The ACIT, Central Circle-2(2), Ahmedabad V. Akik Tiles Pvt.Ltd., Himatnagar

ITSSA 582/AHD/2010

• Counselvise Citation: [2014] 121 COUNSELVISE.COM (IT) 9955 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 07-01-2014
• Assessment Year: 1999-2000
• Appeal Filed On: 09-07-2010
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Keywords: Business income; Income from undisclosed sources; Loose papers
• Section: 153A

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA/CO NO. ASSESSMENT YEAR APPELLANT RESPONDENT ITA(SS) NO.582/AHD/2010 1999-2000 ACIT, CENTRAL CIRCLE-1(2) AHMEDABAD AKIK TILES PVT. LTD. AHMEDABAD PAN NO. AACCA 3201G ITA(SS) NO.583/AHD/2010 2000-01 REVENUE ASSESSEE ITA NO. 584/AHD/2010 2002-03 REVENUE ASSESSEE CO NO. 15/AHD/2013 2000-01 ASSESSEE REVENUE CO NO. 16/AHD/2013 2002-03 ASSESSEE REVENUE REVENUE BY : SH. SUBHASH BAINS, SR.D.R. ASSESSEE(S) BY : SH. P.M. MEHTA, AR / // / DATE OF HEARING : 07/01/2014 !'# / DATE OF PRONOUNCEMENT : 10/01/2014 $%/ O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE CONSOLIDATED ORDER OF CIT(A) DATED 11.05.2010 FOR A SSESSMENT YEARS 1999-2000, 2001-02 & 2002-03 AND CROSS-OBJECTIONS F ILED BY THE ASSESSEE FOR ASSESSMENT YEARS 2000-01 & 2002-03. 2. THE FIRST COMMON GROUND OF APPEAL OF THE REVENUE IN GROUND NO. 1 IN ASSESSMENT YEARS 1999-2000 AND THE ONLY GROUND O F APPEAL IN THE ASSESSMENT YEARS 2000-01 & 2002-03 IS DIRECTED AGAINST THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS 52, 505/- IN THE ASSESSMENT YEARS 1999-2000, RS 5,94,677/- IN THE AS SESSMENT ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 2 - YEARS 2000-01 AND RS 9,59,589/- IN THE ASSESSMENT Y EARS 2002-03 MADE BY THE A.O. ON ACCOUNT OF UNDISCLOSED SALES. 3. IN THE CROSS-OBJECTION, THE SOLE ISSUE INVOLVED IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS 4 LAK HS IN ASSESSMENT YEARS 2000-01 AND RS 4 LAKHS IN THE ASSE SSMENT YEARS 2002-03 ON ACCOUNT OF THE UNDISCLOSED SALES. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . THE RELEVANT FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE CO MPANY WAS ENGAGED IN MANUFACTURING OF CERAMIC TILES. A SEARC H AND SEIZURE OPERATION WAS CONDUCTED IN THE CASE OF THE ASSESSEE ON 20.08.204. SIMULTANEOUSLY, ON THE VERY SAME DAY, SEARCH AND SE IZURE OPERATION WAS ALSO CONDUCTED AT THE RESIDENCE OF SH . AMRUTLAL K. GHELA. DURING THE COURSE OF THE SEARCH AT THE RESI DENCE OF SH. AMRUTLAL K. GHELA, THE STATEMENT OF WHOM WAS RECORD ED BY THE DEPARTMENT AND QUESTION NO. 40 AND QUESTION NO. 57 WITH ANSWERS THERETO AS RECORDED ARE AS UNDER: QUESTION NO. 40 DURING THE SEARCH OF YOUR HOUSE, SOME LOOSE PAPERS OF AKIK TILES PVT. LTD WERE FOUND AND PRIOR TO JOINING OF A KIK TILES PVT LTD, YOU WERE SERVING AT DUDHSAGAR DAIRY. THUS, THE LOO SE PAPER INDICATES ABOUT CASH TRANSACTION, THEN TO PROVIDE D ETAILS AS TO CASH TRANSACTION WHICH WAS NOT MENTIONED IN THE REGULAR ACCOUNTING BOOKS SINCE YOU HAVE JOINED IN AKIK TILES PRIVATE L IMITED. ANSWER NO. 40 ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 3 - WHEN I JOINED AKIK TILES PVT. LTD., SHRI CHANDUBHAI ISHWARBHAI PATEL (VIMAL GROUP) HAD RETAINED SHARE O F BHALAVAT FAMILY. THIS TRANSACTION WAS TAKEN PLACE APPROXIMA TELY JUNE 1999, OR THEREAFTER AND SHRI CHANDUBHAI E PATEL HAD MADE 30% PAYMENT THROUGH CHEQUES AND REST OF THE PAYMENT TO BE MADE IN CASH. THE SHARE OF BHALAVAT FAMILY DID NOT TRANSFE R IN THE NAME OF CHANDUBHAI PATEL TILL I WAS IN AKIK TILES PVT. LTD. DURING MY ADMINISTRATION, SALE OF 25% WAS MADE IN CASH WITHOU T BILL, WHOSE CORRESPONDING RAW MATERIAL WAS PURCHASED BY CASH. IN THE YEAR 2002, DUE TO DISPUTE, I WAS RELIEVED FROM THE FACTO RY. SHARE OF MY PORTION STILL DOES NOT TRANSFER. SHRI CHANDUBHAI P ATEL PURCHASED MY AS WELL AS OTHER PARTNERS SHARE WHICH WERE GIVE N TO SHRI GIRISHBHAI JAYANTILAL PATEL AND SHRI PANKAJ NARANBH AI PATEL. THE FACTORY IS VALUED AT RS 4,85,00,000/-. RELIEVED PA RTNERS SUCH AS HITESH KUBERDAS PATEL WAS MADE HIS PAYMENT. AT PRE SENT AS PER MY BELIEF, SHRI CHANDUBHAI, SHRI GIRISHBHAI AND SHR I PANKAJBHAI ARE HAVING PARTNERSHIPS OF 51%, 25% AND 24% RESPECT IVELY. I DO NOT AS TO WHO ARE THE PARTNERS AS ON TODAY ON REGUL AR BOOKS OF ACCOUNT. QUESTION NO. 57 WHAT WOULD YOU LIKE TO SAY ABOUT UNDISCLOSED INCOME OF THE COMPANY, BECAUSE AS PER YOUR SAY 1200 BOXES WERE TO BE MADE IN ONE DAY AND BY CONSIDERING THE 325 WORKI NG DAYS OF A YEAR AND RS 100/- AS AVERAGE COST, THE PR ODUCTION VALUE COMES. HENCE, AS PER YOUR SAY 25% THEREOF AR E UNDISCLOSED SALES THEN BY CONSIDERING LAST FOUR YEA RS (JULY 1997 TO OCTOBER 2002) OF AKIK TILES PRIVATE LIMITE D. ANSWER-57 ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 4 - I HEREBY STATE THAT APPROXIMATELY THE AVERAGE MANUFACTURE OF OUR COMPANY IS NOT 1200 BOXES BUT 60 0 BOXES AND AS PER GRADE THEREOF AVERAGE PRICE IS RS 80/- AND ACCORDINGLY, THE WORKING DAYS WOULD BE 300 DAYS AND HENCE UNDISCLOSED INCOME OF OUR COMPANY FOR FOUR YEARS IS RS 1,44,00,000/-. 5. IN PURSUANCE OF THE ABOVE SEARCH, A NOTICE U/S 1 53A WAS SERVED ON THE ASSESSEE COMPANY FOR THE ASSESSMENT YEAR 1999-0 0 TO 2002- 03 ON 27.01.2005 IN COMPLIANCE OF WHICH THE ASSESSE E FILED ITS RETURN OF INCOME. IN THE AFORESAID RETURN OF INCOM E, THE ASSESSEE DISCLOSED THE FOLLOWING UNDISCLOSED INCOME ON ACCOU NT OF THE UNDISCLOSED SALES: ASSESSMENT YEARS ADDITIONAL INCOME OFFERED IN RETURN 1999-2000 17,00,000 2000-01 5,00,000 2001-02 20,00,000 2002-03 5,00,000 2003-04 18,00,000 HOWEVER, IN THE ASSESSMENT MADE BY THE A.O., THE A. O. ON THE BASIS OF ANSWER OF SH. AMRUTLAL K. GHELA TO QUESTIO N NO. 40 EXTRACTED HEREIN THE ABOVE ESTIMATED THE YEAR-WISE UNDISCLOSE D SALES OF THE ASSESSEE COMPANY @ 33.33% OF THE UNDISCLOSED SALES OF THE RESPECTIVE YEARS AND TAKEN 25% OF THOSE SALES AS UNDISCLOSED I NCOME OF THE ASSESSEE AND THEREBY ADDED THE DIFFERENCE AMOUNT FROM THE UN DISCLOSED INCOME ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 5 - ADMITTED BY THE ASSESSEE IN THE RETURN OF INCOME TO THE INCOME OF THE ASSESSEE THEREBY THE A.O. MADE YEAR-WISE ADDITION A S UNDER: ASSESSMENT YEARS SALES SHOWN IN BOOKS OF ACCOUNTS UNACCOUNTED SALES COMPUTED BY AO GROSS PROFIT BEING 25% ADDITIONAL INCOME OFFERED IN RETURN NET ADDITION (A) (B) (C)=33.33% OF B (D)=25% OF C (E) (F)= D-E 1999-2000 2,10,30,063 70,10,021 17,52,505 17,00,000 52,505 2000-01 2,39,14,836 59,78,709 14,94,677 5,00,000 9,94,677 2001-02 2,84,45,064 71,11,266 17,77,817 20,00,000 - 2002-03 2,97,53,416 74,38,534 18,59,589 5,00,000 13,59,589 2003-04 1,80,00,000 45,00,000 11,25,000 18,00,000 - 6. ON APPEAL, THE LD. CIT(A) HELD AS UNDER: 3.5 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE RS AND SUBMISSION MADE BY APPELLANT. THE ASSESSING OFFICE R HAS RELIED UPON STATEMENT OF MR. AMRUT K GHELA, WHILE M AKING ADDITIONS FOR ALL THE YEARS, WHEREAS, APPELLANTS M AIN THRUST OF ARGUMENT IS THAT SUCH STATEMENT CANNOT BE BLATAN TLY APPLIED IN CASE OF IT. IT IS UNDISPUTED FACT THAT MR. GHELA WAS DIRECTOR OF THE COMPANY UPTO OCTOBER, 2002 AND HE WAS LOOKING AFTER PRODUCTION AND SALE DURING RELEVANT P ERIOD OF TIME. HENCE, IT CANNOT BE ACCEPTED THAT HIS STATEM ENT DOES NOT HAVE ANY EVIDENTIARY VALUE AS STATED BY APPELLA NT. THE APPELLANT HAS RELIED ON AFFIDAVIT FILED BY EX-DIREC TOR ALONG WITH ITS WRITTEN SUBMISSION ON 25.12.2006 WHEREIN H E RETRACTED FROM HIS STATEMENT GIVEN ON 20.08.2004. HOWEVER, APPELLANT ITSELF HAS MADE DISCLOSURE OF ADDITIONAL INCOME IN RETURN OF INCOME FILED U/S 153A AS DETAILED HEREIN ABOVE, ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 6 - AND THEREFORE, AFFIDAVIT CANNOT BE RELIED UPON. IN THE PRESENT CASE, WHILE MAKING IMPUGNED ADDITIONS OF UNACCOUNTED SALES & INCOME THEREOF, THE ASSESSING O FFICER HAS MAINLY RELIED ON ANSWER NO. 40 OF STATEMENT OF MR. GHELA RECORDED U/S 132(4) OF THE ACT AND COMPLETELY IGNORED THE LAST QUESTION NO. 57 WHEREIN SAID PERSO N WAS ASKED TO QUANTIFY THE AMOUNT OF UNDISCLOSED INCOME EARNED BY THE APPELLANT COMPANY IN FOUR YEARS I.E. DURING THE PERIOD OF HIS TENURE IN THE COMPANY. QUESTION AND ANSWER 57 OF HIS STATEMENT IS MORE RELEVANT IN CASE OF APPELLANT WHI CH READS AS UNDER: QUESTION NO. 57 WHAT WOULD YOU LIKE TO SAY ABOUT UNDISCLOSED INCOME OF THE COMPANY, BECAUSE AS PER YOUR SAY 1200 BOXES WERE TO BE MADE IN ONE DAY AND BY CONSIDERING THE 325 WORKI NG DAYS OF A YEAR AND RS 100/- AS AVERAGE COST, THE PR ODUCTION VALUE COMES. HENCE, AS PER YOUR SAY 25% THEREOF AR E UNDISCLOSED SALES THEN BY CONSIDERING LAST FOUR YEA RS (JULY 1997 TO OCTOBER 2002) OF AKIK TILES PRIVATE LIMITE D. ANSWER-57 I HEREBY STATE THAT APPROXIMATELY THE AVERAGE MANUFACTURE OF OUR COMPANY IS NOT 1200 BOXES BUT 60 0 BOXES AND AS PER GRADE THEREOF AVERAGE PRICE IS RS 80/- AND ACCORDINGLY, THE WORKING DAYS WOULD BE 300 DAYS AND HENCE UNDISCLOSED INCOME OF OUR COMPANY FOR FOUR YEARS IS RS 1,44,00,000/-. ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 7 - MR. GHELA IN HIS STATEMENT HAS ADMITTED UNDISCLOSED INCOME OF FOUR YEARS AT RS 1.44 CRORE BUT CONSIDERING HIS EXPLANATION IN RETRACTED STATEMENT AS WELL AS FACTS GIVEN IN ANSWER TO 57, AMOUNT OF RS 1.4 CRORE IS IN FACT UNA CCOUNTED SALES ADMITTED BY DIRECTOR OF COMPANY. ANY STATEME NT CANNOT BE APPLIED ON CHOOSE AND PICK BASIS BUT ENTI RE CONTENTS OF STATEMENT HAS TO BE LOOKED INTO WHEN SU CH STATEMENT I RELIED UPON. CONSIDERING THESE FACTS, MR GHELA, IN HIS STATEMENT, HAS ADMITTED THAT THE PRODUCTION OF THE APPELLANT COMPANY IS 600 BOXES PER DAY WITH THE AVE RAGE SELLING PRICE OF RS 80 PER BOX, AND HENCE CONSIDERI NG 300 WORKING DAYS IN A YEAR AND 25% SALES AS UNACCOUNTED , THE UNACCOUNTED SALES IN CASE OF THE APPELLANT COMPANY FOR THE PERIOD OF FOUR YEARS IS RS 1,44,00,000 AND APPLYING GROSS PROFIT RATE @ 25% AVERAGE UNACCOUNTED INCOME OF APP ELLANT COMES TO RS 36 LACS WHICH HAS TO BE EVENLY DISTRIBU TED IN EACH YEAR AT RS 9 LACS IN ASSESSMENT YEAR 1999-2000 TO 2002-2003 AND RS 4.50 LACS AS DIRECTOR WAS WORKING TILL OCTOBER 2003. ADDITION MADE IN CASE OF APPELLANT I N EACH YEAR IS RESTRICTED AS UNDER: ASSESSMENT YEARS UNACCOUNTED INCOME AS COMPUTED SUPRA ADDITIONAL INCOME OFFERED IN RETURN NET ADDITION CONFIRMED IN CASE OF APPELLANT (A) (B) (C) (D) 1999-2000 9,00,000 17,00,000 - 2000-01 9,00,000 5,00,000 4,00,000 2001-02 9,00,000 20,00,000 - 2002-03 9,00,000 5,00,000 4,00,000 2003-04 4,50,000 18,00,000 - ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 8 - THE GROUNDS OF APPEAL FOR ALL THE YEARS ARE ADJUDIC ATED HEREIN ABOVE AND PARTLY ALLOWED. 7. BEING AGGRIEVED BY THE DELETION OF ADDITION OF R S 16,06,771/-, THE REVENUE IS IN APPEAL BEFORE US AND IN RESPECT OF CO NFIRMATION OF ADDITION OF RS 8 LAKH THE ASSESSEE IS IN CROSS-OBJE CTION BEFORE US. 8. THE PLEA OF THE REVENUE BEFORE US IS THAT THE DI RECTOR OF THE COMPANY HAS CATEGORICALLY ADMITTED IN THE STATEMENT U/S 132(4) THAT 25% OF THE UNDISCLOSED SALES WERE UNDISCLOSED SALES OF THE ASSESSEE COMPANY AND THEREFORE THE CIT(A) WAS NOT J USTIFIED IN HOLDING THAT ONLY RS 1.44 CRORE WAS UNDISCLOSED SAL ES OF 5 YEARS AND THEREFORE, RESTRICTING THE ADDITION TO RS 8 LAK HS IN PLACE OF RS 24,06,771/- MADE BY THE A.O. 9. ON THE OTHER HAND, THE AR OF THE ASSESSEE SUBMIT TED THAT SH. AMRUTLAL K. GHELA WAS NOT THE DIRECTOR OF THE COMPA NY AT THE TIME AT WHICH THE STATEMENT WAS RECORDED U/S 132(4). HE SUBMITTED THAT THE STATEMENT WAS RECORDED ON 20.08.2004 WHEREAS SH . AMRUTLAL K. GHELA CEASED TO BE THE DIRECTOR SINCE OCTOBER 2 002. FURTHER, HE CONTENDED THAT SH. AMRUTLAL K. GHELA CEASED TO B E THE DIRECTOR BECAUSE OF A DISPUTE WITH THE COMPANY AND EVEN THE COMPANY FILED A CASE U/S 138 OF THE NEGOTIABLE INSTRUMENTS ACT AG AINST THE SAID SH. AMRUTLAL K. GHELA. THEREFORE, SH. AMRUTLAL K. GHELA WAS HOSTILE TO THE COMPANY AND HIS STATEMENT CANNOT BE ALONE WITHOUT ANY CORROBORATIVE EVIDENCE BE TREATED AS AN EVIDENC E AGAINST THE COMPANY. HE SUBMITTED AS THERE WAS NO EVIDENCE ON RECORD TO SHOW THAT THE COMPANY HAD MADE ANY UNDISCLOSED SALE S OF AN ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 9 - AMOUNT MORE THAN WHAT HAS BEEN ADMITTED BY THE COMP ANY IN ITS RETURN OF INCOME, THE A.O. WAS NOT JUSTIFIED IN EST IMATING UNDISCLOSED SALES ONLY ON THE BASIS OF THE STATEMEN T OF THE HOSTILE PERSON AND THE LD. CIT(A) WAS NOT JUSTIFIED IN CONF IRMING A PART OF THE ADDITION AGAIN ONLY ON THE BASIS OF THE STATEME NT OF SUCH A PERSON. HE STRONGLY URGED THAT THE ADDITION TO THE RETURN OF INCOME BY THE ASSESSEE CAN BE MADE ONLY ON THE BASIS OF RE LEVANT AND RELIABLE EVIDENCE FOUND DURING THE COURSE OF SEARCH AND NOT ON THE BASIS OF ANY UNCORROBORATED STATEMENT OF ANY PERSON WHICH HAS NO BASIS AND THEREFORE PRAYED FOR DELETION OF ADDITION OF RS 8 LAKHS SUSTAINED BY THE LD. CIT(A). 10. IN THE REJOINDER, THE LD. DR SUBMITTED THAT THE STATEMENT OF SH. AMRUTLAL K. GHELA IS CORROBORATED BY THE FACT THAT THE ASSESSEE COMPANY ITSELF ADMITTED UNDISCLOSED SALES IN THE RE TURN FILED AFTER THE SEARCH AND THEREFORE THE ASSESSEE COMPANY CANNO T DENY TO HAVE MADE UNDISCLOSED SALES. 11. WE FIND THAT THE ASSESSEES CONTENTION THAT SH. AMRUTLAL K. GHELA WAS EX-DIRECTOR AS ON 20.08.2004 WHEN HIS STATEMENT WAS RECORDED BY THE DEPARTMENT IS NOT DISPUTED BY THE DEPARTMENT . THUS, IT IS FOUND THAT SH. AMRUTLAL K. GHELA WAS NOT A DIRECTOR OF THE ASSESSEE COMPANY AT THAT POINT OF TIME WHEN HIS STATEMENT WA S RECORDED U/S 132(4) OF THE ACT. FURTHER, IN OUR CONSIDERED VIEW , ANY ADDITION TO THE INCOME DISCLOSED BY THE ASSESSEE CANNOT MADE ME RELY ON THE BASIS OF A STATEMENT OF SUCH AN EX-DIRECTOR WITHOUT ANY CORROBORATIVE MATERIAL FOUND BY THE DEPARTMENT EITH ER DURING THE COURSE OF THE SEARCH OR THEREAFTER. ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 10 - 12. IN THE INSTANT CASE, WE FIND THAT THE DEPARTMEN T COULD NOT BRING ON RECORD ANY MATERIAL WHICH WAS FOUND DURING THE COUR SE OF SEARCH IN THE PREMISES OF THE ASSESSEE WHICH COULD CORROBO RATE THE STATEMENT MADE BY SH. AMRUTLAL K. GHELA. FURTHER, THERE IS ABSOLUTELY NO MATERIAL BROUGHT BEFORE US BY THE DEP ARTMENT WHICH WAS FOUND DURING THE SEARCH OR THEREAFTER WHICH WOU LD SHOW THAT THE ASSESSEE COMPANY MADE UNDISCLOSED SALES OF AN A MOUNT MORE THAN THE AMOUNT WHICH WAS ADMITTED BY THE ASSESSEE IN ITS RETURN FILED AFTER FOR THE YEARS UNDER CONSIDERATION. 13. WE DO NOT FIND ANY FORCE IN THE ARGUMENT OF THE LD. DR THAT MERELY BECAUSE THE ASSESSEE COMPANY SHOWED UNDISCLO SED SALES IN THE RETURN, AND THEREFORE, THE STATEMENT MADE BY SH . AMRUTLAL K. GHELA WAS SACROSANCT AND WAS AN EVIDENCE AGAINST TH E ASSESSEE, ON THE BASIS OF WHICH AN ADDITION CAN BE MADE IN THE H ANDS OF THE ASSESSEE COMPANY. 14. IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD WH ICH WAS FOUND DURING THE COURSE OF SEARCH OF THE ASSESSEE WHICH C OULD CORROBORATE THE STATEMENT OF SH. AMRUTLAL K. GHELA OR WHICH COULD SHOW THAT THE ASSESSEE MADE UNDISCLOSED SALES OF AN AMOUNT MORE THAN WHAT WAS ACCEPTED BY IT IN ITS RETURN FILED AF TER SEARCH, IN OUR CONSIDERED OPINION NO ADDITION TO THE INCOME OF THE ASSESSEE COULD BE VALIDLY MADE ON THAT GROUND. WE THEREFORE, DELE TE THE ADDITION OF RS 8 LAKHS SUSTAINED BY THE LD. CIT(A) BEING RS 4 LAKHS IN THE ASSESSMENT YEAR 2000-01 & RS 4 LAKHS IN THE ASSESSM ENT YEAR 2002-03. ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 11 - 15. THE ONLY OTHER GROUND OF APPEAL TAKEN BY THE RE VENUE IN THE ASSESSMENT YEAR 1999-2000 IS DIRECTED AGAINST THE O RDER OF THE CIT(A) DELETING THE ADDITION OF RS 28,11,719/- ON A CCOUNT OF UNDISCLOSED SALES. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E ORDERS OF LOWER AUTHORITIES AND MATERIAL ON RECORD. WE FIND THAT H E A.O. MADE ADDITION OF RS 28,11,719/- FOR THE ASSESSMENT YEAR 1999-2000 BY OBSERVING AS UNDER: ON PERUSAL OF THE CASE RECORDS OF THE ASSESSEE COMP ANY, IT IS NOTICED THAT THE ASSESSEE HAS SHOWN TOTAL SALES OF RS 2,10,30,064/- DURING THE YEAR. THE ASSESSEE HAS ALSO SHOWN CLOSI NG STOCK OF RS 11,80,092/- AND DEBTORS OF RS 72,55,879/-. IT MEAN S, FOR MAKING SALES OF RS 2,10,30,064/-, INITIAL INVESTMENT OF RS 84,35,971/- (11,80,092+72,55,879) IS REQUIRED, WHICH COMES TO 4 0.11% OF TOTAL SALES. APPLYING THE SAME RATIO, FURTHER ADDIT ION OF RS 28,11,719/-(40.11% OF UNDISCLOSED SALES OF RS 70,10 ,021/-, AS DETERMINED ABOVE) IS MADE TO THE TOTAL INCOME OF TH E ASSESSEE AS INITIAL INVESTMENT FOR MAKING UNACCOUNTED SALES OF RS 70,10,021/- 17. THE LD. CIT(A) DELETED THE ABOVE ADDITION BY OB SERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AN D SUBMISSION MADE BY APPELLANT. IN EARLIER PARAS, I HAVE HELD THAT UNACCOUNTED SALES FOR A.Y. 1999-2000 IS RS 36 LAKHS ON THE BASIS OF STATEMENT OF MR. GHELA AND FOR MAKING SUCH SALES EVEN IF IT IS ASSUMED TO BE ROLLED OVER PERIO D OF 12 ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 12 - MONTHS, MONTHLY SALES COMES TO RS 3 LACS FOR WHICH APPELLANT REQUIRES WORKING CAPITAL OF RS 1.5 LAC WH ICH IS ABOUT 50% OF MONTHLY TURNOVER AND ACCORDINGLY ADDIT ION FOR THAT AMOUNT OF RS 1.5 LAC IS JUSTIFIED IN CASE OF A PPELLANT. HOWEVER, AS IN PRESENT CASE, APPELLANT HAS OFFERED RS 17 LACS WHICH IS HIGHER THAN FIGURE OF UNACCOUNTED INC OME COMPUTED SUPRA AT PARA 3 AND ADDITION OF WORKING CA PITAL HENCE NO SEPARATE ADDITION IS CALLED FOR. THE GROU ND OF APPEAL IS ADJUDICATED IN FAVOUR OF APPELLANT. 18. WE FIND THAT THE AHMEDABAD BENCH OF THE TRIBUNA L IN THE CASE OF ACIT VS. M/S VIMAL PUMPS PVT. LTD. IN ITA NO. 3066/ AHD/2007 AND C.O. NO. 311/AHD/2007 IN ASSESSMENT YEAR 2000-0 1, ORDER DATED 03.02.2012 HELD AS UNDER: 6. ON GROUND NO. 3, REVENUE CHALLENGED THE DELETIO N OF ADDITION OF RS 4,34,500/- MADE ON ACCOUNT OF UNEXPL AINED INITIAL INVESTMENT REQUIRED FOR UNACCOUNTED SALES. THE AO OBSERVED IN THE ASSESSMENT ORDER THAT RATIO OF CLOS ING STOCK AND DEBTORS OF TURNOVER CAME TO 14.7% OF TOTAL SALE S, WHICH IS INITIAL INVESTMENT REQUIRED FOR THE PURPOSE OF C ARRYING OUT UNACCOUNTED SALES. THE AO HAS APPLIED THE SAID RAT IO OF UNACCOUNTED SALES OF RS 40,00,000/- AND MADE THE AB OVE ADDITION. IT WAS SUBMITTED BEFORE THE LEARNED CIT( A) THAT FINANCIAL STATEMENT WOULD PROVE THAT THERE IS NO RE QUIREMENT OF WORKING CAPITAL. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT TAKEN ANY WORKING CAPITAL LOAN FOR BUSINESS PURPOSE WHICH ESTABLISHES THAT ON REALIZATION OF ST OCK AND ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 13 - DEBTORS, THE ASSESSEE HAS MADE PAYMENTS TO SUNDRY CREDITORS. INITIAL ACCRUALS ARE SUFFICIENT TO MAKE THE PAYMENTS TO THE CREDITORS; NO ADDITION IS REQUIRED TO BE MADE FOR INITIAL INVESTMENT. NO DOCUMENT WAS FOUND TO PROVE THIS ISSUE. THEREFORE, ESTIMATED ADDITION WI THOUT BRINGING ANY EVIDENCE OR MATERIAL ON RECORD AGAINST THE ASSESSEE IS UNJUSTIFIED. THE ASSESSEE RELIED UPON THE DECISIONS IN THE CASE OF ASHOK KUMAR RASTOGI VS CIT , 100 CTR 204 AND IN THE CASE OF PARKER VS V.B. PALEKAR, 94 ITR 616. THE LEARNED CIT(A) CONSIDERING THE MATERIAL O N RECORD FOUND THAT NO UNACCOUNTED BILL OR OTHER MATERIAL WA S FOUND TO POINT OUT IF ANY UNACCOUNTED CAPITAL HAD BEEN US ED FOR THE PURPOSE OF MAKING THE UNACCOUNTED TURNOVER. THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO PROVE THAT TH E ASSESSEE REQUIRED WORKING CAPITAL. ADDITION WAS FO UND TO BE MADE MERELY ON PRESUMPTION. ADDITION WAS ACCORDING LY DELETED. 7. THE LEARNED DR RELIED UPON THE ORDER THE AO. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE RE ITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 8. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVE NUE. THE AO MERELY ON PRESUMPTION MADE THE ADDITION FOR REQUIREMENT OF INITIAL INVESTMENT IN MAKING UNACCOU NTED SALES. NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO P ROVE THAT THE ASSESSEE USED ANY INITIAL INVESTMENT FOR MAKING THE ITSS NO.582, 583 & 584 AHD 2010 AND CO NO. 15 & 16 AHD 2013 AKIK TILES PVT. LTD.. VS. ACIT, CENTRAL CIRCLE-1(2) , AHD FOR A.Y. 1999-2000 TO 2002-03 - 14 - UNACCOUNTED SALES. ADDITION IS MADE MERELY ON PRES UMPTION AND SURMISES. THEREFORE, THE LEARNED CIT(A) RIGHTL Y DELETED THE ADDITION. THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 19. IN VIEW OF THE ABOVE, WE DONT FIND ANY MERIT I N THE GROUND OF APPEAL OF THE REVENUE AND THE SAME IS DISMISSED. 20. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED AND THE CROSS-OBJECTIONS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 10 TH OF JANUARY, 2014 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 10/01/2014 GHANSHYAM MAURYA GHANSHYAM MAURYA GHANSHYAM MAURYA GHANSHYAM MAURYA, SR. P , SR. P , SR. P , SR. P. .. .S SS S. .. . TRUE COPY $% &' ($'# $% &' ($'# $% &' ($'# $% &' ($'#/ COPY OF THE ORDER FORWARDED TO : 1. )* / THE APPELLANT 2. &+)* / THE RESPONDENT. 3. ,, - / CONCERNED CIT 4. -() / THE CIT(A)-III, AHMEDABAD 5. '01 & , , / DR, ITAT, AHMEDABAD 6. 123 4 / GUARD FILE. $% $% $% $% / BY ORDER, 5 55 5/ // / ,6 ,6 ,6 ,6 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD