M/s Jain Sons, Chandigarh V. ACIT, Chandigarh

ITA 591/CHANDI/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8915 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Retraction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.591/CHD/2013 (ASSESSMENT YEAR : 2008-09) M/S JAIN SONS, VS. THE A.C.I.T., SCO 24, SECTOR 17-E, CENTRAL CIRCLE-1, CHANDIGARH. CHANDIGARH. PAN: AACFJ3533D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET KRISHAN RESPONDENT BY : SHRI SUSHIL KUMAR, CIT DR DATE OF HEARING : 26.09.2016 DATE OF PRONOUNCEMENT : 16.12.2016 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)(CENTRAL), GURGAON DATED 12.03.2013, RELAT ING TO ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 2. THAT THE ID. COMMISSIONER OF INCOME TAX (APPEALS) G RAVELLY ERRED IN REJECTING THE RETRACTION OF SURRENDER MADE BY THE ASSESSEE. THE SURRENDER WAS UNDER COERCION AND MISU NDERSTANDING OF FACTS AND LAW. 2 3. A) THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN UPHOLDING THE ADDITION OF RS.23,92,000/- MADE BY TH E ID. ASSESSING OFFICER ON ACCOUNT OF ALLEGED DIFFERENCE IN STOCKS. B) WITHOUT PREJUDICE TO GROUND NO. 3 (A) THE ADDI TION SUSTAINED IS HIGHLY EXCESSIVE. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN SUSTAINING THE ADDITION OF RS.25000/- OUT OF TOTAL ADDITION OF RS.50,000/- MADE BY THE ID. ASSESSING OFFICER ON AC COUNT OF PERSONAL USE OF VEHICLE AND TELEPHONE. 3. AT THE OUTSET IT MAY BE STATED THAT GROUND NO.4 RAISED BY THE ASSESSEE WAS NOT PRESSED BEFORE US AN D THE SAME IS THEREFORE TREATED AS DISMISSED. 4. GROUND NOS.2 &3 RAISED BY THE ASSESSEE RELATE TO THE ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK, UPHELD BY THE CIT(A). 5. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE IS ENGAGED IN THE TRADING OF READYMADE GAR MENTS. SEARCH WAS CONDUCTED ON THE ASSESSEE ON 28.11.2007. DURING THE COURSE OF SEARCH OPERATION, INVENTORY OF STOCK WAS PREPARED AND TOTAL VALUE OF STOCK FOUND WAS RS.1,88,09,898/-, WHEREAS AS PER BOOKS OF ACCOUNT T HE STOCK ON THE DATE OF SEARCH WAS RS.2,79,75,096/-. THUS, THE ACTUAL STOCK FOUND WAS LESS BY RS.91,65,198/-. IN THE STATEMENT RECORDED DURING THE COURSE OF SEARCH, THE ASSESSEE EXPRESSED HIS INABILITY TO EXPLAIN THE DIF FERENCE BUT ON 30.11.2007 I.E. TWO DAYS AFTER THE SEARCH, T HE 3 ASSESSEE SURRENDERED THE DIFFERENCE IN STOCK FOUND, AS BEING ON ACCOUNT OF SALES OUTSIDE THE BOOKS AND ASS UMING THE GROSS PROFIT @ 26%, SURRENDERED THE GROSS PROFI T ON THE SAME AMOUNTING TO RS.23.92 LACS. THEREAFTER IN THE RETURN OF INCOME FILED, THE ASSESSEE DID NOT DISCLO SE THE IMPUGNED SURRENDER AND IN THE LETTER FILED DURING T HE ASSESSMENT PROCEEDINGS, DATED 16.12.2009, RETRACTED FROM THE SAME. THE REASON FOR THE RETRACTION WERE THAT : A) THE SURRENDER WAS OBTAINED BY COERCION. B) THE FAMILY OF THE ASSESSEE WAS UNDER THE PROCESS OF PARTITION AND TO BALANCE THE STOCK VIS- - VIS FAMILY MEMBERS, THE STOCK WAS SENT TO THE PREMISES OF JAIN BROTHERS AND IN THE MEAN TIME SEARCH WAS CONDUCTED AND EXCESS STOCK FOUND AT JAIN BROTHERS, WHILE SHORT STOCK WAS FOUND WITH THE ASSESSEE. C) WHILE VALUING THE STOCK FOUND, COST OF CERTAIN ITEMS WAS TAKEN LESS AND THERE WAS CERTAIN CALCULATION MISTAKE ALSO TOTALING TO RS.3,43,931/-. D) GP RATE OF 26% APPLIED FOR CALCULATING STOCK AS PER BOOKS WAS UNREASONABLE AND IF GP RATE OF 22% WAS APPLIED THE DIFFERENCE IN STOCK WOULD BE REDUCE D BY RS.10 LACS. 6. THE ASSESSING OFFICER REJECTED THE RETRACTION MADE ON ALL ACCOUNTS BY STATING AS UNDER : 4 1) THE STATEMENT WAS GIVEN VOLUNTARILY WITHOUT ANY FORCE AND NOTHING WAS PRODUCED BY THE ASSESSEE TO EVIDENCE COERCION, THREAT OR PRESSURE AT THE TIME O F SURRENDER. 2) NO MATERIAL WAS THERE TO SUGGEST ANY MISTAKEN BELIEF OF LAW OR FACT TO HOLD THE RETRACTION AS VAL ID. 3) THE FAMILY SETTLEMENT TOOK PLACE MORE THAN 7 MONTHS BEFORE SEARCH I.E. IN APRIL, 2007. NO OTHER FAMILY MEMBER HAS MADE SUCH CLAIM, NO DOCUMENTS PRODUCED TO SHOW THAT THE STOCK WAS TRANSFERRED TO JAIN BROTHERS, NO ENTRY IN THE BOOKS OF JAIN BROTHE RS TO EVIDENCE THE TRANSFER AND EVEN JAIN BROTHERS DID NOT SHOW THE STOCK IN ITS CLOSING STOCK. THUS THE STOCK OF THE ASSESSEE COULD NOT BE ATTRIBUTED TO ST OCK FOUND AT JAIN BROTHERS ON ACCOUNT OF FAMILY SETTLEMENT. 4) GP FALL OF 22% FROM 26% IN PRECEDING YEAR WAS NOT EXPLAINED BY THE ASSESSEE AND, THEREFORE, 26% RATE OF GP WAS CORRECTLY APPLIED FOR WORKING OUT TH E VALUE OF STOCK. 5) RELIANCE PLACED ON GP OF ONE M/S S.S. NATH & CO. OF 7% COULD NOT BE RELIED UPON SINCE NO DETAIL FILED. 6) THE ARGUMENT OF THE ASSESSEE THAT THE GP OF ASSESSMENT YEAR 2007-08 @ 26% WAS SHOWN ON THE INSTANCE OF THE AUTHORITIES HAD NOT BEEN DULY EVIDENCED. 5 7. THUS, THE CONTENTIONS RAISED FOR RETRACTION FRO M THE DISCLOSURE WERE REJECTED AND ADDITION OF GP @ 2 6% ON UNACCOUNTED STOCK OF RS.91,65,198/- AMOUNTING TO RS.23.92 LACS WAS MADE TO THE INCOME OF THE ASSESSE E. 8. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT (APPEALS), WHO VIDE HIS ORDER DATED 12.03.2013 UPHELD THE ORDER OF THE ASSESSING OFFICER. 9. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT (APPEALS). 10. THE LD. DR, ON THE OTHER HAND, STATED THAT SIN CE NO EVIDENCE OF EXERCISE OF COERCION OR UNDUE PRESSU RE HAS BEEN BROUGHT ON RECORD THE ARGUMENTS OF THE ASSESSE E CANNOT BE ACCEPTED. THE LD. DR STATED THAT THE FAC T THAT RETRACTION TOOK PLACE 11 MONTHS AFTER THE SURRENDER ITSELF, MAKES THE RETRACTION INVALID. THE LD. DR RELIED UP ON THE FOLLOWING CASE LAWS IN SUPPORT OF ITS ABOVE CONTENT IONS : A) NAVDEEP DHINGRA VS. CIT, 56 TAXMANN.COM 75 (P&H) B) B.KISHORE KUMAR VS. DCIT 52 TAXMANN.COM 449 (MAD) C) B.KISHORE KUMAR VS. DCIT 62 TAXMANN.COM 215 (SC) 6 11. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. 12. THE FIRST ISSUE BEFORE US IS WHETHER THE STATEMENT MADE ON OATH CAN BE RETRACTED. WHILE THE LEARNED COUNSEL FOR THE ASSESSEE HAS STATED THAT SI NCE THE STATEMENT WAS EXTRACTED UNDER PRESSURE AND THERE WA S NO INCRIMINATING MATERIAL RELATING TO THE SURRENDER MA DE, THE SAME COULD BE RETRACTED. THE LD. DR, ON THE OTHER HAND, HAS STATED THAT THE RETRACTION OF SURRENDER AFTER L ONG TIME GAP CANNOT BE MADE. THE LD. DR RELIED UPON JUDICIA L DECISIONS IN THIS REGARD. 13. ON THIS ISSUE, WE FIND THAT THE HON'BLE SUPREM E COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. VS. STATE OF KERALA AND ANR. (1973) 91 ITR 18 (SC) HAS STATED THAT THE RETRACTION FROM SURRENDER OF INCOME MADE U NDER SECTION 132(4) OF THE ACT MAY BE ACCEPTED ON THE FA CTS OF THE CASE. THE HON'BLE APEX COURT HELD AS UNDER : AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT . 14. THIS PROPOSITION WAS REITERATED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF KRISHAN L AL SHIV CHAND VS. CIT (1973) 88 ITR 293 WHEREIN THE HON'BLE HIGH COURT HELD AS UNDER : 7 IT IS AN ESTABLISHED PRINCIPLE OF LAW THAT A PARTY IS ENTITLED TO SHOW AND PROVE THAT THE ADMISSION MADE BY HIM PREVIOUSLY IS IN FACT NOT CORRECT AND TRUE. 15. THEREFORE, IT IS SETTLED LAW THAT IF THE FACTS SO WARRANT EVEN A SURRENDER MADE ON OATH UNDER SECTION 132(4) OF THE ACT MAY BE RETRACTED. THE RELIANCE P LACED BY THE LD.DR ON THE DECISION IN THE CASE OF B.KISHORE KUMAR (SUPRA), WITH REFERENCE TO RETRACTION FROM STATEMEN T AFTER A LONG TIME GAP ,WE FIND IS MISPLACED SINCE IN THAT CASE THE HONBLE COURT HAD FOUND THAT THERE WAS A CLEAR AND CATEGORICAL ADMISSION OF UNDISCLOSED INCOME WHICH W AS NOT DEMONSTRATED AS INCORRECT OR MISTAKE OF FACT AN D THEREFORE WAS HELD TO CONSTITUTE A GOOD PIECE OF EV IDENCE. 16. HAVING SAID SO, THIS RATIO HAS TO BE APPLIED T O THE FACTS OF THE PRESENT CASE. 17. IT IS NOT DENIED THAT THE ACTUAL STOCK FOUND W AS SHORT OF THE STOCK AS PER THE BOOKS BY AN AMOUNT OF RS.91,65,198/-, WHICH WAS SURRENDERED BY THE ASSESS EE AS UNACCOUNTED SALES AND APPLYING GP OF 26% ON THE SAM E, SURRENDER OF RS.23.92 LACS WAS MADE BY THE ASSESSEE . THE ASSESSEE THEREAFTER RETRACTED THE SURRENDER FOR THE REASONS STATED ABOVE, WHICH WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND ALSO BY THE LD. CIT (APPEALS) . THE LD. CIT (APPEALS), WE FIND GAVE DETAILED FINDINGS F OR REJECTING THE SURRENDER AS FOLLOWS : 8 4.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSES SEE AND THE IMPUGNED ORDER. DURING THE SEARCH OPERATION THE PHYSICAL STOCK FOUND WAS RS. 1,88,09,898/- AS AGAINST RS. 2, 79,75,096/- AS PER BOOKS. THE STOCK FOUND SHORT TO THE EXTENT O F RS.91,65,198/-COULD NOT BE EXPLAINED BY THE ASSESSE E. CONSEQUENTLY VIDE LETTER DATED 30-11-2007 THE ASSES SEE INTER- ALIA SURRENDERED THE DIFFERENCE IN STOCK AS ARISING OUT OF SALES OUTSIDE THE BOOKS OF ACCOUNT AND ON APPLYING GP RAT E OF 26%, THE GROSS PROFIT WAS WORKED OUT AT RS.23,921ACS. HOWEVER THE AO NOTICED THAT THE ADDITIONAL INCOME SURRENDERED WAS NOT INCLUDED IN THE RETURN OF INCOM E FILED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A LETTE R DATED 16- 12-2009 WAS FILED EXPLAINING THE RETRACTION AS OBTA INED UNDER PRESSURE BESIDES CONTENDING THAT THERE WERE DISCREP ANCIES IN STOCK INVENTORIED DURING THE SEARCH PROCEEDINGS VIZ. CALC ULATION ERROR OF RS. 4,34,931/- AND WRONG APPLICATION OF THE PRICE-R ATES. 1T WAS FURTHER CONTENDED THAT THE ASSESSEE WAS MENTALLY PR EOCCUPIED WITH A FAMILY DISPUTE. THESE CONTENTIONS WERE REJECTED. IT IS THE CASE OF THE ASSESSEE THAT NO DISCREPANCIE S WERE FOUND IN THE BOOKS AS NO UNVOUCHED PURCHASE AND SALE VOUC HERS WERE FOUND AND NEITHER ANY MATERIAL TO SUGGEST ANY TRANSACTION S OUTSIDE THE BOOKS. THAT THE TRADING ACCOUNT WORKED OUT BY APPLY ING THE G.P, RATE OF 26.56% WAS NOT CORRECT AS THE VALUE OF THE STOCK WAS REQUIRED TO HAVE BEEN CONSIDERED AT AVERAGE RATE IN EARLIER YEARS. IT WAS EXPLAINED THAT THE MARGIN OF THE APPELLANT-FIRM HAS BEEN SHOWN 17.42%, 17.23%, 19.35%, 21.86%, 26.56% AND 22% OF T HE ASSESSMENT YEAR 2002-03, 2003-04, 2004-05, 2005-06, 2006-07 AND 2007-08 RESPECTIVELY. THE AVERAGE RATE COMES TO 20. 73%. THAT THE RATES SHOWN IN EARLIER YEARS CANNOT BE IGNOR ED AND IF THE RATE AS SHOWN IN THE A.Y. 2002-03 AND 2003-04 IS APPLIED, T HERE WOULD BE HARDLY ANY DIFFERENCE. THE FACT THAT THERE WAS A FAMILY DISPUTE WHICH WAS SETTLED SEVEN MONTH EARLIER TO THE SEARCH OPERATION IS NOT IN DEBATE. THE STOCK IN THE ASSESSEE CASE WAS FOUND SHORT WHILE E XCESS STOCK WAS FOUND IN THE OTHER CONCERN M/S JAIN BROS. BOTH THE CONCERNS ARE 9 ENGAGED IN THE SAME BUSINESS OF TRADING IN READYMAD E GARMENTS. BE THAT AS IT MAY, THE STOCK OF GOODS STATED TO BE PAR T OF THE FAMILY SETTLEMENT OR THAT PART OF THE STOCK WAS LYING WITH JAIN BROS, HAVE NOT BEEN EVIDENCED DOCUMENTARILY. FIVE BILLS HAVE BEEN LISTED AT PAGE 10 WHICH HAVE NOT BEEN ACCOUNTED FOR, THREE OF WHICH A RE DATED AUGUST 2007. SO THE CONTENTION THAT BARRING TWO-THREE DAYS ' VOUCHERS PRIOR TO DATE OF SEARCH, ALL HAVE BEEN ENTERED IN THE BOO KS IS INCORRECT. SIMILARLY THE SIXTH BILL OF REPAIRS/MAINTENANCE OF VEHICLES WHICH HAS BEEN DISCREDITED AS DUMB DOCUMENT/ ASSESSEE-FIRM NO T OWNING ANY VEHICLE IS ALSO NOT TENABLE AS THE AUDITED ACCOUNTS FOR FY 2007-08 [FILED WITH SUBMISSION DATED 14.4.2011] REFLECT EXP ENSES DEBITED UNDER HEAD RUNNING AND MAINTENANCE OF VEHICLE. AS R EGARDS THE ASSESSEE RETRACTING THE SURRENDER MADE IN U/S 132(4 ), NO EVIDENCE HAS BEEN PUT FORTH OF ANY THREAT OR COERCION. THE L ETTER OF SURRENDER DATED 30.11.2007 WAS MADE TWO DAYS AFTER THE SEARCH BEFORE THE DD1T (INV). IN OTHER WORDS IT WAS VOLUNTARY. THE WI THDRAWING OF SURRENDER ON STOCK WAS MADE WHILE FILING ITS RETURN OF INCOME ON 3.10.2008 I.E AFTER 11 MONTHS, WHICH WAS FOLLOWED B Y LETTER DATED 16.12.2009. IT HAS BEEN HELD IN MANOHARLAL KASTURIC HAND (V) AC1T (1997) 57 TTJ (AHD) 639 AND PARAM ANAND BUILDERS (P ) LTD ( 1996) 56 TTJ (MUMBAI) 21, THAT FOR RETRACTMENT OF S TATEMENT, ASSESSEE SHOULD PROVE THREAT OR COERCION. NEITHER A NY SUCH PROOF HAS BEEN GIVEN NOR CAN THERE BE A THREAT OR COERCIO N WHEN THE SURRENDER WAS MADE TWO DAYS AFTER THE SEARCH BY WAY OF A LETTER. THE ARGUMENTS FOR RETRACTMENT STANDS DISPROVED AS DISCU SSED ABOVE. FURTHERMORE THE DELAY BY ELEVEN MONTHS FURTHER WEAK ENS THE CASE OF THE ASSESSEE IN VIEW OF THE DECISION OF GUWAHATI HIGH COURT IN THE CASE OF M/S GREENVIEW RESTAURANT (V) ACIT, 263 ITR 169. ON THE ISSUE OF THE G.P. RATE APPLIED OF 26%, THE A SSESSEE HAD SUBMITTED THAT THE RATIO FLUCTUATES DEPENDING UPON MARKET TREND ETC AND THAT THE RATE WAS TOO EXCESSIVE. NO FURTHER SUB STANTIATION HAS BEEN MADE TO CONTEST WITH PROOF THE APPLICATION OF THE GP RATE OF 26%. NEEDLESS TO SAY THE ASSESSEE HAS ALSO BEEN UNSUCCES SFUL IN DISPROVING THE POSITION OF SIX OF THE BILLS DISCUSSED ABOVE. T HUS, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, 1 AM INCLI NED TO UPHOLD THE ADDITION MADE BY THE AO. THE ASSESSEE FAILS ON THIS GROUND. 10 18. WE ARE IN AGREEMENT WITH THE LD. CIT (APPEAL S) THAT THE REASON GIVEN BY THE ASSESSEE FOR RETRACTIN G THE SURRENDER, THAT IT WAS FORCED AND MADE UNDER COERCI ON, WAS BASELESS. NO EVIDENCE OF ANY THREAT OR COERCIO N HAS BEEN PRODUCED EITHER BEFORE THE LOWER AUTHORITIES O R EVEN BEFORE US. FURTHER, NO FACTS OR CIRCUMSTANCES UNDE R WHICH THE SURRENDER WAS MADE, TO PROVE UNDUE PRESSU RE OR COERCION, HAS BEEN STATED BY THE ASSESSEE. NO STATEMENT OR AFFIDAVIT OF PANCH (WITNESS) HAVE BEEN FILED IN SUPPORT OF PRESSURE HAVING BEEN BROUGHT UPON THE ASSESSEE. IN SHORT, NO EVIDENCE OF EXISTENCE OF AN Y PRESSURE OR COERCION AT THE TIME OF MAKING SURRENDE R HAS BEEN BROUGHT ON RECORD. THE CONTENTION OF THE ASSE SSEE THAT THE SURRENDER WAS MADE UNDER PRESSURE APPEARS TO BE A MERE STATEMENT WITH NO BASIS AT ALL. ONCE THE STATEMENT HAS BEEN GIVEN MAKING A SURRENDER, THE PRESUMPTION IS THAT IT HAS BEEN GIVEN VOLUNTARILY W ITHOUT ANY PRESSURE OR COERCION AND WHILE STATING OTHERWIS E FOR RETRACTING THE SAME, THE ONUS IS ON THE ASSESSEE TO PROVE SO, AS HELD BY VARIOUS COURTS AS FOLLOWS : I) MANOHARLAL KASTURICHAND VS. ACIT (1997) 57 TTJ (AHD)639 II) PARAM ANAND BUILDERS (P LTD. VS. ITO (1996) 56 TTJ (AHD) 21 19. THEREFORE, WE HOLD THAT, THE ADMISSION MAD E BY THE ASSESSEE, SURRENDERING THE EXCESS STOCK, CA NNOT BE REJECTED AS ADMISSIBLE EVIDENCE ON THIS GROUND. 11 20. THE NEXT CONTENTION OF THE ASSESSEE FOR RETRACTING THE SURRENDER, THAT THERE WAS ACTUALLY N O SHORTAGE OF STOCK SINCE CERTAIN STOCK BELONGING TO THE ASSESSEE WAS AT THE PREMISES OF JAIN BROTHERS ON AC COUNT OF FAMILY SETTLEMENT, HAS ALSO BEEN RIGHTLY REJECTE D BY THE LD. CIT (APPEALS). AS POINTED OUT BY THE LD. CIT (A PPEALS), THE DISPUTE WAS SETTLED 7 MONTHS BACK, WHICH FACT HAS NOT BEEN CONTROVERTED BY THE ASSESSEE. FURTHER NO DOCUMENTARY EVIDENCE HAS BEEN PRODUCED TO PROVE THE STOCK AT THE PREMISES OF JAIN BROTHERS BELONGING TO THE ASSESSEE, IN THE FORM OF DISCLOSURE IN THE SALES TA X RETURN, DISCLOSURE OF MOVEMENT OF STOCK IN THE BOOKS OF THE ASSESSEE OR EVEN IN THE BOOKS OF JAIN BROTHERS. FU RTHER, AS POINTED OUT BY THE LD. DR THAT EVEN THE STATEM ENT OF SHRI RAJ JAIN, PROPRIETOR OF JAIN BROTHERS MAKES IT VERY CLEAR THAT THERE WAS NO STOCK OF THE ASSESSEE AT TH E PREMISES OF JAIN BROTHERS AT THE TIME OF SEARCH. THEREFORE, THIS CONTENTION OF THE ASSESSEE ALSO DOE S NOT JUSTIFY RETRACTION OF THE SURRENDER MADE. 21. ON THE ISSUE OF APPLICATION OF GP RATE OF 26% FOR THE PURPOSE OF CALCULATING THE DIFFERENCE IN STOCK AS ALSO THE GROSS PROFIT ON THE STOCK FOUND SHORT, THE CONT ENTION OF THE ASSESSEE THAT IT IS EXCESSIVE CONSIDERING TH E PAST HISTORY OF THE ASSESSEE, WE FIND MERIT. THE GP RAT E SHOWN BY THE ASSESSEE IN DIFFERENT YEARS TABULATED AT PAG E 5 OF THE LD. CIT (APPEALS) IS AS FOLLOWS : 12 A.Y. SALES G.P. G.P. RATE 2002 - 03 28,975,231 / - RS. 50.47.095/ - 17.42% 2003 - 04 3,51,74,7 68/ - RS. 60,61,737 / - 17.23% 2004 - 05 3,53,82,810 / - RS. 68,45,093 / - 19.35% 2005 - 06 3,63,63,847 / - RS. 79,48,231/ - 21.86% 2006 - 07 3,59, 09,981 / - RS. 96,38,919 / - 26.56% 2007-08 4,17, 44,280 /- RS. 92,1 6,392 /- 22% 22. FURTHER GP RATE OF THE CURRENT YEAR IS 22%. A LL THESE FACTS HAVE NOT BEEN CONTROVERTED BY THE REVEN UE. WHAT EMERGES FROM THE ABOVE IS THAT THE AVERAGE GP RATE OF THE ASSESSEE IS 20.48%. THE REVENUE HAS GIVEN NO REASON FOR ADOPTING THE GP RATE OF THE IMMEDIATELY PRECEDING YEAR ONLY I.E. 26% AND WE FIND NO REASON TO ADOPT THE SAME PARTICULARLY CONSIDERING THE FACT T HAT THE AVERAGE GP RATE OF THE PRECEDING YEARS COMES TO 20. 48% AND FURTHER GP RATE ACCEPTED IN THIS YEAR IS UNDENI ABLY 22%. IN SUCH CIRCUMSTANCES, WE HOLD ,IT WOULD BE FAIR AND REASONABLE TO ADOPT THE GP RATE OF THE CURRENT YEAR I.E. 22% FOR THE PURPOSE OF CALCULATING STOCK AS PE R BOOKS ON THE DATE OF SEARCH. THE RETRACTION OF THE ASSES SEE IS TO THIS EXTENT, THEREFORE, ACCEPTED. 23. THE ASSESSING OFFICER IS THEREFORE DIRECTED TO COMPUTE THE DIFFERENCE IN STOCK FOUND ON THE DATE OF SEARCH BY CALCULATING THE STOCK AS PER BOOKS BY APP LYING GP RATE OF 22% TO THE TRADING RESULTS OF THE ASSESS EE AS ON THE DATE OF SEARCH. THE GROSS PROFIT ON THE STOCK F OUND SHORT IF ANY IS ALSO DIRECTED TO BE CALCULATED AFTE R APPLYING GP RATE OF 22% AND ADDITION IS DIRECTED TO BE UPH ELD OF THE SAME. 13 24. GROUND NOS.2 & 3 RAISED BY THE ASSESSEE ARE THEREFORE ALLOWED ACCORDINGLY. 25. IN EFFECT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH DECEMBER, 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH