ACIT, Trichy V. M/s. Ahamed Textile Agency, Trichy

ITA 496/CHNY/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7919 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 17-11-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 07-03-2012
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained expenditure; Business income; Business expenditure; Deemed to accrue or arise in india; Cost of acquisition; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 69C; 143(3); 37(1); 147; 131; 56; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ! , ' !# BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ ITA NO. 496 TO 498/MDS/2012 (AND CORRESPONDING COS. 51 TO 53/2012) ' $ %$ / ASSESSMENT YEAR : 2005-06 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE II, NO.44, WILLIAMS ROAD, CANTONMENT, TIRUCHIRAPALLI 620 001 ( &' /APPELLANT) &' ( ) /APPELLANT BY : *+&' ( ) /RESPONDENT BY : V. M/S. AHAMED TEXTILE AGENCY, NO.8B/1, SINGARATHOPE, TRICHY 620 008. [P.A NO.AAFA 7608A] M/S. AHAMED FAB, NO.21/1, SINGARATHOPE, TRICHY 620 008. [P.A NO.AAHFA 7607C] M/S. AHAMED BROTHERS, NO.21/1, SINGARATHOPE, TRICHY 620 008. [P.A NO.AAHFA 7608A] ( *+&' /RESPONDENTS) SHRI SUPRIYA PAL, JCIT SHRI S.SRIDHAR, ADVOCATE ( , /DATE OF HEARING : 17.11.2016 -% ( , /DATE OF PRONOUNCEMENT : 30.11.2016 2 I.T.A NOS. 496 TO 498 & COS. 51 TO 53 OF 2012 ACIT V. AHAMED TEXTILE AGENCY, AHAMED FAB & AHAMED BROTHERS /O R D E R PER BENCH : THIS IS SET OF THREE APPEALS BY THE REVENUE AND COR RESPONDING CROSS OBJECTIONS (COS) BY THREE ASSESSEES CONTESTING THE CONFIRMATION OF THEIR ASSESSMENTS U/S. 143(3) R/W S.147 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR ASSESSMENT YEAR (AY) 2005-06 BY TH E COMMISSIONER OF INCOME TAX (APPEALS), THIRUCHIRAPALLI (CIT(A) FOR SHORT). THE FACTS AND CIRCUMSTANCES BEING COMMON, THE SAME WERE POSTED FOR, AND HEARD T OGETHER. 2. THE HEARING BEFORE US PROCEEDED BY ADOPTING AHAME D TEXTILE AGENCIES AS THE LEAD MATTER. BOTH THE REFERENCE TO THE FACTS AND FIGURES, WHERE SO, IN NARRATING THE FACTS, WOULD BE WITH REFERENCE THERET O. THE THREE ASSESSEES ARE SISTER CONCERNS, BEING IN FACT PART OF NINE PARTNERSHIP FI RMS, IN TEXTILE TRADING BUSINESS, RUN BY THREE BROTHERS AND THEIR FAMILY MEMBERS, AT TRICHY AND MADHURAI; THE PATRIARCH OF THE FAMILY BEING SHRI ABDUL KAREEM AHM ED. A SURVEY U/S. 133-A OF THE ACT WAS CARRIED BY THE REVENUE AT THE BUSINESS PREMISES ON 03.02.2005 , PURSUANT TO WHICH, SHRI HUSSAIN ABDUL KAREEM, MANAG ING PARTNER, AHMED BROTHERS GROUP, VIDE HIS STATEMENTS U/S. 133 (ON 03 .02.2005) AND SECTION 131 (ON 24.02.2005), ADMITTED TO UNACCOUNTED STOCK OF 50 LA KHS, WHICH WAS OFFERED AS ADDITIONAL INCOME IN THE CURRENT YEAR IN THE HANDS OF THREE ASSESSEE-APPELLANTS, AGREEING TO PAY TAX THEREON (APB PAGES 1-8). IT WA S FURTHER CLARIFIED THAT THE INCOME FOR THE CURRENT YEAR WOULD NOT FALL BELOW TH E NORMAL INCOME DISCLOSED FOR THE EARLIER YEARS. RETURNS OF INCOME WERE FILED IN OCTOBER, 2005 AND ASSESSMENT FRAMED U/S. 143(3) IN DECEMBER, 2007. THE DISCLOSUR E OF THE EXCESS STOCK WAS DONE BY WAY OF CREDIT TO THE TRADING ACCOUNT OF THE THRE E FIRMS FOR F.Y. 2004-05, AS UNDER: (AMT. IN RS. LACS) APPELLANT STOCK DISCLOSED SALES GROSS PROFIT NET PROFIT REMARKS ATA 23.00 578.39 46.16 12.82 APB2, PG. 08 AB 23.50 827.26 81.24 19.13 APB2, PG. 10 AT 3.50 289.47 37.85 2.17 APB2, PG. 12 50.00 (*) ATA: AHAMED TEXTILE AGENCY; AB: AHAMED BROTHE RS; AT: AHAMED TEXTILES 3 I.T.A NOS. 496 TO 498 & COS. 51 TO 53 OF 2012 ACIT V. AHAMED TEXTILE AGENCY, AHAMED FAB & AHAMED BROTHERS ASSESSMENTS WERE FRAMED IN THE CASE OF EACH OF THE THREE ASSESSEES, ACCEPTING THE RETURNS OF INCOME. SUBSEQUENTLY, THE ASSESSING OFFICER (A.O.) REOPENED THE ASSESSMENTS ON 09.10.2009 . THE ASSESSEES RESPONDED BY SUBMITTING THAT THE RETURNS ALREADY FILED MAY BE TREATED AS FU RNISHED IN RESPONSE TO NOTICES U/S. 148. REASONS RECORDED, SAME IN ALL THE CASES, READ AS UNDER: (DPB PGS. 4-5) FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005-06, THE ASSESSEE HAS OFFERED FOR TAXATION ADDITIONAL STOCK TO THE EXTENT OF RS.23 LAKHS IN THE RETURN OF INCOME FILED FOR THIS ASSESSMENT YEAR AND THE TOTAL INCOME ADMITTED IS RS.12,81,750/-. IT IS ALSO SEEN THAT THE ASSESSEE HAD WORKED OUT WORKING PARTNER'S REMUNERAT ION U/S 40(B)(V) TO THE EXTENT OF RS.9,42,000/-. THIS HAS B EEN CLAIMED OUT OF THE TOTAL INCOME AS ABOVE WHICH INCLUDED ADDITIO NAL UNDISCLOSED INCOME BY WAY OF UNACCOUNTED STOCK DETE CTED DURING THE COURSE OF SURVEY CARRIED OUT IN THIS CASE ON 03 .02.2005. THE ADDITIONAL INCOME OFFERED IN THE FORM OF CLOSING ST OCK BEING UNEXPLAINED EXPENDITURE U/S 69C COULD NOT BE TAKEN INTO ACCOUNT WHILE WORKING OUT THE REMUNERATION PAYABLE TO PARTN ERS FOR THE REASON THAT - DEEMED INCOME ON ACCOUNT OF UNEXPLAIN ED EXPENDITURE FOR PURCHASE OF STOCK IS TO BE AGGREGAT ED TO TOTAL INCOME WORKED OUT UNDER CHAPTER IV BEING UNEXPLAINED CANNOT BE TREATED AS INCOME UNDER ANY 'HEADS OF INCOME' ME NTIONED IN SECTION 14 INCLUDING HEAD OF INCOME FROM 'PROFITS & GAINS OF BUSINESS & PROFESSION' AS HELD IN THE CASE OF 'FAKHIR MOHAMED HAJI HASAN VS C.I.T (2001) 247 ITR 290(GUJ) AND INCOME-TAX OFFICER VS SMT. SUNDARI CHIMANDAS (2008)16 DTR (CHENNAI)(TRIB) 390'. THUS, IT IS SEEN THAT THE ASSESSEE HAS CLAIMED EXCESS REMUNE RATION TO WORKING PARTNERS U/S 40(B)(V) AND THEREBY THE INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THIS ASSESSMENT Y EAR. THE REMUNERATION TO WORKING PARTNERS WAS RESTRICTED TO, IN TERMS OF SECTION 40(B)(V), WITH REFERENCE TO BOOK PROFIT, I.E., BY REDUCING THE AMOUNT OFFERED BY WAY OF UNDISCLOSED STOCK IN-AS-MUCH AS THE SAME, A DEEMED INCOME U/S. 69-C, WOULD NOT FORM PART OF THE BOOK PROFIT IN VIEW OF EXPLANATION 3 OF SECTION 40(B) AND PROVISO TO SECTION 69-C. IN APPEAL, THE LD. CIT(A) OPINED T HE REOPENING OF ASSESSMENTS AS BAD IN LAW AND ANNULLED THE REASSESS MENT/S, HOLDING THAT THE AO HAVING FAILED TO ACT ON THE MATERIALS BEFORE HIM, C ANNOT INITIATE REASSESSMENT PROCEEDINGS, WITH THERE BEING NO FRESH MATERIALS TO CAUSE A CHANGE OF OPINION. AGGRIEVED, THE REVENUE IS IN APPEAL. 4 I.T.A NOS. 496 TO 498 & COS. 51 TO 53 OF 2012 ACIT V. AHAMED TEXTILE AGENCY, AHAMED FAB & AHAMED BROTHERS 3. BEFORE US, THE REVENUES CASE, RELYING ON THE GR OUNDS OF APPEAL AND WRITTEN SUBMISSIONS BY IT, WAS THAT POST AMENDMENT, I.E., W .E.F. 01.04.1989, ALL THAT WAS NECESSARY, WHETHER THE ASSESSMENT SOUGHT TO BE REOP ENED IS WITHIN A PERIOD OF FOUR YEARS (FROM THE END RELEVANT ASSESSMENT YEAR), AS I N THE INSTANT CASE, OR NOT, IS THAT THERE HAS BEEN AN ESCAPEMENT OF INCOME FROM ASSESSM ENT. A FAILURE ON THE PART OF THE A.O TO INVESTIGATE THE TRUTH OF THE MATTER AND APPLY HIS MIND DURING THE INITIAL ASSESSMENT WOULD NOT PRECLUDE REOPENING. THE ASSESS ING OFFICER (AO) HAD CLEARLY OVERLOOKED TO CONSIDER THE FACTS AND APPLY THE LAW, SO THAT IT COULD NOT BE REGARDED AS A CASE OF CHANGE OF OPINION. RELIANCE, INTER ALIA , IS PLACED ON THE FOLLOWING DECISIONS: KALYANJI MAVJI & CO. V. CIT ; RAKESH AGGARWAL. ASST. CIT [1997] 225 ITR 496 (DEL); RAM PRASAD V. ITO [1995] 82 TAXMANN 199 (ALL); PRAFUL CHUNILAL PATEL V. ASST. CIT [1999] 236 ITR 832 (GUJ); CIT V. RINKU CHAKRABORTHY [2011] 242 CTR 425 (KAR); AND EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD. V. ADDL. CIT [2013] 350 ITR 651 (BOM). THE ASSESSEES CASE, ON THE OTHER HAND, IS THREE-FOL D. THE ENTIRE MATERIAL WAS TAKEN INTO ACCOUNT BY THE AO WHILE FRAMING THE ORIG INAL ASSESSMENT AND, THEREFORE, IT IS A CASE CHANGE OF OPINION, WHICH IS IMPERMISSI BLE IN VIEW OF CIT V. KELVINATOR OF INDIA LTD . [2002] 256 ITR 1 (DEL)(FB), APPROVED IN [2010] 320 ITR 561 (SC), AND REITERATED IN CIT V. EICHER LTD . [2007] 294 ITR 310 (DEL). THERE WAS NO FRESH MATERIAL NECESSITATING THE REOPENING, AND AN ASSESS MENT CANNOT BE REOPENED ON THE PRETEXT OF A MISTAKE, AS CLARIFIED IN CIT V. ASHLEY SERVICES [2014] 369 ITR 209 (MAD). THE DECISION IN THE CASE OF FAKIR MOHAMED HAJI HASAN V. CIT [2001] 247 ITR 290 (GUJ), RELIED UPON BY THE REVENUE, STANDS EX PLAINED IN DY. CIT V. RADHEY DEVELOPERS INDIA LTD . [2010] 329 ITR 1 (GUJ), FOLLOWING CIT V. D.P. SANDHU BROS. CHEMBUR PVT. LTD . [2005] 273 ITR 1 (SC), WHEREIN THE APEX COURT HAS UNEQUIVOCALLY EXPRESSED THAT UNDER THE SCHEME OF TH E ACT ANY INCOME CHARGEABLE TO TAX IS TO BE NECESSARILY ASSIGNED TO ANY OF THE HEADS OF INCOME SPECIFIED IN SECTION 14. THE DECISION IN THE CASE OF FAKIR MOHAMED HAJI HASAN (SUPRA) HAS BEEN DISAPPROVED, IF NOT PRACTICALLY OVERRULED. ON AN ENQUIRY BY THE BENCH AS TO 5 I.T.A NOS. 496 TO 498 & COS. 51 TO 53 OF 2012 ACIT V. AHAMED TEXTILE AGENCY, AHAMED FAB & AHAMED BROTHERS THE BASIS ON WHICH IT COULD BE SAID THAT THE INCOME OFFERED BY WAY OF EXCESS STOCK WAS ASSESSABLE AS ITS BUSINESS INCOME, THE LD. A.R WOULD SUBMIT THAT THE VERY FACT OF IT BEING FOUND IN THE FORM OF STOCK-IN-TRADE OF THE BUSINESS, AT HIS BUSINESS PREMISES, WOULD PROVE IT. FURTHER, THOUGH THERE WAS NO FINDING IN THE MATTER BY THE LD. CIT(A), IT WAS WELL OPEN FOR THIS COURT TO ALLOW THE RELIEF OR CONFIRM THE APPEAL ON A DIFFERENT GROUND. ON A FURTHER ENQUIRY QUA THE ASSESSEES COS, HE ADMITTED TO THE SAME BEING ONLY SUPPORTIVE, WITHDRAWING AS NOT PRESSED GROUND-IV ASSUMED THEREIN CHALLENGING THE ASSESSMENTS AS TIME BARRED. THE LD. D.R, IN REJOINDER, WOULD SUBMIT THAT IN THE ABSENCE OF ANY DECLARATION AS TO THE MANNER OF EARNING THE SAME, E ITHER IN THE DEPOSITIONS OR THE RETURN OF INCOME, MUCH LESS SUBSTANTIATED, THE SAME IS ONLY ASSESSABLE U/S. 56 AS INCOME FROM OTHER SOURCES. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. OUR FIRST OBSERVATION IN THE MATTER IS THAT THE LD. CIT(A) HAVING ANNULLED THE ASSESSMENT/S, THAT IS THE ONLY ASPECT WE ARE REQUIR ED TO LOOK AT, FOR, IN THE EVENT OF OUR DECISION IN DISAGREEMENT AND, CONSEQUENTLY VACA TING HIS FINDINGS, THE MATTER WOULD REQUIRE BEING SET ASIDE TO HIS FILE FOR ADJUD ICATION OF THE OTHER GROUNDS RAISED BY THE ASSESSEE BEFORE HIM. IN THIS REGARD, THOUGH THE A.O HAS, WE OBSERVE, MADE ADDITIONS ALSO ON GROUNDS OTHER THAN THAT RECORDED IN THE REASONS RECORDED, HE IS WELL WITHIN HIS PURVIEW TO DO SO IN VIEW FIRST PROVISO AND EXPLANATION 3 TO S. 147. THE VALIDITY OF THE REOPENING, HOWEVER, WOULD HAVE T O BE EXAMINED ONLY WITH REFERENCE TO THE REASONS RECORDED. THE ALLOWANCE OF REMUNERATION TO THE WORKING PARTNERS WITH REFERENCE TO DEEMED INCOME U/S. 69-C, I.E., QUA THE UNACCOUNTED EXCESS STOCK, IS THE SOLE REASON THAT INFORMS THE A .O.S MIND IN INFERRING UNDER- ASSESSMENT OF INCOME WHICH, UNDER EXPLANATION 2(C)(III) TO SECTION 147 CONSTITUTES ONE OF THE GROUNDS FOR INITIATING REASSESSMENT PROC EEDINGS. THE SAME BEING WITHIN FOUR YEARS (FROM THE END OF THE RELEVANT ASSESSMENT YEAR), THE QUESTION OF ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF HIS INCOME DOES NOT ARISE FOR CONSIDERATION. THE 6 I.T.A NOS. 496 TO 498 & COS. 51 TO 53 OF 2012 ACIT V. AHAMED TEXTILE AGENCY, AHAMED FAB & AHAMED BROTHERS ASSESSEE IN THIS REGARD CONTENDS THAT THE DEEMED IN COME, BE IT U/SS. 68, 69, 69-A TO 69-D, IS REQUIRED TO BE BROUGHT TO TAX ONLY UNDER O NE OF THE SPECIFIED HEADS OF INCOME U/S. 14 AND, FURTHER, THE VERY FACT OF IT BE ING IN THE FORM OF UNDISCLOSED STOCK OF ITS BUSINESS, EXHIBITS IT TO BE ITS BUSINE SS INCOME, SO THAT DEDUCTION IN RESPECT OF REMUNERATION TO THE WORKING PARTNERS, ON THE BASIS OF THE INCOME ARRIVED AT INCLUDING THE SAME, IS NOT A MISTAKE SO AS TO FO RM A REASON TO BELIEVE UNDER- ASSESSMENT OF INCOME. WE AGREE, EVEN AS THE AO WHIL E FRAMING THE ORIGINAL ASSESSMENT HAS COMPLETELY FAILED TO APPLY HIMSELF I N THE MATTER. HIS CRYPTIC ORDER, PASSED ON 26.12.2007, I.E., ON THE VERGE OF THE LIM ITATION PERIOD, EXTENDS TO HALF A PAGE AND MERELY RECORDS THE PRODUCTION OF BILLS AND ACCOUNT BOOKS AND THEIR VERIFICATION, ACCEPTING THE RETURNED INCOME. THERE I S NO REFERENCE TO ANY DETAILS, IF ANY, CALLED FOR, PRODUCED OR VERIFIED. THERE IS NO REFERENCE TO SURVEY OR TO THE ADDITIONAL STOCK FOUND THEREAT. HOW HAS THE ADDITIONAL STOCK BEEN ACCOUNTED FOR REGULAR BOOKS OF ACCOUNT ? WHY, THERE IS NO FINDING AS TO WHETHER THE DISCL OSURE AS MADE IS PROPER OR EVEN AT THE CORRECT AMOUNT. THIS IS AS IT WOULD QUALIFY TO BE SO ONLY WHERE IT IS OVER AND ABOVE THE STOCK ARRIVED A T APPLYING THE NORMAL TRADING (GROSS) PROFIT RATE (ON THE DISCLOSED TURNOVER), AN D TO WHICH THERE IS NO REFERENCE. WHY, THE RETURNED (AND ASSESSED) INCOME, INCLUDING THE ADDITIONAL STOCK, IS NEGATIVE, I.E., AT A LOSS, EVEN CONSIDERING IT AT N ET OF REMUNERATION TO WORKING PARTNERS ATTRIBUTABLE THERETO. THIS FACT IS ALSO APP ARENT FROM THE BUSINESS INCOME OF RS.9,506/-, I.E., WHICH IN FACT INCLUDES RS. 1.56 L ACS BY WAY OF PROFIT ON UNACCOUNTED SALES, ALSO BROUGHT TO TAX ONLY IN THE REASSESSMENT PROCEEDINGS. THE QUESTION OF THE A.O. HAVING CONSIDERED THE HEAD OF INCOME UNDER WHICH THE DEEMED INCOME IS TO BE ASSESSED, OR IF THE REMUNERA TION TO THE WORKING PARTNERS IS TO BE RECKONED WITH REFERENCE THERETO, JUST DOES NO T ARISE. THE ASSESSEES CONTENTION IN THIS RESPECT IS BALD AND WHOLLY WITHOUT BASIS. TH E LAW IN THE MATTER IS WELL- SETTLED, EVEN AS OBSERVED BY THE BENCH DURING HEARI NG, ALLUDING TO THE DECISION IN KALYAN MAVJI & CO . (SUPRA), REFERRED TO PRAFUL CHUNILAL PATEL (SUPRA) AND RINKU CHAKRABORTHY (SUPRA), DECISIONS RELIED UPON BY THE REVENUE. KALYANJI MAVJI & CO. 7 I.T.A NOS. 496 TO 498 & COS. 51 TO 53 OF 2012 ACIT V. AHAMED TEXTILE AGENCY, AHAMED FAB & AHAMED BROTHERS (SUPRA) CONTINUES TO BE THE LOCUS CLASSICUS ON THE SUBJECT, AND HOLDS THE FIELD TO DATE. AS EXPLAINED THEREIN WITH REFERENCE TO MAHARAJ KUMAR KAMAL SINGH V. CIT [1959] 35 ITR 1 (SC), IF THE ITO ERRONEOUSLY FAILS TO TAX A PART OF THE ASSESSABLE INCOME, IT IS A CASE WHERE THE SAID PART OF INCOME HAS ESCAPED ASSESSMENT. REFERENCE HERE IS ALSO MADE TO THE DECISION BY APEX COURT IN ASST. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD . [2007] 291 ITR 500 (SC). THE ASPECT AS TO THE HEAD OF INCOME UNDER WHICH THE INCOME ON ACCOUNT OF THE EXCESS STOCK IS TO BE ASSESSED, OR IF THE REMUNERATION TO WORKING PARTNERS, DEDUCTI BLE U/S. 37(1) R/W S. 40(B) (V), COULD BE ALLOWED AGAINST THE SAID INCOME, HAS NOT A T ALL BEEN CONSIDERED IN THE ORIGINAL ASSESSMENT/S. A CHANGE OF OPINION, WHICH P RECLUDES REASSESSMENT, AND THE LAW ON WHICH IS EQUALLY WELL-SETTLED, SHALL COME IN TO PLAY ONLY WHEN THERE HAS INDEED BEEN A CONSIDERATION AND, CONSEQUENTLY, FORM ATION OF OPINION. ALL THIS, HOWEVER, WOULD NOT DETRACT FROM THE VALID ITY OF THE ASSESSEES ARGUMENT AFORESAID. THIS IS AS A FAILURE TO APPLY T HE LAW IN THE FACTS OF THE CASE MUST LEAD TO A REASON TO BELIEVE AN ESCAPEMENT OF I NCOME. THE INFERENCE THEREOF MUST BE CLEAR AND DIRECT, I.E., FOLLOW IRRESISTIBLY , AS IF IN CONSEQUENCE. WHERE THE SAME DEPENDS ON THE RESULT OF A FURTHER ENQUIRY OR CONSIDERATION OF MATERIALS AND EVEN EXPLANATIONS, WHICH MAY SUGGEST UNDER ASSESSME NT OF INCOME OR OTHERWISE, IT CANNOT BE SAID THAT THE AO HAS REASON TO BELIEVE UN DER-ASSESSMENT OF INCOME. HE COULD BE SAID AS HAVING A REASONABLE DOUBT AS TO TH E CORRECTNESS OF THE ASSESSEES CLAIM, WHICH MAY OR MAY NOT SURVIVE INQUIRY OR VERI FICATION, THE RESULT OF WHICH WOULD INFORM AND DETERMINE THE CORRECTNESS OF THE S AID CLAIM. THE INFORMATION IN THE POSSESSION OF THE ASSESSING AUTHORITY MUST LEAD TO A UNEQUIVOCAL VIEW OF INCOME HAVING ESCAPED ASSESSMENT. REFERENCE IN THIS REGARD BE MADE TO THE DECISION IN VIPAN KHANNA V. CIT [2002] 255 ITR 220 (P&H); THE HONBLE COURT CLARIFYING THAT REASSESSMENT PROCEEDINGS WERE NOT M EANT TO LAUNCH INQUIRY IN A MATTER. IN THE PRESENT CASE, THE INCOME DEEMED AS S UCH IS, FIRSTLY, NOT SO U/S. 69-C. THIS IS AS THE COST OF GOODS BECOMES AN EXPENDITURE ONLY WHEN THEY ARE CONSUMED AND/OR TRANSFERRED FOR CONSIDERATION, EITHER AS SUC H OR IN A CHANGED FORM, SO THAT 8 I.T.A NOS. 496 TO 498 & COS. 51 TO 53 OF 2012 ACIT V. AHAMED TEXTILE AGENCY, AHAMED FAB & AHAMED BROTHERS THEY CEASE TO BE THE ASSESSEES PROPERTY. IT IS IN THAT CASE THAT THE PURCHASE COST IS EXPENSED AGAINST THE CORRESPONDING REVENUE. THAT IS, ACQUISITION OF GOODS IS PER SE NOT AN EXPENDITURE, BUT A BALANCE-SHEET ITEM. ITS R EFLECTION ON THE CREDIT SIDE OF THE TRADING ACCOUNT IS ONLY TO NEUTRALIZE THE COST THER EOF DEBITED TO THE TRADING ACCOUNT. IF IN THE PRESENT CASE, THE COST THEREOF HAS INDEED BEEN SO DEBITED, AS IMPLIED BY ITS CREDITING THE STOCK DISCLOSED TO THE TRADING ACCOUN T, THE ASSESSEE HAS NOT OFFERED ANY INCOME ON ACCOUNT OF THE SAID DISCLOSURE AT ALL ; THE TWO NEUTRALIZING EACH OTHER . THIS MAY BE LOOKED AT FROM ANOTHER ANGLE, I.E., AS AFORE-STATED, HOW HAS STOCK DISCLOSED BEEN ACCOUNTED FOR, ON WHICH, AGAIN , WE FIND NO ANSWER. THIS IS PRECISELY WHY WE SAY THAT THE ASSESSMENT ORDER PASS ED ORIGINALLY IS SANS ANY APPLICATION OF MIND. SUFFICE FOR THE MOMENT, HOWEVE R, TO STATE THAT THE COST OF GOODS DISCLOSED IS DEEMED AS THE ASSESSEES INCOME ONLY FOR THE REASON THAT IT IS UNEXPLAINED AS TO THE SOURCE (OF ITS ACQUISITION). THE SAME MAY WELL BE THE MANIFESTED FORM OF THE UNDISCLOSED PROFITS OF THE B USINESS, AS WHERE THE ASSESSEE UNDER-REPORTS ITS PROFITS ON THE DISCLOSED TURNOVER OR ENGAGES IN OUT-OF-BOOKS BUSINESS, THE PROFIT ON WHICH IS, NEVERTHELESS, TO THAT EXTENT, RETAINED THEREIN. IN EITHER SUCH CASE, THE INCOME ON ACCOUNT OF THE EXCE SS STOCK, DEEMED AS SO U/S. 69/69-A, SHALL BE BUSINESS INCOME. ON THE OTHER HAN D, IT MAY WELL BE THAT THE ASSESSEE HAS EARNED SOME PROFIT/GAIN ON AN UNRELATE D (TO BUSINESS) TRANSACTION, AS (SAY) SALE OF PROPERTY, INVESTING THE UNDISCLOSED G AIN THEREIN IN ITS BUSINESS, IN WHICH CASE IT SHALL BE ASSESSABLE AS CAPITAL GAINS. THE ONUS TO EXHIBIT THE SOURCE IS ON THE ASSESSEE, AS EXPLAINED IN CIT V. MADHURI RAJAIAHGARI KISTAIAH [1979] 120 ITR 294 (AP) FOLLOWING/APPLYING CIT V. DEVI PRASAD VISWANATH PRASAD [1969] 72 ITR 194 (SC), WHEREIN THE APEX COURT CLARIFIED THAT IT WAS OPEN FOR THE ASSESSING AUTHORITY TO TAX THE CASH CREDIT ENTERED IN THE BOO KS OF ACCOUNT OF THE BUSINESS - AND NO FURTHER BURDEN LAY ON HIM TO SHOW THAT IT WAS FR OM A PARTICULAR SOURCE, AS WELL AS TO ESTIMATE ITS PROFIT, AND THAT IT WAS FOR THE ASSESSEE TO PROVE THAT THE CASH CREDITS REPRESENTS INCOME FROM A SOURCE ALREADY SUB JECT TO TAX. AND, FAILING WHICH, THEREFORE, THE TRIBUNAL IN P. SUBRAMANIAM V. ITO (ITA NO.1363/MDS/2010 DATED 9 I.T.A NOS. 496 TO 498 & COS. 51 TO 53 OF 2012 ACIT V. AHAMED TEXTILE AGENCY, AHAMED FAB & AHAMED BROTHERS 26.07.2012), RELIED UPON BY THE ASSESSEE (REPRESENT ED BY THE SAME COUNSEL WHO REPRESENTED THAT CASE) IS TO BE ASSESSED AS INCOME FROM OTHER SOURCE U/S. 56, DRAWING ON THE CITED DECISIONS AS WELL AS IN THE CA SE OF D.P. SANDHU BROS. CHEMBUR PVT. LTD . (SUPRA). COMING TO THE FACTS OF THE PRESENT CASE, THOUGH TH E ASSESSEE HAS NOT RENDERED ANY EXPLANATION, MUCH LESS PROVED THE AMOUNT OF THE EXCESS STOCK AS REPRESENTING BUSINESS INCOME, IN FAIRNESS, NO EXPLANATION WAS CA LLED FOR BY THE AO; THE MATTER REMAINING TO BE CONSIDERED BY HIM. TO ITS CREDIT, T HE ASSESSEE HAS REPORTED THE INCOME, CLAIMING SET-OFF OF ALL BUSINESS EXPENSES, INCLUDING ON REMUNERATION TO WORKING PARTNERS, THERE-AGAINST. THERE IS IN FACT M ATERIAL ON RECORD TO SUGGEST THAT THE ASSESSEE ENGAGED IN OUT-OF-BOOKS SALES AS WELL, AND WHICH COULD PRESUMABLY YIELD INCOME, AS IN FACT ASSESSED IN REASSESSMENT P ROCEEDINGS. NO OTHER SOURCE OF INCOME WAS ALSO FOUND DURING SURVEY, WHICH TAKES PL ACE TOWARDS THE END OF THE YEAR. THAT THIS MATTER WAS ALSO NOT CONSIDERED BY TH E A.O. IN THE ORIGINAL PROCEEDINGS IS BESIDES THE POINT, AS WE ARE PRESENT LY CONCERNED ONLY WITH THE VALIDITY OF THE REASON/S RECORDED U/S. 148. THEN TH ERE IS ALSO THE QUESTION OF WHETHER THE ENTIRE INCOME IS TO BE ASSESSED AS BUSI NESS INCOME IN-AS-MUCH AS THE SAME IS REGARDED AS THE INCOME OF THE RELEVANT YEAR ONLY IN VIEW OF THE DEEMING PROVISIONS, WHICH ARE ESSENTIALLY RULES OF EVIDENCE . AS SUCH, TO THE EXTENT IT CANNOT JUSTIFIABLY BE REGARDED AS THE EARNINGS OF THE RELE VANT YEAR, UNLESS SHOWN AS EARNED IN THE PAST, REPRESENTING ACCUMULATED PROFITS OF BU SINESS IN WHICH CASE THE SAME WOULD STAND TO BE ASSESSED IN THE PRECEDING YEARS, THE SAME WOULD PRESUMABLY STAND TO BE ASSESSED AS INCOME FROM OTHER SOURCES, AS WAS CONFIRMED IN P. SUBRAMANIUM (SUPRA). THOUGH, THEREFORE, THERE IS NO QUESTION OF THE A.O. FORMING ANY OPINION, BUT COULD IT, UNDER THE GIVEN CIRCUMST ANCES, BE SAID THAT A MISTAKE HAD OCCURRED IN ASSESSING THE DEEMED INCOME AS BUSI NESS INCOME AND, CONSEQUENTLY, ALLOWING EXPENDITURE ON REMUNERATION TO WORKING PARTNERS THERE- AGAINST. IN OUR VIEW, SURELY NOT. THERE WAS CLEARL Y AN OMISSION BY THE AO IN BOTH, ISSUING FINDING IN FACT AND APPLYING THE LAW. THAT, HOWEVER, WOULD BY ITSELF NOT 10 I.T.A NOS. 496 TO 498 & COS. 51 TO 53 OF 2012 ACIT V. AHAMED TEXTILE AGENCY, AHAMED FAB & AHAMED BROTHERS ENTITLE REASSESSMENT UNLESS THE INFERENCE OF ESCAPE MENT OF INCOME FOLLOWS UNMISTAKABLY ON THE BASIS OF THE UNDISPUTED FACTS, AND WHICH IS CLEARLY NOT THE CASE. THIS IS AS ONLY IN SUCH A CASE CAN HE CLAIM TO HAVE A REASON TO BELIEVE UNDER- ASSESSMENT, JUSTIFYING INVOCATION OF REASSESSMENT P ROCEEDINGS. THE VERY FACT THAT THE ASSESSEE CAN, ON BEING CALLED UPON TO, FURNISH MATERIALS AND/OR EXPLANATION TO SUBSTANTIATE ITS CLAIM OF THE EXCESS STOCK DISCLOSE D AS ONLY REPRESENTING INCOME FROM ITS BUSINESS AND, THUS, ASSESSABLE AS BUSINESS INCOME FOR THE CURRENT YEAR, WOULD BY ITSELF REMOVE ITS ASSESSMENT FROM THE AMBI T OF REASSESSMENT PROCEEDINGS. WE MAY HERE ALSO CLARIFY THAT WE HAVE VERIFIED THE REASONS RECORDED IN THE CASE OF AHAMED FABS IN WHICH CASE THERE WAS NO DISCLOSURE (REFER PARA 2 OF THIS ORDER), TO FIND IT ALSO ON THE SAME LINES, STATING THE AMOU NT OF EXCESS STOCK DISCLOSED AT RS. 23.50 LACS. THIS ORDER WOULD THUS EQUALLY APPLY IN ITS CASE AS WELL. 5. IN OUR VIEW, IT IS A CLEAR CASE OF LACK OF, NAY, OMISSION TO MAKE, ENQUIRY AND APPLICATION OF MIND BY THE AO IN ADDRESSING THE ISS UES ARISING FOR DETERMINATION WHILE FRAMING THE ORIGINAL ASSESSMENT. THE SAME MAY JUSTIFY INTERFERENCE U/S. 263 BUT, IN THE GIVEN FACTS AND CIRCUMSTANCES AND THE L AW IN THE MATTER, DOES NOT GIVE RISE TO A REASON TO BELIEVE UNDER-ASSESSMENT OF INC OME. THE REASSESSMENT/S IS ACCORDINGLY STRUCK DOWN. THE LD.CIT(A) HAS ANNULLED THE ASSESSMENTS ON THE BASIS THAT THE REASSESSMENT HAD BEEN OCCASIONED BY A CHAN GE OF OPINION IN-AS-MUCH AS THERE WAS NO FRESH INFORMATION/MATERIAL JUSTIFYING REASSESSMENT. WE, ON THE CONTRARY, HAVE FOUND A TOTAL FAILURE, AN OVERLOOKIN G, ON THE PART OF THE AO TO CONSIDER THE RELEVANT FACTS AND MATERIALS. WE, ACCO RDINGLY, VACATING THE FINDINGS OF THE FIRST APPELLATE AUTHORITY, YET UPHOLD HIS ORDER IN RESULT, FINDING NO VALID BASIS WITH THE AO TO FORM A HONEST REASON TO BELIEVE UNDE R-ASSESSMENT OF INCOME QUA THE REASON RECORDED, I.E., IN THE GIVEN FACTS AND C IRCUMSTANCES AND THE LAW IN THE MATTER. THE ASSESSEES COS ARE ONLY SUPPORTIVE IN NA TURE, REQUIRING NO ADJUDICATION. WE DECIDE ACCORDINGLY. 11 I.T.A NOS. 496 TO 498 & COS. 51 TO 53 OF 2012 ACIT V. AHAMED TEXTILE AGENCY, AHAMED FAB & AHAMED BROTHERS 6. IN THE RESULT, THE REVENUES APPEALS ARE DISMISS ED AND THE ASSESSEES COS ARE DISMISSED AS UNFRUCTUOUS. ORDER PRONOUNCED ON NOVEMBER 30, 2016 AT CHENNAI . SD/- SD/- ( . ! ) ( ) (G. PAVAN KUMAR) (SANJAY ARORA) ' /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, . /DATED, THE 30 TH NOVEMBER, 2016. EDN . / ( *',01 21%, /COPY TO: 1. &' /APPELLANT 2. *+&' /RESPONDENT 3. 3, ( )/CIT(A) 4. 3, /CIT, 5. 145 *',' /DR 6. 56$ 7 /GF.