M/S Bansal Rice Mills, Kurukshetra V. The Income Tax Officer, Kurukshetra

ITA 344/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9807 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 11-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMARCIT
• Keywords: Unexplained investment; Unexplained expenditure; Business income; Salary income; Deemed to accrue or arise in india
• Section: 69C; 143(3); 69; 148; 54; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 344/CHD/2016 (ASSESSMENT YEAR : 2007-08) M/S BANSAL RICE MILLS, VS. THE INCOME TAX OFFICER, ISMAILABAD, WARD -2, KURUKSHETRA. KURUKSHETRA. PAN: AABEB9095K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI SUSHIL KUMAR,CIT DR DATE OF HEARING : 18.07.2016 DATE OF PRONOUNCEMENT : 20.07.2016 O R D E R THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1, GURGAON DATED 7.3.2016 FOR ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUNDS : 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN LAW IN UPHOLDING THE INVOCATION OF THE PROVISIONS OF SECTION 154 OF THE ACT BY THE ASSESSING OFFICER WHEN IN FAC T AS THREE IS NO MISTAKE APPARENT FROM RECORD WARRANTING ACTIO N UNDER SECTION 154 OF THE ACT WHICH IS ILLEGAL, ARBITRARY WITHO UT JURISDICTION & AS SUCH UNJUSTIFIED. 2. THAT WHETHER SET OFF ANY LOSS OR OTHERWISE IS T O BE ALLOWED AGAINST SURRENDERED INCOME IS CLEARLY A DEBATABLE ISS UE 2 WARRANTING EXTENSIVE DEBATE AND AS SUCH THE ORDER P ASSED UNDER SECTION 154 IS ILLEGAL, ARBITRARY & UNJUSTIFIED. 3. THAT WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSING OFFICER HAS ERRED IN LAW AS WELL AS ON FACTS IN ASSESSING THE INCOME AT RS.40,13,510/- AS AGAINST ORIGINALLY ASSESSED AT RS.29,54,357/- RESULTING IN ADDITIONAL DEMAND OF TAX AT RS.4,74,160/- WHICH IS ILLEGAL, ARBITRARY AND UNJUSTIFIED. 4. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AN D FACTS OF THE CASE AND IS, THUS, UNTENABLE. 3. THE BRIEF FACTS ARE THAT AFTER A SURVEY OPERATI ON UNDER SECTION 133A(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) WAS CONDUCTED AT THE BUSINESS PRE MISES OF THE ASSESSEE FIRM ON 13.03.2007. THE ASSESSING OFFI CER VIDE ORDER DATED 30.12.2009 MADE THE ORIGINAL ASSES SMENT AT RS.29,54,357/- AGAINST THE RETURNED INCOME OF RS.15,060/-. IN THE COURSE OF SURVEY PROCEEDINGS, T HE ASSESSEE MADE A DISCLOSURE OF ADDITIONAL INCOME OF RS.38 LACS. THE ADDITIONAL INCOME DISCLOSED IN THE SURVE Y WAS RELATED TO THE STOCK FOUND AT THE BUSINESS PREMISES AS WELL AS DOCUMENTS FOUND IN THE COURSE OF SURVEY OPERATIO NS. IT WAS NOTICED THAT THE DISCLOSURE OF ADDITIONAL INCOM E WAS MADE VIDE LETTER DATED 13.03.2007, WHICH IS REPRODU CED AS UNDER: - SURVEY UNDER SECTION 1 33 A WAS CONDUCTED ON 13.03.2007 AT BUSINESS PREMISES MENTIONED ABOVE. INVENTORY OF STOCK WAS PREPARED. DURING SURVEY DISCREPANCIES IN STOCK AND CASH DOC UMENTS WAS FOUND. TO PURCHASE PEACE OF MIND AND TO AVOID FURTHER LITIGAT ION AND FOR THE BENEFIT OF BUSINESS, THE FIRM HAS OFFERED AN ADDITIONAL INC OME OF RS. 38 LACS FOR THE 3 F.Y. 2006-07 RELEVANT TO AY 2007-08. A CHEQUE OF RS.12,76,800/- IS ENCLOSED HEREWITH FOR PAYMENT OF ADVANCE TAX BY 15. 03.2007. THE SURRENDER OF ABOVE INCOME IS IN ADDITION TO INC OME OF THE FIRM. THE SURRENDER IS VOLUNTARILY AND WITHOUT ANY PRESSURE A ND WITHOUT ANY PENAL ACTION UNDER SECTION 271(1)(C) 4. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER NOTICED THAT THE ASSESSEE HAS DECLARED DIFFERENTIAL GP RATE FROM 1.04.2006 TO 13.03.2007 (DATE OF SURVEY) @ OF 4.63%, WHEREAS FROM 14.03.2007 TO 31.03.2007 GROSS LOSS OF RS.22,07,240/- ON THE TURN OVER OF RS.70,21,059/- I N THIS PERIOD. THE ASSESSING OFFICER EXAMINED THE COMPLET E DETAILS IN THIS REGARD AND CAME TO A CONCLUSION IN PARAS 6 TO 17 OF THE ORDER THAT THE ASSESSEE IS NOT ENTITLED TO ADJU STMENT OF LOSS FROM THE BUSINESS AGAINST THE INCOME DISCLOSED IN THE COURSE OF SURVEY. THE RELEVANT PARAGRAPHS OF THE OR DER ARE REPRODUCED HERE UNDER :- 6. THE ASSESSES HAS RETURNED GROSS PROFIT OF RS.13 ,15,516/- ON SALES OF RS.2,84,06,214/-, GIVING GP RATE OF 4.63%, IN THE F IRST PERIOD FROM 01.04.2006 TO 13.03.2007 I.E. PERIOD UP TO THE DATE OF SURVEY, AN D GROSS LOSS OF RS.2207240/-- ON SALES OF 7021059/- FROM 14.03.2007 TO 31.03.2007. THUS IT IS SEEN THAT THERE IS VAST DIFFERENCE BETWEEN THE GROSS PROFIT OF THE FOR MER ACCOUNTING PERIOD AND GROSS LOSS OF THE LATER ACCOUNTING PERIOD. THUS THERE IS GROSS LOSS RS. 891724/- ON SALES OF RS.35427273/- FOR THE ENTIRE PERIOD OF 01.04.2006 TO 30.03,2007, AS AGAINST GRASS PROFIT OF RS.1630544/- AGAINST SALES OF RS. 440879 14/- GIVING A GP RATE OF 3.7% IN THE IMMEDIATELY PRECEDING YEAR I.E. AY 2006-07. THU S IT IS SEEN THE SALES HAVE GONE DOWN CONSIDERABLY AS COMPARED TO LAST YEAR AND GP OF FIRST PERIODS HAS GONE UP, BUT BY SHOWING LOSS FOR THE SECOND PERIOD THERE IS LOSS. THIS IS FOR THE POST SURVEY PERIOD THAT LOSS HAS BEEN SHOWN TO COVER THE SURRENDER MADE AT THE TIME OF SURVEY. 7. THE ASSESSEE HAS SURRENDERED AN AMOUNT OF 38 LAC AT THE TIME OF SURVEY ON ACCOUNT OF EXCESS STOCK. THE CORRECTNESS AND GENUI NENESS OF THE BOOKS. AS OF ACCOUNTS OF THE ASSESSEE HUGE DIFFERENCE BETWEEN T HE GROSS PROM./LOSS OF THE SAID 4 TWO SEPARATE ACCOUNT ACCOUNTING PERIODS EXPLICITLY SHOWS THAT THE BOOKS OF ACCOUNT THE ASSESSEE CANNOT BE TERMED AS RELIABLE. MOREOVER THE DEFECTS POINTED OUT AS PER LETTER DATED 22.12.2009 AND CONSIDERING THE REPLY O F THE ASSESSEE AND FURTHER FINDINGS, AS DISCUSSED ABOVE, IT IS HELD THAT THE BOOKS OF ACCOUNTS ARE NEITHER RELIABLE NOR GENUINE. THESE ARE INCORRECT A ND THE ACTUAL GROSS PROFIT CANNOT BE DEDUCED FROM THESE BOOK OF ACCOUNT BECAUS E OF THE AFORESAID DEFECTS. HENCE, MANUFACTURING/TRADING RES ULTS OF THE ASSESSEE ARE HEREBY REJECTED BY INVOKING PROVISIONS OF SECTI ON 145(2) OF THE INCOME TAX ACT, 1961 . 8. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS . BRITISH PAINTS LTD. 188 ITR 44 HAS HELD THAT IT IS NOT RIGHT BUT THE DU TY OF THE AO TO CONSIDER WHETHER OR NOT THE BOOKS OF ACCOUNTS DISCLOSE THE T RUE STATE OF ACCOUNTS AND CORRECT INCOME CAN BE DEDUCED THEREFROM. IT IS INC ORRECT TO SAY THAT THE OFFICER IS BOUND TO ACCEPT, THE SYSTEM OF ACCOUNTIN G REGULARLY EMPLOYED BY THE ASSESSE. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: DHODI RAM DULL CHAND VS. CIT 81 ITR 609 (B OMBAY) CENTRAL AUTOMOBILES VS. STATE 35 STC 478 (1975) (KERELA) CIT VS. PAREEK BROS. 167 ITR 344 PATNA MULJI UDHAVJI VS. CIT 145 ITR 575(MP) ACTON ELECTRICAL VS. CIT 258 ITR 158(DELHI) AWADESH PARTAP SINGH ABDUL REHMAN BROS. VS. CIT 76 TAXMAN 106(AU) KISHIN CHAND CHELA RAM VS. CIT 114 ITR 671, 65 4(BOM) S.N. NAMASIVAYAM CHETTIAR VS. CIT 38 1TR 579(SC) 9. KEEPING IN VIEW THE ABOVE AND THAT THE ASSESSEE HAS DECLARED GP RATE OF 4.63% IN FIRST PERIOD I E. 01.04.2006 31.03,2007. THE SAME RATE, OF GROSS PROFIT IS TAKEN FOR THE WHOLE OF YEAR. BY APPLYING GROSS PROFIT RATE OF 4.63% ON SALE OF RS. 35427273/-, THE GROSS PROFIT WORKS OUT AT RS.16 40283/- AS AGAINST LOSS OF RS.891724 FOR THE ENTIRE PERIOD. HENCE TRADING ADD ITION OF RS.2532007/- (I640283/- +89I724/- ) IS MADE TO THE ASSESSEES DECLARED INCOME. 10. 1 AM SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS/FURNISHED THE INACCURATE PARTICULARS OF ITS INCOME OF RS.2532007/ -. HENCE PENALTY PROCEEDINGS U/S 27L(L)(C) OF THE INCOME TAX ACT ARE INITIATED S EPARATELY. 5 11. THE ASSESSEE, VIDE THIS OFFICE LETTER DATED 22. 12.2009, WAS ASKED TO EXPLAIN:- PLEASE EXPLAIN AS TO WHY THE EXCESS STOCK FOUND AT RS.3800000/- AT YOUR PREMISES AT THE TIME OF SURVEY SHOULD NOT BE ASSESSED TO TAX U /S 69 OF THE INCOME TAX ACT. 12. THE REPLY OF THE ASSESSEE IN THIS REGARD IS AS UNDE R :- SIR THE SURRENDER OF RS. 38 LACS WAS ON THE BASIS OF PADDY AND RICE ETC FOUND IN THE RICE MILL MORE THAN ACTUAL STOCK AS PER BOO KS. SIR, THERE ITEMS WERE PURCHASED IN THE MONTH OF FEB. & MARCH AS IS CLEAR FROM THE KANDA PARCHIES FOUND AND IMPOUNDED DURING THE SURVEY. THESE BILLS OR PURCHASE OF KANDA PARCHI WAS TO BE ENTERED BY THE ACCOUNTANT IN BOOKS . BUT WAS UPTO DATE UPTO DATE OF SURVEY SO THE SAME WAS SURRENDERED TO PURCH ASE PEACE OF MIND AND TO REDUCE THE LITIGATION SUBJECT TO NO PENAL ACTION UN DER ANY SECTION OF INCOME TAX ACT, IF WE REJECT THE BOOKS THAN IT IS BREACH OF CO NTRACT AS PER LETTER OF SURRENDER. SO YOUR GOODSELF IS HUMBLY REQUESTED NOT TO APPLY THE PROVISION OF SECTION 145(3) OF INCOME TAX ACT. 13. IN HIS STATEMENT, RECORDED DURING THE COURSE OF SURVEY, SH. SATISH KUMAR, PARTNER OF THE FIRM HAS STATED SPECIFICALLY THAT TH ERE WAS NO STOCK IN THE MILL, WHOSE BILL IS YET TO BE RECEIVED. EVEN IF THE BILL S OR PURCHASE OF KANDA PURCHI WAS TO BE ENTERED BY THE ACCOUNTANT IN BOOKS THESE SHOULD HAVE BEEN ENTERED DURING THE COM- ,F SURVEY. THERE WAS NO NEED TO SUR RENDER THE HUGE AMOUNT OF RS.38 LAC, SIMPLY ON THE GROUND THAT SOME BILLS WER E NOT TO BE ENTERED. A SUM OF RS.38, 00,000/- HAS BEEN SURRENDERED ON ACCOUNT OF EXCESS STOCK. IT CLEARLY SHOWS THAT THE BOOKS OF ACCOUNTS ARE NEITHER RELIAB LE NOR GENUINE. 14. THE ASSESSEE HAS CREDITED ADDITIONAL INCOME OF RS.38 LAC IN HIS PROFIT & LOSS ACCOUNT. THE SUM OF RS. 38 LAC IS ASSESSABLE AS DEE MED INCOME UNDER SUCTION 69. THIS HAS BEEN EXPLICITLY HELD BY THE HON'BLE GU JARAT HIGH COURT IN THE CASE OF FAKIR MOHD. HAJI HASAN [120 TAXMAN 11&247 ITR 29 0] (2002) THAN SECTION 69, 69A,69B,AND 69C ARE DEEMING PROVISIONS AND NO D EDUCTION UNDER THE OTHER SECTIONS IS PERMITTED. THE CLASSIFICATION OF HEADS OF INCOME IS GOVERNED BY U/S 14 OF THE INCOME TAX ACT, 1961. THE INCOME DETERMINED U/S 69, 69 A, 69B & 69C ARE TO BE TREATED SEPARATELY AS 'DEEMED I NCOME' AND SUCH DEEMED INCOME IS NEITHER INCOME FROM SALARY NOR HOU SE PROPERTY NOR PROFIT OR GAIN OF BUSINESS OR PROFESSION OR CAPITAL GAIN A ND NOR IT IS INCOME FROM OTHER SOURCES, BUT IS THE CASE OF THE SPECIFIC PROV ISIONS OF 6 SECTION 69 HAVING REGARD TO THE ABOVE FACTUAL POSIT ION, NO FURTHER DEDUCTION OR SET OFF ANY KIND IS APPLICABLE TO SUCH INCOME ASSES SED/ASSESSABLE U/S 69, 69A, 69B & 69C OF THE ACT. 15. IN THE CASE OF THE ASSESSEE TO THERE IS NO D ISPUTE THAT INCOME HAS BEEN SURRENDERED ON ACCOUNT OF UNACCOUNTED STOCK, WHICH IS ASSESSABLE U/S 69 OF THE ACT. IT IS ALSO SEEN FROM THE FACTS IF THERE IS NO EVIDENCE ON RECORD EITHER DURING THE ASSESSMENT PROCEEDING OR DURING THE SURVEY INDICATING THE SOURCE OF THE SAID UNACCOUNTED STOCK WAS EXPLAINED. THERE IS NO SUBMISSION REGARDING ANY PARTICULAR PURCHASE OR SALE TRANSACTI ONS WHICH WAS BUSINESS IN NATURE, WHICH GENERATED THE SAID UNACCOUNTED. I TS BEING SO, HAVING REGARD TO THE RATIO OF THE DECISION OF HON'BLE GU JARAT HIGH COURT WHICH IS CLEAR ON THE RELEVANT POINT THAT INCOME HAVING B EEN ASSESSED I .. 69 OF THE ACT, NO SET OFF OF ANY KIND OF DEDUCTION OF ANY KIND IS ADMISSIBLE AGAINST THE SAID INCOME. HENCE ADDITIONAL INCOME OF RS.38 LAC CREDITED IN THE P& L ACCOUNT IS ASSESSABLE AS DEEMED INCOME U/S 69. I6. ACCORDINGLY ADDITIONAL INCOME OF RS.38 LAC IS ASSESSED AS DEEMED INCOME UNDER SECTION 69, SINCE THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF UNACCOUNTED STOCK OR UNACCOUNTED CASH OR UNACCOUNTED INVESTMENT WITH SUPPORTIVE EVIDENCE EITHER AT THE L IME OF SURVEY OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 17. I AM SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS/FURNISHED THE INACCURATE PARTICULARS OF ITS INCOME OF RS.38,00,000/-. HENCE PENALTY PROCEEDINGS U/S 271(1) (C) OF THE I NCOME TAX ACT, 1961 ARE INITIATED SEPARATELY.' 5. THE ASSESSING OFFICER PASSING THE AFORESAID ORDER GAVE EFFECT TO THE AFORESAID FINDING BY THE FOLLOWING C OMPUTATION OF THE INCOME IN THE ASSESSMENT ORDER:- GROSS PROFIT AS DISCUSSED ON PAGE 12 16,40,283/- ADD: OTHER INCOME AS PER P&L ACCOUNT 18,91,427/- TOTAL 35,31,710/- LESS: EXPENSES CLAIMED IN P&L ACCOUNT 47,84,640/- 7 BALANCE (-)12,52,930/- ADD : INCOME U/S 69 AS DISCUSSED ABOVE PAGE NO 14 38,00,000/- PAGE NO.10 1,23,027/- 39,23,027/- INCOME U/S 69 C AS DISCUSSED ABOVE PAGE NO 9 8,957/- PAGE NO 9 41,280/- PAGE NO 9 9,802/- PAGE NO 9 15,000/- PAGE NO 10 7,745/- PAGE NO 10 28,309/-- PAGE NO 10 44,761/- PAGE NO 10 8,952/- PAGE NO 10 43,960/- PAGE NO 11 75,494/- 2,84,260/- TOTAL ASSESSED INCOME 29,54,357/- 6. THE ASSESSEE CHALLENGED ASSESSMENT ORDER DATED 30.12.2009 BEFORE THE CIT(APPEAL), KARNAL IN IT NO. 50/2009- 10, WHICH WAS DECIDED ON 30.03.2012. IN THIS APPEAL , THE ASSESSEE TOOK SPECIFIC GROUNDS OF APPEAL (GROUND NO . 1, 2 AND 3) THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION UNDER SECTION 69 OF THE ACT. A SPECIFIC CHALLENGE WAS MADE TO THE FACT THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN NOT SETTING OFF THE BUSINESS LOSS AGAINST THE INCOME SURRENDERED. 7. THE CIT (APPEALS) KARNAL VIDE ORDER DATED 30.03.2012 RECORDED A SPECIFIC FINDING OF THE FACT THAT THE ASSESSEE IS NOT ENTITLED TO SET OFF THE DE EMED INCOME. 8 THE RELEVANT PARAGRAPHS OF THE ORDER ARE AS UNDER:- THE FACTS IN BRIEF ARE THAT A SURVEY ACTION WAS CA RRIED OUT AT THE BUSINESS PREMISES OF THE APPELLANT ON 13.03.2007. DURING TH E SURVEY, DIFFERENCE IN STOCK AND VARIOUS LOOSE DOCUMENTS WERE FOUND WHICH WERE IMPOUNDED. THE APPELLANT DECLARED ADDITIONAL INCOME OF RS.38 1AC BESIDES THE REGULAR INCOME DECLARED YEAR AFTER YEAR. THE RETURN OF INCO ME WAS, HOWEVER, FILED DECLARING INCOME OF RS. 15,060/- ONLY, AFTER CONSID ERING THE ADDITIONAL INCOME DECLARED. IN OTHER WORDS, THE APPELLANT DECLARED L OSS OF RS.37,84,940/- AFTER EXCLUDING THE ADDITIONAL INCOME OF RS. 38 LAC DECLA RED. THE AO ASKED THE APPELLANT TO FURNISH THE TRADING ACCOUNT TILL THE D ATE OF SURVEY I.E., 01.04.2006 TO I3.03.2007 AND FROM THE DATE OF SURVEY TO THE END O F THE FINANCIAL YEAR, I.E., 14.03.2007 TO 31.03.2007. ON EXAMINATION THEREOF, THE AO NOTED THAT THE APPELLANT DECLARED GP @ 4.63% ON TURNOVER OF RS.2.8 4 CRORE IN THE FIRST PERIOD I.E., TILL THE DOTE OF SURVEY AND LOSS OF RS.22,07, 240/- ON SALES OF RS.70,21,059/- IN THE SECOND PERIOD I.E. FROM 14.03 .2007 TO 31 03,2007. THE AO FURTHER NOTED THAT THE ENTIRE EXPENSES AMOUNTING TO RS.29,56,640/- WERE CLAIMED TO BE PAID IN CASH ON SELF VOUCHERS AND NOT EVEN A SINGLE VOUCHER IS FROM THE THIRD PARTY. FURTHER A NUMBER OF VOUCHERS BEAR THUMB IMPRESSIONS AND A NUMBER OF VOUCHERS WERE SIGNED BY THE SAME PERSON , DESPITE ISSUED IN DIFFERENT NAMES. 1.8 THE APPELLANT STATED THAT THEIR 14 CONSIGNMENTS WERE REJECTED BY THE FCI WHICH RESULTED TO SALE THEM AT REDUCED PRICE IN THE OPEN MARKET SUBSEQUENT TO THE DATE OF SURVEY. THE APPELLANT FUR THER SUBMITTED THAT VARIOUS EXPENSES WERE PAID IN CASH SINCE NO LABOUR TAKES HI S LABOUR THROUGH CHEQUE AS EVERYONE IS ON DAY TO DAY BASIS AND HAS TO RUN HIS FAMILY FROM THE LABOUR EARNED. THE SUBMISSIONS OF THE APPELLANT ARE CONSIDERED. AS PER THE TRADING ACCOUNT PREPARED AT -THE TIME OF SURVEY, THE CLOSING STOCK WAS FOUND AS UNDER:- RICE GRADE A 3069. 81QTLS RICE BASMATI 335. 45 QTLS PADDY BASMATI 52.17 QTLS. ON PHYSICAL VERIFICATION, ACTUAL STOCK AT THE TIME OF SURVEY WAS, HOWEVER, FOUND AS UNDER: PADDY BASM ATI 759.10 QTLS 9 PADDY MUCHHAL 39.65 QTLS PARMAL 6056.05 QTLS RICE GRADE A 14945.65 QTLS RICE BRAN 10.40 QTLS. RICE BROKEN 299.50 QTLS PADDY HUSK 1800 QTLS BARDANA NEW & OLD 1,12,035 BAGS THE APPELLANT DECLARED ADDITIONAL INCOME OF RS.38 1 AC ON ACCOUNT OF VARIOUS DISCREPANCIES DETECTED DURING SURVEY INCLUDING DIFF ERENCE IN STOCK AND VARIOUS PAPERS IMPOUNDED BESIDES THE FACT THAT MOST OF THE EXPENSES WERE PAID TO THE LABOURERS IN CASH, AS HAS BEEN DISCUSSE D ABOVE AND HENCE THE GENUINENESS THEREOF COULD NOT BE VERIFIED. IN VIEW OF THESE FACTS, CASE LAWS RELIED UPON BY THE APPELLANT ARE OF NO HELP BEING D ISTINGUISHABLE ON FACTS AND IT IS HELD THAT THE BOOKS OF ACCOUNTS AND THE TRADING RESULTS DECLARED BY THE APPELLANT ARE NOT CORRECT/VERIFIABLE AND HENCE REJE CTION THEREOF MADE BY THE AO BY INVOKING THE PROVISO TO SECTION 145(3) OF THE ACT IS HEREBY CONFIRMED. 1.10 AS DISCUSSED ABOVE THAT THE APPELLANT DECLARED GP @ 4.63% TILL THE DATE OF SURVEY I.E., 01.04.2007 TO 13.03.2007 AS AGAINST DECLARED LOSS OF RS.22,07,240/-FOR THE SECOND PERIOD I.E., 1 4.03.2007 TO 31.03.2007 WHEREAS G P. @ 3.7% WAS DECLARED ON TURNOVER OF RS.4.4 CRORE IN THE LAST YEAR. THE APPELLANT AS SUCH DECLA RED STEEP DECLINE IN GP IN A SHORT PERIOD OF 18 DAY ONLY I.E., IN THE SU BSEQUENT PERIOD OF SURVEY. THE APPELLANT TRIED TO JUSTIFY THE STEEP DE CLINE OF G.P. IN THE GARB OF REJECTION OF 14 CONSIGNMENT OF RICE, OUT OF THE PADDY MILLED ON BEHALF OF THE FCI AND THE SAME WERE CLAIMED TO BE S OLD AT A REDUCED PRICE SUBSEQUENT TO THE DATE OF SURVEY. THE APPELLA NT IS NOT A NEW ENTRANTS IN THIS TRADE AND HENCE, IT IS DIFFICULT T O APPRECIATE THAT THERE WOULD BE SO MUCH REJECTION BY THE FCI, I.E., OF 14 CONSIGNMENTS WEIGHING 270 QTLS EACH, TOTALING TO 3780 QTLS AND T HE SAME WAS AFTER THE DATE OF SURVEY AND IN A SHORT PERIOD OF 18 DAYS ONLY. IT IS ALSO DIFFICULT TO BELIEVE THAT THE RICE WAS SO MUCH DAMA GED THAT IT RESULTED INTO HUGE LOSS. THE APPELLANT HAS SHOWN THE VALUE O F RICE GRADE A WEIGHING 3069.81 QUINTAL AT RS. 30,69,810/- IN RESP ECT OF CLOSING STOCK AS PER BOOKS ON 13.3.2007 GIVING RATE OF RS.1000/- PER QUINTAL AND RICE BASMATI WEIGHING 335.45 QTLS FOR RS.6,I0,519/-. I.E ., @ RS, 1820/- PER QTL ., WHEREAS SALE OF RICE GRADE A HAS BEEN SHOWN AT RS. 64,57,964/- FOR 8021.88/- QTL. WITH SALE RATE OF RS. 805/- QTLS . AND RICE BASMATI 10 WEIGHING 335.45 QTLS FOR RS.3,68,955/- AT SALE RA TE OF RS.1100/- PER QTL., ONLY AFTER THE DATE OF SURVEY. THERE WAS NO J USTIFICATION FOR SELLING THE RICE AT SUCH A LOWER RATE. 1.11 IN VIEW OF THE FACTS DISCUSSED ABOVE, THE ONLY INFERENCE WHICH CAN BE DRAWN IS THAT THE ENTIRE EXERCISE WAS CARRIE D OUT JUST TO SET OFF THE ADDITIONAL INCOME DECLARED DURING SURVEY. THE TRADING RESULTS DECLARED BY THE APPELLANT ARE, THEREFORE, HELD TO BE NOT ACCEPTABLE. THE GP DECLARED IN THE LAST YEAR IS 3.7% WHEREAS IN THE YEAR UNDER CONSIDERATION UPTO THE DALE OF SURVEY HAS BEEN AT 4.63%. IN VIEW OF THIS FACT, G.P.% 4% IS HELD TO BE REASONABLE AS AGAINST 4.63% ADOPTED BY THE AO AND THE AO IS ACCORDINGLY DIRECTED TO WORK OUT THE GROSS PROFIT OF THE APPELLANT FIRM OF THE YEAR UNDER CONSIDERATION. 1.12 NOW COMING TO THE NEXT ISSUE I.E., THE HEAD OF INCOME UNDER WHICH THE ADDITIONAL INCOME OF RS.38 LAC DECLARED BY THE APPE LLANT IS TO BE ASSESSED. THE AO NOTED IN PARA 14 OF THE ASSESSMENT ORDER THAT TH E ADDITIONAL INCOME OF RS.38 LAC WAS CREDITED BY THE APPELLANT IN THE PROFIT AND LOSS ACCOUNT BUT THE SAME IS TO BE ASSESSED AS DEEMED INCOME U/S 69 OF THE ACT, IN VIEW OF THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOH D. HAJI HASAN (247 ITR 290) WHEREIN THE HON'BLE COURT HAS HELD THAT SECTION 69, 69A, 69B & 69C ARE DEEMING PROVISIONS AND NO DEDUCTION UNDER THE O THER SECTION IS PERMITTED. THE AO FURTHER NOTED THAT THERE IS NO DISPUTE THAT INCOME WAS SURRENDERED ON ACCOUNT OF UNACCOUNTED STOCK, WHICH IS ASSESSABLE U /S 69 OF THE ACT. THERE IS NO EVIDENCE ON RECORD INDICATING THE SOURCE OF THE SAID UNACCOUNTED STOCK. THERE IS NO SUBMISSION REGARDING ANY PARTICULAR PUR CHASE OR SALE TRANSACTIONS WHICH WAS OF BUSINESS IN NATURE AND GENERATED THE S AID UNACCOUNTED STOCK. THE AO, THEREFORE, HELD THAT ADDITIONAL INCOME DECLARED HAS TO BE ASSESSED AS DEEMED INCOME U/S 69 OF THE ACT AND HENCE NO SET OF F OF ANY KIND OR DEDUCTION OF ANY KIND IS ADMISSIBLE AGAINST THE SAID INCOME. 1.13 THIS ISSUE HAS ALSO BEEN CONSIDERED BY THE JUR ISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S KIM PHARMA (P ) LTD., VS. CIT PANCHKULA & ANOTHER, CASE NO. 106 OF 2011, DATE OF ORDER 27.04.2011. RELEVANT PARAS 5 TO 7 FROM THAT ORDER ARE REPRODU CED BELOW:- 'THE POINT FOR DETERMINATION IN THIS APPEAL IS, WHETHER RS.5,00,000/- WHICH WAS SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SURVEY UNDER SECTION 133 A OF THE ACT WOULD FORM PART OF BUSINESS INCOME OR WA S ASSESSABLE UNDER U/S 69A 11 OF THE ACT THE ASSESSING OFFICER, THE CIT(A) AND T HE TRIBUNAL AFTER CONSIDERING THE FACTUAL ASPECT NOTICED THAT THE AMOUNT SURRENDE RED DURING THE SURVEY WAS REFLECTED IN THE BOOKS OF ACCOUNT AND NO SOURCE FR OM WHERE IT WAS DERIVED WAS DECLARED BY THE ASSESSEE AND, THEREFORE, IT WAS DEE MED INCOME OF THE ASSESSEE UNDER SECTION 69A OF THE ACT. THE FINDINGS RECORDED BY THE TRIBUNAL IN THIS REGARD ARE AS UNDER:- IN THE FACTS OF THE PRESENT CASE, WE FIND THAT ASSE SSEE DURING THE COURSE OF SURVEY HAD SURRENDERED THE INCOME AS INCOME FROM OTHER SOURCES THROUGH A PLEA HAS BEEN RAISED BY THE ASSESSEE THAT THE INCOME WAS SUR RENDERED AS INCOME FROM JOB WORK BUT NO EVIDENCE TO PROVE THE STAND OF THE ASSE SSEE HAS BEEN BROUGHT ON RECORD. THE ASSESSEE HAD ALSO SURRENDERED ADDITION AL INCOME OF RS. 10 LACS IN ASSESSMENT YEAR 2005-06 ON ACCOUNT OF SUNDRY CREDIT S, REPAIRS TO BUILDING AND ADVANCES TO STAFF, WHICH BEING RELATABLE TO BUSINES S CARRIED ON BY ASSESSEE AS INCLUDED AS INCOME FROM BUSINESS, HOWEVER, IN RESPE CT OF CASH FOUND DU R ING SURVEY, WHICH WAS NOT REFLECTED IN THE BOOKS OF ACC OUNT, NO SOURCE AS DECLARED BY THE ASSESSEE AND IN THE ABSENCE OF NATURE OF SOU RCE OF CASH BEING PROVED: THE SAME IS NOT ASSESSABLE AS INCOME FROM BUSINESS. IN THE CIRCUMSTANCES, WE UPHOLD THE ORDER OF THE CIT(A) IN INCLUDING THE ADDITIONAL INCOME AS DEEMED INCOME U/S 69A OF THE ACT AND NOT ALLOWING THE BENEFIT OF THE BUSINESS LOSSES DETERMINED AGAINST THE SAID DEEMED INCOME. THE GROUNDS OF APP EAL RAISED BY THE ASSESSEE ARE DISMISSED. THE TRIBUNAL HAD RELIED UPON A DECISION OF THE GUJR AT HIGH COURT IN FAKIR MOHMED HAJI HASAN V. COMMISSIONER OF INCOME-T AX (2001) 247 ITR 290. IN THAT CASE INTERPRETING THE SCOPE AND DESCRIBING THE SCHEME OF SECTIONS 69, 69A, 69B AND 69C OF THE ACT, IT WAS OBSERVED:- THE SCHEME OF SECTION 69, 69A, AND 69C OF THE ACT, 1961, WOULD SHOW THAT IN CASES WHERE THE NATURE AND SOURCE OF INVESTMENT MAD E BY THE ASSESSEE OR THE NATURE AND SOURCE OF ACQUISITION OF MONEY, BULLION ETC. OWNED BY THE ASSESSEE OR THE SOURCE OF EXPENDITURE INCURRED BY THE ASSESS EE ARE NOT EXPLAINED AT ALL, OR NOT SATISFACTORILY EXPLAINED, THEN THE VALUE OF SUCH INVESTMENTS AND MONEY OR THE VALUE OF ARTICLES NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE UNEXPLAINED EXPENDITURE MAY BE DEEMED TO BE THE INCOME OF SUCH ASSESSEE. IT FOLLOWS THAT THE MOMENT A SATISFACTORY EXPLANATION IS GIVEN ABOUT SU CH NATURE AND SOURCE BY THE ASSESSEE, THEN THE SOURCE WOULD STAND DISCLOSED AND WILL, THEREFORE BE KNOWN 12 AND THE INCOME WOULD BE TREATED UNDER THE APPROPRIA TE HEAD OF INCOME FOR ASSESSMENT AS PER THE PROVISIONS OF THE ACT. HOWEV ER, WHEN THESE PROVISIONS APPLY BECAUSE NO SOURCES IS DISCLOSED AT ALL ON THE BASIS OF WHICH THE INCOME CAN BE CLASSIFIED UNDER ONE OF THE HEADS OF INCOME UNDER SECTION 14 OF THE ACT, IT WOULD NOT BE POSSIBLE TO CLASSIFY SU CH DEEMED INCOME UNDER ANY OF THESE HEADS INCLUDING INCOME FROM OTHER SOURCES' WH ICH HAVE TO HE SOURCES KNOWN OR EXPLAINED, WHEN THE INCOME CANNOT BE SO CL ASSIFIED UNDER ANY ONE OF THE HEADS OF INCOME UNDER SECTION 14, IT FOLLOWS THAT THE QUESTION OF GIVING ANY DEDUCTIONS UNDER THE PROVISIONS WHICH CORRESPON D TO SUCH HEADS OF INCOME WILL NOT ARISE. IF IT IS POSSIBLE TO PEG THE INCOME UNDER ANY ONE HEADS BY VIRTUE OF A SATISFACTORY EXPLANATION BEING GIVEN, THEN THESE PROVISIONS OF SECTION 69 69A, 69B, 69C WILL NOT APP LY, IN WHICH EVENT, THE PROVISIONS REGARDING DEDUCTIONS ETC. APPLICABLE TO THE RELEVANT HEAD OF INCOME UNDER WHICH SUCH INCOME FALLS WILL AUTOMATIC ALLY BE ATTRACTED. THE OPENING WORDS OF SECTION 14 'SAVE AS OTHERWISE PROVIDED BY THIS ACT' CLEARLY LEAVE SCOPE FOR DEEMED INCOME' OF THE NATU RE COVERED UNDER THE SCHEME OF 69, 69A 69B AND 69C BEING TREATED SEPARAT ELY, BECAUSE SUCH DEEMED INCOME IS NOT FROM SALARY, HOUSE PROPERTY, P ROFITS AND GAINS OF BUSINESS OR PROFESSION, OR CAPITAL GAINS, OR CAPITAL GAINS, NOR AS IT INCOME FROM OTHER SOURCES' BECAUSE THE PROVISION OF COOLING 69 69A 69 B AND 69C UNEXPLAINED INVESTMENT UNEXPLAINED MONEY, BULLION ETC, AND UNEX PLAINED EXPENDITURE AS DEEMED INCOME WHERE THE NATURE AND SOURCES OF INVES TMENT, ACQUISITION OR EXPENDITURE, AS THE CASE MAY BE, HAVE NOT BEEN EXPL AINED OR SATISFACTORILY EXPLAINED. THEREFORE, IN THESE CASES, THE SOURCE NO T BEING KNOWN, SUCH DEEMED INCOME WILL NOT FALL EVEN UNDER THE HEAD ''INCOME F ROM OTHER SOURCES'. THEREFORE, THE CORRESPONDING DEDUCTIONS WHICH ARE A PPLICABLE TO THE INCOMES UNDER ANY OF THESE VARIOUS HEADS, WILL NOT BE ATTRA CTED IN THE CASE OF DEEMED INCOMES WHICH ARE COVERED UNDER THE PROVISIONS OF SECTIONS 69, 69A 69B AN 69C OF THE ACT IN VIEW OF THE SCHEME OF THOSE PROVI SIONS. THE SAID DECISION FULLY APPLIES TO THE FACTS OF THE PRESENT CASE.' 1.14 IN VIEW OF THE DIRECT DECISION ON THIS ISSUE OF THE HON'BLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT, IT IS HELD THAT THE AD DITIONAL INCOME OF RS.38 LAC DECLARED BY THE APPELLANT DURING SURVEY IS TO B E ASSESSED AS DEEMED INCOME AND NO SET OFF FROM THAT INCOME IS TO BE ALLOWED. GROUND NO. I, 2 & 3 OF APPEAL ARE AS SUCH REJECTED,' 13 8. THE ASSESSING OFFICER ISSUED A NOTICE UNDER SEC TION 154 OF THE INCOME TAX ACT ON 24.03.2014 POINTING O UT THAT WHILE GIVING APPEAL EFFECT TO THE ORDERS OF CIT (AP PEALS), KARNAL DATED 30.03.2012, A MISTAKE OCCURRED BY WHIC H BUSINESS SET OFF WAS INADVERTENTLY ALLOWED AGAINST THE INCOME SURRENDERED THE SAID MISTAKE WAS PROPOSED TO BE REC TIFIED BY RECOMPUTING THE INCOME OF THE ASSESSEE. IN THESE PROCEEDINGS, THE ASSESSEE RAISED CONTENTIONS, WHICH WERE CONSIDERED AND THE ASSESSING OFFICER PASSED RECTIFI CATION ORDER DISALLOWING THE SET OFF BUSINESS LOSS AGAINST THE INCOME SURRENDERED. 9. THE ASSESSEE CHALLENGED THE ORDER UNDER SECTION 154 OF THE ACT BEFORE THE CIT (APPEALS). THE WRITTEN S UBMISSIONS OF THE ASSESSEE ARE REPRODUCED IN THE APPELLATE ORD ER, IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT THE ORIGI NAL ASSESSMENT UNDER SECTION 143(3) OF THE ACT DATED 30 .12.2009 WAS PASSED AND THE INCOME OF THE ASSESSEE WAS DETER MINED AT RS.29,54,357/-. THE ASSESSEE FURTHER APPEALED BEF ORE THE CIT (APPEALS), WHO HAS GRANTED PART RELIEF TO THE A SSESSEE. THE ASSESSEE, HOWEVER, CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL BUT WITHDREW THE SAME VIDE ORDER DATED 22. 1.2014. NOTICE UNDER SECTION 154 OF THE ACT WAS, HOWEVER, I SSUED ON 24.3.2014. THE ISSUE OF ADDITIONAL INCOME OF RS.38 LACS HAS BEEN CONSIDERED AT ORIGINAL ASSESSMENT STAGE AND TH E ASSESSING OFFICER MADE THE ASSESSMENT IN ACCORDANCE WITH LAW. THERE IS NO MISTAKE APPARENT FROM RECORD. WH ETHER SET OFF ANY LOSS OR OTHERWISE IS TO BE ALLOWED AGAINST SURRENDERED 14 INCOME IS CLEARLY A DEBATABLE ISSUE AND WOULD NOT F ALL UNDER SECTION 154 OF THE ACT. THE LEARNED CIT (APPEALS), HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND D ISMISSED THE APPEAL OF THE ASSESSEE. HIS FINDING IN PARA 5 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER : 5. I HAVE GIVEN CAREFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND THAT THE ASSESSMENT ORDER DATED 30.12.2009 HAS ATTAINED FINALITY AFTER PASSING OF APPELLATE ORDER BY CIT(A), KARNAL ON 30. 03.2012. THE ISSUE OF NOT PERMITTING SETTING OFF THE BUSINESS LOSS WITH THE S URRENDERED INCOME IS A MIXED QUESTION OF FACT AND LAW WHICH HAS BEEN ADJUD ICATION UPON BY THE FIRST APPELLATE AUTHORITY IN THE ORDER DATED 30.03. 2012. IN THE PRESENT ORDER PASSED BY THE ASSESSING OFFICER U/S 28.03.2014 A MI STAKE APPARENT FROM THE RECORD IS BEING RECTIFIED TO THE EXTENT THAT THE FI NDING OF CIT(A) OF NOT PERMITTING SETTING OFF WAS INADVERTENTLY OMITTED. I FIND NO REASON AND INFIRMITY IN THIS ORDER BECAUSE THE FINDINGS GIVEN BY CIT A) ARE CLEAR TO THE EXTENT THAT NO SETTING OFF OF SURRENDERED INCOME AG AINST LOSS IS PERMITTED. IF ANY SUCH FINDINGS ARE OMITTED BY THE ASSESSING OFFI CER WHILE GIVING EFFECT TO THE APPELLATE ORDER, THESE ARE MIS TAKES APPARENT FROM RECORD BECAUSE THE POINTS OF FACT AND LAW HAS BEEN SETTLED BY THE APPELLATE AUTHORITY. THE ASSESSING OFFICER HAS NO OPTION BUT TO GIVE EFF ECT TO THESE FINDINGS. ANY OMISSION OF GIVING EFFECT TO THE APPELLATE FINDINGS IS APPARENT FROM THE RECORD, THE ASSESSING OFFICER WAS FULLY JUSTIFIED I N CORRECTING THE MISTAKE BY INVOKING SECTION 154 OF THE ACT. THE APPELLANT AT T HIS POINT OF TIME NOT PERMITTED TO TAKE ARE ARGUMENTS AGAINST THE FINDING S RECORDED BY CIT( A) IN HIS ORDER BY INDIRECTLY CHALLENGING THE ORDER OF RE CTIFICATION. I FIND NO MERITS IN THE GROUNDS OF APPEAL AND HENCE THE GROUNDS OF APPE AL ARE DISMISSED. 10. AFTER CONSIDERING THE RIVAL CONTENTIONS, I AM NOT INCLINED TO SUSTAIN THE ORDERS OF THE AUTHORITIES B ELOW. THE HON'BLE SUPREME COURT IN THE CASE OF T.S. BALARAM, ITO, COMPANY CIRCLE IV, BOMBAY VS. VOLKART BROTHERS & OT HERS, 82 ITR 50 (SC) HELD AS UNDER : 15 A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. A DECISION ON A DEBATABL E POINT OF LAW IS NOT A MISTAKE APPARENT FROM THE RECORD. 11. THE LEARNED COUNSEL FOR THE ASSESSEE HAS REFER RED TO ORIGINAL ASSESSMENT ORDER DATED 30.12.2009 UNDER SE CTION 143(3) OF THE ACT, COPY OF WHICH IS FILED AT PAGE 5 OF THE PAPER BOOK, IN WHICH THE ASSESSING OFFICER EXAMINED THE E NTIRE ISSUE IN DETAIL AFTER EXAMINING THE BOOKS OF ACCOUNT SO P RODUCED WITH REGARD TO THE SURRENDER OF ADDITIONAL INCOME O F RS.38 LACS. THE ASSESSING OFFICER IN THE COMPUTATION OF INCOME HAS CONSIDERED THE GROSS PROFIT AND REDUCED THE EXPENDI TURE FROM THE PROFIT & LOSS ACCOUNT AND THEN COMPUTED THE INC OME OF THE ASSESSEE (AFTER CONSIDERING THE ADDITIONAL INCOME) AT RS.29,54,357/-. THE ASSESSEE PREFERRED APPEAL BEFO RE THE CIT (APPEALS), WHICH WAS DECIDED VIDE ORDER DATED 30.3. 2012 (PB- 27) AND THE ASSESSEE WITHDREW THE APPEAL BEFORE THE TRIBUNAL VIDE ORDER DATED 22.1.2014 (PB-20). THE COMPUTATIO N OF INCOME BY THE ASSESSING OFFICER CLEARLY SHOWS THAT HE HAS APPLIED MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE HAS COMPUTED THE INCOME OF THE ASSESSEE ACCORDINGLY. E VEN THEREAFTER, THE ASSESSING OFFICER HAD TAKEN UP THE PROCEEDINGS UNDER SECTION 148 OF THE ACT AND ALSO PASSED ORDER UNDER SECTION 143(3)/147 OF THE ACT DATED 18.3.2013 (PB-2 3) AND ASSESSED THE SAME INCOME AS WAS ASSESSED EARLIER VI DE ORDER DATED 30.12.2009 FINDING NO DISCREPANCY IN THE RECO RD. 16 THE QUESTION, THEREFORE, LEFT FOR MY CONSIDERATION WOULD BE WHETHER SET OFF ANY LOSS OR OTHERWISE AS ALLOWED AG AINST SURRENDERED INCOME BY ASSESSING OFFICER CAN BE TAKE N IN PROCEEDINGS UNDER SECTION 154 OF THE ACT. DEFINITE LY, IT WOULD CLEARLY BE A DEBATABLE ISSUE AND AS SUCH, CANNOT BE SUBJECT MATTER OF RECTIFICATION PROCEEDINGS UNDER SECTION 1 54 OF THE ACT. FURTHER WHEN THE MATTER TRAVELLED BEFORE THE CIT (APPEALS) AGAINST ORIGINAL ASSESSMENT ORDER AND REJ ECTION OF THE BOOKS OF ACCOUNT, APPLYING GP RATE AND SURRENDE RED AMOUNT OF RS.38 LACS HAVE BEEN CONSIDERED BY THE CI T (APPEALS) AND THE ORDER OF THE ASSESSING OFFICER HA S BEEN UPHELD. THE ASSESSMENT ORDER AND COMPUTATION OF IN COME HAS THUS BEEN AFFIRMED BY THE CIT (APPEALS). THE CIT ( APPEALS) HAS CO-TERMINUS POWERS TO THAT OF THE ASSESSING OFF ICER AND IF THERE WAS ANY OBJECTION TO THE COMPUTATION OF INCOM E PASSED BY THE ASSESSING OFFICER, THE CIT (APPEALS) COULD H AVE TAKEN COGNIZANCE OF THE SAME AND PASSED THE NECESSARY ORD ER THEREON. THE CIT (APPEALS) AFFIRMED THE ORDER OF T HE ASSESSING OFFICER IN THIS REGARD. THEREFORE, THE A SSESSMENT ORDER DATED 30.12.2009 WOULD MERGE WITH THE APPELLA TE ORDER DATED 30.3.2012. THEREFORE, THE ASSESSMENT ORDER W HICH HAS MERGED WITH THE APPELLATE ORDER CANNOT REMAIN SUBJE CT MATTER OF RECTIFICATION UNDER SECTION 154 OF THE ACT. IT APPEARS FROM THE IMPUGNED ORDER THAT THE ASSESSING OFFICER AFTER LONG DRAWN PROCESS OF REASONINGS AND AFTER EXAMINING REC ORD AND DETAILS HAS PASSED THE IMPUGNED ORDER UNDER SECTION 154/155 OF THE ACT, WHICH IS NOT PERMISSIBLE IN LAW. IT FU RTHER APPEARS THAT SUBSEQUENT ASSESSING OFFICER TRIED TO DIFFER W ITH THE 17 EARLIER ASSESSING OFFICER WHO HAS PASSED THE ORIGIN AL ASSESSMENT ORDER. THEREFORE, THE IMPUGNED ORDER C ANNOT BE SUSTAINED IN LAW. I, THEREFORE, SET ASIDE THE ORDE RS OF THE AUTHORITIES BELOW AND QUASH THE SAME, RESULTANTLY, THE ADDITIONS ARE DELETED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 20 TH JULY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH