M/s Kesarwani Sheetalaya, Allahabad V. DCIT, Allahabad

ITA 436/ALLD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2188 (ITAT-ALLAHABAD)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 25-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANDEEP CHAUHAN
• Assessee Lawyers: ANAND GODBOLE; S P AGRAWAL S
• Keywords: Business expenditure; Income from undisclosed sources; Search and seizure; Document seized; Valuation report; Agreed addition; Assessment record; Documents seized
• Section: 143(3); 153A; 234B; 27; 37; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.436/A/2012 ASSESSMENT YEAR: 2004-05 M/S. KESARWANI SHEETALAYA VS. DY. COMMISSIONER OF INCOME TAX, SAHSON, ALLAHABAD. CENTRAL CIRCLE, ALLAHABAD. (PAN: AADFK 6563 D). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANAND GODBOLE & SHRI S.P. AGRAWAL, ADVOCATES RESPONDENT BY : SHRI SANDEEP CHAUHAN, CIT (D.R.) DATE OF HEARING : 06.06.2013 DATE OF PRONOUNCEMENT : 25.06.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 31.07.2012 PASSED BY THE LD. CIT(A), ALLAHABAD FOR THE ASSESSM ENT YEAR 2004-05. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 2 ITA NO.436/A/2012 A.Y. 2004-05 1. THAT IN ANY VIEW OF THE MATTER ORDER DATED 28.1 2.2011 PASSED UNDER SECTION 153A(B) OF THE INCOME TAX ACT IS WITH OUT JURISDICTION, ILLEGAL, BAD IN LAW AND FRAMED IN ARBITRARY MANNER AND HIS ACTION PARTLY CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS HIGHLY UNJUSTIFIED IN THE FACTS AND CIRCUMSTANCES O F THE CASE AND THE ADDITION/DISALLOWANCES HAVE BEEN MAINTAINED BY THE COMMISSIONER OF INCOME TAX (APPEALS) WITHOUT ANY REASON BY IGNORING THE NATURE OF CLAIM. 2. THAT IN ANY VIEW OF THE MATTER FOR THE YEAR UNDE R CONSIDERATION ORIGINAL ASSESSMENT WAS MADE UNDER SECTION 143(3) O F THE INCOME TAX ACT ON THE BASIS OF DISCLOSED INCOME AS PER BOOKS O F ACCOUNTS AND DETAILS SCRUTINY AND EXAMINATION OF BOOKS OF ACCOUN TS BY THE THEN ASSESSING OFFICER HENCE THE SAID ASSESSMENT IS NOT LIABLE FOR ABATEMENT UNDER SECTION 153A OF THE INCOME TAX ACT. 3. THAT IN ANY VIEW OF THE MATTER ASSESSMENT FRAMED UNDER SECTION 153A(B) OF THE INCOME TAX ACT DATED 28.12.2011 BASE D ON ONLY REGULAR BOOKS OF ACCOUNTS WHICH WAS EXAMINED EARLIE R AND NOT ON ANY SEARCH MATERIAL FOUND IN THE COURSE OF SEARCH DATED 27.08.2009 IS WHOLLY WITHOUT JURISDICTION AND INVALID HENCE TWO L OWER AUTHORITIES WERE WRONG/INCORRECT IN MAKING THE ADDITION/DISALLO WANCE AND CONFIRMING THE SAME AS PER THEIR OWN WHIM AND WISHE S SIMPLY BASED ON WRONG INFERENCES IN RESPECT OF POINT IN ISSUE. 4. THAT IN ANY VIEW OF THE MATER DISALLOWANCE OF RS .84,277.00 MADE UNDER THE HEAD LOADING AND UNLOADING EXPENSES AND SUCH DISALLOWANCE WAS MADE WITHOUT CONSIDERING THE NATUR E OF BUSINESS, NEED OF SUCH EXPENDITURE FROM THE POINT OF VIEW OF TRADERS AND HIS ACTION AS CONFIRMED BY THE COMMISSIONER OF INCOME T AX (APPEALS) IS HIGHLY UNJUSTIFIED AND SPECIALLY WHEN THERE IS NO P ROVISION UNDER THE INCOME TAX ACT TO DISALLOW THE EXPENDITURE @ 20% HE NCE THE DISALLOWANCE IS UNWARRANTED. 5. THAT IN ANY VIEW OF THE MATTER THE OBSERVATION O F THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN PARA-5.2 OF HIS ORDER FOR CONFIRMING THE DISALLOWANCE ARE GENERAL IN NATURE A ND NOT FROM THE ANGLE OF TRADER WHO ACTIVELY ENGAGED IN SUCH BUSINE SS AND WHO SPENT THE AMOUNT IN REGULAR COURSE OF BUSINESS SINCE THE EXPENDITURE 3 ITA NO.436/A/2012 A.Y. 2004-05 RECORDED IN BOOKS AND THE BOOKS ENTRIES ARE NOT IN DOUBT HENCE THE DISALLOWANCE OF RS.84,277.00 IS HIGHLY UNJUSTIFIED. 6. THAT IN ANY VIEW OF THE MATTER DISALLOWANCE OF R S.47,268.00 @ 10% OUT OF DIESEL EXPENSES AS CLAIMED BY THE APPELL ANT AND THE ACTION OF TWO LOWER AUTHORITIES IS HIGHLY UNJUSTIFIED AND INCORRECT WHEN THE EXPENDITURE ARE SUPPORTED BY VOUCHERS AND MOST OF T HE PAYMENT MADE BY CHEQUES TO THE DEALERS HENCE THE DISALLOWANCE MA INTAINED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS UNWARRANTED . THE DECISIONS CITED BY THE COMMISSIONER OF INCOME TAX ( APPEALS) ARE ON DIFFERENT FACT AND NOT APPLICABLE IN THE PRESENT CA SE. 7. THAT IN ANY VIEW OF THE MATTER IN THE ORIGINAL A SSESSMENT ORDER DATED 20.12.2006 PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT NO DISALLOWANCE WAS MADE UNDER THE HEAD OF DIESEL E XPENSES BY CONSIDERING THE NATURE OF BUSINESS, BOOKS ENTRIES H ENCE THE TWO LOWER AUTHORITIES WRONG IN MAKING AND CONFIRMING THE ADDI TION. 8. THAT IN ANY VIEW OF THE MATTER ADDITION OF RS.4, 85,975.00 HAS BEEN MADE BY THE ASSESSING OFFICER SIMPLY ON THE BA SIS OF DVOS REPORT IGNORING THE FACT THAT EXPENDITURE IN CONSTR UCTION OF BUILDING ARE RECORDED IN REGULAR BOOKS, THERE WAS NO REJECTI ON OF BOOKS, NO PROVISO WAS INVOKED, NO MATERIAL FOUND IN THE COURS E OF SEARCH REGARDING OUTSIDE EXPENDITURE HENCE THE TWO LOWER A UTHORITIES WERE WRONG IN MAKING AND CONFIRMING THE ADDITION. 9. THAT IN ANY VIEW OF THE MATTER THE TWO LOWER AUT HORITIES TREATED THE DVOS REPORT AS GOSSIPLE TRUTH WHEN THE SAME IS SIMPLE AND OPINION AND SPECIALLY WHEN DVO INSPECTED THE PROPER TY ON 18.10.2011 WHICH FALLS IN ASSESSMENT YEAR 2012-13 A ND YEAR WISE DETAILS OF CONSTRUCTION ARE RECORDED IN BOOKS THERE FORE THE ACTION OF THE TWO LOWER AUTHORITIES IS GENERAL, VAGUE AND SIM PLY TO JUSTIFY SEARCH AS SUCH THE ACTION IS HIGHLY UNJUSTIFIED AND THE ADDITION IS LIABLE TO BE DELETED. 10. THAT IN ANY VIEW OF THE MATTER THE ADDITION OF RS.4,85,975.00 MADE BY THE ASSESSING OFFICER WITHOUT CONSIDERING T HE EARLIER ASSESSMENT RECORDS FOR ASSESSMENT YEAR 1996-97 TO 1 999-2000 WHEN AN IDENTICAL TYPE OF ADDITION IN THE APPELLANTS OW N CASE WAS MADE 4 ITA NO.436/A/2012 A.Y. 2004-05 AND FINALLY DELETED BY THE HONBLE ITAT BY ORDER DA TED 21.07.2006 AND THE SAID DECISION IS BINDING ON THE LOWER AUTHO RITIES BUT NO COGNIZANCE WAS GIVEN HENCE THE ADDITION IS UNWARRAN TED. 11. THAT IN ANY VIEW OF THE MATTER ADDITION/DISALLO WANCE WAS MADE AND MAINTAINED BY THE TWO LOWER AUTHORITIES IGNORIN G THE BOOKS ENTRIES, PAST RECORD, NEED OF BUSINESS EXPENDITURE, NATURE OF BUSINESS AND BY GIVING WEIGHTAGE ONLY TO DVOS REPORT WITHOU T ANYTHING FURTHER TO TAKE ADDITION AND WITHOUT REJECTING THE BOOKS HENCE THE ADDITION/DISALLOWANCE MADE ARE UNWARRANTED. 12. THAT IN ANY VIEW OF THE MATTER ADDITION OF RS.4 0,500.00 WHICH WAS THE ADVANCE GIVEN TO MR. B. D. PANT AND SANJAY KESARWANI EMPLOYEES OF THE FIRM AND SUCH AMOUNT WAS GIVEN FRO M DEFINITE SOURCE HENCE THE TWO LOWER AUTHORITIES ARE WRONG AND INCOR RECT IN MAKING AND MAINTAINING THE ADDITION. 13. THAT IN ANY VIEW OF THE MATTER THE ADDITION OF RS.10,000.00 BY SAYING INVESTMENT FROM UNDISCLOSED SOURCE IS HIGHLY UNJUSTIFIED. 14. THAT IN ANY VIEW OF THE MATTER ASSESSMENT FRAME D IS ABINITIO VOID AND UNLAWFUL AND BAD IN LAW WITHOUT APPRECIATI ON OF FACTS AND UTTER DISREGARD OF THE SUBMISSIONS MADE BY THE ASSE SSEE WHICH ACTION OF THE TWO LOWER AUTHORITIES ARE NOT CORRECT. 15. THAT IN ANY VIEW OF THE MATTER NO REASONABLE OP PORTUNITY WAS PROVIDED TO THE ASSESSEE AS SUCH THE ADDITION MADE BY THE ASSESSING OFFICER UNDER DIFFERENT HEAD AND PARTLY CONFIRMED B Y THE COMMISSIONER OF INCOME TAX (APPEALS) ARE UNWARRANTE D. 16. THAT IN ANY VIEW OF THE MATTER THE PENAL INTERE ST CHARGED UNDER SECTION 234A, 234B AND 234C OF THE INCOME TAX ACT I S INCORRECT AND BEFORE CHARGING INTEREST NO OPPORTUNITY OF BEING HE ARD WAS ALLOWED TO THE APPELLANT NOR ANY WORKING OF CHARGING OF INTERE ST WAS PROVIDED TO THE APPELLANT. THE PENALTY NOTICE UNDER SECTION 27 1(1)(C) HAS ALSO BEEN WRONGLY ISSUED AS THE ASSESSEE DID NOT CONCEAL ANY INCOME. 5 ITA NO.436/A/2012 A.Y. 2004-05 17. THAT IN ANY VIEW OF THE MATTER THE APPELLANT RE SERVES HIS RIGHT TO TAKE ANY FRESH GROUND OF APPEAL OR MODIFY/AMEND OR WITHDRAW THE SAME BEFORE OR AT THE TIME OF HEARING OF APPEAL. IT IS, THEREFORE MOST RESPECTFULLY PRAYED THAT RELI EF MAY PLEASE BE ALLOWED ACCORDINGLY. 3. THE LD. AUTHORISED REPRESENTATIVE DID NOT PRESS GROUND NOS.1, 2 & 3 CHALLENGING LEGALITY OF THE A.O.S ORDER. SINCE TH E LD. AUTHORISED REPRESENTATIVE DID NOT PRESS THESE GROUNDS, THEREFORE THESE GROUND S I.E. GROUND NOS.1, 2 & 3 ARE DISMISSED. HOWEVER, THE LD. AUTHORISED REPRESENTAT IVE SUBMITTED THAT THE FIRST EFFECTIVE GROUNDS PERTAIN TO ADDITION OF RS.84,277/ - DISALLOWANCE OUT OF EXPENDITURE WHICH HAS BEEN RAISED AS GROUND NOS.4 & 5 IN GROUNDS OF APPEAL. 4. THE BRIEF FACTS OF THE GROUND NO.4 & 5 ARE THAT THE ASSESSEE FIRM IS ENGAGED IN COLD STORAGE BUSINESS AND IT HAS TWO BRANCHES, O NE AT SAHSON IN THE NAME OF M/S BHOLA SHEETGRIH AND OTHER IN THE NAME OF KESARWANI SHEETALAYA AT SORAON. A SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT, 196 1 (THE ACT HEREINAFTER) WAS CARRIED OUT ON 27.08.2009 IN THE GROUP CASE OF KESA RWANI ZARDA BHANDAR, SAHSON, ALLAHABAD AND ITS PARTNERS. THE ASSESSEE FIRMA IS ONE OF THIS GROUP IN WHICH ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED ON SIMULTA NEOUSLY. A NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED ON 07.07.2010. A NOTICE UNDER SECTION 143(2) WAS ISSUED ON 19.10.2010. DURING THE COURSE OF EXA MINATION OF BOOKS OF ACCOUNT 6 ITA NO.436/A/2012 A.Y. 2004-05 THE A.O. NOTICED THAT BILLS AND VOUCHERS APPERTAINI NG TO LOADING AND UNLOADING EXPENSES FOR HEAD OFFICE AND BRANCHES WERE NOT SUPP ORTED BY VOUCHERS. SOME OF THE VOUCHERS WERE NOT PRODUCED BEFORE THE A.O. TH E A.O., AFTER CONSIDERING HE ASSESSEES SUBMISSION, OBSERVED THAT THE ASSESSEE H AS ENHANCED ITS EXPENSES TO REDUCE TAX LIABILITY. THEREFORE, THE A.O. DISALLOW ED 20% OF RS.4,21,385/- BEING EXPENSES CLAIMED UNDER LOADING AND UNLOADING AND AC CORDINGLY CALCULATED AMOUNT OF ADDITION OF RS.84,277/-. THE A.O. MADE THE ADDI TION OF RS.84,277/- DISALLOWING OUT OF LOADING AND UNLOADING EXPENSES. THE CIT(A) CONFIRMED THE ORDER OF THE A.O. AFTER CONSIDERING THE ASSESSEES SUBMISSION AN D REMAND REPORT OF THE A.O. OBSERVING AS UNDER :- (PAGE NO.12, PARAGRAPH NO.5.2 ) I HAVE GONE THROUGH THE ORDER OF THE A.O., SUBMISS ION OF THE APPELLANT AND THE REMAND REPORT OF THE A.O. IN THE WRITTEN SUBMISSION, THE APPELLANT HAS EMPHASIZED THE NEED O F LABOURERS FOR TURNING OR SHIFTING OF THE POTATO BAGS. I DO NOT A GREE WITH THE SUBMISSION OF THE APPELLANT THAT THE A.O. DID NOT P IN POINT ANY ITEM OF EXPENDITURE NOT SUPPORTED BY BILLS/VOUCHERS. AS A MATTER OF FACT, THE A.O. HAS CLEARLY MENTIONED THAT NO BILLS & VOUCHERS WERE FOUND DURING THE COURSE OF SEARCH AND SEIZURE ACTION. IF THE GENERAL CONDITIONS OF MAINTENANCE OF BILLS & VOUCHERS HAVE BEEN MENTIONED BY THE A.O., THERE WAS NO NEED TO SINGLE OUT A PART ICULAR ITEM OF PAYMENT. I DO NOT AGREE WITH THE APPELLANT THAT ON CE THE MATTER WAS EXAMINED BY THE A.O. IN THE REGULAR ASSESSMENT PROC EEDINGS U/S 143(3), THERE WAS NO NEED TO FURTHER EXAMINE THE MA TTER. IN FACT, THE EVIDENCE THAT HAS BEEN FUND ON CONDUCTING THE SEARC H THAT THE ASSESSEE DID NOT HAVE BILLS AND VOUCHERS FOR LOADIN G AND UNLOADING EXPENSES WAS NOT AVAILABLE WITH THE A.O. WHO PASSED THE ORIGINAL ASSESSMENT ORDER. THERE IS NO DENIAL OF THE FACTS THAT FOR CARRYING OUT LOADING AND UNLOADING WORK THERE IS NEED OF LABOUR. BU AT THE SAME TIME, THE ASSESSEE HAS TO ESTABLISH AS TO WHAT EXTE NT THE PAYMENTS TO 7 ITA NO.436/A/2012 A.Y. 2004-05 THE LABOURS WERE MADE IN THIS RESPECT. IT IS NOT O PEN TO ANYBODY TO RECORD ANY EXPENDITURE BEHIND THE CLAIM OF ITS EXIG ENCY. I ALSO DO NOT AGREE WITH THE CLAIM OF THE APPELLANT THAT BOOKS OF ACCOUNT WERE NOT REJECTED BY THE A.O. THE BOOKS OF A/C MAY BE REJEC TED BY EXPLICIT REMARKS OR BY IMPLICIT REMARKS. WHEN THE A.O. STAT ES THAT THE EXPENSES ARE NOT VERIFIABLE IN THE ABSENCE OF BILLS & VOUCHERS, SHE DIRECTLY SAYS THAT THE BOOKS OF A/C ARE NOT RELIABL E. THE REPLY OF THE APPELLANT GIVEN BEFORE THE A.O. VOUCHERS BEING V ERY OLD ONE ARE PRESENTLY NOT TRACEABLE SPEAKS FOR ITSELF. 5. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. THE ADMITTED FACTS OF THE CASE ARE THAT IT IS A CAS E OF SEARCH ASSESSMENT UNDER SECTION 153(A) OF THE ACT. IT IS ADMITTED FACT THA T THERE IS NO INCRIMINATING MATERIAL FOUND PERTAINING TO DISALLOWANCE OF RS.84,277/-. T HE REVENUES CASE IS THAT THE ASSESSEE HAS ENHANCED ITS EXPENSES TO REDUCE TAX LI ABILITY. THE A.O. HAS MADE ADHOC DISALLOWANCE OF 20% WITHOUT GOING INTO DETAIL S. REGARDING ADHOC DISALLOWANCE, WE FIND THAT EVEN IN REGULAR ASSESSME NT SUCH ADDITIONS ARE NOT SUSTAINABLE. SECTION 37 OF THE ACT PROVIDES THAT I F THE ASSESSEE HAS LAID OUT OR EXPENSED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, THE EXPENSES ARE ALLOWABLE. IN THE CASE UNDER CONSIDERATION, THERE IS NO DISPUTE ABOUT THE FACT THAT THE EXPENDITURE WAS LAID OUT AND EXPENDED WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE A.O. DID NOT FIND ANY CONTRARY MA TERIAL TO THIS FACT. ONCE IT IS FOUND THAT THE EXPENDITURE HAS BEEN LAID OUT AND EX PENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, WE ARE OF THE CONSIDER ED VIEW THAT SUCH ADHOC 8 ITA NO.436/A/2012 A.Y. 2004-05 DISALLOWANCE OUT OF LOADING AND UNLOADING MERELY ON THE BASIS OF PRESUMPTION THAT THE ASSESSEE HAS ENHANCED THE EXPENSES TO REDUCE TA X LIABILITY UNLESS CONTRARY MATERIAL IS AVAILABLE ON RECORD, SUCH ADDITION IS N OT SUSTAINABLE IN LAW. WE, THEREFORE, DELETE THE ADDITION OF RS.84,277/- 6. THE SECOND EFFECTIVE GROUND IS IN RESPECT OF ADD ITION OF RS.47,260/- BEING 10% DISALLOWANCE OUT OF DIESEL EXPENSES. THIS ISSU E HAS BEEN RAISED IN GROUND NOS.6 & 7 OF GROUND OF APPEAL. 7. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THIS ISSUE IS COVERED BY THE ORDER OF I.T.A.T., ALLAHABAD BENCH IN ASSESSEES OW N CASE IN ITA NO.440/ALLD./2012 VIDE ORDER DATED 30.11.2012 WHERE IN THE I.T.A.T. HAS RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 5%. THE RELEVANT FINDING OF THE I.T.A.T. IS REPRODUCED AS BELOW :- 16. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN DISALL OWING THE EXPENSES UNDER THIS HEAD BECAUSE IT WAS ADMITTED BY THE ASSE SSEE BEFORE THE AO THAT CERTAIN VOUCHERS ARE MISPLACED OR NOT TRACEABL E. HOWEVER, THE AO HAS NOT GIVEN EXACT DETAILS OF THE AMOUNT, IN WH ICH THE VOUCHERS HAVE NOT BEEN PRODUCED BEFORE HIM AT ASSESSMENT STA GE. THE DIESEL IS USED IN GENERATOR, WHICH IS NECESSARY FOR RUNNING O F COLD STORAGE DUE TO FREQUENT FAILURE OF ELECTRICITY IN THE STATE OF U.P. THEREFORE, IT WAS NECESSARY COMPONENT/EXPENSE FOR RUNNING THE COLD ST ORAGE. 9 ITA NO.436/A/2012 A.Y. 2004-05 CONSIDERING THE ABOVE, IT WOULD BE REASONABLE AND A PPROPRIATE TO RESTRICT THE ADDITION BY DISALLOWING 5% OF THE EXPE NSES INSTEAD OF 10% CONFIRMED BY THE AUTHORITIES BELOW. WE, ACCORDINGLY , MODIFY THE ORDERS OF THE AUTHORITIES BELOW AND RESTRICT THE AD DITION OF DISALLOWANCE TO 5%. IN THE RESULT, THESE GROUNDS OF APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED. 8. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND FOUND THAT ON IDENTICAL SET OF FACTS, THE I.T.A.T., ALLAHABAD BEN CH HAS DECIDED THE ISSUE SUSTAINING THE DISALLOWANCE TO THE EXTENT OF 5% OF THE EXPENSES INSTEAD OF 10% CONFIRMED BY THE CIT(A). SINCE THE FACTS ARE IDENT ICAL, TO MAINTAIN CONSISTENCY, WE FOLLOW THE ORDER OF I.T.A.T. (SUPRA) AND IN THE LIGHT OF THE FACT, ADDITION BY DISALLOWANCE OF 5% OF THE EXPENSES INSTEAD OF 10% C ONFIRMED BY THE AUTHORITIES IS SUSTAINED. THE A.O. IS DIRECTED ACCORDINGLY. 9. THE THIRD EFFECTIVE GROUND IS IN RESPECT OF ADDI TION OF RS.4,85,975/- ON ACCOUNT OF DVOS REPORT WHICH HAS BEEN RAISED IN GR OUND NOS.8, 9 10 & 11 OF GROUNDS OF APPEAL. 10. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T THIS ISSUE IS ALSO COVERED BY THE ORDER OF I.T.A.T., ALLAHABAD BENCH IN ASSESS EES OWN CASE IN ITA NO.440/ALLD./2012 VIDE ORDER DATED 30.11.2012. 10 ITA NO.436/A/2012 A.Y. 2004-05 11. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATI VE, WE FIND THAT ON IDENTICAL SET OF FACTS THE I.T.A.T, ALLAHABAD BENCH HAS DECID ED THE ISSUE BY SENDING BACK THE MATTER TO THE FILE OF A.O. THE RELEVANT FACTS AND FINDING OF THE I.T.A.T. ARE REPRODUCED AS UNDER :- 19. ON GROUND NO. 20 AND 21, THE ASSESSEE CHALLENG ED THE ADDITION OF RS.5,47,928/- ON ACCOUNT OF ADDITION UNDER THE H EAD BUILDING. THE AO FOUND THAT THE ASSESSEE HAS MADE ADDITION TO THE FIXED ASSETS UNDER THE HEAD BUILDING. THE ASSESSEE WAS REQUIRED TO PRODUCE THE BILLS/VOUCHERS FOR VERIFICATION BUT NO COMPLIANCE W AS MADE. THEREFORE, THE MATTER WAS REFERRED TO THE VALUATION CELL ON 19.10.2011, WHO HAD SUBMITTED THE REPORT ON 09.12.2 011. THIS REPORT WAS CONFRONTED TO THE ASSESSEE AND THE ASSESSEE FIL ED HIS OBJECTIONS IN WHICH ONE OF THE OBJECTIONS WAS THAT THE REPORT OF THE DVO IS NOT INDEPENDENT AND IT WAS PREPARED AFTER OBTAINING THE DETAILS OF YEAR- WISE INVESTMENT IN CONSTRUCTION FROM THE ASSESSEE. IT WAS ONLY THE OPINION OF THE AO AND THAT THE DVO INSPECTED THE PR OPERTY ON 18.11.2011 WHEREAS THE CONSTRUCTION FALL IN DIFFERE NT ASSESSMENTS FROM 2004-05 TO 2010-11. THE AO, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND THE DIFFERENCE IN THE COST OF C ONSTRUCTION / INVESTMENT AS NOTED BY THE DVO AND DISCLOSED BY THE ASSESSEE WAS CONSIDERED AS INVESTMENT FROM UNDISCLOSED SOURCES I N A SUM OF RS.5,47,928/- AND ADDITION WAS ACCORDINGLY MADE. TH E LD. CIT(A) FOLLOWING HIS ORDER FOR THE ASSESSMENT YEAR 2005-06 CONFIRMED THE ADDITION. THE LD. COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNT WHICH HAVE NOT B EEN REJECTED AND DURING THE COURSE OF SEARCH, NO INCRIMINATING MATER IAL WAS FOUND AGAINST THE ASSESSEE. THE AO DID NOT REJECT THE BOO KS OF ACCOUNT OF THE ASSESSEE WHICH CONTAINED DAY-TO-DAY EXPENDITURE/INV ESTMENT RECORDED IN THE BOOKS OF ACCOUNT. THEREFORE, THE ADDITION IS UNJUSTIFIED. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDERS OF TH E AUTHORITIES BELOW. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD. HONBLE SUPREME COURT IN THE CASE OF SARGAM CINENA VS. CIT, 328 ITR 513 HELD THAT WHEN BOOKS OF ACCOUNT OF THE ASSESSEE ARE NOT 11 ITA NO.436/A/2012 A.Y. 2004-05 REJECTED, THE ASSESSING OFFICER CANNOT REFER THE MA TTER TO THE DEPARTMENTAL VALUATION OFFICER. HONBLE RAJASTHAN H IGH COURT IN THE CASE OF CIT VS. PRATAPSINGH AMROSINGH RAJENDRA SING H & DEEPAK KUMAR, 200 ITR 788 HELD THAT THERE WAS NO DISPUTE THAT THE ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNT AND SAME HAD BEE N ACCEPTED IN PAST AND NO DEFECTS WERE POINTED OUT IN THE BOOKS. THE EXPENSES WERE FULLY SUPPORTED BY VOUCHERS. FULL DETAILS WERE ALSO MENTIONED IN RESPECT OF EACH ITEMS IN THE BOOKS. SIMPLY BECAUSE VALUATION REPORT WAS OF A HIGHER AMOUNT, BOOKS COULD NOT BE SAID TO BE UNRELIABLE. THE TRIBUNAL WAS, THEREFORE, JUSTIFIED IN DELETING THE ADDITION OF RS.55,780/-. THE ASSESSEE FILED DETAILS OF INVESTM ENT MADE IN EARLIER YEARS IN THE PROPERTY AT PAGES 116 OF THE PAPER BOO K, WHICH SUPPORT THE SUBMISSIONS OF THE ASSESSEE THAT INVESTMENT HAS BEEN MADE FROM THE ASSESSMENT YEAR 2004-05 TO 2010-11. THE ASSESSE E MAINTAINED PROPER BOOKS OF ACCOUNT IN PAST AND IT WAS ONLY WHE N NO REGULAR BOOKS OF ACCOUNT WERE FOUND DURING THE COURSE OF SU RVEY, THE AO INFERRED THAT THE ASSESSEE DID NOT MAINTAIN REGULAR BOOKS OF ACCOUNT, BUT WITH REGARD TO SHORTAGE OF CASH ON WHICH ADDITI ON OF RS.37,30,710/- WAS MADE, THE AO ON PERUSAL OF THE A UDIT REPORT RELEVANT TO ASSESSMENT YEAR UNDER APPEAL TOOK THE F IGURE OF CASH AVAILABLE WITH THE ASSESSEE FIRM AT RS.64,70,642/-. THUS, THE AO ACTED ON THE AUDIT REPORT, WHICH IS PREPARED ON THE BASIS OF THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THUS, THERE WER E NO REASONS TO DISCARD THE BOOKS OF ACCOUNT MERELY BECAUSE THE SAM E WERE NOT FOUND DURING THE COURSE OF SURVEY. THE AO SHOULD HAVE VER IFIED EACH AND EVERY ENTRY FROM THE BOOKS OF ACCOUNT OF THE ASSESS EE ON THIS ISSUE BEFORE MAKING REFERENCE TO THE DVO. HOWEVER, NO SUC H FINDINGS HAVE BEEN GIVEN AND THE AO MERELY BECAUSE THE ASSESSEE D ID NOT PRODUCE BILLS AND VOUCHERS REFERRED THE MATTER TO THE DVO F OR ESTIMATING COST OF CONSTRUCTION. THE FINDINGS OF THE AO ARE, THEREF ORE, NOT JUSTIFIED IN VIEW OF THE JUDGMENTS OF HONBLE SUPREME COURT AND RAJASTHAN HIGH COURT REFERRED TO ABOVE. IT, THEREFORE, APPEARS THA T THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF THE AO. WE ACCORDIN GLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THIS ISSUE AND R ESTORE THE MATTER TO THE FILE OF THE AO WITH DIRECTION TO RE-DECIDE THE ISSUE BY CONSIDERING THE BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE. IN T HE RESULT, GROUND NO. 20 & 21 OF THE APPEAL OF THE ASSESSEE, ARE ALLO WED FOR STATISTICAL PURPOSES. 12 ITA NO.436/A/2012 A.Y. 2004-05 12. SINCE THE FACTS ARE IDENTICAL, TO MAINTAIN CONS ISTENCY, WE FOLLOW THE ORDER OF I.T.A.T. (SUPRA) AND IN THE LIGHT OF THAT, WE ARE S ENDING BACK THE ISSUE TO THE FILE OF A.O. WITH IDENTICAL DIRECTION. 13. THE FOURTH EFFECTIVE GROUND IS IN RESPECT OF AD DITION OF RS.40,500/- ON ACCOUNT OF ADVANCE GIVEN TO SHRI B.D. PANT WHICH HA S BEEN RAISED IN GROUND NO.12 OF GROUNDS OF APPEAL. DURING THE ASSESSMENT PROCEE DINGS, WHILE EXAMINING THE SEIZED DOCUMENTS, THE A.O. NOTICED THAT IN ANNEXURE -A2/53 THERE WERE ADVANCE TO SHRI B.D. PANT AND SHRI SANJAY KESARWANI. THE ASSE SSEE WAS REQUIRED TO SUBSTANTIATE THIS ADVANCE WITH BOOKS OF ACCOUNT. T HE ASSESSEE APPEARED BEFORE THE A.O. ON 18.10.2011 ALONG WITH BOOKS OF ACCOUNT. IT WAS FOUND THAT ADVANCE OF RS.15,500/- WAS GIVEN TO SHRI B.D. PANT AND RS.5,00 0/- TO SHRI SANJAY KESARWANI WHICH WERE NOT RECORDED IN BOOKS. THE ASSESSEE WAS CONFRONTED BY THE A.O. VIDE ORDER SHEET ENTRY IN ASSESSMENT RECORD FOR A.Y. 200 8-09 FOR WHICH HE AGREED. THEREFORE, THE A.O. TREATED THIS AMOUNT OF RS.40,50 0/- OUT OF INCOME FROM UNDISCLOSED SOURCES AND ADDED TO THE TOTAL INCOME O F THE ASSESSEE. THE CIT(A) CONFIRMED THE ADDITION. 14. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES AND RECORDS PERUSED. WE NOTICED THAT THE ASSESSEE HAS AGREED F OR THIS ADDITION AS NOTED BY THE 13 ITA NO.436/A/2012 A.Y. 2004-05 A.O. IN HIS ORDER THAT THE ASSESSEE WAS CONFRONTED VIDE ORDER SHEET ENTRY FOR ASSESSMENT RECORD FOR THE A.Y. 2008-09. WHEN THERE IS AN AGREED ADDITION AND THE ASSESSEE HAS NO GRIEVANCE, THE ASSESSEE SHOULD NOT HAVE RAISED THE GROUND. IN THE LIGHT OF THE FACT, WE SUSTAIN THE ADITION OF RS.40, 500/- AND CONFIRM THE ORDER OF CIT(A) ON THE ISSUE. 15. THE FIFTH EFFECTIVE GROUND I.E. GROUND NO.13 IS IN RESPECT OF ADDITION OF RS.10,000/- ON ACCOUNT OF INVESTMENT FROM UNDISCLOS ED SOURCES. THE A.O. NOTICED THAT THE ANNEXURE-A11 FOUND AND SEIZED FROM THE BUS INESS PREMISES OF THE ASSESSEE IS A REGISTER IN WHICH SUBSTANTIAL PAYMENT S WERE MADE. THE ASSESSEE WAS REQUIRED TO SUBSTANTIATE THESE PAYMENTS WITH ITS RE GULAR BOOKS OF ACCOUNT. THE ASSESSEE COULD NOT CORRELATE THE PAYMENTS MADE TO T HE PARTIES IN THIS REGISTER. THEREFORE, THE A.O. TREATED RS.10,000/- PERTAINING TO F.Y. 2003-04 RELEVANT TO A.Y. 2004-05 AND MADE ADDITION OF RS.10,000/-. THE CIT( A) CONFIRMED THE ADDITION. 16. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND RECORDS PERUSED. WE NOTICE THAT DURING THE COURSE OF SEARCH ANNEXURE -A11 WAS FOUND AND SEIZED FROM THE BUSINESS PREMISES OF THE ASSESSEE WHICH IS A REGISTER IN WHICH SUBSTANTIAL PAYMENTS WERE MADE. THE ASSESSEE WAS ASKED TO CORR ELATE THE PAYMENTS FROM BOOKS OF ACCOUNTS BUT THE ASSESSEE FAILED TO DO SO. WHEN THE REGISTER IS FOUND AT 14 ITA NO.436/A/2012 A.Y. 2004-05 THE TIME OF SEARCH AND THE ASSESSEE HAS FAILED TO R ECONCILE THIS ENTRY IN THE REGISTER AND BOOKS OF ACCOUNT, THE ADDITION IS WARRANTED. T HE ASSESSEE HAS FAILED TO RECONCILE THIS ENTRY BEFORE US ALSO AND ALSO FAILED TO SUBMIT ANY MATERIAL THAT THIS WAS ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNT. IN THE LIGHT OF THE FACT, THE ADDITION OF RS.10,000/- SUSTAINED BY THE CIT(A) IS CONFIRMED. ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 17. GROUND NOS.14 TO 17 ARE GENERAL IN NATURE INCLU DING CHARGING OF INTEREST UNDER SECTION 234A, 234B & 234C OF THE ACT WHICH IS MANDATORY AND CONSEQUENTIAL. INITIATION OF PENALTY U/S.271(1)(C) IS PREMATURE GROUND OF APPEAL. THE A.O. IS DIRECTED ACCORDINGLY. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: APPELLANT/RESPONDENT/CIT (APPEALS) CONCERNED/CIT CO NCERNED D.R., ITAT, ALLAHABAD BENCH, ALLAHABAD/GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, ALLAHABAD TRUE COPY