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

ITA 440/ALLD/2012

• Counselvise Citation: 44020714 RSA 2012
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 25-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Assessee Lawyers: UMESH KESARWANI S
• Keywords: Unexplained investment; Depreciation; Income from undisclosed sources; Loose papers; Document seized; Opportunity of being heard; Rule of consistency; Application of stay; Additional evidence; Fair market value; Corroborative evidences; Valuation report; Documents seized
• Section: 143(3); 142(1); 133A; 153A; 68; 15

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. 440/ALLD./2012 ASSTT. YEAR : 2008-09 M/S. KESARWANI SHEETALAYA VS. D.C.I.T., CENTRAL CIRCLE, SAHSON, ALLAHABAD. ALLAHABAD. (PAN : AADFK 6563 D) (APPELLANT) (RESPONDENT) APPELLANT BY : S/SRI RAVI KANT, SR. ADV., ANAN D GODBOLE, S.P. AGARWAL & UMESH KESARWANI, ADVOCATES RESPONDENT BY : SHRI JAGDISH, CIT/DR DATE OF HEARING : 02.11.2012 DATE OF PRONOUNCEMENT OF ORDER : 30.11.2012 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF LD. CIT(A), ALLAHABAD DATED 06.08.2012 FOR THE ASSESSMENT YEAR 2008-09 ON THE FOLLOWING GROUNDS : 1. THAT IN ANY VIEW OF THE MATTER ASSESSMENT ORDER DATED 28.12.2011 PASSED UNDER SECTION 153A(B) OF THE INCO ME TAX ACT' 1961 BY THE ASSESSING OFFICER AND WHICH IS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEAL ) VIDE ORDER DATED 06.05.2012 IS HIGHLY UNJUSTIFIED A ND INCORRECT BECAUSE BOTH THE LOWER AUTHORITIES FAILED TO CONSIDER REAL FACTS OF THE CASE AND EVIDENCES BROUG HT ON ITA NO. 440/ALLD./2012 2 RECORD AND ALSO FAILED TO CONSIDER BOOKS OF ACCOUNT S, PAST RECORDS AND CITED CASES . 2. THAT IN ANY VIEW OF THE MATTER THE ASSESSEE MAIN TAINED THE BOOKS OF ACCOUNT IN THE SAME MANNER AND SAME FASHIO N AS ADOPTED FROM THE YEAR OF INCEPTION OF THE APPELLANT FIRM WHICH IS A WELL RECOGNIZED METHOD OF ACCOUNTING AND ALSO ACCEPTED BY THE DEPARTMENT YEAR AFTER YEAR, THEREFO RE BOTH THE LOWER AUTHORITIES WHILE FRAMING AND CONFIRMING THE ORDERS/ADDITIONS IGNORED THE PRINCIPLES OF CONSISTENCY , HENCE THE ADDITION/ DISALLOWANCES MADE ARE CONFIRME D AND UNWARRANTED. 3. THAT IN ANY VIEW OF THE MATTER ORDER DATED 28.1 2.2011 PASSED UNDER SECTION 153A(B) OF THE INCOME TAX ACT VIDE WHICH INCOME AS DETERMINED AT RS. 24,27,32,281/- IS AT ALL NOT CORRECT AS THE SAME IS NOT BASED ON ANY INCRIMI NATING MATERIAL FOUND IN THE COURSE OF SEARCH BUT BASED ON PRESUMPTION AND SURMISES AND WRONG INFERENCES DRAWN BY IGNORING ALL THE SEIZED ANNEXURES WHICH INCLUDES SUBSIDIARY BOOKS THOUGH ENTRIES WERE CO-RELATED WIT H EACH BOOK, HENCE THE TWO LOWER AUTHORITIES ARE WRONG IN MAKING AND MAINTAINING THE ADDITION. 4. THAT IN ANY VIEW OF THE MATTER THE UNDISCLOSED I NCOME WAS NOT DETERMINED ON THE BASIS OF ANY SEARCH MATERIAL AND THE ASSESSING OFFICER SIMPLY PROCEEDED AS IF IT IS A NO RMAL ASSESSMENT AND NOT ON THE BASIS OF ANY SEARCH MATER IAL, THEREFORE SECTION 153A OF THE INCOME TAX ACT HAD NO APPLICATION TO THE FACTS OF THE CASE, HENCE THE ASS ESSMENT IS LIABLE TO BE DECLARED ILLEGAL. 5. THAT IN ANY VIEW OF THE MATTER ADDITION OF RS. 3 7,30,710/- MADE BASED ON ANNEXURE A-3/1 WHICH IS A DUMB AND WA STE DOCUMENT BY WORKING OUT AN ARTIFICIAL FIGURES WHICH DO NOT HAVE RELEVANCY TO THE WORKING MADE BY THE ASSESSING OFFICER AND HER ACTIONS AS CONFIRMED BY THE COMMISS IONER OF INCOME TAX (APPEAL) IS UNJUSTIFIED AND HENCE THE ADDITION IS HIGHLY UNWARRANTED. ITA NO. 440/ALLD./2012 3 6. THAT IN ANY VIEW OF THE MATTER OBSERVATION OF TH E ASSESSING OFFICER IN PARA 7.2 OF HER ORDER ARE TOTALLY INCORR ECT AND BASELESS AS SHE FAILED TO CONSIDER THE TRUE FACTS O F THE CASE. THE COMMISSIONER OF INCOME TAX (APPEAL) ALSO RECORD ED HIS OBSERVATIONS WITH SET-MIND TO CONFIRM THE ADDIT ION OF RS. 37,30,710/- RELYING ONLY UPON ASSESSMENT ORDER WHICH IS WRONG. THEREFORE THE ADDITION IS UNJUSTIFIED. 7. THAT IN ANY VIEW OF THE MATTER ADDITION OF RS. 23,31,28,321/- WAS MADE IN ARBITRARY MANNER WITHOUT ANY VALID REASON AND BY IGNORING THE EXPLANATIONS , AND CHARTS FILED BEFORE THE TWO LOWER AUTHORITIES , HENCE THE ACTION OF TWO LOWER AUTHORITIES ARE NOT JUDICIOUS IN EYES OF LAW. IN MAKING AND CONFIRMING THE ADDITION THE ALLEGATION O F THE TWO LOWER AUTHORITIES THAT THE PARTNERS OF THE APPE LLANT FIRM DID POTATOES BUSINESS IS TOTALLY WRONG AS NO INCRIM INATING DOCUMENT OR ANY ADDITIONAL EVIDENCE INDICATING ANY SUCH POTATOES BUSINESS BY THE PARTNERS OF THE FIRM WAS F OUND IN THE COURSE OF SEARCH NOR THE ASSESSING OFFICER BROU GHT ANY EVIDENCE ON RECORD THAT THE PARTNERS WERE INDULGED IN SUCH POTATOES BUSINESS. THEREFORE IN ABSENCE OF ANY EVID ENCE TWO LOWER AUTHORITIES WERE WRONG IN MAKING AND CONFIRMING THE ADDITION. 8. THAT IN ANY VIEW OF THE MATTER ADDITION OF RS. 23,31,28,321/- WAS MADE BY THE ASSESSING OFFICER ON FLIMSY AND VAGUE MANNER AS THE BASIS OF THE SAID ADDITION WAS ANNEXURE P-11 & P-13 WHICH ARE CALLED BHANDARAN- NIKASI-REGISTER OF WHICH COLUMNS WERE FILLED IN AT THE TIME OF DELIVERY OF POTATOES TO THE CONCERNED CONSTITUENTS AND THE ENTRIES OF SUCH REGISTERS DULLY TALLIED WITH THE ENTRIES OF ANNEXURE A-2/22, A-2/9 AND A-1/ 1 TO A-2/5 RESPECTIVELY WHICH ARE THE INITIAL REGISTER WRITTEN AT THE TIME OF ENTRY OF THE SAME POTATOES IN THE COLD STORAGES HAVING DETAILS IN SIMILAR COLUMNS AS THE ANNEXURE P -11 & P-13. THOUGH THE LOWER AUTHORITIES VERIFIED THE FAC TS BUT IGNORED THE TRUTH OF THE VERIFICATION AND EVEN NO F INDING WAS RECORDED IN THEIR ORDERS, HENCE THE ADDITION IS UNJUSTIFIED AND ILLEGAL IN FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 440/ALLD./2012 4 9. THAT IN ANY VIEW OF THE MATTER AFTER SUBMISSION OF TWO SETS OF VOLUMINOUS PAPER BOOKS BEFORE THE COMMISSIONER O F INCOME TAX (APPEAL) WHICH CONTAIN WRITTEN SUBMISSIO N AND CHART EXPLAINING DETAILS OF THE FACTS OF ALL THE CO LUMNS OF ALL THE AFORESAID ANNEXURES, BASED ON WHICH A REMAND REPORT WAS ALSO CALLED FROM THE ASSESSING OFFICER. EVEN BEFORE SUBMITTING THE REMAND REPORT THE CONCERNED ASSESSIN G OFFICER EXAMINED AND VERIFIED ALL THE ANNEXURE TOGE THER AT A TIME IN PRESENCE OF APPELLANT ON 23.07.2012 AND HE FOUND THAT THE ENTRIES OF THE ANNEXURES CORRELATE W ITH EACH OTHER AND HE ADMITTED THIS FACT IN HIS ORDER S HEET ALSO BUT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL ) FAILED TO CONSIDER THE SAME AND EVEN FAILED TO MAKE ANY FINDING IN THIS REGARD IN HIS ORDER, HENCE THE ADDI TION IS WRONG AND UNWARRANTED. 10. THAT IN ANY VIEW OF THE MATTER ALLEGATION MADE BY THE ASSESSING OFFICER THAT THE PARTNERS WERE INDULGED I N POTATOES BUSINESS BY TWISTING THE FACTS OF ANNEXURE P-11 & P-13 IS ABSOLUTELY WRONG AND THE SO CALLED INVESTME NT AND PROFIT AS WORKED OUT BY THE ASSESSING OFFICER IS SI MPLY BASED ON HER OWN IMAGINATION AND WHIMS TO JUSTIFY T HE ADDITION AND ALSO TO MISLEAD THE HIGHER AUTHORITIES . THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ALSO EXAMINED AND VERIFIED ALL THE ABOVE MENTIONED RELEV ANT ANNEXURES AND FOUND THAT ENTRIES/DETAILS OF EACH AN NEXURE ARE TALLYING AND THE RESPECTIVE GATE PASSES AND REN T RECEIPTS WERE ALSO EXAMINED AND HE WAS FULLY SATISF IED. BUT IN COMMISSIONER OF INCOME TAX (APPEAL)'S ORDER NO REFERENCE OF SUCH EXAMINATION AND VERIFICATION WAS GIVEN AND BY IGNORING THE FACTS THE ADDITION WAS CONFIRME D WHICH IS HIGHLY UNJUSTIFIED AND AGAINST THE JUDICIOUS APP ROACH, THEREFORE THE ADDITION IS INCORRECT. 11. THAT IN ANY VIEW OF THE MATTER THE LEARNED COMM ISSIONER OF INCOME TAX (APPEAL) IS HIGHLY UNJUSTIFIED AND INCOR RECT IN OBSERVING AT PAGE 61 OF HIS ORDER THAT THE APPELLAN T COULD NOT SUBSTANTIATE THE CLAIM WHENEVER THE OPPORTUNITY WAS GIVEN. SUCH OBSERVATION OF THE COMMISSIONER OF INCO ME TAX (APPEAL) IS TOTALLY FALSE SPECIALLY WHEN IN THE ITA NO. 440/ALLD./2012 5 ASSESSING OFFICER'S ORDER SHEET ENTRY DATED 23.07.2 012, THE ASSESSING OFFICER HIMSELF HAS ADMITTED THAT THE RELEVANT ANNEXURES WERE VERIFIED AND TEST CHECKED . THEREFORE SUCH OBSERVATION OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL) IS NOTHING BUT ONLY AN ATTEMPT TO GIVE STRENGTH TO HIS ORDER BY CONFIRMING THE UNJUSTIFIED ADDITION. 12. THAT IN ANY VIEW OF THE MATTER THE LEARNED COMM ISSIONER OF INCOME TAX (APPEAL) IS TOTALLY WRONG AND INCORRECT IN OBSERVING THAT ON THE BASIS OF FRESH QUERIES RAISED BY THE ASSESSING OFFICER IN THE COURSE OF REMAND REPORT TH E APPELLANT FAILED TO GIVE EXPLANATION WHEN THE EXPLA NATION WAS OFFERED AND IS STILL AVAILABLE ON ASSESSING OFF ICER'S RECORD, HENCE THE ADDITION IS UNWARRANTED. THE ENTI RE ADDITION IS BASED ON PRESUMPTION OF THE TWO LOWER AUTHORITIES BY IGNORING THE FACTS AND ENTRIES RECOR DED IN THE BOOKS. 13. THAT IN ANY VIEW OF THE MATTER AT PAGE 6 OF THE ASSESSMENT ORDER THE ALLEGED INVESTMENT OF RS. 21,08,69,838/- AS WORKED OUT BY THE ASSESSING OFFICER IS SIMPLY ON TH E BASIS OF SEIZED PAPERS WHICH BELONGS TO THIRD PARTY MUKHTAR AHMED WHO IS NEITHER EMPLOYEE OF THE FIRM NOR HAS ANY CON NECTION ANY MANNER WITH THE APPELLANT FIRM NOR THE APPELLANT WAS GIVEN ANY CHANCE AT ANY TIME TO CONFRONT HIM NOR HIS STATEMENT WAS RECORDED IN PRESENCE OF THE APPELLANT , THEREFORE THE ENTIRE CONCOCTED THEORY FOR MAKING AN D CONFIRMING THE ADDITION IS ILLEGAL AND ACTIONS OF T HE ASSESSING OFFICER AS CONFIRMED BY THE CIT(A) IS ALS O INCORRECT AND UNWARRANTED. 14. THAT IN ANY VIEW OF THE MATTER THE ALLEGED PROF IT OF RS. 2,22,58,483/- AS WORKED OUT BY THE ASSESSING OFFICE R AT PAGE 6 & 7 OF THE ASSESSMENT ORDER IS ONLY AN ARTIF ICIAL AND IMAGINARY FIGURE WHICH HAS NO VALUE IN THE EYES OF LAW SPECIALLY WHEN DECLARED RENTAL RECEIPTS FROM COLD STORAGE BUSINESS HAVE BEEN ACCEPTED, THEREFORE THE TWO LOWE R AUTHORITIES WERE WRONG IN MAKING AND CONFIRMING THE ADDITION . ITA NO. 440/ALLD./2012 6 15. THAT IN ANY VIEW OF THE MATTER THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS) FAILED TO GIVE COGNIZANCE TO T HE CONTENTS OF THE AFFIDAVIT OF THE PARTNER, PAST RECO RD OF THE APPELLANT AND FAILED TO CONSIDER PRINCIPLE OF CONSI STENCY, DISCLOSED RENTAL RECEIPTS HAS BEEN ACCEPTED YEAR AF TER YEAR, NO VERIFICATION WAS DONE BY THE CONSTITUENTS KEPT T HEIR POTATOES IN COLD STORAGE, NO DISCUSSION BY THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE EXPLANA TION DATED 22.08.2012, NON CONSIDERATION OF PAPER BOOK N O. 2 HENCE THE ENTIRE ADDITION MADE AND CONFIRMED IN FIR ST APPEAL IS UNWARRANTED. 16. THAT IN ANY VIEW OF THE MATTER DISALLOWANCES OF RS. 3,01,703/- UNDER THE HEAD DIESEL EXPENSES MADE BY T HE ASSESSING OFFICER AND CONFIRMED BY THE CIT (A) IS H IGHLY UNJUSTIFIED SPECIALLY WHEN EACH AND EVERY ITEM OF PURCHASES OF DIESEL WAS RECORDED IN BOOKS DULY SUPP ORTED BY THE VOUCHERS HENCE THE DISALLOWANCES IS UNWARRAN TED. 17. THAT IN ANY VIEW OF THE MATTER DISALLOWANCE OF DISALLOWANCES OF DIESEL EXPENSE @ 10 % OF THE TOTAL PURCHASE OF RS. 30,17,037/- IS HIGHLY UNJUSTIFIED A ND INCORRECT SPECIALLY WHEN 90 % OF THE PURCHASE WAS ACCEPTED, IN PAST NO SUCH TYPE OF DISALLOWANCES WAS MADE, NO MATERIAL ABOUT OUTSIDE PURCHASE OF DIESEL WAS FO UND IN THE COURSE OF SEARCH. THEREFORE THE TWO LOWER AUTHO RITIES ARE WRONG IN MAKING AND CONFIRMING THE ADDITIONS. 18. THAT IN ANY VIEW OF THE MATTER DISALLOWANCES OF PETROL EXPENSES OF RS. 77,099/- OUT OF PETROL EXPENSES BY SAYING ON ACCOUNT OF PERSONAL USE OF CAR IS HIGHLY UNJUSTI FIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 19. THAT IN ANY VIEW OF THE MATTER DISALLOWANCE OF RS. 1,17,246/- UNDER THE HEAD DEPRECIATION ON CAR FOR P ERSONAL USE IS HIGHLY UNJUSTIFIED IN THE FACTS AND CIRCUMST ANCES OF THE CASE. 20. THAT IN ANY VIEW OF THE MATTER ADDITION OF RS. 5,47,928/- ON ACCOUNT OF ADDITION UNDER THE HEAD BUILDING IS H IGHLY UNJUSTIFIED AND THE ADDITION HAS BEEN MADE SIMPLY O N THE ITA NO. 440/ALLD./2012 7 BASIS OF DVOS REPORT ONLY WHICH IS NOT A GOSPEL TR UTH ESPECIALLY WHEN EXPENDITURES ARE RECORDED IN REGULAR BOOKS AND WITHOUT REJECTING THE BOOKS THE ADDITION IS UNWARRANTED . 21. THAT IN ANY VIEW OF THE MATTER REFERENCE TO DVO IS NOT CORRECT IN SO FOR AS IN THE COURSE OF SEARCH OPERAT ION NO INCRIMINATING MATERIAL / DOCUMENT WHAT SO EVER WAS FOUND, HENCE THE REFERENCE IS UNWARRANTED AND UNJUSTIFIED. 22. THAT IN ANY VIEW OF THE MATTER THE PENAL INTERE ST UNDER SECTION 234A, 234B, AND 234C OF THE INCOME TAX ACT IS INCORRECT AND BEFORE CHARGING INTEREST NO OPPORTUNI TY OF BEING HEARD WAS ALLOWED TO THE APPELLANT NOR ANY WO RKING OF CHARGING OF INTEREST WAS PROVIDED TO THE APPELLA NT AND THE PENALTY NOTICE UNDER SECTION 271 (1)(C) HAS ALS O BEEN WRONGLY ISSUED AS NO INCOME CONCEALED. 23. THAT IN ANY VIEW OF THE MATTER THE APPELLANT RE SERVES ITS RIGHT TO TAKE ANY FRESH GROUND OF APPEAL OR MODIFY/ AMEND OR WITHDRAW BEFORE THE HEARING OR AT THE TIME OF HE ARING OF APPEAL. 2. THE EARLY HEARING WAS GRANTED IN THE MATTER WHIL E DISPOSING OF THE STAY APPLICATION NO. 01/ALLD./2012 FILED BY THE ASSESSEE . 3. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MA TERIAL ON RECORD. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A PARTNERSHIP FIRM ENGAGED IN COLD STORAGE BUSINESS WITH ITS HEAD OFFI CE AT SAHSON. THE BRANCHES OF ITA NO. 440/ALLD./2012 8 THE ASSESSEE ARE M/S. BHOLA SHEET GRAH AT SAHSON AN D M/S. KESARWANI SHEETALAYA AT SORAON. ACTION U/S. 132(1) WAS TAKEN ON 27.08.20 09 IN GROUP CASES OF KESERWANI ZARDA BHANDAR, SAHSON, ALLAHABAD AND ITS PARTNERS. THE AO FRAMED THE ASSESSMENT U/S. 153A VIDE ORDER DATED 28.12.2011 FOR ASSESSMEN T YEAR UNDER APPEAL, I.E., 2008- 09 AND MADE SEVERAL ADDITIONS, WHICH WERE CHALLENGE D BEFORE THE LD. CIT(A). THE ASSESSEE RAISED THE ADDITIONAL GROUNDS OF APPEALS A S WELL AS SOUGHT ADMISSION OF ADDITIONAL EVIDENCES BEFORE THE LD. CIT(A), WHICH W ERE ADMITTED BY THE LD. CIT(A) FOR HEARING OF APPEAL. 5. THOUGH SEVERAL GROUNDS HAVE BEEN RAISED IN THE A PPEAL OF THE ASSESSEE, BUT MAINLY THE ASSESSEE CHALLENGED TWO MAJOR ADDITIONS ON MERITS APART FROM DISALLOWANCES OF EXPENSES. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUND NO. 1 & 2 OF APPEAL OF THE ASSESSEE ARE GENERAL IN NATURE AND ON GROUND NO. 3 TO 15, THE ASSESSEE CHALLENGED THE ADDITION OF RS.37,30,710/- AND ADDIT ION OF RS.23,31,28,321/-. 7. THE FIRST ADDITION UNDER CHALLENGE IS RS.37,30,7 10/-. IN THE ASSESSMENT ORDER, THE AO HAS REMARKED THAT A BUNCH OF LOOSE PAPERS MA RKED AS ANNEXURE A-3/1 WAS FOUND AND SEIZED. AT PAGE NO. 107 OF THE ABOVE BUNC H OF LOOSE PAPERS, THERE IS ITA NO. 440/ALLD./2012 9 DESCRIPTION OF CONSOLIDATED DETAILS OF CASH IN HAND PERTAINING TO M/S KESARWANI SHEETALAYA, SAHSON, SOROAN AND BHOLA SHEETGRIH, SAH SON. THESE DESCRIPTIONS ARE RELATING TO F.Y.2007-08. ON THIS PARTICULAR LOOSE P APER, IT IS MENTIONED THE TOTAL CASH IN HAND OF BOTH THE CONCERNS NAMELY M/S KESARW ANI SHEETALAYA, SAHSON, SOROAN AND BHOLA SHEETGRIH, SAHSON IN THE F.Y. 2007 -08 IS 27,39,932-86. THE NARRATION IS AS UNDER:- DT 15.03.08 F.Y. 2007-08 A.Y.2008-09 KESARWANI SHEETALAYA BHOLA SHEETGRIH SOHSON. CASH RECEIVED BHOLA SHEETGRIH (1) TOTAL RENT 9472171.10 KESARWANI SHEETALAYA (2) TOTAL RENT 8969700.55 KESARWANI SHEETALAYA CASH WITHDRAW 12 00000.00 FROM BAN K ____________ 19641871.65 BHOLA EXPENDITURE - 929662.95 K.S. - EXPENDITURE - 954275.84 K.S. - CASH DEPOSIT - 15018000.00 16901938.79 TO BANK 2739932.86 CASH BALANCE - DT. 11.03.08 CR. 4813470.70 (KESARWANI SHEETALAYA) CASH BALANCE - DT. 03.03.08 - DR. 8790921.62 (BHOLA SHEETGRIH) 3977450.92 OPENING BALANCE DR. 248413.47 (BHOLA) ITA NO. 440/ALLD./2012 10 OPENING BALANCE DR. 989104.59 (K.S.) 1237518. 06 NET CASH FOR F.Y. 07-08 = (3977450.92 1237518.06 = 2739932.86) THE A.O. HAS FURTHER COMPARED CASH IN HAND WITH DIF FERENT BRANCHES OF THE CONCERN AS PER THE AUDIT REPORT FOR THE F.Y. 2007-08 RELEVA NT TO A.Y. 2008-09. BHOLA SHEET GRIH K.S. SORAON K.S.SAHSON TOTAL 27,95,969.71 22,97,647.48 13,77,0 25.46 64,70,642.65 7.1 ON THE ABOVE COMPARISON, THE A.O. FOUND THAT AC TUAL CASH WITH THE ABOVE CONCERNS OF THE ASSESSEE WAS RS.27,39,932.86/- WHER EAS THE ASSESSEE HAS SHOWN THE CASH AT HAND AT RS.64,70,642.65/-, MEANING THEREBY THE CASH AMOUNTING TO RS.37,30,709.79/- IS UNEXPLAINED. THE A.O. HAS OBSE RVED THAT THE EXCESS CASH SHOWN IN THE BALANCE SHEET MAY EITHER RELATE TO BOG US LIABILITY OR UNEXPLAINED CASH FROM UNDISCLOSED SOURCE INTRODUCED BY THE PARTNERS. THE A.O. FURTHER REMARKED THAT THE ASSESSEE HAS NOT MAINTAINED REGULAR BOOKS OF A/C IN THE SHAPE OF CASH BOOK, LEDGER ETC. THE SEARCH & SEIZURE ACTION DID NOT RES ULT IN RECOVERING ANY BOOKS OF A/C FROM THE BUSINESS PREMISES OF THE FIRM OR FROM THE RESIDENTIAL PREMISES OF THE PARTNERS OF THE FIRM. THE SAID REGULAR BOOKS OF A/C WERE NOT FOUND EVEN IN THE PREMISES OF SHRI SANJAY GUPTA, FCA WHOSE PLACES WER E COVERED U/S 133A OF THE I.T. ACT. ON THE STRENGTH OF ABOVE DISCUSSION, THE A.O. HAS TREATED RS.37,30,710/- AS BOGUS LIABILITY AND HAS MADE THE ADDITIONS U/S 6 8 OF THE I.T. ACT. ITA NO. 440/ALLD./2012 11 7.2 THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A) AND THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED IN THE A PPELLATE ORDER AS UNDER : THAT THE ASSESSING OFFICER HAS DISCUSSED THE FACTS IN PARA-3 OF THE ASSESSMENT ORDER. THE MANNER AND BASIS OF MAKING TH E ADDITION IS HIGHLY OBJECTIONABLE IN SO FAR AS THE LOOSE PAPER MARKED A S ANNEXURE A-3/1 PAGE 107 IS NOTHING BUT A ROUGH, WASTE AND DUMB DOCUMENT HENCE LIABLE TO BE DISCARDED. THE ASSESSING OFFICER WHILE COMPUTING TH E INCOME LEFT THIS AMOUNT TO INCLUDED IN THE TOTAL ASSESSED INCOME OF THE APPELLANT AS HE WAS SATISFIED WITH THE EXPLANATION. THAT SIR, THE FIRST OBJECTION OF THE APPE LLANT IS THAT THE ASSESSING OFFICER'S OBSERVATION IN THE ORDER THAT NO REGULAR BOOKS OF ACCOUNT IN THE SHAPE OF CASH-BOOK & LEDGER ETC. HAVE BEEN FOUND FO R ANY FINANCIAL YEAR EITHER FROM THE BUSINESS PREMISES OF THE FIRM OR FR OM RESIDENTIAL PREMISES OF THE PARTNERS OF THE FIRM DURING THE COURSE OF SE ARCH. EVEN IN THE OFFICE OF THE CHARTERED ACCOUNTANT SRI SANJAY GUPTA, FCA D URING THE COURSE OF A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT T HE BOOKS WERE NOT FOUND. THEREFORE THE ASSESSING OFFICER OBSERVED/ HE LD THAT IT IS CLEAR THAT REGULAR BOOKS OF ACCOUNT ARE NOT MAINTAINED BY THE APPELLANT FIRM, SUCH OBSERVATION IS ABSOLUTELY INCORRECT VAGUE AND IRREL EVANT WHICH CAN BE CALLED AS UNHEALTHY OBSERVATION WHEN THE FACTS IS T HAT REGULAR BOOKS OF ACCOUNTS ARE BEING MAINTAINED BY THE APPELLANT AND PRODUCED AND EXAMINED BY ASSESSING OFFICER HENCE ALLEGATION LIAB LE TO BE SPONGED AND EVEN OR THE DATE OF SEARCH ALSO THE BOOKS OF ACCOUN T WERE LYING IN THE BUSINESS PREMISES. THAT SIR, THE APPELLANT FIRM CAME INTO EX ISTENCE IN THE YEAR 1978 AND TILL DATE REGULAR ASSESSMENTS HAVE BEEN FRAMED BY THE DEPARTMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT FOR NUMB ER OF YEARS AND IN THOSE ASSESSMENTS THE ASSESSING OFFICER ADMITTED TH AT THE BOOKS OF ACCOUNT WERE PRODUCED AND EXAMINED. IN THE PRESENT CASE TIL L DATE NO EX-PARTE DECISION WAS MADE ON THE ALLEGATION THAT BOOKS WERE NOT PRODUCED NOR MAINTAINED. LIKEWISE IN THE PRESENT BLOCK PERIOD, R EGULAR ORIGINAL ASSESSMENTS WERE FRAMED AFTER EXAMINATION OF THE BO OKS OF ACCOUNTS FOR ITA NO. 440/ALLD./2012 12 ASSESSMENT YEAR 2004-05, 2005-06 & 2007-08. IN THIS WAY AT ONE POINT THE DEPARTMENT IS ACCEPTING AND ADMITTING THAT BOOK S OF ACCOUNTS ARE MAINTAINED AND PRODUCED BY THE APPELLANT BUT FOR MA KING THE ADDITION OF RS. 37,30,710/- THE ASSESSING OFFICER HAS TAKEN A S HELTER BY SAYING THAT NO BOOKS OF ACCOUNTS ARE MAINTAINED. SIR, EVEN IN EARLIER YEARS ALSO A MATTER WAS REFERRED BY THE DEPARTMENT FOR A SPECIAL AUDIT IN ONLY KESARWANI ZARDA BHANDAR CASES AND DURING THAT AUDI T BOOKS OF ACCOUNTS OF THE APPELLANT FIRM WERE EXAMINED AND FOUND IN OR DER. IN THE APPELLANTS CASE THE DEPARTMENT HAS ALLOWED AUDITOR 'S FEE AND ACCOUNTING EXPENSES YEAR AFTER YEAR. THUS SIMPLY BECAUSE IN TH E COURSE OF SEARCH OPERATION SINCE THE BOOKS WERE NOT TAKEN BY THE SEA RCH PARTY ALTHOUGH AVAILABLE IN THE BUSINESS PREMISES OF THE APPELLANT THAT DOES NOT MEAN THAT THE ASSESSING OFFICER IS FREE TO MAKE ANY KIND OF ALLEGATION ACCORDING TO HER OWN TEST. THAT THE ASSESSING OFFICER VIDE NOTICE DATED 28.0 2.2011 U/S 142 (1) A QUERY NO. 06 WAS MADE WHICH IS REPRODUCED AS UNDER : NO BOOKS OF ACCOUNT OF FIRM HAVE BEEN FOUND AND S EIZED DURING THE COURSE OF SEARCH/ SURVEY OPERATION OF THE GROUP , IN THE ABSENCE OF BOOKS OF ACCOUNT YOU ARE REQUIRED TO JUSTIFY THE BO OKS RESULT SHOWN IN THE AUDIT FINAL ACCOUNT THAT IN COMPLIANCE TO THE QUERY NO. 06 REP LY WAS GIVEN IN FOLLOWING MANNER : ;G FD VKIDS UKSFVL DS IZ'U UA0&6 DS CKJS ESA ;G DGUK GS FD Q EZ DS O;OLK; LS LECFU/KR LHKH CGH [KKRS FOF/KOR~