ITO, Faridabad V. Sh. Yash Pal Gera, Faridabad

ITA 4647/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3983 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 05-05-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 09-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHANISH VERMA
• Keywords: Rejection of books of accounts; Unexplained investment; Search and seizure; Tax effect
• Section: 142(1); 153A; 205; 251; 268A; 143(2); 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I : NEW DELHI) SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NOS.4646 TO 4651/DEL./2009 (ASSESSMENT YEARS : 1998-99 TO 2003-04) ITO, WARD II (4), VS. SHRI YASHPAL GERA, FARIDABAD. PROP. M/S. GERA STAINLESS STEEL CORP ORATION, 2H/78, N.I.T., FARIDABAD. (PAN : ACRPG5633N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAKASH CHAND YADAV, ADVOCATE REVENUE BY : SHRI MOHANISH VERMA, CIT DR ORDER PER BENCH : THESE SIX APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER OF CIT (APPEALS), KARNAL DATED 01.10.2009. 2. THE FACTS IN ALL THE AFOREMENTIONED SIX APPEALS ARE SIMILAR. TO GIVE A CLARITY OF THE FACTS, WE ARE GIVING THE BRIEF FACTS OF THE CASE FROM ITA NO.4648/DEL/2009 FOR THE ASSESSMENT YEAR 2000-01, W HICH ARE AS UNDER :- A SEARCH OPERATION WAS CARRIED OUT UNDER SECTION 13 2 OF THE INCOME-TAX ACT, 1961 AT THE RESIDENCE OF ONE SHRI C .P. KAUSHIK. IN THE ITA NOS.4646 TO 4651/DEL/2009 2 SEARCH OPERATION, CERTAIN DOCUMENTS WERE SEIZED AND AS PER THESE DETAILS, THE ASSESSEE MADE CASH PAYMENTS DURING THE PERIOD RELEVANT TO ASSESSMENT YEARS 1998-99 TO 2003-04. THE CASH PAYM ENTS AS PER THE SEIZED MATERIAL FOR THE ASSESSMENT YEAR 2000-01 IS AS UNDER :- SR.NO. DATE AMOUNT 1. 28.04.1999 5,000/- 2. 09.06.1999 70,000/- 3. 09.07.1999 66,000/- TOTAL : 1,41,000/- THE ASSESSING OFFICER RECEIVED THE DOCUMENTS/STATEM ENTS/INFORMATION FROM THE ACIT, CENTRAL CIRCLE, FARIDABAD WHO WAS AL SO THE ASSESSING OFFICER FOR MR. C.P. KAUSHIK. ON THAT BASIS, THE NOTICE UNDER SECTION 153C READ WITH SECTION 153A OF THE INCOME-TAX ACT W AS ISSUED ON 28.11.2006 WHICH WAS DULY SERVED ON ASSESSEE ON 4.1 2.2006. THE ASSESSEE DID NOT FILE THE RETURN OF INCOME IN RESPO NSE TO THAT NOTICE. THEN, THE ASSESSING OFFICER ALSO ISSUED THE NOTICE UNDER SECTION 142(1) ON 20.8.2007 FIXING THE HEARING ON 10.9.2007. IN R ESPONSE TO THAT, THE ASSESSEE FILED THE RETURN OF INCOME. THEREAFTER, A GAIN A NOTICE U/S 142(1) WAS ISSUED FIXING THE HEARING ON 12.11.2007 WHICH WAS ALSO DULY SERVED ON ASSESSEE ON 4.11.2007. AGAIN A NOTI CE DATED 14.11.2007 WAS ISSUED AND SERVED UPON THE ASSESSEE ON 15.11.20 07 AND THE HEARING WAS POSTED ON 27.11.2007. IT HAS BEEN NOTED BY THE ASSESSING OFFICER ITA NOS.4646 TO 4651/DEL/2009 3 THAT NO BOOKS OF ACCOUNT AND BILLS AND VOUCHERS ETC . HAVE BEEN PRODUCED ON THE DATES FIXED FOR HEARING IN RESPONSE TO NOTICES U/S 142(1) DATED 20.08.2007, 31.10.2007 AND 14.11.2007. THE ASSESSING OFFICER ESTIMATED THE TOTAL TURNOVER BY INTERPOLATI NG THE AMOUNT ENTERED INTO THE SEIZED MATERIAL AND CALCULATING THE NET PR OFIT @ 5%. FINALLY, THE ASSESSEE FILED THE RETURN OF INCOME ON 20.12.20 07 DECLARING THE TOTAL INCOME OF RS.42,850/-. THEN, STATUTORY NOTICE U/S 143(2) WAS ISSUED ON 20.12.2007. THIS NOTICE WAS SERVED ON THE ASSESSEE ON 21.12.2007. THE CASE WAS POSTED ON 24.12.2007. THE ASSESSING OFFIC ER ALSO RECORDED THAT THE ASSESSEE HAS NOT PRODUCED THE REQUIRED BOO KS OF ACCOUNTS IN TERMS OF NOTICES ISSUED. HENCE, THE TURN OVER DECL ARED FOR WORKING OUT THE NET PROFIT. THE ASSESSING OFFICER ALSO RECORDED THAT THE ASSESS EE HAS FILED THE RETURN ONLY ON 20.12.2007. HOWEVER, THE NOTICE U/S 153C ISSUED AS BACK AS ON 28.11.2006 REQUIRING THE ASSESSEE TO FIL E THE RETURN WITHIN 20 DAYS. IT IS AN ADMITTED FACT THAT THE ASSESSEE WAS HAVING BUSINESS DEALING WITH SHRI C.P. KAUSHIK AND SHRI M.L. SHARMA . IN SUPPORT OF THE RETURN, THE ASSESSEE ONLY RELIED ON THE SALES-T AX ASSESSMENT. ON THE BASIS OF THE CASH PAYMENTS RECORDED IN THE S EIZED MATERIAL ON VARIOUS DATES, THE ASSESSING OFFICER ESTIMATED T HE TOTAL TURNOVER OF ITA NOS.4646 TO 4651/DEL/2009 4 THE ASSESSEE AND THEN CALCULATED THE NET PROFIT @ 5 % FOR WORKING OUT THE INCOME. THE ASSESSING OFFICER RELIED ON THE JUDGMENT OF HON 'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF SALES- TAX, MADHYA PRADESH VS. H.M. ESUFALI H.M. ABDULALI REPORTED IN 90 ITR 271 (SC). THE CIT (A) GRANTED THE PART RELIEF BY HOLDING AS UNDER :- IN GROUND NO.2, THE ASSESSEE HAS OBJECTED TO THE ADDITIONS ON ACCOUNT OF ESTIMATION OF TURNOVER AND ESTIMATION OF NET PROFIT @ 5%. DURING SEARCH AT PRE MISES OF MR. C. P. KAUSHIK ONLY ONE DOCUMENT IN THE FORM OF A DIARY WAS FOUND IN WHICH CERTAIN RECEIPTS FROM 'GER A SCRAP' WERE RECORDED. IT HAS ALREADY BEEN UPHELD AB OVE THAT THESE RECEIPTS WERE FROM THE APPELLANT ON ACCO UNT OF SCRAP PURCHASES BY THE APPELLANT FROM MR. C. P. KAU SHIK. NATURALLY THESE PURCHASES WERE OVER AND ABOVE THE PURCHASES RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THERE WAS NO OTHER DOCUMENT OR EVIDENCE F OUND DURING THE SEARCH OF MR. C. P. KAUSHIK WHICH CAN SU GGEST THAT THERE WERE ANY OTHER UNACCOUNTED PURCHASES BY THE APPELLANT FROM MR. C. P. KAUSHIK OTHER THAN WHAT IS RECORDED IN THE SAID DIARY. NO OTHER MATERIAL WAS F OUND OR BROUGHT ON RECORD BY THE AO OF MR. C. P. KAUSHIK OR BY THE AO OF THE APPELLANT DURING ASSESSMENT PROCEEDIN GS WHICH CAN SUGGEST OR EVIDENCE OR CAN BE MADE BASIS FOR PRESUMPTION THAT THERE WAS ANY OTHER UNACCOUNTED PURCHASE BY THE ASSESSEE, EITHER FROM MR. C. P. KAU SHIK OR FROM ANY OTHER PARTY OTHER THAN WHAT IS RECORDED IN SAID SEIZED DIARY AND THEREFORE, THE PRESUMPTION OF THE AO OF THE APPELLANT THAT THERE WERE REGULAR UNRECORDED PU RCHASES BY THE APPELLANT FROM OTHER UNDISCLOSED SOURCES IS WITHOUT ANY BASIS, EVIDENCE OR LOGIC. HENCE THE ACTION OF T HE AO IN TAKING THE UNRECORDED PURCHASE OF 'GERA SCRAP' IN T HE SAID DIARY AS BASIS FOR CALCULATING AVERAGE AND THEN EST IMATING THE TURNOVER IS WITHOUT ANY EVIDENCE, BASIS OR LOGI C, HENCE ITA NOS.4646 TO 4651/DEL/2009 5 THE ADDITION ON ACCOUNT OF UNACCOUNTED PURCHASES BY THE AO IS UPHELD TO THE EXTENT UNACCOUNTED RECEIPTS HAV E BEEN FOUND, RECORDED IN THE DIARY SEIZED FROM MR. C. P. KAUSHIK FROM 'GERA SCRAP' ONLY. IT IS CORRECT THAT UNACCOUN TED PURCHASES WERE NATURALLY FURTHER SOLD BY THE APPELL ANT AND THEREFORE, THE ESTIMATION OF NET PROFIT IS REQUIRED WHICH IS TAKEN AT 5% BY THE AO. IN VIEW OF THE NATURE OF BUS INESS AND OTHER FACTS AND CIRCUMSTANCES OF THE CASE, THE ESTIMATION AT 5/0 OF UNACCOUNTED SALES IS UPHELD. T HE AO HAS RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF H.M. ESUFALI (SUPRA) BUT IN THAT CASE A BIL L BOOK CONTAINING BILLS FOR 19 DAYS WAS FOUND ON THE BUSIN ESS PREMISES OF THE ASSESSEE DURING THE FLYING SQUARED INSPECTION WHICH WAS MADE BASIS FOR ESTIMATING TURN OVER BUT IN THE CASE OR THE.; ASSESSEE ALL THE PAYMENTS FOR ALL THE YEARS UNDER CONSIDERATION HAVE BEEN FOUND RECORDED AND THEREFORE, THERE CAN NOT BE ANY PRESUMPTION THAT TH ERE WERE MORE PURCHASES FROM MR. C. P. KAUSHIK OR ANY OTHER PARTY IN THE ABSENCE OF ANY OTHER EVIDENCE. ACCORDINGLY Y EAR WISE ADDITIONS ON ACCOUNT OF NET PROFIT FROM UNACCO UNTED TURNOVER IN THE CASE OF THE APPELLANT IS UPHELD TO THE EXTENT GIVEN BELOW:- AY. 1998-99 RS.53,735/- A.Y. 1999-00 RS.56,601/- A.Y. 2000-01 RS.70,501/- A.Y. 2001-02 RS.22,250/- A.Y. 2002-03 RS.10,250/- A.Y. 2003-04 RS. 4,600/- ACCORDINGLY GROUND NO.2 OF APPEAL OF THE ASSESSEE FOR ALL THE ASSTT. YEARS IS PARTLY ALLOWED. IN RESU LT, GROUND NO.1 AND ADDITIONAL GROUND NO.1 & 2 ARE REJECTED AN D GROUND NO.2 IS PARTLY ALLOWED FOR ALL THE ASSTT. YE ARS INVOLVED IN THE APPEALS. 3. GROUND NO.1 IS COMMON IN ALL THE ASSESSMENT YEAR S EXCEPT THE DIFFERENCE IN THE ADDITION AMOUNT AND THE SAME IS R EPRODUCED AS UNDER : ITA NOS.4646 TO 4651/DEL/2009 6 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETIN G THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NET PROFIT FROM UNACCOUNTED TURNOVER IN ABSENCE OF ANY BOOKS OF ACCOUNT AND EXPENSE VOUCHERS/BILLS/CASH ME MO ETC. DESPITE GIVEN THE REASONABLE OPPORTUNITIES AS SUCH THE ASSESSING OFFICER WAS LEFT WITH NO ALTERNATIVE EXCE PT THE ESTIMATION OF TURNOVER ON THE BASIS OF DIARY FOUND AND CONTRARY TO THE JUDGMENT OF THE HON'BIE SUPREME COU RT IN THE CASE OF COMMISSIONER OF SALES TAX, MADHYA PRADESH VS H.M. ESUFALI H.M. ABDULALI REPORTED IN 9 0 ITR 271.' 4. THE LEARNED DR SUBMITTED AS UNDER :- GROUND NO.1 RELATES TO DELETION OF RS.4,46,265/- (AY 98- 99) BY THE CIT(A) BY HOLDING THAT THE UNACCOUNTED T URNOVER FOUND IN THE BILL BOOK DURING THE COURSE OF THE SEA RCH SHOULD ONLY BE RESTRICTED TO THE ACTUAL AMOUNTS STATED IN THE NOTE BOOK AND THE ESTIMATION DONE BY THE AO FOR THE WHOLE YEA R WAS NOT JUSTIFIED. ACCORDINGLY THE AMOUNTS UPHELD WERE ONLY PART OF THE TOTAL ADDITIONS MADE BY THE AO(PAGE 29 OF THE C1T(A )'S ORDER). ON GOING THROUGH THE ORDER OF THE CIT(A) ON PAGE 28 AND 29, THE CIT(A) HAS ACCEPTED THAT THE AMOUNTS ARE UN ACCOUNTED RECEIPTS OF THE ASSESSEE. THE AO HAS RELIED UPON TH E DECISION OF HON'BLE SUPREME COURT IN THE CASE OF H.M. ESUFALI H .M. ABDULALI 90 ITR 279 (SC) TO HOLD THAT ON THE BASIS OF DOCUMENTS FOR PART OF THE YEAR, ESTIMATION CAN BE M ADE FOR THE WHOLE YEAR. RELIANCE IS PLACED UPON THE OBSERVATIONS OF THE A O ON PAGE 10 & 11 OF THE ASSTT. ORDER WHEREIN IT WAS OBS ERVED THAT EVEN THOUGH THE ASSESSEE WAS LEGALLY REQUIRED TO MA INTAIN OF BOOKS OF ACCOUNTS, NO SUCH BOOKS OF ACCOUNTS WERE M AINTAINED BY THE ASSESSEE. IT WAS FURTHER POINTED OUT BY THE AO THAT THE ASSESSEE HAD ADMITTED HIS BUSINESS DEALING WITH SH. C.P. KAUSHIK AND SH M.L. SHARMA WHICH CLEARLY SHOWED THA T ASSESSEE WAS DOING BUSINESS AT LEAST AS EARLY AS MO NTH OF JUNE, ITA NOS.4646 TO 4651/DEL/2009 7 1997. THE AO HAS RELIED UPON THE DETAILS OF THE PUR CHASES OF STEEL SCRAP FOR 27 DAYS. SINCE NO BOOKS OF ACCOUNTS WERE MAINTAINED AND PRODUCED DESPITE VARIOUS OPPORTUNITI ES, NEITHER ANY VOUCHERS, BILLS WERE MADE AVAILABLE BY THE ASSE SSEE (PG 6&7 OF ASSESSMENT ORDER). THE AO WAS JUSTIFIED IN E STIMATING THE TOTAL TURNOVER ON THE BASIS OF DETAILS FOR 29 D AYS IN THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH. THE AO HAS ESTIMATED THE TOTAL TURNOVER ASSUMING 300 WORKING DAYS IN A YEAR AND ACCORDINGLY ARRIVED AT T HE TOTAL SALES/TURNOVER AFTER WHICH NET PROFIT RATE OF 5% WA S APPLIED. THE SAME PRINCIPLE WAS APPLIED FOR DIFFERENT YEARS. HOWEVER THE CIT{A) HAS OBSERVED THAT SINCE IN THE PRESENT CASE ALL THE PAYMENTS FOR ALL THE YEARS UND ER CONSIDERATION HAVE BEEN FOUND RECORDED, THERE CANNO T BE ANY PRESUMPTION THAT THERE WERE MORE PURCHASES WHICH WE RE UNRECORDED (PAGE 29 OF THE CIT(A)'S ORDER) . THIS FINDING OF THE CIT(A) IS ERRONEOUS SINCE THE ASSESSEE HAS NOT MAIN TAINED ANY BOOKS OF ACCOUNTS AND THE BILL BOOK FOUND FOR THE P ART PERIOD ONLY INDICATES THAT UNACCOUNTED TRANSACTIONS WERE B EING CARRIED OUT BY THE ASSESSEE BY RECORDING SUCH TRANSACTIONS IN A ROUGH MANNER. SINCE NO REGULAR BOOKS OF ACCOUNTS WERE MAINTAINED BY THE ASSESSEE IT IS MORE LOGICALLY AND FAIR TO AS SUME THAT SUCH ROUGH NOTINGS HAVE BEEN MAINTAINED IN A DISORG ANISED MANNER, EVEN THOUGH ONLY PART OF THE ROUGH NOTINGS/DOCUMENTS WERE FOUND DURING THE SEARCH. THE ASSESSEE ALSO SUBMITTED BEFORE THE CIT(A) THAT BOOK S OF ACCOUNTS WERE BEING MAINTAINED BY THE ASSESSEE(PAGE 25 OF CIT (A), ORDER. THOUGH NEVER PRODUCED BEFORE ANY AUTHORITY). THE CIT(A) WAS NOT JUSTIFIED IN DIFFERENTIATING T HE DECISION OF HON'BLE SUPREME COURT IN H M ESUFALI , WHEREIN BILL BOOKS CONTAINING FOR 19 DAYS WAS FOUND ON THE BUSINESS PREMISES OF THE ASSESSEE DURING THE FLYING SQUAD IN SPECTION AND ESTIMATION OF TOTAL TURNOVER WAS MADE. THE PRESENT CASE IS SQUARELY COVERED BY THIS DECISION. THE ASSESSEE HAS ITSELF BEEN ITA NOS.4646 TO 4651/DEL/2009 8 TAKING CONTRADICTORY STANDS REGARDING MAINTENANCE O F BOOKS OF ACCOUNTS AND THE CIT(A) SHOULD NOT HAVE GIVEN RELIE F WITHOUT VERIFYING BOOKS OF ACCOUNTS OR THE AO VERIFYING THE BOOKS OF ACCOUNTS. ACCORDINGLY NO RELIEF SHOULD HAVE BEEN GI VEN BY THE CIT(A). ON GOING THROUGH THE ASSTT. ORDER (PAGE 10) THE AO HAS OBSERVED THAT VIDE LETTER DT. 24.12.2007 THE AS SESSEE HAS STATED THAT THE BOOKS OF ACCOUNTS WERE NOT PREPARED AND MAINTAINED AS THE TOTAL TURNOVER OVER WAS RS. 75,14 5/- (BELOW PRESCRIBED LIMIT).:. HOWEVER, BEFORE THE C11 (8) IT WAS SUBMITTED BY THE ASSESSEE(PAGE 25 PARA 4 OF C11 (A)'S ORDER) THAT THE BUSINESS DEALING WITH MR. KAUSHIK W AS PART OF THE BOOKS OF ACCOUNTS BASED UPON WHICH THE RETUR N OF INCOME WAS FURNISHED. THE ASSESSEE HAS ACCEPTED BUSINESS DEALING WITH SHR I C P KAUSHIK AND SHRI M L SHARMA VIDE HIS LETTER DT. 24. 12.2007. ON THE BASIS OF THE ABOVE OBSERVATIONS THE CONTENTI ON OF THE ASSESSEE APPEARS TO BE CONTRADICTORY REGARDING MAINTENANCE BOOKS OF ACCOUNTS. HOWEVER, THE ASSESSEE ADMITS OF BUSINESS DEALINGS WITH MR. C.P. KAUSHIK, DETAILS OF WHICH WE RE HOWEVER NEVER PRODUCE BEFORE THE AO. IN VIEW OF THESE FACTS IT IS CLEAR THAT THE ASSESSEE WAS HAVING REGULAR BUSINESS ACTIV ITIES AND HAS ALSO ACCEPTED THAT BOOKS OF ACCOUNTS WERE BEING MAI NTAINED, THOUGH THEY HAVE NEVER PRODUCE BEFORE THE AO. IT IS THEREFORE, CLEAR THAT THE FACTS ARE COVERED BY THE SUPREME COU RT DECISION OF H M ESUFALI (SUPRA). SINCE THE BOOKS OF ACCOUNTS WERE NOT PRODUCED ALONGWITH SUPPORTING DOCUMENTS, THE AO HAS RIGHTLY ESTIMATED THE UNACCOUNTED TRANSACTION AND ARRIVED A T THE PROFIT RATE. WITHOUT PREJUDICE TO THE FACT THAT NO RELIEF SHOULD BE GIVEN TO THE ASSESSEE AS IT HAS NOT PRODUCED THE BO OKS OF ACCOUNTS AND OTHER DOCUMENTS TO EXPLAIN THE UNRECOR DED TRANSACTIONS, ALTERNATIVELY, THE HON'BLE BENCH MAY CONSIDER SETTING ASIDE THE CASE TO THE AO FOR COMPLETE VERIF ICATION OF BOOKS OF ACCOUNTS AS WELL AS EXPLANATIONS REGARDING THE TRANSACTIONS FOUND DURING THE COURSE OF SEARCH. ITA NOS.4646 TO 4651/DEL/2009 9 SOME OF THE DECISIONS HOLDING THAT ESTIMATION OF INCOME IS POSSIBLE IN BLOCK ASSTT. ARE AS FOLLOWS: A) RAJENDER KUMAR LAHOTY VS DCIT 266 ITR 621 B) S. SURNDER NATH REDDY VS ACIT(ITAT HYD 72 ITD 205 C) RAJNIK & CO. VS ACIT (AP) 251 ITR 561 D) VAZHAKALA ESTATE VS CIT 210 ITR 451 (KERELA) IN THIS CASE IT HAS BEEN HELD THAT WHERE BOOKS OF A CCOUNTS WERE NOT RELIABLE, ESTIMATE BASED ON SLIP OF PAPERS FOR ARRIVING AT ESTIMATED INCOME IS JUSTIFIED. IT IS ALSO PERTINENT TO NOTE THAT VARIOUS OPPORTU NITIES HAD BEEN PROVIDED TO THE ASSESSEE BY THE AO WHICH WERE REPORTED IN THE REMAND REPORT DT. 16.9.2009 ALSO REPRODUCED ON PAGES 20 TO 23 OF THE CIT(A)'S ORDER. THE AO HAS EMPHASISED THA T NO RETURN OF INCOME WAS FILED BY THE ASSESSEE, THE ASS ESSEE DID NOT COMPLY WITH SHOW CAUSE NOTICES AND OPPORTUNITIES WH ICH WERE GIVEN TO HIM (PAGE 21 & 22 OF THE ORDER) THE ASSESS EE HAS NEVER PRODUCED ANY BOOKS OF ACCOUNTS OR CONTROVERTE D THE VARIOUS CONTENTIONS IN THE SHOW CAUSE SENT TO THE A SSESSEE. THE RELIEF GIVEN BY THE CIT(A} ACCORDINGLY IS NO T JUSTIFIED. 5. THE LEARNED AR RELIED ON THE ORDER OF THE CIT (A ). 6. AFTER HEARING BOTH THE SIDES, WE FIND THAT THIS WAS THE ASSESSMENT U/S 153C READ WITH SECTION 153A WHEREIN THE ASSESSMENT IS BASED ON THE SEIZED MATERIAL FOUND AND SEIZED AT THE PREMISES OF THE OT HER PERSONS, BELONGS TO THE ASSESSEE. THE CASH PAYMENTS RECORDED IN THE DIARY SEIZED WERE SPREAD OVER THE YEAR. THESE ENTRIES WERE NOT FOR A PARTICULAR PERIOD OF THE YEAR. THESE PAYMENTS WERE NOT FOR A PARTICULAR PERIOD OF A MONT H OR MONTHS. CONSIDERING ITA NOS.4646 TO 4651/DEL/2009 10 THESE ASPECTS, WE FIND THAT THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF COMMISSIONER OF SALES-TAX, MADHYA PRADESH VS. H. M. ESUFALI H.M. ABDULALI (SUPRA) CANNOT BE MADE APPLICABLE TO THE F ACTS OF THIS CASE. THERE IS NO EVIDENCE THAT THE ASSESSEE HAS MADE MORE PURCHAS ES OUTSIDE THE BOOKS EITHER WITH SHRI C.P. KAUSHIK WITH WHOM HE WAS DEAL ING AND FROM WHOSE PREMISES, THE DETAILS OF THE CASH PAYMENTS WERE FOU ND AND SEIZED AND FROM ANY OTHER PARTY. CONSIDERING THESE FACTS, WE FIND THAT THE CIT (A) HAS GRANTED THE PART RELIEF IN ALL THE APPEALS IS JUSTIFIED. K EEPING THIS FACT IN VIEW, WE DISMISS GROUND NO.1 OF REVENUES APPEAL IN ALL THE ASSESSMENT YEARS. 7. GROUND NO.2 IS COMMON IN ALL THE ASSESSMENT YEAR S EXCEPT THE DIFFERENCE IN THE ADDITION AMOUNT, REPRODUCED HEREU NDER :- 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETIN G THE ADDITION IN RELYING ON THE DECISION OF HON'BLE ALLA HABAD HIGH COURT IN THE CASE OF CIT VS BANWARI LAL BANSI DHAR, 229 ITR 229 (ALL) AND THE JUDGMENT OF HON'BLE ITAT IN THE CASE OF ACIT VS PADAM CHAND BHANSALI 85 TTJ 215 (JODH.) EVEN THOUGH THE FACTS OF THE PRESEN T CASE ARE MATERIALLY DIFFERENT IN AS MUCH AS THAT THE ASS ESSMENT IN THIS CASE HAD TO BE COMPUTED WITHOUT BOOKS OF ACCOUNT; AS SUCH QUESTION OF REJECTING BOOKS OF ACC OUNT DOES NOT ARISE.' 8. THE LEARNED DR SUBMITTED AS UNDER ;- THIS GROUND RELATES TO DISALLOWANCE OF SECTION 40 A(3) OF THE IT ACT. IN THIS REGARD IT IS SUBMITTED THAT THE CASES RELIED UPON BY THE CIT(A) ARE FACTUALLY DIFFERENT AND IN T HE PRESENT ITA NOS.4646 TO 4651/DEL/2009 11 CASE THE ISSUE IS NOT REGARDING REJECTION OF BOOKS OF ACCOUNTS, BUT ESTIMATING THE GP/NP ON THE BASIS OF DOCUMENTS FINDING DURING SEARCH. ACCORDINGLY RELIEF GIVEN BY THE CIT( A} IS NOT JUSTIFIED. 9. THE LEARNED AR RELIED ON THE ORDER OF THE CIT (A ). 10. AFTER HEARING BOTH THE SIDES, WE FIND THAT SINC E WE ARE SUSTAINING THE ADDITION ON THE BASIS OF ESTIMATING THE INCOME FROM UNRECORDED SALES, THEREFORE, WE HOLD THAT THE ISSUE IS COVERED BY THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARI LAL BANSI DHAR, 229 ITR 229 (ALL.) AND ITAT IN THE CASE OF ACIT VS. PAD AM CHAND BHANSALI, 85 TTJ 215 (JODH.). KEEPING THESE FACTS IN VIEW, WE SUSTAIN THE ORDER OF CIT (A) AND DISMISS GROUND NO.2 OF ALL THE REVENUES AP PEALS. 11. GROUND NO.3 IS ALSO COMMON IN ALL THE APPEALS E XCEPT THE DIFFERENCE IN THE ADDITION AMOUNT AND THE ISSUE INVOLVED IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASES EVEN THOUGH IT IS NOT POSSIBLE THAT WHOLE OF THE STOCK HAS BEEN SOLD BEFORE THE DATE OF NEXT ENTRY AND FURTHER ON A SINGLE DAY. 12. THE LEARNED DR SUBMITTED AS UNDER :- THIS GROUND RELATES TO THE ADDITION ON ACCOUNT OF UNACCOUNTED PURCHASES BEING RESTRICTED TO THE PEAK FOR THE ITA NOS.4646 TO 4651/DEL/2009 12 PAYMENTS. ONLY THIS PEAK AMOUNT HAS BEEN CONFIRMED BY THE CIT(A). WHILE DOING THIS IT HAS BEEN ASSUMED BY THE CIT(A) THAT ALL THE PURCHASES HAVE BEEN MADE ON ACCOUNT OF SALE OF EARLIER STOCK, WHICH HOWEVER, IS NOT ESTABLISHED BY THE ASSESSEE. UNLESS SUCH EVIDENCE IS PROVIDED BY THE ASSESSEE TO ESTABLISH THAT WHOLE OF THE STOCK WAS SOLD BEFORE THE DATE OF NEXT ENTRY, THIS BENEFIT SHOULD NOT BE ALLOWED TO THE ASSESSEE. THE OBSERVATION OF THE CIT(A) ON PAGE 31 IS THEREFORE N OT ACCEPTABLE. 13. THE LEARNED AR RELIED ON THE ORDER OF THE CIT ( A). 14. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE CIT (A) HAS GRANTED PART RELIEF BY WAY OF WORKING OUT THE ADDITION ON THE BA SIS OF PEAK. SINCE, THE ASSESSEE PURCHASED UNACCOUNTED GOODS AND SOLD THE S AME, THEREFORE, THE ADDITION FOR WHOLE OF THE AMOUNT WAS NOT JUSTIFIED. WE THEREFORE, FIND JUSTIFICATION IN GRANTING THE PART RELIEF AND SUSTA INING THE ADDITION ONLY UP TO THE PEAK OF THE AMOUNT. THEREFORE, WE FIND NO FAUL T IN THE ORDER OF THE CIT (A) AND WE SUSTAIN THE SAME. ACCORDINGLY, GROUND N O.3 IN ALL THE REVENUES APPEALS IS DISMISSED. 15. GROUND NO.4 TAKEN IN ASSESSMENT YEARS 1999-00 & 2000-01 IS COMMON EXCEPT THE DIFFERENCE IN AMOUNT AND THE SAME IS REP RODUCED BELOW :- ALTHOUGH TAX INVOLVED IS RS.1,64,370/- (IN A.Y. 1999-00) AND RS. 1,91,906/ - (IN A.Y. 2000-01) WHI CH IS LESS THAN THE LIMITS LAID DOWN BY THE CBDT'S INSTRU CTIONS NO. 5/2008 DATED 15-05-2008 ISSUED U/S 268A OF THE INCOME TAX ACT, 1961, YET THE APPEAL IS BEING FLIED AS PER PARA 5 OF THE SAID INSTRUCTION BECAUSE IT IS A CASE OF COMPOSITE ORDER OF THE CIT(A) WHICH INVOLVED ASSTT. ITA NOS.4646 TO 4651/DEL/2009 13 YEAR 1998-99 TO 2003-04 AND TAX EFFECT INVOLVED IN ONE YEAR I.E. IN ASSTT. YEAR 1998-99 IS MORE THAN THE MONETARY LIMITS PRESCRIBED IN PARA 3 OF THE SAID INSTRUCTION. 16. WE HAVE HEARD BOTH THE SIDES. SINCE WE HAVE DI SMISSED ALL THE FIRST THREE GROUNDS, THE GROUND NO.4 IN ASSESSMENT YEARS 1999-00 AND 2000-01 BECOMES INFRUCTUOUS AND HENCE DISMISSED. 17. GROUND NO.4 IN ASSESSMENT YEARS 1998-99, 2001-0 2, 2002-03 & 2003- 04 AND GROUND NO.5 IN ASSESSMENT YEARS 1999-00 AND 2000-01 IS COMMON BEING GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJU DICATION. 18. AT THE OUTSET OF THE HEARING, THE LEARNED AR SU BMITTED THAT ALTHOUGH THE ASSESSEE HAD NOT FIELD CROSS APPEAL OR CROSS OBJECT ION, HOWEVER, AS PER RULE 27 OF INCOME-TAX RULES, THE ASSESSEE SEEKS TO SUPPORT THE ORDER OF THE CIT (A) BY AGITATING THE ISSUE RELATED TO THE JURISDICTION WHI CH WAS RAISED BEFORE THE CIT (A) AND CIT (A) HAS DECIDED THE SAME AGAINST THE AS SESSEE. LEARNED AR ALSO PLEADED THAT ALL THE RELEVANT FACTS FOR ADJUDICATIN G THESE ISSUES ARE ON RECORD AND THE SAME MAY BE DECIDED IN THE INTEREST OF JUST ICE. HE RELIED ON THE DECISION OF GURINDER JEET KAUR REPORTED IN 102 ITD 189 (DEL.). HE SUBMITTED THAT THE FOLLOWING TWO GROUNDS ARE DECIDED AGAINST THE ASSESSEE BY THE CIT (A) AND HE WANTS TO AGITATE THESE GROUNDS BY VIRTUE OF RULE 27 WITHOUT FILING ANY CROSS OBJECTION :- ITA NOS.4646 TO 4651/DEL/2009 14 A. THE ORDER OF THE AO IS WITHOUT JURISDICTION SIN CE THERE WAS NO SATISFACTION OF THE AO OF SEARCH PERSON TO T HE EXTENT THAT THE SEIZED MATERIAL BELONGS TO THE ASSESSEE. B. THE ORDER OF THE AO IS BARRED BY LIMITATION IN V IEW OF THE PROVISO TO SECTION 153C. IN THIS REGARD, HE HAS MADE THE FOLLOWING SUBMISSIO NS :- 2. IT IS SUBMITTED THAT IN RELATION TO THE ABOVE C ONTENTION A BIRD VIEW TO THE SEQUENCE OF EVENTS IS NECESSARY AN D THE SAME IS REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE TH E SAME IS REPRODUCED HEREUNDER DATE EVENTS 27.02.2004 SEARCH AND SEIZURE ACTION WAS TAKEN AGAINST SHRI C.P. KAUSHIK WHICH MEANS IN AY 2004-05 AND FINANCIAL YEAR 2003-04 31.12.2005 TIME LIMIT OF EIGHTEEN MONTHS HAVE BEEN EXPIRED FOR FRAMING THE ASSESSMENT OF SEARCH PERSON 09.06.2006 AO OF ASSESSEE INFORMED THE AO OF SEARCH PERSON THAT ASSESSEE IS BEING ASSESSED TO HIS WARD (SEE PAGE NO 21 OF THE CIT(A) ORDER 08.11.2006 AO OF SEARCHED PERSON HANDOVER THE MATERIAL TO THE AO OF ASSESSEE. WHICH MEANS THE MATERIAL COMES TO THE AO OF ASSESSEE IN AY 2007-08. 3. BARE PERUSAL OF THE ABOVE CHART WOULD SHOW THAT IT IS THE AO OF THE ASSESSEE WHO HAS REQUESTED TO THE AO OF S EARCH PERSON FOR THE SEIZED MATERIAL. AND HENCE THERE WAS NO SATISFACTION OF THE SEARCHED PERSON'S AO. IT IS SUB MITTED THAT UNDER THE NEW PROVISIONS OF SECTION 153C, NO DOUBT THE EXPRESSION USED IS 'SEIZED MATERIAL' AND NOT 'UNDIS CLOSED INCOME' AS IT WAS THERE IN SECTION 158BD, HOWEVER, THE PHRA SE 'SEIZED ITA NOS.4646 TO 4651/DEL/2009 15 MATERIAL' IS PREFIXED BY AN ADJECTIVE THAT IS 'SATI SFACTION' OF THE SEARCH PERSON'S AO. THEREFORE THE PRESENT ASSESSMEN T IS WITHOUT JURISDICTION. 4. BE THAT AS IT MAY BE IT IS SUBMITTED THAT THE AF TER THE COMPLETION OF ASSESSMENT PROCEEDINGS OF THE SEARCHE D PERSON THE AO OF THE SEARCHED PERSON BECOME 'FUNCTUS OFFIC IO' AND COULD NOT HAVE JURISDICTION TO TINKER WITH THE ASSE SSMENT OF THE OTHER PERSON. 19. THE LEARNED DR SUBMITTED THAT SINCE THE ASSESSE E HAD NOT FILED ANY CROSS OBJECTION, THE ASSESSEE CANNOT TAKE THE SHELT ER OF RULE 27. THE CIT (A) HAS GRANTED PART RELIEF TO THE ASSESSEE ON MERITS O F ADDITIONS. THE ISSUES RAISED IN THE APPEAL BEFORE CIT (A) IN RESPECT OF J URISDICTION, SATISFACTION OF THE ASSESSING OFFICER AND REGARDING THE LIMITATION HAVE BEEN DECIDED AGAINST THE ASSESSEE. ASSESSEE HAD NOT CHALLENGED THE SAME . THEREFORE, IN RULE 27, THE ASSESSEE CANNOT ASK FOR RELIEF ON THE ISSUES WH ICH HAVE BEEN DECIDED AGAINST THE ASSESSEE AND NO APPEAL FILED AGAINST TH E SAME. IF HE WANTS TO SUPPORT THE ORDER OF THE CIT (A) THEN THESE ISSUES CANNOT BE COVERED BY RULE 27. 20. AFTER HEARING BOTH THE SIDES ON THE ISSUE AND C ONSIDERING THE FACTS OF THE CASE, WE FIND THAT THE ASSESSEE HAS NOT FILED C ROSS OBJECTION AND CROSS APPEAL. THE CIT (A) GRANTED THE RELIEF ON MERITS A GAINST WHICH THE REVENUE IS IN APPEAL. THE ISSUES REGARDING SATISFACTION AND L IMITATION HAS BEEN DECIDED BY THE CIT (A) AGAINST THE ASSESSEE, THEREFORE, THE SE ISSUES CANNOT BE RAISED ITA NOS.4646 TO 4651/DEL/2009 16 BEFORE THE TRIBUNAL UNDER RULE 27. UNDER THE RULE 27, ONLY THE RESPONDENT MAY SUPPORT THE ORDER OF CIT (A) WHICH HAS BEEN DEC IDED IN FAVOUR. THE REVENUE HAS AGITATED IN THE APPEAL THE PART RELIEF GRANTED BY THE CIT (A) ON THE MERITS OF THE ADDITIONS. THE SCOPE OF RULE 27 CAN BE ONLY TO THE ISSUES RAISED IN THE APPEAL BY THE REVENUE. AT THE MOST, UNDER R ULE 27, THE ASSESSEE IS ENTITLED TO DEFEND THE RELIEF GRANTED BY THE CIT (A ) ALTHOUGH IT MAY BE ON A DIFFERENT FOOTING. WE HAVE ALREADY UPHELD THE ORDE R OF THE CIT (A) IN WHICH THE ASSESSEE HAS BEEN GRANTED THE PART RELIEF ON ME RITS. KEEPING THESE FACTS IN VIEW, THE PLEA TAKEN BY THE ASSESSEE IS IRRELEVANT. HOWEVER, CONSIDERING ALL THE AFORESAID FACTS IN VIEW, WE DISMISS THIS PLEA R AISED BY THE LEARNED AR IN THE APPELLANT PROCEEDINGS. 18. IN THE RESULT, ALL THE SIX APPEALS OF THE REVEN UE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF MAY, 2011. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 20 TH DAY OF MAY, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A), KARNAL. 5.CIT(ITAT), NEW DELHI. AR, ITAT, NEW DELHI.