RSA Digiprints, Baroda V. The ACIT, Central Circle-1, Baroda

ITSSA 119/AHD/2014

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2448 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 27-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Keywords: Unexplained cash credit; Rejection of books of accounts; Depreciation; Income from undisclosed sources; Question of law; Reasonable cause; Unabsorbed depreciation
• Section: 143(3); 153A; 68; 132; 2; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER IT(SS)A NOS. 118 TO 120/AHD/2014 & ITA NO.593/ AHD/2014 (ASSESSMENT YEARS: 2007-08 & 2010-11) M/S. RSA DIGI PRINTS, FF-19, CLASSIC COMPLEX, BPC ROAD, AKOTA, BARODA-390020 APPE LLANT VS. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, BARODA RESPONDENT & IT(SS)A NOS. 165/AHD/2014 & ITA NO.1219/AHD/20 14 (ASSESSMENT YEAR: 2009-10 & 2010-11) ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, BARODA APPELLANT VS. M/S. RSA DIGI PRINTS, FF-19, CLASSIC COMPLEX, BPC ROAD, BARODA-390020 RESPONDENT PAN: AAIFR3385F / BY ASSESSEE : SHRI ANIL KSHATRIYA, A.R. /BY REVENUE : SMT. VIBHA BHALLA, CIT D.R. & MR. PRASOON KABRA, SR.D.R. /DATE OF HEARING : 26.10.2016 /DATE OF PRONOUNCEMENT : 21.11.2016 IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 2 - ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS BATCH OF SIX APPEALS PERTAINS TO ASSESSMENT YE ARS 2007-08 TO 2010-11 . THIS ENTIRE BATCH OF CASES ARISES AGAINS T A COMMON ORDER OF THE CIT(A)-IV, AHMEDABAD DATED 03.02.2014 IN APPEAL NOS . CIT(A)- IV/157B/CC-1/11-12, CIT(A)-IV/158B/CC-1/11-12, CIT( A)-IV/159B/CC- 1/11-12 & CIT(A)-IV/160B/CC-1/11-12 (ASSESSMENT YEA R-WISE); RESPECTIVELY. 2. FIRST ASSESSMENT YEAR 2007-08 COMPRISES OF ASSES SEES APPEAL IT(SS)A NO.118/AHD/2014 RAISING TWO SUBSTANTIVE GROUNDS INT ER ALIA PLEADING THAT THE CIT(A)S ORDER IS AGAINST THE LAW AND FACTS FOLLOWE D BY THE LATTER GROUND ASSAILING CORRECTNESS OF SECTION 68 ADDITION OF UNE XPLAINED CASH CREDITS OF RS.50LACS RECEIVED FROM ONE SHRI JAI SINGH BHANWERL AL CHAUHAN AS MADE BY BOTH THE LOWER AUTHORITIES; RESPECTIVELY. 3. SECOND ASSESSMENT YEAR 2008-09 INVOLVES ASSESSEE S APPEAL IT(SS)A NO.119/AHD/2014 RAISING IDENTICAL FIRST SUBSTANTIVE GROUND AS IN FORMER ASSESSMENT YEAR HEREINABOVE ALONGWITH THE LATTER ON E CHALLENGING DISALLOWANCE OF INTEREST OF RS.3,07,530/- PAID TO T HE ABOVE CREDITOR ON SECTION 68 ADDITION AMOUNT OF RS.50LACS HEREINABOVE ; RESPECTIVELY. 4. THIRD ASSESSMENT YEAR 2009-10 INVOLVES ASSESSEE S AND REVENUES CROSS APPEALS IT(SS)A NO.120 & 165/AHD/2014; RESPEC TIVELY. THE ASSESSEES FIRST SUBSTANTIVE GROUND IS IDENTICAL AS IN PRECEDING ASSESSMENT YEARS APPEALS. ITS SECOND SUBSTANTIVE GROUND ASSA ILS CORRECTNESS OF SECTION 68 ADDITION OF RS.25LACS LOAN AMOUNT RECEIVED FROM SHRI CHAUHAN HEREINABOVE AS MADE IN COURSE OF BOTH THE LOWER PRO CEEDINGS. THE REVENUES CROSS APPEAL ON THE OTHER HAND SEEKS TO R EVIVE SECTION 68 ADDITION IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 3 - OF RS.80,83,000/- OF UNEXPLAINED CASH CREDITS ALONG WITH INTEREST THEREUPON OF RS.3,75,252/- AS MADE IN THE COURSE OF ASSESSMEN T AND DELETED IN LOWER APPELLATE PROCEEDINGS. RELEVANT PROCEEDINGS IN THE ABOVE THREE ASSESSMENT YEARS 2007-08 TO 2009-10 ARE U/S.153A R.W.S. 143(3) OF THE INCOME TA X ACT, 1961 IN SHORT THE ACT. 5. WE PROCEED FURTHER TO NOTICE THAT THE ASSESSEE H AS FILED AN IDENTICAL NOTE DATED 3-6/9/2016 IN ALL OF ITS THREE APPEALS I N FIRST THREE ASSESSMENT YEARS SEEKING TO RAISE THE FOLLOWING ADDITIONAL GROUNDS: 1.1 THE ABOVE NAMED APPELLANT RESPECTFULLY BEGS TO SUBMIT THAT THE IT. APPEAL MATTERS IN OUR CASE WAS HANDLED BY M/S. S.G.BHAGVAT & CO. CHARTERED ACCOUNTANTS, PREVIOUSLY. IN THE MEANWHILE, THE BRIE F OF THE CASE HAS BEEN REFERRED TO SHRI ANIL KSHATRIYA, ADVOCATE ALONG WITH COPIES OF PART OF RECORD. 1.2 ON GOING THROUGH THE RECORD, IT IS SEEN THAT TH E APPELLANT HAD PREFERRED AN APPEAL AGAINST THE ORDER U/S 153A R.W.S 143(3) OF T HE ACT DATED 26/12/2011 PASSED BY THE ACIT, CENT.CIRCLE-1 BARODA, BEFORE LD.CIT(A) . THE LD.CIT(A) HAS PASSED APPELLATE ORDER DATED 03/02/2014 WHO HAS PARTLY ALL OWED THE SAME. BEING AGGRIEVED, THE APPELLANT HAS PREFERRED FURTHER APPE AL ON 27/02/2014 BEFORE THE HON'BLE TRIBUNAL, WHICH IS IN THE PROCESS OF HEARIN G. 1.3 WHEREAS IT'S NOTICED THAT THROUGH BONAFIDE INAD VERTENT ERROR, THE GROUNDS OF APPEAL BEING RAISED NOW, REMAINED TO BE RAISED AT T HE INITIAL STAGE. IT IS RESPECTFULLY SUBMITTED THAT THERE IS NO WILLFUL OMI SSION ON THE PART OF THE APPELLANT. IN THIS VIEW OF THE MATTER, IT IS KINDLY REQUESTED TO EXERCISE THE DISCRETION VEST IN HON'BLE TRIBUNAL BY ALLOWING THE APPELLANT TO GO IN TO THE GROUNDS RAISED NOW WHICH REMAINED TO BE RAISED SPECIFICALLY IN THE ORI GINAL GROUNDS OF APPEAL. THE SAME ARE IN CONFIRMITY WITH THE RELEVANT FACTS WHIC H ARE IN RECORD IN RESPECT OF ISSUE INVOLVED. 1.4 NOW IT IS SEEN THAT IN ORDER TO MEET WITH THE F INDINGS OF THE A.O. &. CIT(A), IT IS FELT NECESSARY TO RAISE SPECIFIC GROUNDS RELEVAN T TO IT FOR THE FAIR DISPOSAL OF THE PRESENT APPEAL. THEREFORE, THIS MAY KINDLY BE ALSO TREATED AS AN AP PLICATION UNDER RULE 11 OF THE IT (A.T.) RULE 1963 IN RESPECT OF THE ADDITIONAL GROUNDS BEING RAISED. THE SAME MAY BE KINDLY BE ADMITTED AN D TAKEN UP FOR HEARING. IT MAY KINDLY BE APPRECIATED THAT THE ISSUE(S) RAISED IN THE ADDITIONAL GROUNDS WERE EMERGING FROM THE RETURN OF INCOME FILED AND SUBSEQ UENT ASSESSMENT MADE ON IT AND DON'T REQUIRE INVESTIGATION OF ANY FACTS. THERE FORE, IT IS URGED THAT THE SAME MAY BE ADMITTED AND ADJUDICATED UPON, IN THE INTERE ST OF JUSTICE & EQUITY. 2. REASONS FOR RAISING ADDITIONAL GROUNDS OF A PPEAL IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 4 - 2.1 IN THE GROUNDS OF APPEAL ANNEXED TO THE APPEAL MEMO IN FORM NO. 35, THE APPELLANT HAD RAISED A GROUND BEARING SI.NO.1.3 WHI CH READ AS UNDER.- '1.3 THE ORDER OF THE ASSISTANT COMMISSIONER OF INC OME TAX, CENTRAL CIRCLE-1, BARODA (HEREINAFTER REFERRED TO AS THE A. O.) IS AGAINST LAW AND FACTS.' 2.2 HOWEVER, WHILE PASSING A CONSOLIDATED ORDER DAT ED 3RD FEBRUARY, 2014 FOR A.Y. 2007-08 TO 2010-11, THE LD.CIT (APPEALS)-IV, A HMEDABAD HAS FAILED IN ADJUDICATING AND DECIDING THE AFORESAID GROUND WHIC H IS A FUNDAMENTAL GROUND CHALLENGING THE LEGALITY AND VALIDITY OF SECTION 15 3A PROCEEDINGS INITIATED BY THE A.O. AND AS EMERGING FROM THE GROUNDS OF APPEAL NOT ADJUDICATED FULLY, IS DEEMED TO HAVE BEEN DECIDED AGAINST THE ASSESSEE. 2.3 THE FACTS, IN BRIEF, LEADING TO THE PRESENT PRA YER ARE THAT A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT IN THE RMD GROUP OF CASES, INCLUDING THE CASE OF THE ASSESSEE ON 20/01/2010. DURING THE COURSE OF SEARCH , NEITHER ANY UNDISCLOSED CASH NOR VALUABLES WERE FOUND FROM THE PREMISES OF THE A SSESSEE. BESIDES, THERE HAS BEEN NO INCRIMINATING MATERIAL WHATSOEVER, AS PRESC RIBED U/S 153A OF THE ACT, SO AS TO GIVE RISE TO THE PROCEEDINGS IN QUESTION. 2.4 HOWEVER, THE A.O. ISSUED A NOTICE U/S 153A ON 0 9/09/2011. AND IN ORDER TO CO- OPERATE WITH THE DEPARTMENT, IN RESPONSE TO THE SAI D NOTICE, THE ASSESSEE SUBMITTED A RETURN OF INCOME U/S 153A OF THE A CT, ON 10/10/2011. IN TURN, THE A.O. PASSED ORDER U/S 153A R.W.S. 143(3) OF THE ACT ON 28/12/2011. WHILE DOING SO, THE A.O. MADE ADDITIONS AS UNDER: ON ACCOUNT OF CASH CREDIT U/S 68 OF THE ACT ... R S. 50,00,000/- DISALLOWANCE OF INTEREST ON ABOVE ... RS. 1,25,508/- 2.5 AS SUBMITTED EARLIER, ONCE NO INCRIMINATING MAT ERIAL OR ANY UNDISCLOSED ASSETS HAD BEEN DISCOVERED DURING THE SEARCH IN THE ASSESS EE'S CASE, THE IMPUGNED JURISDICTION UNDER SECTION 153A COULD NOT HAVE BEEN ASSUMED. IT IS SUBMITTED THAT THE ASSESSING OFFICER, NOWHERE MENTIONED ANY OF SUC H MATERIAL IN HIS ASSESSMENT ORDER. AND ALSO THAT PROCEEDINGS SECTION 153A ARE N OT IN THE NATURE OF DE-NOVO ASSESSMENT. IT IS SUBMITTED THAT THE ASSESSMENT PRO CEEDINGS FOR THE YEAR UNDER CONSIDERATION WERE NOT PENDING ON THE DATE OF SEARC H SO AS TO ABATE U/S 153A VIDE 2 ND PROVISO THERE TO AS MAY BE NOTICED FROM THE FOLLOW ING TABLE: A.Y. DATE OF ORIGINAL RETURN OF INCOME U/S 139(1) OF THE FILED AS PER ACKNOWLEDGEMENT ENCLOSED LAST DATE OF ISSUING NOTICE U/S 143(2) OF THE ACT R.W. PROVISO THERE UNDER 2007-08 22/08/2008 31/08/2009 IT IS SUBMITTED THAT NO NOTICE U/S 143(2) OF THE AC T FOR THE ABOVE YEAR WAS ISSUED WITHIN THE AFORESAID PRESCRIBED TIME STATED IN THE ABOVE TABLE, AS SUCH. WHEREAS, THE NOTICE U/S 153A (L)(A) OF THE ACT ONLY ON 09/09/2011. I.E. MUCH BEYOND THE PRESCRIBED DATE OF ISSUANCE OF NOTICE AS ABOVE. 2.6 IT IS INBUILT PROVISIONS OF THE ACT THAT NON-AB ATED I.E. ASSESSMENT WHICH ARE NOT PENDING AS PER SECOND PROVISO TO SECTION 153A WILL BE MADE ON THE BASIS OF BOOKS IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 5 - OF ACCOUNT OR OTHER DOCUMENT NOT PRODUCED IN THE CO URSE OF ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH AND UNDISCLOSED I NCOME OR ASSETS DISCOVERED IN THE COURSE OF SEARCH. THIS IS NOT AVAILABLE IN THE ASSESSEE'S CASE OR FOR THAT NO SUCH MATERIAL IS PLACED ON RECORD THAT THE SEARCH IN QUE STION UNEARTHED ANY SUCH UNDISCLOSED MATERIAL IN ASSESSEE'S CASE. 2.7 THUS, ON THE FACTS & CIRCUMSTANCES OF THE CASE, IN THE ABSENCE OF ANY SUCH INCRIMINATING MATERIAL OR UNDISCLOSED ASSETS BELONG ING OR RELATED TO THE APPELLANT ASSESSEE OR OTHERWISE, NO ROUTINE NATURE OF ADDITIO N COULD HAVE BEEN MADE IN THE CASE OF APPELLANT FOR A.Y. 2007-08 IN VIEW OF THE ABOVE STATED FACTS. 2.8 FOR THIS PROPOSITION RELIANCE IS PLACED ON T HE FOLLOWING: (I) CIT V KABUL CHAWLA (2015) 61 TAXMANN.COM 4 12 (DEL.) (II) INTAS PHARMACEUTICAL V. DCIT IN IT(SS) A N OS. 807-809/AHD/2010 (III) JAY INFRASTRUCTURE AND PROPERTIES PVT. LTD . V. ACIT ITANO.2169/AHD/2011 (IV) VIJAYKUMAR D AGARWAL, VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-L(3), AHMEDABAD IN IT(SS)A NOS.1 53, 154, 155 & 156/AHD/2012 (V) CIT V. GURINDER SINGH BAWA [2016] 386 ITR 4 83 (BOM.) IN ALL THE ABOVE CASES, THE ISSUE BEFORE THE HON'BL E COURTS WAS ABOUT THE LEGALITY AND VALIDITY OF THE ASSESSMENT FRAMED U/S 153A OF THE ACT VISA-VIS ASSESSMENTS FRAMED EARLIER, IN ABSENCE OF ANY INCRI MINATING MATERIAL INDICATING THE UNACCOUNTED INCOME UNEARTHED AT THE TIME OF SEA RCH. ON IN-DEPTH JUDICIAL EXERCISE, IT HAS BEEN LAID DOWN THAT THE SCOPE OF A SSESSMENT U/S 153A DEPENDS UPON WHETHER ANY ASSESSMENT OR RE-ASSESSMENT PROCEE DINGS WERE PENDING OR COMPLETED ON THE DATE OF SEARCH. WHEREVER THE PROCE EDINGS ARE COMPLETED PRIOR TO THE SEARCH, THEN NOTHING MERGES WITH PROCEEDINGS U/ S 153A OF THE ACT AND NOTHING ABATES. IN SUCH A SITUATION, THE A.O. HAS TO RESPEC T THE COMPLETENESS OF THE PROCEEDINGS, WHEN THERE IS NO INCRIMINATING MATERIA L FOUND DURING THE SEARCH AND TIME LIMIT FOR ISSUING NOTICE U/S 143(2) HAD ALREAD Y BEEN ELAPSED, IN SUCH A SITUATION, ON THE DATE OF SEARCH THE ASSESSMENTS AL READY ATTAINED FINALITY. THEREFORE, THE PROCEEDINGS DO NOT GET ABATED BY VIR TUE OF PROVISO TO SEC. 153A. THEREFORE, ASSESSMENT FRAMED U/S 153A NEED TO BE QU ASHED. IN THE ASSESSEE'S CASE, THERE IS NO INCRIMINATING M ATERIAL FOUND DURING THE COURSE OF SEARCH RELATING TO ASSESSMENT YEAR UNDER CONSIDERATION. THE IMPUGNED ADDITIONS MADE FOR A.Y.2007-08 WERE IN THE NATURE O F CASH CREDITS U/S 68 OF THE ACT & INTEREST THERETO, WHICH WERE ALREADY DISCLOSED IN THE AUDITED ACCOUNTS/ BALANCE SHEET FILED, EVEN IN THE ORIGINAL RETURN OF INCOME FURNISHED AS NARRATED IN THE CHART ABOVE. THUS, THERE WAS NO EXTRANEOUS MATERIAL OR IN FORMATION AVAILABLE WITH THE A.O. AND THE ONE WHICH IS AVAILABLE IS IN THE FORM OF ORIGINAL RETURN OF INCOME FILED AS SUBSEQUENTLY FILED IN RESPONSE TO NOTICE U/S 153 A(L)(A) OF THE ACT. FURTHER, THE TIME LIMIT FOR ISSUING NOTICES U/S 143(2) HAD ALREA DY BEEN EXPIRED AN IN SUCH A SITUATION, THERE WAS NO ASSESSMENT PENDING IN THIS CASE. THE ASSESSMENT FRAMED U/S 153A OF THE ACT REQUIRES TO BE QUASHED, 3. IT IS RE SPECTFULLY SUBMITTED THAT AS NARRATED IN PRECEDING PARAGRAPH, THE ASSESSEE HAD R AISED A SPECIFIC GROUND BEFORE THE LD.CIT (A), CHALLENGING THE LEGALITY AND VALIDI TY OF THE IMPUGNED ORDER PASSED BY THE A.O. HOWEVER, THE SAME WAS NOT ADJUDICATED A ND DECIDED BY THE LD.CIT(A). IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 6 - MOREOVER A PLEA/CONTENTION AS EMERGING FROM THE GRO UNDS OF APPEAL NOT ADJUDICATED FULLY IS DEEMED TO HAVE BEEN DECIDED AG AINST THE ASSESSEE AND THEREFORE, FACTS BEING AVAILABLE ON RECORD AND NO F URTHER INVESTIGATION INTO FACTS BEING REQUIRED, THE ISSUE SHOULD BE DECIDED ON THE BASIS OF ADDITIONAL GROUNDS RAISED FOR THE SAME. IN THIS CONTEXT THE FOLLO WING REFORMULATED ADDITIONAL GROUND EMERGED FROM THE PROCEEDINGS BEFORE LOWER AU THORITIES FOR CONSIDERATION OF THE HON'BLE BENCH OF TRIBUNAL. 4. ADDITIONAL GROUND OF APPEAL IN THE EVENTUALITY IF THE ORDER OF LD. CIT(A) IS UP HELD IN RESPECT OF QUANTUM ADDITIONS MADE BY THE A.O., THEN, ADDITIONAL GROUND NO.L. WITHOUT PREJUDICE TO THE GROUNDS RAISED EARLIER, IN LAW AND ON THE PECULIAR FACTS AS WELL AS CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HA S ERRED IN NOT ADJUDICATING AND DECIDING THE GROUND NO.1.3 OF THE ASSESSEE'S APPEAL BEFORE HIM CHALLENGING THE LEGALITY AND VALIDITY OF THE ASSESSMENT ORDER PASSE D U/S 153A R.W.S 143(3) OF THE ACT 1961, AND BY WILLFUL NEGLIGENCE ERRED IN NOT DE CIDING THE SPECIFIC PLEA/CONTENTION RAISED BEFORE HIM BY THE APPELLANT AND THEREBY FURTHER ERRED IN NOT HOLDING THAT THE IMPUGNED ASSESSMENT ORDER IS LIABL E TO BE QUASHED. ADDITIONAL GROUND NO.2. IN LAW AND ON THE PECULIAR FACTS, THE LD.CIT(A) HAS ERRED IN NOT APPRECIATING THAT EVEN THE ASSESSMENT U/S 153A OF THE ACT IS RESTRICT ED TO MATERIAL AND EVIDENCES FOUND IN THE COURSE OF SEARCH AND THE SAME CANNOT G O BEYOND THAT SAME. IN THE FACTS OF THE PRESENT CASE, THE ADDITIONS MADE ARE V ERY MUCH PART OF TRANSACTION REFLECTED IN THE AUDITED ACCOUNTS DISCLOSED IN THE ASSESSEE'S ORIGINAL RETURN OF INCOME FILED U/S 139(1) OF THE ACT, THEREFORE, SINC E NO ASSESSMENT WAS PENDING FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND AS SUCH THERE WAS NO QUESTION OF ABETMENT. LEAVE CRAVED THE APPELLANT CRAVES PERMISSION TO ADD, AMEND AND/O R WITHDRAW ANY OR ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. CONSEQUENTIAL RELIEF CLAIMED WITHOUT PREJUDICE TO THE RELIEF CLAIMED IN THE ORIG INAL MEMORANDUM OF APPEAL DATED 27/02/2014, THE ASSESSEE PRAYS TO ADMIT THE A DDITIONAL GROUNDS RAISED ABOVE AND IN THE EVENTUALITY THE ASSESSMENT ORDER MAY BE QUASHED. 6. LEARNED COUNSEL REPRESENTING ASSESSEE ACCORDING LY REITERATES THE ABOVE PLEADINGS IN THE COURSE OF HEARING TO SEEK ACCEPTAN CE OF ASSESSEES ABOVE STATED PETITIONS. IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 7 - 7. WE AFFORDED SUFFICIENT OPPORTUNITY TO THE REVENU E QUA ADMISSION OF THESE ADDITIONAL GROUNDS. MS. BHALLA STRONGLY ARGU ED THAT THE ASSESSEES ABOVE STATED RELIEF SOUGHT TO BE OBTAINED BY WAY OF RAISING ADDITIONAL GROUNDS IS ENTIRELY MISFOUNDED ONE. SHE INFORMED THE BENCH ABOUT THE REVENUES OPTION OF FILING WRITTEN RESPONSE TO ASSESSEES PET ITION. THE SAME CAME ON 15.11.2016 INTER ALIA PLEADING THAT THIS TRIBUNAL C AN VERY WELL ENTERTAIN ADDITIONAL GROUNDS IN CASE REASONABLE CAUSE IS MADE OUT ABOUT THE REASON OF PREVENTING THE CONCERNED LITIGANT FOR NOT HAVING AD OPTED THE VERY COURSE OF ACTION EARLIER, SHE HIGHLIGHTED THE FACT THAT THE A SSESSEE HAD ONLY RAISED A GENERAL GROUND NO.1.3 IN THE LOWER APPELLATE PROCEE DINGS AS EXTRACTED HEREINABOVE, IT NEVER OBJECTED THE VALIDITY OF THE IMPUGNED SECTION 153A PROCEEDINGS THROUGHOUT AND THERE IS NO CHANGE IN CI RCUMSTANCES OR ANY COMPELLING REASON FOR ADMISSION OF THE SAID ADDITIO NAL OF THE SAID ADDITIONAL GROUNDS. MS. BHALLA FURTHER QUOTED SOME JUDICIAL P RECEDENT IN SUPPORT. 8. HEARD BOTH THE SIDES ON THE ISSUE OF ADMISSION O F ASSESSEES ADDITIONAL GROUNDS. FIRST WE COME TO THE TRIBUNALS JURISDICT ION FOR ALLOWING A LITIGANT TO SEEK SUCH A RELIEF. THIS TRIBUNALS SPECIAL BENCH IN ALL CARGO GLOBAL LOGISTICS LTD. VS. DCIT (2012) 137 ITD 26 (MUMBAI) HOLDS THAT WE CAN VERY WELL ENTERTAIN A PURE QUESTION OF LAW WHEREIN ALL T HE RELEVANT FACTS ARE ALREADY ON RECORD IN ORDER TO ASCERTAIN AN ASSESSEES CORRE CT TAX LIABILITY. IT FOLLOWS HONBLE APEX COURTS DECISION IN NTPCS CASE 229 IT R 383. THERE IS NO DISPUTE ABOUT THIS LEGAL POSITION. WE NOW ADVERT T O RELEVANT FACTUAL BACKGROUND. IT HAS ALREADY COME ON RECORD THAT THE ASSESSEE VERY WELL PLEADED ITS GROUND NO.1.3 HEREINABOVE TO CHALLENGE THE IMPUGNED ASSESSMENT ORDER TO BE AGAINST THE LAW AND FACTS. A PERUSAL O F THE CIT(A)S COMMON ORDER REVEALS THAT HE HAS NOWHERE APPLIED HIS MIND BEFORE FRAMING THE SUBSTANTIVE ISSUES. THIS APPEARS TO BE PRECISE REA SON ON HIS PART FOR NOT ADJUDICATING ASSESSEES GROUND NO.1.3. BE THAT AS IT MAY, IT IS NOT IN DISPUTE IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 8 - THAT THE ASSESSEES ADDITIONAL GROUNDS VERY WELL GO TO ROUT OF THE MATTER IN CHALLENGING LEGALITY OF THE IMPUGNED ASSESSMENTS FR AMED U/S.153A R.W.S. 143(3) OF THE ACT. WE THUS EXERCISE OUR JURISDICTI ON BY FOLLOWING THE ABOVE CASE LAW TO ADMIT THE ASSESSEES ADDITIONAL GROUND HEREINABOVE FOR ADJUDICATION IN ABSENCE OF ANY NEW FACTS REQUIRED I N COURSE THEREOF. 9. WE NOW COME TO THE RELEVANT FACTS ALREADY ON REC ORD. THE ASSESSEE FIRM IS IN DIGITAL PRINTING BUSINESS. IT FILED REG ULAR RETURNS OF INCOME FOR THE IMPUGNED ASSESSMENT YEARS 2007-08 TO 2009-10 ON 22. 08.2008, 26.09.2008 AND 19.9.2009; RESPECTIVELY STATING INCOME OF RS.9, 80,222/-, RS.12,32,530/- & RS.17,29,730/- IN QUESTION. THE ASSESSING OFFICE R HIMSELF STATES IN ALL THE CORRESPONDING ASSESSMENT ORDERS THAT THESE RETURNS ARE VERY WELL U/S.139(1) OF THE ACT. 10. THE DEPARTMENT APPEARS TO HAVE CONDUCTED A SEAR CH IN CASE OF M/S. RMD GROUND OF CASES INCLUDING THIS ASSESSEE ON 20.0 1.2010. THE ASSESSING OFFICER ISSUED SECTION 153A NOTICES ON 09.09.2011. THE ASSESSEE FILED RETURNS ON 10.10.2011 STATING INCOME OF RS.10,37,72 0/- IN ASSESSMENT YEAR 2007-08. HE WOULD REITERATE THE INCOME ALREADY RET URNED U/S.139 IN THE LATTER TWO ASSESSMENT YEARS. THE ASSESSING OFFICER FRAMED THE IMPUGNED ASSESSMENT AFTER MAKING VARIOUS DISALLOWANCES/ADDIT IONS FORMING SUBJECT MATTER OF BOTH PARTIES RESPECTIVE PLEADINGS NARRATE D HEREIN ABOVE. THE CIT(A) UPHOLDS ASSESSING OFFICERS ACTION IN FORMER TWO ASSESSMENT YEARS AND PARTLY ACCEPTS ASSESSEES CONTENTIONS IN ASSESS MENT YEAR 2009-10 LEAVING BOTH THE PARTIES AGGRIEVED AS INDICATED IN PRECEDIN G PARAGRAPH. 11. SHRI ANIL KSHATRIYA, ADVOCATE REPRESENTS THE AS SESSEE. HE STRONGLY ARGUES THAT THE IMPUGNED ASSESSMENTS FRAMED U/S.153 A OF THE ACT ARE NOT SUSTAINABLE IN LAW FOR WANT OF ANY SPECIFIC INCRIMI NATING MATERIAL EITHER UNEARTHED OR CEASED IN THE COURSE OF THE IMPUGNED S EARCH. HE QUOTES HONBLE IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 9 - JURISDICTIONAL HIGH COURTS DECISION IN PCIT VS. M/ S. DESAI CONSTRUCTION PVT. LTD. TAX APPEAL NO.216 OF 1016 DECIDED ON 20.07.201 6 FOLLOWING ITS EARLIER DECISION IN PCIT VS. SAUMYA CONSTRUCTION PVT. LTD. TAX APPEAL NO. 24 OF 2016 DECIDED ON 14.03.2016 HOLDING THAT SECTION 153 A PROCEEDINGS ARE EXIGIBLE IN CASE THERE IS ANY INCRIMINATING MATERIA L FOUND DURING SEARCH AND NOT OTHERWISE. HONBLE DELHI HIGH COURT IN KABUL S INGH CHAWLAS CASE (2016) 380 ITR 573 (SUPRA) ALSO ECHOES THE SAME PRI NCIPLE. LD. COUNSEL ACCORDINGLY SEEKS TO QUASH THE IMPUGNED ASSESSMENTS . 12. WE AFFORDED AMPLE OPPORTUNITY TO THE REVENUE. MS. BHALLA AT THIS STAGE INVITES OUR ATTENTION TO THE FACT THAT THE ASSESSEE S RETURNS FILED IN A.Y. 2007- 08 (SUPRA) U/S.139(1) OF THE ACT AND THE ONE IN FUR THERANCE TO SECTION 153A NOTICE STATE DIFFERENCE OF INCOME FROM RS.9,80,222/ - TO RS.10,37,220/- (SUPRA). HER CASE IS THAT THE SAME AMPLY PROVES TH AT THERE EXISTED INCRIMINATING MATERIAL FOR VERY WELL INITIATING THE IMPUGNED SECTION 153A PROCEEDINGS UNDER CHALLENGE. 13. WE HAVE HEARD BOTH THE PARTIES. IT IS NO LONGE R IN DISPUTE THAT THE REVENUES SOLE ARGUMENT IN SUPPORT OF IMPUGNED SECT ION 153A PROCEEDINGS IS THAT THERE EXISTS A DIFFERENCE OF INCOME BETWEEN ASSESSEES REGULAR AND POST SEARCH RETURN (SUPRA). WE FIND THE SAME TO BE AGAI NST THE FACTS. THIS CASE FILE REVEALS THAT THE CIT(A)S ORDER AT PAGE 28 PARA 7.2 ITSELF HOLDS THAT THE SAID DIFFERENCE HAS CROPPED UP BECAUSE OF ADJUSTMENT IN UNABSORBED DEPRECIATION OF ASSESSMENT YEAR 2006-07. HE IS OF THE VIEW THAT THE SAME DOES NOT REPRESENT ASSESSEES UNDISCLOSED INCOME. WE ACCORD INGLY ACCEPT ASSESSEES LEGAL CONTENTION BY FOLLOWING HONBLE JURISDICTIONA L HIGH COURTS JUDGMENT HEREINABOVE TO CONCLUDE THAT THE IMPUGNED SECTION 1 53A PROCEEDINGS ARE NOT SUSTAINABLE. 14. THIS LEAVES US WITH AN EQUALLY IMPORTANT QUESTI ON AS TO WHETHER REGULAR ASSESSMENTS IN ASSESSEES CASE FOR THE THREE IMPUGN ED ASSESSMENT YEARS COULD IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 10 - BE HELD TO BE PENDING AS PER SECTION 153A(1) SECOND PROVISO OF THE ACT. WE FIND THAT THE ASSESSEE HAD FILED ITS RETURNS U/S.13 9(1) OF THE ACT. RELEVANT TIME PERIOD OF SIX MONTHS FROM THE END OF THE FINAN CIAL YEAR OF FURNISHING OF THESE RETURNS EXPIRED WELL BEFORE THE IMPUGNED SEAR CH CONDUCTED ON 20/1/2010. MS. BHALLA DOES NOT DISPUTE THIS FACTUA L POSITION. WE NOTICE IN THESE CIRCUMSTANCES THAT A CO-ORDINATE BENCH OF THI S TRIBUNAL IN CASE OF VIJAYKUMAR D. AGRAWAL VS. DCIT IT(SS)A NO.153/AHD/2 012 DECIDED ON 29.04.2016 ALONG WITH A BATCH OF CASES HOLDS THAT R EGULAR ASSESSMENT IN SUCH CIRCUMSTANCES IS DEEMED TO HAVE BEEN COMPLETED AND NOT PENDING UPON EXPIRY OF SECTION 143(2) TIME LIMIT HEREINABOVE. W E DRAW SUPPORT THEREFROM TO CONCLUDE THAT NONE OF THE REGULAR ASSESSMENT IN THESE THREE ASSESSMENT YEARS COULD BE STATED TO BE PENDING U/S.153A (1) SE COND PROVISO. WE THUS ACCEPT ASSESSEES ADDITIONAL GROUNDS TO QUASH ALL T HERE IMPUGNED ASSESSMENTS PERTAINING TO ASSESSMENT YEARS 2007-08 TO 2009-10 I N APPEALS IT(SS)A NOS. 118 TO 120/AHD/2014; RESPECTIVELY. THESE THREE APP EALS SUCCEED. REVENUES CROSS APPEAL IT(SS)A NO.165/AHD/2014 ON MERITS STAN DS DISMISSED. 15. WE NOW COME TO ASSESSMENT YEAR 2010-11 INVOLVIN G ASSESSEES AND REVENUES CROSS APPEALS ITA NO.593 & 1219/AHD/2014 IN PROCEEDINGS U/S.143(3) OF THE ACT. THE ASSESSEES APPEAL RAISE S A SINGLE SUBSTANTIVE GROUND CHALLENGING BOTH THE LOWER AUTHORITIES ACTI ONS DISALLOWING INTEREST PAYMENT OF RS.4,97,915/- ON LOANS RECEIVED FROM SHR I JAI SINGH BHANWERLAL CHAUHAN. THERE IS NO QUARREL ABOUT THE FACT THAT T HE ASSESSEE HAS INCURRED THE IMPUGNED INTEREST ON LOANS RECEIVED FROM THE SAID C REDITOR IN PRECEDING ASSESSMENT YEARS. BOTH THE LOWER AUTHORITIES ADDED THE SAME AS UNEXPLAINED CREDITS IN PRECEDING ASSESSMENT YEARS. THOSE ADDIT IONS STAND QUASHED IN VIEW OF OUR FINDINGS ON LEGALITY ISSUE IN PRECEDING PARA GRAPHS. WE THUS HOLD THAT THE IMPUGNED DISALLOWANCE DOES HAVE NO LEGS TO STAN D. THE SAME IS DELETED ACCORDINGLY. THE ASSESSEES APPEAL ITA NO.593/AHD/ 2014 STANDS ACCEPTED. IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 11 - 16. THIS LEAVES US WITH REVENUES CROSS APPEAL ITA NO.1219/AHD/2014. IT RAISES THREE SUBSTANTIVE GROUNDS. FORMER TWO GROUN DS SEEK TO REVIVE SECTION 68 ADDITION OF RS.47.90LACS AND INTEREST THEREUPON OF RS.2,96,007/- QUA LOAN AMOUNT AVAILED FROM ASSESSEES SISTER CONCERN M/S. RSA MARKETING. THE ASSESSING OFFICER TREATED THE SAME AS UNEXPLAINED C ASH CREDITS U/S.68 OF THE ACT AND FURTHER DISALLOWED ASSESSEES INTEREST EXPE NSES IN QUESTION. THE CIT(A) ACCEPTS ASSESSEES CONTENTIONS IN VIEW OF HI S FINDINGS ON IDENTICAL ISSUE IN ASSESSMENT YEAR 2006-07 TO DECIDE THE ISSU E AGAINST THE DEPARTMENT. 17. WE HAVE HEARD BOTH THE PARTIES REITERATING THEI R RESPECTIVE STANDS. THE ASSESSEE FILES BEFORE US A COPY OF THIS TRIBUNALS ORDER IN IT(SS)A NO.35/AHD/2014 IN ITS OWN CASE FOR ASSESSMENT YEAR 2006-07 UPHOLDING THE CIT(A)S ORDER DELETING IDENTICAL SECTION 68 DECISI ON QUA LOANS RECEIVED FROM THE ABOVE SISTER CONCERN. BOTH PARTIES VERY M UCH AGREE THAT THE ASSESSEE HAS FILED SIMILAR TYPE OF EVIDENCE I.E. COPY OF PAN CARD, ADDRESS, CONFIRMATION, COPY OF RETURN AND BANK STATEMENTS ET C. IN BOTH ASSESSMENT YEARS. WE THUS FIND NO REASON TO ADOPT A DIFFERENT APPROACH IN THE IMPUGNED ASSESSMENT YEAR IN THIS BACKDROP OF FACTS. THESE T WO REVENUES GROUNDS ARE ACCORDINGLY DECLINED. 18. THE REVENUES NEXT SUBSTANTIVE GROUND SEEKS TO REVIVE ESTIMATED GROSS PROFIT ADDITION OF RS.14,49,996/- MADE BY THE ASSES SING OFFICER AFTER REJECTING ITS BOOKS AND DELETED IN THE LOWER APPELL ATE PROCEEDINGS. WE FIND THAT THE CIT(A)S OBSERVATION DISCUSS ASSESSING OFF ICERS CONCLUSION AND ASSESSEES SUBMISSION AS FOLLOWS: 6. GROUND NO.2 & 3 OF AY 2010-11 RELATES TO ADDIT ION OF RS.14,49,996/- ON ACCOUNT OF GROSS PROFIT. DURING THE SEARCH, THERE WAS PHYSICAL STOCK OF RS.28,01,476/- WHEREAS THE STOCK AS PER BOOK WAS CA LCULATED AT RS.65,19,415/-. THUS, THERE WAS SHORTAGE OF STOCK OF RS.37,17,939/- . THE APPELLANT EXPLAINED THAT IT IS IN THE JOB OF PRINTING AND THE ITEMS ARE PURC HASED IN THE FORM OF ROLLS WHEREAS THE SALES ARE EFFECTED ON SQ. FT. BASIS. AT THE END OF THE YEAR, THE ROLLS ARE CONVERTED INTO SQ. FT. AND ENTERED INTO TALLY PROGRAMME TO CA LCULATE THE CLOSING STOCK. IT WAS EXPLAINED THAT THIS METHOD WAS ADOPTED BY THE APPEL LANT FOR MANY YEARS. IF THE IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 12 - ABOVE CORRECTION IS CARRIED OUT IN THE STOCK AS PER BOOKS, THERE REMAINED NO DISCREPANCY. HOWEVER, THE AO DID NOT ACCEPT THE EXP LANATION OF THE APPELLANT AND REJECTED ITS BOOKS OF ACCOUNT. THE AO TOOK THE SHOR TAGE OF STOCK AS UNACCOUNTED SALES AND CALCULATED THE GROSS PROFIT AT 39% AND MA DE ADDITION OF RS. 14,49,9967- TO THE INCOME OF THE APPELLANT. 6.1 THE RELEVANT PORTION OF THE SUBMISSIONS FURNISH ED BY THE APPELLANT IS REPRODUCED AS UNDER: '3.1 WE HAVE TO BRING TO YOUR HONOUR'S KIND NOTICE THAT A SEARCH WAS CONDUCTED ON THE PREMISES OF THE APPELLANT FIRM ON 20.01.2010. Y OUR APPELLANT MAINTAINS BOOKS OF ACCOUNTS ON COMPUTER AND IS USING TALLY ACCOUNTI NG SOFTWARE PROGRAMME FOR MAINTAINING THE BOOKS AND STOCKS. ON THE DAY OF THE SEARCH RELEVANT BACKUP OF THE TALLY PROGRAMME WAS TAKEN AWAY BY THE SEARCH PARTY, WHEREIN, THE STOCKS WERE SHOWN IN THE BOOKS AT RS.55,07,455.34. THE SAID STO CK CONSISTS OF THE FOLLOWING ITEMS. [A] ALL PRINTING JOB (CORP.) RS. 15,46,000.53 [B] ALL PRINTING JOB (RATE CARD) (-) RS.36,37,1 46.10 [C] FINISHED GOODS RS. 17,64,887.66 [D] RAW MATERIAL RS.86,95,284.25 [E] SUNBOARD RS. 3,60,191.14 [F] 3M VINYL SA RS. 89,300.00 [G] ELECTRONIC MOTION DISPLAY RS. 1,57,192.84 [H] WIPES RS. 61,520.34 TOTAL RS.55,07,455.34 3.2 THE LEARNED AO HAD ASKED YOUR APPELLANT TO EXPL AIN THE DETAILS OF THE STOCKS. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, VI DE LETTER DATED 07.12.2011 A DETAILED RECONCILIATION OF STOCK WAS FURNISHED. THI S IS REPRODUCED HEREIN BELOW FOR YOUR HONOUR'S READY REFERENCE. 1.1. IT WAS POINTED OUT TO YOU IN OUR EARLIER COMM UNICATIONS THAT THE FIGURE OF THE STOCK REFERRED TO BY YOU ARE IN RESPECT OF TWO PARTNERSHIP FIRMS VIZ. RSA DIGIPRINTS AND RSA MARKETING. KEEPING THIS IN MIND, WE HAVE BEEN ASKED TO EXPLAIN THE ALLEGED DIFFERENCE IN STOCKS AS UNDER. 1.2 FROM THE STOCK SUMMARY OF RSA DIGIPRINTS, THE AMOUNT OF STOCK AS PER THE HOOKS SHOWN ON THE DATE OF SEARCH WAS RS. 55,07,455 .34. THE SAME CONSIST OF THE FOLLOWING ITEMS. [A] ALL PRINTING JOB (CORP.) RS. 15,46,000.53 [B] ALL PRINTING JOB (RATE CARD) (-) RS.36,37,1 46.10 IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 13 - [C] FINISHED GOODS RS. 17,64,887.66 [D] RAW MATERIAL RS.86,95,284.25 [E] SUNBOARD RS. 3,60,191.14 [F] 3M VINYL SA RS. 89,300.00 [G] ELECTRONIC MOTION DISPLAY RS. 1,57,192.84 [H] WIPES RS. 61,520.34 TOTAL RS.55,07,455.34 1.3 IT WAS EXPLAINED TO YOU THAT THE NEGATIVE FIGUR E SHOWN UNDER THE HEAD ALL PRINTING JOB (RATE CARD) RS.36,37,146.10 AND FINISH ED GOODS RS.17,64,887.66 ARE THE FIGURES WHICH ARE CALCULATED BY THE TALLY P ROGRAMME. WE ENCLOSE HEREWITH A DETAILED STOCK SUMMARY OF ALL PRINTING JOB (RATE CARD) AND FINISHED GOODS AS ON THE DATE OF THE SEARCH. FROM THE DETAILS SUBMITT ED IT WILL BE KINDLY SEEN THAT WHEN THE SALE IS EFFECTED, THE QUANTITY DETAILS ARE SHOWN AS NEGATIVE FIGURE AND ARE REPORTED IN OUTWARD COLUMN SINCE THE ENTRY REGARDIN G SALE IS ALSO MADE IN THE STOCK RECORDS. THIS CAN BE SEEN FROM THE STOCK SUMM ARY FURNISHED TO YOU. FROM THE STOCK SUMMARY FURNISHED YOU WILL KINDLY SEE THAT AL L THE ITEMS OF SALE ARE SHOWING A NEGATIVE QUANTITY WHERE AS THERE IS NO INWARD ENT RY. IT WAS EXPLAINED TO YOU THAT THE PURCHASES OF VARIOUS ITEMS ARE RECEIVED BY THE ASSESSEE FIRM IN ROLL FORM AND THE SALE IS EFFECTED IN SQ. FT. BASIS. ENTRIES REGA RDING THE INWARDS OF VARIOUS STOCKS IS MADE AT THE END OF THE YEAR WHEN THE ROLLS RECEI VED ARE CONVERTED TO SQ.FT AND ENTERED AND THE TALLY PROGRAMME CALCULATES THE CLOS ING STOCKS. IT WAS ALSO EXPLAINED TO YOU THAT THIS METHOD IS ADOPTED BY THE ASSESSEE SINCE INCEPTION OF THE FIRM. IN OUR EARLIER COMMUNICATION, WE HAD ENCLOSED STOCK SUMMARY AS ON 3CF MARCH OF RESPECTIVE YEAR WHERE IT WAS SEEN THAT ALL THE SALE BILLS MADE WERE REFLECTED IN THE STOCKS AS NEGATIVE FIGURES AND ON 31 ST MARCH WHEN THE QUANTITIES FOR PURCHASES WERE ENTERED, CLOSING STOCK WAS ARRIV ED AT BOTH IN TERMS OF QUANTITY AND VALUE. FROM THE STOCK DETAILS FURNISHED TO YOU TILL THE DA TE OF SEARCH, YOU WILL KINDLY SEE THAT ONE ITEM OF INWARD ( PURCHASE ) IS ENTERED IN THE STOCK DETAILS AND THE TALLY PROGRAMME HAS CALCULATED THE VALUE OF NEGATIVE FIGU RE IN THE CLOSING BALANCE OF THAT PARTICULAR ITEM AND THE SHOW THE NEGATIVE FIGU RE AS ON THE DATE OF THE SEARCH . SINCE THE PURCHASE (INWARD) OF 1000 SQ. FEET IS AT THE RATE OF RS.7/-, THE TALLY PROGRAMME HAS CALCULATED NEGATIVE CLOSING STOCKS BY APPLYING THE RATE OF RS 7/- TO THE NEGATIVE QUANTITY AND HAS ARRIVED AT THE NEGATI VE VALUE OF RS.36,37,146.10. YOU WILL KINDLY APPRECIATE THAT THERE IS NO UNACCOUNTED SALE AS ALLEGED BY YOU. A SIMILAR NEGATIVE FIGURE OF RS 17,64,887.66 IS WORKE D OUT BY THE TALLY PROGRAMME AS CAN BE SEEN FROM THE STOCK RECORDS FURNISHED TO YOU . IT IS RESPECTFULLY SUBMITTED THAT THERE IS NO UNACCOUNTED SALE AS ALLEGED BY YOU . IT IS THE WORKING DONE BY THE TALLY PROGRAMME AUTOMATICALLY AND THE NEGATIVE FIGU RES ARE REFLECTED AS CAN BE SEEN FROM THE DETAILS SUBMITTED. IT WILL NOT BE OUT OF PLACE TO STATE THAT THIS FACT CAN BE VERIFIED FROM THE SEIZED DATA WHICH IS AVAILABLE WITH YOU. IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 14 - 1.4 IT IS SUBMITTED THAT STOCK DETAILS IN RESPECT O F THE VARIOUS SALES MADE BY THE ASSESSEE FIRM ARE ENTERED ON DAY TO DAY BASIS AND S INCE THE PURCHASES ARE IN TERMS OF VARIOUS ROLLS WHICH ARE PURCHASED, THE ENTRIES A RE MADE BY CONVERTING THE SAME TO SQ.FT AT THE YEAR END. THIS FACT CAN ALSO BE SEE N FROM THE STOCK DETAILS OF PURCHASES FOR THE YEAR. IT IS RESPECTFULLY SUBMITTED THAT THERE ARE NO NEGA TIVE STOCK AS ALLEGED BY YOU UNDER THE HEAD ALL PRINTING JOB (RATE CARD) OFRS.36,37,14 6/- AND FINISHED GOODS OF RS.17,64,887/-. 1.5 AS REGARDS THE STOCK OF RS. 55,07,455.34 SHOWN IN THE STOCK SUMMARY, WE HAVE BEEN ASKED TO INFORM YOU THAT FROM THE STOCK D ETAILS SUBMITTED TO YOU, YOU WILL KINDLY SEE THE AMOUNT OF RS 55,07,455.34 IS ARRIVED AT BY TAKING INTO ACCOUNT THE VARIOUS FIGURES WHICH INCLUDE NEGATIVE FIGURES. AS REGARDS THE NEGATIVE FIGURES, IT IS EXPLAINED TO YOU THAT THE SAME ARE ON ACCOUNT OF AUTOMATIC CALCULATIONS DONE BY TALLY PROGRAMME AS EXPLAINED IN THE EARLIER PART OF THIS SUBMISSION. ENTRIES REGARDING THE SALES ARE MADE IN THE STOCK RECORDS O N A BILL TO BILL BASIS WHEREAS THE CONSUMPTION OF RAW MATERIAL IS ENTERED INTO STO CK RECORDS BY CONVERSION OF THE ROLLS INTO SQUARE FEET AT THE END OF THE YEAR. FROM THE STOCK SUMMARY YOU WILL SEE THAT RAW MATERIALS ARE SHOWN AT RS. 86,95,284.25. T HIS FIGURE REPRESENTS THE PURCHASE OF RAW MATERIALS AS CAN BE SEEN FROM THE S TOCK RECORDS. ENTRIES REGARDS CONSUMPTION ARE NOT ENTERED AS ON THE DATE OF SEARC H. SIMILARLY, SUNBOARD IS ALSO REFLECTED AT RS. 3,60,191.14. ONCE THE CONSUMPTION (OUTWARD) ENTRIES ARE MADE, THE CORRECT STOCK IS DETERMINED AND ONCE THE VALUE ARE PUT THE FIGURE OF CLOSING STOCK IS ARRIVED AT ON THE DATE OF SEARCH. THIS EXE RCISE IS DONE BY THE ASSESSEE FIRM AND A STATEMENT SHOWING THE DETAILS OF OPENING STOC K, INWARD, OUTWARD AND CLOSING STOCK AS ON THE DATE OF SEARCH IS DRAWN AND FROM TH E SAID STATEMENT WHICH WAS FURNISHED VIDE OUR COMMUNICATION DATED 22' NOVEMBER 2011 YOU WILL KINDLY SEE THAT THE STOCKS FOUND AT THE TIME OF SEARCH VALUED AT RS 27,60,335/- OF THE ASSESSEE FIRM TALLY WITH THE SAID STATEMENT. THERE ARE NO NE GATIVE STOCKS, EXCESS STOCKS OR UNACCOUNTED SALES AS ALLEGED BY YOU. 1.6 IT WILL NOT BE OUT OF PLACE TO BRING TO YOUR KI ND NOTICE THAT THE STOCK SHOWN UNDER THE HEAD RSA MARKETING ALSO AMOUNTING TO RS.1 0,11,960/- AS PER THE BOOKS ARE ALSO ON ACCOUNT OF NON PASSING OF ENTRIES IN RE SPECT OF THE CONSUMPTION OF THE MATERIALS. THIS FIRM ALSO FOLLOWS THE SAME METHOD W HILE ACCOUNTING OF SALES, PURCHASES AND CONSUMPTION ETC. 1.7 AS REGARDS THE VALUE OF PHYSICAL STOCK FOUND AG GREGATING TO RS.28,01,476/-, A RECONCILIATION STATEMENT IS ALREADY FURNISHED TO YOU AS ON THE DATE OF THE SEARCH BY PASSING MONTHLY ENTRIES FOR CONSUMPTION IN RESPE CT OF BOTH THE FIRMS RSA DIGIPRINTS AND RSA MARKETING FROM WHICH YOU WILL KI NDLY OBSERVE THAT CLOSING STOCK OF RSA DIGIPRINTS IS RS. 27,60,335/- AND IN R ESPECT OF RSA MARKETING, IT IS RS. 41142/-. THE AGGREGATE THEREOF MATCH WITH THE A MOUNT OF RS.28,01,476/- BEING THE AMOUNT OF STOCK FOUND AT THE PREMISES OF RSA DI GIPRINTS AND RSA MARKETING. 1.8 WE HAVE ALSO BEEN ASKED TO INFORM YOU THAT THE ABOVE FACT CAN BE VERIFIED FROM THE DATE OF TALLY PROGRAM WHICH WAS SEIZED DUR ING THE COURSE OF SEARCH PROCEEDINGS. IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 15 - 1.9 IT IS RESPECTFULLY SUBMITTED THAT THERE IS NO V ARIATION IN THE PHYSICAL STOCK FOUND AND THE STOCK AS PER THE BOOKS OF ACCOUNTS AS CAN BE SEEN FROM THE RECONCILIATION STATEMENT FURNISHED TO YOU. THERE IS NO NEGATIVE STOCK OFRS.36,37,146/- UNDER THE HEAD ALL PRINTING JOB (R ATE CARD) AND RS. 17,64,887/- UNDER THE HEAD FINISHED GOODS. WE TRUST THE ABOVE WILL MEET WITH YOUR REQUIREMENTS . SHOULD YOU REQUIRE ANY FURTHER CLARIFICATION/DETAILS ON THIS POINT, PLEASE LET US KNOW, WE SHALL BE PLEASED TO FURNISH THE SAME.' 3.3 FROM THE ABOVE, YOUR HONOUR WILL KINDLY APPRECI ATE THAT THERE WAS NO DIFFERENCE IN THE STOCK AS ALLEGED BY THE LEARNED A O. HOWEVER, THE LEARNED AO DID NOT ACCEPT YOUR APPELLANT'S SUBMISSION BY STATING T HAT THE BOOKS OF ACCOUNTS OF THE APPELLANT WERE NOT MAINTAINED PROPERLY AS DURING TH E COURSE OF SEARCH PROCEEDINGS AT THE PREMISE OF THE APPELLANT A PHYSI CAL STOCK OF RS.28,01,476/- WAS FOUND WHEREAS AS PER THE APPELLANT'S BOOKS THE STOC K WAS AT RS.65,19,415/-, HENCE, THERE WAS AN EXCESS STOCK OF RS.37,17,939/- IN THE BOOKS OF APPELLANT IN COMPARISON TO PHYSICAL STOCK AND HAS FURTHER GONE O N TO STATE THAT THE BOOKS OF ACCOUNTS WAS NOT MAINTAINED PROPERLY AND WAS NOT RE LIABLE, ACCORDINGLY, THE BOOKS OF ACCOUNT OF THE APPELLANT WAS REJECTED AND G.P. A DDITION @ 39% ON THE DIFFERENCE OF STOCK WAS MADE I.E. RS.37,17,939/- X 39% = RS. 14,49,996/- AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE APPELLANT . 3.4 WE HAVE TO BRING TO YOUR HONOUR'S KIND NOTICE T HAT THE LEARNED AO HAS NOT APPRECIATED THE FACT THAT THERE WAS NO DIFFERENCE I N THE STOCK AS ALLEGED BY HIM. HE HAS NOT POINTED OUT ANY DEFECT IN THE RECONCILIATIO N OF STOCKS FURNISHED AS ON THE DATE OF THE SEARCH. HE HAS BROUGHT NO MATERIAL ON R ECORD TO SHOW THAT THE BOOKS OF ACCOUNTS MAINTAINED ARE DEFECTIVE AND THE STOCK REC ORDS MAINTAINED BY YOUR APPELLANT SUFFER FROM ANY DEFECT. THE LEARNED AO HA S ON MERE CONJECTURES AND SURMISE AND ON MERE SUSPICION REJECTED THE BOOKS OF ACCOUNTS WHICH ARE REGULARLY AUDITED . THE LEARNED AO HAS NOT BEEN ABLE TO SHOW THAT APPELLANT HAS INDULGED INTO PURCHASE/SALE OF APPELLANT'S PRODUCTS OUT OF H IS BOOKS FROM THE MATERIAL SEIZED DURING THE COURSE OF SEARCH. ALL THE DOCUMENTS/PAPE RS WERE EXPLAINED AND THE EXPLANATION OFFERED BY YOUR APPELLANT WERE DULY ACC EPTED. THE LEARNED AO HAS REJECTED THE BOOKS OF ACCOUNTS A ND HAS GONE ON TO MAKE THE ADDITION OF RS. 14,49,996/- BEING G.P. CALCULATED @ 9% ON THE ALLEGED DIFFERENCE IN STOCK OF RS.37,17,939/-. 3.5 THE RELEVANT DETAILS ARE PLACED AT PAGE NOS.L54 A TO 154AK, 215 TO 219 AND 257 TO 258 OF THE PAPER BOOK FOR YOUR HONOURS KIND REFERENCE. 3.6 IT IS RESPECTFULLY SUBMITTED THAT THE LEARNED A O BE DIRECTED TO ACCEPT THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND DELETE THE ADDITION OF RS. 14,49,996/- MADE ON ACCOUNT OF G.P. ON THE ALLEGED DIFFERENCE IN STOCK OF RS.37,17,939/-.' 6.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE APPELLANT AND HAVE GONE THROUGH THE ASSESSMENT ORDER PASSED BY TH E AO. 6.2.1 FIRSTLY, FROM THE ASSESSMENT ORDER IT IS CLEA R THAT THE EXPLANATION GIVEN BY THE APPELLANT DURING ASSESSMENT PROCEEDINGS WAS NOT PRO PERLY EXAMINED BY THE AO AS IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 16 - THERE IS NO SPECIFIC FINDING IN THE ASSESSMENT ORDE R IN THIS REGARD. THE AO HAS NOT GIVEN ANY REASON AND MERELY RELYING ON THE FACT THA T AT THE TIME OF SEARCH SOME DISCREPANCY IN STOCK WAS WORKED OUT, HE HAS REJECTE D THE BOOKS OF ACCOUNTS OF THE APPELLANT. THOUGH THE FINDING OF EXCESS STOCK OR SH ORTAGE OF STOCK IS SUFFICIENT FOR REJECTING THE BOOKS OF ACCOUNT OF ASSESSEE BUT BEFO RE COMING TO THIS CONCLUSION THE EXPLANATION GIVEN BY THE ASSESSEE TO EXPLAIN THE DI SCREPANCY NEEDS TO BE VERIFIED AND EXAMINED THOROUGHLY. THIS HAS NOT BEEN DONE BY THE AO AS APPARENT FROM THE ASSESSMENT ORDER. 6.2.2 THE APPELLANT VIDE LETTER DTD.7-12-2011 HAS G IVEN RECONCILIATION OF STOCK TO THE AO. FIRSTLY THE STOCK ALSO INCLUDED STOCK OF OT HER FIRM NAMED M/S RSA MARKETING. THE AO HAS NOT TAKEN ANY COGNIZANCE OF T HIS FACT. FURTHER, IT IS EXPLAINED BY THE APPELLANT THAT WHEN THE SALE IS EF FECTED, THE QUANTITY DETAILS ARE SHOWN AS NEGATIVE FIGURE AND ARE REPORTED IN OUTWAR D COLUMN SINCE THE ENTRY REGARDING SALE IS ALSO MADE IN THE STOCK RECORDS. T HIS WAS APPARENT FROM THE STOCK SUMMARY WHEREIN ALL THE ITEMS OF SALE ARE SHOWING N EGATIVE QUANTITY. IT WAS ALSO EXPLAINED THAT PURCHASES OF VARIOUS ITEMS ARE MADE BY THE APPELLANT FIRM IN 'ROLL' FORM WHEREAS THE SALE IS EFFECTED IN SQ. FT. AT T HE TIME OF PURCHASES, WHEN THE ROLLS ARE RECEIVED ENTRY OF INWARD IS MADE WITHOUT CONVER TING THE SAME INTO SQ. FT. AT THE END OF THE YEAR ROLLS ARE CONVERTED INTO SQ. FT. AN D THE TALLY PROGRAMME CALCULATES THE CLOSING STOCK. THIS FACT IS ALSO AVAILABLE AND VERIFIABLE FROM THE SEIZED DATA WITH THE AO BUT NO EFFORT WAS MADE BY THE AO IN THI S DIRECTIONS. IN THE RAW MATERIAL ACCOUNT ALSO, THE PURCHASES WERE ENTERED B UT THE ENTRIES REGARDING CONSUMPTION WERE NOT MADE. THE TALLY PROGRAMME SEIZ ED DURING THE COURSE OF SEARCH WILL ALSO REFLECT THE ABOVE STATED FACTS. IF THE ABOVE CORRECTIONS ARE MADE, THE STOCK FOR APPELLANT COMES TO RS.27,60,335/- AND IN CASE OF M/S RSA MARKETING COMES TO RS.41,142/- AGGREGATING TO RS.28,42,618/- WHICH ALMOST MATCHES WITH THE PHYSICAL STOCK FOUND OF RS.28,01,476/-. THEREFORE, AFTER CONSIDERING THE EXPLANATION OF THE APPELLANT IT IS CLEAR THAT IF CO RRECTIONS ARE MADE IN THE INVENTORY, AS EXPLAINED BY THE APPELLANT, THEN THER E DOES NOT REMAIN ANY SIGNIFICANT DIFFERENCE IN THE PHYSICAL STOCK AND STOCK AS PER B OOKS. ALL THE EXPLANATIONS GIVEN BY THE APPELLANT ARE VERIFIABLE FROM THE SEIZED DAT A AVAILABLE WITH THE AO. THEREFORE, IT IS HELD THAT THERE WAS NO DIFFERENCE IN THE STOCK FOUND DURING THE COURSE OF SEARCH. HAVING HELD SO, IT IS ALSO CLEAR THAT THE BOOKS OF ACCOUNT OF THE APPELLANT CANNOT BE REJECTED. THEREFORE, THE ACTIO N OF THE AO OF REJECTING THE BOOKS OF ACCOUNT OF THE APPELLANT AND MAKING ADDITI ON OF GROSS PROFIT OF RS.14,49,996/- IS NOT CORRECT AND THE SAME IS DELET ED. THESE GROUNDS ARE ALLOWED. 19. HEARD BOTH THE PARTIES REITERATING THEIR RESPEC TIVE STANDS. THIS IS ADMITTEDLY NOT A CASE WHEREIN THE CIT(A) HAS NOT AF FORDED OPPORTUNITY TO THE ASSESSING OFFICER SO FAR AS ASSESSEES RECONCILIATI ON CLAIM IS CONCERNED. IT HAS COME ON RECORD THAT THE ASSESSEE HAS DULY RECON CILE ITS STOCK STATEMENT THEREBY WIPING OUT THE ALLEGED DIFFERENCE AS ALLEGE D IN ASSESSMENT ORDER. THE REVENUE FAILS TO REBUT CORRECTNESS THEREOF ON MERIT S DURING THE COURSE OF HEARING. WE THUS FIND NO REASON TO INTERFERE IN CI T(A)S WELL REASONED IT(SS)A NOS. 118 TO 120 & 165/AHD/2014 & ITA NOS.59 3 & 1219/AHD/2014 (RSA DIGI PRINTS) A.YS. 2007-08 TO 2010-11 - 17 - FINDINGS DELETING THE IMPUGNED ADDITION. THIS REVE NUES GROUND IS ALSO REJECTED. SO IS ITS APPEAL ITA NO.1219/AHD/2014. 20. THE ASSESSEES ALL FOUR APPEALS IT(SS)A NOS. 11 8 TO 120/AHD/2014 WITH ITA NO.593/AHD/2014 ARE ACCEPTED. REVENUES T WO APPEALS IT(SS)A NO.165/AHD/2014 & ITA NO.1219/AHD/2014 ARE DISMISSE D. [PRONOUNCED IN THE OPEN COURT ON THIS THE 21 ST DAY OF NOVEMBER, 2016.] SD/- SD/- (AMARJIT SINGH) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD: DATED 21/11/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )* + ,--. . /0 / DR, ITAT, AHMEDABAD 1 + 23 / GUARD FILE. BY ORDER / . // . /0