION COULD BE MADE IN THE TOTAL INCOME OF THE ASSESSEE. THIS ASPECT HAS BEEN CHALLENGED IN GROUND NO.2. 6. WE TAKE BOTH THESE GROUNDS TOGETHER. 7. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS FIRM ENGAGED IN THE BUSINESS OF DEVELOPMENT RESIDENTIAL TOWNSHIP. IT H AS FILED ITS RETURN OF INCOME ON 27.9.2008 DECLARING TOTAL INCOME AT RS.2,52,67,9 93/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. A SURVEY UNDER SECTION 133A WAS ITA NO.2200/AHD/2011 4 CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 13.9 .2007. DURING THE COURSE OF SURVEY, THE DEPARTMENT LAID ITS HAND ON A DIARY EXH IBITING ON-MONEY RECEIVED BY THE ASSESSEE ON SALE OF FLATS AND SHOPS, AND ADD ITIONAL INCOME AT RS.2,13,20,000/- WAS DECLARED, WHICH ACCORDING TO T HE ASSESSEE, WAS OFFERED FOR TAXATION. ON SCRUTINY OF THE ACCOUNTS, IT REVE ALED TO THE AO THAT THE ASSESSEE HAS SHOWN GROSS-TURNOVER OF RS.12,67,59,02 5/- AND DECLARED A GP OF RS.1,07,56,252/-, IN TERMS OF PERCENTAGE, IT WAS DE CLARED AT THE RATE OF 8.49% OF THE GROSS TURNOVER. THE GP IN THE IMMEDIATELY P RECEDING YEAR DECLARED BY THE ASSESSEE AT 14% OF THE GROSS-TURNOVER. THUS, T HERE WAS A DECLINE IN THE GP AT THE RATE OF 5.51%. THE LD.AO HAS CONFRONTED THE ASSESSEE TO SHOW REASONS FOR DECLINE IN SUCH GP. IN RESPONSE TO THE QUERY OF THE AO, A DETAILED REPLY WAS SUBMITTED BY THE ASSESSEE. THE LD.AO HAS SUMMARIZED THE REASONS SHOWN BY THE ASSESSEE ON PAGE NO.9 AND 10 OF THE AS SESSMENT ORDER. EXPLANATION OF THE ASSESSEE SUMMARIZED BY THE AO RE ADS AS UNDER: A SUMMARY OF THE SUBMISSION OF THE ASSESSEE AS CLEAR FROM ABOVE IN SHORT IS MENTIONED BELOW:- [A] THE ASSESSEE NOW DISPUTES ITS OWN GP FOR A Y 2007-08 (14 %) [B] THE ASSESSEE IS CLAIMING THAT THE BANK INT EREST COMPONENT HAS BEEN WRONGLY CONSIDERED THE G P WORKING FOR AY 2007 -08 AND 2008- 09. [C] THE ASSESSEE CLAIMS THAT THE CORRECT G P W ORKING SHOULD BE PARTICULARS A.Y. 2007/08 A.Y. 2008/09 SALES 5,12,88,475 12,67,59,025 GROSS PROFIT EXCLUDING INTEREST AND INCOME DISCLOSED 91,49,745 17.84% 1,88,82,876 14.90% [D] THE ASSESSEE ACCEPTS THAT THE CORRECT DIFFERENC E IN GROSS PROFIT IS 2.94% AS COMPARED TO A.Y, 2007/08. ITA NO.2200/AHD/2011 5 [E] THE ASSESSEE CLAIMS THAT THERE IS A DIFFERENCE IN THE SALE OF SHOPS (RS. 700 PER SQ. FTS) AND FLATS (RS. 525/- PER SQ. FTS) . IT CLAIMS THAT THERE WAS A SALE OF SHOP IN A Y 2007-08 WHICH WAS N IL IN AY 2008-09 AND HENCE, THE G P WAS HIGHER. THE NET EXCESS PROFI T RS. 34,02,000/- WAS MORE DUE TO SALE OF SHOPS. [F] THEREFORE, EXCLUDING THE SALE OF SHOPS THE G P FOR AY 2007-08 WOULD BE 12% INSTEAD OF 17. 84%( EXCLUDING BANK INT EREST ). THEREFORE, THE GROSS PROFIT DURING THE YEAR HAS NOT REDUCED AN D HENCE, DECISION OF THE ITAT AHMEDABAD IN THE CASE OF WHITELINE CHEMICA LS IN ITA NO. 3509/A/2004 IS NOT APPLICABLE. [G] THE ASSESSEE CLAIMS THAT EVEN IF THERE WAS FALL IN G P IT IS ENTITLED TO HAVE A SET-OFF AGAINST THE INCOME DISCLOSED AS THE ASSESSEE IS ENTITLED TO TELESCOPE THE FALL IN GROSS PROFIT AGAINST THE INCO ME DISCLOSED. [H] THE DECISION OF THE WHITELINE CHEMICALS IS NOT APPLICABLE SINCE IN THAT CASE THE ASSESSEE HAD PROFIT DURING THE PRE SU RVEY PERIOD AND HAD SHOWN A HUGE LOSS WIPING OFF THE PROFIT IN A PRE-SU RVEY PERIOD . IN THE CASE OF ASSESSEE THE PROFIT IN POST SURVEY PERIOD I S HIGHER THAN PROFIT IN PRE-SURVEY PERIOD. THE ASSESSES HAS FILED THE G P WORKING FOR PRE - AN D POST SURVEY PERIOD. THE GP WORKING IS REPRODUCED AS BELOW :- G P WORKING FOR PRE AND POST SURVEY PERIOD( DATE OF SURVEY 11. 09.2007). DEBIT PRE SURVEY AMOUNT POST SURVEY AMOUNT CREDIT PRE SURVEY AMOUNT POST SURVEY AMOUNT TO OPENING WORK IN PROGRESS 84,81,968 4,05,44,500 BY SALES FLATS & SHOPS 3,14,55,675 9,53,03,350 TO CONSTRUCTIO N EXPENSES 6,14,90,707 11,15,78,906 TO GROSS 46,35,052 1,42,47,824 CLOSING 4,05,44,500 7,10,67,880 ITA NO.2200/AHD/2011 6 PROFIT WORK IN PROGRESS TOTAL 7,20,00,175 16,63,71,230 7, 20,00,175 1 6,63, 71, 230 EXPENSES 39,80,385 1,55,33,423 BY GROSS PROFIT 46,35,052 1,42,47,824 NET PROFIT 6,54,667 2,01,58,225 OTHER INCOME 0 12324 TOTAL 46,35,052 3,56,91,648 46,35,052 3,56,91,648 4.4 AS PER THE ABOVE DATA FILED BY THE ASSESSEE, T HE G P IS CLAIMED TO BE AT 14.74% IN THE PRE SURVEY PERIOD AND 14.95% IN THE POST SURVEY PERIOD EXCLUDING THE BANK INTEREST, AS EXPLAINED AB OVE, IT MAY BE NOTED HERE THAT THE ASSESSEE HAS ACCEPTED THAT THE G P FO R AY 2007-08 EXCLUDING BANK INTEREST WAS 17.84% AND THE NET REDU CTION IN GP AS COMPARED TO A Y 2007-08 WAS AT LEAST 2.94%. 8. THE LD.AO HAS REJECTED BOOK RESULTS OF THE ASSES SEE AND ESTIMATED THE GP AT THE RATE OF 14% AND WORKED OUT THE GP ADDITIO N AT RS.1,37,99,000/-. 9. ON APPEAL, THE LD.CIT(A) DID NOT CONCUR WITH THE AO ABOUT THE REJECTION OF BOOK RESULTS. SHE HAS ACCEPTED THE CO NTENTIONS OF THE ASSESSEE THAT THERE ARE NO SPECIFIC DEFECTS IN THE BOOKS WHI CH CAN PREVENT THE AO TO COMPUTE TRUE INCOME OF THE ASSESSEE. SIMILARLY, AS FAR AS QUANTIFICATION OF THE AMOUNT AT RS.1,37,99,000/- IS CONCERNED, THE LD.CIT (A) HAS OBSERVED THAT IT IS AN INCORRECT QUANTIFICATION. ACCORDING TO THE LD.C IT(A), THE ALLEGED DIFFERENCE BETWEEN THE GP DECLARED BY THE ASSESSEE AS WELL AS CALCULATED BY ITA NO.2200/AHD/2011 7 THE AO COULD BE RS.69,90,011/-. THE FINDING OF THE CIT(A) ABOUT POINTING OUT INCORRECT COMPUTATION OF THE AMOUNT HAS BEEN RE CORDED IN PARA 6.3 OF THE ORDER. IT IS PERTINENT TO TAKE NOTE OF THIS FINDIN G: 6.3. I HAVE CAREFULLY GONE THROUGH THE SUBMISSION OF APPELLANT AND ASSESSMENT ORDER. THERE IS A MISTAKE IN WORKING OF AMOUNT OF RS. 1,37,99,000/- ON PAGE 20 OF THE ASSESSMENT ORDER. T HE ASSESSING OFFICER HAS WORKED OUT THE GROSS PROFIT OF THE YEAR AT RS. 1,77,46,2637- BY APPLYING GROSS PROFIT RATE OF 14% OF A.Y. 2007/0 8 AND MADE THE DEDUCTIONS AS UNDER : 1. GROSS PROFIT OF A.Y. 2007/08 @ 14% OF RS. 12, 67, 59, 025/- - RS. 1,77, 46, 263 2. DISCLOSURE - RS. 2,13,20, 000 TOTAL RS. 3, 90, 66, 263 3. INCOME SHOWN IN THE E-RETURN FILED ON 27.09.2008 - RS. 2, 52, 67, 263 RS. 1,37, 99, 000 THE ASSESSING OFFICER HAS, WORKED OUT GROSS PROFIT INCLUDING DISCLOSURE BY APPLYING 14% GROSS PROFIT RATE AT RS. 3,90,66,263/--, FROM THIS FIGURE HE REDUCED THE NET PROF IT OF RS. 2,52,67,263/- WHICH IS THE RETURNED INCOME AND NOT THE GROSS PROF IT SHOWN IN THE REGULAR BOOKS OF ACCOUNT. THE GROSS PROFIT SHOWN IN THE BOOKS OF ACCOUNT INCLUDING DISCLOSURE IS RS. 3,20,76,252/-(R S.1,07,56,252/-+ RS. 2,13,20,000/-). THEREFORE, THE ALLEGED DIFFERENCE W ORKS OUT TO RS. 69,90,011/- AND THE FIGURE OF 1,37,99,000/- IS NOT CORRECT. 10. WITH THE ASSISTANCE OF THE LD.DR, WE HAVE PERUS ED THE RECORD. BEFORE EMBARKING UPON AN INQUIRY ON THE FACTS OF THE PRESE NT CASE, WE DEEM IT PERTINENT TO APPRAISE OURSELVES WITH THE POSITION O F LAW IN THE INCOME TAX ACT FOR DECIDING THE ACCEPTABILITY OF BOOKS OF ACCOUNTS OR NOT. SECTION 145 OF THE INCOME TAX ACT IS THE RELEVANT PROVISION FOR THIS I SSUE, THEREFORE, IT IS PERTINENT TO TAKE NOTE OF THIS SECTION. IT READS A S UNDER: ITA NO.2200/AHD/2011 8 145. (1) INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OR 'INCOME FROM OTHER SOURCES' SHALL , SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), BE COMPUTED IN ACCOR DANCE WITH EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. (2) THE CENTRAL GOVERNMENT MAY NOTIFY IN THE OFFICI AL GAZETTE FROM TIME TO TIME [ACCOUNTING STANDARDS] TO BE FOLLOWED BY ANY CLASS OF ASSESSEES OR IN RESPECT OF ANY CLASS OF INCOME. (3) WHERE THE ASSESSING OFFICER IS NOT SATISFIED AB OUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WH ERE THE METHOD OF ACCOUNTING PROVIDED IN SUB-SECTION (1) [OR ACCOUNTI NG STANDARDS AS NOTIFIED UNDER SUB-SECTION (2), HAVE NOT BEEN REGULARLY FOLL OWED BY THE ASSESSEE], THE ASSESSING OFFICER MAY MAKE AN ASSESSMENT IN THE MAN NER PROVIDED IN SECTION 144.] 11. A BARE READING OF SECTION 145 WOULD REVEAL THAT IT PROVIDE THE MECHANISM HOW TO COMPUTE THE INCOME OF THE ASSESSEE . ACCORDING TO SUB- SECTION 1, THE INCOME CHARGEABLE UNDER THE HEAD PRO FIT AND GAINS OF BUSINESS OR PROFESSION OR INCOME FROM OTHER SOURCE SHALL BE COMPUTED IN ACCORDANCE WITH THE METHOD OF ACCOUNTANCY EMPLOYED BY AN ASSES SEE REGULARLY, SUBJECT TO SUB-SECTION 2 OF SECTION 145 OF THE ACT. SUB-SEC TION 2 PROVIDES THAT THE CENTRAL GOVERNMENT MAY NOTIFY IN THE OFFICIAL GAZET TE FROM TIME TO TIME, THE ACCOUNTING STANDARD REQUIRED TO BE FOLLOWED BY ANY CLASS OF ASSESSEE IN RESPECT OF ANY CLASS OF INCOME. THUS, IT INDICATES THAT INCOME HAS TO BE COMPUTED IN ACCORDANCE WITH THE METHOD OF ACCOUNTAN CY FOLLOWED BY AN ASSESSEE I.E. CASH OR MERCANTILE, SUCH METHOD HAS T O BE FOLLOWED KEEPING IN VIEW THE ACCOUNTING STANDARD NOTIFIED BY THE CENTRA L GOVERNMENT FROM TIME TO TIME. SUB CLAUSE 3 PROVIDES A SITUATION, THAT IS , IF THE ASSESSING OFFICER IS UNABLE TO DEDUCE THE TRUE INCOME, ON THE BASIS OF M ETHOD OF ACCOUNTANCY FOLLOWED BY AN ASSESSEE THAN HE CAN REJECT THE BOOK RESULT AND THE ASSESS INCOME ACCORDING TO HIS ESTIMATION OR ACCORDING TO HIS BEST JUDGMENT. THE ASSESSING OFFICER IN THAT CASE IS REQUIRED TO POINT OUT THE DEFECTS IN THE ACCOUNTS OF ASSESSEE AND REQUIRED TO SEEK EXPLANATI ON OF THE ASSESSEE QUA ITA NO.2200/AHD/2011 9 THOSE DEFECTS. IF THE ASSESSEE FAILED TO EXPLAIN TH E DEFECTS THAN ON THE BASIS OF THE BOOK RESULT, INCOME CANNOT BE DETERMINED AND AS SESSING OFFICER WOULD COMPUTE THE INCOME ACCORDING TO HIS ESTIMATION KEEP ING IN VIEW THE GUIDING FACTOR FOR ESTIMATING SUCH INCOME. 12. FOR EXERCISING THE BEST JUDGMENT, SECTION 144 O F THE INCOME TAX ACT PROVIDE THE GUIDANCE TO THE LD.AO. THIS SECTION RE ADS AS UNDER: 144. [(1)] IF ANY PERSON (A) FAILS TO MAKE THE RETURN REQUIRED [UNDER SUB-S ECTION (1) OF SECTION 139] AND HAS NOT MADE A RETURN OR A REVISED RETURN UNDER SUB- SECTION (4) OR SUB-SECTION (5) OF THAT SECTION, OR (B) FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142 [OR FAILS TO COMPLY WIT H A DIRECTION ISSUED UNDER SUB-SECTION (2A) OF THAT SECTION], OR (C) HAVING MADE A RETURN, FAILS TO COMPLY WITH ALL THE TERMS OF A NOTICE ISSUED UNDER SUB-SECTION (2) OF SECTION 143, THE [ASSESSING] OFFICER, AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL WHICH THE [ASSESSING] OFFICER HAS GATHERED, [SHAL L, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, MAKE THE AS SESSMENT] OF THE TOTAL INCOME OR LOSS TO THE BEST OF HIS JUDGMENT AN D DETERMINE THE SUM PAYABLE BY THE ASSESSEE [* * *] ON THE BASIS OF SU CH ASSESSMENT : [PROVIDED THAT SUCH OPPORTUNITY SHALL BE GIVEN BY THE ASSESSING OFFICER BY SERVING A NOTICE CALLING UPON THE ASSESSEE TO SH OW CAUSE, ON A DATE AND TIME TO BE SPECIFIED IN THE NOTICE, WHY THE ASS ESSMENT SHOULD NOT BE COMPLETED TO THE BEST OF HIS JUDGMENT : PROVIDED FURTHER THAT IT SHALL NOT BE NECESSARY TO GIVE SUCH OPPORTUNITY IN A CASE WHERE A NOTICE UNDER SUB-SECTION (1) OF S ECTION 142 HAS BEEN ISSUED PRIOR TO THE MAKING OF AN ASSESSMENT UNDER T HIS SECTION.] [(2) THE PROVISIONS OF THIS SECTION AS THEY STOOD I MMEDIATELY BEFORE THEIR AMENDMENT BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 (4 OF 1988), SHALL APPLY TO AND IN RELATION TO ANY ASSESS MENT FOR THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 1988, OR ANY EARLIER ASSESSMENT YEAR AND REFERENCES IN THIS SECT ION TO THE OTHER PROVISIONS OF THIS ACT SHALL BE CONSTRUED AS REFERE NCES TO THOSE ITA NO.2200/AHD/2011 10 PROVISIONS AS FOR THE TIME BEING IN FORCE AND APPLI CABLE TO THE RELEVANT ASSESSMENT YEAR.] 13. IT IS PERTINENT TO NOTE THAT THAT SECTION 144 W OULD SUGGEST THAT IN ORDER TO ESTIMATE INCOME, LEARNED ASSESSING OFFICER HAS T O EXERCISE HIS DISCRETION WHICH SHOULD BE IN CONSONANCE WITH BEST OF HIS JUDG MENT. WE ARE CONSCIOUS OF THE FACT THAT IN VARIOUS AUTHORITATIVE PRONOUNCE MENTS, IT HAS BEEN PROPOUNDED THAT IN MAKING A BEST JUDGMENT ASSESSMEN T, THE ASSESSING OFFICER MUST NOT ACT DISHONESTLY OR VINDICTIVELY OR CAPRICI OUSLY. HE MUST MAKE, WHAT HE HONESTLY BELIEVE TO BE A FAIR ESTIMATE OF THE PR OPER FIGURE OF ASSESSMENT AND FOR THIS PURPOSE HE MUST BE ABLE TO TAKE INTO CONSI DERATION, LOCAL KNOWLEDGE, REPUTATION OF THE ASSESSEE ABOUT HIS BUSINESS, THE PREVIOUS HISTORY OF THE ASSESSEE OR THE SIMILARLY SITUATED ASSESSEE. IT IS ALSO PERTINENT TO MENTION THAT JUDGMENT IS A FACULTY TO DECIDE MATTER WITH WISDOM, TRULY AND LEGALLY. JUDGMENT DOES NOT DEPEND UPON THE ARBITRARY, CAPRIC E OF AN ADJUDICATOR, BUT ON SETTLED AND INVARIABLY PRINCIPLES OF JUSTICE. TH US, IN A BEST JUDGMENT, EVEN IF, THERE IS AN ELEMENT OF GUESS WORK, IT SHOULD NO T BE A WILD ONE, BUT SHALL HAVE REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND CIRCUMSTANCES OF EACH ASSESSEE. 14. IN THE LIGHT OF THE ABOVE, LET US EXAMINE THE F ACTS OF THE PRESENT CASE. THERE IS AN OLD DICTUM FALSUS IN UNO, FALSUS IN OMNIBUS . CONSIDERING THIS OLD DICTUM, HONBLE CALCUTTA HIGH COURT IN AMAL KUMAR C HAKRABORTY VS. CIT (1994) 207 ITR 376 (CAL) HAS OBSERVED THAT THOUGH T HIS DICTUM IS APPLICABLE IN CRIMINAL LAW, BUT IS A SOUND PRINCIPLE TO APPLY IN TAXATION WHEN THE MATTER IS ONE OF FINDING OF FACT ON THE BASIS OF STATEMENT S OF A WITNESS AND THEIR JUDICIAL EVALUATION. THIS MAXIM RELATES TO CREDIBI LITY OF WITNESS. THUS, THE ACCEPTED POSITION IN LAW IS THAT SEARCH AND SURVEY ARE THE LAST RESORT WITH THE REVENUE FOR DETECTING CONCEALMENT OF THE INCOME OF THE ASSESSEE. IF DURING THE SURVEY, AN ASSESSEE IS FOUND IN POSSESSION OF I NCRIMINATING MATERIAL, ITA NO.2200/AHD/2011 11 WHICH WAS FOUND AS BASIS FOR CONCEALMENT OF INCOME, OBVIOUSLY, FOR OTHER PERIOD ALSO, CONDUCT OF THE ASSESSEE WOULD NOT BE F REE FROM DOUBT. IN THESE CIRCUMSTANCES, HEAVY BURDEN LIES UPON ASSESSEE TO E XPLAIN ITS BOOKS OF ACCOUNTS AS WELL AS ITS POSITION WITH MORE SOUND EV IDENCE. FIRST EXPLANATION GIVEN BY THE ASSESSEE BEFORE THE AO WAS THAT THE GP IN AUDITED REPORT WAS NOT CORRECTLY WORKED OUT, BECAUSE, INTEREST TO BANK WAS INCLUDED IN CONSTRUCTION EXPENSES OF THE ASSTT.YEAR 2007-08 AND 2008-09. AC CORDING TO THE ASSESSEE, IT IS TO BE EXCLUDED TO ARRIVE AT CORRECT GP. THE AO HAS OBSERVED THAT IN THE PAST THE ASSESSEE HAS BEEN WORKING OUT ITS GP AFTER INCLUDING INTEREST EXPENDITURE IN CONSTRUCTION EXPENSES. THE GP WHICH WAS CONSIDERED FOR COMPARISON OF THE ASSTT.YEAR 2007-08 WAS ALSO WORKE D OUT BY INCLUDING THIS EXPENDITURE. THEREFORE, THIS CANNOT BE A REASON TO EXPLAIN THE FALL IN GP. THE LD.CIT(A) WHILE DEALING WITH THIS ASPECT, HAS OBSER VED THAT GP IS TO BE WORKED OUT EXCLUDING THE AMOUNT OF INTEREST FOR THE PURPOSE OF COMPARISON OF GP OF TWO YEARS. CIT(A) HAS FAILED TO APPRECIATE T HAT THE COMPARISON BETWEEN BOTH THE YEARS WAS BEING MADE WITH SAME FOR MULA. THEN, WHY IT SHOULD BE EXCLUDED ? NO REASON HAS BEEN GIVEN, RAT HER, ON APPRECIATION OF THE FINDING OF THE LD.CIT(A), WE GATHER AN IMPRESSION T HAT INSTEAD OF ANALYTICALLY EXAMINING THE FACTS, THE LD.CIT(A) REITERATED THE S UBMISSIONS OF ASSESSEE IN A THEORETICAL MANNER. NEXT REASON GIVEN BY THE ASSESSEE WAS THAT IN THIS YEAR, IT HAS NOT SOLD SHOPS, RATHER, SOLD FLATS ONLY, WHEREAS IN THE ASST T.YEAR 2007-08 THE SHOPS WERE SOLD. THE SALE RATE OF THE SHOP IS RS.700 PE R SQ.FEET WHEREAS THAT OF FLAT IS RS.525/- PER SQ.FEET. THE LD.AO HAS HELD THAT T HIS IS FACTUALLY INCORRECT. HE MADE REFERENCE TO THE STATEMENT OF THE PARTNER, WHO HAS DISCLOSED ADDITIONAL INCOME. HE ADMITTED THAT SHOPS WERE SOLD IN THIS Y EAR. THE AO FURTHER MADE REFERENCE TO THE AMOUNTS MENTIONED IN THE STATEMENT OF THE ASSESSEE EXHIBITING ITA NO.2200/AHD/2011 12 THE SHOPS SOLD BY IT. HE MADE REFERENCE TO PAGE NO S.78 TO 83 OF THE DIARY IMPOUNDED DURING THE COURSE OF SURVEY. NEXT REASON GIVEN BY THE AO IS THAT THE ASSESSEE F AILED TO SUBMIT PRIMARY RECORDS EXHIBITING THE DETAILS OF EXPENSES. WHILE DEALING WITH THIS ASPECT, THE LD.CIT(A) HAS MADE REFERENCE TO THE JUD GMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF NISAR BIRI SIKK A NO.1 VS. CIT, 174 TAXMANN 51 AND ALSO OBSERVED THAT BOOKS OF ACCOUNTS CANNOT BE REJECTED ON THE GROUND THAT LABOUR PAYMENT MADE BY SELF-MADE VOUCHERS AND REGISTER BEARING THUMB IMPRESSIONS OF THE WORKERS. IF THIS REASONING IS BEING ANALYSISED WITH THE FINDING RECORDED BY THE AO, THE N IT WOULD FIND THAT THE AO HAS NOT REJECTED THE BOOKS FOR THIS REASON. THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE HAS ACCEPTED RECEIPT OF MONEY ON SALE OF FLATS. THE SALE CONSIDERATION WAS UNRECORDED IN THE BOOKS. SIMILAR LY, IT HAS INCURRED EXPENDITURE WITHOUT RECORDING IN THE REGULAR BOOKS. WHEN THE AO HAS VERIFIED THE PRIMARY DETAILS SHOWING THE INCURRENCE OF EXPENDITURE, THEN THE ASSESSEE FAILED TO SUBMIT THOSE DETAILS AND FAILED TO RECONCILE THE EXPENDITURE. THE MOMENT THE ASSESSEE HAS ACCEPTED RECEIPT OF ON- MONEY OF MORE THAN RS.2.13 CRORS THEN, FACTUALLY IT WOULD HAVE BEEN IN FERRED BY THE AO THAT EXPENDITURE MIGHT HAVE BEEN INCURRED OUT OF BOOKS. HE WAS REQUIRED TO EXAMINE THE DETAILS OF EXPENDITURE. IN THIS EXERCI SE, HE FOUND THAT THE DETAILS RELATING TO THE EXPENDITURE WERE NOT MAINTAINED MET HODOLOGICALLY AND SCIENTIFICALLY. THEREFORE, HE MADE REFERENCE ABOUT THESE LABOUR REGISTER, OTHER DETAILS AND OTHER EXPENDITURE. THE CIT(A) INSTEAD OF POINTING OUT ANY INCIDENCE AS TO HOW THIS EXPENDITURE ARE TO BE TERM ED AS RIGHTLY DEBITED BY THE ASSESSEE, SIMPLY OBSERVED THAT BOOKS OF ACCOUNTS CA NNOT BE REJECTED ON GROUND THAT LABOUR PAYMENTS MADE BY THE ASSESSEE ON SELF-MADE VOUCHERS. THIS IS AN INFERENCE OF FACT IN A PARTICULAR SITUAT ION. IT IS NOT A RATIO OF LAW. THE LD.CIT(A) MISERABLY FAILED TO APPRECIATE THE FA CTS IN RIGHT PERSPECTIVE. ITA NO.2200/AHD/2011 13 THEREFORE, ON DETAILED ANALYSIS OF THE FACTS CONSID ERED BY THE AO, AND THE MANNER IN WHICH LD.CIT(A) HAS APPRECIATED THEM IN T HE FINDING RECORDED IN PARA.43, WE ARE OF THE VIEW THAT THE LD.CIT(A) HAS FAILED TO APPRECIATE THE FACTS IN RIGHT PERSPECTIVE AND ERRED IN UPHOLDING T HE BOOK RESULTS OF THE ASSESSEE. GROUND NO.1 IS ALLOWED AND REJECTION OF THE BOOKS AT THE END OF THE AO IS RESTORED. 15. AS FAR AS QUANTIFICATION OF THE GP IS CONCERNED , WE FIND THAT EXERCISE MADE BY THE AO WAS NOT CORRECT. THE LD.CIT(A) HAS RIGHTLY POINTED OUT ACTUAL DIFFERENCE OF FALL IN THE GP SHOULD BE RS.69 ,90,011/-, AND THIS IS THE REASON, THE REVENUE HAS ALSO TAKEN THIS AMOUNT IN I TS GROUND OF APPEAL. 16. WE HAVE EXTRACTED THIS FINDING OF THE LD.CIT(A) IN PARA-9. ACCORDINGLY, THIS GROUND IS ALSO ALLOWED AND THE ADDITION OF RS. 69,90,011/- IS RESTORED. 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 7 TH OCTOBER, 2016 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 07/10/2016