THAKKAR POPATLAL VELJI SALES LTD, PANVEL V. DCIT CEN CIR 25, MUMBAI

ITA 3502/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3703 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 18-04-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANISH SANGHVI
• Assessee Lawyers: V V SHASTRI; PRANN KUMAR
• Keywords: Rejection of books of accounts; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI BEFORE SHRI R.K.GUPTA, JM & SHRI P.M.JAGTAP , AM ITA NO. 5743 /MUM/20 1 0 ( ASSESSMENT YEAR : 200 6 - 0 7 ) ACIT, CENTRAL CIRCLE - 25, MUMBAI . VS. M/S THAKKAR POPATLAL VELJI SALES LTD., 41, JESWANI HOUSE, M.G.ROAD, PANVEL - 410 206. PAN NO. : AABCT 7939 D ( APP ELLANT ) .. ( RESPONDENT ) AND C.O. NO. 189 /MUM/20 1 1 (ARISING OUT OF ITA NO. 5743/M/2010) ( ASSESSMENT YEAR :200 6 - 0 7 ) M/S THAKKAR POPATLAL VELJI SALES LTD., 41, JESWANI HOUSE, M.G.ROAD, PANVEL - 410 20 6. VS. ACIT, CENTRAL CIRCLE - 25, MUMBAI PAN NO. : AABCT 7939 D ( APP ELLANT ) .. ( RESPONDENT ) AND ITA NO. 574 4 /MUM/20 10 ( ASSESSMENT YEAR :200 7 - 0 8 ) ACIT, CENTRAL CIRCLE - 25, MUMBAI. VS. M/S THAKKAR POPATLAL VELJI SALES LTD., 41, JESWANI HOUSE, M.G.RO AD, PANVEL - 410 206. PAN NO. : AABCT 7939 D ( APP ELLANT ) .. ( RESPONDENT ) AND ITA NO. 3502 /MUM/20 10 ( ASSESSMENT YEAR :200 8 - 0 9 ) M/S THAKKAR POPATLAL VELJI SALES LTD., 41, JESWANI HOUSE, M.G.ROAD, PANVEL - 410 206. VS. ACIT, CENTRAL CIRCLE - 25, MUMBAI. PAN NO. : AABCT 7939 D ( APP ELLANT ) .. ( RESPONDENT ) AND ITA NO. 1875 /MUM/20 1 2 ( ASSESSMENT YEAR :2008 - 09 ) M/S THAKKAR POPATLAL VELJI SALES LTD., 41, JESWANI HOUSE, M.G.ROAD, PANVEL - 410 206. VS. ACIT, CENTRAL CIRCLE - 25, MUMBAI. PAN NO. : AABCT 793 9 D ( APP ELLANT ) .. ( RESPONDENT ) ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 2 REVENUE BY : MR. MANISH SANGHVI ASSESSEE BY : MR. PRANN KUMAR & MR. V.V.SHASTRI DATE OF HEARING : 1 8 TH APRIL , 2013 DATE OF PRONOUNCEMENT : 8 TH MAY, 2013 O R D E R PER B E NCH : ITA NO S . 5743 & 5 744/M/10 HAVE BEEN FILED BY THE DEPARTMENT WHEREAS ITA NO.3502/M/10 & ITA NO. 1875/M/2012 ALONG WITH C.O.NO. 189/201 1 HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LEANED CIT (A) , MUMBAI RELA TING TO THE ASSESSMENT YEAR S 2006 - 07, 2007 - 08 & 200 8 - 09 . 2 . SINCE THE COMMON ISSUES ARE INVOLVED IN ALL THE CASES, THEREFORE, FOR THE SAKE OF CONVENIENCE, ALL THE CASES HAVE BEEN HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER 3 . FIRST WE WILL TAKE UP APPEAL OF THE DEPARTMENT AND CROSS OBJECTION OF THE ASSESSEE F OR THE ASSESSMENT YEAR 2006 - 07 (I.E. ITA NO.5743/M/10 & CO NO.189/M/11 ) . IN APPEAL OF THE DEPARTMENT, THE DEPARTMENT IS OBJECTING IN DELETING THE ADDITION MADE ON ACCOUNT OF ESTIMATED UNACCOUNTED TURNOVER AND UNACCOUNTED INCOME. IN CROSS OBJECTION, THE ASSE SSEE IS OBJECTING IN NOT HOLDING THAT THE ADDITIONS MADE WERE BEYOND THE SCOPE OF ASSESSMENT MADE UNDER SECTION 153A AND CONFIRMING EH ADDITION OF RS. 6,44,368/ - OUT OF THE TOTAL ADDITION OF RS.95,23,800/ - MADE BY THE AO ON ACCOUNT OF ESTIMATED GROSS PROFIT ON ESTIMATED UNACCOUNTED TURNOVER. ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 3 4 . SINCE THE GROUNDS OF THE DEPARTMENT AND ASSESSEE ARE INTERLINKED, THEREFORE, THEY ARE DISPOSED OF TOGETHER. 5 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF DISTRIBUTOR AND TRADIN G IN CEMENT. A SEARCH OPERATION UNDER SECTION 132 WAS CONDUCTED ON 5 - 6 - 2007 AT THE RESIDENTIAL/BUSINESS PREMISES OF METRO GROUP OF CASES. THE ASSESSEE WAS ONE OF THE GROUP CONCERN AND, THEREFORE, INTER ALIA , COVERED IN SEARCH OPERATION. THE ASSESSEE FILED RETURN IN RESPONSE TO NOTICE UNDER SECTION 153A DECLARING TOTAL INCOME AT RS. 1,52,67,624/ - . THIS INCOME WAS DECLARED BY THE ASSESSEE ORIGINALLY ALSO WHILE FILING RETURN UNDER SECTION 139(1) . THE AO NOTED THAT CERTAIN LOOSE PAPERS WERE FOUND AND SEIZED AND TH EY WERE KEPT IN THE FILE MARKED AS ANNEXURE - A /17 ( VOLUME I & II ) FOR THE PERIOD OF 15 - 1 - 07 TO 31 - 5 - 07 . AO NOTED THAT THE LOOSE PAPER FOUND AND SEIZED WERE IN FORM OF A ROUGH CASH BOOK AND DID NOT CONTAIN COMPLETE DETAILS. THESE PAPERS WERE TALLIED WITH TH E BOOKS OF ACCOUNTS AND IT WAS FOUND THAT SOME OF THE TRANSACTIONS WERE RECORDED IN THE BOOKS OF ACCOUNTS WHILE MANY OF THE TRANSACTIONS AS NOTED IN THESE PAPERS WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS. ON PERUSAL OF THE PAPERS, IT REVEALED THAT THE UNA CCOUNTED TRANSACTIONS WERE IN THE NATURE OF UNACCOUNTED TURNOVER OF THE ASSESSEE. THE LOOSE PAPERS FOUND DURING THE COURSE OF THE SEARCH WERE NOT FOR COMPLETE PERIOD AS THESE DOCUMENTS WERE FOUND FOR THE PERIOD AUGUST 2005 TO SEPTEMBER 2005 AND FROM APRIL 2006 TO APRIL 2007 (EXCEPT JULY 2006) AND ROUGH CASH BOOKS FOR THE PERIOD 15 - 1 - 2007 TO 30 - 5 - 2007. THIS ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 4 CASH BOOKS DID NOT CONTAIN COMPLETE DETAILS. ACCORDINGLY, THE AO HELD THAT THE ONLY COURSE OF ACTION OPEN WAS TO ESTIMATE THE UNACCOUNTED TURNOVER OF THE ASSESSEE. ON THE BASIS OF SEIZED PAPERS BY WHICH UNACCOUNTED TURNOVER WAS FOUND FROM AUGUST 2005 TO SEPTEMBER 2005 AND FROM APRIL 2007 (EXCEPT JULY 2006) . THE TOTAL TURN OVER WAS OF RS. 7.42 CRORES. THE AO OBSERVED THAT ON AN AVERAGE THE UNACCOUNTED TURNOV ER OF THE ASSESSEE WAS RS. 1.65 CRORES PER MONTH I.E. NEARLY 19.80 CRORES PER ANNUM. THE AO FOUND THAT THE ASSESSEE HAD ADOPTED GP RATE FOR VARIOUS YEARS I.E. FOR ASSESSMENT YEAR 2004 - 05 TO ASSESSMENT YEAR 2008 - 09. ACCORDINGLY, BY APPLYING A GP RATE OF 4.81 % AND TAKING ESTIMATED TURN OVER OF RS. 9.80 CRORE, THE AO COMPUTED THE UNACCOUNTED TURNOVER OF RS. 95,23,800/ - FOR ASSESSMENT YEAR 2003 - 04 TO ASSESSMENT YEAR 2007 - 08 EACH. ACCORDINGLY, THE AO ADDED A SUM OF RS. 95,23,800/ - FOR THE YEAR UNDER CONSIDERATION. 6 . THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), BEFORE WHOM DETAILED ARGUMENTS WERE RAISED. RELIANCE WAS PLACED ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SHRI ANIL KUMAR BHATIA VS. ACIT, DECIDED IN ITA NOS.2660 TO 2665/DEL/20 09, VIDE ORDER DATED 1 - 1 - 2010, WHEREIN IT WAS HELD THAT ADDITION CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH. IT WAS ALSO SUBMITTED THAT IT IS SETTLED LAW THAT NO ASSESSMENT CAN BE BASED PURELY ON ASSUMPTION, PRESUMPTION , SURMIS ES, CONJECTURES OR GUESS WORK IN MAKING ASSESSMENT UNDER SECTION ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 5 143(3), ADDITION CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND AND NOT ON THE BASI S OF GUESS WORK AND SUSPICION. FURTHER RELIANCE WAS PLACED IN VARIOUS CASE LAWS MENTIONED IN THE ORDER OF LEARNED CIT(A) AT PAGE 6. IT WAS SUBMITTED THAT IT CAN BE SEEN FROM THE STATEMENT OF EMPLOYEES AND DIRECTORS THAT THE UNACCOUNTED TURNOVER WAS ESTIMATED AT RS. 92 LAKHS FOR THE PERIOD OF FOUR AND - A - HALF MONTHS . THEREFORE, THE ESTIMATION OF TURN OVER OF RS. 92 LAKHS OR ODD CANNOT BE ADOPTED FOR EACH MONTH. IT WAS EXPLAINED THAT DURING THE COURSE OF SEARCH ACTION, REGISTERS MARKED AS ANNEXURE - A - 1 TO 15 WERE FOUND AND SEIZED FROM THE PREMISES OF THE ASSESSEE. THESE REGISTERS CONTA IN DETAILS OF TOTAL DISPATCHES MADE BY THE ASSESSEE FROM THE PERIOD FROM AUGUST 2005 TO SEPTEMBER 200 5 AND FROM APRIL 2006 TO APRIL 2007 (EXCEPT JULY, 2006) . THE REGISTERS CONTAIN DETAILS OF DISPATCHES MADE AGAINST WHICH NO BILLS ARE PREPARED. THE TOTAL VA LUE OF SUCH DISPATCHES IS APPROXIMATELY RS. 98 LAKHS FOR A PERIOD OF 14 MONTHS . THUS, EVEN IF EVERYTHING IS ASSUMED AGAINST THE ASSESSEE THE UNACCOUNTED TURNOVER AS PER THESE REGISTERS AT THE HIGHEST WOULD WORK OUT TO APPROXIMATELY RS. 7 LAKHS PER MONTH. DET AILS OF ENTRIES FOUND RECORDED IN THE REGISTER WERE ALSO FILED. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, AND TAKING INTO CONSIDERATION THE DECISION IN THE CASE OF H.M.ESUFALI H.M. ANDULALI, REPORTED IN 90 ITR 271(SC) , THE CIT( A) HELD THAT THE ADDITION MADE BY THE AO BY ESTIMATING THE TURNOVER WAS NOT JUSTIFIED. THOUGH HE HAS CONFIRMED THE REJECTION OF BOOKS OF ACCOUNTS FOLLOWING THE DECISION OF ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 6 THE HON BLE SUPREME COURT IN THE CASE OF H.M.ESUFALI H.M. ANDULALI (SUPRA) , HOWEVER, IN PARA 7.2.1 AT PAGE 16, LEARNED CIT(A) OBSERVED AS UNDER : - 7.2.1 IN THE APPELLANTS CASE EVIDENCE WAS FOUND DURING THE SEARCH TO SHOW UNACCOUNTED SALES DURING THE PERIOD. HOWEVER, THE AO HAS ESTIMATED THE UNDISCLOSED TURNOVER FOR THIS ACCOUNTING YEAR BASED ON THE ROUGH CASH REGISTERS (A17) FOUND FOR THE PERIOD 15 - 1 - 2007 TO 31 - 5 - 2007 I.E. THE ACCOUNTING PERIOD RELEVANT TO SUBSEQUENT ASSESSMENT YEARS. THE APPELLANTS REPRESENTATIVE VEHEMENTLY ARGUES THAT THE ESTIMATION OF INCOME FOR ASSESSMENT YEAR 2006 - 07 SHOULD BE BASED ON THE RELEVANT MATERIALS SEIZED RELATED TO ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEAR 2006 - 07. THE APPELLANT CONTENDS THAT THE UNACCOUNTED SALES AS PER SIZED DOCUMENTS A1 AND A2 WILL COME AS FOLLOWS : - AUG. 2005 RS. 12,15,577/ - SEPT.200 5 RS.10,17,161/ - THE APPELLANT SUBMITS THAT THE UNACCOUNTED SALES FOR THIS ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEAR 2006 - 07 SHOULD BE ESTIMATED ON THE BASIS OF SEIZED DOCUMENTS A - 1 AND A - 2. 7.3 I FIND MERITS IN THE APPELLANT'S ARGUMENTS. THERE IS SEIZE D MATERIAL TO SHOW THAT THE APPELLANT INDULGED IN UNACCOUNTED SALES DURING THE ACCOUNTING YEAR RELEVANT TO THIS ASSESSMENT YEAR. SO THE ESTIMATION OF UNACCO UNTED SALES SHOULD BE BASED ON THE SEIZED MATERIALS FOUND WHICH ARC RELEVANT TO THIS ASSESSMENT YEAR . THE A. O . I S DIRECTED TO FIND OUT THE UNACCOUNTED SA LES FOR AUG.2005 AND SEPT. 2005 FROM THE SEIZED MATERIAL RELEVANT TO THIS ACCOUNTING YEAR (I.E. AL & A2 OF SE IZED DOCUMENTS) AND FIND OUT THE AVERAGE OF TWO MONTHS AND THE SAME FOR 12 MONTHS AND FIX THAT AMOUNT AS UNACCOUNTED SALES AND APPLY THE GP ACCORDINGLY AND DETERMINE THE INCOME TO BE ASSESSED IN ADDITION TO THE RETURNED INCOME. 7 . NOW, BOTH THE DEPARTMENT AND THE ASSESSEE ARE IN APPEAL HERE BEFORE THE TRIBUNAL. 8 . LEARNED DR STRONGLY OBJECTED T HE DELETION OF ADDITION MADE ON ESTIMATED BASIS. HE PLACED RELIANCE ON THE VARIOUS CASE LAWS I.E. CASE OF GOPAL LAL BHADRUKA VS. DCIT, REPORTED IN (2012) 346 ITR 106 (AP) AND THE DECISION IN THE CASE OF CIT VS. ANIL KUMAR BHATIA, ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 7 DECIDED BY THE HONBLE DEL HI HIGH COURT IN ITA NO.1626/2010 AND OTHER CONNECTED APPEALS , VIDE ORDER DATED 7 - 8 - 2012. IT WAS SUBMITTED THAT THE HON BLE ANDHRA PRADESH HIGH COURT HAS CONFIRMED THAT THE PROCEEDING UNDER SECTION 153A /153C ARE VALID AS THE SCOPE OF ADDITION CAN BE ENHANCE D DURING THE ASSESSMENT PROCEEDING. IT WAS FURTHER SUBMITTED THAT IN THIS CASE, THE ORDER OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE HONBLE HIGH COURT WHERE THE ESTIMATED INCOME WAS CONFIRMED BY THE TRIBUNAL. IT WAS ALSO SUBMITTED THAT THE HON BLE HIGH COU RT HAS CONCLUDED THAT THE AO CAN TAKE INTO CONSIDERATION MATERIAL OTHER THAN WHAT WAS AVAILABLE DURING SEARCH AND SEIZURE OPERATION FOR MAKING AN ASSESSMENT OF UNDISCLOSED INCOME OF ASSESSEE . ATTENTION OF THE BENCH WAS DRAWN ON PARA 17 & 22 OF THE JUDGMENT S, WHICH WAS READ ALSO. SIMILARLY, RELEVANT PARA OF THE ORDER OF THE HONBLE DELHI HIGH COURT WAS ALSO READ BY LEARNED DR. IT WAS FURTHER SUBMITTED THAT THE DECISION RENDERED BY THE SPECIAL BENCH IN THE CASE OF ALL CARGO GLOBAL LOGISTIC LTD. VS. DCIT, REPO RTED IN (2012) 137 ITD 287 (MUMBAI) (SB) , IS NOW NO MORE GOOD LAW AS THE HON BLE DELHI HIGH COURT AND THE HON BLE ANDHRA PRADESH HIGH COURT HAVE HELD THAT THE AO CAN CONSIDER THE MATERIAL OTHER THAN THE MATERIAL FOUND DURING THE COURSE OF SEARCH. IT WAS FUR THER ADDED THAT UNRECORDED TURNOVER FOR FEW MONTHS WERE FOUND DURING THE COURSE OF SEARCH, THEREFORE, THE AO WAS RIGHT IN ESTIMATING THE TURN OVER FOR WHOLE OF THE BLOCK PERIOD WHICH WAS COVERED IN THE SEARCH. RELIANCE WAS ALSO PLACED ON THE DECISION REPOR TED IN 120 ITD 48 (INDORE) . ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 8 9 . IN REPLY, LEARNED COUNSEL OF THE ASSESSEE STATED THAT THERE IS NO DISPUTE THAT THE AO CAN CONSIDER THE MATERIAL OTHER THAN THE MATERIAL FOUND DURING THE COURSE OF SEARCH BUT IN THE PRESENT CASE THERE IS NO OTHER MATERIAL FOU ND BY THE AO AS ONLY MATERIAL WAS FOUND IN RESPECT TO UNRECORDED SALES FOR FEW MONTHS. THEREFORE, THE AO WAS NOT CORRECT IN ESTIMATING THE TURN OVER FOR WHOLE OF THE BLOCK PERIOD COVERED BY THE SEARCH. IT WAS FURTHER SUBMITTED THAT THE TRIBUNAL HAS ALREADY HELD THAT THE BACK DATE ESTIMATION WAS NOT JUSTIFIED AND THE IMPUGNED ADDITION MADE BY THE AO FROM ASSESSMENT YEAR 2003 - 04 & 2005 - 06 HAVE BEEN DELETED BY THE TRIBUNAL . COPY OF THE ORDER OF THE TRIBUNAL HAS ALSO BEEN FILED. IT WAS FURTHER SUBMITTED THAT TH E DISPATCH REGISTER WAS FOUND AND SALES HAVE BEEN ENTERED IN THE DISPATCH REGISTER, HOWEVER, THE BILLS WERE NOT ISSUED AT THAT POINT OF TIME, WHICH WERE TO BE ISSUED ON A LATER STAGE, THEREFORE, EVEN NO ADDITION CAN BE MADE ON THE BASIS OF TURN OVER RECORD ED IN THE DISPATCH REGISTER. ALTERNATIVELY, IT WAS SUBMITTED THAT IF THE ENTRIES RECORDED IN THE DISPATCH REGISTER ARE TAKEN AS UNRECORDED OR UNDISCLOSED TURNOVER, THEN ONLY TO THE EXTENT OF ENTRY RECORDED IN THE DISPATCH REGISTER, THE TURNOVER CAN BE ACCO UNTED F OR, HOWEVER NO ESTIMATION MADE FOR EARLIER PERIOD OR SUBSEQUENT PERIOD AS THERE WAS NO INCRIMINATING MATERIAL WAS FOUND EITHER DURING THE COURSE OF SEARCH OR AFTER THE SEARCH. RELIANCE WAS PLACED ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ALL CARGO GLOBAL LOGISTIC LTD. (SUPRA) . ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 9 10 . WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE SUBMISSIONS ADVANCED AT THE HANDS OF THE LEARNED COUNSEL OF THE ASSESSEE AS WELL AS LEARNED DR FOR THE DEPARTMENT. AFTER CONSIDERING THE RIVAL S UBMISSIONS OF THE PARTIES AND PERUSING THE MATERIAL ON RECORD ALONG WITH THE CASE LAWS, ON WHICH RELIANCE HAVE BEEN PLACED BY BOTH THE PARTIES, WE FOUND THAT THE LEARNED DR HAS PLACED HEAVILY RELIANCE ON THE DECISION OF THE HON BLE ANDHRA PRADESH HIGH COUR T IN CASE OF GOPAL LAL BHADRUKA VS. DCIT, REPORTED IN (2012) 346 ITR 106 (AP) . WE HAVE GONE THROUGH THIS DECISION AND FOUND THAT IN THIS DECISION, THE HON BLE ANDHRA PRADESH HIGH COURT HAS HELD THAT, AS THE PROVISIONS CHAPTER XIV - B ARE NOT APPLICABLE TO T HE PROCEEDINGS UNDER SECTION 153A/153C, THE AO CAN TAKE INTO CONSIDERATION MATERIAL OTHER THAN WHAT WAS AVAILABLE DURING SEARCH AND SEIZURE OPERATION FOR MAKING AN ASSESSMENT OF UNDISCLOSED INCOME OF ASSESSEE. THERE IS NO DISPUTE IN REGARD TO THESE FINDIN GS OF THE HON BLE ANDHRA PRADESH HIGH COURT. THE SPECIAL BENCH OF THE TRIBUNAL , CONSTITUTED AT MUMBAI , IN CASE OF ALL CARGO GLOBAL LOGISTIC LTD. (SUPRA) , HAS ALSO GIVEN SIMILAR FINDING , WHICH ARE AS UNDER : - (A) IN ASSESSMENT THAT ARE ABATED, THE ASSESSIN G OFFICER RETAINS THE ORIGINAL JURISDICTION AS WELL AS JURISDICTION CONFERRED ON HIM UNDER SECTION 153A FOR WHICH ASSESSMENTS SHALL BE MADE FOR EACH OF THE SI X ASSESSMENT YEARS SEPARATELY; (B) IN OTHER CASES, IN ADDITION TO THE INCOME THAT HAS ALREADY BEE N ASSESSED, THE ASSESSMENT UNDER SECTION 153A WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL, WHICH IN THE CONTEXT OF RELEVANT PROVISIONS MEANS - BOOKS OF ACCOUNT, OTHER DOCUMENTS, FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE COURSE OF ORIGINAL ASSESSMENT, AND UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH. ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 10 AFTER GOING THROUGH THE RATIO OF THE AFORESAID DECISION OF THE HON BLE ANDHRA PRADESH HIGH COURT AND THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL , IT IS AMPLY CLEAR THAT THE ASSESSMENT UNDER SECTION 153 WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL WHICH IN THE CONTEXT OF RELEVANT PROVISION, NEEDS BOOKS OF ACCOUNTS, OTHER DOCUMENTS FOUND IN THE COURSE OF SEARCH BUT NOT PRODUCED IN THE ORIGINAL ASSESSMENT AS UNDI SCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH, WHEREAS THE HON BLE ANDHRA PRADESH HIGH COURT HA S TAKEN INTO CONSIDERATION THAT, ANY OTHER MATERIAL ALSO CAN BE TAKEN INTO CONSIDERATION WHICH WAS AVAILABLE TO THE ASSESSING OFFICER, HOWEVER, T HE SAME WAS NOT AVAILABLE DURING THE COURSE OF SEARCH AND SEIZURE. IN OUR CONSIDERED VIEW, BY BOTH THE AFORESAID DECISIONS, IT HAS BEEN SETTLED THAT THE ADDITION CAN BE MADE ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH OR MATERIAL AVAILABLE W ITH THE AO AT THE TIME OF FRAMING OF ASSESSMENT. 11 . IN THE PRESENT CASE, EXCEPT THE MATERIAL WHICH WAS FOUND DURING THE COURSE OF SEARCH I.E. DISPATCH REGISTER IN WHICH THE SALES TURNOVER WAS RECORDED, HOWEVER, THEY WERE NOT ENTERED INTO REGULAR BOOKS O F ACCOUNTS, NEITHER ANY BILLS WERE ISSUED AT THAT POINT OF TIME. THEREFORE, IN OR VIEW, THE ADDITION CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR GATHERED BY THE AO AT THE TIME OF FRAMING ASSESSMENT. HOWEVER, IN THE PRESENT CASE, AS THERE WAS NO MATERIAL FOUND EXCEPT THE DISPATCH REGISTER FOUND DURING THE COURSE OF SEARCH IN WHICH CERTAIN TURNOVER WAS RE CORDED, WHICH WAS ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 11 NOT ENTERED INTO THE REGULAR BOOKS OF ACCOUNTS , NOR ANY BILLS WERE ISSUED IN RESPECT TO TH AT TURNOVER RECORDED IN THE DISPATCH REGISTER. 12 . LEARNED DR STATED THAT IN THE CASE BEFORE THE HON BLE ANDHRA PRADESH HIGH COURT, THE ESTIMATION WAS MADE AND IT HAS BEEN AP PROVED BY THE HONBLE HIGH COURT . HOWEVER, WE FOUND THAT IN THAT CASE SALE OF TRANSACTION OF AHURA HOLDINGS WERE FOUND AND ON THOSE SALES ON - MONEY WAS ESTIMATED. IN THE PRESENT CASE, SALES WERE FOUND RECORDED IN THE DISPATCH REGISTER AND ON THAT SALES ONLY THE PROFIT CAN BE ESTIMATED BUT NOT THE SALE . BEFORE THE HON BLE ANDHRA PRADE SH HIGH COURT ALSO THE ISSUE WAS NOT ON ESTIMATION OF SALES BUT THE ISSUE WAS ON ESTIMATION OF ON - MONEY ON SALES. THEREFORE, FACTS ARE TOTALLY DIFFERENT FROM THE FACTS OF THE CASE IN HAND . AS STATED ABOVE, THE TURN OVER WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AND WAS FOUND RECORDED IN THE DISPATCH REGISTER, THAT TURN OVER CAN ONLY BE TAKEN FOR DETERMINING UNDISCLOSED INCOME ON THAT TURNOVER , THEREFORE, THE PROFIT CAN BE ESTIMATED BUT TURNOVER CANNOT BE ESTIMATED FOR THE PERIOD FOR WHICH NO INCRIMINATI NG DOCUMENT OR MATERIAL WAS FOUND. THEREFORE, WE FOUND THAT THE DECISION OF THE HON BLE ANDHRA PRADESH HIGH COURT DOES NOT SUPPORT THE CASE OF THE DEPARTMENT ON THE FACTS OF THE PRESENT CASE. SIMILARLY, THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANIL KUMAR BHATIA (SUPRA) , ALSO DOES NOT SUPPORT THE CASE OF THE DEPARTMENT ON THE FACTS OF THE PRESENT CASE HERE BEFORE US. RATHER THE DECISION OF THE SPECIAL BENCH OR THE DECISION OF THE HON BLE ANDHRA PRADESH HIGH COURT SUPPORTS THE CASE OF THE ASSESSEE AS THE ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 12 ADDITION CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR DIS COVERED BY THE AO AT THE TIME OF FRAMING ASSESSMENT AS HELD BY THE HON BLE HIGH COURT OF ANDHRA PRADESH . AS STATED ABOVE, NO FU RTHER MATERIAL WAS FOUND DURING THE COURSE OF SEARCH OR DI S COVERED BY THE AO AT THE TIME OF FRAMING OF THE ASSESSMENT, T HEREFORE, THE TURN OVER CANNOT BE ESTIMATED FOR OTHER PERIOD FOR WHICH NO INCRIMINATING DOCUMENT WAS FOUND. ACCORDINGLY, WE DIRECT THE A O TO TAKE THE TURNOVER OF THE ASSESSEE ON ACCOUNT OF UNDISCLOSED TURNOVER FOR THE MONTH OF AUGUST, 2005 TO SEPTEMBER 2005 . A S PER THE ARGUMENTS , THE TURN OVER FOR AUGUST 2005 WAS OF RS. 12,15,577/ - , WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AND FOR SEP TEMBER, 2005, THE TURNOVER WAS OF RS. 10,17,161/ - , WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT, THEREFORE, THIS TURN OVER ONLY HAS TO BE TAKEN AS UNDISCLOSED INCOME AND THE PROFIT ON THIS TURNOVER HAS TO BE COMPUTED BY THE AO. WE DIRECT ACCORDINGLY. IN T HIS WAY, THE GROUNDS OF THE DEPARTMENT FAILS AND THE GROUNDS OF THE ASSESSEE ARE ALLOWED IN PART. 1 3 . NOW, WE WILL TAKE UP THE APPEAL OF THE DEPARTMENT FOR ASSESSMENT YEAR 2007 - 08(I.E. ITA NO. 5744/M/2 010 ) , WHEREIN THE DEPARTMENT IS OBJECTING IN DIRECTIN G THE AO TO DELETE THE ADDITION MADE ON ACCOUNT OF ESTIMATED UNACCOUNTED TURNOVER AND UNACCOUNTED INCOME. ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 13 1 4 . AT THE VERY OUTSET, THE LEARNED COUNSEL OF ASSESSEE STATED THAT, IN FACT, LEARNED CIT(A) HAS NOT DELETED ANY ADDITION BUT HAS DIRECTED TO ALLOW TELESCOPY. THEREFORE, THE GROUND OF THE DEPARTMENT IS INFRUCTUOUS IN NATURE. HOWEVER, LEARNED DR HAS PLACED RELIANCE ON THE ORDER OF THE AO. 1 5 . FACTS OF THE CASE, WE HAVE ALREADY DISCUSSED WHILE DISPOSING THE APPEAL FOR ASSESSMENT YEAR 2006 - 07. AS A R ESULT OF SEARCH, ON THE BASIS OF VARIOUS INCRIMINATING THE MATERIAL FOUND DURING THE COURSE OF SEARCH, THE AO MADE VARIOUS ADDITIONS DURING THE YEAR UNDER CONSIDERATION ALSO. THESE ADDITIONS WERE MADE ON ACCOUNT OF UNRECORDED TURNOVER AND THEREAFTER MAKING ESTIMATED TURNOVER AND APPLYING A GP RATE OF 4.81%, THE AO MADE ADDITION OF RS. 95,23,800/ - . FURTHER ADDITION OF RS. 31,31,340/ - WAS MADE ON THE BASIS OF HIGHEST ACCUMULATED CASH BALANCE AS PER LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH. THE AO FURTHER MADE AN ADDITION OF RS .1,81,67,568/ - ON ACCOUNT OF JEWELLERY FOUND IN THE VARIOUS LOCKERS DURING THE COURSE OF SEARCH. THE AO FURTHER NOTED THAT SHRI YOGESH THAKKAR HAS ALREADY DISCLOSED A SUM OF RS. 1.25 CRORES INCLUDING JEWELLERY OF RS. 20 LAKHS. THEREFOR E, HE REDUCED THE JEWELLERY OF RS. 20 LAKHS FROM THE TOTAL JEWELLERY OF RS.1,81,67,568/ - AND REMAINING JEWELLERY OF RS. 1,61,67,568/ - WAS ADDED IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED JEWELLERY. THE AO ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 14 ALSO NOTED THAT CERTAIN UNACCOUNTED AMOUNT WAS ALSO FOUND TOTALING TO RS. 50,58,000/ - AND THE SAME WAS ALSO ADDED. IN THIS WAY, THE TOTAL ADDITION COMPUTED BY THE AO WAS RS. 3,38,80,368/ - . THE ASSESSEE HAS ALREADY DECLARED UNDER SECTION 132 (4) AT RS. 3,00,00,000/ - . AFTER REDUCING THE AMOUNT OF RS. 3 CRORES, THE AO MADE ADDITION OF RS. 38,80,368/ - WHILE COMPLETING THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION FALLING IN THE BLOCK PERIOD. 1 6 . ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) . LEARNED CIT(A) WITHOUT GOING INTO THE DETAIL FURTHER FOUND THAT THE TOTAL COMPUTATION OF INCOME AT RS. 3,38,80,368/ - IS NOT JUSTIFIED BECAUSE THE AO HAS NOT TAKEN INTO CONSIDERATION THE ADDITION OF RS. 95 LAKHS OR ODD, WHICH WAS MADE BY ESTIMATING TURNOVER OF THE ASSESSEE. THEREFORE, HE WAS OF THE VIEW THAT THE ADDITION OF RS. 50, 58,000/ - MADE ON ACCOUNT OF CASH AVAILABLE WITH THE ASSESSEE SHOULD HAVE BEEN ADJUSTED AGAINST THE PROFIT ON ESTIMATED TURN OVER BECAUSE THAT PROFIT SHOULD HAVE BEEN TREATED BY THE AO AS AVAILABLE WITH THE ASSESSEE. ACCORDINGLY, HE ALLOWED THE TELESCOPY OF RS. 50,58,000/ - . IN THIS WAY, THE ADDITION OF RS. 38,80,368/ - , WHICH WAS LESS THAN THE AMOUNT OF RS. 50,58,000/ - BEING ALLOWED AS TELESCOPY. THEREFORE, THE ADDITION OF RS. 38,80,368/ - WAS DELETED BY THE CIT(A). ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 15 1 7 . NOW, THE DEPARTMENT IS IN APPEAL HERE BEFOR E THE TRIBUNAL. 1 8 . AFTER CONSIDERING THE ORDER OF THE AO AND CIT(A), WE FOUND NO INFIRMITY IN THE FINDING OF THE CIT(A) IN ALLOWING THE TELESCOPY IN RESPECT TO CASH OF RS. 50,58,000/ - AGAINST ESTIMATED PROFIT ON ACCOUNT OF ESTIMATED TURNOVER. WE ARE OF TH E VIEW THAT THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT IF THE AO ESTIMATED TURNOVER AND PROFIT WHICH WAS MORE THAN RS. 50,58,000/ - THEN HE SHOULD HAVE TAKEN INTO CONSIDERATION THAT THE PROFIT EARNED ON ACCOUNT OF UNRECORDED TURNOVER WAS AVAILABLE WITH THE ASSESSEE. THEREFORE, THE CASH FOUND DURING THE COURSE OF SEARCH SHOULD HAVE BEEN ADJUSTED AGAINST THE PROFIT COMPUTED ON ESTIMATED TURNOVER. THEREFORE, WITHOUT GOING INTO DETAIL FURTHER, WE FOUND THAT THE CIT(A) WAS JUSTIFIED IN ALLOWING THE TELESCOPY OF RS. 50,58,000/ - FOUND DURING THE COURSE OF SEARCH AGAINST PROFIT ON ACCOUNT OF ESTIMATED TURNOVER. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) AND THE GROUNDS OF THE DEPARTMENT FAIL. 1 9 . IN APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 (I.E. ITA N O. 3502 /M/1 0 ), THE ASSESSEE IS OBJECTING IN SUSTAINING THE ADDITION O F RS. 15,87,500/ - ON ACCOUNT OF ALLEGED SUPPRESSION OF PROFIT. 20 . FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS FILED RETURN OF RS. 1,83,67,705/ - ON 13 - 10 - 2008 . DURING THE ASSESSMENT PROCEEDING, THE AO NOTED THAT CERTAIN LOOSE PAPERS WERE FOUND AND SEIZED AND THE SAME WERE FILED AS ANNEXURE - A/17 (VOLUME I & II) FOR THE PERIOD 15 - 1 - 2007 TO 31 - 5 - 2007. ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 16 21 . WE HAVE ALREADY DISCUSSED THE FACTS OF THE CASE WHILE DISPOSING THE APPEAL FOR THE ASSESSMENT YEAR 2006 - 07. THE AO MADE THE ADDITION BY ESTIMATING TURNOVER AT RS. 19.80 LAKHS FOR ASSESSMENT YEAR 2003 - 04 TO ASSESSMENT YEAR 2007 - 08 EACH AND APPLIED THE GP RATE OF 4.81 AND IN THIS WAY, THE UNACCOUNTED INCOME WAS COMPUTED AT RS. 95,23,800/ - F OR EACH ASSESSMENT YEAR I.E. FROM ASSESSMENT YEAR 2003 - 04 TO 2007 - 08. SINCE THE SEARCH WAS CONDUCTED ON 5 - 6 - 2007, THEREFORE, UPTO THIS DATE, THE AO ESTIMATED THE TURN OVER AT RS. 3,30 , 00,000/ - AND APPLIED A GP RATE OF 4.81% WHICH RESULTED A PROFIT OF RS. 15, 87,500/ - AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. CIT(A) HAS CONFIRMED THE ACTION OF THE AO. 2 2 . AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD WE FOUND THAT THE ASSESSEE DESERVES TO SUCCEED IN PART. WE HAVE ALREADY GIVE N OUR FINDING WHILE DISPOSING THE APPEAL FOR ASSESSMENT YEAR 2006 - 0 7 , WHEREIN WE HAVE HELD THAT THE ADDITION CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THEREFORE, THE ESTIMATING THE TURNOVER BY THE AO WAS NOT CORRECT. THEREFORE, FOLLOWING THE SAME REASONING, WE DIRECT THE AO TO RECOMPUTE THE TURNOVER OF THE ASSESSEE ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH AND THEN COMPUTE THE PROFIT BY APPLYING GP RATE AS APPLIED BY HIM EARLIER. THE ASSESSEE SHOULD BE ALLOWED AN OPPORTUNITY BEFORE COMPUTING THE PROFIT. WE ORDER ACCORDINGLY. THUS, GROUND RAISED BY THE ASSESSEE IS ALLOWED IN PART. ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 17 2 3 . NOW, WE WILL TAKE UP THE APPEAL OF THE ASSESSEE LISTED UNDER ITA NO. 1875/M/2012 , WHICH IS IN RESPECT TO PENALT Y LEVIED UNDER SECTION 271AAA, RELATING TO ASSESSMENT YEAR 2008 - 09. 2 4 . THE AO LEVIED PENALTY OF RS. 1,79,860/ - UNDER SECTION 271AAA ON THE ESTIMATED PROFIT OF RS. 15,87,500/ - AS THE SAME WAS NOT DISCLOSED BY THE ASSESSEE. IN APPEAL BEFORE THE CIT(A) , THE A CTION OF THE AO WAS CONFIRMED. 2 5 . AFTER CONSIDERING THE RIVAL SUBMISSIONS OF THE PARTIES, WE FOUND THAT ON ESTIMATION OF PROFIT, PENALTY CANNOT BE LEVIED. WE HAVE ALSO DISPOSED OF THE APPEAL OF THE ASSESSEE ON MERIT, WHEREIN WE HAVE HELD THAT THE TURNOVE R CANNOT BE ESTIMATED AS ONLY ADDITION CAN BE MADE ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH. THE TRIBUNAL IN THE CASE OF M/S SHREEJI TRADERS VS. DCIT, DECIDED IN ITA NOS.281 TO 285/MUM/2010, VIDE ORDER DATED 13 - 1 - 2012 FOR THE ASSESSMENT Y EARS 2002 - 03 TO 2006 - 07 , HAS HELD THAT ON ESTIMATED TURNOVER THE PENALTY CANNOT BE LEVIED. COPY OF THE ORDER WAS ALSO FILED. THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL AND TAKING INTO CONSIDERATION THAT WE HAVE ALSO DISAPPROVED THE ACTION OF THE AO, NO TURNOVER CAN BE ESTIMATED WITHOUT ANY MATERIAL, WE CANCEL THE LEVY OF PENALTY . 2 6 . IN RESULT, APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 200 8 - 0 9 (I.E. ITA NO.3502/M/10 ) AND CROSS OBJECTION NO. 189/M/2011 ARE ALLOWED IN PART AND APPEAL IN RESPECT OF PENAL TY LEVIED UNDER SECTION 271AAA OF THE ACT (I.E. ITA NO. 1875/M/2012 ) IS ALLOWED , WHERE AS ITA NO S . 5743,5744, 3502/10, 1875/2012 & CONO.189/201 1 18 APPEALS OF THE DEPARTMENT FOR ASSESSMENT YEARS 2006 - 07 & 2007 - 08 (I.E. ITA NOS. 5743&5744/M/2010 ) ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF MAY . 2013 . SD/ - SD/ - ( P.M.JAGTAP ) ( R.K.GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED : 0 8 /05/ 2013 . PKM , PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - X, MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI