DCIT 15(3), MUMBAI v. M/s. KUVERJI KHIMRAJ & CO., MUMBAI

ITA 1177/MUM/2006 | 2002-2003
Pronouncement Date: 20-01-2010 | Result: Dismissed

Appeal Details

RSA Number 117719914 RSA 2006
Assessee PAN AADFK9069Q
Bench Mumbai
Appeal Number ITA 1177/MUM/2006
Duration Of Justice 3 year(s) 11 month(s) 4 day(s)
Appellant DCIT 15(3), MUMBAI
Respondent M/s. KUVERJI KHIMRAJ & CO., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 20-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted J
Tribunal Order Date 20-01-2010
Date Of Final Hearing 05-11-2009
Next Hearing Date 05-11-2009
Assessment Year 2002-2003
Appeal Filed On 16-02-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI. BEFORE SHRI D.K. AGARWAL JUDICIALMEMBER AND SHRIJ. SUDHAKAR REDDY ACCOUNTANT MEMBER. I.T.A. NO. 11 77/MUM/2006 ASSESSMENT YEAR : 2002-03. ASSTT. COMMISSIONER OF M/S KUVERJI KHIMRAJ & CO. INCOME TAX -15(3) VS. 132-136 APPA BUILDING MUMBAI. S.V.P. ROAD NULL BAZAR MUMBAI 400 004. PAN : AADFK9069Q APPELLANT RESPONDENT APPELLANT BY : SHRI N.K. BALODIA. RESPONDENT BY : SHRI B.V.JGAVERI. O R D E R PER J. SUDHAKAR REDDY A.M. THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-XV MUMBAI DATED 01 ST DEC. 2005 FOR THE ASSESSMENT YEAR 2002-03. 2. THE FACTS ARE BROUGHT OUT AT PARA 2 OF THE CIT( APPEALS) ORDER WHICH ARE EXTRACTED BELOW FOR READY REFERENCE : THE APPELLANT IS CARRYING ON THE BUSINESS OF TRAD ING FOODGRAINS PULSES AND KIRANA ITEMS ON WHOLESALE AN D RETAIL BASIS FROM IT SHOP PREMISES AT SVP ROAD MUMBAI 4000 004 AND THE GODOWN PREMISES AT APMC MARKET NEW MUMBAI. ON 21.3 .2002 THE SURVEY PARTY HAD CARRIED OUT THE SURVEY U/S. 13 3A OF THE ACT AT ALL THE BUSINESS PREMISES OF THE APPELLANT DURING WHICH THE PHYSICAL INVENTORY OF THE STOCK AT ALL THE PREMISES WAS TAKEN AND VALUED. AS PER THE PHYSICAL INVENTORY TAKEN BY THE SURVEY PARTY 2 THE APPELLANT HAD A STOCK OF RS.68 29 383/-. THE SU RVEY PARTY PREPARED THE TRADING ACCOUNT S ON THE DATE OF THE S URVEY I.E. ON 20.3.2002 WHEREIN THE GROSS PROFIT WAS ESTIMATED AT 4.9 PERCENT ON THE BASIS SOF THE LAST YEARS GROSS PROFIT SHOWN BY THE APPELLANT AND ACCORDINGLY THE CLOSING STOCK AS PER THE BOOKS WAS ARRIVED AT RS.28 31 498/-. THUS THE APPELLANT HAD EXCESS STOC K OF RS.39 97 906/-. THEREFORE THE APPELLANT AGREED TO DISCLOSE THE ADDITIONAL INCOME OF RS.40 LACS IN ITS RETURN OF IN COME FOR THE A.Y. 2002/03. BY REFERRING TO THE AUDITED ACCOUNTS IT W AS REPRESENTED THAT BY TAKING THE STOCK INVENTORIZED BY THE SURVEY PARTY ON 21.3.2002 THE SAID ADDITIONAL INCOME OF RS.40 LACS IS OFFERED FOR TAXATION AND THE APPELLANT HAS PAID TAX ON THE SAID INCOME. 3. THE AO PASSED AN ORDER U/S 143(3) ON 28 TH MARCH 2005 INTER ALIA MAKING THE FOLLOWING ADDITIONS : A) ON ACCOUNT OF ADDITIONAL STOCK AVAILABLE ON THE SURVEY DATE : RS. 4 42 709/- B) ON ACCOUNT OF UNACCOUNTED ALES : RS. 7 47 179/- C) ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CLOSING STOCK. : RS. 5 80 420/- D) ON ACCOUNT OF UNEXPLAINED INVESTMENT IN NEGATIVE STOCK : RS. 2 86 781/- ----------------- ---- TOTAL : RS.20 57 089/- ----------------- ----- THE AO ALSO MADE CERTAIN DISALLOWANCES AGGREGATING TO RS.2 61 234/-. 4. THE FIRST APPELLATE AUTHORITY ON APPEAL CONSI DERED THE DETAILED SUBMISSIONS OF THE ASSESSEE AND GRANTED RE LIEF ON VARIOUS GROUNDS. THE APPEAL WAS PARTLY ALLOWED. AGGRIEVED W ITH THE ORDER OF THE FIRST APPELLATE AUTHORITY THE REVENUE IS IN APPEAL ON THE FOLLOWING GROUNDS : 3 1(A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN DIRECTING THE D ELETION OF THE ADDITION OF RS.4 42 709/- MADE BY THE AO ON ACCOUNT OF ADDITIONAL STOCK AVAILABLE AS ON THE DATE OF SURVEY. 1(B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN NOT CONSIDERING THE PROPORTIONATE DIRECT COSTS DEBITED BY THE ASSESSEE TO THE TRADING ACCOUNT WHILE VALUING THE STOCK FOUND AND INVENTOR ISED ON THE DATE OF SURVEY. 2(A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN RESTRICTING THE ADDITION OF RS.7 47 179/- MADE DUE TO UNACCOUNTED SALES TO RS.2 74 353/- ON THE GROUND THAT THE AVERAGE RATES OF VARIOUS ITEMS WERE REQUIRED TO BE ADOPTED WHILE VALUING PHYSICAL INVENTORY OF THE STOCK AS ON THE DATE OF SURVEY AS WELL AS ON 31.03.2002. 2(B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN DIRECTING THAT THE RATES OF ITEMS LISTED IN THE INVENTORY OF STOCK S PREPARED BY THE SURVEY PARTY SHOULD BE CHARGED FROM ACTUAL RATES TO AVERAGE RATES ON THE BASIS OF EVIDENCE FURNISHED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE CIT(A) AND WITHOUT FOLLOWING THE DUE PROCEDURE LAI D DOWN IN RULE 46A OF THE I.T. RULES 1962. 3(A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN DIRECTING THAT THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN CLOSING STO CK SHOULD BE REDUCED FROMRS.5 80 420/- TO RS.1 21 123/-. 3(B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN GIVING THE BENE FIT OF SETTING-OFF WHILE ARRIVING AT THE VALUE OF PURCHASES OF UNACCOU NTED ITEMS FROM THE FUNDS AVAILABLE TO THE ASSESSEE OUT OF UNACCOUN TED SALES WITHOUT ANY CO-RELATION BETWEEN THE DATES OF UNACCO UNTED PURCHASES AND UNACCOUNTED SALES. 4(B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE SUM OF RS.2 86 781/- BEING THE ADDITION ON ACCOUNT OF UNEXPLAINED INVEST MENT IN NEGATIVE STOCK ON THE GROUND THAT THE ASSUMPTION O F THE AO 4 REGARDING TREATMENT OF STOCK NOT AVAILABLE WITH THE ASSESSEE WAS INCORRECT. 4(B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN DIRECTING THE D ELETION OF CERTAIN ADDITIONS ON THE PRESUMPTION THAT THE AO TREATED TH EM AS UNACCOUNTED SALES WHEREAS THE AO HAD TREATED INVES TMENTS WHICH IS NOT CONTRARY TO THE LAW AND CONSEQUENTLY THE A DDITION MADE BY THE AO ON THAT ACCOUNT SHOULD BE RESTORED. 5. THE LEARNED DR MR. N.K. BALODIA SUBMITTED THA T THE AO IN THIS CASE HAS FOLLOWED A VERY SCIENTIFIC METHOD OF TAKING THE STOCK ON 21 ST MARCH 2002 I.E. THE DATE OF SURVEY AND THEREAFTER ADJUSTING THE SAME TO THE ACTUAL PURCHASES MADE AND ACTUAL SALES MADE AND ULTIMATELY ARRIVING AT THE VALUE OF CLOSING STOCK AS ON 31 ST MARCH 2002. HE SUBMITTED THAT THE INVENTORY WAS VALUED AT RS.68 29 383/- AND WHEN THE SURVEY PARTY PREPARED THE TRADING ACCOUNT AS ON THE DATE OF SURV EY IT ESTIMATED THE GROSS PROFIT OF 49% WHICH WAS THE PREVIOUS YEARS GROSS PROFIT AND THIS WAS APPLIED TO THE TURNOVER WHICH WAS AS PER BOOKS AND THE DIFFERENCE IN STOCKS ARRIVED AT. HE SUBMITTED THAT THE PURCHASE C OST INCLUDED INWARD COST TRANSPORTATION IN OCTROI ETC. AND AS THE AO W ANTED TO LOAD THE CLOSING STOCK WITH THE INWARD COST OF TRANSPORTATION/OCTROI CHARGES THIS AGREED AMOUNT OF RS.68 LAKHS WAS INCREASED BY 1.9%. HE SU BMITTED THAT THE ASSESSEE HAS NOT GIVEN ANY EVIDENCE THAT THE VALUE OF CLOSING STOCK INCLUDED THE COST OF TRANSPORT AND COST OF OCTROI. DESPITE THIS HE SUBMITS THAT THE CIT(APPEALS) HAS GROSSLY ERRED IN APPRECIA TING THE FACTS AND HAS WRONGLY ARRIVED AT A CONCLUSION THAT THE ADDITION O F RS.4 42 709/- HAS TO BE DELETED. HE VEHEMENTLY CONTENDED THAT THE CIT(AP PEALS) HAS ERRED IN RESTRICTING THE ADDITION MADE ON ACCOUNT OF UNACCOU NTED SALES. HE DISPUTED THE FINDINGS OF THE CIT(APPEALS) THAT IN R ESPECT OF UNBRANDED ITEMS AN AVERAGE RATE IS REQUIRED TO BE ADOPTED WH ILE VALUING THE PHYSICAL INVENTORY AND THAT THE WORKING OF THE AO ON DEFICIT STOCK AS WELL AS 5 EXCESS STOCK WAS ERRONEOUS. HE TOOK THIS BENCH TO T HE ORDER OF THE AO AND SUPPORTED THE SAME. HE FURTHER SUBMITTED THAT T HE DECISION OF THE CIT(APPEALS) TO GRANT TELESCOPING BENEFIT TO UNACCO UNTED INVESTMENT IN STOCK IS NOT CORRECT. HE FURTHER SUBMITTED THAT THE CIT(APPEALS) HAS WRONGLY ADMITTED ADDITIONAL EVIDENCE WITHOUT FOLLOW ING THE DUE PROCEDURE LAID DOWN IN RULE 46A. HE PRAYED FOR RELI EF. 6. SHRI B.V. JHAVERI LEARNED COUNSEL FOR THE ASSE SSEE ON THE OTHER HAND SUBMITTED THAT THERE IS NO VIOLATION OF RULE 46A AS THE STATEMENTS IN QUESTION WERE PREPARED FROM OUT OF TH E PURCHASE BILLS FILED WHICH WAS PRODUCED BEFORE THE AO. HE SUBMITTED THAT NO ADDITIONAL EVIDENCE WHATSOEVER WAS FILED BEFORE THE CIT(APPEAL S) AND HENCE THIS GROUND OF THE REVENUE NEED BE DISMISSED. MR. JHAVER I FURTHER SUBMITTED THAT THERE WERE MANY MISTAKES AND DISCREPANCIES IN THE STATEMENT PREPARED BY THE SURVEY PARTY OUT OF WHICH THE STOC K WAS CARRIED FORWARD AND REMAIN IN THE CLOSING STOCK ON 31-3-2002. HE SU BMITTED THAT THE SAID MISTAKES OR DISCREPANCIES WERE REQUIRED TO BE RECT IFIED OR CORRECTED AND THAT THIS WAS CORRECTLY DONE BY THE FIRST APPELLATE AUTHORITY. ON THE ISSUE OF NEGATIVE STOCKS HE SUBMITTED THAT THERE WAS CON FUSION ABOUT THE NAMES OF SOME OF THE ITEMS FOR EXAMPLE MUNG DAL IS KNOW N S MOGAR IN GUJRATI AND THEREFORE SALE OF MOGAR WAS NOT ADJUSTED AGAI NST STOCK OF MUNG DAL WHICH RESULTED IN EXCESS STOCK OF MUNG DAL AND NEGA TIVE STOCK OF MOGAR. HE POINTED OUT THAT THE LEARNED DR COULD NOT SPELL OUT AS TO HOW THE FIRST APPELLATE AUTHORITY CAME TO A CONCLUSION THAT THE D IFFERENCE IN QUESTION CAN AT BEST BE RS.2 61 537/-. ON AN ADDITION OF RS. 5 80 420/- MR. JHAVERI COMPARED CLOSING STOCK STATEMENT OF THE ASSESSEE AS TO THE AUDITEDD BOOKS OF ACCOUNT AND THE CLOSING STOCK STATEMENT PREPARED BY HIM AS ON 31-3- 2002 AND CAME TO A CONCLUSION THAT IN RESPECT OF 33 ITEMS THE ASSESSEE HAS SHOWN HIGHEST STOCK THAN THE STOCK SHOWN IN THE STA TEMENT PREPARED BY 6 THE AO. HE SUBMITTED THAT THE STOCK IS AS PER BOOKS OF ACCOUNT AND THE ESTIMATED STOCK STATEMENT PREPARED BY THE AO HAS NO RELEVANCE. HE FURTHER SUBMITS THAT THE CIT(APPEALS) CONSIDERED TH E EXPLANATION OF THE ASSESSEE ON THE ALLEGATION OF EXCESS STOCK AND REDU CED THE FIGURE OF EXCESS STOCK FROM RS.4 59 831/- TO RS.1 21 123/-. H E SUBMITTED THAT WHEN IT IS THE CONTENTION OF THE REVENUE THAT THE ASSESS EE EARNED CERTAIN AMOUNT ON ACCOUNT OF UNACCOUNTED SALES THEN THE AMOUNT EA RNED BY THE ASSESSEE OUT OF SUCH SALE WAS AVAILABLE WITH THE ASSESSEE FO R ACQUIRING EXCESS STOCK OF RS.1 21 123/-. HE SUBMITTED THAT THE CIT(APPEALS ) WAS RIGHT IN GRANTING TELESCOPING BENEFIT. HE THEREFORE SUBMIT TED THAT THE ORDER OF THE FIRST APPELLATE AUTHORITY BE UPHELD. 7. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSA L OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW WE HOLD AS FOLLOWS. 8. ON THE ADDITION OF RS.4 42 793/- THERE ARE TWO ASPECTS NAMELY A) THE ADDITION OF RS.1 34 911/- ON ACCOUN T OF DIRECT COST NOT INCLUDED IN THE VALUATION OF CLOSING STOCK AND B) THE ADDITION ON ACCOUNT OF BOOK STOCK AS ON THE DATE OF SURVEY. 9. AFTER CONSIDERING THE CONTENTIONS OF THE ASSESS EE THE FIRST APPELLATE AUTHORITY OBSERVED THAT THE AO HAS ASKE D THE ASSESSEE WHETHER IN THE RATES ADOPTED BY THE SURVEY PARTY VARIOUS E XPENSES INCURRED WHILE PURCHASING THE GOODS WERE INCLUDED OR NOT AND THE ASSESSEE HAD REPLIED THAT ALL COSTS WERE INCLUDED IN THE RATES ADOPTED B Y THE SURVEY PARTY. THIS SUBMISSION IS NOT CONTRADICTED BY THE AO WITH ANY E VIDENCE. THE CIT(APPEALS) EXAMINED COPIES OF PURCHASE BILLS FILE D IN THE PAPER BOOK AND GAVE A FINDING OF FACT THAT TRANSPORTATION CHAR GES AND OTHER EXPENSES ARE INCLUDED IN THE RATE CHARGED TO THE APPELLANT B Y THE SUPPLIERS. THIS 7 FINDING OF FACT IS NOT CONTRADICTED BY THE LEARNED DR. SIMILARLY THE SECOND ASPECT OF ADDITION IS ON ACCOUNT OF BOOK STO CK AS ON THE DATE OF SURVEY. THE FIRST APPELLATE AUTHORITY HAS GIVEN A F ACTUAL FINDING THAT IN RESPECT OF 28 ITEMS THE RATES ADOPTED BY THE SURVE Y PARTY WERE NOT CORRECT WHEN COMPARED WITH THE LATEST PURCHASES OF THE SAID ITEMS PRIOR TO THE DATE OF SURVEY. HE CATEGORICALLY STATED THAT THE AS SESSEE HAS RIGHT TO CORRECT AND RECTIFY THE RATES BASED ON THE LATEST P URCHASE BILLS OF THE SAID ITEMS. THE FACTUAL FINDING GIVEN IN PARA 14 AND 15 PAGES 8 & 9 OF THE CIT(APPEALS) ORDER ARE NOT CONTROVERTED BY THE LEA RNED DR. UNDER THE CIRCUMSTANCES WE UPHOLD THE ORDER OF THE CIT(APPEA LS) AND DISMISS GROUND NO. 1(A) AND 1(B) OF THE REVENUE. 10. GROUND NO. 2 IS AGAINST THE ISSUE OF UNACCOUNT ED SALES. THE CIT(APPEALS) HAS GIVEN A SPECIFIC FINDING OF FACT T HAT THE AO HAS MADE TRANSPOSITION ERROR WHILE ENTERING THE STOCK TAKEN BY THE SURVEY PARTY INTO THE COMPUTER. ANOTHER FINDING OF FACT THAT THE SURV EY PARTY HAD INCORRECTLY ADOPTED DIFFERENT RATES IS NOT CONTRADI CTED BY THE REVENUE. AT PARA 18 AFTER DUE VERIFICATION THE FIRST APPELLAT E AUTHORITY HAS COME TO A CONCLUSION THAT IN CASE OF UNBRANDED ITEMS AVERAGE RATES IS REQUIRED TO BE ADOPTED WHILE VALUING THE PHYSICAL INVENTORY OF STO CK TAKEN ON THE DATE OF SURVEY. ON ADOPTION OF SUCH RATES HE ARRIVED AT THE DIFFERENCE IN VALUATION AT RS.2 72 104/-. FURTHER AT PARA 19 THE CIT(APPE ALS) HELD AS FOLLOWS : I HAVE ALSO VERIFIED THE CONTENTION OF THE APPELL ANT IN RESPECT OF THE NEGATIVE STOCK DETERMINED BY THE ASSESSING O FFICER IN RESPECT OF SOME OF THE ITEMS FOR WHICH THERE WAS A POSITIVE STOCK BUT DUE TO DIFFERENCE IN THE NAME THE SAME WAS NOT CONSIDERED BY THE ASSESSING OFFICER. I FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE APPELLANT WHEREBY THE STOCK HAS BEEN REDUCED BY A SUM OF RS.1 34 852/-.I THEREFORE UPHOLD ALL THE THREE CO NTENTIONS OF THE APPELLANT WHEREBY THE POSITIVE CLOSING STOCK WORKED OUT BY THE ASSESSING OFFICER AT RS.66 89 851/- REDUCES BY A SU M OF 8 RS.450 779/- AND THEREFORE THE CLOSING STOCK AS O N 31.3.2002 WORKED OUT BY THE APPELLANT AT RS.62 39 072/- IS FO UND TO BE CORRECT. HENCE THE ADDITION ON ACCOUNT OF UNACCOUN TED SALES IS CONFIRMED TO THE EXTENT OF RS.2 61 537/- PLUS 4.9% PROFIT THEREON OF RS.12 815/-. THE APPELLANT THEREFORE GETS A REL IEF OF RS.4 72 826/- (I.E. RS.7 47 178/- MINUS RS.2 74 352 /-). THESE FINDINGS COULD NOT BE CONTRADICTED BY THE LEA RNED DR WITH ANY EVIDENCE. THUS WE UPHOLD THESE FINDINGS AND DISMISS GROUND NO. 2 OF THE REVENUE. 11. GROUND NO. 3 IS ON AN ADDITION OF UNEXPLAINED INVESTMENT IN CLOSING STOCK. AT PAR 23 THE FIRST APPELLATE AUTH ORITY HELD AS FOLLOWS : I HAVE CAREFULLY GONE THROUGH THE STATEMENTS AND THE NOTES PREPARED BY THE APPELLANT AND LOOKED INTO THE MISTA KES SHOWN BY THE APPELLANT IN ANNEXURE G PREPARED BY THE ASSESSI NG OFFICER. I FIND SUBSTANTIAL FORCE IN THE CONTENTIONS OF THE AP PELLANT AS I HAVE VERIFIED THE SAID MISTAKES BY REFERRING TO THE STOC K STATEMENT PREPARED BY THE ASSESSING OFFICER AS ON THE DATE OF THE SURVEY AND AS ON 31.3.2002 AND ALSO THE PHYSICAL HAND WRITTEN INVENTORY WHICH WAS PREPARED BY THE SURVEY PARTY. I FIND THAT THE A SSESSING OFFICER DID MAKE THE VARIOUS MISTAKES SHOWN BY THE APPELLAN T ON PAGES 98 AND 99. THESE MISTAKES ARE GLARING AND THEY HAVE BE EN VERIFIED BY ME. I THEREFORE ACCEPT THE CONTENTION OF THE ASSESS EE TO THE EXTENT OF MISTAKES SHOWN IN ANNEXURE G WHEREBY THE ADDITION O F RS.5 80 954/- GETS REDUCED TO RS.1 21 123/-/-. AS T HE APPELLANT IS UNABLE TO EXPLAIN THE SAID EXCESS STOCK OF RS.1 21 123/- THE SAME IS REQUIRED TO THE ADDED TO THE INCOME OF THE APPEL LANT AS UNEXPLAINED INVESTMENT IN THE STOCK AS ON 31.3.2002 . THESE FINDINGS OF FACT COULD NOT BE CONTRADICTED B Y THE LEARNED DR. FURTHER WHEN THERE IS AN ADDITIONAL ACCOUNT OF UNA CCOUNTED SALE IN OUR HUMBLE OPINION THE FIRST APPELLATE AUTHORITY WAS R IGHT IN HOLDING THAT THIS AMOUNT SHOULD BE TELESCOPED INTO THE UNEXPLAINED IN VESTMENT IN THE CLOSING STOCK. AT PARA 25 THE FIRST APPELLATE AUTHO RITY HELD AS FOLLOWS : 9 I HAVE NO REASON TO DISAGREE WITH THE AFORESAID C ONTENTION OF THE APPELLANTS REPRESENTATIVE BECAUSE BOTH THE INC OME AND THE APPLICATION OF INCOME CANNOT BE ADDED TO THE INCOME OF THE APPELLANT. ONCE THE INCOME IN THE FORM UNACCOUNTED SALES IS ADDED THE APPLICATION OF THE SAID INCOME TO THAT EXTENT CANNOT BE ONCE AGAIN ADDED TO THE INCOME OF THE APPELLANT. I THEREFORE DELETE THE WHOLE OF THE ADDITION OF RS.5 80 420/- W HICH WAS MADE ON THE GROUND OF UNEXPLAINED INVESTMENT IN THE CLOS ING STOCK. 12. WE FULLY AGREE WITH THE ABOVE FINDINGS OF THE FIRST APPELLATE AUTHORITY AND DISMISS GROUND NO. 3(A) AND 3(B) OF T HE REVENUE. 13. GROUND NO. 4 IS ON THE ISSUE OF ADDITION ON AC COUNT OF UNEXPLAINED INVESTMENT IN THE NEGATIVE STOCK. THE A O ARRIVED AT POSITIVE STOCK AS WELL AS NEGATIVE STOCK. THE ASSESSEE EXPLA INED THAT THE NEGATIVE STOCK WAS ARRIVED AT BY THE AO MAINLY BECAUSE THE RE WAS A MISUNDERSTANDING ABOUT THE NON-COLLECTOR OF VARIOUS ITEMS. FOR EXAMPLE MUNG DAL IS ALSO KNOWN AS MOGAR IN GUJARATI. THERE ARE ALSO VARIATIONS IN THE NAMES OF THE ITEMS DEPENDING UPON VARIOUS FA CTORS SUCH AS REMOVAL OF OUTER COVER. THE ASSESSEE PREPARED DETAILED ANNE XURES TO RECONCILE THE POSITIVE STOCK WITH THE NEGATIVE STOCK AND AT PARA 29 THE FIRST APPELLATE AUTHORITY HELD AS FOLLOWS: ON CAREFUL PERUSAL OF THESE STATEMENTS EXPLAININ G THE NEGATIVE STOCK I ACCEPT THE CONTENTION OF THE APPE LLANT THAT THE NEGATIVE STOCK HAS BEEN ARRIVED AT BY THE ASSESSING OFFICER MAINLY DUE TO THE NOMENCLATURE DIFFERENCE. I THEREFORE DE LETE THE ADDITION OF RS.1 41 920/- OUT OF THE ADDITION ON ACCOUNT OF NEGATIVE STOCK OF RS.1 71 592/-. 14. THIS FACTUAL FINDING IS NOT CONTROVERTED BY TH E LEARNED DR. WE FURTHER FIND NO ERROR IN THE VIEW OF LEARNED CIT (APPEALS) THAT ONCE AN ADDITION IS MADE ON ACCOUNT OF UNACCOUNTED SALES N O SEPARATE ADDITION NEED BE MADE ON ACCOUNT OF NEGATIVE STOCK. THUS WE DISMISS GROUND NO. 4(A) AND 4(B) OF THE REVENUE. 10 15. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 20 TH DAY OF JANUARY 2010. SD/- SD/- (D.K. AGARWAL) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI DATED : 20 TH JANUARY 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT` 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR J-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT MUMBAI BENCHES