The ACIT, 3(1), V. Shri Rameshchand Shah,

ITSSA 65/IND/2005

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9448 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 29-03-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-03-2010
• Assessment Year: misc
• Appeal Filed On: 20-04-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJPAL SINGH
• Assessee Lawyers: A GOYAL; G AGRAWAL
• Keywords: Unexplained cash credit; Document seized; Peak credit; Block assessment; Documents seized

Judgement Text

1 THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER IT(SS)A NO. 65/IND/2005 BLOCK PERIOD 1.4.1995 TO 3.1.2002 ASSTT. COMMR. OF INCOME TAX 3(1) BHOPAL APPELLANT VS RAMESH CHAND SHAH PROP. M/S RAMESH CHAND VISHANJI GANJBASODA PAN ADAPS8417J RESPONDENT C.O. NO. 75/IND/05 ARISING OUT OF ITA NO IT(SS)A NO. 65/IND/2005 BLOCK PERIOD 1.4.1995 TO 3.1.2002 RAMESH CHAND SHAH PROP. M/S RAMESH CHAND VISHANJI GANJBASODA OBJECTOR VS. ASSTT. COMMR. OF INCOME TAX 3(1) BHOPAL RESPONDENT DEPTT. BY SHRI RAJPAL SINGH, SR. DR ASSESSEE BY S/SHRI A.GOYAL AND G.AGRAWAL 2 O R D E R PER BENCH THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION B Y THE ASSESSEE ARISE OUT OF THE ORDER OF THE LEARNED COMM ISSIONER OF INCOMETAX (APPEALS) DATED FOR THE ASSESSMENT YEAR 2005-06. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PER USED THE MATERIAL ON RECORD. 3. FIRSTLY, WE SHALL TAKE UP THE REVENUES APPEAL I N IT(SS) A. NO. 65/IND/2005. 4. GROUND NO. 1 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN :- 1) DELETING THE ADDITION OF RS.63,99,455/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS CASH CREDITS OF FARMERS. 5. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT THE ASSESSEE WAS ONE OF THE ENTITIES OF SHAH GROUP WHERE SUCH OPERATIONS HAD TAKEN PLACE ON 3.1. 2002. HE FURTHER SUBMITTED THAT SIMILAR ISSUE WAS INVOLVED I N THE CASE OF ANOTHER ASSESSEE OF THE GROUP WHICH ALSO REACHED UP TO THE LEVEL OF THE TRIBUNAL AND THE TRIBUNAL IN THE CASE OF MAGANLAL SHAH IN IT(SS)A NO. 48/IND/05 ORDER DATED 29 TH MAY, 2009 DELETED THE SAME, HENCE, THIS ISSUE WAS COVERED IN FAVOUR OF 3 THE ASSESSEE. 6. ON THE OTHER HAND, THE LD DEPARTMENTAL REPRESENT ATIVE PREFERRED TO RELY ON THE ORDER OF THE ASSESSING OFF ICER. 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOTED THAT THE ASSESSING OFFICER TREAT ED THE CREDITS IN KISAN UDRAT ACCOUNT AS UNEXPLAINED CREDITS AND M ADE AN ADDITION OF RS. 73,22,901/- WHICH WAS SUSTAINED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AT RS.9,23,446/ -. IT IS FURTHER NOTED THAT THE ASSESSEE HAS OFFERED RS. 7 L ACS ON THIS ACCOUNT IN THE BLOCK RETURN. IT IS FURTHER NOTED T HAT THE ASSESSEE HAS CLAIMED THAT OPENING BALANCE OF RS.2,95,174/- P RIOR TO THE COMMENCEMENT OF BLOCK PERIOD SHOULD HAVE BEEN GIVEN CREDIT. WE FURTHER FIND THAT THE TRIBUNAL IN THE ORDER RELI ED UPON BY THE ASSESSEE HAS ACCEPTED THE CLAIM OF THE ASSESSEE AS REGARD TO THE CREDIT OF OPENING BALANCE TO BE GIVEN TO WORK O UT THE PEAK CREDIT. HENCE, IF THE OPENING BALANCE IS GIVEN CRED IT, THEN, HAVING REGARD TO THE VOLUNTARY OFFER MADE BY THE AS SESSEE IN THE BLOCK RETURN, NO ADDITION IS WARRANTED. ACCORD INGLY, WE DISMISS THIS GROUND OF THE REVENUE. 4 8. GROUND NO. 2 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN : DELETING THE ADDITION OF RS.63,98,709/- RIGHTLY MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF DEPOSITS OF OWN UNACCOUNTED STOCK IN WARE HOUSE. 9. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VE RY OUTSET SUBMITTED THAT THE ASSESSEE WAS ONE OF THE ENTITIES OF SHAH GROUP WHERE SUCH OPERATIONS HAD TAKEN PLACE ON 3.1. 2002. HE FURTHER SUBMITTED THAT SIMILAR ISSUE WAS INVOLVED I N THE CASE OF ANOTHER ASSESSEE OF THE GROUP WHICH REACHED UPTO TH E LEVEL OF THE TRIBUNAL AND THE TRIBUNAL IN THE CASE OF JAYESH SHAH IN IT(SS)A NO.63/IND/05 ORDER DATED 29 TH AUGUST, 2008 DELETED THE SAME DISALLOWANCE, HENCE, THIS ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE. 10. ON THE OTHER HAND, THE LD DEPARTMENTAL REPRESEN TATIVE PREFERRED TO RELY ON THE ORDER OF THE ASSESSING OFF ICER. 11. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOTED A SIMILAR ISSUE WAS INVOLVED IN THE CASE OF ANOTHER ASSESSEE OF THE GROUP WHICH REACHED UPTO TH E LEVEL OF THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 29 TH AUGUST, 5 2008 IN THE CASE OF JAYESH SHAH IN IT(SS)A NO.63/IN D/05 DELETED THE SIMILAR DISALLOWANCE WITH THE FOLLOWING OBSERVATIONS :- 15. ON CONSIDERATION OF THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THE RE IS NO MERIT IN THE DEPARTMENTAL APPEAL ON THIS ISSU E. THE ASSESSEE HAS SPECIFICALLY PROVED BEFORE THE AUTHORITIES BELOW THAT THE GOODS LYING IN THE WAREHOUSE DID NOT BELONG TO HIM. NO EVIDENCE WAS FOUND BY THE ASSESSING OFFICER THAT THE GOODS LYING IN WAREHOUSE BELONGED TO THE ASSESSEE. THE PERSONS/FARMERS WHO CLAIMED OWNERSHIP AND POSSESSION OF THE GOODS LYING IN THE WAREHOUSE FILE D THEIR AFFIDAVITS BEFORE THE ASSESSING OFFICER AS WE LL AS THEIR STATEMENTS WERE RECORDED IN WHICH THEY HAVE CONFIRMED THAT THE GOODS LYING IN WAREHOUSE BELONGED TO THEM. IT WOULD THEREFORE, PROVE THAT T HE ASSESSING OFFICER WITHOUT BRINGING ANY COGENT EVIDENCE AND THE MATERIAL AGAINST THE ASSESSEE MADE THE ADDITION. SIMILARLY, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) NOTED THAT THE 6 LOANS RAISED ON SECURITY OF WAREHOUSE RECEIPTS ARE RECORDED IN THE PLEDGE ACCOUNT AS WELL AS THE REPAYMENTS ARE RECORDED IN THE LEDGER ACCOUNT AGAINST THE LOAN RAISED EARLIER AND THESE FACTS HAV E NOT BEEN DISPUTED BY THE ASSESSING OFFICER. SINCE ALL THE ENTRIES OF THE LOAN AND REPAYMENT ARE RECORDED IN THE BOOKS OF ACCOUNTS PRIOR TO SEARCH AND HAVE BEEN DISCLOSED TO THE REVENUE DEPARTMENT FOR FILING THE RETURN FOR THE FINANCIAL YEAR 2000-01, AS EXPLAINED BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), THE SAME CANNOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ON PROPER APPRECIATION OF FACTS AND THE MATERIAL CORRECTLY DELETED THE ENTIRE ADDITION. THIS GROUND OF APPEAL OF THE REVENUE IS, THEREFORE, DISMISSED. WE, THEREFORE, FOR THE REASONS RECORDED BY THE TRIB UNAL IN THE AFORESAID ORDER, FIND NO MERIT IN THIS GROUND OF TH E REVENUE AND THE SAME IS DISMISSED. 12. GROUND NO. 3 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN 7 DELETING THE ADDITION OF RS.1,09,890/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED AND UNRECORDED CASH IN A.Y. 2001-02. 13. THE FACTS, IN BRIEF, ARE THAT THE ASSESSING OFF ICER BASED UPON A DOCUMENT NO. LPS-3, CONTAINING DETAILS OF PU RCHASES AND SALE OF CHANA, MADE AN ADDITION OF RS.1,22,390/ - COMPRISING OF TWO ITEMS OF RS.50,000/- AND RS.72,39 0/-, BEING THE AMOUNT OF CASH RECEIVED AS UNDISCLOSED INCOME F OR THE BLOCK PERIOD 1.4.2000 TO 31.3.2001. AGGRIEVED BY T HIS, THE ASSESSED PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), WHEREIN IT WAS SUBMITTED THAT THIS PAPER WAS FOUND AT THE PREMISE S OF THE ACCOUNTANT OF THE ASSESSEE WHO WAS ALSO DOING ACCOU NTING WORK FOR OTHER FIRMS AND THIS WAS NEITHER IN THE HA ND-WRITING OF THE ASSESSEE NOR SIGNED BY THE ASSESSEE, HENCE, IT DID NOT BELONG TO THE ASSESSEE AND, THEREFORE, NO ADDITION COULD BE MADE. 14. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HELD THAT A PERUSAL OF THE SEIZED DOCUMENT SHOWED THAT THERE WAS SALE TO THE TUNE OF RS.3,81,753/- IN TWO ASSESSMENT YEARS I.E. 2001-02 AND 2002-03, HENCE, NET PROFIT THEREON WORK ED OUT TO RS.11,949/- @ 3.13%, HOWEVER, AFTER TAKING INTO CON SIDERATION 8 THE ELEMENT OF PURCHASE ALSO IT WAS REASONABLE TO M AKE THE ADDITION OF RS.25,000/- TO BE BIFURCATED @ RS. 12,5 00/- FOR IMPUGNED ASSESSMENT YEARS RESPECTIVELY. ACCORDINGL Y, HE REDUCED THE ADDITION MADE BY THE ASSESSING OFFICER TO RS.12,500/-. AGGRIEVED BY THIS, BOTH THE REVENUE AN D THE ASSESSEE ARE BEFORE US. 15. THE LEARNED DEPARTMENTAL REPRESENTATIVE NARRATE D THE FACTS, DREW OUR ATTENTION TO PAGE 303 CONTAINING PH OTOCOPY OF THE IMPUGNED SEIZED DOCUMENT AND CONTENDED THAT ATL EAST THE ADDITION SHOULD HAVE BEEN MADE TO THE EXTENT OF UND ISCLOSED INVESTMENT MADE IN THE PURCHASE OF ITEMS NOT RECORD ED IN THE BOOKS OF ACCOUNTS. HE ALSO CONTENDED THAT THE ADDI TION SUSTAINED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS MUCH LESS. 16. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICER HAD MADE THE A DDITION ONLY IN RESPECT OF CASH RECEIPTS AND NOT ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE PURCHASES, HENCE, THE PLEA OF THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS NOT SUBJECT MATTER OF DISPUTE BEFORE THE TRIBUNAL. HE FURTHER SUBMITTED THAT THIS PAGE DID NOT BELONG TO THE ASSESSEE AND IN SUPPORT OF IT , HE TOOK US 9 THROUGH THE AFFIDAVIT OF THE ACCOUNTANT ALSO. HOWE VER, ON PERUSAL THEREOF, IT IS EVIDENTLY CLEAR THAT THE ACC OUNTANT HAS NOT STATED SPECIFICALLY THAT THIS PAPER DID NOT BELONG TO THE ASSESSEE. MOREOVER, ON THE TOP OF THE PAGE, THE NA ME OF THE ASSESSEE IS MENTIONED, HENCE WE REJECT THIS CONTENT ION OF THE LEARNED COUNSEL FOR THE ASSESSEE. WE, HOWEVER, CO NFIRM THE ACTION OF THE LEARNED COMMISSIONER OF INCOMETAX (AP PEALS) AS REGARD TO THE QUANTUM OF ADDITION SUSTAINED BY HIM FOR THE REASON THAT HE HAS TAKE PROPERLY ANALYSED COMPLETE FACTS OF THE SEIZED DOCUMENTS. THUS, THIS GROUND OF THE REVENUE STANDS DISMISSED. 17. GROUND NO. 4 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN - DELETING THE ADDITION OF RS.5,08,580/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNRECORDED PURCHASE OF CHANA. 18. THE FACTS, IN BRIEF, ARE THAT THE ON THE BASIS OF SEIZED DOCUMENTS, THE ASSESSING OFFICER FOUND THAT THE ASS ESSEE HAD PURCHASED CHANA WEIGHING 2618 QUINTALS FOR RS. 4,34 ,567/- WHICH WAS NOT DISCLOSED IN THE BOOKS OF ACCOUNTS, H ENCE, HE TREATED THE SAME AS UNRECORDED PURCHASES REPRESENTI NG UNDISCLOSED INCOME FOR THE BLOCK PERIOD 1.4.2000 TO 31.3.2001. 10 THE ASSESSING OFFICER FURTHER ADDED A SUM OF RS.86, 513/- FOR UNDISCLOSED INVESTMENT IN THE UNACCOUNTED PURCHASES ON THE BASIS OF SEIZED DOCUMENT LPS1/2 SEIZED FROM THE RES IDENCE OF SHRI RAMESH CHAND. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WHEREIN THE ASSESSEE SUBMITTED THAT THE PURCHASES WORTH RS.4,34,567/- PERTAINED TO ONE M/S SHEETAL TRADING COMPANY AS THE SAME WAS FOUND RECORDED IN T HEIR BOOKS WHICH WERE ALSO KEPT WITH THE ACCOUNTANT OF T HE ASSESSEE WHO WAS ALSO DOING THE ACCOUNTING WORK OF THE SAID FIRM AND A NOTICE UNDER SECTION 158BD HAD BEEN ISSU ED TO THAT FIRM, HENCE, THE SAME WAS NOT CORRECTLY MADE BY THE ASSESSING OFFICER. 19. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AGREED WITH THE ABOVE SUBMISSIONS OF THE ASSESSEE A ND DELETED THE ADDITION OF RS.4,34,567/-. AS REGARDS THE OTHER ITME OF RS.86,513/-, HE SUSTAINED AN ADDITION OF RS.12,5 00/- IN THE ASSESSMENT YEAR 2002-03 FOR PURCHASES AND NET PROFI T. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 20. THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED STRONG RELIANCE ON THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED 11 COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEA LS) AND PLACED STRONG RELIANCE THEREON TO THE EXTENT OF REL IEF GRANTED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). 21. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. AS FAR AS THE ADDITION OF RS.4,34,567/- IS C ONCERNED, WE FIND THAT THE SEIZED DOCUMENTS HAVE BEEN CO-RELATED WITH ANOTHER ASSESSEE TO WHOM NOTICE UNDER SECTION 158BD OF THE ACT HAS BEEN ISSUED AND THE SAID ACTION, BY ITSELF, MEANS THAT THE INCOME/TRANSACTION RECORDED IN THE SAID SEIZED DOCUMENT, DO NOT PERTAIN TO THE ASSESSEE. THEREFORE, WE CONF IRM THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOMETAX ( APPEALS) IN THIS REGARD. AS REGARDS THE OTHER ADDITION, FOR TH E REASONS GIVEN ON GROUND NO. 3, THE ADDITION DELETED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IS SUSTAINED. THUS, GROUND NO. 4 OF THE REVENUE STANDS DISMISSED. 22. GROUND NOS. 5 READS AS UNDER :- 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, T HE LD CIT(A) HAS ERRED IN - DELETING THE ADDITION OF RS.11,28,580/- RIGHTLY MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH DIFFERENCE. 12 23. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VE RY OUTSET SUBMITTED THAT THE ASSESSEE WAS ONE OF THE E NTITIES OF SHAH GROUP WHERE SUCH OPERATIONS HAD TAKEN PLACE ON 3.1.2002. HE FURTHER SUBMITTED THAT SIMILAR ISSUE W AS INVOLVED IN THE CASE OF ANOTHER ASSESSEE OF THE GROUP WHICH REACHED UPTO THE LEVEL OF THE TRIBUNAL AND THE TRIBUNAL IN THE CASE OF MAGANLAL SHAH IN IT(SS)A NO.48/IND/05 ORDER DATED 3 1 ST JULY, 2008 DELETED THE SAME DISALLOWANCE, HENCE, THIS ISS UE WAS COVERED IN FAVOUR OF THE ASSESSEE. 24. ON THE OTHER HAND, THE LD DEPARTMENTAL REPRESEN TATIVE PREFERRED TO RELY ON THE ORDER OF THE ASSESSING OFF ICER. 25. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOTED A SIMILAR ISSUE WAS INVOLVED IN THE CASE OF ANOTHER ASSESSEE OF THE GROUP WHICH REACHED UPTO TH E LEVEL OF THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 29 TH AUGUST, 2008 IN THE CASE OF JAYESH SHAH IN IT(SS)A NO.63/IN D/05 DELETED THE SIMILAR DISALLOWANCE WITH THE FOLLOWING OBSERVATIONS :- 23. ON CONSIDERATION OF THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT 13 THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WAS JUSTIFIED IN DELETING THE ENTIRE ADDITION. THE AMENDED DEFINITION OF SECTION 158BB CLEARLY PROVIDES THAT SOME EVIDENCE IS TO BE FOUND AS A RESULT OF SEARCH OPERATION AND IT IS ONLY THEREAFTE R THAT THE REMAINING PART OF THE PROVISION COULD COME INTO PLAY AND THAT TOO THE REMAINING EVIDENCE MUST BE RELATABLE TO THE EVIDENCE RECOVERED DURING THE COURSE OF SEARCH. THE BLOCK ASSESSMENT THUS WILL BE MADE IN RESPECT OF UNDISCLOSED INCOME IF DURING THE PERIOD UNDISCLOSED INCOME IS RECOVERED AS A RESULT OF EVIDENCE FOUND DURING THE COURSE OF SEARC H AND NOT AS A RESULT OF OTHER DOCUMENTS OR MATERIAL WHICH CAME TO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT TO THE CONCLUSION OF THE SEARCH OPERATION UNLESS AND UNTIL SUCH MATERIAL OR DOCUMENT IS RELATABLE TO SUCH EVIDENCE RECOVERED DURING THE COURSE OF SEARCH OPERATION. ADMITTEDLY, INCOMPLETE BOOKS OF ACCOUNTS WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER FOUND FROM SUCH BOOKS OF ACCOUNTS THAT FROM 14 6.11.2001 ONWARDS CASH BOOK IS COMPLETELY BLANK. THE ASSESSEE FILED THE PHOTOCOPIES OF THJE CASH BOOK ALONG WITH THE REPLY AND ON SUCH PHOTOCOPIES THE ASSESSEE EXPLAINED THE RECONSTRUCTION OF THE CASH BOOK FROM 6.11.2001 TO 11 TH DECEMBER, 2001 AND SUCH PAPERS WERE FILED BEFORE THE ASSESSING OFFICER ON 6.1.2004 I.E. AFTER THE SEARCH AND AT TH E CLOSE OF THE BLOCK ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER FROM SUCH PHOTOCOPIES OF THE CASH BOOK FOUND THAT THE ASSESSEE HAS SHOWN THE PAYMENTS TO VARIOUS PERSONS THROUGH CASH OR THROUGH BEARER CHEQUES IN RESPECT OF WHICH PAYMENT WAS TAKEN BACK FROM THE BANK. THE ASSESSING OFFICER NOTED SUCH ENTRIES FORM 6.11.2001 TO 11 TH DECEMBER, 2001 AT NOTED AT PAGES 24 AND 25 OF THE ASSESSMENT ORDER THAT THE ASSESSEE MADE CASH PAYMENTS OFRS.8,92,126/- TO VARIOUS PERSONS DURING THIS PERIOD. SINCE THIS CASH WAS NOT FOUND DURING THE COURSE OF SEARCH THEREFORE, THE ASSESSING OFFICER BELIEVED THAT SUCH DEFICIENT CASH IS INVESTED BY THE ASSESSEE 15 SOMEWHERE ELSE. IT WOULD, THEREFORE, PROVE THAT NO SEIZED MATERIAL OR EVIDENCE WAS RECOVERED DURING THE COURSE OF SEARCH THAT THE ASSESSEE MADE CSH PAYMENTS TO VARIOUS PERSONS FROM 6.11.2001 TO 11 TH DECEMBER, 2001. NO ADDITION THEREFORE COULD BE MADE OF SUCH AN AMOUNT IN THE BLOCK ASSESSMENT. MOREOVER, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CORRECTLY RECORDED THE FINDING THAT THE CASH NOT FOUND IS NOT LINKED WITH ANY INVESTMENT . THE FINDING OF THE ASSESSING OFFICER THUS IS BASED ON ASSUMPTION AND PRESUMPTION ONLY. EVEN OTHERWISE, WE MAY NOTE THAT AS PER THE FINDING OF THE ASSESSING OFFICER THE AFORESAID CASH BELONGED TO THE ASSESSEE AS PER THE RECONSTRUCTED CASH BOOK THEREFORE, THERE IS NO REASON TO HOLD THAT THE SAME IS UNDISCLOSED INVESTMENT BY THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER NOTING THE FACTS AND THE FINDING OF THE ASSESSING OFFICER CORRECTLY CAME TO THE FINDING IN DELETING T HE ADDITION. THE OPERATIVE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THOUGH IS IN 16 BRIEF BUT THE ENTIRE FACTS AND CIRCUMSTANCES RECORDED IN THE IMPUGNED ORDER CLEARLY SUGGEST THAT THE FINDING OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IS IN ACCORDANCE WITH LAW. IT, THEREFORE, CANNOT BE TREATED AS NON-SPEAKING ORDER. THERE IS THUS NO INFIRMITY IN THE ORDER OF THE LEAR NED COMMISSIONER OF INCOMETAX (APPEALS) IN DELETING THE ADDITION. THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 26. WE, THEREFORE, FOR THE REASONS RECORDED BY THE TRIBUNAL IN THE AFORESAID ORDER, FIND NO MERIT IN T HIS GROUND OF THE REVENUE AND THE SAME IS DISMISSED. 27. GROUND NO. 6 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN - DELETING THE ADDITION OF RS.9,61,325/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEPOSITS OF SELF MA DE DRAFT IN NEW BANKS ACCOUNT IN A.Y. 2002-03. 28. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VER Y OUTSET SUBMITTED THAT THE ASSESSEE WAS ONE OF THE ENTITIES OF SHAH GROUP WHERE SUCH OPERATIONS HAD TAKEN PLACE ON 3.1. 2002. HE FURTHER SUBMITTED THAT SIMILAR ISSUE WAS INVOLVED I N THE CASE OF 17 ANOTHER ASSESSEE OF THE GROUP REACHED UPTO THE LEVE L OF THE TRIBUNAL AND THE TRIBUNAL IN THE CASE OF JAYESH SHA H IN IT(SS)A NO.63/IND/05 ORDER DATED 29 TH AUGUST, 2008 DELETED THE SAME DISALLOWANCE, HENCE, THIS ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE. 29. ON THE OTHER HAND, THE LD DEPARTMENTAL REPRESEN TATIVE PREFERRED TO RELY ON THE ORDER OF THE ASSESSING OFF ICER. 30. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOTED A SIMILAR ISSUE WAS INVOLVED IN THE CASE OF ANOTHER ASSESSEE OF THE GROUP WHICH REACHED UPTO TH E LEVEL OF THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 29 TH AUGUST, 2008 IN THE CASE OF JAYESH SHAH IN IT(SS)A NO.63/IN D/05 DELETED THE SIMILAR DISALLOWANCE WITH THE FOLLOWING OBSERVATIONS ON CONSIDERATION OF THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE MATTER. THE ASSESSEE HAS FURNISHED SUFFICIENT MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE SOLD THE GOODS TO VARIOUS PARTIES EITHER DIRECTLY OR THROUGH THE BROKERS. THE 18 SALE OF GOODS IS NOT IN DISPUTE. THE MATERIAL AND THE EVIDENCE FILED BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ARE ALSO NOT DISPUTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. THE EVIDENCE AVAILABLE ON RECORD CLEARLY PROVED THAT THE ASSESSEE MADE SALES TO THE PARTIES AND AGAINST THE SAME PAYMENTS HAVE BEEN RECEIVED. THE ASSESSING OFFICER HAS NOT EXAMINED ANY OF THE CONCERNED PARTIES. THE ASSESSING OFFICER HAS ALSO NOT EXAMINED PROPERLY THE DETAILS FILED ON RECORD. THE ASSESSING OFFICER HAS NOT BROUGHT ANY EVIDENCE ON RECORD THAT THE ASSESSEE WAS THE PURCHASER OF DRAFTS OR THAT THE CONCERNED PARTIES WERE BENAMIDARS OF THE ASSESSEE OR THAT THE PARTIES WERE NON- EXISTENT. IN THE ABSENCE OF ANY RELIABLE EVIDENCE ON RECORD, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADD ON THIS ISSUE. THE LEARNED COUNSEL FOR THE ASSESSEE IN SUPPORT OF THE CONTENTION RELIED UPON THE 19 DECISION OF THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF COMMISSIONER OF INCOMETAX V. P.V. KALYANSUNDARAM; 282 ITR 259 IN WHICH IT WAS HELD THAT BURDEN OF PROVING ACTUAL CONSIDERATION IN SUCH A TRANSACTION WAS THAT OF THE REVENUE. THE ASSESSING OFFICER DID NOT CONDUCT ANY INDEPENDENT INQUIRY RELATING TO VALUE OF PROPERTY PURCHASED. THE DELETION OF ADDITION WAS HELD TO BE JUSTIFIED. THIS DECISION MAY NOT BE DIRECTLY APPLICABLE TO THE ISSUE INVOLVED IN THE PRESENT GROUND. HOWEVER, WE FIND THAT THE ASSESSEE HAS BEEN ABLE TO SATISFACTORILY EXPLAIN THE RECEIPT OF DRAFTS AGAINST SALE OF GOODS. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 31. WE, THEREFORE, FOR THE REASONS RECORDED BY THE TRIBUNAL IN THE AFORESAID ORDER, FIND NO MERIT IN THIS GROUND O F THE REVENUE AND THE SAME IS DISMISSED. 20 32. GROUND NO. 7 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.67,50,00/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROFIT EARNED BY UN DER INVOICING & TAKING ON MONEY IN A.Y. 2002-03 33. THE FACTS, IN BRIEF, ARE THAT THE ASSESSING OFF ICER, BASED UPON THE SEIZED DOCUMENT SHOWING RECEIPT OF MONEY O VER THE INVOICE VALUE IN RESPECT OF SALE OF CHANA TO ONE M/ S. SHRIRAM ENTERPRISES, WORKED OUT THE ADDITION AT RS.90,000/- @ RS. 300/- PER QUINTAL ON 300 QUINTALS QUANTITY SOLD TO THE SA ID PARTY. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), ON APP EAL BY THE ASSESSEE, FOUND THAT THE ACTUAL QUANTITY SOLD W AS 150 QUINTALS AS PER BILL NO. 138 DATED 4.10.2010, HENCE , THE EXCESS QUANTITY WORKED OUT BY THE ASSESSING OFFICER WAS NO T CORRECT. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) FUR THER HELD THAT THE QUALITY OF GOODS HAD NOT BEEN ASCERTAINED TILL THE PREPARATION OF THE BILL AND, THEREFORE, THE FACT OF BARGAINING COULD NOT BE IGNORED. HENCE, SUM OF RS.3,00/- PER QUINTAL AS ON-MONEY WAS ON HIGHER SIDE. THEREAFTER, HE REDUCE D THE SAME TO RS.150/- PER QUINTAL AND WORKED OUT THE QUA NTUM OF ADDITION AT RS. 22,500/-. AGGRIEVED BY THIS, THE R EVENUE IS IN APPEAL BEFORE US. 21 34. THE LEARNED DEPARTMENTAL REPRESENTATIVE NARRATE D THE FACTS AND PLACED STRONG RELIANCE ON THE ORDER OF TH E LEARNED COMMISSIONER OF INCOMETAX (APPEALS). 35. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOT IN DISPUTE THAT THE CORRECT QUANTU M AS PER THE BILL IS 150 QUINTAL, HENCE, THE QUANTITY OF 300 QUI NTALS ADOPTED BY THE ASSESSING OFFICER IS NOT CORRECT. HOWEVER, WE FURTHER FIND THAT AS PER THE SEIZED DOCUMENTS IN RESPECT OF THE SAME BILL, IT HAS BEEN MENTIONED THAT RS.300/- PER QUINT AL WERE TO BE RECEIVED AS ON-MONEY, HENCE, WE ARE UNABLE TO UNDER STAND AS TO WHEREFROM THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS FOUND THAT THE QUALITY OF CHANA WAS I N DISPUTE/OR IT HAS NOT BEEN ASCERTAINED. THUS, IN OUR VIEW, TH E ADDITION SHOULD HAVE BEEN MADE FOR RS. 45,000/- I.E. 150 QUI NTALS @ RS. 300/- PER QUINTAL. ACCORDINGLY, WE MODIFY THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) TO THIS EXTENT. THUS, THIS GROUND OF THE REVENUE STANDS PARTLY ALLO WED. 36. GROUND NO. 8 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN - 22 DELETING THE ADDITION OF RS.50,000/- RIGHTLY MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF UNRECORDED EXPENSES IN A.Y. 2002-03. 37. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VER Y OUTSET SUBMITTED THAT THE ASSESSEE WAS ONE OF THE ENTITIES OF SHAH GROUP WHERE SUCH OPERATIONS HAD TAKEN PLACE ON 3.1. 2002. HE FURTHER SUBMITTED THAT SIMILAR ISSUE WAS INVOLVED I N THE CASE OF ANOTHER ASSESSEE OF THE GROUP WHICH REACHED UPTO TH E LEVEL OF THE TRIBUNAL AND THE TRIBUNAL IN THE CASE OF RAMESH CHAND KANTILAL SHAH IN IT(SS)A NO.50/IND/05 ORDER DATED 2 9 TH MAY, 2009, DELETED THE DISALLOWANCE, HENCE, THIS ISSUE W AS COVERED IN FAVOUR OF THE ASSESSEE. 38. ON THE OTHER HAND, THE LD DEPARTMENTAL REPRESEN TATIVE PREFERRED TO RELY ON THE ORDER OF THE ASSESSING OFF ICER. 39. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. WE FIND THAT A SIMILAR ISSUE WAS INVOLVED IN THE CASE OF ANOTHER ASSESSEE OF THE GROUP WHICH REACHED UPTO TH E LEVEL OF THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 29 TH MAY, 2009 IN THE CASE OF RAMESH CHAND KANTILAL SHAH IN I T(SS)A NO.50/IND/05 DELETED THE SIMILAR DISALLOWANCE WITH THE FOLLOWING OBSERVATIONS :- 23 55. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE NOTED THAT BOTH THE SEIZED PAPERS CANNOT BE COMPARED FOR ARRIVING AT INFLATED EXPENSES BECAUSE THE DATES OF THESE SEIZED PAPERS ARE DIFFERENT. MOREOVER, THERE IS A DOUBLE ADDITION OF RS.50,000/- UNDER THE HEAD SUPPRESSION OF PROFIT AND ANOTHER UNDER THE HEAD UNEXPLAINED EXPENSES. BOTH THE ADDITIONS WERE ACCORDINGLY DELETED. 56. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT POINTED OUT ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). WE, THEREFORE, CONFIRM HIS FINDINGS AND DISMISS THESE GROUNDS OF APPEAL OF THE REVENUE. 40. WE, THEREFORE, FOR THE REASONS RECORDED BY THE TRIBUNAL IN THE AFORESAID ORDER, FIND NO MERIT IN THIS GROUN D OF THE REVENUE AND THE SAME IS DISMISSED. 24 41. GROUND NO. 9 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN - DELETING THE ADDITION OF RS.9,86,000/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INFLATION OF PURCHA SE TO REDUCE PROFIT IN A.Y. 2002-03. 42. THE FACTS, IN BRIEF, ARE THAT THE ASSESSING OFF ICER FROM THE SEIZED DOCUMENT BS-1/8, SEIZED FROM THE RESIDENCE O F SHRI RAMESH CHAND SHAH, FOUND THAT IN SUCH DOCUMENT, DET AILS OF PURCHASES FROM 12 PARTIES DURING THE PERIOD 15.9.20 01 TO 27.9.2001 HAD BEEN MENTIONED. THE ASSESSING OFFICE R FURTHER FOUND THAT FOUR PARTIES OUT OF SUCH 12 PARTIES WERE LOCAL PARTIES AND AGAINST THEIR NAMES, THE ASSESSEE HAS MENTIONED KEVAL JAMA KHARCH, HENCE, HE REQUIRED THE ASSESSEE TO EX PLAIN THE NATURE AND ISSUED QUESTIONNAIRE. THE ASSESSEE SUBM ITTED REPLY IN THE CASE OF ANOTHER CONNECTED ASSESSEE, NA MELY, M/S RAMESH CHAND KANTILAL SHAH. THE ASSESSING OFFICER, HOWEVER, INFERRED THAT NO PHYSICAL TRANSFER OF GOODS HAD TAK EN PLACE AND THESE DOCUMENTS HAD BEEN CREATED ONLY TO COVER UP UNRECORDED STOCK, HENCE, THE ASSESSING OFFICER HELD THAT CORRESPONDING INVESTMENT IN THE RECORDED STOCK REPR ESENTED UNDISCLOSED INCOME OF THE ASSESSEE. ACCORDINGLY, H E MADE AN ADDITION OF RS.9,86,000/-. AGGRIEVED BY THIS, THE ASSESSEE 25 PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) WHEREIN IT WAS CONTENDED THAT T HESE TRANSACTIONS WERE RELATED TO KANTILAL SHAH WHO WAS NOT EXAMINED. THE ASSESSEE ALSO SUBMITTED OTHER DOCUME NTARY EVIDENCES TO SHOW THAT THESE TRANSACTIONS DID NOT B ELONG TO THE ASSESSEE. 43. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND DELETE D THE IMPUGNED ADDITION BY HOLDING THAT THE ASSESSING OFF ICER SHOULD HAVE VERIFIED THE RECORDED PURCHASES FROM THE SEIZE D DOCUMENTS BEFORE COMING TO THE CONCLUSION THAT THE PURCHASES IN RESPECT OF THESE FOUR PARTIES WERE NOTHING BUT S HAM TRANSACTIONS. HE, HOWEVER, HELD THAT THE TRANSACTI ONS WERE NOT RELATED TO THE APPELLANT AND HAD BEEN EXPLAINED IN THE COURSE OF ASSESSMENT PROCEEDINGS OF M/S RAMESH CHAND KANTILAL SHAH. IT WAS ALSO OBSERVED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) THAT THE ASSESSING OFFICER HAD NOT MADE ANY ADVERSE COMMENT ON THIS EXPLANATION OF THE ASSE SSEE. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 44. THE LEARNED DEPARTMENTAL REPRESENTATIVE NARRATE D THE FACTS AND PLACED STRONG RELIANCE ON THE ORDER OF TH E ASSESSING 26 OFFICER. 45. THE LEARNED COUNSEL FOR THE ASSESSED, ON THE OT HER HAND, BESIDES REITERATING THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), PLACED STRONG RELIANCE ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOMET AX (APPEALS). 46. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOTED THAT THE SEIZED TRANSACTIONS REC ORDED IN THE SEIZED DOCUMENT HAVE BEEN FOUND AS PERTAINING TO OT HER CONCERN AND IN THE CASE OF SUCH CONCERN, THESE TRAN SACTIONS HAVE BEEN EXPLAINED, HENCE, IN OUR VIEW, THE LEARNE D COMMISSIONER OF INCOMETAX (APPEALS) HAS RIGHTLY DEL ETED THE IMPUGNED ADDITION. THUS, THIS GROUND OF THE REVENU E IS DISMISSED. 47. GROUND NO. 10 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN - DELETING THE ADDITION OF RS.35,424/- RIGHTLY MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF SHAM TRANSACTION IN A.Y. 2002-03. 48. THE FACTS, IN BRIEF, ARE THAT THE ASSESSING OF FICER FOUND THAT THE ASSESSEE HAD SOLD 150 QUINTALS OF CHANA TO M/S AMIT 27 TRADING COMPANY @ RS. 1700/- PER QUINTAL WHICH WAS REPURCHASED FROM THE SAME PARTY AT THE RATE OF RS.2 134/- PER QUINTAL. THE ASSESSING OFFICER HELD THAT THE LOSS OF RS.59,000/- SUFFERED BY THE ASSESSEE WAS NOTHING BUT A CASE OF SHAM TRANSACTION. HENCE, HE ADDED THE SAME AS UNDISCLOS ED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD 1.4.2001 TO 12 .12.2001. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED APPEAL BE FORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS), WHO TR EATED THE TRANSACTION OF SALE AND REPURCHASAE AS GENUINE, HOW EVER, REDUCED THE ADDITION TO RS.24,360/- BY ADOPTING THE RATE OF RS.250/- PER QUINTAL FOR THE REASON THAT THE ASSESS EE FAILED TO FURNISH COMPARABLE EVIDENCE TO ESTABLISH THE LESSER PRICE PREVAILING AT THE TIME OF REPURCHASE. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 49. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) GAV E RELIEF TO THE ASSESSEE FOR THE REASON THAT IN PRINCIPLE HE HA S APPROVED ACTION OF THE ASSESSING OFFICER, HENCE, WITHOUT ANY EVIDENCE FURNISHED BY THE ASSESSEE, THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) SHOULD NOT HAVE REDUCED THE QUA NTUM OF ADDITION MADE BY THE ASSESSING OFFICER. 28 50. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE PLACED STRONG RELIANCE ON THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) TO THE EXTENT O F RELIEF GRANTED BY THE LEARNED COMMISSIONER OF INCOMETAX (A PPEALS). 51. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IN OUR VIEW, THE TRANSACTION IS NOT GENUINE AS MERELY A PAPER TRANSACTION, INSPITE OF THE FACT, EVIDENCES H AVE BEEN CREATED FOR GIVING A GENUINE SHAPE TO THE SAID TRAN SACTION. IT IS SO ALSO FOR THE REASON THAT NO BUSINESS PRUDENCE OR NECESSITY HAS BEEN SHOWN TO SELL THE GOODS AT SUCH RATES AND TO REPURCHASE THE SAME GOODS AT A HIGHER RATE. ACCORD INGLY, WE HOLD THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IS NOT CORRECT IN LAW, HENCE, WE CONFIRM THE ORDER OF THE ASSESSING OFFICER. ACCORDINGLY, THIS GROUND OF THE REVENUE IS ALLOWED. 52. GROUND NO. 11 RELATING TO LEVY OF SURCHARGE IS LIABLE TO BE DISMISSED AS THE SEARCH HAS TAKEN PLACE PRIOR TO 1. 6.2002, HENCE, THIS GROUND OF THE REVENUE IS DISMISSED. 53. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS PARTLY ALLOWED. 29 54. NOW, WE SHALL TAKE UP THE CROSS OBJECTION OF TH E ASSESSEE. 55. GROUND NOS. 1 AND 2 WERE NOT PRESSED AND THE SA ME ARE DISMISSED AS NOT PRESSED. 56. IN GROUND NO. 3, THE ISSUE IS REGARDING ALLOWAN CE OF CREDIT OF OPENING BALANCE OF RS.2,95,174/- IN COMPUTING TH E PEAK CREDIT. THIS GROUND IS RELATED TO THE ISSUE RAISED BY THE REVENUE IN GROUND NO. 1 OF THE REVENUES APPEAL AND IN VIEW OF THE ORDER OF THE TRIBUNAL IN THE CASE OF MAGANLAL SHAH (SUPRA ) AND OUR DECISION IN RESPECT OF REVENUES GROUND NO. 1, THIS HAS BECOME INFRUCTUOUS, HENCE, DISMISSED. 57. IN GROUND NOS. 4 AND 5, THE ISSUE IS AGAIN RELA TED TO COMPUTATION OF PEAK CREDIT AND IN VIEW OF OUR DECIS ION ON GROUND NO. 1 OF THE REVENUES APPEAL, IT HAS ALSO B ECOME INFRUCTUOUS, HENCE, DISMISSED. 58. THE ISSUE RAISED IN GROUND NOS. 6 AND 7 IS CONN ECTED WITH THE ISSUE RAISED IN GROUND NOS. 3 AND 4 OF THE REVE NUES APPEAL, HENCE, IN VIEW OF OUR DECISION ON THOSE GROUNDS, TH ESE GROUNDS ARE DISMISSED. 59. GROUND NO. 8 IS RELATING TO RECEIPT OF MONEY ON SALE OF CHANA TO SHRIRAM ENTERPRISES AND IS CONNECTED WITH GROUND NO. 30 7 OF THE REVENUES APPEAL. IN VIEW OF OUR DECISION ON GROUND NO. 7 IN THE REVENUES APPEAL, THIS GROUND OF THE A SSESSEE IS DISMISSED. 60. THE ISSUE RAISED IN GROUND NO. 9 IS CONNECTED W ITH GROUND NO. 10 OF THE REVENUES APPEAL AND IN VIEW OF OUR D ECISION THEREON, THIS GROUND OF THE ASSESSEE IS DISMISSED. 61. GROUND NOS. 10 AND 11 WERE NOT PRESSED, HENCE, DISMISSED AS NOT PRESSED. 62. IN THE RESULT, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 63. TO SUM UP, THE REVENUES APPEAL IS PARTLY ALLOW ED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29 TH MARCH, 2010 SD SD (JOGINDER SINGH) (V.K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER 29 TH MARCH, 2010 COPY TO APPELLANT, RESPONDENT, CIT, CIT(A), DR, GUA RD FILE D/- 31