Income Tax Appellate Tribunal - Jaipur
J C Home Tex, Jaipur vs Assistant Commissioner Of Income Tax ... on 10 July, 2024
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,"B" JAIPUR
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BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI,
vk;dj vihy la-@ITA No. 292/JP/2024
fu/kZkj.k o"kZ@Assessment Years : 2016-17
J C Home Tex, cuke Assistant Commissioner of
G- 164 B, Sitapura Industrial Vs. Income Tax,
Area Cirlce-07, Jaipur
Sanganer, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAFFJ 2493 P
vihykFkhZ@Appellant izR;FkhZ@Respondent
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s Assessee by : Sh. Tarun Mittal, CA &
Sh. Harshit Agarwal, CA
jktLo dh vksj ls@ Revenue by : Sh. Anoop Singh (Addl. CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 29/05/2024
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 10/07/2024
vkns'k@ ORDER
PER: RATHOD KAMLESH JAYANTBHAI, AM The present appeal is filed by the assessee aggrieved from the order of the Commissioner of Income Tax (Appeals)-04, Jaipur dated 16/01/2024 [here in after ld. CIT(A)] for assessment year 2016-17 which in turn arise from the order dated 28.12.2018 passed under section 143(3) of the Income Tax Act, by ACIT, Circle-07, Jaipur.
2ITA No. 292/JP/2024
2. In this appeal, the assessee has raised following grounds: -
"1. On facts and in circumstances of the case ld.CIT(A) has erred in confirming the action of ld.AO in invoking provisions of section 145(3) arbitrarily.
1.1 That, the ld. CIT(A) has further erred in confirming addition to the tune of Rs. 89,94,655/- by applying gross profit rate of 18.94% on entire turnover solely on his own presumptions.
1.2 That, the Ld. CIT(A) has further erred in confirming addition of Rs. 89,94,655/- out of total addition of Rs.1,25,60,000/- made by ld.AO on account of excess stock, solely based on the admission obtained in the statements recorded on oath during the course of Survey and without considering the submissions made and evidences adduced. Thus, the addition of Rs. 89,94,255/- deserves to be deleted.
1.3 That, the ld. CIT(A) has further erred in confirming the addition of Rs.10,77,000/- made by ld.AO on account of bogus expenses, solely on the basis of admission obtained from assessee in the statements during the course of survey.
1.4 That the Ld. CIT(A) has further erred in confirming addition of Rs.1,00,71,655/- (i.e. Rs.89,94,655/- on account of excess stock and Rs.10,77,000/- on account of bogus expenses) merely on whims & fancies and without appreciating the fact that assessee had already offered additional income of Rs.68,00,000/- worked out after completing books of accounts wherein all the entries contained in the seized records which do not find proper mention in the regular books of accounts maintained stood incorporated. Therefore confirming the addition made on mere assumptions without corroborating evidence deserves to be deleted in toto more particularly when all the entries alleged as unrecorded stood verified by Ld. AO in the Revised Trading account prepared by assessee to offer addition income as on the date of survey.
1.5. That, ld.CIT(A) has further erred in not allowing telescoping benefit to the tune of Rs.10,77,000/- against additional income of Rs.68,00,000/- offered by assessee on account of advances made, arbitrarily.
1.6 That the Ld. CIT(A) has further erred in ignoring the cardinal principal of law that only real income should be taxed and no hypothetical income could be 3 ITA No. 292/JP/2024 J C Home Tex vs. ACIT added on notional basis, thus addition made on notional basis deserves to be deleted.
2. The appellant craves the right to add, delete or amend any of the grounds of appeal either before or at the time of hearing of appeal."
3. Succinctly, the fact as culled out from the records is that the return of income for assessment year 2016-17 was e-filed on 17.10.2016 declaring total income of Rs. 1,68,13,781/-, which was processed u/s 143(1) of the IT Act, 1961. The case was selected for scrutiny under compulsory manual selection. Notice u/s 143(2) of the IT Act, 1961 was issued on 19.09.2017, which was duly served upon the assessee through e-filing website. Subsequently, upon change of incumbent, notices u/s 142(1) of the I.T. Act, 1961 were issued on 13.11.2018 and 09.12.2018 with digital signature requiring certain details / information through electronic mode. In compliance with these notices, the assessee uploaded replies on e-filing portal and submitted required details / explanation / justification which were perused and examined by ld. AO. Books of accounts were produced, which were examined on a test check basis by the ld. AO. The assessee firm engaged in the business of manufacturing of garments and home furnishing items for domestic retail chain companies. During the year under consideration, the assessee has declared gross profit at Rs. 4 ITA No. 292/JP/2024
J C Home Tex vs. ACIT 5,26,11,541/- on total sales/turnover of Rs. 25,89,59,093/- thereby giving a GP rate of 20.32%.
3.1 A survey action u/s. 133A of the Act was carried out at the business premises of the assessee firm on 16.02.2016 and was concluded on 18.02.2016. The statement of one of the partners of the assessee firm Shri Avnesh Sharma was recorded during survey proceedings. During the recording of that statement the partner of the firm surrendered a sum of Rs. 2,04,37,000/- on the following account as undisclosed income for the year under consideration:
1. Advances Given to Various persons Rs. 68,00,000/-
2. On account of Excess stock Rs. 1,25,60,000/-
3. On account of bogus expenses Rs. 10,77,000/-
Rs. 2,04,37,000/ 3.2 During the course of assessment proceedings, on perusal of return of income filed for the year under consideration, it was noticed that the assessee firm has disclosed only Rs. 68,00,000/- in its return of income filed on 17.10.2016 instead of Rs. 2,04,37,000/- as surrendered income while filling the return of income. In this manner, the assessee disclosed surrendered income less by Rs. 1,36,37,000/-.
5ITA No. 292/JP/2024
J C Home Tex vs. ACIT 3.3 As the case was selected for scrutiny, notice u/s. 142(1) dated 09.12.2018 was issued to the assessee firm asking them to show cause as to why the difference of Rs. 1,36,37,000/- should not be added to the income for the year under consideration on account of excess stock and bogus expenses as declared in the statement. In compliance the assessee filed a detailed reply explaining that when the stock physically inventoried, the books of accounts were not completed as on the date of survey, so the entries for which the goods received but remained to be included in the books were left the attention of the partner. The assessee also submitted that those purchases were made by an account payee cheque and in some cases the payment has also been made before the date of survey. The ld. AR of the assessee submitted that page no. 18 of the inventory sheets prepared by the survey team which contained the details of goods available in "Grey Outside packed" and the goods are in "Bale" which further support the contention of the assessee. The balance alleged excess stock of Rs. 53,17,973.33 which remained forms part of the closing stock. The reply of the assessee was considered but was not found tenable by the ld. AO.
6ITA No. 292/JP/2024
J C Home Tex vs. ACIT 3.4 As regards other disclosure amount the assessee contended that bogus expenses have been utilized to give advances which was disclosed. Therefore, telescoping benefit was asked in the assessment proceeding. These contentions raised were considered but not tenable as contended by the ld. AO and accordingly, an addition of Rs. 1,36,37,000/- was made as undisclosed income of the assessee.
3.5 The ld. AO also noted that the books of the assessee are not complete and correct and thus he invoked the provision of section 145(3) of the Act and made a lump sum addition of Rs. 2,00,000/- in the income of the assessee.
3.6 Finally, ld. AO completed the assessment vide order dated 28.12.2018 at a total income of Rs. 3,06,44,480/- by making an addition of Rs. 1,36,37,000/- on account of undisclosed income declared less by the assessee and a further addition of Rs. 2,00,000/- on account of trading addition.
4. Aggrieved from the order of the assessment, assessee preferred an appeal before the ld. CIT(A). Based on the grounds so raised by the 7 ITA No. 292/JP/2024 J C Home Tex vs. ACIT assessee, the ld. CIT(A) has partly allowed the appeal of the assessee. The relevant finding of the ld. CIT(A) is reiterated here in below:
"4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
A survey action was carried out in the business premises of the appellant partnership firm and during the survey the appellant made a surrender of additional income on account of three reasons. However in the return of income filed subsequently the appellant has not honoured the statements made by its partner and has offered additional income only partly. The two accounts where the additional income has not been offered in the ITR or has been offered by a lesser sum are namely bogus cash expenses and unexplained excess stock.
Bogus cash expenses (Rs. 10,77,000) Regarding the bogus cash expenses (Rs. 10,77,000) the appellant has claimed that the same gets covered by the undisclosed cash advances (Rs. 68 lakhs) due to telescoping on which surrender was made during the survey action and income on account of the same has been offered in the ITR and the income on account of bogus cash expenses (Rs. 10,77,000) has not been offered in the ITR.
The appellant has claimed the telescoping without explaining the facts of the case behind the telescoping. The factual position in this regard is required to be laid out by the appellant and onus in this regard is on the appellant. The same has been held so in the below mentioned two judgements of Hon'ble Allahabad High Court and Hon'ble Calcutta High Court as under:-
Bhaiyalal Shyam Behari v. Commissioner of Income-tax [2005] 276 ITR 38 (Allahabad)/[2006] 202 CTR 515 (Allahabad) [19-01-2005] "For adjudicating upon the plea of peak credit the factual foundation has to be laid by the assessee.
Piyush Poddar v. Commissioner of Income-tax, XVII [2017] 88 taxmann.com 599 (Calcutta)/[2017] 393 ITR 381 (Calcutta)[14-01-2015] "8. We have considered the rival submissions advanced by the learned advocates appearing before us. We are inclined to think that Mr. Saraf is correct in his submission that the factual foundation for applying the theory of peak credit was not laid by the assessee. The assessee may have impliedly done so, but expressly no such attempt is discernible to us. We should not be deemed to have express any opinion as to whether the peak credit theory is applicable to 8 ITA No. 292/JP/2024 J C Home Tex vs. ACIT the fact and circumstances of the case or is not applicable to the facts and circumstances of the case. That question is left to be decided by the Tribunal on the basis of evidence, which may be adduced before them and they shall allow letting in of necessary evidence, if the assessee so desires. The limited question to be considered is whether the assessee is entitled to any benefit on the basis of peak credit theory".
As per the above judgement the assessee is also required to adduce the evidence to claim credit of peak credit (similar for telescoping). In this regard, factual finding in the assessment order is as under:-
"The contention of the AR of the assessee that cash generated out of bogus expenses were utilised to give advances to various persons is not acceptable as it is not ascertained that whether the advances given after booking of bogus expenses. Moreover, the amount of bogus expenses might have been utilised for other purposes. The assessee could not prove the nexus between the amounts of bogus expenses booked and were utilised for the advances given. In such circumstances, the benefit of telescoping of Rs. 10,77,000/- cannot be allowed to the assessee against the advances given to various persons of Rs. 68,00,000/-. As, the partner of the assessee firm had admitted that the same as bogus expenditure, hence, a sum of Rs. 10,77,000/- is added to the total income of the assessee."
The appellant has not rebutted the above factual findings in the appeal. The three key findings are as under:-
It is not shown by the appellant that the cash advances were given after the unaccounted cash was generated out of bogus cash expenses.
It is not shown by the appellant that the cash claimed to have been given for certain expenses which were found to be bogus was not given or utilized for something else.
The assessee did not show the cash flow trail to show the generation and application of unaccounted cash.
Another important crucial element is that nowhere in the survey statement it is was stated that the cash out of bogus expenses was given as cash advances and this amount was offered to tax as additional income even in addition to offered additional income on account of cash advances. The statement recorded during survey cannot be brushed aside. It has some evidentiary value. Such statement also reflects the original and initial response of the person giving statement whereas the replies/statements given thereafter are likely to be improved upon versions and after thoughts.9 ITA No. 292/JP/2024
J C Home Tex vs. ACIT In the case of Bachittar Singh v. Commissioner of Income-tax [2010] 328 ITR 400 it is held by the Hon'ble Punjab & Haryana High Court as under:-
"6. It is not disputed that the statement was made by the assessee at the time of survey, which was retracted on May 28, 2003, and he did not take any further action for a period of more than two months. In such circumstances, the view taken by the Tribunal that retraction from the earlier statement was not permissible, is definitely a possible view. The mere fact that some entries were made in a diary could not be held to be sufficient and conclusive to hold that the statement earlier made was false. The assessee failed to produce books of account which may have been maintained during regular course of business or any other authentic contemporaneous evidence of agricultural income. In the circumstances, the statement of the assessee could certainly be acted upon.
7. As regards the judgments in Pullangode Rubber Produce Co. [1973] 91 ITR 18 (SC) and Ester Industries Limited [2009] 316 ITR 260 (Delhi) relied upon by the assessee, even though it may be open to show an earlier statement or an entry to be erroneous, in the present case, the Tribunal was justified in holding that the earlier statement was not proved to be incorrect. As regards the judgment of the Madras High Court in S. Khader Khan Son[2008] 300 ITR 157. we are of the view that even if the statement under section 133A was not at par with the statement under section 132(4) and did not have that evidentiary value, such statement cannot be held to be irrelevant material so as to be ruled out of consideration in totality of facts, particularly in the absence of regular books of account. The Tribunal rightly followed the observations of the Allahabad High Court in Dr. SC. Gupta [2001] 248 ITR 782 and of this court in Surinder Kumar [2006] 282 (TR 78 (P&H). Thus, having regard to the facts and circumstances of the case, the view taken by the Tribunal cannot be held to be perverse or illegal."
(Emphasis supplied) (In the above case the referred statement is recorded during survey. The above judgement is thus in the context of evidentiary value of statement recorded during survey) Dr. S.C. Gupta v. Commissioner of Income-tax [2001] 118 Taxman 252 (Allahabad) "6. As regards the assessee's contention that the statement having been retracted, the Assessing Officer should have independently come to a conclusion that there was additional income as sought to be assessed and that there was no material to support that there was such income, this contention in our view is not correct. As held by the Supreme Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 admission is an extremely 10 ITA No. 292/JP/2024 J C Home Tex vs. ACIT important piece of evidence though it is not conclusive. Therefore, a statement made voluntarily by the assessee could form the basis of assessment. The mere fact that the assessee retracted the statement could not make the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and, in fact, there was no additional income. This burden does not even seem to have been attempted to be discharged. Similarly, case P.K. Palwankar v. CGT [1979] 117 ITR 768 (MP) and CIT v. Mrs. Doris S. Luiz [1974] 96 ITR 646 (Ker.) on which also the learned counsel for the assessee placed reliance, are of no help to the assessee. The Tribunal's order is concluded by findings of fact and in our view, no question of law arises. The applications are, accordingly, rejected."
(Emphasis supplied) (In the above case the referred statement is recorded during survey. The above judgement is thus in the context of evidentiary value of statement recorded during survey.) In view of the above discussion that the appellant has not laid out the factual position behind claiming the telescoping and thus did not discharge its onus and also not shown the nexus and dates between the generation of cash and usage of the same in advancing of cash advances and considering the legal position and the statements of the partner during the survey, the ground of Appeal in regard to addition on account of bogus cash expenses of Rs. 10,77,000 is hereby dismissed.
Excess Stock and Lumpsum Trading Addition Now coming to the issue of the unexplained excess stock found during the survey and the extent to which it has been offered in the tax return by the appellant it is seen that during the survey the appellant clearly admitted regarding the unexplained excess stock of Rs. 1,25,60,000 found during the survey that this stock has been worked out after verification of the all details and also made a statement that this excess stock has been purchased by the firm out of the unexplained cash and such stock is out of the unexplained cash purchases and duly offered the same for the taxation as additional income. The Id. AO has rejected the books of accounts and made a lumpsum addition of Rs. 2 lakhs also. The Id. AO observed in this regard inter-alia that
(a) the assessee has not maintained stock register of its business and also did not maintain day to day quantitative & qualitative details of items.
(b) valuation of closing stock has been made on estimated basis. 11 ITA No. 292/JP/2024
(c) In the column No. 35(a) and 35(b) of Audit Report furnished in Form No. 3CD, regarding quantitative details of principal items the Auditor has mentioned remarks that Nil.
(d) during the course of survey, excess stock was found and books of account were not found complete on the day of survey.
(e) Since maintenance of quantitative and qualitative details of stock is necessary to ascertain the day-to-day activities of the business and to work out the correct trading results also. However, the assessee did not maintain such records and day-to-day quantitative and qualitative details of slock, therefore it cannot be said that the assessee has deduced its actual profits in the absence of such details.
(f) assessee's books of account cannot be accepted as complete and correct and therefore the true profits of the assessee's business cannot be deduced
(g) the trading results declared by the assessee cannot be verified. And in view of the discrepancies, the books of accounts of the assesse were rejected in the assessment order.
The appellant has submitted that as per Trading Account as per finalized books for the period 01.04.2015 to 19.02.2016. the GP is worked out at Rs. 5,00,52,299.33, as against GP Rs. 4,47, 34,326/- as per the trading account as on the date of survey prepared on the basis of incomplete books of accounts. In this manner assessee has declared additional income of Rs. 53,17,973.33 (5,00,52,299.33 - 4,47,34,326) on account of excess stock. However, as per submission of appellant, it is observed that this G.P. of Rs. 5,00,52,299 is after including the excess stock found during survey i.e. taking the actual stock (Rs. 2,96,24,738) found during survey. At the turnover of Rs. 23,58,21,590 the G.P. ratio works out to 21.22%.
whereas the G.P. of Rs. 4,47,34,326 during survey was as per the books of accounts as per stock in books (Rs. 1,70,65,394) and not by taking the actual stock found during survey.
12ITA No. 292/JP/2024
J C Home Tex vs. ACIT As per the submissions of the appellant the gross profit ratio for the year from the beginning of the year till the date of survey is 21.32% and from the date of survey to the end of the year is 11.06%.
From the above it is clear that there is abnormally low gross profit shown by the appellant in the period after the survey and this further goes on to show that the trading results shown for the year are not reliable coupled with the fact that excess undisclosed stock and other discrepancies were found during the survey. Also, as noted by the Id. AO, the appellant has not maintained stock register of its business and also did not maintain day to day quantitative & qualitative details of items. Valuation of closing stock has been made on estimated basis. In the column No. 35(a) and 35(b) of Audit Report furnished in Form No. 3CD, regarding quantitative details of principal items the Auditor has mentioned remarks that Nil.
Further the treatment shown by the appellant in the books regarding the unrecorded purchases is not in synchronisation with the clarifications and affirmations made by the appellant (partner of appellant) during the survey. Some of the important statements and affirmations made by the partner are as under:-
13ITA No. 292/JP/2024
J C Home Tex vs. ACIT 14 ITA No. 292/JP/2024 J C Home Tex vs. ACIT 15 ITA No. 292/JP/2024 J C Home Tex vs. ACIT 16 ITA No. 292/JP/2024 J C Home Tex vs. ACIT In none of the statements or the replies given by the partner of the firm in response to various questions including the questions on the issue of stock and purchases and sales and un-entered bills of the same and the physical quantification etc. nowhere there is not even any whisper from the partner that some stock has been received but the bills for the same were not yet received even when he has specifically mentioned in the statement that some of the job 17 ITA No. 292/JP/2024 J C Home Tex vs. ACIT work and some miscellaneous petty expenses are remaining to be entered in books.
As per the list of the unenetred bills submitted during the appeal it is seen that there are 47 such purchases which are claimed to have been unenetred in the books however the goods for the same were already part of the stock in trade of the Appellant. It is not a small number. Number of documents were impounded during the survey including the purchase and sale related documents and bills etc and there is no document regarding the delivery challan or lorry details or any letter or any other document which could have shown that the goods were actually received by the appellant but the bills were not yet received. The claim of the appellant thus is highly improbable and contradictory to records found during survey.
The partner replied in the statement that the stock in trade as per books of accounts was Rs. 1.5 cr. to 1.75 cr. and lateron upon the examination of the books of accounts the figure was actually found to be matching as the stock in trade as per books of accounts was found to be little over 1.7 cr. However if the claim of the appellant regarding unentered bills is accepted this takes the figure of stock in trade as per books of accounts to more than 2.5 cr which is almost 60% more than the figure informed by the partner during the survey and also is thus much less reliable than the figure which was found during the survey and which was matching with partner statement.
RETRACTION Another important crucial element is that the statement recorded during survey cannot be brushed aside. It has evidentiary value even if not equal to the value of statement u/s 132(4) and statement u/s 131 of the Act.
Statement recorded during survey also reflects the original and initial response of the person giving statement whereas the replies/statements given thereafter are likely to be improved upon versions and after thoughts. The subsequent responses given after much time has elapsed after the date of survey needs to be proved by the taxpayer with much stronger evidence to counter the facts provided by him during the course of survey action to be wrong.
In the case of Pr. CIT v. Shri Roshan Lal Sancheti [IT Appeal No 47 of 2018, dated 30-10-2018], Hon'ble Rajasthan High Court has inter-alia held that "Therefore, what we gather from the Assessment Order and on perusal of the above finding that the retraction was at the stage when the assessment proceedings were being finalized ie, almost after a gap of more than an year. Such a so-called retraction in our view is no retraction in law and is simply a self-serving statement without any material."18 ITA No. 292/JP/2024
J C Home Tex vs. ACIT "...........such retraction ought to have been generally made within reasonable time or by filing complaint to superior authorities or otherwise brought to notice of the higher officials by filing duly sworn affidavit or statement supported by convincing evidence.
..........Such retraction is required to be made as soon as possible or immediately after the statement of the assessee was recorded. Duration of time when such retraction is made assumes significance and in the present case retraction has been made by the assessee after almost eight months to be precise, 237 days."
The above judgement is in the context of statement recorded u/s 132(4) / 131 However the part of the judgement providing general law regarding retraction is equally applicable to retraction of statement recorded during survey.
In the case of Commissioner of Income-tax v. MAC Public Charitable Trust [2022] 144 taxmann.com 54 (Madras)/[2023] 450 ITR 368 (Madras) [31-10- 2022] it is held inter-alia that "63......... Unless the retractions are made within a short span of time, supported by affidavit swearing that the contents are incorrect and it was obtained under force, coercion and by lodging a complaint with higher officials, the same cannot be treated as retracted. This position laid down in catena of decisions by the various High Courts in Lekh Raj Dhunna (supra), Bachittar Singh (supra), Rameshchandra & Co. v. CII[1987] 35 Taxman 153/168 IIR 375 (Bom.), Dr. S.C. Gupta (supra), CIT v. Hotel Meriya [2010] 195 Taxman 459/[2011] 332 ITR 537 (Ker.), O. Abdul Razak (supra)."
The above judgement is in the context of statement recorded u/s 132(4). However the part of the judgement providing general law regarding retraction is equally applicable to retraction of statement recorded during survey. In the case of Bachittar Singh v. Commissioner of Income-tax [2010] 328 ITR 400 it is held by the Hon'ble Punjab & Haryana High Court as under:-
"6. It is not disputed that the statement was made by the assessee at the time of survey. which was retracted on May 28, 2003, and he did not take any further action for a period of more than two months. In such circumstances, the view taken by the Tribunal that retraction from the earlier statement was not permissible, is definitely a possible view. The mere fact that some entries were made in a diary could not be held to be sufficient and conclusive to hold that the statement earlier made was false. The assessee failed to produce books of account which may have been maintained during regular course of business or any other authentic contemporaneous evidence of agricultural income. In the circumstances the statement of the assessee could certainly be acted upon.19 ITA No. 292/JP/2024
J C Home Tex vs. ACIT
7. As regards the judgments in Pullangode Rubber Produce Co.[1973] 91 IIR 18 (SC) and Ester Industries Limited [2009] 316 ITR 260 (Delhi) relied upon by the assessee, even though it may be open to show an earlier statement or an entry to be erroneous, in the present case, the Tribunal was justified in holding that the earlier statement was not proved to be incorrect. As regards the judgment of the Madras High Court in S. Khader Khan Son [2008] 300 ITR 157, we are of the view that even if the statement under section 133A was not at par with the statement under section 132(4) and did not have that evidentiary value, such statement cannot be held to be irrelevant material so as to be ruled out of consideration in totality of facts, particularly in the absence of regular books of account. The Tribunal rightly followed the observations of the Allahabad High Court in Dr. S.C. Gupta [2001] 248 ITR 782 and of this court in Surinder Kumar [2006] 282 ITR 78 (P&H). Thus, having regard to the facts and circumstances of the case, the view taken by the Tribunal cannot be held to be perverse or illegal."
(Emphasis supplied) (In the above case the referred statement is recorded during survey. The above judgemerit is thus in the context of evidentiary value of statement recorded during survey.) In the case of Dr. S.C. Gupta v. Commissioner of Income-tax [2001] 118 Taxman 252 (Allahabad) it is held by Hon'ble Allahabad High Court that "6. As regards the assessee's contention that the statement having been retracted, the Assessing Officer should have independently come to a conclusion that there was additional income as sought to be assessed and that there was no material to support that there was such income, this contention in our view is not correct. As held by the Supreme Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 an admission is an extremely important piece of evidence though it is not conclusive. Therefore, a statement made voluntarily by the assessee could form the basis of assessment. The mere fact that the assessee retracted the statement could not make the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and, in fact, there was no additional income. This burden does not even seem to have been attempted to be discharged. Similarly cay P.K. Palwankar v. CGT [1979] 117 ITR 768 (MP) and CIT v. Mrs. Doris S. Luiz [1974] 96 ITR 646 (Ker.) on which also the learned counsel for the assessee placed reliance, are of no help to the assessee. The Tribunal's order is concluded by findings of fact and in our view, no question of law arises. The applications are, accordingly, rejected."
(Emphasis supplied) 20 ITA No. 292/JP/2024 J C Home Tex vs. ACIT (In the above case the statement was recorded during survey. The above judgement is thus in the context of evidentiary value of statement recorded during survey.) In view of the above judgements:-
The mere fact that the assessee retracted the statement could not make the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong.
even if the statement under section 133A was not at par with the statement under section 132(4) and did not have that evidentiary value, such statement cannot be held to be irrelevant material so as to be ruled out of consideration in totality of facts Unless the retractions are made within a short span of time, supported by affidavit swearing that the contents are incorrect and it was obtained under force, coercion and by lodging a complaint with higher officials, the same cannot be treated as retracted.
Retraction is required to be made as soon as possible or immediately after the statement of the assessee was recorded. Duration of time when such retraction is made assumes significance.
Statement recorded during survey also reflects the original and initial response of the person giving statement whereas the replies/statements given thereafter are likely to be improved upon versions and after thoughts.
In the present case there is no claim or document from the appellant that the statements made during the survey were retracted immediately after the survey. From the record it appears that the statements were retracted much later after several months during the course of assessment proceedings only. Whereas the appellant was immediately aware after the survey if the statement made during the survey was incorrect when he would have received the bills of the goods which were already part of the stock in trade but not recorded in the purchases ledger or books of accounts. The abnormal delay also further fortifies the view taken by the learned assessing officer that the so called unenterred purchase bills do not represent the actually unentered purchase bills for which the stock was already received by the appellant.
The appellant has not maintained stock register of its business and also did not maintain day to day quantitative & qualitative details of items. Valuation of closing stock has been made on estimated basis. In the column No. 35(a) and 35(b) of Audit Report furnished in Form No. 3CD, regarding quantitative details 21 ITA No. 292/JP/2024 J C Home Tex vs. ACIT of principal items the Auditor has mentioned remarks that Nil. The appellant can not show that it has deduced its actual profits in the absence of such details. Accordingly, it is not even possible for the learned assessing officer to verify the claim of the appellant that the goods were actually received before the date of survey and the Bills and other documents were received after that date of survey and such goods were not entered in the books. Appellant can't take advantage of the fact that no stock details were maintained. In fact any bills could be submitted by appellant with the claim that material was received earlier. It is a settled law that no one can take advantage of its own wrong.
From the above it is clear that there is abnormally low gross profit shown by the appellant in the period after the survey, explanation regarding the un-entered bills is unacceptable and other discrepancies & unaccounted income were found during the survey The gross profit ratio for the period upto the date of survey (as found during the survey) (excluding excess stock) is 18.97% which is very much similar to immediately preceding year.
Considering the totality of facts, trading results shown for the year are not reliable and are rejected. The decision of the ld. AO in the assessment order regarding rejecting the books of accounts is hereby upheld. The income is to be assessed considering the gross profit ratio of 18.94% (excluding excess stock i.e. the stock will be over and above this G.P.) which is exactly similar as immediately preceding year and also take care for the some expenses left over and not entered in the books of accounts on date of survey. This gives the meaning that had the survey not taken place on 19.02.2016 (which is just 1 month and little over 1 week prior than the end of year) the appellant would have shown a gross profit at the rate of 18.94% (excluding excess stock) considering the best of probabilities and considering judicial pronouncements about using the preceding year G.P. ratio when the books in the current year are rejected.
As per the gross profit ratio of 18.94% (excluding excess stock), the details for the year are worked out as under:-
The appeal end during the survey has on its own in the reply has stated that the excess stock was due to the cash purchases made by the appellant which were not disclosed. Thus the excess stock was not on account of the rate of the goods in the stock but the excess stock was on account of the excess quantity of 22 ITA No. 292/JP/2024 J C Home Tex vs. ACIT the items. It is an undisputed fact as is also mentioned in the subsequent submissions of the appellant in the proceedings. This fact along with the above analysis further shows that the excess stock was over and above the regular gross profit ratio maintained by the appellant. Excess cash if generated out of bogus purchases or out of suppression of sales would show actual gross profit ratio is over and above what is already declared by the appellant in earlier years also. Even if it is found that the excess cash was generated out of bogus indirect expenses that would have no impact on the gross profit ratio maintained by the appellant and such excess stock naturally would be over and above such gross profit ratio. The excess cash could have been sourced from several other sources which are possible both from disclosed or undisclosed sources of the person or the source from which such cash was sourced and even in such a scenarios the excess stock would be over and above the gross profit ratio. Be that as it may, in the case of Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-03-1977] it is held by the Hon'ble Supreme Court as under:-
"Now, the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him. If he disputes the liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the revenue is entitled to treat it as taxable income. This was laid down as far back as 1958 when this court pointed out in A. Govindarajulu Mudaliar v. Commisioner of Income-tax [1958] 34 ITR 807, 810 (SC) that:
"There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature.""
In the case of Kale Khan Mohammad Hanif v. Commissioner of Income-tax [1963] 50 ITR 1 (SC)[08-02-1963] it is held by the Hon'ble Supreme Court as under:-
"It seems to us that the answer to this question must be in the affirmative and that is how it was answered by the High Court. It is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, was exempt from taxation under the provisions of the Act. In the absence of such proof, the Income-tax Officer is entitled to treat it as taxable income: see A. Govindarajulu Mudaliar v. Commissioner of Income-tax [1958] 34 [TR 807 (SC)".23 ITA No. 292/JP/2024
J C Home Tex vs. ACIT As per judgements of Hon'ble Supreme Court in the case of CIT v. M.Ganapathi Mudaliar [1964] 53 ITR 623 (SC)/A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC), where the assessee has failed to prove satisfactorily the source and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assesse, it is not necessary for the department to locate its exact source.
The above legal principles are applicable to the present appeal. In view of the above discussion, the addition in the assessment order on account of excess stock found during survey and lumpsum addition after rejection of books of accounts, on both the accounts, in total, is sustained at Rs. 89,94,655. The appellant gets partial relief in this regard. Further the addition of Rs. 10,77,000 is also sustained as discussed in pre-paragraphs.
In view of the above discussion, Ground of Appeal No. 1 and 3 as taken together are partly allowed. Total addition in the assessment order on ground of appeal no. 1 and 3 is Rs. 1,36,37,000 and the same is reduced to Rs. 1,00,71,655/- (Rs. 89,94,655 + Rs. 10,77,000) in this order. Further Ground of Appeal No. 2 stands dismissed."
5. As the assessee was dissatisfied with the finding of the ld. CIT(A), wherein the appeal of the assessee was considered only in part. The assessee thus preferred the present appeal on the ground as reproduced hereinabove. To support the various grounds so raised by the ld. AR of the assessee, he has filed the written submissions and the same is reproduced herein below:
"Brief facts of the case are that assessee is a partnership firm and engaged in the manufacturing of garments and home furnishing items for domestic retail chain companies. Assessee is also engaged in export of the home furnishing items. A survey action u/s 133A was carried out at the business premises of the assessee and other sister concerns on 16.02.2016. During the course of survey, certain loose papers/documents were found and impounded, and the statements of the partner of the assessee firm, Sh. Avnesh Sharma were recorded on oath (APB 32-
67),wherein surrender of Rs. 2,04,37,000/- was obtained from him for the year under appeal on following items, based on incomplete books of accounts:24 ITA No. 292/JP/2024
J C Home Tex vs. ACIT
4. Advances Given to Various persons Rs. 68,00,000/-
5. On account of Excess stock Rs. 1,25,60,000/-
6. On account of bogus expenses Rs. 10,77,000/-
Rs. 2,04,37,000/ After completion of survey, assessee completed the books of accounts, duly incorporating all the items noted in loose papers found and impounded and also purchases worth Rs. 82,40,125/-, which though were physically available at assessee's premises, however bills were not entered in the books of account. As the books of accounts were incomplete on the date of survey, the same were completed later on and got audited. Accordingly, in the return of income filed u/s 139(1) of the Act, on 17.10.2016:
1. Additional income of Rs. 68,00,000/- was offered under the head "Income from Business or Profession" [as additional income actually determined on the basis of alleged advances found noted in the loose papers and not recorded in books and accounts on the date of survey].
2. Cash expenses of Rs.10,77,000/- for which admission was obtained by alleging the same as bogus, the same were claimed as telescoped and were set off against the advances of Rs. 68,00,000/- and therefore no separate income was offered on that count.
3. So far as admission obtained on allegation of excess stock is concerned, after completion of Survey, assessee prepared Trading account till the date of survey after duly incorporating sales bills, purchase bills and expenses vouchers which remained to be incorporated in books as on the date of survey. Accordingly, as against excess stock of Rs 1,25,59,344/- computed during the course of survey, adjustment towards purchase bills worth Rs. 82,40,125/-, expenses vouchers of Rs.
8,58,956/- and sales bills of Rs. 18,57,710/- was made and actual excess stock remained at Rs. 53,17,973/- was incorporated in books of accounts by taking the total value of physical stock at Rs. 2,96,24,738/- (APB 86) as inventoried and valued by survey team and thus the same was offered for taxation by including the same in the total profits of the assessee. By doing so the stock as per books of accounts stood increased by the amount of Rs. 53,17,973/- being the excess stock available with the assessee after reducing the cost of purchases not entered at the time of survey and also certain sales and expenses which remained to be entered in the books of accounts.
During the course of assessment proceedings, assessee furnished copies of all such vouchers for purchases, sales and expenses (APB 164-538), wherein no discrepancy whatsoever was pointed out by ld.AO. As submitted above, in the Trading account so prepared as on the date of survey (APB 86), value of closing stock was taken at Rs.2,96,24,738, i.e. the value of stock physically quantified and valued by the survey team and GP was worked out at Rs.5,00,52,299.33 as against Rs.4,47,34,326/- as per Trading account prepared by survey team during the survey and as such assessee computed additional gross profit of Rs. 53,17,973.33 (5,00,52,299.33 - 4,47,34,326) which was actual additional income offered on account of excess stock as admitted during the course of survey by one of the 25 ITA No. 292/JP/2024 J C Home Tex vs. ACIT partner of the assessee. Thereafter, by taking the value of stock as quantified and valued by the survey team as the opening stock on the very next day, the closing stock as on the last day of the previous year was computed and in this manner the income of the assessee is increased by the amount of profit of Rs. 53,17,973.33 due to variation in the actual value of stock and as recorded in the books of accounts.
Trading Account Pre & Post Survey
01.04.2015 To 19.02.2016
Particulars Before After Completion Particulars Before After Completion
Completion of of Books Completion of of Books
Books Books
Opening Stock 2,14,82,640.00 2,14,82,640.00 Sales 23,39,63,879.98 23,58,21,589.98
Purchases 11,75,81,188.50 12,58,21,313.50 Closing Stock 1,70,65,394.00 2,96,24,738.00
Direct Expenses 6,72,31,118.95 6,80,90,075.15
Gross Profit 4,47,34,326.53 5,00,52,299.33
Total 25,10,29,273.978 26,54,46,327.98 Total 25,10,29,273.97 26,54,46,327.98
8
Thus to summarize, it is submitted as under:
Stock as per Books of Accounts as on Date of Survey 1,70,65,394/-
Add: Excess Stock found during the course of survey 1,25,59,344/-
Total Value of Closing Stock as on 19.02.2016 (Just after 2,96,24,738/-
survey)
Break up of Excess Stock found during the course of Survey 1,25,59,344/-
Less: Pertaining to pending entries of Purchases 82,40,125/-
Excess Stock offered for Tax as part of Closing Stock 53,17,973/-
However, ld.AO completed the assessment, without considering the submission made and evidences adduced by assessee and also without pointing out any specific error or omission in the working of excess stock or in the bills and vouchers submitted in support of the same, had rejected the books of accounts and made trading addition of Rs.2,00,000/- and addition of Rs.1,25,60,000/- on account of excess stock (solely on the basis of admission obtained during survey) and further added Rs,10,77,000/- on account of bogus expenses by rejecting the plea of assessee regarding telescoping of the same against advances made of Rs.68,00,000/- as admitted by assessee and duly honoured by paying taxes.
26ITA No. 292/JP/2024
J C Home Tex vs. ACIT On appeal ,ld. CIT(A) upheld rejection of books of accounts u/s 145(3) and confirmed the order of ld.AO in not allowing telescoping of Rs,10,77,000/- towards the advances made, however trading addition was recomputed by ld. CIT(A) at Rs.89,94,655/- (as against trading addition of Rs.2,00,000/- and addition of Rs.1,25,60,000/- made by ld.AO on account of excess stock) by applying GP rate of 18.94% and further added the excess stock computed at the time of survey and also not allowed the credits claimed by the assessee towards incomplete books of accounts. With this background, detailed submission on ground of appeals raised is made as under:
Grounds of Appeal No. 1 to 1.6:
In grounds of appeal no.1 to 1.2 assessee has challenged action of ld. CIT(A) in confirming the rejection of books of accounts u/s 145(3) and thereafter confirming the trading addition of Rs.89,94,655/- as against Rs. 1,27,60,000/- made by the ld.AO.
In grounds of appeal no. 1.3, assessee has challenged the conformation of addition of Rs.10,77,000/- on account of bogus expenses. In grounds of appeal no. 1,4 & 1.5, assessee has challenged action of ld. CIT(A) in making all the additions primarily due to admission made by assessee during survey and thus not considering the plea of assessee regarding purchases worth Rs. 82,40,125/, being entered in books of accounts after survey In ground of appeal no.1.6, assessee has challenged action of ld. CIT(A) in computing income of assessee on notional basis, without showing any discrepancy in trading results shown by assessee, though no evidence was found in support of income being earned by assessee actually. As all the grounds of appeal, revolve around admission obtained from the assessee during survey, the same are inter-connected and are being dealt with together for the sake of convenience.
At the outset, it is submitted that as is evident from order passed by ld. CIT (A), invocation of provisions of section 145(3) was upheld primarily, because no day to day quantitative stock register was maintained by assessee and stock physically available at the time of survey was found in excess to the stock as per books of accounts.
In this regard, it is submitted that the assessee has maintained regular books of accounts on day to day basis which are duly audited by a reputed firm of Chartered Accountant who had not pointed out any defect therein. It is an admitted fact that at the time of survey, books of accounts were incomplete and department has impounded certain loose papers containing the purchases bills, sales bills and expenses vouchers which remained to be incorporated in the books of accounts. Therefore, after the conclusion of survey proceedings, assessee obtained he copies of such loose papers and documents impounded 27 ITA No. 292/JP/2024 J C Home Tex vs. ACIT during the course of survey and incorporated the same in the books of accounts. During the course of assessment proceedings, such completed books of accounts alongwith copies of bills and vouchers of purchases, sales and expenses which were incorporated in the books of accounts after survey were produced before the ld.AO who also examined the same on test check basis and found no defect. Solely because the books of accounts were incomplete and excess stock was found, it was alleged that assessee is not maintaining proper books of accounts and ld. AO invoked the provisions of section 145(3) of the Income Tax Act, 1961.
In this regard, at the outset, it is submitted that it is an established law that the books of accounts, if found incomplete as on the date of survey, the assessee should be given an opportunity to complete the same as to declare the real income. The hon'ble bench in the case of Jewels Emporium Vs ACIT in ITA NO. 303/Jp/2019 while dealing the similar issue has observed in para 11 at page 9 of the order (copy enclosed)
11. We also found that both the AO as well as ld. CIT(A) failed to appreciate the fact that sales to the extent of Rs. 33,57,000/- was duly incorporated and recorded in the books of accounts while completing the same after search and thus there remained no difference in the cash physically found and as per books of accounts as on the date of search, therefore, no adverse inference could be drawn. It is settled proposition of law that assessee should be allowed to complete its books of accounts upto the date of search. In this regard reliance is placed on the decision of the ITAT Ahmedabad Bench reported in 107 Taxman 85 in the case of V.M. Thakkar Vs. ACIT wherein it has been held that "It is incumbent upon Authorised officer during search or during assessment to allow the assessee to complete his books till date of search".
It is thus submitted that it is the duty of the assessing officer to allow the assessee to complete its books of accounts and thereafter the onus shifted upon the AO to bring on record the errors and omissions in the completed books of accounts before invoking the provisions of section 145(3). Merely stating that the books of accounts were not complete at the time of survey and without pointing out any error in the entries incorporated after the survey, it cannot be said that claim made by the assessee on account of said incorporated entries is wrong merely on assumptions and presumptions as has been held in the present case by the ld. Ao as well as by ld. CIT(A). It is further submitted that as per section 145(3), books of accounts can be rejected only if AO records satisfaction that books of accounts maintained by assessee are either incomplete or incorrect, however in the instant case, ld.AO has failed to point out even a single discrepancy in books of accounts completed after the survey and audited by qualified chartered accountants and produced before him for examination.
28ITA No. 292/JP/2024
J C Home Tex vs. ACIT In this regard reliance is placed on the following:
329 ITR 336 CIT v. Forech India Ltd. (Delhi) Undisclosed stock- Books of account incomplete at time of survey- Finding of Commissioner (Appeals) and Tribunal that stock related to import purchases verifiable from customs records- Accounts reconciled later- Finding of fact- Income-tax Act, 1961.
396 ITR 580 -Principal CIT Vs. Marg Ltd. (Bom) [DOD: 20.07.2017]:
Best judgment assessment - Scope of section 144 - Condition precedent - Rejection of books of account by Assessing Officer - Nothing on record to show satisfaction of Assessing Officer that books incorrect, incomplete or unreliable - Provisions of section 144 cannot be invoked - Income Tax Act, 1961, ss. 144, 145(3).
146 TTJ 476 Asstt. CIT vs. Intermedia Cable Communication (P) Ltd. (Pune 'B') Accounts - Rejection - Absence of defects/discrepancies in the accounts vis-à-
vis estimation of income - AO cannot reject the books of accounts unless the accounts of the assessee suffer from either of the twin reasons specified in s. 145(3) i.e., incompleteness or incorrectness - AO having nowhere expressly rejected the books of accounts of the assessee nor enlisted inaccuracies or incompleteness of the accounts by implication, rejection of books of accounts impliedly made by the AO and the estimation of income for the relevant years cannot be sustained.
In the circumstances it is humbly prayed that the results declared by the assessee are based on the books of accounts maintained and supported by the necessary bills and vouchers, thus the same deserve to be accepted. With regard to stock found in excess, it is submitted that, during the course of survey proceedings, value of the stock physically available was higher by Rs.1,25,59,344/- than that recorded in books of accounts, for which an admission was obtained from one of the partner of the assessee firm in the statements recorded on oath u/s 133A, it was submitted before the ld.AO and ld. CIT(A) that the same was due to non-incorporation of certain bills of purchases, sales and expenses vouchers and after inclusion of the same the real figure would be much less that what was worked out during the course of survey. Further during the course of assessment a detailed reply was filed (APB 79-86) the reconciliation and reason of the non-incorporation of the said bills in the books was stated and a copy of trading account pre and post incorporation of such entries was also submitted to explain the difference. It is a matter of fact that assessee did not challenge the quantity as well as value of stock as computed by survey team. However, assessee during the course of survey proceedings, in response to Question No 32, in clear and unambiguous terms stated that certain bills, vouchers etc. pertaining to the period prior to the date of 29 ITA No. 292/JP/2024 J C Home Tex vs. ACIT survey were not received from parties and were yet to be recorded in books though the value to this extent has been applied on the goods physically available and valued by the department. Relevant extracts of the statements so recorded are reproduced herein below:
iz'u 32 d`i;k crk;s fd vkids [kkrs cfga;ksa esa dc rd dk tek [kpZ Purchase, Sale vkfn dk bUnzkt gks pqdk gS ,oa D;k dEI;wVj ds vykok eSU;wvy [kkrk Hkh j[krs gS \ mÙkj 32 gekjh leLr [kkrk cfga;ka dsoy dEI;wVj ij j[kh tkrh gS] dsoy Section-wise Stock Register esa j[kk tkrk gS pwfa d dqN [kpksZa ds fcy tSls tkWc odZ o vU; fofo/k [kpsZa vkfn okmpj vHkh izkIr ugh gq, gS mudk bUnzkta ugh gks ik;k Fkk blds ckjs esa eSa vkidks ckn esa crk nwxa kA HkkSfrd lR;kiu ds fy, c;ku fy, x;s gSA LVkWd ds HkkSfrd lR;kiu ds ckn c;ku iqu% 'kq: fd;s x;sA During the course of assessment proceedings, it was submitted before ld. AO that there was raw material available with the assessee which was yet to be recorded in the regular books of accounts as some procedural formalities prior to its inclusion in the books were yet to be completed. Since the books of accounts were not complete in all respect as on the date of survey, the stock as per books of accounts as on the date of survey was Rs.1,70,65,394/- as against stock physically found at Rs. 2,96,24,738/-. The survey team, after comparing the value of the stock physically verified and value of stock recorded as per its books of accounts, worked out the excess stock at Rs. 1,25,59,344/. After completion of survey, during the course of assessment proceedings, assessee supplied copy of revised Trading account (APB 86) after duly incorporating all the pending entries, including purchases worth Rs. 82,40,125/- and adopting value of stock derived at Rs. 2,96,24,738/- and consequently gross profit was also revised at Rs. 5,00,52,299.33 as against gross profit of Rs. 4,47,34,326/- computed from Trading account prepared on the date of survey (APB -86). Thereafter by taking he value of the stock at Rs. 2,96,24,738/- i.e. the value worked out by survey team had completed the books of accounts for the year ended on 31.3.2016 and in this way assessee itself included he additional profit of Rs. 53,17,973.33 on account of excess stock in the net profit declared at the end of the year. In support of such revised Trading account, assessee also furnished copies of complete bills/ vouchers (APB 164-538) of which a detailed chart was also furnished to ld. AO at APB 84-85. However, as submitted above, ld.AO without pointing out any single discrepancy in the working and without doubting any such bill / voucher, brushed aside the Revised Trading account prepared by assessee in arbitrary manner and solely relied upon statements recorded during survey made the addition of the differential amount.
Ld. CIT(A) also disbelieved the claim of he assessee by observing that in the statements recorded during the survey assessee has only stated about the certain expenses vouchers and not stated about purchases and sales bills. However, he also has not given any credit for the expenses vouchers though he himself has accepted this fact. Ld. CIT(A) also failed to appreciate the fact that 30 ITA No. 292/JP/2024 J C Home Tex vs. ACIT assessee has produced all the details relating to the claim of such purchases etc. before ld.AO and before him also and no defect was found however, still no credit was allowed.
Relevant extracts of observations of ld. CIT(A) with regards to non consideration of the documents submitted in support of purchase entered while completing the books of accounts are at page 31 of the Ld. CIT(A)'s Order:
"As per the list of the unentered bills submitted during the appeal it is seen that there are 47 such purchases which are claimed to have been unentered in the books however the goods for the same were already part of the stock in trade of the Appellant. It is not a small number. Number of documents were impounded during the survey including the purchase and sale related documents and bills etc and there is no documents regarding the delivery challan or lorry details or any letter or any other document which could have shown that the goods were actually received by the appellant but the bills were not yet received. The claim of the appellant thus is highly improbable and contradictory to records found during survey."
In this regard, so far as observation of ld. CIT(A) that there were 47 purchases, however not a single document was found showing actual delivery of goods prior to the date of survey, though bills thereof were received afterwards, is concerned, it is submitted that firstly, such purchases were made from 15 parties (and not 47), and all of them were regular suppliers of assessee. In fact, the purchases which were entered while completing the books of accounts are majorly from those entities with whom the assessee is dealing regularly and such invoices are issued in regular course. However, no effort was made by ld.CIT(A) to even verify such purchases. At this juncture List of inventory of documents found and seized during the course of survey is reproduced as under for ready reference:
31ITA No. 292/JP/2024
J C Home Tex vs. ACIT It is submitted that out of above documents, except at serial no. 7 and 9, all other documents are in the nature of "Tally printouts" of books of accounts taken during the course of survey. Even in Annexure 7 also, there are certain tally printouts as well as certain vouchers. It is submitted that the survey proceedings continued for 3 days and no effort was made by the survey officials to collect 32 ITA No. 292/JP/2024 J C Home Tex vs. ACIT evidences apart from tally printouts i.e. purchase bills, freight receipt etc. At this juncture, kind attention of your goodself is invited to relevant extracts of Budget Speech of Finance Minister for F.Y.2003-04:
"Simplifying the procedure and methods employed during search and seizure, and during survey by the Income Tax department. First, hereafter, stocks found during the course of a search and seizure operation will not be seized under any circumstances. Second, no confession shall be obtained during such search and seizure operations. Third, no survey operation will be authorized by an officer below the rank of Joint Commissioner of Income Tax. Finally, books of account impounded during survey will not be retained beyond ten days, without the prior approval of the Chief Commissioner."
The said position was further clarified by CBDT vide Circular no.10 dated 2003, which clearly stated that focus and concentration should be on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments rather than on obtaining confession.
Whereas, in the instant case, entire focus was on obtaining surrender and not on collecting evidences, which is contrary to the spirit of CBDT Circular. In the backdrop of above factual position, it is submitted that had those unrecorded bills been already recorded in the books of found on the date of survey, there would be no difference in the stock physically found and as per books of accounts or the difference would have been very meagre. However, ld. CIT(A) did not accept contention of assessee and recomputed the gross profit declared by assessee. Basically, ld. CIT(A) bifurcated the trading results in pre and post survey period and concluded that GP rate prior to survey was (21.22%) more than post survey period (11.06%) and then concluded that treatment of purchases in books of assessee, was not in synchronization to the books of accounts.
In this regard, statements referred by ld.CIT(A) and conclusions drawn are discussed as under:
iz'u 28 vkids bl Premised essa D;k vkt dh rkjh[k esa fdlh vU; QeZ dk Stock ;k dksbZ vU;
lkeku Cash vkfn gS ;k vkidk Stock Cash D;k dgh vU; txg ij iM+k gS rks tkudkjh ns vkSj fdldk iM+k gS crk;s\ mRrj 28- gekjs ;gka ij eS- J.C. Papers dk izk-s Jh lqcks/k tSu dh dqN ys[kk cfg;ka iM+h gS ,oa mudk dqN Cash yxHkx 50]000@& :Ik;s vkt dh rkjh[k esa gksxk tks fd gekjs J.C. Antique ds dsf'k;j Jh egs'k ds ikl gh jgrk gS blds vykok eSa J.C. Home Tex dk Cash Hkh yxHkx tks vkt dh rkjh[k esa 1&1-25 yk[k gksxkA egs'k ds ikl gh jgrk gS tks fd gekjs Accountant furs'k Hkknoh ds }kjk okmpj cukus ij ogka ls oks Payment djrs gS blds vykok gekjs bl QeZ esa fdlh vU; dk LVkWd ugh gSa gkW gekjk dqN LVkWd 33 ITA No. 292/JP/2024 J C Home Tex vs. ACIT tkcodZ ds fy;s ckgj x;k gS ftldh Entry esa Book of Account esa ns[kdj crk nwx a kA Ld. CIT(A) has concluded that there is no mention regarding stock received but not recorded in books. In this regard, it is submitted that in this question, query was raised if stock of firm was lying somewhere else or stock of assessee is kept somewhere else/sent out of job work. As there was no specific query about stock received but not yet entered in books, no specific reply was given on this aspect.
iz'u 30- vkidh ys[kk cfg;ksa ds vuqlkj vHkh vkids ikl fdruk LVkWd gS crk;sa \ mRrj 30 esjs fglkc ls djhc 1-5 ls 1-75 djksM+ dk LVkWd ftlesa fd jkW esVSfj;y] Finished, WIP dqy feykdj gksxk ftldh fLFkfr eSa vkidksa ys[kk cfg;ksa ls lR;kfir dj nwxa kA Query was raised that how much stock was available "as per books of accounts" and it was stated by assessee that stock as per books would be around 1.5 to 1.75 crores and on actual verification also, stock as per books was found at Rs.1,70,65,394/-, which tallied with such statements. However, ld. CIT(A) has stated that after inclusion of Rs.82,40,125/- (i.e. purchases not recorded in books on the date of survey), stock value comes to Rs.2,53,05,519/- , which is materially different from statements, In this regard, it is submitted that query was raised regarding stock as per "books" and such purchases was not yet recorded in books at that time and the reply was given by assessee on the basis of incomplete books of accounts.
With regards to Question No.32 (as reproduced in above paras), ld. CIT(A) has observed that assessee did not mention anything about stock received but not recorded, it is noteworthy to mention here that no specific query was made regarding stock and assessee clearly stated that some of the bills/vouchers were not entered.
With regards to Question No.37, wherein surrender was obtained, it is submitted that surrender so made was not willful and stood retracted after completion of books of accounts.
With regards to question no. 38, 39 and 41, wherein assessee is sought to explain nature of documents found during survey, ld. CIT(A) has concluded that how it is possible that no delivery documents were not found with respect to stock found, for which corresponding purchase bills were entered after survey. In this regard, firstly as submitted above, it is reiterated that in a survey, which continued for as long as 3 days, department has merely seized printouts taken from Tally data and has not put effort to collect/ seize and analyse the supporting documentary evidences, which clearly proves the intention of survey officials to obtain surrender.34 ITA No. 292/JP/2024
J C Home Tex vs. ACIT It is further submitted that during survey, assessee was shown certain pages and he described the nature of such documents broadly and generally, so adverse inference drawn on this basis is not correct. Moreover, during the course of assessment proceedings, assessee has filed the copies of the freight vouchers and claimed that the freight for these goods was paid and duly recorded in the books of accounts much prior to the survey and due to pendency of quality check and verification, the same remained unrecorded in the books of accounts, which explanation was not found incorrect by ld.AO after verification of the books of accounts as no defect is pointed out in the same. The relevant extract of explanation so filed is reproduced for ready reference (APB 81):
"Assessee has limited place for storage of the goods thus the goods have been lifted from the transporter as per the requirement though the bill for the same has been received and in some cases payments is also made prior to lifting from the transporter. At the time of physical receipt of goods, the cartage @ Rs. 60/- per bale is paid which is duly recorded in the day books of respective day and can be verified from copy of day books impounded during the course of survey. Alter physical receipt of goods in the shape of bale, the same is got opened and measurement is being done. Thereafter the same is tested to check for quality and when the quality is approved the goods inward memo is prepared. On the basis of such goods inward memo, final entry in the books of accounts is made. A chart of total purchases of Rs. 82,40,125/- is enclosed containing the details like date of bill, name of party, bill no., amount, page number of inventory sheet prepared during the survey and its serial number. In support of the claim, we are also enclosing herewith the copies of all the bills of such purchases, copies of the goods delivery memo issued by the transporter at the time of taking the delivery of goods, copies of measurement sheets, copies of goods inspection reports and final goods inward memo prepared, based on which, final entry of purchases and stock records is made by the assessee."
This claim was then made before the ld. CIT(A), who also failed to appreciate the facts and completely ignored the fact that after survey, books of accounts were completed to incorporate all pending entries and effect thereof was duly appearing in revised profit as worked out by assessee at Rs.5,00,52,299.33 (till the date of survey), accordingly GP rate of entire year was computed at Rs.5,26,11,541 giving GP rate of 20.32%. In fact, ld. CIT(A) applied his own analogy and recomputed the gross profit of assessee by firstly, applying gross profit rate of 18.94% (i.e. GP rate of A.Y. 2015-16) on total turnover of Rs.25,89,59,093/- giving GP at Rs, 4,90,46,852/- and then adding entire excess stock of Rs.1,25,59,344/- as admitted during survey to such gross profit, giving GP of Rs.6,16,06,196/- and GP rate of 23.9%. Accordingly, difference between GP so computed at Rs.6,16,06,196/- and GP declared by assessee at 35 ITA No. 292/JP/2024 J C Home Tex vs. ACIT Rs.5,26,11,541/-, i.e. Rs. 89,94,655/- was added as Trading Addition. If the due credit of the entries for purchases and expenses totaling to Rs. 84,40,125/- remained to incorporated in the books of accounts at the time of survey is given to the assessee out of the additions confirmed by the ld. CIT(A) the resultant addition remained would be of Rs. 5,54,530/- only which is mainly due to the estimation only and deserves to be deleted.
At this juncture, it is submitted that the trading results for the year under consideration after getting incorporated such excess stock found during the course of survey are as under with the comparative results of earlier years.
S. No. AY Sales/Turnover GP GP (%)
1 2016-17 25,89,59,093.00 5,26,11,541.00 20.32%
2 2015-16 16,81,59,525.00 3,18,48,981.00 18.94%
3 2014-15 8,34,21,657.00 1,41,38,014.00 16.95%
Details of GP as computed with and without inclusion of excess stock of Rs. 53,17,973/-is tabulated as under for the sake of ready reference:
Particulars Amount/ % Turnover for the A.Y. 2016-17 25,89,59,093/- Gross Profit for entire year (without including excess stock offered 4,72,93,568/- of Rs.53,17,973/-) GP rate without including excess stock 18.26% Gross Profit for entire year (after including excess stock) 5,26,11,541/- GP rate after inclusion of excess stock offered 20.32%
From the perusal of chart above, it is clear that the rise in GP ratio is solely due to the fact that the value of excess stock found is duly incorporated in the books of accounts which has resulted into the increase in % of profits offered for taxation.
Whereas ld. CIT(A), without considering this, has computed GP rate of 23.9% by completely ignoring the fact that there is almost 50% rise in turnover and it is not possible for any business to achieve both increase in turnover and a simultaneous jump in profit also. In fact, in normal circumstances, increase in turnover is coupled with decrease in GP rate, whereas assessee has been able to maintain GP rate.
It is submitted that Income Tax Act provides two basic mechanisms for computing income, i.e. (i) presumptive taxation, whereby profit is computed by applying a fixed rate to turnover in the event assessee does not maintain proper 36 ITA No. 292/JP/2024 J C Home Tex vs. ACIT books of accounts and (ii) profit computed on the basis of regular books of accounts maintained by assessee and duly audited.
Whenever, department is not satisfied with the income declared by the assessee on the basis of regular books of accounts, it resorts to make trading addition. However, it is trite law that such addition cannot be arbitrary as has been done by ld.CIT(A) in present case. Ld. CIT(A) has grossly ignored the fact that if actual additional stock as offered by assessee (i.e. Rs.53,17,973/- is reduced), resultant GP would be Rs. 4,72,93,568/-, giving GP rate of 18.26%, which is in parity with previous year. Basically, ld.CIT(A) has computed trading addition on pick and choose method, i.e. firstly applied GP rate of A.Y. 2015-16 to entire turnover and then by further adding the alleged excess stock to GP so derived without allowing any credit for entries remained to be incorporated in the books of accounts at the time when such excess stock was computed by the survey team.
With regards to observations of ld. CIT(A), wherein action of ld.AO in doubting the purchases of Rs. 82,40,125/- incorporated by assessee is affirmed, as stated above, it is reiterated that during the course of assessment proceedings itself, assessee furnished complete details as well as bills of suppliers. So, if there was any doubt regarding genuineness of such purchases, ld.AO was having ample powers to conduct direct enquiries u/s 133(6) to issue summons to such parties, however the same was not exercised. It is submitted that the parties from whom such purchases was made are regular suppliers and to whom payment is made through banking channels.
Moreover, ld. CIT(A) has added entire excess stock as worked during survey (to GP computed by applying GP rate of 18.94% by ignoring that assessee himself has added stock to the tune of Rs.53,17,973/-), solely on the basis of statements of assessee, even though assessee has clarified as well furnished necessary evidences to prove that after completing books of accounts and recording purchases, which were yet to be recorded in books, excess stock comes to Rs. 53,17,973/- only as against Rs. 1,25,59,344/- worked out during survey and the same was incorporated by assessee and due taxes were paid. It was also submitted before ld. CIT(A) that assessee has never disputed the quantity taken by the department at the time of survey nor its valuation was disputed, thus the only issue is with regard to the completion of the books of accounts which is a legal right of the assessee and assessee should be permitted to record all the pending entries so that the correct stock could be worked out. The total goods worth of Rs. 82,40,125/- which were physically available with the assessee but the same were not recorded in the regular books of accounts thus a credit for the same deserved to be allowed. It was further submitted that all the payments of such purchases were made through payees account cheque and as stated above, Assessee even furnished confirmation of some of the suppliers duly confirming sale of such goods to assessee and receipt of payments in due course, thus the due credit of such 37 ITA No. 292/JP/2024 J C Home Tex vs. ACIT goods should be allowed for working out any excess stock. It was further submitted that as per page No. 18 of the inventory sheets prepared by the survey team which contained the details of goods available in "Grey Outside packed" and the goods are in 'Bale', which further proves the contention of the assessee that certain goods were available with the assessee which was in packed form and was not yet opened.
Thus, assessee clarified the reason for difference in value of stock found and recorded in books of accounts along with all the possible documentary evidences in support of such submission. On the other hand, explanation so furnished and documentary evidences filed were brushed aside, without assigning a single reason /discrepancy in the same.
It was also submitted that certain expenses were also incurred which remained to be recorded in the books of accounts as on the date survey, thus after completion of survey proceedings which continued for almost three days, all such purchase bills and expenses vouchers were recorded in the books of accounts. A trading account as on the date of survey was prepared where all such claims of purchases and expenses were made and the value of stock physically inventoried as closing stock was taken as assessee never challenged the quantity and valuation of stock carried out by survey team, which is as under:
Trading Account as per books from 01.04.2015 to 19.02.2016 Particulars Amount Particulars Amount Opening Stock 2,14,82,640.00 Sales 23,58,21,589.98 Purchases 12,58,21,313.50 Closing Stock 2,96,24,738.00 Direct Expenses 6,80,90,075.15 Gross Profit 5,00,52,299.33 Total 26,54,46,327.98 Total 26,54,46,327.98 From the perusal of the above, the GP is worked out at Rs. 5,00,52,299.33, as against GP Rs. 4,47, 34,326/- as per the trading account as on the date of survey prepared on the basis of incomplete books of accounts. In this manner assessee has declared additional income of Rs. 53,17,973.33 (5,00,52,299.33 - 4,47,34,326) on account of excess stock. In this manner assessee has included the excess stock actually available with it and incorporated the same in the books of accounts and net result of the same is reflected in the GP which is increased by a sum of Rs. 53,17,973.33 and ultimately resulted into the increase in net profit for the year declared by the assessee. As stated above, 38 ITA No. 292/JP/2024 J C Home Tex vs. ACIT the assessee has not disputed the quantity or valuation of the inventory taken during the course of survey and in fact day to day stock register has been prepared from the date of survey by taking quantity physically found as on the date of survey as opening stock and closing stock as on the last day of previous year i.e. as on 31.3.2016 was worked out. The only claim of the assessee before ld.AO was that the books may please be allowed to be completed as on the date of the survey and due cognizance of the bills/ vouchers not recorded in the books of accounts be given, which is a legal right of assessee. However, submission so made was brushed aside and addition of Rs. 1,25,60,000/- was made on account of alleged excess stock solely on the basis of admission made by assessee during survey.
Legal Submission: Kind attention of the hon'ble bench is also invited to the fact that the statements as recorded during survey are not the statements capable of giving any credence as the same were recorded on oath u/s 133A without there being any circumstances to record such statements on oath and the Hon'ble Supreme Court time and again affirmed such statements to be of no legal consequence. This hon'ble bench in numerous cases has held that no addition could be made on the basis of the admission taken on oath from the assessee in the statements recorded u/s 133A and such orders also get confirmation from the hon'ble jurisdictional high court. Few of the decisions are as under:
1. Shri Anu Milk Products (P) Ltd., ITA No. 122/JP/12 upheld by Hon'ble High Court in Appeal No. 74/2014 dated 18.09.2017.
2. Maverick Share Brokers (P) Ltd., ITA No. 701/JP/12, upheld by Hon'ble High Court in Appeal No. 14/2016.
3. Roshan Lal Lodha, Rajasthan High Court (Appeal No. 185/2014 order dated 03/11/2015)
4. Ratan Textiles (P) Ltd. ITA No.525-528/JP/2016 As a matter of repetition, it is once again reiterated that the ld. AO as well as ld.
CIT(A) have failed to rebut the additional income offered by the assessee with any documentary evidence and solely proceeded with the surrender made by the partner in the statements recorded during the course of survey, thus such addition is not tenable.
Your goodself would appreciate that section 133A(3)(iii) empowers an IT authority to record the statement of any person which may be useful for or relevant to any proceedings under the Act. However, section does not authorises IT authority to administer oath and therefore such statements do not have evidentiary value and cannot be the solely relied upon for making addition in the absence of any other tangible evidence. No cognizance therefore, can be attached on such statements. The same therefore deserves to be ignored. Your honours would appreciate that unlike statements recorded u/s 132(4), during the course of search, which are permitted to be used as evidence in any proceeding under either the 1922 or the present Act, there is no such sanctity conferred on a statement recorded under Section 133A(iii). The utility of a 39 ITA No. 292/JP/2024 J C Home Tex vs. ACIT statement recorded in the course of survey is limited to the extent to which it is useful or relevant to any proceeding under the Act. Thus, a statement recorded in the course of survey can, at best, support a proceeding for assessment; that is, where the Assessing Officer has some corroborative material / documentary evidence in his possession, based on which he comes to the conclusion that a particular income/expense has been unaccounted / undisclosed and only when such material evidence is found or brought on record, then for making addition, the same may be given support from the statement recorded in the course of survey. However, in absence of any documentary evidence found during the course of survey, the addition made merely on the basis of statements is not sustainable.
Coming to the facts of the case, it is submitted that, due to so many sudden queries within a short a span of time and that too in a charged atmosphere for a common man created due to survey, the partner of the assessee firm agreed and signed on the dotted lines to the whatever interpretation was made by officials regarding a particular query and in this manner, admission of Rs. 2,04,37,000/- was obtained from him for the year under appeal. It is submitted that such admission was made by Sh. Avnesh Sharma, without deeply and properly referring to the regular books of accounts and also without fully and properly cross verifying the entries in loose papers with the entries already made in books of accounts which were not complete as on that day (as same was also not possible in the short time and also due the psychological pressure of presence of so many Income Tax officials). It is pertinent to note here that sum of Rs.2,04,37,000/- (additional income admitted) represented receipts as well as payments as appearing in the loose papers which were alleged as not recorded in the books of accounts without full and proper verification and also the value of excess stock. Such admission was made on the dotted lines as was asked to be admitted as additional income over and above the regular income by the survey officials who recorded the statements (APB 32-67). After the survey, upon receipt of the copies of loose papers and documents so impounded, books of accounts were completed and whatever additional income was noticed on completion of books of accounts, same was offered for taxation. However, ld. AO observed that Shri Avnesh Sharma, partner of the assessee firm, in his statements recorded during the course of survey u/s 133A on 18.02.2016 (APB 32-67), has admitted the additional income of Rs. 2,04,37,000/- for the year under appeal and thus made addition of Rs. 1,36,37,000/- holding the same as differential amount and ignored the fact that in addition to Rs. 68.00 lacs offered in the computation of income, assessee further offered a sum of Rs. 53,17,973.33 which is included in the profit so declared.
In this regard reliance is also placed on following case law:
CIT vs S. Khader Khan Son (Supreme Court) 323 ITR 480: Relevant extracts of the said judgement are reproduced herewith:40 ITA No. 292/JP/2024
J C Home Tex vs. ACIT "From the foregoing discussion, the following principles can be culled out:
(i) .............. (ii) In contradistinction to the power under section 133A, section 132(4) of the
Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law, vide Paul Mathews and Sons v. CIT [2003] 263 ITR 101 (Ker.);
(iii) The expression "such other materials or Information as are available with the Assessing Officer" contained in section 158BB of the Income-tax Act, 1961, would include the materials gathered during the survey operation under section 133A, vide CIT v. G. K. Senniappan [2006] 284 ITR 220 (Mad.) ;
(iv) The material or information found in the course of survey proceeding could not be a basis for making any addition in the block assessment, vide decision of this court in T. C (A) No. 2620 of 2006 (between CIT v. S. Ajit Kumar [2008] 300 ITR 152 (Mad.);
(v) Finally, the word "may" used in section 133A(3)(iii) of the Act, viz., "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act", as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under section 133A are not conclusive piece of evidence by itself.
For all these reasons, particularly, when the Commissioner and the Tribunal followed the circular of the Central Board of Direct Taxes dated March 10, 2003, extracted above, for arriving at the conclusion that the materials collected and the statement, obtained under section 133A would not automatically bind upon the assesses we do not see any reason to interfere with the order of the Tribunal.
Accordingly, finding no substantial question of law arises for consideration, the tax case appeal stands dismissed.
Paul Mathews and Sons Vs. CIT (Ker.) 263 ITR 101 The provision also enables the income-tax authority to impound and retain in his custody for such period as he thinks fit any books of account or other documents inspected by him, provided the authority records his reasons for doing so and also shall not retain the books of account for a period not exceeding 15 days. Section 133A(3)(iii) enables the authority to record the statement of any person which may be useful for, or relevant to, any proceeding 41 ITA No. 292/JP/2024 J C Home Tex vs. ACIT under the Act. Section 133A, however, enables the income-tax authority only to record any statement of any person which may be useful, but does not authorize taking any sworn statement. On the other hand, we find that such a power to examine a person on oath is specifically conferred on the authorised officer only under section 132(4) of the Income-tax Act in the course of any search or seizure. Thus, the Income-tax Act, whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been expressly provided whereas section 133A does not empower any Income- tax Officer to examine any person on oath. Thus, in contradistinction to the power under section 133A, section 132(4) of the Income-tax Act enables the authorised officer to examine a person on oath and any statement made by such person during such examination can also be used in evidence under the Income-tax Act. On the other hand, whatever statement is recorded under section 133A of the Income-tax Act it is not given any evidentiary value obviously for the reason that the officer is not authorised to administer oath and to take any sworn statement which alone has evidentiary value as contemplated under law. Therefore, there is much force in the argument of learned counsel for the appellant that the statement elicited during the survey operation has no evidentiary value and the Income-tax Officer was well aware of this. Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala and another 91 ITR 18 has held that "Such admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect and the assessee should be given a proper opportunity to show that the books of account do not disclose the correct state of facts." Shri Basant Bansal Vs. CIT [ITAT Jpr Bench in ITA no. 534/JP/2012] Held that neither any worthwhile incriminating material, information, and evidence was discovered as a result of impugned multiple search operations nor the additions sustained are based on any such material. The sole basis of additions is the disclosure which we have held to be involuntary. Consequently the additions do not conform to the mandate of sec 153A. AIR 1976 SC 376, Shri Krishan vs. Kuruksheta University Admission made in ignorance of supporting record and legal rights or under duress cannot bind such statement or disclosure.
DCIT v. Pramukh Buildings (2008) 112 ITR 179 (Ahd), It was held that even in the absence of proof of coercion or pressure, the statement by itself cannot be taken as conclusive. Therefore, mere absence of proof of pressure, threat, coercion or inducement is not proved the statement cannot be held as conclusive and additions cannot be made by solely relying on statement or a letter.
42ITA No. 292/JP/2024
J C Home Tex vs. ACIT In view of above, it is submitted that trading addition made by ld.CIT(A) by re- computing gross profit solely on the basis of excess stock worked out during survey, is not in accordance with law and deserves to be deleted. Further, it is a cardinal principle of law that only real income should be taxed and no hypothetical income could be added. In the case of assessee, books of accounts were duly audited by chartered accountant without any adverse remarks and thus did not call for any addition. However, ld .CIT (A) has re computed profit of assessee on his own presumptions without bringing any rebutting documentary evidences, on the basis of assessee has computed excess stock. By doing so, ld. CIT(A) has taxed the income, which was never earned by assessee, solely on the basis of statements of Sh. Avnesh Sharma, which remained uncorroborated.
In this regard reliance is placed on the following:
Hon'ble Supreme Court judgement in the case of CIT vs Godhra Electricity Ltd. has held as under (225 ITR 746) "Income Tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of income and its receipt, but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in book keeping, an entry is made about a hypothetical income, which does not materialize."
With regards to not allowing benefit of telescoping of expenses to the tune of Rs.10,77,000/- alleged as bogus, it is submitted that while filing the Return of Income after survey, additional income of Rs. 68.00 lacs was offered, being income surrendered on account of advances made to job workers. As against this, assessee claimed benefit of telescoping of Rs.10,77,000/- on the contention that cash generated due to such bogus expenses would have been utilized for making advances and if separate addition is made on both the counts, the same would tantamount of double addition. However, both ld.AO rejected the claim of telescoping, which stood confirmed by ld.CIT(A). In this regard, it is submitted that basically during the course of survey, on the basis of pages 14 and 15 of Annexure AS 7, which were in the nature of self- made vouchers of Wages dated 31.12.2015 and 04.02.2016 of 4,97,000/- and Rs.5,80,000/- respectively.
Similarly, on the basis of page no 4 of Annexure AS - 9 and its backside, certain details of advances made in cash were found noted, additional income of Rs.68 lacs was admitted. Relevant extracts of statements of Sh. Avnesh Sharma as recorded during survey are reproduced hereunder for the sake of ready reference:43 ITA No. 292/JP/2024
J C Home Tex vs. ACIT iz'u&43 tSlk vkius mij crk;k fd i`"B 4 esa ,oa i`"B 4 ds Back Page esa yksxksa dks fn;s x;s Advance dh Detail gSa ftldk uspj vkius Li"B uh fd;k gS ,oa ;g ugh crk;k fd D;k bu Advance dh Entry ys[kk cfg;ksa esa dh xbZ gS fd ughA bu ukeksa ls ;g Hkh izrhr gksrk gS fd ;g Advance ds Figure actual ugh gSAa vr% i`"B 4 ,ao i`"B 4 ds Back Page esa fy[ks x;s fuEu ukeksa vkSj ,oa mlds lkFk fy[ks xbZ Figure/Amount dks Li"V djsa vkSj ;g fdl rjg ds Advance gS ;g Hkh crk;sAa mRrj&43 Ann.A-9 Page-4, 16.12.2015 Back Side of Page-4 20.12.2015 ykykjke 600 jke/ku 600 ';keyky 500 gtkjhyky 500 xksj/ku 700 lqj's kpUnz 500 iUukyky 700 iou dqekj 500 eksrhyky 600 egkohj 500 ?khlwjke 500 bLekby 600 Total 3600 Total 3200 Due Date 22/02/2016 Due Date 07/03/2016 eSa vkidks ;g crkuk pkgrk gwaw fd Ann. 9 ds Page 4 ,oa mlds Back Side esa tks uke fy[ks gSa mudksa muds lkeus fy[ks gq, Amount ;k jkf'k esa 3 'kwU; vkSj yxkus ds ckn tks jkf'k curh gS mruk Advance Job Work ds iSVs udn fn;k x;k gS TkSls fd ^^ ykykjke 600 ^^ dk eryc gS Jh ykykjke dks Job Work ds iSVa s 6 yk[k :Ik;s Advance udn esa fn;s x;s gSA blh rjg bu O;fDr;ksa dks nh xbZ dqy jkf'k 68]00]000@&¼vMlB yk[k :Ik;s ek=½ gksrh gS tks fd udn esa Advance fn;s x;s gS D;kafs d ;s yksx gekjk Job Work dk dk;Z djrs gS ml i`"B esa fy[kh Due Date dk eryc gS fd ml Date rd eky rS;kj gekjs ikl vk tkuk pkfg,A bu Entries dh gekjh ys[kk cfg;ksa esa dgh dksbZ fglkc fdrkc ugh j[kk x;k gS blfy;s mDr Cash Payment dk L=ksr crkus esa eSa vleFkZ gWAw vr% mDr 68]00]000@& :Ik;s ds vfxze dks eSa vius v?kksf"kr L=ksra ksa }kjk vftZr dh xbZ vk; ekurs gq, pkyw forh; o"kZ gSaSA pkyw foRr o"kZ dh vk; ekurs gq, djkjksi.k ds lefiZr djrk gww vkSj bl ij fu;ekuqlkj tks Hkh Tax Liabilities cusxh mldksa eSa 31 ekpZ ls igys tek djk nwx a kA It is submitted that both the vouchers of bogus expenses and payments as advances made were found in loose papers and were treated as unexplained and cumulative figure was taken as additional undisclosed income of the assessee, without considering the fact that such cash available on account of bogus expenses as recorded in books, ultimately formed source in cash for making advances.
However, ld. CIT(A) has not allowed the benefit of telescoping solely by alleging that assessee has failed to establish the nexus between cash advances and bogus expenses. In this regard, it is submitted that so far as expenses were treated as bogus, i.e. not incurred actually, cash to that extent was available with assessee throughout the period. Moreover, no instance whatsoever has been brought on record by ld.AO, of utilization of cash so generated elsewhere nor any material was found during the survey indicating the use of such money 44 ITA No. 292/JP/2024 J C Home Tex vs. ACIT elsewhere rather these advances favours the contention of the assessee, therefore denial of telescoping merely alleging that cash flow trail was not furnished by assessee is not correct. It is submitted that ld. CIT(A) has relied upon certain case laws related to peak working and has thus concluded that assessee could not provide the linking between cash available and advances made. In this regard, it is submitted that peak credit theory is usually applied to compute additional income in the case assessee has borrowed as well as lent money/ made cash deposits as well as withdrawals whereas in the instant case, cash available with assessee is of its own and though expenses were booked, cash to that extent actually remained with assessee. In view of above, it is submitted that assessee has rightly claimed telescoping set off of bogus expenses of Rs.10,77,000/- towards surrender of Rs.68,00,000/- made towards advances made and the same deserves to be allowed as such."
6. To support the contention so raised in the written submission reliance was placed on the following evidence / records:
S. No. PARTICULARS PAGE NOS.
1. Copy of ITR and computation of income for A.Y.2016-17 1-5
2. Copy of Tax Audit Report for the year ending 31.03.2016 6-20
Copy of Balance Sheet and Trading & Profit & Loss account for the year ended
3. 21-31 31.03.2016 along with its schedules Copy of statements of Shri. Avnesh Sharma , Partner recorded during survey
4. conducted on 18.02.2016 along with Annexure S : Detailed Stock Inventory 32-67 taken during Survey Copy of e-proceeding response acknowledgement dated 19.11.2018 along with
5. 68-71 enclosures.
6. Copy of notice u/s 142(1) dated 09.12.2018. 72-74 Copy of e-proceeding response acknowledgement dated 18.12.2018 along with
7. 75-76 enclosures.
Copy of e-proceeding response acknowledgement dated 18.12.2018 along with
8. 77-86 enclosures.45 ITA No. 292/JP/2024
J C Home Tex vs. ACIT S. No. PARTICULARS PAGE NOS.
Copy of CIT submission acknowledgement dated 19.01.2021 along CIT written
9. 87-105 submission.
10. Copy of Purchase Register. 106-163 Copy of Purchase bills along with supporting documents recorded post survey
11. 164-538 date
12. Copy of bank statement. 539-558
7. In addition to the written submission at the time of hearing of the appeal, the ld. AR of the assessee vehemently argued that the survey team conducted a detailed survey on three days at the business premises of the assessee. A statement of the partner Shri Avnesh Sharma was recorded and based on that statement disclosure of Rs. 2,04,37,000/- was obtained as recorded in the statement. The addition so made in the assessment order and confirmed by the ld. CIT(A) is merely based on that statement. The ld. AR of the assessee submitted that the Hon'ble Supreme Court has held in the case of CIT Vs. S. Khader Khan Son [ 79 DTR 184 (SC) ] that section 133A does not empower any IT authority to examine any person on oath. Thus, any such statement has no evidentiary value. Therefore, any admission made during survey in a statement it cannot by itself be made the basis for making the addition. Therefore, the 46 ITA No. 292/JP/2024 J C Home Tex vs. ACIT addition made by ld. AO and sustained by ld. CIT(A) has no merits and is required to be deleted based on the set of evidence placed on record. 7.1 Without prejudice to that the ld. AR of the assessee submitted that the assessee has not disputed the valuation as well as the value derived at Rs. 1,25,59,344/- being the amount of alleged excess stock found at the time of survey. But while arriving that excess stock, the assessee contended that value of purchase bills for an amount of Rs. 82,40,125/- which were pending to be entered into the accounts required to be reduced from the amount of the excess stock found by the survey team. He demonstrated that if those purchases are considered then the difference as alleged excess stock amounts to Rs. 53,17,973/-. The said amount was considered by the assessee as part of the closing stock and is part of the books of account of the assessee and therefore, without considering that aspects no additions can be made.
7.2 In the assessment proceeding the assessee submitted as to how they have adhered to the disclosure and the said fact is duly mentioned in the assessment order at page 8. The relevant part of the submission made 47 ITA No. 292/JP/2024 J C Home Tex vs. ACIT by the assessee during the assessment proceeding is reproduced here in below for the sake of convenience:
"Besides this certain expenses were also incurred which remained to be recorded in the books of accounts as on the date survey, thus after completion of survey proceedings which continued for almost three days, all such purchases bills and expenses vouchers were recorded in the books of accounts. A trading account as on the date of survey is prepared where all such claims of purchases and expenses has been made and the value of stock physically inventoried as closing stock is taken as assessee never challenged the quantity and valuation of stock carried out by survey team, which is as under:
Trading Account as per books from 01.04.2015 to 19.02.2016 Particulars Amount Particulars Amount Opening 2,14,82,640.00 Sales 23,58,21,589.98 Stock Purchases 12,58,21,313.50 Closing 2,96,24,738.00 Stock Direct 6,80,90,075.15 Expenses Gross 5,00,52,299.33 Profit Total 26,54,46,327.98 Total 26,54,46,327.98 From the perusal of the above, the GP is worked out at Rs. 5,00,52,299.33, as against GP Rs. 4,47, 34,326/- as per the trading account as on the date of survey prepared on the basis of incomplete books of accounts. In this manner assessee has declare additional income of Rs. 53,17,973.33 (5,00,52,299.33-4,47,34,326) on account of excess stock. In this manner assessee has included the excess stock actually available with it is incorporated 48 ITA No. 292/JP/2024 J C Home Tex vs. ACIT in the books of accounts and net result of the same is reflected in the GP which is increased by a sum of Rs. 53,17,973.33 and ultimately resulted into the increase in net profit for the year declared by the assessee. It may further be appreciated that assessee has not disputed the quantity or valuation of the inventory taken during the course of survey and in fact day to day stock register has been prepared from the date of date of survey by taking quantity physically found as on the date of survey as opening stock and closing stock as on the last day of previous year i.e. as on 31.3.2016 was worked out. The only claim of the assessee is to let the books be completed as on the date of the survey and take the due cognizance of the bills/ vouchers not recorded in the books of accounts, which is a legal right of assessee."
7.3 Even before the ld. CIT(A) the assessee clarified the issue of declaration of excess stock and stated said fact is part of the submission reproduced at page 26 of the order of the ld. CIT(A). The said clarification made by the assessee reads as under ;
"The appellant has submitted that as per Trading Account as per finalized books for the period 01.04.2015 to 19.02.2016. the GP is worked out at Rs. 5,00,52,299.33, as against GP Rs. 4,47,34,326/- as per the trading account as on the date of survey prepared on the basis of incomplete books of accounts. In this manner assessee has declared additional income of Rs. 53,17,973.33 (5,00,52,299.33 - 4,47,34,326) on account of excess stock."
7.4 The ld. AR of the assessee submitted that there is reference of these aspect of the matter in the order of the lower authority but there is no finding of the ld. CIT(A) on this issue except analysis of the gross profit and statement recorded at the time of survey. The relevant observation of the ld. CIT(A) while dealing with the issue is reproduced here in below:
"As per the submissions of the appellant the gross profit ratio for the year from the beginning of the year till the date of survey is 21.32% and from the date of survey to the end of the year is 11.06%, 49 ITA No. 292/JP/2024 J C Home Tex vs. ACIT From the above it is clear that there is abnormally low gross profit shown by the appellant in the period after the survey and this further goes on to show that the trading results shown for the year are not reliable coupled with the fact that excess undisclosed stock and other discrepancies were found during the survey. Also, as noted by the Id. AO, the appellant has not maintained stock register of its business and also did not maintain day to day quantitative & qualitative details of items. Valuation of closing stock has been made on estimated basis. In the column No. 35(a) and 35(b) of Audit Report furnished in Form No. 3CD, regarding quantitative details of principal items the Auditor has mentioned remarks that Nil."
8. Though ld. CIT(A) aware of the arguments of the assessee, remained silent on the issue. On being asked about the clarity on the claim that the closing stock disclosed by the assessee is covering the excess stock found or not? How the same can be considered as included in the closing stock. Based on that question raised by the bench on the next date of the hearing the ld. AR of the assessee relying to the books of account, tax audit report already on record also filed an application under rule 29 wherein to bring the following facts on record:
"Kindly refer to the appellate proceedings in progress in the case of above stated assessee.
In this regard, the humble appellant presents this application under Rule 29 of the Income Tax Appellate Tribunal Rules. 1963 with the following facts for your kind consideration.
(Relevant to Grounds of Appeal Nos. 01 to 1.4):
1. That, income tax assessment conducted survey u/s 133A, in the case of assessee on 16.02.2016. During the course of survey, stock worth Rs.
1,25,59,344/- was found in excess to that recorded in books of accounts on that day;
50ITA No. 292/JP/2024
2. That, as the books of accounts were incomplete on the date of survey and certain invoices/vouchers in relation to the transactions prior to survey were recorded in the books only after survey. Accordingly, bills worth Rs. 82,40,125/- related to purchases made by assessee prior to survey, were also incorporated in books only after survey:
3. That, differential amount of stock, i.e. Rs. 53,17,973/- (viz. 1,25,59,344/- less Rs. 82,40,125/-), stood incorporated in closing stock in Trading account as on the date of survey and (which stood carried over to Trading account for post survey period) and corresponding gross profit was declared by assessee and due taxes were paid on the same;
4. That, although the same facts were before the CIT(A) also however same did not receive proper appreciation while adjudicating the appeal;
5. That, the fact of such incorporation of excess stock in books of accounts was duly examined by auditor conducting tax audit in the case of assessee;
6. That, in order to clarify the above factual position, which was evident from Financial Statements already furnished and further explained in submission made before Id.AO and Ld. CIT(A) (however not considered), assessee as obtained certificate from Auditor duly clarifying the fact of "Incorporation of Excess Stock in regular books", which is being submitted now for your honours kind consideration;
7. That, the certificate from Auditor is being furnished for the first time, however it is merely clarification by auditor of factual position already available on record and no new fact is being broughton record by way of this application;
8. That, an affidavit in support of the facts mentioned above is being submitted alongwith this application.
Therefore, in the background of abovementioned facts, it is submitted that the Certificate furnished herewith as Additional evidence, goes to the root of the main issue involved in the present appeal, therefore, it is prayed that in the interests of justice and proper adjudication of appeal may please be admitted." 51 ITA No. 292/JP/2024
9. As the assessee submitted an affidavit of the partner of the firm and thereby also submitted a clarification of CA certifying the fact that the excess stock found during survey dated 16.02.2016 is incorporated in the final accounts. The content of the affidavit given by the partner of the assessee firm reads as under:
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J C Home Tex vs. ACIT 53 ITA No. 292/JP/2024 J C Home Tex vs. ACIT
10. In support of the affidavit a certificate cum clarification on facts was also placed on record as certified by an independent Chartered Accountant who has signed the tax audit report. The content of the that CA certificate is reproduced here in below:
"Re: Clarification on consideration of Excess Stock found during the course of Survey (dated 16.02.2016) as incorporated in the final accounts Please refer to the discussions held with yours Shri Subodh Pugalia on 29.04.2024 with reference to the treatment given in the books of accounts regarding the excess stock as found during survey (i.e. on 16.02.2016), while finalizing the audit u/s 44AB of the Income Tax Act, 1961 for the year ended on 31.03.2016.
Apropos it is clarified that during survey action by the Income Tax Department on 16.02.2016 which concluded on 18.02.2016, certain amount of stock was found in excess as compared to the recorded in books of accounts, which worked out to Rs. 1,25,59,344/- [reference to the statements recorded of the partner Shri Avnesh Sharma). As you are aware and as admitted by the partner during the survey that the books of accounts were incomplete on the date of survey. with the consequence that certain entries were made in the books of accounts subsequently. which entries inter-alia related to the purchase of raw material to the tune of Rs. 82,40,125/-, thus was incorporated post survey for which bills as verified by us were dated prior to the date of survey and the payment thereof were made to the subject suppliers through banking channels and the balance amount of Rs. 53,17,973/- (being difference of (1,25,59,344.00- 82,40,125.00) was included in the closing stock taken on 18.02.2016 as well as 31.03.2016.
Thus the tax audit conducted by us of your firm in accordance with the provisions of section. 44AB of the Income Tax Act, 1961 for the year ended on 31.03.2016 and has issued the tax audit report dated 15.10.2016 which has also been filed with the Income Tax Department.
While finalizing the Tax Audit for the year under consideration, Balance Sheet along with Profit & Loss Account and Schedules were prepared and signed by us. Relevant set to the same stood already shared with you long back.54 ITA No. 292/JP/2024
J C Home Tex vs. ACIT This certificate is issued in response to the clarification sought with respect to the closing stock appearing on the Balance Sheet date i.e. 31.03.2016 which is as under:
Closing Stock as per Books of Accounts as on 31.03.2016 2,97,90,227/-
Add: Excess Stock found during the course of survey and offered for tax 53,17,973/-
Total Value of Closing Stock as on 31.03.2016 3,51,08,200/-
It is further clarified that we represent the firm in the Income Tax assessments also as authorized representative thus have filed the final accounts duly audited by us before the Assessing Authority considering the figures on the date of survey (ie. prior to completion of Books of Accounts) and after incorporating the pending entries (ie. post completion of Books of Accounts) as on 19.02.2016:
Stock as per Books of Accounts as on date of Survey 1,70,65,394/-
Add: Excess Stock found during the course of survey 1,25,59,344/-
Total Value of Closing Stock as on 19.02.2016 2,96,24,738/-
Break up of Excess Stock found during the course of Survey 1,25,59,344/-
Less: Pertaining to pending entries of Purchases 82,40,125/-
Excess Stock offered for Tax 53,17,973/-
It is further certified that an amount of Rs. 53,17,973/- has been offered for tax as excess stock found during the course of survey and has been included in the total stock as appearing in the Balance Sheet as on 31.03.2016.
This certificate had been issued on the specific request of the client and as per the documents produced before us."
11. The ld. AR of the assessee submitted that all the purchase bills which were submitted are also placed on record along with the details of the payment made of those bills with the lower authority. The ld. AR submitted that none of the purchase bill are paid in cash. The parties from 55 ITA No. 292/JP/2024 J C Home Tex vs. ACIT the purchases are made are regular parties and that regular dealing is already part of the records seized. Despite these details being placed on record, the ld. AO made another addition of the same purchases which are already reflected in the books. The ld. AR submitted that even the ld. CIT(A) has not considered the argument of the assessee. During the hearing the ld. AO through the ld. DR did not controvert the facts being placed on record with the paper book so filed. The ld. DR also did not controvert the affidavit of the partner of the assessee firm and that of the CA certificate clarifying the fact that excess stock of Rs. 53,17,973/- included in the closing stock offered by the assessee. Thus, on the aspect of the matter the arguments based on the evidence has not been controverted.
12. The disclosure so made was subject to reconciliation of the purchase to be accounted for, to support the contention the assessee placed on record all the details of reconciling the disclosure with that of the amount in fact required to be disclosed were placed on record. The ld. AR of the assessee referring to page three of his submission before us submitted that the assessee has not disputed the working and the valuation of stock. The only factual error remained that the purchase to the extent of 56 ITA No. 292/JP/2024 J C Home Tex vs. ACIT 82,40,125/- remained to be accounted, so the excess stock so computed is required to be reduced to that extent. For these purchases which remained to be entered in the books, details showing the bill of each party showing name, address and details of the item purchased along with the payment details were placed on record. Considering that aspect of the matter the computation of the actual excess stock found was computed by the assessee and was explained to the ld. AO. The breakup of the excess stock found vis a vis amount offered is explained as under:
Stock as per Books of Accounts as on Date of Survey 1,70,65,394/- Add: Excess Stock found during the course of survey 1,25,59,344/- Total Value of Closing Stock as on 19.02.2016 (Just after 2,96,24,738/- survey) Break up of Excess Stock found during the course of Survey 1,25,59,344/- Less: Pertaining to pending entries of Purchases 82,40,125/- Excess Stock offered for Tax as part of Closing Stock 53,17,973/- [ in support affidavit and CA certificate placed on record]
13. As the above excess stock worked out was stated to be forming part of the closing stock disclosed by the assessee which the lower authority has not decided the issue. Therefore, the additional evidence was required and the same was submitted by the ld. AR by an application dated 30.04.2024 and the matter was kept for hearing on 14.05.2024. The ld. DR was given time to rebut the submission of the assessee. The matter was 57 ITA No. 292/JP/2024 J C Home Tex vs. ACIT posted for hearing on 28.05.2024 and ultimately heard on 29.05.2024. The ld. DR did not controvert the content of the CA certificate clarifying the correct position of the stock being inclusive of the excess stock derived in the closing stock. There is is no dispute about the working and the valuation done to arrive at the stock at the time of survey. But after the survey proceeding over, the assessee corrected the records by reconciling the working derived with that of the goods received but remained entered in the purchase records on the date of survey. To support the contention so raised the ld. AR of the assessee filed a list of parties (APB-84-85) for an amount of Rs. 82,40,125/- whose goods were received but the invoice to be entered in the books vide submission filed before the ld. AO in an online mode. The ld. AO has not made any independent enquiries with any of the parties to verify the contention raised by the assessee in those purchase bills. As it is evident from the records placed on record the bills were also supported with the transport receipt wherever required and all the invoices were before the date of survey.
14. Per contra, the ld. DR relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). He vehemently submitted that since the books of 58 ITA No. 292/JP/2024 J C Home Tex vs. ACIT accounts of the assessee have already been rejected there cannot be further reliance on any of the aspects including the closing stock mentioned in the accounts. He invited our attention to clause 35(a) and 35(b) of the form no. 3CD where in the tax auditor has certified that assessee does not maintain the stock register. Therefore, the issue raised by the assessee is nothing but an after thought. The ld. DR also submitted that the purpose of the survey to check the records and working of the assessee on real time basis. Based on the contention and verification done by the survey team the assessee in a statement explained the amount to be considered as income and the said disclosure so made was not adhered to by the assessee. If that statement which is recorded after verifying the records and if that statement is not admissible then what is. Legality of the proceeding and the purpose of the proceeding be seen prevailing at that time. Based on that statement he heavily relied upon the disclosure recorded in the statement recorded by the survey team. In the proceedings before the ld. CIT(A) he has incorporated all aspects and given substantial relief to the assessee. As regards the telescoping of bogus expenses with that of the advances declared by the assessee the same cannot be considered in the absence of the any specific evidence or detailed cash flow made available by the assessee. Thus, on that 59 ITA No. 292/JP/2024 J C Home Tex vs. ACIT telescoping aspect ld. DR relied upon the finding of the ld. CIT(A), who has rightly denied that benefit to the assessee. The assessee should have raised the issue at the time of recording of statement but not. Thus, the argument raised at the assessment stage is an afterthought. There is no nexus on this aspect provided by the assessee and the arguments are general in nature. While recording the statement in question no. 43 no telescoping was sought. The ld. DR submitted that ld. CIT(A) denied that telescoping benefit as the assessee claimed the same without explaining any cash flow statement and reasons as to why the telescoping benefit be given.
14.1 As regards the addition on account of the excess stock, the value of the stock has been taken in the presence of the assessee. The value of excess stock has been derived after comparing the physical stock with that of the book stock. The books of account were rejected by the ld. CIT(A) based on the reasons that no stock register is maintained, valuation of stock is made on estimated, Tax auditor stated in the report that the assessee did not maintain the quantitative records. As on the date of the survey the books of account were not complete and thus the trading results cannot be verified. The very basis of the disputing the excess stock 60 ITA No. 292/JP/2024 J C Home Tex vs. ACIT itself is not believable the ld. AR of the assessee contended that the bills of purchases not accounted and that too for an amount of Rs. 82,40,125/- is not correct. So, relying on the statement, calculation of the stock found is duly dealt with in the orders of the ld. AO and that of the ld. CIT(A). The question no. 32 (APB-39) wherein the assessee was asked specific question on purchase remained to be accounted where the assessee has not given the details. The assessee has not filed any retraction statement after the statement is recorded so the plea taken by the assessee at time of assessment is not correct. Even the ld. CIT(A) has in detailed discussed the trading results given substantial relief to the assessee.
15. In the rejoinder the ld. AR of the assessee relied upon the judgment the S. Khader Khan Son(Supra). The ld. AR submitted that the assessee has submitted the bills, wherein the details of the party and goods purchased is given. The payment details were also submitted. Even though all these details are available the ld. AO has not issued a single letter to any of the party as per provision of section 133(6) to confirm the facts presented by the assessee. Whereas the assessee has submitted the daybook and bills for all these purchases and their payment details. All this evidence has not been challenged or controverted. None of the 61 ITA No. 292/JP/2024 J C Home Tex vs. ACIT purchases are in cash and the payment details shows all were by banking channel and even in some of the case payment has been done in advance and the bill has been recorded subsequently.
16. We have heard the rival contentions and perused the material placed on record. The fact related to the disputes as emerges from the record is that assessee is a partnership firm and engaged in the manufacturing of garments and home furnishing items for domestic retail chain companies. Assessee is also engaged in export of home furnishing items. A survey action u/s 133A was carried out at the business premises of the assessee. In the proceeding so conducted certain loose papers / documents were found and impounded, and the statements of the partner of the assessee firm, Shri Avnesh Sharma were recorded. In the statement so recorded partner of the firm made surrender of Rs. 2,04,37,000/- consisting of Rs. 68,00,000/- on account of Advances Given to Various persons, Rs. 1,25,60,000/- being the amount found as excess stock then the stock recorded in the books and Rs. 10,77,000/- on account of bogus expenses. On completion of the survey assessee completed the books of accounts, duly incorporating all the items noted in loose papers found and impounded. While doing so it was noted that purchases worth Rs. 62 ITA No. 292/JP/2024
J C Home Tex vs. ACIT 82,40,125/-, which though were physically available at assessee's premises, but bills were not entered in the books of account. As the books of accounts were incomplete on the date of survey, the same were completed later and got them audited. While filling the return of income as per provision of section 139(1) of the Act, the assessee has included income of Rs. 68,00,000/- disclosed as advance given to various persons. In the return of income so filed the assessee telescoped the disclosed bogus expenses of Rs. 10,77,000/- as source of given the advances given to various persons. The case of the assessee was selected for manual scrutiny. Notices were issued to the assessee and the same were replied by the assessee. The ld. AO noted that the assessee submitted details / explanation / justification which were perused and examined along with the books of accounts and consequently the assessment was completed u/s. 143(3) of the Act on 28.12.2018. While completing the assessment the ld. AO made addition on three aspects. First Rs. 10,77,000/- disclosure of unexplained expenditure telescoped with the disclosure of Rs. 68,00,000/- was not considered and secondly excess stock of Rs. 1,25,60,000/- was added as the assessee has not adhered to the disclosure. The third addition made was for an adhoc trading addition of Rs. 2,00,000/- by 63 ITA No. 292/JP/2024 J C Home Tex vs. ACIT observing that the assessee's book does not reflect the complete and correct profit of the business.
17. The assessee challenged that finding of the ld. AO before ld. CIT(A). The ld. CIT(A) sustained the addition of Rs. 10,77,000/- and as regards the addition of excess stock and lump sum trading addition he hold that the profit is to be computed @ 18.94 % and accordingly he sustained the addition of Rs. 89,94,655 being the difference of gross profit estimated and declared by the assessee.
18. The assessee challenged the finding of ld. CIT(A) in this appeal, where in the ground no. 1 challenges the rejection of the books of accounts u/s. 145(3) of the Act and ground no. 1.1. & 1.6 deals with the addition sustained by the ld. CIT(A).
19. First, we are taking up ground no. 1 raised by the assessee challenging the rejection of the books of accounts. The ld. AO in para 4 of his order noted that the assessee has not maintained stock register and the valuation of closing stock is on estimated basis. In the column no. 35(a) and 35(b) in the report of the Chartered Accountant in form no. 3CD 64 ITA No. 292/JP/2024 J C Home Tex vs. ACIT while reporting the quantitative details mentioned nil. Based on this observation he invoked the provision of section 145(3) and hold that books of account of the assessee cannot be accepted as compete and correct and therefore, true profit of the assessee's business cannot be accepted. The ld. CIT(A) has confirmed the action of the ld. AO by holding that assessee does not maintained day to day quantitative stock register and the stock found physically was found in excess.
19.1 Before us the ld. AR of the assessee submitted that the survey team physically taken the stock and arrived the working of the excess stock and there is no dispute so far as the computation of that amount of Rs. 1,25,60,000/- is concerned. In the assessment proceeding as it is evident from the order of the ld. AO that the assessee has submitted all the details that were called for and even the books were produced and examined by the ld. AO. The ld. AO invoked the provision of section 145(3) merely on the reasons that the stock is valued on estimate basis and no quantitative records maintained. As regards the valuation of stock we note from the column 14(a) of the tax audit report the auditor has mentioned the method of valuation as cost or market price whichever is lower. The stock found and computed is not disputed by the revenue and the assessee as the 65 ITA No. 292/JP/2024 J C Home Tex vs. ACIT same is based on the regular method of accounting followed and therefore, there cannot be any reasons to reject the books of account. As regards the quantitative records not maintained on day-to-day basis, we note that since the survey was conducted on 16.02.2016 and the stock calculated physically is not disputed the reasons advanced for non- maintenance of stock records should not be a reason or basis of rejection of the book results which are otherwise verified, and no defects were found by the ld. AO and ld. CIT(A) confirmed the view of the ld. AO. Thus, as the provision of section 145(3) is invoked, it would be better go through the provision that section and the same reads as under :
Method of accounting.
145. (1) Income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" shall, subject to the provisions of sub-section (2), be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee.
(2) The Central Government may notify in the Official Gazette from time to time income computation and disclosure standards to be followed by any class of assessees or in respect of any class of income.
(3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2), the Assessing Officer may make an assessment in the manner provided in section 144.
19.2 As it is evident that the provision of section 145(3) can be invoked in the following circumstances:
66ITA No. 292/JP/2024
J C Home Tex vs. ACIT • When the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee.
• When the method of accounting provided in Section 145 (1) has not been regularly followed by the assessee.
• When the accounting standards notified under Section 145 (2) have not been regularly followed by the assessee.
19.3 From the observations recorded in the order of the lower authority none of the condition is satisfied and thus same is not evident from the finding of the lower authority. Not only that the bench also observed that when the provision of section 145(3) is to be invoked the assessment is to be completed as per the manner provided in section 144 of the Act and the proper opportunity is required to be given by pointing out the defects in the books of account which we observe that the same is not followed and the order is passed u/s. 143(3) of the Act which is also not correct. We get strength to support our view based on the provision of the Act and decision of the Hon'ble Jurisdiction Rajasthan high court in the case of CIT Vs. Pink City Developers [99 taxmann.com 422 (Rajasthan) ]. In that case the Hon'ble High court held that;
7. The counsel for the respondent contended that the Tribunal while considering the objection of section 145(3) of the Income-tax Act has rightly observed as under :
"(3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) or accounting standards as notified under sub-section (2), have not been regularly followed by the assessee, the Assessing Officer may make an assessment in the manner provided in section 144."67 ITA No. 292/JP/2024
8. Taking into considerations, the overall facts and circumstances of the case, we are of the opinion that the Tribunal while confirming the order passed by the Commissioner of Income-tax (Appeals) has not committed any error, therefore, the issue is answered in favour of the assessee and against the Department. Based on the discussion so recorded we considered ground no. 1 in favour of the assessee.
20. Ground no. 1 & 1.1 relates to the gross profit added instead of excess stock found of Rs. 1,25,60,000/- [ Actual excess stock works out to Rs. 1,25,59,344/- ] and added by the ld. AO. The brief facts as emerges related to the addition is that survey u/s. 133A of the Act was conducted on 16.02.2016 at the business premises of the assessee. The survey team worked out the inventory of the goods found at the business premises at Rs. 2,96,24,738/-. That working of the stock was confronted to the assessee vide question no. 33 of the statement recorded at the time of survey and partner of the firm confirmed that working done by the survey team. Before that vide question no. 32 the assessee confronted by the survey team about the completeness and correctness of the books of account and the relevant question and answer is reproduced here in below:
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J C Home Tex vs. ACIT iz'u 32 d`i;k crk;s fd vkids [kkrs cfga;ksa esa dc rd dk tek [kpZ Purchase, Sale vkfn dk bUnzkt gks pqdk gS ,oa D;k dEI;wVj ds vykok eSU;wvy [kkrk Hkh j[krs gS \ mÙkj 32 gekjh leLr [kkrk cfga;ka dsoy dEI;wVj ij j[kh tkrh gS] dsoy Section-wise Stock Register esa j[kk tkrk gS pwfa d dqN [kpksZa ds fcy tSls tkWc odZ o vU; fofo/k [kpsZa vkfn okmpj vHkh izkIr ugh gq, gS mudk bUnzkta ugh gks ik;k Fkk blds ckjs esa eSa vkidks ckn esa crk nwxa kA HkkSfrd lR;kiu ds fy, c;ku fy, x;s gSA LVkWd ds HkkSfrd lR;kiu ds ckn c;ku iqu% 'kq: fd;s x;sA 20.1 At the time of the survey as per the books available in the computer the closing stock was at Rs. 1,70,65,394/-. Thus, the said book stock figure was compared with that of the actual stock taken by the survey team. The difference of Rs. 1,25,59,344/- was considered as excess stock in the hands of the assessee. Accordingly, the statement of the partner of the assessee firm was recorded wherein the partner of the firm admitted the working and valuation of stock. Based on that the excess stock was worked out as reproduced here in below :
Stock as per Books of Accounts as on Date of Survey 1,70,65,394/- Add: Excess Stock found during the course of survey 1,25,59,344/- Total Value of Closing Stock as on 19.02.2016 (Just after 2,96,24,738/- survey) Break up of Excess Stock found during the course of Survey 1,25,59,344/- Less: Pertaining to pending entries of Purchases 82,40,125/- Excess Stock offered for Tax as part of Closing Stock 53,17,973/-
20.2 During the assessment proceeding ld. AO noted that assessee has not disclosed undisclosed excess stock as income in the return of income filed by the assessee. That is why the assessee was asked to show cause 69 ITA No. 292/JP/2024 J C Home Tex vs. ACIT as to why the said amount of Rs. 1,25,60,000/- being the amount of excess stock should not be added to the income of the assessee. The assessee filed a reply explaining the fact that as on the date of survey as stated by the partner that books were not complete and thereafter the survey on verification of the evidences the assessee noted that the purchases worth Rs. 82,40,125/- for which the goods were received by the assessee but the bills remained to be recorded in the books of account of the assessee. The assessee submitted a list of such bills stating the details of the purchases remained to be accounted for. The assessee also submitted that all the bills for which the purchases had remained accounted are supported by the bills and all bills are paid by an account payee cheque. It was also submitted that the payment for some of the purchases were made before the date of survey. In this manner after reduction of that purchase the balance amount of Rs. 53,17,973/-
remained as the ultimate excess stock which the assessee offered in the closing stock. The ld. AO did not consider this explanation of the assessee and made the addition of Rs. 1,25,60,000/-. When the matter was challenged before the ld. CIT(A), the ld. CIT(A) sustained the addition of Rs. 89,94,655/- holding that;
Considering the totality of facts, trading results shown for the year are not reliable and are rejected. The decision of the ld. AO in the assessment order 70 ITA No. 292/JP/2024 J C Home Tex vs. ACIT regarding rejecting the books of accounts is hereby upheld. The income is to be assessed considering the gross profit ratio of 18.94% (excluding excess stock i.e. the stock will be over and above this G.P.) which is exactly similar as immediately preceding year and also take care for the some expenses left over and not entered in the books of accounts on date of survey. This gives the meaning that had the survey not taken place on 19.02.2016 (which is just 1 month and little over 1 week prior than the end of year) the appellant would have shown a gross profit at the rate of 18.94% (excluding excess stock) considering the best of probabilities and considering judicial pronouncements about using the preceding year G.P. ratio when the books in the current year are rejected. As per the gross profit ratio of 18.94% (excluding excess stock), the details for the year are worked out as under:-
20.3 The ld. AR of the assessee stated that the list of the purchases remaining to be entered on the date of the survey were placed before the lower authority and same forms part of the paper book page 84-85 and all the bills along with the details of the payment made in the paper book filed.
The ld. AR of the assessee placed on record the acknowledgement of the online response submitted by the assessee whereby the assessee submitted all those bills before the assessing officer. This fact has not been controverted by the lower authority and that of the ld. AO through the ld. DR when the appeal was heard. To verify the contention of the 71 ITA No. 292/JP/2024 J C Home Tex vs. ACIT assessee bench tested the version of the assessee at the time of hearing of the appeal from the list of purchases made available at page 84-85. The transaction tested are tabulated herein below:
Date of survey 16.02.2016 Name of party Bill at page in Invoice Payment proof at Payment made paper book & date Amount page in paper with date of invoice book Matushree 461 411153 545 Rs.4,11,153 Dt.15.02.2016 Dt. 15.02.2016 Manglam 394 172589 544 Rs.13,00,000 Dt. 21.1.2016 Dt.12.02.2016 Vikram Traders 435 525868 Submitted vide Rs. 5,25,868 Dt. 05.02.2016 letter dated Dt. 12.04.2016 31.05.2024 As it is seen that the purchases are made before the date of survey and it is also evident from the chart available at paper book page 84-85 from where we note that all the bills were before the date of survey. The bills were placed on record along with the supporting evidences before the ld.
AO. The ld. AO through the ld. DR did not controvert these basic details placed on record and we note that not a single enquiry with any of the parties from whom the purchases claimed to have been made were not made even though all the details placed on record by the assessee. 72 ITA No. 292/JP/2024
J C Home Tex vs. ACIT 20.4 All these instances read with the statement of the partner of the firm wherein while answering questions no. 32 stated that the books are not complete. Even the records which were seized shows the advance payment as per the respective party ledger placed on record and in the paper book filed. The assessee submitted the purchase bills along with transport receipt, packing list etc. The chart submitted by the assessee shows the date of the bill, name of the supplier, bill number and supporting evidence attached to the bills. All this evidence corroborates with the accounting records wherein the name of the suppliers is repeated. The ld. AO as well as the ld. CIT(A) does not feel it to be tested or verified by using the power vested u/s. 133(6) of the Act. The details submitted to ld. AO as well as to the ld. CIT(A) has not been controverted. The books of account produced were not found to be faulty on any of the entries or bills as referred by the assessee. The version of the assessee that bills remained to be accounted get strength from the page 18 of the inventory prepared wherein that inventory sheet prepared by the survey team itself shows written as "Grey Outside packed" and the goods are in 'Bale', this aspect further proves the contention of the assessee that certain goods were available with the assessee which was in packed form and was not yet opened. Thus, this version of the assessee get support for the alleged 73 ITA No. 292/JP/2024 J C Home Tex vs. ACIT difference in value of stock found and remained to be recorded in books of accounts. The assessee has in the assessment proceeding placed on record all the possible documentary evidence in support of such claim but all the evidences furnished were brushed aside, without assigning a single reason / discrepancy in the same and that too without following the provision of section 145(3) of the Act. As we have while dealing with the ground no. 1 held that without finding any faults in the books of account the same cannot be rejected. Not only that if the revenue intends to invoke the provision of section 145(3), there is a procedure to be followed which has not been followed. We note that the addition was made merely based on the fact that the assessee has disclosed the excess stock and the same is not adhered to in full by the assessee. The apex court in the case of CIT Vs. S. Khader Khan Son (Supra) held that statement itself cannot, by itself be made the basis for making the addition. Thus, merely the assessee has disclosed the unaccounted excess stock in the statement the purchases which remained to be accounted and subsequently demonstrated with evidence that none of the purchases were in cash and is supported by the relevant evidence, we do not find any single reason not to believe the contention of the assessee. As we also note that all the parties are regular from where the assessee has already made purchases and the transaction 74 ITA No. 292/JP/2024 J C Home Tex vs. ACIT are not solitary transactions, all the relevant evidence for purchases made were submitted showing the bill, transport receipt and freight payment etc. Merely this list is of 47 parties and the amount was for Rs. 82,40,125/- based on the documents placed on record that purchases cannot be considered as undisclosed, and the credit of that purchases cannot be denied.
20.5 As regards the balance amount of Rs. 53,17,973/- since the assessee has already based on the affidavit and Chartered Accountant Certificate demonstrated that the same is forming part of the closing stock declared by the assessee. The bench noted that this certificate of CA is of the same CA who has signed the annual audited accounts and that is why the assessee at the request of the bench submitted that certificate of the same CA to confirm the contention raised by the assessee. Since this evidence in the form of the additional evidence called for from the assessee at the instance of the bench the same is very well fall within the power of the bench as per rule 29 which reads as under : 75 ITA No. 292/JP/2024
J C Home Tex vs. ACIT
29. [ Production of additional evidence before the Tribunal [Substitued by the Income-tax (Appellate Tribunal) Amandment Rules, 1973] - The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or , if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced.] 20.6 As the assessee has already raised the contention that they have disclosed the amount of Rs. 53,17,973/- in the closing stock at the time of survey and this contention were not examined by the lower authority. The bench directed to ld. AR of the assessee to justify the claim and for that the partner of the firm filed an affidavit and the CA certificate to support the contention raised by the assessee. Considering that additional evidence were called for by the to enable to pass order and substantial cause of justice the same is considered for decided the issue on hand. Thus, in totality of the fact if we considered that the details of the purchase remained to be entered in the books of accounts and non-disputed working of the excess stock of Rs. 1,25,59,344/-. The working of the income disclosed or not is determined as under:
Excess stock [ not disputed by both the parties ] Rs. 1,25,59,344/-
Less : Purchases accounted after the date of survey for Rs. 82,40,125/- which stock was available but bills were entered after the 76 ITA No. 292/JP/2024 J C Home Tex vs. ACIT date of survey Less: Purchase related expenses vouchers Rs. 8,58,956/- Add: Sales bills accounted after the date of survey Rs. 18,57,710/-
Balance Rs. 53,17,973/- Amount disclosed in the closing stock as certified by CA Rs. 53,17,973/- Balance addition to be made Nil
20.7 As it is seen that the credit for purchase remained to be accounted for an amount of Rs. 82,40,125/- expenses vouchers of Rs. 8,58,956/- and sales bills of Rs. 18,57,710/- the actual excess stock figure works out at Rs. 53,17,973/- is incorporated in the books as part of the closing stock by the assessee and thereby offered the additional income we hold that there is no separate addition is required to be made in the hands of the assessee. Based on these observations ground no. 1.1 & 1.2 are allowed.
21. Ground no. 1.3, 1.4, 1.5 & 1.6 relate to the addition of Rs.
10,77,000/- being the alleged bogus expenses declared by the partner of the assessee firm at the time of survey. During the assessment proceeding it was contended that the cash generated out of the bogus expenses were utilized to give advances to various persons. The ld. AO did not accept this contention of the assessee as the assessee has not proved the nexus between the amounts of bogus expenses booked and were utilized for the advances given. Based on that contention telescoping benefit was not 77 ITA No. 292/JP/2024 J C Home Tex vs. ACIT allowed. The ld. CIT(A) confirmed the finding that of the ld. AO stating that the assessee has not laid down the factual position behind claiming the telescoping benefit and since that onus is not discharged the addition of Rs. 10,77,000/- was sustained.
21.1 The assessee challenged the confirmation of addition of Rs. 10,77,000/- by the ld. CIT(A). The brief facts as emerges from the records related to this issue are that during the course of survey page 14 & 15 of Annexure AS-7 were found. That two pages are self-made vouchers of wages dated 31.12.2015 and 04.02.2016 of Rs. 4,97,000/- and Rs. 5,80,000/- respectively. Similarly, page no. 4 of Annexure AS-9 and the back side of that page, certain advances were found noted. Based on that evidence the assessee disclosed Rs. 68,00,000/- as advances given to job worker. The assessee contended that both the vouchers for bogus expenses and payments as advances made were found in loose papers and were treated as unexplained and cumulative figure was taken as additional undisclosed income of the assessee. The assessee contended that such cash was available on account of bogus expenses as recorded in books, ultimately formed source in cash for making the advance. The ld. AO as well as of the ld. CIT(A) not allowed the benefit of telescoping solely 78 ITA No. 292/JP/2024 J C Home Tex vs. ACIT by alleging that assessee has failed to establish the nexus between cash advances and bogus expenses. As argued that so far as expenses were treated as bogus, i.e. not incurred, cash to that extent was available with assessee throughout the period. Moreover, no instance whatsoever has been brought on record for any such utilization of cash so generated elsewhere nor any material was found during the survey indicating the use of such money elsewhere rather these advances favours the contention of the assessee, therefore denial of telescoping merely alleging that cash flow trail was not furnished by assessee is not correct. The ld. CIT(A) has relied upon certain case laws related to peak working and presumed that assessee could not provide the linking between cash available, and advances made. As the decision of peak credit are relied on we note that the peak credit theory is usually applied to compute additional income in the case assessee has borrowed as well as lent money / made cash deposits as well as withdrawals. Whereas in the instant case, cash available with assessee is of its own and though expenses were booked on paper was in fact not booked and thus, the cash of that expenses was very well available and remained with assessee to advance the money to the job worker. Therefore, the contention that the assessee was having the cash balance to the extent of Rs. 10,77,000/- to make the advances so 79 ITA No. 292/JP/2024 J C Home Tex vs. ACIT disclosed and the benefit of the telescoping cannot be denied merely on the ground that there is no cash flow statement made available by the assessee. Based on these observations the ground no. 1.3, 1.4, 1.5 & 1.6 raised by the assessee are allowed.
22. Ground no. 2 raised by the assessee being general in nature does not require our adjudication.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 10/07/2024.
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(Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 10/07/2024
*Ganesh Kumar, Sr. PS
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. The Appellant- J. C. Home Tex, , Jaipur
2. izR;FkhZ@ The Respondent- ACIT, Circle-07, Jaipur
3. vk;dj vk;qDr@ The ld CIT
4. vk;dj vk;qDr¼vihy½@The ld CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 292/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar