ACIT, Jaipur V. YOGESH MAHESHWARI, Jaipur

ITA 224/JPR/2011

• Counselvise Citation: 22423114 RSA 2011
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-10-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 11-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Assessee Lawyers: G G MUNDRA
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Retraction; Documents seized
• Section: 153A; 132

Judgement Text

1 ITA 224(2)-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 224/JP/2011 ASSTT. YEAR : 2008-09. THE ACIT, CENTRAL CIRCLE-1, VS. SHRI YOGESH MAHES HWARI, JAIPUR. 5/4, ANANDPURI,MOTI DOONGRI ROAD, JAIPUR. (APPELLANT) (RESPONDENT) C.O. NO. 45/JP/2011 ( ARISING OUT OF ITA NO. 224/JP/2011 ) ASSTT. YEAR : 2008-09. SHRI YOGESH MAHESHWARI, VS. THE ACIT, CENTRAL CIR CLE-1, JAIPUR. JAIPUR. (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SHRI VINOD JOHARI RESPONDENT BY : SHRI G.G. MUNDRA DATE OF HEARING : 17.10.2011. DATE OF PRONOUNCEMENT : 21.10.2011 ORDER DATE OF ORDER : 21/10/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AND CROSS OBJECTIO N BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2008-09. 2. GROUND NOS. 1 TO 4 IN THE APPEAL OF THE DEPARTME NT IS AGAINST DELETING THE ADDITION OF RS. 44,15,820/-. 2 3. THE ASSESSEE IN HIS CROSS OBJECTION, OBJECTING I N UPHOLDING ADDITION OF RS. 3,30,289/-. 4. BRIEF FACTS OF THE CASE ARE THAT SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE RESIDENTIAL AND BUSINESS PREMISES OF THE APPELL ANT. DURING THE COURSE OF SEARCH PROCEEDINGS ON 14.3.08, PHYSICAL STOCK OF EMERALDS /TURMILE, ROUGH STONES WAS FOUND AND INVENTORIZED AND THE SAME WAS VALUED BY G OVT. APPROVED VALUER, AS BELOW: STOCK FOUND AT KEDIA BHAWAN, GOPAL II KA RASTA RS. 12,06,090/- STOCK FOUND AT RATNA SAGAR SAFE DEPOSITS & PRAHARI SAFE DEPOSIT VAULT RS. 68,25,199/- RS. 80,33,109/- 4.1. THE ASSESSEE HAS STATED THAT BOOK STOCK WAS RS . 10 LAKHS AND ADMITTED THE EXCESS STOCK OF RS. 70,33,109/- ACQUIRED OUT OF UND ISCLOSED SOURCES AND SURRENDERED IN THE STATEMENT RECORDED U/S 132(4). H OWEVER, THE ASSESSEE HAS ONLY DECLARED AN ADDITIONAL AMOUNT OF RS. 22,87,000/-IN THE RETURN OF INCOME OF A.Y 2008- 09 ON ACCOUNT OF EXCESS STOCK INSTEAD OF EXCE SS STOCK OF RS. 70,33,109/- FOUND ON DATE OF SEARCH. THE ASSESSEE HAS STATED IN HIS SUBMISSION AS UNDER : ON THE BASIS OF SAID YEAR-WISE DETAILS OF PURCHASE AND SALES THE ASSESSEE FURTHER CONSOLIDATED AND SEGREGATED THESE ENTRIES A ND PREPARED YEAR WISE TRADING, PROFIT AND LOSS ACCOUNT. COPY OF THE SAID FINANCIAL STATEMENT SUMMARY OF YEAR WISE PURCHASES, SALES AND EXPENSES PREPARED FROM ABOVE DETAILS ARE ENCLOSED HEREWITH. ON THE BASIS OF SAID SUMMARY THE VALUER OF STOCK AS ON THE DATE OF SEARCH WORKS OUT TO (RS. 67 ,43,335/-+ 10,02,786/- = RS. 77,46,121/-. THUS THE VALUE OF UNEXPLAINED INVE STMENT IN INVENTORY WORKS OUT AS UNDER : 3 INVENTORY AS PER VALUER S REPORT RS. 80,33, 109/- LESS: INVENTORY AS PER REGULAR BOOKS OF ACCOUNTS R S. 10,02,786/- INVENTORY AS PER SEIZED RECORDS RS. 67,43,33 5/- RS. 77,46,121/ - RS. (-)2,86,988/ - HOWEVER TO BY PEACE AND AVOID LONG LITIGATION WITH THE DEPARTMENT THE ASSESSEE DECLARED ADDITIONAL INCOME OF RS. 22,87,00 0/- ON ACCOUNT OF EXCESS INVESTMENT IN INVENTORY IN THE RETURN OF INC OME FILED FOR THE A. Y 2008-09. THE SAID FIGURE ALSO INCLUDES THE AMOUNT D UE TO CREDITORS AS PER BALANCE SHEET. THE A.O. DID NOT ACCEPT THE ARGUMENT OF THE APPELLA NT ON FOLLOWING REASONING AND ADDED THE DIFFERENCE AMOUNT NOT SURRENDERED IN THE RETURN OF INCOME BEING RS.47,46,109/- :- I) THE ASSESSEE HAS TAKEN DIFFERENCE AND NOTIONAL F IGURE CLOSING STOCK AS PER TRADING ACCOUNT FOR 31.3.2008 WHICH HAS NO L OGICAL EXPLANATION TO SUPPORT BASIS OF DECLARING THIS CLOSING STOCK. II) THE ASSESSEE HAS FAILED TO TALLY QUANTITATIVELY PHYSICAL STOCK OF RS. 80,33,109/- FOUND AND INVENTROIZED ON THE DATE OF S EARCH WITH THE CLOSING STOCK TAKEN AS PER TRADING ACCOUNT FOR PERIOD 1.4.0 7 TO 31.3.08. III) THE ASSESSEE HAS COULD NOT PROVE THE STOCK PHY SICALLY FOUND WERE ACCUMULATED OF EARLIER YEARS WITH THE EVIDENCES AND COULD NOT PRODUCE ANY VOUCHER/PURCHASE/EVIDENCE IN HIS SUPPORT! QUANTITAT IVE STOCK BELONGED TO EARLIER YEARS. IV) THERE IS NO CHANGE OF FACT AND CIRCUMSTANCES TO RETRACT FROM STATEMENT GIVEN U/S 132(4) ON OATH DURING SEARCH OP ERATION BY ASSESSEE THAT TO PROVE THAT STATEMENT GIVEN WAS NOT VOLUNTARY. 4 5. DETAILED SUBMISSIONS WERE FILED BEFORE LD. CIT ( A) WHICH HAS BEEN TABULATED IN THE ORDER OF LD. CIT (A) IN PARA 2.3 AT PAGES 3 TO 7 ARE AS UNDER :- (1) THE GROUND NO. (1) OF APPEAL RELATES TO OBJE CTING THE ACTION OF LD. A.O. IN MAKING AN ADDITION OF RS. 47,46,109/- TO TH E INCOME OF THE APPELLANT ON THE GROUND THAT OUT OF STOCK VALUED AT RS. 80,33,109/- FOUND AT THE TIME OF SEARCH THE APPELLANT HAS FAILED TO E XPLAIN STOCK TO THE EXTENT OF SAID RS. 47,46,109/-. THE LD. A.O. WHILE DOING S O DID NOT ACCEPT THE FIGURE OF CLOSING STOCK DECLARED BY APPELLANT IN TR ADING ACCOUNT(S) FOR THE YEAR(S) ENDED 31-3-2002 TO 31-3-2007 WHICH CLOSING STOCK AS DECLARED BY ASSESSEE IN RETURNS FILED IN RESPONSE TO NOTICE U/S 1 53A WAS ACCEPTED BY LD. A.O. WHILE SIMULTANEOUSLY MAKING ASSESSMENT FOR A.Y. 2002-03 TO 2007-08 U/S 153A AND THE APPELLANT IN THOSE YEARS S URRENDERED THE INCOME RESULTED FROM PURCHASE/SALES ETC. WHICH REMAINED IN VESTED IN THE CLOSING STOCK SO DECLARED IN EACH OF THOSE YEARS. THUS THE LD. A.O. WRONGLY HELD THAT STOCK TO THE EXTENT OF RS. 47,46,109/- REMAINS UNEXPLAINED AND SAME IS LIABLE TO BE ADDED IN THE INCOME OF APPELLANT FO R THE YEAR ALLEGEDLY ON THE GROUND THAT APPELLANT SURRENDERED THE STOCK TO THE EXTENT OF RS. 70,33,109/- IN HIS STATEMENT U/S 132 (4) AT THE TIM E OF SEARCH. IT IS SUBMITTED THAT IN COURSE OF SEARCH VARIOUS LO OSE INCRIMINATING DOCUMENTS/PAPERS WERE FOUND AND SEIZED FROM THE BUS INESS PREMISES KEDIA BUILDING, GOPAIJI KA RASTA, JAIPUR. THESE PAP ERS WERE MOSTLY RELATED TO PURCHASE, MANUFACTURING EXPENSES AND SAL ES OF GEMS & STONES BUSINESS OF ASSESSEE PERTAINING TO FINANCIAL YEARS 200 1-02 ONWARDS AND WERE UNACCOUNTED IN REGULAR BOOKS OF ACCOUNTS. THE REGULAR ACCOUNT BOOKS OF ASSESSEE WERE ALSO INCOMPLETE AND, THEREFORE, ST OCK AS ON DATE OF SEARCH AS PER BOOKS OF ACCOUNTS AND AS PER THOSE SEIZED PA PERS COULD NOT BE ASCERTAINED AT THE TIME OF SEARCH. IN COURSE OF SEA RCH INVENTORY OF GEMS & STONES FOUND AT BUSINESS PREMISES WAS PREPARED AND ITS VALUATION WAS GOT DONE BY DEPARTMENTS APPROVED VALUER SHRI MANOHAR L AL WHO VALUED THE 5 SAID STOCK AT RS. 12079 10/-. THE STOCK FOUND IN LO CKERS OF ASSESSEE AT RATNA SAGAR SAFE DEPOSIT VAULT AND PRAHARI SAFE DEP OSITS WAS ALSO INVENTORIED, GOT VALUED BY VALUER AND HE ASSESSED T HE VALUE OF SUCH STOCK AT RS. 68,25,199/-. THUS THE TOTAL VALUE OF STOCK F OUND DURING THE COURSE OF SEARCH WORKS OUT TO RS. 8033 109/- (1207910 + 68251 99). IN THE STATEMENT RECORDED U/S 132 (4) OF THE I. T. ACT, 1961 ON 14.3 .2008, STOCK HAVING APPROX. VALUE OF RS. 10,00,000/- WAS TAKEN AS STOCK HELD BY THE ASSESSEE AS PER REGULAR BOOKS OF ACCOUNTS AND REMAINING AMOUNT RS. 7033109/- (8033109 - 1000000) WAS TAKEN AS UNDISCLOSED INVEST MENT IN STOCK. THE ASSESSEE SURRENDERED THE SAID STOCK AS ADDITIONAL I NCOME OF F.Y. 07- 08 IN HIS STATEMENT RECORDED U/S 132 (4). THE ASSESSEE ON RECEIVING NOTICE U/S 1 53A HAD WORK ED OUT UNRECORDED PURCHASES, SALES AND STOCK ON THE BASIS OF VARIOUS LOOSE PAPERS FOUND IN COURSE OF SEARCH. THE ASSESSEE HAS COMPILE D ALL THE ENTRIES RELATING TO PURCHASES, SALES AND EXPENSES ON MANUFA CTURING/FINISHING OF ROUGH, WHICH WERE NOTED ON SEIZED LOOSE PAPERS/DOCU MENTS AND DETAILS ABOUT EACH AND EVERY ENTRY RELATING TO PURCHASES, S ALES AND MANUFACTURING EXPENSES OF GEM STONES ROUGH WERE PREPARED AND SUBM ITTED TO LD. A.O. A COPY OF WHICH IS SUBMITTED HEREWITH. THE ASSESSEE O N THE BASIS OF YEAR- WISE DETAILS OF PURCHASES AND SALES FURTHER CONSOLI DATED AND SEGREGATED THESE ENTRIES AND PREPARED YEAR WISE TRADING, PROFI T AND LOSS ACCOUNT AND SUBMITTED TO LD. A.O. A COPY OF WHICH IS ALSO SUBMI TTED HEREWITH. THE ASSESSEE ON THE BASIS OF THESE PROFIT & LOSS ACCOUN T AND BALANCE SHEET FILED RETURN OF INCOME U/S 1 53A FOR A.Y. 2002-03 TO 2007 -08 WHICH HAS BEEN ACCEPTED BY ED. A.O. IN ASSESSMENT FOR THOSE YEARS. THUS THE PURCHASE, SALES & CLOSING STOCK SHOWN IN THESE STATEMENTS STA ND ACCEPTED IN ASSESSMENTS FOR A.Y. 2002-03 TO 2007-08 COMPLETED B Y ED. A.O. ON THE BASIS OF SAID YEAR WISE TRADING ACCOUNT THE VALUE O F STOCK AS ON THE DATE OF SEARCH WORKS OUT TO RS. 67,43,33 5 AND STOCK AS PER REGULAR BOOKS OF ACCOUNTS WORKS TO RS. 10,02,786 I.E. TOTAL RS. 77,4 6,121/-. THUS THE 6 POSITION OF UNEXPLAINED STOCK AS ON DATE OF SEARCH WAS WORKED OUT BY ASSESSEE AS UNDER: - INVENTORY AS PER VALUERS REPORT 80,33,109/- LESS: CLOSING STOCK AS PER REGULAR BOOKS OF ACCOUNTS 10,02,786/- CLOSING STOCK AS PER SEIZED RECORDS 67,43,335 /- 77,46,121/- 2,86,988/- THE ASSESSEE HOWEVER TO AVOID LONG LITIGATION WITH THE DEPARTMENT DECLARED ADDITIONAL INCOME OF RS. 22,87,000/- ON AC COUNT OF EXCESS INVESTMENT IN CLOSING STOCK IN THE RETURN OF INCOME FILED FOR THE A.Y. 2008-09 WITH A VIEW TO COVER UP THE SURRENDER MADE BY HIM IN HIS STATEMENT U/S 132 (4). IN COURSE OF SEARCH PROCEEDINGS STATEMENT OF ASSESS EE WAS ALSO RECORDED U/S 132 (4) OF I.T. ACT, 1961 AND IN REPLY TO Q. NO. 14 & 19, ASSESSEE HAS DECLARED APPROX. ADDITIONAL INCOME OF RS. 50,00,000/- ON ACCOUNT OF SALE AND PURCHASES OF ROUGH / FINISH ENT RIES APPEARING IN SEIZED LOOSE DOCUMENTS/PAPERS ETC. HOWEVER ON THE BASIS OF ACTUAL CALCULATION THE SAID INCOME WORKS OUT TO RS. 44,15,820/- (AS GIVEN BELOW) IN RESPECTIVE ASSESSMENT YEARS. THE ASSESSEE DECLARED THE SAID IN COME IN THE RETURN FILED U/S 153A OF THE I. T. ACT, 1961 AS FOLLOWS : - ASSESSMENT YEAR ADDITIONAL INCOME 2002-03 4,31,111/- 2003-04 3,56,591/- 2004-05 10,12,822/- 2005-06 4,94,976/- 2006-07 8,84,455/- 2007-08 8,41,000/- 2008-09 3,94,865/- 44,15,820/- IN THIS CONNECTION THE ASSESSEE FURTHER SUBMITS THA T IN THE STATEMENT RECORDED U/S 132 (4) OF THE I. T. ACT, 1961 SURREND ER ON ACCOUNT OF EXCESS GEMS/STONE STOCK AND ADDITIONAL INCOME ON ACCOUNT O F SAID GEMS STONES BUSINESS BOTH GOT DONE BY THE SEARCH PARTY SEPARATE LY. THE SAID SURRENDER 7 IS NOT CORRECT, BECAUSE THE INCOME EARNED BY THE AS SESSEE WAS UTILIZED/INVESTED IN GEMS STONES STOCK AND AS SUCH TO ARRIVE AT THE FIGURE OF UNDISCLOSED INVESTMENT IN STOCK THE UNDISCLOSED INC OME DECLARED IN EARLIER YEARS HAS TO BE DEDUCTED OUT OF THE SAID UNDISCLOSE D TOTAL UNEXPLAINED INVESTMENT IN STOCK. THUS CREDIT FOR THE ADDITIONAL INCOME DECLARED SHOULD BE ALLOWED TO THE ASSESSEE FROM TOTAL UNEXPLAINED I NVESTMENT IN STOCK DETERMINED AT THE TIME OF SEARCH. THE ASSESSEE ALSO SUBMITS THAT THE METHOD/SYSTEM ADOPTED IN THE STATEMENT RECORDED U/S 132 (4) IS APPARENTLY A CASE OF DOUBLE TAXATION OF ONE AND SAME INCOME. T HE ASSESSEE FURTHER SUBMITS THAT IN THE STATEMENT RECORDED U/S 132 (4) OF THE I. T. ACT, 1961 BESIDES THE SURRENDER OF EXCESS ADDITIONAL INCOME O N ACCOUNT OF GEM STONES BUSINESS/EXCESS VALUE OF STOCK THE ASSESSEE ALSO DECLARED ADDITIONAL INCOME OF RS. 5,00,000/- ON ACCOUNT OF TRANSACTIONS RECORDED ON SEIZED PAGE NO. 3, 4 & 6 OF EXHIBIT NO. A.Y.-3. THE SAID T RANSACTIONS ARE OF THE LOAN I ADVANCES MADE TO SHRI NAVAL KISHORE AGARWAL, R.R. TAMBI & COMPANY AND OM ENTERPRISES FOR RS. 1,00,000/- EACH AND ON PAGE NO. 53 OF EXHIBIT NO. A-5 FOR RS. 2,00,000/- THUS THE ADDI TIONAL INCOME DECLARED BY THE ASSESSEE IN RETURNS FILED MORE OR LESS TALLI ES WITH ADDITIONAL INCOME STATED BY ASSESSEE IN STATEMENT RECORDED U/S 132 (4 ) OF I. T. ACT, 1961. THE TOTAL SURRENDER MADE-THUS WAS RS. 44,15,820 + 5,00, 000 + 22,87,000 I.E. RS. 72,02,820/-. THE ASSESSEE IN COURSE OF ASSESSMENT PROCEEDINGS MA DE THE SAME EXPLANATION BEFORE LD. A.O. AND CLAIMED THAT HE HAS DISCLOSED THE ENTIRE ADDITIONAL INCOME AS WELL AS UNDISCLOSED STOCK AS P ER STATEMENT RECORDED U/S 132 (4). THE ADDITIONAL INCOME DECLARED HAVING BEEN INVESTED IN STOCK IS APPARENT FROM YEAR WISE TRADING AND PROFIT & LOSS A CCOUNT PREPARED FROM SEIZED PAPERS IN WHICH NO MISTAKE OR DEFICIENCY HAS BEEN FOUND AND SO THE STOCK APPEARING IN THOSE TRADING ACCOUNTS BE TREATE D AS STOCK AVAILABLE ON THE DATE OF SEARCH AS ASSESSEE HAS SEPARATELY DISCLOSED YEARWISE ADDITIONAL INCOME WORKED OUT ON SAID BASIS AND NO MISTAKE HAS ALSO BE EN FOUND IN SAID WORKING. THE LD. A.O. IN ASSESSMENT ALSO ACCEPTED THE YEARWI SE ADDITIONAL INCOME 8 WORKED OUT ON THE BASIS OF SAID TRADING ACCOUNT AND , THEREFORE, THERE IS NO VALID REASON NOT TO ALLOW CREDIT OF SAME STOCK SHOW N IN TRADING ACCOUNT AND ACCEPTED BY A.O. WHILE WORKING OUT UNEXPLAINED STOC K. THE LD. A.O. GAVE FOLLOWING REASONS FOR NOT ACCEPTING THE CONTENTION OF ASSESSEE. (I) THE ASSESSEE HAS TAKEN DIFFERENCE AND NOTIONAL FIGU RE CLOSING STOCK AS PER TRADING ACCOUNT FOR 31.03.2008 WHICH HAS NO LOGICAL EXPLANATION TO SUPPORT BASIS OF DECLARING THIS CLOSING STOCK. (II) THE ASSESSEE HAS FAILED TO TALLY QUANTITATIVELY PHY SICAL STOCK OF RS. 80,33,109/- FOUND AND INVENTORIZED ON THE DATE OF SEARCH WITH T HE CLOSING STOCK TAKEN AS PER TRADING ACCOUNT FOR PERIOD 1.4.2007 TO 31.3.200 8. (III) THE ASSESSEE COULD NOT PROVED THE STOCK PHYSICALLY FOUND WERE ACCUMULATED OF EARLIER YEARS WITH THE EVIDENCES AND COULD NOT P RODUCED ANY VOUCHER/PURCHASE/EVIDENCE IN HIS SUPPORT/QUANTITATI VE STOCK BELONGED TO EARLIER YEARS. (IV) THERE IS NO CHANGE OF FACT AND CIRCUMSTANCES TO RET RACT FROM STATEMENT GIVEN U/S 132(4) ON OATH DURING SEARCH OPERATION BY ASSES SEE THAT TO PROVE THAT STATEMENT GIVEN WAS NOT VOLUNTARY AND FINDS SUPPORT FROM FOLLOWING RULINGS. IN THIS CONNECTION IT IS SUBMITTED THAT ABOVE REASO NS ARE WHOLLY NOT SUSTAINABLE (I) THE CLOSING STOCK SHOWN IN TRADING ACCOUNT PREPARED FROM LOOSE PAPER ARE NOT NOTIONAL FIGURES. THESE ARE PREPARED FROM SEIZED PAPERS THEREFORE EXPLANATION OF ASSESSEE IS SUPPORTED AS WELL AS LOG ICAL, (II) THE ADDITION IN CLOSING STOCK IS BEING MADE ON THE BASIS OF VALUE OF CLOSIN G STOCK AS ON DATE OF SEARCH AND VALUE OF STOCK WORKED OUT FROM LOOSE PAPERS AND SHO WN IN REGULAR BOOKS OF ACCOUNT HAVE BEEN ACCEPTED IN ASSESSMENT AND, THERE FORE, CREDIT OF VALUE HAS TO BE ALLOWED AND THERE IS NO QUESTION OF QUANTITATIVE TA LLY OF PHYSICAL STOCK, (III) THE FACT OF CLOSING STOCK AT THE END OF EACH YEAR STAND ACCEPTED IN ASSESSMENT AS ADDITIONAL INCOME DECLARED ON THE BASIS OF SAID TRA DING & P & L A/C HAS BEEN ASSESSED. (IV) THE ASSESSEE ON TOTALITY OF FACTS MA DE NO RETRACTION FROM HIS STATEMENT RECORDED U/S 132 (4). THE ASSESSEE IS ONL Y CLAIMING SET OFF OF DECLARED INCOME FROM THE STOCK FOUND IN COURSE OF SEARCH WHI LE IN STATEMENT BOTH THE 9 FIGURES WERE MENTIONED SEPARATELY WITHOUT ALLOWABLE SET OFF WHICH WAS AN ERROR OF FACTS AS WELL AS IN LAW. IN VIEW OF ABOVE FACTS OF THE CASE AND SUBMISSIONS MADE THE LD. A.O. IS WRONG AND HAS ERRED IN LAW IN MAKING AN ADDITION OF 47,46,109/- AS ADDITIONAL INCOME DECLARED IN SEARCH. IT IS NOW A SETTLED LAW THAT NO INCOME CAN BE ASSESSED SOLELY ON THE BASIS OF STATEMENT UNLESS THERE ARE S OME CORROBORATIVE MATERIALS AVAILABLE OR BROUGHT ON RECORD. IT IS, THEREFORE, PRAYED THAT ADDITIONAL OF RS. 47, 46,109/- MADE IN THE INCOME OF APPELLANT DESERVES TO BE DELETED. 6. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, THE LD. CIT (A) FOUND THAT OUT OF TOTAL ADDITION OF RS. 47,46,1 09/-, ADDITION OF RS. 44,15,820/- IS LIABLE TO BE DELETED. FOR DELETING THIS ADDITION, THE FOLLOWING FINDINGS HAVE BEEN RECORDED BY LD. CIT (A) IN PARA 2.4 OF HIS ORDER AT PAGES 7 TO 9 :- 2.4 I HAVE CONSIDERED THE SUBMISSION OF LD. A.R AN D HAVE PERUSED THE MATERIAL ON RECORD. THE A.R. HAS ARGUED THAT THE CL OSING STOCK AND THE OPENING STOCK AS WELL AS THE TRADING ACCOUNT PREPAR ED FROM THE SEIZED BOOKS OF ACCOUNTS FOR THE EARLIER YEARS WAS SUBMITT ED BEFORE THE A.O. AND THE INCOME OF THE EARLIER YEARS WAS OFFERED TO TAXA TION WHICH WAS ACCEPTED BY THE A.O. THEN HE SHOULD HAVE ACCEPTED THE CLOSIN G STOCK AS ON THE DATE OF SEARCH AS WORKED OUT FROM THE SEIZED RECORD. THE ARGUMENT OF THE A.R IS PARTLY CORRECT THAT INCOME OF THE VARIOUS EARLIE R YEARS HAVE BEEN OFFERED FOR TAXATION BY TAKING THE UNACCOUNTED PURCHASE AND SALES FROM THE SEIZED DOCUMENTS. HOWEVER, IT IS SEEN THAT NO DETAILS OF O PENING AND CLOSING STOCK OF THE EARLIER YEARS TAKEN BY APPELLANT IS AV AILABLE IN THE SEIZED DOCUMENTS. OBVIOUSLY THESE FIGURES OF OPENING AND C LOSING STOCK OF THE EARLIER YEARS ARE NOT SUBJECTED TO VERIFICATION. HO WEVER, IT IS ALSO THE FACT THAT AS THE APPELLANT HAS BEEN DOING PARALLEL UNACC OUNTED BUSINESS, OBVIOUSLY SOME UNACCOUNTED STOCK IS AVAILABLE, WHIC H HAVE BEEN 10 PURCHASED OUT OF THE UNDISCLOSED INCOME OF THE EARL IER YEARS. IN ABSENCE OF THE EXACTNESS OF THE UNACCOUNTED STOCK OF UNACCOUNT ED BUSINESS AS PER THE SEIZED RECORD, IT WILL BE APPROPRIATE AND REASONABL E TO CONSIDER THAT SUCH STOCK CAN WILL BE AVAILABLE TO THE EXTENT OF UNACCO UNTED INCOME EARNED BY THE APPELLANT IN EARLIER YEARS, IN ABSENCE OF ANY E VIDENCE BROUGHT OUT ON RECORD BY THE A.O. OF THESE UNACCOUNTED INCOME BEIN G UTILIZED ELSEWHERE. AVAILABILITY OF STOCK OF MORE THAN THIS AMOUNT CANN OT BE CONSIDERED, UNLESS THERE IS EVIDENCE THAT PAYMENT FOR SUCH UNAC COUNTED PURCHASES WERE OUTSTANDING AS ON THE DATE OF SEARCH, WHICH TH E APPELLANT HAS FAILED TO PRODUCE. IT IS SEEN THAT THE APPELLANT HAS FILED RE TURN SHOWING UNDISCLOSED BUSINESS INCOME IN VARIOUS EARLIER YEARS INCLUDING THE CURRENT YEAR TOTALING TO RS. 44,15,820/-. IN THE PROFIT AND LOSS ACCOUNT OF THE CURRENT YEAR (I.E A.Y 2008-09) SHOWING NET PROFIT OF RS. 5,15,538/-, THE APPELLANT HAS TAKEN THE FIGURES OF UNACCOUNTED PURCHASE AND SALE AND AS WELL AS EXPENSES AS REFLECTED IN THE SEIZED PAPERS SEPARATELY AND HAS T HEREBY SHOWN PROFIT OF RS. 3,94,865/- FROM THESE SEIZED PAPERS (TILL THE D ATE OF SEARCH I.E 18.3.08), WHICH IS INCLUDED IN THE TOTAL PROFIT OF RS. 5,15,5 38/-. IN VIEW OF THE ABOVE, THIS ARGUMENT OF THE APPELLANT IS ACCEPTABLE THAT CREDIT FOR ADDITIONAL INCOME DECLARED IN THE EARLIER YEARS INC LUDING CURRENT YEAR (TILL THE DATE OF SEARCH), WHICH HAVE TO BE CONSIDERED BE ING INVESTED IN EXCESS STOCK IN ABSENCE OF ANY OTHER EVIDENCE, IS TO BE GI VEN. IT IS SEEN THAT THE APPELLANT HAS SURRENDERED UNDISCL6SED INCOME FROM P ARALLEL UNACCOUNTED BUSINESS TILL THE DATE OF SEARCH BEING 14.3.08, TOT ALING TO RS. 44,15,820/-, WHICH CAN BE REASONABLY CONSIDERED TO BE REFLECTED IN THE FORM OF EXCESS UNACCOUNTED STOCK FOUND DURING THE COURSE OF SEARCH . ACCORDINGLY ADDITION ON ACCOUNT OF UNEXPLAINED EXCESS STOCK GET S REDUCED BY THE AFORESAID UNDISCLOSED INCOME ALREADY OFFERED FOR TA XATION. HENCE THE APPELLANT GETS RELIEF OF RS. 44, 15,820/- AND THE R EMAINING ADDITION TO THE EXTENT OF RS.3,30,289/- IS CONFIRMED. 7. NOW THE DEPARTMENT AS WELL AS ASSESSEE ARE IN AP PEAL. 11 8. THE DEPARTMENT IS OBJECTING IN DELETING THE ADDI TION AND THE ASSESSEE IS OBJECTING IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 3,3 0,289/-. 9. SINCE BOTH THE GROUNDS ARE CO-RELATED, THEREFORE , THEY ARE BEING DISPOSED OFF TOGETHER. 10. THE LD. D/R FIRST PLACED RELIANCE ON THE ORDER OF AO. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS RETRACTED AFTER THE SEARCH PROCEED INGS WHICH SHOULD NOT BE ACCEPTED. RELIANCE WAS PLACED ON THE DECISION REPORTED IN 248 ITR 782 AND 191 ITR 18. ATTENTION OF THE BENCH WAS DRAWN ON PAGES 1 & 2 OF THE PAPER BOOK ALSO. 11. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSES SEE PLACED RELIANCE ON THE ORDER OF LD. CIT (A) TO THE EXTENT TO WHICH THE ADDITION HAS BEEN DELETED. THEREAFTER, HE PLACED RELIANCE ON THE WRITTEN SUBMISSIONS FILED DURING TH E APPELLATE PROCEEDINGS. 11.1. REGARDING THE ISSUE RAISED THROUGH CROSS OBJE CTION, IT WAS SUBMITTED THAT WHATEVER THE STOCK WAS FOUND THAT WAS INVENTORIZED AND HAS A CCEPTED. NO DISCREPANCY WAS NOTED IN THE INVENTORY OF STOCK PREPARED. OVER AND ABOVE, TH E ASSESSEE HAS SURRENDERED A SUM OF RS. 20,00,000/-. THEREFORE, THERE WAS NO JUSTIFICA TION IN SUSTAINING THE ADDITION OF RS. 3,30,289/-. 12. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING MATERIAL O N RECORD, WE FIND THAT LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 44,15 ,820/- OUT OF TOTAL ADDITION OF RS. 47,46,109/- ON ACCOUNT OF STOCK FOUND AT THE TIME O F SEARCH ALLEGEDLY REMAINED UNEXPLAINED. THE FACTS OF THE CASE AND THE SUBMISS IONS OF THE ASSESSEE HAVE ALREADY BEEN REPRODUCED SOMEWHERE ABOVE IN THIS CASE AS WERE REC ORDED BY LD. CIT (A). THERE IS NO DISPUTE IN THE FACTS AND OTHER SUBMISSIONS SUBMITTE D BEFORE LD. CIT (A) WHICH HAS BEEN 12 RECORDED AS STATED ABOVE. THE DEPARTMENTS CASE IS THAT ASSESSEE HAS RETRACTED FROM HIS STATEMENT AS HE HAS SURRENDERED RS. 70 LACS OR ODD IN THE STATEMENT RECORDED UNDER SECTION 134, IN OUR VIEW THE ASSESSEE HAS NOT RETRA CTED BUT HAS QUANTIFIED THE SURRENDER MADE BY HIM. HE HAS DECLARED UNDISCLOSED INCOME FO R VARIOUS YEARS I.E. 2002-03 UPTO 2008-09 AT RS. 44 LACS OR ODD. THE ADDITIONAL INCO ME OF RS. 5 LACS HAS ALREADY BEEN OFFERED FOR TAXATION ON ACCOUNT OF TRANSACTION RECO RDED IN SEIZED PAPERS. THEREAFTER ASSESSEE HAS ALSO SURRENDERED A SUM OF RS. 22,87,00 0/-. TOTAL OF THESE INCOME DISCLOSED BY THE ASSESSEE COMES TO RS. 72 LACS OR ODD WHICH I S MORE THAN RS. 70 LACS OR ODD ADMITTED DURING THE COURSE OF STATEMENT RECORDED UN DER SECTION 132(4). THEREFORE, THIS IS NOT THE CASE OF RETRACTION BUT IT IS THE CASE OF EX PLANATION OF INCOME SURRENDERED. THE LD. CIT (A) HAS APPRECIATED THE CONTENTION OF THE ASSES SEE IN RIGHT PERSPECTIVE AND, THEREFORE, HE HAS DELETED THE ADDITION OF RS. 44 LACS OR ODD. HOWEVER, HE HAS SUSTAINED AN ADDITION OF RS. 3,30,289/- FOR THE REASON THAT IN VARIOUS YE ARS THE ASSESSEE HAS SURRENDERED A TOTAL SUM OF RS. 44,15,820/-. THEREFORE, TO THIS EXTENT THE ADDITION HAS BEEN DELETED BY LD. CIT (A) AND THE REMAINING AMOUNT OUT OF TOTAL ADDITION HAS BEEN SUSTAINED BY LD. CIT (A) HAS NOT TAKEN INTO CONSIDERATION THAT ASSESSEE HAS OVER AND ABOVE THIS INCOME HAS SURRENDERED A SUM OF RS. 22,87,000 + 05,00,000/-. THEREFORE, I N OUR VIEW, AN ADDITION OF RS. 3,30,289/- SUSTAINED BY LD. CIT (A) WAS NOT JUSTIFI ED. ACCORDINGLY WE DELETE THE ADDITION SUSTAINED BY LD. CIT (A). 13. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. 13 14. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 .10.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE ACIT, CC-1, JAIPUR. SHRI YOGESH MAHESHWARI, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 224(2)/JP/2011) BY ORDER, AR ITAT JAIPUR.