The DCIT, Central Circle-2(2), Ahmedabad V. Shri Dashrath V.Patel, Mehsana

ITSSA 38/AHD/2009

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9114 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-02-2013
• Assessment Year: misc
• Appeal Filed On: 06-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLY JINDAL
• Assessee Lawyers: MUKESH M PATEL
• Keywords: Business expenditure; Document seized; Block assessment; Capital receipt; Documents seized; Revenue expenditure
• Section: 142(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD A BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTA NT MEMBER DCIT CENTRAL CIRCLE 2(2) AHMEDABAD (APPELLANT) VS 1.SRI DASHRATH V. PATEL 2.GUJRAT MULTI GAS BASE CHEMICALS PVT. LTD. 3.MANEK CHEMICALS PVT LTD (RESPONDENT) REVENUE BY: SRI SHELLY JINDAL, CIT- D. R. ASSESSEE BY: SRI MUKESH M. PATEL, A. R. DATE OF HEARING : 19-2-2013 DATE OF PRONOUNCEMENT : 05-4-2013 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THESE APPEALS FILED IN RESPECT OF THREE ASSESSEES ARISE OUT OF CONSOLIDATED ORDER OF LD. CIT(A) DATED 19-03-2009. 2. AS THE FACTS AND CIRCUMSTANCES INVOLVED IN THREE APPEALS ARE SAME AND GROUNDS TAKEN BY THE REVENUE ARE ALSO SAME EXCEPT F IGURES OF ADDITION, ALL THESE APPEALS ARE BEING DISPOSED OF BY PASSING A CO NSOLIDATED ORDER. THE REVENUE HAS TAKEN FOLLOWING COMMON GROUNDS OF APPEA LS:- IT(SS)A NOS. 38,39 &40/AHD/2009 BLOCK ASSTT. 01-04-1989 TO 16-11-1999 I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 2 1. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DE TERMINING UNDISCLOSED INCOME AT RS.. ON ACCOUNT OF UNDISCLO SED RECEIPTS NOT RECORDED IN REGULAR BOOKS OF ACCOUNTS AS AGAINST RS .DETERMINED BY THE A.O. 2. THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN COM PUTING UNDISCLOSED INCOME WHEREIN HE EXCLUDED RECEIPTS OF RS. 1,91,02,221/- (TOTAL IN RESPECT OF THREE ASSESSEES) AS CAPITAL RE CEIPTS AS CALLED BY THE ASSESSEE WITHOUT THERE BEING ANY EVIDENCE OR WITHOU T THE ASSESSEE EXPLAINING THE NATURE AND SOURCE OF SUCH RECEIPTS. 3. BRIEF FACTS OF THE CASE ARE CASE ARE THAT A SEA RCH OPERATION U/S 132 OF THE ACT TOOK PLACE ON 16-11-1999 ON THE PREMISES OF MANEK GROUP AND ASSOCIATED PERSONS INCLUDING GUJRAT MULTI GAS BASE CHEMICALS PVT. LTD, (GMGB) MANEK CHEMICAL PVT LTD (MPCL) AND SRI DASHRA THBHAI V. PATEL ,PROPRIETOR SRI RAM CHEMICAL INDUSTRIES (SRCI) IN R ESPONSE TO NOTICES U/S 158BC, RETURN FOR THE BLOCK PERIOD FROM 01-04-1984 TO 16-11-1995 FILED DECLARING NIL UNDISCLOSED INCOME. THE ASSESSING OF FICER PROVIDED COPIES OF THE SEIZED DOCUMENTS AND SERVED NOTICES U/S 143(2)/ 142(1) ALONG WITH QUESTIONNAIRES. THE REPLIES OF THE ASSESSEES WERE RECEIVED. ASSESSING OFFICER REPRODUCED PARTLY THE CONTENTS OF HIS SHOW CAUSE NOTICES AND SUBMISSIONS OF THE ASSESSEE IN HIS ORDERS. THE ASS ESSING OFFICER HAS ALSO REFERRED TO THE STATEMENTS OF SRI DASHRATHBHAI PATE L, PROPRIETOR OF SCRI AND DIRECTOR OF GMGB AND MCPL AND OF THE ACCOUNTANT OF THE GROUP NAMELY, AMRUTBHAI PRAJAPATI,P FROM WHOSE RESIDENCE ALSO, DO CUMENTS/BOOKS OF ACCOUNTS HAD BEEN SEIZED AS PER ANNEXURE A OF THE RELEVANT PANCHNAMA. ON THE BASIS OF THE DOCUMENTS SEIZED AND THE STATEM ENTS RECORDED REFERRED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER, T HE ASSESSING OFFICER ASSESSED THE UNDISCLOSED INCOME OF THESE THREE ASSE SSEES UNDER ALMOST I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 3 IDENTICALLY DRAFTED ORDERS. THE TWO ASSESSEEES, M/S GUJARAT MULTI GAS CHEMICAL PVT. LTD (GMPL) AND (MPCL) ARE PVT LIMITED COMPANIES PROMOTED BY SRI DASHRATHBHIA PATEL. THE PLANTS OF BOTH OF THESE ARE IN MEHSANA DISTRICT. THE PRODUCTS MANUFACTURED BY MCP L ARE MOLECULAR SIEVES AND DET BUILD-150. THE PRODUCTS MANUFACTURE D BY MCPL ARE BLEACH-9 AND CLEAN-HI. CMCB COMMENCED ITS BUSINESS IN THE YEAR 1989- 90, WHEREAS MCPL IN THE YEAR 1993-94. THE THIRD AS SESSEE IS M/S. SHRI RAM CHEMICALS INDUSTRIES (SRCI) A PROPRIETARY CONCERN O F SHRI DASHRATHBHAI, WHICH COMMENCED ITS OPERATIONS IN 1990-91 AND IS MA NUFACTURING CHEMICAL PRODUCTS NAMELY SODIUM SILICATE LIQUID-LUMPS, MOLEC ULAR SIEVES AND DET BUILD-150. THE AO OBSERVED THAT THE SEIZED DOCUMEN TS REVEAL THAT THE ASSESSEES HAVE NOT ACCOUNTED FOR THE ACTUAL PRODUCT ION AND THE TRANSACTIONS OF SALES AND PRODUCTS WERE NOT FULLY RECORDED WITH SEVERAL TRANSACTIONS MADE IN CASH BEING TOTALLY UNACCOUNTED. THE AO FURTHER NOTED THAT IT IS TRANSPIRED FROM THE BOOKS/DOCUMENTS SEIZED FROM THE COMMON ACC OUNTANT OF THESE THREE ASSESSEES SRI PRAJAPATI PARTICULARLY AS THE A NNEXURE A-2, A-3, A-6, A- 18 AND A-21 OF THE PANCHNANMA, THAT THERE WERE UNAC COUNTED SALE PROCEEDS RELEVANT FOR THE ASSESSMENT YEARS 1990-1991, 2000-0 1. THE FACT OF UNACCOUNTED SALE PROCEEDS WAS CONFIRMED BY THE ACCO UNTANT AND SRI DASHRATHBHAI PATEL IN THEIR STATEMENTS RECORDED AT THE TIME OF SEARCH. THE A.O. FELT THAT THE CONTENTS OF THE SEIZED BOOKS, RE CORDED STATEMENTS, SURVEYS AND ENQUIRES MADE, ETC, POINTED TO THE UNDERSTATEME NT OF PRODUCTION/SALES OR INFLATION OF PURCHASES, SALARIES/TRAVELING EXPENSE AND OTHER EXPENDITURE. THE AO FURTHER POINTED OUT THAT MODVAT CREDIT HAD BEEN CLAIMED FRAUDULENTLY AND WAS SO ADMITTED BY THE ASSESSEE BEFORE THE CENTRAL EXCISE WHEREBY THE EXCESS CLAIM OF MODVAT HAD TO BE REPAID ALONG PENAL TY BY THE ASSESSEE. I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 4 4. IN HIS SHOW CAUSE NOTICES THE A.O COMPUTED AND CONFRONTED THE FIGURES OF UNACCOUNTED SALES OF EACH OF THE THREE A SSESSEES FROM ASSESSMENT YEARS 1990-91 TO 2000-01, ON THE BASIS OF UNACCOUNT ED TRANSACTIONS IN CASH AS REFLECTED IN THE AFOREMENTIONED SEIZED ANNEXURES . THIS WAS DETAILED/SUMMARIZED BY THE A.O. IN HIS RELEVANT SHO W CAUSE NOTICES PARTLY REPRODUCED IN HIS ASSESSMENT ORDERS. 5. THE REPLY OF THESE ASSESSEES WHICH HAVE ALSO BE EN PARTLY REPRODUCED BY THE A.O. IN HIS ASSESSMENT ORDER IT WAS SUBMITTE D THAT THE REFERRED SEIZED BOOKS OF ACCOUNT CONTAINED THE CONSOLIDATED PICTURE OF THE UNACCOUNTED TRANSACTIONS OF THE THREE GROUP CONCERNS NAMELY THE THREE APPELLANTS. THE ENTRIES IN THESE BOOKS WERE IN THE NATURE OF CREDIT S AND DEBITS. THE CREDIT ENTRIES REFLECTED RECEIPTS, BOTH ON REVENUE AND CAP ITAL ACCOUNT, WHILE THE DEBIT ENTRIES REFLECTED BUSINESS EXPENSES AND OTHER OUTGOINGS AND IT WAS THE CUMULATIVE TOTAL EFFECT OF THESE DEBIT/CREDIT ENTRI ES THAT WAS REQUIRED TO BE CONSIDERED FOR DETERMINING THE UNDISCLOSED INCOME A ND NOT THE GROSS TOTAL OF THE ENTIRE RECEIPTS AS HAD BEEN PROPOSED BY THE A.O . THE ENTIRE RECEIPTS COULD NOT BE CONSIDERED AS CONCEALED INCOME, SINCE THE UNACCOUNTED RECEIPTS WERE NOT FULLY IN THE NATURE OF TRADING RECEIPTS AN D THE SAME INCLUDED SEVERAL ITEMS IN THE NATURE OF CAPITAL RECEIPTS NOT LIABLE TO INCOME-TAX. THERE WERE ALSO ITEMS OF BUSINESS REVENUE EXPENDITURE APPEARIN G ON THE DEBIT SIDE, ENTITLED FOR DEDUCTION IN THE DETERMINATION OF UNDI SCLOSED INCOME. 6. THIS SUBMISSION OF THE ASSESSEES THAT CAPITAL R ECEIPTS/BUSINESS EXPENSES SHOULD BE EXCLUDED FROM DETERMINING THE UN DISCLOSED INCOME WAS NOT ACCEPTABLE TO A.O. ON THE GROUND, THAT THE ASSE SSEE HAD NOT PROVIDED DETAILS OF THE EXPENSES AND/OR OF THEIR BEING IN TH E NATURE OF THE STATED I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 5 PERSONAL, CAPITAL AND BUSINESS EXPENDITURE. THE A. O. OBSERVED THAT THE UNDISCLOSED RECEIPTS SHOULD BE ENTIRELY CONSIDERED AS CONCEALED INCOME, PARTICULARLY SINCE THE TRANSACTIONS ENTERED IN THES E BOOKS OF ACCOUNTS WERE TOTALLY UNACCOUNTED, AS ADMITTED BY THE ACCOUNTANT AND SHRI DASHRATHBHAI. THE A . O. ALSO FELT THAT ALL THE PRODUCTION COSTS WERE ALR EADY DEBITED TO THE REGULAR BOOKS OF ACCOUNTS. THE A.O. REFERRED TO THE STATEMENT OF THE ACCOUNTANT SHRI PRAJAPATI AND OF SHRI DASHRATHBHAI PARTLY REPRODUCED IN THE ASSESSMENT ORDERS TO BROADLY ASSERT THAT THE TRANSA CTIONS IN THE IMPUGNED SEIZED RECORDS WERE NOT ENTERED IN THE CONCERNED RE GULAR BOOKS OF ACCOUNTS AND THAT THE ENTRIES REVEALED RECEIPTS OF SALE PROC EEDS IN CASH BY THE THREE ASSESSEES. THE A.O. POINTED OUT THAT SOME OF THE EN TRIES WRITTEN IN THESE BOOKS WERE CODED AND THE INTERPRETATION/DECODING OF THESE ENTRIES WERE ACCEPTED AS CORRECT BY THE ACCOUNTANT. 7. THE A.O. FURTHER MENTIONED THAT THE UNACCOUNTED RECEIPTS, AS GLEANED FROM THE IMPUGNED DOCUMENTS WERE COMPOSITE FIGURES OF RECEIP TS OF THE THREE ASSESSEES. THE A.O. FELT THAT THE QUANTUM OF UNACCOUNTED RECEIPTS, ATTRIBUTABLE TO EACH OF THESE THREE ASSESSEES SHOULD BE ASCERTAINED BY ALLOCATING/CONSIDERING THE PROPORTIONATE DECLARED S ALES OF THESE THREE CONCERNS. ACCORDINGLY THE A.O. DETERMINED THE AGGREGATE OF TOTAL UNDISCLOSED INCOME, FOR THE ASSESSMENT YEARS COMPRI SED IN THE BLOCK PERIOD, IN RESPECT OF THE THREE, AS UNDER:- A.Y. GMGB SRCI MCPL TOTAL 90-91 - - - - I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 6 91-92 16,90,108/- 8,31,313/- - 25,21,421/- 92-93 31,26,926/- 21,97,314/- - 53,24,240/- 93-94 21,09,280/- 5,90,426/- - 26,99,706/- 94-95 72,96,770/- 23,79,360/- - 96,76,130/- 95-96 53,61,832/- 10,10,990/- 33,955/- 64,06,777/- 96-97 1,05,80,948/- 14,74,255/- 10,02,859/- 1,30,58,062/- 97-98 96,85,670/- 11,70,721/- 25,84,728/- 1,34,41,1 19/- 98-99 1,04,01,242/- 23,92,213/- 53,01,957/- 1,80,95,412/- 99-2000 81,65,324/- 14,44,841/- 83,15,906/- 1,79,26 ,071/- 2000-01 35,81,207/- 11,58,813/- 43,70,149/- 91,10,1 69/- 6,19,99,307/- 1,46,50,246/- 2,16,09,554/- 9,82,59,107/- CONSEQUENTLY, THE A.O, DETERMINED THE UNDISCLOSED I NCOME OF THE AFOREMENTIONED ASSESSEES AS UNDER : GUJARAT MULTI GAS BASE CHEMICALS PVT. LTD. RS. 6,19,99,310/- MANEK CHEMICALS PVT LTD RS. 2,16,09,550/- SHREE RAM CHEMICAL INDUSTRIES RS. 1,46,50,250/- 8. AGGRIEVED BY THE ABOVE DETERMINATION OF THE UND ISCLOSED INCOME, ALL THE THREE GROUP CONCERNS GMGB, MCPL AND SRCI WENT I N APPEAL BEFORE FIRST APPELLATE AUTHORITY. BEFORE LD. CIT(A), IT W AS SUBMITTED THAT THE A.O. HAD MECHANICALLY TOTALED THE ENTIRE RECEIPTS APPEAR ING ON THE CREDIT SIDE (IN THE SEIZED DOCUMENTS) AND TREATED THE SAME AS UNDIS CLOSED INCOME, WHICH HE DIVIDED IN THE THREE CONCERNS PROPORTIONATELY, ON T HE BASIS OF THEIR YEAR-WISE SALES, AS PER THEIR REGULAR BOOKS OF ACCOUNT. THE A CTION OF THE A.O. IN I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 7 TREATING THE ENTIRE CREDITS AS BEING THE UNDISCLOSE D INCOME OF THE APPELLANTS WAS NOT JUSTIFIED IN LAW KEEPING IN VIEW THE RATIO OF THE JUDICIAL DECISIONS IN THE CASES OF CIT VS. SM OMER - 201 ITR 60S (CAL.) A ND C1T VS. PRESIDENT INDUSTRIES, 258 ITR 654 (GUJ.), WHEREIN IT WAS HELD THAT 'ENTIRE UNDISCLOSED SALES COULD NOT BE ADDED AS INCOME OF THE ASSESSEE IN AS MUCH AS FOR EARNING THIS INCOME THE ASSESSEE HAD MADE CERTAIN EXPENDITU RE AND ADDITIONS COULD BE MADE ONLY TO THE EXTENT OF ESTIMATED PROFITS EMB EDDED IN SALES.' IT WAS ALSO SUBMITTED THAT WHILE MECHANICALLY ADDING THE T OTAL OF THE RECEIPTS AS UNDISCLOSED INCOME, THE A.O. DID NOT GIVE TRUE EFFE CT TO THE NATURE OF THE ENTRIES IN THE SEIZED DOCUMENTS. IN THE SEIZED DOCU MENTS, THERE WAS A CONSOLIDATED SUMMARY OF YEAR-WISE CREDITS AND DEBIT S, REPRESENTING RECEIPTS AND PAYMENTS ON BOTH CAPITAL AND REVENUE ACCOUNT. T HE RECEIPTS APPEARING ON THE CREDIT SIDE CONSISTED OF THE SALE PROCEEDS O F THE PRODUCTS, OF THE THREE /-CONCERNS, SALE PROCEEDS OF SCRAP AND OTHER ITEMS AND ALSO RECEIPTS ON THE CAPITAL ACCOUNT BEING IN THE NATURE OF RECEIPT OF L OANS AND ADVANCES. THE TOTAL RECEIPTS OF RS.9 82 CRORES INCLUDED SUCH RECE IPTS ON CAPITAL ACCOUNT OF AROUND RS. 1.91 CRORES. THE ENTRIES ON THE DEBIT SI DE IN THE SEIZED BOOKS REPRESENTED BUSINESS EXPENSES AND OUTGOINGS ON THE CAPITAL ACCOUNT. OUT OF THE TOTAL PAYMENTS OF RS.8.89 CRORES, THE PAYMENTS ON CAPITAL ACCOUNT WORKED OUT TO AROUND RS. 3.01 CRORES AND THE BALANC E OF RS. 5.8S CRORES REPRESENTED BUSINESS REVENUE EXPENDITURE. THE NATUR E OF THE RECEIPTS ON THE CREDIT SIDE AND OF THE PAYMENTS REPRESENTING EXPENS ES AND OUTGOINGS ON THE DEBIT SIDE WAS ASCERTAINABLE AND IDENTIFIABLE FROM A BARE SCRUTINY OF THE RELATED SEIZED RECORD, PARTICULARLY IN VIEW OF THE CLEAR AND DISCERNIBLE NARRATION AGAINST SUCH ENTRIES. IT WAS EMPHATICALLY URGED THAT THE A.O. SHOULD HAVE COMPUTED THE UNDISCLOSED INCOME AND ITS ALLOCATION AMONG THE I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 8 ASSESSEES, ONLY AFTER EXCLUDING THE RECEIPTS AND OU TGOINGS ON THE CAPITAL ACCOUNT AND THE BUSINESS EXPENSES, ON THE FOLLOWING BASIS: SUMMARY OF RECEIPTS & PAYMENTS AS PER SEIZED BOOKS AND DETERMINATION OF NET UNDISCLOSED INCOME AMOUNT RS. AMOUNT NO. TOTAL RECEIPTS (ADDED AS INCOME BY A.O.) 9,82,59,10 3/- LESS : RECEIPTS ON CAPITAL ACCOUNT (NOT IN THE NATURE OF TAXABLE INCOME AS PER SR. NO. 7 OF PAPER BOOK) 1,91,02,221/- BALANCE BEING UNDISCLOSED SALES 7,91,56,882/- TOTAL PAYMENTS 8,89,48,819/- LESS: PAYMENTS ON CAPITAL ACCOUNT (NOT IN THE NATURE OF DEDUCTIBLE EXPENDITURE AS PER SR. NO. 7 OF PAPER BOOK) 3,01,16,524/- BALANCE BEING BUSINESS REVENUE EXPENDITURE 5,88,32 ,295/- NET UNDISCLOSESD INCOME OF THE THREE CONCERNS FOR THE BLOCK PERIOD 2,03,24,587/- PERCETNAGE OF UNDISCLOSED INCOME TO UNDISCLOSESD SALES 25.68 % 9. IT WAS FURTHER SUBMITTED THAT CONSIDERING THE A BOVE PROFIT PERCENTAGE OF 25.65% OF UNDISCLOSED INCOME TO UNDISCLOSED SALE S, AS WORKED OUT ON THE BASIS OF A LOGICAL COMPREHENSION OF THE RECEIPTS AN D PAYMENTS, APPEARING IN THE SEIZED RECORDS, THE NET UNDISCLOSED INCOME TOTA LS RS.2.03 CRORES AGAINST I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 9 THE UNDISCLOSED SALES OF RS.7.91 CRORES WAS FAIR AN D REASONABLE, IN VIEW THE FACTS OF THE ASSESSSEES CASES AND THE RATIO AS LAI D DOWN BY THE DECISIONS OF S. M OMER AND PRESIDENT INDUSTRIES (SUPRA) RELIED B Y THE ASSESSEES. 10. THESE SUBMISSIONS OF THE ASSESSEES ALONG ALONG WITH 40 PAGES FILED IN SUPPORT OF THEIR CONTENTION WAS FORWARDED BY LD. CI T(A) TO AO FOR VERIFICATION. AFTER RECEIVING THE REPORT OF THE A. O. THE SAME WAS GIVEN TO ASSESSEES FOR THEIR COMMENTS. THE A.O. IN HIS REPO RT HAS REFERRED TO THE SUMMARIZED TOTALS OF THE AMOUNTS FOR THE ENTIRE BLO CK PERIOD UNDER DIFFERENT HEADS APPEARING IN THE SEIZED DOCUMENTS GIVEN BY TH E ASSESSEE AS UNDER: TOTAL RECEIPTS RECEIPTS ON CAPITAL ACCOUNT BALANCE BEING UNDISCLOSED SALES TOTAL PAYMENTS PAYMENTS ON CAPITAL ACCOUNT BALANCE BEING BUSINESS EXPENDITURE UNDISCLOSED INCOME A B (A-B)=C D E (D-E)=F (C-F)=G 98259103 19102221 79156882 88948819 30116524 58832295 20324587 11. THE A.O. FURTHER OBSERVED AS UNDER: (A) THE NARRATION MENTIONED AGAINST THE ENTRIES IN THE IMPUGNED RECORDS, WAS IN GREATER DETAILS THAN HAS BEEN MENTI ONED BY THE APPELLANT IN ITS SUBMISSIONS. THE A.O. HAS ILLUST RATED THIS WITH EXAMPLES. (B) THE TOTAL OF RECEIPTS I.E. 9,82,59,103/- (COL. A) I S NOT DISPUTED. IT IS ALSO AS PER THE QUANTUM TAKEN IN THE ASSESSMENT OR DER. (C) THE TOTAL OF RECEIPTS ON CAPITAL ACCOUNT I.E. RS. 1 ,91,02,221/- (IN COL. B) AND THE TOTAL OF PAYMENTS ON CAPITAL ACCOUN TS RS. 3,01,16,524/- (COL. E) ALSO TALLIED WITH THE FIGURE S MENTIONED IN THE SEIZED RECORDS. THE A.O. HOWEVER FELT THAT NARRATI ON (IN COL. B) I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 10 WAS NOT REPORTED IN FULL AND RECEIPTS IN NAME OF A O BHI APPEARED TO BE OF REVENUE AND NOT OF CAPITAL NATURE . SIMILARLY IT WAS NOT CLEAR IF THE PAYMENT/OUTGOING (IN COL. E) W AS ON CAPITAL ACCOUNT. (D) THE TOTALS IN COL. C AND COL. G REPRESENTED THE DIF FERENCE OF THE TOTALS OF COL. A AND B AND COL. C AND F RESPECTIVEL Y, AND WERE SUBJECT TO VARIATION ACCORDINGLY. (E) THE QUANTUM MENTIONED IN COL. D, I.E. RS. 8,89,48,8 19/- IS NOT BACKED BY DATE-WISE-PAGE-WISE DETAILS (OF SEIZED DO CUMENTS), THOUGH THE YEARLY TOTALS ARE FOUND IN SEIZED ANNEXU RE A-18 (BEING SUMMARY SHEETS). (F) THE EXPENSES OF RS. 5,88,32,295/- (COL. F) IS DEDUC ED, BEING DIFFERENT OF TOTALS IN COL. D AND COL. E AND SO DEP ENDS ON VARIATIONS IN COLUMN D/E. THE AO IN HIS REPORT DATED 9/3/2009, ALSO NOTED THA T THIS VERIFICATION WAS DONE ON THE BASIS OF THE COPIES OF THE SEIZED RECOR DS AVAILABLE WITH THE ASSESSEE. 12. ON THE REPORT OF THE A.O. ASSESSEES REPLY WAS A S UNDER:- (A) THAT THE ABBREVIATED DESCRIPTION GIVEN BY THE APPELLANT WAS AS APPEARING IN THE SUMMARY SHEET I.E ANNCXURE A-18, WHICH HAD THE SUMMARIZED VERSION OF THE ENTRIES CONTAINED IN DOC UMENTS SEIZED AS PER ANNEXURE A-6. DESPITE THE ABBREVIATIONS USED, THERE WAS NO INCONSISTENCY OR VARIATION IN THE AMOUNTS OR THE EF FECTIVE TREATMENT GIVEN IN THE CHARTS APPEARING IN THE PAPER BOOK. (B) IT WAS POINTED OUT THAT THE TOTAL RECEIPTS OF RS.9.82 CROR ES WERE NOT IN DISPUTE. THE TOTAL OF THE AMOUNTS MENTIONED IN COL, B AND COL. D HAD ALSO BEEN FOUND BY THE A.O. AS TALLIED. THE E NTRY AGAINST THE NARRATION AO BHI' REFERRED TO CAPITAL RECEIPTS IN THE NATU RE OF FINANCE RECEIVED FROM BHIMANI THROUGH AHMEDABAD OFFICE. THERE I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 11 WAS NO EMPLOYEE BY THE NAME OF BHIMANI AND THE SAID AMOUNTS DID NOT REPRESENT ANY UNACCOUNTED SALES AS ALLEGED BY T HE A.O, MOREOVER, THERE WERE SIMILAR OTHER ENTRIES WITH ABBREVIATIONS , WHICH WERE NOT DOUBTED BY THE A.O. IN ANY CASE, THE BASIC CONTEN TION THAT THESE RECEIPTS ON THE CAPITAL ACCOUNT TO THE TUNE OF RS. 1.91 CRORES SHOULD NOT BE TREATED AS PART OF THE UNDISCLOSED INCOME, S TOOD DULY SUBSTANTIATED. (C) THE OBSERVATION OF THE A.O. THAT THE UNDISCLOSE D SALES OF RS.7.91 CRORES (COL.C) WAS SUBJECT TO VARIATION WAS IRRELEVANT, SINCE THE VERACITY OF THE FIGURES UNDER COL. A AND COL. B OF THE CHART WAS ITSELF ESTABLISHED. (D) IT WAS EXPLAINED THAT THE A.O.'S OBSERVATION T HAT DATE-WISE BREAK UP WAS NOT AVAILABLE FOR FIGURES APPEARING UN DER COL. D WAS NOT RELEVANT, SINCE THE A.O. HAD NOT DISPUTED THE O VERALL TOTAL OF THE YEARLY PAYMENTS APPEARING IN THE SEIZED DOCUMENTS ( SUMMARY SHEETS IN ANNEXURE A-18) UNDER THE VARIOUS HEADS. THE SAID ANNEXURE A-L8 CLEARLY REFERRED TO ITEMS OF BUSINESS EXPENDITURE O N THE REVENUE ACCOUNT SUCH AS PURCHASES, RAW MATERIALS, OFFICE EX PENSES, COMMISSION, FREIGHT, TRAVELING, SALARY DIFFERENCE E TC. SIMILARLY, THE SAID ANNEXURE A-18 ALSO REFERRED TO PAYMENTS ON CAP ITAL ACCOUNT AND INADMISSIBLE BUSINESS EXPENDITURE SUCH AS LOANS AND ADVANCES TO VARIOUS PARTIES, LAND PURCHASED, DONATIONS, ELECTIO N EXPENSES ETC. (E) REGARDING THE OBSERVATION OF THE A.O. THAT THE NATURE OF PAYMENTS/OUTGOINGS OF RS 3.01 CRORES, UNDER COL. E WAS NOT CLEAR WHETHER THE PAYMENT WAS ON REVENUE OF CAPITAL ACCOU NT, IT WAS SUBMITTED THAT THE SAME HAD NO MEANING AS THE APPEL LANT HAD NOT TREATED THE SAME AS ADMISSIBLE EXPENDITURE FOR COMP UTING THE NET UNDISCLOSED INCOME. (F) THE A.O. HAS HIMSELF ACCEPTED THE VERACITY OF T HE FIGURES APPEARING UNDER COL. D AND COL. E AND THEREFORE, TH E QUANTUM OF BUSINESS EXPENDITURE OF RS.5.88 CRORES UNDER COL. F (BEING THE DIFFERENCE BETWEEN COL. D AND COL. E) DO NOT CALL F OR ANY FURTHER VERIFICATION. (G) THUS, THE UNDISCLOSED INCOME WORKED OUT AT RS.2 .03 CRORCS SHOULD NOT BE A MATTER OF DISPUTE. IT WAS FURTHER C ONFIRMED THAT THE CHARTS/ANALYSIS OF SEIZED DOCUMENTS SUBMITTED IN TH E APPELLANT'S PAPER I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 12 BOOK, HAD BEEN VERIFIED BY THE A.O. WITH THE COPIES OF THE SEIZED DOCUMENTS, AS GIVEN TO THE APPELLANT BY THE DEPARTM ENT AND THE SAME HAD ALSO BEEN DULY CERTIFIED IN THE UNDERTAKING GIV EN ' THE APPELLANT TO THE A.O. 13. THE SPECIFIC OBSERVATIONS OF THE A.O. ON THE AN ALYSIS OF THE SEIZED DOCUMENTS CARRIED OUT BY HIM WITH REFERENCE TO THE CHARTS FURNISHED BY THE ASSESSEES IN HIS PAPER BOOK AND THE EXPLANATION OF THE ASSSESSEES, IN RESPONSE TO THE A.O.S OBSERVATION WERE REPRODUCED BY CIT(A) IN HIS ORDER AS UNDER:- ENTRY WISE EXPLNATION IN REGARD TO THE VARIATIONS POINTED OUT BY THE LEARNED A.O. IN HIS REPORT REF. PAGE NO. OF ASSESSEES SUBMISSION ANNEXURE PAGE NO. NARRATION IN SEIZED A/CS NARRATION IN ASSESSEES SUBMISSION APPELLANTS EXPLANATION IN RESPONSE TO THE AOS OBSERVATIONS 20 A/6 64, 65, 70, 71 ROKADA JAMA (IN GUJRATI) I.E. CASH RECEIVED LOAN RETURN (A/6-64 RS. 1,25,029, A/6-65 RS. 1,54,935, A/6-70 RS. 73,435 &RS. 67,954 AND A/6- 71 RS. 93,532) TOTAL RS. 5,14,885 HAVE BEEN MENTIONED IN SUMMARY SHEET HAS LOAN RETURN FOR FY 1993-94. THESE ENTRIES REPRESENT CASH RECEIVED FROM VARIOUS PERSONS AS MENTIONED IN THE RESPECTIVE PAGES, WHICH HAVE BEEN AGGREGATED AND SHOWN AS LOAN RETURN I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 13 IN THE SUMMARY SHEET A/18. NATURE OF TRANSACTION IS SPECIFIED IN SUMMARY SHEET, WHILE INDIVIDUAL NAMES OF PAYEES ARE SPECIFIED IN THE RESPECTIVE PAGES A/6 20 A/6 54 TO 60 ROKADA JAMA (IN GUJRATI) I.E. RECEIVED ON A/C OF AO/BH AO/BHI THESE ENTRIES REPRESENT AMOUNT OF CASH RECEIVED VIA AHMEDABAD OFFICE FROM BHIMANI BEING FINANCE TRANSACTIONS. 20 A/6 57,64 CASH DEPOSITED IN BANKS CASH IN BANK THESE ENTRIES APPEARING IN CAPITAL OUTGOING REPRESENT CASH DEPOSITED IN VARIOUS BANK ACCOUNT. 20 A/6 54 PURCHASIN GROUND NUT OIL, GIVEN TO KIRITBHAI M.DVP THIS ENTRY APPEARING IN CAPITAL OUTGOING RELATES TO PAYMENT MADE TO KIRTIBHAI FOR HOUSEHOLD EXPENSES OF DV PATEL AND HENCE THE SAME IS SHOWN AS PAYMENT TO MEHSANA- D.V.PATEL. 20 A/6 54, 57 TO 60, 62 TO 65, 70, 72, 73 DETAILS NARRATION WITH NAMES OF PERSONS AND PURPOSE FOR CASH PAYMENTS M.DVP REFERENCE TO PAGE 54 IS DUPLICATION OF ABOVE REFERRED ENTRY. THE REMAINING ENTRIES APPEARING IN CAPITAL OUTGOING RELATE TO PAYMENTS MADE FOR VARIOUS PERSONAL PURPOSE S OF D V PATEL AND HENCE THE SAME IS SHOWN AS PAYMENT TO MEHSANA-D.V. PATEL. I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 14 21 A/6 55 TO 74 DETAILED NARRATION OF EACH ENTRY WITH NAME OF THE PERSON FROM WHOM CASH IS RECEIVED BACK. PETTY CASH RETURN THESE ENTRIES APPEARING IN CAPITAL OUTGOING RELATE TO PAYMENTS MADE FOR VARIOUS PARTIES FOR VARIOUS PURPOSES AND THE SAME NOT BEING IN THE NATURE OF ADMISSIBLE EXPENDITURE, HAVE BEEN SHOWN ON THE CAPITAL ACCOUNT AND GROUPED AS PETTY CASH RETURN AS DESCRIBED UNDER THE COMMON GROUP HEADING AS APPEARING IN THE SUMMARY SHEET A/18 21 A/12 125 RS. 25,000/- RS. 15,000/- CASH (HEADING-R. GANDALAL & CO.) M.R./GO THE HEADING RELATES TO HE PARTY MEHSANA R. GANDALAL & CO., WHICH HAS BEEN REFERRED TO IN ABBREVIATED FROM AS M R/GO. WHILE PAGE 125 REFERS TO TWO AMOUNT OF RS. 25000 AN RS. 1500 SEPARATELY, THE SUMMARY SHEET ANNEXURE A/18 REFLECTS THE TOTAL OF THE TWO BEING RS. 40,000 21 A/6 63, 65, 69 DETAILED NARRATION IN EACH ENTRY WITH NAME OF THE PERSON FROM WHOM CASH IS BO/RO/CHI THE HEADING RELATES TO THE PARTY BOMBAY ROYAL CHEMICALS, WHICH HAS BEEN REFERRED TO IN ABBREVIATED FORM AS BO/RO/CHI. WHILE I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 15 RECEIVED PAGE 63, 65 AND 69 REFER TO THE FULL NAME BOMBAY ROYAL CHEMICALS, WITH THE NAME OF THE CONCERNED HANDLING PERSON THROUGH WHOM FINANCE IS RECEIVED AND SHOWN ON CAPITAL ACCOUNT, THE SUMMARY SHEET ANNEXURE A/18 REFLECTS THE AMOUNTS AGAINST BO/RO/CHI 21 A/6 54, 64, 65 DETAILED NARRATION IN EACH ENTRY WITH NAME OF THE PERSON FROM WHOM CASH IS RECEIVED BACK. YOTANA THE HEADING RELATES TO THE PARTY YOTANA MACHINE TOOLS AND ITS ASSOCIATE TO WHOM FINANCE GIVEN EARLIER HAS BEEN RETURNED AND HENCE SHOWN AS RECEIPTS ON CAPITAL ACCOUNT, AS PER THE NARRATION IN DETAIL ON PAGES 54, 64 AND 65 OF ANNEXURE A/6. IN THE SUMMARY SHEET ANNEXURE A/18, THE SAID THREE ENTRIES HAVE BEEN REFLECTED UNDER THE ABBREVIATION YOTANA. 21 A/6 69 RS. 75,000/- SURESH SINGH-RS. 700=00 KANAIYA ELECTRICAL- CASH PAID EARLIER, RECEIVED BACK GAL RETURN THE AMOUNT AS APPEARING AGAINST THE NAME OF SURESH SINGH OF ONGC (AGL) IS RS. 70,000 WHICH REPRESENTS RETURN OF FINANCE GIVEN EARLIER AND HENCE SHOWN AS RECEIPT ON CAPITAL I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 16 RS. 50=00 ACCOUNT. IN THE SUMMARY SHEET ANNEXURE A/18, THE SAME IS REFERRED TO GAL RETURN. THE OTHER AMOUNT OF RS. 5,000 IS A SEPARATE ENTRY RELATING TO KANAIYA ELECTRICAL. HOWEVER, THE SAME HAVE BEEN TOTALED UP AT RS. 75000 BY THE AO AGAINST GAL RETURN. 21 A/6 12 NOT FOUND RS. 50,000/- DONATION THIS PAYMENT APPEARING IN CAPITAL OUTGOING IS REFLECTED ON PAGE 72 (AND NOT ON PAGE 12 AS INADVERTENTLY MENTIONED) OF ANNEXURE A/6. SINCE IT IS PAID TO KOTHARIA ANNAKSHETRA, IT HAS BEEN DESCRIBED AS DONATION IN SUMMARY SHEET ANNEXURE A/18 21 A/6 68 TO 86 IT SEEMS TO BE TOTAL OF VARIOUS ENTRIES NOT VERIFIABLE RS. 52,800/- O.ADV THIS IS THE TOTAL OF AMOUNTS APPEARING IN CAPITAL OUTGOING REPRESENTING SMALL ADVANCES TO VARIOUS EMPLOYEES AS ADVANCE AGAINST SALARY. SINCE THIS AMOUNT IS TREATED AS PAYMENT ON CAPITAL ACCOUNT THE SAME HAS NOT BEEN CLAIMED AS ALLOWABLE BUSINESS EXPENDITURE I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 17 21 A/6 55 SEND TO JANTA SOAP THROUGH SOMABHAI ANGADIA KA/R RS. 1,00,000/- THIS AMOUNT APPEARING IN CAPITAL OUTGOING WAS SENT THROUGH SOMABHAI ANGADIA TO USHA CHEMICALS AND JANTA SOAP. SINCE THIS FINANCE TRANSACTION WAS MADE ON BEHALF OF RAMBHAI OF KALOL, THE SAME HAS BEEN REFLECTED IN THE SUMMARY SHEET ANNEXURE A/18, AGAINST THE NAME OF KA R, ABBREVIATED FOR KALOL RAMBHAI. 21 A/6 56 RS. 25,000/- (CASH RECEIVED FROM A/O MURVTRADERS) RS. 25000/- (CASH PAID) KA/R THIS AMOUNT APPEARING IN CAPITAL OUTGOING WAS A PERSONAL ADVANCE GIVEN TO RAMBHAI N. PATEL OF DEEPAK CERAMICS, KALOL. SINCE THIS FINANCE TRANSACTION WAS MADE WITH RAMBHAI OF KALOL, THE SAME HAS BEEN REFLECTED IN THE SUMMARY SHEET ANNEXURE A/18, AGAINST THE NAME OF KAR, ABBREVIATED FOR KALOL RAMBHAI. THE A.O. HAS ERRONEOUSLY REFERRED TO A TRANSACTION OF SIMILAR AMOUNT OF RS. 25,000 APPEARING ON THE RECEIPT SIDE OF THE I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 18 SAME PAGE AGAINST THE NAME OF AO/MURV TRADERS. IT NEEDS TO BE NOTED THAT THE TRANSACTION ON THE RECEIPT SIDE HAS BEEN DULY ACCOUNTED IN THE REVENUE RECEIPTS 22 A/12 135 CASH BH AO RS. 4,00,000/- AO BHI THIS AMOUNT REPRESENTS CASH RECEIVED ON CAPITAL ACCOUNT, AS FINANCE VIA AHMEDABAD OFFICE FROM BHIMANI UNDER ANNEXURE A/12 PAGE 135, WHICH HAS BEEN DESCRIBED IN THE ABBREVIATED FORM IN SUMMARY SHEET ANNEXURE A/18 AS AO BHI. THERE IS NO VARIATION IN THE DESCRIPTION UNDER ANNEXURE A/12 AND ANNEXURE A/18 AS OBSERVED BY THE A.O. 22 A/12 135 CASH BH AO RS. 1,00,000/- AO BHI THIS AMOUNT REPRESENTS CASH RECEIVED ON CAPITAL ACCOUNT, AS FINANCE VIA AHMEDABAD OFFICE FORM BHIMANI UNDER ANNEXURE A/12 PAGE 135, WHICH HAS BEEN DESCRIBED IN THE ABBREVIATED FORM IN SUMMARY SHEET ANNEXURE A/18 AS AO BHI. THERE IS NO VARIATION IN THE I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 19 DESCRIPTION UNDER ANNEXURE A/12 AN ANNEXURE A/18 AS OBSERVED BY THE A.O. 22 A/6 81,81, 83, 42 GMGB BANK OF INDIA A/C OF BABLI KHUSH CASH WITHDRAWN BY SELF CHEQUE, AND SIMILAR ENTRIES. NO MENTION OF ANY LOAN. RS. 2,00,000/-, RS. 48910/-, 23792/- ,71036/- LOAN RETURN (A/6-81 RS. 2,00,000, A/6-81 RS. 48910,A/6- 83 RS. 23,792 AND A/6- 42 RS. 71,036) THE TOTAL OF THESE FOUR AMOUNTS WORKING OUT TO RS. 3,43,738 HAS BEEN MENTIONED IN THE SUMMARY SHEET ANNEXURE A/18 AS LOAN RETURN. THEE ENTRIES HAVE BEEN DESCRIBED IN DETAIL ON RELEVANT PAGES OF ANNEXURE A/6 AS CASH DRAWN FROM BANK ACCOUNTS, WITH THE REFERENCE OF THE NAMES OF INDIVIDUAL PARTIES. THE SUMMARIZED NATURE OF TRANSACTIONS OF THE AGGREGATED AMOUNTS APPEARS AT RS. 3,43,738/- AS LOAN RETURN 14. AFTER DOING ALL THESE EXERCISES LD. CIT(A) WHIL E GIVING RELIEF TO THE ASSESSEES HAS OBSERVED AS UNDER:- 13. I HAVE CAREFULLY CONSIDERED THE CONTENTIONS O F BOTH, THE A.O AND THE A.R. IT IS SEEN THAT THE TOTAL OF THE UNACCOUNT ED RECEIPTS AS PER THE SEIZED DOCUMENTS, I.E . . RS. 9,82,59,103/- IS NOT IN DISPUTE. THE I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 20 APPELLANT HAS CLAIMED THAT RECEIPTS OF RS. 1.91 CRO RES OUT OF THE SAME WERE CAPITAL RECEIPTS ON ACCOUNT OF LOANS, ETC. FRO M VARIOUS PERSONS AS INDICATED FROM THE NARRATION AGAINST THE RELEVAN T ENTRIES AND FURTHER CROSS VERIFIED BY ENTRIES IN THE SUMMARY SH EET I.E. ANNEXURE A- 18. THE DOUBTS OF THE A. O., AS EXPRESSED IN HIS R EPORT ABOUT THE NATURE OF THESE RECEIPTS BEING CAPITAL OR OTHERWISE , ARE ONLY IN RELATION TO THE BREVITY OF THE NARRATION. THE A.O A LSO EXPRESSED HIS RESERVATION IN REGARD TO THE ENTRY APPEARING IN THE NAME OF AO BHI. I FIND THAT THESE DOUBTS AND RESERVATION OF THE A.O . HAVE BEEN SATISFACTORILY EXPLAINED BY THE APPELLANT IN ITS RE SPONSE. THUS THE NET FIGURE OF THE UNDISCLOSED SALES (AFTER DEDUCTING TH E AMOUNT OF RECEIPTS ON CAPITAL ACCOUNT FROM THE TOTAL RECEIPTS) AS APPE ARING IN COL. C AT RS.7,91,56,882/- AS PER THE APPELLANT'S CONTENTION IS ACCEPTED. 13.1 THE APPELLANT HAS SHOWN TOTAL PAYMENTS ON THE DEBIT SIDE AT RS. 89,48,819/- REPRESENTING OUTGOINGS ON CAPITAL ACCOU NT, BUSINESS EXPENSES AND OTHER INADMISSIBLE EXPENSES. THE YEAR- WISE BREAK UP OF THESE PAYMENTS FOR THE FINANCIAL YEARS 1993-94 1999 -2000 AS APPEARING IN THE SEIZED RECORDS HAS ALSO BEEN GIVEN FOR THE THREE FINANCIAL YEARS 1990-91 TO 1992-93, THE APPELLANT E XPLAINED THAT NO DETAILED RECORDS OF RECEIPTS AND PAYMENTS WERE FOUN D DURING THE COURSE OF THE SEARCH. THE ONLY RECORD AVAILABLE WAS THE SUMMARY SHEET CONTAINING BRIEF DETAILS OF RECEIPTS. WHILE T HE TOTAL RECEIPTS HAD BEEN TAKEN AS GROSS UNDISCLOSED INCOME, THE NET UND ISCLOSED INCOME WAS ESTIMATED BY THE APPELLANT AT 25% OF THE SAME, FOR THESE 3 YEARS ALLOWING THE CORRESPONDING AMOUNT OF 75% AS THE MAR GIN OF EXPENSES, BASED ON THE WEIGHTED AVERAGE OF SUCH EXPENSES WITH REFERENCE TO THE GROSS UNDISCLOSED INCOME FOR THE REMAINING SIX YEAR S. THUS THE TOTAL PAYMENTS OF RS.8,89 ; 48,819/- AS SHOWN BY THE APPELLANT TINDER COL. D , COMPRISE OF RS. 8,10,39,793/- BEING AMOUNTS DULY RE FLECTED IN THE SEIZED RECORDS AND RS, 79,09,0267/- AS CLAIMED BY T HE APPELLANT ON AN ESTIMATED BASIS AS MENTIONED HEREINABOVE. 13.2 IN ITS SUBMISSIONS, THE APPELLANT HAS GIVEN D ETAILS OF THE PAYMENTS ON CAPITAL ACCOUNT OF RS.3,01,16,524/- TOW ARDS LOANS AND ADVANCES TO VARIOUS PARTIES AND WITHDRAWALS, INCLUD ING INADMISSIBLE BUSINESS EXPENDITURE SUCH AS DONATIONS, ELECTION EX PENSES ETC INCURRED IN THE FINANCIAL YEARS 1993-94 TO 1999-200 0. IN. HIS REPORT, THE A.O. HAS EXPRESSED DOUBTS ABOUT THESE OUTGOINGS BEING ON CAPITAL ACCOUNT. THE A. O. HAS HOWEVER NOT GIVEN ANY REASON S IN THIS REGARD. I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 21 IN ANY CASE, SINCE THE APPELLANT HAS NOT CLAIMED TH ESE OUTGOINGS AS AN ADMISSIBLE EXPENDITURE, THIS HAS NO BEARING WITH TH E COMPUTATION OF THE UNDISCLOSED INCOME. 13.3 DEDUCTING THE PAYMENTS OF RS 3,01,16,524/- ON CAPITAL ACCOUNT FROM THE ABOVE REFERRED TOTAL PAYMENTS OF RS,8,89,4 8,819/- THE BALANCE OF RS.5,88,32,295/-HAS BEEN CLAIMED BY THE APPELLANT AS BUSINESS EXPENDITURE. IT IS PERTINENT TO NOTE THAT THE A.O., IN HIS REPORT, HAS NOT DISPUTED, IN PRINCIPLE, THE APPELLA NT'S CONTENTION THAT ANNEXURE A-18 FORMING PART OF THE SEIZED DOCUMENTS CONTAINS NO TINGS WHICH, CLEARLY INDICATE ITEMS OF BUSINESS EXPENDITU RE UNDER VARIOUS HEADS, SUCH AS PURCHASES, RAW MATERIAL, OFFICE EXPE NSES, COMMISSION, FREIGHT, TRAVELING, SALARY DIFFERENCE ETC. THE A.O. IN HIS REPORT HAS ALSO CONFIRMED THAT THE YEARLY TOTAL OF SUCH PAYMENTS UN DER DIFFERENT HEADS ARE FOUND IN SEIZED ANNEXURE A-18, BUT ACCORDING TO HIM THERE IS NO FURTHER BREAK UP OF THE DAILY FIGURES ON THE BASIS OF WHICH THE YEARLY TOTALS HAVE BEEN MADE UP. I FIND FORCE IN THE APPEL LANT'S CONTENTION THAT WHAT MATTERS FOR THE COMPUTATION OF THE TOTAL UNDISCLOSED INCOME IS THE OVERALL TOTAL OF YEARLY PAYMENTS AND CLASSIF ICATION OF EXPENDITURE AS ALLOWABLE OR DISALLOWABLE BEING IN T HE NATURE OF REVENUE OR CAPITAL, AND THE VERIFICATION OF THE BRE AK UP OF DAILY FIGURES OF SUCH EXPENSES IS NOT RELEVANT FOR THIS PURPOSE. 13.4 EVEN IN THE ASSESSMENT ORDER FINALIZED U/S. 1 58BC (UNDER PARA 14-1)., THE A.O. HAS TREATED THE ENTIRE RECEIPTS AS UNDISCLOSED INCOME, MAINLY ON THE COUNT THAT 'TO CLAIM THE RELEVANT EXP ENDITURE PERTAINING TO UNDISCLOSED INCOME, THE ONUS LIES ON THE ASSESSE E TO PROVIDE BASIC DETAILS SUCH AS BIFURCATION OF THE NATURE OF EXPEND ITURE AS BASIS OF EXPENDITURE, PERSONAL EXPENDITURE, CAPITAL EXPENDIT URE ETC. AND THAT THE ASSESSEE HAS NOT PRODUCED THE NECESSARY WORKING OF THE EXPENDITURE INCURRED FOR EARNING THE UNACCOUNTED IN COME. IN VIEW OF THE FAD THAT THE APPELLANTS HAVE RAISED THE RELEVAN T CLAIMS AND CONTENTIONS IN REGARD TO ADMISSIBLE BUSINESS EXPEND ITURE DURING THE COURSE OF THE APPEAL PROCEEDINGS AND THE SAME HAS A LSO BEEN EXAMINED BY THE A.O. UNDER HIS REPORT SUBMITTED AFT ER DUE VERIFICATION, I AM OF THE OPINION THAT THE APPELLAN TS' CLAIM FOR DEDUCTION OF BUSINESS EXPENDITURE TO THE TUNE OF RS .5,88,32,295/- DESERVES TO BE ALLOWED. AS REGARDS THE BUSINESS EXP ENDITURE OF RS 79,09,026/- RELATING TO THE INITIAL THREE YEARS FYS . 1990-91 TO 1992-93 WORKED OUT AT 75% OF THE UNDISCLOSED RECEIPTS. I F IND THAT THE A.O. I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 22 HAS NOT RAISED ANY SPECIFIC OBJECTION AGAINST THIS CLAIM OF THE APPELLANTS. MOREOVER, THERE IS FORCE IN THE CONTEN TION OF THE APPELLANTS THAT ON THE FACTS OF THEIR CASE, AS ALSO KEEPING IN VIEW THE RATIO OF THE TWO DECISIONS S.M OMER AND PRESIDENT I NDUSTRIES (SUPRA), THE ENTIRE UNACCOUNTED SALES FOR THESE THREE YEARS CANNOT BE TREATED AS UNDISCLOSED INCOME. UNDER THE CIRCUMSTANCES, THE UNDISCLOSED PROFIT ESTIMATED AT 25% OF THE UNACCOUNTED SALES APPEARS TO BE REASONABLE, I THEREFORE HOLD THAT BUSINESS EXPENDIT URE OF RS.5,88,32,295/- CLAIMED BY THE APPELLANTS DESERVES TO BE ALLOWED AGAINST THE UNDISCLOSED SALES OF RS.7.91,56,882/-. THE UNDISCLOSED INCOME OF THE THREE GROUP CONCERNS, GMGB, MCPL AND SRCI, FOR THE BLOCK PERIOD IS THUS DETERMINED AT RS.2,03,24,587 ( 7,91,56,882- 5,88,32,295). 13.5 IN THE BLOCK ASSESSMENT FINALIZED BY THE A.O IN THESE THREE CASES, HE HAS DIVIDED THE UNDISCLOSED INCOME AS FIN ALLY DETERMINED BY HIM ON A CONSOLIDATED BASIS AMONGST THESE THREE CON CERNS ON THE BASIS OF THEIR PROPORTIONATE YEAR-WISE SALES AS PER THEIR REGULAR BOOKS OF ACCOUNTS. THE APPELLANTS HAVE ALSO SUBMITTED THA T SINCE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD ATTRACTS TAX THE FLAT RATE OF 60%, THE BIFURCATION OF THE UNDISCLOSED INCOME (AS FINALLY DETERMINED IN APPEAL) AMONGST THE THREE GROUP CONCERNS, IN THE ABOVE MANNER AS DETERMINED BY THE A.O, IS LOGICALLY ACCEPTABLE. FOL LOWING THE VERY SAME BASIS, THE BIFURCATION OF THE NET UNDISCLOSED INCOME OF RS.2,03,24,587/- AMONGST THE THREE GROUP CONCERNS Y EAR-WISE, FOR THE ACCOUNTING YEARS WITHIN THE BLOCK PERIOD, IS ACCORD INGLY WORKED OUT AS UNDER:- YEAR-WISE UNDISCLOSED INCOME FOR THE BLOCK PERIOD FINANCIAL YEAR GMGB RS. SRCI MCPL TOTAL RS. 1989-90 0 0 0 0 1990-91 4,26,750 2,03,605 0 6,30,355 1991-92 7,87,189 5,43,871 0 13,31,060 1992-93 5,35,351 1,39,575 0 6,74,926 I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 23 1993-94 10,00513 3,48,979 0 13,49,492 1994-95 14,05,380 2,90,505 0 16,95,885 1995-96 15,14,910 2,29,775 11,25,860 28,70,545 1996-97 5,77,582 74,169 9,29,478 15,81,230 1997-98 27,28,443 8,48,904 14,84,516 50,61,863 1998-99 19,65,806 3,47,996 9,15,571 32,29,373 199-2000 10,97,118 4,70,641 3,32,099 18,99,858 1,20,39,042 34,98,020 47,87,525 2,03,24,587 15. AGGRIEVED BY THIS ORDER OF LD. CIT(A), THE REVE NUE IS IN APPEAL BEFORE US. AT THE TIME OF HEARING LD. CIT-DR RELIE D ON THE ORDER OF A.O. AND TOOK US TO THE RELEVANT PORTION OF HIS ORDER TO ARG UE VEHEMENTLY THAT THE ORDER PASSED BY HIM MAY KINDLY BE RESTORED BACK AN D THE ORDER PASSED BY LD. CIT(A) MAY KINDLY BE SET ASIDE WHILE A.R. OF T HE ASSESSEE RELIED ON THE ORDER OF LD. CIT(A) AND TOOK US TO THE RELEVANT PAG ES OF PAPER BOOK FILED BY HIM AS TO SHOW HOW LD. CIT(A) WAS JUSTIFIED IN GIV ING RELIEF TO THE ASSESSEES. 16. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT DURING SEARCH OPERATION U/S 132 OF THE ACT ON THE BUSINESS PREMISES OF THESE ASSESSEES AS PER THE SEIZED DOCUMENTS UNACCOUNTED R ECEIPTS OF RS. 9,82,59,103/- WERE DETECTED. ASSESSING OFFICER TRE ATED THESE RECEIPTS AS CONCEALED INCOME OF THESE ASSESSEES AS THE SAME WER E NOT ENTERED IN THE BOOKS OF ACCOUNTS, ON THE BASIS OF ADMISSION MADE B Y THE ACCOUNTANT OF THE GROUP MR. PRAJAPATI AND SRI DASHRATHBHIA PATEL HIMS ELF DURING THE SEARCH OPERATION. THE ASSESSEES CONSISTENT CONTENTION HA S BEEN THAT CAPITAL RECEIPTS I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 24 AND BUSINESS EXPENSES SHOULD BE EXCLUDED FOR DETERM INING THE UNDISCLOSED INCOME. BEFORE LD. CIT(A), IT WAS CLAIMED THAT OU T OF TOTAL RECEIPTS RS. 9,82,59,103/- RECEIPTS OF RS. 1.91 CRORES WERE ON A CCOUNT OF LOANS ETC FROM VARIOUS PERSONS AND NET FIGURE OF RS. 7,91,56,852/- SHOULD BE TREATED AS UNDISCLOSED RECEIPTS. ASSESSEES FURTHER CLAIMED TO TAL PAYMENTS ON THE DEBIT SIDE ARE AT RS. 8,89,48,819/-. OUT OF THESE PAYME NTS, ASSESSEES THEMSELVES CONCEDED THAT PAYMENTS TO THE TUNE OF RS. 3,01,16,5 24/- WERE OF CAPITAL NATURE AND DID NOT CLAIM THIS AMOUNT AS AN ADMISSI BLE EXPENDITURE. THE ASSESSEES CLAIMED ONLY BALANCE AMOUNT OF RS. 5,88,3 2,295/- AS BUSINESS EXPENDITURE. ALL THESE CLAIMS WERE MADE BY THESE A SSESSEES ON THE BASIS OF SEIZED DOCUMENTS. THUS, ASSESSEES OFFERED NET UNDI SCLOSED INCOME OF RS. 2,03,25,587/- FOR THE BLOCK PERIOD WHICH COMES TO 2 5.68 % OF THE UNDISCLOSED SALES. FOR MAKING THIS SUBMISSION REL IANCE WAS PLACED ON THE NOTINGS AND NARRATIONS APPEARING ON THE DEBIT AND C REDIT SIDE IN THE SEIZED DOCUMENTS. THE ENGLISH TRANSLATION OF THESE NOTING S/NARRATIONS WAS ALSO SUBMITTED BEFORE THE FIRST APPELLATE AUTHORITY. LD . CIT(A) SENT THIS SUBMISSION OF THE ASSESSEE TO A.O. FOR VERIFICATION . THE ASSESSING OFFICER SUBMITTED HIS REMAND REPORT, ASSESSEES COMMENT ON THIS REMAND REPORT OF THE A.O. WERE ALSO OBTAINED BY LD. CIT(A). IN PAR A 12 OF HIS ORDER WHICH WE HAVE ALREADY REPRODUCED IN PARA 13 OF THIS ORDER , THE LD. CIT(A) ANALYZED THE ENTRY-WISE EXPLANATION OF THE ASSESSEE S IN RESPECT OF VARIATIONS POINTED OUT BY ASSESSING OFFICER IN HIS REPORT AND FOUND THAT CONTENTION OF THE ASSESSEES WAS CORRECT AND JUSTIFIED AND THEREFORE T HE SAME WAS ACCEPTED BY HIM. WHILE DOING SO HE FOLLOWED THE RATIO OF THE T WO DECISIONS IN THE CASES OF CIT VS. S.M. OMER 201 ITR 608 (CAL) AND CIT VS. PRESIDENT INDUSTRIES 258 ITR 654 (GUJ) OF JURISDICTIONAL HIGH COURTS WHE REIN IT WAS HELD THAT ENTIRE UNDISCLOSED SALES COULD NOT BE ADDED AS INCO ME OF THE ASSESSEE IN AS I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 25 MUCH AS FOR EARNING THIS INCOME THE ASSESSEE HAD MA DE CERTAIN EXPENDITURE AND ADDITIONS COULD BE MADE ONLY TO THE EXTENT OF E STIMATED PROFITS EMBEDDED IN SALES. WE FURTHER FIND THAT DURING THE PENDENCY OF APPEALS BEFORE LD. CIT(A), THESE ASSESSEES MOVED APPLICATIO NS BEFORE SETTLEMENT COMMISSION OFFERING TOTAL UNDISCLOSED INCOME FOR TH E BLOCK PERIOD AS UNDER:- NAME OF THE APPELLANT UNDISCLOSED INCOME GUJARAT MULTI GAS BASE CHEMICALS PVT LTD RS. 83,93,670/- SHREE RAM CHEMICALS INDUSTRIES RS. 27,39,188/- MANEK CHEMICAL PVT. LTD. RS. 23,76,115/- TOTAL UNDISCLOSED INCOME RS. 1,35,08,973/- 17. THE APPLICATIONS OF THE ASSESSEES WERE ADMITTED BY SETTLEMENT COMMISSION U/S 245D OF THE ACT AND CONSEQUENTLY THE APPEALS FILED BEFORE LD. CIT(A) SOUGHT TO BE WITHDRAWN AND WERE DISMISSE D. FURTHER SINCE THE ORDER U/S 245D(4) WERE NOT PASSED BY THE SETTLEMENT COMMISSION WITHIN THE SPECIFIED TIME UNTIL 31 ST MARCH, 2008, IN VIEW OF THE PROVISIONS OF SECTION 245 HA(1)(I)(IV) THE PROCEEDINGS BEFORE SETTLEMENT COMMISSION WERE ABATED ON 31 ST MARCH, 2008 AND ALL THESE ASSESSEES WERE REVIVED. IT APPEARS THAT DURING THIS PERIOD EACH ENTRY OF THE RECEIPTS AND PAYMENTS APPEARING IN THE SEIZED RECORDS WERE FURTHER ANALYZED BY THE ASS ESSEES AND THEY CAME FORWARD WITH PROFIT PERCENTAGE OF 25.68 % OF UNDISC LOSED INCOME TO UNDISCLOSED SALES DECLARING UNDISCLOSED TOTAL INCO ME OF RS. 2.03 CRORES AS AGAINST THE TOTAL INCOME OF RS. 1.35 CRORES OFFERED BEFORE THE SETTLEMENT COMMISSION. THIS INCREASED OFFER ON THE PART OF TH ESE ASSESSEES THROWS I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 26 SOME LIGHT ON THE BONAFIDES OF THESE ASSESSEES. W E FURTHER FIND THAT OUT OF THE PAYMENTS OF RS. 8,89,48,819/- ASSESSEES THEMSEL VES CONCEDED THAT A SUM OF RS. 3,01,16,524/- WAS INADMISSIBLE EXPENDITURE A S THESE PAYMENTS WERE OF CAPITAL ACCOUNT. THIS ALSO SHOWS FAIRNESS AND REAS ONABLENESS ON THE PART OF THESE ASSESSEES. KEEPING ALL THESE FACTS AND CIRCU MSTANCES OF THESE CASES IN VIEW, WE FEEL NO NEED TO INTERFERE WITH THE ORDER P ASSED BY LD CIT(A) AND THE SAME IS HEREBY UPHELD. 18. IN THE RESULT, APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (T.R.MEENA) ( D.K.TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 05 /04/2013 AK / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# I.T.(SS)A NOS.38,39 &40/AHD/2009 A.Y. BLOCK PERIOD PAGE NO DCIT VS. DASHRATH V. PATEL & OTHERS 27 STRENGTHENED PREPARATION & DELIVERY OF ORDERS IN TH E ITAT 1) DATE OF TAKING DICTATION 20-03-2013 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE N.A. 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 21-03-2013 4) DATE OF CORRECTION 22-03-2013 5) DATE OF FURTHER CORRECTION 01-04-2013 6) DATE OF INITIAL SIGN BY MEMBERS 02-04-2013 7) ORDER UPLOADED ON 05-04-2013 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) ORDER SENT TO BENCH CLERK 05-04-2013