Mukund Bankatlal Bhattad, Solapur V. Assistant Commissioner of Income-tax,

ITA 589/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1180 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 27-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAVE
• Assessee Lawyers: S N DOSHI
• Keywords: Search and seizure; Loose papers; Document seized; Peak credit; Additional evidence; Retraction; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE T RIBUNAL PUNE BENCH B, PUNE . . , , BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS A WASTHY, JM . / ITA NO.589/PN/2 014 / ASSESSMENT YEAR : 2007-08 SHRI MUKUND BANKAT LAL BHATTAD, 69B, JODBHAVI PETH, SOLAPUR, SOLAPUR 413002 PAN NO. AATPB9445 P . / APPELLANT V/S ACIT, CENTRAL CIRCLE- 2(1), PUNE . / RESPONDENT / ASSESSEE BY : SHRI S.N. DOSHI / DEPARTMENT BY : SHRI . HITENDRA NINAVE / ORDER PER R.K. PANDA, A M : THIS APPEAL FILED BY THE ASSESSEE IS DIRE CTED AGAINST THE ORD ER DATED 29-01-2014 OF THE CIT(A) CENTRAL, PUNE RELATING TO ASS ESSMENT YEAR 2007-08. 2. GROUND OF APP EAL NO.1 BY THE ASSES SEE READS AS UNDER : ON THE FACTS AND CIRC UMSTANCES OF CASE THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADDITI ON OF RS.28,00,000/ ON ACCOUNT OF PE AK CREDIT/INVESTMENT DISR EGARDING THE SUBMISSI ON THAT THE SAME IS D ULY COVERED IN THE DECLARA TION AND OTHER ADDITIO N MADE BY THE ASSESS ING OFFICER IN THE ASSESSMEN T ORDER AND THIS SUSTAIN ING AMOUNTS TO TAXING T HE SAME AMOUNT TWICE. / DATE OF HEARING :06. 08.2015 / DATE OF PRONOUNCEM ENT:26.08.2015 2 ITA NO.589/PN/2014 3. FACTS OF THE CA SE, IN BRIEF, ARE THAT THE ASSESSEE IS AN IN DIVIDUAL ENGAGED IN THE BUSIN ESS OF WHOLESALER OF K IRANA AND BHUSAR. A SEARCH AND SEIZURE ACTION U /S.132 AND SURVEY A CTION U/S.133A OF TH E I.T. ACT IN THE CASE OF BHA TTAD GROUP WAS CAR RIED OUT ON 16-11- 2006 AT SOLAPUR. THE ASSE SSEE WAS ALSO COVE RED UNDER THE WAR RANT OF AUTHORIZATION EXECU TED ON 16-11-2006 . IN RESPONSE TO NOTICE U/S.153A DATED 30- 11-2007, THE ASSES SEE FURNISHED THE R ETURN OF INCOME ON 28-12-20 07 DECLARING TOTAL IN COME OF RS.99,25,71 2/-. THE RETURN WAS ACCOMPA NIED WITH THE STATEM ENT SHOWING COMPUT ATION OF INCOME, TRADING, PRO FIT AND LOSS ACCOUNT , CAPITAL ACCOUNT, TA X AUDIT REPORT AND OTHER ANN EXURES. 4. THE AO NOTED THAT DURING THE CO URSE OF SEARCH ACTI ON CASH AMOUNTING TO RS.45, 92,723/- WAS FOUND WHEREAS THE CASH REC ORDED AS PER THE BOOKS OF ACCOUNTS AS NOTED BY THE SEARCH PAR TY WAS RS.88,944/-. THUS , THERE WAS DIFFEREN CE OF RS.45,03,779/ -. THE ASSESSEE IN ANSWER T O QUESTION NOS. 25 A ND 29 HAS ACCEPTED THE TOTAL UNDISCLOSED CASH A MOUNTING TO RS.45 ,00,484/-. THE A SSESSEE RECONCILED THE SAME WITH DIFFERENCE OF RS .5,295/-. THE AO AC CORDINGLY MADE ADDITION OF RS .45,05,779/- TO THE TOTAL INCOME AS UND ISCLOSED INCOME OF THE ASSESS EE. 5. THE AO SIMIL ARLY NOTED THAT DU RING THE COURSE OF SURVEY CONDUCTED U/S.133A OF THE I.T. ACT IN THE CASE OF M/S. SAIRAM TRADING COMPANY STOCK INVEN TORIES WERE PREPARED. A TENTATIVE TRADING ACCOUNT WAS ALSO PREPARED A CCORDING TO WHICH E XCESS STOCK OF RS.1, 44,663/- WAS FOUND. THE A O CONFRONTED THE A SSESSEE REGARDING TH E SAME. REJECTING THE EXPLAN ATION OF THE ASSESSEE THAT THE DIFFERENCE WAS DUE TO METHOD OF VALUATI ON ADOPTED BY THE S EARCH PARTY AND CON SIDERING 3 ITA NO.589/PN/2014 THE FACT THAT THE A SSESSEE ONLY SURREN DERED RS.46,676/- ON THIS ACCOUNT, THE AO MA DE ADDITION OF RS.44 ,663/- TO THE TOTAL IN COME OF THE ASSESSEE AS UN DISCLOSED INCOME IN SHAPE OF UNDISCLOS ED STOCK FOUND DURING THE COU RSE OF SEARCH. 6. THE AO FURTH ER NOTED THAT DUR ING THE COURSE OF SEARCH PROCEEDINGS AT THE RESIDENCE OF SHRI M UKUND BHATTAD LOOS E PAPER BUNDLE NO.4 CONTAI NING 1 TO 154 PAG ES WAS SEIZED. UN RECORDED PURCHASE AND SALES WERE ALSO FOUND TO B E NOTED ON THESE PA PERS. IN THE STATEMENT OF SHR I MUKUND BANKATLAL BHATTAD RECORDED D URING THE COURSE OF SEARCH ACTI ON ON 17-11-2006 TH E AO NOTED THAT THE ASSESSEE IN HIS REPLY TO QUES TION NO.20 & 21 HA D STATED THAT THE IN COME ON PURCHASES AND SALES ON PAGES 68 TO 78 A ND PAGES 78 TO 88 A S WELL AS PAGES 1 TO 22 ARE C REDIT PURCHASES AND CREDIT SALES WHICH ARE NOT ACCOUNTED IN THE BOO KS OF ACCOUNT. HE NO TED THAT IN REPLY TO Q UESTION NO.26 THE ASSESSEE H AD STATED THAT APPRO XIMATELY AN AMOUNT OF RS.25 TO 30 LAKHS HAS BEEN INVOLVED IN UNACCOU NTED TRANSACTIONS. F URTHER, HE HAS STATED THAT THE AMOUNTS RECEIVE D TOWARDS SALES HA VE BEEN REINVESTED IN THE PURCHASES AND THE PEAK INVESTMENT IN THESE UNACCOUNTED TRANSA CTIONS WAS AT RS.25 TO 30 LAKHS. IN REPLY TO QUESTION NO.29 THE A SSESSEE HAD FURTHER STATED THAT THE INVES TMENT IN THESE TRANSACTIONS IS UNACCOUNTED FOR WH ICH HE OFFERED RS.28 LAKHS AS HIS UNDISCLOSED INCOM E. 7. THE AO ALSO N OTED THAT DURING THE COURSE OF SEARCH A NNEXURE BR-1/AN.A/INV.NO.0 6/PAGES 1 TO 7 WAS S EIZED AS BUNDLE NO.6 . THESE PAGES REFLECT THE UN RECORDED CREDIT SALES MADE BY SHRI SATNA RAYANAN AND SHRI RAJA KOLI W HO ARE ASSESSEES SA LESMEN. AS PER THE LIST THE TOTAL AMOUNT YET TO BE COLLECTED OUT OF THESE SALES REPRESE NTED BY 4 ITA NO.589/PN/2014 ENTRIES NOT ROUNDED OFF IN THE CASE OF SHR I RAJA KOLI WAS RS.8, 03,732/- AND THAT OF SHRI SAT YANARAYAN WAS RS.1 0,08,141/-. THESE A MOUNTS WERE RECEIVABLE ON THE DATE OF SEARCH. THE ASSESSEE IN REPLY TO QUESTION NO.22 RECO RDED DURING THE COUR SE OF SEARCH ACTION O N 17-11- 2006 SURRENDERED TH ESE DEBTORS FOR TAXATI ON. 8. HOWEVER, THE AO NOTED THAT IN TH E RETURN FILED IN RES PONSE TO NOTICE U/S.153A THE ASSESSEE HAS NOT O FFERED THE AMOUNT O F RS.28 LAKHS WHICH WAS DEC LARED DURING THE SEAR CH AS PEAK INVESTME NT IN THE UNACCOUNTED BUSINE SS, ALTHOUGH HE HA S INCLUDED THE AM OUNT OF RS.18,11,873/- IN THE TAXABLE AMOU NT (I.E.RS.8,03,732 /- + RS.10,08,151/-). TH E AO, THEREFORE, ASKE D THE ASSESSEE TO EX PLAIN AS TO WHY THE AMOUNT OF RS.28 LAKHS SHOU LD NOT BE ADDED TO HIS TOTAL INCOME WHICH WAS DECLARED BY HIM A S PEAK INVESTMENT IN THE UNACCOUNTED TRANSA CTIONS. THE ASSESSE E IN HIS REPLY SUBM ITTED AS UNDER : 'PEAK CREDIT : WE DRAW Y OUR KIND ATTENTION TO AN SWER TO Q. NO. 26, WHERE IN IT IS CLEARLY SLATED THAT CIRCULATING CAPITAL WA S RS. 25 TO 30 LAKHS A ND LOOSELY TERMED AS PEAK CREDIT AND ALSO OFFERED FOR TAXATION. IT MAY PLE ASE HE NOTED THAT, THIS DOES NOT CONSTITUTE THE UNDEC LARED INCOME BECAUSE CA SH ON HAND ON THE DATE OF SEARCH OFFERED FOR TAXA TION WAS MORE THAN PE AK CREDIT. IN OTHER WORD S, THE SAME CASH WA S ROTATED OR CIRCULATE D CONTINUOUSLY IN THE BUS INESS. ONCE THE CASH ON HAND IF OFFERED FOR TAXAT ION, QUESTION OF PEAK CREDIT TO BE TAXED DOES NOT AR ISE. BECAUSE, CASH ON HA ND WAS QUITE MORE THAN THE ESTIMATED PEAK CREDIT. I N CASE HAD IT BEEN DONE , IT IS NOTHING BUT TAXATION OF A SINGLE ITEM TWICE, W HICH IS NOT PERMITTED. A S PER THE PRINCIPALS OF TAX ATION, UNDISCLOSED INCOM E WILL BE EITHER MAXIMU M UNDECLARED CAPITAL IN TH E FORM OF CASH ROTATED O R CIRCULATED IN THE BUSIN ESS OR CASH ON HAND ON THE DATE OF SEARCH WHICH IS HIGHER. ACCORDINGLY IN T HIS CASE, ASSESSEE HAS ALRE ADY OFFERED CASH ON HA ND FOR TAXATION, THEREFO RE TAXATION OF PEAK CREDIT D OES NOT ARISE. DURING THE COURSE OF SEA RCH THE ASSESSEE WAS NO T IN A POSITION TO VISUALI ZE THE IMPACT OF PEAK CRE DIT ON DECLARATION ON A CCOUNT OF PANIC CONDITI ON, THEREFORE, THE DECLARATIO N WAS NOT APPROPRIATE O R CORRECT. IT MAY PLEASE BE NOTED THAT DECLARATION OF INC OME ON ACCOUNT OF PEA K CREDIT, NEITHER CREATED A NY TANGIBLE ASSET AND FO UND AT THE TIME OF SEARC H NOR TANGIBLE EXPENDITUR E FOUND SUPPORTED BY SE IZED MATERIAL. 5 ITA NO.589/PN/2014 9. HOWEVER, THE A O WAS NOT SATISFIED W ITH THE EXPLANATION G IVEN BY THE ASSESSEE. HE OB SERVED THAT THE EXPL ANATION OF THE ASSES SEE THAT THE UNEXPLAINED CASH OF RS.45,00,484/- IN CLUDES THE AMOUNT O F RS.28 LAKHS IS NOT CORRECT SINCE THE ASSESSEE H AS FAILED TO ESTABLISH THE LINK BETWEEN THE PEAK IN VESTMENT IN THE UNA CCOUNTED BUSINESS A ND THE UNACCOUNTED CASH FO UND. ACCORDING TO H IM, THE PROCEEDS OU T OF THE UNACCOUNTED SALES W HEN RECEIVED IN CASH NEED NOT NECESSARILY REMAIN WITH THE ASSESSEE IN CASH. THE UNACCOUN TED BUSINESS WAS NOT A SINGLE TRANSACTION AFFAIR. T HERE WAS CONTINUOUS PURCHASE AND SALES IN THIS BUSINESS. IT IS THE REFORE ONLY REASONAB LE TO PRESUME THAT THE SALE CONSIDERATION WOULD HAVE BEEN REINVE STED IN THE UNACC OUNTED BUSINESS TOWARDS F RESH PURCHASES. SINCE THE TRANSACTI ONS ARE UNRECORDED AS ADMIT TED BY THE ASSESSEE I T IS NOT KNOWN THE FU LL EXTENT OF THE DEBTORS FOR GO ODS IN UNACCOUNTED BUSINESS. THE AO T HEREFORE MADE ADDITION OF RS. 28 LAKHS TO THE TOTAL INCOME OF THE ASSESS EE WHICH IS THE PEAK INVESTME NT IN THE UNACCOUNTE D BUSINESS. 10. BEFORE CIT(A) T HE ASSESSEE VEHEMEN TLY CHALLENGED THE AD DITION OF RS.28 LAKHS MADE B Y THE AO. IT WAS S UBMITTED THAT THE A O WHILE MAKING THE ADDITION BASED ON THE DECLARA TION MADE U/S.132(4 ) HAS NOT POINTED OUT ANY CORR OBORATIVE INVESTMENT OF SUCH UNDISCLOSED INCOME MADE IN THE BUSINES S OR ANYWHERE ELSE N OR THE SEARCH PARTY F OUND ANY OTHER UNDISCLOSED AS SET, EXPENDITURE ETC. , WHICH SHOULD BE LI NKED TO THE PEAK CREDIT DI SCLOSED. IT WAS A RGUED THAT THE DE CLARATION U/S.132(4) IS NOT SU FFICIENT FOR MAKING TH E ADDITION TO INCOME . IT WAS ARGUED THAT THE PEA K CREDIT INVESTMENT IS CIRCULATING CAPITA L HAVING ROLE OVER EFFECT WHIC H GOES ON CHANGING ITS NATURE FROM TIME TO TIME. HAVING BEEN BROUG HT IN CASH IT IS CONVERTED INTO STOC K AND SUBSEQUENTLY INTO CR EDIT SALES, SUNDRY DE BTORS ETC. WHAT THE ASSESSEE 6 ITA NO.589/PN/2014 HAS DISCLOSED WAS T HE CIRCULATING CAPITA L OF RS.28 LAKHS WH ICH WAS LOOSELY TERMED AS PEA K CREDIT INVESTMENT. UNDER THESE CIRCUM STANCES, EITHER THE INITIAL AMO UNT AT THE TIME OF IN TRODUCTION, I.E. RS. 2 8 LAKHS OR UNACCOUNTED STOC K/DEBTORS/CASH ON T HE DATE OF SEARCH IS TAXABLE BUT NOT BOTH. RELYIN G ON A NUMBER OF DEC ISIONS IT WAS ARGUED THAT THE ADDITION OF RS.28 LAK HS MADE BY THE AO S HOULD BE DELETED. 11. HOWEVER, THE CIT(A) WAS NOT SAT ISFIED WITH THE ARG UMENTS ADVANCED BY THE ASSE SSEE. HE OBSERVED TH AT THE ADDITION WAS M ADE BY THE AO BASED ON THE ASSESSEES OWN STAT EMENT DULY SUBSTANT IATED BY SEIZED DOCUMENTS. RELYING ON VARIOUS DECISIONS HE NOTED THAT THE STATEMENT RECORDED U/S.132(4) HAS GREAT EVIDENTIARY VALUE. HE NOTED THAT ADMISSION BY A PERSON IS A GOOD P IECE OF EVIDENCE BEC AUSE THE PERSON MAKING A ST ATEMENT STOPS THE OPPOSITE PARTY FROM MAKING FURTHER INVESTIGATION . A STATEMENT RECOR DED U/S.132(4) OF TH E I.T. ACT STANDS ON AN EVEN S TRONGER FOOTING. THE TRUTH OF THE STATEM ENTS CAN BE DOUBTED ONLY IN T HE FACE OF HARD AND INCONTROVERTIBLE EVID ENCE THAT THE SAME WERE FACTU ALLY INCORRECT. HOW EVER, THE ASSESSEE H AS NOT PRESENTED ANY SUCH EVIDENCE TO SAY THAT THE STATEMENT GIVEN DURING THE COURSE OF SEARCH U/S.132(4) WAS INCOR RECT. THE ASSESSEE H AS MADE A GENERAL PRESENTATIO N WITH REGARD TO PRIN CIPLES OF ACCOUNTING AND THE CIRCULATING EFFECT OF C ASH WHICH MAY ASSU ME VARIOUS FORMS FRO M CASH IN HAND, TO STOCKS, SU NDRY DEBTORS, ASSETS OR EXPENDITURE. HOW EVER, IN ABSENCE OF ANY CON CRETE EVIDENCE TO SH OW THAT THE STATEME NT GIVEN DURING THE COURSE O F STATEMENT RECORDED U/S.132(4) IS INCOR RECT, THE SAME CANNOT BE ACC EPTED. DISTINGUISHIN G THE VARIOUS DECISIO NS CITED BEFORE HIM THE LD.CI T(A) UPHELD THE ADDIT ION MADE BY THE AO. 7 ITA NO.589/PN/2014 12. AGGRIEVED WITH SUCH ORDER OF THE CI T(A) THE ASSESSEE IS I N APPEAL BEFORE US. 13. THE LD. COUNS EL FOR THE ASSESSEE S TRONGLY OPPOSED THE ORDER OF THE CIT(A). HE SUBM ITTED THAT THE ADDITIO N OF RS.28 LAKHS NEE DS TO BE RECTIFIED BECAUSE AS PER THE AO THE TO TAL DEBTORS EMERGIN G OUT OF UNACCOUNTED SALES AND PURCHASES BY 2 SALESMAN TOTA LING TO RS.10,76,176/- ARE A LREADY INCLUDED IN R S.28 LAKHS, THEREFORE , THE AO HAS OBSERVED THAT A DDITION IS NOT WARRA NTED. SINCE THESE D EBTORS OF RS.10,76.176/- ARE O UT OF THE UNEXPLAINE D INVESTMENT OF RS.2 8 LAKHS FOUND MADE IN UN ACCOUNTED SALES AN D PURCHASES, THERE FORE, ON REDUCING THESE DEBTO RS, THE ADDITION ON A CCOUNT OF PEAK INVES TMENT IN UNACCOUNTED SALES AND PURCHASES WOU LD BE RS.17,23,824 /-. HE SUBMITTED THAT EVEN THE ABOVE PEAK IN VESTMENT OF RS.17,2 3,824/- CANNOT BE ADDED S INCE THE ASSESSEE HAS ALREADY OFFERED CASH OF RS.45,00,484/- AND HAS NOT DISPUTED TH E SAME. IT IS THIS C ASH ONLY WHICH WAS UTILIZED I N EFFECTING UNACCOU NTED SALES AND PURC HASES AS WERE RECORDED IN THE LOOSE PAPERS. HE S UBMITTED THAT IN CAS E WHERE THERE IS AN INVOLVEM ENT IN PEAK CASH OF RS.28 LAKHS IN UNAC COUNTED SALES AND PURCHASES AND AT THE SAME TIM E EXCESS CASH IS FOU ND, THE ADDITION CAN ONLY BE MADE ON THAT AMOU NT WHICH IS HIGHER A ND NOT BOTH THE AMOUNTS. ACCORDING TO HIM TH E PEAK INVESTMENT O F RS.28 LAKHS IS VERY MUCH COVERED IN EXCESS CASH OF RS.45,00,48 4/- AND THEREFORE MAKING FU RTHER ADDITION OF T HE SAME AMOUNT E ITHER OF RS.17,23,824/- OR R S.28 LAKHS WOULD AM OUNT TO DOUBLE ADDIT ION. HE SUBMITTED THAT SINCE THE ASSESSEE HAS AL READY OFFERED EXCESS CASH OF RS.45,05,779/-, UN ACCOUNTED STOCK OF RS.1,44,663/- AND SUNDRY DEBTORS OF RS.10,08, 141/-, THEREFORE, FUR THER ADDITION OF RS.2 8 LAKHS WILL AMOUNT TO DOUB LE ADDITION OF THE SAM E AMOUNT AND THEREF ORE THE 8 ITA NO.589/PN/2014 SAME SHOULD BE DELE TED. HE ALSO RELIED O N THE DECISION OF THE MUMBAI BENCH OF THE TRIBUN AL IN THE CASE OF SH RI ARVIND M. KARIYA VS. ACIT VIDE ITA NO.7024/MU M/2010 ORDER DATED 30-01-2013. 14. THE LD. DEPAR TMENTAL REPRESENTAT IVE ON THE OTHER HAN D HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE S UBMITTED THAT THE A SSESSEE DURING THE COURSE OF HIS STATEMENT RECORDED U/S.132 (4) HAD CATEGORICALLY OFFERED ADDITIONAL INCOME OF RS.28 LAKHS BEING T HE PEAK INVESTMENT IN UNACC OUNTED PURCHASES A ND SALES. THUS, BY OFFERING THE ADDITIONAL INCOM E OF RS.28 LAKHS, T HE ASSESSEE PREVEN TED THE DEPARTMENT FROM M AKING FURTHER ENQU IRY. THERE WAS NO FORMAL RETRACTION BY THE ASS ESSEE IMMEDIATELY AF TER THE SEARCH AND ON LY IN THE RETURN OF INCOME, THE ASSESSEE DID NOT AD D THE SAME. THEREFO RE, THERE IS ALSO NO VALID RETRA CTION AFTER OFFERING TH E ADDITIONAL INCOME OF RS.28 LAKHS ON ACCOUNT OF PEAK INVESTMENT IN T HE UNACCOUNTED TRAN SACTIONS. HE ACCORDINGLY SUBM ITTED THAT THE ORDER O F THE CIT(A) BE CONFIR MED AND THE GROUND RAISED BY THE ASSESSEE BE DISM ISSED. 15. WE HAVE CONSI DERED THE RIVAL ARGUM ENTS MADE BY BOTH TH E SIDES, PERUSED THE ORDERS OF THE ASSESSING OFF ICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSE E. WE HAVE ALSO CON SIDERED THE VARIOUS DECISION S CITED BEFORE US. T HERE IS NO DISPUTE TO THE FACT THAT DURING THE COU RSE OF SEARCH EXCESS CASH OF RS.45,05,77 9/- WAS FOUND OUT OF WHICH THE ASSESSEE ACCEPTE D RS.45,00,484/-. S IMILARLY, DURING THE COURSE OF SEARCH THE ASSESSEE HAD ALSO ADMITTED A DDITIONAL INCOME OF RS.28 LAKH S AS UNDISCLOSED INCO ME BEING PEAK INVEST MENT IN THE UNACCOUNTED TRA NSACTIONS. THE ASSES SEE HAS ALSO SURREND ERED AN AMOUNT OF RS.18,11, 873/- BEING ENTRIES NOT RECORDED IN THE BOOKS OF ACCOUNT ON ACCOUNT OF SUNDRY DEBTORS. W E FIND THE AO MADE A DDITION 9 ITA NO.589/PN/2014 OF RS.28 LAKHS SINCE THE SAME WAS NOT DE CLARED BY THE ASSESSE E IN THE RETURN FILED IN RESPON SE TO NOTICE U/S.153 A ALTHOUGH THE ASSES SEE HAS DECLARED THE CASH FOUND DURING THE COURSE OF SEARCH A ND THE UNRECORDED SUNDRY D EBTORS AND A PART OF THE UNACCOUNTED STO CK IN THE RETURN OF INCOME. W E FIND THE CIT(A) CON FIRMED THE ADDITION O F RS.28 LAKHS MADE BY THE AO ON THE GROUND THAT THE ASSESSEE C OULD NOT SUBSTANTIATE WITH CO NCRETE EVIDENCE TO SH OW THAT THE STATEMEN T GIVEN DURING THE COURSE OF SEARCH WAS BASED O N WRONG FACTS. ACCO RDING TO THE CIT(A) THE ADMIS SION BY THE ASSESSEE DURING THE COURSE O F SEARCH IS A GOOD PIECE OF EVID ENCE AND BY MAKING SUCH STATEMENT THE A SSESSEE PREVENTED THE AO FRO M MAKING FURTHER INV ESTIGATION ON THIS ISS UE. IT IS THE SUBMISSION OF T HE LD. COUNSEL FOR THE ASSESSEE THAT S INCE THE ASSESSEE HAS ALREAD Y DECLARED THE CASH FOUND DURING THE C OURSE OF SEARCH AMOUNTING TO RS.45,05,779/- AND THE NET ADDITION ON ACCOUNT OF SUNDRY DEBTORS IS RS.10,76,176/- ON AC COUNT OF UNEXPLAINED SUNDRY DEBTORS, THEREFORE, T HE AMOUNT OF RS.28 LAKHS DECLARED DUR ING THE COURSE OF SEARCH B EING THE PEAK INVE STMENT IN THE UNA CCOUNTED PURCHASES AND SALE S IS ALREADY INCLUD ED IN THE SAID AMO UNT AND THEREFORE THE ADDITION OF THE SAME WILL AM OUNT TO DOUBLE TAXAT ION. WE DO NOT FIND ANY FORCE IN THE ABOVE ARGUME NT OF THE LD. COUNSE L FOR THE ASSESSEE. THE AS SESSEE WAS ENGAGE D IN BOTH ACCOUN TED AND UNACCOUNTED BUSINE SS. THE ASSESSEE DU RING THE COURSE OF SE ARCH HAS HIMSELF ADMITTED AD DITIONAL INCOME OF R S.28 LAKHS BEING TH E PEAK INVESTMENT IN THE UN RECORDED PURCHASES A ND SALES. THE ABOVE AMOUNT WAS OVER AND ABOVE THE AMOUNT OF CASH FOUND DURING THE C OURSE OF SEARCH AMOUNTING T O RS.45,05,779/-. THE ASSESSEE BY M AKING A STATEMENT DURING THE COURSE OF SEARCH AN D BY NOT RETRACTING T HE SAME IMMEDIATELY THEREAFT ER HAS PREVENTED TH E DEPARTMENT FROM MAKING 10 ITA NO.589/PN/2014 FURTHER ENQUIRIES. T HEREFORE, THE ARGUME NT OF THE LD. COUNSE L FOR THE ASSESSEE THAT AN AM OUNT OF RS.28 LAKHS IS ALREADY INCLUDED IN THE CASH FOUND DURING THE COURSE OF SEARCH AT RS.45,05,779/- AND THE UNACCOUNTED DEBTORS AT RS.19,76,176/- C ANNOT BE ACCEPTED. H OWEVER, WE FIND SOME FORCE IN THE SUBMISSION OF THE LD. COUNSE L FOR THE ASSESSEE THAT THE ENT IRE AMOUNT OF RS.28 LAKHS CANNOT BE ADD ED TO THE TOTAL INCOME OF THE A SSESSEE. WE FIND THE ASSESSEE DURING THE COURSE OF SEARCH HAS ADM ITTED UNRECORDED C REDIT SALES MADE B Y SHRI SATNARAYANAN AND S HRI RAJA KOLI AMOUN TING TO RS.10,08,141 /- AND RS.8,03,732/- RESPEC TIVELY BOTH TOTALING TO RS.18,11,873/-. TH E ABOVE AMOUNT OF RS.18,11, 873/- RELATES TO THE UNRECORDED CREDIT SA LES MADE BY THE TWO SALESMAN OF THE ASSESSEE, I.E. SHRI SATNARAYANAN AND SHRI RAJA KOLI. WE FIND T HE AO AT PARA 4.8 O F THE ORDER HAS ANAL YSED AND HAS MENTIONED THAT T HE ABOVE AMOUNT INC LUDES DEBTORS TO THE EXTENT OF RS.10,76,176/- RELAT ING TO THE UNACCOUN TED BUSINESS. THERE FORE, IN OUR OPINION, AN AM OUNT OF RS.10,76,17 6/- OUT OF THE SURR ENDER OF RS.18,11,873/- DECLA RED BY ASSESSEE ON A CCOUNT OF UNRECORDED SUNDRY DEBTORS FORMS A PAR T OF THE PEAK INVEST MENT OF RS.28 LAKH S IN THE UNACCOUNTED BUSINE SS AND THEREFORE THE ADDITION OF THE ABOVE AMOUNT WILL AMOUNT TO DOUB LE TAXATION. WE THE REFORE ARE OF THE CON SIDERED OPINION THAT OUT OF T HE ADDITION MADE BY THE AO AT RS.28 LAK HS WHICH HAS BEEN UPHELD BY THE CIT(A) ONLY AN AM OUNT OF RS.17,23,824 /- ONLY CAN BE SUSTAINED. 16. IT IS AN ADMITT ED FACT THAT AFTER DE CLARING THE AMOUNT OF RS.28 LAKHS THE ASSESSEE HAS NOT RETRACTED TH E STATEMENT IMMEDI ATELY OR THEREAFTER. ONLY IN T HE RETURN FILED IN RES PONSE TO NOTICE U/S.1 53A THE ASSESSEE HAS NOT INC LUDED THE SAME IN H IS TOTAL INCOME ALTHO UGH HE HAD ACCEPTED THE CASH OF RS.45,00,4 84/- AND THE DEB TORS OF 11 ITA NO.589/PN/2014 RS.18,11,873/-. BY MAKING A DECLARATION DURING THE COURSE O F SEARCH THE ASSESSEE PREVENT ED THE DEPARTMENT FR OM MAKING FURTHER E NQUIRIES. IT HAS BEEN DECIDED I N VARIOUS DECISIONS T HAT ADMISSION BY A P ERSON IS A GOOD PIECE OF EVIDE NCE BECAUSE THE PERS ON MAKING A STATEME NT STOPS THE OPPOSITE PARTY F ROM MAKING FURTHER INVESTIGATION. A S TATEMENT RECORDED U/S.132(4)O F THE I.T. ACT STANDS ON AN EVEN STRONGER FOOTING. SINCE NOTHING HAS BE EN BROUGHT BEFORE TH E LOWER AUTHORITIES A S WELL AS BEFORE US THAT THE ST ATEMENT GIVEN DURING THE COURSE OF SEARCH WAS ON WRONG ASSUMPTION O F FACTS OR THAT THE STATEMENT GIVEN DUR ING THE COURSE OF SEARCH IS U NTRUE OR FALSE, THEREF ORE, WE DO NOT FIND A NY MERIT IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT AD DITION OF THE SAME WILL AMO UNT TO DOUBLE TAXA TION. HOWEVER, AS ALREADY MENTIONED EARLIER, TH E AO HIMSELF HAS NO TED IN PARA 4.8 OF H IS ORDER THAT DEBTORS TO EXTE NT OF RS.10,76,176/ - RELATES TO THE UNA CCOUNTED BUSINESS AS EVIDENC ED BY BUNDLE NO.4 , THEREFORE, THE ASS ESSEE IS ENTITLED TO RELIEF OF O NLY RS.10,76,176/- OUT OF THE ADDITION OF RS.28 LAKHS MADE BY THE A O ON THE BASIS OF TH E ADMISSION OF THE A SSESSEE DURING THE COURSE O F SEARCH BEING PEAK INVESTMENT IN UNR ECORDED TRANSACTIONS IN PURCH ASES AND SALES. 17. SO FAR AS THE DECISION RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IS CONCERNE D IN THE CASE OF SHRI ARVIND M. KARIYA (SU PRA), THE SAME IN OUR OPINION IS DISTINGUISHABLE A ND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THAT CASE, THE AS SESSEE WAS ENGAGED IN SHARE TRANSACTIONS ALLEGED TO BE PENNY STOCK COMPANIES WHERE FRA UDULENT TRANSACTIONS HAVE T AKEN PLACE IN CONN IVANCE WITH SOME BROKERS. HOWEVER, HERE THE ISS UE IS ADDITION OF PEAK INVESTMENT IN UNACC OUNTED TRANSACTIONS WHICH I S BASED ON THE ADMI SSION BY THE ASSESSE E DURING THE COURSE OF SEARCH. WE ACCORDINGLY HOLD THAT THE CASE DECISIO N RELIED 12 ITA NO.589/PN/2014 ON BY THE LD. COUNS EL FOR THE ASSESSEE IS NOT APPLICABLE TO TH E FACTS OF THE PRESENT CASE. IN VIEW OF OUR ABOVE D ISCUSSION, THE ASSES SEE GETS RELIEF OF RS.10,76,176 /- ONLY AND BALANCE AMOUNT OF RS.17,23, 824/- IS SUSTAINED. THE GRO UND RAISED BY THE A SSESSEE IS ACCORDING LY PARTLY ALLOWED. 18. GROUND OF APP EAL NO.2 BY THE ASSES SEE READS AS UNDER : ON THE FACTS AND CIRC UMSTANCES OF CASE THE LD.CIT(A) HAS ERRED IN SUSTAINING THE ADHOC ADDITION OFRS.1,00,000/ ONLY RELYING UPON T HE ADMISSION MADE BY THE APPELLANT. 19. AFTER HEARING BOTH THE SIDES WE FI ND THE AO MADE AD DITION OF RS.1 LAKH ON ADHOC BASIS OUT OF VARIOUS EXPENSES ON THE GRO UND THAT THE SAME WERE NOT FU LLY VERIFIABLE WITH SU PPORTING VOUCHERS FO R WHICH THE ASSESSEE HIMSELF HAS AGREED FOR ADDI TION OF RS.1 LAKH. I N APPEAL THE LD.CIT(A) SUSTAIN ED THE ADDITION BY OB SERVING AS UNDER : 5.12 I HAVE GIVE N CAREFUL CONSIDERATION TO THE SUBMISSION. TH E APPELLANT HIMSELF ADMIT S THAT HE HAD AGREED TO T HE ADDITION. IN DOING SO , THE APPELLANT HAD IN EFF ECT, MADE A PROMISE WH ICH DISCOURAGED THE AO FROM MAKING PROBING INQUIRIES INTO THE VERA CITY OF THE EXPENDITURE CLAIMED. AS SUCH, IT IS NOT OPEN IN MY VIEW F OR THE APPELLANT TO TUR N AROUND AT THE APPELLATE STAGE AND QUESTION THE ADDITION RESULTING FROM HIS OWN CONSENT. THE ADDITIONAL EVIDENCE IN THE FORM OF BILLS AND VOUCHERS SOUGHT TO BE F ILED BY THE APPELLANT AR E HEREBY REJECTED AS THE SAME ARE NOT FOUND TO FALL WITHIN ANY OF THE CI RCUMSTANCES MENTIONED UNDER RULE 46A OF THE I. T RULES. AS SUCH, THIS PA RT OF GROUND NO.1 IS ALSO HEREBY DISMISSED. 20. WE DO NOT FIN D ANY INFIRMITY IN T HE ABOVE SINCE THE ASSESSEE HIMSELF BY AGREEING FOR ADDITION OF RS.1 LAKH PREVENTED THE A O FROM MAKING FURTHER ENQU IRIES. THEREFORE, THE CIT(A) WAS FULLY JUS TIFIED IN NOT ACCEPTING THE VA RIOUS ADDITIONAL EVID ENCES IN THE FORM OF BILLS AND VOUCHERS. MERELY BECAUSE BOOKS OF ACCOUNTS ARE DULY AUDITED U/S.44AB, THE SAME , IN OUR OPINION, IS NOT SUFFICIENT TO DE LETE THE ADDITION ESPECIALLY W HEN THE AO HAD POIN TED OUT THAT THE EXPE NSES ARE 13 ITA NO.589/PN/2014 NOT SUPPORTED BY PRO PER VOUCHERS AND THE ASSESSEE HIMSELF HA S AGREED FOR ADDITION OF RS.1 LAKH AND PREVENTED THE AO FROM MAKING FURTHER ENQUIRIES. UNDER T HESE CIRCUMSTANCES THE ORDER OF THE C IT(A) IS UPHELD AND THE GROU ND RAISED BY THE ASSE SSEE IS DISMISSED. 21. IN THE RESULT, T HE APPEAL FILED BY THE ASSESSEE IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 -08-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) / JUDICIAL MEMBER / ACCOUNTANT MEM BER IQ.KS PUNE ; DATED : 26 TH AUGUST, 2015. LRH'K / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) S / THE CIT(A) CENTRAL, PUNE 4 . S / THE CIT CENTRAL, PUNE 5 . 6. , , IQ.KS / DR, ITAT, B PUNE; / GUARD FILE. / BY ORDER , //TRUE C //TRUE COPY// / SR. PRIVATE SECRETA RY , IQ.KS / ITAT, PUNE