PUNJAB SIND DAIRY PRODUCTS P.LTD, MUMBAI V. DCIT CC-33, MUMBAI

ITA 7965/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92753 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 13-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Assessee Lawyers: K K LALKAKA
• Keywords: Rejection of books of accounts; Search and seizure; Retraction
• Section: 143(3); 153A; 234B; 131; 132; 15

Judgement Text

PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI , , BEFORE SHRI SANJAY ARORA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDIC IAL MEMBER ITA ITA NO. : 7965 /MUM/20 10 (ASSESSMENT YEAR: 2008 - 09 ) PUNJAB SIND DIARY PRODUCTS PVT LTD , AG - 2, CAMA INDUSTRIAL ESTATE, WALBHAT ROAD, GOREAGAON (EAST) MUMBAI - 400 0 63 .: PAN: AA D C P 5 41 9 Q VS DY. CIT, C C - 33, IT OFFICES, CENTRAL CI RCLE, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K K LALKAKA RESPONDENT BY : SHRI A C TEJPAL /DATE OF HEARING : 13 - 0 3 - 201 5 / DATE OF PRONOUNCEMENT : 11 - 0 6 - 201 5 ORDER PER AMIT SHUKLA, AM : THE A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE A GAINST IMPUGNED ORDER DATED 17.09.2010, PASSED BY CIT(A) - 41, MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED U/ S 143(3) FOR THE ASSESSMENT YEAR 2008 - 09. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE , SHRI K K LALK AKA SUBMITTED THAT GROUND NO. 1 & 2 AS RAISED BY THE ASSESSEE ARE NOT PRESSED , TO WHICH LD. DR ALSO DID NOT HAD ANY OBJECTIONS. ACCORDINGLY , GROUND NOS. 1 & 2 ARE TREATED AS DISMISSED AS NOT PRESSED. THE OTHER EFFECTIVE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 3. ON THE FACTS AND IN THE CIRCUMSTANCES AND IN LAW, THE LEARNED CIT(A) ERRED IN REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) OF THE I.T. ACT, A LTHOUGH NO DEFECTS WERE DISCOVERED AT THE TIME OF ASSESSMENT PROCEEDINGS. PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION MADE OF RS. 8,30,742/ - AS ESTIMATED UNDISCLOSED INCOME ON IRRELEVANT AND CONS EQUENTIAL GROUNDS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDITION OF RS. 8,73,500/ - U/S 69A OF THE I.T. ACT, ALTHOUGH THE SOURCE OF INVESTMENT WAS PROPE RLY EXPLAINED . 6. ON THE FACTS AND IN THE CIRCUMSTANCES AND IN LAW, THE INTEREST CHARGED U/S 234A, 234B, AND 234C OF THE I.T ACT, 1961 ARE INVALID AND BAD IN LAW. 3. BRIEF FACTS OF THE CASE QUA THE ISSUE RAISED IN GROUND NO. 3 & 4 ARE THAT , THE ASSESSEE IS A COMPANY INCORPORATED ON 31 ST MARCH, 2005 WITH MAIN OBJECT OF CARRYING ON THE BUSINESS OF MANUFACTURERS AND TRADERS IN ALL KINDS OF DAIRY /MILK PRODUCTS THROUGH VARIOUS RETAIL OUTLETS AND ITS BUSINESS PREMISES . A SURVEY OPERATIONS WERE CONDUCTED ON 8 TH MARCH, 2007 U/S 133A, ON THE BUSINESS PREMISES AND RETAIL OUTLETS WHICH WAS CONVERTED INTO SEARCH U/S 132 (1) ON THE SAME DATE. THE SEARCH AND SEIZURE OPERATION WAS CARRIED OUT NOT ONLY ON THE BUSINESS PREMISES OF THE ASSESSEE , BUT ALSO ON RESIDENTIAL PREMI SES OF THE DIRECTORS AND FAMILY MEMBERS . DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATION CONDUCTED BY THE INVESTIGATION WING, STATEMENTS OF VARIOUS PERSONS INCLUDING DIRECTORS AND EMPLOYEES WERE RECORDED AND CERTAIN PAPERS/DOCUMENTS WERE ALSO SE IZED . IN PURSUANCE OF SUCH SEARCH AND SEIZURE ACTION, NOTICES U/S 153A W ERE SENT AND ASSESSMENTS WERE COMPLETED FOR THE AY S 2006 - 07 AND 2007 - 08 , WHEREIN THE MAIN ADDITION W AS MADE ON THE GROUND THAT THE SALE OF MILK PRODUCTS HAVE BEEN CAMOUFLAGED AS SALE O F MILK TO REDUCE THE TAX LIABILITY , A FTER REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) . THE SAID SREJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF INCOME HAS BEEN UPHELD UPTO THE STAGE OF THE TRIBUNAL IN THE SECOND APPEAL F OR PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 3 AFORESAID ASSESSMENT YEAR S . FOR THE IMPUGNED ASSESSMENT YEAR T HE PROCEEDINGS U/S 143(3) WAS INITIATED AS T HI S WAS THE YEAR OF SEARCH AND, THEREFORE, THE ASSESSMENT P ROCEEDINGS WAS COMMENCED UNDER NORMAL PROVISIONS OF THE ACT , I.E. U/S 14 3 (3). THE STARTING POINT OF THE AO AS STATED IN THE ASSESSMENT ORDER WAS THAT THE GROSS PROFIT SHOWN BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR WAS 19.09% , WHICH IS LOWER AS COMPARED TO LAST YEARS GROSS PROFIT OF 20.45% , FOR WHICH THE ASSESSEE HAD NOT GIVEN ANY PROPER REASONS FOR SUCH A FALL IN THE G ROSS PROFIT RATE. FUR T HER, THE AO OBSERVED THAT, DURING THE COURSE OF SEARCH /SURVEY OPERATIONS, AN IMPORTANT FACT WHICH HAD EMERGE D WA S THAT THE ASSESSEE WAS SHOWING HUGE QUANTITY OF SALE OF MILK IN ITS BOOKS OF ACCOUNTS BUT HARDLY ANY DOCUMENTARY EVID E NCE S WERE FOUND DURING THE SEARCH/SURVEY IN SUPPOR T OF THE SALE OF MILK. THE AO HAS NOTED DOWN THE STATEMENT OF MR. JASWINDER SINGH BAJAJ, OF THE DIRECTOR OF THE ASSESSEE - C OMPANY, WHICH WAS RECORDED U/S 131 DATED 09.05.2007 AT THE FACTORY PREMISES, THE RELEVA NT QUESTIONS POSED BY HIM AND ANSWERS GIVEN THERETO BY THE DIRECTOR READS AS UNDER: Q. NO. 9: DURING THE COURSE OF SURVEY ACTION AT YOUR PREMISES, IT IS NOTICED THAT M/S PUNJAB SIND DIARY PRODUCTS PVT. LTD. IS NOT HAVING ANY INWARD REGISTER, PRODUCTION/CON SUMPTION REGISTER AND ALSO OUTWARD REGISTER. YOU ARE REQUESTED TO CERTIFY IF SUCH REGISTERS ARE MAINTAINED AND, IF SO, PLEASE PRODUCE THE SAME? ANS: IT IS VERY DIFFICULT TO MAINTAIN SUCH REGISTERS AND SO I DO NOT MAINTAIN SUCH REGISTERS. Q. NO. 10: PLEASE GIVE DETAILS OF ALL YOUR DAIRY PRODUCTS AND SINCE YOUR PRINCIPAL RAW MATERIAL IS MILK, PLEASE GIVE DETAILS OF YIELD RATIO OF EACH PRODUCTS VIS - - VIS 1 LITER OF MILK? ANS: WE MAKE ALL DAIRY PRODUCTS I.E. PANEER, CREAM, MAWA, GHEE, LASSI AND BUTTER MILK, SHR IKHAND ETC. THE YIELDING RATIO CANNOT BE ASCERTAINED AS THE CLARIFICATIONS OF THESE HAVE BEEN STATED IN EARLIER ANSWERS. Q.NO. 11: PLEASE SUBMIT THE QUANTITATIVE DETAILS OF PURCHASE OF MILK IN LITER OF AY 2006 - 07 AND 2007 - 08 ALONG WITH QUANTITATIVE DETAILS OF ALL YOUR PRODUCTS IN LITER /KGMS. PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 4 ANS: I SHALL SUBMIT THE DETAILS OF PURCHASE OF MILK AT THE EARLIEST. I SHALL SUBMIT THE SALES REGISTER DETAILS AT THE EARLIEST. Q.NO. 12 : IT IS ONCE AGAIN REQUESTED THAT YOU SHOULD PROVIDE QUANTITATIVE DETAILS OF MILK AND QUANTITATIVE DETAILS OF SALES? ANS: WE SHALL PROVIDE YOU ALL THE DETAILS AND PRIOR TO THAT WE SHALL SHOW YOU ALL THE REGISTERS AND WE SHALL GIVE YOU DETAILS ON YOUR GUIDANCE. AO, FURTHER NOTED THAT ASSESSEE HAS SALES OUTLETS AT VARIOUS PLACES ( AS PER THE DETAILS NOTED BY HIM AT PAGE 4 OF THE ASSESSMENT ORDER ) AND STATED THAT ASSESSEE BUYS MILK AND MANUFACTURE S VARIOUS DAIRY PRODUCTS, WHICH ARE SOLD THROUGH THESE OUTLETS , H OWEVER , THERE IS NO SALE OF MILK FROM THESE RETAIL OUTLETS. IN RESPONSE TO THE SHOW CAUSE NOTICE THAT THE ASSESSEE DOES NOT DEAL IN SA LE OF MILK AS FOUND DURING THE COURSE OF SEARCH , T HE ASSESSEE SUBMITTED THAT ITS MAIN BUSINESS IS IN MILK AND MILK PRODUCTS AND THE INFORMATION GATHERED BY THE SEARCH PARTY WAS BASED ON STATEM ENT GIVEN BY S O M E OF THE STAFF S , UPON WHICH DIRECTOR S HAVE ALREADY CLARIFIED THAT IT IS NOT CORRECT . IT WAS FURTHER STATED THAT, TRADING IN MILK AND INCOME GENERATED FROM SALE OF MILK HAS ALWAYS BEEN OFFERED IN THE RETURN OF INCOME ALSO. THIS WAS FURTHER C LARIFIED VIDE LETTER DATED 16.11.2009, WHICH HAS BEEN REPRODUCED BY THE AO IN PARA 6.3 AND FURTHER ELABORATE D IN THE REPLY GIVEN VIDE LETTER DATED 07.12.2009, WHICH TOO HA S BEEN REPRODUCED BY THE AO IN PARA 7.1. 4 . HOWEVER, THE LD. AO, REJECTED THE ASSESS EES CONTENTION ON THE GROUND THAT NO PAPER OR SALE VOUCHER F OR SALE OF MILK WAS FOUND DURING THE COURSE OF SURVEY AT THE COMPANY S PREMISES OR AT ITS VARIOUS OUTLETS AND ALSO THE BOOKS OF ACCOUNTS AND VOUCHERS WERE NOT PRODUCED BEFORE THE INVESTIGATION WI NG. FURTHER , THE DIRECTOR IN HIS STATEMENT RECORDED ON 09.05.2007, HIMSELF HAS STATED THAT IT IS DIFFICULT TO MAINTAIN INWARD REGISTER, PRODUCTION/CONSUMPTION REGISTER AND ALSO OUTWARD REGISTER AND, THEREFORE, HIS CLAIM THAT COMPLETE MOVEMENT OF ANALYSIS O F MILK IS ATTACHED HEREWITH IS NOT RELIABLE. THE ASSESSEES CLAIM THAT THE PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 5 MILK WAS SOLD TO SOME OF THE PARTIES THROUGH CHEQUE S , CANNOT BE ACCEPTED AS THE SALE INVOICES D O NOT CORROBORATE THE ASSESSEES CLAIM IN ABSENCE OF SIGNATURE S OF THE OTHER PARTIES O N SUCH INVOICES . LASTLY, HE HELD THAT IN THE STATEMENT OF FOUR SALESMEN , RECORDED DURING THE COURSE OF SURVEY, THEY HAVE STATED THAT, NO MILK IS SOLD FROM THESE OUTLETS OR AT LEAST THEY HAVE NO KNOWLEDGE ABOUT THE SAME. ON THESE GROUNDS, AO REJECTED THE BO OKS OF ACCOUNT U/S 145(3) AND PROCE E DED TO ESTIMATE THE INCOME OF THE ASSESSEE AND THEREBY MADE THE ADDITION OF RS. 8 ,30,747 / - AS UNDISCLOSED INCOME OF THE ASSES S EE, AS PER HIS DISCUSSION AND WORKING IN PARA 9 TO 9.2 OF THE ASSESSMENT ORDER . 5 . BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE DETAILS OF MILK PURCHASE, QUANTITY OF MILK CONVERTED INTO VARIOUS MILK PRODUCTS AND QUANTITY OF MILK DIRECTLY SOLD WAS DULY PRODUCED DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE DAY - TO - DAY DE T AILS OF MILK PURCHAS E, QUANTITY OF MILK PRODUCT PRODUCED AND THE MILK SOL D WAS ALSO FILED BEFORE THE CIT(A) . T HE ASSESSEES SUBMISSIONS IN THIS REGARD HAVE BEEN INCORPORATED AT PAGES 6 TO 8 OF THE APPELLATE ORDER. HOWEVER, T HE LD. CIT(A), CONFIRMED THE ACTION OF THE AO AFTER OBSERVING AND HOLDING AS UNDER: 4.5 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ASSESSMENT ORDER OF THE ASSESSING OFFICER AND FACTS OF THE CASE CAREFULLY. IT IS NOTICED THAT THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF SALE OF MILK AND MIL K PRODUCTS. DURING THE COURSE OF SEARCH AND SURVEY OPERATION NO BILLS VOUCHERS ETC. WERE FOUND AND SEIZED TO PROVE THAT THE ASSE S SEE IS SELLING MILK AS CLAIMED IN THE BOOKS AS CLAIMED IN THE BOOKS OF ACCOUNTS . THE BOOKS OF ACCOUNTS WERE ALSO NOT FOUND DURI NG THE SEARCH AND NEVER PRODUCED BEFORE INVESTIGATION WING. STATEMENT OF SHRI JASWINDER SINGH BAJAJ DIRECTOR OF THE COMPANY WAS ALSO RECORDED WHO HAS PROMISED TO SUBMIT THE STATEMENT OF SALE AND PURCHASE OF MILK AND ADMITTED THAT NO INWARD REGISTER, PRODUC TION/CONSUMPTION PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 6 REGISTER AND OUTWARD REGISTER HAS BEEN MAINTAINED BY THE COMPANY. THE STATEMENT OF SALESMEN AT SIX OTHER PLACED WAS ALSO RECORDED WHO HAVE STATED THAT ONLY MILK PRODUCTS ARE SOLD ON THOSE COUNTERS AND NO MILK WAS SOLD. DURING THE ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER HAS AGAIN CALLED FOR QUANTITATIVE DETAILS OF SALE OF MILK WITH DOCUMENTARY EVIDENCE. HOWEVER NO DOCUMENTARY EVIDENCE WAS SUBMITTED BEFORE THE ASSESSING OFFICER INSPITE OF SPECIFIC ENQUIRES WERE MADE F R OM TIME TO TIME. N EITHER THE BOOKS OF ACCOUNT, NOR BILL VOUCHERS ETC. WERE PRODUCED TO SUBSTANTIATE ITS CLAIM THAT MILK WAS SOLD AS CLAIMED IN THE BOOKS OF ACCOUNTS. SINCE THE DIRECTOR OF THE COMPANY HAS ADMITTED THAT NO QUANTITATIVE DETAILS HAVE BEEN MAINTAINED AND NO INWA RD AND OUTWARD REGISTERS AND CONSUMPTION AND PRODUCTION REGISTER HAS BEEN MAINTAINED, THEREFORE, IT WAS A SUFFICIENT GROUND BEFORE THE ASSESSING OFFICER TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 4.10 THE SECOND ISSUE IS REGARDING THE ESTIMATION O F PROFIT OF THE BUSINESS. TO COMPUTE THE PROFIT THE ASSESSING OFFICER HAS ADOPTED THE DIFFERENCE OF GROSS PROFIT BETWEEN THE MILK SALE AND SALE OF REMAINING ITEMS GROSS PROFIT AND COMPUTED THE GROSS PROFIT @ 16.31% OF RS. 50,93,449/ - . SINCE THE APPELLANT H AS FAILED TO SUBMIT THE REQUIRED DETAILS BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND EVEN BEFORE ME DURING THE APPELLATE PROCEEDINGS, THEREFORE, IT IS HELD THAT THE ASSESSING OFFICER HAS RIGHTLY ESTIMATED THE INCOME BY ADOPTING THE M ETHOD OF DIFFERENCE OF GROSS PROFIT BETWEEN MILK SALE AND GROSS PROFIT OF OTHER MILK PRODUCTS SOLD BY THE ASSESSEE. THEREFORE THE ADDITION MADE OF RS. 8,30,742/ - IS CONFIRMED. GROUND OF APPEAL IS DISMISSED. 6 . BEFORE US, LD. COUNSEL SHRI LALKAKA SUBMI TTED THAT THE ENTIRE ASSESSMENT ORDER IS BASED ON PREMISE AND GROUND THAT CERTAIN STATEMENT WERE GIVEN BY SALESMEN OF THE ASSESSEE COMPANY PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 7 DURING THE COURSE OF SURVEY, NEGATING THE SALES OF MILK AND RELEVANT BOOKS AND REGISTERS WERE NOT FILED BEFORE AUTHOR IZED OFFICERS. FURTHER T HIS PREMISE OF THE AO HAS BEEN DULY CLARIFIED AGAIN BEFORE HIM AND WAS EXPLAINED THAT DAY - TO - DAY PURCHASE AND SALE OF MILK AND MILK PRODUCTS HAVE BEEN MAINTAINED BY THE ASSESSEE ON THE REGULAR BASIS AND SAME WERE ALSO FILED BEFORE H IM. IT WAS ALSO BROUGHT ON RECORD THAT BULK OF THE SALE OF THE MILK WAS DONE THROUGH CHEQUE S AND WAS SOLD TO PARTIES LIKE , ASIAN CHEMIST, G ODREJ NAT URE B ASKET, NANDU DISTRIBUTORS, ETC . ALL THESE DETAILS AND EXPLANATIONS WERE SUBMITTED BY THE ASSESSEE VIDE REPLY DATED 07.10.2009. NOT ONLY THAT , THE COMPLETE MOVEMENT ANALYSIS OF MILK WAS ALSO FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. EVEN FROM THE STATEMENT OF THE EMPLOYEES, IT DOES NOT CONCLUSIVELY IMPL Y THAT MILK HAS NOT SOLD BECAUSE THE BULK OF T HE MILK IS SOLD DIRECTLY THROUGH FACTORY . IN FACT, IT WAS CLARIFIED THAT THE SALE OF MILK HAS NEVER BEEN DENIED BY THE DIRECTORS OR THE MANAGER SALES. IT WAS MADE CLEAR TO THE CONCERNED AUTHORITY THAT SALE OF MILK IS DONE IN THE EARLY HOURS OF THE MORNING FROM THE FACTORY PREMISES ITSELF, PRIOR TO THE OPENING OF THE SHOP. IN SUPPORT, HE REFERRED TO THE REPLY FILED BY THE ASSESSEE BEFORE THE AO. THESE AVERMENTS OF THE ASSESSEE HAVE NOT BEEN PROPERLY REBUTTED EITHER BY THE AO OR BY THE CIT ( A). H E FURTHER SUB MITTED THAT A DETAILED STATEMENT OF PURCHASE AND SALE OF MILK AND MILK PRODUCTS FOR THE FINANCIAL YEAR 2007 - 08 WAS FILED BEFORE THE AO AS WELL AS CIT ( A), THE COPY OF WHICH IS APPEARING FORM PAGES 46 TO 105 OF THE PAPER BOOK . THE SAID DETAILS ARE ALSO DULY RECORDED IN THE BOOKS OF ACCOUNTS, WHICH ARE NOT ONLY AUDITED BUT WERE ALSO PRODUCED BEFORE THE AO. HE FAIRLY ADMITTED THAT IN THE ASSESSMENT YEARS 2006 - 07 AND 2007 - 08, THE TRIBUNAL HAS DECIDED THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATION OF NET PROFIT RATE AGAINST THE ASSESSEE. HOWEVER, THE SAID FINDING WILL NOT ACT AS A RES JUDICATA AND WILL NOT BE APPLICABLE IN THE IMPUGNED ASSESSMENT YEAR FOR THE REASON THAT , IN THE MATTER OF REJECTION OF BOOKS OF ACCOUNTS, THE AO SHOULD NOT BE INFLUENCED BY THE DECISION ARRIVED IN THE PAST ASSESSMENT A S EACH ASSESSMENT PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 8 YEAR IS A SEPARATE AND DISTINCT AND THE FACTS OF EACH YEAR NEED S TO BE EXAMINED TO SEE THE BOOK RESULTS. THE ASSESSEE, IN THIS YEAR HA S NOT ONLY PRODUCED THE ENTIRE BOOKS OF ACCOUNTS AND DE TAILS BUT ALSO THE STOCK REGISTER, WHICH GIVES THE COMPLETE DETAIL OF PURCHASE OF MILK, MILK PROCESSED FOR MILK PRODUCTS, CONSUMPTION OF MILK PRODUCTS AND SALE OF MILK NOT ONLY QUANTITY - WISE BUT ALSO VALUE - WISE. INSTEAD OF EXAMINING THESE DETAILS OR CARRYI NG OUT ANY ENQUIRY FROM THE CUSTOMERS, WHOSE NAMES AND DETAILS WERE GIVEN BEFORE THE AO TO WHOM THE MILK WAS SOLD AND PAYMENT S W ERE RECEIVED THROUGH ACCOUNT PAYEE CHEQUES, HE HAS RELIED UPON THE UNCORROBORATED STATEMENTS OF THE EMPLOYEES AND THAT NO DETAIL S WERE PRODUCED BEFORE THE AUTHORIZED OFFICERS. THE ENTIRE REASONING OF THE AO FOR REJECTING THE BOOKS OF ACCOUNTS CANNOT BE SUSTAINED IN THIS YEAR, AS THE ASSESSEE HAS ALREADY CLARIFIED THESE ASPECTS VIDE VARIOUS REPLIES FILED BEFORE THE AO, WHICH HAS NOT BEEN REBUTTED PROPERLY. NOW IN WAKE OF THESE FACTS AND CIRCUMSTANCES THE DECISION OF THE EARLIE R YEARS SHOULD NOT BE FOLLOWED WITHOUT PREJUDICE HE SUBMITTED THAT THE EARLIER DECISION OF THE TRIBUNAL IS CONTRARY TO FACTS AND TO HIGHLIGHT THE DISCREPANCY CR EPT IN THE ORDER OF THE TRIBUNAL, HE FILED A COPY OF THE WRITTEN SUBMISSION DATED 12 TH MARCH, 2015 HIGHLIGHTING THE VARIOUS FACTS AND ISSUES WHICH HAVE NOT BEEN PROPERLY CONSIDERED OR APPRECIATED EITHER BY THE TRIBUNAL IN THE EARLIER YEARS NOR BY THE AO OR CIT(A) IN THIS YEAR. HE FURTHER RELIED UPON THE DECISION OF FULL BENCH OF ITAT D ELHI IN THE CASE OF NAPAR DRUGS (P) LTD. VS DCIT, REPORTED IN 98 ITD 28 5 (DEL) AND 3 RD MEMBER DECISION IN THE CASE OF ITO VS BAKER TECHNICAL SERVICES PVT LTD, 126 TTJ (MUM) TM 455. WHEREIN IT HAS BEEN HELD THAT IF THE SUBSEQUENT BENCH OF THE TRIBUNAL FINDS THAT THE FACTS AND MATERIAL ON RECORD AND ARGUMENT BASED ON SUCH MATERIAL HAS NOT BEEN GIVEN DUE CONSIDERATION, THEN THE BENCH CAN REVERSE ITS EARLIER DECISION IF THE MATERIA L FACTS POINT OUT THAT THE EARLIER DECISION CANNOT BE FOLLOWED BEING CONTRARY TO THE FACTS ON RECORD. IN ANY CASE, HE SUBMITTED THAT, IN THIS YEAR, THE MATTER NEEDS TO BE PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 9 VERIFIED AND EXAMINED AFRESH IN THE LIGHT OF THE DOCUMENTS AND MATERIAL AVAILABLE ON RECORD. 7 . DURING THE COURSE OF THE HEARING, TH IS BENCH REQUIRED THE LD. COUNSEL TO SHOW THE NATURE OF BOOKS OF ACCOUNTS MAINTAINED AND ALSO THE STOCK REGISTER FOR THE PERIOD 1 ST APRIL, 2007 TO 31 ST MARCH, 2008 AND ALSO FOR THE PERIOD SUBSEQUENT TO THE SE ARCH I.E. ASSESSMENT YEARS 2009 - 10 & 2010 - 11. IN RESPONSE, THE ASSES S EE HAD FURNISHED THE DETAILS OF STOCK REGISTER AS MAINTAINED IN TALLY , WHICH GIVES THE DETAILS OF OPENING BALANCE, PURCHASE OF MILK, MILK PROCESSED FOR MILK PRODUCTS, CONSUMPTION OF MIL K PRODUCTS, SALE OF MILK AND CLOSING BALANCE. THESE DETAILS HAVE BEEN MAINTAINED ON DAY - TO - DAY BASIS , WHEREIN QUANTITY - WISE AND VALUE - WISE DETAILS HAVE BEEN GIVEN. THE STOCK REGISTER ITSELF SHOWS THE VERACITY OF THE PURCHASE, CONSUMPTION, PRODUCTION AND SA LE. THE COPY OF REGISTER/STOCK REGISTER FOR THE FINANCIAL YEAR 2007 - 08 HAS BEEN KEPT ON RECORD. LASTLY, MR LALKAKA SUBMITTED THAT ONE VERY IMPORTANT FACT WHICH NEEDS TO BE NOTED THAT IN THE CASE OF THE ASSESSEE IN THE ASSESSMENT YEAR 2009 - 10 AND 2010 - 11, T HE ASSESSMENT IN THE CASE OF THE ASSESSEE HA VE BEEN COMPLETED UNDER SCRUTINY PROCEEDINGS AND ORDER U/S 143(3) HA VE BEEN PASSED , WHEREIN , NOT ONLY THE SALE OF MILK BUT ALSO THE BOOK RESULTS SHOWN IN THE REGULAR BOOKS OF ACCOUNTS HAVE BEEN ACCEPTED . THE COPY OF THE ASSESSMENT ORDER S FOR THE AY 2009 - 10 & 2010 - 11 WAS FILED BY HIM . 8. ON THE OTHER HAND LD. CIT DR, SUBMITTED THAT ON CE THE TRIBUNAL ON THE SAME ISSUE HAS DECIDED THE MATTER AND WITHOUT THERE BEING ANY CHANGE IN THE FACTS AND CIRCUMSTANCES , THE SA ID DECISION SHOULD BE FOLLOWED OR ELSE THE MATTER SHOULD BE REFERRED TO A LARGER BENCH. IN SUPPORT OF THIS PROPOSITION, HE STRONGLY RELIED UPON THE ITAT MUMBAI SB DECISION IN THE CASE OF DCIT VS SUMMIT SECURITIES LTD REPORTED IN [2011] 132 ITD 1. ON MERITS , HE SUBMITTED THAT THE FINDINGS OF THE AO AS WELL AS LD. CIT(A), IS CATEGORICAL THAT THE QUANTITATIVE DETAIL OF SALE OF MILK AND DOCUMENTARY EVIDENCES WERE FILED INSPITE OF QUERY RAISED FROM TIME PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 10 TO TIME. BASED ON THESE FACTS ITAT HAS CONFIRMED THE REJECT ION OF BOOK RESULTS. NEITHER T HE BOOKS OF ACCOUNT NOR THE BILL/ VOUCHERS ETC . WERE PRODUCED BEFORE THE AUTHORIZED OFFICERS AT THE TIME OF SURVEY TO SUBSTANTIATE THE CLAIM OF SALE OF MILK. EVEN THE DIRECTOR OF THE COMPANY, AT THE TIME OF SURVEY HAS ADMITTED THAT NO QUANTITATIVE DETAILS HAVE BEEN MAINTAINED AND NO INWARD AND OUTWARD REGISTER S AND FRESH REGISTER HAS BEEN MAINTAINED. THIS FINDING ITSELF IS SUFFICIENT FOR REJECTING THE BOOKS OF ACCOUNTS AND HAS ESTIMATED THE PROFIT . THUS, HE STRONGLY RELIED UPON THE ORDER OF THE AO AS WELL AS CIT(A) AND ALSO THE ORDER OF THE TRIBUNAL FOR THE AYS 2006 - 07 AND 2007 - 08. 9 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AND ALSO THE MATERIAL PLACED ON REC ORD. THE MAIN ISSUE FOR ADJUDICATION IS , WHETHER THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN RIGHTLY REJECTED U/S 145(3) ON THE GROUND THAT ASSESSEE IS SHOWING BOGUS SALE OF MILK IN ITS BOOK IN ORDER TO SUPPRESS THE PRODUCTION AND SALE OF VARIOUS HIGH P ROFIT MARGIN PRODUCTS MANUFACTURED BY IT AND, THEREFORE, ESTIMATION OF INCOME IS JUSTIFIED. FIRST OF ALL, WE HAVE TO SEE WHAT ARE THE MATERIALS BEFORE THE AO AND THE FINDING GIVEN BY THE AUTHORITIES BELOW FOR REJECTING THE BOOKS OF ACCOUNT. FROM THE ORDER OF THE AO IT IS SEEN THAT THE AO HAS REFERRED TO A STATEMENT OF ONE OF THE DIRECTOR S RECORDED U/S 131 ON 09.05.2007, WHEREIN, HE WAS ASKED , WHETHER THE ASSESSEE COMPANY IS HAVING ANY INWARD REGISTER, PRODUCTION/CONSUMPTION REGISTER AND ALSO THE OUTWARD REG ISTER. IN RESPONSE, IT HAS BEEN STATED THAT IT IS VERY DIFFICULT TO MAINTAIN SUCH REGISTER ; SECONDLY, HE WAS ASKED TO PROVIDE QUANTITATIVE DETAILS OF MILK AND THE QU A NT IT ATIVE DETAILS OF PRODUCTS SOLD T O WHICH IT WAS STATED THAT THE SAME SHALL BE PROVIDED AFTER SOME TIME . THE AO HAS ALSO REFERRED TO THE EXTRACT OF CERTAIN STATEMENTS OF THE SALESMEN, WH O HAVE DENIED ANY SALE OF MILK FROM THE OUTLET S WHERE THEY WERE WORKING. SIMILARLY, SOME OF THE OTHER EMPLOYEES/SALESMEN HAVE REITERATED THE SAME THAT MILK I S NOT SOLD FROM THE RETAIL SHOPS. FROM THESE MATERIALS, THE AO HA D PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 11 COME TO THE CONCLUSION THAT ASSES S EE HAS SHOWN BOGUS SALE OF MILK IN ITS BOOK IN ORDER TO SUPPRESS THE PRODUCTION OF OTHER MILK PRODUCT S , WHICH HAVE A HIGHER MARGIN. HE HAS FURTHER NOTED TH AT AT THE TIME OF SURVEY/SEARCH ASSESSEE COULD NOT PRODUCE REGISTERS, BOOKS OF ACCOUNT AND DETAILS OF SALE OF MILK. 11. ON THE CONTRARY, THE ASSES S EE BEFORE THE AO VIDE LETTER DATED 16.11.2009 HAD STATED AS UNDER: YOUR QUERY REGARDING THE STATEMENTS M ADE BY THE STAFF THAT THEY HAVE NOT SOLD THE MILK IS WRONG IN NATURE AS YOU HAVE COLLABORATED THE STATEMENT FROM ONE UNIT OF ONE PERSON WITHOUT ASCERTAINING THE FACTS FROM OTHER OUTLETS. MOREOVER , THE NATURE OF SELLING THE MILK IS ALSO DIFFEREN T AS SMALL C ONSUMABLE PACKETS ARE SOLD AT THE OUTLETS, MOREOVER BULK QUANTITIES ARE SOLD DIRECTLY WHEREIN OUR SUPPLIER IS DIRECTLY INSTRUCTED TO DELIVER THE MILK TO OUR PURCHASER. IT IS A KIND OF AGENT IN THE DEAL. FURTHER , WE WISH TO STATE THAT WE HAVE ALREADY FURNIS H THE DETAILS IN OUR EARLIER LETTER DATED 06.10.2009. FURTHER , I WOULD LIKE TO STATE THAT I MYSELF, MY BROTHER AND MY WIFE HAVE SHOWN TRADING IN MILK AND THE INCOME GENERATED IN TRADING IN MILK IS OFFERED IN THE RESPECTIVE RETURN OF INCOME. THEREAFTER, THE ASSESSEE, AGAIN, VIDE REPLY DATED 07.12.2009, SUBMITTED THAT SOME OF THE BULK SALE OF MILK HAS BEEN DONE TO VARIOUS ESTABLISHED PARTIES FROM WHOM PAYMENT HAS BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. FOR THE RELEVANT FINANCIAL YEAR 2007 - 08, THE ASSE SSEE HAD GIVEN THE FOLLOWING DETAILS IN ITS REPLY BEFORE AO : IN THE FINANCIAL YEAR 2007 - 08 SALE MILK HAS BEEN EXECUTED IN THE NAME OF ASIAN CHEMIST PROP., GODREJ NATURES BASKET KANDIVLI, KAILSAH PARBAT, NANDA DISTRIBUTORS, R.K. SHASHANK DIARY THE AMOUN T FOR THE SAME WAS RECEIVED BY CHEQUE, WHICH PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 12 IS DULY REFLECTED IN THE BOOKS OF ACCOUNTS. THE COMPLETE MOVEMENT ANALYSIS OF MILK IS ALSO ATTACHED WHICH IS EVIDENT THAT THERE ARE ALSO PARTIES TO WHOM CASH SALE IS MADE, HENCE CASH SALE OF MILK CANNOT BE DROPP ED OUT RIGHTLY AND ALL EVIDENCES ARE PAGES FROM PG. NO. 37 TO 39. 12. REGARDING THE STATEMENT OF THE EMPLOYEES, THE ASSESSEE HAD STATED THAT THE DIRECTORS HAVE NEVER DENIED THAT THERE IS NO SALE OF MILK. ON THE CONTRARY , IT WAS MADE CLEAR TO THE CONCERNE D OFFICER S THAT THE SALE OR SUPPLY OF MILK IS DONE IN THE EARLY HOURS OF THE MORNING, PRIOR TO THE OPENING OF THE RETAIL SHOPS AND THE BOYS OR STAFF WAS PAID THE INCENTIVE DIRECTLY TO EXECUTE THE SUPPLIES. THE SALES HAVE BEEN MADE MOSTLY FROM THE SOURCE I. E. FROM THE FACTORY PREMISES AND PAYMENT OF CASH ON SUCH SALE HAS BEEN DULY ACCOUNTED FOR. ASSESSEES DETAIL ED SUBMISSION HAS BEEN EVEN REPRODUCED AT PAGE 5 OF THE ASSESSMENT ORDER. THOUGH, SOME OF THE EMPLOYEE S AT THE OUTLETS HAVE DENIED THE SALE OF MILK , HOWEVER, THE MANAGER , SHRI BAL W INDER SINGH BAJAJ WHO LOOKS AFTER THE SALE, IN HIS STATEMENT BEFORE THE AUTHORIZED OFFICER VIDE QUESTION NO. 4 HAD STATED AS UNDER: Q. NO. 4 OF THE STATEMENT IS AS UNDER: Q. NO. 4: WHAT IS YOUR MODUS OPERANDI OF WORKING F OR PURCHASE AND SALES OF THE PRODUCTS AND MAINTENANCE OF RECORDS AT YOUR SALES COUNTER? ANS: DAILY MORNING I OPEN THE SHOP WITH THE HELP OF MY ATTENDANT. FROM THE MAIN SHOP LOCATED NEARBY AT PUNJAB SIND PANNER CENTRE, 622, DURGA NIWAS, KHAR PALI ROAD, KHAR (W), MUMBAI - 52, I RECEIVED ON AN AVERAGE ON DAILY BASIS 20 KGS OF PANEER FOR MY SALES COUNTER. THE MANAGER AT THE DURGA NIWAS SHOP DELIVERED ME PANEER WITH A SMALL SHEET OF WHITE PAPER ON WHICH THE WEIGHT IS WRITTEN ON IT. IN A WHOLE DAY, I SELL THE PROD UCT AT MY COUNTER AS A RETAIL AS PER REQUIREMENT OF THE CUSTOMER SAY 100 GMS., 250 GMS., 500 GMS. ETC. AT THE RATE OF RS. 170/ - PER KG. AT THE END OF THE DAY WHILE CLOSING, I SUBMIT PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 13 THE CASH AND THE BALANCE PANEER AT THE SHOP AT DURGA NIWAS FROM WHERE I TO OK IT IN THE MORNING. I PREPARE A SHEET WHICH IS AVAILABLE WITH ME IN A PRINTED FORMAT ON WHICH IT IS WRITTEN THE AMOUNT OF PRODUCT TAKEN, AMOUNT OF PRODUCT SOLD IN A DAY, CASH RECEIVED, CASH SUBMITTED AND THE BALANCE PANEER - SUBMITTED. I PREPARE THIS SHEET ON DAILY WORKING BASIS. THE SHOP IS OPEN FOR ALL DAYS IN A WEEK FROM 8.30 A.M. TO 9.30 P.M. THERE IS ONLY COUNTER SALES AND THERE IS NO HOME DELIVERY , HOTEL DELIVERY. THE AFORESAID CLARIFICATION AND THE STATEMENT HAVE NOT BEEN REBUTTED BY THE AO WITH ANY MATERIAL FACTS OR EVIDENCE ON RECORD AND HAVE BEEN REJECTED SIMPLY ON THE GROUND THAT SOME OF THE EMPLOYEES HAVE DENIED THE SALE. 13. FROM THE RECORDS AND THE REPLIES FILED BEFORE THE AO, IT IS SEEN THAT THE ASSESSEE HAD FILED THE ENTIRE STATEMENT OF PURCHASE AND SALE OF MILK PRODUCTS AND MILK SHOWING DAY - TO - DAY PURCHASE OF MILK, SALE OF MILK AND THE PRODUCTS MANUFACTURED. ALL THESE DETAILS HAVE NEITHER BEEN EXAMINED NOR HAVE BEEN COMMENTED UPON EITHER BY THE AO OR BY THE CIT(A) . SO FAR AS THE DIRECTO RS STATEMENT, THE ONE PART OF THE STATEMENT STATES THAT QUANTITATIVE DETAILS OF PURCHASE OF MILK AND QUANT IT ATIVE DETAILS OF SALES WOULD BE GIVEN WHICH LATER ON HAD BEEN DULY COMPLIED WITH, WHICH IS EVIDENT FROM THE STATEMENT OF PURCHASE AND SALES APPEARI NG IN THE PAPER BOOK VOLUME - I PAGE 46 TO 105 ; AND FURTHER THE SECOND PART, REGARDING MAINTENANCE OF VARIOUS REGISTERS, THE SAME TOO HAVE BEEN CLARIFIED BY LETTER FILED BEFORE THE AO THAT THEY ARE NOT ONLY MAINTAINED BUT WERE FILED ALSO. FURTHER WH EN THE AS SESSEE BEFORE THE AO HAD CLAIMED THAT BULK OF SALE OF THE MILK HAVE BEEN GIVEN TO ESTABLISHED PARTIES AND PAYMENT HA VE BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES, THEN, IT WAS INCUMBENT UPON THE AO TO CARRY OUT NECESSARY ENQUIRY FROM SUCH BUYERS OF THE MI LK OR ELSE, HE SHOULD HAVE ACCEPTED SUCH A VITAL EVIDENCE OF THE SALE OF MILK . THE AO SEEMS TO BE LARGELY GUIDED BY THE STATEMENT RECORDED BY PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 14 THE AUTHORIZED OFFICER WITHOUT VERIFYING THE RECORDS SUBMITTED BEFORE HIM . EVEN THE LD. CIT(A) WITH WHOM ALL THESE DETAILS AND SUBMISSIONS WERE GIVEN, AS GONE LARGELY BY THE FACT THAT THE BOOKS OF ACCOUNTS WERE NOT PRODUCED BEFORE THE INVESTIGATION WING AND BY THE STATEMENT OF SOME OF THE SALES M A N. THE FINDING OF THE CIT(A) THAT NO DOCUMENTARY EVIDENCES , NEITHER THE QUANT IT ATIVE DETAILS NOR THE BOOKS OF ACCOUNT OR BILLS OR VOUCHERS WERE FILED BEFORE THE AO APPEAR S TO BE INCORRECT AND CONTRARY TO THE RECORD AND SUBMISSIONS FILED BEFORE HIM, WHICH IS FURTHER EVIDENT FROM THE REPLIES FILED BEFORE THE AO AND ALSO THE STAT EMENT OF PURCHASE AND SALES FILED BEFORE THE AO. SUCH A SWEEPING STATEMENT OF CIT(A) IS NOT ONLY UNCORROBORATED BUT ALSO DIVORCED FROM THE FACTS ON RECORD. 14. AT THE TIME OF HEARING, TH IS BENCH HAD ASKED THE LD. COUNSEL OF THE ASSESSEE TO PRODUCE THE ST OCK REGISTER AND KINDS OF DETAILS, WHICH ARE BEING MAINTAINED BY THE ASSES S EE FOR RECORDING THE DAY - TO - DAY PURCHASE AND SALES OF MILK AND VARIOUS MILK PRODUCTS. AS PER THE DIRECTION, THE COUNSEL HAS FILED THE PRINT - OUT OF STOCK REGISTER, WHICH HAS BEEN MAI NTAINED IN TALLY AND ALSO THE RELEVANT PURCHASE AND SALE INVOICES ON SAMPLE BASIS. FROM THE PERUSAL OF THE STOCK REGISTER, WHICH HAS BEEN MAINTAINED ON DAY - TO - DAY BASIS, IT IS SEEN THAT ASSESSEE HAS RECORDED THE DATE - WISE OPENING BALANCE OF THE MILK ; PUR CHASES MADE DURING THE DAY ; MILK PROCESSED FOR MILK PRODUCTS I.E. IN THE PIPELINES AND MACHINES ; CONSUMPTION FOR MILK PRODUCTS ; SALES OF MILK AND CLOSING STOCK . ALL THESE DETAILS HAVE BEEN MAINTAINED ON QUANT IT ATIVE - WISE AND VALUE - WISE . FROM THE PERUSAL OF THE STOCK REGISTER, IT IS SEEN THAT S O FAR AS SALE OF MILK IS CONCERNED, THE QUANTITY OF SALES IS QUITE LESS AS COMPARED TO THE QUANTITY USED FOR MANUFACTURING OF VARIOUS MILK PRODUCTS. FOR EXAMPLE, IN THE MONTH OF APRIL 2007 , THE QUANTITY OF MILK SOLD IS 560 LITERS ON 04.04.2007 AND 481 LITERS ON 30 TH APRIL, 2007. SIMILARLY, IN THE MONTH OF MAY 2007 , THERE IS ONLY ONE INSTANCE OF MILK WHICH WAS SOLD ON 05.05.2009. FROM THE MONTH OF JUNE ONWARDS, THE MILK HAS BEEN SOLD ALMOST EVERY DAY, THOUGH, PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 15 QUANTITY SO LD IS FAR LESS THAN THE QUANTITY OF MILK USED FOR OWN CONSUMPTION FOR PRODUCTION OF VARIOUS MILK PRODUCTS. THESE PURCHASE S AND SALES ARE ALSO CORROBORATED BY THE INVOICES RAISED BY THE ASSESSEE. IT IS F URTHER SEEN THAT MAJORITY OF THE MILK PURCHASED ARE EI THER UNDER PROCESS OR HAVE BEEN USED FOR MANUFACTURE OF MILK PRODUCTS FOR WHICH THERE IS NO DISPUTE EITHER BY THE AO OR BY THE CIT(A). THE ONLY ALLEGATION OF THE DEPARTMENT IS THAT THERE IS NO SALE OF MILK BY THE ASSES S EE. SUCH A N ALLEGATION OF THE AO CANN OT BE SUSTAINED, FIRSTLY, FOR THE REASON THAT THE SALE OF MILK HAS BEEN DULY SHOWN IN THE BOOKS OF ACCOUNT, WHICH HAVE BEEN MAINTAINED ON REGULAR BASIS AND THE RELEVANT ENTRY OF SALE OF MILK IS DULY CORROBORATED BY INVOICES OF PURCHASE AND SALE. SECONDLY, THE BULK OF THE MILK SOLD IS EVIDENCED BY THE I NVOICES WHICH HAVE BEEN SOLD ON CREDIT AND PAYMENT HAS BEEN RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. THE DETAILS OF WHICH ARE THERE IN THE PAPER BOOK. NOT ONLY THAT , THE ASSES S EE HAS SEPARATELY MAINTAINED PURCH ASE REGISTER, SALE REGISTER, CASH BOOK, LEDGER & JOURNAL ACCOUNT FOR RECORDING THE ENTIRE TRANSACTION . NO DEFECT IN THESE BOOKS OF ACCOUNTS AND RECORD HAVE BEEN POINTED OUT EITHER BY THE AO OR BY THE CIT(A). FURTHER , FROM THE PERUSAL OF RECORDS IT IS OBSER VED THAT IN THE STATEMENT RECORDED OF SHRI SWARANJIT SINGH BAJAJ, ONE OF THE DIRECTORS OF THE COMPANY ON 08.05.2007, THE FOLLOWING QUESTION REGARDING BOOKS OF ACCOUNT WERE ASKED FOR WHICH IT WAS CATEGORICALLY STATED THAT THE BOOKS ACCOUNTS HAVE BEEN REGULA RLY MAINTAINED. THE RELEVANT STATEMENT APPEARS IN THE PAPER BOOK, VOLUME III AT PAGE 18 TO 26. THE RELEVANT QUESTIONS AND ANSWER IN THIS REGARD ARE REPRODUCED HEREUNDER: Q. 7 IN WHAT FORM WHERE ARE THE BOOKS OF THE PRIVATE COMPANY MAINTAINED? ANS: TH E BOOKS OF ACCOUNTS ARE MAINTAINED IN THE ELECTRONIC FORM AS TALLY ON THE MEZZANINE FLOOR AT THE REGISTERED OFFICE. Q. 8 WHO MAINTAINS THE BOOKS OF ACCOUNTS AND UPTO WHAT DATE ARE THEY MAINTAINED? ANS: THE BOOKS OF ACCOUNTS ARE UPDATED UPTO 31.03 .2007 AND ARE MAINTAINED BY OUR ACCOUNTANT, MRS. VARSHA PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 16 AND ALSO BY MR. GUPTA BOTH OF WHOM WAS NOT PRESENT IN THE PREMISES TODAY. Q. 9 WHAT ABOUT BOOKS OF ACCOUNTS OF THE CURRENT FINANCIAL YEAR? ANS: THE BOOKS OF ACCOUNTS ARE WRITTEN ON MONTHLY BASIS ON THE BASIS OF MONTHLY PAPER PERTAINING TO PURCHASE AND SALES, PAPER OF WHICH HAVE BEEN SENT TO KHAR FOR BEING CHECKED BY MR. JASWINDER SINGH BAJAJ COMPUTERIZED ENTRIES ARE, THEREFORE, NOT BEING SEEN ON COMPUTER AT THIS PREMISES AS THE PAPERS ARE SENT TO KHAR. Q. 11 WHAT ARE THE DAILY REPORTS OF PRODUCTION AND DISPATCH, STOCK AND SALES FOR THE CURRENT FINANCIAL YEAR MAINTAINED? PLEASE PRODUCE THE SAME. ANS: I AM PRODUCING THE RESPECTIVE PAPERS FOR THE CURRENT F.Y. THE SAME ARE AS PER INVENTORY IN ANN EXURE A. Q. 22 DO YOU WANT TO SAY ANYTHING ELSE? ANS: THE ACCOUNTS ARE REGULARLY MAINTAINED IN NORMAL PRACTICE BUT TO YEAR - END FINALIZATION AND THE ABSENCE OF THE ACCOUNTANT BEING ON LEAVE, THE ACCOUNTS OF APRIL 2007 TO DATE, COULD NOT BE UPDATED. HOWEV ER, REGULARLY OUR ACCOUNTS ARE MAINTAINED REGULARLY BUT DUE TO THE ABOVE TWO REASONS THE ACCOUNTS WERE NOT THERE . FURTHER , THE RELE V ANT REPLY OF THE ASSESSEE FILED BEFORE THE AO VIDE LETTER DATED 05.11.2009, 10.11.2009, 19.11.2009 & 7 TH DECEMBER, 2009 R EITERATING THE MAINTENANCE OF BOOKS OF ACCOUNT AND THE NATURE OF DETAILS BEFORE THE AO, ARE ALSO REPRODUCED HEREUNDER: LETTER DATED 5 TH NOVEMBER, 2009 PLEASE NOTE THAT AS PER YOUR EARLIER QUESTIONNAIRE A QUESTION WAS PUT UP WHETHER THE INVENTORIES ARE MAI NTAINED IN WHICH WE HAD SPECIFIED THE INVENTORIES ARE MAINTAINED AND INWARD AND OUTWARD REGISTER IS MAINTAINED, WE HOPE OUR ANSWER TO THIS SUBJECT SHALL NOT BE MISUNDERSTOOD AS WE MAINTAIN THE ROUGH SHEETS OF PRODUCTION RECORDS DAILY BUT ARE BEING DISPOSED AFTER ENTERING PROPERLY AND WE HAVE ALREADY SUBMITTED STOCK ITEM REGISTER AND STOCK JOURNAL REGISTER FOR FINANCIAL YEAR 2007 - 08 WHICH WAS DULY SUBMITTED TO YOUR GOOD SELF DURING OUR EARLIER PROCEEDINGS AND MOREOVER WE STATE THAT REGISTERS FOR FINANCIAL YE AR 2006 - 07 HAS BEEN CHECKED AND VERIFIED FROM YOUR SIDE AND FURTHER ASSISTANCE OR REQUIREMENTS SHALL BE SUBMITTED ON HEARING PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 17 FROM YOU. STOCK SUMMARY FOR THE YEARS 2005 - 06, 2006 - 07 AND 2007 - 08 ARE HEREBY ATTACHED FOR YOUR KIND PERUSAL LETTER DATED 10 TH NOV EMBER, 2009 'MOREOVER, WE ARE HEREBY ALSO SUBMITTING THE ITEM WISE MONTHLY SUMMARY OF SALES AND PURCHASE COPIES FOR THE F.Y. 2005 - 06 PAGES NOS. 7 TO 58.' LETTER DATED 19TH NOVEMBER, 2009 'DURING THE PROCEEDINGS YOU HAD INITIATED SOME QUERIES REGARDING TH E PRODUCTION REGISTER COMPARING THE SAME WITH ANNEXURE A - 15. SIR, I WISH TO REMIND YOU THAT THE STOCK REGISTERS MAINTAINED IN THE ACCOUNTS ARE THE TRUE AND FACTUAL FIGURES, MOREOVER THE ANNEXURE A - 15 ARE THE STOCK DISPATCH REGISTERS TO OUR VARIOUS OUTL ETS, AND WHEREIN THE STOCKS TRANSFERRED TO THE OUTLETS IS MENTIONED. THE TRUE AND FACTUAL FIGURES ARE ALREADY STATED IN THE STOCK STATEMENT LEDGERS WHICH HAVE BEEN DULY SUBMITTED AT YOUR OFFICE FOR YOUR KIND PERUSAL AT THE EARLIER STAGES OF PROCEEDINGS. HE NCE WE REQUEST YOU THAT THE SAME SHOULD NOT BE CONSIDERED AS STOCK REGISTERS WHEREAS THEY ARE STOCK DISPATCH REGISTERS, ANY FURTHER QUERY SHALL BE ANSWERED ON HEARING FROM YOU.' LETTER DATED 7TH DECEMBER. 2009, PARA B PAGE 62 TO 65 OF PAPER I N THE FINANC IAL YEAR 2005 - 06 SALE OF MILK HAS BEEN EXECUTED IN THE NAME OF PUNJAB SWEET & FARSAN THE AMOUNT FOR THE SAME WAS RECEIVED BY CHEQUE, WHICH IS DULY REFLECTED IN THE BOOKS OF ACCOUNTS. THE COMPLETE MOVEMENT ANALYSIS OF MILK IS ALSO ATTACHED WHICH IS EVIDENT THAT THERE ARE ALSO PARTIES TO WHOM CASH SALE IS MADE, HENCE CASH SALE OF MILK CANNOT BE DROPPED OUT RIGHTLY. IN THE FINANCIAL YEAR 2006 - 07 SALE OF MILK HAS BEEN EXECUTED IN THE NAME OF AMRITPAL SINGH NANDA, KAY BEE EXPORT & PUNJAB PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 18 SWEET & FARSAN THE AMOUN T FOR THE SAME WAS RECEIVED BY CHEQUE, WHICH IS DULY REFLECTED IN THE BOOKS OF ACCOUNTS. THE COMPLETE MOVEMENT ANALYSIS OF MILK IS ALSO ATTACHED WHICH IS EVIDENT THAT THERE ARE ALSO PARTIES TO WHOM CASH SALE IS MADE, HENCE CASH SALE OF MILK CANNOT BE DROPP ED OUT RIGHTLY. IN THE FINANCIAL YEAR 2007 - 08 SALE OF MILK HAS BEEN EXECUTED IN THE NAME OF ASIAN CHEMIST PROP., GODREJ NATURES BASKET - KANDIVLI, KAILASH PARBAT, NANDA DISTRIBUTORS, R. K. & SHASHANK DAIRY THE AMOUNT FOR THE SAME WAS RECEIVED BY CHEQUE, WH ICH IS DULY REFLECTED IN THE BOOKS OF ACCOUNTS. THE COMPLETE MOVEMENT ANALYSIS OF MILK IS ALSO ATTACHED WHICH IS EVIDENT THAT THERE ARE ALSO PARTIES TO WHOM CASH SALE IS MADE, HENCE CASH SALE OF MILK CANNOT BE DROPPED OUT RIGHTLY AND ALL EVIDENCES ARE PAGE D FROM PG. NO. 37 TO 39. THE COPY OF THE STATEMENT OF BALKRISHNA SHINDE, PRATAP, MALKAR, PRASHANT BALKIRSHNA CHAVAN, RAMUGRAH MAURYA, BALDEV SINGH IS ATTACHED HEREWITH WHICH IS EVIDENT THAT THE SALE OF MILK WAS EXECUTED THEREBY NOT RETRACTING THE STATEMENT BUT DEFINING THE STATEMENT MORE CLEARLY, 'SIR WE HAVE NEVER DENIED THE SALE OF MILK AND MADE IT CLEAR TO THE CONCERNED OFFICER THAT SALE OR SUPPLY OF MILK IS DONE IN THE EARLY HOURS PRIOR TO THE OPENING OF THE SHOP AND THE BOYS OR THE STAFF WAS PAID THE I NCENTIVE DIRECTLY WHO EXECUTED THE SUPPLY, AND THE ACCOUNTS FOR THE SAME WAS NOT COLLABORATED WITH THE SALES FROM THE OUTLET BUT DIRECTLY FROM THE SOURCE I.E. FROM THE FACTORY AND THE PATTERN ADOPTED FOR ACCOUNTING PURPOSE IS NOT KNOWN TO S AS WE PAID THE CASH DIRECTLY TO THE FACTORY' WHICH MAY HAVE BEEN MISINTERPRETED DURING THE COURSE OF INVESTIGATION. IT SEEM THAT YOU HAVE ALREADY COME TO A CONCLUSION THAT THE SALE OF MILK IS NOT IN EXISTENCE AND ALL THE SAME AMOUNT SHOULD BE ADDED AS UNDISCLOSED CASH, W HICH IS UNTRUE FROM THE FACTS SUBMITTED AND EVIDENCES PROVIDED, MOREOVER THE LAW CAN BE INTERPRETED EITHER WAYS, THE CONCLUSION DERIVED WILL HAVE AN ADVERSE RESULT ON THE FINDINGS THUS THE TRUTH WILL BE LEFT ON THE HORIZONS, WHICH IS ABSURD, FALSE PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 19 AND IMAG INARY, ALSO THE PURCHASE OF MILK IS ALL LEGALLY DONE THROUGH THE RECOGNIZED PARTIES AND THE PAYMENTS FOR THE SAME HAVE BEEN MADE BY CHEQUE AND IF PURCHASE IS THERE AND SALE NOT EXECUTED, THEN WHERE HAS THE MILK GONE MOREOVER THE CASH FOUND DURING THE COURS E HAS BEEN DULY EXPLAINED FORM THE BOOKS OF ACCOUNTS, ANY FURTHER CLARIFICATION SHALL BE PROVIDED ON HEARING FROM YOU. 1 4 . FROM ALL THESE REPLIES AND DETAILS, FILED BEFORE THE AO AND REITERATED SEVERAL TIMES, GOES TO SHOW THAT NEITHER THE AO NOR THE CIT( A) HAD EXAMINED THIS ISSUE IN PROPER PERSPECTIVE. ACCORDINGLY, THE REASONS FOR REJECTING THE BOOKS OF ACCOUNTS IN THIS YEAR , SANS ANY VERIFICATION OF THE RECORDS PRODUCED CANNOT BE SUSTAINED. IN FACT WHEN DURING THE SURVEY CERTAIN INFORMATION/ MATERIAL IS FOUND, WHICH HAS BEEN REBUTTED OR DENIED BY THE ASSESSEE, THEN IT IS ALL THE MORE INCUMBENT UPON THE AO TO ENQUIRE AND VERIFY THE CONTENTS OF THE ASSESSEES ASSERTION AND DOCUMENTS. HE SHOULD HAVE EXAMINED THE BOOKS OF ACCOUNTS, DETAILS MAINTAINED AND BILL S AND THEN IF THERE WAS ANY DISCREPANCY OR SHORTCOMINGS IN SUCH BOOKS OF ACCOUNT OR DETAILS , HE COULD R E JECT THE BOOK RESULTS AND MAKE ESTIMATION OF INCOME UNDER BEST JUDGMENT ASSESSMENT. SIMPLY RELYING UPON THE STATEMENTS AT THE TIME OF SURVEY AND NON PRO DUCTION OF REGISTERS AT THAT TIME CANNOT BE THE CONCLUSIVE FINDING OF FACT, ALBEIT CAN BE THE STARTING POINT OF SHOW CAUSE AND INQUIRY AND THEN ONUS IS HEAVILY UPON THE ASSESSEE TO CONTROVERT SUCH INFORMATION OR MATERIAL. HERE IN THIS CASE AS DISCUSSED ABO VE, ASSESSEE HAS BEEN ABLE TO CONTROVERT AND SUBSTANTIATE THE CLAIM OF SALE OF MILK. THUS, THE REASONS GIVEN BY THE AO AS WELL AS CIT(A) FOR DISTURBING THE BOOK RESULTS IS REJECTED AND WE HOLD THAT THE ASSESSEES BOOKS OF ACCOUNTS AND BOOK RESULTS ARE LIAB LE TO BE ACCEPTED. PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 20 15 . NOW, COMING TO THE DECISION OF THE TRIBUNAL FOR THE AYS 2006 - 07 & 2007 - 08, WE FIND THAT THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE, AFTER OBSERVING AND HOLDING AS UNDER: 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSE D THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ADMITTEDLY, THIS IS THE CASE WHERE THE BOOKS PERTAINING TO THE PRODUCTION, ISSUANCE, CONSUMPTION ARE NOT MAINTAINED BY THE ASSESSEE. THEREFORE, THE FINDING OF THE CI T (A) ON THIS ISSUE IS FAIR AND DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.3 IS DISMISSED. 13. GROUND NO.4 RELATES TO MERITS OF ADDITION OF RS. 12,15,244/ - CONFIRMED BY THE CIT (A) AS PER THE ESTIMATIONS DISCUSSED ABOVE. WE HAVE ALREADY EX TRACTED THE FINDING OF THE AO AS WELL AS THE CIT (A) IN THE PRECEDING PARAGRAPHS OF THIS ORDER. SO FAR AS, WE HAVE NOT ONLY UPHELD THE VALIDITY OF THE SEARCH ASSESSMENT BUT ALSO CONFIRMED THE ACT OF REJECTION OF BOOKS OF ACCOUNTS. ONCE THE BOOKS OF ACCOUNT S ARE REJECTED UNDER THE PROVISIONS OF SECTION 145(3) OF THE ACT, BEST JUDGMENT ASSESSMENT BECOMES A FOLLOW UP ACTIVITY OF THE AO. IN THIS CASE, AO HAS MADE CERTAIN ERRORS WHILE MAKING ADDITIONS WHICH ARE SUBSEQUENTLY CORRECTED BY THE CIT (A), DETERMININ G THE GP AT 23.23%. 14. THIS IS A CASE WHERE ALLEGATION OF USE OF MILK FOR DAIRY PRODUCTS WAS NOT SUBSTANTIATED, BY THE FACT THAT THERE IS NO SALE OF MILK AS EVIDENCED BY WAY OF FILING BILLS. THE AO / CIT (A) HAVE CATEGORICALLY STATED THAT THE ASSESSEE FA ILED TO SUBMIT THE DETAILS IN SUPPORT OF THE SALE OF MILK TO THE TUNE OF 12,15 ,244/ - . THUS, THE SAID ASSESSEE S FAILURE CLUBBED WITH THE STATEMENTS OF THE EMPLOYEES GIVEN ON OATH BECAME RELEVANT. THE ARGUMENTS RELATING TO THE RETRACTION OF THE SAID STATEME NTS BY THE EMPLOYEES ARE NOT SUSTAINABLE CONSIDERING THE FACT THAT THE RETRACTION WAS DONE IN UNDATED LETTERS WITHOUT GIVING SUSTAINABLE REASONS FOR SUCH RETRACTION. THEREFORE, IN PRINCIPLE, THE ALLEGATION OF THE REVENUE ON UTILIZATION OF MILK FOR MAKING O F THE MILK PRODUCTS BY PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 21 THE ASSESSEE IS SUSTAINABLE. ACCORDINGLY, THE SUSTENANCE OF ADDITION OF 12,15,244/ - BY THE CIT (A) DOES NOT CALL FOR ANY INTERFERENCE. THE ALLEGATION THAT THE ADDITIONS ARE MADE WITHOUT ANY HELP OF INCRIMINATING MATERIAL IS NOT SUSTA INABLE CONSIDERING THE FACT THAT THERE ARE MULTIPLE STATEMENTS OF THE EMPLOYEES TOGETHER WITH CIRCUMSTANTIAL EVIDENCES OF NO SUPPORTING REGISTERS SHOWING THE CONSUMPTION DETAILS OF MILK CONSTITUTES INCRIMINATING INFORMATION PERTAINING TO THE BUSINESS AFFAI RS OF THE ASSESSEE IN GENERAL AND MILK AND DAIRY PRODUCTS IN PARTICULAR. ACCORDINGLY, GROUND NO.4 RAISED BY THE ASSESSEE IS DISMISSED. 16 . THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE ON THE PREMISE AND THE GROUND THAT, THE BOOKS PERTAINING TO PRODUCTION, ISSUANCE AND CONSUMPTION HAVE NOT BEEN MAINTAINED BY THE ASSESSEE. SUCH A GROUND FOR REJECTION OF BOOKS OF ACCOUNT ARE NON - EXISTENT IN THIS YEAR, AS WE HAVE ALREADY STATED ABOVE TH AT THE BOOKS OF ACCOUNTS ALONG WITH THE REGISTER, WHICH GIVES T HE ENTIRE DETAILS OF DAY - TO - DAY PURCHASE , PRODUCTION/CONSUMPTION AND SALES HAVE BEEN NOT ONLY MAINTAINED BUT WERE ALSO FILED BEFORE THE AO AS WELL AS CIT(A) . ANOTHER REASON FOR JUSTIFYING THE APPLICATION OF ESTIMATION OF GP RATE BY THE TRIBUNAL, W AS THAT T HE ASSESSEE HAS FAILED TO SUBMIT DETAIL IN RESPECT OF SALE OF MILK TO THE TUNE OF RS. 12,54,254/ - . HERE, IN THIS YEAR, THERE IS NO SUCH MATERIAL THAT ASSESSEE HAS FAILED TO SUBMIT ANY DETAILS IN SUPPORT OF SALE OF MILK. ON THE CONTRARY, THE ASSESSEE HAD S TATED BEFORE THE AO AS WELL AS CIT(A) THAT BULK SALE HAVE BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES AND SECONDLY, DAY - TO - DAY SALES HAVE BEEN RECORDED, WERE ALSO PRODUCED BEFORE THE AO. NO SPECIFIC DEFECT OR DISCREPANCY HAS BEEN HIGHLIGHTED BY THE AO NOR ANY ENQUIRY HAS BEEN MADE. FURTHER, WE HAVE ALSO CALLED FOR THE RECORDS AND BOOKS OF ACCOUNT OF THE ASSESSEE TO SEE THE NATURE OF ENTRY AND RECORDING OF TRANSACTIONS. THEREFORE, U NDER SUCH FACTS AND CIRCUMSTANCES PREVAILING IN THIS YEAR, THE FINDING OF THE TRI BUNAL IN THE EARLIER YEARS WILL NOT APPLY IN THE IMPUGNED ASSESSMENT YEAR. OTHERWISE PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 22 ALSO, IF THE ASSESSEES BOOKS OF ACCOUNTS WERE NOT FOUND PROPERLY MAINTAINED IN THE EARLIER YEAR S THEN, IT CANNOT BE IPSO FACTO PRESUMED THAT THE BOOKS OF ACCOUNTS ARE DEF ECTIVE OR NOT PROPERLY MAINTAINED IN THIS YEAR ALSO . THE PRINCIPLES OF RES JUDICATA WILL NOT APPLY IN SUCH MATTERS. HAD IT BEEN SO, THEN IN ASSESSEES OWN CASE, FOR THE ASSESSMENT YEARS 2009 - 10 & 2010 - 11, THE DEPARTMENT HAS NOT ONLY ACCEPTED THE BOOKS OF A CCOUNT AND BOOK RESULT BUT ALSO I T S INCOME FROM SALE OF MILK. IF IN THE SUBSEQUENT YEAR, THE FACTUM OF SALE OF MILK HAVE BEEN ACCEPTED THEN WI TH THE SAME LOGIC, THE FINDING OF THE ASSESSMENT YEAR 2006 - 07 AND 2007 - 08 THAT THERE IS NO SALE OF MILK, CANNOT BE HELD TO BE APPLICABLE IN THE IMPUGNED ASSESSMENT YEAR , I.E. A.Y. 2008 - 09. EACH YEAR HAVE TO BE EXAMINED INDEPENDENTLY BASED ON FACTS AN D MATERIALS ON RECORD , BECAUSE , THE MATTER PERTAINING TO REJECTION OF BOOKS OF ACCOUNTS ARE FACTUAL ISSUES, WHICH NEED T O BE EXAMINED EVERY YEAR. THUS, IN VIEW OF OUR ABOVE FINDING, WE HOLD THAT BOOKS OF ACCOUNT AND THE BOOK RESULT, AS SHOWN BY THE ASSESSEE SHOULD BE ACCEPTED AND CONSEQUENTIALLY THE ESTIMATION OF THE UNDISCLOSED INCOME OF RS. 8,30,742/ - , AS SUBMITTED BY THE CIT(A) IS DELETED. 1 8 . COMING TO THE NEXT ISSUE, I.E. ADDITION OF RS. 8,73,500/ - U/S 69A, THE AO HAD NOTED THAT, DURING THE COURSE OF SEARCH ACTION AT THE RESIDENCE OF THE DIRECTOR JASVINDER BAJAJ, A CASH OF RS. 8,34,000/ - WERE FOUND. IN RESPONSE TO THE SHOW CAUSE NOTICE TO RECONCILE THE CASH FOUND WITH THE EVIDENCE, THE ASSESSEE SUBMITTED THAT CASH BALANCE AVAILABLE WITH THE ASSESSEE GROUP AND ALL THE FAMILY MEMBERS, AS PER CASH BOOK WAS RS. 32,67,379/ - AND CASH BALANCE OF THE ASSESSEE COMPANY ITSELF WA S RS. 25,32,868/ - , THEREFORE, THERE IS NO QUESTION OF UNEXPLAINED CASH. THE AO HELD THAT THE ASSES S EE COULD NOT EXPLAIN THE SOURCE OF THIS CASH BY SHOWING CASH BALANCE SHOWING IN THE HANDS OF THE INDIVIDUALS OF THE COMPANY BASED ON BOOKS OF ACCOUNT AT THE TIME OF SEARCH . ACCORDINGLY, HE ADDED SUM OF RS. 8,73,000/ - , WHICH HAS BEEN CONFIRMED BY THE CIT(A) ALSO. PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 23 19 . BEFORE US, LD. COUNSEL , SHRI LALKAKA SUBMITTED THAT, NO CASH WAS FOUND IN THE HANDS OF THE ASSESSEE COMPANY BUT IN THE HANDS OF THE DIRECTORS AT THEIR RESIDENCES AND IF AT ALL , ANY ADDITION WAS CALLED FOR, THE SAME SHOULD HAVE BEEN CONSIDERED IN THE HANDS OF THE DIRECTORS AND THE OTHER FAMILY MEMBERS. SINCE THE SEARCH WAS CONDUCTED ON THE ENTIRE GROUP AND ALL THE FAMILY MEMBERS OF THE DIRECTORS THE REFORE, CASH HELD BY THE EACH FAMILY MEMBER WILL HAVE TO BE TAKEN INTO CONSIDERATION AND NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY . HE FURTHER SUBMITTED THAT, THIS WAS SPECIFICALLY POINTED OUT BEFORE THE AO VIDE LETTER DATED 7 TH DECEMBER, 2009 WH EREIN THE ASSESSEE GAVE THE DETAILS OF CASH IN HAND H E LD BY EACH INDIVIDUAL AND THE COMPANY, WHICH AGGREGATED TO RS. 32,72,780/ - . THE RELEVANT EXTRACT OF THE LETTER IS AS UNDER: C) AS PER YOUR QUESTIONER REGARDING THE CASH OF RS. 8,34,000/ - + RS. 39500/ - FROM SWARANJIT SINGH BAJA J FOUND DURING THE SEARCH AS MENTIONED IN YOUR ANNEXURE 2 B 1. PLEASE NOTE THAT THE SEARCH WAS ON THE ENTIRE GROUP/FAMILY HENCE WE ARE PROVIDING YOU DETAILS AS PER THE CASH IN HAND HELD BY EACH INDIVIDUAL & THE COMPANY ON THE DAT E OF SEARCH I.E. 8/5/07 IS AS UNDER: JASVINDER SINGH BAJAJ, THE TOTAL CASH IN HAND WAS RS. 39058/ - & SWARANJIT SINGH BAJAJ, THE TOTAL CASH IN HAND WAS RS. 190460/ - & BHUPENDER KA U R BAJAJ, THE TOTAL CASH IN HAND WAS RS. 268095/ - & GURPREET KA U R BAJAJ, THE TOTAL CASH IN HAND WAS RS. 246898/ - & PUNJAB SIND DAIRY PRODUCTS PVT LT D THE TOTAL IN HAND WAS RS 2528269/ - HENCE THE TOTAL CASH IN HAND BY THE GROUP IS 32,72,780/ - (THIRTY TWO LAKHS SEVENTY TWO THOUSAND SEVEN HUNDRED EIGHTY ONLY) ALL THE RELEVANT DETAILS ARE ENCLOSED IN (PAGE NO. 47 TO 51) WHICH GIVES COMPLETE DETAILS REGARDING THE CASH IN HAND. ON THE DATE OF SEARCH, CASH FOUND BY THE DEPARTMENT WAS RS. 2,73,500/ - & OUT OF WHICH CASH AMOUNTING TO RS. 7,34,000/ - WAS SEIZED BY THE DEPARTMENT. ON MY EXPLANATION AT THE TIME OF SEARCH, THAT ALL THE CASH FOUND DURING THE SEARCH IS OUR ACCOUNTED MONEY AND SAME IS DULY REFLECTED IN THE CASH WITH THEM. I HEREBY REQUEST YOUR GOOD SELF TO KINDLY RETURN THE CASH SEIZED, ALONG WITH THE INTERES T THEREON, I HOPE THAT THE ABOVE EXPLANATION IS BEST TO YOUR SATISFACTION. 20. HE FURTHER POINTED OUT THAT T HE BOOKS OF ACCOUNTS OF THE DIRECTOR , JASVINDER BAJAJ AND OTHERS HAVE BEEN ACCEPTED, WHICH SHOWS THE CASH BALANCE OF RS. 39,058/ - , AND RS. 1,92,460/ - ON THE DATE OF SEARCH ITSELF. FURTHER IN THE HANDS OF THE LAD IES OF THE PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 24 FAMILY ALSO, CASH BALANCE OF RS. 2,68,095/ - WERE ALSO TALLIED WITH THE IR BOOKS OF ACCOUNTS. THUS, THE TOTAL CASH BALANCE OF RS. 7,44,511/ - WERE FOUND TO BE ACCEPTED IN THE BOOKS OF ACCOUNTS. IN SUCH A CASE, NO ADDITION OF UNACCOUNTED CASH CAN BE MADE IN THE HANDS OF THE ASSESSEE. 21. ON THE OTHER HAND, LD. DR STRONGLY RELIED ON THE ORDER OF THE AO AS WELL AS CIT(A) AND SUBMITTED THAT ONUS IS UPON THE ASSESSEE TO SHOW THE E XACT SOURCE OF THE CASH. 22. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE MATERIAL ON RECORD, IT IS SEEN THAT THE CASH WAS FOUND FROM THE RESIDENCE OF THE DIRECTOR JASVINDER BAJAJ, WHEREIN A SUM OF RS. 7,34,000/ - WAS FOUND AND RS. 39,500/ - WAS FOUND FROM ANOTHER DIRECTOR , SHRI SWARANJIT BAJAJ. AT THE TIME OF SEARCH, IT WAS CLAIMED THAT THERE WAS CASH IN HAND IN THE NAMES OF VARIOUS PERSONS INCLUDING THAT OF THE ASSESSEE COMPANY, WHICH AGGREGATED AT RS. 32,72,780/ - . THE REPLY OF THE ASSESSE E AS FILED BEFORE THE AO HAS NOT BEEN PROPERLY REBUTTED OR EXAMINED. FURTHER, FROM THE STATEMENT OF CASH BALANCE OF VARIOUS PERSONS, IT IS SEEN THAT, THE AVAILABILITY OF CASH AS PER THE IR BOOK S MAINTAINED AND CLAIMED BY THE ASSESSEE APPEARS TO BE CORRECT . IN ALL THE PERSONAL BALANCE - SHEETS AND CASH BALANCE AS APPEARING IN THE CASH - BOOK BELONG ING TO THE FAMILY MEMBERS OF THE DIRECTORS AND DIRECTOR THEMSELVES SUFFICIENT CASH WAS AVAILABLE , THEREFORE, UNDER THESE CIRCUMSTANCES SAME CANNOT BE ADDED IN THE HANDS OF THE ASSES S EE COMPANY , BECAUSE THE AMOUNT HAS NOT BEEN FOUND FROM THE PREMISES OF THE ASSESSEE COMPANY BUT FROM THE RESIDENCE OF THE DIRECTORS AND THE FAMILY MEMBERS. ACCORDINGLY, WE HOLD THAT NO ADDITION ON ACCOUNT OF UNEXPLAINED CASH CAN BE MADE IN TH E HANDS OF THE ASSESSEE COMPANY U/S 69A OF THE ACT AND HENCE, ADDITION OF RS. 8,73,500/ - IS DELETED AND GROUND NO. 5, AS RAISED BY THE ASSES S EE IS ALLOWED. 23. GROUND NO. 6 RELATES TO LEVY OF INTEREST U/S 234A, 234B & 234C. THE LEVY OF INTEREST UNDER THES E SECTIONS ARE MANDATORY AND ALSO CONSEQUENTIAL , A CCORDINGLY, GROUND NO. 6 IS DISMISSED. PUNJAB SIND DIARY PRODUCTS PVT LTD ITA NO. 7965 / M UM /20 1 0 25 24. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JUNE , 2015. SD/ - SD/ - ( ) ( ) ( SANJAY ARORA ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 11 TH JUNE , 2015 / COPY TO: - 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A) - 4 1 , MUMBAI. 4) THE CIT CENTRAL III, MUMBAI. 5) , , / THE D.R. C BENCH, MUMBAI. 6) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS