DCIT, Central Circle, Sambalpur V. Shri Sanjay Sharma, Bargarh

ITSSA 138/CTK/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6122 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-09-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 23-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Assessee Lawyers: H K PADHEE
• Keywords: Bogus purchase; Business income; Depreciation; Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Principle of natural justice; Corroborative evidences; Onus to prove; Retraction; Documents seized; TDS
• Section: 143(3); 250; 201; 64; 43; 48; 73; 72; 13; 22; 131; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM ( ) . / IT (SS) A NO. 138 /CTK/20 18 ( / ASSESSMENT YEAR : 20 1 4 - 201 5 ) DCIT , CENTRAL CIRCLE, SAMBALPUR VS. SHRI SANJAY SHARMA, WARD NO.10, NEAR GOVT. BUS STAND, BARGARH PAN NO. : A DQPS 4646 H AND . /CROSS OBJECTION NO. 51 /CTK/2018 ( / ASSESSMENT YEAR :201 4 - 201 5 ) SHRI SANJAY SHARMA, WARD NO.10, NEAR GO VT. BUS STAND, BARGARH VS. DCIT, CENTRAL CIRCLE, SAMBALPUR PAN NO. : ADQPS 4646 H ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI M.K.GAUTAM, CIT - DR /ASSESSEE BY : SHRI H.K.PADHEE , ADVOCATE / DATE OF HEARING : 05 / 0 8 /20 20 / DATE OF PRONOUNCEMENT : 25 / 0 9 /20 20 / O R D E R PER L.P.SAHU , A M : TH E REVENUE HAS FILED THIS APPEAL AGAINST THE ORDER OF CIT(A) - 2 , BHUBANESWAR , DATED 29.06.2018 FOR THE A.Y.201 4 - 201 5 , ON THE FOLLOWING GROUNDS OF APPEAL : - (I) THAT, THE LD. CIT (APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.7,72,400/ - WHICH WAS ADDED BY THE A.O. AS BOGUS SUNDRY CREDITORS. (II) THAT, THE LD. CIT (APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE ASSESSEE WAS UNABLE TO SUBMIT ANY DETAILS OR EXPLANATION OF SUNDRY CREDITORS DURING THE ASSESSMENT PROCEEDING TO PROVE THE IDENTITY AND CREDIT WORTHINESS OF THE CREDITORS AND WAS ALSO IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 2 FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS. DURING REMAND PROCEEDING, EXCEPT LEDGER COPIES, NO SUPPORTING BILLS AND VOUCHERS WERE PRODUCED BEFORE A.O. REGARDING THE SUNDRY CREDITORS. LD. CIT (APPEALS) DELETED THE ADDITION IGNORING THE ABOVE FACT AND ACCEPTING THE EXPLANATION OF THE ASSESSEE WITHOUT ANY BASIS. (III) THAT, THE LD. CIT (APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.5,97,186/ - WHICH WAS ADDED BY THE A.O. AS UNEXPLAINED CAPITAL INTRODUCTION FROM UNDISCLOSED SOURCES. (IV) THAT, THE LD. CIT (APPEALS) HAS FAILED TO N OTICE THE FACT THAT THE ASSESSEE WAS UNABLE TO SUBMIT ANY DETAILS EXPLAINING SOURCE OF ADDITION OF SUCH FRESH CAPITAL INTRODUCTION WITH DOCUMENTARY EVIDENCE DURING THE ASSESSMENT PROCEEDING. DURING REMAND PROCEEDING, THE ASSESSEE COULD NOT EXPLAIN BEFORE A .O. THE SOURCE OF SUCH CAPITAL INTRODUCED. THE LD. CIT (APPEALS) DELETED THE ADDITION IGNORING THE ABOVE FACT AND ACCEPTING THE EXPLANATION OF THE ASSESSEE WITHOUT PROPER REASONS. (V) THAT, THE LD. CIT (APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING TH E ADDITION OF RS.83,62,872/ - WHICH WAS ADDED BY THE A.O. ON A/C OF SALE SUPPRESSION OF RICE BRAN. (VI) THAT, THE LD. CIT (APPEALS) HAS FAILED TO APPRECIATE THE FACT THE SAID ADDITION ON A/C OF SALE SUPPRESSION OF RICE BRAN WAS MADE ON THE BASIS OF IMPOUND ED DOCUMENT MFP - 30. (VII) THAT, THE LD. CIT (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT SRI DEEPAK SHARMA, MANAGER OF THE ORGANIZATION HAD ADMITTED IN HIS STATEMENT RECORDED U/S. 131 OF THE I.T. ACT THAT THE ABOVE SALE OF RICE BRAN HAD NOT BEEN DISC LOSED IN THE REGULAR BOOKS OF A/C. (VIII) THAT, THE LD. CIT (APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.83,62,872/ - HOLDING THE VIEW THAT THE LEDGER A/C IN IMPOUNDED DOCUMENT MFP - 30 ARE NEITHER RELIABLE NOR VALID WHEN TH E SAID DOCUMENTS WAS IMPOUNDED FROM THE BUSINESS PREMISES OF THE ASSESSEE. (IX) THAT, THE LD. CIT (APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.1,28,72,786/ - ON A/C OF SHORTAGE OF STOCK OF PADDY AND BRA N AND RS.13,47,352/ - ON A/C O F EXCESS OF RICE AND BROKEN RICE. (X) THAT, THE LD. CIT (APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE INVENTORY OF STOCK WAS TAKEN BY THE SURVEY PARTY IN PRESENCE OF THE MANAGER SRI DEEPAK SHARMA WITH THE HELP O F THE STAFF MEMBERS OF THE ASSESSEE CONCE RN AND NO SATISFACTORY AND CONVINCING REPLY WAS GIVEN BY SRI SHARMA WHEN HE WAS CONFRONTED WITH THE STOCK DIFFERENCE DURING THE COURSE OF SURVEY OPERATION. NO RECONCILIATION OF STOCK DIFFERENCE WAS PRODUCED BY THE ASSESSEE LATER ON ALSO. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 3 (XI) THAT, THE LD . CIT (APPEALS) HAS IGNORED THE FACT THAT THE ASSESSEE WAS UNABLE TO EXPLAIN THE SHORTAGE OF STOCK OF PADDY AND BRAN AND THE EXCESS OF STOCK OF RICE AND BROKEN RICE DURING THE ASSESSMENT PROCEEDING AS WELL AS REMAND PROCEEDING BEFORE A.O. HENCE LD CIT (APP EALS) IS NOT JUSTIFIED IN DELETING THE ADDITION ON THIS GROUND. (XII) THAT, THE LD. CIT (APPEAS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.2,40,000/ - WHICH WAS ADDED BY THE A.O. ON A/C OF INCOME OF THE ASSESSEE FROM BUS PLYING IGNORING T HE FACT THE BUS PLYING INCOME HAD NOT BEEN SHOWN BY THE ASSESSEE ANYWHERE IN THE RETURN OF INCOME. (XIII) THAT, THE ADDITIONS MADE BY THE A.O. ARE LAWFUL AND JUSTIFIED AND THOSE NEED TO BE SUSTAINED IN FULL. (XIV) THAT, THE APPELLANT CRAVES TO ADD, AMEND, MODIFY OR ALTER ANY GROUND OF APPEAL AT THE TIME OR BEFORE HEARING OF APPEAL. 2. THE ASSESSEE HAS TAKEN TOTAL FOURTEEN GROUNDS OUT OF WHICH GROUND NO. 14 IS RESIDUARY GROUND, THEREFORE, THE SAME IS NOT REQUIRED FOR ANY SEPARATE ADJUDICATION. NOW, W E HAVE TO DECIDE THE REMAINING EFFECTIVE GROUNDS AS GROUND NOS. 1 TO 13 . 3 . BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED ON 21.08.2013 IN THE BUSINESS AND RESIDENTIAL PREMISES OF MAHARAJA GROUP OF CASES, BARGARH (M/S. HOTEL MAHARAJA & GROUP). SIMULTANEOUSLY, SURVEY OPERATION WAS ALSO CONDUCTED IN THE BUSINESS - CUM - OFFICE PREMISES BELONGING TO THE ASSESSEE GROUP. SINCE THE SEARCH & SEIZURE OPERATION WAS CONDUCTED IN THIS GROUP CASES DURING T HE FINANCIAL YEAR 2013 - 14 RELEVANT TO THE ASSESSMENT YEAR 2014 - 15, THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2014 - 15 WAS TAKEN UP FOR SCRUTINY ASSESSMENT BY THE AO U/S. 143(3) OF THE INCOME TAX ACT, 1961. ACCORDINGLY, THE AO ISSUED NOTICE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 4 U/S. 142(1 ) OF THE INCOME TAX ACT, 1961 CALLING FOR THE RETURN OF INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION TO BE FILED ON OR BEFORE THE DATE SPECIFIED IN THE SAID NOTICE AND SERVED ON THE ASSESSEE FOR COMPLIANCE. IN RESPONSE TO THE SAID NOT ICE, THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ELECTRONICALLY ON 21.09.2015 SHOWING A TOTAL INCOME OF RS.13,00,990/ - AFTER CLAIMING DEDUCTION UNDER CHAPTER - VIA OF THE INCOME TAX ACT, 1961. FROM THE RETURN OF INCOME FILED BY THE ASSESSEE , THE AO FOUND THAT THE ASSESSEE DERIVES INCOME FROM RUNNING OF A RICE MILL NAMELY M/S. MAHARAJA FOOD PRODUCTS, AT CHAKERKEND, BARGARH AND INCOME FROM BUS PLYING BUSINESS ETC. THEREAFTER STATUTORY NOTICES WERE ISSUES TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AFTER DISCUSSING IN DETAIL, THE AO FOUND THAT SINCE THE ASSESSEE HAS FAILED TO EXPLAIN THE POINT RAISED BY HIM WITH REGARD TO THE SHORTAGE OF STOCK OF PADDY AND BRAN AND THE EXCESS OF STOCK OF RICE AND BROKEN RIC E IN WHATSOEVER MANNER, THEREFORE, THE AO CONCLUDE D THAT THE ASSESSEE HAS NO EXPLANATION WHATSOEVER, TO OFFER ON THIS POINT I.E. THE SHORTAGE OF STOCK OF PADDY AND BRAN OF RS.1,28,72,786/ - AND THE EXCESS OF STOCK OF RICE AND BROKEN RICE OF RS.13,47,352/ - . FURTHER, THE AO NOTED THAT IT WAS THE PRIMARY OBLIGATION ON THE PART OF THE ASSESSEE TO DISCHARGE HIS ONUS/RESPONSIBILITY WHICH HE TOTALLY FAILED TO DO SO. THEREFORE, THE AO COMPUTED THE SHORTAGE OF STOCK OF PADDY AND BRAN AT RS.1,28,72,786/ - IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 5 (RS.1,28,06,2 50/ - PLUS RS. 66,736/ - ) AND THE EXCESS OF STOCK OF RICE AND DETERMINED BROKEN RICE AT RS.13,47,352/ - (RS.10,90,600/ - PLUS RS.2,56,752/ - ) . ACCORDINGLY, THE AO ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE FOR THE ASSE SSMENT YEAR UNDER CONSIDERATION AFT ER OBSERVING AS UNDER : - 3. ON VERIFICATION OF BALANCE SHEET FILED IT IS SEEN THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN SUNDRY CREDITORS AMOUNTING TO RS.7,72,400/ - . IN THIS CONN ECTION, THE ASSESSEE WAS REQUIRED VIDE THIS OFFICE LETTER (QUESTIONNAIRE) NO.DCIT(CENTRAL)/SBP/2015 - 16/569, & NOTICE U/S.42(L) DATED 24.09.2015 TO FURNISH THE FOLLOWING INFORMATION ALONG WITH OTHER REQUISITIONS ON 13.10.2015: SI. NO. NAME OF SUNDRY DEBTORS , SUNDRY CREDITORS, LOAN & ADVANCE TAKEN, LOANS & ADVANCES GIVEN (EACH IN SEPARATE TABLE) AMOUNT NATURE OF THE DEBTOR/ CREDITOR AND LOANS AND ADVANCES. IF LOANS AND ADVANCES BEAR INTEREST, PLEASE FURNISH RELATIONSHIP WITH THE ENTITY (PARTY/ CONCERN) COMPLE TE PRESENT ADDRESS OF SUCH ENTITY WITH PIN CODE. MAXIMUM AMOUNT OUTSTANDING FOR THREE YEARS AND AS ON DATE. AT THE BEGINNING AND AT THE END OF THE F.Y. UNDER CONSIDERATIO N. BALANCE AS ON DATE. AMOUNT OF INTEREST PAID/ AMOUNT OF INTEREST RECEIVED AND T HE AMOUNT INVOLVED. 1. 2. 3. 4. 5 - 6. 7. 8. 9. IN THIS CONNECTION, IT MAY BE STATED HERE THAT IN RESPONSE TO THE SAID NOTICE AND QUESTIONNAIRE, SRI SUDIP SAWDIA, ADVOCATE & THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED ON 14.10.2015 AND FILED ACKNOWLEDGEMENT COPY OF ITR - V, COMPUTATION STATEMENT OF INCOME, FORM NO.26AS, COPY OF AUDITED PROFIT & LOSS ACCOUNT, BALANCE SHEET WITHOUT SCHEDULES AND PREMIUM PAID CERTIFICATE ISSUED BY LIC OF INDIA ETC. HOWEVER, OTHER DETAILS AND/OR DOCUMENTS CALLED FO R VIDE THE SAID QUESTIONNAIRE WERE NOT FILED . THEREAFTER, THE CASE WAS POSTED FOR HEARING ON 23.10.2015. ON 23.10.2015, THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE. THE ASSESSEE ALSO NOT FILED TIME PETITION. ACCORDINGLY, THE CASE WAS FIXED FOR HEAR ING ON 13.11.2015 AND COMMUNICATED TO THE ASSESSEE VIDE LETTER DATED 02.11.2015. ON .11.2015 THERE WAS AGAIN NO COMPLIANCE. LATER, THE ASSESSEE FILED A TIME PETITION BY SPEED POST WHICH WAS RECEIVED IN THIS OFFICE ON 16.11.2015. CONSIDERING THE SAID TIME P ETITION, THE CASE OF THE ASSESSEE WAS POSTED FOR HEARING ON 27.11.2015 AT 4.00 PM. BUT ON 27.11.2015 ALSO THERE WAS NO COMPLIANCE. SUBSEQUENTLY, THE CASE WAS FIXED FOR HEARING ON 11.01.2016 AT 4.15 PM AND COMMUNICATED TO HIM VIDE THIS OFFICE LETTER DATED 2 9.12.2015. ON 11.01.2016, THE ASSESSEE DID NOT APPEAR TO REPRESENT HIS CASE EITHER PERSONALLY OR THROUGH AUTHORIZED REPRESENTATIVE. HENCE, ANOTHER LETTER NO. DCIT(CENTRAL)/SBP/2015 - 16/1228 WAS ISSUED TO THE ASSESSEE ON 20.01.2016 FOR COMPLIANCE ON IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 6 28.01.20 16 AT 10.30 AM. BUT ON THIS GIVEN DATE ALSO THE ASSESSEE DID NOT APPEAR TO REPRESENT HIS CASE. ACCORDINGLY, A SHOW - CAUSE LETTER BEING NO. DCIT(CENTRAL)/SBP/2015 - 16/1392 WAS ISSUED ON 10.02.2016 FIXING THE DATE OF COMPLIANCE ON 19.02.2016 AT 2.00 PM. HOWEVE R, ON VERIFICATION OF RECORDS IT IS SEEN THAT ON 19.02.2016 THE ASSESSEE NEITHER APPEARED NOR HAVE FILED TIME PETITION. FROM THE ABOVE DISCUSSION, IT CAN BE SEEN THAT THERE WAS FREQUENT NON - COMPLIANCE ON THE PART OF THE ASSESSEE AND THE REASONS FOR SUCH NO N - COMPLIANCE IS BEST KNOWN TO THE ASSESSEE ONLY. VIDE SI. NO.11 OF THE SAID SHOW - CAUSE LETTER DATED 10.02.2016, THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE CLAIM OF SUNDRY CREDITORS WHICH IS REPRODUCED HEREIN BELOW: 'IN THE CASE OF THE SUNDRY C REDITORS ALSO YOU WERE ASKED TO FURNISH CERTAIN INFORMATION CONCERNING TO THE ASSESSMENT YEARS 2008 - 09, 2009 - 10, 2010 - 11, 2011 - 12, 2012 - 13, 2013 - 14 AND 2014 - 15 AS PER THE PRO - FORMA PROVIDED IN THE QUESTIONNAIRE DATED 24 TH SEPTEMBER, 2015. BUT TILL DATE YOU HAVE NOT FURNISHED THE SAME. RATHER YOU HAVE PREFERRED TO REMAIN SILENT, THE REASON OF WHICH IS BEST KNOWN TO YOU ONLY. SINCE YOU HAVE FAILED TO DISCHARGE YOUR DUTIES/RESPONSIBILITIES, THE ONUS TO PROVE THE GENUINENESS OF THE CLAIM ON ACCOUNT OF SUNDRY CR EDITORS NOW LIES WITH YOU. YOU ARE, THEREFORE, REQUIRED TO ESTABLISH THE IDENTITY PROOF OF THE SUNDRY CREDITORS, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTIONS WITH PROPER EVIDENCE, FAILING WHICH THE CLAIM MADE ON ACCOUNT OF SUNDRY CREDITOR S DURING THE FINANCIAL YEARS 2007 - 08 TO 2013 - 14 SHALL BE TREATED AS BOGUS AND ADDED TO THE TOTAL INCOME OF THE RESPECTIVE ASSESSMENT YEARS ACCORDINGLY. HOWEVER, IT IS FOUND ON VERIFICATION OF RECORDS THAT YOU HAVE NOT FILED YOUR REPLY ON THIS POINT TILL D ATE IN SPITE OF SEVERAL REQUISITIONS. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, IT IS CONCLUDED THAT YOU DO NOT HAVE ANY EXPLANATION, WHATSOEVER, TO OFFER IN THIS REGARD AND THEREFORE, IT IS PROPOSED TO TREAT THE SUNDRY CREDIT ORS SHOWN IN DIFFERENT ASSESSMENT YEARS, AS BOGUS AND TO ADD THE SAME IN RESPECTIVE ASSESSMENT YEAR.' IN SPITE OF SEVERAL OPPORTUNITIES GIVEN TO THE ASSESSEE AS DISCUSSED ABOVE, THE ASSESSEE FAILED TO FURNISH DETAILS AS CALLED FOR. SINCE THE ASSESSEE HAS NOT FILED ANY DETAILS AND/OR EXPLANATION BY ESTABLISHING THE IDENTITY PROOF OF THE SUNDRY CREDITORS, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION AND PRODUCED RELEVANT BOOKS OF ACCOUNT FROM WHICH IT COULD HAVE BEEN VERIFIED, MORE PARTICUL ARLY THE PARTY LEDGER ACCOUNTS, THE CLAIM MADE ON ACCOUNT OF SUNDRY CREDITORS AMOUNTING TO RS.7,72,400/ - IS TREATED AS BOGUS AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2014 - 15. ADDITION: RS.7,72,400/ - . 4. ON VERIFICATION OF BALANCE SHEET, IT IS SEEN THAT DURING THE YEAR THE ASSESSEE HAS SHOWN TO HAVE INTRODUCED ADDITIONAL CAPITAL TO THE TUNE OF RS.5,97,186/ - . IN THIS CONNECTION, THE ASSESSEE WAS ASKED VIDE THIS OFFICE LETTER DATED 11.02.2016 TO FILE DETAILS EXPLAINING THE SOURCE OF ADDITION IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 7 OF SUCH FRESH CAPITAL WITH DOCUMENTARY EVIDENCE. EVEN THOUGH THE DATE OF COMPLIANCE TO THE SAID LETTER DATED 11.02.2016 WAS GIVEN ON 19.02.2016, AS A USUAL PRACTICE, THE ASSESSEE NEITHER APPEARED ON THE GIVEN DATE TO EXPLAIN THE SOURCE OF ADDITIONAL CAPITAL INTRODUCED DURING THE YEAR NOR HAVE FILED ANY WRITTEN SUBMISSION IN THIS REGARD. IN ABSENCE OF EXPLANATION REGARDING THE SOURCE OF SUCH FRESH CAPITAL INTRODUCED DURING THE YEAR, I HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT THE ASSESSEE HAS INTRODUCED SUCH FRESH CAPITAL OUT OF THE INCOME EARNED FROM UNDISCLOSED SOURCES AND ADD THE SAME TO HIS TOTAL INCOME FOR THE ASSESSMENT YEAR 2014 - 15. ADDITION: RS.5,97,186/ - . 5. IN THE BALANCE SHEET, THE ASSESSEE HAS SHOWN E.P.F. & PROFESSIONAL TAX PAYABLE AT RS.11,888/ - AND RS.2,500/ - RESPECTIVELY, TOTALLING TO RS.14,388/ - AS ON 31.03.2014 UNDER THE HEAD 'LIABILITIES FOR EXPENSES.' SINCE THE ASSESSEE HAS NOT FILED ANY EVIDENCE REGARDING ITS PAYMENT WITHIN THE DUE DATE AS PROVIDED UNDER THE INCO ME TAX ACT, 1961, THE SAME IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF ASSESSEE FOR THE ASSESSMENT YEAR 2014 - 15. FURTHER IN THE PERSONAL BALANCE SHEET, THE ASSESSEE HAS SHOWN OUTSTANDING LIABILITY ON ACCOUNT OF TDS PAYABLE AMOUNTING TO RS.1,22,613/ - FO R WHICH NO EVIDENCE HAS BEEN ENCLOSED ALONG WITH RETURN OF INCOME FILED. SINCE THERE IS NO EVIDENCE REGARDING ITS PAYMENT INTO THE ACCOUNT OF CENTRAL GOVERNMENT, THE OUTSTANDING LIABILITY ON ACCOUNT OF TDS PAYABLE SHOWN AT RS.1,22,613/ - IS DISALLOWED AND A DDED TO HIS TOTAL INCOME. THUS, THE TOTAL AMOUNT DISALLOWED AND ADDED TO HIS TOTAL INCOME IS RS.1,37,001/ - [RS.14,388/ - PLUS RS.1,22,613/ - ]. ADDITION: RS.1,37,001/ - . 6. CONSEQUENT UPON THE SEARCH & SEIZURE OPERATION CONDUCTED ON 21.08.2013 IN M/S. HOTEL MAHARAJA & GROUP, BARGARH, A SURVEY OPERATION U / S .133A OF THE INCOME TAX ACT, 1961 WAS ALSO CONDUCTED IN THE OFFICES AND BUSINESS PREMISES OF M/S. MAHARAJA FOOD PRODUCTS. DURING SUCH SURVEY OPERATION, CERTAIN BOOKS OF ACCOUNT AND INCRIMINATING DOCUME NTS WERE FOUND AND IMPOUNDED. ON PERUSAL OF PAGE NO.9, 10, 11, 22, 23, 24 & 25 OF IMPOUNDED DOCUMENT MFP - 30, IT IS SEEN THAT THE SALES OF BRAN ARE NOT INCLUDED IN THE SALES REGISTER. THE DETAILS OF SUCH SALE OF BRAN ARE GIVEN HEREIN UNDER: LEDGER ACCOUNT OF MAHARAJA FOOD PRODUCTS IN THE BOOKS OF THE BELOW MENTIONED PARTIES. IDENTIFICATION MARK. PERIOD OF TRANSACTION TOTAL TRANSACTION (SALE) IN CASH. SHREE SHYAM PRODUCTS PAGE NO. 09 TO 10, MFP - 30 01.06.2013 TO 27.06.2013 RS.21,44,142/ - INCLUDING OPENING BA LANCE OF RS.7,78,781/ - RADHE KRISHNA PAGE NO.11 OF MFP - 30 29.06.2013 TO 04.07.2013 RS.2,80,213/ - SHREE SHYAM PRODUCTS (BRAN ACCOUNT) PAGE NO.22 & 23, MFP - 30 01.04.2013 TO 28.04.2013 RS.18,77,683/ - INCLUDING OPENING BALANCE OF RS.8,32,053 / - SHREE SHYAM PRODUCTS (BRAN ACCOUNT) PAGE NO.24 & 25, MFP - 30 01.05.2013 TO 31.05.2013 RS.15,78,781/ - INCLUDING OPENING BALANCE OF RS.15,859/ - . IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 8 THUS, ON PERUSAL OF THE LEDGER ACCOUNTS IT IS SEEN THAT ALL THE SALES ARE MADE IN CASH AND TH E SALE OF BRAN HAS NOT BEEN DISCLOSED IN THE REGULAR BOOKS OF ACCOUNT. IN THIS CONNECTION, STATEMENTS SRI DEEPAK SHARMA, MANAGER OF M/S. MAHARAJA FOOD WAS RECORDED ON 27.11.2013 WHEREIN HE HAS ADMITTED THAT THE SALES OF THE SAID RICE BRAN HAVE NOT BEEN REC ORDED AND DISCLOSED. THE RELEVANT PORTIONS OF THE STATEMENTS ARE REPRODUCED HEREIN UNDER: 'Q. NO.8: PLEASE GO THROUGH THE IMPOUNDED LOOSE SHEET BUNDLE MFP - 30 AT PAGE NO.9, 10 REGARDING THE LEDGER OF MAHARAJA FOOD PRODUCTS IN THE BOOKS OF SHREE SHYAM PRODU CTS, FOR PERIOD 1.6.2013 27.6.2013 WITH OPENING BALANCE OF RS.7,78,781/ - . ALL THE RECEIPTS BY YOU ARE IN CASH IN RESPECT OF BRAN SALES. HOW IS SHREE SHYAM PRODUCTS ASSOCIATED WITH YOU AND HOW DO YOU ACCOUNT FOR THE ABOVE TRANSACTIONS IN YOUR BOOKS OF ACCOU NTS? THE TOTAL TRANSACTION AS PER THIS LEDGER ACCOUNT IS RS.21,44,182/ - INCLUDING OPENING BALANCE, PHOTO COPIES OF WHICH HAS BEEN SUPPLIED TO YOU. ANS: THE SALE OF BRAN AS PER THIS ACCOUNT IS SOLD TO BRMC. THE BRAN PRODUCTION AS PER GOVT, RULE SHOULD BE 4%> BUT THE ACTUAL PRODUCTION IS 5 - 5.5%. WE HAVE PURCHASED BRAN FROM THE MARKET AND SOLD IT IN CASH TO DIFFERENT PARTIES. Q. NO.9: AS YOU SAID THAT YOU HAVE PURCHASED BRAN BUT DURING THE COURSE OF SEARCH AND SURVEY IN YOUR GROUP, NO EVIDENCE OF PURCHASE OF B RAN WAS FOUND. AND YOU SAID THAT THE BRAN PRODUCTION IS USUALLY MORE THAN 4% AND GOES UP TO 5 - 5.5%. HENCE, WHY IT SHOULD NOT BE CONSTRUED FROM THE DOCUMENTS SHOWN TO YOU THAT THESE SALES ARE OUT OF THE EXCESS BRAN YOU HAVE PRODUCED? ANS: I REPEAT THAT WE H AVE PURCHASED BRAN AND HAVE SOLD IT. BOTH THE PURCHASES AND SALES HAVE NOT BEEN SHOWN IN THE BOOKS OF ACCOUNT. Q. NO.10: PLEASE GO THROUGH THESE DOCUMENTS BEING SHOWN TO YOU BEARING IDENTIFICATION MARKS AS MENTIONED AGAINST IT AND COMMENT ON THE NATURE OF THESE TRANSACTIONS, PHOTOCOPIES OF WHICH HAS ALSO BEEN SUPPLIED TO YOU. LEDGER ACCOUNT OF MAHARAJA FOOD PRODUCTS IN THE BOOKS OF THE BELOW MENTIONED PARTIES. IDENTIFICATION MARK TOTAL TRANSACTION (SALE) IN CASH. RADHE KRISHNA PAGE NO.11 OF MFP - 30 RS.2,80 ,213/ - SHREE SHYAM PRODUCTS (MAHARAJA HUSK ACCOUNT) PAGE NO.15 OF MFP - 30 RS. 2,03,682/ - SHREE SHYAM PRODUCTS (BRAN ACCOUNT) PAGE NO.20, 21 OF MFP - 30 RS.24,82,053/ - INCLUDING OPENING BALANCE OF RS.13,76,368/ - SHREE SHYAM PRODUCTS (BRAN ACCOUNT) PAGE NO.2 2 & 23 OF MFP - 30 RS. 18,77,683/ - INCLUDING OPENING BALANCE OF RS.8,32,053/ - SHREE SHYAM PRODUCTS (BRAN ACCOUNT) PAGE NO.24 & 25 OF MFP - 30 RS.15,78,781/ - INCLUDING OPENING BALANCE OF RS.15,859/ - SHREE SHYAM PRODUCTS ( HUSK ACCOUNT) PAGE NO.40, 41 & 42 OF MFP - 30 RS.2,40,348/ - INCLUDING OPENING BALANCE OF RS.22,677/ - IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 9 ANS: THESE ARE ALL CASH SALES OF BRAN WHICH ARE NOT SHOWN IN THE BOOKS OF ACCOUNTS. THE BRAN WAS PURCHASED BY ME. DURING THE COURSE OF SURVEY OPERATION NO DOCUMENTARY EVIDENCE VIZ. BILLS, VOU CHERS AND REGISTERS ETC. IN SUPPORT OF PURCHASE OF RICE BRAN WERE ALSO FOUND. SRI DEEPAK SHARMA ALSO COULD NOT ABLE TO PRODUCE THE SAME DURING THE COURSE OF SUCH PROCEEDINGS AND ALSO DURING RECORDING HIS STATEMENT ON 27.11.2013. HE ALSO FAILED TO IDENTIFY THE BOOKS/DOCUMENTS CONTAINING SUCH UNACCOUNTED PURCHASE OF RICE BRAN. FURTHER, SRI DEEPAK SHARMA ALSO FAILED TO PRODUCE ANY MATERIAL EVIDENCE IN SUPPORT OF HIS CLAIM. THUS, IT IS PROVED BEYOND REASONABLE DOUBT THAT THE UNDISCLOSED SALES OF RICE BRAN WAS O UT OF EXTRA PRODUCTION MADE FROM MILLING IN RICE MILL I.E. M/S. MAHARAJA FOOD PRODUCTS'. IN VIEW OF THE ABOVE FINDINGS, THE ASSESSEE VIDE LETTER IN THE FORM OF QUESTIONNAIRE NO. DCIT(CENTRAL)/SBP/2015 - 16/569, DATED 24.09.2015 WAS REQUIRED TO EXPLAIN THE U NDISCLOSED SALES OF RICE BRAN WITH DOCUMENTARY EVIDENCE ON 13.10.2015. ON THIS GIVEN DATE, SRI SUDIP SAWDIA, ADVOCATE AND THE AUTHORIZED REPRESENTATIVE APPEARED AND REPRESENTED THE CASE ON BEHALF OF THE ASSESSEE. IN RESPONSE TO THE SAID QUESTIONNAIRE, HE F ILED ACKNOWLEDGMENT COPY OF ITR - V SUBMITTED FOR AY. 2013 - 14, COMPUTATION STATEMENT OF TOTAL INCOME, FORM NO. 26AS, COPY OF AUDIT REPORT ALONG WITH AUDITED PROFIT & LOSS ACCOUNT AND BALANCE SHEET WITH RELEVANT SCHEDULES AND PREMIUM PAID CERTIFICATE ISSUED B Y THE LIC OF INDIA ETC. APART FROM THE ABOVE, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE DID NOT FILE ANY DETAILS/DOCUMENTS INCLUDING THE EXPLANATION CALLED FOR ON THE UNDISCLOSED SALES OF RICE BRAN AS DISCUSSED ABOVE . HENCE, THE CASE WAS SUBSEQUENTLY F IXED FOR HEARING ON 23.10.2015, 13.11.2015, 27.11.2015, 11.01.2016, 28.01.2016 AND LASTLY ON 19.02.2016. BUT ALL THE TIME THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE. THE ASSESSEE HAS ALSO NOT THOUGHT IT PROPER AND APPROPRIATE TO FILE TIME PETITION EXCEPT FOR THE DATE OF HEARING FIXED ON 13.11.2015. EVEN THOUGH THE ASSESSEE FILED TIME PETITION IN RESPECT OF THE PROCEEDING DATED 13.11.2015, HE HAS NOT FILED THE SAME IN TIME. THE TIME PETITION FILED BY THE ASSESSEE WAS RECEIVED IN THIS OFFICE ON 16.11 .2015 I.E. AFTER THE DATE POSTED FOR HEARING. SINCE THERE WAS NON - COMPLIANCE ON THE PART OF THE ASSESSEE ALL THROUGH THE PROCEEDING, A SHOW - CAUSE LETTER NO. DCIT(CENTRAL)/SBP/201 - 16/1392 WAS ISSUED TO THE ASSESSEE ON 10.02.2016 FOR COMPLIANCE ON 19.02.201 6. EVEN THOUGH THE SAID LETTER WAS SERVED ON 10.02.2016, THERE WAS NO COMPLIANCE ON 19.02.2016 ON THE PART OF THE ASSESSEE. IN THE LETTERS DATED 20.01.2016 & 10.02.2016 IT WAS CATEGORICALLY STATED THAT IN CASE OF NON - COMPLIANCE ON THE GIVEN DATES, THE ASSE SSMENT MAY BE COMPLETED EX - PARTE ON THE BASIS OF THE MATERIAL FACTS/INFORMATION AVAILABLE ON RECORDS WITHOUT MAKING ANY FURTHER CORRESPONDENCE. IN VIEW OF THE ABOVE DISCUSSION AND SINCE THE ASSESSEE HAS FAILED TO EXPLAIN THE ABOVE NOTED POINT I.E. UNDISCL OSED SALES OF RICE BRAN IN WHATSOEVER MANNER, I HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT THE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 10 ASSESSEE HAS NO EXPLANATION WHATSOEVER, TO OFFER ON THIS POINT I.E. UNDISCLOSED SALES OF RICE BRAN AMOUNTING TO RS. RS.83,62,872/ - . IT WAS THE PRIMARY OBLIGATION O N THE PART OF THE ASSESSE TO EXPLAIN THE ISSUE RAISED DURING THE COURSE OF ASSESSMENT PROCEEDING BY PRODUCING BOOKS OF ACCOUNT AND RELEVANT PAPERS/DOCUMENTS MAINTAINED FOR THE PURPOSES. THUS, HE HAS TOTALLY FAILED TO DISCHARGE HIS RESPONSIBILITY/ONUS. HENC E, THE UNDISCLOSED SALE OF RICE BRAN AS WORKED OUT ABOVE AMOUNTING TO RS. RS.83,62,872/ - IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. 7. DURING THE COURSE OF SURVEY, INVENTORY OF STOCK FOUND IN THE MILL PREMISES WAS TAKEN BY PHYSICAL COUNTING IN THE PRESENCE OF THE MANAGER SRI DEEPAK SHARMA WITH THE HELP OF THEIR STAFF MEMBERS. ON CROSS VERIFICATION OF SAID PHYSICAL STOCK FOUND WITH STOCK REGISTERS MAINTAINED, THE FOLLOWING DISCREPANCIES WERE FOUND. ITEM S STOCK AS PER BOOKS (QTLS.) STOCK FOUND ON PHYSICAL VERIFICATION (QTLS.) EXCESS/SHORTA GE (QTLS.) PADDY 36,077 25,835 ( - ) 10,245 RICE 3,808.70 4,354 ( + ) 545.30 BROKEN RICE 123.72 409 ( + ) 285.28 BRAN 139.67 56.25 R83.42 IN THIS CONNECTION, A STATE MENT OF SRI DEEPAK SHARMA, MANAGER & BROTHER OF SRI SANJAY SHARMA, PROPRIETOR OF M/S. MAHARAJA FOOD PRODUCTS, WHO LOOKS AFTER BUSINESS ACTIVITIES WAS RECORDED DURING THE COURSE OF SURVEY OPERATION. DURING SUCH PROCEEDING, HE WAS ASKED TO EXPLAIN THE REASON S FOR SHORTAGE/EXCESS OF STOCK FOUND. IN HIS REPLY SRI SHARMA STATED THAT THERE SHOULD NOT BE SUCH DIFFERENCE OF STOCK. HE ALSO STATED THAT THE STOCK INVENTORY WAS TAKEN ON EYE ESTIMATE BUT AT THE SAME TIME HE ALSO ASSURED TO EXPLAIN THE STOCK DIFFERENCE L ATER ON AFTER VERIFYING THE RECORDS. HOWEVER, HE FAILED TO FURNISH RECONCILIATION STATEMENT OF STOCK TILL THE DATE OF PREPARATION OF APPRAISAL REPORT. DURING THE COURSE OF POST - SEARCH INVESTIGATION, A STATEMENT OF SRI DEEPAK SHARMA WAS RECORDED ON 27.11.20 13. WHILE RECORDING HIS STATEMENT, HE WAS CATEGORICALLY ASKED TO EXPLAIN THE STOCK DIFFERENCE WHICH HE FAILED TO DO. IN HIS STATEMENT HE SIMPLY REPEATED THE ANSWER WHICH HE HAD GIVEN EARLIER IN HIS STATEMENT AND FAILED TO GIVE SATISFACTORY AND CONVINCING R EPLY ON THE DIFFERENCE OF STOCK FOUND WITH SUPPORTING DOCUMENTARY EVIDENCE. THE RELEVANT PORTIONS OF THE STATEMENT ARE REPRODUCED HEREIN BELOW: 'Q. NO.4: IN YOUR STATEMENT DATED 22.08.2013 DURING THE COURSE OF SURVEY IN REPLY TO QUESTION NO.21, YOU HAD STA TED TO EXPLAIN THE STOCK DIFFERENCE. HOWEVER TILL DATE YOU HAVE NOT FILED ANY RECONCILIATION OF STOCK. PLEASE EXPLAIN WHY THE DIFFERENCE WILL NOT BE TREATED AS UNACCOUNTED STOCK. ANS: THE DIFFERENCE OF STOCK FOUND DURING THE COURSE OF SURVEY MAY BE DUE TO EYE ESTIMATION. Q. NO.5: THE STOCK WAS TAKEN IN YOUR PRESENCE AND THAT WAS TAKEN BY COUNTING THE POCKETS IN ROWS AND COLUMNS. HENCE, THERE MAY NOT BE ANY DIFFERENCE. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 11 ANS: THERE MAY BE DIFFERENCE IN WEIGHMENT.' AS STATED IN PRECEDING PARAGRAPH, THE STOCK I NVENTORY WAS TAKEN BY PHYSICAL COUNTING. HENCE, THE STATEMENT OF THE MANAGER SRI DEEPAK SHARMA THAT THE STOCK INVENTORY WAS TAKEN ON EYE ESTIMATION AND THERE MAY BE DIFFERENCE IN WEIGHMENT IS WITHOUT BASIS AND SUPPORTING DOCUMENTARY EVIDENCE. IT IS NOT AT ALL CONVINCING, SATISFACTORY AND HENCE, ACCEPTABLE. THEREFORE, THE STOCK DIFFERENCE HAS BEEN DETERMINED ON THE BASIS OF THE PRICE ADOPTED BY THE ASSESSEE DURING THE RELEVANT PERIOD WHICH IS AS UNDER: (I) PADDY ( - ) 10,245 QTLS. X RS.1,250/ - RS. 1,28,06,250/ - (II) RICE (+) 545.30 QTLS. X RS.2,000/ - RS. 10,90,600/ - (III) BROKEN RICE (+) 285.28 QTLS. X RS.900/ - RS. 2,56,752/ - (IV) BRAN ( - ) 83.20 QTLS. X RS.800/ - RS. 66,736/ - IN VIEW OF THE ABOVE FINDINGS, THE ASSESSEE VIDE LETTER IN THE FORM OF QUESTIONNAIRE NO. DCIT(CENTRAL)/SBP/2015 - 16/569, DATED 24.09.2015 WAS REQUIRED TO EXPLAIN THE SHORTAGE OF STOCK OF PADD Y AND BRAN AS COMPUTED ABOVE AT RS.1,28,72,786/ - (RS.1,28,06,250/ - PLUS RS. 66,736/ - ) AND THE EXCESS OF STOCK OF RICE AND BROKEN RICE DETERMINED ABOVE AT RS.13,47,352/ - (RS.10,90,600/ - PLUS RS.2,56,752/ - ) WITH SUPPORTING DOCUMENTARY EVIDENCE ON 13.10.2015. IN THIS CONNECTION, IT MAY BE STATED HERE THAT ON THIS GIVEN DATE, SRI SUDIP SAWDIA, ADVOCATE AND THE AUTHORIZED REPRESENTATIVE APPEARED AND REPRESENTED THE CASE ON BEHALF OF THE ASSESSEE. IN RESPONSE TO THE SAID QUESTIONNAIRE, HE FILED ACKNOWLEDGMENT CO PY OF ITR - V SUBMITTED FOR AY. 2013 - 14, COMPUTATION STATEMENT OF TOTAL INCOME, FORM NO. 26AS, COPY OF AUDIT REPORT ALONG WITH AUDITED PROFIT & LOSS ACCOUNT AND BALANCE SHEET WITH RELEVANT SCHEDULES AND - PREMIUM PAID CERTIFICATE ISSUED BY THE LIC OF INDIA ETC . APART FROM THE ABOVE, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE DID NOT FILE ANY DETAILS/DOCUMENTS INCLUDING THE EXPLANATION CALLED FOR ON THE ISSUE AS DISCUSSED ABOVE. HENCE, THE CASE WAS SUBSEQUENTLY FIXED FOR HEARING ON 23.10.2015, 13.11.2015, 27.11.2015, 11.01.2016, 28.01.2016 AND LASTLY, ON 19.02.2016. BUT ALL THE TIME THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE. THE ASSESSEE HAS ALSO NOT THOUGHT IT PROPER AND APPROPRIATE TO FILE TIME PETITION EXCEPT FOR THE DATE OF HEARING FIXED ON 13.11.2015. EVEN THOUGH THE ASSESSEE FILED TIME PETITION FOR THE PROCEEDING DATED 13.11.2015, HE HAS NOT FILED THE SAME IN TIME. THE TIME PETITION FILED BY THE ASSESSEE WAS RECEIVED IN THIS OFFICE ON 16.11.2015 I.E. AFTER THE DATE POSTED F OR HEARING. SINCE THERE WAS NON - COMPLIANCE ON THE PART OF THE ASSESSEE ALL THROUGH THE PROCEEDING, A SHOW - CAUSE LETTER NO. DCIT(CENTRAL)/SBP/201 - 16/1392 WAS ISSUED TO THE ASSESSEE ON 10.02.2016 FOR COMPLIANCE ON 19.02.2016. EVEN THOUGH THE SAID LETTER WAS SERVED ON 10.02.2016, THERE WAS NO COMPLIANCE ON 19.02.2016 ON THE PART OF THE ASSESSEE. IN THE LETTERS DATED 20.01.2016 & 10.02.2016, IT WAS CATEGORICALLY STATED THAT IN CASE OF NON - COMPLIANCE ON THE GIVEN DATES, THE ASSESSMENT MAY BE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 12 COMPLETED EX - PARTE ON THE BASIS OF THE MATERIAL FACTS/INFORMATION AVAILABLE ON RECORDS WITHOUT MAKING ANY FURTHER CORRESPONDENCE. IN VIEW OF THE ABOVE DISCUSSION AND SINCE THE ASSESSEE HAS FAILED TO EXPLAIN THE ABOVE NOTED POINT I.E. THE SHORTAGE OF STOCK OF PADDY AND BRAN AND THE EXCESS OF STOCK OF RICE AND BROKEN RICE IN WHATSOEVER MANNER, I HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT THE ASSESSEE HAS NO EXPLANATION WHATSOEVER, TO OFFER ON THIS POINT I.E. THE SHORTAGE OF STOCK OF PADDY AND BRAN OF RS.1,28,72,786/ - AND THE EXC ESS OF STOCK OF RICE AND BROKEN RICE OF RS.13,47,352/ - . FURTHER, IT IS NEEDLESS TO SAY THAT IT WAS THE PRIMARY OBLIGATION ON THE PART OF THE ASSESSEE TO DISCHARGE HIS ONUS/RESPONSIBILITY WHICH HE TOTALLY FAILED TO DO SO. HENCE, THE SHORTAGE OF STOCK OF PAD DY AND BRAN AS COMPUTED ABOVE AT RS.1,28,72,786/ - (RS.1,28,06,250/ - PLUS RS. 66,736/ - ) AND THE EXCESS OF STOCK OF RICE AND BROKEN RICE DETERMINED ABOVE AT RS.13,47,352/ - (RS.10,90,600/ - PLUS RS.2,56,752/ - ) IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR T HE ASSESSMENT YEAR UNDER CONSIDERATION. ADDITION: RS.1,28,72,786/ - & RS.13,47,352/ - 8. IT IS SEEN ON VERIFICATION OF PERSONAL BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME THAT THE ASSESSEE HAS ONE BUS. HOWEVER, THE ASSESSEE HAS NOT SHOWN AN Y INCOME FROM PLYING OF BUS. SINCE THE ASSESSEE DID NOT EXTEND HIS CO - OPERATION IN FINALISING THE ASSESSMENT AS NARRATED ABOVE IN THE BODY OF THE ASSESSMENT ORDER, DETAILS OF INCOME EARNED FROM PLYING OF BUSES COULD NOT BE VERIFIED. HENCE, IN ABSENCE OF AN Y DETAILS AS WELL AS SUPPORTING DOCUMENTARY EVIDENCE REGARDING THE INCOME EARNED FROM BUS PLYING, I DEEM IT FAIR AND REASONABLE TO ESTIMATE THE INCOME OF THE ASSESSEE FROM BUS PLYING FOR THE ASSESSMENT YEAR 2014 - 15 AT RS.2,40,000/ - PER ANNUM I.E. RS.20,000 / - PER MONTH, AFTER ALL EXPENSES WHICH WORKS OUT TO RS.2,40,000/ - AND ADD THE SAME IN HIS TOTAL INCOME. ADDITION: RS.2,40,000/ - . FOR THE REASONS STATED ABOVE, INITIATED PENALTY PROCEEDINGS U/S. 271(L)(B) & U/S. 271(L)(C) OF THE INCOME TAX ACT, 1961. IN V IEW OF THE ABOVE DISCUSSION, THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER: NET PROFIT AS PER PROFIT & LOSS ACCOUNT RS. 14,02,890/ - LESS: INCOME TO BE CONSIDERED SEPARATELY RS.1,896/ - RS. 14,00,994/ - ADD: SUNDRY CREDITORS TREAT ED AS BOGUS AS DISCUSSED IN THE BODY OF THE ASSESSMENT ORDER VIDE PARA NO.3 RS.7,72,400/ - ADD: INCOME EARNED FROM UNDISCLOSED SOURCE AND INTRODUCED AS FRESH CAPITAL AS DISCUSSED IN THE ORDER VIDE PARA NO.4 RS.5,97,186/ - ADD: UNPAID OUTSTANDING LIABILITIES DISALLOWED AS DISCUSSED IN THE BODY OF THE ORDER VIDE PARA NO.5. RS.1,37,001/ - IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 13 ADD: UNDISCLOSED SALE OF RICE BRAN AS, DISCUSSED IN THE BODY OF ASSESSMENT ORDER VIDE PARA NO.6. RS.83,62,872/ - ADD: SHORTAGE OF STOCK OF PADDY & BRAN F OUND DURING THE COURSE OF SURVEY OPERATION AS DISCUSSED IN THE BODY OF THE ASSESSMENT ORDER VIDE PARA NO.7. RS.1,28,72,786/ - ADD: EXCESS OF RICE & BROKEN RICE FOUND DURING THE COURSE OF SURVEY OPERATION AS DISCUSSED IN THE BODY OF THE ASSESSMENT ORDER VIDE PARA NO.7. RS.13,47,352/ - ADD: INCOME FROM BUS PLYING AS DISCUSSED IN THE BODY OF THE ASSESSMENT ORDER VIDE PARA NO.8 RS.2,40,000/ - ADD: INCOME FROM OTHER SOURCES (BANK INTEREST) AS SHOWN RS.1,896/ - GROSS TOTAL INCOME RS.2,57,32, 487/ - LESS : DEDUCTIION U/S.80C . RS.1,00,000/ - U/S.80TTA. RS.1,896/ - RS.1,01,896/ - NET TAXABLE INCOME RS.2,56,30,591/ - OR, U/S.288A RS. 2 , 56,30,590/ - 4 . AGAINST THE ORDER OF AO, THE ASSESSEE PREFERRED APPEAL BEFORE T HE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FINDINGS OF THE AO HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AFTER OBSERVING AS UNDER : - 5. GROUND NO. 2(I): - 5.1 IN THIS GROUND, THE APPELLANT HAS CONTESTED THE ADDI TION MADE BY THE ASSESSING OFFICER OF RS 7,72,400/ - ON ACCOUNT OF SUNDRY CREDITORS. DURING THE COURSE OF APPEAL PROCEEDINGS, THE APPELLANT HAS STATED THAT THESE CREDITORS ARE THE TRADE CREDITORS. AND AUTHORIZED REPRESENTATIVE OF THE APPELLANT WHO COLLECT P ADDY FROM PROCUREMENT CENTRES, WHOSE DETAILS WERE SUBMITTED DURING THE ASSESSMENT PROCEEDINGS ON 21.03.2016. DURING THE APPEAL PROCEEDINGS, THE APPELLANT HAS FILED LEDGER COPIES CONFIRMATIONS AND AADHAR CARD COPIES OF THESE CREDITORS. 2 IN REMAND PRO CEEDINGS, THE ASSESSING OFFICER HAS STATED THAT THE APPELLANT HAS FURNISHED ONLY THE LEDGER COPIES, BUT, SUPPORTING BILLS AND VOUCHERS WERE NOT FILED EITHER OF ASSESSMENT STAGE OR APPEAL STAGE. AS IT CAN BE SEEN FROM THE LETTER OF THIS OFFICE DATED 19.01 . 2018, CALLING FOR REMAND REPORT, THE ASSESSING OFFICER WAS ASKED TO OBTAIN ANY FURTHER DETAILS REQUIRED BY HER DURING THE REMAND PROCEEDINGS. THE ASSESSING OFFICER HAS NOT CALLED FOR ANY DETAILS AND HAS SUBMITTED REMAND REPORT. THE APPELLANT HAS FILED NAME ADDRESS , AADHAAR CARD DETAILS AND LEDGER COPIES, IT IS SEEN THAT THESE CREDITORS ARE REGULAR SUPPLIERS OF PADDY AND AUTHORIZED REPRESENTATIVE FOR PADDY COLLECTION, IN THE PREVIOUS YEAR AS WELL AS SUBSEQUENT YEARS. THIS IS A SEARCH AND SEIZURE CASE AND IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 14 NO EVIDENCE OF BOGUS PURCHASES WAS FOUND DURING THE SEARCH. CONSIDERING THESE ASPECTS, THE CREDITORS ARE HELD AS GENUINE AND THE ADDITION OF RS 7,72,400/ - IS ORDERED TO BE DELETED. THE GROUND OF APPEAL IS ALLOWED. 6. GROUND NO 2(H): - 6.1 IN TH IS GROUND THE APPELLANT HAS CONTESTED THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 5,97,186/ - ON ACCOUNT OF UNEXPLAINED CAPITAL. THE APPELLANT HAS EXPLAINED THAT MAHARAJA FOOD PRODUCTS IS A PROPRIETARY CONCERN OF THE APPELLANT AND THE CASH INTRODUCE D IN THIS CONCERN FROM HIS INDIVIDUAL ACCOUNT. THE RELEVANT PORTION OF THE APPELLANT'S SUBMISSION IS AS BELOW: '55. AS REGARDS GROUND NO.2(11) - ADDITION OF RS.5,97,186 MADE HOLDING INCOME EARNED FROM UNDISCLOSED SOURCE AND INTRODUCED AS FRES H CAPITAL, IT IS HUMBLY SUBMITTED AT THE OUTSET THAT THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH AS REGARDS TO THIS ISSUE. THEREFORE, THE LEARNED ASSESSING OFFICER HAVE NO JURISDICTION IN MAKING DISALLOWANCE AND THEREBY MAKING ADDITION, IN V IEW OF VARIOUS JUDICIAL AUTHORITIES REFERRED TO ABOVE. 56. THAT IT IS FURTHER HUMBLY SUBMITTED THAT THE ASSESSEE SHRI SANJAY SHARMA IS THE PROPRIETOR OF TWO PROPRIETORSHIP CONCERNS - (I) M/S.MAHARAJA FOOD PRODUCTS, CHKARKEND HAVING RICE MILL BUSINESS AND (2) SANJAY SHARMA CARRYING ON BUSINESS OF BUS PLYING AND TRADING BESIDES EARNING INCOME FROM OTHER SOURCES. THE AMOUNT OF RS. 5,97,186 WHICH IS NOW IN DISPUTE, IS THE CASH INTRODUCED BY SANJAY SHARMA (INDIVIDUAL) IN THE FIRM M/S. MAHARAJA FOOD PRODUCTS, ON DIFFERENT DATES AS PER LEDGER COPIES OF BOTH THE CONCERNS. THE LEARNED AO HAS MADE THE IMPUGNED ADDITION ON THE OBSERVATION THAT THE ASSESSEE DID NOT EXPLAIN REGARDING THE SOURCE OF SUCH FRESH CAPITAL INTRODUCED DURING THE YEAR, WHICH IS NOT AT ALL CORRECT . THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNT INCLUDING THE LEDGER ACCOUNT OF RESPECTIVE FIRMS BEFORE THE LEARNED AO, FROM WHICH IT IS WELL EXPLAINED THAT THE IMPUGNED AMOUNT OF RS. 5,97,186 IS FROM SHRI SANJA SHARMA (INDIVIDUAL). THEREFORE, THE LEARNED AO IS GROSSLY ERRED IN HOLDING THE AMOUNT OF RS.30,00,000 AS UNDISCLOSED INCOME INTRODUCED AS CAPITAL, WITHOUT PROPER VERIFICATION OF THE ACCOUNTS PRODUCED BEFORE HIM ON DIFFERENT DATES, LASTLY ON 21.3.2016, WHICH IS WELL EVIDENT FROM THE HAZIRA FILED ON 21.3 .2016. THE RELEVANT PORTION OF THE SAME IS AS UNDER (SEE PB 104): 'I AM ALSO ASKED TO PRODUCE REGULAR BOOKS OF ACCOUNT SUCH AS CASH BOOK & LEDGER, RELATED BILLS VOUCHERS, AND OTHER RELEVANT PAPERS/DOCUMENTS RELATED TO M/S. MAHARAJA FOOD PRODUCTS, CHAKARKE ND FROM THE ASSTS. YEAR 2008 - 09 TO 2014 - 15 THOSE ARE PRODUCED AND OTHER DOCUMENTS, RELEVANT PAPERS ARE FILED AS NARRATED IN MY PETITION DTD.21.03.2016 IN RESPONSE TO NOTICE ISSUED U/S.131 OF THE ACT:'' IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 15 THE RELEVANT ACCOUNTS/PAPERS/DOCUMENTS FILED AS NARRA TED IN THE PETITION DT. 21.3.2016 (SEE PB PAGE 48 - 49) ARE AS UNDER A. DETAILS OF BOOKS OF ACCOUNT PRODUCE FOR VERIFICATION. CASH BOOK, JOURNAL, LEDGER, PADDY STOCK REGISTER, BRAN & BROKEN SALE REGISTER, VOUCHERS, BANK STATEMENTS, TAX INVOICES, PURCHAS E BILL AND OTHER RELEVANT PAPERS/DOCUMENTS FROM THE ASST. YEAR 2008 - 09 TO 2014 - 15. B. OTHER DOCUMENTS & RELEVANT PAPERS FILED HEREWITH. (I) REPLY TO QUESTIONNAIRE DTD.24.09.2015 ISSUED U/S.L53C OF THE ACT FROM THE ASST. YEAR 2008 - 09 TO 2014 - 15. (II) RE PLY TO QUESTIONNAIRE DID. 10.02.2016 ISSUED U/S.L53C OF THE IT ACT FROM THE ASST. YEAR 2008 - 09 TO 2014 - 15. ( III ) LEDGER COPY OF THE DAY TO DAY EXPENSES WITH VOUCHERS TOWARDS CARRIAGE INWARDS AND LABOUR CHARGES FOR THE ASST. YEAR 2010 - 11. (IV) LED GER COPY OF THE DAY TO DAY EXPENSES INCURRED TOWARDS CUSTOM MILLING EXPENSES FOR THE ASST. YEAR 2012 - 13. (V) DETAILS OF UNSECURED LOAN CONFIRMATION ACCOUNT FROM THE ASST. YEAR 2008 - 09 TO 2014 - 15. (VI) COPY OF THE LOAN CONFIRMATION ACCOUNT OF M/S . BARGARH RICE MILLER CONSORTIUM PVT. LTD. (VII) LEDGER COPY OF THE SALE OF BRAN ACCOUNT CONFIRMING THE BRAN SALE BY M/S. BARGARH RICE MILLER CONSORTIUM PVT. LTD. & M/S. BALGOPAL FOOD PRODUCTS DURING THE ASST. YEAR 2013 - 14. (VIII) (A) REGI STERED COPY OF AGREEMENT TO SALE DTD.21.07.2010 BETWEEN SHRI SANJAY SHARMA AND SHRI SHANTI SWARUP MISHRA. (B) COPY OF THE REGISTERED LAND SALE DEED BETWEEN SHRI SHANTI SWARUP MISHRA AND SHRI PURANMAL SHARMA, BARGARH. IN VIEW OF THE ABOVE, WITHOUT E XAMINING THE ACCOUNTS PRODUCED BEFORE HIM, THE LEARNED AO IS NOT AT ALL JUSTIFIED IN HOLDING THE IMPUGNED AMOUNT OFRS. 5,97,186 AS UNDISCLOSED INCOME INTRODUCED AS CAPITAL. THE COPY OF RESPECTIVE LEDGER ACCOUNTS ARE PLACED AT PB PAGE NOS. 88 AND 89, WHICH WERE NOT EXAMINED BY THE LEARNED AO THOUGH PRODUCED BEFORE HIM. IT IS RESPECTFULLY SUBMITTED THAT ON THE FACE OF BOOKS OF ACCOUNTS AND FINANCIAL STATEMENTS DULY AUDITED, THE ACTION OF THE ASSESSING OFFICER IN MAKING THE IMPUGNED ADDITION HOLDING IT AS UNDI SCLOSED INCOME, IS NOT ALL JUSTIFIED AND THEREFORE, THE ADDITION MADE ON THIS COUNT IS LIABLE TO BE DELETED. IT IS PRAYED THAT THE SAID ADDITION MAY KINDLY BE DELETED. ' 6.2 IN THE REMAND REPORT THE ASSESSING OFFICER HAS STATED AS BELOW. 'FROM THE A SSESSMENT RECORD, RETURN OF INCOME AND COMPUTATION OF INCOME, IT IS NOTICED THAT ASSESSEE HAS NOT SHOWN ANY INCOME FROM BUSINESS OF BUS PLYING AND TRADING. THE SOURCE OF CAPITAL INTRODUCED COULD NOT BE EXPLAINED. THEREFORE, RS. 5,97,186 / - IS CONSIDERED AS UNEXPLAINED CAPITAL INTRODUCTION IN THE HAND OF THE ASSESSEE. ' IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 16 6.3 IN THE REJOINDER, THE APPELLANT HAS REITERATED ITS EARLIER SUBMISSIONS. 6.4 I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE APPELLA NT. IT IS CLEAR THAT THE INTRODUCTION OF CAPITAL IS FROM THE APPELLANT TO THE PROPRIETARY CONCERN AND IT HAS BEEN DEMONSTRATED BY THE APPELLANT. REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER INDICATES THAT SHE HAS NOT AT ALL TAKEN INTO CONSIDERATION THE SUBMISSIONS OF THE APPELLANT. CONSIDERING THESE ASPECTS THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 5,97,186 / - IS ORDERED TO BE DELETED. 8. GROUND NO. 2(IV) 8.1 IN THIS GROUND, THE APPELLANT HAS CONTESTED THE ADDITION MADE BY THE ASSESSING OFFICER OF RS 83,62,872/ - ON ACCOUNT OF UNDISCLOSED SALE OF RICE BRAN. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS RELIED UPON PAGES 9, 10, 11, 22, 23, 24 AND 25 OF IMPOUNDED DOCUMENT MFP - 30. 8.2 DURING THE COURSE' OF APPEAL PROCE EDINGS, THE APPELLANT HAS STATED THAT HE HAS NEVER SOLD ANY BRAN TO SHRI SHYAM PRODUCTS AND FURTHER THAT THE ACTUAL AMOUNT AS PER THE IMPOUNDED MATERIAL IS RS 86,69,929/ - , WHICH INCLUDES TURNOVER OF SHRI SHYAM PRODUCTS AND RADHE KRISHNA OF RS 46,75,479/ - , DOUBLE ADDITION OF RS 28,88,765/ - AND AMOUNTS PERTAINING TO EARLIER PERIOD OF RS 11,05,685/ - . ACCORDING TO THE APPELLANT, ENTIRE ADDITION AMOUNT TO RS 86,69,929/ - WHICH IS ALLEGED BY THE ASSESSING OFFICER AS RECEIVED FROM SHRI SHYAM PRODUCTS WHICH IS TOTAL LY INCORRECT. THE RELEVANT PORTION OF THE SUBMISSION OF THE APPELLANT IS AS BELOW '23. AS REGARDS GROUND NO.2(IV) - ADDITION OF RS.83,62,872 MADE ON ACCOUNT OF UNDISCLOSED SALE OF RICE BRAN, IT IS HUMBLY SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THIS ADDITION ON THE BASIS OF SEIZED LOOSE PAPER MARKED MFP 30, WHERE THE ASSESSEE HAS BEEN INDICATED TO HAVE SOLD RICE BRAN TO SHRI SHYAM PRODUCTS AND RADHE KRISHNA TOTALLING RS.83,62,872, WHICH IN FACT ACCORDING TO CORRECT CALCULATION IS RS.46,75,479 THUS - T HE TOTAL BRAN TRANSACTION AS PER SHOW CAUSE NOTICE IS RS. 83,62,8727 - , WHEREAS TOTAL TRANSACTION AS PER TABLE - I & II SHOWN IN THE SHOW CAUSE NOTICE COMES AT RS.86,69,9297 - (42,54,1267 - + 44,15,8037 - ). FURTHER THERE IS DOUBLE ADDITION OF THE SAME AMOUNT WHI CH ALSO REQUIRED TO BE DEDUCTED AND SO ALSO THE TRANSACTION RELATES TO THE EARLIER PERIOD, WHICH IS EXPLAINED AS UNDER. THUS TOTAL TRANSACTION AS PER TABLE - I & II - RS. 86,69,929.00 LESS : DEDUCTION (I) TRANSACTION OF RADHE KRISH AN - RS. 2,80,213.00 (II) TRANSACTION OF SHYAM PRODUCT - RS.11,05,685.00 (III)TRANSACTION OF SHYAM PRODUCT - RS.10,45,630.00 (IV) TRANSACTION OF SHYAM PRODUCT - RS.15,62,922.00 RS. 3 9,94,450.00 RS. 46,7 5,47 9.00 IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 17 THUS THE TOTAL TRANSACTION AS PER SHOW CAUS E NOTICE COMES TO RS.46,75,479, WHICH THE ASSESSEE CLAIMS TO BE NOT RELATING TO THE ASSESSEE. 24. THAT THE ASSESSEE RIGHT FROM BEGINNING IS DENYING TO HAVE SOLD BRAN/HUSK TO SHRI SHYAM PRODUCTS/RADHE KRISHNA. IT IS HUMBLY SUBMITTED THAT DURING THE ASST. YEAR 2014 - 15 THE ASSESSEE HAS NEVER SOLD RICE BRAN/HUSK TO SHREE SHYAM PRODUCT AND RADHE KRISHNA AS ALLEGED. THE PAGE NO.9 - 10, PAGE 11, PAGE - 22 & 23, PAGE - 24 & 25, PAGE - 15, PAGE - 20 & 21 & PAGE - 40,41 & 42 OF MFP - 30 IMPOUNDED DURING THE YEAR ARE UNSIGNED LO OSE SHEETS OF THIRD PARTIES AND THEREFORE, THE CONTENTS THEREIN CANNOT BE IMPLICATED AGAINST THE ASSESSEE WITHOUT EXAMINING THOSE PARTIES. IT IS HUMBLY SUBMITTED THAT THE ASSESSEE HAS SOLD HIS ENTIRE BRAN PRODUCED BY HIS MILL DURING THE FINANCIAL YEAR 2013 - 14 I.E. ASST. YEAR 2014 - 15 TO BARGARH RICE MILLER CONSOTIRUM PVT. LTD. (BRMC) AND NOT TO OTHERS. 25. THAT AS CAN BE SEEN FROM THE SEIZED PAPERS, THOSE LOOSE PAPERS IMPOUNDED ARE THE LEDGER COPY OF THE ASSESSEE IN THE BOOKS OF ACCOUNT OF BOTH THE AB OVE NAMED PARTIES NAMELY M/S.SHREE SHYAM PRODUCTS AND M/S.RADHE KRISHNA, WHO ARE THIRD PARTIES. THEREFORE, ONUS HEAVILY LAY ON THE REVENUE TO PROVE THAT THE NOTING APPEARING IN THE SEIZED LOOSE PAPERS OF A THIRD PARTY ACTUALLY RELATES TO THE TRANSACTIONS OF THE PRESENT ASSESSEE. THIS CAN ONLY BE PROVED BY EXAMINING THE SAID THIRD PARTY AND THAT CAN BE DONE ONLY ON ISSUANCE OF NOTICE U/S.131 OF THE ACT TO THE SAID THIRD PARTY. IT IS, THEREFORE, RIGHT FROM THE BEGINNING THE ASSESSEE IS REQUESTING TO ISSUE SU MMONS TO THOSE PARTIES AND ALLOW OPPORTUNITY OF CONFRONTATION TO THE ASSESSEE, BUT UNFORTUNATELY THE AO HAS NEITHER CONDUCTED ANY ENQUIRY FROM THOSE PARTIES NOR ISSUED SUMMONS TO THEM IN ORDER TO ASCERTAIN THE TRUTH. ALL THESE FACTS HAVE CLEARLY GIVEN IN THE REPLY TO SI. 8 TO THE NOTICE NO. DCIT(CENTRAL)/SBP/2015 - 16/139 DT.10.02.2016 (PB PAGE NO. 13 - 14) IT WAS SPECIFICALLY REQUESTED TO THE ASSESSING OFFICER TO SUMMON SHREE SHYAM PRODUCT AS WELL AS RADHE KRISHNA TO CONFIRM THE FACTS THAT THEY HAVE PURCHAS ED EITHER RICE BRAN OR HUSK, AS ALLEGED, FROM M/S. MAHARAJA FOOD PRODUCTS, CHAKARKEND, THE ASSESSEE. BUT THE REQUEST TO THE ASSESSING OFFICER WAS IN VAIN. NO SUMMON WAS ISSUED AND NO CROSS EXAMINATION WAS ALLOWED TO THE ASSESSEE THOUGH PRAYED FOR BEFORE TH E LEARNED ASSESSING OFFICER, WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. INSTEAD OF SO DOING, THE AO INSISTED UPON THE ASSESSEE TO EXPLAIN THE NOTING IN THE SEIZED PAPERS'OF THIRD PARTIES, WHICH IS IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTIC E. IT IS THEREFORE PRAYED BEFORE YOUR HONOUR TO PLEASE ISSUE SUMMON TO M/S.SHREE SHYAM PRODUCT AND M/S.RADHE KRISHAN TO ESTABLISH HE TRUTH. THE ASSESSEE HAS REQUESTED YOUR HONOUR VIDE A SEPARATE PETITION DT. 10.11.2017 ( B Y SPEED POST) TO ISSUE SUMMONS TO T HE SAID THIRD PARTY NAMELY, M/S.SHYAM PRODUCTS AND M/S.RADE KRISHAN AND ALLOW OPPORTUNITY OF CONFRONTATION TO THE ASSESSEE, FOR THE ENDS OF NATURAL JUSTICE. 25. THAT IN VIEW OF THE ABOVE, WITHOUT CORRELATING THE SAME BY EXAMINING THE THIRD PARTY AN D/OR OBTAINING STATEMENTS FROM THEM, THE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 18 ENTRIES FOUND IN THE ACCOUNTS OF THIRD PARTY HAVE BEEN UTILISED AGAINST THE ASSESSEE AND THEREFORE THE ADDITION AS MADE BY THE LEARNED ASSESSING OFFICER ON THIS COUNT IS UNJUSTIFIED AND IS LIABLE TO BE DELETED AND I T IS PRAYED ACCORDINGLY.' 8.3 THESE SUBMISSIONS WERE FORWARDED TO THE ASSESSING OFFICER VIDE THIS OFFICE LETTER DATED 19.01.2018 FOR SUBMISSION OF THE REMAND REPORT. THE ASSESSING OFFICER HAS SUBMITTED REMAND REPORT IN WHICH SHE HAS STATED THAT DOCUMENT M FP - 30 WAS IMPOUNDED FROM THE BUSINESS PREMISES OF THE APPELLANT AND THEREFORE, THE APPELLANT CAN NOT DENY THAT THE TRANSACTION BELONG TO HIM. THE RELEVANT PORTION OF THE REMAND REPORT IS AS BELOW: - DURING THE ASSESSMENT PROCEEDING ADDITION OF RS. 83,62,87 2/ - WAS MADE ON ACCOUNT OF UNDISCLOSED SALE OF RICE BRAN. DURING THE SURVEY PROCEEDING AT THE OFFICE PREMISES OF THE ASSESSEE, SOME LOOSE PAPERS WERE IMPOUNDED NAMED AS MFP - 30. MFP - 30 CONTAINS DETAILS OF SALE OF RICE BRAN BY THE ASSESSEE WHICH WAS NOT ACCO UNTED FOR. SEIZED DOCUMENT HMB 69 WAS BRAN SALE REGISTER. ON VERIFICATION OF BOTH THE DOCUMENTS, TOTAL UNACCOUNTED RICE BRAN SALE WAS CALCULATED. DURING THE ASSESSMENT PROCEEDING ASSESSEE WAS GIVEN OPPORTUNITY TO EXPLAIN IT. BUT HE COULD NOT EXPLAIN IT. A T THE TIME OF APPELLATE PROCEEDING, THE ASSESSEE FURNISHED SUBMISSION ON PAGE NO. 53 TO 55 THAT THE TRANSACTION DOES NOT BELONG TO HIM. THE DOCUMENT MFP - 30 WAS IMPOUNDED FROM THE BUSINESS PREMISES OF THE ASSESSEE, WHICH CONTAINS LEDGER COPY OF TRANSACTION OF SALE OF RICE BRAN TO SHRI SHYAM PRODUCTS AND RADHE KRISHNA. THEREFORE, THE ASSESSEE CANNOT DENY THAT TRANSACTION DOES NOT BELONG TO \ HIM. THE SALE OF RICE BRAN WAS NOT ACCOUNTED IN THE BOOKS OF ACCOUNT, ACCORDINGLY / ASSESSING OFFICER MADE THE ADDITION . ' 8.4 THEREAFTER, THE APPELLANT HAS FILED A REJOINDER. IN THE REJOINDER, THE APPELLANT HAS FILED PHOTO COPY OF ONE CHEQUE WHICH APPEARS IN LEDGER ACCOUNT OF THE APPELLANT IN BOOKS OF ACCOUNTS OF SHRI SHYAM PRODUCTS AND HAS STATED THAT THIS CHEQUE HAS BE EN ISSUED BY BRMC. THE APPELLANT HAS ALSO SUBMITTED A CERTIFICATE FROM UNITED BANK OF INDIA, BARGARH THAT THEY DO NOT HAVE ANY ACCOUNT IN THE NAME OF SHRI SHYAM PRODUCTS. THE SUBMISSION OF THE APPELLANT ALONG WITH EVIDENCE WAS FORWARDED VIDE THE OFFICE LET TER DATED 21.06.2018 TO THE ASSESSING OFFICER FOR SUBMISSION OF REMAND REPORT. THE RELEVANT PORTION OF THIS OFFICE LETTER IS AS BELOW: - '2. IN THE CASE OF THE APPELLANT, FOR ASST. YEAR 2014 - 15, ONE OF THE ADDITIONS MADE IS OF RS. 83,62,872/ - ON ACCOUNT OF SALE SUPPRESSION OF RICE BRAN. AS PER YOUR REMAND REPORT, VIDE LETTER UNDER THE REFERENCE ABOVE, YOU HAVE STATED THAT DOCUMENT MFP - 30 WAS IMPOUNDED FROM THE BUSINESS PREMISES OF THE APPELLANT AND THEREFORE THE APPELLANT CAN NOT DENY THE TRANSACTIONS WITH SRI SHYAM PRODUCTS AND RADHEY KRISHNA. SIMILARLY, YOU HAVE ALSO STATED THAT THE SEIZED DOCUMENT HMB - 25 SEIZED IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 19 FROM THE BUSINESS PREMISES OF M/S. MAHARAJA HOTELS ALSO INDICATES THE UNACCOUNTED SALE OF RICE BRAN TO SRI SHYAM PRODUCTS. 3. THE DOCUMEN TS HMB - 25/MFP - 30 MENTION CHEQUE PAYMENTS AS WELL AS CASH PAYMENTS. IN RESPECT OF CHEQUE PAYMENTS, IT IS STATED IN THE ASSESSMENT ORDER THAT MAHARAJA FOOD PRODUCTS HAS RECEIVED CHEQUE PAYMENTS FROM BOTH THE PARTIES I.E. M/S. SRI SHYAM PRODUCTS AND M/S. BARG ARH RICE MILLERS CONSORTIUM PRIVATE LTD BY THE SAME CHEQUES DRAWN ON SAME BANK. THE RELEVANT PORTION OF THE ASSESSMENT ORDER IS REPRODUCED BELOW. 'FROM THE ABOVE CHARTS, IT IS SEEN THAT THE ASSESSEE SRI SANJAY SHARMA, PROP. M/S. MAHARAJA FOOD PRODUCTS HAS RECEIVED PAYMENTS FROM BOTH THE PARTIES I.E. M/S. SHREE SHYAM PRODUCTS AND M/S. BARGARH RICE MILLERS CONSORTIUMS PVT LTD BY SAME CHEQUES 0$$ J*JJ OF UNITED BANK OF INDIA, BARGARH I.E. CHEQUE NOS. ARE HE SAME. FURTHER, THE DATE AND THE AMOUNT OF THE CHEQU ES ARE ALSO THE SAME. ' IT IS NOT POSSIBLE THAT A PERSON WILL RECEIVE PAYMENT FROM TWO PARTIES BY A CHEQUE BEARING SAME NUMBER, DATE, AMOUNT AND DRAWN ON THE SAME BANK. 4. IN THE REJOINDER FILED BY THE APPELLANT, HE HAS STATED THAT ALL THE CHEQUES HAVE BEEN ISSUED BY BARGARH RICE MILLER CONSORITIUM PVT LTD. A COPY OF CHEQUES HAS ALSO BEEN FILED BY THE APPELLANT ALONGWITH HIS BANK STATEMENT. FURTHER, THE APPELLANT HAS FILED A CERTIFICATE FROM UNITED BANK OF INDIA, BARGARH BRANCH, BARGARH STATING THA T SRI SHYAM PRODUCTS HAS NOT OPENED ANY SUCH ACCOUNT WITH THEM. IT IS IMPORTANT TO NOTE THAT THE ALLEGED ACCOUNT OF MAHARAJA FOOD PRODUCTS IN THE BOOKS OF ALLEGED SRI SHYAM PRODUCTS, AS MENTIONED IN HMB - 25 AND MFP - 30, IS A RUNNING LEDGER ACCOUNT WHICH HAS THE ENTRIES OF THE SIX CHEQUES AS WELL AS CASH RECEIPTS. IF THESE CHEQUES DO NOT PERTAIN TO SRI SHYAM PRODUCTS THEN THE VALIDITY OF THE RELEVANT SEIZED/IMPOUNDED MATERIAL IN HMB - 25 AND MFP - 30 IS DOUBTFUL. SINCE THIS EVIDENCE GOES TO THE VERY ROOT OF THE AD DITION MADE, THE REJOINDER DTD.14.06.2018 ALONGWITH ITS ENCLOSURES IS FORWARDED HEREWITH. ' 8.5 THE ASSESSING OFFICER HAS SUBMITTED REMAND REPORT ON 25.06.2018 IN WHICH SHE HAS STATED THAT THE CHEQUE PAYMENTS MADE BY BMRC TALLIES WITH THE BANK STATEMENT O F THE APPELLANT. HOWEVER, SHE HAS REITERATED THAT THE APPELLANT CAN NOT DENY RECEIPT OF CASH PAYMENTS. THE RELEVANT PORTION OF THE REMAND REPORT IS AS BELOW: - 'DURING THE ASSESSMENT PROCEEDING, AN ADDITION OF RS. 83,62,872/ - WAS MADE ON ACCOUNT OF SALE SUP PRESSION OF BRAN. DURING THE STATEMENT RECORDED ON 27.11.2013, SRI DEEPAK SHARMA, MANAGER OF MAHARAJA FOOD PRODUCTS, ACCEPTED THAT ALL CASH SALES OF BRAN WAS NOT SHOWN IN THE BOOKS OF ACCOUNTS. ASSESSEE IN THE SUBMISSION BEFORE THE APPELLATE AUTHORITY FURN ISHED THE SUBMISSION THAT THERE WERE NO SALES MADE TO M/S, SHYAM PRODUCTS AND RADHE KRISHNA. AS PER SEIZED DOCUMENTS MFP - 30, SALE WAS MADE WITH M/S. SHYAM PRODUCTS AND RADHE KRISHNA. AS PER LEDGER COPY OF SEIZED DOCUMENTS MFP - 30, CASH SALE WITH M/S. SHYAM PRODUCTS AND RADHE KRISHNA WITH THE ASSESSEE WAS MADE. ASSESSEE MADE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 20 THE SUBMISSION THAT THERE WERE NO SALES MADE TO M/S. SHYAM PRODUCTS AND RADHE KRISHNA, WHICH CANNOT BE ACCEPTED. IN THE ASSESSMENT YEAR 2014 - 15, THERE ARE NO ISSUES OF CH EQUE RECEIVED FROM M/S. SHYAM PRODUCTS AND M/S. BARGARH RICE MILLERS CONSORTIUM PVT LTD. ADDITION WAS MADE ON ACCOUNT OF LEDGER COPY OF TRANSACTION IN SEIZED DOCUMENTS MFP - 30. THEREFORE THE TRANSACTION CANNOT BE DENIED. 8 .6 I HAVE CAREFULLY EXAMINED THE ASSESSMENT ORDER, SUBMISSIONS OF THE APPELLANT, REMAND REPORT OF THE ASSESSING OFFICER AND REJOINDER OF THE APPELLANT. AS STATED EARLIER, THE PAGES IN THE IMPOUNDED DOCUMENT MFP - 30, IS NOTHING BUT ALLEGED LEDGER ACCOUNT OF MAHARAJA FOOD PRODUCTS IN BOOKS OF SHRI SHYAM PRODUCTS. THIS LEDGER COPY CONTAINS CHEQUE PAYMENT AS WELL AS CASH PAYMENTS. ACCORDING TO THE ASSESSING OFFICER, THESE ARE UNDISCLOSED RECEIPTS OF THE APPELLANT FROM SHRI SHYAM PRODUCTS. HOWEVER, THE APPELLANT HAS VEHEMENTLY DENIED ANY SUCH RECEIPT, EITHER IN CASH OR IN CHEQUE FROM SHRI SHYAM PRODUCTS. SINCE, IT IS A RUNNING LEDGER, THE BEST WAY TO ESTABLISH WHETHER THE LEDGER ACCOUNT IS GENUINE OR NOT, IS TO FIND OUT TO WHO HAS MADE THE CHEQUE PAYMENT TO THE AP PELLANT. IF THE CHEQUE PAYMENT IS MADE BY THE SHRI SHYAM PRODUCTS THEN BY THE PRINCIPLE OF PREPONDERANCE OF PROBABILITY, IT WILL BE ESTABLISHED THAT CASH PAYMENTS ARE ALSO MADE BY SHRI SHYAM PRODUCTS TO THE APPELLANT. THE APPELLANT HAS PRODUCED EVIDENCE IN THE FORM OF CHEQUE THAT THE PAYMENT IS MADE BY BMRC AND NOT BY SHRI SHYAM PREDUCTS. THE ASSESSING OFFICER HAS ACCEPTED THE EVIDENCE AND HAS AGREED TO THE APPELLANT ON THIS ISSUE. THEREFORE, THERE IS NO DOUBT THAT PAYMENT RECEIVED BY THE APPELLANT IN CHEQU E AS APPEARING IN THE IMPOUNDED MATERIAL HAS COME FROM BMRC AND NOT FROM SHRI SHYAM PRODUCTS. THEREFORE, IT IS MY CONSIDERED VIEW THAT ALLEGED LEDGER ACCOUNT IN MFP - 30 OF THE APPELLANT IN BOOKS OF SHRI SHYAM PRODUCTS IS NEITHER RELIABLE NOR VALID. ACCORDIN GLY, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS 83,62,872/ - IS ORDERED TO BE DELETED. THE GROUND OF APPEAL IS ALLOWED. 9. GROUND NO. 2(V) AND 2(VI): - 9.1 IN THESE GROUNDS, THE APPELLANT HAS CONTESTED THE ADDITION MADE BY THE ASSESSING OFFICE R OF RS 1,28,72,786/ - ON THE ALLEGED SHORTAGE OF STOCK OF PADDY AND BRAN AND OF RS 13,47,352/ - ON ALLEGED EXCESS RICE AND BROKEN RICE. ACCORDING TO THE ASSESSING OFFICER, THE APPELLANT COULD NOT GIVE SATISFACTORY EXPLANATION AND THEREFORE, HE MADE THE ADDI TIONS. 9.2 DURING THE COURSE OF APPEAL PROCEEDINGS, THE APPELLANT HAS STATED THAT IT WAS IMPOSSIBLE TO TAKE PHYSICAL STOCK OF SUCH HUGE AMOUNT OF PADDY, BRAN AND RICE IN SHORT TIME AND THE STOCK WAS TAKEN ON EYE ESTIMATE. THE APPELLANT HAS FURTHER STATED THAT WEIGHMENT OF STOCK OF PADDY/RICE/BRAN WAS NOT TAKEN. THE APPELLANT HAS ALSO ADDED THAT HE IS ONLY A MILLING AGENT OF CORPORATIONS OF STATE GOVERNMENT OF ORISSA AND PADDY IS KEPT UNDER LOCK AND KEY OF THE OFFICIALS OF THE PRINCIPALS AND IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 21 MILLING OF PADD Y TAKES PLACE ONLY AFTER RELEASE OF STOCK OF PADDY BY THE OFFICIALS. THE APPELLANT HAS FURTHER ADDED THAT STOCK IS CHECKED FOR TIME TO TIME BY FOOD AND SUPPLY DEPARTMENT OF GOVERNMENT OF ORISSA AND THEY REGULARLY CHECKED THE REGISTRAR AND PUT THEIR SIGNATU RES ON REGISTER KEPT FOR THE PURPOSE AND THAT LAST CHECK WAS ON 16.08.2013, JUST FIVE DAYS BEFORE THE DATE OF SURVEY CONDUCTED ON 21.08.2013 AND FURTHER THAT NO DISCREPANCY WERE FOUND BY THE OFFICERS OF GOVERNMENT OF ORISSA. THE RELEVANT PORTION OF THE SUB MISSION OF THE APPELLANT IS REPRODUCED BELOW: - '26. IN THESE TWO GROUNDS FOLLOWING TWO ADDITIONS ARE DISPUTED - (V) ADDITION OFRS. 1,28,72,786 ON THE ALLEGED SHORTAGE OF STOCK OF PADDY AND BRAN, AND (VI) ADDITION OF RS. 13,47,352 ON THE ALLEGED EXCESS OF RICE & BROKEN RICE 27. THAT THE SURVEY PARTY REPORTED EXCESS/SHORTAGE OF PADDY, RICE, BROKEN RICE AND BRAN AS UNDER: ITEMS STOCK AS PER BOOKS (QTLS) STOCK FOUND ON PHYSICAL VERIFICATION (QTLS) EXCESS/SHORTAGE (QTLS) PADDY 36,077* 25,935 ( - ) 10,245 RICE 3,808.70 4,354 (+) 545.30 'BROKEN RICE 123.72 409 (+) 285.28 BRAN 139.67 56.25 ( - ) 83.42 *(THE TOTAL OF 27,977 QTS. AS PER PADDY JOINT CUSTODY AND MAINTENANCE OF STOCK REGISTER (SEE PB PAGE 108 ) PLUS 8,100 QTLS., AS PER PADDY STOCK REGISTER (SEE PB PAGE 92). AT THE OUTSET THE ASSESSEE MAY KINDLY BE PERMITTED TO REFER TO THE INVENTORY OF STOCK OF PADDY, RICE, BROKEN RICE AND BRAN PREPARED BY THE SEARCH PARTY (COPY PLACED AT PB PAGE NO. 81 AND 82) FROM WHICH IT CAN BE SEEN THAT THEY HAVE FIRSTLY MENTIONED THE PHYSICAL STOCK IN BAGS ON EYE ESTIMATION, THEN CONVERTED INTO QUINTALS BY ADOPTING UNIQUE CONTENTS IN EACH BAG AND THEN COMPARED WITH THE STOCKS MENTIONED IN THE STOCK REGISTER (IMPOUNDED). THE ASSESSEE HUMBLY S UBMITS THAT THE ENTIRE PROCESS OF STOCK INVENTORY AND WORKING OUT THE EXCESS/SHORTAGE OF STOCK ARRIVED AT BY THE SEARCH PARTY IS COMPLETELY ERRONEOUS AND ALSO COMPLETELY BASED ON EYE ESTIMATION AND NOT BY ACTUAL WEIGHMENT OF THE STOCKS OF PADDY/RICE/BRAN E TC., WHEN MEN POWER AND WEIGHING MACHINES ARE AVAILABLE IN THE MILL PREMISES. IT IS FURTHER SUBMITTED THAT AT THE TIME OF SURVEY, WHEN ASKED, IT WAS EXPLAINED THAT THERE SHOULD NOT BE SUCH DIFFERENCE OF STOCK. IT IS BECAUSE THE STOCK INVENTORY WAS TAKEN ON EYE ESTIMATE. THE SAME STAND WAS ALSO TAKEN BEFORE THE LEARNED ASSESSING OFFICER. HOWEVER, THE LEARNED ASSESSING OFFICER DID NOT BELIEVE THE SAME AND PROCEEDED TO ESTIMATE THE PRICE OF THE ABOVE STOCKS AT IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 22 RS.1,28,72,786 (RS.1,28,06,250 FOR PADY + RS.66,37 6 FOR BRAN) AND RS. 13,47,352 (RS. 10,90,600 FOR RICE + RS.2,56,752 FOR BROKEN RICE) AND MADE THE ADDITION ON THIS COUNT TO THE DISCLOSED INCOME. THAT THE ASSESSEE RUNS A RICE MILL NAMED 'M/S. MAHARAJA FOOD PRODUCTS ' AND IS ENGAGED IN THE CUSTOM MILLING BUSINESS FOR MILLING OF PADDY TO RICE OF ITS ' PRINCIPALS AND SALE OF BYE PRODUCTS I.E., BROKEN RICE, BRAN. 29. THAT IN THIS RESPECT, THE ASSESSEE HAS REPLIED TO THE QUESTIONER ISSUED BY THE AO, VIDE REPLY TO SI. NO. 9 (SEE PB 15 TO 21) , AS UNDER : REP LY TO SI.NO.9 OF THE NOTICE UNDER REFERENCE FOR ASST. YEAR 2014 - 15. IN REPLY TO SI. NO. 9 THE ASSESSEE HAS BEEN ASKED TO CLARIFY THE STOCK DISCREPANCY FOUND IN COURSE OF SURVEY IN THE MILL PREMISES ON 21.08.2013 TO 22.08.2013 AN ESTIMATED THE VALUE OF EXCE SS/SHORTAGE FOUND AT RS.1,28,72,786/ - AND RS. 13,47,352/ - SHALL NOT BE ADDED TO YOUR TOTAL INCOME. IN THJS REGARD THE ASSESSEE MAY KINDLY BE ALLOWED TO FORTH THE FACTS & FIGURE FOR KIND APPRECIATION OF THE CASE. AT THE OUTSTATE THE ASSESSEE AGAIN PRAYS TH AT COPY OF THE CALCULATION SHEET PREPARED FOR TAKING/DETERMINE THE STOCK OF GOODS SUCH AS PADDY, RICE, BROKEN RICE & BRAN KEPT IN DIFFERENT FOUR BIG GODOWNS, VERANDA, PADDY CHALANA, RAW PADDY SILO, ABOVE HANDI STORAGE, IN HANDI, IN DRIER, PARBOILED SILO IN MILL PREMISES, SCATTERED PADDY IN MILLING SIDE. THAT THE ASSESSEE M/S. MAHARAJA FOOD PRODUCTS (MFP IN SHORT) IS ENGAGED IN THE BUSINESS OF MILLING OF PADDY & SALE OF RICE PRODUCE AND BY PRODUCTS BROKEN RICE, BRAN. IN ORDER TO EFFECTUATE THE BUSINESS ACTI VITIES THE ASSESSEE HAS INSTALLED A RICE MILL UNIT IN THE NAME & STYLE OF M/S. MAHARAJA FOOD PRODUCTS, PO: CHAKARKEND, DIST .BARGARH. THE FIRST COMMERCIAL PRODUCTION WAS COMMENCED ON 03.11.2004 I.E. DURING THE ASST. YEAR 2005 - 06. THAT FOR THE AFORESAID AC TIVITIES THE ASSESSEE IS REGISTERED UNDER THE ODISHA VALUE ADDED TAX ACT' 2004/ CENTRAL SALES TAX ACT' 1956 AND ENTRY TAX ACT' 1999 BEING A REG. NO. TIN - 21711700794 ICST - 21711700794(C)/ ET - 21711700791 (ET) HAVING ONLY, A REGISTERED OFFICE AT THE MILL PREMI SES AND OTHER THAN IT, THERE IS NO OTHER OFFICE OF THE ASSESSEE. COPY OF THE REGISTRATION CERTIFICATE ISSUED UNDER THE OVAT ACT' 2004 IS ENCLOSED HEREWITH. THAT THE MILLING OF PADDY AND SALE OF RICE ARE UNDER THE CONTROL AND REGULATED BY THE ESSENTIAL SUP PLIES ACT AND THE STOCK OF PADDY & RICE IN POSSESSION OF THE ASSESSEE ON BEHALF OF THE OSCSC LTD. ARE FROM TIME TO TIME CHECKED BY THE FOOD & SUPPLY DEPARTMENT, GOVT. OF ORISSA. THEY PERIODICALLY AND REGULARLY CHECK THE REGISTERS AND PUT THEIR INITIALS IN SUPPORT OF HAVING INSPECTED THE STOCK OF PADDY AND RICE AND VERIFIED THE PHYSICAL STOCK WITH ACCOUNTS. DURING THE ASST. YEAR 2014 - 15 THE CIVIL SUPPLY AUTHORITY OFFICIALS INSPECTED THE ASSESSEE MILL PREMISES AND VERIFIED PHYSICALS STOCK OF PADDY AND RICE ON DIFFERENT OCCASION AND TIMES I.E. ON 01.04.2013, 21.04.2013, 12.05.2013, 24.05.2013, 18.06.2013, 10.07.2013, 05.08.2013 & 16.08.2013 JUST FIVE DAYS BEFORE THE DATE OF SURVEY CONDUCTED ON 21.08.2013. NO DISCREPANCIES EITHER IN IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 23 PADDY ACCOUNT OR RICE ACCOUNT THEY FOUND AND ACCEPTED. THE PHYSICAL STOCK OF PADDY AND RICE ARE TALLIED WITH THE STOCK REGISTER. THEY PUT THEIR SIGNATURE IN THE STOCK REGISTER IN SUPPORT OF HAVING INSPECTED THE STOCK OF PADDY & RICE AND VERIFIED THE PHYSICAL STOCK WITH ACCOUNTS ON DIF FERENT DATE OF INSPECTION AS STATED HEREIN BEFORE. THAT CIVIL SUPPLY OFFICIAL HAS NOT DETECTED ANY OMISSION OR COMMISSION AS THERE IS NO COMMENTS BY THOSE AUTHORITIES IN THIS REGISTER. THEY HAVE NO COMMENTS ANYTHING ADVERSELY REGARDING MAINTENANCE OF STOC K REGISTER. REGISTERS ARE IMPOUNDED U/S.J33A OF THE ACT AND LAYING WITH THE DEPARTMENT SINCE THEN. THAT' THE SAID REGISTERED I.E. PADDY & RICE STOCK REGISTER HAS BEEN IMPOUNDED UNDER IDENTIFICATION NO. MFP - 40 PAGES - 1 TO 20. THE SAID REGISTER IS STILL TODAY LAYING IN YOUR HONOUR POSSESSION & CUSTODY. THAT THE ASSESSEE UNDERTAKES CUSTOM - MILLING FOR M/S. ORISSA STATE CIVIL SUPPLIES CORPORATION LTD. (OSCSC LTD.) BESIDES HE ALSO WAS THE AGENT OF MARKFED, NAFED, NCMSL, PACS AND FCI. THAT FOR THE PURPOSE OF CUSTO M MILLING THE ASSESSEE HAS ENTERED IN TO AN AGREEMENT WITH THE ORISSA STATE CIVIL SUPPLIES CORPORATION LTD(OSCSC LTD. /ORISSA STATE CO - OPERATIVE MARKETING FEDERATION LTD. (MARKFED) ORISSA; IN TERMS OF SUCH AGREEMENT THE PRINCIPAL SUCH AS MARKFED, ORISSA SH ALL PURCHASE PADDY DIRECTLY FROM THE FARMERS AND THE ASSESSEE CUSTOM MILLER WILL TRANSPORT THE SAME FROM THE MARKET YARD ON PAYMENT OF CHARGE WITHIN THE LIMIT PRESCRIBED; THAT AFTER MILLING, RICE OF SPECIFIED QUALITY AS PER THE OUT TURN RATIO FIXED IS DELI VERED. THUS IT IS CLEARLY EVIDENT THAT WHATEVER THE STOCKS OF PADDY AND RICE ARE FOUND AT MILL PREMISES BELONG TO THE PRINCIPAL OSCSC/MARKFED. AND THAT THE OWNERSHIP OF SUCH STOCKS ARE OF THE PRINCIPAL. THE ASSESSEE IS ONLY A CUSTOM MILLING AGENT. A STATE MENT HAS BEEN RECORDED U/S. 133 A OF THE INCOME TAX ACT FROM SHRI DEEPAK SHARMA IN COURSE OF SURVEY PROCEEDINGS IN THE MILL PREMISES ON 21.08.2013 & 22.08.2013. THE SURVEY PARTY PUTS THE QUESTION. RELEVANT QUESTION FOR PRESENT PURPOSES ARE QUOTED AS FOLLO WS 6Q. WHAT ARE THE BOOKS OF ACCOUNT MAINTAINED BY M/S. MAHARAJA FOOD PRODUCTS ? A. WE MAINTAIN STOCK REGISTER FOR PADDY, RICE, BRAN AND BROKEN RICE. 7Q. DO YOU MAINTAIN PURCHASE AND SALE REGISTERS ? A. WE DO NOT MAINTAINED P URCHASE AND SALE REGISTER FOR PADDY AND RICE, BECAUSE WE DO NOT PURCHASE PADDY AND SALE RICE. WE RECEIVE PADDY FROM ODISHA STATE CIVIL SUPPLY CORPORATION AND MARKFED. IN OUR MILL, WE PROCESS PADDY AND PRODUCE RICE AND SUPPLY THE SAME TO ODISHA STATE CIVIL SUPPLY CORPORATION AND MARKFED. WE ARE ONLY DOING CUSTOM MILLING AND RECEIVE MILLING CHARGES AND INCIDENTAL CHARGES SUCH AS HANDLING (LABOUR) CHARGES AND TRANSPORTATION CHARGES ETC. WE RECEIVE MILLING CHARGES @ RS.25/ - PER QUINTAL. THUS, SINCE WE DO NOT PU RCHASE PADDY AND SALE RICE, WE ARE NOT MAINTAINING PURCHASE AND SALE REGISTERS. HOWEVER, WE MAINTAIN SALE REGISTER FOR BRAN AND BROKEN RICE AND PURCHASE REGISTER FOR MATERIALS PURCHASE. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 24 THERE WAS A SURVEY ON 21.08.2013 & 22.08.2013 WHEN THE MILLING WHICH IN CONTINUOUS MILLING FROM 16.08.2013 TO 20.08.2013, THE ASSESSEE WAS ADVISE TO STOP THE MILLING PROCESS, HENCE THERE IS NO MILLING FROM 21.08.2013 & 22.08.2013. HENCE THE RICE, BROKEN RICE, BRAN RECEIVED OUT OF MILLING I.E. (FROM 16.08.2013 TO 20.08.2013) WERE SCATRED IN MILLING HOUSE, VERANDA AND AT DIFFERENT PLACES. THEY COULD NOT BE WEIGHT, PACKET PROPERLY IN THE BAGS AND ALSO THE KUNDA MIXED WITH THE OUT TURN OF RICE COULD NOT BE SEGREGATED THROUGH CHALANA. AGAIN RAW PADDY IN LOOSE SCATRED BEFORE CHALA NA, CLEAN PADDY STORAGE, PADDY STORED IN EIGHT NUMBERS HANDI LOADED FOR BOILING, STORAGE SITUATED ABOVE HANDI, DRIER, PARBOILED PADDY STORAGE IN MILL PREMISES. THE STOCK OF PADDY AS KEPT DIFFERENT STORING PLACES AS MENTIONED ABOVE HAS NOT TA KEN INTO CONSIDERATION WHILE TAKING THE PHYSICAL VERIFICATION OF THE STOCK OF PADDY. THE FACTS AS STATED ABOVE IS EVIDENT ITSELF BY LOOKING THE MANNER THE SEARCHING OFFICIAL PARTIES HAS TAKEN THE PHYSICAL STOCK OF PADDY ON ESTIMATION AS THEY HAVE TAKEN T HE STOCK OF PADDY ONLY KEPT IN DIFFERENT FOUR LARGE & BIG GODOWNS HAVING CAPACITY OF MORE THAN FORTY THOUSAND BAGS AT A TIME EACH. DATE OF SEARCH INVENTORY OF STOCKS FOUND/SEIZED (PADDY) RESTRAINED AT THE PREMISES SI. NO. DESCRIPTION QUANTITY IN NOS. OFWT . VALUE 01. VERANDAHA GODOWN NO. - L 10505 BAG RS. 55,15,125/ - 02. GODOWN NO - 2 27500 BAG RS. 1,44,3 7,500/ - 03. VARANDAHA GODOWN NO. 3 5900 BAG RS. 30,97,500/ - 04. GODOWN NO - 4 17600 BAG RS. 92,40,000/ - TOTAL 61505 BAG RS. 3,22,90,125/ - 61,505.00 X 42KG.X 1250 = RS.3,22,90,125/ - 100 61505 X 42 = 25832 QTL. 100 STOCK OF PADDY KEPT AT DIFFERENT GODOWN HAS BEEN ESTIMATED TAKING EACH BAG @ 42 WHICH IS NOT A FACT AT ALL IN REALITY. THE STOCK OF PADDY IN BAG ARE NOT STORED AT A UNIF ORM QUANTITY, GENERALLY IT IS ALSO A FACT THAT BAG/PACKETS CONTENTS PADDY EITHER 40 KG. TO 50 KG. AND AT TIMES THE BAGS CONTENTS 74 OR 75 KG. THERE IS NO ACTUAL WEIGHMENT THOUGH ALL THE FACILITIES REQUIRED FOR THE PURPOSE OF WEIGHMENT WERE AVAILABLE. LIKEW ISE THE STOCK OF BROKEN RICE & BRAN SCARRED AT DIFFERENT PALACES IN MILLING PREMISES ARE ESTIMATED CONTAINING THE RICE @ 50 KG. PER BAG, BROKEN RICE @ 50 KG. PER BAG AND BRAN @ 45 KG. PER BAG AND CALCULATED AS FOLLOWS - DATE OF SEARCH INVENTORY OF STOCKS FO UND/SEIZED RESTRAINED AT THE PREMISES ASST. YEAR 2014 - 15 IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 25 SI. NO. DESCRIPTION QUANTITY IN F NOS. OFWT. TOTAL QUANTITY IN ALL 01. RICE 8708 BAG (50 KG. PER BAG) 4354 QTL. 02. BROKEN RICE 818 BAG (50 KG. PER BAG) ' 409 QTL. 03. BRAN 125 BAG (45 KG. PE R BAG) 56.25 QTL. THUS ON THE BASIS OF THE INVENTORY OF THE STOCK, THE FOLLOWING DISCREPANCY OF STOCK ARE FOUND AS FOLLOWS - ITEMS STOCK AS PER BOOKS (QTLS) STOCK FOUND ON PHYSICAL VERIFICATION (QTLS) EXCESS/ SHORTAGE (QTLS) PADDY 36077 25832 ( - ) 10245 RICE 3808.70 4354 (+) 545.30 BROKEN RICE 123.72 409 (+) 285.28 BRAN 139.67 56.25 ( - ) 83.42 PADDY & RICE AS PER BOOKS OF ACCOUNT ON 21.08.2013. AGENCY PADDY (IN QTLS) RICE (IN QTLS) MARKFED NIL NIL O.C.S.C.S. 36077 3808.70 TOTAL 36077 3808.70 AS P ER SURVEY REPORT 25832 4354.00 SHORTAGE/EXCESS ( - ) 10245 (+) 545.30 THE SHORTAGE/EXCESS IN PADDY & RICE ARE DUE TO EYE ESTIMATION AND FURTHER TAKING THE EACH BAG AT A UNIFORM QUANTITY OF 42 KG. IN PADDY AND 50 KG. IN RICE RESPECTIVELY. THIS SAMPLE METHO D OF CALCULATING IS UNSCIENTIFIC AND UNSUSTAINABLE IN THE DAY TO DAY BUSINESS AND ALSO IN THE EYE OF LAW. THERE IS NO PHYSICAL WEIGHMENT THOUGH EVERY KIND OF FACILITIES LIKE AUTOMATIC KANTA (WEIGHING MACHINE) ARE AVAILABLE IN THE MILL PREMISES ITSELF. EVEN THE LABOURS FOR IT ARE ALSO AVAILABLE. THE ASSESSEE FEELS SORRY TO SAY THAT HE HAD MADE A PRAYER EARLIER TO SUPPLY THE CALCULATION SHEET HOW THE QUANTITY OF PADDY KEPT IN EACH BIG GODOWN ARE DETERMINED. THERE MAY BE CERTAIN MISTAKE IN CALCULATION, ADDITI ON AND SUBTRACTION OR OTHERWISE WHILE TAKING THE INVENTORY OF THE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 26 STOCK OF GOODS AND IN COUNTING AND IN PREPARATION WHILE TAKING THE PHYSICAL STOCK OF GOODS. THE ASSESSEE ALSO STATES WHEN DEEPAK SHARMA WHILE RECORDING THE STATEMENT U/S.L33A ON 22.08.2013 WAS ASKED TO EXPLAIN THE EXCESS/SHORTAGE OF DIFFERENT ITEMS (Q.21 OF THE STATEMENT DT. 22.08.2013) IN MY OPINION THERE SHOULD NOT BE SUCH DIFFERENCE OF STOCK. FURTHER, THE STOCK INVENTORY HAS BEEN TAKEN AN EYE ESTIMATE. HOWEVER, I WILL EXPLAIN THIS DIFFERE NCE LATER ON AFTER GOING THROUGH OUR RECORDS. WITH REGARD TO EXCESS OFRICE~AS CALCULATED IS DUE TO ON EYE ESTIMATION, FURTHER THE YIELD OF RICE OUT OF MILLING OF PADDY FROM 16.08.2013 TO 20.08.2013 WERE SCARRED IN THE MILLING HOUSE. THAT STOCK AS ESTIMATE D AS PER THE PRESCRIBED FORMULA, ACTUALLY THERE IS NO PHYSICAL WEIGHMENT. WHATEVER THE STOCK EITHER OF PADDY OR RICE CALCULATED ON ESTIMATION BELONGS TO OSCSC LTD. HONOUR SHIP OF THE SAID ITEMS OF GOOD WITH THE PRINCIPAL WHO TRANSPORTS THE PADDY FROM MARK ET YARD TO THE ASSESSEE FOR CUSTOM MILLING. THERE IS NO QUESTION OF EITHER OF SHORTAGE OF PADDY OR EXCESS OF RICE IT IS DUE TO ESTIMATION NOT FOR PROPER WEIGHMENT SCIENTIFICALLY. IN CASE OF BROKEN RICE IT IS SUBMITTED THAT DAY TO DAY YIELD OF BROKEN RICE FROM 16.08.2013 TO 20.08.2013 OUT OF MILLING IN A RAW STAGE LAYING ON THE FLOOR OF IN THE MILLING HOUSE. IT WAS MIXED WITH HUSK, KUNDA, SAND & OTHER MATERIALS WHICH WERE YET TO BE CLEANED. IN CASE OF BRAN THE SALE TO THE TUNE OF 90 QTLS AFFECTED ON THE DA Y OF SURVEY I.E. 21.08.213 WAS NOT DEDUCTED FROM THE OPENING BALANCE IN ORDER TO ARRIVE AT CLOSING BALANCE. THE SAID SALE OF BRAN HAS BEEN EFFECTED TO A VAT REGISTERED DEALER M/S. BARGARH RICE MILLER CONSOTORIUM LTD. VIDE TAX INVOICE NO. 1121, DT.21.08.201 3, BRAN 90 QTLS. FOR RS.94,500/ - WHICH IS INCLUSIVE OF VAT CHARGED AT RS.4,500/ - VEHICLE NO. OR17C - 7574 WHICH HAS BEEN DULY REFLECTED IN VAT RETURN. THERE WILL BE NEGLIGENCE/TOLERANCE SHORTAGE IF IT IS CONSIDERED. (COPY OF THE BILL ENCLOSED AND MARKED AS AN NEXURE - 'H' THE SEARCHING PARTY DURING THE SURVEY DID NOT FIND ANY VALUABLE ASSETS OR ANY INCRIMINATING MATERIAL OR PAPERS AGAINST THE ASSESSEE. BASING ON A DISCREPANCY FOUND IN THE STOCK OF PADDY AND RICE DURING THE SURVEY VALUED IT. ' 29. THAT THE STO CK INVENTORY PREPARED BY THE SURVEY PARTY WAS ACTUALLY BASED ON EYE ESTIMATION AND NOT BY WAY OF ACTUAL WEIGHMENT, WHEN THE WEIGHMENT FACILITY IS AVAILABLE WITH THE ASSESSEE. NO WORKING SHEET FOR STOCK INVENTORY WAS PREPARED BY THE SURVEY TEAM. THEY HAVE P REPARED THE STOCK INVENTORY ON SAMPLING METHOD. FURTHER THEY HAVE NOT TAKEN INTO ACCOUNT THE STOCK OF GOODS SUCH AS, PADDY, RICE, BROKEN RICE & BRAN KEPT IN DIFFERENT FOUR BIG GODOWNS, VERANDA, PADDY CHALANA, RAW PADDY SILO, ABOVE HANDI STORAGE, IN HAND I, IN DRIER, PARBOILED SILO IN MILL IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 27 PREMISES, SCATTERED PADDY IN MILLING SITE ETC. IF THE STOCKS IN THE PLANT ITSELF WHICH WAS IN THE PROCESS OF MILLING AND MILLING SITES, WOULD HAVE BEEN TAKEN BY THE SURVEY PARTY, THERE WOULD NOT HAVE BEEN ANY DISCREPANCY . 30. FURTHER THE SURVEY TEAM, AS CAN BE SEEN FROM THE INVENTORY PREPARED BY THEM, THEY HAVE REPORTED THE STOCK IN TERM OF 'BAGS ' WITHOUT PHYSICAL COUNTING OF BAGS, RATHER ON EYE ESTIMATION, BUT SUBSEQUENTLY CONVERTED THE SAME INTO 'QUINTALS' BY TAKING U NIQUE QUANTITY PER BAG. THE STOCK OF PADDY IN BAG ARE NOT STORED AT A UNIFORM QUANTITY, GENERALLY IT IS ALSO A FACT THAT BAG/PACKETS CONTAINS PADDY EITHER 40 KG. OR 50 KG. AND AT TIMES THE BAGS CONTAINS 74KGS OR 75 KGS. THE ACTUAL QUANTITY OF PADDY CANNOT BE ASCERTAINED WITHOUT ACTUAL WEIGHMENT OF THE SAME. THUS, THE WORKING OUT OF THE STOCK > INVENTORY IS ERRONEOUS, BECAUSE IT WAS ON THE BASIS OF EYE ESTIMATION AND NOT ACTUALLY ON WEIGHMENT. THEREFORE, THE ADDITIONS MADE ON THE BASIS OF SUCH ERRONEOUS STOC K INVENTORY AND DEDUCING EXCESS/SHORTAGE, IS NOT AT ALL JUSTIFIED AND NOT SUSTAINABLE IN THE EYE OF LAW. 30. T HAT IT IS FURTHER SUBMITTED THAT THE MILLING OF PADDY AND SALE OF RICE ARE UNDER THE CONTROL AND REGULATED BY THE ESSENTIAL SUPPLIES ACT AND THE STOCK OF PADDY & RICE IN POSSESSION OF THE ASSESSEE ON BEHALF OF THE OSCSC LTD., ARE FROM TIME TO TIME CHECKED AND VERIFIED BY THE FOOD & SUPPLY DEPARTMENT, GOVT, OF ORISSA. THEY PERIODICALLY AND REGULARLY CHECK THE REGISTERS AND PUT THEIR INITIALS IN SUPP ORT OF HAVING INSPECTED THE ISTOCK OF PADDY AND RICE TALLYING WITH THE PHYSICAL STOCK WITH ACCOUNTS. DURING THE ASSESSMENT YEAR 2014 - 15 THE CIVIL SUPPLY AUTHORITY OFFICIALS INSPECTED THE ASSESSEE'S MILL PREMISES AND VERIFIED PHYSICALS STOCK OF PADDY AND RI CE ON DIFFERENT DATES I.E., ON 01.04.2013, 21.04.2013, 12.05.2013, 24.05.2013, 18.06.2013, 10.07.2013, 05.08.2013 & 16.08.2013 JUST FIVE DAYS BEFORE THE DATE OF SURVEY CONDUCTED ON 21.08.2013, AS CAN BE SEEN FROM THE COPY OF THE PADDY STOCK REGISTER AND RI CE STOCK REGISTER AND JOINT CUSTODY STOCK REGISTER, WHICH ARE IMPOUNDED BY THE SEARCH PARTY IS PLACED AT PB PAGE NOS. 83 TO 108. NO DISCREPANCIES, WHATSOEVER, EITHER IN PADDY ACCOUNT OR RICE ACCOUNT WERE NOTICED OR REPORTED BY THEM. THE PHYSICAL STOCK OF P ADDY AND RICE ARE TALLIED WITH THE STOCK REGISTER. THEY PUT THEIR SIGNATURE IN THE STOCK REGISTER IN SUPPORT OF HAVING INSPECTED THE STOCK OF PADDY & RICE AND VERIFIED THE PHYSICAL STOCK WITH ACCOUNTS ON DIFFERENT DATE OF INSPECTION AS STATED HEREIN BEFORE . IN VIEW OF THIS, THE EXCESS/SHORTAGE CLAIMED TO HAVE BEEN FOUND BY THE SURVEY PARTY IS FAR FROM TRUTH AND IT WAS SO REPORTED BY THEM ONLY ON EYE ESTIMATION AND BY NON - TAKING THE STOCKS AVAILABLE IN THE MILLING PROCESS AND FURTHER ON WRONG METHOD OF CONV ERTING BAGS INTO QUINTALS. FURTHER, THE CIVIL SUPPLY OFFICIALS HAVE NOT NOTICED ANY OMISSION OR COMMISSION AS THERE ARE NO COMMENTS BY THOSE AUTHORITIES IN THE REGISTERS MAINTAINED BY THE ASSESSEE. THEY HAVE NOT COMMENTED ANYTHING ADVERSELY REGARDING MAINT ENANCE OF STOCK REGISTER. REGISTERS ARE IMPOUNDED U/S.I33A OF THE ACT AND LAYING WITH THE DEPARTMENT SINCE THEN. THAT THE SAID REGISTER I.E. PADDY & RICE STOCK IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 28 REGISTER HAS BEEN IMPOUNDED UNDER IDENTIFICATION NO. MFP - 40 PAGES - 1 TO 20 AND 21 TO 29. 31. THA T IT IS FURTHER SUBMITTED THAT THE ASSESSEE UNDERTAKES ONLY CUSTOM - MILLING FOR M/S. ORISSA STATE CIVIL SUPPLIES CORPORATION LTD. (OSCSC LTD.) BESIDES HE WAS ALSO THE AGENT OFMARKFED, NAFED, NCMSL, PACS AND FCI. FOR THE PURPOSE OF CUSTOM MILLING THE ASSESSE E HAS ENTERED IN TO AGREEMENT WITH THE ORISSA STATE CIVIL SUPPLIES CORPORATION LTD (OSCSC LTD. /ORISSA STATE CO - OPERATIVE MARKETING FEDERATION LTD.(MARKFED) ORISSA. IN TERMS OF SUCH AGREEMENT THE PRINCIPAL SUCH AS MARKFED, ORISSA SHALL PURCHASE PADDY DIRE CTLY FROM THE FARMERS AND THE ASSESSEE CUSTOM MILLER WILL TRANSPORT THE SAME FROM THE MARKET YARD ON PAYMENT OF CHARGES WITHIN THE LIMIT PRESCRIBED AND AFTER MILLING, RICE OF SPECIFIED QUALITY AS PER THE OUT - TURN RATIO FIXED BY THEM IS DELIVERED. IT IS NEC ESSARY TO SLATE HERE THAT THE STOCK OF PADDY KEPT IN THE MILL PREMISES WAS UNDER LOCK AND KEY OF THE OFFICIALS OF THE PRINCIPALS AS WELL AS THE ASSESSEE AND MILLING OF PADDY TAKES PLACE ONLY AFTER RELEASING OF STOCK OF PADDY BY THE SAID OFFICIALS FOR THE P URPOSE OF MILLING. THE OFFICERS OF THE PRINCIPLALS GIVE PERIODICAL CERTIFICATE ON THE VERIFICATION REPORT - 'IT IS CERTIFIED THAT THERE IS NO MIS - APPROPRIATION/DIVERSION BY THE MILLER AND PADDY/RICE AVAILABLE HAS BEEN STORED SAFELY'. FOR READY REFERENCE A SAMPLE COPY OF SUCH CERTIFICATE IS ENCLOSED HEREWITH AT PB PAGE NO. 109 AND 110 . AS ALREADY STATED, THE ASSESSEE IS REQUIRED TO DELIVER THE RICE TO THEM AND THE ASSESSEE IS DEBARRED/PROHIBITED FROM SELLING RICE TO OTHERS. THE ASSESSEE IS ENTITLED TO ON LY MILLING CHARGES. IN THIS PROCESS, WHATEVER STOCKS OF PADDY AND RICE ARE FOUND AT MILL PREMISES BELONG TO THE PRINCIPAL OSCSC/MARKFED AND THAT THE OWNERSHIP OF SUCH STOCKS ARE OF THE PRINCIPALS. THE ASSESSEE IS ONLY A CUSTOM MILLING AGENT. BECAUSE THE PA DDY AS WELL AS RICE SOLELY BELONGS TO THE PRINCIPALS, THE ASSESSEE DOES NOT MAINTAIN ANY PURCHASE/SALE REGISTER BUT MAINTAINS ONLY STOCK REGISTERS TO BE VERIFIED BY THE PRINCIPALS FROM TIME TO TIME. THIS HAS BEEN SO EXPLAINED BY THE ASSESSEE WHILE ANSWERIN G TO QUESTION NO. 6Q AS UNDER : '6Q. WHAT ARE THE BOOKS OF ACCOUNT MAINTAINED BY M/S. MAHARAJA FOOD PRODUCTS ? B. WE MAINTAIN STOCK REGISTER FOR PADDY, RICE, BRAN AND BROKEN RICE. 7Q. DO YOU M AINTAIN PURCHASE AND SALE REGISTERS ? A. WE DO NOT MAIN TAINED PURCHASE AND SALE REGISTER FOR PADDY AND RICE, BECAUSE WE DO NOT PURCHASE PADDY AND SALE RICE. WE RECEIVE PADDY FROM UDISHA STATE CIVIL SUPPLY CORPORATION AND MARKFED. IN OUT MILL, WE PROCESS PADDY AND PRODUCE RICE AND SUPPLY THE SAME TO ODISHA STAT E CIVIL SUPPLY CORPORATION AND MARKFED. WE ARE ONLY DOING CUSTOM MILLING AND RECEIVE MILLING CHARGES AND INCIDENTAL CHARGES SUCH AS HANDLING (LABOUR) CHARGES AND TRANSPORTATION CHARGES ETC. WE RECEIVE MILLING CHARGES @ RS.25/ - PER QUINTAL. THUS, SINCE WE D O NOT PURCHASE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 29 PADDY AND SALE RICE, WE ARE NOT MAINTAINING PURCHASE AND SALE REGISTERS. HOWEVER, WE MAINTAIN SALE REGISTER FOR BRAN AND BROKEN RICE AND PURCHASE REGISTER FOR MATERIALS PURCHASE. ' THE LEARNED AO DID NOT CONSIDER THE ABOVE SUBMISSIONS AND B ASING ON ERRONEOUS STOCK INVENTORY HAS WORKED OUT THE EXCESS/SHORTAGE IN STOCK AND MADE THE IMPUGNED ADDITION, WHICH IS NOT PROPER. 32. IN CASE OF BROKEN RICE DAY TO DAY YIELD OF BROKEN RICE FROM 16.08.2013 TO 20.08.2013 OUT OF MILLING IN A RAW STAGE WAS LAYING ON THE FLOOR OF THE MILLING HOUSE. IT WAS MIXED WITH HUSK, KUNDA, SAND & OTHER MATERIALS WHICH WERE YET TO BE CLEANED. IN CASE OF BRAN THE SALE TO THE TUNE OF 90 QTLS AFFECTED ON THE DAY OF SURVEY I.E. 21.08.213 WAS NOT DEDUCTED FROM THE OPENING BA LANCE IN ORDER TO ARRIVE AT CLOSING BALANCE. THE SAID SALE OF BRAN HAS BEEN EFFECTED TO A VAT REGISTERED DEALER M/S. BARGARH RICE MILLER CONSOTORIUM LTD. VIDE TAX INVOICE NO. 1121, DT.21.08.2013, BRAN 90 QTLS. FOR RS.94,500/ - WHICH IS INCLUSIVE OF VAT CHAR GED AT RS.4,500/ - VEHICLE NO. OR17C - 7574 WHICH HAS BEEN DULY REFLECTED IN VAT RETURN (COPY OF BILL IS PLACED AT PB PAGE NO. 104). IF ALL THESE ABOVE ARE TAKEN INTO COHSIDERATION, THERE IS NO SHORTAGE AND/OR NEGLIGENCE/TOLERANCE SHORTAGE. IN VIEW OF THE ABO VE, THE ADDITION OF RS.13,47,352 IS NOT JUSTIFIED AND LIABLE FOR DELETION.' 9.3 IN THE REMAND REPORT, THE ASSESSING OFFICER HAS STATED THAT STOCK WAS TAKEN CORRECTLY THE VALUATION WAS DONE CORRECTLY. 9.4 I HAVE CAREFULLY EXAMINED THE ASSESSMENT ORDER, WRITTEN SUBMISSIONS OF THE APPELLANT AND REMAND REPORT OF THE ASSESSING OFFICER. I FIND THAT THE APPELLANT IS ONLY A CUSTOM MILLING AGENT OF AGENCIES OF GOVERNMENT OF ORISSA. THE PRINCIPALS HAVE RIGHT, INTEREST AND TITLE TO THE STOCK. THE GODOWNS I N WHICH PADDY AND RICE IS KEPT ARE UNDER LOCK AND KEY OF THE PRINCIPALS. THE APPELLANT HAS FILED COPIES OF REGISTER OF STOCK WHICH ARE INSPECTED BY GOVERNMENT OFFICIALS. THE LAST SUCH INSPECTION IS ON 16.08.2013, JUST FIVE DAYS BEFORE THE SURVEY. NO DISCRE PANCIES WERE FOUND BY OFFICIALS OF THE GOVERNMENT OF ORISSA. SINCE, THEY ARE THE OWNER'S OF RICE AND PADDY; THEY HAVE FAR HIGHER STAKES IN THE STOCK OF RICE AND PADDY. CONSIDERING THESE ASPECTS, THE ADDITION OF RS 1,28,72,786/ - ON ACCOUNT OF ALLEGED SHORTA GE OF STOCK OF PADDY AND BRAN AND OF RS 13,47,352/ - ON ACCOUNT OF ALLEGED EXCESS OF RICE AND BROKEN RICE ARE ORDERED TO BE DELETED. THE GROUNDS OF APPEAL ARE ALLOWED. 10. GROUND NO 3 (VI): - 10.1 IN THIS GROUND, THE APPELLANT HAS CONTESTED THE ADD ITION OF RS 2,40,000/ - ON ACCOUNT OF INCOME FROM BUS PLYING. ACCORDING TO THE ASSESSING OFFICER, THE APPELLANT HAS ONE BUS AND INCOME FROM PLYING OF BUS HAS NOT BEEN DISCLOSED BY THE APPELLANT. HE ESTIMATED THE INCOME AT RS 2,40,000/ - AND MADE ADDITION OF THIS AMOUNT IN THE TOTAL INCOME OF THE APPELLANT. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 30 10.2 ACCORDING TO THE APPELLANT, HE HAD ONLY ONE OPERATIONAL BUS AND HAS DISCLOSED GROSS RECEIPT OF RS 2,96,350/ - FROM BUS PLYING AND AFTER DEDUCTING DEPRECIATION, THE INCOME OF RS 1,87,750/ - HAS BEEN D ISCLOSED. IN THE REMAND REPORT, THE ASSESSING OFFICER HAS STATED THAT THIS INCOME HAS NOT BEEN SHOWN SEPARATELY ANYWHERE IN RETURN OF INCOME AND THEREFORE, SUBMISSION OF THE APPELLANT CAN NOT BE ACCEPTED. 10.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, REMAND REPORT AND SUBMISSIONS OF THE APPELLANT. IT IS IMPORTANT TO NOTE HERE THAT THIS IS AN ASSESSMENT AFTER THE SEARCH ON GROUP MEMBERS. NO INCRIMINATING MATERIAL REGARDING BUS PLYING ACTIVITIES OF THE APPELLANT WAS FOUND. IN THE ABSENCE OF ANY E VIDENCE, IT WILL BE WRONG TO PRESUME THAT THE APPELLANT HAS NOT DISCLOSED INCOME FROM BUS PLYING ACTIVITIES. INDEED, DURING THE COURSE OF APPEAL PROCEEDINGS AND REMAND PROCEEDINGS, THE APPELLANT HAS GIVEN DETAILS SUCH AS GROSS INCOME, DEPRECIATION AND NET INCOME FROM BUS PLYING ACTIVITIES. CONSIDERING THESE ASPECTS, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS CORRECTLY OFFERED INCOME FROM BUS PLYING ACTIVITIES OF RS. 1,87,750/ - . ACCORDINGLY, THE ADDITION OF RS 2,40,000/ - IS ORDERED TO BE DELETED. THE GROUND OF APPEAL IS ALLOWED. 5 . AGGRIEVED FROM THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 6. L D. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED A WRITTEN SYNOPSIS , WHICH READ AS UNDER : - I.) TH IS IS A DEPARTMENTAL APPEAL AGAINST THE VARIOUS RELIEFS ALLOWED BY THE CIT(A) - 2, BHUBANESWAR VIDE APPELLATE ORDER DATED 29.06.2018 U/S. 250 OF THE INCOME TAX ACT. THE ASSESSEE IS RUNNING A RICE MILL UNDER THE NAME & STYLE AS M/S. MAHARAJA FOOD PRODUCTS AT CHAKERKEND. A SEARCH & SEIZURE WAS CARRIED OUT AT THE MAHARAJA HOTEL GROUP TO WHICH THE ASSESSEE BELONGS, ON 21.08.2013 BY THE OFFICERS OF THE DEPARTMENT. II.) THE FIRST AND SECOND GROUNDS OF APPEAL RELATE TO THE ADDITION OF RS.7,72,400/ - MADE BY THE A.O. THIS ISSUE HAS BEEN DISCUSSED BY THE AO IN PARA - 11 ON PAGE 110 (INTERNAL MARKING). THE FINAL CONCLUSION OF THE AO CAN BE SEEN IN THE LAST PARAGRAPH ON PAGE 108 (INTERNAL MARKING). THE CIT(A) HAS ALLOWED THE RELIEF TO THE ASSESSEE AND HIS FINDINGS ARE CO NTAINED IN PARA - 5.2 ON PAGE - 7 OF THE APPELLATE ORDER. THE DECISION OF THE CIT(A) IS TOTALLY ERRONEOUS AND CONTRADICTORY TO THE SUBMISSIONS MADE BY THE ASSESSEE DURING APPELLATE PROCEEDINGS FOR THE FOLLOWING REASONS: A) THE CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE ON THE GROUND THAT THE CREDITORS IN QUESTION WERE TRADE CREDITORS AND PADDY WAS PURCHASED FROM THEM IN THE CURRENT YEAR AS WELL AS SUBSEQUENT YEARS. IN THIS CONNECTION, KINDLY REFER TO PARA - 20 ON PAGE - 10 OF ANNEXURE - I (AFFIDAVIT IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 31 OF THE ASSESSEE) W HEREIN HE HAS CLEARLY STATED THAT HE WAS MERELY A CUSTOM MILLING AGENT FOR ORISSA STATE CIVIL SUPPLIES CORPORATION LTD. (OSCSC LTD.) BESIDES BEING AN AGENT OF MARKFED, NAFED, NCMSL, PACS AND FCI. IN FACT, PADDY WAS PURCHASED BY HIS PRINCIPALS DIRECTLY FROM FARMERS AND IT WAS SENT TO HIM FOR MILLING. THESE FACTS ARE AGAIN REITERATED IN PARA - 23 ON PAGE - 12 OF ANNEXURE - I (AFFIDAVIT OF THE ASSESSEE) AND IN ADDITION TO THAT, IT WAS ALLEGED THAT HE HAD APPOINTED CERTAIN REPRESENTATIVES FOR SPEEDY WORK. IT WAS ALSO CONCEDED BY THE ASSESSEE THAT THEY WERE NOT CREDITORS HOWEVER IN THE BOOKS OF ACCOUNT, THEIR CLOSING BALANCES WERE WRONGLY SHOWN UNDER THE NOMENCLATURE 'SUNDRY CREDITORS'. B) THESE SO CALLED AUTHORIZED REPRESENTATIVES WERE APPOINTED THOUGH AN UNDATED AGRE EMENT (PAGE - 57 OF ANNEXURE - II ENCLOSED WITH PAPER BOOK CONTAINING 114 PAGES) WHICH IS DULY SIGNED BY THE MANAGER, OSCSC LTD. AGAINST THE NAMES OF SO CALLED AUTHORIZED REPRESENTATIVES, THEIR SIGNATURES ALSO APPEAR. IN ADDITION TO THE ABOVE, COPIES OF LEDGER ACCOUNTS AS WELL THEIR CONFIRMATIONS ARE ALSO ENCLOSED AS PER PAGES 59 TO 75 OF ANNEXURE - II. C) ON PERUSAL OF THESE LEDGER ACCOUNTS, IT WILL BE CRYSTAL CLEAR THAT SO CALLED CREDITORS WERE ENGAGED IN PACKING & NETING WORK, LABOUR WORK, LOADING & UNLOADING WORK, FREIGHT WORK ETC. THUS NO PADDY WAS PURCHASED FROM THEM AS CONCLUDED BY THE CIT(A). IT MAY BE APPRECIATED THAT SUCH FINDING OF CIT(A) WAS TOTALLY ERRONEOUS. D) ALL SUCH EXPENSES WERE BOOKED IN THE MONTHS OF FEBRUARY AND MARCH, 2014 I.E. AT THE FAG - EN D OF THE FINANCIAL YEAR. THE ENTIRE AMOUNT WAS KEPT OUTSTANDING AND REMAINED UNPAID. THE CLAIM MADE BY THE ASSESSEE THAT HE USED TO GIVE THEM ADVANCES FROM TIME TO TIME IS NOT BORNE OUT FROM THESE LEDGER ACCOUNTS. E) IT IS PERTINENT TO MENTION HERE THAT SI GNATURES OF SO CALLED REPRESENTATIVES AS PER AGREEMENT (PAGE - 57 OF ANNEXURE - II OF PAPER BOOK CONTAINING 114 PAGES) AND CONFIRMATIONS DO NOT TALLY. IT IS THEREFORE CLEAR THAT CONFIRMATIONS OF SO CALLED REPRESENTATIVES CAN'T BE RELIED UPON. THESE ARE JUST FA BRICATED EVIDENCES. F) THE ORDER OF CIT(A) IS NON - SPEAKING ONE AND CRYPTIC. IT IS STATED BY HIM THAT THE AO DID NOT CALL FOR FURTHER DETAILS. IT IS A SETTLED LAW THAT THE POWERS OF THE CIT (A) ARE CO - TERMINUS WITH THAT OF THE AO, EMPOWERING HIM TO DO ALL THAT, WHAT THE AO COULD OR ALSO SHOULD HAVE DONE, FOR THE PURPOSES OF ASSESSMENT. A REFERENCE MAY BE MADE TO THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. KANPUR COAL SYNDICATE (53 ITR 225) IN WHICH IT WAS HELD THAT AAC HAS PLENARY POWERS I N DISPOSING OFF AN APPEAL; THAT THE SCOPE OF HIS POWER IS CO - TERMINUS WITH THAT OF THE ITO, THAT HE CAN DO WHAT THE ITO CAN DO AND ALSO DIRECT HIM TO DO WHAT HE FAILED TO DO. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PREMKUMAR ARJUNDAS LUTHRA (H UF) (69 TAXMANN.COM 407) HAS HELD THAT THE CIT(A) IS REQUIRED TO APPLY HIS MIND TO ALL ISSUES WHICH ARISE FROM IMPUGNED ORDER BEFORE HIM WHETHER OR NOT SAME HAD BEEN RAISED BY APPELLANT BEFORE HIM AND THAT HE IS OBLIGED TO DISPOSE OF THE APPEAL ON MERITS. IN VIEW OF ABOVE FACTS, IT IS REQUESTED THAT THE ADDITION MADE BY THE A.O. MAY KINDLY BE RESTORED AND FINDING OF CIT(A) BE REVERSED. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 32 III.) THE THIRD AND FOURTH GROUNDS OF APPEAL RELATE TO THE ADDITION OF RS.5,97,186/ - MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED CAPITAL. THIS ISSUE HAS BEEN DISCUSSED BY THE AO IN PARA - 4 ON PAGE 107 (INTERNAL MARKING - INADVERTENTLY TWO PAGES HAVE BEEN MARKED AS 107). THE CIT(A) HAS DISCUSSED THE REMAND REPORT OF THE A.O.IN PARA - 6.2 ON PAGE - 9 OF THE APPELLATE ORDER. IN THE REMAND REPORT, THE AO HAS STATED THAT SOURCES OF CAPITAL HAVE REMAINED UNEXPLAINED. THE CIT(A) HAS ALLOWED THE RELIEF TO THE ASSESSEE AND HIS FINDINGS ARE CONTAINED IN PARA - 6 .4 ON PAGE - 10 OF THE APPELLATE ORDER. THE DECISION OF THE CIT(A) IS TOTALLY ERRONEOUS FOR THE FOLLOWING REASONS: A) THE CIT(A) HAS HELD THAT AN AMOUNT OF RS.5,97,186/ - WAS TRANSFERRED FROM INDIVIDUAL ACCOUNT TO THE PROPRIETARY CONCERN. HOWEVER THERE IS NO FINDING ABOUT THE SOURCES OF SUCH CAPITAL INTRODUCTION. B) THERE IS NO EVIDENCE ON RECORD THAT CASH OF RS.5,97,186/ - WAS EARNED FROM BUS PLYING BUSINESS. ON THE OTHER HAND, THE TOTAL RECEIPTS OF SUCH BUS PLYING BUSINESS ARE STATED AT RS.2,96,350/ - BY THE ASSESSEE (PARA - 10.2 ON PAGE - 30 OF CIT(A)'S ORDER) WHICH IS ALMOST 50% OF SUCH CAPITAL INTRODUCTION. THE INESCAPABLE CONCLUSION IS THAT THE AMOUNT IN QUESTION WAS INTRODUCED BY THE ASSESSEE OUT OF HIS UNDISCLOSED INCOME. C) KINDLY REFER TO PAGE - 77 OF ANNEX URE - II OF PAPER - BOOK CONTAINING 114 PAGES. ON PERUSAL OF THE SAME, IT WOULD BE CRYSTAL CLEAR THAT THE ENTIRE AMOUNT WAS INTRODUCED BY THE ASSESSEE IN CASH. IN SUCH AN EVENTUALITY, THERE WAS A HEAVY ONUS ON THE ASSESSEE TO EXPLAIN THE SOURCES OF THE SAME. D ) RELIANCE IS PLACED ON THE DECISION OF HON'BLE DELHI ITAT IN THE CASE OF DCIT VS. AITHENT TECHNOLOGIES (P) LTD. (53 TAXMANN.COM 298) WHEREIN IT WAS HELD THAT WHERE NO REASONING WAS GIVEN BY CIT(A) IN HIS ORDER AND IT WAS A NON - SPEAKING CRYPTIC ORDER, THEN THE MATTER WAS REQUIRED TO BE RE - ADJUDICATED. IN VIEW OF ABOVE FACTS, IT IS REQUESTED THAT THE ADDITION MADE BY THE A.O. MAY KINDLY BE RESTORED AND FINDING OF CIT(A) BE REVERSED. IV.) THE FIFTH TO EIGHTH GROUNDS OF APPEAL RELATE TO THE ADDITION MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF SUPPRESSED SALE OF RICE BRAN TO THE EXTENT OF RS.83,62,872/ - . THIS ISSUE HAS BEEN DISCUSSED BY THE AO IN PARA - 8 ON PAGE 114 (INTERNAL MARKING). THE FINAL CONCLUSION OF THE AO CAN BE SEEN IN PARA - 6 ON PAGE - 107 (INTERNAL MAR KING). THE CIT(A) HAS DISCUSSED THE REMAND REPORT OF THE A.O. IN PARA - 8.3 ON PAGE - 13 AND PARA - 8.5 ON PAGE 15 OF THE APPELLATE ORDER. IN THE REMAND REPORT, THE AO HAS STATED THAT THE ASSESSEE CAN'T DENY THE TRANSACTIONS OF UNACCOUNTED SALE OF RICE BRAN. THE CIT(A) HAS ALLOWED THE RELIEF TO THE ASSESSEE AND HIS FINDINGS ARE CONTAINED IN PARA - 8.6 ON PAGE - 16 OF THE APPELLATE ORDER. THE DECISION OF THE CIT(A) IS TOTALLY ERRONEOUS FOR THE FOLLOWING REASONS: A) THESE LEDGER ACCOUNTS (MFP - 30) WERE IMPOUNDED FROM TH E PREMISES OF THE ASSESSEE. THE PRESUMPTION ABOUT THE AUTHENTICITY/GENUINENESS OF SUCH DOCUMENTS AND THE TRUENESS OF THEIR CONTENTS AS PER SECTION 292C HAS NOT BEEN REBUTTED BY THE ASSESSEE. MERE DENIAL BY THE ASSESSEE IS NOT ENOUGH. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 33 B) THESE LEDGER ACCOUN TS CLEARLY MENTION NAME OF BUYERS, DATES OF UNACCOUNTED SALE, DATES OF CASH RECEIPTS ETC. HENCE BY NO STRETCH OF IMAGINATION, THESE CAN BE CALLED DUMB DOCUMENTS OR IRRELEVANT. C) THE SUPPRESSED SALE OF RICE BRAN STANDS PROVED BY THE CONTENTS OF IMPOUNDED D OCUMENTS WHEN IT IS READ IN CONJUNCTION WITH THE STATEMENT OF SHRI DEEPAK SHARMA, MANAGER OF M/S. MAHARAJA FOOD PRODUCTS AND ELDER BROTHER OF THE ASSESSEE, WHICH WAS RECORDED ON OATH U/S. 131 OF THE INCOME TAX ACT. HE HAS CLEARLY ADMITTED THAT SUCH SALE OF RICE BRAN WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT. HIS VERSION THAT RICE BRAN WAS PURCHASED OUT OF BOOKS OF ACCOUNT REMAINED UNSUBSTANTIATED AS NO SUCH PURCHASE BILLS WERE FOUND DURING THE COURSE OF SURVEY OPERATION. ON THE CONTRARY, HE HAD STATE D ON OATH THAT RICE BRAN WAS PRODUCED IN THE VICINITY OF 5% TO 5.5% DURING RICE MILLING (AS AGAINST NORM OF 4% FIXED BY THE GOVT.) AND SUCH UNACCOUNTED PRODUCTION WAS SOLD OUT OF BOOKS OF ACCOUNT. RELIANCE IS PLACED ON THE DECISION OF HONBLE PUNJAB AND H ARYANA HIGH COURT IN THE CASE OF RAKESH MAHAJAN VS. CIT (214 CTR 218) WHEREIN IT WAS HELD THAT 'IT IS WELL SETTLED THAT ADMISSIONS CONSTITUTE BEST PIECE OF EVIDENCE BECAUSE ADMISSION ARE SELF - HARMING STATEMENTS MADE BY THE MAKER BELIEVING IT TO BE BASED ON TRUTH. IT IS WELL KNOWN THAT NO ONE WILL TELL A LIE ESPECIALLY HARMING ONE'S OWN INTEREST UNLESS SUCH A STATEMENT IS TRUE'. D) THE COMPARISON OF LOOSE SHEET BUNDLE MARKED AS MFP - 30 WITH HMB - 69 (BRAN SALE REGISTER) LEAVES NO DOUBT IN MIND THAT SUCH SALE OF RICE BRAN WAS NOT RECORDED IN REGULAR BOOKS OF ACCOUNT. E) THE FINDING OF CIT(A) THAT CHEQUES ISSUED BY BARGARH RICE MILLS CONSORTIUM (BRMC) ARE FOUND RECORDED IN SUCH LEDGER ACCOUNTS, IS ALSO ERRONEOUS BECAUSE IF ONE GOES BY HIS LOGIC THAT ENTRIES OF CASH RECEIPTS AS APPEARING IN THESE LEDGER ACCOUNTS, MUST ALSO RELATE TO BARGARH RICE MILLS CONSORTIUM (BRMC). IT IS A SETTLED LAW THAT IF A PART OF A DOCUMENT IS TRUE THEN WHOLE SHOULD BE CONSTRUED AS TRUE (GLASS LINES EQUIPMENT CO. VS. ACIT (253 ITR 454) (GUJARAT HC). MOREOVER THE CIT(A) HAS FAILED TO EXAMINE ALL THE LEDGER ACCOUNTS AND INSTEAD HE HAS RELIED ONLY ON TWO LEDGER ACCOUNTS THOUGH THERE WERE MANY LEDGER ACCOUNTS. KINDLY REFER TO PAGES - 1 & 2 OF ANNEXURE - III (ENCLOSURE OF 19 PAGES) WHICH CONTA INS THE LEDGER ACCOUNT OF M/S. MAHARAJA FOODS PRODUCTS IN THE BOOKS OF SHREE SHYAM PRODUCTS. IN THIS LEDGER ACCOUNT, THERE ARE ALL THE CASH RECEIPTS FOR THE MONTH OF JUNE, 2013. AS THERE ARE NO CHEQUE PAYMENTS, THE UNACCOUNTED SALE OF RICE BRAN TO SHREE SH YAM PRODUCTS STANDS PROVED. KINDLY REFER TO PAGES - 3 OF ANNEXURE - III (ENCLOSURE OF 19 PAGES) WHICH CONTAINS THE LEDGER ACCOUNT OF M/S. MAHARAJA FOODS PRODUCTS IN THE BOOKS OF RADHE KRISHNA. IN THIS LEDGER ACCOUNT, THERE ARE ALL THE CASH RECEIPTS FOR THE PER IOD 01.05.2013 TO 05.07.2013. AS THERE ARE NO CHEQUE PAYMENTS, THE UNACCOUNTED SALE OF RICE BRAN TO RADHE KRISHAN STANDS PROVED. KINDLY REFER TO PAGES - 4 & 5 OF ANNEXURE - III (ENCLOSURE OF 19 PAGES) WHICH CONTAINS THE LEDGER ACCOUNT OF M/S. MAHARAJA FOODS PR ODUCTS IN THE BOOKS OF SHREE SHYAM PRODUCTS. IN THIS LEDGER ACCOUNT, THERE IS ONE CHEQUE PAYMENT OF RS.4,11,824/ - BY BRMC. BUT THE CIT(A) HAS CHOSEN TO REMAIN SILENT FOR OTHER CASH RECEIPTS OF RS.14,50,000/ - FOR THE MONTH OF APRIL, 2013. KINDLY REFER TO PA GES - 6 & 7 OF ANNEXURE - III (ENCLOSURE OF 19 PAGES) WHICH CONTAINS THE LEDGER IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 34 ACCOUNT OF M/S. MAHARAJA FOODS PRODUCTS IN THE BOOKS OF SHREE SHYAM PRODUCTS. IN THIS LEDGER ACCOUNT, THERE ARE ALL THE CASH RECEIPTS FOR THE MONTH OF MAY, 2013. AS THERE ARE NO CH EQUE PAYMENTS, THE UNACCOUNTED SALE OF RICE BRAN TO SHREE SHYAM PRODUCTS STANDS PROVED. F) IT IS PERTINENT HERE THAT THE ASSESSEE WAS A DIRECTOR IN BARGARH RICE MILLS CONSORTIUM (BRMC) TILL 2012 (KINDLY REFER TO QUESTION NO.25 ON PAGE - 55 OF ANNEXURE - II OF PAPER - BOOK). THEREFORE THE COLLUSIVE NATURE OF SUCH UNACCOUNTED TRANSACTIONS CAN'T BE DENIED BY THE ASSESSEE. IN FACT, IF REPLIES OF THE ASSESSEE ON PAGE 54 OF ANNEXURE - II OF PAPER BOOK (QUESTIONS 22 & 23) ARE EXAMINED, THEN IT WOULD BE CLEAR THERE WERE L ARGE NUMBER OF TRANSACTIONS BETWEEN THE ASSESSEE AND BRMC WHICH WERE NOT FOUND RECORDED IN THE BOOKS OF ACCOUNT. G) AS REGARD PRESUMPTION AVAILABLE TO THE ASSESSING OFFICER U/S. 292C OF THE ACT, RELIANCE IS PLACED ON THE DECISION OF HON'BLE DELHI HIGH COUR T IN THE CASE OF CIT VS. NARESH KUMAR AGGARWALA (9 TAXMANN.COM 249 /331 ITR 510) WHERE IT WAS HELD THAT THERE WAS A PRESUMPTION RAISED UNDER SECTION 132(4A) ON SEIZURE OF FAX MESSAGE AND IT WAS UPON ASSESS EE TO REBUT THAT PRESUMPTION BY OFFERING A PLAUSIBLE EXPLANATION. IN VIEW OF ABOVE FACTS, IT IS REQUESTED THAT THE ADDITION MADE BY THE A.O. MAY KINDLY BE RESTORED AND FINDING OF CIT(A) BE REVERSED. V.) THE NINTH, TENTH AND ELEVENTH GROUNDS OF APPEAL RELAT E TO THE ADDITION OF RS.1,28,72,786/ - AND RS.13,47,352/ - MADE BY THE A.O. ON ACCOUNT OF SHORTAGE AND EXCESS STOCK. THIS ISSUE HAS BEEN DISCUSSED BY THE AO IN PARA - 9 ON PAGE 112 (INTERNAL MARKING). THE FINAL CONCLUSION OF THE AO CAN BE SEEN IN PARA - 7 ON PA GE 105 (INTERNAL MARKING). THE CIT(A) HAS ALLOWED THE RELIEF TO THE ASSESSEE AND HIS FINDINGS ARE CONTAINED IN PARA - 9.4 ON PAGE - 29 OF THE APPELLATE ORDER. THE DECISION OF THE CIT(A) IS TOTALLY ERRONEOUS FOR THE FOLLOWING REASONS: A) THE CIT(A) HAS FAILED T O CONSIDER THE FACT THAT PHYSICAL INVENTORY OF STOCK WAS TAKEN BY THE SURVEY PARTY IN THE PRESENCE OF SHRI DEEPAK SHARMA, MANAGER OF M/S. MAHARAJA FOODS PRODUCTS & ELDER BROTHER OF THE ASSESSEE. HE WAS LOOKING AFTER DAY TO DAY AFFAIRS OF THE RICE MILL. THE SAME WAS ALSO WITNESSED BY THE PANCHAS. B) DURING THE COURSE OF SURVEY, SHRI DEEPAK SHARMA FAILED TO GIVE ANY REPLY REGARDING THE STOCK DIFFERENCE. NEITHER AT THE STAGE OF ASSESSMENT PROCEEDINGS NOR AT THE STAGE OF APPELLATE PROCEEDINGS, THE ASSESSEE MADE AN ATTEMPT TO RECONCILE THE DISCREPANCY. MERE STATEMENT THAT THE STOCK BELONGED TO THE PRINCIPALS IS NOT SUFFICIENT. C) THE CIT(A) ALSO FAILED TO CONSIDER A VERY VITAL ISSUE THAT BRAN/BROKEN RICE PRODUCED DURING RICE MILLING WAS NOT TO BE RETURNED TO THE PRINCIPALS. THE ASSESSEE WAS THE OWNER OF SUCH BRAN/BROKEN RICE WHICH WAS BEING SOLD TO OUTSIDE PARTIES OUT OF BOOKS OF ACCOUNT. D) IF THERE WAS NO DIFFERENCE IN THE STOCK, THEN WHAT PREVENTED THE ASSESSEE OR SHRI DEEPAK SHARMA FROM FILING AN AFFIDAVIT IN THIS REGARD. THE AFFIDAVIT, IF ANY, WAS REQUIRED TO BE FILED AFTER SURVEY OPERATION. ON THE OTHER HAND, THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 14.01.2018 I.E. AFTER A LAPSE OF 5 YEARS. E) IN THE CASE OF HOTEL KIRAN (82 ITD 453) (PUNE ITAT) AND HIRALA L MAGANLAL (96 ITD 113) (MUMBAI ITAT), THE HON'BLE TRIBUNALS HAVE HELD THAT WHERE DURING THE COURSE OF SEARCH, THE ASSESSEE HAS MADE SOME IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 35 ADMISSION, THEN HE DEBARS THE AUTHORIZED OFFICERS FROM MAKING FURTHER INVESTIGATION. THEREFORE, IN THEIR WISDOM THE LE GISLATURE HAS PROVIDED THAT SUCH STATEMENT CAN BE USED AS EVIDENCE AND THE ASSESSMENT CAN BE MADE ON THAT BASIS. RELIANCE IS ALSO PLACED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SURJEET SINGH CHHABRA VS. UNION OF INDIA [1997] 1 SCC 508 ' WHER EIN IT WAS HELD THAT THE REVENUE OFFICIALS ARE NOT POLICE OFFICERS AND THE CONFESSION, THOUGH RETRACTED, IS AN ADMISSION AND WOULD BIND THE PETITIONER. IN VIEW OF ABOVE FACTS, IT IS REQUESTED THAT THE ADDITION MADE BY THE A.O. MAY KINDLY BE RESTORED AN D FINDING OF CIT(A) BE REVERSED. VI.) THE TWELFTH GROUND OF APPEAL RELATES TO THE ADDITION OF RS.2,40,000/ - MADE BY THE A.O. THIS ISSUE HAS BEEN DISCUSSED BY THE AO IN PARA - 8 ON PAGE 103 (INTERNAL MARKING). THE CIT(A) HAS ALLOWED THE RELIEF TO THE ASSESSEE AND HIS FINDINGS ARE ASSAILED IN PARA - 10.2 ON PAGE - 30 OF THE APPELLATE ORDER. THIS ISSUE MAY PLEASE BE ADJUDICATED ON MERIT. 7. IN ADDITION TO THE ABOVE WRITTEN SUBMISSIONS, THE LD. CIT DR SUBMITTED THAT THE LD. CIT(A) HAS NOT DEALT THE ISSUE PROPERLY IN RESPECT OF EVERY GROUNDS ALLOWED BY HIM. HE SHOULD HAVE BEEN DISCUSSED IN DETAILS BEFORE ALLOWING THE APPEAL OF THE ASSESSEE AND HE HAS NOT PROPERLY CONSIDERED THE REMAND REPORT SUBMITTED BY THE AO AND DOCUMENTS FOUND DURING THE COURSE OF SEARCH AND SEIZU RE/POST ENQUIRY/SURVEY PROCEEDINGS. THE ASSESSING OFFICER GAVE MANY OPPORTUNITIES TO THE ASSESSEE AT THE TIME OF SCRUTINY ASSESSMENT PROCEEDINGS FOR REBUTTING THE SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE. HE ALSO DID NOT REBUT THE POINTS RAISED BY THE AO I N HIS ASSESSMENT ORDER DURING THE COURSE OF REMAND PROCEEDINGS. THE ASSESSEE FILED AFFIDAVIT BEFORE THE CIT(A) AFTER A LAPSE OF LONG TERM WHICH CANNOT BE ACCEPTED AND THE DOCUMENTS WERE ALSO FOUND IN THE PREMISES OF THE ASSESSEE REGARDING SALE OF BRAN HAS NOT BEEN REBUTTED. HE ALSO STATED THAT IN THE COMPUTATION OF INCOME FILED BY THE ASSESSEE HE HAS NOT IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 36 SHOWN THE INCOME FROM PLYING OF BUSES, THEREFORE, THE CAPITAL INTRODUCTION, IN CASE, IS NOT ACCEPTABLE. FURTHER IN RESPECT OF STOCK DIFFERENCES, THERE WAS NOT PLAUSIBLE EXPLANATION BEFORE THE ASSESSING OFFICER AS WELL AS IN THE REMAND PROCEEDINGS. HE FURTHER STATED IN RESPECT OF SUNDRY CREDITORS REFERRING TO THE PAPER BOOKS IN THIS REGARD AND SUBMITTED THAT THEY ARE NOT TRADE CREDITORS, WHICH IS EVIDENT FRO M THE LEDGER ACCOUNTS PRODUCED BY THE ASSESSEE, WHICH ARE FOR OTHER PURPOSE, THEY ARE ONLY ACTING AS AGENT ON BEHALF OF THE ASSESSEE FOR PURCHASE OF PADDY BUT HOW THE ASSESSEE HAS TREATED THEM AS TRADE CREDITORS AND MADE THE PAYMENTS FOR DIFFERENT PURPOSES . HE ALSO REFERRED TO PARA NO.20, 23 & 24 OF WRITTEN SUBMISSIONS OF THE LD. AR OF THE ASSESSEE IN WHICH HE HAS CATEGORICALLY ACCEPTED THAT HE IS A CUSTOM MILLER AND HAS NEVER PURCHASED ANY PADDY AND NOT MAINTAINING PURCHASE REGISTER. HE ALSO REFERRED TO TH E PAGE NO.51 TO 77 OF THE PAPER BOOK AND COPY OF STATEMENTS RECORDED AND COPY OF LEDGER ACCOUNTS FOUND DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS AND STOCK STATEMENTS. IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, THE CASE LAWS RELIED ON BY THE LD. AR OF THE ASSESSEE ARE NOT APPLICABLE IN THE PRESENT CASE. THEREFORE, THE LD. CIT DR SUBMITTED THAT THE ORDER OF THE ASSESSING OFFICER SHOULD BE RESTORED. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 37 8 . ON THE OTHER HAND, L D. AR RELIED ON THE ORDER OF CIT(A) AND FILED PAPER BOOK CONTAINING ANNEXURES - I TO IV, WHICH IS PLACED ON RECORD. LD. AR ALSO FILED HIS WRITTEN SUBMISSIONS, WHICH READ AS UNDER: - 1 . THE APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) DELETING VARIOUS ADDITIONS MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2014 - 15. THE RESPONDENT - ASSESSEE HAS FILED THE CROSS OBJECTION FULLY SUPPORTING THE IMPUGNED ORDER OF THE LEARNED CIT(A). - 2. THAT AT THE OUTSET IT IS HUMBLY SUBMITTED THAT THE ASSESSING OFFICER PASSED THE IM PUGNED ASSESSMENT ORDER EXPARTE WHICH WAS VEHEMENTLY CHALLENGED BEFORE THE LEARNED CIT(A) TO BE ARBITRARY, ILLEGAL AND UNJUSTIFIED. AN AFFIDAVIT IN THIS REGARD CONTAINING 15 PAGES WAS FILED BEFORE THE LEARNED CIT(A) ( COPY ATTACHED AS ANNEXURE - I ) AND IT WAS CONTENDED BEFORE THE LEARNED CIT(A) THAT THE ASSESSING OFFICER HAS FRAMED THE ASSESSMENT ORDER IN HASTE AND WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. FURTHER DISPUTING THE VARIOUS ADDITIONS (MADE BY THE ASSESSING OFFICER) BEFORE TH E LEARNED CIT(A), THE ASSESSEE ALSO FILED WRITTEN SUBMISSIONS CONTAINING 53 PAGES ALONGWITH ITS ENCLOSURES IN SHAPE OF PAPER BOOK OF 114 PAGES ( COPY ATTACHED AS ANNEXURE - II ) ON VARIOUS ISSUES ENCLOSING THEREWITH RELEVANT DOCUMENTS. LEARNED CIT(A) CALLED FO R REMAND REPORT FROM THE ASSESSING OFFICER VIDE LETTER DT.19.01.2018. THE ASSESSING OFFICER FURNISHED THE REMAND REPORT VIDE LETTER DT.22.03.2018. THEREAFTER THE ASSESSEE FILED COUNTER TO REMAND REPORT ENCLOSING THEREWITH FURTHER VARIOUS EVIDENCES/DOCUMENT S CONTAINING 19 PAGES ( COPY ATTACHED AS ANNEXURE - III ). THEREAFTER, ON THE DATE OF HEARING BEFORE THE LEARNED CIT(A), THE ASSESSEE ALONG WITH HIS ADVOCATES ENTERED APPEARANCE ALONGWITH THE BOOKS OF ACCOUNTS. CONSIDERING THE WRITTEN SUBMISSIONS OF THE ASSESS EE, REMAND REPORT OF THE ASSESSING OFFICER AND COUNTER TO REMAND REPORT FILED BY THE ASSESSEE, VARIOUS SUBMISSIONS OF THE ASSESSEE MADE BEFORE HIM AND ALSO EXAMINING THE BOOKS OF ACCOUNT PRODUCED BEFORE HIM, LEARNED CIT(A) DECIDED THE ISSUES RAISED BEFORE HIM AND PASSED A VERY REASONABLE ORDER DELETING VARIOUS ADDITIONS, WHICH ARE NOW DISPUTED BY THE REVENUE IN THEIR APPEAL. ON THE OTHER HAND, THE ASSESSEE SUPPORTS THE IMPUGNED ORDER OF THE LEARNED CIT(A). 3. GROUNDS NO.(I) AND (II) AS RAISED BY THE REVEN UE READ AS UNDER: (I) THAT THE LD. CIT(APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.7,72,400 WHICH WAS ADDED BY THE A.O. AS BOGUS SUNDRY CREDITORS. (II) THAT THE LD. CIT(APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE ASSESSEE W AS UNABLE TO SUBMIT ANY DETAILS OR EXPLANATION OF SUNDRY CREDITORS DURING THE ASSESSMENT PROCEEDING TO PROVE THE IDENTITY AND CREDIT WORTHINESS OF THE CREDITORS AND WAS ALSO FAILED IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 38 TO PROVE THE GENUINENESS OF THE TRANSACTIONS. DURING REMAND PROCEEDING, EXC EPT LEDGER COPIES, NO SUPPORTING BILLS AND VOUCHERS WERE PRODUCED BEFORE A.O. REGARDING THE SUNDRY CREDITORS. LEARNED CIT(A) DELETED THE ADDITION IGNORING THE ABOVE FACT AND ACCEPTING THE EXPLANATION OF THE ASSESSEE WITHOUT ANY BASIS . 3.1. THAT IN THIS REGARD THE ASSESSEE HUMBLY SUBMITS THAT THE ASSESSEE HAS MADE SUBMISSIONS IN REGARD TO SUNDRY CREDITORS IN PARAGRAPH 17 OF THE WRITTEN SUBMISSIONS (ANNESURE II) FILED BEFORE LEARNED CIT(A), WHICH READS AS UNDER. 17. THAT IN THE BALANCE SHEET, THE ASSES SEE HAS SHOWN SUNDRY CREDITORS AT RS.7,72,400, THE DETAILS OF WHICH HAVE BEEN CLEARLY GIVEN IN THE SUBMISSIONS FILED BEFORE THE ASSESSING OFFICER ON DT.21.03.2016 GIVING ALL DETAILS SUCH AS NAME OF THE CREDITORS, AMOUNT CREDITED ETC. THE ASSESSEE IS HAVIN G ALL THE DETAILS OF SUNDRY CREDITORS WITH LEDGER ACCOUNTS, THEIR NAME, ADDRESS, ADHAR NUMBER ETC. THE DETAILS ARE AS UNDER : SUNDRY CREDITORS : FOR THE ASST. YEAR - 2014 - 15 [ LEDGER COPIES ATTACHED WITH CONFIRMATIONS OF THE RESPECTIVE AUTHORISED REPRESENTATIVES PLACED AT PB PAGE NOS.66 TO 77 ] IN RESPECT OF CREDITORS NAMELY VISIONTEK CONSULTANCY (P) LTD., ABOVE, THE ASSESSEE HUMBLY SUBMITS THAT IT REPRESENT FOR PURCHASE OF GOODS AND THE AMOUNT HAS BEEN SHOWN AGAINST PURCHASE VOUCHERS THEREFORE, THE ADDITION IN RESPECT OF THESE TRADE CREDITORS IS NOT JUSTIFIED, WHICH REQUIRES TO BE DELETED. SL. N O. NAME OF SUNDRY DEBTORS, SUNDRY CREDITORS, LOAN & ADVANCE TAKEN, LOANS & A DVANCES GIVEN (EACH IN SEPARATE TABLE) AMOUNT NATURE OF THE DEBTOR/ CREDITOR AND LOANS AND ADVANCES IF LOANS AND ADVANCES BEAR INTEREST, PLEASE FURNISH RELATIONSHI P WITH THE ENTITY (PARTY/ CONCERN) COMPLETE PRESENT ADDRESS OF SUCH ENTITY WITH PIN CODE. MA XIMU M AMOUNT OUTSTAND ING FOR THREE YEARS AND AS ON DATE. AT THE BEGINNI NG AND AT THE END OF THE F.Y. UNDER CONSIDE RATION BALANC E AS ON DATE. AMOUNT OF INTEREST PAID/ AMOUNT OF INTEREST RECEIVED AND THE AMOUNT INVOLVED. 1 2 3 4 5 6 7 8 9 1 BANBAS S AHU NIL 96000 CREDITOR NIL CREDITOR BARGARH NO 2 BHUBANESWAR SAHU NIL 92000 CREDITOR NIL CREDITOR BARGARH NO 3 BIRENDRA KHUNTIA NIL 87500 CREDITOR NIL CREDITOR BARGARH NO 4 CHANDRASEKHAR MEHER NIL 90500 CREDITOR NIL CREDITOR BARGARH NO 5 CHATURBHUJ A PRADHAN NIL 86000 CREDITOR NIL CREDITOR BARGARH NO 6 DIBYA KISHOR BEHERA NIL 78600 CREDITOR NIL CREDITOR BARGARH NO 7 PRABHAT SAHU NIL 85400 CREDITOR NIL CREDITOR BARGARH NO 8 RABHUPATI BHOI NIL 84000 CREDITOR NIL CREDITOR BARGARH NO 9 VISIONTEK CONSULTANCY (P) LTD TRADE CREDITOR NIL 72400 CREDITOR NIL CREDITOR BARGARH NO IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 39 IN RES PECT OF OTHER CREDITORS, IT IS HUMBLY SUBMITTED THAT MOST OF THEM ARE AUTHORISED REPRESENTATIVES OF THE ASSESSEE TO RECEIVE PADDY FROM THE PADDY PURCHASE CENTRE AND FOR MILLING FROM JOINT CUSTODY AND MAINTENANCE AND FOR DELIVERY THE RESULTANT CMR IN THE RR C/FCI ON BEHALF OF THE ASSESSEE. A SAMPLE COPY OF SUCH LETTER OF AUTHORISATION IS PLACED AT PB PAGE NO. 57 - 58 . IN THE SAID AUTHORISATION LETTER, IT IS FURTHER STATED AS UNDER : ALL THE ACTS, DEEDS, THINGS DONE BY THE ABOVE REPRESENTATIVES SHALL BE CONST RUED AS THE ACTS, DEEDS, THINGS AND MATTERS DONE BY ME AS IF I AM PERSONALLY PRESENT TO DO THE SAME. FOR ANY ACTS, COMMISSIONS OR OMISSION OF MY ABOVE AUTHORISED REPRESENTATIVES THAT MAY CAUSE ANY PECUNIARY LOSS TO THE CORPORATION I SHALL BE RESPONSIBLE TO MAKE GOOD LOSS OF THE SAME . FOR THIS WORK, THE ASSESSEE SOMETIMES MAKES ADVANCES TO THEM AND SOMETIMES THE REPRESENTATIVES SPENT MONEY OF THEIR OWN AND SUBSEQUENTLY REIMBURSED THE SAME FROM THE ASSESSEE. IN THIS PROCESS OF INVOLVEMENT OF THE REPRESENTAT IVES IN ASSESSEES BUSINESS, MONETARY TRANSACTIONS WITH THEM ARE INEVITABLE. THEREFORE, IT IS HUMBLY SUBMITTED THAT THEY ARE ACTUALLY NOT CREDITORS THOUGH THE AMOUNT SHOWN AS SUNDRY CREDIT AGAINST THEM IS ACTUALLY THE AMOUNT THEY HAD SPENT IN THE ABOVE PRO CESS OF WORK SUBSEQUENTLY TO BE PAID BY THE ASSESSEE. THEREFORE, THE WORD SUNDRY CREDITORS APPEARING IN THE ACCOUNTS IS NOTHING BUT A NOMENCLATURE AS AGAINST LIABILITY TO BE PAID TO THOSE REPRESENTATIVES. THUS, THE TRANSACTIONS HAVE BEEN EFFECTED DURING THE COURSE OF BUSINESS OF THE ASSESSEE. FURTHER THE TRANSACTIONS ARE NOT BOGUS. ALL OF THEM ARE PERMANENT RESIDENTS OF THEIR RESPECTIVE LOCALITY AND MOST OF THEM ASSIST THE BUSINESS IN THIS WAY YEAR AFTER YEAR. THE COPIES OF ADHAR CARD IN RESPECT OF EACH P ERSON ARE PLACED AT PB PAGE NOS. 59 TO 65 . THE LEARNED ASSESSING OFFICER NEVER MADE ANY QUERY ABOUT THE ABOVE CREDITS AND INSTEAD WITHOUT CONSIDERING THE REPLY OF THE ASSESSEE, BUT WHIMSICALLY DISALLOWED THE CLAIM OF THE ASSESSEE SIMPLY ALLEGING THAT THE A SSESSEE HAS NO EXPLANATION. FURTHER THE ASSESSING OFFICER HAS NEVER ESTABLISHED THAT THE AMOUNT SHOWN AS SUNDRY CREDITORS HAS BEEN OUT OF THE INCOME OF THE ASSESSEE. IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT THE IMPUGNED ADDITION UNDER THIS HEAD BEING UN JUSTIFIED MAY KINDLY BE DELETED. FURTHER DURING THE HEARING OF THE APPEAL PROCEEDINGS, THE ASSESSEE FILED LEDGER COPIES, CONFIRMATIONS AND AADHAR CARD COPIES OF THE CREDITORS. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, REMAND REPORT OF THE ASSESSING OFFICER, THE COUNTER FILED BY THE ASSESSEE AND THE LEDGER COPIES, CONFIRMATIONS AND AADHAR CARD AND BOOKS OF ACCOUNTS PRODUCED BEFORE HIM, AND FURTHER CONSIDERING THE FACT THAT NO EVIDENCE OF BOGUS PURCHASES WAS FOUND DURING THE SEARCH, THE LEARNED CIT(A) HAS DELETED THE ADDITION OF RS.7,72,400 MADE ON ACCOUNT OF SUNDRY CREDITORS, OBSERVING IN PARAGRAPH 5.2 IN HIS ORDER, WHICH READS AS UNDER: IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 40 5.2. IN REMAND PROCEEDINGS, THE ASSESSING OFFICER HAS STATED THAT THE APPELLANT HAS FURNISHED ONLY THE LEDGER COPI ES, BUT SUPPORTING BILLS AND VOUCHERS WERE NOT FILED EITHER OF ASSESSMENT STAGE OR APPEAL STAGE. AS IT CAN BE SEEN FROM THE LETTER OF THIS OFFICE DATED 19.01.2018, CALLING FOR REMAND REPORT, THE ASSESSING OFFICER WAS ASKED TO OBTAIN ANY FURTHER DETAILS REQ UIRED BY HER DURING THE REMAND PROCEEDINGS. THE ASSESSING OFFICER HAS NOT CALLED FOR ANY DETAILS AND HAS SUBMITTED REMAND REPORT. THE APPELLANT HAS FILED NAME, ADDRESS, AADHAR CARD DETAILS AND LEDGER COPIES. FROM LEDGER COPIES, IT IS SEEN THAT THESE CREDIT ORS ARE REGULAR SUPPLIERS OF PADDY AND AUTHORISED REPRESENTATIVE FOR PADDY COLLECTION, IN THE PREVIOUS YEAR AS WELL AS SUBSEQUENT YEARS. THIS IS A SEARCH AND SEIZURE CASE AND NO EVIDENCE OF BOGUS PURCHASES WAS FOUND DURING THE SEARCH. CONSIDERING THESE ASP ECTS, THE CREDITORS ARE HELD AS GENUINE AND THE ADDITION OF RS.7,72,400 IS ORDERED TO BE DELETED. THE GROUND OF APPEAL IS ALLOWED. 3.2. THAT IN THE BALANCE SHEET, THE ASSESSEE HAS SHOWN SUNDRY CREDITORS AT RS.7,72,400, THE DETAILS OF WHICH HAVE BEEN CL EARLY GIVEN IN THE SUBMISSIONS FILED BEFORE THE ASSESSING OFFICER ON DT.21.03.2016 GIVING ALL DETAILS SUCH AS NAME OF THE CREDITORS, AMOUNT CREDITED ETC. THE ASSESSEE IS HAVING ALL THE DETAILS OF SUNDRY CREDITORS WITH LEDGER ACCOUNTS, THEIR NAME, ADDRESS, AADHAR NUMBER ETC. THE DURING THE ASSESSMENT PROCEEDINGS LEARNED ASSESSING OFFICER NEITHER EXAMINED THE SAME NOR MADE ANY QUERY ABOUT IT AND WHIMSICALLY DISALLOWED THE CLAIM OF THE ASSESSEE SIMPLY ALLEGING THAT THE ASSESSEE HAS NO EXPLANATION. THEREFORE, T HE ASSESSEE FURNISHED BEFORE THE LEARNED CIT(A) THE DETAILS OF SUNDRY CREDITORS, RESPECTIVE LEDGER COPIES WHICH WERE NOT EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT THOUGH PRODUCED BEFORE HIM. IN THE REMAND PROCEEDING, THE ASSESSING O FFICER NEITHER EXAMINED THE CLAIM OF THE ASSESSEE NOR CALL FOR ANY DETAILS FROM THE ASSESSEE BUT SIMPLY FURNISHED THE REMAND REPORT STATING THEREIN THAT THE ASSESSEE FURNISHED ONLY THE LEDGER COPIES, BUT SUPPORTING BILLS AND VOUCHERS WERE NOT FILED EITHER AT ASSESSMENT STAGE OR APPEAL STAGE. 3.3. CONSIDERING ALL ABOVE FACTS AND AFTER PROPERLY EXAMINING THE VARIOUS EVIDENCES AND VERIFYING BOOKS OF ACCOUNTS PRODUCED BEFORE HIM, THE LEARNED CIT(A) IS PERFECTLY JUSTIFIED IN DELETING THE ADDITION OF RS.7,72,400 MADE ON ACCOUNT OF SUNDRY CREDITORS AND AS SUCH, THE GROUNDS NO.(I) AND (II) RAISED BY THE REVENUE IN THEIR GROUNDS OF APPEAL ARE LIABLE TO BE DISMISSED BY UPHOLDING THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN THIS REGARD AND IT IS PRAYED ACCORDINGLY. 4. GROUND NO. (III) AND (IV) AS RAISED BY THE REVENUE READ AS UNDER: (III) THAT THE LD. CIT(APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.5,97,186 WHICH WAS ADDED BY THE A.O. AS UNEXPLAINED CAPITAL INTRODUCTION FROM UNDISCLOSED SOURC ES. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 41 (IV) THAT THE LEARNED CIT(A) HAS FAILED TO NOTICE THE FACT THAT THE ASSESSEE WAS UNABLE TO SUBMIT ANY DETAILS EXPLAINING SOURCE OF ADDITION OF SUCH FRESH CAPITAL INTRODUCTION WITH DOCUMENTARY EVIDENCE DURING THE ASSESSMENT PROCEEDING. DURING REMAND PR OCEEDINGS, THE ASSESSEE COULD NOT EXPLAIN BEFORE A.O. THE SOURCE OF SUCH CAPITAL INTRODUCED. THE LEARNED CIT(APPEALS) DELETED THE ADDITION IGNORING THE ABOVE FACT AND ACCEPTING THE EXPLANATION OF THE ASSESSEE WITHOUT PROPER REASONS. 4.1. THAT THE LEARNE D CIT(A) HAS DELETED THE IMPUGNED ADDITION VIDE PARAGRAPH 6.4 OF HIS ORDER, WHICH READS AS UNDER: 6.4. I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE APPELLANT. IT IS CLEAR THAT THE INTRODUCTION OF CAPITA L IS FROM THE APPELLANT TO THE PROPRIETARY CONCERN AND IT HAS BEEN DEMONSTRATED BY THE APPELLANT. REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER INDICATES THAT SHE HAS NOT ALL TAKEN INTO CONSIDERATION THE SUBMISSIONS OF THE APPELLANT. CONSIDERING THESE A SPECTS THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.5,97,186 IS ORDERED TO BE DELETED. 4.2. THAT BEFORE THE LEARNED CIT(A) THIS ISSUE WAS EXPLAINED VIDE PARAGRAPH 19 OF THE WRITTEN SUBMISSION ( ANNEXDURE - II ) AS UNDER: 19. THE ASSESSEE SHRI SANJAY S HARMA IS THE PROPRITER OF TWO PROPRIETORSHIP CONCERNS (1) M/S.MAHARAJA FOOD PRODUCTS, CHKARKEND HAVING RICE MILL BUSINESS AND (2) SANJAY SHARMA CARRYING ON BUSINESS OF BUS PLYING AND TRADING BESIDES EARNING INCOME FROM OTHER SOURCES. THE AMOUNT OF RS.5,97 ,186, WHICH IS NOW UNDER DISPUTE, IS THE CASH TRANSFER FROM THE ACCOUNT OF SANJAY SHARMA TO M/S.MAHARAJA FOOD PRODUCTS, ON DIFFERENT DATES, WHICH IS WELL VERIFIABLE FROM THE CASH BOOK MAINTAINED. THE ASSESSEE HAS PRODUCED THE CASH BOOK. THE LEARNED ASSESSI NG OFFICER WITHOUT PROPER VERIFICATION OF THE SAME HAS ADDED THIS AMOUNT HOLDING AS INCOME FROM UNDISCLOSED SOURCES AND INTRODUCED AS FRESH CAPITAL. COPY OF RESPECTIVE LEDGER ACCOUNTS ARE PLACED AT PB PAGE NOS. 76 AND 77 . ON THE FACE OF RECORD/ACCOUNTS, TH E ACTION OF THE ASSESSING OFFICER IS NOT ALL JUSTIFIED AND THEREFORE, THE ADDITION MADE ON THIS COUNT IS LIABLE TO BE DELETED. THE AMOUNT OF RS.5,97,186, WHICH IS NOW UNDER DISPUTE, IS THE CASH TRANSFER FROM THE ACCOUNT OF SANJAY SHARMA (INDIVIDUAL) TO M /S.MAHARAJA FOOD PRODUCTS, ON DIFFERENT DATES, WHICH IS WELL VERIFIABLE FROM THE CASH BOOK MAINTAINED. BEFORE THE LEARNED CIT(A) THE ASSESSEE PRODUCED THE CASH BOOK AND COPY OF RESPECTIVE LEDGER ACCOUNTS AND ALSO DEMONSTRATED AND ESTABLISHED THIS FACT. THE REFORE, THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, REMAND REPORT OF THE ASSESSING OFFICER AND THE BOOKS OF ACCOUNTS PRODUCED BEFORE HIM, HAS PERFECTLY JUSTIFIED IN DELETING THE IMPUGNED ADDITION. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 42 4.3. THAT IN THEIR GROUNDS OF APPEAL, THE REVENUE HAS URGED THAT THE LEARNED CIT(A) HAS FAILED TO NOTICE THE FACT THAT THE ASSESSEE WAS UNABLE TO SUBMIT ANY DETAILS EXPLAINING SOURCE OF ADDITION OF SUCH FRESH CAPITAL INTRODUCTION WITH DOCUMENTARY EVIDENCE DURING ASSESSMENT PROCEEDI NG AND SO ALSO IN THE REMAND PROCEEDING. IN THIS RESPECT IT IS HUMBLY SUBMITTED THAT NEITHER ANYTHING WAS ASKED BY THE ASSESSING OFFICER IN THIS REGARD IN THE ASSESSMENT PROCEEDINGS NOR EXAMINED THE BOOKS OF ACCOUNTS THOUGH PRODUCED BEFORE HIM DURING THE C OURSE OF ASSESSMENT BUT HE COMPLETED THE ASSESSMENT HASTILY ON DT.29.03.2016 SINCE THE LIMITATION FOR COMPLETION OF ASSESSMENT WAS GOING TO BE TIME BARRED BY DT.31.03.2016. FURTHER THE REMAND REPORT WAS SUBMITTED BY THE ASSESSING OFFICER WITHOUT CALLING FO R THE ASSESSEE TO EXPLAIN THIS ISSUE. THEREFORE, THE GROUND RAISED BY THE REVENUE IN THIS REGARD DOES NOT MERIT ANY CONSIDERATION. 4.4. ON THE FACTS AND CIRCUMSTANCES STATED ABOVE, THE LEARNED CIT(A) IS PERFECTLY JUSTIFIED IN DELETING THE IMPUGNED ADDITI ON. IT IS PRAYED THAT THE SAME MAY KINDLY BE UPHELD BY DISMISSING THE GROUNDS RAISED BY THE REVENUE IN THIS REGARD IN THEIR GROUNDS OF APPEAL. 5. GROUNDS NO. (V) AND (VI) AS RAISED BY THE REVENUE READ AS UNDER: (V) THAT THE LD. CIT(APPEALS) ERRED IN LAW AS WELL AS ACT IN DELETING THE ADDITION OF RS.83,62.872 WHICH WAS ADDED BY THE A.O. ON A/C OF SALE SUPPRESSION OF RICE BRAN. (VI) THAT THE LD.CIT (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT THE SAID ADDITION ON A/C OF SALE SUPPRESSION OF RICE BRAN WA S MADE ON THE BASIS OF IMPOUNDED DOCUMENT MFP - 30. (VII) THAT THE LD. CIT (APPEALS) HAS FAILED TO APPRECIATE THE FACT THAT SRI DEEPAK SHARMA, MANAGER OF THE ORGANISATION HAD ADMITTED IN HIS STATEMENT RECORDED U/S.131 OF THE I.T.ACT THAT THE ABOVE SALE OF R ICE BRAN HAD NOT BEEN DISCLOSED IN THE REGULAR BOOKS OF A/C. (VIII) THAT THE LD. CIT(APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.83,62,872 HOLDING THE VIEW THAT THE LEDGER A/C IN IMPOUNDED DOCUMENT MFP - 30 ARE NEITHER RELIABLE NOR VALID WHEN THE SAID DOCUMENTS WAS IMPOUNDED FROM THE BUSINESS PREMISES OF THE ASSESSEE. 5.1 . THAT DURING THE COURSE OF SEARCH & SURVEY OPERATION, SOME LOOSE PAPERS SEIZED AND MARKED AS MFP - 30 WHERE THE ASSESSEE HAS BEEN INDICATED TO HAVE SOLD RICE BRAN TO SHRI SHYAM PRODUCTS AND RADHE KRISHNA AND THE STATEMENT RECORDED FROM ONE DEEPAK SHARMA, ON THE BASIS OF WHICH THE ASSESSING OFFICER MADE THE IMPUGNED ADDITION WITHOUT CONSIDERING THE REPLY TO QUESTIONNAIRE FILED BY THE ASSESSEE IN THIS REGARD DURING TH E COURSE OF ASSESSMENT. 5.2. IN APPEAL THE LEARNED CIT(A) DELETED THE SAID ADDITION OF RS.83,62,872. THE RELEVANT PARAGRAPH 8.6 OF THE ORDER OF THE LEARNED CIT(A) READS AS UNDER: IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 43 8.6. I HAVE CAREFULLY EXAMINED THE ASSESSMENT ORDER, SUBMISSIONS OF THE A PPELLANT, REMAND REPORT OF THE ASSESSING OFFICER AND REJOINDER OF THE APPELLANT. AS STATED EARLIER, THE PAGES IN THE IMPOUNDED DOCUMENT MFP 30 IS NOTHING BUT ALLEGED LEDGER ACCOUNT OF MAHARAJA FOOD PRODUCTS IN BOOKS OF SHRI SHYAM PRODUCTS. THIS LEDGER COPY CONTAINS CHEQUE PAYMENT AS WELL AS CASH PAYMENTS. ACCORDING TO THE ASSESSING OFFICER, THESE ARE UNDISCLOSED RECEIPTS OF THE APPELLANT FROM SHRI SHYAM PRODUCTS. HOWEVER, THE APPELLANT HAS VEHEMENTLY DENIED ANY SUCH RECEIPT, EITHER IN CASH OR IN CHEQUE FROM SHRI SHYAM PRODUCTS. SINCE, IT IS RUNNING LEDGER, THE BEST WAY TO ESTABLISH WHETHER THE LEDGER ACCOUNT IS GENUINE OR NOT, IS TO FIND OUT TO WHO HAS MADE THE CHEQUE PAYMENT TO THE APPELLANT. IF THE CHEQUE PAYMENT IS MADE BY SHRI SHYAM PRODUCTS THEN BY THE PRINCIPLE OF PREPONDERANCE OF PROBABILITY, IT WILL BE ESTABLISHED THAT CASH PAYMENTS ARE ALSO MADE BY SHRI SHYAM PRODUCTS TO THE APPELLANT. THE APPELLANT HAS PRODUCED EVIDENCE IN THE FORM OF CHEQUE THAT THE PAYMENT IS MADE BY BMRC AND NOT BY SHRI SHYAM PRO DUCTS. THE ASSESSING OFFICER HAS ACCEPTED THE EVIDENCE AND HAS AGREED TO THE APPELLANT ON THIS ISSUE. THEREFORE, THERE IS NO DOUBT THAT PAYMENT RECEIVED BY THE APPELLANT IN CHEQUE AS APPEARING IN THE IMPOUNDED MATERIAL HAS COME FROM BMRC AND NOT FROM SHRI SHYAM PRODUCTS. THEREFORE, IT IS MY CONSIDERED VIEW THAT ALLEGED LEDGER ACCOUNT IN MFP - 30 OF THE APPELLANT IN BOOKS OF SHRI SHYAM PRODUCTS IS NEITHER RELIABLE NOR VALID. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.83,62,872 IS ORDERED TO BE DELETED. THE GROUND OF APPEAL IS ALLOWED. 5.3. THAT IN APPEAL THE ADDITION WAS DISPUTED BEFORE THE LEARNED CIT(A). THE ASSESSEE FILED WRITTEN SUBMISSIONS BEFORE THE LEARNED CIT(A) . IN PARAGRAPH 23 TO 25 THEREIN (ANNEXURE - II) THE ASSESSEE SUBMITTED AS UNDER: 23. AS REGARDS GROUND NO.2(IV) - ADDITION OF RS.83,62,872 MADE ON ACCOUNT OF UNDISCLOSED SALE OF RICE BRAN, IT IS HUMBLY SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THIS ADDITION ON THE BASIS OF SEIZED LOOSE PAPER MARKED MFP 30, WHERE THE ASS ESSEE HAS BEEN INDICATED TO HAVE SOLD RICE BRAN TO SHRI SHYAM PRODUCTS AND RADHE KRISHNA TOTALLING RS.83,62,872, WHICH IN FACT ACCORDING TO CORRECT CALCULATION IS RS.46,75,479 THUS - THE TOTAL BRAN TRANSACTION AS PER SHOW CAUSE NOTICE IS RS.83,62,872/ - , WH EREAS TOTAL TRANSACTION AS PER TABLE - I & II SHOWN IN THE SHOW CAUSE NOTICE COMES AT RS.86,69,929/ - (42,54,126/ - + 44,15,803/ - ). FURTHER THERE IS DOUBLE ADDITION OF THE SAME AMOUNT WHICH ALSO REQUIRED TO BE DEDUCTED AND SO ALSO THE TRANSACTION RELATES TO THE EARLIER PERIOD, WHICH IS EXPLAINED AS UNDER. THUS TOTAL TRANSACTION AS PER TABLE - I & II - RS.86,69,929.00 LESS : DEDUCTION (I) TRANSACTION OF RADHE KRISHAN - RS. 2,80,213.00 IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 44 (II) TRANSACTION OF SHYAM PRODUCT - RS.11,05,685.00 (III) TRANSACTION OF SHYAM PRODUCT - R S.10,45,630.00 (IV) TRANSACTION OF SHYAM PRODUCT - RS.15,62,922.00 RS.39,94,450.00 RS.46,75,479.00 THUS THE TOTAL TRANSACTION AS PER SHOW CAUSE NOTICE COMES TO RS.46,75,479 , WHICH THE ASSESSEE CLAIMS TO BE NOT RELATING TO THE ASSESSEE. 24. THAT THE ASSESSEE RIGHT FROM BEGINNING IS DENYING TO HAVE SOLD BRAN/HUSK TO SHRI SHYAM PRODUCTS/RADHE KRISHNA. IT IS HUMBLY SUBMITTED THAT DURING THE ASST. YEAR 2014 - 15 THE ASSESSEE HAS NEVER SOLD RICE BRAN/HUSK TO SHREE SHYAM PRODUCT AND RADHE KRISHNA AS ALLEG ED. THE PAGE NO.9 - 10, PAGE 11, PAGE - 22 & 23, PAGE - 24 & 25, PAGE - 15, PAGE - 20 & 21 & PAGE - 40,41 & 42 OF MFP - 30 IMPOUNDED DURING THE YEAR ARE UNSIGNED LOOSE SHEETS OF THIRD PARTIES AND THEREFORE, THE CONTENTS THEREIN CANNOT BE IMPLICATED AGAINST THE ASSESSE E WITHOUT EXAMINING THOSE PARTIES. IT IS HUMBLY SUBMITTED THAT THE ASSESSEE HAS SOLD HIS ENTIRE BRAN PRODUCED BY HIS MILL DURING THE FINANCIAL YEAR 2013 - 14 I.E. ASST. YEAR 2014 - 15 TO BARGARH RICE MILLER CONSOTIRUM PVT. LTD. ( BRMC ) AND NOT TO OTHERS. 25. THAT AS CAN BE SEEN FROM THE SEIZED PAPERS, THOSE LOOSE PAPERS IMPOUNDED ARE THE LEDGER COPY OF THE ASSESSEE IN THE BOOKS OF ACCOUNT OF BOTH THE ABOVE NAMED PARTIES NAMELY M/S.SHREE SHYAM PRODUCTS AND M/S.RADHE KRISHNA, WHO ARE THIRD PARTIES. THER EFORE, ONUS HEAVILY LAY ON THE REVENUE TO PROVE THAT THE NOTING APPEARING IN THE SEIZED LOOSE PAPERS OF A THIRD PARTY ACTUALLY RELATES TO THE TRANSACTIONS OF THE PRESENT ASSESSEE. THIS CAN ONLY BE PROVED BY EXAMINING THE SAID THIRD PARTY AND THAT CAN BE DO NE ONLY ON ISSUANCE OF NOTICE U/S.131 OF THE ACT TO THE SAID THIRD PARTY. IT IS, THEREFORE, RIGHT FROM THE BEGINNING THE ASSESSEE IS REQUESTING TO ISSUE SUMMONS TO THOSE PARTIES AND ALLOW OPPORTUNITY OF CONFRONTATION TO THE ASSESSEE, BUT UNFORTUNATELY THE AO HAS NEITHER CONDUCTED ANY ENQUIRY FROM THOSE PARTIES NOR ISSUED SUMMONS TO THEM IN ORDER TO ASCERTAIN THE TRUTH. ALL THESE FACTS HAVE CLEARLY GIVEN IN THE REPLY TO SL.8 TO THE NOTICE NO. DCIT(CENTRAL)/SBP/2015 - 16/139 DT.10.02.2016 ( PB PAGE NO. 14 ) IT W AS SPECIFICALLY REQUESTED TO THE ASSESSING OFFICER TO SUMMON SHREE SHYAM PRODUCT AS WELL AS RADHE KRISHNA TO CONFIRM THE FACTS THAT THEY HAVE PURCHASED EITHER RICE BRAN OR HUSK, AS ALLEGED, FROM M/S. MAHARAJA FOOD PRODUCTS, CHAKARKEND, THE ASSESSEE. BUT TH E REQUEST TO THE ASSESSING OFFICER WAS IN VAIN. NO SUMMON WAS ISSUED AND NO CROSS EXAMINATION WAS ALLOWED TO THE ASSESSEE THOUGH PRAYED FOR BEFORE THE LEARNED ASSESSING OFFICER, WHICH IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. INSTEAD OF SO DOING, THE A O INSISTED UPON THE ASSESSEE TO EXPLAIN THE NOTING IN THE SEIZED PAPERS OF THIRD PARTIES, WHICH IS IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. IT IS THEREFORE PRAYED IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 45 BEFORE YOUR HONOUR TO PLEASE ISSUE SUMMON TO M/S.SHREE SHYAM PRODUCT AND M/S.RAD HE KRISHAN TO ESTABLISH THE TRUTH. THE ASSESSEE HAS REQUESTED YOUR HONOUR VIDE A SEPARATE PETITION DT.10.11.2017 ( BY SPEED POST ) TO ISSUE SUMMONS TO THE SAID THIRD PARTY NAMELY, M/S.SHYAM PRODUCTS AND M/S.RADE KRISHAN AND ALLOW OPPORTUNITY OF CONFRONTATI ON TO THE ASSESSEE, FOR THE ENDS OF NATURAL JUSTICE. 25. THAT IN VIEW OF THE ABOVE, WITHOUT CORRELATING THE SAME BY EXAMINING THE THIRD PARTY AND/OR OBTAINING STATEMENTS FROM THEM, THE ENTRIES FOUND IN THE ACCOUNTS OF THIRD PARTY HAVE BEEN UTILISED AGAINS T THE ASSESSEE AND THEREFORE THE ADDITION AS MADE BY THE LEARNED ASSESSING OFFICER ON THIS COUNT IS UNJUSTIFIED AND IS LIABLE TO BE DELETED AND IT IS PRAYED ACCORDINGLY. 5.4. THAT THE LEARNED CIT(A) CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER, WHO IN HER TURN SUBMITTED THE REMAND REPORT STATING THEREIN THAT THE DOCUMENT MFP 30 WAS IMPOUNDED FROM THE BUSINESS PREMISES OF THE ASSESSEE, WHICH CONTAINS LEDGER COPY OF TRANSACTION OF SALE OF RICE BRAN TO SHRI SHYAM PRODUCTS AND RADHE KRISHNA. THERE FORE, THE ASSESSEE CANNOT DENY THAT TRANSACTION DOES NOT BELONG TO HIM. THE SALE OF RICE BRAN WAS NOT ACCOUNTED IN THE BOOKS OF ACCOUNT, ACCORDINGLY ASSESSING OFFICER MADE THE ADDITION. ON RECEIPT OF REMAND REPORT, THE ASSESSEE FILED A COUNTER TO REMAND R EPORT IN WHICH THE ASSESSEE FURTHER EXPLAINED THE ISSUE IN PARAGRAPHS 12 TO 20 OF THE COUNTER FILED BY THE ASSESSEE ( ANNEXURE - III ) WHICH IS QUOTED HEREUNDER: 12. THAT THE ALLEGATION MADE AGAINST THE ASSESSEE THAT HE HAS SOLD BRAN/HUSK TO SHRI SHYAM PRODU CTS/RADHE KRISHNA IS WITHOUT CONSIDERING THE DENIAL OF HAVING ANY BUSINESS RELATIONSHIP WITH THE ABOVE PARTIES RIGHT FROM THE BEGINNING OF THE PROCEEDINGS AND REPEATEDLY REQUESTED TO SUMMON THOSE PARTIES. THE AO DID NOT SUMMON/EXAMINE THOSE PARTIES BUT ALL EGED THE ASSESSEE TO HAVE SOLD BRAN/HUSK TO THOSE PARTIES BASING ON DOCUMENTS RELATED TO THIRD PARTIES, WHICH IS IN COMPLETE VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. THEREFORE, THE ADDITION MADE ON THIS COUNT IS LIABLE TO BE DELETED. 13. THAT THE AO WHI LE SUBMITTING HER REMAND REPORT HAS NOT CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. SHE DID NOT BOTHER TO SUMMON/EXAMINE THOSE PARTIES IN ORDER TO ASCERTAIN THE TRUTH IN THIS REGARD AND SUBMITTED HER REMAND REPORT SAYING MFP - 30 WAS IMPOUNDED FROM THE BUSIN ESS PREMISES OF THE ASSESSEE, WHICH CONTAINS LEDGER COPY OF TRANSACTION OF SALE OF RICE BRAN TO SRI SHYAM PRODUCTS AND RADHE KRISHNA THEREFORE, THE ASSESSEE CANNOT DENY THAT TRANSACTION DOES NOT BELONG TO HIM. THE FACTS REMAIN THAT PAPERS UNDER MFP - 30 ARE THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF SHRI SHYAM PRDUCTS AND RADHE KRISHNA , WHICH MEANS THOSE ARE THE ACCOUNTS OF SHRI SHYAM PRODUCTS AND RADHE KRISHNA AND NOT OF THE ASSESSEE AND AS SUCH, THE SAID PARTIES ARE THE BEST PERSONS TO EXPLAIN THE E NTRIES MADE IN THEIR BOOKS OF ACCOUNTS. THE AO SUBMITTING REMAND REPORT, AS IT APPEARS, HAS GIVEN MUCH STRESS ON THE FACT THAT THOSE DOCUMENTS IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 46 WERE IMPOUNDED FROM THE BUSINESS PREMISES OF THE ASSESSEE WHILE OBSERVING THAT THE ASSESSEE CANNOT DENY THAT TRAN SACTION DOES NOT BELONG TO HIM. THIS OBSERVATION OF THE AO IS COMPLETELY IMAGINARY. MERE IMPOUNDING OF ANY PAPERS/DOCUMENTS OF A THIRD PARTY FROM THE BUSINESS PREMISES, WHICH DO NOT BELONG TO OR PERTAIN TO ASSESSEE DOES NOT IPSO FACTO PROVES THAT THE TRANS ACTIONS APPEARING THEREIN MUST RELATE TO THE ASSESSEE WITHOUT FURTHER CORROBORATION OF MATERIALS GATHERED FROM THOSE THIRD PARTIES, SPECIFICALLY WHEN THE TRANSACTIONS THEREIN WAS DENIED BY THE ASSESSEE. IN THIS RESPECT IT IS HUMBLY SUBMITTED THAT THE DOCUM ENTS UNDER MFP 30 WERE PART OF ACCOUNTS OF THIRD PARTIES, THE ENTRIES THEREIN IS COMPLETELY DENIED BY THE ASSESSEE AND THEREFORE, THE ASSESSEE REQUESTED TO SUMMON/EXAMINE THOSE PARTIES. WITHOUT SUMMONING/EXAMINING THOSE PARTIES AND GIVING OPPORTUNITY OF CR OSS EXAMINATION TO THE ASSESSEE, ALLEGATION OF SALES TRANSACTION WITH THOSE PARTIES AND THEREAFTER MAKING ADDITION IS IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 14. IN THIS REGARD IT IS ONCE AGAIN REITERATED THAT THE ASSESSEE RIGHT FROM BEGINNING IS DENYING TO HAVE SOLD BRAN/HUSK TO SHRI SHYAM PRODUCTS/RADHE KRISHNA. IT IS HUMBLY SUBMITTED THAT DURING THE ASST. YEAR 2014 - 15 THE ASSESSEE HAS NEVER SOLD RICE BRAN/HUSK TO SHREE SHYAM PRODUCT AND RADHE KRISHNA AS ALLEGED. THE COPY OF PAGE NO.9 - 10, PAGE 11 , PAGE - 22 & 23, PAGE - 24 & 25, PAGE - 15, PAGE - 20 & 21 & PAGE - 40,41 & 42 OF MFP - 30 (PLACED AT PAGES 1 TO 13) IMPOUNDED DURING THE YEAR ARE UNSIGNED LOOSE SHEETS OF THIRD PARTIES AND THEREFORE, THE CONTENTS THEREIN CANNOT BE IMPLICATED AGAINST THE ASSESSEE WITHOUT EXAMINING THOSE PARTIES. 15. THAT AS REGARDS ALLEGATION OF SALES OF HUSK, IT IS HUMBLY SUBMITTED THAT THE ASSESSEE HAD USED THE HUSK OBTAINED FROM MILLING OF PADDY AS FUEL FOR STEAM GENERATION WHICH IS ESSENTIAL FOR RUNNING THE BROILER FOR THE PU RPOSE OF MILLING OF RICE OUT OF PADDY. THE ASSESSEE HAS NEVER SOLD HUSK TO ANYBODY. 16. THAT AS REGARDS BRAN, IT IS FURTHER SUBMITTED THAT DURING THE AY UNDER CONSIDERATION THE ASSESSEE HAD THE STOCK OF BRAN AS UNDER : OPENING BALANCE 35.45 QNTLS BRAN OBTAINED FROM MILLING PROCESS 5548.00 QNTLS SOLD 5409.40 QNTLS SHORTAGE 0.05 QNTL CLOSING BALANCE 174.00 QNTLS IN SUPPORT, COPY OF STOCK STATEMENT IS PLACED AT PAGE 14 ) AND THE COPY OF BRAN SALE REGISTER IS PLACED AT PAGES 15 & 16). 17. FROM THE BRAN SALE REGISTER IT MAY KINDLY BE SEEN THAT DURING THE AY UNDER CONSIDERATION BRAN WAS SOLD ONLY TO IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 47 M/S.BARGARH RICE MILLERS CONSORTIUM PVT. LTD AND NOT TO ANY OTHER PARTY, WHICH IS WELL VERIFIABLE FROM THE BRAN SALE REGISTER MAINTAINED BY THE ASSESSEE W HICH SALES HAVE BEEN DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. FURTHER, NOTHING HAS BEEN UNEARTHED DURING THE COURSE OF SEARCH POINTING OUT ANY EXCESS RECEIPT OF BRAN OVER AND ABOVE WHAT THE ASSESSEE HAD ACTUALLY RECEIVED FROM MILLING OF GOVERNMENT PADDY AND DULY DISCLOSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. 18. THAT THE AO HAS MADE THE IMPUGNED ADDITION IN RESPECT OF ALLEGED SALES OF BRAN/HUSK TO M/S.SHREE SHYAM PRODUCTS/RADHE KRISHAN. THE ASSESSEE HAS RIGHT FROM BEGINNING DENIED T O HAVE ANY BUSINESS RELATIONSHIP WITH M/S.SHREE SHYAM PRODUCTS EITHER BY THE ASSESSEE OR BY ANY OF HIS FAMILY MEMBERS, WHICH CAN BE SEEN FROM THE STATEMENT OF SRI SANJAY SHARMA (ASSESSEE) RECORDED ON THE DATE OF SEARCH I.E., DT.22.08.2013 (COPY OF RELEVANT PORTION PLACED AT PAGE 17) WHEN HE CATEGORICALLY STATED AS UNDER: Q.38. YOU/YOUR FAMILY MEMBERS/YOUR BUSINESS CONCERNS IN WHICH WAY RELATED TO SHYAM PRODUCTS AND WHAT IS THE BUSINESS TRANSACTIONS ? ANS. I/MY FAMILY MEMBER ARE NOT RELATED TO ANY BUSIN ESS TRANSACTIONS WITH M/S. SHYAM PRODUCTS. 19. THAT THE ASSESSEE HAS MADE VARIOUS SUBMISSIONS IN THIS REGARD IN PARAGRAPHS 23 TO 25 OF THE WRITTEN SUBMISSIONS ON PAGES 30 TO 33, FILED EARLIER. 20. IN VIEW OF THE ABOVE, IT IS PRAYED BEFORE YOUR HONOUR THAT THE WRITTEN SUBMISSIONS FILED EARLIER AND THIS COUNTER TO REMAND REPORT AND FURTHER SUBMISSIONS, IF ANY, TO BE MADE AT THE TIME OF HEARING OF THE APPEAL MAY KINDLY BE CONSIDERED AND ALLOW APPROPRIATE RELIEF ON THIS ISSUE. 5.5. THAT IN A REJOINDER D T.14.06.2018 CONTAINING 11 PAGES SUBMISSIONS ALONG WITH ENCLOSURES CONTAINING 23 PAGES (COPY ENCLOSED AS ANNEXURE - IV ) WHEREIN VIDE PARAGRAPH 12 IT WAS SPECIFICALLY STATED THAT THE CHEQUE NO.386848 OF UNITED STATE BANK OF INDIA WAS RECEIVED FROM BARGARH RIC E MILLER CONSORTIUM PVT. LTD AND NOT FROM M/S.SHREE SHYAM PRODUCTS AS APPEARED IN THE SEIZED LEDGER ACCOUNT MFP - 30. THE ASSESSEE PRODUCED COPY OF THE SAID CHEQUE, BANK STATEMENT, CERTIFICATE FROM UNITED BANK OF INDIA. THE RELEVANT PORTION OF PARAGRAPH 12 I S AS UNDER: 12. THAT IT MAY KINDLY BE NOTICED THAT FROM MFP - 30 THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF SHREE SHYAM PRODUCTS ( PAGE 4 HEREOF ) THE SAID PARTY HAS SHOWN TO HAVE PAID RS.4,11,824 BY CHEQUE NO.386848 OF UNITED BANK OF INDIA . THIS I S COMPLETELY FALSE. ACTUALLY CHEQUE NO.386848 WAS ISSUED BY BARGARH RICE MILLERS CONSORTIUM PVT.LTD., AND IT WAS DULY DEPOSITED BY THE ASSESSEE IN THE UNITED BANK OF INDIA. IN SUPPORT, COPY OF THE SAID CHEQUE AND BANK STATEMENT, CERTIFICATE FROM UNITED BAN K OF INDIA ( PAGES 18,19,20 RESPECTIVELY ). THAT ON ENQUIRY FROM THE BANK IT IS ASCERTAINED THAT THERE IS NO ACCOUNT IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 48 OPENED IN THE NAME OF SHREE SHYAM PRODUCTS. THE CERTIFICATE ISSUED BY THE BANK IS PLACED ON PAGE 21 , WHICH READS AS UNDER: THIS IS TO CERTI FY; THAT WE HAVE NOT OPENED ANY SUCH ACCOUNT IN THE NAME OF M/S. SHREE SHYAM PORODUCTS TILL DATE. THIS CERTIFICATE HAS BEEN ISSUED ON REQUEST OF THE CUSTOMER WITHOUT SEEKING ANY LIABILITY ON THE PARTS OF THE ISSUING AUTHORITY. 5.6. THAT FROM THE FACTS A ND CIRCUMSTANCES STATED ABOVE, IT MAY KINDLY BE APPRECIATED THAT THE IMPOUNDED DOCUMENT MFP - 30 IS THE ALLEGED LEDGER ACCOUNT OF MAHARAJA FOOD PRODUCTS (ASSESSEE) IN THE BOOKS OF SHRI SHYAM PRODUCTS, WHICH CONTAINS BOTH CHEQUE PAYMENT AS WELL AS CASH PAYMEN T. THE ASSESSEE RIGHT FROM BEGINNING IS DENYING OF HAVING ANY BUSINESS RELATIONSHIP WITH M/S.SHYAM PRODUCTS. THE PAYMENT BY CHEQUE SHOWN IN THE SAID DOCUMENT MFP - 30 AS PAID BY M/S.SHYAM PRODUCT IS FALSE AS THE SAID CHEQUE WAS ACTUALLY RECEIVED FROM BARGARH RICE MILLER CONSORTIUM PVT. LTD AND NOT FROM M/S.SHREE SHYAM PRODUCTS IN SUPPORT OF WHICH THE ASSESSEE PRODUCED THE COPY OF CHEQUE, BANK STATEMENT, CERTIFICATE FROM THE BANK. THE AO HAS ACCEPTED THE EVIDENCE AND HAS AGREED TO THE ASSESSEE ON THIS ISSUE IN THE REMAND REPORT. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE SUPPORTING EVIDENCES/DOCUMENTS PRODUCED BY THE ASSESSEE BEFORE HIM, THE LEARNED CIT(A) IS PERFECTLY JUSTIFIED IN HOLD ING THAT THE ALLEGED LEDGER ACCOUNT IN MFP - 30 OF THE ASSESSEE IN BOOKS OF SHRI SHYAM PRODUCTS IS NEITHER RELIABLE NOR VALID AND THUS DELETING THE IMPUGNED ADDITION IN THIS REGARD. IT IS PRAYED BY THE ASSESSEE THAT THE SAID ORDER OF THE LEARNED CIT(A) ON TH IS ISSUE MAY KINDLY BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE IN THIS REGARD MAY KINDLY BE DISMISSED. 6. GROUNDS NO. (IX) TO (XI) AS RAISED BY THE REVENUE READ AS UNDER: (IX) THAT THE LD.CIT(APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.1,28,72,786 ON A/C OF SHORTAGE OF STOCK OF PADDY AND BRAN AND RS.13,47,352 ON A/C OF EXCESS OF RICE AND BROKEN RICE. (X) THAT THE LD. CIT(APPEALS) HAS FAILED TO NOTICE THE FACT THAT THE INVENTORY OF STOCK WAS TAKEN BY THE SURVEY PARTY IN PR ESENCE OF THE MANAGER SRI DEEPAK SHARMA WITH THE HELP OF THE STAFF MEMBERS OF THE ASSESSEE CONCERN AND NO SATISFACTORY AND CONVINCING REPLY WAS GIVEN BY SRI SHARMA WHEN HE WAS CONFRONTED WITH THE STOCK DIFFERENCE DURING THE COURSE OF SURVEY OPERATION. NO R ECONCILIATION OF STOCK DIFFERENCE WAS PRODUCED BY THE ASSESSEE LATER ON ALSO. (XI) THAT THE LD. CIT(APPEALS) HAS IGNORED THE FACT THAT THE ASSESSEE WAS UNABLE TO EXPLAIN THE SHORTAGE OF STOCK OF PADDY AND BRAN AND THE EXCESS OF STOCK OF RICE AND BROKEN RI CE DURING THE ASSESSMENT PROCEEDING AS WELL AS REMAND PROCEEDING BEFORE A.O. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 49 HENCE LD. CIT(APPEALS) IS NOT JUSTIFIED IN DELETING THE ADDITION ON THIS GROUND. 6.1. THAT DURING THE COURSE OF SURVEY OPERATION THE SURVEYING PARTY REPORTED STOCK DISCREPANCY O N COMPARISON OF THE STOCK AS PER BOOKS AND STOCK FOUND ON PHYSICAL VERIFICATION AS UNDER: ITEMS STOCK AS PER BOOKS (QTLS) STOCK FOUND ON PHYSICAL VERIFICATION (QTLS) EXCESS/SHORTAGE (QTLS) PADDY 36,077* 25,935 ( - ) 10,245 RICE 3,808.70 4,354 (+) 545.30 B ROKEN RICE 123.72 409 (+) 285.28 BRAN 139.67 56.25 ( - ) 83.42 DURING THE SURVEY OPERATION SRI DEEPAK SHARMA, THE PERSON PRESENT THEN STATED THAT THE STOCK INVENTORY WAS TAKEN ON EYE ESTIMATE. DURING THE POST - SEARCH INVESTIGATION WHILE ANSWERING TO QUESTIO N 5, SHRI SHARMA REPEATED THAT THE DIFFERENCE OF STOCK FOUND DURING THE COURSE OF SURVEY MAY BE DUE TO EYE ESTIMATION. THESE STATEMENT DOES NOT FIND FAVOUR OF THE AO. THEREFORE, THE AO ESTIMATED THE PRICE OF THE EXCESS/SHORTAGE STOCK FOUND AND MADE THE IMP UGNED ADDITION OF RS.1,28,72,786 ON A/C OF SHORTAGE OF STOCK OF PADDY AND BRAN AND RS.13,47,352 ON A/C OF EXCESS OF RICE AND BROKEN RICE. 6.2. THAT DURING THE APPEAL PROCEEDINGS, THE ASSESSEE FILED A WRITTEN SUBMISSIONS ( ANNEXURE - II ) AND IN PARAGRAPHS 26 TO 32 THEREOF HAS MADE ELABORATE SUBMISSIONS WHICH HAVE BEEN QUOTED IN THE APPELLATE ORDER, READS AS UNDER : 26. IN THESE TWO GROUNDS FOLLOWING TWO ADDITIONS ARE DISPUTED (V) ADDITION OF RS.1,28,72,786 ON THE ALLEGED SHORTAGE OF STOCK OF PADDY AND BRAN, AND (VI) ADDITION OF RS.13,47,352 ON THE ALLEGED EXCESS OF RICE & BROKEN RICE 27. THAT THE SURVEY PARTY REPORTED EXCESS/SHORTAGE OF PADDY, RICE, BROKEN RICE AND BRAN AS UNDER: ITEMS STOCK AS PER BOOKS (QTLS) STOCK FOUND ON PHYSICAL VERIFICATION (QTLS) EXCESS/SHORTAGE (QTLS) PADDY 36,077* 25,935 ( - ) 10,245 RICE 3,808.70 4,354 (+) 545.30 BROKEN RICE 123.72 409 (+) 285.28 BRAN 139.67 56.25 ( - ) 83.42 IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 50 *(THE TOTAL OF 27,977 QTS. AS PER PADDY JOINT CUSTODY AND MAINTENANCE OF STOCK REGISTER ( SEE PB PAGE 108 ) PLUS 8,100 QTLS., AS PER PADDY STOCK REGISTER (SEE PB PAGE 92). AT THE OUTSET THE ASSESSEE MAY KINDLY BE PERMITTED TO REFER TO THE INVENTORY OF STOCK OF PADDY, RICE, BROKEN RICE AND BRAN PREPARED BY THE SEARCH PARTY (CO PY PLACED AT PB PAGE NO. 81 AND 82) FROM WHICH IT CAN BE SEEN THAT THEY HAVE FIRSTLY MENTIONED THE PHYSICAL STOCK IN BAGS ON EYE ESTIMATION, THEN CONVERTED INTO QUINTALS BY ADOPTING UNIQUE CONTENTS IN EACH BAG AND THEN COMPARED WITH THE STOCKS MENTIONED IN THE STOCK REGISTER (IMPOUNDED). THE ASSESSEE HUMBLY SUBMITS THAT THE ENTIRE PROCESS OF STOCK INVENTORY AND WORKING OUT THE EXCESS/SHORTAGE OF STOCK ARRIVED AT BY THE SEARCH PARTY IS COMPLETELY ERRONEOUS AND ALSO COMPLETELY BASED ON EYE ESTIMATION AND NOT BY ACTUAL WEIGHMENT OF THE STOCKS OF PADDY/RICE/BRAN ETC., WHEN MEN POWER AND WEIGHING MACHINES ARE AVAILABLE IN THE MILL PREMISES. IT IS FURTHER SUBMITTED THAT AT THE TIME OF SURVEY, WHEN ASKED, IT WAS EXPLAINED THAT THERE SHOULD NOT BE SUCH DIFFERENCE OF STOCK. IT IS BECAUSE THE STOCK INVENTORY WAS TAKEN ON EYE ESTIMATE. THE SAME STAND WAS ALSO TAKEN BEFORE THE LEARNED ASSESSING OFFICER. HOWEVER, THE LEARNED ASSESSING OFFICER DID NOT BELIEVE THE SAME AND PROCEEDED TO ESTIMATE THE PRICE OF THE ABOVE STOCKS AT RS.1,28,72,786 (RS.1,28,06,250 FOR PADY + RS.66,376 FOR BRAN) AND RS.13,47,352 (RS.10,90,600 FOR RICE + RS.2,56,752 FOR BROKEN RICE) AND MADE THE ADDITION ON THIS COUNT TO THE DISCLOSED INCOME. 28. THAT THE ASSESSEE RUNS A RICE MILL NAMED M/S. MAHAR AJA FOOD PRODUCTS AND IS ENGAGED IN THE CUSTOM MILLING BUSINESS FOR MILLING OF PADDY TO RICE OF ITS PRINCIPALS AND SALE OF BYE PRODUCTS I.E., BROKEN RICE, BRAN. 29. THAT IN THIS RESPECT, THE ASSESSEE HAS REPLIED TO THE QUESTIONER ISSUED BY THE AO, VI DE REPLY TO SL. NO.9 ( SEE PB 15 TO 21 ) , AS UNDER : REPLY TO SL.NO.9 OF THE NOTICE UNDER REFERENCE FOR ASST. YEAR 2014 - 15. IN REPLY TO SL. NO.9 THE ASSESSEE HAS BEEN ASKED TO CLARIFY THE STOCK DISCREPANCY FOUND IN COURSE OF SURVEY IN THE MILL PREMISES O N 21.08.2013 TO 22.08.2013 AN ESTIMATED THE VALUE OF EXCESS/SHORTAGE FOUND AT RS.1,28,72,786/ - AND RS.13,47,352/ - SHALL NOT BE ADDED TO YOUR TOTAL INCOME. IN THIS REGARD THE ASSESSEE MAY KINDLY BE ALLOWED TO FORTH THE FACTS & FIGURE FOR KIND APPRECIATION O F THE CASE. AT THE OUTSTATE THE ASSESSEE AGAIN PRAYS THAT COPY OF THE CALCULATION SHEET PREPARED FOR TAKING/DETERMINE THE STOCK OF GOODS SUCH AS PADDY, RICE, BROKEN RICE & BRAN KEPT IN DIFFERENT FOUR BIG GODOWNS, VERANDA, PADDY CHALANA, RAW PADDY SILO, AB OVE HANDI STORAGE, IN HANDI, IN DRIER, PARBOILED SILO IN MILL PREMISES, SCATTERED PADDY IN MILLING SIDE. THAT THE ASSESSEE M/S. MAHARAJA FOOD PRODUCTS (MFP IN SHORT) IS ENGAGED IN THE BUSINESS OF MILLING OF PADDY & SALE OF RICE PRODUCE AND BY IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 51 PRODUCT S BROKEN RICE, BRAN. IN ORDER TO EFFECTUATE THE BUSINESS ACTIVITIES THE ASSESSEE HAS INSTALLED A RICE MILL UNIT IN THE NAME & STYLE OF M/S. MAHARAJA FOOD PRODUCTS, PO: CHAKARKEND, DIST :BARGARH. THE FIRST COMMERCIAL PRODUCTION WAS COMMENCED ON 03.11.2004 I .E. DURING THE ASST. YEAR 2005 - 06. THAT FOR THE AFORESAID ACTIVITIES THE ASSESSEE IS REGISTERED UNDER THE ODISHA VALUE ADDED TAX ACT 2004/ CENTRAL SALES TAX ACT 1956 AND ENTRY TAX ACT 1999 BEING A REG. NO. TIN - 21711700794 /CST - 21711700794(C)/ ET - 21711 700791(ET) HAVING ONLY, A REGISTERED OFFICE AT THE MILL PREMISES AND OTHER THAN IT, THERE IS NO OTHER OFFICE OF THE ASSESSEE. COPY OF THE REGISTRATION CERTIFICATE ISSUED UNDER THE OVAT ACT 2004 IS ENCLOSED HEREWITH. THAT THE MILLING OF PADDY AND SALE O F RICE ARE UNDER THE CONTROL AND REGULATED BY THE ESSENTIAL SUPPLIES ACT AND THE STOCK OF PADDY & RICE IN POSSESSION OF THE ASSESSEE ON BEHALF OF THE OSCSC LTD. ARE FROM TIME TO TIME CHECKED BY THE FOOD & SUPPLY DEPARTMENT, GOVT. OF ORISSA. THEY PERIODICAL LY AND REGULARLY CHECK THE REGISTERS AND PUT THEIR INITIALS IN SUPPORT OF HAVING INSPECTED THE STOCK OF PADDY AND RICE AND VERIFIED THE PHYSICAL STOCK WITH ACCOUNTS. DURING THE ASST. YEAR 2014 - 15 THE CIVIL SUPPLY AUTHORITY OFFICIALS INSPECTED THE ASSESSEE MILL PREMISES AND VERIFIED PHYSICALS STOCK OF PADDY AND RICE ON DIFFERENT OCCASION AND TIMES I.E. ON 01.04.2013, 21.04.2013, 12.05.2013, 24.05.2013, 18.06.2013, 10.07.2013, 05.08.2013 & 16.08.2013 JUST FIVE DAYS BEFORE THE DATE OF SURVEY CONDUCTED ON 21.08 .2013. NO DISCREPANCIES EITHER IN PADDY ACCOUNT OR RICE ACCOUNT THEY FOUND AND ACCEPTED. THE PHYSICAL STOCK OF PADDY AND RICE ARE TALLIED WITH THE STOCK REGISTER. THEY PUT THEIR SIGNATURE IN THE STOCK REGISTER IN SUPPORT OF HAVING INSPECTED THE STOCK OF PA DDY & RICE AND VERIFIED THE PHYSICAL STOCK WITH ACCOUNTS ON DIFFERENT DATE OF INSPECTION AS STATED HEREIN BEFORE. THAT CIVIL SUPPLY OFFICIAL HAS NOT DETECTED ANY OMISSION OR COMMISSION AS THERE IS NO COMMENTS BY THOSE AUTHORITIES IN THIS REGISTER. THEY H AVE NO COMMENTS ANYTHING ADVERSELY REGARDING MAINTENANCE OF STOCK REGISTER. REGISTERS ARE IMPOUNDED U/S.133A OF THE ACT AND LAYING WITH THE DEPARTMENT SINCE THEN. THAT THE SAID REGISTERED I.E. PADDY & RICE STOCK REGISTER HAS BEEN IMPOUNDED UNDER IDENTIFICA TION NO. MFP - 40 PAGES - 1 TO 20. THE SAID REGISTER IS STILL TODAY LAYING IN YOUR HONOUR POSSESSION & CUSTODY. THAT THE ASSESSEE UNDERTAKES CUSTOM - MILLING FOR M/S. ORISSA STATE CIVIL SUPPLIES CORPORATION LTD.(OSCSC LTD.) BESIDES HE ALSO WAS THE AGENT OF MARK FED, NAFED, NCMSL, PACS AND FCI. THAT FOR THE PURPOSE OF CUSTOM MILLING THE ASSESSEE HAS ENTERED IN TO AN AGREEMENT WITH THE ORISSA STATE CIVIL SUPPLIES CORPORATION LTD(OSCSC LTD. /ORISSA STATE CO - OPERATIVE MARKETING FEDERATION LTD.(MARKFED) ORISSA; IN T ERMS OF SUCH AGREEMENT THE PRINCIPAL SUCH AS MARKFED, ORISSA SHALL PURCHASE PADDY DIRECTLY FROM THE FARMERS AND THE ASSESSEE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 52 CUSTOM MILLER WILL TRANSPORT THE SAME FROM THE MARKET YARD ON PAYMENT OF CHARGE WITHIN THE LIMIT PRESCRIBED; THAT AFTER MILLING, RI CE OF SPECIFIED QUALITY AS PER THE OUT TURN RATIO FIXED IS DELIVERED. THUS IT IS CLEARLY EVIDENT THAT WHATEVER THE STOCKS OF PADDY AND RICE ARE FOUND AT MILL PREMISES BELONG TO THE PRINCIPAL OSCSC/MARKFED. AND THAT THE OWNERSHIP OF SUCH STOCKS ARE OF THE PRINCIPAL. THE ASSESSEE IS ONLY A CUSTOM MILLING AGENT. A STATEMENT HAS BEEN RECORDED U/S.133A OF THE INCOME TAX ACT FROM SHRI DEEPAK SHARMA IN COURSE OF SURVEY PROCEEDINGS IN THE MILL PREMISES ON 21.08.2013 & 22.08.2013. THE SURVEY PARTY PUTS THE QUEST ION. RELEVANT QUESTION FOR PRESENT PURPOSES ARE QUOTED AS FOLLOWS 6Q. WHAT ARE THE BOOKS OF ACCOUNT MAINTAINED BY M/S. MAHARAJA FOOD PRODUCTS ? A. WE MAINTAIN STOCK REGISTER FOR PADDY, RICE, BRAN AND BROKEN RICE. 7Q. DO YOU MAINTAIN PURCHASE AND SALE REGI STERS ? A. WE DO NOT MAINTAINED PURCHASE AND SALE REGISTER FOR PADDY AND RICE, BECAUSE WE DO NOT PURCHASE PADDY AND SALE RICE. WE RECEIVE PADDY FROM ODISHA STATE CIVIL SUPPLY CORPORATION AND MARKFED. IN OUR MILL, WE PROCESS PADDY AND PRODUCE RICE AND SUPP LY THE SAME TO ODISHA STATE CIVIL SUPPLY CORPORATION AND MARKFED. WE ARE ONLY DOING CUSTOM MILLING AND RECEIVE MILLING CHARGES AND INCIDENTAL CHARGES SUCH AS HANDLING (LABOUR) CHARGES AND TRANSPORTATION CHARGES ETC. WE RECEIVE MILLING CHARGES @ RS.25/ - PER QUINTAL. THUS, SINCE WE DO NOT PURCHASE PADDY AND SALE RICE, WE ARE NOT MAINTAINING PURCHASE AND SALE REGISTERS. HOWEVER, WE MAINTAIN SALE REGISTER FOR BRAN AND BROKEN RICE AND PURCHASE REGISTER FOR MATERIALS PURCHASE. THERE WAS A SURVEY ON 21.08.2013 & 22.08.2013 WHEN THE MILLING WHICH IN CONTINUOUS MILLING FROM 16.08.2013 TO 20.08.2013, THE ASSESSEE WAS ADVISE TO STOP THE MILLING PROCESS, HENCE THERE IS NO MILLING FROM 21.08.2013 & 22.08.2013. HENCE THE RICE, BROKEN RICE, BRAN RECEIVED OUT OF MILLING I .E. (FROM 16.08.2013 TO 20.08.2013) WERE SCATRED IN MILLING HOUSE, VERANDA AND AT DIFFERENT PLACES. THEY COULD NOT BE WEIGHT, PACKET PROPERLY IN THE BAGS AND ALSO THE KUNDA MIXED WITH THE OUT TURN OF RICE COULD NOT BE SEGREGATED THROUGH CHALANA. AGAIN RAW PADDY IN LOOSE SCATRED BEFORE CHALANA, CLEAN PADDY STORAGE, PADDY STORED IN EIGHT NUMBERS HANDI LOADED FOR BOILING, STORAGE SITUATED ABOVE HANDI, DRIER, PARBOILED PADDY STORAGE IN MILL PREMISES. THE STOCK OF PADDY AS KEPT DIFFERENT STORING PLACES AS MENTIO NED ABOVE HAS NOT TAKEN INTO CONSIDERATION WHILE TAKING THE PHYSICAL VERIFICATION OF THE STOCK OF PADDY. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 53 THE FACTS AS STATED ABOVE IS EVIDENT ITSELF BY LOOKING THE MANNER THE SEARCHING OFFICIAL PARTIES HAS TAKEN THE PHYSICAL STOCK OF PADDY ON ESTIMATION A S THEY HAVE TAKEN THE STOCK OF PADDY ONLY KEPT IN DIFFERENT FOUR LARGE & BIG GODOWNS HAVING CAPACITY OF MORE THAN FORTY THOUSAND BAGS AT A TIME EACH. DATE OF SEARCH INVENTORY OF STOCKS FOUND/SEIZED (PADDY) RESTRAINED AT THE PREMISES SL. NO. DESCRIPTION Q UANTITY IN NOS. OF WT. VALUE 01. VERANDAHA GODOWN NO. - 1 10505 BAG RS. 55,15,125/ - 02. GODOWN NO - 2 27500 BAG RS.1,44,37,500/ - 03. VARANDAHA GODOWN NO.3 5900 BAG RS. 30,97,500/ - 04. GODOWN NO - 4 17600 BAG RS. 92,40,000/ - TOTAL 61505 BAG RS.3,22,90,125 / - 61,505.00 X 42 KG. X 1250 = RS.3,22,90,125/ - 100 61505 X 42 = 25832 QTL. 100 STOCK OF PADDY KEPT AT DIFFERENT GODOWN HAS BEEN ESTIMATED TAKING EACH BAG @ 42 WHICH IS NOT A FACT AT ALL IN REALITY. THE STOCK OF PADDY IN BAG ARE NOT STORED AT A UNIFORM QUANTITY, GENERALLY IT IS ALSO A FACT THAT BAG/PACKETS CONTENTS PADDY EITHER 40 KG. TO 50 KG. AND AT TIMES THE BAGS CONTENTS 74 OR 75 KG. THERE IS NO ACTUAL WEIGHMENT THOUGH ALL THE FACILITIES REQUIRED FOR THE PURPOSE OF WEIGHM ENT WERE AVAILABLE. LIKEWISE THE STOCK OF BROKEN RICE & BRAN SCARRED AT DIFFERENT PALACES IN MILLING PREMISES ARE ESTIMATED CONTAINING THE RICE @ 50 KG. PER BAG, BROKEN RICE @ 50 KG. PER BAG AND BRAN @ 45 KG. PER BAG AND CALCULATED AS FOLLOWS - DATE OF SEA RCH INVENTORY OF STOCKS FOUND/SEIZED RESTRAINED AT THE PREMISES SL. NO. DESCRIPTION QUANTITY IN NOS. OF WT. TOTAL QUANTITY IN ALL 01. RICE 8708 BAG (50 KG. PER BAG) 4354 QTL. 02. BROKEN RICE 818 BAG (50 KG. PER B AG) 409 QTL. 03. BRAN 125 BAG (45 KG. PER BAG) 56.25 QTL. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 54 THUS ON THE BASIS OF THE INVENTORY OF THE STOCK, THE FOLLOWING DISCREPANCY OF STOCK ARE FOUND AS FOLLOWS - ITEMS STOCK AS PER BOOKS (QTLS) STOCK FOUND ON PHYSICAL V ERIFICATION (QTLS) EXCESS/ SHORTAGE (QTLS) PADDY 36077 25832 ( - ) 10245 RICE 3808.70 4354 (+) 545.30 BROKEN RICE 123.72 409 (+) 285.28 BRAN 139.67 56.25 ( - ) 83.42 PADDY & RICE AS PER BOOKS OF ACCOUNT ON 21.08.2013. AG ENCY PADDY (IN QTLS) RICE (IN QTLS) MARKFED NIL NIL O.C.S.C.S. 36077 3808.70 TOTAL 36077 3808.70 AS PER SURVEY REPORT 25832 4354.00 SHORTAGE/EXCESS ( - ) 10245 (+) 545.30 THE SHORTAGE/EXCESS IN PADDY & RICE ARE DUE TO EYE ESTIMATION AND FURTHER TAKING THE EACH BAG AT A UNIFORM QUANTITY OF 42 KG. IN PADDY AND 50 KG. IN RICE RESPECTIVELY. THIS SAMPLE METHOD OF CALCULATING IS UNSCIENTIFIC AND UNSUSTAINABLE IN THE DAY TO DAY BUSINESS AND ALSO IN THE EYE OF LAW. THERE IS NO PHYSICAL WEIGHMENT THOUGH EVERY KIND OF FACILITIES LIKE AUTOMATIC KANTA (WEIGHING MACHINE) ARE AVAILABLE IN THE MILL PREMISES ITSELF. EVEN THE LABOURS FOR IT ARE ALSO AVAILABLE. THE ASSESSEE FEELS SORRY TO SAY THAT HE HAD MADE A PRAYER EARLIER TO SUPPLY THE CALCULATION SHEET HOW T HE QUANTITY OF PADDY KEPT IN EACH BIG GODOWN ARE DETERMINED. THERE MAY BE CERTAIN MISTAKE IN CALCULATION, ADDITION AND SUBTRACTION OR OTHERWISE WHILE TAKING THE INVENTORY OF THE STOCK OF GOODS AND IN COUNTING AND IN PREPARATION WHILE TAKING THE PHYSICAL ST OCK OF GOODS. THE ASSESSEE ALSO STATES WHEN DEEPAK SHARMA WHILE RECORDING THE STATEMENT U/S.133A ON 22.08.2013 WAS ASKED TO EXPLAIN THE EXCESS/SHORTAGE OF DIFFERENT ITEMS (Q.21 OF THE STATEMENT DT.22.08.2013) A. IN MY OPINION THERE SHOULD NOT BE SUCH DIF FERENCE OF STOCK. FURTHER, THE STOCK INVENTORY HAS BEEN TAKEN AN EYE ESTIMATE. HOWEVER, I WILL EXPLAIN THIS DIFFERENCE LATER ON AFTER GOING THROUGH OUR RECORDS. WITH REGARD TO EXCESS OF RICE AS CALCULATED IS DUE TO ON EYE ESTIMATION, FURTHER THE YIELD OF RICE OUT OF MILLING OF PADDY FROM 16.08.2013 TO 20.08.2013 WERE SCARRED IN THE MILLING HOUSE. THAT STOCK AS ESTIMATED AS PER THE PRESCRIBED FORMULA, ACTUALLY THERE IS NO PHYSICAL WEIGHMENT. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 55 WHATEVER THE STOCK EITHER OF PADDY OR RICE CALCULATED ON ESTIM ATION BELONGS TO OSCSC LTD. HONOURSHIP OF THE SAID ITEMS OF GOOD WITH THE PRINCIPAL WHO TRANSPORTS THE PADDY FROM MARKET YARD TO THE ASSESSEE FOR CUSTOM MILLING. THERE IS NO QUESTION OF EITHER OF SHORTAGE OF PADDY OR EXCESS OF RICE IT IS DUE TO ESTIMATION NOT FOR PROPER WEIGHMENT SCIENTIFICALLY. IN CASE OF BROKEN RICE IT IS SUBMITTED THAT DAY TO DAY YIELD OF BROKEN RICE FROM 16.08.2013 TO 20.08.2013 OUT OF MILLING IN A RAW STAGE LAYING ON THE FLOOR OF IN THE MILLING HOUSE. IT WAS MIXED WITH HUSK, KUNDA, SA ND & OTHER MATERIALS WHICH WERE YET TO BE CLEANED. IN CASE OF BRAN THE SALE TO THE TUNE OF 90 QTLS AFFECTED ON THE DAY OF SURVEY I.E. 21.08.213 WAS NOT DEDUCTED FROM THE OPENING BALANCE IN ORDER TO ARRIVE AT CLOSING BALANCE. THE SAID SALE OF BRAN HAS BEEN EFFECTED TO A VAT REGISTERED DEALER M/S. BARGARH RICE MILLER CONSOTORIUM LTD. VIDE TAX INVOICE NO. 1121, DT.21.08.2013, BRAN 90 QTLS. FOR RS.94,500/ - WHICH IS INCLUSIVE OF VAT CHARGED AT RS.4,500/ - VEHICLE NO. OR17C - 7574 WHICH HAS BEEN DULY REFLECTED IN V AT RETURN. THERE WILL BE NEGLIGENCE/TOLERANCE SHORTAGE IF IT IS CONSIDERED. (COPY OF THE BILL ENCLOSED AND MARKED AS ANNEXURE H THE SEARCHING PARTY DURING THE SURVEY DID NOT FIND ANY VALUABLE ASSETS OR ANY INCRIMINATING MATERIAL OR PAPERS AGAINST THE ASSESSEE. BASING ON A DISCREPANCY FOUND IN THE STOCK OF PADDY AND RICE DURING THE SURVEY VALUED IT. 29. THAT THE STOCK INVENTORY PREPARED BY THE SURVEY PARTY WAS ACTUALLY BASED ON EYE ESTIMATION AND NOT BY WAY OF ACTUAL WEIGHMENT, WHEN THE WEIGHMENT FAC ILITY IS AVAILABLE WITH THE ASSESSEE. NO WORKING SHEET FOR STOCK INVENTORY WAS PREPARED BY THE SURVEY TEAM. THEY HAVE PREPARED THE STOCK INVENTORY ON SAMPLING METHOD. FURTHER THEY HAVE NOT TAKEN INTO ACCOUNT THE STOCK OF GOODS SUCH AS, PADDY, RICE, BROKEN RICE & BRAN KEPT IN DIFFERENT FOUR BIG GODOWNS, VERANDA, PADDY CHALANA, RAW PADDY SILO, ABOVE HANDI STORAGE, IN HANDI, IN DRIER, PARBOILED SILO IN MILL PREMISES, SCATTERED PADDY IN MILLING SITE ETC. IF THE STOCKS IN THE PLANT ITSELF WHICH WAS IN THE PROCE SS OF MILLING AND MILLING SITES, WOULD HAVE BEEN TAKEN BY THE SURVEY PARTY, THERE WOULD NOT HAVE BEEN ANY DISCREPANCY. 30. FURTHER THE SURVEY TEAM, AS CAN BE SEEN FROM THE INVENTORY PREPARED BY THEM, THEY HAVE REPORTED THE STOCK IN TERM OF BAGS WITHOU T PHYSICAL COUNTING OF BAGS, RATHER ON EYE ESTIMATION, BUT SUBSEQUENTLY CONVERTED THE SAME INTO QUINTALS BY TAKING UNIQUE QUANTITY PER BAG. THE STOCK OF PADDY IN BAG ARE NOT STORED AT A UNIFORM QUANTITY, GENERALLY IT IS ALSO A FACT THAT BAG/PACKETS CONTA INS PADDY EITHER 40 KG. OR 50 KG. AND AT TIMES THE BAGS CONTAINS 74KGS OR 75 KGS. THE ACTUAL QUANTITY OF PADDY CANNOT BE ASCERTAINED WITHOUT ACTUAL WEIGHMENT OF THE SAME. THUS, THE WORKING OUT OF THE STOCK INVENTORY IS IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 56 ERRONEOUS, BECAUSE IT WAS ON THE BASI S OF EYE ESTIMATION AND NOT ACTUALLY ON WEIGHMENT. THEREFORE, THE ADDITIONS MADE ON THE BASIS OF SUCH ERRONEOUS STOCK INVENTORY AND DEDUCING EXCESS/SHORTAGE, IS NOT AT ALL JUSTIFIED AND NOT SUSTAINABLE IN THE EYE OF LAW. 30. THAT IT IS FURTHER SUBMITTED THAT THE MILLING OF PADDY AND SALE OF RICE ARE UNDER THE CONTROL AND REGULATED BY THE ESSENTIAL SUPPLIES ACT AND THE STOCK OF PADDY & RICE IN POSSESSION OF THE ASSESSEE ON BEHALF OF THE OSCSC LTD., ARE FROM TIME TO TIME CHECKED AND VERIFIED BY THE FOOD & S UPPLY DEPARTMENT, GOVT. OF ORISSA. THEY PERIODICALLY AND REGULARLY CHECK THE REGISTERS AND PUT THEIR INITIALS IN SUPPORT OF HAVING INSPECTED THE STOCK OF PADDY AND RICE TALLYING WITH THE PHYSICAL STOCK WITH ACCOUNTS. DURING THE ASSESSMENT YEAR 2014 - 15 THE CIVIL SUPPLY AUTHORITY OFFICIALS INSPECTED THE ASSESSEES MILL PREMISES AND VERIFIED PHYSICALS STOCK OF PADDY AND RICE ON DIFFERENT DATES I.E., ON 01.04.2013, 21.04.2013, 12.05.2013, 24.05.2013, 18.06.2013, 10.07.2013, 05.08.2013 & 16.08.2013 JUST FIVE DAY S BEFORE THE DATE OF SURVEY CONDUCTED ON 21.08.2013, AS CAN BE SEEN FROM THE COPY OF THE PADDY STOCK REGISTER AND RICE STOCK REGISTER AND JOINT CUSTODY STOCK REGISTER, WHICH ARE IMPOUNDED BY THE SEARCH PARTY IS PLACED AT PB PAGE NOS. 83 TO 108 . NO DISCREP ANCIES, WHATSOEVER, EITHER IN PADDY ACCOUNT OR RICE ACCOUNT WERE NOTICED OR REPORTED BY THEM. THE PHYSICAL STOCK OF PADDY AND RICE ARE TALLIED WITH THE STOCK REGISTER. THEY PUT THEIR SIGNATURE IN THE STOCK REGISTER IN SUPPORT OF HAVING INSPECTED THE STOCK OF PADDY & RICE AND VERIFIED THE PHYSICAL STOCK WITH ACCOUNTS ON DIFFERENT DATE OF INSPECTION AS STATED HEREIN BEFORE. IN VIEW OF THIS, THE EXCESS/SHORTAGE CLAIMED TO HAVE BEEN FOUND BY THE SURVEY PARTY IS FAR FROM TRUTH AND IT WAS SO REPORTED BY THEM ONLY ON EYE ESTIMATION AND BY NON - TAKING THE STOCKS AVAILABLE IN THE MILLING PROCESS AND FURTHER ON WRONG METHOD OF CONVERTING BAGS INTO QUINTALS. FURTHER, THE CIVIL SUPPLY OFFICIALS HAVE NOT NOTICED ANY OMISSION OR COMMISSION AS THERE ARE NO COMMENTS BY THOS E AUTHORITIES IN THE REGISTERS MAINTAINED BY THE ASSESSEE. THEY HAVE NOT COMMENTED ANYTHING ADVERSELY REGARDING MAINTENANCE OF STOCK REGISTER. REGISTERS ARE IMPOUNDED U/S.133A OF THE ACT AND LAYING WITH THE DEPARTMENT SINCE THEN. THAT THE SAID REGISTER I.E . PADDY & RICE STOCK REGISTER HAS BEEN IMPOUNDED UNDER IDENTIFICATION NO. MFP - 40 PAGES - 1 TO 20 AND 21 TO 29. 31. THAT IT IS FURTHER SUBMITTED THAT THE ASSESSEE UNDERTAKES ONLY CUSTOM - MILLING FOR M/S. ORISSA STATE CIVIL SUPPLIES CORPORATION LTD.(OSCSC LT D.) BESIDES HE WAS ALSO THE AGENT OF MARKFED, NAFED, NCMSL, PACS AND FCI. FOR THE PURPOSE OF CUSTOM MILLING THE ASSESSEE HAS ENTERED IN TO AGREEMENT WITH THE ORISSA STATE CIVIL SUPPLIES CORPORATION LTD (OSCSC LTD. /ORISSA STATE CO - OPERATIVE MARKETING FEDER ATION LTD.(MARKFED) ORISSA. IN TERMS OF SUCH AGREEMENT THE PRINCIPAL SUCH AS MARKFED, ORISSA SHALL PURCHASE PADDY DIRECTLY FROM THE FARMERS AND THE ASSESSEE CUSTOM MILLER WILL TRANSPORT THE SAME FROM THE MARKET YARD ON PAYMENT OF CHARGES WITHIN THE LIMIT P RESCRIBED AND AFTER MILLING, RICE OF SPECIFIED QUALITY AS PER THE OUT - TURN RATIO FIXED BY THEM IS DELIVERED. IT IS NECESSARY TO STATE HERE THAT THE STOCK OF IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 57 PADDY KEPT IN THE MILL PREMISES WAS UNDER LOCK AND KEY OF THE OFFICIALS OF THE PRINCIPALS AS WELL A S THE ASSESSEE AND MILLING OF PADDY TAKES PLACE ONLY AFTER RELEASING OF STOCK OF PADDY BY THE SAID OFFICIALS FOR THE PURPOSE OF MILLING. THE OFFICERS OF THE PRINCIPLALS GIVE PERIODICAL CERTIFICATE ON THE VERIFICATION REPORT IT IS CERTIFIED THAT THERE IS NO MIS - APPROPRIATION/DIVERSION BY THE MILLER AND PADDY/RICE AVAILABLE HAS BEEN STORED SAFELY. FOR READY REFERENCE A SAMPLE COPY OF SUCH CERTIFICATE IS ENCLOSED HEREWITH AT PB PAGE NO. 109 AND 110 . AS ALREADY STATED, THE ASSESSEE IS REQUIRED TO DELIVER THE RICE TO THEM AND THE ASSESSEE IS DEBARRED/PROHIBITED FROM SELLING RICE TO OTHERS. THE ASSESSEE IS ENTITLED TO ONLY MILLING CHARGES. IN THIS PROCESS, WHATEVER STOCKS OF PADDY AND RICE ARE FOUND AT MILL PREMISES BELONG TO THE PRINCIPAL OSCSC/MARKFED AND THAT THE OWNERSHIP OF SUCH STOCKS ARE OF THE PRINCIPALS. THE ASSESSEE IS ONLY A CUSTOM MILLING AGENT. BECAUSE THE PADDY AS WELL AS RICE SOLELY BELONGS TO THE PRINCIPALS, THE ASSESSEE DOES NOT MAINTAIN ANY PURCHASE/SALE REGISTER BUT MAINTAINS ONLY STOCK REG ISTERS TO BE VERIFIED BY THE PRINCIPALS FROM TIME TO TIME. THIS HAS BEEN SO EXPLAINED BY THE ASSESSEE WHILE ANSWERING TO QUESTION NO.6Q AS UNDER : 6Q. WHAT ARE THE BOOKS OF ACCOUNT MAINTAINED BY M/S. MAHARAJA FOOD PRODUCTS ? B. WE MAINTAIN STOCK REGISTER F OR PADDY, RICE, BRAN AND BROKEN RICE. 7Q. DO YOU MAINTAIN PURCHASE AND SALE REGISTERS ? A. WE DO NOT MAINTAINED PURCHASE AND SALE REGISTER FOR PADDY AND RICE, BECAUSE WE DO NOT PURCHASE PADDY AND SALE RICE. WE RECEIVE PADDY FROM ODISHA STATE CIVIL SUPPL Y CORPORATION AND MARKFED. IN OUT MILL, WE PROCESS PADDY AND PRODUCE RICE AND SUPPLY THE SAME TO ODISHA STATE CIVIL SUPPLY CORPORATION AND MARKFED. WE ARE ONLY DOING CUSTOM MILLING AND RECEIVE MILLING CHARGES AND INCIDENTAL CHARGES SUCH AS HANDLING (LABOUR ) CHARGES AND TRANSPORTATION CHARGES ETC. WE RECEIVE MILLING CHARGES @ RS.25/ - PER QUINTAL. THUS, SINCE WE DO NOT PURCHASE PADDY AND SALE RICE, WE ARE NOT MAINTAINING PURCHASE AND SALE REGISTERS. HOWEVER, WE MAINTAIN SALE REGISTER FOR BRAN AND BROKEN RICE AND PURCHASE REGISTER FOR MATERIALS PURCHASE. THE LEARNED AO DID NOT CONSIDER THE ABOVE SUBMISSIONS AND BASING ON ERRONEOUS STOCK INVENTORY HAS WORKED OUT THE EXCESS/SHORTAGE IN STOCK AND MADE THE IMPUGNED ADDITION, WHICH IS NOT PROPER. 32. IN CASE OF BROKEN RICE DAY TO DAY YIELD OF BROKEN RICE FROM 16.08.2013 TO 20.08.2013 OUT OF MILLING IN A RAW STAGE WAS LAYING ON THE FLOOR OF THE MILLING HOUSE. IT WAS MIXED WITH HUSK, KUNDA, SAND & OTHER MATERIALS WHICH WERE YET TO BE CLEANED. IN CASE OF BRAN TH E SALE TO THE TUNE OF 90 QTLS AFFECTED ON THE DAY OF SURVEY I.E. 21.08.213 WAS NOT DEDUCTED FROM THE OPENING BALANCE IN ORDER TO ARRIVE AT CLOSING BALANCE. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 58 THE SAID SALE OF BRAN HAS BEEN EFFECTED TO A VAT REGISTERED DEALER M/S. BARGARH RICE MILLER CONSOTO RIUM LTD. VIDE TAX INVOICE NO. 1121, DT.21.08.2013, BRAN 90 QTLS. FOR RS.94,500/ - WHICH IS INCLUSIVE OF VAT CHARGED AT RS.4,500/ - VEHICLE NO. OR17C - 7574 WHICH HAS BEEN DULY REFLECTED IN VAT RETURN (COPY OF BILL IS PLACED AT PB PAGE NO. 104 ). IF ALL THESE A BOVE ARE TAKEN INTO CONSIDERATION, THERE IS NO SHORTAGE AND/OR NEGLIGENCE/TOLERANCE SHORTAGE. IN VIEW OF THE ABOVE, THE ADDITION OF RS.13,47,352 IS NOT JUSTIFIED AND LIABLE FOR DELETION. 6.3. THAT THE LEARNED CIT(A) CALLED FOR REMAND REPORT AND THE AO I N HER REMAND REPORT HAS SIMPLY STATED THAT THE AO HAS STATED THAT STOCK WAS TAKEN CORRECTLY THE VALUATION WAS DONE CORRECTLY. HOWEVER, THE AO HAS NOT MADE ANY COMMENT AS TO THE OWNERSHIP OF THE STOCK AS STATED BEFORE THE AO AT THE TIME OF ASSESSMENT AND AL SO STATED BEFORE THE LEARNED CIT(A). 6.4. THAT CONSIDERING THE SUBMISSIONS OF THE ASSESSEE WEIGHING WITH VARIOUS SUPPORTING EVIDENCES/DOCUMENTS PRODUCED BY THE ASSESSEE BEFORE HIM, THE LEARNED CIT(A) HAS DELETED THE IMPUGNED ADDITION MADE ON THE ALLEGATIO N OF EXCESS/SHORTAGE OF STOCK STATING IN PARAGRAPH 9.4 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER: 9.4. I HAVE CAREFULLY EXAMINED THE ASSESSMENT ORDER, WRITTEN SUBMISSIONS OF THE APPELLANT AND REMAND REPORT OF THE ASSESSING OFFICER. I FIND THAT THE APPEL LANT IS ONLY A CUSTOM MILLING AGENT OF AGENCIES OF GOVERNMENT OF ORISSA. THE PRINCIPALS HAVE RIGHT, INTEREST AND TITLE TO THE STOCK. THE GODOWNS IN WHICH PADDY AND RICE IS KEPT ARE UNDER LOCK AND KEY OF THE PRINCIPALS. THE APPELLANT HAS FILED COPIES OF REG ISTER OF STOCK WHICH ARE INSPECTED BY GOVERNMENT OFFICIALS. THE LAST SUCH INSPECT IS ON 16.08.2013, JUST FIVE DAYS BEFORE THE SURVEY. NO DISCREPANCIES WERE FOUND BY OFFICIALS OF THE GOVERNMENT OF ORISSA. SINCE, THEY ARE THE OWNERS OF RICE AND PADDY, THEY H AVE FAR HIGHER STAKES IN THE STOCK OF RICE AND PADDY. CONSIDERING THESE ASPECTS, THE ADDITION OF RS.1,28,72,786 ON ACCOUNT OF ALLEGED SHORTAGE OF STOCK OF PADDY AND BRAN AND OF RS.13,47,352 ON ACCOUNT OF ALLEGED EXCESS OF RICE AND BROKEN RICE ARE ORDERED T O BE DELETED. THE GROUNDS OF APPEAL ARE ALLOWED. 6.5. THAT IN THE GROUNDS OF APPEAL, THE REVENUE HAS CHALLENGED THE IMPUGNED DELETION OF THE ADDITION ON THE GROUND THAT THE PERSON PRESENT DURING THE SURVEY COULD NOT GIVE SATISFACTORY AND CONVINCING REPLY AS THE STOCK DISCREPANCY. FURTHER NO RECONCILIATION OF STOCK DIFFERENCE WAS PRODUCED BY THE ASSESSEE LATER ON. IN THIS RESPECT, IT IS HUMBLY SUBMITTED THAT AT THE TIME OF SURVEY THE PERSON PRESENT NAMELY SRI DEEPAK SHARMA HAS CATEGORICALLY STATED IN HIS R ECORDED STATEMENT THAT THE STOCK INVENTORY HAS BEEN TAKEN ON EYE ESTIMATE AND THERE SHOULD NOT BE SUCH DIFFERENCE OF STOCK. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS STATED IN THE FOREGOING PARAGRAPHS ALONGWITH VARIOUS DOCUMENTS/EVIDENCES PRODUCED BEFO RE THE LOWER AUTHORITIES THE UNDISPUTED FACTS EMERGES THAT WHATEVER THE STOCKS OF PADDY AND RICE ARE FOUND AT MILL PREMISES BELONG TO THE PRINCIPAL OSCSC/MARKFED AND NOT OF THE ASSESSEE. THAT THE OWNERSHIP OF SUCH STOCKS KEPT IN THE MILL PREMISES ARE WITH THE PRINCIPAL AND NOT THE ASSESSEE IT BEING ONLY A CUSTOM MILLING AGENT. FURTHER FOR THIS PURPOSE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 59 THE ASSESSEE MAINTAINS STOCK REGISTER OF PADDY & RICE, WHICH HAVE BEEN CHECKED BY FOOD & SUPPLY DEPARTMENT, GOVERNMENT OF ORISSA FROM TIME TO TIME WITH THE AC TUAL PHYSICAL STOCK IN THE MILL PREMISES, AS CAN BE WELL VERIFIED FROM THE COPY OF STOCK REGISTER. ONE SUCH CHECKING WAS CONDUCTED BY THE CIVIL SUPPLY AUTHORITY OFFICIALS ON 21.08.2013 JUST FIVE DAYS BEFORE THE DATE OF SURVEY, WHEN NO DISCREPANCIES, WHATS OEVER, EITHER IN PADDY ACCOUNT OR RICE ACCOUNT WERE NOTICED OR REPORTED BY THEM. THE PHYSICAL STOCK OF PADDY AND RICE ARE TALLIED WITH THE STOCK REGISTER. ON THESE FACTS IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) THAT THE EXCESS/SHORTAGE CL AIMED TO HAVE BEEN FOUND BY THE SURVEY PARTY ON THE DATE OF SURVEY, WHICH IS ONLY BASED ON EYE ESTIMATION, IS FAR FROM TRUTH. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, SUBMISSION OF THE ASSESSEE AND CONSIDERING THE EVIDENCE/DOCUMENTS PRODUCED BE FORE HIM, THE LEARNED CIT(A) JUSTIFIABLY DELETED THE IMPUGNED ADDITIONS MADE ON ACCOUNT OF ALLEGED SHORTAGE OF STOCK OF PADDY & BRAN AND ALLEGED EXCESS OF RICE & BROKEN RICE. THE ASSESSEE, THEREFORE, PRAYS BEFORE YOUR HONOUR TO KINDLY UPHELD THE ORDER OF T HE LEARNED CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE ON THIS ISSUE. IT IS PRAYED ACCORDINGLY. 7. GROUND NO. (XII) AS RAISED BY THE REVENUE READS AS UNDER: (XII) THAT THE LD. CIT(APPEALS) ERRED IN LAW AS WELL AS FACT IN DELETING THE ADDITION OF RS.2.40,000 WHICH WAS ADDED BY THE A.O. ON A/C OF INCOME OF THE ASSESSEE FROM BUS PLYING IGNORING THE FACT THE BUS PLYING INCOME HAD NOT BEEN SHOWN BY THE ASSESSEE ANYWHERE IN THE RETURN OF INCOME. 7.1. THAT THE ASSESSING OFFICER MADE THE ADDITION OF RS .2,40,000 ON ESTIMATING THE INCOME FROM PLYING OF BUS ALLEGING THAT THE ASSESSEE HAS ONE BUS AND INCOME FROM PLYING OF BUS HAS NOT BEEN DISCLOSED BY THE ASSESSEE. 7.2. THAT THE ASSESSMENT ORDER WAS PASSED BY THE ASSESSING OFFICER HASTILY WITHOUT PROPERLY EXAMINING THE BOOKS OF ACCOUNTS, THOUGH THOSE WERE PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT. THE ALLEGATION OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT DISCLOSED ANY INCOME FROM BUS PLYING BUSINESS IS NOT AT ALL CORRECT. THE ASSESSE E HAD ONLY ONE BUS DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. BEFORE THE LEARNED CIT(A) THE ASSESSEE FILED THE COPY OF CONSOLIDATED (INDIVIDUAL) ACCOUNTS. IN THE P & L ACCOUNT THE ASSESSEE SHOWN OTHER BUSINESS INCOME OF RS.13,35,950 WHICH INCLUDES INC OME EARNED FROM BUS PLYING. VEHICLE RECEIPTS 4,84,100 MISC.OTHER RECEIPTS 8,51,850 TOTAL: 13,35,950 FROM THE VEHICLE RECEIPTS OF RS.4,84,100 THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS.1,87,750 AND INCOME FROM BUS PLYING THUS COMES TO RS.2,96,350 (I.E., 4,84,100 1,87,750). THE LEARNED ASSESSING OFFICER SHOULD HAVE VERIFIED THE ACCOUNTS AS WELL AS THE BALANCE SHEET & PROFIT AND LOSS ACCOUNT, WHEN PRODUCED BEFORE HIM. IN THE REMAND REPORT, THE ASSESSING OFFICER HAS NOT DENIED THE ABOVE FACTS BUT STATED T HAT THIS IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 60 INCOME HAS NOT BEEN SHOWN SEPARATELY ANYWHERE IN RETURN OF INCOME AND THEREFORE, SUBMISSION OF THE APPELLANT CANNOT BE ACCEPTED. FURTHER THE ASSESSEE CONTENDED BEFORE THE LEARNED CIT(A) THAT NO INCRIMINATING MATERIAL REGARDING BUS PLYING ACTIVITIE S OF THE ASSESSEE WERE FOUND DURING THE COURSE OF SEARCH & SURVEY. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE REMAND REPORT OF THE ASSESSING OFFICER AND THE BOOKS OF ACCOUNTS PRODUCED BEFOR E HIM, THE LEARNED CIT(A) HAS DELETED THE ADDITION OF RS.2,40,000 MADE ON ACCOUNT OF BUS PLYING BUSINESS OBSERVING IN PARAGRAPH 10.3 IN HIS ORDER, WHICH READS AS UNDER: 10.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, REMAND REPORT AND SUBMISSIONS OF THE APPELLANT. IT IS IMPORTANT TO NOTE HERE THAT THIS IS AN ASSESSMENT AFTER THE SEARCH ON GROUP MEMBERS. NO INCRIMINATING MATERIAL REGARDING BUS PLYING ACTIVITIES OF THE APPELLANT WAS FOUND. IN THE ABSENCE OF ANY EVIDENCE, IT WILL BE WRONG TO PRESUME T HAT THE APPELLANT HAS NOT DISCLOSED INCOME FROM BUS PLYING ACTIVITIES. INDEED, DURING THE COURSE OF APPEAL PROCEEDINGS AND REMAND PROCEEDINGS, THE APPELLANT HAS GIVEN DETAILS SUCH AS GROSS INCOME, DEPRECIATION AND NET INCOME FROM BUS PLYING ACTIVITIES. CON SIDERING THESE ASPECTS, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS CORRECTLY OFFERED INCOME FROM BUS PLYING ACTIVITIES OF RS.1,87,750. ACCORDINGLY, THE ADDITION OF RS.2,40,000 IS ORDERED TO BE DELETED. THE GROUND OF APPEAL IS ALLOWED. 7.3. THAT I T IS HUMBLY SUBMITTED THAT THERE IS NO INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND SURVEY REGARDING BUS PLYING BUSINESS. DURING AY UNDER CONSIDERATION THE ASSESSEE HAS EARNED INCOME FROM BUS PLYING BUSINESS FROM RUNNING ONE BUS WHICH HAS B EEN DULY SHOWN IN THE PROFIT LOSS ACCOUNT UNDER THE HEAD MISC. INCOME & RECEIPTS. THE ASSESSEE HAS CLAIMED DEPRECIATION IN THE P & L ACCOUNT. WITHOUT PROPERLY EXAMINING THE ACCOUNTS PRODUCED BEFORE HIM, THE ASSESSING OFFICER IS NOT JUSTIFIED IN ALLEGING THAT THE ASSESSEE HAS NOT SHOWN ANY INCOME FROM BUS PLYING BUSINESS. THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS HAS ALSO FAILED TO CONSIDER THIS ASPECT OF THE CASE. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) IS PERFECTLY JUSTIFIED IN DELETING THE IMPUGNED ADDITION OF RS.2,40,000 MADE ON ACCOUNT OF BUS PLYING BUSINESS. IT IS THEREFORE PRAYED THAT THE IMPUGNED ORDER OF THE LEARNED CIT(A) IN THIS REGARD MAY KINDLY BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE MAY KINDLY BE DISMISSED. 8. GROUNDS NO. (XIII) AND (XIV) RAISED BY THE REVENUE READ AS UNDER : (XIII) THAT THE ADDITIONS MADE BY THE A.O. ARE LAWFUL AND JUSTIFIED AND THOSE NEED TO BE SUSTAINED IN FULL. (XIV) THAT THE APPELLANT CRAVES TO ADD, AMEND, MODIFY OR ALTER ANY GROUND OF APPEAL AT THE TIME OR BEFORE HEARING OF APPEAL. 8.1. THAT THE ABOVE TWO GROUNDS OF THE REVENUE ARE GENERAL IN NATURE AND NEED NO SPECIFIC ADJUDICATION. 9. THAT ON THE FACTS AND CIRCUMSTANCES STATED IN THE FOREGOING PARAGRAPHS, THE APPEAL FILED BY THE REVENUE MAY KINDLY BE DISMISSED BY UPHOLDING THE IMPUGNED ORDER OF THE LEARNED CIT(A). THE CROSS OBJECTION FILED BY THE ASSESSEE SUPPORTING THE IMPUGNED ORDER OF THE LEARNED CIT(A) MAY KINDLY BE ALLOWED. IT IS PRAYED ACCORDINGLY. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 61 9 . AFTER HEAR ING BOTH THE SIDES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD AND THE ORDER OF AUTHORITIES BELOW, WE FIND THAT THE AO HAS MADE ADDITIONS ON DIFFERENT HEADS WHICH HAS BEEN DELETED BY THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REMAND REPORT RECEIVED FROM THE AO WITHOUT DISCUSSING IN DETAILS ON THE ISSUES INVOLVED . AGGRIEVED THEREBY THE REVENUE IS IN APPEAL BEFORE US AND THE ASSESSEE HAS FILED CROSS OBJECTION SUPPORTING TO THE ORDER OF CIT(A). NOW, WE SHALL DECIDE THE GROUND NO S . I & II . IN THESE GROUNDS THE REVENUE HAS CHALLENGED AGAINST THE DELETION OF RS.7,72,400/ - ON ACCOUNT OF SUNDRY CREDITORS. WE NOTED FROM THE PAPER BOOK FILED BY THE ASSESSEE THAT THE SUNDRY CREDITORS WERE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AND ACTIN G ON BEHALF OF THE ASSESSEE FOR PROCURING PADDY. WE FURTHER NOTED FROM PAGE NO.10 OF THE PAPER BOOK PARA 20 OF THE AFFIDAVIT FILED BY THE ASSESSEE IN WHICH T HE Y CATEGORICALLY UNDERTAKES THAT HE IS DOING ONLY CUSTOM - MILLING FOR M/S ORISSA STATE CIVIL SUPPLI ES CORPORATION LTD.(OSCSC LTD.) BESIDES WORKING ALSO AS AGENT OF MARKFED, NAFED, NCMSL, PACS AND FCI. FOR THE SAKE OF BREVITY, WE WOULD LIKE TO REPRODUCE PARA 23 & 24 PLACED IN THE PAPER BOOK AS ANNEXURE - I, WHICH READS AS UNDER : - 23. THAT IN ORDER TO CARR Y OUT THE CUSTOM MILLING, AND BECAUSE IT IS A SEASONAL BUSINESS, IN ORDER TO WORK EFFECTIVELY AND SPEEDILY TO REACH THE TARGET FIXED BY THE PRINCIPALS, I USE TO ENGAGE AUTHORIZED REPRESENTATIVE UNDER AGREEMENT TO RECEIVE PADDY FROM THE PADDY PURCHASE CENTR E LOCATED AT DIFFERENT DISTANT PLACES ON MY BEHALF AND SPORTING THE SAME TO THE MILL PREMISES. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 62 24. THAT FOR THE ABOVE PURPOSE I SOMETIMES PAY MONEY IN ADVANCE TO THOSE AUTHORISED REPRESENTATIVES AND SOMETIMES THE REPRESENTATIVES SPENT MONEY BY OWN ARRANGEMENT AND SUBSEQUENTLY TAKE RETURN BACK OF THE SAME FROM ME. IN THIS PROCESS THEY ARE INVOLVED IN MY BUSINESS. I MAINTAIN LEDGER ACCOUNTS OF EACH AUTHORISED REPRESENTATIVES IN MY BOOKS OF ACCOUNTS. ACTUALLY THEY ARE NOT CREDITORS THOUGH THE CLOSI NG BALANCE, IN RESPECT OF EACH SUCH AUTHORISED REPRESENTATIVE, ARE WRONGLY SHOWN IN MY BOOKS OF ACCOUNT, UNDER THE NOMENCLATURE 'SUNDRY CREDITORS'. 10. FROM THE ABOVE QUOTED PARA, IT IS CLEAR THAT THE ASSESSEE IS NOT PURCHASING PADD Y DIRECTLY. HE IS DOING CUSTOM MILLING ONLY. IN THESE CIRCUMSTANCES, THERE SHOULD BE NO CREDITORS FOR PURCHASE OF PADDY. FURTHER ON PERUSAL OF THE PAPER BOOK PAGE NO.57 & 58, WHICH IS A COPY OF LETTER OF AUTHORIZATION IN WHICH THE ASSESSEE HAS POINTED OUT TO OFFER PERSONS FOR PU RCHASE OF PADDY AS AUTHORIZED REPRESENTATIVE. THE CREDITORS ARE MENTIONED BY THE ASSESSEE IN HIS REPORTS, WHO HAVE FILED UNDERTAKING IN WHICH THEY HAVE CATEGORICALLY STATED THAT THEY ARE AUTHORIZED REPRESENTATIVE BUT RECEIVED PADDY FROM THE PADDY PURCHASE CENTRE AND FOR MILLING FROM JOINT CUSTODY AND MAINTENANCE AND TO DELIVER THE RESULTANT CMR IN THE RRC/FCI ON BEHALF OF THE ASSESSEE. ON PERUSAL OF THE LEDGER COPY OF THE CREDITORS SHOWN BY THE ASSESSEE THE NARRATION IS WITH REGARD TO LABOUR CHARGES, LOADIN G, UNLOADING, BANKING AND NETTING EXPENSES AND FREIGHT INWARD AND OUTWARD EXPENSES. WE ALSO NOTED FROM THE PAPER BOOK PAGE NO.66 WHICH IS THE DETAILS OF SUNDRY CREDITORS OF RS.7,72,400/ - AND EXPENSES HAVE BEEN INCURRED BY THE ASSESSEE ONLY FOR THE MONTH OF FEBRUARY & MARCH, 2014. LD.DR HAS IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 63 ALSO SUBMITTED THAT SIGNATURE OF BOTH THE PAGES MENTIONED IN THE PAPER BOOK AT ANNEXURE - 2 WERE NOT MATCH AND, THEREFORE, IT APPEARS THAT THE CONFIRMATIONS/DECLARATIONS FILED BY THE ASSESSEE CANNOT BE RELIED ON. THE L.D CI T(A) HAS ALLEGED UPON THE ASSESSING OFFICER THAT THE AO WITHOUT CALLING THE CREDITORS HAS SUBMITTED THE REMAND REPORT. THE ASSESSEE HAD FILED NAME, ADDRESS, AADHAR CARD, LEDGER COPY OF THE CREDITORS BEFORE THE CIT(A). IF THE ASSESSING OFFICER HAS NOT DISC HARGED HIS DUTY PROPERLY THEN IN THIS CIRCUMSTANCES THE LD. CIT(A) SHOULD HAVE EXERCISED HIS POWERS PROVIDED UNDER THE PROVISIONS OF INCOME TAX ACT. THE CIT(A ) HAS CO - TERMINUS POWER AS PER THE SECTIONS PROVIDED UNDER THE INCOME TAX ACT. HE SHOULD HAVE CAL LED THE CREDITORS FOR THEIR TRUTHNESS AND EXAMINED THE ISSUE. FROM THE ABOVE OBSERVATIONS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS PROVIDED DETAILS OF THE CREDITORS, WHICH SHOULD HAVE BEEN EXAMINED BY BOTH THE AUTHORITIES BELOW BUT THEY DID NOT DO SO FOR PROVING THE GENUINENESS OF THE CREDITORS. AS PER OUR CONSIDERED OPINION, THE ASSESSEE DISCHARGED HIS LIABILITY AS CAST UPON HIM AND NOW THE DUTY SHIFTED ON THE REVENUE AUTHORITIES FOR THE VERIFICATION OF THE GENUINENESS OF THE CREDITORS, WHICH ARE LACK IN THIS CASE. IN THE SECOND ROUND OF PROCEEDINGS BEFORE THE ASSESSING OFFICER, HE COULD HAVE EXERCISED HIS POWERS FOR PRESENCE OF THE CREDITORS AND VERIFICATION OF THE GENUINENESS OF THE TRANSACTIONS DONE WITH THE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 64 CREDITORS BUT DID NOT DO SO. ACCORDINGLY, WE DISMISS THE GROUND NOS. I & II RAISED BY THE REVENUE AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 11 . GROUND NOS. III & IV RELATE TO DELETION OF ADDITION OF RS.5,97,186/ - REGARDING CAPITAL INTRODUCTION FROM UNDISCLOSED SOURCES. GROUND NO. XII & XIII ARE RELAT ING TO DELETION OF ADDITION OF RS.2,40,000/ - ON ACCOUNT OF INCOME OF THE ASSESSEE FORM BUS PLYING. 12 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES RAISED WITH REGARD TO THE ABOVE GROUNDS AND WE OBSERVE THAT THE ASSESSEE IN HIS STATEMENTS HAS STATED THAT HE IS THE OWNER OF THE BUSES AND HE HAS INTRODUCED A CAPITAL IN CASH BUT THIS CAPITAL INTRODUCTION HAS NOT BEEN ACCEPTED BY THE AO. THE ASSESSEE HAS HIMSELF SUBMITTED IN HIS WRITTEN SUBMISSION AT PARA 4.3 & 4.4 THAT THE AO HAD NOT EXAMINED HIS BOOKS DURING THE ASSESSMENT PROCEEDINGS AND REMAND PROCEEDINGS PROPER L Y. HE ALSO STATED IN REGARD TO RS.2,40,000/ - NOWHERE HAS BEEN SHOWN IN THE RETURN OF INCOME. IN RESPECT OF GROUND NOS. III & IV , LD. DR REQUESTED FOR SETTING ASIDE TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION AND HE HAS ALSO TO ASCERTAIN AS TO WHETHER THE ASSESSEE HAS INTRODUCED FRESH CAPITAL IS A TAX PAID AMOUNT OR NOT . WE OBSERVE FROM THE ORDER OF THE CIT(A) FROM PARA NO.6.2 WHICH IS REMAND REPORT OF THE ASSESSING OFFICER IN WHICH HE HAS CATEGORICALLY STATED THAT THE COMPUTATION OF INCOME WAS PRODUCED BEFORE THE ASSESSING OFFICER BUT THE ASSESSEE HAS NOT SHOWN ANY INCOME FROM BUSINESS OF BUS PLYING AND TRADING AND THE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 65 SOURCE OF CAPITAL INTRODUCED COULD NOT BE EXPLAINED WHEREAS THE ASSE SSEE HAS STATED THAT THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND THE CAPITAL INTRODUCTION HAS BEEN SHOWN PROPERLY. IN THE INTEREST OF JUSTICE, WE SEND THESE ISSUES TO THE FILE OF AO FOR VERIFICATION OF COPY OF INCOME TAX RETURN FI LED WITH THE INCOME TAX DEPARTMENT FOR THE PURPOSE OF VERIFICATION OF THE INCOME SHOWN FROM BUSINESS OF BUSES PLYING. IN RESPECT OF GROUND NO.XII & XIII, HE IS FURTHER TO ASCERTAIN AS TO WHETHER THE INCOME FROM BUS PLYING OF RS.2,40,000/ - HAS BEEN SHOWN I N THE RETURN OF INCOME AND HAS PAID DUE TAXES THEREON. THE ASSESSEE IS DIRECTED TO PRODUCE THE COPY OF INCOME TAX RETURN FOR THE VERIFICATION OF INCOME OFFERED UNDER BUSES PLYING. ACCORDINGLY, WE RESTORE THE GROUND NOS. III , IV , XII & XIII TO THE FILE OF AS SESSING OFFICER FOR FRESH ADJUDICATION. THUS, GROUND NOS. III, IV, XII & XIII ARE ALLOWED FOR STATISTICAL PURPOSES. 13 . GROUND NO S . V , VI , VII & VIII RELATING TO DELETION OF ADDITION OF RS.83,62,872/ - ON ACCOUNT OF SALE SUPPRESSION OF RICE BRAN. 14 . IN THIS REG ARD, LD. DR SUBMITTED BEFORE US THAT IN LEDGER ACCOUNT OF M/S MAHARAJAN FOODS PRODUCTS IN THE BOOKS OF SHREE SHYAM PRODUCTS , THERE ARE ALL THE CASH RECEIPTS FOR THE MONTH OF APRIL, MAY & JUNE 2013. AS THERE ARE NO CHEQUE PAYMENTS, THE UNACCOUNTED SALE OF R ICE BRAN TO SHREE SHYAM PRODUCTS HAS NOT PROVE D . THE SAID DOCUMENTS WERE FOUND FROM THE PREMISES OF THE ASSESSEE WHICH IS A COPY OF LEDGER IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 66 ACCOUNT MAINTAIN BY SHREE SHYAM PRODUCTS AND RADHEY KRISHNA IN THE NAME OF MAHARAJA FOOD PRODUCTS, WHICH HAS BEEN MA RKED AS MFP - 30. IT WAS THE DUTY OF THE ASSESSEE TO REBUT THE SAME BUT HE COULD DO SO. AFTER LONG TIME HE FILED AFFIDAVIT WHICH CANNOT BE ACCEPTED. HE ALSO REFERRED TO SECTION 292C OF THE INCOME TAX ACT 1961. THEREFORE, THE AO HAS RIGHTLY MADE THE ADDITION ON ACCOUNT OF SUPPRESSION OF SALES, WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IT IS ALSO CLEAR FROM THE ORDER OF THE CIT(A) THAT THIS IS A MODUS OPERANDI ADOPTED BY THE ASSESSEE BECAUSE THERE IS AN OPENING BALANCE SHOWING IN THE LEDGER ACCOUNT SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS . ON THE OTHER HAND, LD. AR RELIED ON THE ORDER OF CIT(A) AND SUBMITTED THAT THE CIT(A) IS PERFECTLY JUSTIFIED IN HOLDING THAT THE ALLEGED LEDGER ACCOUNT IN MFP - 30 OF THE ASSESSEE IN BOOKS OF S HRI SHYAM PRODUCTS IS NEITHER RELIABLE NOR VALID AND THUS DELET ED THE IMPUGNED ADDITION IN THIS REGARD. HE ALSO STATED THAT THE CHEQUE WAS RECEIVED FROM BRMC WHICH HAS RIGHTLY BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS, THE SEIZED DOCUMENTS HAS NOT ANY SA NCTITY, THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAS BEEN DULY AUDITED BY THE QUALIFIED CHARTERED ACCOUNTANTS AND NO ANY DEFECT HAS BEEN POINTED OUT BY THE AO. 15 . THE ARGUMENTS ADVANCED BY BOTH THE PARTIES WITH REGARD TO THE ABOVE GROUNDS ARE CONSIDERED AND ALSO THE ORDERS OF BOTH THE AUTHORITIES ARE PERUSED. ON PERUSAL OF THE ORDER OF THE CIT(A), WE FIND IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 67 THAT WHEN THE ADDITION MADE BY THE AO ON ACCOUNT OF SALE SUPPRESSION OF RICE BRAN, WHICH WAS MADE ON THE BASIS OF IMPOUNDED DOCUMENT MFP - 30, THEN THE CIT(A) OUGHT TO HAVE CONSIDERED THE STATEMENT OF SHRI DEEPAK SHARMA, WHO IS THE MANAGER OF THE ORGANIZATION. WE FURTHER NOTICED THAT T HE ASSESSEE HAS ALLEGED UPON THE AO THAT THE NATURAL JUSTICE HAS NOT BEEN FOLLOWED BY THE AO BEFORE RELYING THE DOCUMENTS FOUND IN THE PREMISES OF THE ASSESSEE REGARDING SALES TO M/S SHREE SHYAM PRODUCTS & RADH EY KRISHNA . HE HAS ALSO ALLEGED THAT THE CROSS - EXAMINATIONS HAVE ALSO NOT PROVIDED TO THE ASSESSEE BEFORE MAKING ADDITION FOR SUPPRESSION OF BRAN SELLS TO SHYAM PRODUCTS & R ADH EY KRISHNA . IN THIS REGARD, WE HAVE OBSERVED THAT THE DOCUMENTS WERE FOUND IN THE BUSINESS PREMISES OF THE ASSESSEE MARKED AS MFP - 30 IN WHICH CASH SALES ARE SHOWING , IN WHICH THE PURCHASES OF BRAN HAS BEEN RECORDED BY BOTH THE PARTIES AND AGAINST WHICH THE PAYMENTS HAVE BEEN RECEIVED IN CASH . DURING THE COURSE OF SEARCH PROCEEDINGS STATEMENTS WERE RECORDED OF DEEPAK SHARMA, WHO IS ELDER BROTHER OF THE ASSESSEE, HAS CATEGORICALLY ACCEPTED IN THE QUESTION ANSWER NO.8, 9 & 10 (SUPRA), THAT THE PAYMENTS HAVE BEEN RECEIVED IN CASH AND CASH SALES HAVE NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS, THE BRAN HAS ALSO BEEN SOLD TO BRMC, THE BRAN PRODUCTION IS AS PER GOVERNMENT NORMS IS 4% BUT THE ACTUAL PRODUCTION IS 5 - 5.5% AND HAS ALSO STATED THAT BRAN HAVE BEEN PUR CHASED AND SOLD TO DIFFERENT PARTIES ALSO. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 68 16. IT WAS THE DUTY OF THE ASSESSEE TO REBUT THE DOCUMENTS FOUND REGARDING CASH SALES OF BRAN . NO RETRACTION WAS MADE BY SHRI DEEPAK SHARMA (MANAGER) TILL DATE AS WELL AS BY THE ASSESSEE . IF THE STATEMENTS WERE NOT TRUE THEN THE ASSESSEE SHOULD HAVE RETRACTED IMMEDIATELY BEFORE THE CONCERNED AUTHORITIES. THE AFFIDAVITS FILED BY SANJAY SHARMA PLACED IN THE PAPER BOOK AT PAGES 51 & 52, IS ALSO NOT ACCEPTABLE. MERELY FILING OF THE AFFIDAVIT WITHOUT ANY CORROBORATING EVIDENCES IN THE CONTENTS OF THE AFFIDAVITS ,ARE NOT ACCEPTABLE. OUR THIS VIEW IS SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S MEHTA PARIKH AND CO. VS. CIT 1956 AIR 554 (SC). DURING THE ASSESSMENT PROCEEDINGS, THE AO HAS PROVID ED AMPLE OPPORTUNITY TO THE ASSESSEE FOR EXPLAINING THE MATTER BUT THE ASSESSEE DID NOT DO SO. IT WAS NOT THE DUTY OF THE ASSESSING OFFICER TO CALL SHRI SHYAM PRODUCTS & RADH EY KRISHNA FOR CROSS EXAMINATION AS ALLEGED BY THE ASSESSEE THAT THE NATURAL JUSTI CE HAS BEEN FOLLOWED BY THE ASSESSEE BECAUSE THE DOCUMENTS WERE FOUND IN THE PREMISES OF THE ASSESSEE IN WHICH IT CLEARLY SHOWS THAT THERE IS A TRANSACTION HAS BEEN DONE WITH AFORESAID TWO PARTIES. THE SAID DOCUMENTS FOUND FROM THE ASSESSEES PREMISES, HE SHOULD HAVE EXPLAINED WHY THESE DOCUMENTS ARE LYING WITH HIM. THEREFORE, AS PER SECTION 292C, THE COPY OF LEDGER ACCOUNT IN RESPECT OF TRANSACTIONS WITH M/S SHREE SHYAM PRODUCTS AND RADHEY KRISIHNA ARE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 69 GENUINE. T HERE ARE SANCTITY ON THE COPY OF THE LEDGER ACCOUNTS FOUND REGARDING SALE OF BRAN. 17. EVEN IF IN PARA NO.8.6 OF THE ORDER OF THE CIT(A) THAT HE HAS ACCEPTED THAT IT IS A RUNNING LEDGER I.E. IT IS BROUGHT FORWARDED FROM THE PREVIOUS YEAR BECAUSE THERE ARE OPENING BALANCE APPEARING IN THE SAID LEDGE R. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE COULD NOT CONTROVERT THE FINDINGS OF THE ASSESSING OFFICER AND THE LD. CIT(A) HAS WRONGLY ALLOWED TO THE APPEAL OF THE ASSESSEE IN THIS REGARD. THE ASSESSING OFFICER HAS OBSER VED THAT THERE IS A SUPPRESSION OF SALE OF BRAN DURING THE YEAR. AFTER CONSIDERING THE REMAND REPORT, SUBMISSION AND REJOINDER OF THE ASSESSEE AND FINDING OF THE LD. CIT(A) , IT IS CLEAR THAT THERE ARE DIFFERENCES OBSERVED BY THE ASSESSEE IN REGARD TO THE A DDITION MADE BY THE ASSESSING OFFICER, THEREFORE, IT WOULD BE BETTER TO SEND THIS ISSUE TO THE A SSESSING OFFICER FOR CALCULATING THE CURRENT YEARS TRANSACTIONS. THE ASSESSING OFFICER IS DIRECTED TO CALCULATE THE ACTUAL CURRENT YEAR S SALE OF BRAN IN CASH TO THE ABOVE TWO PARTIES AND WHICH HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE . THE ASSESSEE IS DIRECTED TO COOPERATE WITH THE DEPARTMENT FOR EARLY DISPOSAL OF THE APPEAL AND AVOID TO TAKE UNNECESSARY ADJOURNMENTS. ACCORDINGLY, WE RESTO RE THESE ISSUES TO THE FILE OF CIT(A) FOR FRESH ADJUDICATION. THUS, GROUND NOS. V TO VIII ARE ALLOWED FOR STATISTICAL PURPOSES. IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 70 18 . WITH REGARD TO GROUND NOS. IX , X & XI , LD. DR SUBMITTED THAT THE CIT(A) FAILED TO CONSIDER THE FACT THAT THE INVENTORY OF ST OCK WAS TAKEN BY THE SURVEY PARTY IN PRESENT OF THE MANAGER SRI DEEPAK SHARMA WITH THE HELP OF THE STAFF MEMBERS OF THE ASSESSEE CONCERN AND NO SATISFACTORY AND CONVINCING REPLY WAS GIVEN BY SHRI SHARMA WHEN HE WAS CONFRONTED WITH THE STOCK DIFFERENCE DURI NG THE COURSE OF SURVEY OPERATION. IT WAS ALSO SUBMITTED BY THE LD. DR THAT NO RECONCILIATION OF STOCK DIFFERENCE WAS PRODUCED BY THE ASSESSEE LATER ON ALSO. IT WAS FURTHER SUBMITTED BY THE LD. DR THAT THE ASSESSEE WAS UNABLE TO EXPLAIN THE SHORTAGE OF STO CK OF PADDY AND BRAN AND THE EXCESS OF STOCK OF RICE AND BROKEN RICE DURING THE ASSESSMENT PROCEEDINGS AS WELL AS REMAND PROCEEDING BEFORE THE AO, THEREFORE, THE AO HAS RIGHTLY MADE THE ADDITION. ON THE OTHER HAND, LD. AR SUBMITTED THAT AT THE TIME OF SUR VEY THE PERSON PRESENT NAMELY SRI DEEPAK SHARMA HAS CATEGORICALLY STATED IN HIS RECORDED STATEMENT THAT THE STOCK INVENTORY HAS BEEN TAKEN ON EYE ESTIMATE AND THERE SHOULD NOT BE SUCH DIFFERENCE OF STOCK. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS STATE D IN THE FOREGOING PARAGRAPHS ALONGWITH VARIOUS DOCUMENTS/EVIDENCES PRODUCED BEFORE THE LOWER AUTHORITIES THE UNDISPUTED FACTS EMERGES THAT WHATEVER THE STOCKS OF PADDY AND RICE ARE FOUND AT MILL PREMISES BELONG TO THE PRINCIPAL OSCSC/MARKFED AND NOT OF TH E ASSESSEE. THAT THE OWNERSHIP OF SUCH STOCKS KEPT IN THE MILL PREMISES ARE WITH THE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 71 PRINCIPAL AND NOT THE ASSESSEE IT BEING ONLY A CUSTOM MILLING AGENT. FURTHER FOR THIS PURPOSE THE ASSESSEE MAINTAINS STOCK REGISTER OF PADDY & RICE, WHICH HAVE BEEN CHECKED BY FOOD & SUPPLY DEPARTMENT, GOVERNMENT OF ORISSA FROM TIME TO TIME WITH THE ACTUAL PHYSICAL STOCK IN THE MILL PREMISES, AS CAN BE WELL VERIFIED FROM THE COPY OF STOCK REGISTER. ONE SUCH CHECKING WAS CONDUCTED BY THE CIVIL SUPPLY AUTHORIT Y OFFICIALS ON 21.08.2013 JUST FIVE DAYS BEFORE THE DATE OF SURVEY, WHEN NO DISCREPANCIES, WHATSOEVER, EITHER IN PADDY ACCOUNT OR RICE ACCOUNT WERE NOTICED OR REPORTED BY THEM. THE PHYSICAL STOCK OF PADDY AND RICE ARE TALLIED WITH THE STOCK REGISTER. ON TH ESE FACTS IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) THAT THE EXCESS/SHORTAGE CLAIMED TO HAVE BEEN FOUND BY THE SURVEY PARTY ON THE DATE OF SURVEY, WHICH IS ONLY BASED ON EYE ESTIMATION, IS FAR FROM TRUTH. CONSIDERING THE FACTS AND CIRCUMST ANCES OF THE CASE, SUBMISSION OF THE ASSESSEE AND CONSIDERING THE EVIDENCE/DOCUMENTS PRODUCED BEFORE HIM, THE LEARNED CIT(A) JUSTIFIABLY DELETED THE IMPUGNED ADDITIONS MADE ON ACCOUNT OF ALLEGED SHORTAGE OF STOCK OF PADDY & BRAN AND ALLEGED EXCESS OF RICE & BROKEN RICE. 19 . WE HAVE CONSIDERED THE ARGUMENTS ADVANCED BY BOTH THE PARTIES WITH REGARD TO THE ABOVE GROUNDS AND PERUSED THE ORDERS OF BOTH THE AUTHORITIES BELOW. WE ALSO FOUND SUBSTANCE OF THE ARGUMENTS OF THE LD. DR THAT D URING THE COURSE OF SURVEY , SHRI DEEPAK SHARMA FAILED TO GIVE IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 72 ANY REPLY REGARDING THE STOCK DIFFERENCE. NEITHER AT THE STAGE OF ASSESSMENT PROCEEDINGS NOR AT THE STAGE OF APPELLATE PROCEEDINGS, THE ASSESSEE MADE AN ATTEMPT TO RECONCILE THE DISCREPANCY. MERE STATEMENT THAT THE STOCK BELONGED TO THE PRINCIPALS IS NOT SUFFICIENT. IT WAS ALSO SUBMITTED BY THE LD. DR THAT THE ASSESSEE WAS THE OWNER OF SUCH BRAN/BROKEN RICE WHICH WAS BEING SOLD TO OUTSIDE PARTIES OUT OF BOOKS OF ACCOUNT. IF THERE WAS NO DIFFERENCE IN THE STOCK, THEN WHAT PREVENTED THE ASSESSEE OR SHRI DEEPAK SHARMA FROM FILING AN AFFIDAVIT IN THIS REGARD. THE AFFIDAVIT, IF ANY, WAS REQUIRED TO BE FILED AFTER SURVEY OPERATION. ON THE OTHER HAND, THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 14.01.2018 I.E. AFTER A LAPSE OF 5 Y EARS. THE DIFFERENCE OBSERVED BY THE AO COULD NOT BE EXPLAINED TO THE SATISFACTION OF THE AO DURING THE ASSESSMENT PROCEEDINGS AS WELL AS IN THE REMAND PROCEEDINGS. THE SUBMISSION OF THE ASSESSEE THAT THE OFFICIALS OF GOVT. OF ODISHA CHECKED ON 16.08.2013 JUST BEFORE THE FIVE DAYS BACK AND THEY DID NOT FIND ANY MISTAKE IS ALSO NOT ACCEPTABLE BECAUSE ON 21.08.2013 THERE WAS A STOCK LYING IN THE PREMISES OF THE ASSESSEE. THE REVENUE AUTHORITIES HAVE COUNTED PHYSICALLY TO BAGS AS KEPT LYING IN THE ROW. THE ASS ESSEE HAS ALSO ALLEGED THAT THE STOCK/INVENTORY HAS BEEN COUNTED BY THE SEARCH TEAM ONLY ON THE BASIS OF EYE ESTIMATION BUT NOT ACTUAL WEIGHMENT OF STOCK OF PADDY/RICE/BRAN/HUSK ETC. THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CAS E, WE ALLOW 20% (TWENTY PERCENT) IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 73 RELIEF TO THE ASSESSEE ON THE TOTAL ADDITION MADE DUE TO THERE MAY BE DIFFERENCE BETWEEN EYE - E STIMATION FOR STOCK TAKING AND ACTUAL WEIGHMENT OF THE STOCKS FOUND AND THE RATES APPLIED BY THE REVENUE AUTHORITIES AND UPHOLD 80% (EIGHTY PERCENT) OF THE ADDITION MADE BY THE AO IN THIS REGARD. ACCORDINGLY, WE ARE NOT IN AGREEMENT WITH THE OBSERVATIONS MADE BY THE CIT(A) DELETING THE ADDITIONS MADE BY THE AO. THUS, THE GROUND NOS. IX , X & XI ARE PARTLY ALLOWED TO THE EXTENT AS IND ICATED ABOVE . 20 . SINCE, WE HAVE PARTLY ALLOWED THE APPEAL OF THE REVENUE , THEREFORE, THE CROSS OBJECTION FILED BY THE ASSESSEE SUPPORTING TO THE ORDER OF CIT(A) HAS BECOME INFRUCTUOUS AND THE SAME IS HEREBY DISMISSED. 21 . IN THE RESULT, THE APPEAL OF REVE NUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 / 0 9 / 20 20 . S D/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 25 / 0 9 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK IT (SS) A NO. 138 /CTK/2018 CO NO.51/CTK/2018 74 / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , /ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//