The ITO, Ward-7(1), Ahmedabad V. Shri Pundrik R. Trivedi,HUF, Ahmedabad

ITA 3542/AHD/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57028 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-11-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 24-10-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: G C PIPARA
• Keywords: Gross profit estimation; Gift; Income from undisclosed sources; Revised return
• Section: 143(3); 68; 145

Judgement Text

, , . .. . . .. . , , , , . .. .!' !' !' !' !' !' !' !' , #$ #$ #$ #$ # % # % # % # % IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD BEFORE SHRI G.C.GUPTA, HONBLE V.P. & SHRI A.MOHAN ALANKAMONY, HONBLE A.M.) . ITA NO. 3542/AHD./2008 : ' &' - 2003-2004 ITO, WARD-7(1), AHMEDABAD -VS- PUNDRIK R. TRIVE DI (HUF), ABAD (PAN : AAGHP 7585M) ( () /APPELLANT) ( *+() /RESPONDENT ) () , - # / APPELLANT BY : SHRI SAMIR TEKRIWAL, SR.D.R. *+() , - # / RESPONDENT BY : SHRI G.C.PIPARA, A.R. '. , /0$ / DATE OF HEARING : 24/11/2011 1!& , /0$ / DATE OF PRONOUNCEMENT : 13/01/2012 #2 #2 #2 #2 / ORDER PER SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY T HE ORDER OF THE LD. CIT (A)-XI, AHMEDABAD IN APPEAL NO. CIT(A)-XI/3 69/07-08 DATED 12.09.2008 FOR THE ASSESSMENT YEAR 2003-2004 PASSED UNDER SECT ION 143(3) R.W.S. 263 OF THE I.T. ACT . 2. IN THIS APPEAL, THE REVENUE HAS RAISED SIX GROUN DS, WHEREIN GROUND NOS.5 AND 6 ARE GENERAL IN NATURE AND THEREF ORE, DO NOT SURVIVE FOR ADJUDICATION. GROUND NOS. 1 TO 4 ARE REPRODUCED HEREIN-BELOW:- 1. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN ADMITTING ADDITIONAL M ATERIALS FROM THE ASSESSEE IN CONTRAVENTION OF THE RULE 46A(3) OF THE I.T. RULES 1962. 2. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITI ON MADE TOWARDS ITA NO.3542-AHD-2008 2 LOW GROSS PROFIT TO RS.1,24,335/- FROM RS.8,62,880/ - AND THEREBY ALLOWING A RELIEF OF RS.7,38,545/-. 3. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMED ABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE UNEXPLAIN ED GIFT OF RS.1,37,004/-. 4. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE OF RS.31,49,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDI T U/S 68 OF THE ACT. 3. THE ASSESSEE IS AN H.U.F. ENGAGED IN THE BUSINES S OF IMPORT OF ELECTRONIC ARTICLES AND TRADING AS A WHOLESALER. TH E ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 ON 24.11.2004 DECLARING A LOSS OF RS.47,690/- . THE CASE WAS TAKE N UP FOR SCRUTINY AND THE ORDER WAS PASSED UNDER SECTION 143(3) ON 29.03. 2006 WHICH WAS SUBSEQUENTLY SET ASIDE BY THE HONBLE CIT UNDER SEC TION 263 ORDER DATED 06.03.2007 FOR FRESH ASSESSMENT. THE FRESH ASSESSME NT UNDER SECTION 143(3) R.W.S. 263 OF THE ACT WAS FRAMED BY THE LD. A.O. ON 12.11.2007. 4. AGAINST THIS ORDER, THE ASSESSEE WENT ON APPEAL BEFORE THE LD. CIT(A) AND THE APPELLATE ORDER WAS PASSED ON 12.09. 2008. AGGRIEVED BY THIS ORDER, THE REVENUE IS IN APPEAL BEFORE US WITH THE ABOVE-MENTIONED GROUNDS. 5. GROUND NO.1: THE REVENUE HAS AGITATED IN THIS G ROUND THAT THE LD. CIT(A) HAD ADMITTED ADDITIONAL MATERIALS FROM THE A SSESSEE IN CONTRAVENTION OF RULE 46A(3) OF THE I.T. RULES, 196 2. HOWEVER, ON PERUSING THE APPELLATE ORDER, WE DO NOT FIND THAT T HE LD. CIT(A) HAD INFERRED ANY SUBSTANCE FROM SUCH ADDITIONAL MATERIA LS FOR ARRIVING AT HIS DECISION IN THE APPEAL. THEREFORE, THIS GROUND RAIS ED BY THE REVENUE IS DISMISSED. ITA NO.3542-AHD-2008 3 6. GROUND NO.2 : RESTRICTING THE ADDITION MADE TOWA RDS LOW GROSS PROFIT TO RS.1,24,335/- FROM RS.8,62,880/-. THE LD. A.O. HAD ESTIMATED UNACCOUNTED SALES WITH RESPECT TO M/S.SOUMYA MARKETING RS.2,97,342/- AND WITH RESPE CT TO M/S. MEGHA ENTERPRISES RS.32,55,116/-, BASED ON HIS FOLLOWIN G FINDS: 2.A IN RESPECT OF M/S SAUMYA MARKETING, AS PER THE WORKING GIVEN IN THE ANNEXURE S-S, THERE IS DIFFERENCE IN QUANTIT Y OF ITEMS ACTUALLY SOLD VIS-A-VIS THOSE PURCHASED WHICH IS VALUED AT R S 38,16,947/- BUT CONSIDERING THAT THERE IS CASH SALES OF RS. 35, 19,605/- THE BALANCE AMOUNT OF RS.2,97,342/- CONSTITUTES YOUR UN ACCOUNTED SALES. 2.B SIMILARLY, IN THE CASE OF M/S MEGHA ENTERPRISES , AS PER THE WORKING GIVEN PER ANNEXURE M-S THE DIFFERENCE IN VA LUE AMOUNTS TO RS. 55,66,666/- AND CONSIDERING THE CASH SALES OF R S. 23,11,550/-, THE BALANCE AMOUNT OF RS.32,55,116/- CONSTITUTES YO UR UNACCOUNTED SALES . ALSO KEEP IN MIND THAT IN THIS CASE, ONLY SOME MAJOR ITEMS HAVE BEEN SELECTED AND THIS FIGURE IS I N RESPECT OF THESE MAJOR ITEMS AND THEREFORE, THE ACTUAL SALES W ILL BE MORE IN RESPECT OF THE ENTIRE SALES. 6.1 FINALLY AFTER REJECTING THE BOOKS UNDER SECTION 145 OF THE I.T. ACT, THE AO MADE AN ADDITION OF RS.1,71,560/- WITH RESPE CT TO M/S. SOUMYA MARKETING AND RS.6,91,323/- WITH RESPECT OF M/S. ME GHA ENTERPRISES BY ESTIMATING THE GROSS PROFIT AT 5%. THE ASSESSEE HAD DECLARED A PROFIT @2.98% WITH RESPECT TO SOUMYA MARKETING AND 1.57% W ITH RESPECT TO M/S. MEGHA ENTERPRISES. THE LD. AO MADE THIS AGGREG ATE ADDITION OF RS.8,62,880/-, BASED ON THE FOLLOWING COMPUTATION PARTICULARS SAUMYA MEGHA MARKETING(RS.) ENTERPRISE(RS.) GROSS TURNOVER AS SHOWN 77,68,000.00 1,53,89,465.0 0 ADD: UNACCOUNTED SALES AS 2,97,342.00 32,55,1 66.00 WORKED OUT TOTAL TURNOVER 80,65,342.00 1,86,44,581.00 GROSS PROFIT ESTIMATED AT 4,03,267.10 9,32, 229.05 5% ON TOTAL TURNOVER ITA NO.3542-AHD-2008 4 LESS: GROSS PROFIT ALREADY 2,31,708 2,40,9 06 SHOWN (@2.98%) (@1.57%) DIFFERENCE ADDED BACK RS.1,71,560 RS.6,91 ,323 7. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). THE LD. CIT(A), AFTER EXAMINING THE FACTS, CAME TO THE FOLL OWING CONCLUSION: 3.2.1 COMING TO THE GROUND OF APPEAL NO.3 PERTAINI NG TO THE ESTIMATION OF THE GROSS PROFIT RATE @ 5% RESULTING INTO AN ADDITION OF RS.8,62,880/-. I HAVE CAREFULLY GONE THROUGH THE AS SESSMENT ORDER AS WELL AS SUBMISSION AND IT IS CLEAR THAT WHEN THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) ON 29/03/2006 N O SUCH ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER. MO REOVER, WHILE APPLYING GROSS PROFIT RATE OF 5% NO BASIS OR COMPAR ABLE CASES HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER. EV EN THOUGH THE SHOW CAUSE NOTICE DATED 15/10/2007 ISSUED BY THE AS SESSING OFFICER, THERE IS NO MENTION OF GROSS PROFIT RATE O F 5%. THE APPELLANT HAS SUBMITTED REASONS FOR THE LOW GROSS PROFIT RATE AND IT IS NOT EVEN THE CASE OF THE ASSESSING OFFICER THAT GROSS P ROFIT RATE IS DECLINED IN THIS YEAR AS COMPARED TO EARLIER YEAR. THIS IS FIRST YEAR OF THE BUSINESS OF THE APPELLANT AS SUBMITTED DURIN G THE COURSE OF APPEAL HEARING AND BOOKS OF ACCOUNT OF BOTH PROPRIE TARY CONCERNS ARE AUDITED AND THE TAX AUDIT REPORT HAVE BEEN FURN ISHED ALONGWITH THE RETURN OF INCOME WHICH HAS BEEN MADE PART OF TH E PAPER BOOK BEFORE ME ALSO AND FROM THE PERUSAL OF THE TAX AUDI T REPORT IT IS SEEN THAT THERE ARE NO ADVERSE REMARKS. THEREFORE, IN ABSENCE OF ANY CONCRETE EVIDENCES OR COMPARABLE CASES, THE EST IMATION OF THE GROSS PROFIT RATE @ 5% IS WITHOUT ANY BASIS. 3.2.2. IT IS FURTHER SEEN THAT THE SAID GROSS PROFI T RATE OF 5% HAS BEEN APPLIED BY THE ASSESSING OFFICER EVEN WHILE ES TIMATING THE GROSS PROFIT ON THE TURNOVER SHOWN IN THE BOOKS OF ACCOUNT. WHEN ON THE BASIS OF DIFFERENCE SEPARATE UNACCOUNTED SAL ES HAS BEEN WORKED OUT BY THE ASSESSING OFFICER, THERE IS NO BA SIS FOR ESTIMATING THE GROSS PROFIT RATE FOR THE TURNOVER S HOWN IN THE BOOKS OF ACCOUNT, WHICH IS DULY SUPPORTED BY SALES AND PU RCHASE INVOICES AND OTHER VOUCHERS ETC. EVEN FROM THE PERUSAL OF TH E AUDITED P & L ACCOUNT PLACED ON PAGE-7 PERTAINING TO MEGHA ENTERP RISES AND SAUMYA MARKETING PLACED ON PAGE-22 OF THE PAPER BOO K IT IS SEEN THAT APART FROM SALES AND PURCHASES THE ONLY EXPEND ITURE WHICH HAS BEEN CLAIMED IS RS.1,49,770/- AND R S.41,040/- RESPECTIVELY. AS PER DETAILS GIVEN ON PAGE-8 AND PA GE-23 OF THE PAPER BOOK, THE SAID EXPENDITURE IS PERTAINING TO T HE TRANSPORTATION ITA NO.3542-AHD-2008 5 CHARGES AND THEREFORE, GROSS PROFIT IS DIFFERENCE O F SALES AND PURCHASES AND TRANSPORTATION CHARGES AND THEREFORE, I FIND NO LOGIC IN ESTIMATING THE GROSS PROFIT RATE FOR THE TURNOVE R SHOWN IN THE BOOKS OF ACCOUNT WHICH ARE AUDITED, IN ABSENCE OF A NY SPECIFIC FINDING. THEREFORE, THE ACTION OF THE ASSESSING OFF ICER IN ESTIMATING THE ADDITIONAL GROSS PROFIT ON TURNOVER SHOWN IN TH E BOOKS OF ACCOUNT IS NOT SUSTAINED. 3.2.3. COMING TO THE ACTION OF THE ASSESSING OFFICE R IN ESTIMATING THE GROSS PROFIT ON UNACCOUNTED SALES, AT THE OUTSE T THE UNACCOUNTED SALES AS WORKED OUT BY THE ASSESSING OF FICER OF RS.2,97,342/- IN CASE OF SAUMYA ' MARKETING AND RS. 32,55,116/- IN CASE OF MEGHA ENTERPRISES ARE CONFIRMED IN PRINCIPL E, RESULTING INTO A TOTAL UNACCOUNTED SALES OF RS.35,52,458/-. THE RA TE OF GROSS PROFIT SHOWN IN THE BOOKS OF ACCOUNT IS 2.98% IN CA SE OF SAUMYA MARKETING AND 1.57% IN CASE OF MEGHA ENTERPRISES. T HEREFORE, IT WILL BE LOGICAL TO CONFIRM THE GROSS PROFIT RATE @ 3.5% IN CASE OF SAUMYA MARKETING ON AN UNACCOUNTED SALES OF RS.2,97 ,342/- WORKED OUT BY THE ASSESSING OFFICER WHICH COMES TO RS.10,406/-. IN CASE OF MEGHA ENTERPRISES AN UNACCOUNTED SALES O F RS.32,55,116/- THE GROSS RATE @ 3.5% IS CONFIRMED C ONSIDERING THAT APPELLANT HAS SHOWN GROSS PROFIT @ 1.57% IN THE BOO KS OF ACCOUNT. THEREFORE, ADDITION TO THE EXTENT OF RS.1,13,929/- IS CONFIRMED IN CASE OF MEGHA ENTERPRISES. ACCORDINGLY, OUT OF THE TOTAL ADDITION MADE BY THE ASSESSING OFFICER OF RS.8,62,880/- ADDI TION TO THE EXTENT OF RS,1,24,335/- IS CONFIRMED AND BALANCE AD DITION OF RS.7,38,545/- IS DELETED. ACCORDINGLY, OUT OF THE A DDITION MADE BY THE A.O. OF AN AMOUNT OF RS. 8,62,880/-, AN AMOUNT OF RS. 1,24,335/- PERTAINING TO BOTH THE CONCERNS, IS CON FIRMED WHICH IS TO BE ADDED TO THE INCOME ASSED BY THE A. O. THE ELABO RATE CONTENTION RAISED BY THE APPELLANT REGARDING THE DI FFERENCE BETWEEN THE CASH CREDIT AS SEPARATED ADDED AND HIGH ER AMOUNT SHOWN IN THE REVISED RETURN OF INCOME IS REJECTED A S THERE IS NO LINK BETWEEN THE SAME. ACCORDINGLY, GROUNDS OF APPEAL NO .3 IS PARTLY ALLOWED. 8. THE LD. D.R. VEHEMENTLY ARGUED THAT THE ADDITION MADE BY THE LD. AO WAS IN ORDER AND IT MAY BE SUSTAINED. HE SUBMITT ED THAT THE LD. AO HAD CLEARLY DETECTED THE UNACCOUNTED SALES WITH RES PECT OF SOUMYA MARKETING AND MEGHA ENTERPRISES AS RS.2,97,342/- AN D RS.32,55,116/- ITA NO.3542-AHD-2008 6 AND ESTIMATED 5% ON THE TOTAL TURNOVER AS THE GROSS PROFIT OF THE APPELLANT. HE ARGUED THAT IN THE WHOLESALE BUSINESS OF ELECTRONIC ARTICLES, 5% GROSS PROFIT IS QUITE REASONABLE AND THEREFORE, THE ORDER OF THE LD. AO MAY BE SUSTAINED. 9. THE LD. A.R., ON THE OTHER HAND, SUPPORTED THE F INDINGS OF THE LD. CIT(A) AND PRAYED THAT HIS ORDER MAY BE SUSTAINED. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LD. CIT(A), AFTER EXAMININ G THE ISSUES IN DETAIL, HAD SUSTAINED THE ADDITION TO RS.1,24,335/- FOR THE FOLLOWING REASONS: I) IN THE ORIGINAL ASSESSMENT WHICH WAS COMPLETED U NDER SECTION 143(3) OF THE ACT ON 29.03.2006, NO ADDITIO N WAS MADE BY ESTIMATION OF 5% OF GROSS PROFIT. II) THE LD. AO HAS NOT BROUGHT ANY COMPARABLE CASES TO ARRIVE AT THIS CONCLUSION. III) THE REASONS SUBMITTED BY THE APPELLANT FOR LOW GROSS PROFIT WAS NOT PROPERLY EXAMINED BY THE LD.AO. IV) NO ALLOWANCE WAS GIVEN TO THE FACT THAT THE APP ELLANT WAS IN ITS FIRST YEAR OF BUSINESS. V) THE TAX AUDIT REPORT AND THE AUDIT REPORT SUBMIT TED BY THE APPELLANT DID NOT HAVE ANY ADVERSE REMARKS. VI) THE APPELLANT HAD MAINTAINED PROPER BOOKS OF AC COUNTS AND SALES AND PURCHASE VOUCHERS. ITA NO.3542-AHD-2008 7 10.1 CONSIDERING THESE FACTS, THE LD. CIT(A) REJECT ED THE DECISION OF THE LD. AO IN ESTIMATING 5% OF THE TURNOVER AS THE GROS S PROFIT OF THE APPELLANT. HOWEVER, HE SUSTAINED THE ADDITION AT 3. 5% ON THE UNACCOUNTED SALES ESTIMATED BY THE LD. AO WHICH WOR KS OUT TO RS.1,24,335/- I.E. 3.5% ON RS.2,97,342/- + RS.32,55 ,116/-. THUS, THE LD. CIT(A) HAS CONFIRMED THE GROSS PROFIT RATE OF 3.5% IN THE CASE OF MEGHA ENTERPRISE AND SAUMYA MARKETING ON THE UNACCOUNTED SALES WHEREAS THE ASSESSEE HAD DECLARED THE GROSS PROFIT @ 1.5% A ND 2.98% RESPECTIVELY ON THE DECLARED TURNOVER OF BOTH THE C ONCERNS RESPECTIVELY. THIS APPROACH OF THE LD. CIT(A) DOES NOT SEEM TO BE REASONABLE. ONCE HE HAS JUDICIOUSLY ARRIVED AT A CONCLUSION THAT THE G.P. RATE OF 3.5% IS APPROPRIATE, THEN THE SAME RATE SHOULD BE APPLIED F OR BOTH DECLARED TURNOVER AND UNDISCLOSED TURNOVER OF THE ASSESSEE. THEREFORE, WE HEREBY HOLD THAT THE GROSS PROFIT RATE OF 3.5% SHAL L BE ADOPTED FOR BOTH DECLARED TURNOVER AND UNDISCLOSED TURNOVER FOR MAKI NG THE ADDITIONS. THUS, THE COMPUTATION FOR THE ADDITION SHALL BE MAD E AS STIPULATED BELOW: PARTICULARS SAUMYA MEGHA MARKETING(RS.) ENTERPRISE(RS.) GROSS TURNOVER AS SHOWN 77,68,000.00 1,53,89,465.0 0 ADD: UNACCOUNTED SALES AS 2,97,342.00 32,55,1 66.00 WORKED OUT TOTAL TURNOVER 80,65,342.00 1,86,44,581.00 GROSS PROFIT ESTIMATED AT 2,82,287.00 6,52, 560.00 3.5% ON TOTAL TURNOVER LESS: GROSS PROFIT ALREADY 2,31,708 2,40,9 06 SHOWN (@2.98%) (@1.57%) DIFFERENCE ADDED BACK RS. 50,579 RS.4,11,654 THUS, AN ADDITION OF RS.4,62,233/- (RS.50,579/- + R S.4,11,654/-) IS SUSTAINED. ITA NO.3542-AHD-2008 8 11. GROUND NO.3: ADDITION OF ACCOUNT OF UNACCOUNTED GIF T OF RS.1,37,004/- THE ASSESSEE HAD STATED IN ITS RETURN OF INCOME THA T IT HAS RECEIVED GIFT AMOUNTING TO RS.1,37,004/- ON VARIOUS DATES AS FOLL OWS: SAUMYA MARKETING 1/4/02 CASH GIFT FROM R C TRIVEDI 10001 10/4/02 CASH GIFT FROM J L RASANIA 10001 10/4/02 CASH GIFT FROM C J RASANIA 18500 MEGHA ENTERPRISES 1/4/02 CASH GIFT FROM C J RASANIA 18500 1/4/02 CASH GIFT FROM R C TRIVEDI 40001 26/4/02 CASH GIFT FROM J L RASANIA 40001 TOTAL GIFTS RECEIVED RS.1,37,004/- 11.1 THE LD. AO, AFTER ISSUING A SHOW CAUSE NOTICE, ISSUED SUMMONS TO THE THREE DONORS, NAMELY, R.C.TRIVEDI, C.J. RASANIA AND J. L.RASANIA. HOWEVER, THESE PERSONS FAILED TO BE PRESENT BEFORE THE LD. AO BUT LETTERS WERE SENT CONFIRMING THE GIFTS BY SHRI R.C.TRIVEDI AND SHRI J. L RASANIA. SINCE THE DONORS HAD FAILED TO BE PRESENT BEFORE TH E LD. AO FOR EXAMINATION, THE GENUINENESS OF THE GIFT WAS DOUBTE D AND THE LD. AO MADE THE ADDITION OF RS.1,37,004/- . 12. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WHO, AFTER CONSIDERING THE FACTS, CAME TO THE FOLLOWING CONCLU SION: 4.2 I HAVE CONSIDERED THE FACTS AND SUBMISSION A CCORDINGLY AND SINCE ASSESSING OFFICER HIMSELF HAS OBSERVED IN PAR A 5.2 OF THE ASSESSMENT ORDER THAT A LETTER DATED 10/10/2007 FRO M MR R.C. TRIVEDI AND MR J.L. RASANIA WAS RECEIVED IN HIS OFF ICE ON 24/10/2007 STATING THAT THEY HAD GIVEN THE GIFTS IN CASH. FURTHER THEY ARE CLOSE FAMILY MEMBERS OF THE APPELLANT BEIN G FATHER AND ITA NO.3542-AHD-2008 9 FATHER-IN-LAW AND THEREFORE, I FIND NO LOGIC IN CON FIRMING THE SAID GIFTS, AS UNEXPLAINED, THEREFORE, THE ADDITION PERT AINING TO THESE 2 PERSONS OF RS.1,00,004/- IS DELETED AND THE REMAINI NG GIFTS OF RS.37,000/- AS RECEIVED FROM MR C.J RASANIA, SINCE NO CONFIRMATION HAS BEEN FILED DURING THE COURSE OF AS SESSMENT PROCEEDINGS AS WELL AS APPEAL HEARING. THEREFORE, T HIS GIFTS OF RS.37,000/- IS HELD TO BE UNEXPLAINED. HOWEVER, APP ELLANT HAS RAISED AN ALTERNATE SUBMISSION THAT IF ADDITION OUT OF THE UNACCOUNTED SALES AND PROFIT THEREON IS CONSIDERED, THE SAID GIFT BEING APPLICATION OF THE SAID INCOME, NO SEPARATE A DDITION IS REQUIRED TO BE MADE. SINCE I HAVE CONFIRMED A SEPAR ATE ADDITION OF RS,1,24,335/- PERTAINING TO UNACCOUNTED PROFIT AND THERE BEING NO OTHER INVESTMENT, THE SEPARATE ADDITION FOR THE GIF T OF RS.37,000/- BEING APPLICATION OF THE SAID UNACCOUNTED INCOME, N O SEPARATE ADDITION IS REQUIRED TO BE CONFIRMED. THIS GROUND O F APPEAL IS ACCORDINGLY ALLOWED. 13. THE LD. D.R. SUPPORTED THE ORDER OF THE LD. AO WHEREAS THE LD. A.R. RELIED ON THE FINDINGS OF THE LD. CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS ON RECORD. THE LD. CIT(A) HAD OBSERVED TH AT THE GIFTS ARE BONAFIDE WHICH ARE RECEIVED FROM THE PERSONS WHO H AD RESPONDED TO THE LETTER OF THE LD. AO. FURTHER BOTH THESE PERSONS WE RE CLOSE FAMILY MEMBERS OF THE ASSESSEE BEING FATHER AND FATHER-IN- LAW. THEREFORE, THE ADDITION PERTAINING TO THESE PERSONS AMOUNTING TO R S.1,00,004/- WAS DELETED BY THE LD. CIT(A). HOWEVER, THE AMOUNT OF G IFT OF RS.37,000/- RECEIVED FROM MR. C J RASANIA WAS CONFIRMED. SINCE THE APPELLANT HAD RAISED AN ALTERNATE SUBMISSION FOR GIVING TELESCOPI C EFFECT DUE TO THE ADDITIONS MADE ON UNACCOUNTED SALES AND CONFIRMED B Y THE LD. CIT(A), THE LD. CIT(A) GRANTED SUCH BENEFIT AND NO SEPARATE ADDITION OF RS.37,000/- WAS SUSTAINED. THUS FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE LD . CIT(A) HAS DELIBERATED THE ISSUE IN DETAIL AND ARRIVED AT A FA IR DECISION WHICH DOES ITA NO.3542-AHD-2008 10 NOT REQUIRE ANY INTERFERENCE. THEREFORE, WE DISMISS THIS GROUND RAISED BY THE REVENUE. 15. GROUND NO.4 : ADDITION MADE ON ACCOUNT OF UNEXP LAINED CASH CREDIT UNDER SECTION 68 OF RS.31,49,000/- THE LD. AO HAD OBSERVED CASH DEPOSIT OF RS.18,50,00 0/- IN THE BANK ACCOUNT NO.CA12519 IN CANARA BANK, BHADRA BRANCH IN THE NAME OF SAUMYA MARKETING AND RS.12,99,000/- IN THE BANK ACC OUNT NO.CA 12520 IN CANARA BANK, BHADRA BRANCH IN THE NAME OF MEGHA ENTERPRISE. WHEN THIS FACT WAS CONFRONTED BEFORE THE ASSESSEE, THE A SSESSEE HAD REPLIED THAT SINCE ADDITIONS WERE MADE ALREADY ON ACCOUNT O F CASH CREDIT OF RS.36,63,000/-, WHILE FRAMING THE ASSESSMENT ORDER DATED 29.03.2006, THIS ADDITION WAS NOT WARRANTED. HOWEVER, THE LD,. AO MADE THE ADDITION OF RS.31,49,000/- WITH THE FOLLOWING OBSERVATIONS: I) IN THE CASE OF SOUMYA MARKETING, IT WAS SEEN THA T CASH WAS RECEIVED FROM BOGUS DEPOSITORS IN THE MONTH OF JULY , 2002 BUT THE DEPOSIT IN THE BANK ACCOUNT RELATES TO OTHE R MONTHS. II) CASH RECEIVED FROM BOGUS DEPOSITORS WERE FINALL Y DEPOSITED IN THE ACCOUNT MAINTAINED WITH ORIENTAL BANK OF COM MERCE AND NOT IN CANARA BANK. III) THE ASSESSEE HAD MENTIONED BEFORE THE ADIT(INV ESTIGATION), UNIT-1(1), AHMEDABAD THAT AN AMOUNT OF RS.30 LACS W AS RECEIVED BY HIM BY WAY OF SALE PROCEEDS OF AN ANCES TRAL PROPERTY AND THIS AMOUNT WAS USED FOR IMPORT OF ELE CTRONIC GOODS IN THE NAME OF THE TWO CONCERNS. 15.1 WHEN THESE ISSUES WERE BROUGHT BEFORE THE LD. CIT(A) BY THE ASSESSEE, THIS AMOUNT OF RS.31,49,000/- WAS DELETED , HOWEVER WITH A ITA NO.3542-AHD-2008 11 CAUTION TO AO TO ASCERTAIN THAT THE AMOUNT OF RS.36 ,63,000/- WAS OFFERED BY THE ASSESSEE REMAINS ADDED TO THE RETURNED INCOM E. HIS OBSERVATIONS IN ARRIVING AT THIS DECISION ARE REPRODUCED HEREINB ELOW. 5.2 I HAVE CONSIDERED THE FACTS AND CAREFULLY GONE THROUGH THE SUBMISSION AS WELL AS THE OBSERVATION OF THE ASSESS ING OFFICER AND IT IS CLEAR THAT THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER FOR THE CASH DEPOSITS IN BANK ACCOUNT BUT NOT U/S. 68 AS CASH CREDIT. IT HAS BEEN OBSERVED BY THE ASSESSING OFFIC ER THAT AN AMOUNT OF RS.18,50,000/- HAS BEEN DEPOSITED IN SAUM YA MARKETING AND RS.12,99,000/- IN MEGHA ENTERPRISES, TOTAL AMOUNTING TO RS.31,49,000/-, WHICH HAS BEEN CONSIDE RED BY THE ASSESSING OFFICER AS UNEXPLAINED AND THEREFORE, ADD ED TO THE TOTAL INCOME. THE APPELLANT HAS DRAWN MY ATTENTION TO THE ORIGINAL ASSESSMENT ORDER AS WELL AS REVISED RETURN OF INCOM E PLACED ON PAGE NO.50 TO 52 OF THE PAPER BOOK. IN THE ORIGINAL ASSESSMENT NO ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER FOR THE DEPOSITS OF CASH IN THE BANK ACCOUNT, RATHER IN THE SAID ORD ER DATED 29/03/2006 ASSESSING OFFICE HAS OBSERVED IN PARA-3 THAT ENTIRE LOAN/DEPOSITS WERE ACCEPTED IN CASH. IN THE NOTE AC COMPANYING WITH THE REVISED RETURN OF INCOME IT HAS CLEARLY BE EN MENTIONED THAT 'IT WAS SUBMITTED DURING THE SAID PROCEEDINGS U/S. 263 THAT THE ENTIRE AMOUNT OF DEPOSIT OF RS.36,63,000/-, RECEIVE D IN THE SAID 2 FIRMS, WERE IN CASH AND THE VERY SAME CASH OF RS.36 ,63,000/-, WERE DEPOSITED INTO BANK ACCOUNT NO.12519, CURRENT A/C. IN THE NAME OF SAUMYA MARKETING AND ACCOUNT NO.12520 CURRE NT A/C. IN THE NAME OF MEGHA ENTERPRISE'. SINCE THE ENTIRE AMO UNT OF DEPOSIT OF RS.36,63,000/- HAS BEEN OFFERED FOR TAX IN THE R EVISED RETURN OF INCOME AND EVEN IN THE PRESENT ASSESSMENT ORDER THE TOTAL INCOME HAS BEEN TAKEN AT RS.36,25,450/- AS PER ORDER U/S.1 43(3) DATED 29/03/2006 AND ON THE SAID TOTAL INCOME FURTHER ADD ITION HAS BEEN MADE. THUS, THE TOTAL INCOME OF RS.36,25,450/- INCL UDES THE IMPUGNED ADDITION OF RS.36,63,000/-. THE APPELLANT HAS SUBMITTED THE DETAILS OF THE CASH DEPOSITS IN THE BANK ACCOUN T BEING OUT OF THE CASH CREDITS AS WELL AS CASH SALES. IN ORDER TO VERIFY THE FACTS, THE CASH BOOK WAS PRODUCED BEFORE ME AND THE XEROX COPY OF THE SAID CASH BOOK HAS BEEN KEPT ON RECORD AND FROM THE PERUSAL OF THE SAID CASH BOOK IT IS VERY DEAR THAT THE ENTIRE CASH WHICH HAS BEEN DEPOSITED IN CANARA BANK ON 14/12/2002 AND 16/ 12/2002 AND THE SAID CASH ARE OUT OF CASH SALES AS SHOWN BY THE APPELLANT PRIOR TO SUCH CASH DEPOSITS. EVEN ASSESSING OFFICER IN THE ITA NO.3542-AHD-2008 12 ASSESSMENT ORDER ON PAGE-7 PARA 4.6(B) HAS STATED T HAT IN CASE OF SAUMYA MARKETING THERE IS A CASH SALES OF RS.35,19, 606/- .THEREFORE, IN VIEW OF THESE FACTS, THERE IS NO REA SON TO CONSIDER THE SAID CASH DEPOSITS IN BANK ACCOUNT AS UNACCOUNT ED. SIMILARLY CASH DEPOSITS IN CASE OF MEGHA ENTERPRISE, FROM THE PERUSAL OF THE CASH BOOK IT IS SEEN THAT THE CASH HAS BEEN DEPOSIT ED ON 6/12/2002, 7/12/2002, 8/12/2002. FROM THE PERUSAL OF THE CASH BOOK IT IS SEEN THAT THE SAID CASH HAS BEEN DEPOSIT ED OUT OF DEPOSITS WHICH HAS BEEN RECEIVED IN CASH AND WHICH HAS ALREADY OFFERED IN THE REVISED RETURN OF INCOME AMOUNTING T O RS.23,50,000/- IN CASE OF MEGHA ENTERPRISE. THEREFORE, FOR THE VER Y SAME DEPOSITS WHICH HAS BEEN RECEIVED IN CASH AND OFFERED FOR TAX ATION IN THE REVISED RETURN OF INCOME AND DEPOSITED IN THE BAN K ACCOUNT IN CASH AGAIN CANNOT CONSIDER FOR THE PURPOSE OF ADD ITION AS IT TANTAMOUNT TO DOUBLE ADDITION. THEREFORE, IN VIEW OF THE FACTS, THE ENTIRE ADDITION OF RS.31.49,0007- IS DELETED AS THE SAID CASH DEPOSITS IS PART OF THE REGULAR BOOKS OF ACCOUNT, B OOKS OF ACCOUNTS ARE AUDITED, ALL THE CASH DEPOSITS ARE FORMING PART OF THE CASH BOOK WHERE DAY-TO-DAY CASH BALANCE HAS BEEN DRAWN AND TH E CASH DEPOSITED ARE EITHER OUT OF THE CASH SALES OR THE LOANS RECEIVED IN CASH AND BOTH SUCH SALES AS WELL AS DEPOSITS RECEIV ED IN CASH HAS BEEN OFFERED AND FORMING PART OF THE TOTAL INCOME A ND THEREFORE, NO SEPARATE ADDITION IS WARRANTED AND THUS, ENTIRE ADD ITION OF RS.31,49,000/- IS DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 16. THE LD. D.R. SUPPORTED THE ORDER OF THE LD. AO WHEREAS THE LD. A.R. RELIED ON THE FINDINGS OF THE LD. CIT(A). 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. THE LD.CIT(A) HAS EXAMINED THE ISSUE IN DET AIL AND ALSO HAD PERUSED THE BOOKS OF ACCOUNTS AND THE INVOICES AND VOUCHERS OF THE ASSESSEE. SINCE ALREADY AN ADDITION OF RS.36,63,000 /- WAS MADE IN THE ORIGINAL ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT DATED 29.03.2006, IT IS JUDICIOUSLY HELD BY THE LD. CIT(A ) THAT FURTHER ADDITION OF RS.31,49,000/- WILL TANTAMOUNT TO DOUBLE ADDITION. FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE LD. ITA NO.3542-AHD-2008 13 CIT(A)S ORDER NEED NOT BE INTERFERED AT THIS STAGE . THEREFORE, THIS GROUND RAISED BY THE REVENUE IS ALSO DISMISSED. 18. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. 3 #2 , 1!& 4' ' 13 / 01 /201 2 ! 5 , . SD/- SD/- (G.C.GUPTA) (A.MOHAN ALANKAMONY) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 13/01/2012 #2 #2 #2 #2 , ,, , */6 */6 */6 */6 7#6&/' 7#6&/' 7#6&/' 7#6&/'- -- - 1. () 2. *+() 3. / < 4. <- - 5. 6? */' , , @ 6. B C3 #2 #, D/ , @ TALUKDAR/ SR. P.S.