SHRI BANWARI LAL SONI, Indore V. THE ITO-3(1), Indore

ITA 769/IND/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2221 (ITAT-INDORE)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-02-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 08-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M D JAVED
• Assessee Lawyers: S D JETHANI
• Keywords: Rejection of books of accounts; Loose papers; Corroborative evidences; Reason to believe
• Section: 143(3); 142(1); 133A; 147; 68; 69; 148

Judgement Text

BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 1 OF 16 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER BANWARI LAL SONI, 218/3, SAVHARA NAGAR, NANDA NAGAR MAIN ROAD, INDORE (MP) V. ITO-3(1), INDORE / APPELLANT / RESPONDENT . . ./ PAN:AERPS2078F / APPELLANT BY SHRI S.D. JETHANI, CA / RESPONDENT BY SHRI M.D. JAVED, DR / DATE OF HEARING 04.05.2017 / DATE OF PRONOUNCEMENT 15.05.2017 / O R D E R PER BENCH: 1. THESE APPEALS FILED BY THE ASSESSEE IS DIRECTED AGA INST THE SEPARATE ORDER OF CIT(A)-1, INDORE [FOR SHORT THE CIT(A)] ALL DATED 25.03.2016 FOR THE ASSESSMENT YEAR 2005-06, 2006-07 AND 2007- 08. THESE APPEALS WERE HEARD TOGETHER AND BEING DIS POSED OF BY THIS COMMON ORDER FOR THE SAKE OF BREVITY AND CONVE NIENCE. I.T.A. NO. 769/IND/2016 FOR ASSESSMENT YEAR 2005-06: 2. GROUND NO. 1 IS GENERAL IN NATURE AND THE SAME WAS NOT PRESSED BEFORE US, HENCE, TREATED AS DISMISSED AS W ITHDRAWN. . . ./ I.T.A. NOS.769 TO 771/IND/2016 &(( / ASSESSMENT YEAR: 2005-06 TO 2007-08 BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 2 OF 16 3. GROUND NO. 2 READS AS UNDER: THAT THE ASSESSMENT PROCEEDINGS ARE AB INITIO, ILLEG AL AS THE LD.AO HAS PASSED THE ORDER WITHOUT ISSUING AND SERVING NOTICE U/S 143(2) OF THE INCOME-TAX ACT, 19 61. 4. BRIEFLY STATED THE FACTS ARE THAT THERE WAS A SURVE Y U/S 133A OF THE ACT CONDUCTED ON 11.10.2006 AT THE BUSINESS PREMISES OF THE ASSESSEE. CONSEQUENTLY ASSESSMENT ORDER WAS REO PENED BY WAY OF ISSUANCE OF NOTICE U/S 148 ON 29.03.2012 AND THE ASSESSMENT WAS COMPLETED U/S 143(3)/148 OF THE ACT ON 26.03.2013.THE LD. COUNSEL FOR THE ASSESSEE PLACING RELIANCE IN THE CASE OF ITO VS. RAMESWAR MALPANI (2010) 16 ITJ 267 (TRIB- INDORE) AND ITO VS. KRISHNA DUBEY (2013) 22 ITJ 137 (TRIB- INDORE) SUBMITTED THAT THE ASSESSMENT WAS COMPLETED WITHOUT ISSUING AND SERVING OF NOTICE U/S 143(2) OF THE INC OME-TAX ACT, 1961. THEREFORE, THE ORDER OF THE AO DESERVES TO BE QUASHED. 5. ON THE OTHER HAND, THE LD. SENIOR DR REFERRING THE APPELLATE ORDER OF CIT(A) SUBMITTED THAT THE ASSESSEE HAS NOT RAISED ANY OBJECTION AS TO THE SERVICE OF NOTICE U/S 143(2) DU RING THE COURSE OF ASSESSMENT PROCEEDINGS THEREFORE, THE PROVISIONS OF PROVISO TO SECTION 292BB COULD BE PRESSED INTO SERVICE AFTER C OMPLETION OF THE ASSESSMENT. FURTHER CBDT VIDE CIRCULAR NO. 1 OF 2009 CLARIFIED THAT THE PROVISIONS OF SECTION 292BB SHAL L BE APPLICABLE IN ALL PROCEEDINGS WHICH WERE PENDING ON 01.04.2008 . SINCE, THE NOTICE U/S 148 WAS ISSUED IN THE CASE OF ASSESSEE O N 29.03.2012, HENCE, THE SAME WERE PENDING AS ON 01.04.2008 THERE FORE, THE PROVISION OF SECTION 292BB COULD BE APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. SENIOR DR ALSO SUPPORTED HIS VIEW BY PLACING RELIANCE IN THE CASE OF ITO VS. M/S BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 3 OF 16 INDUSTRIALIST SYNDICATE IN I.T.A. NO. 2589/DEL/2011 FOR THE ASSESSMENT YEAR 2007-08 OF DELHI I.T.A.T. DATED 11. 05.2012 AND DECISION IN THE CASE OF CIT VS. PANCHAVATI MOTORS ( P) LTD. [I.T.A. NO. 292 OF 2008 DATED 03.05.2011] OF HON'BLE PUNJAB & HARIYANA HIGH COURT WHICH WERE ALSO QUOTED BY THE CIT(A). TH E LD. SENIOR DR FURTHER SUBMITTED THAT THE ASSESSEE HAS RAISED O BJECTIONS TO THE NOTICE ISSUED U/S 148 AND THESE HAVE BEEN DISPO SED OF BY THE AO BY WAY OF WRITTEN ORDER. THEREAFTER, THE ASSESSE E HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS AND HAS ALSO BEEN GRANTED AN ADJOURNMENT AS REQUESTED AT THE TIME OF THE ACCIDENT OF HIS BROTHER WITHOUT ANY OBJECTIONS AND HAS NOT T AKEN ANY OBJECTION TO THE FACT THAT NO NOTICE WAS ISSUED U/S 143(2) OF THE ACT, THEREFORE, THE PROVISIONS OF SECTION 292BB WIL L BE APPLICABLE AND THE ASSESSMENT CANNOT BE HELD TO BE INVALID IN THE EYES OF LAW. 6. WE HAVE CONSIDERED THE FACTS, RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND PRECEDENTS RE LIED UPON BY THE PARTIES. IT IS SEEN THAT A SURVEY U/S 133A WAS CONDUCTED IN THE CASE OF ASSESSEE. CONSEQUENTLY, A NOTICE U/S 14 8 OF THE ACT WAS ISSUED ON 29.03.2012 WHICH WAS SERVED PROPERLY UPON THE ASSESSEE. THEREAFTER, A NOTICE U/S 142(1) TOGETHER WITH QUESTIONNAIRE DATED 10.12.2012 WAS DULY ISSUED AND SERVED UPON THE ASSESSEE WITHIN TIME. IN COMPLIANCE TO THESE NO TICES, SHRI MANISH TRIVEDI, AUTHORIZED REPRESENTATIVE OF THE AS SESSEE ATTENDED FROM TIME TO TIME AND FURNISHED THE REQUIS ITE INFORMATION AND DOCUMENTS. THE AO HAS ALSO DISPOSED OF THE OBJECTION RAISED AGAINST THE ISSUE OF NOTICE U/S 14 8. THE PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT AT NO POINT OF T IME, THE BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 4 OF 16 ASSESSEE HAS RAISED NOT ANY OBJECTION REGARDING ISS UANCE OF NOTICE U/S 143(2) AND PARTICIPATED IN THE ASSESSMENT PROCE EDINGS BY WAY OF FURNISHING VARIOUS INFORMATION AND DOCUMENTS AS REQUIRED THEREFORE, THE PROVISIONS OF SECTION 292BB WOULD BE APPLICABLE IN RESPECT OF NON-ISSUANCE OF NOTICE U/S 143(2) ALTHOU GH THE NOTICE U/S 142(1) IS IMPLIEDLY MEANS. THAT THE NOTICE U/S 143(2) OF THE ACT WAS ISSUED AND SERVED. SINCE, THE ASSESSEE HAS PARTICIPATED IN THE ASSESSMENT PROCEEDINGS AND HAS NOT RAISED OB JECTION AS TO THE SERVICE OF THE NOTICE U/S 143(2) OF THE ACT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THEREFORE, THE PROVISIONS O F SECTION 292BB WILL BE APPLICABLE IN THE CASE ASSESSMENT UND ER CONSIDERATION WHICH WAS PENDING AS ON 01.04.2008 AS CLARIFIED BY THE CBDT CIRCULAR NO. 1/2009 WHICH IS MADE APPLICAB LE FROM THE PRESENT ASSESSMENT YEAR. FURTHER, RELIANCE IS PLACE D IN THE CASE OF CIT VS. RAM NARAYAN BANSAL (2011) 113 TAXMANN.COM 2 26 (P&H) WHEREIN IT WAS HELD THAT WHERE THE ASSESSEE HAS PAR TICIPATED IN THE RE-ASSESSMENT PROCEEDINGS WITHOUT RAISING ANY O BJECTION REGARDING ISSUANCE OF NOTICE U/S 143(2) OF THE ACT, THE ASSESSMENT WAS MADE U/S 143(3) READ WITH SECTION 148 IS VALID. SIMILARLY, IN THIS CASE THE ASSESSMENT WAS REOPENED U/S 148 THERE FORE, THERE WAS NO REQUIREMENT FOR ISSUE OF NOTICE U/S 143(2) I N CASE OF RE- ASSESSMENT U/S 147 AS HELD IN THE CASE OF CIT VS. M ADHYA BHARAT ENERGY CORPORATION LTD. (2012) 20 TAXMANN.COM 557 ( DELHI) 337 I.T.A. 389 (DELHI) WHEREIN IT WAS OBSERVED AS UNDER : 12. IT IS NOTICED THAT THE IMPUGNED ASSESSMENT IS IN RESPONSE TO NOTICE U/S 148 OF THE ACT AND THE ACT DOES NOT SPE CIFICALLY PROVIDE THAT THE ASSESSMENT MADE U/S 147 OF THE ACT WILL BE AFTER ISSUE OF THE NOTICE U/S 143(2) OF THE ACT. IN FACT, THE BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 5 OF 16 ASSESSING OFFICER HAS THE BASIC JURISDICTION TO ASSE SS THE INCOME IN TERMS OF SECTION 147 AND SECTION 148 OF THE ACT WHERE HE HAS REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. ON THE SUBMISSIONS OF NON-ISSUANCE OF N OTICE U/S 143(2) OF THE ACT, WE ARE OF THE VIEW THAT THE F INDINGS OF THE TRIBUNAL IN THIS REGARD ARE NOT AS PER THE SCHE ME OF THE PROVISIONS OF SECTIONS 147 AND 148 OF THE ACT. 13. THOUGH NO SPECIFIC NOTICE WAS REQUIRED U/S 143( 2) OF THE ACT, AS NOTED ABOVE, THE QUESTIONNAIRES DATED NOVEMB ER 11,2003, AND JANUARY 21, 2004, PROVIDED THE ASSESSE E SPECIFIC OPPORTUNITY TO SUPPORT HIS RETURN BY SEEKI NG DOCUMENTARY EVIDENCE AND DETAILS IN REGARD TO THE F OLLOWING QUERY: AS PER THE RETURN, INTEREST OF RS. 93,81,222 /- WAS RECEIVED BY YOU DURING THE YEAR, WHIH IS ADJUSTED A GAINST PRE- OPERATIVE EXPENSES. THE INTEREST INCOME SHOULD BE C HARGED. 7. FURTHER, THE HON'BLE PUNJAB & HARIYANA HIGH COURT I N THE CASE OF CIT VS. PANCHAVATI MOTORS (P) LTD. (SUPRA) AS RELIED BY THE CIT(A) HAS HELD THAT IN A CASE OF NO OBJECTION REGA RDING VALIDITY OF SERVICE OF NOTICE U/S 143(2) OF THE ACT WAS TAKEN B EFORE THE COMPLETION OF ASSESSMENT PROCEEDING, PROVISION OF S ECTION 292BB WILL BE APPLICABLE. THE DECISION IN THE CASE OF RAM ESHWAR MALPANI OF I.T.A.T., (SUPRA) INDORE RELIED BY THE ASSESSEE IS DISTINGUISHABLE ON THE FACTS IN AS THE FINDINGS RECORDED BY THE LD . CIT(A) ON NON- ISSUANCE OF NOTICE U/S 143(2) WAS NOT CHALLENGED BE FORE THE TRIBUNAL, HENCE, THE TRIBUNAL HAS HELD THAT THE FIN DINGS OF THE LD. CIT(A) REMAINED UNCHALLENGED ON ACCOUNT OF NON-ISSU ANCE OF SERVICE OF NOTICE U/S 143(2) AND HAVE BECOME FINAL. WHEREAS IN THE PRESENT CASE, THE PROVISION OF SECTION 292BB WE RE MADE BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 6 OF 16 APPLICABLE BY THE CIT(A) AND THE GROUND OF THE ASSE SSEE WAS REJECTED. SIMILARLY, IN THE CASE OF KRISHNA DUBEY, I.T.A.T., INDORE (SUPRA) WAS IN RELATION TO NON-ISSUE OF NOTICE U/S 143(2) WITHIN THE PRESCRIBED TIME LIMIT OF THE ISSUANCE OF NOTICE U/S 143(2) OR TAKING THE CASE UNDER SCRUTINY SELECTION WHEREAS IN THE PRESENT CASE, THE ASSESSMENT WAS REOPENED U/S 147 BY WAY OF ISSUANCE OF NOTICE U/S 148, HENCE, THE FACTS OF THIS CASE ARE E NTIRELY DIFFERENT. THEREFORE, THESE DECISIONS ARE NOT APPLICABLE TO TH E PRESENT FACTS. THEREFORE, IN THE LIGHT OF ABOVE FACTS AND LEGAL PO SITION AND IN THE LIGHT OF PROVISIONS AS CONTAINED U/S 292BB OF THE A CT. THE ASSESSMENT IN THE CASE OF ASSESSEE CANNOT BE HELD T O BE INVALID IN THE EYES OF LAW, ACCORDINGLY, THIS LEGAL GROUND OF THE ASSESSEE, THEREFORE, IS REJECTED AND TREATED AS DISMISSED. 8. GROUND NO. 3 RELATES TO CONFIRMING THE ADDITION OF RS. 5,37,151/-. 9. THE FACTS APROPOS OF THIS GROUND ARE THAT DURING TH E COURSE OF SURVEY AT THE BUSINESS PREMISES OF THE ASSESSEE, AN AUDITED BALANCE SHEET PERTAINING TO ASSESSMENT YEAR UNDER C ONSIDERATION WAS IMPOUNDED SHOWING TURNOVER OF RS. 1,84,74,400/- WITH NET PROFIT OF RS. 1,50,501/- FOR ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER, ON GOING THROUGH THE RETURN FILED BY THE A SSESSEE IT WAS NOTICED THAT THE ASSESSEE HAS SHOWN TURNOVER OF RS. 30,11,675/- AND ONLY DECLARED NET PROFIT OF RS. 1,50,501/-. ACC ORDINGLY, NOTICE U/S 148 WAS ISSUED. DURING THE COURSE OF ASSESSMEN T TURNOVER OF THE ASSESSEE WAS CONSIDERED AT RS. 1,54,62,725/- (1,84,74,400- 30,11,675) AND UNDISCLOSED INCOME OF RS. 15,46,272/ - WAS ADDED @10% CONSIDERING NET PROFIT OF THE SAID TURNOVER. I N THE APPEAL, THE LD. CIT(A) CONSIDERED THE PROFIT RATE AT 5% AS TAKEN FOR THE BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 7 OF 16 ASSESSMENT YEAR 2007-08 ON THE ESTIMATE TURNOVER OF RS. 1,07,43,037/- BY CONSIDERING AVERAGE OF FIGURE OF B ALANCE SHEET FOUND DURING SEARCH AND SHOWN IN RETURN BY THE ASSE SSEE AND COMPUTED PROFIT AT RS. 5,37,151/-. ACCORDINGLY, THE ADDITION OF RS. 15,46,270/- WAS DIRECTED TO BE RESTRICTED TO RS . 5,37,151/-. 10. BEING AGGRIEVED, THE ASSESSEE FILED THIS APPEAL BEF ORE US. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASS ESSEE HAS DISCLOSED CORRECT SALES AT RS. 30,11,675/- ON WHICH NET PROFIT OF RS. 1,50,501/- WAS DISCLOSED. THE LD. COUNSEL REFER RED THE REPLY TO THE QUESTION NO. 31 TO 41 OF THE STATEMENT RECOR DED DURING THE COURSE OF SURVEY WHEREIN THE ASSESSEE HAS CLEARLY M ENTIONED THAT THE AUDITED BALANCE SHEET FOUND FROM THE PREMISES F ROM THE ASSESSEE HAS BEEN PREPARED FOR THE PURPOSE OF GETTI NG LOAN FROM THE BANK. THE QUANTUM OF NET PROFIT WAS NOT DISTURB ED BEFORE THE INCOME TAX DEPARTMENT AND THE SALES BEFORE THE COMM ERCIAL TAX DEPARTMENT. THE PURPOSE OF SHOWING INCREASED SALES WAS TO OBTAIN BANK LOAN. FURTHER THE AO HAS NOT FOUND ANY DEFECT IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND AL SO NOT REJECTED THE BOOKS OF ACCOUNTS, THEREFORE, WITHOUT REJECTING THE BOOKS OF ACCOUNTS AND WITHOUT FINDING ANY DEFECT IN THE BOOKS OF ACCOUNTS, THE ADDITION MADE ON INFLATED SELLER, EST IMATED BASIS IS CONTRADICTORY AND WRONG AND THEREFORE, THE ADDITION S BE DELETED. THE LD. CIT(A) HAS TAKEN AVERAGE ON THE TURNOVER SH OWN IN THE BOOKS OF ACCOUNTS AND TURNOVER THE AUDIT REPORT TO THE TURNOVER OF THE YEAR AND HAS APPLIED NET PROFIT RATE OF 5% ON T HAT AVERAGE RATE. HENCE, WITHOUT REJECTION OF BOOKS OF ACCOUNTS TAKING OF AVERAGE TURNOVER OF THE PROFIT DISCLOSED BY THE ASS ESSEE IS NOT TENABLE AND DESERVES TO BE QUASHED. BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 8 OF 16 11. ON THE OTHER HAND, THE LD. SENIOR DR SUBMITTED THAT THE TURNOVER AS SHOWN BY THE ASSESSEE IN THE AUDITED BA LANCE SHEET WERE FOUND DURING THE COURSE OF SURVEY THEREFORE, T HE PLEA OF THE ASSESSEE THAT BALANCE SHEET WHICH WAS ALSO AUDITED, WAS PREPARED FOR THE PURPOSE OF RAISING LOANS FROM THE BANK IS NOT CORRECT AND THE SAME IS NOT SUPPORTED BY ANY EVIDEN CE. THE LD. CIT(A) HAS TAKEN A LIBERAL VIEW AND ESTIMATED THE A VERAGE OF THE TURNOVER OF THE ASSESSMENT YEAR UNDER CONSIDERATION WHICH IS QUITE REASONABLE HENCE, THE FINDINGS OF THE LD. CIT (A) SHOULD BE UPHELD. 12. WE HAVE CONSIDERED THE FACTS, RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND FROM THE AUDITED BALANCE SHEET IMPOUNDED DURING THE COURSE OF SURVEY SHOWED THE TURNOVER OF ASSESSEE AT RS. 1,84,74,400/- AS AGAINS T THE TURNOVER OF RS. 30,11,675/- DISCLOSED IN HIS RETURN WITH THE NET PROFIT OF RS. 1,50,501/-. THE AO WORKED OUT THE OF THE TURNOV ER SHOWN IN BALANCE SHEET AND COMPUTED DIFFERENCE THE NET PROFI T RATE OF 10% ON ESTIMATED TURNOVER. HOWEVER, THE LD. CIT(A) RELY ING ON THE DECISION OF HON'BLE GUWAHATI HIGH COURT IN THE CASE OF DHANSIRAM AGARWAL (1995) ITR 379 HAS UPHELD THE FIN DINGS ON REJECTION OF THE BOOKS OF ACCOUNTS ON THE GROUND T HAT THERE WAS A PRACTICE FOLLOWED BY THE BUSINESS MAN OF DECLARING LARGER STOCK TO THE BANK FOR THE PURPOSE OF GETTING HIGHER LOANS WA S NOT CONVINCIBLE PROPOSITION AND IF THAT SO, IT IS IMMOR AL PRACTICE AMONG THE TRADERS. HOWEVER, CONSIDERING THE SALES T AX RECORD AND LOCATION OF BUSINESS PREMISES OF THE ASSESSEE A ND PECULIAR FACTS OF THE CASE CONSIDERED THE AVERAGE OF THE TUR NOVER SHOWN IN THE BOOKS OF ACCOUNTS AND TURNOVER AS SHOWN IN THE AUDITED BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 9 OF 16 BALANCE SHEET FOR THE YEAR UNDER CONSIDERATION AND WORKED OUT TURNOVER AT RS. 1,07,43,037/- AND AFTER DEDUCTION O F THE DISCLOSED TURNOVER OF RS. 30,11,675/- APPLIED THE NET PROFIT RATE OF 5% ON BALANCE TURNOVER AND THUS, RESTRICTED THE ADDITION TO RS. 5,37,151/-. WE ARE OF THE CONSIDERED OPINION THAT T HE FINDING OF THE CIT(A) APPEARS TO BE REASONABLE, HENCE, NO INF ERENCE IS CALLED FOR. ACCORDINGLY, THE SAME IS UPHELD, THIS GROUNDS OF APPEAL OF THE ASSESSEE THEREFORE DISMISSED. 13. IN THE RESULT, THE APPEAL FOR ASSESSMENT YEAR 2005- 06 IS DISMISSED. I.T.A. NO. 770/IND/2016 FOR ASSESSMENT YEAR 2006-07 14. GROUND NO. 1 IS GENERAL IN NATURE WHICH WAS ALSO NOT PRESSED HENCE, THE SAME IS TREATED AS DISMISSED. 15. GROUND NO. 2 RELATES TO CONFIRMING THE ADDITION OF RS. 6,26,990/-. 16. THIS GROUNDS NO. 2 IS IDENTICAL TO THE GROUND NO. 3 IN I.T.A. NO. 769/IND/2016 FOR ASSESSMENT YEAR 2005-06 EXCEPT FIGURES. IN THIS CASE, THE LD. CIT(A) HAS ALSO CONSIDERED AVERA GE TURNOVER AS SHOWN IN THE BALANCE SHEET OF AUDITED REPORT FOUND IN SURVEY AND SHOWN IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE AND APPLIED NET PROFIT RATE OF 5% AS SHOWN BY THE ASSESSEE HIMSELF IN THE ASSESSMENT YEAR 2007-08. ACCORDINGLY, THE ADDITION OF RS. 18,81,675/- WAS RESTRICTED TO RS. 6,26,699/-. SINCE , THE FACTS ARE IDENTICAL AS OF ASSESSMENT YEAR 2005-06, THEREFORE, WE DISMISS THIS GROUNDS OF APPEAL ON THE BASIS OF THE REASONS DISCUSSED AND FINDING GIVEN BY US IN RESPECT OF GROUND NO. 3 ABOV E FOR BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 10 OF 16 ASSESSMENT YEAR 2005-06. THIS GROUNDS OF APPEAL IS ACCORDINGLY DISMISSED. 17. IN THE RESULT, THE APPEAL FOR ASSESSMENT YEAR 2006- 07 IS DISMISSED. I.T.A. NO. 771/IND/2016 FOR ASSESSMENT YEAR 2007-08: 18. GROUND NO. 1 IS GENERAL IN NATURE AND SAME WAS NOT PRESSED BEFORE US, HENCE, TREATED AS DISMISSED. 19. GROUND NO. 2 RELATES TO ESTIMATION INCOME UNDER HEAD INCOME FROM THE BUSINESS AT RS. 9,31,528/- AND STAT ED IN THE DECLARED INCOME. 20. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT DURING THE COURSE OF SURVEY IT HAD BEEN FOUND AND ADMITTED THAT HE WAS IN PRACTICE OF PREPARING D UPLICATE BALANCE SHEET AND AUDIT REPORTS ONE FOR SUBMITTING BEFORE THE BANK AUTHORITY AND ONE FOR SUBMITTING BEFORE THE IN COME TAX AUTHORITIES. BESIDES, THERE WAS DEFICIENCY OF CASH BY RS. 2,39,000/- AS CASH WAS NOT FOUND WRITTEN UP TO DATE . IN ABSENCE OF ANY EXPLANATION, THE AO MADE THE ADDITION OF RS. 2,39,000/- ON ACCOUNT OF CASH TO THE TOTAL INCOME OF THE ASSE SSEE. THE AO FURTHER NOTED THAT THERE WAS EXCESS STOCK OF RS. 4, 26,813/- (RS. 2,69,259/- OF GOLD + RS. 1,57,554/- OF SILVER) FOR WHICH NO EXPLANATION WAS PROVIDED HENCE, THE SAME WAS CONSID ERED AS INCOME OF THE ASSESSEE U/S 69 OF THE ACT. FURTHER, LP 2 LOOSE PAPER FILED CONTAINING NUMEROUS ENTRIES OF TRANSACT IONS TOTALING TO RS. 2,07,12,638/- WAS FOUND WHICH WAS CLAIMED TO BE KATCHI CASH BOOK. IT WAS CONTENDED BY THE ASSESSEE, IN H IS REPLY DATED 29.12.2009 THAT ENTRIES OF THE KATCHI CASH BOOK WER E MADE IN REGULAR CASH BOOK BY THE ACCOUNTANT. HOWEVER, THE A O NOTED THAT BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 11 OF 16 NO SUPPORTING DOCUMENTARY PROOF WAS ADDUCED IN SUPP ORT OF THIS CLAIM. FURTHER VARIOUS SMALL DIARIES ARE IMPOUNDED ON WHICH EXPLANATION OF THE ASSESSEE AS CALLED FOR BUT NO EX PLANATION WAS OFFERED BY THE ASSESSEE. IN THE ABSENCE OF ANY EXPL ANATION, IN RESPECT OF ENTRIES IN THE KATCHI CASH BOOK, AND THE OTHER SMALL DIARIES, THE AO ESTIMATED THE NET SALE OF THE ASSES SEE AT RS. 3,00,00,000/- ON WHICH PROFIT @ 5% WAS APPLIED BY I NVOKING THE PROVISIONS OF SECTION 44AF OF THE ACT AS THE ASSESS EE WAS DOING RETAIL BUSINESS. ACCORDINGLY, NET PROFIT OF RS. 15, 00,000/- WAS ESTIMATED AND THE SAME WAS ADDED TO THE TOTAL. THE AO FURTHER FOUND THAT THE ASSESSEE HAD MADE CASH DEPOSITS AMOU NTING TO RS. 1,12,27,701/- AS ON DATE OF SURVEY AND UP TO DATE A T RS. 49,76,394/-. THEREAFTER, IT WAS SIMPLY STATED THAT THESE ARE OUT OF SALE PROCEEDS, BUT NO DOCUMENTARY EVIDENCE WAS A DDUCED HENCE, THIS CASH DEPOSITS TOTALING TO RS.1,62,04,09 5/- WERE ADDED TO THE TOTAL INCOME U/S 68 OF THE ACT AS UNEXPLAINE D CASH CREDITS. 21. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFOR E THE CIT(A). BEFORE THE CIT(A) SUBMISSIONS WERE FILED WH ICH HAVE BEEN INCORPORATED BY THE CIT(A) IN HIS APPELLATE ORDER. AFTER CONSIDERING THE VARIOUS SUBMISSIONS AND LEGAL POSIT ION, THE CIT(A) HELD THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT DI D NOT GIVE THE TRUE AND CORRECT PICTURE OF HIS INCOME AND WERE NOT RELIABLE, THESE WERE THEREFORE, RIGHTLY REJECTED BY THE AO. THE ACT ION OF THE AO TO THE ABOVE EXTENT WAS THEREFORE UPHELD. WITH REGARD TO THE ESTIMATED TURNOVER AT RS. 3,00,00,000/- THE CIT(A) NOTED THAT THE ASSESSEE HAS SUBMITTED AUDIT REPORTS TO THE BANK WH EREIN THE TURNOVER REPORTED WAS MUCH HIGHER THAN TURNOVER AS PER BOOKS. FURTHER DATA AVAILABLE WAS REPRODUCED AS UNDER: BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 12 OF 16 A.Y. TURNOVER AS PER AUDIT REPORT TURNOVER AS PER B OOKS 2004-05 17901429/- 2025351/- 2005 - 06 18474400/ - 3011675/ - 2006-07 2194320/- 3125645/- THE CIT(A) FURTHER OBSERVED THAT THE CASH OF RS. 1, 62,04,095/- HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THE APPEL LANT WHICH WAS STATED TO BE REPRESENTING CASH SALES AND DEPOSI T OF CASH WITHDRAWN FROM THE SAME ACCOUNT. FURTHER THE APPELL ANT HAS NOT BEEN ABLE TO ESTABLISH THE SECOND PART OF ITS CONTE NTION. THE CASH DEPOSIT IN THE BANK ACCOUNT IS COMMENSURATE WITH TH E TURNOVER AS REPORTED IN THE AUDIT REPORT FOR THE EARLIER YEA RS. KEEPING IN VIEW OF THE ABOVE, TURNOVER WAS ESTIMATED BY TAKING THE AVERAGE OF TURNOVER FOR THE THREE PRECEDING YEARS AND CASH DEP OSIT IN BANK ACCOUNT OF THE APPELLANT FOR THIS YEAR. ACCORDINGL Y, THE CIT(A) HAS WORKED OUT THE TOTAL OF AMOUNT AT RS. 7,45,22,244/- COMPUTED THE AVERAGE OF THE SAME AT RS. 1,86,30,561/- AND CO NSIDERED THE SAID FIGURE AS ESTIMATED TURNOVER FOR THE YEAR UNDE R CONSIDERATION ON WHICH NET PROFIT RATE OF 5% WAS APPLIED WHICH GI VES PROFIT OF RS. 9,31,528/-. THE CIT(A) FURTHER OBSERVED THAT ON CE BOOKS OF ACCOUNTS ARE REJECTED AND THE PROFITS ARE ESTIMATED OTHER ADDITIONS ON THE BASIS OF BOOKS OF ACCOUNTS ARE NOT WARRANTED. ACCORDINGLY, THE ADDITION OF RS. 2,39,000/- BEING C ASH FOUND, RS. 4,26,813 BEING EXCESS STOCK FOUND AND RS. 1,62,04,0 95/- BEING CASH DEPOSITED IN BANK ACCOUNTS WERE DELETED. 22. BEING AGGRIEVED WITH THE CONFIRMATION OF ADDITION O F RS. 9,31,528/- THE ASSESSEE HAS FILED THIS APPEAL BEFOR E US. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF SURVEY, THE ASSESSEE IN REPLY TO QUESTION NO. 31 TO 40 HAS CLEARLY BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 13 OF 16 MENTIONED THAT THE AUDITED BALANCE SHEET FOUND FROM THE PREMISES OF THE ASSESSEE HAVE BEEN PREPARED FOR THE PURPOSE OF GETTING LOAN FROM THE BANK. THE LD. CIT(A) HAS TAKE N THE AVERAGE OF TURNOVER OF ASSESSMENT YEAR 2004-05, 2005-06 AND 2006-07 AS PER THE AUDIT REPORT AND APPLIED NET PROFIT RATE OF 5%. THE LD. CIT(A) IN THE ASSESSMENT YEAR 2005-06 AND 2006-07 H AS HIMSELF NOT TAKEN THE TURNOVER AS PER AUDIT REPORT BUT HAS TAKEN THE AVERAGE OF THE TURNOVER AS PER AUDIT REPORT AND TUR NOVER AS PER THE RETURN OF INCOME. WHEN THE BASIS OF TURNOVER IN THE ASSESSMENT YEAR 2005-06 AND 2006-07 IS NOT THE TURN OVER AS PER THE AUDIT REPORT THEN TAKING THE AVERAGE OF THE TUR NOVER OF THREE EARLIER YEARS IS NOT JUSTIFIED. IN VIEW OF THIS FAC T THE ADDITIONS SUSTAINED BY THE LD. CIT(A) NEEDS TO BE QUASHED. 23. ON THE OTHER HAND, THE LD. DR HAS RELIED ON THE AUT HORITIES BELOW. 24. WE HAVE CONSIDERED THE FACTS AND PERUSED THE MATERI AL ON RECORD. WE FIND THAT DURING THE COURSE OF SURVEY CA SH OF RS. 2,39,000/- WAS FOUND SHORT. THE STOCK OF RS. 4,26,8 13/- WAS FOUND IN EXCESS FOR WHICH NO PROPER EXPLANATION WAS SUBMITTED. BESIDES THIS, THE CASH DEPOSITS IN THE BANK ACCOUNT AMOUNTING TO RS. 1,62,04,095/- WERE FOUND AS REFLECTED IN LOOSE PAPERS IMPOUNDED AS PER LP2 AND VARIOUS SMALL DIARIES. THE EXPLANATION OF THE DEPOSITS WERE CLAIMED TO BE REPRESENTING CAS H SALES AND DEPOSITS OF CASH OUT OF CASH WITHDRAWN FROM THE BAN K ACCOUNT. HOWEVER, THE SECOND PART OF THE DEPOSIT OF CASH WIT HDRAWN FROM THE SAME ACCOUNT WAS NOT FOUND ACCEPTABLE IN ABSENC E OF SUPPORTING EVIDENCES AND ALSO UPHELD BY THE SAME BY THE LD. CIT(A). THEREFORE, THE CONSPECTUS OF FACTS DURING T HE YEAR UNDER BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 14 OF 16 CONSIDERATION, THE LD. CIT(A) HAS CONSIDERED TURNO VER ON THE BASIS OF THE TURNOVER OF ASSESSMENT YEAR 2004-05 T O 2006-07 AS PER AUDIT REPORT AS AGAINST IN THE ASSESSMENT YEAR 2005-06 AND 2006-07. THE AVERAGE WAS CONSIDERED FOR THE TURNOVE R AS REPORTED IN THE AUDIT REPORT FOR BANK PURPOSE AND AUDIT REPO RT FOR INCOME TAX PURPOSE. THEREFORE, THE FACTS FOR THE YEAR UNDE R CONSIDERATION WERE ENTIRELY DIFFERENT THEREFORE, WE ARE OF THE C ONSIDERED OPINION THAT CONSIDERING THE FACTS OF SHORTAGE OF CASH, EXC ESS STOCK AND CASH DEPOSITS IN BANK, THE VIEW TAKEN BY THE LD. CI T(A) IS APPEARS TO BE VERY REASONABLE AND LOGIC DRAWN THEREOF, NO INFERENCE IS THEREFORE, CALLED FOR. HOWEVER, IT IS ALSO RELEVANT TO MENTION THAT THE CIT(A) HAS DELETED THE ADDITION MADE ON ACCOUNT OF SHORTAGE OF CASH EXCESS IN STOCK AND CASH DEPOSITS AND ALLOW THE SAME AS PART OF TURNOVER AS ESTIMATED BY HIM AT RS. 1,86,00 ,000/-. THEREFORE, WE ARE NOT PERSUADED WITH THE GRIEVANCE OF THE ASSESSEE. HENCE, THE FINDINGS OF THE LD. CIT(A) ARE UPHELD ACCORDINGLY, THIS GROUNDS OF APPEAL IS DISMISSED. 25. GROUND NO. 3 RELATES TO CONFIRMING ADDITION OF RS. 5,00,000/- AS INCOME UNDER THE HEAD FROM PAWNING IN COME. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT TH E ASSESSEE HAS ALSO DONE PAWNING BUSINESS WHICH WAS NOT REFLECTED IN THE REGULAR BOA IN ASSESSMENT PROCEEDINGS THE ASSESSEE HAS EXPRESSED HIS INABILITY TO FURNISH ANY DETAILS HENC E, THE INCOME FROM THIS BUSINESS WAS ESTIMATED AT RS. 5,00,000/- 26. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFOR E THE CIT(A). WHEREIN IT WAS STATED THAT THERE WAS NO BAS IS FOR MAKING THE IMPUGNED ADDITION HOWEVER, THIS ARGUMENT OF THE ASSESSEE WAS FOUND TO BE FALLACIOUS ON THE GROUND THAT DURI NG THE COURSE BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 15 OF 16 OF SURVEY THE STATEMENT OF THE APPELLANT WAS RECORD ED AND VIDE QUESTION NO. 63 IT WAS POINTED OUT TO THE APPELLANT THAT AS PER LEDGER (RED COLOUR) PERTAINING TO ASSESSMENT YEAR 2 006-07 WHEREIN PAGE NO. 1 TO 9 ARE WRITTEN AND ON THE PAGE 3 THERE IS AN ENTRY OF RS. 20,000/- GIVEN TO AJAY JEWELLERS WHICH WAS NOT REFLECTED IN THE COMPUTERIZED ACCOUNT. THE APPELLAN T REPLIED THAT THE ENTRIES THROUGH GIRBI ACCOUNT AND HENCE, IS NOT REFLECTED IN THE COMPUTERIZED ACCOUNT. THE APPELLANT FURTHER STA TED THAT THIS BUSINESS IS NOT REFLECTED IN THE RETURN OF INCOME A GAIN IN QUESTION NO. 50, THERE IS A REFERENCE TO CANCEL THE CHEQUES GIVEN AS A SECURITY FOR NON-TRANSACTION WHICH ARE NOT REFLECTE D IN THE BOOKS OF ACCOUNTS. IN VIEW OF THE ABOVE, THE LD. CIT(A) A S HELD THAT IT IS ESTABLISHED THAT THE APPELLANT WAS ALSO HAVING INCO ME FROM MONEYLENDING/PAWNING THEREFORE, THE AO WAS JUSTIFIE D IN ESTIMATING SUCH INCOME AT RS. 5,00,000/- AS NO DETA ILS PROVIDED BY THE APPELLANT. 27. BEING AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE AO HAS PASSED ASSESSMENT ORDER BY MAKING EXORBITANT ADDITIONS TO THE INCOME WITHOUT BASIS. THE LD. CIT(A) CONSIDERED THESE FACT S EXORBITANT ADDITION UNDER OTHER HEADS OF INCOME BUT THROUGH OV ERSIGHT DID NOT CONSIDER UNDER THIS HEAD OF INCOME OF PAWNING B USINESS. THEREFORE, THE INCOME UNDER THE HEAD OF INCOME OF P AWNING BUSINESS BEING FROM NOMINAL ADDITION MADE UNDER TH E HEADS NEEDS TO BE QUASHED. 28. ON THE OTHER HAND, THE LD. SENIOR DR CONTENDED THAT THE CIT(A) HAS CLEARLY ESTABLISHED BY REFERRING THE STA TEMENTS OF THE ASSESSEE THAT THE ASSESSEE WAS INDULGING IN PAWNING BUSINESS BANWARI LAL SONI/I.T.A. NOS.769 TO 771/IND/2016/A. Y.:05-06 TO 07-08 PAGE 16 OF 16 WHICH WAS NOT BEING SHOWN IN THE RETURN OF INCOME T HEREFORE, THE FINDING OF THE CIT(A) ARE JUSTIFIED. 29. WE HAVE CONSIDERED THE FACTS AND FIND THAT THE STA TEMENT RECORDED DURING THE COURSE OF SURVEY U/S 133A HAS C LEARLY ESTABLISHED THAT THE ASSESSEE WAS ALSO DOING PAWNIN G BUSINESS AND MONEYLENDING OF WHICH NO REGULAR BOOKS OF ACCO UNTS WERE MAINTAINED. THE SEIZED MATERIAL REFERRED BY THE CIT (A) ALSO PROVED THIS FACT THAT THE ASSESSEE WAS INVOLVED IN THE MON EYLENDING BUSINESS. SINCE NO DETAILS OF THE SAME ARE FILED AN D CONSIDERING THE VOLUME OF BUSINESS AND TURNOVER OF THE ASSESSEE AT 1.86 CRORES AS ESTIMATED BY THE CIT(A), WE ARE OF THE CO NSIDERED OPINION THAT THE ESTIMATED ADDITION OF RS. 5,00,000 /- IS QUITE JUSTIFIED ON THE FACTS AND CIRCUMSTANCES OF THE CAS E. ACCORDINGLY, WE DID NOT FIND ANY MERITS IN THE GROUND OF ASSESSE E THEREFORE, THE SAME IS DISMISSED. 30. IN THE RESULT, THE APPEAL FOR ASSESSMENT YEAR 2007- 08 IS DISMISSED. 31. IN THE RESULT, THE APPEALS FOR ASSESSMENT YEAR 2005 -06, 2006-07 AND 2007-08 ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 15.5.2017 SD/- (..) /(C.M. GARG) SD/- (..) /(O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER DATED: 15.05.2017 SB*