M/s. Ganga Singh & sons, Jalandhar V. The Income Tax Officer, Jalandhar

ITA 482/ASR/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63555 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 06-11-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 13-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: K C SUMAN; SSH M R BHAGAT
• Keywords: Business income; Depreciation; Additional evidence
• Section: 142(1); 234B; 133(6); 147; 145; 148; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.474, 475, 476 & 477 (ASR)/2010 ASSESSMENT YEARS:1998-99, 1999-2000, 2000-01 & 2001 -02 PAN :AAFFG5483N M/S. GANGA SINGH & SONS (MANUFACTURERS) VS. INCOME TAX OFFICER, JALANDHAR. WARD-II(1), JALANDHAR. (APPELLANT) (RESPONDENT) I.T.A. NOS.478, 479, 480 & 481 (ASR)/2010 ASSESSMENT YEARS:1998-99, 1999-2000, 2000-01 & 2001 -02 PAN :AAFF9543D M/S. GANGA SINGH ENGINEERS VS. INCOME TAX OFFICER , JALANDHAR. WARD-II(1), JALANDHAR. (APPELLANT) (RESPONDENT) I.T.A. NOS.482 & 483 (ASR)/2010 ASSESSMENT YEARS: 2000-01 & 2001-02 PAN :AAFFG4784B M/S. GANGA SINGH & SONS VS. INCOME TAX OFFICER, JALANDHAR. WARD-II(1), JALANDHAR. (APPELLANT) (RESPONDENT) ITA NOS. 474 TO 483(ASR)/2010 2 APPELLANT BY:S/SH.M.R. BHAGAT & K.C.SUMAN RESPONDENT BY:SH. AMRIK CHAND, DR DATE OF HEARING:06/11/2012 DATE OF PRONOUNCEMENT:08/11/2012 ORDER PER BENCH ; THESE TEN APPEALS OF THREE DIFFERENT ASSESSEES I.E . M/S. GANGA SINGH & SONS (MANUFACTURERS) FOR THE ASSESSMENT YEARS 1998- 99 TO 2001-02, IN THE CASE OF M/S. GANGA SINGH ENGINEERS FOR THE ASSESSME NT YEARS 1998-99 TO 2001-02 AND IN THE CASE OF M/S. GANGA SINGH & SONS FOR THE ASSESSMENT YEARS 2000-01 & 2001-02 ARISE FROM ONE CONSOLIDATED ORDER OF CIT(A), JALANDHAR, DATED 31.08.2010. 2. ALL THE ASSESSEES HAVE RAISED IDENTICAL GROUNDS IN ALL THE APPEALS, WHICH FOR THE SAKE OF CLARITY IN THE CASE OF M/S. G ANGA SINGH & SONS (MANUFACTURERS) FOR THE ASSESSMENT YEARS 1998-99 AR E REPRODUCED AS UNDER: 1. THE APPELLATE ORDER IS PERVERSE, UNLAWFUL AND N OT BASED ON PROPER APPRECIATION OF FACTS OF THE CASE AND LAW RE LEVANT TO THE POINT AT DISPUTE. 2. THE LD. CIT(A) ERRED IN REJECTING APPLICATION UN DER RULE 46A OF THE INCOME TAX RULES, 1962, WITHOUT APPRECIATING THAT THERE WAS DISPUTE IN THE FAMILY AND THAT WAS NOT LIKELY T O CONTINUE INDEFINITELY. IT IS PRAYED THAT PERMISSION TO PRODU CE THE BOOKS OF ACCOUNTS MAY BE GRANTED AND ORDER MAY BE SET ASIDE. 3. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE NET PROFIT RATE OF 5% WITHOUT APPRECIATING THE FACTS THAT PROVISIONS O F SECTION ITA NOS. 474 TO 483(ASR)/2010 3 44AF ARE NOT APPLICABLE IN THE CASE OF A MANUFACTUR ING CONCERN AND WITHOUT PREJUDICE TO THAT, SALARY AND INTEREST PAID ON CAPITAL IS ALLOWABLE WHEN PROFITS ARE DETERMINED U/S 44AF A ND THE NET PROFIT RATE HAS BEEN APPLIED WITHOUT CONFRONTING AN Y MATERIAL TO THE APPELLANT OR CITING ANY COMPARABLE CASE. IT IS PRAYED THAT RETURNED INCOME MAY BE ORDERED TO BE ACCEPTED. 4. THAT THE LD. CIT(A) ERRED IN HOLDING THAT INTERE ST U/S 234A & 234B IS CHARGEABLE AND THE SAME IS PRAYED TO BE DEL ETED. 5. THE APPELLANT CRAVES TO AMEND/ADD GROUND(S) OF A PPEAL BEFORE THE APPEAL IS FINALLY DISPOSED OFF. 3. FIRST OF ALL, WE TAKE UP APPEALS IN THE CASE OF M/S. GANGA SINGH & SONS (MANUFACTURERS) IN ITA NOS. 474 TO 477(ASR)/20 10 FOR THE ASSESSMENT YEARS 1998-99 TO 2001-02 AS UNDER: 4. THE BRIEF FACTS AS ARISING OUT THE ORDER OF THE LD. CIT(A) ARE REPRODUCED IN PARA 2 TO 3 AS UNDER: 2. IT IS MENTIONED THAT THE AO HAD ISSUED NOTICES U/S 148 AFTER RECORDING REASONS. THE ASSESSEE DID NOT FILE RETURN S OF INCOME WITHIN THE TIME ALLOWED U/S 139 OF THE I.T. ACT AND THE AO HAD INFORMATION THAT THE ASSESSEE HAD RECEIVED RENT FOR BUILDING FO R THE ASSTT. YEARS UNDER CONSIDERATION. THE ASSESSEE SUBMITTED THAT RE TURNS OF INCOME FILED AFTER THE TIME ALLOWED U/S 139 OF THE I.T. AC T MAY BE TREATED TO HAVE BEEN FILED IN RESPONSE TO NOTICES U/S 148 OF T HE I.T. ACT. THE AO ISSUED QUESTIONNAIRES ALONG WITH NOTICES U/S 142(1) AND 143(2) BUT THERE WAS VERY LITTLE COMPLIANCE. THE ASSESSEE MOVE D A PETITION U/S 144A BEFORE THE JT. CIT, RANGE-II, JALANDHAR WHICH WAS DISPOSED OFF ON 11.3.2004. BOOKS OF ACCOUNTS WERE NOT PRODUCED B EFORE THE AO INSPITE OF SPECIFIC REQUISITION AND THE REPLY TO TH E QUESTIONNAIRE WAS ITA NOS. 474 TO 483(ASR)/2010 4 ALSO NOT FILED COMPLETELY. SINCE THE ASSTT. WAS GET TING BARRED BY LIMITATION, THE AO COMPLETED THE ASSTT. ON THE BASI S OF MATERIAL AVAILABLE ON RECORD. THE ASSESSEE DERIVED INCOME FR OM SALE OF BEAMS AND L.S. BEAMS AND INCOME FROM HOUSE PROPERTY. THE AO HAD ALSO CALLED FOR INFORMATION FROM RAIL COACH FACTORY, KAP URTHALA FROM WHICH IT WAS FOUND THAT ASSESSEE HAD SUPPRESSED ITS SALES SHOWN IN THE RETURN OF INCOME. AS THE ASSESSEE HAD NOT PRODUCED THE BOOKS OF ACCOUNT DURING THE ENTIRE ASSTT. PROCEEDINGS, THE A O HELD THAT IT WAS NOT POSSIBLE TO VERIFY THE PURCHASES AND SALES AND EXPENSES DEBITED TO P&K A/C AND APPLYING THE NET PROFIT RATE OF 5% ON T OTAL SALES AS INFORMED BY RAIL COACH FACTORY, KAPURTHALA ESTIMATE D THE NET PROFIT OF THE ASSESSEE. THE AO ALSO COMPUTED THE INCOME FR OM HOUSE PROPERTY BASED ON INFORMATION ABOUT THE RENT RECEIV ED BY THE ASSESSEE FROM DIFFERENT PARTIES. 2.1. 2.1. THE ASSESSEE FILED APPEAL BEFORE THE CIT( A). THE LD. CIT(A) VIDE HIS ORDER DATED 30.12.2004 REJECTED THE ASSESSEES GROUND CHALLENGING THE REOPENING OF THE ASSESSMENTS. HOWEV ER, THE ADDITION TO THE TOTAL INCOME ON THE BASIS OF THE 5% PROFIT E STIMATED ON SALES WAS DELETED BY THE LD. CIT(A). THE ASSESSEE HAD PRO DUCED THE BOOKS OF ACCOUNTS BEFORE THE LD. CIT(A) WHO ACCEPTED THE EVIDENCE THEREIN AND DECIDED THE APPEAL. 2.2. THE REVENUE FILED APPEAL BEFORE THE HONBLE IT AT AGAINST THE ORDER OF LD. CIT(A) DELETING ADDITION MADE FOR ALL THE FOUR ASSTT YEARS AFTER ADMITTING ADDITIONAL EVIDENCE IN THE FORM OF BOOKS OF ACCOUNTS IN VIOLATION OF PROVISIONS OF RULE 46A OF THE I.T. RUL ES. THE REVENUE ALSO AGITATED THE ACTION OF THE LD. CIT(A) IN PRESU MING THAT THE GP RATE OF 5% WAS ADOPTED BY THE AO ON THE BASIS OF RATE PR ESCRIBED IN SECTION 44AF. DURING THE COURSE OF APPELLATE PROCEE DINGS BEFORE THE HONBLE ITAT, THE ASSESSEE AGITATED THE REOPENING O F THE RESPECTIVE ASSESSMENT ORDERS. 2.3. THE HONBLE TRIBUNAL REJECTED THE ASSESSEES P LEA FOR ENTERTAINING THE GROUND TAKEN BY IT DURING THE APPE LLATE PROCEEDINGS ON THE ISSUE OF REOPENING OF THE ASSESSMENTS. ON TH E DEPARTMENTS CONTENTION THAT THE ADDITIONAL EVIDENCE HAD BEEN AD MITTED BY THE CIT(A) IN VIOLATION OF PROVISIONS OF RULE 46A, THE HONBLE TRIBUNAL NOTED THAT THERE WAS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE DID NOT FILE RETURNS OF INCOME FOR ANY OF THE ASSTT YEARS W ITHIN TIME ALLOWED ITA NOS. 474 TO 483(ASR)/2010 5 U/S 139(10 OF THE I.T. ACT. THE AO, THEREFORE, INIT IATED PROCEEDINGS U/S 147 BY ISSUE OF NOTICES U/S 148 OF THE ACT ON 3 1.3.2003. THE HONBLE TRIBUNAL FURTHER NOTED THAT IN THE RETURNS OF INCOME FILED, THE ASSESSEE HAD SHOWN THE LOSS FROM BUSINESS OF MANUFA CTURE AND SALE OF BEAMS AND L.S. BEAMS. THE ASSESSEE HAD SUBSTANTIAL INCOME FROM HOUSE PROPERTY LIABLE TO TAX. THEY FURTHER NOTED TH AT THE AO HAD ALLOWED INNUMERABLE OPPORTUNITIES TO THE ASSESSEE T O FURNISH INFORMATION AS PER THE QUESTIONNAIRE ISSUED AND TO PRODUCE THE BOOKS OF ACCOUNTS BUT THE ASSESSEE KEPT ON SEEKING ADJOUR NMENT ON ONE PRETEXT OR THE OTHER. THE HONBLE TRIBUNAL NOTED TH AT NO STOCK REGISTER WAS MAINTAINED AND LIST OF CLOSING STOCK WAS STATED BY THE ASSESSEE BEFORE THE AO AS NOT TRACEABLE. THE HONBLE TRIBUNA L HELD THAT THESE FACTS SHOWED THAT THERE WAS NO EVIDENCE PRODUCED OR TO BE PRODUCED IN SUPPORT OF THE VALUATION OF THE CLOSING STOCK, M ORE SO, WHEN THE STOCK REGISTER HAD ADMITTEDLY NOT BEEN MAINTAINED. THE HONBLE TRIBUNAL REFERRED TO THE DECISION OF HONBLE APEX C OURT IN THE CASE OF CIT VS. BRITISH PAINT INDIA LTD. 188 ITR 44 IN WHIC H IT WAS HELD THAT THE VALUE OF CLOSING STOCK MUST BE SHOWN CORRECTLY IN THE TRADING ACCOUNT AND FAILURE TO DO SO CONFERRED SUFFICIENT P OWERS ON THE AO TO INVOKE THE PROVISION OF SECTION 145 AND ESTIMATE TH E CORRECT INCOME OF THE ASSESSEE. THE HONBLE TRIBUNAL HELD THAT IN THE FAILURE OF THIS INFORMATION ITSELF, REJECTION OF BOOK RESULTS WAS J USTIFIED. IT WAS ALSO NOTED BY HONBLE TRIBUNAL THAT THE ASSESSEE DID NOT PRODUCE COPIES OF BANK ACCOUNTS NOR PRODUCED THE BOOKS OF ACCOUNT. TH E HONBLE TRIBUNAL HELD THAT IN VIEW OF THESE FACTS, THE AO H AD NO OPTION BUT TO COMPLETE THE TIME BARRING ASSESSMENT U/S 144 OF THE I.T.ACT. 2.4. THE HONBLE TRIBUNAL FURTHER NOTED THAT THE AO HAD OBTAINED THE FIGURE OF SALES FROM THE RAIL COACH FACTORY, KA PURTHALA TO WHOM THE ASSESSEE SUPPLIED THE GOODS AND THAT THE ASSESS EE HAD NOT FILED ANY LETTER FROM RAIL COACH FACTORY, KAPURTHALA TO SHOW THAT THE INFORMATION FURNISHED EARLIER TO AO BY THE SAID FAC TORY WAS NOT CORRECT. THE HONBLE TRIBUNAL NOTED THAT THE CIT(A) HAD MERELY RELIED ON ENTRIES OF SALES AS RECORDED IN THE BOOKS OF ACC OUNT WHICH WERE NEVER PRODUCED BEFORE THE AO. THEY HELD THAT THE RA IL COACH FACTORY, KAPURTHALA WAS A GOVT. ORGANIZATION AND ONCE THEY T HEMSELVES HAD SUPPLIED FIGURES OF SALES, THE AUTHENTICITY OF THE SAME SHOULD HAVE BEEN ACCEPTED UNTIL THE ASSESSEE FILED CLARIFICATOR Y LETTER FROM RAIL COACH FACTORY STATING THAT THE ENTIRE SALE WAS NOT MADE BY THE ASSESSEE, BUT BY ITS SISTER CONCERNS ALSO. THEY HEL D THAT IT WAS NOT ITA NOS. 474 TO 483(ASR)/2010 6 UNDERSTOOD AS TO HOW THE CIT(A) HAD ACCEPTED THE FI GURE OF SALES AS SHOWN BY THE ASSESSEE IN THE BOOKS WITHOUT MAKING A NY FURTHER INQUIRY WITH RAIL COACH FACTORY, KAPURTHALA. 2.5. THE HONBLE TRIBUNAL NOTED THAT THE AO HAD APP LIED NET PROFIT RATE OF 5%, BUT NO BASIS HAD BEEN GIVEN FOR APPLYIN G THIS RATE. THEY ALSO HELD THAT PROVISION OF SECTION 44AF WERE NOT A PPLICABLE TO THE FACTS OF THE CASE BECAUSE THE ASSESSEE WAS NOT ENGA GED IN THE RETAIL TRADE. THEY ALSO NOTED THAT NO EVIDENCE WAS FILED B Y THE ASSESSEE TO JUSTIFY THE NET LOSS SUFFERED FOR ALL THE ASSTT YEA RS. HOWEVER, THE HONBLE TRIBUNAL FURTHER HELD THAT IT WAS THE DUTY OF THE AO TO MAKE A FAIR AND REASONABLE ESTIMATE OF THE ASSESSEES INCO ME WHICH INVOLVED CERTAIN DEGREE OF GUESS WORK. THE TRIBUNAL NOTED TH AT EVEN DURING THE COURSE OF HEARINGS OF THE APPEAL BEFORE THEM THE AS SESSEE HAD NOT PRODUCED ANY MATERIAL TO SHOW THAT NET PROFIT RATE OF 5% APPLIED BY THE AO WAS EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE NET PROFIT RATE SHOWN IN OTHER CASES. THE HONBLE TRIBUNAL NOT ED THAT CIT(A) HAD NOT RECORDED A FINDING THAT HE HAD HIMSELF EXAM INED THE BOOKS OF ACCOUNT AND WAS SATISFIED WITH THE BOOK RESULTS. NO REMAND REPORT WAS CALLED BY THE CIT(A) FROM THE AO. NO APPLICATION UN DER RULE 46A WAS FILED BY THE ASSESSEE BEFORE THE CIT(A) FOR ADM ISSION OF FRESH EVIDENCE IN THE FORM OF BOOKS OF ACCOUNTS, BILLS AN D VOUCHERS ETC. THEY NOTED THAT UNDER RULE 46A THE ASSESSEE WAS NOT ENTITLED TO PRODUCE EVIDENCE BEFORE THE CIT(A) OTHER THAN THE E VIDENCE PRODUCED BY HIM DURING THE COURSE OF ASSTT PROCEEDINGS EXCEP T IN THE CIRCUMSTANCES MENTIONED IN CLAUSES (A) TO (B) OF SU B-RULE (1) OF RULE 46A AND THAT THE CIT(A) WAS REQUIRED TO RECORD HIS REASON FOR ADMISSION OF THE EVIDENCE. THEY NOTED THAT IN THE P RESENT CASE NEITHER THE CIT(A) HAD RECORDED ANY FINDINGS AS TO WHY HE W AS SATISFIED WITH THE ADMISSION OF THE FRESH EVIDENCE NOR HAD BE ALLO WED ANY OPPORTUNITY TO THE AO TO EXAMINE THE VERACITY OF S UCH EVIDENCE. IN VIEW OF THESE FACTS THE HONBLE TRIBUNAL HELD THAT THE ORDERS OF CIT(A) COULD NOT BE UPHELD. THEY ALSO NOTED THAT A O HAS NOT GIVEN ANY BASIS FOR APPLYING NP RATE OF 5%. THE ORDER OF THE CIT(A) WAS SET-ASIDE TO HIS FILE FOR DECIDING THE SAME AFRESH AS PER LAW AFTER COMPLYING WITH RULE 46A AND AFTER ALLOWING SUFFICIE NT OPPORTUNITY BOTH TO THE ASSESSEE AND THE AO. THEY FURTHER HELD THAT WHILE DOING SO, THE CIT(A) MAY CALL FOR THE REMAND REPORT, IF T HE ASSESSEE CHOOSES TO PRODUCE BOOKS OF ACCOUNT BILLS/VOUCHERS BEFORE H IM AND ALSO RECONCILE THE FIGURES OF SALE FROM RAIL COACH FACTO RY. ITA NOS. 474 TO 483(ASR)/2010 7 3. AFTER THE INITIATION OF APPELLATE PROCEEDINGS IN THE AFORESAID CASES, THE LD. AR FOR THE APPELLANT FURNISHED AN AP PLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULES. IN THIS APPLICATION, IT WAS CONTENDED THAT THE ASSTT P ROCEEDINGS WERE ADJOURNED BEFORE THE AO BECAUSE THE ASSESSMENTS HAD NOT BEEN VALIDLY REOPENED AND REFERENCE U/S 144A OF THE ACT HAVE BEEN MADE. IT WAS SUBMITTED THAT CASES WERE FINALLY ADJOURNED FOR 18.3.2004 AND WHEN THE COUNSEL FOR THE APPELLANT APPEARED, THE LD . AO ANNOUNCED THAT ASSESSMENTS HAD BEEN COMPLETED ON 17.3.2004. H OWEVER, THE ASSESSMENTS WERE FINALLY COMPLETED ONLY ON 28.3.200 5. THE APPELLANT HAS SUBMITTED THAT BOOKS OF ACCOUNTS OF ALL THE THR EE CONCERNS VIZ M/S. GANGA SINGH & SONS (MANUFACTURERS), JALANDHAR, M/S. GANGA SINGH ENGINEERS, JALANDHAR AND M/S. GANGA SINGH & SONS, J ALANDHAR, WERE AVAILABLE WITH THE APPELLANT. IT WAS SUBMITTED TH AT THE CASE MAY BE DECIDED AFTER PASSING ORDER UNDER RULE 46A BECAUSE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FOR PRODUCING BOOKS O F ACCOUNTS BEFORE THE AO AND THE AO HAD ALSO REFUSED TO EXAMINE THE B OOKS WHICH WERE PRODUCED BEFORE HIM ON THE DATE FIXED BY HIM ORALLY , WHICH HE FAILED TO MENTION IN THE ASSTT. ORDER. IT WAS SUBMITTED TH AT AO HAD ALSO NOT MENTIONED IN THE ASSTT ORDER THAT REPLY TO QUESTION NAIRE HAD BEEN FILED ON 17.3.2004. 5. THE APPLICATION OF THE ASSESSEE WAS FORWARDED TO THE A.O. FOR HIS COMMENTS AND THE AO SUBMITTED THE COMMENTS WHICH AR E AVAILABLE AT PAGES 6 & 7 OF CIT(A)S ORDER. THE REPORT OF THE AO WAS M ADE AVAILABLE TO THE ASSESSEE AND AFTER CONSIDERING THE FACTS ON RECORD, REPORT OF THE AO AND COUNTER COMMENTS OF THE ASSESSEE, THE LD. CIT(A) VI DE PARA 3.2 OF HIS ORDER OBSERVED THAT HE IS SATISFIED THAT THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNT AND DOCUMENTS TO SUPPORT THE APPLICATION UN DER RULE 46A OF THE I.T. RULES. THE AO OBSERVED THAT SINCE THE ASSESSEE HAS NOT PRODUCED THE ITA NOS. 474 TO 483(ASR)/2010 8 RELEVANT BOOKS OF ACCOUNT ALONGWITH CORRESPONDING B ILLS AND VOUCHERS EVEN DURING THE PRESENT PROCEEDINGS, AS ALSO BEFORE THE AO DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND IN THE REMAND PROCEEDING S, THE LD. CIT(A) WAS OF THE VIEW THAT THERE WAS NO JUSTIFIABLE REASON FO R THE ASSESSEE FOR NOT PRODUCING THE BOOKS OF ACCOUNT ALONGWITH RELEVANT S UPPORTING DOCUMENTS. THEREFORE, APPLICATION UNDER RULE 46A DOES NOT DESE RVE TO BE ACCEPTED. MOREOVER, THE ASSESSEE HAS NOT RECONCILED THE FIGUR ES OF SALES FROM M/S. RAIL COACH FACTORY, KAPURTHALA. THE ARGUMENT OF THE ASSE SSEE THAT THE BOOKS OF ACCOUNT CANNOT BE PRODUCED BECAUSE OF THE DISPUTE B ETWEEN THE MANAGING PARTNER AND HIS SON WAS NOT ACCEPTED IN THE ABSENCE OF ANY EXPLANATION WITH REGARD TO THE INFORMATION CALLED FOR BY THE AO FROM RAIL COACH FACTORY. 6. THE LD. CIT(A) VIDE PARA 3.4 OF HIS ORDER HAS OB SERVED THAT THE ASSESSEE HAS NOT RECONCILED THE FIGURES OF SALES RE CEIVED FROM M/S. RAIL COACH FACTORY, KAPUTHALA AND THUS HAS NOT BEEN AB LE TO JUSTIFY THE LOSS SHOWN IN THE BUSINESS WITH REFERENCE TO THE BOOKS O F ACCOUNTS OF BILLS AND VOUCHERS. THE LIST OF CLOSING STOCK HAS ALSO NOT B EEN SUBMITTED. THE FIGURES OF SALES AS PROVIDED BY RAIL COACH FACTORY, KAPURTH ALA, A GOVT. OF INDIA UNDERTAKEN HAS NOT BEEN SHOWN TO BE UNTRUE. ACCORDI NGLY, THE LD. CIT(A) OBSERVED THAT THE BOOK RESULTS OF THE ASSESSEE CANN OT BE ACCEPTED AS CORRECT ITA NOS. 474 TO 483(ASR)/2010 9 AS REGARDS THE RECEIPTS OR THE INCOME/LOSS CLAIMED BY THE ASSESSEE AND THEREFORE, THE AO WAS NOT JUSTIFIED IN REJECTING TH E BOOK RESULTS OF THE ASSESSEE AND COMPLETING ASSESSMENT U/S 144 OF THE A CT IN ALL THE APPEALS. 7. THE LD. CIT(A) VIDE PARA 3.5 OF HIS ORDER OBSERV ED THAT A.R OF THE ASSESSEE HAS NOT SUBMITTED ANY REPLY TO THE QUERY OF THE LD. CIT(A) AS TO WHY NP RATE OF 5% ESTIMATED BY THE AO BE NOT ACCEPT ED. ACCORDINGLY, IT WAS PRESUMED BY THE LD. CIT(A) THAT THERE IS NOTHIN G TO SAY IN THE MATTER. AS DIRECTED BY THE ITAT, THE PRESENT AO WAS REQUEST ED TO JUSTIFY THE NET PROFIT RATE OF 5% WITH REFERENCE TO COMPARABLE CASE S. THE AO HAS ALSO SUBMITTED THAT EVEN AFTER MAKING SUBSTANTIAL EFFORT S, NO COMPARABLE CASE FOR THE RELEVANT PERIOD FOR SIMILAR ITEM COULD BE FOUND BY HIM AT PRESENT. THE AO, HOWEVER, SUBMITTED THAT THE NP RATE OF 5% WAS R EASONABLE PROFIT MARGIN AND THE SAME BE UPHELD. 8. THE LD. CIT(A) VIDE PARA 3.6 OF ITS ORDER FINALL Y JUSTIFIED THE ACTION OF THE AO AND CONSIDERING THE AGITATION BY THE ASSESS EE THAT APPLICATION OF NET PROFIT RATE AT 5% UNDER SECTION 44AF IS NOT APPLICA BLE. THE LD. CIT(A) JUSTIFIED NET PROFIT RATE OF 5% NOT ON THE BASIS O F SECTION 44AF BUT OTHERWISE HAS MENTIONED THE REASONS IN HIS ORDER AND THEREAFT ER ALLOWED THE DEDUCTION OF THE SALARY TO THE PARTNERS OUT OF SUCH ESTIMATIO N. THE LD. CIT(A) ITA NOS. 474 TO 483(ASR)/2010 10 CONFIRMED THE SALES, AS ESTIMATED BY THE AO FOR THE REASON THAT THE AO HAD ESTIMATED THE SALES ON THE SPECIFIC INFORMATION REC EIVED BY HIM FROM RAIL COACH FACTORY, KAPURTHALA FOR WHICH NO EXPLANATION OR RECONCILIATION HAS BEEN GIVEN BY THE ASSESSEE EITHER IN ASSESSMENT PRO CEEDINGS OR BEFORE HIM. THE LD. CIT(A) ACCORDINGLY MADE THE ORDER WHICH FOR THE SAKE OF CLARITY (IN PARA 3.6) IS REPRODUCED AS UNDER: 3.6. I HAVE CONSIDERED THE SUBMISSIONS OF THE AO CAREFUL LY. IT IS SEEN IN ASSTT. YEAR 1999-2000 M/S. GANGA SINGH & SO NS (MANUFACTURERS) HAVE SHOWN GP RATE OF APPROXIMATELY 11.86% ON SALES OF RS.24,87,969/-. IN THE P & L ACCOUNT EXPEN DITURE HAS BEEN CLAIMED IN RESPECT OF, INTER ALIA ADVERTISEMENT, BO NUS, COMMISSION, FEES AND SUBSCRIPTION, LABOUR AND STAFF WELFARE, SA LARY AND TELEPHONE. THE NET LOSS AFTER EXCLUDING RENTAL INCOME IS RS.4, 33,850/- WHICH IS (-) 17.44%. SIMILAR LOSSES HAVE BEEN CLAIMED IN ALL THE ASSTT YEARS UNDER APPEAL. IN MY OPINION, IT IS NOT PROBABLE THAT FIRM S ENGAGED IN SUPPLY OF GOODS TO GOVT. CONCERNS WOULD INCUR LOSS IN THE MANUFACTURING OPERATIONS YEAR AFTER YEAR. A REASONABLE PROFIT ON THE OPERATIONS WOULD CERTAINLY BE EXPECTED TO BE EARNED FROM THE O PERATIONS. THOUGH THE ASSESSEE HAS SHOWN NET PROFIT IN ALL THE ASSTT. YEAS IN THE PROFIT & LOSS ACCOUNT IN THIS CASE, THE PROFIT HAS ARISEN O NLY ON ACCOUNT OF THE RENT CREDITED TO THE P & L A/C AND IF THE RENT WER E TO BE EXCLUDED, THE MANUFACTURING OPERATIONS SHOW A LOSS, AS STATED ABO VE. NO JUSTIFIABLE REASON FOR THE LOSS IN THE MANUFACTURING OPERATION S HAS BEEN SUBMITTED BY THE APPELLANT. THE PURCHASES AND EXPEN SES ARE NOT VERIFIED THROUGH BILLS AND VOUCHERS AND THE PARTICU LARS OF CLOSING STOCK HAVE ALSO NOT BEEN SUBMITTED. CONSIDERING THE FACTS OF THE CASE AND THE INABILITY OF THE ASSESSEE TO PRODUCE THE BO OKS OF ACCOUNTS AND BILLS AND VOUCHERS ETC BEFORE THE AO EITHER IN THE ORIGINAL ASSTT PROCEEDINGS OR IN THE PRESENT APPELLATE PROCEEDINGS , I HOLD THAT THE ASSESSEE HAD NOT INCURRED LOSS IN ITS MANUFACTURING OPERATIONS AND HAS SHOWN LOSSES IN ITS MANUFACTURING OPERATIONS ON LY TO OFFSET ITS RENTAL INCOME. AS REGARDS THE INCOME OWNED BY THE A PPELLANT, SECTION 44AF DEEMS 5% OF THE SALES AS THE ASSESSEES INCOME IN THE BUSINESS ITA NOS. 474 TO 483(ASR)/2010 11 OF RETAIL TRADE. INCOME IN MANUFACTURING OPERATIONS MAY BE EXPECTED TO BE HIGHER THAN THE RETAIL TRADE SINCE THERE IS V ALUE ADDITION ON THE RAW MATERIAL BY THE ASSESSEE, WHICH IS NOT SO IN TH E RETAIL TRADE. OF COURSE, SPECIFIC FACTORS MAY RESULT IN LOWER INCOME IN A MANUFACTURING CONCERN, BUT N THE ABSENCE OF BILLS A ND VOUCHERS FOR EXPENSES, THE SAME CANNOT BE VERIFIED IN THE PRESEN T CASE. HENCE, IN THE ABSENCE OF BOOKS OF ACCOUNTS SUPPORTED BY BILLS AND VOUCHERS ETC, I AM OF THE OPINION THAT THE ESTIMATE OF NET PROFI T RATE AT 5% , AFTER ALLOWING DEPRECIATION, IS FAIR AND REASONABLE. HOWE VER, I AM ALSO OF THE OPINION THAT THE NET PROFIT RATE @ 5% SHOULD BE REDUCED BY THE SALARY ALLOWED TO THE PARTNERS SINCE THE EFFORT BY THE PARTNERS IN MANAGING THE AFFAIRS OF THE FIRM SHOULD NOT BE TAK EN INTO ACCOUNT IN COMPUTING THE INCOME OF THE FIRM. I, THEREFORE, UPH OLD THE NET PROFIT RATE OF 5% APPLIED BY THE AO, SUBJECT TO ALLOWING D EDUCTION OF THE SALARY TO PARTNERS DEBITED IN THE P & L A/C FROM SU CH ESTIMATE OF NET PROFIT TO ARRIVE AT THE INCOME FROM THE MANUFACTUR ING OPERATIONS. THE ASSESSEE WILL GET CONSEQUENTIAL RELIEF. THE AO IS D IRECTED ACCORDINGLY. AS REGARDS THE SALES ON WHICH THE AO HAS ESTIMATED THE NET INCOME, I SEE NO REASON TO INTERFERENCE WITH THE SAME AS THE FIGURE OF SALES IS BASED ON THE INFORMATION RECEIVED FROM THE RAIL COA CH FACTORY, KAPURTHALA WHICH THE APPELLANT HAS NOT BEEN ABLE TO NEGATE. THOUGH THE FIGURE OF THE ALES IN THE RETURNS TALLY WITH T HAT RECORDED IN THE BOOKS PRODUCED BEFORE THE AO IN THE PRESENT PROCEED INGS, THEY ARE NOT SUPPORTED BY SALE BILLS OR VOUCHERS AND CANNOT BE ACCEPTED AGAINST THE SPECIFIC INFORMATION RECEIVED BY THE A O FROM THE RAIL COACH FACTORY, KAPURTHALA. HENCE, THE FIGURE OF THE SALES IS HELD TO REMAIN THE SAME AS TAKEN BY THE AO IN THE RESPECTIV E ASSTT ORDERS FOR ASSTT YEARS 1998-99 TO 2001-02. 9. AS REGARDS THE BILLS IN THE CASE OF M/S. GANGA S INGH ENGINEERS, THE AO ESTIMATED THE SALES IN THE ABSENCE OF ANY INFORM ATION RECEIVED FROM RAIL COACH FACTORY AND ESTIMATED THE NET PROFIT RATE OF 5%. 9.1 THE LD. CIT(A) IN THE CASE OF M/S. GANGA SINGH ENGINEERS ACCEPTED THE SALES AS DECLARED BY THE ASSESSEE SINCE THE AO DID NOT RECEIVE ANY ITA NOS. 474 TO 483(ASR)/2010 12 INFORMATION FROM RAIL COACH FACTORY, KAPURTHALA BUT CONFIRMED THE APPLICATION OF NET PROFIT RATE OF 5% ON THE SALES D ECLARED BY THE ASSESSEE. 10. IN THE CASE OF M/S. GANGA SINGH & SONS ALSO THE AO IN THE ABSENCE OF ANY INFORMATION RECEIVED AND IN THE ABSENCE OF BOOK S OF ACCOUNT PRODUCED AND AFTER REJECTING THE BOOKS OF ACCOUNT ESTIMATED THE SALES AND APPLIED NET PROFIT RATE OF 6% ON THE ESTIMATED SALES. 10.1 THE LD. CIT(A) DIRECTED TO APPLY NET PROFIT RA TE OF 5% ON THE DECLARED SALES BY THE ASSESSEE IN THE CASE OF M/S. GANGA SIN GH ENGINEERS. 11. THE LD. COUNSEL FOR THE ASSESSEE, MR. M.R. BHAG AT, FIRST OF ALL RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND ARGUED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN REJECTING THE APPLICATI ON UNDER RULE 46A SINCE THE ASSESSEE HAD PRODUCED BOOKS OF ACCOUNT BEFORE B OTH THE AUTHORITIES BELOW IN PART BUT THE SAME COULD NOT BE PRODUCED BE CAUSE OF THE DISPUTE IN THE FAMILY. MR. M.R. BHAGAT FURTHER ARGUED THAT IF THE MATTER IS RESTORED TO THE FILE OF THE LD. CIT(A) OR TO THE FILE OF THE A. O., THE ASSESSEE CAN PRODUCE BOOKS OF ACCOUNT. ITA NOS. 474 TO 483(ASR)/2010 13 12. AS REGARDS THE RECONCILIATION OF THE SALES DECL ARED BY THE ASSESSEE AND THE INFORMATION RECEIVED BY THE AO FROM RAIL COACH FACTORY, HE INVITED OUR ATTENTION TO THE LETTER DATED 30.11.2004 SUBMITTED TO THE ITO. AS REGARDS THE APPLICABILITY OF NET PROFIT RATE, IT WAS ARGUED THA T THERE WAS NO MATERIAL WITH ANY OF THE AUTHORITIES BELOW TO APPLY THE NET PROFI T RATE OF 5% EVEN AFTER DIRECTION OF THE ITAT IN THIS REGARD. THE LD. COUNS EL FOR THE ASSESSEE, MR. M.R. BHAGAT AT THE END, WHEN THE ARGUMENTS WERE OVE R INVITED OUR ATTENTION TO PAPER BOOK-1 WHERE HE WANTED TO RAISE ADDITIONAL GROUNDS WHICH READ AS UNDER: THE LD. CIT(A) ERRED IN CONFIRMING SALE FIGURES AS ASSESSED BY THE FIRST ASSESSING OFFICE INSPITE OF FACT THAT BOO KS OF ACCOUNTS WERE PRODUCE BEFORE THE SUCCESSOR ASSESSING OFFICER AND HE HAD NOT REPORTED ANY DISCREPANCY IN THE SALES DECLA RED BY THE APPELLANT. IT IS PRAYED THAT THE SALES AS DECLARED BY THE APPELLANT MAY BE ORDERED TO BE ACCEPTED. 13. THE LD. DR, ON THE OTHER RELIED UPON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE ADDITIONAL GROUND RAISED BY THE ASSE SSEE HEREINABOVE, THE SAME IN FACT ARE THE ARGUMENTS TAKEN BEFORE THE LD. CIT(A) AND ALSO BEFORE ITA NOS. 474 TO 483(ASR)/2010 14 US WHICH WILL BE DEALT WITH HEREINAFTER. THOUGH THE LD. AR HAS NOT FILED ANY APPLICATION FOR ADMISSION OF THE ADDITIONAL EVIDENC E MENTIONED HEREINABOVE, THE CONTENTS OF THE ADDITIONAL GROUND ARE IN FACT T HE ARGUMENTS MADE AND THEREFORE, THE SAME IS ADMITTED. 14.1. THE AO FOR THE ASSESSMENT YEAR 1998-99 TO 200 1-02 IN EACH OF THE YEAR IN THE CASE OF M/S. GANGA SINGH & SONS (MANUF ACTURERS), HAS PASSED THE ORDER ON 28.03.2010 UNDER SECTION 144/147 OF TH E ACT. THE ASSESSEE DERIVES INCOME FROM MANUFACTURE AND SALE OF BEAMS A ND LS BEAMS AND INCOME FROM HOUSE PROPERTY. VIDE PARA 8 OF HIS ORDER IN EACH YEAR, THE AO HAS SPECIFICALLY MENTIONED THAT ON THE BASIS OF INF ORMATION RECEIVED FROM FA & CAO, RAIL COACH FACTORY, KAPURTHALA, THE ASSESSEE HAS RECEIVED DIFFERENT PAYMENTS AS COMPARED TO THE SALES DECLARED BY THE A SSESSEE. THE SAID PARA 8 FOR THE ASSESSMENT YEAR 1998-99 FOR THE SAKE OF CLA RITY IS REPRODUCED AS UNDER: 8. DURING THE YEAR UNDER ASSESSMENT, THE ASSESSEE H AS SHOWN GROSS PROFIT OF RS.4,59,723/- ON TOTAL SALES OF RS.38,76,250/-. HOWEVER, INFORMATION U/S 133(6) OF INCOME TAX ACT, 1961 WAS CALLED FOR FROM THE OFFICE OF THE FA & CAO, RAIL COACH FACTORY, KAPURTHALA. ACCORDING TO THE INFORMA TION FURNISHED BY THE AFORESAID OFFICE, THE ASSESSEE REC EIVED PAYMENT OF RS.62,11,026/-. IN VIEW OF THE ABOVE THE ASSESSE E HAS SUPPRESSED ITS SALE. SINCE THE ASSESSEE HAS NOT PRO DUCED THE BOOKS OF ACCOUNT DURING THE ENTIRE ASSESSMENT PROCE EDINGS IT IS NOT POSSIBLE TO VERIFY THE SALES AND PURCHASES DECL ARED AND ITA NOS. 474 TO 483(ASR)/2010 15 EXPENSES DEBITED TO P & L ACCOUNT. THEREFORE, BY AP PLYING A NET PROFIT RATE OF 5% ON THE TOTAL SALES OF RS.62,1 1,026/-, THE PROFIT WORKED OUT TO RS.3,10,551/-. 14.2. THE SAID PARA 8 IN EACH ORDER IN EACH YEAR IS IDENTICAL EXCEPT THE SALES DECLARED BY THE ASSESSEE AND THE PAYMENT RECEIVED B Y THE ASSESSEE AS PER INFORMATION RECEIVED U/S 133(6) OF THE ACT, AS MENT IONED HEREINABOVE. THE SAID FIGURES ARE MENTIONED HEREIN BELOW: ASSTT. YEAR SALES DECLARED PAYMENT RECEIVED AS PER THE ASSESSEE INFORMATION U/S 133(6) 1999-2000 24,87,969/- 53,19,587/- 2000-01 11,84,715/- 52,10,613/- 2001-02 2,85,199/- 21,95,462/- 14.3. THE ASSESSEE DURING THE COURSE OF ORIGINAL AS SESSMENT PROCEEDINGS BEFORE THE LD. CIT(A) OR BEFORE THE ITAT IN THE FIR ST ROUND OR BEFORE LD. CIT(A) OR BEFORE THE A.O. IN THE REMAND PROCEEDINGS IN THE FIRST ROUND HAS NEVER SUBMITTED ANY EXPLANATION WITH REGARD TO PAYM ENT RECEIVED AS PER THE INFORMATION RECEIVED U/S 133(6) FROM RAIL COACH FAC TORY, KAPURTHALA, WHICH IS MUCH MORE THAN THE SALES DECLARED BY THE ASSESSE E. THE DIFFERENCE BETWEEN THE PAYMENTS RECEIVED AGAINST SALES OVER AN D ABOVE THE SALES DECLARED BY THE ASSESSEE IN EACH YEAR IS AS UNDER: ASSTT. YEAR SALES OUT SIDE THE BOOKS OF ACCOUNT FOR WHICH PA YMENT HAS BEEN RECEIVED BY THE ASSESSEE. 1988-99 23,34,776/- ITA NOS. 474 TO 483(ASR)/2010 16 1999-2000 28,31,618/- 2000-01 40,25,898/- 2001-02 19,10,263/- 14.4. AS A MATTER OF FACT, ASSESSEE HAD MADE THE SA LES OUTSIDE THE BOOKS OF ACCOUNT AS MENTIONED HEREINABOVE IN EACH YEAR FOR W HICH THE ASSESSEE MIGHT HAVE DECLARED THE PURCHASES AND THAT IS THE REASON IN OUR OPINION THAT THE ASSESSEE HAD DECLARED THE LOSES IN EACH YEAR. IF TH E PURCHASES HAVE NOT BEEN DECLARED BY THE ASSESSEE THEN THE PURCHASES FOR MAK ING THE SALES OUTSIDE THE BOOKS OF ACCOUNT SHOULD HAVE BEEN A SUBJECT MATTER OF ADDITION. IN ANY CASE, PRESENTLY, THE ASSESSEE HAVING NOT DECLARED ABOVE M ENTIONED SALES IN EACH YEAR, IN FACT, HAS CONCEALED SUCH INCOME I.E. RS.23 ,34,776/-, RS.28,31,618/-, RS.40,25,898/- AND RS.19,10,263/- DURING THE ASSESS MENT YEARS 1998-99, 1999-2000, 2000-01 AND 2001-02 RESPECTIVELY. THIS ASPECT, IN FACT, HAS NOT BEEN CONSIDERED BY ANY OF THE AUTHORITIES BELOW. 14.5. THE LD. COUNSEL FOR THE ASSESSEE HAD INVITED OUR ATTENTION AT PB 3 & 4 WITH REGARD TO THE RECONCILIATION AND EXPLANATION F OR THE SALES MADE OUTSIDE THE BOOKS OF ACCOUNT. IT WAS OBSERVED AT PB 3 & 4 THAT NO RECONCILIATION OR EXPLANATION WITH REGARD TO THE SALES MADE OUTSIDE T HE BOOKS OF ACCOUNT OR PAYMENT RECEIVED FOR WHICH SALES HAS NOT BEEN DECLA RED AS PER AT PB 3 & 4. THEREFORE, THE SAID LETTER AT PB 3 & 4 CANNOT TANTA MOUNT TO AN EXPLANATION WHICH DOES NOT HELP THE ASSESSEE. ITA NOS. 474 TO 483(ASR)/2010 17 14.6. AS REGARDS THE PRODUCTION OF BOOKS OF ACCOUNT , MR. M.R.BHAGAT, ON ONE HAND ARGUED THAT HE HAD PRODUCED THE BOOKS OF A CCOUNT BEFORE THE AO IN THE ORIGINAL PROCEEDINGS AS WELL AS IN THE SECOND R OUND BEFORE THE LD. CIT(A) AND BEFORE THE AO IN THE REMAND PROCEEDINGS. THIS F ACT IS INCORRECT IN VIEW OF THE FINDINGS OF THE LD. CIT(A) AND IN THE ABSENC E OF ANY EVIDENCE IN THIS REGARD PRODUCED BEFORE US EVEN. MR. M.R. BHAGAT, ON THE OTHER HAND ARGUED THAT BOOKS OF ACCOUNT CANNOT BE PRODUCED BECAUSE OF THE DISPUTE IN THE FAMILY AND THE SAME CAN BE PRODUCED IF THE MATTER I S RESTORED BACK TO THE FILE OF THE LD. CIT(A) OR THE A.O. THIS ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSED, MR. M.R. BHAGAT TANTAMOUNT TO BLOWING HOT AND COLD IN THE SAME BREATH I.E. ON ONE SIDE HE IS MAKING ARGUMENTS THAT HAS PRODUCED THE BOOKS OF ACCOUNT BEFORE THE LOWER AUTHORITIES AND ON THE OTHER HAND HE IS ARGUING THAT THE BOOKS OF ACCOUNT CANNOT BE PRODUCED BECAUS E OF THE DISPUTE IN THE FAMILY AND CAN BE PRODUCED IF SECOND CHANCE IS GIVE N BY RESTORING THE MATTER TO THE LD. CIT (A) OR THE A.O. SUCH BOOKS OF ACCOUN T WERE NOT PRODUCED BEFORE THE BENCH EVEN FOR THE SAKE OF ARGUMENT, THO UGH THE SAME WERE NOT DESIRED TO BE PRODUCED BY THE BENCH. THEREFORE, THE PRAYER OF THE LD. COUNSEL FOR THE ASSESSED, MR. M.R. BHAGAT FOR RESTORING THE MATTER TO THE FILE OF THE LOWER AUTHORITIES FOR PRODUCING THE BOOKS OF ACCOUN T NOW AND THAT TOO SHOWING HIS NON-COOPERATION THROUGHOUT IN THE FIRST ROUND AS WELL AS IN THE ITA NOS. 474 TO 483(ASR)/2010 18 SECOND ROUND CAN NOT BE GIVEN AND SUCH PRAYER OF MR . M.R. BHAGAT IS REJECTED. 14.7. AS REGARDS THE ESTIMATION OF SALES, THE LD. C IT(A) HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. WHICH IS BASED ON THE SPECIFIC INFORMATION RECEIVED FROM FA & CAO OF RAIL COACH FACTORY, KAPUR THALA AND WE DO NOT INTERFERE IN THE SAME. 14.8. AS REGARDS THE RECONCILIATION OF THE SALES AS ARGUED BY THE LD. COUNSEL MR. M.R. BHAGAT, MENTIONED IN THE ORDER OF THE LD. CIT(A) IS WITH REGARD TO THE SALES DECLARED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT WHICH TALLY WITH THE SALES DECLARED IN THE RETURN OF INCOME. SINCE T HIS IS NOT AN ISSUE OR CANNOT BE THE ISSUE IF THE SALES DECLARED IN THE BOOKS OF ACCOUNT ARE TO BE FROM THE SALE DECLARED IN THE RETURN OF INCOME. THE DISPUTE IS THAT THE SALES HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNT FOR WHICH THE ASS ESSEE HAD RECEIVED PAYMENT IS A MATTER OF RECORD FOR WHICH NO EXPLANAT ION HAS BEEN GIVEN BEFORE ANY OF THE AUTHORITIES IN THE FIRST ROUND OR IN PRESENT ROUND I.E. BEFORE AO AND/OR LD. CIT(A) AND EVEN BEFORE US. IN THE FAC TS AND CIRCUMSTANCES, AS MENTIONED HEREINABOVE REPEATING OUR FINDINGS, WE DO NOT INTERFERE IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. WITH REGARD TO THE SALES ESTIMATED BY THE A.O. ITA NOS. 474 TO 483(ASR)/2010 19 14.9. AS REGARDS THE ESTIMATION OF NET PROFIT RATE OF 5%, WE FIND THAT THE FINDINGS OF THE LD. CIT(A) ARE CORRECT IN VIEW OF O UR FINDINGS GIVEN HEREINABOVE WITH REGARD TO DIFFERENCE IN SALES MADE BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT IN DIFFERENT YEARS MENTIONED H EREINABOVE. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THOUGH THE PROFIT EARNED BY THE ASSESSEE IS MUCH MORE THAN ESTIMATED BY THE AO AND CONFIRMED BY THE LD. CIT(A), BUT WE HAVE NOT ALTERNATIVE AS MENTIONED H EREINABOVE, BUT TO CONFIRM THE ACTION OF THE LD. CIT(A), WHO HAS RIGHT LY CONFIRMED THE ACTION OF THE A.O. WITH REGARD TO APPLICATION OF NET PROFIT R ATE OF 5% ON ESTIMATED SALES.. 14.10 AS REGARDS THE REJECTION OF APPLICATION UND ER RULE 46A, WE CONFIRM THE FINDINGS OF THE LD. CIT(A) SINCE THE ASSESSEE H AS NOT PRODUCED THE BOOKS OF ACCOUNT AND ALSO RECONCILIATION OF THE SALES MAD E OUTSIDE THE BOOKS OF ACCOUNT. THEREFORE, IN THE ABSENCE OF ANY BOOKS OF ACCOUNT AND ANY RECONCILIATION WITH REGARD TO THE SALES MADE OUTSID E THE BOOKS OF ACCOUNT, THE ADDITIONAL EVIDENCE BY THE LD. CIT(A) HAS RIGHTLY B EEN REJECTED UNDER RULE 46A OF I.T.RULES. AS A MATTER OF FACT, ADDITIONAL E VIDENCES FILED BY THE ASSESSEE WITH REGARD TO THE BOOKS OF ACCOUNT, WHICH WERE NEVER PRODUCED BY THE ASSESSEE OR WERE PRODUCED IN PART COULD NOT SER VE THE PURPOSE OF ADDITIONAL EVIDENCES AND THEREFORE, THE ASSESSEE HA D ON ONE SIDE RAISED ITA NOS. 474 TO 483(ASR)/2010 20 ADDITIONAL GROUND FOR PRODUCING BOOKS OF ACCOUNT AN D ON THE OTHER HAND, HE HAD ARGUED AND SUBMITTED BEFORE THE LD. CIT(A) AS W ELL AS BEFORE US THAT THE BOOKS OF ACCOUNT COULD NOT BE PRODUCED BECAUSE OF T HE DISPUTE IN THE FAMILY. THEREFORE, RAISING OF THE ADDITIONAL GROUND AS ADDI TIONAL EVIDENCE BECAME INFRUCTUOUS WHICH HAS RIGHTLY BEEN REJECTED BY THE LD. CIT(A). THUS, GROUNDS NO.2 & 3 OF THE ASSESSEE ARE DISMISSED. 15. GROUNDS NO. 1 & 5 ARE GENERAL IN NATURE AND THE REFORE, DO NOT REQUIRE ANY ADJUDICATION. 16. GROUND NO.4 IS WITH REGARD TO CHARGING OF INTER EST UNDER SECTION 234A & 234B, WHICH IS MANDATORY AND CONSEQUENTIAL IN NAT URE. 17. THUS, THE APPEAL OF THE ASSESSEE IN ITA NO.474( ASR)/2010 IS DISMISSED. 18. SINCE THE FACTS AS MENTIONED HEREINABOVE IN ITA NO.475(ASR)/2010, ITA NO.476(ASR)/2010 & ITA NO.477(ASR)/2010 IN THE CASE OF M/S. GANGA SINGH & SONS (MANUFACTURERS) FOR THE ASSESSMENT YEA RS 1999-2000, 2000- 01 & 2001-02 ARE IDENTICAL TO THE FACTS IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR IN 1998-99 IN ITA NO.474(ASR)/2010, DECIDED BY US HEREINABOVE, THEREFORE OUR ORDER IN ITA NO.474(ASR) /2010 IS IDENTICALLY ITA NOS. 474 TO 483(ASR)/2010 21 APPLICABLE IN ITA NO.475(ASR)/2010, ITA NO.476(ASR) /2010 & ITA NO.477(ASR)/2010 AND ACCORDINGLY ALL THE APPEALS OF THE ASSESSEE IN THE CASE OF M/S. GANGA SINGH & SONS (MANUFACTURERS) FOR THE ASSESSMENT YEARS 1998- 99, 1999-2000, 2000-01 & 2001-02 ARE DISMISSED. 19. SINCE THE FACTS IN APPEAL OF TWO DIFFERENT ASSE SSEES I.E. M/S. GANGA SINGH & SONS FOR THE ASSESSMENT YEARS 2000-01 & 200 1-02 IN ITA NO. 482(ASR)/2010 & ITA NO.483(ASR)/2010 AND M/S. GANGA SINGH ENGINEERS FOR THE ASSESSMENT YEARS 1998-99 TO 2001-02 IN ITA NOS. 478 TO 481(ASR)/2010 ARE IDENTICAL TO THE FACTS IN THE CAS E OF M/S. GANGA SINGH & SONS (MANUFACTURERS) FOR THE ASSESSMENT YEAR 1998-9 9, EXCEPT THE SALES HAVE BEEN ESTIMATED BY THE AO IN THE ABSENCE OF ANY INFO RMATION U/S 133(6), WHICH HAS BEEN DELETED BY THE LD. CIT(A) IN ALL THE SIX APPEALS MENTIONED HEREINABOVE AND THE LD. CIT(A) HAS IDENTICALLY CON FIRMED THE ACTION OF THE A.O. FOR APPLICATION OF NET PROFIT RATE OF 5% IN AL L THE SIX APPEALS MENTIONED HEREINABOVE. SINCE THE FACTS REMAINING TO BE DECIDE D BY US ARE NOW IDENTICAL TO THE FACTS, AS MENTIONED HEREINABOVE, IN THE CASE OF M/S. GANGA SINGH & SONS (MANUFACTURERS), DECIDED BY US HEREINA BOVE, THEREFORE, OUR ORDER IN THE CASE OF M/S. GANGA SINGH & SONS (MANUF ACTURERS) FOR THE ASSESSMENT YEAR 1998-99 IN ITA NO.474(ASR)/2010 ID ENTICALLY WILL BE APPLICABLE IN THE PRESENT SIX APPEALS IN THE CASE OF M/S. GANGA SINGH & ITA NOS. 474 TO 483(ASR)/2010 22 SONS AND M/S. GANGA SINGH ENGINEERS IN ALL THE APP EALS BEFORE US. ACCORDINGLY, ALL THE APPEALS OF BOTH THE ASSESSEES I.E. M/S. GANGA SINGH & SONS FOR THE ASSESSMENT YEAR 20001-01 & 2001-02 AND M/S. GANGA SINGH ENGINEERS FOR THE ASSESSMENT YEARS 1998-99 TO 2001- 02 ARE DISMISSED. 20. IN THE RESULT, THE APPEALS OF ALL THE ASSESSEES IN ITA NOS. 474 TO 477(ASR)/2010, ITA NOS.478 TO 481 AND IN ITA NOS. 4 82 & 483(ASR)/2010 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8TH NOVEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8TH NOVEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEES:I) M/S. GANGA SINGH & SONS (MANUFACTU RERS), II) M/S. GANGA SINGH & SONS & III) M/S. GANGA SINGH ENG INEERS, JALANDHAR. 2. THE ITO II(1), JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.