ACIT, Circle-20(1), V. Surat Electric Industries (India),

ITSSA 115/DEL/2003

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3020 (ITAT-DELHI)
• Duration Of Justice: 13 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 16-01-2017
• Assessment Year: misc
• Appeal Filed On: 10-04-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S S RANA
• Keywords: Gross profit estimation; Unexplained investment; Business income; Income from undisclosed sources; Loose papers; Document seized; Corroborative evidences; Block assessment; Documents seized
• Section: 69; 132; 154

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI H. S. SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER IT (SS) NO. 115 / DEL / 2003 ( BLOCK PERIOD 01.04.1989 TO 29.12.1999 ) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 20(1), NEW DELHI VS. M/S. SURAT ELECTRIC INDUSTRIES (INDIA), 3370, KUCHA JALAL, BHUKARI, DELHI GATE, DARYAGNAJ, DELHI PAN:AABFS5971M (APPELLANT) (RESPONDENT) CO NO. 123/DEL/2005 (IN IT ( SS) NO. 115 / DEL/2003) (BLOCK PERIOD 01.04.1989 TO 29.12.1999) M/S. SURAT ELECTRIC INDUSTRIES (INDIA), 3370, KUCHA JALAL, BHUKARI, DELHI GATE, DARYAGNAJ, DELHI PAN:AABFS5971M VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 20(1), NEW DELHI (APPELLANT) (RESPONDENT) IT ( SS) NO. 1 14 /DEL/2003 (BLOCK PERIOD 01.04.1989 TO 29.12.1999) (FILED AGAINST THE ORDER U/S 154 OF THE AO) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 20(1), NEW DELHI VS. MR. RAM BABU GUPTA, 3370, KUCHA JALAL, BHUKARI, DELHI GATE, DARYAGNAJ, DELHI PAN:AABFS5971M (APPELLANT) (RESPONDENT) PAGE 2 OF 28 IT ( SS) NO. 367 /DEL)/ 200 3 (BLOCK PERIOD 01.04.1989 TO 29.12.1999) M/S. SURAT ELECTRIC INDUSTRIES (INDIA), 3370, KUCHA JALAL, BHUKARI, DELHI GATE, DARYAGNAJ, DELHI PAN:AABFS5971M VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 20(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SS RANA, CIT DR REVENUE BY: SH. SB GARG, CA SH. BHAGWAN GARG, CA SH. PUNEET GUPTA, CA SH. SACHIN GARG, CA DATE OF HEARING 19/01/2017 DATE OF PRONOUNCEMENT 27 / 02 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THESE ARE THE APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF THE LD CIT (A) DATED 24/01/2003 PASSED IN APPEAL AGAINST THE ORDER OF LD AO PASSED U/S 158BC IN BLOCK ASSESSMENT ORDER DATED 31 - 12 - 2001 FOR BLOCK PERIOD .01.04.21989 TO 29.12.1999 . 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN IT(SS) NO. 115/DEL/2003: - I. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE LD CIT(A) HAS E R RED IN REDUCING UNDISCLOSED SALES TO THE EXTENT OF RS. 6033755/ - . PAGE 3 OF 28 II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD CIT(A) HAS ERRED IN DELETING UNACCOUNTED SALES AND UNACCOUNTED INVESTMENT OF RS. 627011/ - III. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD CIT ( A) HAS ERRED IN REDUCING SALES AND INVESTMENT TO THE EXTENT OF RS. 84894/ - . IV. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE LD CIT ( A) HAS ERRED IN DELETING UNDISCLOSED PROFIT OF RS. 89605/ - . V. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE LD CIT(A) HAS ERRED IN REDUCI NG DUPLICATE SALES AND UNDISCLOSED INVESTMENT OF RS. 115053/ - AND RS. 1035435/ - . VI. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD CIT ( A) HAS ERRED IN DELETING UNACCOUNTED PURCHASES/ TRANSPORTATION OF RS. 166155/ - AND RS. 18462/ - . VII. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD CIT(A) HAS ERRED IN REDUCING THE NET BALANCE OF SHRI KRISHAN BEING UNDISCLOSED SALES AMOUNTING TO RS. 4668/ - . VIII. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE LD CIT ( A) HAS ERRED IN DIRECTING THE AO TO APPLY NET PROFIT @2 % ON UNDISCLOSED SALES. 3. WE FIRST TAKE UP THE MAIN APPEAL FILED BY THE REVENUE IN IT (SS) NO. 115/DEL/2003 AGAINST THE ORDER OF THE L D CIT ( A) - XXII DATED 24.01.2003, ASSESSEE HAS FILED APPEAL AGAINST THE SAME ORDER IN IT ( SS) NO. 367/DEL/2003. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE APPEALS PERTAIN TO BLOCK PERIOD 01.04.1989 TO 29.12.1999. THE RELEVANT FACTS OF THE CASE ARE THAT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF TRADING AND MANUFACTURE OF ELECTRICAL ITEMS LIKE IRONS, TOA STERS, SMALL FANS, IMMERSION WATER HEATER ETC. PURSUANT TO THE INFORMATION RECEIVED FROM THE CUSTOMS AUTHORITIES, ACTION U/S, 1 32(1) OF THE INCOME TAX ACT WAS TAKEN AT RAJIV GANDHI INTERNATIONAL AIRPORT, HYDERABAD, ON 29 - 12 - 1999. DURING THIS ACTION, CASH O F RS. 6,98,500/ - WAS FOUND WITH SHRI RAM BABU GUPTA, WHO IS A PARTNER OF THE APPELLANT FIRM. OUT OF THIS AMOUNT, CASH PAGE 4 OF 28 OF RS. 6,90,000/ - WAS SEIZED . BESIDES THE CASH, BUNDLES OF LOOSE SHEETS CONTAINING DETAILS OF SALES ETC. WERE ALSO FOUND AND SEIZED WHICH ARE TITLED AS ANNEXURE RBG - 1, 2 AND 3 IN PANCHNAMA . STATEMENT OF THE APPELLANT WAS ALSO RECORDED AND A PANCHNAMA PREPARED. IN HIS STATEMENT, SHRI RAM BABU GUPTA ADMITTED THAT HE WAS THE MANAGING PARTNER OF THE APPELLANT FIRM, AND THAT HE WAS ENGAGED ON A LARGE SCALE IN THE PURCHASE AND SALE OF ELECTRICAL ITEMS OUTSIDE THE BOOKS OF ACCOUNT. HE STATED THAT THESE TRANSACTIONS, NOT RECORDED IN THE BOOKS OF ACCOUNT, WERE CARRIED OUT ON BEHALF OF THE FIRM MS. SURAT ELECTRIC INDUSTRIES (INDIA), ( ASSESSEE - APPELLANT) SITUATED AT DELHI, OF WHICH HE WAS ONE OF THE PARTNERS ALONG WITH HIS FATHER NAMELY SHRI SURAT RAM GUPTA . SHRI GUPTA ALSO ADMITTED THAT THIS FIRM HAD APPOINTED THEIR SELLING AGENTS AT HYDERABAD, BANGALORE, AND MUMBAI. TO A SPECIFIC QUESTION REGARDING CASH OF RS. 6,90,000/ - . SHRI RAM BABU GUPTA REPLIE D THAT HE HAD RECEIVED THIS MONEY FROM THREE PARTIES NAMELY , PRIME ELECTRICALS, GOLD STAR ELECTRICALS, AND FAMOUS ELECTRICALS ALL AT HYDERABAD. REGARDING THE LOOSE PAPERS, IT WAS ADMITTED THAT THE DETAILS MENTIONED IN THEM REPRESENTED SALES OUTSIDE THE BOO KS MADE TO THE FIRM'S PAGE 5 OF 28 AGENTS LOCATED AT MUMBAI, HYDERABAD, AND BANGALORE. SHRI RAM BABU GUPTA CATEGORICALLY ADMITTED THAT NOT ALL THESE SALES WERE RECORDED IN THE FIRM'S BOOKS OF ACCOUNTS AND SUCH BUSINESS TRANSACTIONS WERE CARRIED OUT OUTSIDE THE BOOKS, W ITHOUT BILLS ETC. SHRI RAM BABU GUPTA ALSO ADMITTED THAT THE RECEIPTS ON ACCOUNT OF THE SALE PROCEEDS WERE RECEIVED IN CASH. IN HIS STATEMENT GIVEN TO THE CUSTOMS AUTHORITIES AT HYDERABAD, SHRI RAM BABU GUPTA HAD STATED THAT HE HAD COLLECTED RS. 1 LAC FROM M / S. PRIME ELECTRICALS , HYDERABAD, RS, 15,200/ - FROM M/S. GOLDSTAR ELECTRICAL , H YDERABAD AND RS. 4,46,500/ - FROM M/S. FAMOUS EECTRICALS, HYDERABAD. THESE AMOUNTS RECEIVED FROM THESE PARTIES WERE NOT REFLECTED IN THE BOOKS OF ACCOUNT OF THE APPELLANT, AS T HERE WERE NO BILLS RAISED AGAINST THESE PARTIES. THE 19 COVERS FOUND IN POSSESSION OF SHRI RAM BABU GUPTA CONTAINED LOOSE SHEETS RELATING TO 19 PARTIES. EACH COVER CONTAINED PARTICULARS OF THE MATERIAL SENT ON VARIOUS DATES TO THAT PARTICULAR PARTY AND THE AMOUNTS FOR THE MATERIAL AND THE OUTSTANDING DUES WERE WRITTEN. ON THE RIGHT SIDE OF THE PAGE, PAYMENTS RECEIVED EARLIER WERE ALSO WRITTEN. THESE WERE ALL UNACCOUNTED TRANSACTION S DONE WITH THE PARTIES AND NOT PAGE 6 OF 28 REFLECTED IN THE BOOKS OF ACCOUNT. AS A FOLL OW UP TO THE SEARCH, THE I .T. AUTHORITIES AT HYDERABAD ALSO SURVEYED THE PREMISES OF MS. PRIME ELECTRICALS, M/ S. GOLD STAR ELECTRICALS AND M/S. FAMOUS ELECTRICALS ON THE SAME DAY. THE STATEMENTS OF THEIR PROPRIETORS / PARTNERS WERE RECORDED. THEY ADMITTED T HAT THEY WERE SIMULTANEOUSLY ENGAGED IN THE PURCHASE OF ELECTRICAL GOODS WITHOUT ANY BILLS ETC. FROM M / S. SURAT ELECTRIC INDUSTRIES (INDIA) AT DELHI. THEY ALSO ADMITTED TO HAVE GIVEN CASH LO SHRI RAM BABU GUPTA ON ACCOUNT OF PURCHASES MADE BY THEM OUTSIDE THE ACCOUNT BOOKS. A SEARCH U/S. 132 OF THE I. T. ACT WAS ALSO CARRIED OUT AT THE PREMISES OF THE APPELLANT FIRM AT DELHI, BOOKS OF ACCOUNT, AND SOME LOOSE SHEETS WERE SEIZED. A STOCK INVENTOR Y WAS ALSO PREPARED. IN THE COURSE OF THE ASSESSMENT PROCEEDIN GS BEFORE LD AO , IT WAS STATED ON BEHALF OF THE APPELLANT THAT THE TRANSACTIONS RECORDED IN THE LOOSE SHEETS SEIZED FROM SHRI RAM BABU GUPTA AT HYDERABAD RELATED TO A BUSINESS CARRIED OUT BY THE HUF OF SHRI RAM BABU GUPTA. HOWEVER, ON BEING ASKED BY THE L D AO SHRI RAM BABU GUPTA FAILED TO PRODUCE THE SALE BILLS. ALTHOUGH SHRI RAM BABU GUPTA PRODUCED ACKNOWLEDGEMENTS OF SOME IT AND W.T. RETURNS PAGE 7 OF 28 TILED BY THE HUF IN SOME EARLIER YEARS IN ORDER TO PROVE THAT THE HUF EXISTED, NO PROOF COULD BE FILED TO PROVE THAT THE UNACCOUNTED BUSINESS DETECTED AS A RESULT OF THE SEARCH AT HYDERABAD AIRPORT WAS EARNED OUT BY THE HUF. THE LD AO HAS GIVEN DETAILED REASONS IN THE ASSESSMENT ORDER FOR REJECTING THE APPELLANT'S EXPLANATION THAT THE UNACCOUNTED BUSINESS BELONGED TO THE HUF. INTER ALIA, THESE REASONS STATE THAT THE ONLY BANK ACCOUNT OF THE HUF WAS A SAVINGS ACCOUNT, IN WHICH ONLY ONE DEPOSIT OF RS. 5 , 000/ - WAS MADE AND THERE WERE NO WITHDRAWALS. THE HUF WAS NOT REGISTERED WITH THE SALE TAX DEPARTMENT. ALTHOUGH INCO ME TAX RETURN ACKNOWLEDGEMENTS HAVE BEEN FILED, NO PROOF OF PAYMENT OF ANY INCOME TAX HAS BEEN FILED. THE SEIZED LOOSE PAPERS CONTAIN THE NAME OF THE APPELLANT FIRM, AND FORTH THE APPELLANT AND THE AGENTS AT HYDERABAD HAD STATED AT THE TIME OF SEARCH THAT THE TRANSACTIONS WERE OF THE APPELLANT FIRM. NEITHER SALES BILLS NOR PURCHASE VOUCHERS IN THE NAME OF THE H UF WERE FILED. LD AO CONCLUDED THAT THE UNACCOUNTED TRANSACTIONS WERE A PART OF THE APPELLANT'S BUSINESS OUTSIDE THE BOOKS OF ACCOUNT, THE AO HAS PR OCEEDED TO ASSESS THE UNACCOUNTED INCOME AND THE INVESTMENT MADE OUTSIDE THE BOOKS DURING PAGE 8 OF 28 THE BLOCK PERIOD. THE AO HAS PREPARED A PARTY WISE SUMMARY OF THE TRANSACTIONS RECORDED IN THE LOOSE SHEETS. THIS SUMMARY HAS BEEN MADE AN ANNEXURE OF THE ASSESSMENT ORDER. ACCORDING TO THE LD AO, THE SALES AS PER THESE LOOSE SHEETS WERE RS. 2,68,50,073/ - FOR THE FINANCIAL YEARS 1997 - 98 TO 1999 - 2000 (FOR F. Y, 1997 - 98 RS. 8,61,953/ - , FOR F.Y. 1998 - 99 RS. 83,69,393/ - AND TOR AY 1999 - 2000 RS. 1,76,18,527/ - ). SINCE THES E SALES WERE NOT RECORDED IN THE BOOKS OF ACCOUNT, THE AO ESTIMATED THE NET PROFITS ON THESE SALES @ 10 % AND MADE AN ADDITION OF RS. 26,85,008/ - . THE LD AO HAS ALSO MADE A DETAILED ANALYSIS IN THE SUMMARY TO COMPUTE THE DIFFERENCE OF AMOUNT OF SALES MADE ON DIFFERENT DATES AND PARTIAL PAYMENTS RECEIVED AGAINST THESE SALES. ON THE BASIS OF THIS ANALYSIS, THE LD AO HAS COMPUTED THE UNDISCLOSED INVESTMENT IN THE UNACCOUNTED BUSINESS AS UNDER: I. F. Y. 1997 - 98 RS. 4,09,198/ - II. F.Y. 1998 - 99 RS. 41,63,232/ III. F.Y. 1999 - 2000 RS. 82,67,932/ - TOTAL RS, 1,28,40,362/ - THIS AMOUNT OF RS. 1,28,40,362/ - WAS SEPARATELY ADDED U/S. 69 AS UNEXPLAINED INVESTMENT, THE LD AO HAS FURTHER OBSERVED FROM THE SEIZED LOOSE SHEETS THAT ALL THE UNDISCLOSED TRANSACTIONS HAD NOT BEEN RECORDED IN THE PAGE 9 OF 28 SEIZED LOOSE SHEETS. THIS WAS BECAUSE THE LOOSE SHEETS WERE PRESERVED ONLY TILL THE PAYMENTS WERE RECEIVED. AFTER RECEIPT OF ALL THE PAYMENTS, THE SHEETS WERE DESTROYED. THE OLDER THE TRANSACTION, THE GREATER WAS THE CHANCE OF ITS BEING SQUARED UP. THAT IS WHY THE SHEETS FOR OLDER YEARS SHOWED CONSIDERABLY LESS SALES. FOLLOWING THIS ARGUMENT, THE LD AO ESTIMATED THE SALES FOR F.Y, 1997 - 98 AT RS. 50 LAKHS AND FOR F.Y. 1998 - 99 AT RS. 1 CRORE. SINCE THE AMOUNTS AS PER THE SEIZED PAPERS WERE LESS, THE AO MADE FURTHER ADDITIONS FOR NET PROFIT @10 % AND ALSO FOR THE UNEXPLAINED INVESTMENT IN THESE ADDITIONALLY ESTIMATED SALES. THESE ADDITIONS HAVE BEEN WORKED OUT TO RS. 16.3 LAC IN F.Y. 1997 - 98 AND R S. 41.4 LAC IN F.Y. 1998 - 99. O N THE BASIS OF SOME DOCUMENTS SEIZED IN THE SEARCH AT THE APPELLANT'S DELHI PREMISES, VIZ. BILL BOOKS OF M/S. DELTA TRADERS, THE AO HAS CALCULATED THE TOTAL OF UNACCOUNTED UNDISCLOSED PROFITS @ 10 % AND UNDISCLOSED INVESTMENT AT RS. 13,100/ - FOR F.Y. 1999 - 2000. IN THIS PROCESS, LD AO COMPUTED TOTAL UNDISCLOSED INCOME AT RS. 2 13,07,470 / - CONSEQUENTLY, ORDER U/S 158B, 158C OF THE ACT WAS FRAMED ON 31.12.2001 DETERMINING UNDISCLOSED INCOME OF RS. 21307470/ - . 5. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD CIT(A) - XXII, WHO PASSED AN ORDER ON 24.01.2003 PARTLY ALLOWING THE APPEAL OF THE ASSESSEE. 6. AFTER THAT THE ASSESSEE AND THE REVENUE BOTH PREFERRED APPEAL BEFORE COORDINATE BENCH WHO VIDE ORDER DATED 07.11.2008 DI SMISS ED THE APPEAL OF THE REVENUE AND ALLOWED THE APPEAL OF THE ASSESSEE IN CO NO. PAGE 10 OF 28 123/DEL/2005 HOLDING THAT WARRANT OF AUTHORIZATION ISSUED BY THE A D L . DIRECTOR OF INCOME TAX WAS INVALID. THEREFORE, THE WHOLE OF THE ASSESSMENT PROCEEDINGS WERE ALSO CONSE QUENTLY HELD TO BE VOID. 7. AGAINST THE ORDER OF THE COORDINATE BENCH THE REVENUE - PREFERRED APPEAL BEFORE THE HON'BLE DELHI HIGH COURT WHO VIDES ORDER DATED 05.05.2009 IN ITA NO. 709/2009 HAS HELD THAT WARRANT ISSUED BY THE ADDL . DIRECTOR OF INCOME TAX IS VALID AND THEREFORE SET ASIDE THE MATTER BACK TO THE TRIBUNAL TO CONSIDER THE APPEAL ON MERITS AND GO THROUGH ALL THE QUESTIONS RAISED THEREIN. 8. THEREFORE, NOW ALL THESE APPEALS ARE REQUIRED TO BE DECIDED ON MERITS. 9. THE FIRST GROUND OF THE APPEAL OF THE REVENUE IS AGAINST THE REDUCTION OF UNDISCLOSED SALES TO EXTENT OF RS. 6033755/ - . 10. LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE LD. ASSESSING OFFICER AND SUBMITTED THAT THE LD. CIT A HAS GIVEN DEDUCTION OF THE SUM WHICH ARE NOT NECESSARILY THE OPENING BALANCE IS OR HAVE NOT BEEN TAKEN INTO CONSIDERATION FOR MAKING AN ADDITION TO THE ACCOUNT OF SALES. 11. LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE LD. CIT APPEAL HAS JUST CONSIDERED THE AMOUNT OF OPENING BALANCE IS ADDED A GAIN ON EACH PAGE OF THE ANNEXURE SEIZED AND, THEREFORE IT IS JUST A CORRECTION IN THE TOTAL DISCLOSE AN AMOUNT WHERE THE AMOUNT OF RS. 6 033755/ HAS BEEN CONSIDERED TWICE BY THE LD. ASSESSING OFFICER. THEREFORE, IT WAS SUBMITTED THAT T HERE IS NO ERROR IN THE ORDER OF THE LD. CIT A. PAGE 11 OF 28 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE LD. CIT A HAS DEALT WITH THIS ISSUE AS UNDER: - THE APPELLANT HAS OBJECTED TO CERTAIN CALCULATION MISTAKES WHICH THE AO HAS ALLEGEDLY COMMITTED WHILE DRAWING INFERENCES FROM THE SEIZED MATERIAL IN GROUNDS NO. 10(1), 10(2) AND 10(3), THE APPELLANT HAS STATED THAT THE AO HAS ERRED IN ADDING AMOUNTS WHICH WERE DIFFERENT FROM THE AMOUNTS PROPOSED TO BE ADD ED IN THE SHOW CAUSE LETTER ISSUED TO THE APPELLANT. WHILE IT IS OBSERVED THAT THE AMOUNTS ADDED BY THE AO ARE INCORRECT THE AMOUNTS PROPOSED TO BE ADDED IN THE SHOW CAUSE LETTER WERE ALSO INCORRECT. THE CONNECT AMOUNTS TO BE ADDED ON THE BASIS OF THE SEIZED MATERIAL ARE SEPARATELY BEING WORKED OUT IN THIS APPEAL ORDER. THEREFORE, THESE GROUNDS ARE TREATED AS PARTLY ALLOWED. IN GROUND NO. 10(4), THE APPELLANT HAS STATED THAT SOME OF THE OPENING BALANCES WHICH HAD BEEN BROUGHT FORWARD FROM PREVIOUS PAGE S OF ANNEXURE RBG / 1, 2 AND 3, AS DETAILED BELOW, HAVE BEEN ERRONEOUSLY CONSIDERED BY THE AO AS SALES. PAGE NO. OF ANNX E OF ASSTT. ORDER AMOUNT (RS.) DATE RBG ANNX PAGE NO. NAME OF PART)' 1 1 165000 214410 16.07.97 18.11.97 2 2 63 62 PRINCE PRINCE 379410 SUB TOTAL A 3 3 170305 550000 01 .04.98 04.05.98 2 1 64 5 PRINCE MILTON 8 8 940913 222455 14.09.98 16.09.98 1 2 3 66 MILTON PRINCE 8 12 297000 772233 26.10,98 17,02.99 3 1 77 7 BHANDUP MILTON 13 13 339090 698069 22.03.99 31.03.99 2 1 65 8 PRINCE MILTON 3990065 SUB TOTAL B 14 15 140000 294433 22.04.99 27.04.99 2 3 59 77 - 78 PARAHK VIJAY 15 15 100000 320000 30.04.99 04.05.99 1 3 92 85 KISHORE KC 15 15 400000 100000 04.05.99 06.05.99 3 2 7 3 VISHNU GOLDSTAR 15 21 100000 704367 06.05.99 14.06.99 2 1 19 2 PRIME MILTON 24 26 301940 267620 17.07.99 31.07.99 2 1 67 113 PRINCE KISHORE 28 28 473442 714000 16.08.99 20.08.99 3 3 37 - 38 8 MITESH VISHNU PAGE 12 OF 28 32 38 230320 1600000 17.09.09 26.10.99 1 2 123 50 KISHORE MAHESH 38 163600 26.10.99 1 76 KISHORE 4469722 SUB - TOTAL C 8839197 GRAND TOTAL IT WAS STATED BY THE APPELLANT THAT THE AO, BY CONSIDERING THE OPENING BALANCES AS SALES, ERRED IN TAKING UNDISCLOSED SALES BY AN EXCESS AMOUNT OF RS. 3,79.410/ - FOR THE ASSESSMENT YEAR 1998 - 99, RS. 39.90.065/ - FOR THE ASSESSMENT YEAR 1999 - 2000 AND RS. 44,69,722/ - FOR ASSESSMENT YEAR 2000 - 01 (AGGREGATING TO RS.88,39,197/ - ). T H E E N T R I E S M E N T I ONED ABOVE HAVE BEEN CROSSCHECKED WITH THE SEIZED LOOSE SHEETS MARKED AS RBG - 1, 2 AND 3. IT IS FOUND THAT SALES TO A CERTAIN PARTY FOR A CERTAIN PERIOD HAVE BEEN RECORDED IN SUMMARY SHEETS. THESE SUMMARY SHEETS OFTEN HAVE OPENING BALANCES. THESE SHEETS ALSO CONTAIN RECORDS OF PAYMENTS REC EIVED, AND AMOUNTS RECEIVABLE CARRIED FORWARD. WHILE ALL THE FIGURES CLAIMED BY THE APPELLANT AS OPENING BALANCES ARE INDEED RECORDED IN THE SUMMARY SHEETS AS OPENING BALANCES, THE APPELLANT IS LIABLE TO GET BENEFIT ONLY IN RESPECT OF THOSE OPENING BALANCE S WHOSE CORRESPONDING SALES HAVE ALSO BEEN ADDED. WHEREVER AN OPENING BALANCE IS FOUND AS THE FIRST ENTRY IN RESPECT OF A PARTICULAR PARTY, IT IS TO BE ASSUMED THAT THE SALES THAT CONTRIBUTED TO THAT OPENING BALANCE HAVE NOT BEEN SEPARATELY ADDED TO THE UN DISCLOSED TURNOVER. THE APPELLANT WILL, HOWEVER, GET RELIEF FOR THOSE BALANCES IN RESPECT OF WHICH THE SALES LEADING TO THAT BALANCE HAVE BEEN SEPARATELY ADDED, AND THE BALANCE AMOUNT HAS ALSO BEEN ADDED. IN SUCH CASES, THERE HAS BEEN DOUBLE ADDITION. THE FOLLOWING ENTRIES ARE THOSE WHOSE BALANCES HAVE BEEN CARRIED FORWARD FROM THE PREVIOUS PAGES AND THE CONTRIBUTING ENTRIES OF THOSE BALANCES HAVE ALREADY BEEN CONSIDERED AS SALES: THIS SUM OF RS. 60,33,755/ - IS TO BE REDUCED FROM THE AMOUNT OF TOTAL SALES CALCULATED BY THE AO AT RS. 2,68,50,073/ - . ACCORDING TO US , THE LD. CIT A HAS JUST CORRECTED THE AMOUNT OF DISCLOSURE BY CHECKING ARITHMETIC ACCURACY OF THE PAPERS IMPOUNDED AND HE HAS NOT DELETED THE ADDITION . THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT 1 214410 18.11.97 2 62 PRINCE 3 170305 01.04.98 2 64 PRINCE 8 940913 14.09.98 1 3 MILTON 8 222455 16.09.98 2 66 PRINCE 12 772233 17.02.99 1 7 MILTON 13 339090 22.03.99 2 65 PRINCE 13 698069 31.03.99 1 8 MILTON 15 294433 27.04.99 3 77 - 78 VIJAY 21 704367 14.06.99 1 2 MILTON 24 301940 17.07.99 2 67 PRINCE 26 267620 31.07.99 1 113 KISHORE 28 714000 20.08.99 3 8 VISHNU 32 230320 17.09.99 1 123 KISHORE 38 163600 26.10.99 1 76 KISHORE 6033755 GRANT TOTAL PAGE 13 OF 28 POINT OUT ANY INFIRMITY OR INACCURACY IN THE ORDER OF THE LD. CIT APPEAL IN GRANTING REDUCTION OF ADDITION BY RS. 6 033755/ . IN THE RESULT GROUND NO. 1 OF THE APPEAL OF THE REVENUE IS DISMISSED. 13. GROUND NO. 2 OF THE APPEAL OF THE REVENUE IS AGAINST THE DELETION OF UNACCOUNTED SALES AND UNACCOUNTED INVESTMENT OF RS. 627011/ - . ON THIS GROUND, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE LD. ASSESSING OFFICER , WHEREAS THE LD. AUTHORIZED REPRE SENTATIVE RELIED UPON THE ORDER OF THE LD. CIT (A). 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND ALSO PERUSED THE ORDER OF THE LD. CIT A WHEREIN WHILE DECIDING GROUND NO. 10 (6) OF APPEAL BEFORE HIM. HE DEALT WITH THIS ISSUE AS UNDER: IN GROUND N O. 10 (6), THE APPELLANT HAS STATED MAT THE GOODS RETURNED BY THE PARTIES WHICH ARE DULY RECORDED IN THE ALLEGED SEIZED DOCUMENTS THAT IS, ANNEXURE RBG - 1. 2 AND 3 , AS DETAILED BELOW, HAVE NOT BEEN CONSIDERED BY THE AO, FOR CALCULATING THE UNDISCLOSED PRO FIT AND INVESTMENT AND THEREBY THE AO ERRED IN TAKING THE UNDI SCLOSED PROFIT AND INVESTMENT BY AN EXCESS AMOUNT OF RS. 62,701/ AND RS. 5,64,310/ - RESPECTIVELY. NAME OF PARTY AMOUNT (RS.) DATE RBG ANNEX PRINCE 8205 18900 25.03.98 22.05.98 2 1 62 13 KISHAN KISHAN 29216 62873 12.08.98 14.09.98 1 1 47 6 KISHAN MILTON 69399 9895 16.02.99 20.03.99 1 2 4 66 PRINCE MILTON 17776 54941 29.03.99 24.04.99 1 3 7 77 MILTON VIJAY 19284 15438 14.06.99 26.06.99 1 2 8 65 MILTON PRINCE PAGE 14 OF 28 33043 6180 18.08.99 13.09.99 3 1 7 113 VISHNU KISHORE 12926 31160 05.11.99 15.11.99 2 3 21 85 USHA KC 6260 107538 02.12,99 02.12.99 2 3 61 36 SABIE SAHAB MITESH 7614 5303 02.12.99 14.12.99 1 2 76 75 KISHORE PRINCE 10381 15.12.99 2 28 NAKODA 41872 17.12.99 2 59 PARAKH 58807 20.12.99 3 78 VIJAY 627011 THESE ALLEGED MISTAKES HAVE ALSO BEEN VERIFIED AND THE APPELLANT'S CONTENTION HAS BEEN FOUND CORRECT. THESE SALES RETURNS ALSO REDUCE BOTH UNACCOUNTED SALES AND UNACCOUNTED INVESTMENT. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY INFIRMITY IN THE ORDER OF THE LD. CIT APPEAL THAT HOW IS INCORRECT IN DELETING THE ADDITION OF RS. 627011/ - ON ACCOUNT OF UNACCOUNTED INVESTMENT AS ACCORDING TO HIM THERE IS AN ALLEGED MISTAKE WHI CH IS BEEN VERIFIED BY HIM AND THESE SALES RETURNS WERE ALSO REDUCED BOTH FROM THE UNACCOUNTED SALES AND UNACCOUNTED INVESTMENT. WE ALSO COULD NOT FIND OUT ANY ERROR IN THE ORDER OF THE LD. CIT (A) AND THEREFORE WE CONFIRM THE ORDER OF THE LD. CIT IN REDUC ING THE UNACCOUNTED INVESTMENT BY RS. 6 27011/ - FROM THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE. IN THE RESULT GROUND NO. 2 OF THE APPEAL OF THE REVENUE IS DISMISSED. 15. GROUND NO. 3 OF THE APPEAL OF THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT (A IN R ED UCING SALES AND INVESTMENT TO THE EXTENT OF RS. 84894/ - . THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE LD. ASSESSING OFFICER, WHEREAS THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT CIT APPEAL HAS CORRECTLY DELETED THE ADDITION WIDE DE CIDING GROUND NO. 10 (7) OF THE ASSESSEE. 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE LD. PAGE 15 OF 28 CIT (A) HAS DEALT WITH THIS ISSUE. WHILE DECIDING GROUND NO. 10 (7) OF HIS ORDER WHEREIN HE HAS GIVEN HIS FINDING AS UNDER: - IN GROUND NO. 10(7), THE APPELLANT THAT STATED THAT THE GOODS RETURNED BY THE PARTIES WHICH ARE DULY RECORDED IN THE ALLEGED SEIZED DOCUMENTS, THAT IS, ANNEXURE RBG - 1, 2 AND 3 . AS DETAILED BELOW, HAVE ERRONEOUSLY BEEN CONSIDERED B Y THE AO, AS SALES FOR CALCULATING THE UNDISCLOSED PROFIT AND INVESTMENT AND WHICH HAS DOUBLED THE EFFECT AND THEREBY THE AO ERRED IN TAKING THE UNDISCLOSED PROFIT AND INVESTMENT BY AN EXCESS AMOUNT OF RS. 8,489/ - AND RS. 76,405/ - RESPECTIVELY. PAGE NO. AMOUNT DATE ANNX PAGE NO. NAME PARTY 9 9971 17.11.98 1 16 KISHAN 46 10381 15.12.99 2 28 NAKODA 6 22095 23.07.98 1 18 KISHAN THIS MISTAKE HAS ALSO BEEN VERIFIED AND THE APPELLANT'S CONTENTION HAS BEEN FOUND TO BE CORRECT. THIS SUM OF RS. 84,894/ - HAS TO BE REDUCED BOTH FROM UNDISCLOSED SALES AND INVESTMENT. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) WHEREAS WE COULD FIND THAT IT IS ONLY CORRECTION OF THE DOUBLED ADDITION MADE BY T HE LD. ASSESSING OFFICER BASED ON THE SEIZED DOCUMENTS. THEREFORE WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT (A) AND CONFIRM HIS FINDING. IN VIEW OF THIS GROUND NO. 3 OF THE APPEAL OF THE REVENUE IS DISMISSED. 17. GROUND NO. 4 OF THE APPEAL OF THE R EVENUE IS AGAINST THE DELETION OF A SUM OF RS. 8 9605/ AS UNDISCLOSED PROFIT OF THE ASSESSEE . THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE LD. ASSESSING OFFICER, WHEREAS THE PAGE 16 OF 28 LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT CIT APPEAL HAS CORRECTLY DELETED THE ADDITION WIDE DECIDING GROUND NO. 10 (8) OF THE ASSESSEE. 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE LD. CIT (A) HAS DEALT WITH THIS ISSUE. WHILE DECIDING GROUND NO. 10 (8) OF HIS ORDER WHEREIN HE HAS GIVEN HIS FINDING AS UNDER: - IN GROUND NO, 10(8) THE APPELLANT HAS STATED THAT THE DISCOUNTS ALLOWED TO THE PARTIES WHICH ARE DULY RECORDED IN THE ALLEGED SEIZED DOCUMENTS THAT IS, ANNEXURE RBG - 1, 2 AND 3 AS DETAILED BELO W, HAVE NOT BEEN CONSIDERED BY THE AO, FOR CALCULATING THE UNDISCLOSED PROFIT AND THEREBY THE AC) ERRED IN TAKING THE UNDISCLOSED PROFIT BY AN EXCESS AMOUNT OF RS. 89,605/ - . THIS CONTENTION OF THE APPELLANT HAS ALSO BEEN VERIFIED AND FOUND CORRECT. THE UNDISCLOSED SALES AS WELL AS THE UNDISCLOSED INVESTMENT HAVE TO BE REDUCED BY THIS AMOUNT OF RS.89,605/ - AMOUNT (RS.) 6230 15902 6642 6130 10700 44000 89605 DATE 05.11.99 11.01.99 14.01,99 17.01.99 02.01.99 01.01.99 RBG ANNX 2 2 2 2 2 3 PAGE NO. 21 25 50 59 61 36 NAME OF PARTY USHA NAKODA MAHESH PARAKH SABIR SAHAB MITESH PAGE 17 OF 28 THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) WHEREAS WE COULD FIND THAT IT IS ONLY CORRECTION OF THE DOUBLED ADDITION MADE BY THE LD. ASSESSING OFFICER BASED ON THE SEIZED DOCUMENTS. THEREFORE WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT (A) AND CONFIRM HIS FINDING. IN VIEW OF THIS GROUND NO. 4 OF THE APPEAL OF THE REVENUE IS DISMISSED. 19. GROUND NO. 5 OF T HE APPEAL OF THE REVENUE IS AGAINST THE DELETION OF A SUM OF RUPEES ON 01/05/2005 TO 8/ ON ACCOUNT OF DUPLICATE SALES AND UNDISCLOSED INVESTMENT OF RS. 115053/ - AND RS. 1035435/ - . 20. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE LD. ASSESSING OFFICER, WHEREAS THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT CIT APPEAL HAS CORRECTLY DELETED THE ADDITION VIDE DECIDING GROUND NO. 10 (9) OF THE ASSESSEE. 21. WE HAVE CAREFUL LY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE LD. CIT (A) HAS DEALT WITH THIS ISSUE. WHILE DECIDING GROUND NO. 10 (9) OF HIS ORDER WHEREIN HE HAS GIVEN HIS FINDING AS UNDER: - PAGE 18 OF 28 IN GROUND NO. 10(9), THE APPELLA NT HAS STATED THAT SOME OF THE SALES WHICH ARE DULY RECORDED IN THE ALLEGED SEIZED DOCUMENTS THAT IS, ANNEXURE RBG - 1, 2 AND 3, AS DETAILED BELOW, HAVE BEEN CONSIDERED BY THE AC) MORE THAN ONCE TOR CALCULATING THE UNDISCLOSED INVESTMENT AND THEREBY THE AO H AS ERRED IN TAKING THE UNDISCLOSED INVESTMENT BY AN EXCESS AMOUNT OF RS. 1,15,053/ - AND RS. 10,35,475/ - RESPECTIVELY. PAGE NO. OF ANNX E OF ASST ORDER AMOUNT (RS.) DATE RBGAN NX PAGE N O . NAME OF PARTY 6 11 24132 8 29260 27.07.98 28.12.98 1 3 13 67 KISHAN BHANDUP 14 14 16800 15120 01.04.99 01,04.99 3 3 67 67 BHANDUP BHANDUP 14 15 32200 8640 12.04.99 05.05.99 3 1 38 92 BORIVALI KISHORE 15 16 11340 17440 10.05.99 11.05.99 1 3 92 67 KTSHORE BHANDUP 16 17 11040 14920 11.05.99 15.05.99 1 3 92 38 KISHORE BORIVALI 18 18 12000 13600 22.05.99 27.05.99 1 1 92 92 KISHORE KISHORE 19 19 11520 10200 02.06.99 05.06,99 I 1 92 92 KISHORE KISHORE 19 20 7360 7360 07.06.99 07.06.99 3 3 67 38 BHANDUP BORIVALI 20 21 20000 21720 08.06.99 16.06.99 1 3 92 38 KISHORE BORIVALI 21 22 8520 1 17.06.99 23.06.99 3 1 38 92 BORIVALI KISHORE 22 22 12400 9600 24.06.99 25.06.99 1 1 92 92 KISHORE KISHORE 23 23 8520 17000 02.07.99 02.07.99 1 1 92 92 KISHORE KISHORE 23 23 23400 24020 03.07.99 10.07.99 1 3 92 38 KISHORE BORIVALI 24 24 23400 8240 13.07.99 17.07.99 3 3 38 67 BORIVALI BHANDUP PAGE 19 OF 28 24 24 20000 15120 17.07.99 19.07.99 1 1 92 92 KISHORE KISHORE 25 26 10200 19200 19.07,99 31.07.99 KISHORE KISHORE 27 720 12.08,99 1 113 KISHORE 27 12000 13.0899 1 113 KISHORE 28 28 20000 6480 21.08.99 23.08.99 1 113 KISHORE KISHORE 29 29 13600 13600 27.08.99 37.08.99 1 113 KISHORE 31 31 14880 10200 10.09.99 11.09.99 1 113 KISHORE 31 20000 13,0999 32 12480 18.09.99 113 123 KISHORE KISHORE 32 33 10560 10800 21.09.99 22,09,99 123 123 KISHORC KISHORE 33 33 10800 10560 22.09.99 23.09.99 123 123 KISHORE KISHORE 33 33 10560 10560 23,09,99 23.09.99 123 123 KISHORE KISHORE 36 36 14880 14880 1.10.99 11.10.99 123 KISHORE 123 KISHORC 36 36 24000 24000 13.10.99 13.10.99 123 123 KISHORE KISHORC 39 39 15600 14880 02.11.99 03.11.99 1 1 KISHORE KISHORC 40 40 19800 8580 03.11.99 03.11.99 25 25 NAKODA NAKODA 42 43 20760 12480 19,11.99 24.11.99 76 76 KISHORE KISHORE 43 43 14880 17280 26.11.99 26,11.99 76 76 KISHORC KISHORE PAGE 20 OF 28 43 44 24000 17280 27.11.99 02.12.99 76 76 KISHORE KISHORE ON VERIFICATION, THIS CONTENTION OF THE APPELLANT HAS ALSO BEEN FOUND TO BE CORRECT. THE DUPLICATE SALES AMOUNTING TO RS.11,50,528/ - (RS. 1,15,053/ - + RS. 10,35,475/ - ) HAVE TO BE REDUCED. 22. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) WHEREAS WE COULD FIND THAT IT IS ONLY CORRECTION OF THE DOUBLED ADDITION MADE BY THE LD. ASSESSING OFFICER BASED ON THE SEIZED DOCUMENTS. THEREFORE WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT (A) AND CONFIRM HIS FINDING. IN VIEW OF THIS GROUND NO. 5 OF THE APPEAL OF THE REVENUE IS DISMISSED. 23. GROUND NO. 6 OF THE APPEAL OF THE REVENUE WAS AGAINST THE DELETION OF A SUM OF RS. 184617/ ON ACCOUNT OF UNACCOUNTED PURCHASES AND TRANSPORTATION EXPENSES OF RS. 166155/ - AND RS. 18462/ - RESPECTIVELY . 24. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE LD. ASSESSING OFFICER, WHEREAS THE LD. AUTHORIZED REPRESENTATIVE RELIED UPON THE ORDERS OF THE LD. CIT (A) . 25. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE LD. CIT (A) HAS DECIDED THIS ISSUE WIDE GROUND NO. 10 (10) AN D DELETED THE ABOVE ADDITION HOLDING AS UNDER: - IN GROUND NO. 10(10), THE APPELLANT HAS STATED THAT SOME OF THE SALES WHICH ARE RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COVERED UNDER BLOCK PERIOD HAVE ERRONEOUSLY BEEN CONSIDERED BY THE AO FOR CA LCULATING THE UNDISCLOSED INVESTMENT AND THEREBY THE AO HAS ERRED IN TAKING THE PAGE 21 OF 28 UNDISCLOSED PROFIT AND INVESTMENT BY AN EXCESS AMOUNT TO RS. 18.462/ - AND RS. 1,66,155/ - . PAGE NO. OF ANNX OF ASSTTT AMOUNT E (RS.) ORDER DATE RBG ANNX PAGE NO. NAME OF PARTY 1 2 5429 16224 13.08.97 18.02.98 2 2 6 6 TOP LINE TOP LINE 7 7 7488 3994 26.08.98 27.08.98 1 1 12 12 MILTON MILTON 7 5616 28.08.98 1 12 MILTON 7 7779 19.10.98 1 12 MILTON 37 11981 16.10.99 1 122 MAHINDRA 16 10857 13.05.99 3 88 KC 18 8424 24.05.99 3 88 KC 24 8570 17.07.99 3 88 KC 3 17982 16.04.98 3 86 KC 3 20467 24.04.98 3 86 KC 9 15444 04. I 1.98 3 86 KC 10 8112 20.11.98 3 86 KC 10 10234 24.11.98 3 86 KC 10 8611 20.11.98 3 86 KC 12 7675 12.02.99 3 86 KC 12 5740 12.02.99 3 86 KC ON VERIFICATION, IT IS ESTABLISHED THAT ALL THE ENTRIES EXCEPT THE LAST ONE, ARE RELATED TO M/S. EVERITE ELECTRICALS, IN FACT, THE SEIZED MATERIAL ITSELF MENTIONS THE NAME OF EVERITE ELECTRICALS. THE APPELLANT HAS ALSO PRODUCED A PHOTOCOPY OF THE LEDGER AC COUNTS OF KAYCEE ELECTRICALS AND MILTON ELECTRICAL IN THE BOOKS OF EVERITE ELECTRICALS (SEIZED), WHERE THESE ENTRIES EXIST. THE LAST ENTRY IS CLAIMED TO BE RECORDED IN THE BOOKS OF THE APPELLANT. HOWEVER, THE APPELLANT IS UNABLE TO FURNISH A COPY OF THE SE IZED LEDGER, AS ACCORDING TO HIM THE AO HAS NOT ALLOWED HIM TO TAKE PHOTOCOPIES. IN ANY CASE, THE SEIZED PAGE NO. 91 OF RBG - 3 SHOWS THAT THIS AMOUNT OF RS. 3,990/ - IS ACTUALLY A SALES RETURN AND NOT A SALE. THEREFORE, ALL THESE SALES HAVE TO BE EXCLUDED F ROM THE FIGURE OF UN DIS CLOSED SALES. PAGE 22 OF 28 THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) WHEREAS WE COULD FIND THAT IT IS ONLY CORRECTION OF THE DOUBLED ADDITION MADE BY THE LD. ASSESSING OFFICER BASED O N THE SEIZED DOCUMENTS. THEREFORE WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT (A) AND CONFIRM HIS FINDING. IN VIEW OF THIS GROUND NO. 6 OF THE APPEAL OF THE REVENUE IS DISMISSED . 26. REVENUE DID NOT PRESS GROUND NO. 7 OF THE APPEAL ON ACCOUNT OF SMALLNESS OF THE AMOUNT AND THEREFORE IT IS DISMISSED. 27. GROUND NO. 8 OF THE APPEAL OF THE REVENUE IS AGAINST THE ADOPTION OF THE GROSS PROFIT RATE APPLIED BY THE LD. CIT (A) AT THE RATE OF 2% ON THE UNDISCLOSED SALES AGAINST THE ESTIMATE MADE BY THE LD. ASSESSING OFFICER AT THE RATE OF 10%. 28. THIS GROUND WAS VEHEMENTLY CONTESTED BY THE LD. DEPARTMENTAL REPRESENTATIVE STATING THAT THE LD. CIT (A) HAS ALSO TAKEN A VERY LOW GROSS PROFIT RATE, WHICH IS NOT COMMENSURATE IN WITH THE UNACCOUNTED SALES OF THE ASSESSEE. HE SAID VEHEMENTLY SUBMITTED THAT IN UNACCOUNTED SALES. THERE IS LOT OF EXPENDITURE, WHICH IS BEEN ALREADY INTO THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE. THEREFORE, THE NET PROFIT RATE A DOPTED BY THE LD. CIT (A) IS VERY, VERY LOW. THE LD. DEPARTMENTAL REPRESENTATIVE THEREFORE VEHEMENTLY CONTESTED THAT THE TRIBUNAL SHOULD ADOPT A RATE, WHICH IS IN BETWEEN THE RATE ADOPTED BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (A). PAGE 23 OF 28 29. LD. A UTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE RATE OF PROFIT HAS BEEN RIGHTLY TAKEN BY THE LD. CIT (A) AT 2% OF THE UNACCOUNTED SALES. HE RELIED UPON THE ORDERS OF THE LD. CIT (A) THOUGH RESERVING HIS RIGHT TO CONTEST THE AMOUNT OF UNACCOUNTE D SALES. 30. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AS WELL AS PERUSED THE ORDER OF THE LD. ASSESSING OFFICER AS WELL AS LD. CIT (A). THE ISSUE HAS BEEN DEALT WITH BY THE LD. 1 ST APPELLATE AUTHORITY AS UNDER: - I HAVE CONSIDERED THE APPELLANT'S SUBM ISSIONS AND THE EVIDENCES BROUGHT ON RECORD BY THE AO. IN ARRIVING AT THE TAXABLE INCOME OF THE YEAR, THE AO HAS RESORTED TO ESTIMATES OF VARIOUS TYPES. HE HAS ESTIMATED THE NET PROFIT % 10 % OF THE UNDISCLOSED SALES. FOR DOING SO, HE HAS TAKEN THE FIGURE OF SALES NOT ONLY FROM THE SEIZED PAPERS, BUT HE HAS ALSO SEPARATELY ESTIMATED SALES OF RS. 50 LAC IN F.Y. 1997 - 98 AND RS. 1 CRORE IN F.Y. 1998 - 99. NO SUCH ESTIMATE HAS BEEN RESORTED TO IN THE LAST F.Y. 1999 - 20OO, APPARENTLY BECAUSE THE FIGURE OF RS. 1.76 CRORE INDICATED BY THE SEIZED PAPERS WAS SUFFICIENTLY HIGH. THE ONLY REASON FOR ESTIMATING THE UNDISCLOSED SALES IN THE FIRST TWO YEARS AT FIGURES HIGHER THAN THE FIGURES COMING OUT OF THE SEIZED PAPERS IS THAT THESE FIGURES ARE CONSIDERABLY LOWER THAT THE FIGURE OF F.Y. 1999 - 2000. THE AO HAS ACTED ON THE CONJECTURE THAT THE SALES MUST HAVE BEEN ON A SIMILAR LARGE SCALE IN THESE TWO YEARS ALSO, BUT THE SEIZED PAPERS DO NOT REFLECT THE CORRECT FIGURES. 1 HIS WAS PROBABLY SO BECAUSE, AS THE APPELLANT COLLECTED THE PAYMENTS AND SQUARED UP THE ACCOUNTS, THE LOOSE SHEETS WERE DESTROYED. THIS IS A CLASSIC EXAMPLE OF A CONJECTURE BASED UPON SUSPICION. IN LAW, A DECISION HAS TO BE BASED UPON EVIDENCE. SUSPICION, HOWEVER GREAT, CANNOT TAKE THE PLACE OF EVIDENCE. IN THIS CASE, A SEARCH HAS TAKEN PLACE IN THE PREMISES OF THE APPELLANT AND ON THE PE RSON OF THE MAIN PARTNER . CERTAIN EVIDENCE HAS BEEN DISCOVERED. IN ADDITION, SURVEYS HAVE BEEN CONDUCTED AT THE PREMISES OF SOME BUYERS AND STATEMENTS OF SOME BUYERS HAVE BEEN RECORDED. IF ANY MORE INVESTIGATION WAS NEEDED, THE AO WAS AT LIBERTY TO CARRY I T OUT. HOWEVER, WHEN THE AO SITS DOWN TO CALCULATE THE TAXABLE INCOME AFTER SUCH ELABORATE INVESTIGATION, HIS ASSESSMENT ORDER WOULD LOOK CONVINCING ONLY IF HE RELIED UPON EVIDENCE COLLECTED BY HIM. PAGE 24 OF 28 SINCE THERE IS NO EVIDENCE OR COGENT MATERIAL TO SUPPORT THE ESTIMATES OF SALES OF RS. 50 LAC AND RS. 1 CRORE. THE ESTIMATED ADDITIONS OF NET PROFITS AND UNEXPLAINED INVESTMENTS AS A CONSEQUENCE OF THESE ESTIMATES ARE DELETED. THE ESTIMATED 10 % RATE OF NET PROFIT IS ALSO WITHOUT ANY BASIS. THE BOOKS OF ACCOUNT OF THE APPELLANT HAVE BEEN SEIZED. THE AO HAS NOT ANALYZED THESE BOOKS TO FIND OUT THE REASONABLE RATE OF NET PROFIT IN THE APPELLANT'S BUSINESS. IN FACT THERE IS NO INDICATION IN THE ASSESSMENT ORDER THAT THESE BOOKS HAVE BEEN EXAMINED. THERE IS NO MATERI AL IN THE SEIZED LOOSE SHEETS TO SUPPORT THE AO'S CONTENTION THAT THE NET PROFIT SHOULD BE 10 %, THE POST SEARCH INVESTIGATION ALSO HAS THROWN UP NO EVIDENCE THAT THE CORRECT NET PROFIT RATE .SHOULD BE 10 %. THE AO HAS NOT BEEN ABLE TO QUOTE ANY COMPARABLE CASE ALSO. SO FAR AS THE SALES OF RS, 13.100/ - BEING DENIED BY THE APPELLANT ARE CONCERNED, THE APPELLANT HAS PRODUCED NO MATERIAL TO REBUT THE ONUS CAST UPON IT US. 132(4A) OF THE LT. ACT. AS THE BILLS OF MS. DELTA TRADERS HAVE BEEN FOUND IN THE APPELLAN T'S PREMISES AND THE APPELLANT HAS FAILED TO FURNISH ANY EVIDENCE THAT THESE PAPERS DO NOT RELATE TO ITS BUSINESS, THE AO'S ACTION IN TREATING THESE SALES OF RS. 13,100/ - AS THE APPELLANT'S SALES HAS TO BE CONFIRMED. HOWEVER, THE ENTIRE AMOUNT OF RS. 13,10 0 - HAS BEEN WRONGLY TREATED AS THE APPELLANT'S INCOME. SINCE THE PROFIT AND THE UNDISCLOSED INVESTMENT IN THE UNDISCLOSED TURNOVER ARE BEING SEPARATELY WORKED OUT, THESE UNDISCLOSED SALES WOULD ALSO BE SUBJECTED TO THE SAME TREATMENT. ACCORDING TO THE APP ELLANT, THE RETURNED NET PROFITS ON THE BASIS OF ITS BOOKS OF ACCOUNT FOR THE THREE YEARS WERE AS UNDER; A.Y. 1998 - 99 G.P. 14.52 % N.P. 0.72 % A.Y. 1999 - 2000 G.P.14.86 % N.P. 0.82 % A.Y. 2000 - 01 G.P. 14.76 % N.P. 1.99 % SINCE IT HAS BEEN ESTABLISHED THAT THE SALES RECORDED IN THE SEIZED LOOSE SHEETS WERE NOTHING BUT AN UNDISCLOSED PART OF THE APPELLANT'S BUSINESS OF MANUFACTURE AND SALE OF ELECTRICAL GOODS, VIZ. IRONS, IMMERSION RODS. TOASTERS AND FANS, IT HAS TO BE ASSUM ED THAT THE ENTIRE BUSINESS WAS ESSENTIALLY THE SAME. THE SAME GOODS WERE MANUFACTURED AND SOLD , AND THE RAW MATERIALS WERE THE SAME. PROBABLY THE SUPPLIERS OF RAW MATERIALS AND PURCHASERS OF FINISHED GOODS WERE ALSO THE SAME PARTIES, BUT THIS FACT IS NOT AVAILABLE FROM THE RECORD. EVEN IF THE SUPPLIERS OF RAW MATERIALS AND PURCHASERS OF FINISHED PAGE 25 OF 28 GOODS WERE NOT THE SAME, IT HAS TO BE KEPT IN MIND THAT THE UNDISCLOSED PART OF THE BUSINESS WAS ALSO SUBJECT TO THE SAME MARKET FORCES AND CONDITIONS. THEREFORE, MERE IS NO CHANCE THAT THE MARGIN OF PROFIT ON THE UNDISCLOSED GOODS WAS HIGHER. THE AO HAS MADE NO EFFORT TO COLLECT INFORMATION ABOUT THE COST OF GOODS AND THE MANUFACTURING COSTS. HOWEVER, IT IS KNOWN THAT THERE IS NO SHORTAGE IN THE MARKET OF THE PROD UCTS MANUFACTURED BY THE APPELLANT. THE APPELLANT DOES NOT ENJOY THE BENEFIT OF A REPUTED BRAND NAME OR A MONOPOLY IN TECHNOLOGY. THEREFORE, A NET PROFIT RATE OF 10 O, WHICH TRANSLATES TO A GROSS PROFIT RATE OF ABOUT 2 % , DOES NOT SEEM PROBABLE. IN THE ABS ENCE OF SUPPORTING EVIDENCE, LIKE TRADING RESULTS OF OTHERS IN A COMPARABLE BUSINESS, THIS NET PROFIT RATE OF 10 % CANNOT BE UPHELD. THE AO IS DIRECTED TO ADOPT A NET PROFIT RATE OF 2 %. WHICH IS THE APPROXIMATE RATE OF NET PROFIT IN THE DISCLOSED PART OF THE APPELLANTS BUSINESS? THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) WHEREAS WE COULD FIND THAT LD CIT (A) HAS ADOPTED THE NET PROFIT RATE OF 2 % WHICH IS HIGHEST OF THE THREE YEARS CONSIDERE D BY T HIM . HE ALSO CORRECTLY HELD THAT THERE IS NO BASIS OF ADOPTING RATE OF 10 % BY THE LD. AO. THEREFORE WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT (A) AND CONFIRM HIS FINDING. IN VIEW OF THIS GROUND NO. 8 OF THE APPEAL OF THE REVENUE IS DIS MISSED. 31. IN THE RESULT ITA NO. 115/DEL/2003 FILED BY THE REVENUE IS DISMISSED. 32. ASSESSEE HAS FILED CROSS OBJECTION VIDE CO NO. 123/DEL/2005 (IN IT(SS) NO. 115/DEL/2003) (BLOCK PERIOD 01.04.1989 TO 29.12.1999), AND IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE BEFORE US THAT THE ASSESSEE DOES NOT WANT TO PRESS THE CROSS OBJECTION. IN THE RESULT, CO FILED BY THE ASSESSEE IN ITA NO. 115/DEL/2003 IS DIS MISSED. PAGE 26 OF 28 33. THE ASSESSEE HAS FILED CO NO. 123/DEL/2005 IN THE ABOVE APPEAL OF REVENUE, HOWEVER, DURING THE COURSE OF HEARING THE LD AR SUBMITTED THAT THE ASSESSEE DOES NOT WANT TO PURSUE THIS CROSS OBJECTION. SUCH ARGUMENT WAS ALSO NOTED ON THE GROUNDS OF CROS S OBJECTION, WHICH WERE SIGNED BY THE LD AR ON 19.01.2017. IN VIEW OF THIS WE DISMISS CO NO. 123/DEL/2005 FILED BY THE ASSESSEE. 34. ASSESSEE HAS ALSO FILED AN APPEAL WHEREIN ASSESSEE HAS RAISED THE SEVERAL GROUNDS OF APPEAL IN IT(SS) NO. 367/DEL/2003. ON CA LLED FOR HEARING AND ARGUMENT, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT IT DOES NOT WANT TO PRESS THIS APPEAL. SUCH ARGUMENT WAS ALSO NOTED ON THE GROUNDS OF CROSS OBJECTION, WHICH WERE SIGNED BY THE LD AR ON 19.01.2017. IN VIEW OF THE ABOVE SUBMISSIONS. WE DISMISS IT (SS) 367/DEL/2003 FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT APPEAL IS ALSO DISMISSED. 35. T HE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN IT(SS) NO. 114/DEL/2003 AGAINST THE ORDER OF LD CI T(A) PASSED ON 22.01.2003 IN APPEAL AGAINST THE ORDER U/S 154 OF THE INCOME TAX ACT PASSED BY THE LD ASSESSING OFFICER ON 29.08.2002. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD CIT(A) HAS ERRED IN ALLOWING A RELIEF OF RS. 6033755/ - UNDER THE HE AD UNDISCLOSED SALES. THE APPELLANT CRAVE, FOR PERMISSION FOR ADDITION/ ALTERATION TO THE GROUNDS OF APPEAL DURING THE COURSE OF HEARING. 36. THE ASSESSEE FILED A RECTIFICATION APPLICATION U/S 154 ON 21.02.2002 FOR EXCLUSION SOME OF THE OPENING BALANCES PAGE 27 OF 28 WHICH WERE BROUGHT FORWARD FROM PREVIOUS PAGES OF SEIZED SHEETS, WHICH HAVE BEEN CONSIDERED BY THE AO AS SALES . 37. THE LD AO REJECTED THE APPLICATION AND THEREFORE APPEAL WAS PREFERRED BEFORE THE LD CIT(A). THE LD CIT(A) DIRECTED THE AO TO REDUCE THE SUM OF RS. 6033755/ - FROM THE AMOUNT OF TOTAL SALES CALCULATED OF RS. 26850073/ - . AGAINST THE ORDER OF THE LD CIT(A) REVENUE IS IN APPEAL BEFORE US. 38. AS WE HAVE ALREADY DEALT WITH THIS GROUND OF APPEAL IN GROUND NO. 1 OF THE APPEAL OF THE REVENUE IN ITA NO. 115/DEL/2003 WHEREIN WE HAVE HELD THAT THERE IS NO ERROR IN THE ORDER OF LD. CIT APPEAL IN ALLOWING THE RELIEF OF RS. 6033755/ - FROM UNDISCLOSED SALES. IN THE RESULT WE DISMISS THIS APPEAL OF THE REVENUE. 39. IN THE RESULT ALL THE APPEALS FILED BY THE REVENUE AND ALL THE CROSS OBJECTION AND APPEAL FILED BY THE ASSESSEE AS UNDER ARE DISMISSED. ITA NO. PREFERRED BY PERIOD SECTION RESULT 115/DEL/2003 REVENUE AGAINST ORDER CIT(A) DATED 24.01.2003 01.04.1989 TO 29.12.199 158BC DISMISSED CO 123/DEL/2005 ASSESSEE IN ITA NO. 115/DEL2003 01.04.1989 TO 29.12.199 158BC DISMISSED PAGE 28 OF 28 367/DEL/2003 ASSESSEE AGAINST ORDER OF CIT(A) DATED 24.01.2003 01.04.1989 TO 29.12.199 158BC DISMISSED 114/DEL/2003 REVENUE AGAINST ORDER OF CIT(A) DATE D 22.01.2003 01.04.1989 TO 29.12.199 158BC READ WITH SECTION 154 OF THE ACT DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 / 0 2 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 7 / 0 2 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI