Rasranjan Food Products Pvt.Ltd., Ahmedabad V. The ACIT., Cent.Circle-2(4), Ahmedabad

ITSSA 235/AHD/2004

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7839 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-01-2012
• Assessment Year: misc
• Appeal Filed On: 13-08-2004
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained expenditure; Business income; Income from undisclosed sources; Salary income; Loose papers; Document seized; Opportunity of being heard; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER IT(SS)A NO.235 & 269/AHD/2004 BLOCK PERIOD FROM 01/04/95 TO 08/01/02 RASRANJAN FOOD PRODUCTS PVT. LTD. RASRANJAN COMPLEX, NR. VIJAY CHAR RASTA, NAVRANGURA, AHMEDABAD 380 009 PAN NO.AABCR8986Q DCIT, CENTRAL CIRCLE- 2(4), AHMEDABAD / V/S . / V/S . ACIT, CENTRAL CIRCLE- 2(4), AHMEDABAD M/S RASRANJAN FOOD PRODUCTS PVT. LTD. / APPELLANT .. / RESPONDENT IT(SS)A NO.14/AHD/2007 BLOCK PERIOD FROM 01/04/95 TO 08/01/02 RASRANJAN FOOD PRODUCTS PVT. LTD. RASRANJAN COMPLEX, NR. VIJAY CHAR RASTA, NAVRANGURA, AHMEDABAD 380 009 PAN NO.AABCR8986Q / V/S . ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-5, C.U. SHAH BUILDING, ASHRAM ROAD, AHMEDABAD / APPELLANT .. / RESPONDENT / ASSESSEE BY: SHRI M.K. PATEL, AR /REVENUE BY: SHRI ALOK JOHRI CIT-DR ! / DATE OF HEARING 17-01-2012 '#$% ! / DATE OF PRONOUNCEMENT 20-01-2012 IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 2 &'( &'( &'( &'( / / / / ORDER PER B.P. JAIN, ACCOUNTANT MEMBER:- THESE CROSS-APPEALS OF THE ASSESSEE AND THE REVENUE ARISE FROM THE ORDER OF LD. COMMISSIONER OF INC-TAX (APPEALS)-III, AHMEDABAD DATED 25-06- 2004 FOR THE BLOCK PERIOD FROM 01-04-1995 TO 08-01- 2002. THE ASSESSEE HAS ALSO FILED THE APPEAL AGAINST THE ORDER OF LD. CIT (A)-III, AHMEDABAD DATED 06- 11-2006 FOR THE SAID BLOCK PERIOD. THE GROUND RAISE D BY THE ASSESSEE IN THE CROSS-APPEAL AS UNDER:- IT(SS)A NO.235/AHD/2004 BY THE ASSESSEE. 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDI TION OF RS.4,49,558/- ON ACCOUNT OF CASH FOUND AT THE TIME OF SEARCH. IN VIEW OF THE FACTS AND SUBMISSIONS ONLY CASH OF RS.2,89,105/- IS REQUIRED TO BE CONSIDERED AS EXCESS CASH AND THEREFORE, THE BALANCE AMOUNT OF CA SH FOUND REQUIRES TO BE CONSIDERED AS EXPLAINED. 2. THE LEARNED CIT(A) HAS ALSO ERRED IN CONFIRMING ADDITION OF RS.2,00,000/- AS THE AMOUNT ADVANCED TO MANGILAL. I N VIEW OF THE FACTS, DETAILS AND SUBMISSION, THE SAID ADDITION OF RS.2,0 0,000/- REQUIRES TO BE DELETED. 3. THE LEARNED CIT(A) HAS ALSO ERRED IN GIVING A FI NDING THAT INTEREST OF RS.1,40,400/- ON AMOUNT ADVANCED OF RS.2,00,000/- T O MANGILAL IS REQUIRED TO BE TAXED AS AND WHEN ACTUALLY RECEIVED. IN VIEW OF THE FACTS, SINCE NO SUCH AMOUNT IS ADVANCED AND THEREFORE, THE SAID FINDING OF THE LEARNED CIT(A) REQUIRES TO BE REVERSED. 4. THE LEARNED CIT(A) HAS ALSO ERRED IN CONFIRMING ADDITION OF RS.4,31,957/- MADE BY THE A.O AS UNDISCLOSED INVEST MENT. IN VIEW OF THE FACTS, THE SAID AMOUNT IS REQUIRED TO BE CONSID ERED AT RS.3,97,157/- AND THEREFORE, BALANCE AMOUNT OF RS.34,800/- REQUIR ES TO BE DELETED. 5. THE LEARNED CIT(A) HAS ERRED IN CONSIDERING THE ENTIRE SALE OF RS.11,78,245/- AS UNACCOUNTED AND AS A RESULT, CONF IRMING THE ENTIRE SALES FOR THE PURPOSE OF ADDITION. IN VIEW OF THE F ACTS AND DETAILS EITHER THE ENTIRE ADDITION REQUIRES TO BE DELETED OR IN TH E ALTERNATIVE AT THE MOST ONLY GROSS PROFIT IS REQUIRED TO BE CONSIDERED FOR THE PURPOSE OF ADDITION. 6. THE LEARNED CIT(A) HAS ALSO ERRED IN CONFIRMING THE ADDITION OF RS.3,29,791/- ON ACCOUNT OF UNACCOUNTED SALES. IN V IEW OF THE FACTS AND DETAILS, EITHER THE ENTIRE ADDITION REQUIRES TO BE DELETED OR ONLY THE GROSS PROFIT CAN BE CONSIDERED FOR THE PURPOSE OF ADDITIO N. IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 3 7. THE LEARNED CIT(A) HAS ERRED IN CONSIDERING AN I NVESTMENT OF RS.60,000/- IN VALUABLES AS UNACCOUNTED AND MADE BY THE APPELLANT COMPANY. IN VIEW OF THE FACTS AND DETAILS THE SAID ADDITION FOR INVESTMENT REQUIRES TO BE CONSIDERED AS EXPLAINED. 8. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING CHARG ING OF INTEREST U/S.158BFA(1) OF THE ACT. IN VIEW OF THE FACTS THAT DELAY IN FURNISHING THE RETURN IS ATTRIBUTABLE TO THE DEPARTMENT AND THEREF ORE, NO INTEREST IS REQUIRED TO BE CHARGED U/S.158BFA(1) OF THE ACT. THE GROUND RAISED BY THE REVENUE IN CROSS-APPEAL AS UNDER:- IT(SS)A NO.269/AHD/2004. 1. THE LEARNED CIT(A) HAS ERRED, ON THE FACTS OF T HE CASE AND IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE INTEREST INCOME ON ADVANCE MADE TO MANGILAL OF RS.1 ,40,400/-. 2. THE LEARNED CIT(A) HAS ERRED, ON THE FACTS OF TH E CASE AND IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BEING UNACCOUNTED ADVANCE MADE TO VARIOUS PARTIES AMOUNTING TO RS.3,7 9,467/- WRITTEN IN CODED FORM BY OMITTING TWO ZEROS AS PER PAGE NO.1 A ND IS BACKSIDE OF ANNEXURE A/2 SIZED. 3. THE LEARNED CIT(A) HAS ERRED, ON THE FACTS OF TH E CASE AND IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BEING UNACCOUNTED ADVANCES TO VARIOUS PARTIES AMOUNTING TO RS.4,1,259 /- WRITTEN IN CODED FORM BY OMITTING TWO ZEROS AS PER PAGE NO.3 OF ANNE XURE A/2 SEIZED. 4. THE LEARNED CIT(A) HAS ERRED, ON THE FACTS OF TH E CASE AND IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BEING UNACCOUNTED ADVANCE MODE TO SHRI PREMCHAND AMOUNTING TO RS.9,90 ,000/- AND INTEREST INCOME EARNED ON THE SAID ADVANCES OF RS.5 3,248/- WRITTEN IN CODED FORM BY OMITTING TWO ZEROS. 5. THE LEARNED CIT(A) HAS ERRED, ON THE FACTS OF TH E CASE AND IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BEING UNACCOUNTED ADVANCE MADE TO SHRI KANTIBHAI AMOUNTING TO RS.11,8 8,000/- AND INTEREST INCOME EARNED ON THE ABOVE ADVANCE OF RS.6 9,717/- WRITTEN IN CODED FORM BY OMITTING TWO ZEROS. 6. THE LEARNED CIT(A) HAS ERRED, ON THE FACTS OF TH E CASE AND IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED SALES OF RS.1,98,110/- AS PER PAGE NO.1 OF ANNEXURE A/28 SEIZED FROM THE FACTORY PREMISES. IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 4 7. THE LEARNED CIT(A) HAS ERRED, ON THE FACTS OF T HE CASE AND IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED EXPENDITURE INCURRED IN CASH OF RS.2,77 ,298/- AS PER PAGE NO.75 TO 79 OF ANNEXURE A/1 SEIZED. 8. THE LEARNED CIT(A) HAS ERRED, ON THE FACTS OF TH E CASE AND IN LAW IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER BEING UNACCOUNTED SALARY OF RS.1,55,000/- PAID TO SHRI KIRTIKUMAR S S HAH, EMPLOYEE OF THE COMPANY. 9. THE LEARNED CIT(A) HAS ERRED, ON THE FACTS OF TH E CASE AND IN LAW IN ALLOWING THE SET OFF OF UNACCOUNTED EXPENDITURE/INV ESTMENT AGAINST UNACCOUNTED INCOME. 10. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) OUGHT HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND IN IT( SS)A NO.14/AHD/2007 AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE PENALTY OF RS.9,22,917/- LEVIED BY THE A.O U/S158BF A(2) OF THE ACT. IN VIEW OF THE FACTS, SUBMISSIONS AND EVIDENCES FILED AS WELL AS LEGAL POSITION, THE IMPUGNED PENALTY OF RS.9,22,817/- REQ UIRES TO BE DELETED/CANCELLED. NOW WE TAKE UP THE CROSS-APPEALS OF THE ASSESSEE AN D THE REVENUE AS UNDER:- 2. IN GROUND NO.1 OF THE CROSS-APPEAL OF ASSESSEE T HE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF SEARCH CASH OF R S.4,93,771/- WAS FOUND AT VARIOUS PLACES OF THE ASSESSEE GROUP AS DETAILED BY THE ASSESSING OFFICER ON PAGE-7 OF THE ASSESSMENT ORDER OUT OF WHICH CASH OF RS.3,82,500/- WAS SEIZED. THE ASSESSING OFFICER AFTER GIVING CREDIT O F BUSINESS CASH OF RS.44,213/- AS DETERMINED BY HIM ON PAGE-9 OF THE A SSESSMENT ORDER MADE AN ADDITION OF RS.4,49,558/- AS UNDISCLOSED INCOME OF THE ASSESSEE-COMPANY BEING UNEXPLAINED CASH. THE LD. CIT(A) CONFIRMED TH E ACTION OF THE ASSESSING OFFICER. IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 5 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. IT WAS ARGUED BY THE LEARNED COUNSEL FOR THE ASSESS EE THAT EXCESS CASH WORKED OUT BY THE ASSESSEE AT RS.2,89,105/- HAS ALR EADY BEEN OFFERED FOR TAXATION AND THE AVAILABILITY OF CASH AS ON THE DAT E OF SEARCH HAS BEEN EXPLAINED TO BE AVAILABLE WITH ALL THE FAMILY MEMBE RS. THE LD. CIT- DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, RELI ED UPON THE ORDER OF BOTH AUTHORITIES BELOW. 4. THE EXPLANATION OF THE ASSESSEE THAT THE CASH FO UND FOR WHICH THE ADDITIONS HAVE BEEN MADE WAS CASH-IN-HAND AVAILABLE WITH OTHER FAMILY MEMBERS IS WITHOUT ANY COGENT EXPLANATION OR ANY EV IDENCE. THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE PLEADINGS MADE BY THE LD. AR BEFORE THE AUTHORITIES BELOW AND BEFORE US CANNOT HELP THE ASSESSEE. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO ERR OR IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER. THUS, THE GROUND NO.1 OF THE ASSESSEE IS DISMISSED. 5. AS REGARDS GROUND NO.2 OF THE ASSESSEE AND GROUN D NO.1 OF THE REVENUE. THE BRIEF FACTS ARE THAT THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF NOTINGS MADE IN S EIZED MATERIAL AND THE EXPLANATION GIVEN BY SHRI D.D. AGARWAL IN HIS STATE MENT RECORDED DURING THE COURSE OF SEARCH PROCEEDINGS. THE ADDITION IS BASED ON NOTINGS MADE ON PAGE-23 OF LOOSE PAPER FILE OF ANNEXURE A-1 SEIZED FROM RASRANJAN COMPLEX. ON THE BASIS OF NOTINGS THEREIN A.O HAS CONCLUDED T HAT AS ADMITTED BY SHRI D.D. AGARWAL WHEREVER THE FIGURES HAVE BEEN WRITTEN WITH PAISA NOTINGS WHILE PUTTING A BRACKET FOLLOWED BY 2 ZEROS, THE BRACKET IS TO BE OMITTED FOR ARRIVING AT THE ACTUAL AMOUNT. ACCORDINGLY, THE FIGURE OF 2000) AND THE TOTAL OF 3404)00 HAS BEEN TREATED BY THE A.O AS RS.2,00,000/- AND RS .3,40,400/- WHILE OMITTING THE BRACKET. THE TOTAL OF RS.3,40,400/- HAS BEEN BI FURCATED INTO AMOUNT OF RS.2,00,000/- AS OUTSTANDING AMOUNT AND RS.1,40,400 /- BEING INTEREST ON THE SAID AMOUNT ON VARIOUS DATES. THE AO WHILE REJECTIN G THE ASSESSEES IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 6 CONTENTION HAS OBSERVED THAT THE CONFIRMATION FILED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM IS ONLY A SELF-SERVING DOCUMENT AND AC CORDINGLY, HAS NO MATERIAL VALUE. AO HAS OBSERVED THAT THE LOGICAL ANALYSIS OF ALL THE NOTINGS ON LOOSE PAPER AND ON THIS AMOUNT HAS EARNED INTEREST INCOME OF RS.1,40,400/-. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO AS REGARD S THE ADDITION OF RS.2 LAKH BUT DELETED THE ADDITION OF RS.1,40,400/- BECAUSE T HERE IS NO EVIDENCE TO ESTABLISH THAT THE SAID INTEREST HAS IN FACT BEEN R ECEIVED BY THE ASSESSEE. 6. OUR ATTENTION WAS INVITED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT ASSESSEES PAPER BOOK (PB) PAGE-87, WHERE THE SAID SEIZED DOCUMENT IS ON RECORD. THEN WE WERE TAKEN AT PAGE-85 OF THE ASSESS EES PB, WHERE THE ASSESSEE HAD ADMITTED THE ENTRY OF RS.2, AS RS.20,0 00/-. THEREAFTER OUR ATTENTION WAS INVITED AT PAGE-94 OF THE DEPARTMENTA L PB IN WHICH MR.AGARWAL HAS STATED IN THE STATEMENT ABOUT THE ZEROS OMITTED IN THE SAID SEIZED DOCUMENT. LEARNED COUNSEL FOR THE ASSESSEE ARGUED A T THE FIRST INSTANCE THAT THE AMOUNT ADVANCE IS RS.2,000 WHICH IS RECOVERABLE AS AT 1-4-99 AS PER ASSESSEES PB PAGE-87 AND THEREAFTER THE ENTRIES OF INTEREST HAVE BEEN MADE AND ULTIMATELY THE ACCOUNT HAS BEEN SETTLED AT RS.3 ,404/-. THEREAFTER HE MADE THE ARGUMENT THAT THE ASSESSEE HAD AGREED AS PER AS SESSEES PB PAGE-85 THE ADVANCE AS NOT RS.2,000 BUT AS RS.20,000. TO TH IS ARGUMENT LD. CIT-DR, ALOK JOHARI ARGUED THAT IF THE LOGIC ARGUED BY LD. AR IS TAKEN INTO CONSIDERATION THEN THE FIGURE OF RS.194)40 IS TAKEN AS CORRECT AT RS.19,440/- THEN THE CALCULATION OF INTEREST COMES AT RS.194)4. 7. WE ARE CONVINCED WITH THE ARGUMENTS MADE BY LD. CIT-DR IN THIS RESPECT. THERE IS NO DISPUTE ABOUT THE FACT THAT TH E FIGURES HAVE BEEN WRITTEN IN THE CODED FORM AS PER STATEMENT OF MR M. D AGRAW AL AVAILABLE AT ASSESSEES PB-85. IT WAS ALSO AGREED IN THE SAID ST ATEMENT THAT THE CODED FORM SHOULD BE READ AFTER REMOVING THE BRACKET FROM THE READING OF THE DOCUMENT AT ASSESSEES PB-87. IT APPEARS THAT MR. M . D AGARWAL HAS PUT THE ZERO AT SOME PLACES WHERE THE FIGURES ARE IN THE RO UND AMOUNT AND AT OTHER IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 7 PLACES HE HAS WRITTEN THE FIGURE WITHIN THE BRACKET AND AFTER THE BRACKET AS WELL. IN VIEW OF THE SEQUENCE OF NOTINGS AND APPLYI NG THE UNIFORMITY, THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE ACTION OF THE AO F OR TREATING THE FIGURE OF 2,) AS RS.2 LAKH). THEREFORE IN THE CIRCUMSTANCES AND F ACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A), WHO HAS RI GHTLY CONFIRMED THE ACTION OF THE AO. 8. AS REGARDS THE INTEREST WE ALSO CONCUR WITH THE VIEWS OF LD. CIT(A) SINCE THERE IS NO MATERIAL WITH THE ASSESSING OFFIC ER THAT THE ASSESSEE HAS RECEIVED THE INTEREST. THEREFORE THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. THUS, GROUND NO.2 OF ASSESSEE AND GROUND NO.1 OF RE VENUE ARE DISMISSED. 9. AS REGARDS GROUND NO.2 OF THE REVENUE. THE BRIEF FACTS ARE THAT ADDITION MADE BY THE ASSESSING OFFICER IS BASED ON THE NOTINGS ON PAGE-1 AND BACK SIDE OF PAGE-1 OF SEIZED ANNEXURE-A/2. THE AO ON THE BASIS OF HIS DETAILED OBSERVATION AND FINDING IN PARA-6 AND MORE PARTICULARLY ON PAGE-23 AND 24 OF THE ASSESSMENT ORDER HAS MADE THE SAID AD DITION WHILE TREATING THE NOTINGS IN RESPECT OF AMOUNTS AS MADE ON THE ABOVE MENTIONED PAGES OF ANNEXURE-A/2 BY ADDING 2 ZEROS WRITTEN AFTER THE RA CKET AGAINST THE AMOUNTS NOTED TO ARRIVE AT THE ACTUAL AMOUNT. THE LD. CIT(A ) VIDE PARA-5.2 OF HIS ORDER RESTRICTED THE ADDITION TO RS.20,833/- AND ALLOWED A RELIEF OF RS.3,79,467/-. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE LD. CIT(A) HAS DECIDED THE ISSUE ON THE BASIS O F THE STATEMENT MADE BY SHRI MANOJ D AGRAWAL AND THE NOTINGS MADE IN THE AN NEXRE-A/2. ON PERUSAL OF THE RECORD, WE FIND NO ERROR IN THE ORDER OF LD CIT (A) THAT AS PER ANNEXURE-A/2 WHICH SPECIFIC REFERENCE TO THE STATEMENT OF SHRI M ANOJ D AGRAWAL ACTUAL AMOUNT OF ADDITION WORKS OUT TO RS.20,833/- AND THE REFORE WE FIND NO INFIRMITY IN THE ORDER OF LD CIT(A). THUS, GROUND NO.2 OF THE REVENUE IS DISMISSED. IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 8 11. AS REGARDS TO GROUND NO.3 OF THE REVENUE. THE B RIEF FACTS ARE THAT THE ADDITION IS BASED ON NOTINGS MADE ON PAGE-3 OF ANNE XURE-A/2. THE ADDITION IS MADE BY THE ASSESSING OFFICER WHILE TREATING THE FI GURES WRITTEN IN THE SAID ANNEXURE BY REMOVING THE BRACKET IN BETWEEN AND TRE ATING THE SAME AS UNDISCLOSED ADVANCES/INVESTMENT MADE OUT OF UNDISCL OSED INCOME AO HAS FURTHER OBSERVED THAT THE FIRST ENTRY WRITTEN PERTA INS TO PAYMENT TO BE RECEIVED FROM SOME PARTIES AND THE AMOUNT MENTIONED BELOW, T HE FIGURES WRITTEN WERE THE ADVANCES GIVEN TO SOME PARTIES ON VARIOUS DATES AND SINCE THE SAME ARE NO REFLECTED IN THE BOOKS OF ACCOUNT, THE ADDITION HAS BEEN MADE. THE LD. CIT(A) DELETED THE ADDITION VIDE PARA-6.2 OF HIS OR DER IN THE ABSENCE OF ANY EVIDENCE AGAINST THE ASSESSEE. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF LD. CIT(A) THAT IN THE ABSENCE OF ANY EVIDENCE AGAINST THE ASSESSEE, THE NOTINGS IN THE SEIZED DOC UMENTS CANNOT BE A SUBJECT-MATTER OF ADDITION. THEREFORE, IN THE CIRCU MSTANCES AND FACTS OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT( A) WHO HAS RIGHTLY DELETED THE ADDITION MADE BY AO. THUS, GROUND NO.3 OF THE REVEN UE IS DISMISSED. 13. AS REGARDS TO GROUND NO.4 OF REVENUE WHICH PERT AINS TO ADDITION OF RS.10 LAKH AS ADVANCED TO PREMCHAND AND ADDITION OF RS.53,786/- BEING INTEREST THEREON. THE ADDITION IS MADE BY THE A.O O N THE BASIS OF NOTINGS MADE ON PAGE-2 OF ANNEXURE-A/2 AS DISCUSSED BY HIM IN PARA-6 MORE PARTICULARLY ON PAGE-25 AND 26 OF THE ASSESSMENT OR DER. BRIEFLY SPEAKING THE ASSESSING OFFICER WHILE APPLYING THE SAME ANALOGY O F CONVERTING THE FIGURES AFTER WHICH THE BRACKET ARE PUT AS NOTED IN THE SEI ZED MATERIAL BY ADDING TWO ZEROS TO THE SAID FIGU9RE WHILE RELYING UPON THE ST ATEMENT OF SHRI MANOJ D AGARWAL RECORDED DURING THE COURSE OF SEARCH PROCEE DINGS AND THE NOTINGS MADE IN VARIOUS SEIZED ANNEXURE. IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 9 14. LD. CIT(A) RESTRICTED THE ADDITION OF RS.10 LAK H AND RS.53,786/- TO RS.10,000 AND RS.537.86 KEEPING IN VIEW THE STATEME NT OF SHRI MANOJ D AGARWAL AND IN THE ABSENCE OF ANY CONTRARY FINDING OF THE AO. 15. WE CONCUR WITH THE VIEWS OF LD. CIT(A) THAT THE SAID AMOUNT OF 10,) CANNOT BE READ AS RS.10 LAKH AND INTEREST OF 537)86 CANNOT BE READ AS RS.53,786 IN THE ABSENCE OF ANY CORROBORATING EVIDE NCE ON RECORD. THEREFORE, LD. CIT(A) HAS RIGHTLY ALLOWED THE RELIEF TO THE AS SESSEE AND WE FIND NO ERROR IN HIS ORDER. THUS, GROUND NO.4 OF THE REVENUE IS D ISMISSED. 16. AS REGARDS TO GROUND NO.5 OF REVENUE WHICH PERT AINS TO ADDITION OF RS.12 LAKH AS ADVANCED TO KANTIBHAI AND INTEREST OF RS.70,421/- THEREON. THE IMPUGNED ADDITION HAS BEEN MADE BY THE AO ON THE BA SIS OF NOTINGS ON PAGE- 2 OFANNEXURE-A/2 AND THE OBSERVATION MADE BY HIM ON PAGE-26 AND 27 OF THE ASSESSMENT ORDER. THE ADDITION HAS BEEN MADE WHILE APPLYING THE SAME ANALOGY OF ADDING 2 ZEROS IN THE FIGURES WRITTEN ON PAGE-2 OF THE SEIZED ANNEXURE. 17. LD. CIT(A) RESTRICTED THE ADDITION OF RS.12,000 /- AND RS.794.21 VIDE PARA-8.2 OF HIS ORDER ON THE SAME REASONINGS AS IN THE IMMEDIATE PRECEDING GROUND. 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE FACTS IN THE PRESENT GROUND ARE IDENTICAL TO TH E FACTS IN REVENUES GROUND NO.4 HEREINABOVE AND THEREFORE FOLLOWING OUR DECISI ON IN GROUND NO.4 HEREINABOVE, WE DISMISS THE GROUND NO.5 OF THE REVE NUE. 19. AS REGARDS GROUND NO.4 OF THE ASSESSEE WHICH RE LATES TO ADDITION OF RS.4,31,957/- BEING ADVANCES AS UNDISCLOSED INVESTM ENT OF THE ASSESSEE. THE ADDITION MADE BY THE ASSESSING OFFICER IS BASED ON NOTINGS ON PAGE-1 TO 24 OF ANNEXURE-A/4 AND ON THE GROUND THAT THE ASSES SEE HAS ALREADY IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 10 ACCEPTED THAT THE FIGURES WRITTEN ON THE SAID PAGES ARE AFTER REMOVING 2 ZEROS FROM THE FIGURES AND THAT THE SAME PERTAINS TO UNAC COUNTED ADVANCES. 20. THE LD. CIT(A) CONFIRMED THE ACTION OF ASSESSIN G OFFICER. 21. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT IN THE ABSENCE OF ANY EVIDENCE IN SUPPORT OF CONTENTION THAT THE ADVANCES HAVE BEEN RECEIVED BACK ON VARIOUS OCCASIONS, THE CLAIM OF THE ASSESSEE HAS RIGHTLY NOT BEEN ACCEPTED BY THE LD. CIT(A). IN THE CIRCUMSTANCES AND FACTS O F THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTL Y CONFIRMED THE ACTION OF AO. THUS, GROUND NO.4 OF ASSESSEE IS DISMISSED. 22. AS REGARDS TO GROUND NO.5 OF THE ASSESSEE WHICH PERTAINS TO ADDITION OF RS.11,78,245/- AS UNACCOUNTED SALES. THE ADDITION I S MADE BY THE ASSESSING OFFICER ON THE BASIS OF HIS DETAILED OBSERVATION IN PARA-7 PAGE-27 TO 34 OF THE ASSESSMENT ORDER. THE SAID ADDITION PERTAINS TO SAL ES FOUND NOTED AT THE AIRPORT COUNTER. THE BRIEF FACTS OF THE CASE ARE TH AT THE SALES OF THE ASSESSEE- COMPANY FROM THE PREMISES SITUATED AT THE AHMEDABAD DOMESTIC AIRPORT IS MANAGED BY M/S/. B.D.VAKIL & CO. WHICH IS A PROPRIE TARY CONCERN OF SMT. BHARATIBEN DAX VAKIL WHICH SELLS THE GOODS OF THE A SSESSEE-COMPANY AT LABELED PRICE ON COMMISSION BASIS. THE EXPENSES PER TAINING TO THE SAID PREMISES ARE BORNE BY THE ASSESSEE-COMPANY AND THE STAFF SALARY IS PAID BY M/S B.D. VAKIL & CO. DURING THE COURSE OF SEARCH PR OCEEDINGS, VARIOUS BOOKS OF ACCOUNT WERE FOUND AND SEIZED FROM THE SHOP PREM ISES AT AHMEDABAD DOMESTIC AIRPORT. FURTHER, BOOKS OF ACCOUNT WERE AL SO FOUND AND SEIZED FROM THE RESIDENCE OF SMT. BHARATIBEN DAX VAKIL. ON THE BASIS OF SAID BOOKS OF ACCOUNT OF M/S. B.D. VAKIL & CO. THE AO WORKED OUT UNACCOUNTED SALES REFLECTED THEREIN AT RS.14,59,128/- AFTER GIVING CR EDIT OF SALES AS PER BOOKS OF THE ASSESSEE-COMPANY TO THE SAID CONCERN. THE AO TH EN ON PAGE-34 OF THE ASSESSMENT ORDER PROCEEDED TO MAKE ADDITION OF RS.1 1,78,245/- AS IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 11 UNACCOUNTED SALES MADE BY THE ASSESSEE-COMPANY. LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER. 23. IT WAS ARGUED BY LEARNED COUNSEL FOR THE ASSESS EE THAT THE SALES DO NOT BELONG TO THE ASSESSEE AND ALTERNATIVELY ONLY G ROSS PROFIT SHOULD BE ADDED. 24. ON THE OTHER HAND, LD. CIT-DR ARGUED THAT THE A SSESSEE HAS ALREADY DEBITED ALL THE PURCHASES AND EXPENSES IN THE REGUL AR BOOKS OF ACCOUNT. THUS SALES FOUND OUTSIDE THE BOOKS OF ACCOUNT ARE NOTHIN G BUT UNDISCLOSED INCOME OF THE ASSESSEE AND THEREFORE CANNOT BE GIVEN THE C REDIT FOR PURCHASES AND THE EXPENSES AND THEREFORE GROSS PROFIT ADDITION CA NNOT BE MADE. AS REGARDS THE ARGUMENT OF LD. AR THAT SALE BELONGED TO M/S. B .D. VAKIL & CO. IS WITHOUT ANY EVIDENCE ON RECORD. 25. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE AS PER MATERIALS AVAILABLE ON RECORD, THE SALES BEL ONGED TO THE ASSESSEE WHICH IS EVIDENT FROM THE SEIZED MATERIAL. THE ARGU MENT MADE BY THE LD. CIT- DR HAS BEEN FOUND TO BE CONVINCING THAT ALL THE PUR CHASES AND EXPENSES HAVE ALREADY BEEN BOOKED IN THE REGULAR BOOKS OF AC COUNT AND THEREFORE GROSS PROFIT ADDITION CANNOT BE THE SUBJECT-MATTER AS ALT ERNATIVE ARGUMENT MADE BY LD. AR. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO ERROR IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTLY CONFIRMED THE A CTION OF THE ASSESSING OFFICER. THUS, GROUND NO.5 OF THE ASSESSEE IS DISMI SSED. 26. AS REGARDS GROUND NO.6 OF THE REVENUE WHICH REL ATES TO ADDITION OF RS.1,98,118/- BEING UNACCOUNTED SALES. THE ADDITION HAS BEEN MADE BY THE A.O ON THE GROUND THAT THE TOTAL SALES FOR THE YEAR APRIL, 99 TO MARCH,00 IS SHOWN AT RS.2,70,35,562.70 AS NOTED ON PAGE-1 OF AN NEXURE A/1/22 FOUND AND SEIZED FROM THE FACTORY PREMISES OF THE ASSESSE E AT NARODA. AS AGAINST THE SALE OF RS.2,68,37,445/- SHOWN BY THE ASSESSEE FOR THE ABOVE PERIOD IN IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 12 THE REGULAR BOOKS OF ACCOUNT. THE AO HAS THEN REJEC TED ASSESSEES CONTENTION AND HAS PROCEEDED TO MAKE THE ADDITION IN RESPECT O F DIFFERENCE OF ABOVE TWO AMOUNTS AS UNACCOUNTED SALES. 27. LD. CIT(A) DELETED THE ADDITION FOR THE REASONS THAT THE SALES SHOWN BY THE ASSESSEE IN THE REGULAR BOOKS OF ACCOUNT TALLIE S WITH THE SALES DETERMINED BY THE SALES TAX DEPARTMENT IN THE SALES TAX ASSESS MENT ORDER. THE SALES DECLARED IN THE BOOKS OF ACCOUNT ARE HIGHER THAN SA LES FOUND NOTED IN LOOSE PAPER. 28. WE HAVE HEAD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEW OF LD. CIT(A) THAT THE SALE S DECLARED BY THE ASSESSEE ARE HIGHER THAN SALES FOUND IN THE LOOSE PAPER AND IN THE ABSENCE OF ANY OTHER EVIDENCE FOUND AGAINST THE ASSESSEE. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADD ITION MADE BY ASSESSING OFFICER. THUS, GROUND NO.6 OF REVENUE IS DISMISSED. 29. AS REGARDS GROUND NO.6 OF THE ASSESSEE WHICH PE RTAINS TO ADDITION OF RS.3,29,781/- BEING UNACCOUNTED SALES TO CUSTOMERS. THE IMPUGNED ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF NOTINGS IN VARIOUS LOOSE PAPERS AS SET OUT ON PAGE-36 OF THE ASSESSMEN T ORDER. THE AO HAS OBSERVED THAT ASSESSEE HAS NOT ISSUED ANY BILL FOR CASH SALES AND NO RECORD EXCEPT THE TOTAL AMOUNT OF SALES MADE DURING THE DA Y IS KEPT AND THAT THE BILLS ARE ISSUED ONLY FOR CREDIT SALES AND THE SALES MADE TO FRANCHISES. THE AO WAS OF THE VIEW THAT THE ASSESSEES CONTENTION THAT CER TAIN SALES ARE RECORDED IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE AND ACCOR DINGLY, THE SALES NOTED ON VARIOUS LOOSE PAPERS AGGREGATING TO RS.3,29,791/ - IS TREATED AS UNACCOUNTED TURNOVER. THE LD. CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER. IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 13 30. THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN GROUND NO.5 OF THE ASSESSEE HEREINABOVE AND THEREFORE IN THE CI RCUMSTANCES AND FACTS OF THE CASE, IN THE ABSENCE OF ANY EXPENDITURE BROUGHT ON RECORD OUTSIDE THE BOOKS BY THE ASSESSEE, THE ASSESSEE CANNOT BE GIVEN THE BENEFIT FOR APPLICATION OF GROSS PROFIT. THEREFORE, WE FIND NO ERROR IN THE ORDER OF LD. CIT(A) IN THIS RESPECT. THUS, GROUND NO.6 OF THE AS SESSEE IS DISMISSED. 31. AS REGARDS GROUND NO.7 OF THE ASSESSEE FOR TRAD ING INVESTMENT IN VALUABLE TO THE EXTENT OF RS.60,000/- AS MADE BY SM T. MEENU M AGAWAL AND FOR INITIATING PROCEEDINGS U/S.158BD IN HER CASE ON THE BASIS OF SAID FINDING. THE ASSESSING OFFICER HAS OBSERVED THAT PAGE-4 OF A NNEXURE-A/1 SHOWS NOTINGS REGARDING PURCHASES OF MUSIC SYSTEM AND COL OUR TELEVISION WORTH RS.60,000/- IN THE NAME OF SMT. MEENU M AGARWAL. TH E AO HAS REJECTED ASSESSEES EXPLANATION THAT THE SAID ASSETS ARE COV ERED IN THE AMOUNT OF RS.90,000/-DISCLOSED FOR HOUSEHOLD GOODS AND VALUAL ES UNDER VDIS BY MANOJ AGARWAL AS THE ASSETS ARE IN THE NAME OF SMT. MEENU M AGARWAL AND SHE HAS NOT DISCLOSED ANYTHING UNDER VDIS AND THAT EVEN OTH ERWISE SHRI MANOJ D AGARWAL HAS NOT IDENTIFIED THE HOUSEHOLD GOODS AND VALUABLES IN THE VDIS DISCLOSURE. THE LD. CIT(A) DIRECTED THE AO TO TREAT THE INVESTMENT IN QUESTION OF RS.60,000/- AS MADE OUT OF UNDISCLOSED INCOME OF THE ASSESSEE AND NO SEPARATE ADDITION WAS REQUIRED TO MAKE. 32. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT ASS ESSING OFFICER HAS PROCEEDED MERELY ON THE GROUND THAT THE ASSETS ARE IN THE NAME OF SHRI MEENU M AGARWAL AND HAVE NOT ATTEMPTED TO VERIFY TH E SOURCE OF THE INCOME FROM WHICH THE INVESTMENT HAVE BEEN MADE. IT IS ALS O A FACT THAT SHRI MANOJ D AGARWAL HAS MADE A DISCLOSURE OF RS.90,000/- AS HOU SEHOLD GOODS AND VALUABLES UNDER VDIS FILED BY HIM. HOWEVER, IN ABSE NCE OF BIFURCATION OF ASSETS GIVEN BY SHRI AGARWAL IT IS NOT ASCERTAINABL E AS TO WHETHER THE ASSETS IN QUESTION HAVE BEEN CONSIDERED OR NOT IN THE SAID DI SCLOSURE. IT IS ALSO A FACT IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 14 THAT SOURCE OF INCOME IN CASE OF THE DIRECTOR IS NO T IN HIS INDIVIDUAL CAPACITY BUT THE INCOME SHOWN BY THE ASSESSEE-COMPANY AND AC CORDINGLY KEEPING IN VIEW THE TOTALITY OF SUCH CIRCUMSTANCES, IN OUR OPI NION, THE SOURCE OF INVESTMENT IN THE SAID ASSETS WOULD LOGICALLY BE TH E UNDISCLOSED INCOME OF THE ASSESSEE-COMPANY. ACCORDINGLY, AO WAS DIRECTED TO T REAT THE INVESTMENT IN QUESTION OF RS.60,000/- AS MADE OUT OF UNDISCLOSED INCOME OF THE ASSESSEE- COMPANY AND NO SEPARATE ADDITION WAS DIRECTED TO BE MADE. THEREFORE, IN THE CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO INF IRMITY IN THE ORDER OF LD. CIT(A). THUS, GROUND NO.7 OF THE ASSESSEE IS DISMIS SED. 33. AS REGARDS GROUND NO.7 OF THE REVENUE WHICH REL ATES TO ADDITION OF RS.2,77,298/- ON ACCOUNT OF EXPENDITURE INCURRED IN CASH. THE ADDITION IS MADE BY THE ASSESSING OFFICER ON THE BASIS OF NOTIN GS ON PAGE-75 TO 79 OF ANNEXURE-A/1. THE AO WHILE REJECTING ASSESSEES CON TENTION HAS OBSERVED HAT SHRI KUMBHARAM JHAT COULD NOT PROPERLY EXPLAIN HOW THE PAPERS ON WHICH DETAILS REGARDING CASH PAYMENT ARE MADE IN HIS HAND WRITING WERE FOUND AND SEIZED FROM THE RESIDENTIAL PREMISES OF THE DIRECTO R AT RASRANJAN COMPLEX. FURTHER, NOWHERE THE NAMES OF PERSONS OR THE CONCER NS REFERRED TO BY SHRI KUMBHARAM JHAT HAVE BEEN FOUND NOTED IN THE SEIZED DOCUMENTS EXCEPT THE NAME OF SHRI BALU. HE HAS ALSO OBSERVED THAT ALL TH E CONCERNS WHOSE NAMES HAVE BEEN GIVEN ARE OWNED BY THE RELATIVES OF SHRI MANOJ D AGARWAL. A.O ACCORDINGLY CONCLUDED THAT THE EXPENDITURE TO THE E XTENT OF RS.2,77,298/- NOTED ON THE SAID PAGES AND INCURRED IN CASH HAVING NOT BEEN REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE-COMPANY IS NOTHING BUT UNDISCLOSED INCOME OF THE ASSESSEE-COMPANY. 34. LD. CIT(A) DELETED THE ADDITION VIDE PARA-16.2 OF HIS ORDER IN THE ABSENCE OF ANY EVIDENCE AGAINST THE ASSESSEE. 35. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF LD. CIT(A) THAT IN THE STATEMENT OF SHRI IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 15 KUMBHARAM JHAT IT HAS CLEARLY BEEN ACCEPTED BY HIM THAT THE NOTINGS IN THE SAID LOOSE PAPERS ARE IN HIS HANDWRITING AND THE SA ME DOES NOT PERTAIN TO THE ASSESSEE-COMPANY. HAVING SAID SO, THE SAID STATEMEN T COULD NOT BE CONTROVERTED BY THE ASSESSING OFFICER AND SIMPLY AD DITION HAS BEEN MADE WITHOUT BRINGING ANY EVIDENCES ON RECORD. EVEN SAID SHRI KUMBHARAM JHAT IN HIS STATEMENT GIVEN THE NAME OF THE PARTIES TO WHOM HE HAS SUPPLIED THE LABOUR TO WHICH THE SAID NOTINGS ARE PERTAINING, AD DITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE-COMPANY AS UNACCOUNTED EXPEND ITURE. THE DIRECTOR OF THE ASSESSEE-COMPANY HAS ALSO EXPLAINED AS TO HOW B Y MISTAKE THE SAID LOOSE PAPER HAS BEEN CARRIED TO HIS RESIDENCE FROM FACTORY AND AS A RESULT, IT WAS FOUND FROM HIS RESIDENCE. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE ASSESSEE HAVING DISCHARGED ITS ONUS, THEREFORE WE F IND NO INFIRMITY IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADD ITION MADE BY AO. THUS, GROUND NO.7 OF THE REVENUE IS DISMISSED. 36. AS REGARDS GROUND NO.8 OF REVENUE WHICH PERTAIN S TO ADDITION OF RS.1.55 LAKH AS UNACCOUNTED SALARY TO SHRI KIRITKUM AR S SHAH. THE AO HAS OBSERVED THAT DURING THE COURSE OF SEARCH AT THE RE SIDENCE OF SHRI KIRTIKUMAR S SHAH, AN EMPLOYEE OF THE ASSESSEE-COMPANY, DOCUME NTS WERE FOUND AND SEIZED WHEREIN SHRI KIRTIKUMAR S SHAH HAS SHOWN HIS SALARY INCOME AT RS.5,000/- PER MONTH. IT WAS FURTHER OBSERVED BY TH E AO THAT SHRI KIRTIKUMAR S SHAH IN HIS STATEMENT HAS CONFIRMED THE FACT OF DRA WING SALARY OF RS.5,000/- PER MONTH AND ONE MONTH BONUS FROM THE ASSESSEE-COM PANY AND AO FOUND THAT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE-COMPAN Y, SALARY TO SHRI KIRTIKUMAR S SHAH IS SHOWN AT RS.2,500/- PER MONTH ONLY. HE ACCORDINGLY WORKED OUT THE YEAR-WISE UNACCOUNTED EXPENDITURE ON SALARY FROM MAY97 I.E. FROM THE PERIOD FROM WHICH SHRI KIRTIKUMAR S SHAH J OINED THE ASSESSEE- COMPANY. 37. LD. CIT(A) DELETED THE ADDITION FOR THE REASON THAT IN THE ABSENCE OF ANY INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH AND ALSO THE IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 16 ASSESSING OFFICER HAVING NOT GIVEN ANY OPPORTUNITY TO THE ASSESSEE FOR CROSS- EXAMINATION OF THE PERSON CONCERNED. 38. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT AO HAS RELIED UPON THE DOCUMENTS FOUND AND SEIZED FROM THE POSSESSIONS OF SHRI KIRTIKUMAR S SHAH DURING THE COURSE OF SEARCH AT HIS RESIDENCE AND HI S STATEMENT FOR MAKING THE IMPUGNED ADDITION. IN OUR OPINION, THAT HAVING RELI ED UPON SUCH DOCUMENTS FOUND FROM THE POSSESSION OF A THIRD PARTY, THE AO OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE ASSESSEE FOR CROSS-EXAMINATION O F THE SAID PERSON AND REBUTTAL OF THE SEIZED MATERIAL SO FOUND FROM KIRTI KUMAR S SHAH. IT IS NOT THE CASE OF THE AO THAT ANY INCRIMINATING DOCUMENTS HAV E BEEN FOUND FROM THE POSSESSION OF THE ASSESSEE TO ESTABLISH PAYMENT OF SALARY IN EXCESS OF RS.2,500/- PER MONTH SHOWN IN THE REGULAR BOOKS OF ACCOUNT. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, WE FIND NO INF IRMITY IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO. THUS, GROUND NO.8 OF REVENUE IS DISMISSED. 39. AS REGARDS GROUND NO.9 OF REVENUE THE LD. CIT(A ) HAS ALLOWED THE SET OFF AND DIRECTED THE ASSESSING OFFICER TO CONSIDER THE INVESTMENT OF RS.14,26,148/- AS OUT OF THE SAID UNACCOUNTED SALES AND NO SEPARATE ADDITION IS REQUIRED TO BE MADE FOR SUCH UNACCOUNTED INVESTM ENT AS THE SAME ARE OUT OF UNACCOUNTED INCOME FOR WHICH SEPARATE ADDITION O F RS.15,08,036/- HAS BEEN CONFIRMED BY THE LD. CIT(A), AS THE SET OFF HA S BEEN GIVEN AS THERE IS NO LIVE LINK BETWEEN THE INCOME AND THE INVESTMENT AND NO EVIDENCE WERE FOUND DURING THE COURSE OF SEARCH SUGGESTING UTILIZATION OF SUCH INCOME ELSEWHERE. 40. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE TELESCOPIN G BENEFIT CAN BE GIVEN BUT WHEN THE ASSESSEE SUBMITTED A CHART YEAR-WISE OF TH E UNDISCLOSED INCOME OF EACH YEAR, WHICH HAS NOT BEEN GIVEN FOR UNDISCLOSED INCOME AND EXPENDITURE IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 17 / INVESTMENT. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE AO IS DIRECTED TO ALLOW THE TELESCOPING BENEFIT , IF ANY, AS DIRECTED HEREINABOVE BUT BY AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS , GROUND NO.9 OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 41. AS REGARDS GROUND NO.8 OF THE ASSESSEE WITH REG ARD TO CHARGING OF INTEREST U/S.158BFA(1), IT WAS ARGUED BY THE LEARNE D COUNSEL FOR THE ASSESSEE THAT XEROX COPIES OF LOOSE PAPERS WERE MAD E AVAILABLE TO THE ASSESSEE AT A VERY LATER STAGE DURING THE ASSESSMEN T PROCEEDINGS AND THEREFORE THERE WAS A DELAY IN FILING OF THE RETURN OF INCOME. THE LD. CIT(A) CONFIRMED THE LEVY OF INTEREST BY THE ASSESSING OFF ICER. 42. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) IN PARA- 9 OF HIS ORDER AND ALSO IN THE ABSENCE OF ANY EVIDENCE FOR MATERIALS ON RECORD WITH REGARD TO THE DELAY IN THE XEROX COPIES OF LOOSE PAPERS SUPPLIED BY THE DEPARTMENT INTEREST U/S.158BFA(1) HAS RIGHTLY BEEN CONFIRMED. THEREFORE , WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) WHO HAS RIGHTLY CONFIRMED T HE ACTION OF AO. THUS, GROUND NO.8 OF THE ASSESSEE IS DISMISSED. 43. IN THE RESULT, APPEAL OF REVENUE IN IT(SS)A NO. 269/AHD/2004 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND APPEAL OF ASSE SSEE IN IT(SS)A NO.235/AHD/2004 IS DISMISSED. NOW WE TAKE UP ASSESSEES APPEAL IN IT(SS)A NO.14/A HD/2007. 44. THE BRIEF FACTS OF THE CASE AS EMANATING FROM T HE ORDER OF ASSESSING OFFICER ARE AS UNDER:- IN THIS CASE THE BLOCK RETURN OF INCOME UNDER SECT ION 158BC DECLARING TOTAL INCOME OF RS. NIL/- FOR THE BLOCK PERIOD WAS FIELD ON 19/02/03. SUBSEQUENTLY THE ASSESSMENT WAS FINALIZED UNDER SEC TION 158BC OF THE ACT ON 30.01.02 DETERMINING TOTAL UNDISCLOSED INCOM E OF RS.66,31,378/- IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 18 AFTER MAKING VARIOUS ADDITIONS. WHILE FINALIZING TH E ORDER, PENALTY PROCEEDINGS UNDER SECTION 158BFA(2) OF THE ACT WAS INITIATED FOR ON CONCEALMENT OF UNDISCLOSED INCOME BY ISSUE OF NOTIC E U/S.158BFA((3) R.W.S. 158BFA(2) OF THE ACT ON 31/01/2004. THE PENA LTY PROCEEDINGS WERE KEPT IN ABEYANCE AS THE ASSESSEE HAD PREFERRED APPEAL WITH CIT(A) AGAINST THE ASSESSMENT ORDER. WHILE FINALIZI NG THE APPEAL THE LD. CIT(A) II, AHMEDABAD VIDE HIS ORDER NO. CIT(A)III/C C.2(4)73/03-04 DATED 25.04.04 HAS RESTRICTED THE AS WITH RESPECT O F UNACCOUNTED SALES MADE BY THE AO OF RS.15,08,036. 2. AS PER AMENDED PROVISIONS PENALTY PROCEEDINGS WA S TAKEN UP FOR DISPOSAL. ACCORDINGLY, A FRESH OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WAS ISSUED TO THE ASSESSEE ON 17/02/2006 & SERVED UPON THE ASSESSEE ON 25/02/06 REQUESTING THE ASSESSEE TO ATT END THE OFFICE OF THE UNDERSIGNED WITHIN THREE DAYS OF RECEIPT OF THI S NOTICE OR FURNISH ANY EXPLANATION AGAINST PENALTY PROCEEDINGS. IN RESPONS E, THE ASSESSEE NEITHER ATTENDED THE OFFICE OF THE UNDERSIGNED NOR FURNISHED ANY WRITTEN SUBMISSION IN COMPLIANCE TO THE SHOW CAUSE NOTICE I SSUED. 3. THE ISSUES INVOLVED IN THE CASE OF THE ASSESSEE IS DISCUSSED AS UNDER: [1] DURING THE ASSESSMENT PROCEEDINGS FOR THE BLOCK , THE AO WORKED OUT THE YEAR-WISE UNDISCLOSED INCOME TO THE TUNE OF RS. 66,99,728/./- AS AGAINST DECLARED UNDISCLOSED INCOME OF RS.68,350/-. THE LD. CIT(A) WHILE FINALIZING THE APPEAL FILED BY THE ASSESSEE, HAS RESTRICTED THE UNDISCLOSED INCOME TO THE TUNE OF RS.15,08,036/- TR EATING THE SAME AS UNACCOUNTED SALES INCURRED FOR MAKING THE UNDISCLOS ED INVESTMENT UNEARTHED DURING THE COURSE OF SEARCH. FROM THE ABO VE, IT CAN CLEARLY SEEN THAT THE ASSESSEE HAS INTENTIONALLY CONCEALED HIS PARTICULARS OF INCOME AND THE AO HAD CORRECTLY INITIATED PENALTY P ROCEEDINGS U/S.158BFA(2) OF THE ACT. 4. FROM THE ABOVE, FACTS, I AM SATISFIED THAT THE A SSESSEE HAS COMMITTED DEFAULT WITHIN THE MEANING OF PROVISIONS OF SECTION 158BFA(2) OF THE ACT BY CONCEALING HIS INCOME TO TH E TUNE OF RS.15,08,036/-. ACCORDINGLY KEEPING IN MIND ALL THE FACTS OF THE CASE, I IMPOSE A MINIMUM PENALTY OF RS.9,22,917/- @ 100% OF TAX SOUGHT TO BE EVADED AS AGAINST @ 300% LEVIABLE OF RS.27,68,75 1/- UNDER SECTION 158BFA(@) OF THE INCOME TAX ACT, 1961. 45. THE LD. CIT(A) CONFIRMED THE ACTION OF ASSESSIN G OFFICER. IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 19 46. IT WAS ARGUED BY LEARNED COUNSEL FOR THE ASSESS EE THAT LEVY OF PENALTY U/S.158BFA(2) IS AKIN TO SECTION 271(1)(C) OF THE A CT AND THEREFORE THERE IS NO DEEMED CONCEALMENT OF THE INCOME. THE ASSESSING OFF ICER HAS NOT TAKEN INTO CONSIDERATION THE UNDISCLOSED INCOME DECLARED. 47. LD. CIT-DR ON THE OTHER HAND ARGUED THAT THE PR OVISIONS CONTAINED IN SECTION 158BFA(2) ARE NOT AKIN TO SECTION 271(1)(C) IN VIEW OF THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF DCIT V. SPARK ELECTRO COMMUNICATION SYSTEMS (2006) 98 ITD 237 (MUM) AND ITAT DELHI BENCH IN TH E CASE OF KAY CEE ELECTRICALS V. DCIT (2003) 87 ITD 35 (DEL). 48. WE HAVE HARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE ARE CONVINCED WITH THE ARGUMENTS MADE BY LD. CIT -DR. IN THE PRESENT CASE, THE ASSESSEE HAS NOT DISCLOSED ACCURATE INCOM E IN RESPONSE TO IN RESPECT OF U/S.158BC OF THE ACT. MOREOVER, RECOURSE TO PROVISIONS OF EXPLANATION-5 TO SECTION 271(1)(C) CANNOT BE TAKEN FOR DETERMINING THE SCOPE OF UNDISCLOSED INCOME AND SAME HAS TO BE DETERMINED ONLY WITH REFERENCE TO SECTION 158B(B) OF THE ACT. ANALYSING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HEREBY HOLD THAT IT I S A FIT CASE FOR RESTORATION BACK TO THE FILE OF THE AO. WE HAVE NOTICED THAT NO ONE HAS REPRESENTED BEFORE THE AO FROM THE SIDE OF THE ASSESSEE. WE HAV E ALSO NOTICED THAT THE PROVISOS ATTACHED TO SECTION 158BFA(2) OF THE ACT H AVE NOT BEEN CONSIDERED BY THE AUTHORITIES. WE HAVE NOTED THAT RELIEF HAS B EEN GRANTED AT THE TWO STAGES OF APPEAL, HENCE, THAT EFFECT OUGHT TO HAVE BEEN GIVEN WHILE RE- DETERMINING THE QUANTUM OF PENALTY U/S 158BFA(2) OF THE ACT CONSIDERING THE APPLICABLE PROVISIONS OF THE SAID SECTION INVOLVED. THE ASSESSING OFFICER IS DIRECTED TO RECONSIDER THE LEVY OF PENALTY AS PER L AW TAKING INTO CONSIDERATION THE APPEAL DECIDED BY US IN IT(SS)A NO.235/AHD/2004 AND IT(SS)A NO.269/AHD/2004 HEREINABOVE. THUS, THE APPEAL OF AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSES. IT(SS)A NO.235, 269/A/04 & IT(SS)A NO.14/AHD/07 B.P.1/4/95 TO 8/1/02 RASRANJAN FOOD PRODUCTS P.LTD. V. ACIT CC-2(4) ABD PAGE 20 49. IN THE RESULT, APPEAL OF REVENUE IN IT(SS)A NO.269/AHD/2004 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ASSESSE ES APPEAL IN IT(SS)A NO.14/AHD/2007 IS ALLOWED FOR STATISTICAL PURPOSES AND THAT OF ASS ESSEES APPEAL IN IT(SS)A NO.2325/AHD/2004 IS DISMISSED. ) &'( '#$% *'+, 20 / 01 /201 2 # ! 0 1 2 3 THIS ORDER PRONOUNCED IN OPEN COURT ON 20/01/ 201 2. SD/- SD/- ( MUKUL KUMAR SHRAWAT ) ( B.P. JAIN ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) *'+,- 20/01/2012 5'' 3 DKP* &'( &'( &'( &'( 6 6 6 6 76$ 76$ 76$ 76$ / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ++ & &: / CONCERNED CIT 4. & &:- / CIT (A) 5. 6=2 , & %, 5'' / DR, ITAT, AHMEDABAD 6. 2@ A) / GUARD FILE. BY ORDER/ &'( , /TRUE COPY/ B/5 + & %, 5'' 3