The ACIT, Circle-4, Surat V. M/s. Span Diagnostics Ltd., Surat

ITA 2366/AHD/2004

• Counselvise Citation: 236620514 RSA 2004
• Duration Of Justice: 7 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-01-2012
• Assessment Year: 1997-1998
• Appeal Filed On: 06-08-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: S N SOPARKAR
• Keywords: Unexplained investment; Unexplained expenditure; Loose papers; Deemed to accrue or arise in india
• Section: 69C; 133A

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH , , , , ! ! ! ! '# '# '# '# ' '' '. .. . . .. .%&' %&' %&' %&', , , , ( ! ( ! ( ! ( ! , ) ) ) ) BEFORE S/SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND A.K. GARODIA, ACCOUNTANT MEMBER) ITA NOS.2366, 2367, 2368/AHD/2004 [ASSTT.YEAR : 1997-1998, 1998-1999 AND 1999-2000] WITH CO.NO.221, 222 AND 223/AHD/2004 ACIT, CIR.4 SURAT. /VS. M/S. SPAN DIAGNOSTICS LTD. 173/B, NEW INDUSTRIAL ESTATE ROAD NO.6G, UDHNA, SURAT. ( (( (+, +, +, +, / APPELLANT) ( (( (-.+, -.+, -.+, -.+, / RESPONDENT) /! 0 1 / REVENUE BY : SHRI B.L. YADAV, DR 34 0 1 / ASSESSEE BY : SHRI S.N. SOPARKAR 56 0 4(/ DATE OF HEARING : 23 RD JANUARY, 2012 7&8 0 4(/ DATE OF PRONOUNCEMENT : 28.03.2012 / O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER: OUT OF BUNCH OF THESE SIX APPEALS, THREE APPEALS ARE BY THE REVE NUE FOR A.Y.1997-98 TO 1999-2000 AND THE REMAINING ARE CROSS-OBJECTIONS FI LED BY THE ASSESSEE FOR THE SAME ASSESSMENT YEARS, WHICH ARE DIRECTED AGAIN ST SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-III, S URAT DATED 27.5.2004, 12.04.2004 AND 27.5.2004 FOR THE RESPECTIVE ASSESSM ENT YEARS. SINCE SOME COMMON ISSUES ARE INVOLVED IN THESE APPEALS, ALL TH E APPEALS AND COS. ARE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -2- 2. FIRST WE TAKE UP THE REVENUES APPEAL FOR A.Y.19 97-98 IN ITA NO.2366/AHD/2004. THE GROUND OF THE REVENUES APPE AL READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING AN ADDITION OF RS.3,56,580/- MADE ON ACCOUNT OF INFLATED PURCHASES FROM AWARENES S TECHNOLOGY INC., USA RE; PAGE NO.45 OF LOOSE PAPER FILE NO.B1/ 1. 3. BRIEF FACTS OF THIS ISSUE ARE NOTED BY THE LEARN ED CIT(A) IN PARA-6 OF HIS ORDER, WHICH IS REPRODUCED BELOW: 6. GROUND NO. 3 RELATES TO THE ADDITION OF RS. 3,5 6,580/- ON ACCOUNT OF INFLATED PURCHASE FROM M/S.AWARENESS TECHNOLOGY INC USA ON THE BASIS OF PAGE 45 OF LOOSE PAPER FILE NO. B1/1, WHIC H WAS IMPOUNDED AS A RESULT OF SURVEY U/S. 133A IN THE PREMISE OF T HE APPELLANT COMPANY. AFTER PERUSAL OF THE ASSESSMENT ORDER IT I S SEEN THAT THE AO HAD DISCUSSED IN DETAIL ABOUT THE NATURE OF ENTRIES WRITTEN IN ALL THE SIX COLUMNS OF THIS PAGE. ON THE LOWER SIDE OF THIS PAGE, THE DETAILS OF UNPAID BILLS WERE RECORDED AND IT CONSISTED OF 5 CO LUMNS. DURING THE COURSE OF SURVEY SHRI VEERAL DESAI, EXECUTIVE DIREC TOR OF THE COMPANY WAS CONFRONTED WITH THE CONTENTS OF THESE L OOSE PAPERS AND WAS REQUIRED TO EXPLAIN ITS CONTENTS AND NATURE OF TRANSACTIONS WRITTEN THEREON. HOWEVER, HE COULD NOT EXPLAIN THE SAME. LATER ON, THE STATEMENT ON OATH OF DR. PRADEEP DESAI CHAIRMAN AND TECHNICAL DIRECTOR WAS RECORDED ON 8.9.2002 AND HE WAS REQUIR ED TO EXPLAIN CONTENTS AND NATURE OF ENTRIES ON THESE PAGES. HE A LSO COULD NOT FULLY AND SATISFACTORILY EXPLAIN THE CONTENTS AND THE NAT URE OF ENTRIES BUT HE STATED THAT THIS WAS WRITTEN BY ONE OF ITS (CO.) EMPLOYEES AND EXPRESSED HIS UNAWARENESS ABOUT THE CORRECT NATURE OF DETAILS AND SOUGHT SOME TIME TO FIND OUT THE NATURE OF SUCH ENT RIES. LATER ON, AFTER SOMETIME, VIDE ITS REPLY DTD. 1.3.04, THE APP ELLANT COMPANY SUBMITTED THAT IT HAD BEEN GATHERED FROM ITS MARKET ING DEPARTMENT THAT THIS STATEMENT WAS PREPARED FOR COMPUTING THE POSSIBLE CLAIM OF QUANTITY DISCOUNT IN RELATION TO PURCHASES MADE OVE R A PERIOD OF TIME FROM M/S. AWARENESS TECHNOLOGY INC. USA. IT WAS AGA IN STATED THAT ITS SALES MANAGER (INSTRUMENT), SHRI PARAS DESAI, W HO WAS ACCOUNTABLE FOR THE PERFORMANCE OF 'INSTRUMENT DIVI SION' OF THE COMPANY HAD EXCHANGED CORRESPONDENCE WITH M/S.AWARE NESS TECHNOLOGY INC. USA, AS HE WAS NEGOTIATING FOR A SP ECIAL QUANTITY DISCOUNT SO AS TO MEET ITS PERFORMANCE TARGET FOR T HE F.Y ENDING ON MARCH 31, 1999. IT WAS FURTHER STATED THAT DURING T HE COURSE OF THIS ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -3- NEGOTIATIONS, HE HAD COMPUTED THIS DISCOUNT CLAIM A ND GENERATED THIS STATEMENT AND IT WAS AN ATTACHMENT FORMING PART OF THE FAX DTD. 13.3.99 SENT TO M/S. AWARENESS TECHNOLOGY INC. USA. HOWEVER, THE SUPPLIERS HAD NOT ACCEPTED THE CLAIM AND EXPRESSED THEIR INABILITY TO CONSIDER THE SAME FOR SPECIAL DISCOUNT IN VIEW OF R OCK BOTTOM PRICE ALREADY OFFERED BY THEM FOR THE INSTRUMENTS SUPPLIE D TO THE COMPANY FOR RESALE IN INDIA. AFTER THAT, IN ITS WRITTEN SUBMISSION DTD.2.3.04, I T WAS FURTHER STATED THAT SINCE THE LOOSE PAPER NO. 45 WAS PREPAR ED BY PARAS DESAI AND THEREFORE HIS STATEMENT SHOULD BE RECORDE D AND CONSEQUENTLY SHRI PARAS DESAI WAS SUMMONED AND HE A PPEARED BEFORE THE A.O AND GAVE HIS STATEMENT ON 4.3.04. IN HIS STATEMENT, MR. DESAI HAD ACCEPTED THAT THIS PAPER WAS PREPARED BY HIM WHILE NEGOTIATING FOR SPECIAL DISCOUNT ON THE TOTAL NUMBE R OF INSTRUMENTS SOLD IN INDIA AFTER PURCHASING-THE- SAME FROM M/S. AWARENESS TECHNOLOGY INC. USA, RIGHT FROM THE BEGINNING TILL THE DATE OF PREPARATION OF THE DOCUMENTS @ $ 100 PER INSTRUMENT . HE FURTHER NARRATED THE NATURE OF ENTRIES IN ALL THE COLUMNS ( ON THE UPPER PART OF PAPER NO. 45) BY STATING THAT COL. NO. 1 DENOTED THE INVOICE NUMBER REGARDING THE PURCHASE FROM AWARENESS TECHNO LOGY INC. USA; COL. NO. 2 WAS DENOTING THE DATE OF INVOICE; C OL. 3 REPRESENTED THE AMOUNT AFTER DEDUCTING THE REQUESTED DISCOUNT F ROM THE ORIGINAL INVOICE AMOUNT; COL. NO.4 REPRESENTED THE DATE OF P AYMENT I.E DISBURSEMENT BY THE COMPANY; COL. NO. 5 REPRESENTED THE INVOICE AMOUNT, WHICH WOULD BE VERIFIED FROM INDIVIDUAL INV OICES AND COL. NO. 6 REPRESENTED THE DIFFERENCE OF AMOUNT BETWEEN THE INVOICE AMOUNT I.E COL. NO. 5 AND THE AMOUNT WORKED OUT BY US AS SHOWN IN COL. NO, 3 ASSUMING THAT OUR REQUEST FOR SPECIAL DI SCOUNT WOULD BE CONSIDERED. AFTER PERUSING THE CONTENTS OF STATEMENT AS MADE BY SHRI PARAS DESAI, THE AO POINTED OUT THAT WHATEVER HE (S HRI PARAS DESAI) HAD STATED WAS FAR FROM THE TRUTH. THE AO HA D FURTHER STATED THAT IF HIS VERSION FOR ENTRIES IN COL. NO. 3 WAS A CCEPTED THEN THE ENTRIES MENTIONED IN COL. 3 AND 5 WITH RESPECT TO I NSTRUMENT PURCHASED VIDE INVOICE NO. 9550 DATED 19/8/97 WERE SHOWING THE SAME AMOUNT , BUT IN COL. NO. 6 THE DIFFERENCE HAD BEEN WORKED OUT AT US$ 1000. SIMILARLY, THE AO POINTED OUT THAT THE SAME WERE IN RESPECT OF INVOICE NO. 9052 DATED 29.8.97 THE DIFFE RENCE OF US$ 600 WAS SHOWN; IN RESPECT OF INVOICE NO. 9573, THE DIFF ERENCE WAS SHOWN AT US$ 1300 AND IN RESPECT OF INVOICE NO. 10477 THE DIFFERENCE WAS ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -4- WORKED OUT AT USS 2800 WHEREAS IN COL. NO. 3 AND 5 AND SAME AMOUNT WAS WRITTEN. ON THE BASIS OF THESE FACTS, TH E AO HAD ASKED SHRI PARAS DESAI TO SUBMIT HIS CLARIFICATION BECAUS E ON THE BASIS OF THESE ENTRIES HIS EXPLANATION ABOUT COL NO. 3 AND C OL. NO. 5 WERE NOT FOUND IN CONSONANCE. SHRI PARAS DESAI IN RESPONSE T O THE ABOVE QUESTION STATED THAT THE WORKING ON LOOSE PAPER WAS CARRIED OUT TO FIND THE QUANTUM OF TOTAL PROPOSED DISCOUNT AMOUNT IF ACCEPTED BY M/S. AWARNESS TECHNOLOGY INC. USA AND THERE WAS NO INTENTION TO MISLEAD THE DEPARTMENT AS SUCH. HE FURTHER STATED T HAT A LONG SHEET RELATING TO ALL THE PURCHASE INVOICES WAS PREPARED AND IN THE PROCESS THE FIGURES OF COL. NO. 3 IN CASE OF ABOVE 4 INVOIC ES WERE TAKEN THE SAME AS WERE CORRESPONDINGLY SHOWN IN COL. NO. 5 [B EING THE INVOICE AMOUNT] BY MISTAKE AND THEREFORE, THE SAME MIGHT BE ACCEPTED AS CORRECT VERSION. THE AO AFTER GOING THROUGH THE SUB MISSION AND STATEMENT AS MADE BY DR. PRADEEP DESAI, VEERAL DESE AI AND ALSO BY SHRI PARAS DESAI (SALES MANAGER OF THE APPELLANT CO MPANY) ALONGWITH DETAILS FILED FOR EXPLAINING THE NATURE O F ENTRIES IN THE ABOVE REFERRED LOOSE PAPERS, CAME TO THE CONCLUSION THAT THE ENTIRE SUBMISSIONS WERE MADE TO MISLEAD THE DEPARTMENT AND THESE WERE FAR FROM THE TRUTH. HE MADE THE FOLLOWING OBSERVATI ONS IN THE ASSESSMENT ORDER :- XXXX DURING THE APPELLATE PROCEEDINGS, THE A.RS SUBMITTE D THAT THE AO WAS NOT JUSTIFIED IN HIS ACTION BY MAKING ADDITION OF RS.3,56,580/- TREATING THE SAME AS THE AMOUNT OF EXCESSIVE CLAIM OF PURCHASE EXPENDITURE. THE A.RS MADE FOLLOWING SUBMISSIONS DU RING APPELLATE PROCEEDINGS : A. CUSTOM DUTY HAS BEEN PAID ON THE PROPER. INVOICE AMOUNT. B. CONFIRMATION FURNISHED BY THE OVERSEAS SUPPLIER HAS JUST BEEN BRUSHED ASIDE. C. THE OVERSEAS SUPPLIER IS A WHOLLY UNRELATED PARTY. D. ALL PAYMENTS ARE MADE AFTER AVAILING CREDIT PERIODS AND THROUGH PROPER BANKING CHANNELS. E. THE ALLEGED OVER INVOICING CONSTITUTE 0.94% OF THE TOTAL IMPORTS DURING THE YEAR (3,56,580/377.8 LACS). IT CONSTITUTE 0.58% OF THE TOTAL PURCHASES DURING YEAR (PAPER BOOK 3) (3,56,580/6,08,63,000). THERE WAS N O PERCEIVED REASON FOR RESORTING TO SUCH RISK PRONE D EVICE. ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -5- F. DURING THE A.Y. 97-98 AND ONWARDS, THE APPELLAN T WAS TO PAY MORE PRICE ON IMPORTS AS INDIAN CURRENCY WAS BECOMING WEAKER AND WEAKER. CORRESPONDING INCREASE IN SALE PRICE WAS NOT THERE, HENCE, % OF GROSS PROFIT MARGIN WAS AFFECTED. INSPITE OF THIS, OVER ALL RESULT IN T HIS YEAR IMPROVED AND THE LOSS OF THE EARLIER YEAR WAS CONVE RTED INTO PROFIT. KINDLY REFER TO PAGE 4 OF THE PAPER BOOK. I T SHOWS TRADING ACCOUNT OF SALES OF INSTRUMENT PURCHASED FR OM AWARENESS, THIS REFLECTS FALL FROM 35.71% TO 30.15% TO 24.07% STARTING FROM A.Y. 1997-98 TO AY. 1999-00. T HE RATE OF DOLLAR ALSO INCREASED FROM RS. 36/- TO RS. 39.70 TO RS. 42.71 RESPECTIVELY. THIS CLARIFIES THE FACT THAT TH E RESULT SHOWN BY THE APPELLANT IS CORRECT AND IS DEPENDENT OF THE RATE OF DOLLAR. CONSIDERING THE FACT RISING DOLLAR RATE THE RESULT OF THE APPELLANT EVEN FOR THESE ITEMS IS FAIRLY GOOD. THE ABOVE PARAMETERS INDICATE THAT THE ACCOUNTS ARE PROPERLY MAINTAINED AND QUESTION OF INFLATION IN PURCHASE DO ES NOT ARISE. G. THERE HAS BEEN NO CORROBORATIVE EVIDENCE AT ALL TO SUGGEST OR INDICATE THAT THERE HAS BEEN ANY MOVEMEN T OF MONEY OR THAT THE MONEY WAS RECEIVED BACK FROM THE SUPPLIER. NO SUCH NOTING IS FOUND ON THE IMPOUNDED PAPER. H. FOR MAKING ADDITION UNDER SECTION 69, THE ONUS I S ON THE AO TO ESTABLISH THAT SOME MONEY OR CONCRETE ASS ET EXISTED IN THE OWNERSHIP OR POSSESSION OF THE ASSESSEE AS O N THAT DAY. IN THE INSTANT CASE, THE ONUS HAS NOT EVEN BEEN ATT EMPTED TO BE DISCHARGED, THE ADDITION HAS BEEN MADE BASED ON THE UNSIGNED LOOSE PAPER HAVING NO OTHER BACK UP TO SUP PORT. A.OS CONCLUSION. I. AT THE TIME OF SURVEY ITSELF MR. VIRAL DESAI IND ICATED THAT THE COLUMN OF DIFFERENCE RELATES TO SOME DISPU TED CLAIM BETWEEN THE PARTIES. J. ASSUMING (BUT NOT AT ALL ACCEPTING) THERE WAS SO ME INCONSISTENCY, STILL, THERE IS ABSOLUTELY NOTHING T O SUGGEST THAT THE INCONSISTENCY WAS WITH THE CONNIVANCE OF THE AS SESSEE AND SUPPLIER (AN UNRELATED PARTY) AND/OR THAT, THERE WA S ANY ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -6- INFLOW WITHIN THE COFFERS OF THE COMPANY. MISCHIEF, IF ANY, BY SOME OFFICIAL OF THE COMPANY (WORKFORCE BEING HUGE AND NO DIRECT CONTROL OVER THEM) DOES NOT RESULT IN ANY IN FLOW OR INCOME FOR THE COMPANY. K. ASSUMING (BUT NOT AT ALL ACCEPTING) THAT THERE W AS ANY SUCH INFLOW, THERE WAS NO SEPARATE ADDITION THEREAF TER REQUIRED ON ADHOC BASIS - BECAUSE, ADDITION OF A RS . 2 LAKHS. FURTHER, THIS INFLOW SHOULD BE SET OFF AGAINST ANY OTHER ADDITION BASED ON ALLEGED APPLICATION OF INCOME. ON LY THE HIGHER OF THE TWO CAN, AT THE WORST, BE ADDED. L. ASSUMING (BUT NOT AT ALL ACCEPTING) THAT THERE WERE ANY SUCH INFLATED PURCHASES, TO THE EXTENT OF UNSOL D STOCK OF INSTRUMENTS VALUED AT GROSS VALUE, THERE IS DOUBLE ADDITION. DETAILS ABOUT STOCK POSITION IS GIVEN (PAPER BOOK P AGE 4). IN VIEW OF ALL THE ABOVE FACTS, THE ADDITION IS MER ELY ON SURMISES AND PRESUMPTION WITHOUT ANY EVIDENCE OR DIRECT PROO F TO SUGGEST OR INDICATE THAT THE NOTINGS EVER FRUCTIFIED INTO ANY ENFORCEABLE RIGHT OR ACCRUAL OF CLAIM IN FAVOUR OF THE APPELLANT. THE AD DITION NEEDS TO BE DELETED' BESIDES ABOVE SUBMISSION, THE A.RS ALSO SUBMITTED A CHART ALONGWITH PURCHASE INVOICES RECEIVED FROM M/S. AWARENESS TECH NOLOGY INC., USA (ATI) FOR THE ENTIRE PERIOD I.E FROM 7.2.97 TIL L 7.8.98 SHOWING THE DATEWISE PURCHASE OF INSTRUMENTS FROM THE SAID COMP ANY. AFTER GOING THROUGH THE PURCHASE INVOICES, IT IS FOUND THAT NUMBER OF INSTRUMENTS PURCHASED AGAINST EACH INVOIC E AND THE AMOUNT OF PROPOSED DISCOUNT AS PROJECTED IN COL. NO . 6 OF THE SEIZED PAPER NO. 45, AFTER MULTIPLYING THE NUMBER OF INSTR UMENTS, PURCHASED, BY US$ 100 (FOR EACH INSTRUMENT) IS THE SAME AND TH ERE IS NO DIFFERENCE AT ALL EXCEPT INVOICE NO. 8282 DTD. 17.2 .97 WHERE THERE IS MINOR DIFFERENCE OF US$ 195. IT WAS EXPLAINED DURIN G THE APPELLATE PROCEEDINGS THAT THE SAID MINOR DIFFERENCE WAS ON A CCOUNT OF COMPUTATION ERROR WHICH CREPT-UP WHILE WORKING OUT THE FIGURES OF PROPOSED DISCOUNT FOR ALL INSTRUMENTS. REGARDING TH E INVOICE AMOUNT MENTIONED IN COL. NO.5 WITH RESPECT OF ABOVE PURCHA SE INVOICE NO. 8282, THE SAME HAS BEEN FOUND PROPERLY REFLECTED IN BOOKS OF ACCOUNTS. AS SUBMITTED EARLIER, THE DIFFERENCE BETW EEN THE AMOUNT AS SHOWN IN COL.NO. 5 AND THAT OF COL NO.3 PER INVOICE HAS ALSO BEEN EXAMINED AND IT IS FOUND THAT EXCEPT INVOICE NO.900 5 DD. 19.8,97; ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -7- INVOICE NO. 9052 DD. 29.8.97: INVOICE NO. 9753 DTD. 22.2.98 AND INVOICE NO. 10472 DTD. 7.8.98 (WHERE THERE IS NO DI FFERENCE IN FIGURES OF COL NO. 3 AND COL.NO. 5), IN ALL OTHER CASES, TH E DIFFERENCE AS PER NUMBER OF INSTRUMENT PER INVOICE @ US$100 HAS BEEN CORRECTLY REFLECTED. REGARDING THE WORKING OF ABOVE REFERRED 4 INVOICES, WHERE THERE WAS NO DIFFERENCE IN AMOUNT AS SHOWN IN COL.N O. 5 AND COL. NO. 3, THE SAME REPLY AS WAS GIVEN BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS HAS BEEN MADE BEFORE ME ALSO. IT WAS FU RTHER SUBMITTED THAT INVOICE NO., DATE, AMOUNT OF INVOICE AND NUMBE R OF INSTRUMENTS PURCHASED YEARWISE WERE PROPERLY REFLECTED IN BOOKS OF ACCOUNTS AND ON THAT BASIS, THE PROPOSED DISCOUNT WAS WORKED OUT AND HENCE IF THERE WAS SOME MISTAKE WHILE WORKING OUT THE PROPOS ED DISCOUNT IN CASE OF 4 INVOICES THAT MIGHT BE TREATED AS HUMAN E RROR. IT WAS AGAIN STATED BY THE A.RS THAT NO ADVERSE INFERENCE WOULD HAVE BEEN DRAWN BY THE AO IN VIEW OF THE FACT THAT NO SUCH REQUEST FOR PROPOSED DISCOUNT WAS ENTERTAINED BY THE SUPPLIERS FOR WHICH NECESSARY PROOF IN THE FORM OF FAX LETTERS HAD BEEN SUBMITTED, SHOW ING CORRESPONDENCE WITH ATI. THE A.RS AGAIN STATED THAT THE ACTUAL PURPOSE WAS TO QUANTIFY THE AMOUNT OF PROPOSED DISC OUNT AND THE SAME WAS CORRECTLY WORKED OUT ON THE BASIS OF NUMBE R OF INSTRUMENTS PURCHASED AND SOLD RIGHT FROM THE BEGINNING INCLUDI NG CLOSING STOCK. IT HAD BEEN AGAIN ARGUED BY THE A RS THAT THE AO DI D NOT BRING ANY EVIDENCE ON RECORD AGAINST THE APPELLANT COMPANY SH OWING THAT THE SAID AMOUNT OF PROPOSED DISCOUNT (AS PER COL. NO. 6 ) WAS REALLY PAID IN EXCESS OF ACTUAL PURCHASE AMOUNT BY THE COMPANY AND LATER ON IT WAS RECEIVED BACK BY IT. DURING THE APPELLATE PROCEEDINGS, THE A.RS WERE REQ UESTED TO EXPLAIN AS TO WHETHER SUCH WORKING SHOWING TOTAL PU RCHASE OF INSTRUMENTS PER INVOICE AND WORKING OF PROPOSED DIS COUNT ACCORDING TO NUMBER OF INSTRUMENT (SHOWING IN EACH INVOICE) W AS SUBMITTED BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS OR NOT? IN RESPONSE TO THIS QUERY, THE A.RS STATED THAT ALL SU CH DETAILS ALONGWITH PURCHASE INVOICES WERE SUBMITTED BEFORE THE AO AND AFTER THAT THESE WERE DULY VERIFIED BY THE AO AND THUS THE SUBMISSIO NS MADE DURING APPELLATE PROCEEDINGS WAS NOT NEW. AS PER THE A.RS THE CHART SUBMITTED WAS PREPARED FOR EASY UNDERSTANDING AND A LL THE FIGURES WERE TAKEN FROM PURCHASE INVOICES. 4. IT IS NOTED BY THE AO IN THE ASSESSMENT ORDER TH AT IN THE COURSE OF SURVEY OPERATION A LOOSE PAPER FILE INVENTORISED AS B-1/1 WAS FOUND AND IMPOUNDED. HE FURTHER NOTED THAT PAGE NO.45 OF THI S LOOSE PAPER FILE IS A ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -8- STATEMENT CONSISTED OF SIX COLUMNS. I.E. BILL NO, D ATE, AMOUNT IN US DOLLAR, PAYMENT DATE, PAYMENT US DOLLAR AND THE DIFFERENCE IN US DOLLAR ON UPPER SIDE. HE ALSO NOTED THAT ON THE LOWER SIDE, UNPAID BILLS WERE RECORDED AND IT CONSISTED OF FIVE COLUMNS; BILL NO., DATE, AMOUNT I N US DOLLAR, PAYMENT US DOLLAR AND DIFFERENCE IN US DOLLAR. IN THE COURSE OF SURVEY ITSELF, SHRI VIRAL DESAI, EXECUTIVE DIRECTOR OF THE ASSESSEE COMPANY W AS CONFRONTED WITH THE CONTENTS OF THE LOOSE PAPER AND WAS REQUIRED TO EXP LAIN THE CONTENTS AND NATURE OF TRANSACTIONS APPEARING IN THE LOOSE PAPER , BUT HE COULD NOT EXPLAIN. LATER ON ALSO, A STATEMENT ON OATH OF DR. PRADEEP DESAI, CHAIRMAN & TECHNICAL DIRECTOR OF THE ASSESSEE COMPANY WAS RE CORDED ON 8.9.2002 AND WAS REQUIRED TO EXPLAIN THE CONTENTS AND NATURE OF LOOSE PAPER. BUT HE COULD NOT FULLY AND SATISFACTORILY EXPLAIN THE CONT ENTS AND NATURE OF THE LOOSE PAPER. HE COULD ONLY STATE THAT THE CONTENTS WERE TRANSACTIONS WITH THE AMERICAN COMPANIES AND DETAILS MIGHT BE RELATED TO COMPANYS BUSINESS. IN THE COURSE OF ASSESSMENT, THE AO VERI FIED THE CONTENTS OF THE LOOSE PAPER FROM REGULAR BOOKS OF ACCOUNTS. THE BI LL NO, DATE, DATE OF PAYMENT AND PAYMENT IN US DOLLAR WERE DULY GOT VERI FIED, BUT THE AMOUNT OF US DOLLAR IN THIRD COLUMN AND DIFFERENCE IN US D OLLAR IN LAST COLUMN COULD NOT BE GOT VERIFIED FROM THE REGULAR BOOKS OF ACCOUNT. THE AO HAS NOTED IN HIS ORDER THAT IT WAS CONSIDERED NECESSARY TO SEEK EXPLANATION FROM DOER OF THE BUSINESS, DR. PRADEEP DESAI, CHAIRMAN & TECHNICAL DIRECTOR OF THE ASSESSEE-COMPANY. HIS STATEMENT WAS AGAIN RECO RDED ON 26.2.2004. RELEVANT PORTION OF THE STATEMENT OF DR.PRADEEP DES AI WAS REPRODUCED BY THE AO IN THE ASSESSMENT ORDER. THE AO HAS NOTED T HAT NEW STORY HAS BEEN STATED BY HIM AND THE STORY DID NOT MATCH WITH THE FACTS APPEARING ON THE LOOSE PAPER. THE STORY STATED BY SHRI PRADEEP DESA I IN THE STATEMENT RECORDED IN THE COURSE OF ASSESSMENT PROCEEDINGS WA S THAT THIS STATEMENT WAS RECORDED FOR COMPUTING THE POSSIBLE CLAIM OF QU ANTITY DISCOUNT IN RELATION TO PURCHASES MADE OVER A PERIOD OF TIME FR OM M/S.AWARENESS ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -9- TECHNOLOGY INC., USA. IT WAS FURTHER SUBMITTED BE FORE THE AO BY WAY OF WRITTEN SUBMISSIONS DATED 2.3.2004 THAT SINCE THE L OOSE PAPER WAS PREPARED BY SHRI PRARAS DESAI AND THEREFORE, HIS STATEMENT S HOULD BE RECORDED. THE AO RECORDED THE STATEMENT OF SHRI PARAS DESAI ALSO. HE HAS NOTED THAT EVEN SHRI PARAS DESAI COULD NOT EXPLAIN THE CONTENTS OF THE LOOSE PAPER. THE RELEVANT PORTION WAS ALSO REPRODUCED BY THE AO IN T HE ASSESSMENT ORDER. THEREAFTER, THE AO HAS CONCLUDED THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE BASIS AS TO HOW THE AMOUNT APPEARED IN COL.NO.3 AND HE HAS NOTED THAT THE ASSESSEE HAS TRIED TO MISLEAD AND THEREBY NO CORREC T FACTS ABOUT THE SAME HAD BEEN EXPLAINED. IT WAS HELD THAT DR.PRADEEP DE SAI, CHAIRMAN OF THE ASSESSEE-COMPANY SHIFTED HIS ONUS TO HIS EMPLOYEE, SHRI PARAS DESAI WHO IN TURN ADOPTED EVASIVE TACTICS AND DID NOT SUBSTAN TIATE HIS STORY THAT DIFFERENCE IN COLUMN NO.6 WAS CLAIM OF SPECIAL DISC OUNT AT THE RATE OF US DOLLAR 100 BASED ON NUMBER OF INSTRUMENTS IMPORTED AND THAT COLUMN NO.3 SHOWS DISCOUNTED VALUE OF THE INVOICE AT THE ABOVE RATE. THE AO CAME TO THE CONCLUSION THAT THE ASSESSEE WAS CLAIMING INFLA TED PURCHASES THROUGH OVER INVOICING. THE AO HAS STATED THAT FROM COLUMN NO.3, 5 & 6 IT CAN BE ASSUMED THAT IN COLUMN NO.3 THE REAL COST OF PURCHA SE WAS SHOWN, IN COLUMN NO.5 WAS INFLATED PURCHASE AMOUNT AS PER INF LATED INVOICES AND COLUMN NO.6 IS THE DIFFERENCE BETWEEN THE TWO. IN THE PRESENT YEAR, THE AO MADE ADDITION OF RS.3,56,580/- BY CONVERTING US DOL LAR 9905 RELATED TO THE PRESENT YEAR AT THE RATE OF RS.36/- PER US DOLLAR TOTAL AMOUNTING TO RS.3,56,580/-. AGAINST THIS ADDITION, NOW THE REVE NUE IS IN APPEAL BEFORE US. 5. THE LEARNED DR SUPPORTED THE ORDER OF THE AO WHI LE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A). HE ALSO SUBMITTED THAT PAGE NOS.169 TO 172 OF THE PAPER BOO K ARE RELEVANT REGARDING THIS ISSUE. ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -10- 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD AND ALSO GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. THE RELEVANT FINDINGS OF THE LEARNED CIT(A) CONTAINED A T PAGE NOS.12 AND 13 OF HIS ORDER ARE REPRODUCED BELOW: AFTER THE PERUSAL OF ABOVE SUBMISSION RELATING TO THE DISALLOWANCE MADE BY THE AO, IT IS FOUND THAT ALL T HE ENTRIES IN THE SAID LOOSE PAPER FILE NO. 45 ARE FOUND PROPERLY EXP LAINED EXCEPT A MINOR DIFFERENCE IN THE CASE OF INVOICE NO. 8282 WH ERE PROPOSED DISCOUNT HAD BEEN SHOWN AT US$ 1305 INSTEAD OF US$ 1500 (THIS PURCHASE INVOICE SHOWED THE PURCHASE OF 15 INSTRUME NTS). SIMILARLY, SOME ARITHMETICAL ERRORS HAVE ALSO BEEN FOUND IN TH E NEXT 4 INVOICES REFERRED ABOVE WITH RESPECT TO COL NO. 3 ENTRIES. S HRI PARAS DESAI WHO PREPARED THE ABOVE REFERRED CHART HAD REPEATEDL Y ADMITTED IN HIS STATEMENT RECORDED ON OATH BEFORE THE AO THAT S UCH MISTAKES CREPT-UP BECAUSE OF HUMAN ERRORS. THIS HIS EXPLANAT ION OF SHRI DESAI SEEMS TO BE ACCEPTABLE AND IT APPEARS PERHAPS INADVERTENTLY HE MENTIONED INVOICE FIGURES OF COL. NO. 5 IN COL. NO. 3 ALSO TING TO THESE 4 INVOICES. THE PROPOSED WORKING OF DISCOUNT WAS SENT BY FAX TO ATI,USA ON 13.3.99 ALONGWITH THIS CHART AND IN R ESPONSE TO THAT WHATEVER REPLY WAS RECEIVED, THE SAME HAD ALSO BEEN SUBMITTED FOR PERUSAL BEFORE THE AO AND ALSO DURING THE APPELLATE PROCEEDINGS. AFTER THE PERUSAL OF THE SAME, IT APPEARS THAT THE WORKING WAS GENUINELY CARRIED OUT AND THE A.RS HAVE SUCCEEDED T O PROVE THEIR CONTENTION IN THIS REGARD. ON THE CONTRARY, THE AO COULD NOT BRING ON RECORD ANY CLINCHING EVIDENCE ABOUT THE PAYMENT OF INFLATED PURCHASE AMOUNTS MADE BY THE APPELLANT COMPANY TO A TI. THE AO, IT SEEMS IGNORED THE MAJORITY OF EVIDENCES SUCH AS PUR CHASE INVOICE, FAX LETTERS SENT TO FOREIGN SUPPLIERS (UNRELATED TH IRD PARTY), THE NUMBER OF INSTRUMENTS PURCHASED AND THE DATE OF PUR CHASE ETC., WHICH WERE IN FAVOUR OF THE CONTENTION OF THE APPEL LANT COMPANY AND SIMPLY RELIED UPON 'DIFFERENCE CHARGED' OF AMOUNTS AS SHOWN IN COL. NO. 5 AND COL.NO. 3 AGAINST ABOVE INVOICES AND WITH OUT ASSIGNING CONVINCING REASONS AND CITING CORROBORATIVE EVIDENC ES, CAME TO THE CONCLUSION THAT THE PROPOSED DISCOUNT AMOUNT MENTIO NED IN COL. NO. 6 WAS THE RECEIPT ON ACCOUNT OF INFLATED PAYMENTS M ADE AGAINST ITS PURCHASES DURING THE ENTIRE PERIOD. I DO NOT AGREE WITH SUCH FINDINGS OF THE AO AS THE SAME IS BASED ON CONJUNCTURE AND S URMISES. FOR MY ABOVE FINDING, I RELY UPON THE FINDINGS OF HON'BLE SUPREME COURT IN ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -11- THE CASE OF DHIRAJBHAI GIRDHARLAL VS. CIT 26 ITR 73 6 (SC); DHAKESHWARI COTTON MILLS LTD VS. CIT 26 ITR 755 (SC ) AND OMAR SALAY MOHAMMED VS. CIT 37 ITR 151 WHEREIN THE HON'B LE APEX COURT HAS HELD THAT THE ASSESSMENT MADE ON THE BASI S OF CONJECTURES, SURMISES AND PRESUMPTIONS AND NOT ON HARD ROCK OF F ACTS AND RELEVANT MATERIALS, IS LIABLE TO BE CANCELLED. FURT HER, IN CASE OF SHRI DHIRAJBHAI GIRDHARILAL (SUPRA), THE HON'BLE COURT H ELD THAT 'FINDING WOULD BE VITIATED IF IT IS BASED PARTLY ON CONJUNCT URES OR ON MATERIAL WHICH IS PARTLY INADMISSIBLE OR IRRELEVANT EVEN THO UGH THERE MAY BE SOME OTHER RELEVANT ADMISSIBLE MATERIAL TO SUPPORT THE FINDINGS'. I THEREFORE, ON THE BASIS OF ABOVE REFERRED FACTS DEL ETE THE ADDITION AS MADE BY THE AO AT RS. 3,56,580/- AS THE SAME WAS MA DE WITHOUT ' ANY BASIS. HENCE THIS GROUND OF APPEAL IS ALLOWED. 7. AS PER THE ABOVE PARAS OF THE ORDER OF THE LEARN ED CIT(A), WE FIND THAT A CLEAR FINDING IS GIVEN BY THE LEARNED CIT(A) THAT THE AO COULD NOT BRING ON RECORD ANY CLINCHING EVIDENCE ABOUT THE PA YMENT OF INFLATED PURCHASE AMOUNT MADE BY THE ASSESSEE-COMPANY, WHERE AS THE AR OF THE ASSESSEE HAS SUCCEEDED TO PROVE THE CONTENTIONS REG ARDING THE PROPOSED CLAIM FOR ADDITIONAL DISCOUNT. COPY OF THE IMPOUN DED PAPER IS AVAILABLE AT PAGE NO.171 OF THE PAPER BOOK. AT PAGE NO.169 TO 1 70 IS THE ASSESSEES REQUEST LETTER DATED 13-3-1999 SENT BY FAX TO MS. M ARY FREEMAN OF AWARENESS REQUESTING FOR SPECIAL DISCOUNT OF US DOL LAR 100 FOR EACH OF THESE INSTRUMENTS RETROSPECTIVELY FROM 1997. THERE ARE SOME MISTAKES IN THE CALCULATION CONTAINED IN THE IMPOUNDED PAPER WH ICH IS AVAILABLE AT PAGE NO.171 OF THE PAPER BOOK BUT ON ACCOUNT OF THIS SMA LL MISTAKE, THE EXPLANATION OF THE ASSESSEE CANNOT BE REJECTED OUT- RIGHTLY WITHOUT VERIFYING FROM THE SUPPLIERS. THERE IS NO MENTION IN THE ASS ESSMENT ORDER THAT ANY EFFORTS WERE MADE BY THE AO TO GET FACT VERIFIED FR OM THE SUPPLIER OR EVEN FOR ASKING THE ASSESSEE TO OBTAIN CONFIRMATION FROM THE SUPPLIER. CONSIDERING THE FACTS OF THE PRESENT CASE IN ITS EN TIRETY, WE FEEL THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT( A) ON THIS ISSUE, WHICH IS ACCORDINGLY CONFIRMED AND THE GROUND NO.1 OF THE RE VENUE IS REJECTED. ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -12- 8. THE GROUND NO.2 OF THE REVENUES APPEAL READS AS UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING AN ADDITION OF RS.5,52,000/- MADE ON ACCOUNT OF SECRET COMMISSION BASED ON IMPOU NDED INCRIMINATING DOCUMENTS (PAGE-3 OF LOOSE PAD BOOK B 1/2). 9. THE BRIEF FACTS NOTED BY THE AO AT PAGE NO.14 OF THE ASSESSMENT ORDER ARE THAT IN THE COURSE OF SURVEY, PAD BOOK B1 /2 WAS FOUND FROM THE CABIN OF DR.PRADEEP DESAI AND THE SAME RELATED TO C ERTAIN TRANSACTIONS AMOUNTING TO RS.30.34 LAKHS IN RESPECT OF SUPPLY OF REAGENTS/CHEMICALS AND IN TURN KICKBACK/COMMISSION WAS PAYABLE AT 25%, 17. 5%, 15% AND 14.3%. HE FURTHER NOTED THAT THE FIGURE OF 5.52 RELATED TO TOTAL KICKBACK/COMMISSION PAID TO VARIOUS PARTIES AND THE SE TRANSACTIONS WERE NOT FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNT. HE FURTHER NOTED THAT DR. DESAI, CHAIRMAN OF THE ASSESSEE-COMPANY ON BEIN G CONFRONTED HAS GIVEN VAGUE REPLY IN RESPECT OF CONTENTS OF THIS PA PER IMMEDIATELY AFTER THE SURVEY TOOK PLACE. IN THE COURSE OF ASSESSMENT PRO CEEDINGS, THE AO ASKED THE ASSESSEE TO OFFER EXPLANATION ABOUT THE CONTENT S AND NATURE OF THIS PAGE NO.3 AND IN REPLY IT WAS SUBMITTED BEFORE THE AO BY THE ASSESSEE THAT THE STATEMENT OF DR. DESAI RECORDED ON 8.7.02 WAS TOWAR DS THE ANSWER TO QUESTION NO.8, BUT THE AO WAS NOT SATISFIED. HE HE LD THAT AN AMOUNT OF RS.5.52 LAKHS WAS CONSIDERED AS KICKBACK/COMMISSION PAYMENT AND THE SAME WAS EXPENDITURE INCURRED OUT OF UNEXPLAINED SO URCES WITHIN THE MEANING OF PROVISIONS OF SECTION 69C OF THE ACT. H E MADE ADDITION OF THIS COUNT. BEING AGGRIEVED, THE ASSESSEE CARRIED THE M ATTER IN APPEAL BEFORE THE LEARNED CIT(A) WHO HAS DELETED THIS ADDITION, AND N OW THE REVENUE IS IN APPEAL BEFORE US. ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -13- 10. THE LEARNED DR SUPPORTED THE ORDER OF THE AO WH EREAS THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A). HE FURTHER SUBMITTED THAT IT IS A DUMB DOCUMENT AND CO PY IS AVAILABLE AT PAGE NO.175 OF THE PAPER BOOK. HE PLACED RELIANCE ON TH E JUDGMENT OF THE HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CO MMISSIONER OF INCOME-TAX V. GIRISH CHAUDHARY, 296 ITR 619 (DEL). HE ALSO REPLACED RELIANCE ON THE DECISION OF THE TRIBUNAL RENDERED I N THE CASE OF ASSISTANT COMMISSIONER OF INCOME-TAX VS SATYAPAL WASSAN (ITA T[JABL]) 295 ITR (AT) 352. 11. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD AND ALSO GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW AND THE JUDGMENTS CITED BY THE LEARNED COUNSEL FOR THE ASSE SSEE. WE FIND THAT IT IS OBSERVED BY THE LEARNED CIT(A) AT PAGE NO.18 OF HIS ORDER THAT IT IS NOT CLEAR AS TO ON WHAT BASIS THE AO PICKED THE FIGURE OF RS. 5.52 LAKHS AND CONSIDERED THE SAME AS THE AMOUNT OF KICKBACK/COMMI SSION PAID BY THE ASSESSEE-COMPANY DURING THE YEAR. WE HAVE ALSO GON E THROUGH THE RELEVANT PAPER WHICH IS AVAILABLE ON RECORD AT PAGE NO.175 O F THE PAPERBOOK WHEREIN WE DID FIND THAT IN THE MIDDLE OF THE PAGE, THERE I S MENTION OF FIGURE 5.52, BUT THERE IS NO NAME, DATE OR NARRATION NEAR TO THI S FIGURE AND HENCE THERE IS NO BASIS TO HOLD THAT THIS FIGURE APPEARING IN THE MIDDLE OF THE PAGE IS REGARDING ANY PAYMENT OF KICKBACK/COMMISSION BY THE ASSESSEE-COMPANY. IT IS NOT CLEAR WHETHER THIS IS PAYMENT OR RECEIPT OR ASSETS OR LIABILITY, AND IN THIS VIEW OF THE MATTER, WE FEEL THAT NO INTERFEREN CE IS CALLED FOR IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE, WHICH IS CONFI RMED AND THE GROUND NO.2 OF THE REVENUE IS REJECTED. 12. THE GROUND NO.3 OF THE REVENUES APPEAL READS A S UNDER: ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -14- 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A), SURAT HAS ERRED IN RESTRICTING THE A DDITION OF RS.1,81,000/- TO RS.6,824/- MADE ON ACCOUNT OF DEEM ED INCOME U/S.69A OF THE ACT BASED ON IMPOUNDED INCRIMINATING DOCUMENTS (PAGE-2 OF PAD INVENTORISED AS B1/4). 13. THE BRIEF FACTS ARE THAT IT IS NOTED BY THE AO AT PAGE NOS.14 AND 15 OF THE ASSESSMENT ORDER THAT PAGE NO.2 OF PAD NEELGAGA N INVENTORISED AS B1/4 CONTAINED SOME DATES, AMOUNTS ETC., THE TOTAL OF W HICH IS GOING TO RS.1,81,000/-. HE FURTHER NOTED THAT ON 8.7.2000, DR. PRADEEP DESAI WAS CONFRONTED TO EXPLAIN THIS PAPER AND IN REPLY, IT W AS SUBMITTED BY HIM THAT DR.HILGER IS A SCIENTIST BELONGED TO HOLLAND AND BI OPROBE COMPANY BELONGED TO HIM. IT WAS FURTHER STATED THAT THE A SSESSEE-COMPANY HAD BUSINESS RELATION WITH HIM AND FROM THEM SCIENTIST CLONES WERE OBTAINED AND AFTER OBTAINING AND AFTER PREPARING ANTIBODIES THE SAME WERE RETURNED. THE DETAILS OF ACCOUNT OF MONEY RECEIVABLE FROM HIM CAN BE EXPLAINED AFTER LOOKING INTO THE BOOKS OF ACCOUNTS. REGARDING THE ENTRY OF 4000 CASH DATED 29.4.97, IT WAS SUBMITTED THAT IT WAS THE DET AILS OF DUTCH CURRENCY WHICH MIGHT BE THE TRANSACTION OF DR. HILGER ON 29. 4.1997. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS AGAIN ASKED BY THE AO TO EXPLAIN THE ENTRY OF TRANSACTION APPEARING ON THIS PAPER. SOME REPLIES WERE SUBMITTED, BUT THE AO WAS NOT SATISFIED AND HE HELD THAT THE AMOUNT OF RS.1,81,000/- WAS UNEXPLAINED AND HE MADE ADDITION OF THIS AMOUNT BY HOLDING THAT THE SAME IS DEEMED INCOME OF THE ASSES SEE FOR A.Y.1997-98. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) WHO HAS DELETED THIS ADDITION. NOW THE REVENUE IS IN APPEAL BEFORE US. 14. THE LEARNED DR OF THE REVENUE SUPPORTED THE ASS ESSMENT ORDER WHEREAS THE LEARNED AR OF THE ASSESSEE SUPPORTED TH E ORDER OF THE LEARNED CIT(A). IT WAS ALSO SUBMITTED BY THE LEARNED DR OF THE REVENUE THAT THIS ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -15- AMOUNT IS UNRECORDED UNACCOUNTED RECEIPTS AND THERE FORE, THE ENTIRE AMOUNT IS TO BE ADDED. HE ALSO SUBMITTED THAT PAGE NO.178 OF THE PAPER BOOK ARE THE RELEVANT DOCUMENTS AND PAGE NOS.179 TO 188 ARE THE AGREEMENT OF THE ASSESSEE-COMPANY WITH BIOPROBE B.V., A COMPANY INCO RPORATED UNDER THE LAWS OF THE NETHERLANDS. 15. WE HAVE CONSIDERED RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND THE JUDGMENTS CITED BY THE LEARNED COUNSEL FOR THE ASSE SSEE. WE FIND THAT IN THE RELEVANT PAPER WHICH IS AVAILABLE AT PAGE NO.178 OF THE PAPER BOOK, THERE IS MENTION OF PAYMENTS; ONE IS 4000/- AND OTHER IS 1,8 1,000/-. NO ADDITION HAS BEEN MADE IN THE PRESENT YEAR REGARDING THE ENT RY OF 4000 CASH AND HENCE IN THE PRESENT YEAR, WE ARE NOT CONCERNED WIT H THIS ENTRY. REGARDING THE AMOUNT OF 1,81,000/- WE FIND THAT AGAINST THIS AMOUNT, THERE IS MENTION OF BILL NUMBERS ALSO I.E. 001/96, 002/96 AND 003/96 . THE LEARNED CIT(A) HAS HELD THAT FOR THIS AMOUNT OF RS.1,81,000/-, ONL Y ADDITION FOR PROFIT ELEMENT CAN BE MADE AND HE CONFIRMED THE ADDITION O F RS.6,824/- AND DELETED THE BALANCE ADDITION BY HOLDING THAT THE RE LEVANT NET PROFIT RATE IS 3.77% AND NET PROFIT ON RS.1,81,000/- AT THE RATE O F 3.7% COMES TO RS.6,824/-. THE CASE OF THE REVENUE IS THAT THE EN TIRE AMOUNT SHOULD BE ADDED. CONSIDERING THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT IN THE FACTS OF THE PRESENT CASE, THE ENTIRE ADDITION CAN NOT BE SUSTAINED AND THE LEARNED CIT(A) HAS RIGHTLY CONFIR MED THE ADDITION TO THE EXTENT OF NET PROFIT ON THE UNACCOUNTED RECEIPTS AN D HENCE WE DECLINE TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A) ON T HIS ISSUE ALSO. ACCORDINGLY, THE GROUND NO.3 OF THE REVENUE IS REJE CTED. 16. THE GROUND NO.4 OF THE REVENUE READS AS UNDER: ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -16- 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING AN ADDITION OF RS.2,00,000/- MADE ON ACCOUNT OF ESTIMATION OF NET PROFIT BY REJE CTING THE BOOKS OF ACCOUNTS U/S.145(3) R.W.S. 144 OF THE IT ACT, 1961. 17. BRIEF FACTS ARE THAT IT IS NOTED BY THE AO AT P AGE NO.13 OF THE ASSESSMENT ORDER THAT THE BOOK RESULTS OF THE ASSES SEE-COMPANY IS NOT ACCEPTABLE BECAUSE OF CERTAIN LOOSE DOCUMENTS FOUND DURING THE COURSE OF SURVEY AND HENCE IT HAS TO BE HELD THAT BOOKS OF AC COUNT DID NOT REFLECT THE CORRECT PICTURE OF THE BUSINESS OF THE ASSESSEE AND ALSO THE ACCOUNT OF THE ASSESSEE. BY REJECTING THE BOOK RESULTS, THE AO ES TIMATED FURTHER NET PROFIT OF RS.2,00,000/- AND MADE ADDITION TO THE TOTAL INC OME OF THE ASSESSEE. THE AGGRIEVED ASSESSEE CARRIED THE MATTER BEFORE THE LE ARNED CIT(A) WHO HAD DELETED THE ADDITION AND NOW THE REVENUE IS IN APPE AL BEFORE US. 18. THE LEARNED DR SUPPORTED THE ASSESSMENT ORDER W HEREAS THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A). 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT ON THE BASIS OF CERTAIN LOOSE DOCUMENTS, CERTA IN ADDITIONS WERE MADE BY THE AO AND THEREAFTER, IT WAS HELD BY HIM THAT T HE BOOK RESULTS ARE NOT RELIABLE. THE ADDITIONS MADE BY THE AO IN RESPECT OF THOSE LOOSE PAPERS FOUND IN THE COURSE OF SURVEY, HAVE BEEN DELETED BY THE LEARNED CIT(A) AND THE ACTION OF THE LEARNED CIT(A) WITH REGARD TO SUC H ADDITIONS WAS UPHELD BY US HEREINABOVE, EXCEPT CONFIRMING THE ADDITION O F RS.6,824/- IN RESPECT OF SALE OUTSIDE THE BOOK OF RS.1,81,000/-. UNDER T HESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE VERY BASIS R EGARDING THE REJECTION OF THE BOOK RESULTS IS NO MORE SURVIVING, AND HENCE, O N THIS ISSUE ALSO, NO ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -17- INTERFERENCE IN THE ORDER OF THE LEARNED CIT(A) IS CALLED FOR ON THIS ISSUE. THIS GROUND OF THE REVENUE IS ACCORDINGLY REJECTED. 20. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.2366/AHD/2004 FOR A.Y.1997-98 IS REJECTED. 21. NOW, WE TAKE UP THE CROSS-OBJECTIONS FILED BY T HE ASSESSEE FOR THESE THREE YEARS. NO SERIOUS ARGUMENTS WERE MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE WITH REGARD TO GROUNDS RAISED IN THE C OS, AND HENCE COS. ARE DISMISSED AS NOT PRESSED. 22. NOW, WE TAKE UP THE SECOND APPEAL OF THE REVENU E FOR A.Y.1998- 1999 IN ITA NO.2367/AHD/2004. 23. AT THE OUTSET, IT WAS AGREED BY BOTH THE SIDES THAT THE GROUND NOS.1, 2 AND 3 RAISED BY THE REVENUE IN THIS YEAR IS IDENT ICAL WITH GROUND NOS.1, 3 AND 4 RAISED BY THE REVENUE FOR A.Y.1997-98 AND THE SE THREE GROUNDS IN THE PRESENT YEAR CAN BE DECIDED IN THE SIMILAR LINE . IT WAS ALSO NOTED BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER THAT THE LEARN ED CIT(A) HAS ALSO FOLLOWED HIS ORDER FOR A.Y.1997-98 IN THE PRESENT YEAR. IN A.Y.1997-98, WE HAVE REJECTED THESE GROUNDS OF THE REVENUE AND A CCORDINGLY, IN THE PRESENT YEAR ALSO, THESE THREE GROUNDS OF THE REVEN UE ARE REJECTED. 24. THE GROUND NO.4 READS ASS UNDER: 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING AN ADDITION OF RS.1,00,000/- MADE ON ACCOUNT OF DEEMED INCOME AS UNEXPLAINED MON EY U/S.69A OF THE ACT. 25. THE BRIEF FACTS ARE THAT AN ADDITION OF RS.1,27 ,000/- WAS MADE BY THE AO ON THE BASIS OF LOOSE PAPER NO.11 OF INVENTORISE D PAD B-1/9, SEIZED ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -18- DURING THE SURVEY OPERATION. THE AO HAS TREATED C ERTAIN ENTRIES RECORDED AGAINST THE NAMES OF ISHWARLAL, ARJUNBHAI AND NAYAN AS UNEXPLAINED BECAUSE THESE WERE NOT FOUND DULY RECORDED IN THE B OOKS OF ACCOUNTS. THE AO MADE ADDITION OF RS.1,27,000/- . BEING AGGRIEVE D THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A) WHO HAS CONFIR MED THE ADDITION OF RS.27,000/- AND DELETED THE ADDITION OF RS.1,00,000 /-. NOW, THE REVENUE IS IN APPEAL BEFORE US FOR THE RELIEF GRANTED BY THE L EARNED CIT(A). 26. THE LEARNED DR SUPPORTED THE ORDER OF THE AO WH EREAS THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED CIT(A). 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY THE LEARNED CIT (A) AS PER PARA 10.4 OF HIS ORDER, WHICH IS REPRODUCED BELOW: 10.4 AFTER THE PERUSAL OF THE FINDINGS OF THE A.O AND ALSO AFTER THE PERUSAL OF SUBMISSIONS AND EVIDENCES FILED BY THE A .RS BEFORE ME, I AM OF THE VIEW THAT THE ENTRIES WRITTEN AGAINST THE NAMES OF SHRI ISHWARLAL PATEL AND SHRI ARJUN M. DESAI ARE FOUND R EASONABLY EXPLAINED. THESE PERSONS HAVE GIVEN A COMPLETE DETA IL ABOUT THEIR STATUS IN USA, THE DURATION OF THEIR STAY ALONGWITH THE PASSPORT NUMBERS AND THE NATURE OF JOB CARRIED OUT BY THEM. FROM THEIR CONFIRMATION LETTERS IT IS SEEN THAT THEY ARE MEN O F SUBSTANCE AND WORKING IN USA AT HIGHER POSITIONS. SHRI ISHWARLAL IS STAYING IN USA SINCE 1971 AND SHRI ARJUNBHAI DESAI IS STAYING THER E SINCE 1964. HOWEVER, IN THE CASE OF DEPOSITS SHOWN AGAINST THE NAMES OF 'NAYANBHAI', AMOUNTING TO RS.27,000/- NO SUCH CONFI RMATION HAS BEEN FILED BY THE A.RS AND THEREFORE IT IS DIFFICUL T TO ACCEPT ABOUT THE EXPLANATION OFFERED BY THEM THAT HE WAS ALSO A FRIE ND STAYING ABROAD AND DEPOSITED THE SAID AMOUNT WITH DR. DESAI FOR SA FE KEEPING AND TO BE UTILISED WHENEVER HE (MR. NAYAN) VISITED INDIA. I THEREFORE, ON THE BASIS OF ABOVE DISCUSSED FACTS TREAT THE AMOUNT OF RS.27,000/- AS UNEXPLAINED. THUS THE ADDITION MADE BY THE A.O IS R ESTRICTED TO RS. 27,000/- UNDER THIS GROUND OF APPEAL. ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -19- FROM THE ABOVE ORDER OF THE LEARNED CIT(A), WE FIND THAT IT IS NOTED BY THE LEARNED CIT(A) THAT ENTRIES RELATED TO THE NAMES OF SHRI ISHWARLAL PATEL AND SHRI ARJUN M. DESAI ARE FOUND REASONABLY EXPLAINED. HE ALSO NOTED THAT THESE PERSONS HAVE GIVEN THEIR COMPLETE DETAILS ABO UT THE STATUS IN USA, THE DURATION OF STAY ALONG WITH THE PASSPORT NUMBERS AN D THE NATURE OF JOB CARRIED OUT BY THEM. FROM THEIR CONFIRMATION LETT ERS, IT COULD BE SEEN THAT THEY WERE MEN OF SUBSTANCE AND WORKING IN USA AT HI GHER POSITIONS. UNDER THESE FACTS, WE FEEL THAT ON THIS ISSUE ALSO NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LEARNED CIT(A). ACCORDINGLY, T HE GROUND NO.4 OF THE REVENUE IS REJECTED. 28. THE GROUND NO.5 OF THE REVENUE READS AS UNDER: 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING AN ADDITION OF RS.3,61,887/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S.69C O F THE ACT BASED ON IMPOUNDED INCRIMINATING DOCUMENTS (FILE NO.B1/12 ). 29. REGARDING GROUND NO.5, THE FACTS ARE THAT ADDIT ION OF RS.3,61,887/- WAS MADE BY THE AO ON THE BASIS OF CERTAIN LOOSE PA PERS OF LOOSE PAPER FILE NO.B12/12. AS PER THE AO, PAGE NOS.20, 21, 27, 28, 29 & 30 PERTAINED TO THESE ASSESSMENT YEARS AND THESE PAGES REFLECTED CA SH PAYMENTS. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHETHER THE TRA NSACTIONS REFLECTED ON SUCH PAGES ARE DULY RECORDED IN THE REGULAR BOOKS O F ACCOUNTS OF THE ASSESSEE OR NOT. THE ASSESSEE COULD NOT GIVE SATIS FACTORY REPLY AND THEREFORE, THE AO MADE THIS ADDITION. IN FIRST APP EAL BY THE ASSESSEE, IT WAS HELD BY THE LEARNED CIT(A) THAT FOR THE ADDITION MA DE BY THE AO OF RS.3,61,887/- U/S.69C A SET OFF OF RS.3,61,887/- WH ICH REPRESENTED VARIOUS UNRECORDED EXPENSES INCURRED FOR BUSINESS PURPOSES HAS TO BE ALLOWED UNDER SECTION 37 OF THE IT ACT AND IN THIS MANNER, THE LEARNED CIT(A) ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -20- ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING VARI OUS JUDGMENTS NOTED BY HIM IN HIS ORDER VIDE PARA 12.2. NOW THE REVENUE I S IN APPEAL BEFORE US. 30. THE LEARNED DR RELIED ON THE ORDER OF THE AO WH EREAS THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE LEARNED CIT(A). HE ALSO SUBMITTED THAT PROVISO TO SECTION 69C WAS INSERTED IN THE STATUTE BOOK W.E.F 1-4-1999 AND THE SAME IS NOT APPLICABLE IN THE PRES ENT YEAR. 31. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT THE ADDITION WAS MADE BY THE AO WITH REGARD TO UNEXPLAINED EXPENDITURE. THE PROVISO TO SECTION 69C WAS INSERT ED BY THE FINANCE (ACT NO.2) 1998 W.E.F. 1-4-1999 AND HENCE THIS PROVISO I S NOT APPLICABLE TO THE PRESENT CASE BECAUSE THE ASSESSMENT YEAR INVOLVED I N THE PRESENT CASE IS A.Y.1998-99. THE LEARNED CIT(A) HAS RIGHTLY HELD T HAT THE ASSESSEE DESERVES SET OFF OF VARIOUS UNACCOUNTED EXPENDITURE . IN THESE FACTS OF THE CASE, WE DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. ACCORDINGLY, THE GROUND NO.5 OF THE REVENUES APPEAL IS DISMISSED. 32. NOW, WE TAKE UP THE REMAINING APPEAL OF THE REV ENUE FOR A.Y.1999- 2000 I.E. ITA NO.2368/AHD/2004. 33. THE GROUNDS RAISED IN THIS APPEAL OF THE REVENU E ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING AN ADDITION OF RS.2,39,400/- MADE ON ACCOUNT OF INFLATED PURCHASES FROM AWARENES S TECHNOLOGY INC., USA RE; PAGE NO.45 OF B1/1. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING AN ADDITION OF RS.2,00,000/- ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -21- MADE ON ACCOUNT OF ESTIMATION OF NET PROFIT BY REJE CTING THE BOOKS OF ACCOUNTS U/S.145(3) R.W.S. 144 OF THE IT ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A), SURAT HAS ERRED IN RESTRICTING THE A DDITION OF RS.9,15,000/- TO RS.3,08,000/- MADE ON ACCOUNT OF D EEMED INCOME U/S.69A OF THE ACT BASED ON IMPOUNDED INCRIMINATING DOCUMENTS. 34. IT WAS AGREED BY BOTH THE SIDES THAT GROUND NO. 1 AND 2 OF THE REVENUE ARE TO BE DECIDED ON SIMILAR LINE AS OF A.Y .1997-98 BECAUSE, THE LEARNED CIT(A) HAS SIMPLY FOLLOWED HIS ORDER FOR A. Y.1997-98. IN THAT YEAR, WE HAVE DECIDED BOTH THE ISSUES AGAINST THE R EVENUE AND IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY SINCE SIMILAR ISSUES A LSO ARE RAISED IN THE PRESENT YEAR, THESE GROUND NO.1 AND 2 ARE ALSO REJE CTED. 35. REGARDING GROUND NO.3, THE FACTS ARE THAT AS PE R PAGE NO.35 OF THE SEIZED LOOSE PAPER (FILE NO.B1/12) IN THE COURSE OF SURVEY, THE ASSESSEE WAS HAVING POOL OF CASH OF RS.9,15,000/- (LOOSE PAPER N O.31/A). OUT OF THESE, THE ASSESSEE USED IT TO PAY TO CERTAIN PERSONS WHIC H IS EVIDENT FROM LOOSE PAPERS. THE ASSESSEE ALSO USED TO PAY M/S.BHARAT C OLOUR OUT OF POOL OF CASH AND IT IS ALSO NOTED THAT PAGE NO.34 IS A RECE IPT ISSUED BY SHRI VEERAL DESAI FOR CASH RECEIPT OF RS.2,00,000/- UNDER HIS O WN SIGNATURE AND NOTED EARLIER PAYMENT TO M/S.BHARAT COLOUR. ALL PAYMENT S EVIDENCED FROM THESE LOOSE PAPERS, IF CONSIDERED AS PAID RETURNED BACK A ND RECEIVED BACK ON GIVING CHEQUE THERE REMAINED PEAK OF RS.9,15,000/- AS EVIDENCED FROM PAGE 31A. SUCH CASH RECEIPTS AND CASH PAYMENT FROM SUCH PAYEE ARE NOT FOUND RECORDED IN REGULAR BOOKS OF THE ASSESSEE. THE AO FOUND THAT THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF THIS POOL OF CASH A ND MADE ADDITION THEREOF UNDER SECTION 69A OF THE ACT. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A) WHO HAD HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION IN RESPECT OF UNCLAIMED EXPENDITURE T O THE TUNE OF RS.6.07 LAKHS OUT OF RS.9.15 LAKHS AND HE CONFIRMED THE BAL ANCE ADDITION OF RS.3.08 ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -22- LAKHS. NOW, THE REVENUE IS IN APPEAL BEFORE US FOR THE RELIEF ALLOWED BY THE LEARNED CIT(A) TO THE ASSESSEE. 36. THE LEARNED DR SUPPORTED THE ORDER OF THE AO WH EREAS THE LEARNED AR SUPPORTED THE ORDER OF THE LEARNED CIT(A). 37. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT PROVISO TO SECTION 69C OF THE ACT IS APPLICABL E FROM 1.4.1999 (FROM A.Y.1999-2000) AND IN THE PRESENT CASE, WE ARE IN A .Y.1999-2000 AND THEREFORE, THE PROVISO IS APPLICABLE AND AS PER THI S PROVISO, NO DEDUCTION IS ALLOWABLE TO THE ASSESSEE WITH REGARD TO UNEXPLAINE D EXPENDITURE AND THEREFORE, IN OUR CONSIDERED OPINION, THE LEARNED C IT(A) WAS NOT JUSTIFIED IN ALLOWING THE RELIEF OF RS.6.07 LAKHS. WE, THEREFOR E, REVERSE THE FINDINGS LEARNED CIT(A) ON THIS ISSUE AND RESTORE ORDER OF T HE AO. THE GROUND NO.3 OF THE REVENUE IS ALLOWED AND THE APPEAL OF THE REV ENUE IS PARTLY ALLOWED. 38. IN THE COMBINED RESULT, APPEALS FOR A.Y.1997-98 AND 1998-99 ARE DISMISSED, WHEREAS, THE APPEAL FOR A.Y.1999-2000 IS PARTLY ALLOWED. ALL THE COS. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD./- SD./- ( /BHAVNESH SAINI) ! ! ! ! /JUDICIAL MEMBER ( ' '' '. .. . . .. .%&' %&' %&' %&' /A.K. GARODIA) ( ! ( ! ( ! ( ! /ACCOUNTANT MEMBER ORDER PRONOUNCED ON SD./- (KB)JM SD./-(AKG)AM C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER ITA NOS.2366, 2367, 2368/AHD/2004 WITH CO.NO.221, 222 AND 223/AHD/2004 -23- DR/AR, ITAT, AHMEDABAD 1. DATE OF DICTATION : 13-03-2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER. : 14-03-2012 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S : 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT. : 28/3/2012 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER : 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. : 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. : 28/3/2012 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. : 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. : 10. DATE OF DESPATCH OF THE ORDER :