Rajesh Trade Link Pvt.Ltd.,, Ahmedabad v. The ACIT.,Cent,Circle-1(4),, Ahmedabad

CO 168/AHD/2008 | misc
Pronouncement Date: 16-04-2010 | Result: Dismissed

Appeal Details

RSA Number 16820523 RSA 2008
Bench Ahmedabad
Appeal Number CO 168/AHD/2008
Duration Of Justice 1 year(s) 9 month(s) 5 day(s)
Appellant Rajesh Trade Link Pvt.Ltd.,, Ahmedabad
Respondent The ACIT.,Cent,Circle-1(4),, Ahmedabad
Appeal Type Cross Objection
Pronouncement Date 16-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 16-04-2010
Date Of Final Hearing 07-04-2010
Next Hearing Date 07-04-2010
Assessment Year misc
Appeal Filed On 11-07-2008
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI T.K. SHARMA JM AND D.C.AGRAWAL AM ASSTT. CIT CEN.CIR.1(4) 318 3 RD FLOOR AAYKAR BHAVAN AHMEDABAD. V/S . RAJESH TRADE LINK (P) LTD. 1-BASEMENT SUMATHINATH COMPLEX PRITAMNAGAR ELLISBRIDGE AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI RAJEEV AGARWAL CIT DR RESPONDENT BY:- SHRI P. F. JAIN AR O R D E R PER D. C. AGRAWAL ACCOUNTANT MEMBER. THIS IS AN APPEAL FILED BY THE DEPARTMENT AND THE C.O. HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT( A) DATED 28 TH JUNE 2002. 2. DURING THE COURSE OF HEARING THE LD. AR DID NOT PRESS FOR THE CROSS OBJECTION AND HENCE THE SAME IS DISMISSED AS NOT PR ESSED. 3. IN ITS APPEAL THE DEPARTMENT HAS RAISED FOLLOWIN G GROUND :- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.45 75 000/- MADE ON ACCOUNT OF UNEXPLAINED IN VESTMENT IT(SS)A NO.238/AHD/2002 ALONG WITH CO NO.168/AHD/2008 BLOCK PERIOD :1.4.89 TO 18.4.99 2 IN PURCHASES RS.76 888/- ON ACCOUNT OF UNACCOUNTED SALE OF GOODS AND RS.1 37 250/- ON ACCOUNT OF UNACCOUNTED I NCOME ON SALE OF GOODS. 4. THE FACTS OF THE CASE ARE THAT ASSESSEE IS A PRI VATE LTD. COMPANY INCORPORATED ON 13.6.1997 AND IS CARRYING ON BUSINE SS OF TRADING OF PAN PARAG. THE INCOME-TAX DEPARTMENT CARRIED OUT A SEAR CH AND SEIZURE OPERATION U/S 132(1) ON 18.11.1999 AT THE BUSINESS PREMISES OF THE ASSESSEE COMPANY AND RESIDENTIAL PREMISES OF THE DI RECTORS. DURING THE COURSE OF SEARCH SEVERAL RECEIPTS SHOWING PAYMENT O F OCTROI DUTY AMOUNTING TO RS.1 01 000/- ON INVOICES VALUE OF RS. 45 75 000/- WERE FOUND. THE SUMMARISED DETAILS OF THOSE RECEIPTS ARE GIVEN BY THE AO AS UNDER :- DATE RECEIPT NO. DESCRIPTION CHECKING TIME AMOUNT OCTROI PAID (RS.) INVOICE AMOUNT OF GOODS (RS.) PAGE NO. OF ANNEXURE 20.7.99 8 LOOSE PAN MASALA 7.00 PM 25 000(@2%) 12 50 000 1 20.7.99 9 LOOSE PAN MASALA PAN PARAG! 7.05 PM 19 000(@2%) 9 50 000 2 20.7.99 10 LOOSE PAN MASALA 7.05 PM 19 000(@2%) 9 50 000 2 20.7.99 11 LOOSE PAN MASALA 7.15 PM 19 000(@2%) 9 50 000 3 20.7.99 12 LOOSE GUTKHA 7.15 PM 19 000(@4%) 4 75 000 3 1 01 000 45 75 000 5. WHEN ASKED TO EXPLAIN THE ASSESSEE REPLIED THAT OCTROI DEPARTMENT CARRIED OUT THE SURPRISE CHECKING ON 17.7.99 AT THE PREMISES PERTAINING JOINTLY TO ASSESSEE AND TWO SISTER CONCERNS NAMELY- J. K. TRADING CO. AND ATUL SALES CORPORATION. THE BUSINESS PREMISES CONTA INED GOODS OF THREE CONCERNS. THE OCTROI DEPARTMENT SEALED THE PREMISES ON 17.7.99 AND CALLED FOR THE BOOKS OF ACCOUNT. THE STOCK FOUND WA S RECONCILED WITH THE 3 BOOKS OF ACCOUNT BUT THE OCTROI DEPARTMENT IN ABSEN CE OF OCTROI PAID RECEIPTS ON PURCHASE BILLS CHARGED RS.1 01 000/- O N THE PREVIOUS PURCHASES AMOUNTING TO RS.45 75 000/-. EVEN THOUGH THE ASSESSEE HAD SOUGHT FOR THE DETAILS FROM THE OCTROI DEPARTMENT A S TO ON WHICH ITEMS OCTROI WAS LEVIED BUT NO SUCH DETAILS WERE PROVIDED . IT WAS FURTHER EXPLAINED THAT ASSESSEE HAS NOT MADE PURCHASES OF R S.45.75 000/- IN JULY 1999 AS CAN BE SEEN FROM PURCHASE REGISTER AND STOC K REGISTER. OCTROI DUTY PAID IS NOT BASED ON THE PURCHASE PRICE OF STOCK TA KEN. FURTHER SPOT INSPECTION WAS CARRIED OUT BY THE OCTROI DEPARTMENT TO CHECK THE STOCK. THE TOTAL STOCKS CONTAIN THE GOODS OF J. K. TRADING CO. AND ATUL SALES CORPORATION ALSO AND COMBINED STOCK OF THE THREE CO NCERNS INCLUDING THAT OF THE ASSESSEE AMOUNTED TO RS.20 83 325/-. IT WAS HOWEVER ADMITTED BEFORE THE AO THAT OCTROI DUTY OF RS.1 01 000/- WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE OCTROI DUTY WAS PAID BY THE ASSESSEE COMPANY ON ITS OWN AND FOR ITS OWN IRREGULARITIES. THESE OCTRO I DUTY RECEIPTS WERE FOR DIFFERENT INVOICE AMOUNTS. THE PURCHASE REGISTER DI D NOT SHOW ANY PURCHASE OF SIMILAR ITEMS IN JULY 1999. THE LAST P URCHASES MADE FROM KOTHARI PRODUCT WAS VIDE BILL DATED 24.6.99 WHEREAS NEXT PURCHASE WAS DATED ONLY ON 31.7.99. THE TOTAL PURCHASES OF THE A SSESSEE COMPANY UPTO 20.7.99 WERE OF RS.76 32 298/- WHEREAS TOTAL SALES UPTO 20.7.99 WERE AT RS.1 01 12 578/-. THE CLOSING STOCK AS ON THE DATE OF INSPECTION BY OCTROI DEPARTMENT WAS RS.4 15 728/- WHILE STOCK AS PER BOO KS AS ON 15.7.99 WAS RS.8 32 082/-. THE RELEVANT FIGURES OF THE STOCK AS PER BOOKS AS ON 10.7.99 WAS RS.13 11 693/- AND THAT ON 31.3.1999 WA S RS.11 77 802/- ONLY. 6. ON THE ABOVE BASIS ASSESSEE CLAIMED THAT SUM OF RS.45 75 000/- COULD NOT BE ASSESSED AS CONCEALED INCOME OF THE AS SESSEE IN THE BLOCK PERIOD. THE AO HOWEVER TOOK THE VIEW THAT (I) O CTROI DUTY PAYMENT OF 4 RS.1 01 000/- IS NOT RECORDED IN THE BOOKS; (II) TH ERE ARE NO PURCHASE BILLS MATCHING WITH THE INVOICES RECORDED IN THE OCTROI R ECEIPTS DATED 20.7.99; SEARCH OF THE I.T. DEPARTMENT WAS DONE ON 18.11.99. TILL THEN OCTROI DUTY PAYMENT OF RS.1 01 000/- WAS NOT RECORDED IN THE BO OKS; (IV) THERE WERE NEWSPAPER CUTTING SEIZED FROM THE PREMISES OF THE A SSESSEE PLACED AT ANNEXURE A-1 PAGE 12 INDICATING THAT SHRI NILESH J. KOTHARI HAS BEEN CAUGHT ALONG WITH THE GOODS IN ONE MATADOR NO.GJ-I. T.4698 AND OCTROI DUTY OF RS.1 00 000/- HAS BEEN RECOVERED FROM HIM; (V) THERE IS A STOCK DIFFERENCE FOUND WHEN DEPARTMENT CONDUCTED THE SEAR CH. THE DIFFERENCE WAS AS UNDER :- SR. NO. ITEMS PHYSICAL QTY. AS PER BOOKS DIFFERENCE IN QTY. AMOUNT IN RS. 1. PAN PARAG 2GM POUCH 5 46 000 5 51 000 (-)5 100 8 058 2. GUTKHA 2 GM PUCH 85 500 99 500 (-)10 000 15 800 3. GUTKHA 4 GM POUCH 76 100 76 400 (-)300 948 4. CARD BOARD MATCHES 56 58 (-)2 403 5. PAN PARAG (OUT) 2 GM 7 38 000 7 50 000 (-)12 000 18 960 6. PAN PARAG (OUT) 4GM 49 500 50 000 (-)500 1 580 7. WAS MATCHES 3 352 0 (-)3 352 33 520 RS.79 266 IT SHOWED THAT THE PHYSICAL STOCK OF THE GOODS DID NOT MATCH WITH THE STOCK AS PER BOOKS. 7. THUS HOLDING THAT ASSESSEE HAS IN FACT PURCHASED GOODS WORTH RS.45 75 000/- OUTSIDE THE BOOKS AND SOLD THEM WHIC H ALSO RESULTED PROFIT. THUS PROFIT WAS ESTIMATED AT RS.1 37 250/-. FURTHER AS ON THE DATE OF THE SEARCH STOCK WAS FOUND SHORT BY RS.79 266/- . THE SAME WAS ALSO TREATED AS SALES OUTSIDE THE BOOKS AND ADDITION WAS MADE. THE AO ACCORDINGLY PROPOSED THE FOLLOWING ADDITIONS :- 5 (I) UNEXPLAINED INVESTMENT IN PURCHASE RS.45 75 0 00/- (II) UNACCOUNTED INCOME IN SALES OF THE GOODS RS.1 37 250/- (III) UNRECORDED EXPENDITURE FOR OCTROI PAYMENT RS. 1 01 000/- (IV) UNACCOUNTED SALES AS PARA 5.0 RS. 79 266/- ------------------------ RS.48 92 516/- ------------------------- 8. THE LD. CIT(A) DELETED THE ADDITION OF RS.45 75 000/- ON THE FOLLOWING GROUNDS :- (1) THE OCTROI DEPARTMENT HAD CARRIED OUT ONLY SPOT INS PECTION AS MENTIONED AT THE TOP OF THE RECEIPTS ONLY ON 17.7.9 9 WHEREAS ALLEGED PURCHASES ON WHICH DUTY WAS PAID WAS ON 20. 7.99. (2) THE DUTY WAS CHARGED ON ACCOUNT OF CERTAIN IRREGULA RITIES NOTICED AT THE BOOKS OF ACCOUNTS AND ON THE BASIS O F DETAILS FURNISHED DURING THE SPOT INSPECTION. THERE IS NO M ATERIAL TO SHOW THAT ANY UNACCOUNTED PURCHASES WERE MADE BY TH E ASSESSEE. (3) NO ADVERSE REMARK HAS BEEN MADE BY THE OCTROI DEPAR TMENT REGARDING UNACCOUNTED PURCHASES. (4) PAYMENT OF OCTROI DUTY IS THE LIABILITY OF THE PRIN CIPALS NAMELY KOTHARI PRODUCTS LTD. AND KOTHARI POUCHES LTD. THE OCTROI DUTY WAS PAID ON BEHALF OF THESE PRINCIPALS AND ACCORDIN GLY DEBITED TO THE ACCOUNT OF PRINCIPAL COMPANIES. IT IS NOT TH E LIABILITY OF THE ASSESSEE COMPANY (5) THE COPY OF THE SALES-TAX ASSESSMENT ORDER FOR F.Y. 99-00 DID NOT SHOW ANY UNACCOUNTED PURCHASES. 9. ONCE LD. CIT(A) HELD THAT THERE WERE NO UNACCOUN TED PURCHASES OF RS.45 75 000/- THE PROFIT THEREON BY PRESUMING THE SALES OUTSIDE THE 6 BOOKS COULD NOT BE TAXED. HE ACCORDINGLY DELETED AD DITION OF RS.1 37 250/-ALSO. 10. HE CONFIRMED THE ADDITION OF RS.1 01 000/- BEIN G OCTROI DUTY PAID AS THEY WERE NOT FOUND RECORDED IN THE REGULAR BOOK S OF ACCOUNT EVEN AFTER EXPIRY OF FOUR MONTHS OF THIS PAYMENT. IT WAS CLAIMED THAT LOAN WAS TAKEN FROM FAMILY MEMBERS FOR PAYMENT OF OCTROI DUT Y BUT IT WAS NOT SUPPORTED BY ANY EVIDENCE. ACCORDINGLY HE CONFIRMED THE ADDITION OF RS.1 01 000/-. 11. IN RESPECT OF ADDITION OF RS.79 266/- BEING UNA CCOUNTED SALES RESULTING FROM SHORTAGE OF STOCK ON COMPARISON WITH THE BOOKS LD. CIT(A) HELD THAT ONLY GP @ 3% AT RS.2378/- ALONE COULD BE TAXED. 12. BEFORE US LD. DR SUBMITTED THAT THE DOCUMENTS IN THE FORM OF OCTROI RECEIPTS WERE FOUND IN THE SEARCH. IT IS UND ISPUTED THAT OCTROI DUTY OF RS.1 01 000/- WAS PAID BY THE ASSESSEE WHICH IS SUPPORTED BY RECEIPTS. SUCH PAYMENT IS NOT RECORDED IN THE BOOKS. PAYMENT OF OCTROI DUTY RELATED TO PURCHASES OF THE GOODS VALUING RS.45 75 000/-. ASSESSEE WAS NOT ABLE TO SHOW AS TO WHICH PURCHASES RECORDED IN THE BOOKS OCTROI DUTY PAYMENT RELATED. HE SUBMITTED THAT PAYMENT OCTROI D UTY COULD BE IN RESPECT OF GOODS PURCHASED AND RECORDED IN THE BOOK S IN RESPECT OF WHICH NO OCTROI DUTY WAS PAID AT THE TIME OF PURCHASES W HICH IS NOW DETECTED BY THE OCTROI DEPARTMENT AND THEREFORE ASSESSEE I S REQUIRED TO MAKE PAYMENT OF OCTROI DUTY NOW WHEN HE IS CAUGHT ON SPO T INSPECTION BY THE OCTROI DEPARTMENT. IN THIS SITUATION THE ONUS IS O N THE ASSESSEE TO SHOW THAT OCTROI DUTY PAYMENT RELATED TO CERTAIN SPECIFI C PURCHASES RECORDED IN THE BOOKS BUT OCTROI DUTY WAS NOT PAID AT THE TIME OF PURCHASES AND THEIR IMPORT INTO THE CITY. THE SECOND SITUATION IS THAT PURCHASE OF GOODS ON 7 WHICH OCTROI DUTY IS CHARGED ON PURCHASES NOT AT AL L RECORDED IN THE REGULAR BOOKS OF ACCOUNT. IN THE FIRST SITUATION I F ASSESSEE IS ABLE TO SHOW THAT ACTUAL PURCHASES ARE RECORDED IN THE BOOKS THE N NO ADDITION COULD BE MADE AND IN THE SECOND SITUATION THE PURCHASES ON WHICH OCTROI DUTY WAS PAID CAN ONLY BE TREATED AS UNDISCLOSED PURCHASES A ND THEREFORE LIABLE TO BE TAXED UNDER SECTION 69. IN THE PRESENT CASE ASSE SSEE HAS FAILED TO SHOW THE LD. DR SUBMITTED THAT PURCHASES OF RS.45 75 00 0/- ARE RECORDED IN THE REGULAR BOOKS. 13. REGARDING GP ADDITION LD. DR SUBMITTED THAT ONC E PURCHASES ARE MADE OUTSIDE THE BOOKS AND ARE NOT FOUND PHYSICALLY AT THE PREMISES OF THE ASSESSEE THEY SHOULD BE TREATED AS SALES OUTSID E THE BOOKS AND ACCORDINGLY ADDITION OF GP ESTIMATED BY THE AO WAS JUSTIFIED. 14. REGARDING ADDITION OF RS.79 266/- LD. DR SUBMIT TED THAT ADDITION IS JUSTIFIED BECAUSE PHYSICAL STOCK WAS FOUND LESS. 15. AGAINST THIS LD. AR FOR THE ASSESSEE SUBMITTED THAT OCTROI DEPARTMENT HAS NOT FOUND ANY SPECIFIC ITEM OF PURCH ASES ON WHICH OCTROI DUTY WAS NOT PAID. IT WAS SIMPLY A CHARGE OF OCTROI DUTY BY ESTIMATE ON DETECTION OF CERTAIN IRREGULARITIES. HE SUBMITTED T HAT SPOT INSPECTION WAS CARRIED ON 17.7.99 WHEREAS PAYMENT OF OCTROI DUTY A S PER OCTROI RECEIPT PERTAINED TO PURCHASES MADE ON 20.7.99. THE OCTROI DEPARTMENT WAS NOT SPECIFIC AS TO IN RESPECT OF WHICH PURCHASES IT WAS CHARGING THE DUTY. THE CHARGE WAS SIMPLE BY ESTIMATE AND THEREFORE IT CA NNOT BE INFERRED THAT ASSESSEE HAD MADE PURCHASES OUTSIDE THE BOOKS. THE TOTAL STOCK AS ON THE DATE OF SPOT INSPECTION WAS ONLY AROUND RS.4 15 728 /-. THERE WAS NO INSPECTION ON 20.7.99. THEREFORE INFERENCE THAT OC TROI DUTY PAYMENT RELATED TO ANY UNACCOUNTED PURCHASES ON 20.7.99 WAS INCORRECT. FURTHER 8 THE DEPARTMENT HAS NOT BROUGHT OUT ANY ADDITIONAL M ATERIAL TO SHOW THAT ASSESSEE HAD MADE PURCHASES OUTSIDE THE BOOKS. 16. THE LD. AR FURTHER RELIED ON THE DECISION OF TH E TRIBUNAL JABALPUR BENCH IN ACIT VS. SATYAPAL WASSAN (2007) 295 ITR (A T) 352 (JABALPUR) FOR THE PROPOSITION THAT OCTROI RECEIPTS COULD NOT BE RELIED UPON AS THEY ARE NOT COMPLETE DOCUMENTS AND THEY ARE NOT SUPPORTED BY POST SEARCH INVESTIGATION. HE THEN FURTHER REFERRED TO THE DECI SION OF THE TRIBUNAL AHMEDABAD BENCH IN ITA NO.793/AHD/2000 FOR ASST. YE AR 1996-97 IN THE CASE OF ITO VS. M/S. A. RAMANLAL & CO. FOR THE PROPOSITION THAT EVEN WHERE ADDITIONAL EXCISE DUTY IS PAID ON ACCOUNT OF SPOT INSPECTION BY OCTROI DEPARTMENT IT WOULD NOT LEAD TO INFERENCE T HAT ASSESSEE HAS MADE PURCHASES OUTSIDE THE BOOKS. 17. THE LD. DR IN REJOINDER CLARIFIED THAT DATE 20. 7.99 IS THE DATE FOR PAYMENT OF OCTROI DUTY BY THE ASSESSEE AND NOT THE DATE OF PURCHASES AS PER OCTROI RECEIPTS ON WHICH OCTROI DUTY WAS PAID. THE LD. DR FURTHER POINTED OUT THAT ASSESSEE HAS FAILED TO CO-RELATE V ARIOUS PURCHASES ON WHICH OCTROI DUTY WAS PAID WITH THE PURCHASES RECOR DED IN THE BOOKS OF ACCOUNT. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW IT IS NOT NECESSA RY THAT POST SEARCH INVESTIGATION NECESSARILY BE DONE IN RESPECT OF THE EVIDENCE FOUND IN THE SEARCH. IF DOCUMENTS FOUND IN THE SEARCH ARE SUFFIC IENT TO FASTEN THE LIABILITY THEN THE AO MAY DECIDE NOT TO MAKE INVEST IGATION FURTHER. THE OCTROI RECEIPTS FOUND IN THE SEARCH CLEARLY INDICAT ED THAT THERE ARE PURCHASES AMOUNTING TO RS.45 75 000/- ON WHICH OCTR OI WAS NOT PAID. THERE COULD BE TWO EXPLANATIONS AS POINTED BY THE L D. DR. ONE IS THAT 9 DUTY RELATED TO PURCHASES WHICH ARE RECORDED IN THE BOOKS BUT ON WHICH EXCISE DUTY IS NOT PAID AND THE SECOND IS THAT PURC HASES ARE NOT AT ALL RECORDED IN THE BOOKS. SINCE IT IS THE CLAIM OF ASS ESSEE THAT PURCHASES ON WHICH OCTROI WAS CHARGED WERE RECORDED IN THE REGUL AR BOOKS THE ONUS IS ON THE ASSESSEE TO SHOW THAT CONCERNED PURCHASES AR E RECORDED IN THE BOOKS. NO SUCH SPECIFIC PURCHASE BY COMPARISON WITH THE BOOKS WAS SHOWN. THEREFORE IT IS DIFFICULT TO INFER THAT OCT ROI DUTY WAS CHARGED IN RESPECT OF PURCHASES RECORDED IN THE BOOKS IN RESPE CT OF WHICH PURCHASE BILLS WERE NOT AVAILABLE. WE UPHOLD THE ARGUMENT OF LD. DR THAT ONUS IS ON THE ASSESSEE TO EXPLAIN AS TO ON WHICH PURCHASES RECORDED IN THE BOOKS OCTROI WAS CHARGED BY OCTROI DEPARTMENT DURI NG SPOT INSPECTION. WE ALSO AGREE WITH LD. DR THAT DATE 20.7.99 MENTION ED IN THE OCTROI RECEIPT IS THE DATE OF PAYMENT OF OCTROI DUTY AND N OT THE DATE OF ALLEGED PURCHASES WITHOUT PAYING OCTROI DUTY. SINCE SPOT IN SPECTION WAS CARRIED OUT ON 17.7.99 AND BOOKS AND DOCUMENTS WERE EXAMINE D BY THE OCTROI DEPARTMENT THIS IMPUGNED PURCHASE COULD ONLY BE PE RTAINED TO DATES PRIOR TO 17.7.99. WHERE ASSESSEE FAILS TO DISCHARGE THE ONUS LYING ON HIM THEN AO WILL BE WITHIN HIS RIGHT TO INFER THAT THE IMPUGNED PURCHASES ARE UNEXPLAINED AND THEREFORE LIABLE TO BE TAXED UNDE R SECTION 69. IT IS NOW WELL SETTLED LAW THAT PROVISIONS OF SECTION 69 CAN BE INVOKED WHILE MAKING THE ASSESSMENT UNDER SECTION 158BC . SUPPORT IS DERIVED FROM THE DECISIONS OF HON. KARNATAKA HIGH COURT IN BENGATBAV A VS. CIT (2009) 318 ITR 276 (KARNATAKA) RAJENDRA LABOTIA VS. DCIT (2004) 266 ITR 621 (RAJ) AND H. SAHUL VS. ACIT (2002) 258 ITR 266 (MAD). WHEN THE ASSESSEE FAILED TO EXPLAIN AND RECONCILE THE PURCHA SES ON WHICH OCTROI DUTY WAS CHARGED THE AO WAS JUSTIFIED IN MAKING THE ADDITION. THE DECISION RELIED ON BY THE LD. AR IN M/S A. RAMANLAL & CO.S CASE (SUPRA) IS DISTINGUISHABLE ON FACTS. IN THAT CASE ASSESSEE HAD RECONCILED THE PURCHASES ON WHICH OCTROI DUTY WAS CHARGED AT RS.90 000/-. THERE WAS 10 NO INDEPENDENT FINDING THAT PURCHASES WERE MADE OUT SIDE THE BOOKS. SALES RECONCILIATION WAS MADE IN THAT CASE. THEREFO RE THAT DECISION CANNOT HELP THE ASSESSEE WHEN HE WAS UNABLE TO RECO NCILE THE PURCHASES ON WHICH OCTROI DEPARTMENT HAD CHARGED DUTY. FURTHE R THE RELIANCE ON THE DECISION OF ITAT JABALPUR BENCH IN THE CASE OF A CIT VS. SATYAPAL WASSAN (SUPRA) IS ALSO MISPLACED BECAUSE IN THAT CA SE ENTRIES FOUND RECORDED IN THE SEIZED DOCUMENTS COULD NOT BE CONST RUED AS EITHER SALE OR PURCHASE OR LOAN OR DEBT. IT WAS HELD IN THAT CASE FOR AFFIXING ADDITIONAL LIABILITY ON THE BASIS OF SEIZED DOCUMENTS FOUR ING REDIENTS ARE REQUIRED TO BE ESTABLISHED. THEY ARE (I) NAME OF THE ASSESSEE (II) NATURE OF TRANSACTION (III) QUANTUM INVOLVED AND (IV) PERIOD OF TRANSACTION. IF ANY OF THESE INGREDIENTS ARE NOT INFERABLE FROM THE SEI ZED DOCUMENTS THEN ONUS IS ON THE AO TO FULFILL THE DEFICIENCIES BY CA RRYING OUT POST SEARCH INVESTIGATION. IF ANY OF THE INGREDIENTS IS MISSING AND CANNOT BE REASONABLY INFERRED THEN IT WOULD BE CALLED A DUMB DOCUMENT AND NO ADDITION CAN BE MADE ON THAT BASIS. IN THE PRESENT CASE NAME OF THE ASSESSEE IN RESPECT OF WHOM UNACCOUNTED PURCHASES ARE ALLEGED AND OCTROI DUTY WAS CHARGED IS NOT DISPUTED; QUANTUM OF TRANSACTION IS ALSO NOT DISPUTED WHICH IS RS.45 75 000/-; THAT THERE AR E PURCHASES ARE ALSO NOT DISPUTED. FURTHER THEY PERTAINED TO THE BLOCK PERIO D IS ALSO NOT DISPUTED. IT WAS FOR THE ASSESSEE TO SHOW THAT THESE PURCHASES R ELATED TO PRE-BLOCK PERIOD. FURTHER CORRECTNESS OF BOOKS OF ACCOUNTS FO R INFERRING THAT ASSESSEE COULD NOT HAVE MADE PURCHASES OUTSIDE THE BOOKS CANNOT BE PRIMA FACIE ACCEPTED PARTICULARLY WHEN STOCK DEFICI ENCY WAS FOUND AT THE TIME OF SEARCH BY THE INCOME-TAX DEPARTMENT AND ALS O IRREGULARITIES WERE FOUND BY OCTROI DEPARTMENT. 20. HOWEVER WE ARE INCLINED TO ACCEPT THE ALTERNAT IVE SUBMISSION THAT ALL THE PURCHASES COULD NOT HAVE BEEN MADE ON ONE D AY. ASSESSEE IS ALSO 11 MAKING SALES OUTSIDE THE BOOKS. THERE WOULD BE A TU RNOVER AND RECYCLING OF THE PURCHASES AND SALES THEREFORE ENTIRE INVEST MENT OF RS.45 75 000/- CANNOT BE SAID TO HAVE BEEN DONE ON A SINGLE DAY. T HERE IS ALSO NO MATERIAL TO INFER THAT THEY WERE DONE IN A SINGLE D AY. LOOKING TO THE CLOSING STOCK AS ON 31.3.99 SHOWN AT RS.4 15 728/- AND TURNOVER AT RS.1 01 12 528/- AS ON 20.7.99 A STOCK TURNOVER RAT IO OF 4.1% IS WORKED OUT. AS ASSESSEE IS SHOWING GP 3% WHICH IS ACCEPTED BY THE DEPARTMENT THE TURNOVER VALUE OF RS.45 75 000/- WOULD BE RS.47 12 250/-. WITH STOCK TURNOVER RATIO OF 4.1% THE VALUE OF INVESTMENT IN S UCH PURCHASES WOULD BE RS.1 93 202/-. ACCORDINGLY AN ADDITION TO THIS EXTENT IS RESTORED AS UNACCOUNTED INVESTMENT IN PURCHASES AND IS UPHELD. WE ALSO UPHOLD THE VIEW THAT ASSESSEE HAS EARNED GP ON SALE OF THESE G OODS TO THIS EXTENT. THEREFORE GP ADDITION OF RS.1 37 250/- IS ALSO UPHE LD. WE ALSO UPHOLD THE ADDITION ON THE GROUND OF UNACCOUNTED SALES OF RS.79 266/- AS ASSESSEE HAS FAILED TO EXPLAIN THE STOCK DEFICIENCY . SINCE THE PURCHASES RELATED TO THESE SALES ARE NOT CLAIMED OUTSIDE THE BOOKS ADDITION TO THIS EXTENT IS CALLED FOR. ACCORDINGLY ADDITION TO THE E XTENT OF RS.79 266/- IS ALSO UPHELD. 21. AS A RESULT DEPARTMENTAL APPEAL IS PARTLY ALLO WED. SD/- SD/- (T.K. SHARMA) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED : 16/04/2010 MAHATA/- ORDER PRONOUNCED IN OPEN COURT ON 16/4/2010 12 COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD