The ACIT, Circle-4, Surat V. M/s. Rameshwar Textile Mills Ltd., Surat

ITA 591/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9922 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RASESH SHAH
• Assessee Lawyers: ALBINUS TIRKEY
• Keywords: Unexplained expenditure; Business expenditure; Income from undisclosed sources
• Section: 143(3); 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA NO: 553 & 591/AHD/2012 (ASSESSMENT YEAR: 2006-07) M/S. RAMESHWAR TEXTILE MILLS LTD. 5101, B WING, RAGHUKUL MARKET, RING ROAD SURAT V/S THE A.C.I.T., CIRCLE-4, SURAT (APPELLANT) (RESPONDENT) THE A.C.I.T., CIRCLE-4, SURAT V/S M/S. RAMESHWAR TEXTILE MILLS LTD. 5101, B WING, RAGHUKUL MARKET, RING ROAD SURAT (APPELLANT) (RESPONDENT) PAN: AAACR2714D APPELLANT BY : SHRI RASESH SHAH, AR RESPONDENT BY : SHRI ALBINUS TIRKEY, SR. D.R . ( )/ ORDER DATE OF HEARING :11-12-2015 DATE OF PRONOUNCEMENT : 01 -01-2016 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NOS. 553 & 591/AHD/2012 . A.Y. 2006-0 7 2 1. THESE TWO APPEALS OF WHICH ONE IS FILED BY THE ASSE SSEE AND THE OTHER ONE IS FILED BY REVENUE, ARE AGAINST THE ORDER OF CIT(A)-I V, SURAT DATED 29.11.2011 FOR A.Y. 2006-07. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE B USINESS OF DYEING & PRINTING OF ART SILK CLOTH. ASSESSEE FILED ITS RETU RN OF INCOME FOR A.Y. 2006- 07 ON 27.09.2008 DECLARING TOTAL INCOME AT RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAM ED UNDER SECTION 143(3) R.W.S. 147 VIDE ORDER DATED 24.03.2011 AND THE TOTA L INCOME WAS DETERMINED AT RS. 2,83,52,490/-. AGGRIEVED BY THE ORDER OF A. O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), AS SESSEE AND REVENUE ARE NOW IN APPEAL BEFORE US. THE GROUNDS RAISED BY REVE NUE IN ITS APPEAL IN ITA NO. 591/AHD/2012 READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A)-IV, SURAT HAS ERRED IN RESTRICTING THE ADDITION TO RS. 35,24, 121/- AS AGAINST THE ADDITION OF RS. 3,52,41,212/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNDISCLOSED INCOME FROM JOB RECEIPTS OUTSIDE THE BOOKS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A)-IV, SURAT OUGHT TO HAVE UP HELD THE ORDER OF THE ASSESSING OF FICER. 4. ON THE OTHER HAND THE GROUNDS RAISED BY THE ASSESSE E IN ITS APPEAL IN ITA NO. 553/AHD/2012 READS AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ASSUMING ITA NOS. 553 & 591/AHD/2012 . A.Y. 2006-0 7 3 JURISDICTION U/S. 148 OF THE ACT AND THEREBY ERRED IN FRAMING THE ASSESSMENT U/S. 147 OF THE ACT. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT (APPEALS) HAS PARTLY ERRED IN PARTLY CO NFIRMING THE ACTION OF THE ASSESSING OFFICER BY SUSTAINING THE ADDITION TO THE EXTENT OF RS. 35,24,121/- OUT OF TOTAL ADDITION OF RS. 3,52,41,212/- BY ESTIMATING G .P OF 10% ON NET ADDITIONAL TURNOVER OF RS.3,52,41,212/-TO THE TOTAL INCOME OF ASSESSEE COMPANY. 3. IT IS THEREFORE PRAYED THAT ABOVE ADDITION MADE B Y ASSESSING OFFICER AND CONFIRMED BY CIT (APPEALS) MAY PLEASE BE DELETED. 5. SINCE THE GROUNDS ARE INTERCONNECTED BOTH THE APPEA L ARE CONSIDERED TOGETHER. 6. A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED ON THE ASSESSEE AND ITS PROPRIETARY CONCERN M/S. KIRTIDA SILK MILLS ON 03.0 3.2008. DURING THE COURSE OF SURVEY, STATEMENTS OF DIRECTORS, EMPLOYEE S AND OTHER PERSONS WERE RECORDED. AT THE TIME OF SURVEY LAPTOP OF ONE OF TH E DIRECTORS SHRI SANJAY KUMAR SUDHRANIA WAS EXAMINED AND IT WAS FOUND TO HA VE CONTAINED VARIOUS ACCOUNTS PERTAINING TO PROCESS CHARGES RECEIVED B Y THE ASSESSEE. ON THE PERUSAL OF THE IMPOUNDED MATERIAL, IT WAS FOUND THA T DURING THE PERIOD OF 7 MONTHS FROM 29.08.2005 TO 31.03.2006, ASSESSEE HAD DEPOSITED CHEQUES WORTH 2,05,57,374/- AND THE AVERAGE AMOUNT OF CHEQU ES DEPOSITS WERE WORKED OUT TO RS. 29,36,767/-. A.O ALSO NOTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF A.Y. 2007-08 & 2008-09, T HE BOOKS OF ACCOUNTS WERE FOUND TO BE INCORRECT AND DOCTORED AND HENCE T HE BOOKS WERE REJECTED AND THE TOTAL INCOME WAS DETERMINED AFTER TAKING IN TO ACCOUNT VARIOUS FACTORS THAT WERE DETECTED DURING THE SURVEY AND ASSESSMENT PROCEEDINGS AND ADDITIONS WERE MADE. FOR THE YEAR UNDER CONSIDERATI ON, A.O AFTER ITA NOS. 553 & 591/AHD/2012 . A.Y. 2006-0 7 4 CONSIDERING THE ASSESSMENT MADE IN EARLIER YEARS AN D ON THE BASIS OF AVERAGE DEPOSITS OF RS. 29,36,767/- WORKED OUT THE TOTAL DE POSITS FOR THE YEAR TO BE AT RS. 3,52,41,212/- AND IT WAS CONSIDERED TO BE UNDIS CLOSED INCOME FROM JOB RECEIPTS. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE C ARRIED THE MATTER BEFORE LD. CIT(A) WHO GRANTED PARTIAL RELIEF TO ASSESSEE B Y HOLDING AS UNDER:- 5.THE SECOND, THIRD, FOURTH AND FIFTH GROUNDS OF AP PEAL ARE RELATED TO THE COMMON ISSUE OF ADDITION OF RS. 3,52,41,212/- AND THEREFORE THEY ARE TAKEN UP FOR ADJUDICATING TOGETHER. 5.1 THE AO OBSERVED THAT AT THE TIME OF SURVEY A LA PTOP OF ONE OF THE DIRECTORS SHRI SANJAY KUMAR SUDHRANIA WAS EXAMINED AND THE USB HAR D DRIVE OF THE SAME WAS IMPOUNDED. VARIOUS STATEMENTS WERE RECORDED, INCLUD ING THAT OF A DIRECTOR SHRI SANJAY SUDHRANIA AS WELL AS OTHER STAFF MEMBERS, WHO ADMIT TED TO HAVE RECEIVED BENAMI CHEQUES AS PAYMENT TO THE APPELLANT AND RAMESHWAR SILK MILL S LTD. WHICH-WERE DISCOUNTED FROM SHRI JAYKUMAR SHROFF. SHRI SANJAY SUDHRANIA HAD ALS O ADMITTED THAT HE WAS MAINTAINING PARALLEL ACCOUNTS ON USB HARD DISK OPERATED THROUGH HIS LAPTOP. THE AO ALSO OBSERVED THAT DURING ASSESSMENT PROCEEDINGS OF A.Y. 2007-08- AND A.Y. 2008-09, THE BOOK RESULTS WERE REJECTED AND AFTER TAKING ALL THE FACTORS INTO ACCOUNT, ADDITIONS OF RS. 4,20,73,972/- AND RS. 6,35,17,609/-RESPECTIVELY WERE MADE. ON PER USAL OF THE IMPOUNDED MATERIAL, THE AO OBSERVED THAT BOOKS BEARING SERIAL NOS. B-55, B- 56 B-58 AND B-60 CONSISTED OF SIMILAR TRANSACTIONS OF CHEQUES DEPOSITED WITH JAIK UMAR SHROFF AND THE APPELLANT COMPANY HAD DEPOSITED CHEQUES AGGREGATING TO RS. 2. 05.57.374/- DURING THE PERIOD OF SEVEN MONTHS (I.E. FROM 29-08-2005 TO-1 -03-2006. T HE AO WORKED OUT THE .AVERAGE AMOUNT OF DEPOSIT PER MONTH WHICH CAME TO RS. 29,36 .767/- AND ACCORDINGLY CALCULATED THE TOTAL DEPOSITS FOR THE YEAR UNDER CONSIDERATION AT RS. 3.52,41,212/- (RS. 29,36,767 X 12 MONTHS). THE AO CONCLUDED THAT THERE WERE EVIDEN CES OF UNACCOUNTED SALES IN FORM OF CHEQUES DISCOUNTED. HE FURTHER HELD THAT ALL THE EX PENSES WERE ALREADY CLAIMED IN THE REGULAR BOOKS OF ACCOUNTS AND HENCE MADE AN ADDITIO N OF THE SAID AMOUNT TREATING IT AS THE INCOME OF THE APPELLANT. 5.2 BEFORE ME, THE LEARNED ARS FILED A DETAILED SUB MISSIONS AND ARGUED THAT THE AO FAILED TO APPRECIATE VARIOUS SUBMISSIONS GIVEN BY T HE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH WERE SUPPORTED BY FULL DETAILS AND ADEQUATE EXPLANATIONS. ITA NOS. 553 & 591/AHD/2012 . A.Y. 2006-0 7 5 THE ARS SUBMITTED THAT THE APPELLANT HAD INCURRED C ERTAIN EXPENSES WHICH WERE NOT ACCOUNTED FOR AND THAT THESE WERE INCURRED OUT OF A DDITIONAL TURNOVER TOWARDS SALARY, WAGES AND OTHER DIRECT OVER HEADS AND ADMINISTRATIV E EXPENSES FOR RUNNING AND MAINTENANCE OF THE MILL. IT WAS SUBMITTED THAT THE DETAILS REGARDING THE EXPENSES WERE AVAILABLE IN THE IMPOUNDED MATERIALS AS WELL AS DAT A FOUND IN THE LAPTOP AT THE TIME OF SURVEY FROM WHICH IT WAS CLEAR THAT THE SOURCES OF THE SAID UNACCOUNTED EXPENDITURE WERE UNACCOUNTED SALE PROCEEDS AND THEREFORE THE AO OUGH T TO HAVE GRANTED THE DEDUCTION OF THE SAME. 5.3 THE ARS SUBMITTED THAT THE FACTS REGARDING UNAC COUNTED EXPENDITURE WERE CLARIFIED AT THE TIME OF SURVEY AND THEREAFTER BY SUBMITTING VAR IOUS CLARIFICATORY LETTERS ON 04-04- 2008 AND 04-05-2008 AND DURING ASSESSMENT PROCEEDIN GS ALSO COMPLETE DETAILS WERE SUBMITTED AND THE SAID LETTERS HAVE BEEN REPRODUCED ON PAGE NO 4 TO 6 OF THE ASSESSMENT ORDER. THE ARS REPRODUCED SUMMARIZED BIFURCATION OF FEW MAIN~ EXPENSES EXTRACTED FROM THE IMPOUNDED MATERIALS BEARING B-53, B-55, B- 58 AND B-60 WHICH IS AS BELOW. A SALARY & WAGES 2,71,66,985 B CHEMICAL EXPENSES 1,00,30,650 TOTAL 3,71,97,635 THE ARS FURTHER SUBMITTED THAT DURING THE COURSE OF SURVEY PROCEEDINGS, ON ONE HAND THE DETAILS REGARDING UNACCOUNTED TURNOVER WERE FOUND A ND AT THE SAME TIME, THE DETAIL REGARDING UNACCOUNTED EXPENDITURE INCURRED OUT OF T HE UNACCOUNTED JOB WORK CHARGES WERE ALSO FOUND AND THAT ALL THE EXPENSES RELATED T O JOB WORK CHARGES WERE SUPPORTED BY FULL DETAILS AND THE SAME WERE DULY REFLECTING IN I MPOUNDED MATERIALS FOUND DURING THE COURSE OF SURVEY. IT WAS SUBMITTED THAT THE IMPORTA NT FACT WAS THAT THE EXISTENCE OF SUCH UNACCOUNTED EXPENDITURE WERE FOUND ALONGWITH DETAIL S OF UNACCOUNTED INCOME ITSELF AND SUCH CO-EXISTENCE WAS THE BEST EVIDENCE IN AS MUCH AS EITHER BOTH HAD TO BE ACCEPTED OR BOTH HAD TO BE IGNORED. THE ARS RELIED ON THE DECIS ION OF HON'BLE AHMEDABAD TRIBUNAL IN THE CASE OF RATILAL H. SHAH VS. ACIT(ITA NO.3926 /AHD/1993) WHEREIN IT WAS OBSERVED THAT. THE DEPARTMENT CANNOT APPROBATE AND REPROBA TE THE SAME DOCUMENT AT THE SAME TUNE '. THE ARS ARGUED THAT THE AO REJECTED THE CLA IM OF EXPENSES MERELY ON THE PRESUMPTION THAT THE APPELLANT COMPANY HAD ALREADY CLAIMED THE EXPENSES IN ITS REGULAR BOOKS OF ACCOUNTS AND THAT HE HAD NO MATERIAL EVIDE NCE TO ESTABLISH THIS FACT. ITA NOS. 553 & 591/AHD/2012 . A.Y. 2006-0 7 6 5.4 THE ARS ALTERNATIVELY SUBMITTED THAT THE AO ERRED IN NOT GRANTING DEDUCTI ON FOR BUSINESS EXPENDITURE INCURRED BY THE APPELLANT AND AS A RESULT OF THIS ACTION, THE ENTIRE TURNOVER HAD BEEN TAXED WHICH AMOUNTED TO EARNING O F 100% PROFIT OUT OF THE TURNOVER. THE ARS SUBMITTED THAT IT WAS NOT PRACTICALLY POSSI BLE FOR ANY BUSINESSMAN TO EARN 100% PROFIT FROM ANY TRANSACTION AND AT THE MOST, THE IN COME COULD BE TO THE EXTENT OF CERTAIN ESTIMATED PROFITS EMBEDDED IN THE JOB WORK CHARGES BASED ON PAST TREND AS WELL AS THE PREVAILING RATE OF NET PROFIT IN CASE OF SIMILAR IN DUSTRIES. THE ARS SUBMITTED THAT THE APPELLANT HAD SHOWN GROSS PROFIT AT THE RATE OF 4.8 5% IN THE YEAR UNDER APPEAL AS COMPARED TO 5.22% IN EARLIER YEAR. DURING THE DISCU SSION, THE ARS ALSO POINTED OUT THAT IF THE ENTIRE ADDITIONAL TURNOVER WOULD BE TREATED AS NET PROFIT, THEN, THE GROSS PROFIT MARGIN WOULD REVEAL A VERY UNREALISTIC AND DISTORTE D RESULT. THE ARS RELIED ON THE OPINION OF THE HONBLE GUJARAT HIGH COURT IN THE CA SE OF CIT V/S. PRESIDENT INDUSTRIES [258ITR 654] 5.5 I HAVE GONE THROUGH THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE ARS. ALL THE GROUNDS RAISED BY THE APPE LLANT REVOLVE AROUND THE COMMON ISSUE OF ADDITION OF RS. 3,52,41,212/-. THE AO, WHI LE FINALIZING THE ORDER CONCLUDED THAT THE ADDITIONAL TURNOVER OF THE APPELLANT WAS RS. 3, 52,41,212/- AND STATED THAT THE CLAIM OF WAGES AND CHEMICAL EXPENSES WERE ALREADY CLAIMED IN THE REGULAR BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY. THE AO ARRIVED AT THIS FIGUR E OF UNACCOUNTED TURNOVER ON THE BASIS OF THE RECORDINGS IN THE IMPOUNDED MATERIAL B EARING SERIAL NUMBERS B-55, B-5.6, B- 58 AND B-60 WHICH CONSISTED OF TRANSACTIONS OF CHEQ UES DEPOSITED AMOUNTING TO RS. 2,05,57,374/- WITH JAIKUMAR SHROFF DURING THE PERIO D 29-08-2005 TO 31-03-2006 I.E. DURING THE PERIOD OF SEVEN MONTHS AND ON THIS BASIS , THE AO EXTRAPOLATED THE CHEQUE DISCOUNTED ON AVERAGE BASIS AND CALCULATED THE TOTA L UNACCOUNTED TURNOVER FOR THE YEAR UNDER APPEAL AT RS. 3,52.41,212/- (RS. 29,36,767 X 12 MONTHS). AT THE SAME TIME, IT IS ALSO OBSERVED THAT THE SAID IMPOUNDED MATERIALS ALS O CONTAINED DETAILS OF EXPENSES INCURRED WHICH WERE NOT ACCOUNTED FOR. THE IMPOUNDE D MATERIAL INDICATED THAT THE SAID UNACCOUNTED EXPENDITURE WERE INCURRED OUT OF THE PR OCEEDS OF CHEQUE DISCOUNTED WHICH WAS ALLEGED AS THE SALE PROCEEDS OR TURNOVER OF THE APPELLANT. IT WAS ALSO CONCLUDED IN THE APPELLATE ORDER OF A.Y. 2007-08 AS WELL AS A.Y. 2008-09 THAT THE CHEQUE DISCOUNTED THROUGH SHROFF WAS THE UNACCOUNTED SALE PROCEEDS / TURNOVER OF THE APPELLANT. FOR THE ITA NOS. 553 & 591/AHD/2012 . A.Y. 2006-0 7 7 YEAR, THE PRECISE QUANTUM OF SUPPRESSED ADDITIONAL TURNOVER BECOMES DIFFICULT TO DETERMINE BECAUSE SHRI JAIKUNIAR PERIWAL HAD NOT KE PT ANY RECORDS OF CHEQUE DISCOUNTED AND DETAILS WERE AVAILABLE ONLY FOR 7 MONTHS IN THE IMPOUNDED MATERIAL. IT MAY HOWEVER BE MENTIONED THAT THE FACT OF SUPPRESSION OF TURNOV ER WAS CLEARLY ESTABLISHED AND ALSO ACCEPTED BY THE DIRECTORS DURING SURVEY. HOWEVER, SINCE THE TOTAL QUANTUM OF CHEQUE DISCOUNTED WAS NOT AVAILABLE AND ONLY THE DETAILS O F FEW MONTHS WERE AVAILABLE IN THE IMPOUNDED MATERIAL, THE ASSESSING OFFICER WAS LOGIC ALLY CORRECT TO WORK OUT THE SUPPRESSED TURNOVER ON AN AVERAGE BASIS AT RS. 3,52 ,41,212/-. IT IS ALSO OBSERVED THAT THE IMPOUNDED MATERIAL REFLECTED THE EXISTENCE OF UNACC OUNTED EXPENDITURE IN THE YEAR UNDER APPEAL AS WELL AS THE A.Y. 2007-08 AND A.Y. 2008-09 . THE APPELLANT HAS SUBMITTED THE DETAILS OF SUCH EXPENDITURE DURING ASSESSMENT AND A LSO STATED THAT THE FACTS RELATED TO SUCH EXPENDITURE WERE DULY EXPLAINED AT THE TIME OF SURVEY AND THEREAFTER BY SUBMITTING DIFFERENT LETTERS. HOWEVER, THE AO DREW THE INFEREN CE THAT THE APPELLANT HAD ALREADY CLAIMED ALL THE EXPENSES .IN THIS REGARD IN REGULAR BOOKS AND THEREFORE, DID NOT ALLOW THE SAME. 5.6 CONSIDERING THE FACTUAL MATRIX OF THE CASE, UND ER MENTIONED POSSIBILITIES EMERGE. (I) ENTIRE TURNOVER TO BE TREATED AS INCOME. OR (II) THE NET INCOME AFTER GRANTING EXPENDITURE AS C LAIMED BY THE APPELLANT ON THE BASIS CO-EXISTENCE OF EVIDENCES OF UNACCOUNTED INC OME AND EXPENDITURE TO BE TREATED AS INCOME. OR (III) TO ESTIMATE THE GROSS PROFIT BASED ON PAST TR END AS WELL AS THE PREVAILING RATE OF NET PROFIT IN CASE OF SIMILAR OTHER INDUSTRIES. 5.7 THE MOST PECULIAR FEATURE OF THE CASE WAS THAT THE EVIDENCES FOUND AN D IMPOUNDED DURING SURVEY WERE RELATED TO BOTH ACCOUNTED AND UN ACCOUNTED TRANSACTIONS AND THESE INCLUDED BOTH INCOME AND EXPENDITURE. FOR SOME YEARS, THE SAME WERE RECORDED SYSTEMATICALLY IN FORM OF BOOKS OF ACCOUNT S MAINTAINED ON LAPTOP. FOR THE YEAR UNDER APPEAL, THE DETAILS OF INCOME AND EXPENDITUR E WERE AVAILABLE IN THE IMPOUNDED MATERIAL AND THEREFORE, IT IS UNJUSTIFIABLE IF THE EXPENSES ARE TOTALLY IGNORED AND THE ENTIRE ADDITIONAL TURNOVER OF RS. 3,52.41,212/- IS TREATED AS NET INCOME OF THE APPELLANT. 5.8 NOW COMING TO ANOTHER ALTERNATIVE OF, GRANTING THE ENTIRE CLAIM- OF UNACCOUNTED EXPENDITURE ON THE BASIS OF CO-EXISTENCE OF ENTRIES RELATED TO ACCOUNTED AND UNACCOUNTED ITA NOS. 553 & 591/AHD/2012 . A.Y. 2006-0 7 8 TRANSACTIONS IN THE IMPOUNDED MATERIALS. THE APPELL ANT HAD CLAIMED THAT IT HAD INCURRED A SUM OF RS. 3,71,97,6357- TOWARDS WAGES AND CHEMIC AL EXPENSES FROM UNACCOUNTED INCOME. THE AO STATED THAT THE SAME CANNOT BE ACCEP TED AS IT APPEARED TO BE EXCESSIVE AND SINCE SIMILAR EXPENSES WERE ALSO CLAIMED IN THE REGULAR ACCOUNTS, HE HELD THAT THESE EXPENSES WERE ALREADY CLAIMED BY THE ASSESSEE. HOWE VER, THE RECORDS AND EVIDENCES SUBMITTED BY THE APPELLANT SHOW EXISTENCE OF VARIOU S ENTRIES IN THE IMPOUNDED MATERIALS, WHICH CLEARLY SUGGESTED THAT VARIOUS EXPENSES WERE INCURRED BY THE APPELLANT BUT NOT ACCOUNTED FOR IN THE REGULAR BOOKS OF ACCOUNTS. DUR ING ASSESSMENT PROCEEDINGS, THE APPELLANT HAD SUBMITTED THE EVIDENCES OF UNRECORDED WAGES AND SALARY EXPENDITURE INCURRED OUT OF UNACCOUNTED ADDITIONAL INCOME. ALSO AT THE TIME OF SURVEY PROCEEDINGS, THE APPELLANT HAD CLARIFIED THAT CERTAIN EXPENSES A ND MORE PARTICULARLY WAGES WERE NOT ACCOUNTED FOR OUT OF COMPULSION IN VIEW OF CERTAIN RESTRICTIONS OF OTHER LAWS AND THE EXISTENCE OF COMPULSIVE UNACCOUNTED SALES AS A TREN D IN THE MARKET WHICH FORCED THE APPELLANT TO INCUR CERTAIN BUSINESS EXPENDITURE FRO M SUCH UNACCOUNTED RECEIPTS. I FIND FORCE IN THE ARGUMENTS OF ARS THAT THE CO-EXISTENCE OF EVIDENCES OF UNACCOUNTED INCOME AND UNACCOUNTED EXPENDITURE CANNOT BE IGNORED IN TO TO AS THE DEPARTMENT CANNOT APPROBATE AND REPROBATE THE SAME DOCUMENT AT THE SA ME TIME. HOWEVER, IT IS ALSO NOTICED THAT THE APPELLANT HAD ALSO FAILED TO PROVE CATEGOR ICALLY THAT THE-IMPUGNED UNACCOUNTED EXPENSE TRANSACTIONS AS REFLECTED IN THE IMPOUNDED MATERIAL WERE NOT ACCOUNTED FOR AT ALL IN THE REGULAR BOOKS OF ACCOUNTS. AT THE SAME TIME, THE AO ALSO COULD NOT ESTABLISH WITH EVIDENCE THAT THE APPELLANT'S CLAIM WAS INCORRECT A ND ALL THE TRANSACTIONS OF UNACCOUNTED EXPENDITURE WERE INCORPORATED IN THE REGULAR BOOKS OF ACCOUNTS. THEREFORE, I AM OF THE VIEW THAT IF IT IS NOT JUSTIFIABLE TO REJECT THE CL AIM OF UNACCOUNTED EXPENDITURE IN TOTO, IT IS ALSO NOT JUSTIFIABLE TO ALLOW THE DEDUCTION OF ALL THE EXPENDITURE AS CLAIMED BY THE APPELLANT. 5.9 IN VIEW OF THE ABOVE DISCUSSION, IT IS TO BE HELD THAT THE BOOKS OF ACCO UNTS ARE REQUIRED TO BE REJECTED AS THE APPELLANT HAD NOT AC COUNTED FOR THE FULL QUANTUM OF RECEIPTS. IT IS ALSO TO BE HELD THAT THE ENTIRE ADD ITIONAL TURNOVER CANNOT BE CONSIDERED AS THE ADDITIONAL INCOME OF THE APPELLANT. THE ADDITIO NAL PROFIT ACCRUING IN RESPECT OF ADDITIONAL TURNOVER IS REQUIRED TO BE DETERMINED. F ACED WITH SIMILAR SITUATION IN APPEAL FOR A.Y. 2007-08 (APPEAL NO. CAS-IV/137/2009-10) AN D FOR A.Y.2008-09 (APPEAL NO. ITA NOS. 553 & 591/AHD/2012 . A.Y. 2006-0 7 9 CAS-IV/I92/10-11) MY PREDECESSOR AND MYSELF HAD UPH ELD THE REJECTION OF BOOKS AND ESTIMATED THE ADDITIONAL INCOME ACCRUING TO THE APP ELLANT FROM UNDISCLOSED ADDITIONAL TURNOVER AT 10% ON THE GROUND THAT G.P FORM UNACCOU NTED TURNOVER WILL BE HIGHER THAN ON DECLARED TURNOVER AND ALSO KEEPING COMPARABLE CA SES IN MIND. I HAVE NO REASON TO DIFFERE FROM THE ESTIMATES OF PROFIT RATES MADE IN EARLIER ORDERS. IF THIS IS APPLIED TO THE UNDISCLOSED TURNOVER DETERMINED BY THE A.O AT RS. 3 ,52,41,212/-, THE ADDITIONAL INCOME COMES TO RS. 35,24,121/-. THE A.O IS DIRECTED TO RE STRICT THE ADDITION TO RS. 35,24,121/- AS AGAINST THE ADDITION OF RS. 3,52,41,212/- MADE BY H IM. GROUND NOS. TWO TO FIVE ARE PARTLY ALLOWED. 7. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE AND REVENUE BOTH ARE NOW IN APPEAL BEFORE US. 8. BEFORE US, LD. A.R. SUBMITTED THAT IDENTICAL ISSUES IN ASSESSEES OWN CASE AROSE IN A.Y. 2007-08 AND A.Y. 08-09. IN SECOND APP EAL BEFORE HONBLE TRIBUNAL, HONBLE TRIBUNAL VIDE ORDER FOR A.Y. 07-0 8 IN ITA NO. 1568 & 1937/AHD/2010 ORDER DATED 09.01.2015 AND FOR A.Y. 2 008-09 IN ITA NO. 1666/AHD/2011 ORDER DATED 21.10.2015 UPHELD THE ORD ER OF LD. CIT(A) WHEREBY THE ADDITIONS HAVE BEEN ESTIMATED @ 10% OF THE UNDISCLOSED TURNOVER. HE THEREFORE SUBMITTED THAT SINCE THE FAC TS FOR THE YEAR ARE SIMILAR TO THAT OF A.Y. 07-08 & 08-09 AND AFTER RELYING ON THE AFORESAID DECISIONS OF HONBLE ITAT, THE ADDITIONS FOR THE YEAR UNDER CONS IDERATION BE ALSO RETAINED AT 10% UNDISCLOSED INCOME. HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISIONS. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND DID NOT OBJECT TO THE LD. A.RS SUBMISSI ON THAT THE CASE OF THE YEAR UNDER CONSIDERATION IS IDENTICAL TO THAT OF A. Y. 2007-08 & 2008-09. ITA NOS. 553 & 591/AHD/2012 . A.Y. 2006-0 7 10 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, A.O ON THE BASIS OF MATERIALS GAT HERED DURING THE COURSE OF SURVEY MADE AN ADDITION OF RS. 3,52,41,212/- ON ACC OUNT OF UNDISCLOSED INCOME FROM JOB RECEIPTS WHICH WERE OUTSIDE THE BOO KS. AGAINST THE ORDER OF A.O, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) WH O ESTIMATED THE UNDISCLOSED INCOME AT 10% OF THE UNDISCLOSED TURNOV ER AND AS MADE IN EARLIER YEARS. WE FIND THAT THE CO-ORDINATE BENCH O F TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2008-09 AND FOLLOWING THE DECISIO N OF CO-ORDINATE BENCH IN A.Y. 2007-08 DECIDED THE ISSUE IN FAVOUR OF ASSE SSEE BY HOLDING AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE C ASE FILE. THE REVENUE'S ARGUMENTS SEEK TO RESTORE THE ENTIRE IMPUGNED ADDITION OF RS. 5,50,17,603/- AS ADDED BY A SUM OF RS.851ACS DECLARED AT THE ASSESSEE'S BEHEST RESULTI NG IN GROSS SUM OF RS.6,35,17,609/- DISCLOSED IN THE SURVEY EXERCISE (SUPRA). THE ASSES SEE FILES BEFORE US A COPY OF THE TRIBUNAL'S ORDER IN ASSESSMENT YEAR 2007-08, ITA NO .L568/AHD/2010 ALONG WITH REVENUE'S CROSS APPEAL ITA NO. 1937/AHD/2010 DECIDED ON 09.01 .2015 RE-DETERMINING ITS NET PROFIT FROM THAT @10% OF THE ABOVE STATED SURVEY DISCLOSUR E AMOUNT TO 4.85% ONLY. IT CLAIMS TO HAVE SPLIT OVER THE ENTIRE DISCLOSURE SUM OF RS. 13 .01 CRORE. THE ASSESSEE'S CASE IN THIS BACKDROP OF FACTS IS THAT THE CIT(A) HAS RIGHTLY DE TERMINED THE IMPUGNED ADDITION @10% OF RS.6,35,17,609/- I.E. UNDISCLOSED ADDITIONAL TUR N OVER COMING TO RS.63,51,761/- COMING TO ALREADY LESS THAN THE DECLARED INCOME OF RS.851A CS. THE REVENUE FAILS TO REBUT THIS FACTUAL POSITION. WE ACCORDINGLY UPHOLD THE CIT(A) S ORDER BY FOLLOWING THE CO-ORDINATE DECISION. THE REVENUES SOLE SUBSTANTIVE GROUND FAI LS ACCORDINGLY. 10. SINCE IT IS ADMITTED BEFORE US BY BOTH THE PARTIES THAT THE FACTS OF THE CASE FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THAT OF A.Y. 2007-08 & 2008- 09, WE THEREFORE FOR SIMILAR REASONS AND REASONING AS GIVEN BY THE CO- ORDINATE BENCH WHILE DECIDING THE ASSESSEES APPEAL FOR A.Y. 07-08 & 08- 09 UPHOLD THE ORDER OF LD. CIT(A) IN RESTRICTING TH E ADDITION AT 10% OF THE ITA NOS. 553 & 591/AHD/2012 . A.Y. 2006-0 7 11 UNDISCLOSED TURNOVER AND THEREFORE FIND NO REASON T O INTERFERE WITH THE ORDER OF LD. CIT(A). WE THUS DISMISS THE GROUNDS OF REVEN UE AND ASSESSEE. 11. AS FAR AS GROUND NO. 1 OF ASSESSEES APPEAL IN ITA NO. 553/AHD/2012 IS CONCERNED, LD. A.R. SUBMITTED THAT THE GROUND IS NO T PRESSED AND THEREFORE WE DISMISS THE GROUND. 12. IN THE RESULT, THE APPEALS OF REVENUE AND ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 01 - 01 - 2016. SD/- SD/- (S.S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD