Irfan & Brothers,, Baroda v. The ACIT., Cent.Circle-2,, Baroda

ITSSA 125/AHD/2004 | misc
Pronouncement Date: 26-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 12520516 RSA 2004
Assessee PAN AAAFI6243H
Bench Ahmedabad
Appeal Number ITSSA 125/AHD/2004
Duration Of Justice 5 year(s) 9 month(s) 26 day(s)
Appellant Irfan & Brothers,, Baroda
Respondent The ACIT., Cent.Circle-2,, Baroda
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 26-02-2010
Date Of Final Hearing 17-02-2010
Next Hearing Date 17-02-2010
Assessment Year misc
Appeal Filed On 30-04-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH JM & SHRI A.N. PAHUJA AM I.T.(SS)A. NO.183/AHD/2004 (BLOCK PERIOD 01-04-1990 TO 04-10-2000) ACIT CENTRAL CIRCLE-2 VS M/S IRFAN & BROS BARODA NEAR NAVAGAJPIR WADI BARODA [PAN : AAAFI6243H] (APPELLANT) (RESPONDENT) I.T.(SS)A. NO.125/AHD/2004 (BLOCK PERIOD 01-04-1990 TO 04-10-2000) M/S IRFAN & BROS VS ACIT CENTRAL CIRC LE-2 BARODA BARODA (APPELLANT) (RESPONDENT) REVENUE BY : SHRI BS SANDHU DR ASSESSEE BY : SHRI SN SOPARKAR AR O R D E R A.N. PAHUJA : THESE CROSS APPEALS AGAINST AN ORDER DATED 31-03 -2004 OF THE LD CIT(A)-IV AHMEDABAD RAISE VARIOUS GROUNDS ON CER TAIN COMMON ISSUES.. ACCORDINGLY THESE APPEALS WERE HEARD SIMULTANEOUSL Y FOR THE SAKE OF CONVENIENCE AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER. 2. AT THE OUTSET THE LD. AR ON BEHALF OF THE ASSE SSEE DID NOT PRESS GROUND NOS. 1 & 2 IN THEIR APPEAL ACCORDINGLY THESE TWO GROUNDS ARE DISMISSED 3. ADVERTING NOW TO GROUND NO.3 IN THE APPE AL OF THE ASSESSEE AND GROUND NO. 1 IN THE APPEAL OF THE REVENUE FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT A SEARCH U/S 132 OF THE INCOME-TAX ACT 1961[HEREINA FTER REFERRED TO AS THE ACT] WAS CONDUCTED ON 4.10.2000 IN THE RESIDENTIAL AND B USINESS PREMISES OF IRFAN GROUP OF CASES INCLUDING IN THE PREMISES OF THE AS SESSEE ENGAGED IN THE BUSINESS OF SELLING FIRE CRACKERS AND ALLIED GOODS. CONSEQUENTLY IN RESPONSE TO NOTICE DATED 15.12.2000 ISSUED U/S 158BC OF THE ACT THE ASSESSEE SUBMITTED IT(SS)A NO.183& 125/AHD/2004 2 RETURN DECLARING UNDISCLOSED INCOME OF RS.6.80 000/ - ON 8.2.2001.DURING THE COURSE ASSESSMENT PROCEEDINGS THE ASSESSING OFFIC ER[AO IN SHORT] FOUND ON PERUSAL OF THE SEIZED NOTE BOOK (ANNEXURE A-49) SAL ES OF RS.2 75 71 144/-. TO A QUERY BY THE AO THE ASSESSEE SUBMITTED THAT THE SA ID NOTE BOOK WAS A KIND OF JANGAD REGISTER IN WHICH NOTINGS OF DETAILS OF GO ODS DELIVERED TO VARIOUS PARTIES ON RETURNABLE BASIS WERE MADE. SINCE THE ASSESSEE D ID NOT FURNISH ANY EVIDENCE OF GOODS RETURNED BY ANY PARTY THE AO SHOWCAUSED THE ASSESSEE AS TO WHY GROSS PROFIT @20% OF THE AFORESAID SALES OF RS.2 7 5 71 144/- BE NOT ADDED TO THE INCOME IN THE FOLLOWING TERMS: IN THIS REGARD YOUR EXPLANATION TO A QUERY RAISED IN THE PAST YOU HAD STATED THAT THIS IS A KIND OF JANGAD REGISTER IN WHICH NOTINGS OF THE DETAILS OF THE GOODS DELIVERED TO VARIOUS PA RTIES ARE MADE. NOTHING MORE THAN THIS WAS EXPLAINED BY YOU. ON PE RSISTENCE VIDE YOUR LETTER DATED 16.10.2002 YOU HAVE TRIED TO EXP LAIN AWAY THAT THIS DIARY IS MAINTAINED ON JANGAD BASIS I.E. ON RE TURNABLE BASIS AT THE SAME TIME AGREEING THAT THIS DIARY CONTAINS DET AILS OF GOODS SUPPLIED. HOWEVER YOUR CLAIM OF GOODS BEING RETUR NED IS NOT EXPLAINED WITH PROOF SINCE THE DIARY CONTAINS ONLY FIGURES OF GOODS SUPPLIED. THE TOTAL OF THE FIGURES APPEARING IN TH IS DIARY AMOUNTS TO RS.2 75 71 144/- WHICH UNDOUBTEDLY ARE THE UNACCOUN TED SALES MADE BY YOU. IN THE CIRCUMSTANCES GROSS PROFIT CA LCULATED @20% IS PROPOSED TO BE TREATED AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD. FOR THE PURPOSE OF CALCULATING GROSS PROFI T THE FIGURE IS TAKEN AT 20% SINCE THE MAIN TWO ASSESSEES VIZ. M/S IRFAN & BROTHERS AND M/S MOHD.SIDDIQUE ABDUL REHMAN GOLAWAL & CO. ARE TAKEN AS ONE GROUP (AS IN ORDINARY COURSE PURCHASE S ARE MADE BY M/S MOHD.SIDDIQUE ABDUL REHMAN GOLAWAL & CO. WHICH SELLS TO M/S IRFAN & BROTHERS WHICH IN TURN SELLS TO THIRD P ARTIES) AND IT IS FOUND THAT EACH ONE OF THEM EARNS 3% G.P. AND 12% O F SALES TAX AND 2% OF FREIGHT CHARGES ARE COLLECTED FROM THE CU STOMERS; WHEREAS NO SALES TAX IS PAID BY YOU IN REALITY AND FREIGHT CHARGES ARE ALREADY DEBITED TO YOUR REGULAR P&L ACCOUNT. T HE G.P. SO CALCULATED AMOUNTS TO RS.55.14 228/-. YOU ARE REQU ESTED TO SHOW CAUSE AS TO WHY THIS AMOUNT SHOULD NOT BE TREATED A S UNDISCLOSED INCOME FOR THE BLOCK PERIOD. 3.1 IN THEIR REPLY DATED 21-10-2002 THE ASSESSEE EXPLAINED THAT THE GOODS WERE PURCHASED ON CREDIT MAINLY FROM MANUFACTURERS SITUATED IN SIVKASI TAMIL NADU BY M/S MOHD. SIDDIQUE ABDUL REHMAN GOLAWALA & CO A GROUP CONCERN OF IT(SS)A NO.183& 125/AHD/2004 3 THE ASSESSEE AND SOLD TO THE ASSESSEE BY THE SAID F IRM AT A PRICE WHICH INCLUDED PURCHASE COST SALES TAX FREIGHT AND OCTROI AND TH EIR PROFIT MARGIN WAS GENERALLY 2 TO 3%. THEREAFTER THE ASSESSEE SOLD THESE GOODS O N WHOLESALE BASIS TO VARIOUS RETAILERS MAINLY CO-OPERATIVE SOCIETIES AND CHARIT ABLE INSTITUTIONS BESIDES SMALL PORTION OF THE SALES TO OTHERS LIKE TRADERS HAWKER S AND INDIVIDUALS WHO WERE ENGAGED IN THE BUSINESS OF TRADING SEASONAL PRODUCT S ON TEMPORARY BASIS. SOME OF THEM DOES NOT HAVE PERMANENT BUSINESS ESTABLISHM ENT. SINCE IN TERMS OF THE GOVERNMENT RULES THE PERSONS HAVING EXPLOSIVE LICEN SE CAN ONLY TRADE IN THIS ITEM THE LICENSE WAS GENERALLY PROCURED BY THE CUS TOMERS FOR A PARTICULAR PERIOD ON TEMPORARY BASIS. AS THE ASSESSEE HAD TO BUY BA CK FROM THE PARTIES AS THEIR CUSTOMERS COULD NOT KEEP THESE GOODS AFTER EXPIRY O F LICENSE PERIOD BILLS WERE GENERALLY PREPARED AFTER FINALIZATION OF SALES MADE BY THE CUSTOMERS. MOREOVER THIS BEING SEASONAL BUSINESS OF VERY SHORT DURATION IT WAS NOT POSSIBLE TO MAINTAIN VARIOUS RECORDS SHOWING MOVEMENT OF STOCK THE ASSESSEE POINTED OUT. IT WAS FURTHER SUBMITTED THAT SINCE THEIR CUSTOMERS WERE ALSO SMALL TIME OPERATORS HAVING NO PERMANENT ESTABLISHMENT AND SO ME OF THEM BEING ILLITERATE DID NOT PREPARE ANY GOODS RETURN MEMO THE MAIN THR UST BEING TO SELL THE GOODS BEFORE THE END OF THE FESTIVAL SEASON . 3.2 THE ASSESSEE FURTHER EXPLAINED THAT IN OR DER TO KEEP TRACK OF GOODS DELIVERED AND TO SECURE MONEY ETC. THE ASSESSEE MA INTAINED A DIARY IN ANNEXURE A-49 DURING FY 1999-2000 WHEREIN NOTING O F DELIVERY MEMOS AS WELL AS AMOUNT COLLECTED AS ADVANCE HAD BEEN MENTIONED . THE AMOUNT COLLECTED WAS NOT NECESSARILY THE SALE PRICE RECEIVED WHILE T HE ACTUAL SALES MADE TO THESE PARTIES WERE DULY RECORDED IN REGULAR BOOKS OF ACCO UNTS UPON PREPARATION OF SALES BILL. IT WAS INFORMED THAT THE NOTINGS WERE MADE LIKE MONEY RETURNED IN SOME OF THE CASES AMOUNTS RETURNED WERE CANCELLED A ND OTHER SIMILAR NOTINGS WERE MADE. IN SUPPORT OF THEIR CONTENTION THAT THE AFORESAID SEIZED WAS A JANGAD REGISTER THE ASSESSEE SUBMITTED AS UNDER : IT(SS)A NO.183& 125/AHD/2004 4 A. IN THE SAID SEIZED RECORD AT MANY PLACES THE AMO UNT RETURNED ARE MENTIONED (PAGES 1 32 & 42 ETC. OF T HE SEIZED MATERIAL) B. IN MANY PLACES THE AMOUNT RETURNED HAVE BEEN SCR ATCHED OR SCORED OUT AS FOR EXAMPLE PAGES 1 32 69 ETC. C. THE AMOUNT COLLECTED IS NOT A SALE PRICE. IN TH E SAID RECORD AT NO PLACE THE SALES BILL NUMBERS AS WELL AS ITS A MOUNT IS MENTIONED AND UNLESS THE SALES ARE MADE AMOUNT COLL ECTED IS NOTHING BUT AN ADVANCE. D. UPON FINALIZATION OF THE SAID TRANSACTION SALES BILLS ARE PREPARED AND ARE DULY ACCOUNTED IN THE BOOKS OF ASS ESSEE. THE PARTY WISE DETAILS OF SALES / AMOUNT CREDITED I N BOOKS ARE GIVEN IN ANNEXURE-I. 3.3 ALTERNATIVELY THE ASSESSEE SUBMITTED THAT THE CORRECT TOTAL OF THE AMOUNT COMES TO RS.2 42 82 647/- AND NOT RS.2 75 71 144/- AFTER EXCLUDING THE AMOUNT RETURNED AS WELL AS THE AMOUNT SCRATCHED OR SCORED OUT. SINCE THE SALE BILLS WERE PREPARED ON FINALIZATION OF SALE AND THE SAME WERE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT OF THE RELEVANT FINANCIAL YEAR ONLY THE NET AMOUNT OF RS.1 06 75 770/- (RS.2 42 82 647/- MINUS RS. 1 36 0 6 877/-) MAY BE CONSIDERED AS UNDISCLOSED SALES FOR PURPOSE OF MAKING ADDITION . 3.4 AS REGARDS THE PROPOSED ESTIMATION OF GROSS PR OFIT @ 20% ON UNACCOUNTED SALES THE ASSESSEE SUBMITTED THAT THE SAID RATE IS ARBITRARY AND EXORBITANT. THE ALLEGATION THAT 6% PROFIT IS NORMA LLY EARNED AND FURTHER 12% AND 2% IS COLLECTED BY WAY OF SALES TAX AND OCTROI WAS TOTALLY GUESS WORK AND NOT SUPPORTED BY ANY EVIDENCE. THE ASSESSEE BEING ENGA GED IN THE BUSINESS ON WHOLESALE BASIS EARNED MAXIMUM 3% GROSS PROFIT ONL Y AS WAS EVIDENT FROM THE BOOK RESULTS YEAR AFTER YEAR. IT WAS POINTED OUT T HAT IT WAS COMMON PRACTICE THAT WHEN SALES WERE MADE OUT OF BOOKS NO SALES TAX WAS CHARGED BY THE SELLER AND THE BENEFIT OF THE SALES TAX WAS PASSED ON TO THE B UYER AND THEREFORE THERE IS NO QUESTION OF ADDING 12% OF SALES TAX AS PROFIT OF TH E ASSESSEE ON PRESUMPTIONS. REGARDING OCTROI COLLECTION THE ASSESSEE SUBMITTED THAT THERE IS NO QUESTION OF COLLECTING OCTROI BY THE ASSESSEE THE GOODS HAVING BEEN DISPATCHED DIRECTLY FROM THE GODOWN TO THE OUTSTANDING PARTIES . IT WAS NOT POSSIBLE FOR THE ASSESSEE TO COLLECT SALES TAX OCTROI ETC. AS ALL THE PARTIES W ITH WHOM THE ASSESSEE HAD IT(SS)A NO.183& 125/AHD/2004 5 DEALING WERE BUSINESSMEN. ON THE CONTRARY THE BUYE RS ALWAYS ENSURED THAT SAID AMOUNTS WERE DEDUCTED FROM THE SALES PRICE. IT WA S POINTED OUT THAT WHEN GOODS WERE SOLD OUTSIDE BOOKS THE MARGIN OF PROFIT WAS LOWER DUE TO SAVING IN VARIOUS TAXES AND LEVIES ESPECIALLY WHEN THE GOODS LOST ITS DEMAND AFTER THE FESTIVE SEASON AND WITH EFFLUX OF TIME ITS QUALITY DETERIORATED .SINCE THERE WAS NOTHING TO SUGGEST THAT THE GROSS PROFIT RATIO DEC LARED BY THE ASSESSEE WAS SUPPRESSED AND AVERAGE GROSS PROFIT EARNED BY THE ASSESSEE @ 2.68% HAVING BEEN ACCEPTED FOR THE PERIOD FALLING WITHIN THE B; OCK PERIOD EVEN IF THE ADDITION IS TO BE MADE IT SHOULD BE MADE AT SUCH RATE ONLY THE ASSESSEE PLEADED. 4. HOWEVER THE AFORESAID SUBMISSIONS OF THE ASSESS EE WERE NOT ACCEPTED BY THE AO AND HE ADDED AN AMOUNT OF RS.17 72 270/ - IN THE FOLLOWING TERMS: 4.2 THE ASSESSEES CONTENTION HAVE BEEN CONSIDERED CAREFULLY WITH REFERENCE TO THE SEIZED NOTE BOOK AND ARE NOT FOUND ACCEPTABLE ON THE FOLLOWING GROUNDS: (I) IN THE FIRST PLACE THE TOTAL OF THE AMOUNTS AP PEARING AS SALES IN THE BOOK A-49 IS RS.2 75 71 144/- AND THERE IS N O MISTAKE IN THE TOTAL. IT IS AGREED THAT THERE ARE CERTAIN ENTRIES WHICH HAVE BEEN CANCELLED AND CERTAIN ENTRIES WITH A REMARK THAT TH E GOODS HAVE BEEN RETURNED THE TOTAL OF WHICH AMOUNTS TO RS.22 53 000/-. GIVING CREDENCE TO THE ASSESSEES ARGUMENT THAT THI S FIGURE SHOULD NOT FORM A PART OF THE TOTAL SALES THERE IS NO DOU BT THAT THE DIFFERENCE AMOUNTING TO RS.2 53 18 144/- SHOWS THE SALES WHICH WERE NOT ACCOUNTED FOR. IN THE ABSENCE OF ANY CONC RETE AND RELIABLE EVIDENCE THE ASSESSEES ARGUMENT IS BASEL ESS THAT THE AMOUNT COLLECTED IS NECESSARILY THE SALES PRICE REC EIVED AND EXCESS MONEY RECEIVED IS RETURNED ON PREPARATION OF FINAL BILL DUE TO THE RETURN OF GOODS ETC AND THE ADVANCE MONEY IS ALSO R ETURNED AGAINST CHEQUE OR DD. THE ASSESSEE HAS NOT PRODUCED ANY OR DER FORMS / DELIVERY MEMOS AS ALLEGED BY THE ASSESSEE TO BE USE D FOR CARRYING OUT THE BUSINESS REFLECTED IN ANNEXURE A-49. THE A SSESSEES ARGUMENT IS NOT BACKED BY ANY EVIDENCE WHATSOEVER T HAT EVEN THE SALES (NOT INDICATED AS RETURNED) IN THE NOTE BOOKS HAVE NOT BECOME FINAL. THE ASSESSEE HAS NOT MADE ANY EFFORT WHATSOEVER TO MATCH ENTRIES IN THE SEIZED NOTE BOOK WITH THE R EGULAR BOOKS OF ACCOUNTS. THUS THE CONTENTION THAT AMOUNT OF RS.1 36 06 877/- STANDS RECORDED IN THE BOOKS IS NOT VERIFIABLE. IN FACT THE ASSESSEES CONTENTION IS JUST AN AFTERTHOUGHT AND H AS JUST BEEN IT(SS)A NO.183& 125/AHD/2004 6 MADE TO DIVERT ATTENTION FROM THE MAIN ISSUE I.E. C ASH SALES ARE CLEARLY SHOWN AS MADE IN A-49 AND THE SAME ARE NOT ACCOUNTED FOR. NO REASONABLE EXPLANATION HAS BEEN PUT FORTH TO EXP LAIN AS TO WHY SUCH ENTRIES COULD NOT BE MADE STRAIGHT AWAY IN THE REGULAR BOOKS ITSELF. FURTHER THE ARGUMENT THAT SALES CAN BE CA NCELLED / RETURNED EVEN AFTER RECEIPT OF CASH ON DELIVERY OF GOODS DEF IES LOGIC. THE FACT REMAINS THAT UNACCOUNTED CASH RECEIPTS AGAINST SALES ARE RECORDED IN THE NOTE BOOK A-49 SEIZED DURING SEARCH AND ONLY A FEW ARE MARKED AS RETURNED OR ARE CANCELLED. THE ASSES SEE HAS ALREADY BEEN GIVEN CREDIT TO WHATEVER ENTRIES HAVE BEEN CANCELLED AND WHEREVER THERE ARE REMARKS LIKE RETURNED AND THE BALANCE REPRESENT SALES MADE BY THE ASSESSEE OUT OF THE BOO KS. (II) COMING TO THE ARGUMENT THAT THE ASSESSEE HAS NOT CHARGED ANY SALES TAX ON THESE SALES SINCE THEY ARE TOTALLY OUT OF THE BOOKS AND NO CUSTOMER WILL PAY SALES TAX ON THIS IS ACCEP TABLE SINCE THE SALES ARE IN CASH AND HENCE ADDING 12% SALES TAX I S NOT CONTEMPLATED. HOWEVER; ITS CLAIM THAT IT IS EARNIN G ONLY 2.68% GROSS PROFIT ON SUCH SALES IS TOTALLY UNACCEPTABLE FOR THE REASON THAT THIS ASSESSEE FORMS A PART OF THE GROUP ALONG WITH ITS SISTER CONCERN VIZ. M/S MOHD. SIDDIQUE ABDUL REHMAN GOLAWALA & CO WHICH SELLS THE GOODS TO THE ASSESSEE IN THE NORMAL COURSE OF A CCOUNTED BUSINESS EARNING A SEPARATE GROSS PROFIT AND THE AS SESSEE EARNS ITS OWN GROSS PROFIT SEPARATELY ON THE SAME GOODS SOLD TO THE FINAL CUSTOMERS. IN THE CASE OF THE UNACCOUNTED SALES B OTH PURCHASES AS WELL AS SALES ARE BEING MADE BY THE ASSESSEE ONL Y AND THEREFORE IT CAN BE LOGICALLY INFERRED THAT THE G. P. EARNED IS EQUAL TO THE AGGREGATE OF SPLIT G.P. RATES ORDINARILY SHOWN IN THE HANDS OF THE TWO CONCERNS. IT IS SEEN THAT DURING THE ACCOU NTING YEAR 1999- 2000 FOR WHICH THE SEIZED ANNEXURE UNDER DISCUSSION PERTAINS M/S MOHD. SIDDIQUE ABDUL REHMAN GOLAWALA & CO. HAS EARN ED A G.P. OF 1.43% AND THE ASSEESSEE ITSELF ANOTHER 3.26% MAK ING THE TOTAL GAIN BY THE ASSESSEE PERCENTAGE WISE AT 4.69% OR RA THER 5% AT AN AVERAGE TAKING INTO CONSIDERATION THE OVERALL SITUA TION FOR THE ENTIRE BLOCK PERIOD AS THE FIGURE OF 1.43% IS FOUND TO BE AN ABERRATION AND AVERAGE PERCENTAGE OF PROFIT IS ALWAYS BETWEEN 2.5% AND 3.25%. SINCE THE ASSESSEE IN ORDINARY COURSE PURC HASES THE GOODS FROM M/S MOHD. SIDDIQUE ABDUL REHMAN GOLAWALA ITS SISTER CONCERN AND SELLS THE GOODS TO THIRD PARTIES IT CA N JUSTIFIABLY CONSIDERED AS ONE WING OF A COMPOSITE GROUP AND THE G.P. EARNED BY IT AT 5% REMAINS A FACT. THIS G.P. OF 5% WOULD BE EARNED IF FREIGHT CHARGES WERE ALSO BEING INCURRED OUT OF THE UNACCOUNTED RECEIPTS. HOWEVER THIS G.P. OF 5% HAS TO BE SCALE D UPWARDS BY AVERAGE FREIGHT OF 2% SINCE FREIGHT CHARGES ALREADY STAND DEBITED TO THE REGULAR P&L ACCOUNT. THERE IS NEITHER ANY NOTI NG IN THE SEIZED MATERIAL REGARDING FREIGHT BEING INCURRED OUT OF UN ACCOUNTED IT(SS)A NO.183& 125/AHD/2004 7 RECEIPTS NOR HAS THE ASSESSEE BROUGHT ANY SUCH EVID ENCE ON RECORD. IN ANY CASE THE ASSESSEE HAS NOT MADE ANY ARGUMENT TO REBUT THE DEPARTMENTS STAND. IN THE CIRCUMSTANCES THE ASSESSEE HAS GAINED AT LEAST 7% ON THE UNACCOUNTED SALES AMO UNTING TO RS.2 53 18 144/-. THE SAME WORKS OUT TO RS.17 72 72 0/- AND TREATED AS UNDISCLOSED INCOME FOR THE BLOCK PERIOD( A.Y. 2000- 2001). 5. ON APPEAL THE ASSESSEE REITERATED THEIR SUBMISS IONS BEFORE THE AO. IN THE ABSENCE OF ANY EVIDENCE THE LD.CIT(A) REJECTE D THE CONTENTIONS OF THE ASSESSEE THAT ANNEXURE A-49 WAS A JANGAD BOOK AND A CCORDINGLY CONCLUDED THAT THE ENTRIES APPEARING IN THE REGISTER WERE NOT HING BUT UNDISCLOSED SALES. AFTER HAVING A REMAND REPORT FROM THE AO THE LD. CIT(A) ACCEPTED THE FIGURES OF UNDISCLOSED SALES OF RS.2 48 88 964/- FURNISHED BY THE ASSESSEE .AS REGARDS PLEA FOR A FURTHER REDUCTION OF RS.1 36 06 877/- FR OM THE TOTAL UNDISCLOSED SALES OF RS.2 48 89 964/- ON THE GROUND THAT THIS FIGURE STANDS RECORDED IN THE REGULAR BOOKS OF ACCOUNTS THE LD.CIT(A) REMANDED THE MATTE R BACK TO THE AO WHO REPORTED IN HIS LETTER DATED 17.3.2004 AS FOLLOWS: THE SECOND CONTENTION OF THE ASSESSEE THAT TURNOVE R TO THE EXTENT OF RS.1 36 06 877/- OUT OF TOTAL TURNOVER REFLECTED IN ANNEXURE A-49 HAS NOT BEEN CONSIDERED AND NO CREDIT FOR THE SAME HAS BEEN GIVEN. FOR THE PURPOSE OF RECONCILIATION THE FOLL OWING SEIZED MATERIALS HAVE BEEN VERIFIED. (A) ANNEXURE A-49: PARTY ACCOUNT SHOWING DATE WISE RECEIPTS AND DELIVERY MEMO NUMBER IS WRITTEN IN THIS LEDGER. (B) ANNEXURE A-37:THE LEDGER FOR F.Y. 1999-2000. (C) ANNEXURE A-36 : SALES REGISTER F.Y. 1999-2000. (D) ANNEXURE A-14 A-60 A-70 & A-76 ARE SALES BILL S FILED. ON VERIFICATION OF THESE SEIZED MATERIALS IT IS NO TICED THAT THERE ARE INSTANCES WHERE NAME AND AMOUNT NOTED IN ANNEXURES A-19 ARE NOT AT ALL REFLECTED IN ANY OF OTHER ANNEXURES THE RE ARE INSTANCES WHERE AMOUNT NOTED IN ANNEXURE A-49 IS GREATER THAN THOSE NOTED IN THE OTHER REGULAR BOOKS AND THERE ARE INSTANCES WHERE AMOUNT NOTED IN ANNEXURE A-49 IS LESSER THAN THOSE NOTED I N THE OTHER REGULAR BOOKS. THESE INSTANCES ARE DEALT WITH AS F OLLOWS. WHERE THE AMOUNT NOTED IN THE ANNEXURE A-37 AND OTH ER ANNEXURE FOR THE YEAR 1999-2000 IS LESSER THAN THAT NOTED IN ANNEXURE A-49 IT(SS)A NO.183& 125/AHD/2004 8 THE DIFFERENCE IS CONSIDERED AS SALES REFLECTED. W HERE THE AMOUNT NOTED IN ANNEXURE LESS THAN THAT NOTED IN OTHER ANN EXURES SALES IS TAKEN TO THE EXTENT NOTED IN ANNEXURE A-49. ON THE ABOVE BASIS NAMES OF THE PARTY APPEARING IN ANNEXURE A- 49 AND CORRESPONDING AMOUNT CREDITED IN THE OTHER A NNEXURES I.E. A-37 A-38 A-14 A-60 A-70 AND A-76 A CHART IS P REPARED WHICH IS ENCLOSED WITH THIS REPORT. AS PER THIS CHART OUT O F TOTAL SALES RECORDED IN ANNEXURE A-49 AT RS.2 48 88 964/- RS.7 1 98 900/- IS REFLECTED IN THE REST OF THE ANNEXURES MENTIONED AB OVE. IT MAY BE CLARIFIED THAT THOUGH THE NAME OF THE PARTIES APPEA RING IN THE ANNEXURE A-49 AND THE REST OF THE ANNEXURES IS THE SAME THERE IS NO DIRECT LINK BETWEEN THE ENTRIES MADE IN THE RESP ECTIVE ANNEXURES BECAUSE IN THE ANNEXURE A-49 AMOUNT RECE IVED AND DELIVERY MEMO NUMBER IS MENTIONED WHEREAS IN THE SA LES BILLS OR IN ANNEXURE A-37 I.E. LEDGER DELIVERY MEMO NUMBERS ARE NO WHERE MENTIONED. DURING THE REMAND PROCEEDINGS ALSO THE ASSESSEE COULD NOT ESTABLISH THE DIRECT NEXUS EXCEPT THE NAM E OF THE PARTY. IN VIEW OF THE ABOVE THE CREDIT FOR SALES OF RS.71 98 900/- MAY NOT BE GIVEN. CASH SALES OF RS.58 45 541/-: THE ASSESSEE CLAIMS CREDIT OF CASH SALES MADE DURIN G THE PERIOD FROM 3/10/99 TO 8/11/99 RECORDED IN ANNEXURE A-37 ( PG. NO.25) AND CLAIM TO BE A PART OF THE TOTAL TURNOVER REFLECTED IN A-49 AT RS.2 48 88 964/-. IN THIS CASE ALSO THERE IS NO D IRECT NEXUS BETWEEN THE AMOUNT SHOWN TO HAVE BEEN RECEIVED IN A NNEXURE A- 49 WITH CASH MEMO ENTERED ON PAGE NO.25 OF ANNEXURE A-37. THEREFORE THIS ISSUE MAY KINDLY BE DECIDED ON MERI TS. 5.1 THE LD. CIT(A) FORWARDED THE AFORESAID REPORT O F THE AO TO THE ASSESSEE WHEN THEY SUBMITTED AS UNDER: AS FAR AS THE UNDISCLOSED SALES CONSIDERED PARA-4. 2(II) OF THE ASSESSMENT ORDER THE LEARNED ASST.COMMISSIONER OF INCOME TAX HAS CERTIFIED THAT THE ACTUAL TOTAL OF ANNEXURE A-4 9 COMES TO RS.2 48 964/- AS AGAINST RS.2 53 18 144/- CONSIDERE D BY HIM IN THE ASSESSMENT ORDER. HENCE WITHOUT PREJUDICE TO THE SUBMISSION MADE EARLIER THE SAID AMOUNT SHOULD BE CONSIDERED FOR THE PURPOSE OF MAKING AN ADDITION AS UNDISCLOSED INCOME AND NOT RS.2 53 18 144/- CONSIDERED BY THE LEARNED ASST.COM MISSIONER OF INCOME TAX IN HIS ORDER. IT(SS)A NO.183& 125/AHD/2004 9 AS FAR AS THE APPELLANTS CONTENTION THAT FROM THE SAID AMOUNT THE SALES RECORDED IN THE REGULAR BOOKS OF ACCOUNTS SHO ULD BE EXCLUDED THE LEARNED ASST.COMMISSIONER HAS ACCEPTE D THE FACT THAT RS.71 98 900/- IS ALREADY REFLECTED IN THE SAL ES BILL SALES REGISTER AS WELL AS THE LEDGER. KINDLY REFER THE L AST PARA OF PAGE 2 OF HIS REMAND REPORT. AS FAR AS HIS OBSERVATION THAT IN ANNEXURE A-49 ENT RIES OF THE AMOUNT RECEIVED AND DELIVERY MEMO NOS ARE MENTIONED AND IN THE SALES BILL OR IN THE LEDGER DELIVERY MEMOS NOS. ARE NOT MENTIONED. YOUR APPELLANT MOST HUMBLY SUBMIT THAT RIGHT FROM T HE BEGINNING IT HAS BEEN SUBMITTED BY HIM THAT ANNEXURE A-49 IS A JHANGAD REGISTER AND NOT THE SALES REGISTER OR LEDGER AND IN THIS ANNEXURE DELIVERY MEMOS NOS. ARE RECORDED AS THE GO ODS ARE DELIVERED SUBJECT TO RETURN. UPON FINALISATION OF SALE SALES BILL ARE PREPARED AND THEN THE SALES BILLS ARE RECORDED IN T HE SALES REGISTER AS WELL AS IN THE LEDGER. THE LEARNED ASST.COMMISSIONER FOUND THAT SALES AMOUNTING TO RS.71 98 900/- IS REF LECTED IN THE REGULAR BOOKS. THIS SYSTEM IS FOLLOWED BY YOUR APP ELLANT DUE TO PECULIAR NATURE OF ITS BUSINESS. THE DETAILED SUBM ISSION IS MADE IN PARA 3.3 & 3.4 OF ITS WRITTEN SUBMISSION DATED 24/1 /2003. YOUR APPELLANT REQUEST YOUR HONOUR TO CONSIDER THE SAME. AS FAR AS CASH SALES AMOUNTING TO RS.53 45 541/- T HE LEARNED ASST.COMMISSIONER VIDE PARA III OF HIS REMAND REP ORT HAS OBSERVED THAT THERE IS NO DIRECT NEXUS BETWEEN THE AMOUNT SHOWN IN ANNEXURE A-49 YOUR APPELLANT MOST HUMBLY SUBMIT S THAT THE LEARNED ASST.COMMISSIONER HAS ACCEPTED THAT THESE C ASH SALES IS ALREADY DISCLOSED IN ANNEXURE A-37 I.E. SALES REGIS TER. THESE SALES IS MADE TO THE PARTIES WHOSE NAMES ARE MENTIONED IN ANNEXURE A- 49. IN VIEW OF THE ABOVE YOUR APPELLANT MOST HUMBLY SU BMITS THAT FROM RS.2 48 88 964/- CERTIFIED BY THE LEARNED ASST.COMM ISSIONER SALES RECORDED IN THE REGULAR BOOKS AMOUNTING TO RS.1 25 44 441/- (RS.71 98 900 + RS.53 45 541/-) SHOULD BE EXCLUDED AND THE NET AMOUNT OF RS.1 23 44 523/- ONLY SHOULD BE CONSIDER AS UNDISCLOSED SALES FOR THE PURPOSE OF MAKING ANY ADDITION AS UND ISCLOSED INCOME. THE ABOVE SUBMISSION IS MADE WITHOUT PREJUDICE TO T HE APPELLANTS CONTENTION THAT NO PART OF THE ENTRIES RECORDED IN ANNEXURE A-49 IS UNDISCLOSED SALES. THESE CONTENTION IS ACCEPTED BY THE LEARNED ASST.COMMISSIONER IN HIS REMAND REPORT THAT ANNEXUR E A-49 AMOUNT RECEIVED AND DELIVERY MEMO NOS. ARE3 MENTION ED WHERE AS THE SALES BILLS ARE RECORDED IN SALES REGISTER A ND THE LEDGER. IT(SS)A NO.183& 125/AHD/2004 10 HENCE THE CONCLUSION DRAWN BY THE LEARNED ASST.COM MISSIONER IN THE ASST.ORDER THAT THE ENTRIES MADE IN ANNEXURE A- 49 IS THE UNRECORDED SALES IS NOT SUPPORTED BY ANY EVIDENCES. HENCE YOUR APPELLANT MOST HUMBLY SUBMITS THAT NO PART OF THE S AME CAN BE CONSIDERED AS UNDISCLOSED SALES. 6. IN THE LIGHT OF REPORT OF THE AO AND SUBMISSIO NS OF THE ASSESSEE THEREON THE LD. CIT(A) WHILE GIVING FEW INSTANCES OF IDENTICAL ENTRIES IN A- 49 & A-37 A-71 CONCLUDED AS UNDER: 5.7 AS CAN BE SEEN FROM THE ABOVE THE FIGURES OF RS.1 36 06 877/- HAVE BEEN BIFURCATED INTO TWO I.E. RS.71 98 900/- AND CASH SALES OF RS.53 45 541/-. THE CONTENTION O F THE APPELLANT THAT IT IS MERELY IN A JANGAD BOOK IS NOT ACCEPTABL E BY ME IN THE PRECEDING PARAGRAPHS HOWEVER THE ENTRIES OF RS.71 98 900/- HAS BEEN TEST CHECKED BY ME AND I FIND THAT MOST OF THE ENTRIES ARE IDENTICAL I.E. RECORDED IN A-49 AS WELL IN A-37 ET C. I.E. .. 6.1 ACCORDINGLY THE LD. CIT(A) DIRECTED THE AO TO REDUCE SALES OF RS.71 98 900/- FROM THE TOTAL SALES OF RS.2 48 88 9 64/-.AS REGARDS CASH SALES OF RS. 58 45 541/- THE LD. CIT(A) CONCLUDED I N FOLLOWING TERMS: (B) WITH REGARD TO ANOTHER CLAIM OF CASH SALES OF RS.58 45 541/- APPEARING IN DIFFERENT NAMES ON DIFFERENT DATES IN A-49 THE APPELLANT FAILED TO IDENTIFY IT FROM THE LEDGER I.E . A-37 IN THE ASSESSMENT PROCEEDINGS IN THE REMAND PROCEEDINGS A ND ALSO BEFORE ME THEREFORE THIS GROUND CAN NOT BE ENTERTA INED. NO RELIEF ON THIS ACCOUNT IS THEN POSSIBLE. IN NUTSHELL THE A.O. IS DIRECTED TO TAKE THE FIGURE OF SALES AT RS.1 76 90 067/- (RS.24 8 88 964 MINUS RS.71 98 900) 6.2 . WITH REGARD TO ADOPTION OF GROSS PROFIT THE LD.CIT(A) WHILE NOTING THE FACT THAT IN THE ORDINARY COURSE THE ASSESSEE PURCHASED GOODS FROM MOHAMMED SIDDIQUE ABDUL REHMAN GOLAWALA ITS SISTER CONCERN AND SOLD GOODS TO A THIRD PARTY IT CAN JUSTIFIABLY CONSIDER AS ONE WING OF A COMPOSITE GROUP AND GP EARNED BY THEM @5% REMAINS A FACT .ACCORDINGLY THE LD. C IT(A) DIRECTED THE A.O. TO WORK OUT GROSS PROFIT @5% ON THE TOTAL SALES OF RS. 1 76 90 067/-. THUS THE ADDITION OF RS.8 84 503/- WAS UPHELD WHILE ALLOWING RELIEF OF RS.8 87 764/-. IT(SS)A NO.183& 125/AHD/2004 11 7. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID CONFIRMATION OF ADDITION OF RS.8 84 503/- BY THE LD. CIT(A) WHILE THE REVENUE IS IN APPEAL AGAINST THE REDUCTION OF ADDITION. THE L D. AR ON BEHALF OF THE ASSESSEE WHILE REITERATING THEIR SUBMISSIONS BEFORE THE LD. CIT(A) AND CARRYING US THROUGH THE PAPERBOOK AND THE IMPUGNED ORDER CONTENDED THAT SINCE THEIR GP RATE IN THE PERIOD FALLING IN THE BLOCK PERIOD WAS AROUND 2 .68% THE LD. CIT(A) WAS NOT JUSTIFIED IN ADOPTING THE GP RATE OF 5%.ON THE OTHE R HAND THE LD. DR CONTENDED THE GP RATE OF 7% ADOPTED BY THE AO SHOULD BE UPHE LD. HOWEVER NO COGENT BASIS HAS BEEN ADDUCED BEFORE US FOR ADOPTING GP R ATE OF 5%. 8. WE HAVE HEARD BOTH THE PARTIES AND GON E THROUGH THE FACTS OF THE CASE. WE FIND THAT THE LD. CIT(A) AFTER EXAMINING THE FAC TS AND CIRCUMSTANCES OF THE CASE CONCLUDED THAT IN THE ABSENCE OF ANY EVIDENCE THE CONTENTIONS OF THE ASSESSEE THAT ANNEXURE A-49 WAS A JANGAD BOOK WERE NOT ACCEPTABLE AND ACCEPTED THE FIGURES OF UNDISCLOSED SALES OF RS.2 4 8 88 964/- FURNISHED BY THE ASSESSEE. CONSIDERING THE TOTALITY OF FACTS AND CIR CUMSTANCES OF THE CASE ESPECIALLY WHEN THE LD. AR ON BEHALF OF THE ASSESS EE DID NOT PLACE BEFORE US ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIE W IN THE MATTER WE ARE NOT INCLINED TO INTERFERE WITH THE AFORESAID FINDINGS O F FACTS RECORDED BY THE LD. CIT(A) IN HOLDING THAT THE ANNEXURE A-49 WAS NOT MERE A JANGAD BOOK BUT CONTAINED DETAILS OF UNDISCLOSED SALES OF RS. RS.2 48 88 964/ -. 8.1 AS REGARDS PLEA FOR A FURTHER REDUCTION OF R S.1 36 06 877/- FROM THE TOTAL UNDISCLOSED SALES OF RS.2 48 89 964/- THE LD. CIT( A) IN THE LIGHT OF REPORT OF THE AO WHILE QUOTING FEW INSTANCES OF IDENTICAL ENTRI ES IN A-49 & A-37 A-71 CONCLUDED THAT ENTRIES RELATING TO SALES OF RS.71 98 900/- BEING IDENTICAL SHOULD BE REDUCED FROM THE TOTAL SALES OF RS.2 48 88 964/- .AS REGARDS CASH SALES OF RS. 58 45 541/- SINCE THE ASSESSEE FAILED TO IDENTIFY THE AMOUNT FROM THE LEDGER I.E. A-37 IN THE ASSESSMENT PROCEEDINGS IN THE REMAND P ROCEEDINGS AND EVEN BEFORE THE LD. CIT(A) SHE DECLINED TO GIVE ANY FUR THER RELIEF . EVEN BEFORE US SITUATION IS NO BETTER AND THE LD. AR ON BEHALF OF THE ASSESSEE DID NOT REFER US TO IT(SS)A NO.183& 125/AHD/2004 12 ANY MATERIAL SO AS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER. IN THESE CIRCUMSTANCES WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A) AND THEREFORE WE HAVE NO ALTERNATIVE BUT TO UPHOLD THE FINDINGS OF THE LD. CIT(A) . 8.2 NOW ADVERTING TO ESTIMATION OF PROFIT S @ 5 % BY THE LD. CIT(A) AS AGAINST 7% BY THE AO BOTH THE AO AND THE LD. C IT(A) WHILE NOTING THE FACT THAT IN THE ORDINARY COURSE THE ASSESSEE PURCHASED GOODS FROM MOHAMMED SIDDIQUE ABDUL REHMAN GOLAWALA ITS SISTER CONCERN AND SOLD GOODS TO A THIRD PARTY IT CAN JUSTIFIABLY CONSIDER AS ONE WING OF A COMPOSITE GROUP AND GP EARNED BY THEM @ 5% REMAINS A FACT . THE AO HOWEVER INCREASED THE RATE TO 7% ATTRIBUTING 2% TO AVERAGE FREIGHT. HOWEVER THE L D. CIT(A) ACCEPTED THE SUBMISSIONS OF THE ASSESSEE THAT THEY WERE NOT COLL ECTING ANY FREIGHT NOR ANY SUCH EVIDENCE WAS FOUND DURING THE SEARCH. ACCORDIN GLY SHE DIRECTED THE A.O. TO WORK OUT GROSS PROFIT @5% ON THE TOTAL SALES OF RS.1 76 90 067/-. CONSIDERING THE FACTS OF THE CASE WE ARE OF THE OPINION THAT N O DOUBT THE AO/CIT(A) SHOULD TRY TO MAKE AN HONEST AND FAIR ESTIMATE OF THE INCO ME EVEN IN A BEST JUDGMENT ASSESSMENT AND SHOULD NOT ACT TOTALLY ARBITRARILY BUT THERE IS NECESSARILY SOME AMOUNT OF GUESS WORK INVOLVED IN A BEST JUDGMENT AS SESSMENT AND IT IS THE ASSESSEE HIMSELF WHO IS TO BLAME AS HE DID NOT SUBM IT PROPER ACCOUNTS AND DETAILS AND WAS NOT ACCOUNTING FOR THEIR ENTIRE S ALE IN THE BOOKS. [ KACHWALA GEMS VS JCIT 288 ITR 10 (2007)(SC) ]. SINCE THE S EARCH REVEALED THAT THE ASSESSEE WAS NOT ACCOUNTING FOR THEIR ENTIRE SALE S IN THEIR BOOKS OF ACCOUNTS WHILE NO MATERIAL HAS BEEN PLACED BEFORE US SO AS TO TAKE A DIFFERENT VIEW IN THE MATTER WE DO NOT FIND ANY INFIRMITY IN THE FINDING S OF THE LEARNED CIT(A) WHILE SUSTAINING THE ADDITION APPLYING THE GP RATE OF 5 %. IN THIS VIEW OF THE MATTER AND CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTA NCES OF THE CASE WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEAR NED CIT(A). THEREFORE GROUND NO.3 IN THE APPEAL OF THE ASSESSEE AND GROUND NO. 1 IN THE APPEAL OF THE REVENUE ARE DISMISSED. IT(SS)A NO.183& 125/AHD/2004 13 9. NEXT GROUND NOS. 4 & 5 IN THE APPEAL OF THE ASSE SSEE AND GROUND NO. 2 IN THE APPEAL OF THE REVENUE RELATING TO ADOPTION OF G ROSS PROFIT RATE OF 5% BY THE CIT(A) INSTEAD OF 20% ON THE UNDISCLOSED TURNOVER IN THE HOSIERY BUSINESS AND ADDITION OF RS.20 800/- UPHELD BY THE LD. CIT(A) T HE AO NOTICED THAT THE SEIZED DOCUMENT IN ANNEXURE A-55 CONTAINED THE DETAILS OF SALES & PURCHASES AS WELL AS DETAILS OF EXPENDITURE IN HOSIERY DIVISION OF T HE ASSESSEE. THE AO NOTICED A NUMBER OF CREDITS OF RS.2 34 401/- BESIDES SALES OF RS. 6 23 472/-. TO A QUERY BY THE AO THE ASSESSEE REPLIED VIDE LETTER DATED 2 1.10.2002 THAT ANNEXURE A- 55 CONTAINED A NOTING OF SALES AND PURCHASE MADE AS WELL AS EXPENSES INCURRED BY A PERSON WHO WAS HANDLING THEIR CLIENTS HOSIERY ACTIVITY. IN THIS ANNEXURE DATE-WISE ENTRIES HAD BEEN MADE OF CASH RECEIVED AG AINST SALES AS WELL AS CASH PAID FOR PURCHASES AND EXPENDITURE INCURRED . WHIL E ENCLOSING COMPUTERIZED STATEMENTS OF CASH BOOK PURCHASE AND EXPENSES ACCO UNT SALES ACCOUNT AND TRIAL BALANCE PREPARED FROM THE SAID ANNEXURE THE ASSESSEE SUBMITTED THAT THE AMOUNT CREDITED IN THE SAID ACCOUNT AS COLLECTION O F SALE PRICE WAS LESS THAN THE AMOUNT DEBITED AS PAYMENT MADE FOR PURCHASES ETC. SINCE THE NET RESULT OF THE TRANSACTIONS RECORDED IN THIS ANNEXURE WAS LOSS TH E ASSESSEE PLEADED THAT NO ADDITION CAN BE MADE. THE ASSESSEE ARGUED THAT SINC E THE SAID AMOUNTS HAD BEEN CREDITED OUT OF CASH WITHDRAWN FROM THE BANK A CCOUNT WITH DENA BANK & TAMILNADU MERCANTILE CO-OP. BANK THERE WAS NO UNEX PLAINED AMOUNT CREDITED . IN THE LIGHT OF THESE SUBMISSIONS THE AO CONCLUDED THAT ANNEXURE A-55 CONTAINED DETAILS OF THE HOSIERY BUSINESS CONDUCTED BY IT WHEREIN THE SALES FIGURES AND INTRODUCTION OF MONEY BY ONE MEMBER OF THE GROUP VIZ. SHRI MOHAMMED SOEB GOLAWALA WERE NOTED. SINCE AN AMOUN T OF RS.20 800/- INTRODUCED BY SHRI MOHAMMED SOEB GOLAWALA IN CASH D ID NOT FIND PLACE IN THE BANK STATEMENT THE SAME WAS TREATED AS OUT OF UNDI SCLOSED INCOME . AS REGARDS UNACCOUNTED SALES OF RS.6 23 472/- IN ITS HOSIERY B USINESS THE AO OBSERVED THAT THE DIARY CANNOT BE CONSIDERED TO BE A COMPLETE REC ORD OF TRANSACTIONS IN THE SENSE THAT IT WAS NOT PROVED THAT ALL THE SALES PE RTAINING TO THE EXPENSES NOTED IT(SS)A NO.183& 125/AHD/2004 14 WERE ALSO RECORDED IN THE DIARY. MOREOVER IT DEFI ED LOGIC THAT UNACCOUNTED SALES WOULD BE MADE IN ORDER TO INCUR UNACCOUNTED LOSSES. IN THESE CIRCUMSTANCES 20% OF THE SALES WERE TREATED AS UNDISCLOSED INCOM E FOR THE BLOCK PERIOD RESULTING IN ADDITION OF RS.1 24 695/-. 10. ON APPEAL THE ASSESSEE CONTENDED THAT INVEST MENT OF RS. 20 800/- SHOULD BE CONSIDERED OUT OF ADDITION OF RS.8 84 503 /- IN RESPECT OF UNDISCLOSED SALES AS PER ANNEXURE A-49 IN THE PRECEDING GROUND. HOWEVER THE LD. CIT(A) REJECTED THE CONTENTIONS OF THE ASSESSEE THE SAID INVESTMENT HAVING BEEN MADE IN THE PERIOD RELEVANT TO THE AY 1999-2000 WHILE THE ADDITION AS PER ANNEXURE A-49 RELATED TO THE AY 2000-01. AS REGARDS ADDITI ON OF RS.1 24 695 THE LD. CIT(A) AGREED WITH THE FINDINGS OF THE AO THAT TH E ASSESSEE FAILED TO PROVE THAT THE EXPENSES NOTED IN THE DIARY PERTAINED TO THE H OSIERY BUSINESS ITSELF NOR THE ASSESSEE ATTEMPTED TO FURNISH COMPLETE DETAILS OF S UCH EXPENSES. HOWEVER THE LD. CIT(A) CONSIDERED 5% OF THE GP IN THE HOSIERY L INE OF BUSINESS AS REASONABLE AND UPHELD ADDITION OF RS.31 170/- AS AGAINST RS.1 24 695/- ESTIMATED BY THE AO ADOPTING GP RATE OF 20% IN THE FOLLOWING TERMS : 6.4 THE SUBMISSION OF THE APPELLANT IS DULY CONSID ERED AND AS CAN BE SEEN FROM THE ASSESSMENT ORDER THAT THE A.O. HAS REPORTED THAT THE ASSESSEE HAS FAILED TO PROVE THAT THE EXPE NSES SO NOTED DOWN IN THE DIARY PERTAINS TO THE HOSIERY BUSINESS THEREFORE THE PLEA IS NOT ACCEPTABLE. IN THE APPELLATE PROCEEDIN GS NO EFFORT HAS BEEN MADE BY HIM TO GIVE THE COMPLETE DETAILS OF TH E EXPENSES THEREFORE THIS ARGUMENT IS NOT TENABLE. HOWEVER IT HAS ALSO CONTENDED THAT THE G.P. @20% IS VERY HIGH IN THIS B USINESS AND IT WOULD BE REASONABLE TO ADOPT THE G.P. @5% WHICH IS NORMALLY IN THIS LINE OF BUSINESS. I FIND FORCE IN THE SUBMISS ION OF THE APPELLANT AND A.O. IS DIRECTED TO ADOPT G.P. @5% ON THE TOTAL SALES OF RS.6 23 472/- WHICH COMES TO RS.31 170/-. THE ADDI TION IS CONFIRMED TO THAT EXTENT AND A.O. IS DIRECTED TO DE LETE BALANCE ADDITION OF RS.93 525/-. 11. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAI NST ADDITIONS OF RS.20 800/- & RS. 31 170/- SUSTAINED BY THE LD. CIT(A) WHILE THE REVENUE IS IN APPEAL AGAINST REDUCTION BY RS.93 525/-. THE LD. AR ON BEHALF OF T HE ASSESSEE SOUGHT BENEFIT OF IT(SS)A NO.183& 125/AHD/2004 15 NETTING OFF OF RS.20 800/- AGAINST ADDITION OF RS.8 84 503/- SUSTAINED BY THE LD. CIT(A) IN GROUND NO. 3 ABOVE AND FURTHER SUBMITTED THAT INCOME ATTRIBUTABLE TO THE HOSIERY BUSINESS SHOULD BE DETERMINED ON THE BA SIS OF SEIZED DOCUMENT THE AO HAVING ADOPTED INCOME WITHOUT ALLOWING ANY EXPE NSES .ON THE OTHER HAND THE LD. DR SUPPORTED THE FINDINGS OF THE AO. 12. WE HAVE HEARD BOTH THE PARTIES AND GONE TH ROUGH THE FACTS OF THE CASE. AS REGARDS CLAIM FOR SET OFF IN RESPECT OF AMOUNT OF RS.20 800/- AGAINST ADDITION OF RS.8 84 503/- WE FIND THAT ADDITION OF RS. 20 800/- RELATED TO THE AY 1999- 2000 WHILE THE AFORESAID AMOUNT OF RS.8 84 503/- O N THE BASIS OF SEIZED DOCUMENT IN ANNEXURE A-49 RELATED TO THE AY 2000-01 . IN THESE CIRCUMSTANCES ESPECIALLY WHEN NO NEXUS HAS BEEN ESTABLISHED BETW EEN THE TWO FIGURES WE HAVE NO HESITATION IN UPHOLDING THE FINDINGS OF THE LD. CIT(A). AS REGARDS APPLICATION OF GP @ 5% ON THE TURNOVER OF HOSIERY BUSINESS WE FIND THAT THE AO DETERMINED THE UNDISCLOSED INCOME OF RS.1 24 695/- APPLYING GP RATE OF 20% ONLY BECAUSE THE ASSESSEE DID NOT ESTABLISH THAT TH E TRANSACTIONS MENTIONED IN ANNEXURE-55 RESULTED IN LOSS NOR THE ASSESSEE ESTAB LISHED THAT EXPENSES MENTIONED IN THE SAID SEIZED DOCUMENT WERE INCURRED IN RELATION TO SALES REFLECTED THEREIN. EVEN BEFORE THE LD. CIT(A) THE A SSESSEE FAILED TO ESTABLISH THE CO-RELATION OF EXPENSES MENTIONED IN THE SAID SEIZE D DOCUMENT WITH THE TURNOVER IN HOSIERY BUSINESS. BEFORE US THE ASSESS EE INVITED OUR ATTENTION TO PAGES PAGES 59 TO 78 IN THE PAPER BOOK FILED BEFOR E US AND SUBMITTED THAT THE INCOME FROM THE HOSIERY BUSINESS SHOULD BE DETERMIN ED AFTER CONSIDERING THE EXPENSES MENTIONED IN THE SAID SEIZED DOCUMENT AND NOT BY APPLICATION OF GP RATE .IN OTHER WORDS PLEA ON BEHALF OF THE ASSESSEE IS DOCUMENT SHOULD BE CONSIDERED IN ITS ENTIRETY. WE FIND FORCE IN THIS PLEA ON BEHALF OF THE ASSESSEE. WE ARE OF THE OPINION THAT WHEN THE SEIZED DOCUMEN T BELONGED TO THE ASSESSEE AND INCOME IS DETERMINED ON THAT BASIS THE NATURAL PRESUMPTION IS THAT THE EXPENDITURE MENTIONED THEREIN ALSO RELATES TO THE OWNER OF THE DOCUMENT UNLESS THERE IS EVIDENCE TO SHOW THAT IN ENTIRETY OR A PAR T OF IT REPRESENTS BELONGING TO SOMEONE ELSE. IN THE INSTANT CASE THERE IS NO EVI DENCE OR FINDING THAT THE IT(SS)A NO.183& 125/AHD/2004 16 EXPENSES MENTIONED IN THE SEIZED DOCUMENT AND EXTRA CTED ON PAGE 59 TO 78 OF THE PAPER BOOK RELATE TO SOMEONE ELSE OR TO SOME OT HER BUSINESS OF THE ASSESSEE. IN THESE CIRCUMSTANCES WE CONSIDER IT FA IR AND APPROPRIATE TO VACATE THE FINDINGS OF THE LD. CIT(A) AND RESTORE THE MATT ER TO THE FILE OF AO WITH THE DIRECTIONS TO ALLOW SUFFICIENT OPPORTUNITY TO THE A SSESSEE FOR ESTABLISHING THAT EXPENSES MENTIONED THEREIN RELATE TO HOSIERY BUSINE SS OF THE ASSESSEE AND THEREAFTER ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. WITH THESE DIRECTIONS GROUND NO. 4 IN THE APPEAL OF THE ASSESSEE IS DISM ISSED WHILE GROUND NO.5 IN THE APPEAL OF THE ASSESSEE AND GROUND NO. 2 IN THE APP EAL OF THE REVENUE ARE DISPOSED OF AS INDICATED HEREINABOVE. . 13. NEXT GROUND NO.6 IN THE APPEAL OF THE ASSESSEE AND GROUND NOS. 3 & 4 IN THE APPEAL OF THE REVENUE RELATE TO ADDITIONS OF R S. 21 04 695/- AND RS.34 39 150/- ON ACCOUNT OF DEPOSITS IN UNDISCLOSE D ACCOUNT WITH DENA BANK AND TAMILNADU MERCANTILE CO-OPERATIVE BANK. THE AO VIDE LETTER DATED 17-10- 2002 REQUIRED THE ASSESSEE TO GIVE EXPLANATION TO T HE FOLLOWING QUERIES: (III)(A) YOU HAVE ADMITTED THAT YOUR BANK ACCOUNT S IN THE TAMILNADU MERCANTILE BANK LIMITED ALKAPURI AND IN DENA BANK CHOKHANDI BAZAR BRANCH BARODA ARE UNDISCLOSED TO T HE DEPARTMENT. ON VERIFYING THE BANK STATEMENTS FOR T HE BLOCK PERIOD IT IS SEEN THAT THERE ARE A LOT OF INITIAL DEPOSITS IN THESE BANK ACCOUNTS AND LATER ON ON A REGULAR BASIS THERE ARE CREDITS AND DEBITS. THE INITIAL DEPOSITS AMOUNT TO RS.21.05.69 5/- IN DENA BANK ACCOUNT AND THE PEAK OF THE DEPOSITS AMOUNTS TO RS. 16 88 958/- IN TAMILNADU MERCANTILE BANK LIMITED FOR WHICH NO EXPL ANATION IS GIVEN. YOU ARE REQUESTED TO OFFER THE SAME FAILING WHICH THE SAME WILL BE TREATED AS UNEXPLAINED INVESTMENT OUT OF UN DISCLOSED SOURCES FOR THE BLOCK PERIOD AND TAXED ACCORDINGLY. (B) IT IS NOTICED THAT THERE ARE CASH DEPOSITS TO THE TUNE OF RS.3 30 000/- BY YOU IN TAMILNADU MERCANTILE BANK L IMITED. YOU ARE REQUESTED TO EXPLAIN THE SOURCES OF THE SAME FA ILING WHICH THE SAME WILL BE TREATED AS UNEXPLAINED INVESTMENTS OUT OF UNDISCLOSED SOURCES FOR THE BLOCK PERIOD AND TAXED ACCORDINGLY. (C) AS ADMITTED BY YOU THE CREDITS REPRESENT CONSI DERATION RECEIVED BY YOU FROM THE UNACCOUNTED SALES MADE BY YOU DURING IT(SS)A NO.183& 125/AHD/2004 17 THE BLOCK PERIOD. THE TOTAL DEPOSITS MADE IN DENA BANK AMOUNTS TO RS.1 09 15 136/- (RS.1 30 20 831/- MINUS RS.21 0 5 695/-) AND RS.66 10 614/- IN TAMILNADU MERCANTILE BANK LIMITED .LEAVING RS.3 30 000/- IN TAMILNADU MERCANTILE BANK LIMITED WHICH HAS BEEN CONSIDERED ABOVE AT (III)(B) AND RS.21 05 695/ - AT (III)(A) THE BALANCE REPRESENTS SALES CONSIDERATIONS DEPOSITED I N THIS ACCOUNT. THE TOTAL OF THE SALES CONSIDERATIONS DEPOSITED IN DENA BANK AND TAMILNADU MERCANTILE BANK LIMITED AMOUNT TO RS.1 75 25 750/-. YOU HAVE NOT GIVEN ANY SATISFACTORY WORKING OF UNDI SCLOSED INCOME EARNED ON THE AFORESAID SALES. TAKING G.P. @20% AS ABOVE THE UNDISCLOSED PROFIT WORKS OUT TO RS.35 05 150/-. PL EASE SHOW CAUSE AS TO WHY THIS INCOME SHOULD NOT BE TREATED AS UNDI SCLOSED INCOME FOR THE BLOCK PERIOD. 13.1 THE ASSESSEE REPLIED VIDE THEIR LETTER DAT ED 21.10.2002 AS UNDER: 4.1 IN PARA 2.(III)(A) YOU HAVE PROPOSED TO ADD IN ITIAL AMOUNT DEPOSITED IN DENA BANK AS WELL AS TAMILNADU MERCANT ILE CO-OP. BANK AMOUNTING TO RS.21 05 695/- AND RS.16 88 958/- RESPECTIVELY AS UNEXPLAINED INVESTME NT AND PROFIT @20% ON THE TOTAL AMOUNT CREDITED IN BOTH TH ESE BANK ACCOUNTS AMOUNTING TO RS.1 09 15 136/- AND RS.66 10 614/- RESPECTIVELY. IN THIS CONNECTION WE HAVE TO WRITE TO YOU AS UNDER: 4.2 WE HAVE TO INFORM YOU THAT THE DETAILED EXPLANA TION OF THE SAID ANNEXURE HAVE BEEN SUBMITTED BY OUR CLIENT VID E HIS LETTER DATED 10/10/2002. WE ARE REPRODUCING THE RE LEVANT PARA FOR YOUR READY REFERENCE. REGARDING TRANSACTIONS RECORDED IN TAMILNADU MERCA NTILE CO-OP BANK LTD & DENA BANK WE HAVE TO INFORM YOU TH AT IN THE SAID ACCOUNTS MAINLY PAYMENTS MADE FOR PURCHASE OF GOODS AND MONEY RECEIVED FOR SALE OF GOODS ARE THER E. IN THE CREDIT SIDE THE AMOUNTS RECEIVED ARE MAINLY REC EIPTS OF SALES MADE ARE THERE AND ON DEBIT SIDE THE PAYMENTS MADE FOR PURCHASES OF GOODS BY DEMAND DRAFT OR BANKER CH EQUES ETC. ARE THERE. BOTH THESE TRANSACTIONS ARE NOT RE CORDED IN THE BOOKS OF ACCOUNTS OF OUR CLIENT. WE ARE ALSO E NCLOSING HEREWITH THE COMPUTERIZED STATEMENTS WHICH INCLUDES COPY OF BOTH THE BANK ACCOUNT CASH COUNT PURCHASES AND SALES ACCOUNT EXPENSES ACCOUNT AND TRIAL BALANCE WHICH A RE PREPARED FROM THE BANK STATEMENTS OF THE SAID BANKS . FROM THE SAID ANALYSIS YOU WILL OBSERVE THAT THE AMOUNT CREDITED IN THE SAID ACCOUNTS AS COLLECTION OF SALE PRICE IS LE SS THAN THE IT(SS)A NO.183& 125/AHD/2004 18 AMOUNT DEBITED AS PAYMENT MADE FOR PURCHASES ETC. IN OTHER WORDS THERE IS A NEGATIVE INCOME. 14. HOWEVER THE AO DID NOT ACCEPT THE AFORESAI D CONTENTIONS OF THE ASSESSEE THAT AMOUNT DEPOSITED IN THE DENA BANK WAS ON ACCO UNT OF SALES ACCORDINGLY THE AMOUNT OF RS.21 04 695/- WAS CONSIDERED AS UNEX PLAINED INVESTMENT IN THE FORM OF INITIAL DEPOSIT. BESIDES ON THE BASIS O F TRANSACTIONS IN THE AFORESAID TWO BANK ACCOUNTS AND THE ADMISSION OF THE ASSESSEE TH AT TRANSACTIONS RELATED TO PAYMENTS FOR PURCHASE OF GOODS AND MONEY RECEIVED ON SALE OF GOODS AS ALSO AFTER CONSIDERING THE CONTENTIONS OF THE ASSESSEE RELATING TO GP RATE IN RESPECT OF TRANSACTIONS AS PER ANNEXURE A-49 THE AO ADDED AN AMOUNT OF RS.34 39 150/- ON THE BASIS OF SALES EXTRACTED FROM THE TWO BANK ACCOUNTS ADOPTING GP RATE OF 20% IN TERMS OF HIS FINDINGS ON PAGES 12 TO 19 OF THE ASSESSMENT ORDER. 15. ON APPEAL THE ASSESSEE SUBMITTED THAT A COMPL ETE LIST OF SALES OF RS.21 04 695/- ALONG WITH THEIR CONFIRMATIONS WAS F ILED BEFORE THE AO. HOWEVER DUE TO PAUCITY OF TIME HE COULD NOT EXAMINE. ACCO RDINGLY THE LD. CIT(A) FORWARDED THESE DETAILS TO AO FOR HIS VERIFICATION. IN REPLY THE AO SUBMITTED AS UNDER: AS PER THE DETAILS DISCUSSION IN PARA 6 OF THE ASS ESSMENT ORDER ADDITION OF RS.21 04 695/- WAS MADE ON ACCOUNT OF U NDISCLOSED INVESTMENT CREDITED IN A BANK ACCOUNT WITH DENA BAN K. THE ASSESSEE HAS CONTENDED THAT THE SAME ARE RECEIPTS B Y DEMAND DRAFTS FROM CUSTOMERS ON SALE OF GOODS AND NOT INVE STMENTS. IN SUPPORT OF ITS CLAIM THE ASSESSEE HAS FURNISHED CO NFIRMATION LETTER AS WELL AS COPIES OF BANK ACCOUNT OF THESE PARTIES FOR THE RELEVANT PERIOD. ON VERIFICATION OF THE SAME IT IS NOTICED THAT THE DEBIT ENTRIES IN THESE ACCOUNTS ALMOST MATCH WITH THE CRE DIT ENTRIES ON CORRESPONDING DATES IN THE SAID BANK ACCOUNT WITH D ENA BANK. A CLOSE PERUSAL OF THE SAID LEDGER ACCOUNT REVEALS T HE MODE OF CREDIT BY CLEARING WHICH INDICATES THAT THE AMOUNTS HAVE BEEN CREDITED BY CLEARING. HOWEVER THESE ENTRIES ARE NO WHERE R EFLECTED IN EITHER ANNEXURE A.49 OR LEDGER SALES REGISTER ETC. I.E. A .37 A.38 AND OTHER SALES RECORD AND THEREFORE IT COULD NOT BE CO NSIDERED AS IT(SS)A NO.183& 125/AHD/2004 19 SALES. THEREFORE THE A.O. HAS CORRECTLY TREATED A S UNEXPLAINED INVESTMENT IN THE BLOCK ORDER. 15.1 IN THEIR REJOINDER THE ASSESSEE SUBMITTED TH AT IT NEVER CLAIMED THAT THESE SALES ARE REFLECTED IN A-49 A-37 OR A-38 AND THAT THE SALES APPEARING IN THESE BANK ACCOUNTS WERE COMPLETELY UNDISCLOSED AND THERE FORE THERE WAS NO QUESTION OF APPEARING IT IN THE ABOVE REGISTERS. SI NCE THE AO DID NOT DISPUTE THE CONFIRMATIONS FILED BY THE ASSESSEE BEFORE HIM THE ADDITION OF RS.21 04 695/- AS UNEXPLAINED INVESTMENT WAS THEREFORE DELETED BY T HE LD.CIT(A) WITH THE DIRECTIONS TO INCLUDE THE SAME IN THE TOTAL SALES A PPEARING IN THE BANK ACCOUNTS. 15.2. AS REGARDS ADDITION @ 20% ON UNDISCLOSED SA LES REFLECTED IN THE AFORESAID TWO BANK ACCOUNTS THE ASSESSEE REITERATE D THEIR CONTENTIONS BEFORE THE AO. THE LEARNED CIT(A) ACCEPTED THE PLEA OF T HE ASSESSE THAT THE CORRECT FIGURE OF SALE WAS RS.1 88 83 503/- AND NOT RS.2 1 3 20 403/- MENTIONED BY THE AO AS DETAILED HEREUNDER: DENA BANK 2-12-97 TO 27-4-00 RS. 1 24 96 978/- TAMILNADU MERCANTILE CO-OP BANK 6-12-99 TO 10-7-00 RS. 63 86 525/- ----------------------- TOTAL RS. 1 88 83 503/- ----------------------- . IN LINE WITH HER DECISION IN RESPECT OF APPLICATION OF GP RATE OF 5% ON UNDISCLOSED SALES AS PER ANNEXURE A-49 THE LD. CIT(A) CONSIDER D IT FAIR TO ADOPT GP RATE OF 5% ON TOTAL SALES OF RS. 1 88 83 503/- AS AGAINST E STIMATION @ 20% BY THE AO .AS A RESULT ADDITION OF RS.9 44 175/- WAS UPHELD WHILE ASSESSEE WAS ALLOWED RELIEF OF RS.24 94 975/-. 16 . THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAIN ST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR WHILE NOT DISPUTING THE FIGURE OF TURNOVER ADOPTED BY THE LD. CIT(A) REQUESTED FOR APPLICATION OF A REASO NABLE GP RATE WHILE THE LD. DR IT(SS)A NO.183& 125/AHD/2004 20 SUPPORTED THE FINDINGS OF THE AO WITHOUT GIVING A NY BASIS FOR GP RATE OF 20% ADOPTED BY THE AO. 17. WE HAVE HEARD BOTH THE PARTIES AND GON E THROUGH THE FACTS OF THE CASE. UNDISPUTEDLY BOTH THE AFORESAID BANK ACCOUNTS OF THE ASSESSEE WITH DENA BANK AND AND TAMILNADU MERCANTILE CO-OPERATIVE BANK WERE UNDISCLOSED AND CONSEQUENTLY SALE PROCEEDS DEPOSITED IN THE SAID B ANK ACCOUNTS WERE ALSO UNDISCLOSED. SINCE THE AO DID NOT DISPUTE THE CONFI RMATIONS FILED BY THE ASSESSEE BEFORE HIM NOR THE LD. DR REFERRED US TO ANY MATERIAL CONTRARY TO THE FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) WE AR E OF THE OPINION THAT THE ADDITION OF RS.21 04 695 AS UNEXPLAINED INVESTMENT WAS RIGH TLY DELETED BY THE LD.CIT(A) WITH THE DIRECTIONS TO INCLUDE THE SAME IN THE TOTA L SALES APPEARING IN THE BANK ACCOUNT . AS REGARDS APPLICATION OF GP RATE OF 5% ON THE UNDISPUTED UNACCOUNTED TURNOVER OF RS. 1 88 83 503/- IN VIEW OF OUR REASONS IN PARA 8.2 ABOVE ESPECIALLY WHEN NO MATERIAL HAS BEEN PLACED BEFORE US BY EITHER THE LD. AR OR THE LD. DR SO AS TO ENABLE US TO TAKE A DIFFE RENT VIEW IN THE MATTER WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LEA RNED CIT(A) WHILE SUSTAINING THE ADDITION APPLYING THE GP RATE OF 5%. IN THIS VIEW OF THE MATTER AND CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT(A). THEREFORE GROUND NO.6 IN THE APPEAL OF THE ASSESSEE AND GROUND NOS. 3 & 4 IN THE APPEAL O F THE REVENUE ARE DISMISSED. 18. IN THEIR GROUND NO.7 THE ASSESSEE AGITATES THAT T HE LD.CIT(A) IS ERRED IN NOT GRANTING BENEFIT OF TELESCOPING BENEFIT OF ADDI TION CONFIRMED AGAINST INVESTMENTS MADE IN TO VARIOUS BANK ACCOUNTS AMOUNT ING TO RS.7 19 102/- [20 800+6 98 302]. AS REGARDS TELESCOPING BENEFIT IN RESPECT OF ADDIT ION OF RS. 20 800/- WE HAVE ALREADY REJECTED THE CONTENTIONS OF THE ASSESSEE IN PARA 12 ABOVE WHILE ADJUDICATING GROUND NO. 4 IN THE APPEAL OF THE ASSESSEE. AS REGARDS TELESCOPING BENEFIT IN RESPECT OF AMOUNT OF RS. 6 9 8 302/- ON ACCOUNT OF PEAK OF CASH DEFICIT SINCE THIS PLEA WAS NEVER RAISED BEFO RE THE LOWER AUTHORITIES IN THE IT(SS)A NO.183& 125/AHD/2004 21 INTEREST OF JUSTICE AND FAIR PLAY WE RESTORE THE ISSUE OF TELESCOPING TO THE FILE OF THE AO WITH THE DIRECTIONS TO EXAMINE THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY TO T HE ASSESSEE. WHILE CONSIDERING THE BENEFIT OF TELESCOPING THE ASSESSING OFFICER SHALL KEEP IN VIEW THE VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE DECISIONS IN THE CASE OF CIT V. DEVI PRASAD VISWANATH PRASAD [1969] 72 ITR 194 (SC) AND CIT VS. JHAVERBHAI BIHARILAL & CO.160 ITR 634(PATNA) . SUBJECT TO THES E DIRECTIONS GROUND NO. 7 IS DISPOSED OF. 19. GROUND NOS. 5 & 6 IN THE APPEAL OF THE REVENU E BEING GENERAL IN NATURE DO NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDI TIONAL GROUND HAVING BEEN RAISED IN TERMS OF RESIDUARY GROUND NO.8 IN THE APP EAL OF THE ASSESSEE ALL THESE GROUNDS ARE DISMISSED. 20. IN THE RESULT BOTH THE APPEALS ARE PARTL Y ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26TH D AY OF FEBRUARY 2010. SD/- SD/- (MAHAVIR SINGH) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED : 26 TH FEBRUARY 2010 PK/- COPY TO: 1. THE ASSESSEE 2. ACIT CENTRAL CIRCLE-2 BARODA 3. THE CIT(A)-IV AHMEDABAD 4. THE CIT CONCERNED BY ORDER 5. THE DR D BENCH DEPUTY REGISTRAR ITAT AHMEDABAD