Shyam Sunder (Haryana) Industries P. Ltd., V. ACIT, Hissar,

ITSSA 84/DEL/2006

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8169 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 30-05-2017
• Assessment Year: misc
• Appeal Filed On: 22-03-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RIS GILL
• Keywords: Search and seizure; Block assessment; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI T.S. KAPOOR IT(SS) 63/DEL/2006 BLOCK PERIOD: 1-4-1998 TO 12-03-2003 ASSTT. COMMISSIONER OF VS. M/S SHYAM SUNDER (HAR YANA) INCOME-TAX, HISAR. INDUSTRIES PVT. LTD., HISAR. AND IT(SS) 84/DEL/2006 BLOCK PERIOD: 1-4-1998 TO 12-03-2003 M/S SHYAM SUNDER (HARYANA) VS. ASSTT. COMMISSIONER OF INDUSTRIES PVT. LTD., HISAR. INCOME-TAX, HISAR. ( APPELLANT ) ( RESPONDENT ) DEPARTMENT BY : SHRI R.I. S. GILL CIT(DR ) ASSESSEE BY : SH. SURESH KUMAR GUPTA ADV. O R D E R PER R.P. TOLANI, J.M: : THESE ARE CROSS-APPEALS BY THE REVENUE AS WELL AS THE ASSESSEE, ASSAILING CIT(A)S ORDER DATED 30-12-2005 ON RESPEC TIVE GROUNDS PERTAINING TO BLOCK PERIOD 1-4-1998 TO 13-2-2003. BOTH THE AP PEALS ARE HEARD TOGETHER AND DISPOSED OF BY A CONSOLIDATED ORDER. IT(SS) 63 & 84/DEL/06 M/S SHYAM SUNDER 2 2. THE MAIN APPEAL IS BY THE REVENUE, RAISING FOLL OWING EFFECTIVE GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 19 ,86,359/- AND RS. 30,45,504/- RESPECTIVELY FOR THE FINANCIAL YEAR 1998-99 AND 1999-2000 FOR THE BLOCK PERIOD, MADE ON ACCOUNT OF UNDISCLOSED/ CONCEALED INCOME ON THE BASIS OF SALE BILLS SEIZED DURING THE SEARCH OPERATION UNDER SECTION 132 OF TH E INCOME-TAX ACT, 1961 WHICH HAD NOT BEEN ACCOUNTED FOR BY THE A SSESSEE IN THE ACCOUNT BOOKS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 12 ,50,000/- MADE ON ACCOUNT OF INVESTMENT MADE IN UCHANTI PURCH ASES REPRESENTED BY SALES OF RS. 13,14,880/- ON 28-04-19 98 CONTRARY TO THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS. L.A. MEDICA 250 ITR 575. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING TO WORK OUT PROFIT TO THE EXTENT OF 4.78% OF RS. 12,570/- AND 3.84% OF RS. 14,80,019/- THEREBY ALLOWING RELIEF OF RS. 11,970/- AND RS. 14,23,187/- FOR THE ASSESSMENT YEAR 1999-2000 AND 2000-2001 RESPECTIVEL Y WITHOUT APPRECIATING THE FACTS THAT THE TRUE NATURE OF RECE IPT AS EMANATED FROM THE SALE BILLS, WAS SALES-TAX COLLECTED FROM T RADERS WHICH CANNOT BE CONSIDERED AS SALES AS HELD BY LD. CIT(A ). 3. IN ITS APPEAL, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN REJECTING THE SALES RETURNS AS PER THE BOOKS OF ACC OUNTS AND RECORDING A CONTRADICTORY FINDING OF ESTIMATING THE SALES RETURNS AT 20% OF THE SALES FOR THE FINANCIAL YEARS 1998-19 99 AND 1999- 2000, AGAINST THE DISCLOSED SALES RETURNS OF 26.15% AND 64.72% RESPECTIVELY, BUT DESPITE THE ABOVE CATEGORICAL FIN DING RESTRICTING THE SAME TO 20% OF THE SALES RETURNS AS DISCLOSED IN THE REGULAR RETURN. IT(SS) 63 & 84/DEL/06 M/S SHYAM SUNDER 3 2. THE LD. CIT(A) AND THE ASSESSING OFFICER BOTH ACTED AGAINST THE PROVISIONS OF LAW IN ENTERING INTO THE VERACITY OF THE SALES RETURNS SHOWN AS PER THE REGULAR BOOKS OF ACC OUNTS WHILE FRAMING THE ASSESSMENT UNDER CHAPTER XIVB OF THE I NCOME TAX ACT. 3. THE LD. CIT(A) AND THE ASSESSING OFFICER BOTH HAVE ERRED IN SUPPORTING THE ADDITION OF RS. 3270/- ON A CCOUNT OF SALE BILL OF RS. 68430/- SEIZED FROM A THIRD PARTY AND E STIMATING THE SUPPRESSED PROFIT @ 4.78% OF THE ABOVE SALES WITHOU T VERIFYING WHETHER OR NOT THE ABOVE SALE HAS BEEN MADE BY THE APPELLANT BY HOLDING PROPER INVESTIGATION WHEN THERE WAS CATE GORICAL REPLY ON BEHALF OF THE APPELLANT THAT THE SAID BILL DOES NOT BELONG TO THE APPELLANT COMPANY. 4. THE LD. CIT(A), ON THE FACTS AND CIRCUMSTANCES OF THE CASE HAVE ACTED WITHOUT BASIS IN HOLDING THE AMOUN TS OF SALES TAX ON THE SALES RETURNS OF RS. 12,570/- AND 14,80, 019/- FOR THE ASSESSMENT YEAR 1999-2000 AND 2000-2001, AS PART OF THE SUPPRESSED TURNOVER AND WORKING OUT THE INCOME BY A DOPTING GP RATIO OF 4.78% AND 3.84% FOR THE RESPECTIVE YEAR S. WITHOUT PREJUDICE TO THE CHALLENGE TO THE LEGALITY OF THE A BOVE ACTION, THE LD. CIT(A) SHOULD HAVE ALLOWED THE BENEFIT OF SALE S RETURNS GRANTED BY HIMSELF HOLDING THE 20% OF THE SALES AS GENUINE SALES RETURNS, FOR WORKING OUT THE ADDITION IN QUES TION. 3. BRIEF FACTS ARE: ASSESSEE DEALS IN VANASPATI OIL S. SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT 13-02-2003 AT THE BUSIN ESS AND RESIDENTIAL PREMISES OF THE ASSESSEE. THE DOCUMENTS SEIZED MAIN LY CONSISTED OF UNDISCLOSED SALE BILLS FOR F.Y. 1998-99 AND 1999-2 000 AND TRANSPORT RECEIPTS. ACCORDING TO ASSESSING OFFICER , THE ASS ESSEE HAD DEVISED A PRACTICE OF CLAIMING INFLATED SALE RETURNS OF VANAS PATI GHEE ON THE GROUND THAT GOODS SUPPLIED WERE DEFECTIVE IN NATURE. ASSE SSEE CLAIMED THAT THE GOODS WERE DAMAGED AND NOT ACCEPTED BY THE PURCHASE RS WHICH WERE RETURNED TO THE ASSESSEE AND CLAIMED AGAINST PROFIT S. ASSESSEES BOOKS WERE IT(SS) 63 & 84/DEL/06 M/S SHYAM SUNDER 4 REJECTED AND ON CONSIDERATION OF MATERIAL ON RECORD , EXPLANATION, BLOCK ASSESSMENT IN CASE OF ASSESSEE RESULTED IN FOLLOWIN G ADDITIONS BY ASSESSING OFFICER: ASSTT. YR: 1999-2000: UNDISCLOSED INCOME ON ACCOUNT OF SUPPRESSION SALES AS DISCUSSED ABOVE AS PER PARA 27 RS. 44,24,130/- SALES TAX COLLECTED FROM THE TRADERS BUT NOT PAID TO THE GOVT. AS PER PARA 28 RS. 12,570/- UNDISCLOSED INCOME ON ACCOUNT OF SUPPRESSION OF SALES AS DISCUSSED IN PARA 31 RS. 3270/- ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT AS PER PARA 30 RS. 12,50,000/- RS. 56,89,970 (A) 2. ASSTT. YR. 2000-2001 UNDISCLOSED INCOME ON ACCOUNT OF SUPPRESSION SALES AS DISCUSSED ABOVE AS PER PARA 27 RS.11589442/- SALES TAX COLLECTED FROM THE TRADERS BUT NOT PAID TO THE GOVT. AS PER PARA 28. RS. 1480019/- RS.13069461 (B) ADD: UNDISCLOSED INCOME AS DECLARED BY THE ASSESSEE IN THE BLOCK RETURN FOR THE A.Y. 2002- 03 RS. 115285 (C) TOTAL UNDISCLOSED INCOME FOR THE BLOCK PERIOD (A+B+C) RS. 1,88,74,716/- 3.1. THUS THE ADDITIONS WERE MADE MAINLY ON ACCOUNT OF: (I) SUPPRESSED SALES (ASSESSEES GOODS RETURN CLAIM WAS REJECTED) (II) INVESTMENT IN UCHANTI PURCHASES (SEIZED PAPER DATED 28-4-98) (III) SALES TAX COLLECTED BUT NOT PAID. IT(SS) 63 & 84/DEL/06 M/S SHYAM SUNDER 5 3.2. IN FIRST APPEAL, CIT(A) HELD THAT GOODS RETU RN CLAIMS MAE BY ASSESSEE WERE UNBELIEVABLE. THE ASSESSEE HAD CLAIMED SALES R ETURN @ 26.15% IN F.Y. 1998-99 AND 64.72% IN F.Y. 1999-2000. AGAINST ASSES SING OFFICERS FULL DISALLOWANCE, CIT(A) ESTIMATED 20% TO BE THE ALLOW ABLE SALES RETURNED CLAIMED. AGGRIEVED ON THIS ISSUE BOTH THE PARTIES A RE IN APPEAL. RELEVANT OBSERVATIONS OF CIT(A) ARE AS UNDER: THE APPELLANT HAS SHOWN UNPROVED SALES RETURN FO R THE FINANCIAL YEAR 1998-99 AND 1999-2000 AS UNDER: F.Y. 1998-99 F.Y. 1999-2000 SALES RETURNS SHOWN RS. 6,74,70,540 RS. 27,84,89,415 SALES SHOWN RS. 25,79,94,745 RS. 43,03,03,949 % AGE OF SALES RETURN TO THAT OF SALES SHOWN 26.15% 64.72% THUS, THE PERCENTAGE OF SALES RETURNS TO THAT OF SALES SHOWN IS AS HIGH AS 26.15% IN THE FINANCIAL YEAR 1998-99 AND 64.72% IN THE FINANCIAL YEAR 1999-2000 RESPECTIVELY, SOMETHIN G UNHEARD OF (AND WHICH AS STATED ABOVE, REMAINS UNPROVED BY THE APPELLANT) BEFORE THE ASSESSING OFFICER AND ALSO B EFORE ME. ON A CAREFUL CONSIDERATION OF THE FACTS BROUGHT ON RE CORD, I ALLOW A MAXIMUM OF 20% OF SALES AS SALES RETURN. THE BALANC E SHALL REMAIN INCLUDED IN SUPPRESSED SALES OF RS. 9,25,55, 028/-, RS. 30,18,08,393/- FOR THE FINANCIAL YEARS 1998-99 AND 1999-2-000 RESPECTIVELY. 3.3. CIT(A) FURTHER OBSERVED THAT BOOKS OF A/C FO R A.Y. 1999-2000 & 2000-01 WERE NOT PRODUCED BEFORE ADI(INV.) DURING T HE COURSE OF ASSESSMENT PROCEEDINGS UP TO 15-2-2005. THESE BOOKS WERE NOT PRODUCED BEFORE ASSESSING OFFICER ON THE PRETEXT THAT THEY WERE LYING WITH CENTRAL IT(SS) 63 & 84/DEL/06 M/S SHYAM SUNDER 6 EXCISE DEPARTMENT. CIT(A) HELD THAT THESE BOOKS WE RE NOT RELIABLE AND WERE REJECTED ON THE GROUND THAT: (I) NON-PRODUCTION OF STOCK REGISTER, JOURNALS BEFO RE ASSESSING OFFICER. (II) THE ENTRIES REGARDING SALE RETURNS BEING AT VA RIANCE WITH THE ACTUAL SALE RETURNS. (III) FINDINGS OF ASSESSING OFFICER IN PARAS 11 TO 15 OF HIS ORDER WERE JUSTIFIED. IT WAS HELD THAT ASSESSING OFFICER HAD RIGHTLY MADE THE ASSESSMENT U/S 158BC ON THE BASIS OF SEIZED MATERIA L READ WITH SEC. 144/145 OF THE I.T. ACT. 3.4. ASSESSEE PLEADED THAT THE DETAILS WERE ARRIVED AT BY ADDING FIGURES FROM DUPLICATE/ TRIPLICATE COPY OF THE SALE BILLS E TC. A RECONCILED STATEMENT VIDE ANNEXURE E1 & E2 ALONG WITH CANCELED BILLS WAS FILED. CIT(A) FOUND THAT THERE WERE TOTALING MISTAKES OF RS. 10 LACS AN D RS. 98,72,846/- RESPECTIVELY IN A.Y. 1999-2000 AND 2000-01. 3.5. IN SUM AND SUBSTANCE CIT(A) ACCEPTED THE CALC ULATION AND DUPLICATION MISTAKES. G.P. RATE ADOPTED BY ASSESSI NG OFFICER @ 4.78% FOR A.Y. 1999-2000 AND 3.84% FOR A.Y. 2000-01 WAS UPHEL D BY CIT(A). 3.6. APROPOS SALES OUT SIDE THE BOOKS OF ACCOUNT, CIT(A) GAVE THE PARTIAL RELIEF BY FOLLOWING OBSERVATIONS: 12. THE EVIDENCE OF SALE OUTSIDE THE BOOKS OF ACCO UNT IS ALSO FOUND IN THE SEIZED MATERIAL VIDE PARA 31,32 AND 35 OF A.OS ORDER. THIS NAILS THE APPELLANTS CONTENTION THAT T HERE WAS NO EVIDENCE OF SALES OUTSIDE THE BOOKS OF ACCOUNT. AS DISCUSSED ABOVE IN PARA 7 IBID, THE FACT OF SALES RETURN HAS TO BE ACCEPTED ONLY A LIMITED AND REASONABLE EXTENT. IN THE FINANC IAL YEAR 1998- 99, THE SALES RETURN WHICH WAS SHOWN AT 26.15%, HAS BEEN SKEWED TO 64.72% IN THE FINANCIAL YEAR 1999-2000. O N A CAREFUL CONSIDERATION, I ALLOW A MAXIMUM OF 20% OF SALE RET URNS FOR BOTH THE FINANCIAL YEAR 1998-99 AND 1999-2000. HENC E, THE IT(SS) 63 & 84/DEL/06 M/S SHYAM SUNDER 7 UNDISCLOSED SALES/ CONCEALED SALES FOR THE FINANCIA L YEARS 1998- 99 AND 1999-2000 ARE REDUCED AS BELOW: REDUCTION ALLOWED IN R/O F.Y. 1998-99 F.Y.1999-2000 I) 20% SALE RETURN 1,34,94,108 (20% OF RS.67470540) 5,56,97,883(20% OF RS.27,84,89,415) II) ENTERED BILLS 1,00,09,316 (ANNEXURE E-1) 28,57,951 (ANNEXURE E-2) III) DOUBLE BILLS 17,73,116 ((ANNEXURE D-1) 10,65,470 ((ANNEXURE D-2) IV) CANCELLED BILLS 1,47,63,954 ((ANNEXURE C-1) 98,15,855 ((ANNEXURE C-2) V) TOTALING MISTAKE CORRECTED 10,00,000 ((ANNEXURE T-1) 98,72,846 ((ANNEXURE T-2) 4,10,40,494 7,93,10,005 GP PERCENTAGE 4.78% 3.84% ACCORDINGLY, THE UNDISCLOSED INCOME/ CONCEALED INCO ME IS DIRECTED TO BE REDUCED BY 4.78% OF RS. 4,10,40,494/ -, 3.84% OF RS. 7,93,10,005/- I.E. RS. 19,86,359/- AND RS. 30,4 5,504/- RESPECTIVELY FOR THE FINANCIAL YEAR 1998-99 AND 199 9-2000 OF THE BLOCK PERIOD. 3.7. AGGRIEVED, ON THIS ISSUE REVENUE BY WAY OF GRO UND NOS. 1 & 3 AND ASSESSEE BY WAY OF GROUND NOS. 1,2 & 4 ARE IN APPEA L. 4. APROPOS THE ADDITION OF RS. 12,50,000/- ON ACCOU NT OF INVESTMENT ON UCHANTI PURCHASES FOR A.Y. 1999-2000 AND 2000-01, A SSESSING OFFICER WAS OF THE VIEW THAT THERE WERE OUT OF BOOK SALES OF RS . 13,14,880/- ON 28-4- 1998, AS PER ANNEXURE S1. FOR EFFECTING THESE SALE S IN ONE DAY, THE ASSESSEE MUST HAVE PURCHASED GOODS VALUING RS. 12,50,000/- A S THE SAME WAS OUT OF THE BOOKS, IT WAS ADDED AS UNDISCLOSED INVESTMENT OF THE BLOCK PERIOD. IT(SS) 63 & 84/DEL/06 M/S SHYAM SUNDER 8 4.1. CIT(A) DELETED THIS ADDITION BY FOLLOWING OBS ERVATIONS: 14. BEFORE ME, IT IS ARGUED THAT THE ADDITION HAS BEEN MADE ON AN HYPOTHETICAL AND A PURE ASSUMPTION SECTION 15 8B(B) SPEAKS OF THOSE ADDITIONS WHICH ARE BASED ON THE BA SIS OF MATERIAL/ DOCUMENT FOUND DURING THE COURSE OF SEARC H/ ON THE BASIS OF ENTRIES IN THE BOOKS OF ACCOUNT OR OTHER D OCUMENTS. THE SALES CULLED AS ABOVE, ARE ON THE BASIS OF SEIZED S ALE BILLS AND ARE NOT THE EXCLUSIVE ENTRIES UNCOMMON TO OTHERS. T HERE IS NO EVIDENCE OF ANY PURCHASES OUTSIDE THE BOOKS OF ACCO UNT WITH REFERENCE TO ABOVE SAID SALES. HENCE, ON THE BASIS OF THESE ENTRIES ALONE, NO SUCH ADDITION COULD BE MADE INDEP ENDENTLY UNLESS THERE ARE PURCHASES OUTSIDE THE BOOKS OF ACC OUNT TO PROVE ANY UNDISCLOSED INCOME. BEFORE ME, IT IS ARGUED THA T THERE HAS BEEN REGULAR PURCHASES OF VANASPATI FROM 1.4.1998 T O 28.4.1998 OF 292.949 (-) 5.544 = 258.675 MT (28.73 MT & 5.544 MT ARE THE PURCHASES MADE ON 29.4.1998 AND 30.4.1998). THE SALES FROM 1.4.1998 TO 28.4.1998 EXCLUSIVE OF SALES RETUR N, ARE 310.49 (-) 15.374 = 295.566 MT, WHICH IS LESS THAN THE TOT AL OF OPENING STOCK 40.706 MT PLUS PURCHASES TILL 28.4.1998 OF 25 8.675 MT VIZ. 299.381 MT. IN VIEW OF THESE FACTS, THERE WOU LD BE NO ADDITION OF RS. 12,50,000/-. THE APPELLANT GETS A R ELIEF OF RS. 12,50,000/-. 5. BOTH THE PARTIES ARE HEARD ON THE ISSUE, WHO REF ERRED TO VARIOUS PAGES OF THE PAPER BOOK. APROPOS ASSESSEES FIRST GROUND, LD. COUNSEL CONTENDS THAT THE GOODS RETURN CLAIM WAS ACCORDING TO BOOKS OF TH E ASSESSEE. IT WAS SUPPORTED BY CONFIRMATIONS FROM CUSTOMER. IT SHOULD HAVE BEEN ALLOWED AS PER BOOKS. 6. LD. CIT(DR) VEHEMENTLY ARGUES THAT THE ASSESSEE DID NOT PRODUCE BOOKS BEFORE THE LOWER AUTHORITIES, DESPITE BEING C ALLED AGAIN AND AGAIN. THE SAME WERE NOT PRODUCED BEFORE ADIT ALSO AND AT THE FAG END OF THE PROCEEDINGS, THE BOOKS WERE PRODUCED. FROM THE SEIZ ED MATERIAL IT WAS FOUND THAT THE ASSESSEE WAS INDULGING IN WIDE SPREA D SALES OUT OF BOOKS. TO IT(SS) 63 & 84/DEL/06 M/S SHYAM SUNDER 9 PROTECT ITSELF UNBELIEVABLE SALES RETURN OF 26.15% IN F.Y. 1998-99 AND 64.72% IN F.Y. 1999-2000 WERE CLAIMED. IT IS UNBELI EVABLE THAT ASSESSEE SENT SO MUCH DEFECTIVE VANASPATI GHEE TO ITS CUSTOM ERS. 6.1. APROPOS UCHANTI SALES, IT IS CONTENDED THAT TH E SALES OF RS. 13,14,880/- WERE MADE BY ASSESSEE ON 28-4-1998. THE SE SALES WERE NEITHER ACCOUNTED FOR NOR THE CORRESPONDING PURCHASES. FOR EFFECTING SUCH HUGE SALES IN ONE DAY, THE ASSESSEE OUGHT TO HAVE PURCHASED VA NASPATI GHEE AMOUNTING TO RS. 12,50,000/- OUT OF BOOKS, WHICH HAS BEEN RIG HTLY ADDED BY THE ASSESSING OFFICER. LD. DR RELIES ON ASSESSING OFFIC ER S ORDER AND ASSESSEE ON CIT(A)S ORDER. 6.2. APROPOS REDUCTION OF G.P. @ 4.78% AND 3.84%, CIT(A) FAILED TO APPRECIATE THAT IN CASE OF NON-PRODUCTION OF BOOKS AND REJECTION THEREOF, WHICH IS UPHELD BY HIM, THE ESTIMATE MADE BY ASSESS ING OFFICER CANNOT BE DISTURBED UNLESS IT IS FOUND TO BE ARBITRARY. WITHO UT THERE BEING SUCH A FINDING, THE RELIEF GIVEN BY CIT(A) IS NOT WARRANT ED. 7. LEARNED COUNSEL FOR THE ASSESSEE APROPOS REVENU ES APPEAL RELIED ON THE ORDER OF CIT(A) AND APROPOS ITS APPEAL CONTEND S THAT THE SALE RETURN CLAIM SHOULD HAVE BEEN ALLOWED IN ITS ENTIRETY, THE SAME IS PROVED BY THE BOOKS OF A/CS. ON OTHER ADDITIONS ALSO REPRESENTED BY GROUND NOS. 3 & 4 ASSESSEE CONTENDS THAT THE ADDITION SHOULD HAVE BEE N DELETED. 8. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD. COMING TO REVENUES A ND ASSESSEES GROUNDS ABOUT GOODS RETURN CLAIM OF THE VANASPATI, IN ITS B OOKS OF A/CS, THE ASSESSEE IT(SS) 63 & 84/DEL/06 M/S SHYAM SUNDER 10 CLAIMED HUGE SALES RETURNS AMOUNTING TO 26.15% AND 64.72% RESPECTIVELY IN F.Y. 1998-99 AND 1999-2000. THE VANASPATI GHEE IS B RANDED COMMODITY AND MANUFACTURED UNDER THE REGULATIONS OF ESSENTIAL COM MODITY ACT. BEING AN EDIBLE ITEM, IT CANNOT BE ASSUMED THAT ANY BRAND WI LL MANUFACTURE TO SUCH AN EXTENT DEFECTIVE GHEE. BESIDES, IN CASE THE ASSESSE E HAS RECEIVED SUCH A QUANTITY, THEN IT WILL BE RETURNED BY HIM TO THE MA NUFACTURER ALSO. WE ARE OF THE VIEW THAT IN NORMAL CIRCUMSTANCES, ASSESSEE CAN NOT BE ALLOWED SUCH GOODS RETURN AS CLAIMED, MORE SO, WHEN THE BOOKS OF ACCOUNTS ARE REJECTED. IN OUR VIEW CIT(A) HAS ALLOWED GOODS RETURN CLAIM @ 20% WITHOUT PROPER JUSTIFICATION AND ON AD HOC BASIS. IT APPEARS THAT ASSESSEE INDULGED IN NON PRODUCTION OF BOOKS ON ONE REASON OR OTHER. IN VANA SPATI BUSINESS IT IS UNBELIEVABLE TO HAVE SUCH REGULAR SALE RETURN CLAIM S. IN OUR VIEW ENDS OF JUSTICE WILL MEET IF SALE RETURN CLAIM IS RESTRICTE D TO ESTIMATED 5%. THUS THE UNDISCLOSED ALES WILL BE WORKED OUT ACCORDINGLY. ON THE ISSUE OF MISTAKES IN UNDISCLOSED SALES TOTALING, CIT(A) HA PROPERLY CON SIDERED THE SAME, NO INTERFERENCE IS CALLED FOR. 8.1. CIT(A) HA DELETED AN AMOUNT OF RS. 12,50,000/ - AS UNDISCLOSED INVESTMENT IN PURCHASES USED IN UNDISCLOSED SALES. ASSESSEE HAS INDULGED IN WIDE SPREAD UNDISCLOSED SALES. NO REASON IS ADVANCE D AS TO HOW SUCH A VOLUMINOUS TURN OVER CAN BE CARRIED OUT WITHOUT SOM E UNDISCLOSED PURCHASES. IN OUR VIEW, RS. 12,50,000/- ADDITION WA S VERY REASONABLE ADDITION BY ASSESSING OFFICER . THE SAME IS UPHELD, CIT(A)S ORDER IS REVERSED ON THE ISSUE. 8.2. COMING TO GROUND NO. 3 OF REVENUES APPEAL AND GROUND NO. 4 OF ASSESSEES APPEAL, WE FIND NO INFIRMITY IN THE ORDE R OF CIT(A), WHO HAS DIRECTED THE ESTIMATION OF G.P. @ 4.78% AND 3.84%, THEREFORE, REVENUES GROUND NO. 3 AND ASSESSEES GROUND NO. 4 ARE DISMI SSED. IT(SS) 63 & 84/DEL/06 M/S SHYAM SUNDER 11 8.3. COMING TO THE LAST ISSUE I.E. GROUND NOS. 3 OF ASSESSEES APPEAL, WE SEE NO INFIRMITY IN THE ADDITION, SINCE WE HAVE ALR EADY HELD THAT THE ASSESSEE WAS INDULGING IN OUT OF BOOKS SALES WHICH WERE IN T HE FORM OF GOODS RETURN CLAIMS AND WE DIRECTED THAT THE UNDISCLOSED SALES SHALL BE WORKED OUT ON G.P. RATE AS HELD BY CIT(A) AND ASSESSEES GOODS R ETURN CLAIM SHOULD BE RESTRICTED TO 5%. SINCE THE G.P. WILL BE INCLUDED I N THE GROSS SALES, THEREFORE, WE ALLOW ASSESSEES GROUND NO. 3 CLAIMING DELETION OF ADDITION OF RS. 3270/- ON ACCOUNT OF SALE BILL OF RS. 68,430.. 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE AS WELL AS THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13-07-2012. SD/- SD/- ( T.S. KAPOOR ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13-07-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR IT(SS) 63 & 84/DEL/06 M/S SHYAM SUNDER 12