The DCIT, Circle-9, Surat V. M/s. BSP Exports, Surat

ITA 778/AHD/2011

• Counselvise Citation: 77820514 RSA 2011
• Duration Of Justice: 4 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 11-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Keywords: Unexplained investment; Search and seizure; Retraction
• Section: 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD .. , ( .) , BEFORE SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.778/AHD/2011 ( / ASSESSMENT YEAR : 2007-08 ) THE DCIT CIRCLE-9 SURAT / VS. M/S.B.S.P. EXPORTS PITRU CHHAYA BAJIWALA IND.ESTATE A.K. ROAD, SURAT % & ./ ./ PAN/GIR NO. : AADFB 1152 F ( %( / APPELLANT ) .. ( )*%( / RESPONDENT ) %( + / APPELLANT BY : SHRI NARENDRA SINGH, SR.DR )*%( , + / RESPONDENT BY : WRITTEN SUBMISSIONS -. , /& / DATE OF HEARING 28/07/2015 0123 , /& / DATE OF PRONOUNCEMENT 14/08/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-V, SURAT [CIT(A) IN SHORT] DATED 16/11/2010 PERTAINING TO ASSESSMENT YEAR (AY) 2007-08. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW ,THE ID. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.6,26,5 77/- MADE ON ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 2 - ACCOUNT OF EXCESS CASH FOUND DURING SURVEY DESPITE THE FACT THAT THE SAME WAS ADMITTED TO BE UNACCOUNTED DURING THE COUR SE OF SURVEY PROCEEDINGS AND NO MENTION WAS MADE OF EXISTENCE OF ANY EVIDENCE BY WAY OF SATAKHAT WHICH IS SUBSEQUENTLY PRODUCED BY T HE ASSESSEE ONLY ON THE DATE OF COMPLETION OF ASSESSMENT PROCEEDINGS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW ,THE ID.CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.8,98, 600/- MADE ON ACCOUNT OFF UNACCOUNTED EXPENSES ON HOUSES DESPITE THE FACT THAT THE ADDITION WAS MADE ON THE BASIS OF DOCUMENTS IMPOUNDED DURING THE COURSE OF SURVEY AND WAS ADMITTED BY THE ASSESSEE'S PARTNER I N HIS STATEMENT. FURTHER THE ASSESSEE FIRM FAILED TO EXPLAIN THE SA ME DURING THE ASSESSMENT PROCEEDINGS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ID. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 28,09 ,862/- MADE ON ACCOUNT OF UNACCOUNTED EXCESS STOCK ADMITTED BY T HE ASSESSEE DURING THE COURSE OF SURVEY PROCEEDINGS DESPITE THE FACT THAT THE UNACCOUNTED STOCK WAS NOT FOUND RECORDED IN THE ASSESSEE'S REGU LAR BOOKS OF ACCOUNTS AT THE TIME OF SURVEY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ID. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.43,3 5,039/- BY ACCEPTING THE EXPLANATIONS OF THE ASSESSEE ON THE RETRACTIONS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FIRM HAD FILED THE EX PLANATIONS/DETAILS OF SUCH RETRACTIONS ONLY ON 24/12/2009 WITH THE MALA- FIDE INTENTION OF PREVENTING THE A.O. FROM MAKING ANY INDEPTH INQUIRI ES AS THE ASSESSMENT WAS GETTING BARRED BY LIMITATION ON 31/1 2/2009. 5. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE L D.CIT(A) BE SET ASIDE AND THE ASSESSING OFFICERS ORDER BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 3 - DATED 24/12/2009, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION(S) ON ACCOUNT OF EXCESS CASH OF RS.6,26,57 7/-, ON ACCOUNT OF UNACCOUNTED EXPENSES OF RS.8,98,600/- AND ON ACCOUN T OF UNACCOUNTED STOCK OF RS.28,09,862/-. AGAINST THE SAID ASSESSME NT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, ALLOWED THE APPEAL. A GGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS NOW IN APPEAL BEFO RE US. 3. NO ONE APPEARED ON BEHALF OF ASSESSEE, HOWEVER W RITTEN SUBMISSIONS DATED 04/08/2014 HAVE BEEN PLACED ON RE CORD AND IT IS PRAYED ON BEHALF OF ASSESSEE THAT THE APPEAL MAY BE DECIDED ON THE BASIS OF SUBMISSIONS MADE BY THE ASSESSEE. 4. APROPOS TO GROUND NOS.1 & 2, THE LD.SR.DR SUBMIT TED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITIO NS. HE SUBMITTED THAT THE AO HAS RECORDED THAT DURING THE COURSE OF SURVE Y, THE EXCESS CASH OF RS.6,26,577/- WAS ADMITTED AS UNDISCLOSED INCOME OF THE FIRM IN ANSWER TO QUESTION NO.12 OF STATEMENT OF SHRI DEVCHANDBHA I G. KAKADIA,PARTNER OF THE ASSESSEE-FIRM. HE FURTHER SUBMITTED THAT TH E PARTNER OF THE ASSESSEE-FIRM ADMITTED THE UNACCOUNTED EXPENSES OF RS.9,65,000/-. DURING THE COURSE OF SURVEY, ASSESSEE HAD DISCLOSED TOTAL INCOME OF RS.70,02,520/-. HOWEVER, THE ASSESSEE HAS DISCLOSE D ONLY RS.26,67,481/- IN HIS RETURN OF INCOME. HE SUBMITTED THAT THE ASS ESSEE MADE RETRACTION ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 4 - OF RS.43,35,039/- OUT OF TOTAL DISCLOSURE OF RS.70, 02,520/- VIDE LETTER DATED 31/10/2007. HE SUBMITTED THAT THE AO HAD CON SIDERED THE SUBMISSIONS OF THE ASSESSEE AND FOUND THAT THE SUBM ISSIONS WERE NOT ACCEPTABLE AS THE AGREEMENT WAS NOT FOUND DURING TH E COURSE OF SURVEY, NOR IT WAS POINTED OUT TO THE SURVEY TEAM WHILE REC ORDING THE STATEMENT. HE SUBMITTED THAT THE CASH TRANSACTION OF RS.15,25, 000/- CLAIMED TO HAVE BEEN RECEIVED IN CONSIDERATION OF SALE OF PROPERTY AND THE SAME WAS INTRODUCED AS CAPITAL BY ONE OF THE PARTNERS AND TH E OTHER PARTNERS ARE NOT AWARE OF THE SAME. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ASSESSEE HAS MADE THE FOLLOWING WRITTEN SUBMISSIONS VIDE LETTER DATED 04/08/2014:- WE ORE IN RECEIPT OF YOUR NOTICE FIXING UP THE HEA RING DATED 22-08-2014 IN THE SUBJECT APPELLATE MATTER AND IN RESPONSE TO IT, WE WOULD LIKE TO MAKE FOLLOWING SUBMISSION FOR THE KIND CONSIDERATION OF YOUR HONOU RS. 1. THE APPELLANT IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF DIAMONDS. 2. THE YEAR UNDER CONSIDERATION IS A.Y. 2007-2008 . 3. THE SUBJECT SUBMISSION IS FILED AGAINST THE AP PEAL FILED BY THE DEPARTMENT ON THE FOLLOWING GROUNDS: THE LEARNED AO HAS ERRED IN MAKING ADDITION OF RS. 43,35,039/- TOWARDS INCOME DISCLOSED IN SURVEY, INSPITE OF THE FACT THA T THE APPELLANT HAD MADE PARTIAL RETRACTION OUT OF THE AGGREGATE DISCLO SURE OF RS. 70,02,520/- IN SURVEY. ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 5 - THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED AO HAS ERRED IN MAKING THE IMPUGNED ADDITION ON FOLLOWING GROUNDS, TOTALLY DISREGARDING THE SUBMISSIONS ALONG WITH RELEVANT DO CUMENTARY EVIDENCES FILED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. GROUNDS FOR MAKING THE ADDITION AMOUNT (IN ) CASH FOUND TO BE 'IN EXCESS OF CASH AS PER THE CASH BOOK COMPLETED UPTO FEW DAYS BEFORE THE DATE OF SURVEY 6,26,577 UNACCOUNTED INVESTMENT IN THE RESIDENTIAL HOUSE PRO PERTY OF THE PARTNERS 8,98,600 STOCK FOUND TO BE IN EXCESS OF THE STOCK RECORDED I N THE BOOKS OF ACCOUNT OF THE APPELLANT FIRM AT THE TIME OF S URVEY 28,09,862 TOTAL ADDITION 43,35,039 THE LEARNED AO HAS MADE THE IMPUGNED ADDITION EVEN AFTER ACCEPTING THE BOOK RESULT FOR THE SUBJECT YEAR AND ACCEPTING THE METHO D OF ACCOUNTING CONSISTENTLY FOLLOWED BY THE APPELLANT FIRM. -THAT ON THE FACTS AND CIRCUMSTANCE OF THE CASE, TH E LEARNED AO HAS ERRED IN MAKING THE ADDITION IN UTTER CONTRAVENTION OF THE CBDT INSTRUC TIONS RELATING TO SEARCH AND SEIZURE -F. NO. 28A/2/2003-IT(LNV. II) DTD. 10-3-20 03 WHICH PROVIDES FOR MAKING ADDITION ONLY ON THE BASIS OF EVIDENCES / MATERIALS GATHERED DURING THE COURSE OF SURVEY PROCEEDINGS OR THEREAFTER DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. 4. THE SUBJECT ADDITIONS AND DISALLOWANCES MADE B Y THE LEARNED AO WAS DELETED BY THE HON'BLE CIT(A)-V VIDE ORDER DATED 27.01.2010 AFTER CONSIDERING ALL THE RELEVANT FACTS OF CASE AND DOCUMENTARY EVIDENCES SUBMITTED BY THE APP ELLANT AND ALLOW THE APPEAL IN FAVOUR OF THE APPELLANT. A COPY OF THE SUBJECT ORDE R PASSED BY THE HON'BLE CIT(A) V, SURAT IS ENCLOSED HEREWITH IN ANNEXURE-I 5. FURTHER, IT IS SUBMITTED THAT BEFORE MAKING AN Y ADDITION OR DISALLOWANCE, BOOKS OF ACCOUNTS NEEDS TO BE REJECTED. THE LEARNED AO HAS W ITHOUT REJECTING REGULARLY MAINTAINED& AUDITED BOOKS OF ACCOUNTS HAS MADE THE IMPUGNED ADDITION, WHICH IS BAD- IN-LAW. IN THIS REGARD RELIANCE IS PLACED ON HON'BL E APEX COURT DECISION IN THE CASE OF SARGAM CINEMA VS. CIT (201 1) 241 CTR (SC) 179. THE ENTIRE ADDITION OF RS. 43,53,059/- WAS MADE BY THE LEARNED AO PURELY BASED ON - - RETRACTED STATEMENT, - WITHOUT ANY CORROBORATIVE AND JUSTIFYING DOCUM ENTARY EVIDENCES AND ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 6 - - IN TOTAL DISREGARD OF THE JUSTIFYING, CORROBORA TIVE AND TRUE & FACTUAL WRITTEN SUBMISSIONS FILED BY THE APPELLANT DURING THE COURS E OF ASSESSMENT PROCEEDINGS. 6. IN ADDITION TO THIS, WE WOULD LIKE TO PLACE RE LIANCE ON THE FOLLOWING JUDGEMENTS WHEREIN IT HAS BEEN HELD THAT STATEMENT RECORDED U/ S. 133A HAS NO EVIDENTIARY VALUE. - PAUL METHEW AND SONS VS. CIT (2003) 263 1TR 1 01 (HON'BLE HIGH COURT OF KERALA) - CIT VS. S. KHADER KHAN SONS (2008) 300 1TR 157 (HON'BLE HIGH COURT OF MADRAS) - DC1T VS. M/S. PREMSONS 1TA NO. 4698/MUM/2006 (HON'BLE IT AT MUMBAI) COPY OF THE SAID JUDGEMENTS IS ENCLOSED HEREWITH IN ANNEXURE-2 FOR THE .IMMEDIATE REFERENCE OF YOUR HONOURS. 7.PRAYER: IN THE LIGHT OF ABOVE SUBMISSIONS AND JUDICIAL PRON OUNCEMENT, WE MOST RESPECTFULLY AND HUMBLY REQUEST YOUR HONOUR TO ACCEPT THE ORDER AS PASSED BY THE LEARNED CIT.(A)-V, SURAT AND TO PASS SUITABLE DIRECTION TAK ING SYMPATHETIC AND JUDICIOUS VIEW IN THE SUBJECT MATTER. 5.1. WE FIND THAT THE LD.CIT(A) DELETED THE ADDITIO N BY OBSERVING AS UNDER:- DECISION: 6.1. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE DETAILED SUBMISSIONS OF THE APPELLANT AS MADE ABOVE. I DO NOT AGREE WITH THE REASONS GIVEN BY THE A.O. W HILE MAKING ADDITION ON ACCOUNT OF EXCESS CASH FOUND AND UNACCOUNTED INV ESTMENT MADE IN PARTNERS HOUSES, DUE TO THE FOLLOWING REASONS: I. THE A.O. HAS MENTIONED THAT SATAKHAT WAS NOT FOUND DURING THE SURVEY NOR IT WAS POINTED OUT BY THE ASSESSEE DURIN G THE SURVEY. IN MY OPINION, THIS IS NOT A COGENT REASON TO MAKE ADDITION BECAUSE THE PAPERS MAY OR MAY NOT BE FOUND DURING T HE SURVEY BUT WHEN PRODUCED LATER ON, THE MATTER OF GENUINENE SS OF SUCH PAPERS SHOULD BE LOOKED INTO WHICH IS IMPORTANT. THE A.O. HAS FAILED TO DO SO. II. THE A.O. HAS MENTIONED THAT BRINGING THE CASH TRANS ACTIONS ON RECORD IN SALE OF PROPERTY IS ABNORMAL. IN MY OPIN ION, THERE IS NO LEGAL BAR IN PURCHASING OR SELLING OF PROPERTY I N CASH. INSTEAD OF TAKING THIS AS BASE FOR ADDITION HE SHOULD HAVE VERIFIED THE ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 7 - GENUINENESS OF EVIDENCES LIKE CONFIRMATIONS OF THE PURCHASE PARTIES, THEIR P.A.N.S ETC., PRODUCED BEFORE HIM. III. THE A.O. FOR MAKING ADDITION HAS GIVEN THE REASON O F INORDINATE DELAY IN FILING THE EVIDENCES. IN MY OPINION, DELA Y IN SUBMISSION OF ANY DETAILS OR EVIDENCES HARDLY AFFECTS IN MAKIN G SUCH JUDICIAL DECISIONS. IV. ONCE THE SOURCE OF CASH AND SOURCE OF INVESTMENTS W ERE EXPLAINED BY THE APPELLANT I.E. THE SOURCE BEING CA SH BELONGING TO ONE OF THE PARTNER SHRI SHANTILAL G.KAKADIA, (RE CEIPT FROM SIX PARTIES WITH WHOM AGREEMENT FOR SALE OF HIS PROPERT Y WAS MADE) THE A.O. SHOULD NOT HAVE ADDED THIS AMOUNT TO THE F IRMS TOTAL INCOME. IF AT ALL THE ACTION WAS REQUIRED TO BE TA KEN THAT SHOULD HAVE BEEN TAKEN IN THE CASE OF THE CONCERNED PARTNE R AS PER THE PROVISIONS OF THE I.T.ACT AS HE HAS OWNED UP THE SO URCE OF EXCESS CASH AND INVESTMENTS IN PARTNERS HOUSES. HENCE, IN MY VIEW THE EXCESS CASH FOUND DURING THE SEARCH STANDS EXPLAINED (CASH BELONGING TO SHRI. SHANTILAL G.KAKADIA INTRODUCED AS HIS CAPITAL IN THE FIRM) AND THE UNAC COUNTED INVESTMENTS IN PARTNERS HOUSES ALSO STANDS EXPLAINE D (CASH BELONGING TO SHRI.SHANTILAL G.KAKADIA INVESTED IN P ARTNERS HOUSES). ACCORDINGLY, THE ADDITIONS MADE ON THESE COUNTS ARE HEREBY DELETED AND THE FIRST AND SECOND GROUNDS OF APPEAL ARE ALLOWED. 5.2. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE RIVAL CONTENTIONS. THE CONTENTION OF THE ASSESSEE IS THA T ONE OF THE PARTNERS ENTERED INTO THE SALE AGREEMENT AND RECEIVED ADVANC E FROM SIX PARTIES AS CASH IN PART WHICH WAS UTILIZED FOR INTRODUCING CAP ITAL INTO THE FIRM AND BALANCE WAS UTILIZED FOR IMPROVEMENT OF HOUSE PROPE RTY OF THE PARTNERS. THIS EXPLANATION OF THE ASSESSEE IS BELIEVED BY THE LD.CIT(A) AS TRUE. IT IS PERTINENT TO NOTE THAT THE SURVEY ACTION WAS CAR RIED OUT ON 28/03/2007. ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 8 - THE AGREEMENT WAS NOT FOUND DURING THE COURSE OF SU RVEY. THE AGREEMENT WAS EXECUTED ON 25/01/2007. AS PER THE A OS OBSERVATION, THE ASSESSEE ENTERED INTO AGREEMENT FOR SALE OF IMM OVABLE PROPERTY. IT WAS CLAIMED THAT THE AGREEMENT WAS EXECUTED IN INDI VIDUAL CAPACITY BY THE PARTNER IN FAVOUR OF THE SIX PARTIES WHO GAVE A DVANCE TO THE PARTNER OF THE ASSESSEE-FIRM. ADMITTEDLY, THE AO HAS NOT MADE ANY ENQUIRY FROM THE PARTIES WHO HAS GIVEN ADVANCES TO THE PARTNER O F THE ASSESSEE WHO CLAIMED TO HAVE BEEN RECEIVED ADVANCE IN CASH. THE LD.CIT(A) DELETED THE ADDITION ON THE BASIS THAT THE AO HAS FILED TO ASCERTAIN THE GENUINENESS OF THE AGREEMENT. THE LD.CIT(A) ALSO O BSERVED THAT THERE IS NO LEGAL BAR IN PURCHASING OR SELLING OF PROPERTY I N CASH. THE LD.CIT(A) WAS OF THE VIEW THAT THE SOURCE BEING CASH BELONGIN G TO ONE OF THE PARTNERS SHRI SHANTIAL G.KAKADIA (RECEIPT FROM SIX PARTIES WITH WHOM AGREEMENT FOR SALE OF HIS PROPERTY WAS MADE), THE A .O. SHOULD NOT HAVE ADDED THIS AMOUNT TO THE FIRMS TOTAL INCOME. THER E IS NO DISPUTE WITH REGARD TO THE FACT THAT ONE OF THE PARTNERS OF THE ASSESSEE-FIRM HAS OWNED UP THE EXCESS CASH FOUND DURING THE COURSE OF SURVE Y SUBSEQUENT TO SURVEY ACTION. IT IS ALSO NOT IN DISPUTE ANOTHER P ARTNER SURRENDERED THE SAME AS UNDISCLOSED INCOME DURING THE COURSE OF SUR VEY. SUBSEQUENTLY, THE OTHER PARTNER RETRACTED FROM HIS STATEMENT AND CLAIMED THAT THE EXCESS CASH FOUND WAS IN FACT CAPITAL INTRODUCED BY OTHER PARTNER. THE SOURCE OF EXCESS CASH AND UNEXPLAINED EXPENSES, BEING THE ADV ANCE RECEIVED, THE PARTNER OF FIRM UPON ENTERING INTO AGREEMENT TO SAL E OF IMMOVABLE ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 9 - PROPERTY. WE AGREE WITH THE VIEW OF LD.CIT(A) THAT SO FAR AS ISSUE OF TAXABILITY OF AMOUNT INTRODUCED BY THE PARTNERS OF FIRM IS CONCERNED, THE AO HAS NOT MADE ANY INQUIRY TO VERIFY THE VERACITY OF EXPLANATION. THE PARTNER OF FIRM CLAIMS TO BE HIS CAPITAL INTRODUCED INTO FIRMS ACCOUNT. SO FAR AS ASSESSEE-FIRM IS CONCERNED, IT HAS AN EXPLAN ATION ALTHOUGH SAME IS SUBJECT TO FURTHER VERIFICATION ON THE PART OF AO. THE REVENUE HAS NOT PLACED ANY MATERIAL SUGGESTING THE EXPLANATION OF A SSESSEE BEING FALSE. UNDER THESE FACTS, WE DO NOT SEE ANY REASON TO INTE RFERE WITH THE ORDER OF LD.CIT(A), SAME IS HEREBY UPHELD. HENCE, GROUND NO S.1 & 2 OF THE REVENUES APPEAL ARE DISMISSED. 6. THE GROUND NO.3 IS AGAINST DELETION OF ADDITION OF RS.28,09,862/-. THE LD.SR.DR SUBMITTED THAT THE LD.CIT(A) WAS NOT J USTIFIED IN DELETING THE ADDITION. HE SUBMITTED THAT SO-CALLED PURCHASE BILL WAS SUBMITTED ON 24/12/2009. THE AO HAD NO TIME TO VERIFY THE VERAC ITY OF PURCHASE BILL AND EVEN THE LD.CIT(A) DID NOT SEEK ANY REMAND REPO RT FROM THE AO QUA THE PURCHASE BILL CLAIMED TO HAVE NOT BEEN ENTERED INTO THE BOOKS OF ACCOUNT. HE SUBMITTED THAT THERE IS NO STIPULATION UNDER LAW THAT FOR MAKING DISALLOWANCE OF ANY EXPENDITURE, THE BOOKS O F ACCOUNTS ARE REQUIRED TO BE REJECTED. HE SUBMITTED THAT UNDER THESE FACTS, THE LD.CIT(A) OUGHT NOT TO HAVE DELETED THE ADDITION. 6.1. ON THE OTHER HAND, THE CONTENTION OF THE ASSES SEE IS THAT BEFORE MAKING ADDITION OR DISALLOWANCE, THE BOOKS OF ACCOU NTS NEEDS TO BE ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 10 - REJECTED. THE AO WITHOUT REJECTING REGULARLY MAINT AINED AND AUDITED BOOKS OF ACCOUNTS HAS MADE THE IMPUGNED ADDITION, W HICH IS BAD IN LAW. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE PLACED RELIANCE ON JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF SARGA M CINEMA VS. CIT REPORTED AT (2011) 241 CTR 179(SC). IT IS FURTHER CONTENDED THAT THE IMPUGNED ADDITION IS MADE ON THE BASIS OF SURVEY ST ATEMENT SUBSEQUENTLY RETRACTED AND WITHOUT ANY CORROBORATIVE AND JUSTIFY ING DOCUMENTARY EVIDENCES. IT IS ALSO CONTENDED ON BEHALF OF THE A SSESSEE THAT THE STATEMENT RECORDED U/S.133A OF THE ACT HAS NO EVIDE NTIARY VALUE. IN SUPPORT OF THIS CONTENTION, RELIANCE IS PLACED ON T HE FOLLOWING CASE-LAWS:- 1. PAUL MATHEW & SONS. VS. CIT (2003) 263 ITR 101 (KE R.) 2. CIT VS. S.KHADER KHAN SONS (2008) 300 ITR 157 (MAD. ) 3. DC(IT VS. M/S.PREMSONS ITA NO.4698/MUM/2006. 6.1. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERI AL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AS WELL AS THE WRITTEN SUBMISSIONS OF THE ASSESSEE. WE FIND THAT THE LD.CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER:- 6.2. SO FAR AS ADDITION ON ACCOUNT OF UNACCOUNTED STOCK OF RS.28,09,862/- (RETRACTED AMOUNT) IS CONCERNED THE APPELLANT HAS REASONABLY BEEN ABLE TO EXPLAIN/JUSTIFY THE RETRACT ION MADE BY WAY OF BRINGING THE FACT THAT ONE OF THE PURCHASE BILLS WA S REMAINED TO BE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. THE A.O. I NSTEAD OF VERIFYING THIS CLAIM OF THE APPELLANT, HAS EMPHASIZED ON THE OTHER NOT SO SIGNIFICANT FACTS LIKE THE PURCHASE BILL WAS NOT FO UND DURING THE COURSE OF SURVEY, THE BILL IS FOR ROUGH DIAMOND WHEREAS EX CESS GOOD WAS ROUGH ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 11 - AND SEMI POLISHED DIAMOND, THERE IS DIFFERENCE BETW EEN THE BILL VALUE AND THE VALUE CONFIRMED IN THE STATEMENT DURING THE SURVEY ETC. I DO NOT AGREE WITH THE A.O.S ACTION WHO SOLELY RELIED ON SU CH FACTS INSTEAD OF VERIFYING THE VERACITY OF THE CLAIM OF THE APPELLAN T WITH THE BOOKS OF ACCOUNTS OF THE APPELLANT. THE A.O. HAS FURTHER ME NTIONED THAT THE APPELLANT HAS ATTEMPTED TO MISLEAD THE ASSESSMENT B Y SUBMITTING ONE OF THE SEVERAL BILLS TO REDUCE ITS LIABILITY. HOWEVER, THE A.O. HAS NOT FOUND OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT IN WHICH THE TRANSACTIONS RELATED TO THIS PURCHASE BIL L HAVE DULY BEEN RECORDED. FURTHER THE A.O. HAS NOT BROUGHT ANY MAT ERIAL OR CORROBORATIVE EVIDENCE ON RECORD WHICH SUPPORTS AND STRENGTHENS THE DECISION TAKEN BY HIM. HENCE, IN VIEW OF THE VARIO US JUDGMENTS QUOTED ABOVE BY THE APPELLANT AND THE EXPLANATIONS OFFERED BY THE APPELLANT, I HOLD THAT THE STOCK UP TO THE EXTENT OF RETRACTION STANDS EXPLAINED AND THE RETRACTION MADE ON THIS COUNT IS IN ORDER. HEN CE, THE ADDITION MADE ON THIS COUNT IS HEREBY DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 6.2. UNDISPUTEDLY, THE ASSESSEE RETRACTED FROM THE STATEMENT RECORDED DURING THE SURVEY PROCEEDINGS AND OFFERED EXPLANATI ON TOWARDS DISCLOSURE OF RS.43,35,039/- OUT OF TOTAL DISCLOSUR E OF RS.70,02,520/-. THE EXPLANATION SO OFFERED WAS NOT ACCEPTED BY THE AO ON THE GROUND THAT PURCHASE BILL OF RS.28,09,862/- AND ACCOUNTS W ERE PRODUCED ON 24/12/2009 WHEN FURTHER VERIFICATION WAS IMPOSSIBLE DUE TO TIME CONSTRAINT. THE LD.CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE AO HAS NOT FOUND ANY DEFECTS IN THE BOOKS OF ACCOUN TS MAINTAINED BY THE ASSESSEE. WE DO NOT AGREE WITH THE REASONING OF LD .CIT(A), AS THE AO HAS RECORDED THAT THE PURCHASE BILL AND RELATED AC COUNTS WERE FURNISHED ONLY ON 24/12/2009. THEREFORE, THE AO HAD NOT EXAM INED THE ACCOUNTS AND VERIFIED THE GENUINENESS OF PURCHASE BILL. UND ER THESE FACTS, THE ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 12 - LD.CIT(A) OUGHT TO HAVE VERIFIED THE VERACITY OF PU RCHASE BILL AND EXAMINED THE RELATED ACCOUNTS. THE LD.CIT(A) COULD HAVE SOUGHT REMAND REPORT FROM THE AO. SO FAR AS EVIDENTIARY VALUE OF SURVEY STATEMENT IS CONCERNED, IT IS TO BE CORROBORATED WITH MATERIAL E VIDENCE. IN THE PRESENT CASE, THERE IS NO DISPUTE WITH REGARD TO DISCLOSURE OF RS.70,02,520/- OF WHICH RS.26,67,481/- OFFERED FOR TAX AND IN RESPECT OF BALANCE AMOUNT THE ASSESSEE-FIRM OFFERED CERTAIN EXPLANATION IN TH E FORM OF INTRODUCTION OF CAPITAL BY ONE OF THE PARTNERS AND NON-RECORDING OF PURCHASE BILL INTO ITS ACCOUNT. THEREFORE, IT IS NOT THE CASE THAT TH E IMAGINARY FIGURE WERE DISCLOSED BY THE PARTNER OF FIRM. THE ONLY QUESTIO N REMAINS TO BE EXAMINED WHETHER THE EXPLANATION OFFERED FOR RETRAC TED AMOUNT IS ACCEPTABLE. SO FAR AS INTRODUCTION OF CAPITAL BY O NE OF THE PARTNERS IS CONCERNED, THAT WE HAVE ALREADY ADJUDICATED IN GROU ND NUMBERS 1 & 2(SUPRA). THE RELIANCE PLACED BY THE ASSESSEE ON T HE JUDGEMENT OF HONBLE SUPREME COURT RENDERED IN THE CASE OF SARGA M CINEMA VS. CIT REPORTED AT (2011) 241 CTR 179(SC) IS TOTALLY MISPL ACED AND, HENCE, IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. T HE HONBLE APEX COURT UNDER THE PECULIARITY OF FACTS OF THAT CASE HAD HEL D THAT A CATEGORICAL FINDING IS RECORDED BY THE TRIBUNAL THAT THE BOOKS WERE NEVER REJECTED. IN THE CIRCUMSTANCES, RELIANCE PLACED ON THE REPORT OF THE DVO WAS MISCONCEIVED. AFTER CONSIDERING THE TOTALITY OF FA CTS, WE SET ASIDE THE ORDER FO THE LD.CIT(A) ON THIS GROUND AND RESTORE T HIS ISSUE TO THE FILE OF AO FOR DECISION AFRESH. THE AO WOULD VERIFY THE CL AIM OF THE ASSESSEE ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 13 - THAT ONE OF THE PURCHASE BILL WAS NOT ENTERED INTO THE ACCOUNTS ON THE DATE OF SURVEY AND THE SAME WAS RECORDED SUBSEQUENTLY. THE AO WOULD ALSO VERIFY THE GENUINENESS OF PURCHASE BILL BY MAKING N ECESSARY INQUIRY. NEEDLESS TO SAY THAT THE AO WOULD GRANT SUFFICIENT OPPORTUNITY TO THE ASSESSEE. THUS, THIS GROUND OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE IN THE TERMS INDICATED HEREINABOVE. 7. APROPOS TO GROUND NO.4, THE LD.SR.DR HAS ADOPTED THE ARGUMENT AS WERE MADE IN GROUND NOS.1 & 3. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS. THE WRITTEN SUBMISSIONS OF THE ASSESS EE ARE ALREADY REPRODUCED IN PRECEDING PARAS OF THIS ORDER. IN VI EW OF OUR REASONING IN GROUND NOS.1 TO 3, THIS GROUND OF REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 14 TH DAY OF AUGUST, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( . ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 14/ 08 /2015 6/..-, .-../ T.C. NAIR, SR. PS ITA NO.778/AHD/ 2011 THE DCIT VS. BSP EXPORTS LTD. ASST.YEAR 2007-08 - 14 - !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )*%( / THE RESPONDENT. 3. 789 : / CONCERNED CIT 4. : ( ) / THE CIT(A)-V, SURAT 5. ;< )-89 , / 893 , 7 / DR, ITAT, AHMEDABAD 6. <= >. / GUARD FILE. / BY ORDER, *; ) //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 4.8.15 (DICTATION-PAD 10+PA GES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..4.8.15/7/.8.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.14.8.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14.8.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER