Smt. Suman Sachdeva, v. The ACIT, 1(2),

CO 14/IND/2008 | 2000-2001
Pronouncement Date: 23-03-2011 | Result: Dismissed

Appeal Details

RSA Number 1422723 RSA 2008
Assessee PAN AELPS9951F
Bench Indore
Appeal Number CO 14/IND/2008
Duration Of Justice 3 year(s) 1 month(s) 12 day(s)
Appellant Smt. Suman Sachdeva,
Respondent The ACIT, 1(2),
Appeal Type Cross Objection
Pronouncement Date 23-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 23-03-2011
Date Of Final Hearing 11-02-2011
Next Hearing Date 11-02-2011
Assessment Year 2000-2001
Appeal Filed On 11-02-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI R.C.SHARMA ACCOUNTANT MEMBER PAN NO. : AELPS9951F I.T.A.NO. 799 801 802/IND/2007 A.YS. : 2000-2001 2003-04 2004-05 ACIT 1(2) SHRI CHANDRA MOHAN SACHDEVA BHOPAL VS PROP. M/S. CHIC POULTRIES BHOPAL. (ASSESSEE) (RESPONDENT) C.O.NOS. 19 21 & 22/IND/2008 ARISING OUT OF I.T.A.NOS. 799 801 & 802/IND/2007 A.YS.: 2000-2001 2003-04 2004-05 SHRI CHANDRA MOHAN SACHDEVA ACIT 1(2) PROP. M/S. CHIC POULTRIES VS BHOPAL BHOPAL. (CROSS OBJECTOR) (RESPONDENT) PAN NO. : AELPS9952G I.T.A.NO. 797/IND/2007 A.Y. : 2004-05 ACIT 1(2) SMT. SUMAN SACHDEVA PROP. M/S. SAHIL FARMS BHOPAL VS BHOPAL -: 2: - 2 (ASSESSEE) (RESPONDENT) C.O.NOS. 14 & 17/IND/2008 (ARISING OUT OF I.T.A.NOS. 794 & 797/IND/2007) A.YS. 2000-01 & 2004-05 SMT. SUMAN SACHDEVA PROP. M/S. SAHIL FARMS ACIT 1(2) BHOPAL VS BHOPAL (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI PRADEEP KUMAR MITRA SR. DR ASSESSEE BY : SHRI H.P.VERMA & SHRI ASHISH GOYAL O R D E R PER R. C. SHARMA A.M. THESE ARE THE APPEALS FILED BY THE REVENUE AND CRO SS OBJECTIONS BY THE ASSESSEE AGAINST THE ORDER OF CIT (A) DATED 21/12/2009 FOR THE ASSESSMENT YEARS 2000-2001 2003 -04 AND 2004-05 IN THE MATTER OF ORDER PASSED U/S 143( 3) READ WITH SECTION 147 OF THE INCOME-TAX ACT 1961. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUS ED. -: 3: - 3 3. FACTS IN BRIEF ARE THAT THE ASSESSEE SHRI C.M. SACHDEVA AND HIS WIFE SMT. SUMAN SACHDEVA ARE CARRYING ON THE BUSINESS OF POULTRY FARMS IN THE NAMES OF M/ S. CHIC POULTRY FARMS AND M/ S. SAHIL FARMS RESPECTIVELY FROM THE COMMON BUSINESS PREMISES AT RATIBAD BHOPAL. BOTH OF THESE ASSESSEE S WERE FILING THEIR RETURNS SEPARATELY FROM YEAR TO Y EAR AND' THEY WERE BEING ACCEPTED U/S 143(1) OF THE INCOME TAX ACT. THE SURVEY U/S 133A WAS CONDUCTED AGAINST BOTH THE ASSESSEES ON 20-09-2005 AND CERTAI N DOCUMENTS WERE IMPOUNDED. THE ASSESSING OFFICER RECORDED THE REASONS FOR INITIATING THE REASSESSMEN T PROCEEDINGS AND ISSUED THE NOTICE U/S 148 FOR ALL THE ABOVE SAID ASSESSMENT YEARS (EXCEPT FOR THE ASSESSMENT YEAR 2004-05) AND COMPLETED THE ASSESSMENTS ON 29-12-2006 BY MAKING VARIOUS ADDITIONS. THE ASSESSING OFFICER REJECTED THE ACCOU NT BOOKS OF THE ASSESSEE AFTER GIVING DETAILED REASONS IN HIS ORDER. ON THE BASIS OF DOCUMENTS FOUND DURING SURVEY HE COMPUTED THE INCOME FROM SALE OF EGGS AN D -: 4: - 4 CULLED BIRDS AND ORGANIC MANURE FOR ALL THE ASSESSMENT YEARS. HE ALSO MADE THE ADDITIONS U/S . 69B TOWARDS THE UNEXPLAINED INVESTMENT IN THE HOUSE PROPERTY AT E-5/59 ARERA COLONY BHOPAL IN THE ASSESSMENT YEAR 1999-00 AND 2000-01. THE ASSESSEE HAS DISPUTED ALL THE ADDITIONS MADE BY THE ASSESSIN G OFFICER AS WELL AS THE LEGALITY OF THE REASSESSMENT BEFORE CIT(A). THE GROUND RAISED WITH REGARD TO REOPENING OF ASSESSMENT U/S 147 WAS DISMISSED BY CIT(A) AFTER HAVING THE FOLLOWING OBSERVATIONS : I HAVE GONE THROUGH THE ORDER OF THE ASSESSING OFFICER AND I FIND THAT THE LEGALITY OF NOTICE U/S. 148 WAS NOT CHALLENGED BEFORE THE ASSESSING OFFICER AND THE ASSESSEE ALL ALONG PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. 1 ALSO FIND THAT IF THE NATURE OF BUSINESS REMAINS THE SAME THE ASSESSMENT OF THE EARLIER YEARS CAN BE REOPENED ON THE BASIS OF DOCUMENTS RELATING TO THE LATER PERIOD. I AM NOT CONVINCED WITH -THE ARGUMENTS OF THE LD. A.R. AND I REJECT -: 5: - 5 THE SAME. I HOLD THAT THE ISSUE OF NOTICE U/S . 148 AND SUBSEQUENT ASSESSMENT FOR ALL THE ASSESSMENT YEARS WERE LEGAL IN THE EYES OF LAW. ACCORDINGLY THIS GROUND OF THE ASSESSEE IS DISMISSED. 4. THE GROUND RAISED WITH REGARD TO REJECTION OF BOOKS OF ACCOUNT BY THE ASSESSING OFFICER WAS UPHELD BY THE LD. CIT(A). HOWEVER THE ADDITIONS MADE ON ACCOUNT OF SALE OF B AGS BIRDS AND MANURE SUBSTANTIAL REDUCTION WAS ALLOWED AFTER HAVING THE FOLLOWING OBSERVATIONS:- I HAVE GONE THROUGH THE ORDER OF THE ASSESSING OFFICER VERY MINUTELY AND ALSO CONSIDERED THE SUBMISSIONS MADE BY THE LD. A.R. I AM CONVINCED THAT THE ASSESSING OFFICER HAS MADE A GOOD CASE IN P. NO.3 TO 7 OF HIS ORDER TO REJECT THE ACCOUNT BOOKS FOR ALL THE ASSESSMENT YEARS FROM 1999-00 TO 2004-05. HOWEVER I FIND THAT THE ESTIMATE OF INCOME FROM SALE OF EGGS AND BIRDS AND THE MANURE -: 6: - 6 AS MADE BY THE ASSESSING OFFICER IS CERTAINLY AT THE HIGHER SIDE. I FIND FORCE IN THE SUBMISSIONS OF THE LD. A.R. THAT THE PROJECT REPORT PREPARED BY THE SELLER OF CHICKS AS ADVERTISEMENT CAMPAIGN CANNOT BE ADOPTED AS THE SOLE BASIS FOR THE ESTIMATION OF INCOME. EVEN THE BOOK VERSION CANNOT BE REFLECTIVE OF THE GROUND REALITIES. SINCE THE MORTALITY RATE GIVEN BY THE LD. A.R. GIVES THE RESULT OF TALLYING THE NUMBER OF BIRDS FOUND AT THE TIME OF SURVEY AT THE JOINT PREMISES M/S. SAHIL FARMS AND M/S. CHICKS POULTRY FARMS I ACCEPT THE MORTALITY RATE AS SHOWN BY THE LD. AUTHORIZED REPRESENTATIVE IN HIS CHART AT 5% BEFORE 8 WEEKS 6 % BEFORE 20 WEEKS AND 13% AFTER 20 WEEKS INCLUSIVE OF UN-SALABLE BIRDS. IT IS DIFFICULT TO ACCEPT THE PRODUCTION OF EGGS PER BIRD AT 310 AS ADOPTED BY THE ASSESSING OFFICER ON THE BASIS OF THE PROJECT REPORT. I FIND FORCE IN THE SUBMISSION OF LD. -: 7: - 7 A.R. THAT AFTER GENETIC IMPROVEMENT THE PRODUCTION OF EGGS WENT UP TO 310 FROM 2005 ONWARDS. THE PROJECT REPORT RELIED UPON BY THE ASSESSING OFFICER IS ALSO DATED 10-09- 2005. THEREFORE THE PRODUCTION OF EGGS AT 290 PER BIRD IN VIEW OF P. NO. 11 OF THE BOOK BY 'EGG INDUSTRY IN THE NEW MILLENNIUM' IS ALSO ACCEPTABLE. THERE IS NO DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AO WITH REGARD TO THE SELLING RATE AT RS. 1.20 PER EGG AND THEREFORE THE SAME IS ACCEPTED. HOWEVER THE ASSESSING OFFICER HAS ADOPTED THE SELLING RATE OF THE CULLED BIRDS AT RS.60/- PER BIRD. I FIND THAT IT IS ALSO ON A HIGHER SIDE. IN THE STATEMENT RECORDED DURING THE COURSE OF SURVEY IT WAS TOLD BY WIFE AND EMPLOYEE OF THE ASSESSEE THAT THE SELLING RATE DOES NOT EXCEED RS. 30/- PER BIRD. ACCORDINGLY I ACCEPT THE SELLING RATE OF THE BIRDS AT RS. 45 PER BIRD BEING THE AVERAGE OF RS. 30 AS PER -: 8: - 8 ASSESSEE AND RS. 60 AS PER ASSESSING OFFICER. HOWEVER I DO NOT FIND ANY FORCE IN THE SUBMISSIONS OF THE A.R. THAT THE RATIO OF THE COST OF FEEDS AND MEDICINES ADOPTED BY THE ASSESSING OFFICER FROM YEAR TO YEAR SHOULD BE REDUCED I FIND THAT THE ASSESSING OFFICER HAS RIGHTLY ADOPTED THE RATIO OF COST OF FEEDS AND MEDICINES ON THE BASIS OF ACCOUNT BOOKS OF THE ASSESSEE HIMSELF AND THEREFORE I DECLINE TO MAKE ANY CHANGE IN THE RATIO OF FEED MEDICINE WITH THE SALES AS ADOPTED BY THE ASSESSING OFFICER. AS PER ABOVE DISCUSSIONS I ACCEPT THE TOTAL SALE FIGURES OF EGGS AND BIRDS IN BOTH THE CONCERNS AS SHOWN BY LD. AUTHORIZED REPRESENTATIVE IN THE ANNEXURE WHICH IS MADE PART OF THE ORDER IN THE DIFFERENT ASSESSMENT YEARS AND WORKED OUT THE ESCAPED INCOME IN THE DIFFERENT ASSESSMENT YEARS AS UNDER :- -: 9: - 9 A.Y. TOTAL ESTIMATED SALE OF BIRDS & EGGS FOR M/S.SAHIL & M/S. CHICKS TOTAL SALE SHOWN IN THE ACCOUNT BOOKS OF BOTH THE CONCERNS DIFFERENCE (2-3) %AGE OF FEED & MEDICINE ESTIMATED AMOUNT OF FEED & MEDICINE ESCAPED INCOME 1 2 3 4 5 6 7 1999-00 20729269 25141800 (4412531) 74.44 (3284688) (1127843) 2000-01 26626169 25932900 693269 73.00 506087 187183 2001-02 28177487 34154400 (5976913) 68.25 (4079243) (189670) 2002-03 33931195 36359100 (2427905) 64.47 (1565270) (862635) 2003-04 37222675 37703600 (480925) 63.76 (306637) (174288) 2004-05 35656937 34734025 922912 57.23 528182 394229 THE ABOVE SAID ESCAPED INCOME IN THE DIFFERENT ASSESSMENT YEARS IS FOR THE ASSESSEE AS WELL AS HIS WIFE SMT. SUMAN SACHDEVA. AFTER LOOKING INTO THE STATEMENT OF SHRI C.M. SACHDEVA DATED 21-09-2005 I FIND THAT THE ACTION OF THE ASSESSING OFFICER AND THE CLAIM OF THE ASSESSEE TO ALLOCATE 1/3 RD AND 2/3RD INCOME IN THE HANDS OF ASSESSEE AND HIS WIFE BOTH ARE NOT CORRECT. IN FACT THE RATIO IS 3:5 AS STATED IN THE ABOVE SAID '\ \ \ 6 \ \ -: 10: - 10 STATEMENT. ACCORDINGLY I ALLOCATE THE 3/8 INCOME IN THE HANDS OF THE ASSESSEE AND 5/8 IN THE HANDS OF THE WIFE OF THE ASSESSEE. ACCORDINGLY I CONFIRM THE ADDITION OF RS. 70 193/- IN THE ASSESSMENT YEAR 2000-01 AND RS. 1 48 023/- IN THE ASSESSMENT YEAR 2004-05. THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR L999-00 2002-03 AND 2003-04 ARE HEREBY DELETED. 5. THE ADDITION MADE ON ACCOUNT OF DROPPING OF BIRDS W AS SUBSTANTIALLY REDUCED BY THE LD. CIT(A) AFTER HAVIN G FOLLOWING OBSERVATIONS :- I HAVE GONE THROUGH THE ORDER OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE LD. A.R. I DO NO T AGREE WITH THE SUBMISSIONS OF THE A.R. THAT THERE SHOULD BE NO INCOME FROM THE DROPPINGS OF THE BIRDS EVEN IF IT IS ACCEPTED THAT GUNNY BAGS ARE USED FOR CURTAINS. HOWEVER I FIND THAT THE ESTIMAT E MADE BY THE ASSESSING OFFICER IS TOO HIGH TO BE -: 11: - 11 ACCEPTED. IN FACT THE ASSESSING OFFICER IS OF THE OPINION THAT THE INCOME FROM BY PRODUCT LIKE MANURE IS MUCH MORE THAN THE MAIN PRODUCT OF EGGS AND BIRDS. EVEN THE BOOK BY G.C. BANERJEE AT P. NO. 1/ 56 HAS ESTIMATED THE INCOME FROM ORGANIC MANURE AT RS. 1 PER BIRD PER YEAR. HOWEVER SINCE THERE IS NO READY MARKET AVAILABLE FOR THE MANURE AT BHOPAL I ESTIMATE THE INCOME FROM MANURE AFTER GIVING SOME DEDUCTION FOR COLLECTION TRANSPORTATION AND WASTAGE AT RS. 0.30 PER BIRD PER YEAR FOR THE NUMBER OF BIRDS SHOWN AS CLOSING STOCK IN THE DIFFERENT ASSESSMENT YEARS IN THE CHART IN THE ANNEXURE GIVEN BY THE LD. AUTHORIZED REPRESENTATIVE WHICH IS AS UNDER :- ASSESSMENT YEAR CLOSING STOCK OF BIRDS WITH SAHIL FARMS CLOSING STOCK OF BIRDS WITH CHICKS FARMS TOTAL INCOME AT RS. 0.30 PER BIRD 1999-00 38946 48617 87563 26268 2000-01 8451 88319 96770 29031 2001-02 40400 76453 116853 35055 -: 12: - 12 2002-03 62586 74552 137138 41141 2003-04 66094 62260 128354 38596 2004-05 61010 46164 107174 32152 AS DECIDED IN THE EARLIER GROUND I ALLOCATE 3/8 SHA RE OF THE ABOVE SAID INCOME IN THE HANDS OF ASSESSEE SHRI C.M. SACHDE VA AND 5/8 SHARES IN THE HANDS OF HIS WIFE SMT. SUMAN SACHDEVA AS UNDER : ASSESSMENT YEAR INCOME FROM SALE OF MANURE & GUNNY BAS 5/8 TH SHARE OF SMT. SUMAN SACHDEVA 3/8 TH SHARE OF SHRI C.M. SACHDEVA 1 2 3 4 1999-00 26268 16417 9850 2000-01 29031 18144 10886 2001-02 35055 21909 13145 2002-03 41141 25713 15427 2003-04 38596 24122 14473 2004-05 32152 20095 12057 ACCORDINGLY I REDUCE THE ADDITION IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF SALE OF MANURE AND GUNNY BAGS TO THE AMOUNTS STATED IN COLUMN -4 ABOVE IN TH E DIFFERENT ASSESSMENT YEAR. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. -: 13: - 13 6. WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF CONSTRUCTION OF HOUSE PROPERTY THE SAME WAS DELETE D BY THE LD. CIT(A) AFTER HAVING FOLLOWING OBSERVATIONS :- THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE AND HIS WIFE CONSTRUCTED THE HOUSE PROPERTY AT PLOT NO. E-5/59 ARERA COLONY BHOPAL DURING THE ASSESSMENT YEARS 1998-99 1999-00 AND 2000-01. HE FOUND THAT THE ASSESSEE AND HIS WIFE SPENT THE AMOUNT OF RS. 41 50 836/- DURING THESE THREE - ASSESSMENT YEARS. HE FOUND THAT THE EXPENDITURE SHOWN BY THE PARTIES WAS NOT SUFFICIENT AND THEREFORE HE REFERRED THE MATTER TO THE VALUATION OFFICER U/S 142(A) OF THE INCOME TAX ACT. THE VALUATION OFFICER ESTIMATED THE COST OF CONSTRUCTION OF THE HOUSE PROPERTY AT RS. 44 53 819/- AS PER HIS REPORT DATED 22-12-2006. THE ASSESSEE FILED THE OBJECTION BEFORE THE ASSESSING OFFICER WHICH HE -: 14: - 14 REJECTED. HE TREATED THE DIFFERENCE BETWEEN THE COST SHOWN BY THE ASSESSEE AND HIS WIFE IN THE COST ESTIMATED BY THE V.O. AS THE UNEXPLAINED INVESTMENT AND MADE THE ADDITION IN THE ASSESSMENT YEAR 1999-2000 AND 2000-01 AS UNDER :- DECLARED COST ASSESSED COST ASSESSMENT YEAR COST SHOWN BY SMT. SUMAN SACHDEVA COST SHOWN BY C.M. SACHDEVA COST ALLOCATED TO SMT. SUMAN SACHDEVA COST ALLOCATED TO C.M. SACHDEVA 1 2 3 4 1998-99 19 900 .00 97 238.00 21 486.00 1 04 985.00 1999-00 8 24 532.00 10 19 269.00 8 84 649.00 10 98 487.00 2000-01 0 42 291.00 11 47 606.00 11 16 324.00 12 27 888.00 ASSESSMENT YEAR ADDITION TOWARDS DIFFERENCE 5 6 SMT.SUMAN SACHDEVA C.M. SACHDEVA 1998-99 1 586.00 7 747.00 1999-00 60 117.00 79 218.00 2000-01 74 033.00 80 280.00 HOWEVER AT THE TIME OF MAKING THE ADDITION THE AO MADE THE ADDITION OF RS. 60 117/- IN THE ASSESSMENT -: 15: - 15 YEAR 1999-2000 AND RS. 74 033/- IN THE ASSESSMENT YEAR 2000-01 IN THE HANDS OF THE ASSESSEE WHICH WAS ATTRIBUTABLE TO SMT. SUMAN SACHDEVA AND NOT TO IN THE HANDS OF THE ASSESSEE. I HAVE CONSIDERED THE ORDER OF AO AS WELL AS THE SUBMISSION OF THE LD. AUTHORIZED REPRESENTATIVE I ABIDE BY DECISIONS OF INDORE BENCH OF I.T.A.T. CITE D BY THE A. R. AS A MATTER OF JUDICIAL DISCIPLINE. I FIND THAT THE VALUATION OFFICER HAS APPLIED THE P.W.D. RATES WHICH IS AGAINST THE SPIRIT OF THE ABOVE-CIT ED DECISION OF I.T.A.T. INDORE IN THE CASE OF PRAKASHCHAND SONI. I ALSO FIND THAT THERE IS ONLY A SMALL DIFFERENCE BETWEEN THE ASSESSEE AND HIS WIFE AND THE ESTIMATE MADE BY THE V.O. FOLLOWING THE IT AT INDORE BENCH DECISION IN THE CASE OF KISHAN EXTRUSIVE LIMITED. I HOLD THAT NO ADDITION TOWARDS THE SMALL DIFFERENCE OF 7.3% IS CALLED FOR. ACCORDINGLY I DELETE ALL THE -: 16: - 16 ADDITIONS MADE BY THE AO IN THE ASSESSMENT YEARS 1998-99 TO 2000-01. 7. AGAINST THE ABOVE ORDER OF THE LD. CIT(A) THE REVE NUE IS IN FURTHER APPEAL BEFORE US AND THE ASSESSEE HAD AL SO FILED CROSS OBJECTIONS. 8. IN ADDITION TO THE GROUNDS RAISED IN THE CROSS OBJE CTIONS ORIGINALLY FILED DURING THE COURSE OF HEARING BEFO RE US THE ASSESSEE FILED APPLICATION FOR CONDONATION OF DELAY IN FILING ADDITIONAL GROUND WITH REGARD LEGALITY OF REOPENING AND REJECTION OF BOOKS OF ACCOUNT WHICH WERE NOT FILED ALONGWITH ORIGINAL GROUNDS TAKEN IN CROSS OBJECTION. SINCE TH ERE ARE PURELY LEGAL GROUNDS AND ALL THE FACTS RELATING TO THESE ARE AVAILABLE IN THE ORDER OF THE LOWER AUTHORITIES AND ALSO ARISING OUT OF ORDER OF CIT(A) WE CONDONE THE DELAY AND AD MIT THESE ADDITIONAL GROUNDS FOR ADJUDICATION. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT REOPENING WAS MADE ON THE BASIS OF DOCUM ENTS FOUND DURING THE COURSE OF SURVEY. THE ORIGINAL ASS ESSMENTS WERE FRAMED U/S 143(1) WHICH ARE JUST INTIMATION THEREFORE -: 17: - 17 THERE IS NO QUESTION OF ANY CHANGE OF VIEW WHILE RE OPENING THE ASSESSMENT. IN THE CASE OF RAJESH JHAVERI 291 ITR 500 THE HON'BLE SUPREME COURT HAS CATEGORICALLY DEALT WITH REOPENING OF ASSESSMENT WITH REGARD TO MODE UNDER WHICH ASSES SMENT HAS BEEN DONE EITHER BY WAY OF INTIMATION U/S 143( 1) OR BY WAY OF SCRUTINY U/S 143(3). IT WAS OBSERVED THAT TH ERE IS A CONTEXTUAL DIFFERENCE BETWEEN THE TWO EXPRESSIONS I N THE CONTEXT THE EXPRESSIONS ARE USED. THE WORD ASSESSM ENT IS USED AS MEANING SOMETHING THE COMPUTATION OF INCOM E SOMETIMES DETERMINATION OF AMOUNT OF TAX PAYABLE BUT SOMETIMES THE WHOLE PROCEDURE LAID DOWN IN THE HEAD FOR IMPOSING LIABILITY UPON THE TAX PAYERS. IT WAS FURT HER OBSERVED THAT IN THE SCHEME OF THINGS INTIMATION U/S 143(1) (A) CANNOT BE TREATED TO BE AN ORDER OF ASSESSMENT. THIS DISTI NCTION IS ALSO WELL BROUGHT OUT BY THE STATUTORY PROVISIONS A S THEY STOOD AT DIFFERENT POINTS OF TIME PRIOR TO 1 ST APRIL 1989 U/S 143(1)(A) WHERE THE AO HAD TO PASS AN ASSESSMENT O RDER IF HE DECIDED TO ACCEPT THE RETURN BUT UNDER THE AMENDED PROVISION THE REQUIREMENT OF PASSING OF AN ASSESSM ENT ORDER HAS ALSO BEEN DISPENSED WITH AND INSTEAD OF IT AN I NTIMATION IS -: 18: - 18 REQUIRED TO BE SENT. IT WAS CATEGORICALLY OBSERVED BY HON'BLE SUPREME COURT THAT UNDER THE FIRST PROVISO TO NEWLY SUBSTITUTED SECTION 143(1) W.E.F. 1 ST JUNE 1999 EXCEPT AS PROVIDED IN THE PROVISIONS ITSELF ACKNOWLEDGEMENT OF THE RETURNS SHALL BE DEEMED TO BE INTIMATION U/S 143(1) WHERE NO SUM IS PAYABLE BY THE ASSESSEE OR WHERE NO REFUND I S DUE TO HIM. IT WAS CATEGORICALLY OBSERVED THAT ACKNOWLEDGE MENT IS NOT ISSUED BY THE ASSESSING OFFICER BUT BY THE MIN ISTERIAL STAFF. UNDER THESE CIRCUMSTANCES IT CANNOT BE SAID THAT THE ASSESSMENT HAS BEEN MADE BY THE MINISTERIAL STAFF. INTIMATION U/S 143(1)(A) IS DEEMED TO BE A NOTICE OF DEMAND U/ S 156 FOR THE APPARENT PURPOSE OF MAKING MACHINERY PROVISIONS RELATING TO RECOVERY OF TAX APPLICABLE. THUS THERE IS NO A SSESSMENT U/S 143(1)(A). THEREFORE NEITHER ANY OPINION IS FO RMED NOR THERE IS A QUESTION OF CHANGE OF OPINION. SINCE INT IMATION U/S 143(1) IS NOT AN ASSESSMENT THERE IS NO NECESSITY OF EVEN NEW MATERIAL TO EMPOWER TO AO TO REOPEN THE ASSESSMENT U/S 147 WHEN THERE IS REASON TO BELIEVE THAT THERE IS AN ES CAPEMENT OF INCOME. IN THE INSTANT CASE BEFORE US IN CASE OF BO TH THE ASSESSEES IN ALL THE PREVIOUS YEARS RETURNS WERE P ROCESSED -: 19: - 19 U/S 143(1) AND NO ASSESSMENT WAS FRAMED BY ISSUE OF NOTICES U/S 143(2). IN THESE FACTS AND CIRCUMSTANCES THE P ROPOSITION LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI 291 ITR 500 IS CLEARLY APPLICABLE. DOCUME NTS FOUND DURING SURVEY WERE SUFFICIENT TO MAKE THE AO BELIEF THAT THERE IS ESCAPEMENT OF INCOME. 10. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF CIT(A) FOR UPHOLDING THE VALIDITY OF REASSESSMENT PROCEEDINGS. 11. WITH REGARD TO ADDITIONS MADE ON MERIT WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFULLY GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECO RD THAT IN THE COURSE OF SURVEY AMONG VARIOUS DOCUMENTS FOUND AND IMPOUNDED THERE EXISTED DAILY REPORTS OF PRODUCTION EXPENSES AND SALE OF EGGS AND CHICKS COVERING THE PERIOD 03.08.2004 TO 17.02.2005 AND ALSO THE PERIOD 01.09. 2005 TO 20.9.2005. THE SALE WAS IN RESPECT OF COMBINED FIGURE OF THE ASSESSEE AS WELL AS THAT OF M/S . SAHIL FARMS A PROPRIETORY A PROPRIETARY CONCERN OF SMT. SUMAN SACHDEVA WIFE OF THE -: 20: - 20 ASSESSEE RUNNING ITS ACTIVITIES JOINTLY WITH THAT OF THE ASSESSEE FROM THE SAME PREMISES. AS PER THE ENTRIES FOUND NOTED ON THESE SHEETS THE AVERAGE DAILY SALE OF EG GS PER DAY OF BOTH THE FARMS WERE TO THE TUNE OF 85000 EGGS DA ILY. THIS WORKS OUT TO BE AROUND SALE OF 3.10 CRORE OF EGGS I N A YEAR. ENTRIES OF THE ABOVE DAILY REPORTS ARE FURTHER SUBS TANTIATED FROM THE OTHER LOOSE PAPERS IMPOUNDED DURING THE CO URSE OF SURVEY. FOR EXAMPLE LPF-9 OF THE IMPOUNDED DOCUMEN TS IS A DATE WISE CASH-FLOW DOCUMENT WHICH SHOWS AVERAGE DAILY SALE OF EGGS IN EXCESS OF ONE LAKH OF RUPEES. SIMIL ARLY LPF- 21 DEPICTS DEPICTS PER DAY PRODUCTION OF EGGS ETC. FINALLY THE ASSESSEE ALSO ADMITTED THE ABOVE FIGURE TO BE T HE ACTUAL DATA OF THE SAID PERIOD. IT WAS OBSERVED BY THE ASS ESSING OFFICER THAT IT IS A SCIENTIFICALLY PROVEN FACT THAT CHICKS USUALLY START LAYING EGGS FROM ' THE AGE OF 18 TO 20 WEEKS. IN NO CASE THE BIRDS START LAYING EGGS LATER THAN 20T H WEEK. EGGS ARE IN FACT PRODUCT OF MENSTRUATION CYCLE OF BIRDS. THE BIRDS LAY EGGS AFTER EVERY 26 HRS. TO 30 HRS. CONSI DERING 24 HOURS IN A DAY THE NUMBER OF EGGS PRODUCED PER DAY VARIES -: 21: - 21 BETWEEN 80 % TO 92 % OF NUMBER OF LAYER BIRDS EXIST ING. THE BIRDS LAY EGGS UP TO THE AGE OF 72 WEEKS. AFTER THA T AGE THE PRODUCTION PER BIRD STARTS DECLINING. THEREFORE AS AND WHEN A SUITABLE BUYER IS FOUND SUCH AGED BIRDS ARE SOLD [CULLED]. HOWEVER IN THE CASE OF THE ASSESSEE THE CHART ENC LOSED ALONG-WITH THE RETURN OF INCOME FOR THE YEARS UNDER CONSIDERATION SHOWING AGE-WISE BIFURCATION OF NUMBER OF BIRDS PURCHASED SOLD CLOSING STOCK ETC. THE NUM BER OF EGGS PRODUCED ARE FOUND NOT TO BE COMMENSURATE WITH THE NUMBER OF LAYER BIRDS AND THE TREND OF EGG PRODUCTION SHOWN IS FOUND TO BE NOT IN LINE WITH THE ABOVE BI OLOGICAL FACTS AND IS FOUND TO BE GROSSLY UNDERSTATED. THE AO FURTHER OBSERVED THAT I T IS SEEN FROM THE RECORD OF THE ASSESSEE THAT THERE HAS BEEN NO CHANGE IN THE EXTEN SION OF THE SHEDS ETC. OF THE ASSESSEE SINCE THE FINANCIAL YEAR 2000-01 AND THE CAPACITY OF THE POULTRY FARM HAS REMAINED THE SAME. NO MAJOR FLUCTUATION IN THE SALE FIGURE OF EGGS AS SHOWN BY THE ASSESSEE SINCE 2000-01 HAS BEEN NOTICED. IT WAS FURTHER STATED THAT THERE HAD BEEN NO NOTE -: 22: - 22 WORTHY DECLINATION IN THE RATE OF PRODUCTION OF EGG S SINCE LAST 5 OR 6 YEARS. HOWEVER THE DOCUMENTS ANNEXED W ITH THE RETURN OF INCOME OF THE ASSESSEE FILED FOR THE ABOVE YEAR REVEAL THAT HE HAS SHOWN SALE OF EGG FOR THE FINANCIAL YEAR 1998-99 RELEVANT TO THE ASSESSMENT YEAR 1999- 2000 TO THE TUNE OF 8467500 EGGS ONLY AND THERE WAS NEG LIGIBLE MORTALITY OF CHICKS AS SHOWN IN THE YEAR UNDER CONSIDERATION. THE SALE OF EGG FOR THE SAME PERIOD OF M/S SAHIL FARM WHICH IS RUNNING ITS ACTIVITY FROM THE SAME PREMISES WAS FOUND TO BE THERE TO THE TUNE OF THAT OF M/S CHICK POULTRY ONLY. THUS TOTAL SALE OF EGGS FOR BOT H THE ABOVE CONCERNS WAS SHOWN TO BE LESS THAN 2 CRORES OF EGGS ONLY AS AGAINST AVERAGE SALE AS MENTIONED IN THE ABOVE PARA OF 3.10 CRORE EGGS. THUS THERE IS CLEARLY A SUPPRESSION OF SALE OF MORE THAN ONE CRORE OF EGGS I.E. SUPPRESSION OF SALE TO THE TUNE OF ONE CRORE OF RUPEES IN THE YEAR UNDER CONSIDERATION. IN THE COURSE OF ABOVE SURVEY CERTAIN BLANK VOUCHERS BLANK RECEIPTS BLANK LETTER HEADS AND BL ANK INVOICES OF DIFFERENT CONCERNS WERE FOUND. IN THE C OURSE OF -: 23: - 23 HIS STATEMENT THE ASSESSEE WAS SPECIFICALLY ASKED TO FURNISH CLARIFICATION FOR KEEPING THOSE BLANK RECEIPTS ETC. ASSESSEE WAS ALSO ASKED AS TO WHY THE SAME BE NOT CONSIDERED TO BE USED BY THE ASSESSEE FOR SHOWING BOGUS PURCHASES OR BOGUS EXPENSES. THE ASSESSEE COULD NOT EXPLAIN THE PURPOS E OF THE ABOVE. FROM THE RETURN OF THE INCOME OF THE ASSESSE E FOR THE YEARS UNDER CONSIDERATION IT IS SEEN THAT SOME OF THE ABOVE CONCERNS LIKE M/S. SHAKTI PHARMA M/S. GREAT BEER F ARMS M/S. PIONEER MARKETING M/S. VIP PRODUCTS M/S. PIONEER MARKETING AND MANY OTHER CONCERNS HAVE BEEN SHOWN A S SUNDRY CREDITORS IN THE ACCOUNT OF THE ASSESSEE FOR THE RELEVANT YEAR. SIMILARLY SOME OF THE CONCERNS WHICH EXISTED WERE CONTACTED BY THE INSPECTOR OF THIS OFF ICE. TWO OF SUCH CONCERNS NAMELY M/S. GREAT BEAR FARM AND M/S. IDEAL FARM DENIED TO HAVE ANY TRANSACTIONS WITH THE ASSES SEE IN THE YEARS UNDER CONSIDERATION. SOME OTHER CONCERNS LIKE M/S. SHAKTI PHARMA AND M/S. MEDI LINK AGENCIES FURNISHED THEIR COPIES OF ACCOUNT REGARDING THEIR TRANSACTION S WITH THE ASSESSEE. IN THE COURSE OF ASSESSMENT ALL THE ABOV E FACTS -: 24: - 24 WERE BROUGHT TO THE NOTICE OF THE ASSESSEE VIDE ORD ER SHEET ENTRY DATED 7.12.2006. THE ASSESSEE WAS ALSO PROVID ED WITH THE COPIES OF STATEMENT ALONGWITH COPY OF LETTER OF INDORE POULTRY FEDERATION EXTRACTED BY THE INSPECTOR IN TH E COURSE OF HIS ENQUIRY. ON THAT DATE DOCUMENTS IMPOUNDED D URING THE COURSE OF SURVEY OPERATION WERE ALSO TALLIED WI TH THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT WAS SEEN THAT ENTRIES DEPICTED IN LPF-7 AND LPF-LL REFLECTING SALE OF EGG S ON VARIOUS DATES WERE NOT MATCHING WITH THE RELEVANT E NTRIES APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. 12. IT IS QUITE CLEAR FROM THE ABOVE OBSERVATION OF THE AO THAT ADDITION ON ACCOUNT OF CONCEALED INCOME HAS BE EN WORKED OUT ON THE BASIS OF SEIZED MATERIAL AND NOT ON THE BASIS OF ANY ESTIMATION IN AIR. IN THE COURSE OF SE ARCH DAILY REPORT OF PRODUCTION EXPENSES AND SALE OF EGGS AND CHICKS PERTAINING TO THE PERIOD 3.8.2004 TO 17.2.2005 AND ALSO FOR THE PERIOD 1.9.2005 TO 20.9.2005 WERE FOUND. IN THE SE DOCUMENTS COMBINED SALE OF ASSESSEE AS WELL AS OF M /S. SAHIL FARM A PROPRIETORY CONCERN OF THE ASSESSEES WIFE WAS -: 25: - 25 MENTIONED. WIFE WAS ALSO RUNNING ITS ACTIVITY JOINT LY WITH THAT OF THE ASSESSEE FROM THE VERY SAME PREMISES. T HE AO WORKED OUT DAILY SALE OF EGGS PER DAY OF BOTH THE F ARMS ON THE BASIS OF THESE DOCUMENTS WHICH WORKED OUT AT 8 5000 EGGS DAILY. THUS THE ANNUAL SALE OF EGGS WAS COMPU TED AT RS. 3.10 CRORES IN A YEAR. DURING THE COURSE OF SUR VEY DOCUMENT RELATING TO DATE-WISE CASH FLOW ABOVE DAIL Y SALES OF EGGS WERE ALSO FOUND WHICH INDICATED SALE OF EGGS IN EXCESS OF ONE LAKH OF RUPEES. THE DOCUMENT FOUND MARKED AS LPF- 12 DEPICTED DAILY PRODUCTION OF EGGS. WHILE TAKING THE STATEMENT DURING SURVEY THE ASSESSEE HAS ALSO ADMI TTED THESE FIGURES TO BE THE ACTUAL DATA OF THE SAID PER IOD. ON THE BASIS OF THESE DOCUMENTS ADDITIONS WERE MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF EGG PRODUCTION AND SALE AND INCOME OUT OF SALE OF CULLED BIRDS. 13. DURING THE COURSE OF SURVEY BUNCH OF LOOSE PAPERS WERE FOUND WHICH CONTAINED BLANK BILLS AND LETTER P ADS OF VARIOUS CONCERNS OF INDORE DHAR GUJARAT AND MAHAR ASHTRA. THE ASSESSEE WAS ASKED ABOUT THE NATURE OF THOSE BL ANK -: 26: - 26 DOCUMENTS AND WAS ALSO ASKED TO FURNISH HIS EXPLANA TION REGARDING THEIR EXISTENCE IN THE ASSESSEES PREMISE S. HOWEVER THE ASSESSEE EXPRESSED HIS IGNORANCE IN TH IS REGARD. IN THE POST SURVEY PROCEEDINGS THE ASSESSE E WAS AGAIN ASKED THE REASONS TO EXPLAIN THOSE BLANK DOCU MENTS AND THE REASONS AS TO WHY THESE WERE KEPT AT ASSESS EES PREMISES. HOWEVER THE ASSESSEE WAS UNABLE TO REPLY THE SAME AND EXPRESSED HIS IGNORANCE. THE AO OBSERVED T HAT MOST OF THE CONCERNS WHOSE BLANK BILLS/LETTER PADS WERE FOUND FROM THE PREMISES OF THE ASSESSEE WERE SHOWN AS A CREDITORS OF THE ASSESSEE. THE AO ALSO DEPUTED INSP ECTOR TO INQUIRE ABOUT THE EXISTENCE AND NATURE OF TRANSACTI ONS OF THOSE CONCERNS WITH ASSESSEE. IT WAS SURFACED THAT SOME OF THE CONCERNS LIKE M/S. MINI BEE FARMS M/S. RADHA K ISHNA FARMS M/S. PREM POULTRY FARM WERE NOT AT ALL IN EX ISTENCE AT THE ADDRESSES GIVEN BY THE ASSESSEE. TWO OF SUCH CONCERNS NAMELY M/S. GREAT BEER FARMS AND M/S. ID EAL FARMS DENIED TO HAVE ANY TRANSACTIONS WITH THE ASSE SSEE IN THE YEARS UNDER CONSIDERATION. M/S. SHAKTI FARM AND M/S. -: 27: - 27 MEDILINK AGENCIES FURNISHED THEIRS COPIES OF ACCOUN T REGARDING THEIR TRANSACTIONS WITH THE ASSESSEE. THE ASSESSEE WAS ALSO PROVIDED WITH THE COPIES OF THESE STATEMEN TS. HOWEVER THE AO HAS ALSO TALLIED THE DOCUMENTS IMPO UNDED DURING THE COURSE OF SURVEY OPERATION WITH THE BOOK S OF ACCOUNT OF THE ASSESSEE AND FOUND THAT THE ENTRIES DEPICTING SALES OF GOODS ON VARIOUS DATES WERE NOT MATCHING I N THE RELEVANT DATE APPEARED IN THE BOOKS OF ACCOUNT OF T HE ASSESSEE. HOWEVER THE ASSESSEE COULD NOT GIVE ANY EXPLANATION FOR THE SAME NOR ANY CONCLUSIVE REPLY W AS FURNISHED. UNDER THESE FACTS AND CIRCUMSTANCES THE AO PROCEEDED TO REJECT THE BOOK RESULT SHOWN BY THE AS SESSEE. THE AO ALSO FOUND THAT WHILE COMPARING THE SEIZED DOCUMENTS WITH THE BOOK ENTRIES THE ASSESSEE WAS IN CONTINUOUS PRACTICE OF INFLATING ITS EXPENSES BY SH OWING FICTITIOUS PURCHASES OF FEEDS MEDICINES AND EVEN B IRDS. IN THE BOOKS OF ACCOUNT THE ASSESSEE HAD SHOWN PURCHA SES OF GROWERS FROM M/S. MINI BEE FARMS M/S. GREAT BEER F ARMS M/S. IDEAL FARMS. HOWEVER THESE CONCERNS WERE EITH ER -: 28: - 28 FOUND TO BE NON-EXISTENT CONCERNS OR THEY DENIED TO HAVE ANY TRANSACTION WITH THE ASSESSEE IN THESE YEARS UN DER CONSIDERATION. 14. OBSERVATION OF THE AO WITH REGARD TO PURCHASES OF BLOWERS AND SALES OF LAYERS WERE AS UNDER :- (IV) THE ASSESSEE IS RUNNING A EGG PRODUCING FARM AND NOT A BROILER FARM. ITS MAIN INCOME EARNING ACTIVIT Y IS FROM SALE OF EGGS. HOWEVER IT HAS SHOWN PURCHASE O F GROWERS AND CONSECUTIVE SALES OF LAYERS. FROM THE ACCOUNTS OF THE ASSESSEE THE AGE OF GROWERS PURCHA SED ARE NOT ASCERTAINABLE. ON ONE HAND THE ASSESSEE IS PURCHASING CHICKS AND NOURISHING THEM WITH FEED AND MEDICINE UP TO THE AGE OF LAYERS AND TAKING EGGS FR OM THEM HE EVEN TAKES EGGS FROM THOSE LAYERS BEYOND T HE AGE OF 72 WEEKS IN SOME CASE AND ON THE OTHER HAND IT PURCHASES GROWERS AND AFTER NOURISHING THEM UPTO TH E AGE OF BEING LAYER SELLS THEM AT A LOSS OR NO PROF IT MARGIN. MOREOVER AFTER PURCHASING OF GROWERS AND FEEDING THEM UP TO THE AGE OF BEING LAYERS AND IN T HE PLACE OF TAKING EGGS FROM THEM SELLING THEM @ RS 55/- -: 29: - 29 OR RS. 60/- PER PIECE IS NOT AT ALL A MOVE OF COMMERCIAL PRUDENCE. EXAMPLE WHEREAS GETTING EGGS FROM THE LAYERS IS QUITE PROFITABLE AND IS MAIN BUSINESS AND INCOME EARNING ACTIVITY OF THE ASSESSEE. HENCE THE SHOWING OF PURCHASE OF GROWERS AND SELLING THEM AS LAYERS IS MOST IMPROBABLE FROM THE SENSE OF COMMERCIAL PRUDENCE AND IS AGAINST THE NORMAL TRADE PRACTICE IN THIS LINE OF BUSINESS. SINCE PRODUCTION OF EGGS FROM LAYERS PERIOD OF DEVELOPMENT OF CHICKS IN TO LAYERS FEED AND MEDICINE INTAKE OF BIRDS ARE SCIENTIFICALLY PROVEN FACT AND CANNOT VARY TO GREAT ER EXTENT THE ABOVE METHOD OF PURCHASE OF GROWERS AND SALE OF LAYERS HAVE BEEN ADOPTED BY THE ASSESSEE ONLY TO REDUCE ITS PROFIT BY COMPRESSING I TS SALE OF EGGS AND OFFSETTING THE PROFIT WITH THE LOSS/REDUCED PROFIT FROM PURCHASE & SALE OF BIRDS. (V) ALL SUCH GROWER PURCHASES HAVE BEEN SHOWN AGAINST CASH PAYMENTS NO EVIDENCE OF -: 30: - 30 TRANSPORTATION OF SUCH GROWERS ARE AVAILABLE EVEN ALL SALE OF LAYERS ARE ALSO IN CASH AND NONE OF SUC H PURCHASERS ARE IDENTIFIABLE. (VI) FEED AND MEDICINE PURCHASES HAVE BEEN SHOWN FROM A NUMBER OF CONCERNS. OUT OF THEM BLANK BILLS/VOUCHERS AND LETTER-PADS OF SOME OF THE CONCERNS WERE FOUND FROM THE PREMISES OF THE ASSESSEE. NO EVIDENCE IN RESPECT OF TRANSPORTATION FROM THOSE CONCERNS COULD BE PRODUCED. MOST OF THE PAYMENTS MADE TO SUCH CONCERNS ARE IN CASH. THIS TYPE OF PRACTICE HAS BEEN NOTICED IN ALL THE ABOVE YEARS UNDER CONSIDERATION. (VII) IT IS WORTH MENTIONING HERE THAT A CHICK UP TO THE AGE OF 20 WEEKS INTAKES AROUND 15 TO 55 GMS. OF FEED PER DAY. THE SAME QUANTITY FOR A LAYER IS 131 GMS. PER DAY. THIS FACT IS ALSO ESTABLISHED FROM TH E ABOVE STATED THREE DAILY SHEETS FOUND FROM THE PREMISES OF THE ASSESSEE. CONSUMPTION OF FEED SHOWN BY THE ASSESSEE IS NOT FOUND TO BE COMMENSURATE WITH THE NUMBER OF BIRDS EXISTING AT -: 31: - 31 A GIVEN POINT OF TIME. (VIII) IN ALL THE ABOVE YEARS UNDER CONSIDERATION SALE OF EGGS HAS BEEN SHOWN AT A CONSTANT RATE OF EITHER @ RS. 1.10 PER EGG. OR RS. 1.20 PER EGG. IT IS WORTH MENTIONING HERE THAT THERE IS A GREAT FLUCTUATION I N THE RATES OF EGGS VARYING ON THE SEASONAL CONDITIONS. THE ABOVE FACT IS EVIDENT FROM THE IMPOUNDED DOCUMENT BEARING NO. LPF-11. IN PAGES NO. 1 & 2 OF THIS DOCUMENT RATE OF EGGS FOR THE PERIOD OCT. & NOV. 2000 HAS BEEN SHOWN AT RANGING BETWEEN RS. 1.12 TO RS.1.46 PER EGG. SIMILARLY PAGE 4 OF THIS DOCUMENT SHOWS RATE OF EGGS IN JULY 01 RANGING BETWEEN RS.1.15 TO RS. 1.20 PER EGG. HOWEVER THE ASSESSEE IN ALL THE ABOVE YEARS HAS NOT SHOWN ANY SUCH RATE OR ANY SUCH FLUCTUATION IN THE RATE OF EGGS IN ITS BOOKS O F ACCOUNT. (IX) IN THE SAME DOCUMENT I.E. LPF-11 AN ACCOUNT OF SOME AFTAB BHAI IS APPEARING. THE ABOVE PERSON HAS BEEN A REGULAR CUSTOMER OF THE ASSESSEE WHO -: 32: - 32 REGULARLY PURCHASES EGGS FROM THE ASSESSEE MOSTLY ON CREDIT AND MAKES PERIODIC CASH PAYMENTS. HOWEVER ASSESSEES BOOKS OF ACCOUNT DO NOT REFLECT ANY COPY OF ACCOUNT OF AFTAB BHAI. EVEN IN THE DAILY SHEETS FOUND DURING THE COURSE OF SURVEY AFTAB BHAI HAS BEEN SHOWN TO BE PURCHASING EGGS FROM THE ASSESSEE REGULARLY EVEN IN THE YEAR OF SURVEY. (X) IN THE SALE OF CULLED BIRDS ONLY TWO RATES HAVE BE EN ADOPTED BY THE ASSESSEE I.E. RS. 55/- AND RS. 60/- PER BIRD . ALL SALE HAVE BEEN SHOWN TO HAVE MADE IN CASH. NONE OF THE PURCHASER IN ANY OF THE YEARS UNDER CONSIDERATION ARE IDENTIFIABLE. IT IS A COMMON FACT THAT THE RATE OF BIRDS VARIES A GREAT EXTENT DEPENDING UPON THE SEASONS. (XI) MORTALITY OF BIRDS HAVE BEEN SHOWN IN THE QUANTITATIVE CHART OF THE ASSESSEE ENCLOSED ALONGWITH THE RETURNS OF INCOME ON A PURELY ARBITRARY BASIS. NO SUCH MORTALITY IS APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IT IS NOT -: 33: - 33 MENTIONED ANYWHERE AS TO ON WHAT DATE AND AT WHAT AGE THE MORTALITY OF BIRDS OCCURRED. (XII) QUANTITATIVE CHART ANNEXED WITH THE RETURN APPEARS NOT TO BE PREPARED KEEPING IN VIEW THE BOOKS OF ACCOUNT OF THE ASSESSEE. FOR EXAMPLE IN FINANCIAL YEAR 02-03 BOOKS OF ACCOUNT OF THE ASSESSEE SHOWS 43858 NUMBER OF CHICKS IN THE ENTIRE YEAR. HOWEVER IN THE QUANTITATIVE CHART TH E ABOVE FIGURE HAS BEEN SHOWN AT 43829 WHICH IS ALSO TALLYING WITH THE COPY OF ACCOUNTS OF THE ASSESSEE APPEARING IN THE BOOKS OF M/S. PHOENIX HATCHERIES OF JABALPUR. IT IS WORTH MENTIONING HERE THAT THE ABOVE CONCERN IS THE ONLY CONCERN FROM WHOM THE ASSESSEE HAS PURCHASED CHICKS. (XIII) BOOKS OF ACCOUNT OF ALL THE YEARS APPEAR TO BE WRITTEN BY A SINGLE PERSON USING THE SAME INK AND APPEAR TO HAVE BEEN WRITTEN IN A SINGLE SITTING. ( XIV) IN THE COURSE OF SURVEY SOME DOCUMENTS WERE FOUND WHICH DEPICTED ACTUAL SALE OF EGGS FOR A -: 34: - 34 CERTAIN PERIOD IN FINANCIAL YEAR 2004-05 AND 2005-06. IN THE COURSE OF HIS STATEMENT THE ASSESSEE ACCEPTED THE FIGURES REFLECTED ON THOSE DOCUMENTS TO BE GENUINE. IN THOSE STATEMENTS THE ASSESSEE ALSO CONTENDED THAT FOR LAST SO MANY YEARS THERE HAS NOT BEEN ANY MAJOR FLUCTUATION SO FAR AS HIS BUSINESS OF CHICKS AND EGGS ARE CONCERNED. THIS FACT IS ALSO VERIFIABLE FROM THE RECORDS OF THE ASSESSEE WHEREIN THE MORTALITY RATE OF CHICKEN HAS NOT FLUCTUATED MUCH. SALE OF EGGS PURCHASE OF CHICKS ETC HAVE ALSO NOT BEEN OF MUCH FLUCTUATION. HOWEVER THE EXTENT OF SALE OF EGGS WHICH COMES OUT FROM THE ANALYSIS OF IMPOUNDED DOCUMENT IS FOUND TO BE MUCH MORE THAN THAT FOR THE YEAR UNDER CONSIDERATION. 15. ON THE BASIS OF ABOVE OBSERVATION IT WAS CONCLUDED BY THE ASSESSING OFFICER THAT BOOKS OF ACCOUNT MAIN TAINED -: 35: - 35 BY THE ASSESSEE DID NOT REFLECT THE TRUE AND CORREC T AFFAIRS OF THE BUSINESS. ACCORDINGLY THE SAME WAS REJECTED BY INVOKING PROVISIONS OF SECTION 145(3) OF THE ACT. B Y IMPUGNED ORDER THE LD. CIT(A) HAD CONFIRMED THE RE JECTION OF BOOKS OF ACCOUNT AND UPHELD THE INVOCATION OF PR OVISIONS OF SECTION 145(3) WE DO NOT FIND ANY INFIRMITY IN THE ACTION OF LOWER AUTHORITIES IN INVOKING PROVISIONS OF SECT ION 145(3). 16. IT IS CLEAR FROM THE ORDER OF THE AO THAT ADDITION ON ACCOUNT OF CONCEALED UNACCOUNTED SALES AND EXPENDIT URE INCURRED FOR FEED AND MEDICINE WERE MADE ON THE BAS IS OF VARIOUS DOCUMENTS AND DIARIES/DAILY SALE STATEMENT FOUND DURING THE COURSE OF SURVEY. EVEN THOUGH THE DOCUME NTS SO FOUND WERE NOT RELATED TO THE ENTIRE PERIOD BUT TH E AO AFTER RECORDING STATEMENT OF THE ASSESSEE HAD APPLIED THE UNACCOUNTED SALE TO THE ENTIRE PERIOD UNDER CONSIDE RATION. VARIOUS FINDINGS HAVE BEEN RECORDED BY THE ASSESSIN G OFFICER WITH REGARD TO COMPUTATION OF PRODUCTION AND SALE O F EGGS AND INCOME FROM SALE OF GUNNY BAGS AND MANURE. NONE OF THE FINDINGS SO RECORDED BY THE ASSESSING OFFICER WITH REFERENCE TO -: 36: - 36 THE DOCUMENTS IMPOUNDED HAVE BEEN CONTROVERTED BY T HE LD. CIT(A). THE LD. CIT(A) WAS ALSO WRONG IN ALLEGING T HAT THE AO HAS BASED HIS ESTIMATION OF INCOME ON PROJECT REPOR T PREPARED BY THE SELLER OF CHICKS AS ADVERTISEMENT CAMPAIGN. NO WHERE THE AO HAS COMPUTED UNACCOUNTED INCOME FROM SALE OF EGGS ON THE BASIS OF PROJECT REPORT BUT THE SAME WAS BA SED ON THE DOCUMENTS IMPOUNDED DURING SURVEY AS WELL AS STATEM ENT OF THE ASSESSEE RECORDED WITH REFERENCE TO THESE INCR IMINATING DOCUMENTS. DURING THE COURSE OF HEARING BEFORE US THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAD ARGUE D THAT PRODUCTION OF EGGS AT RS. 290/- PER BIRD IS BASED O N BOOK VERSION BY NAME EGG INDUSTRY IN NEW MILLENIUM. HOWEVER ON ASKING BY THE BENCH THE LD. AUTHORIZED REPRESENTATIVE COULD NOT PRODUCE ANY SUCH BOOKS TO SUBSTANTIATE THE CLAIM OF PRODUCTION OF EGGS AT RS. 290/-PER BIRD. WE FOUND THAT THE LD. CIT(A) HAS DELETED THE ADDITION MADE ON ACCOUNT OF SALE OF BIRDS AND EGGS IN RESPEC T OF BOTH THE FIRMS JUST BY ESTIMATING SALE OF BIRDS AND EGGS WHICH WAS EVEN LOWER THAN WHAT THE ASSESSEE HAD ACTUALLY SHOW N IN THEIR BOOKS OF ACCOUNT IN RESPECT OF ASSESSMENT YEAR 1999 -2000 -: 37: - 37 2001-02 2002-03 AND 2003-04. WE FAIL TO UNDERSTAND THAT HOW THE LD. CIT(A) HAD ESTIMATED THE SALE OF BIRDS LOWER THAN WHAT THE ASSESSEE HAS ACTUALLY SHOWN IN ITS AUDITED BOOKS OF ACCOUNT IN ALL THESE YEARS. WE ACCORDINGLY SET AS IDE THE ORDER OF THE LD. CIT(A) WITH REFERENCE TO THE ADDITIONS D ELETED BY HIM WITH REFERENCE TO ESTIMATION OF SALE OF BIRDS AND EGGS OF BOTH THE FIRMS WHICH IS NOT BASED ON ANY MATERIAL ON RE CORD AND RESTORE THE MATTER BACK TO THE FILE OF LD. CIT(A) F OR RE- COMPUTING THE SAME ON ACCOUNT OF BIRDS AND EGGS ON THE BASIS OF VARIOUS FINDINGS RECORDED BY THE ASSESSING OFFIC ER BASED ON SEIZED DOCUMENTS AND THE STATEMENT OF THE ASSESSEE RECORDED DURING SURVEY. WE DIRECT ACCORDINGLY. 17. WITH REFERENCE TO THE OBSERVATION MADE BY THE ASSESSING OFFICER IN RESPECT OF DROPPING OF BIRDS A ND SALE OF GUNNY BAGS HE HAS REFERRED TO PROJECT REPORT PREPA RED BY THE BIGGEST HATCHERIES GROUP OF INDIA. THE AO OBSERVED THAT A PROJECT REPORT PREPARED BY ONE OF THE BIGGEST HATCH ERIES GROUP OF INDIA I.E. VENKATESHWARA HATCHERIES PVT.LTD. OF PUNE REVEALS THAT IN A POULTRY FARM OF 12000 BIRDS SALE OF DROPPINGS WHICH IS TREATED AS A VERY GOOD ORGANIC MANURE IS -: 38: - 38 TO THE TUNE OF RS. 848000/- AND SALE OF GUNNY BAGS IS TO THE TUNE OF RS. 56512/-. THE CONSOLIDATED CAPACITY OF T HE POULTRY FARM OF THE ASSESSEE AND HIS SPOUSE IS MORE THANE O NE LAKH OF BIRDS. EVEN IF IT IS ASSUMED THAT A ROSY PICTURE OF SALE OF MANURE AND GUNNY BAG HAS BEEN GIVEN IN THE SAID PRO JECT REPORT IT CAN VERY SAFELY AND IN A VERY CONSERVATIV E MANNER ASSUMED THAT THERE HAS BEEN SALE OF RS. TEN LAKHS O F RUPEES HAS BEEN CONCEALED BY THE ASSESSEE AND HIS SPOUSE I N THIS REGARD AS NO SALE HAS BEEN SHOWN BY THE ASSESSEE IN THESE HEADS. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOU ND THAT ON THE BASIS OF THE ASSESSEES STATEMENT DURING SUR VEY AND THE DOCUMENTS SO FOUND DURING SURVEY THE AO HAS MADE A DDITION ON ACCOUNT OF DROPPING OF BIRDS AND SALE OF GUNNY B AGS AT RS. 10 LAKHS IN RESPECT OF BOTH THE ASSESSEE AND FOR THIS PURPOSE HE HAS ALSO REFERRED TO PROJECT REPORT PREPARED BY BIGGEST HATCHERIES GROUP OF INDIA. WITHOUT GIVING ANY BASIS AND REASONING ANY WITHOUT CONTROVERTING THE FINDINGS RE CORDED BY THE ASSESSING OFFICER THE CIT(A) HAD SUBSTANTIALLY REDUCED THE ADDITIONS SO MADE. KEEPING INTO THE VIEW THE TOTALI TY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED HE REINABOVE -: 39: - 39 WE DIRECT THE AO TO RESTRICT THE ADDITION TO THE EX TENT OF 50 % OF THE WHAT HAS BEEN MADE BY THE ASSESSING OFFICER IN HIS ORDER DATED 29.12.2006 18. THE ADDITION MADE ON ACCOUNT OF CONSTRUCTION OF THE HOUSE PROPERTY BY BOTH THE ASSESSEES WHICH WERE MA DE BY THE ASSESSING OFFICER ON THE BASIS OF DVOS REPORT WAS DELETED BY THE LD. CIT(A) BY OBSERVING THAT DVO HAS NOT APPLIE D LOCAL PWD RATES. FOR THIS PURPOSE CIT(A) HAS ALSO RELIE D ON THE DECISION OF THE COORDINATE BENCH OF INDORE REPORTED AT 94 TTJ 631. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF T HE CIT(A) FOR DELETING THE ADDITION MADE ON ACCOUNT OF CONSTRUCTI ON OF HOUSE PROPERTY BASED ON THE PRINCIPLE LAID DOWN BY THE COORDINATE BENCH OF INDORE. 19. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWE D IN PART IN TERMS INDICATED HEREINABOVE WHEREAS CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 23RD MARCH 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD MARCH 2011. CPU* 7.21D