ACIT Khandwa, Khandwa V. M.s, Sitaram Agrawal, Kasrawad

ITA 925/Ind/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9459 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-07-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 04-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MOURYA
• Assessee Lawyers: S N AGRAWAL; PANKAJ MOURYA ARS
• Keywords: Rejection of books of accounts; Peak credit; Revised return
• Section: 143(3); 142(1); 143(2); 13; 145(3); 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.925/IND/2018 ASSESSMENT YEARS: 2014-15 APPELLANT BY S/ SHRI S.N. AGRAWAL & PANKAJ MOURYA, ARS REVENUE BY SHRI R.P. MOURYA, SR. DR DATE OF HEARING 29.07 .2020 DATE OF PRONOUNCEMENT 20 .0 8 .2020 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE O F REVENUE PERTAINING TO ASSESSMENT YEAR 2014-15 IS DIRECTED A GAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II (IN SHOR T LD.CIT], INDORE DATED 19.09.2018 WHICH IS ARISING OUT OF THE ORDER U/S ASSISTANT COMMISSIONER OF INCOME TAX, KHANDWA VS. M/S. SITARAM AGRAWAL, PROP. M/S SMO INDUSTRIES, INDORE ROAD, KASRAWAD, DIST. KHARGONE (M.P) (REVENUE ) (APPELLANT) PAN NO. A AZPA9277E ITA NO.925/IND/2018 SITARAM AGRAWAL 2 143(3) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT ) DATED 28.12.2016 FRAMED BY ACIT, KHANDWA. 2. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL : - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE OF THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE PEAK CREDIT A DDITION OF RS. 1,25,53,136/- MADE TO THE TOTAL INCOME OF THE ASSE SSEE ON THE BASIS OF DEPOSITS IN UNDISCLOSED BANK ACCOUNT WITH ICICI BA NK, HOLDING THAT THE ASSESSEE USED CASH AND STOCK AVAILABLE IN THE BOOK S OF ACCOUNTS FOR MAKING SUCH UNACCOUNTED CREDITS, WHEREAS PEAK CRED IT ARRIVED AT BY AO FROM THE BANK ACCOUNT IS IN NOT PART OF THE TURNOV ER. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE OF LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 67,76,73 4/- MADE ON ACCOUNT OF G.P ON TOTAL TURNOVER AFTER REJECTING BOOKS OF ACCOUNT S OF THE ASSESSEE U/S 145(3) OF THE IT ACT WHICH WAS BASED ON SERIOUS D EFECTS IN BOOKS OF ACCOUNTS OF THE ASSESSEE. 3. THE APPELLANT CRAVES LEAVE TO ADD TO OR DEDUCT FROM OR OTHERWISE AMEND THE ABOVE GROUNDS OF APPEAL. 3. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE RECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM THE BUSINESS OF MANUFACTURING AND TRADING OF COTTON, COTTON BALES A ND COTTON SEEDS. RETURN OF INCOME DECLARING INCOME OF RS.26,88,550/- WAS FILED ON 21.09.2014 ELECTRONICALLY AND FURTHER REVISED RETUR N ON 11.3.2016 DECLARING TOTAL INCOME AT RS. 73,95,540/- AND AGRIC ULTURE INCOME AT RS. 53,640/-. THE CASE WAS SELECTED FOR SCRUTINY TH ROUGH CASS. ITA NO.925/IND/2018 SITARAM AGRAWAL 3 NOTICES U/S 143(2) AND 142(1) ALONG WITH QUESTIONNA IRE WERE DULY SERVED UPON THE ASSESSEE. THE ASSESSMENT WAS COMP LETED U/S 143(3) DATED 28.12.2016 AT RS.2,67,25,410/- AND AGR ICULTURE INCOME AT RS.53,640/- AFTER MAKING ADDITION OF RS. 1,25,53,136/- AND RS.67,76,734/- ON ACCOUNT OF PEAK CREDIT IN UND ISCLOSED BANK ACCOUNT AND LOW NET PROFIT RESPECTIVELY. 4. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. C IT(A) AGAINST THE ABOVE ADDITIONS AND SUCCEEDED. 5. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ABOVE DELETIONS EFFECTIVELY RAISING TWO ISSUES AGAI NST THE FINDING OF LD. CIT(A) FIRSTLY DELETING THE PEAK CREDIT ADDITIO N OF RS.1,25,53,136/- AND ALSO DELETION OF ADDITION OF R S. 67,76,734/- BY WAY OF APPLYING HIGHER NET PROFIT RATE. 6. WE FIRST TAKE UP GROUND NO.1 RELATING TO PEAK CR EDIT ADDITION OF RS.1,25,53,136/-. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS LD. A.O WHILE EXAMINING THE UNACCOUNTED SALES TRANS ACTION ACCEPTED BY THE ASSESSEE WHICH WERE CARRIED OUT THR OUGH THE UNDISCLOSED BANK ACCOUNT HELD WITH ICICI BANK. LD. A.O ALSO EXAMINED THE PEAK BALANCE IN THE BANK ACCOUNT AND F OUND THAT ON ITA NO.925/IND/2018 SITARAM AGRAWAL 4 1.3.2014 THERE IS A PEAK BALANCE OF RS.1,25,53,136/ -. IN REPLY TO THE SHOW CAUSE NOTICE IT WAS SUBMITTED THAT NO ADDI TION WAS CALLED FOR ON ACCOUNT OF PEAK CREDIT SINCE THE ASSESSEE HA D SUFFICIENT CASH AND STOCK IN HAND ON VARIOUS DATES AROUND THE YEAR WHICH WERE VALUING MORE THAN THE PEAK BALANCE AVAILABLE IN THE BANK ACCOUNT AND THUS REQUIRE SET OFF BEFORE CALCULATING THE PEA K CREDIT. LD. A.O FOUND NO JUSTIFICATION IN THIS SUBMISSION AND MADE THE ADDITION FOR PEAK CREDIT OF RS. 1,25,53,136/- WHICH WAS SUBSEQUE NTLY DELETED BY LD. CIT(A) ACCEPTING THE ASSESSEES CONTENTIONS AND JUDICIAL PRECEDENCE REFERRED BEFORE HIM. NOW THE ISSUE IS BEFORE US. 7. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D AND SUPPORTED THE ORDERS OF LD. A.O AND ALSO RAISED DOU BT ON THE ALLOWABLITY OF VALUE OF STOCK IN HAND AGAINST THE P EAK BANK BALANCE. 8. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY SUPPORT ED THE ORDERS OF LD. CIT(A) AND ARGUED ON THE BASIS OF FOLLOWING WRI TTEN SUBMISSION PLACED ON RECORD :- 1.1] THE DEPARTMENT IN THIS GROUND OF APPEAL HAS CH ALLENGED THE DELETION OF ADDITION OF RS 1,25,53,136/- AS MADE ON ACCOUNT OF PEAK INVESTMENT. ITA NO.925/IND/2018 SITARAM AGRAWAL 5 1.2.1] THE APPELLANT IN THE YEAR UNDER CONSIDERATIO N HAS SHOWN TOTAL TURNOVER OF RS 37,47,40,488/- IN ITS BOOKS OF ACCOU NT ON WHICH NET PROFIT OF RS 27,49,896/- WAS OFFERED. 1.2.2] THE APPELLANT HAS ALSO EXECUTED TOTAL TURNOV ER OF RS 18,82,79,709/- THROUGH HIS BANK ACCOUNT WITH ICICI BANK WHICH WAS ORIGINALLY NOT INCORPORATED IN HIS REGULAR BOOKS OF ACCOUNT BUT NE T PROFIT ON THE SAME AS CALCULATED TO THE TUNE OF RS 47,06,993/- WAS OFFERE D FOR TAX. 1.2.3] THE ASSESSING OFFICER WHILE PASSING THE ASSE SSMENT ORDER CONSIDERED THE HIGHEST CREDIT BALANCE IN THE BANK ACCOUNT WITH ICICI BANK AND ADDED THE SAME TO THE TOTAL INCOME OF THE APPELLANT. THE ASSESSING OFFICER CONSIDERED THE SAME AT RS 1,25,53,136/-. 1.3] THE APPELLANT IS ENGAGED IN THE BUSINESS OF CO TTON. THE APPELLANT HAS MAINTAINED SUFFICIENT STOCK IN HIS BOOKS OF ACCOUNT . HOWEVER, SOME OF THE REALIZATIONS ON SALE OF GOODS WERE DEPOSITED IN THE BANK ACCOUNT WITH ICICI BANK WHICH WAS NOT INCORPORATED IN THE REGULAR BOOK S OF ACCOUNT OF THE APPELLANT. 1.4] THE ASSESSING OFFICER WHILE PASSING THE ASSESS MENT ORDER CONSIDERED THE PEAK CREDIT IN THE BANK ACCOUNT WITH THE ICICI BANK AS ON 01-03-2014 WAS OF RS 1,25,53,136/- [PEAK BALANCE OF RS 1,04,72 ,722/- AS ON 28-02- 2014 AND RS 10,33,136/- AS ON 01-03-2014] AND ADDED THE SAME TO THE TOTAL INCOME OF THE APPELLANT. 1.5] THE APPELLANT WHILE CALCULATING THE ADDITIONAL INCOME ON ACCOUNT OF UNRECORDED TURNOVER AS EXECUTED THROUGH HIS ICICI B ANK ACCOUNT TAKEN INTO CONSIDERATION THE CASH AND STOCK AS AVAILABLE IN ITS REGULAR BOOKS OF ACCOUNT. THAT WHEN THE APPELLANT HAVING SUFFICIENT AMOUNT OF CASH AND STOCK IN HIS REGULAR BOOKS OF ACCOUNT, IN THAT CASE CERTAINLY HE HAS USED THE SAME FOR HIS UNRECORDED BUSINESS ALSO. ONE CANN OT DENY CREDIT OF THE SAME WHILE CALCULATING PEAK CREDIT. THE APPELLANT D EAL IN COTTON, COTTON ITA NO.925/IND/2018 SITARAM AGRAWAL 6 BALES AND COTTON SEEDS, THE GOODS WERE ALSO SOLD TO HIS REGULAR PARTIES BUT REALIZATION OF SOME OF THE BILLS WERE DEPOSITED IN THE ICICI BANK ACCOUNT. 1.6] THAT WHEN THE APPELLANT PREPARED HIS BOOKS OF ACCOUNT AFTER INCORPORATING THE TOTAL TURNOVER WHICH INCLUDES REC ORDED AND UNRECORDED TURNOVER IN THAT CASE THERE WAS NO NEGATIVE BALANCE OF STOCK. HENCE, THERE WAS NO JUSTIFICATION FOR SEPARATELY ADDING THE PEAK AMOUNT TO THE TOTAL INCOME OF THE APPELLANT ON THE BASIS OF BANK BALANC E WITH BANK ACCOUNT WITH ICICI BANK. 1.7] THAT FOR CALCULATING THE PEAK BALANCE TOTAL TU RNOVER OF THE APPELLANT HAS TO BE CONSIDERED AND THE SAME IS INCORPORATED W ITH CASH AND STOCK AS AVAILABLE IN THE REGULAR BOOKS OF ACCOUNT OF THE AP PELLANT. HENCE, THERE WAS NO JUSTIFICATION FOR IGNORING CASH AND STOCK AS AVA ILABLE IN THE BOOKS OF ACCOUNT OF THE APPELLANT AND SEPARATELY CALCULATED PEAK INVESTMENT IN RESPECT OF TURNOVER AS EXECUTED THROUGH THE BANK AC COUNT WITH ICICI BANK. 1.8] THAT IT IS SETTLED POSITION OF LAW, WHILE CALC ULATING THE PEAK CREDIT ENTIRETY OF THE CIRCUMSTANCES MUST BE TAKEN INTO AC COUNT. IN THE PRESENT CASE IN HAND, THE ENTIRE TRANSACTION OF THE ICICI B ANK TAKEN INTO ACCOUNT IN THE REGULAR BOOKS OF ACCOUNT, THERE WAS NO NEGATIVE CASH BALANCE AS TO CALCULATED PEAK. THE AMOUNT AS FOUND CREDITED IN TH E ICICI BANK ACCOUNT WAS ON ACCOUNT OF SALE PROCEED OF MATERIAL AS SHOWN IN THE BOOKS OF ACCOUNT BUT SOLD BY THE ASSESSEE OUT OF BOOKS AND C ASH AS FOUND RECORDED IN THE BOOKS OF ACCOUNT ALSO USED BY THE ASSESSEE F OR HIS BUSINESS AS DONE BY HIM THROUGH ICICI BANK. 1.9] THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDING FILED A SHEET WHEREIN STOCK AND CASH IN HIS BOOKS OF ACCOUNT WITH THE AMOUNT AS FOUND CREDITED IN THE ICICI BANK ACCOUNT WAS MENTIONED. O N PERUSAL OF THE SAME YOU WILL FIND THAT THERE WAS NO NEGATIVE BALANCE EV EN AFTER DEDUCTING THE ITA NO.925/IND/2018 SITARAM AGRAWAL 7 AMOUNT OF ICICI BANK BALANCE FROM THE TOTAL OF CASH AND STOCK IN THE REGULAR BOOKS OF ACCOUNT. 1.10.1] THE FEW ENTRIES FROM THE STATEMENT AS FILED DURING THE COURSE OF ASSESSMENT IS RE- PRODUCED HEREUNDER FOR SAKE OF CL ARITY:- S.NO DATE CLOSING STOCK CLOSING CASH TOTAL [ STOCK + CASH] BANK BALANCE WITH ICICI CASH & STOCK AVAILABLE QTY [ IN QUINTALS] AMOUNT [RS] 21 -02-14 1319.39 14097682 2393422 16491104 2130993 14360111 22 -02-14 1160.89 12404109 2372792 14776901 1730993 13045908 23 -02-14 1160.89 12404109 2365018 14769127 1730993 13038134 24 -02-14 1325.54 14163394 2357975 16521369 1621278 14900091 25 -02-14 1325.54 14163394 2303975 16467369 28134 16439235 26 -02-14 1490.20 15922787 2186384 18109171 3973435 14135736 27 -02-14 1490.20 15922787 2186384 18109171 6810435 11298736 28 -02-14 1328.35 14193419 2090816 16284235 10472722 5811513 01 -03-14 1328.35 14193419 1978374 16171793 1033136 15138657 02 -03-14 1328.35 14193419 1970874 16164293 1033136 15131157 03 -03-14 1328.35 14193419 1764979 15958398 1956759 14001639 04 -03-14 1647.75 17606208 1415274 19021482 506759 18514723 1.10.2] POSITION OF STOCK AND CASH AS SHOWN IN THE REGULAR BOOKS OF ACCOUNT FOR WHOLE YEARS I.E. FROM 01-04-2013 TO 31-03-2014 ARE ENCLOSED ON PAGE NOS 84 TO 91 OF THE COMPILATION. THE SAID DETAILS H AVE ALREADY BEEN FILED BEFORE THE ASSESSING OFFICER AND THE SAME WAS NOT D OUBTED BY THE ASSESSING OFFICER. 1.10.3] THE APPELLANT WHILE CALCULATING THE PEAK HA S CONSIDERED THE FOLLOWING COMPONENTS: - S.NO PARTICULARS 1 CASH AS PER REGULAR BOOKS OF ACCOUNT AND AS AVAILAB LE WITH THE ASSESSEE FOR HIS BUSINESS THROUGH ICICI BA NK ITA NO.925/IND/2018 SITARAM AGRAWAL 8 2 STOCK OF FINISHED GOODS AS PER BOOKS OF ACCOUNT AND AS AVAILABLE FOR SALE OUT OF BOOK PROCEED OF WHICH WAS DEPOSITED IN THE ICICI BANK ACCOUNT 3 NET PROFIT AS CALCULATED ON EVERY TRANSACTIONS AS EXECUTED THROUGH ICICI BANK AVAILABLE FOR CALCULATI NG PEAK CREDIT 1.11] THAT ON PERUSAL OF THE TABLE AS REPRODUCED I N PARA 1.10.1 OF THIS LETTER, YOU WILL FIND THAT AFTER CONSIDERING THE CR EDIT OF THE CASH AND STOCK AS AVAILABLE IN THE BOOKS OF ACCOUNT, THE BALANCE A S CREDITED IN THE BANK STATEMENT IS DULY EXPLAINED AND THE ASSESSING OFFIC ER WAS NOT JUSTIFIED IN ADDING AN AMOUNT OF RS 1,25,53,136/- TO THE TOTAL I NCOME OF THE ASSESSEE. 1.13] THAT IN VIEW OF THE ABOVE, ADDITION AS MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF PEAK CREDIT WAS NEITHER LEGAL NOR PRO PER, AFTER CONSIDERING THE CASH AND STOCK AS AVAILABLE IN THE REGULAR BOOK S OF ACCOUNT AND AFTER CONSIDERING THE CREDIT OF PROFIT AS AVAILABLE FOR I NVESTMENT IN THE UN- RECORDED BUSINESS, THERE WAS NO NEGATIVE BALANCE AS TO ATTRACT THE PEAK ADDITION IN THE CASE OF THE ASSESSEE. THE ADDITION AS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PEAK WAS THEREFORE NEITHER LE GAL NOR PROPER. THE LD CIT(A) HAS RIGHTLY DELETED THE SAME. HONBLE BENCH IS HEREBY REQUESTED TO APPROVED THE ORDER OF THE LD CIT(A) 9. LD. COUNSEL FOR THE ASSESSEE ALSO RELIED AND REF ERRED ON THE FOLLOWING DECISIONS:- (I) HONBLE ITAT JODHPUR BENCH IN THE CASE OF ACIT V/S KASHMIR TRADING COMPANY REPORTED IN 2012) 20 TAXMA NN.COM 337 (JODHPUR) ITA NO.925/IND/2018 SITARAM AGRAWAL 9 (II) HONBLE ALLAHABAD HIGH COURT IN THE CASE OF C IT CENTRAL) VS FERTILIZER TRADERS REPORTED IN (2015) 42 TAXMANN.C OM 476 (ALLAHABAD) (III) HONBLE GUJARAT HIGH COURT IN THE CASE OF CI T VS TIRUPATI CONSTRUCTION CO. REPORTED IN (2015) 55 TAXMANN.COM 308 ( GUJARAT). 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. THROUGH GROUND NO.1 REVENUE IS A GGRIEVED WITH THE FINDING OF LD. CIT(A) DELETING THE ADDITION FOR PEAK CREDIT OF RS. 1,25,53,136/- IN THE UNDISCLOSED BANK ACCOUNT HELD WITH ICICI BANK. IT IS A UNDISPUTED FACT THAT THE ASSESSEE EX ECUTED TOTAL TURNOVER OF RS.18,82,79,709/- THROUGH THE UNDISCLOS ED BANK ACCOUNT HELD WITH ICICI BANK AND THE TRANSACTIONS E NTERED INTO THIS BANK ACCOUNT WERE NOT INCORPORATED IN THE REGULAR B OOKS OF ACCOUNTS. ASSESSEE OFFERED NET PROFIT OF RS.47,06,9 93/- ON THE UNACCOUNTED SALES IN THE REVISED RETURN OF INCOME. AS PER THE LD. A.O AS ON 1.3.2014 ASSESSEES PEAK BALANCE IN THE U NDISCLOSED ICICI BANK ACCOUNT AT RS. 1,25,53,136/-, HOWEVER AS SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE THE PEAK BALANCE WAS R S. ITA NO.925/IND/2018 SITARAM AGRAWAL 10 1,04,72,722/- AS ON 28.2.2014. AS ON 1.3.2014 THER E ARE VARIOUS TRANSACTIONS AND IF ALL THE ENTRIES (DEBIT AND CRED IT) ARE GIVEN EFFECT THE BALANCE AS ON 1.3.2014 WOULD BE RS.10,43,136/-. WE FIND FORCE IN THE SUBMISSION OF LD. COUNSEL FOR THE ASSESSEE A ND ARE CONVINCED THAT THE PEAK BALANCE IN THE UNDISCLOSED BANK ACCOUNT HELD WITH ICICI BANK IS RS.1,04,72,722/- AS ON 28.2 .2014. NOW THE ISSUE ARISES THAT WHETHER THE LD. A.O IS JUSTIF IED IN MAKING ADDITION FOR THE PEAK BALANCE IN THE UNDISCLOSED BA NK ACCOUNT. WE OBSERVE THAT THE LD. CIT(A) AFTER EXAMINING THE FAC TS IN DETAIL DELETED THE ADDITION FOR PEAK CREDIT OBSERVING AS F OLLOWS:- 3.1] THE ASSESSEE IN THIS GROUND OF APPEAL HAS CHAL LENGED THE ADDITION OF RS 1,25,53,136/- AS MADE ON ACCOUNT OF PEAK INVESTMENT. I HAVE CAREFULLY GONE THROUGH THE ASSES SMENT ORDER AS WELL AS SUBMISSION OF THE APPELLANT IN THIS REGA RD. 3.2] THE RELEVANT PORTION OF THE APPELLANT SUBMISSI ON IS REPRODUCED HEREUNDER:- 3.2] THE ASSESSEE IS ENGAGED IN THE BUSINESS OF COTTON. THE ASSESSEE HAS MAINTAINED SUFFICIENT STOCK IN HIS BOOKS OF ACC OUNT. HOWEVER, SOME OF THE REALIZATIONS ON SALE OF GOODS WERE DEPO SITED IN THE BANK ACCOUNT WITH ICICI BANK WHICH WAS NOT INCORPORATED IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE. 3.3] THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER CONSIDERED THE PEAK CREDIT IN THE BANK ACCOUNT WITH THE ICICI BANK AS ON 01-03-2014 WAS OF RS 1,25,53,136/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3.4] THE ASSESSEE WHILE CALCULATING ADDITIONAL INCOME ON ACCOUNT OF UNRECORDED TURNOVER AS EXECUTED THROUGH HIS ICICI B ANK ACCOUNT HAD TAKEN INTO CONSIDERATION THE CASH AND STOCK AS AVAI LABLE IN ITS REGULAR BOOKS OF ACCOUNT. THAT WHEN AN ASSESSEE HAVING CASH AND STOCK IN HIS REGULAR BOOKS OF ACCOUNT, IN THAT CASE CERTAINL Y HE HAS USED THE SAME FOR HIS- UNRECORDED BUSINESS ALSO. ONE CANNOT DENY CREDIT OF ITA NO.925/IND/2018 SITARAM AGRAWAL 11 THE SAME WHILE CALCULATING PEAK CREDIT. THE ASSESSEE DEAL IN COTTON, COTTON BALES AND COTTON SEEDS, THE GOODS WE RE ALSO SOLD TO HIS REGULAR PARTIES BUT REALIZATION OF SOME OF THE BILL S WERE DEPOSITED IN THE ICICI BANK ACCOUNT. 3.5] THAT WHEN WE PREPARED BOOKS OF ACCOUNT OF THE ASSES SEE AFTER INCORPORATING THE TOTAL TURNOVER WHICH INCLUDES REC ORDED AND UNRECORDED TURNOVER IN THAT CASE THERE WAS NO NEGAT IVE BALANCE. HENCE, THERE WAS NO JUSTIFICATION FOR SEPARATELY AD DING THE PEAK ON THE BASIS OF BANK ACCOUNT WITH ICICI BANK. 3.6] THAT FOR CALCULATING THE PEAK BALANCE TOTAL TURNOVE R OF THE ASSESSEE HAS TO BE CONSIDERED AND THE SAME IS INCOR PORATED WITH CASH AND STOCK AS AVAILABLE IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE. HENCE, THERE WAS NO JUSTIFICATION FOR IGNOR ING CASH AND STOCK AS AVAILABLE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND SEPARATELY CALCULATED PEAK INVESTMENT IN RESPECT OF TURNOVER AS EXECUTED THROUGH THE ICICI BANK. 3.7] THAT IT IS SETTLED POSITION OF LAW WHILE CALCULATING THE PEAK CRE DIT ENTIRETY OF THE CIRCUMSTANCES MUST BE TAKEN INTO AC COUNT. IN THE PRESENT CASE IN HAND, THE ENTIRE TRANSACTION OF THE ICICI B ANK TAKEN INTO ACCOUNT IN THE REGULAR BOOKS OF ACCOUNT, THERE WAS N O NEGATIVE CASH BALANCE AS TO CALCULATED PEAK. THE AMOUNT AS FOUND CREDITED IN THE ICICI BANK ACCOUNT WAS ON ACCOUNT OF SALE PROCEED O F MATERIAL AS SHOWN IN THE BOOKS OF ACCOUNT BUT SOLD BY THE ASSES SEE OUT OF BOOKS AND CASH AS FOUND RECORDED IN THE BOOKS OF ACCOUNT ALSO USED BY THE ASSESSEE FOR HIS BUSINESS-AS -DONE BY HIM THROUGH IC ICI BANK. 3.8] THE ASSESSEE DURING THE COURSE OF ASSESSMENT P ROCEEDING FILED A SHEET WHEREIN STOCK AND CASH IN HIS BOOKS OF ACCOUN T WITH THE AMOUNT AS FOUND CREDITED IN THE ICICI BANK ACCOUNT WAS MENTI ONED. ON PERUSAL OF THE SAME YOU WILL FIND THAT THERE WAS NO NE GATIVE BALANCE EVEN AFTER DEDUCTING THE AMOUNT OF ICICI BANK BALAN CE FROM THE TOTAL OF CASH AND STOCK IN THE REGULAR BOOKS OF ACCOUNT. 3.9] THE FEW ENTRIES FROM THE STATEMENT AS FILED DUR ING THE COURSE OF ASSESSMENT IS RE- PRODUCED HEREUNDER FOR SAKE OF CLARITY: - S.NO DATE CLOSING STOCK CLOSING TOTAL [ STOCK BANK CASH & CASH + CASH} BALANCE STOCK WITH ICICI AVAILABLE QTY [ I N AMOUNT QUILTALSJ [RS} 1 21-02-14 1319.39 14097682 2393422 16491104 2130993 14360111 2 22-02-14 1160.89 12404109 2372792 14776901 1730993 13045908 3 23-02-14 1160.89 12404109 2365018 14769127 1730993 13038134 ITA NO.925/IND/2018 SITARAM AGRAWAL 12 A -. 24-02-14 1325.54 . ]4163394 2357975 16521369 1621278 14900091 5 25-02-14 1325.54 14163394 2303975 16467369 28134 16439235 6 26-02-14 1490.20 15922787 2186384 18109171 3973435 14135736 7 27-02-14 1490.20 15922787 2186384 18109171 6810435 11298736 8 28-02-14 1328.35 I4193419 2090816 16284235 10472722 5811513 9 01-03-14 1328.35 14193419 1978374 16171793 1033136 15138657 10 02-03-14 1328.35 14193419 1970874 16164293 1033136 15131157 11 03-03-14 1328.35 14193419 1764979 15958398 1956759 14001639 12 04-03-14 1647.75 17606208 1415274 19021482 506759 18514723 3.10] THE ASSESSEE WHILE CALCULATING THE PEAK HAS CONSIDERED THE FOLLO WING COMPONENTS:- S.NO PARTICULARS 1 CASH AS PER REGULAR BOOKS OF ACCOUNT AND AS AVAILABLE WITH THE ASSESSEE FOR HIS BUSINESS THROUGH ICICI BANK 2 STOCK OF FINISHED GOODS AS PER BOOKS OF ACCOUNT AND AS AVAILABLE FOR SALE OUT OF BOOK PROCEED OF WHICH WAS DEPOSITED IN THE ICICI BANK ACCOUNT 3 NET PROFIT AS CALCULATED ON EVERY TRANSACTIONS AS EXECUTED THROUGH ICICI BANK AVAILABLE FOR CALCULATING PEAK CREDIT 3.11] THAT ON PERUSAL OF THE TABLE AS REPRODUCED IN PARA 3.9 OF THIS LETTER, YOU WILL FIND THAT AFTER CONSIDERING THE CR EDIT OF THE CASH AND STOCK AS AVAILABLE IN THE BOOKS OF ACCOUNT, THE BALANCE AS CREDITED IN THE BANK STATEMENT IS DULY EXPLAINED AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING AN AMOUNT OF RS 1,25,53,136/- TO THE TOTAL INCOME OF THE ASSESSEE. 3.12.1] THAT HON'BLE JODHPUR BENCH OF ITAT IN THE CASE OF ACIT VS KASHMIR TRADING COMPANY AS REPORTED IN 20 TAXMANN.COM 337 HAD AN OCCASION TO DISCUSS THE SIMILAR ISSUE IN DETAIL AND HELD THAT [ REFER PARA 5 J OF THE ORDER :- 5. ---------------------------------- THE AO HAD MADE THE ADDITION ON THE BASIS OF ENTRIES FOUND RECORDED IN THE REGULAR BOOKS OF A CCOUNT APART FROM ADDITION BASED ON PEAK OF 'DASTI BAHI'. SINCE THE AO HAD MADE ADDITION ON THE BASIS OF PEAK OF ENTRIES RECORDED IN REGULAR BOOKS OF ACC OUNT WHILE ITA NO.925/IND/2018 SITARAM AGRAWAL 13 DETERMINING THE UNDISCLOSED INCOME OF THE ASSESSEE, THE ENTRIES RECORDED IN THE REGULAR BOOKS OF ACCOUNT HAVE TO BE TELESCOPED WITH ENTRIES RECORDED IN THE 'DASTI BAHI'. LEARNED CIT(A), THEREFORE, IS JUSTIFI ED IN ALLOWING THE TELESCOPING OF THE ADDITION MADE ON THE BASIS OF PEAK CREDITS OF THE ENTRIES RECORDED IN THE REGULAR BOOKS OF ACCOUNT AGAINST THE PEAK OF CREDIT S FOUND RECORDED IN 'DASTI BAHI'. IN OUR CONSIDERED OPINION, LEARNED CIT(A) IS JUSTIFIED IN TELESCOPING THE AMOUNT IN THE NAMES OF SHRI JAI NARAYAN AND SHRI ROSHAN LAL TO THE EXTENT OF RS. 2,68,000. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER PASSED BY LEARNED CIT(A) DELETING THE ADDITION. '. 3.12.2] THAT HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS FERTILIZER TRADERS AS REPORTED IN 42 TAXMANN.COM 476 HAS HELD THAT [ REFER PARA 15 & 16 J AS UNDER:- ' 15. A REFINEMENT OR EXTENSION OF THE PLEA OCCURS WHERE THE CREDITS APPEAR NOT IN THE SAME ACCOUNT BUT IN THE ACCOUNTS OF DIFFERENT PERSONS. EVEN THEN, IF THE GENUINENE SS OF ALL THE PERSON IS DISBELIEVED AND ALL THE CREDITS APPEARING IN THE DIFFERENT ACCOUNT ARE HELD TO BE THE ASSESSEE'S OWN MONEYS, THE ASSESSEE WILL BE ENTITLED TO SET OFF AND DETERMINATION OF THE PEAK CREDIT AFTER ARRANGING ALL THE CREDITS I N THE CHRONOLOGICAL ORDER. 16. SUCH PROPOSITION WAS ALSO CONSIDERED BY THIS HON'BL E COURT IN THE MATTER OF CIT V. NEEMAR RAM BADLU RAM [1980[ 122 ITR 68 (ALL.) IN WHICH THE RELEVANT PARAGRAPHS ARE REPRODUCED- AS UNDER:- 'THE TRIBUNAL ALSO DID NOT AGREE WITH THE DEPARTME NTAL AUTHORITIES THAT MERELY BECAUSE THE ASSETS IN TH E BALANCE SHEET CHANGED FROM TIME TO TIME, THE DIFFERENCE WOULD NOT BE AVAILABLE FOR EXPLAINING A SIMILAR DIFFERENCE IN SUBSEQUENT YEARS 3.12.3] THAT HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS TIRUPATI CONSTRUCTION CO AS REPORTED IN 55 TAXMANN.COM 308 HAS HELD THAT [ REFER PARA 7 OF THE ORDER:- '7. AT THE OUTSET, IT IS REQUIRED TO BE NOTED THAT, WHILE APPRECIATING A DOCUMENT, IT IS REQUIRED TO BE CONSIDERED IN ITS ENTIRETY AND IT CANNOT BE CONSIDERED IN PART. IN THE CASE ON HAND, WHILE APPRECIATING THE PAPERS / DOCUMENTS, WHICH ACCORDING TO THE ASSESSING OFFICER, CONTAINED ACCOUNTED AND UNACCOUNTED TRANSACTIONS ON THE PART OF THE RESPO NDENT ASSESSEE, SHE NOT ONLY FAILED TO EXAMINE IT PROPERLY BUT ALSO FAILED IN ASSESSING THE INCOME AS PER LAW. FURTHER , THOUGH, THE AO, HERSELF, HAD PREPARED THE ACCOUNT OF PROFIT AN D LOSS IN ITA NO.925/IND/2018 SITARAM AGRAWAL 14 RESPECT OF ACCOUNTED AND UNACCOUNTED ENTRIES, SHE DID NOT ASSIGN ANY REASON, AS TO WHY THE PROFIT AND LOSS ACCOUNT OF UNACCOUNTED TRANSACTIONS OF THE RESPONDENT- ASSES SEE CANNOT BE BELIEVED TO BE TRUE. MOREOVER, THE AO ALSO DID NOT TAKE INTO CONSIDERATION THE EXPLANATIONS TENDERED BY THE RESPONDENT ASSESSEE VIDE LETTERS DATED 10.12.2008 AND 29.12.2008. EVEN, THE WORKING OF THE PEAK BASED ON THE SEIZED DIARY GIVEN BY THE RESPONDENT ASSESSEE FOR THE CON CERNED ASSESSMENT YEARS WAS ALSO OVERLOOKED BY THE AO AN D, HERE AGAIN, NO REASON WAS ASSIGNED FOR THE SAME. WE ARE , THEREFORE, OF THE OPINION THAT THE CIT(A) RIGHTLY HELD THAT IT WOULD BE JUST AND PROPER, IF, THE INCOME FROM THE TRANSACTIONS RECORDED IN THE SEIZED DIARY ARE DETERMINED ON THE BASIS OF HIGHE ST PEAK, AS INCREASED BY THE NET PROFIT OF 5 PER CENT ON THE RECEIPTS AND TAXED ACCORDINGLY, FOR THE RELEVANT ASSESSMENT YEA RS. WE DO NOT FIND THAT THE CIT(A) AND ITAT HAS COMMITTED AN Y JURISDICTIONAL ERROR IN PASSING THE IMPUGNED ORDE RS. 3.13] THAT IN VIEW OF THE ABOVE, ADDITION AS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PEAK CREDIT WAS N EITHER LEGAL NOR PROPER, AFTER CONSIDERING THE CASH AND STOCK AS AVAILABLE IN THE REGULAR BOOKS OF ACCOUNT AND AFTER CONSIDERIN G THE CREDIT OF PROFIT AS AVAILABLE FOR INVESTMENT IN THE UNRE CORDED BUSINESS, THERE WAS NO NEGATIVE BALANCE AS TO ATTR ACT THE PEAK ADDITION IN THE CASE OF THE ASSESSEE. THE ADDITIO N AS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PEAK WAS THER EFORE NEITHER LEGAL NOR PROPER, THE SAME NOW REQUIRES TO BE DEL ETED IN FULL. 3.3 IT IS CLEAR FROM THE ABOVE SUBMISSION AS WELL AS ASSESSMENT ORDER THAT THE ASSESSEE WAS ENGAGED IN T HE BUSINESS OF COTTON AND HAD SHOWN TOTAL TURNOVER IN HIS BOOKS OF ACCOUNT AT RS 37,47,40,488/- AND TOTAL TURNOVER AS PER BANK ACCOUNT WITH ICICI BANK CAME TO RS 16,66,66,003/-. THUS, TOTAL TURNOVER AS SHOWN BY THE ASSESSEE INCLUDING B OTH THE DISCLOSED AND UNDISCLOSED TURNOVER WAS TO THE TUNE OF RS 54, 14,06,491/ -. IT WAS FURTHER CLAIMED THAT GOODS WER E SOLD TO THE REGULAR PARTIES BUT SALE PROCEED IN RESPECT OF FEW BILLS AS REALIZED FROM THESE PARTIES WERE DEPOSITED IN THE B ANK ACCOUNT WITH THE ICICI BANK WHICH REMAINED TO BE INCORPORAT ED IN REGULAR BOOKS OF ACCOUNT. IT WAS ALSO CLAIMED BY TH E ASSESSEE THAT HE WAS HAVING SUFFICIENT AMOUNT OF STOCK AND C ASH IN HIS BOOKS OF ACCOUNT SO AS TO JUSTIFY THE SALES AS EXEC UTED BY HIM. THE PROCEEDS OF THE SAME WERE DEPOSITED IN THE BANK ACCOUNT WITH ICICI BANK . THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING AND ALSO IN THE APPELLATE PRO CEEDING HAD FILED DETAILED CHART SHOWING THE CASH BALANCE A ND STOCK AS PER HIS REGULAR BOOKS OF ACCOUNT AND ALSO COMPARED THE SAME ITA NO.925/IND/2018 SITARAM AGRAWAL 15 WITH THE BALANCE WITH ICICI BANK ON ACCOUNT OF SALE PROCEED AS DEPOSITED. ON COMPARING THE TWO, THE AMOUNT OF CASH AND STOCK AS PER BOOKS OF ACCOUNT WAS ALWAYS HIGHER THA N THE SALE PROCEEDS AS DEPOSITED IN THE ICICI BANK AND THEREFORE, IT WAS CLAIMED THAT ADDITION AS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PEAK INVESTMENT WAS NOT JUSTIFIED. FEW ENTRIES AS SHOWN BY THE ASSESSEE IN HIS SUBMISSION ARE BEING REPRODUCED FOR SAKE OF CLARITY HEREUNDER:- S.NO DATE CLOSING STOCK CLOSING TOTAL [ BANK CASH & CASH STOCK + BALANCE STOCK CASH] WITH ICICI AVAILABLE '. QTY [ I N AMOUNT QUILTALS] [RS] 1 21-02-14 1319.39 14097682 2393422 16491104 2130993 14360111 2 22-02-14 1160.89 12404109 2372792 14776901 1730993 13045908 3 23-02-14 1160.89 12404109 2365018 14769127 1730993 13038134 4 24-02-14 1325.54 14163394 2357975 16521369 1621278 14900091 5 25-02-14 1325.54 14163394 2303975 16467369 28134 16439235 6 26-02-14 1490.20 15922787 2186384 18109171 3973435 14135736 7 27-02-14 1490.20 15922787 2186384 18109171 6810435 11298736 8 28-02-14 1328.35 14193419 2090816 - 16284235 10472722 5811513 9 01-03-14 1328.35 14193419 1978374 16171793 1033136 15138657 10 02-03-14 1328.35 14193419 1970874 16164293 1033136 15131157 11 03-03-14 1328.35 14193419 1764979 15958398 1956759 14001639 12 04-03-14 1647.75 17606208 1415274 19021482 506759 18514723 3.4. THE ASSESSEE ALSO REFERRED THE DECISION IN TH E CASE OF HONBLE JODHPUR BENCH OF ITAT IN THE CASE OF ACIT VS KASHMI R TRADING C OMPANY AS REPORTED IN 20 TAXMANN.COM 337 AND DECISION IN THE CASE OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS FERTILISER TRADERS AS REPORTED IN 42 TAXMANN.COM 47 6 AND HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V S TIRUPATI CONSTRUCTION CO AS REPORTED IN 55 TAXMANN. COM ITA NO.925/IND/2018 SITARAM AGRAWAL 16 308. CONSIDERING THE OVERALL FACTS OF THE CASE, ON PERUS AL OF THE ASSESSMENT ORDER AND SUBMISSIONS AS MADE BY THE ASS ESSEE, IT IS NOTICED THAT THE ASSESSING OFFICER SIMPLY ON THE BASIS OF CREDIT BALANCE IN THE BANK ACCOUNT WITH THE ICICI BANK HAD REACHED TO A CONCLUSION THAT PEAK INVESTMENT TO THE TUNE OF RS 1,25,53,136/WAS MADE BY THE ASSESSEE AND TOTALLY IG NORED THE SUBMISSION AS MADE BEFORE HIM ON MERIT. IT IS AN UN DISPUTED FACT THAT THE ASSESSEE WAS HAVING SUFFICIENT AMOUNT OF STOCK AND CASH IN HIS REGULAR BOOKS OF ACCOUNT THE TELESC OPING OF WHICH SHOULD HAVE BEEN ALLOWED TO THE APPELLANT FOR THE TOTAL TURNOVER AS EXECUTED BY HIM THROUGH THE ICICI BANK ACCOUNT. SINCE THE ASSESSEE DEALS IN THE BUSINESS OF COTTON A ND THE ASSESSEE HIMSELF WAS HAVING SUFFICIENT AMOUNT OF STOCK AND CASH IN HIS BOOKS OF ACCOUNT, IN THAT CASE FURTHER MAKING ADDITION ON ACCOUNT OF PEAK INVESTMENT IN THE BUSINESS DONE OUT OF BOOKS CARRIED ON THROUGH THE BANK ACCOUNT WITH ICICI BANK WAS NOT JUSTIFIED. THE ASSESSING OFFICER HAS ALSO FAILED TO BRING ON R ECORD THAT ADDITIONAL GOODS WERE PURCHASED BY THE ASSESSEE FOR EXECUTING OUT OF BOOKS SALES, THE PROCEEDS OF WHICH WERE DEPO SITED IN THE BANK ACCOUNT WITH ICICI BANK. THE ASSESSEE WAS ENGA GED IN THE BUSINESS OF COTTON AND THE SALE PROCEEDS IN RESPECT O:[-SOME - OF THE BILLS AS RAISED TO HIS CUSTOMERS WERE DEPOSITED IN THE BANK ACCOUNT WITH ICICI BANK WHICH WAS INITIALLY NOT DIS CLOSED TO THE DEPARTMENT. THIS ACCOUNT WAS USED FOR DEPOSITING TH E SALE PROCEEDS OUT OF BOOKS. THE ASSESSING OFFICER HIMSEL F HAS NOT DISPUTED THE STOCK AND CASH AS REFLECTED IN THE REG ULAR BOOKS OF ACCOUNT. SINCE THE AMOUNT OF CASH AND STOCK IN THE REGULAR BOOKS OF ACCOUNT WAS HIGHER THAN THE CREDITS AS REF LECTED IN THE BANK ACCOUNT WITH THE ICICI BANK; HENCE THE ASSESSI NG OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION SO MADE BY THE ASSESSING OFFICER OF RS.1,25,53,136/- IS DELETED IN FULL. KEEPING IN MIND, THE ABOVE FACTS AND JUDICIAL DEC ISION SO DISCUSSED ABOVE, THE ASSESSEE ACCORDINGLY GET RELIE F TO THE TUNE OF RS 1,25,53,136/-. THIS GROUND OF APPEAL IS ALLOWED. 11. IN THE ABOVE DETAILED FINDING OF FACT GIVEN BY LD. CIT(A) WE OBSERVE THAT LD. CIT(A) HAS CONSIDERED THE TOTAL VA LUE OF CLOSING ITA NO.925/IND/2018 SITARAM AGRAWAL 17 STOCK OF GOODS IN HAND RECORDED IN THE BOOKS OF ACC OUNTS AND ALSO THE CLOSING CASH IN HAND AVAILABLE IN THE CASH BOOK AGAINST THE BANK BALANCE APPEARING IN THE UNDISCLOSED ICICI BAN K. IT IS PERTINENT TO NOTE THAT ON 28.2.2014 AS PER STOCK RE CORDS ASSESSEE POSSESSED 1328.35 QUINTAL OF FB COTTON BALES WHICH VALUED AT RS.1,41,93,419/- AND THE CASH IN HAND IN THE CASH B OOK IS RS.20,90,816/- THE TOTAL OF THESE TWO FIGURES COMES TO RS.1,62,84,235/-. AGAINST THIS FIGURE OF THE TOTAL OF STOCK AND CASH IN HAND ACCOUNTED FOR IN THE DULY AUDITED ACCOUNTS THE PEAK BALANCE IN THE ICICI BANK IS RS. 1,04,72,722/- WHIC H IS LESS THAN THE FIGURE OF STOCK AND CASH OF RS.1,62,84,235/-. 12. NOW WHETHER THE ASSESSEE IS ELIGIBLE FOR SET OF F VALUE OF STOCK AND CASH IN HAND APPEARING IN THE REGULAR BOOKS OF ACCOUNTS AGAINST THE PEAK BALANCE OF UNACCOUNTED TRANSACTION S CARRIED OUT IN THE BANK ACCOUNT. THE ISSUE NEEDS TO BE EXAMINE D IN THE LIGHT OF JUDICIAL PRECEDENCE. 13. WE FIND THAT THE CO-ORDINATE BENCH JODHPUR IN THE CASE OF ACIT VS KASHMIR TRADING COMPANY (2012) 20 TAXMANN.C OM 337 HELD, CONSIDERING THE ISSUE WHEREIN THE LD. A.O DID NOT ALLOW THE ITA NO.925/IND/2018 SITARAM AGRAWAL 18 TELESCOPING OF THE PEAK CREDIT IN THE BOOKS OF ACCO UNTS THAT OF DASTI BAHI (DASTI BAHI IS A HINDI NAME OF BOOKS CONTAINI NG UN ACCOUNTED/UNDISCLOSED TRANSACTIONS), THE CO-ORDINAT E BENCH CONFIRMED THE FINDING OF LD. CIT(A) ALLOWING THE TE LESCOPING BENEFIT OF THE ENTRIES RECORDED IN THE REGULAR BOOKS OF ACC OUNTS WITH THE ENTRIES RECORDED IN DASTI BAHI OBSERVING AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS STATED ABOVE, IT IS CLEAR THAT THE AO HAD MADE ADDITION OF RS. 1,13,000 IN THE NAME OF SHRI JAI NARAYAN AND RS. 1,55,000 IN THE NA ME OF SHRI ROSHAN LAL ON THE BASIS OF THE ENTRIES FOUND RECORD ED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAD TAKEN A PLEA BEFORE THE CIT(A) THAT NO ADDITION IN RESPECT OF ENTRIES FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNT CAN BE MADE IN THE ASSESSMENT PROCEEDINGS UNDER S. 158BC. THIS PLE A OF THE ASSESSEE HAS BEEN REJECTED BY THE CIT(A). HERE, WE WOULD LIKE TO MENTION THAT IT IS A SETTLED LAW THAT NO ADDITIO N ON THE BASIS OF ENTRIES RECORDED IN REGULAR BOOKS OF ACCOUNT CAN BE MADE UNDER S. 158BC. SINCE ASSESSEE HAD NOT FILED ANY AP PEAL AGAINST REJECTION OF THE PLEA, WE CANNOT RECORD OUR FINDING ON THIS ISSUE. HOWEVER, LEARNED CIT(A) HAS ALLOWED TEL ESCOPING OF RS. 1,13,000 IN THE NAME OF SHRI JAI NARAYAN AND RS . 1,55,000 IN THE NAME OF SHRI ROSHAN LAL OUT OF THE PEAK OF ' DASTI BAHI'. LEARNED CIT(A) HAS RECORDED A FINDING OF FACT THAT THE ASSESSEE ITA NO.925/IND/2018 SITARAM AGRAWAL 19 WAS NOT HAVING ANY OTHER SOURCE OF INCOME OR ANY OT HER ASSETS. THEREFORE, WHATEVER WAS INTRODUCED I N THE REGULAR BOOKS OF ACCOUNT IN THE NAME OF BOGUS PERSONS WAS OUT OF THE AMOUNTS APPEARING M THE 'DASTI BAHI.'THIS FINDING OF FACT H AS NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US. THE ASSESSEE WAS CARRYING ON THE BUSINESS OF ARHAT AND UNDISCLOSED INCOME WAS FOUND RECORDED IN THE 'DASTI BAHI'. THE AO HAD MADE THE ADDITION ON THE BASIS OF ENTRIES RECORDED IN THE RE GULAR BOOKS OF ACCOUNT APART FROM ADDITION BASED ON PEAK OF 'DASH BAHI. SINCE THE AO HAD MADE ADDITION ON THE BASIS OF PEAK OF EN TRIES RECORDED IN REGULAR BOOKS OF ACCOUNT WHILE D ETERMINING THE UNDISCLOSED INCOME OF THE ASSESSEE, THE ENTRIES REC ORDED IN THE REGULAR BOOKS OF ACCOUNT HAVE TO BE TELESCOPED WIT H ENTRIES RECORDED IN THE 'DASTI BAHI'. LEARNED CIT(A), THERE FORE, IS JUSTIFIED IN ALLOWING THE TELESCOPING OF THE ADDITION MADE ON THE BASIS OF PEAK CREDITS OF THE ENTRIES RECORDED IN THE REGU LAR BOOKS OF ACCOUNT AGAINST THE PEAK OF CREDITS FOUND RECORDED IN 'DAST I BAHI'. IN OUR CONSIDERED PINION, LEARNED CIT(A) IS JUSTIFIED IN T ELESCOPING THE AMOUNT IN THE NAMES OF SHRI JAI NARAYAN AND SHRI ROSHAN LAL T O THE EXTENT OF RS. 2,68,000. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY LEARNED CIT(A) DELETING THE ADDITION. 14. HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CI T VS TIRUPATI CONSTRUCTION CO. (2015) 55 TAXMANN.COM (GUJARAT) DE ALING WITH THE ISSUE ABOUT THE DETERMINATION OF THE PEAK FROM THE TRANSACTIONS RECORDED IN THE SEIZED DIARY AND ACCEP TING PROFIT & ITA NO.925/IND/2018 SITARAM AGRAWAL 20 LOSS ACCOUNT OF UNRECORDED TRANSACTIONS PREPARED BY THE ASSESSEE HELD IN FAVOUR OF THE ASSESSEE BY CONFIRMI NG THE DECISION TAKEN BY THE TRIBUNAL OBSERVING AS FOLLOWS :- 6. WE HAVE HEARD MR. PARIKH, LEARNED ADVOCATE APPEA RING ON BEHALF OF THE APPELLANT-REVENUE, AND PERUSED THE MATERIAL ON RECORD. 7. AT THE OUTSET, IT IS REQUIRED TO BE NOTED THAT, WHILE APPRECIATING A DOCUMENT, IT IS REQUIRED TO BE CONSIDERED IN ITS EN TIRETY AND IT CANNOT BE CONSIDERED IN PART. 1N THE CASE ON HAND, WHILE APPR ECIATING THE PAPERS/ DOCUMENTS, WHICH ACCORDING TO THE ASSESSING OFFICER , CONTAINED ACCOUNTED AND UNACCOUNTED TRANSACTIONS ON THE PART OF THE RES PONDENT-ASSESSEE, SHE NOT ONLY FAILED TO EXAMINE IT PROPERLY BUT ALSO FAILED IN ASSESSING THE INCOME AS PER LAW. FURTHER, THOUGB, THE AO, HERSELF , HAD PREPARED THE ACCOUNT OF PROFIT AND LOSS IN RESPECT OF ACCOUNTED AND UNACCOUNTED ENTRIES, SHE DID NOT ASSIGN ANY REASON, AS TO WHY THE PROFIT AND LOSS ACCOUNT OF UNACCOUNTED TRANSACTIONS OF THE RESPONDENT-ASSESSEE CANNOT BE BELIEVED TO BE TRUE- MOREOVER, THE AO ALSO DID NOT TAKE INTO CONSIDERATI ON THE EXPLANATIONS TENDERED BY THE RESPONDENT-ASSESSEE VI DE LETTERS DATED 10.12.2008 AND 29.12.2008 . EVEN, THE WORKING OF TH E PEAK BASED ON THE SEIZED DIARY GIVEN BY THE RESPONDENT-ASSESSEE FOR T HE CONCERNED ASSESSMENT YEARS WAS OVERLOOKED BY THE AO AND, HERE AGAIN, NO REASON WAS ASSIGNED FOR THE SAME. WE ARE, THEREFORE, OF TH E OPINION THAT THE CLT(A) RIGHTLY HELD THAT IT WOULD BE JUST AND PROPE R, IF, THE INCOME FROM THE TRANSACTIONS RECORDED IN THE SEIZED DIARY ARE DETER MINED ON THE BASIS OF HIGHEST PEAK, AS INCREASED BY THE NET PROFIT OF 5 P ER CENT ON THE RECEIPTS AND TAXED ACCORDINGLY, FOR THE RELEVANT ASSESSMENT YEARS. WE DO NOT FIND THAT THE CIT (A) AND IT AT HAS COMMITTED ANY JURIS DICTIONAL ERROR IN PASSING THE IMPUGNED ORDERS . 15. IN THE LIGHT OF ABOVE JUDICIAL PRECEDENCE AND F INDING OF LD. CIT(A) AND ON EXAMINING THE FACTS, WE OBSERVE THAT THE ASSESSEE HAS MAINTAINED THE REGULAR QUANTITATIVE DETAILS OF THE STOCK IN HAND AND DULY SUMMARISED STOCK OF COTTON BALES AND QUANTITAT IVE VALUE AS WELL AS CASH IN HAND HAS BEEN ANNEXED IN THE PAPER BOOK FROM PAGE ITA NO.925/IND/2018 SITARAM AGRAWAL 21 84 TO 291. ALONG WITH THE DETAILS OF STOCK AND CAS H IN HAND THERE IS ALSO A COLUMN MENTIONING THE CLOSING BANK BALANCE I N THE ICICI BANK WHICH WAS NOT DISCLOSED BY THE ASSESSEE. 16. AS ON 28.2.2014 THE VALUE OF STOCK IN CASH AND CASH IN HAND WHICH TOTAL AT RS.1,62,84,235/- IS HIGHER THAN THE UNRECORDED ICICI BANK BALANCE OF RS.1,04,72,722/-. ANOTHER FACT WHI CH WE HAVE OBSERVED WHILE EXAMINING THE UNRECORDED BANK ACCOUN T WHEREIN UNRECORDED SALES WERE REALIZED THROUGH BANKING CHAN NEL AND THE WITHDRAWALS WHICH ARE MOSTLY BY CASH AND CERTAIN WI THDRAWALS BY WAY OF BANK TRANSFER TO SOME PARTIES NAMELY SHAILEN DRA GINNING FACTORY, SOURABH BIO TECH ETC. THESE PARTIES ARE A LSO HAVING REGULAR TRANSACTIONS OF PURCHASE AND SALES WITH THE ASSESSEE RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. IN OUR CONSIDERED VIEW ASSESSEE HAD CARRIED OUT THE TRANSACTIONS OF SALES AND PURCHASES WITH THE REGULAR PARTIES OF WHICH SOME HAVE BEEN R ECORDED IN THE REGULAR BOOKS AND SOME HAVE NOT BEEN RECORDED WHICH ARE ROUTED THROUGH THE ICICI BANK. THIS FACTS STRONGLY SUPPOR TS THE SUBMISSION OF THE ASSESSEE THAT THE PHYSICAL STOCK AND CASH IN HAND IN THE REGULAR BOOKS HAVE BEEN UTILISED FOR MA KING UN ITA NO.925/IND/2018 SITARAM AGRAWAL 22 ACCOUNTED SALES. IT IS NOTEWORTHY THAT THE ASSESSE E IS CARRYING OUT OF BOOKS SALES TRANSACTIONS IN THE PAST ALSO AND TI LL THE DATE OF PEAK BANK BALANCE ON 28.2.2014 THE PROFITS EARNED ON UNR ECORDED SALES HAVE BEEN OFFERED TO TAX AND THEY FORM PART OF THE PEAK BANK BALANCE. SO IN NUTSHELL AGAINST PEAK BALANCE FOUND IN THE BANK ACCOUNT NOT DISCLOSED IN THE REGULAR BOOKS IN THE I NSTANT CASE THREE THINGS HAVE TO BE CONSIDERED, FIRSTLY STOCK IN HAND AVAILABLE WITH THE ASSESSEE, SECONDLY CASH IN HAND AVAILABLE IN REGULA R BOOKS AND THIRDLY THE UNDISCLOSED PROFIT EARNED ON THE UNACCO UNTED SALES TILL THE DATE OF PEAK BALANCE WHICH HAVE BEEN OFFERED TO TAX. TAKING THESE FACTORS TOGETHER, IN THE INSTANT CASE THE PEA K BALANCE IN THE UNDISCLOSED ICICI BANK ACCOUNT IS MUCH LESS THAN TH E TOTAL OF STOCK IN HAND, CASH IN HAND AND UNACCOUNTED PROFITS OFFER ED TO TAX. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANCES OF T HE CASE AND CONSIDERING JUDICIAL PRECEDENCE FIND NO INCONSISTEN CY IN THE FINDING OF LD. CIT(A) DELETING THE PEAK CREDIT ADDITION OF RS.1,25,33,136/-. WE ACCORDINGLY DISMISS REVENUES GROUND NO.1. ITA NO.925/IND/2018 SITARAM AGRAWAL 23 17. NOW WE TAKE UP GROUND NO.2 RELATING TO DELETION OF ADDITION MADE BY ENHANCING NET PROFIT AT RS.67,76,734/-. BR IEF FACTS RELATING TO THIS ISSUE ARE THAT IN THE RETURN OF IN COME ASSESSEE OFFERED FOR TAX THE NET PROFIT OF RS.47,06,993/-COM PUTED @2.50% ON THE UNRECORDED SALES OF RS.18,82,79,709/-. IN THE AUDITED BOOKS THE ASSESSEE DISCLOSED NET PROFIT @0.73% ON THE SAL ES TURNOVER. BUT SINCE THE ASSESSEE HAD OFFERED 2.50% NET PROFIT ON THE UNRECORDED SALES LD. A.O WAS OF THE VIEW THAT THE SIMILAR RATE @2.50% SHOULD ALSO BE APPLIED ON THE SALES TURNOVER RECORDED IN T HE REGULAR BOOKS. THOUGH IT WAS CONTENDED BY THE ASSESSEE THAT THE RA TE OF 2.50% WAS APPLIED KEEPING IN VIEW THAT FINANCIAL EXPENSES I.E. BANK INTEREST AND BANK CHARGES HAVE ALREADY BEEN CLAIMED IN THE REGULAR BOOKS WHICH COMES TO AROUND 1.82% OF THE TOTAL TUR NOVER AND SINCE THIS HAVE BEEN ALREADY CLAIMED THEREFORE NET PROFIT @ 2.50% WAS APPLIED ON THE UNRECORDED SALES. HOWEVER THIS SUBMISSION DID NOT CONVINCED THE LD. A.O AND HE REJECTED THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT AND NET PROFIT WAS ESTIMATED @ 2.50% ON THE TOTAL TURNOVER OF RS.37,47,40,488/- THEREBY DETERMI NING THE NET PROFIT AT RS.93,68,512/- AS AGAINST PROFIT DISCLOSE D BY THE ASSESSEE ITA NO.925/IND/2018 SITARAM AGRAWAL 24 AT RS.25,91,778/-. THUS THE DIFFERENCE OF RS.67,76, 734/- ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED ASSESSE E PREFERRED APPEAL BEFORE LD. CIT(A) AND SUCCEEDED AS LD. CIT(A ) FOUND FORCE IN THE CONTENTION OF THE ASSESSEE AND ALSO CONSIDERED THE FACT THAT INTEREST AND BANK CHARGES HAVE ALREADY BEEN CLAIMED IN THE REGULAR BOOKS AND THE NET PROFIT RATE IS IN CONSONANCE WITH THE PAST HISTORY OF NET PROFIT OFFERED BY THE ASSESSEE AND ACCEPTED BY THE REVENUE. 18. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNA L. 19. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARG UED AND SUPPORTED THE ORDER OF LD. A.O. 20. LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE FUND ING OF L:D. CIT(A) AND ALSO REFERRED TO THE FOLLOWING WRITTEN S UBMISSIONS:- 2.1] THE DEPARTMENT IN THIS GROUND OF APPEAL HAS CH ALLENGED THE DELETION OF ADDITION OF RS 67,76,734/- FROM THE TOTAL INCOME OF THE ASSESSEE. 2.2] THE ASSESSING OFFICER WHILE PASSING THE ASSESS MENT ORDER APPLIED THE RATE OF NET PROFIT AT 2.5 % ON THE AMOUNT OF TOTAL TURNOVER AS DISCLOSED IN THE BOOKS OF ACCOUNT OF RS 37,47,40,488/- WHICH CAL CULATED COMES TO RS 93,68,512/- AND AFTER ALLOWING CREDIT OF NET PROFIT OF RS 25,91,778/- AS DISCLOSED IN THE BOOKS OF ACCOUNT BALANCE AMOUNT OF RS 67,76,734/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE:- ITA NO.925/IND/2018 SITARAM AGRAWAL 25 S.NO PARTICULAR AMOUNT [RS] 1 TOTAL TURNOVER AS DISCLOSED IN THE BOOKS OF ACCOUNT 37,47,40,488 2.1 NET PROFIT AS ESTIMATED BY APPLYING THE RATE OF NET PROFIT AT 2.5% 93,68,512 2.2 NET PROFIT AS SHOWN IN THE BOOKS OF ACCOUNT 25,91,778 2.3 DIFFERENCE IN THE NET PROFIT AS ADDED TO THE TOTAL INCOME 67,76,734 2.3] COMPARATIVE CHART OF PERCENTAGE OF GROSS PROFI T AND NET PROFIT OF PROPRIETORSHIP CONCERN OF THE ASSESSEE M/S SMO INDU STRIES FOR THE ASSESSMENT YEARS 2013-14 TO 2015-16 IS AS UNDER:- S.NO PARTICULARS 31.03.2013 31.03.2014 31.03.2015 1 % OF GROSS PROFIT 8.13 % 4.45 % 5.41 % 2 % OF NET PROFIT 0.91% 0.73% 0.84 % 2.4] COMPARATIVE CHART OF INCOME AS DECLARED IN THE CASE OF THE OTHER ASSESSEE ENGAGED IN THE TRADING ACTIVITIES OF SIMIL AR TYPE OF THE ASSESSEE IS AS UNDER:- S.NO NAME OF THE FIRM PARTICULAR 31.03.13 31.03.14 31.03.15 1 SANJAY AGRAWAL PROP OF SOURABH BIO TECH, KASRAWAD GROSS PROFIT 2.38 1.06 1.77 NET PROFIT 0.66 0.50 0.70 2 M/S RAJPAL COTTON INDUSTRIES, SENDHWA GROSS PROFIT 2.30 2.66 2.67 NET PROFIT 0.31 0.32 0.35 ITA NO.925/IND/2018 SITARAM AGRAWAL 26 3 M/S SUHAN COTTON FIBERS, SENDHWA GROSS PROFIT 2.21 2.07 NET PROFIT 0.31 0.32 2.5] THAT FROM THE ABOVE CHART, THE PERCENTAGE OF G ROSS PROFIT IN RESPECT OF ALL THE ABOVE FIRMS VARIES BETWEEN 2.21% TO 2.67 % AND SIMILARLY THE PERCENTAGE OF NET PROFIT CALCULATED COMES TO 0.31 % TO 0.70%. 2.6] THAT IN THE FOLLOWING DECISIONS IT WAS HELD TH AT ONLY NET PROFIT CAN BE TAXED AS INCOME OF THE ASSESSEE, FOR THIS PREPOSITI ON WE REPLY ON THE FOLLOWING DIRECT DECISIONS:- 1 CIT VS BALCHANDAJIT KUMAR 263 ITR 610 [MP] 2 DCIT VS HIMMATMAL FAFARIA 009 ITJ 475 [INDORE ] 2.7] THAT AS PER AVAILABLE DECISIONS INCLUDING THAT OF JURISDICTIONAL HIGH COURT, ONLY NET PROFIT IS TAXABLE ON THE AMOUNT OF UNRECORDED SALES WHICH IN CASE OF TRADING FIRMS VARIES BETWEEN 0.31% TO 0.70% . HOWEVER, WHILE CALCULATING THE INCOME ON THE AMOUNT OF UNRECORDED TURNOVER THE ASSESSEE APPLIED RATE OF NET PROFIT AT 2.5%. SINCE, THE AMOU NTS OF INTEREST AND BANK CHARGES HAVE ALREADY BEEN DEBITED IN THE REGULAR BO OKS OF ACCOUNT. THE ASSESSEE FOR THE PURPOSE OF HIS UNRECORDED NEED NOT REQUIRES TO MAKE ANY INVESTMENT IN FORM OF STOCK. THUS, THE ASSESSING OF FICER WAS NOT JUSTIFIED IN APPLIED THE NET PROFIT RATE MERELY ON THE BASIS OF INCOME AS DECLARED BY THE ASSESSEE AT 2.5% ON THE AMOUNT OF TOTAL TURNOVER AS EXECUTED WITH THE ICICI BANK 2.8] THE ASSESSING OFFICER WAS THEREFORE NOT JUSTIF IED IN APPLIED THE SAME RATE OF NET PROFIT IN RESPECT OF TOTAL TURNOVER AS DISCLOSED IN THE REGULAR BOOKS OF ACCOUNT. ITA NO.925/IND/2018 SITARAM AGRAWAL 27 2.9] THE APPELLANT AS EXPLAINED IN GROUND NO 1 OF T HIS APPEAL THAT HE HAS USED CASH AND STOCK AS SHOWN IN HIS REGULAR BOOKS O F ACCOUNT AND NO FUNDS WERE EITHER BORROWED FROM OUTSIDE PARTIES. HE NCE, THE MARGIN OF HIS TRADING BUSINESS WAS SLIGHTLY HIGHER THAN MANUFACTU RING AS SHOWN IN ITS BOOKS OF ACCOUNT. 2.10] THE NET PROFIT OF THE ASSESSEE AS DECLARED IN HIS REGULAR BOOKS OF ACCOUNT IS AS UNDER:- S.NO PARTICULARS AMOUNT [RS] % OF PROFIT 1 SALES 37,47,40,488 2.1 NET PROFIT 27,49,896 0.73% 2.2 INTEREST AS CHARGED IN THE PROFIT & LOSS A/C 62,57,566 1.67% 2.3 BANK CHARGES 5,66,548 .15% 2.3 NET PROFIT BEFORE INTEREST & BANK CHARGES 95,74,010 2.55% 2.11] THAT WHILE COMPARING THE NET PROFIT AS PER RE GULAR BOOKS OF ACCOUNT AND AS CALCULATED ON THE AMOUNT OF TOTAL TURNOVER R OUTED THROUGH THE ICICI BANK, THE COMPONENT OF INTEREST MUST BE IGNORED. TH E ASSESSEE HAS NOT CLAIMED ANY DEDUCTION ON ACCOUNT OF INTEREST IN HIS UNACCOUNTED TURNOVER, SINCE, THE ENTIRE FUNDS OF THE REGULAR BUSINESS WAS USED BY HIM FOR THE PURPOSE OF HIS UNACCOUNTED TURNOVER. IF THE EFFECT OF INTEREST AND BANK CHARGES IGNORED, THE PERCENTAGE OF NET PROFIT IN HI S BOOKS OF ACCOUNT WAS 2.55% I.E. HIGHER THAN WHAT WAS CONSIDERED BY THE A SSESSEE FOR HIS UNACCOUNTED BUSINESS. ITA NO.925/IND/2018 SITARAM AGRAWAL 28 2.12] THE ASSESSEE CHARGED ENTIRE AMOUNT INTEREST I N ITS BOOKS OF ACCOUNT. FOR THIS REASON THE PERCENTAGE OF NET PROFIT AS SHO WN IN THE BOOKS OF ACCOUNT WAS LOWER THAN WHAT WAS DISCLOSED FOR UNACC OUNTED TURNOVER. THE ASSESSING OFFICER WAS GROSSLY ERRED IN APPLIED THE RATE OF NET PROFIT AT 2.5% AS AGAINST RATE OF NET PROFIT AS DISCLOSED BY THE A SSESSEE AT 0.73%. THE BOOK RESULT AS DECLARED BY THE ASSESSEE REQUIRES TO BE A CCEPTED AND ADDITION AS MADE IN THE TURNOVER AS SHOWN IN THE BOOKS OF ACCOU NT WAS NOT JUSTIFIED. 2.13] THAT IN VIEW OF THE ABOVE FACTS OF THE CASE, THE LD CIT(A) AFTER CONSIDERING THE SAME HAS DELETED THE ADDITION OF RS 67,76,734/- AS MADE TO THE TOTAL INCOME OF THE APPELLANT. HONBLE BENCH IS HEREBY REQUESTED TO APPROVED THE ORDER AS PASSED BY THE LD CIT(A). 21. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE RECORDS PLACED BEFORE US. THROUGH GROUND NO.2 REVENUE HAS CHALLENGED THE FINDING OF LD. CIT(A) DELETING THE ADDITION OF RS.67,76,734/- MADE BY THE LD. A.O BY WAY OF APPLYING NET PROFIT @ 2.5% AS AGAINST THE NET PROFIT DISCLOSED BY THE ASSESSEE @0.73%. 22. RECORDS REVEAL THAT THE ASSESSEE CARRIED OUT CERTAIN TRANSACTIONS OF SALE THROUGH UNDISCLOSED BANK HELD WITH ICICI BA NK. DURING THE YEAR TRANSACTIONS TOTALING TO RS.18,82,79,709/- WAS CARRIED OUT. HOWEVER THE ASSESSEE DISCLOSED NET PROFIT @2.5% ON THE UNDISCLOSED TURNOVER OF RS.18,82,79,709/- AND OFFERED INCOME OF RS.47,06,993/-AND PAID TAXES THEREON. 23. ON THE VERY BASIS OF THE FACT THAT THE ASSESS EE HAS UNDISCLOSED ITA NO.925/IND/2018 SITARAM AGRAWAL 29 BANK ACCOUNT, LD. A.O INFERRED THAT THE BOOK RESULT S OR THE BOOKS OF ACCOUNTS OF THE ASSESSEE CANNOT BE RELIED UPON FOR DETERMINATION OF PROFIT FROM BUSINESS AND THUS BOOKS OF ACCOUNTS NEE DS TO BE REJECTED IN VIEW OF THE PROVISIONS OF SECTION 145(3 ) OF THE ACT AND THE FAIR AND REASONABLE PROFIT NEEDS TO BE ESTIMATE D ON THE ENTIRE TURNOVER TRADE OUT BY THE ASSESSEE. 24. IN THE REGULAR BOOKS OF ACCOUNTS ASSESSEE HAS D ISCLOSED TURNOVER OF RS.37,47,40,488/- ON WHICH THE NET PROF IT @ 0.73% WAS OFFERED. IT WAS SUBMITTED BEFORE THE LD. A.O THAT NET PROFIT @ 0.73% WAS ARRIVED AFTER CLAIMING THE INTEREST EXPENDITURE AND BANK CHARGES WHICH IN PERCENTAGE TERMS WERE 1.67% AND 0. 15% RESPECTIVELY. SINCE THE INTEREST AND BANK CHARGES ALREADY STANDS CLAIMED IN THE REGULAR BOOKS NET PROFIT @2.5% WAS A PPLIED ON UNDISCLOSED TURNOVER. HOWEVER LD. A.O WAS NOT SATIS FIED AND SINCE HE HAD REJECTED THE BOOK RESULTS HE APPLIED NET PRO FIT @2.5% ON THE TOTAL RECORDED SALES OF RS.37,47,40,488/- DECLARED IN THE REGULAR BOOKS THEREBY WORKING OUT NET PROFIT AT RS.93,68,51 2/- AS AGAINST THE DISCLOSED NET PROFIT OF RS. 25,91,778/- AND THE DIFFERENCE OF RS. 67,76,734/- WAS ADDED TO THE TOTAL INCOME OF THE AS SESSEE. ITA NO.925/IND/2018 SITARAM AGRAWAL 30 25. WHEN THE MATTER CAME UP BEFORE LD. CIT(A) AS SESSEE MADE DETAILED WRITTEN SUBMISSION SHOWING CONSISTENCY OF NET PROFIT RATE OFFERED TO TAX AND THE FACT THAT INTEREST EXPENDITU RE AND BANK CHARGES WERE ALREADY DEBITED TO PROFIT AND LOSS ACC OUNT. LD. CIT(A) BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE DE LETED THE ADDITION OF RS. 67,76,734/- OBSERVING AS FOLLOWS :- GROUND NO 4 4.0 THE ASSESSEE IN THIS GROUND OF APPEAL HAS CHALLENGE D THE ADDITION OF RS 67,76,734/- TO THE TOTAL; INCOME OF THE ASSESSEE. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS SUBMISSION OF THE APPELLANT IN THIS REGARD. 4.1 THE RELEVANT PORTION OF THE APPELLANT'S SUBMISSION IS REPRODUCED HEREUNDER:- '4.2] THE ASSESSING OFFICER WHILE PASSING THE ASSES SMENT ORDER APPLIED THE RATE OF NET PROFIT AT 2.5 ON THE AMOUNT OF TOTAL TURNOVER AS DISCLOSED IN THE BOOKS OF ACCOUNT OF R S 37,47,40,488/- WHICH CALCULATED COMES TO RS 93,68, 512/- AND AFTER ALLOWING CREDIT OF NET PROFIT OF RS 25,91,778/- AS DISCLOSED IN THE BOOKS OF ACCOUNT BALANCE AMOUNT OF RS 67,76,734/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4.3] COMPARATIVE CHART OF PERCENTAGE OF GROSS PRO FIT AND NET PROFIT OF M/ S SMO INDUSTRIES FOR THE ASSESSMENT YEARS 2013-14 TO 2015-16 IS AS UNDER.- ITA NO.925/IND/2018 SITARAM AGRAWAL 31 PARTICULARS 31.03.2013 31.03.2014 31.03.2015 % OF GROSS PROFIT 8.13% 4.45% 5.41% % OF NET PROFIT 0.91% 0.73% 0.84% 4.4] COMPARATIVE CHART OF INCOME AS DECLARED IN THE CASE OF THE OTHER OF SIMILAR TYPE OF THE OTHER ASSESSEE ENGAGED IN THE TRADING ACTIVITIES OF SIMILAR TYPE OF THE ASSESSEE IS AS UNDER :- S.NO. NAME OF FIRM PARTICULAR 31.03.13 31.03.14 31. 03.14 1 SANJAY AGRAWAL PROP. OF SOURABH BIO TECH, KASRAWAD GROSS PROFIT 2.38 1.06 1.77 NET PROFIT 0.66 0.50 0.70 2 M/S RAJPAL COTTON INDUSTRIES, SENDWA GROSS PROFIT 2.30 2.66 2.67 NET PROFIT 0.31 0.32 0.35 3 M/S SUHAN COTTON FIBERS, SENDHWA GROSS PROFIT 2.21 2.07 NET PROFIT 0.31 0.32 4.5] THAT FROM THE ABOVE CHART, THE PERCENTAGE OF GROSS PROFIT IN RESPECT OF ALL THE ABOVE FIRMS VARIES BETWEEN 2.21 TO 2.67 AND SIMILARLY THE PERCENTAGE OF NET PROFIT CALCULATED C OMES TO 0.31 TO 0.70. 4.6] THAT IN THE FOLLOWING DECISIONS IT WAS HELD THAT ON LY NET PROFIT CAN BE TAXED AS INCOME OF THE ASSESSEE, FOR THIS PREPOS ITION WE REPLY ON ITA NO.925/IND/2018 SITARAM AGRAWAL 32 THE FOLLOWING DIRECT DECISIONS:- CIT VS BALCHAND AJIT KUMAR 263 ITR 610 [MP] DCIT VS HIMMATMAL FAFARIA 009 ITJ 475 [INDORE ] 4.7] THAT AS PER AVAILABLE DECISIONS INCLUDING THAT OF J URISDICTIONAL HIGH COURT, ONLY NET PROFIT IS TAXABLE ON THE AMOUN T OF UNRECORDED SALES WHICH IN CASE OF TRADING FIRMS VARIES BETWEEN 0.31 TO 0.70. HOWEVER, WHILE CALCULATING THE INCOME ON THE AMOUNT OF UNRECORDED TURNOVER THE ASSESSEE APPLIED RATE OF NET PROFIT AT 2.5. SINCE, THE AMOUNTS OF INTEREST AND BANK CHARGES HAVE ALREADY B EEN DEBITED IN THE BOOKS OF ACCOUNT. THUS, MERELY ON THE BASIS OF INCOME AS DECLARED BY THE ASSESSEE AT 2.5 ON THE AMOUNT OF TOTAL TURNOVER AS EXECUTED WITH THE ICICI BANK WHICH WAS NOT RECORDED IN THE B OOKS OF ACCOUNT. THE ASSESSINQ OFFICER WAS NOT JUSTIFIED IN AJ5J5LIE A-THE SAME RATE OF NET PROFIT IN RESPECT OF TOTAL TURNOVER AS DISCLOSE D IN THE REGULAR BOOKS OF ACCOUNT. 4.8] THE ASSESSEE IN THE EARLIER PARA OF THIS LETTER HAS STATED THAT HE HAS USED CASH AND STOCK AS SHOWN IN THE BOOKS OF ACCOUNT AND NO FUNDS WERE EITHER BORROWED FROM OUTSIDE PARTIES. HE NCE, THE MARGIN OF HIS TRADING B USINESS WAS SLIGHTLY HIGHER THAN MANUFACTURING AS SHOWN IN. ITS BOOKS OF ACCOUNT. 4.9] THE NET PROFIT OF THE ASSESSEE AS DECLARED IN HIS R EGULAR BOOKS OF ACCOUNT IS AS UNDER.- S.NO PARTICULARS AMOUNT [RS] % OF PROFIT ITA NO.925/IND/2018 SITARAM AGRAWAL 33 1 SALES 37,47,40,488 2.1 NET PROFIT 27,49,896 0.73 2.2 INTEREST AS CHARGED IN THE PROFIT & LOSS AI C 62,57,566 1.67 2.3 BANK CHARGES 5,66,548 .15 2.3 NET PROFIT BEFORE INTEREST &; BANK CHARGES 95,74,010 2.55 4.10] THAT WHILE COMPARING THE NET PROFIT AS PER RE GULAR BOOKS OF ACCOUNT AND AS CALCULATED ON THE AMOUNT OF TOTAL TU RNOVER ROUTED THROUGH THE ICICI BANK, THE COMPONENT OF INTEREST M UST BE IGNORED. THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION ON ACCOU NT OF INTEREST IN HIS UNACCOUNTED TURNOVER, SINCE, THE ENTIRE FUNDS O F THE REGULAR BUSINESS WAS USED BY HIM FOR THE PURPOSE OF HIS UNA CCOUNTED TURNOVER. IF THE EFFECT OF INTEREST AND BANK CHARGE S IGNORED, THE PERCENTAGE OF NET PROFIT IN HIS BOOKS OF ACCOUNT WA S 2.55% I.E. HIGHER THAN WHAT WAS CONSIDERED BY THE ASSESSEE FOR HIS UN ACCOUNTED BUSINESS. 4.11] THE ASSESSEE CHARGED ENTIRE AMOUNT INTEREST I N ITS BOOKS OF ACCOUNT. FOR THIS REASON THE PERCENTAGE OF NET PROF IT AS SHOWN IN THE BOOKS OF ACCOUNT WAS LOWER THAN WHAT WAS DISCLOSED FOR UNACCOUNTED TURNOVER. THE ASSESSING OFFICER WAS GRO SSLY ERRED IN APPLIED THE RATE OF NET PROFIT AT 2.5% AS AGAINST RATE OF NET PROFIT AS DISCLOSED BY THE ASSESSEE AT 0.73%. THE BOOK RESULT AS DECLARED BY THE ASSESSEE REQUIRES TO BE ACCEPTED AND ADDITION A S MADE IN THE TURNOVER AS SHOWN IN THE BOOKS OF ACCOUNT WAS NOT J USTIFIED. 4.12]THAT IN VIEW OF THE ABOVE, ADDITION OF RS 67,76,734/- AS MADE TO THE TOTAL INCOME OF THE ASSESSEE WAS LEGALLY AND FA CTUALLY NOT JUSTIFIED, THE SAME NOW REQUIRES TO BE DELETED IN F ULL. ITA NO.925/IND/2018 SITARAM AGRAWAL 34 4.2 IT IS EVIDENT FROM THE ABOVE FACTS THAT THE APPELLA NT HAD SHOWN TOTAL TURNOVER IN HIS BOOKS OF ACCOUNT TO THE TUNE OF RS 37,40,40,488/- AND UNRECORDED SALES AS EXECUTED THROUGH THE BANK ACCOUNT OF ICICI BANK WAS OF RS 16,66,66,003/-. THE ASSESSEE HAD SHOWN NET PROFIT IN HIS REGULAR BOOKS OF ACCOUNT AT 0. 73% BUT ON THE AMOUNT OF UNRECORDED SALES NET PROFIT WA S SHOWN AT 2.5%. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER APPLIED THE NET PROFIT RATE AT 2.5 % ON THE AMOUNT OF TOTAL TURNOVER AS SHOWN BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT. COMPARATIVE CHART OF NET PROFIT AS SHOW N BY THE ASSESSEE FOR THIS YEAR AND THAT OF ONE YEAR PRIOR A ND ALSO FOR SUCCEEDING YEAR IS AS UNDER:- S.NO PARTICULARS 31.03.2013 31.03.2014 31.03.2015 ' 1 OF GROSS PROFIT 8.13 4.45 5.41 2 OF NET PROFIT 0.91 0.73 0.84 4.3 THE ASSESSEE HAD BORROWED FUNDS FROM THE BANKS AND FROM OUTSIDE PARTIES FOR THE PURPOSE OF HIS BUSINESS AND THE SAME WERE DULY RECORDED IN HIS BOOKS OF ACCOUNT. THE FUN DS WERE ALSO UTILIZED FOR THE PURPOSE OF HIS BUSINESS AND SHOWN IN THE FORM OF STOCK, CASH AND SUNDRY DEBTORS. THE ENTIRE AMOUNT O F INTEREST AND BANK CHARGES AS PAID ON THE BORROWED FUNDS WERE DEBITED IN HIS BOOKS OF ACCOUNT. IT HAS BEEN CLAIMED BY THE ASSESSEE THAT THE STOCK AND CASH AS REFLECTED IN THE BOOKS O F ACCOUNT WAS ALSO USED BY THE ASSESSEE FOR THE PURPOSE OF HIS OU T OF BOOKS SALES WHICH WERE ROUTED THROUGH THE ICICI BANK ACCO UNT. SINCE, THE ASSESSEE HAD ALREADY ACCOUNTED FOR ENTIRE INTER EST AND BANK CHARGES IN HIS BOOKS OF ACCOUNT; HENCE, DEDUCTION F OR THE SAME WAS NOT CONSIDERED WHILE CALCULATING THE NET PROFIT RATE AS ITA NO.925/IND/2018 SITARAM AGRAWAL 35 APPLIED IN RESPECT OF UNRECORDED TURNOVER AS EXECUT ED THROUGH THE ICICI BANK. THE RATE OF NET PROFIT AS DECLARED BY THE ASSESSEE AT 2.50 IN RESPECT OF TOTAL TURNOVER AS EX ECUTED THROUGH THE BANK ACCOUNT WITH ICICI BANK AND NOT INCORPORAT ED IN THE REGULAR BOOKS OF ACCOUNT IS CALCULATED AS UNDER:- S.NO PARTICULARS AMOUNT [RS] % OF PROFIT 1 SALES 37,47,40,488 2.1 NET PROFIT 27,49,896 0.73% 2.2 INTEREST AS CHARGED IN THE PROFIT & LOSS AI C 62,57,566 1.67% 2.3 BANK CHARGES 5,66,548 .15% 2.3 NET PROFIT BEFORE INTEREST &; BANK CHARGES 95,74,010 2.55% 4.4 THE NET PROFIT RATE PRIOR TO INTEREST AND BANK CHAR GES CALCULATED COMES TO 2.55% AND THEREFORE IT WAS CLAI MED BY THE ASSESSEE THAT NET PROFIT ON THE AMOUNT OF TOTAL TUR NOVER AS EXECUTED THROUGH THE ICICI BANK WHICH WAS NOT RECOR DED IN THE BOOKS OF ACCOUNT WAS OFFERED AT 2.50% IN PLACE OF 0 .73% AS DECLARED IN THE REGULAR BOOKS OF ACCOUNT. THE ASSES SEE HAD FURTHER CLAIMED THAT THE ASSESSING OFFICER HAD GROS SLY ERRED IN APPLYING THE RATE OF NET PROFIT AT 2.5% ON THE AMOUNT OF TOTAL TURNOVER AS DISCLOSED IN THE BOOKS OF ACCOUNT. THE ASSESSEE HAS ALSO CLAIMED THAT HE HAD DEBITED INTEREST AND BANK CHARGES IN HIS BOOKS OF ACCOUNT AND THEREFORE, THE RATE OF NET PROFIT WAS REDUCED TO 0.73% AND THE SAME WAS CORRECTLY DISCLOS ED BY THE ASSESSEE. AS STATED, THE ASSESSEE HAD USED HIS STOC K AND CASH AS SHOWN IN HIS REGULAR BOOKS OF ACCOUNT IN RESPECT OF SALE PROCEEDS WHICH WERE DEPOSITED IN THE BANK ACCOUNT W ITH ICICI ITA NO.925/IND/2018 SITARAM AGRAWAL 36 BANK AND THEREFORE ON THE AMOUNT OF UNRECORDED SALE S, HE WAS NOT LIABLE TO PAY ANY ADDITIONAL AMOUNT OF INTEREST AND BANK CHARGES. CONSIDERING THE OVERALL FACTS OF THE CASE AS DISCUSSED IN THE ASSESSMENT ORDER AND SUBMISSION AS MADE BY T HE ASSESSEE, IT APPEARS THAT THOUGH THE NET PROFIT RAT E AS PER BOOKS OF ACCOUNT OF THE ASSESSEE WAS AT 0.73% ONLY AND VA RIOUS DECISIONS INCLUDING THAT OF HON 'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT--VS- BAL CHAND AJIT KUMAR AS REPORTED IN 263- ITR 610 HAD HELD TO TAX ONLY NET PROFIT RATE ON THE AMOUNT OF UNRECORDED TURNOVER, THE ASSESSEE IN PLACE OF 0.73% , APPLIED THE RATE OF NET PROFIT AT 2.50% ON THE AMOUNT OF SALES NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT AFTER TAKING EFFECT OF INTEREST AND BANK CHARGES AND RIGHTLY SO. THUS, THE ASSESSING OFFICER WAS NOT RIGHT IN APPLYING THE SAID RATE OF 2.50% WHICH WAS RIGHTLY OFFERED BY THE ASSESSEE IN RESPECT OF UNRECORDED SALES FOR THE SALES AS SHOWN IN THE BOOKS OF ACCOUNT. THE ASSESSEE DURING THE COURS E OF ASSESSMENT PROCEEDING HAD EXPLAINED THE REASON F OR HIGHER RATE OF NET PROFIT IN RESPECT OF UNRECORDED SALES A S AGAINST NET PROFIT RATE AS DECLARED IN RESPECT OF DISCLOSED TUR NOVER BUT THE ASSESSING OFFICER DID NOT APPRECIATE THE SUBMISSIONS OF THE ASSESSEE. THE ADDITION AS MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF LOW NET PROFIT RATE ON THE AMOUNT OF TOT AL TURNOVER AS SHOWN IN THE BOOKS OF ACCOUNT WAS NOT CORRECT, AS T HE ASSESSEE WAS ABLE TO EXPLAIN THE REASON FOR HIGHER RATE OF N ET PROFIT AS APPLIED IN RESPECT OF UNRECORDED SALES AS COMPARED TO THE NET PROFIT RATE AS APPLIED IN RESPECT OF SALES SHOWN IN HIS REGULAR BOOKS OF ACCOUNT. THE ASSESSEE HAS NOT CLAIMED DEDU CTION OF INTEREST PAID AND BANK CHARGES AGAINST, THE SALE PR OCEED AS REALIZED THROUGH THE ICICI BANK AND SHOWN NET PROFIT RATE AT 2.50% IN PLACE OF 0.73% AS DECLARED IN HIS REGULAR BOOKS OF ITA NO.925/IND/2018 SITARAM AGRAWAL 37 ACCOUNT. THE RATE OF NET PROFIT APPLIED AT 2.50% ON THE AMOUNT OF TOTAL TURNOVER AS SHOWN IN THE BOOKS OF ACCOUNT WAS THUS NOT JUSTIFIED; SINCE, THE PERCENTAGE OF NET PROFIT WAS CALCULATED AT 2.50% AFTER IGNORING THE DEDUCTION AS CLAIMED ON ACCOUNT OF BANK INTEREST AND BANK CHARGES. SINCE, BOTH THESE E XPENSES WERE DEBITED IN THE REGULAR BOOKS OF ACCOUNT AND AF TER CONSIDERING THE AMOUNT OF BANK INTEREST AND BANK CH ARGES THE PERCENTAGE OF NET PROFIT GETS REDUCED FROM 2.50% TO 0.73% WHICH WAS CORRECTLY OFFERED AND APPLIED BY THE ASSESSEE O N THE AMOUNT OF TOTAL TURNOVER AS SHOWN IN HIS BOOKS OF A CCOUNT. THE ASSESSING OFFICER FAILED TO APPRECIATE THIS ASPECT OF THE FACTS OF THE CASE. THEREFORE, THE ADDITION SO MADE BY THE AS SESSING OFFICER TO THE TUNE OF RS 67,76,734/- IS NOT JUSTIFIED AND IS HEREBY DELETED IN FULL. THE ASSESSEE ACCORDINGLY GET RELIE F OF RS 67,76,734/ . THIS GROUND OF APPEAL IS ALLOWED. 26. FROM PERUSAL OF THE DETAILED FINDING OF FACT BY LD. CIT(A) AND THE FACTUAL ASPECT WE OBSERVE THAT THE LD. A.O HAS ONLY TAKEN THE BASIS OF UNDISCLOSED BANK ACCOUNT FOR REJECTING THE BOOKS OF ACCOUNTS. NOWHERE IN THE ASSESSMENT ORDER HE HAS POINTED OUT ANY OTHER IRREGULARITY IN THE REGULAR BOOKS OF ACCOUNTS MAINT AINED BY THE ASSESSEE WHICH ARE DULY AUDITED. LD. DEPARTMENTAL REPRESENTATIVE HAS FAILED TO BRING ON RECORD ANY SUCH OBSERVATION OF THE LD. A.O. IT IS WELL EVIDENT THAT THE FACT OF UNDISCLOSED BANK A CCOUNT HAS DULY BEEN ADMITTED BY THE ASSESSEE IN THE REVISED RETURN OF INCOME AND HAS OFFERED THE NET PROFIT @2.5% ON THE TOTAL TRANS ACTIONS OF THE ITA NO.925/IND/2018 SITARAM AGRAWAL 38 UNDISCLOSED BANK ACCOUNT TREATING IT AS UNDISCLOSED SALES AT RS.18,82,79,709/- ON WHICH NET PROFIT OF RS.47,06,9 93/- HAS BEEN OFFERED. APART FROM THIS FACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. A.O WHILE EXAMINING THE STOCK RECOR DS AND BOOKS OF ACCOUNTS HAS NOT COME ACROSS ANY MISTAKE OR IRREGUL ARITY WHICH COULD PROVE THAT THE BOOKS OF ACCOUNTS REGULARLY MA INTAINED BY THE ASSESSEE AND BOOK RESULTS ARE QUESTIONABLE. IN THE SE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT T HE ACTION OF THE LD. A.O REJECTING THE BOOK RESULTS THEREBY INVOKING PRO VISIONS OF SECTION 145(3) OF THE ACT WAS NOT JUSTIFIED AND SO WAS ALSO NOT JUSTIFIED IN ESTIMATING THE NET PROFIT ON THE REGULAR TURNOVER I N THE BOOKS OF ACCOUNTS @2.5% AS AGAINST 0.73% OFFERED BY THE ASSE SSEE. REVENUE HAS ALSO FAILED TO REBUT THE FACT THAT LD. A.O HAS NOT POINTED OUT ANY MISTAKE IN THE SUBMISSIONS OF THE ASSESSEE WHEREIN IT WAS MENTIONED THAT NET PROFIT RATE OF 2.5% APPLIED ON THE UNDISCL OSED TURNOVER WAS ON THE BASIS OF CALCULATION AS PER WHICH THE INTERE ST AND BANK CHARGES WERE CLAIMED IN THE REGULAR BOOKS WHICH IN PERCENTAGE TERMS WERE AROUND 1.82% OF THE TOTAL DISCLOSED TURNOVER A ND SINCE THEY HAVE ALREADY BEEN CLAIMED SO THE PERCENTAGE OF INTE REST AND BANK ITA NO.925/IND/2018 SITARAM AGRAWAL 39 CHARGES WERE ADDED TO THE NET PROFIT OFFERED IN THE BOOKS OF ACCOUNTS AND FAIR NET PROFIT @2.5% WAS APPLIED. THIS APPLIC ATION OF 2.5% ON UNDISCLOSED TURNOVER CANNOT BE EQUATED TO BE APPLIE D ON THE REGULAR TURNOVER DISCLOSED BY THE ASSESSEE. IN THE IMMEDIA TELY PRECEDING ASSESSMENT YEAR 2013-14 ASSESSEE HAS OFFERED 0.91% AS NET PROFIT RATE WHICH HAS BEEN ACCEPTED BY THE REVENUE. IN TH ESE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WE HEREBY FIND NO REA SON TO INTERFERE IN THE FINDING OF LD. CIT(A) DELETING THE ADDITION OF RS.67,76,734/- AND WE ALSO FIND NO JUSTIFICATION IN THE ACTION OF THE LD. A.O REJECTING THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT. WE AC CORDINGLY DISMISS GROUND NO.2 OF THE REVENUES APPEAL. IN THE RESULT APPEAL OF THE REVENUE STANDS DISMISS ED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.08.20 20. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 20 TH AUGUST, 2020 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ITA NO.925/IND/2018 SITARAM AGRAWAL 40 ASSTT.REGISTRAR, I.T.A.T., INDORE