ACIT, Erode v. M/s. Golden Refineries Private Ltd., Vellakoil

ITA 1311/CHNY/2011 | 2001-2002
Pronouncement Date: 18-11-2011 | Result: Dismissed

Appeal Details

RSA Number 131121714 RSA 2011
Assessee PAN AABCG1071F
Bench Chennai
Appeal Number ITA 1311/CHNY/2011
Duration Of Justice 4 month(s) 4 day(s)
Appellant ACIT, Erode
Respondent M/s. Golden Refineries Private Ltd., Vellakoil
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 18-11-2011
Date Of Final Hearing 01-11-2011
Next Hearing Date 01-11-2011
Assessment Year 2001-2002
Appeal Filed On 14-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH CHENNAI [BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER] I.T.A.NO.1311/MDS/2011 ASSESSMENT YEAR : 2001-02 THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE II ERODE VS M/S GOLDEN REFINERIES PVT. LTD NO.117/144 MULANUR ROAD KARATTUPALAYAM VELLAKOIL 638 111 [PAN - AABCG1071F] (APPELLANT) (RESPONDENT) C.O.NO.140/MDS/2011 ASSESSMENT YEAR : 2001-02 M/S GOLDEN REFINERIES PVT. LTD NO.117/144 MULANUR ROAD KARATTUPALAYAM VELLAKOIL 638 111 VS THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE II ERODE (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI R.B. NAIK CIT/DR ASSESSEE BY : SHRI S.SRIDHAR ADVOCATE (ERODE) DATE OF HEARING : 01.11.2011 DATE OF PRONOUNCEMENT : 18.11.2011 ITA 1311/11 CO 140/11 :- 2 -: O R D E R PER HARI OM MARATHA JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE AND TH E CORRESPONDING CROSS OBJECTION FILED BY THE ASSESSEE PERTAINING ASSESSM ENT YEAR 2001-02 ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-I COIMBATORE DATED 21.3.2011. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE- COMPANY DERIVES INCOME FROM TRADING IN EDIBLE OILS AFTER REFINING HTEM. THE COMPANY FILED ITS RETURN OF INCOME FOR ASSESSME NT YEAR 2001-02 ON 31.10.2001 ADMITTING TOTAL INCOME OF ` 18 58 600/-. SUBSEQUENTLY ASSESSMENT WAS MADE U/S 143(3) ON 27.2.2004 DETERM INING THE TOTAL INCOME AT ` 24 49 350/-. THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AGAINST THE ADDITIONS MADE AND THE LD. C IT(A) VIDE HIS ORDER IN I.T.A.NO. 107-C/04-05 DATED 21.10.2004 PARTLY AL LOWED THIS APPEAL. THE ORDER GIVING EFFECT TO THE ORDER OF THE LD. CIT (A) WAS PASSED ON 17.12.2004 ARRIVING AT A TAXABLE INCOME OF ` 22 16 730/-. FURTHER APPEAL WAS PREFERRED AND THE ITAT VIDE ITS ORDER D ATED 18.5.2006 IN I.T.A.NO. 238/MDS/2005 DISMISSED THE APPEAL OF THE ASSESSEE. THE ASSESSEE HAD INADVERTENTLY FILED ONE MORE APPEAL AG AINST THE SAME ORDER OF THE LD. CIT(A) DATED 21.10.2004 WHICH WAS DISMISSED AS ITA 1311/11 CO 140/11 :- 3 -: WITHDRAWN BY THE ITAT VIDE ITS ORDER DATED 29.12.20 06 IN I.T.A.NO. 712/MDS/2005. A SURVEY U/S 133A OF THE ACT WAS CON DUCTED IN THE CASE OF THE ASSESSEE-COMPANY ON 6.2.2001 IN CONNEC TION WITH THE SEARCH U/S 132 CONDUCTED IN THE CASE OF JMD GROUP O F CASES DELHI. DURING THE SURVEY IN ASSESSEES PREMISES PARALLEL S ET OF BOOKS OF ACCOUNT PERTAINING TO FINANCIAL YEAR 2000-01 CONTAI NING ASSESSEES UNACCOUNTED BUSINESS TRANSACTIONS AND UNEXPLAINED C ASH WERE FOUND WHICH WERE INVENTORIED. IN THE PARALLEL SET OF BOO KS LOAN DEBTORS OF ` 27 31 450/- AND UNACCOUNTED TRADE DEBTORS OF ` 93 08 277/- WERE NOTICED AND CASH OF ` 14 42 528/- WAS ALSO FOUND. SINCE THESE FACTS WERE NOT DISCLOSED IN THE RETURN OF INCOME FILED FO R ASSESSMENT YEAR 2001-02 THE DEPARTMENT WAS OF THE VIEW THAT THIS I NCOME HAS ESCAPED ASSESSMENT. CONSEQUENTLY A NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE-COMPANY FOR ASSESSMENT YEAR 2001-02 ON 12.4.2007 AFTER RECORDING THE REASONS IN WRITING AN D AFTER OBTAINING PRIOR APPROVAL OF THE CIT. RESPONDING TO THE NOTIC E THE ASSESSEE FILED ITS RETURN OF INCOME ON 25.3.2008 ADMITTING TOTAL I NCOME OF ` 22 16 730/- AND ALSO MADE A REQUEST FOR THE SUPPLY OF REASONS RECODED U/S 148 OF THE ACT WHICH WERE SUPPLIED. TH E ASSESSEE OBJECTED AGAINST REASONS VIDE LETTER DATED 23.12.20 08 WHICH WERE DECIDED VIDE OFFICE ORDER DATED 23.12.2008. ITA 1311/11 CO 140/11 :- 4 -: 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSEES REPRESENTATIVE PRODUCED BOOKS OF ACCOUNT WHICH WERE EXAMINED. THE ASSESSING OFFICER PROPOSED TO TAX THE FOLLOWING UNEXPLAINED/UNACCOUNTED INCOME IN ASSESSMENT YEAR 2 001-02: (I) UNEXPLAINED CASH FOUND AND INVENTORISED DURING SURVEY ` 14 42 528 (II) UNACCOUNTED TRADE DEBTORS AS PER PARALLEL SET OF BOOKS FOUND AND INVENTORISED DURING SURVEY ` 93 08 277 (III) UNEXPLAINED ADVANCE TO LOAN DEBTORS AS PER PARALLEL SET OF BOOKS FOUND AND INVENTORISED DURING SURVEY ` 27 31 450 TOTAL ` 1 34 82 255 4. THE ASSESSEE TRIED TO EXPLAIN THE SOURCES OF THESE INCOMES AS UNDER: UDI INVESTED IN STOCK REALIZED 25 84 874 UDI FOR THE PERIOD FROM 1.4.2000 TO 6.2.2001 40 62 929 PROFIT AS PER BOOKS OF ACCOUNT AS ON 5.2.2001 35 45 148 ADD: DEPRECIATION CHARGED 7 65 753 43 10 901 REALIZATION FROM DEBTORS OUT OF OPENING BALANCES 15 83 795 ADVANCE AGAINST FUTURE SUPPLIES 16 48 650 TOTAL 1 41 91 149 THE ASSESSEE HAS FURNISHED REVISED WORKING OF SOURC ES VIDE LETTER DATED 29.12.2008 AS UNDER: I) REALISATION OF UDI INVESTED IN STOCK ` 25 84 874 II) SURPLUS IN IV ABOVE ` 78 398 III) NET PROFIT AS PER BOOKS 14 08 504 AS ON 5.2.2001 ADD: DEPRECIATION DEBITED 5 75 970 ` 19 84 474 ITA 1311/11 CO 140/11 :- 5 -: IV) REALISATION FROM DEBTORS (AS PER SEIZED MATERIALS ANNEXURE-I) ` 15 83 795 V) CASH BALANCE AVAILABLE OUT OF DRAWINGS BY N.R AND N.D ( AS PER SEIZED MATERIAL) ` 4 00 000 VI) ADVANCE AGAINST FRIENDS & RELATIVES (AS PER SEIZED MATERIAL) (ANNEXURE III) ` 21 24 809 VII) LOAN FROM FRIENDS & RELATIVES (AS PER SEIZED MATERIAL) (ANNEXURE III) ` 26 31 790 VIII) ADVANCE FROM FUTURE SUPPLIES (KG/B&D/S-1&5) (ANNEXURE IV) ` 7 41 691 ` 1 21 29 831 5. BUT THE ASSESSING OFFICER DID NOT FIND THE ABOVE E XPLANATION AS SATISFACTORY AND SO BROUGHT THE ENTIRE AMOUNT TO TAX. AGGRIEVED THE ASSESSEE PREFERRED FIRST APPEAL AND THE LD. CIT(A) HAS REVERSED THE FINDING OF ASSESSING OFFICER BY CONCLUDING THAT UND ISCLOSED TRADE DEBTORS AND UNDISCLOSED LOAN DEBTORS STAND FULLY EX PLAINED BY THE EVIDENCE AVAILABLE IN THE SEIZED MATERIALS ITSELF. UNEXPLAINED CASH HAS ALREADY BEEN OFFERED FOR TAX IN THE RETURN FIL ED IN FORM 2B. NOW THE REVENUE IS AGGRIEVED AND HAS RAISED THE FOLLOWI NG GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCO ME-TAX (APPEALS) IS AGAINST FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIO NS MADE ON ACCOUNT OF UNEXPLAINED TRADE CREDITORS BROU GHT TO TAX U/S 69B AND ADVANCE TO LOAN CREDITORS BROUGH T TO TAX U/S 69. 3. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THESE ADDITIONS WERE MADE FOR WANT OF PROPER EXPLANATION . ITA 1311/11 CO 140/11 :- 6 -: 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE OUGHT TO HAVE SUBMITTED EXPLANATION WI TH EVIDENCE THE SOURCE OF UNACCOUNTED TRADE DEBTORS AN D ADVANCE TO LOAN DEBTORS TO THE ASSESSING OFFICER FO R CONSIDERATION DURING THE RE-ASSESSMENT PROCEEDINGS WHICH WERE NOT DONE BY THE ASSESSEE. 5. THE ANNEXURES FILED WITH THE CIT(A) PURPORTING T O EXPLAIN THE SOURCES FOR FUNDS RELATING TO UNACCOUNT ED TRADE DEBTORS AND LOAN DEBTORS WERE NOT FURNISHED T O THE ASSESSING OFFICER WHILE CALLING FOR THE REMAND REPO RT. 6. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSEE FAILED TO SUBMIT THE DETAILS/EVID ENCES CALLED FOR BY THE ASSESSING OFFICER DURING THE COUR SE OF REMAND REPORT PROCEEDINGS AND SO THERE IS VIOLATION OF RULE 46A(2) OF I.T RULES. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUC ED AT THE TIME OF HEARING THE ORDER OF THE CIT(APPEAL S) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER RESTORED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CARE FULLY PERUSED THE ENTIRE RECORD. IT WAS NOTICED THAT THE APPEAL OF THE REVENUE IS TIME BARRED BY 27 DAYS FOR WHICH CONDONA TION PETITION HAS BEEN FILED BY SHRI SANJAY GANDHI NATARAJ ACIT [A SSESSING OFFICER]. THE REASON MENTIONED IN THE PETITION IS THAT THIS D ELAY IS DUE TO TIME CONSUMED IN TRANSIT OF FILES FROM ERODE OFFICE TO ADDL. CITS OFFICE AT COIMBATORE AND TO CITS OFFICE AT COIMBATORE; AND B ACK TO ERODE. WE HAVE FOUND THAT THIS IS A SUFFICIENT REASON TO EXPL AIN THE DELAY. ITA 1311/11 CO 140/11 :- 7 -: THEREFORE WE CONDONE THIS DELAY AND ADMIT THE APPE AL OF THE REVENUE. 7. AFTER HEARING BOTH SIDES ON MERITS OF THE CASE WE HAVE COLLATED THAT A SURVEY U/S 133A WAS CONDUCTED ON 6.2.2001 IN THE FIRST HALF OF THE DAY WHICH WAS CONVERTED INTO A SEARCH IN THE SE COND HALF OF THE DAY. IT IS ALSO NOTICED THAT ALL ITEMS OF INCOME WHICH ARE THE SUBJECT MATTER OF THIS APPEAL WERE FOUND DURING THE COURSE OF SURVEY AND NOT DURING THE COURSE OF SEARCH PROCEEDINGS. IT IS AN ACCEPTED POSITION. THE ASSESSMENT ORDER ORIGINALLY MADE U/S 143(3) ON 27.2.2004 WAS IN RESPECT OF THE PREVIOUS YEAR ENDING ON 31.3.2001 . THE DATE OF SURVEY/SEARCH BEING 6.2.2001 FALLS BETWEEN THE BE GINNING AND THE END OF THE PREVIOUS YEAR. IN FACT THE REVENUE HAD FRAMED A BLOCK ASSESSMENT ORDER U/S 158BC IN RESPECT OF THE EVIDE NCE FOUND AND SEIZED DURING SURVEY PROCEEDINGS. THE ASSESSMENT FOR THE BLOCK PERIOD 1.4.1990 TO 6.2.2001 WAS FRAMED VIDE ORDER DATED 18.2.2003 DETERMINING THE UNDISCLOSED INCOME AT ` 2 21 48 784/- AS AGAINST ` 47 21 518/- RETURNED BY THE ASSESSEE IN FORM 2B AND THE ASSESSEE ALSO PAID TAX THEREON @ 60% AND ADJUSTED AGAINST TH E MONEY SEIZED. THE LD. CIT(A) GAVE A PART RELIEF TO THE ASSESSEE W HEN APPEAL AGAINST ITA 1311/11 CO 140/11 :- 8 -: THE BLOCK ASSESSMENT WAS PREFERRED BEFORE HIM AND UNDISCLOSED INCOME WAS RECOMPUTED AT ` 1 72 93 981/-. 8. IN SECOND APPEAL THE ASSESSEE WAS SUCCESSFUL IN GETTING THE ENTIRE BLOCK ASSESSMENT ORDER STRUCK DOWN ON THE RE ASONING THAT THE MATERIALS GATHERED DURING SURVEY CANNOT BE MADE A B ASIS FOR FRAMING BLOCK ASSESSMENT IN VIEW OF THE HON'BLE JURISDICT IONAL HIGH COURTS DECISION IN THE CASE OF CIT VS G.K.SENNIAPPAN 284 ITR 220. IT MAY BE MENTIONED THAT ORIGINAL ASSESSMENT MADE U/S 143 (3) ON 27.2.2004 ALSO SUFFERED TWO APPEALS IN WHICH PART RELIEF WAS GRANTED AND THE TRIBUNALS ORDER DATED 18.5.2006 HAS BECOME FINAL A ND NO APPEAL WAS FILED AGAINST THE ORDER BY ANY PARTY. THEREAFTER NOTICE DATED 12.4.2007 WAS ISSUED TO THE ASSESSEE TAKING RECOURS E TO SECTION 147 AND THE ASSESSEE RESPONDED TO THIS NOTICE BUT UNDER PROTEST BY FILING RETURN ON 25.3.2008 AND ALSO SOUGHT COPY OF REASO NS RECORDED FOR REOPENING U/S 148. COPY OF THE REASONS RECORDED WA S SUPPLIED VIDE LETTER DATED 18.11.2008 WHICH WAS RECEIVED BY THE A SSESSEE ON 20.11.2008. THE REASONS RECORDED ARE AS UNDER: ' SURVEY U/S.133A OF THE I.T. ACT WAS CONDUCTED IN TH E CASE OF THE ASSESSEE ON 06.02.2001 IN CONNECTION WITH SEARC H U/S.132 IN THE CASE OF JMD GROUP OF CONCERNS DELHI WHICH WAS CONVERTED INTO A SEARCH ACTION U/S 132. CERTAIN UNA CCOUNTED CASH AND PARALLEL SET OF BOOKS OF ACCOUNT SEEN TO B E MAINTAINED BY THE ASSESSEE WERE SEIZED U/S 132. ASSESSMENT FOR THE BLOCK PERIOD 01.04.91 TO 06.02.2001 WAS COMPLETED U/S 158 BC OF THE I.T. ACT. THE ITAT ON ASSESSEE'S APPEAL HAS VIDE IT S ORDER IN ITA 1311/11 CO 140/11 :- 9 -: IT(SS)A NO.100/MDS/2004 DATED 28.12.2006 HELD THAT EIGHT BOOKS OF ACCOUNT AND CASH OF ` 20 91 005/- WAS ACTUALLY FOUND DURING THE COURSE OF THE SURVEY BEFORE THE ACTION WAS CONVERTED IN TO SEARCH U/S 132 AND HENCE THE UNACCOUNTED INCO ME ARISING FROM SUCH BOOKS AND THE CASH DO NOT CONSTITUTE UNDI SCLOSED INCOME WITHIN THE MEANING OF SEC 158B(6) OF THE I.T .ACT. HENCE THE IT AT DIRECTED TO DELETE INCOME TO THE TUNE OF ` L 34 82 255/- FROM THE UNDISCLOSED INCOME ASSESSED IN THIS CASE. THE ABOVE INCOME IF NOT ASSESSABLE AS UNDISCLOSED INCOME U/S 158B(6) OF THE ACT IS ASSESSABLE AS THE ASSESSEE'S REGULAR IN COME NOT DISCLOSED TO THE DEPARTMENT FOR THE RELEVANT ASSESS MENT YEAR. THE ENTIRE INCOME MENTIONED ABOVE EMANATE FROM THE CASH DETECTED DURING THE COURSE OF THE SURVEY U/S.133AJS EARCH U/S.132 ON 06.02.2001 AND THE PARALLEL SET OF BOOKS OF ACCOUNT FOR THE F.Y.2000-01 MENTIONED BY THE ASSESSEE. HENC E THE ENTIRE INCOME IS ASSESSABLE FOR THE ASST.YEAR 2001- 02 WHICH ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC.147 OF THE I.T.ACT'. 9. THE ASSESSEE FILED OBJECTIONS AND THE ASSESSING OFF ICER PASSED ORDER ON 23.12.2008 DISMISSING THE OBJECTIONS RAISE D BY THE ASSESSEE. LATER RE-ASSESSMENT ORDER WAS RECTIFIED VIDE ORDE R DATED 23.1.2009 PASSED U/S 154 OF THE ACT WHEN A MISTAKE IN THE CA LCULATION OF INTEREST WAS NOTICED. PARAGRAPHS 9 TO 18 OF THE ORDER APP EALED AGAINST CONTAIN DETAILED FACTS AND THE HISTORY OF THE CASE THEREFORE THESE ARE BEING EXTRACTED BELOW WHICH WILL GIVE THE CORRECT P ICTURE OF THE FACTS TO CORRECTLY UNDERSTAND THEM IN THEIR CORRECT PERSPECT IVE: 9. THE NEXT GROUND OF APPEAL IS REGARDING THE ADD ITION MADE BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT P ROCEEDINGS ALTHOUGH THE ASSESSEE HAS EXPLAINED FACTUALLY HOW THE INCOME PROPOSED TO BE ADDED IS NOT TAXABLE IN THE EYES OF LAW AS WELL AS ON FACTS. ITA 1311/11 CO 140/11 :- 10 - : 10. THE APPELLANT SUBMITTED THAT THE SUBMISSIONS SO MAD E DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAVE NO T BEEN CONSIDERED IN PROPER PERSPECTIVE AND HENCE THE ADDI TION MADE IN THE ASSESSMENT REQUIRES DELETION. DURING THE COUR SE OF BLOCK ASSESSMENT ALSO SUBSEQUENTLY DURING THE COURSE OF A SSESSMENT PROCEEDINGS UNDER SECTION 143(3) R.W.S 147 OF THE I NCOME-TAX ACT THE APPELLANT SUBMIT T ED THAT THE D E T A I LS REGA RDI N G THE SE IZ E D MATER I A L A ND HAS ASK E D FOR T E L E SCOPING WITH REGARD TO S O UR CES A V A I L A BL E IN TH E SE I ZED MA TERIALS UNA CCOU NTED I NVEST M ENTS FO UND DUR I NG THE CO U RSE OF S U R VE Y/SEA RC H . THE AP P ELL AN T HAS FILE D CO P IE S O F A LL THE SUBMISSIONS M A DE BEFORE THE ASSESSING O F FICER D UR ING TH E COU R SE OF A S SESSMENT PROCEED I NGS . THE A P PELLANT SUBM I TT ED TH E PR OF I T AN D LOSS ACCOUNT A ND B ALANCE SHEET P R EPARED U P TO 05 . 02 . 0 1 I . E . B E FORE TH E DA TE OF SEARCH . I N THE BA L A NC E SHEET AND P ROFIT AND LOSS A CC OUNT PREPARE D A S ON 5 .2 . 01 THE APPELLANT HAS INCORPORATED BOTH THE ACCOUNTED AND UNACCOUNTED TR ANSACT I O NS MA D E BY THE APPELLANT F R OM 1 . 4 . 00 TO 5 . 2 . 0 1 . . T H E PROF IT A ND LOSS A C COUNT A ND B AL ANCE S HE E T AS O N 5 . 2 . 0 1 W I TH D ETA IL S INC O RPOR A TIN G T HE TURN OV ER AS P ER THE B OOKS O F ACCOUNTS AND S U PPRESSED SALES OU T SIDE T H E B OOKS OF A C C OU NTS S U ND R Y DEBTORS CREDITORS CASH AND D . DS ' RECEIVED AND SEIZED WITH REFEREN CE T O THE S AME W ER E FIL ED . T H E I NCO ME A RI S ING OUT O F SUPP RESSE D S ALES TURNO V E R W A S ESTA BLI SHE D AS UND I SCLO SE D I N C OME AFTER DED UCTI N G TH E B OO K PR OF IT AND WAS ADM I TTE D IN THE RETURN OF U N D I SC L OSED I NCOME F I LED I N FO RM N O . 2B AND TA X E S HAS ALREADY BEEN PAID @60 % . FOLLOWING IS THE EXT R ACT OF T HE ST A TEMENT OFFE RED BY THE A SSE SS EE I N TH E IR SUBMI SS ION : II THE UDI OFFERED BY THE COMPANY S.NO. PARTICULARS AMOUNT ( ` ) ASSESSMENT YEAR 2000-01 (FALLING IN BLOCK) 1. INVESTMENT IN STOCK ASSESSMENT YEAR 2001-02 (FALLING IN BLOCK) 25 84 874 2. INCOME ADMITTED 54 71 433 INCOME AS PER REGULAR BOOKS 14 08 507 40 62 926 TOTAL INCOME (BEFORE DEDUCTION OF SALES TAX LIABILITY PAYABLE AS PER 2B RETURN TOTAL (A) 66 47 800 3. THE ABOVE UDI OFFERED FOR TAX @ 60% (TAX PAYABLE ADJUSTED AGAINST CASH AND CHEQUES DDS SEIZED) WAS EQUATED TO THE FOLLOWING INVESTMENTS AS PER LETTER DATED 8.8.02 FILED IN THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS: A) DIFFERENCE IN CLOSING STOCK FOR A.Y 2000-01 25 84 874 ITA 1311/11 CO 140/11 :- 11 - : B) UNACCOUNTED CASH FOUND 14 12 528 C) UNEXPLAINED CASH FOUND IN LOCKER 10 00 000 D) DD IN THE NAMES OF EMPLOYEES 15 42 000 (B) 65 69 402 FROM THE ABOVE IT IS CLEAR THAT OUT OF THE INCOME PROPOSED TO BE ASSESSED BY YOU THE EXPLAINED CASH OF ` 14 42 528/- SEIZED IS TAKEN AWAY BY THE ABOVE EXPLANATION WHICH ONLY LEAVES THE UNACCOUNTED TRADE DEBTORS AND UNACCOUNTED ADVANCES TO LOAN DEBTORS AS ENUMERATED BELOW: UNACCOUNTED TRADE DEBTORS ` 93 08 277 ADVANCE TO LOAN DEBTORS ` 27 31 450 ` 1 20 39 727 THE ABOVE IS EXPLAINED AS UNDER: I) REALISATION OF UDI INVESTED IN STOCK 25 84 874 II) SURPLUS IN 4 ABOVE 78 398 III) NET PROFIT AS PER BOOKS AS ON 5.2.01 14 08 504 ADD: DEPRECIATION DEBITED 5 75 970 19 84 474 IV) REALISATION FROM DEBTORS (AS PER SEIZED MATERIALS (ANNEXURE I) 15 83 795 V) CASH BALANCE AVAILABLE OUT OF DRAWINGS BY N.R AND N.D(AS PER SEIZED AMTERIAL) 4 00 000 VI) ADVANCE AGAINST FUTURE SUPPLIES (AS PER SEIZED MATERIALS(ANNEXURE II) 21 24 809 VII) LOAN FROM FRIENDS AND RELATIVES AS PER SEIZED MATERIALS (ANNEXURE III) 26 31 790 VIII) ADVANCES FROM THE FUTURE SUPPLIES (KG/B&D/S-1&5) (ANNEXURE IV) 7 41 691 1 21 29 831 11. T H E ID AR . ARGUED THAT THE ADD I T I ONS MADE B Y T HE ASSESS IN G OFFICER I N THE R EASSESSMENT PROCEEDINGS AMOUNT TO TAXING T HE SAME I N C O M E TW IC E AN D IN TH I S R EGA R D THE AR . FILED THE EXPLANATION GIVEN I N THE LETT ER D ATE D 29 . 1 2 . 2008 FILED BEFO R E THE AO IN THE C OU R SE O F RE ASSES SMENT PROCEEDINGS . AS SEEN F R O M T HE DETAILS THE UND I SC L OSE D INC O M E OF F E R E D BY THE COMPANY BEF O RE D ED UC T ION OF SA L ES T A X LIAB I LIT Y P AYA BLE AS P ER 28 RETURN IS ` 66 4 7 800/- . THI S WA S ITA 1311/11 CO 140/11 :- 12 - : C O MP UTED B Y T HE AP P ELLAN T AF TER AD MI TT ING A N I N COME O F ` 2584874/- FOR THE ASSESSMENT YEAR 2000-01 AND INCOME OF ` 40 62 926/- FOR THE ASSESSMENT YEAR 2001-02. AS PER THE SUBMISSION S MADE THE UNDISCLOSED INCOME OFFERED TO TAX @ 60% IS EQUATED TO THE FOLLOWING INVESTMENTS: E) DIFFERENCE IN CLOSING STOCK FOR ASSESSMENT 25 84 874 F) UNACCOUNTED CASH FOUND 14 42 528 G) UNEXPLAINED CASH FOUND IN LOCKER 10 00 000 H) DD IN THE NAMES OF EMPLOYEES 15 42 000 65 69 402 THE A P P EL L AN T SUB M IT TED T HA T F RO M TH E ABO V E IT IS CLEA R THAT O U T O F THE INCOME PROPOSED TO BE AS S E S SED BY TH E ASSESS ING O FFI CE R THE EXPLAINED CA S H O F ` 14 42 52 8/- SE I Z ED IS TAKE N AWA Y BY T HE A B OVE E XPL A NATI O N WHICH ONLY LEAVES THE UNACCOU N TED T RADE D E B TOR S AND UNA C CO U NT ED ADV AN C E S T O LOAN DEBTORS AS ENUMERATED BELOW: UNACCOUNTED TRADE DEBTORS 93 08 277 ADVANCE TO LOAN DEBTORS 27 31 450 1 20 39 727 12. TH IS EXPLANAT I ON W A S G I VE N F O R THE PROPO S ED ADDITION OF ` 1 3 4 8 2 255/ - ( ` 1 20 39 727 + ` 14 42 528 ) M A DE BY T HE ASSESS I N G OFFICER . THE A PP E LL A N T S UBMITTED THA T THE P R OF IT A ND L OSS A C C O UNT AND BALANCE SHEET ALONG W ITH A LL THE DET A ILS AND T H E SCHED UL ES FO R TH E P E RIOD 11.4.00 TO 5 . 2 . 0 1 AND 6 . 2 . 01 TO 31 . 3 . 01 SH OWIN G TH E T OTAL D E BT OR S I NC L UD ING THOSE A RI S ING OUT OF THE U NACCOUN T ED SA L ES ALSO WE RE FI E L D . THE DETA IL ED LI S T O F D E BTOR S ARISING OUT OF UNACCOUNTED S A LES COLLEC T I ON M ADE FR O M TH E M CL O S I NG BALANCE OUTSTANDING PROFIT AND LO S S AC C O U N T A ND BALANCE SHEET ALON G W IT H THE D ET A ILS FO R THE PERIOD 1 . 4 . 00 TO 5 . 2 . 0 1 AND 6 . 2 . 01 TO 31 . 3 . 02 W ERE FILE D I N THE C O UR S E OF EARLIER ASSESSMENT P R OC EE D I NGS FOR BLOCK P E RIOD. 13 . SUBM IS S I ONS MADE B Y THE A PPE LLA NT WERE F ORWAR D ED TO THE ASSESS I NG OFFICER F O R HIS COMME NTS BY MY PR E D ECES S O R . THE ASSESS ING OFFICER IN H I S REMAND REPORT DATED 15 . 9.2 0 1 0 STA T E D A LL T H E F AC T S TO S UB STAN TI A TE THE FACT THAT THE A D DI T I ONS M A DE A RE ENT I R ELY ON ACCOU N T O F U N E XP LA I NED C A S H FOUND U NACCOUNT E D TRADE D E BTORS A N D ADVAN C E TO L OAN D EBTO R S . A S SEE N FR O M THE R EMA N D REPORT S I NCE THE AMOUNT O F ` 134 82 2 55 W A S DEL ETE D FROM T H E UNDISCLO S ED IN C OM E AS P ER THE OBSE R VA T I ON S OF T H E I T A T W AS ITA 1311/11 CO 140/11 :- 13 - : ASS ES S ED AS I NCOME FOUND DURING THE COUR S E OF S UR VE Y F O R T H E A S SESSMEN T Y EA R 2 001-02 . THE ASSESS ING OFF I CER HAS N OT GIVEN ANY FINDING ON TH E SOURCE S FOR THE T R ADE DEBTORS A ND A L SO ADVAN C E TO LOAN DEBT O R S ON T HE SU BM I S S I O N MADE BY THE APPELLANT . THE APPELLANT HAS MADE DETAILED SUBMISSION WITH RESPECT TO THE SEIZED MATERIALS REGARDING THE SOURCE TO EXPLAIN TH E UNACCOUNTED TRADE DEBTORS AND ADVANCE TO LOAN DEBTORS. THE FIN DINGS OF THE ASSESSING OFFICER IN THE REMAND REPORT WERE FORWARDED TO THE APPELLANT FOR HIS COMMENTS. IN HIS LETTER FILED ON 1.11.10 THE APPELLANT SUBMITTED THAT THE ASSESSING OFFICER HAS ADMITTED THAT A COPY OF THE ADDITIONAL WRITTEN SUBMISSION ALONG WIT H ANNEXURE WAS MADE AVAILABLE TO HIM BY THE CIT(APPEALS) WHILE CAL LING FOR THE REMAND REPORT. THE SAID ADDITIONAL WRITTEN SUBMISSI ON INCLUDES THE COPIES OF LETTERS FILED IN THE COURSE OF ORIGIN AL ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2001-02 AND THE BLOCK ASSESSMENT PROCEEDINGS FOR THE BLOCK PERIOD ENDING ON 6.2.01. THE APPELLANT STATED THAT THE ASSESSING OFFICER HAS NOT VERIFIED ANY OF THESE DETAILS AND HAD IT BEEN DONE HE WOULD HAVE COME TO KNOW OF THE FOLLOWING POINTS: I. THE EIGHT MATERIALS SEIZED VIDE SURVEY ANNEXURE DT.06.02.01 AND SEIZED AS PER SEARCH PANCHANAMA ARE ONE AND SAME WHICH REVEALS THE SALE EFFECTED BY THE APP ELLANT COLLECTION MADE BY WAY OF CHEQUES AND DEMAND DRAFTS KEPT ON HAND AND SEIZED BY THE DEPARTMENT AT THE TIME OF SEARCH CASH COLLECTIONS MADE AND KEPT ON HAND FOUND AT THE TIME OF SURVEY AND SEIZED AT THE TIME OF SEARCH ETC. II. THE CASH FOUND AT THE TIME OF SURVEY AND SEIZED BY THE DEPARTMENT HAVE BEEN ADMITTED BY THE APPELLANT IN T HE BLOCK RETURN FILED IN FORM 2B AND ACCEPTED BY THE A SSESSING OFFICER IN HIS REMAND REPORT. III. THE DEBTORS ALLEGED AS UNACCOUNTED HAVE BEEN I DENTIFIED AND EXPLAINED PARTYWISE THE SOURCES FOR THE SAME IN THE REGULAR ASSESSMENT FOR THE ASST.YEAR 01-02 AND AS W ELL IN THE BLOCK ASSESSMENT PROCEEDINGS FOR THE PERIOD END ING ON 06.02.01 AND IN THE LETTERS FILED IN THE REASSESSME NT PROCEEDINGS VIDE LETTERS DTD2312. 08 AND 2912.08. A LTHOUGH ALL THE RECORDS ARE AVAILABLE WITH THE ASSESSING OF FICER THE SAME HAVE NOT BEEN ELUCIDATED OR VARIED IN HIS REMA ND REPORT. IV. THE ASSESSING OFFICER IN POINT NO..9 OF HIS REP ORT STATED AS REPRODUCED IN POINT NO.VI AND VII SUPRA. FROM HI S REPORT IT IS IMMENSELY CLEAR THAT THE CASH BALANCE FOUND TRA DE DEBTORS ARRIVED ARE ONE AND SAME AS CONSIDERED IN T HE BLOCK AS WELL AS REGULAR ASSESSMENT PROCEEDINGS AND THESE ITEMS ITA 1311/11 CO 140/11 :- 14 - : HAVE ALL BEEN CONSIDERED IN ITS ENTIRETY IN THE BLO CK RETURN AS WELL AS THE ORIGINAL REGULAR RETURN FILED FOR THE A SST.YEAR 01- 02 WHICH ARE EVIDENCED BY THE PROFIT & LOSS ACCOUNT AND BALANCE SHEET FILED FOR THE PERIOD UPTO 05.02.01 A ND FOR THE PERIOD 06.02.01 TO 3 1.03.01 THE NOTES ON AND FORM ING PARTS OF ACCOUNTS AND THE VARIOUS REPLIES FILED IN THE SA ID PROCEEDINGS. V. THE ASSESSING OFFICER IN POINT NO.9 PAGE NO.A O F HIS REPORT HAS STATED AS REPRODUCED BELOW: 'THE ABOVE INCOME IF NOT ASSESSABLE AS THE ASSESSEE'S REGULAR INCOME NOT DISCLOSED TO THE DEPARTMENT FOR THE RELEVANT ASSESSMENT YEAR'. FROM THE ABOVE IT IS CLEARLY EXPLAINS THAT IT IS O NLY A CHANGE OF OPINION BY THE ASSESSING OFFICER CENTRAL CIRCLE -I COIMBATORE WHILE ISSUING NOTICE U/S 148 OF THE ACT FOR THE ASST.YEAR 01-02 AND THE ASSESSING OFFICER CIRCLE-I ERODE TO WHOM THE APPELLANT'S CASE HAS BEEN RE-NOTIFIED PAS SED THE REASSESSMENT ORDER. VI. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCING THAT THE ADDITIONS MADE ARE ENT IRELY DIFFERENT WHILE THE CONTRARY IS PROVED BY THE MATER IALS AVAILABLE ON RECORD BY WAY OF SURVEY STATEMENT RECO RDED U/S 133A THE ANNEXURES DRAWN PANCHANAMA'S WITH ANNEXU RES DRAWN THAT THEY ARE ONE AND SAME WHICH AMOUNTS TO TAXING OF THE SAME INCOME TWICE BY WAY OF BLOCK ASSESSMENT AND REASSESSMENT. VII. THE AO EVEN WHILE PASSING AN ORDER TO THE OBJE CTIONS MADE BY THE APPELLANT (ORDER DT.23.12.08) HAS NOT BROUGHT ON RECORD ANY EVIDENCE DISPROVING THE CLAIM MADE BY THE APPELLANT. VIII. THE ASSESSING OFFICER NEITHER CONSIDERED NOR EVALUA TED THE DETAILS FILED IN THE ASSESSMENT PROCEEDINGS OR IN THE APPELLANT PROCEEDINGS NOR EVEN THE SEIZED MATERIALS KEPT BY HIM TILL DATE AND REFERRED TO IN THE WRITTEN SUBMIS SIONS FILED IN THE APPELLATE PROCEEDINGS OR AT THE TIME OF OPPO RTUNITY OF HEARING GIVEN BY HIM WITH REFERENCE TO THE REMAND R EPORT AS SPECIFIED BY HIM IN POINT NO.2 OF HIS REMAND REP ORT AND HENCE THE REMAND REPORT SUB M I TT E D B Y H I M CL A IM ING T H AT T H E ASSESS ME NT F R A M E D I S COR R EC T IS F AC T UALLY I NCO R REC T A ND IS NOT S U STAINAB L E ON FA C TS. ITA 1311/11 CO 140/11 :- 15 - : I HAVE GONE THROU G H THE E L ABORATE SUBMISSIONS MADE BY THE A . R AND A L SO T HE MATERIAL ON RECORD. THE A . R . WAS ASKED TO FILE A DETAILED CASH FLOW STATEMENT TO EXPLAIN THE SOURCES FOR THE UNACCOUNTED INVESTMENTS MADE BY THE ASSESSEE . THE APPELLANT SUBMITTED A DETA I LED DAK WISE CASH FLOW STATEMENT EXPLAIN I NG T HE SO UR CES OF UNDISCLOSED INCOME AND ITS APPLICATION FOR INVESTMENT IN UNACCOUNTE D DEBTORS AND ADVANCES TO LOAN DEBTORS . THE B RI EF OF THE C ASH FLOW STATEMEN T I S AS FOLLOWS : INCOME 25 84 874 25 84 874 INVESTMENT IN CLOSING STOCK AS ON 31 . 03 . 200 0 25 84 874 25 84 874 CASH FLOW STATEMENT FOR THE YEAR ENDED 31.3.2001 40 62 926 9 3 08 2 7 7 UN D ISCLOSED I NCOME ADMITTED IN FORM 2B UNACCOUNTED TRADE DEBTORS 25 84 874 UNACCOUNTED 1 4 42 528 CASH FOUND REALISATIO N OF INVESTMENT IN STOCK AS ON 3 1 . 03 . 2000 OUT O F UD I ADMITTED FOR 1999-2000 19 84 474 10 00 000 NET PROFI T AS PER B OOKS AS ON 5.2.01 (B EFO R E DEPRECIATION ) UNEXPLAINED CASH FOUND I N LOCKER REALIZATION FROM DEBTORS (AS PER SEIZED MATERIALS) OUT OF OPENING BALANCE AS ON 1.4.2000 (ANNEXURE I) 15 83 795 ADVANCE IN LOAN DEBTORS 27 31 450 ITA 1311/11 CO 140/11 :- 16 - : CASH BALANCE AVAILABLE OUT OF DRAWINGS BY N.R AND N.D.(AS PER SEIZED MATERIALS) 4 00 000 DDS IN THE NAME OF EMPLOYEES 15 42 000 ADVANCE AGAINST FUTURE SUPPLIES (AS PER SEIZED MATERIAL) (ANNEXURE II) 21 24 809 SURPLUS 90 104 LOAN FROM FRIENDS AND RELATIVES (AS PER SEIZED MATERIAL) (ANNEXURE III) 26 31 790 ADVANCE AGAINST FUTURE SUPPLIES (KG/B&D/S- 1&5)(ANNEXURE IV) 7 41 691 TOTAL 1 61 14 359 TOTAL 1 61 14 359 1 4 . A L ONG WITH THE CASH FLOW STATEMENT THE BA L ANCE SHEET FILED FO R T H E PE R I O D F R O M 6.2 .0 1 TO 3 1 . 3. 01 WAS A L SO EXAMINED. IT I S PE R TI NENT TO PO I NT OUT THAT THE BALANC E O F S UND R Y DEBTORS AND ADVANCES ARE ` 4 7 29 9 95 /- AND ` 31 17 99 4/ - R ESPECTIVELY ON 5 . 2 . 01 AND WH E REAS THE SAID ACCO U NT SHOWS A BAL A NCE OF ` 12 1 0 225/- AND ` 1 0 42 1540/- R ESPECTIVELY FO R T HE PE R IOD 6 . 2 . 01 TO 31 . 3 . 01. THI S S HOWS T HAT T H E ENT I RE TRANSACTION RELATIN G TO BOTH DISCLO S ED A ND UN D I SCLOSED BUSINESS HAVE BEEN INCLUDED AND CONSIDERED IN THE AUDITED PROFIT A ND LOSS ACCO U NT AND THE BALAN C E SHEET F I LED ALONG WITH O RIG INA L R ETURN O F I NCOM E FO R TH E ASSESSMENT YEA R 2001 - 02 AND IS FURTHE R SUBS T ANT I AT E D BY THE D IRECTORS R EPORT NO TES ON AUDITED ACCOUN T S FILED WITH THE BALANCE SHE ET . THE APPELLANT H A S ALS O F U RNISHED PH OTO C OP I ES O F A L L THE SEIZED MATERIALS AS P E R ANNE XUR E TO E XPLAIN THE CA S H FL O W STA T E MEN T . TH E DETAILS FILED REGARDIN G TH E S UND R Y DE BTO R S AS PER SEIZ E D M AT E R IAL KG/NS/B&D/ 1 T O 8 WERE EXAMIN E D . AS S E E N F R O M T H E SE D ET AILS OF THE S EI Z ED MA TER I ALS T H E B ALANCE SHEET THE AMOUNT ACC O UNTED AS S ALE S IN REGULAR BOOKS T H E U N D I SCLOSE D SALES THE COL L EC T ION F R O M TH E U NDIS C LO SED SALES AND A L SO CLO S ING B AL ANCES WER E ESTABL I SHED FROM L ED GER E XT RACTS OF THE S EIZED M AT ERIALS . AS S EE N FR O M THES E DETA I LS THE R EALIZATION FR O M DEBTO R S OUT O F THE OP E NING BAL AN CE A S ON 1 . 4 . 00 AS PER SEIZED MATE R IA L I S ` 1 5 8 3 7 9 5 / - . THE APPELLANT ITA 1311/11 CO 140/11 :- 17 - : HA S A L S O P R ODU CE D T HE DETAILS R EGARDING A DVA N CE S RECEIV E D A G A INST FUTURE SUPPLIES A S PER SE IZ ED M AT ER IALS SM NO.KG/S / B & D/ 2 & 5 . 15 . I HAV E GONE T H RO U GH T HE LED GER E X TR AC T O F THE SE I ZE D MATERIAL NO . KG/ S / B & D /2 AN D 0/5 WH IC H R E F LECTS T HE D ET AIL S OF AD VA NCE S A G A IN ST FUTURE SUPPLIE S . THE A M OUNT S R E CE I VE D FROM M/S . NAGPUR MA D H AV TR ADIN G CO AS PER L . F . N O . 79& D /5 W AS SE IZED AS D O DURI NG THE CO U RSE OF SEARCH PROCEEDINGS . SIMILARLY IN THE CASE OF GONDIA G UR UNANAK T HE AMOUNT O F ` 1 89 250/- WAS A L SO SEIZE D AS DO RECEIVED DURING THE C OU RSE OF SEARCH . THE APPELL A NT ALSO C OUL D NOT ESTABLI S H TH E AMOUNT O F ` 40 000 R ECEIVED AS ADVANCE FROM M / S . AKOLA SOAPS (L.F.NO.240 OF D/2). THE TOTAL CLAIM OF THE APPELLANT FOR ADVANCE RECEIV ED AGAINST FUTURE SUPPLIES IS ` 21 24 809/- . HOWEVER ON VERIFYING THE SEIZED MATERIALS IT IS FOUND THAT THE AMOU N T O F ` 40 000 ( A KOLA S OAPS ) AND DO FO R ` 1 89 250/- ( GOND I A G URUN ANA K) AND ` 3 31 500 ( NAGPUR MADHAV TADING CO .) A RE NO T A CCEPT AB LE AS SOURCE S F O R THE IN VE S TME N T . OUT OF TH E T OT AL AMOUNT OF ` 2 1 24 8 09 /- O NL Y A N AM O UN T OF ` 1 5 64 0 59/- WAS AVA I LAB L E TO T H E A PPELLANT TO EXP LA IN FOR H I S UNACCOUN TE D I NVESTM EN T . H E N C E TH E A S SESS ING OFF I CER I S DIRE CTE D T O M AKE A N A DDI T I O N OF ` 5 6 0750/- ON TH IS A C C OUNT . 16 . T H E AP P E LL ANT HAS A L SO F I LED DETA I LS OF A DV AN C ES AG A IN S T FUTURE SUPPLIES AS PER SE I ZE D M ATE RI A L NO . KG/S / B & D / 5&2 4) A MOUNTING T O ` 7 . 4 1 . 691 /- . I HAVE G O NE THR OU GH T HE SE IZ E D MATERIA L SUB M IT TE D BY THE AP P EL L ANT T O VE RIFY THE SAME . THIS AMOU N T I S AVAILAB L E TO TH E APPEL L A NT A S S O U RC E F OR H IS UNEXPLA I NED I NVESTMENT . THE APPELLAN T HAS AL SO CLA IMED TH E S OURCE FROM L OA NS RAISED F R O M FR I ENDS AND RE L A T I VES AS S HOW N IN THE SEIZE D MAT ER I AL . A S SEEN FROM THE SEIZED MATERIAL KG/B& D / S 5 THE R E IS AN AMOUNT OF ` 4 37 008/- RECEI VE D F R O M MS . D . NEELA AND A L SO ` 18 54 782/- R ECEI V ED FRO M MS . R K E E RTHANA BOTH DAUGHTERS OF THE PARTN ER S . IN THE C AS E OF SMT . N PATT AMMA L TH E AM O UNT O F ` 3 4 0 000/- RECEIV E D IS NO T C L EA R F ROM THE SEIZED MATER IA L S . TH E SA ME W AS POINTE D OU T TO A . R . HE HA S A C C E P T E D T HA T TH I S A M OUNT CA N N O T BE CON S ID E R ED AS SOURCE FO R INVESTMENT . O UT O F T H E CL A IM OF T HE A P PE LL A N T FOR SOURCE OF ` 26 31 790 /- RECEI VE D A S LOANS FROM FR I E N DS A ND RE L ATIV E S FROM THE SE I Z ED M A TER I ALS A CLAIM OF ` 22 91 790/- C AN B E A C CE P TE D . THE ASSESS ING OF FI CE R TO MAK E A N ADDITION OF ` 3 40 000/ - O N T H IS ACC O UNT . ITA 1311/11 CO 140/11 :- 18 - : 17. THE XEROX COPY OF THE SEIZED MATERIAL EVIDENCIN G THE WITHDRAWAL OF CASH OF ` 4 00 000/- BY THE DIRECTORS WAS FURNISHED. THE AMOUNT WITHDRAWN BY THE DIRECTOR IS EQUATED AS ONE OF THE SOURCE FOR SUNDRY DEBTORS AND ADVANCES ASSESSED AS INCOME OF THE APPELLANT AND THE SAME IS CONSIDERED FOR THE RE ASON THAT THE WITHDRAWAL BY ONE OF THE DIRECTOR LATE SRI. N RAMA NUJAM AMOUNTING TO ` 4 00 000/- IS INCLUDED UNDER THE HEAD ADVANCES TO LOAN DEBTORS AND ASSESSED AS INCOME. THERE IS WITHD RAWAL OF ` 5 LAKHS EACH ON 15.10.2000 BY THE DIRECTORS MR. DAMOD ARAN AND MR. RAMANUJAM AS PER THE SEIZED MATERIAL. THE DEPOS IT WAS MADE AS PER SEIZED MATERIAL ON 19.10.2000 28.22.20 00 AND 21.12.2000 FOR AN AMOUNT OF ` 4 LAKHS. CASH BALANCE WAS AVAILABLE OUT OF DRAWING FOR THE DEPOSIT OF ` 4 LAKHS. 18. THE APPELLANT ALSO BROUGHT ON RECORD THE DETAILED L IST FOR DEBTORS ARISING OUT UNACCOUNTED SALES COLLECTIONS MADE FROM THEM CLOSING BALANCE OUTSTAND ING TH E P R OF I T A N D LO SS A CC OUNT AND BALAN CE S HEET ALO NG WI TH TH E DE T A I LS FOR THE PERIODS 1 . 4.2000 T O 5 . 2 . 20 01 AND 06 . 02 . 2 0 0 1 TO 31 . 03 . 200 1 F I LE D IN THE COURSE OF EARLIER ASSESSMENT PROCEEDINGS DETAILS OF UNDISC L OSED IN CO ME RETU R NED IN FORM 2B . THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER DA TED 31 . 12 . 2008 HELD THAT AS THE UNEXPLAINED CASH OF ` 14 42 580/- UNEXPLA I NE D LOAN DEBTO R S OF ` 27 31 450/ - AND UNACCOUNTED TRADE DEBTORS OF ` 93 08 2 77/- FOUND DUR I NG THE COURSE OF SURVEY ON 6 . 2 . 2001 COULD NOT BE EXPLAINED AS O N DAT E OF SU R VEY I . E . 6 . 2 . 2001 THE SAME ARE BROUGHT TO TAX UNDER THE SPECIA L PROVIS IONS OF SEC . 69A 69B . IT IS MENTIONED AT PAGE 4 OF THE ORDER ' ON PE R USAL O F DETAI LS FI L ED I T I S OBSERVED THAT THE ASSESSEE I S TRY I NG TO EXPLAIN VAGUE LY WITHOUT PRO OF/EVIDENCE THE SOURCES AT A LATER DATE/PERIOD BEYO ND THE DATE OF S URVEY I . E . 6 . 2 . 200 1 . 11. AT THE TIME OF HEARING BEFORE US BOTH THE PARTI ES STUCK TO THEIR RESPECTIVE STANDS TAKEN BEFORE THE FIRST APP ELLATE AUTHORITY. FROM THE BARE READING OF THE OBSERVATIONS OF THE L D. CIT(A) MADE IN THE ABOVE PARAGRAPHS IT IS EVINCED THAT THE RELIE F GIVEN BY HIM IS BASED SOLELY ON SEIZED MATERIAL ITSELF MEANING THE REBY THAT UNDISCLOSED/UNACCOUNTED TRADE CREDITORS CLEARLY STA ND EXPLAINED FROM ITA 1311/11 CO 140/11 :- 19 - : THE SEIZED MATERIAL ITSELF. WE ARE NOT REQUIRED TO REPEAT THE SAME AS THE LD.DR COULD NOT SUCCESSFULLY DISPUTE THE IMPUGN ED FINDING. THE LD. CIT(A) HAS ALSO CALLED FOR THE REMAND REPORT OF THE ASSESSING OFFICER ON THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AN D AFTER CONSIDERING THE SAME HE HAS GIVEN HIS FINDING. SO VIOLATION OF RULE 46A(2) OF THE I.T.RULES IS NOT ESTABLISHED BY THE REVENUE. THE ASSESSING OFFICER HAD MADE THE IMPUGNED ADDITION FOR WANT OF PROPER E XPLANATION BUT WHEN PROPER EXPLANATION WAS AVAILABLE IN THE SEIZED MATERIAL AND THE LD. CIT(A) CALLED FOR HIS REPORT HE COULD NOT DENY THAT EXPLANATION QUA THESE ADDITIONS WAS NOT AVAILABLE ON RECORD. THE A NNEXURES FILED BEFORE THE LD. CIT(A) EXPLAINING THE SOURCES FOR FU NDS RELATED TO UNACCOUNTED TRADE LOANS AND LOAN DEBTORS CLEARLY EX PLAIN THE SOURCE OF THE SAME. WE ARE IN AGREEMENT WITH THE LD. CIT(A) THAT THE ASSESSING OFFICER HAS NOT DOUBTED THE SUBMISSIONS M ADE BEFORE HIM REGARDING THE SOURCES OF UNDISCLOSED TRADE DEBTORS AND UNDISCLOSED LOAN DEBTORS. IT WAS AVAILABLE IN THE SEIZED MATER IAL ITSELF. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE IM PUGNED ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. ALL THE DOCUMENTS WHICH WERE PLACED BEFORE THE LD. CIT(A) WHICH SUFFERED REMAND REPORT ARE ALSO PLACED BEFORE US. 12. IN THE RESULT THE APPEAL FILED BY THE REVENUE STAN DS DISMISSED. ITA 1311/11 CO 140/11 :- 20 - : 13. IN THE CROSS OBJECTION THE ASSESSEE APART FROM SUP PORTING THE FINDING OF THE LD. CIT(A) HAS CHALLENGED THE RE-AS SESSMENT PROCEEDINGS BUT WE ARE NOT IN AGREEMENT WITH THE LD .AR IN THIS REGARD BECAUSE WHEN WE HAVE ACCEPTED THE UNDISCLOSED TRADE CREDITORS AND LOAN CREDITORS AS FULLY EXPLAINED TO THAT EXTENT T HE LEGAL ISSUE IS LABYRINTH THAT IT WILL GIVE MULTIFACETED QUERIES W HICH WILL HAVE TO BE DECIDED WITHOUT ANY MATERIAL GAIN TO THE PARTIES. THE LEGAL ISSUE INVOLVED IN THIS APPEAL IS A COMPLEX QUESTION OF FA CTS AND LAW. THE SUBMISSION OF THE LD.AR IS THAT WHEN ONCE THE SAME INCOME WHICH HAS BEEN TREATED AS ESCAPED INCOME HAD ALREADY BEEN FO UND DURING SURVEY AND WHICH HAS SUFFERED THE TEST OF SCRUTINY UPTO THE LEVEL OF ITAT AND THE HON'BLE ITAT HAS FOUND THAT WHATEVER W AS FOUND DURING SURVEY CANNOT BE MADE A BASIS FOR ADDITION IN THE B LOCK ASSESSMENT ORDER AND AS SUCH HAS STRUCK DOWN THE BLOCK ASSESS MENT ORDER HOW CAN IT BE AGAIN TAKEN UP WITH RECOURSE TO PROVISION S OF SECTION 147. THE LD.AR HAS STATED THAT THE ASSESSING OFFICER HAS RESORTED TO THE PROVISIONS OF SECTION 147 R.W.S 148 OF THE ACT IN O RDER TO SUBVERT THE FINDING OF THE TRIBUNAL BUT IT IS NOT EXACTLY THE C ASE. THE ASSESSEE HAS SUFFERED TAX TO THE EXTENT @ 60% BUT AT THE SAME T IME CERTAIN EVIDENCE FOUND DURING SURVEY WERE NOT CONSIDERED AS VALID EVIDENCE FOR MAKING BLOCK ASSESSMENT ORDER. IN THAT VIEW OF THE MATTER THE ITA 1311/11 CO 140/11 :- 21 - : ASPECT OF ESCAPED INCOME CAN ALSO BE CONSIDERED. BUT SINCE THIS ISSUE WAS NOT REALLY PRESSED AND ARGUED WE ARE NOT GOING TO DECIDE THE SAME AND KEEP IT OPEN. 14. IN THE RESULT THE CROSS OBJECTION FILED BY THE ASS ESSEE STANDS DISMISSED. TO SUMMARIZE THE RESULT THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE STAND DIS MISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.11.2011. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 18 TH NOVEMBER 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR