SHRI JAI KUMAR GOLANI, Jaipur V. DCIT, Jaipur

ITA 461/JPR/2011

• Counselvise Citation: 46123114 RSA 2011
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 16-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: S L PODDAR
• Keywords: Assessment record
• Section: 133A

Judgement Text

ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 461/JP/2011 ASSESSMENT YEAR: 2006-07 PAN : ABDPG 1352 M SHRI JAI KUMAR GOLANI VS. THE DCIT PROP. M/S. KALA FASHIONS CIRCLE- 1 116-117, BAPU BAZAR, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ITA NO. 495/JP/2011 ASSESSMENT YEAR: 2006-07 PAN : ABDPG 1352 M THE ITO VS. SHRI JAI KUMAR GOLANI WARD- 1(3) PROP. M/S. KALA FASHIONS JAIPUR 116-117, BAPU BAZAR, JAIPUR (APPELLANT) (RESPONDENT) ITA NO. 462/JP/2011 ASSESSMENT YEAR: 2006-07 PAN : AEXPG 2060 D SHRI MAHENDRA KUMAR GOLANI VS. THE DCIT PROP. M/S. KALA MANDIR CIRCLE- 1 116-117, BAPU BAZAR, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ITA NO. 494/JP/2011 ASSESSMENT YEAR: 2006-07 PAN : ABDPG 1352 M THE ITO VS. SHRI MAHENDRA KUMAR GOLANI WARD- 1(3) PROP. M/S. KALA MANDIR JAIPUR 116-117, BAPU BAZAR, JAIPUR (APPELLANT) (RESPONDENT) ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 2 ITA NO. 493/JP/2011 ASSESSMENT YEAR: 2006-07 PAN : ACEPG 9987 G THE ITO VS. SHRI PRAKASH CHAND GOLANI WARD- 1(3) PROP. M/S. FEMINA FASHION JAIPUR 116-117, BAPU BAZAR, JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.L. PODDAR DEPARTMENT BY: SHRI D.C. SHARMA DATE OF HEARING: 07-01-2015 DATE OF PRONOUNCEMENT: 09 -01-2015 ORDER PER R.P. TOLANI, JM THIS IS A GROUP OF APPEALS SOME FILED BY THE REVEN UE AND SOME BY ASSESSEES AGAINST DIFFERENT ORDERS OF THE LD. CIT(A )-1, JAIPUR DATED 01-03- 2011 AND 10-03-2011 FOR AY 2006-07. AS THE ISSUES ARE COMMON AND THE ASSESSEES BELONG TO SAME GROUP; THIS SET OF APPEAL S IS BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. RESP ECTIVE GROUNDS ARE AS UNDER: 2.1 GROUND RAISED BY THE ASSESSEE I.E. SHRI JAI KU MAR GOLANI:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS WRONG, UNJUST AND HAS ERRED IN LA W IN CONFIRMING ADDITION MADE BY THE ASSESSING OFFICER T O THE EXTENT OF RS. 15,80,480/- ON ACCOUNT OF ALLEGED UNRECORDE D AND / OR EXCESS STOCK FOUND AT THE TIME OF SURVEY U/S 133A O F THE I.T. ACT, 1961` ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 3 2.2 GROUND RAISED BY THE REVENUE IN THE CASE OF SHR I JAI KUMAR GOLANI :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW:- (I) THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADD ITION OF RS. 34,16,581/- MADE BY THE AO ON ACCOUNT OF EX CESS STOCK FOUND DURING THE SURVEY. (II) THE LD. CIT(A) IS JUSTIFIED IN DELETING THE AD DITION OF RS. 4,29,000/- MADE BY THE AO ON ACCOUNT OF UNR ECORDED PAYMENTS.. 3.1 GROUND RAISED BY THE ASSESSEE I.E. SHRI MAHENDR A KUMAR GOLANI:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS WRONG, UNJUST AND HAS ERRED IN LA W IN CONFIRMING ADDITION MADE BY THE ASSESSING OFFICER T O THE EXTENT OF RS. 26,67,389/- ON ACCOUNT OF ALLEGED UNRECORDE D AND / OR EXCESS STOCK FOUND AT THE TIME OF SURVEY U/S 133A O F THE I.T. ACT, 1961` 3.2 GROUND RAISED BY THE REVENUE IN THE CASE OF SHR I MAHENDRA KUMAR GOLANI :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW:- (I) THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADD ITION OF RS. 23,62,818/- MADE BY THE AO ON ACCOUNT OF EX CESS STOCK FOUND DURING THE SURVEY. 4.1 GROUND RAISED BY THE REVENUE IN THE CASE OF SHR I PRAKASH CHAND GOLANI :- ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 4 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW:- (I) THE LD. CIT(A) IS JUSTIFIED IN DELETING THE ADD ITION OF RS.37,59,921/- MADE BY THE AO ON ACCOUNT OF EXC ESS STOCK FOUND DURING THE SURVEY. (II) THE LD. CIT(A) IS JUSTIFIED IN DELETING THE AD DITION OF RS. 2,00,000/- MADE BY THE AO ON ACCOUNT OF UNR ECORDED PAYMENTS.. 5.1 BRIEF FACTS OF THE CASE ARE THAT THE ABOVE THRE E RELATED ASSESSEES ARE PROPRIETORS OF THEIR RESPECTIVE CONCERNS NAMELY. 1. SHRI JAI KUMAR GOLANI - PROP. KALA FASHIONS. 2. SHRI MAHENDRA KUMAR GOLANI PROP. KALA MANDIR 3. SHRI PRAKASH CHAND GOLANI PROP. FEMINA FASHI ON THEY DEAL IN LADIES SUITS AND DRESS MATERIALS ON WH OLESALE AND RETAIL BASIS. THE SURVEY WAS CONDUCTED ON THEIR PREMISES ON 01-02 -2006. DURING THE COURSE OF SURVEY, SHRI JAI KUMAR GOLANI WAS PRESENT AT THE PREMISES OF KALA FASHIONS AND KALA MANDIR, PHYSICAL INVENTORIES OF S TOCK ARE CLAIMED TO BE PREPARED IN HIS PRESENCE AND HIS STATEMENT WAS RECO RDED FOR BOTH CONCERNS. ACCORDING TO SURVEY TEAM FOLLOWING EXCESS STOCK WAS FOUND IN THEIR RESPECTIVE PREMISES AS PER PHYSICAL STOCK INVENTORY : 1. SHRI JAI KUMAR GOLANI, PROP. KALA FASHIONS RS. 49,97,061/- 2. SHRI MAHENDRA KUMAR GOLANI, PROP. KALA MANDIR RS . 50,30,207/- 3. SHRI PRAKASH CHAND GOLANI, PROP. FEMINA FASHIONS RS. 37,80,708/- ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 5 5.2 SHRI JAI KUMAR GOLANI IN THE SURVEY STATEMENT SURRENDERED FOLLOWING AMOUNTS IN CASE OF HIS PROPRIETORSHIP CONCERN M/S. KALA FASHIONS. (I) RS. 49,97,061/- FOR EXCE SS STOCK. (II) RS. 4,29,000/- FOR UNRECORDED PAYMENT FOR PU RCHASE OF SHOP IN THE NAME OF WIFE AND OTHERS. 5.3 ON BEHALF OF SHRI MAHENDRA KUMAR GOLANI , PROP. M/S. KALA MANDIR, SHRI JAI KUMAR GOLANI SURRENDERED FOLLOWING AMOUNTS :. (I) RS. 50,30,207/- FOR EXCESS STOCK. (II) RS. 25,000/- FOR DISALLOWANCE OF ESI PENALTY. 5.4 LIKEWISE IN CASE OF PRAKASH CHAND GOLANI, PROP. M/S. FEMINA FASHION, SURRENDERED FOLLOWING AMOUNTS: (I) RS. 37,80,708/- ON ACCOUNT OF EXCESS STOCK. (II) RS. 2,00,000/- AS UNRECORDED PAYMENT OF SHOP EXPENSES. 5.5 THESE ASSESSEES FILED THEIR RESPECTIVE RETURNS OF INCOME IN WHICH NO SURRENDERED AMOUNT WAS OFFERED. AO RELYING ON SURV EY STATEMENTS, ASSESSED THEM BY MAKING FOLLOWING ADDITIONS:- 1. SHRI JAI KUMAR GOLANI, PROP. KALA FASHIONS (I) ADDITION OF RS. 49,97,061/- ON ACCOUNT OF EXCESS S TOCK. (II) ADDITION OF RS. 4,29,000/- ON ACCOUNT OF UNR ECORDED PAYMENT FOR PURCHASE OF SHOP IN THE NAME OF WIFE AN D OTHERS. ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 6 2. SHRI MAHENDRA KUMAR GOLANI, PROP. KALA MANDIR (I) ADDITION OF RS. 50,30,207/- ON ACCOUNT OF EXCESS S TOCK. (II) ADDITION OF RS. 25,000/- ON ACCOUNT OF DISALL OWANCE OF ESI PENALTY 3. SHRI PRAKASH CHAND GOLANI. PROP. FEMINA FASHION . (I) ADDITION OF RS. 37,80,708/- ON ACCOUNT OF EXCESS S TOCK. (II) ADDITION OF RS. 2,00,000/- ON ACCOUNT OF UNRE CORDED PAYMENT OF SHOP EXPENSES. 5.6 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE LD. CIT(A) WHERE IT WAS PLEADED THAT SURVEY TEAM COMMITTED VARIOUS M ISTAKES WHILE VALUING THE STOCK ITEMS FOUND DURING THE COURSE OF SURVEY. THEY DID NOT BOTHER TO VERIFY THE PURCHASE BILLS, DEFECTIVE STOCK, OLD STO CK AND UNSALABLE STOCK ITEMS. THE VALUATION THEREOF WAS ADOPTED IN CASUAL MANNER WITHOUT ALLOWING THE ASSESSES OR THEIR STAFF TO INTERFERE. STOCK INV ENTORIES WERE COMPLETED IN THE WEE HOURS OF NEXT DATE I.E. 2-02-2006 AND IMMED IATELY THEREAFTER SURVEY STATEMENTS WERE RECORDED WITHOUT GIVING ANY TIME TO RECONCILE THE PHYSICAL STOCK IN TERMS OF QUANTITY, VALUE, OBSOLETE, DISCOU NTED STOCK ETC. WHICH ARE ESSENTIAL AND COMMON FEATURE IN THE LADIES SUIT TRA DE. IT WAS PLEADED THAT: (I) THE STOCK INVENTORIES AND STATEMENTS RECORDED BY SURVEY TEAM SUFFERED FROM MANY DISCREPANCIES AND INFIRMITIES, S TOCK VALUES WERE TAKEN WITHOUT TALLYING IT WITH ACTUAL PURCHASE BILLS. STO CK INVENTORIES WERE ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 7 COMPLETED IN THE WEE HOURS OF 02-02-2006 AND THE ST ATEMENTS ALSO WERE RECORDED IMMEDIATELY THEREAFTER WITHOUT GIVING THE TIRED AND MENTALLY EXHAUSTED ASSESSEES ANY OPPORTUNITY TO VERIFY THE C OPIOUS INVENTORIES OF VALUATION OF STOCK ITEMS WITH THEIR RECORD. (II) THE SURVEY TEAM WANTED THE SURRENDER OF ENTIRE EXCESS STOCK AS PER THEIR INVENTORIES AS ADDITIONAL INCOME WITHOUT APPRECIATING THAT THEIR LISTS CONTAINED MANY MISTAKES WHICH WERE NEVER ALLO WED TO BE PROPERLY VERIFIED BY THE ASSESSEES AT THE TIME OF RECORDING THEIR STATEMENTS. IN VIEW OF THE PRESSURE BUILD UP BY THIS EXERCISE AND RELENTLE SS DEMAND OF A SURRENDER, TIRED ASSESSEES WERE LEFT IN THE WEE HOURS WITH NO ALTERNATIVE BUT TO ACCEDE TO THE SURRENDER AMOUNTS AS DESIRED BY SURVEY TEAM. RESULTANTLY THE VALUATION OF THE STOCK AS PER SURVEY INVENTORIES WA S A RESULT OF PURE GUESS WORK AND DEFECTIVE PROCEDURE ADOPTED BY SURVEY TEAM . INVENTORIESED ITEMS DO NOT REFER TO EVEN A SINGLE DETAIL OF ANY ACTUAL PURCHASE BILL. THUS THE VALUATION AS ADOPTED BY SURVEY TEAM AND AO ARE BASE D ON THESE CLEAR CONTRADICTIONS. (III) IT IS WELL KNOWN THAT IN TRADE OF LADIES SUI TS, LEHANGAS, LACHES AND DRESS MATERIAL, A SIZEABLE QUANTITY OF STOCK BE COMES LESS IN VALUE DUE TO MATERIAL, DESIGNS AND PATTERNS BECOMING OUT OF FASH ION, DEFECTIVE, MISMATCH OF COLORS OR COMBINATIONS, DAMAGED AND OBSOLETE ITE MS, SOME OF THE COMING ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 8 FROM EARLIER DEAD STOCK. NO REDUCTION IN VALUATION IN RESPECT OF SUCH INFERIOR STOCK ITEMS WHATSOEVER IS GIVEN IN THE PHYSICAL INV ENTORIES. (IV) IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT DURING THE COURSE OF SURVEY, NOT A SINGLE LOOSE PAPER , VOUCHE R OR ANY INCRIMINATING MATERIAL WAS FOUND TO SUGGEST ANY OUT OF BOOKS PURC HASE, SALE, EXCESS CASH OR OTHER IRREGULARITY. THE AUDITED BOOKS OF ACCOUNT S OF THE ASSESSE ARE OTHERWISE ACCEPTED AS IT IS AND NO DEFECT WHATSOEVE R HAS BEEN POINTED THEREIN AT THE TIME OF ASSESSMENT. IT IS INCOMPREHE NSIBLE AS TO HOW THE ASSESSES WILL BE CARRYING ON SUCH MASS SCALE EXCES S STOCK TRADE. THUS THE ALLEGATIONS OF EXCESS STOCK LACK FROM EVEN A WHISP ER OF ANY CORROBORATIVE MATERIAL DURING THE SWEEPING SURVEY OPERATIONS. (V) THE AO ON ONE HAND, HIMSELF HAS MENTIONED IN T HE ORDER THAT ASSESSEE'S BUSINESS CONSISTS OF VARIETIES OF MATERI ALS AND MAINTENANCE OF DAY TO DAY STOCK REGISTER IS IMPOSSIBLE IN THIS LINE OF TRADE. ON THE OTHER HAND IT HAS BEEN CLAIMED THAT SURVEY TEAM ADOPTED THE VALUE OF STOCK ITEMS WERE TALLIED WITH THE ACTUAL PURCHASE BILLS OF THE ASSES SE. THESE ASSERTIONS ARE SELF- CONTRADICTORY AS THE INVENTORIES DO NOT HAVE ANY CO LUMN ABOUT ANY COMPARATIVE VALUE OF THE ITEM IN PURCHASE BILL. A P URCHASE BILL BASED PHYSICAL COMPARISON OF STOCK OF 3 CONCERNS DEALING IN HUNDREDS OF DESIGNS, VARIETIES, SALEABLE AND OBSOLETE ITEMS IS PHYSICALL Y NOT POSSIBLE IN SUCH A ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 9 SHORT TIME. THE ADDITIONS HAVE BEEN SUSTAINED BY AO ONLY ON THE BASIS OF SURVEY INVENTORIES AND STATEMENTS WHICH WERE UNRELI ABLE ON ACCOUNT OF VARIOUS MISTAKES, INCONSISTENCIES AND MISSTATEMENTS WHICH WERE BROUGHT TO THE NOTICE OF LD. CIT(A). 5.7 LD. CIT(A) ALLOWED PARTIAL RELIEF IN THE CASE O F SHRI JAI KUMAR GOLANI (JKG FOR SHORT) BY FOLLOWING OBSERVATIONS. DURING THE HEARING OF APPEAL IT WAS SUBMITTED THA T BEING RETAIL TRADE IT WAS NOT POSSIBLE TO MAINTAIN DAY TO DAY STOCK REGISTER. ON THE BASIS OF G.P. THE STOCK AS P ER BOOKS WAS ESTIMATED AT RS.5553900/- AND THE INVENTORY WAS VAL UED AT RS.10550961/-. THUS EXCESS STOCK OF RS.4997061/- WA S DETERMINED. IT WAS SUBMITTED THAT COPY OF THE INVEN TORY WAS NOT PROVIDED BUT OBJECTION WAS RAISED BEFORE THE AO WHE N COPY WAS PROVIDED. INVENTORY OF 18 PAGES IS SR.L TO SR. NO.388. THE LIST CONTAINED ALL THE STOCK ITEMS LYING IN THE SHO PS AT THE RELEVANT TIME AND THE VALUE OF STOCK WAS TAKEN AT R S.7861141/-. ANOTHER LIST OF RS.2689550/- WAS PREPARED THOUGH AL L THE ARTICLES HAD ALREADY BEING TAKEN IN THE INVENTORY. COST OF ARTICLES WAS TAKEN AT ESTIMATED SALE PRICE. THAT TH E DEAD STOCK WAS ALSO TAKEN AS PART OF INVENTORY. A LIST OF ITEM S CONSIDERED MORE THAN ONCE WAS PROVIDED. DUPLICATE ITEMS ALONGW ITH DEAD STOCK COMES TO RS.798860/-. AT THE TIME OF SURVEY B OOKS OF ACCOUNTS WERE NOT COMPLETE AND THEREFORE, STOCK AS PER BOOKS WAS ONLY AN ESTIMATION. THE AO HAS ACCEPTED THE BOO KS OF ACCOUNTS AND FAILED TO FIND OUT ANY MISTAKE. THE PR EVIOUS HISTORY SHOWS THAT STOCK REMAINS BETWEEN RS.50 LACS TO RS. 60 LACS. IT WAS ALSO SUBMITTED THAT MERE SIGNING OF PA NCHNAMA AND INVENTORY LIST DID NOT MEAN THAT THEY CERTIFIED THE CORRECTNESS OF THE INVENTORY LIST RATHER IT ONLY CERTIFIES THAT TH EY WERE WITNESS OF THE PROCEEDINGS. INVENTORY LIST PREPARED AND SUB MITTED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCE EDINGS WAS SUBMITTED AND REQUESTED TO BE ACCEPTED. ALTERNATIVE LY IT WAS ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 10 SUBMITTED THAT A SECOND LIST PREPARED BY THE SURVEY TEAM WHICH HAS NO BASIS SHOULD BE DELETED AND IN THE FIRST LIS T THE STOCK MUST BE TAKEN AT COST AFTER DELETING THE ITEMS LIKE DEAD STOCK. 20% DEDUCTION SHOULD BE GIVEN OUT OF THE SALE PRICE . AS IT WAS ALLEGED THAT THE ADDITION WAS MADE BY THE AO ONLY ON THE BASIS OF STATEMENTS RECORDED DURING THE COURSE OF SURVEY AND INVENTORIES PREPARED AT THAT TIME WHICH WERE NOT SIGNED BY ANY INDEPENDENT WITNESS AND BOTH THE INVE NTORIES WERE NOT COMPLETED, A SECOND INVENTORY WAS SUBSEQUE NTLY PREPARED WHICH SHOWS THE LIST OF STOCK AS ON 31/3/0 6. IT WAS CLAIMED BY THE AR THAT THE INVENTORY WAS PREPARED B Y HIM AS PER BOOKS OF ACCOUNTS. THE AO WAS ASKED TO OFFER HI S COMMENTS ON THE SUBMISSION. THE AO'S REMAND REPORT WAS RECEIVED ON 18/1/2011. THE AO HAS STATED THAT NO NE W EVIDENCE WAS BROUGHT ON RECORD BY THE APPELLANT WHI CH REQUIRES ANY VERIFICATION AND ADJUDICATION. THE REP LY FURNISHED BY THE ASSESSEE HAS BEEN PROPERLY DEALT W ITHIN THE ASSESSMENT ORDER. VERIFICATION ON THE BASIS OF NEW LIST PREPARED BY THE A.R. WAS NOT POSSIBLE FROM THE FACT S OF THE CASE AS IT WAS PREPARED SUBSEQUENT TO THE SURVEY PROCEEDINGS. THE AO'S REMAND REPORT AND FURTHER SUBMISSION OF TH E AR ON REMAND REPORT ARE CONSIDERED. THE INVENTORY P REPARED AT THE TIME OF SURVEY AND SIGNED BY THE APPELLANT O R HIS EMPLOYEE AVAILABLE AT THE TIME OF SURVEY SHOULD BE ACCEPTED AS AN EVIDENCE AGAINST THE APPELLANT. MORE SO IN SU CH CASES WHERE THE VALUE OF STOCK WAS TAKEN AS STATED BY THE APPELLANT OR HIS EMPLOYEE. HOWEVER THE SIGNATURE OF THE APPEL LANT OR HIS EMPLOYEE CONFIRMS ONLY THAT THE INVENTORY WAS PREPA RED IN THEIR PRESENCE. IF ANY MISTAKES OR SHORTCOMINGS IS POINTED OUT BY THE APPELLANT AT A LATER STAGE WHICH IS SUPP ORTED BY SOME EVIDENCE THEN APPROPRIATE CORRECTION CAN BE MA DE. THE LIST PREPARED BY THE AR CANNOT BE CONSIDERED AS IT IS NOTHING BUT AN AFTER THOUGHT AND THERE APPEARS NO REASON FO R IGNORING THE INVENTORY PREPARED AT THE TIME OF SURVEY. SIMIL ARLY THE INVENTORY PREPARED BY THE AR AS ON 31/3/06 WILL NOT BE RELEVANT ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 11 TO DETERMINE THE EXCESS STOCK ON THE DATE OF SURVEY . AT THE SAME TIME THERE IS SOME FORCE IN THE ARGUMENT OF TH E AR THAT THE INVENTORY APPEARING FROM PAGE NO.L TO 18 W ITH SR.L TO 388 WAS CONCLUDED. SUBSEQUENT INVENTORY FROM PAGE N O. 19 TO 26 IS WITHOUT ANY SERIAL NO. AND VALUE HAS BEEN TAK EN IN ROUND FIGURES. FROM PAGE NO.25 ONWARDS THE NUMBER OF ITEM S AS WELL AS PURCHASE PRICE BOTH ARE IN ROUND FIGURE. TH E DESCRIPTION OF GOODS IS ALSO NOT GIVEN. THE DEAD ST OCK OF RS.72100/- IS ALSO INCLUDED IN THE INVENTORY. ITEMS CONSIDERED MORE THAN ONCE COMES TO RS.726760/-. THUS THE INVEN TORY LIST STARTING FROM PAGE NO.L TO 18 GIVING DESCRIPTION OF ITEMS FROM SR. NO.L TO 388 ALONE SHOULD BE CONSIDERED. THE TOT AL OF PAGE NO.L TO 18 COMES TO RS.7861141/- WHEREAS AS PER THE BOOKS THE STOCK SHOULD BE RS.5553900/-. THUS THE EXCESS STOCK COMES TO RS.1580480/-. FURTHER DEDUCTION OF RS.726760/- IS A LLOWED FOR THE ITEMS CONSIDERED MORE THAN ONCE. THE ADDITION O F RS.4997061/- IS THEREFORE REDUCED TO RS.1580480/-. THE AO IS THEREFORE DIRECTED TO REDUCE THE ADDITION OF RS. 4997061/- TO RS.1580480/-. THE APPELLANT THUS GETS PARTIAL RELIE F. 5.8 AGGRIEVED THEREON, BOTH THE PARTIES ARE BEFORE US ON THEIR RESPECTIVE GRIEVANCES QUA THE STOCK ADDITION IN THE CASE OF JA I KUMAR GOLANI. 5.9 AS REGARDS THE SECOND ISSUE RAISED BY THE REVEN UE ON ACCOUNT OF UNRECORDED PAYMENT AMOUNTING TO RS. 4.29 LACS, THE LD. CIT(A) HAS DELETED THE SAME BY FOLLOWING OBSERVATIONS. IN THE STATEMENT OF SH. JAI KUMAR GOLANI IT WAS ADMITTED THAT PROPERTY WORTH RS.1021000/- WAS PURCH ASED IN THE NAME OF CLOSE RELATIVES. THIS WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS AND THEREFORE INCOME WAS OFFERED FOR TA XATION. FURTHER RS.4,29,000/- WAS ALSO SPENT IN CASH FOR RE GISTRATION OF DOCUMENTS TO PURCHASE THE PROPERTY. FOR THIS ADDITI ON WAS MADE IN AY 05-06 WHICH WAS DELETED BY CIT(A) HOLDIN G THAT THE PAYMENT WAS MADE IN THE ACCOUNTING PERIOD RELEVANT TO AY ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 12 06-07. THE ADDITION OF RS.4,29,000/- WAS THEREFORE, MADE IN AY 06-07 IN THE HANDS OF THE APPELLANT. THE CONTENTION OF THE AR IS THAT THE PROPERTY UNDER QUESTION WAS ACQUIRED JOINTLY BY SOME FAMILY MEMBER S WHO ARE ALL ASSESSED TO TAX. THE AO HAD NO MATERIAL TO DRAW INFERENCE THAT AMOUNT WAS PAID IN CASH. EVEN IF IT IS ACCEPTE D THAT THE PAYMENT WAS MADE IN CASH IT WAS VERY MUCH AVAILABLE WITH THE APPELLANT AT THE BEGINNING OF THE YEAR. THE AO HAS NOT GIVEN ANY EXPLANATION IN HIS REMAND REPORT. THE ADDITION MADE BY THE AO IS NOT JUSTIFIED. THE CONTENTION OF THE AR IS CONSIDERED. THE AO'S OBSERVATION REGARDING FINDING OF CIT(A) WHILE DECID ING THE APPEAL FOR AY 05-06 IS NOT BASED ON THE FACTS. NO S UCH FINDING WAS GIVEN IN THE APPELLATE ORDER FOR AY 05-06 THAT ADDITION OF RS.4,29,000/- WAS DELETED BECAUSE THE PAYMENT MADE PERTAINS TO AY 06-07. IN FACT NO ADDITION OF RS.4,29,000/- W AS MADE IN AY 05-06 OR AT LEAST NO GROUND OF APPEAL IS THERE O N THIS ISSUE AND THEREFORE, QUESTION OF DELETING THE ADDITION OF RS.4,29,000/- JUST NOT ARISES. AS THE ADDITION MADE BY THE AO IS BASED ON THE WRONG ASSUMPTION, THE SAME IS HEREBY D ELETED. SECOND GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE APPELLANT. 5.10 AGGRIEVED THEREON, THE REVENUE IS IN APPEAL BE FORE US. 5.11 THE FACTS ABOUT VALUATION OF STOCK IN THE CASE OF SHRI MAHENDRA KUMAR GOLANI AND PRAKASH GOLANI ARE CLAIMED TO BE O N THE SAME LINES. LD. CIT(A) IN THE CASE OF MAHENDRA KUMAR GOLANI GAVE P ARTIAL RELIEF IN STOCK ADDITION BY FOLLOWING OBSERVATIONS. DURING THE HEARING OF APPEAL IT WAS SUBMITTED THA T BEING RETAIL TRADE IT WAS NOT POSSIBLE TO MAINTAIN DAY TO DAY STOCK REGISTER. ON THE BASIS OF ESTIMATED G.P. OF EARLIER YEAR THE STOCK AS PER BOOKS WAS ESTIMATED AT RS.8034821/- AND THE INVENTORY WAS VALUED AT RS.13065028/-. THUS EXCESS STOCK OF RS.5030207/- WA S DETERMINED. ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 13 IT WAS SUBMITTED THAT COPY OF THE INVENTORY WAS NOT PROVIDED. WHEN OBJECTION WAS RAISED BEFORE THE AO WHEN ONLY COPY W AS PROVIDED. INVENTORY OF 5 PAGES AT SR.L TO SR. NO. 138 AND INVENTORY OF 2 PAGES FROM SR. NO.1 TO SR. NO.32 WERE PREPARED IN RESPECT OF KALA MANDIR. FURTHER THIRD INVENTORY OF 2 PAGES WAS PREPARED WHE REIN AT PAGE NO.1 SR. NO. RUNS FROM 1-21 BUT AT PAGE NO.2 NO SERIAL N O. IS GIVEN. THIS THIRD INVENTORY IS IN RESPECT OF 2 ND FLOOR AND THE VALUE WORKED OUT IS RS.10020390/-. IN RESPECT OF EARLIER TWO INVENTORIE S NO SUCH TOTAL WAS DONE. THE LIST CONTAINED ALL THE STOCK ITEMS LYING IN THE SHOPS AT THE RELEVANT TIME AND THE VALUE OF STOCK WAS TAKEN. COS T OF ARTICLES WAS TAKEN AT ESTIMATED SALE PRICE. THAT THE DEAD STOCK WAS ALSO TAKEN AS PART OF INVENTORY. A LIST OF ITEMS CONSIDERED MORE THAN ONCE WAS PROVIDED. DUPLICATE ITEMS ALONGWITH DEAD STOCK COME S TO RS.358740/-. AT THE TIME OF SURVEY BOOKS OF ACCOUNT S WERE NOT COMPLETE AND THEREFORE, STOCK AS PER BOOKS WAS ONLY AN ESTIMATION. THE AO HAS ACCEPTED THE BOOKS OF ACCOUNTS AND FAILE D TO FIND OUT ANY MISTAKE. THE PREVIOUS HISTORY SHOWS THAT STOCK REMAINS BETWEEN RS.75 LACS TO RS.85 LACS. IT WAS ALSO SUBMITTED THA T MERE SIGNING OF PANCHNAMA AND INVENTORY LIST DID NOT MEAN THAT THEY CERTIFIED THE CORRECTNESS OF THE INVENTORY LIST RATHER IT ONLY CE RTIFIES THAT THEY WERE WITNESS OF THE PROCEEDINGS. INVENTORY LIST PREPARED AND SUBMITTED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCE EDINGS WAS SUBMITTED AND REQUESTED TO BE ACCEPTED. ALTERNATIVE LY IT WAS SUBMITTED THAT A THIRD LIST PREPARED BY THE SURVEY TEAM WHICH HAS NO BASIS SHOULD BE DELETED AND IN THE FIRST AND SECOND LIST THE STOCK MUST BE TAKEN AT COST AFTER DELETING THE ITEMS LIKE DEAD ST OCK. 20% DEDUCTION SHOULD BE GIVEN OUT OF THE SALE PRICE. AS IT WAS ALLEGED THAT THE ADDITION WAS MADE BY THE AO ONLY ON THE BASIS OF STATEMENTS RECORDED DURING THE COURSE OF SURVEY AND INVENTORIES PREPARED AT THAT TIME WERE NOT SIGNED B Y ANY INDEPENDENT WITNESS AND BOTH THE INVENTORIES WERE N OT COMPLETED. A SECOND INVENTORY WAS SUBSEQUENTLY PREPARED BY THE AO WHICH SHOWS THE LIST OF STOCK AS ON 31/3/06. IT WAS CLAIM ED BY THE AR THAT THE INVENTORY WAS PREPARED BY HIM AS PER BOOKS OF A CCOUNTS. THE AO WAS ASKED TO OFFER HIS COMMENTS ON THE SUBMISSION. THE AO'S REMAND REPORT WAS RECEIVED ON 18/1/2011. THE AO HAS STATED THAT NO NEW EVIDENCE WAS BROUGHT ON RECORD BY THE APPELLANT WHI CH REQUIRES ANY ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 14 VERIFICATION AND ADJUDICATION. THE REPLY FURNISHED BY THE ASSESSEE HAS BEEN PROPERLY DEALT WITH IN THE ASSESSMENT ORDER. V ERIFICATION ON THE BASIS OF NEW LIST PREPARED BY THE AR WAS NOT POSSIB LE FROM THE FACTS OF THE CASE AS IT WAS PREPARED SUBSEQUENT TO THE SURVE Y PROCEEDINGS. IT WAS FURTHER STATED BY THE AO THAT INVENTORY OF STOC K LYING AT TWO DIFFERENT LOCATIONS WERE PREPARED SEPARATELY AND VA LUED. IF FIRST INVENTORY IS FOUND TO BE ACCEPTABLE, THEN THERE IS NO VALID REASON TO REJECT THE AUTHENTICITY OF SECOND INVENTORY TITLED AS ANNEXURE KM-3. LASTLY IT WAS STATED THAT THE LIST PREPARED BY AR C AN BE CONSIDERED ONLY WHEN THE ASSESSEE WOULD HAVE PREPARED STOCK RE GISTER. ALSO THAT HE HAS NOT PREPARED SEPARATE TRADING A/CS UPTO THE DATE OF SURVEY AND THEREAFTER. THAT NO PERSON OF INCOME-TAX DEPARTMENT WAS PRESENT AT THE TIME OF PREPARATION OF THE LIST BY THE AR. THE AO'S REMAND REPORT AND FURTHER SUBMISSION OF TH E AR ON REMAND REPORT ARE CONSIDERED. THE INVENTORY PREPARE D AT THE TIME OF SURVEY AND SIGNED BY THE APPELLANT OR HIS EMPLOYEE AVAILABLE AT THE TIME OF SURVEY SHOULD BE ACCEPTED AS AN EVIDENCE AG AINST THE APPELLANT. MORE SO IN SUCH CASES WHERE THE VALUE OF STOCK WAS TAKEN AS STATED BY THE APPELLANT OR HIS EMPLOYEE. HOWEVER THE SIGNATURE OF THE APPELLANT OR HIS EMPLOYEE CONFIRMS ONLY THAT TH E INVENTORY WAS PREPARED IN THEIR PRESENCE. IN THE PRESENT CASE THO UGH THE PROPRIETOR WAS NOT PRESENT AT THE TIME OF PHYSICAL VERIFICATIO N, HE HAS PUT HIS SIGNATURE ON THE STATEMENT OF HIS BROTHER SH. JAI K UMAR GOLANI WHEN ALMOST AT THE END OF THE DAY OF SURVEY HE CAME TO T HE SHOP. IF ANY MISTAKES OR SHORTCOMINGS IS POINTED OUT BY THE APPE LLANT AT A LATER STAGE WHICH IS SUPPORTED BY SOME EVIDENCE THEN APPR OPRIATE CORRECTION CAN BE MADE. AT THE SAME TIME THE LIST P REPARED BY THE AR CANNOT BE CONSIDERED AS IT IS NOTHING BUT AN AFTER THOUGHT AND THERE APPEARS NO REASON FOR IGNORING THE INVENTORY PREPAR ED AT THE TIME OF SURVEY. SIMILARLY THE INVENTORY PREPARED BY THE AR AS ON 31/3/06 WILL NOT BE RELEVANT TO DETERMINE THE EXCESS STOCK ON TH E DATE OF SURVEY. AT THE SAME TIME THERE IS SOME FORCE IN THE ARGUMENT O F THE AR THAT THE THIRD INVENTORY (ANNEXURE KM-3) WAS CONCLUDED, THOU GH THE OTHER TWO INVENTORIES WERE NOT INCLUDED. IN THE THIRD INV ENTORY AT SECOND PAGE NO SERIAL NOS. ARE GIVEN. VALUE IS TAKEN IN RO UND FIGURES. THIS INVENTORY IS IN RESPECT OF 2 ND FLOOR WHEREIN THERE IS A GODOWN OF ANOTHER CONCERN KALA SAREE WHICH WAS NOT COVERED U/ S 133A. KALA SAREE SEPARATELY ASSESSED TO TAX WHEREIN CLOSING ST OCK AS ON ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 15 31/03/06 HAS BEEN SHOWN AT RS.28.25 LACS AND SALES RS.42.91 LACS. THE VALUE TAKEN PER ITEM IS ABNORMALLY HIGHER THAN THE VALUE TAKEN IN FIRST TWO INVENTORIES. IT IS HIGHER BY ALMOST 10 TI MES OR MORE IN EACH CASE. IN SECOND INVENTORY LEHENGA IS VALUED AT RS.2 500/- PER PIECE WHEREAS THE SAME HAS BEEN TAKEN IN THE THIRD INVENT ORY AT RS.15,000/-, RS.11,500/-, RS. 21,000/-, RS. 13,7507- AND EVEN AT RS.16800/-. SAREE SILK IN INVENTORY NO. 2 IS VALUED AT RS.400/- EACH WHEREAS SAME HAS BEEN VALUED AT RS.3,400/- IN INVENTORY NO.3. IN INV ENTORY NO.L VALUE OF SAREE JORGET WORK HAS BEEN TAKEN AT RS.700/- AND RS .2,300/- PER PIECE WHEREAS IN THE INVENTORY LIST 3 THE SAREE BASE IS T AKEN AT RS.21000/- AND RS.15000/- PER PIECE. WITH THESE EXAMPLES CONCL USION CAN BE DRAWN THAT THE VALUE TAKEN BY THE SURVEY TEAM IN IN VENTORY NO.3 IS ABNORMALLY HIGH. CONTENTION OF THE AR THAT THE VALU E WAS TAKEN AS PER GUESS WORK ONLY THEREFORE CAN BE ACCEPTED. IT WILL BE REASONABLE IF THE VALUE TAKEN IS REDUCED BY 20%. THUS THE STOCK VALUE OF RS.10020390/- MAY BE REDUCED BY RS.2004070/-. FURTHER REDUCTION O N ACCOUNT OF DUPLICATE ITEMS OF RS.358740/- MAY ALSO BE GIVEN. I N OTHER WORDS THE PHYSICAL STOCK VALUE OF RS.13065028/- MAY BE REDUCE D BY RS.2362818/-. THUS THE PHYSICAL STOCK COMES TO RS.L 0702210/- AS AGAINST STOCK OF RS.8034821/-. AS A RESULT THE EXCE SS STOCK COMES TO RS.2667389/-. THE AO IS THEREFORE, DIRECTED TO REDU CE THE ADDITION OF RS.5030207/- TO RS.2667389/-. THE GROUND OF APPEAL IS DECIDED PARTLY IN FAVOUR OF THE APPELLANT. 5.12 AGGRIEVED AGAINST THE PARTIAL RELIEF IN STOCK ADDITION , BOTH THE PARTIES ARE IN APPEAL BEFORE US. IT MAY BE PERTINENT TO MEN TION THAT IN ORDER TO VERIFY THE ABOVE MENTIONED OBSERVATIONS OF LD. CIT(A) THA T I N THE THIRD INVENTORY AT SECOND PAGE NO SERIAL NOS. ARE GIVEN. VALUE IS T AKEN IN ROUND FIGURES. THIS INVENTORY IS IN RESPECT OF 2 ND FLOOR WHEREIN THERE IS A GODOWN OF ANOTHER CONCERN KALA SAREE WHICH WAS NOT COVERED U/ S 133A. KALA SAREE SEPARATELY ASSESSED TO TAX WHEREIN CLOSING STOCK AS ON 31/03/06 HAS BEEN SHOWN AT RS.28.25 LACS AND SALES RS.42.91 LACS THE APPEALS WERE REFIXED ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 16 FOR HEARING AND DEPARTMENT WAS DIRECTED TO PRODUCE THE ASSESSMENT RECORD AND SURVEY FOLDERS. ON VERIFICATION THE OBSERVATION S WERE FOUND TO BE CORRECT. LD. DR WAS ALSO HEARD ON THESE ISUES. 5.13 IN THE CASE OF SHRI PRAKASH CHAND GOLANI, THE LD. CIT(A) GRANTED THE RELIEF TO ASSESSEE BY FOLLOWING OBSERVATIONS. THE AO'S REMAND REPORT DT.18/01/11 AND FURTHER SUBMISSION OF THE AR ON REMAND REPORT ARE CONSIDERE D. THE INVENTORY PREPARED AT THE TIME OF SURVEY AND SIGNED BY THE APPELLANT OR HIS EMPLOYEE AVAILABLE AT THE TIME OF SURVEY SHOULD BE ACCEPTED AS AN EVIDENCE AGAINST THE APPEL LANT. MORE SO IN SUCH CASES WHERE THE VALUE OF STOCK WAS TAKEN AS STATED BY THE APPELLANT OR HIS EMPLOYEE. HOWEVER TH E SIGNATURE OF THE APPELLANT OR HIS EMPLOYEE CONFIRMS ONLY THAT THE INVENTORY WAS PREPARED IN THEIR PRESENCE. IF ANY MI STAKES OR SHORTCOMINGS IS POINTED OUT BY THE APPELLANT AT A L ATER STAGE WHICH IS SUPPORTED BY SOME EVIDENCE THEN APPROPRIAT E CORRECTION CAN BE MADE. THE LIST PREPARED BY THE AR CANNOT BE CONSIDERED AS IT IS NOTHING BUT AN AFTER THOUGHT AN D THERE APPEARS NO REASON FOR IGNORING THE INVENTORY PREPAR ED AT THE TIME OF SURVEY. SIMILARLY THE INVENTORY PREPARED BY THE AR AS ON 31/3/06 WILL NOT BE RELEVANT TO DETERMINE THE EXCES S STOCK ON THE DATE OF SURVEY. HOWEVER, THE SUBMISSION OF THE AR THAT THE EXCESS STOCK WAS WRONGLY WORKED OUT LESS BY RS.172684/- IS ACCEPTED AS THIS HAS BEEN WORKED OUT BY TAKING CORRECT G.P. RATE OF LAST YEAR AS WELL AS ACTUAL PURCHASES AND SALES UPTO THE DATE OF SURVEY. THE OPENING STOCK HAS BEEN TAKEN CORRECTLY BY THE SURVEY TEAM. FURTHER THE TOTAL OF FIRST LIST WORKED OUT BY THE SURVEY TEAM COMES TO RS.2262955/- WHEREAS THE AR'S CONTENTION OF CORRECT FIGURE OF RS.2265955/-IS ACCE PTED. THUS THE STOCK WAS SHORTLY TAKEN BY RS.3,000/-. WITH THI S THE EXCESS STOCK DETERMINED BY THE AO SHOULD BE INCREASED BY R S.175684/- ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 17 . IN OTHER WORDS THE EXCESS STOCK AS PER SURVEY TEA M SHOULD COME TO RS.3956392/-. AT THE SAME TIME THERE IS SOME FORCE IN THE ARGUMEN T OF THE AR THAT THE INVENTORY NO.2 STARTING FROM PAGE N O.1-12 GIVING SR. NO. FROM 1-334 DOES NOT APPEAR TO BE PAR T OF THE STOCK. IN THIS INVENTORY NO.2 INSTEAD OF GIVING SPE CIFICATION ALMOST ALL ITEMS ARE NAMED AS COTTON SALWAR SUITS. ON THE CONTRARY IN THE FIRST INVENTORY SPECIFICATIONS HAVE BEEN GIVEN. AS THERE IS ONLY ONE PREMISES AND THE APPELLANT MAI NLY DEALS IN LADIES SALWAR SUITS WHEN ONE LIST IS COMPLETED, THE RE APPEARS NO REASON FOR STARTING SECOND LIST PARTICULARLY WHE N THE BUSINESS PREMISES IS ONLY ON GROUND FLOOR. FURTHER THE POSSIBILITY OF KEEPING 9000 PIECES OF SALWAR SUITS IN ONE PREMISES IS ALSO BEYOND THE STORAGE CAPACITY OF THE SHOP. THE SHOP SIZE IS 18 X X 20' AND INSTALLED RACKS ARE ONLY 10. CAPACITY OF EACH RACK IS ONLY 200 PIECES. THUS MAXI MUM STORAGE CAPACITY IS ONLY 2000 PIECES. FURTHER SALES ARE OF RS. 37 LACS WHICH IS IN THE SA ME RANGE OF EARLIER YEAR. FOR THIS MUCH TURNOVER NO BUSINESSMAN WILL KEEP INVENTORY OF RS. 63 LACS, PAR TICULARLY WHEN APPELLANT DEALS IN FASHIONABLE ITEMS WHICH GET S OBSOLETE WITHIN SHORT TIME. THUS THE SECOND INVENTORY, RELIED UPON BY THE AO IS NOT CONSIDERED FOR DETERMINING THE EXCESS STOCK FOUND A T THE TIME OF SURVEY. THUS THE TOTAL OF FIRST INVENTORY COMES TO RS. 2265955/-. AS AGAINST THIS THE CLOSING STOCK AS PER BOOKS COMES TO RS.2245168/-. THE DIFFERENCE I.E. THE EXCE SS STOCK ACTUAL COMES TO RS.20787/-. WITH THIS THE ADDITION OF RS.3780708/- MADE BY THE AO IS REDUCED TO RS.20787/ -. THUS THE APPELLANT GETS PARTIAL RELIEF. ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 18 5.14 APROPOS SECOND GROUND OF REVENUE IN RESPECT OF ADDITION OF RS. 2.00 LACS AGAINST UNRECORDED SHOP FURNISHING EXPENSES SA ME WAS DELETED BY LD. CIT(A) BY FOLLOWING OBSERVATIONS: CONTENTION OF A.R. IS CONSIDERED. ADDITION OF RS. 2 LACS HAS BEEN MADE PURELY ON ACCOUNT OF STATEMENT OF SH RI PRAKASH CHAND GOLANI. THE AOS OBSERVATION THAT HEAD OF THE FAMILY NORMALLY INCURS EXPENSES IS GENERAL OBSERVATION WHI CH IS NOT SUPPORTED BY ANY FACT IN THE PRESENT CASE. ON THE O THER HAND, EXPENSES OF MORE THAN WHAT WAS ADMITTED AT THE TIME OF SURVEY, HAS FOUND PLACE IN THE BOOKS OF ACCOUNTS OF SMT. KA NCHANDEVI GOLANI, ONE OF THE COOWNER OF THE PROP. UNDER QUEST ION. UNDER THESE CIRCUMSTANCES, THERE APPEARS NO REASON FOR MA KING ANY ADDITION IN THE HANDS OF ANY OTHER PERSON. FURTHER FROM THE COPY OF SCHEDULE OF FIXED ASSETS IT IS EVIDENT THAT EXPENSES WERE INCURRED IN FINANCIAL YEAR 2005-06 AND HAS BEEN DUL Y REFLECTED IN THE RETURN OF INCOME OF SMT. KANCHANDEVI GOLANI. ADDITION OF RS. 2 LACS MADE IN THE HANDS OF SHRI PRAKASHCHAN D GOLANI IS THEREFORE, DELETED. AS SUCH, THE GROUND OF APPEAL I S DECIDED IN FAVOUR OF THE APPELLANT. 5.15 AGGRIEVED ON THIS RELIEF ALSO, THE REVENUE IS BEFORE US. 5.16 LD. COUNSEL FOR THE ASSESSEE IN RESPECT OF STO CK ADDITIONS BASED ON SURVEY INVENTORIES CONTENDS THAT: (I) THESE ARE ADMITTED FACTS THAT SURVEY WAS CONDUCTED ON 01-02- 2006 AND AFTER PRELIMINARY QUESTION ANSWERS THE PHY SICAL VERIFICATION OF STOCK STARTED AT AROUND 11 AM & COM PLETED ON 01-02-2006 ITSELF. THIS IS EVIDENT FROM THE FACT TH AT ALL THE PAGES OF STOCK LIST FROM 1 TO 6 HAVE BEEN SIGNED BY THE SURVEY OFFICER AND THE ASSESSEE ON 01-02-2006. PAGES 1 TO 4 OF THE ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 19 SURVEY STATEMENT ALSO WERE RECORDED ON 01-02-2006, TILL THEN NO QUESTION WAS ASKED FOR EXPLANATION REGARDING ALLEGE D EXCESS STOCK. THE STATEMENT OF THE ASSESSEE WAS COMPLETED IN THE WEE HOURS OF 02-02-2006, THIS CAN BE VERIFIED FROM THE LAST PAGES AND PARTICULARLY IN THE CASE OF PRAKASH CHAND GOLAN I FROM PAGES 5 TO 9. THIS SCHEDULE ESTABLISHES THAT THE FI NALIZATION OF INVENTORIES WAS DRAGGED TO LATE HOURS SO THAT ASSES SES ARE TIRED AND EXHAUSTED BY THE DAY LONG SURVEY OPERATIONS AND THE STATEMENTS ARE RECORDED IN THIS SITUATION. THIS ALS O MAKES IT ABUNDANTLY CLEAR THAT NO TIME WAS GIVEN TO ANY ASSE SSEE TO RECONCILE THE ALLEGED EXCESS STOCK FROM RECORD, WOR K OUT OBSOLETE, OUT OF FASHION, DEFECTIVE, RETURNABLE DRE SS MATERIAL AND DEPRECIATED STOCK. EXISTENCE OF THESE ISSUES IN THI S BUSINESS IS RECOGNIZED AND AN UNDENIABLE. THUS THE ENTIRE SURVE Y EXERCISE EXECUTED BY THE DEPARTMENT IS FULL OF CONTRADICTION S AND LAPSES WHICH DENIED ANY OBJECTIVE RESPONSE TO ASSESSES. A PRESSURE WAS SYSTEMATICALLY BUILT ON THE ASSESSEES TO BE LEF T WITH NO CHOICE BUT TO SURRENDER ENTIRE ALLEGED EXCESS STOCK AS THEIR ADDITIONAL INCOME. (II) IT IS NEARLY IMPOSSIBLE TO COMPLETE PHYSICAL STOCK INVENTORIES OF 3 RUNNING BUSINESS CONCERNS BY VERIFICATION OF ITEM TO ITEM PURCHASE BILL IN THE TIME FRAME TAKEN BY SURVEY TEA M. IT IS WELL- NIGH IMPOSSIBLE TO SEGREGATE HUNDREDS OF DIFFERENT VARIETIES OF LADIES GARMENTS SO AS TO COMPARE WITH ACTUAL PURCHA SE BILLS IN THE DAY LONG TIME. THE VALUE OF LADIES SUITS AND G ARMENTS DEPENDS ON TYPE OF CLOTH, DESIGN, JARI, EMBROIDERY, MOTIF WORK ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 20 AND OTHER VALUE ADDITIONS THEREON. IN THE ABSENCE O F ANY COLUMN IN THE INVENTORIES SUGGESTING THE COMPARISON WITH P URCHASE BILLS DATE AND NO. WITH THE INVENTORY ITEMS. CONSEQUENTL Y THE EXCESS STOCK CLAIM OF THE SURVEY TEAM AND ITS TOTAL ADAPTA TION BY AO REMAIN UNCORROBORATED AND THE ADDITIONS THUS ARE AR BITRARY AND UNTENABLE. SUCH TYPE OF STOCK INVENTORIES CANNOT BE A RELIABLE EVIDENCE WITHOUT PROPER CORROBORATION, ATTENDING CI RCUMSTANCES AND PREPONDERANCE OF PROBABILITIES. LD. CIT(A) THOU GH APPRECIATED THESE ISSUES AND CONTENTIONS BUT DID NO T PROVIDE ADEQUATE RELIEF IN THE CASE OF JAI GOLANI AND MAHEN DRA GOLANI. (III) IT IS MENTIONED BY AO IN THE ASSESSMENT ORDER THAT IT IS NOT POSSIBLE TO MAINTAIN DETAILS OF SUCH STOCK IN REGUL AR COURSE OF ASSESSES BUSINESS. GOING BY THESE OBSERVATIONS ENTI RE STOCK INVENTORIES OF THREE DIFFERENT SHOPS CANNOT BE EXP EDITED IN A SHORT TIME BY VERIFYING THE PURCHASE BILLS OF THE E DIFFERENT CONCERNS. THUS THE CLAIM OF AO AND SURVEY TEAMS THA T EVERY ITEM OF STOCK INVENTORY WAS TALLIED WITH THE PURCHA SE BILLS BECOMES UNTENABLE. THUS THE EXCESS STOCK ADDITIONS MADE BY AO SOLELY RELYING ON THESE INVENTORIES WITHOUT CONS IDERING THE SUBMISSIONS OF THE ASSESSEE IS UNJUSTIFIED AND AGAI NST THE JUDICIAL DECISIONS IN THIS BEHALF. THUS THE MANNER, METHOD AND VALUATION OF THE STOCK ITEMS OF THESE SHOPS AND CO NSEQUENT ADDITIONS ARE UNJUSTIFIED; AD HOC; CONTRADICTORY AND UNRELIABLE IN NATURE. (IV) LEAVING ASIDE THE REFERENCE TO PURCHASE BILLS LD. AO HAS NOT MENTIONED AS TO HOW EXCESS STOCK HAS BEEN DETERMINE D. ON ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 21 PAGE 3 & 4 HE HAS LAID DOWN THE MANNER OF DETERMINA TION OF STOCK IN AN ACADEMIC FASHION WITHOUT GIVING RELEVAN T FIGURES SUCH AS OPENING STOCK AS PER BOOKS, PURCHASES MADE UP TO THE SURVEY TIME, SALES MADE UP TO THE SURVEY TIME. THIS ALL SHOWS THAT THE SURVEY TEAM SUMMARILY CONCLUDED THE VERIFI CATION OF STOCK PURELY ON THE BASIS OF GUESS WORK. THEREFORE, NO ADDITION COULD HAVE BEEN MADE ON THE BASIS OF SUCH DEFECTIVE VALUATION AND THE ADDITIONS SO MADE DESERVE TO BE DELETED. (V) THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE AUDITED U /S 44AB OF THE ACT, AUDITORS OR LD. AO HAS ALSO NOT POINTED OU T ANY DEFECT IN THE MAINTENANCE OF THE BOOKS. THE MAINTENANCE OF STOCK REGISTER IN THE CASE OF SUCH RETAIL BUSINESS IS ADM ITTED TO BE IMPOSSIBLE BY LD. AO. IN THESE CIRCUMSTANCES WHEN N O INCRIMINATING MATERIAL WHATSOEVER IN RESPECT OF PUR CHASE OR SALE OR DEFERENCE IN CASH IS FOUND DURING THE COURSE OF SURVEY; AN INFERENCE CANNOT BE DRAWN THAT ASSESSEE ACCUMULATED UNACCOUNTED STOCK. LD. CIT(A) HAS CORRECTLY OBSERVE D IN THE CASE OF PRAKASH CHAND GOLANI THAT AT THE SAME TIM E THERE IS FORCE IN THE ARGUMENT OF THE A.R. THAT THE INVENTOR Y APPEARING FROM PAGE NO.1 TO 18 WITH SR. NO.388 WAS CONCLUDED. SUBSEQUENT INVENTORY FROM PAGE NO. 19 TO 26 IS WITH OUT ANY SR. NO. AND VALUE HAS BEEN TAKEN IN ROUND FIGURES. FROM PAGE NO. 25 ONWARDS THE NUMBERS OF ITEMS AS WELL AS PURCHASE PRICE BOTH ARE IN ROUND FIGURE. THE DESCRIPTION OF GOODS IS AL SO NOT GIVEN. THE DEAD STOCK OF RS. 72,100/- IS ALSO INCLUDED IN THE INVENTORY ITEMS CONSIDERED MORE THAN ONCE COMES TO RS. 7,26,7 60/-. THUS ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 22 THE INVENTORY LIST STARTING FROM PAGE 1 TO 18 GIVIN G DESCRIPTION OF ITEMS FROM NO.1 TO 388 ALONE SHOULD BE CONSIDERE D. THUS THE LD. CIT(A) HAS CORRECTLY INFERRED THAT THE SURV EY TEAM DID NOT PREPARE THE INVENTORY FROM PAGES 19 TO 26 IN UN TENABLE MANNER. THIS HAS VITIATED THE ENTIRE VALUATION. AS THE VALUATION IS UNRELIABLE AND LD. AO HAS MADE THIS VALUATION AS THE SOLE BASIS OF STOCK ADDITIONS, LD. CIT(A) SHOULD HAVE DE LETED THE ENTIRE STOCK ADDITION. (VI) THE SURRENDER OBTAINED ON THE BASIS OF STATEMENT W HICH IN TURN ARE BASED ON PALPABLY WRONG VALUATION CAN NOT BE RE LIED AS A SOLE EVIDENCE FOR MAKING THE ADDITIONS. IT HAS BEEN HELD BY VARIOUS AUTHORITIES THAT NO ADDITION CAN BE MADE ON THE BASIS OF SUCH STATEMENT RECORDED U/S 133A OF THE ACT. THE RI GHT OF THE ASSESSE TO DEMONSTRATE THAT THE SURRENDER BEING BAS ED ON WRONG FACTS HAS BEEN RECOGNIZED AND UPHELD BY THE COURTS; IT HAS BEEN FURTHER HELD IN PLETHORA OF JUDGMENTS THAT SUCH ADD ITIONS CANNOT BE SUSTAINED. RELIANCE IS PLACED ON FOLLOWING CAS E LAWS: 1.KAILASH BEN MOHANLAL CHOKSI VS. CIT 14 DTR 257 ( GUJ.) 2. CONTECH TRANSPORT SERVICE (P) LTD. ORS VS. ACIT 19 DTR 191 (MUMBAI) 3. CHITRA DEVI VS. ACIT, 77 TTJ (JODHPUR) 640 4.AJIT CHINTAMAN KAVE VS. ITO 311 ITR (AT) 66 PUN E. 5. CIT VS. BHASKAR MITTAL73 TAXMAN 437 (CAL.) 6. KAILASH BEEN MANHARILAL CHOKSHI VS. CIT 14 DTR 2 57 (GUJ.) 7. PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA, 91 ITR 18 (SC). 8. JAIN TRADING CO. VS. ITO 17 SOT 574 (MUM.) ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 23 (VII) WITHOUT PREJUDICE TO ABOVE SUBMISSIONS, IT IS ALTER NATIVELY CONTENDED BY LD. COUNSEL THAT AFTER DETERMINING THE EXCESS STOCK TO RS. 15,80,480/- THE LD. CIT(A) IN THE CASE OF JAI KUMAR GOLANI HAS OBSERVED THAT FURTHER DEDUCTION OF RS. 7,26,760/- IS ALLOWED FOR THE ITEMS CONSIDERED MORE THAN ONCE. HOWEVER, WHILE CONCLUDING THE RELIEF THIS DEDUCTION OF RS. 7 ,26,760/- HAS NOT BEEN GIVEN. THUS IN EFFECT, THE ADDITION SUSTAI NED BY THE LD. CIT(A) IN THE CASE OF PRAKASH CHAND GOLANI SHOULD H AVE BEEN ONLY OF RS. 8,53,720/-. IT IS PLEADED THAT FACTS REGARDING STOCK ADDITIONS IN THE CASES OF MAHENDRA KUMAR & PRAKASH CHAND GOLANI ARE WRITTEN SUBMISSIO NS FILED IN ALL THESE CASES ARE RELIED ON. 5.17 LD. DR CONTENDS THAT IN THE SURVEY STATEMENT OR THEREAFTER ASSESSES HAVE NEVER CLAIMED THAT ANY DURESS OR PRESSURE WAS EXERTED ON THEM. THEREFORE, NO CREDENCE CAN BE GIVEN TO THIS PLEA. A PROPOS VALUATION OF STOCK, LD.DR CONTENDS THAT IN SURVEY STATEMENT ASSESSES HA VE AGREED FOR THE VALUATION AND DETERMINATION OF CLOSING STOCK AND VO LUNTARILY ADMITTED TO OFFER THE DEFERENCE AS ADDITIONAL INCOME. NO RETRAC TION WAS MADE BEFORE FILING OF THE RETURN OF INCOME. THUS THE CLAIM ABOU T VALUATION BEING DEFECTIVE OR ERRONEOUS IS AN AFTERTHOUGHT. LD. CIT( A) SHOULD NOT HAVE GIVEN THE RELIEF IN RESPECT OF STOCK VALUATION WHICH IS A GITATED BY REVENUE IN THE ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 24 RESPECTIVE GROUNDS. THE ORDERS OF THE LD. AO ARE RE LIED ON THIS ISSUE IN THE CASES OF THESE THREE ASSESSEES. 5.18 APROPOS OTHER REVENUE GROUNDS IN THE CASES OF SHRI JAI KUMAR GOLANI AND PRAKASH CHAND GOLANI, ORDER LD. AO IS RELIED ON . 5.19 THE LD. COUNSEL FOR THE ASSESSEE APROPOS REMAI NING REVENUE GROUND CONTENDS THAT IN THE CASE OF JAI KUMAR GOLANI FOR M AKING ADDITION OF RS. 4,29,000/- LD. AO HAS OBSERVED AS UNDER:- (A) ADDITION OF RS. 4,29,000/- WAS MADE IN ASSESSME NT YEAR 2005-06. (B) THE AFORESAID ADDITION OF RS. 4,29,000/- WAS DE LETED BY THE LD. CIT(A) HOLDING THAT IT RELATED TO THE PERIO D RELEVANT TO ASSESSMENT YEAR 2006-07. (D) THE ADDITION OF RS. 4,29,000/- BEING UNACCOUNTE D INVESTMENT FOR AY 2006-07 HAS PASSED THE TEST OF AP PEAL. IT IS PLEADED THAT THESE OBSERVATIONS MADE BY AO AR E NOT CORRECT. LD. CIT(A) BY CORRECT APPRECIATION OF APPEAL ORDER FOR ASSESSM ENT YEAR 2005-06, DELETED THE ADDITION HOLDING THAT THE FACTS MENTIONED BY TH E AO ARE NOT BORNE OUT FROM THE APPEAL ORDER. THE ADDITION HAS BEEN MADE B Y MISINTERPRETING THE APPEAL ORDER FOR AY 2005-06. THEREFORE, THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION. ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 25 5.20 APROPOS THE REMAINING REVENUE GROUND IN THE CA SE OF PRAKASH CHAND GOLANI PERTAINS TO ADDITION OF RS. 2 LACS, LD. COUN SEL CONTENDS THAT LD. AOS ADDED THE AMOUNT ON A PRESUMPTION THAT HEAD OF THE FAMILY NORMALLY INCURS EXPENSES. LD. CIT(A) HAS RIGHTLY HELD IT TO AS A GE NERAL OBSERVATION BESIDES EXPENSES MORE THAN SURRENDERED IN SURVEY IS FOUND T O BE RECORDED IN THE BOOKS OF ANOTHER FAMILY MEMBER SMT. KANCHANDEVI GOL ANI. FURTHER ASSESSEE DEMONSTRATED FROM THE COPY OF SCHEDULE OF FIXED ASS ETS OF SMT. KANCHANDEVI GOLANI THAT EXPENSES WERE INCURRED IN FINANCIAL YEA R 2005-06 AND ARE DULY REFLECTED IN HER RETURN. IN VIEW OF THESE FACTS THE ADDITION OF RS. 2 LACS HAS BEEN RIGHTLY DELETED. DECISION 5.21 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE MAIN CONTENTIONS RAISED BY THESE ASSESSEES PERTAIN TO THE MISTAKES COMMITTED BY SURVEY TEAM IN THE VAL UATION OF CLOSING STOCK ON THE ISSUES LIKE MANNER OF PREPARATION OF STOCK INVENTORY; OVERVALUATION; NOT CONSIDERING THE DAMAGED AND OBSOLETE STOCK; NOT REFERRING TO ANY PURCHASE BILL OF THE ASSESSEE AND HOLDING THAT VALU ATION OF PHYSICAL STOCK WAS BASED THEREON ETC. IN OUR CONSIDERED VIEW THE MISTA KES AS CONSIDERED BY AND ADJUDICATED UPON BY LD. CIT(A) ARE JUSTIFIED AND BA SED ON SOUND REASONING. ASSESSEES HAVE BEEN ABLE TO DEMONSTRATE THE EXISTEN CE OF ABERRATIONS IN THE ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 26 VALUATION OF STOCK ON VARIOUS COUNTS. IT DOES NOT E MERGE FROM THE AVAILABLE RECORD THAT VALUATION WAS ADOPTED BY SURVEY TEAM BY COMPARING THE STOCK ITEMS WITH THE PURCHASE BILLS OF THE ASSESSEE. LD. CIT(A) CALLED FOR THE REMAND REPORT FROM AO WHICH HAS BEEN CONSIDERED ALB EIT GIVING PARTIAL RELIEF. HONBLE SUPREME COURT IN THE CASE OF PULLAN GODE RUBBER PRODUCE (SUPRA) HAS HELD THAT A STATEMENT IS IMPORTANT PIEC E OF EVIDENCE BUT IF THE DEPONENT IS ABLE TO DEMONSTRATE THAT THERE ARE FACT UAL AND CALCULATION MISTAKES THEREIN, IN THAT CASE STATEMENT IS TO BE R EAD ACCORDINGLY. RESPECTFULLY FOLLOWING THIS JUDGMENT OF HONBLE SUP REME COURT WE UPHOLD THE ORDER OF LD CIT(A) QUA THE REVENUE GROUNDS RELA TING TO STOCK VALUATION, WHICH ARE ACCORDINGLY DISMISSED. 5.22 ADVERTING TO ASSESSEE APPEAL LD CIT(A) AWARDE D THE PARTIAL RELIEF IN THE CASE OF SHRI JAI KUMAR GOLANI MAINLY OBSERVING AS UNDER: I) TWO INVENTORIES WERE PROVIDED TO ASSESSEE, ONE CONTAINING 18 PAGES FROM SR.L TO SR. NO.388 WHICH INCLUDED ALL T HE STOCK ITEMS LYING IN THE SHOPS AT THE RELEVANT TIME AMOUNTING T O RS.7861141/-. ANOTHER LIST OF RS.2689550/- WHOSE ITEMS HAD BEEN A LREADY CONSIDERED IN FIRST INVENTORY. II) COST OF ITEMS IS TAKEN ON ESTIMATED SALE PRICE & D EAD STOCK IS ALSO INCLUDED IN THE INVENTORY. ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 27 III) A LIST OF ITEMS CONSIDERED MORE THAN ONCE WAS PROVI DED, THEIR VALUE ALONG WITH DEAD STOCK AMOUNTS TO RS.798860/-. AO H AS ACCEPTED THE BOOKS OF ACCOUNTS AND FAILED TO FIND OUT ANY MI STAKE. THE PREVIOUS HISTORY SHOWS THAT STOCK REMAINS BETWEEN R S.50 LACS TO RS. 60 LACS. IV) SECOND INVENTORY PREPARED BY THE SURVEY TEAM HAS N O BASIS AND SHOULD BE DELETED AND IN THE FIRST LIST THE STOCK M UST BE TAKEN AT COST AFTER DEAD STOCK ITEMS FOR WHICH 20% REDUCTIO N SHOULD BE GIVEN OUT OF THE VALUE. V) INVENTORY APPEARING FROM PAGE NO.L TO 18 WITH SR.L TO 388 WAS PROPER AND SECOND INVENTORY FROM PAGE NO. 19 TO 26 IS WIT HOUT ANY SERIAL NO. AND WITH ROUND FIGURE VALUES OF THE ITEM. FROM PAGE NO.25 ONWARDS THE NUMBER OF ITEMS AS WELL AS PURCHASE PR ICE BOTH ARE IN ROUND FIGURE. THE DESCRIPTION OF GOODS IS ALSO NOT GIVEN. VI) THE INVENTORY INCLUDED DEAD STOCK OF RS.72100/-. I TEMS CONSIDERED MORE THAN ONCE COMES TO RS.726760/-. THUS THE INVEN TORY LIST STARTING FROM PAGE NO.L TO 18 GIVING DESCRIPTION OF ITEMS FROM SR. NO.L TO 388 ALONE SHOULD BE CONSIDERED. THE TOTAL O F PAGE NO.L TO 18 COMES TO RS.7861141/- WHEREAS AS PER THE BOOKS T HE STOCK SHOULD BE RS.5553900/-. THUS THE EXCESS STOCK COMES TO RS.1580480/-. FURTHER DEDUCTION OF RS.726760/- IS A LLOWED FOR THE ITEMS CONSIDERED MORE THAN ONCE. THE ADDITION OF RS .4997061/- IS THEREFORE REDUCED TO RS.1580480/-. THE AO IS THE REFORE ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 28 DIRECTED TO REDUCE THE ADDITION OF RS.4997061/- TO RS.1580480/-. THE APPELLANT THUS GETS PARTIAL RELIEF. LD. CIT(A)S OBSERVATION CLEARLY INDICATE THAT AN A MOUNT OF RS. 7,26,760/- ON ACCOUNT OF DOUBLE VALUATION WAS TO BE GIVEN, HOW EVER THE REDUCTION REMAINS TO BE GIVE. IN OUR CONSIDERED VIEW THIS BEI NG A MATHEMATICAL CALCULATION IT SHOULD BE REDUCED FROM RS. 1580480/- , CONSEQUENTLY THE FINAL ADDITION AMOUNT COME TO RS. 8,53,720/-. 5.23 THUS IN OUR CONSIDERED VIEW THAT AFTER THIS CO RRECTION THE AMOUNT OF ADDITION ON ACCOUNT OF STOCK IN THE CASE OF JAI KUM AR GOLANI SHOULD COME TO RS. 8,53,720/-. THUS WE HOLD ACCORDINGLY, CONSEQUEN TLY THIS GROUND OF REVENUE IS DISMISSED AND THAT OF ASSESSEE IS PARTLY ALLOWED. 5.24 APROPOS SECOND REVENUE GROUND IN THE CASE OF J AI KUMAR GOLANI, AO MADE THE ADDITION UNDER IMPRESSION THAT LD CIT(A ) DELETED THE SAME HOLDING THAT THE PAYMENT WAS MADE IN THE ACCOUNTING PERIOD RELEVANT TO AY 06-07. LD. CIT(A) FOUND NO SUCH DIRECTION IN HIS OR DER FOR AY 2005-06. BESIDES, AO HAS NOT GIVEN ANY EXPLANATION IN HIS RE MAND REPORT, THERE BEING NO OTHER REASON LD. CIT(A) DELETED THIS ADDIT ION . 5.25 IN OUR CONSIDERED VIEW, LD. AO MADE THE IMPUGN ED ADDITION ON WRONG ASSUMPTION ABOUT THE EARLIER APPEAL ORDER WHI CH DOES NOT CONTAIN ANY ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 29 SPECIFIC DIRECTION. CONSEQUENTLY LD. CIT(A) RIGHTLY DELETED THE SAME. SECOND GROUND OF REVENUE APPEAL IS DISMISSED. 5.26 ADVERTING TO THE APPEAL OF SHRI MAHENDRA KUMAR GOLANI, THE ISSUE OF STOCK VALUATION IS SAME AND PART AMOUNT DELETED/ RE TAINED BY LD. CIT(A) IS AGITATED BY BOTH THE PARTIES.LD. CIT(A) HAS OBSERVE D THAT O N THE BASIS OF ESTIMATED GP OF EARLIER YEAR, THE STOCK AS PER BOO KS WAS ESTIMATED AT RS.8034821/- AND THE SURVEY INVENTORY WAS VALUED AT RS.1,30,65,028/- RESULTING IN EXCESS STOCK OF RS.50,30,207/-. THREE INVENTORIES WERE PREPARED BY SURVEY TEAM; INVENTORY OF 5 PAGES AT SR.L TO SR. NO. 138 AND INVENTORY OF 2 PAGES FROM SR. NO.1 TO SR. NO.32; T HIRD INVENTORY OF 2 PAGES WAS PREPARED WHEREIN AT PAGE NO.1 SR. NO. RUNS FROM 1-21 BUT AT PAGE NO.2 NO SERIAL NO. IS GIVEN. 5.27 LD. CIT(A) HAS FURTHER OBSERVED THAT THE THIR D INVENTORY WAS IN RESPECT OF 2 ND FLOOR AND THE VALUE WORKED OUT IS RS.10020390/-. I N RESPECT OF EARLIER TWO INVENTORIES NO SUCH TOTAL WAS DONE. THE LIST CO NTAINED ALL THE STOCK ITEMS LYING IN THE SHOPS AT THE RELEVANT TIME AND THE EST IMATED VALUE OF STOCK WAS TAKEN. THE DEAD STOCK WAS ALSO INCLUDED AT FULL VAL UE IN THE INVENTORY. A LIST OF ITEMS CONSIDERED MORE THAN ONCE WAS ALSO PR OVIDED BY THE ASSESSEE. DUPLICATE ITEMS ALONG WITH DEAD STOCK COM ES TO RS.358740/-. ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 30 ASSESSEES PAST HISTORY REVEALED THAT STOCK REMAINE D BETWEEN RS.75 LACS TO RS.85 LACS. IT IS VEHEMENTLY PLEADED THAT THIRD LI ST PREPARED BY THE SURVEY TEAM HAS NO BASIS SHOULD BE DELETED AND IN THE FIRS T AND SECOND LIST THE STOCK MUST BEING CORRECT INVENTORIES TAKEN AT COST AFTER DELETING THE ITEMS LIKE DEAD STOCK@ 20% DEDUCTION SHOULD BE GIVEN OUT OF THE SAL E PRICE. AO'S REMAND REPORT WAS ALSO RECEIVED ON 18/1/2011, LD. CIT(A) D ULY CONSIDERED THE SAME. 5.28 LD. COUNSEL CONTENDS THAT THIRD INVENTORY WAS IN RESPECT OF 2 ND FLOOR WHEREIN THERE IS A GODOWN OF ANOTHER CONCERN KALA S AREE WHICH WAS NOT COVERED U/S 133A. KALA SAREE IS SEPARATELY ASSESSED TO TAX WHEREIN CLOSING STOCK AS ON 31/03/06 HAS BEEN SHOWN AT RS.28.25 LAC S AND SALES RS.42.91 LACS. THE VALUE TAKEN PER ITEM IS ABNORMALLY HIGHER THAN THE VALUE TAKEN IN FIRST TWO INVENTORIES. IT IS HIGHER BY ALMOST 10 TI MES OR MORE IN EACH CASE. IN SECOND INVENTORY LEHENGA IS VALUED AT RS.2500/- PER PIECE WHEREAS THE SAME HAS BEEN TAKEN IN THE THIRD INVENTORY AT RS.15 ,000/-, RS.11,500/-, RS. 21,000/-, RS. 13,7507- AND EVEN AT RS.16800/-. SILK SAREE IN INVENTORY NO. 2 WHEREAS SAME HAS BEEN VALUED AT RS.3,400/- IN INVEN TORY NO.3. IN INVENTORY NO.L VALUE OF SAREE JORGET WORK HAS BEEN TAKEN AT R S.700/- AND RS.2,300/- PER PIECE WHEREAS IN THE INVENTORY LIST 3 THE SAREE BAS E IS TAKEN AT RS.21,000/- ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 31 AND RS.15000/- PER PIECE. WITH THESE EXAMPLES LD. C IT(A) DREW A CONCLUSION THAT THE VALUE TAKEN BY THE SURVEY TEAM IN INVENTOR Y NO.3 IS ABNORMALLY HIGH. LD. CIT(A) INSTEAD OF DELETING THE THIRD LIST ESTIM ATED THE STOCK AND GAVE 20% REDUCTION. 5.29 LD.CIT(A) GAVE THE REDUCTION ON ACCOUNT OF DUP LICATE ITEMS OF RS.3,58,740/- CONSEQUENTLY STOCK OF RS.13065028/- W AS REDUCED BY RS.23,62,818/- IS EQUAL TO RS.L,07,02.210/- AS AGA INST BOOK STOCK OF RS.80,34,821/-. AS A RESULT THE EXCESS STOCK WORKED OUT AT RS.26,67,389/-. LD. CIT(A) DIRECTED TO REDUCE THE ADDITION IN THIS BEHALF FROM RS.50,30,207/- TO RS.26,67,389/-. 5.30 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. FOR THE SAME OBSERVATIONS AND REASONINGS AS GIVEN IN THE CASE OF JAI GOLANI, WE DISMISS THE REVENUE GROU ND IN THIS BEHALF. ADVERTING TO THE ASSESSEES APPEAL THAT THE THIRD I NVENTORY WAS PREPARED BY SURVEY TEAM IN RESPECT OF 2 ND FLOOR WHICH WAS A GODOWN OF ANOTHER CONCERN KALA SAREE WHICH WAS NOT COVERED U/S 133A. KALA SAREE SEPARATELY ASSESSED TO TAX WHERE CLOSING STOCK AS O N 31/03/06 HAS BEEN RETURNED AT RS.28.25 LACS. LD. COUNSEL PLEADS THAT THE THIRD INVENTORY ITSELF HAS NO VALIDITY, THE ITEMS BELONGED TO KALA SAREES WHICH WAS NOT UNDER ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 32 SURVEY OPERATIONS. ASSESSEE IS NOT DEALING IN SAREE S, THEREFORE, THERE IS NO JUSTIFICATION IN INCLUDING THE THIRD INVENTORY AS A SSESSEES STOCK. LD. CIT(A) HAS OFFERED CORRECT ADVERSE OBSERVATIONS ABO UT THIRD INVENTORY BEING NOT SERIALLY NUMBERED AND VALUES BEING GIVEN IN ROUND FIGURES AND INCLUDES THE STOCK OF SAREES NOT DEALT IN BY THE AS SESSEE. CONSIDERING THESE INCONSISTENCIES, THE THIRD INVENTORY ITSELF SHOULD HAVE BEEN EXCLUDED. THUS DESPITE ADVERSE OBSERVATIONS LD. CIT(A) THUS ERRED IN AGGREGATING THE THREE INVENTORIES AND REDUCING THE VALUE BY 20%. IN CORRE CT TERMS THIRD INVENTORY INCLUDING STOCK OF KALA SAREES SHOULD HAV E BEEN EXCLUDED AND DOUBLE ADDITION ITEMS + 20% OLD STOCK REDUCTION SHO ULD HAVE BEEN GIVEN ON AGGREGATE OF TWO INVENTORIES, THIS WILL RESULT I N DELETION OF ENTIRE ADDITION, WHICH IS PRAYED TO BE DELETED. 5.31 WE ARE OF THE CONSIDERED VIEW THAT AFTER HAVIN G GIVEN ADVERSE FINDINGS ABOUT THE THIRD INVENTORY BEING RELATED TO THE PREMISES OF KALA SAREES AND THE ITEMS BEING NOT DEALT IN BY THE ASSE SSEE; LD. CIT(A) SHOULD HAVE EXCLUDED THE THIRD INVENTORY. SEPARATE EXISTEN CE OF KALA SAREES AND INCLUSION OF ITS STOCK IN ASSESSEE'S STOCK IS NOT D ISPUTED BY THE AO IN REMAND REPORT AND NO ADVERSE COMMENTS ARE OFFERED BY AO IN RESPECT OF THIRD INVENTORY. ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 33 5.32 CONSIDERING ALL THE FACTS, CIRCUMSTANCE AND PL EADING OF BOTH THE PARTIES WE ARE OF THE VIEW THAT THIRD INVENTORY SH OULD BE EXCLUDED FROM THE AGGREGATE STOCK ADDED IN THE HANDS OF THE ASSES SEE. IT IS NOT DISPUTED THAT IF THIRD INVENTORY IS EXCLUDED THERE WILL BE N O RESULTANT ADDITION AS RETAINED BY THE LD. CIT(A) . THUS WE DELETE THE DIS ALLOWANCE RETAINED BY LD. CIT(A). IN THE RESULT REVENUE GROUND IS DISMISS ED AND ASSESSEES GROUND IS ALLOWED. 5.33 ADVERTING TO REVENUES APPEAL IN THE CASE OF P RAKASH GOLANI FOR THE REASONS AS GIVEN IN FOREGOINGS THE ORDER OF LD CIT( A) GIVING PARTIAL RELIEF IN RESPECT OF STOCK IS UPHELD AND REVENUE APPEAL IS DISMISSED. 5.34 2 ND REVENUE GROUND IN THE CASE OF PRAKASH GOLANI AGITA TES ADDITION OF RS. 2 LACS. LD. AOS MADE THE ADDITION BY A PRES UMPTIVE OBSERVATION THAT HEAD OF THE FAMILY NORMALLY INCURS EXPENSES WHICH H AS BEEN RIGHTLY HELD BY LD. CIT(A) TO BE NOT SUFFICIENT FOR MAKING ADDITION . ASSESSEE DEMONSTRATED THAT IT WAS SHOWN AS ASSETS OF SMT. KANCHANDEVI GOL ANI WHICH IS DULY REFLECTED IN HER RETURN. IN VIEW OF THESE FACTS, WE HOLD THAT THE ADDITION OF RS. 2 LACS HAS BEEN RIGHTLY DELETED BY LD. CIT(A). THUS REVENUE APPEAL IS DISMISSED. ITA NO. 461/JP/2011 SHRI JAI KUMAR GOLANI VS. DCIT, CIRCLE- 1 JAIPU R 34 6.0 IN THE RESULT, SET OF APPEALS ARE DISPOSED OF AS UNDER: (I) JAI KUMAR GOLANI: REVENUE APPEAL IS DISMISSED; ASSESSEE APPEAL IS PARTLY ALLOWED. (II) MAHENDRA KUMAR GOLANI: REVENUE APPEAL IS DISM ISSED; ASSESSEE APPEAL IS ALLOWED. (III) PRAKASH CHAND GOLANI: REVENUE APPEAL IS DISMI SSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09-01-2015 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 9 TH JAN 2015 *MISHRA COPY FORWARDED TO:- 1. SHRI JAI KUMAR GOLANI, JAIPUR 2. THE DCIT, CIRCLE- 1, JAIPUR / ITO , WARD- 1(3), JAIPUR 3. SHRI MAHENDRA KUMAR GOLANI, JAIPUR 4. THE DCIT, CIRCLE- 1, JAIPUR / ITO, WARD- 1(3), JAIPUR 5. THE ITO , WARD- 1(3), JAIPUR (IN THE CASE OF PRA KASH CHAND GOLANI ) 6. THE LD. CIT(A) 7. THE LD. CIT BY ORDER 8..THE LD. DR 9.THE GUARD FILE (IT NO. 461/JP/2011) AR ITAT, JAIPUR