ACIT, Ludhiana V. Mrs. Mridula, Ludhiana

ITSSA 19/CHANDI/2008

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3717 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 year(s) 7 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 09-02-2016
• Assessment Year: misc
• Appeal Filed On: 05-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH ABROL
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Documents seized
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER IT(SS)A. NO.19/CHD/2008 (BLOCK PERIOD 1.4.1998 TO 5.2.2003) THE A.C.I.T-I, VS. MRS.MRIDULA, PROP M/S DHRUV FABRICS LUDHIANA. C-30, PHASE-II, FOCAL POINT, LUDHIANA. PAN: ACDPM6848D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHISH ABROL, CIT DR RESPONDENT BY : SHRI SUBHASH AGGARWAL, ADV. DATE OF HEARING : 08.01.2018 DATE OF PRONOUNCEMENT : 05.04.2018 ORDER PER ANNAPURNA GUPTA, A.M. : THE PRESENT APPEAL OF THE REVENUE HAS BEEN FIXED BEFORE US IN PURSUANCE TO THE DIRECTIONS OF THE HON 'BLE PUNJAB & HARYANA HIGH COURT TO HEAR THE APPEAL ON M ERITS. 2. BRIEFLY STATED, A SEARCH OPERATION WAS CONDUCTED U/S 132(1) ON 05.02.2003 ON ONE SHRI S.K.BHATIA, A YARN DEALER. CERTAIN DOCUMENTS PERTAINING TO THE ASSESSEE, WHO I S A MANUFACTURER OF HOSIERY GOODS CARRYING ON BUSINESS IN THE NAME AND STYLE OF M/S DHRUV FABRICS, WERE SEIZED. THEREAFTER, NOTICE U/S 158BC OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS ISSUED TO THE ASSESSEE, IN RESPONSE TO WHICH RETURN DECLARING NIL INCOME WAS FILED BY T HE ASSESSEE. THE ASSESSING OFFICER, THEREAFTER FINALI ZED THE ASSESSMENT U/S 158BD OF THE ACT AT RS.91,96,083/- H OLDING THE SALES REFERRED TO IN THE DOCUMENTS SEIZED BEING NOT 2 RECORDED AS PURCHASES IN THE BOOKS OF THE ASSESSEE AND, THEREFORE, BRINGING THE UNDISCLOSED INCOME ON ACCOU NT OF INVESTMENT THEREON AND PROFIT ELEMENT IN RESPECT OF THE UNACCOUNTED SALES MADE OUT OF IT TO TAX. THE MATT ER WAS CARRIED IN APPEAL BEFORE THE CIT(APPEALS) WHO DELET ED THE ADDITION MADE HOLDING THAT THE SAME WAS COVERED IN THE SURRENDER MADE BY THE ASSESSEE OF RS.2.75 CRORES DU RING SURVEY CARRIED OUT AT ITS PREMISES ON 19.2.2003, SU BSEQUENT TO THE SEARCH OPERATION. THE REVENUE FILED AN APPE AL AGAINST THE AFORESAID ORDER OF THE CIT(APPEALS) TO THE I.T.A.T. WHO UPHELD THE ORDER OF THE CIT(APPEALS) T HOUGH ON DIFFERENT GROUND, THAT RECORDING OF SATISFACTION U/ S 158BD BY THE ASSESSING OFFICER OF THE SEARCHED PERSON AND THE CONSEQUENT ISSUANCE OF NOTICE U/S 158BD WERE BELATE D AND BEYOND THE PRESCRIBED PERIOD OF LAW. THE I.T.A.T. FOR THE ABOVE REASON DISMISSED THE APPEAL OF THE REVENUE. AGGRIEVED BY THE SAME, THE REVENUE FILED AN APPEAL BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT WHO ALLOWED THE APPEAL OF THE REVENUE ON THIS LEGAL GROUND AND THE REAFTER RESTORED THE APPEAL BACK TO THE I.T.A.T. TO DECIDE THE SAME ON MERITS SINCE THE SAME HAD NOT BEEN DECIDED EARLI ER BY THE I.T.A.T. 3. THE GROUND OF APPEAL, THEREFORE, TO BE ADJUDICAT ED NOW IS AS UNDER: 1. THE LD. CIT(A)-I HAS ERRED IN LAW AND FACTS IN DELETING THE ADDITION OF RS.91,96,083/- MADE BY THE A.O. ON ACCOUNT OF TRANSACTIONS WITH BHATIA GROUP SURFACED DURING THE SEARCH AND SEIZURE OPERATIONS ON BHATIA GROUP. THE SURRENDER OF RS.2.75 CRORE MADE DURING THE COURSE OF SURVEY DID NOT COVER THESE TRANSACTIONS WITH BHATIA GROUP 3 AS THE SAME WAS MADE ON ACCOUNT OF CASH & EXCESS STOCK FOUND DURING THE COURSE OF SURVEY. 4. DURING THE COURSE OF HEARING BEFORE US, THE LD. DR TOOK US THROUGH THE FACTS OF THE CASE AS DRAWN OUT AT PAGES 2 TO 4 OF THE CIT(APPEALS)S ORDER AND POINTED OUT THEREFROM THAT DURING THE COURSE OF SEARCH CONDUCTED ON ONE S HRI S.K. BHATIA, A YARD DEALER ON 5.2.2003, CERTAIN LOOSE PA PERS RELATING TO TWO BUSINESSES OF SHRI S.K. BHATIA WERE FOUND, WHICH CONSISTED OF DELIVERY CHALLANS, SLIPS, ENVELO PES AND OTHER DOCUMENTS, PERTAINING TO UNACCOUNTED SALES O F SHRI S.K BHATIA. OUT OF THESE UNRECORDED SALES, SOME SA LES WERE FOUND TO BE MADE TO M/S DHRUV FABRICS, A PROPRIETOR SHIP CONCERN OF THE ASSESSEE, WHICH AMOUNTED TO RS.4,11,38,254/- AND THESE PURCHASERS WERE FOUND TO BE NOT RECORDED IN THE BOOKS OF THE ASSESSEE ALSO. TH E DETAILS OF THE DOCUMENTS RELATING TO THESE PURCHASERS WERE POINTED OUT AT PAGE 2 OF THE CIT(APPEALS)S ORDER. IT WAS THEREAFTER POINTED OUT THAT WHEN CONFRONTED WITH THE SAME, THE ASSESSEE CONTENDED THAT SUBSEQUENT TO THE SEARCH OPERATION, A SURVEY WAS CONDUCTED AT THE ASSESSEES PREMISES ON 19.2.2003 WHEREIN HE HAD MADE SURRENDER OF RS.2.75 CRORES WHICH COVERED THE UNACCOUNTED TRANSA CTIONS WITH BHATIA GROUP. THE LD. DR FURTHER POINTED OUT THAT THE ASSESSING OFFICER REJECTED THIS CONTENTION OF THE A SSESSEE OBSERVING THAT THERE WAS NO CORROBORATION OF FACTS THAT THE SURRENDER MADE BY THE ASSESSEE DURING SURVEY WAS ON ACCOUNT OF SAME TRANSACTION WHICH WAS FOUND DURING SEARCH OF M/S BHATIA GROUP. THE ASSESSING OFFICER THEREAFT ER 4 QUANTIFIED THE UNACCOUNTED INCOME ON ACCOUNT OF PRO FIT EARNED FROM SALES MADE FROM THE UNACCOUNTED PURCHAS ES OF RS.4,11,38,254/- BY APPLYING GP @ 18.27%, AS ACCEP TED IN ASSESSMENT YEAR 2003-04, AND WORKED OUT GROSS PROFI T ON THE SAME AT RS.91,96,083/- MAKING AN ADDITION OF SA ME INCOME TO THE ASSESSEE. THE LD. DR THEREAFTER, DUR ING THE COURSE OF ARGUMENTS BEFORE US, RELIED HEAVILY ON T HE ORDER OF THE ASSESSING OFFICER, STRESSING ON THE FINDING RECORDED BY THE ASSESSING OFFICER THAT THE SURRENDER MADE BY THE ASSESSEE DURING SURVEY OF RS.2.75 CRORES WAS NEVER CORROBORATED BY THE ASSESSEE TO HAVE BEEN MADE ON A CCOUNT OF THE SAME TRANSACTIONS RELATING TO UNACCOUNTED PU RCHASES OF THE ASSESSEE WHICH WAS UNEARTHED DURING THE COUR SE OF SEARCH CONDUCTED AT THE PREMISES OF M/S S.K. BHATIA . THE LD. DR FURTHER DREW OUR ATTENTION TO THE FINDINGS O F THE ASSESSING OFFICER THAT EVEN THE ASSESSEE DID NOT AD MIT TO THE SAID FACT IN HIS STATEMENT RECORDED DURING SURV EY ON 19.2.2003. THE LD. DR, THEREFORE, STATED THAT THE ADDITION MADE BY THE ASSESSING OFFICER WAS JUSTIFIED. 5. THE LD. COUNSEL FOR ASSESSEE, ON THE OTHER HAND, DREW OUR ATTENTION TO THE FINDINGS OF THE LD.CIT(APPEALS ) IN THIS REGARD WHILE DELETING THE ADDITION MADE AND MORE PARTICULARLY DREW OUR ATTENTION TO THE FINDING OF T HE CIT(APPEALS) THAT SHRI SOHAN LAL WHO WAS THE FATHER -IN-LAW OF THE ASSESSEE AND WAS THE MANAGER OF M/S DHRUV FA BRICS WHICH WAS PROPRIETARY CONCERN OF THE ASSESSEE, IN HIS STATEMENT RECORDED ON OATH DURING SURVEY U/S 133A OF THE 5 ACT HAD ADMITTED THAT THE PURCHASES MADE FROM M/S S.K. BHATIA GROUP HAD NOT BEEN RECORDED IN THE BOOKS OF THE ASSESSEE AND WERE DULY INCLUDED IN THE SURRENDER MA DE BY THE ASSESSEE OF RS.2.75 CRORES. OUR ATTENTION WAS DRAWN TO THE RELEVANT QUESTION ASKED FROM SHRI SOHAN LAL AND HIS REPLY, FROM THE COPY OF THE STATEMENT RECORDED PLAC ED BEFORE US, AS UNDER : Q:- YOU HAVE INFORMED US THAT SURVEY HAS BEEN CONDU CTED UNDER SECTION/133-A OF I.T.ACT 1961 BY THE INCOME TAX DEPARTMENT IN THE CASE OF M/S DHRUV FABRICS, FOCAL PO NT, LUDHIANA RECENTLY. P LEASE INFORM US EXACT DATE OF SURVEY ? ANS:-THE SURVEY WAS CONDUCTED IN THE CASE OF M/S DH RUV FABRICS ON 19-02-03 Q:- A SEARCH WAS CONDUCTED IN THE CASE OF M/S SWASTIK T RADING COMPANY LUDHIANA AT ITS BUSINESS PREMISES ALONG WIT H RESIDENTIAL PREMISES OF THE PARTNER. CERTAIN INCREM ATING DOCUMENTS WERE SEIZED FROM THE R/O S.K.BHATIA. CIVI L LINE, LUDHIANA P/0 SWASTIK TRADING COMPANY LUDHIANA. AS P ER SOME OF THESE DOCUMENTS, THE DETAILS OF WHICH ARE GIVING BELOW, SALES HAVE BEEN MADE BY M/S SWASTIK TRADING COMPANYTO M/S ESSESS FABRICS ONE OF YOUR CONCERN. YOUR REQUESTED TO EXPLAIN WHETHER THESE PURCHASES WAS MADE BY YOU ARE REFLECT ED IN YOUR BOOKS OF ACCOUNTS? DETAIL OF SALE TO M/S ESSESS FABRICS ANNEXURE MONTH AMOUNT A-82 14-08-02 12,30,282.17 A-40 NOV 2002 54,86,579.16 A-46 AUG/SEP 2002 19,91,026.59 A-59 OCT ,2002 28,86,667.92 A-76 JULY/AUG 2002 12,83,549.00 A-68 SEPT-2002 34,22,875.67 A-88 MAY-2002 26,21,840.04 A-97 SEPT-2002 26,26,999.95 ------------------------- 2,15,49,820.50 ------------------------ ANS:-1 WOULD LIKE TO CLARIFY THAT M/S ESSESS FABRIC S ENGAGED IN EMBROIDERY BUSINESS ONLY. THE DOCUMENT SHOWN TO ME REFLECT PURCHASE OF YARN. YARN IS PURCHASED FOR MANUFACTURE OF CLOTH IN M/S DHRUV FABRICS. THESE PURCHASE ARE MADE BY. M/S DHRUV FABRICS FROM M/S SWASTIK TRADING COMPANY. THESE PURCHASES ARE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF 6 M/S DHRUV FABRICS. M/S DHRUV FABRICS IS PROPRIETORY CONCERN WITH MRS.MRIDULA AS PROPRIETOR SHE IS MY DAUGHTER I N LAW. I AM MANAGER OF THE CONCERN. I AM ALSO DRAWING SALARY FOR THE SAME. I AM ALSO AUTHORISED SIGNATORY OF THIS CONCERN AND AL SO SIGN CHEQUES ON BEHALF OF THIS CONCERN AND I AM ALSO IN FULL KNOWLEDGE OF ALL THE AFFAIRS OF THIS CONCERN Q:- WHAT RECORD OF PURCHASES MAINTAINED BY YOU? REP LY ANS:- ALL THE PURCHASES ARE ENTERED IN OUR BOOKS OF ACCOUNT MAINTAINED IN COMPUTER WHICH ALSO MAINTAINED STOCK T ALLY ON THE BASES OF THESE ENTRIES. THESE STOCK REGISTER IS MAI NTAINED IN THE COMPUTER IT SELF. THE ABOVE PURCHASES CONFRONTED TO ME HOWEVER NOT RECORDED ANY WHERE. Q:- ARE THERE ANY OTHER PURCHASES MADE BY YOU SIMILA R TO THE ONE MENTIONED ABOVE FROM ANY OTHER CONCERN IN THE C ASE OF M/S DHRUV FABRICS OR YOUR OTHER SISTER CONCERN WHICH HA VE NOT BEEN RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE RES PECTIVE CONCERNS ? ANS:- THERE ARE NO SUCH PURCHASES WHICH HAVE NOT BEEN R ECORDED IN THE BOOKS OF THESE CONCERN Q:- WHAT IS THE MODE OF PAYMENT FOR THESE UNACCOUNT ED PURCHASES IN M/S DHRUV FABRICS ? ANS:- 90% OF SUCH PAYMENTS ARE MADE IN THE FORM OF UNACCOUNTED DRAFTS WHICH IN TERM RECORDED BY US FRO M UNACCOUNTED SALE MADE OUT OF MATERIAL PREPAID OUT O F UNACCOUNTED PURCHASES. REST OF THE AMOUNT IS PAID IN C ASH. Q:-WHAT ARE THE STEPS INVOLVED IN FINISHING/MANUFACT URING OUT OF THESE UN ACCOUNTED PURCHASES AND NOW ARE THE FINISH ED GOODS DISPOSED OFF, ANS:- THE MANUFACTURING PROCESS IS KNITTING OF YARN (RAW MATERIAL IN TO KNITTED CLOTH ON CIRCULAR KNITTING MA CHINES. THIS KNITTED CLOTH IS SOLD IN THE MARKET .THE SALE MADE OF SUCH CLOTH MADE OUT OF THESE UN ACCOUNTED PURCHASES IS ALSO SO LD OUT SIDE THE BOOKS OF ACCOUNT .THERE ARE NO OTHER UN ACCOUNT ED EXPENSES ON ACCOUNT OF MANUFACTURE OF THESE PRODUCTS SOLD OU T THE BOOKS OF ACCOUNT Q:- DO YOU HAVE TO SAY ANY THING MORE? ANS:-THE ABOVE UN ACCOUNTED PURCHASES FROM M/S SWAS TIK TRADING COMPANY LDH ARE ROTATED IN OUR CONCERN M/S DHRUV FABRICS IN THE FORM OF UN ACCOUNTED PURCHASE, MANUF ACTURE AND SALE OF MANUFACTURE CLOTH? AS MENTIONED BEFORE SURVEY OPERATION WERE CONDUCTED ON 19-02- 03 AT OUR BUSINESS PREMISES FOCAL POINT LUDHIANA.TH E ABOVE MENTIONED TRANSACTIONS ARE DULY COVERED BY THE SURR ENDER OF CASH AND STOCK TO THE TUNE OF RS.2.75 CRORE VOLUNTA RILY MADE BY US VIDE OUR SURRENDER LETTER DATED 19-02-2003. 6. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, STATED THAT THERE WAS NO INFIRMITY IN THE ORDER OF THE CIT(APPE ALS) ACCEPTING ASSESSEES CONTENTION THAT UNACCOUNTED PURCHASES RELATING TO DOCUMENTS FOUND DURING THE CO URSE OF 7 SEARCH CONDUCTED AT S.K. BHATIA GROUP AND RELATING TO THE ASSESSEE WERE DULY INCLUDED IN THE SURRENDER MADE B Y THE ASSESSEE DURING SURVEY CONDUCTED AT ITS PREMISES AN D THERE WAS NO NEED FOR MAKING SEPARATE ADDITION IN THIS RE GARD. 7. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S. THE SOLE ISSUE IN THE PRESENT APPEAL PERTAINS TO AD DITION MADE ON ACCOUNT OF INCOME PERTAINING TO UNRECORDED PURCHASES MADE BY THE ASSESSEE FROM ONE S.K. BHATIA GROUP BASED ON DOCUMENTS FOUND DURING THE COURSE OF SEARCH AT THE GROUP AND AMOUNTING TO RS.91,96,083/- , WHICH THE ASSESSEE CLAIMED WAS INCLUDED IN THE SURR ENDER OF RS.2.75 CRORES MADE BY HER DURING SURVEY CONDUCT ED AT HER PREMISES, WHILE THE REVENUE OPPOSES THE SAID CL AIM FOR THE REASON THAT THE SAME IS UNCORROBORATED AND UNADMITTED. 8. THE LD. CIT(APPEALS), WE FIND, ACCEPTED ASSESSE ES CONTENTION THAT THE SAID PROFITS ON ACCOUNT OF UNAC COUNTED SALES MADE FROM UNACCOUNTED PURCHASES MADE BY THE ASSESSEE FROM S.K.GUPTA CONCERNS WERE INCLUDED IN T HE SURRENDER MADE BY THE ASSESSEE DURING SURVEY CONDUC TED ON ITS PREMISES IMMEDIATELY AFTER THE SEARCH ON S.K. B HATIA GROUP. THE RELEVANT FINDINGS OF THE CIT(A) HOLDING SO ARE AS UNDER: I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE L D.COUNSEL AND PERUSED THE RELEVANT RECORD. IT IS SEEN THAT IN THIS CASE, THE APPELLANT HAD ADMITTED THAT THE TRANSACTIONS RECO RDED IN THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH IN THE BH ATIA GROUP OF CASES AND WHICH TRANSACTIONS ARE PERTAININ G TO THE APPELLANT WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. TH EREFORE, THE RELEVANT TRANSACTIONS BEING NOT RECORDED IN THE BOOKS OF ACCOUNT IS AN ADMITTED POSITION. THE ONLY CONTENTION O F THE 8 APPELLANT IS THAT THE INCOME, WHATSOEVER, EARNED BY T HE APPELLANT FROM THESE UN ACCOUNTED TRANSACTIONS IS COVE RED IN THE SURRENDER OF RS.2.75 CR. MADE BY THE APPELLANT DURI NG THE COURSE OF SURVEY U/S 133A CONDUCTED ON 19.2.2003. T HE DOCUMENTS WERE SEIZED, IN THIS CASE ON 5.2.2003 WHER EAS THE SURVEY DURING THE COURSE OF WHICH SURRENDER WAS MAD E AS ABOVE, WAS CONDUCTED SUBSEQUENTLY I.E. ON 19.2.200 3. THOUGH THE A.O. IS OF THE VIEW THAT THERE IS NOTHIN G ON RECORD TO SHOW THAT THE INCOME FROM THE TRANSACTIONS FOUND IN THE SEIZED DOCUMENTS WERE INCLUDED IN THE SURRENDERED AMOUNT, THIS CONCLUSION OF THE A.O. DOES NOT APPEAR TO BE JUSTIFI ED. AS BROUGHT OUT IN THE ASSESSMENT ORDER ITSELF, THE STA TEMENT OF THE APPELLANT WAS RECORDED ON 19.2.2003 DURING THE COUR SE OF SURVEY. THE A.O. HAS REPRODUCED THE EXTRACTS OF THIS STATEMENT ON PAGE 13, AND 14 OF THE ASSESSMENT ORDER ITSELF. F URTHER, A STATEMENT OF SHRI SOHAN LAL S/O SHRI RAUNAQ RAM WAS RECORDED ON OATH DURING THE COURSE OF SURVEY U/S 13 3A ON THE BUSINESS PREMISES OF M/S ESS ESS FABRICS, TALAB BAZA R, LUDHIANA ON 7.3.2003. EXTRACTS OF THIS STATEMENT ARE A LSO BROUGHT OUT ON PAGES 14 AND 15 OF THE ASSESSMENT OR DER BY THE A.O. AS PER THIS STATEMENT, SHRI SOHNA LAL, IS FATHER IN LAW OF THE APPELLANT. HE HAD STATED THAT HE WAS THE MANAGER OF THE CONCERN M/S DHRUV FABRICS WHICH IS T HE PROPRIETORY CONCERN OF THE APPELLANT. AS PER THIS S TATEMENT, SHRI SOHAN LAI ADMITTED THAT THE PURCHASES CONFRONTED TO HIM WERE NOT RECORDED BY THE APPELLANT ANYWHERE. IN ANSWER T O THE QUESTION AS TO IF M/S DHRUV FABRICS HAS MADE UNACCO UNTED PURCHASE OTHER THAN ABOVE MENTIONED FROM BHATIA GROU P, SHRI SOHAN LAL CATEGORICALLY STATED AS UNDER.- 'THERE ARE NO SUCH PURCHASES WHICH HAVE NOT BEEN REC ORDED IN THE BOOKS OF THESE CONCERNS.' FURTHER AS REPRODUCED ON PAGE 15 OF THE ASSESSMENT ORDER IN ANSWER TO ONE OF THE QUESTIONS, SHRI SOHAN LAI HAS STATED AS UNDER. 'THE ABOVE UNACCOUNTED PURCHASES FROM M/S SWASTIC TRADING COMPANY LTD ARE ROTATED IN OUR CONCERN M/S DHRUV FABRICS IN THE FORM OF UNACCOUNTE D PURCHASE, MANUFACTURE AND SALES OF MANUFACTURING CLOTH. AS MENTIONED BEFORE SURVEY OPERATION WERE CONDUCTED ON 19.2.2003 AT OUR BUSINESS PREMISES, FOCAL POINT, LUDHIANA. THE ABOVE-MENTIONED TRANSACTIONS ARE DULY COVERED BY THE SURRENDER OF C ASH AND STOCK TO THE TUNE OF RS.2.75 CR. VOLUNTARILY MADE BY US VIDE OUR SURRENDER LETTER DATED 19.2.2003.' THEREFORE, IN THE ABOVE STATEMENT OF SHRI SOHAN LAI, FATHER-IN-LAW OF THE APPELLANT AND WHO IS STATED TO BE THE MANAGER OF THE PROPRIETORY CONCERN OF THE APPELLANT M/S DHRUV FABRICS, HE HAS RATHER DULY EXPLAINED DURING THE COURSE OF SURVEY ON 7.3.2003 THAT THE INCOME WHATSOE VER, EARNED FROM THE UNRECORDED TRANSACTIONS, AS PER THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH, IS COV ERED IN THE SURRENDER OF RS.2.75 CRY MADE US ABOVE. IN THE ASSESSMENT ORDER, THE A.O. HAS HIMSELF MENTIONED THAT THE STOCKS FOUND DURING THE COURSE OF SURVEY ON 19.2.20 03 IN THE 9 CASE OF THE APPELLANT WAS MUCH MORE THAN WHAT COULD HAVE BEEN ON THE BASIS OF UNRECORDED STOCKS AS PER SEIZED DOCUMENTS. FROM THIS, THE A.O. INFERRED THAT THE APPELLA NT ENTERED INTO OTHER UNACCOUNTED TRANSACTION ALSO. RAT HER THIS OBSERVATION OF THE A.O. SUPPORTS THE CASE OF THE AP PELLANT. THE UNRECORDED STOCKS FOUND AND SURRENDERED APPELLA NT DURING THE COURSE OF SURVEY AND WHICH SURVEY WA S CONDUCTED AFTER THE DATE OF SEARCH IN THE BHATIA GR OUP OF CASES ON 5.2.2003, WAS FOUND TO BE MUCH MORE THAN TH E INCOME WHATSOEVER EARNED FROM THE UNRECORDED TRANSA CTIONS WITH THE BHATIA GROUP CASES. IN THE FACE OF THE ABOV E FACTUAL POSITION AND THE STATEMENTS OF THE APPELLANT AND SHR I SOHAN LAL REPRODUCED IN THE ASSESSMENT ORDER AND WHICH HA VE BEEN DISCUSSED ABOVE, THE INFERENCE DAWN BY THE A.O. THA T THE SURRENDERED AMOUNT OF RS.2.75 CR. DID NOT INCLUDE T HE INCOME EARNED BY THE APPELLANT FROM UNRECORDED TRANSACTIONS WITH BHATIA GROUP CANNOT BE SAID TO BE JUSTIFIED AT ALL. INFERENCE DRAWN BY THE A.O. AS ABOVE, IS WITHOUT ANY CONVINCING MATERIAL. THE INCOME WORKED OUT BY THE A.O. FROM SU CH TRANSACTIONS CAME TO RS.91,96,083/- WHICH IS FAR LESS THAN THE AMOUNT SURRENDERED DURING THE COURSE OF SURVEY. THE INFERENCE DRAWN BY THE A.O. COULD BE TAKEN TO BE CORR ECT AND JUSTIFIED ONLY IF COMPLETE DETAILS OF TRANSACTIONS OUT OF WHICH SURRENDERED INCOME OF RS.2.75 CR. WAS EARNED, WERE THER E AND IT COULD HAVE BEEN SHOWN THAT THE TRANSACTIONS WITH BHATIA GROUP RECORDED IN THE SEIZED DOCUMENTS WERE N OT INCLUDED IN THE SAME. HOWEVER, AS SEEN FROM THE DISCUS SIONS IN THE PRECEDING PARAS, NOTHING OF THIS SORT HAS BEE N DONE IN THIS CASE. THEREFORE, THE INFERENCE DRAWN BY THE A.O . IS NOT SUSTAINABLE AND IT HAS TO BE TAKEN THAT THE INCOME OF RS.91,96,083/- WORKED OUT BY THE A.O. IS COVERED IN T HE INCOME OF RS.2.75 CR. SURRENDERED BY THE APPELLANT DUR ING THE COURSE OF SURVEY ON 19.2.2003. THIS GROUND IS, THEREFOR E, ALLOWED. 9. THE LD.CIT(A), WE FIND, ACCEPTED ASSESSEES CONTE NTION BASED ON THE FACT THAT THE MANAGER OF THE ASSESSEE FIRM HAD ADMITTED TO THE UNACCOUNTED TRANSACTIONS IN HIS STA TEMENT RECORDED DURING SURVEY CONDUCTED AT THE ASSESSEES P REMISES AND HAD CATEGORICALLY STATED THAT THE INCOME FROM T HE SAID TRANSACTION WAS INCLUDED IN THE SURRENDER OF 2.75 C RORES MADE BY THE ASSESSEE DURING SURVEY. LD.CIT(A), WE FIND, FURTHER NOTED THAT THE AO ON THE OTHER HAND DID NOT BASE HIS FIND INGS THAT THE UNACCOUNTED PURCHASES DID NOT STAND CORROBORATE D WITH THE SURRENDER MADE BY THE ASSESSEE, ON ANY EVIDENCE IN THE FORM OF DETAIL OF TRANSACTIONS OUT OF WHICH SURRENDERED INC OME WAS 10 EARNED. HE FURTHER NOTED THAT THE ADDITION MADE ON ACCOUNT OF THE UNACCOUNTED PURCHASES AT RS.91,96,083/- WAS FAR LESS THAN THE SURRENDER MADE BY THE ASSESSEESSE OF RS. 2.75 CRORES. HE THEREFORE AGREED WITH THE ASSESSEE THAT THE INCOME ON ACCOUNT OF UNACCOUNTED PURCHASES MADE FRO M S.K GUPTA GROUP WAS INCLUDED IN THE SURRENDER MADE BY THE ASSESSEE DURING SURVEY OF RS. 2.75 CRORES AND DELET ED THE ADDITION MADE. NONE OF THE ABOVE FACTS HAVE BEEN CONTROVERTED BY THE REVENUE BEFORE US. IN FACT THE LD. COUNSEL FOR ASSESSEE HAS REAFFIRMED THE FACT OF THE MANAGER OF THE ASSESSEES FIRM ADMITTING TO THE UNACCOUNTED TRANSACTIONS AND INCLUSION OF INCOME THEREFROM IN T HE SURRENDER MADE BY IT, BY REPRODUCING THE COPY OF TH E STATEMENT RECORDED OF SHRI SOHAL LAL, THE MANAGER O N 07- 03-03. WE THEREFORE SEE NO REASON TO INTERFERE IN THE WELL REASONED ORDER OF THE LD.CIT(APPEALS), HOLDING THAT THERE IS NO REASON FOR MAKING SEPARATE ADDITION ON ACCOUNT O F THE SAID DOCUMENTS AND THE SAME ARE ALREADY INCLUDED IN THE SURRENDER MADE BY THE ASSESSEE. THE GROUND OF APPEA L RAISED BY THE REVENUE IS, THEREFORE, DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS, TH EREFORE, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 5 TH APRIL, 2018 *RATI* 11 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH