ITO WARD - 3(2), KALYAN, KALYAN V. PRAKASH H. MUTHA, KALYAN

ITA 5988/MUM/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7958 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 07-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gross profit estimation; Unexplained investment; Value adopted by valuation officer; Unexplained expenditure; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Corroborative evidences; Valuation report; Revised return; Documents seized
• Section: 153A; 131; 132

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 5988 /MUM/ 201 6 (ASSESSMENT YEAR 20 07 - 08 ) ITO, WARD 3(2) 2 ND FLOOR RANI MANSION MURBAD ROAD KALYAN(W) - 421 301 V S . PRAKASH H. MUTHA PROP. MUTHA JEWELLERS 301, 3ND FLOOR MUTHA HOUSE OPP. WELCOME HOTEL SHIVAJI CHOWK KALYAN WEST. ( APPELLANT ) ( RESPONDENT ) I.T.A. NO. 5982/MUM/2016 (ASSESSMENT YEAR 2005 - 06) I.T.A. NO. 5983/MUM/2016 (ASSESSMENT YEAR 2006 - 07) I.T.A. NO. 598 4 /MUM/2016 (ASS ESSMENT YEAR 2007 - 08) PRAKASH H. MUTHA PROP. MUTHA JEWELLERS 301, 3ND FLOOR MUTHA HOUSE OPP. WELCOME HOTEL SHIVAJI CHOWK KALYAN WEST. V S . DCIT, CENTRAL CIRCLE - 1 THANE ( APPELLANT ) ( RESPONDENT ) PAN : ADRPS9728F ASSESSEE BY SHRI PIYUSH CHHAJED D EPARTMENT BY SHRI PURSHOTTAM TRIPURI DATE OF HEARING 7.5 . 201 9 DATE OF PRONOUNCEMENT 1 . 7 . 201 9 O R D E R PER SHAMIM YAHYA (AM) : - THESE ARE THREE APPEALS BY THE ASSESSEE AND ONE APPEAL BY THE REVENUE AGAINST COMMON ORDER OF LEARNED CIT(A) DAT ED 5.7.2016 PERTAINING TO A.YS. 2005 - 06 TO 2007 - 08. ASSESSEES APPEALS : 2. ASSESSEE HAS FILED REVISED GROUNDS OF APPEAL. PRAKASH H. MUTHA 2 COMMON ISSUES : 3. ONE GROUND RAISED IN THESE APPEALS IS THAT THE ASSESSING OFFICER ERRED IN ASSUMING JURISDICTION ON THE BASIS OF C ENTRALIZ ATION ORDER PASSED U/S. 127 OF THE I.T. ACT, 1961 WITHOUT GIVING REASONABLE OPPORTUNITY OF BEING HEARD. 4. ANOTHER COMMON ISSUE RAISED IS THAT LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION BY ESTIMATING THE GROSS PROFIT RATE AT 35% AGAINST GROSS PROFIT OF 18.31% ALREADY OFFERED BY THE ASSESSEE. SEPARATE ISSUE IN A.Y. 2005 - 06 5. ONE ISSUE RAISED IS THAT LEARNED CIT(A) ERRED IN ENHANCING THE INCOME TO THE EXTENT OF RS. 15,09,208/ - IN RESPECT OF INITIAL INVESTMENT IN STOCK WITHOUT GIVING ANY OPPORT UNITY/SHOW CAUSE NOTICE DURING THE APPELLATE PROCEEDINGS. THAT THE SAME HAS BEEN DONE WITHOUT ANY BASIS OR EVIDENCE. SEPARATE ISSUE IN A.Y. 2006 - 07 6. O NE ISSUE RAISED IS THAT LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 6,86,625/ - ON ACCOUNT O F UNEXPLAINED INVESTMENTS IN MUTHA HOUSE ONLY ON THE BASIS OF DVO REPORT WITHOUT APPRECIATING THAT THERE WAS NO SEARCH MATERIAL FOUND DURING THE COURSE OF SEARCH IN RESPECT OF INVESTMENT IN MUTHA HOUSE. 7. ANOTHER GROUND RAISED IN A.Y. 2006 - 07 IS THAT LE ARNED CIT(A) ERRED IN NOT PROVIDING TELESCOPING BENEFIT IN RESPECT OF ADDITION OF UNEXPLAINED INVESTMENTS IN MUTHA HOUSE WHEN ALREADY THE ASSESSEE HAD OFFERED THE ADDITIONAL INCOME IN THE REVISED RETURN FILED U/S. 153A DECLARING GROSS PROFIT AT THE RATE OF 18.31% ON THE SALES. SEPARATE ISSUE IN A.Y. 200 7 - 0 8 8. ONE I SSUE RAISED IS THAT LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 9,93,518/ - TREATING THE SAME AS UNEXPLAINED ADVANCES WITHOUT APPRECIATING THAT THE SAME WERE RECEIVED AG AINST THE SALES AND ALREADY ASSESSEE HAD OFFERED GROSS PROFIT @ 18.31% ON ENTIRE SLAES. PRAKASH H. MUTHA 3 9. ANOTHER ISSUE RAISED IS THAT LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 17,17,497 / - ON ACCOUNT OF UNACCOUNTED STOCK WITHOUT APPRECIATING THAT ONLY DIFFER ENCE WAS IN RESPECT OF SILVER WHICH AMOUNTED TO RS.9,14,760 / - AND THEREFORE ADDITION NEEDS TO BE RESTRICTED TO THE SAME AND FURTHER BENEFIT OF TELESCOPING NEEDS TO BE ALLOWED. 10 ANOTHER ISSUE RAISED IS THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN CONFIRMING THE ADDITION OF RS.3,61,344 / - IN RESPECT OF LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH WITHOUT APPRECIATING THAT THE SAID PAPER HAD NO CO - RELATION WITH THE ASSESSEE'S BUSINESS OR THE PERSONAL EXPENSES AND THEREFORE THE SAID ADDITION WAS DEVOID OF MERITS. 11. ANOTHER ISSUE RAISED IS THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.1,29,066 / - PRESUMING IT TO BE A MONEY LENDING TRANSACTION WITHOUT APPRECIATING THAT THE APPELLANT WAS NOT ENGAGED IN MONEY LENDING BUSINESS AND NO SUCH MATERIAL WAS FOUND. FURTHER THE SAID DOCUMENT WAS IN RESPECT OF SOME ROOP SANGAM WHICH IS A SAREE SHOWROOM, OPPOSITE THE APPELLANT'S SHOP. 12. ANOTHER ISSUE RAISED IS THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN CONFIRMING THE ADDITION OF RS.3,59,989 / - IN RESPECT OF GOLD RECEIVED AND REFUNDED BACK TO M/S. YASH GOLD. 13. ANOTHER ISSUE RAISED IS THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT PROVIDING THE TELESCOPING BENEFIT WHEN ALREADY THE APPELLANT HAD OFFERED THE ADDITIONAL INCOME IN THE REVISED RETURN FILED U/S.153A DECLARING GROSS PROFIT AT THE RATE OF 18.31% ON THE SALES. 14. GROUNDS RAISED BY THE REVENUES APPEAL FOR A.Y. 2007 - 08 ARE AS UNDER : - 1.1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE MADE ON ACCOUNT OF UNRECORDED SALES/PURCHASES FROM RS. 82,79,317 / - TO RS. 39,94,516/ - BY ESTIMATING THE PROFIT @ 35% OF THE ON UNACCOUNTED SALES FOR THE A.Y. 2007 - 08. PRAKASH H. MUTHA 4 1.2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN GRANTING THE ABOVE RELIEF DESPITE THE FACT THAT THE BASIS OF ESTIMATION WAS THE AVERAGE PROFIT FOR A.Y. 2005 - 06 & 2006 - 07 WHICH ARE ITSELF INCORRECT AND SUBJECT MATTER OF APPEAL BEFORE THE LD. CIT(A) FOR THE SAME YEARS. 1.3 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN GRANTING THE ABOVE RELIEF DESPITE THE FACT THAT THE ASSESSEE HAD FAILED TO SUBST ANTIATE HIS CLAIM WITH SUPPORTING EVIDENCES BEFORE THE A.O. DURING THE COURSE OF ASSESSMENTS AS WELL AS REMAND PROCEEDINGS. 1.4 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD, CIT(A) ERRED IN GRANTING THE ABOVE RELIEF DE SPITE THE FACT THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE HIS CLAIM WITH SUPPORTING EVIDENCES DURING THE COURSE OF REMAND PROCEEDINGS DESPITE BEING GIVEN SUFFICIENT OPPORTUNITIES VIDE LETTER DATED 25/03/2011, 23/06/2011, 11/09/2011 & 04/08/2014. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN GRANTING RELIEF BY DELETING THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN MUTHA COLLEGE OF RS. 41,25,991/ - , UNEXPLAINED INVESTMENT IN STOCK OF RS. 17,17,597/ - , UNEXPLAINED PURCHASES OF RS. 3,17,710/ - AND PAYMENT TO KARIGARS OF RS. 10,98,000/ - AGGREGATING TO RS. 72,59,298/ - . 2.1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN GRANTING THE ABOVE RELIEF B Y GIVING TELESCOPIC EFFECT OF THE DISALLOWANCE CONFIRMED BY HIM MADE ON ACCOUNT OF UNRECORDED SALES/PURCHASES WHEREAS THE CONFIRMATION OF UNRECORDED GROSS PROFIT IS AMOUNTING TO RS. 39,94,516/ - ONLY. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE MADE ON ACCOUNT OF UNEXPLAINED ADVANCES FROM RS. 20,61,848/ - TO RS. 9,93,518/ - . 3.1 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN GRANTING THE ABOVE RELIEF SAYING THAT THE A.O. HAS NOT COMMENTED ADVERSELY ON THIS ISSUE IN HER REMAND REPORT DESPITE THE FACT THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE HIS CLAIM WITH SUPPORTING EVIDENCES DURING THE COURSE OF REMAND PROCEEDINGS DESPITE BEING GIVEN SUFFICIENT OPPORTUNITIES VIDE LETTER DATED 25/03/2011, 23/06/2011, 11/09/2011 & 04/08/2014. 4. THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. PRAKASH H. MUTHA 5 BRIEF FACTS : - 15. ASSESSEE IS AN INDIVIDUAL ENGA GED IN RETAIL BUSINESS OF GOLD, SILVER AND DIAMOND JEWELLERY. SEARCH WAS CONDUCTED U/S. 132 OF THE ACT ON 7.12.2006 ON THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE. DURING THE SEARCH, CERTAIN DOCUMENTS WERE FOUND INDICATING SALES/PURCHASE MADE BY THE ASSESSEE OUTSIDE THE BOOKS. IN ASSESSMENT ORDERS, THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF PROFIT EARNED FROM SUCH UNDISCLOSED SALES/PURCHASE TRANSACTIONS. ADDITIONS WERE ALSO MADE ON ACCOUNT OF EXCESS STOCK FOUND DURING SEARCH AND UNEXPLAINED INVESTMENT IN HOUSE PROPERTY ETC. 16. UPON ASSESSEES APPEALS, LEARNED CIT(A) ADJUDICATED THE ISSUE S IN THE FOLLOWING MANNER : - 17. FIRST ISSUE RELATES TO ADDITION ON ACCOUNT OF PROFIT FROM UNDISCLOSED S A LES/PURCHASES. BRIEF FACTS ON THIS I SSU E A RE AS UNDER : - 18. DOCUMENTS SEIZED FROM THE ASSESSEE 'S PREMISES WERE RECEIPT AND PAYMENT ACCOUNT CONTAINING DETAILS OF SALES/PURCHASES MADE ON A PARTICULAR DATE MENTIONED THERE IN. IN HIS STATEMENT RECORDED DURING THE SEARCH, THE ASSESSEE AVOIDED EXPLAINI NG THE CONTENTS OF THESE SEIZED DOCUMENTS. HOWEVER DURING THE POST SEARCH ENQUIRIES, IN A STATEMENT RECORDED ON 29/1/2007 U/S 131 OF THE ACT, THE ASSESSEE ADMITTED THAT THE ABOVE SEIZED DOCUMENTS CONTAINED DETAILS OF HIS BUSINESS TRANSACTIONS IN THE NATURE OF SALES/PURCHASES AND LOANS GIVEN/RETURNED ETC. IN THE COURSE OF THE ASST PROCEEDINGS THE ASSESSEE MAINTAINED THAT THE SEIZED DOCUMENTS WERE DETAILS OF HIS SALES AND PURCHASES OF GOLD, JEWELLERY ETC. HOWEVER THE ASSESSEE ALSO CLAIMED THAT THE SEIZED DOCU MENTS WERE NOT COMPLETE AND THE ENTIRE PURCHASES WERE NOT RECORDED IN THESE PAPERS. THE ASSESSEE THEREFORE OFFERED TO DISCLOSE ADDITIONAL INCOME BEING GROSS PROFIT CALCULATED @ 1 8.3% OF THE SALES RECORDED IN THE SEIZED PAPERS. THE AO HOWEVER TREATED THE DI FFERENCE BETWEEN THE SALES AND PRAKASH H. MUTHA 6 PURCHASES AS RECORDED IN THE SEIZED PAPERS AS ADDITIONAL INCOME OF THE ASSESSEE . THE AO HAS WORKED OUT THE ADDITION IN DIFFERENT YEARS AS UNDER: PERIOD ASST YEAR SALES PURCHASES DIFFERENCE ADDED AS INCOME 1.09.04 - 31.03. 05 2005 - 06 1,35,66,958 55,07,980 80,58,969 1.04.05 - 31.03.06 2006 - 07 1,14,48,967 49,79,528 64,69,439 1.04.06 - 31.10.06 2007 - 08 1,19,22,590 36,57,002 82,65,588 TOTAL 3,69,38,515 1,41,44,519 2,27,93,996 19. THE ASSESSEE MADE ELABORATE S UBMISSIONS BEFORE LEARNED CIT(A). LEARNED CIT(A) ALSO OBTAINED REMAND REPORT FROM THE ASSESSING OFFICER AND ALSO REJOINDER FROM THE ASSESSEE. 20. LEARNED CIT(A) AT THE OUTSET GAVE FINDING THAT THE ASSESSEE HAS DISPUTED THE SALES COMPUTED BY THE ASSESSING OFFICER. THAT THE ASSESSEE HAS GIVEN WORKING. THAT EVEN IN THE REMAND REPORT THE ASSESSING OFFICER HAS NOT BOTHERED TO CHECK SALES FIGURES AND ASSESSEES WORKING. HENCE HE HELD THAT HE WAS ADOPTING SALES FIGURES AS WORKED BY THE ASSESSEE. THEREAFTER LEARNE D CIT(A) NOTED THAT THE ASSESSING OFFICER HAS TREATED DIFFERENCE BETWEEN THE SALES AND PURCHASE FIGURES AND UNACCOUNTED PROFIT OF THE ASSESSEE. LEARNED CIT(A) PROCEEDED TO ACCEPT THE ASSESSEES SUBMISSIONS THAT THE ASSESSING OFFICERS APPROACH WAS FAULTY. LEARNED CIT(A) HELD THAT HE AGREED WITH THE ASSESSEES CONTENTION THAT PROPER METHOD OF ASCERTAINING HIS PROFIT FROM UNACCOUNTED SALES/PURCHASE WOULD BE ESTIMATION OF GROSS PROFIT ON A REASONABLE BASIS. THEREAFTER LEARNED CIT(A) OBSERVED THAT THE ASSESSEE HAS HIMSELF APPLIED GROSS PROFIT RATE AT 18.3%. THEREAFTER LEARNED CIT(A) NOTED THAT FOLLOWING THE RETURN IN LAST ASSESSMENT YEARS , HE FOUND THAT IN THE THREE YEARS IMMEDIATELY PRECEDING THE SEARCH, THE ASSESSEE HAD DISCLOSED GROSS PROFIT IN THE RANGE OF 3 2 PRAKASH H. MUTHA 7 TO 37% AND THE AVERAGE OF THE THREE YEARS COMES TO 34.63%. ACCORDINGLY, HE HELD THAT 35% WILL BE AN APPROPRIATE RATE FOR ESTIMATION OF PROFIT FROM THE UNACCOUNTED SALES. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO ESTIMATE PROFIT FROM UNACCOUNTED S ALES @ 35%. LEARNED CIT(A) THEREAFTER OBSERVED THAT HE HAD DELIBERATELY LEFT OUT THE GROSS PROFIT DISCLOSED BY THE ASSESSEE IN THE ASSESSMENT YEAR 2007 - 08 FOR THE SIMPLE REASON THAT THE ACCOUNTS OF THIS ASSESSMENT YEAR WERE COMPLETED AFTER THE SEARCH AND T HEREFORE SALES RECORDED IN THE SEIZED PAPERS MIGHT HAVE BEEN INCORPORATED BROADLY IN THE REGULAR BOOKS. THAT THE ASSESSEE HAS ALSO USED OPPORTUNITY TO BRING DOWN ITS DISCLOSED GROSS PROFIT. HE FURTHER NOTED THAT THE ASSESSEE DID NOT MAINTAIN DAY - TO - DAY STO CK REGISTER. HE NOTED THAT THERE IS NO INDEPENDENT VERIFICATION OF THE ACTUAL STOCK AS ON 31.3.2007. THAT CONSIDERING THE TURNOVER OF THE ASSESSMENT YEAR 2007 - 08, THE CLOSING STOCK SHOWN IS ABNORMALLY LOW WHEN COMPARED TO THE EARLIER YEARS. HE FOUND THAT T HE STOCK AS PER PERCENTAGE OF S A LES FROM THE CONCERNED YEARS WAS AS UNDER : - ASSESSMENT YEAR STOCK AS % OF SALES 2004 - 05 118.95 2005 - 06 129.41 2006 - 07 144.88 AVERAGE 131.08 2007 - 08 53 21. ACCORDINGLY, HE GAVE A FINDING THAT ON THE DATE OF SEARCH, STOCK WAS ABOUT 110% OF THE SALES. ACCORDINGLY, HE HELD THAT THE GROSS PROFIT DISCLOSED FOR A.Y. 2007 - 08 IS NOT CONSIDERED FOR THE PURPOSE OF ESTIMATING THE GROSS PROFIT FROM THE UNRECORDED SALES. HE FURTHER HELD THAT EVEN IF WE TAKE INTO ACCOUNT THE DISCL OSED GROSS PROFIT OF A.Y. 2007 - 08, THERE IS NO REASON TO IGNORE THE GROSS PROFIT DISCLOSED IN THE EARLIER YEARS AND INCLUSION OF GROSS PROFIT OF A.Y. 2007 - 08 WILL NOT MAKE MUCH DIFFERENCE TO THE AVERAGE GROSS PROFIT RATE. LEARNED CIT(A) SUMMARIZED THE PRO FIT WHICH IS TO BE TAXED, ACCORDING TO HIM FOR A.Y. 2005 - 06 & 2007 - 08 AS UNDER : - PRAKASH H. MUTHA 8 TO SUM UP, THE ADDITIONAL PROFIT FROM THE UNACCOUNTED SALES IS WORKED OUT AS UNDER APPLYING THE GP @ 35% OF SALES: - 2005 - 06 2006 - 07 SALES AS DETERMINED BY THE ASSESSEE 15601961 19832596 LESS: SALES ALREADY INCLUDED IN RETURN FILED U/S. 139(1) 6329913 6863940 UNDISCLOSED SALES 9272048 12968656 GROSS PROFIT 35% AS DISCUSSED ABOVE 3235216 4539029 20. THUS THE PROFIT FROM THE UNACCOUNTED SALES IS WORKED OUT AT R S 32,35,216 / - IN THE ASST YEAR 2005 - 06. HOWEVER THIS IS THE FIRST YEAR FOR WHICH THE DETAILS OF THE UNACCOUNTED SALES ARE AVAILABL E IN A REGULAR MANNER. WHEN WE ARE TAXING ONLY THE PROFIT FROM SUCH SALES, WE ARE ALLOWING CREDIT FOR THE PURCHASES UTILIZED I N SUCH SALES. SUCH PURCHASES WERE ALSO UNDOUBTEDLY MADE OUTSIDE THE BOOKS. THE APPELLANT MUST HAVE USED HIS UNACCOUNTED CAPITAL IN SUCH 'PURCHASES AT LEAST IN THE INITIAL STAGE. IN T HE ABSENCE OF FULL DETAILS OF THE UNACCOUNTED PURCHASES 'AND THE SOURCE TH EREOF, A REASONABLE AMOUNT IS REQUIRED TO BE ADDED AS THE INIMICAL UNACCOUNTED CAPITAL UTILIZED FOR MAKING SUCH PURCHASES. THE APPELLANT'S PROFIT HAS BEEN WORKED OUT @ 35% OF THE UNACCOUNTED SALES. THE COST OF SALES THUS WOULD BE 65% OF THE TOTAL SALES. IN THE ASST YEAR 2005 - 06 THE COST OF THE UNACCOUNTED SALES WORKS OUT TO RS. 60,36,632 / - . I ESTIMATE THE INITIAL INVESTMENT @ 25% OF THIS AMOUNT. THE SUM OF RS. 15,09,208 / - IS THUS ADDED TO THE APPELLANT'S INCOME OF ASST YEAR 2005 - 06 AS THE UNACCOUNTED INITIA L CAPITAL USED IN THE UNACCOUNTED BUSINESS OF JEWELLERY . TOTAL ADDITION IN ASST YEAR 2005 - 06 THUS COMES TO RS. 47,44,425 / - . THE ADDITION MADE BY THE AO IN ASST YEAR 20 05 - 06 IS RS. 80,58,969/ - WHICH IS REDUCED TO RS. 47,44,425/ - . THE APPEL LANT GETS RELIEF OF RS. 33,14,545/ . SIMILARLY IN ASST YEAR 2006 - 07, THE ADDITION OF RS. 64,69,439 / - IS REDUCED TO RS. 45,39,029/ - . T HE APPELLANT GETS RELIEF OF RS. 16,45,686 / - . IN - THE ASST YEAR 2006 - 07 AND SUBSEQUENT ASST YEARS NO ADDITION IS REQUIRED TO BE MADE AS INITIAL INVESTMENT IN UNACCOUNTED PURCHASES BECAUSE THE SAME WOULD HAVE BEEN SOURCED OUT OF THE EARLIER YEAR'S PROFIT AND SALES. 21. AS FAR AS ASST YEAR 2007 - 08 IS CONCERNED, THE PREVIOUS YEAR CLOSED AFTER THE DATE OF THE SEARCH AND THE SALES/PURCHASES AS RECORD ED IN THE SEIZED PAPERS HAVE BEEN INCLUDED IN THE REGULAR BOOKS OF ACCOUNTS. BUT GP SHOWN IN THE REGULAR BOOKS IS ADJUSTED BY MANIPULATING THE CLOSING STOCK FIGURES. THE APPELLANT DOES NOT MAINTAIN DAY TO DAY STOCK REGISTER. THE BOOKS AT LEAST TILL THE DAT E OF THE SEARCH WERE NOT MAINTAINED REGULARLY. THE BOOKS ARE THEREFORE UNRELIABLE AND DESERVE TO BE REJECTED. THE ABNORMALLY LOW GP SHOWN IN ASST YEAR 2007 - 08 IS WITHOUT ANY PROPER JUSTIFICATION. THEREFORE I THINK IT WILL BE PROPER TO APPLY THE AVERAGE GP RATE OF 35% TO THE ENTIRE TURNOVER OF THE PRAKASH H. MUTHA 9 APPELLANT. THE GP THUS CALCULATED COMES TO RS. 82,79,317 / - AS AGAINST THE GP OF RS. 42,84,801 / - DISCLOSED IN THE BOOKS. THE DIFFERENCE OF RS. 39,94,516 / - IS CONFIRMED AS ADDITION ON ACCOUNT OF UNDISCLOSED PROFIT . T HE APPELLANT GETS RELIEF OF RS. 42,71,072 / - . 22. THUS THE FIRST ISSUE OF PROFIT FROM UNACCOUNTED TURNOVER IS DECIDED PARTLY IN FAVOR OF THE APPELLANT. THE RELEVANT GROUNDS OF APPEAL IN ALL THE THREE ASST YEARS ARE ALLOWED PARTLY . 22. LEARNED CIT(A) FURT HER OBSERVED THAT APART FROM THE UNACCOUNTED SALES, OTHER ISSUE IS ON ACCOUNT OF ADDITION OF RS. 6,86,625 / - AS UNEXPLAINED INVESTMENT IN CONSTRUCTION OF MUTHA HOUSE. HE NOTED THAT IN THE ASSESSMENT ORDER IT IS MENTIONED THAT THE ASSESSEE HAS ACCEPTED THIS ADDITION DURING THE ASSESSMENT PROCEEDINGS. BEFORE LEARNED CIT(A) IN THE WRITTEN SUBMISSION, THE ASSESSEE SUBMITTED THAT THIS ADDITION IS NOT BASED ON SEIZ ED MATERIAL. LEARNED CIT(A) DID NOT AGREE WITH THE SAME. HE NOTED THAT THE ASSESSEE HAS ADMITTED THA T SEIZED MATERIAL CONTAINED DETAILS OF UNACCOUNTED EXPENDITURE INCURRED IN CONSTRUCTION OF MUTHA HOUSE. FURTHER HE OBSERVED THAT I N FACT IN THE ASST YEAR 2002 - 03, THE ASSESSEE DID ADMIT AND OFFER ADDITIONAL INCOME OF RS. 72,793 / - AS UNACCOUNTED INVESTMENT IN CONSTRUCTION OF THIS PROPERTY. THAT O NCE SOME PAPERS ARE FOUND CONTAINING DETAILS OF UNACCOUNTED INVESTMENT IN CONSTRUCTION OF A PROPERTY IN ANY OF THE YEAR FALLING IN THE BLOCK, THE AO IS DUTY BOUND TO EXAMINE THE ISSUE AND ASCERTAIN TOTAL UNACCOUNTED INVESTMENT IN CONSTRUCTION OF THE PROPERTY. THAT A REFERENCE TO THE DVO WOULD BE JUSTIFIED IN SUCH CIRCUMSTANCES EVEN IN BLOCK ASST PROCEEDINGS. TH AT TH E TECHNICAL OBJECTIONS RAISED ARE THEREFORE REJECTED. TH AT TH E ASSESSEE HAS NOT ARGUED ON THE COMPUTATIO N PART, HENCE THE ADDITION IS CONFIRMED . 23. ANOTHER ISSUE FOR A.Y. 2007 - 08 FOR ADDITION OF RS. 41,25,991/ - AS UNEXPLAINED INVESTMENT IN CONSTRUCTION OF MUTHA COLLEGE. 24. ASSESSEE ON THIS ISSUE ARGUED THAT THE COLLEGE WAS CONSTRUCTED BY THE AOP AND HENC E UNEXPLAINED INVESTMENT SHOULD NOT BE TAXED IN HIS HANDS. HOWEVER, LEARNED CIT(A) REJECTED THIS CONTENTION ON THE GROUND THAT PRAKASH H. MUTHA 10 UNEXPLAINED INVESTMENT IN THE COLLEGE HAS ALREADY BEEN OFFERED BY THE ASSESSEE AS PART OF ADDITIONAL INCOME. 25. ANOTHER ISSUE RAISED BY THE REVENUE IS TELESCOPIC EFFECT. 26. IN THIS REGARD LEARNED CIT(A) ACCEPTED THE CONTENTION THAT DURING THE YEAR ADDITION OF RS. 39,94,516/ - HAS BEEN CONFIRMED AS ADDITIONAL GROSS PROFIT HENCE, LEARNED CIT(A) ALLOWED TELESCOPIC EFFECT WITH THE CONDITION THAT IF ADDITIONAL INCOME BROUGHT TO TAX IN FURTHER APPELLATE PROCEEDINGS IS REDUCED , TELESCOPIC BENEFIT SHOULD ALSO BE ALTERED ACCORDINGLY. 27. ANOTHER ISSUE FOR A.Y. 2007 - 08 WAS DISALLOWANCES AGAINST AN ADVANCE OF RS. 20,61,848/ - AS UNEXPLAINE D ADVANCES. 28. ON THIS ISSUE LEARNED CIT(A) NOTED ASSESSEES CONTENTION THAT THERE WAS SOME ERROR ON THE PART OF THE ASSESSING OFFICER AND ADDITION SHOULD BE OF RS. 9,93,518/ - . LEARNED CIT(A) NOTED THAT COMPUTATION WAS REMANDED TO THE ASSESS ING OFFIC ER AND HE HAS NOT COMMEN TED ADVERSELY. HENCE, LEARNED CIT(A) REDUCED THE ADDITION TO RS. 9,93,518/ - . ASSESSEE CONTENTION THAT THE AMOUNT WAS RECEIVED AGAINST CREDIT SALE WAS REJECTED BY LEARNED CIT(A) ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO L INK THIS AMOUNT TO ANY PART OF SALES. LEARNED CIT(A) FURTHER NOTED THAT RELEVANT NOTINGS IN THE SEIZED PAPERS DO NOT SUGGEST ANY REALIZATION OUT OF SALES BUT SHOWN AS ADVANCE RECEIPTS, HENCE HE CONFIRMED THE ADDITION TO THE EXTENT OF RS. 9,93,518/ - . 29. A NOTHER ISSUE FOR A.Y. 2007 - 08 WAS ADDITION OF RS. 17,17,497/ - ON ACCOUNT OF UNACCOUNTED INVESTMENT IN STOCKS. 30. THE SAID ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE BETWEEN VALUATION REPORT AND STOCK APPEARING IN THE BOOKS OF ACCOUNT ON THE DATE OF SEARCH. ASSESSEE SUBMITTED FOLLOWING EXPLANATION TO THE ASSESSING OFFICER : - PRAKASH H. MUTHA 11 4. UNACCOUNTED INVESTMENT IN STOCK OF RS. 17.17.597/ - THE LEARNED ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 17,17,597/ - AS UNACCOUNTED INVESTMENT IN STOCK. T HE SAID ADDITION WAS MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF THE DIFFERENCE BETWEEN THE VALUATION REPORT AND THE STOCK APPEARING IN THE BOOKS OF ACCOUNTS ON THE DATE OF SEARCH. ON THE DATE OF SEARCH, THE TOTAL QUANTITY OF GOLD ORNAMENTS WAS FO UND TO BE 12622.310 GMS WHICH WERE VALUED AT RS. 8,556/ - PER 10 GMS, AGGREGATING TO RS. 1,07,99,648/ - , FURTHER, THE GOLD JEWELLERY WITH DIAMOND FINED WEIGHING 68.19GMS NET AND 9.63 CARAT OF DIAMONDS WERE VALUED AT RS. 2,41,014/ - . SILVER ARTICLES WEIGHING 5 88 KILOS WERE VALUED AT THE RATE OF RS. 18,000/ - PER KILO AGGREGATING TO RS. 10,44,000/ - , THEREBY VALUING THE TOTAL STOCK AT RS. 1,20,84,662/ - . THE APPELLANT HEREBY SUBMITS THE QUANTITY OF THE CLOSING STOCK AS ON 31 - 3 - 06 AND 31 - 3 - 07, AS UNDER: (COPY OF RE LEVANT PAGES OF AUDITED STATEMENTS IS GIVEN AT (PAGE NO 47 - 48] PARTICULARS AS ON 31 - 03 - 2006 IN GRAMS AS ON 31 - 03 - 2007 IN GRAMS GOLD BAR 1273.990 39.86 GOLD 18883.31 20169.22 GOLD SCRAP NIL 264.05 SILVER 318.730 14054.75 IT WILL BE APPRECIATED THAT THE TOTAL STOCK FOUND ON THE DATE OF SEARCH AND VALUED BY M/S. RAJ WANT IS DULY COVERED BY THE AVERAGE STOCK MAINTAINED BY THE APPELLANT. IN FACT, FROM THE AUDIT REPORT FILED U/S. 44AB, IT WILL BE APPRECIATED THAT THE AUDITORS THEMSELVES HAVE MENTIONED TH AT THE ASS ESSEE IS NOT MAINTAINING DAY - TO - DAY STOCK REGISTER AND THEREFORE, TO VALUE THE STOCK ON A PARTICULAR DATE AT THE CURRENT MARKET VALUE WOULD BE INAPPROPRIATE. FURTHER FOR ASCERTAINING THE VALUE OF STOCK AT THE END OF THE BALANCE SHEET DATE, PHYSIC AL STOCK IS TAKEN AND THE SAME IS VALUED AT COST (NET OF MVAT) IN ACCORDANCE WITH THE CONSISTING ACCOUNTING POLICY FOLLOWED BY THE ASSESSEE. THUS, THERE CAN BE NO ADDITION SINCE THERE WAS NO EXCESS QUANTITY OF GOLD FOUND ON THE DATE OF SEARCH WHILE COMPARI NG WITH THE AVERAGE STOCK MAINTAINED BY THE ASSESSEE. FURTHER, SINCE THERE IS NO EXCESS STOCK FOUND, THE QUESTION OF VALUING THE SAME FOR THE PURPOSE OF CALCULATING THE UNACCOUNTED INVESTMENT WAS NOT REQUIRED. THE NET ADDITION THAT IS SOUGHT TO BE MADE ON ACCOUNT OF DIFFERENCE IN THE VALUE OF GOL D STOCK IS ONLY RS.6,73,597/ - . THE SAID PRAKASH H. MUTHA 12 ADDITION HAS BEEN MADE WITHOUT CONSIDERING THE FACT THAT THE VALUATION WAS DONE ADOPTING THE RATES PREVAILING ON THE DATE OF SEARCH, WHEREAS THE STOCK HELD BY THE APPELLANT WAS DEFINITELY NOT PURCHASED ON THE SAME DATE AND WAS PURCHASED AND ACCUMULATED OVER A PERIOD OF TIME AND THEREFORE, THE MARKET RATE ON THE DATE OF ACTION U/S 132 CANNOT BE ADOPTED. FURTHER, THE LEARNED ASSESSING OFFICER HAS NOT IN ANY OF THE EARLIER ASS ESSMENT YEARS, BEEN ABLE TO REBUT THE VALUATION RATES ADOPTED BY THE APPELLANT, WHICH WAS DULY AUDITED, AND THEREFORE, TO MAKE AN ADDITION CONSIDERING THE VALUE ON THE DATE OF RAID WOULD BE INAPPROPRIATE. ALSO IN FIGHT OF THE FACT THAT THERE WAS NO DIFFERE NCE IN THE QUANTITY FOUND ON THE DATE OF SEARCH, THE QUESTION OF VALUATION DOES NOT ARISE. THE BALANCE DIFFERENCE OF RS. 10,44,0007 - IS ON ACCOUNT OF 58 KILOS OF SILVER VALUED AT RS. 18,0007 - FOUND ON THE DATE OF SEARCH. THE APPELLANT SUBMITS THAT IN FACT , VIDE LETTER DATED 3 - 12 - 08, RECEIVED BY THE LEARNED ASSESSING OFFICER ON 4 - 12 - 08, THE ASSESSEE HIMSELF HAS ACCEPTED THE DIFFERENCE TO THE EXTENT OF 50.82 KILOS OF SILVER AND HAS ACCORDINGLY ACCEPTED RS. 9,14,7607 - CONSIDERING THE MARKET RATE OF RS. 18,000 7 - AS ADOPTED BY THE VALUER. THUS, THE APPELLANT STATES THAT THERE WAS NO DIFFERENCE IN THE GOLD JEWELLERY FOUND. THE ONLY DIFFERENCE WAS TO THE EXTENT OF 50.82 KILOS OF SILVER ARTICLES ON THE DATE OF SEARCH, WHICH EVEN IF VALUED AT THE MARKET RATE ON THE DATE OF SEARCH I.E. RS. 18.0007 - COMES TO RS. 9,14.7607 - WHICH GETS COVERED BY THE ADDITIONAL CASH FLOW SUBMITTED TO THE LEARNED ASSESSING OFFICER, ALONG WITH THE LETTERS DATED 1 - 12 - 08 AND 3 - 12 - 08. THE PERUSAL OF THESE LETTERS AND THE CASH FLOWS SUBMITTE D ALSO BRINGS TO LIGHT THAT THE LEARNED ASSESSING OFFICER HAS NOT APPLIED ''.'V X/7/S MIND AND THEREFORE, MADE SUCH AN IMPETUS STATEMENT AGAINST THE APPELLANT THAT 'NO CASH /TOW STATEMENT HAS BEEN FILED BY THE ASSESSEE'. THUS, CONSIDERING THE ABOVE FACTS , THE ADDITION OF RS, 17,17,497/ - MADE BY THE LEARNED ASSESSING OFFICER NEEDS TO BE DELETED SINCE THE NET DIFFERENCE THAT WAS FOUND IN THE WEIGHT OF SILVER COMES TO RS. 9,14,760 / - ONLY, WHICH GETS ADJUSTED FROM THE ADDITIONAL CASH GENERATED VIDE THE RETURN OF INCOME FILED U/S. 153A . 31. CONSIDERING THE ABOVE, LEARNED CIT(A) HELD THAT THE ASSESSEE HAS ADMITTEDLY UNACCOUNTED TRADING IN GOLD JEWELLERY. THEREFORE HE HELD THAT THIS ACTIVITY WOULD ALSO INVOLVE CARRYING OF UNACCOUNTED STOCK, THOUGH NO SUCH STOCK REGISTER WAS FOUND. HENCE, HE HELD THAT ADDITION MADE ON ACCOUNT OF PRAKASH H. MUTHA 13 EXCESS STOCK APPEARS TO BE IN ORDER. HOWEVER, LEARNED CIT(A) ALSO DIRECTED THAT AS ADDITIONAL PROFIT EARNED ON UNACCOUNTED SALE/PURCHASE IS SUFFICIENT TO COVER THIS INVESTMENT IN EXCESS ST OCK. THE ASSESSING OFFICER WAS DIRECTED TO DELETE THIS ADDITION. 32. ANOTHER ISSUE WAS ADDITION OF RS. 3,17,710/ - ON ACCOUNT OF UNACCOUNTED PURCHASES. 33. THE ASSESSEE CLAIM ED THIS WAS ALREADY CONSIDERED BY THE ASSESSEE IN THE GROSS MARGIN OFFERED FOR TA XATION AND ANOTHER ISSUE WAS MAKING ADDITION OF R S. 10,98,000/ - TOWARDS UNACCOUNTED PAYMENTS TO KARIGARS WHICH WERE SAID TO HAVE ALREADY CONSIDERED IN THE GROSS MARGIN OFFERED. 34. CONSIDERING THE ASSESSEES SUBMISSIONS IN THIS REGARD, LEARNED CIT(A) HE LD HE AGREED WITH THE CONTENTION THAT THE PURCHASE/PAYMENTS TO KARIGARS ARE RECORDED IN THE SEIZED PAPERS ARE PART OF THE UNACCOUNTED BUSINESS OF THE ASSESSEE. PROFIT EARNED FROM SUCH BUSINESS HAS BEEN BROUGHT TO TAX ALREADY, HENCE, HE DIRECTED THE ASSESSI NG OFFICER TO DELETE THIS ADDITION. 35. ANOTHER ISSUE RAISED WAS ADDITION OF RS. 11, 1 2,430/ - BE UNEXPLAINED EXPENDITURE INCURRED IN SEIZED PAPERS. 36. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THIS REGARD, LEARNED CIT(A) DEALT WITH THIS ISSUE AS UND ER : - 3 9 . I HAVE CONSIDERED THE APPELLANT'S SUBMISSIONS AND HAVE GONE THROUGH THE COPIES OF THE SEIZED PAPERS. AS REGARDS THE ADDITI ON OF RS. 3,61 , 344/ - THE RELEVANT PAPER APPEARS TO BE FROM THE APPELLANT'S DIARY. ON THE TOP IS WRITTEN DETAILS OF CHEQUE PA YMENT FOLLOWED BY CASH PAYMENT DETAILS. THE TOTAL PAYMENT IS RS. 3,61,344 / - . ON THE BOTTOM IS WRITTEN 325 PYJAMA AND 85 CAPS. THE PAPER WAS SEIZED FROM APPELLANT'S PREMISES. THE HANDWRITING ON THIS PAPER AND ON OTHER PAPERS APPEARS IDENTICAL. THUS IT WAS F OR THE APPELLANT TO EXPLAIN THE SOURCE OF THE PAYMENTS RECORDED ON THIS PAPER. THE APPELLANT HAS FAILED TO DO SO. THEREFORE THE ADDITION MADE BY THE AO IS CONFIRMED. 40. APPELLANT'S EXPLANATION REGARDING CONTENTS OF PAGE NO 12 IS ACCEPTED. THE TRANSACTION S REGARDING SALE/PURCHASE OF GOODS OUTSIDE PRAKASH H. MUTHA 14 THE BOOKS ARE ALREADY COVERED WHILE CONSIDERING THE ADDITIONAL PROFIT FRO M SUCH BUSINESS. THE AMOUNT OF RS. 82,735/ - IS THEREFORE DIRECTED TO BE DELETED. 41. AS REGARDS WRITINGS ON PAGE NO 13, THE NAME ROOP SANAG M IS HAND WRITTEN ON THE PAGE AND THE HAND WRITING APPEARS TO BE IDENTICAL WITH THAT ON THE OTHER PAPERS. THE TRANSACTION APP EARS TO BE A LOAN GIVEN TO ROOP SANGAM, WHICH IS JUST OPPOSITE THE APPELLANT'S SHOP. THE APPELLANT IS IN THE BUSINESS OF MONEY LEND ING WHICH IS DONE OUTSIDE THE BOOKS. THUS PROBABILITIES ARE THAT THE PAPER REPRESENTS A MONEY LENDING TRANSACTION. THE ADDITION OF RS. 1,29,066 / - (74,000+55066) IS CONFIRMED. 42. PAGE NO 17 CONTAINS DETAILS OF PERSONAL EXPENSES OF THE APPELLANT AN D HIS FA MILY TO THE EXTENT OF RS. 7,776/ - . THE APPELLANT CLAIMS THAT THE EXPENDITURE IS INCURRED OUT OF THE ADDITIONAL INCOME TAXED. TELESCOPING BENEFIT IS ALLOWED AND THE ADDITION IS DIRECTED TO BE DELETED. 43. PAGE NO 18 IS STATED TO BE CONTAINING D ETAILS OF BU SINESS EXPENSES OF RS. 61,470/ - WHICH ARE DULY RECORDED IN THE BOOKS. THE REMAND REPORT OF THE AO IS SILENT ON THE ISSUE. SIMILAR CONTENTION HAS BEEN MADE BEFORE THE AO IN THE APPELLANT'S SUBMISSIONS DATED 7/11/2008. THE AO'S SILENCE ON THE MATTER LEADS ON E TO ACCEPT THE APPELLANT'S CONTENTIONS. THE ADDITION OF RS. 61 , 470/ - IS DIRECTED TO BE DELETED. 44. PAGE NO 20 AND 21 ARE EXPLAINED AS GOLD RECEIVED FROM YASH GOLD. THE APPELLANT HAS NEITHER FURNISHED ANY CONFIRMATION FROM YASH GOLD NOR HAS FURNISHED THE PAN ETC OF THE CONCERN. HENCE THE ADDITION OF RS. 3,59,989 / - IS CONFIRMED. 45. PAGE NO 22 AND 23 ARE AGAIN EXPLAINED AS DETAILS .OF CASH DEPOSITED IN THE BANK OR PERSONAL EXPENDITURE OUT OF THE ADDITIONAL INCOME OFFERED. TELESCOPING BENEFIT IS GIVEN AGAI NST THE ADDITIONAL INCOME OFFERED. THE ADDITION OF RS. 1,10,050 / - (50,000+60,050) IS DIRECTED TO BE DELETED . 46. TO SUM UP OUT OF RS. 11,12,430/ - ADDITION TO THE EXTENT OF RS. 8,50,399/ - IS CONFIRMED. THE APPELLANT GETS RELIEF OF RS. 2,62,031/ - . 37. AGAI NST THE ABOVE ORDER OF LEARNED CIT(A), ASSESSEE IS IN APPEAL BEFORE US FOR ALL THE THREE YEARS . REVENUE HAS FILED THE APPEAL FOR A.Y. 2007 - 08 AGAINST THE RELIEF GRANTED BY LEARNED CIT(A) AS RAISED IN GROUNDS ABOVE. WE PRAKASH H. MUTHA 15 HAVE HEARD THE ARGUMENTS OF LEARNED CO UNSEL OF THE ASSESSEE AND LEARNED DEPARTMENTAL REPRESENTATIVE. 38. THE FIRST GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESSING OFFICER ERRED IN ASSUMING JURISDICTION ON THE BASIS OF CENTRALIZATION ORDER PASSED U/S. 127 OF THE I.T. ACT WITHOUT GIVING REASO NABLE OPPORTUNITY OF BEING HEARD. 39. WE FIND THAT THIS ISSUE WAS NEVER RAISED BEFORE THE AUTHORITIES BELOW. IT IS NEITHER ARISING OUT OF THE ORDER OF ASSESSING OFFICER NOR OUT OF THE ORDER OF LEARNED CIT(A). THERE IS NOT EVEN WHISPER THAT THE ASSESSEE HA S RAISED ANY SUCH GROUND EITHER BEFORE THE ASSESSING OFFICER OR LEARNED CIT(A). BEFORE US ALSO NO REASON HAS BEEN ATTRIBUTED AS TO WHY THIS GROUND WAS NOT RAISED BEFORE THE AUTHORITIES BELOW. 40. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE CANNOT FILE APPEAL AGAINST THE ORDER U/S. 127 OF THE ACT BEFORE THE ITAT. LEARNED COUNSEL OF THE ASSESSEE IN THIS REGARD SUBMITTED THAT HE IS NOT CHALLENGING THE ORDER U/S. 127 BUT CHALLENGING THE JURISDICTION OF THE ASSESSING OFFICER . 41. UPON C AREFUL CONSIDERATION ON THIS ISSUE, WE FIND THAT THERE IS NO MATERIAL ON RECORD, WHICH CAN COGENTLY SHOW THAT THERE WAS ANY INFIRMITY IN THE JURISDICTION OF THE ASSESSING OFFICER PURSUANT TO THE ORDER PASSED U/S. 127 OF THE ACT. THIS WAS NEVER RAISED BEFOR E ANY OF THE AUTHORITIES BELOW. ISSUE IS BEING RAISED BY THE ASSESSEE WITHOUT ANY BASIS WHATSOEVER. IN THESE CIRCUMSTANCES, THIS GROUND RAISED BY THE ASSESSEE IS STANDS DISMISSED. 42. ANOTHER ISSUE RAISED IN THESE APPEALS IS THAT LEARNED CIT(A) ESTIMATED GROSS PROFIT AT 35% WHICH DID NOT ALLOW FOR THE GROSS PROFIT ALREADY DECLARED BY THE ASSESSEE. WE FIND CONSIDERABLE COGENCY IN THE SUBMISSIONS OF THE ASSESSEE IN THIS REGARD. WHEN ADDITION IS BEING ESTIMATED @ 35% ON SALES , PROFIT IN THIS REGARD WHICH IS A LREADY OFFERED DESERVES TO BE REDUCED. WE DIRECT ACCORDINGLY. PRAKASH H. MUTHA 16 43. ANOTHER ISSUE RAISED BY THE ASSESSEE IN A.Y. 2005 - 06 RELATES TO ADDITION IN RESPECT OF INITIAL INVESTMENT OF STOCK OF RS. 15,09,208/ - . THE ASSESSEE HAS RAISED GRIEVANCE THAT THIS WAS AN ENHA NCEMENT WITHOUT ADEQUATE NOTICE TO THE ASSESSEE. WE DO NOT AGREE WITH THE CONTENTION THAT THERE WAS AN ENHANCEMENT. THE ASSESSING OFFICER HAS MADE ADDITION OF THE ENTIRE DIFFERENCE OF SALES AND PURCHASES FOUND IN SEARCH, WHICH WERE NOT RECORDED. AGAINST TH OSE HUGE ADDITION, LEARNED CIT(A) HAS GRANTED RELIEF BY ESTIMATING ONLY 35% GROSS PROFIT ON SALES ACCEPTED BY THE ASSESSEE. LEARNED CIT(A) HAS NOT MADE ANY OTHER ADDITION AND HE HAS DELETED ADDITION ON ACCOUNT OF UNACCOUNTED PURCHASES. HE HAS ONLY SUSTAINED RS. 15,09,208/ - WHICH CO U LD HAVE BEEN ATTRIBUTED AS INITIAL INVESTMENT. HENCE, UNACCOUNTED PURCHASES WERE REDUCED TO RS. 15,09,208/ - HENCE ASSESSEES CONTENTION THAT THERE WAS ANY ENHANCEMENT IS LIABLE TO BE REJECTED. ASSESSEE HAS NOT MADE ANY SUBMISSIONS ON MERITS OF THE ABOVE. 44. AS REGARDS TELESCOPING FOR UNACCOUNTED MUTHA HOUSE IS CONCERNED, WE FIND THAT LEARNED CIT(A) HAS ALREADY DIRECTED FOR TELESCOPING. 45. AS REGARDS ADDITION OF RS. 6,86,625/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT IN MUTHA HOUSE ONLY ON THE BASIS OF DVOS REPORT IS CONCERNED, WE NOTE THAT LEARNED CIT(A) HAS GIVEN A FINDING THAT THERE WAS ALREADY SEARCHED MATERIAL AND ADDITIONS WERE ACCEPTED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT. ACCORDINGLY, WE UPHOLD THE ORDER OF LEARNED CI T(A). 46. AS REGARDS SUSTAINING THE ADDITION OF RS. 9,93,518/ - TREATING THE SAME AS UNEXPLAINED ADVANCES IS CONCERNED, ASSESSEES CONTENTION IS THAT THE SAME WERE RECEIVED AGAINST THE SALES HAVE ALREADY BEEN REJECTED BY LEARNED CIT(A) ON THE GROUND THAT T HE ASSESSEE HAS NOT BEEN ABLE TO LINK THE SAME WITH THE CONCERNED SALES. HENCE, WE CONFIRMED THIS ADDITION. 47. AS REGARDS CONFIRMATION OF ADDITION OF RS. 17,17,497/ - ON ACCOUNT OF UNACCOUNTED STOCK , WE FIND THAT THE ASSESSEE HAS GIVEN WORKING OF REC ONCILIATION WHICH HAS NOT BEEN PROPERLY EXAMINED BY LEARNED CIT(A). W E PRAKASH H. MUTHA 17 DEEM IT APPROPRIATE TO REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE WORKING OF THE ASSESSEE AND DECIDE THE ISSUE AS PER LAW. 48. AS REGARDS THE AD DITION OF RS. 3,61,344/ - ON ACCOUNT OF LOOSE PAPER, LEARNED CIT(A) HAS CONFIRMED THE ADDITION AS THE MATERIAL WAS OBTAINED FROM ASSESSEE S DIARY LEARNED CIT(A) HAS PROPERLY ANALYSED CONTENTS. THERE IS NO PROPER REBUTTAL BY THE ASSESSEE. HENCE, THIS ADDITI ON IS CONFIRMED. 49. AS REGARDS THE ADDITION OF RS. 1,29,066/ - IS CONCERNED, THE SAME IS ALSO BASED UPON COGENT APPRECIATION OF SEIZED MATERIAL. IN ABSENCE OF PROPER REBUTTAL BY ASSESSEE THIS IS ALSO CONFIRMED. 50. AS REGARDS ADDITION OF RS. 3,59, 989/ - IS CONCERNED, THE SAME HAS BEEN CONFIRMED AS ASSESSEE NEITHER FURNISHED ANY CONFIRMATION FROM YASH GOLD NOR THE PAN ETC. IN SUPPORT OF ITS CLAIM. HENCE, THIS ADDITION IS SUSTAINED. 51. AS REGARDS TELESCOPING IN CONCERNED, WE FIND THAT LEARNED CI T(A) HAS GRANTED THE RELIEF AS WARRANTED. HENCE, THERE IS NO NEED OF ANY FURTHER DIRECTION. 52. AS REGARDS REVENUES APPEAL FOR A.Y. 2007 - 08 IS CONCERNED, WE FIND THAT THE ISSUE HAS ALREADY BEEN DEALT WITH IN THE ADJUDICATION OF ASSESSEES APPEAL ABOVE. OUR ORDER IN THAT CONTEXT APPLIES MUTATIS MUTANDIS TO ISSUE IN REVENEUS APPEAL. 53. HENCE ALL THESE APPEALS ARE PARTLY ALLOWED AS ABOVE. O RDER HAS BE EN PRONOUNCED IN THE COURT ON 1 . 7 . 201 9 . SD/ - SD/ - (AMARJIT SINGH ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 1 / 7 / 20 1 9 COPY OF THE ORDER FORWARDED TO : PRAKASH H. MUTHA 18 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI