RAGHUVEER METAL INDUSTRIES LTD., DELHI V. ACIT, Alwar

ITA 566/JPR/2013

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0208 (ITAT-JAIPUR)
• Duration Of Justice: 7 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA
• Keywords: Business income; Business expenditure; Income from undisclosed sources; Loose papers; Document seized; Documents seized; Liquidation
• Section: 143(3); 142(1); 133A; 13; 22; 153C; 131; 132; 15

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 566/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2009-10 RAGHUVEER METAL INDUSTRIES LIMITED C/O KAPIL GOEL ADV. A-1/25 SECTOR 15 ROHINI DELHI 110085 CUKE VS. ACIT, CENTRAL CIRCLE, ALWAR, RAJASTHAN LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCR 7496 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. HIMANSHU GOYAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SH. K. C. GUPTA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 03/06/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 23/06/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) (CENTRAL), JAIPUR DATED 26.03.2013 WHEREIN THE ASS ESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFER RING THE ACTION OF A.O IN MAKING ADDITION OF AN AMOUNT OF RS. 1,66,92, 172/- ON ACCOUNT OF UNDISCLOSED INCOME. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 2 (II) THAT THE ABOVE ADDITION HAS BEEN CONFERRED DES PITE THE FACT THAT THE SAME WAS MADE ONLY ON THE BASIS OF SO ME REPLY FILED BY A THIRD PERSON EXPLAINING THE MATERIAL FOU ND DURING THE COURSE OF SEARCH & SEIZURE ACTION CONDUCTED AT HIS PREMISES. (III) THAT THE ADDITION HAS BEEN CONFERRED DESPITE THE SAME HAVING BEEN MADE TOTALLY INDULGING IN SURMISES AND CONJECTURES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 2,3 2,193/- BEING LOSS CLAIMED BY ASSESSEE ON ACCOUNT OF THEFT OF GOODS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 11, 00,469/- ON ACCOUNT OF EXCESS STOCK OF CERTAIN ITEM & SHORT STOCK OF CE RTAIN ITEM FOUND DURING THE SURVEY. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 44, 800/- ON ACCOUNT OF SHORT STOCK FOUND DURING THE COURSE OF SURVEY. 2. WITH THE CONSENT OF BOTH THE PARTIES, THE PRESEN T APPEAL, ALONG WITH TWO OTHER APPEALS IN ITA NOS. 555 & 556/JP/2016 WAS TAKEN UP FOR ADJUDICATION ON 30.01.2020. THE OTHER TWO APPEALS HAVE ALREADY BEEN DISPOSED OFF VIDE ORDER DATED 12.03.2020, HOWEVER, THIS MATTER COULDNT BE PRONOUNCED WITHIN THE PRESCRIBED TIME DUE TO CURREN T SITUATION PREVAILING IN THE COUNTRY ON ACCOUNT OF COVID-19 PANDEMIC AND NON -FUNCTIONING OF THE BENCHES AND THE MATTER WAS RELEASED FROM RESERVED FOR ORDER CATEGORY AND THEREAFTER, LISTED FOR FRESH HEARING ON 03.06.2020. HENCE, THIS APPEAL HAS COME UP FOR ADJUDICATION BEFORE US AND IS BEING DIS POSED OFF BY THIS ORDER. 3. GROUND NO.1 IS GENERAL IN NATURE AND DOESNT REQ UIRE ANY SPECIFIC ADJUDICATION AND THE SAME IS THUS DISMISSED. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 3 4. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 1,66,92,172/- ON ACCOUNT OF UNDISCLOSED INCOME. 5. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SEARCH OPERATION U/S 132 WERE CONDUCTED ON 17.09.2008 IN M/S KAMDHENU GROUP OF COMPANIES. SIMULTANEOUSLY, THE SURVEY OPERATION WERE CARRIED O UT AT THE BUSINESS PREMISES OF THE ASSESSEE, A FRANCHISEE OF M/S KAMDH ENU ISPAT LTD, SITUATED AT BRIKCHIAWAS, NASIRABAD ROAD, MANGALIYAWAS, AJMER . SUBSEQUENTLY, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 6.09 .2010 DISCLOSING LOSS OF RS. 75,76,150/- WHICH WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) VIDE ORDER DATED 23.12.2010 WH EREIN THE ASSESSING OFFICER INTER ALIA MADE AN ADDITION OF RS. 1,66,92,172/- ON ACCOUNT OF UNACCOUNTED INCOME OF THE ASSESSEE COMPANY. IN THIS REGARD, THE RELEVANT FINDINGS OF THE AO ARE CONTAINED AT PARA 3(IV) OF T HE ASSESSMENT ORDER WHICH READS AS UNDER:- (IV) SURRENDER OF RS. 2.5 CRORES BY SH. PRADEEP A GARWAL THEN DIRECTOR OF THE COMPANY: IN THE POST SEARCH PROCEEDINGS BEFORE INVESTIGATION WING, JAIPUR SH. PRADEEP AGARWAL THEN DIRECTOR OF THE COMPANY SURREN DERED UNDISCLOSED INCOME OF RS. 2.5 CRORES AS UNACCOUNTED INCOME OF M/S RAGHUVEER METAL INDUSTRIES LTD FOR THE F.Y 2008-09 IN HIS LETTER DATED 02.12.2008 SUBMITTED TO THE ASSISTANT DIRECTOR OF I NCOME-TAX (INVESTIGATION-II), JAIPUR. HE FURTHER MENTIONED IN THE LETTER THAT THE AMOUNT OF RS. 2.5 CRORES WOULD COVER ENTIRE LOOSE P APER OF M/S RAGHUVEER METAL INDUSTRIES LTD AND SH. PRADEEP AGAR WAL AND SH. ASHISH AGARWAL WHO HAS ROUTED THROUGH AND INTRODUCE D THE UNDISCLOSED INCOME AS CAPITAL AND LOAN IN THE BOOKS OF COMPANY MENTION IN PAGE NO. 21 TO 23 OF ANNEXURE A-5 SEIZED DURING THE COURSE ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 4 OF SEARCH AND WILL FILE THE ASSESSEE-WISE BIFURCATI ON AFTER RECEIVING THE PHOTOCOPIES OF SEIZED PAPER. FURTHER IN HIS LETTER DATED 20.01.2009 SUBMITTED TO THE ASSISTANT DIRECTOR OF INCOME-TAX ( INVESTIGATION-II), JAIPUR, SH. PRADEEP AGARWAL GAVE THE BIFURCATION OF UNACCOUNTED INCOME INTRODUCED BY FOLLOWING PERSONS IN M/S RAGHU VEER METAL INDUSTRIES LTD. SH. ACHIN AGARWAL RS. 5,04,690/- SMT. GEETA AGARWAL RS. 15,45,312/- SH. PRADEEP AGARWAL RS. 36,32,837/- M/S PRADEEP KUMAR AGARWAL & SONS (HUF) RS. 26,24,9 86/- TOTAL RS. 83, 07, 825/- AS SUCH AMOUNT OF RS. 1,66,92,175/- WAS THE UNACCOU NTED INCOME OF THE ASSESSEE COMPANY. HOWEVER, THE ASSESSEE COMPANY HAS NOT INCLUDED IN ITS INCOME FOR THE YEAR 2008-09 ANY AMO UNT OUT OF RS. 2.5 CRORES SURRENDERED ON ITS BEHALF BY SH. PRADEEP AGA RWAL, DIRECTOR. IN VIEW OF IT, THE ASSESSEE COMPANY WAS ASKED TO EXPLA IN VIDE NOTICE U/S 142(1) DATED 11.11.2010 WHY IT HAS NOT INCLUDED THE AMOUNT SURRENDERED DURING SEARCH AS DISCUSSED ABOVE IN ITS INCOME FOR THE YEAR 2008-09 RELEVANT TO A.Y 2009-10. THE ASSESSEE COMPANY HAS REPLIED IN ITS LETTER DATED 27.11.2010 THAT THE COM PANY WAS NOT AWARE OF ANY SUCH LETTER SUBMITTED BY SH. PRADEEP AGARWAL TO THE ASSISTANT DIRECTOR OF INCOME-TAX (INVESTIGATION-II), JAIPUR N OR HAS THE BOARD OF DIRECTORS OF OUR COMPANY EVER GIVEN SANCTION TO ANY SUCH LETTER NOR HAS EVER AUTHORIZED SH. PRADEEP AGARWAL TO SURRENDE R ANY INCOME AS THERE WAS NO UNDISCLOSED INCOME IT HAS FURTHER CONT ENDED THAT ALLEGED LETTER IS ON BEHALF OF SH. PRADEEP AGARWAL AS IS VE RY CATEGORICALLY STATED IN THE LETTER IN THE REFERENCE COLUMN IN TH E CASE OF SH. PRADEEP AGARWAL. THE ASSESSEE COMPANY HAS ALSO MENTIONED T HAT THE DISPUTE WAS GOING ON WITH SH. PRADEEP AGARWAL IN THE COMPAN Y LAW BOARD ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 5 AND HE EVENTUALLY RESIGNED FROM THE COMPANY. THE AS SESSEE COMPANY HAS FURTHER CONTESTED THAT PAGE NO. 21-23 OF ANNEXU RE A-5 WERE NEITHER SEIZED FROM THE PREMISES OF THE COMPANY NOR THE PAPERS WERE EXPLAINED BY THE COMPANY AS THERE WERE NOT PROVIDED TO IT. THE ALLEGED SUBMISSION OF SH. PRADEEP AGARWAL DESCRIBE THE DOCUMENTS AS REVALUED BALANCE SHEET THOUGH HIS BASES AND YARD ST ICKS WOULD BE KNOWN TO HIM OR THE PERSON WHO HAS PREPARED THIS. W E ARE UNABLE TO UNDERSTAND THE PURPOSE OF PREPARATION OF THE DOCUME NTS. SUBMISSION OF THE ASSESSEE HAS BEEN CONSIDERED AND IT IS NOT FOUND CONVINCING FOR THE FOLLOWING REASONS. I) SINCE SH. PRADEEP AGARWAL BEING THE DIRECTOR OF THE COMPANY HAS BEEN AUTHORIZED BY THE ASSESSEE COMPANY TO COND UCT BUSINESS AFFAIRS OF THE COMPANY WHICH INCLUDED DEALING WITH VARIOUS DEPARTMENTS LIKE SALES-TAX, CENTRAL EXCISE, INCOME- TAX ETC. THEREFORE, THE ASSESSEE COMPANY CANNOT TAKE THE PLEA THAT SH. PRADEEP AGARWAL WAS NOT AUTHORIZED TO MAKE STATEMENT OR SUBMISSION BEFORE THE INCOME-TAX AUTHORITIES ON BEHALF OF THE COMPANY. TH EREFORE, WHATEVER HAS BEEN STATED BY SH. PRADEEP AGARWAL STILL HOLDS AS HE HAS NOT RETRACTED THE CONTENTS OF THE LETTERS SUBMITTED BY HIM TO ASSISTANT DIRECTOR OF INCOME-TAX (INVESTIGATION-II), JAIPUR O N 02.12.2008 AND 20.01.2009. IN THIS REGARD IT IS WORTH NOTICING THA T SH. SUNIL POKHARNA, ONE OF THE DIRECTORS OF THE COMPANY MADE A SURRENDE R OF RS. 15 LACS ON ACCOUNT OF EXCESS AND SHORT STOCK FOUND DURING T HE COURSE OF SURVEY U/S 133A IN HIS STATEMENT RECORDED ON 17.09. 2008. THE COMPANY HAS ACCEPTED THE CONTENTS OF THE STATEMENT OF SH. SUNIL POKHARNA BY ADMITTING IN ITS REPLY FILED IN THIS O FFICE ON 04.12.2010 AS FOLLOWS: THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY OPERATIONS HAS BEEN SOLD DURING THE NORMAL COURSE O F BUSINESS AND THE ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 6 TOTAL SALES CONSIDERATION WAS INCLUDED IN THE SALES REFLECTED IN THE BOOKS OF ACCOUNT OF THE COMPANY WHEN THE ASSESSEE COMPANY HAS ACCEPTED THE CONTENTS OF THE STATEMENT OF SH. SUNIL POKHARNA HOW CAN IT DENY THE SUBMISSION/ADMISSION MADE BY OTHER DIRE CTOR I.E. SH. PRADEEP AGARWAL. AS SUCH ADMISSION MADE BY SH. PRAD EEP AGARWAL ON BEHALF OF THE COMPANY IS ALSO BINDING ON IT. II) EVEN IF, THERE IS A DISPUTE WITH SH. PRADEEP AGARWA L, IT CANNOT BE DENIED THAT HE WAS NOT THE DIRECTOR OF THE COMPA NY WHEN HE MADE SUBMISSION BEFORE THE ASSISTANT DIRECTOR OF INCOME- TAX (INVESTIGATION- II), JAIPUR, THEREFORE THE ADMISSION MADE BY HIM AS DISCUSSED IN PARA ABOVE, IS BINDING ON THE COMPANY. III) SUBMISSION OF THE ASSESSEE THAT THE DOCUMENT SEIZED AT PAGE NO. 21-23 OF ANNEXURE A-5 WERE NEITHER SEIZED FROM THE PREMISES OF THE COMPANY NOR THE PAPERS WERE EXPLAINED BY THE CO MPANY, IS NO GROUND FOR DENYING THE CONTENTS OF THE DOCUMENTS. I F A DOCUMENT INDICATING ITS OWNERSHIP BY THE COMPANY IS SEIZED F ROM THE RESIDENCE OF THE DIRECTOR OF THE COMPANY, THE COMPANY CANNOT DENY ITS CONTENTS ONLY FOR THE REASON THAT IT WAS NOT SEIZED FROM THE BUSINESS PREMISES OF THE COMPANY BUT FROM THE RESIDENCE OF ITS DIRECT OR. IT IS VERY NORMAL FOR THE DIRECTORS TO CARRY BUSINESS ACTIVITY OF A C OMPANY FROM ITS RESIDENCE ALSO. THEREFORE, FINDING OF DOCUMENTS RELATED TO THE COMP ANY FROM THE RESIDENCE OF THE DIRECTOR IS NOT SOMETHING UNUSUAL. THEREFORE, IN THE CASE OF THE ASSESSEE COMPANY IF A DOCUMENT RELATING TO IT HAS BEEN FOUND FROM THE RESIDENCE OF ITS DIRECTOR IT IS AS G OOD AS HAVING BEEN FOUND FROM THE BUSINESS PREMISES OF THE COMPANY. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 7 ANY STATEMENT MADE BY THE DIRECTOR OF A COMPANY IS BINDING ON THE COMPANY BECAUSE COMPANY IS AN ARTIFICIAL ENTITY WHI CH WORKS THROUGH ITS DIRECTORS. IF A DIRECTOR SEIZED TO BE THE DIREC TOR OF THE COMPANY, IT DOES NOT MEAN THAT THE DECISIONS TAKEN BY HIM DURIN G HIS/HER TENURE ON BEHALF OF THE COMPANY WOULD CEASE TO EXIST. SH. PRADEEP AGARWAL, THEN DIRECTOR OF THE COMPANY, HAS NOT RETRACTED HIS STATEMENT REGARDING SURRENDER OF RS. 2,50,00,000/- MADE IN TH E HANDS OF THE COMPANY AND HIS FAMILY MEMBERS OUT OF WHICH RS. 1,6 6,92,175/- WAS SURRENDERED BY HIM IN THE HANDS OF THE ASSESSEE COM PANY. IN THIS REGARD I WOULD ALSO LIKE TO MENTION THAT IF AN OFFI CER OF THE INCOME-TAX DEPARTMENT CANNOT REFUSE TO ALLOW RELIEF TO THE ASS ESSEE AGAINST AN ASSESSMENT ORDER ONLY FOR THE REASON THAT THE ASSES SMENT ORDER HAS NOT BEEN ISSUED BY HIM BUT BY HIS PREDECESSOR. IN T HE SIMILAR VEIN, DECISION OF AN EARLIER DIRECTOR ARE BINDING ON THE COMPANY AND ITS CURRENT MANAGEMENT. EVEN IF, THE SURRENDER WAS RETRACTED BY SH. PRADEEP AGARWAL, IT WOULD STILL BE BINDING ON THE ASSESSEE COMPANY AND SH. PR ADEEP AGARWAL IN VIEW OF FOLLOWING DECISION OF SUPREME COURT OF INDI A & HIGH COURTS. IN VIEW OF THE DISCUSSION AS ABOVE IT IS HELD THAT THE AMOUNT OF RS. 2.5 CRORES HAVE BEEN CORRECTLY SURRENDERED BY SH. P RADEEP AGARWAL AND WHO HAS OWNED UNACCOUNTED INCOME TO THE TUNE OF RS. 83,07,825/- FOR HIMSELF AND OTHER MEMBERS OF HIS FA MILY. THEREFORE, THE REMAINING AMOUNT OF RS. 1,66,92,175 [2,50,00,00 0 - 83,07,825/-] IS CONSIDERED TO BE UNACCOUNTED INCOME OF THE ASSES SEE COMPANY. 6. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS SINCE CONFIRMED THE ADDITION MAD E BY THE AO HOLDING THAT ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 8 THE FINDING OF THE AO CANNOT BE FAULTED. AGAINST TH E SAID FINDING, THE ASSESSEE IS IN APPEAL BEFORE US. 7. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT A SEARCH OPERATION TOOK PLACE AT THE PREMISES OF KAMDHENU GR OUP ON 17.09.2008 INCLUDING SH. PRADEEP AGARWAL, THE DIRECTOR OF THE COMPANY. DURING THE COURSE OF POST SEARCH INQUIRY, ON THE BASIS OF CERT AIN LOOSE PAPERS FOUND, SH. PRADEEP AGARWAL SURRENDERED AN AMOUNT OF RS. 1,66,9 2,172/- IN THE NAME OF ASSESSEE COMPANY THROUGH A LETTER FILED BY HIS COUN SEL BEFORE THE ADIT (INVESTIGATION-II), JAIPUR ON 02.12.2008. IT WAS SU BMITTED THAT THE SAID LETTER WAS EXECUTED ON THE LETTER HEAD OF THE COUNSEL OF S H. PRADEEP AGARWAL SIGNED BY THE COUNSEL HIMSELF AND THEREAFTER, SH. P RADEEP AGARWAL AUTHORIZED CONTENTS OF THE SAID LETTER ON 20.01.200 9. IT WAS FURTHER SUBMITTED THAT ANOTHER LETTER WAS FILED BY THE COUN SEL OF SH. PRADEEP AGARWAL ON 15.12.2008 WHICH WAS AGAIN EXECUTED ON T HE LETTER HEAD OF THE COUNSEL AND SIGNED BY THE COUNSEL HIMSELF AND THERE AFTER, THE CONTENTS OF THE LETTER WERE AUTHORIZED BY SH. PRADEEP AGARWAL O N 20.01.2009. 8. FURTHER, OUR REFERENCE WAS DRAWN TO THE SUBMISS ION FILED BY THE ASSESSEE COMPANY BEFORE THE AO VIDE LETTER DATED 27 .10.2010 IN RESPONSE TO THE NOTICE ISSUED BY THE AO U/S 142(1) DATED 11.11. 2010 AND THE CONTENTS OF THE SAID LETTER READ AS UNDER:- TO, THE ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, ALWAR, RAJASTHAN REF: M/S RAGHUVEER METAL INDUSTRIES LTD. 21, ADRASH NAGAR, AJMER ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 9 SUB: NOTICE U/S 142(1) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2009-10. DEAR SIR, IN THIS REGARD, WE WOULD LIKE TO SUBMIT THE FOLLOWI NG DOCUMENTS/CLARIFICATIONS/EXPLANATIONS REQUIRED BY Y OUR GOOD SELF. THE LETTER DATED 15/12/2008 REFERRED BY YOU IN HAS COME TO US AS SURPRISE TO US AND WE WERE NOT AWARE OF ANY SUCH LE TTER NOR HAS THE BOARD OF DIRECTORS OF OUR COMPANY EVEN GIVEN SANCTI ON TO ANY SUCH LETTER NOR HAS EVEN AUTHORIZED SHRI PRADEEP AGARWAL TO SURRENDER ANY INCOME AS THERE WAS NO UNDISCLOSED INCOME. THE ALLE GED LETTER IS ON BEHALF OF MR. PRADEEP AGGARWAL AS IS VERY CATEGORIC ALLY STATED IN THE LETTER IN THE REFERENCE COLUMN IN THE CASE OF SHRI PRADEEP AGGARWAL. THERE WAS A DISPUTE GOING ON WITH SHRI PRADEEP AGGA RWAL IN THE COMPANY LAW BOARD AND HE HAS EVENTUALLY RESIGNED FR OM THE COMPANY. THE C.L.B DOCUMENTS CAN BE SUBMITTED IF RE QUIRED. THAT THE D BENCH OF DELHI ITAT IN THE CASE OF JCIT VS. BAL I MEDICAL & DENTAL CENTRE (2005) 98 TTJ (DEL) 644 HELD, IT IS SETTLED LEGAL POSITION THAT STATEMENT OF ONE PERSON CANNOT BIND THE OTHER. THU S, THE SURRENDER MADE BY SHRI PRADEEP KUMAR AGGARWAL, CANNOT BE BIND THE APPELLANT. WE WOULD LIKE TO FURTHER SUBMIT THAT WE WERE NEVER PART OF THE SHRI PRADEEP AGGARWAL GROUP OF COMPANIES AS IS EVIDENT F ROM THE STATEMENT OF SHRI VIJESH KARANWAL WHEREIN HE HAS GI VEN NAMES OF P. K. GADDI, P. K & COMPANY, P. K. & SONS ETC. WE ARE MAK ING KAMDHENU BRAND TMT BAR WHICH THE OFFICIAL TRADE MARK OF KAM DHENU ISPAT LIMITED AND PAYING ROYALTY TO M/S KAMDHENU ISPAT LI MITED WHICH IS AN ENTITY OWNED BY MR SATISH AGGARWAL. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 10 IT WOULD NOT BE OUT OF PLACE TO MENTION THAT AS WE WERE NOT PART OF THE PRADEEP AGGARWAL GROUP THOUGH SRI PRADEEP AGGAR WAL AND HIS GROUP OF COMPANY HAS CHALLENGED THE CENTRALIZATION OF CASES IN ALWAR IN THE HIGH COURT WE DID NOT OPPOSE CENTRALIZATION EVEN THOUGH WE ARE LOCATED FAR AWAY IN AJMER. FROM THE DOCUMENTS WHICH HAVE BEEN CITED AS HAVING BEEN SEIZED DURING THE SEARCH AND SURVEY OPERATIONS AT THE VARI OUS PREMISES OF SHRI PRADEEP AGGARWAL NONE OF THEM RELATES TO OUR C OMPANY. IT WOULD NOT BE OUT OF PLACE TO MENTION THAT NOTHING INCRIMI NATING WAS SEIZED FROM THE PREMISES OF THE COMPANY. WITHOUT PREJUDICE TO THE ABOVE AFTER A CLOSE READIN G OF LETTER PROVIDED TO US WE WOULD LIKE TO SUBMIT AS UNDER: 1. IN PARA-1 HE HAS SUBMITTED ALL EARNINGS OF THE ASS ESSEE STANDS INVESTED IN M/S RAGHUVEER METAL INDUSTRIES LTD. IN THE FORM OF UNSECURED LOANS ETC. THROUGH VARIOUS CHANNELS. FROM THE ABOVE IT IS APPARENT THAT THE ASSESSEE STA NDS FOR MR PRADEEP AGARWAL AND NOT M/S RAGHUVEER METAL INDUSTR IES LTD. 2. IN PARA-2 HE HAS SUBMITTED THAT THE ASSESSEE HAS A RRANGED LOANS IN THE NAME OF VARIOUS PERSONS IN HIS PERSONA L FILES AND ALSO DIRECTLY IN THE BOOKS OF M/S RAGHUVEER METAL I NDUSTRIES AND ALL SUCH LOANS AND OTHER CREDITS ARE APPEARING AS C APITAL IN ANNEXURE A-5 PAGE 21 TO 23. FROM THE ABOVE IT IS APPARENT AGAIN MR. PRADEEP AGA RWAL MAY HAVE ARRANGED LOANS ETC. AND M/S RAGHUVEER METAL IN DUSTRIES DID NOT HAVE ANY UNDISCLOSED INCOME. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 11 3. IN PARA-3 HE HAS SUBMITTED IN THE GROUP CASE OF SH RI PRADEEP AGARWAL AS PER BALANCE SHEET OF VARIOUS INDIVIDUAL FILES ON THE DATE OF SEARCH. THE FOLLOWING LOANS ARE APPEARING W HICH HAVE BEEN ROUTED THROUGH/INTRODUCED IN THE BOOKS OF M/S RAGHUVEER METAL INDUSTRIES:- SR. NO. PARTICULARS AMOUNT (A) IN THE FILE OF SHRI ACHIN AGARWAL RS. 5,04,690/- (B) IN THE FILE OF SMT. GEETA AGARWAL RS. 15,45,312/- (C) IN THE FILE OF SHRI PRADEEP AGARWAL R S. 36,32,837/- (D) M/S PRADEEP KUMAR AGARWAL & SONS (HUF) RS. 15,45, 312/- TOTAL RS. 83, 07, 825/- ALL THE ABOVE LOANS APPEARING IN THE BOOKS OF ABOVE INDIVIDUALS ARE UNACCOUNTED MONEY WAS INTRODUCED DIRECTLY OR IN DIRECTLY IN THE BOOKS OF M/S RAGHUVEER METAL INDUSTRIES AS CAPI TAL. FROM THE ABOVE EVEN IF THE STATEMENT IS CORRECT IT IS INVARIABLY CONFIRMED THAT M/S RAGHUVEER METAL INDUSTRIES HAS R ECEIVED FUNDS FROM MR PRADEEP AGARWAL & HIS FAMILY AND IS D ULY DISCLOSED IN THE BALANCE SHEET AND EVEN IF THERE WA S ANY UNDISCLOSED INCOME THAT WAS ON THE END OF MR. PRADE EP AGARWAL AND NOT M/S RAGHUVEER METAL INDUSTRIES. 4. IN PARA-4 HE HAS SUBMITTED THAT IT IS FURTHER SUBM ITTED THAT DURING THE LAST 3-4 YEARS THE ASSESSEE HAS ALSO TAK EN VARIOUS INCOME/COMMISSION FOR WHICH HE HAS PAID COMMISSION OUT OF UNACCOUNTED/UNDISCLOSED INCOME. SUCH PAYMENT OF COM MISSION BEING UNACCOUNTED STANDS SURRENDERED IN THE YEAR OF PAYMENT IN THE HANDS OF THE RELEVANT PERSON. THE SAME WILL BE QUANTIFIED ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 12 SOON AFTER THE PHOTOCOPIES OF RELEVANT SEIZED MATER IAL ARE PROVIDED TO US. THE ASSESSEE IN LETTER STANDS FOR MR. PRADEEP AGARW AL CLEARLY EVIDENT FROM SUBSTANCE OF LETTER AND THE PARA 1-4 ABOVE AND HE MAY HAVE RECEIVED SUCH COMMISSION. THE PAGE NO. 21-23 OF ANNEXURE A-5 WAS NEITHER SEIZ ED FROM THE PREMISES OF THE COMPANY NOR THE PAPERS WERE EXPLAIN ED BY THE COMPANY AS THEY WERE NOT PROVIDED ALSO. THE ALLEGED SUBMISSION OF EVEN MR. PRADEEP AGARWAL DESCRIBES THE DOCUMENT AS REVALUED BALANCE SHEET THOUGH HIS BASIS AND YARDSTICKS WOULD BE KNOWN TO HIM OR THE PERSON WHO HAS PREPARED THIS. WE ARE UNABLE TO UNDERSTAND THE PURPOSE OF PREPARATION OF THE DOCUMENTS. 1. RS. 2.5 CRORES HAS NEVER BEEN SURRENDERED BY M/S RA GHUVEER METAL INDUSTRIES LTD. AND SURRENDER IF ANY WAS BY M R. PRADEEP AGARWAL IN HIS INDIVIDUAL CAPACITY AS IS ALSO EVIDENT FROM THE FACT THAT ON THE LETTER PROVIDED TO US HE HAS WRITTEN THAT THE ABOV E SUGGESTION WAS GIVEN BY MY COUNSEL AS PER MY DIRECTION AND CONSENT . OUR CONTENTION IS FURTHER CONFIRMED BY THE FACT THAT HE HAS SIGNED IN HIS INDIVIDUAL CAPACITY. 2. IN ADDITION TO OUR SUBMISSION ABOVE AND WITHOUT PRE JUDICE TO THE ABOVE REVALUATION AMOUNT OF RS. 12,58,50,000/- CAN T BE TAXED AND IT IS NOT THAT YOU ACCEPT ONE SUBMISSION OF MR. PRADEE P AGARWAL WHILE NOT THE OTHER. MOREOVER EVEN IF IT IS PRESUMED THAT IT IS HIS EXTRA CAPITAL THEN IT SHOULD BE TAXED IN HIS PERSONAL HAN D. WE HOPE THE ABOVE WILL SERVE YOUR PURPOSE. IF YOUR GOOD SELF REQUIRES ANY OTHER DETAILS/CLARIFICATIONS WE SHALL BE EAGER TO PROVIDE THE SAME ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 13 TO YOU. HOWEVER IF YOUR GOODSELF IS NOT SATISFIED W ITH OUR SUBMISSION THEN AN OPPORTUNITY OF PERSONAL HEARING MAY BE GRAN TED BEFORE ANY ADVERSE VIEW IS TAKEN AGAIN US. THANKING YOU YOURS TRULY, FOR RAGHUVEER METAL INDUSTRIES PVT. LTD. (AUTHORIZED SIGNATORY) 9. FURTHER, OUR REFERENCE WAS DRAWN TO THE AFFIDAVI T OF SH. SUNIL POKHRANA, DIRECTOR OF THE ASSESSEE COMPANY WHICH WA S FILED BEFORE THE LD. CIT(A) AND THE CONTENTS OF THE SAID AFFIDAVIT READ AS UNDER:- 1. THAT I SUNIL POKHRANA S/O SOHAN LAL POKHRANA R/O 2 1, ADARSH NAGAR, AJMER SOLEMNLY AFFIRMS THAT I AM DIRECTOR OF M/S RAGHUVEER METALS INDUSTRIES LTD. AND I AM FULLY AWARE ABOUT T HE FACTS AND TRANSACTION OF THIS COMPANY AND I AM ALSO COMPETENT TO FILE EXPLANATION AND AFFIDAVIT ON BEHALF OF SAID RAGHUVEER METAL IND USTRIES LTD. 2. THAT I SOLEMNLY AFFIRM THAT IN THE CASE OF M/S RAGH UVEER METALS INDUSTRIES LTD. & ALSO IN THE CASE OF SHRI PRADEEP AGARWAL, A SEARCH & SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT, 19 61 WAS CARRIED OUT ON 17.09.2008 AND ON THE DATE OF SEARCH, THE DEPONE NT, SHRI SUNIL POKHRANA, SHRI PRADEEP AGARWAL SHRI ASHISH AGARWAL & SHRI VIJESH KARNWAL WERE THE DIRECTORS OF M/S RAGHUVEER METALS INDUSTRIES LTD. 3. THAT I SOLEMNLY AFFIRM THAT M/S RAGHUVEER METALS IN DUSTRIES LTD., NOW IT SHALL BE CALLED AS APPELLANT, HAS FILE D AS APPEAL BEFORE THE CIT(A)-CENTRAL, JAIPUR AGAINST THE ORDER DATED 23.1 2.2010 PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSME NT YEAR 2009-10. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 14 4. THAT I SOLEMNLY AFFIRM THAT SHRI S. L. PODDAR, PART NER/ PROPRIETOR OF M/S S. L. PODDAR & CO. WAS THE COUNSEL OF SHRI P RADEEP AGARWAL & HE WAS NEVER THE COUNSEL OF THE APPELLANT. 5. THAT I SOLEMNLY AFFIRM THAT THE LOOSE PAPERS PAGE N O. 21-23 OF ANNEXURE A-5 WAS NOT SEIZED FROM THE PREMISES OF TH E APPELLANT AND THE DESCRIPTION ABOUT REVALUATION OF ASSETS OF THE APPELLANT AND THE INCREASE IN THE CAPITAL AMOUNT OF SHRI PRADEEP AGAR WAL AND OF SHRI ANIL POKHRANA AS MENTIONED IN SAID LOOSE PAPERS ARE INCO RRECT AND NOT PERTAINING TO THE APPELLANT AND SHRI ANIL POKHRANA. 6. THAT I SOLEMNLY AFFIRM THAT NEITHER THE APPELLANT N OR THE DEPONENT & OTHER DIRECTORS, VIZ. SHRI SUNIL POKHRAN A & SHRI RAJESH POKHRANA WERE AWARE ABOUT REVALUATION OF THE ASSETS NOR ABOUT THE INCREASE IN THE CAPITAL AMOUNT OF SHRI PRADEEP AGAR WAL AND OF SHRI ANIL POKHRANA. 7. THAT I SOLEMNLY AFFIRM THAT THE APPELLANT HAS NEITH ER AUTHORIZED TO SHRI PRADEEP AGARWAL FOR THE REVALUALTION OF THE ASSETS NOR SUCH REVALUATION OF ASSETS AND CORRESPONDING ENTRIES IN THE CAPITAL OF SHRI PRADEEP AGARWAL AND OF SHRI ANIL POKHRANA HAS EVER BEEN AUTHENTICATED. 8. THAT I SOLEMNLY AFFIRM THAT SHRI PRADEEP AGARWAL WA S NEVER AUTHORIZED BY THE APPELLANT FOR MAKING ANY SURRENDE R OF INCOME AND THE SURRENDER OF RS. 2.5 CRORES VIDE LETTERS DATED 02.12.2008 AND 15.12.2008 BEFORE THE ADIT (INV.) AS MADE BY HIM WA S NOT ON BEHALF OF THE APPELLANT AS IT WAS NOT APPROVED BY THE BOAR D OF DIRECTORS. 10. IT WAS SUBMITTED BY THE LD AR THAT BASIS AFORES AID DOCUMENTATION AVAILABLE ON RECORD, IT IS TO BE NOTED THAT SHRI PR ADEEP AGGARWAL, DIRECTOR OF THE ASSESSEE COMPANY WAS HAVING DISPUTES WITH THE C OMPANY & OTHER DIRECTORS & IN FACT A COMPLAINT BEFORE THE CLB WAS LODGED AGAINST HIM & HE ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 15 RESIGNED FROM THE COMPANY AT LAST. IF WE ESCHEW THE LETTERS FILED BY THE COUNSEL OF THE EX-DIRECTOR, PRADEEP AGGARWAL WHICH WAS AUTHORIZED BY HIM AFTER A MONTH, THEN THERE IS LOGICALLY NO INCRIMINA TING MATERIAL ON RECORD TO JUSTIFY THE ADDITIONS. IT WAS SUBMITTED THAT THE FI NANCIALS SO GENERATED BY THE COUNSEL OF PRADEEP AGGARWAL WERE MADE INDULGING IN CONJECTURES AND SURMISES. IT WAS FURTHER SUBMITTED THAT A STATEMENT RECORDED OR CONFESSION MADE BY A HOSTILE DIRECTOR CANNOT BE TAKEN AS A GRO UND CONCLUSIVE ENOUGH FOR MAKING AN ADDITION ON THE ASSESSEE COMPANY. HIS INTENT BEING MALAFIDE TOWARDS THE ASSESSEE CANNOT BE DOUBTED. EVEN OTHERW ISE ON THE BASIS OF A HANDMADE LEDGER FOUND IN THE PREMISES OF A THIRD PA RTY AND THE THIRD PARTYS STATEMENT CANNOT BE TAKEN AS A GROUND FOR MAKING AN Y ADDITION IN CASE OF ASSESSEE AND IN SUPPORT, RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: CIT VS. ANIL KHANDELWAL (ITA NO. 247/2015 & 248/2015 & 248/2015) DCIT VS. YASH PAL NARENDRA KUMAR (ITA NO. 5340, 5341 & 5342/D/2012) SHRI KETAN V SHAH AND OTHERS VS. ACIT (ITA NO. 2321 & 2322/MUM/2013) 11. IT WAS FURTHER SUBMITTED THAT NO ADDITION COULD BE MADE ON THE BASIS OF LOOSE PAPERS FOUND IN THE PREMISES OF A THIRD PA RTY AND IN SUPPORT, RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: ADD. CIT VS. LATA MANGESHKAR [1947] 97 ITR 696 (BOM ) KANTILAL L. LUNKAD, L/H SMT. PUSHPA K. LUNKAD VS. D CIT (ITA NO. 725 & 726/PUN/2014) ITO VS. SHRI PUKHRAJ SONI (ITA NO. 585/IND/2015) 12. WITHOUT PREJUDICE TO ABOVE, IT WAS SUBMITTED TH AT EVEN IF THE CALCULATION IS DONE AS PER THE METHOD FOLLOWED BY T HE AO AND CONFIRMED BY CIT(A) FOR MAKING THE ADDITION ON THE BASIS OF DOCU MENT MARKED AS A-5, ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 16 THERE WOULD NOT BE ANY BASIS FOR MAKING THE ADDITIO N AS PER DETAILED WORKING BELOW: AS DONE BY THE AO: PARTICULARS AS ON 31.03.2018 (A) AS ON 30.06.2008 (B) DIFFERENCE (B- A) TOTAL OF CAPITAL ACCOUNTS 13,66,50,000 26,25,00,000/- 12,58,50,000/- FIXED ASSETS 7,89,28,394 17,98,66,704/- 10,10,00,00 0/- TOTAL UNDISCLOSED INCOME (APPROX) 2,50,00,000/- UNACCOUNTED MONEY ON ACCOUNT OF LOANS INTRODUCED IN THE ASSESSEES BOOKS 83,07,825/- ADDITION MADE 1,66,92,172/- CORRECT CALCULATION( AS PER ASSESSEE):- INCREASE IN VALUATION OF ASSETS AS PER THE CAPITAL LEDGER ACCOUNTS OF ANIL POKHARANA AND P RADEEP AGGARWAL IS RS. 3.90 CR+ 3.60 CR + 3.90 CR + 3.60 CR = RS 15 CR. PARTICULARS AS ON 31.03.2018 AS ON 30.06.2008 (B) DIFFERENCE/INCREASE (B-A) TOTAL OF CAPITAL ACCOUNTS 13,66,50,000 26,25,00,000 12,58,50,000/- FIXED ASSETS 15,00,00,000/- TOTAL UNDICLOSED INCOME (APPROX.) NIL UNACCOUNTED MONEY ON ACCOUNT OF LOANS INTRODUCED IN THE ASSESSEES BOOKS 83,07,825/- THEREFORE ADDITION TO BE MADE NIL 13. PER CONTRA, THE LD. DR SUBMITTED THAT SH. PRADE EP AGARWAL WAS THE DIRECTOR OF THE ASSESSEE COMPANY AT THE TIME OF REC ORDING OF THE STATEMENT AND IN HIS STATEMENT RECORDED ON OATH U/S 131 ON 19 .11.2008 IN REPLY TO ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 17 QUESTION NO. 56, HE HAS CATEGORICALLY ADMITTED THAT PAGE NO. 23 OF ANNEXURE-A5 WAS ACTUAL BALANCE-SHEET OF M/S RAGHUVE ER METAL INDUSTRIES LTD. WHEREIN UNACCOUNTED TRANSACTIONS WERE ALSO INC LUDED AND THE SAME WAS SURRENDERED. IT WAS FURTHER SUBMITTED THAT IN HIS S TATEMENT, HE HAS OWNED SUCH UNACCOUNTED INCOME RECORDED IN THESE DOCUMENTS AT VARIOUS ANNEXURE AND ENDORSED THE SUBMISSION OF THE COUNSEL WHEN CON FRONTED TO HIM. IN VIEW OF ABOVE AND ON CAREFUL CONSIDERATION OF ALL R ELEVANT FACTS, THE ADDITION WAS RIGHTLY MADE BY THE AO. 14. FURTHER, LD DR PLACED RELIANCE ON THE FINDINGS OF THE LD CIT(A) WHICH READ AS UNDER: IN THIS GROUP CASE THE SEARCH WAS CONDUCTED ON 17.09.2008 AND THE GROUP CASES ARE RAGHUVEER METAL INDUSTRIES LTD. KAMDHENU ISPAT LTD. ETC. THERE IS NO DISPUTE ON THE FACT THAT ON T HE DATE OF SEARCH SH. PRADEEP AGARWAL AND SH. SUNIL POKHARNA WERE THE MAI N DIRECTORS OF THE APPELLANT COMPANY. THOUGH IT IS STATED THAT THERE W AS SOME DISPUTE BETWEEN THE DIRECTORS EVEN BEFORE THE DATE OF SEARC H BUT NO SUCH FACT APPEAR TO HAVE BEEN BROUGHT TO THE NOTICE OF THE SE ARCH PARTY OR THE DEPARTMENT DURING THE COURSE OF SEARCH, THEREFORE I T CANNOT BE SAID THAT SH. PRADEEP AGARWAL WAS NOT COMPETENT TO MAKE SUCH DISCLOSURE OF INCOME. ON PERUSAL OF SUCH LETTERS DATED 2.12.2008 AND 15.12.2008 IT MAY BE NOTED THAT THE CONTENTS OF SUCH LETTERS ARE VERY SPECIFIC. IN LETTER DATED 02.12.2008 IT IS MENTIONED THAT ON THE BASIS OF PAGE NO. 21 TO 23 OF ANNEX. A-5 WHICH IS REVALUED BALANCE SHEET OF M/ S RAGHUVEER INDUSTRIES LTD. AS ON 30.06.2008 AND IN THIS BALANC E SHEET THE TOTAL CAPITAL OF BOTH THE DIRECTORS ARE MENTIONED AT RS. 262632985/- (129882027 AND 132750958). AGAINST SUCH CAPITAL, FI XED ASSETS WERE SHOWN AT RS. 179866704/- WHEREAS IN THE BOOKS OF AC COUNTS OF M/S RAGHUVEER METAL INDUSTRIES LTD. THE TOTAL CAPITAL + LOAN FUND WAS FOR RS. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 18 136650000/- AND FIXED ASSETS WERE FOR RS. 78928394/ -. ACCORDINGLY, THE CAPITAL AS PER LOOSE PAPERS WAS AT RS. 262500000/- WHEREAS THE CAPITAL AS PER BOOKS WAS AT RS 136650000/- AND ACCORDINGLY, EXTRA CAPITAL AS PER LOOSE PAPERS WAS SHOWN FOR RS. 125850000/-. THE REASON FOR EXTRA CAPITAL WAS REVALUATION OF FIXED ASSETS FOR THE PUR POSE OF THE PARTITION BETWEEN BOTH THE DIRECTORS NAMELY SH. PRADEEP AGARW AL AND SH. ANIL POKHARAN. BY SUCH REVALUATION THE FIXED ASSET OF RS . 78928394/- WAS ARRIVED AT RS. 179866704/- AND THE DIFFERENCE OF RS . 101000000/- WAS CREDITED IN DIRECTORS CAPITAL ACCOUNT BY RS. 5.50 CR. IN EACH DIRECTOR. THE ACTUAL UNDISCLOSED INCOME OF THE COMPANY SHARED BY BOTH THE DIRECTORS AND CREDITED IN THE CAPITAL ACCOUNT WAS AT RS. 2485 0000/- (125850000- 101000000) AND ACCORDINGLY SURRENDER OF RS. 2.50 CR . WAS MADE AS UNDISCLOSED INCOME/UNACCOUNTED INCOME OF M/S RAGHUV EER METAL INDUSTRIES LTD. TO PURCHASE PEACE OF MIND. IT WAS A LSO STATED IN THE LETTER THAT THIS SURRENDER WILL COVER THE ENTIRE LO OSE PAPERS OF M/S RAGHUVEER METAL INDUSTRIES LTD. SH. PRADEEP KUMAR A GARWAL AND SH. ASHISH AGARWAL WHO HAS ROUTED AND INTRODUCED THE UN DISCLOSED INCOME AS CAPITAL AND LOAN IN THE BOOKS OF THE COMPANY. IN THE SUBSEQUENT LETTER DATED 15.12.2008, BIFURCATION OF RS 2.5 CR W AS GIVEN AND UNDISCLOSED INCOME AMOUNTING TO RS. 8307825/- WAS A DMITTED IN THE HANDS OF SH. ACHIN AGARWAL, SMT. GEETA AGARWAL, SH. PRADEEP AGARWAL AND SH. PRADEEP AGARWAL AND SONS HUF, BY STATING TH AT LOANS IN THE NAME OF VARIOUS SUCH PERSONS WERE RAISED IN THE BOO KS OF M/S RAGHUVEER METAL INDUSTRIES LTD. AND THAT ALL SUCH L OANS ARE UNACCOUNTED MONEY WHICH WAS INTRODUCED DIRECTLY OR INDIRECTLY I N THE BOOKS OF ACCOUNTS OF M/S RAGHUVEER METAL INDUSTRIES LTD. A S THE UNDISCLOSED INCOME TO THE EXTENT OF RS. 8307825/- WAS ADMITTED BY THE INDIVIDUAL MEMBER OF SH. PRADEEP AGARWAL, THEREFORE THE REMAIN ING AMOUNT OF UNDISCLOSED INCOME AMOUNTING TO RS. 16692175/- WAS ADDED IN THE ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 19 APPELLANTS CASE. THE ABOVE FACT WILL INDICATE THAT SH. PRADEEP AGARWAL ONE OF THE MAIN DIRECTOR OF THE APPELLANT COMPANY W AS COMPETENT TO MAKE SUCH SURRENDER AND SUCH ADMISSION OF INCOME IS NEVER RETRACTED BY HIM. IT IS NOT THE CASE THAT SUCH ADDITION OF IN COME WAS NOT BASED ON ANY DOCUMENT AND THE FACT DETAILED EXERCISE AND BAS IS IS GIVEN AS TO HOW THE UNDISCLOSED INCOME WAS DETERMINED. EVEN REF ERENCE OF SEIZED DOCUMENTS IS ALSO MADE. IT MAY ALSO BE STATED THAT EVEN IF SUCH SURRENDER WAS NOT MADE STRICTLY U/S 132(4) IT MAY N OT AFFECT THE AUTHENTICITY AND VALIDITY OF SUCH ADMISSION. AS REG ARDS THE OBJECTION OF THE APPELLANT THAT SUCH SURRENDER WAS BASED ON THE REVALUATION OF ASSETS AND THAT FOR REVALUATION OF ASSETS CERTAIN PROCEDUR ES ARE LAID DOWN WHICH WERE NOT FULFILLED, IT MAY BE STATED THAT THO UGHT THE APPELLANT COMPANY IS A CORPORATE ENTITY BUT ON THE BASIS OF I NCRIMINATING DOCUMENTS/ PAPERS ONE OF THE DIRECTOR MADE VERY SPE CIFIC DISCLOSURE OF UNDISCLOSED INCOME AND SUCH ADMISSION OF UNACCOUNTE D INCOME MAY NOT NECESSARILY BE AS PER THE PARAMETERS AND PROCEDURES FOR REVALUATION OF ASSETS BUT SIMPLY NON-ADHERENCE OF PROCEDURAL REQUI REMENT MAY NOT BE A VALID GROUND OF NEGATE THE AUTHENTICITY OF VALID DISCLOSURE OF INCOME. THE OTHER OBJECTIONS OF THE APPELLANT ARE BROADLY O F ACADEMIC NATURE WITHOUT ANY WAY AFFECTING THE VALIDITY OF SURRENDER OF UNDISCLOSED INCOME. THE ULTIMATE FACT REMAINS THAT ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND FROM THE PREMISES OF MAIN DIRECTOR OF COMPANY, ONE OF THE MAIN DIRECTOR ADMITTED UNDISCLOSED INCOME. THER E IS NOTHING ON RECORD THAT SUCH SURRENDER WAS MADE UNDER DURESS OR COERCION, IN FACT THE ADMISSION OF UNACCOUNTED INCOME WAS ABSOLUTELY VOLUNTARY ACT BY THE MAIN DIRECTOR. IT MAY ALSO BE MENTIONED THAT TH OUGH TECHNICALLY THE SURRENDER OF INCOME WAS NOT UNDER SEC. 132(4) OF IT ACT BUT SUCH SURRENDER WAS IN CONSEQUENCE TO SEARCH AND BASED ON SPECIFIC INCRIMINATING DOCUMENTS AND THEREFORE SUCH SURRENDE R OF INCOME CAN ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 20 DEFINITELY BE SAID TO BE SIMILAR TO SURRENDER OF IN COME MADE U/S 132(4) AND THE ADMISSION MADE U/S 132(4) ARE DEFINITELY HA VING STRONG EVIDENTIARY VALUE. RELIANCE IS PLACED ON THE FOLLOW ING CASE LAWS FOR THE ABOVE PROPOSITION OF LAW:- ACIT VS. HUKUM CHAND & ORS. (2010) 337 ITR 238 (CHH ATISGARH) RAJMAL NAWAL VS. CIT & ANR. (2003) 183 CTR 144 (RAJ .) HOTEL KIRAN VS. ACIT (2002) 77 TTJ 87 (PUNE) V. KUBHAMBU & SONS VS. CIT (1986) 131 CTR 396 (KER) RAKESH MAHAJAN VS. CIT (2008) 214 CTR 218 (P & H) KEEPING IN VIEW THE ABOVE FACTS AND CIRCUMSTANCES, THE FINDING OF THE AO MAKING ADDITION OF RS. 16692175/- CANNOT BE FAUL TED. THE ADDITION IS MADE BY THE AO IS ACCORDINGLY CONFIRMED. THE GROUND OF APPEAL IS DISMISSED. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, WE REFER TO THE STAT EMENT OF SHRI. PRADEEP AGARWAL RECORDED U/S 132(4) ON 17.10.2008. IN RESPO NSE TO QUESTION NO. 3, HE HAS STATED THAT HE IS ENGAGED IN IRON AND CEMENT BUSINESS AND HE IS THE MANAGING DIRECTOR OF M/S KAMDHENU INDUSTRIES LTD AN D THE OFFICE OF SAID COMPANY IS LOCATED AT 24 SHIVAJI MARG, KARANPURA, D ELHI AND THE SAID STATEMENT WAS THUS GIVEN IN THE STATUS AND CAPACITY OF MANAGING DIRECTOR OF M/S KAMDHENU INDUSTRIES LTD. THERE IS HOWEVER, NO QUESTION WHICH WAS RAISED BY THE REVENUE IN RELATION TO THE ASSESSEE C OMPANY OR IN TERMS OF ANY DOCUMENTS/LOOSE PAPERS RELATING TO THE ASSESSEE COM PANY WHICH WERE SEIZED DURING THE SEARCH WHILE RECORDING HIS STATEMENT U/S 132(4) OF THE ACT. 16. NOW, LETS LOOK AT HIS EARLIER STATEMENT RECOR DED U/S 131 ON 26.09.2008, IN RESPONSE TO QUESTION NO.4, HE HAS ST ATED THAT HE IS THE DIRECTOR OF M/S RAGHUVEER METAL INDUSTRIES, AJMER B ESIDES 4 OTHER ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 21 COMPANIES AND HE IS ALSO THE SHARE HOLDER IN THIS C OMPANY. IN RESPONSE TO QUESTION NO. 6, HE HAS STATED THAT BESIDES HIS FAMI LY, THE FAMILY OF SH. ANIL POKHARNA AND FAMILY OF SH. TARSEN SINGH ARE ALSO IN VOLVED IN THIS COMPANY IN CAPACITY OF DIRECTOR AND SHARE HOLDER. IN RESPONSE TO QUESTION NO. 7, HE HAS STATED THAT M/S RAGHUVEER METAL INDUSTRIES IS INVOL VED IN THE BUSINESS OF MANUFACTURING IRON BARS. IN RESPONSE TO QUESTION NO . 8, HE HAS STATED THAT SH. SURENDRA KUMAR IS A MAIN PERSON INVOLVED IN M/S RAGHUVEER METAL INDUSTRIES. WE THEREFORE FIND THAT AS ON DATE OF RE CORDING OF AFORESAID STATEMENT U/S 131 OF SH. PRADEEP AGARWAL, HE WAS ON E OF THE SHARE HOLDERS AND THE DIRECTOR OF THE ASSESSEE COMPANY AND BESIDE S HIM, SH. ANIL POKHARNA, SH. TARSEN SINGH AND THEIR FAMILY MEMBERS WERE ALSO SHARE HOLDERS AND DIRECTORS IN THE ASSESSEE COMPANY. 17. THEREAFTER, IN HIS ANOTHER STATEMENT RECORDED U /S 131 ON 19.11.2008, IN RESPONSE TO QUESTION NO. 53 WHEREIN HE WAS SHOWN ANNEXURE A1 TO A10 WHICH WERE SEIZED DURING THE COURSE OF SEARCH FROM THE RESIDENCE OF SH. ASHISH AGARWAL WHO WAS INCHARGE OF KHAMDENU INDUSTR IES, HE HAS STATED THAT THESE LOOSE PAPERS ARE RELATING TO HIS COMPANI ES AND BUSINESS ESTABLISHMENTS WHICH MAY INCLUDE ACCOUNTED AND UNAC COUNTED TRANSACTIONS, HE WILL GIVE DETAIL INFORMATION ABOUT THIS TRANSACT IONS LATTER ON AND HE FURTHER STATED THAT ON SUCH UNACCOUNTED INCOME, HE WILL PAY TAXES AND SURRENDER FOR INCOME TAX PURPOSES. FURTHER, IN RESPONSE TO QUESTI ON NO. 56 WHEREIN HE WAS SHOWN PAGES 23 AND 60 OF ANNEXURE-A5, HE HAS ST ATED THAT PAGE 23 SHOWS THE BALANCE SHEET OF M/S RAGHUVEER METAL INDU STRIES LTD ON 30.06.2008. HE FURTHER STATED THAT THE SAID BALANCE SHEET CONTAINS BOTH UNACCOUNTED AND ACCOUNTED TRANSACTIONS OF THE ACTUA L BUSINESS OF THE COMPANY. FURTHER, HE HAS STATED THAT ACCORDING TO T HE SAID BALANCE SHEET WHATEVER PROFITS HAVE NOT BEEN SHOWN IN THE BOOKS O F ACCOUNTS, HE WILL PAY ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 22 THE TAXES BY ACCEPTING THE UNACCOUNTED INCOME OF TH E CURRENT FINANCIAL YEAR. NOW, LETS LOOKS AT ANNEXURE-A5 PAGE 23, THE CONTENT S THEREOF READ AS UNDER: ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 23 18. ON PERUSAL OF THE ABOVE, WE FIND THAT IT IS A H ANDWRITTEN DOCUMENT WHICH IS NOT AUTHENTICATED BY ANY PERSON. THERE IS NO MENTION OF ANY FIGURE OF PROFIT OR LOSS AS ON 30.06.2008. FURTHER, ON PER USAL OF THE LEDGER ACCOUNTS OF SH. P. K. AGARWAL AND SH. ANIL POKHARNA MARKED A S ANNEXURE-A5 PAGE 21- 22, WE FIND THAT IT CONTAINS PARTICULARS AND CORRES PONDING FIGURES ABOUT FIXED FURNACE, FIXED ROLLING AND FURNACE, RUNNING ACCOUNT AND DIRECTOR REMUNERATION AND AGAIN DOES NOT CONTAIN ANY SPECIFIC FIGURE OF S HARE OF PROFIT AND LOSS ACCOUNT AND THEIR RESPECTIVE SHARE CAPITAL AS ON 30 TH JUNE, 2008. FURTHER, WE FIND THAT THERE IS NO FINDING RECORDED BY THE ASSES SING OFFICER AS TO THE ACTUAL PROFITS AS PER BOOKS OF ACCOUNTS AS ON 30 TH JUNE, 2008 AND THE UNACCOUNTED PROFITS EMBEDDED IN THE BALANCE SHEET A S PER ANNEXURE A5 PAGE 23 AND THE VERACITY OF OTHER FIGURES AS STATED IN THE AFORESAID BALANCE SHEET SO FOUND AS ON 30.06.2008 AS TO WHETHER THEY CORROBORATE WITH THE ASSESSEES BOOKS OF ACCOUNTS OR NOT. MERELY STATIN G THAT THE SAID DOCUMENT REPRESENTS THE BALANCE SHEET OF THE ASSESSEE COMPAN Y WILL NOT SUFFICE UNLESS IT IS ESTABLISHED THAT THE FINANCIAL SUMMARY SO DEP ICTED ON THE FACE OF THE BALANCE SHEET REPRESENTS AND INCLUDES THE ACTUAL TR ANSACTIONS SO RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY, BESI DES THE UNRECORDED TRANSACTIONS. 19. WE THEREFORE FIND THAT FIRSTLY, THE DOCUMENT SO FOUND AND SEIZED IS FROM THE PREMISES OF SHRI ASHISH AGARWAL WHO WAS ST ATED TO BE INCHARGE OF KHAMDENU INDUSTRIES, AND NOT FROM THE PREMISES OF S HRI PRADEEP AGARWAL, THE DIRECTOR OF THE ASSESSEE COMPANY WHICH LENDS CR EDENCE TO THE FACT THAT SHRI PRADEEP AGARWAL WAS NOT CONFRONTED WITH THE SA ID DOCUMENT AT THE TIME OF RECORDING HIS STATEMENT U/S 132(4) OF THE ACT. THERE IS NOTHING ON RECORD WHICH SHOWS THAT SHRI ASHISH AGARWAL WAS CONFRONTED WITH SUCH DOCUMENT AND HIS STATEMENT WAS RECORDED AND HIS EXPLANATION WAS CALLED FOR REGARDING THE CONTENTS AND AUTHENCITY OF SUCH DOCUMENTS. FUR THER, WHEN SHRI PRADEEP ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 24 AGARWAL, THE DIRECTOR OF THE ASSESSEE COMPANY WAS C ONFRONTED WITH SUCH DOCUMENT WHILE RECORDING HIS STATEMENT U/S 131 ON 1 9.11.2008, HE HAS STATED THAT THE SAID DOCUMENT SHOWS THE BALANCE SHE ET OF ACCOUNTED AND UNACCOUNTED TRANSACTION OF THE ASSESSEE COMPANY AS ON 30.06.2008, WHATEVER PROFITS HAVE NOT BEEN SHOWN IN THE BOOKS O F ACCOUNTS, HE WILL PAY THE TAXES BY ACCEPTING THE UNACCOUNTED INCOME OF TH E CURRENT FINANCIAL YEAR. HOWEVER, AS WE HAVE SEEN ABOVE, THERE ARE NO EFFORT S WHICH HAVE BEEN MADE BY THE ASSESSING OFFICER TO VERIFY THE CONTENT S OF THE SAID DOCUMENTS WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY AND TO DETERMINE THE PROFITS WHICH HAVE BEEN REPORTED AS ON 30.06.2008 A ND THE PROFITS WHICH REMAIN UNACCOUNTED. THEREFORE, MERELY RELYING ON TH E STATEMENT OF SHRI PRADEEP AGARWAL ON A STANDALONE BASIS WITHOUT ANY C ORROBORATIVE EVIDENCE TO SHOW THAT THERE IS ANY UNACCOUNTED INCOME IN THE HANDS OF THE ASSESSEE COMPANY WILL NOT SATISFY THE REQUIREMENTS OF LAW TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE COMPANY. 20. NOW, IN TERMS OF SUBSEQUENT DEVELOPMENTS IN THE MATTER, THERE ARE TWO LETTERS DATED 02.12.2008 AND 15.12.2008 ADDRESS ED TO THE ADIT (INVESTIGATION-II), JAIPUR BY SHRI S L PODDAR, COUN SEL FOR SHRI PRADEEP AGARWAL WHICH HAVE BEEN TAKEN NOTE OF BY THE ASSESS ING OFFICER DURING THE ASSESSMENT PROCEEDINGS. IT WOULD BE RELEVANT TO RE FER TO THE CONTENTS OF THE SAID LETTER DATED 02.12.2008 AS ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 25 UNDER: ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 26 ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 27 21. THEREAFTER, THERE IS ANOTHER LETTER DATED 15.12 .2008 AND THE CONTENTS THEREOF READ AS UNDER:- ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 28 ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 29 ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 30 22. TAKING THE CONTENTS OF THESE TWO LETTER DATED 0 2.12.2008 AND 20.01.2009 INTO ACCOUNT, THE ASSESSING OFFICER HELD THAT OUT OF TOTAL UNDISCLOSED INCOME OF 2.5 CRORES, SH. PRADEEP AGARW AL HAS SURRENDERED RS. 83,07,825/- IN THE INDIVIDUAL HANDS OF HIS FAMI LY MEMBERS AND HUF ON ACCOUNT OF UNACCOUNTED INCOME INTRODUCED IN ASSESSE E COMPANY AND THE BALANCE AMOUNT OF RS. 1,66,92,175/- WAS THEREFORE C ONSIDERED AS UNACCOUNTED INCOME OF THE ASSESSEE COMPANY AND A NO TICE U/S 142(1) WAS ISSUED TO THE ASSESSEE COMPANY ON 11.11.2010. THE ASSESSEE COMPANY HAS HOWEVER DISPUTED SUCH SURRENDER MADE ON ITS BEHALF BY SH. PRADEEP AGARWAL AND FILED ITS SUBMISSION EXPLAINING ITS POSITION TO THE ASSESSING OFFICER VIDE LETTER DATED 27.11.2010 WHICH WERE NOT FOUND ACCEPT ABLE AND ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE COMPANY WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LD CIT(A). 23. FIRSTLY, WE FIND THAT THE NOTICE U/S 142(1) DAT ED 11.11.2010 IS THE FIRST COMMUNICATION ISSUED BY THE REVENUE DIRECTLY ADDRES SED TO THE ASSESSEE COMPANY REGARDING THE UNACCOUNTED INCOME OF THE ASS ESSEE COMPANY. THIS IS DESPITE THE FACT THAT SIMULTANEOUS SURVEY OPERAT IONS WERE CARRIED OUT AT THE ASSESSEES PREMISES AROUND THE SAME TIME WHEN T HE SEARCH OPERATIONS WERE CARRIED OUT ON 17.10.2008 IN CASE OF M/S KAMDH ENU GROUP OF COMPANIES AND THE IMPUGNED DOCUMENTS WAS SEIZED FRO M THE PREMISES OF SHRI ASHISH AGARWAL AND WHERE THE REVENUE AUTHORITI ES WERE CEASED OF THESE DOCUMENTS, WHAT PRECLUDED THEM FROM INITIATING PROC EEDINGS U/S 153C OF THE ACT. FURTHER, STATEMENT OF OTHER DIRECTOR SHRI SUNI L POKHARNA WAS ALSO RECORDED AND THERE IS NOTHING ON RECORD THAT HE WAS CONFRONTED WITH SUCH DOCUMENTS. FURTHER, THERE ARE CLAIMS AND COUNTER-C LAIMS AS TO WHETHER SHRI PRADEEP AGARWAL HAS AUTHORIZED THE CONTENTS OF THES E TWO LETTERS IN HIS INDIVIDUAL CAPACITY OR IN THE CAPACITY OF DIRECTOR OF THE ASSESSEE COMPANY, WHETHER HE HAS BECOME HOSTILE AND HAS DISPUTE WITH OTHER DIRECTORS, ETC. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 31 HOWEVER, KEEPING THESE ISSUES ASIDE FOR THE MOMENT, IN OUR VIEW, WHERE THESE TWO LETTERS HAVE TO BE CONSIDERED, THEY CANNO T BE CONSIDERED, READ AND UNDERSTOOD IN ISOLATION AND INDEPENDENT OF HIS STATEMENT RECORDED U/S 131 OF THE ACT AND THUS, HAVE TO BE READ IN FURTHER ANCE OF HIS STATEMENT RECORDED U/S 131 OF THE ACT. IN HIS STATEMENT RECO RDED U/S 131 OF THE ACT, HE HAS STATED THAT THE SAID DOCUMENT SHOWS THE BALA NCE SHEET OF ACCOUNTED AND UNACCOUNTED TRANSACTION OF THE ASSESSEE COMPANY AS ON 30.06.2008, WHATEVER PROFITS HAVE NOT BEEN SHOWN IN THE BOOKS O F ACCOUNTS, HE WILL PAY THE TAXES BY ACCEPTING THE UNACCOUNTED INCOME OF TH E CURRENT FINANCIAL YEAR. HOWEVER, AS WE HAVE SEEN ABOVE, THERE ARE NO EFFORT S WHICH HAVE BEEN MADE BY THE ASSESSING OFFICER TO VERIFY THE CONTENT S OF THE SAID DOCUMENT WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY AND TO DETERMINE THE PROFITS WHICH HAVE BEEN REPORTED AS ON 30.06.2008 A ND THE PROFITS WHICH REMAIN UNACCOUNTED. NOW, MERELY GOING BY THE CONTEN TS OF THESE TWO LETTERS, THE ASSESSING OFFICER HELD THAT OUT OF TOTAL UNDISC LOSED INCOME OF 2.5 CRORES, SH. PRADEEP AGARWAL HAS SURRENDERED RS. 83,07,825/- IN THE INDIVIDUAL HANDS OF HIS FAMILY MEMBERS AND HUF ON ACCOUNT OF UNACCOU NTED INCOME INTRODUCED IN M/S RAGHUVEER METAL INDUSTRIES AND TH E BALANCE AMOUNT OF RS. 1,66,92,175/- WAS THEREFORE CONSIDERED AS UNACCOUNT ED INCOME OF THE ASSESSEE COMPANY. WE THEREFORE FIND THAT THE ASSES SING OFFICER HAS MERELY GONE BY THE STATEMENT OF SHRI PRADEEP AGARWAL WHICH SUITS HIS INDIVIDUAL REQUIREMENT WITHOUT INDEPENDENTLY VERIFYING THE SAM E WITH THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY. THE SAME IS ALSO APPARENT FROM CONTENTS OF THE LETTER DATED 02.12.2008 WHERE SHRI PRADEEP A GARWAL HAS CONFIRMED SIMILAR SURRENDER OF UNACCOUNTED INCOME IN THE HAND S OF M/S KALI METALS LTD WHICH READ AS UNDER: (2) THAT AS PER ANNEXURE A-7, THE BALANCE SHEET OF M/S KALI METALS PVT LTD WAS THERE IN WHICH THE TOTAL PROFIT OF RS 1 ,13,02,911/- WHEREAS ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 32 IN THE BOOKS OF ACCOUNTS THE PROFIT IS ONLY RS 68 L ACS SO WE SURRENDERED RS 50 LACS AS UNACCOUNTED INCOME OF M/S KALI METALS PVT LTD FOR THE CURRENT FINANCIAL YEAR 2008-09. THE ABOVE NATURE OF SURRENDER IN RESPECT OF M/S KAL I METALS WAS IDENTICAL TO SURRENDER IN CASE OF THE ASSESSEE COMPANY IN RESPEC T OF UNACCOUNTED INCOME AND ALSO MATCHES WITH HIS STATEMENT RECORDED UNDER SECTION 131 OF THE ACT DATED 19.11.2008 WHERE HE HAS TALKED ABOUT THE UNAC COUNTED INCOME OF THE ASSESSEE COMPANY AS WELL AS M/S KALI METALS. HOWEV ER, THE ASSESSING OFFICER HAS ACCEPTED THE SAID WORKING IN RESPECT OF M/S KAL I METALS WHERE THE PROFITS AS PER BOOKS AND AS PER SEIZED DOCUMENTS WERE WORKE D OUT, HOWEVER, THERE WAS NO SIMILAR EXERCISE DONE EITHER BY SHRI PRADEEP AGRAWAL OR BY THE ASSESSING OFFICER TO DETERMINE THE PROFITS AS REPOR TED IN THE BOOKS OF ACCOUNTS AND AS PER THE SEIZED DOCUMENT IN CASE OF ASSESSEE COMPANY. THIS SHOWS THE INHERENT INCONSISTENCY IN THE APPROACH OF THE ASSESSING OFFICER AND ALSO SHOWS HOW HE WAS MERELY SWAYED BY THE STAT EMENT OF SHRI PRADEEP AGARWAL TO SUIT HIS INDIVIDUAL REQUIREMENTS. 24. FURTHER, LETS LOOK AT THE MATTER FROM ANOTHER PERSPECTIVE. THE LD CIT(A) HAS RETURNED A FINDING THAT THE DOCUMENT SO SEIZED REPRESENTS THE REVALUED BALANCE SHEET OF THE ASSESSEE COMPANY AS O N 30.06.2008 AND THE CAPITAL AS PER LOOSE PAPERS WAS AT RS. 262500000/- WHEREAS THE CAPITAL AS PER BOOKS WAS AT RS 136650000/- AND ACCORDINGLY, EX TRA CAPITAL AS PER LOOSE PAPERS WAS SHOWN FOR RS. 125850000/-. THE REASON FO R EXTRA CAPITAL WAS REVALUATION OF FIXED ASSETS FOR THE PURPOSE OF THE PARTITION BETWEEN BOTH THE DIRECTORS NAMELY SH. PRADEEP AGARWAL AND SH. ANIL P OKHARAN. BY SUCH REVALUATION THE FIXED ASSET OF RS. 78928394/- WAS A RRIVED AT RS. 179866704/- AND THE DIFFERENCE OF RS. 101000000/- WAS CREDITED IN DIRECTORS CAPITAL ACCOUNT BY RS. 5.50 CR. IN EACH DIRECTOR. THE ACTUA L UNDISCLOSED INCOME OF ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 33 THE COMPANY SHARED BY BOTH THE DIRECTORS AND CREDIT ED IN THE CAPITAL ACCOUNT WAS AT RS. 24850000/- (125850000-101000000) AND ACC ORDINGLY SURRENDER OF RS. 2.50 CR. WAS MADE AS UNDISCLOSED INCOME/UNACCOU NTED INCOME OF M/S RAGHUVEER METAL INDUSTRIES LTD. TO PURCHASE PEACE O F MIND. AS PER THE AFORESAID FINDINGS RETURNED BY THE LD CI T(A), THERE IS THUS AN EXTRA CAPITAL WHICH IS REPRESENTED BY REVALUATION OF FIXE D ASSETS FOR THE PURPOSES OF PARTITION BETWEEN THE TWO DIRECTORS. SUCH EXTRA CA PITAL HAS BEEN CREDITED IN RESPECTIVE CAPITAL ACCOUNT. TO OUR MIND, REVALUATIO N OF FIXED ASSETS GENERATE CORRESPONDING RESERVES IN NATURE OF REVALUATION RES ERVES AND THEREAFTER, THE ASSESSEE COMPANY CAN USE SUCH REVALUATION RESERVES FOR SPECIFIED PURPOSES INCLUDING DISTRIBUTION TO THE SHAREHOLDERS AT THE T IME OF LIQUIDATION OF THE COMPANY. HOWEVER, MERELY REVALUING THE FIXED ASSETS DOESNT GENERATE ANY PROFITS AND THAT TOO, UNACCOUNTED PROFITS WHICH CAN BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE COMPANY. THOUGH THE ASSESSEE COMPANY IS DISPUTING ANY SUCH REVALUATION EXERCISE AS ACTUALLY BEEN COND UCTED AND THEREAFTER IMPLEMENTED BY PASSING APPROPRIATE ENTRIES IN THE B OOKS OF ACCOUNTS, EVEN IF, WE GO BY THE AFORESAID FINDINGS OF THE LD CIT(A ), THE REVALUATION RESERVE SO CREATED BY REVALUATION OF FIXED ASSETS DOESNT G ENERATE ANY IMMEDIATE CASH FLOWS IN THE HANDS OF THE ASSESSEE COMPANY AND GIVE RISE TO ANY TAXABLE INCOME WHICH CAN BE BROUGHT TO TAX. IN OUR VIEW, SUCH REVALUATION AT BEST COULD BE USED TO DETERMINE THE ENTERPRISE V ALUE OF THE ASSESSEE COMPANY AND THE BASIS FOR LIQUIDATION OF THE ASSESS EE COMPANY AND DISTRIBUTION AMONG THE SHAREHOLDERS AND LIABILITY I F ANY WILL THEREFORE ARISE IN THE HANDS OF INDIVIDUAL SHAREHOLDERS AND NOT THE AS SESSEE COMPANY. 25. IN LIGHT OF AFORESAID DISCUSSIONS, MERELY RELYI NG ON THE STATEMENT OF SHRI PRADEEP AGARWAL ON A STANDALONE BASIS WITHOUT ANY CORROBORATIVE EVIDENCE TO SHOW THAT THERE IS ANY UNACCOUNTED INCO ME IN THE HANDS OF THE ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 34 ASSESSEE COMPANY WILL NOT SATISFY THE REQUIREMENTS OF LAW TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE COMPANY AND T HE ADDITION SO MADE IS HEREBY DIRECTED TO BE DELETED. IN THE RESULT, THE MATTER IS DECIDED IN FAVOUR OF THE ASSESSEE COMPANY AND AGAINST THE REVENUE AND THE GROUND OF APPEAL IS THUS ALLOWED. 26. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED TH E SUSTENANCE OF DISALLOWANCE OF LOSS OF RS. 2,32,193/- ON ACCOUNT O F THEFT OF GOODS. 27. BRIEFLY STATED, FACTS OF THE CASE ARE THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE AS SESSEE HAS CLAIMED LOSS ON ACCOUNT OF THEFT OF GOODS AMOUNTING TO RS. 2,32, 193/- AND ON PERUSAL OF LETTER DATED 28.08.2008 SUBMITTED BY THE ASSESSEE C OMPANY TO THE SUPERINTENDENT, CENTRAL EXCISE RANGE, AJMER, IT WAS OBSERVED BY THE AO THAT THE GOODS STOLEN WERE RECOVERED BY THE POLICE AND H AVE BEEN HANDED OVER TO THE ASSESSEE COMPANY. ACCORDINGLY, THE CLAIM OF LOS S ON ACCOUNT OF THEFT OF GOODS BY THE ASSESSEE COMPANY WAS FOUND NOT TENABLE , HENCE DISALLOWED WHICH ON APPEAL, HAS BEEN CONFIRMED BY THE LD. CIT( A). 28. DURING THE COURSE OF HEARING, THE LD. AR REFERR ING TO THE INVOICE OUT OF WHICH GOODS WERE LOST AND PARTIALLY RECOVERED BACK, SUBMITTED THAT 15.400 MT OF KAMDHENU TMT- BAR WAS SOLD FOR RS. 5,98,965/- AND OUT OF WHICH, 9.430 MT GOODS WERE RECOVERED BACK AND IN THIS MANN ER, PROPORTIONALLY A LOSS OF RS. 2,32,193/- WAS INCURRED WHICH WAS CLAIM ED BY THE ASSESSEE COMPANY. IN SUPPORT , WEIGHMENT SLIP OF GOODS RETUR NED, AFFIDAVIT OF DIRECTOR OF THE ASSESSEE COMPANY WERE ALSO FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND WHICH WERE NOT CONSIDERED AND APPRE CIATED BY THE LOWER AUTHORITIES. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 35 29. PER CONTRA, THE LD. DR RELIED ON THE FINDINGS O F THE LOWER AUTHORITIES AND SUBMITTED THAT A THEFT HAD OCCURRED IN THE PREM ISES OF THE APPELLANT FOR GOODS AMOUNTING TO RS. 2,32,193/- FOR WHICH AN FIR WAS LODGED BEFORE THE POLICE AUTHORITIES. HOWEVER SUBSEQUENTLY SUCH STOLE N GOODS OF RS. 2,32,193/- WERE RECOVERED BY THE POLICE AND HANDED OVER TO THE ASSESSEE. IN THIS CIRCUMSTANCES, THERE WAS NO CASE FOR CLAIM OF SUCH AMOUNT AS BUSINESS EXPENDITURE BECAUSE LOSS ON ACCOUNT OF THEFT IN AS MUCH AS THERE IS NO LOSS AS THE STOLEN GOODS WERE RECOVERED AND RECEIVED BAC K BY THE APPELLANT. THEREFORE, THERE IS NOTHING WRONG IN THE FINDING OF THE AO AND CONFIRMATION BY THE LD CIT(A) IN REJECTING THE CLAIM OF THE APPE LLANT FOR RS. 2,32,193/- AND MAKING ADDITION ACCORDINGLY. HE ACCORDINGLY SUPPORT ED THE FINDINGS OF THE LOWER AUTHORITIES. 30. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. ON PERUSAL OF RECORDS, WE FIN D THAT GOODS WORTH RS 5,98,965/- WERE INITIALLY LOST AND OUT OF WHICH, GOODS WORTH RS 3,66,772/- WERE RECOVERED AND THE REMAINING GOODS WORTH RS 2,3 2,193/- WERE PERMANENTLY LOST AND A CLAIM OF RS 2,32,193/- WAS M ADE BY THE ASSESSEE. SUCH A LOSS OF GOODS DURING THE COURSE OF BUSINESS IS AN ELIGIBLE LOSS WHILE COMPUTING THE INCOME UNDER THE HEAD INCOME FROM BU SINESS/PROFESSION AND HAS RIGHTLY BEEN CLAIMED BY THE ASSESSEE. IN T HE RESULT, WE SET-ASIDE THE ORDER OF THE LOWER AUTHORITIES AND THE MATTER IS DE CIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. IN THE RESULT, T HE GROUND OF ASSESSEES APPEAL IS ALLOWED. 31. REGARDING GROUND NO. 3 AND 4, THE RELEVANT FACT S AND FINDINGS OF THE LD CIT(A) WHICH ARE UNDER CHALLENGE BEFORE US READS AS UNDER: ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 36 6.1 THE GROUND NO. 3 IS AGAINST THE DISALLOWANCE O F RS. 11,00,469/- WHEREAS THE GROUND NO. 3 IS AGAINST THE DISALLOWANC E OF RS. 44,800/- ON ACCOUNT OF EXCESS STOCK OF CERTAIN ITEMS AND SHO RT STOCK OF CERTAIN ITEMS. AS BOTH THE GROUND ARE RELATED TO ADDITION O N ACCOUNT OF SHORTAGE AND EXCESS STOCK THEREFORE BOTH THESE GROU NDS ARE TAKEN UP TOGETHER. 6.2 AS REGARDS ADDITION OF RS. 11,00,469/- ON ACCOU NT OF EXCESS STOCK, THE AOS FINDINGS ARE AS UNDER:- ADDITION ON ACCOUNT OF EXCESS STOCK OF CERTAIN ITE MS & SHORT STOCK OF CERTAIN ITEMS FOUND DURING. THE SURVEY U/S 133A:- EXCESS STOCK OF CERTAIN ITEMS WAS FOUND DURING THE COURSE OF SURVEY OPERATION U/S 133A IN THE CASE OF ASSESSEE COMPANY AT ITS FACTORY PREMISES AT MANGALTYAWAS, NASIRABAD ROAD, AJMER, IN VIEW OF IT, THE ASSESSEE WAS ASKED VIDE NOTICE U/S 142(1) OF THE AC T DATED 30.09.2010 AS UNDER:- FOLLOWING AMOUNTS WERE ADMITTED AND SURRENDERED AS UNACCOUNTED/UNEXPLAINED/UNDISCLOSED INVESTMENT IN S TOCK BY SH POKHARNA IN HIS STATEMENT UNDER CONSIDERATION IN VI EW OF EXCESS STOCK OVER AND ABOVE THE STOCK AS PER BOOKS OF ACCOUNT ON 17.09.2008 FOUND ON PHYSICAL VERIFICATION. HE HAS FURTHER ADMI TTED THAT THESE AMOUNTS WOULD BE THE ADDITIONAL INCOME OF THE COMPA NY IN ADDITION TO THE REGULAR INCOME, DECLARED BY THE COMPANY FOR THE YEAR 2008-09. (A) RS. 4,28,498/- EXCESS STOCK OF TMT BAR SURRENDERE D. (B) RS. 36,314/- EXCESS STOCK OF RUNNER & RIZER SURRE NDERED. (C) RS. 2,55,697/- EXCESS STOCK OF END CUTTING, STAG (MIX), MISS ROLL (MIX) (D) RS. 3,79,960/- EXCESS STOCK OF SCROP, FERRO FERRO SILICON, ETC. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 37 SIMILARLY, STOCK OF RS. 4,48,005/- WAS FOUND TO BE SHORT OF CERTAIN ITEMS. HOWEVER, ON GOING THROUGH THE RETURN OF INCOME FILE D FOR A.Y 2009-10 IT IS SEEN THAT NO INCOME ON ACCOUNT OF EXCESS STOC K OR SHORT STOCK SURRENDERED HAS BEEN DECLARED. IN VIEW OF IT, YOU A RE REQUIRED TO EXPLAIN WHY AN ADDITION OF RS. 11,00,469/- ON ACCOU NT OF EXCESS STOCK ADMITTED DURING THE SURVEY AND GROSS PROFIT ON SHOR T STOCK CONSIDERING IT TO SALES OUT OF BOOKS, SHOULD NOT BE MADE TO THE INCOME OF THE COMPANY OF THE YEAR 2008-09. THE ASSESSEE HAS REPLIED IN ITS SUBMISSION FILED ON 04.12.2010 THAT THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY OPER ATION HAS BEEN SOLD DURING THE NORMAL COURSE OF BUSINESS AND THE T OTAL SALES CONSIDERATION WAS INCLUDED IN THE SALES REFLECTED I N THE BOOKS OF ACCOUNT IN THE COMPANY. IN THE ABSENCE OF PROPER DOCUMENTARY EVIDENCE LIKE PROFIT & LOSS ACCOUNT UPTO THE PERIOD OF SURVEY I.E. UPTO 17.09.2 008 AND P & L ACCOUNT FOR THE PERIOD 18.09.2008 TO 18.03.2010 MER E STATEMENT THAT THE EXCESS STOCK HAS BEEN SOLD DURING THE NORMAL CO URSE OF BUSINESS AND SALES HAVE BEEN PROPERLY ACCOUNTED FOR DOES NOT EXPLAIN THAT THE EXCESS STOCK HAS BEEN INCLUDED IN THE INCOME OF ASS ESSEE. IN VIEW OF IT, AN ADDITION OF RS. 11,00,469/- IS MADE TO THE I NCOME OF THE ASSESSEE. 6.3 AS REGARDS ADDITION OF RS. 44,800/- ON ACCOUNT OF SHORTAGE OF STOCK THE FINDINGS OF THE AO ARE AS UNDER:- SHORT STOCK OF CERTAIN ITEMS: THE ASSESSEE HAS NOT FILED ANY REPLY REGARDING STOC K OF RS. 4,48,005/- FOUND SHORT OF CERTAIN ITEMS. IN VIEW OF IT, AN ADD ITION OF RS. 4,48,007/- IS MADE TO THE INCOME OF ASSESSEE BY APPLYING RATE OF 10%. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 38 6.5 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AS ALSO THE FINDINGS OF THE AO. IT MAY BE NOTED THAT D URING THE COURSE OF SURVEY U/S 133A CERTAIN ITEMS OF STOCK WERE FOUND E XCESS FOR RS. 11,00,469/- WHEREAS CERTAIN SPECIFIC ITEMS OF STOCK WERE FOUND SHORT FOR RS. 4,48,007/-. THERE IS NO DISPUTE ON THE VALU E OF SUCH STOCK FOUND EXCESS AS WELL AS SHORT. IT MAY BE MENTIONED THAT IT IS NOT A CASE WHERE THE STOCK OF SAME NATURE, SAME ITEM HAVE BEEN FOUND SHORT AT ONE PLACE AND EXCESS AT OTHER PLACE AND IF THE STOCK OF THE SAME NATURE WOULD HAVE BEEN FOUND SHORT AND EXCESS AT DIFFERENT PREMISES THEN DEFINITELY THE APPELLANT WOULD HAVE G OT BENEFIT OF NETTING OF THE STOCK POSITION FOR DETERMINATION OF EXCESS OR LESS STOCK. BUT AS THE APPELLANT IS MAINTAINING STOCK INVENTORY ON ITEM-WISE AND VALUE-WISE, THEREFORE, THE STOCK OF SPECIFIC ITEMS IS FOUND EXCESS FOR RS. 11,00,469/- AND LESS FOR RS. 4,48,005/-. THEREF ORE THE STOCK OF DIFFERENT ITEMS CANNOT BE ADJUSTED AGAINST EACH OTH ER AND SUCH CONTENTION OF THE APPELLANT GIVING BENEFIT OR VALUA TION OF STOCK IS REJECTED. AS REGARDS EXCESS STOCK OF RS. 11,00,469/ - THE APPELLANTS CASE IS THAT THE EXCESS STOCK IS FOUND DURING THE C OURSE OF SURVEY WAS SOLD DURING THE A.Y UNDER CONSIDERATION AND THE TOT AL SALE CONSIDERATION WAS INCLUDED IN THE SALES REFLECTED I N THE BOOKS OF ACCOUNTS, WHEREAS THE AOS CASE IS THAT THE APPELLA NT HAS FAILED TO PROVE BY NECESSARY DOCUMENTARY EVIDENCE AS TO HOW I NCOME ON ACCOUNT OF UNDISCLOSED STOCK TO THE EXTENT OF RS. 1 1,00,469/- WAS SHOWN IN THE RETURN. IN THIS CONNECTION IT MAY BE M ENTIONED THAT AS THE EXCESS STOCK AMOUNTING TO RS. 11,00,469/- WAS A DMITTED TO BE UNDISCLOSED INCOME AS ON DATE OF SURVEY THEREFORE I NCOME TO SUCH AN EXTENT AS ON DATE OF SURVEY WAS TO BE SHOWN SEPARAT ELY IN THE TOTAL INCOME OF THE A.Y UNDER CONSIDERATION. DURING THE A PPELLATE PROCEEDINGS ALSO THE APPELLANT HAD FAILED TO JUSTIF Y AS TO HOW BY ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 39 MAKING SALES OF SUCH STOCK THE TOTAL INCOME WAS OFF ERED FOR TAXATION. IN THIS BACKGROUND THE AO WAS JUSTIFIED IN MAKING S UCH ADDITION OF RS. 11,00,469/-. AS REGARDS ADDITION OF RS. 44,800/- ON ACCOUNT OF S HORT STOCK THE AOS CASE IS THAT SUCH SHORT STOCK OF RS. 4,48,005/- IND ICATED THAT THE STOCK HAS BEEN SOLD IN UNACCOUNTED MANNER AND THE AO ACCO RDINGLY APPLIED GP RATE OF 10%. THE APPELLANT HAS NOT DISPUTED APPL ICATION OF GP RATE OF 10%. THE APPELLANT ALSO DID NOT DISPUTE SUCH SHO RT STOCK FOR RS. 4,48,005/- AS ALSO WHY THE STOCK WAS FOUND SHORT TO SUCH AN EXTENT. IN THIS BACKGROUND WHEN NEITHER THE VALUE OF SHORT STO CK IS DISPUTED NOR THE APPLICATION OF GP RATE OF 10% IS DISPUTED. THE ACTION OF THE AO DETERMINING PROFIT OF RS. 44,800/- APPEARS TO BE FA IR AND REASONABLE IN AS MUCH AS SHORT STOCK INDICATED THAT SUCH STOCK SO LD IN UNACCOUNTED MANNER. THE ACTION OF THE AO IS ACCORDINGLY CONFIRM ED. 32. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT THE SURRENDER WAS MADE DURING THE SURVEY AND IN THE ABSENCE OF TR ADING ACCOUNT WHEN THE ASSESSEE COULD NOT SUBSTANTIATE THAT THE EXCESS AMO UNT OF STOCK WAS DULY SOLD WITH OTHER SALES AND HAND INFACT FORMED PART O F THE P & L A/C. WITHOUT PREJUDICE TO THE ABOVE, THE GP RATE ON THE SAID UND ISCLOSED STOCK BE APPLIED, GP OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS 1.25%. BOOKS OF THE ASSESSEE HAS NOT BEEN REJECTED, THIS STAND HAS BEEN TAKEN BY THE DEPARTMENT IN SUCCEEDING YEARS. REGARDING SHORT ST OCK, IT WAS SUBMITTED THAT THE SHORTAGE OF STOCK SHOULD BE DEDUCTED FROM EXCESS STOCK. WITHOUT PREJUDICE TO THE ABOVE, THE GP RATE APPLIED BY THE AO IS EXCESSIVE AS THE GP OF THE ASSESSEE COMPANY IS 1.25%. 33. PER CONTRA, THE LD. DR RELIED ON THE FINDINGS O F THE LOWER AUTHORITIES. ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 40 34. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY AND UNDISPUTEDLY, T HE EXCESS STOCK AMOUNTING TO RS. 11,00,469/- NOT RECORDED IN THE BO OKS OF ACCOUNTS WAS FOUND AS ON DATE OF SURVEY AND SURRENDERED BY THE A SSESSEE COMPANY. THEREFORE, THE UNDISCLOSED INCOME BY WAY OF INVESTM ENT IN SUCH EXCESS STOCK WAS TO BE OFFERED TO TAX IN THE RETURN OF INCOME WH ICH THE ASSESSEE HAS FAILED TO DO SO. IN THE RESULT, WE AFFIRM THE FIND INGS OF THE LOWER AUTHORITIES IN THIS REGARD. REGARDING SHORT STOCK WHICH HAS BE EN SOLD OUT OF BOOKS, THE AO HAS ESTIMATED GROSS PROFIT RATE OF 10% AND THE L D AR HAS CONTENDED THAT 1.25% DECLARED BY THE ASSESSEE MAY BE APPLIED IN TH E INSTANT CASE. BEFORE THE AO AND THE LD CIT(A), THE ASSESSEE HAS NOT CONT ESTED THE RATE OF GROSS PROFIT RATE ON SUCH OUT OF BOOKS SALE AND HENCE, WE ARE NOT INCLINED TO EXAMINE THE FRESH PLEA RAISED BEFORE US AND INTERFE RE IN THE FINDINGS OF THE LOWER AUTHORITIES AND THE SAME IS HEREBY CONFIRMED. IN THE RESULT, THE GROUND OF APPEAL IS DISMISSED. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISPOSED O FF IN LIGHT OF AFORESAID DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 23/06/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23/06/2020 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S RAGHUVEER METAL INDUSTRIES LIMIT ED, 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CENTRAL CIRCLE-, ALWAR 3. VK;DJ VK;QDR@ CIT ITA NO. 566/JP/2013 M/S RAGHUVEER METAL INDUSTRIES LTD VS. ACIT, ALWAR 41 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 566/JP/2013} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR