M/S SURESH MEDICAL AGENCY, Jaipur V. DCIT, Jaipur

ITA 443/JPR/2012

• Counselvise Citation: 44323114 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Keywords: Income from undisclosed sources; Bonafide belief; Retraction
• Section: 153A; 132

Judgement Text

1 ITA 443-12 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH : JAIPUR. BEFORE SHRI B.R. JAIN AND SHRI KUL BHARAT ITA NO. 443/JP/2012 ASSESSMENT YEAR : 2009-10. M/S. SURESH MEDICAL AGENCY, VS. THE DCIT, CENTRAL CIRCLE-3, FILM COLONY, CHOURA RASTA, JAIPUR. JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY GOYAL RESPONDENT BY : SHRI A.K. KHANDELWAL DATE OF HEARING : 20.08.2013. DATE OF PRONOUNCEMENT : 21.08.2013. ORDER PER BENCH : THIS APPEAL BY ASSESSEE AGAINST THE ORDER DATED 29 .02.2012 OF LD. CIT (A), CENTRAL, JAIPUR RAISES THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 25, 00,000/- MADE BY THE ASSESSING OFFICER MERELY ON THE BASIS OF THE STATEMENT RECORDED U/S 132(4) OF THE IT ACT, 1961 WITHOUT HAV ING ANY CORROBORATIVE EVIDENCE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT (A) ERRED IN CONFIRMING THE REJECTION OF THE BO OKS OF ACCOUNT MADE BY THE A.O. AND ERRED IN UPHOLDING THE FINDING S OF THE A.O. IN THIS REGARD. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 799 28/- MADE BY A.O. ON ACCOUNT OF ALLEGED EXCESS STOCK FOUND AT TH E TIME OF SEARCH. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 12, 685/- MADE BY THE 2 A.O. ON ACCOUNT OF DISALLOWANCE AGAINST EXCESS REMU NERATION TO PARTNERS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT (A) ERRED IN NOIT GIVING THE BENEFIT OF TELESCO PING, RECYCLING, ROTATION OF FUNDS (EXCEPT OF RS. 79,928/-) AGAINST EXCESS STOCK AGAINST THE ADDITION OF RS. 25,00,000/- CONFIRMED ON ACCOUN T OF SURRENDER OF INCOME DURING THE STATEMENT U/S 132(4) OF INCOME TA X ACT. 2. IN GROUND NO. 1 IN APPEAL BRIEFLY THE FACTS ARE THAT A SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED ON ASSESSEE GROUP ON 27.08.20 08. THE APPELLANT IS ENGAGED IN THE BUSINESS IN TRADING OF MEDICINES IN WHOLESALE AS WE LL AS IN RETAIL AND RETURNED AN INCOME OF RS. 5,23,510/- PURSUANT TO NOTICE UNDER SECTION 153A OF THE ACT. THE ASSESSING OFFICER RECORDED FINDINGS AND HELD THAT DURING THE COURSE OF SEARCH STATEMENT OF SHRI MURARI LAL MITTAL, PARTNER OF THE ASSESSEE FIRM WAS RECORDED U/S 132(4) OF THE IT ACT ON 27.08.2008. IN THAT STATEMENT HE OFFERED TO TAX AN AMOUNT OF RS. 25 LACS AS UNRECORDED INCOME OF THE FIRM. THE AFORESAID STATEMENT OF SHR I MURARI LAL MITTAL WAS CONFIRMED BY SHRI RADHEY SHYAM MITTAL (HUSBAND OF ANOTHER PARTNE R SMT. SARDA MITTAL). THE INCOME, HOWEVER, WAS NOT REFLECTED IN THE RETURN OF INCOME FILED ON 29.09.2009. THE LD. ASSESSING OFFICER IN LAST OF PARA HELD THAT STATEME NT TAKEN DURING THE COURSE OF SEARCH HAS GREAT EVIDENTIARY VALUE AND THE RETRACTION CAN BE TREATED VALID ONLY WHEN THE COERCION HAS BEEN PROVED. THE FACT THAT THE ASSESSEE RETRACTED H IS STATEMENT AFTER A LAPSE OF SEVEN MONTHS, IS NOTHING BUT AN AFTER THOUGHT. IF HE WAS PERTURBED OF THE COERCION COMMITTED BY THE IT AUTHORITIES, HE COULD HAVE RETRACTED HIS STA TEMENT WITHIN A FEW DAYS OR WEEKS TIME AND NOT AFTER ELAPSE CONSIDERABLE TIME. ALSO THE A SSESSEE HAS FAILED TO DISCHARGE THE ONUS OF PROVING THAT COERCION WAS USED WHILE RECORDING T HE STATEMENTS. THE LD. ASSESSING OFFICER MENTIONED THAT THE DEPARTMENT HAS SEIZED AN NEXURE A-1 TO A-13 FROM THE 3 PREMISE OF THE ASSESSEE AND ON THE BASIS OF THESE D OCUMENTS AN INCOME OF RS. 27,15,292/- HAS BEEN OFFERED TO TAX IN RETURN FILED BY SHRI PRA FUL MITTAL AND RS. 1,59,195/- IN THE HANDS OF SHRI MURARI LAL MITTAL. AFTER TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE INCOME OFFERED IN THE STATEMENT U/S 132(4) OF THE ACT OF RS. 25 LACS BY ASSESSEES PARTNER IN THE HANDS OF A SSESSEE FIRM HAS BEEN TREATED AS UNDISCLOSED INCOME FOR THE YEAR UNDER CONSIDERATION . 3. THE LD. CIT (A) TOOK NOTE OF THE REPLY OF SHRI M URARI LAL MITTAL TO QUESTION NO. 9 IN HIS STATEMENT RECORDED ON 27.8.2008 WHERE HE HAD ADMITTED THAT AFTER GOING THROUGH THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH AND AFTER CONSULTING WITH THE OTHER MEMBER OF THE FAMILY DEALING IN THE BUSINESS OF THE APPELLANT FIRM, THE ASSESSEE ADMITTED THAT HE HAS EARNED ABOUT RS. 20-25 LACS OUT OF UNAC COUNTED SALES AND PURCHASES OF MEDICINES. SHRI RADHEY SHYAM MITTAL SUBSEQUENTLY I N HIS STATEMENT RECORDED ON 05.09.2008 RECONFIRMED THE UNACCOUNTED INCOME EARNE D BY THE GROUP INTER ALIA INCLUDING RS. 25 LACS EARNED BY THE APPELLANT FIRM. HE DID NO T AGREE WITH THE ASSESSEES PLEA THAT THE SURRENDER HAS BEEN TAKEN UNDER DURESS AND BY PUTTIN G PRESSURE ON THE ASSESSEE. THE RETRACTION FILED BY THE ASSESSEE IS AFTER 6-7 MONTH S OF SEARCH. THE BURDEN LAY UPON THE ASSESSEE TO PROVE THAT WHAT WAS ADMITTED DURING THE COURSE OF SEARCH IS NOT CORRECT AND THIS BURDEN CAN ONLY BE TREATED TO BE DISCHARGED WH EN THE RETRACTION BY WAY OF AN AFFIDAVIT IS FILED IMMEDIATELY ON THE CONCLUSION OF SEARCH. THE ASSESSEES AFFIDAVIT CAME AS LATE AS ON 31.3.2009 WHICH WAS NOT TAKEN AS A TI MELY RETRACTION. SINCE THE ASSESSING AUTHORITY HAS ACTED ON THE BASIS OF STATEMENT OF TH E ASSESSEE AND ASSESSING OFFICER HAS MENTIONED THE DOCUMENTS IMPOUNDED FROM PREMISE OF T HE APPELLANT PARTICULARLY ANNEXURES A-1 TO A-13 CONTAINING DETAILS OF HIS UNR ECORDED INCOME WERE FOUND AND ON 4 THE BASIS OF SUCH DOCUMENTS, INCOME OF RS. 27,15,29 2/- AND RS. 1,59,195/- HAS BEEN OFFERED TO TAX BY SHRI PRAFUL MITTAL AND SHRI MURAR ILAL MITTAL RESPECTIVELY. HE, THEREFORE, FOUND NO MERIT IN THE ARGUMENTS RAISED BY THE ASSES SEE AND THUS CONFIRMED THE ADDITION OF RS. 25 LACS. 3. ASSESSEES COUNSEL SHRI VIJAY GOYAL IN HIS WRITT EN SUBMISSIONS AS WELL AS ORALLY CONTENDS THAT THE STATEMENT DATED 27.8.2008 OF MURA RILAL MITTAL WAS RECORDED IN A DIFFERENT CONTEXT. THE QUESTION NO. 9 ASKED WAS IN DIFFERENT CONTEXT AND THERE IS NO DISCUSSION NOR ANY QUESTION ASKED ABOUT UNDISCLOSED INCOME OF THE FIRM FROM HIS MEDICINE BUSINESS. IN FACT, THE STATEMENT PLACED A T ASSESSEES PAPER BOOK PAGE 128 WILL REVEAL THAT THE AUTHORIZED OFFICER MERELY ASKED FOR DETAILS OF THE FIRM AND COMPANIES AND VERIFICATION OF PROFIT & LOSS ACCOUNT AND DOCUMENTS ONLY. IN HIS REPLY THE ASSESSEE GAVE AN UNCERTAIN AND VAGUE REPLY OF UNDISCLOSED INCOME OF RS. 20-25 LACS. NO DOCUMENTARY EVIDENCE WAS FOUND AS A RESULT OF SEARCH FROM WHICH IT COULD BE DISCERNED THAT THE ASSESSEE HAS TRANSACTED ANY BUSINESS OUTSIDE THE BO OKS MAINTAINED IN THE NORMAL COURSE OF BUSINESS. THE STATEMENT BY SHRI RADHEY SHYAM MI TTAL, HUSBAND OF ONE OF THE PARTNERS SMT. SARDA MITTAL IS STATEMENT BY THE STRANGER AND IS NOT BINDING ON THE APPELLANT FIRM. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE REVEALING U NDISCLOSED INCOME, THE ASSESSEE WAS UNDER GOOD FAITH THAT THE STATEMENT SO MADE WILL NO T BE USED AGAINST HIM. THE APPELLANT, HOWEVER, HAS BEEN MAKING REPEATED REQUESTS TO THE A UTHORIZED OFFICER AS WELL AS THE ASSESSING AUTHORITY TO GIVE COPIES OF THE STATEMENT S RECORDED UNDER SECTION 132(4) OF THE ACT. IT IS AS LATE AS ON 13.3.2009 THE COPY OF STA TEMENT WAS PROVIDED. THIS FACT IS EVIDENT FROM THE ASSESSEES PAPER BOOK PAGE 203. IMMEDIATE LY AFTER RECEIPT OF STATEMENT, THE ASSESSEE RETRACTED THE STATEMENT ON 31.3.2009 BY FI LING AFFIDAVIT TO THIS EFFECT. THIS 5 AFFIDAVIT IS PLACED AT ASSESSEES PAPER BOOK PAGES 129 TO 131. THE ASSESSING AUTHORITY MADE NO ENQUIRY ON THE AFFIDAVIT NOR CALLED UPON TH E ASSESSEE TO PROVE CONTENTS THEREOF. NO CROSS EXAMINATION HAS BEEN DONE BY THE ASSESSING AUTHORITY. THE ASSESSEE, THEREFORE, TOOK THAT THE RETRACTION MADE BY HIM THROUGH HIS AF FIDAVIT STANDS ADMITTED. EVEN OTHERWISE, THE ADMISSION TAKEN DURING THE COURSE OF SEARCH IS CONTRARY TO THE INSTRUCTIONS ISSUED BY CBDT VIDE F.NO.286/2/2003-IT (INV.) DATED 10.3.2013, COPY OF WHICH IS APPENDED WITH THE WRITTEN SUBMISSIONS OF THE ASSESS EE. THE ASSESSING AUTHORITY WAS DUTY BOUND TO MAKE ASSESSMENT ON THE BASIS OF MATERIAL F OUND AS A RESULT OF SEARCH. THIS, HOWEVER, HAS NOT BEEN DONE. IT WAS OPEN TO THE ASSE SSEE TO SHOW THAT THE ADMISSION TAKEN DURING THE COURSE OF SEARCH IS NOT CORRECT AND THIS STANDS PROVED AS THE SAME IS NOT CORROBORATED BY ANY EVIDENCE FOUND AS A RESULT OF S EARCH. FOR THIS PROPOSITION RELIANCE HAS BEEN PLACED ON THE JUDGMENT BY HON'BLE APEX COU RT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA (1973) 91 ITR 18 (SC). RELIANCE HAS ALSO BEEN PLACED ON THE JUDGMENT BY HON'BLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS. ASHOK KUMAR SONI, 291 ITR 172 (RAJ.) WHEREIN IT HAS BEEN HELD THAT ADMISSION IN STATEMENT DURING SEARCH IS NOT CONCLUSIVE PROOF OF FACT AND CAN ALWAYS BE EXPLAINED. THE ASSESSEE HAVING SUCCESSFULLY MADE A RETRACTION, THE RE WAS NO OCCASION OR BASIS TO MAKE ADDITION OF RS. 25 LACS AS UNDISCLOSED INCOME OF TH E ASSESSEE. THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE WRITTEN SUBMISSIONS AND CASE LAWS REFERRED THEREIN BY DISTINGUISHING THE CASE LAWS RELIED UPON BY THE AUT HORITIES BELOW IN THEIR RESPECTIVE ORDERS. ANY STATEMENT BY A PARTNER OR THE COUNTER S IGNATURES BY THE LADY PARTNER ON THE STATEMENT THOUGH DO NOT MAKE ADMISSION WITH REFEREN CE TO MATERIAL, YET LOOSE THEIR IMPORTANCE AFTER THE APPELLANT HAS MADE A VALID AND TIMELY RETRACTION. 6 4. ON THE OTHER HAND, THE LD. D/R CONTENDS THAT THE ADDITION CAN BE MADE ON THE BASIS OF STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. THE APPELLANT IS A PARTNERSHIP FIRM AND ITS PARTNER SHRI MURARILAL MIT TAL HAD MADE AN ADMISSION OF INCOME EARNED OUTSIDE BOOKS FROM TRANSACTING BUSINESS OF P URCHASE AND SALE OF MEDICINES AND SUCH INCOME STATED TO HAVE BEEN EARNED TO THE TUNE OF RS. 20-25 LACS AND THEREAFTER ADMITTED OF MAKING THE SURRENDER OF HIS INCOME FOR RS. 25 LACS. THE HUSBAND OF ANOTHER PARTNER SMT. SARDA MITTAL ALSO CONFIRMED THE SAID A DMISSION AND SURRENDER. SHRI RADHEY SHYAM MITTAL, THE HUSBAND OF LADY PARTNER IS AN INT ERESTED PARTY AND IS AN EDUCATED PERSON. THE ADMISSION MADE BY HIM IS COUNTER SIGNED BY HIS WIFE SMT. SARDA MITTAL AND THIS FACT IS REVEALED FROM ASSESSEES PAPER BOOK PA GES 89 TO 92. THE ASSESSEE HAS NOT MADE RETRACTION WELL IN TIME. THE PUNE BENCH OF TH E TRIBUNAL IN THE CASE OF HOTEL KIRAN, 82 ITD 453 (PUNE) HAS DISCUSSED ELABORATE CIRCUMSTA NCES UNDER WHICH A VALID RETRACTION CAN BE MADE. THIS RETRACTION, HOWEVER, DOES NOT ME ET SUCH CIRCUMSTANCES. THE ASSESSING OFFICER AT INTERNAL PAGE 3 OF THE ASSESSM ENT ORDER HAS MADE ELABORATE DISCUSSION ABOUT CASH GENERATION WITH THE APPELLANT . EVEN THE PANCHNAMA PLACED AT ASSESSEES PAPER BOOK PAGE 18 REVEALS THAT THERE AR E 13 LISTED ITEMS WHICH GIVE RISE TO THE UNDISCLOSED INCOME. SINCE THE RETRACTION IS NOT VA LID AND THERE ARE MATERIAL ON THE BASIS OF WHICH THE AUTHORITIES BELOW HAVE ACTED, THE ADDI TION CANNOT BE DELETED ON THE BASIS OF A SELF SERVING AFFIDAVIT FILED BY THE ASSESSEE. IT, THEREFORE, HAS BEEN CONTENDED THAT THE GROUND RAISED IN APPEAL NEEDS TO BE REJECTED. 5. IN REJOINDER, SHRI VIJAY GOYAL CONTENDS THAT THE DOCUMENTS FOUND AS A RESULT OF SEARCH REVEALED INCOME WHICH WERE NOT BELONGING TO THE FIRM BUT TO THE TWO PERSONS IN THE FAMILY, NAMELY, SHRI PRAFUL MITTAL AND SHRI MUR ARILAL MITTAL WHO HAVE MADE 7 DISCLOSURE OF SUCH INCOME IN THEIR RESPECTIVE HANDS TO THE EXTENT OF RS. 27,15,292/- AND RS. 1,59,195/- RESPECTIVELY. THIS FACT HAS BEEN FO UND AND STANDS ADMITTED BY THE LD. CIT (A) IN THE IMPUGNED ORDER VIDE PARA 2.3 OF INTERNAL PAGES 15 TO 17. THERE IS THUS NO BASIS WITH THE REVENUE TO MAKE ADDITION ON THE BASIS OF S AME DOCUMENTS AGAIN IN THE HANDS OF THE APPELLANT AS ALSO THE VALID RETRACTION HAS BEEN MADE BY THE APPELLANT. 6. WE HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD AND CASE LAWS BROUGHT TO OUR NOTICE. THE ACTION UNDER SECTION 132 WAS CA RRIED AT THE ASSESSEES PREMISES ON 27.08.2008 AND IN THE STATEMENT SHRI MURARI LAL MIT TAL, ONE OF THE PARTNERS OF THE APPELLANT FIRM MADE SURRENDER OF INCOME OF RS. 25 L ACS ON ACCOUNT OF INCOME EARNED FROM SALE AND PURCHASE OF MEDICINES CARRIED OUTSIDE THE BOOKS. THE HUSBAND OF THE PARTNER SMT. SARDA MITTAL ALSO CONFIRMED THE SURREN DER. THE APPELLANT, HOWEVER, HAD BEEN APPROACHING THE AUTHORIZED OFFICER TO PROVIDE COPY OF STATEMENT SO OBTAINED IN PROCEEDINGS UNDER SECTION 132 OF THE ACT. WHEN THE SE STATEMENTS WERE NOT PROVIDED, THE APPELLANT VIDE LETTER DATED 3.10.2008 TO THE AUTHOR IZED OFFICER, COPY PLACED IN ASSESSEES PAPER BOOK PAGE 203 AND LETTER DATED 18.12.2008 ADD RESSED TO THE ASSESSING AUTHORITY REQUESTED TO PROVIDE COPY OF STATEMENT IN CASE THE SAME WERE TO BE USED AGAINST HIM. TILL SUCH TIME THE COPY OF STATEMENT WAS NOT PROVIDED, A SSESSEE ENTERTAINED A BONAFIDE BELIEF THAT IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE OR CORROBORATIVE EVIDENCE HAVING BEEN FOUND AS A RESULT OF SEARCH, SUCH STATEMENT WOULD N OT BE USED AGAINST HIM. IF SUCH STATEMENTS WERE TO BE USED, THE DEPARTMENT WAS UNDE R LEGAL OBLIGATION TO HAVE PROVIDED COPY THEREOF TO THE APPELLANT. IT IS ONLY ON PERSIS TENT EFFORT OF THE APPELLANT, THE COPIES OF STATEMENTS WERE PROVIDED ONLY ON 13.3.2009. THE AP PELLANT AFTER UNDERSTANDING THE LEGAL IMPLICATION OF SUCH STATEMENTS MADE A VALID RETRACT ION AS THE SURRENDER WAS NOT SUPPORTED 8 BY ANY CORROBORATIVE EVIDENCE. THE AFFIDAVIT FILED IN THIS REGARD IS LAID ON ASSESSEES PAPER BOOK PAGES 129 TO 131. THIS AFFIDAVIT HAS CA REFULLY BEEN PERUSED. AFTER THE AFFIDAVIT WAS FILED BEFORE THE ASSESSING AUTHORITY, HE REMAINED SILENT ON THE FACE OF IT AND CARRIED NO ENQUIRY THEREON TO VERIFY THE CORRECTNES S THEREOF. THE ASSESSEE WAS ALSO NOT CROSS EXAMINED ON THE POINT OF RETRACTION NOR WAS R EQUIRED TO PRODUCE ANY DOCUMENTARY EVIDENCE OR ANY OTHER EVIDENCE. THE ASSESSEE WAS, THEREFORE, ENTITLED TO ASSUME THAT THE INCOME TAX AUTHORITIES WERE SATISFIED WITH THE AFFI DAVIT AS SUFFICIENT ON THIS POINT. THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF SOHAN L AL GUPTA VS. CIT, (1958) 33 ITR 786 (ALL.), AS WAS ALSO PUT TO THE PARTIES DURING T HE COURSE OF ARGUMENT, HAS MADE ELABORATE DISCUSSION ON THE EVIDENTIARY VALUE OF TH E AFFIDAVIT. THE RELEVANT PASSAGE FROM THE AFORESAID JUDGMENT AT PAGE 791 OF THE REPORT IS REPRODUCED AS UNDER :- THE MOST IMPORTANT POINTS ON WHICH THE TRIBUNAL R ELIED, IS THAT MENTIONED AT NO. 2, VIZ., THAT, ACCORDING TO THE TR IBUNAL, THE ASSESSEE HAD NOT SATISFACTORILY ESTABLISHED THAT THE SHARES HAD TO BE SOLD AS THE PURCHASER OF THE JASWANT SUGAR MILLS WAS NOT WILLIN G TO PURCHASE THAT MILL UNLESS THE SHARES IN THE STRAW BOARD MILLS LTD. HEL D BY THE FAMILY WERE ALSO TRANSFERRED TO HIM AT THE SAME TIME. ON THIS P OINT, THE ONLY MATERIAL AVAILABLE ON THE RECORD IS THE AFFIDAVIT WHICH WAS FILED BY THE ASSESSEE BEFORE THE INCOME-TAX OFFICER. THE ASSESSEE IN HIS AFFIDAVIT, HAD DEFINITELY STATED THAT THE PURCHASER WANTED TO PURCHASE BOTH T HE GOING CONCERNS, THE JASWANT SUGAR MILLS AND THE STRAW BOARD MILLS LTD., TOGETHER AND ONE OF HIS CONDITIONS OF PURCHASE WAS THAT ALL THE SHARES OF LALA JASWANT RAI, HIS SONS AND OTHER RELATIVES HAD TO BE TRANSFERRED TO THE PURCHASER. THE INCOME-TAX APPELLATE TRIBUNAL REJECTED THIS AFFIDAV IT OF THE ASSESSEE ON THE MERE GROUND THAT THERE WAS NO DOCUMENTARY EVIDENCE IN CORROBORATION IN THE FORM OF ANY CORRESPONDENCE OF OTHERWISE ON THIS POINT. SHRI G.S. PATHAK CONTENDED RIGHTLY BEFORE US THAT THE TRIBUN AL WAS NOT ENTITLED TO REJECT THE AFFIDAVIT ON THIS POINT ON SUCH A GROUN D. AFTER THE ASSESSEE HAD FILED THE AFFIDAVIT, HE WAS NEITHER CROSS-EXAMINED ON THAT POINT, NOR WAS HE CALLED UPON TO PRODUCE ANY DOCUMENTARY EVIDENCE . CONSEQUENTLY, THE ASSESSEE WAS ENTITLED TO ASSUME THAT THE INCOME-TA X AUTHORITIES WERE SATISFIED WITH THE AFFIDAVIT AS SUFFICIENT PROOF O N THIS POINT. IF IT WAS NOT TO BE ACCEPTED AS A SUFFICIENT PROOF EITHER BY THE IN COME-TAX OFFICER OR BY THE APPELLATE ASSISTANT COMMISSIONER OF INCOME-TAX OR BY THE INCOME- TAX APPELLATE TRIBUNAL, THE ASSESSEE SHOULD HAVE B EEN CALLED UPON TO 9 PRODUCE DOCUMENTARY EVIDENCE, OR, AT LEAST HE SHOUL D HAVE BEEN CROSS- EXAMINED TO FIND OUT HOW FAR HIS ASSERTIONS IN THE AFFIDAVIT WERE CORRECT. (EMPHASIS SUPPLIED) THE RELIANCE PLACED BY ASSESSEE TO THE JUDGMENT BY HON'BLE APEX COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. (SUPRA) AND HON' BLE RAJASTHAN HIGH COURT IN CASE OF CIT VS. ASHOK KUMAR SONI (SUPRA) ARE WELL PLACED AS THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED THAT THE ADMISSION MADE DURING THE COU RSE OF SEARCH IS NOT CORRECT. THE INGREDIENT FOR RETRACTION OF STATEMENT MADE DURING THE SEARCH, THEREFORE, STAND DULY SATISFIED AS THE ASSESSEE IS FOUND TO HAVE MADE RET RACTION WITHIN A REASONABLE TIME IMMEDIATELY AFTER THE COPIES OF STATEMENT WERE PROV IDED TO HIM. SINCE THE DOCUMENTS FOUND AS A RESULT OF SEARCH WERE PERTAINING TO THE INCOME OF THE OTHER TWO PERSONS NAMELY S/SHRI PRAFUL MITTAL AND MURARI LAL MITTAL AND THER E BEING NO MATERIAL OR EVIDENCE ON RECORD TO SHOW THAT THE APPELLANT HAS CARRIED ANY B USINESS OUTSIDE THE BOOKS FOR SALE AND PURCHASE OF MEDICINES THAT COULD GIVE RISE TO THE I NCOME TO THE EXTENT OF RS. 25 LACS, THE ADDITION MERELY ON THE BASIS OF SUCH STATEMENT WHIC H STOOD VALIDLY RETRACTED COULD NOT HAVE BEEN MADE. WE, THEREFORE, FIND NO FACTUAL OR L EGAL JUSTIFICATION IN SUSTENANCE OF ADDITION BY LD. CIT (A) IN THIS REGARD. 7. GROUND NO. 2 NOT PRESSED. 8. IN GROUND NO. 3, THE LD. CIT (A) HAS CONFIRMED T HE ADDITION OF RS. 79,928/- ON ACCOUNT OF ALLEGED EXCESS STOCK OF MEDICINES FOUND AT THE TIME OF SEARCH. 9. WE HAVE HEARD PARTIES AND HAVE PERUSED THE INVEN TORY OF STOCK PLACED AT ASSESSEES PAPER BOOK PAGES 22 TO 67. THE INVENTOR Y SO FOUND REVEALS THAT SOME OF THE MEDICINES WHICH WERE SAMPLE AND HAD NO VALUE AND AL SO MEDICINES WITH EXPIRY WHICH WERE TO BE DISCARDED BY THE ASSESSEE HAVE ALSO BEEN INCLUDED IN THE LIST. THE VALUE 10 THEREOF, COULD NOT BE INCLUDED FOR DETERMINING UNEX PLAINED INVESTMENT IN STOCK. IN THIS VIEW OF THE MATTER, WE SET ASIDE THIS ISSUE TO THE ASSESSING AUTHORITY SO THAT THE ASSESSEE CAN DEMONSTRATE HIS CLAIM FOR EXCLUSION OF VALUE OF SUCH ITEMS OF STOCKS FOR SUSTAINING ONLY THE RESULTANT ADDITION, IF ANY, AS HIS UNDISCL OSED INCOME. 10. GROUND NO. 4 IN APPEAL RELATES TO THE DISALLOWA NCE OF REMUNERATION TO THE PARTNERS ON THE GROUND THAT THE INTEREST INCOME OF RS. 31,71 1/- CANNOT BE A SUBJECT MATTER OF DEDUCTION UNDER SECTION 40(B) OF THE ACT. 11. HEARD PARTIES WITH REFERENCE TO MATERIAL ON REC ORD. THE PERUSAL OF MATERIAL REVEALS THAT THE AMOUNT OF RS. 31,711/- IS A JOURNA L ENTRY BY WHICH THE ASSESSEE REVERSED THE EXCESS AMOUNT OF BANK INTEREST CHARGED. THIS H AS GONE TO REDUCE THE EXPENSES CHARGED UNDER THE HEAD BANK INTEREST AND CHARGES. THE RESULTANT INCOME HAS ALSO BEEN ASSESSED AS INCOME FROM BUSINESS. THIS AMOUNT OF R S. 31,711/- IS NOT SHOWN TO HAVE BEEN ASSESSED AS ASSESSEES INCOME FROM OTHER SOURC ES. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION IN EXCLUDING SUCH AMOUNT FOR MAKING D ISALLOWANCE OF RS. 12,685/- UNDER SECTION 40(B) OF THE ACT. ACCORDINGLY THE GROUND R AISED IN APPEAL STANDS ALLOWED. 12. IN SO FAR AS GROUND NO. 5 REGARDING TELESCOPING , HAVING ANSWERED GROUND NO. 1 IN FAVOUR OF THE ASSESSEE, THERE REMAINS NO SCOPE FOR ANY SUCH TELESCOPING AS CLAIMED BY THE ASSESSEE. THE GROUND RAISED, THEREFORE, STANDS DISP OSED OFF ACCORDINGLY. 13. IN THE RESULT, APPEAL BY ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.08.2013. SD/- SD/- ( KUL BHARAT ) ( B. R. JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 21/08/2013. 11 D/- COPY FORWARDED TO :- M/S. SURESH MEDICAL AGENCY, JAIPUR. THE DCIT, CENTRAL CIRCLE-3, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 443/JP/2012) BY ORDER, ` AR ITAT JAIPUR.