Shri Pradeepkumar Biyani,., Surat V. The Income Tax Officer, Ward-1(3)(1), Surat

ITA 2599/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1506 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-09-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S L CHANDEL
• Assessee Lawyers: R N VEPARI
• Keywords: Gross profit estimation; Rejection of books of accounts; Business income; Depreciation; Income from undisclosed sources; Retraction
• Section: 143(3); 133A; 131; 144

Judgement Text

I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 1 OF 18 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD C BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S S GODARA JM ] I.T.A. NO. 2599 /AHD/ 20 1 5 ASSESSMENT YEAR : 200 9 - 10 PRADEEPKUMAR BIYANI .. .......... .APPELLANT SHOP NO.28/29, VARDHMAN COMPLEX, B HATAR ROAD, SURAT 395 017. [PAN: AA SPB 9593 R ] VS. INCOME TAX OFFICER, WARD - 1(3)(1), SURAT. ............. . RESPONDENT APPEARANCES BY: R. N . VEPARI , FOR THE APPELLANT S.L. CHANDEL , FOR THE RESPONDENT D ATE OF CONCLUDI NG THE HEARING : MARCH 10 TH , 201 6 DATE OF PRONOUNCING THE ORDER : MAY 31 ST , 201 6 O R D E R PER PRAMOD KUMAR AM : 1. BY WAY OF THIS APPEAL, THE A SSESS EE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 1 7 TH JULY, 2015 , PASSED BY THE L EARNED CIT(A) , IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) R.W.S. 254 OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR 200 9 - 10. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOWS : - (I) VALIDITY OF ORDER: (1) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) NOT HAVING FOLLOWED THE DIRECTIONS OF THE HON. TRIBUNAL OF GIVING NOTICE FOR ENHANCEMENT U/S.251( 1 ), THE ORDER IS REQUIRED TO BE CANCELLED. I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 2 OF 18 (2) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED I N MAKING ADDITION OF RS.59,40,000 BEING INCOME DECLARED UNDER SURVEY WHEN THAT AMOUNT WAS ALREADY DELETED BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IN THE FIRST ROUND AND THERE WAS NO ISSUE RELATING TO THAT ADDITION BECAUSE THE DEPARTMENT HAD ACC EPTED SUCH DELETION AND NOT TAKEN THE MATTER IN APPEAL. (II) REJECTION OF BOOK RESULT: (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN REJECTING THE BOOK RESULT WITHOUT MENTIO NING HOW PROVISIONS OF SECTION 145(3) WERE APPLICABLE. (2) THE APPELLANT SUBMITS THAT THE REJECTION OF BOOK RESULT HAS BEEN MADE NOT ON ACCOUNT OF ANY DEFECT IN THE BOOKS BUT ON PRESUMPTION AND ON THE BASIS OF CERTAIN PAPERS AND OTHER QUERIES WHICH WERE A LL EXPLAINED. (III) DISALLOWANCE OUT OF EXPENSES: (1) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING DISALLOWANCE OF 20% OUT OF THE FOLLOWING: (A) EXPENSES AND DEPRECIATION ON CAR RS.1,05,425 (B) TELEPHONE EX PENSES RS. 77,860 (C) STAFF WELFARE AND SHOP EXPENSES RS.1,00,119 (2) THE APPELLANT SUBMITS THAT THE VARIOUS EXPENSES ARE EMINENTLY REASONABLE IN THE BACKGROUND OF THE BUSINESS AND TURNOVER OF THE APPELLANT AND THEREFORE, OUGHT NOT TO HAVE BEEN DISALLOWED. (3) T HE APPELLANT FURTHER SUBMITS THAT THE EXPENDITURE ARE SUPPORTED BY VOUCHERS AND ACCOUNTS ARE AUDITED. (IV) MISCELLANEOUS: (1) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE DELETED IN TEREST U/S.234A, 234B, 234C AND 234D OF THE ACT. 3 . BRIEFLY STATED , THE R E LE V ANT MATERIAL FACTS ARE LIKE THIS. THE PROCEEDINGS BEFORE US ARE SECOND ROUND OF PROC EE DINGS . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING SWEETS, FARSH AN S, NAMKINS AND OTHER ITEMS OF SNACKS ETC. T HE ASSESSEE WAS SUBJECTED TO A SURVEY ON 24 TH AND 25 TH FEBRUARY 2009. DURING THE COURSE OF SURVEY SOME DOCUMENTS WERE IMPOUNDED AND STATEMENT OF ONE SHRI MAHESH BIYANI, AN EMPLOYEE AND BROTHER OF TH E ASSESSEE, WAS RECORDED. THE I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 3 OF 18 ASSESSEE, IT MAY BE STATED, WAS N OT AVAILABLE A T THE TIME OF SURVEY. DURING THE COURSE OF THIS SURVEY, SHRI MAHESH BIYANI ACCEPTED THAT HIS ACCOUNTING RECORDS WERE FUDGED INASMUCH AS THE SALE WAS UNDERSTATED BY RS.18,000/ - EACH DAY, A N D, HE MADE DISCLOSURE OF RS.59,40,000/ - ON THAT ACCOUNT. SUBSEQUENTLY, HOWEVER, THIS STATEMENT WAS RETRACTED. THE ASSESSEE CONTENDED THAT A STATEMENT MADE BY AS SESS E E S BROTHE R COULD NOT BE LEGALLY SUSTAINABLE BASIS FOR ADDITIONS IN THE HANDS OF THE ASS ESSEE. THE ASSESSING OFFICER, HOWEVER, PROCEEDED WITH THIS ADDITION OF RS.59,40,000/ - . WHILE DOING SO, THE ASSESSING OFFICER OBSERVED AS FOLLOWS : - IN VIEW OF THE ABOVE DISCUSSION AND THE SUBMISSION MADE BY THE ASSESSEE AND CONSIDERING ALL THE RELEVANT PAPERS, STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS, IMPOUNDED MATERIALS AND IN THE ABSENCE OF ANY PRIMARY DOCUMENT IN RESPECT OF SALES OF THE ASSESSEE AND THE DISCREPANCIES POINTED OUT IN THE PRECEDING PARAS I HAVE NO ALTERN ATIVE EXCEPT TO REJECT THE BOOKS OF ACCOUNTS U/S. 145(3) OF THE I. T. ACT AND DETERMINE THE SALES AS WELL AS GROSS PROFIT OF THE ASSESSEE IN THE MANNER PROVIDED U/S 144 OF THE I.T. ACT. IT HAS BEEN CONCLUSIVELY PROVED THAT ASSESSEE IS NOT MAINTAINING ANY D OCUMENTS OF SALES MADE BY HIM AND HE IS INDULGING IN UNACCOUNTED SALES. ACCORDINGLY IN VIEW OF THE ABOVE DISCUSSION, FACTS OF THE CASE, CONSIDERING ALL THE ASPECTS AND MATERIAL AVAILABLE ON RECORD I ESTIMATE SALE OF THE ASSESSEE OF RS.2,90,69,346/ - WHICH I NCLUDES RS.1,60,29,346/ - BEING SALES SHOWN IN THE BOOKS OF ACCOUNTS PLU S UNACCOUNTED NET INCOME OF RS. 59,40,000/ - AS DISCLOSED DURING THE COURSE OF SURVEY. THEREFORE AN AMOUNT OF RS.59,40,000/ - IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE CONSIDERING IT AS UNACCOUNTED NET SALES OF THE ASSESSEE EARNED DURING THE YEAR EARLIER CLAIMING ALL THE EXPENSES. 4 . AGGRIEVED , ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT(A) WHO RESTRICTED THE ADDITION TO RS.56,00,000/ - ON THE BASIS OF FOLLOWING REASONING: - 4. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(A) HAS MADE AN ENHANCEMENT AS FOLLOWS: 4.3. ONCE THE BOOKS HAVE BEEN REJECTED, THE INCOME OF THE APPELLANT IS REQUIRED TO BE ESTIMATED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE A.O. ON THE BASIS OF THE STATEMENT OF THE EMPLOYEE HANDLING THE CASH COUNTER AT THE VARDHAMAN COMPLEX SHOP ESTIMATED THAT THE UNACCOUNTED SALES WOULD BE 60% OF THE RECORDED SALES. HE ALSO MENTIONS THAT THE GP OF 26% SHOWN BY THE ASSESSEE WAS MUCH LOWER THAN THE NORMAL GP IN THIS LINE OF BUSINESS WHICH WAS STATED TO BE 50% ON THE BASIS OF MARKET INFORMATION. HOWEVER, THE A.O, ULTIMATELY MADE AN ADDITION OF RS.59,40,000/ - ON THE BASIS I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 4 OF 18 OF DISCLOSURE MADE IN THE STATEMENT. THE APPELLANT HAS OBJEC TED TO THE ADDITION ON THE GROUND THAT SHRI MAHESH BIYANI, THE BROTHER, WHO MADE THE DISCLOSURE WAS NOT AUTHORIZED TO DO SO. HE HAS ALSO OBJECTED TO THE OBSERVATION OF THE A.O. WITH REGARD TO LOW GP ON THE GROUND THAT THE GP OF 20.63% WAS ACCEPTED IN A EAR LIER YEAR UNDER SECTION 143(3), THAT THE GP HAS MOVED IN A SMALL RANGE AND THAT THE BASIS OF NORMAL GP BEING 50% HAS NOT BEEN COMMUNICATED TO HIM. IT IS ALSO CLAIMED THAT NOTHING COMES OUT FROM THE STATEMENT OF THE EMPLOYEE STATING THAT SALES WAS RS.13,100 / - AS THE AVERAGE DAILY SALES OF THE APPELLANT WAS RS.48,000/ - (RS.1,60,29,346/ - DIVIDED BY 330 DAYS). IN MY OPINION BASING THE ADDITION ON THE DISCLOSURE MADE BY THE BROTHER WOULD NOT BE THE CORRECT THING AS IT PERTAINS TO ANOTHER PERSON AND THE OBJECTION TO THIS EXTENT IS REQUIRED TO BE SUSTAINED. HOWEVER, THIS IN NO WAY CAN BE INTERPRETED TO MEAN THAT WHAT WAS STATED IN THE STATEMENTS CANNOT BE RELIED UPON AS EVIDENCE AS IT STILL IS A GOOD PIECE OF EVIDENCE AND THE OBJECTION IS SUSTAINED ONLY ON THE GROU ND THAT DISCLOSURE OF ADDITIONAL INCOME MADE BY ANOTHER PERSON IS NOT BINDING ON THE ASSESSEE, HOWEVER CLOSE THAT PERSON MIGHT BE. THE SAME CANNOT BE SAID ABOUT THE OTHER TWO OBJECTIONS. IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT THE A.O. MADE AN ANALYS IS OF AT LEAST ONE ITEM (PANIPURI) AND THE GP RATE FOR THIS WORKED OUT TO 67%. THIS ANALYSIS HAS NOT BEEN COUNTERED BY THE APPELLANT BUT IT IS CLAIMED THAT THE AVERAGE GP ACROSS ALL ITEMS IS CORRECTLY SHOWN. THERE IS NO WAY TO ACTUALLY ARRIVE AT AN ITEM BY ITEM GP AS BASIC DATA IN THIS REGARD IS NOT AVAILABLE AS PRODUCTION DETAILS OF EACH ITEM, THOUGH PROMISED, WAS NOT PROVIDED. THE FACT THAT A LOWER GP HAD BEEN ACCEPTED IN AN EARLIER YEAR AND THE GP MOVES IN A SHORT RANGE DO SUPPORT THE CASE OF THE APPELLA NT BUT THIS CANNOT BE TAKEN TO MEAN THAT THE GP IN ALL EARLIER YEARS WERE CORRECTLY SHOWN AS THE EVIDENCES OBTAINED IN SURVEY WERE NOT WITH THE A.O. WHEN GP WAS ACCEPTED. IN ANY CASE IN A BEST JUDGMENT ASSESSMENT, ESTIMATION IS REQUIRED TO BE MADE. IN MY O PINION, AN AVERAGE GP RATE OF 35% WOULD BE REASONABLE. THE CLAIM OF THE APPELLANT THAT IT HAD AVERAGE DAILY SALE OF RS.48,000/ - AND ON THE BASIS OF SALES OF RS.13,100/ - UNACCOUNTED SALES CANNOT BE CONCLUDED IS REQUIRED TO BE REJECTED. THE SALES OF RS.13,10 0/ - IS ONLY FOR THE SHOP AT VARDHAMAN COMPLEX AND THIS WAS CATEGORICALLY STATED BY THE PERSON HANDLING CASH AT THAT SHOP. THE DAILY SALES ESTIMATE FOR THIS SHOP WAS GIVEN BY SHRI MAHESH BIYANI AS RS.8,000/ - TO RS.9,000/ - AND BY THE EMPLOYEE AS RS.7,000/ - T O RS.8,000/ - . THE AVERAGE DAILY SALES OF THIS SHOP WORKED OUT FROM THE SALES RECORDED IN THE BOOKS IS RS.9,635/ - PER DAY. THE SALES OF RS.13,100/ - WAS ONLY UPTO THE TIME OF ENTRY OF THE SURVEY PARTY, I.E. 5.00PM. THE USUAL TREND IN THIS LINE OF BUSINESS IS THAT THE SALES ARE HIGHER IN THE EVENINGS. IT WOULD BE FAIR TO TAKE THE SALES FOR THE DAY OF THIS SHOP TO BE RS.20,000/ - WHICH WOULD GIVE A SUPPRESSION OF APPROX. 100% AND TO THIS EXTENT THE ESTIMATE OF UNACCOUNTED SALES MADE BY THE A.O. WAS WRONG AS HE D ID NOT COMPARE THE FULL DAY SALES. THERE IS NO REASON TO ASSUME THAT SIMILAR SITUATION WOULD NOT OBTAIN AT THE OTHER SHOP OF THE ASSESSEE. AT THE SAME TIME ALLOWANCE IS REQUIRED TO BE MADE FOR VARIATIONS ON DIFFERENT DAYS AND TO ACCOMMODATE FOR ANY SPIKE O N THE DAY OF SURVEY. IT WOULD BE FAIR TO ASSUME A SUPPRESSION OF SALES OF 75%. IN VIEW OF THE ABOVE DISCUSSION, THE ADDITIONAL INCOME OF THE APPELLANT IS REQUIRED TO BE COMPUTED BY CONSIDERING UNACCOUNTED SALES @ 75% OF RECORDED SALES AND AFTER APPLYING GP OF 35% TO THE TOTAL SALES AND REDUCING THE DISCLOSED GP. THE GROSS PROFIT OF THE ASSESSEE IS ACCORDINGLY DETERMINED AT RS.98,17,974/ - . THE DISCLOSED GP IS RS.42,20,638/ - . THE UNACCOUNTED INCOME WORKS OUT TO RS.55,97,336/ - , ROUNDED OFF TO RS.56,00,000/ - . T HE APPELLANT GETS RELIEF ACCORDINGLY. I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 5 OF 18 5 . AGGRIEVED, ASSESSEE C ARRIED THE MATTER IN APP E AL BEFORE THE TRIBUNAL, INTER ALIA, ON THE GROUND OF OPPORTUNITY OF HEARING, AS NECESSARY BEFORE ENHANCEMENT OF INCOME BY THE CIT ( A ) , WAS NOT GIVEN . W HILE UPHOLDING T HIS PLEA, THE T RIBUNAL REMITTED THE MATTER BACK TO THE CIT (A) BY OBSERVING AS FOLLOWS : - 7. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS ALSO THE DECISION OF HON BLE DELHI HIGH COURT PRONOUNCED IN THE CASE OF GEDORE TOOLS PVT. LTD. VS. CIT, 238 ITR 68 (DEL), WE HEREBY HOLD THAT FROM THE ORDER OF LEARNED CIT(A) IT IS EVIDENT THAT THE GROSS PROFIT FIGURE AS WELL AS THE TOTAL TURNOVER FIGURE HAVE BEEN DISTURBED WHICH RESULTED INTO AN ENHANCEMENT, AS CLAIMED BEFORE US. BECAUSE OF THAT REASON, WE HEREBY HOLD THAT THERE WAS AN INFRINGEMENT OF THE PROVISIONS OF SECTION 251(2) OF IT ACT. AS HELD BY THE HON BLE COURT IN THE DECISION CITED ABOVE SECTION 251(2) CLEARLY PRESCRIBES THAT CIT(A) SHALL NOT ENHANCE AN ASSESSMENT UNLESS THE A PPELLANT HAS HAD A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST SUCH ENHANCEMENT. WE, THEREFORE, DEEM IT PROPER AS WELL AS JUSTIFIABLE TO RESTORE THE ENTIRE ISSUE BACK TO HIM TO BE DECIDED DENOVO NEEDLESS TO SAY AFTER PROVIDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE, SO THAT THE SAID LAPSE AS OCCURRED EARLIER SHOULD NOT BE REPEATED. THIS APPEAL THEREUPON CAN BE DECIDED ON MERITS. WITH THESE DIRECTIONS, WE HEREBY RESTORE THIS ISSUE; HENCE, THE GROUNDS RAISED BEFORE US MAY BE TREATED AS ALLOWED BU T FOR STATISTICAL PURPOSE ONLY . 6 . IN THE ENSUING PROCEEDINGS BEFORE THE LD . CIT(A) , L D. CIT ( A ) UPHELD THE DISALLOWANCE ENTIRELY. THE DETAILED REASONING OF THE L D. CIT(A) , WHICH W E MUST REPRODUCE FOR READY REFERENCE, WAS AS FOLLOWS : - 6.1.1 I HAVE CONSIDE RED THE ASSESSMENT ORDER AS WELL AS THE SUBMISSIONS OF THE APPELLANT. THE GROUNDS OF APPEAL - GROUND NO.1 PERTAINS TO MAKING ADDITION OF RS.59,40,000/ - AS NET UNACCOUNTED INCOME AND THE ADDITION IS TOTALLY UNJUSTIFIED AS IT HAS BEEN MADE AS PER DISCLOSURE OF THE TIME OF SURVEY NOT BY THE APPELLANT BUT BY HIS BROTHER. THE APPELLANT SUBMITS THAT NO ADDITION CAN BE MADE ON THE BASIS OF DISCLOSURE AS PER SURVEY AS IT IS IN CONTRAVENTION OF INSTRUCTION DATES 10.03.2003 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES . DURING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSING OFFICER HAS NOT FOUND ANY UNACCOUNTED ASSETS TO JUSTIFY THE ABOVE DISCLOSURE. THE APPELLANT FILED HIS RETURN OF INCOME ON 29.09.2009 DISCLOSING TOTAL INCOME OF 6,52,640/. THE APPELLANT IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF SWEETS, FARSAN, SNACKS, KULFI, COLD DRINKS, ETC. THERE WAS A SURVEY ACTION U/S. 133A ON 24 TH & 25 TH FEBRUARY, 2009. DURING THE COURSE OF SURVEY PROCEEDINGS DOCUMENTS WERE IMPOUNDED AND A DISCLOSURE OF I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 6 OF 18 59,40,000 / - WAS MADE BUT THE SAME WAS NOT OFFERED IN THE RETURN, IT IS MENTIONED BY THE A.O. THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS 'INCOMPLETE BOOKS OF ACCOUNTS' WERE PRODUCED FROM WHICH FACTS HAVE BEEN EXTRACTED. THE A.O. REQUIRED THE APPELLANT TO FURNI SH PRIMARY EVIDENCE OF SALES MADE DURING THE YEAR BUT THE APPELLANT CATEGORICALLY DENIED FURNISHING THE PRIMARY DOCUMENT REGARDING DAILY SALES. ON THE BASIS OF MATERIAL IMPOUNDED AND STATEMENT RECORDED, SHOW CAUSE WAS ISSUED BY THE AO WHICH IS MENTIONED ON PAGES 2,3,4 & 5 OF THE ASSESSMENT ORDER. IN SHORT, THE A.O. ASKED THE APPELLANT TO RECONCILE THE CASH AND STOCK FOUND DURING THE COURSE OF SURVEY AS THE SAME REMAINED UN - RECONCILED DURING SURVEY AND SUBSEQUENT ASSESSMENT PROCEEDINGS. THE APPELLANT WAS ALS O ASKED TO GIVE EXPLANATION REGARDING CERTAIN IMPOUNDED DOCUMENTS. IT WAS ALSO BROUGHT TO THE NOTICE OF THE APPELLANT THAT THERE WAS DIFFERENCE IN THE CASH BALANCE ON SEVERAL DATES BETWEEN CASH BOOK AND COMPUTER PRINT OUTS. IN VIEW OF THE DISCREPANCIES POI NTED OUT IN THE SHOW CAUSE AS ALSO THE FACT THAT STOCK REGISTER WAS NOT MAINTAINED AND COMPLETE BOOKS OF ACCOUNTS WERE NOT PRODUCED FOR VERIFICATION, THE APPELLANT WAS ASKED TO SHOW CAUSE WHY BOOKS OF ACCOUNTS NOT BE REJECTED. 6.1.2 IN REPLY TO THE SHOW C AUSE, IT WAS SUBMITTED BY THE APPELLANT THAT EXPLANATIONS AND DETAILS REQUIRED HAD ALREADY BEEN GIVEN AT THE TIME OF STATEMENT OF SHRI PRADEEP KUMAR BIYANI RECORDED BY THE A.O. ON 19, 20, 21.12.2011. IT WAS ALSO STATED THAT SHRI PRADEEP KUMAR BIYANI (APPEL LANT) HAS NOT DISCLOSED ANY UNDISCLOSED INCOME DURING THE COURSE OF SURVEY PROCEEDINGS AND THAT HE HAS NOT AUTHORIZED ANY PERSON TO DISCLOSE UNDISCLOSED INCOME ON HIS BEHALF. IT WAS FURTHER STATED THAT THE BOOKS OF ACCOUNTS HAVE BEEN AUDITED U/S. 44AB AND GUJARAT VAT ACT. IT WAS ALSO STATED THAT AT THE TIME OF SURVEY PROCEEDINGS ACCOUNTS WERE NOT COMPLETED BECAUSE ONLY PART TIME ACCOUNTANT WAS EMPLOYED AND ALSO BECAUSE IN BUSINESS DETAILS, VOUCHERS, BILLS ARE NOT RECEIVED TIMELY. IT WAS ARGUED THAT INCOME - TAX LAW DOES NOT REQUIRE THAT ACCOUNTS SHOULD BE COMPLETED DAILY AND BECAUSE TIME WAS NOT ALLOWED BY THE SURVEY PARTY TO COMPLETE THE BOOKS, INCOMPLETE BOOKS WERE TAKEN BY THE INCOME - TAX DEPARTMENT. AS REGARDS STOCK RECORDS IT WAS STATED THAT THE PRACTICE FOLLOWED BY THE APPELLANT WAS TO TAKE PHYSICAL STOCK AT THE YEAR END AS THE CLIENT WAS HAVING MORE THAN 500 ITEMS INCLUDING CONSUMABLE STOCK AND PERISHABLE FOOD ITEMS. IT WAS ARGUED THAT MAINTENANCE OF STOCK RECORD IS NOT COVERED UNDER PRIMARY BOOKS AND RE CORDS. AN EXPLANATION FOR THE DIFFERENT IMPOUNDED PAGES WAS GIVEN. HOWEVER IT IS SEEN THAT FOR PAGES CONNECTED WITH INVESTMENT OR CONSTRUCTION, THE ONLY EXPLANATION WAS THAT IT BELONGS TO SOME CUSTOMER WHO HAS LEFT IT BEHIND AND THE APPELLANT HAD RETAINED IT SO AS TO BE ABLE TO GIVE IT BACK IF THE CUSTOMER COMES IN SEARCH OF HIS BELONGINGS. 6.1.3 THE SAID EXPLANATIONS WERE NOT ACCEPTABLE TO THE A.O. THE A.O. CATEGORICALLY MENTIONS THAT THE STATEMENT OF THE APPELLANT (SHRI PRADEEP KUMAR BIYANI) WAS RECORDED ONLY ON 19.12.2011 AND ADJOURNED TO I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 7 OF 18 20.12.2011 ON HIS REQUEST AND NO STATEMENT WAS RECORDED ON 21.12.2011 AND THAT COMPLETE EXPLANATIONS AND DETAILS WERE NOT SUBMITTED DURING THE STATEMENT AS CLAIMED IN THE REPLY TO THE SHOW CAUSE. THE A.O. FURTHER STATES THAT DURING THE COURSE OF SURVEY PROCEEDINGS THE ELDER BROTHER OF THE APPELLANT SHRI MAHESH BIYANI WHO IS ALSO AN EMPLOYEE OF THE PROPRIETARY CONCERN 'GANGOR' WAS PRESENT IN THE PREMISES AND HIS STATEMENT WAS RECORDED ON OATH U/S.131 IN WHICH HE HAD INFOR MED THAT THE FIRM INDULGED IN UNACCOUNTED SALE OF GOODS ON DAILY BASIS AND THAT A SUM OF RS.18,000/ - WAS SEPARATED FROM THE DAILY SALES AND ONLY THE REMAINING AMOUNT WAS ENTERED IN THE BOOKS OF ACCOUNTS. THE UNACCOUNTED SALES OF 59,40,000/ - (18,000 X 330 D AYS) WAS DISCLOSED AS UNACCOUNTED INCOME OVER AND ABOVE REGULAR INCOME. IN HIS STATEMENT SHRI MAHESH BIYANI HAD ALSO STATED THAT NO NOTING OR DETAILS OF UNACCOUNTED SALES MADE BY THE FIRM WAS KEPT AND THEREFORE NO EVIDENCE OF SUCH THING WOULD BE FOUND AT T HE PREMISES SURVEYED. SHRI MAHESH BIYANI WAS THE PERSON IN - CHARGE OF THE PREMISES ON THE DAY OF SURVEY AND REGULARLY LOOKED AFTER THE AFFAIRS OF THE BUSINESS, A FACT ADMITTED BY BOTH SHRI MAHESH BIYANI AND SHRI PRADEEP KUMAR BIYANI, THE APPELLANT, IN THEIR STATEMENTS UNDER OATH. THE A.O. DID NOT ACCEPT THE RETRACTION OF DISCLOSURE MADE THROUGH AFFIDAVIT OF SHRI PRADEEP KUMAR BIYANI FILED ON 22.05.2009, I.E. AFTER 3 MONTHS OF COMPLETION OF SURVEY PROCEEDINGS AS ACCORDING TO HIM SHRI PRADEEP BIYANI, THE APPEL LANT, COULD NOT RETRACT A SWORN STATEMENT GIVEN BY HIS BROTHER, SHRI MAHESH BIYANI. 6.1.4 THE A.O. FURTHER REFERS TO THE STATEMENT OF SHRI GIRDHARILAL CHHAGANLAL TAPARIA, THE PERSON HANDLING THE CASH COUNTER SALES OF GANGOR, VARDHAMAN COMPLEX, SURAT. IN H IS STATEMENT, SHRI TAPARIA STATED THAT THE AVERAGE DAILY CASH SALES OF THIS SHOP IS RS.5,000/ - TO 7.000/ - . HOWEVER, CASH OF RS.47,645/ - WAS FOUND AT THE SHOP IN VARDHAMAN COMPLEX AND THE CLOSING CASH BALANCE AS ON 23.02.2009 WAS RS.30,700/ - , THE DIFFERENCE OF APPROXIMATELY RS.17,000/ - IN CASH WAS STATED TO BE THE CASH SALES OF 24.02.2009 UPTO THE TIME OF STARTING SURVEY PROCEEDINGS. THE BREAKUP OF THE SALES WAS GIVEN AS RS.3,900/ - FOR M/S. GANGOR DISTRIBUTORS AND RS.13,100/ - AS CASH SALES OF M/S. GANGOR. M/ S. GANGOR IS THE PROPRIETARY CONCERN OF THE APPELLANT. IN VIEW OF THE ADMISSION OF SALES OF RS.8,000/ - AND ACTUAL SALES OF RS.13,100/ - UPTO THE TIME OF STARTING OF SURVEY PROCEEDINGS, THE A.O. ESTIMATED SUPPRESSION OF SALES BY 60%. ACCORDING TO THE A.O., T HESE FACTS FURTHER STRENGTHEN THE DISCLOSURE MADE BY SHRI MAHESH BIYANI. 6.1.5 THE A.O. FURTHER STATES THAT STOCK WAS NOT RECONCILED DURING SURVEY OR ASSESSMENT PROCEEDINGS DESPITE SEVERAL OPPORTUNITIES. HE FURTHER POINTS OUT THAT EVEN THE AUDITORS OF THE APPELLANT HAVE MENTIONED THAT 'PROPER QUANTITATIVE RECORDS WERE NOT AVAILABLE WITH THE APPELLANT'. REGARDING THE CLAIM OF THE APPELLANT THAT NO LAW REQUIRES MAINTENANCE OF BOOKS ON DAILY BASIS WAS REJECTED BY THE A.O. AS THE LAW REQUIRED MAINTENANCE OF DA Y TO DAY BOOKS OF BUSINESS AND THAT NON - MAINTENANCE OF BOOKS ON DAILY BASIS WOULD OPEN THE BOOKS AND THEREFORE OF PROFITS TO MANIPULATION. THE I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 8 OF 18 A.O. DISCUSSES THE MODUS OPERANDI OF RECORDING SALES AS EXPLAINED BY THE APPELLANT TO SHOW THAT THE APPELLANT IS NOT MAINTAINING ANY DOCUMENTARY EVIDENCES OF SALES MADE. IT WAS EXPLAINED BY THE APPELLANT THAT AT THE BHATAR ROAD SHOP THE CUSTOMER GIVES CASH AT THE COUNTER AND TAKES AWAY THE GOODS PURCHASED WHEREAS AT THE GHOD DOD ROAD SHOP THE CUSTOMER PAYS CASH AND O BTAINS A TOKEN WITH WHICH HE PURCHASES THE ITEMS REQUIRED BY HIM. THE SALES MADE DURING THE DAY AT BHATAR ROAD IS FIRST ENTERED IN A 'KACHHA SHEET' OF PAPER AND THEREAFTER IN 'DAILY CASH SHEET' ON THE BASIS OF WHICH A FINAL BILL IS PREPARED AND THE AMOUNT IN THIS FINAL BILL IS ENTERED IN BOOKS OF ACCOUNTS. THE SALES MADE AT THE GHOD DOD ROAD SHOP IS PREPARED ON THE BASIS OF TOKEN SOLD. IT WAS ADMITTED BY THE APPELLANT THAT THEY DO NOT KEEP 'KACHHA SHEET', 'DAILY CASH SHEET' OR ANY DETAILS OF TOKEN ISSUED B Y THEM DURING THE DAY. ON THE BASIS OF THIS THE A.O. CONCLUDED THAT THE APPELLANT SHOWS HIS SALES AS PER HIS SWEET WILL AND CONVENIENCE. 6.1.6 THERE WAS A DIFFERENCE IN THE CASH BALANCE APPEARING IN THE CASH BOOK WITH THE CASH BALANCES IN THE COMPUTER PRI NT OUT. VIDE SHOW CAUSE THE APPELLANT WAS ASKED TO CLARIFY THE DIFFERENCE AND IN RESPONSE TO THIS IT WAS SUBMITTED THAT THE APPELLANT'S ACCOUNTS WERE NOT COMPLETED TILL THE DATE OF SURVEY AND THAT HE HAS COMPLETED HIS ACCOUNTS AFTER SURVEY AND MINOR DIFFER ENCES ARE DUE TO INCOMPLETION OF BOOKS OF ACCOUNTS. THE SAID CONTENTIONS WAS REJECTED BY THE A.O. AS SHRI MAHESH BIYANI IN HIS STATEMENT DURING THE SURVEY ON 24.02.2009 HAD STATED THAT BOOKS OF ACCOUNTS WERE COMPLETED UPTO 20.02.2009 IN ALL RESPECTS. IT W AS ALSO OBSERVED BY THE A.O. THAT THE DIFFERENCES WERE FOR THE PERIOD APRIL, 2008 TO MAY, 2008 WHEREAS SURVEY WAS CONDUCTED AT THE END OF FEBRUARY, 2009 AND IF THE BASIC BOOK, I.E. CASH BOOK, WAS REMAINING INCOMPLETE FOR THIS PERIOD, THE BOOKS OF ACCOUNTS CANNOT BE CONSIDERED AS RELIABLE. IT IS ALSO STATED BY THE A.O. THAT THERE WAS A CASH SHORTAGE OF RS.4,62,442/ - WHEN BOOKS OF ACCOUNTS WERE COMPARED TO PHYSICAL CASH DURING SURVEY PROCEEDINGS AND THAT THIS DIFFERENCE HAD NOT BEEN RECONCILED TILL COMPLETION OF THE ASSESSMENT PROCEEDINGS ALTHOUGH SHRI MAHESH BIYANI IN HIS STATEMENT DURING SURVEY HAD STATED THAT THE DIFFERENCE IN CASH WOULD BE RECONCILED ON THE NEXT DAY. THE A.O. RELIED ON SEVERAL DECISIONS TO HOLD THAT BOOKS OF ACCOUNTS WERE REQUIRED TO BE RE JECTED U/S 145(3) AND IN ABSENCE OF ANY DOCUMENTS FOR SALES MADE, ESTIMATED THE SALES AT RS.2,90,69,346/ - WHICH INCLUDED DISCLOSED SALES OF RS.1,60,29,346/ - PLUS UNACCOUNTED NET INCOME OF RS.59,40,000/ - DISCLOSED DURING THE COURSE OF SURVEY. HE THEREFORE M ADE AN ADDITION OF RS.59,40,000/ - TO THE TOTAL INCOME OF THE APPELLANT CONSIDERING IT AS UNACCOUNTED NET SALES AFTER EXPENSES. 6.1.7 DURING THE COURSE OF APPEAL PROCEEDINGS, IT WAS SUBMITTED THAT THE DISCLOSURE OF UNDISCLOSED INCOME WAS NOT MADE BY THE AP PELLANT, SHRI PRADEEP KUMAR BIYANI BUT BY HIS BROTHER, SHRI MAHESH BIYANI, WHO WAS NOT AUTHORIZED TO GIVE STATEMENT ON BEHALF OF THE APPELLANT. IT WAS FURTHER SUBMITTED THAT THE STATEMENT WAS PROMPTLY RETRACTED BY THE I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 9 OF 18 BROTHER ON 05.03.2009 AS ALSO BY THE A PPELLANT AND THEIR SWORN AFFIDAVITS RETRACTING THE SAME HAD BEEN GIVEN TO THE A.O., THE ADDL. CIT, RANGE - 3, SURAT AND THE COMMISSIONER OF INCOME - TAX, SURAT ON 14.05.2009, LONG BEFORE THE ASSESSMENT PROCEEDINGS STARTED. IT WAS STATED THAT THE A.O. HAS RELI ED SOLELY ON THE CONFESSION MADE BY THE APPELLANT IN SURVEY. IT WAS ARGUED THAT DISCLOSURE MADE IN SURVEY CANNOT BE ADDED AS IT WAS OBTAINED UNDER COERCION; DISCLOSURE WAS MADE BY THE BROTHER OF THE APPELLANT AND NOT APPELLANT HIMSELF; THAT THE DISCLOSURE HAD BEEN RETRACTED; THAT IN ANY CASE IT WAS NOT BINDING ON THE APPELLANT; NO PAPER OR MATERIAL WERE FOUND TO JUSTIFY THE DISCLOSURE; THE DISCLOSURE WAS OBTAINED IN VIOLATION OF INSTRUCTION DATED 10.03.2003 OF THE CBDT. IT WAS ARGUED THAT NO ADDITION CAN B E MADE ONLY ON THE BASIS OF ADMISSION IN STATEMENT. IT WAS FURTHER SUBMITTED THAT THE APPELLANT HAD DISCLOSED GROSS PROFIT RATE OF 26.33% FOR THE YEAR WHICH WAS COMPARABLE TO THE RATE OBTAINED IN EARLIER YEARS (22.92% IN AY 2005 - 06, 27.80% IN AY 2006 - 07, 23.24% IN AY 2007 - 08 AND 22.47% IN AY 2008 - 09). IT WAS ALSO SUBMITTED THAT FOR AY 2003 - 04 ASSESSMENTS MADE U/S. 143(3) HAD ACCEPTED TRADING RESULTS WITH GROSS PROFIT OF 20.63%. IT WAS STATED THAT THE BOOKS HAD BEEN REJECTED FOR NON - MAINTENANCE OF STOCK RE GISTER AND NON - COMPLETION OF BOOKS DAILY. IT WAS ARGUED THAT IT WAS NOT POSSIBLE FOR THE APPELLANT TO MAINTAIN STOCK RECORDS AS HE DEALS IN HUNDREDS OF ITEMS WHICH ARE ALL PERISHABLE AND PREPARED FOOD ITEMS ARE THROWN AWAY AT THE END OF THE DAY. IT WAS SU BMITTED THAT TO MAINTAIN STOCK RECORDS IN SUCH CIRCUMSTANCES IS IMPOSSIBILITY. AS REGARDS NON - MAINTENANCE OF DAILY CASH BOOK, IT WAS SUBMITTED THAT THE APPELLANT HAS BEEN RECORDING PURCHASES AND SALES ON DAILY BASIS AND THAT ONLY EXPENSES ARE RECORDED IN K ACHHA BOOKS WHICH ARE INCORPORATED SUBSEQUENTLY AND AS MAIN ITEMS HAVE BEEN WRITTEN DAILY, THE BOOKS CANNOT BE REJECTED. IT WAS ALSO SUBMITTED THAT IT HAS BEEN STATED BY THE A.O. THAT AS PER MARKET INFORMATION GATHERED FROM INQUIRY, THE AVERAGE GROSS PROFI T IN THIS LINE OF BUSINESS IS ALMOST 50% AS AGAINST GROSS PROFIT OF 26% SHOWN BY THE APPELLANT, THE MARKET INFORMATION OR THE RESULT OF THE INQUIRY WAS NOT MADE AVAILABLE TO THE APPELLANT AND THE A.O. HAD NOT ISSUED ANY SHOW CAUSE IN RESPECT OF THIS. IT WA S FURTHER SUBMITTED THAT COMPLETE DETAILS AND EXPLANATIONS WERE GIVEN BY THE APPELLANT IN HIS STATEMENT RECORDED WHERE THE SYSTEM OF SALES AND CONTROLS WERE EXPLAINED; WHY PRODUCTION REGISTER IS NOT MAINTAINABLE; THAT VAT RETURNS HAD BEEN FILED AND ASSESSM ENT FOR THE YEAR WERE COMPLETED AND THAT HE HAD NOT GIVEN ANY RIGHT TO ANYONE FOR MAKING STATEMENT ON HIS BEHALF. IT HAS BEEN FURTHER SUBMITTED THAT NOTHING COMES OUT FROM THE STATEMENT OF SHRI TAPARIA, WHO HANDLES CASH COUNTER AT VARDHAMAN COMPLEX, TO SUP PORT THE CASE FOR UNACCOUNTED SALES AS THE AVERAGE DAILY SALES DISCLOSED BY THE APPELLANT IS MORE THAN RS.48,000/ - (1,60,29,346 / 330 DAYS) AND SALES OF ONLY RS.13,100/ - UPTO THE STARTING OF SURVEY PROCEEDINGS ON THE DATE OF SURVEY HAS BEEN MENTIONED IN TH E STATEMENT. IT WAS ARGUED THAT ONE FAILS TO UNDERSTAND HOW THE APPELLANT STATING THAT DAILY ENTRY IS MADE IN KACHHA SHEETS OF ALL THE CASH SALES AND THESE SHEETS ARE NOT I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 10 OF 18 MAINTAINED AFTERWARDS AS IT IS NOT NECESSARY AFTER RECORDING SALES IN THE BOOKS, CAN BE INTERPRETED AS INDULGING IN UNACCOUNTED SALES. IT WAS ACCEPTED THAT THERE WAS MINOR DISCREPANCY IN THE COMPUTER PRINT OUT AND THE CASH BOOK AND THIS WAS SOUGHT TO BE EXPLAINED ON THE GROUND THAT THOUGH PURCHASES AND SALES ARE RECORDED DAILY, THE EXPENSE S ARE NOT RECORDED EVERY DAY BECAUSE THAT IS DONE BY PART TIME ACCOUNTANT WHO COMES AND PASSES ENTRIES PERIODICALLY. IT WAS ARGUED THAT THE BOOKS CANNOT BE REJECTED ON THIS GROUND AND THAT EVEN IF BOOKS ARE REJECTED, THE A.O. CAN MAKE ADDITION TO PROFITS E ARNED BUT CANNOT ADD ARBITRARY FIGURE OF UNACCOUNTED SALES WHEN GROSS PROFIT MARGINS OF THE APPELLANT MOVED IN A SMALL RANGE IN THE PAST 6 YEARS. IT WAS SUBMITTED THAT THE ADDITION HAD BEEN MADE ON THE BASIS OF UNACCOUNTED SALES CALCULATED AT RS.18,000/ - X 330 DAYS WHICH WOULD TAKE THE GROSS PROFIT RATE FROM 26% TO MORE THAN 40%. 6.2.1 ON THE PERUSAL OF THE FACTS OF THE CASE, IT IS OBSERVED THAT IT IS TRUE THAT COURTS HAVE RULED THAT STATEMENTS BY THEMSELVES ARE NOT CONCLUSIVE EVIDENCE BUT IT IS EQUALLY TR UE THAT THE STATEMENTS HAVE BEEN HELD TO BE GOOD PIECES OF EVIDENCE EVEN IN A CASE WHERE THE STATEMENT HAS BEEN RETRACTED. LIKE ANY OTHER EVIDENCE IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. IN THIS CASE THE STATEMENT OF MAHESH BIYANI, BROTHER OF THE APPELLANT, WAS RECORDED UNDER OATH DURING THE COURSE OF SURVEY PROCEEDINGS ON 24.02.2009. SHRI MAHESH BIYANI WAS NOT ONLY AN EMPLOYEE OF THE PROPRIETARY CONCERN OF THE APPELLANT WHICH WAS SURVEYED BUT ALSO HIS BROTHER AND THE PERSON IN - CHARGE OF THE PREMISES ON THE DATE OF SURVEY. THE DAY TO DAY WORK WAS BEING LOOKED AFTER BY THE BROTHER. FROM THE STATEMENT OF THE BROTHER IT IS EVIDENT THAT HE WAS AWARE OF ALL THE FACTS REGARDING NOT ONLY THE BUSINESS OF M/S. GANGOR AND M/S. GA NGOR DISTRIBUTORS BUT ALSO PERSONAL DETAILS OF, AGAIN, NOT ONLY HIS FAMILY BUT ALSO OF HIS BROTHER'S FAMILY. THIS IS QUITE NATURAL WHEN HIS OWN PROPRIETARY CONCERN AND HIS BROTHER'S PROPRIETARY CONCERN RUN FROM THE SAME PREMISES. IN FACT THE CASH OF BOTH T HE CONCERNS WERE KEPT AT THE SAME PLACE (REFER Q. NO.12). THIS FACT IS ALSO CORROBORATED BY THE STATEMENT OF THE PERSON HANDLING THE CASH COUNTER AT THE VARDHAMAN COMPLEX SHOP. THEREFORE THE STATEMENT MADE BY THE BROTHER, SHRI MAHESH BIYANI, UNDER OATH CAN NOT BE WHISKED AWAY SIMPLY BY STATING THAT THE APPELLANT HAD NOT AUTHORIZED HIM TO MAKE ANY STATEMENT ON HIS BEHALF. 6.2.2 ANOTHER CLAIM IS THAT THE STATEMENT HAS BEEN RETRACTED AND IS THEREFORE OF NO VALUE. THE RETRACTION HAS TO BE VIEWED IN REFERENCE T O THE FACTS MENTIONED IN THE AFFIDAVIT AND ALSO WITH REFERENCE TO THE DATES ON WHICH THEY WERE SWORN AND THEIR SUBMISSION TO THE DEPARTMENT. IT IS SURPRISING THAT THE AFFIDAVIT RETRACTING THE STATEMENT WAS SWORN BY SHRI MAHESH BIYANI ON 05.03.2009 BUT SUBM ITTED TO THE DEPARTMENT ONLY ON 22.05.2009. SIMILARLY, THE AFFIDAVIT SWORN BY THE APPELLANT RETRACTING FROM THE STATEMENT OF HIS BROTHER IS SWORN ON 18.03.2009 I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 11 OF 18 BUT AGAIN SUBMITTED TO THE DEPARTMENT ON 22.05.2009. THE REASON FOR THIS MYSTERIOUS DELAY PUTS A QUESTION MARK ON THE TRUTHFULNESS OF THE RETRACTION ITSELF. FURTHER, THE AFFIDAVIT OF THE BROTHER STATES THAT HE WAS CONTINUOUSLY HARASSED TO GIVE A DISCLOSURE OF 2 CRORES. HE ALSO STATES THAT HE HAS SIGNED THE STATEMENT WHATEVER WAS WRITTEN BY THE INCOME - TAX PEOPLE. IF THIS WAS TRUE, NOTHING STOPPED THE INCOME - TAX OFFICIALS TO OBTAIN THE DISCLOSURE OF 2 CRORES BUT THE DISCLOSURE FIGURE IS ONLY 59,40,000/ - . ANOTHER POINT TO BE NOTED IS THAT IN THE STATEMENT RECORDED, DETAILS OF MOVABLE AND IMMOVABLE ASSETS OF THE FAMILY - HIS OWN AND BROTHER'S (APPELLANT) HAVE BEEN MENTIONED. THESE WOULD NOT BE KNOWN TO THE INCOME - TAX OFFICIALS. AGAIN THERE ARE SIMILARITIES IN THE STATEMENT OF THE EMPLOYEE, WHO STATES THAT SALES FOR THE VARDHAMAN COMPLEX SHOP IS APPROX. RS. 8,000/ - TO 9.000/ - PER DAY AND SHRI MAHESH BIYANI, WHO STATES THAT SALES OF THIS SHOP IS APPROX. RS.7,000/ - TO 8,000/ - PER DAY. THAT SHRI MAHESH BIYANI HAD NOT SLEPT FOR TWO NIGHTS IS NOT SUPPORTED BY FACTS. THE DEPARTMENT OFFICIALS WERE PRESENT FOR THE SU RVEY ONLY BETWEEN 5.00 P.M. ON 24.02.2009 AND 5.00 P.M. ON 25.02.2009. SIMILAR THINGS HAVE BEEN STATED IN THE AFFIDAVIT OF SHRI PRADEEP KUMAR BIYANI. IN ADDITION IT IS ALSO STATED THAT HE HAS REQUESTED THE INCOME - TAX PEOPLE TO TAKE HIS STATEMENT BUT THERE HAS BEEN NO RESPONSE. THIS STATEMENT IS NOT SUPPORTED WITH ANY VERIFIABLE EVIDENCE. 6.2.3 IN HIS STATEMENT, THE MODUS OPERAND! OF GENERATING UNACCOUNTED INCOME WAS EXPLAINED BY SHRI MAHESH BIYANI. IT WAS STATED THAT AN AMOUNT OF RS.18.000/ - WAS TAKEN OUT FROM THE TOTAL SALES OF THE DAY AND REMAINDER WAS RECORDED AS THE SALE. SHRI PRADEEP KUMAR BIYANI IN HIS STATEMENT HAS GIVEN THE METHOD OF RECORDING THE SALES IN THE BOOKS. IT WAS EXPLAINED THAT THE SALES ARE RECORDED ON THE BASIS OF TOKEN SALE OR CASH COL LECTED AT THE COUNTER WHICH WAS FIRST ENTERED IN A KACHHA SHEET AND ON THE BASIS OF KACHHA SHEETS THE SALES ARE RECORDED IN THE BOOKS AFTER WHICH THE KACHHA SHEETS ARE NOT MAINTAINED. IT WAS ALSO ACCEPTED THAT NO RECORD OF THE TOKEN SALE WAS RETAINED. IT W AS ALSO MENTIONED IN THE STATEMENT THAT IF THE CUSTOMER DESIRES THEN HE IS ISSUED A CASH MEMO. IT IS OBSERVED FROM THE SALES LEDGER THAT 100% OF THE SALES ARE IN CASH. EVEN PAYMENTS FOR SPECIAL ORDERS ARE IN CASH. IN FACT THE TOTAL SALES OF THE APPELLANT A RE IN CASH. ONLY ONE CONSOLIDATED CASH SALES FIGURE IS ENTERED IN THE SALES REGISTER FOR EACH DAY, UNSUPPORTED BY ANY BILLS/CASH MEMO/KACHHA SALE SHEET/TOKEN SALE DETAILS. THERE IS NO WAY OF VERIFYING THE CORRECTNESS OF THE SALES RECORDED BY THE APPELLANT AS NO RECEIPTS ARE ISSUED TO THE CUSTOMER ON A REGULAR BASIS AND DAILY SALE SHEETS/TOKEN SALE DETAILS WHICH WOULD BE THE PRIMARY DOCUMENT ARE NOT MAINTAINED OR AT LEAST NOT PRODUCED FOR VERIFICATION. THIS IS REQUIRED TO BE VIEWED ALONG WITH THE FACT THAT C ASH FOUND DURING THE SURVEY WAS NOT RECONCILED EVEN DURING THE ASSESSMENT PROCEEDINGS AND REMAINS UN - RECONCILED EVEN TODAY. THERE IS ALSO THE ISSUE OF DISCREPANCY IN CASH BALANCE ON VARIOUS DATES BETWEEN CASH BOOK AND I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 12 OF 18 COMPUTER PRINTS - OUT. THIS HAS BEEN SOU GHT TO BE EXPLAINED AS MINOR DISCREPANCY AND FOR THE REASON THAT BOOKS WERE INCOMPLETE AT THE TIME OF SURVEY. IT IS ALSO HARD TO BELIEVE THAT THE PART TIME ACCOUNTANT WOULD MAKE ENTRIES FOR PURCHASES AND SALES ON A DAILY BASIS BUT MAKE ENTRY FOR EXPENSES A T ONE SITTING ON SOME OTHER DAY. AGAIN THE DIFFERENCES PERTAINED TO APRIL TO JUNE, 2008 AND REMAINED SO EVEN IN FEBRUARY, 2009 WHEN SURVEY ACTION WAS TAKEN AGAINST THE APPELLANT. IT IS ALSO SEEN THAT IMPOUNDED DOCUMENTS WHICH COULD NOT BE EXPLAINED WERE ST ATED TO BELONG TO SOME CUSTOMER WHO WOULD HAVE LEFT THEM BEHIND AND RETAINED BY THE APPELLANT TO BE RETURNED BACK IF THE CUSTOMER COMES LOOKING FOR IT. THIS IS NOT POSSIBLE AS NEITHER THE GHOD - DOD ROAD SHOP NOR THE VARDHAMAN COMPLEX, BHATAR ROAD SHOP HAS A NY SITTING ARRANGEMENT SO AS TO MAKE THIS CLAIM BELIEVABLE. EVEN OTHERWISE SOME OF THESE DOCUMENTS DATE BACK TO 2005 AND THERE WAS NO REASON TO RETAIN THEM UNLESS THEY PERTAINED TO THE APPELLANT HIMSELF. THIS CLAIM IS ONLY A PLOY TO GET OUT OF EXPLAINING U NCOMFORTABLE PAPERS RECOVERED AND NOT ACCOUNTED. IN THE CASE OF THE APPELLANT BOOKS ARE NOT WRITTEN DAILY, SALES ARE ONLY IN CASH, PRIMARY DOCUMENTS OF SALE ARE NOT MAINTAINED MAKING SALES UNVERIFIABLE, SALES WERE FOUND TO BE IN EXCESS OF THE AVERAGE SALES FROM THE SHOP (REFER STATEMENTS OF EMPLOYEE AND SHRI MAHESH BIYANI), THERE WERE DISCREPANCIES IN CASH BALANCE AS PER BOOKS AND AS FOUND PHYSICALLY DURING SURVEY, THERE WERE DIFFERENCES IN CASH BALANCES OF COMPUTER PRINTS - OUT AND CASH BOOK ON VARIOUS DATES , AND IMPOUNDED DOCUMENTS WERE NOT FULLY EXPLAINED. UNDER THESE CIRCUMSTANCES, THE BOOKS OF ACCOUNTS HAVE BEEN CORRECTLY REJECTED. 6.2.4 THE CONTENTS OF THE RETRACTION APPEAR TO BE GENERAL IN NATURE AND THERE IS NO SPECIFIC MENTION OF A PARTICULAR ADMISSI ON WHICH WAS CLAIMED TO BE RETRACTED. IN THE SAID RETRACTION, THERE WAS ALSO A MENTION OF SOME PRESSURE TACTICS APPLIED BUT REMAINED UNSUBSTANTIATED. THERE WAS NO REFERENCE OR MENTION OF ANY EVIDENCE. THOUGH AT THE CLOSE OF THE STATEMENT RECORDED IT WAS DU LY VERIFIED THAT THE SAME WAS MADE WITHOUT ANY PRESSURE BUT IT WAS SO ALLEGED IN THE IMPUGNED RETRACTION. HAD THERE BEEN ANY PRESSURE OR TORTURE AS ALLEGED, THE ASSESSEE WOULD HAVE COMPLAINED THE SAME TO THE COMMISSIONER OR TO ANY OTHER AUTHORITY. NO SUCH ATTEMPT WAS EVER MADE. THE RETRACTIONS THEREFORE CAN ONLY BE TREATED AS MOTIVATED. LAW IN RESPECT OF ADMISSIBILITY OF A RETRACTION IS VERY WELL SETTLED. THERE MUST BE SOME CONVINCING AND EFFECTIVE EVIDENCE IN THE HANDS OF THE ASSESSEE THROUGH WHICH HE COUL D DEMONSTRATE THAT THE SAID STATEMENT WAS FACTUALLY INCORRECT. AN ASSESSEE IS UNDER STRICT OBLIGATION TO DEMONSTRATE THAT THE STATEMENT RECORDED EARLIER WAS INCORRECT, THEREFORE, ON THE BASIS OF THOSE SPECIFIC EVIDENCES LATER ON RETRACTED. FURTHER THERE SH OULD ALSO BE SOME STRONG EVIDENCE TO DEMONSTRATE THAT THE EARLIER STATEMENT RECORDED WAS UNDER COERCION. IN THE INSTANT CASE, THE RETRACTION IS GENERAL IN NATURE AND LACKING ANY SUPPORTIVE EVIDENCE. RATHER THE ASSESSEE TOOK SEVERAL MONTHS TO RETRACT THE IN ITIAL STATEMENT, WHICH BY ITSELF CREATED A I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 13 OF 18 SERIOUS DOUBT. THE SAID RETRACTION WAS NOT IMMEDIATELY SUBMITTED BEFORE THE ASSESSING OFFICER BUT IT WAS SUBMITTED IN THE FORM OF AN AFFIDAVIT DATED 18.03.2009 BUT SUBMITTED TO THE DEPARTMENT ON 22.05.2009. THE SA ID DELAY DEMONSTRATES THAT THE ASSESSEE WAS NOT CONFIDENT ABOUT FILING OF THE RETRACTION. 6.2.5 THE ONLY ARGUMENT OF THE ASSESSEE WAS THAT APART FROM THE SAID STATEMENT NO OTHER EVIDENCE WAS FOUND BUT THIS ARGUMENT HAS NO FORCE AS ALSO NO LEGAL SUPPORT BE CAUSE THE STATEMENT RECORDED UNDER SECTION 131 OF THE ACT WAS AN EVIDENCE BY ITSELF. THE QUESTION OF EVIDENTIARY VALUE OF A STATEMENT RECORDED UNDER SECTION 131 OF THE ACT IS NO MORE 'RES INTEGRA'. WHEN AN ASSESSEE HAD MADE A STATEMENT OF FACTS, HE CAN HAV E NO GRIEVANCE IF HE IS TAXED IN ACCORDANCE WITH THAT STATEMENT. THE REASONABLENESS OF THE ASSESSING OFFICER'S APPROACH IS THAT HE HAD NOT MADE ANY ENHANCEMENT OR SUBSTITUTION IN THE AMOUNTS AS OFFERED/DISCLOSED IN THE SAID STATEMENT. IT WAS A STATEMENT P ERTAINING TO CERTAIN FACTS WHICH WERE IN THE EXCLUSIVE KNOWLEDGE OF THE ASSESSEE. THOSE FACTS WERE DISCLOSED TO THE REVENUE DEPARTMENT. THEREUPON THOSE WERE ACCEPTED BY THE REVENUE DEPARTMENT. THOSE FACTS WERE OF SUCH NATURE THAT THERE WAS NO SCOPE OF EXIS TENCE OF ANY OTHER EVIDENCE. AFFIRMATION OF FACTS AT BEST CAN ONLY BE DONE BY THE ASSESSEE IN HIS OWN VOLITION. IF THE ASSESSEE WANTED TO CORRECT THE SAID STATEMENT, THEN IT WAS OPEN FOR HIM TO SHOW THE EVIDENCES TO RETRACT THOSE FACTS. THE INCOME - TAX ACT, WHEREVER THOUGHT FIT AND NECESSARY HAS CONFERRED SUCH POWERS TO EXAMINE A PERSON ON OATH. THOSE POWERS ARE THEREFORE HAS BEEN EXPRESSLY PROVIDED. IN THIS CONTEXT SECTION 131 OF THE ACT ENABLES AN AUTHORISED OFFICER TO EXAMINE A PERSON ON OATH. A STATEMENT RECORDED UNDER SECTION 131 HAS A FAR REACHING CONSEQUENCE BECAUSE IF IT IS PROVED TO BE FALSE WHICH THE ASSESSEE ONLY KNOWS OR BELIEVES TO BE FALSE OR THE ASSESSEE DOES NOT BELIEVE IT TO BE TRUE, THEN THE CONSEQUENCE IS THAT HE SHALL BE PUNISHABLE UNDER T HE ACT AND PROSECUTION PROCEEDINGS CAN BE AUTHORISED. SIMILAR VIEWS HAVE BEEN HELD IN THE CASE OF KANTILAL C. SHAH [2011] 14 TAXMANN.COM 108 (AHD.) 6.2.6 FROM THE ABOVE, IT IS - SEEN THAT THE APPELLANT PROVIDED SPECIFIC DETAILS OF THE TRANSACTION IN THE STA TEMENT ON OATH RECORDED U/S 131 OF THE IT ACT. THE APPELLANT ADMITTED UNDER AN OATH REGARDING THE MODUS OPERAND! OF THE TAX EVASION, IT IS A SETTLED LAW THAT THE ADMISSION MADE IN STATEMENT ON OATH HAS A GREAT EVIDENTIARY VALUE AND IS BINDING ON A PERSON W HO MAKES IT. THEREFORE, THE EVIDENCE CAN BE MADE ON THE BASIS OF SUCH ADMISSIONS. THE LEGISLATURE IN ITS WISDOM HAS PROVIDED THAT SUCH STATEMENT CAN BE USED IN EVIDENCE AND THE ASSESSMENT CAN BE MADE ON THE BASIS OF SUCH STATEMENT. THE SANCTITY OF SUCH PRO VISION WOULD BE LOST IF THE ASSESSEE IS ALLOWED TO CONTEND THAT NO ADDITION CAN BE MADE ON THE BASIS OF SUCH ADMISSION. HOWEVER, SUCH ADMISSION CAN BE RETRACTED BY THE ASSESSEE ONLY IF THE CIRCUMSTANCES SUCH AS THREAT, COERCION, UNDUE PRESSURE ETC ARE ESTA BLISHED BY THE ASSESSEE OF EXIST, I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 14 OF 18 SIMILAR VIEW HAS BEEN EXPRESSED BY IN THE CASE OF HOTEL KIRAN 82 ITD 453 (PUNE). 6.2.7 THE SUPREME COURT IN THE CASE OF SURJIT SINGH CHHABRA 135 TAXMANN 711 HELD THAT THE CONFESSION THOUGH RETRACTED IS AN ADMISSION AND BI NDS THE PETITIONER. THE VARIOUS COURTS, IN SEVERAL CASES HAVE GIVEN SIMILAR VIEW REGARDING THE ADMISSION MADE IN THE STATEMENT OF OATH BEING BINDING. DURGA PRASAD MORE 82 ITR 540 (SC) DR. S.C. GUPTA 248 ITR 782 (ADD.) PULLANGEODE RUBBER PRODUCE COMP ANY 91 ITR 18 (SC) 6.2.8 NOW COMING TO THE ISSUE OF FILING OF AFFIDAVITS BY THE APPELLANT AND MAHESH BIYANI RAISES A QUESTION THAT MERE FILING OF AFFIDAVITS DOES NOT PROVE THAT THE SUBMISSIONS MADE BY THE PERSON SWEARING THE AFFIDAVIT IS TRUE AND CORRECT. IT IS A SETTLED LAW THAT AFFIDAVIT NEED NOT ALWAYS BE ACCEPTED AS CORRECT. IT IS NEITHER A RULE OF PRUDENCE NOR RULE OF LAW THAT THE STATEMENTS MADE IN AN AFFIDAVIT WHICH REMAINS UNCONTROVERTED MUST INVARIABLY BE ACCEPTED AS TRUE AND RELIABLE. ORDINARILY IN ABSENCE OF DENIAL, THE STATEMENTS MAY BE ACCEPTED AS TRUE BUT IF THERE ARE CIRCUMSTANCES WHICH SUGGESTS THAT STATEMENTS ON AFFIDAVIT SHOULD NOT BE ACCEPTED AS TRUE, THE ABSENCE OF DENIAL BY THE OTHER SIDE, WOULD NOT BY ITSELF BE SUFFICIENT TO CLOTHE THE STATEMENTS ON AFFIDAVIT WITH TRUTHFULNESS AND RELIABILITY. 6.2.9 IN THE CASE OF SILK MUSEUM V/S CIT 257 ITR 22 (GUJ) THAT AFFIDAVIT IS A PIECE OF EVIDENCE WHICH ALONG WITH OTHER MATERIAL ON RECORD HAS TO BE TAKEN INTO CONSIDERATION BEFORE ARRIVING AT A F INDING. A STATEMENT OF THE DEPONENT CAN BE HELD TO BE UNRELIABLE EITHER ON THE BASIS OF CROSS EXAMINATION OF THE DEPONENT OR BY REFERENCE TO OTHER MATERIAL ON RECORD. SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF GUNWANTIBAI RATILAL V/S CIT 146 ITR 140 (MP). 6.2.10 IN THE CASE OF SUNDER INDUSTRIES V/S GENERAL ENGINEERING WORKS AIR 1982 DEL 220, PP223, THE HON, COURT HELD THAT 'AFFIDAVITS ARE EITHER AFFIRMED AS TRUE TO KNOWLEDGE OR FROM INFORMATION RECEIVED PROVIDED THE SOURCE OF INFORMATION IS DISCLOSED OR A S TO WHAT THE DEPONENT BELIEVES TO BE TRUE PROVIDED THE GROUNDS FOR SUCH BELIEF ARE SATED, IF AN AFFIDAVIT LACKS SUCH VERIFICATION, IT IS OF NO USE'. SIMILAR VIEWS HAVE BEEN EXPRESSED IN CASE OF AKK NAMBIAR V/S UOI AIR 1970 SC 652 AND BARIUM CHEMICALS LTD V/S CLB AIR 1967 SC 295 6.2.11, IT HAS ALREADY BEEN DISCUSSED AT LENGTH THAT THE APPELLANT HAS NOT MAINTAINED QUANTITATIVE DETAILS OF THE STOCK. THE SALES ARE COMPLETELY IN CASH AND NO PROPER RECORDS OF THE SALES HAVE BEEN MAINTAINED, DURING THE COURSE OF APPELLATE PROCEEDINGS ALSO, THE APPELLANT WAS NOT ABLE TO BRING ON RECORD ANY NEW FACTS OR EVIDENCE TO I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 15 OF 18 SHOW THE REASON FOR NON - MAINTENANCE OF QUANTITATIVE DETAILS. IT WAS CONTENDED BY THE APPELLANT THAT NON MAINTENANCE OF STOCK REGISTER IS NOT A MANDATOR Y. IN THE CASE OF AMIYA KUMAR ROY & BROS. 206 ITR 306 (CAL), THE COURT HELD THAT 'WE WOULD HAVE BEEN IMPRESSED WITH THE CONTENTIONS IF THE ASSESSEE HAD MAINTAINED THE STOCK BOOK SHOWING STOCK TALLY. IN THAT CASE, THE ACCOUNTS BEING FOOL PROOF, NO ADDITION COULD BE WARRANTED. FAILURE TO MAINTAIN STOCK ACCOUNTS IS A SUBSTANTIAL DEFECT IN THE ACCOUNTS JUSTIFYING AN INFERENCE THAT THE ACCOUNTS ARE MAINTAINED IN A MANNER FROM WHICH THE TRUE AND CORRECT PROFITS ARE NOT DEDUCIBLE.' 6.2.12. SIMILAR VIEW HAS BEEN E XPRESSED BY THE OTHER COURTS ALSO WHERE NON MAINTENANCE OF STOCK REGISTERS HAS BEEN HELD TO BE SUFFICIENT GROUNDS FOR THE REJECTION OF BOOKS OF ACCOUNTS. THE RELEVANT FEW CASE LAWS ARE AS FOLLOWING: DHONDRAM DULICHAND V/S CIT 81 ITR 609 (BOM) SN NAMASIVAYA M CHETTIAR V/S CIT 38 ITR 579 (SC) 6.2.13 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT IS EVIDENT THAT THE APPELLANT HAS NOT MAINTAINED THE BOOKS OF ACCOUNTS IN TRUE AND CORRECT MANNER. THE MODUS OPERAND! OF THE APPELLANT ADMITTED IN THE STATEMENT ON OATH ALONG WITH THE VARIOUS DISCREPANCIES DISCUSSED IN THE AFORESAID PARAS, PROVE THAT THE APPELLANT WAS SUPPRESSING ITS RECEIPTS AND MANIPULATING HIS BOOKS OF ACCOUNTS AND NOT DISCLOSING TRUE AND CORRECT INCOME. HE HAS SIMPLY ARGUED THAT THE SAID STATEMEN T WAS RETRACTED, BUT IN THE ABSENCE OF ANY EVIDENCE FURNISHED TO DEMONSTRATE THAT THE ASSESSEE WAS IN FACT COERCED OR INCORRECT IN NARRATING THE FACTS, THAT RETRACTION HAS NO LEGAL VALUE. IT WAS A BALD RETRACTION AND AN ALLEGATION OF COMPULSION OR COERCION MUST NOT BE ACCEPTED MERELY ON A STATEMENT IF REMAINED UNSUBSTANTIATED. HENCE, THE REJECTION OF BOOKS OF ACCOUNTS IS UPHELD. 6.2.14 THE VARIOUS COURTS HAVE ALSO HELD THAT STRICT RULES OF EVIDENCE ARE NOT APPLICABLE IN THE INCOME TAX PROCEEDINGS. THE PROC EEDINGS UNDER THE INCOME TAX ACT ARE CIVIL PROCEEDINGS. THE DEGREE OF PROOF REQUIRED IN ASSESSMENT PROCEEDINGS IS BASED ON THE PRINCIPLES OF PREPONDERANCE OF PROBABILITY, UNLIKE IN CRIMINAL PROCEEDINGS WHERE PROOF BEYOND REASONABLE DOUBT IS INSISTED UPON. IT IS OPEN TO THE ASSESSING OFFICER TO PROBABILISE HIS STAND AND SHOW ITS PREPONDERANCE WHERE CONCLUSIVE PROOF IS NOT FORTHCOMING. THIS RAISES THE QUESTION WHETHER THE APPARENT CAN BE CONSIDERED AS REAL. AS LAID DOWN BY APEX COURT IN THE CASE CIT V. DURGA PRASAD MORE [1971] 82 ITR 540, APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL AND THAT THE TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE RE ALITY AND THE MATTER HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES. THE APEX COURT HELD; 'IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REAL UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL PARTY WH O I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 16 OF 18 RELIES ON A RECITAL IN A DEED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS, OTHERWISE IT WILL BE VERY EASY TO MAKE SELF - SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS TO E VADE TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS NOT THE REAL. THE TAX ING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF THE RECITALS MADE IN THOSE DOCUMENTS,' 6.2.15 THE HON. SUPRE ME COURT IN CASE OF D. BHOORMALL (AIR 1974 SC 859) THE DEPARTMENT IS NOT REQUIRED TO PROVE ITS CASE WITH MATHEMATICAL, A DEMONSTRABLE DEGREE FOR IN ALL HUMAN AFFAIRS, ABSOLUTE CERTAINLY IS A MYTH AND AS PROOF ALL EXACTNESS IS A FAKE. THE ABSOLUTE PROOF BEI NG UNATTAINABLE, THE LAW ACCEPTS FOR IT PROBABILITY AS A WORKING SUBSTITUTES IN THIS WORK - A - DAY WORLD. THE LAW DOES NOT REQUIRE ESTABLISHMENT TO PROVE THE IMPOSSIBLE. ALL THAT IT REQUIRES IS THE ESTABLISHMENT OF SUCH A DEGREE OF PROBABILITY THAT A PRUDENT MAN MAY FORM ON THE BASIS OF EXISTENCE OF FACTS. 6.2.16. THE APPELLANT HAS CONTENDED THAT ADDITION ON ACCOUNT OF ESTIMATED GROSS PROFIT ON SALES IS ERRONEOUS AND WITHOUT ANY BASIS. IT WAS ALSO SUBMITTED THAT THE GP RATES SHOWN IN EARLIER YEARS HAVE BEEN A CCEPTED BY THE AO SO THE ENHANCEMENT OF GP RATE IS INCORRECT. IT IS SETTLED LAW THAT THE PRINCIPLES OF RES JUDICATA IS NOT APPLICABLE IN INCOME TAX PROCEEDINGS. THE AO HAD MADE THIS ADDITION ON THE BASIS EVIDENCES FOUND DURING THE COURSE OF SURVEY PROCEEDI NGS, STATEMENT ON OATH RECORDED, AND ESTIMATION OF INCOME AFTER THE REJECTION OF BOOKS OF ACCOUNTS. THE HON. SUPREME COURT IN THE CASE OF HM ESUFALI HIM ABDULALI 90 ITR 271 (SC) HELD THAT IN ESTIMATING ANY ESCAPED TURNOVER, IT IS INEVITABLE THAT THERE IS S OME GUESS WORK..... PRIMA FACIE THE AO IS THE BEST JUDGE OF THE SITUATION. IT IS HIS BEST JUDGMENT AND NOT ANYONE ELSE'S. 6.2.17. SEVERAL OTHER COURTS HAVE ALSO UPHELD SIMILAR VIEWS IN THE FOLLOWING CASES: > KHOPADE KRISHNARAO MANIKRAO 250 ITR 18 (TM, I TAT, PUNE) > SN NAMASIVAYAM CHETTIAR 38 ITR 579 (SC) > A. KRISHNASWAMI MUDALIAR 53 ITR 122 (SC) 6.2.18. THE FACTS AND CIRCUMSTANCES OF THE CASE ALONG WITH VARIOUS JUDICIAL PRONOUNCEMENTS HAVE BEEN CONSIDERED. SINCE, THE REJECTION OF BOOKS OF ACCOUNTS HAS ALREADY BEEN UPHELD AND NOW THE ESTIMATION OF INCOME BY THE AO IS BEING UPHELD AND THE ADDITION MADE BY THE AO OF RS.59,40,000/ - IS CONFIRMED. THE GROUND OF APPEAL IS DISMISSED. I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 17 OF 18 7 . THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE US. 8 . WE HAVE H EARD THE R IVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLICABLE LEGAL PO S ITION . 9. WE HAVE NOTED THAT THE IMPUGNED ADDITIONS HAVE BEEN MADE, SO FAR DECLARATION OF INCOME OF R.59,40,000/ - IS CONCE RNED, ON THE BASIS OF STATEMENT GIVEN BY SHRI MAHESH BIYANI, WHO IS NOT BROTHER OF THE ASSESSEE BUT IS AN EMPLOYEE OF THE ASSESSEE, WHEN HE WAS CONFRONTED WITH DISCREPANCIES FOUND DURING SURVEY PROCEEDINGS. SHRI MAHESH BIYANI WAS THE PERSON REPRESENTING T HE ASSESSEE AT THE TIME OF SURVEY. THE INFORMATION GIVEN BY HIM CANNOT BE SIMPLY BRUSHED ASIDE OR IGNORED, NOR HAS THE ASSESSEE BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT IT WAS INCORRECT OR UNREASONABLE . THE MATERIAL FOUND DURING THE SURVEY PROCEEDINGS CLEARLY SHOW S THAT THE BOOKS OF ACCOUNT WERE NOT COR RECTLY MAINTAINED. UNDER THESE CIRCUMSTANCES , REJECTION OF THE B OOKS OF ACCOUNT CANNOT BE FAULTED EITHER. W E HAVE ALSO NOTED THAT THE ASSESSEE DID NOT EVEN BOTHER TO REMAIN PRESENT DURING THE SURVEY PR OCEEDINGS OR TO GIVE REASONABLE EXPLANATIONS IMMEDIATELY AFTER THE SURVEY . THE ATTITUDE OF THE ASSESSEE HAS BEEN ALL ALONG UN COOPERATIVE, AND, ONCE THE PROCEEDINGS ARE OVER, HE IS TRYING TO FIND TECHNICAL FAULTS IN THE WORK BY THE REVENUE AUTHORITIES. LE ARNED COUNSEL S REPEATED ASSERTION THAT THE STATEMENT GIVEN BY THE ASSESSEE S BROTHER AND NOT BY THE ASSESSEE , DOES NOT IMPRESS US. THE STATEMENT WAS GIVEN BY THE PERSON PRESENT WHO WAS DEALING WITH THE THINGS AND IN THE LIGHT OF DISCREPANCIES FOUND. GIV EN THE PECULIAR CIRCUMSTANCES OF THIS CASE, THE APPROACH ADOPTED BY THE AUTHORITIES BELOW CANNOT BE FAULTED. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE A PPROVE THE CONCLUSIONS ARRIVED A T BY THE LD . CIT(A) ON THIS POINT , AND DECLINE TO INTERFERE IN THE MATTER. I.T.A. NO . 2599 /AHD/ 20 1 5 ASSESSMENT Y EAR: 200 9 - 10 PAGE 18 OF 18 10. AS REGARDS THE NOTICE FOR ENHANCEMENT, IT IS NOT EVEN DISPUTE BEFORE US THAT A SPECIFIC OPPORTU NITY WAS GIVEN BY THE LD. CIT(A), PURSUANT TO TRIBUNAL S DIRECTION, FOR THIS PURPOSE. IT IS ALSO NOTED THAT NO SPEC IFIC ARGUMENT ARE ADVANCED IN RESPECT OF GROUND I (2). AS FOR REJECTION OF BOOKS, WE HAVE NOTED THAT LEARNED LD. CIT(A) H A S SPECIFICALLY DEALT WITH THE SAME IN PARAGRAPH NOS.6.2.11 AND 6.2.12 EXTRACTED ABOVE, AND WE APPROVE THE SAME. 11. NO OTHER ISSUE WIT H RESPECT TO DISALLOWANCE OF EXPENSES WAS RAISED BEFORE US. THE SAME IS, THEREFORE, DISMISSED IN LIMINE . 12. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 31 ST DAY OF MAY , 2016. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 31 ST DAY OF MAY , 2016. COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD