Smt. Daxaben Kiritbhai Thakkar, Nadiad V. The Income tax Officer, Ward-4, Nadiad

ITA 462/AHD/2006

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1654 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-02-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 22-02-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Assessee Lawyers: K R DIXIT
• Keywords: Gross profit estimation; Rejection of books of accounts; Unexplained investment; Income from undisclosed sources; Principle of natural justice; Additional evidence; Question of law; Set aside
• Section: 69C; 133A; 250; 143(2); 131; 145; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' BEFORE SHRI BHAVNESH SAINI,JM & SHRI A N PAHUJA,AM ITA NO.462/AHD/2006 (ASSESSMENT YEAR:-2002-03) SMT. DAXABEN KIRITBHAI THAKKAR, A TO Z PLY CENTRE, MAHALAXMI BHAVAN, GHODIYA BAZAR, NADIAD V/S INCOME-TAX OFFICER, WARD- 4,NADIAD. PAN: ABAPT 8071 B [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI K R DIXIT, AR REVENUE BY:- SHRI R K DHANESTA, DR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE AGAINST ORDER DATED 12- 12-2005 OF THE LD. CIT(APPEALS)-IV, BARODA, FOR TH E ASSESSMENT YEAR 2002-03, RAISES THE FOLLOWING GROUNDS:- 1 THE LEARNED CIT(A) ERRED AT LAW AND ON FACTS IN CONFIRMING THE AOS ORDER IN RESPECT OF RECASTING OF THE PROFIT & LOSS ACCOUNT OF ASSESSEE. THE LD. CIT(A) ALSO ERRED AT LAW AND ON FACTS IN DI RECTING THE AO TO RECAST THE P&L ACCOUNT IN RESPECT OF THE POST SURVE Y PERIOD BY ADOPTING GP @ 8.67%. THE OBSERVATIONS MADE IN THE A SSESSMENT ORDER ARE INCORRECT AND ERRONEOUS IN LAW. 2 THE LEARNED CIT(A) ERRED AT LAW AND ON FACTS IN C ONFIRMING THE ADDITION OF RS.21,71,063/- U/S 69 OF THE IT ACT ON ACCOUNT O F SO-CALLED INVESTMENT IN THE EXCESS STOCK FOUND DURING THE SUR VEY. THE LD. CIT(A) OUGHT TO HAVE DIRECTED THE AO TO CONSIDER ALL THE S UBMISSION MADE BY THE ASSESSEE AND ACCEPT THE BOOK RESULTS OF THE ASS ESSEE. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE LEGAL POSITION THAT THE STATEMENT RECORDED DURING SURVEY HAS NO EVIDENTIARY VALUE. 3 THE LEARNED CIT(A) ERRED AT LAW AND ON FACTS IN C ONFIRMING THE ADDITION OF RS.23,614/- U/S 69C OF THE IT ACT ON ACCOUNT OF DIFFERENCE IN THE CLOSING BALANCE AS PER THE ASSESSEES BOOKS AND M/S UNICORN CORPORATION. 4 THE ASSESSEE RESERVES RIGHT TO ADD, AMEND OR ALTE R ANY OR ALL GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING OF APPEA L. ITA N O.462/A/06 2 2. ADVERTING FIRST TO GROUND NOS.1 AND 2 IN THE APP EAL, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECL ARING INCOME OF RS.15,58,730/- FILED ON 31-10-2002 BY THE ASSESSE E, ENGAGED IN SELLING PLYWOOD AND ALLIED ITEMS, WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE INCOME-TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT] ON 1 1-12-2002 . IN THIS CASE A SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 31.1.2002,WHEN THE ASSESSEE STATED THAT BOOKS OF ACCOUNTS OF THE A SSESSEE REFLECTED STOCK OF RS.4,99,032/- ON THE DATE OF S URVEY WHILE THE INVENTORY OF PHYSICAL STOCK TAKEN IN PRESENCE OF TH E ASSESSEE WAS FOUND TO BE OF THE VALUE OF RS.25,08,860/-. IT MAY BE POINTED OUT THAT DURING THE COURSE OF SURVEY, STATEMENT OF THE ASSES SEE WAS RECORDED ON OATH U/S 131 OF THE ACT AND IN HER STATEMENT, IN REPLY TO QU ESTION NO.8, THE ASSESSEE SUBMITTED THAT BOOKS OF ACCOUNT OF HER FIRM WERE LY ING IN THE BUSINESS PREMISES AND WERE WRITTEN UPTO 15.12.2001 . IN REPLY TO QUES TION NO.4, IT WAS POINTED OUT THAT MAJORITY OF THE WORK SUCH AS SALES AND PURCHAS ES WERE BEING ATTENDED BY HER HUSBAND, NAMELY, SHRI KIRIT KUMAR P. THAKKAR. A S REGARDS THE VALUE OF STOCK FOUND IN THE COURSE OF SURVEY, THE ASSESSEE SUBMITT ED IN REPLY TO QUESTION NO.7 THAT SINCE HER HUSBAND HAD HANDLED THE SALES AND PU RCHASES, SHE HAD NO KNOWLEDGE OF THE STOCK IN TRADE. IT WAS ADMITTED TH AT THE CASH IN HAND WOULD BE RS.16,000/- TO RS.17,000/-. SUBSEQUENTLY, IN ANOTHE R STATEMENT OF THE ASSESSEE RECORDED ON 4.2.2002 , THE ASSESSEE SUBMITTED A WOR KING OF THE CLOSING STOCK AS PER BOOKS OF ACCOUNTS UPTO THE DATE OF SURVEY ,DISC LOSING STOCK OF RS.4,99,032/-. IN REPLY TO QUESTION NO.5, THE ASSESSEE SUBMITTED T HAT PHYSICAL VALUE OF THE STOCK WAS RS.25,08,860/- WHEREAS THE BOOKS REFLECTED ONLY RS.4,99,032/-. TO A FURTHER QUERY, IN REPLY TO QUESTION NO.5, THE ASSESSEE OFFE RED THE DIFFERENCE IN STOCK VALUED AT RS.20,09,828 AS ITS INCOME AND AGREED TO PAY ADVANCE TAX THEREON. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE VIDE LETTER DATED 16-12-2002 TO FURNISH IT EM-WISE DETAILS OF SALES, PURCHASES, ETC. AND COMPLETE INVENTORY OF OP ENING AND CLOSING STOCK IN TERMS OF QUANTITY ALONG WITH METH OD OF ITS VALUATION. IN RESPONSE, THE ASSESSEE REPLIED VIDE LETTER DATED 8-01-2003 AS UNDER:- ITA N O.462/A/06 3 REGARDING COMPLETE INVENTORY OF OPENING & CLOSING STOCK IN QUANTITY TERM, WE HAVE TO SAY THAT QUANTITY RECORDS WERE NOT MAINT AINED BY US. WE HAVE MAINTAINED STOCK RECORDS, FOR THE PERIOD F ROM DT. 31-1-2002 TO 31- 03-2002, ONLY. THE CLOSING STOCK AS ON 31-03-2002 IN TERM OF QUAN TITY IS ARRIVED ON THE BASIS OF STOCK MOVEMENT ANALYSIS FOR THE ABOVE PERI OD BASE ON PHYSICAL STOCK VERIFICATION AS ON DATE 31-01-2002 DURING THE COURSE OF SURVEY. THE CLOSING STOCK IS VALUED ON THE BASIS OF COST O R MARKET PRICE WHICHEVER IS LOWER. COST FOR THE PURPOSE OF VALUATION INCLUDE D PURCHASE PRICE PLUS TRANSPORTATION CHARGES. THE CLOSING QUANTITY IS ARRIVED AT ON THE BASIS OF FIFO METHOD, AND VALUED ON COST BASIS AS EXPLAINED ABOVE. 2.1. ON PERUSAL OF TRADING ACCOUNT PRIOR TO THE DATE OF SURVEY AND AFTER THE DATE OF SURVEY ,WITHOUT INCLUDING THE UN ACCOUNTED STOCK FOUND DURING THE SURVEY AND AFTER CONSIDERING THE S AID UNACCOUNTED STOCK AS DETAILED ON PAGE 3 & 4 OF THE ASSESSMENT O RDER , THE AO OBSERVED THAT THE ASSESSEE HAD SHOWN GROSS PROFIT[G P] @ 73.45% FOR THE PERIOD PRIOR TO SURVEY WHILE FOR THE POST S URVEY PERIOD, LOSS OF RS.6,02,012/- WAS ARRIVED AT, YIELDING NEGATIVE GP @ 48.06%. THE GP FOR THE WHOLE YEAR WORKED OUT AT 40.38%. IN VIE W OF NEGATIVE GP IN THE POST SURVEY PERIOD, THE ASSESSEE WAS ASK ED TO EXPLAIN THE REASONS FOR ABNORMAL RESULTS. THE ASSESSEE VIDE LETTER DATED 08- 03-2004 SUBMITTED THAT (A) SALES MADE DURING THE PERIOD 01-02-2002 TO COMP ARED TO RATES QUOTED IN SURVEY ON PHYSICAL STOCK VALUATION AS ON 31- 01-2002 (B) SALES WERE MADE AT LOWER RATE DUE TO RECESSION IN THE MARKET AND THERE WAS A SLACK SEASON DUE TO RIOTS TA KEN PLACE IN GUJARAT ON 28-02-2002 ONWARDS FOR TWO MONT HS (C) ASSESSEE HAS TO MAKE PAYMENTS OF RS,9,38,133/- AND WAS HAVING A FINANCIAL PROBLEM DUE TO LOWER SALES AT LO WER RATES. (D) PAYMENT MADE DURING THE PERIOD 01-02-2002 TO 31 -03-2002 TO SUPPLIERS RS.3,09,142=00 DEPOSIT REPAYMENT RS.2,69,702=00 COMPUTER PURCHASE RS.1,80,000=00 ITA N O.462/A/06 4 EXPENSES RS. 21,033=00 DONATION RS. 50,000=00 ADVANCE INCOME TAX RS. 50,000=00 INVESTMENT IN LIC ETC. RS. 48,256=00 HOUSE HOLD EXPENSES RS. 10,000=00 ------------------- RS.9,38,133=00 ACCORDING TO THE ASSESSEE, THEY SOLD THE GOODS AT THE LOWER RATES AND INCURRED HUGE LOSS OF RS.6,02,011=80 DURING TH E POST SURVEY PERIOD OF 2 MONTHS 01-02-2002 TO 31-03-2002. 2.2. AFTER CONSIDERING THE AFORESAID SUBMISSIONS AND REPLY DATED 29-12-2004, THE AO OBSERVED THAT SINCE THE ASSESSEE DID NOT MAINTAIN ANY STOCK REGISTER WHILE EVEN CASH BOCK FO R THE CURRENT YEAR HAD BEEN WRITTEN ON THE DATE OF SURVEY ONLY UP TO OCT. 01, APPARENTLY, THE ASSESSEE COMMITTED GROSS IRREGULARI TY IN MAINTAINING THE BOOKS OF ACCOUNTS, WHICH DID NOT REVEAL TRUE PR OFITS. EVEN IN COLUMN NO 28(A) OF THE TAX AUDIT REPORT, THE CA CAT EGORICALLY MENTIONED THAT THE ASSESSEE DID NOT MAINTAIN THE ST OCK RECORDS FOR WHOLE YEAR NOR THESE WERE PRODUCED BEFORE THE CA FO R AUDIT. FORM NO. 3CD RELEVANT FOR THE FY 2000-2001 ALSO MENTIONE D THAT QUANTITATIVE DETAILS WERE NOT AVAILABLE. FOR THE Y EAR UNDER CONSIDERATION, EVEN THE QUANTITATIVE DETAILS OF P RINCIPAL ITEMS OF GOOD TRADED WERE NOT FURNISHED BY THE ASSESSEE. MOR EOVER, PERUSAL OF THE STOCK STATEMENT SUBMITTED TO THE NADIAD PEOP LES CO-OP. BANK LTD. REVEALED THAT THE SALE PRICE WAS ALWAYS HIGHE R THAN THE PURCHASE PRICE IN RESPECT EVERY COMMODITY AS DETAI LED HEREUNDER: COMMODITY DATED 31-12-2001 BEFORE SURVEY DATED 28-2-2002 AFTER SURVEY PURCHASE VALUE SALES VALUE PURCHASE VALUE SALES VALUE PLY 12 MM RS.8/- RS.9.5/- RS.8/- RS.9.5/- PLY 4 MM RS.4/- RS.4.5/- RS.4/- RS.4.5/- SUN MICA RS.140/- RS.175/- RS.140/- RS.175/- PLY 6 MM RS.6.5/- RS.7.5/- RS.6.5/- RS.7.50/- PLY 8 MM RS.7.5/- RS.9/- RS.7.5/- RS.9/- ITA N O.462/A/06 5 PLY 18 MM RS.10/- RS.12/- RS.15/- RS.17/- 2.3 THE AO FURTHER POINTED OUT THAT IN THE STATEM ENT FOR THE PERIOD ENDING MARCH'02 SUBMITTED TO THE BANK, THE ASSESSE E HERSELF ACCEPTED AND ADMITTED THE MARKET PRICE HIGHER THEN THE PURCHASE OR COST PRICE BY 12% TO 25%. MOREOVER, THE QUALITATIVE VALUE OF CLOSING STOCK WAS NOT VERIFIABLE WITH THE PURCHASE AND SALE S BILLS. EVEN IN AN RELATED FIRM OF THE ASSESSEE, DEALING IN THE SAME C OMMODITIES FROM THE SAME PREMISES, GROSS PROFIT WAS SHOWN @ 83.17% DURING THE POST SURVEY PERIOD. ACCORDINGLY, WHILE REJECTING TH E BOOK RESULTS FOR THE POST SURVEY PERIOD, HAVING RECOURSE TO PROVISIO NS OF SEC. 145(3) OF THE ACT, THERE BEING NO COGENT REASONS FOR THE N EGATIVE G P FOR THE POST SURVEY PERIOD AND SINCE THE ASSESSEE HAD S HOWN CLOSING STOCK OF RS.8,05,973/- AS ON 31ST MARCH 2002, ADOPT ING THE G.P @ 10%(IN CONSONANCE WITH THE G.P DECLARED IN THE ASST YEAR 2001-02), FOR THE POST SURVEY PERIOD SALES OF RS.18,50,593/- (25,08,860[485503+2171063] + 1,47,006 - 8,05,973), THE AO ADDED AN AMOUNT OF RS.1,85,059/- . 2.4 AS ALREADY OBSERVED, SINCE THE ASSESSEE DID NOT EXPLAIN THE SOURCE OF INVESTMENT IN THE EXCESS STOCK OF RS.21 ,71,063/- FOUND DURING THE SURVEY, IN HER STATEMENT RECORDED ON 4.2 .2002, THE ASSESSEE OFFERED THE AMOUNT ATTRIBUTABLE TO UNACCO UNTED STOCK TO TAX AND SUBSEQUENTLY PAID THE TAX THEREON. THE AO A LSO NOTICED THAT THE ASSESSEE DID NOT MAINTAIN THE STOCK RECORDS FOR THE ENTIRE FINANCIAL YEAR NOR ANY SUCH RECORDS WERE PRODUCED BEFORE THE AUDITORS . REJECTING THE CONTENTIONS OF THE ASSESSEE THAT THE DISCLOSURE HAD BEEN MADE B Y HER DURING THE COURSE OF SURVEY ACTION WITH A VIEW TO BUY PEACE OF MIND , TH E AO OBSERVED THAT IT WAS ONLY WHEN BOOKS OF ACCOUNTS WERE FOUND TO BE INCOMPLETE AND UNACCOUNTED STOCK WAS FOUND DURING THE SURVEY AND THE ASSESSEE COULD NOT OFFER ANY COGENT EXPLANATION THAT THE UNEXPLAINED INVESTMENT IN STO CK WAS OFFERED TO TAX AND SUBSEQUENTLY PAID THE TAX THEREON . IN RESPONSE TO A LETTER DATED 1/2/2005, SEEKING EXPLANATION AS TO THE NATURE AND SOURCE OF INCOME INVESTED IN THE ITA N O.462/A/06 6 EXCESS STOCK OF RS.21,71,063/-, THE ASSESSEE VIDE H ER REPLY DATED 4/2/2005 SUBMITTED AS UNDER: YOU HAVE REQUESTED US TO EXPLAIN THE NATURE & SOUR CE OF INCOME INVESTED IN THE EXCESS STOCK OF RS.21,71,063/- FAILING WHIC H, THERE WILL BE ADDITION IN TOTAL INCOME U/S 69, OF INCOME TAX ACT .WITH REFERE NCE TO ABOVE, WE HAVE TO SAY AS UNDER. A) EXCESS STOCK FOUND IS OF RS.20,09,808/- AND NOT RS.21,71,063/- AS RECASTED ONE. B) THE ABOVE EXCESS STOCK IS ACCUMULATED OVER A NO. OF YEARS AND NOT IN THE CURRENT YEAR ITSELF. C) THE EXCESS STOCK OF RS.20,09,828/- IS OFFERED FO R INCOME BY WAY DISCLOSURE AND CURRENT YEAR RETURN OF INCOME IS FIE LD FOR RS.15,83,726/- AND THE TAX OF RS.4,29,031/- IS PAID IN DUE COURSE ALONG WITH THE INTEREST OF RS.52,380/-. D) THERE WILL BE DUPLICATION OF INCOME DUE TO INCLU SION OF ABOVE AS THIS IS INCLUDED IN STOCK BY WAY OF DISCLOSER AND IN SUB SEQUENT SALES DURING THE POST SURVEY PERIODS.' HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF T HE ASSESSEE AND IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION IN REGARD T O THE NATURE AND SOURCE OF THE INCOME INVESTED IN THE EXCESS STOCK FOUND DURING TH E COURSE OF THE SURVEY, THE AO BROUGHT TO TAX THE SAID AMOUNT OF RS.21,71,063/ - U/S 69 OF THE ACT. 3. ON APPEAL, THE LEARNED CIT(A) CONCLUDED IN THE FOLLOWING TERMS:- AT THE TIME OF THE HEARING OF APPEAL, THE APPELLAN T BASICALLY REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THAT THE REASON FO R DECLINE IN THE G.P. WAS DUE TO THE RECESSION IN THE MARKET OWING TO POS T GODHRA RIOTS IN THE STATE AND THAT THE ASSESSEE HAD TO MAKE PAYMENTS TO SUPPLIERS, DEPOSITORS, FOR EXPENSES, INCOME TAX ETC., TO THE T UNE OF RS.9,38,133/-, AS A RESULT OF WHICH, THE APPELLANT WAS COMPELLED TO S ELL THE STOCK AT LOWER PRICE. IT WAS CLAIMED THAT THE G.P. IN THE LAST YEA R WAS 9.69% AND THE AVERAGE G.P. FOR THE WHOLE DURING THE YEAR WAS 40.3 8%. THEREFORE, THERE WAS NO REASON FOR MAKING ANY FURTHER ADDITION U/S. 69 OF THE ACT BY THE TREATING THE EXCESS STOCK AS UNEXPLAINED INVESTMENT DURING THE YEAR. THE A.O. HAD WRONGLY RECASTED THE TRADING ACCOUNT AND T HE PROFIT AND LOSS ACCOUNT AND DETERMINED THE EXCESS STOCK AT RS.21,71 ,063/- AS ON THE DATE OF SURVEY. THE A.O. HAD FURTHER ERRED IN ADOPTING T HE G.P. RATE OF 10% FOR THE POST SURVEY PERIOD AS AGAINST THE ACTUAL G.P. O F (-)48.08%. SINCE, THE EXCESS AMOUNT FOR WHICH THE A.O HAD MADE AN ADDITIO N U/S. 69 WAS ALREADY RECORDED IN THE BOOKS OF ACCOUNT. THEREFORE , THE ADDITION MADE BY THE A.O. WAS UNWARRANTED END DESERVES TO BE DELETED . ITA N O.462/A/06 7 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE FINDINGS OF THE A.O. AND OBSERVE THAT AS PER THE DETAILS FILED BY T HE ASSESSEE BEFORE THE A.O. THE APPELLANT HAS TAKEN CLOSING STOCK FOR PRE SURVEY PERIOD AT RS.25,08,860/- WHICH IS THE VALUE OF STOCK DETERMIN ED ON PHYSICAL STOCK TAKING AT THE TIME OF SURVEY. THE SALES HAVE ALSO B EEN REFLECTED AT A GOOD FIGURE OF RS.33 51,096/-. HOWEVER, IN THE POST SURV EY PERIOD, THERE IS A DRASTIC FALL IN SALES AS WELL AS IN THE CLOSING STO CK. THE ASSESSEE HAS SHOWN SALES OF RS.12,53,132/- AND CLOSING STOCK OF RS.8,05,973/- ONLY. AS NOTED BY THE A.O. THAT THE ASSESSEE HAD SHOWN NORMA LLY HIGHER SALE PRICE AS COMPARED TO PURCHASE PRICE IN THE STOCK STATEMEN TS SUBMITTED TO THE BANK, THEREFORE, IN THE POST RIOT PERIOD, THERE MAY BE POSSIBILITY OF DECLINE IN THE QUANTITATIVE SALES DURING FEBRUARY/MARCH, 20 02 BUT THERE APPEARS TO BE NO POSSIBILITY FOR DECLINE IN THE SALE PRICE OF THE GOODS. THUS, ON THE WHOLE IT MAY HAVE AFFECTED THE TURNOVER OF THE APPE LLANT IN THE POST SURVEY PERIOD BUT SUCH DRASTIC FALL AS PROJECTED BY THE AP PELLANT IS UNACCEPTABLE. THE APPELLANT IS ALSO NOT MAINTAINING ANY STOCK REG ISTER, THEREFORE, THE TRADING RESULTS ARE NOT VERIFIABLE. THUS, IN THE CI RCUMSTANCES, I HOLD THAT THE A.O. IS QUITE JUSTIFIED IN REJECTING THE BOOKS OF T HE APPELLANT AND REWORKING THE TRADING ACCOUNT BASED ON THE G.P. RATIO OF 8.67 % ACCEPTED BY THE APPELLANT IN HER SUBMISSIONS MADE BEFORE THE A.O. S INCE, NO PROPER EXPLANATION HAS BEEN GIVEN FOR SUCH DRASTIC ARBITRA RY FALL IN THE G.P. RATIO TO (-) 48.08%, THEREFORE, THE ADDITION MADE BY THE A.O . OF RS.21,71,063/- U/S. 69 DESERVES TO BE SUSTAINED. HOWEVER, AS REGARDING THE WORKING OF NET PROFIT AT RS.1,74,215/- AFTER EXCLUDING THE STOCK DIFFERENCE, THE A.O. WAS NOT RE ASONABLE IN ADOPTING A G.P. RATIO OF 10% FOR THE POST SURVEY PERIOD AS AGAINST (-)48.08% DEC LARED BY THE APPELLANT ON ACCOUNT OF POST GODHRA RIOTS AN D FOR OTHER REASONS GIVEN BY THE APPELLANT. IN THE CIRCUMSTANCES AND IN THE INTEREST OF JUSTICE, THE A.O. IS DIRECTED TO ADOPT THE G.P. 8.67% FOR TH E POST SURVEY PERIOD ALSO AND REWORK THE TRADING ADDITION ACCORDINGLY. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE WHILE RELYING UPON A CBDT CIRCULAR DATED.1 0.3.2003 REITERATED THEIR SUBMISSIONS BEFORE THE LEARNED CI T(A) AND FURTHER SUBMITTED THAT THE AO DID NOT EXAMINE THE HUSBAND O F THE ASSESSEE WHILE REFERRING TO PAGE 3 & 17 OF HE PAPER BOOK , T HE LD. AR SUBMITTED THAT THE NO ADDITION CAN BE MADE ON THE B ASIS OF STATEMENT RECORDED DURING THE COURSE OF SURVEY . I NTER ALIA, THE LD. AR RELIED UPON DECISION IN CIT VS. PK NOORJAHAN, 237 ITR 570(SC). THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE FI NDINGS OF THE LEARNED CIT(A) AND CONTENDED THAT THE ASSESSEE HERS ELF IN HER ITA N O.462/A/06 8 STATEMENTS RECORDED ON 31.1.2002 DURING THE COURSE OF SURVEY AND IN HER SUBSEQUENT STATEMENT RECORDED U/S 131 OF THE ACT ON 4.2.2002 OFFERED THE AMOUNT TO TAX SINCE SHE COULD NOT EXPLA IN THE SOURCE OF INVESTMENT IN THE UNACCOUNTED STOCK FOUND DURING TH E SURVEY. EVEN BOOKS OF ACCOUNTS WERE FOUND INCOMPLETE WHILE NO ST OCK RECORDS WERE MAINTAINED. THE ASSESSEE DID NOT FURNISH ANY C OGENT EXPLANATION FOR SHOWING GP @ 73.45% BEFORE THE SURV EY AND LOSS THEREAFTER. MOREOVER, THE HUSBAND OF THE ASSESSEE R EFLECTED GP OF 83.17% IN SIMILAR BUSINESS FOR THE POST SURVEY PERI OD. WHILE RELYING UPON THE DECISIONS IN SANJEEV KUMAR PANDHI VS. CIT , 305 ITR 128 (PB.) AND CERTAIN OTHER DECISIONS, THE LD. DR ADDED THAT SINC E NEITHER THE BOOKS OF ACCOUNT WERE MAINTAINED DURING THE COURSE OF BUSINESS NOR S TOCK REGISTER WHILE EXCESS STOCK OF RS.21,71,063/- WAS FOUND, THE ASSESSING OF FICER WAS JUSTIFIED IN REJECTING THE BOOK RESULTS OF THE POST SURVEY PERIOD BESIDES ADDING UNEXPLAINED INVESTMENT IN STOCK. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. UNDISPUTED FACTS ON RECORD REVEAL THAT THE ASSESSEE IS TRADING IN PLYWOOD AND OTHER ITEMS AND DURING THE COURSE OF SURVEY ON 31.1.2002, THE UNACCOUNTED STOCK OF RS.20,09,8 28[25,08,860-4,99,032] AS PER COMPUTATION OF THE ASSESSEE ,WAS FOUND WHILE BO OKS OF ACCOUNTS WERE FOUND TO BE WRITTEN ONLY UP TO OCTOBER,2001. SUBSEQUENTLY , DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THIS DIFFERENCE IN STOCK W AS WORKED OUT TO BE RS.21,71,063/- .ADMITTEDLY, NO STOCK REGISTER WAS B EING MAINTAINED NOR THE LD. AR DISPUTED THE FINDINGS OF THE LOWER AUTHORITIES ON T HIS ASPECT. THE ASSESSEE IN HER STATEMENT RECORDED U/S 131 OF THE ACT ON 4.2.2002 I.E. ONLY AFTER THE SURVEY, OFFERED THE INVESTMENT IN UNACCOUNTED STOCK AS HER INCOME FOR THE YEAR UNDER CONSIDERATION AND AGREED TO PAY ADVANCE TAX THEREON . SUBSEQUENTLY, THE ASSESSEE, ACCORDINGLY, PAID THE TAX ON THE UNACCOUN TED INCOME. WE FIND THAT THE AO, WHILE MAKING ADDITIONS ON ACCOUNT OF EXTRA STOC K FOUND DURING THE COURSE OF SURVEY HAS NOT PLACED RELIANCE ONLY ON THE STATEMEN T OF RECORDED DURING THE COURSE OF SURVEY . IT WAS ONLY IN THE LIGHT OF STAT EMENT OF THE ASSESSEE RECORDED ON OATH ON 4.2.2002 , WHEREIN THE ASSESSEE HERSELF ADMITTED IN REPLY TO QUESTION ITA N O.462/A/06 9 NO. 5 THAT THE CLOSING STOCK AS PER BOOKS WORKED OU T TO RS.4,99,032/- WHILE PHYSICAL STOCK WAS RS.25,08,860/- THAT SHE ADMITTED THE SAID AMOUNT ON ACCOUNT OF EXCESS STOCK AS HER UNACCOUNTED INCOME OF THE C URRENT YEAR AND OFFERED TO PAY TAX THEREON. EVEN DURING THE COURSE OF ASSESSME NT PROCEEDINGS VIDE LETTER DATED 4.2.2005, THE ASSESSEE UNEQUIVOCALLY REITERAT ED THAT THE AMOUNT OF RS.20,09,828/- IS OFFERED TO TAX BY WAY OF DISCLOSU RE OF INCOME FOR THE YEAR UNDER CONSIDERATION AND TAX OF RS.4,29,031/- HAD BEEN PAI D THEREON. IT MAY WORTH BE MENTIONING THAT THE LD. AR APPEARING BEFORE US DID NOT DISPUTE THE DISCREPANCIES IN THE BOOKS OF ACCOUNTS POINTED OUT BY THE LOWER A UTHORITIES NOR EVEN DISPUTED THE FINDINGS OF THE LOWER AUTHORITIES IN RELATION T O REJECTION OF BOOKS OF ACCOUNTS. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE BOOKS O F THE ASSESSEE WERE FOUND TO BE INCOMPLETE WHILE NO STOCK REGISTER WAS MAINTAINE D, THE LD. CIT(A) CONCLUDED THAT THE ADDITION OF RS. 21,71,063/-(25,08,880-3,37,797) ON ACCOUNT OF UNACCOUNTED STOCK U/S. 69 OF THE ACT DESERVES TO B E SUSTAINED.. THE LD. AR HAS NOT REFERRED US TO ANY MATERIAL SUGGESTING THAT TH E CALCULATION OF UNACCOUNTED STOCK AND RESULTANT ADDITION MADE BY THE AO SUFFERS FROM ANY INFIRMITY. THERE IS NO FORCE IN THE CONTENTIONS OF THE LD. AR THAT HUSB AND OF THE ASSESSEE SHOULD HAVE BEEN QUESTIONED, ESPECIALLY WHEN THE ASSESSEE HERSELF IN HER STATEMENT RECORDED SUBSEQUENT TO THE SURVEY ON 4.2.2002 AND EVEN IN HER LETTER DATED 4.2.2005 DURING THE COURSE OF ASSESSMENT PROCEEDING S, ADMITTED THE UNACCOUNTED STOCK AND OFFERED THE UNACCOUNTED INCOM E ATTRIBUTED TO THE SAID STOCK TO TAX AND CONSEQUENTLY PAID THE TAX. IT IS WELL NIGH IMPOSSIBLE THAT THE SAID DISCLOSURE WAS MADE AND REITERATED WITHOUT THE CONSENT OF HUSBAND OF THE ASSESSEE. IN VIEW OF THE FOREGOING, WE DO NOT FIND ANY MISTAKE IN THE APPROACH OF THE LD. CIT(A) IN UPHOLDING THE ADDITION OF UNACCO UNTED STOCK TO THE EXTENT OF RS.21,71,063/- . 5.1 ADVERTING NOW TO THE ARGUMENT OF THE LD. AR THAT THE STATEMENT RECORDED DURING THE COURSE OF SURVEY DOES NOT HAVE ANY EVIDE NTIARY VALUE, AS ALREADY MENTIONED HEREINBEFORE, THE ASSESSEE HERSELF IN HE R STATEMENT RECORDED SUBSEQUENT TO THE SURVEY ON 4.2.2002 AND EVEN IN H ER LETTER DATED 4.2.2005 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ADMITT ED THE UNACCOUNTED STOCK AS HER INCOME FOR THE YEAR UNDER CONSIDERATION AND AGREED TO PAY TAX THEREON. ITA N O.462/A/06 10 THE AO OR THE LD. CIT(A) DID NOT MERELY RELY UPON T HE STATEMENT OF THE ASSESSEE DURING THE SURVEY EVEN OTHERWISE IN CIT VS. KAMAL & CO.,213CTR 200,HONBLE RAJASTHAN HIGH COURT , RELYING UPON THE DECISIONS I N THE CASE OF DR. PARTAP SINGH & ANR. VS. DIRECTOR OF ENFORCEMENT & ORS. (1985) 46 CTR (SC) 319 : (1985) 155 ITR 166 (SC) AND POORAN MAL VS. DIRECTOR OF INSPECTION (I NV.) (1993) 93 ITR 505 (SC) HELD THAT 9. CONSIDERING THE JUDGMENT OF THE HON'BLE APEX COU RT IN TWO CASES REFERRED ABOVE WE FIND THAT THE MATERIAL COLLECTED DURING TH E COURSE OF ILLEGAL SEARCH CAN BE MADE USE OF THUS IF THE RATIO DECIDENDI OF THE J UDGMENTS OF THE HON'BLE APEX COURT IS APPLIED THEN IT BECOMES CLEAR THAT EVEN IN THE CASE OF ILLEGAL SURVEY, MATERIAL COLLECTED CAN BE USED FOR ADDITIONS. WHILE DELIVERING THE JUDGMENT THE HON'BLE APEX COURT WAS CAUTIOUS ABOUT THE FACT THAT MATERIAL COLLECTED IS COMING OUT FROM ILLEGAL SEARCH AND YET MATERIAL COLLECTED WAS ALLOWED TO BE USED BY THE AO. THE SAME ANALOGY APPLIES HERE FOR THE REASON TH AT SO FAR AS THE PROCEDURE UNDERTAKEN BY THE AO IS CONCERNED, IT REMAINS SAME IN REGARD TO USE OF MATERIAL EITHER COLLECTED IN SEARCH OR IN SURVEY. THE INVENT ORY OF STOCK WAS PREPARED BY THE INSPECTOR DURING THE COURSE OF ILLEGAL SURVEY A ND MATERIAL WAS THEN USED BY THE AO FOR MAKING ADDITIONS. HENCE IN THOSE CIRCUMS TANCES, WE ARE OF THE OPINION THAT IN VIEW OF THE TWO JUDGMENTS OF THE HON'BLE AP EX COURT, REVENUE WAS ENTITLED TO USE MATERIAL COLLECTED DURING THE COURS E OF ILLEGAL SURVEY. 5.2 SIMILARLY, WHERE A SURVEY WAS CONDUCTED IN TH E PREMISES OF THE ASSESSEE, A MEDICAL PRACTITIONER, AND A STATEMENT WAS RECORDED FROM HIM, IN WHICH THE ASSESSEE SURRENDERED ADDITIONAL INCOME AND PURSUANT TO THE S AME, THE AO REOPENED THE ASSESSMENT, BUT DURING THE COURSE OF WHICH THE ASSE SSEE RETRACTED THE ADDITIONAL INCOME OFFERED AND CONTENDED THAT THE STATEMENT WAS THE RESULT OF DURESS, WHICH WAS NOT ACCEPTED BY THE AO AND ALSO BY THE TRIBUNAL HOL DING THAT THE STATEMENT IS VALID AND THAT IT WAS MADE WITHOUT DURESS, A DIVISION BEN CH OF THE ALLAHABAD HIGH COURT IN DR. S.C. GUPTA VS. CIT (2001) 170 CTR (ALL) 421 : ( 2001) 248 ITR 782 (ALL), OF COURSE, PLACING RELIANCE ON THE DECISION OF THE APE X COURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA HELD THAT THE BURDEN THAT WAS LAID ON THE ASSESSEE TO ESTABLISH THAT THE ADMISSION MADE IN TH E STATEMENT AT THE TIME OF SURVEY WAS WRONG AND THAT THERE WAS NO ADDITIONAL INCOME W AS NOT EVEN ATTEMPTED TO BE DISCHARGED AND THUS, THE ORDER OF THE TRIBUNAL WAS BASED ON FACTS AND NO QUESTION OF LAW AROSE FROM IT. HONBLE HIGH COURT CLEARLY HELD THAT 'AS REGARDS THE ASSESSEE'S CONTENTION THAT THE STAT EMENT HAVING BEEN RETRACTED THE ASSESSING OFFICER SHOULD HAVE INDEPENDENTLY COM E TO A CONCLUSION THAT THERE ITA N O.462/A/06 11 WAS ADDITIONAL INCOME AS SOUGHT TO BE ASSESSED AND THAT THERE WAS NO MATERIAL TO SUPPORT THAT THERE WAS SUCH INCOME, THIS CONTENT ION IN OUR VIEW IS NOT CORRECT. AS HELD BY THE SUPREME COURT IN PULLANGODE RUBBER P RODUCE CO. LTD V. STATE OF KERALA [1973] 91 ITR 18 AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE THOUGH IT IS NOT CONCLUSIVE. THEREFORE, A STATEMENT MADE VOLUNTARILY BY THE ASSESSEE COULD FORM THE BASIS OF ASSESSMENT. TH E MERE FACT THAT THE ASSESSEE RETRACTED THE STATEMENT COULD NOT MAKE THE STATEMENT UNACCEPTABLE. THE BURDEN LAY ON THE ASSESSEE TO ESTABLISH THAT TH E ADMISSION MADE IN THE STATEMENT AT THE TIME OF SURVEY WAS WRONG AND IN FA CT THERE WAS NO ADDITIONAL INCOME. THIS BURDEN DOES NOT EVEN SEEM TO HAVE BEEN ATTEMPTED TO BE DISCHARGED. SIMILARLY, P.K. PALWANKAR V. CGT [1979] 117 ITR 768 (MP) AND CIT V. MRS. DORIS S. LUIZ [1974] 96 ITR 646 (KER.) ON WHICH ALSO LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ARE OF NO HELP TO THE ASSESSEE. THE TRIBUNAL'S ORDER IS CONCLUDED BY FINDINGS OF FACT AND IN OUR VIEW NO QUESTION OF LAW ARISES.' 5.3 IN THE CASE UNDER CONSIDERATION, IN HER STA TEMENT RECORDED ON OATH ON 4.2.2002 AFTER THE DATE OF SURVEY, THE ASSESSEE HERSELF VOLU NTARY OFFERED THE AMOUNT OF EXCESS STOCK FOUND DURING THE SURVEY AS HER UNACCOUNTED IN COME. SUBSEQUENTLY, THE ASSESSEE PAID TAX THEREON AND EVEN REITERATED THES E FACTS OF DISCLOSURE IN HER LETTER DATED 4.2.2005 . IT WAS THE ASSESSEE WHO, BY HER DE CLARATION AND ACTS, INTENTIONALLY CAUSED OR PERMITTED THE DEPARTMENTAL AUTHORITIES TO BELIEVE THE DECLARATION MADE BY THE ASSESSEE ON 4.2.2002 IN HER STATEMENT ON OATH T O BE TRUE AND INDUCED THEM TO ACT UPON SUCH BELIEF. DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE FACTUM OF UNACCOUNTED INCOME DUE TO EXCESS STOCK FOUND DURING THE COURSE OF SURVEY WAS AGAIN ADMITTED. IT IS NOT OPEN TO THE ASSESSEE TO DENY THE TRUTH OF THE FACTS STATED IN THE SAID DECLARATION NOR THE SAID DECLARATION HAS BEEN RETRACTED AT ANY STAGE. THIS IS BASED ON THE MAXIM, ALLEGANS CONTRARIA NON EST AUDI ENDUS (A PERSON ALLEGING CONTRADICTORY FACTS SHOULD NOT BE HEARD). IN PICKAR D V. SEARS [1837] 6 AD & EI 469, 474, IT HAS BEEN HELD THAT WHERE A PERSON 'BY HIS W ORDS OR CONDUCT WILFULLY CAUSES ANOTHER TO BELIEVE THE EXISTENCE OF A CERTAIN STATE OF THING, AND INDUCES HIM TO ACT ON THAT BELIEF, SO AS TO ALTER HIS OWN PREVIOUS POSITI ON, THE FORMER IS PRECLUDED FROM AVERRING AGAINST THE LATTER A DIFFERENT STATE OF TH INGS AS EXISTING AT THE SAME TIME.' IN THE CELEBRATED BOOK TITLED 'ADMINISTRATIVE LAW' BY SIR WILLIAM WADE (EIGHTH EDITION BY WADE AND FORSYTH-OXFORD UNIVERSITY PRESS), THE LEGA L POSITION HAS BEEN EXPLAINED AT P. 242 AS UNDER: 'THE BASIC PRINCIPLE OF ESTOPPEL IS THAT A PERSON W HO BY SOME STATEMENT OR REPRESENTATION OF FACT CAUSES ANOTHER TO ACT TO HIS DETRIMENT IN RELIANCE ON THE TRUTH OF IT IS NOT ALLOWED TO DENY IT LATER, EVEN T HOUGH IT IS WRONG. JUSTICE HERE ITA N O.462/A/06 12 PREVAILS OVER TRUTH. ESTOPPEL IS OFTEN DESCRIBED AS A RULE OF EVIDENCE, BUT MORE CORRECTLY IT IS A PRINCIPLE OF LAW. AS A PRINCIPLE OF COMMON LAW IT APPLIES ONLY TO REPRESENTATIONS ABOUT PAST OR PRESENT FACTS.' 5.4 THE RELEVANT PROVISIONS OF SECTION 115 OF THE EVIDENCE ACT ARE ALSO QUITE APPOSITE AND THE CASE OF THE ASSESSEE SQUARELY FALL S THEREUNDER. SECTION 115 OF THE EVIDENCE ACT READS AS UNDER: '115. WHEN ONE PERSON HAS, BY HIS DECLARATION, ACT OR OMISSION, INTENTIONALLY CAUSED OR PERMITTED ANOTHER PERSON TO BELIEVE A THI NG TO BE TRUE AND TO ACT UPON SUCH BELIEF, NEITHER HE NOR HIS REPRESENTATIVE SHAL L BE ALLOWED, IN ANY SUIT OR PROCEEDING BETWEEN HIMSELF AND SUCH PERSON OR HIS R EPRESENTATIVE, TO DENY THE TRUTH OF THAT THING.' 5.5. IN CHUHARMAL V. CIT [1988] 172 ITR 250 , 255, THE HON'BLE SUPREME COURT HELD THAT WHAT IS MEANT BY SAYING THAT THE EVIDENCE ACT DOES NOT APPLY TO INCOME-TAX PROCEEDINGS UNDER THE ACT IS THAT THE R IGOUR OF THE RULES OF EVIDENCE CONTAINED IN THE EVIDENCE ACT IS NOT APPLICABLE BUT THAT DOES NOT MEAN THAT WHEN THE TAXING AUTHORITIES ARE DESIROUS OF INVOKING THE PRINCIPLES OF THE EVIDENCE ACT IN PROCEEDINGS BEFORE THEM, THEY ARE PREVENTED FROM DOING SO. BESIDES, SECTION 115 OF THE EVIDENCE ACT INCORPORATES A SALUTARY PRI NCIPLE OF COMMON LAW BASED ON THE MAXIM ALLEGANS CONTRARIA NON EST AUDIENDUS ( A PERSON ALLEGING CONTRADICTORY FACTS SHOULD NOT BE HEARD) AND HENCE THE SAID PRINCIPLE IS FULLY APPLICABLE TO THE PROCEEDINGS UNDER THE INCOME-TAX ACT. THE PROVISIONS OF SECTION 115 OF THE EVIDENCE ACT STIPULATE STATUTORY RECOGNI TION TO THE SAID PRINCIPLE WHICH IS OTHERWISE ALSO APPLICABLE TO ALL THE JUDICIAL AN D QUASI-JUDICIAL PROCEEDINGS. THE UNDERLYING PHILOSOPHY BEHIND THE SAID PRINCIPLE BEI NG TO ENSURE, IN THE WORDS OF SIR WADE IN HIS ADMINISTRATIVE LAW, THAT JUSTICE PR EVAILS OVER TRUTH. 5.6 IN THE CASE BEFORE US, THERE IS NO DISPU TE THAT THE ASSESSEE MADE THE DECLARATION IN HER STATEMENT RECORDED ON OATH, ADMI TTING UNACCOUNTED STOCK AS HER UNDISCLOSED INCOME ON 4.2.2002 I.E. ONLY AFTER THE SURVEY , WHICH THE DEPARTMENTAL AUTHORITIES ACCEPTED AND UPON WHICH TH EY DID NOT PROCEED WITH FURTHER INVESTIGATIONS IN ORDER TO LOCATE THE WHERE ABOUTS OF THE UNACCOUNTED STOCK. IF THE ASSESSEE HAD NOT MADE THE SAID STAT EMENT, THE DEPARTMENTAL AUTHORITIES COULD HAVE CONTINUED THEIR INVESTIGATIO NS AND INVESTIGATED THE ENTIRE MATTER. BY MAKING THE DISCLOSURE OF ADDITIONAL INC OME , WHICH SHE OFFERED FOR ITA N O.462/A/06 13 TAXATION ON OATH, THE ASSESSEE STOPPED THE ENTIRE P ROCESS OF FURTHER INVESTIGATION AS THE DEPARTMENT ACCEPTED THE DISCLOSURE AND CLOSE D FURTHER INVESTIGATION ON THE SAID ISSUE. HAVING MADE A VOLUNTARY DECLARATIO N ON OATH AND INDUCED THE DEPARTMENTAL AUTHORITIES TO ACT UPON THE SAME AT TH E TIME OF SURVEY, THE ASSESSEE CANNOT BE PERMITTED TO TURN AROUND LATER A ND DENY THE TRUTH OF THE AFORESAID DECLARATIONS OR THE REPRESENTATIONS MADE THEREIN. SECTION 115 OF THE EVIDENCE ACT PREVENTS HIM FROM DOING SO. FURTHER, DECLARATIONS FALLING UNDER SECTION 115 OF THE EVIDENCE ACT DO NOT REQUIRE ANY CORROBORATION. THE PLEA OF THE LD. AR NOW IN RELYING UPON CBDT CIRCULAR DATED 10. 3.2003 IS BASELESS, WHEN THE AFORESAID FACTS STARE IN THE FACE OF THE ASSESSEE , WHO IN HER LETTER DATED 4.2.2005 AGAIN VOLUNTARILY REAFFIRMED THAT SHE HAD UNACCOUNT ED STOCK AND ACCORDINGLY, OFFERED THE SAME TO TAX. EVEN OTHERWISE, NO SUCH C ONFESSION ,AS IS ENVISAGED IN AFORESAID CIRCULAR DATED 10.3.2003, WAS EXTRACTED F ROM THE ASSESSEE. THE ASSESSEE, IN HER STATEMENT RECORDED ON OATH, ONLY S UBSEQUENT TO THE SURVEY OFFERED THE UNACCOUNTED INCOME TOWARDS EXTRA STOCK TO TAX AND SUBSEQUENTLY, PAID TAX THEREON. MOREOVER, THERE IS NO SUCH INFL EXIBLE RULE THAT ADDITION CAN NEVER BE MADE ON THE BASIS OF THE FACTS ADMITTED IN THE STATEMENT RECORDED UNDER SECTION 131 OF THE INCOME-TAX ACT, 1961. A STATEME NT MAY STILL FORM THE SOLE BASIS FOR ADDITION IF THE ASSESSEE FAILS TO PROVE T HE INCORRECT OR ERRONEOUS NATURE OF THE FACTS ADMITTED OR STATED IN THE STATEMENT AT THE EARLIEST POSSIBLE OPPORTUNITY FROM THE STATEMENT/CONFESSION. THE VIEW THAT WE HA VE TAKEN ABOVE IS SUPPORTED BY SEVERAL JUDICIAL AUTHORITIES SOME OF WHICH ARE A S FOLLOWS. IN SURJEET SINGH CHHABRA'S CASE, IT HAS BEEN HELD THAT THE CUSTOMS O FFICIALS ARE NOT POLICE OFFICERS AND THE CONFESSION, THOUGH RETRACTED, IS AN ADMISSI ON AND BINDS THE CONFESSOR. THE HON'BLE COURT HELD: '... SINCE THE DISPUTE CONCERNS THE CONFISCATION OF THE JEWELLERY, WHETHER AT CONVEYOR BELT OR AT THE GREEN CHANNEL, PERHAPS THE WITNESSES WERE REQUIRED TO BE CALLED. BUT IN VIEW OF CONFESSION MADE BY HIM, IT B INDS HIM AND, THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THIS CASE THE FAILURE TO GIVE HIM THE OPPORTUNITY TO CROSS-EXAMINE THE WITNESS IS NOT VIOLATIVE OF PRINC IPLE OF NATURAL JUSTICE. IT IS CONTENDED THAT THE PETITIONER HAD RETRACTED WITHIN SIX DAYS FROM THE CONFESSION. THEREFORE, HE IS ENTITLED TO CROSS-EXAMINE THE PANC H WITNESSES BEFORE THE AUTHORITY TAKES A DECISION ON PROOF OF THE OFFENCE. WE FIND NO FARCE IN THIS CONTENTION. THE CUSTOMS OFFICIALS ARE NOT POLICE OF FICES. THE CONFESSION, THOUGH ITA N O.462/A/06 14 RETRACTED, US AN ADMISSION AND BINDS THE PETITIONER . SO THERE IS NO NEED TO CALL PANCH WITNESSES FOR EXAMINATION AND CROSS-EXAMINATI ON BY THE PETITIONER.' 5.7. FOLLOWING THE JUDGMENT IN SURJEET SINGH CHHABR A'S CASE, THE MADRAS BENCH OF THE TRIBUNAL HELD IN T.S. KUMARASAMI V. ASSTT. C IT [1998] 65 ITD 188, AS UNDER: 'IT IS WELL-KNOWN THAT THE INCOME-TAX OFFICERS ARE NOT POLICE OFFICERS AND THEY DO NOT USE OR RESORT TO UNFAIR MEANS OR THIRD DEGREE M ETHODS IN RECORDING OATH STATEMENTS AND THEREFORE WHATEVER IS CONFESSED AND ADMITTED BEFORE THEM DURING THE COURSE OF SEARCH OPERATIONS OR DURING THE COURS E OF ANY PROCEEDINGS BEFORE THEM THEN WE THINK SUCH STATEMENTS, ADMISSIONS AND CONFESSIONS ARE BINDING AND CANNOT BE RETRACTED, UNLESS AND UNTIL, WE REPEA T, UNLESS AND UNTIL IT IS PROVED BY LEGALLY ACCEPTABLE EVIDENCE THAT SUCH ADMISSION, CONFESSION OR OATH STATEMENT WAS INVOLUNTARY OR TENDERED UNDER COERCION OR DURES S. NO SUCH CIRCUMSTANCES EXISTED OR PROVED TO HAVE EXISTED. IN SAYING SO WE ARE SUPPORTED BY THE OBSERVATION OF THEIR LORDSHIPS OF THE SUPREME COURT IN THE CASE OF SURJEET SINGH CHHABRA V. UNION OF INDIA [1997] 1 SCC 508.' 5.8 NOW ADVERTING TO DECISION IN P.K.NOORJAHAN(S UPRA) RELIED UPON BY THE LD. AR , IN THAT CASE FACTS WERE THAT THE ASSESSEE A MUSL IM LADY, AGED ABOUT 20 YEARS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSE SSMENT YEAR 1968-69 ON NOVEMBER 15, 1967, PURCHASED 16 CENTS OF LAND IN ER NAKULAM AND THE AMOUNT SPENT BY HER, INCLUSIVE OF STAMP AND REGISTRATION C HARGES, FOR THIS PURCHASE WAS RS. 34,628. ON NOVEMBER 27, 1968, SHE PURCHASED ANO THER 12 CENTS OF LAND AT ERNAKULAM AND THE TOTAL INVESTMENT FOR THIS PURCHAS E WAS RS. 25,902. THE EXPLANATION OF THE ASSESSEE REGARDING THE SOURCE OF THE PURCHASE MONEY FOR THESE INVESTMENTS WAS THAT THE SAME WERE FINANCED O UT OF THE SAVINGS FROM THE INCOME OF THE PROPERTIES WHICH WERE LEFT BY HER MOT HER'S FIRST HUSBAND. THE SAID EXPLANATION OFFERED BY THE ASSESSEE WAS REJECTED EX CEPT TO THE EXTENT OF RS. 2,000 BY THE INCOME-TAX OFFICER WHO MADE AN ADDITIO N OF RS. 32,628 AS INCOME FROM OTHER SOURCES IN THE ASSESSMENT YEAR 1968-69 A ND AN ADDITION OF RS. 25,902 IN THE ASSESSMENT YEAR 1969-70. THE SAID ORD ERS WERE AFFIRMED IN APPEAL BY THE APPELLATE ASSISTANT COMMISSIONER. THE INCOME -TAX APPELLATE TRIBUNAL , HOWEVER, HELD THAT EVEN THOUGH THE EXPLANATION ABOU T THE NATURE AND SOURCES OF THE PURCHASE MONEY WAS NOT SATISFACTORY BUT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IT WAS NOT POSSIBLE FOR THE ASSESSEE TO EA RN THE AMOUNT INVESTED IN THE PROPERTIES AND THAT BY NO STRETCH OF IMAGINATION CO ULD THE ASSESSEE BE CREDITED ITA N O.462/A/06 15 WITH HAVING EARNED THIS INCOME IN THE COURSE OF THE ASSESSMENT YEAR OR WAS EVEN IN A POSITION TO EARN IT FOR A DECADE OR MORE. THE TRIBUNAL TOOK THE VIEW THAT ALTHOUGH THE EXPLANATION OF THE ASSESSEE WAS LIABLE TO BE REJECTED, SECTION 69 OF THE ACT CONFERRED ONLY A DISCRETION ON THE INCOME.- TAX OFFICER TO DEAL WITH THE INVESTMENT AS INCOME OF THE ASSESSEE AND THAT IT DI D NOT MAKE IT MANDATORY ON HIS PART TO DEAL WITH THE INVESTMENT AS INCOME OF T HE ASSESSEE AS SOON AS THE LATTER'S EXPLANATION HAPPENED TO BE REJECTED. ON TH AT VIEW, THE TRIBUNAL ALLOWED THE APPEALS OF THE ASSESSEE AND CANCELLED THE ASSES SMENT MADE BY THE INCOME- TAX OFFICER. THEREAFTER, THE TRIBUNAL AT THE INSTAN CE OF THE REVENUE REFERRED THE QUESTION TO THE HIGH COURT FOR ITS OPINION. THE HIG H COURT AGREED WITH THE SAID VIEW OF THE TRIBUNAL AND HELD THAT IN THE INSTANT CASE IT COULD NOT BE SAID THAT THE TRIBUNAL WAS WRONG IN HAVING DIFFERED FROM THE INCO ME TAX OFFICER AND THE APPELLATE ASSISTANT COMMISSIONER IN THE MATTER OF E XERCISING JUDICIAL DISCRETION AS TO WHETHER EVEN AFTER REJECTING THE EXPLANATION OF THE ASSESSEE, THE VALUE OF THE INVESTMENTS WERE TO BE TREATED AS THE INCOME OF THE ASSESSEE. ACCORDING TO THE HIGH COURT, THE TRIBUNAL HAD NOT COMMITTED ANY ERRO R IN TAKING INTO ACCOUNT THE COMPLETE ABSENCE OF RESOURCES OF THE ASSESSEE AND A LSO THE FACT THAT HAVING REGARD TO HER AGE AND THE CIRCUMSTANCES IN WHICH SH E WAS PLACED SHE COULD NOT BE CREDITED WITH HAVING MADE ANY INCOME OF HER OWN AND IN THESE CIRCUMSTANCES THE TRIBUNAL WAS RIGHT IN REFUSING TO MAKE AN ADDIT ION OF THE VALUE OF THE INVESTMENTS TO THE INCOME OF THE ASSESSEE. HONBLE APEX COURT UPHELD THE VIEW OF THE HONBLE HIGH COURT. THE LD. AR APPEARING BEF ORE US DID NOT EXPLAIN AS TO HOW THIS DECISION IS OF ANY HELP TO THE ASSESSEE, E SPECIALLY WHEN THE ASSESSEE, IN THE INSTANT CASE, ON BEING QUESTIONED IN THE L IGHT OF MATERIAL FOUND DURING THE COURSE OF SURVEY, OFFERED THE AMOUNT ATTRIBUTABLE TO UNACCOUNTED STOCK FOUND DURING THE SURVEY TO TAX IN HER STATEMENT RECORDED ONLY AFTER THE SURVEY AND SUBSEQUENTLY PAID TAX THEREON. THERE IS NOTHING TO SUGGEST THAT AT ANY STAGE, THIS OFFER HAS BEEN RETRACTED. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE RELIANCE ON THE AFORESAID DECISION, RENDERED ON ALT OGETHER DIFFERENT FACTS, IS TOTALLY MISPLACED. 5.81 MOREOVER, THE LD. AR DID NOT EXPLAIN AS TO WHICH IRRELEVANT FACT HAS BEEN CONSIDERED BY THE AO OR THE LD. CIT(A ) NOR ITA N O.462/A/06 16 DEMONSTRATED AS TO HOW THE DECISION REFERRED TO IN ACIT VS. DAULAT RAM RAWATMULL (1973) 87 ITR 349 (SC) IS OF ANY ASSI STANCE TO THE ASSESSEE. CONSIDERING THE CONDUCT OF THE ASSESSEE I N OFFERING THE UNACCOUNTED STOCK TO TAX AFTER THE SURVEY AND SUBSE QUENTLY PAYING THE TAX THEREON ,ESPECIALLY WHEN EVEN THE CASH BOOK WAS FOUND TO BE WRITTEN ONLY UP TO OCTOBER,2001AND THERE BEING N O MATERIAL BEFORE US THAT AT ANY STAGE THIS OFFER WAS RETRACT ED, WE DO NOT FIND ANY FORCE IN THE ARGUMENTS OF THE LD. AR . 5.9. IN VIEW OF THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT ADMISSION MADE IN STATEMENT UNDER SECTION 131 OF THE ACT ON OATH , TH AT TOO AFTER THE SURVEY, HAS GREAT EVIDENTIARY VALUE AND IS BINDING ON A PERSON WHO MAKES IT. THE LEGISLATURE WAS WELL AWARE THAT UNDER THE GENERAL LAW MERE ADMI SSION MAY NOT BE CONCLUSIVE ONE. THE INCOME-TAX ACT IS A SPECIFIC ACT AND ASSES SMENT HAS TO BE MADE ON THE BASIS OF MATERIAL GATHERED BY THE ASSESSING OFFICER . FOR THIS PURPOSE, VAST POWERS HAVE BEEN CONFERRED ON THE INCOME-TAX AUTHOR ITIES FOR MAKING INVESTIGATION INCLUDING THE POWERS OF SURVEY. IF TH E ASSESSEE MAKES SOME ADMISSION, HE DEBARS THE AUTHORITIES FROM MAKING FU RTHER INVESTIGATION. IN VIEW OF THIS, LEGISLATURE IN ITS WISDOM HAS PROVIDED THAT S UCH STATEMENT CAN BE USED IN EVIDENCE AND THE ASSESSMENT CAN BE MADE ON THE BASI S OF SUCH STATEMENT. THE SANCTITY OF SUCH PROVISION WOULD BE LOST IF THE ASS ESSEE IS ALLOWED TO CONTEND THAT NO ADDITION CAN BE MADE ON THE BASIS OF SUCH ADMISS ION. 5.10. IN THE CASE OF BHIMRAJ RAJPUROHIT VS. ITO 105 TTJ 899(JODHPUR) , A SURVEY ACTION REVEALED THE AVAILABILITY OF EXCESS STOCK AN D SHORTAGE IN CASH THAT NECESSITATED THE MAKING OF SURRENDER OF RS. 55,000 WHICH IS APPA RENT FROM COMPUTATION OF INCOME FILED BY THE ASSESSEE. THE ITAT HELD THAT WHEN BOTH THE CASH AND STOCK WERE NOT CORRECT, HOW IT CAN BE INFERRED THAT THE BOOKS OF A CCOUNT WERE PROPERLY MAINTAINED? IT WAS FURTHER FOUND FROM THE STATEMENT OF THE ASSESSE E RECORDED AT THE TIME OF SURVEY, THAT THE ASSESSEE ADMITTED IN RESPONSE TO QUESTION NO. 12 THAT HE WAS ISSUING SALE BILLS IN SOME CASES AND IN CERTAIN OTHER CASES THE ADJUSTMENT WAS MADE ON ORDER/ESTIMATE. UNDER THESE CIRCUMSTANCES THE ITAT HELD THAT THE LEARNED CIT(A) WAS JUSTIFIED IN UPHOLDING THE APPLICABILITY OF S. 145 OF THE ACT AND THEREBY SUSTAINING ITA N O.462/A/06 17 THE ADDITION TO THE TUNE OF RS. 15,000. IN THE CITED DECISION ALSO THE ASSESSEE HAD ALREADY SHOWN THE SURRENDERED AMOUNT IN THE INCOME AND DID NOT RETRACT. SIMILAR ARE THE FACTS IN THE INSTANT CASE. 5.11 AS REGARDS PLEA OF THE ASSESSEE THAT STA TEMENT OF HUSBAND OF THE ASSESSEE HAS NOT BEEN RECORDED, WE ARE OF THE OPINI ON THAT NOTHING PREVENTED THE ASSESSEE TO PRODUCE HER HUSBAND ON 4.2.2002 ,WH EN SHE OFFERED THE UNACCOUNTED STOCK AS HER INCOME TO TAX OR EVEN SUB SEQUENTLY IF SHE SO DESIRED. THE ONUS WAS ON THE ASSESSEE TO EXPLAIN THE UNACCOU NTED STOCK. AS ALREADY OBSERVED, WHEN QUERIED, SHE OFFERED THE AMOUNT TO T AX . THIS STATEMENT OF HERS IS COUPLED WITH THE FACT THAT NOT AN IOTA OF EVIDEN CE HAS BEEN PLACED BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MAT TER. IN THE ABSENCE OF ANY BASIS, WE HAVE NO HESITATION IN UPHOLDING THE FINDINGS OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.21,71,063/-. THIS VIEW OF OURS ALS O FINDS SUPPORT FROM THE DECISION IN SANJEEV KUMAR PANDHI(SUPRA) AS ALSO ANOTHER DECI SION DATED 21.1.2011 OF TM IN ACIT VS. RATAN INDUSTRIES N ITA NO.95/AGRA/2005, WHEREIN IN SIMILAR CIRCUMSTANCES, ADDITION TOWARDS UNACCOUNTED STOCK U/S 69 OF THE ACT HAS BEEN UPHELD. IN VIEW OF THE FOREGOING, WE DO NOT FIND AN Y MERIT IN GROUND NO.2 IN THIS APPEAL. 6. NOW ADVERTING TO GROUND NO.1 RELATING TO ADDI TION TOWARD LOW GP IN THE POST SURVEY PERIOD , THE LD. AR DID NOT EVEN WHISPER B EFORE US REGARDING REJECTION OF BOOK RESULTS . UNDISPUTEDLY, THE ASSESSEE WAS FO UND TO BE CARRYING ON SUBSTANTIAL BUSINESS OUTSIDE THE BOOKS OF ACCOUNTS WHILE THE ASSESSEE DID NOT MAINTAIN ANY STOCK REGISTER OR QUANTITATIVE RECORDS . CONSEQUENTLY, THE ASSESSEE DECLARED ADDITIONAL INCOME ATTRIBUTABLE TO UNACCOUN TED STOCK IN THE PRE-SURVEY PERIOD. AS A RESULT, TRADING RESULTS FOR THE PRE-SU RVEY PERIOD IMPROVED CONSIDERABLY AND WERE NOT DISTURBED. AFTER CONSIDER ING THE EXCESS STOCK OFFERED AS UNDISCLOSED INCOME DURING THE COURSE OF SURVEY, UNDISPUTEDLY, GP RATE WORKED OUT TO 73.45% IN THE P RE-SURVEY PERIOD WHILE IN THE POST SURVEY PERIOD ,IT WORKED OUT TO ( -) 48.08%. ONLY DISPUTE BEFORE US IS REGARDING APPLICATION OF GP RATE AND THE RESULTANT ADDITION. THOUGH THE ASSESSEE PLEADED BE FORE THE LOWER ITA N O.462/A/06 18 AUTHORIIES THAT SALES WERE MADE AT LOWER RATES DUE TO RECESSION AND GODHRA RIOTS AND THE ASSESSEE FACED FINANCIAL CON STRAINTS, THESE STATEMENTS WERE NOT SUPPORTED BY ANY EVIDENCE ,ESPE CIALLY WHEN THE ASSESSEE WAS NOT MAINTAINING ANY STOCK REGISTER NOR COULD EXPLAIN THE STEEP FALL IN GP IN THE POST SURVEY PERIOD WITH ANY COGENT MATERIAL. EVEN THE INVENTORY WAS NOT FOUND VERIFIAB LE VIS--VIS PURCHASES AND SALES AND THE SALES RATES EXCEEDED PU RCHASE RATES IN POST SURVEY PERIOD. THE AO APPLIED GP RATE OF 10% I N CONSONANCE WITH GP RATE IN THE PRECEDING YEAR AND ADDED AN AMO UNT OF RS.1,85,059/-, RESULTING IN DETERMINATION NET PROFI T OF RS.1,74,215/- FOR THE YEAR UNDER CONSIDERATION. THE LD. CIT(A),HO WEVER, ADOPTED GP RATE OF 8.67% COMPUTED BY THE ASSESSEE FOR THE P RE SURVEY PERIOD AND DIRECTED THE AO TO RECOMPUTE THE ADDITIO N. THE LD. AR APPEARING BEFORE US DID NOT ADDUCE ANY REASONS AT A LL FOR REFLECTING GROSS LOSS IN THE POST SURVEY PERIOD AS AGAINST GP OF 73.45% IN THE PRE SURVEY PERIOD CALCULATED ON THE BASIS OF PHYSI CAL STOCK FOUND DURING THE COURSE OF SURVEY AND THE ASSESSEE HAVIN G ALREADY OFFERED TO TAX AN UNACCOUNTED STOCK FOUND DURING TH E SURVEY. THE AO AND THE LD. CIT(A) FOUND THAT CLOSING STOCK WAS NO T AMENABLE TO VERIFICATION IN THE ABSENCE OF STOCK RECORDS. IN THESE CIRCUMSTANCE S, ONCE THE ASSESSEE FAILED TO FURNISH THE RELEVANT DETAILS AND SUBSTANTIATE TH E TRADING RESULTS FOR THE RELEVANT PERIOD UNDER CONSIDERATION, IT WAS OPEN TO THE AO A ND THE LD. CIT(A) TO REJECT THE BOOK RESULTS AND ESTIMATE THE GROSS PROFIT. IT IS N OT A CASE WHERE BOOKS OF ACCOUNT ARE PROPERLY MAINTAINED AND THE ASSESSING OFFICER H AS SUBSTITUTED HIS OWN ESTIMATE IGNORING THE BOOKS OF ACCOUNT, WITHOUT GIV ING ANY REASONS. EVEN THOUGH THERE WAS SUBSTANTIAL DECLINE IN GP VIS--VIS TRADI NG RESULTS OF THE PRE SURVEY PERIOD, THERE IS NOTHING ON RECORDS TO SUGGEST THA T THE ASSESSEE EXPLAINED THIS SUBSTANTIAL FALL IN GP WITH ANY COGENT EVIDENCE. IT MAY BE OBSERVED UNDER THE CIRCUMSTANCES, IT IS DIFFICULT TO CATALOGUE VARIOU S TYPES OF DEFECTS IN THE ACCOUNT BOOKS OF AN ASSESSEE WHICH MAY RENDER REJECTION OF ACCOUNTS ON THE GROUND THAT ACCOUNTS ARE NOT COMPLETE AND FROM WHICH THE CORREC T PROFIT CANNOT BE DEDUCED. WHETHER PRESENCE OR ABSENCE OF STOCK REGISTER IS MA TERIAL OR NOT, WOULD DEPEND UPON THE TYPE OF BUSINESS. IN THE CASE UNDER CONSID ERATION, UNDISPUTEDLY, ITA N O.462/A/06 19 SUBSTANTIAL STOCK WAS FOUND TO BE UNACCOUNTED WHILE NO STOCK REGISTER OR QUANTITATIVE RECORDS WERE FOUND TO BE MAINTAINED . CONSEQUENTLY, THE CLOSING STOCK WAS NOT AMENABLE TO VERIFICATION. IT IS TRUE THAT ABSENCE OF STOCK REGISTER OR CASH MEMOS IN A GIVEN SITUATION MAY NOT PER SE LEAD TO AN INFERENCE THAT ACCOUNTS ARE FALSE OR INCOMPLETE. HOWEVER, WHERE TH E ABSENCE OF STOCK REGISTER, ETC. IS COUPLED WITH OTHER FACTORS LIKE EXCESS STOC K HAVING BEEN FOUND DURING THE COURSE OF SURVEY AND SHARP DECLINE IN PROFIT, GIVE RISE TO LEGITIMATE INFERENCE THAT ALL IS NOT WELL WITH THE BOOKS . SUCH IS THE SITUAT ION IN THE INSTANT CASE AND HENCE WE HOLD THAT THE LD. CIT(A) IS QUITE JUSTIFIED IN U PHOLDING THE FINDINGS OF THE AO IN REJECTING THE BOOK RESULTS, HAVING RECOURSE TO PROV ISIONS OF SEC.145(3) OF THE ACT THIS VIEW OF OURS IS ALSO FORTIFIED BY THE DECISIO N OF HONBLE ORISSA HIGH COURT IN THE CASE OF RATANLAL OMPRAKASH VS. CIT,132 ITR 640( ORISSA), AWADHESH PRATAPSINGH ABDUL RAHEMAN & BROS VS CIT (1994) 210 ITR(ALL) AND DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. K Y PILLIAH AND SONS, 63 ITR 411(SC).AS REGARDS ESTIMATION OF PROFITS, NO DOUBT THE AO/CIT(A) SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCOME EVEN IN A BEST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBITRARILY, BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGMENT AS SESSMENT, AND IT IS THE ASSESSEE HIMSELF WHO IS TO BLAME AS HE DID NOT SUBM IT PROPER ACCOUNTS AND DETAILS.[ KACHWALA GEMS VS JCIT, 288 ITR 10 (2007)( SC) ]. SINCE THE ASSESSEE DID NOT SUBSTANTIATE THE TRADING RESULTS WITH COG ENT EVIDENCE BEFORE THE AO OR THE LD. CIT(A) NOR EVEN ANY MATERIAL HAS BEEN PLAC ED BEFORE US SO AS TO TAKE A DIFFERENT VIEW IN THE MATTER, WE DO NOT FIND ANY IN FIRMITY IN THE FINDINGS OF THE LEARNED CIT(A) WHILE UPHOLDING REJECTION OF BOOK RE SULTS AND SUSTAINING THE ADDITION , APPLYING THE GP RATE OF 8.67% FOR THE P RE-SURVEY, THEREBEING NO COGENT EXPLANATION FOR THE ABNORMAL FALL IN GP RATE IN TH E POST SURVEY PERIOD .EVEN THE HUSBAND OF THE ASSESSEE, CARRYING ON SIMILAR BUSINE SS FROM THE SAME PREMISES, REFLECTED GP OF 83.17% IN THE POST SURVEY PERIOD. I T IS TRUE THAT ASSESSING OFFICER OR THE CIT(A) ARE NOT FETTERED BY TECHNICAL RULES O F EVIDENCE AND ARE ENTITLED TO ACT ON MATERIALS WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN COURT OF LAW, NEVERTHELESS, THE ASSESSING OFFICER SHOULD ADOPT A METHOD WHICH MUST REFLECT THE PROFITS TRULY AND JUSTLY[ GEMINI PICURES LTD. VS CI T (1958) 33 ITR 547 (MAD).] FOR ESTIMATING THE GROSS PROFIT, THE AO AND THE LD. CIT(A) CAN ALWAYS HAVE A LOOK AT ITA N O.462/A/06 20 THE MARGIN RETURNED IN COMPARABLE CASES OR EVEN IN ASSESSEES OWN CASE. WE ARE OF THE OPINION THAT IN THE FACTS AND CIRCUMSTAN CES OF THE CASE, ESPECIALLY WHEN THERE WAS ABNORMAL FALL IN GP RATE IN THE PERI OD UNDER CONSIDERATION VIS-- VIS PRE SURVEY PERIOD AND NO COGENT EVIDENCE HAS B EEN PLACED BEFORE THE LD. CIT(A) OR EVEN BEFORE US IN SUPPORT OF BOOK RESULTS WHILE HUGE UNACCOUNTED STOCK WAS DETECTED DURING THE SURVEY, THE LD. CIT(A) WE RE JUSTIFIED IN APPLYING THE GP RATE[ 8.67%] OF THE WHILE UPHOLDING REJECTION OF BO OK RESULTS, HAVING RECOURSE TO PROVISIONS OF SECTION 145(3) OF THE ACT. IN THIS V IEW OF THE MATTER AND CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE , ESPECIALLY WHEN THE REVENUE HAVE NOT PLACED BEFORE US ANY MATERIAL IN ORDER TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER, WE ARE NOT INCLINED TO INTERFER E WITH THE FINDINGS OF THE LEARNED CIT(A). THEREFORE, GROUND NOS. 1& 2 IN THE APPEAL ARE DISMISSED. 7. GROUND NO.3 RELATES TO ADDITION OF RS. 23,614/- U/S 69 OF THE ACT. THE ASSESSING OFFICER NOTICED DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THAT THE UNICORN CORPORATION HAD SHOWN CLOSING BALANCE OF RS . 3500/- WHILE THE BOOKS OF ACCOUNT OF THE ASSESSEE REFLECTED RS.20144/-. TO A QUERY BY THE ASSESSING OFFICER, THE ASSESSEE EXPLAINED THAT THE AMOUNT OF RS.23,614/- WAS PAYABLE TO M/S UNICORN CORPORATION LTD. WHILE THE ASSESSEE HA D TO RECEIVE BACK A DEPOSIT OF RS.25,000/- FROM M/S BHUTAN BOARDS PRODUCTS LTD .. M/S UNICORN CORPORATION WAS DISTRIBUTOR OF M/S BHUTAN BOARDS PRODUCTS LTD. . THE AMOUNT OF RS.23,641/- WAS NOT PAID TO THE DISTRIBUTOR AND MATTER WAS DISP UTED. SINCE THIS WAS OLD BALANCE, THE ASSESSEE PLEADED THAT NO ADDITION SHOU LD BE MADE. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THERE WAS NO POSITIVE EVIDENCE IN SUPPORT OF T HE CONTENTION OF THE ASSESSEE, RESULTING IN AN ADDITION OF RS.23,615/- U/S 69C OF THE ACT. 8. ON APPEAL, THE LD. CIT(A) UPHELD THE ADDITION OB SERVING AS UNDER: IT WAS NOTED BY THE A.O. THAT CLOSING BALANCE IN T HE BOOKS OF UNICORN CORPORATION WAS SHOWN AT RS.3,500/- WHEREAS , IN THE BOOKS OF THE ASSESSEE IT WAS REFLECTED AT RS.20,144 /-. THE ASSESSEE WAS CONFRONTED WITH THIS DIFFERENCE FOR WH ICH THE ASSESSEE EXPLAINED THAT A DEPOSIT OF RS.25,000/- WA S MADE TO BHUTAN BOARDS LTD., OF WHICH UNICORN CORPORATION WA S THE DISTRIBUTOR. THE AMOUNT OF RS.23,614/- (RS.20,144 3,500) PAYABLE ITA N O.462/A/06 21 TO UNICORN CORPORATION WAS NOT ACTUALLY PAID BECAUS E THE DEPOSIT OF RS.25,000/- HAD NOT BEEN RECEIVED BACK BY THE ASSES SEE, THEREFORE, THE SAID PAYABLE AMOUNT BECAME DISPUTED. SIMILAR AR GUMENTS WERE TAKEN BY THE APPELLANT AT THE TIME OF THE HEARING O F APPEAL BUT NO DOCUMENTARY EVIDENCE IN SUPPORT OF THE ARGUMENTS WA S FURNISHED. THEREFORE, THE ADDITION MADE BY THE A.O. IS CONFIRM ED. 9. THE ASSESSEE IS NOW IN APPEAL AGAINST THE AFORES AID FINDING. AT THE OUTSET, THE LD. A.R. WHILE REFERRING TO AN APPLICATION DATE D 19.5.2009 FOR ADMISSION OF ADDITIONAL EVIDENCE IN THE FORM OF A CREDIT NOTE DA TED 4.8.99 CONTENDED THAT ADDITION U/S 69C OF THE ACT HAD BEEN MADE FOR LACK OF EVIDENCE. SINCE THE DOCUMENTS SOUGHT TO BE RELIED UPON ARE RELEVANT, T HE LD. AR WHILE RELYING ON THE DECISION IN THE CASE OF PARI MANGALDAS GIRDHARDAS V . CIT 6 CTR 647(GUJ.) AND R.DALMIA VS. CIT,113 ITR 522, ARGUED THAT ADDITIONA L EVIDENCE IN THE FORM OF SAID CREDIT NOTE DATED 8.4.1999 MAY BE ADMITTED IN THE I NTEREST OF JUSTICE. ON THE OTHER HAND, THE LD. D.R. OPPOSED THE ADMISSION OF ADDITIO NAL EVIDENCE AND SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 10. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE ARE OF THE OPINION THAT IN VIEW OF REA SONS ADDUCED BY THE LD. AR, THE AFORESAID ADDITIONAL EVIDENCE IS VITAL AND ESSE NTIAL FOR THE PURPOSE OF CONSIDERATION OF THE SUBJECT-MATTER OF THE ISSUE I N THIS APPEAL AND TO ARRIVE AT A FINAL AND ULTIMATE DECISION IN A FAIR AND JUST MANN ER. THE TRIBUNAL, UNDER RULE 29 OF THE ITAT RULES, 1963, HAS POWER TO ADMIT ADDITIO NAL EVIDENCE IN THE INTEREST OF JUSTICE OR IF THERE EXISTS SUBSTANTIAL CAUSE. THE C AUSE OF JUSTICE WILL BE BETTER SERVED IF THE SAID CREDIT NOTE DATED 4.8.1999 IS AD MITTED BECAUSE THE DOCUMENT HAS A NEXUS WITH THE FACTS OF THE CASE AND ALSO VER Y ESSENTIAL FOR PROPER APPRECIATION AND ADJUDICATION OF THE LIS/CONTROVER SY INVOLVED. ACCORDINGLY, PRAYER FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 29 OF THE ITAT RULES,1963 IS ACCEPTED IN THE LIGHT OF GUIDELINES LAID DOWN IN T HE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF PARI MANGALDAS GIRDHARIDA S VS. CIT,(1977) 6 CTR(GUJ)647. IN THESE CIRCUMSTANCES, WE CONSIDER IT FAIR AND APPROPRIATE TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE M ATTER TO HIS FILE FOR DECIDING THE ISSUE AFRESH IN ACCORDANCE WITH LAW, IN THE LIGHT O F AFORESAID ADDITIONAL EVIDENCE AND OF COURSE AFTER ALLOWING SUFFICIENT OPPORTUNITY TO BOTH THE PARTIES. THE LD. ITA N O.462/A/06 22 CIT(A) IS FREE TO UNDERTAKE ANY INDEPENDENT ENQUIRE S, IF FOUND NECESSARY AND THEREAFTER, MAY PASS SUCH ORDER AS HE DEEMS PROPER, IN ACCORDANCE WITH LAW . WITH THESE OBSERVATIONS, GROUND NO. 3 IN THE APPEAL IS DISPOSED OF. 11. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFOR E US IN TERMS OF THE RESIDUARY GROUND NO.4 IN THE APPEAL, ACCORDINGL Y, THIS GROUND IS DISMISSED. 12.IN THE RESULT, APPEAL IS PARTLY ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT TODAY ON 31-03-2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 31 -03-2011 COPY OF THE ORDER FORWARDED TO: 1. SMT. DAXABEN KIRITBHAI THAKKAR, A TO Z PLY CENTR E, MAHALAXMI BHAVAN, GHODIYA BAZAR, NADIAD 2. ITO, WARD-4, NADIAD 3. CIT CONCERNED 4. CIT(A)-IV, BARODA 5. THE DR, ITAT, AHMEDABAD BENCH-, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD