ACIT,, Varanasi v. M/s Pee Woolen Mills,, Bhadohi

ITA 184/ALLD/2011 | 2009-2010
Pronouncement Date: 27-04-2015 | Result: Allowed

Appeal Details

RSA Number 18420714 RSA 2011
Assessee PAN AAGFP9010R
Bench Allahabad
Appeal Number ITA 184/ALLD/2011
Duration Of Justice 3 year(s) 7 month(s) 24 day(s)
Appellant ACIT,, Varanasi
Respondent M/s Pee Woolen Mills,, Bhadohi
Appeal Type Income Tax Appeal
Pronouncement Date 27-04-2015
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 27-04-2015
Date Of Final Hearing 21-04-2015
Next Hearing Date 21-04-2015
Assessment Year 2009-2010
Appeal Filed On 02-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH: ALLAHABAD BEFORE SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER AND SHRI C. N. PRASAD JUDICIAL MEMBER I.T.A .NO.-152/ALLD/2011 ASSESSMENT YEAR : 2009-10. M/S PEE WOOLEN MILLS VS. ACIT MAIN ROAD CENTRAL CIRCLE BHADOHI VARANASI. PAN: AAGFP9010R (APPELLANT) (RESPONDENT) I.T.A .NO.-184/ALLD/2011 ASSESSMENT YEAR : 2009-10. ACIT VS. M/S PEE WOOLEN MILLS CENTRAL CIRCLE MAIN ROAD VARANASI. BHADOHI PAN: AAGFP9010R (APPELLANT) (RESPONDENT) ASSESSEE BY: SH. AJIT DHAWAN ADV. REVENUE BY:-SH. RAJKU MAR LACHHIRAMAKA CIT. DR. DATE OF HEARING: 21/04/2015 DATE OF PRONOUNCEMENT:27/04/2015 ORDER PER C. N. PRASAD: THESE TWO APPEALS ARE FILED BY THE ASSESSEE AND REV ENUE RESPECTIVELY FOR THE ASSESSMENT YEAR 2009-10 AGAINS T THE ORDER OF THE CIT(A) VARANASI DATED 16.06.2011. I.T.A .NO.-152/ALLD/2011 & 184/ALLD/2011 2 2. ASSESSEE IS CHALLENGING THE ORDER OF THE LD. CIT (A) IN PARTLY SUSTAINING THE ADDITION MADE U/S 69 OF THE INCOME T AX ACT. 3. REVENUE FILED APPEAL CHALLENGING THE ORDER OF TH E LD. CIT(A) IN PARTLY DELETING THE ADDITION MADE U/S 69 AS WELL AS DELETING THE ESTIMATION OF NET PROFIT ARRIVED BY ASSESSEE AT 8% BY REJECTING THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 4. FACTS OF THE CASE ARE THAT ASSESSEE IS A FIRM EN GAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF WOOLEN YARN. ASSESSEE IMPORTS WOOL FROM OUTSIDE THE COUNTRY AND MANUFACTURES WOOLEN YARN. S EARCH AND SEIZURE OPERATION U/S 132 OF THE I.T. ACT WAS CONDUCTED IN THE RESIDENTIAL AND THE BUSINESS PREMISES OF M/S CARPET INTERNATIONAL PVT. LTD. ITS DIRECTORS ITS PARTNERS AND ITS SISTER CONCERN AND OTHER GROUP CAS ES ON 11.02.2009. ASSESSEE FIRM BELONGS TO SAME GROUP. FOR THE A.Y. 2 009-10 ASSESSEE FILED RETURN OF INCOME ON 29.09.2009 DECLARING INCO ME OF RS.7 93 940/-. THE ASSESSMENT WAS COMPLETED ON 30.12.2010 U/S 143( 3) DETERMINING THE INCOME OF ASSESSEE AT RS.1 30 61 820/-. WHILE C OMPLETING THE ASSESSMENT THE AO MADE ADDITION OF RS.38 08 531/- T OWARDS NET PROFIT AND ADDITION OF RS.84 59 347/- AS UNDISCLOSED STOCK . AO REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE OBSERVING THAT RE GULAR BOOKS OF ACCOUNTS WERE NOT FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED ON 11.02.2009. AO STATES THAT T HOUGH BOOKS WERE I.T.A .NO.-152/ALLD/2011 & 184/ALLD/2011 3 PRODUCED IN THE COURSE OF ASSESSMENT PROCEEDINGS TH EY WERE NOT SUPPORTED BY PROPER BASIC DOCUMENTS ON THE BASIS OF WHICH THEY WERE PREPARED. IT WAS THE FINDING OF THE AO THAT DAY TO DAY BOOKS WERE NOT MAINTAINED AND THE BOOKS OF ACCOUNTS PRODUCED BEFOR E HIM WERE PREPARED SUBSEQUENT TO SEARCH AND SEIZURE OPERATION . THE AO ALSO FOUND THAT MAJOR EXPENSES DEBITED TO P & L ACCOUNT WERE N OT SUPPORTED BY PROPER BILLS AND VOUCHERS. THUS THE AO REJECTED THE BOOK RESULTS OF THE ASSESSEE AND ESTIMATED NET PROFIT AT 8% INSTEAD OF 0.97% SHOWN BY THE ASSESSEE. 5. ON APPEAL THE COMMISSIONER OF INCOME TAX (APPEAL S) ACCEPTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND DELETED T HE ESTIMATION OF NET PROFIT MADE BY AO HOLDING THAT IN THE COURSE OF SEA RCH SEVERAL DOCUMENTS WITH COMPUTER HARD DISK HAVING STOCK DETA ILS SALES AND PURCHASES ACCOUNT PERTAINING TO FINANCIAL YEAR FOR THE BLOCK PERIOD WERE FOUND AND MOREOVER AO HAS ACCEPTED THE BOOKS RESULT S IN THE ASSESSMENT COMPLETED U/S 143(3) FOR THE A.Y. 2006-0 7. LD. CIT(A) HELD THAT IN SUCH SCENARIO AO HAD VERY LIMITED SCOPE TO ESTIMATE THE NET PROFIT REJECTING BOOK RESULTS. REVENUE IS IN APPEAL BEFORE US IN ACCEPTING THE BOOKS RESULT AND DELETING THE ADDITION MADE TOWARDS LOW NET PROFIT. 6. THE AO WHILE COMPLETING THE ASSESSMENT MADE ADDI TION OF RS.84 59 347/- AS UNDISCLOSED STOCK IN RESPECT OF R AW WOOL WOOLEN YARN I.T.A .NO.-152/ALLD/2011 & 184/ALLD/2011 4 AND LOW MEDIUM COLOURED WOOLEN AND STORES. IT WAS T HE SUBMISSION OF THE ASSESSEE THAT SEARCH HAS BEEN CARRIED OUT IN AB SENCE OF PARTNER OR MANAGER WHO COULD ASSIST THE SEARCH PARTY IN INVENT ORYING THE GOODS. IT WAS THE SUBMISSION THAT THE STOCK WAS ESTIMATED AND IT WAS ON MERE ESTIMATE AND GUESS-WORK THE INVENTORY WAS PREPARED DURING SEARCH THEREFORE THIS CANNOT BE RELIED ON. IT WAS THE SUB MISSION THAT QUANTITY QUALITY AND DETAILS WORKED OUT BY THE SEARCH PARTY WERE MADE IN HURRY AND WITHOUT AID AND ASSISTANCE OF ANY PERSON WHO KN OW ABOUT THE QUALITY OF GOODS FOR WHICH INVENTORY HAS BEEN PREPA RED. IT WAS ALSO THE SUBMISSION THAT INVENTORY HAS BEEN SIGNED BY TWO PE RSONS ONE WAS A MECHANIC AND ANOTHER WAS A DRIVER. IT WAS ALSO THE SUBMISSION THAT SOME OF THE GOODS WHICH WERE PART OF INVENTORY PREPARED DURING SEARCH RELATED TO PERSONS FOR WHOM THE ASSESSEE DOES JOB WORK. ALL THESE CONTENTIONS WERE NOT ACCEPTED BY THE AO AND MADE ADDITION TOWAR DS UNDISCLOSED STOCK. 7. ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A). T HE LD. CIT(A) SUSTAINED THE ADDITION TO THE EXTENT OF RS.32 93 82 0/- OUT OF ADDITION OF RS.84 59 347/- AND THE DETAILS ARE AS UNDER: S.NO. NATURE OF ADDITION TOTAL ADDITION MADE BY AO ADDITION CONFIRMED BY CIT (A) 1. RAW WOOL RS.22 25 744 RS.7 65 916 (STOCK BELONGI NG TO OTHER PERSON RECEIVED FOR JOB WORK) RS.14 59 828 (ERRORS IN WEIGHT & ESTIMATION BY SEARCH PARTY) I.T.A .NO.-152/ALLD/2011 & 184/ALLD/2011 5 2. WOOLEN YARN RS.8 07 646 RS.8 07 646 (STOCK BELON GING TO OTHER PERSON RECEIVED FOR JOB WORK) 3. OTHER- LOW MEDIUM COLOURED WOOL & STORES ETC. RS.54 25 957 RS.1 17 935 (OWN STOCK) RS.1 42 495 (STOCK BELONGING TO OTHER PERSON RECEIVED FOR JOB WORK) TOTAL RS.84 59 347 RS.32 93 820 8. AS COULD BE SEEN FROM THE ABOVE THE LD. CIT(A) SUSTAINED THE ADDITION TOWARDS UNDISCLOSED STOCK IN RESPECT OF WO OL AND WOOLEN YARN ENTIRETY. HOWEVER LD. CIT(A) PARTLY SUSTAINED THE ADDITION MADE IN RESPECT OF LOW MEDIUM COLOUR AND STORES. 9. COUNSEL FOR THE ASSESSEE SUBMITS THAT LD. CIT(A) CONFIRMED THE ADDITION OF UNDISCLOSED STOCK UNDER RAW WOOL AMOUNT ING TO RS.22 25 744/- OBSERVING THAT THE STOCK CLAIMED BY THE ASSESSEE BELONGING TO OTHER PERSONS RECEIVED FOR JOB WORK IS NOT ACCEPTABLE BECAUSE NEITHER ANY STOCK IN EARLIER YEAR LEFT WITH THE ASSESSEE RELATING TO JOB WORK NOR ANY PAPER RELATING TO SUCH STOCK FOUND DURING SEARCH. 10. COUNSEL FURTHER SUBMITS THAT LD. CIT(A) TREATED THE ENTIRE STOCK OF EXCESS RAW WOOL AS BELONGING TO OTHERS INSPITE OF F ACT THAT THE ASSESSEE CLAIMED ITS OWN STOCK WEIGHING 23253 KG WORTH RS.14 59 823(23253 KG X RS.62.78) MISTAKENLY ESTIMATED BY THE SEARCH P ARTY AS PER THE CHART REPRODUCED BY HIMSELF ON PAGE 22 OF APPELLATE ORDER . THE COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT EVEN IN THE REMAND RE PORT SENT BY THE AO IN I.T.A .NO.-152/ALLD/2011 & 184/ALLD/2011 6 APPELLATE PROCEEDINGS AO ADMITS THAT A MISTAKE IS C REPT BY SEARCH PARTY IN COUNTING THE BALES OF RAW WOOL IN ITEM NO. 5 PAN CHNAMA IN AS MUCH AS 19 BALES WERE COUNTED INSTEAD OF 18 BALES BUT THE L D. CIT(A) HAS NOT CONSIDERED EVEN THIS MISTAKE WHILE CONFIRMING THE I MPUGNED ADDITION. THEREFORE COUNSEL SUBMITS THAT THE FINDING ON THE B ASIS OF WHICH ADDITION HAS BEEN CONFIRMED IS ERRONEOUS. THE GIST OF DIFFER ENCE OF RAW WOOL BETWEEN ACTUAL STOCK AND STOCK ESTIMATED BY THE SEA RCH PARTY AND ADOPTED BY THE AO IS SUBMITTED BY THE ASSESSEE AS U NDER: ITEM NOS. IN PANCHNAMA STOCK TAKEN MISTAKENL Y BY SEARCH PARTY STOCK BELONGING TO OTHERS WHO GAVE IT FOR JOB WORK TOTAL REMARKS 29 3600 KG. - 3600 KG. THE SEARCH PARTY HAS MISTAKE NLY TAKEN 4000 KG. INSTEAD OF 400 KG. IT IS A COMMON KNOWLEDGE THAT BALE OF RAW WOOL OF 1000 KG. IS NOT POSSIBLE. 26 79 62 3 & 4 195 KG. 200 KG. 2395 KG. FIRSTLY THESE WERE TOPS AN D SLAVERS WHICH WERE ADDED TO RAW WOOL STOCK. HOWEVER OUT OF 2395 KG. 2200 KG BELONGED TO JOB WORK AND THE REMAINING 195 KG. ATTRIBUTABLE TO ESTIMATION ERROR. - 10000 KG. 10000 KG. BELONGED TO JOB WORK 9 19 21 22 24 25 27 & 46 2700 KG. - 2700 KG. ALL THESE ARTICLES WERE FOUND I N OPEN FORM (WITHOUT BALES) MIXED WITH THOSE BEING IN OWN PRODUCTION OF THE ASSESSEE. THEREFORE THE WEIGHT TAKEN BY THE SEARCH PARTY AT 4700 KGS WAS PURELY ON ESTIMATE BASIS. SUBSEQUENTLY ON BEING LINKED IT WITH THE STOCK UTILIZATION IN PROCESS OF PRODUCTION THE RESULT WEIGHT WAS NOT MORE THAN 2000 KGS. THUS IN FACT 2700 KGS WAS EXCESSIVELY ESTIMABE I.T.A .NO.-152/ALLD/2011 & 184/ALLD/2011 7 BY THE SEARCH PARTY. 5 400 KG. - 400 KG. THERE WAS A MISTAKE IN TOTALING OF BALES INVENTORIED BY SEARCH PARTY IN AS MUCH AS 18 BALES WERE TAKEN AS 19 BALES. THUS THERE WAS EXCESS ESTIMATION OF 400 KG. THE MISTAKE IS ACCEPTED BY THE AO. IN HIS REMAND REPORT CALLED FOR BY CIT (APPEALS) 5 6 59 66 67 81 & 87 11 724 KG. - 11724 AS PER PURCHASE RECORDS AVERAGE PER BALE WEIGHT COMES TO 255.38 KG. AS AGAINST 324.75 KG. ADOPTED BY THE SEARCH PARTY AND AUTHORITIES BELOW. THUS DIFFERENCE OF 69.37 PER BALE ARISES WHICH RESULTS INTO DIFFERENCE OF 11724 KG. WHICH ARE AS EXCESSIVELY ESTIMATED. 4 634 - 4 634 KG. THE REMAINING DIFFERENCE OF 4634 KG. IS DUE TO AD HOC ESTIMATION ERROR WHICH CANNOT BE RULED OUT WHILE ESTIMATING BULK OF RAW WOOL LYING IN THE FACTORY. TOTAL 23253KGS. 12200 KGS. 35453 KGS. 11. IN RESPECT UNDISCLOSED WOOLEN YARN OF RS.8 07 7 46/- SUSTAINED BY THE LD. CIT(A) COUNSEL SUBMITS THAT THIS STOCK BEL ONGING TO OTHER PERSONS WAS RECEIVED FOR THE ASSESSEE FOR JOB WORK. THIS IS NOT ACCEPTED BY THE LD. CIT(A) STATING THAT NO STOCK IN EARLIER YEAR WAS LEFT WITH THE ASSESSEE RELATED TO JOB WORK OR ANY PAPER RELATING TO SUCH STOCK WAS FOUND DURING SEARCH. COUNSEL SUBMITS THAT ALL THESE STOCK OF RS.17 16 057/- [RS.7 65 916/- + RS.8 07 646/- + 1 4 2 495/-]WHICH WAS SUSTAINED BY THE LD. CIT(A) BELONGS TO OTHER PARTIE S WHO GAVE STOCK FOR JOB WORK TO THE ASSESSEE. HE SUBMITS THAT ASSESSEE IS READY TO PRODUCE I.T.A .NO.-152/ALLD/2011 & 184/ALLD/2011 8 THE PARTIES CONFIRMATIONS STATING THAT THE STOCK RE LATES TO THEM AND IT WAS GIVEN ON JOB WORK. 12. IN RESPECT OF THE ADDITION CONFIRMED BY THE LD. CIT(A) ON LOW MEDIUM COLOURED WOOL AND STORES ETC. AMOUNTING TO R S.2 60 430/- COUNSEL SUBMITS THAT STOCK WORTH 1 17 935/- RELATES TO OWN STOCK AND STOCK WORTH RS.1 42 495/- RELATES TO OTHER PARTIES WHO GAVE ON JOB WORK. 13. THE LD. DR VEHEMENTLY SUPPORTS THE ORDERS OF TH E AO IN MAKING THE ADDITION TOWARDS UNDISCLOSED STOCK OF RS.84 59 347/-. THE LD. DR SUBMITS THAT THERE IS NO JUSTIFICATION BY LD. CIT(A ) IN DELETING THE ADDITION TO THE EXTENT OF RS.51 65 527/- OUT OF RS. 84 59 347/-. 14. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE OR DERS OF THE LOWER AUTHORITIES AND RIVAL CONTENTION OF THE PARTIES AND MATERIAL PLACED ON RECORD. WE FIND THAT THERE ARE SUBSTANTIAL MERITS I N THE ARGUMENTS OF THE ASSESSEE THE VARIOUS DISCREPANCIES ARE THERE IN RE SPECT OF STOCK RECORDED BY SEARCH PARTY AND THE RECONCILIATION MADE BY THE ASSESSEE AND THEY HAVE NOT BEEN LOOKED INTO BY THE LOWER AUTHORITIES. THE CHART EXTRACTED ABOVE IN PARA 7 THIS ORDER CLEARLY SHOWS THERE ARE VARIOUS DISCREPANCIES WHICH WERE NOT ADDRESSED BY THE LD. CIT(A) INSPITE OF ASSESSEE MAKING ITS SUBMISSIONS. IT IS SUBMITTED THAT SOME OF THE M ISTAKES WERE EVEN ACCEPTED BY THE AO IN REMAND REPORT. WE ALSO FIND T HAT THE LD. CIT(A) I.T.A .NO.-152/ALLD/2011 & 184/ALLD/2011 9 HAS NOT GIVEN ANY SUBSTANTIAL REASONS FOR SUSTAININ G THE ADDITIONS. THE REASON GIVEN BY THE LOWER AUTHORITIES IN NOT ACCEPT ING THE JOB WORK STOCK IS THAT NEITHER ANY STOCK IN ANY YEAR LEFT WITH ASS ESSEE RELATING TO JOB WORK NOR ANY PAPER RELATING TO SUCH STOCK FOUND DUR ING SEARCH. IN OUR VIEW THIS IS NOT A REASON AT ALL FOR REJECTING THE CLAIM OF THE ASSESSEE THAT IT HAD ACCEPTED THE STOCK FOR JOB WORK AND SUCH STO CK DOES NOT BELONG TO THE ASSESSEE. 15. THE LD. CIT(A) WHILE ACCEPTING THE CONTENTIONS OF THE ASSESSEE THAT NET PROFIT CANNOT BE ESTIMATED AT 8% AND THE BOOK R ESULTS SHOULD BE ACCEPTED DID NOT GO INTO THE FINDINGS OF THE AO THA T NO PROPER BOOKS HAVE BEEN MAINTAINED BY THE ASSESSEE. IN FACT FOR T HE ASSESSMENT ORDER THE AO OBSERVED AS UNDER: 5. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANU FACTURING AND TRADING OF WOOLEN YEARN. AFTER PERUSAL OF TRADING AND P & L ACCOUNT F ILED ALONGWITH AUDITORS REPORT FOR THE YEAR ENDED 31/03/2007 VIS--VIS THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS PRODUCED BY THE ASSESSEE IT WAS NOTED TH AT MAJOR EXPENSES DEBITED TO P & L ACCOUNT WERE NOT SUPPORTED BY PROPER BILLS A ND VOUCHERS. SIMILARLY OTHER DEFECTS WHICH WERE NOTICED WERE CONFRONTED TO THE A SSESSEE VIDE ORDER SHEET ENTRY 10/12/2010. THE EXACT ORDER SHEET ENTRY IS BEING RE PRODUCED HEREUNDER: 10/12/2010 ACA ASHISH APPEARED ALONGWITH ACCOUNTAN T RAMASHANKAR MAURYA AND FILED REPLY. HE WAS ASKED TO PRODUCE BIL LS/VOUCHERS FOR PURCHASES DEBITED TO P & L ACCOUNT. BILLS WERE PRODUCED FOR T HE EXPENSES WHICH ARE PAID THROUGH CHEQUE FOR CASH PAYMENTS ONLY CERTAIN BILL S WERE PRODUCED. FOR MOST OF THE CASE PAYMENTS ONLY SELF MADE VOUCHERS HAVE BEEN PRODUCED SPECIFICALLY FOR FOLLOWING HEADS: I. FREIGHT INWARD II. SORTING CHARGES III. WOOL WASHING EXPENSES IV. WOOL YARN WASHING EXPENSES I.T.A .NO.-152/ALLD/2011 & 184/ALLD/2011 10 V. BOILER EXPENSES VI. OFFICE EXPENSES. FURTHER FOLLOWING POINTS ARE OBSERVED ALSO. (I) THE PAGES USED IN THESE VOUCHERS ARE QUITE NEW AND WITHOUT LOSS OF COLOUR WHICH IS QUITE UNNATURAL FOR THE VOUCHERS WHICH ARE SUPPOSEDLY PREPARED IN F.Y. 04-05. (II) JOURNAL WAS PRODUCED ON PERUSAL OF THE SAME IT BE COMES CLEAR THAT IT BEARS BILL NUMBER BUT NOT THE VOUCHER NUMBERS. (III) MOST OF THE VOUCHERS ARE NOT BEARING ANY SIGNATURES OF THE RECIPIENTS. (IV) NO VOUCHERS ARE BEARING NAMES & ADDRESSES OF RECIPI ENTS. (V) WAGES REGISTER IS NOT PRODUCED. IN VIEW OF THIS SECTION 145(3) BE REJECTED AND PROF IT MAY BE ESTIMATED. DATE OF COMPLIANCE IS 14/12/2010. LIKEWISE OTHER EXPENSES WERE NOT FULLY SUPPORTED BY BILLS/VOUCHERS. IT IS IMPORTANT TO MENTION THAT THE REGULAR BOOKS OF ACCOUNTS WERE NOT FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION CONDUCTED ON 11/02/200 9. ALTHOUGH BOOKS OF ACCOUNTS WERE PRODUCED BY THE ASSESSEE DURING THE C OURSE OF ASSESSMENT PROCEEDINGS BUT THE SAME WERE NOT SUPPORTED BY THE PROPER BASIC DOCUMENTS ON THE BASIS OF WHICH THEY WERE PREPARED. THEREFORE I T IS APPARENT THAT ASSESSEE DOES NOT MAINTAIN DAY TO DAY BOOKS OF ACCOUNTS. IT IS ALSO APPEARED THAT THE BOOKS OF ACCOUNTS WHICH WERE PRODUCED BEFORE THE UNDERSIG NED WERE PREPARED SUBSEQUENT TO THE SEARCH AND SEIZURE OPERATION. 16. AS COULD BE SEEN FROM THE ABOVE IT IS THE FIND ING OF THE AO THAT REGULAR BOOKS OF ACCOUNTS WERE NOT FOUND DURING THE COURSE OF SEARCH. THOUGH BOOKS WERE PRODUCED THE SAME WERE NOT SUPPOR T BY PROPER BASIC DOCUMENTS ON THE BASIS OF WHICH THE BOOKS WERE PREP ARED BY ASSESSEE. ASSESSEE DID NOT MAINTAIN DAY TO DAY BOOKS. EXPENSE S NOT FULLY SUPPORTED BY BILLS AND VOUCHERS. THE BOOKS OF ACCOU NTS PRODUCED WERE PREPARED SUBSEQUENT TO THE SEARCH AND SEIZURE OPERA TIONS. NONE OF THESE FINDINGS OF THE AO WERE DEALT WITH BY THE LD. CIT(A ). THE CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT BOOK R ESULTS HAVE TO BE ACCEPTED AND NO NET PROFIT ALSO IS TO BE REJECTED STATING THAT IN THE A.Y. 2006-07 BOOK RESULTS WERE ACCEPTED AND THERE IS NO SCOPE FOR ESTIMATION I.T.A .NO.-152/ALLD/2011 & 184/ALLD/2011 11 OF NET PROFIT THIS YEAR ON AD HOC BASIS. FROM THE L D. CIT(A)S ORDER WE FIND THAT THE REASON FOR ACCEPTING THE ASSESSEES C ONTENTION WAS THAT AO COMPLETED THE ASSESSMENT FOR AY 2006-07 U/S 143(3) ACCEPTING THE BOOK RESULTS AND IN SUCH SCENARIO AO HAD VERY LIMITED SC OPE TO ESTIMATE THE NET PROFIT AFTER REJECTING THE BOOK RESULTS AND ACC EPTED SALES AND PURCHASES. 17. IN OUR CONSIDERED VIEW COMPLETION OF ASSESSMEN T U/S 143(3) FOR THE A.Y. 2006-07 ACCEPTING BOOK RESULTS CANNOT BE A REASON FOR ACCEPTING THE BOOK RESULTS FOR A.Y. 2009-10 WHEN TH ERE IS A FINDING OF AO THAT DAY TO DAY BOOKS WERE NOT MAINTAINED BY THE ASSESSEE BOOKS WERE NOT FOUND DURING THE SEARCH. BOOKS WERE PREPAR ED AFTER SEARCH AND SEIZURE OPERATIONS. SINCE THE LD. CIT(A) HAS NOT GO NE INTO ANY OF THESE CONTENTIONS OF THE AO. IN OUR CONSIDERED VIEW THIS MATTER IS TO BE LOOKED INTO ONCE AGAIN BY THE LD. CIT(A) TO FIND OU T WHETHER THE ASSESSEE HAS MAINTAINED ANY BOOKS OF ACCOUNT FOR TH E IMPUGNED ASSESSMENT YEAR. IF MAINTAINED WHAT ARE THE DEFECTS IN THE BOOKS OF ACCOUNT WHETHER BOOK RESULTS CAN BE ACCEPTED OR NOT . THE CIT(A) HAS NOT EXAMINED THESE ASPECT OF THE MATTER. IN THESE C IRCUMSTANCES WE SET ASIDE BOTH THE APPEALS OF THE ASSESSEE AND THE REVE NUE TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION IN ACCORDANCE WITH LA W AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. THE LD. CIT(A ) SHALL CALL FOR A REMAND REPORT FROM THE AO IN RESPECT OF THE CONTENT IONS SUBMISSIONS I.T.A .NO.-152/ALLD/2011 & 184/ALLD/2011 12 AND THE EVIDENCES PRODUCED BY THE ASSESSEE IN RESPE CT OF THE ISSUES IN APPEALS AND DECIDE THE APPEAL IN ACCORDANCE WITH LA W. 18. IN THE RESULT BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27/04/2015. SD/- SD/- ( D. KARUNAKARA RAO ) (C. N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:27/04/2015 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR