RASTOGIE STEEL FURNITURE, Jaipur V. ITO, Jaipur

ITA 306/JPR/2011

• Counselvise Citation: 30623114 RSA 2011
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 05-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHARI
• Keywords: Rejection of books of accounts; Search and seizure; Opportunity of being heard
• Section: 133A; 234B; 69; 145; 15

Judgement Text

1 ITA 306-11 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ) ITA NO. 306/JP/2011 ASSTT. YEAR : 2006-07. M/S. RASTOGI STEEL FURNITURE, VS. THE INCOME-TAX OFFICER, 102, NEHRU BAZAR, JAIPUR. WARD 1(3), JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH AGARWAL RESPONDENT BY : SHRI VINOD JOHARI DATE OF HEARING : 04.10.2011 DATE OF PRONOUNCEMENT : 21.10.2011. ORDER DATED : 21/10/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. GROUND NOS. 1 & 2 ARE AGAINST SUSTAINING THE APP LICATION OF PROVISIONS OF SECTION 145(3) AND THEREAFTER CONFIRMING THE ADDITION OF RS . 19,29,530/- AGAINST ADDITION OF RS. 26,64,246/- MADE BY THE AO ON ACCOUNT OF EXCESS STO CK FOUND DURING THE COURSE OF SURVEY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM IS ENGAGED IN MANUFACTURING AND TRADING OF STEEL AND WOODEN FURNITURE. A SURVE Y UNDER SECTION 133A WAS CARRIED OUT DURING THE YEAR UNDER CONSIDERATION ON 29.6.2005. S TOCK AVAILABLE AS PER BOOKS WAS 2 WORKED AT RS. 8,83,170/- AND AS PER PHYSICAL VERIFI CATION OF STOCK IT WAS RS. 35,47,406/-. SHRI PAWAN RASTOGI, PARTNER ADMITTED THE DIFFERENCE OF RS. 26,64,246/- AS UNEXPLAINED EXCESS STOCK. 3.1. DURING THE ASSESSMENT PROCEEDINGS, IT WAS EXPL AINED THAT THE VALUE OF CLOSING STOCK WORKED OUT AT RS. 35,47,406/- SHOULD BE RS. 1 6,17,886/- AS THE VALUATION TAKEN BY THE DEPARTMENT WAS NOT REALISTIC AND INVENTORY VALU ED BY THE ASSESSEE IS BASED ON PURCHASE/SALE VOUCHERS KEPT IN THE COURSE OF BUSINE SS. THE AO HAS OBSERVED THAT THE AMOUNT SHOWN BY THE ASSESSEE IN THE LIST IS NOT GOI NG TO TALLY WITH THE AMOUNTS OF BILL COPIES FILED. THAT DURING THE COURSE OF SURVEY THE LIST WAS PREPARED BY TAKING PRICE OF THE GOODS AS REPORTED BY SHRI PAWAN RASTOGI AS NO TAGS WERE ATTACHED TO THE GOODS. THE ASSESSEE DID NOT RAISE ANY OBJECTION WITH REGARD TO THE VALUE OF STOCK BEFORE INITIATING ASSESSMENT PROCEEDINGS. THE STATEMENT OF SHRI PAWAN RASTOGI WAS A VOLUNTARY STATEMENT. THE AO, THEREFORE, MADE AN ADDITION OF RS. 26,64,24 6/- UNDER SECTION 69 OF IT ACT. 3.2. THE BOOKS OF ACCOUNT WERE REJECTED BY THE AO A S ON THE DATE OF SURVEY, BOOKS OF ACCOUNTS WERE INCOMPLETE AND UNACCOUNTED CASH SALES AND EXCESS STOCK WAS FOUND DURING THE COURSE OF SURVEY. 4. IT WAS CONTENDED BEFORE LD. CIT (A) THAT DURING SURVEY PROCEEDINGS, STATEMENTS OF THE PARTNERS AND OTHER PERSONS WERE R4ECORDED ON OA TH WHICH IS NOT PERMISSIBLE COURSE AS HELD IN THE CASE OF 263 ITR 101 (KER.). THE VALUE OF ACCOUNTED STOCK AT RS. 8,83,170/- WAS TAKEN ARBITRARILY. THE REJECTION OF BOOKS OF A CCOUNTS ON ACCOUNT OF NON MAINTENANCE OF STOCK REGISTER IS NOT JUSTIFIED AS MAINTENANCE O F DAY TO DAY STOCK REGISTER IS NOT PRACTICALLY POSSIBLE. THE REJECTION OF BOOKS OF ACC OUNTS IS, THEREFORE, NOT JUSTIFIED. 3 4.1. THE ASSESSEE PREPARED A LIST OF STOCK INVENTOR Y FOR THE ITEMS FOUND DURING SURVEY BASED ON THE LIST PREPARED BY SURVEY PARTY AND INCO RPORATED QUANTITY, RATE AND AMOUNT AS PER PURCHASE VOUCHERS, SALES VOUCHERS AND VOUCHERS FOR EXPENSES AND OVER HEAD EXPENSES IN A SCIENTIFIC MANNER. ON THIS BASIS THE VALUE OF STOCK WAS FOUND TAKEN AT RS. 16,17,886/- AS ON THE DATE OF SURVEY. THE ASSESSEE HAS ADOPTED VALUE OF STOCK AS ON DATE OF SURVEY AT RS. 16,17,886/- AS AGAINST VALUE OF STOCK ADOPTED B Y SURVEY PARTY AT RS. 8,83,170/-. THE VALUE OF STOCK FOUND WAS ESTIMATED BY SURVEY PARTY AT RS. 35,47,406/-. AS THERE WERE NO TAGS ATTACHED TO THE ITEMS, THE VALUE OF STOCK INVE NTORY WAS TAKEN BY SURVEY PARTY AS TOLD BY EMPLOYEES OF THE ASSESSEE FIRM. THE EMPLOYEES WE RE NOT SALES MEN AND, THEREFORE, THE VALUE GIVEN BY THEM WERE ONLY A GUESS WORK. THE STO CK LIST RUNNING IN 22 SHEETS SUFFERS FROM VARIOUS DEFECTS. THE RATE AND VALUE WAS TAKEN IN ROUND FIGURES BY THE SURVEY PARTY. THE VALUE OF STOCK AS PER BOOKS TAKEN AT RS. 8,83,1 70/- WAS ONLY THE GUESS WORK. LATER ON WHEN BOOKS OF ACCOUNTS WERE COMPLETED ON THE BASIS OF PAPERS/DOCUMENTS FOUND AND THE PURCHASE AND SALE VOUCHERS THE VALUE OF STOCK AS ON 29.6.2005 WAS DETERMINED AT RS. 16,17,886/-. THUS, THE ASSESSEE HIMSELF HAS DECLAR ED CLOSING STOCK AT RS. 16,17,886/- AS AGAINST RS. 35,47,406/- DETERMINED BY THE SURVEY TE AM. IF THIS IS ACCEPTED THE G.P. RATE ARISES TO 55.78% WHICH IS AN IMPOSSIBILITY. AS THE SURVEY WAS COMPLETED ONLY IN LATE HOURS, THE PARTNERS WERE FULLY EXHAUSTED AND, THERE FORE, STATEMENTS RECORDED CANNOT BE RELIED UPON AS THE SAME CANNOT BE TREATED VOLUNTARI LY. IN THE STATEMENT OF SHRI PAWAN RASTOGI BEFORE THE AO HE HAS MENTIONED THAT THE VAL UATION TAKEN WAS ON HIGHER SIDE. FURTHER, IT WAS SUBMITTED THAT THE DECLARED G.P. RA TE OF 17.80% IS BETTER THAN 15.72% DECLARED IN THE IMMEDIATELY PRECEDING YEAR. RELYIN G ON VARIOUS CASE LAWS INCLUDING THE 4 FOLLOWING, IT WAS SUBMITTED THAT THE ADDITION OF RS . 26,64,246/- MADE BY THE AO DESERVES TO BE DELETED :- 1) 256 ITR 243 (RAJ.) 2) 262 ITR 638 (CAL.) 5. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, THE LD. CIT (A) GAVE FOLLOWING FINDINGS :- CONTENTION OF THE AR IS CONSIDERED. AT THE TIME OF SURVEY, BOOKS OF ACCOUNTS WERE FOUND INCOMPLETE. ALSO UNEXPLAINED CASH AND STOCK WERE FOUND AND STOCK REGISTER HAS NOT BEEN MAINTAINED. FOR THIS REASONS, REJECTION OF BOOKS OF ACCOUNTS IS HEREBY UPHELD. TH E 1 ST GROUND IS DECIDED AGAINST THE APPELLANT. REGARDING EXPLANATION ON WORKING OF EXCESS STOCK FO UND DURING THE COURSE OF SURVEY, CONTENTION OF THE AR THAT THE VALUE SHOWN BY HIS EMPLOYEES AVAILABLE AT THE TIME OF SURVEY WAS ONLY A GUESS WORK, CANNOT BE ACCEPTED. THE PERSONS AVAILABLE THERE WERE NOT O NLY EMPLOYEES BUT INCLUDE ONE OF THE PARTNERS SHRI PAWAN RASTOGI. IN ANY CASE, THE VALUE WAS TAKEN BY THE SURVEY TEAM ONLY AS GIVEN BY THE PERSO NS AVAILABLE AT THE BUSINESS PREMISES AND, THEREFORE, RE-WORKING GIVEN BY THE APPELLANT IS NOTHING BUT AN AFTER THOUGHT. THE VALUE OF EXCESS S TOCK FOUND TAKEN AT RS. 35,47,406/-, THEREFORE, REMAINS UNCHANGED. HOWEVER, THE APPELLANT HAS PREPARED TWO SEPARATE TRADING ACCOUNTS ONE UP TO THE DATE OF SURVEY AND SECOND AFTER THE DATE OF SURVEY WHEREIN AS ON THE D ATE OF SURVEY THE APPELLANT HAS TAKEN CLOSING STOCK AT RS. 16,17,886/ -. THE SURVEY TEAM HAS TAKEN THE SAME AT RS. 8,83,170/- AND DIFFERENCE OF THESE TWO FIGURES WHICH COMES TO RS. 7,34,716/- REMAINS DISCLOSED. THE AO I S, THEREFORE, DIRECTED TO REDUCE THE ADDITION OF RS. 26,64,246/- BY RS. 7, 34,716/-. IN OTHER WORDS THE ADDITION MADE BY THE AO IS REDUCED TO RS. 19,29 ,530/-. WITH THIS, THE 2 ND GROUND OF APPEAL IS DECIDED PARTLY IN FAVOUR OF TH E APPELLANT. 5 6. DURING THE APPELLATE PROCEEDINGS HERE BEFORE THE TRIBUNAL, THE CONTENTIONS RAISED BEFORE LD. CIT (A) WERE REITERATED. COPY OF SAID B RIEF SUBMISSION WAS ALSO FILED. IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF SURVEY, THE STOCK INVENTORY WAS PREPARED AND VALUATION OF STOCK INVENTORY WAS TAKEN ON ESTIMATE BASIS. DUE TO PRESSURE OF SURVEY PARTY, THE ASSESSEE ADMITTED TO DISCLOSE THE EXCESS STOCK IN THE RETURN OF INCOME. HOWEVER, AFTER SURVEY THE COMPLETE STOCK INVENTORY WAS RECONCILED AND IT WAS FOUND THAT DURING THE COURSE OF SURVEY PROPER VALUATION OF STO CK HAS NOT BEEN TAKEN INTO ACCOUNT. THERE WAS A DIFFERENCE IN STOCK DECLARED IN THE BOO KS OF ACCOUNT AND STOCK PREPARED BY THE ASSESSEE AS PER PURCHASE VOUCHERS AND THE EXCES S STOCK WHICH WAS SHOWN IN THE BOOKS OF ACCOUNT WAS OF RS. 8,83,000/- WHICH WAS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME THOUGH AO HAS MADE THE ADDITION OF RS. 26 LA CS OR ODD ON THE BASIS OF STATEMENT RECORDED DURING THE COURSE OF SURVEY. HOWEVER, THE LD. CIT (A) HAS REDUCED THE AMOUNT OF EXCESS STOCK WHICH WAS ALREADY SHOWN BY THE ASSE SSEE WHILE FILING THE RETURN OF INCOME. IT WAS FURTHER SUBMITTED THAT COMPLETE PUR CHASE VOUCHERS WERE PRODUCED BEFORE THE AO AND THERE WAS NO DIFFERENCE IN STOCK ITEMS A S THEY WERE TALLIED WITH THE PURCHASE BILL. THEREFORE, THE STOCK VALUATION HAS TO BE TAK EN ON THE BASIS OF PURCHASE PRICE OR MARKET PRICE WHICH EVER IS LOWER. THIS METHOD OF A CCOUNTANCY HAS BEEN ADOPTED BY THE ASSESSEE SINCE LONG AND ON THIS BASIS WHATEVER THE EXCESS STOCK WAS THERE, THAT HAS BEEN SHOWN BY ASSESSEE ITSELF. THEREFORE, THE LD. CIT (A ) SHOULD HAVE DELETED THE ENTIRE ADDITION. 6.1. REGARDING ADMISSION RECORDED DURING THE COURSE OF SURVEY, IT WAS SUBMITTED THAT SURVEY WAS CONDUCTED UNDER SECTION 133A AND DURING THE COURSE OF SURVEY STATEMENT RECORDED CANNOT BE ADMITTED AS HELD BY HONBLE KERA LA HIGH COURT IN THE CASE OF PAUL 6 MATHEW, 263 ITR 101 (KER.). IT WAS FURTHER SUBMITT ED THAT THOUGH THE STATEMENT GIVEN DURING THE COURSE OF SURVEY CAN BE A PIECE OF EVIDE NCE BUT IT IS NOT A CONCLUSIVE EVIDENCE AS THERE SHOULD BE CORROBORATIVE EVIDENCE ON RECORD . THE CORROBORATIVE EVIDENCE ON RECORD ARE IN FAVOUR OF THE ASSESSEE AS ENTIRE PURC HASE VOUCHERS WERE PRODUCED BEFORE THE AO AND THERE WAS NO DIFFERENCE IN ITEMS OF STOCK FO UND DURING THE COURSE OF SURVEY. DIFFERENCE IS ONLY ON ACCOUNT OF VALUATION OF STOCK . FURTHER RELIANCE WAS PLACED ON VARIOUS CASES MENTIONED IN THE WRITTEN SUBMISSIONS. IT WAS FURTHER SUBMITTED THAT GP RATE DECLARED BY ASSESSEE IS BETTER AS COMPARED TO EARL IER YEAR AS GP SHOWN BY ASSESSEE IS 17.80% AGAINST GP RATE DECLARED IN THE IMMEDIATELY PRECEDING YEAR AT 15.72%. IT WAS ALSO SUBMITTED THAT THE TRADING ACCOUNT FILED BY AS SESSEE ALONG WITH THE RETURN HAVE BEEN ACCEPTED BY THE AO. HOWEVER, HE HAS MADE THE ADDIT ION ON ACCOUNT OF VALUATION OF STOCK BY SURVEY PARTY AND HAS NOT GIVEN ANY BENEFIT OF TH E VALUATION OF CLOSING STOCK IN SUBSEQUENT YEAR. THEREFORE, ADDITION MADE AND PARTL Y SUSTAINED BY LD. CIT (A) IS NOT CORRECT AND LIABLE TO BE DELETED. 7. THE DETAILED WRITTEN SUBMISSIONS FILED BY ASSESS EE ARE TABULATED HERE AS UNDER :- DURING THE COURSE OF SURVEY PROCEEDINGS TOTAL ST OCK AVAILABLE WAS PHYSICALLY QUANTIFIED AND VALUED AT ` 35,47,406/- B Y THE SURVEY PARTY AND BY ALLOWING CREDIT FOR SHOULD BE STOCK AT ` 8,83,170 /- A SURRENDER OF THE BALANCE AMOUNT OF ` 26,64,246/- WAS OBTAINED IN THE STATEME NT OF SHRI PAWAN RASTOGI, PARTNER TOWARDS THE EXCESS STOCK, WHICH WAS ADDED T O THE INCOME OF THE ASSESSEE. DURING THE SURVEY PROCEEDINGS, THE STATEMENTS OF TH E PARTNERS AND OTHER PERSONS CONNECTED WERE RECORDED ON OATH THOUGH ALL THE FACILITIES WERE PROVIDED TO SURVEY PARTY. RECORDING OF STATEMENT ON OATH IN SU RVEY PROCEEDINGS U/S 133A IS NOT A PERMISSIBLE COURSE AND IN VIEW OF THE DECISIO N OF THE HONBLE KERALA HIGH COURT REPORTED IN 263 ITR 101 IN CASE OF PAUL MATHEWS & SONS VS. CIT (KER.) 7 (REPRODUCED BELOW) AND IS LIABLE TO BE HOLD AS NULL AND VOID BEING BASED ON ILLEGAL PROCEDURE ADOPTED IN CONDUCTING THE SURVEY. THE PROVISION ALSO ENABLES THE INCOME-TAX AUTHORIT Y TO IMPOUND AND RETAIN IN HIS CUSTODY FOR SUCH PERIOD AS HE THINKS FIT ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS INSPECTED BY HIM, PROVID ED THE AUTHORITY RECORDS HIS REASONS FOR DOING SO AND ALSO SHALL NOT RETAIN THE BOOKS OF ACCOUNT FOR A PERIOD NOT EXCEEDING 15 DAYS. SECTION 133A(3)(III) ENABLES THE AUTHORITY TO RECORD THE STATEMENT OF AN Y PERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THE ACT. SECTION 133A, HOWEVER, ENABLES THE INCOME-TAX AUTHORITY ONL Y TO RECORD ANY STATEMENT OF ANY PERSON WHICH MAY BE USEFUL, BUT DO ES NOT AUTHORIZE TAKING ANY SWORN STATEMENT. ON THE OTHER HAND, WE FIND THAT SUCH A POWER TO EXAMINE A PERSON ON OATH IS SPECIFICALLY C ONFERRED ON THE AUTHORISED OFFICER ONLY UNDER SECTION 132(4) OF THE INCOME-TAX ACT IN THE COURSE OF ANY SEARCH OR SEIZURE. THUS, THE INCO ME-TAX ACT, WHENEVER IT THOUGHT FIT AND NECESSARY TO CONFER SUC H POWER TO EXAMINE A PERSON ON OATH, THE SAME HAS BEEN EXPRESSLY PROVI DED WHEREAS SECTION 133A DOES NOT EMPOWER ANY INCOME-TAX OFFICE R TO EXAMINE ANY PERSON ON OATH. THUS, IN CONTRADISTINCTION TO THE POWER UNDER SECTION 133A, SECTION 132(4) OF THE INCOME-TAX ACT ENABLES THE AUTHORISED OFFICER TO EXAMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION CAN ALS O BE USED IN EVIDENCE UNDER THE INCOME-TAX ACT. ON THE OTHER HAN D, WHATEVER STATEMENT IS RECORDED UNDER SECTION 133A OF THE INC OME-TAX ACT IT IS NOT GIVEN ANY EVIDENTIARY VALUE OBVIOUSLY FOR THE R EASON THAT THE OFFICER IS NOT AUTHORISED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVIDENTIARY VALUE AS CONT EMPLATED UNDER LAW. THEREFORE, THERE IS MUCH FORCE IN THE ARGUMENT OF LEARNED COUNSEL FOR THE APPELLANT THAT THE STATEMENT ELICITED DURIN G THE SURVEY OPERATION HAS NO EVIDENTIARY VALUE AND THE INCOME-TAX OFFICER WAS WELL AWARE OF THIS. ATTENTION OF THE HONBLE BENCH IS ALSO INVITED TO T HE BUDGET SPEECH GIVEN BY THE HONBLE FINANCE MINISTER ON 28.02.03 WHO WHI LE PRESENTING THE BUDGET BEFORE THE PARLIAMENT HAS PROPOSED TO SIMPLIFY THE PROCEDURE OF SEARCHES AND SURVEYS WHICH READS AS UNDER: PARA 151(I) SIMPLIFYING THE PROCEDURE AND METHODS EMPLOYED DU RING SEARCH AND SEIZURE, AND DURING SURVEY BY THE INCOME TAX DEPARTMENT. FIRST, HEREAFTER, STOCKS FOUND DURING THE COURSE OF A SEARCH AND SEIZURE OPERATION WILL NOT BE SEIZED UNDER ANY CIRCUMSTANCE S. SECOND, NO CONFESSION SHALL BE OBTAINED DURING SUCH SEARCH AND SEIZURE OPERATIONS. THIRD, NO SURVEY OPERATION WILL BE AUTHORIZED BY AN OFFICER BELOW THE RANK OF JOINT COMMISSIONER OF INCOME TAX. FINALLY, BOOKS OF 8 ACCOUNT IMPOUNDED DURING SURVEY WILL NOT BE RETAINE D BEYOND TEN DAYS, WITHOUT THE PRIOR APPROVAL OF THE CHIEF COMMISSIONE R. THE CBDT VIDE INSTRUCTIONS NO. F.NO. 286/2/2002-IT( INV.) DATED 10.03.03 HAS FURTHER CLARIFIED THE ASSERTION MADE B Y THE HONBLE FINANCE MINISTER IN BUDGET SPEECH WHICH READS AS UNDER: INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHE RE ASSESSEE HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS UNDIS CLOSED INCOME DURING THE COURSE OF THE SEARCH AND SEIZURE AND SURVEY OPE RATION. SUCH CONFESSION, IF NOT BASED ON CREDIBLE EVIDENCE, ARE TAKEN/RETRACTED BY THE CONCERNED ASSESSES WHILE FILLING RETURN INCOME. IN THESE CIRCUMSTANCES, CONFESSION DURING THE SEARCH AND SEIZURE AND SURVEY OPERATION DO NOT SERVE ANY USEFUL PURPOSE . IT IS THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE O F INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NO T LIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEPARTMENT. SIMILARLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INC OME SINCE THE HONBLE SUPREME COURT IN THE FOLLOWING CA SES HAS HELD THAT BENEFICIAL CIRCULARS / INSTRUCTIONS ISSUED BY THE C BDT ARE BINDING UPON THE INCOME TAX AUTHORITIES THUS THE ADDITIONS BASED ON THE ALLEGED SURRENDER STATED TO HAVE BEEN OBTAINED DURING THE COURSE OF SURVEY ARE IN CONTRAVENTION TO THE CIRCULARS AND INSTRUCTIONS OF THE CBDT AND THEREFOR E DESERVES TO BE DELETED. 292 ITR 209 TANNA AND MODI VS. CIT (SC) PAGE 218 PARA 21 WE WOULD ALSO ACCEPT AND PARTICULARLY HAVING REGARD TO A LARGE NUMBER OF DECISIONS OF THIS COURT OPERATING IN THE FIELD THAT EXECUTIVE CONSTRUCTION IS ORDINARILY ALLOWED TO PREVAIL AND S HALL BE BINDING ON THE AUTHORITIES UNDER THE ACT. A FORTIORI, CLARIFICATOR Y CIRCULARS ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES MAY ALSO BE TAKEN INT O CONSIDERATION FOR THE PURPOSE OF CONSTRUCTION OF THE STATUTE. 259 ITR 51 KERALA STATE INDUSTRIAL DEV. CORPN. LTD. VS. CIT (SC) INTERPRETATION OF TAXING STATUTES FINANCE MINISTE RS SPEECH BEFORE PARLIAMENT WHILE INTRODUCING BILL CAN BE R ELIED ON TO THROW LIGHT ON OBJECT AND PURPOSE OF PROVISIONS. WITHOUT PREJUDICE TO ABOVE ON MERITS IT IS SUBMITTE D AS UNDER: THE LD. AO HAS INVOKED THE PROVISIONS OF SECTION 14 5(3) BY MAKING ALLEGATION AT PAGE 4 OF THE ORDER AND THE CATEGORIC AL ANSWER TO SUCH OBSERVATION OF 9 LD. AO WERE SUBMITTED THROUGH NECESSARY REPLIES VID E LETTERS DATED 17.10.2008 (APB 6-11) AND 19.12.2008 (APB 1-4) WHICH WERE GROSSLY IGNORED BY LD. AO WHILE INVOKING THE PROVISIONS OF SECTION 145(3). IT IS COMMON FEATURE IN THE LINE OF BUSINESS IN WHI CH ASSESSEE DEALS THAT MAINTENANCE OF DAY TO DAY STOCK REGISTER IS NOT PRA CTICALLY POSSIBLE AS THE ITEMS INVOLVED ARE NUMEROUS IN NATURE, RATE AND QUALITY A S WELL AS IN QUANTITY. THE STOCK IS TAKEN BY THE ASSESSEE AS PER PHYSICALLY QUANTITY VERIFICATION DONE ON RESPECTIVE DAY AND THE VALUATION IS DONE AT COST AFTER TAKING INTO ACCOUNT OVERHEAD EXPENSES INCURRED BY THE ASSESSEE WHICH IS ACCEPTABLE METHOD OF VALUATION OF STOCK THUS RESULTS DECLARED BY THE ASSESSEE DESERVES TO BE ACC EPTED. WITH REGARD TO THE ADDITION OF ` 19,29,530/- UPHOLD BY LD. CIT(A) ON ACCOUNT OF STOCK ALLEGED AS FOUND IN EXCESS DURING THE COURSE OF SURVEY, IT IS SUBMITTED THAT DURING THE SURVEY STOCK AVAILABLE WA S INVENTORIED AND VALUED AT ` 35,47,406/- BY THE SURVEY PARTY. THE ITEMS OF THE S TOCK DID NOT BEAR THE PRICE TAG OR CODE NUMBER AND ADMITTEDLY THE VALUE OF THE ITEM S OF STOCK INVENTORY WAS TAKEN BY THE SURVEY PARTY AS TOLD BY THE EMPLOYEES OF THE ASSESSEE FIRM WHO ARE NOT SALESMEN AND WAS STATED ON WILD GUESS WITHOUT R EFERRING TO THE PURCHASE VOUCHERS. THUS THE ASSESSEE REWORKED THE VALUE OF S TOCK BY SUBSTITUTING THE ACTUAL PRICE AS PER PURCHASE VOUCHERS AND THE VALUE OF THE STOCK FOUND DURING THE COURSE OF SURVEY WAS RECOMPUTED AT ` 16,17,886/-. COPY OF STOCK INVENTORY SO PREPARED WAS SUBMITTED BEFORE THE LD. AO WITH COPIES OF PURC HASE BILLS / VOUCHERS (APB 12-44) WHO FAILED TO POINT OUT A SINGLE DEFECT IN THE SAME . THE ASSESSEE PREPARED MANUFACTURING AND TRADING ACC OUNT SEPARATELY FOR THE PERIOD FROM 01.04.05 TO 28.06.05 (UPTO THE DATE OF SURVEY) WHEREIN THE VALUE OF CLOSING STOCK WAS TAKEN AT ` 16,17,886/- I.E. TH E ACTUAL VALUE OF STOCK QUANTIFIED BY THE SURVEY PARTY (AS WORKED OUT BY ASSESSEE ON THE BASIS OF PURCHASES VOUCHERS) AND ALSO PREPARED A MANUFACTURING AND TRA DING ACCOUNT FOR THE PERIOD FROM 29.06.05 TO 31.03.06 BY INCORPORATING THE VAL UE OF STOCKS AS ON 29.06.05 AT ` 10 16,17,886/- AND COMPUTED THE PROFIT FOR THE YEAR EN DED ON 31.03.06 ACCORDINGLY WHICH WAS DECLARED IN THE RETURN OF INCOME. LD. CIT(A) THOUGH ACCEPTED THE CONTENTION THAT THE SHOULD BE STOCK AS PER BOOKS OF ACCOUNTS AS ON THE DATE OF SURVEY WAS OF ` 16,17,886/- AND NOT OF ` 8,83,170/- AS CONSIDERED BY SURVEY TEAM BUT FAILED TO APPRECIATE THE FACT THAT THE VALUE OF SAID STOCK WAS WORKED OUT ON THE QUANTITY PHYSICALLY VERIFIED AND QUANTIFIED BY SURVEY TEAM AND THE ASSESSEE HAS INCO RPORATED THE VALUE OF THE SAME IN ITS BOOKS OF ACCOUNTS BASED ON WHICH TOTAL INCOM E WAS COMPUTED. THE NET PROFIT AS DECLARED BY THE ASSESSEE AT ` 6,39,730/- IN ITS COMPUTATION OF INCOME WAS NOT DISPUTED BY LD. AO WHO COMPLETED THE ASSESSMENT BY ACCEPTING THE RETURNED PROFIT AND HAD MADE ADDITION OF ` 26,64,246/- OVER AND ABOVE THE RETURNED INCOME ON ACCOUNT OF EXCESS STOCK FOUND AT THE TIME OF SUR VEY ON THE BASIS OF SO CALLED STATEMENT OF ONE OF THE PARTNERS OF THE FIRM. THIS HAS RESULTED IN DOUBLE ADDITION AS THE EFFECT OF THE SAME HAS ALREADY BEEN REFLECTE D IN THE RESULTS WHEREIN THE GP AS ON 28.6.2005 WAS 26.22% AND OVERALL GP FOR THE Y EAR WAS 17.80% WHICH IS HIGHER AS COMPARED TO EARLIER YEARS, THE TRADING RE SULTS FOR THE YEAR UNDER APPEAL AND OF PRECEDING TWO YEARS ARE AS TABULATED BELOW: ASSESSMENT YEAR TURNOVER G.P. RATE 2006-07 1,21,35,301.35 17.80% 2005-06 91,76,227.00 15.72% 2004-05 99,36,120.00 15.69% IN THE COURSE OF SURVEY PROCEEDINGS STATEMENTS OF S HRI PAWAN RASTOGI AND SHRI LOKESH RASTOGI, PARTNER, WERE RECORDED (APB 45-64) . A PERUSAL OF THE STATEMENTS OF THE PARTNERS SHRI PAWAN RASTOGI AND L OKESH RASTOGI WOULD REVEAL THAT THEY WERE NOT ASKED ANY QUESTIONS ABOUT THE BI LLS AND VOUCHERS FOR PURCHASES, SALES AND EXPENSES ETC. FOUND IN THE COURSE OF SURV EY. IF THE SURVEY PARTY HAD MADE A LITTLE EFFORT TO ASCERTAIN THE CORRECT VALUE OF THE STOCK AS PER BOOKS OF ACCOUNT AS ON 29.06.05 IT COULD BE DONE EASILY WITH REFERENCE TO BILLS / VOUCHERS AVAILABLE AT THE BUSINESS PREMISES AT THE TIME OF S URVEY. INSTEAD OF DOING IT, THE SURVEY PARTY CONTINUED TO INSIST ON SURRENDER. 11 LD. AO WITHOUT BRINGING ON RECORD ANY SUPPORTING MA TERIAL OR WITHOUT HOLDING THE WORKING OF ACTUAL STOCK SUBMITTED BY TH E ASSESSEE AS DEFECTIVE BY POINTING OUT A SINGLE INSTANCE HAS MADE THE ADDITIO N SOLELY RELYING UPON THE SO- CALLED CONFESSIONAL STATEMENTS OF THE PARTNER RECOR DED DURING THE COURSE OF SURVEY. WHILE DOING SO THE ASSESSING OFFICER HAS FULLY IGNO RED THE STATEMENT OF SH. PAWAN RASTOGI WERE AGAIN RECORDED BY HIM ON 05.12.2007 DU RING COURSE OF ASSESSMENT PROCEEDINGS (APB 66) WHEREIN IN REPLY TO QUESTION NO. 4, HE CLEARLY STA TED THAT THE VALUATION DONE BY THE SURVEY PARTY WAS ON HIGHE R SIDE AND THE ASSESSEE HAS DULY INCORPORATED THE VALUE OF STOCK AS ON DATE OF SURVEY IN THE BOOKS OF ACCOUNTS AS PER DOCUMENTS / PAPERS FOUND DURING THE COURSE O F SURVEY. SUCH STATEMENTS OF THE ASSESSEE REMAINED UNCONTROVERTED BY LD. AO WHO FAILED TO BRING ON RECORD ANY CONTRARY MATERIAL BY MAKING ANY INDEPENDENT ENQ UIRY. THE AUDITORS IN THE NOTES ON ACCOUNTS TO THEIR AUDI T REPORT AFTER DUE VERIFICATION HAS FURTHER CLARIFIED THE VALUATION OF STOCK, THE OBSERVATIONS OF AUDITORS ARE REPRODUCED AS UNDER: (APB 69) INVENTORIES: CLOSING STOCK IS TAKEN AS VALUED AND CERTIFIED BY PARTNERS. A SURVEY U/S 133A OF THE I.T. ACT, 1961 WAS CONDUCTED BY THE INC OME TAX DEPARTMENT ON DATED 29.06.05 FALLING THE PREVIOUS YEAR ENDED ON 3 1.03.06. THE INVENTORY PREPARED BY THE INCOME TAX DEPARTMENT AND COPY MADE AVAILABLE TO US SHOWS THE STOCK OF ` 35,47,406/-, WHEREAS THE INVENTORY S TANDS VALUED AT ` 16,17,886/- ON THE PLEA THAT THE VALUATION TAKEN ON THE DATE OF SURVEY BY THE INCOME TAX DEPARTMENT WAS NOT REALISTIC AND INVENTORY VALUED B Y THE ASSESSEE IS BASED ON PURCHASE/SALES VOUCHERS KEPT IN THE COURSE OF BUSIN ESS . THE LD. AO WHILE COMPLETING THE ASSESSMENT HAS NOT DOUBTED THE VALUE OF CLOSING STOCK DECLARED WHICH FURTHER STRENGTHEN THE CONTENTION OF THE APPELLANT THAT THE LD. AO HAS ACCEPTED THE VALUATION AS DONE BY THE APPELLANT OF THE STOCK FOUND DURING THE COURSE OF SURVEY AND CERTIFIED BY THE AUDITORS. IT IS AN ADMITTED POSITION OF LAW THAT THE ASSESSEE IS WELL WITHIN HIS RIGHT TO COMPLETE THE BOOKS OF ACCOUNT ON THE BASIS OF PAPER S / DOCUMENTS FOUND AT THE TIME OF SURVEY AND COME OUT WITH CLEAN HANDS. THE D IFFERENCE BETWEEN THE VALUE 12 OF STOCK ESTIMATED BY THE SURVEY PARTY ON PHYSICAL VERIFICATION AND THE VALUE OF STOCK AVAILABLE WITH THE ASSESSEE AS PER BOOKS OF A CCOUNT PREPARED ON THE BASIS OF PAPERS / DOCUMENTS FOUND IN THE COURSE OF SURVEY WH ICH IS DUE TO THE FACT THAT THE VALUE OF VARIOUS ITEMS HAS BEEN ADOPTED AT A HIGHER SIDE AND VALUE OF THE ITEMS HAS BEEN ADOPTED ON WILD GUESS AND IT IS NOT THE ACTUAL VALUE DETERMINED FOR THE PURPOSE OF VALUATION OF STOCKS. UNDER THESE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THERE WAS NO STOCK REMAINED EXCESS AS THE VALUE OF THE STOCK FOUND BY THE SURVEY PARTY STANDS INCORPORATED IN THE BOOKS OF ACCOUNT OF THE ASSESSE E LEAVING NO SCOPE FOR FURTHER ADDITION ON THIS ACCOUNT THUS THE ADDITION OF ` 19, 29,530/- UPHOLD BY LD. CIT(A) DESERVES TO BE DELETED. RELIANCE IS PLACED ON FOLLOWING CASE LAWS:- (A) PAST YEARS PROFIT IS THE BEST GUIDE: 316 ITR 125 (2009) CIT VS. INANI MARBLES PVT. LTD . (RAJ.) ACCOUNTING REJECTION OF ACCOUNTS APPLICATION OF GROSS PROFIT RATE TRIBUNAL JUSTIFIED IN APPLYING GROSS PROFIT RATE OF PRIOR YEAR INCOME TAX ACT, 1961, S. 145. 99 TTJ 164 AJAY GOYAL VS. ITO (JD.) ACCOUNTS REJECTION GP RATE BEST GUIDE FOR EST IMATION OF THE TRADING RESULTS AFTER REJECTING THE BOOKS IS EITHER THE PAS T HISTORY OF THE ASSESSEE OR ANY OTHER COMPARABLE CASE THE PAST HISTORY OF THE ASSESSEE TAKES PREFERENCE OVER A COMPARABLE CASE ASSESSEE HAVING DECLARED H IGHER GP RATE THAN THE PRECEDING YEAR, ITS TRADING RESULTS REQUIRE ACCEPTA NCE AND TRADING ADDITION REQUIRES DELETION. 270 ITR 235 KANSARA BEARINGS P. LTD. VS. ACIT (RAJ. ) (B) REJECTION OF BOOKS OF ACCOUNTS U/S 145(3) 256 ITR 243 CIT V/S GOTAN LIME KHANIJ UDYOG (RAJ.) SECTION 145 OF THE INCOME TAX ACT, 1961 ONLY PROVID ES THE BASIS ON WHICH COMPUTATION OF INCOME IS TO BE MADE FOR THE PURPOSE OF DETERMINING THE TAX. THE PROVISION BY ITSELF DOES NOT DEAL WITH THE ADDI TION OR DELETION THEREFORE, 13 MERE REJECTION OF OR SOME DEFICIENCY IN, THE BOOKS OF ACCOUNTS WOULD NOT MEAN THAT ITS NOT NECESSARILY LEAD TO THE ADDITIONS TO THE RETURNED INCOME. 76 ITR 365, 367-8 (KER) ST. TERESAS OIL MILLS V. S TATE OF KERALA ACCOUNTS REGULARLY MAINTAINED IN THE COURSE OF BUSI NESS HAVE TO BE TAKEN AS CORRECT UNLESS THERE ARE STRONG AND SUFFICIENT REAS ONS TO INDICATE THAT THEY ARE UNRELIABLE. THE DEPARTMENT HAS TO PROVE SATISFACTOR ILY THAT ACCOUNT BOOKS ARE UNRELIABLE, INCORRECT OR INCOMPLETE BEFORE IT CAN R EJECT ACCOUNTS, WHICH MAY BE DONE BY SHOWING THAT IMPORTANT PURCHASES ARE OMI TTED THEREFROM OR PROPER PARTICULARS OR VOUCHERS ARE NOT FORTHCOMING OR THE ACCOUNTS DO NOT INCLUDE ENTRIES RELATING TO A PARTICULAR CLASS OF B USINESS. REJECTION OF ACCOUNTS SHOULD NOT BE DONE LIGHT-HEARTEDLY. B) STATEMENT RECORDED DURING SURVEY: IN SAILDSP EMPLOYERS ASSOCIATIONS 1998 VS. UNION OF INDIA (2003) 262 ITD 638 AT PAGE 647 IT HAS BEEN OBSERVED AS UNDER: NO ESTOPPEL IN LAW. THE QUESTION OF ESTOPPEL BECAU SE OF OPTION EXERCISED WITH EYES OPEN TO THE SUBSEQUENT MODIFICATION CANNO T BE SUSTAINED. WHAT IS NOT OTHERWISE TAXABLE CANNOT BECOME TAXABLE BECAUSE OF ADMISSION OF THE ASSESSEE. NOR CAN THERE BE ANY WAIVER OF THE RIGHT OTHERWISE ADMISSIBLE TO THE ASSESSEE IN LAW. THE CHANGEABILITY IS NOT DEPEN DENT ON THE ADMISSION OF OR WAIVER BY THE ASSESSEE. CHANGEABILITY IS DEPENDE NT ON THE CHARGING SECTION WHICH NEEDS TO BE STRICTLY CONSTRUED. CIT VS SIMON CARVES LTD. [1976] 105 ITR 212 (SC). THE TAXING AUTHORITIES EXERCISE QUSI-JUDICIAL POWER S AND IN DOING SO THEY MUST ACT IN A FAIR AND NOT A PARTISAN MANNER. ALTHO UGH IT IS PART OF THEIR DUTY TO ENSURE THAT NO TAX WHICH IS LEGITIMATELY DU E FROM THE ASSESSEE WOULD REMAIN UN-RECOVERED, THEY MUST ALSO AT THE SA ME TIME NOT ACT IN A MANNER AS MIGHT INDICATE THAT SCALES ARE WEIGHTED A GAINST THE ASSESSEE. IT IS IMPOSSIBLE TO SUBSCRIBE TO THE VIEW THAT UNLESS THOSE AUTHORITIES EXERCISE THE POWER IN A MANNER MOST BENEFICIAL TO THE REVENU E AND CONSEQUENTLY MOST ADVERSE TO THE ASSESSEE, THEY SHOULD BE DEEMED TO HAVE EXERCISED IT IN A PROPER AND JUDICIOUS MANNER ACIT VS. JAGDISH NARAIN RATAN KUMAR 22 TW 573 (J P) WHETHER A CONFESSION/ ADMISSION CREATE ANY ESTOPPEL AND CAN BE MADE THE FOUNDATION OF ASSESSMENT HELD NO 14 CIT V/S RAMDAS MOTOR TRANSPORT 238 ITR 177 (AP) STATEMENT OF MANAGING DIRECTOR OR THAT OF OTHER PAR TNER HAD NO EVIDENTIARY VALUE AS THEY WERE NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. 8. ON THE OTHER HAND, THE LD. D/R HAS PLACED RELIAN CE ON THE ORDERS OF THE AO AND LD. CIT (A) AND IT WAS FURTHER SUBMITTED THAT VALUATION WAS TAKEN IN FRONT OF EMPLOYEES OF THE ASSESSEE AND IN THE STATEMENT THE ASSESSEE HAD ADMITTED TO DISCLOSE THE DIFFERENCE IN STOCK FOUND AT ;THE TIME OF SURVEY. THEREFORE, AO W AS RIGHT IN MAKING THE ADDITION. WHATEVER AMOUNT OF DIFFERENCE IN STOCK VALUATION WA S SHOWN BY THE ASSESSEE, THE LD. CIT (A) HAS REDUCED THE ADDITION TO THAT EXTENT. THEREF ORE, THE ORDER OF LD. CIT (A) IS LIABLE TO BE CONFIRMED. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED T HEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERI AL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS GROUND. IT IS SEEN THA T THE STOCK INVENTORY PREPARED BY THE SURVEY PARTY WAS PREPARED ON THE BASIS OF PRICE QUO TED BY EMPLOYEES OF THE ASSESSEE FIRM WHO WERE NOT SALESMEN AND ON ESTIMATE BASIS THE VAL UATION WAS ADOPTED BY THE SURVEY PARTY. THOUGH THE ASSESSEE HAD ADMITTED AT THE TIM E OF SURVEY IN HIS STATEMENT THAT WHATEVER THE EXCESS STOCK IS FOUND THAT WILL BE SHO WN IN THE RETURN OF INCOME. HOWEVER, THE SAME WAS SHOWN IN PART AS PER RECONCILIATION OF VALUATION PREPARED BY ASSESSEE AFTER SURVEY. ON THE BASIS OF REVALUATION OF THE STOCK THE TRADING ACCOUNT WAS PREPARED AND AS PER THIS TRADING ACCOUNT THE GP ARRIVED AT BY THE A SSESSEE AT 17.80%. IN EARLIER YEAR THE GP RATE DECLARED BY ASSESSEE WAS 15.72%. TRADING AC COUNT PREPARED BY ASSESSEE HAS BEEN ACCEPTED BY THE AO. HOWEVER, HE HAS MADE ADDITION OF RS. 26,64,246/- ON ACCOUNT OF VALUATION PREPARED BY SURVEY PARTY. THE ASSESSEE H AS HIMSELF DECLARED EXCESS STOCK OF 15 RS. 8,83,170/- AS PER REVALUATION OF STOCK MADE BY ASSESSEE AFTER SURVEY. THE STOCK OFRS. 8,83,170/- WAS NOT SHOWN IN THE BOOKS OF ACCO UNT. THEREFORE, TO THIS EXTENT THE STOCK HAS ALREADY BEEN SHOWN AS INCOME OF THE ASSES SEE AND ON THIS BASIS THE TRADING ACCOUNT WAS PREPARED BY THE ASSESSEE. 9.1. IT IS FURTHER SEEN THAT ENTIRE PURCHASE VOUCHE RS WERE PRODUCED BEFORE AO SHOWING THE VALUATION OF CLOSING STOCK ON THE DATE OF SURVE Y. IT IS FURTHER SEEN THAT THERE IS NO DIFFERENCE IN ITEMS BUT THE DIFFERENCE IS ON ACCOUN T OF VALUATION. IT IS ALSO A MATER OF FACT THAT WHATEVER THE VALUE OF STOCK HAS BEEN SHOWN BY ASSESSEE THAT VALUE WILL ALSO BE THE VALUE OF STOCK OF NEXT YEAR AND AFTER MAKING SALES WHATEVER THE PROFIT WILL BE ARRIVED AT ON THAT STOCK THAT HAS TO BE SHOWN IN THE PROFIT & LOSS ACCOUNT. THEREFORE, IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW T HAT IF THE ADDITION SUSTAINED BY LD. CIT (A) IS CONFIRMED, THAT WILL TANTAMOUNT TO DOUBLE AD DITION AS THE ASSESSEE HAD ALREADY SHOWN SALE PROCEEDS ON ACCOUNT OF CLOSING STOCK IN SUBSEQUENT YEAR AND WHATEVER THE PROFIT WAS EMBEDDED IN THE SALES THAT HAS ALREADY B EEN SHOWN. THEREFORE, IN OUR VIEW, THE ADDITION SUSTAINED BY LD. CIT (A) IS LIABLE TO BE D ELETED. 9.2. REGARDING THE STATEMENT GIVEN DURING THE SURVE Y PROCEEDINGS, IT HAS BEEN HELD BY HONBLE KERALA HIGH COURT IN CASE OF PAUL MATHEW & SONS (SUPRA) THAT THE STATEMENT RECORDED DURING THE COURSE OF SURVEY CANNOT BE GIVE N MUCH CREDENCE, IF THERE IS NO CORROBORATIVE EVIDENCE. THE CORROBORATIVE EVIDENCE IN THIS CASE ARE THE PURCHASE VOUCHERS OF THE MATERIAL AND WHICH HAS BEEN PRODUCE D BEFORE THE AO AND ON THE BASIS OF PURCHASE VOUCHERS THE RE-VALUATION OF STOCK WAS MAD E BY ASSESSEE AND THEN WHATEVER THE EXCESS STOCK WAS THERE THAT HAS ALREADY BEEN OFFERE D FOR TAXATION. VARIOUS COURT DECISIONS MENTIONED IN THE WRITTEN SUBMISSION ALSO GOES IN FA VOUR OF THE ASSESSEE. THEREFORE, IN 16 VIEW OF THESE FACTS AND CIRCUMSTANCES WE DELETE THE ADDITION OF RS. 19,29,530/- SUSTAINED BY LD. CIT (A). THIS GROUND OF THE ASSESSEE IS ALL OWED. 10. GROUND NO. 3 RELATES TO SUSTAINING ADDITION OF RS. 6,46,687/- UNDER SECTION 69A MADE BY AO ON ACCOUNT OF ALLEGED UNACCOUNTED CASH F OUND DURING THE COURSE OF SURVEY UNDER SECTION 133A. 11. DURING THE COURSE OF SURVEY, TOTAL CASH OF RS. 7,65,679/- WAS FOUND WHEREAS AS PER BOOKS OF ACCOUNT IT WAS RS. 25,542/-. THE DIFFERENC E OF THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE BY THE AO. THE LD. CIT (A) ALSO CO NFIRMED THE ACTION OF THE AO. 12. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT MATTER SHOULD GO BACK TO THE FILE OF AO TO CONSIDER THE SAME AFRESH. IT WAS CONTENDED DURING THE APPELLATE PROCEEDINGS THAT THE RE WERE CERTAIN SALES ALSO WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT ON THE DATE OF SURVEY. HOWEVER, AFTER SURVEY, THE CASH SALES WERE ENTERED AND IF THE CASH SALES ARE T AKEN INTO CONSIDERATION THEN THERE REMAINS NO DIFFERENCE. SINCE THIS FACT WAS NOT EXA MINED BY THE AO, THEREFORE, WE ARE OF THE VIEW THAT THIS ASPECT SHOULD BE EXAMINED BY THE AO AFRESH AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY THIS I SSUE IS SET ASIDE TO THE FILE OF AO. 13. GROUND NO. 4 RELATES TO CHARGING OF INTEREST UN DER SECTION 234B WHICH IS CONSEQUENTIAL IN NATURE. THE AO IS DIRECTED TO GIV E CONSEQUENT RELIEF TO THE ASSESSEE. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 15. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 .10.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, 17 D/ COPY FORWARDED TO :- M/S. RASTOGI STEEL FURNITURE, JAIPUR. THE ITO WARD 1(3), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 306/JP/2011) BY ORDER, AR ITAT JAIPUR.