M/s. G.S. Roller Flour Mills Pvt. Ltd., Bhopal V. The ACIT 3(1), Bhopal

ITSSA 7/IND/2014

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1394 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHANEY
• Assessee Lawyers: L N MALIK; MANISH MALIK CAS
• Keywords: Business income; Search and seizure; Loose papers; Document seized; Source of fund; Assessment record; Documents seized
• Section: 143(3); 153A; 132; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.(SS).A.NOS. 7 TO 12/IND/2014 A.YS : 2004-05 TO 2009-10 M/S.G.S.ROLLER FLOUR MILLS (P) LTD., ACIT, 3(1), BHOPAL VS BHOPAL APPELLANT RESPONDENT PAN NO.AABCG4975E I.T.(SS).A.NOS. 21 TO 25/IND/2014 A.YS : 2004-05 TO 2007-08 & 2009-10 ACIT, 3(1), M/S.G.S.ROLLER FLOUR MILLS (P) LTD., BHOPAL VS BHOPAL APPELLANT RESPONDENT M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 2 2 I.T.A.NO. 08/IND/2014 A.Y. : 2010-11 M/S.G.S.ROLLER FLOUR MILLS (P) LTD., ACIT, 3(1), BHOPAL VS BHOPAL APPELLANT RESPONDENT I.T.A.NO. 17/IND/2014 A.Y. : 2010-11 ACIT, 3(1), M/S.G.S.ROLLER FLOUR MILLS (P) LTD., BHOPAL VS BHOPAL APPELLANT RESPONDENT ASSESSEE BY : SHRI L.N.MALIK & SHRI MANISH MALIK, CAS DEPARTMENT BY : SHRI R AJEEV VARSHANEY, CIT DR DATE OF HEARING : 06 . 10 .2015 . DATE OF PRONOUNCEMENT : 08 . 1 2 .2015 M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 3 3 O R D E R PER BENCH ALL THESE THIRTEEN APPEALS HAVE BEEN FILED AGAINST THE COMMON ORDER PASSED U/S 143(3) READ WITH SECTION 14 3 FOR ASSESSMENT YEARS 2004-05 TO 2009-10 AND 2010-11. SI NCE THE COMMON ISSUES ARE INVOLVED IN ALL THESE SEVEN YEARS , THESE APPEALS ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION U/S 132(1) OF INCOME-TAX ACT, 196 1, HAS BEEN CARRIED OUT ON 04.02.2010 AT THE FACTORY CUM O FFICIAL PREMISES OF THE ASSESSEE COMPANY ALONGWITH THE RESI DENCE OF ITS DIRECTORS SITUATED AT 188, PUL BOGDA, JINSHI, J AHANGIRABAD, BHOPAL. IN RESPONSE TO NOTICE ISSUED U/S 153A ON 28 .04.2011, THE ASSESSEE HAS FILED RETURNS ON 16.08.2011, DECLA RING INCOME AS UNDER AGAINST ORIGINAL RETURNED INCOME ON WHICH ASSESSMENTS HAVE BEEN MADE BY THE ASSESSING OFFICER AND COMMON ORDER IN THESE APPEALS ARE AS UNDER :- M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 4 4 S.NO. A.Y. ORIGINAL RETURNED INCOME DETAILS RETURNED INCOME U/S 153A ( RS.) ASSESSED INCOME ( RS. ) (A) (B) DATE OF FILING RETURN (C) RETURNED INCOME (RS.) (D) (E) (F) 1 2004-05 01.11.2004 (-)1,67,880 (-)1,67,880 24,80,000 2 2005-06 08.07.2005 -- NIL 37,34,400 3 2006-07 11.12.2006 -- NIL 54,53,500 4 2007-08 30.10.2007 -- NIL 14,32,300 5 2008-09 22.09.2008 -- NIL 32,60,900 6 2009-10 26.09.2008 -- NIL 10,47,050 7 2010-11 -- -- NIL 22,50,220 I.T.(SS).A.NOS. 7 TO 12/IND/2014 : A.YS. : 2004-05 TO 2009- 10: 3. IN ALL THESE ASSESSEES APPEALS, COMMON GROUND HAS BEEN TAKEN, WHICH READS AS UNDER :- THE LD. CIT(A) FAILED TO APPRECIATE THAT ADDITIONS MADE TO THE INCOME WITHOUT ANY MATERIAL FOUND DURING THE COURSE OF SEARCH IS OUTSIDE THE SCOPE OF SECTION 153A. 4. THIS GROUND IN ALL THE APPEALS RELATES TO VALIDITY OF VARIOUS ADDITIONS MADE IN THE ORDER PASSED U/S 153A OF THE INCOME-TAX ACT, 1961, ON THE GROUND THAT THE ORIGIN AL PROCEEDINGS STANDS CONCLUDED ONCE THE RETURNS FILED ARE ACCEPTED U/S 143(1) OF THE ACT. THE ASSESSEE HAS FU RTHER STATED THAT SEARCH AND SEIZURE OPERATIONS HAVE NOT LET TO THE M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 5 5 DISCOVERY & SEIZURE OF ANY INCRIMINATING MATERIAL W HICH CAN BE USED BY THE ASSESSING OFFICER IN THE PROCEEDINGS U/ S 153A TO DISTURB THE ASSESSEES RETURNS OF INCOME FILED EARL IER. 5. THE CIT(A) IN HIS ORDER HAS RELIED UPON THE VARIOUS DECISIONS AND IN THAT DECISION, THE LD. CIT(A) HAS HELD THAT IF THERE IS ANY MATERIAL FOUND DURING THE COURSE OF SE ARCH, IT AMOUNTS TO BRINGING BACK THE SAME CONCEPT OF UNDIS CLOSED INCOME IN NEW SECTIONS 153A TO 153C OF THE ACT AND IN ALL FAIRNESS, THAT WOULD BE CONTRARY TO THE INTENTION O F THE LEGISLATURE. THE INTENTION OF THE LEGISLATURE HAS T O BE GATHERED FROM THE LANGUAGE USED IN THE STATUTE WHICH MEANS T HAT ATTENTION SHOULD BE PROVIDED TO WHAT HAS BEEN SAID AS ALSO TO WHAT HAS NOT BEEN SAID. IN THE NEW SECTIONS 153A TO 153C, THE LEGISLATURE HAS NOT SAID THAT THE ASSESSMENT OF TOT AL INCOME HAS TO BE BASED ON EVIDENCE FOUND AS A RESULT OF SE ARCH AND THE AO IS EMPOWERED TO ASSESS AND REASSESS THE TOTA L INCOME AND NOT ONLY THE UNDISCLOSED INCOME ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH. 6. THE LD. CIT DR RELIED UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF MADUGULA VENU VS. D IRECTOR OF M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 6 6 INCOME-TAX, (2013) 29 TAXMANN.COM 200 (DEL), WHEREI N IT IS HELD THAT ONCE THERE IS A SEARCH, THE AO HAS NO OPT ION BUT TO ASSESS THE TOTAL INCOME FOR THE EARLIER SIX ASSESSM ENT YEARS INCLUDING BOTH THE INCOME EARLIER DISCLOSED AND INC OME FOUND CONSEQUENT TO THE SEARCH. THE LD. CIT(A) HAS ALSO R ELIED ON THE DECISION OF CIT VS. CHETAN DAS LACHMAN DAS, (2012) 25 TAXMANN.COM 227 (DEL), WHEREIN THE HON'BLE DELHI HI GH COURT HAS HELD THAT THE ADDITION SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF SEARCH OR OTHER POST SEARCH MATERIAL OR INFORMATION AVAILABLE WITH AO WHICH CAN BE RELATED TO EVIDENCE FOUND. IN VIEW OF THIS, THE LD. CIT DR HAS HELD THAT THE AO HAS POWER TO REASSESS AND ASSESS THE INCOME FOR SIX ASSESSMENT YEARS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IN THE CASE OF CIT VS. KABUL CHAWLA, I N I.T.A.NOS. 707/2014, 709/2014 AND 713/2014, THE HON'BLE DELHI HIGH COURT HAS LAID DOWN THE SUMMARY OF LEGAL POSITION I N RESPECT OF SECTION 153A(1) OF THE ACT, WHICH READS AS UNDER :- M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 7 7 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER :- (I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX A Y S IMMEDIATELY PRECE DING THE PREVIOUS YEAR RELEVANT TO THE A. Y. IN WHICH TH E SEARCH TAKES PLACE. (II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FO R SUCH ASSESSMENT YEARS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. (III) THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT A Y IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 8 8 ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS TH ERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EAC H OF THE SIX A YS 'IN WHICH BOTH THE DISCLOSED AND TH E UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX' (IV) ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE A O WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' (V) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 9 9 SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. (VI) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND TH E ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH A Y ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. (VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF' SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 10 10 8. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE DELH I HIGH COURT (SUPRA), WE ARE OF THE VIEW THAT IN ALL THESE ASSESSEES APPEALS AND DEPARTMENTS APPEALS LATER G ROUND RELATES TO VARIATION IN GROSS PROFIT, THERE WAS NO MATERIAL FOUND REGARDING VARIATION IN GROSS PROFIT DURING THE COUR SE OF SEARCH PROCEEDINGS. WE FOUND THAT DURING THE COURSE OF SEA RCH AND SEIZURE OPERATION CARRIED OUT IN THE ASSESSEES CAS E HAS NOT LED TO ANY DISCOVERY OF SEIZURE OR INCRIMINATING MATERI AL, WHICH IS TO BE USED BY THE ASSESSING OFFICER IN THE PROCEEDI NGS U/S 153A OF THE ACT TO DISTURB THE ASSESSEES RETURN OF INCOME. THE GROSS PROFIT ADDITION COULD HAVE BEEN TEMPTED TO BE MADE IN REGULAR COURSE OF ASSESSMENT PROCEEDINGS. MERELY BE CAUSE SEARCH AND SEIZURE OPERATIONS HAVE BEEN CARRIED OUT , THE AO OUGHT NOT TO ROPE IN THE ISSUE IN THE PROCEEDINGS U /S 153A OF THE ACT, WHEN THERE IS NO INCRIMINATING MATERIAL TO SUGGEST THAT GROSS PROFIT HAS TO BE DISTURBED. THE BASIS OF DISTURBING THE GROSS PROFIT IS THAT THE ASSESSEE HAS SHOWN HIG HER GROSS PROFIT IN ONE OF THE YEARS AND ON THE BASIS OF THAT YEAR, THE ADDITION HAS BEEN MADE. THERE IS NO BASIS TO SUGGES T OF INCRIMINATING MATERIAL FOR AO TO VARY THE GROSS PRO FIT DECLARED M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 11 11 IN ORIGINAL RETURN. THEREFORE, WE DELETE THE ADDITI ON ON ACCOUNT OF GROSS PROFIT MADE U/S 153A OF THE ACT. THEREFORE , WE ALLOW THE APPEALS OF THE ASSESSEE ON THIS GROUND. 9. IN THE RESULT, THE DEPARTMENTS APPEALS ARE DISMISS ED AND ASSESSEES APPEALS ARE ALLOWED ON THIS GROUND. I.T.(SS).A.NOS. 21 TO 25/IND/2014 AND 17/IND/2014 A.YS. 2004-05 TO 2007-08 AND 2010-11 : 10. THE FIRST GROUND OF THE DEPARTMENTS APPEALS RELATE S TO DELETING THE ADDITION ON ACCOUNT OF GROSS PROFIT FO R ALL THE YEARS UNDER APPEAL EXCEPT FOR ASSESSMENT YEAR 2008-09. BY MAKING THE ADDITION, THE AO HAS MENTIONED VARIATION IN GRO SS PROFIT. 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE WAS BOOKING PROFIT FROM MANUFACTURING AND TRADING OF WHEAT, FLOUR, MAIDA, S UJI AND GRAM. FOLLOWING KEY FIGURES WERE ABSTRACTED DURING THE EXAMINATION OF THE FINAL ACCOUNTS PRODUCED BY THE A SSESSEE. MANUFACTURING/TRADING BUSINESS OF FLOUR, WHEAT ETC. A.Y. TURNOVER RS. IN LACS GROSS PROFIT RS. IN LACS % OF GROSS PROFIT 2004-05 302.03 16.68 5.52 2005-06 539.27 26.15 4.85 2006-07 557.27 21.40 3.83 M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 12 12 2007-08 55.89 --- --- 2008-09 205.91 23.55 11.43 2009-10 45.96 1.74 0.38 2010-11 341.69 19.19 5.62 12. THE ASSESSEE WAS ASKED TO PROVIDE EXPLANATION FOR T HE VARIATION IN GROSS PROFIT RATES IN DIFFERENT YEARS IRRESPECTIVE OF THE BUSINESS ACTIVITY BEING THE SAME. ALSO MONTH-WI SE DETAILS OF VALUATION OF CLOSING STOCK WAS ASKED IN TABULAR FORM ALSO THE BASIS OF RECOGNIZING REVENUE WAS ASKED. A PART DETAILS OF MATERIAL PURCHASES, LABOUR PAYMENTS AND OTHER VARIO US ADMINISTRATIVE EXPENSES WAS ASKED TO BE SUBMITTED A LONGWITH RELEVANT BILLS, RECEIPTS, VOUCHERS ETC. THE ASSESSE E FAILED TO PROVIDE AFOREMENTIONED DETAILS DESPITE VARIOUS REMI NDERS. THUS, FOLLOWING ADDITIONS ARE MADE ON ACCOUNT OF GR OSS PROFIT VARIATIONS TAKING THE PEAK GROSS PROFIT SHOWN BY TH E ASSESSEE IN RESPECTIVE YEARS, WHICH READS AS UNDER :- A.Y. TURNOVER (RS.IN LACS) GROSS PROFIT ( RS. IN LACS) % OF GROSS PROFIT SHOWN BY ASSESSEE % OF GROSS PROFIT ASSESSED AMOUNT OF ADDITION 2004-05 302.03 16.68 5.52 11.43 1785000 2005-06 539.27 26.15 4.85 11.43 3545400 2006-07 557.27 21.40 3.83 11.43 4239500 2007-08 55.89 --- --- 11.43 638800 2008-09 205.91 23.55 11.43 11.43 --- 2009-10 45.96 1.74 0.38 11.43 503450 2010-11 341.69 19.19 5.62 11.43 1985220 TOTAL RS. 12700370 M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 13 13 13. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE AO WAS OF THE VIEW THAT THERE IS A VARIATION IN GRO SS PROFIT FOR ALL THE YEARS AND THE MATERIAL WAS FOUND DURING THE COURSE OF SEARCH. THEREFORE, CONSIDERING THE GROSS PROFIT SHO WN BY THE ASSESSEE WAS LOW. THEREFORE, THE AO HAS ASSESSED TH E GROSS PROFIT @ 11.43 % AS SHOWN IN THE ABOVE TABLE INSTEA D OF GROSS PROFIT SHOWN BY THE ASSESSEE AND THE AO HAS MADE TH E ADDITION OF RS. 1,27,00,370/- IN ALL THE ASSESSMENT YEARS. 14. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) PARTLY ALLOWED THE CLAIM BY OBSERVING AS UNDER :- 4.2 APPELLANT'S SUBMISSIONS ALONG WITH ASSESSMENT ORDER HAVE BEEN CONSIDERED CAREFULLY. ASSESSMENT RECORDS HAVE ALSO BEEN PERUSED. THERE IS NO DENYING THE FACT THAT THE APPELLANT HAS BEEN DECLARING VARYING RATES OF GROSS PROFIT BETWEEN 0.38% TO 5.62% FOR THESE YEARS EXCEPT FOR A.Y. 2008-09 WHERE IT HAS BEEN SHOWN @ 11.43% AND WHICH HAS BEEN M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 14 14 MADE THE BASIS BY THE A.O. FOR ALL THE YEARS UNDER APPEAL. IT IS SEEN FROM RECORDS THAT FIRST QUESTIONNAIRE HAS BEEN ISSUED ON 31.10.2011 WHEREBY THE APPELLANT HAS BEEN ASKED TO GIVE EXPLANATION/EVIDENCE REGARDING ITS SOURCES OF INCOME, COPY OF AUDIT REPORTS, RETURNS AND SEIZED DOCUMENTS ETC BUT NO DETAIL REGARDING ITS SALES/PURCHASES OR GROSS PROFIT VARIATION BEEN ASKED FOR THOUGH ITS BOOKS OF ACCOUNT HAVE BEEN ASKED TO BE PRODUCED. THE APPELLANT HAS MADE COMPLIANCE ON 11.11.2011. THEREAFTER VIDE ORDER SHEET ENTRY DT. 23.12.2011, THE APPELLANT HAS BEEN ASKED AS TO WHY PEAK GROSS PROFIT RATE BE NOT APPROXIMATED FOR IT. IN RESPONSE, THE APPELLANT HAS FILED REPLY ON 26.12.2011, AS MENTIONED ABOVE, JUSTIFYING ITS DECLARED GROSS PROFIT AND M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 15 15 NON APPLICABILITY OF PEAK GROSS PROFIT RATE IN ITS CASE. A.O. HAS NOT ACCEPTED APPELLANT'S REPLY BY STATING THAT DETAILS OF MATERIAL PURCHASED, LABOR PAYMENTS ETC. HAVE NOT BEEN SUBMITTED ALONG WITH BILLS/VOUCHERS. THIS FACT IS NOT BORNE OUT FROM ASSESSMENT RECORDS. THE APPELLANT HAS NOT BEEN ASKED TO GIVE ANY MONTH WISE DETAILS OF SALES/PURCHASES OR CLOSING STOCK FOR ANY OF THE YEAR UNDER CONSIDERATION. APPELLANT'S AUDITED BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS HAVE BEEN PRODUCED AND EXAMINED BY THE A.O. THE SAME HAVE ALSO BEEN ACCEPTED BY THE A.O. HIMSELF WITHOUT POINTING OUT ANY DEFECT THEREIN. TOTAL SALES AND PURCHASES DECLARED ALONG WITH VALUATION OF CLOSING STOCK HAVE NOT BEEN DOUBTED BY THE A.O. ALSO NO M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 16 16 INCRIMINATING/ADVERSE DOCUMENT/EVIDENCE REGARDING THESE ACCOUNTS OF SALES AND PURCHASES HAVE ALSO BEEN BROUGHT ON RECORD BY THE A.O. AT ANY STAGE-DURING SEARCH, POST SEARCH ENQUIRIES AND ASSESSMENT PROCEEDINGS. HOWEVER, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE FACT THAT THE APPELLANT HAS SHOWN SUCH WIDELY VARYING GROSS PROFITS, AS MENTIONED IN CHART IN PARA 4 ABOVE, RANGING FROM 0.38% TO 11.43% WITHOUT THERE BEING MAJOR VARIATION IN ITS BUSINESS ACTIVITIES, IT WOULD BE REASONABLE TO APPLY AVERAGE G.P. RATE TO APPELLANT'S DECLARED TURNOVER TO ARRIVE AT GROSS PROFIT. THIS WORKS OUT TO 5.27%. A.O. IS ACCORDINGLY DIRECTED TO COMPUTE ADDITION UNDER GROSS. PROFIT BY TAKING G.P. @ 5.27% ON APPELLANT'S DECLARED TURNOVER M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 17 17 FOR ALL THE YEARS EXCEPT FOR A.Y. 2008.09 WHERE THE APPELLANT ITSELF HAS DECLARED G.P.@11.43% WHILE GIVING EFFECT TO THIS APPEAL ORDER. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 15. THE LD. CIT DR SUBMITTED BEFORE US THAT THERE IS A VARIATION IN THE GROSS PROFIT IN ONE YEAR. THE GROS S PROFIT IN ONE YEAR WAS 11.43 % IN ASSESSMENT YEAR 2008-09 AND IN ASSESSMENT YEAR 2008-09, THE GROSS PROFIT WAS HIGHE R AND THE GROSS PROFIT WAS MORE. THEREFORE, WHEN THERE IS A B LOCK PERIOD OF 6 YEARS ASSESSMENT WAS REOPENED AND THE AO HAS T AKEN THE AVERAGE GROSS PROFIT. THEREFORE, WHEN THERE IS A SE ARCH AND SEIZURE MATTER, THERE IS A VARIATION IN GROSS PROFI T. THEREFORE, THE LD. CIT(A) IS NOT JUSTIFIED IN TAKING THE GROSS PROFIT AT 5.27%. 16. ON THE OTHER HAND, THE LD. AUTHORIZED REPRESENTATIV E SUBMITTED THAT THE AO HAS TAKEN THE HIGHEST PEAK GR OSS PROFIT IN SEVEN ASSESSMENT YEARS AT 11.43 % AND THE SAID G ROSS PROFIT RATE WAS ADOPTED FOR ALL THE YEARS. THE GROSS PROFI T FOR FINANCIAL M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 18 18 YEAR 2005-06 WAS AT 4.85 % AND THE DIFFERENCE OF G ROSS PROFIT RATE WAS 6.58 % ON TURNOVER OF RS. 539.27 LAKHS. IN ASSESSMENT YEAR 2008-09, THE ASSESSEE HAS CARRIED O UT PURCHASE AND SALE OF WHEAT. BECAUSE OF FAVORABLE MA RKET CONDITION, THE GROSS PROFIT RATE WAS HIGHER. THEREF ORE, THE VERY BASIS OF ADOPTING THE GROSS PROFIT RATE WAS WRONG A ND WHILE CALCULATING THE GROSS PROFIT, THE AO HAS NOT CONSID ERED THE EXPENSES INCURRED FOR HAMMALI, MANDI TAX, ELECTRICI TY AND POWER CHARGES, SALARY AND WAGES. THE GROSS PROFIT C OMES TO 7.45 % IN PLACE OF 11.43 %. THE LD. AUTHORIZED REP RESENTATIVE ALSO FOUND THAT THERE IS NO INCRIMINATING MATERIAL TO SUGGEST THAT GROSS PROFIT HAS BEEN DISTURBED. THE GROSS PRO FIT HAS BEEN DISTURBED PRIMARILY BECAUSE ONE OF THE ASSESSMENT Y EARS, FALLING IN THESE SIX ASSESSMENT YEARS AND HIGHER RA TE OF GROSS PROFIT HAS BEEN ADOPTED FOR ALL THE YEARS UNDER CON SIDERATION AND THE ADDITION WAS MADE. THERE WAS NO BASIS TO SU GGEST ON THE BASIS OF INCRIMINATING MATERIAL FOR AO TO VARY THE GROSS PROFIT AS ALREADY DISCLOSED IN THE ORIGINAL ASSESSM ENT ORDER. 17. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 19 19 WE FIND THAT THE CIT(A) IN HIS ORDER HAS ADMITTED THE FACT THAT THE ASSESSEE WAS DECLARING VARYING RATE OF GROSS PR OFIT BETWEEN 0.38% TO 5.62 % FOR ALL THESE YEARS EXCEPT FOR ASSE SSMENT YEAR 2008-09, IT WAS SHOWN @ 11.43 % AND WHICH HAS BEEN MADE BASIS FOR ALL THE YEARS. THE ASSESSEE HAS SUBMITTED THE DETAILS OF MATERIAL PURCHASED, LABOUR PAYMENTS AND VOUCHERS . THE ASSESSEES BOOKS OF ACCOUNT ALONGWITH BILLS AND VOU CHERS HAVE BEEN PRODUCED. THEREFORE, WE ARE OF THE VIEW THAT T HERE IS NO REASON FOR DISTURBING THE GROSS PROFIT OF THE ASSES SEE IN ALL THE ASSESSMENT YEARS. AFTER CONSIDERING THE FACTS OF TH IS CASE, WE ARE OF THE VIEW THAT THERE IS NO REASON FOR DISTURB ING THE GROSS PROFIT OF THE ASSESSEE IN ALL THE ASSESSMENT YEARS. AFTER CONSIDERING THE FACTS OF THIS CASE, WE ARE OF THE V IEW THAT THE ASSESSEE HAS SHOWN THE GROSS PROFIT IN 2009-10 AT 0 .38% EXCEPT THAT YEAR IN ALL THE ASSESSMENT YEARS, THE G ROSS PROFIT SHOWN BY THE ASSESSEE IS REASONABLE. THEREFORE, WE ARE OF THE VIEW THAT THERE IS NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 18. IN THE RESULT, THE APPEALS OF THE DEPARTMENT IN I.T.(SS).A.NOS. 21 TO 25 AND 17/IND/2014 FOR ASSESS MENT M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 20 20 YEARS 2004-05, 2005-06, 2006-07, 2007-08, 2009-10 A ND 2010-11 ARE DISMISSED. I.T.(SS).A.NOS. 07/IND/2014 A.Y. 2004-05 (UN-SECU RED LOAN: 19. THE ASSESSEE HAS CLAIMED TO HAVE TAKEN A LOAN FROM SMT. MANORAMA BAI, ONE OF THE ASSESSEES COVERED UN DER SEARCH PROCEEDINGS. IN HER STATEMENT GIVEN DURING T HE ASSESSMENT PROCEEDINGS, SHE HAS AGREED OF NOT HAVIN G ANY REGULAR INCOME. THUS, THE RETURNS ARE NOT FILED U/S 139(1). SHE HAS ALSO STATED THAT SHE WAS NOT HAVING ANY INVESTM ENTS OF ANY KIND IN BUSINESS PROPERTIES OF MUTUAL FUND, SHA RES, GOVERNMENT SECURITIES. THEREFORE, THE AO HAS DISALL OWED RS. 5,30,000/- AS UNSECURED LOAN IN THE HANDS OF THE AS SESSEE. 20. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 21. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E OPENING BALANCE IN THE ACCOUNT OF SMT. MANORAMA AGR AWAL AS ON 01.04.2003 WAS RS. 5,93,000/-. SHE IS INCOME TAX AND M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 21 21 WEALTH TAX ASSESSEE AND MAINTAINING ACCOUNTS WITH A SSESSEE SINCE LONG. THERE IS NO CASH CREDIT IN THE YEAR UND ER CONSIDERATION. THE COPY OF THE ACCOUNT OF SMT. MANO RAMA AGRAWAL WAS SUBMITTED. SMT. MANORAMA AGRAWAL HAS GI VEN LOAN TO THE ASSESSEE. THEREFORE, IT MAY BE DELETED. 22. ON THE OTHER HAND, THE LD. CIT DR RELIED UPON THE ORDER OF THE REVENUE. 23. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE CREDITWORTHINESS OF LENDER SMT. MA NORAMA AGRAWAL, WHO WAS COVERED UNDER THE SEARCH PROCEEDIN GS HAVE BEEN NOT PROVED BY THE ASSESSEE. THE ASSESSEE HAS S UBMITTED THAT IDENTITY OF THE LENDER HAS BEEN ESTABLISHED AN D THE ASSESSEE HAS FURNISHED ALL THE INFORMATION IN SUPPO RT OF THE ACCOUNTS. THEREFORE, WE ARE OF THE VIEW THAT THE AS SESSEE HAS SATISFACTORILY PROVED ALL THE FACTS. THEREFORE, WE DELETE THE ADDITION AND THE ASSESSEES APPEAL IS ALLOWED. I.T.(SS).A.NO. 11/IND/2014 ( A.Y. 2008-09) : 24. IN THIS APPEAL, THE ASSESSEE HAS TAKEN THE FOLLOWIN G TWO GROUNDS :- M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 22 22 1. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF TH E AO IN TREATING A SUM OF RS. 5,68,900/- AS UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF SOME LOOSE PAPERS FOUND FROM THE PREMISES OF THE ASSESSEE AT THE TIME OF SEARCH. 2. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF TH E AO TREATING RS. 25,00,000/- AS UNDISCLOSED INCOME OF THE ASSESSEE ON ACCOUNT OF LOOSE CHEQUES FOUND FROM THE PREMISES OF THE ASSESSEE AT THE TIME OF SEARCH, IGNORING THE EVIDENCE ON RECORD. 25. GROUND NO. 1 RELATES TO ADDITION OF RS. 5,68,900/-. 26. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PROVIDE THE DETAILS OF LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH SOME OF WHICH WERE CASH BOOK SUMMA RY THE ENTRIES OF WHICH WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. THE ASSESSEE WAS UNABLE TO SHOW THE BOOKS OF ACCOUN T CLAIMING THAT TALLY DATA IS INOPERATIVE DUE TO SOME SOFTWARE AND PASSWORD PROBLEM. HOWEVER, THE ASSESSEE HAS OFF ERED RS. 25 LACS AS UNDISCLOSED INCOME DURING THE SEARCH OPE RATION. BUT IN THE RETURN FILED U/S 153A THE ASSESSEE HAS S URRENDERED M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 23 23 RS. 19,31,100/-. ON BEING ASKED THE DETAILS OF RS. 5,68,900/- NOT SURRENDERED, THE ASSESSEE WAS NOT ABLE TO GIVE EXPLANATION IN HIS SUMMARY BOOKS. THEREFORE, THE AO HAS MADE AD DITION OF RS. 5,68,900/- AS UNDISCLOSED INCOME OF THE ASSESSE E. 27. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS CONFIRMED THE ADDITION. 28. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E AO HAS TAKEN INTO CONSIDERATION CERTAIN SEIZED MATE RIAL BEING SUMMARY OF CASH BOOK AND REQUIRED THE ASSESSEE TO R ECONCILE THE ENTRIES THEREIN WITH THE BOOKS OF ACCOUNT. THE ASSESSEE COULD NOT RECONCILE IT DURING THE SEARCH PROCEEDING S. THEREFORE, HE HAS SURRENDERED THE AMOUNT OF RS 25 L ACS AS UNDISCLOSED INCOME FOR ASSESSMENT YEARS 2006-07, 20 07-08 AND 2008-09. THE TOTAL SUM SURRENDERED WAS RS. 19,3 1,100/-. THE AO FOR THE YEAR UNDER CONSIDERATION HAS ASSESSE D THE BALANCE FIGURE WHICH IS THE DIFFERENCE BETWEEN THE AMOUNT SURRENDERED DURING THE SEARCH OPERATION AND RETURNE D INCOME BY THE ASSESSEE. THERE IS NO MATERIAL TO SURRENDER THE AMOUNT OF RS 5,68,900/- IN THIS YEAR. THEREFORE, THERE IS NO BASIS FOR ADDITION OF THIS AMOUNT. M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 24 24 29. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE AO HAS MADE THE ADDITION ON ACCOUNT OF ASSESSEES S URRENDER AT RS. 25 LACS DURING THE YEAR UNDER CONSIDERATION. DU RING THE COURSE OF HEARING, THE AO HAS ASKED TO RECONCILE CERTAIN S EIZED MATERIAL BEING SUMMARY OF CASH BOOK AND THE ASSESSEE TO RECO NCILE THE ENTRIES CONTAINED IN THE BOOKS OF ACCOUNT. WE FIND THAT THE ASSESSEE COULD NOT RECONCILE THE SAME BEFORE US ALS O. THEREFORE, WE GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO RECONC ILE THESE ENTRIES. 30. IN THE RESULT, THE APPEAL OF THE ASSESSEE ON THIS G ROUND IS ALLOWED FOR STATISTICAL PURPOSES. 31. GROUND NO. 2 RELATES TO THE ADDITION OF RS. 25 LACS AS UNDISCLOSED INCOME ON ACCOUNT LOOSE CHEQUES NOT RE CORDED IN THE BOOKS OF ACCOUNT. 32. DURING THE COURSE OF SEARCH OPERATION, THE ASSESSEE WAS ASKED REGARDING LOOSE PAPERS/DOCUMENTS FOUND FROM T HE RESIDENTIAL/BUSINESS PREMISES. IN REPLY, THE ASSESS EE STATED THAT CHEQUE OF RS. 25 LACS FOUND DURING THE COURSE OF SE ARCH HAS BEEN RECEIVED BY THE ASSESSEE BUT DUE TO NON HONORING OF CHEQUES, SHRI SUNIL AGRAWAL HAS TAKEN WHEAT FROM THE CONCERNED PA RTY AND THE M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 25 25 CONSIDERATION RECEIVED ON SALE OF WHEAT HAS BEEN EN TERED IN THE LEDGER ACCOUNT OF THE PARTY. THE ASSESSEE WAS ASKED TO SUBMIT THE CONFIRMATION OF THE PARTY ALONGWITH THEIR BANK STAT EMENT, PAN NUMBERS AND ADDRESSES, NO REPLY WAS RECEIVED BY THE ASSESSEE. THEREFORE, THE AO HAS MADE THE ADDITION. 33. LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT DURING THE COURSE OF SEARCH, FIVE CHEQUES WERE FOUND AND THE A SSESSEE SUBMITTED THAT ASSESSEE HAS SOLD THE WHEAT TO ONE P ARTY, NAMELY M.P. AGRO TONIC LIMITED. THE ASSESSEE SOLD WHEAT TO THE PARTY WORTH RS. 108.20 LACS AGAINST WHICH THE PARTY HAS M ADE ONLY PAYMENT OF RS. 41.38 LACS. THE PARTY HAS APPROACHED THE ASSESSEE FOR FUNDING SO THAT THEY COULD PROCURE WHEAT FROM FC I LIMITED AND RETURN THE BALANCE AMOUNT OWING TO THE ASSESSEE IN THE FORM OF WHEAT TO BE SO PROCURED FROM THE FCI LIMITED. M/S. M .P.AGRO TONIC LIMITED OR HIS NOMINEE M/S. JVS FOOD PRIVATE LIMITE D ALSO GAVE CHEQUES WHICH WERE FOUND DURING THE COURSE OF SEARC H. THE ASSESSEE HAS ADVANCED A SUM OF RS. 38.18 LACS WHICH WAS UTILIZED BY THE PARTY TO PURCHASE THE WHEAT WORTH RS. 76.22 LACS FROM FCI LIMTED AND THE ASSESSEE HAS ALSO DEBITED TO THE PAR TY A FURTHER SUM OF RS. 5,00,000/- AND RS. 5,000/- FOR THE DELAY ED PAYMENT. M/S. M.P. AGRO TONIC SOLD WHEAT IN MARKET AND PAID THE AMOUNT TO M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 26 26 THE ASSESSEE. THE COPY OF THE ACCOUNT OF M/S. M.P. AGRO TONIC LIMITED TRANSACTION BETWEEN THE ASSESSEE AND M.P.AG RO TONIC WAS FILED WITH THE AO, BUT THAT HAS BEEN IGNORED. THE C HEQUES WERE FOUND DURING THE COURSE OF SEARCH HAD LOST THEIR VA LIDITY AND THE SAME WERE ONLY GIVEN THE ASSESSEE AS SECURITY AGAIN ST THE OUTSTANDING DUES TO THEM BY M/S. M.P.AGRO TONIC LIM ITED. THEREFORE, IT MAY BE DELETED. 34. THE LD. CIT DR RELIED UPON THE ORDER OF THE REVENUE . 35. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PAR TIES. WE FOUND THAT ASSESSEES CONTENTION THAT THE ASSESSEE HAS SOLD WHEAT TO THE PARTY WORTH RS. 108.20 LACS AGAINST WHICH TH E PARTY HAS MADE THE PAYMENT OF RS. 41.38 LACS. THE PARTY HAS N OT PAID THE AMOUNT BUT THE M.P. AGRO TONIC LIMITED HAS GIVEN TH E CHEQUES, WHICH WERE NOT VALID. THEREFORE, ALL THESE CORRESPO NDENCE EXCHANGED AND SEIZED, REQUIRE VERIFICATION, WHICH R EADS AS UNDER :- SEIZED DOCUMENTS DATE CHEQUE NO. AMOUNT NAME OF THE PARTY LPS 4/20 16.07.2007 301 5,00,000/- JVS FOOD PVT.LTD. LPS 4/21 13.06.2007 300 5,00,000/- JVS FOOD PVT.LTD. LPS 4/22 11.06.2007 299 5,00,000/- JVS FOOD PVT.LTD. LPS 4/23 01.04.2007 624 2,67,720/- M.P.AGRO TONIC LIMITED LPS 4/32 20.12.2007 508 5,00,000/- M.P.AGRO TONIC LIMITED M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 27 27 36. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEES CONTENTION REQUIRES VERIFI CATION AT THE END OF THE ASSESSEE AND M/S. AGRO TONIC LIMITED AND ALL THE CORRESPONDENCE AND PAYMENT AS STATED BY THE ASSESSE E HAS TO BE VERIFIED AND IF THE ASSESSEE IS ABLE TO PROVE HI S CONTENTION, WHICH WAS PRODUCED BEFORE US AND WHICH READS AS UND ER, - 3.1 THE APPELLANT AT THE REQUEST OF THE PARTY HAD ADVANCED A SUM OF RS. 38.18 LACS WHICH WAS UTILIZED BY THE PARTY TO PURCHASE WHEAT WORTH RS. 76.22 LACS FR OM FCI LIMITED. THE APPELLANT ALSO DEBITED THE PARTY WI TH A FURTHER SUM OF RS. 5,00,000/- AND RS. 5,000/- FOR TH E DELAYED PAYMENT. THE WHEAT WORTH RS. 76.22 LACS PURCHASED FROM FCI LIMITED WAS GIVEN TO THE APPELLAN T AS ADJUSTMENT OF ACCOUNTS WHICH M/S. M.P.TONIC AGRO OWED TO THE APPELLANT. M/S. M.P. TONIC AGRO SOLD WHE AT WORTH RS. 32,17,770/- IN THE MARKET AND PAID TO THE APPELLANT THE BALANCE AMOUNT DUE. A COPY OF ACCOUNT OF THE TRANSACTIONS BETWEEN THE APPELLANT AND M/S. M.P.TONIC AGRO LIMITED WAS FILED WITH THE AO ALONGW ITH THE LETTER DATED 26 TH DECEMBER, 2011, WHICH HAS BEEN M/S. G. S. ROLLER FLOUR MILLS (P) LTD., BHOPAL VS. ACIT,3(1), BHOPAL I.T.(SS).A.NOS. 7 TO 12, 21 TO 25 , 8 & 17/IND/2014 A.YS. 2004-05 TO 2009-10, AND 2010-11 28 28 TOTALLY IGNORED. THE APPELLANT HAS BEEN ABLE TO PROV E TO THE HILT THE ENTIRE SET OF TRANSACTIONS OF PROCUREM ENT OF WHEAT, SALE OF WHEAT AND THE OTHER PAYMENTS. A COPY OF THE LETTER DATED 26.12.2011 & 09.11.2011 IS BEING ENCLOSED AS ANNEXURE 1 TO THIS SUBMISSION. THEN THE AO SHALL DECIDE THE MATTER AFRESH. THE AO IS DIRECTED TO DECIDE THE MATTER AFRESH AFTER VERIFICATION AS P ER LAW. 37. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 08 TH DECEMBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 08 TH DECEMBER, 2015. CPU* 20.2