M/s Dada Printers, Hyderabad v. DCIT, Hyderabad

ITA 101/HYD/2009 | 2003-2004
Pronouncement Date: 31-08-2010 | Result: Allowed

Appeal Details

RSA Number 10122514 RSA 2009
Assessee PAN AADFP2138B
Bench Hyderabad
Appeal Number ITA 101/HYD/2009
Duration Of Justice 1 year(s) 7 month(s) 7 day(s)
Appellant M/s Dada Printers, Hyderabad
Respondent DCIT, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-08-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 31-08-2010
Date Of Final Hearing 28-07-2010
Next Hearing Date 28-07-2010
Assessment Year 2003-2004
Appeal Filed On 23-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TREIBUNAL HYDERBAD BENCH B BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SH RI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NOS.90 TO 96/HYD/2009 ASST.YEARS: 1999-2000 TO 2005-06 M/S PARAGON PRINTERS HYDERABAD. PAN AADFP2138B .. APPELLANT VERSUS DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 3 HYDERABAD. .. RESPONDENT ITA NOS. 97 TO 103/HYD/2009 ASST.YEARS: 1999-2000 TO 2005-06 M/S DADA PRINTS HYDERABAD. PAN AACFD1624K .. APPELLANT VERSUS DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 3 HYDERABAD. .. RESPONDENT APPELLANT BY : SHRI A.V.RAGHURAM ADVOCATE RESPONDENT BY: SMT. VASUNDHARA SINHA CIT-DR ITA NOS.90 TO 103/HYD/2009 M/S PARAGON PRINTERS & ANOTHER 2 ORDER PER N.R.S.GANESAN JUDICIAL MEMBER: ALL THE ABOVE APPEALS RELATE TO TWO INDEPENDENT ASS ESSEES ARISING OUT OF THE SEARCH OPERATION CONDUCTED ON 14-10-2004 AND ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) I HYDERABAD DT. 10 -11-2008. 2. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN A LL THESE APPEALS WE HAVE HEARD THE SAME TOGETHER AND DISPOSING OF TH E SAME BY THIS COMMON ORDER. 3. SHRI A.V.RAGHURAM LEARNED COUNSEL FOR THE ASSES SEES SUBMITTED THAT THERE WAS SEARCH OPERATION IN THE PREMISES OF THE ASSESSEES U/S 132 OF THE INCOME TAX ACT 1961 (THE ACT) ON 14-10-2004 . ACCORDING TO THE LEARNED COUNSEL INCRIMINATING MATERIAL SAID TO BE SEIZED DURING THE COURSE OF SEARCH OPERATION DOES NOT RELATE TO THE P RESENT ASSESSEES. THE LEARNED COUNSEL FURTHER SUBMITTED THAT DURING THE C OURSE OF SEARCH OPERATION THE REVENUE AUTHORITIES OBTAINED STATEMEN TS FROM SHRI MD.RIYASUDDIN WHO CATEGORICALLY STATED THAT THERE ARE NO TRANSACTIONS WHICH IS NOT RECORDED IN THE REGULAR BOOKS OF ACCOU NT. THE LEARNED COUNSEL SUBMITTED THAT THE COPY OF STATEMENT IS AVA ILABLE AT PAGE 149 OF THE PAPER BOOK. THE LEARNED COUNSEL FURTHER SUBMITT ED THE ASSESSEE LEASED OUT THE PREMISES TO M/S PRINCE PRINTERS. TH EREFORE THE MATERIALS FOUND DURING THE COURSE OF SEARCH OPERATION MAY REL ATE TO THOSE PERSONS WHO TOOK THE PREMISES ON LEASE FROM THE ASSESSEE. 4. REFERRING TO THE COPIES OF THE STATEMENTS AT PAG E 154 OF THE PAPER BOOK THE LEARNED COUNSEL POINTED OUT THAT MR.MD.RI YASUDDIN CATEGORICALLY SAID THAT THERE WAS NO SUPPRESSION OF SALES. THEREFORE ITA NOS.90 TO 103/HYD/2009 M/S PARAGON PRINTERS & ANOTHER 3 ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE THE STATEMENT SAID TO HAVE BEEN RECORDED DURING THE COURSE OF SEARCH OPER ATION DOES NOT SUPPORT THE CASE OF THE REVENUE. THE LEARNED COUNS EL FURTHER SUBMITTED THAT MD. RIYASUDDIN RETRACTED HIS STATEMENT. THE R ETRACTED STATEMENT IS AVAILABLE AT PAGE 167 OF THE PAPER BOOK. THEREFORE THE REVENUE CANNOT PLACE ANY RELIANCE ON SUCH STATEMENTS RECORDED U/S 132 (4) OF THE ACT. 5. REFERRING TO THE STATEMENTS AT PAGE 157 AND 158 OF THE PAPER BOOK THE LEARNED COUNSEL POINTED OUT THAT THE MATERIALS AVAILABLE WITH THE ASSESSING OFFICER DOES NOT RELATE TO THE PRESENT AS SESSEES. THE LEARNED COUNSEL FURTHER POINTED OUT THAT THE COPIES OF THE SEIZED MATERIAL ARE AVAILABLE IN PAGE 60 TO 145 OF THE PAPER BOOK. THE LEARNED COUNSEL FURTHER POINTED OUT THAT THE PARTNER FROM WHOM THE STATEMENT WAS RECORDED RETIRED IN THE YEAR 2002 ITSELF. ON THE D ATE OF THE RECORDING OF THE STATEMENT SHRI MD.RIYASUDDIN IS NOT A PARTNER OF THE ASSESSEE FIRM. ACCORDING TO THE LEARNED COUNSEL IN THE ABSENCE OF ANY MATERIAL THERE CAN NOT BE ANY ADDITION AS UNDISCLOSED INCOME U/S 1 53(A) OF THE ACT. 6. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT THE STATEMENTS OBTAINED BY THE REVENUE AUTHORITIES ARE NOT FROM THE PARTNERS OF THE ASSESSEE FIRMS. MOREOVER THE MATERIAL FOUN D DURING THE COURSE OF SEARCH OPERATION RELATES TO THIRD PARTIES AND NOT T HE ASSESSEES. ACCORDING TO THE LEARNED COUNSEL THE REVENUE AUTHO RITIES HAVE TO FRAME THE ASSESSMENT U/S 153A ON THE BASIS OF THE MATERIA L FOUND DURING THE COURSE OF SEARCH OPERATION. THE ASSESSING OFFICER CANNOT TRAVEL BEYOND THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPER ATION. THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DEC ISION OF THE JAIPUR BENCH OF THIS TRIBUNAL IN ACIT V. SMT.RADHA RANI (2 006) 101 TTJ 1017 (JAIPUR) AND SUBMITTED THAT THE ASSESSING OFFICER H AS TO CONFINE HIMSELF ONLY TO THE MATERIAL FOUND DURING THE COURSE OF SEA RCH OPERATION. THE ITA NOS.90 TO 103/HYD/2009 M/S PARAGON PRINTERS & ANOTHER 4 LEARNED COUNSEL HAS ALSO PLACED RELIANCE ON THE DEC ISION OF THE UNREPORTED DECISION OF THIS BENCH OF THE TRIBUNAL I N SHRI RAGHUMUDRI SRIHARI V. ACIT IN IT (SS) A 87/HYD/2004 DT.30-6-20 09. 7. REFERRING TO THE SEIZED MATERIAL THE LEARNED CO UNSEL FOR THE ASSESSEE POINTED OUT THAT THE SPIRAL BOUND DIARY WH ICH WAS SAID TO HAVE BEEN SEIZED DURING THE COURSE OF SEARCH OPERATION W AS WRITTEN IN ENGLISH AND HINDI. THE PARTNER CANNOT WRITE IN ENGLISH AND THEREFORE IT IS NOT THE PARTNERS HANDWRITING. THIS DOES NOT RELATE T O THE PRESENT ASSESSEES. THE LEARNED COUNSEL FURTHER POINTED OUT THAT THE MA TERIAL FOUND DURING THE COURSE OF SEARCH OPERATION DOES NOT RELATE TO T HE ASSESSEES. MOREOVER THE SO CALLED SALES MADE ON THE BASIS OF THE SEIZED MATERIAL DOES NOT RELATE TO THE ASSESSEES AT ALL. FURTHERMO RE THE DEPARTMENT HAS NO MATERIAL TO SUGGEST THAT ANY SALES WERE SUPPRESS ED BY THE ASSESSEES. THEREFORE ACCORDING TO THE LEARNED COUNSEL THE ADD ITION MADE BY THE ASSESSING OFFICER IS NOT SUPPORTED BY ANY MATERIAL FOUND DURING THE COURSE OF THE SEARCH OPERATION. 8. REFERRING TO THE REMAND REPORT FILED BY THE ASSE SSING OFFICER BEFORE THE CIT(A) THE LEARNED COUNSEL SUBMITTED THAT THE SO CALLED SPIRAL BOUND DIARY WAS NOT FOUND IN THE BUSINESS PREMISES OF THE ASSESSEES OR IN THE PREMISES OF THE PARTNERS. THE LEARNED COUNSEL FURT HER SUBMITTED THAT THERE IS NO LEDGER ACCOUNT IN THE BOOKS OF THE ASSE SSEE FIRM AS OBSERVED BY THE ASSESSING OFFICER IN THE REMAND REPORT. REF ERRING TO ONE OF THE SEIZED MATERIAL MARKED AS PAR/RES/1 THE LEARNED C OUNSEL POINTED OUT THAT THE REPORT OF THE ASSESSING OFFICER DOES NOT S AY THAT THE SEIZED MATERIAL RELATES TO THE PARTICULAR ASSESSEE. THE A SSESSING OFFICER SIMPLY DREW AN INFERENCE ON THE BASIS OF ASSUMPTION WITHOU T ANY SUPPORTING MATERIAL. ITA NOS.90 TO 103/HYD/2009 M/S PARAGON PRINTERS & ANOTHER 5 9. REFERRING TO THE SEIZED MATERIAL THE LEARNED CO UNSEL POINTED OUT THAT THERE WAS A VARIATION WITH REGARD TO THE FIGUR ES AND THE LETTERS WRITTEN IN HINDI. REFERRING TO ONE OF THE SEIZED M ATERIAL THE LEARNED COUNSEL POINTED OUT THAT SINGLE DIGIT WITH DECIMALS OR TWO DIGITS AS 0.30 AND 30 IS FOUND IN THE SEIZED MATERIAL. LIKE THIS THERE IS A VARIATION IN RESPECT OF THE NUMBERS MENTIONED IN NUMERICAL AND I N HINDI LANGUAGE. THEREFORE IT IS OBVIOUS THAT THE SEIZED MATERIAL D OES NOT RELATE TO THE ASSESSEE. THE ASSESSING OFFICER COULD NOT RECORD ANY FINDINGS WHETHER THE SINGLE DIGIT NUMERICAL REFERS TO TENS HUNDRED S OR ANY OTHER DECIMALS. MOREOVER THE FIGURE IN THE SEIZED MATER IALS LEADS TO NEGATIVE FIGURE. THE ASSESSING OFFICER CANNOT CO-RELATE ANY OF THE SEIZED MATERIALS WITH THE BOOKS OF THE ASSESSEE . THEREFORE THE ASSESSING OFFICER CANNOT MAKE ANY ADDITION ON THE BASIS OF THE MATERIAL FOUN D DURING THE COURSE OF SEARCH OPERATION. THE LEARNED COUNSEL FURTHER P OINTED OUT THAT IT IS NOT CORRECT TO SAY THAT THE SEIZED MATERIALS REPRES ENTS ADVANCE AND SALES. THE LEARNED COUNSEL FURTHER SUBMITTED THAT BOTH AUT HORITIES BELOW HAS NOT ESTABLISHED THAT 1. WHO WROTE THE BOOKS SEIZED 2. WHAT IS THE FIGURE IN THE SEIZED BOOK REPRESENTS I. E. WHETHER IT IS TENS HUNDREDS OR ANY OTHER FIGURES. 3. IN THE ABSENCE OF ANY MATERIALS TO SUGGEST THAT TH E RAW MATERIALS WERE PURCHASED OUTSIDE THE BOOKS HOW FINISHED GOOD S COULD BE MANUFACTURED AND SOLD OUTSIDE THE BOOKS OF ACCOUNTS ? 4. HOW THE ASSESSEE IS RECEIVING ADVANCE FOR SALE IN T HE ABSENCE OF ANY MATERIALS. 5. HOW THE ENTRIES IN THE SEIZED BOOK TALLIES WITH BOOKS MAINTAINED BY THE ASSESSEE. 6. IN THE ABSENCE OF ANY MATERIALS WHETHER ANY PRESUM PTION COULD BE DRAWN THAT THE SEIZED BOOKS BELONGS TO THE ASSES SEE. ITA NOS.90 TO 103/HYD/2009 M/S PARAGON PRINTERS & ANOTHER 6 ACCORDING TO THE LEARNED COUNSEL SINCE THE ASSESSI NG OFFICER FAILED TO ESTABLISH ABOVE SAID FACTUAL ASPECTS THERE CANNOT BE ANY ADDITION IN THE HANDS OF THE ASSESSEE. THE LEARNED COUNSEL FURTHER POINTED OUT THAT DADA PRINTS STOPPED THEIR BUSINESS FROM 31.3.2004 E XCEPT SALE OF CLOSING STOCKS. EVEN THOUGH THE ASSESSING OFFICER REFERS THE SO CALLED PARTIES TO WHOM THE ASSESSEE WAS SAID TO HAVE MADE SALES OUTSI DE BOOKS OF ACCOUNT THE ASSESSING OFFICER HAS NOT MADE ANY ENQ UIRY TO FIND OUT WHETHER THE ASSESSEE SOLD ANY MATERIALS OUTSIDE THE BOOKS OF ACCOUNTS. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE ESTI MATION OF PROFIT AT 35% OF ESTIMATED TURNOVER IS ARBITRARY AND HIGHLY E XCESSIVE. ACCORDING TO THE LEARNED COUNSEL THE NET PROFIT OF DADA PRIN TS FOR THE ASSESSMENT YEARS 1999-2000 TO 2005-06 IS 1.57% AND IN THE CASE OF PARAGON PRINTERS FOR THE SAME PERIOD IS 1.64% 10. ON THE CONTRARY SMT.VASUNDHARA SINHA LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT SHE IS PLACING RELIAN CE ON THE OBSERVATION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORD ER AS WELL ON THE REMAND REPORT AND ON THE OBSERVATIONS OF THE CIT(A) IN THE APPELLATE ORDER. REFERRING TO PAGE 10 OF THE ORDER OF THE CI T(A) THE LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT IT IS NOT CORRECT TO SAY THAT SHRI MD.RIYASUDDIN IS NOT A PARTNER OF THE FIRM. S HRI MD.RIYASUDDIN WAS A PARTNER TILL THE YEAR 2002. THEREAFTER HIS S ON SHRI MD.ZAFRUDDIN BECAME THE PARTNER OF THE ASSESSEE FIRM. ONE MR.MD .KANIZUDDIN WAS ALSO A PARTNER ALONG WITH ZAFRUDDIN. THE SEARCH MA TERIAL WAS FOUND IN THE RESIDENCE OF SHRI MD.KANIZUDDIN. THE SPIRAL BO UND DIARY MARKED AS A/PPF/35 WAS SEIZED FROM THE PREMISES OF M/S PARAGO N PRINTERS. THEREFORE IT IS NOT CORRECT TO SAY THAT THE STATEM ENTS WERE NOT RECORDED FROM THE PARTNERS OF THE FIRM AND THE MATERIAL FOUN D DURING THE SEARCH OPERATION DO NOT RELATE TO THE ASSESSEES. ACCORDING TO THE LEARNED ITA NOS.90 TO 103/HYD/2009 M/S PARAGON PRINTERS & ANOTHER 7 DEPARTMENTAL REPRESENTATIVE DURING THE COURSE OF S EARCH OPERATION THE PARTNERS ADMITTED THAT THERE WAS SUPPRESSION OF TUR NOVER. THEREFORE THE ASSESSING OFFICER RIGHTLY REJECTED THE BOOKS OF ACC OUNT AND ESTIMATED THE TURNOVER AND ESTIMATED THE PROFIT THEREON. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE DECISION OF THE AHMEDABAD BENCH OF THIS TRIBUNAL IN MANHARLAL KASTURCHAND V. ACIT (1997) 61 ITD 55 AND SUBMITTED THAT AN ADMISSION OF THE PARTNER OF THE FIRM CAN BE A BEST EVIDENCE F OR MAKING ASSESSMENT IN THE HANDS OF THE PARTNERSHIP FIRM. THE SUBSEQUE NT RETRACTION CANNOT BE A REASON TO IGNORE THE STATEMENT ALREADY MADE. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO PLACED RELIANCE ON THE DECISION OF THE MUMBAI BENCH OF THIS TRIBUNAL IN PARAM ANAND BUILDE RS PVT.LTD. V. ITO (1996) 59 ITD 29 AND SUBMITTED THAT WHEN THE SEARCH WAS CONDUCTED IN THE PREMISES OF PARTNERS WITH INDEPENDENT WITNESSES AND IN THE ABSENCE OF ANY MATERIAL TO INDICATE THAT THE ASSESSEES WERE TORTURED OR HARASSED BY THE REVENUE AUTHORITIES THE STATEMENT RECORDED U/S 132(4) CANNOT BE IGNORED AT ALL. THE LEARNED DEPARTMENTAL REPRESENT ATIVE ALSO PLACED RELIANCE ON THE DECISION OF THE MUMBAI BENCH OF THI S TRIBUNAL IN HIRALAL MANGALAL V. DCIT (2005) 96 ITD 113 (MUM) AND SUBMIT TED THAT WHEN THE ASSESSEE MADE A VOLUNTARY STATEMENT DURING THE COUR SE OF SEARCH OPERATION U/S 132 (4) OF THE ACT THEY CANNOT BE PE RMITTED TO TURN AROUND AND MAKE THE DECLARATION AGAINST THE STATEMENT GIVE N U/S 132(4) OF THE ACT. REFERRING TO THE REMAND REPORT THE LEARNED D EPARTMENTAL REPRESENTATIVE POINTED OUT THAT THE ASSESSEE HAS WR ITTEN THE DIARY IN THE CODED FORM AND ON A DEEP ANALYSIS THE ENTRIES IN H INDI ARE MADE ON DIFFERENT DATES ARE SAME AS WRITTEN AGAINST A PARTI CULAR PARTY IN ENGLISH. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIV E THERE IS ONLY A DIFFERENCE OF CODING IN FIGURES AS 0.30 AND 30 BUT THERE IS NO DIFFERENCE IN CODING OF THE PARTYS NAME. ACCORDING TO THE LEARN ED DEPARTMENTAL ITA NOS.90 TO 103/HYD/2009 M/S PARAGON PRINTERS & ANOTHER 8 REPRESENTATIVE EACH PAGE OF THE DIARY CONTAINS INDI VIDUAL LEDGER ACCOUNT OF VARIOUS PARTIES AND IT WAS CONSOLIDATED ON THE F IRST PAGE. IN VIEW OF THIS MATERIAL AVAILABLE ON RECORD IT IS NOT CORREC T TO SAY THAT THE ASSESSING OFFICER HAS NOT MADE THE ASSESSMENT ON TH E BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATIO N. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER POINTED OUT THA T THE ASSESSMENT HAS BEEN FRAMED ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. THEREFORE THE CIT(A) RIGHTLY CONFIRMED THE ADDITION. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE MATERIALS ON RECORD. ADMITTEDLY THE S EARCH WAS CONDUCTED AT THE PREMISES OF BOTH THE ASSESSEES ON 14-10-2004 . THEREFORE THE ASSESSMENT HAS TO BE FRAMED UNDER CHAPTER XIV OF TH E ACT. THE FIRST OBJECTION OF THE LEARNED COUNSEL FOR THE ASSESSEE I S THAT THE ASSESSING OFFICER HAS TO CONFINE HIMSELF TO THE MATERIAL FOUN D DURING THE COURSE OF SEARCH OPERATION FOR THE PURPOSE OF FRAMING THE ASS ESSMENT. WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LEARNED COUN SEL FOR THE ASSESSEE. SECTION 158BI OF THE ACT INSERTED BY FINANCE ACT 2 003 W.E.F. 1-6-2003 CLEARLY SAYS THAT THE PROVISIONS OF CHAPTER XIVB SH ALL NOT APPLY IN RESPECT OF SEARCHES INITIATED AFTER 31-5-2003. THE REFORE CHAPTER XIVB WHICH PROVIDES A SPECIAL PROCEDURE FOR ASSESSMENT O F UNDISCLOSED INCOME IN SEARCH CASES MORE PARTICULARLY SEC.158BB IS NOT APPLICABLE TO THE ASSESSEE SINCE THE SEARCH ADMITTEDLY WAS CONDUCTED ON 14-10-2004 I.E. AFTER 31-5-2003. SEC.158BB(1) PROVIDES FOR ASSESSM ENT OF UNDISCLOSED INCOME ON THE BASIS OF MATERIALS FOUND DURING THE C OURSE OF SEARCH OPERATION OR THE INFORMATION AVAILABLE WITH THE ASS ESSING OFFICER WHICH IS RELATABLE TO THE MATERIALS FOUND DURING THE COURSE OF SEARCH OPERATION. IN VIEW OF SEC.158 BI THIS SECTION VIZ. 158BB(1) I S NOT APPLICABLE TO THE ASSESSEE. THEREFORE THE ASSESSING OFFICER NEED NO T CONFINE HIMSELF TO THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPER ATION. IN OTHER ITA NOS.90 TO 103/HYD/2009 M/S PARAGON PRINTERS & ANOTHER 9 WORDS IT IS OPEN TO THE ASSESSING OFFICER TO PLACE RELIANCE ON ALL MATERIALS INCLUDING THE MATERIAL FOUND DURING THE C OURSE OF SEARCH OPERATION FOR THE PURPOSE OF FRAMING THE ASSESSMENT ORDER. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIONS OF SEC.153A. SEC.153A DOES NOT SAY THAT THE ASSESSING OFFICER HAS TO CONFINE HIMSE LF ONLY TO THE MATERIALS FOUND DURING THE COURSE OF SEARCH OPERATION AS IT I S PROVIDED IN SEC.158BB(1). THEREFORE IT IS OBVIOUS THAT FOR TH E PURPOSE OF FRAMING ASSESSMENT U/S 153A WHICH FALLS UNDER CHAPTER XIV O F THE ACT DOES NOT REQUIRE THE ASSESSING OFFICER TO CONFINE HIMSELF ON LY TO THE MATERIALS FOUND DURING THE COURSE OF SEARCH. IT DOES NOT MEA N THAT THE ASSESSING OFFICER CAN FRAME ASSESSMENT WITHOUT ANY MATERIAL. WHAT WE ARE TRYING TO SAY IS THAT FOR THE PURPOSE OF FRAMING THE ASSES SMENT THE ASSESSING OFFICER CAN VERY WELL PLACE RELIANCE ON ALL MATERIA LS AVAILABLE ON FILE INCLUDING THE MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. THE DECISION OF THIS TRIBUNAL IN SMT. RADHA RANI (SUPRA ) AND RAGHUMUDRI SRIHARI (SUPRA) HAVE NOT CONSIDERED THE PROVISION O F SEC. 158BI OF THE ACT. MOREOVER THE SEARCH TOOK PLACE BEFORE 31.5.2 003. HENCE THESE DECISIONS DO NOT APPLY TO THE FACTS OF THIS CASE. THEREFORE THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE AS SESSING OFFICER HAS TO CONFINE HIMSELF FOR FRAMING THE ASSESSMENT ORDER ON LY ON THE MATERIALS FOUND DURING THE COURSE OF SEARCH OPERATION IS NOT CORRECT. 13. NOW COMING TO THE MATERIAL AVAILABLE ON R ECORD ADMITTEDLY A SPIRAL BOUND DIARY WAS FOUND DURING THE COURSE OF S EARCH OPERATION. THE CONTENTION OF THE ASSESSEE RIGHT FROM THE ASSESSMEN T ORDER BEFORE THE CIT(A) AND BEFORE THIS TRIBUNAL IS THAT THE MATERIA L FOUND DURING THE COURSE OF SEARCH OPERATION DOES NOT RELATE TO THE A SSESSEES AND THE SALES FOUND TO BE RECORDED IN THE MATERIAL FOUND DURING T HE COURSE OF SEARCH OPERATION IS NOT RELATED TO THE ASSESSEES. THE ASS ESSEES ALSO CONTENDED BEFORE THE LOWER AUTHORITIES THAT THE ENTRIES MADE IN THE SPIRAL BOUND ITA NOS.90 TO 103/HYD/2009 M/S PARAGON PRINTERS & ANOTHER 10 DIARY DO NOT RELATE TO SUPPRESSED SALES. IN SPITE OF SPECIFIC CONTENTION OF THE ASSESSEE THE LOWER AUTHORITIES HAVE NOT GIVEN ANY FINDING HOW THE MATERIALS AVAILABLE ON RECORD RELATE TO THE ASSESSE ES AND HOW IT RELATES TO THE SUPPRESSED SALES. THE CIT(A) BASED UPON SOME OF THE CASELAWS FOUND THAT PROFIT CAN BE ESTIMATED ON THE BASIS OF MATERIALS FOUND DURING THE COURSE OF SEARCH OPERATION PROVIDED THE SAME RE LATES TO THE ASSESSEES. NO DOUBT PROFIT CAN BE ESTIMATED ON TH E BASIS OF MATERIAL AVAILABLE ON RECORD INCLUDING THE MATERIAL FOUND DU RING THE COURSE OF SEARCH OPERATION. FURTHER WHEN THE ASSESSEE CONTE NDS THAT THE MATERIAL DOES NOT RELATE TO THE ASSESSEES IT IS FOR THE AUTH ORITIES BELOW TO RECORD A FINDING AS TO HOW THE MATERIAL AVAILABLE ON RECORD RELATES TO THE ASSESSEES. IN THE ABSENCE OF SUCH A FINDING PLACI NG RELIANCE ON THE MATERIAL FOUND ON RECORD CANNOT BE JUSTIFIED. 14. NOW COMING TO THE CONTENTION OF THE LEARNED DE PARTMENTAL REPRESENTATIVE THAT THE STATEMENT MADE U/S 132(4) C AN BE A BASIS FOR MAKING THE ASSESSMENT NO DOUBT ASSESSMENT ORDER CA N BE PASSED ON THE BASIS OF THE STATEMENT RECORDED U/S 132(4) PROV IDED THE SAME DISCLOSES THE EARNING OF INCOME BY THE ASSESSEES. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT ONE OF THE STATEMEN TS RECORDED BY THE LOWER AUTHORITIES SAYS THAT THERE WAS NO TRANSACTIO N OUTSIDE THE BOOKS OF ACCOUNT. THEREFORE THE LOWER AUTHORITIES HAVE TO EXAMINE ALL THE STATEMENTS AVAILABLE ON RECORD AND FIND OUT WHETHER THE ASSESSEE EARNED ANY INCOME OUTSIDE THE BOOKS OF ACCOUNT OR NOT. ON THE BASIS OF MATERIALS/EVIDENCE THE ASSESSEES ALSO CAN EXPLAIN THAT THE STATEMENTS MADE EARLIER ARE NOT CORRECT. 15. THE DISCREPANCIES POINTED OUT BY THE LEARNED CO UNSEL FOR THE ASSESSEE BETWEEN THE NUMBERS IN NUMERICAL AND WORDS THOUGH THE LEARNED DEPARTMENTAL REPRESENTATIVE ATTEMPTED TO PO INT OUT THAT THERE ITA NOS.90 TO 103/HYD/2009 M/S PARAGON PRINTERS & ANOTHER 11 WAS NO VARIATION IN OUR OPINION THE ASSESSING OFFI CER HAS TO EXAMINE THE CONTENTION OF THE ASSESSEE AND FIND OUT WHETHER THE NOTING FOUND IN THE SPIRAL BOUND DIARY RELATES TO THE ASSESSEES AND THE WORDS WRITTEN IN CODING DISCLOSE ANY INCOME OUTSIDE THE BOOKS OF ACC OUNT. IT IS ALSO NECESSARY TO EXAMINE WHETHER THE CODING IN NUMERICA L REPRESENTS SINGLE DIGIT WITH DECIMALS OR TWO DIGITS. THE VARIATION A S POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE WAS ATTEMPTED TO B E RECONSIDERED BY THE ASSESSING OFFICER IN THE REMAND REPORT. HOWEVER T HE SAME WAS NOT EXAMINED BY THE ASSESSING OFFICER AT THE TIME OF AS SESSMENT PROCEEDINGS AND THE CIT(A). THEREFORE THE ASSESSEE DID NOT GE T A FAIR OPPORTUNITY TO EXPLAIN THE NOTING MADE IN THE SPIRAL BOUND DIARY B EFORE THE ASSESSING OFFICER. THEREFORE IN ALL FAIRNESS IN OUR OPINION THE ASSESSING OFFICER HAS TO RECONSIDER THE ENTIRE ISSUE AFRESH AFTER GIV ING AN OPPORTUNITY TO THE ASSESSEE. 16. NOW COMING TO ESTIMATION OF PROFIT THE RATE OF PROFIT HAS TO BE ESTIMATED AFTER CONSIDERING ALL MATERIAL FACTS SUCH AS PROFIT OF THE ASSESSEE FOR EARLIER YEARS PROFIT OF SIMILARLY PLA CED TRADER IN SIMILAR LINE OF BUSINESS AVAILABILITY OF RAW MATERIALS LABOURE RS DEMAND IN THE MARKET ETC. IN OUR OPINION THE ASSESSING OFFICER SHALL CONSIDER THE RATE OF PROFIT AFTER TAKING INTO CONSIDERATION ALL THE A BOVE FACTS. 17. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LO WER AUTHORITIES AND REMAND THE MATTER TO THE FILE OF THE ASSESSING OFFI CER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AFRESH IN THE LI GHT OF THE MATERIAL AVAILABLE ON RECORD AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY OF HEARIN G TO THE ASSESSEE. WE MAKE IT CLEAR THAT IT IS OPEN TO THE ASSESSING OFFI CER TO EXAMINE ALL THE MATERIAL AVAILABLE ON RECORD AND RELATABLE TO THE A SSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW WITHOUT BEING INFLUENC ED BY ANY OF THE ITA NOS.90 TO 103/HYD/2009 M/S PARAGON PRINTERS & ANOTHER 12 OBSERVATIONS MADE BY THIS TRIBUNAL IN THIS ORDER OR BY THE CIT(A) IN THE FIRST APPELLATE ORDER. WITH THE ABOVE OBSERVATION ALL THE APPEALS OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PUR POSES. ORDER PRONOUNCED IN THE COURT ON 31.8.2010. SD/- SD/- (CHANDRA POOJARI) (N.R.S.GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 31.8.2010 *VNR COPY OF THIS ORDER FORWARDED TO: 1. S/SHRI K.VASANT KUMAR & A.V.RAGHURAM ADVOCATES 6- 3- 240/3 SARADADEVI STREET PREMNAGAR KHAIRATABAD H YDERABAD. 2. DCIT CENTRAL CIRCLE3 3. CIT (A) I HYDERABAD. 4. CIT AP. HYDERABAD. 5. DR ITAT HYDERABAD.