ITO, Puducherry V. M/s. Spectrum Maruthi Spares, Pondicherry

ITA 959/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0737 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 30-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V JAGADISAN
• Keywords: Business income; Income from undisclosed sources
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENN AI BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER .. ITA NO.959/MDS./2012 ASSESSMENT YEAR:2007-08 THE INCOME TAX OFFICER, WARD I(2), D.P.THOTTAM, MUTHIALPET, PUDUCHERRY 605 003. VS. M/S.SPECTURUM MARUTHI SPARES, NO.106,ANNA SALAI, PONDICHERRY 605 001. PAN AALFS 0156 N (APPELLANT) (RESPONDENT) C.O. NO.98/MDS./2012 ASSESSMENT YEAR:2007-08 M/S.SPECTURUM MARUTHI SPARES, NO.106,ANNA SALAI, PONDICHERRY 605 001. VS. THE INCOME TAX OFFICER, WARD I(2), D.P.THOTTAM, MUTHIALPET, PUDUCHERRY 605 003. PAN AALFS 0156 N (CROSS OBJECTOR) (APPELLANT IN APPEAL) REVENUE BY : SHRI SHAJI P JACOB ADDL. CIT D.R ASSESSEE BY : SHRI V.JAGADISAN, C.A. ITA. 959 /MDS12 CO NO.98/MDS/12/ 2 DATE OF HEARING : 29.01.13 DATE OF PRONOUNCEMENT : 14 .02.13 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEAL AND CROSS OBJECTION OF THE REVE NUE AND THE ASSESSEE RESPECTIVELY DIRECTED AGAINST THE ORDE R DATED 30.01.2012 OF CIT(A)-XII, CHENNAI. REVENUE THROUG H ITS FOUR GROUNDS HAS RAISED THREE ISSUES. 2. FIRST IS WITH REGARD TO THE DIRECTION OF THE C IT(A) THAT A SUM OF ` 20 LAKHS OFFERED BY THE ASSESSEE AS OTHER INCOME SHOULD BE ADJUSTED AGAINST THE RECONCILIATION DIFFERENCE IN S ALES. SECOND IS WITH REGARD TO ACCEPTANCE OF THE CLAIM OF ASSESSEE THAT A SUM OF ` 14,43,552/- OUT OF THE RECONCILIATION DIFFERENCE I N THE SALE FIGURES, REPRESENTED SALES RETURN. THIRD IS WITH RE GARD TO THE DIRECTION OF THE OF THE CIT(A) THAT DIFFERENCE IN SUNDRY CREDITORS ACCOUNT COULD BE TELESCOPED WITH ADDITION MADE FO R UNACCOUNTED SALES. 2. 1. AS AGAINST ABOVE, ASSESSEE IN ITS CROSS OBJE CTION IS AGGRIEVED THAT LD. CIT(A) ACCEPTED THE VIEW OF THE ASSESSING OFFICER THAT THERE WERE UN-RECONCILED DIFFERENCES O F SUNDRY ITA. 959 /MDS12 CO NO.98/MDS/12/ 3 CREDITORS AGGREGATING TO ` 6,70,940/-, THOUGH IT WAS ALLOWED TO BE SET OFF AGAINST ADDITIONS MADE FOR SALES SUPPRESSIO N. ASSESSEE HAD ALSO RAISED A GRIEVANCE THAT CIT(A) DID NOT GIV E DIRECTION FOR SETTING OF THE UNEXPLAINED CASH AGAINST ADDITION F OR SUPPRESSED SALES. 3. FACTS APROPOS ARE THAT ASSESSEE IN THE BUSINESS OF SELLING SPARE PARTS OF CARS HAD FILED ITS RETURN OF INCOME ON 31.10.07 DECLARING AN INCOME OF ` 8,69,460/- FOR THE IMPUGNED ASSESSMENT YEAR. DURING THE CURRENCY OF THE RELEVANT PREVIOUS YEAR, TO BE PRECISE, ON 15.02.07 THERE WAS A SURVEY CONDUCTED I N THE PREMISES OF THE ASSESSEE UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). DURING THE SURVEY OPERATIONS, A ROUGH CHITTA BOOK WAS FOUND AND IMPOUNDED. FROM SU CH CHITTA BOOK, ASSESSING OFFICER COMPILED THE SALES OF THE A SSESSEE FOR THE PERIOD 01.04.06 TO 15.02.07, WHICH CAME TO ` 1,48,55,723/-. FOR THE PERIOD 16.02.07 TO 31.03.07, THE SALES WERE TAKEN AT ` 14,73,467/- AS PER THE FIGURES GIVEN BY THE ASSESSE E. THUS, AS PER THE ASSESSING OFFICER, THE TOTAL TURNOVER OF TH E ASSESSEE FOR THE RELEVANT PREVIOUS YEAR CAME TO ` 1,63,29,190/-. HOWEVER, IN THE PROFIT AND LOSS ACCOUNT FILED BY THE ASSESSEE A LONG WITH ITS RETURN, THE SALES SHOWN WAS ` ` 1,18,19,798/- ONLY, THAT TOO, NET OF SALES RETURN. ASSESSEE WAS REQUIRED TO EXPLAIN TH E DIFFERENCE OF ITA. 959 /MDS12 CO NO.98/MDS/12/ 4 ` 45,09,392/-. SUBMISSION OF THE ASSESSEE WAS THAT T HERE WAS NO SUCH DIFFERENCE. NEVERTHELESS, IT ALSO SOUGHT TIME FOR RECONCILIATION. ON RECEIVING NO REPLY FROM THE ASS ESSEE WITHIN THE TIME GIVEN, ASSESSING OFFICER CONSIDERED ` 45,09,392/- AS INCOME OF ASSESSEE. 3.1. ASSESSING OFFICER ALSO SENT LETTERS AS PER TH E LIST OF SUNDRY CREDITORS SHOWN BY THE ASSESSEE, CALLING FOR CONFIR MATION OF BALANCES. FROM THE REPLIES RECEIVED FROM SUCH CRED ITORS, ASSESSING OFFICER IDENTIFIED CERTAIN DIFFERENCES. ASSESSEE WAS REQUIRED TO EXPLAIN SUCH DIFFERENCES. ARGUMENT OF T HE ASSESSEE WAS THAT TRANSACTIONS OF PURCHASES WERE RECORDED CO RRECTLY AND IT WOULD BE POSSIBLE TO RECONCILE THE AMOUNTS. ASSESS ING OFFICER WAS OF THE OPINION THAT ASSESSEE WAS UNABLE TO FILE A RECONCILIATION. AS PER THE ASSESSEE, DIFFERENCES IN THE SUNDRY CREDITORS ACCOUNT, WERE AS UNDER: SL. NO. NAME OF THE CREDITOR BALANCE IN THE BOOKS OF THE ASSESSEE BALANCE IN THE BOOKS OF THE CREDITOR DIFFERENCE 1 ASHAHI INDIA MAP AUTO GLASS LTD 1,76,517 1,01,801 74,716 2 JULLUNDR MOTOR AGENCY (DELHI) LTD. 1,38,005 2,261 1,38,005 3 ABT MARUTHI 1,59,788 1,59,788 4 POOMAKUDY AGENCIES 2,96,638 2,86,780 9,858 5 JOHN FLOWER (I) P LTD 2,58,547 2,58,547 6 KHANNA & CO. 92,500 62,500 30,000 TOTAL 6,70,914 ITA. 959 /MDS12 CO NO.98/MDS/12/ 5 AN ADDITION OF ` 6,70,914/- WAS MADE UNDER SECTION 41(1) OF THE ACT. 3.2. ASSESSING OFFICER ALSO FOUND THAT CASH AS ON 15.02.07, AS PER THE BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE W AS ONLY ` 3,34,423/-, WHEREAS ACTUAL CASH FOUND ON THAT DAT E CAME TO ` 5,28,625/-. THOUGH ASSESSEE EXPLAINED THE DIFFEREN CE TO CONSIST OF HIS PERSONAL MONEY, AS PER THE ASSESSING OFFICER NO EVIDENCE WAS ADDUCED IN THIS REGARD. HE THEREFORE MADE AN A DDITION OF ` 1,94,202/- ALSO TO THE INCOME OF ASSESSEE. 4. ASSESSEE MOVED IN APPEAL BEFORE THE CIT(A) AGAI NST THE ADDITIONS MENTIONED ABOVE. WITH REGARD TO THE ADDIT ION FOR UNACCOUNTED SALE, FIRST ARGUMENT OF THE ASSESSEE WA S THAT THE CHITTA BOOK FOUND AT THE TIME OF SURVEY HAD RECORDE D SALES ONLY UPTO 02.02.07 AND NOT UPTO 15.02.07. ACCORDING TO THE ASSESSEE, THE SUM OF ` 1,48,55,723/- REPRESENTED SALES FOR THE PERIOD FR OM 01.06.06 TO 02.02.07. FURTHER, AS PER ASSESSEE, T HE SALES DURING THE PERIOD FROM 03.02.07 TO 31.03.07 CAME TO ` 17,80,111/- AND NOT THE SUM OF ` 14,33,467/- CONSIDERED BY THE ASSESSING OFFICER. IN OTHER WORDS, ACCORDING T O THE ASSESSEE, THE TOTAL SALES WAS ` 1,66,20,167 AGAINST THE SUM OF ITA. 959 /MDS12 CO NO.98/MDS/12/ 6 ` 1,63,29,190 ADOPTED BY THE ASSESSING OFFICER. FURT HER ACCORDING TO IT, THERE WERE CERTAIN MISTAKES IN TOT ALING OF THE SALES IN CHITTA BOOK WHICH WORKED OUT TO ` 15,667/- AND THEREFORE, THE ACTUAL SALES AS PER THE CHITTA BOOK FROM 01.04. 06 TO 02.02.07 CAME TO ` 1,48,40,056 ONLY. ALONG WITH THE SALES FOR THE PE RIOD FROM 03.02.07 TO 31.03.07, THE TOTAL SALES DURING T HE RELEVANT PREVIOUS YEAR CAME TO ` 1,66,20,167/- LEAVING A DIFFERENCE OF ` 48,00,369/- WHEN COMPARED TO THE SALES RECORDED IN THE P&L ACCOUNT. FOR THE DIFFERENCE OF ` 48,00,369/-, RECONCILIATION PROVIDED BY THE ASSESSEE WAS UNDER:- ` A) ADMITTED IN THE RETURN (AS OTHER INCOME) 20,00,00 0 B) SALES RETURNS(NOT INCLUDED IN CHITTA BOOK 14,43,552 C) BALANCE TO BE RECONCILED/UN-RECONCILED 13,56,817 48,00,369 5. FURTHER, AS PER ASSESSEE A SUM OF ` 1,18,19,798/- SHOWN AS SALES TURNOVER IN THE P&L ACCOUNT WAS AFTER DEDUCTI NG SALES RETURN OF ` 14,43,552/-. AS PER THE ASSESSEE, THE TOTAL SALES AS PER THE BOOKS EXCLUDING THE SALES RETURNS WAS ` 1,32,63,350/-. THUS, THE DIFFERENCE TO BE RECONCILED WAS ONLY ` 33,56,817/-. AGAINST THIS, AS PER THE ASSESSEE, IT HAD ALREADY O FFERED A SUM OF ITA. 959 /MDS12 CO NO.98/MDS/12/ 7 ` 20 LAKH IN ITS RETURN OF INCOME AS INCOME FROM OTH ER SOURCES, BASED ON THE ADMISSIONS MADE DURING THE SURVEY. IN OTHER WORDS, ACCORDING TO THE ASSESSEE, THE AMOUNT THAT W AS LEFT TO BE EXPLAINED WAS ONLY ` 13,56,817/-. LD. CIT(A) ACCEPTED THE ABOVE EXPLANATION AND HELD THAT ADDITION FOR UNACCOUNTED SALES WAS TO BE RESTRICTED TO ` 13,56,817 /-. 6. WITH REGARD TO THE UN-RECONCILED DIFFERENCE OF ` 6,70,940/- IN THE SUNDRY CREDITORS ACCOUNT, ARGUMENT OF THE AS SESSEE WAS THAT SUCH DIFFERENCES WERE ONLY ON ACCOUNT OF CHEQU ES ISSUED, BUT ENCASHED AFTER THE RELEVANT PREVIOUS YEAR. ASS ESSEE ALSO SUBMITTED DETAILS OF SUCH CHEQUES BEFORE THE CIT(A) . FURTHER, AS PER THE ASSESSEE, A PART OF THE DIFFERENCES WERE ON ACCOUNT OF OPENING BALANCES AS ON 01.04.06 AND THESE COULD NOT BE CONSIDERED FOR ASSESSMENT OF RELEVANT PREVIOUS YEA R. IN ANY CASE, AS PER ASSESSEE, SINCE IT HAD BY ITSELF ADMIT TED SUPPRESSED SALES OF ` 13,56,817/-, TELESCOPING WAS TO BE ALLOWED. CIT(A) AFTER CONSIDERING THE ABOVE EXPLANATION, WAS OF THE OPINION THAT DIFFERENCES IN CREDIT BALANCES, EVEN IF IT COULD BE DEEMED AS UNACCOUNTED INCOME, HAD TO BE TELESCOPED WITH THE UNACCOUNTED SALES OF ` 13,56,817/-. IN THIS VIEW OF THE MATTER, HE DELETE D THE ADDITION OF ` 6,70,940/-. ITA. 959 /MDS12 CO NO.98/MDS/12/ 8 7. WITH REGARD TO THE UNEXPLAINED CASH OF ` 1,94,202/-, EXPLANATION OF THE ASSESSEE WAS THAT THIS ALSO WAS TO BE TELESCOPED WITH THE AGREED UNACCOUNTED SALE OF ` 13,56,817/-. LD. CIT(A) WAS APPRECIATIVE OF THIS CONTENTION ALSO AND HELD THAT ASSESSEE HAVING SUPPRESSED SALES OF ` 13,56,817/-, EXCESS CASH, IF ANY, ON THE DATE OF SURVEY STOOD EXPLAINED . THUS, HE DELETED THE ADDITION OF ` 1,94,202/- AS WELL. 8. NOW BEFORE US, LD. D.R. STRONGLY ASSAILING THE ORDER OF THE CIT(A) SUBMITTED THAT ADDITIONAL SUM OF ` 20 LAKHS OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME WAS UNDER THE HEA D OF INCOME FROM OTHER SOURCES AND COULD NOT BE ALLOWED FOR S ET OFF OR TELESCOPING AGAINST ANY UNACCOUNTED SALES OR SUPPRE SSED SALES. AS PER LD. D.R, ONCE ASSESSEE HAD ADMITTED THE SUM OF ` 20 LAKHS UNDER THE HEAD INCOME FROM OTHER SOURCES, IT COULD NOT SAY THAT SUCH AMOUNT REPRESENTED BUSINESS RECEIPTS, WHICH WERE NOT ACCOUNTED. WITH REGARD TO THE ISSUE OF UNACCOU NTED SALE, LD. D.R. RELYING ON THE COPY OF THE AUDITED PROFIT AND LOSS ACCOUNT OF ASSESSEE FOR THE RELEVANT PREVIOUS YEAR STATED THAT THE SALES SHOWN IN P&L A/C AT ` 1,18,19,798.31 WAS AFTER DEDUCTING SALES RETURN OF ` 24,448/-. AS PER D.R., LD. CIT(A) HAS SIMPLY ACCEP TED ITA. 959 /MDS12 CO NO.98/MDS/12/ 9 THE CONTENTION OF THE ASSESSEE WAS THAT THE SALES R ETURNS WERE ` 14,43,552/- WHEREAS SALES RETURN SHOWN IN THE P&L A /C WAS ONLY ` 24,448/-. CIT(A) HAD ACCEPTED THE CLAIM WITHOUT A NY EVIDENCE BEING FILED IN THIS REGARD. AS PER LD. DEPARTMENTA L REPRESENTATIVE, ASSESSEE HAD FILED TAX AUDIT REPORT IN FORM NOS. 3 CB & 3 CD. RELYING ON COPIES OF SUCH TAX AUDIT R EPORT FILED, LD. D.R. SUBMITTED THAT CERTIFICATION OF P&L A/C WAS DO NE BY THE TAX AUDITORS AFTER VERIFICATION OF THE BOOKS OF ACCOUNT S. SUCH CERTIFICATE CLEARLY MENTIONED THAT THE P&L A/C WAS IN AGREEMENT WITH THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSE E. THAT AUDITORS HAD EXAMINED CASH BOOK, JOURNAL, LEDGER, B ANK BOOK WAS EVIDENT FROM FORM NO.3CD FILED BY THE ASSESSEE. THIS BEING THE SITUATION, AS PER LD. D.R, ASSESSEE COULD NOT N OW TURN AROUND AND SAY THAT IT HAD SALES RETURN OF ANY AMOUNT IN E XCESS OF ` 24,448/- MENTIONED IN THE P&L ACCOUNT. 9. IN SO FAR AS ADDITION FOR TRADE CREDITORS WAS C ONCERNED, LD. D.R. SUBMITTED THAT EACH OF THE PARTIES MENTIONED H AD CONFIRMED A DIFFERENT BALANCE THAN THE ONE SHOWED BY THE ASSE SSEE IN ITS BOOKS OF ACCOUNTS. A.O. HAD PUT IT TO ASSESSEES N OTICE. HOWEVER, ASSESSEE HAD NOT CARED TO FILE A RECONCIL IATION. IN TWO OF THE CASES, NAMELY THAT OF M/S.ABT MARUTHI AND JO HN FLOWER ITA. 959 /MDS12 CO NO.98/MDS/12/ 10 INDIA PVT LTD., A.O. HAD SENT THE LETTERS ON THE ADDRESSES GIVEN BY THE ASSESSEE, BUT SUCH LETTERS WERE RETURNED UN- SERVED, WITH AN ENDORSEMENT THAT THE ADDRESSEES HAD LEFT WITHOUT INTIMATION. THEREFORE, ACCORDING TO HIM, ADDITIONS WERE RIGHTLY DONE BY THE ASSESSING OFFICER. DIRECTION OF THE CIT(A) THAT IT SHOULD BE TELESCOPED WITH SUPPRESSED SALES ALSO COULD NOT BE ACCEPTED FOR A REASON THAT TRADE CREDITORS AND SUPPRESSION OF SA LES WERE NOT RELATED TRANSACTIONS. TRADE CREDITORS HAVING COME INTO THE BOOKS OF ACCOUNTS ON ACCOUNT OF PURCHASES, ASSESSEE COUL D NOT SAY THAT THEY WERE PAID IN CASH ARISING OUT OF SUPPRESS ED SALES. 10. WITH REGARD TO THE DIFFERENCE IN CASH BALANCE FOUND ON THE DATE OF SURVEY BEING ALLOWED BY THE CIT(A) TO BE TE LESCOPED WITH THE SUPPRESSED SALES, LD. D.R SUBMITTED THAT THIS W AS ALSO DONE WITHOUT ANY EVIDENCE FURNISHED BY THE ASSESSEE. 11. PER CONTRA, A.R. SUBMITTED THAT CHITTA BOOK BASED ON WHICH THE SALES WERE WORKED OUT , WAS NEVER MADE AV AILABLE TO THE ASSESSEE, AFTER IT WAS IMPOUNDED. ASSESSEE C OULD GET A COPY OF THE CHITTA BOOK ONLY DURING THE COURSE OF A PPELLATE PROCEEDINGS BEFORE THE CIT(A). HENCE, IT WAS CONST RAINED TO FURNISH THE RECONCILIATION ONLY BEFORE THE CIT(A) A ND THE ITA. 959 /MDS12 CO NO.98/MDS/12/ 11 RECONCILIATION WAS CORRECTLY DONE. EVEN A DATE-WIS E RECONCILIATION WAS GIVEN. RELYING ON HIS PAPER BOOK AT PAGE-19, L D. A.R. SUBMITTED THAT DAILY SALES AS PER CHITTA BOOK AND GROSS SALES RECORDED IN THE ACCOUNTS BOOK HAD A DIFFERENCE OF ` 33,56,817/- ONLY. ACCORDING TO HIM, PART OF SUCH DIFFERENCE WA S ON ACCOUNT OF SALES RETURN OF ` 14,43,552/-BEING NOT RECORDED IN CHITTA BOOK. AS PER LD. AUTHORISED REPRESENTATIVE OF ASSESSEE THE C HITTA BOOK DID NOT SHOW ANY SALES RETURNS, SINCE IT WAS ONLY A ROUGH BOOK FOR GIVING THE TOTAL SALES. SALES RETURNS WERE RECORDE D ONLY IN THE CASH BOOK AND LEDGER MAINTAINED. TURNOVER RETURNED BY THE ASSESSEE WAS EXCLUDING THE SALES RETURN OF ` 14,43,552/-. THEREFORE, ACCORDING TO HIM, CIT(A) HAD CORRECTLY G IVEN RELIEF FOR THE SAID SUM AND RESTRICTED THE ADDITION TO ` 13,56,817/- . FURTHER ACCORDING TO HIM, CIT(A) HAS RIGHTLY ALLOWED TELESC OPING OF ` 20 LAKHS ADMITTED AS OTHER INCOME WITH THE UNACCOUNT ED SALES AMOUNT. 12. IN SUPPORT OF ITS CROSS OBJECTION, LD. A.R. SU BMITTED THAT RECONCILIATIONS WERE SUBMITTED TO THE LD. CIT(A) FO R EACH OF THE ADDITIONS. IN SUCH RECONCILIATION, IT WAS CLEAR TH AT THE DIFFERENCES WERE OWING TO CHEQUES ISSUED WHICH WERE ENCASHED BY THE PARTIES IN THE SUBSEQUENT PREVIOUS YEAR. IN ANY CA SE, ACCORDING ITA. 959 /MDS12 CO NO.98/MDS/12/ 12 TO HIM, WITH REGARD TO TWO CREDITORS, NAMELY M/S.A BT MARUTHI & M/S. JOHN FLOWER (I) P LTD., NO ACCOUNT COPY WAS RE CEIVED FROM THE SAID CREDITORS. IT WAS UNFAIR TO TREAT THE TO TAL CREDIT BALANCES ARISING OUT OF REGULAR PURCHASES TO BE UNACCOUNTED INCOME. ACCORDING TO HIM, TRADE CREDITORS BALANCES COULD NO T BE EQUATED WITH LOAN CREDITORS ESPECIALLY SINCE PURCHASES OF THE ASSESSEE WERE NOT DOUBTED. LD. CIT(A) FELL IN ERROR IN CONF IRMING THAT THERE WERE UN-RECONCILED DIFFERENCES OF SUNDRY CREDITORS OF ` 6,70,914/-, THOUGH HE RIGHTLY ALLOWED TELESCOPING OF SUCH AMO UNT AGAINST THE SUPPRESSED SALES. SIMILARLY ACCORDING TO HIM, THERE WAS NO UNEXPLAINED CASH AS ON DATE THE SURVEY ONCE THE UNA CCOUNTED SALES OF ` 13,56,817/- WAS CONSIDERED. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES. FIRST ADDITION IS WITH R EGARD TO THE SUPPRESSED SALE OF ` 45,09,392/-, WHICH WAS SUSTAINED TO THE EXTENT OF ` 13,56,817/- BY THE CIT(A). THERE IS NO DOUBT THAT IN THE COURSE OF SURVEY AS ON 15.02.07, A CHITTA BOOK WAS FOUND. SUCH CHITTA BOOK DID CONTAIN THE SALES OF THE ASS ESSEE, RECORDED DATE-WISE. ASSESSEE ITSELF ADMITTED BEFO RE THE CIT(A) THAT THE CHITTA BOOKS WERE WRITTEN ONLY UP TO 02.02 .07, AND NOT UP TO 15.02.07, I.E. THE DATE OF SURVEY. AS PER ASSES SEE THE SUM OF ` ITA. 959 /MDS12 CO NO.98/MDS/12/ 13 1,48,55,723/- CONSIDERED BY THE ASSESSING OFFICER A S THE SALES EFFECTED DURING THE PERIOD 01.04.06 TO 15.02.07 WAS IN FACT SALES FOR THE PERIOD 01.04.06 TO 02.02.07. AGAIN AS PER THE ASSESSEE, THE SALES FOR THE PERIOD 03.02.07 TO 31.03.07 WAS ` 17,80,111/-. THUS, THE TOTAL SALES BY ASSESSEES OWN VERSION CAM E TO ` 1,66,20,167/- AGAINST THE SUM OF ` 1,63,29,190/- ADOPTED BY THE ASSESSING OFFICER. SINCE FIGURE WORKED OUT B Y THE ASSESSEE IS HIGHER, THERE IS NO REASON TO DOUBT IT. THE QUE STION THAT REMAINS IS WHETHER THE RECONCILIATION BETWEEN THE S UM OF `1,66,20,167/- GIVEN BY THE ASSESSEE AS SALES RECORDED IN THE CHITTA BOOK AND THE SUM OF ` 1,18,19,798.31 SHOWN BY IT IN THE AUDITED P&L ACCOUNT HAS BEEN CORRECTLY RECONCILED. AS PER THE ASSESSEE, OUT OF SUCH AMOUNT `20 LAKHS HAD TO BE TELESCOPED WITH OTHER INCOME ALREADY ADMITTED BY IT IN IT S RETURN. ANOTHER SUM OF ` 14,43,552/-, AS PER THE ASSESSEE REPRESENTED SALES RETURN NOT RECORDED IN THE CHITTA BOOK. THOU GH THE FIRST CONTENTION WITH REGARD TO ` 20 LAKHS, WE CAN ACCEPT, THE SECOND WITH REGARD TO SALES RETURN CANNOT BE ACCEPTED. SI MPLE REASON IS THAT ASSESSEE HAD FILED ITS P&L A/C ALONG WITH THE RETURN, AND SUCH RETURN WAS FILED AFTER THE DATE OF SURVEY. SU RVEY WAS CONDUCTED ON 15.02.07 WHEREAS THE PREVIOUS YEAR END ED ON 31.03.07. RETURN FOR THE IMPUGNED ASSESSMENT YEAR WAS FILED ITA. 959 /MDS12 CO NO.98/MDS/12/ 14 ON 31.10.07. THEREFORE, WE CANNOT WISH AWAY THAT S ALES SHOWN BY THE ASSESSEE IN ITS AUDITED P&L ACCOUNT. CREDI T SIDE OF THE TRADING ACCOUNT, APPEARING IN ITS AUDITED TRADING, PROFIT AND LOSS ACCOUNT IS REPRODUCED HEREUNDER:- BY SALES 11844246.31 LESS:RETURNS 24448.00 11819798.31 BY CLOSING STOCK 14880692.00 IT IS CLEAR THAT A SUM OF ` 1,18,19,798.31 HAS BEEN ARRIVED AFTER DEDUCTING SALES RETURN OF ` 24,448/-. BY ASSESSEES OWN ADMISSION, IT HAD NOT RECORDED ANY SALES RETURN IN THE CHITTA BOOK. THUS, THE SALES RETURN THAT WAS RECORDED IN ITS CA SHBOOK AND LEDGER COULD ONLY HAVE BEEN ` 24,448/-, AS REFLECTED IN THE AUDITED P&L ACCOUNT. ASSESSEES ACCOUNTS WERE SUBJ ECTED TO TAX AUDIT UNDER SECTION 44AB OF THE ACT AND THEREFORE, THE FINAL ACCOUNTS CERTIFIED BY THE TAX AUDITORS CANNOT BE IG NORED. THEREFORE, WE ARE OF THE OPINION THAT THE CIT(A) FE LL IN ERROR IN COMING TO A CONCLUSION THAT SALES RETURN OF THE ASS ESSEE WAS ` 14,43,552/-. CLAIM OF SUCH SALES RETURN WAS NOT E VIDENCED BY ANY RECORD AND THE CIT(A) HAD SIMPLY ACCEPTED THE S UBMISSION OF THE ASSESSEE. ASSESSEE HAD NO DOUBT, WORKED OUT T HE DIFFERENCE BETWEEN THE CHITTA BOOK AND THE SALES RECORDED IN THE REGULAR BOOKS IN A DATE WISE MANNER. HOWEVER, THI S DOES NOT ITA. 959 /MDS12 CO NO.98/MDS/12/ 15 RECONCILE THE DIFFERENCE IN ANY WAY NOR SHOW THAT SUCH DIFFERENCES WERE ON ACCOUNT OF SALES RETURNS. THER EFORE, WE ARE OF THE OPINION THAT CIT(A) FELL IN ERROR IN CURTAIL ING THE AMOUNT OF ADDITION FOR SUPPRESSED SALE OF ` 13,56,817/-. ADDITION REQUIRED FOR SUPPRESSION OF SALE IN OUR OPINION COMES TO ` 28,00,369/- AFTER CONSIDERING THE SUM OF ` 20 LAKHS ADMITTED BY THE ASSESSEE AS OTHER INCOME IN ITS RETURN. CONTENTION OF THE RE VENUE THAT ` 20 LAKHS ADMITTED BY THE ASSESSEE CANNOT BE CONSIDERED FOR EXPLAINING AT LEAST A PART OF UN-RECONCILED DIFFERE NCE IS A VERY NARROW VIEW AND CANNOT BE ACCEPTED. IN OTHER WORDS , THE TOTAL SUPPRESSED SALE WILL BE ` 48,00,369/- OUT OF WHICH A RELIEF OF ` 20 LAKHS CAN BE GIVEN TO THE ASSESSEE ON ACCOUNT OF SU CH AMOUNT BEING RETURNED AS OTHER INCOME. THEREFORE, THE OR DER OF CIT(A) ON THIS ISSUE IS SET ASIDE AND ADDITION TO THE EXTE NT OF ` 28,00,369/- IS SUSTAINED. ORDERED ACCORDINGLY. 14. COMING TO THE NEXT ISSUE WITH REGARD TO THE ADDITIO N OF UN- RECONCILED DIFFERENCES OF SUNDRY CREDITORS `6,70,914/-, WE FIND THAT ASSESSING OFFICER DID PUT BEFORE THE ASSESSEE THE ISSUE OF DIFFERENCE BETWEEN THE FIGURES SHOWN BY THE ASSESSE E AND THOSE CONFIRMED BY THE RESPECTIVE CREDITORS, BUT ASSESSEE HAD NOT REPLIED. NEVERTHELESS, IT IS A FACT THAT ASSESSEE WAS ABLE TO ITA. 959 /MDS12 CO NO.98/MDS/12/ 16 FURNISH SOME RECONCILIATION BEFORE THE CIT(A). AS PER THE ASSESSEE, THE DIFFERENCES WERE OWING TO CHEQUES ISS UED WHICH WERE ENCASHED BY THE PARTIES AFTER 31.03.07. WE AR E OF THE OPINION THAT IF THE CREDIT BALANCE DIFFERENCES WERE ON ACCOUNT OF SUCH CHEQUES, IT WILL BE UNFAIR TO TAX THE ASSESSEE ON SUCH AMOUNTS. WE ARE OF THE OPINION THAT THIS ISSUE REQ UIRES A FRESH LOOK BY THE ASSESSING OFFICER. HOWEVER, IT IS MADE CLEAR THAT UN- RECONCILED DIFFERENCE IN TRADE CREDITORS ACCOUNT CA NNOT BE ALLOWED TELESCOPING WITH SUPPRESSED SALES. SUPPRESSED SALES HAS NO RELEVANCE WITH THE CREDITORS ACCOUNT. TRADE CREDITO RS OF THE ASSESSEE WERE NOT PARTIES TO WHOM CASH PAYMENTS WER E PROBABLE. VERSION OF THE ASSESSEE THAT CASH COMING TO IT ON ACCOUNT OF SUPPRESSED SALES WERE USED FOR PAYMENTS TO SUCH CREDITORS CANNOT IN OUR OPINION BE ACCEPTED. THUS, THE ADDITION OF ` 6,70,914/- ON ACCOUNT OF DIFFERENCE IN CREDITORS RE CONCILIATION, IS REMITTED BACK TO THE ASSESSING OFFICER FOR CONSI DERATION AFRESH AFTER GIVING ASSESSEE AN OPPORTUNITY TO EXPLAIN TH E DIFFERENCES. ASSESSING OFFICER SHALL PROCEED IN ACCORDANCE WITH LAW. 15. NOW COMING TO THE LAST ISSUE, WHICH IS REGARDI NG UNEXPLAINED CASH OF ` 1,94,202/- BEING ALLOWED FOR TELESCOPING, ASSESSEE HAS MADE A CLAIM THAT THE ADDITION ITSELF COULD NOT HAVE ITA. 959 /MDS12 CO NO.98/MDS/12/ 17 BEEN MADE AT ALL. DIFFERENCE IN CASH WAS INDEED FO UND ON THE DATE OF SURVEY. NEVERTHELESS, SUPPRESSED INCOME ON ACCOUNT OF UNACCOUNTED SALES HAVING BEEN ADMITTED, THE EXCESS CASH COULD BE ATTRIBUTED TO IT. IN OTHER WORDS, TELESCOPING OF EXCESS CASH ` 1,94,202/- COULD BE ALLOWED WITH THE SUPPRESSED SAL ES. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE CIT(A) IN THIS REGARD. NEVERTHELESS, WE CANNOT ACCEPT THE CLAIM OF ASSESSEE, THAT THERE WAS NO UNEXPLAINED CA SH ON THE DATE OF SURVEY. ORDERED ACCORDINGLY. 16. TO SUMMARISE, GROUND NOS. 2 & 3 OF REVENUES A PPEAL STAND DISMISSED WHEREAS ITS GROUND NO.3 IS ALLOWED TO THE EXTENT MENTIONED BY US AT PARA 13 ABOVE. GROUND NO.5 OF THE REVENUE IS ALSO ALLOWED IN SO FAR IT RELATES TO TEL ESCOPING. WITH REGARD TO THE CROSS OBJECTION OF THE ASSESSEE, ITS GROUND NOS. 1 TO 2 ARE ALLOWED FOR STATISTICAL PURPOSES WHEREAS G ROUND NOS. 3 TO 4 ARE DISMISSED. 17. TO SUMMARISE, APPEAL OF REVENUE IS PARTLY ALLO WED WHEREAS THAT OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA. 959 /MDS12 CO NO.98/MDS/12/ 18 ORDER PRONOUNCED ON THURSDAY, THE 14 TH FEBRUARY, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED 14 TH FEBRUARY, 2013. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA. 959 /MDS12 CO NO.98/MDS/12/ 19 ITA. 959 /MDS12 CO NO.98/MDS/12/ 20