ACIT CENT. CIR. - 40, MUMBAI V. M/s. SHAH ROOPCHAND MEGHRAJ & CO., MUMBAI

ITSSA 92/MUM/2006

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8270 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-07-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-09-2015
• Assessment Year: misc
• Appeal Filed On: 17-03-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income; Search and seizure; Loose papers; Document seized; Block assessment; Documents seized
• Section: 143(3); 15; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SRI CN PRASAD , JM AND SRI RAMIT KOCHAR , AM IT (SS) A NO. 42 /MUM/200 6 ( BLOCK PERIOD FROM 01 - 04 - 1996 TO 21.01.2003 ) SHAH RUPCHAND MEGHRAJ & CO. 340 - B, GROUND FLOOR, ATMARAM BUILDING, J.S.S. ROAD, THAKURDWAR, MUMBAI - 400 002 V. THE ASST. COMMISSIONER OF INCOME TAX, CC - 40, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 APPELLANT .. RESPONDENT PAN NO. AAAFR1214M IT (SS) A NO. 9 2/MUM/20 0 6 ( BLOCK PERIOD FROM 01 - 04 - 1996 TO 21.01.2003 ) THE ASST. C OMMISSIONER OF INCOME TAX, CC - 40, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 VS. SHAH RUPCHAND MEGHRAJ & CO. 340 - B, GROUND FLOOR, ATMARAM BUILDING, J.S.S. ROAD, THAKURDWAR, MUMBAI - 400 002 APPELLANT .. RESPONDENT ASSESSEE BY : NONE , REVENUE BY : SRI RAHUL RA MAN , CIT - DR DATE OF HEARING: 14 - 12 - 2017 DATE OF PRONOUNCEMENT : 08 - 03 - 2018 O R D E R PER RAMIT KOCHAR , A M : THESE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE FOR THE BLOCK PERIOD FROM 01 - 04 - 1996 TO 21 - 01 - 2003, BEING ITA NO. I T(SS) NOS. 42 & 92/MUM/2006 RESPECTIVELY , ARE DIRECTED AGAINST APPELLATE ORDER 2 IT (SS) A NO S . 92 & 42/MUM/2006 DATED 13 - 01 - 2006 PASSED BY THE LEARNED COMMISSIONER OF INCOME (APPEALS), MUMBAI (IN SHORT CIT(A)) , THE APPELLATE PROCEEDING HAD ARISEN BEFORE LEARNED CIT(A) FROM ASSESSMENT O R DER (IN SHORT AO) DATED 30 - 01 - 2005 PASSED UNDER SECTION 158C READ WITH SECTION 143(3) OF THE ACT FOR THE BLOCK PERIOD FROM 01 - 04 - 1996 TO 21 - 01 - 2003 . THERE WAS SEARCH AND SEIZURE ACTION CONDUCTED BY REVENUE AGAINST ASSESSEE UNDER SECTION 132(1) OF THE AC T ON 21 - 01 - 2003 AND 14 - 0 2 - 2003 AND BLOCK ASSESSMENT WAS FRAMED UNDER SECTION 15 8C R.W.S 143(3) OF THE ACT FOR THE BLOCK PERIOD FROM 01 - 04 - 1996 TO 21.01.2003 , WHEREIN S EVERAL ADDITIONS WERE MADE BY THE AO . THE ASSESSEE WENT IN APPEAL BEFORE LEARNED CIT(A) AND PART RELI EF WAS GRANTED BY LEANED CIT(A) VIDE APPELLATE ORDERS DATED 13 - 01 - 2006. THE A SSESSEE AND R EVENUE BOTH BEING AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) CAME IN APPEAL BEFORE THE INCOME - TAX APPELLATE TRIBUNAL , MUMBAI(HEREINAFTER CALLED THE TRIBUNAL) BY FILING THEIR APPEALS WHEREIN SEVERAL GROUNDS WERE RAISED BY BOTH THE ASSESSEE AND REVENUE IN THEIR RESPECTIVE APPEALS ASSAILING THE APPELLATE ORDER OF LEARNED CIT(A) . THE TRIBUNAL IN THE FIRST ROUND PASSED TWO SEPARATE ORDERS DECIDING ASSESS EES APPEAL VIDE ORDERS IN IT(SS) A NO.42/MUM/2006 VIDE ORDERS DATED 20 - 6 - 2012 WHICH WAS AN EX - PARTE ORDERS WHEREIN THE APPEAL OF THE ASSESSEE WAS DISMISSED IN THE ABSENCE OF REPRESENTATION FROM THE ASSESSEE , WHILE VIDE SEPARATE ORDER PASSED BY TRIBUNAL R EVENUE APPEAL WAS ALLOWED BY TRIBUNAL IN IT(SS)A NO. 92/MUM/2006 VIDE ORDERS DATED 11.07.2012 WHICH WAS AGAIN DECIDED EX - PARTE BY TRIBUNAL WHEREIN THERE WAS NO REPRESENTATION BY THE ASSESSEE BEFORE THE TRIBUNAL. BOTH THESE ORDERS WERE LATER RECALLED BY TH E TRIBUNAL IN AN SEPARATE MAS FILED BY THE ASSESSEE.IN MA NO 285 & 286/MUM/2014. NOW THE MATTER IS AGAIN BEFORE THE TRIBUNAL AFTER THE EARLIER ORDERS PASSED BY TRIBUNAL WERE RECALLED. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE AND REVENUE IN THE MEMO O F APPEAL FILED ALONG WITH THEIR APPEALS FILED WITH THE INCOME - TAX 3 IT (SS) A NO S . 92 & 42/MUM/2006 APPELLATE TRIBUNAL , MUMBAI ( HEREINAFTER CALLED AS THE TRIBUNAL) ARE REPRODUCED HEREUNDER: - REVENUE APPEAL IN IT(SS) A 92/MUM/2006 - GROUNDS OF APPEAL (I ) 'ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF APPEALS HAS ERRED IN RESTRICTING THE ADDITION TO RS 62,99,805/ - ON ACCOUNT OF UNDISCLOSED INVESTMENTS AS AGAINST ADDITION OF RS7,14,38,500/ - MADE BY THE ASSESSING OFFICER, THEREBY GIVING RELIEF OF RS 6.51,8,695/ - . (II) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF APPEALS HAS ERRED IN DIRECTING THE AO TO APPLY THE GP AS DISCLOSED BY THE ASSESSEE IN THE REGULAR BOOKS OF ACCOUNTS ON THE UNACCOUNTED SALES OF RS 39,92,333/ - AS DETERMINED BY THE ASSESSING OFFICER.' (III) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF APPEALS HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED STOCK OF RS 1,52,16,793/ - ON THE GROUND THAT AS THE SAME HAS NO BASIS OTHER THAN NOTINGS ON LOOSE PAPERS SEIZED.' (IV) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. (V) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND AND/ OR AND NEW GROUNDS WHICH MAY BE NECESSARY. ASSESSEES APPEAL IN IT(SS) A 42/MUM/2006 - GROUNDS OF APPEAL 1 .A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) ERR ED IN CONFIRMING VARIOUS ADDITIONS MADE BY THE AO TO THE UNDISCLOSED INCOME OF THE APPELLANT FOR THE BLOCK PERIOD AS UNDER: - I) UNACCOUNTED INVESTMENT RS.62,99,805/ - II) UNACCOUNTED PROFIT RS. 10,00,000/ - III) GROSS PROFIT ON UNACCOUNTED CASH SALE S OF RS.39,92,333/ - B) THE ID. CIT(A) FAILED TO APPRECIATE THAT UNDISCLOSED INCOME OF RS.15,18,817/ - SHOWN BY THE APPELLANT FOR THE BLOCK PERIOD COVERS ALL UNDISCLOSED INCOME ARISING FROM THE MATERIALS AND INFORMATION S GATHERED IN THE COURSE OF SEARCH AND POST SEARCH INVESTIGATION AND AS SUCH NO FURTHER ADDITION OUGHT TO BE MADE. C) IN REACHING TO THE CONCLUSION AND CONFIRMING SUCH ADDITION, THE ID. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS, CONSIDERATIONS, PRINCIPLES AND EVIDENCES WHILE HE WAS OVERWHEL MED, INFLUENCED AND PREJUDICED BY IRRELEVANT CONSIDERATIONS AND FACTORS. 4 IT (SS) A NO S . 92 & 42/MUM/2006 2. THE ASSESSMENT U/S. 15BBC OF THE INCOME TAX ACT, 1961 HAS BEEN COMPLETED IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUS TICE AND THE SAME IS BAD - IN - LAW AND VOID AND OUGHT TO BE QUA SHED. 3. THE LD. CIT(A) ERRED IN HOLDING THAT LEVY OF INTEREST U/S. 158BFA(1 ) OF THE INCOME TAX ACT, 1961 IS CONSEQUENTIAL IN NATURE. THE APPELLANT DENIES ITS LIABILITY FOR SUCH PENALTY. 4. THE LD. CI T(A) ERRED IN HOLDING THAT INITIATION OF PENALTY PROCEE DINGS U/S. 158BFA(2) OF THE INCOME TAX ACT, 1961 IS CONSEQUENTIAL IN NATURE AND PREMATURE. THE APPELLANT DENIES ITS LIABILITY FOR SUCH PENALTY. 3. THESE ARE OLD APPEALS FILED ALMOST MORE THAN A DECADE EARLIER IN THE YEAR 2006. THE ASSESSEE CONDUCT FROM TIM E TO TIME SINCE THESE APPEALS WERE FILED IN THE YEAR 2006 WAS EITHER TO SEEK ADJOURNMENTS FROM THE BENCH WHEN THE APPEAL WAS FIXED FOR HEARING OR NOT TO APPEAR BEFORE THE TRIBUNAL ON THE DATE FIXED FOR HEARING WHICH LED TO THE DELAY IN DISPOSAL OF ASSESSEE S APPEAL AS WELL AS REVENUES APPEAL BY THE TRIBUNAL IN THE FIRST ROUND .AFTER THE EARLIER ORDERS IN THE FIRST ROUND WERE RECALLED BY THE TRIBUNAL AS DETAILED ABOVE , AGAIN SAME CONDUCT IS CONTINUING WHEREIN EITHER ASSESSEE IS SEEKING ADJOURNMENTS FROM TIM E TO TIME WHEN THE MATTER WAS LISTED FOR HEARING BEFORE THE BENCH OR IS NOT APPEARING BEFORE THE TRIBUNAL ON THE DATE FIXED FOR HEARING. 4. THE ASSESSEE ALSO DID NOT APPEAR ON 14 - 12 - 201 8 WHEN THE BOTH THE APPEAL S WERE CALLED FOR HEARING . UNDER THESE CIRCUM STANCES WE ARE PROCEEDING TO DECIDE BOTH THE APPEALS AFTER HEARING THE LEARNED CIT DEPARTMENTAL REPRESENTATIVE. THE LEARNED CIT DEPARTMENTAL REPRESENTATIVE REQUESTED FOR FILING WRITTEN SUBMISSION S IN THESE CASES TO WHICH BENCH GRANTED THE LIBERTY AND THE S AME WERE LATER FILED BY LEARNED CIT DR WHICH READS AS UNDER: - THE HON'BLE MEMBERS, ITAT 'D' BENCH, MUMBAI. SIR, 5 IT (SS) A NO S . 92 & 42/MUM/2006 SUB: APPEAL NO. IT(SS) 42 - 92 /M/06 M/S. SHAH RUPCHAND MEGHRAJ & CO. BLOCK PERIOD 01.04.1996 TO 21.01.2003 REF: HEARING FIXED ON 14.12.2017(T HURSDAY) BEFORE D BENCH KINDLY REFER TO THE ABOVE. 2. THE ABOVE REFERRED APPEALS PERTAINING TO SEARCH & SEIZURE MATTER WERE FIXED FOR HEARING BEFORE ITAT D BENCH, MUMBAI ON 14.12.2017. THESE ARE APPEALS OF THE ASSESSEE. THERE WAS NO REPRESENTATION FROM TH E SIDE OF THE ASSESSEE. HENCE, THE HON'BLE BENCH HEARD THE MATTER EX - PARTE AND DIRECTED THE UNDERSIGNED TO SUBMIT A BRIEF REPORT ON THE BACKGROUND OF THE CASE. HENCE, THIS REPORT. 3. IN VERY BRIEF, THE FACTS OF THE CASE AS MADE OUT FROM THE RANDOMLY PLACE D PAPERS IN THE FILES ARE AS UNDER: AFTER THE SEARCH & SEIZURE OPERATIONS IN THE CASE OF THE ASSESSEE, SEARCH & SEIZURE WAS AGAIN CONDUCTED ON 21.01.2003 AND OTHER DATES IN THE CASE OF THE ASSESSEE AND OTHER GROUP CONCERNS. DURING THE COURSE OF SEARCH, VA RIOUS INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. BASED ON THAT, BLOCK ASSESSMENT PROCEEDINGS WERE INITIATED AND THE TOTAL INCOME OF THE BLOCK PERIOD WAS COMPUTED AT RS. 9,23,97,881/ - . THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT (A), WHO ALLOWED PART RELIEF TO THE ASSESSEE ONLY, AND AS A RESULT, THE ASSESSEE PREFERRED FURTHER APPEAL BEFORE THE ITAT. NOW, FROM WHATEVER FACTS AVAILABLE ON RECORD, IT APPEARS THAT THE ITAT D BENCH, MUMB AI, PASSED AN ORDER ON 20.06.20 12 IN WHICH THE HON'BLE BENCH FINDING NO REPRESENTATION FROM THE SIDE OF THE ASSESSEE DISMISSED THE FILE OF THE ASSESSEE. A COPY OF THE ORDER IS ENCLOSED HEREWITH FOR READY REFERENCE AS ANNEXURE '1'. THEREFORE, THE HONBLE D BENCH AGAIN PASSED AN ORDER ON 11.07.2012. A COPY OF THIS ORDER IS B EING ENCLOSED HEREWITH AS ANNEXURE '2'. IN THIS ORDER, THE APPEAL OF REVENUE WAS ALLOWED BY THE HON'BLE BENCH. THE FACTS OF THE CASE AND THE GROUNDS OF APPEAL WERE DISCUSSED ON MERITS AND A DETAILED ORDER WAS PASSED BY THE BENCH. THE SAME CAN BE APPRECIATE D BY A QUICK REFERENCE TO THE COPY OF ORDER ENCLOSED. FURTHER, AS IT APPEARS, THERE WAS AN ORDER OF THE D BENCH, MUMBAI, AGAIN IN RESPECT OF M A NO. 286/M/2014 DATED 22.09.20 14 BY WHICH TH E EX - PARTE ORDER DATED 20.06.20 12 WAS RECALLED BY BENCH. A COPY OF TH E SAID ORDER DATED 22.09.2014 OF THE TRIBUNAL IS ENCLOSED AS ANNEXURE '3' TO THIS REPORT. THEREAFTER, IT SEEMS THAT THE PROCEEDINGS HAVE BEEN GOING ON IN THIS MATTER, ALLOWING ASSESSEE SEVERAL OPPORTUNITIES OF BEING HEARD, BUT, TO NO AVAIL. THERE HAS BEEN NO PROPER REPRESENTATION FROM THE SIDE OF THE ASSESSEE. 4. IN VIEW OF THE SAME, IT CAN BE SAID THAT THE ASSESSEE IS NOT INTERESTED IN PROSECUTING ITS APPEAL AND THEREFORE, IF DEEMED FIT, THE APPEALS OF ASSESSEE MAY BE DISMISSED. IT IS ALSO REITERATED AGA IN HERE THAT THE ORDER OF TRIBUNAL DT.1L.07.2012, ALTHOUGH WITHOUT REPRESENTATION FROM THE SIDE OF ASSESSEE IS A DETAILED ORDER MADE BY THE BENCH AFTER DISCUSSING MERITS OF EACH AND EVERY ISSUE. THEREFORE, A SUPPORT MAY BE DRAWN FROM THE ORDER DT.1 1.07.20 12 IN THESE APPEALS AS WELL. YOURS SINCERELY, ENCL: COPIES OF THE ORDER SD/ (RAHUL RAMAN) COMMISSIONER OF INCOME TAX (DR) ITAT D BENCH, MUMBAI 6 IT (SS) A NO S . 92 & 42/MUM/2006 THUS IN NUTSHELL, THE LEARNED CIT DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE IS NOT INTERESTED IN PROSECUTING THE SE APPEAL S WHICH HAS DELAYED THE WHOLE PROCEEDINGS AND PRAYER WAS MADE TO ALLOW THE REVENUES APPEAL AND DISMISS THE ASSESSEES APPEAL. 5. ON PERUSAL OF THE MATERIAL ON RECORD AND AFTER HEARING THE LEARNED CIT DEPARTMENTAL REPRE SENTATIVE, WE HAVE OBSERVED THAT SIMILAR GROUNDS OF APPEAL WERE RAISED BY BOTH THE ASSESSEE AS WELL REVENUE , WHERE IN ASSESSEE HAS COME IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ADDITIONS SUSTAINED BY LEARNED CIT(A)S WHILE REVENUE H AS COME IN APPEAL BEFORE THE TRIBUNAL AGAINST THE RELIEF GRANTED BY THE LEARNED CIT(A). WE HAVE OBSERVED THAT THE TRIBUNAL IN THE FIRST ROUND WHILE ALLOWING THE REVENUES APPEAL HAS DISCUSSED ALL THE ADDITIONS AS MADE BY THE AO ON MERITS WHICH WAS SUBJECT MATTER OF APPEAL BEFORE THE LEARNED CIT(A) BY A DETAILED ORDER PASSED BY TRIBUNAL IN IT(SS) 92/MUM/2006 VIDE ORDERS DATED 11.07.2012 WHICH READS AS UNDER: - THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 13.1.2006 OF CIT(A) IN RELATION TO THE BLOCK ASSESSMENT. THE REVENUE IN THIS APPEAL HAS RAISED DISPUTES ON THREE DIFFERENT GROUNDS. 2. THE FACTS IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATION HAD BEEN CONDUCTED ON 21.1.2003 AND 14.2.2003 IN CASE OF THE ASSESSEE AND OTHER GROUP CONCERNS, DURING THE COURSE OF WHIC H INCRIMINATING DOCUMENTS MARKED AS ANNEXURE A - 3, A - 4 AND A - 5 WERE SEIZED. THE AO INITIATED BLOCK ASSESSMENT PROCEEDINGS AND IN RESPONSE TO NOTICE UNDER SECTION 158 BC ISSUED BY AO ON 22.6.2004 THE ASSESSEE DID NOT FILE RETURN WITHIN THE PRESCRIBED TIME LI MIT OF 45 DAYS. RETURN WAS ONLY FILED ON 2.11.2004 DECLARING UNDISCLOSED INCOME OF RS.15,18,817/ - . AS PER THE AO DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD NOT PROVIDED THE NECESSARY ASSISTANCE AND DID NOT SUBMIT THE EXPLANATION TO ALL DOCUMENTS S EIZED FROM PREMISES OF THE ASSESSEE. THE AO ALSO OBSERVED THAT THE ASSESSEE 7 IT (SS) A NO S . 92 & 42/MUM/2006 HAD ALSO NOT CO - OPERATED DURING THE SEARCH PROCEEDINGS AND EVEN AT THE TIME OF RECORDING OF STATEMENT AFTER SEARCH, THE ASSESSEE REMAINED NON - CO - OPERATIVE. THE AO, THEREFORE, COMPL ETED THE ASSESSMENT ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE TOTAL INCOME OF BLOCK PERIOD WAS COMPUTED AT RS.9,23,97,881/ - . THE ASSESSEE HAD DISPUTED THE ADDITIONS BEFORE CIT(A) WHO HAD ALLOWED CERTAIN RELIEF TO THE ASSESSEE AGAINST WHICH THE PRES ENT APPEAL HAS BEEN FILED BY THE REVENUE. 2.1 AT THE TIME OF HEARING OF THE APPEAL BEFORE THE TRIBUNAL, NO ONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE THOUGH THE NOTICE OF HEARING HAD BEEN GIVEN WELL IN ADVANCE. THE PERUSAL OF RECORDS SHOW S THAT ON EARLIER OCCASIONS ALSO THE ASSESSEE, HAD EITHER SOUGHT ADJOURNMENT OR HAD NOT APPEARED AT ALL. ON THE LAST DATE OF HEARING ON 26.3.2012, THE CASE WAS ADJOURNED TO 28.6.2012 AS LAST CHANCE TO THE ASSESSEE BUT NO ONE APPEARED ON BEHALF OF THE ASSES SEE ON THE SAID DATE. WE, THEREFORE, PROCEED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DR WHO STRONGLY SUPPORTED THE ORDER OF AO. 3. THE FIRST DISPUTE IS REGARDING RELIEF OF RS.6,51,38,695 ALLOWED BY CIT(A) IN RELATION TO ADDITION OF RS.7,14,38,500/ - MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INVESTMENT. THE AO DURING THE ASSESSMENT PROCEEDINGS NOTED THAT THERE WERE SEVERAL ENTRIES OF TRANSACTIONS MADE IN THE NOTE BOOK ANNEXURE A - 3 CONTAINING 20 PAGES SEIZED F ROM THE RESIDENTIAL PREMISES OF THE ASSESSEE. THE ASSESSEE HAD EXPLAINED THAT THE SEIZED DOCUMENT WAS A ROUGH BOOK IN WHICH ENTRIES HAD BEEN MADE RELATING TO FAMILY SETTLEMENT DATED 16.3.1996. THE AO HOWEVER NOTED FROM THE COPY OF FAMILY SETTLEMENT DATED 1 6.3.1996 THAT IT SPOKE ONLY ABOUT IMMOVABLE PROPERTIES BELONGING TO THE GROUP. THE AO FURTHER NOTED THAT IN THE SAID DOCUMENTS, THE STOCK OF BHIWANDI GODOWN AS ON 30.6.1996 WAS SHOWN AS RS.10,13,36,000/ - AND THERE WAS ALSO MENTION OF PURCHASE FROM CUSTOMS FOR WHICH DATE OF PAYMENT HAD BEEN MENTIONED AS FEB.97. THE AO ALSO NOTED THAT ALL FIVE BROTHERS WERE PARTNERS OF THE FIRM UP TO FINANCIAL YEAR 1996 - 97 AND THERE WAS CHANGE 8 IT (SS) A NO S . 92 & 42/MUM/2006 OF CONSTITUTION ONLY FROM ASSESSMENT YEAR 1998 - 99. THE AO THEREFORE DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE THAT THE ENTRIES MADE IN THE DOCUMENT RELATED TO THE FAMILY SETTLEMENT. THE ENTRIES FELL WITHIN THE BLOCK PERIOD AND THE AO THEREFORE, ASSESSED THE INCOME RELATING THERETO IN THE BLOCK ASSESSMENT. FROM THE SAID SEIZED DOCUM ENT, THE AO NOTED THE DETAILS OF INVESTMENT TOTALING TO RS.6,58,28,500/ - AS UNDER : - 1. AMOUNT IN NAME OF GANESHMALJI LOANS AS PER PARA NO.3.8 4290000 2. AMOUNT IN NAME OF SURAJMALJI LOANS AS PER PARA NO.3.8 11100000 3. AMOUNT IN NAME OF MEGHRAJI LOANS AS PER PARA NO.3.9 7500000 4. AMOUNT IN NAME OF GANESHMAJI MAL KA RUPIA AS PER PARA NO.3.10 11475000 5. AMOUNT IN NAME OF GANESHMALJI VATAV ACCOUNT AS PER PARA NO.3.11 15000000 TOTAL RS. . 65828500 3.1 IN ADDITION THERE WERE ALSO LOANS GIVEN BY THE ASSESSEE TO VARIOUS PERSONS, DETAILS OF WHICH HAVE BEEN GIVEN IN PARA 3.11 OF THE ASSESSMENT ORDER WHICH WERE ALSO TREATED BY THE AO AS INCOME OF THE BLOCK PERIOD. THUS TOTAL ADDITION MADE BY THE AO ON ACCOUNT OF UNDISCLOSED IN VESTMENT WAS RS.7,14,38,500/ - . IN THE COMPUTATION OF THE SAID ADDITION BASED ON SEIZED ENTRIES, THE AO NOTED THAT THE FIGURES WERE ENTERED IN CODES AND HE HAD ADDED APPROPRIATE NUMBER OF ZEROS TO THE ENTRIES MADE. THE ASSESSEE HAD DISPUTED THE DECISION OF AO. IN APPEAL, CIT(A) OBSERVED THAT, IN HIS OPINION, THERE WAS NO SUFFICIENT MATERIAL AVAILABLE ON RECORD TO SUPPORT THE DECODING OF FIGURES MADE BY AO. CIT(A) OBSERVED THAT ASSESSMENT COULD BE MADE ONLY ON THE BASIS OF ENTRIES MADE IN THE DOCUMENTS AND TH ERE COULD NOT BE ANY PRESUMPTION THAT THE FIGURES WERE WRITTEN IN CODES. CIT(A), THEREFORE, UPHELD THE ADDITION ONLY TO THE EXTENT OF RS.62,99,805/ - ON THE BASIS OF EXACT ENTRIES APPEARING IN THE DOCUMENTS AND THUS DELETED THE BALANCE AMOUNTS, AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 9 IT (SS) A NO S . 92 & 42/MUM/2006 3.2 BEFORE US, THE LD. DR APPEARING FOR THE REVENUE ASSAILED THE ORDER OF CIT(A). IT WAS SUBMITTED THAT CIT(A) WAS NOT CORRECT IN STATING THAT THE AO HAD NO MATERIAL TO DECIPHER THE TRANSACTIONS NOTED IN THE DOCUMENTS. HE REFERRED TO PARA 4,5 AND 6 OF PAGE 3 AND 4 OF THE SHOW CAUSE NOTICE DATED 28.1.2005 ISSUED BY THE AO TO THE ASSESSEE WHICH SHOWS WHY THE AO HAD ADDED CERTAIN NUMBER OF ZEROS TO THE FIGURES ENTERED IN THE DOCUMENTS. COPY OF THE SAID NO TICE WAS PLACED ON RECORD. IN THE SAID PARAS, THE AO HAD GIVEN BASIS FOR ARRIVING AT THE SAID CONCLUSION WHICH HAD NOT BEEN CONTROVERTED BEFORE CIT(A). IT WAS ACCORDINGLY URGED THAT THE ORDER OF CIT(A) SHOULD BE SET ASIDE. 3.3 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING RELIEF OF RS.6,51,38,695 ALLOWED BY CIT(A) IN RELATION TO ADDITION OF RS.7,14,38,500/ - MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INVESTMENT BASED ON THE ENTRIES FOUND ON THE SEIZED DOCUMENTS. T HE AO ON PERUSAL OF SEIZED DOCUMENTS NOTED THAT THE FIGURES ENTERED WERE IN CODES. THE AO HAD GIVEN JUSTIFICATION FOR THE SAID CONCLUSION IN THE SHOW CAUSE NOTICE DATED 25.1.2005 ISSUE TO THE ASSESSEE. IN PARA - 4 OF THE SAID NOTICE THE AO NOTED THAT AT PAGE 38 OF ANNEXURE A - 2 WHICH WAS A HUNDI OF RS.1.00 LACS SIGNED BY DALCHAND T. PALREJA BUT AT PAGE - 2 OF ANNEXURE - 1 ONLY A SUM OF 50 WAS WRITTEN AGAINST THE NAME OF DALCHAND WHICH SHOWED THAT THE FIGURE WAS CODED. SIMILARLY AT PAGE - 2 OF ANNEXURE - 1, THE TOTAL OF LEFT HAND SIDE WAS 14.75 WHEREAS ON THE RIGHT HAND SIDE THE FIGURE WRITTEN WAS 875 BUT THE TOTAL OF THE TWO FIGURES WAS WRITTEN AS 23.50. THIS SHOWS 875 WAS NOTHING BUT 8.75 IN LACS. SIMILARLY IN PARA - 6, THE AO POINTED OUT THAT ON THE BACK SIDE OF PAGE - 2, THERE WERE ENTRIES TOTAL OF WHICH WAS 220.60 WHICH DENOTED LOAN OF RS.2,22,600/ - GIVEN TO VARIOUS PERSONS. THUS THERE WAS JUSTIFICATION FOR AO FOR COMING TO THE CONCLUSION THAT THE FIGURES WERE CODED AND CIT(A) WAS NOT JUSTIFIED IN CONCLUDING THAT AO H AD ACTED ON PRESUMPTIONS. IN CASE, THERE IS MATERIAL TO SHOW THAT THE FIGURES ARE CODED, THE COMPUTATION OF INCOME FROM THE TRANSACTIONS HAS TO BE DONE ON THE BASIS OF REAL FIGURES AND NOT CODED FIGURES. WE ARE THEREFORE, 10 IT (SS) A NO S . 92 & 42/MUM/2006 UNABLE TO SUSTAIN THE ORDER OF CIT (A) IN ALLOWING RELIEF TO THE ASSESSEE AND SAME IS THEREFORE, SET ASIDE AND ADDITION IS UPHELD. 4. THE SECOND DISPUTE IS REGARDING THE ADDITION OF RS.39,92,333/ - MADE BY THE AO AS UNACCOUNTED SALES. THE AO NOTED FROM THE ENTRIES MADE AT VARIOUS PAGES OF THE SEIZED DOCUMENTS IN ANNEX. A - 3 THAT ON THOSE PAGES SALES MADE BY THE ASSESSEE TO VARIOUS PERSONS WERE ENTERED. THE AO COMPUTED THE TOTAL SALES BASED ON SUCH ENTRIES AT RS.39,92,333/ - , THE DETAILS OF WHICH HAVE BEEN GIVEN IN PARA - 6.8 OF THE ASSESSMENT ORDER. SINCE SALES WERE UNACCOUNTED, THE ENTIRE AMOUNT WAS ADDED TO THE TOTAL INCOME OF THE BLOCK PERIOD. THE ASSESSEE DISPUTED THE DECISION OF AO AND SUBMITTED BEFORE CIT(A) THAT NO ADDITION COULD BE MADE ON THE BASIS OF ENTRIES MADE IN THE NOTE BOOKS AS THE SAME WERE NOT PART OF REGULAR BOOKS OF ACCOUNTS. ALTERNATIVELY, IT WAS ALSO SUBMITTED THAT EVEN IF THE ENTRIES WERE TAKEN AS REPRESENTING SALES, ONLY PROFIT ON ACCOUNT OF THESE SALES COULD BE BROUGHT TO TAX AND NOT THE ENTIRE SALES. CIT(A) ACCEPTED THE ALTERNATIVE CLAIM OF THE ASSESSEE AND DIRECTED THE AO TO ADD ONLY GP ON THE UNACCOUNTED SALES ON THE BASIS OF GP RATE DECLARED BY THE ASSESSEE IN THE REGULAR BOOKS OF ACCOUNT. AGGRIEVED BY THE SAID DECISION THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4.1 BEFORE US, THE LD. DR SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION ONLY TO THE EXTENT OF GP. IT WAS POINTED OUT THAT CORRESPONDING PURCHASES HAD ALREADY BEEN RECORDED IN THE BOOKS AND, THEREFORE, ENTIRE SALES HAD TO BE ADDED. I T WAS ACCORDINGLY URGED THAT THE ORDER OF CIT(A) SHOULD BE SET ASIDE. 4.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING ADDITION OF RS.39,92,333/ - MADE BY AO AS UNACCOUNTED SALES BASED ON THE ENTRIES MADE IN THE SEIZED DOCUMENTS. THERE IS NO DISPUTE THAT THE ENTRIES REPRESENTED SALES OF RS.39,92,333/ - AND THE ONLY DISPUTE IS WHETHER THE ENTIRE SALES SHOULD BE ADDED TO THE TOTAL INCOME OR ONLY GP ON THE SALES. ONCE CERTAIN SALES ARE FOUND AS UNACCOUNTED IN THE BOOKS, THE ASSESSEE HAS TO EXPLAIN THE INVESTMENT IN THE CORRESPONDING PURCHASES. IN CASE THE PURCHASES ARE 11 IT (SS) A NO S . 92 & 42/MUM/2006 ACCOUNTED, THE ENTIRE SALES HAD TO BE ADDED TO THE TRADING ACCOUNT AND IN CASE SALES AS WELL AS CORRESPONDING PURCHASES BOTH ARE UNACCOUNTED THEN, IN ADDITION TO GP, THE CORRESPONDING INVESTMENT I.E. PURCHASE VALUE IS ALSO REQUIRED TO BE ADDED. THUS, IN EITHER CASE THE TOTAL SALES WILL HAVE TO BE TREATED AS UNDISCLOSED INCOME. CIT(A) HAS NOT GIVEN ANY BASIS AS TO WHY ONLY GP SHOULD BE ADDED. WE, THER EFORE, SET ASIDE THE ORDER OF CIT(A) AND CONFIRM THE ADDITION MADE BY THE AO. 5. THE THIRD DISPUTE IS REGARDING ADDITION OF RS.1,52,16,793/ - ON ACCOUNT OF UNDISCLOSED STOCK. THE AO NOTED THAT ON PAGE - 7 OF ANNEXURE - 1, THE VALUE OF STOCK AS ON 30.6.1996 HA D BEEN ENTERED WHICH WAS RS.1,01,33,600/ - IN RELATION TO BHIWANDI STOCK AND RS.73,86,000/ - IN RELATION TO KHETWADI STOCK TOTALING TO RS.1,75,19,600/ - . THE ASSESSEE EXPLAINED BEFORE AO THAT THE STOCK BELONGED TO M/S. PALREJA METAL CORPORATION. AO HOWEVER, O BSERVED THAT THERE WAS NO MENTION OF SAID CONCERN IN THE BOOKS ASSESSED AND AT NO POINT OF TIME DURING THE SEARCH, ASSESSEE HAD CLAIMED THAT THE GOODS LYING IN HIS GODOWN BELONGED TO SOMEBODY ELSE. THE AO PREPARED THE TRADING ACCOUNT AS ON 30.6.1996 AS PER BOOKS OF ACCOUNT WHICH GAVE CLOSING STOCK OF RS.11,86,090/ - . HE, THEREFORE, ADDED THE EXCESS STOCK OF RS.56,59,593/ - (17519600 11860907) AS UNACCOUNTED INVESTMENT. FURTHER THERE WERE FIGURES TOTALING RS.95,57,000/ - ENTERED ON PAGE - 3 OF ANNEXURE - 1. THE ASSESSEE GAVE EXPLANATION WHICH WAS FOUND NOT SATISFACTORY BY THE AO AS THE FIGURES GIVEN IN THE EXPLANATION WERE NOT MATCHING WITH THE FIGURES FOUND ON THE SEIZED DOCUMENT. THE AO THEREFORE TREATED THE SUM OF RS.95,57,000/ - ALSO AS UNACCOUNTED STOCK. THUS TOTAL ADDITION MADE BY THE AO WAS RS.1,52,16,793/ - . 5.1 IN APPEAL CIT(A) OBSERVED THAT PAGE - 7 OF THE SEIZED DOCUMENT GAVE POSITION OF THE STOCK ON 30.6.1996 AND NOT ON THE DATE OF SEARCH. ON THE SAID DATE, ALL THE BROTHERS WERE DOING BUSINESS JOINTLY. I T WAS ALSO OBSERVED BY HIM THAT NO EXCESS STOCK HAD BEEN FOUND ON THE DATE OF SEARCH. CIT(A), THEREFORE CONCLUDED THAT THERE WAS NO BASIS FOR MAKING ADDITION ON ACCOUNT OF UNACCOUNTED STOCK ON 30.6.1996 MERELY ON THE 12 IT (SS) A NO S . 92 & 42/MUM/2006 BASIS OF LOOSE PAPER. ACCORDINGLY HE DI RECTED THE AO TO DELETE THE ADDITION. IN REGARD TO ADDITION OF RS.95,57,000/ - BASED ON ENTRIES AT PAGE - 1 OF ANNEXURE - 1, CIT(A) OBSERVED THAT THERE WAS NO DATE MENTIONED ON THE DOCUMENT AND , THEREFORE, STOCK COULD BE OF DIFFERENT DATE. THEREFORE, HE HELD T HAT THE ADDITION MADE WAS NOT CORRECT AND THUS DELETED THE SAME. AGGRIEVED BY THE DECISION OF CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5.2 BEFORE US, THE LD. DR SUBMITTED THAT CIT(A) HAD OMITTED TO CONSIDER THE PROVISIONS OF SECTION 292C AS PER WHICH ANY DOCUMENT FOUND DURING THE COURSE OF SEARCH HAS TO BE EXPLAINED BY THE ASSESSEE TO THE SATISFACTION OF AO AND IN THE ABSENCE OF SATISFACTORY EXPLANATION THE AO IS DUTY BOUND TO COMPUTE INCOME BASED ON SUCH DOCUMENT. THE STOCK HAD BEEN FOUND AS ON 30.6.1996 WHICH IS PART OF THE BLOCK PERIOD AND THEREFORE, UNLESS ENTRIES WERE EXPLAINED SATISFACTORILY, THE AO COULD DETERMINE THE UNDISCLOSED INCOME UNDER THE PROVISIONS OF SECTION 158B(B) AND 158BB. ACCORDINGLY IT WAS URGED THAT THE ORDER OF CIT(A) SHOULD BE SET ASIDE. 5.3 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING ADDITION OF RS.56,59,503/ - MADE BY AO AS UNACCOUNTED STOCK BASED ON THE ENTRIES AT PAGE - 7, ANNEXURE A1 FOUND DURING SEARCH. THE ASSESSEE HA D EXPLAINED THE STOCK AS BELONGING TO M/S. PALREJA METAL CORPORATION BUT SINCE THE ASSESSEE HAD NOT GIVEN ANY SUCH EXPLANATION EARLIER AND SPECIALLY DURING THE SEARCH, THE AO DID NOT ACCEPT THE EXPLANATION GIVEN AND COMPUTED THE INCOME ON ACCOUNT OF SUCH S TOCK IN CASE OF THE ASSESSEE. THE EXCESS STOCK WITH REFERENCE TO BOOKS OF ACCOUNT ON THIS ACCOUNT WAS COMPUTED AT RS.56,59,593/ - . BESIDES, ON BACK SIDE OF PAGE - 3 OF ANNEXURE A - 1, THERE WERE TOTAL FIGURES OF RS.95,57,000/ - WRITTEN THEREIN. THE ASSESSEE HAD GIVEN THE FOLLOWING EXPLANATION BEFORE AO : - THE FIRM HAS PURCHASED GOODS FROM CUSTOM 40,000/ - KG. COPPER FROM COLLECTOR OF CUSTOMS DURING THE YEAR ENDED 13 IT (SS) A NO S . 92 & 42/MUM/2006 MARCH, 1997 OF RS.53,66,400/ - AND 80,000 KG. BRASS TOTAL RS.62,06,720/ - . AS PER YOUR SHOW CAUSE NOTIC E PAGE NO.15 OR PAGE NO.19 OF A - 4 SEIZED ON 21.11.2003 FROM DESAI HOUSE WHERE THE TOTAL AMOUNT PAID TO CUSTOM THROUGH BANK DRAFT CAME TO RS.81,92,072/ - . THEREFORE, THE PAGE NO.3 SHOWS THAT TOTAL STOCK LYING WITH M/S. SHAH RUPCHAND MEGHRAJ & CO. AND GOODS T RANSFERRED TO POONA VARIETY METAL PVT. LTD. RS.8,98,964/ - 20.6.96 AND OTHER FIRMS. 5.4 THE AO HOWEVER DID NOT ACCEPT THE EXPLANATION AS FIGURES WERE NOT MATCHING. HE ACCORDINGLY TREATED THE SUM OF RS.95,57,000/ - AS UNACCOUNTED INVESTMENT IN STOCK AND A DDED TO THE TOTAL INCOME. THUS, THE TOTAL ADDITION MADE BY THE AO TO THE TOTAL INCOME WAS RS. 1,52,16,797/ - . IN APPEAL CIT(A) OBSERVED THAT STOCK OF RS.95,57,000/ - WRITTEN ON PAGE - 3 OF ANNEXURE - 1 WAS NOT AS ON 30.6.1996 AS THERE WAS NO DATE MENTIONED. TH EREFORE, THE DISCREPANCY FOUND REPRESENTED THE STOCK POSITION OF DIFFERENT DATES, CIT(A) ACCORDINGLY DELETED THE ADDITION MADE BY AO OF RS.95,57,000/ - . WE ARE UNABLE TO ACCEPT THE VIEW TAKEN BY THE CIT(A), BECAUSE IN CASE NO DATE IS MENTIONED THE DOCUMENT HAS TO BE TAKEN AS OF THE CURRENT DATE UNLESS THE ASSESSEE EXPLAINS WITH EVIDENCE THAT THE SAME RELATED TO EARLIER PERIOD. THEREFORE, THE TRANSACTIONS HAD TO BE TREATED AS PART OF THE BLOCK PERIOD. THE DECISION OF CIT(A) DELETING THE ADDITION OF RS.56,59,5 93/ - BASED ON ENTRIES ON PAGE - 7 CAN ALSO NOT BE ACCEPTED AS THE STOCK POSITION WAS OF THE DATE 30.6.1996 WHICH WAS WITHIN THE BLOCK PERIOD. THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO SHOW THAT THE SAID STOCK WAS PART OF THE COMMON BUSINESS AND HAD ALREA DY BEEN DECLARED IN THE COMMON ACCOUNTS. THEREFORE, THE STOCK FOUND AS ON 30.6.1996 WHICH WAS WITHIN THE BLOCK PERIOD HAS BEEN RIGHTLY ASSESSED IN CASE OF THE ASSESSEE. THE ORDER OF CIT(A) DELETING BOTH ADDITIONS AGGREGATING TO RS.1,52,16,793/ - CAN NOT BE SUSTAINED AND SAME IS, THEREFORE, SET ASIDE AND ADDITION MADE BY AO IS CONFIRMED. 14 IT (SS) A NO S . 92 & 42/MUM/2006 6. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED. THUS, WE HAVE OBSERVED THAT T RIBUNAL IN FIRST ROUND HAS GONE INTO DETAILS INTO EACH ADDITION S AS MADE BY THE AO WHEREIN RELIEF WAS GRANTED BY LEARNED CIT(A) AND HAS ALLOWED THE REVENUES APPEAL AGAINST THE RELIEF GRANTED BY LEARNED CIT(A) TO THE ASSESSEE BY SETTING ASIDE THE ORDER OF LEARNED CIT(A) . THE ASSESSEE HAS NOTHING MORE TO SAY AGAINST THE ADDITIONS MADE BY THE AO WHEREIN RELIEF WAS GRANTED BY THE CIT(A) WHICH WAS LATER REVERSED BY TRIBUNAL VIDE ORDERS DATED 11.07.2012 . THE AFORESAID ORDER OF THE TRIBUNAL WAS RECALLED IN AN MA FILED BY THE ASSESSEE BUT NO EVIDENCES TO REBUT THE FINDING OF THE TRIBUNAL ALLOWING REVE NUE APPEAL ARE BROUGHT ON RECORD BY THE ASSESSEE RATHER THE ASSESSEE IS EITHER SEEKING ADJOURNMENT ON ONE PRETEXT OR THE OTHER OR IS NOT APPEARING WHEN THE APPEAL IS FIXED FOR HEARING BEFORE THE BENCH . THUS, UNDER THE SE CIRCUMSTANCES, WE ARE OF THE CONSID ERED VIEW THAT APPELLATE ORDER OF THE CIT(A) TO THE EXTENT RELIEF WAS GRANTED BY THE LEARNED CIT(A) CANNOT BE SUSTAINED AS THE ASSESSEE HAD NOTHING MORE TO SAY AND HENCE REVENUES APPEAL IS TO BE ALLOWED BY FOLLOWING THE ORDER OF THE TRIBUNAL DATED 11.07 .2012 WHICH IS A WELL REASONED ORDER ON MERITS . THUS UNDER THE CIRCUMSTANCES, THE APPEAL OF THE REVENUE IN IT(SS) A 92/MUM/2006 IS ALLOWED. WE ORDER ACCORDINGLY. 6. NOW COMING TO THE ASSESSEES APPEAL AGITATING THE ADDITIONS MADE BY THE AO AS WERE CONFIRMED BY LEARNED CIT(A) IN HIS APPELLATE ORDER DATED 13.01.2006, WE HAVE PERUSED THE ASSESSMENT ORDER AS WELL APPELLATE ORDER OF LEARNED CIT(A) , THE DECISION OF LEARNED CIT(A) ON EACH OF THE ISSUES IN THE APPEAL OF THE ASSESSEE ARE REPRODUCED HEREUNDER: - ADDI TIONS ON ACCOUNT OF UNDISCLOSED INVESTMENT S - RS.7,14,38,500/ - *** *** 15 IT (SS) A NO S . 92 & 42/MUM/2006 I HAVE CONSIDERED THE FACTS OF THE CASE TOGETHER WITH REASONS RECORDED BY THE AO AND ARGUMENTS PUT FORWARD BY THE ID. AR. I HAVE ALSO GONE THROUGH THE PAPER BOOK SUBMITTED BY THE ID. AR ALONG WITH COPY OF RELEVANT SEIZED MATERIALS. IT IS NOW WELL SETTLED THAT COMPUTATION OF UNDISCLOSED INCOME SHOULD BE MADE ON THE BASIS OF EVIDENCE, DOCUMENT, MATERIAL AND INFORMATION FOUND AS A RESULT OF A SEARCH AND THE SAME MUST BE AUTHENTIC, RELIAB LE AND VERIFIABLE. IN ORDER TO MAKE ADDITION ON THE BASIS OF SEIZED PAPERS THE AO MUST BRING POSITIVE EVIDENCES TO SHOW THAT THE NOTINGS IN THE SEIZED MATERIALS REPRESENTS INCOME EARNED BY AN ASSESSEE OUT OF BOOKS OF ACCOUNT. COMING TO THE FACTS OF TILE CA SE IT IS SEEN THAT - THE APPELLANT CLAIMED PAGE NOS. 12 TO 16 OF ANNEXURE A4 RELATED TO FAMILY SETTLEMENT WHICH TOOK PLACE ON 16 - 3 - 1996 I.E. PRIOR TO BLOCK PERIOD. THE AO DID NOT ACCEPT SUCH CLAIM ON THE PLEA THAT: A) PAGE NO. 7 OF ANNEXURE A - 1 SEIZED FROM THE RESIDENCE OF LATE SHRI RUPCHAND JAIN SHOWED NOTINGS IN RESPECT OF STOCK OF BHIWANDI GOSWOWN AT 1,01,33,600/ - AS ON 30 - 06 - 1996. B) ON PAGE NO. 19 OF ANNEXURE A - 4 THERE WAS A MENTION OF PURCHASES FROM CUSTOMS AND THE DATE OF PAYMENT HAS BEEN SHOWN AS F EBRUARY, 1997 PERTAINING TO FY 1996 - 97. C ) THE CONSTITUTION OF THE FIRM SHOWED THAT ALL THE FIVE BROTHERS WERE PARTNERS IN THE APPELLANT FIRM UPTO F.Y. 1996 - 97 AND THE CONSTITUTION OF THE APPELLANT FIRM CHANGED FROM THE AY 1998 - 99 WHEN ONLY SHRI RUPCHAND J AIN AND SMT. BHAWARIBAI JAIN BECAME THE PARTNERS. IN VIEW OF THE AFORESAID FACTS OF THE CASE, IN MY OPINION THE PAGE NOS. 12, 15 AND 16 OF ANNEXURE A - 4 BELONGED TO THE FY 1996 - 97 AND AS SUCH BY THE BLOCK PERIOD. HOWEVER IT IS SEEN THAT IN MAKING ADDITIONS THE AO ADDED 00 TO THE FOLLOWING NOTINGS: - ANNEXURE PAGE NO. AMOUNT (RS.) A/4 12 2,65,636 A/4 13 & 14 42,900 A/4 14 74,000 A/4 14 37,000 A/4 16 75,000 A/4 15 1,14,750 A/4 15 1,50,000 LIKEWISE THE AO ADDED 000 TO THE FOLLOWING A/3 4 250 A/3 20 270 16 IT (SS) A NO S . 92 & 42/MUM/2006 LIKEWISE THE AO ADDED 00000 TO THE FOLLOWING A/3 8 29 I HAVE CLEARLY EXAMINED THE NOTINGS ON THE SAID SEIZED PAPERS. IN MY OPINION THERE IS NO SUFFICIENT MATERIAL AVAILABLE ON RECORD TO SUPPORT THE DECODING OF THE FIGURE MADE BY THE AO. THE DECOD ING THEORY ADOPTED BY THE AO APPEARS TO BE WITHOUT ANY BASIS AND NOT BASED ON ANY MATERIAL RECORD. THE ITAT, MUMBAI IN THE CASE OF JAYA S. SHETTY V/S. ACIT 69 ITD 336 (MUM), HAS HELD THAT 'EVEN ACCORDING TO THE PRESUMPTION UNDER SECTION 132(4A) IF IT IS AC CEPTED THAT THESE WERE WRITTEN IN ASSESSEES HANDWRITING, ALTHOUGH ASSESSEE HAS DENIED IT, YET, THE PRESUMPTION WOULD ALSO BE THAT WHATEVER IS W RITTEN THERE IS CORRECT AND THERE WOULD BE NO JURISDICTION IN PRESUMING THAT THE FIGURES WRITTEN AS PAISAS COULD NOT BE PAISAS . FURTHER IN THE CASE OF P IONEER PUBLICITY CORPN. & OTHERS V/S. DY. CIT 67 TTJ 471 (DEL). IT IS HELD THAT THERE IS NO MERIT IN ADOPTING THE FIGURE IN THOUSAND AND ACCORDINGLY, THE TRIBUNAL HAS REJECTED THE THEORY OF DECODING ADOPTED BY THE A SSESSING OFFICER. IN VIEW OF THE ABOVE DISCUSSIONS THE THEORY OF DECODING THE FIGURES NOTED ON THE SEIZED MATERIALS IS NOT PROPER NOR SUPPORTED BY ANY COGENT REASONS. HENCE, THE ADDITIONS OF 7,14,38,500/ - MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INVESTMENTS WILL BE REDUCED TO 62,99,805/ - AS WORKED OUT HEREUNDER: - S. NO ANNEXURE PAGE NO. DESCRIPTION 1. AY 1997 - 98 A/4 12 GANESHMALJI LOANS 2,65,635 A/4 13&14 GANESHMALJI LOANS 42,900 A/4 14 SURAMALJI LOANS 111,000 A/4 16 M E GHRAJJI LOANS 75,000 A/4 15 GANESHMALJI MAL KA RUPIA 114,750 A/4 15 GANESHMALJI VATAV A.C 150,000 759285 2 AY 1998 - 99 A/3 8 & 17 CASH LOAN TO SANDEEP PRAKASHL 2,900,000 3 AY 2001 - 02 A /3 1 BORILAL SEMA UDARAT 230,000 A/3 2&16 BHAGEHAND 1,525,000 A/3 3 PARAS MACHIND 100,000 A/3 4 NARESH 250 A/3 18 PANNALAL SARAFI UDARAT 10,000 A/3 19 POONAM CHAND 250,000 A/3 20 ANCHAK 270 2,115,250 17 IT (SS) A NO S . 92 & 42/MUM/2006 A/5 29 R.K. (WRONGLY TAKEN BY THE A O AS 50,000) 5,00,000 A/5 11 NARAYAN 25,000 5,25,000 5,25,000 TOTAL 62,99,805 THUS, IN MY OPINION IT WILL BE FAIR AND REASONABLE TO RESTRICT THE ADDITION TO 62,99,805/ - ON ACCOUNT OF UNDISCLOSED INVESTMENTS AS AGAINST ADDITION OF 7,14,3 8,500/ - . IN THE RESULT, THE APPELLANT GETS RELIEF OF 6,51,38,695/ - OUT OF ADDITION OF 7,14,38,500/ - MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INVESTMENTS. ADDITION ON ACCOUNT OF UNACCOUNTED STOCK - IN - TRADE - RS.1,52,16,593/ - *** *** I HAVE CONSIDERED TH E FACTS OF THE CASE TOGETHER WITH REASONS RECORDED BY THE AO AND ARGUMENTS PUT FORWARD BY THE ID AR I HAVE ALSO GONE THROUGH THE PAPER BOOK SUBMITTED BY THE ID. AR ALONGWITH COPY OF THE RELEVANT SEIZED MATERIALS. IT IS SEEN THAT THE AO HAS MADE TWO SEPARAT E ADDITIONS OF RS.56,59,593/ - ON THE BASIS OF PAGE NO.7 AND RS. 95 , 57,000/ - ON THE BASIS OF PAGE NO.3 TO THE UNDISCLOSED INCOME OF THE APPELLANT ON ACCOUNT OF UNACCOUNTED INVESTMENT IN STOCK. IT IS SEEN THAT THE PAGE NO. 7 (FRONT AND BACK) BEARS THE DATE 30 - 6 - 1996 WHEREAS ON PAGE NO.3 THERE IS NO SUCH DATE NOR AN Y DESCRIPTION OF STOCK IN TRADE. IT IS SEEN THAT ON PAGE NO.3 OF A - I THERE IS A CONSOLIDATED FIGURE WHICH READS AS UNDER: - MAAL BALANCE 81,66,000 POONA MALL PRAKASH SURYODAY 13,91,000 T OTAL 95,57,000 IT IS FURTHER SEEN THAT STOCK IN TRADE AS ON 30 - 06 - 1996 AS PER PAGE NO. 7 OF A - 1 COMES TO 1,75,19,600 AS UNDER: - BHIWANDI STOCK 1,01,33,600 KHETWADI STOCK 73,86,000 1,75,19,600 IT IS SUBMITTED BY THE AR THAT THE DETAILS OF STOCK OIL PAGE NO.7 ( FRONT AND BACK) FOR RS. 1,75,19 ,600/ AND PAGE NO.3 (BACK) FOR RS.95.57,000/ ARE WRITTEN ON TWO DIFFERENT OCCASIONS AND ON TWO DIFFERENT DALES HENCE BOTH THESE FIGURES CANNOT BE TAKEN TOGETHER TO FIND OUT ACTUAL STOCK AS ON 30 - 6 - 1996. IT IS FURTHER SUBMITTED BY THE AR THAT THE WORKING MADE BY THE AO IS OBVIOUSLY ILLOGICAL AND IRRELEVAN T WITHOUT CONSIDERING THE VITAL (ACTS OF THE CASE THAT THESE TWO PAPERS SHOW ROUGH STOCK POSITION ON TWO DIFFERENT DALES. ADMITTEDLY, THE PAGE NO.7 SHOWS STOCK POSITION ON 30 - 6 - 18 IT (SS) A NO S . 92 & 42/MUM/2006 1996 WHEREAS PAGE NO.3 SHOWS STOCK POSITION WITHOUT ANY DATE. IT MEANS THE STOC K POSITION ON PAGE NO.3 COULD BEEN DIFFERENT DATE. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND FIND FORCE IN HIS ARGUMENTS. THE STOCK WRITTEN ON PAGE NO.3 COULD BE ON A DIFFERENT DATE OTHERWISE THESE NOTINGS WOULD HAVE BEEN MADE WITH THE NOTINGS OF STOCK OF BHIWANDI AND KHETWADI AS ON 30 - 6 - 1996 OIL PAGE NO.7 OF A - I ITSELF. HENCE, THE ADDITION OF RS.95,57,000/ MADE BY THE AO ON ACCOUNT OF UNACCOUNTED STOCK IS OBVIOUSLY INCORRECT AND INVALID MORE PARTICULARLY WHEN NO EXCESS STOCK IN TRADE WAS FOUN D IN THE COURSE OF SEARCH. COMING TO STOCK OF RS. 1,75,19,600/ - ON PAGE NO.7 OF A - I IT IS SEEN THAT DURING THE ASSTT. PROCEEDINGS THE APPELLANT HAD SUBMITTED VIDE LETTER ELF. 23.1.2005 TO THE ASSESSING OFFICER, THE RECONCILIATION OF STOCK IN TRADE AVAILABL E IN THE BOOKS OF ACCOUNT OF THE APPELLANT AND ITS GROUP CONCERN M/S PARLREJA METAL CORPORATION AND TALIED THE STOCK NOTED ON PAGE NO. 7 OF A - 1 WITH THE BOOKS OF ACCOUNT. HOWEVER, THE AO DID NOT GIVE ANY COGNIZANCE TO THE STOCK OF M/S. PALREJA METAL CORPOR ATION ON THE PLEA THAT AT NO POINT OF TIME SPECIALLY DURING THE SEARCH PROCEEDINGS THE APPELLANT HAD CLAIMED THE GOODS OF SOMEBODY ELSE WAS LYING IN ITS GODOWN. I HAVE CONSIDERED THE FINDINGS OF THE AO. ADMITTEDLY, THE PAGE NO.7 SHOWS STOCK POSITION AS ON 30 - 6 - 1996 AND NOT THE STOCK POSITION ON THE DAY OF SEARCH. OBVIOUSLY PAGE NO.7 OF A - I BELONGED TO EARLIER PERIOD WHEN ALL THE BROTHERS WERE DOING BUSINESS JOINTLY AND AS ON THE DAY OF SEARCH THEY HAVE BEEN SEPARATED AND HENCE THERE WAS NO REASON AND BASIS IN POINTING OUT THAT THE GOODS OF M/S PALREJA METAL CORPORATION WAS MUG IN THEIR GODOWN AS ON THE DAY OF SEARCH. IN FACT THE AO HAS CONFUSED HIMSELF AND ARRIVED AT AN ARBITRARY CONCLUSION CONTRARY TO THE FACTS OF THE CASE. IT APPEARS TO ME THAT THE AO HAS CONFUSED HIMSELF WITH THE PRESENT POSITION OF THE APPELLANT AND APPLIED THE SAME POSITION IN 1996 WHEN ALL THE BROTHERS WERE DOING BUSINESS JOINTLY. IT IS SEEN THAT NO ADDITION ON ACCOUNT OF EXCESS STOCK FOUND DURING THE SEARCH HAS BEEN MADE TO THE UNDISCL OSED INCOME OF THE APPELLANT. HENCE, THERE IS NO BASIS AND REASON FOR MAKING ANY ADDITION ON ACCOUNT OF UNACCOUNTED STOCK IN TRADE AS ON 30 - 6 - 1996 MERELY ON THE BASIS OF CERTAIN NOTINGS ON THE LOOSE PAPERS. IN MY OPINION THE ADDITION MADE BY THE AU IS ILL - FOUNDED AND MISCONCEIVED. ACCORDINGLY, I HEREBY DIRECT THE AU TO DELETE THE ADDITION OF RS. 1,52,16,593/. ON ACCOUNT OF UNACCOUNTED STOCK IN TRADE. ADDITION ON ACCOUNT OF UNACCOUNTED PROFITS - RS.15,81,638/ - *** *** I HAVE CONSIDERED THE FACTS OF THE CASE TOGETHER WITH REASONS RECORDED BY THE AO AND ARGUMENTS PUT FORWARD BY THE AR. I HAVE ALSO GONE THROUGH THE PAPER BOOK SUBMITTED BY THE AR ALONGWITH COPY OF THE 19 IT (SS) A NO S . 92 & 42/MUM/2006 RELEVANT SEIZED MATERIALS. IT IS SEEN THAT AO MADE ADDITION OF RS. 15,81,638/ - ON ACCOUNT OF UNACCOUNTED PROFITS AS UNDER : - FY 1996 - 97 10,00,000/ - FY 2000 - 01 5,81,638/ - TOTAL RS.15,81,638/ - IT IS SEEN THAT THE SUBJECT MATTER OF ADDITION OF RS.5,81, 638/ - HAS BEEN DISCUSSED BY THE AO IN PARA NO.6 . 1 OF THE ORDER AND AN ADDITION OF RS.5,81 ,638/ - HAS FORMED PART OF ADDITIONS OF RS.39,92,333/ MADE ON ACCOUNT OF UNACCOUNTED CASH SALES. IT IS OBVIOUS FROM THE ORDER THAT THE ADDITION OF RS.5.81,638/ - HAS BEEN MADE TWICE I.E. ONCE AS UNACCOUNTED PROFIT AND SECONDLY AS UNACCOUNTED CASH SALES. HENCE THE ADDITION OF RS.581, 638 / - MADE AS UNACCOUNTED PROFIT IS DOUBLE ADDITION ACID LIABLE TO BE DELETED OIL COUNT ALONE. AS REGARDS THE NOTINGS ON PAGE NOS. 18 AND 19 OF ANNEXURE A - 4, IT IS SEEN THAT THEY ARE IN RESPECT OF PURCHASE OF GOODS FROM CUSTOMS. APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THE NOTINGS OF PROFIT OF RS. 10,00,000/ - REGARDING SALE OF GOODS PURCHA SED FROM CUSTOMS VIS - A - VIS THE B OOKS OF ACCOUNT. ONGOING THROUGH THE NOTINGS OF THE SEIZED PAPERS, FINDINGS OF THE ASSESSING OFFICER AND THE EXPLANATION FILED BY THE APPELLA NT BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND AT THE APPELLATE STAGE, I HAVE COME TO THE CONCLUSION THAT THE APPELLANT HAS NOT DISCHARGED THE ONUS OF EXPLAINING THE SEIZED PAPER. MERELY STATING THAT NO SUCH PROFIT WAS EARNED, IN FAC T PROVES THE FACT THAT SOME PROFIT HAS BEEN, EARNED BY THE APPELLANT AS IT HAS CONFIRMED THE TRANSACTION OF PURCHASE FORM THE CUSTOM AUTHORITIES. IF THE TRANSACTION OF THE PURCHASE AND SATES ARE REFLECTED IN THE BOOKS OF ACCOUNTS IT IS UPTO THE APPELLANT T O CO - RELATE THE NOTINGS MADE SEIZED PAPER WITH THE SALES AND PURCHASES RECORDED IN THE BOOKS OF ACCOUNTS. FAILURE ON THE PART OF THE APPELLANT DOES NOT ABSOLVE THE APPELLANT FROM THE RESPONSIBILITY OF EXPLAINING THE SEIZED MATERIAL MORE PARTICULARLY IN VIE W OF THE PROVISIONS OF SECTION 132(4A) OF THE IT ACT, 1961. FURTHER, IN ABSENCE OF OTHER EXPLANATION FILED BY THE APPELLANT, THE PROFIT ESTIMATED IN THE SEIZED MATERIAL HAS BEEN RIGHTLY TAXED IN THE HANDS OF THE APPELLANT BY THE ASSESSING OFFICER IN THE AS SESSMENT ORDER AND HENCE FINDINGS OF THE ASSESSING OFFICER NEED NOT BE DISTURBED. IN MY OPINION THE ADDITION MADE ON ACCOUNT OF UNACCOUNTED PROFITS OF 10,00,000/ - IS BASED ON SEIZED MATERIALS AND LIABLE TO BE UPHELD. ACCORDINGLY, I DELETE THE ADDITION OF 5,81,638/ - MADE BY THE AO AND UPHOLD THE ADDITION OF 10,00,000/ - FOR THE REASON DISCUSSED HEREINABOVE. ADDITION ON ACCOUNT OF UNACCOUNTED CASH SA LES 39,92,333 OUT OF PAPERS SEIZED IN THE COURSE OF SEARCH, THE AO RELIED UPON PAGE NOS. 6 & 7 OF ANNEXURE A - 3 AND PAGE NOS. 82, 83,84,85, 81 AND 105 OF ANNEXURE A - 1. 20 IT (SS) A NO S . 92 & 42/MUM/2006 ON BEING ASKED TO EXPLAIN THE NATURE O F NOTINGS ON THESE PAGES IT WAS SUBMITTED BY THE APPELLANT THAT THESE PAGES ARE THE ROUGH NOTINGS, THEREAFTER THE APPELLANT SUBMITTED THAT THE NOTINGS ON PAGE NOS. 6 AND 7 ARE FOR SALES MADE TO M/S B.B. METAL AND PAGE NOS. 82,83,84,85, 81 AND 105 OF ANNEXURE A - 1 ARE ROUGH PAPERS. I N MAKING THE ASSESSMEN T THE AO MADE AN ADDITION OF RS.39.32,333/ - ON ACCOUNT OF UNACCOUNTED CASH SALES. THE FINDINGS OF THE ASSESSING OFFICER IN THIS REGARD IS REPRODUCED HEREIN BELOW: 6. 1) AS PER THE PAGE NO 6 & 7 OF ANNEXURE - A3 , IT IS SEEN THAT ASSESSEE HAS SOLD THE GOODS WO RTH 581,638/ - IN CASH TO BB AND THE SAME IS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS THE ASSESSEE VIDE SUBMISSION DATED 28.1.2005 HAS STATED THAT IT IS INCORPORATED IN THE CASH FLOW. THOUGH IT IS STATED THAT THESE ARE INCORPORATED IN CASH FLOW STATEMEN T THE ASSESSEE HAS NEITHER GIVEN THE CASH FLOW STATEMENT NO, FURNISHED CITY EVIDENCE TO PROVE THAT THE SO CALLED CASH FLOW STATEMENT TERMS PAD OF THE REGULAR BOOKS OF ACCOUNT HENCE AN ADDITION OF RS 587,638/ - IS MADE ON THIS ACCOUNT, 6.2) AS PER THE PAGE NO .82 OF ANNEXURE - A3 FROM PAWA LA BLDG., IT IS SEEN THAT ASSESSEE HAS SOLD THE GOODS WORTH RS.6 LACS IN AUGUST, 2002, IN CASH TO BHURALAL AND THE SAME IS NOT ACCOUNTED FOR THE BOOKS OF ACCOUNTS. THROUGH, IT I S STATED THAT THESE ARE INCORPORATED IN CASH FLOW S TATEMENT, THE ASSESSEE HAS NEITHER GIVEN THE CASH FLOW STATEMENT NOR FURNISHED ANY EVIDENCE TO PROVE THAT THE SO CALLED CASH FLOW STATEMENT FORMS PART OF THE REGULAR HOOKS OF ACCOUNT. 6.3) AS PER THE PAGE NO 83 OF ANNEXURE - A3 FROM PAWALA BLDG., IT IS SEEN THAT ASSESSEE HAS SOLD THE GODS WORTH RS 6,15,774/ - IN MAY, 2002 IN CASH TO BABULAL AND THE SAME IS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. THOUGH IT IS STALED THAT THESE ARE INCORPORATED IN CASH FLOW STATEMENT, THE ASSESSEE HAS NEITHER GIVEN THE CASH FLOW STATEMENT NOR FURNISHED ANY EVIDENCE TO PROVE THAT THE SO CALLED CASH FLOW STATEMENT FORMS PART OF THE REGULAR BOOKS OF ACCOUNT. 6.4) AS PER THE PAGE NO.84 OF ANNEXURE - A3 FROM PAWALA BLDG., IT IS SEEN THAT ASSESSEE HAS SOLD THE GOODS WORTH RS. 4,60,50 0/ - IN AUGUST 2002 IN CASH TO BAUGCHAND AND THE SAME IS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. THOUGH IT IS STATED THAT THESE ARE INCORPORATED IN CASH FLOW STATEMENT, THE ASSESSEE HAS NEITHER GIVEN THE CASH FLOW STATEMENT NOR FURNISHED ANY EVIDENCE TO PROVE THAT THE SO COLLECT CASH FLOW STATEMENT FORMS PART OF THE REGULAR BOOKS ACCOUNTS. 6.51 AS PER THE PAGE NO.84 OF ANNEXURE - A3 FROM PAWALA BLDG., IT IS SEEN THAT ASSESSEE HAS SOLD THE GOODS WORTH RS.5,60,500/ - IN APRIL 2002 IN CASH TO JETU BHAI AND THE SAME IS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AND THE ASSESSEE VI DE SUBMISSION DATED 28.1.2005 HAS STATED THAT IT IS INCORPORATED IN, THE CASH FLOW. THOUGH IT IS STATED THAT THESE ARE INCORPORATED IN CASH FLOW STATEMENT THE ASSESSEE HAS NEITHER GIVEN THE CASH FLOW STATEMENT NOR FURNISHED ANY EVIDENCE TO PROVE THAT HE SO CALLED CASH FLOW STATEMENT FORMS PAN OF THE REGULAR BOOKS OF ACCOUNT. 21 IT (SS) A NO S . 92 & 42/MUM/2006 7. AS PER THE PAGE NO. 84 OF ANNEXURE A3 FROM PAWALA BLDG ., IT IS SEEN THAT ASSESSEE HAS SOLD THE GOODS IN CASH WHICH ARE TABULATED BELOW: DATE NAME CASH SALES 2.5.02 BHAGCHAND 150000 3.5.02 JETU 260000 3.5.02 B.B 25,000 3.5.02 CHANDU 1000 3.5.02 JEEVRAJ 20,4500 DO JETU 150000 DO JETU 100000 8.5.02 JETU 30000 09.5.02 PAWAN 32000 11.05.02 KHUSAL COPPER 25000 1 3.05.02 DO 60276 19.06.02 BHAGCHAND 16000 1053776 THE SAME IS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AND ASSESSEE VIDE HIS SUBMISSION HAS STATED THAT IT IS INCORPORATED IN THE C ASH FLOW. THOUGH IT IS STATED THAT THESE ARE INCORPORATED IN CASH FLOW STATEMENT THE ASSESSEE HAS SIC IT HER GIVEN THE CASH FLOW STATEMENT NOR FURNISHED ANY EVIDENCE TO PROVE THAT THE SO CALLED CASH FLOW STATEMENT FORMS PART OF THE REGULAR BOOKS OF ACCOUNT. 6.7) AS PER THE PAGE NO. 105 OF ANNEXUREA3 FROM PAWALA BLDG., IT IS SEEN THAT ASSESSEE HAS SO LD THE GOODS WORTH RS. 1,20,645/ - IN AUGUST 2002 IN CASH TO DILIP AND THE SA ME IS NOT ACCOUNTED FOR IN THE B OOKS OF ACCOUNTS AND ASSESSEE VIDE SUBMISSION DATED 28. 1.2005 HAS STATED THAT IT IS INCORPORATED IN THE CASH FLOW. THOUGH IT IS STATED THAT THESE ARE INCORPORATED IN CASH FLOW STATEMENT THE ASSESSEE HAS NEITHER GIVEN THE CASH FLOW STATEMENT NOR FURNISHED ANY EVIDENCE TO PROVE THAT THE SO CALLED CASH FLOW STATEMENT FORMS PART OF THE REGULAR BOOKS OF ACCOUNT. '6.8 ALL THE ABOVE SAID AMOUNTS ARE BEING TREATED AS UNACCOUNTED CASH SALES OF THE ASSESSEE THE TOTAL ADDITION ON THIS ACCOUNT IS CIS UNDER. THE AR VEHEMENTLY ARGUED BEFORE ME THAT THE ADDITIONS MADE TO THE UNDISCLOSED INCOME OF THE APPELLANT ON ACCOUNT OF UNDISCLOSED CAS H SALES ARE INCORRECT AND INVALID. THE SUBMISSION MADE BY THE APPELLANT IN THIS REGARD IS REPRODUCED HEREIN BELOW: 22 IT (SS) A NO S . 92 & 42/MUM/2006 'A) IT IS NOW AN ESTABLISHED PREPOSITION OF LAW THAT THE COMPUTATION OF UNDISCLOSED INCOME SHOULD BE MADE ON THE BASIS OF EVIDENCE, DOCUMENT, MATERIAL AND INFORMATION FOUND AS A REASON OF SEARCH AND THE SAME MUST BE AUTHENTIC, RELIABLE AND VERIFIABLE AS DISCUSSED HEREINBEFORE. WE DISCUSS HEREUNDER BRIEFLY THE NATURE OF NOTINGS ON THE IMPUGNED PAPERS ON THE BASIS OF WHICH SUCH ADDITIONS ON ACCOU NT OF SO - CALLED UNDISCLOSED CASH SALES HAVE BEEN MADE. 1) PAGE NO. 6 & 7 OF ANNEXURE A - 3 THE NOTINGS READS AS 4011.300 < 145 AND CERTAIN FIGURES WITH DATE. 2) PAGE NO. 82 OF ANNEXURE A - 1 THERE ARE CERTAIN NOTINGS IN THE NAME OF BHURALAL, THE TOTAL COMES TO 6,00,000/ - . 3) PAGE NO. 83 OF ANNEXURE A - 1 THE NOTINGS READS AS 5413.400 X 113.45=6,15,774.23 IN THE NAME OF BABULAL 4) PAGE NO. 84 OF ANNEXURE A - 1 THERE ARE CERTAIN NOTINGS IN THE NAME OF BHAGCHAND. THE TOTAL COMES TO RS. 4,60,500/ - . 5) PAGE NO. 85 OF ANNEXURE A - 1 THE NOTINGS READS AS 5000.00 X 112 = 5,60,000/ - IN THE NAME OF .JEETUBHAI. 6) PAGE NO. 81 OF ANNEXURE A - 1 THERE ARE CERTAIN NOTINGS IN THE VARIOUS NAMES. THE TOTAL COMES TO RS. 10,53,776/ - . 7) PAGE NO. 105 OF ANNEXURE A - 1 THE NOTINGS READS AS 11 53.300 X 105 = 1,20,645 IN THE NAME OF DILIP. ON PERUSAL OF THE NOTINGS YOUR HONOUR WILL APPRECIATE THAT THERE ARE NOTINGS OF CERTAIN NAMES AND PLAIN FIGURES WITHOUT ARTY NARRATION AND HENCE THESE SEIZED MATRICES DO NOT CONSTITUTE ADMISSIBLE EVIDENCES AG AINST YOUR APPELLANT SO AS TO MAKE SUCH HUGE ADDITIONS ON ACCOUNT OF SO CALLED UNDISCLOSED CASH SALT'S FOR THE REASONS DISCUSSED HEREIN BEFORE. B) IT MAY BE SEEN THAT THE NOTINGS OIL SEIZED MATERIALS DO NOT HAVE ANY ACCEPTABLE NARRATION SO AS TO ESTABLISH THESE NOTINGS TO BE UNDISCLOSED CASH SALES AS HELD BY THE ID. AO. HENCE, NO COGNIZANCE COULD BE PLACED ON SUCH NOTINGS FOR MAKING SUCH ADDITIONS ON ACCOUNT OF SO CALLED UNDISCLOSED CASH SOLES FOR THE REASONS DISCUSSED HEREIN BEFORE. C) THE MEANING OF. THE NOTINGS CANNOT BE STRETCHED ARTIFICIALLY TO PRESUME THE IMPUGNED NOTINGS TO BE UNDISCLOSED CASH SALES OF THE APPELLANT FOR THE REASONS DISCUSSED HEREIN BEFORE. IN MAKING BLOCK ASSESSMENT UNDER CHAPTER XIVB THERE IS NO SCOPE FOR AN AO TO TAKE 23 IT (SS) A NO S . 92 & 42/MUM/2006 RESORT TO 'HYP OTHETICAL' OR 'ESTIMATES' OR 'INFERENCES' ON THE BASIS OF HIS OMIT PERCEPTIONS FOR THE REASONS DISCUSSED HEREIN BEFORE. IF THIS BASIC TEST IS APPLIED THERE REMAINS NO BASIS WHATSOEVER FOR IMAGINARY ADDITION WHEN THE APPELLANT HAS FILED THE RETURN OF INCOME FOR THE BLOCK PERIOD SHOWING UNDISCLOSED INCOME OF RS. 15,18,817/ - ON THE BASIS OF THE SEIZED MATERIALS. (1) ASSUMING (WITHOUT ADMITTING) THESE NOTINQS REPRESENT CASH SALES THEN THAT CASE THE ENTIRE SALE VALUE CANNOT BE ASSESSED AS UNDISCLOSED INCOME BUT ONLY PROFIT EARNED OUT OF THESE CASH SALES COULD BE BROUGHT TO TAX. IN SUPPORT THEREOF WE MAKE REFERENCE TO FOLLOWING JUDICIAL PRONOUNCEMENTS: - I ) AGGARWAL MOTORS V/S. ACIT, 68 ITD 407 (JABALPUR) II) KISHORE MOHANLAL TELWALA V/S. ACIT, 64 TTJ 543 (AHD.) III) ABHISHEK CORPORATION V/S. DCIT, 63 TTJ 651 (AHD.) IV) JAIKISAN R. AGARWAL V/S. ACIT, 66 TTJ 704 (PUNE) V) MD. MUSA & CO. ACIT, 114 TAXMAN 115 (CAL) MAG) IT MAY BE SEEN THAT THE LD. AO FAILED TO ESTABLISH THAT THE CORRESPONDING PURCHASES OF THESE SALE S WERE DEBITED TO THE REGULAR BOOKS OF ACCOUNT.' DURING THE ASSESSMENT PROCEEDINGS THE APPELLANT HAS ACCEPTED THAT THE ABOVE ENTRIES REGARDING THE SALE OF GOODS HAVE BEEN INCORPORATED IN THE CASH FLOW STATEMENT. HOWEVER, THE APPELLANT HAS NOT SUBMITTED TH E CASH FLOW STATEMENT EITHER AT THE ASSESSMENT STAGE OR AT THE APPELLATE STAGE. THE APPELLANT HAS ALSO FAILED TO FURNISH ANY EVIDENCE THAT THE TRANSACTIONS RELATING TO SALE OF GOODS AS PER NOTINGS IN THE SEIZED MATERIAL FORMS PART OF FILE BOOKS OF ACCOUNTS . THE APPELLANT HAS TAKEN ALTERNATIVE PLEA THAT EVEN IF THESE ENTRIES ON SEIZED PAPERS REPRESENT CASH SALES THEN IN THAT CASE ENTIRE SATE VALUE OF RS.3992333/ - CANNOT BE ASSESSED AS UNDISCLOSED INCOME BUT ONLY PROFIT EARNED OUT OF THESE CASH SALES COULD BE BROUGHT TO TAX. THERE IS REASONABLE FORCE IN THE ALTERNATIVE GROUND RAISED BY THE APPELLANT. HENCE, I DIRECT THE ASSESSING OFFICER TO APPLY THE GP AS DISCLOSED BY THE APPELLANT IN FILE REGULAR BOOKS OF ACCOUNTS ON THE UNACCOUNTED SALES OF RS.3992333/ - DET ERMINED BY THE ASSESSING OFFICER IN THE ASSTT. ORDER. THE GROUND OF APPEAL IS THEREFORE, DISPOSED OF ACCORDINGLY AS DIRECTED ABOVE. WE HAVE CAREFULLY GONE THROUGH THE APPELLATE ORDER OF LEARNED CIT(A) AND MATERIAL ON RECORD AND WE HAVE OBSERVED THAT A FA IR AND REASONABLE VIEW HAS BEEN TAKEN BY LEARNED CIT(A) SO FAR AS ADDITIONS SUSTAINED BY HIM AND IT DOES NOT WARRANT ANY INTERFERENCE BY US AS TO THE VIEW OF LEARNED CIT(A) WHILE SUSTAINING ADDITIONS AS WERE MADE BY THE AO IN THE HANDS OF THE ASSESSEE . 24 IT (SS) A NO S . 92 & 42/MUM/2006 THU S , ASSESSEE FAILS IN ITS APPEAL WHICH STAND DISMISSED. WE ORDER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED AND APPEAL OF REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 - 0 3 - 2018 . SD/ - SD/ - ( CN PRASAD ) (RAMI T KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 08 - 0 3 - 2018 SUDIP SARKAR /SR.PS C OPY OF THE ORDER FORWARDED TO : BY ORDER , ASSISTANT REGISTRAR ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRU E COPY//