M/s. Tiki Tar Industries,Bhandup, Baroda V. The ACIT., Cent.Circle-2, Baroda

ITSSA 175/AHD/2006

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7766 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-02-2012
• Assessment Year: misc
• Appeal Filed On: 10-07-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K GUPTA
• Assessee Lawyers: J P SHAH SRAR
• Keywords: Search and seizure; Loose papers; Document seized; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH BEFORE SHRI G.C.GUPTA, VICE-PRESIDENT (AZ) AND SHRI B.P. JAIN, ACCOUNTANT MEMBER IT(SS)A NO.175 & 176/AHD/2006 BLOCK PERIOD FROM :1/4/96 TO 11/3/03 TIKI TAR INDUSTRIES, BHNSUP, 8 TH FLOOR, NEPTUNE TOWERS, PRODUCTIVITY ROAD, BARODA PAN NO.AAFT0614K TIKI TAR INDUSTRIES, TALOJA 8 TH FLOOR, NEPTUNE TOWERS, PRODUCTIVITY ROAD, BARODA PAN NO.AAAFT4044P / V/S . / V/S . ACIT, CENTRAL CIRCLE-2, BARODA ACIT, CENTRAL CIRCLE-2, BARODA / APPELLANT .. / RESPONDENT /ASSESSEE BY SHRI J.P.SHAH, SR-AR /REVENUE BY SHRI S.K. GUPTA CIT-DR / DATE OF HEARING 09-02-2012 !'# / DATE OF PRONOUNCEMENT 17-02-2012 $ $ $ $ / // / ORDER PER B.P. JAIN, ACCOUNTANT MEMBER:- THESE TWO APPEALS OF THE ASSESSEES ARISE FROM TWO D IFFERENT ORDERS OF LD. COMMISSIONER OF INC-TAX (APPEALS)-IV, AHMEDABAD EACH DATED 31-03- 2006 FOR THE BLOCK PERIOD FROM 01-04-1996 TO 11-03- 2003. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL IN IT(SS) A NO.175/AHD/2006:- IT(SS)A NO.175/AHD/2006 1. THE LEARNED COMMISSIONER OF INC TAX (APPEALS) E RRED IN FACT AND IN LAW IN CONFIRMING THE ADDITION OF RS.23,94,960 BEIN G GP @ 17% ON IT(SS)A NO.175-176/AHD/2006 B.P. 1/4/96 TO 11/ 3/03 TIKI TAR INDS. BHANDUP/TALOJA V. ACIT CC-2 BRD PAGE 2 UNACCOUNTED SALES OF RS.1,40,87,998. THE AO HAD EST IMATED THE GP @ 18% INSTEAD OF 12.97% SUBMITTED BY THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN CHARGI NG INTEREST U/S..158BFA(1) OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL IN IT(SS) A NO.176/AHD/2006:- 1. THE LEARNED COMMISSIONER OF INC TAX (APPEALS) E RRED IN FACT AND IN LAW IN CONFIRMING THE ADDITION OF RS.10,89,098 BEIN G GP @ 17% ON UNACCOUNTED SALES OF RS.64,06,461. THE AO HAD ESTIM ATED THE GP @ 18% INSTEAD OF 12.97% SUBMITTED BY THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INC TAX (APPEALS) ER RED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN MAKING AD DITION OF UNACCOUNTED STOCK OF RS.11,22,559. 3. THE LEARNED COMMISSIONER OF INC TAX (APPEALS) ER RED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN CHARGING INTEREST U/S.158BFA(1) OF THE INC TAX ACT, 1961. FIRST OF ALL WE TAKE UP THE APPEAL OF THE ASSESSEE IN IT(SS)A NO.175/AHD/2006 . 2. THE BRIEF FACTS IN GROUND NO.1 OF THE ASSESSEE A RE THAT DURING THE COURSE OF SEARCH AT THE FACTORY PREMISES AND RESIDE NTIAL PREMISES, VARIOUS LOOSE PAPER FILES, REGISTERS AND OTHER DOCUMENTS WE RE FOUND WHICH WERE SEIZED AND INVENTORISED AT ANNEXURE-A/1 TO ANNEXURE -A/8, A/1 & A/2 AS PER PANCHANAMA ADDED 11-03-2003 AND ANNEXURE-A/1 TO A/3 9 AS PER PANCHANAMA DATED 15-04-2003. ON EXAMINATION OF THES E SEIZED DOCUMENTS AND ANNEXURE-A/1 FOUND FROM RESIDENCE OF SHRI RAJEN DRA K SHAH, PARTNER OF THE FIRM, IT WAS FOUND THAT THE ASSESSEE-FIRM WAS E NGAGED IN LARGE SCALE UNACCOUNTED PRODUCTION AND SALES. ON EXAMINATION OF SEIZED ANNEXURE-A/1, A PECULIAR PRACTICE OF RECORDING OF RECEIPTS/PAYMENT ON BACK SIDE OF THE VISITING CARD HAD BEEN OBSERVED. IT HAS BEEN FURTHER NOTED T HAT THESE FIGURES ARE NOT REFLECTED IN THE BOOKS OF ACCOUNT. THE SUMMARY OF U NACCOUNTED SALES NOTICED ON EXAMINATION OF THESE ANNEXURES IS AS UNDER:- IT(SS)A NO.175-176/AHD/2006 B.P. 1/4/96 TO 11/ 3/03 TIKI TAR INDS. BHANDUP/TALOJA V. ACIT CC-2 BRD PAGE 3 SEIZED MATERIALS FROM THE FACTORY PREMISES OF THE A SSESSEE IN RESPECT OF UNACCOUNTED SALES: ANNEXURE NO. AMOUNT OF UNACCOUNTED SALES (RS) A/1 10,81,791 A/4 14,53,381 A/14 21,53,871 A/19 3,47,660 A/24 480 A/27 16,95,915 A/28 38,88,859 A/30 30,03,800 A/37 94,580 A/38 9,600 TOTAL 1,37,29,937 SEIZED MATERIALS FROM THE RESIDENCE OF SHRI RAJENDR A K SHAH IN RESPECT OF UNACCOUNTED SALES: ANNEXURE NO. RELEVANT PAGE NO. AMOUNT OF UNACCOUNTE D SALES (RS) A/1 13-15 9,58,238/- THUS, THE TOTAL UNACCOUNTED SALES WORKS OUT TO RS.1 ,46,88,175/- AND ASSESSEE WAS ASKED TO EXPLAIN THE ENTRIES OF THE AB OVE SEIZED MATERIALS REGARDING UNACCOUNTED SALES AND ALSO DEFICIT TO STO CK VIDE NOTICE DATED 21-03- 2005. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE CLAIMED THAT THE SAME INSTANCE OF UNACCOUNTED SALES HAS BEEN RECORDED IN DIFFERENT ANNEXURE, AND THEREFORE, IT RESULTS INTO DUPLICATION. THE SAME EN TRY FINDS ITS PLACE IN THE SEIZED MATERIAL FOUND FROM R.K. SHAH AS WELL AS H.I . SOEIRO AND ALSO IN OTHER LOOSE PAPERS SEIZED FROM FACTORY / OFFICE. THE ASSE SSEE HAS ALSO CLAIMED THAT IN SOME INSTANCES BILL HAVE BEEN PREPARED AFTER SOM E TIME GAP NO THE SAME PARTY AND OF THE SAME MATERIAL TO WHOM THE DISPATCH OF MATERIAL HAVE BEEN MADE. TO SUPPORT HIS CLAIM THE ASSESSEE SUBMITTED A STATEMENT INCLUDING SUCH ENTRIES. THE ASSESSEE FURTHER SUBMITTED THAT I N THE ABSENCE OF COMPLETE DETAILS IN THE RECORD, THE ASSESSEE IS NOT IN A POS ITION TO GIVE EXPLANATION FOR THE SAME. HOWEVER, THE ACCOUNTED TURNOVER OF THE FI RM IS ABOVE RS.5 CRORE AND THERE MAY BE POSSIBILITY OF INTERNAL TRANSFERS FOR WHICH NO SATISFACTORY EVIDENCE CAN BE GIVEN AT THIS STAGE. IT WAS THEREFO RE REQUESTED THAT UNDISCLOSED INCOME MAY BE WORKED OUT ADOPTING THE G ROSS PROFIT RATE OF IT(SS)A NO.175-176/AHD/2006 B.P. 1/4/96 TO 11/ 3/03 TIKI TAR INDS. BHANDUP/TALOJA V. ACIT CC-2 BRD PAGE 4 MARGIN @ 12% ON UNACCOUNTED SALES. THE SUBMISSION O F THE ASSESSEE WAS CONSIDERED WHICH WAS FOUND TO BE CORRECT IN RESPECT OF ENTRIES AMOUNTING TO RS.6,00,177/- AND ACCORDINGLY UNACCOUNTED SALES WER E TAKEN AT RS.1,40,87,998/-. DURING THE COURSE OF SEARCH, AN I NVENTORY OF THE TOTAL PHYSICAL STOCK WAS TAKEN AND VALUED AT RS.26,67,598 /-. THE ASSESSEE FURNISHED A BALANCE-SHEET DURING THE POST-SEARCH IN QUIRIES AND DETAILS OF BOOK STOCK AS ON THE DATE OF SEARCH. ON EXAMINATION OF T HE SAME THE FOLLOWING SITUATION EMERGED. OPENING STOCK 12,52,482 SALES 3,20,57,986 PURCHASE / EXP. 3,09,85,379 WORK CONTRACT 6 1,001 GP @ 17.91% 57,52,510 CLOSING STOCK 58,71,374 TOTAL 3,79,90,361 3,79,90,361 AS AGAINST THE BOOK STOCK VALUE OF RS.58,71,374/-, THE PHYSICAL STOCK FOUND ON THE DATE OF SEARCH I.E. ON 11-03-2003 WAS ONLY OF R S.26,67,598/-. THUS, THERE ARRIVED DEFICIT IN STOCK TO THE EXTENT OF RS.32,03, 766/-. THE TWO BUSINESS CONCERNS WERE RUNNING THEIR BUSINESS FROM THIS PREM ISE. THE ASSESSEE IS ENGAGED IN MANUFACTURING OF BITUMEN PRODUCTS AND TH E OTHER UNIT NAMELY M/S. H.R.R. AGENCY, A PARTNERSHIP FIRM ENGAGED IN TRADIN G OF THESE PRODUCTS MANUFACTURED BY THE ASSESSEE ITSELF OR ANY OTHER FA MILY UNITS. SHRI RAJENDRA K SHAH (HUF) AND SMT. PARUL R SHAH ARE PARTNERS IN TH E SAID FIRM. DURING THE COURSE OF SEARCH AT THE PREMISES, AN INVENTORY OF F INISHED GOODS WERE PREPARED WHICH INCLUDED STOCK OF BOTH THE BUSINESS CONCERNS AND THEN THE PHYSICAL STOCK FOUND WAS COMPARED WITH BOOK STOCK O F BOTH THE UNITS AND STOCK DEFICIT OF RS.32,03,766/- AND RS.17,97,949/- WAS WORKED OUT IN THE CASE OF THE ASSESSEE AND M/S. H.R. AGENCIES. SINCE, NEIT HER THE STOCK WAS KEPT IN SUCH A MANNER SO THAT THE SAME COULD BE IDENTIFIABL E NOR ANY PERFECT STOCK REGISTER FOR MOVEMENT OF GOODS HAVE BEEN MAINTAINED . MOREOVER, SALE INSTANCES NOTICED ON THESE LOOSE PAPERS WERE ALSO N OT IDENTIFIABLE WHETHER SALE IS OF THE ASSESSEE OR M/S. H.R.R. AGENCIES. TH EREFORE, THE BOOK STOCK DEFICIT EMERGED AND UNACCOUNTED SALES WERE DETECTED ON COMPARISON WITH BOOKS OF ACCOUNT OF BOTH THE UNITS. THE UNACCOUNTED SALES FROM THESE PREMISES WAS CONSIDERED TO BE THAT OF THE ASSESSEE- FIRM AND ACCORDINGLY IT(SS)A NO.175-176/AHD/2006 B.P. 1/4/96 TO 11/ 3/03 TIKI TAR INDS. BHANDUP/TALOJA V. ACIT CC-2 BRD PAGE 5 STOCK DEFICIT IN THE CASE OF H.R.R. AGENCIES WAS DE ALT BY THE AO. IT WAS THE CONTENTION OF THE ASSESSEE THAT NON-RECORDING OF SA LES IN BOOK HAS RESULTED INTO DEFICIT OF STOCK IN BOOKS. THE UNACCOUNTED SAL ES AND DEFICIT IN STOCK REPRESENT EACH OTHER AND THEREFORE THE SAME SHOULD NOT BE TREATED SEPARATELY AND NO ADDITION WAS MADE. THE ASSESSEES ARGUMENT R EGARDING DEFICIT IN BOOK STOCK AND UNACCOUNTED SALES WAS FOUND ACCEPTABLE SI NCE THE TOTAL UNACCOUNTED SALES TAKEN IS GREATER THAN THE DEFICIT IN STOCK. THE CLAIM OF THE ASSESSEE FOR ADOPTING GROSS PROFIT AT THE RATE OF 1 2% WAS NOT CORRECT. DURING THE COURSE OF SEARCH, THE EVIDENCE WHICH REVEALS GP MARGIN WERE FOUND WHICH SEIZED FROM THE RESIDENCE OF SHRI RAJESH K SH AH AND ARE INVENTORIED AT PAGES 26 TO 29 AND 39 TO 40 OF ANNEXURE-A/1. AS PER WORKING ON THESE PAGES, PROFIT MARGINS ARE DEPICTED AT 17.81%, 18.81% AND 1 6.16% RESPECTIVELY. THE SEIZED MATERIALS FROM TALOJA FACTORY ON THE BASIS O F WHICH UNACCOUNTED SALES ARE DETECTED HAVE ALSO REVEALED THAT IN SEVERAL INS TANCES, FINISHED GOODS OF HIGHER GRADE ARE SOLD AS LOWER GRADE. SECONDLY, IN MANY CASES AS RECORDED IN ANNEXURE-A/3, A/6 & A/9, IT WAS ALSO FOUND THAT BIT UMEN IS SHOWN IN SALE BILL BUT ACTUALLY FELT ROLLS ARE SOLD. FURTHER, DISPATCH REGISTER RECORDS LOWER QUANTITY OF SALE THAN THE QUANTITY RECORDED IN SALE BILLS. T HESE EVIDENCES ALSO ESTABLISHED THAT THE GP MARGIN EARNED BY THE ASSESS EE AS MUCH HIGHER THAN ACTUALLY REFLECTED IN THE BOOKS. THE BUSINESS OF TH E ASSESSEE-FIRM AND THAT OF TIKI TAR INDUSTRIES, BARODA IS THE SAME EVEN THE MA NAGEMENT IS ALMOST THE SAME, THE DGP MARGIN IS THEREFORE TAKEN @ 18% AND A CCORDINGLY UNDISCLOSED PROFIT ON UNACCOUNTED SALE OF RS.1,40,87,998/- COME S TO RS.25,35,840/-. THEREFORE AN AMOUNT OF RS.25,35,840/- WAS MADE TAXA BLE AS UNDISCLOSED INCOME OUT OF UNACCOUNTED SALES DURING THE BLOCK PE RIOD BY THE AO. 3. THE LD. CIT(A) VIDE PARA-3 OF HIS ORDER, FOLLOWI NG THE ORDER OF TIKI TAR INDUSTRIES, BARODA DATED 31-03-2006 HAD ADOPTED THE GP MARGIN OF 18% AS UNDISCLOSED PROFIT ON THE UNACCOUNTED SALE OF RS.1, 40,87,998/-. IT(SS)A NO.175-176/AHD/2006 B.P. 1/4/96 TO 11/ 3/03 TIKI TAR INDS. BHANDUP/TALOJA V. ACIT CC-2 BRD PAGE 6 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSING OFFICER HAS WORKED OUT THE UNACCOUNTE D SALE AS WELL AS DEFICIT IN THE STOCK. SINCE THE UNACCOUNTED SALES WERE GREA TER THAN DEFICIT IN THE STOCK, THEREFORE THE AO DID NOT MAKE ANY ADDITION O N ACCOUNT OF DEFICIT OF STOCK TO THE FACT THAT NO COGENT EXPLANATIONS HAVE BEEN BROUGHT ON RECORD BY THE ASSESSEE BEFORE ANY OF THE AUTHORITIES BELOW OR EVEN BEFORE US WITH RESPECT TO QUANTUM OF UNACCOUNTED SALES OF RS.1,40, 87,998/-. NOW THE ISSUE REMAINS TO BE DECIDED WITH REGARD TO ESTIMATION OF GP. IT WAS CLAIMED THAT ASSESSEE HAS DECLARED A GP OF 12.67% AND REQUEST WA S MADE BEFORE THE AUTHORITIES BELOW TO ADOPT A GP RATE OF 12%. THE AO HAS WORKED OUT THE GP IN THE SEIZED ANNEXURE BETWEEN 16.16% TO 18.81% AND ACCORDINGLY HAS APPLIED 18% OF GP RATE ON THE UNACCOUNTED SALES. TH E LD. CIT(A) HAS GIVEN RELIEF AND HAS DIRECTED TO APPLY A GP RATE OF 17%. LD. AR INVITED OUR ATTENTION TO THE DECISION OF ITAT AHMEDABAD D BENCH IN THE CASE OF M/S. TIKI TAR INS. V. ACIT IN ITA NO.3232/AHD/2007 ORDER DATED 02-11-2007 WHERE THE ITAT HAD CONFIRMED THE GP RATE OF 15%, ON THE IDENTICAL FACTS. THE LD. CIT-DR HAS NOT BROUGHT ANY COMPARABLE CASE IN THIS REGARD. IN THE CIRCUMSTANCES AND FACTS OF THE CASE AND TO MEET BOTH THE ENDS AND JUS TICE, WE DIRECT THE ASSESSING OFFICER TO APPLY NET PROFIT RATE OF 15% O N THE UNACCOUNTED SALES. THE ORDER OF AO IS MODIFIED ACCORDINGLY. THUS, GROU ND NO.1 OF THE ASSESSEE IS PARTLY ALLOWED. 5. AS REGARDS GROUND NO.2 OF THE ASSESSEE, LD. COUN SEL FOR THE ASSESSEE ARGUED THAT THE PHOTO COPIES OF THE SEIZED DOCUMENT S WERE NOT PROVIDED AND THEREFORE INTEREST U/S.158BFA(1) CANNOT BE LEVIED. 6. AFTER HEARING THE PARTIES, WE ARE OF THE VIEW TH AT THE DEPARTMENT CANNOT BE PERMITTED TO LEVY INTEREST IF THE PHOTO COPIES O F THE SEIZED ANNEXURE IS NOT PROVIDED TO THE ASSESSEE. IN THE PRESENT CASE, THER E IS NOTHING ON RECORD ON WHAT DATE THE ASSESSEE MADE THE APPLICATION AND WHE N THE DEPARTMENT SUPPLIED THE PHOTO COPIES. THEREFORE IN THE INTERES T OF JUSTICE, THE MATTER IS IT(SS)A NO.175-176/AHD/2006 B.P. 1/4/96 TO 11/ 3/03 TIKI TAR INDS. BHANDUP/TALOJA V. ACIT CC-2 BRD PAGE 7 RESTORED TO THE FILE OF AO WHO WILL DELETE THE INTE REST U/S 158BFA(1) FROM THE DATE OF APPLICATION OF THE ASSESSEE FOR PROVIDING T HE PHOTO COPIES OF THE SEIZED ANNEXURE TILL THE DATE OF PROVIDING THE PHOT O COPIES BY THE DEPARTMENT. THUS, GROUND NO.2 OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. 7. AS REGARDS GROUND NO.3 OF THE ASSESSEE THE SAME IS GENERAL IN NATURE AND THEREFORE DOES NOT REQUIRE ANY ADJUDICATION. TH US, APPEAL OF THE ASSESSEE IN IT(SS)A NO.175/AHD/2006 IS PARTLY ALLOWED FOR ST ATISTICAL PURPOSES. NOW WE TAKE UP ASSESSEES APPEAL IN IT(SS)A NO.176/ AHD/2006. 8. AS REGARDS GROUND N.1 OF THE ASSESSEE, THE BRIEF FACTS ARE THAT DURING THE COURSE OF SEARCH AT THE FACTORY PREMISES AND RE SIDENTIAL PREMISES, VARIOUS LOOSE PAPER FILES, REGISTERS AND OTHER DOCUMENTS WE RE FOUND AND SEIZED AND INVENTORISED AT ANNEXURE A/1 TO A/31 AS PER PANCHNA MA DATED 11-03-2003. ON EXAMINATION OF THESE SEIZED DOCUMENTS AND ANNEXU RE-A/1 FOUND FROM RESIDENCE OF SHRIO RAJENDRA K SHAH, PARTNER OF THE FIRM, AND ALSO ANNEXURE- A/1 TO A/7 FOUND AND SEIZED FROM RESIDENCE OF SHRI MANOJ JAIN, AN EMPLOYEE OF THE FIRM, IT WAS FOUND THAT THE ASSESSEE-FIRM WA S ENGAGED IN LARGE SCALE UNACCOUNTED PRODUCTION AND SALES, ON EXAMINATION OF SEIZED ANNEXURE-A/1, A PECULIAR PRACTICE OF RECORDING OF RECEIPTS/.PAYMENT ON BACK SIDE OF THE VISITING CARD HAD BEEN OBSERVED. IT WAS FURTHER NOTED THAT T HESE FIGURES ARE NOT REFLECTED IN THE BOOKS OF ACCOUNT. THE SUMMARY OF U NACCOUNTED SALES NOTICED ON EXAMINATION OF THESE ANNEXURE IS AS UNDER: ANNEXURE NO. RELEVANT PAGE NO. AMOUNT OF UNACCOUNTED SALES (RS) A/31 21 37,500 A/1 (SEIZED FROM BHANDUP) 37 81,800 TOTAL 1,19,800 IN THE COURSE OF SURVEY U/S.133A CARRIED OUT AT THE BUSINESS PREMISES OF M/S. M.K ENTERPRISES AND MANILA ENTERPRISES, HYDERABAD F OLLOWING PURCHASE BILLS IT(SS)A NO.175-176/AHD/2006 B.P. 1/4/96 TO 11/ 3/03 TIKI TAR INDS. BHANDUP/TALOJA V. ACIT CC-2 BRD PAGE 8 OF TIKI TAR INDUSTRIES WERE FOUND. HOWEVER, ON VERI FICATION OF THE BOOKS OF ACCOUNT OF THE ASSESSEE, FOLLOWING BILLS WERE NOT F OUND TO BE ACCOUNTED FOR:- BILL NO. DATE AMOUNT 411 22/01/02 32,317 575 06/02/03 1,40,306 244 17/07/01 1,17,606 TOTAL 2,90,229 THE ASSESSEE WAS ASKED TO EXPLAIN THE ABOVE SEIZED MATERIALS AND HIS EXPLANATION REGARDING ABOVE NOTED UNACCOUNTED SALES . THE ASSESSEE IN ITS REPLY SUBMITTED THAT CONCEALED SALES IN RESPECT OF TALOJA & BHANDUUP PREMISES HAVE BEEN ACCEPTED AT RS.40 LAKH IN THE BL OCK RETURN FILED IN THE CASE OF M/S. TIKI TAR INDUSTRIES, BARODA. THE ASSES SEE FURTHER SUBMITTED THAT IN THE ABSENCE OF COMPLETE DETAILS IN THE RECORD, T HE ASSESSEE IS NOT IN A POSITION TO GIVE EXPLANATION FOR THE SAME. HOWEVER, THE ACCOUNTED TURNOVER OF THE FIRM IS ABOVE RS.5 CRORE AND THEY MAY BE POSSIB ILITY OF INTERNAL TRANSFERS BETWEEN OTHER FIRM FOR WHICH NO SATISFACTORY EVIDEN CE CAN BE GIVEN AT THIS STAGE. IT WAS THEREFORE REQUESTED THAT UNDISCLOSED INCOME MAY BE WORKED OUT ADOPTING THE GP RATE OF MARGIN @ 12% OF UNACCOUNTED SALES. THE SUBMISSION FILED BY THE ASSESSEE AS ABOVE WAS CONSIDERED BUT T HE SAME WAS NOT FOUND ACCEPTABLE IN VIEW OF THE EVIDENCE OF THE GP RATE O F MARGIN WAS ALSO FOUND DURING THE SEARCH AND SEIZURE ACTION. FROM THE SCRU TINY OF THE SEIZED PAPERS INVENTORIZED AT PAGES 26 TO 29 AND 39 TO 40 OF ANNE XURE A/1 FOUND AND SEIZED FROM THE RESIDENCE OF SHRI RAJESH K SHAH, THE MAIN PERSON OF THE GROUP, IT WAS CLEARLY PROVED THAT THE PROFIT MARGINS @ 17.81% , 18.81% AND 16.16% WAS VERY MUCH THERE IN THE BUSINESS. THE SEIZED MAT ERIALS FROM TALOJA FACTORY ON THE BASIS OF WHICH UNACCOUNTED SALES ARE DETECTE D HAVE ALSO REVEALED THAT IN SEVERAL INSTANCES, FINISHED GOODS OF HIGHER GRAD E ARE SOLD AS LOWER GRADE. SECONDLY, IN MANY CASES AS RECORDED IN ANNEXURE A/3 , A/6 & A/29, IT WAS ALSO FOUND THAT BITUMEN WERE SHOWN IN SALE BILL BUT ACTU ALLY FELT ROLLS WERE SOLD. FURTHER, DISPATCH REGISTER RECORDED LOWER QUANTITY OF SALE THAN THE QUANTITY RECORDED IN SALE BILLS. THESE EVIDENCE ALSO ESTABLI SHED THAT THE GP MARGIN IT(SS)A NO.175-176/AHD/2006 B.P. 1/4/96 TO 11/ 3/03 TIKI TAR INDS. BHANDUP/TALOJA V. ACIT CC-2 BRD PAGE 9 EARNED BY THE ASSESSEE WAS MUCH HIGHER THAN ACTUALL Y REFLECTED IN THE BOOKS. THE BUSINESS OF THE ASSESSEE-FIRM AND THAT OF TIKI TAR INDUSTRIES, BARODA IS THE SAME AND EVEN THE MANAGEMENT IS ALMOST THE SAME . THE GP MARGIN WAS THEREFORE TAKEN @ 18% AND ACCORDINGLY, UNDISCLOSED PROFIT ON UNACCOUNTED SALE OF RS.64,06,461/- WORKED OUT AT RS.11,53,163/- . THEREFORE AN AMOUNT OF RS.11,53,163/- WAS MADE TAXABLE AS UNDISCLOSED INCO ME ON THE UNACCOUNTED SALES DURING THE BLOCK PERIOD. 9. THE LD. CIT(A) FOR THE REASONS MENTIONED IN HIS ORDER APPLIED A GP RATE OF 17%. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. TO MEET BOTH THE ENDS AND JUSTICE AND OUR DECISION ON IDENTICAL ISSUE IN IT(SS)A NO.175/AHD/2006 HEREINABOVE, WE DIRECT THE ASSESSING OFFICER TO APPLY NET PROFIT RATE OF 15% ON THE UNACCOUNTED SAL ES. THE ORDER OF AO AND OF THE LD. CIT(A) IS MODIFIED ACCORDINGLY. THUS, GROUN D NO.1 OF THE ASSESSEE IS PARTLY ALLOWED. 11. AS REGARDS GROUND NO.2 OF THE ASSESSEE, LD. CIT DR POINTED OUT THAT THE SAME DOES NOT EMANATE FROM THE ORDERS OF LD. CI T(A). THE LD. AR CONCEDED THIS FACT. 12. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, SIN CE THE GROUND DOES NOT EMANATE FROM THE ORDER OF LD. CIT(A), THEREFORE THE SAID GROUND OF THE ASSESSEE IS DISMISSED. 13. AS REGARDS GROUND NO.2 OF THE ASSESSEE, LD. CO UNSEL FOR THE ASSESSEE ARGUED THAT THE PHOTO COPIES OF THE SEIZED DOCUMENT S WERE NOT PROVIDED AND THEREFORE INTEREST U/S.158BFA(1) CANNOT BE LEVIED. IT(SS)A NO.175-176/AHD/2006 B.P. 1/4/96 TO 11/ 3/03 TIKI TAR INDS. BHANDUP/TALOJA V. ACIT CC-2 BRD PAGE 10 14. AFTER HEARING THE PARTIES, WE ARE OF THE VIEW T HAT THE DEPARTMENT CANNOT BE PERMITTED TO LEVY INTEREST IF THE PHOTO COPIES O F THE SEIZED ANNEXURE IS NOT PROVIDED TO THE ASSESSEE. IN THE PRESENT CASE, THER E IS NOTHING ON RECORD ON WHAT DATE THE ASSESSEE MADE THE APPLICATION AND WHE N THE DEPARTMENT SUPPLIED THE PHOTO COPIES. THEREFORE IN THE INTERES T OF JUSTICE, THE MATTER IS RESTORED TO THE FILE OF AO WHO WILL DELETE THE INTE REST U/S 158BFA(1) FROM THE DATE OF APPLICATION OF THE ASSESSEE FOR PROVIDING T HE PHOTO COPIES OF THE SEIZED ANNEXURE TILL THE DATE OF PROVIDING THE PHOT O COPIES BY THE DEPARTMENT. THUS, GROUND NO.2 OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. 15. IN THE RESULT, BOTH THE APPEAL OF THE ASSESSEE IN IT(SS)A NO.175 S&176/AHD/2006 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. % $ !'# &'( 17 /0 2 /2012 ! , - . / THIS ORDER PRONOUNCED IN OPEN COURT ON 17/02/ 2012 . SD/- SD/- ( G.C.GUPTA ) ( B.P. JAIN ) (VICE PRESIDENT) (ACCOUNTANT MEMBER) &'(- 17/02/2012 1 / DKP* $ $ $ $ 223 223 223 223 43' 43' 43' 43' / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ''27 8 / CONCERNED CIT 4. 8- / CIT (A) 5. 3;. 2227, 27#, 1 / DR, ITAT, AHMEDABAD 6. .>? @% / GUARD FILE. BY ORDER/ $ , /TRUE COPY/ A/1 ' 27#, 1 /