M/s. Janam Steel & Alloys, Bhavnagar V. The ACIT, Circle-2, Bhavnagar

ITA 2573/AHD/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5883 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 20-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR WITH P M MEHTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 2573 & 2623/AHD/2013 (ASSESSMENT YEAR: 2009-10) M/S. JANAM STEEL & ALLOYS JANAM HOUSE, OLD BUNDER ROAD, BHAVNAGAR 364250 ACIT CIRCLE-2, BHAVNAGAR V/S V/S ACIT CIRCLE-2, BHAVNAGAR M/S. JANAM STEEL & ALLOYS JANAM HOUSE, OLD BUNDER ROAD, BHAVNAGAR 364250 (APPELLANT) (RESPONDENT) PAN: AACFJ3659C APPELLANT BY : SHRI S.N. SOPARKAR WITH P.M. MEHT A RESPONDENT BY: SMT. APARNA AGARWAL CIT/DR WITH SHRI PRASOON KABRA, S R. D.R. ( )/ ORDER DATE OF HEARING : 20 -03-201 8 DATE OF PRONOUNCEMENT : 23-03-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 2 1. ITA NOS. 2573 & 2623/AHD/2013 ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE PREFERRED AGAINST THE ORDER OF THE LD. CIT( A)-XX, AHMEDABAD DATED 29.08.2013 PERTAINING TO A.Y. 2009-10. 2. BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISP OSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. WE WILL FIRST TAKE UP ASSESSEES APPEAL IN ITA NO. 2573/AHD/2013. 4. GRIEVANCE RAISED VIDE GROUND NOS. 1 TO 4 RELATE TO THE ADDITION SUSTAINED BY THE LD. CIT(A) ON ACCOUNT OF ADDITIONS MADE IN RESPECT OF THE DISCREPANCY FOUND IN THE STOCK AT THE TIME OF SURVEY AMOUNTING TO RS. 1, 59,22,356/-. 5. AT THIS POINT, WE WOULD LIKE TO MENTION THAT THE RE VENUE IS ALSO IN APPEAL IN RESPECT OF THE RELIEF GIVEN BY THE LD. CIT(A) TO TH E EXTENT OF RS. 1,39,75,599/-. 6. BRIEFLY STATED THE UNDERLYING FACTS IN ISSUE RELATE S TO THE SURVEY OPERATION CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 11/12.09.2008. DURING THE COURSE OF THE SURVEY PROCEEDINGS, THE SURVEY PA RTIES FOUND STOCK STATEMENTS WHICH WERE SUBMITTED BY THE ASSESSEE TO ITS BANKER, PUNJAB NATIONAL BANK. THE STOCK AS PER BOOK WAS COMPARED WITH THE STOCK MENTI ONED IN THESE STOCK STATEMENTS AND IT WAS FOUND THAT THERE WAS A DISCRE PANCY OF RS. 1,59,22,356/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE. I T WAS EXPLAINED THAT DUE TO THE CHANGE IN ACCOUNTING SOFTWARE, THE SHORTAGE ENT RY OF PRECEDING YEARS WAS NOT PICKED UP RESULTING OVERSTATEMENT OF STOCK AS P ER BOOKS OF ACCOUNTS. IT WAS EXPLAINED THAT THE CLOSING STOCK AS PER THE BOOKS O F ACCOUNTS IS CARRIED FORWARD FROM PRECEDING YEARS WITHOUT BOOKING OF THE SHORTAG E OF EARLIER YEARS AND ALSO ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 3 FOR THE PERIODS UP TO THE DATE OF SURVEY. THE RECON CILIATION STATEMENT WAS ALSO FILED. THE REPLY OF THE ASSESSEE DID NOT FIND ANY F AVOUR WITH THE A.O. WHO MADE THE ADDITION OF RS. 1,59,22,356/- BY MAKING THE FOL LOWING OBSERVATIONS:- (I) THE DISCREPANCIES BETWEEN STOCK AS PER BOOKS AND AS PER THE STATEMENT SUBMITTED WITH THE BANK WERE FOUND NOT ONLY IN TERM S OF VALUE BUT QUANTITY ALSO. (II) IN THE INSTANT CASE, DURING THE COURSE OF SURVEY PR OCEEDINGS, PRINTOUT OF PURCHASES AND SALES ON THE LETTER HEADS OF THE ASSE SSEE WAS FOUND WHICH ITSELF PROVES THAT THE ASSESSEE HAS INDULGED IN UNA CCOUNTED PURCHASES AND SALES. THUS, ON THE BASIS OF MATERIALS OF PURCHASES AND SALES ON THE LETTER HEAD OF THE ASSESSEE BEYOND DOUBT PROVES THAT THE A SSESSEE HAS UNACCOUNTED STOCK AT THE END OF RELEVANT MONTH. IN VIEW OF THE ABOVE MENTIONED OBSERVATIONS, AD ADD ITION OF RS. 1,59,22,356/- IS MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF DIFFERENCE OF STOCK BETWEEN THE STOCK AS PER BOOKS AND STOCK AS PER STA TEMENT (ADDITION OF RS. 1,59,22,356/-). 7. THE ASSESSEE ASSAILED THE ADDITION BEFORE THE LD. C IT(A) AND VEHEMENTLY CONTENDED THAT THERE IS NO DISPUTE THAT THE STOCK R EFLECTED IN THE BANK STATEMENT AND STOCK AS PER BOOKS OF ACCOUNTS DIFFER . IT WAS STRONGLY CONTENDED THAT THERE WAS NO UNACCOUNTED STOCK. IT WAS EXPLAIN ED THAT IT IS A COMMON PRACTICE THAT FOR THE PURPOSE OF CASH CREDIT LIMITS , THE STOCK STATEMENTS SUBMITTED BEFORE THE BANK IS INFLATED IN VALUE AND QUITE OFTEN IN QUANTITY ALSO SO AS TO ENSURE THAT THE CREDIT LIMIT IS MAINTAINED . IT WAS PLEADED THAT NO ADDITION CAN BE MADE ON THIS GROUND UNLESS THE STOC K IN THE BOOKS IS FOUND TO BE UNRELIABLE. IT WAS FURTHER EXPLAINED THAT DURING THE COURSE OF THE SURVEY OPERATIONS, PHYSICAL VERIFICATION OF THE STOCK WAS SHOWN AND NO EXCESS STOCK WAS FOUND. DISCREPANCY NOTED IN THE STOCK AS PER TH E BOOKS WAS EXPLAINED AND THE SAME WAS ACCEPTED BY THE A.O. ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 4 8. COPY OF THE WRITTEN SUBMISSIONS ALONG WITH THE RELA TED DOCUMENTARY EVIDENCES WERE FORWARDED BY THE LD. CIT(A) TO THE A.O. CALLIN G FOR HIS COMMENTS. THE A.O. SUBMITTED HIS REMAND REPORT AND THE RELEVANT P ORTION OF THE SAME READ AS UNDER:- DURING THE COURSE OF SURVEY PROCEEDINGS, DISCREPA NCIES IN THE QUANTITY AND THE VALUE OF STOCK AS PER BOOKS AND AS PER STOCK STATEM ENT SUBMITTED WITH THE BANKER OF THE ASSESSEE (I.E. PUNJAB NATIONAL BANK) -WERE F OUND. IN THIS REGARD, THE ASSESSEE -WAS ASKED TO EXPLAIN THE DISCREPANCIES DU RING THE COURSE OF SURVEY PROCEEDINGS BY THE Q. NO.8 OF THE STATEMENT RECORDE D DURING THE COURSE OF SURVEY. HOWEVER, THE ASSESSEE DID NOT EXPLAIN DI SCREPANCIES IN THE QUANTITY AND VALUE OF STOCK AS PER BOOKS AND AS PER THE STATEMEN T SUBMITTED WITH ITS BANKER SATISFACTORILY. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FURN ISHED THE EXPLANATION THAT THE ACCOUNTANT HAS NOT PASSED THE ENTRY OF SHORTAGE PROCEEDING ASSESSMENT YEAR FOR F.Y. 2006-07 & F.Y. 2007-08 (REFER STATEMENT OF KAUSHIKBHAI D PATEL). THE ACCOUNTING SOFTWARE WAS CHANGED DURING THE YEAR WIT H DATA WHERE IN SHORTAGE ENTRY OF PRECEDING YEARS NOT PICKED UP RESULTING OV ERSTATEMENT OF STOCK AS PER BOOKS OF ACCOUNT. ACCORDINGLY, THE CLOSING STOCK AS PER THE BOOKS OF ACCOUNT WAS CARRIED FORWARD FORM PRECEDING YEARS -WITHOUT BOOKI NG OF SHORTAGE OF EARLIER YEARS AND ALSO FOR THE PERIODS UP TO THE DATE OF SU RVEY. THERE WERE DISCREPANCIES BETWEEN STOCK AS PER THE S TATEMENT SUBMITTED TO THE BANK IN TERMS OF QUANTITY AND VALUE. THEREFORE, THE ADDITION OFRS.1,59,22,356/- WAS MADE. THE ASSESSEE ITSELF ADMITS IN THE SUBMISS ION BEFORE YOUR HONOUR IN THE PETITION VIDE PARA 4.1 THAT THERE IS NO DISPUTE TH AT THE STOCK REFLECTED IN THE BANK STATEMENT AND STOCK AS PER BOOKS OF ACCOUNT OF THE APPELLANT DIFFER. THE A. O. HAD RIGHTLY DISALLOWED THE STOCK DIFFEREN CE AS PER BOOKS OF ACCOUNTS AND THE STATEMENT RECEIVED FROM BANK. THE RELIANCE IS P LACED ON THE CASE LAW IN THE ITAT KOLKATA BENCH 'SMC' ESTEE EXPORTS (P) LTD. VS. INCOME TAX OFFICER REPORTED ON TAXGURU SITE IT APPEAL NO.424 (KOL.) OF 2012. A. Y. 2006-07 DATED 09/08/2012, IN WHICH ITAT UPHELD ADDITION FOR STOCK DIFFERENCE AS PER BOOKS AND IN STATEMENT SUBMITTED TO BANKS. COPY 'OF ORDER IS ENCLOSED. ' ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 5 9. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND THE REMAND REPORT OF THE A.O AND THE REJOINDER BY THE ASSESSEE, THE LD. CIT( A) OBSERVED THAT THE CLAIM OF THE ASSESSEE THAT NO EXCESS STOCK WAS FOUND ON T HE DATE OF SURVEY IS NOT ACCEPTED. IF NO DISCREPANCY IS FOUND ON THE DATE OF SURVEY DOES NOT GIVE CERTIFICATE TO THE ASSESSEE THAT NO UNACCOUNTED TRA NSACTIONS WERE MADE DURING THE FINANCIAL YEAR. THE LD. CIT(A) WAS OF THE OPINI ON THAT THE STOCK SHOWN IN THE STOCK STATEMENT HAS NOT BEEN SOLD AND HENCE THE VALUE HAS TO BE CONSIDERED AS COST BUT SINCE THERE WAS A DIFFERENCE IN THE QUA NTITY. THE LD. CIT(A) CONFIRMED THE ADDITION TO THE EXTENT OF RS. 19,46,7 57/-. 10. AGGRIEVED BY THIS, BOTH ASSESSEE AND REVENUE ARE BE FORE US. 11. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY STATE THAT THE ENTIRE ADDITIONS HAVE BEEN MADE SOLELY ON THE GROUND THAT THE STOCK SHOWN TO THE BANKERS WAS HIGHER THAN THE STOCK SHOWN IN THE BOOKS OF ACCOUNT S. IT IS THE SAY OF THE LD. COUNSEL THAT ON THE DATE OF SURVEY, NO DISCREPANCY WAS FOUND INSOFAR AS PHYSICAL STOCK AND THE BOOK STOCK. THE ENTIRE ADDIT ION HAS BEEN MADE ONLY ON THE DIFFERENCE OF THE STOCK IN THE STOCK STATEMENT AND THE BOOK STOCK. LD. COUNSEL HEAVILY RELIED UPON THE JUDGMENTS OF THE JU RISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF RIDDHI STEEL AND TUBES (P.) LTD. 220 TAXMANN.COM 148, IN THE CASE OF VRUNDAVAN ROLLER FLOOR MILL, 72 TAXM ANN.COM 250, IN THE CASE OF NANGLIA IMPEX 229 TAXMANN.COM 460 AND IN THE CAS E OF VEERDIP ROLLERS PVT. LTD. 323 ITR 341. THE LD.COUSEL CONCLUDED BY S TATING THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THESE JUDGMENTS HAVE C ONSIDERED SIMILAR ISSUE AND HAS DELETED THE ADDITIONS. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 6 12. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT THERE WAS NO DIF FERENCE FOUND IN THE PHYSICAL STOCK AND THE BOOK STOCK ON THE DATE OF SU RVEY. THERE IS ALSO NO DISPUTE THAT THE ENTIRE ADDITION HAS BEEN MADE ONLY ON THE DIFFERENCE FOUND IN THE STOCK STATEMENT FILED WITH THE BANKERS AND THE BOOK STOCK. SURPRISINGLY, THE COPIES OF THE STOCK STATEMENTS FILED WITH THE BANKE RS FOUND AT THE TIME OF SURVEY PERTAINED TO THE MONTHS OF APRIL TO AUGUST W HERE AS THE SURVEY TOOK PLACE ON 11/12 SEPTEMBER. THIS MEANS THAT NO STOCK STATEMENT PERTAINING TO THE MONTH OF SEPTEMBER WAS FOUND. THERE IS NO DENYI NG THAT THE STOCK STATEMENTS GIVEN TO THE BANKS ALWAYS SHOW VALUE OF STOCK ON THE HIGHER SIDE. THIS IS DONE TO SAFEGUARD THE CASH CREDIT LIMITS AV AILED BY THE BUSINESSMAN FROM THE BANKS. THE DIFFERENCE FOUND IN THE SUCH ST ATEMENTS AND THE BOOKS OF ACCOUNTS CANNOT BE ADDED. THE HONBLE HIGH COURT OF GUJARAT IN THE JUDGMENTS REFERRED TO HEREINABOVE HAVE TAKEN A CONS ISTENT VIEW THAT WERE ASSESSING OFFICER MADE ADDITION TO INCOME OF ASSESS EE ON PLEA THAT THERE WAS DIFFERENCE IN QUANTITY AND VALUE OF STOCK SHOWN IN BOOKS OF ACCOUNTS VIS--VIS AS SHOWN TO BANK, IMPUGNED ADDITION ARE NOT JUSTIFI ED. THE HONBLE HIGH COURT HAS FURTHER STATED THAT WHERE INFLATED STATEM ENT WAS FURNISHED TO BANKING AUTHORITIES FOR AVAILING OF HIGHER CREDIT, DIFFEREN CE OF STOCK SHOWN IN BOOKS OF ACCOUNTS AND IN STATEMENT FURNISHED TO BANKING AUTH ORITIES COULD NOT BE TREATED AS UNDISCLOSED INVESTMENT. 13. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT TH E ASSESSEE HAS MADE PURCHASES OUTSIDE THE BOOKS OF ACCOUNTS OUT OF ITS UNDISCLOSE D INCOME. IT IS ALSO NOT THE CASE OF THE A.O. THAT ON THE DATE OF SURVEY, PHYSIC AL STOCK WAS FOUND TO BE DIFFERENT FROM THE STOCK SHOWN IN THE BOOKS OF ACCO UNTS. THE BASIS FOR MAKING THE IMPUGNED ADDITION IS NOT ONLY ERRONEOUS BUT ALS O AGAINST THE FACTS OF THE ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 7 CASE IN HAND AND THEREFORE CANNOT BE SUSTAINED. WE ACCORDINGLY DIRECT THE A.O. TO DELETE THE ENTIRE ADDITION OF RS. 1,59,22,356/-. GROUND NOS. 1 TO 4 OF ASSESSEES APPEAL ARE ALLOWED AND GROUND NO. 1 OF R EVENUES APPEAL IS DISMISSED. 14. GROUND NO. 5 RELATES TO THE ADDITION OF RS. 7,218/- ON ACCOUNT OF DIFFERENCE IN CASH AS PER BOOKS AND PHYSICAL CASH FOUND DURING TH E SURVEY. 15. THE LD. COUNSEL AT THE VERY OUTSET STATED THAT DUE TO THE SMALLNESS OF THE AMOUNT HE IS NOT INCLINED TO PRESS THIS GRIEVANCE O F THE ASSESSEE AND ACCORDINGLY THE SAME IS DISMISSED AS NOT PRESSED. 16. GROUND NOS. 6, 7 & 8 ARE CONSEQUENTIAL IN NATURE. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. COMING TO THE REVENUES APPEAL IN ITA NO. 2623/AHD/ 2013 18. GROUND NO. 2 RELATES TO THE DELETION OF THE ADDITIO N OF RS. 7,48,27,432/-. 19. THE UNDERLYING FACTS IN THIS ISSUE RELATES TO THE D ISCREPANCIES IN PURCHASE AND SALES FIGURES AS PER BOOKS OF ACCOUNTS AND AS PER F IGURERS MENTIONED IN THE LETTER HEAD OF JANAM STEEL &ALLOYS. THE DISCREPANCI ES AS NOTED BY THE A.O. ARE AS UNDER:- PURCHASES:- MONTH AS PER BOOKS - RS. AS PER LETTER HEAD OF JANAM STEEL & ALLOYS DIFFERENCE - RS. ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 8 APRIL - 08 59171660.80 69458642.81 C 10286982. 01 MAY - 08 37467399.00 72886295.81 35418896.81 JUNE - 08 76336541.00 103176018.81 26839477.81 JULY - 08 57611526.00 77167804.81 19556278.81 AUG - 08 45416084.49 74012689.81 28596605.32 TOTAL 276003211.20 396701452.05 120698240.76 SALES:- MONTH AS PER BOOKS - RS. AS PER LETTER HEAD OF JANAM STEEL & ALLOYS DIFFERENCE - RS. APRIL - 08 65323603.00 85480473.26 R 20156870.26 MAY - 08 42911178.00 90537876.26 47626698.26 JUNE - 08 88037671.00 118134106.26 30096435.26 JULY - 08 62872121.00 106185401.26 43313280.26 AUG - 08 53495301.00 107827690.26 54332389.26 TOTAL 312639874.00 5081655 47.30 195525673.30 20. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE DIFFERENC E OF RS. 7.48 CRORES SHOULD NOT BE ADDED. THE ASSESSEE FILED A DETAILED REPLY E XPLAINING THAT DUE TO THE ERROR IN THE SOFTWARE, THE SUMMARY OF SALES AND PURCHASE GENERATED WAS ERRONEOUS. IT WAS EXPLAINED THAT THIS FACT WAS EXPLAINED AT THE T IME OF SURVEY ITSELF. THE CONTENTION OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE A.O. WHO PROCEEDED BY MAKING ADDITION OF RS. 7,48,27,432/-. ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 9 21. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND ONCE AGAIN CONTENDED THAT DUE TO THE ERRONEOUS SOFTWARE, THE DETAILS OF SUNDRY CREDITORS AND SUNDRY DEBTORS WERE SHOWN AS PURCHASES AND SALES. ASSESSEE FILED COMPLETE LEDGER ACCOUNTS OF THE PURCHASES AND THE SALES AND EXPLAIN ED THAT THE TOTAL OF THE DEBIT AMOUNT FOUND IN THE LETTER HEAD PERTAINED TO THE SA LES AND THE TOTAL OF THE CREDIT AMOUNT FOUND IN THE LETTER HEAD PERTAINED TO THE PU RCHASE. 22. THE SUBMISSIONS AND THE DETAILS SO FURNISHED WERE F ORWARDED BY THE LD. CIT(A) TO THE A.O. CALLING FOR A REMAND REPORT. THE A.O. E XAMINED ALL THE DETAILS AND FOUND THAT CREDIT BALANCES WERE TALLIED AT THE END OF THE FINANCIAL YEAR WITH THAT OF THE CREDITORS. HOWEVER, THE A.O. REMARK THAT FRO M THE LEDGER ACCOUNTS IT IS NOT POSSIBLE TO VERIFY EXACT POSITION TO THIS CREDI TORS AND DEBTORS AS CLAIMED BY THE ASSESSEE. 23. AFTER CONSIDERING THE FACT AND THE SUBMISSIONS, THE LD. CIT(A) VERIFIED ALL THE DETAILS SUBMITTED IN THE PAPER BOOK ON TEST CHECK B ASIS AND VERIFIED WITH THE BALANCES THAT OF SUNDRY CREDITORS AND DEBTORS NARRA TED AS PURCHASE AND SALES RESPECTIVELY IN THE IMPOUNDED PAPER. THE LD. CIT(A) WAS CONVINCED THAT THE DETAILS NOTED ON IMPOUNDED PAPER WERE IN FACT DEBTO RS AND CREDITORS AND ACCORDINGLY DIRECTED THE A.O. TO DELETE THE ADDITIO N OF RS. 7.48 CRORES. 24. BEFORE US, THE LD. D.R. STRONGLY SUPPORTED THE FIND INGS OF THE A.O. AND THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN S TATED BEFORE THE LOWER AUTHORITIES. 25. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE OR DERS OF THE AUTHORITIES BELOW QUA THE ISSUE. THERE IS NO DISPUTE THAT DURIN G THE COURSE OF THE SURVEY ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 10 PROCEEDINGS, THE ASSESSEE WAS CONFRONTED WITH THE N OTINGS FOUND IN THE IMPOUNDED LETTER PAD AND AT THAT VERY MOMENT, THE A SSESSEE EXPLAINED THE CONTENTS OF THE NOTINGS. THE RELEVANT PART OF THE S TATEMENT READ AS UNDER:- Q.10 TODAY DURING THE SURVEY PROCEEDINGS CONDUCTED AT YOUR PR EMISES, THE DETAILS OF THE BOOKS OF ACCOUNT PREPARED IN YOUR CO MPUTER- AS WELL AS THE DETAILS PRINTED ON THE LETTER HEAD, OF M/S JANAM STEEL & AL LOYS, FOUND FROM YOUR OFFICE, THE DETAILS OF WHICH ARE AS UNDER, HAVE BEEN FOUND OUT. WHAT ARE ITS DETAILS ? PURCHASE:- MONTH DETAILS AS PER BOOKS OF ACCOUNT (IN )RS. DETAILS AS PER THE LETTER HEAD OF M/S. JANAM STEEL & ALLOYS (IN RS.) DIFFERENCE [IN RS ] . AP RIL - 08 59171660.80 69458642.81 C 10286982. 01 MAY - 08 37467399.00 72886295.81 35418896.81 JUNE - 08 76336541.00 103176018.81 26839477.81 JULY - 08 57611526.00 77167804.81 19556278.81 AUG - 08 45416084.49 74012689.81 28596605.32 TOTA L 276003211.20 396701452.05 120698240.76 SALES:- MONTH AS PER BOOKS - RS. AS PER LETTER HEAD OF JANAM STEEL & ALLOYS DIFFERENCE - RS. APRIL - 08 65323603.00 85480473.26 R 20156870.26 MAY - 08 42911178.00 90537876.26 47626698.26 J UNE - 08 88037671.00 118134106.26 30096435.26 JULY - 08 62872121.00 106185401.26 43313280.26 AUG - 08 53495301.00 107827690.26 54332389.26 TOTAL 312639874.00 508165547.30 195525673.30 ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 11 IN CONTEXT TO THE ABOVE DETAILS, YOU ARE BEING ASKE D THAT THERE COMES A DIFFERENCE OF RS. 12,06,98,240.76 IN PURCHASES AND OF RS. 1955 25673.30 IN SALES. WHAT IS YOUR EXPLANATION FOR THE SAME? A.10.IN CONTEXT TO THE ABOVE REFERRED QUESTION, I H AVE TO STATE THAT I HAVE WRITTEN DOWN THE DETAILS OF THE PURCHASES AND SALES, AS PER THE DETAILS WRITTEN DOWN ON THE LETTER HEAD OF M/S. JANAM STEEL & ALLOYS. IN FA CT, THERE ARE NO DETAILS OF PURCHASES AND SALES BUT IN REALITY, THEY ARE SUNDRY DEBTORS AND SUNDRY CREDITORS, WHICH FACT IS BEING TOLD TO YOUR FOUR YOUR INFORMAT ION PLEASE. 26. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, T HE ASSESSEE ONCE AGAIN EXPLAINED THE NATURE OF ENTRIES AND IT CAN BE SAFEL Y CONCLUDED THAT THE EXPLANATION GIVEN AT THE TIME OF THE ASSESSMENT PRO CEEDINGS WAS NOT AN AFTERTHOUGHT AS THE SAME WAS EXPLAINED AT THE TIME OF SURVEY OPERATIONS ALSO. IF THE EXPLANATION OF THE ASSESSEE IS CONSIDERED IN TH E LIGHT OF THE RELEVANT DOCUMENTARY EVIDENCES, THERE REMAINS NO DOUBT THE E NTRIES DO NOT PERTAIN TO PURCHASE AND SALE BUT ARE CREDITORS AND DEBTORS OF THE ASSESSEE. THE FIRST APPELLATE AUTHORITY, AS MENTIONED ELSEWHERE, HAS TA LLIED THE ENTRIES WITH THE COPIES OF THE LEDGER ACCOUNTS OF THE DEBTORS AND CR EDITORS AND THE LD. D.R. COULD NOT POINT OUT ANY FACTUAL ERROR IN THE FINDIN GS OF THE LD. CIT(A). THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 2 IS ACCORDINGLY DISMISSED. 27. THE LAST GROUND RELATES TO THE DELETION OF THE ADDI TION RS. 44.26 LACS MADE ON ACCOUNT OF NOTING IN THE DIARY FOUND DURING SURVEY. 28. THE UNDERLYING FACTS IN THIS ISSUE RELATE A POCKET DIARY FOUND AT THE TIME OF SURVEY. THE ASSESSEE WAS ASKED TO EXPLAIN THE NOTIN GS IN THE SAID DIARY. IT WAS EXPLAINED THAT THE DIARY BELONGS TO SHRI RAJUBHAI P ATEL AND ONLY HE CAN FURNISH ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 12 THE EXPLANATION. THE A.O. WAS OF THE OPINION THAT T HE ASSESSEE HAS NOT FURNISHED EXPLANATION ON THE TRANSACTIONS FOUND IN THE DIARY AND CONCLUDED BY MAKING ADDITION OF RS. 44,26,995/-. 29. THE ASSESSEE ASSAILED THE ASSESSMENT BEFORE THE LD. CIT(A) AND ONCE AGAIN EXPLAINED THAT AT THE TIME OF SURVEY OPERATIONS ONE SHRI RAJESH P. PATEL WHO ACTS AS BROKER FOR THE ASSESSEE AND DOES BROKERAGE BUSINESS FOR OTHER PARTIES ALSO WAS PRESENT. THE DIARY WAS FOUND WITH HIM AND THE SURVEY PARTY BOOK POSSESSION OF THE DIARY AND ERRONEOUSLY THE ADDITIO N OF RS. 44,26,995/- WAS MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF T HE DOCUMENT WHICH DOES NOT PERTAIN TO THE ASSESSEE. 30. THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE A.O. WHO IN THE REMAND PROCEEDINGS EXAMINED SHRI RAJESH P PATEL WHEREIN SH RI PATEL FURNISHED CONFIRMATION THAT THE POCKET DIARY WAS TAKEN FROM H IM DURING THE COURSE OF SURVEY. SHRI RAJESH PATEL EXPLAINED THE TRANSACTION OF THE DIARY AND FURNISHED HIS COPY OF ITR ETC. SHRI PATEL ALSO FURNISHED AN A FFIDAVIT IN WHICH HE CATEGORICALLY STATED THAT NOTINGS IN THE DIARY DO N OT PERTAIN TO THE ASSESSEE AND FURTHER EXPLAINED THE NOTINGS IN THE DIARY WITH HIS BUSINESS ASSOCIATES. THE LD. CIT(A) WAS CONVINCED WITH THE CLAIM OF THE ASSESSEE VIS--VIS THE STATEMENT OF SHRI PATEL QUA THE NOTINGS IN THE DIARY AND DELETED THE ADDITION OF RS. 44,26,995/-. 31. BEFORE US, THE LD. D.R. STRONGLY SUPPORTED THE FIND INGS OF THE A.O. AND THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN S TATED BEFORE THE LOWER AUTHORITIES. ITA NOS. 257 3 & 2623/AHD/2013 . A.Y. 2009-10 13 32. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW QUA THE ISSUE. DURING THE COURSE OF THE SURVEY PROC EEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE POCKET DIARY MARKED A-1 AND IN HIS REPLY THE ASSESSEE CATEGORICALLY STATED THAT THE SAID DIARY DOES NOT B ELONG TO THE ASSESSEE BUT THE SAME BELONGS TO SHRI RAJUBHAI PATEL. WE FIND THAT S HRI RAJESH PATEL IN HIS LETTER ADDRESSED TO THE ACIT CIRCLE-2 DATED 15.09.2008 WHI CH IS EXHIBITED AT PAGES 364 TO 366 OF THE PAPER BOOK HAS CATEGORICALLY STAT ED THAT AT THE TIME OF SURVEY, HE WAS PRESENT AT THE PREEMIES OF THE ASSESSEE AND THE SAID DIARY WAS IMPOUNDED FROM HIM. EXHIBITS 361 TO 363 OF THE PAPE R BOOK CONTAIN THE AFFIDAVIT OF SHRI PATEL AND IN HIS AFFIDAVIT ONCE A GAIN SHRI PATEL ADMITTED THAT THE SAID DIARY BELONGS TO HIM AND NOT TO THE ASSESSEE. IN OUR CONSIDERED OPINION, ONCE THE OWNERSHIP OF THE DIARY HAS BEEN ESTABLISHE D TO BE THAT WITH SHRI RAJU PATEL THEN WE DO NOT FIND ANY LOGIC IN TREATING THE NOTINGS IN THE DIARY BELONGING TO THE ASSESSEE. CONSIDERING THE FACTS IN TOTALITY, WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROU ND NO. 3 IS ACCORDINGLY DISMISSED. 33. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 23 - 03- 20 18 SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 23 /03/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED.