ACIT, Mathura V. M/s Status Sanitech P.Ltd, Mathura

ITA 381/AGR/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6781 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 10-09-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI JUNEJA
• Keywords: Block assessment; Set aside
• Section: 250; 147; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER IT(SS)A NO.17/AGR/2006 BLOCK PERIOD: 01.04.1996 TO 10.12.2002 M/S. STATUS SANITECH PVT. LTD. VS. ASSTT. C.I.T. , CENTRAL CIRCLE, S-2, SITE-A, INDUSTRIAL AREA, AGRA. MATHURA. (PAN : AAECS 3953 R) . ITA NO.381/AGR/2007 ASST. YEAR: 2003-04 ASSTT. C.I.T., CENTRAL CIRCLE, VS. M/S. STATUS S ANITECH PVT. LTD., AGRA. S-2, SITE-A, INDUSTRIAL AREA, MATHURA. (PAN : AAECS 3953 R). ITA NO.358/AGR/2007 ASST. YEAR: 2003-04 M/S. STATUS SANITECH PVT. LTD., VS. ASSTT. C.I.T. , CENTRAL CIRCLE, S-2, SITE-A, INDUSTRIAL AREA, AGRA. MATHURA. (PAN : AAECS 3953 R) (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI PANKAJ GARGH, ADVOCATE REVENUE BY : SMT. SHEFALI JUNEJA, SR. D.R. ORDER PER P.K. BANSAL, A.M.: SINCE ALL THESE THREE APPEALS, 2 FILED BY THE ASSES SEE AND ONE FILED BY THE REVENUE RELATE TO THE SAME ASSESSEE, THEY ARE BEING DISPOSED OF, F OR THE SAKE OF CONVENIENCE, BY THIS COMMON ORDER. 2 IT(SS)A NO.17/AGR/2006 2. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAIN ST THE ORDER OF THE CIT(A) DATED 30.03.2006 BY TAKING THE FOLLOWING EFFECTIVE GROUND S OF APPEAL :- (4) BECAUSE UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE THE ADDITION MADE FOR SO CALLED DIFFERENCE IN VALUATION OR CLOSING ST OCK IS WRONG, ILLEGAL, ARBITRARY, PERVERSE, AGAINST THE FACTS OF THE CASE AND IS LIAB LE TO BE DELETED. (5) BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPRECIATE WRITTEN SUBMISSIONS FILED BEFORE HIM AND IN SUMMARILY BRUSHING ASIDE THE SAME WHILE NOT GRANTING THE RELIEF CLAIMED BY T HE ASSESSEE AND IN MAKING ENHANCEMENT. (6) BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN READING VARIOUS STATEMENTS RECORDED, IN BETWEEN THE LINES, AND DREW ERRONEOUS INFERENCES SUCH AS THAT ANNEXURE OF STOCK VALUATION WERE HANDED OVER TO NARAYAN SINGH (MALI), THAT NARAYAN SINGH (MALI) WAS LOOKING AFTER WORKING OF THE FACTORY, THAT BHARAT LAL (SUPERVISOR) WAS ASSOCIATED WITH CO UNTING AND VALUATION OF STOCK OF FINISHED GOODS, THAT DISCOUNT OF 50% WAS NOT GIV EN IN ALL SALES BILLS. SUCH OBSERVATIONS ARE ARBITRARY, PERVERSE AND WRONG ON F ACT. (7) BECAUSE THE LEARNED AUTHORITIES ERRED IN IGNORI NG AND DISBELIEVING THE CONTENTS OF AFFIDAVIT FILED DURING THE COURSE OF AS SESSMENT PROCEEDINGS AND THAT TOO WITHOUT PUTTING THE DEPONENT TO CROSS EXAMINATI ON. (8) BECAUSE THE LEARNED AUTHORITIES HAVE ERRED ON F ACTS AND IN LAW IN ESTIMATING THE VALUATION OF STOCK OF FINISHED GOODS RECORDED IN THE PANCHNAMA DURING THE SEARCH IGNORING THAT THE STOCK HAS BEEN VALUED ON THE BASIS OF COST OR MARKET VALUE WHICHEVER IS LOWER AS PER THE CONSISTE NT METHOD OF VALUATION OF STOCK FOLLOWED BY THE ASSESSEE SINCE INCEPTION OF B USINESS. (9) BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX (APEALS) HAS ERRED IN IGNORING THE APPELLANTS OWN PRICE LIST WHICH WAS FO UND AND SEIZED DURING SEARCH ITSELF. AS PER ANNEXURE A-581 PAGE 101 OF SEIZED M ATERIAL. THE VALUATION SHOULD HAVE BEEN DONE AS PER THE PRICE LIST OF THE APPELLA NT AND NOT OF ANY OTHER PARTY HAVING DIFFERENT BRAND NAME MENTOR. MOREOVER THE SAID PRICE LIST IS OF MAXIMUM RETAIL PRICE WHICH INCLUDES MARGIN OF PROFI T OF MANUFACTURER, DEALER, SUB-DEALER, RETAILER AND THE DISCOUNT ALLOWED BY TH EM. 3 (10) BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) INSTEAD OF DELETING THE ADDITION OF RS.1,01,81,207/- MADE BY T HE LEARNED ASSESSING OFFICER ON ACCOUNT OF ALLEGED DIFFERENCE IN VALUATION OF CL OSING STOCK HAS FURTHER ERRED IN MAKING ENHANCEMENT BY RESTRICTING THE RATE OF DISCO UNT ALLOWED TO CUSTOMERS AT 15% AS AGAINST 50% ALLOWED BY THE LEARNED ASSESSING OFFICER. (11) BECAUSE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN RESTRICTING DEDUCTION FOR GROSS PROFIT AT 20% TO AR RIVE AT COST OF STOCKS OF FINISHED GOODS AS AGAINST DISCLOSED AND ACCEPTED GROSS PROFI T OF 25.9%. (12) BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING AN ADDITION OF RS.22,613/- OUT OF ADDITI ON MADE AT RS.47,668/- FOR THE ASSESSMENT YEAR 2001-02 AS UNDISCLOSED INCOME AND H AS FURTHER ERRED IN CONFIRMING AN ADDITION OF RS.17,850/- FOR THE ASSES SMENT YEAR 2002-03 AS UNDISCLOSED INCOME O THE APPELLANT IGNORING THE DIS CLOSURE ALREADY MADE BY THE APPELLANT WHILE FILING THE RETURN FOR BLOCK PERIOD. 3. THE BRIEF FACTS OF THE CASE ARE THAT THERE HAD B EEN SEARCH UNDER SECTION 132(1) CARRIED OUT AT THE PREMISES OF THE ASSESSEE AT S-2, SITE-A, IND USTRIAL AREA, MATHURA ON 10.12.2002. DURING THE COURSE OF SEARCH, INVENTORY OF RAW MATERIAL, SE MI FINISHED GOODS AND FINISHED GOODS WERE PREPARED AS PER ANNEXURE S-1 AND VALUED AS PER ANNE XURE S-2 OF THE PANCHNAMA. RETURN SHOWING UNDISCLOSED INCOME OF RS.5,00,000/- AND RS. 4,25,000/- WAS SURRENDERED ON ACCOUNT OF DIFFERENCE OF CLOSING CASH BALANCE AS ON 31.03.2002 AS PER SEIZED CASH BOOK AND BALANCE OF RS.75,000/- SURRENDERED TO COVER THE UNDISCLOSED TR ANSACTION FOUND IN THE SEIZED RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE OF BRAS S TAPS AND COCKS. THE MAIN RAW MATERIAL IS BRASS WHICH IS PURCHASED FROM THE SUPPLIER WITHIN T HE COUNTRY AND IMPORTS ARE ALSO MADE. THE BUSINESS IS DONE FROM A.Y 2000-01. THE PRICE LIST WAS ALSO SEIZED DURING THE SEARCH. DURING SEARCH, DIRECTOR OF THE COMPANY SHRI BIPIN GOEL WAS NOT PRESENT. SEARCH WAS CONDUCTED IN THE PRESENCE OF SHRI NARAYAN SINGH (MALI) AND PANCHNAMA DRAWN WITH HIS SIGNATURE. THERE IS NO DISPUTE OF THE INVENTORIES OF THE RAW MATERIAL AND SEMI-FINISHED GOODS IN TERMS OF WEIGHT OR VALUATION. DISPUTE ONLY RELATES TO THE RATE ADOPTE D AND VALUATION MADE BY THE REVENUE IN RESPECT 4 OF THE FINISHED GOODS. DURING THE COURSE OF SEARCH , ALONGWITH THE ASSESSEES PRICE LIST OF BRAND NAME PLAYER SOME OTHER PRICE LIST WERE ALSO FOUND AND SEIZED HAVING DIFFERENT BRAND NAMES. WHILE PREPARING THE INVENTORY OF THE FINISHED GOODS , THE ASSESSEE CONTENDED THAT REVENUE HAS ADOPTED THE PRICE LIST OF MENTOR BRAND HAVING THE MAXIMUM SALE PRICE AMONGST ALL THE LIST OF DIFFERENT BRAND NAMES FOUND AND SEIZED DURING THE S EARCH. THE RATE OF THE PRICE LIST OF THE ASSESSEES OWN BRAND WAS NOT ADOPTED. THE A.O. HAS TAKEN THE VALUATION AS PER THE INVENTORY PREPARED BY THE REVENUE AFTER DEDUCTING 50% BEING T HE DISCOUNT ALLOWED AT RS.1,44,58,088/- AND REDUCED BY 25.9% BEING G.P. RATE AS WAS IN THE IMME DIATELY PRECEDING A.Y. AND THUS WORKED OUT THE EXCESS STOCK AT RS.1,01,81,207/- FOR WHICH THE ADDITIONS WERE MADE. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE AND MADE THE ENHANCEMENT IN THE ADDITION WITH REGARD TO THE EXCE SS STOCK BY REDUCING THE MARGIN OF G.P. FROM 25.9% TO 20% AND REDUCING THE DISCOUNT RATE FROM 50 % TO 15% AS PER HIS OBSERVATION GIVEN UNDER PARA NOS.4.1 TO 5 OF THE ORDER WHICH READ AS UNDER :- 4.1 I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ARGUMENTS OF THE LD. REPRESENTATIVE OF THE APPELLANT. I HAVE ALREADY HELD THAT THE INVENTORY OF FINISHED GOODS HAD RIGHTLY BEEN TAKEN. THE DESCRIPT ION OF THE ITEMS FOUND DURING THE COURSE OF SEARCH TALLIED EXACTLY WITH THE NAMES OF THE ITEMS APPEARING IN THE PRICE LIST OF MENTOR BRAND. THE LD. REPRESENTATIVE OF THE APPELLANT HAS BEEN STRESSING THE FACT THAT THE OWN PRICE LIST OF THE A PPELLANT WAS FOUND DURING THE COURSE OF SEARCH AND HENCE SAME SHOULD BE TAKEN AS CORRECT IN VIEW OF THE PROVISION OF SECTION 132(4). AS I HAVE ALREADY DISC USSED, THE PRESUMPTION GIVEN IN SECTION 132(4) WAS APPLICABLE TO THE PRICE LIST OF MENTOR BRAND ALSO SINCE THE APPELLANT HAD NOT GIVEN THE ADDRESS OF PERSONS ALLE GEDLY MANUFACTURING THIS BRAND, THE NATURAL PRESUMPTION WAS THAT THE PRICE L IST WAS APPLICABLE TO THE FINISHED GOODS FOUND DURING THE COURSE OF SEARCH ES PECIALLY IN VIEW OF THE FACT THAT THE DESCRIPTION OF THE ITEMS FOUND DURING THE COURS E OF SEARCH TALLIED EXACTLY WITH THE ITEMS APPEARING IN THIS PRICE LIST. REGARDING T HE SALE PRICE THE DIRECTOR OF THE APPELLANT COMPANY WAS ASKED FOLLOWING QUERY DURING THE COURSE OF HIS STATEMENT RECORDED ON 20.12.2002. (P.145 PAPER BOOK VOL. II) 5 IZU 36 D;K VKI MHYJ FYLV J[KRS GSA RFKK ;G HKH CR K,A FD M.R.P. DK JSV VKI FDL IZDKJ R; DJRS GSA\ MKJ& GK] MHYJ FYLV J[KRK GW FTLS ESA CKN ESA V KIDS LE{K IZLRQR DJ NWXK BL M.R.P. DK JSV MHYJ FYLV LS YXHKX 15% VF/KD GKSRK GSA THIS EXPLAINS THE DIFFERENCE IN THE PRICE LIST OF M ENTOR BRAND FOUND AT ANNEXURE A- 136,/29, 30, 31 AND ANNEXURE A-136/26, 27 AND 28. I T HAS BEEN ARGUED BY THE LD. REPRESENTATIVE OF THE APPELLANT THAT THE PRICES IN THE LIST AVAILABLE AT A-136/26, 27 AND 28 WERE LESS BY 15% IN COMPARISON TO THE PRICE LIST AVAILABLE AT A-136/29, 30 AND 31. IN VIEW OF THE CLARIFICATION GIVEN BY THE D IRECTOR OF THE APPELLANT COMPANY DURING THE COURSE OF RECORDING OF THIS STATEMENT, I T IS CLEAR THAT THE PRICE LIST AVAILABLE A-136/26, 27 AND 28 WAS THE DEALER PRICE LIST AND THE PRICE LIST AVAILABLE A-136/29, 30, AND 31 WAS THE MRP LIST. SI NCE THE PRICE LIST AS PER ANNEXURE A- 136/26, 27 AND 28 WAS DEALER PRICE LIST THE AO SHOULD HAVE ADOPTED THE RATE GIVEN IN THIS LIST AS AGAINST THE HIGHER R ATE ADOPTED BY HIM IN THE PRICE LIST AVAILABLE AT A-136/29, 30 AND 31. I ALSO AGREE WITH THE ARGUMENTS OF THE LD. REPRESENTATIVE OF THE APPELLANT THAT THE GROSS MARG IN SHOULD BE REDUCED FROM THE SELLING PRICE TO ARRIVE AT THE COST. IN THIS CONNEC TION I MAY LIKE TO REFER TO QUERY NO. 37 AND ITS REPLY FROM THE STATEMENT OF THE DIRE CTOR OF THE APPELLANT COMPANY RECORDED ON 20.12.2002 (P145, PAPER BOOK VOL. II) IZU 37 D`I;K CRK,A FD BL O;OLK; ESA VKIDK VIUK MARGIN OF PROFIT FDRUS IZFRKR GKS TKRK GSA\ MKJ BL O;OLK; ESA ESJK MARGIN OF PROFIT I.E. GROSS PROFIT % YXHKX 15 % LS 20 % RD GKS TKRK GS ;G DHKH DHKH MARGIN ?KV C<+ HKH LDRK GSA FT LS ESAUS VIUH BOOK OF ACCOUNTS ESA NKKZ;K GSA THE DIRECTOR OF THE APPELLANT COMPANY HAS THUS HIMS ELF ADMITTED THAT THE GROSS PROFIT VARIES FROM 15% TO 20%. IN VIEW OF THE STATEMENT OF THE DIRECTOR OF THE APPELLANT COMPANY THE AO IS DIRECTED TO ADOPT G P@ 20% FOR COMPUTING THE VALUE OF THE STOCK OF FINISHED GOODS. THIS IS THE M OST BENEFICIAL COURSE FOR THE APPELLANT. 4.2 NOW THE QUESTION WHICH REMAINS TO BE ANSWERED I S REGARDING THE DISCOUNT ALLOWED TO THE DEALERS. THE AO HAS TAKEN THE FIGURE OF 50%. THERE CAN NOT BE ANY DOUBT THAT THE DISCOUNT MUST HAVE BEEN ALLOWED AS A TRADE PRACTICE. THE APPELLANT WAS ASKED TO CLARIFY THE RATE OF DISCOUNT ALLOWED T O THE DEALERS. THE APPELLANT WAS ASKED FOLLOWING QUERY IN THE STATEMENT RECORDED ON 13.1.2003 (P.163, PAPER BOOK VOL. II) IZU 95 D`I;K CRK,A FD ANN.A-60 DS VURXZR I`'B LA[;K 1 LS 167 RD CREDIT NOTE TKS FD VKIDH DEIUH }KJK ISSUE FD;S X;S GKSAA MLLS VKIDK D;K RKRI;Z GSA\ MKJ FOFHKUU IKVHZ DKS TKS EKY HKSTRS GSA ML IJ TKS EXTRA DISCOUNT 8+5=13% NSRSS GSAA MLDH CREDIT NOTE FTLS PARTY A/C CREDIT RFKK DISCOUNT A/C DH DEBIT DJRS GSA TKS FD VF/KDRJ O'KZ DS VUR ESA FN;S TKRS GSAA 6 THUS THE DIRECTOR OF THE APPELLANT COMPANY HAS HIMS ELF POINTED OUT THAT THE DISCOUNT WAS ALLOWED @ 13% AND WAS GIVEN IN THE END OF THE YEAR. THE ADDL. CITY IN HIS LETTER HAS POINTED OUT THAT THE SEIZED MATERIAL A-58/10L WAS NOT SACROSANCT. I HAVE GONE THROUGH THIS PRICE LIST. AS POINTED OUT BY THE AO, THIS PRICE LIST WAS IN RESPECT OF LOW PRICED ITEMS. THE LD. REPRESENTATIVE OF THE APPELLANT HAS AGREED THAT NO DISCOUNT WAS SHOWN IN THE BILLS. HOWEVER IT WAS POINTED OUT THAT THE BILLS WERE RAISED AFTER ALLOWI NG DISCOUNT VARYING FROM 51% TO 55%. THE CONTENTION OF THE APPELLANT EVEN IF ACCEPT ED FOR THE SAKE OF ARGUMENT WITHOUT ADMITTING THE SAME WILL ONLY MEAN THAT A DI SCOUNT WAS ALLOWED IN RESPECT OF THE ITEM MENTIONED IN THE LIST AVAILABLE AT A 58 /101. IT DOES NOT MEAN THAT DISCOUNT WAS ALLOWED AT A UNIFORM RATE ON ALL THE I TEMS. AFTER GOING THROUGH PARA 4.3 OF THE BLOCK ASSESSMENT ORDER I AM OF THE VIEW THAT THE CONTENTION OF THE APPELLANT THAT THE BILLS WERE RAISED AFTER ALLOWING THE DISCOUNT, CAN NOT BE ACCEPTED ON ITS FACE VALUE. IT IS SEEN FROM PARA 4. 3 OF THE BLOCK ASSESSMENT ORDER THAT PAPER NO. 31 OF ANNEXURE A-58 WAS A LETTER IN RESPECT OF BILL NO. 376 DATED 7.2.2002 FOR RS. 17,850/-. THIS LETTER FROM THE APP ELLANT STATED THAT THE ACTUAL SALES WERE OF RS.35,700/- BUT A BILL OF HALF AMOUNT WAS ISSUED AS DESIRED BY THE PARTY. THE APPELLANT HAD FILED A LETTER DATED 24.12 .04 STATING AS UNDER: KINDLY REFER TO S. NO. 31 OF ANNEX. A.-58, THE AMO UNT OF RS.17,850/- BEING ON MONEY IN RESPECT OF BILL REFEREED TO THERE IN DT. 7.2.02 IS COVERED BY SURRENDER OF RS.4,25,000/- MADE IN F.Y. 2001-02 REL EVANT TO A.Y,. 2002-03. THE APPELLANT HAS THUS ACCEPTED THE FACT OF SUPPRES SION OF SALE IN SALE BILL BY 50%. UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE IF A BILL WAS RAISED FOR A LESSER AMOUNT THEN THE SAME WILL REPRESENT SUPPRESS ION OF SALE TO THAT EXTENT. SUCH CONCLUSION IS SUPPORTED BY THE EVIDENCE FOUND DURIN G THE COURSE OF SEARCH. THE CONTENTION OF THE APPELLANT THAT DISCOUNT OF 50% WA S GIVEN ON ALL THE BILLS THEREFORE, CANNOT BE ACCEPTED. CONSIDERING THE OVER ALL FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT DISCOUNT OF 15% TO THE DEALER MAY BE CONSIDERED TO BE NORMAL PRACTICE ESPECIALLY AFTER CONSIDERING THE STATEMENT OF THE DIRECTOR REFERRED TO EARLIER. IT MAY BE ALSO NOTED HERE THAT IN THE PRICE LIST AVAILABLE A- 58/101, THERE IS MENTION OF PACKING CHARGES @ RS.2 PER PIECE. THE SAME WAS NOT HOWEVER, NOT REFLECTED IN ANY OF THE BILLS. THUS IT CAN NOT BE SAID THAT THIS WAS A SACROSANCT PRICE LIST ALL THE TERMS AND CONDITIONS MENTIONED WERE BEING FOLLOWED STRICTLY AND LITERALLY. SO FAR AS THE AFFIDAVIT OF THE DIRECTOR OF THE APPELLANT COMPANY STATING CATEGORICALLY THAT THE PRICE LIST O F MENTOR BRAND DID NOT BELONG TO THE APPELLANT COMPANY IS CONCERNED, THE SAME WAS A SELF SERVING DOCUMENT. IN VIEW OF THE FACT THAT THE DESCRIPTION OF THE ITEMS FOUND DURING THE COURSE OF SEARCH TALLIED EXACTLY WITH THE DESCRIPTION OF THE ITEMS G IVEN IN THE MENTOR PRICE LIST, THE AFFIDAVIT FILED BY THE DIRECTOR OF THE APPELLANT CO MPANY CAN NOT BE ACCEPTED. IT WAS ALSO SUBMITTED BY THE LD. REPRESENTATIVE OF THE APPELLANT THAT THE DESCRIPTION OF THE PRODUCT OF THE APPELLANT COMPANY AS PER THE BILL WISE SUMMARY TALLIED WITH THE DESCRIPTION OF THESE ITEMS AS PER THE APPELLANT S OWN PRICE LIST. THIS FACT ONLY PROVED THAT THE ITEMS SOLD BY WAY OF THESE BILLS WE RE THOSE ITEMS WHICH WERE MENTIONED IN THE APPELLANTS PRICE LIST. THIS HOWEV ER DOES NOT EXPLAIN THE FACT THAT 7 THE DESCRIPTION OF THE FINISHED GOODS FOUND DURING THE COURSE OF SEARCH EXACTLY TALLIED WITH THE DESCRIPTION OF THESE ITEMS AVAILAB LE IN THE PRICE LIST OF THE MENTOR BRAND. THE LD. REPRESENTATIVE OF THE APPELLANT HAS ALSO ARGUED THAT WITH SMALL RAW MATERIAL HOW COULD THE APPELLANT HAVE HELD FINISHED GOODS OF 12 TIMES THE VALUE OF RAW MATERIAL AND WORK IN PROGRESS. HERE IT SHOULD B E KEPT IN MIND THAT THE WEIGHT OF THE FINISHED GOODS FOUND (AS CALCULATED BY THE A PPELLANT ITSELF) WAS NOT VERY EXCESSIVE. THEREFORE, IT CAN NOT BE SAID THAT THE A PPELLANT HAD PRODUCED DISPRONATELY QUANTITY OF FINISHED GOODS. THE VALUE OF THE FINISHED GOODS WAS HIGH BECAUSE OF THE HIGH VALUE ITEMS PRODUCED. THIS ARGU MENTS OF THE APPELLANT IS, THEREFORE, OF NO HELP TO THE APPELLANT. 5. IN VIEW OF THE DISCUSSION MADE ABOVE THE AO IS D IRECTED TO RECOMPUTED THE VALUE OF STOCK OF FINISHED GOODS FOUND DURING THE C OURSE OF SEARCH. THE AO IS DIRECTED TO APPLY THE RATES OF THE ITEMS AS AVAILAB LE IN THE PRICE LIST FOUND AND SEIZED AS PER THE ANNEXURE A136/26, 27 AND 28. THE AO IS DIRECTED TO ALLOW THE DISCOUNT OF 15% AND FURTHER REDUCE THE AMOUNT SO OB TAINED BY 20% ON ACCOUNT OF GROSS MARGIN. THE UNDISCLOSED INCOME SHOULD, THEREF ORE, BE COMPUTED ACCORDINGLY. 4. LD. A.R. BEFORE US VEHEMENTLY CONTENDED THAT THE DIRECTOR SHRI BIPIN GOEL WHO LOOKS AFTER THE ENTIRE BUSINESS WAS NOT PRESENT DURING TH E SEARCH. THE SEARCH WAS CARRIED OUT IN THE PRESENCE OF MALI SHRI NARAIN SINGH WHICH IS EVIDENT FROM THE PANCHNAMA, A COPY OF WHICH IS AVAILABLE AT PAGES 30 TO 33 OF THE PAPER BOOK. SHR I BHARAT LAL IS A MECHANICAL PERSON WHO REPAIRS MACHINES, ETC. AND THE OTHER NAMED PERSON I S A CHARTERED ACCOUNTANT. BOTH THESE PERSONS ARE TECHNICALLY NOT QUALIFIED. ABOUT THE INVENTORY, EVEN THERE ARE NO SIGNATURES OF BOTH THESE PERSONS ON THE INVENTORY PREPARED. ONLY SHRI NARAI N SINGH (MALI) HAD SIGNED THE INVENTORY. MORE THAN 10 STATEMENTS OF SHRI BIPIN GOEL WERE REC ORDED. SUBSEQUENTLY, IN THE VERY FIRST STATEMENT HE STATED THE WEIGHT OF THE RAW MATERIAL, SEMI FINISHED GOODS AND FINISHED GOODS. THE INVENTORY PREPARED BY THE DEPARTMENT DURING SEARCH TALLIED WITH THE BOOKS AS MAINTAINED BY THE ASSESSEE FOR WHICH OUR ATTENTION WAS DRAWN TO PAGES 95 AND 238A OF THE PAPER BOOK. IT WAS STRESSED THAT THE ASSESSEE ALWAYS PREPARES INVENTOR Y IN TERMS OF THE WEIGHT AND WAS VALUING IT ACCORDINGLY. COPY OF THE INVENTORY LIST WAS SUPPLI ED TO THE ASSESSEE ON 20.12.2002 AFTER GREAT PERSUASION WITH THE DEPARTMENT. THE STOCK WAS NEIT HER WEIGHED NOR ACTUALLY COUNTED. QUANTITY 8 AND VALUE ARE HIGHLY EXCESSIVE AND TAKEN ARBITRARIL Y. THE DIRECTOR HAS ALSO FILED AFFIDAVIT BEFORE THE A.O., COPY OF WHICH IS AVAILABLE AT PAGES 141 T O 143 OF THE PAPER BOOK. REFERRING TO PAGES 162 TO 164, LIST OF THE INVENTORY OF THE FINISHED G OODS PREPARED BY THE DEPARTMENT, IT WAS POINTED OUT THAT THE DEPARTMENT HAS CHOSEN PRICE LIST OF M ENTOR BRAND FOR VALUING THE INVENTORY OF THE ASSESSEE. MENTOR BRAND PRICE LIST SHOWS MAXIMUM RATE. THE ASSESSEES PRICE LIST IS DIFFERENT AND THE INVENTORY HAS TO BE VALUED ON THE BASIS OF THE ASSESSEES PRICE LIST AFTER MAKING CERTAIN ADJUSTMENT TO ARRIVE AT THE COST. IT IS AN ADMITTE D FACT THAT THE ASSESSEE WAS REGULARLY VALUING THE STOCK AT COST. DURING SEARCH NEITHER ANY INCRIMINA TING MATERIAL NOR ANY DOCUMENT WAS FOUND INDICATING ANY SUPPRESSED TURNOVER, SALES OUTSIDE B OOKS OF ACCOUNTS. THE A.O. ACCEPTED THE OPENING STOCK, PURCHASES, SALES AND EVEN THE MANUFA CTURING EXPENSES. THE RAW MATERIAL AND SEMI FINISHED GOODS WERE OF RS.11,65,250/- AND THE SALES WERE OF RS.59,35,746/-. A PRUDENT BUSINESSMAN ALWAYS CALCULATES ITS STOCK FOR TURNOVE R. THE VALUATION OF STOCK AT RS.1,32,00,000/- IS NOT CORRECT. ATTENTION WAS DRAWN TOWARDS THE SU BMISSIONS MADE BEFORE THE CIT(A) WHICH IS AVAILABLE AT PAGE 26 OF THE PAPER BOOK. THE PRICE LIST IS THE LIST FOR THE SALE OF GOODS FROM SHOPKEEPER TO CUSTOMER. CUSTOMER GETS THE DISCOUNT FROM SHOPKEEPER. THE ASSESSEES OWN LIST IS THE WHOLESALE PRICE LIST FOR THE SALE OF GOODS T O STOCKIEST/DEALERS ON WHICH ALSO THE ASSESSEE ALLOWS DISCOUNT @ 50% AS IS MENTIONED IN THE PRICE LIST ITSELF. METHOD OF VALUATION OF STOCK AT COST PRICE FOLLOWED BY THE ASSESSEE HAS REGULARLY B EEN ACCEPTED BY THE DEPARTMENT. INVENTORY LIST OF FINISHED GOODS DOES NOT MENTION ANY LOCATIO N WHILE THE INVENTORY OF RAW MATERIAL AND SEMI FINISHED GOODS STATES THE LOCATION OF THE MATERIAL. THE ASSESSEE ALLOWED DISCOUNT @ 50% IS DULY SUPPORTED BY COPY OF THE SALES BILLS WHICH ARE AVAI LABLE AT PAGES 187 TO 200 OF THE PAPER BOOK. ATTENTION WAS ALSO DRAWN TOWARDS THE ASSESSEES OWN PRICE LIST AT PAGE 65, DEBTORS LEDGER AT PAGES 221 TO 231, STATEMENT GIVING THE SALE DETAILS AT PAGE 232 TO 238 OF THE PAPER BOOK. ALL 9 THESE PAPERS WERE SEIZED DURING THE COURSE OF SEARC H. COST OF THE FINISHED STOCK CAME TO RS.24,13,910/- WHEREAS THE STOCK AS PER THE BOOKS I S RS.23,78,845/-. FOR THE WORKING AND THE BIFURCATION, ATTENTION WAS DRAWN TO PAGES 239 TO 24 0 AND 241 TO 243. THE WEIGHT AS PER CALCULATION COMES TO 21593.805 KGS. WHILE AS PER BO OKS THE WEIGHT OF THE INVENTORY WAS 20072.945 KGS. IN THE STATEMENT RECORDED, THE DIRE CTOR HAS ADMITTED BEFORE THE INVESTIGATION WING THAT THE STOCK IS APPROXIMATELY 18000 KGS. TH E AVERAGE WEIGHT COMES TO 20996 KGS. BY TAKING THE TOTAL NUMBER OF CASES AS HAS BEEN TAKEN BY THE DEPARTMENT. EVEN IN THAT CASE ALSO, THE MAXIMUM VALUE WILL COME TO RS.29,13,810/-. THE TOT AL STOCK AS PER THE WORKING AT PAGE 254 COMES TO RS.40,79,060/-. THE A.O. IN THE ASSESSMEN T ODER HAS WORKED OUT THE STOCK AT RS.42,76,818/-. THUS, IT WAS CONTENDED THAT THE DI SCOUNT ALLOWED AT THE RATE OF 50% IS DULY SUPPORTED FROM THE PRICE LIST, SALE BILLS, DEBTORS LEDGER ETC. SIMILARLY, THE GROSS PROFIT IS SUPPORTED BY THE CURRENT AND PAST HISTORY OF THE AS SESSEE. THUS, IT WAS CONTENDED THAT THE ADDITION SO MADE MUST BE DELETED. 5. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF THE CIT(A) AND CONTENDED THAT THE A.O. MADE THE ADDITION AT RS.1,01,81,207/- BEING TH E DIFFERENCE BETWEEN THE VALUE OF THE STOCK TAKEN BY THE A.O. AS PER THE INVENTORY TAKEN BY THE SEARCH PARTY AND WORKED OUT BY HIM AS PER THE BOOKS OF THE ASSESSEE. FOR THIS, ATTENTION WAS DRAWN TO PAGE NO.9 OF THE ASSESSMENT ORDER. IT WAS CONTENDED THAT SEARCH PARTY HAS VALUED THE F INISHED STOCK AS PER THE PRICE LIST FOUND DURING THE COURSE OF SEARCH. THE PLEA TAKEN BY THE ASSESS EE HAS DULY BEEN CONSIDERED BY THE A.O. THE ONUS IS ON THE ASSESSEE THAT THE VALUE ADOPTED BY T HE SEARCH PARTY WAS BASED ON BASIS OF PRICE LIST BELONGING TO THE OTHER MANUFACTURER, NOT THE ASSESS EES. THE PRICE LIST WAS FOUND AND SEIZED FROM THE POSSESSION OF THE ASSESSEE. THEREFORE, THE PRI CES GIVEN IN THE PRICE LIST HAS RIGHTLY BEEN 10 APPLIED IN THE CASE OF THE ASSESSEE. SHE REFERRED TO PAGE 7 & OF THE ASSESSMENT ORDER AND VEHEMENTLY CONTENDED THAT THE CIT(A) HAS EXAMINED A LL THE CONTENTION TAKEN BY THE ASSESSEE AND HAS RIGHTLY ENHANCED THE VALUE OF THE CLOSING STOCK . 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ALONGWITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THERE HAD BEEN SE ARCH IN THE CASE OF THE ASSESSEE. DURING THE COURSE OF SEARCH, INVENTORY OF THE SEMI-FINISHED GO ODS AND RAW MATERIAL AS WELL AS THE FINISHED GOODS WAS INVENTORISED AND VALUED AS PER THE ANNEXU RE S-1 & S-2. THERE IS NO DISPUTE SO FAR THE VALUES SHOWN IN ANNEXURE S-1 WHICH WERE RELATING TO THE SEMI-FINISHED GOODS AND RAW MATERIAL. THE DISPUTE RELATES TO THE VALUATION OF THE FINISHE D GOODS. THE LIST AS SEIZED DURING THE COURSE OF SEARCH IS AVAILABLE AT PAGE NOS.160 TO 164 OF THE P APER BOOK GIVING DETAILS OF THE INVENTORY OF THE FINISHED STOCK FOUND DURING THE COURSE OF SEARCH AT THE BUSINESS PREMISES OF THE ASSESSEE. THE LIST HAS NOT BEEN SUMMARIZED IN THE PRESENCE OF THE DIRECTOR OF THE ASSESSEE COMPANY. IT IS SIGNED BY SOME SAHRI NARAYAN SINGH AND SHRI ASHOK. THE REVENUE HAS WORKED OUT THE VALUE OF THE STOCK BY APPLYING THE PER PIECE RATE AT RS.2,65 ,85,676/-. WE ALSO NOTED FROM ANNEXURE A-58, THE COPY OF WHICH IS FILED BEFORE US, THAT IT CONTA INS THE WHOLESALE PRICE LIST W.E.F. 01.04.2002 GIVING THE NAME OF THE ITEMS, THEIR APPROXIMATE WEI GHT AND THE PRICE PER UNIT AND ALSO CONTAINING THE NAME OF THE ASSESSEE. THIS PRICE LIST IS AVAIL ABLE AT PAGE 165 OF THE PAPER BOOK. IT CONTAINS THE FOLLOWING TERMS AND CONDITIONS ALSO :- 1) DISCOUNT OF 50% SHALL BE ALLOWED 2) PAYMENT SHALL BE WITHIN 30 DAYS 3) RATES ARE EX-FACTORY 4) ALL TAXES AND LEVIES SHALL BE CHARGED EXTRA AS A PPLICABLE 5) PACKING CHARGES SHALL BE EXTRA @ RS.2/- PER PIEC E IN CASE OF BOX PACKING. 6) IN GUNNY BAG PACKING NO CHARGES 7) WEIGHT TOLERANCE UPTO 10% SHALL BE ACCEPTABLE. 11 7. WE ALSO NOTED THAT THERE IS ANOTHER PRICE LIST W HICH CONTAINS THE BRAND NAME MENTOR HALF TURN COLLECTION, MENTIONING ON THE TOP, MAXIMU M RETAIL PRICE EFFECTIVE FROM 01.11.2001, COPY OF WHICH IS AVAILABLE AT PAGE NOS. 169 TO 174 OF THE PAPER BOOK. THIS ALSO FORMS PART OF ANNEXURE A-58. THERE IS ANOTHER PRICE LIST WHICH HAS GOT PRINTED ON IT AS FINEST BATHROOM FITTINGS. THE WORD FINEST WAS CUT OFF AND BY HAND THE WORD MENTOR IS MENTIONED. THIS IS AVAILABLE AT PAGES 175 OF THE PAPER BOOK FORMING PA RT OF ANNEXURE A-58. THERE IS ANOTHER PRICE LIST IN THE NAME OF THE PUNJAB GENERAL MFG. WORKS, 1-2, KRISHNA NAGAR, MATHURA WHICH IS AVAILABLE AT PAGE 176 TO 179, FORMING PART OF ANNEX URE A-58. ONE MORE PRICE LIST RELATING TO PLUMBER BATHROOM FITTINGS EFFECTIVE FROM 01.08.19 95 IS ALSO AVAILABLE AT PAGE NOS.180 TO 186 OF THE PAPER BOOK. THIS ALSO FORMS PART OF ANNEXUR E A-58. ALL THESE PRICE LISTS HAVE THE DIFFERENT RATES PER PIECE HAVING THE SIMILAR NAME O F THE PRODUCT. IN ALL THESE PRICE LISTS, SIZE AND THE PRICE PER UNIT IS GIVEN EXCEPT IN THE CASE OF T HE PRICE LIST ON WHICH THE NAME OF THE ASSESSEE IS MENTIONED. THEREIN, IN THE PRICE LIST, THE APPROXI MATE WEIGHT OF EACH ITEM IS MENTIONED WHICH IS AVAILABLE AT PAGE NO.165 OF THE PAPER BOOK. THE CO NTENTION OF THE ASSESSEE IS THAT THE ITEM INVENTORISED BY THE SEARCH PARTY AT THE TIME OF SEA RCH IN RESPECT OF THE FINISHED GOODS HAS BEEN VALUED AS PER THE PRICES GIVEN IN THE PRICE LIST BE LONGING TO THE MENTOR BRAND. WE VERIFIED THE PER PIECE PRICES TAKEN BY THE SEARCH PARTY IN THE I NVENTORY LIST GIVEN AT PAGE NO.168 ON TEST BASIS AND WE NOTED THAT THE PRICE HAS BEEN TAKEN FROM THE PRICE LIST OF MENTOR BRAND AVAILABLE AT PAGE NOS.169 TO 171 OF THE PAPER BOOK. WE ALSO NOTED TH AT THE PRICE LIST OF MENTOR BRAND RELATES TO THE RETAIL PRICELIST WHILE THE PRICE LIST OF STATUS SANITECH IS A WHOLESALE PRICE LIST AND FURTHER TO THAT ON THE PRICE LIST ITSELF IT HAS BEEN MENTIONE D THAT A DISCOUNT OF 50% SHALL BE ALLOWED. THIS FACT HAS NOT BEEN DENIED BEFORE US BY THE LD. D.R. THIS IS A FACT THAT THE ASSESSEE WAS NOT MANUFACTURING MENTOR BRAND OF BATHROOM FIXTURES. EVEN IT WAS NOTED THAT THE CONTENTION OF 12 THE DEPARTMENT THAT THE ASSESSEE WAS DEALING IN THE BATH ROOM FITTINGS OF MENTOR BRAND, THE ASSESSEE WAS MANUFACTURING THE BATH ROOM FITTINGS. THE PRICE LIST OF WHICH IS AVAILABLE AT PAGE NO.165 OF THE PAPER BOOK. THEREFORE, THE PRICE AS GIVEN IN THE PRICE LIST BELONGING TO THE ASSESSEE SHOULD HAVE BEEN TAKEN INSTEAD OF THE PRIC E LIST BELONGING TO THE OTHER MANUFACTURER. THIS FACT IS ON RECORD THAT DURING THE COURSE OF SE ARCH ALONGWITH THE ASSESSEES PRICE LIST, PRICE LISTS BELONGING TO OTHER BRANDS WERE ALSO FOUND AND SEIZED. WE ALSO NOTED THAT FROM THE COPY OF THE BILLS WHICH ARE AVAILABLE AT PAGES 187 TO 220 A S WELL AS THE COPY OF THE LEDGER SEIZED AS ANNEXURE A-56 AVAILABLE AT PAGE NOS.221 TO 231 THAT THE ASSESSEE HAS SOLD THE FINISHED GOODS ITEMS AT THE PRICE GIVEN IN THE WHOLESALE PRICE LIS T AVAILABLE AT PAGE 165 AFTER ALLOWING A DISCOUNT AS MENTIONED IN THE TERMS AND CONDITIONS. THIS FAC T IS ALSO DULY VERIFIED FROM THE BILLS. COPY OF THE BILLS ALSO CONFIRM THE LIST OF THE PRICE LIST B ELONGING TO THE ASSESSEE AS THE COPY OF THE BILLS A ND THE WHOLESALE PRICE LIST SEIZED HAS THE SAME PHONE NUMBER AND THE ADDRESS. THESE BILLS ARE CO- RELATED WITH THE COPY OF THE LEDGER SEIZED AS ANNEX URE A-56, THE COPY OF WHICH ARE FILED BEFORE US. IN OUR OPINION, THE SEARCH PARTY WAS NOT CORRE CT IN VALUING THE SEIZED ITEMS ON THE BASIS OF THE PRICE LIST BELONGING TO THE OTHER MANUFACTURER MERE LY ON THE BASIS THAT THE PRICE LISTS OF THE OTHER MANUFACTURERS ARE SEIZED FROM THE POSSESSION OF THE ASSESSEE. THERE IS NO FINDING EITHER IN THE INVENTORY LIT PREPARED AS ANNEXURE S-2 THAT THE ITE M SEIZED DURING THE COURSE OF SEARCH FROM THE FACTORY OF THE ASSESSEE HAS THE BRAND NAME MENTOR SO THAT IT CAN BE VALUED AT THE PRICES WHICH ARE APPLICABLE TO THE MENTOR PRODUCT. IN OUR OPI NION, THREE ARE DIFFERENCE IN THE QUALITY OF DIFFERENT PRODUCTS CARRYING OUT THE SAME FUNCTION. EVEN THERE IS DIFFERENCE IN THE PRICES IN THE PRODUCT MANUFACTURED BY DIFFERENT MANUFACTURERS. N O EVIDENCE OR MATERIAL WAS BROUGHT TO OUR KNOWLEDGE WHICH MAY PROVE THAT THE ASSESSEE HAS SOL D ITS PRODUCTS AT THE PRICES AT WHICH THE MENTOR BRAND ITEMS WERE SOLD. EVEN THOUGH THE BO OKS OF ACCOUNTS OF THE ASSESSEE WERE DULY 13 SEIZED, THE SEARCH PARTY SHOULD HAVE VALUED THE INV ENTORY FOUND AS PER THE PRICE LIST OF THE ASSESSEE. IN ACCORDANCE WITH THE METHOD OF ACCOUNT ING REGULARLY FOLLOWED BY THE ASSESSEE, THE ASSESSEE WAS VALUING THE CLOSING STOCK AT THE COST REGULARLY AND THIS FACT HAS NOT BEEN DENIED BY THE A.O. THE ASSESSEE HAS WORKED OUT THE VALUE AS PER THE PRICE LIST GIVEN AT PAGE NO.165 AND SEIZED DURING COURSE OF SEARCH BELONGING TO THE PRO DUCT MANUFACTURED BY THE ASSESSEE WHICH IS AVAILABLE AT PAGES 241 TO 243 WHICH WAS FILED BEFOR E THE AUTHORITIES BELOW AND WAS ALSO TEST CHECKED BY US. WE NOTED THAT THE ASSESSEE HAS APPL IED THE RATES AS PER THE WHOLESALE MAXIMUM PRICE LIST OF THE ASSESSEE SEIZED DURING THE COURSE OF SEARCH AND THE WHOLESALE MAXIMUM PRICE VALUE OF THE SEIZED MATERIAL COMES TO RS.65,15,277/ - AND IF A DISCOUNT GIVEN @ 50% AS IS MENTIONED IN THE PRICE LIST THE VALUE OF THE FINISH ED STOCK INVENTORISED DURING THE COURSE OF SEARCH WILL BE RS.32,57,638/-. THIS VALUE REPRESENTED THE SALE PRICE OF THE FINISHED STOCK AS HAS BEEN FOUND DURING THE COURSE OF SEARCH. WE ALSO NOTED H AT THE ASSESSEE WAS CONSISTENTLY VALUING THE FINISHED STOCKS AT COST AND IN THE IMMEDIATELY PREC EDING A.Y. 2002-03, THE G.P. HAS BEEN SHOWN BY THE ASSESSEE @ 25.9% AS HAS BEEN MENTIONED BY T HE A.O. IF THE SAME G.P. IS APPLIED, THE COST OF THE INVENTORY WILL FURTHER BE REDUCED BY RS .8,43,728/- AND THE COST OF THE INVENTORY SO FOUND AS ON THE DATE OF THE SEARCH WILL BE RS.24,13 ,910/-. THE SAID VALUE IS DULY SUPPORTED BY THE COST WORKED OUT BY THE ASSESSEE ON THE BASIS OF WEIGHT OF THE ITEMS FOUND DURING THE COURSE OF SEARCH. THE ASSESSEE HAS WORKED OUT THE SAME AT RS.23,38,293/- AS PER THE WORKING GIVEN AT RS.248 TO 250 OF THE PAPER BOOK. THE VALUE OF THE RAW MATERIAL AND WORKING SO SEIZED WAS RS.11,65,250/-. THE STOCK IN ANY CASE FOR THE RAW MATERIAL AND THE FINISHED INVENTORY WILL NOT EXCEED RS.42,76,881/- AS HAS BEEN WORKED OUT BY THE A.O. BY APPLYING A G.P. RATE OF 25.9% AS GIVEN AT PAGE 9 OF THE ASSESSMENT ORDER. THUS, IN OUR OPINION, THERE WILL NOT BE ANY EXCESS STOCK FOUND DURING THE COURSE OF THE SEARCH WHICH C AN BE ADDED UNDER SECTION 69 OF THE ACT. WE 14 ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND D ELETE THE ADDITION MADE ON ACCOUNT OF DIFFERENCE IN THE VALUATION OF THE CLOSING STOCK. 8. WE NOTED THAT THERE IS ANOTHER ISSUE ALSO INVOLV ED IN THIS APPEAL RELATING TO THE SUSTENANCE OF THE ADDITION OF RS.22,613/- FOR THE A.Y. 2001-02 AND RS.17,850/- FOR THE A.Y. 2002-03 AS UNDISCLOSED INCOME OF THE ASSESSEE. 9. AFTER HEARING THE RIVAL SUBMISSIONS AND GOING TH ROUGH THE ORDERS OF THE TAX AUTHORITIES BELOW, WE NOTED THAT THESE ADDITIONS HAS RIGHTLY BE EN SUSTAINED BY THE CIT(A) AS THE ADDITIONS ARE BASED ON THE BASIS OF THE MATERIAL SEIZED AS AN NEXURE A-53 (SL. NO.86) AND ANNEXURE A-58 (PAPER BOOK PAGE NO.31). NO COGENT MATERIAL OR EVI DENCE WAS BROUGHT ON RECORD BY THE LD. A.R. WHICH MAY WARRANT OUR INTERFERENCE IN THE ORDER OF THE CIT(A). WE ACCORDINGLY DISMISS THIS GROUND. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NOS.381 & 358/AGR/2007 11. THESE CROSS APPEALS HAVE BEEN FILED BY THE REVE NUE AND THE ASSESSEE RESPECTIVELY AGAINST THE ORDER OF THE CIT(A) DATED 28.03.2007. THE A.O. ISSUED NOTICE UNDER SECTION 148 FOR THE A.Y. 2003-04 AFTER NOTING THAT DURING THE COURSE OF SEAR CH CARRIED OUT ON 10.12.2002 EXCESS STOCK WAS FOUND FROM THE POSSESSION OF THE ASSESSEE FOR WHICH THE ADDITION WAS MADE AT RS.1,01,81,207/- AND ENHANCED BY THE CIT(A) AT RS.1,30,98,859/-. TH E A.O. WAS OF THE VIEW THAT THE ASSESSEE HAS 15 NOT SHOWN THE SALES OF THE SAID STOCK DURING THE YE AR ENDED ON 31.03.2003 NOR HAS SHOWN THE SAID AMOUNT AS CLOSING STOCK AS ON 31.03.2003 AND ULTIMA TELY COMPLETED THE ASSESSMENT MAKING THE ADDITION BY APPLYING THE G.P. RATE @ 25% ON UNACCOU NTED STOCK CONFIRMED BY THE CIT(A). WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) UPHELD THE VALIDITY OF THE PRICEEDINGS UNDER SECTION 147 BUT DIRECTED THE A.O. TO APPLY TH E G.P. RATE @ 20%. BOTH THE PARTIES BEING AGGRIEVED, CAME IN APPEAL BEFORE US. 12. SINCE WE HAVE ALREADY DELETED THE ADDITION BEIN G MADE DURING THE BLOCK ASSESSMENT ON ACCOUNT OF UNACCOUNTED STOCK, THE QUESTION OF ANY A DDITION BEING MADE BY WAY OF G.P. ON THE EXCESS STOCK DOES NOT SURVIVE AND THE ACTION TAKEN BY THE A.O. WILL NOT BE VALID. WE ACCORDINGLY DELETE THE ADDITION SO MADE IN THE A.Y. 2003-04. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D, WHILE THAT OF THE REVENUE STANDS DISMISSED. 14. IN THE RESULT, IT(SS)A NO.17/AGR/2006 OF THE AS SESSEE IS PARTLY ALLOWED, ITA NO.381/AGR/2007 OF THE REVENUE IS DISMISSED AND ITA NO.358/AGR/2007 OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 25.06.2010) . SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 25 TH JUNE, 2010. PBN/* 16 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY