Shri Firoz Yusufbhai Kaliwala, Bhavnagar V. The ACIT.,Cent.Circle-2(1), Ahmedabad

ITSSA 447/AHD/2012

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 2936 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 16-03-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 21-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA CIT D R ITSSA NOS
• Assessee Lawyers: S N SOPARKAR
• Keywords: Business income; Income from undisclosed sources; Loose papers; Document seized; Peak credit; Retraction; Documents seized
• Section: 143(3); 153A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER IT(SS)A NO. 447/AHD/2012 (ASSESSMENT YEAR: 2005-06) SHRI FIROZ YUSUFBHAI KALIWALA, PLOT NO.474, PRABHUDAS LAKE, NR. SHISHUVIHAR CIRCLE, BHAVNAGAR APPELLANT VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), AHMEDABAD R ESPONDENT & IT(SS)A NOS. 503 & 504/AHD/2012 (ASSESSMENT YEARS: 2005-06 & 2010-11) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), AHMEDABAD APPELLANT VS. SHRI FIROZ YUSUFBHAI KALIWALA, PLOT NO.474, PRABHUDAS LAKE, NR. SHISHUVIHAR CIRCLE, BHAVNAGAR RES PONDENT PAN: AGCPK2191G /BY ASSESSEE : SHRI S. N. SOPARKAR & SHRI PA RIN SHAH, A.R. /BY REVENUE : MS. VIBHA BHALLA, CIT. D.R. IT(SS)A NOS. 447, 503 & 504/AHD/2012 (SHRI FIROZ Y. KALIWALA) A.YS. 2005-06 & 2010-11 - 2 - /DATE OF HEARING : 16.03.2017 /DATE OF PRONOUNCEMENT : 29.03.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS BATCH OF THREE APPEALS PERTAINS TO ASSESSMENT YEARS 2005-06 & 2010-11. FORMER ASSESSMENT YEAR 2005-06 INVOLVES A SSESSEES AND REVENUES CROSS APPEALS IT(SS)A NOS. 447 & 503/AHD/ 2012 AS AGAINST LATTERS APPEAL ONLY IN ASSESSMENT YEAR 2010-11. T HESE THREE APPEALS ARISE AGAINST THE CIT(A)-III, AHMADABADS COMMON ORDER DA TED 31.07.2012 INVOLVING PROCEEDINGS U/S.153A R.W.S. 143(3) OF THE INCOME TAX ACT, 1961, IN SHORT THE ACT AND 143(3) OF THE ACT; RESPECTIV ELY. 2. WE ADVERT TO THE RIVAL PLEADINGS NOW. THE ASSES SEES APPEAL IT(SS)A NO.447/AHD/2012 FOR ASSESSMENT YEAR 2005-06 RAISES SOLE SUBSTANTIVE GROUND THAT THE CIT(A) HAS ERRED IN FACTS AS WELL IN ALLEG ING HIM TO HAVE MADE AT LEAST SOME INITIAL INVESTMENTS IN SCRAP STOCK THERE BY ESTIMATING 15 DAYS CYCLE IN WORKING OUT SUCH A SEED CAPITAL ON ESTIM ATION BASIS OF RS.59,94,595/- AND AFTER GIVING CREDIT OF ADMITTED INCOME OF RS.5LACS, MAKING FURTHER ADDITION OF RS.54,94,595/- IN QUESTI ON. THE REVENUES SOLE GROUND IN ITS CROSS APPEAL IN IT(SS)A NO.503/AHD/20 12 SEEKS TO REVIVE THE ENTIRE UNDISCLOSED INCOME ADDITION OF RS.87,77,522/ - AS DELETED TO THE TUNE OF RS.27,82,927/- IN LOWER APPELLATE PROCEEDINGS. ITS SOLE SUBSTANTIVE GROUND IN LATTER APPEAL IT(SS)A NO.504/AHD/2012 AVERS THAT TH E CIT(A) HAS ERRED IN DELETING ADDITION OF RS.1,43,20,151/- OUT OF TOTAL ADDITION AMOUNT OF RS.1,53,20,151/- IN THE NATURE OF UNDISCLOSED INCOM E THEREBY ADOPTING GP RATIO @5% INSTEAD OF ADDING THE ABOVE ENTIRE SUM. IT(SS)A NOS. 447, 503 & 504/AHD/2012 (SHRI FIROZ Y. KALIWALA) A.YS. 2005-06 & 2010-11 - 3 - 3. IT IS EVIDENT THAT THESE APPEALS IN FACT EMANATE OUT OF A SEARCH ACTION DATED 12.01.2010 CARRIED OUT IN ASSESSEES CASE. H E GOT RECORDED HIS STATEMENT IN COURSE THEREOF. THE ASSESSING OFFICER TOOK COGNIZANCE OF ALLEGED INCRIMINATING EVIDENCE TO INITIATE SECTION 153A PROCEEDINGS BY ISSUING NOTICES DATED 10.01.2011. THE ASSESSEE FIL ED HIS RETURNS ON 16.03.2011. HIS FORMER ASSESSMENT YEARS INCOME RE ADS A FIGURE OF RS.10,29,163/- FOLLOWED BY AN AMOUNT OF RS.14,24,41 0/- IN LATTER ASSESSMENT YEAR. THE ASSESSING OFFICER TOOK UP SCRUTINY. HE REFERRED TO ASSESSEES SEARCH STATEMENT DATED12.01.2010 OFFERING TOTAL INC OME OF RS.2,42,11,092/- IN THE NATURE OF NET INCOME AFTER CLAIMING TO HAVE ALREADY INCURRED ALL EXPENSES AS DEBITED IN BOOKS OF THE CORRESPONDING A SSESSMENT YEARS. THE ASSESSING OFFICER FURTHER REITERATED ASSESSEES SAI D STATEMENT UNDERTAKING NOT TO CLAIM ANY EXPENSES AGAINST THE SAME. IT EMERGES THAT THE ASSESSEE HAD THEREAFTER FILED A RETRACTION LETTER DATED 15.02.20 10 WITH AFFIDAVIT DATED 13.01.2010 BEFORE THE ADIT BY STATING THAT THE ABO VE DISCLOSURE OF RS.2.42 CRORES HAD BEEN MADE WITHOUT PROPER INSPECTION OF B OOKS AND RECORDS. THE CASE FILE INDICATES THAT THE ASSESSING OFFICER ALSO GOT RECORDED ASSESSEES STATEMENT UNDER SECTION 131 OF THE ACT ON 09.04.201 0 TO ALLEGE THAT THE ASSESSEE HAD THROUGHOUT BEEN ADOPTING VARYING STAND S IN ORDER TO DECLARE THE ABOVE UNDISCLOSED INCOME OF RS.2.2 CRORES (SUPRA). HE THEN FRAMED THE IMPUGNED ASSESSMENTS ADDING UNDISCLOSED INCOMES IN QUESTION OF RS.82,77,522/- IN ASSESSMENT YEAR 2005-06 AND RS.1, 53,20,151/- IN LATTER ASSESSMENT YEAR 2010-11. HE THEREAFTER GAVE CREDIT TO THE ASSESSEE FOR THE UNDISCLOSED INCOME OF THE TWO ASSESSMENT YEARS ALRE ADY DECLARED IN HIS RESPECTIVE RETURNS. 4. THE ASSESSEE PREFERRED SEPARATE APPEALS AGAINST THE SAID TWO UNDISCLOSED INCOMES ADDITIONS. THE CIT(A) PARTLY AGREES WITH HIM IN IT(SS)A NOS. 447, 503 & 504/AHD/2012 (SHRI FIROZ Y. KALIWALA) A.YS. 2005-06 & 2010-11 - 4 - FORMER ASSESSMENT YEAR AND ACCEPTS HIS CONTENTIONS IN LATTER ASSESSMENT YEAR AS UNDER: 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND ALSO THE ASSESSMENT ORDER. THE CASE OF THE AO IS, THAT IN THE ORIGINAL STATEMENT RECORDED' AT THE TIME OF SEARCH THE APPELLANT HAS ACCEPTED THE ENTRIES IN TH E DIARY AND LOOSE PAPERS AS HIS INCOME. IN RESPONSE TO Q.NO.33 OF HIS STATEMENT THE APPELLANT HAD CATEGORICALLY STATED THAT HE AGAIN CONFIRMS HE DISCLOSURE OF RS.2 42,11,092/- FOR TAXATION ON THE BASIS OF THE SEIZED DOCUMENTS. IN THE SAID STATEME NT, THE APPELLANT FURTHER STATED THAT THE INCOME OF RS.24211092/- IS HIS NET INCOME BUT SINCE ALL THE EXPENSES INCURRED IN ORDER TO EARN THE INCOME HAS ALREADY BE EN DEBITED IN THE BOOKS OF IN THE RESPECTIVE YEARS IN WHICH THE INCOME HAS BEEN O FFERED FOR TAXATION. ACCORDING TO THE AO, THE SUBSEQUENT RETRACTION BY FILING AFFI DAVIT ON 15/2/2010 IS AN AFTER THOUGHT. THE ADIT ALSO RECORDED THE STATEMENT OF T HE APPELLANT ON 9/4/2010 IN WHICH HE STATED THAT THE ENTRIES IN THE SEIZED PAPE RS REPRESENT HIS UNACCOUNTED INCOME SALES. IN RESPECT OF THE ENTRIES IN SOME PA GES, THE APPELLANT STATED THAT THE ENTRIES REPRESENT PURCHASE ALSO. THE CONTENTION OF THE AR BEFORE ME IS THAT THE APPELLANT HAS ACCEPTED THE ENTRIES IN THE VARIOUS P AGES AS UNACCOUNTED TRANSACTIONS. EARLIER THE ACCEPTED THE ENTRIES AS HIS NET INCOME BUT SUBSEQUENTLY THE ENTRIES TED BY HIM AS UNACCOUNTED SALES. ACCORD ING TO THE AR, THE WHOLE SALES BE THE UNACCOUNTED INCOME OF THE APPELLANT PARTICUL ARLY WHEN THE APPELLANT HAS ACCEPTED THE TRANSACTIONS OF SALE AS A RESULT OF HI S TRADING IN IN. IT WAS STATED THAT THE APPELLANT HAS NOT SHOWN ANY TRADING IN THE SCRA P IN HIS PERSONAL CAPACITY IN ANY ASSESSMENT YEAR. ON THE BASIS OF THE SEIZED PAP ERS, FOR THE FIRST TIME THE APPELLANT HAS SHOWN THE TRADING IN SCRAP IN A.Y. 20 05-06 AND 2009-10 AND 2010- 11. ON THE BASIS OF THE SALES RECORDED IN THE SEIZE D DIARY, THE G.P. @ 5% SHOULD BE CONSIDERED AS THE INCOME OF THE APPELLANT WHICH IS DISCLOSED BY HIM THE RETURN OF INCOME AT RS.5 LAKHS IN A.Y. 2005-06, RS.1,12,500/- IN A.Y. 2009-10 AND RS.10 LAKHS IN A,Y. 2010-11. IT IS THE EASE OF THE AR THA T SINCE THE APPELLANT HAD ALREADY DISCLOSED MORE THAN 5% OF THE G.P., THE AO SHOULD H AVE NOT MADE ANY ADDITION IN ANY OF THE ASSESSMENT YEARS. I PARTLY AGREE WITH TH E AR THAT ALL THE SALES CANNOT BE THE INCOME OF THE APPELLANT PARTICULARLY WHEN THE A PPELLANT HAS NOT SHOWN ANY PURCHASES EITHER IN HIS REGULAR BOOKS OF ACCOUNTS O R IN THE SEIZED DOCUMENTS. BUT AT THE SAME TIME, I CANNOT ACCEPT THE CONTENTION OF THE AR THAT ONLY THE G.P. @5% SHOULD BE TAXED ON THE BASIS OF THE ENTRIES IN THE SEIZED DOCUMENTS. BOTH THE PARTIES, NAMELY, THE AR AS WELL AS THE AO HAS ACCEP TED THAT THE ENTRIES IN THE SEIZED DIARIES AS UNACCOUNTED INCOME OF THE APPELLA NT. THE CASE OF THE AO IS, THAT THE PURCHASE COULD HAVE BEEN BOOKED BY THE APPELLAN T IN SOME OTHER CASE'S AND THEREFORE, THE GROSS SALES AS APPEARING IN THE SEIZ ED PAPERS IS REQUIRED TO BE TAXED AS THE UNDISCLOSED INCOME OF THE APPELLANT. I DO NO T AGREE WITH THE CONTENTION OF THE' AO ON THIS POINT. IF THE PURCHASES WERE BOOKE D BY SOME OTHER PARTY, THEN THE SALE OF THE SCRAP SHOULD ALSO HAVE BEEN TAXED IN TH E HAND OF THAT PARTY WHO HAD BOOKED PURCHASE AND NOT IN THE HANDS OF THE APPELLA NT. OTHERWISE, IF IT IS TO BE PRESUMED THAT THE ENTRIES IN THE SEIZED PAPER REPRE SENT THE UNACCOUNTED SALES OF THE APPELLANT, THEN IT HAS TO BE PRESUMED THAT THE APPELLANT MUST HAVE PURCHASED THE SCRAP FOR WHICH HE MUST HAVE INCURRED SOME EXPE NSES. IN OTHER WORDS, THE APPELLANT MUST HAVE SOME INITIAL INVESTMENT IN THE STOCK OF SCRAP SO THAT HE CAN SELL THE STOCK AND AGAIN PURCHASE IT AND AGAIN PURCHASE IT AND AGAIN SELL TO GENERATE TOTAL TURNOVER OF RS.2.42 CRORES. FOR THIS PURPOSE, THE AR WAS REQUESTED TO FURNISH DETAILS AS PER THE SEIZED, DOCUMENTS. IT WAS CONTEN DED BY THE AR THAT THERE HAS IT(SS)A NOS. 447, 503 & 504/AHD/2012 (SHRI FIROZ Y. KALIWALA) A.YS. 2005-06 & 2010-11 - 5 - BEEN SOME DUPLICATION OF SAME ENTRY IN THE SEIZED D OCUMENTS. THE DUPLICATION POINTED OUT BY THE AR IS REPRODUCED AS UNDER: FIROZ Y.KALIWALA ANALYSIS OF SEIZED MATERIALS - ACTUAL AND AS PER AO - REASON FOR VARIANCE ANN. PAGE AMOUNT AS PER AO ACTUAL AMOUNT REMARKS A-1 1 & 2 1 50,000 150,000 46 112,500 112,500 47 40,450 40,450 50 & 51 1,022,051 683,700 TH E AO HAS ADDED FIGURES WRITTEN ON PAGE 50 AT 3,38,351 AND ON PAGE 51 AT 6,83,700/-. HOWEVER, CONTENT ON PAGE NO. 50, I.E., 3,38,351 R.M. IS SOME MISC. NOTING MADE, WHICH IS NOT FINANCIAL TRANSACTION. THEREFORE, THE ASSESSES HAS CONSIDERED AMOUNT OF RS. 6,83,700/- WRITTEN ON PAGE 51 AS UNACCOUNTED SALES. 53 1,613,680 1,613,680 - A-2 16 840,000 840,000 - 9& 11 1,662,000 1,662,000 - 4 & 5 1,030,000 730,000 THE AO HAS ADDED AMOUNT WRITTEN ON PAGE 4 AT 7,30,000/- AND ON PAGE 5 AT 3,00,000/-. HOWEVER, RS. 3,00,000/- NOTED ON PAGE NO. 5 IS INCLUDED IN TOTAL OF RS. 7,30,000/- ON PAGE NO, 4. THIS FACT HAS BEEN DEPOSED WHILE ANWERING TO THE QUESTION NO. 15 OF THE STATEMENT U/S. 131 OF THE ACT A-3 1 & 2 4,736,103 2,660,600 THE AO HAS ADDED ALL THE AMOUNT WRITTEN ON THESE PAGES AND MADE SUM OF RS. 47,36, 103/- . HOWEVER, IN ACTUAL TOTAL OF CREDIT SIDE (IN COME) COMES TO RS. 26,60,600/- AND TOTAL OF DEBIT SIDE (EXPENSE) COMES TO RS.20,75,503/-. THE ASSESSEE HAS CONSIDERED THE CREDIT SIDE TOTAL, I.E., RS.26,60,600/- AS UNACCOUNTED SALES FOR F.Y. 2009- 10. AND THE SAME HAS BEEN COVERE D IN WORKING OF ADMITTED INCOME. IT(SS)A NOS. 447, 503 & 504/AHD/2012 (SHRI FIROZ Y. KALIWALA) A.YS. 2005-06 & 2010-11 - 6 - THIS FACT HAS BEEN DEPOSED BY THE APPELLANT WHILE ANSWERING THE QUESTION NO. 17 OF THE STATEMENT U/S. 131 OF THE ACT A-4 7 575,000 575,000 - 20 3,651,786 THIS IS NOTING MADE REGARDING, CUSTOMER NAMELY SHADEN SINGH FOR HIS INQUIRY REGARDING PURCHASE OF MACHINERIES AT HIS PREFERRED PRICE. HOWEVER, NO ACTUAL SALE HAD BEEN MADE. THIS FACT HAS BEEN DEPOSED BY THE APPELLANT WHILE ANSWERING- THE QUESTION NO. 20 OF THE STATEMENT U/S, 131 OF THE: ACT. 25 2,638,219 2,638,219 A-5 1 TO 35 6,139,303 5,564,333 OUT OF TOTAL AMOUNT OF RS. 87,77,522/- AS PER THIS ANNEXURE, THE AO HAS GIVEN CREDIT OF RS. 26,38,219/- WRITTEN ON PAGE 25 OF ANNEXURE A- 4. HOWEVER, ANOTHER DUPLICATION ENTRY OF RS. 5,75,000/- AT PAGE 7 OF ANNEXURE A-4 REMAINED TO BE CONSIDERE D BY THE AO. THEREFORE, THE ASSESSEE HAS CONSIDERED TOTA L UNACCOUNTED SALES AT RS. 55,64,333/- (87,77,552 - 26,38,219 - 5,75,000)THIS FACT HAS BEEN DEPOSED BY THE APPELLANT WHILE ANSWERING THE QUESTION NO. 22 OF THE STATEMENT U/S. 131 OF THE ACT A-7 1 TO 4 - 25,668 THE ASSESSEE HAS VOLUNTARILY ADMITTED THE MISC. AMOUNT WRITTEN ON THESE PAGES AT UNACCOUNTED SALES. TOTAL 24,211,092 17,296,150 YEAR WISE PEAK BALANCE WORKING , ANNEXUR E PAGE DATE SALES PURCHASE/ EXPENSE BALANCE A-5 1 12/16/2004 458,947 458,947 A-5 1 12/17/2004 1 ,300,893 1,759,840 A-5 1 12/18/2004 178,665 1,938,505 A-5 2 12/20/2004 329,794 2,268,299 IT(SS)A NOS. 447, 503 & 504/AHD/2012 (SHRI FIROZ Y. KALIWALA) A.YS. 2005-06 & 2010-11 - 7 - A-5 2 12/21 /200 4 369,920 2,638,219 A-5 3 12/22/200 4 200,643 2,838,862 A-5 4 12/24/200 4 281,959 3,120,821 A-5 5 12/25/2004 140,913 3,261,734 A-5 6 12/23/2004 98,200 3,359,934 A-5 7 12/27/2004 595,620 3,955,554 A-5 8 12/28/2004 908,351 4,863,905 A-5 9 & 10 2/29/2004 318,527 5,182,432 A-5 11 & 12 1 2/30/2004 265,491 5,447,923 A-5 13 12/31/2004 241,129 5,689,052 A-5 14 TO 16 1/1/2005 402,631 6,091,683 A-5 17& 18 1 /3/2005 1 46,329 6,238,012 A-5 19 1 /4/2005 124,968 6,362,980 A-5 20 1/5/2005 803,205 7,166,185 A-5 21 1/6/2005 56,827 7,223,012 A-5 22 1 /7/2005 26,785 7,249,797 A-5 23 1/10/2005 1,790 7,251,587 A-5 23 1/11/2005 - 690 7,252,277 A-5 24 1/13/2005 550 7,252,827 A-5 24 1/15/2005 52,594 7,305,421 A-5 25 1/17/2005 125,345 7,430,766 A-5 25 1/18/2005 283,305 7,714,071 A-5 26 1/19/2005 3,045 7,717,116 A-5 26 1/20/2005 13,219 7,730,335 A-5 26 1/22/2005 5,941 7,736,276 A-5 27 1 /24/2005 1,250 7,737,526 A-5 27 1 /25/2005 1,54,697 7,092,223 A-5 27 1 /27/2005 6,281 7,898,504 A-5 28 1 /29/2005 242,363 8,140,867 A-7 1 TO 4 JANU 2005 649,000 591,123 8,198,744 A-5 28 2/1/2005 475 8,199,219 A-5 28 2/3/2005 13,200 8,212,419 A-5 29 2/4/2005 400 8,212,819 A-5 29 2/7/2005 244,126 8,456,945 A-5 30 2/12/2005 210,089 8,667,034 A-5 33 2/25/2005 168,415 8,835,449 A-7 1 TO 4 FEBRU 2005 875,000 907,209 8,803,240 10,301,572 1,498,332 253,761,361 A-L 45 6/7/2008 112,500 112,500 IT(SS)A NOS. 447, 503 & 504/AHD/2012 (SHRI FIROZ Y. KALIWALA) A.YS. 2005-06 & 2010-11 - 8 - A-2 9 &11 9/30/2009 1,662,000- 1,662,000- A-2 4 &5 12/10/2009 730,000 2,392.000 A-2 16 1/12/2010 840,000 3,232,000 A-3 1 & 2 1/12/2010 2,660,600 2,075,503 3,817,097 A-1 1 & 2 1/12/2010 150,000 3,967,097 A-1 47 1/12/2010 40,450 4,007,547 A-1 50 & 51 1/12/2010 683,700 4,691,247 A-1 53 1/12/2010 1 ,61 3,680 6,304,927 8,380,430 2,075,503 30,073,715 6. ON THE BASIS OF THE ABOVE MENTIONED INFORMATION SUBMITTED BY THE AR, IT IS SEEN THAT THE DETAILS OF UNACCOUNTED SALES ARE AVAILABLE FOR THE PERIOD 16/12/2004 TO 7/6/2008, 30/9/2009, 10/12/2009 AND IN RESPECT OF O THER UNDATED TRANSACTIONS, THE APPELLANT HAS CONSIDERED THE DATE AS 12/1/2010 I. E. THE DATE OF SEARCH. IN OTHER WORDS, WHEREVER THERE WAS SPECIFIC DATE IN THE DOCUMENTS, THE SAME HAS BEEN CONSIDERED IN THE RELEVANT YEAR I.E. 2005-06 OR 200 9-10. IN RESPECT OF THOSE TRANSACTIONS WHERE THERE IS NO SPECIFIC DATE MENTIO NED, THE APPELLANT HAS CONSIDERED THE SAME IN CURRENT YEAR. THE AO HAS A LSO ASSESSED THE INCOME IN A.Y. 2005-06, 2009-10 AND 2010-11 ACCORDINGLY. ON THE PE RUSAL OF THE ABOVE MENTIONED CHART, IT IS SEEN THAT THE APPELLANT HAS SOLD TOTAL STOCK OF RS.56,89,052/- DURING THE PERIOD 16-12-2004 TO 31-12-2004 IN 15 DA YS TIME AND ALSO SOLD THE SCRAP OF RS.81.40 LAKHS UPTO JANUARY, 2005. EVEN IF IT IS ESTIMATED THAT 15 DAYS TIME IS TAKEN BY THE APPELLANT TO SELL THE STOCK, T HEN THE INITIAL INVESTMENT IN THIS CASE CAN BE ESTIMATED AT RS.56,89,052/- BEING THE S ALE OF THE STOCK MADE BY THE APPELLANT DURING 16/12/2004 TO 31/12/2004 (IN 15 DA YS) MINUS G.P. @5% = RS.54,04,600/-. 7. AS PER THE CHART SUBMITTED BY THE APPELLANT, THE TOTAL TURNOVER OF THE APPELLANT IS CLAIMED AT RS.172,96,150/- AS AGAINST RS.242,11,092/-ADOPTED BY THE AO. ONE OF THE IMPORTANT POINTS FOR THE VARIANCE IS THAT SOME OF THE ENTRY HAS BEEN CONSIDERED BY THE APPELLANT AS PURCHASES AS AGAINST THE SALES ADOPTED BY THE AO. FOR EXAMPLE AS PER ANNEXURE A/7 PAGE NUMBER 1 TO 4 THE APPELLANT HAS CLAIMED PURCHASES OF RS.591,123/- AND AS PER THE SAME PAGE NUMBERS THE APPELLANT HAS CLAIMED PURCHASES OF RS.907,2097- IN THE MONTH OF F EBRUARY 2005. THE REASON FOR CONSIDERING THE PURCHASES AS AGAINST THE SALE WAS S TATED THAT THERE ARE TWO COLUMNS IN THESE PAGES. THE ENTRIES IN THE LEFT SID E ART CONSIDERED AS PURCHASES AND THE ENTRIES IN THE RIGHT SIDE AS THE SALES. I HAVE VERIFIED THE ENTRIES IN PAGE NUMBER 1 TO 4 OF ANNEXURE A/7. THE TOTAL OF THE ENTRIES FR OM 19/1/2005 TO 21/1/2005 ON THE LEFT SIDE OF PAGE NUMBER 1 COMES TO RS.189,760/-. T HIS FIGURE IS TAKEN ON THE TOP OF THE RIGHT INSIDE TO ARRIVE AT THE TOTAL OF THE ENTR IES IN THE RIGHT INSIDE IN PAGE NUMBER ONE AT RS.559,698/-. IN OTHER WORDS, THE TOT AL OF THE LEFT HAND SIDE ENTRIES IS ALSO INCLUDED IN THE TOTAL OF THE RIGHT INSIDE ENTR IES. FURTHER, THE DATE IS MENTIONED IN CHRONOLOGICAL ORDER, I.E. THE LAST ENTRY ON THE LEFT SIDE OF PAGE NUMBER ONE IS DATED 21/1 WHEREAS THE FIRST ENTRY ON THE RIGHT-HAN D SIDE OF THIS PAGE IS DATED 24/1. IT IS THEREFORE CLEAR THAT THE ENTRIES MENTIONED IN THE ALL THE PAGES NUMBER 1 TO 4 IT(SS)A NOS. 447, 503 & 504/AHD/2012 (SHRI FIROZ Y. KALIWALA) A.YS. 2005-06 & 2010-11 - 9 - ARE EITHER RELATING TO PURCHASES/EXPENSES OR TO SAL ES. SINCE THE APPELLANT HAS ADMITTED THAT THE ENTRIES REPRESENT THE SALES, THE SAME TREATMENT AS TO BE GIVEN FOR ALL THE ENTRIES WHETHER ON THE .LEFT SIDE RIGHT INS IDE WRITTEN IN PAGE NUMBER 1 TO 4 OF ANNEXURE A-7. SIMILAR IS THE CASE IN RESPECT OF OTH ER ENTRIES AS APPEARING IN OTHER PAGES. IN OTHER WORDS, FOR THE PURPOSE OF COMPUTING THE UNACCOUNTED INCOME OF THE APPELLANT, THE PURCHASES SHOWN BY THE APPELLANT ARE IN FACT TO BE INCLUDED IN THE SALES. FOR ASSESSMENT YEAR 2005-06, THE TOTAL SALES WILL HAVE TO BE CONSIDERED AS 10, 300,572+ RS.14,98,332 = RS. L17,99,904/-. THE GP AT THE RATE OF 5% COMES TO RS.589,995/-. IN OTHER WORDS, THE UNACCOUNTED INCOM E OF THE APPELLANT FOR ASSESSMENT YEAR 2005-06 WOULD BE COMPUTED AS THE IN ITIAL INVESTMENT OF RS.54,04,600+ THE GP ON THE TOTAL SALES OF RS.117,9 9,904/- I.E. RS.589,995/- = RS.59,94,595/-. IN OTHER WORDS, THE AO IS DIRECTED TO ADOPT THE UNA CCOUNTED INCOME FOR ASSESSMENT YEAR 2005-06 AT RS.59,94,595/ - AS AGAINST RS.87,77,522/- ADOPTED BY THE AO. 8. IN ASSESSMENT YEAR 2010-11, THE AO HAS ADOPTED T HE TOTAL SALES OF THE APPELLANT AT RS. 153,20,151/- WHEREAS ACCORDING TO THE APPELLANT, THERE WAS SOME DUPLICATION OF SOME ENTRIES: THEREFORE, THE ACTUAL SALES AND PURCHASES AS PER THE SEIZED MATERIAL COMES TO RS.103,01,5 72/- A ND RS.14,98,332/- RESPECTIVELY. THE AO IS DIRECTED TO VERILY THE CONTENTION OF THE APPELLANT. IF SOME OF THE ENTRIES ARE REPEATED AGAIN IN; SOME OTHER PAGES, THEN HE IS DIRECTED TO IGNORE SUCH REPETITION. SINCE IN EARLIER PARAGRAPH IT HAS BEEN HELD BY ME THAT THE ENTRIES OF PURCHASES ARE TO BE CONSIDERED AS THE SALES, THE TO TAL SALES FOR ASSESSMENT YEAR 2010-11 WOULD BE CONSIDERED BY THE AO AS RS.L0,301, 572 + RS. 1,498,332 (SUBJECT TO VERIFICATION OF DUPLICATE ENTRIES) = RS. 117,99, 904/-. FURTHER, IN A.Y. 2010-11 THERE WOULD NOT BE ANY ADDITION OF INITIAL INVESTME NT AS THE INITIAL INVESTMENT OF RS.54,04,600/- IS PRESUMED TO BE SUFFICIENT TO GENE RATE THE TURNOVER OF RS.L5,320,151/-(AS CONSIDERED BY THE AO OR RS.L03,0 1,572/- AS CONSIDERED BY THE APPELLANT) IN A.Y. 2010-11. HOWEVER, IN A.Y. 2010-1 1 THE APPELLANT HAS DISCLOSED RS.L0 LAKHS WHICH IS MORE THAN 5% OF THE GP ON THE UNACCOUNTED SALE OF RS.15,320,151/- OR RS.103,01,572/- AS MENTIONED ABO VE. IN OTHER WORDS, THERE WOULD NOT BE ANY FURTHER ADDITION IN ASSESSMENT YEA R 2010-11. IN OTHER WORDS, THE AO IS DIRECTED TO ACCEPT THE DISCLOSURE OF RS.10 LA KHS MADE BY THE APPELLANT IN A.Y. 2010-11. THIS LEAVES BOTH THE PARTIES AGGRIEVED TO THE EXTE NT INDICATED IN THEIR RESPECTIVE PLEADINGS. 5. WE FIRST TAKE UP REVENUES TWO APPEALS CHALLENGI NG CIT(A)S ACTION IN ADOPTING ONLY GP RATE INSTEAD OF ADDING THE ENTIRE SUMS IN QUESTION AS DONE BY THE ASSESSING OFFICER IN THE TWO ASSESSMENT YEAR S. MS. VIBHA BHALLA STRONGLY ARGUES THAT THE ASSESSING OFFICER HAD RIGH TLY GONE BY ASSESSEES SEARCH STATEMENT AND EVIDENCE FOUND THEREIN TO MAKE THE SAID TWO ASSESSMENT YEARS. SHE THEN ARGUES THAT FACTS OF THE INSTANT C ASE WARRANT THAT THE ENTIRE IT(SS)A NOS. 447, 503 & 504/AHD/2012 (SHRI FIROZ Y. KALIWALA) A.YS. 2005-06 & 2010-11 - 10 - UNDISCLOSED INCOME OF RS.2.4 CRORES IS TO BE ADDED IN ASSESSEES HANDS INSTEAD OF THE ABOVE GP COMPONENT. SHRI SOPARKAR O N THE OTHER HAND INVITES OUR ATTENTION TO THE CASE RECORD COMPRISING OF ASSE SSEES SEARCH STATEMENT U/S.132 (4) OF THE ACT AT PAGES 157 ONWARDS WHEREIN HE HAD MADE IT CLEAR THAT ANNEXURE A/4 PAGES 22 TO 25 DEMONSTRATED HIS SALE T RANSACTIONS FROM BUSINESS GIVING RISE TO UNACCOUNTED INCOME. HIS NE XT REPLY NO.31 (AS HEAVILY RELIED UPON BY THE ASSESSING OFFICER) FURTHER INDIC ATED THAT ANNEXURE A-5 RECORDED HIS DAY TO DAY SALES NOT ENTERED IN BOOKS . THE ASSESSEE APPEARS TO HAVE STATED THAT SUCH UNACCOUNTED RECEIPTS FROM 16. 12.2004 TO 25.02.2005 AMOUNTED TO RS.87,77,522/-. 6. IT IS THUS CLEAR THAT THE ASSESSING OFFICER HAS NOT CORRECTLY APPRECIATED ASSESSEES ABOVE SEARCH STATEMENT EXPLAINING THAT T HE ADDITION AMOUNT ACTUALLY REPRESENTED HIS SALE OF SCRAP ITEMS. THE ASSESSING OFFICER INSTANT CHOSE TO TREAT ENTIRE OF THE SAID SALES FIGURES TO BE REPRESENTING ASSESSEES INCOME. WE PLACE RELIANCE UPON HONBLE JURISDICTIO NAL HIGH COURTS DECISION IN CIT VS. LEO FORMULATIONS PVT. LTD. [2014] 363 I TR 323 (GUJ) FOLLOWING EARLIER DECISION IN CIT VS. PRESIDENT INDUSTRIES [2 002] 258 ITR 654 (GUJ) TO HOLD THAT THE CIT(A) HAS THEREFORE RIGHTLY ASSESSED ASSESSEES GP COMPONENT ONLY INSTEAD ON THE ENTIRE SALES FIGURES. WE MAKE IT CLEAR THAT THE REVENUE HAS NOT CITED ANY EVIDENCE OR INCRIMINATING DOCUMEN TS FOUND DURING SEARCH THIS CRUCIAL FACT THAT THE ASSESSEE HAD NOT DISCLOS ED HIS SALES TURNOVER THAN HIS UNDISCLOSED INCOME HEREINABOVE. WE FURTHER DO NOT FIND ANY MERIT IN LEARNED DEPARTMENTAL REPRESENTATIVES CONTENTION TREATING T HE ASSESSEES ADMISSION (SUPRA) IN ABSENCE OF EVIDENCE COLLECTED DURING SEA RCH IN VIEW OF THE CBDT CIRCULAR DATED 10.03.2003 AS REITERATED ON 09.01.20 14 ADVISING THE AUTHORIZED OFFICERS TO COLLECT EVIDENCE OF UNDISCLOSED INCOME RATHER THAN THE CONCERNED ASSESSEES ADMISSION/CONFESSION DURING SEARCHES/SUR VEY ACTIONS. WE THUS AFFIRM THE CIT(A)S FINDINGS IN BOTH ASSESSMENT YEA RS SO FAR AS REVENUES IT(SS)A NOS. 447, 503 & 504/AHD/2012 (SHRI FIROZ Y. KALIWALA) A.YS. 2005-06 & 2010-11 - 11 - TWO APPEALS ARE CONCERNED. SHRI SOPARKAR POINTS OU T AT THIS STAGE THAT THE ASSESSEE HAS ALREADY DECLARED AN AMOUNT OF RS.89,99 5/- OUT OF RS.5,89,995/- (SUPRA) AS STATED IN ABOVE EXTRACTED PARA 7. HE TH US IS VERY FAIR IN EXPRESSING ASSESSEES NO OBJECTION QUA THE ADDITION OF THE SAI D AMOUNT IN ASSESSMENT YEAR 2005-06. WE APPRECIATE THIS FAIR STAND AND RE STORE THE IMPUGNED ADDITION IN ASSESSMENT YEAR 2005-06 TO THE EXTENT O F RS.89,995/- ONLY. THE REVENUES FORMER APPEAL IT(SS)A NO.503/AHD/2012 IS PARTLY ACCEPTED AND LATTER APPEAL IT(SS)A NO.504/AHD/2012 IS DECLINED. 7. THIS LEAVES US WITH ASSESSEES APPEAL IT(SS)A NO .447/AHD/2012 RAISING HIS SOLE SUBSTANTIVE GRIEVANCE SEEKING TO D ELETE THE INITIAL SEIZED CAPITAL ADDITION INVESTMENT OF RS.54,04,600/- AS MA DE BY THE CIT(A) IN THE COURSE OF LOWER APPELLATE PROCEEDINGS. HE ESTIMATE S THIS INVESTMENT ADDITION TO BE OF RS.56,89,052/- AFTER TAKING FIFTEEN DAYS TIME SPAN OF SALE OF STOCK AS REDUCED BY GP @ 5% ADOPTED HEREINABOVE. SHRI SOPAR KAR QUOTES HONBLE JURISDICTIONAL HIGH COURTS LATTER DECISION HEREINA BOVE (SUPRA) THAT THERE HAS TO BE SOME EVIDENCE SO AS TO ARRIVE AT SUCH AN ADDITIO N AMOUNT. HE HOWEVER FAILS TO DISPUTE THE FACT THAT THE ASSESSEE HAS ALR EADY BEEN HELD TO HAVE DUPLICATED THE RELEVANT ENTRIES IN BOOKS IN COURSE OF THE LOWER APPELLATES PROCEEDINGS. THERE IS FURTHER NO EVIDENCE AT ASSES SEES BEHEST REVEALING AS TO HOW COULD HE MADE INITIAL INVESTMENT RESULTING IN T HE ABOVE HUGE TURNOVER WITHOUT STATING EVEN A SINGLE PENNY OF DIRECT OR IN DIRECT TAX EXPENDITURE. THE FACT ALSO REMAINS THAT THE CIT(A) ARRIVED AT THE AB OVE HUGE SUM OF RS.54.04LACS ON A HIGHER SIDE BASED ON ASSUMPTION O F FACTS. WE THEREFORE OBSERVE THAT LARGER INTEREST OF JUSTICE WOULD BE MA DE IN CASE THE IMPUGNED SEED CAPITAL INVESTMENT ADDITION IS REDUCED TO A LU MP SUM AMOUNT OF RS.10LACS FROM RS.54.04LACS UNDER CHALLENGE. IT IS MADE CLEAR THAT OUR INSTANT ADJUDICATION SHALL NOT BE TREATED AS PRECEDENT IN A NY PRECEDING OR SUCCEEDING IT(SS)A NOS. 447, 503 & 504/AHD/2012 (SHRI FIROZ Y. KALIWALA) A.YS. 2005-06 & 2010-11 - 12 - ASSESSMENT YEAR . THE ASSESSEES SOLE SUBSTANTIV E GROUND AS WELL AS HIS APPEAL IT(SS)A NO.447/AHD/2012 IS PARTLY ACCEPTED. 8. THE ASSESSEE AS WELL AS REVENUE PARTLY SUCCEED I N THEIR CROSS APPEALS IT(SS)A NOS. 447 & 503/AHD/2012 IN THE TERMS INDICA TED HEREINABOVE. THE REVENUES LATTER APPEAL IT(SS)A NO.504/AHD/2012 IS DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF MARCH, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 29/03/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )* + ,--. . /0 / DR, ITAT, AHMEDABAD 1 + 23 / GUARD FILE. BY ORDER / . // . /0