New India Enterprise, Baroda V. The DYCIT., Cent.Circle-1, Baroda

ITSSA 44/AHD/2005

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2327 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 01-09-2016
• Assessment Year: misc
• Appeal Filed On: 03-03-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Document seized; Block assessment; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) IT(SS)A. NOS: 44 & 46/AHD/2005 (BLOCK PERIOD: 01-04-1991 TO 01.05.2001) DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, BARODA M/S. NEW INDIA ENTERPRISE 503, R.C. DUTT ROAD, ALKAPURI, BARODA V/S V/S M/S. NEW INDIA ENTERPRISE 503, R.C. DUTT ROAD, ALKAPURI, BARODA DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE- 1, BARODA (APPELLANT) (RESPONDENT) PAN: AABFN5979Q APPELLANT BY : SHRI MILIN MEHTA, A.R. RESPONDENT BY : SHRI SANJAY AGRAWAL CIT/DR WITH SHRI SANJAY KUMAR , SR. D.R. ( )/ ORDER DATE OF HEARING : 01 -09-201 6 DATE OF PRONOUNCEMENT : 08 -09-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. IT(SS)A NOS. 44 & 46/AHD/2005 ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-IV, IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 2 AHMEDABAD DATED 30.11.2004 PERTAINING TO BLOCK PERI OD 01.04.1991 TO 01.05.2001. 2. THE SUBSTANTIVE GRIEVANCE OF THE ASSESSEE READS AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN FACT AND IN LAW IN CONFIRMING THE ADDITION OF RS. 1,51,070/- BEING 5.5 % OF RS. 27,46,734/- DESPITE THE FACT THAT THE APPELLANT HAD ALREADY OFFERED THE SAI D INCOME IN THE ADDITIONAL INCOME DECLARED. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN FACT AND IN LAW IN CONFIRMING THE ADDITION OF RS. 30,76,760/- MADE BY THE A.O. ON THE GROUND OF UNEXPLAINED CASH CREDIT DESPITE THE FACT THAT THE S AID AMOUNTS REPRESENTS SALES AND THE APPELLANT HAS ALREADY OFFERED THE GP ON THE ABO VE SALES FOR TAXATION. 3. AND THE SUBSTANTIVE GRIEVANCE OF THE REVENUE READS AS UNDER:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS. 22,16,165/- MADE ON ACCOUNT OF SHORTAGE OF CASH. 2. THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE SURCHARGE LEVIED IN SPITE OF THE SPECIFIC PROVISION CONTAINED IN PARAGRAPH A OF PART I OF THE FIRST SCHEDULE RELATING TO SURCHARGE ON INCOME TAX OF THE FINANCE ACT, 2000. 4. RIVAL SUBMISSIONS HAVE BEEN HEARD AT LENGTH. HAVING HEARD THE RIVAL CONTENTIONS, WE HAVE CAREFULLY PERUSED THE ORDERS O F THE AUTHORITIES BELOW AND WITH THE ASSISTANCE OF THE LD. COUNSEL; W E HAVE CAREFULLY GONE THROUGH THE RELEVANT DOCUMENTARY EVIDENCES PLA CED BEFORE US IN THE FORM OF PAPER BOOK IN THE LIGHT OF THE PROVISIO NS OF RULE 18(6) OF THE APPELLATE TRIBUNAL RULES. 5. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT ON TH E BASIS OF INFORMATION RECEIVED FROM THE OFFICE OF THE ZONAL DIRECTOR, NAR COTICS CONTROL BUREAU (NCB), AHMEDABAD AUTHORIZATION U/S. 132A(1) OF THE ACT WAS IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 3 ISSUED BY THE DIT (INV.), AHMEDABAD TO TAKE THE CUS TODY OF THE BOOKS OF ACCOUNTS AND DOCUMENTS FROM THE OFFICE OF THE ZO NAL DIRECTOR NARCOTICS CONTROL BUREAU, AHMEDABAD. 6. THEREAFTER, NOTICE U/S. 158BC OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE TO FILE THE BLOCK RETURN OF UNDISCLOSE D INCOME. THE ASSESSEE FILED THE BLOCK RETURN OF INCOME DECLARING UNDISCLOSED INCOME FOR THE BLOCK PERIOD AT RS. NIL. 7. STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE A SSESSEE. DURING THE COURSE OF THE BLOCK ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CONFRONTED WITH THE CASH BOOKS WHICH WERE SEIZED BY THE NCB, AHMEDABAD. THE ASSESSING OFFICER FOUND THAT THESE C ASH BOOKS CONTAINED BOTH DISCLOSED AND UNDISCLOSED TRANSACTIO NS PERTAINING TO:- (1) NEW INDIA TRANSPORT COMPANY, (2) NEW INDIA ENTE RPRISE, (3) J.K. ENTERPRISE AND (4) M/S. DHARMISHTA ENTERPRISE. STA TEMENTS OF THE KEY PERSONS OF THE GROUP SHRI ASHOK G. PATEL AND SHRI R AMESH N. PATEL WERE RECORDED U/S. 131(1A) BY THE DDIT (INV.)-II, B ARODA. BOTH THESE KEY PERSONS OF THE GROUP OFFERED RS. 72.90 LACS AS UNDISCLOSED INCOME ON THE BASIS OF NOTINGS MADE IN A-3 AND A-4. 8. SUBSEQUENTLY, THE ASSESSEE FILED AN AFFIDAVIT RETRA CTING FROM THE DISCLOSURE MADE DURING THE COURSE OF THE POST SEARC H INQUIRY BEFORE THE DDIT (INV.)-II, BARODA ON THE GROUND THAT THE D ISCLOSURE WAS NOT MADE CORRECTLY WITHOUT TAKING THE BENEFIT OF PEAK F LOW. 9. IN SUPPORT OF ITS CONTENTION, THE ASSESSEE HAD SUBM ITTED A CASH BOOK OF UNACCOUNTED ENTRIES APPEARING IN A-3 AND A-4, TH E A.O. DID NOT ACCEPT THESE ENTRIES STATING THAT THE SO CALLED CAS H BOOKS CANNOT BE IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 4 RELIED UPON AS A NUMBER OF ENTRIES ARE NOT FOUND IN A-3 AND A-4 AND ALSO THEY ARE NOT SUPPORTED BY ANY EVIDENCE. 10. THEREAFTER, THE ASSESSEE WAS ASKED TO PREPARE A FRE SH CASH FLOW STATEMENT OF UNACCOUNTED ENTRIES WHICH WERE APPEARI NG IN A-3 AND A- 4. THE SAME WAS FURNISHED BY THE ASSESSEE ON 21.04. 2003. FOR THE SAKE OF COMPLETENESS OF OUR ADJUDICATION, WE ARE AN NEXING THIS CASH FLOW STATEMENT WITH OUR ORDER TO UNDERSTAND THE FAC TUAL MATRIX IN THE CORRECT PERSPECTIVE. DATE PARTICULARS PAYM ENT RECEIPT BALANCE 4-4-2000 EXPENSES X Y Z 200000 -200000 7-4-2000 NITC 10000 -210000 8-4-2000 GDI 66100 -276100 11-04-2000 SALES-JAGDISH 50000 -226100 13-4-2000 SALES-JAGDISH 350 -225750 15-4-2000 CLARASIS 418900 193150 15-4-2000 NANDLALJI 314000 507150 15-4-2000 WESTERN DRUG 315000 192150 15-4-2000 M M LADHA 120000 72150 15-4-2000 AMZOLE 34450 37700 15-4-2000 NITC 263450 -225750 18-4-2000 SALES-JAGDISH 9500 -216250 20-04-2000 JAGDISH 35000 -181250 4-5-000 K N PATEL 200000 18750 4-5-2000 SHIVLAL 175000 193750 4-5-2000 NITC 5000 188750 9-5-2000 JAGDISH 40000 228750 9-5-2000 NITC 3780 224970 11-05-2000 SHIVLAL 400000 -175030 15-05-2000 GUPTAJI , 200000 24970 IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 5 15-5-2000 NITC I30000 -105030 18-5-2000 NANDLALJI 200000 -305030 18-5-2000 NITC 50000 -355030 23-5-2000 JAGDISH 50000 -305030 25-5-2000 NITC 100000 -405030 26-5-2000 NANDAIAIJI 100000 -505030 27-5-2000 NANDAIAIJI 1 60000 -665030 28-5-2000 JAGDISH 20000 -645030 29-5-2000 NITC 10000 -655030 3-6-2000 JAGDISH 30000 -625030 6-6-2000 NAVIN CHEMICALS 6615 -631645 6-6-2000 SWAN CHEMICALS 203780 -835425 6-6-2000 NITC 1220 -836645 15-6-2000 SALES 2400 -834245 16-6-2000 SALES 600 -833645 16-6-2000 NITC 30000 -863645 21-6-2000 NITC 200000 -1063645 22-6-2000 NITC 1380 -1065025 23-6-2000 SALES 800 -1064225 23-6-2000 SALES 3445 -1060780 30-6-2000 30-06-2000 PRITI ROADWAYS NITC 25000 25000 -1035780 -1060780 5-7-2000 O.P. JAIN 212100 -1272880 21-07-2000 SALES 180 -1272700 24-07-2000 PANKAJ 55700 -1328400 31-07-2000 SALES 25000 -1303400 02-08-2000 GDI 34650 -1338050 7-8-2000 SALES 3050 -1335000 8-8-2000 NITC 5000 -1340000 23-8-2000 NANDALALJI 50000 -1290000 23-8-2000 NITC 10000 -1300000 25-8-2000 NANDALALJI 300000 -1600000 IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 6 25-8-2000 NITC 75000 -1675000 29-8-2000 NANDALALJI 4650 -1679650 29-8-2000 ANILI OIL 10850 -1690500 5-9-2000 NITC 4600 -1695100 9-9-2000 JAYANTI 13300 -1681800 19-9-2000 SALES 2800 -1679000 19-9-2000 NITC 320 -1679320 29-9-2000 SALES 5000 -1674320 29-9-2000 SALES 1800 -1672520 30-9-2000 SALES 200000 -1472520 3-10-2000 NITC 5000 -1477520 3-10-2000 NANDALALJI 19500 -1497020 5-10-2000 NITC 8000 . -1505020 9-10-2000 NITC 2750 -1502270 13-10-2000 SALES 2400 -1499870 13-10-2000 SALES 200000 -1299870 18-10-2000 JAYESH 25000 -1324870 19-10-2000 NITC 2000 . -1326870 24-10-2000 SALES 6660 -1320210 24-10-2000 SHIVLALJI 33875 -1354085 24-10-2000 NITC 1 225 -1355310 3-11-2000 SALES 1700 -1353610 4-11-2000 ACICHEM 1 37500 -1491110 10-11-2000 NITC 30000 -1521110 15-11-2000 SALES 60000 -1471110 18-11-2000 NITC 50000 -1521-110 18-11-2000 SALES 100000 -1421110 25-11-2000 HN ENT 200000 -1221110 25-11-2000 NITC 150000 -1371110 28-11-2000 SALES 800 -1370310 29-11-2000 GUJARAT CLORIDE 56000 -1426310 IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 7 1-12-2000 SALES 11250 -1415060 3-12-2000 SALES 58200 -1356860 6-12-2000 HN ENT 100000 -1256860 6-12-2000 NITC 250000 -1506860 7-12-2000 NITC 2640 -1509500 9-12-2000 NITC 10000 -1519500 13-12-2000 H N ENT 112200 -1407300 13-12-2000 NITC 62200 -1469500 16-12-2000 SALES 750 -1468750 17-12-2000 SALES 800 -1467950 18-12-2000 SALES 600 -1467350 19-12-2000 SALES 600 -1466750 20-12-2000 SALES /75000 -1291750 20-12-2000 SHIVLAL 435000 -1726750 23-12-2000 SALES 650 -1726100 23-12-2000 SALES 650 -1725450 23-12-2000 SALES 650 -1724800 23-12-2000 SALES 700 -1724100 24-12-2000 SALES 125000 -1599100 24-12-2000 GUPTAJI 200000 -1799100 26-12-2000 SALES 150000 ' -1649100 26-12-2000 NITC 10000 -1659100 30-12-2000 SALES 100000 '-1559100 31-12-2000 NITC 97600 -1656700 31-12-2000 SALES 700 -1656000 31-12-2000 SALES 635 -1655365 31-12-2000 SALES 500 -1654865 1-1-2001 J J 6500 -1648365 3-1-2001 SALES 4000 -1644365 4-1-2001 NITC 30000 -1674365 7-1-2001 CLARASES 150000 -1524365 IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 8 7-1-2001 H N ENT 200000 -1324365 7-1-2001 WESTERN DRUG 445000 -1769365 7-1-2001 NITC 56600 -1825965 10-1-2001 SALES 20900 -1805065 10-1-2001 NITC 10000 -1815065 13-1-2001 SALES 2250 -1812815 15-1-2001 NANDALAJI 200000 -1612815 15-1-2001 NITC 65000 -1677815 16-1-2001 SHIVLAL 244000 -1921815 17-1-2001 NITC 50000 -1971815 19-1-2001 SALES 650 -1971165 19-1-2001 SALES 650 -1970515 20-1-2001 SALES 8800 -1961715 21-1-2001 SALES 650 -1961065 22-1-2001 CHAITEN 26000 -1987065 24-1-2001 SALES 2100 -1984965 28-1-2001 BHAVANA CHEMICAL 15000 -1969965 28-1-2001 NITC 50000 -2019965 1-2-2001 SALES 14000 -2005965 1-2-2001 NANDALALJI 19500 -2025465 8-2-2001 SALES 11500 -2013965 10-2-2001 SALES 1 75000 -1838965 10-2-2001 SALES 1 00000 -1738965 10-2-2001 NITC 100000 -1838965 10-2-2001 NITC 145000 -1983965 14-2-2011 CLARASIS 250000 -1733965 14-2-2011 AKSHAR ORGANIC 164000 -1897965 14-2-2001 NITC 250000 -2147965 14-2-2001 SALES 1 00000 -2047965 16-2-2001 SALRES 100000 -1947965 16-2-2001 NILE 49000 -1996965 IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 9 17-2-2001 SALES 149074 -1847891 17-2-2001 NITC 1 37774 -1985665 1-3-2001 PURCHASES 30500 -2016165 02-03-2001 SALES 50000 -1966165 03-03-2001 SALES 50000 -1916165 07-03-2001 SALES 200000 -1716165 07-03-2001 SHIVLAL 100000 -1816165 07-3-2001 NITC 400000 -2216165 09-03-2001 SALES 200000 -2016165 14-03-2001 SALES 50000 -1966165 14-03-2001 SALES 12900 -1953265 14-03-2001 SALES 10500 -1942765 14-03-2001 SALES 3500 -1939265 14-03-2001 SALES 1000 -1938265 17-03-2001 SALES 100000 -1838265 20-03-2001 JAY JALARAM 200000 -1638265 20-03-2001 GUPTAJI 175300 -1813565 24-03-2001 SHIDDHI 15000 -1798565 24-03-2001 CLARASIS 1402200 -1658365 TOTAL 7481859 5823494 11. A PERUSAL OF SUCH STATEMENT SHOWS THAT THE TOTAL OF THE PAYMENTS COMES TO RS. 74,81,859/- AND THE TOTAL OF RECEIPTS COMES TO RS. 5823494/- THEREBY MAKING THE PAYMENTS IN EXCESS BY RS. 22,16,165/-. THE ASSESSEE WAS ASKED TO SHOW CAUSE A S TO WHY THIS EXCESS PAYMENT OF RS. 22,16,165/- BE NOT ADDED AS H IS UNDISCLOSED INCOME. IN ITS REPLY, THE ASSESSEE STRONGLY OBJECTE D TO THE SAID PROPOSED ADDITION BY THE A.O. STATING THAT THE SO C ALLED CASH DEFICIT HAS NOTHING TO DO WITH THE ASSESSEE-FIRM, BECAUSE S HRI RAMESH N. PATEL WHO WAS MANAGING THE FUNDS OF NITC WHICH WAS FUNDED BY NITC ITSELF. THEREFORE, THE PEAK HAS WORKED OUT ON THE B ASIS OF A-3 AND A-4 IS NOTHING BUT SHRI RAMESH N. PATEL WAS FUNDED BY N ITC FOR THE BUSINESS PURPOSE. IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 10 12. THIS SUBMISSION OF THE ASSESSEE DID NOT FIND ANY FA VOUR WITH THE A.O. WHO WAS OF THE FIRM BELIEF THAT FROM THE STATE MENTS GIVEN BY SHRI ASHOK G. PATEL AND SHRI RAMESH N. PATEL BEFORE THE DDIT AND ALSO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS HAV E ADMITTED THAT SHRI ASHOK G. PATEL WAS MAKING ENTRIES ON THE DIREC TIONS OF SHRI RAMESH N. PATEL AND SHRI ASHOK G. PATEL DID NOT KNO W HOW SHRI RAMESH N. PATEL WAS USING THE UNACCOUNTED FUNDS SO GENERATED AS APPEARING IN A-3 AND A-4. THE A.O. PROCEEDED BY MAK ING AN ADDITION OF RS. 22,16,165/-. 13. AFTER MAKING THE AFOREMENTIONED ADDITION, THE A.O. PROCEEDED FURTHER BY TAKING THE RECEIPTS SIDE AMOUNT AT RS. 58,23,494 /- AND FROM THIS AMOUNT , THE OFFICER REDUCED RS. 27,46,734/- BEING THE TOTAL AMOUNT OF ENTRIES AGAINST WHICH SALES HAS BEEN MENTIONED. I N THE SAID LIST, THE A.O. TREATED THIS AMOUNT OF RS. 27,46,734/- AS SALE S OF THE ASSESSEE AND BY APPLYING GP RATE OF 5.5%, THE UNDISCLOSED ON SALES OF RS. 27,46,734/- WAS DETERMINED AT RS. 1,51,070/- . 14. AS MENTIONED HEREINABOVE, THE A.O. HAS TREATED RS. 27,46,734/- AS SALES OUT OF THE TOTAL RECEIPTS OF RS. 58,23,494 /-, WHICH LEAVES BALANCE OF RS. 30,76,760/-. THE A.O. TREATED THIS A MOUNT AS UNEXPLAINED CASH CREDITS AND MADE THE ADDITION ACCO RDINGLY. 15. TO SUM UP, THE ADDITIONS MADE BY THE A.O. CAN BE CA TEGORIZED AS FOLLOWS:- (I) RS. 22,16,165/- BEING THE DIFFERENCE OF PAYMENT OF RS. 74,81,859/- AND RECEIPTS OF RS. 58,23,494/-. IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 11 (II) RS. 1,51,070/- BEING PROFIT @ 5.5% ON THE SALES O F RS. 27,46,734/- TAKEN FROM THE ENTRIES AGAINST WHICH SA LES HAS BEEN MENTIONED. (III) RS. 30,76,760/- BEING THE BALANCE AMOUNT AFTER REDU CING THE SALES FROM TOTAL RECEIPTS OF RS. 58,23,494/-. 16. ASSESSEE STRONGLY AGITATED THE ASSESSMENT BEFORE TH E FIRST APPELLATE AUTHORITY. 17. THE FIRST APPELLATE AUTHORITY DELETED THE ADDITION OF RS. 22,16,165/-, AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US, A ND CONFIRMED THE ADDITIONS OF RS. 1,51,070/- AND RS.30,76,760/- AGAI NST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 18. HAVING UNDERSTOOD THE FACTUAL MATRIX AS DISCUSSED H EREINABOVE AND HAVING ANNEXED THE SAID CASH FLOW STATEMENT AS PART OF OUR ORDER, WE FIND THAT ON THE RECEIPTS SIDE THERE ARE CREDIT ENTRIES AND IN RESPECT OF SOME OF SUCH CREDIT ENTRIES THE NAME OF THE PART Y AND SALES HAS BEEN MENTIONED. IN RESPECT OF OTHER NAMES MENTIONED IN THE SAID STATEMENT, THE WORD SALES HAS NOT BEEN MENTIONED. THE A.O. AS ACCEPTED THOSE CREDIT ENTRIES AGAINST WHICH SALES HAVE BEEN MENTIONED AND TREATED THE OTHER CREDIT ENTRIES AS U NEXPLAINED AGAINST WHICH NO SUCH MENTION IS FOUND. 19. WE FIND THAT THE OFFICER IS BREATHING THE HOT AND C OLD IN THE SAME BREATH, THE NAMES MENTIONED IN THE STATEMENT ARE RE PETITIVE. FOR EXAMPLE:- 11.04.2000 SALES-JAGDISH 50,000/- 13.04.2000 SALES-JAGDISH 350/- IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 12 20.04.2000 JAGDISH 35,000/- 28.05.2000 JAGDISH 20,000/- 20. A PERUSAL OF THE ABOVE SAMPLE ENTRIES WOULD SHOW TH AT WHERE THE NAME OF PARTIES ALONG WITH SALES ARE WRITTEN, H AVE BEEN ACCEPTED THE A.O. AND WHERE NO SALES HAVE BEEN MENTIONED ONL Y NAME IS THERE, THE SAME IS TREATED AS UNEXPLAINED CREDIT. 21. IN OUR CONSIDERED OPINION AND IN OUR UNDERSTANDING OF THE AFOREMENTIONED FACTS, THE A.O. HAS GROSSLY ERRED IN TREATING THE CREDIT ENTRIES ACCORDING TO HIS OWN WHIMS AND SURMISES. AC CORDING TO THE A.O., THE CREDITS REFLECTING IN THE STATEMENT HAVE NOT BEEN IDENTIFIED TO ANY SPECIFIC PERSON ONCE SALES TO JAGDISH HAS BEEN ACCEPTED THEN WHY THE CREDIT ENTRIES IN THE NAME OF SHRI JAGDISH HAVE BEEN TREATED AS UNEXPLAINED. IN OUR CONSIDERED OPINION, THE ENTIRE RECEIPTS OF RS. 58,23,494/- SHOULD HAVE CONSIDERED AS THE UNACCOUNT ED SALES OF THE ASSESSEE AND ON WHICH, BY APPLYING THE PROFIT RATIO OF 5.5%, THE A.O. SHOULD HAVE MADE THE ADDITION OF RS. 3,20,292/- AS UNDISCLOSED PROFIT OF THE ASSESSEE. 22. CONSIDERING THE FACTS IN TOTALITY AS DISCUSSED HERE INABOVE, IN THE LIGHT OF THE ANNEXURE ANNEXED TO OUR ORDER, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO RESTRICT T HE ADDITION OF RS. 3,20,292/- AS UNDISCLOSED PROFIT ON UNACCOUNTED SA LES. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 24. COMING TO THE REVENUES APPEAL AGAINST THE DELETION OF THE ADDITION OF RS. 22,16,165/- AS MENTIONED ELSEWHERE, THIS AMOUNT IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 13 REPRESENTS THE DIFFERENCE BETWEEN THE PAYMENT SIDE AND THE RECEIPTS SIDE OF THE ANNEXURE A-3 AND A-4. THE MAIN CONTENTI ON OF THE ASSESSEE IS THAT THE A.O. HAS TAKEN ONLY THE ACCOUNTED FIGUR ES IN THE STATEMENT A-3 AND A-4 THEREBY IGNORING THE UNACCOUNTED FIGURE S WHICH WERE VERY MUCH THERE IN THE SEIZED MATERIAL. IT IS THE SAY OF THE LD. COUNSEL THAT IF THE ENTRIES IN THE SEIZED DOCUMENTS ARE CONSIDER ED AS A WHOLE, THERE REMAINS NO DEFICI TO JUSTIFY THE IMPUGNED ADDITIONS . THE LD. D.R. STRONGLY STATED THAT IF THE COUNSEL INSISTS FOR THE VERIFICATION OF ENTRIES THEN THE MATTER SHOULD GO BACK TO THE FILES OF THE A.O. IN ANY NORMAL CIRCUMSTANCES, WE WOULD HAVE ACCEPTED THE CONTENTIO N OF THE LD. D.R. BUT SEEING THE PECULIARITY OF THE CASE IN HAND WHER E THE BLOCK PERIOD ENDED ON 01.05.2001 AND 15 YEARS HAVE SINCE ELAPSED , IT WOULD BE GROSS IN JUSTICE TO THE ASSESSEE TO SET ASIDE THE A SSESSMENT FOR THE VERIFICATION OF ENTRIES. THEREFORE, WE DECIDED TO V ERIFY THE ENTRIES AT THE APPELLATE STAGE ITSELF. WE HAVE CONSIDERED ONLY THE LARGER AMOUNT FOR VERIFICATION. 25. ON 11.05.2000, THERE IS A PAYMENT OF RS. 4,00,000/- IN THE NAME OF SHRI SHIVLAL, THE SAME CAN BE FOUND ON THE DEBIT SIDE OF THE CASH BOOK FOLIO EXHIBITED AT PAGE 152 OF THE PAPER BOOK. WE ALSO FIND THAT THE ASSESSEE HAS SUFFICIENT CASH IN HAND TO MA KE THIS PAYMENT. IT IS AN UNDISPUTED FACT THAT THIS EXHIBIT IS PART OF THE SEIZED MATERIAL. SIMILARLY, ON 25.05.2000, THERE IS A PAYMENT OF RS. 1,00,000/- TO NITC, THE SAME CAN BE FOUND AS DEBITED IN THE CASH BOOK FOLIO EXHIBITED AT PAGE 165 OF THE PAPER BOOK. THE ASSESS EE HAD SUFFICIENT CASH IN HAND TO MAKE SUCH PAYMENT. ON 21.06.2000, T HERE IS A PAYMENT OF RS. 2,00,000/- TO NITC, THE SAME CAN BE FOUND DEBITED IN THE CASH BOOK FOLIO EXHIBITED AT PAGE 185 OF THE PA PER BOOK. ON 25.08.2000, RS. 3,00,000/- IS PAID TO SHRI NANDALAL JI AND THE SAME CAN IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 14 BE FOUND DEBITED AT CBF EXHIBITED AT PAGE 236 OF TH E PAPER BOOK AND THE ASSESSEE HAS SUFFICIENT CASH IN HAND TO MAKE SU CH PAYMENT. ON 20.12.2000, RS. 4,35,000/- IS FOUND TO BE PAID TO S HRI SHIVLAL AND THE SAME IS DEBITED AT CBF EXHIBITED AT PAGE 351OF THE PAPER BOOK AND THE ASSESSEE HAS SUFFICIENT CASH IN HAND TO MAKE SU CH PAYMENT. ON 07.03.2001, RS. 4,00,000/- IS PAID TO NITC AND RS. 1,00,000/- IS PAID TO SHRI SHIVLAL, THESE ENTRIES CAN BE FOUND AT CBF EXHIBITED AT PAGE 421 OF THE PAPER BOOK AND THE ASSESSEE HAS SUFFICIE NT CASH IN HAND TO MAKE SUCH PAYMENTS. 26. THE ABOVE VERIFICATION OF ENTRIES BY TEXT CHECKS SH OW THAT THE PAYMENT ENTRIES ARE VERY MUCH REFLECTED IN THE SEIZ ED MATERIAL. SINCE, THE A.O. HAS TAKEN ONLY THE ACCOUNTED CREDITS FROM THE SEIZED MATERIAL FOR COMPARING THE PAYMENTS MADE, THEREFORE, HE CAME TO THE CONCLUSION THAT THERE IS A DEFICIT OF RS. 22,16,165 /-. 27. ALTHOUGH, THE FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION OF RS. 22,16,165/- ON A DIFFERENT REASONING BUT CON SIDERING THE FACTUAL MATRIX DISCUSSED HEREINABOVE QUA THE SEIZED DOCUMEN TS, THE ADDITION OF RS. 22,16,165/- IS, ANYWAY, UNCALLED FOR. THE AD DITION STANDS DELETED. 28. THE OTHER GRIEVANCE OF THE REVENUE RELATES TO THE L EVY OF SURCHARGE, WE FIND THAT IN THE CASE IN HAND, THE S EARCH TOOK PLACE ON 20.09.2001 WHICH IS A DATE PRIOR TO THE AMENDMENT T O SECTION 113 WITH EFFECT FROM 01.06.2002 PROVIDING FOR THE LEVY OF SURCHARGE ON THE TAX PAYABLE IN SEARCH CASES. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A), THE SECOND GRIEVANC E OF THE REVENUE STANDS DISMISSED. IT(SS)A NOS.44 & 46/AHD/2005 . B.P. 01.04. 1991 TO 01.05.2001 15 29. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 08- 09- 2016. SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD