M/s Munshi Ram Walaiti Ram, Chandigarh V. ACIT, Chandigarh

ITA 42/CHANDI/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0007 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 11-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Income from undisclosed sources; Loose papers; Document seized; Opportunity of being heard; Principle of natural justice; Peak credit; Non-deduction of tax; Reasonable cause; Documents seized
• Section: 69C; 273B; 143(3); 133A; 153A; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 41/CHD/2013 ASSESSMENT YEAR: 2005-06 M/S MUNSHI RAM WALAITI RAM, VS. THE ACIT, CENTRAL C IRCLE-II CHANDIGARH CHANDIGARH PAN NO. AAFFM7631J ITA NO. 42/CHD/2013 ASSESSMENT YEAR: 2006-07 M/S MUNSHI RAM WALAITI RAM, VS. THE ACIT, CENTRAL C IRCLE-II CHANDIGARH CHANDIGARH PAN NO. AAFFM7631J ITA NO. 43/CHD/2013 ASSESSMENT YEAR: 2007-08 M/S MUNSHI RAM WALAITI RAM, VS. THE ACIT, CENTRAL C IRCLE-II CHANDIGARH CHANDIGARH PAN NO. AAFFM7631J ITA NO. 222/CHD/2013 ASSESSMENT YEAR: 2007-08 THE DCIT, CENTRAL CIRCLE-II, VS. M/S MUNSHI RAM WAL AITI RAM, CHANDIGARH CHANDIGARH PAN NO. AAFFM7631J ITA NO. 44/CHD/2013 ASSESSMENT YEAR: 2008-09 M/S MUNSHI RAM WALAITI RAM, VS. THE ACIT, CENTRAL C IRCLE-II CHANDIGARH CHANDIGARH 2 PAN NO. AAFFM7631J ITA NO. 45/CHD/2013 ASSESSMENT YEAR: 2009-10 M/S MUNSHI RAM WALAITI RAM, VS. THE ACIT, CENTRAL C IRCLE-II CHANDIGARH CHANDIGARH PAN NO. AAFFM7631J & ITA NO. 223/CHD/2013 ASSESSMENT YEAR: 2009-10 THE DCIT, CENTRAL CIRCLE-II, VS. M/S MUNSHI RAM WAL AITI RAM, CHANDIGARH CHANDIGARH PAN NO. AAFFM7631J (APPELLANT) (RESPONDENT) APPELLANT BY : SH. NEERAJ JAIN RESPONDENT BY : SH. MANOJ MISHRA DATE OF HEARING : 09.03.2016 DATE OF PRONOUNCEMENT : 29.04.2016 . ORDER PER H.L.KARWA, VP THESE SEVEN APPEALS (05 PREFERRED BY THE ASSESSEE A ND 02 BY THE REVENUE) INVOLVING CERTAIN COMMON ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3 2. FIRSTLY, WE WILL TAKE UP APPEAL OF THE ASSESSEE IN ITA NO. 41/CHD/2013 RELATING TO ASSESSMENT YEAR 2005-06. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN NOT GIVI NG THE PROPER OPPORTUNITY OF HEARING WHICH IS AGAINST THE NATURAL JUSTICE. 2. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMI NG THE ADDITION MADE U/S 153A(1)(B) R.W.S. 143(3) OF I.T. ACT, 1961 WHICH IS NOT AS PER THE PROVISIONS OF THE ASSESSMEN T IN SEARCH CASES. 3. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMI NG THE ADDITION OF RS. 1,20,523/- U/S 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE ON INTEREST PAYMENTS TO DIFFERENT PERSONS. 3. AT THE TIME OF HEARING OF THE APPEAL, SHRI NEERAJ JAIIN, LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS FOR GROUND NOS. 1 & 2 OF THE APPEAL AND, HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 4. GROUND NO.3 OF THE APPEAL RELATES TO ADDITION OF RS. 1,20,523/- U/S 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'TH E ACT'). AS PER PARA 5 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER OBSERVED TH AT ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON INTEREST PAYMENT IN THE FOLLOWING CASES:- S.NO. NAME OF THE PERSONS INTEREST PAID (IN RS.) 1 ANITA AGGARWAL 89361 2 BHUPINDAER SAIN, HUF 21375 3 RAJ KUMAR JINDAL 1000 4 RAM CHAND AGGARWAL 6108 4 5 RITU AGGARWAL 15975 6 RUPAK AGGARWAL 20568 7 SAIN BROTHERS 11348 8 SHAKUNTALA AGGARWAL 6108 9 TARA DEVI AGGARWAL 19680 TOTAL 120523 WHEN THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO SUBMIT T HE REASONS FOR NON- DEDUCTION OF TAX, THE ASSESSEE SUBMITTED THAT ABOVE PERSONS HAVE SUBMITTED FORM NOS. 15G/ 15H. THE ASSESSING OFFICER FURTHER ASKED THE ASSESSEE AS TO WHETHER IT HAD SUBMITTED THOSE FORMS IN CITS OFFICE WITHIN TI ME PRESCRIBED UNDER THE ACT. IN THIS REGARD, THE ASSESSEE DID NOT SUBMIT ANY EVI DENCE AND, THEREFORE, THE ASSESSING OFFICER DISALLOWED THE PAYMENT OF INTERES T OF RS. 1,20,523/- U/S 40(A)(IA) OF THE ACT AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. 5. ON APPEAL, THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER AND, HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI NEERAJ JAIN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE PRESENT CASE, TH E TAX WAS NOT DEDUCTIBLE AT SOURCE BECAUSE ALL THE ABOVE SAID PERSONS TO WHOM T HE INTEREST HAS BEEN PAID FURNISHED FORM NO. 15H/15G TO THE ASSESSEE AS PER THE PROVISIONS OF SECTION 197A (1), (1A) AND (IC) OF THE ACT. SHRI NEERAJ JAI N LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT KEEPING IN VIEW THE PROVISIONS OF ACT / RULES, IT IS CLEAR THAT WHERE FORM NO. 15G / H HAS BEEN FU RNISHED BY THE PAYEES, NO TAX IS REQUIRED TO BE DEDUCTED AT SOURCE ON THE SAME. SHRI NEERAJ JAIN LD. COUNSEL FOR THE ASSESSEE FURTHER POINTED OUT THE FACT OF RE CEIVING FORM NO. 15G/H BY THE ASSESSEE HAS ALSO BEEN ADMITTED BY THE ASSESSING OF FICER IN THE ASSESSMENT ORDER. SHRI NEERAJ JAIN, LD. COUNSEL FOR THE ASSESS EE FURTHER STATED THAT 5 DISALLOWANCE HAS BEEN MADE ON THE BASIS THAT NO IN FORMATION WAS FILED WHETHER FORM NO.15G/H HAS BEEN FILED IN CIT(A)S OFFICE WIT HIN TIME LIMIT OR NOT. IT WAS STATED BY THE LD. COUNSEL FOR THE ASSESSEE THAT COPY OF FORM NO. 15G/H WAS SUBMITTED IN THE CIT(A)S OFFICE ON 7.4.2005, WHICH IS WITHIN TIME PRESCRIBED U/S 197 OF THE ACT. SHRI NEERAJ JAIN, LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT ON THE FACTS OF THE PRESENT CASE, THERE WAS NO NEED TO DEDUCT TAX AT SOURCE ON THE INTEREST PAYMENTS AND THUS, THERE WAS NO DEFAULT CO MMITTED BY THE ASSESSEE. ACCORDINGLY, DISALLOWANCE US/ 40(A)(IA) OF THE ACT WAS UNWARRANTED, SUBMITTED SHRI NEERAJ JAIN LD. COUNSEL FOR THE ASSESSEE. HE RELIED ON THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF KARWAT STEEL TRADE RS V ITO, MUMBAI (2013) 145 ITD 370 (MUMBAI). IN THE ABOVE CASE, THE ASS ESSEE CLAIMED AN AMOUNT OF RS. 5,30,425/- AS DEDUCTION ON ACCOUNT OF INTEREST EXPENDITURE. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY TH E AFORESAID EXPENDITURE SHOULD NOT BE DISALLOWED U/S 40 (A)(IA) OF THE ACT ON ACCO UNT OF FAILURE TO DEDUCT TAX AT SOURCE. IN RESPONSE TO THE SAID QUERY, THE ASSESSEE SUBMITTED THAT THOSE PARTIES WERE PAYING INTEREST ON REGULAR BASIS AND TDS WAS A LSO DEDUCTED ON INTEREST PAID TO THEM EXCEPT FOR 16 PARTIES FROM WHOM FORM 15G/H WAS RECEIVED. THE ASSESSING OFFICER MADE ADDITION ON THE GROUND THAT THE ASSESSEE HAS NOT FILED FORM 15G/H TO THE CIT AS PRESCRIBED UNDER RULE 29C OF THE I.T. RULES, 1962 . CONSEQUENTLY ASSESSING OFFICER DISALLOWED THE ENTIR E AMOUNT OF RS. 5,30,429/- US/ 40(A)(IA) OF THE ACT. 7. ON APPEAL, THE CIT(A) UPHELD THE ORDER OF THE AS SESSING OFFICER. THE ASSESSEE CHALLENGED THE ORDER OF THE CIT(A) IN APPE AL BEFORE THE TRIBUNAL AND THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE OBS ERVING AS UNDER:- 4 WE HAVE CONSIDERED THE ISSUE. THE PROVISIONS OF SECTION 40(A)(IA) ARE AS UNDER:- 40. AMOUNT NOT DEDUCTIBLE NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING AMOUNT S SHALL NOT BE 6 DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER T HE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION: (A) IN THE CASE OF ANY ASSESSEE. (B) (I) . (IA) ANY INTEREST, COMMISSION OR BROKERAGE, [RENT, ROYAL TY,] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICA L SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONT RACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT A NY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER C HAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, [HAS NOT BEEN PAID,- (REST NOT EXTRACTED .)' (EMPHASIS SUPPLIED) 4.1 AS CAN BE SEEN FROM ABOVE PROVISION, THE AMOUNT CAN NOT BE ALLOWED AS DEDUCTION ONLY IN THE EVENT WHEN TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER-XVII-B AND SUCH TAX HAS NOT BE EN DEDUCTED OR, AFTER DEDUCTION HAS NOT BEEN PAID. IN THIS CASE , THE ASSESSEE WAS TO DEDUCT TAX UNDER PROVISIONS OF SECTION 194A. SEC TION 194A IS FURTHER QUALIFIED BY THE PROVISIONS OF SECTION 197A (1A) WHEREIN IF A PERSON FURNISHES A DECLARATION IN WRITING IN PRESCR IBED FORM AND VERIFIED IN THE PRESCRIBED MANNER TO THE EFFECT THA T TAX ON HIS ESTIMATED TOTAL INCOME IS TO BE INCLUDED IN COMPUTI NG HIS TOTAL INCOME WILL BE NIL, THERE IS NO NEED TO DEDUCT TAX THE ASSESSEE HAS RECEIVED SUCH FORMS AS PRESCRIBED FROM THOSE PERSON S TO WHOM INTEREST WAS PAID/BEING PAID AND ACCORDINGLY NO DED UCTION OF TAX WAS TO BE MADE IN SUCH CASES. THE DEFAULT FOR NON-F URNISHING OF THE DECLARATIONS TO THE CIT AS PRESCRIBED MAY RESULT IN INVOKING PENALTY PROVISIONS U/S. 272A(2)(F), FOR WHICH SEPARATE PROV ISION/ PROCEDURE WAS PRESCRIBED UNDER THE ACT. HOWEVER, ONCE FORM 15 G/FORM 15H WAS RECEIVED BY THE PERSON RESPONSIBLE FOR DEDUCTIN G TAX, THERE IS NO LIABILITY TO DEDUCT TAX. ONCE THERE IS NO LIABIL ITY TO DEDUCT TAX, IT 7 CAN NOT BE CONSIDERED THAT TAX IS DEDUCTIBLE AT SOU RCE UNDER CHAPTER XVII-B AS PRESCRIBED U/S. 40(A)(IA). THE PR OVISIONS OF SECTION 40(A)(IA) CAN ONLY BE INVOKED IN A CASE WHE RE TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDU CTED OR AFTER DEDUCTION HAS NOT BEEN PAID. NO SUCH DEFAULT OCCURR ED IN THIS CASE. ACCORDINGLY, WE ARE OF THE OPINION THAT THE PROVISI ONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE TO THE FACTS OF THE CA SE. BOTH THE ASSESSING OFFICER AND CIT(A) ERRED IN CONSIDERING T HAT NON-FILING OF FORM 15H INVITES DISALLOWANCE U/S. 40(A)(IA). 4.2 SIMILAR ISSUE WAS CONSIDERED BY THE CO-ORDINATE BENCH IN THE CASE OF VIPIN P. MEHTA (SUPRA) WHERE IN IT WAS HELD :. 'SECTION 194A, READ WITH SECTIONS 197A AND 40(A)(IA ), OF THE INCOME-TAX ACT, 1961 DEDUCTION OF TAX AT SOURCE INT EREST OTHER THAN INTEREST ON SECURITIES ASSESSMENT YEAR 2006-07 ASSE SSEE WAS CARRYING ON BUSINESS OF MANUFACTURE AND PRINTING OF PACKAGING MATERIALS HE MADE PAYMENT OF INTEREST TO 34 PARTIES IN EXCESS OF RS. 5000 WITHOUT DEDUCTING TAX AT SOURCE IN RESPONSE TO SHOW CAUSE NOTICE, ASSESSEE SUBMITTED THAT ALL PAYEES TO WHOM INTEREST WAS PAID, HAD FURNISHED DECLARATIONS IN FORM NO. 15H/15 G, AS THE CASE MAY BE, BEFORE DATE ON WHICH TAX OUGHT TO HAVE BEEN DEDUCTED AND, THEREFORE, ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AS SESSEE ALSO SUBMITTED THAT BY OVERSIGHT HE DID NOT SUBMIT COPIE S OF DECLARATIONS IN FORM NO. 15G/15H TO OFFICE OF COMMISSIONER (TDS) ASSESSING OFFICER TOOK A VIEW THAT IT WAS ONLY WHEN HE PROPOS ED DISALLOWANCE OF INTEREST BY INVOKING SECTION 40(A)(IA) THEN ASSE SSEE FILED DECLARATIONS CLAIMED TO HAVE BEEN SUBMITTED TO HIM BY PAYEES OF INTEREST, IN OFFICE OF COMMISSIONER (TDS) AS REQUIR ED BY SUB-SECTION (2) OF SECTION 197A ACCORDINGLY, ASSESSING OFFICER INVOKED SECTION 40(A)(IA) AND DISALLOWED INTEREST PAYMENTS COMMISSI ONER (APPEALS) CONFIRMED DISALLOWANCE MADE BY ASSESSING OFFICER ON INSTANT APPEAL, IT WAS SEEN THAT APART FROM AFORESAID INFER ENCE, THERE WAS NO OTHER EVIDENCE IN POSSESSION OF REVENUE AUTHORIT IES TO HOLD THAT DECLARATIONS WERE NOT SUBMITTED BY PAYEES OF INTERE ST TO ASSESSEE AT TIME WHEN PAYMENTS WERE MADE MOREOVER, ASSESSING OF FICER HAD NOT RECORDED ANY STATEMENTS FROM PAYEES OF INTEREST TO EFFECT THAT THEY DID NOT FILE ANY DECLARATIONS WITH ASSESSEE AT APPR OPRIATE TIME OR TO EFFECT THAT THEY FILED DECLARATIONS ONLY AT REQUEST OF ASSESSEE 8 WHETHER IN ABSENCE OF ANY DIRECT EVIDENCE PRODUCED BY REVENUE AUTHORITIES, ASSESSEE'S CLAIM THAT HE HAD DECLARATI ONS OF PAYEES IN PRESCRIBED FORM BEFORE HIM AT TIME WHEN INTEREST WA S PAID, AND, THUS, HE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE UND ER SECTION 194A, WAS TO BE ACCEPTED HELD, YES- WHETHER, CONSEQUENTLY , IMPUGNED DISALLOWANCE MADE BY AUTHORITIES BELOW WAS TO BE DE LETED HELD, YES IN THE INSTANT CASE, THE CLAIM OF THE ASSESSEE WAS THAT AT THE TIME OF PAYING THE INTEREST TO THE 34 PERSONS MENTIONED IN THE ASSESSMENT ORDER, HE HAD BEFORE HIM THE APPROPRIATE DECLARATIO NS IN THE PRESCRIBED FORM FROM THE PAYEES STATING THAT NO TAX WAS PAYABLE BY THEM IN RESPECT OF THEIR TOTAL INCOME AND THEREFORE , TAX NEED NOT BE DEDUCTED FROM INTEREST UNDER SECTION 194A, AND IN T HE LIGHT OF THESE DECLARATIONS HE HAD NO OPTION BUT TO MAKE THE PAYME NT OF INTEREST WITHOUT ANY FAX DEDUCTION. IF THE CLAIM WAS TRUE TH EN THE CONTENTION MUST BE ACCEPTED BECAUSE UNDER SUB-SECTION (IA) OF SECTION 197A, IF SUCH A DECLARATION IS FILED BY THE PAYEE OF INTERES T, NO DEDUCTION OF TAX BE MADE BY THE ASSESSEE. THE REVENUE AUTHORITIE S HAD DOUBTED THE ASSESSEE'S VERSION BECAUSE ACCORDING TO THEM IT WAS ONLY WHEN THE ASSESSING OFFICER PROPOSED THE DISALLOWANCE OF THE INTEREST BY INVOKING THE SECTION 40(A )(IA) IN THE COURSE OF TH E ASSESSMENT PROCEEDINGS THAT THE ASSESSEE FILED THE DECLARATION S CLAIMED TO HAVE BEEN SUBMITTED TO HIM BY THE PAYEES OF THE INTEREST , IN THE OFFICE OF THE COMMISSIONER (TDS) AS REQUIRED BY SUB-SECTION ( 2) OF SECTION 197A. APART FROM THIS INFERENCE, THERE WAS NO OTHER EVIDENCE IN THEIR POSSESSION TO HOLD THAT THE DECLARATIONS WERE NOT SUBMITTED BY THE PAYEES OF THE INTEREST TO THE ASSESSEE AT THE T IME WHEN THE PAYMENTS WERE MADE. WITHOUT DISPROVING THE ASSESSEE 'S CLAIM ON THE BASIS OF OTHER EVIDENCE, EXCEPT BY WAY OF INFERENCE , IT WOULD NOT BE FAIR OR PROPER TO DISCARD THE CLAIM. THE ASSESSING OFFICER HAD NOT RECORDED ANY STATEMENTS FROM THE PAYEES OF THE INTE REST TO THE EFFECT THAT THEY DID NOT FILE ANY DECLARATIONS WITH THE AS SESSEE AT THE APPROPRIATE TIME OR TO THE EFFECT THAT THEY FILED T HE DECLARATIONS ONLY AT THE REQUEST OF THE ASSESSEE IN SEPTEMBER/OC TOBER, 2008. IN THE ABSENCE OF ANY SUCH DIRECT EVIDENCE, THE ASSESS EE'S CLAIM COULD NOT BE REJECTED. THE ASSESSING OFFICER HAD STATED I N THE ASSESSMENT ORDER THAT HE FOUND THAT SOME OF THE LOAN CREDITORS WERE HAVING TAXABLE INCOME BUT STILL THE ASSESSEE HAD SUBMITTED DECLARATIONS FROM THEM IN FORM NO. 15G. UNLESS IT WAS PROVED THA T THESE FORMS 9 WERE NOT IN FACT SUBMITTED BY THE LOAN CREDITORS, T HE ASSESSEE COULD NOT BE BLAMED BECAUSE AT THE TIME OF PAYING THE INT EREST TO THE LOAN CREDITORS, HE HAD TO PERFORCE RELY UPON THE DECLARA TIONS FILED BY THE LOAN CREDITORS AND HE WAS NOT EXPECTED TO EMBARK UP ON AN ENQUIRY AS TO WHETHER THE LOAN CREDITORS REALLY AND IN TRUT H HAD NO TAXABLE INCOME ON WHICH TAX WAS PAYABLE. THAT WOULD BE PUTT ING AN IMPOSSIBLE BURDEN ON THE ASSESSEE. THAT APART SECTI ON (1A) OF SECTION 197A MERELY REQUIRES A DECLARATION TO BE FI LED BY THE PAYEE OF THE INTEREST AND ONCE IT IS FILED THE PAYEE OF T HE INTEREST HAS NO CHOICE EXCEPT TO DESIST FROM DEDUCTING TAX FROM THE INTEREST. THE SUB-SECTION USES THE WORD SHALL WHICH LEAVES NO CHO ICE TO THE ASSESSEE IN THE MATTER. THE SUB-SECTION DOES NOT IM POSE ANY OBLIGATION ON THE PAYER TO FIND OUT THE TRUTH OF TH E DECLARATIONS FILED BY THE PAYEE. EVEN IF THE ASSESSEE HAD DELAYE D THE FILING OF THE DECLARATIONS WITH THE OFFICE OF THE COMMISSIONER /C HIEF COMMISSIONER (TDS) WITHIN THE TIME-LIMIT SPECIFIED IN SUB-SECTION (2) OF SECTION 197A, THAT WAS A DISTINCT OMISSION O R DEFAULT FOR WHICH A PENALTY IS PRESCRIBED SECTION 273B PROVIDES THAT NO PENALTY SHALL BE IMPOSED UNDER ANY OF THE CLAUSES OF SUB-SE CTION (2) OF SECTION 272A FOR THE DELAY, IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAME. FURTHER, UNDER SUB-S ECTION (4) OF SECTION 272A, NO PENALTY CAN BE IMPOSED UNLESS THE ASSESSEE IS GIVEN AN OPPORTUNITY OF BEING HEARD. ALL THESE PROV ISIONS INDICATE THAT THE FAILURE ON THE PART OF THE ASSESSEE, WHO W AS THE PAYER OF THE INTEREST, TO FILE THE DECLARATIONS GIVEN TO HIM BY THE PAYEES OF THE INTEREST, WITHIN THE TIME-LIMIT SPECIFIED IN SU B-SECTION (2) TO SECTION 197A WAS DISTINCT AND SEPARATE AND MERELY B ECAUSE THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO SUBMIT THE DECLARATIONS TO THE INCOME-TAX DEPARTMENT WITHIN THE TIME-LIMIT, IT COULD NOT BE SAID THAT THE ASSESSEE DID NOT HAVE DECLARATIONS WI TH HIM AT THE TIME WHEN HE PAID THE INTEREST TO THE PAYEES. THAT WOULD BE A SEPARATE MATTER AND SEPARATE PROOF AND EVIDENCE WAS REQUIRED TO SHOW THAT EVEN WHEN THE ASSESSEE PAID THE INTEREST, HE DID NO T HAVE THE DECLARATIONS FROM THE PAYEES WITH HIM AND THEREFORE HE OUGHT TO HAVE DEDUCTED THE TAX FROM THE PAYMENT. NO SUCH EVI DENCE OR PROOF HAD BEEN BROUGHT ON RECORD BY THE DEPARTMENT. [PARA 7] FOR THE AFORESAID REASONS, THE ASSESSEE'S CLAIM WAS TO BE ACCEPTED THAT SINCE HE HAD THE DECLARATIONS OF THE PAYEES IN THE PRESCRIBED 10 FORM BEFORE HIM AT THE TIME WHEN THE INTEREST WAS P AID, HE WAS NOT LIABLE TO DEDUCT TAX THERE FROM UNDER SECTION 194A. IF HE WAS NOT LIABLE TO DEDUCT TAX, SECTION 40(A)(IA) WAS NOT ATT RACTED. THERE WAS NO OTHER GROUND TAKEN BY THE INCOME-TAX AUTHORITIES TO DISALLOW THE INTEREST. THEREFORE, THE ASSESSEE'S APPEAL WAS TO B E ALLOWED AND THE DISALLOWANCE OF INTEREST WAS TO BE DELETED. [PARA 8 ]' 4.3 SIMILAR FINDING WAS ALSO HELD IN OTHER CASES RE LIED UPON BY THE ASSESSEE, WHICH WE DO NOT INTEND TO EXTRACT HERE. S UFFICE TO SAY THAT ON THE FACTS OF THE CASE, THERE IS NO NEED TO DEDUC T TAX AT SOURCE IN THE ABOVE 17 CASES AND THUS, THERE IS NO DEFAULT CO MMITTED BY THE ASSESSEE. ACCORDINGLY, DISALLOWANCE UNDER SECTION 4 0(A)(IA) DOES NOT ARISE. NON FILING OR DELAYED FILING OF SUCH FOR MS CAN NOT RESULT IN DISALLOWANCE U/S 40(A)(IA). THE GROUNDS RAISED B Y ASSESSEE ARE ALLOWED. AO IS DIRECTED TO MODIFY THE ORDER ACCORDI NGLY. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AGAIN ST THE REVENUE BY THE DECISION OF THE ITAT MUMBAI BENCH IN THE CASE OF KA RWAT STEEL TRADERS V ITO, MUMBAI (SUPRA). THE FACTS OF THE PRESENT CASE ARE A LMOST SIMILAR TO THAT OF THE CASE OF KARWAT STEEL TRADERS V ITO, MUMBAI (SUPRA). RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT MUMBAI BENCH, WE DELETE THE DISAL LOWANCE OF RS. 1,20,523/- MADE U/S 40(A)(IA) OF THE ACT. 9. IN THE RESULT, THE APPEAL IS ALLOWED PARTLY. ITA NO. 42/CHD/2013 10. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF CIT(A) (CENTRAL), GURGAON DATED 12.12.2012 RELATING TO ASS ESSMENT YEAR 2006-07. 11. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOL LOWING GROUNDS:- 11 1. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT GI VING THE PROPER OPPORTUNITY OF HEARING WHICH IS AGAINST THE NATURA L JUSTICE. 2. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIR MING THE ASSESSMENT MADE U/S 153 (1) (B) R.W.S. 143(3) OF I.T. ACT 1961 WHICH IS NOT AS PER THE PROVISIONS OF THE ASSESSMENT IN SEARCH CASES. 3. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN NOT DEC IDING THE ISSUE THAT THE LD. AO HAS TAKEN THE INCOME OF RS. 2,50,225/- AS DETERMINED U/S. 143 (3) ON 24.12.2008 INSTEAD OF INCOME OF RS. 74,150/- AS DECLARED BY THE ASSESSEE WHILE MAKING THE ASSESSMENT U/S 153 (1) (B ) R.W.S. 143(3) OF I.T.ACT 1961, 4. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIR MING THE ADDITION OF RS. 5,37,900/- U/S. 68 ON ACCOUNT OF PEAK CREDIT OF ANN EXURE: A:3. 5. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRM ING THE ADDITION OF RS. 65,094/- U/S. 40 (A) (IA) ON ACCOUNT OF NON-DEDUCTI ON OF TAX AT SOURCE ON INTEREST PAYMENTS TO DIFFERENT PERSONS. 6. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEALS:- A) THE APPELLANT DISPUTES THE QUANTUM OF ADDITI ONS. B) THAT THE LD. A.O. IS NOT JUSTIFIED IN NOT G IVING THE TELESCOPING/SET OFF OF ADDITION AGAINST THE SURRE NDER MADE IN THE A.Y. 2009-10. 12. AT THE TIME OF HEARING OF APPEAL, SHRI NEERAJ J AIN, LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS FOR GROUND NOS. 1 TO 3 OF TH E APPEAL AND, HENCE, WE DISMISS THE SAME AS NOT PRESSED. 13. GROUND NO.4 RELATES TO ADDITION OF RS. 5,37,900/- MADE U/S 68 O F THE ACT. THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH OPERATION AT THE RESIDENCE OF THE ASSESSEE, A DOCUMENT (ANNEXURE A-3 ) WAS SEIZED. PAGE NOS. 80 TO 86 OF THE SAID DOCUMENT CONTAINED DETAILS OF PUR CHASES, SALES AND OTHER EXPENSES / RECEIPTS OF THE ASSESSEE RELATING TO JEW ELLERY BUSINESS. THESE 12 TRANSACTIONS RELATED TO THE PERIOD FROM 12.2.2006 T O 19.2.2006. THE DETAILS OF THESE PAGES ARE REPRODUCED HEREIN BELOW:- DATE OPENING BALANCE RECEIPTS PAYMENTS CLOSING BALANCE 12-FEB-2006 460800 377283 300183 537900 13-FEB-2006 537900 0 0 537900 14-FEB-2006 537900 878290 1209090 207100 15-FEB-2006 207100 104200 93600 217700 16-FEB-2006 217700 8500 88100 138100 17-FEB-2006 138100 225526 160542 203084 18-FEB-2006 203084 63731 36515 230300 19-FEB-2006 230300 285012 179212 336100 WHEN THE ABOVE DOCUMENT WAS CONFRONTED TO THE ASSESSEE, THE ASSESSEE SUBMITTED THAT THE ABOVE DOCUMENT WAS SEIZED FROM T HE RESIDENCE OF SHRI SANDEEP BANSAL PARTNER OF M/S MUNSHI RAM WALATI RAM OF H. NO. 175, SECTOR 9, PANCHKULA AND THE SAID DOCUMENT BELONGED TO THE FI RM M/S MUNSHI RAM WALATI RAM. IT WAS ALSO EXPLAINED THAT IN THE SAID DOCUMEN T, THE AMOUNT RECEIVED ON VARIOUS ACCOUNTS AND PAYMENTS, MADE AGAINST THE SAM E HAS BEEN RECORDED. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE ABOVE EXPLANATION OF THE ASSESSEE STATING THAT SHRI SANDEEP BANSAL WAS GIVE N THE OPPORTUNITY TO RECONCILE THE ENTRIES IN THE LOOSE PAPERS WITH REGU LAR BOOKS BUT HE FAILED TO RECONCILE THESE ENTRIES WITH REGULAR BOOKS OF THE A SSESSEE. THEREFORE, THE ASSESSING OFFICER ASKED SHRI SANDEEP BANSAL AS TO W HY THE PEAK CREDIT OF THESE ENTRIES SHOULD NOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. NO EXPLANATION WAS GIVEN ON BEHALF OF THE ASSESSEE. A CCORDINGLY, THESE TRANSACTIONS WERE TREATED OUTSIDE THE BOOKS OF ACCO UNT. THE ASSESSING OFFICER 13 WORKED OUT THE PEAK CREDIT OF THESE DOCUMENTS AT R S. 5,37,900/- AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UN EXPLAINED CASH CREDIT U/S 68 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 14. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION ST ATING THAT ANNEXURE A-3 PERTAINED FOR A SHORT PERIOD OF 7 DAYS FROM 12.2.20 06 TO 19.2.2006. THEREAFTER, THE OTHER SEIZED DOCUMENT AND THE ENTRIES THEREIN R ELATE TO THE NEXT FINANCIAL YEAR. ACCORDING TO CIT(A), THERE WAS A GAP OF MORE THAN FOUR MONTHS IN THE SUBSEQUENT SEIZED DOCUMENT. HE, THEREFORE, HELD THA T THE PEAK FOR THE ASSESSMENT YEAR UNDER CONSIDERATION SHOULD BE CONSIDERED SEPAR ATELY, INDEPENDENT OF OTHER DOCUMENTS. HE ACCORDINGLY, CONFIRMED THE ADDITION OF RS. 5,37,900/-. 15. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE HOL D THAT THE AUTHORITIES BELOW WERE FULLY JUSTIFIED IN HOLDING THAT THE PEAK FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS REQUIRED TO BE CONSIDERED SEPARATE LY, INDEPENDENT TO OTHER DOCUMENTS. THERE IS NO DISPUTE THAT THE SEIZED DOCU MENT I.E. ANNEXURE A-3 PERTAINS FOR A SHORT PERIOD OF SEVEN DAY I.E. FROM 12.2.2006 TO 19.2.2006. IT IS ALSO AN ADMITTED FACT THAT THE OTHER SEIZED DOCUMEN TS RELATE TO THE NEXT FINANCIAL YEAR ONWARDS. WE FIND NO MATERIAL ON RECORD TO CONT ROVERT THE FINDINGS OF THE LOWER AUTHORITIES. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT(A) AND REJECT GROUND NO.4 OF THE APPEAL. 16. GROUND NO.5 OF THE APPEAL RELATES TO ADDITION O F RS. 65,094/- MADE U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE ON INTEREST PAYMENTS MADE TO DIFFERENT PERSONS. AS PER PARA 7. 2 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD N OT DEDUCTED TAX AT SOURCE ON INTEREST PAYMENTS IN THE FOLLOWING CASES:- 14 SR.NO. NAME OF THE PERSONS INTEREST PAID (IN RS.) 1. SMT. ANITA GUPTA 10484 2. RAM CHAND AGGARWAL 6841 3. RITU AGGARWAL 17892 4. RUPAK AGGARWAL 23036 5. SHAKUNTALA AGGARWAL 6841 TOTAL 65094 17. WHEN ASSESSING OFFICER ASKED THE ASSESSEE ABOUT THE REASONS FOR NON- DEDUCTION OF TAX, THE ASSESSEE SUBMITTED THAT THE A BOVE PERSONS HAD SUBMITTED FORM 15-G/15H. THE ASSESSING OFFICER FURTHER ASKED THE ASSESSEE AS TO WHETHER IT HAS SUBMITTED THOSE FORMS WITH CIT CONCERNED WIT HIN THE TIME LIMIT AS PRESCRIBED IN THE ACT. THE ASSESSEE FAILED TO FILE ANY EXPLANATION IN THIS REGARD. CONSEQUENTLY, THE ASSESSING OFFICER MADE DISALLOWAN CE OF RS. 65,094/ U/S 40(A)(IA) OF THE ACT. 18. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION AN D, HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 19. WE HAVE DECIDED A SIMILAR ISSUE IN ASSESSEES C ASE IN ITA NO. 41/CHD/2013 RELATING TO ASSESSMENT YEAR 2005-06. T HE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THOSE OF ASSESSMENT YEAR 2005-06. TH E DECISION GIVEN BY US ON SIMILAR ISSUE FOR THE ASSESSMENT YEAR 2005-06 SHALL ALSO APPLY TO THIS GROUND OF APPEAL WITH EQUAL FORCE. FOR THE DETAILED REASONS G IVEN THEREIN, WE ALLOW THIS GROUND OF APPEAL AND DELETE DISALLOWANCE OF RS. 65, 094/- MADE U/S 40(A)(IA) OF THE ACT. 15 20. IN THE RESULT, THE APPEAL IS ALLOWED PARTLY. ITA NO. 43/CHD/2013 (ASSESSEES APPEAL) (AY 2007-08 ) & 222/CHD/2013 REVENUES APPEAL (AY 2007-08):- 21. THE APPEAL FILED BY THE ASSESSEE (ITA NO. 43/CH D/2013) AND THAT OF REVENUE (ITA NO. 222/CHD/2013) ARE DIRECTED AGAINS T THE ORDER OF CIT(A), (GURGAON) DATED 12.12.2012 RELATING TO ASSESSMENT Y EAR 2007-08. THE ASSESSEE IN ITA NO. 43/CHD/2013 HAS RAISED THE FOLLOWING GRO UNDS:- 1. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT GI VING THE PROPER OPPORTUNITY OF HEARING WHICH IS AGAINST THE NATURA L JUSTICE. 2. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIR MING THE ASSESSMENT MADE U/S 153A (1) (B) R.W.S. 143(3) OF I.T. ACT 196 1 WHICH IS NOT AS PER THE PROVISIONS OF THE ASSESSMENT IN SEARCH CASES. 3. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN NOT DEC IDING THE ISSUE THAT THE LD. AO HAS TAKEN THE INCOME OF RS. 2,83,660/- AS DETERMINED U/S. 143 (3) ON 10.12.2009 INSTEAD OF INCOME OF RS. 93,810/- AS DECLARED BY THE ASSESSEE WHILE MAKING THE ASSESSMENT U/S 153 A(1) ( B) R.W.S. 143(3) OF I.T.ACT 1961, 4. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIR MING THE ADDITION OF RS. 25,29,110/- U/S. 68 ON ACCOUNT OF PEAK CREDIT . 5. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRM ING THE ADDITION OF RS. 76,448/- U/S. 40 (A) (IA) ON ACCOUNT OF NON-DEDUCTI ON OF TAX AT SOURCE ON INTEREST PAYMENTS TO DIFFERENT PERSONS. 6. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEALS:- A) THE APPELLANT DISPUTES THE QUANTUM OF ADDITI ONS. B) THAT THE LD. A.O. IS NOT JUSTIFIED IN NOT G IVING THE TELESCOPING/SET OFF OF ADDITION AGAINST THE SURRE NDER MADE IN THE A.Y. 2009-10. 16 C) THAT THE LD. CIT(A) IS NOT JUSTIFIED IN NOT GIVI NG THE TELESCOPING / SET OFF ADDITIONS MADE ON ACCOUNT OF PEAK CREDIT IN ASSESSMENT YEAR 2006-07 AGAINST THE PEAK CREDIT ADD ITION CONFIRMED IN ASSESSMENT YEAR 2007-08. 22. IN ITA NO. 222/CHD/2013, THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON THE FACTS BY RESTRICTING THE ADDITION OF RS. 54,63,982/ - MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 TO RS. 25,29,110/-. II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FA CTS THAT ALL THE DOCUMENTS, ON THE BASIS OF WHICH UNDISCLOSED INCOME OF THE ASSESSEE IN FORM OF PEAK CREDITS WERE ARRIVED ARE INDEPENDENT DOCUMENTS. 23. AT THE TIME OF HEARING OF THE APPEALS, SHRI NEE RAJ JAIN LD. COUNSEL FOR THE ASSESSEE, DID NOT PRESS FOR GROUND NOS. 1, 2, 3 AND 6 OF THE APPEAL AND ACCORDINGLY WE DISMISS THESE GROUNDS AS NOT PRESSED :- 24. GROUND NO.4 OF THE APPEAL RELATES TO ADDITION O F RS. 25,29,110/- U/S 68 OF THE ACT MADE ON ACCOUNT OF PEAK CREDIT. THE ASSES SING OFFICER NOTED THAT DURING THE COURSE OF SEARCH OPERATION AT THE RESIDE NCE OF SHRI SANDEP BANSAL, PARTNER OF THE ASSESSEE FIRM, A DOCUMENT ANNEXURE A -3 WAS SEIZED. THIS DOCUMENT IS A LOOSE BUNCH OF PAPERS. THIS DOCUMENT CONTAINED THE DETAILS OF PURCHASES, SALES AND OTHER EXPENSES / RECEIPTS OF T HE ASSESSEE FOR DIFFERENT PERIODS. SIMILARLY, THE DOCUMENTS A-4, A-5, A-6 ,A- 7, A-8 & A-9 WERE ALSO SEIZED FROM THE RESIDENCE OF SHRI SANDEEP BANSAL W HICH CONTAINED THE DETAILS OF PURCHASES / SALES AND OTHER EXPENSES AND RECEIPTS O F THE ASSESSEE FOR DIFFERENT 17 PERIODS. DURING THE COURSE OF SEARCH OPERATION, SHR I SANDEEP BANSAL, ONE OF THE PARTNER OF THE ASSESSEE FIRM ADMITTED IN HIS STATEM ENT THAT ALL THESE ENTRIES RELATE TO M/S MUNSHI RAM WALATI RAM. THE ASSESSEE VIDE ITS LETTER DATED 16.12.2010 SUBMITTED THE DETAILED REPLY IN THIS REGARD. THE AS SESSING OFFICER OBSERVED THAT THE TOTAL OF THE PEAK CREDITS OF ALL THE SEIZED DOC UMENTS CAME AS UNDER:- DOCUMENT AMOUNT (IN RS.) A-3/P-II 5,26,000 A-3/P-III 6,22,000 A-3/P-IV 3,41,000 A-4 2,73,250 A-5 5,97,300 A-6 15,66,110 A-7 4,14,332 A-8 3,85,200 A-9 7,38,700 TOTAL 54,63,982 ACCORDING TO ASSESSING OFFICER, THE ASSESSEE FAILED TO RECONCILE THE ABOVE ENTRIES WITH BOOKS OF ACCOUNT AFTER GIVING VARIOUS OPPORTUNITIES. THE ASSESSING OFFICER, THEREFORE, TREATED THE PEAK CREDIT OF RS. 54,63,982/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND ADDED BACK TO THE TOT AL INCOME OF THE ASSESSEE. 25. ON APPEAL, THE CIT(A) REDUCED THE ADDITION TO R S. 25,29,110/- AS AGAINST RS. 54,63,982/- MADE BY THE ASSESSING OFFICER. THE CIT(A) ALLOWED A RELIEF OF RS. 29,34,872/-. VIDE GROUND NO.4 OF THE APPEAL TH E ASSESSEE HAS CHALLENGED THE ACTION OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS. 25,29,110/- U/S 68 OF THE ACT ON ACCOUNT OF PEAK CREDIT. 18 26. IN ITA NO. 222/CHD/2013, THE REVENUE HAS CHALLE NGED THE ACTION OF THE CIT(A) IN ALLOWING A RELIEF OF RS. 29,34,872/- TO T HE ASSESSEE. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THIS CASE THE ASS ESSING OFFICER HAS MADE ADDITION OF RS. 54,63,982/- ON THE BASIS OF DOCUMEN TS A-3 TO A-9 (DIARIES) SEIZED DURING THE COURSE OF SEARCH BY CALCULATING THE PEAK CREDIT OF EACH. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT ALL THE RECEIPTS AND PAYMENTS OF SUCH DOCUMENTS ARE RECONCILABLE. ALTERN ATIVELY SHRI NEERAJ JAIN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EVEN I F, THE ABOVE TRANSACTIONS ARE TO BE TREATED OUT OF THE BOOKS OF ACCOUNT, IN SUCH CASE, THE ADDITION OF ONLY NET INCOME CAN BE MADE I.E. WHATEVER AMOUNT HAS BEEN RE CEIVED IS TO BE REDUCED BY THE TOTAL AMOUNT WHICH HAS BEEN PAID / INCURRED WHI CH AS PER DOCUMENTS A-3 TO A-09. SHRI NEERAJ JAIN, LD. COUNSEL FOR THE ASSESSE E POINTED OUT THAT THE ASSESSING OFFICER HAS MADE SEPARATE ADDITIONS BY CA LCULATING THE PEAK CREDIT FOR DIFFERENT BLOCK PERIOD FOR SINGLE FINANCIAL YEAR 20 06-07. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, EVEN THEN IF ANY ADDITION ON ACCOUNT OF PEAK IS TO BE MADE IN SUCH CASE, ONLY ONE PEAK IS TO BE CALCULATE D FOR WHOLE OF THE PERIOD MENTIONED IN THE DOCUMENTS WHICH STARTED FORM 25.5. 2006 AND ENDS ON 31.3.2007 I.E. PERIOD RELEVANT TO ASSESSMENT YEAR 2 007-08 WHICH STARTS FROM THE FIRST DATE I.E. 25.5.2006 AND END ON THE DATE TILL WHICH SUCH DOCUMENT HAS BEEN PREPARED I.E. 31.3.2007. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, THE SEQUENCE WISE PERIODICITY OF THE SEIZED DOCUMENT IS AS UNDER:- ANNEXURE PERIOD ADDITION MADE (IN RS. ) A: 7 25.05.2006 03.06.2006 TO 4,14,332/- A: 6 04.06.2006 14.07.2006 TO 15,66,110/- 19 A: 3 /P-II 14.07.2006 31.08.2006 TO 5,26,000/- A: 5 01.09.2006 21.10.2006 TO 5,97,300/- A:3/P:III 21.10.2006 30.11. 2006 TO 6,22,000/- A: 8 01.12.2006 20.01.2007 TO 3,85,200/- A:3 / P:IV 20.01.2007 TO 31.01.2007 3,41,000/- A;$ 01.02.2007 TO 31.03.2007 2,73,250/- ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, THE ABOV E PERIOD MAY BE TAKEN AS ONE PERIOD AND SHOULD NOT BE BROKEN INTO MONTHS / QUARTERS / YEARS OR ANY OTHER PERIOD. ACCORDING TO HIM, THE ABOVE PERIOD IS IN C ONTINUITY AND, THEREFORE, PERIOD IN THE CONSIDERATION SHOULD NOT BE BROKEN IN TO MONTHS / QUARTERS ETC. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE, WE FIND CONSIDERABLE FORCE IN THE ABOVE SUBMISSIONS OF SHRI NEERAJ JAIN, LD. COUNSEL FOR THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE FINDIN GS OF THE CIT(A) ON THIS ISSUE AND REMAND THE ISSUE TO THE FILE OF THE ASSESSING O FFICER WITH A DIRECTION TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTE R AFFORDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. SHRI NEERAJ JAIN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ADDITION OF RS. 5,37,900/- HAS BEEN MADE U/S 68 ON ACCOUNT OF PEAK CREDIT OF ANNEXURE-3 FOR THE ASSESSMENT YEAR 2006-07 AND THE BENEFIT OF THE SAID ADDITION MAY BE GIVEN IN THIS YEAR. WE REMAND THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION IN ACCORDANCE WITH LAW. ACCORDINGLY, GROUND NO.4 OF T HE ITA NO. 43/CHD/2013 AND GROUND NO.1 OF THE REVENUES APPEAL IN ITA NO. 222/CHD/2013 ARE ALLOWED FOR STATISTICAL PURPOSES. 20 28. GROUND NO. 5 OF THE ASSESSEES APPEAL RELATES TO ADDITION OF RS. 76,448/- MADE US/ 40(A)(IA) OF THE ACT ON ACCOUNT OF NON DED UCTION OF TAX AT SOURCE ON INTEREST PAYMENTS TO DIFFERENT PERSONS . 29. WE HAVE DECIDED A SIMILAR ISSUE IN ITA NOS. 41 & 42/CHD/2013 FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07. THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THAT OF ASSESSMENT YEARS 2005-06 AND 2006-07 REF ERRED TO ABOVE. THE DECISION GIVEN IN ITA NOS. 41 AND 42/CHD/2013 SHALL ALSO AP PLY TO THIS GROUND OF APPEAL WITH EQUAL FORCE. ACCORDINGLY, GROUND NO.5 OF THE APPEAL IS ALLOWED. 30. IN THE RESULT, THE APPEAL OF THE ASSESSEE I.E. ITA NO. 43/CHD/2013 IS ALLOWED PARTLY AND PARTLY FOR STATISTICAL PURPOSES; WHEREAS ITA NO. 222/CHD/2013 I.E. REVENUES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. ITA NO. 44/CHD/2013 : 31. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF CIT(A) (CENTRAL), GURGAON DATED 12.12.2012 RELATING TO ASS ESSMENT YEAR 2008-09. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT GI VING THE PROPER OPPORTUNITY OF HEARING WHICH IS AGAINST THE NATURA L JUSTICE. 2. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIR MING THE ASSESSMENT MADE U/S 153A (1) (B) R.W.S. 143(3) OF I.T. ACT 196 1 WHICH IS NOT AS PER THE PROVISIONS OF THE ASSESSMENT IN SEARCH CASES. 3. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRM ING THE ADDITION OF RS. 7,38,700/- U/S 68 ON ACCOUNT OF PEAK CREDIT OF ANNE XURE : A:9. 4. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIR MING THE ADDITION OF RS. 1,20,000/- U/S. 69C ON ACCOUNT OF PEAK CREDIT . 21 5. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRM ING THE ADDITION OF RS. 1,22,476/- U/S. 40 (A) (IA) ON ACCOUNT OF NON-DEDUC TION OF TAX AT SOURCE ON INTEREST PAYMENTS TO DIFFERENT PERSONS. 6. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEALS:- A) THE APPELLANT DISPUTES THE QUANTUM OF ADDITI ONS/ DISALLOWANCES. B) THAT THE LD. CIT(A) IS NOT JUSTIFIED IN NO T GIVING THE TELESCOPING/SET OFF OF ADDITION AGAINST THE SURRE NDER MADE IN THE A.Y. 2009-10. C) THAT THE LD. CIT(A) IS NOT JUSTIFIED IN NOT GIVI NG THE TELESCOPING / SET OFF ADDITIONS MADE ON ACCOUNT OF PEAK CREDIT IN ASSESSMENT YEAR 2006-07, ASSESSMENT YEAR 2007-08 & ASSESSMENT YEAR 2008-09 AGAINST THE ADDITIONS MADE FOR UNEXPLAINED EXPENDITURE / UNEXPLAINED INVESTMENT. D) THAT THE LD. CIT(A) IS NOT JUSTIFIED IN NOT GIV ING THE TELESCOPING / SET OFF ADDITIONS MADE ON ACCOUNT OF PEAK CREDIT IN ASSESSMENT YEAR 2006-07 AND ASSESSMENT YEAR 2007-08 AGAINST THE PEAK CREDIT ADDITION CONFIRMED IN ASSESSMENT YE AR 2008-09. 32. AT THE TIME OF HEARING OF THE APPEAL SHRI NEERAJ JAIN, LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS FOR GROUND NOS. 1, 2 AND 6 O F THE APPEAL AND, HENCE, WE DISMISS THESE GROUNDS AS NOT PRESSED. 33. GROUND NO.3 OF THE APPEAL RELATES TO THE ADDITI ON OF RS. 7,38,700/- U/S 68 OF THE ACT ON ACCOUNT OF PEAK OF ANNEXURE A-9. THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF SEARCH OPERATION AT THE R ESIDENCE OF SHRI SANDEEP BANSAL, PARTNER OF THE ASSESSEE FIRM A DOCUMENT ANN EXURE A-9 WAS SEIZED. THIS IS A NOTE PAD WHICH CONTAINED DETAILS OF PURCHASES, SALES AND OTHER EXPENSES / RECEIPTS OF THE ASSESSEE RELATING TO THE JEWELLERY W.E.F. 1.4.2007 TO 14.7.2007. THE ASSESSING OFFICER REPRODUCED THE CONTENTS OF TH ESE DOCUMENTS IN PARA 5 OF 22 THE ASSESSMENT ORDER. DESPITE PROVIDING SUFFICIENT OPPORTUNITIES TO THE ASSESSEE, THE ASSESSEE FAILED TO RECONCILE THESE ENTRIES WITH REGULAR BOOKS. THEREFORE, THE ASSESSING OFFICER ASKED THE ASSESSEE AS TO WHY PEAK CREDIT OF THESE ENTRIES SHOULD NOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION IN THIS REGARD. ACCORDI NGLY, THESE TRANSACTIONS WERE TREATED OUTSIDE THE BOOKS OF ACCOUNT. THE PEAK CRED IT OF THESE ENTRIES HAVE BEEN WORKED OUT AT RS. 7,38,700/- BY THE ASSESSING OFFIC ER AND THE SAME WAS ADDED U/S 68 OF THE ACT TO THE TOTAL INCOME OF THE ASSESS EE. 34. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION FO R THE REASONS STATED IN PARA 6.1 OF THE IMPUGNED ORDER, WHICH READS AS UNDE R:- 6.1 I FIND THAT THE CONTENT OF THE SEIZED DOCUMENTS HAVE BEEN REPRODUCED IN THE IMPUGNED ORDER TO WORK OUT T HE PEAK CREDIT IT IS THE ASSESSEE'S CONTENTION THAT THE TRA NSACTION DATES ARE CONTINUOUS FROM 12.02.2006 AND THAT ALL T HE DOCUMENTS SEIZED PERTAINING TO DIFFERENT ASSESSMENT YEAR SHOULD BE CONSIDERED FOR WORKING OUT ONE SINGLE PEA K CREDIT THIS CONTENTION WAS FOUND IN ACCURATE AND CONSEQUEN TLY WHERE EVER THERE WAS A BREAK IN THE TRANSACTION DAT ES AND WHERE THE OPENING AND DOSING BALANCES DID NOT TALLY , PEAK CREDITS HAVE BEEN WORKED OUT SEPARATELY AS EVIDENT FROM THE APPELLATE ORDERS FOR AY 2007-08 AND 2006- 07. THOUG H IT IS ASSESSEE'S CONTENTION THAT ANNEXURE A-9 IS LINKED T O ANNEXURE A-4 THE SAME IS FOUND TO BE INCORRECT AS THE OPENIN G AND CLOSING BALANCES DIFFER. THEREFORE THIS DOCUMENT IS TAKEN TO BE AN INDEPENDENT TRANSACTION. ACCORDINGLY THE PEAK CREDIT WORKED OUT IN RESPECT OF THIS DOCUMENT WHICH IS FRO M 01.04.2007 TO 14.07.2007 OF RS. 7,38,700/- WHICH WA S ADDED BACK BY THE AO IS CONFIRMED. THE ASSESSEE FAILS ON THIS GROUND. 23 35. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH THE PARTIES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS IS SUE. AT THIS STAGE ALSO, THE ASSESSEE FAILED TO GIVE ANY PLAUSIBLE EXPLANATION I N THIS REGARD. THE ENTRIES IN QUESTION HAVE NOT BEEN RECONCILED WITH BOOKS OF ACC OUNT AT THIS STAGE ALSO. IN OUR OPINION, THE CIT(A) WAS JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER AND, HENCE, WE DO NOT SEE ANY MERIT IN THIS GROUND OF APPEAL AND REJECT THE SAME. BEFORE PARTING WITH THIS CASE, IT MAY BE RELEVANT TO OBSERVE HERE THAT SHRI NEAERAJ JAIN, LD. COUNSEL FOR THE ASSESSEE STA TED THAT THE BENEFIT OF ADDITION MADE ON ACCOUNT OF PEAK CREDIT U/S 68 IN T HE IMMEDIATE PRECEDING YEAR MAY BE GIVEN. WE HAVE RESTORED A SIMILAR ISSUE TO T HE ASSESSING OFFICER FOR A FRESH CONSIDERATION IN ACCORDANCE WITH LAW IN ASSES SMENT YEAR 2007-08. WE DIRECT THE ASSESSING OFFICER TO DECIDE THIS ISSUE I N ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE ABOVE TERMS, THIS GROUND OF APPEAL IS DISPOSED OF. 36. GROUND NO.4 OF THE APPEAL RELATES TO ADDITION O F RS. 1,20,000/- U/S 69C ON ACCOUNT OF UNEXPLAINED EXPENDITURE. DURING THE COUR SE OF SEARCH OPERATION AT THE BUSINESS PREMISES OF SHRI SANDEEP BANSAL, PARTNER O F THE FIRM, A DOCUMENT ANNEXURE A-2 WAS IMPOUNDED. PAGE 33 OF THE ANNEXURE A-2 CONTAINED THE ACCOUNT OF SAKSHI JEWELLERS OF DATED 15/2. HOWEVER , THE YEAR IS NOT MENTIONED. 37. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI NEERA J JAIN LD. COUNSEL FOR THE ASSESSEE, POINTED OUT THAT THE CIT(A) WAS NOT JUSTI FIED IN CONFIRMING THE ADDITION, PARTICULARLY WHEN YEAR IS NOT MENTIONED I N THE DOCUMENT MARKED ANNEXURE A-2. HE VEHEMENTLY ARGUED THAT THIS DOCUME NT DOES NOT PERTAIN TO SEARCH PERIOD. IT IS STATED THAT THE DOCUMENT IS VE RY OLD AND WAS RECORDED IN THE BOOKS OF ACCOUNT RELATING THE PERIOD PRIOR TO PERIO D 2003 AND NO COGNIZANCE OF THE SAID DOCUMENT SHOULD BE TAKEN IN THE ASSESSMENT YEAR 2008-09. IN OUR VIEW, THERE IS A FORCE IN THE ABOVE CONTENTION OF SHRI NE ERAJ JAIN, LD. COUNSEL FOR THE 24 ASSESSEE. THE DOCUMENT IN QUESTION DOES NOT CONTAIN THE SPECIFIC DATE PARTICULARLY THE YEAR. THERE IS NO EVIDENCE ON RECO RD TO PROVE THAT THE DOCUMENT IN QUESTION PERTAINS TO ASSESSMENT YEAR 2008-09 OR THE SEARCH PERIOD. IT IS ALSO RELEVANT TO POINT OUT HERE THAT ASSESSING OFFICER HAS NOT EXAMINED ANY AUTHORIZED PERSON OF SAKSHI JEWELLERS IN ORDER TO B RING THE TRUTH. IN OUR OPINION, THE ADDITION MADE BY THE ASSESSING OFFICER AND CONF IRMED BY THE CIT(A) IS UNWARRANTED AND, ACCORDINGLY, WE DELETE THE ADDITIO N OF RS. 1,20,000/- MADE U/S 69C OF THE ACT. 38. GROUND NO.5 OF THE APPEAL RELATES TO ADDITION O F RS. 1,22,476/- MADE U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE ON INTEREST PAYMENTS MADE TO DIFFERENT PERSONS. 39. WE HAVE DECIDED A SIMILAR ISSUE IN FAVOUR OF TH E ASSESSEE ITA NOS. 41, 42 & 43/CHD/2013. THE FACTS OF THE PRESENT YEAR ARE S IMILAR TO THOSE OF THE EARLIER YEARS. THE DECISION GIVEN IN THE EARLIER YEARS SHAL L ALSO APPLY TO THIS GROUND OF APPEAL WITH EQUAL FORCE. ACCORDINGLY, WE ALLOW TH IS GROUND OF APPEAL AND DELETE THE DISALLOWANCE OF RS. 1,22,476/- MAD U/S 40(A)(IA) OF THE ACT. 40. IN THE RESULT, THE APPEAL IS ALLOWED PARTLY. ITA NO. 45/CHD/2013(ASSESSEES APPEAL AY 2009-10) & ITA NO. 223/CHD/2013 (REVENUES APPEAL AY 2009-10) 41. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS:- 1. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT GI VING THE PROPER OPPORTUNITY OF HEARING WHICH IS AGAINST THE NATURA L JUSTICE. 25 2. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIR MING THE ASSESSMENT MADE U/S 153A (1) (B) R.W.S. 143(3) OF I.T. ACT 196 1 WHICH IS NOT AS PER THE PROVISIONS OF THE ASSESSMENT IN SEARCH CASES. 3. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRM ING THE ADDITION U/S 69-B ON ACCOUNT OF DISCREPANCY IN STOCK. 4. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIR MING THE ADDITION OF RS. 9,91,000/- U/S. 68 ON ACCOUNT OF PEAK CREDIT . 5. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRM ING THE ADDITION OF RS. 32,500/- ON ACOCUNT OF PEAK CREDIT OF DOCUMENT A:2 6.. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIR MING THE ADDITION OF RS. 10,84,000/- WHICH THE ASSESSEE HAS ITSELF SURRENDER ED AND DECLARED AS ITS INCOME. THIS AMOUNTS TO DOUBLE ADDITION. 7. THAT WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEALS:- A) THE APPELLANT DISPUTES THE QUANTUM OF ADDITI ONS/ DISALLOWANCES. B) THAT THE LD. CIT(A) IS NOT JUSTIFIED IN NO T GIVING THE TELESCOPING/SET OFF OF ADDITION AGAINST THE SURRE NDER MADE. C) THAT THE LD. CIT(A) IS NOT JUSTIFIED IN NOT GIVI NG THE TELESCOPING / SET OFF ADDITIONS MADE ON ACCOUNT OF PEAK CREDIT IN ASSESSMENT YEAR 2006-07, ASSESSMENT YEAR 2007-08 & ASSESSMENT YEAR 2008-09 & ASSESSMENT YEAR 2009-10 A GAINST THE ADDITIONS MADE FOR UNEXPLAINED EXPENDITURE / UN EXPLAINED INVESTMENT. D) THAT THE LD. CIT(A) IS NOT JUSTIFIED IN NOT GIV ING THE TELESCOPING / SET OFF ADDITIONS MADE ON ACCOUNT OF PEAK CREDIT IN ASSESSMENT YEAR 2006-07 AND ASSESSMENT YEAR 2007-08 AND ASSESSMENT YEAR 2008-09 AGAINST THE PEAK CREDIT AD DITION CONFIRMED IN ASSESSMENT YEAR 2009-10.. 26 42. AT THE TIME OF HEARING OF THE APPEAL SHRI NEERA J JAIN, LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS FOR GROUND NOS. 1, 2 & 7 OF THE APPEAL AND, HENCE, WE DISMISS THESE GROUNDS AS NOT PRESSED. 43. GROUND NO. 3 OF THE APPEAL RELATES TO ADDITION OF RS. 45,03,505/- SUSTAINED BY THE CIT(A) U/S 69B OF THE ACT ON ACCOU NT OF DISCREPANCY IN STOCK. THE ASSESSING OFFICER DISCUSSED THIS ISSUE IN PARA 4.1 OF THE ASSESSMENT ORDER, WHICH READS AS UNDER:- 4.1 DISCREPANCY IN STOCK:- AT THE TIME OF SURVEY, STOCK OF JEWELLERY ITEMS WAS INVENTORIED AND VALUED BY THE APPROVED VALUER. THE STOCK FOUND AT THE TIME OF SURVEY WAS VALUED AT RS 1,63,44,870/- WHEREAS AS PER TRADING ACCOUNT IT WAS RS 1,26,07,455/- .SH. SANDEE P BANSAL THE PARTNER WAS ASKED TO EXPLAIN THE DISCREPANCY IN VALUE OF STOCK FOUND. HE OFFERED AN ADDITIONAL INCOME OF RS 37,37,415/- FOR TAX IN THE HANDS OF THE FIRM OVER AND ABOVE ITS REGULAR INCOME. HOWEVER, IN COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSEE HAD SUBMITTED THAT THERE WAS NO DISCREPANC Y IN STOCK FOUND. SH. SANDEEP BANSAL THE PARTNER HAD FILED A S UBMISSION DATED 16.12.2010 WHICH IS BEING REPRODUCED BELOW:- 'AS REGARDS DIFFERENCE IN STOCK OF RS 37,37,415/- MENTIONED ABOVE, WE HAVE ALREADY STATED IN OUR PREV IOUS REPLY THAT QUANTITY TAKEN BY DEPARTMENT AT THE TIME OF SURVEY IS IN RECONCILIATION WITH THE QUANTITY AS TA KEN BY THE DEPARTMENT IN COMPARISON TO QUANTITY AS PER BOO KS OF ACCOUNTS. THE DIFFERENCE IN VALUATION IS DUE TO RAT E DIFFERENCE AS AT THE TIME OF VALUATION THE DEPARTME NT HAS TAKEN THE CURRENT MARKET RATE WHEREAS IN THE BOOKS OF ACCOUNTS THE ACTUAL PURCHASE RATE HAS BEEN TAKEN FO R THE PURPOSE OF VALUATION OF STOCK. HENCE, WE HAVE NOT SURRENDERED ANY INCOME ON THIS ACCOUNT IN OUR INCOM E TAX RETURN OF A. Y 2009-10. KEEPING IN THE VIEW OF THE ABOVE FACTS & CIRCUMSTANCES OF THE CASE, WE REQUEST THAT 27 NO COGNIGENCE WITH REGARD TO DIFFERENCE IN THE VALU ATION AT THE TIME OF SURVEY BE TAKEN AND NO ADDITION MAY PLEASE BE MADE ON THIS ACCOUNT. ' ON PERUSAL OF THE ABOVE SUBMISSION AS FILED BY THE ASSESSEE IT IS APPARENT THAT THEY HAVE ATTRIBUTED THE DISCREPAN CY IN VALUATION OF STOCK TO THE VALUATION OF THE SAME AT THE MARKET PRICES ON THE DATE OF SURVEY. BUT THE ASSESSEE DID NOT MAINTAIN ANY STOCK REGISTER. NEITHER AT THE TIME OF SURVEY N OR IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED A NY EXPLANATION HOW IT HAD ARRIVED AT THE VALUE OF STOC K FOUND AS ON THE DATE OF SURVEY AT RS 1,26,07,455/- AT NO STA GE THE ASSESSEE HAD FILED ANY EVIDENCE IN SUPPORT OF HIS S UBMISSION AND THEREFORE, THE PLEA THAT THERE WAS NO DISCREPAN CY IN STOCK CANNOT BE ACCEPTED. HENCE, A SUM OF RS 37, 37,415/- IS BEING ADDED BAC K TO THE TOTAL INCOME OF THE ASSESSEE U/S 69B ON ACCOUNT OF DISCREPANCY IN STOCK. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER MADE TH E ADDITION OF RS. 37,37,415/- U/S 69B OF THE ACT. 44. ON APPEAL, THE CIT(A) HELD THAT THERE WAS A COU NTING MISTAKE AS THE ASSESSING OFFICER IN ASSESSMENT ORDER HAS TAKEN STO CK VALUE AT RS. 1,63,44,870/- WHICH SHOULD ACTUALLY BE 1,62,94,820/-. ACCORDING TO CIT(A), THE COPIES OF THE TWO INVENTORY OF GOLD AND DIAMOND RESPECTIVELY TAKE N AT THE TIME OF SURVEY (RS. 41,66,820 + RS. 1,21,28,000) I.E. RS. 1,62,94,820/- HAS BEEN SHOWN. HE THEREFORE, HELD THAT THE DIFFERENCE OF STOCK TO THE EXTENT OF RS. 50,050/- TAKEN IN EXCESS BY THE ASSESSING OFFICER SHOULD BE DELETED. THE CIT(A) FURTHER HELD THAT THE GP RATE APPLIED BY THE ASSESSING OFFICER WAS CO RRECT AND HE, THEREFORE, CONFIRMED THE ORDER OF THE ASSESSING OFFICER TO TH IS EXTENT. AS REGARDS THE VALUATION OF THE STOCK, THE CIT(A) OBSERVED THAT A T THE TIME OF SURVEY, THE STOCK 28 HAD BEEN VALUED AT RS. 1310 PER GRAM WHICH WAS RATE APPLICABLE FOR 24 CT. THE CIT(A) DIRECTED THE ASSESSING OFFICER THE RATE FOR 22 CT OF RS. 1200/- PER GM SHOULD BE APPLIED. ACCORDINGLY, THE CIT(A) DIRECTE D THE ASSESSING OFFICER TO CALCULATE THE VALUE AT 22 CT AT THE RATE OF RS. 12 00/- PER GM. 45. NOW THE ASSESSEE IS IN APPEAL CHALLENGING THE A DDITION SUSTAINED BY THE CIT(A). HOWEVER, THE REVENUE VIDE GROUND NOS.(I) AN D (II) OF THE APPEAL (ITA NO. 223/CHD/2013) HAS CHALLENGED THE ACTION OF THE CIT(A) IN ALLOWING RELIEF OF RS. 12,33,870/- (37,37,415/- - RS. 25,03,545/-) TO THE ASSESSEE. 46. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS OBS ERVED THAT THE MAIN CONTENTION OF SHRI NEERAJ JAIN, LD. COUNSEL FOR THE ASSESSEE IS THAT WHILE PREPARING THE TRADING ACCOUNT ON THE DATE OF SURVEY , THE GP RATE OF 2.61% HAS BEEN APPLIED. SHRI NEEARAJ JAIN, LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE HEAD OFFICE OF THE ASSESSEE IS SITUATED AT NABHA AN D BRANCH OFFICE IS AT MANIMAJRA, CHANDIGARH AND THE SURVEY OPERATION WAS CARRIED OUT AT CHANDIGARH BRANCH OFFICE ONLY. HE FURTHER POINTED OUT THAT BOO KS OF ACCOUNT FOR BOTH THE OFFICES HAVE BEEN MAINTAINED SEPARATELY. THE GP RAT E OF HEAD OFFICE AND BRANCH OFFICE IN ASSESSMENT YEAR 2008-09 WAS 2.61% AND 27. 29% RESPECTIVELY. TO SUBSTANTIATE THE ABOVE CONTENTION, SHRI NEERAJ JAIN LD. COUNSEL FOR THE ASSESSEE SUBMITTED A COPY OF THE TRADING ACCOUNT FOR HEAD OF FICE AND BRANCH OFFICE FOR ASSESSMENT YEAR 2008-09 SHOWING GP RATE OF 2.61% AN D 27.29% RESPECTIVELY. IT IS RELEVANT TO OBSERVE HERE THAT FOR CALCULATION OF STOCK ON THE DATE OF SURVEY, GP RATE OF 2.61%, WHICH IS OF THE HEAD OFFICE WAS A PPLIED: WHEREAS WHILE CALCULATING THE STOCK AT BRANCH OFFICE, THE GP RATE OF BRANCH OFFICE SHOULD HAVE BEEN APPLIED, WHICH IS 27.29%, PARTICULARLY WHEN T HE BOOKS OF ACCOUNT FOR BOTH THE OFFICES WERE BEING MAINTAINED SEPARATELY. SHRI NEERAJ JAIN LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT BY APPLYING THE GP RA TE OF 27.29% THE CLOSING STOCK WORKS OUT TO RS. 1,52,08,473/- INSTEAD OF RS. 1,26,07,455/- AS MENTIONED 29 AT THE TIME OF SURVEY. HE ACCORDINGLY SUBMITTED TH AT ASSESSING OFFICER HAS WRONGLY TAKEN THE DIFFERENCE OF STOCK TO THE EXTENT OF RS. 26,01,018/- WHILE COMPARING THE STOCK VALUATION MADE BY THE REGISTERE D VALUER WITH THE ESTIMATED TRADING ACCOUNT. 47. CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF B OTH THE PARTIES, WE OBSERVE THAT THE LD. CIT(A) HAS CORRECTLY HELD THA T THE ASSESSING OFFICER HAS WRONGLY TAKEN THE DIFFERENCE OF STOCK TO THE EXTENT OF RS. 50,050/- WHILE COMPARING THE STOCK VALUE MADE BY THE REGISTERED VA LUER WITH THE ESTIMATED TRADING ACCOUNT. THE ASSESSING OFFICER HAS MENTIONE D THE CLOSING STOCK AT THE TIME OF SURVEY AT RS. 1,63,44,870/- WHEREAS AS PER VALUATION MADE BY THE REGISTERED VALUER OF THE DEPARTMENT, THE CLOSING ST OCK WAS VALUED AT RS. 1,62,94,820/-. IN OUR OPINION, THE LD. CIT(A) HAS C ORRECTLY OPINED THAT THE DIFFERENCE OF STOCK TO THE EXTENT OF RS. 50,050/- T AKEN IN EXCESS BY THE ASSESSING OFFICER DESERVES TO BE DELETED. IT IS ALS O OBSERVED THAT THE LD. CIT(A) HAS CORRECTLY HELD THAT THE ASSESSING OFFICER HAS W RONGLY TAKEN THE DIFFERENCE OF STOCK TO THE EXTENT OF RS. 11,83,820/- WHILE COMPAR ING THE STOCK VALUATION MADE BY THE REGISTERED VALUER WITH THE ESTIMATED TRADING ACCOUNT. THE ASSESSING OFFICER HAS TAKEN THE QUANTITIES ON ESTIMATE BASIS FOR NET WEIGHT AND NOT THE ACTUAL WEIGHTS. WE ALSO FIND THAT THE STOCK HAS BEE N VALUED AT RS. 1310 PER GMS FOR 24 CT JEWELLERY AT THE TIME OF SURVEY WHEREAS T HE SAME SHOULD HAVE BEEN CALCULATED AT 22 CT GOLD JEWELLERY WHICH WILL BE RS . 1200 PER GM OF JEWELLERY, AS THE JEWELLERY IS MADE OF 22 CT GOLD AND NOT OF 24 CT GOLD. ACCORDINGLY, WE HOLD THAT THE CIT(A) WAS FULLY JUSTIFIED IN DIRECTING TH E ASSESSING OFFICER TO GIVE THE RELIEF OF RS. 11,83,820/- TO THE ASSESSEE. AS REGAR DS THE GP RATE, WE ARE OF THE OPINION THAT THERE IS A MERIT IN THE SUBMISSIONS M ADE BY THE LD. COUNSEL FOR THE ASSESSEE THAT GP RATE OF BRANCH OFFICE SHOULD HAVE BEEN APPLIED WHICH IS 27.29%. THERE WAS NO JUSTIFICATION IN APPLYING THE GP RATE OF 2.61% OF HEAD OFFICE WHICH IS SITUATED AT NABHA PARTICULARLY WHEN THE BOOKS OF ACCOUNT FOR 30 BRANCH OFFICE AND HEAD OFFICE ARE BEING MAINTAINED SEPARATELY. ADMITTEDLY, THE SURVEY WAS CONDUCTED AT BRANCH OFFICE AT MANIMAJRA, CHANDIGARH WHERE GP RATE OF 27.29%, WHICH SHOULD HAVE BEEN APPLIED. CONSIDER ING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, IN OUR OPINION, THERE WAS NO DISCREPANCY IN THE STOCKS. IN FACT THE DISCREPANCY IN THE STOCK HA S BEEN WORKED OUT BY THE ASSESSING OFFICER ON ESTIMATION. I.E. ESTIMATED WEI GHT AND ESTIMATED RATE HAS BEEN TAKEN BY THE REVENUE DURING THE COURSE OF SURV EY AND THE SAID ESTIMATION VALUE OF THE STOCK COMPARED WITH THE ESTIMATED STOC K VALUED AS PER THE BOOKS OF ACCOUNT BY APPLYING ESTIMATED GP RATE. IT IS WELL SETTLED LAW THAT NO ADDITION CAN BE MADE WHERE THE DISCREPANCIES IN STOCK HAS BE EN WORKED OUT AT ESTIMATION BASIS WITHOUT BRINGING ANY MATERIAL ON RECORD. IN V IEW OF THE ABOVE DISCUSSION, WE DO NOT SEE ANY JUSTIFICATION IN SUSTAINING THE A DDITION OF RS. 25,03,545/- ON ACCOUNT OF DISCREPANCY IN STOCK. THEREFORE, WE ALLO W GROUND NO.3 OF THE ASSESSEES APPEAL AND DISMISS GROUND NOS. (I) & (II ) OF THE REVENUES APPEAL. 48. AS REGARDS GROUND NOS. 4 & 5 OF THE ASSESSEES APPEAL, THE RELEVANT FACTS ARE THAT DURING THE COURSE OF SURVEY OPERATION AT T HE BUSINESS PREMISES OF THE ASSESSEE AT KANGAN, THE JEWELLERY SHOP SCO 854, NO TIFIED AREA COMMITTEE, MANIMAJRA, CHANDIGARH A DOCUMENT ANNEXURE A-16 AND A-17 WERE IMPOUNDED. THESE DOCUMENTS CONTAINED THE DETAILS OF PURCHASES / SALES AND OTHER EXPENSES / RECEIPTS OF THE ASSESSEE FOR DIFFERENT PARTIES. THE DETAILS OF ANNEXURE A-16 AND A-17 ARE AVAILABLE IN PARA 5 OF THE ASSESSMENT ORDE R. THE ASSESSING OFFICER NOTED THAT THE PEAK CREDIT OF THOSE TWO DOCUMENTS ( A-16 AND A-17) CAME TO RS. 19,29,920/- (RS.9,38,920/- + RS. 9,91,000/-) . THE ASSESSEE FAILED TO RECONCILE THESE ENTRIES WITH THE REGULAR BOOKS OF ACCOUNT, TH EREFORE, TOTAL PEAK CREDIT OF RS. 19,29,920/- WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE ACT. DURING THE COURSE OF SURVEY OPERATION, YET ANO THER DOCUMENT I.E. ANNEXURE A-2 WAS ALSO IMPOUNDED. THE PEAK CREDIT OF THE SAID DOCUMENT CAME TO RS. 31 32,500/-. THE ASSESSING OFFICER MADE THE ADDITION O F RS. 32,000/- U/S 68 OF THE ACT. 49. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION OF RS. 9,91,000/- AND ALLOWED A RELIEF OF RS. 9,38,920/-, OBSERVING AS UN DER:- 6.1 I FIND THAT THE CONTENT OF THE SEIZED DOCUMEN TS HAVE BEEN REPRODUCED IN THE IMPUGNED ORDER TO WORK OUT T HE PEAK CREDIT. IT IS THE ASSESSEES CONTENTION THAT THE TR ANSACTION DATES ARE CONTINUOUS FROM 12.0.2006 AND THAT ALL TH E DOCUMENTS SEIZED PERTAIN TO DIFFERENT ASSESSMENT YE AR SHOULD BE CONSIDERED FOR WORKING OUT ONE SINGLE PEAK CREDI T. THIS CONTENTION WAS FOUND INACCURATE AND CONSEQUENTLY WH EREVER THERE WAS A BREAK IN THE TRANSACTION DATES AND WHER E THE OPENING AND CLOSING BALANCE OF THE ANNEXURES DID NO T TALLY, PEAK CREDITS HAVE BEEN WORKED OUT SEPARATELY AS EVI DENT FROM THE APPELLATE ORDERS FOR ASSESSMENT YEARS 2008-09, 2007-08 AND 2006-07. FOR THE DOCUMENT PERTAINING TO THIS YE AR, AS THE OPENING AND CLOSING BALANCE IN RESPECT OF A-16 & A- 17 ARE FOUND TO BE TALLYING, THESE ANNEXURES TWO DOCUMEN TS ARE TAKEN TO PERTAIN TO ONE TRANSACTION. THE ASSESSING OFFICER HAD HOWEVER TAKEN TWO PEAK CREDITS FOR A-16 AND A-17. ACCORDINGLY, THE PEAK CREDIT TO BE TAKEN FOR ADDITI ON HERE U/S 68 IS RS. 9,91,000/- WHICH OCCURS IN A-17. CONSEQUE NTLY THE ADDITION IS TO BE DIRECTED TO BE RESTRICTED TO RS. 9,91,000/-. THE ASSESSEE SUCCEEDS ON THIS GROUND. 50. AS REGARDS THE ADDITION OF RS. 32,500/-, THE CI T(A) OBSERVED THAT THE ASSESSEE COULD NOT RECONCILE THE ENTRIES WITH THE B OOKS OF ACCOUNT. THEREFORE, HE CONFIRMED THE PEAK CREDIT OF RS. 32,500/- AS ADDED BY THE ASSESSING OFFICER. 32 51. THE ASSESSEE IS IN APPEAL AGAINST THE ADDITION OF RS. 9,91,000/- AND RS. 32,500/- CONFIRMED BY THE CIT(A) AND THE REVENUE I S IN APPEAL AGAINST THE RELIEF OF RS. 9,38,920/- GIVEN BY THE CIT(A) TO THE ASSESSEE. 52. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS CORRECTLY APPRECIATED THE FACTS OF THE P RESENT CASE. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 9,91,900/- ON THE BASIS OF THE DOCUMENTS A-16 & A-17 BY CALCULATING THE PEAK CREDIT OF CASH. SHRI NEEARAJ JAIN LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE SINGLE PEAK CREDI T TO THE FINANCIAL YEAR 2008-09 AS CALCULATED BY THE ASSESSING OFFICER IN ASSESSMEN T ORDER CAME TO RS. 9,91,900/- ON 10.11.2008. THE ASSESSING OFFICER HAS MADE THE ADDITION OF THIS PEAK CREDIT IGNORING THE CASH BALANCE AS PER BOOK S OF ACCOUNT ON SUCH DATE I.E THE ADDITION HAS ALSO BEEN MADE FOR THE CASH BALANC E DISCLOSED IN THE BOOKS OF ACCOUNT ON THE SAID DATE. THE SEIZED DOCUMENTS RELA TE TO TRANSACTION BETWEEN 21.11.2008 TO 15.01.2009 AND 25.09.2008 TO 20.11.20 08 RESPECTIVELY. SHRI NEERAJ JAIN, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IF ANY ADDITION ON ACCOUNT OF PEAK CREDIT SHOULD HAVE BEEN CALCULATED FOR THE WHOLE OF THE PERIOD OF THE SEIZED DOCUMENTS WHICH STARTS FROM 25.09.200 8 AND ENDS ON 15.1.2009 THEREBY ONLY ONE SINGLE PEAK CREDIT SHOULD BE ADDED BACK. IN OUR OPINION, LD. CIT(A) HAS CORRECTLY OBSERVED THAT THE OPENING OF CLOSING BALANCE IN RESPECT OF A-16 & A-17 ARE TALLYING WITH EACH OTHER AND HE, TH EREFORE, HAS CORRECTLY HELD THAT THESE TWO DOCUMENTS SHOULD BE TAKEN TO PERTAIN TO ONE TRANSACTION. THE ASSESSING OFFICER HAD TAKEN OVER THE TWO PEAK CREDI TS FOR A-16 & A-17, THEREFORE, ASSESSING OFFICER WAS NOT CORRECT WHILE TAKING TWO PEAK CREDIT OF A- 16 & A17. IN OUR OPINION, THE LD. CIT(A) HAS CORRE CTLY TAKEN THE PEAK CREDIT OF RS. 9,91,000/- WHICH IS REFLECTED IN ANNEXURE A-17. AS REGARDS THE ADDITION OF RS. 32,500/- ALSO, WE DO NOT SEE ANY INFIRMITY IN T HE ORDER OF THE CIT(A). THE ASSESSEE HAS FAILED TO RECONCILE THE ENTRIES WITH THE BOOKS OF ACCOUNT. THUS, CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE, WE REJECT 33 GROUND NOS. 4 & 5 OF THE APPEAL. BEFORE PARTING THI S, WE MAY ADD THAT THE ALTERNATIVE CONTENTION, LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT BENEFIT OF ADDITION MADE ON ACCOUNT OF PEAK CREDIT IN THE IMME DIATE PRECEDING ASSESSMENT YEAR MAY BE GIVEN TO THE ASSESSEE. WE DIRECT THE AS SESSING OFFICER TO CONSIDER AND DECIDE THIS ASPECT OF THE MATTER IN ACCORDANCE WITH LAW AFTER AFFORDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE AS SESSEE. 53. GROUND NO.6 OF THE ASSESSEES APPEAL RELATING T O ADDITION OF RS. 10,84,000/-. WE MAY OBSERVE HERE THAT THE ASSESSING OFFICER NOTED THAT AT THE TIME OF SURVEY OPERATION, STATEMENT OF SHRI SANDEEP BANSAL ONE OF THE PARTNERS OF THE ASSESSEE FIRM WAS RECORDED U/S 132(4)( OF T HE ACT, WHEREBY HE HAD SURRENDERED A SUM OF RS. 1 CRORE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE WAS REQUIRED BY THE ASSESSING OFFICER TO SPECIFY THE MANNER OF THE DISCLOSURE. IN THIS REGARD, THE ASSESSEE SUBMITTED REPLY ON 16.12.2010. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FAILED TO SPECIFY THE MANNER OF DISCLOSURE. HOWEVER, THE ASSESSING OFFICER NOTED TH AT ON PERUSAL OF THE ACCOUNT OF THE ASSESSEE IT WAS FOUND THAT THE SURRENDERED I NCOME OF RS. 10,84,000/- HAS BEEN INCLUDED IN THE TRADING ACCOUNT. ACCORDING TO ASSESSING OFFICER THE SURRENDERED INCOME OF THE ASSESSEE WHOULD BE OVER A ND ABOVE ITS REGULAR INCOME. CONSEQUENTLY, THE SURRENDERED INCOME OF RS. 10.84 LAKHS WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 54. ON APPEAL THE CIT(A) CONFIRMED THE ADDITION FOR THE REASONS STATED IN PARA 9 OF THE ASSESSMENT ORDER AND, HENCE, THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 55. WE HAVE HEARD THE RIVAL SUBMISSIONS . SHRI NEERAJ JAIN , LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE ASSESSING OFFICE R HAS ACCEPTED THAT THE SURRENDERED INCOME OF RS. 10.84 LAKHS HAS BEEN INC LUDED IN THE TRADING ACCOUNT. 34 ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, IF THE A MOUNT OF RS. 10.84 LAKHS HAS BEEN SURRENDERED AND HAS ALREADY BEEN INCLUDED IN T HE RETURN OF INCOME BY INCLUDING THE SAME IN THE TRADING ACCOUNT BY SPECIF ICALLY MENTIONING AS SURRENDERED INCOME AND IT IS ADDED AGAIN TO THE R ETURNED INCOME AT THE TIME OF FILING OF RETURN OR AT THE TIME OF MAKING THE ASSES SMENT, THEN IT WILL AMOUNT TO DOUBLE TAXATION OF THE SAME AMOUNT OF RS. 10.84 LAK HS. A COPY OF THE PROFIT AND LOSS ACCOUNT IS AVAILABLE AT PAGE 19 OF THE ASSESSE ES PAPER BOOK, WHEREIN THE AMOUNT OF RS. 10.84 LAKHS HAS ALREADY BEEN INCLUDED IN THE RETURN OF INCOME BY INCLUDING THE SAME IN TRADING ACCOUNT BY SPECIFICAL LY MENTIONING AS SURRENDERED INCOME EARNED OUT OF BUSINESS ACTIVITY OF THE FIRM. IT IS OBSERVED THAT REGULAR INCOME OF THE ASSESSEE WITHOUT INCLUDING THE AFORES AID SURRENDER WAS RS. 1,18,460/- AFTER INCLUDING THE SURRENDERED INCOME O F RS. 10.84 LAKHS, THE TAXABLE RETURNED INCOME WAS RS. 12,02,460/-. IN OUR OPINIO N, THE AMOUNT IN QUESTION HAS ALREADY BEEN INCLUDED IN THE RETURNED INCOME BY INCLUDING THE SAME IN TRADING ACCOUNT BY SPECIFICALLY MENTIONING AS SURRE NDERED INCOME AND MAKING THE ADDITION ON THE SAME WHILE MAKING THE ASSESSMEN T, IT WILL AMOUNT TO DOUBLE ADDITION. ACCORDINGLY, WE HOLD THAT THERE WAS NO JU STIFICATION IN MAKING THE ADDITION OF RS. 10.84 LAKHS AND WE DELETE THE SAME. THIS GROUND OF APPEAL IS ALLOWED. 56. VIDE GROUND NOS. (III) & (IV) OF THE APPEAL, (I TA NO. 223/CHD/2013), THE REVENUE HAS CHALLENGED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION OF RS. 31,38,527/- MADE ON ACCOUNT OF UNEXPLAINED EXPENDIT URE U/S 69C OF THE ACT. THE ASSESSING OFFICER DISCUSSED THIS ISSUE IN PARA 4.2 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER NOTED THAT DURING THE COURSE OF S URVEY CASH OF RS. 1,01,045/- WAS FOUND BUT AS PER BALANCES PREPARED AS ON 16.1. 2009, BALANCE OF RS. 28,43,782/- WAS FOUND. IN THIS REGARD, SHRI SANDEEP BANSAL, PARNTER OF THE FIRM STATED THAT DURING THE COURSE OF SURVEY HE HAD WITH DRAWN A SUM OF RS. 15 LAKHS. HOWEVER, HE FAILED TO EXPLAIN THE DIFFERENCE OF RS. 12,42,737/-. ACCORDINGLY, , 35 SHRI SANDEEP BANSAL SURRENDERED AN ADDITIONAL INCOM E OF RS. 12,42,737/- IN THE HANDS OF THE FIRM. THE ASSESSING OFFICER OBSERVED T HAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SHRI SANDEEP BANSAL SUBMITT ED A LETTER DATED 16.12.2010 WHEREBY HE HAD RETRACTED FORM HIS SURREN DER. THE EXPLANATION GIVEN BY THE PARTNER OF THE FIRM VIDE HIS LETTER DATED 16 .1.2010, WAS NOT ACCEPTABLE TO THE ASSESSING OFFICER BECAUSE THE ASSESSEE COULD NO T EXPLAIN HOW THE DIFFERENCE IN CASH FOUND AT THE TIME OF SURVEY WAS UTILIZED. T HE ASSESSING OFFICER FURTHER MENTIONED THAT AS PER THE CASH BOOK PRODUCED DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE CASH BALANCE AS ON 16.1.2009 WAS R S. 32,39,572/- BUT AT THE TIME OF SURVEY CASH OF RS. 1,01,045/- WAS FOUND PH YSICALLY. THUS, THERE WAS A DIFFERENCE OF RS. 31,38,527/-. THE ASSESSEE FAILED TO SPECIFY THE PURPOSES FOR WHICH CASH OF RS. 31,38,527/- WAS UTILIZED OR SPENT . IN THAT VIEW OF THE MATTER THE DIFFERENCE OF CASH OF RS. 31,38,527/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. 57. ON APPEAL, THE CIT(A) DELETED THE ADDITION RELY ING ON THE DECISION OF THE ITAT DELHI B BENCH IN THE CASE OF DCIT V EASTERN MEDIKIT LTD (2012) 135 ITD 461 (DELHI). A CCORDING TO LD. CIT(A), THE AFORESAID DECISION OF T HE TRIBUNAL IS FULLY APPLICABLE TO THE FACTS OF THE PR ESENT CASE. 58. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE MATERIALS AVAILABLE ON RECORD. IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY FOLLOWED THE DECISION OF THE ITAT DELHI B BENCH IN THE CASE OF DCIT V EASTERN MEDIKIT LTD (2012) 135 ITD 461 (DELHI) . WHILE DECIDING A SIMILAR ISSUE THE TRIBUNAL HELD AS UNDER:- 7. THUS, THE FACTS ARE THAT SURVEY WAS CONDUCTE D AT THE BUSINESS PREMISES OF THE ASSESSEE ON 08.01.2007. TW O IMPORTANT FACTS WERE RECORDED, I.E., EXCESS STOCK O F RS. 36 1,44,25,183/- WAS FOUND AND THERE WAS CASH DEFICIEN CY OF RS. 80,31,100/-. BOTH THESE AMOUNTS WERE OFFERED FOR TA XATION IN THE STATEMENT FURNISHED BY DIRECTOR-CUM-DGM (FINANC E) TO THE AUTHORIZED OFFICER. THE ASSESSEE-COMPANY RENEGE D COMPLETELY FROM THE STATEMENT AND IT WAS MENTIONED IN NOTES ON ACCOUNTS THAT THE STATEMENT WAS OBTAINED BY FORC E AND THAT THE MATTER SHOULD BE EXPLAINED TO THE AO. IN VIEW O F THIS STAND, NO ENTRY WAS PASSED IN RESPECT OF STOCK OR C ASH IN THE BOOKS OF ACCOUNT. THIS STAND WAS ALSO PARTLY CHANGE D WHILE FILING THE RETURN OF INCOME, IN WHICH THE DISCREPAN CY IN STOCK WAS OFFERED FOR TAXATION BUT DISCREPANCY IN CASH WA S NOT OFFERED FOR TAXATION. THE CASE OF THE LD. COUNSEL I S THAT THE ASSESSEE HAS BEEN TAKING SHIFTING STANDS ON VARIOUS POINTS OF TIME. THE AO HAS MADE ADDITION NOT MERELY ON THE BA SIS OF STATEMENT BUT ALSO ON ACCOUNT OF CASH DISCREPANCY N OTED BY THE SURVEY OFFICER. THE ASSESSEE HAS DISPLAYED DISM AL TAX MORALITY. THERE IS NOTHING ON RECORD TO SHOW THE AP PLICATION OF FORCE OR COERCION. THEREFORE, THE ADDITION MADE BY THE AO IS REQUIRED TO BE RESTORED. ON THE OTHER HAND, THE BURDEN OF THE ARGUMENT OF THE LD. COUNSEL IS THAT THE ADDITIO N HAS BEEN MADE SOLELY ON THE STATEMENT, WHICH DOES NOT HAVE EVIDENTIARY VALUE. THE EXCESS STOCK WHICH RESULTS I N INCOME HAS BEEN OFFERED FOR TAXATION NOTWITHSTANDING THE S TAND TAKEN IN THE NOTES ON ACCOUNTS. HOWEVER, SHORTAGE OF CASH DOES NOT LEAD TO INFERENCE OF INCOME. THE SHORTAGE WAS EXPLA INED DURING THE COURSE OF ASSESSMENT AS THE CASH WAS LYI NG ELSEWHERE. THEREFORE, THE ADDITION IS MADE MERELY O N THE STATEMENT, WHICH DOES NOT HAVE ANY EVIDENTIARY VALU E. 7.1 IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LT D. (SUPRA), THE DISTINGUISHING FEATURE IS THAT ENTRIES WERE MADE IN THE BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR C OURSE OF BUSINESS. THE HON'BLE COURT HELD THAT THIS ADMISSIO N IS AN IMPORTANT PIECE OF EVIDENCE BUT IT WAS OPEN TO THE ASSESSEE TO SHOW THAT IT IS NOT CORRECT. IN THE CASE OF S. KHAD ER KHAN SON ( SUPRA), THE TRIBUNAL HAD RECORDED A FINDING THAT THERE IS NO EVIDENCE OF DURESS. WE FIND THAT THERE IS NO EVIDEN CE OF DURESS IN THIS CASE ALSO. TO THE CONTRARY, THE ASSE SSEE HAS TAKEN UP SHIFTING STANDS IN VARIOUS TIMES AND, THER EFORE, THERE 37 IS REASON TO COME TO THE CONCLUSION THAT THE ASSESS EE TRIED TO FORECLOSE ENQUIRY BY MAKING CONFESSION AT THE TIME OF SURVEY. ITS CONDUCT HAS BEEN DUBIOUS. HOWEVER, THE QUESTION STILL REMAINS AS TO WHETHER AN ADDITION HAS TO BE SUSTAIN ED ON THE BASIS OF EVIDENCE ON RECORD OR MERELY BECAUSE THE A SSESSEE HAS BEEN TAKING SHIFTING STANDS. FURTHER, THERE IS UNANIMITY OF OPINION THAT STATEMENTS U/S 132(4) AND 133A STAND O N DIFFERENT FOOTINGS. THE STATEMENT RECORDED U/S 132( 4) IS ON OATH AND THE STATUTE SPECIFICALLY PROVIDES THAT THI S STATEMENT CAN BE USED FOR THE PURPOSE OF THE ACT. ON THE OTHE R HAND, STATEMENT U/S 133A IS NOT ON OATH AND THE SECTION D OES NOT PROVIDE THAT IT CAN BE USED FOR THE PURPOSE OF THE ACT. THEREFORE, EVIDENTIARY VALUE OF STATEMENT U/S 133A IS MUCH LOWER THAN THE EVIDENTIARY VALUE OF STATEMENT U/S 1 32(4). THERE IS ANOTHER FACTOR IN THIS CASE THAT THE FACT DISCOVERED REGARDING SHORTAGE IN CASH IPSO FACTO DOES NOT LEAD TO INFERENCE OF EARNING INCOME OF RS. 80,31,100/-. THE STATEMENT IS IN RELATION TO THE INFERENCE TO BE DRAWN RATHER THAN THE POSITION OF FACT. THE QUESTION IS-WHETHER, A STATEM ENT REGARDING INFERENCE CAN BE BINDING WITHOUT ANY FURT HER EVIDENCE OF THE ACTUAL EARNING OF INCOME? WE FIND T HAT EVEN IF THE EXPLANATION OF THE ASSESSEE THAT THE CASH IS LY ING ELSEWHERE IS NOT ACCEPTED AND, THEREFORE, THERE IS AN ACTUAL DISCREPANCY IN CASH, THE AMOUNT OR ANY PART THEREOF CANNOT BE BROUGHT TO TAX STRAIGHTWAY UNLESS IT IS SHOWN THAT THE MONIES WERE USED FOR EARNING UNACCOUNTED INCOME BY ENTERIN G INTO UNDISCLOSED TRANSACTIONS. THIS CONCLUSION, ACCORDIN G TO US, STAYS EVEN IN THE FACE OF THE ARGUMENT OF THE LD. C IT, DR THAT THE ASSESSEE HAS DISPLAYED LOW TAX MORALITY. IT IS IN THIS CONTEXT THAT THE CIRCULAR OF THE BOARD, REFERRED TO BY THE LD. CIT (APPEALS), ASSUMES IMPORTANCE. THE OFFICERS HAV E BEEN ADVISED THAT THERE SHOULD BE FOCUS AND CONCENTRATIO N ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INF ORMATION ON WHAT HAS NOT BEEN DISCLOSED OR WHAT IS NOT LIKEL Y TO BE DISCLOSED BEFORE THE REVENUE. THEY HAVE BEEN FURTHE R ADVISED THAT NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. HAVING GONE THROUGH THE STATEME NT, WE FIND THAT IT WAS TENDERED VOLUNTARILY AND THERE WAS NO ATTEMPT 38 TO OBTAIN THE CONFESSION. HOWEVER, THE SURVEY OFFIC ERS LOST FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE O F INCOME WHICH LEADS TO INFORMATION ON WHAT HAS BEEN DISCLOS ED OR WHAT IS NOT LIKELY TO BE DISCLOSED IN THE RETURN. T HEY WERE HAPPY BECAUSE THE DIRECTOR-CUM- DGM (FINANCE) MADE A STATEMENT SURRENDERING THE CASH FOR TAXATION AND DI D NOT GO FURTHER TO GATHER FACTS AS TO WHAT HAS HAPPENED TO THE MISSING CASH. WHILE WE MAY AGREE WITH THE LD. CIT, DR THAT THE ASSESSEE HAS DISPLAYED LOW TAX MORALITY, THAT CANNO T BE A GROUND FOR SUSTAINING AN ADDITION, WHICH INFERENCE IS OTHERWISE NOT DEDUCTIBLE UNDER THE LAW. THE DEPARTM ENT HAS NO EVIDENCE EXCEPT SHORTAGE OF CASH, WHICH DOES NOT LEAD TO THE INFERENCE OF EARNING EQUIVALENT INCOME. IN THES E CIRCUMSTANCES, THE ORDER OF THE LD. CIT (APPEALS) C ANNOT BE SAID TO BE PERVERSE OR ILLEGAL. ACCORDINGLY, WE ARE OF THE VIEW THAT THE LD. CIT (APPEALS) WAS RIGHT IN DELETING TH IS ADDITION. 59. IN THIS CASE, THE REVENUE AUTHORITIES RECORDED THE STATEMENT OF SHRI SANDEEP BANSAL, PARTNER OF THE ASSESSEE FIRM U/S 1 33A OF THE ACT DURING THE COURSE OF SURVEY ACTION. IN THE ABOVE DECISION, TH E TRIBUNAL HAS HELD THAT THE STATEMENT RECORDED U/S 133A OF THE ACT IS NOT ON OA TH AND SECTION DOES NOT PROVIDE THAT IT CAN BE USED FOR THE PURPOSE OF ACT. THEREFORE, EVIDENTIAL VALUE OF STATEMENT U/S 133A IS MUCH LOWER THAN THE EVIDENTI AL VALUE OF STATEMENT RECORDED U/S 132(4) OF THE ACT. IN THIS CASE ALSO, THE REVENUE HAS NO EVIDENCE EXCEPT THE SHORTAGE OF CASH, WHICH DOES NOT LEAD T O THE INFERENCE TO EARNING EQUIVALENT INCOME. APPLYING THE RATIO OF THE ABOVE DECISION TO THE FACTS OF THE PRESENT CASE, WE ARE OF THE VIEW THAT CIT(A) WAS FU LLY JUSTIFIED IN DELETING THE ADDITION. ACCORDINGLY, WE DO NOT FIND ANY MERITS IN GROUND NOS. (II) & (IV) OF THE REVENUES APPEAL. ACCORDINGLY, WE DISMISS THESE GROUNDS OF APPEAL. 39 60. IN THE RESULT, THE ITA NO. 45/CHD/2013 IS ALLOW ED PARTLY AND ITA NO. 223/CHD/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.04.2016 SD/- SD/- (RANO JAIN) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 29 TH APRIL, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 40