The ACIT, Central Circle-2(3), Ahmedabad V. Shri Pravin Virchand Shah, Mehsana

ITSSA 180/AHD/2005

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5277 (ITAT-AHMEDABAD)
• Duration Of Justice: 16 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-01-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 13-06-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. PRASAD
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Revision of order; Income from undisclosed sources; Document seized; Corroborative evidences; Competent authority; Documents seized
• Section: 68; 69; 132; 69C; 264; 158BC; 48; 13; 22

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ B’’ BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT, And SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./IT(SS)A No. 180/AHD/2005 िनधाᭅरण वषᭅ/Asstt. Year: Block Period (01/04/1996 to 06/06/2002) A.C.I.T., Central Circle-2(3), Ahmedabad. Vs. Shri Pravin Virchand Shah, Prop. M/s Ashirvad Traders, 11, Main Lane, Market Yard, Unjha, Mehsana. PAN: AELPS5209L (Applicant) (Respondent) Revenue by : Shri R. Prasad,CIT. D.R Assessee by : Shri S.N. Soparkar, Sr. Advocate with Shri Parin Shah, A.R सुनवाई कᳱ तारीख/Date of Hearing : 12/11/2021 घोषणा कᳱ तारीख /Date of Pronouncement: 28/01/2022 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-III, Ahmedabad, dated 28/03/2005, arising in the matter of assessment order passed under s.158BC(c) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year (Block Period). IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 2 2. The fact in brief is that the assessee is an individual engaged in the business of trading on commission basis through propriety concern in the name and style of M/s Ashirvad Traders. A search under section 132 of the Act was carried out on 06- 06-2002 in group of cases and assessee is one of the person of the group. During the search, various documents were found and seized indicating undisclosed income of the various assessee of this group. Notice under section 158BC was issued and served on the assessee. In response the assessee filed the return of income for block period declaring undisclosed income of Rs. 7,95,000/- which was assessed at Rs. 4,61,93,130/- after making addition on different account. However on appeal by the assessee the ld. CIT(A) deleted the all the addition made by the AO. Against which the Revenue is in appeal. 3. The Revenue has raised the following grounds of appeal: 1. The ld. CIT(A) erred on facts in holding that the assessee has earned only commission income in the admittedly unaccounted sales of 434 bags of jeera in January 2002, as evident from Annexure A-41. The ld. CIT(A) also erred in law in deleting the resultant addition of Rs. 20,42,331/-. 2. The ld. CIT(A) erred on facts in erroneously referring to the order u/s. 264 passed by CIT(Central)II, Ahmedabad, on the order u/s. 132B in this case and thereby holding that there was no sales proceeds of 506 bags of Isabgul for which the addition of Rs. 9,10,800/- was made. The order u/s. 264 nor the submission made during the proceeding u/s. 264 had not held or claimed that these 506 bags of Isabgul had been explained or that the same had not been sold. The ld. CIT(A) also erred in law deleting this addition of Rs. 9,10,800/-. 3. The ld. CIT(A) erred in law and on facts in disregarding the statement under oath given by the accountant of the assessee, Shri Mahindra Patel only on the ground that he had retracted from the statement by filling an affidavit later on. The CIT also erred in deleting the resultant addition of Rs. 20,98,800/- being the cost of Rs. 23,320/- kg of Jeera, which had been sold outside books in F.Y. 02-03 and which had been detected from Annexure A-41. The ld. CIT(A) has also erred in law and on facts in not taking cognizance of the finding given by the CIT(C)II), Ahmedabad in his order u/s. 264 (Page-5) where in the statement of Shri Mahendra A. Patel is referred to. 4. The ld. CIT(A) erred in law on facts in erroneously referring to the order u/s. 264 passed by CIT(Central)-II on the proceedings u/s. 132B in this case and thereby holding that the purchase of 5879 bags of jeera is included in the books. The CIT(A) also erred on facts and in law in deleting the addition of Rs. 3,61,77,994/- being the purchase price of 567875 kg of jeera, not entered in the regular books of accounts. The ld. CIT(A) has quoted a part of the order u/s. 264 passed by the CIT(C)-II, totally out of context because the CIT(C)-II Ahmedabad had, in fact held that the claim of the assessee regarding the stock belonging to farmers was untenable (Page-9 of the order). 5. The ld. CIT(A) erred in law and on facts in erroneously referring to the order u/s. 264 passed by the CIT(Central)-II, Ahmedabad and thereby deleting the addition of Rs. 29,66,094/- being the unrecorded purchase and thereby unexplained investment in 2436 bags of Isabgul. The CIT(C)-II, in his order u/s. 264 had adjudicated only on the quantum of stock found vis IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 3 a vis the book stock of the assessee. During the block assessment, the unrecorded transactions were elaborately explained and proved. Therefore, CIT(A) erred in referring to the order u/s. 264 out of context. 6. The ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 9,549/- on account of excess stock of 6 bags of Isabgul wherein he had erroneously relied on the assessee’s misrepresentation of the real facts of the trade. 7. The ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 1,45,260/- made on account of the excess stock of Trabuj seeds. 8. The ld. CIT(A) erred in law and on facts in deleting the suspended and protective addition of Rs. 1,41,90,841/- made on account of the unexplained and hidden stock of jeera of the assessee, disregarding and ignoring the fact that Police investigation in this regard is yet to be finalized. 9. The ld. CIT(A) erred in law and on facts in deleting the suspended and protective addition of Rs. 2,27,77,749/- made on account of unexplained stock of jeera of 3,20,814/- kg found during the search. 10. The ld. CIT(A) erred in law and on facts in deleting the suspended and protective addition of Rs.1,20,06,548/- made on the basis of page 1 & 2 of the Spiral diary Annexure A-04 on which the key man of the group and the father of the assessee, Shri Virchand Shah had stated on oath that the figures noted in the pages are sales figures of the assessee. 11. The ld. CIT(A) erred in law in totally ignoring the sworn statements of the accountant of the group and of Shri Virchand Shah, father of the assessee, recorded during the search and post search enquires and thereby solely relying on some affidavits prepared by these persons negating their earlier depositions under oath. 12. The ld. CIT(A) erred in law and on facts in holding that the substantial addition of Rs. 19,87,756/- be apportioned equally between the three assessee’s irrespective of the fact that the purchases had been effected in the case of the assessee only. 13. The ld. CIT(A) erred in law in directing that the undisclosed income of the group of the assessee shall be apportioned equally between the three assessee even though the assessee or his associates count not, at any point of time, identify any stock or part of trade as belonging to the other concerns. 14. On the facts and in circumstances of the case, the ld. CIT(A) out to have upheld the order of the assessing officer, on the above points. 15. It is, further, prayed that the order of the ld. CIT(A) may be set a side and that of the Assessing Officer be restored to the above extent. 4. The first issue raised by the Revenue is that the ld. CIT(A) erred in deleting the addition of Rs. 20,42,331/- on accounted sale of sale of jeera bag by holding that the assessee only earned commission income in such sale. 5. During assessment proceeding, the AO from seized material being Annexure A 041 and pages 39 to 50 of the annexure found that the assessee has made unaccounted sale of 434 bag of Jeera. In this regard the relevant observation of the assessing officer at page 22 of the assessment order is reproduced as under: “These bills have been generated from a machine numbered plain book as is evident from the numbers super scribed on this bills. The continuity of this bills can also be established because the bills so found are as under:- IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 4 Bill No. Date 58 07/01/2002 (Presumably new book) 10 07/01/2002 11 07/01/2002 13 07/01/2002 14 07/01/2002 15 07/01/2002 16 07/01/2002 18 18/01/2002 20 18/01/2002 21 18/01/2002 22 18/01/2002 23 18/01/2002 The sequence and the module discussed above points straight to a logical inference and not a mere presumption that the assessee had been doing totally unaccounted trade and also was destroying the bills or the counter foil so issued. These seized bills are not bearing the address, sales tax number or any other form of identification of the assessee. They are merely meant for intimation of the price of the goods and the amount so to be recovered almost all of these bills bear notings as to how much money has been recovered. The total of the sales made as detected in these bills to come to 434 bags of Jeera. The total sales proceeds of Jeera as reflected in these bills and as having been shown as collected in cash, come to Rs. 20,42,331/-. The assessee could not reconcile these sales transactions with any of its books of account. The sales proceeds discussed above are clearly unaccounted cash receipts of the assessee and the same warrants treated as undisclosed income. Corresponding purchases of these bills were not detected during the search. This is because of the obvious modus operandi of the assessee firm to destroy the evidences of purchases and sales, once they are squared up. Under the circumstances, the unaccounted receipts of Rs. 20,42,331/-, are prices of both cost factor and the undisclosed profit factor are taxes u/s. 158BB of the Act. 5.1 The AO on perusal of the above found that bills were not in a serial numbers, bills were not bearing the address, sales tax number or any other form of identification of the assessee. They are merely meant for intimation of the price of the goods and the amount so to be recovered, almost all of these bills bear noting as to how much money has been recovered. The total of the sales made as detected in these bills come to 434 bags of Jeera. The total sales proceeds of the Jeera as reflected in these bills and as having been shown as collected in cash, come to Rs. 20,42,331/-. The AO treated the same as unaccounted sale of the assessee and added to the total income of the assessee. IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 5 6. The aggrieved assessee preferred an appeal before ld. CIT(A) 6.1 Before the ld. CIT(A), the appellant submitted that while making the above addition the assessing officer has ignored the explanation given to him which is also reproduced on page 11 of assessment order. The factual explanation furnished by the assessee in response to the show cause is reproduced here in below as contended before the CIT(A). The same is reproduced from the order of the CIT(A): The appellant submits that, the Assessing Officer has while making the above addition totally ignored the explanation given to him which is also reproduced on page 11 of the assessment order. He has also not started as to why the said explanation is not acceptable to him. The appellant now reproduces the said explanation for ready reference as under: “You have treated 434 bags equivalent to 23,870 kgs. as unrecorded sales. You appear to have taken the figures of 434 Bories from Ann. A attached with show cause notice. They are the entries pertaining to Adat commission and not pure sale of jeera. A chart is prepared from the seized “Ann.A” in which commission as per those bills is separately mentioned, which evidently proves that they are the Adat transactions and pure sale transactions. Date Name of the purchaser Page No. of Ann. A-41 Bori Adat Comn. 7.1.2002 Manilal Prabhudas 46 81 2973.94 17.1.2002 Manilal Prabhudas 40 13 522.40 17.1.2002 Babubhai Govindbhai 41 24 939.57 17.1.2002 Noble Trading Co. 44 10 444.06 17.1.2002 Global Trading Co. 48 131 xerox not available 18.1.2002 Kantibhai Jivram 39 50 2392.42 18.1.2002 Choksi Dahyalal Vadilal & Sons 42 4 211.42 18.1.2002 Patel Vasantkumar Tulsidas 47 37 1655.56 18.1.2002 C.R. Enterprise 49 45 2185.76 18.1.2002 Mukeshkumar Vishnuprasad 50 39 1638.19 434 It may please be seen that they are not the sale transactions but the Adat transactions and, therefore, such transactions would not be recorded in the regular books of accounts. Copies of seized Delivery Notes are enclosed which show that the assessee has earned commission only on the aforesaid 434 Bories” Thus, it will be appreciated that the above said seized papers represent the commission business of the assessee and such commission income has been considered by the assessee in total disclosure of the group cases of Rs. 24.85 lacs. In view of the above position the addition made for the alleged unaccounted sales of Rs. 20,42,331/- as appellants income from the sale of Jeera is unjustified and unaccounted.” IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 6 7. The ld. CIT(A) after considering the submission of the assessee deleted the addition by observing as under: I have looked into the assessment order and have considered the contentions put forth on behalf of the assessee. I find that except the alleged logical interpretation on which the addition is based nothing has been brought on record to conclusively establish that the assessee has sold Jeera on his own account and not on commission basis. In view of what is stated by the assessee and reliance placed on the seized document coupled with the absence of any conclusive evidence brought on record by the Assessing Officer, I agree with appellant that he sold 434 bags of Jeera on commission basis only. As for the commission income, as started by the appellant it is covered under the disclosure of Rs.7,95,000/- each by the assessee and the other two concerns of the assessee group. The addition is therefore deleted. 8. Being aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before us. 9. The ld. DR before us relied on the order of the AO whereas the ld. AR before us filed a paper book running from pages 1 to 1024 and vehemently supported the order of the ld. CIT-A. 10. We heard the rival contention of both the parties and perused the material available on record. The addition made in this ground is relates to seized document being Annexure A-041 relating to sale of 434 bag of jeera treated as unaccounted sale of the assessee by the AO. However the ld. CIT(A) held that same is not the sale of the assessee, as such assessee only earned commission income on such sale. The ld. CIT(A) has placed a detailed chart on page 12 of his order from the submission of the assessee. The said chart shows the date of transaction, Name of purchaser, Page number of Annexure A041, number of bags(Bori) and the amount of the Adat Commission earned by the assessee. 10.1 We have gone through the factual aspects and submission in response to the show cause notice, observation of the assessing officer in the assessment order and order of the CIT(A). All the material and information with respect to Annexure A041 has been compiled in the paper book and was also made available to DR by the IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 7 assessee. The ld. AR furnished detail of the party to whom sales were made along with detail of quantity, commission income earned and their reconciliation. It is also not disputed that the assessee is also engaged in the business of selling the goods on commission basis and the assessee has offered the commission income received on sale of 434 bags of jeera. 10.2 Before us nothing has been brought on record by the ld. DR to conclusively establish that the assessee has sold Jeera on his own account and not on commission basis. No any defect pointed out in the submission and records such as reconciliation sheet made available by the appellant, and in the commission offered to tax by the assessee, as such no any enquiry carried out from the parties to assessee claimed to have sold goods on commission basis. Therefore, in the absence of contrary finding and since the assessee has filed the reconciliation of the entries with that the name of the parties, we inclined to agree with the categorical finding given by the CIT(A). 10.3 Therefore, in view of the above discussion the contention of the ld. DR that instead of commission income the entire sale proceeds is to be added fails on merits and in law. Hence the ground of appeal of the Revenue is dismissed. 11. The second ground is that the ld. CIT(A) erred in deleting addition of Rs. 9,10,800/- on account of unaccounted sale by holding that there was no sale of 506 bags of Isabgul. 12. It is derived by the assessing officer that the assessee has sold 506 bags of Isabgul without recording the sales proceeds of this commodity and thereby a sum of Rs. 9,10,800/-(506*75*24=910800) being the price of the goods is added as unaccounted sales of Isabgul. The impugned unaccounted sale was calculated based on the seized document as detailed below: IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 8 Narration Recorded (bags) Unrecorded(bags) Total (bags) Book stock as on 31-03-2002 405 -NIL- 405 Add : Purchase 2048 2436 4484 Total 2453 2436 4889 Less (1) Sales 673 506** 1179 Net Stock 1780 1930 3710 ** Addition of Rs. 9,10,800/- made on this 506 bags (506*75*24=910800, 506*75=37950 kg). In view of the above, the AO added the sum of Rs. 9,10,800.00, treating as unaccounted sale, to the total income of the assessee. 13. Aggrieved assessee preferred an appeal before the ld. CIT-A who observed that there was no sale proceeds of 506 bags of Isabgul for which the addition has been made. The CIT(A) has further observed that having regard to the details of stock reconciliation filed by the assessee which has been ignored by the Assessing Officer and having regard to the fact that the assessee was having Vachyati Mal which fact has been accepted by the Department. The CIT(A) has observed that there was no justification in holding that the assessee has earned a further undisclosed income of Rs. 9,10,800/- and he has ordered for deletion of this addition. 14. It would also be relevant here to take extract from the order passed by the Commissioner of Income Tax, Central -II, Ahmedabad here in after ( CIT ( C ) – II ) on 26-06-2002 i.e. before the assessment order on 30-06-2004 in connection with the goods seized by the department. 14.1 Extract from the para 2 of page of order dated 26-06-2002 u/s. 264 “..........The assessee come forward with a petition dated 14.02.2003 u/s. 264 filed on 20.02.2003 pleading that in the above cases the seizure made at the time of search and retained even after passing order under section 132B may be released.........” 14.2 Extract from the first para of page 4 of order dated 26-06-2002 u/s. 264 IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 9 “The assessee for the first time on 19.06.2002 submitted a list of farmers claiming the goods i.e. Jeera and also castor seeds and Isabgul belonging to them. In the petition u/s. 264 dated 22.02. 2003 it is stated that confirmation letters giving details of vehicle number which head transported the woods claimed to be belonging to the farmers, proof of ownership of land etc. were submitted to support the claim that the goods belonging to farmers as discussed above. It was also claimed that 15743 kgs. of jeera purchased in the period 01.04.2002 to 6.6.2002 has not been considered while working out the booked stock of jeera on the date of the search. The assessing officer in his remand report as per direction of the undersigned has considered this aspect and after taking into account the claim of the assessee has worked out the closing stock.....” 14.3 Extract from the second para of page 9 of order dated 26-06-2002 u/s. 264 “ISABGUL In the petition u/s. 264, it is claimed that purchases made from 5 farmers from 8.6.2002 to 11.6.2002 as per page 7 of the petition u/s. 264 have not been given credit while working out the profit. The A. O. in his verification report submitted to me that during the course of search 278250 kgs of Isabgul was found and seized. There after 30381 kgs and 89475 kgs of Isabgul have been released u/s. 132B order dated 21.10.2002 and 9.12.2002 respectively. The book stock as on 5.6.2002 is verified to be of 209748 kgs and after adding further purchase between 8.6.2002 and 11.6.2002 the same is worked out to 323913 kgs. 278250 kgs of Isabgul were found on the date of search. Since, the verified booked stock as per the A. O. is worked out to 323913 kgs as against the Isabgul found on the date of search of 278250 kgs no seizure u/s. 132(1) second proviso is called for and accordingly the remaining stock of 188775 kgs of Isabgul is directed to be released forthwith.” 14.4 In the assessment order on page 23 para 5.2.1(b) the assessing officer noted that : “ As discussed in the show cause notice and also in the transactions charts of the commodity, the assessee was found to have sold 506 bags of Isabgul without recording the sale proceeds...........” 14.5 While making the above observation the AO has not mentioned which shows cause notice he is referring whether before the reconciliation or after the reconciliation ? The above finding of the AO is contrary to the finding given at the IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 10 time of the proceeding before CIT(C)-II where considering the sufficient explanation no seizure was confirmed and the goods were released. The proof were submitted that the goods to the extent of the 89475 kg belonging to the farmer was also placed on record. Not only that for recording this reasons that the goods sold of 506 bags were out of the books and are not supported from the evidence seized during the course of search operation this is pure premutation and combination that AO has accepted and since, in the beginning the assessee has explained the details of stock before CIT(C)-II and the DR has not pointed any further reference to that basis information. 14.6 The CIT(A) has considered the reconciliation statement provided by the assessee and the fact that 784 bags were not considered of the godown at 118 APMC Unava. The CIT(A) has also considered the goods received from the farmer’s of 1193 kgs lying in the godown of the assessee. Even in the remand proceeding before CIT(C)-II the has accepted that stock of Isabgul is not required to seized as it is in line with the book stock. Considering this factual aspect, the CIT(A) has deleted the addition of Rs. 9,10,800/- by allowing the ground of appeal of the assessee. 15. Being aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before us. 16. Both the ld. DR and AR vehemently supported the order of the authorities below as favorable to them. 17. We heard the rival contention of both the parties and perused the material available on record. We have persuaded the reconciliation of stock and seized material. The DR did not draw specific evidence for sale of this 506 bag sale of Isabgul out of the books with reference to the seized material. The learned Departmental representative vehemently submitted that there is no mistake in the order of the assessing officer. We have carefully considered the rival contentions IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 11 and considering the facts as stated above, we concur with the finding of the CIT(A) on this aspect and dismiss this ground of appeal of revenue on the basis of the reasoning that before CIT(C) -II the assessee has reconciled the quantity, given the details of the farmer whose goods are lying, the stock is duly reconciled in the paper book filed before us and the balance stock as argued before us are covering the adat commission disclosed in respect of the quantity of goods that alleged to have been sold as sale made on behalf of farms and the quantity of the goods lying with the assessee even on the date of search thus, the fact that the assessee is engaged in the business of adat commission and vachyati sale the sale computed by the assessing officer without any reference to the seized material and therefore, we find no merits in respect of this addition made the ground of appeal of the department dismissed. 18. The third ground of the Revenue appeal is that ld. CIT(A) erred in deleting addition of Rs. 20,98,800/- made on account of unaccounted sale of jeera for 23320 kg as admitted on oath by the accountant of the assessee. 19. The AO during assessment proceeding from the seized material being annexure A 41 found that the assessee during F.Y. 2002-03 has made sale of commodity Jeera weighing to 23,320 kg @ Rs. 90 per Kg. which was not accounted in books of account as admitted by the accountant of the assessee namely Shri Mahendra Ambalal Patel in statement recorded as on 06-06-2002. Accordingly the AO made the addition of Rs. 20,98,800 (23320 x 90) to the undisclosed income of the assessee. 20. Aggrieved assessee preferred to appeal before ld. CIT (A) who deleted the addition made by the AO by observing that addition was made on the basis of statement of the accountant of the assessee recorded at time of search, which was subsequently retracted by filling affidavit before the competent authority. Further the assessee has reconciled the total quantity of jeera found and made discloser of commission income on such sale of jeera. IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 12 21. Being aggrieved by the order the learned CIT(A) the Revenue is in appeal before us. 22. The ld. DR at the time of hearing heavily relied upon the order of the AO. The ld. DR argued that the accountant of the assessee has accepted on oath that there was unaccounted sale of Jeera though same was retracted after some which is nothing but afterthought. Thus the addition should be sustained. 23. On the other hand ld. AR for the assessee has filed a detailed chart reconciling the total jeera commodity, showing that the assessee has computed the undisclosed commission income on sale of various commodities of farmer’s goods. The fact that the goods are lying with the assessee is of the farmer has been accepted by the CIT(C)-II while releasing the seized goods. Thus the assessee was selling the goods of farmers on commission’s basis. The AR of the assessee also submitted that whatever undisclosed commission income is offered is not disputed. Therefore, merely on the statement of the accountant believing that it is unaccounted sale is incorrect and the alleged sale is covered in the three group concerns and therefore, the grievance of the department is addressed. 23.1 The AR of the assessee vehemently argued that while making the addition the department has taken a stand that the addition is purely based on the statement of an accountant namely Shri Mahindra Patel, that transaction pertains to F. Y. 02- 03. The statement that the department is relying is retracted. The appellant has already disclosed the adat commission on the undisclosed quantity of the commodity jeera which also cover the entries in seized material being Annexure A041 and therefore, the finding of the AO is erroneous and finding of the CIT(A) is correct based on the facts available on record. 24. We have heard the rival contention of both the parties and perused the material available on record. Admittedly the addition of Rs. 20,98,000/- for IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 13 unaccounted sale of jeera weighing 23320 kg was made by the AO on the basis of admission by the accountant of the assessee which was deleted by the ld. CIT(A). The CIT(A) has given a finding that as the statement relied upon is retracted and assessee has earned commission income out of such sales which would be covered in the total disclosure by the group. 24.1 We have also gone through the content of the affidavit filed by Shri Mahendra A. Patel. The affidavit filed states that they did not have the correct facts on hand have requested to call for the owner at the premises and in their absence the statement has been recorded forcefully without the correct fact being explained. The ld. AR has been able to explain his contention by filling the reconciliation of the quantity of jeera and commissions income earned on such sale. It is also not out of place to mention that the assessee is engagaed in selling of various commodity of farmers on commission basis as held CIT while releasing the goods seized during search. On the factual aspect the ld. DR has not brought anything on record except what is contended in the assessment order, argued that the addition is based on the statement of an accountant considering the same as unaccounted sale as evidence from the statement of the accountant. The department has not contradicted the fact being already on record from the the affidavit is filed, nothing discussed against about the facts filed in affidavit or in the quantity of the jeera reconciled in the paper book. The same is not found faulty or wrong at this stage too and thus the addition based merely on admission in statement which is not reliable no addition survives and thus we concur the finding given by the CIT(A). Not only that the grievance of the department that this sale is not accounted is also addressed as the appellant has already accepted that they have disclosed the income earned. Not only that the appellant has reconciled the total quantity of 567875 kg of jeera found during the search. Thus, the entries found at Annexure A041 is of the goods on vachyati goods and the commission income has already been disclosed as unaccounted income and therefore, we confirm the views of the CIT(A) so far as this addition is concern, hence ground of appeal of the Revenue is dismissed. IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 14 25. The fourth ground of appeal is in relation to the deletion of the addition of Rs. 3,61,77,994 being the purchase price of 567875 kg of jeera not entered in the regular books of accounts as unexplained investment in purchase of jeera u/s. 69 of the Act. 26. The figure of the addition is worked out considering the total of jeera recorded as purchase and by reducing an amount which is already taxed as unexplained sale dealt with in ground no 1 & 3. Thus, the figure of total alleged jeera purchase at Rs. 4,03,19,125 less Rs. 20,42,331/- (Ground no. 1) and Rs. 20,98,900 ( Ground no. 3) comes to Rs. 3,61,77,994/- is added as purchases not entered in the books of account of the assessee, and the view of the CIT(A) that the stock was belonging to the farmer is untenable. 26.1 The assessing officer during the course of assessment proceedings based on seized material found out that the assessee had purchased 15,371 bags of Jeera as detailed below: Bags in number ( i ) Purchase bills appearing in Annexure A-29** 6655 ( ii ) Purchase bills appearing in Annexure A-27** 4972 ( iii ) Purchase bills appearing in Annexure A-39** 1332 ( iv ) Purchases clearly marked as “Vyapar Khatu” in Annexure A- 22 2412 Total number of Bags 15371 26.2 The assessing officer further observed that the 15371 bag of jeera weighing at 845405 kgs of Jeera whereas the appellant had recorded purchase of jeera at 277530 kg only. Thus balance 567875 kg of jeera have remained unrecorded. The accountant of the assessee also admitted in statement recorded under section IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 15 132(4) that many purchases were not recorded in the books of account. The AO worked out the value of unaccounted purchase at Rs. 4,03,19,125/- by taking average cost of jeera at Rs. 71 per kg. The AO treated the same as unexplained investment in purchase under section 69 of the Act. However the AO against this has given set off to the extent of Rs. 41,41,131/- on account of addition made from unrecorded sales. While making addition the assessing officer has given following reasons :- (a) The accountant of the assessee firm admitted that many of the purchase were made in cash and had not been entered into the regular books of accounts. (b) Practice of doing unaccounted trade is found from Annexure A-22 and the separate vyapar Khatu mentioned therein.( The assessee has dishonored this evidence) (c) Unaccounted purchases found as per annexure A29, A-39 & A-27 are examples of unrecorded investments. (d) The assessee’s cliam that incidental expenses and some purchases are debited in the books is irrelevant as according to the Assessing Officer the purchases are not fully shown in the books. It is stated by the Assessing Officer that the accountant of the assessee had identified certain bills ( Computer generarted and not in the normal bill book form ) and had certified them to have been the purchase made in cash which had not been accounted for. It is stated that therefore, the claim that hamali charges are debited for this accounted purchases does not hold any value. The addition made is on account of investment part of unaccounted purchase and not on petty expenses. 26.3 The assessing officer in his order calculated the consolidated stock of three concerns operative at the premises being searched and the same is tabulated here in below for the sake of brevity of the facts: Under the circumstance combined stock position of all your 3 concerns on the date of search will be as under: Narration Recorded Kg Unrecorded kg Total kg Books stock as on 31.3.2002 190631 - 190631 Add ; Purchases 277530 567875 845405 IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 16 Total 468161 567875 1036036 Less : (1) Sales 320815 23320 344135 (2) Unrecorded sale of Jan 2002 deteced in A041 to be reduced from the book stock of 31.3.2002 23870 23870 Net stock 147346 520685 668031 26.4 The actual stock of Jeera found on the date of search was of 468160 kg as against the accounted book stock of 147346 kg. 26.5 The assessing officer further on page 23 of his assessment order after considering the show cause notice and replies filed by the assessee considered that the total purchases by the assessee during the year for trade was of 15371 bags or 845405 kg. Out of this, the assessee was seen to have above unrecorded quantity of 567875 kg of Jeera which was valued at Rs. 4,03,19,125.00 and added the same after setting off the amount ( Rs. 41,41,131.00) of unrecorded sale (Rs. 3,61,77,994.00) to the total income of the assessee. 27. Aggrieved assessee preferred to appeal before learned CIT(A) who deleted the addition made by the AO by observing as under: 7.2 I have considered the assessment order and the above submissions made on behalf of the appellant and also the chart submitted by the appellant which shows the correct amount of purchases based on the seized material. It seen that as explained by the assessee, if the duplications etc.. are excluded the assessee has purchased 5S79 bags and that these bags are duly recorded in the books. This positions about and duty recorded begs in the books has also been accepted in the proceedings u/s. 264 when the CIT has observed that : "The A.O has re-verified the claim and accordingly worked out the book stock as on 05.06.2002 as 227053 Kgs. Accordingly, the excess stock on 05.06.2002, with reference to the book stock as verified above even after considering the claim of the assessee relating to purchases between the period 1.4.2002 to 5.6.2002, is 227053 kgs. Assessee relating to purchases between the period 1.4.2002 to 5.6.2002 is 227O53 kgs. The excess stock accordingly works out to 241107 kgs. as against the seized stock of 256850 kgs under the second proviso cf section 132(1), Accordingly, jeera seized to the extent of 15743 kgs is directed to released by the A.O. in view of the above f actual position. * IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 17 The above para from the order of the CIT U/s. 264 confirms the claim that 5879 boys are duty recorded in the books. In view of this position, I hold that there is no justification for making any addition on account of unrecorded purchase which is made at Rs. 3,61,77,994/- by the Assessing Officer. This addition is accordingly deleted. 28. Being aggrieved by the order of the learned CIT (A) the Revenue is in appeal before us. 29. The ld. DR before us has relied upon the finding given in the assessment order. 30. On the other hand before us the learned AR has relied on the order of ld. CIT-A and filed a detailed chart where in the reconciliation in the form of the chart has been filed for a quantity of 15,371/- bags, showing the details such as Date, Bill No., Name of the party, Place, Jeera Kg, reference in cash book seized, paper books page number where the relevant seized material is compiled and detailed pages relied upon by the department were also placed before us along with the evidences seized and co-related in the form of spiral binder paper books. The said chart were filed with the department representative also. The reconciliation filed is reproduced for the sake of brevity: Table - C Particulars Quantity ( Bags) Un accounted stock of Jeera as per AO (Pg 23 of Assessment order 15371 Less : Stock duly recorded in books of accounts and verified by CIT in proceeding u/s. 264 of the Act (Pg 22 of CIT(A) order ) 5879 Balance 9492 Less : Duplication / Triplication as per Annexure A/27, A/29, A/15, & A/39 9492 Un accounted stock NIL 31. We have heard the rival contention of both the parties, have gone through the reconciliation statements and material placed before the assessing officer and before CIT(A) and a reconciliation statement filed before us. Also perused the finding in the order passed under section 264 by ld. CIT for release of seized goods IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 18 before the assessment proceeding which were also discussed in the preceding paragraph in this order, where in the assessing officer has also filed a detailed remand report. We have persuaded all these arguments, finding recorded in the assessment order and finding of the CIT(A) in his order. So far as the reconciliation of the quantity found and recorded in the books with that of the disclosure has been reconciled. 31.1 The main grievance in this ground raised before us that the purchase price of 5,67,875 kg of jeera are not entered in the regular books of accounts. Whereas, the quantity as disputed has already been reconciled and shown to us that the same is accounted. As the difference in quantity was on account of duplicate entries for same bags of jeera in different seized material. The income being vachayati sales commission on those bags of jeera also covered under discloser of unaccounted income made by the assessee and assessee groups. Before us, the ld. DR has not brought any new evidence or arguments to controvert and the reference to remand report u/s 264 against that no independent enquiry is also conducted during the assessment proceeding and thus, the finding of the CIT(A) is also based on this facts has not been questioned before us by filling any fresh evidence or error of fact in a detailed reconciliation with that of the seized material placed on record. Therefore, considering the reconciliation chart placed before us with the seized records and entries passed in the books and the amount of the commission disclosed in the return of income as undisclosed income. We do not find any force in the arguments of the ld. DR and inclined to accept the views of the CIT(A). We do not find any infirmity with the finding of the CIT(A) while deleting this addition and therefore, the ground of the Revenue appeal is failed and dismissed. 32. The fifth grounds of appeal raised in relation to the deletion of an addition made for an amount of Rs. 29,66,094/- being the unrecorded purchase and thereby unexplained investment in 2436 bags of Isabgul. The grievance of the department that the CIT(A) has taken a view that CIT(C)-II has given its final finding but it was IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 19 merely the observation of the quantum of stock found vis a vis the book stock of the assessee. 33. The fact about the making this addition is mentioned in para 5.2.2(b) in the order of the assessing officer and the same is extracted here in below for the sake of understanding the fact of the issue involved. Extract from para 5.2.2(b) page 25 of the assessment order “In Isabgul also, the assessee was found to have done unaccounted trade. The total detected unrecorded purchases made was of 2436 bags or 2436*75=182700 kg. The investment therein at the average cost of Rs. 21.22 being 2436*75*21.22 = 36,76,894 is therefore, treated as unexplained investment made by the assessee. Out of this, the sale proceeds of 506 bags being Rs. 9,10,800 has been taxed in para 5.2.1(b) above. In the same manner as discussed in detail in the case of Jeera above, the sale proceeds need to be treated as having been reinvested in the procurement of unaccounted stock of Isabgul. Hence the effective addition on this count as unexplained purchase of Isabgul will be (3876894 – (910800) = Rs. 29,66,094/-. 33.1 The assessee stated that originally the AO had issued show cause notice proposing to make addition of Rs. 80,81,114/- on this Isabgul commodity. Thereafter, as tabulated in 12.2 para while considering unaccounted sales a table is extracted from the assessment order which was in the opinion of the assessing officer to be the alleged unaccounted purchase of 2436 bags. The value as derived for this purchase comes to Rs. 38,76,894/- out of that AO has considered 506 bags unexplained sales of Rs. 9,10,800/- and balance amount of Rs. 29,66,094/- as unrecorded purchase and added to the income of the assessee. In this regard we have discussed the finding at para 12.2 that the book stock is more than the goods found. Even we have considered the finding of the CIT(C)-II that the goods were lying are of the farmers as per remand report of the assessing officer submitted in that proceeding. As discussed in para 12 there is no reference to the seized material that these goods are purchased out of the books, on the one hand CIT(C)-II has accepted the assessee is in possession of the farmer stock and AO himself sent a remand report to the CIT( C )-II in the matter and the extracted portion has been IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 20 reproduce at para 9 above for the sake of understanding the facts. Even while making the addition there is no specific finding about the reconciliation statement submitted by the assessee and departmental representative before us not placed any contrary facts or finding. The AR of the assessee that no enquiry were conducted from the farmer even the details were placed in 2003 and assessment is completed in 2004. As stated in para 12.2 the net stock was derived by the AO at 3710 bags whereas actual stock of bags as per submission of submitted before the AO comes to 4319 bags. It may be seen from Annexure X that 58800 kgs i.e. 784 bags lying in the godown 118, APMC, Unava has not been considered. Not only that the purchases as per the records shown before us are 2422 as against 2048 considered by the AO. The actual situation is as under : Bags Kgs. Book stock as on 31.3.2002 405 30,381 Add : Purchases 2,422 1,81,671 2,827 2,12,052 Less : Sales 30 2,304 Stock as on 6.6.2002 2,797 2,09,748 Add; Purchases between 8.6.02 to 11.06.02 1,522 1,14,165 4,319 3,23,913 33.2 Thus, the book stock derived by the assessee is 4,319 as against that the physical stock found is at 3,710 (see table at para 12.2). This shows that there is no alleged unaccounted purchase of the commodity Isabgul. Considering the above factual position and the DR has not pointed any defect in the finding made based on stated facts by the CIT(A) and he has vehemently replied upon the argument and discussion made in the assessment order. 33.3 We have persuaded the above submission and order of the CIT(A) on the issue and the arguments placed before us by both the party we are of the considered view that looking to the above factual aspects on fact there is no additional stock IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 21 found. Even the CIT(A) has given a detailed finding of facts in his order vide para 8 of his order. 33.4 Considering the stated facts, we are of the considered view that the finding of the CIT(A) is in accordance with the material placed on record. The point of the AR of the assessee that the CIT(C)-II has already given his finding based on the remand report of the AO ( see para 9 above ), even the details of the farmer whose commodity is lying as confirmed by placing their confirmation have not been contradicted even though this details were placed well in advance in 2003 and the order is passed in 2004. The absence of the enquiry and reconciliation of statement coupled with the overall disclosure made by the assessee we are of the considered view that the addition deleted by CIT(A) has no error of facts. We have considered the rival submission and in the absence of the department brought any contrary material on record we concurred the view of the CIT(A) and the ground of the department that the assessee has unaccounted purchases of 2436 bags out of the book fails on facts in absence of any evidence and the against the finding and the same is dismissed. 34. The ground no. 6 of the department appeal is on account of the excess stock of 6 bags of Isabgul found which has been deleted by the CIT(A) considering the facts presented before the CIT(A). 35. The assessing officer is of the view that unrecorded purchase of Isabgul was 1930 (see table at 14.2 ) whereas the excess stock of Isabgul was found at 1936 thus, there is difference of 6 bags which was in the opinion of the assessing officer is required to be added under section 69 of the Act. Since, we have considered the detailed reconciliation of the stock of the commodity Isabgul and relied upon the finding of CIT(C)-II recorded at para 9 and at point no. 14 and 15 above we do not find any force in the argument of the department. Before us there is no contrary facts presented by the department and even the CIT(A) has given a detailed finding about the quantity of this commodity and considering the reconciliation of stock IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 22 statement and other evidence placed on record by the assessee before us we do not find any merits in the grounds of appeal filed by the revenue and the same is dismissed. 36. The ground no. 7 in this appeal by the department is that the addition of 1,45,260 made on account of the excess stock of Tarbuj is wrongly deleted. 36.1 While making this addition the AO in his order stated that in the case of the other commodities the stock of excess stock of Tarbuj seeds comes to Rs. 1,45,260/- and the same is required to be taxed under section 69 of the Act. 36.2 In the assessment order at page 7 the observation of the assessing office is required to be noted for the sake of brevity and the same is reproduce from that page 7 “ ( D ) Tarbuj During the search 16140 kg of Tarbuj seeds were found from your premises. In this case also you had claimed that same belonging to some farmers. As in the case of Castor seeds elaborately discussed above, this item of trade was also not mentioned in any of your regular books. For the reasons mentioned in the case of Castor seeds above these stocks of Tarbuj seeds also prima facie, represents your undisclosed investment in stock. The value of this stock as on the day of search at the rate of Rs. 9 per Kg. is Rs. 1,45,260/-. 36.3 There is no other finding in the assessment order, therefore, we have persuaded the order of the CIT( C )-II where in on page 2 the quantity of this item listed and the shown as released there is no adverse remark in that order. 36.4 We have also persuaded the order of the CIT(A) on this issue and he has relied upon the submission of the assessee and in para 11.1 on page 30 of his order he has stated that IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 23 “ I have looked in to the assessment order and have considered the contentions put forth on behalf of the assessee. For similar reasons as discussed above while dealing with the addition for the stock of Caster seeds, Isabgul etc. I hold that there is no justification for making the addition of Rs.1,45,260/- as the goods belonged to the farmers received as Vaisiti Mal. It is deleted.” 36.5 We have also gone through the submission made by the assessee before the CIT(A) where in the assessee has contended that the assessing officer has added a sum of Rs. 1,45,260 for the excess stock of trabuj seeds. The stock involved is 16,140 kgs. The same belongs to the farmers received by the assessee on “Vasiyati Mal” for commission account. The details of the goods of the farmer were lying with the AO since 2003 and the order is passed in 2004 nothing is contrary finding given on the fact that the goods were of the farmer even though the details of the farmer in the form of confirmation filed before CIT(C)-II filed for similar reasons as stated in the case of Jeera, Isabgul the addition is uncalled for. 36.6 Based on the above facts we find force in the arguments of the assessee and finding of the CIT(A) we do not find any inconsistency and in the absence of any contrary material placed before us we do not find any irregularity in the finding given by the CIT(A). Therefore, this ground of appeal that the tarbuj seeds stock is excess stock of the assessee, raised before us is fails on merits and the department has already accepted the fact that the assessee is engaged in the sale of goods on commission, we hold the decision of the CIT(A) is on finding of facts and we do not wish to consider the grounds of the department in absence of any contrary evidence and DR has merely relied upon finding given in the assessment order. In the light of the stated facts this ground of appeal of the department fails on merit and thus the same is dismissed. 37. The 8 th ground of appeal raised by the department before us is for deleting the suspended and protective addition of Rs. 1,41,90,841/- made on account of the unexplained and hidden stock of jeera of the assessee, where in the police investigation is yet to be finalized. IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 24 38. In this regard we would like to summaries the logical arguments placed by the assessing officer while making this addition the assessing officer has contended that quantitative summary of Jeera shown in the show cause notice and stated that as per the table given in the said show cause notice total detected unaccounted purchase was 567875 Kg ( Refer table given in para 14.3 ) and unaccounted sale was of 23329 kg. After considering these figures with the accounted turnover the total stock that the assessee should be holding was worked out at 668031 kg, as against the stock found at the time of search 468160 kg. From this figurative the assessing officer of the view that the stock was short to the extent of 199871 kgs. The assessing officer has referred to the reply of the assessee and stated that the same is not acceptable for the following reasons: “(a) The assessee has not voluntarily given the full details regarding the stock of its goods. (b) The assessee has not given any full data regarding its sales. (c )Unaccounted sales were detected in many instances in the assessee's case. (d)The unaccounted purchases and sales are not correlated lot-wise inthese instances. So, looking to the above argument the assessing officer took a view that the part of the stock could not be found during the search.” 38.1 The next argument of the assessing officer is that the assessing officer given contradictory statements about the godowns and its location where in the goods were stored for the three concerns of the group. The assessee has not disclosed the godown No.6/B and 300 of APMC and Kamonia Para. It has been stated that in the Financial Express of 17th June 2002 it was reported that seal put by Income- tax Department was systematically removed and the goods were taken out. 38.2 During the course of search proceeding the statement of Shri Virchand Shah had recorded wherein he stated that about 2000 to 2550 bags of Jeera, Isabgul etc. were kept in the said godown, FIR was launched with the Police and the IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 25 investigation was started in the matter. It is stated by the assessing officer that from the said godown 594 bags of Isabgul, 30 bags of Jeera and 142 bags of cattle feed were found which was much less than statement of Shri Virchand Shah dated 17-5-2002. He has therefore, took a view that the assessee might have removed the stock and might have kept in another godown which could still not be recovered by the search authorities. 38.3 Therefore the stock of 199871 kg of Jeera valued at 1,41,90,841/- is treated as excess stock removed and kept hidden which is taxed u/s.69 of the Act by the assessing officer and the addition was suspended for the reason that the stock is part of the result of the unaccounted purchases quantified and taxed separately. 38.4 In this matter the arguments of the assessee is that the door were sealed on 12.6.2002 in the presence of the witnesses and that the police inspector, Unjha police station, Unjha was also requested to protect the said seal on 12.6.2002. No stock taking was done but the premises were simply sealed. It was only on 18th June, 2002 the said godown was opened and although the ADI happened to be knowing that there was a Press Report regarding the removal of the goods and FIR filed, he recorded statement of the assessee who gave the details of the estimated stock that may be lying in the godown. Needless to point out that the very fact that the assessee gave the details of estimated stock that may have been lying in the said premises, this stock was far too much more than the actual stock found after allegedly tampering with the sealed premises conclusively establishes that no goods were removed as alleged. Had it been that the goods were removed the assessee would have certainly known what was removed and what was left behind to be found by the search party. In such a situation he would certainly state the stock that was left behind after alleged removal. Assessee did not do so. These facts conclusively establish that no goods were removed from the alleged premises. 38.5 Thus, what the assessee stated was the stock on an estimated basis without having specific knowledge of the contents of the stock of goods lying in the godown IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 26 and no credence should be given to such a statement based upon the probabilities which on the contrary establishes that nothing was removed by the assessee as alleged. Therefore, there is no justification in adopting the imaginary figure of stock in the godown when assessee ought to have proceeded with the actual stock found. No addition is called for on the estimate basis. The assessee further furnished that Forensic Science Laboratory of the government had given their report dated 18-6- 2002 wherein it was stated by them after investigation that (a) There was no indication of any fresh welding made in the hinges of the doors. (b) The color of the hinges of the doors was same. 38.6 It was therefore, stated by the assessee that there was thus no proof of any depressing with the sealed premises as alleged by the ADI. He had launched the FIR only on the basis of hearsay and without any proof and merely based on some news reported in the news paper. The AR pointed out that the authorized officer had not taken stock of goods lying in godown before making seal which they have done. Thus, he has not counted the stock before recording the statement. In the circumstances, how the department can allege removal of stock which are not found in godown before making seal. There is no basis supported on the argument placed on record by the department and the assessee stated that they have proved with the forensic report that the seal is not tempered. Thus, the AR argued before us that no addition could be on the basis of such presumptions which are not supported by any proof. On the contrary the department representative vehemently argued and relied upon the finding given in the assessment order. 38.7 We have persuaded the rival submissions, and finding given in the assessment order and the finding on the CIT(A). The Assessing Officer in the order and the department representative before did not bring on record any new argument or evidence to conclusively establish that any goods were removed from the godown except for the allegations contained in the assessment order. This IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 27 allegation is not based on any evidence or recording any statement of any witness thus, the arguments are unsupportive and based only on the presumptions and assumptions. Department has not brought any evidence which conclusively proves on record that the assessee has removed the stock from the godown. 38.8 During the course of search itself certain allegations were made by the Departmental officer there is no reason not to believe the claim of the assessee that nothing was removed as alleged which is further supported by the statement of the assessee during the course of search itself wherein the assesses gave the details of estimated stock which was fair too much more than the actual stock found even after allegedly tampering with the sealed premises conclusively establishes the claim of the assessee that no goods were removed as alleged because for had it been so, the assessee would have certainly known what was removed and what was left behind to be found by the search party. In such situation the assessee would have certainly stated the stock or near about that what was left behind after the alleged removal that has not been done. Thus, it seems that the failure on the part of authorized officer to count the stock while putting seal, and subsequent allegation based on news report without any evidence cannot justify such conclusion of removal of goods. Therefore, the statement recorded during the course of search itself conclusively establish that no stock was removed as alleged. The question of making any addition simply does not arise. Therefore, the observation made by the Assessing Officer or the Department representative has no force supported by an evidence. 38.9 Looking the rival submission on the record and argument made during the course of hearing we find force in the argument of the AR of the assessee and is based on the supportive evidence. Even the stock found in search were duly reconciled and the commission on the sale of Vachyati Goods is already offered and that amount is accepted by the department making any adjustment that figure too and there is no contrary finding placed on record in the assessment order and thus based on our finding on the various additions made on account of item jeera we IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 28 find no force that the assessee is still having unexplained and hidden stock of jeera to the extent of Rs1,41,90,841/-, therefore, we find force in the finding of the CIT(A) on this point and looking to the arguments and evidence we also confirm the views of the CIT(A) on this issue and dismiss the ground raised by the department failing on merits. 39. The next ground of appeal before us is for deleting the suspended and protective addition of Rs. 2,27,77,749/- made on account of the unexplained and hidden stock of jeera of 3,20,814 kg found during the search. 39.1 In order to understand the arguments of the assessing officer we have extracted the arguments of the assessing officer made as per para 5.2.3 of the assessment order here in below: Extract from Page 3 of the assessment order, last para reads as under: "PURE TRADE OF JEERA: As briefly discussed above, your procurement of 15371 bags of Jeera from 01/04/2002 till the date of search, has been proven with documentary evidence during the search. On verification of your regular books, it is seen that you have recorded the inward of only 57046 bags or 277530 Kg in this count. It is further seen from the seized sale bills that you had not recorded the sales of 5833 bags or 320815 kg in your regular books. In the loose paper file Annexure A-41, it is also seen that some sales pertaining to January 2002, totaling 434 bags, had not been recorded anywhere in your closed books. Under the circumstances combined stock position of all your 3 concerns on the date of search will be as under: Narration Recorded [kg] Unrecorded [kg] TOTAL [kg] Book stock on 31-3-2002 Add: purchases 190631 277530 - 567875 190631 845405 IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 29 Total 468161 567875 1036036 Less (1) Sales (2) Unrecorded sale of Jan. 2002 detected in A-41 to be reduced from the book stock of 31-03-2002 320815 23320 (A-41) 23870 344135 23870 Net Stock 147346 520685 668031 The actual stock of Jeera found on the date of search was 468160 Kg. as against the accounted book stock of 147346 Kg. Thus, the following facts are, prima-facie evident. (a) On the date of search, stock of 320814 Kg. [468160 (-) 147346] was found in excess of the book stock. This represents the undisclosed investment made by you and the value therein at the rate of Rs.71 per kg. totaling Rs.2,27,77,794/- warrants taxation u/s. 158BB.” 39.2 The arguments placed by the AR in response to the above contention and appearing at page 34 of the order of the CIT(A) is extracted here in below: "The excess stock worked out by you does not reflect the correct position of stock. The combined stock position of all the three concerns will be as shown below: Book stock as on 31.3.2002 190879 Add: Purchases from 01.04.2002 till the date of search (5705 Bags) 313785 IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 30 504664 Less: Sales from 01.04.2002 till 05.06.2002 (5047 bags) 277610.700 gms Stock on date of search 227053 Stock of Vachayati Mal i.e. goods belonging to various farmers as per list already submitted 236775 Total Stock: 463828 Stock found during course of search in various godowns 468160 Excess stock covered under disclosure 4332 From the above, it may kindly be noted that excess stock of 4332 kgs valued at Rs.70 per kg. at Rs.3,03,000 has been covered under disclosure." 39.3 The argument of the AR before us and before the learned CIT(A) was that the huge difference as per the working of the AO was for the reason that he did not consider the accounted for purchases and also that he did not consider the stock of farmers lying with the assessee. The assessing officer has, however, in para 5.2.3 of the order stated that the plea of the assessee that the stock belonging to farmers was lying with him was after thought on the following grounds as observed in the order of the CIT(A) on page 35& 36: IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 31 (a) During the search, the assessee and its associates had consistently clarified that it was not keeping any stock belonging to any other person. (B) None of the gunny bags bore any identification mark to even distantly suggest the ownership of the stock. (c) During the search not even a piece of paper was found which indicated the arrival or custody of this stock. (d) It is virtually impossible to believe that the assessee, its employees and associates had kept the full data regarding the farmers and their quantum of stock in memory and had reproduced the data, from their memory, during the post search enquiry and 132B proceedings. (e)The assessee has not recorded anything regarding this stock in any of its books or even in any of the seized papers. (f) The unaccounted trade of the assessee is evident in the "Vepor Khatu” in the diary identifiable as A-22. (g) Even while presenting a list of farmers and their so-claimed stock, during the revocation proceedings on 17-6-2002, the assessee could not identify as to which part of the stock belonged to which former, Under the circumstances, the actual stock found in excess of the book stock of the assessee represents its unaccounted investment taxable u/s.69 and assessable u/s.158BB. 39.4 The undisclosed income quantified in this regard, in respect of various commodities as explained by the AR of the assessee in various charts is as under: Item Book stock (Kg) Stock found(Kg) Difference (Kg) Cost(Rs.) Jeera 147346 468160 320804 22777794 Isabgul 133500 278700 145200 3081114 Caster Seeds 318575 477580 159005 1987562 Tarbuj seeds NIL 17140 16140 145260 Total 22991730 IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 32 39.5 The view of the assessing officer while making the assessment order was that separate addition is not made on this account because the excess stock is result of unaccounted purchases made by the firm for which separate addition is made. 39.6 We persuaded the material placed before us and the detailed finding of the assessing officer as well as the detailed analysis made by the CIT(A) at length in his order on page 33 to 49 considering the arguments of the assessing officer and with that the assessee and for the sake of duplications the same is not reproduced and we have in detailed persuaded the points of arguments placed in the para 13 to 13.2 of the CIT(A) wherein he has extracted arguments of the assessing officer and the arguments of the assessee. 39.7 As regards the FIR made, we have not been updated the current status of that investigation but looking to the finding of the fact that the forensic report clearly establishes that the there is no tempering of the seal and the statement made by the assessee and their relative and staff with that of the quantity mentioned is not exactly matching. In fact, the quantity found in the questioned godown much more than mentioned the quantity mentioned in the statement. Had it been the case of the department than the quantity given in the statement may be matching exactly or in shortage whereas, the quantity found is much more than what is mentioned in the statement. Thus, looking to these two aspects and as quantity of the item jeera is already reconciled and for the reasoned mentioned the same is dealt with the other grounds in this appeal and thus, we do not find merit in the grounds placed before us that the CIT(A) has erred in deleting the suspended and protective addition of Rs. 2,27,77,749/- made on account of unexplained stock of jeera of 3,20,814 kg found during the search fails and the same is dismissed. 40. The next ground no. 10 & 11 of the appeal before us are co-related to each other and is taken for deleting the suspended and protective addition of Rs. 1,20,06,548/- ( in fact the figure as per assessment order it is Rs. IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 33 1,20,06,368/- and thus we have taken and decided accordingly) made on the basis of page 1 & 2 of the spiral diary Annexure A - 04 on which the key man of the group and the father of the assessee Shri Virchand Shah had stated on oath that the figures noted in the pages are sales figures of the assessee. In ground no 11 the department has stated that CIT(A) has ignored the sworn statements of the accountant of the group and thereby solely relying on some affidavits prepared by these persons negating their earlier depositions under oath. 40.1 These are the additions made under section 68 and 69C and assessed in the assessment order u/s 158BB of the Act. The breakup of this addition as is made on page 20 of the assessment order is reproduced here in below for the sake of brevity of the amount and its nature. Unexplained cash credit Rs. 1,15,00,000/- Unexplained interest Rs. 3,35,572/- Unexplained cash credit (Kishore) Rs. 1,60,000/- Unexplained interest (Kishore) Rs. 10,796/- ---------------------- Rs. 120,06,368/- ============ 40.2 Before us the authorized representative has argued that the CIT(A) has given detailed finding on this issue at para 14 to 14.2 on page 49 to 53. The addition has been made on the basis of the seized Annexure A-04 found during the search where in the it is alleged that the coded figures are written. The finding of the assessing officer and that of the CIT(A) on this issues is recorded by the CIT(A) and the same is extracted from page 49 to 53 for the sake of brevity of the facts in respect of the disputed addition before us: “14. The next 3 grounds thirteen, fourteen and fifteen relates to the common issue i.e addition made on account of unexplained cash credits of Rs. 1,15,00,00,000/ and interest of Rs. 3,35,572/- and of Rs. 10,976/-. This IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 34 addition has been made as per para 5.1 on page 19 of the assessment order. It is stated by the assessing officer that as a spiral diary being annexure-A- 04 found during the course of search contained certain amount written in coded figures on page 1 and 2 as under: Page-1 Page -2 5 20/10/2000 5 25/6 4 23/10/2000 3 26/6 5 23/10/2000 6 2/7 4 24/10/2000 2.75 --------- -- 3/7 12 25/10/2000 40.75 10 14/11 Kishore 10 13/11 1.00 26/8 10 24/11 60 29/9 10 ----- 25/11 10796 Int. 31/3 70 3.35572 15 19 It is stated by him that the appellant could not offer any worthwhile explanation. It is stated that in the statement u/s. 131 Shri Virchand D Shah recorded on 18/07/2002 he had stated that it may represent the sales. The notings against "Kishore" might be cash transactions. It is stated by the Assessing officer that the transactions can be easily de-coded on the basis of notings of page no.1 a figure 3.35572 identifiable as interest needs no further interpretation and he has recognized it as Rs. 3,35,572/- therefore according to him a total of the page no.1 can be established Rs. 70,00,000/-+ Rs. 45,00,000/ being un accounted cash loans taken by the assessee and the amount of Rs. 3,35,572/- represent interest paid thereof. Accordingly these amounts are held to be taxable u/s. 68 and 69C respectively. It is stated by the assessing officer that however, this amounts are identified as undisclosed income for which the addition is suspended on account of composite addition made for the unrecorded purchases. IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 35 14.1 In this connection the appellant referred to the following explanation furnished to the assessing officer: "In this connection, reference to para 2 of our letter dated 15.4.2002 is invited. In this para, it is submitted that this annexure contain some papers with no details and that the assessee did not recollect as to who and for what purpose the said writing was made. It was also submitted by Shri Virchand D. Shah in the said letter that the writing on page nos.1 & page no.2 was either in single digit or in double digits and in decimal and that it was too much to say that the said single digit figure represented the amount in lacs. The assessee further submitted that he has not obtained any cash loan of Rs.70 lacs or Rs.40.75 lacs as alleged. Statement of Shri Virchand D. Shah was recorded u/s.131 on 18.7.2002 and the question Nos. 5, 6, 7 & 8 are in respect of those amounts, written on a dumb paper. He stated that though he did not recollect anything, but the figures might be related to the sales. If those papers are related to the sales during the course of business, the assessee might have purchased some goods or sold some goods and the papers might be related to those purchases or sales. For making addition u/s.68, the credit should be in the books of account maintained by the assessee. Merely because the said papers were found from the possession of the assessee, to make addition as cash credit, would be a remote and far fetch conclusion to hold that a single digit entry or a double digit entry represented the amounts written in lacs and that those moneys belonged to the assessee. For the purpose, reference is invited to the decision in the case of Ashok Kumar Rastogi vs. CIT (1991) 100 CTR 204 (All) in which it is held that addition u/s.69 as unexplained investment cannot be made without reference to any supporting evidence, notwithstanding seizure of certain documents from the assessee. There must be something more than bare suspicion to support the allegation. The ITAT Delhi A Bench in the case of Rajpalsingh Ram Avatar vs. ITO (1991) 39 TTJ (Del) 544 has held that the papers seized from the premises during search proceedings merely contained certain figures, rate and consequent calculation and it did not bear any name. The assessee categorically explained that it did not belong to him and that it was not in his handwriting or the handwritings of any other partner or any other connected persons. Initial burden lying upon the assessee, was thus discharged. On these grounds it was held that the Department had completely failed that the assessee had made any unexplained investment during relevant year. In our case also the assessee has stated that he had not written that paper and that he did not remember/recollect as to for what purpose and who had written that paper. He also stated that it is possible that it might be related to the sales. Our case is further supported by the Ahmedabad Tribunal decision in the case ACIT vs. Prabhat Oil Mill (1995) 52 TTJ 533 in which also it was held that mere entries in the account of a third party is not sufficient to prove that the assessee had made sales outside books of account. The Ahmedabad Tribunal has relied on the Bombay decision in Addl. CIT vs. Lata Mangeshker (1974) 97 ITR 696 (Bom). In this view of the matter, it is submitted that the amounts totaling to Rs.1,12,35,000/- are not the cash transactions pertaining to the assessee and that they are not written in any books maintained by the assessee and, IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 36 therefore, no addition u/s.68 r.w.s. 1588B requires to be made in the case of the assessee group." In the course of hearing the appellant further stated that a cursory glance at the figures mentioned on the said pages 1 & 2 would show that there is nothing in these figures to even indicate that it represent cash received by the assessee. The alleged de-codification of the interest of Rs.3,35,572/-. It may be pointed i out that there is nothing in the seized material even to presume that Interest and such interest of Rs.3.35,572/- was ever received by the assessee. Similarly there is nothing about the unexplained cash of R5.1,60,000 in the name of one Shri Kishorebhai and the unexplained interest of Rs 10,976 in the name of Shri Kishorebhai. Therefore, on that score alone no addition is called for. In this regard reliance is placed on the following decisions : i. Ashok Kumar Rastogl v. CIT (1991) 100 CTR 204 (All.) ii. Ajpalsingh Ram Avatar v. ITO (1991) 39 TTJ (Del) 544 (ITAT Delhi bench) iii. ACIT v. Prabhat Oil Mill (1995) 52 TTJ 533 (Ahmedabad Tribunal) iv. Addl. CIT v. Lata Mangeshker (1974) 97 ITR 696 (Bom.) Without prejudice to the above, it may be specifically pointed out that these interests are disallowed invoking the provisions of section 69C. The provisions of section 69C envisages the existence of the expenditure having been incurred. The moment the interest expenses are added invoking the provisions of section 69C it is established that the Assessing Officer is satisfied that these represent the expenditure incurred by the assessee which is not recorded in the books of account. Thus, position in law would be that the alleged unexplained credits are also accepted to be genuine by the Assessing Officer then only the question of payment of interest would arise. It is not that the expenditure is claimed and therefore disallowed. It may also be perused from assessment order that there is not a word in this reference nor any explanation to conclusively establish that the figures narrated therein are cash credits received by the assessee and if so from whom and why. In any case, the noting in the seized material are not the books of account and therefore the question of taxing the unexplained cash credits simply does not arise in this position there was no justification in holding that the amount added u/s. 68 represents the assessee's unexplained income in the form of cash credit and unexplained expenses. In view, of what is stated hereinabove, there is no justification to hold that a sum of Rs.1,20,06,368 is otherwise taxable in the hands of the assessee in light of the provisions the Act; the question of suspending the addition does not arise. I have considered the contentions put forth on behalf of the assessee. I find enough force in the assessee's argument that there are nothing in the records to even indicate that it represents cash received by the assessee. Therefore, IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 37 the question of taxing the same as cash credit simply does not arise. Similarly there is no justification in making the addition of Rs.3,35,572/- invoking the provisions of section 69C of the IT. Act because there is nothing in the assessment order to justify the addition as the expenditure itself is not established. I therefore hold that there is no question of suspending the additions held by the Assessing Officer. These are deleted. “ 40.3 Before us, the authorized representative have argued that a) The page seized did not belong to him b) It was not in his handwriting or the handwritings of any other partner or any other connected persons. c) Initial burden lying upon the assessee, was thus discharged. d) On these grounds it was held that the Department had completely failed that the assessee had made any unexplained investment during relevant year out of that money so borrowed all the investment and stock found has been duly reconciled and there is no portion of the assesse that has been deemed to have been acquired out of this cash credits. e) The assessee has stated that he had not written that paper and that he did not remember/recollect as to for what purpose and who had written that paper. f) He also stated that it is possible that it might be related to the sales. g) The moment the interest expenses are added invoking the provisions of section 69C it is established that the Assessing Officer is satisfied that these represent the expenditure incurred by the assessee which is not recorded in the books of account, than the position in law would be that the alleged unexplained credits are also accepted to be genuine by the Assessing Officer then only the question of payment of interest would arise. It is not that the expenditure is claimed and therefore, disallowable. h) It may also be perused from assessment order that there is not a word in this reference nor any explanation to conclusively establish that the figures narrated therein are cash credits received by the assessee and if so from whom and why. IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 38 i) In any case, the noting in the seized material are not the books of account and therefore the question of taxing the unexplained cash credits simply does not arise. j) There was no justification in holding that the amount added u/s. 68 represents the assessee's unexplained income in the form of cash credit and unexplained expenses. k) Our case is further supported by the Ahmedabad Tribunal decision in the case ACIT vs. Prabhat Oil Mill (1995) 52 TTJ 533 in which also it was held that mere entries in the account of a third party is not sufficient to prove that the assessee had made sales outside books of account. The Ahmedabad Tribunal has relied on the Bombay decision in Addl. CIT vs. Lata Mangeshker (1974) 97 ITR 696 (Bom). 40.4 On the other side the DR has argued that the term ”Interest is written” name of the party “Kishore” is written the other notings are recorded with date in the coded figures and thus the figures are related to unexplained cash credit and interest there on. He has not placed any further arguments or material before us and vehemently relied upon the order of the assessing officer and forcefully raised the contentions and stated that the addition be confirmed on the basis of the stated facts. 40.5 We have considered the rival submissions and material placed before us. We do not find any inconsistency in the finding of the CIT(A). The AR has relied upon the decision of the Ahmedabad bench decision and raised various points as noted in point no. 20.3 above and the points of the arguments placed before us by the DR. We considered the findings of the CIT(A) is the finding of the facts and in law and DR has not pointed out any single defects in the findings of the CIT(A). Considering the arguments of both the side we find force in the arguments placed by the AR of the assessee and finding of the CIT(A) and thus looking to the overall arguments of the both the sides we inclined to accept the findings of the CIT(A) IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 39 and dismissed both the grounds of appeal of the department on facts and in law. Thus, Grounds No. 10 & 11 both are dismissed on the reasons stated here in above. 41. The ground no. 13 is in relation to the substantial addition of Rs. 19,87,756 be apportioned equally between the three assessee’s irrespective of the fact that the purchases had been effected in the case of the assessee only and ground no. 13 is in relation the findings of the CIT(A) directing that the undisclosed income of the group of assessee shall be apportioned equally between the three assessee even though the assessee or his associates could, at any point of time, identify or part of trade as belonging to the other concerns. 42. In respect of this issue the AR of the assessee vehemently argued before us that the addition is in respect of the all the three concerns and the stock has been accepted to have been reconciled considering the three firm as group and accordingly, he has accepted the books stock and accordingly he has considered the various reconciliation of commodities of stock of the group. Now while making the assessment, he cannot take a different stand that the income is of one particular assessee, when the finding of the fact that all the three concern were part of the group and have been doing the business and there is no contrary finding that is available the benefit of the apportionment of the addition is given to the group of assessee operating in the group. 42.1 The departmental representative has simply relied upon the finding in the assessment order and the office note where in the AO has considered that the assessee is key person and hence the addition of the unexplained sales and purchase is made in his case only. There is no other finding of the facts or any further evidence has been placed before us. Therefore, we find there is no force in respect of these two grounds raised that the same is be treated as assessee’s income alone we feel that the finding of the CIT(A) that the addition be apportioned in respect of all the three assessee is after taking into account the over all aspect of facts explained, reconciliation of the commodities and its stock were considered to IT(SS)A no.180/AHD/2005 Asstt. Year Block Period 40 of all the three concerns together and accepted by AO, reconciliation of stock found and recorded in books were considered of all the concerns, we do not find any error of facts in the finding of the CIT(A) and thus, the ground no. 12 & 13 of the department fails on facts and in law and the same is dismissed. 43. The Ground no. 14 & 15 are General in nature not having any specific grounds related to the seized documents and are taken as general in nature and looking to the finding given in the other grounds these two grounds are also dismissed being general in nature. 44. In the result the appeal of the revenue is dismissed. Order pronounced in the Court on 28/01/2022 at Ahmedabad. Sd/- Sd/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 28/01/2022 Manish