The ACIT, Central Circle2,, Surat v. M/s. Satadhar Enterprises, Vapi

ITA 51/AHD/2007 | 2002-2003
Pronouncement Date: 31-05-2010 | Result: Dismissed

Appeal Details

RSA Number 5120514 RSA 2007
Assessee PAN AAPFS8442R
Bench Ahmedabad
Appeal Number ITA 51/AHD/2007
Duration Of Justice 3 year(s) 4 month(s) 28 day(s)
Appellant The ACIT, Central Circle2,, Surat
Respondent M/s. Satadhar Enterprises, Vapi
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 31-05-2010
Date Of Final Hearing 26-05-2010
Next Hearing Date 26-05-2010
Assessment Year 2002-2003
Appeal Filed On 03-01-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' [BEFORE SHRI BHAVNESH SAINI JM & SHRI A N PAHUJA AM ] ITA NO.51/AHD/2007 (ASSESSMENT YEAR:-2002-03) ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE- 2 SURAT V/S M/S SATADHAR ENTERPRISES S NO. 276 NEAR CINE PARK SILVASSA ROAD CHANOD VAPI [PAN: AAPFS 8442 R] [APPELLANT] [RESPONDENT] REVENUE BY :- DR. JAYANT JHAVERI . DR ASSESSEE BY:- SHRI S. N. L. AGARWALA AR O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATED 11-10-2006 OF THE LD. CIT(APPEALS)-III SURAT RAIS ES THE FOLLOWING TWO GROUNDS: 1 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.54 73 288/- MADE ON ACCOUNT OF ON MONEY RECEIPT. 2 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION OF RS.3 94 390/- MADE ON ACCOUNT OF UNEXPLAINED PURCHA SES AND RS.5 78 813/- MADE ON ACCOUNT OF UNEXPLAINED EXPENS ES. 2 ADVERTING FIRST TO GROUND NO.1 FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING NIL INCOME FILED ON 31-03-2003 BY THE ASSESSEE A PARTNERSHIP FIRM CONSTITUTED IN TER MS OF PARTNERSHIP DEED DATED 23-11-2001 AFTER BEING PROCESSED U/S 14 3(1) OF THE INCOME-TAX ACT 1961 [ HEREINAFTER REFERRED TO AS T HE ACT] WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 26.5.2003. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THE ASSESSING OFFICER [AO IN SHORT] NOTICED THAT A SURVEY ACTION U/S 133A OF THE ACT WAS CONDUCTED IN THE PREMISES OF MEHSANA STEEL SUPPLIE RS ON 17-7- 2002 WHEN ONE BOOKING REGISTER NUMBERED AS ANNEXUR E BF 9 REVEALED THAT THE ASSESSEE HAD RECEIVED BOOKING AMO UNT OF ITA NO.51/AHD/2007 FOR AY 2002-03 M/S SATADHAR ENTERPRISES 2 RS.78 57 800/- DURING THE PREVIOUS YEAR RELEVANT TO AY 2003-04 BY CHEQUE AND CASH AS DETAILED UNDER: RS.29 55 000/- BY CHEQUE RS.49 02 800/- BY CASH ------------------ RS.78 57 800/- TOTAL THE AO NOTICED THAT 62% OF TOTAL RECEIPTS WERE TAK EN IN CASH IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2003-04 WHICH WERE N OT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS WHILE IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2002-03 THE ASSESSEE HAD SHOWN RECEIPT OF RS .33 54 596/- ON ACCOUNT OF BOOKING AMOUNT IN REGULAR BOOKS OF ACCOU NTS. IN RESPONSE TO A SHOW CAUSE AS TO WHY AN AMOUNT OF RS. 54 73 288/- I.E. 62% OF TOTAL RECEIPTS SHOULD NOT BE ADDED TO THE INCOME IN THE HANDS OF FIRM IN THE YEAR UNDER CONSIDERATION THE ASSESSEE REPLIED VIDE LETTER DATED 29.03.2005 THAT THEY HAVE NEVER RECEIVED ANY 'ON MONEY' NOR THERE IS ANY JUSTIFIABLE REASON FOR THE SAME PARTICULARLY WHEN THE BOOKS OF ACCOUNTS FOR A.Y. 2003-04 INCORPORATE ALL THE SAID AMOUNTS AS MENTIONED IN ANNEXURE BF-9. IT WAS FURTHER SUBMITTE D THAT MERELY BECAUSE IN THE SUCCEEDING YEAR CASH HAS BEEN RECEIVED IT CAN NOT BE SAID THAT THEY WOULD HAVE RECEIVED AN 'UNACCOUNTED ON MONEY' IN THE YEAR UND ER CONSIDERATION ALSO. HOWEVER THE AO DID NOT ACCEPT THE CONTENTIONS OF T HE ASSESSEE AND ADDED AN AMOUNT OF RS.54 73 288/- ON THE GROUND THAT THE ANN EXURE BF-9 IMPOUNDED FROM THE SITE OFFICE OF CHANDRALOK PROJEC T REVEALED THE NAME OF THE PARTIES DETAILS OF SHOPS / OFFICE / FLAT TOTAL PR ICE OF THE SHOPS / OFFICE / FLAT DATE WISE DETAILS OF PAYMENT MODE OF PAYMENTS ETC. AND SHRI KAMLESHBHAI YADAV S/O THE PARTNER ADMITTED IN REPLY TO QUESTION NO.10 THA T THE MODUS OPERANDI FOLLOWED BY THE GROUP WAS TO WRITE THE FULL AMOUNT BY WAY OF = ' MARK BEFORE LAST TWO DIGITS OF THE FIGURE. FOR EXAMPLE ON PAGE NO. 12 O F BF-9 THE DETAILS OF THE ACCOUNTS OF SHRI HEMANTBHAI ISHVERBHAI PATEL AND SH RI KISHORBHAI ISHVERBHAI PATEL WERE WRITTEN WHEREIN TOTAL PRICE OF THE SHOP S WAS WRITTEN AS 7510=00 WHICH WASS RS.7 51 000/-. THE SAME MODUS OPERANDI H AD BEEN FOLLOWED FOR ALL ITA NO.51/AHD/2007 FOR AY 2002-03 M/S SATADHAR ENTERPRISES 3 THE AMOUNTS WRITTEN IN THIS LEDGER. IT WAS FURTHER POINTED OUT THAT IN THIS LEDGER THE WORD 'RO' IN GUJARATI LANGUAGE WAS WRITTEN AGAINST THE AMOUNT .IN SHORT FORM GUJARATI WORD 'ROKDA' MEANT RECEIVED IN CASH FROM V ARIOUS PARTIES FOR THE BOOKING / PAYMENT FOR THE PURCHASE OF FLATS / SHOPS AND THE DETAILS OF PAYMENTS RECEIVED IN CHEQUES WAS ALSO MENTIONED. THIS FACT WAS ALSO A DMITTED BY SHRI KAMLESHBHAI YADAV DURING HIS STATEMENT RECORDED U/S 132(4) OF T HE ACT ON OATH ON 01.08.2002 (REPLY TO QUESTION NO.9) DURING THE COURSE OF SEARC H PROCEEDINGS. IT WAS FURTHER STATED BY SHRI KAMLESHBHAI THAT REGULAR BOOKS LIKE CASH BOOK GENERAL LEDGER ETC. WERE NOT WRITTEN OR MAINTAINED BY M/S. SATADHAR ENT ERPRISES. THE TOTAL AMOUNT RECEIVED AS SHOWN IN BF-9 WAS RS.78 57 800/- OF WHI CH RS.49 02 800/- WAS RECEIVED IN CASH AND RS.29 55 000/- WAS RECEIVED BY CHEQUE. AND THESE ENTRIES WERE WRITTEN IN CODED FORM WHEREBY LAST TWO ZEROS H AD BEEN OMITTED. IN THE LIGHT OF THESE FACTS THE AO OBSERVED THAT THE ASSESSEE NEVER INTENDED TO DISCLOSE THESE CASH TRANSACTIONS. ACCORDINGLY RELYING UPON DECISIONS IN THE CASE OF KIRAN HOTEL VS. DCIT 82 ITD 453 (PUNE ITAT] KUN HAMBU VS CIT (219 ITR 235) (KERALA) ISHWAR DASS JAIN VS. SOHAN LAL AIR 2 000 SC 426 432 433 SHERATON APPARELS: TRESSA FASHIONS VS. ACIT (2002) 256 ITR 20 31 (BOM.) AND GOLANI BROS VS. ACIT 75 ITD1(PUNE) THE AO BROUGHT TO TAX THE ON MONEY RECEIPTS OF RS.54 73 288/- ON THE BASIS OF THE ADM ISSION MADE DURING THE COURSE OF SEARCH BY SHRI KAMLESHBHAI YADAV REVEALING THE MODUS OPERANDI AND DISCARDING THE COMPUTERIZED BOOKS OF ACCOUNTS FOR A.Y. 2003-04 HAVING BEEN PREPARED AFTERWARDS KEEPING IN MIND DIFFERENT ASPEC TS OF THE CASE AS EMERGING FROM SURVEY / SEARCH ACTION AND THE CONSEQUENCES AND HAZARDS OF STATEMENTS RECORDED U/S 132(4) AND 131 OF THE ACT. 3 ON APPEAL THE ASSESSEE REITERATED THEIR SUBMISSI ONS BEFORE THE AO AND CONTENDED THAT THE ASSESSEE HAD BOOKED A LL THE RECEIPTS WHETHER RECEIVED IN CASH OR IN CHEQUE AND NEVER REC EIVED ANY ON MONEY . MERELY BECAUSE IN THE NEXT YEAR CASH HAD BEEN RECEI VED IT CANNOT BE SAID THAT THEY HAD RECEIVED ANY 'UNACCOUNTED ON MONEY' IN TH E EARLIER YEAR ALSO . ON RECEIPT OF WRITTEN SUBMISSIONS THE LD. CIT(A) CALL ED FOR A REPORT FROM THE AO. IN HIS REPORT DATED 27/4/2006 THE AO STATED THAT ANNE XURE BF-9 RECORDED RS.23 ITA NO.51/AHD/2007 FOR AY 2002-03 M/S SATADHAR ENTERPRISES 4 LAKHS RECEIVED IN CASH FROM SHRI HEMANT SHAH WHICH WAS NOT EXPLAINED. SIMILARLY OTHER CASH AMOUNTS WERE ALSO UNEXPLAINED . A COPY OF THE SAID REPORT OF THE AO WAS FORWARDED TO THE ASSESSEE WHO STATED I N HIS COMMENTS THAT THE ANNEXURE BF-9 CONTAINED BOOKINGS RECEIVED IN CASH A ND CHEQUE IN BOTH THE YEARS. THE AO HAD NOT BROKEN THE TOTAL RECEIPTS IN TWO YEARS I.E. AY 2002-03 AND AY 2003-04 AND ARRIVED AT AN INCORRECT CONCLUSION. THE BOOKING AMOUNTS RECEIVED AS ADVANCE DO NOT FLOW IN A STANDARD FORM AT AND HENCE NO UNIFORM MATHEMATICALLY FORMULA CAN BE APPLIED ON THEM ESPE CIALLY WHEN THE BOOKS OF ACCOUNTS WERE NOT REJECTED U/S 145 OF THE ACT. SINC E ALL THE ENTRIES FOUND IN THE BOOKING REGISTER WERE DULY ACCOUNTED FOR BY THE ASS ESSEE IT CANNOT BE PRESUMED THAT OVER AND ABOVE ANY CASH WAS RECEIVED BY THE A SSESSEE IT WAS ARGUED. IN THE LIGHT OF SUBMISSIONS OF THE ASSESSEE AND THE REPORT OF THE AO INCLUDING REPORT DATED 2/6/2006 THE LEARNED CIT(A) HELD TH AT HENCE I AM CONSTRAINED TO HOLD THAT THE ADDITION OF RS.54 73 288/- BEING TREATED AS 'ON MONEY OVER AND ABOVE THE BOOKING AMOUNT OF RS.34 54 596/- AS DISCLOSED IN RE TURN OF INCOME BE DELETED SINCE THE SAME HAS BEEN MADE PURELY ON S URMISE AND CONJECTURE AND IS CONTRADICTORY TO THE STAND TAKEN BY AO HIMSELF IN HIS REMAND REPORT. MOREOVER SINCE THE AO HAS HIMSE LF BY PARA-7 OF HIS REMAND REPORT DATED 2/6/2006 ACCEPTED THE FACT THAT THIS AMOUNT OF RS.34 54 596/- WHICH IS TO BE SUBSTITUTED AS UNE XPLAINED CASH CREDIT THERE IS NO JUSTIFICATION TO RETAIN THE ADD ITION OF RS.54 73 288/-. EVEN OTHERWISE THE CALCULATION OF R S.54 73 288/- SUFFERED FROM SERIOUS INFIRMITY BECAUSE THE CASH BO OKING AMOUNT WAS ALREADY INCLUDED IN THE AMOUNT OF RS.34 54 596/ - WHICH STOOD DECLARED IN THE RETURN OF INCOME AND HENCE NO FURTH ER ESTIMATION COULD HAVE BEEN MADE. HENCE THE ADDITION OF RS.54 73 288/- BASED ON MATHEMATICAL FORMULA IS DELETED. 3.1 THE LEARNED CIT(A) FURTHER CONSIDERED THE ISS UE AS TO WHETHER OR NOT THE BOOKING AMOUNT OF RS.34 54 596/- CAN BE TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. AFTER HA VING A REPORT FROM THE AO AND COMMENTS OF THE ASSESSEE THE LD. CIT(A) CONCLUDED AS UNDER: I HAVE CONSIDERED THE ABOVE SUBMISSIONS AND HAVE P ERUSED THE MATERIAL ON RECORD. THERE IS NO DISPUTE TO THE FACT THAT DET AILED AND COMPLETE ITA NO.51/AHD/2007 FOR AY 2002-03 M/S SATADHAR ENTERPRISES 5 ENQUIRIES HAVE BEEN MADE BY THE AO BY DEPUTING INSP ECTORS MAKING SELF ENQUIRIES AND EVEN REQUESTING THE INVESTIGATION WI NG RAJKOT TO CONDUCT ENQUIRIES ON THE ISSUE. HOWEVER IT IS OBSERVED THA T NO ADVERSE MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO TO WARRANT TRE ATING THE BOOKING AMOUNTS AS REFLECTED BY THE APPELLANT IN HIS BOOKS OF ACCOUNT AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. ALL THE PARTIES HAVE CONFIRMED TO THE TRANSACTION AND HAVE SUBMITTED DETAILS OF THE A MOUNTS GIVEN IN CASH AND CHEQUES WHICH TALLY WITH THE AMOUNTS REFLECTED BY THE APPELLANT IN ITS BOOKS OF ACCOUNT. MERELY BECAUSE THE BOOKING HOLDER S DID NOT APPEAR IN RESPONSE TO SUMMONS FROM VAPI TO SURAT DOES NOT MEA N THAT EITHER THESE PARTIES DID NOT EXIST OR THEY HAD NOT GIVEN THESE A MOUNTS AS MENTIONED BY THEM IN THEIR CONFIRMATIONS. EVEN THE AO HAS NOT PU RSUED THE MATTER FURTHER AND HAS NOT PENALIZED THESE PARTIES FOR NON COMPLIANCE OF SUMMONS. EVEN THE INSPECTOR'S REPORT DOES NOT ANYWH ERE STATE THAT ON PERSONAL ENQUIRY ANY OF THE BOOKING HOLDERS HAVE D ENIED THE BOOKINGS AND QUANTUM OF TRANSACTIONS. EVEN THE CAPACITY TO G IVE BOOKING ADVANCE CANNOT BE DOUBTED SINCE MOST OF THEM ARE INCOME-TAX ASSESSES WHO HAVE NOT ONLY FILED THEIR PANS BUT HAVE ALSO FILED COPIE S OF THEIR RETURN OF INCOME ALONG WITH COPIES OF BANK STATEMENT WHEREVER APPLIC ABLE. THE APPELLANT HAD ALSO FILED COPIES OF BOOKING AGREEMENTS WITH TH E BOOKING HOLDERS WHEREIN THE AMOUNTS MENTIONED TALLY WITH THE AMOUNT S REFLECTED IN APPELLANT'S BOOKS OF ACCOUNT WHETHER IN CASH OR CHE QUE. VARIOUS EVIDENCES FILED BY THE APPELLANT BEFORE THE AO DURI NG ASSESSMENT AND REMAND PROCEEDING REMAIN UNCONTROVERTED SO MUCH SO THAT EVEN THE INVESTIGATION WING AT RAJKOT HAS NOT GIVEN ANY ADVE RSE REPORT ON THE BOOKING HOLDERS AT RAJKOT. THERE IS NO BASIS TO HOL D THAT THE BOOKING AMOUNTS WERE UNEXPLAINED OR UNSATISFACTORILY MADE S O AS TO WARRANT INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. T HE DECISION OF SHANKAR INDUSTRIES (SUPRA) AS CITED BY THE AO IS RATHER IN FAVOUR OF THE APPELLANT SINCE THE HON'BLE SUPREME COURT HAD IN THAT CASE LA ID DOWN THAT THE DUTY OF THE APPELLANT IN CASE OF CASH CREDITS IS TO PROV E THE TRANSACTION PRIMA FACIE BY LEADING EVIDENCES. THEREAFTER THE ONUS SHI FTS ON THE AO TO REBUT THE DOCUMENTARY EVIDENCE SUBMITTED BY APPELLANT BRI NGING ON RECORD COGENT EVIDENCE THAT THE EXPLANATION SUBMITTED WAS FALSE OR INCORRECT. IN THE INSTANT CASE THE APPELLANT HAS DISCHARGED ITS O NUS AND AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO INVOKE PROVISIONS OF SECTION 68. ADDITION ON THIS ACCOUNT IS THEREFORE DIRECTED TO B E DELETED. THERE IS ANOTHER ANGLE TO THIS ENTIRE CONTROVERSY T HAT THE AO HAD MADE HIS INQUIRY BY CALLING FOR VARIOUS DETAILS VIDE ORDER S HEET ENTRY DATED 23-3- 2002 24-3-2002 AND 29-3-2002 WHEREIN SHOW CAUSE NO TICE WAS GIVEN FOR MAKING THE ADDITION U/S 68 FOR THESE BOOKING AMOUNT S. HOWEVER IN THE FINAL ASSESSMENT ORDER THE AO DID NOT MAKE ANY ADD ITION. HENCE I AGREE WITH THE APPELLANT THAT THE CHANGE IN STAND IN THE REMAND PROCEEDINGS IS MERELY A CHANGE OF OPINION ON THE SAME EVIDENCE. FU RTHER THE BOOKING AMOUNTS SHOWN TO HAVE BEEN RECEIVED THROUGH SHRI HE MANT SHAH ARE EXPLAINED BY THE APPELLANT AS BEING GENUINE AMOUNTS FROM VARIOUS ITA NO.51/AHD/2007 FOR AY 2002-03 M/S SATADHAR ENTERPRISES 6 PERSONS AT RAJKOT WHO HAVE CONFIRMED THE TRANSACTIO NS AND AGAINST WHOM EVEN AFTER DETAILED ENQUIRIES NO EVIDENCE HAS BEEN FOUND TO THE CONTRARY. IT CAN ALSO BE SEEN THAT THE AO HAS HIMSELF INVOKED THE PROVISIONS OF SECTION L32(4A) TO HOLD THAT THERE WAS PRESUMPTION TO THE GENUINENESS OF DOCUMENTS FOUND DURING SEARCH AND SURVEY. THE FACT THAT THESE AMOUNTS ARE BOOKING AMOUNTS DULY REFLECTED IN ANNEXURE BF-9 (BOOKING LEDGER) BF-10 (BOOKING AGREEMENTS) & BF-12 (RECEIPTS ISSUED TO BOOKING HOLDER FOR CHEQUES AND CASH) WHICH WERE FOUND DURING THE C OURSE OF SURVEY ITSELF. HENCE THE PRESUMPTION IF ANY CAN BE INVOKED ONLY I N FAVOUR OF THE APPELLANT THAT THESE ARE BOOKING AMOUNTS. FURTHER EVEN THE AMOUNT OF RS.15 00 000/- WHICH IS BEING TREATED AS LOAN FROM HEMANT SHAH WAS ACTUALLY BOOKING AMOUNT FROM V ARIOUS PARTIES WHICH WAS OBTAINED THROUGH HEMANT SHAH. THE PARTIES WHO HAD' APPLIED THROUGH SHRI HEMANT SHAH HAVE SUBMITTED THEIR CONFI RMATIONS. MOREOVER AGAINST THESE PARTIES NO ADVERSE REPORT HAS BEEN GI VEN BY THE RAJKOT INVESTIGATION WING. THESE AMOUNTS ALREADY FORM PART OF RS.34 54 596/- AGAINST WHICH NO ADVERSE EVIDENCE HAS BEEN FOUND AN D THE TRANSACTIONS STAND CONFIRMED FROM THE PARTIES INCLUDED THEREIN. HENCE NO ADVERSE INFERENCE CAN BE DRAWN ON THIS COUNT ALSO. 4 THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST TH E AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED DR SUPPORTE D THE ORDER OF THE AO WHILE THE LEARNED AR ON BEHALF OF THE ASSESSEE S UPPORTED THE FINDINGS OF THE LD. CIT(A). 5 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH T HE FACTS OF THE CASE. UNDISPUTEDLY AND AS POINTED OUT BY THE LD . CIT(A) SINCE THE AO HIMSELF ACCEPTED THE FACT IN PARA-7 OF HIS REMAND REPORT DATED 2/6/2006 THAT THE AMOUNT OF RS.34 54 596/-IS TO BE SUBSTITUTED AS UNEXPLAINED CASH CREDIT THE LD. CIT(A) CONCLUD ED THAT THERE WAS NO JUSTIFICATION TO RETAIN THE ADDITION OF RS.54 73 288/-. THE LD. CIT(A) FURTHER OBSERVED THAT EVEN OTHERWISE THE CAL CULATION OF RS.54 73 288/- SUFFERED FROM SERIOUS INFIRMITY BECA USE THE CASH BOOKING AMOUNT WAS ALREADY INCLUDED IN THE AMOUNT O F RS.34 54 596/- DECLARED IN THE RETURN OF INCOME AND HENCE NO FURTHER ESTIMATION COULD HAVE BEEN MADE. INTER ALIA IT WAS ALSO CONCLUDED ITA NO.51/AHD/2007 FOR AY 2002-03 M/S SATADHAR ENTERPRISES 7 THAT THE TRANSACTIONS STOOD CONFIRMED BY THE RESPEC TIVE PARTIES AND THERE WAS NO BASIS EVEN FOR MAKING ADDITION U/S 68 OF THE ACT. T HE LD. DR APPEARING BEFORE US DID NOT REFER US TO ANY MATERIAL CONTROVERTING TH ESE FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) AFTER HAVING A REMAND REPORT FROM T HE AO. IN THE ABSENCE OF ANY BASIS TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER WE ARE NOT INCLINED TO INTERFERE. THEREFORE GROUND NO.1 IN THE APPEAL IS DISMISSED. 6. GROUND NO.2 RELATES TO ADDITION OF RS.3 94 390/ ON ACCOUNT OF UNEXPLAINED PURCHASES AND RS. 5 78 813/- ON ACCOUNT OF UNEXPLAINED EXPENSES. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD PURCHASED STEEL OF RS.2 33 718/- RS.2 63 215/- AND RS.1 59 290/- F ROM MAHESANA STEEL SUPPLIERS VAPI AND THE SAME WAS NOT ACCOUNTE D FOR IN THE BOOKS OF M/S. MAHESANA STEEL SUPPLIERS. THIS WAS AD MITTED BY SHRI KALPESHBHAI PATEL OF MAHESANA STEEL IN REPLY TO QUE STION NO. 32 OF HIS STATEMENT. THE AO NOTICED THAT NONE OF THE ABOV E REFERRED PURCHASES WERE ACCOUNTED FOR IN THE BOOKS OF ACCOUN TS OF THE ASSESSEE. TO A QUERY BY THE AO THE ASSESSEE IN THE IR REPLY DATED 25-03-2005 SUBMITTED THAT THE PAYMENTS MADE TO MAHE SANA STEEL AMOUNTING TO RS.5 37 700/- WERE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. THE ASSESSEE ALSO SUBMITTED TWO XEROX COP IES OF PURCHASE BILLS OF RS.2 63 215/-AND RS.39 385/- TO E XPLAIN THE DEBIT OF RS.3 02 600/-. HOWEVER THE AO DID NOT ACCEPT T HE SUBMISSIONS OF THE ASSESSEE AND IN THE ABSENCE OF ANY CLARIFICA TION ABOUT THE OTHER TWO PURCHASES OF RS.2 33 718/- AND RS.1 59 29 0/- THE AO ADDED THE ENTIRE AMOUNT OF RS.6 56 223/- AS UNACC OUNTED PURCHASES OF THE ASSESSEE . 6.1 BESIDES AN AMOUNT OF RS.23 30 281/- WAS AD DED BY WAY OF UNACCOUNTED EXPENSES. THIS INCLUDED AN AMOUNT OF RS .45 050/- RS. 4 05 582/- RS. 1 20 000/- RS. 4 000/- & RS. 4 181/- DISPUTED BY THE REVENUE BEFORE US. THE AO NOTICED THAT SHRI KAMLES HBHAI YADAV ITA NO.51/AHD/2007 FOR AY 2002-03 M/S SATADHAR ENTERPRISES 8 SON OF ONE OF THE PARTNERS OF ASSESSEE FIRM IN HIS STATEMENT RECORDED U/S. 131 OF THE ACT BY THE ADIT (INV.) VA LSAD ON 20-09- 2002 ADMITTED THAT ALL THE EXPENSES IN RESPECT OF CHANDRALOK PROJECT WERE INCURRED BY M/S. SATADHAR ENTERPRI SES. IN RESPONSE TO A SHOW CAUSE NOTICE DATED 24-03-2005 THE ASSE SSEE REPLIED VIDE LETTER DATED 28-03-2005 THAT WHATEVER EXPENSE S PERTAINED TO THEM HAD BEEN DULY RECORDED IN THEIR BOOKS IN THIS FINAN CIAL YEAR AS WELL AS IN THE NEXT FINANCIAL YEAR . HOWEVER THE AO DID NOT ACCEPT TH E CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT UNACCOUNTED EXPENSES PERTAINING TO PROPRIETARY CONCERN M/S. K.D. DEVELOPERS OF SHRI KAMLESHBHAI D. YADAV HAVE BEEN TAXED IN HIS BLOCK ASSESSMENT AND THE EXPENSES PERTAINING TO M/S SATAD HAR ENTERPRISES HAVE NOT BEEN CONSIDERED. THE SOURCE OF THESE UNACCOUNTED IN VESTMENTS/EXPENSES IN THE PRESENT CASE REMAINING UNEXPLAINED THE AO ADDED TH E AMOUNT OF RS.23 30 281/- 7. ON APPEAL THE LEARNED CIT(A) AFTER HAVING A R EMAND REPORT FROM THE AO CONCLUDED WITH REGARD TO THE AMOUNT OF RS.6 56 223/- THAT SINCE THE ADDITIONS WERE ACCEPTED BY THE AO AS HAVING BEEN INCORRECTLY MADE THERE REMAINED NO DISPUTE AND THEREFORE D ELETED THE ADDITION OF RS.2 63 215/- AND RS.1 59 290/-. AS REGARDS THE AMO UNT OF RS.2 33 718 +1 382 = 2 35 100/- THE LD. CIT(A) FOUND THAT THE AMOUNT OF RS.2 35 100/- WAS RECORDED IN THE IMPOUNDED BOOK BF-9 ON PAGE 32 AND THE AO AD MITTED THE FACT THAT BF-9 WAS PART OF REGULAR BOOKS OF ACCOUNT OF THE ASSESSE E FIRM WHEREIN THE DETAILS OF AMOUNTS RECEIVED AND CERTAIN EXPENSES PAID IN CASH AND CHEQUES WERE DULY RECORDED. THE FINAL BOOKS OF ACCOUNT ON THE BASIS O F WHICH THE RETURN WAS FILED INCORPORATED THESE ENTRIES. ACCORDINGLY THE LD. C IT(A) DELETED THIS AMOUNT ALSO. 7.1 REGARDING ADDITION OF RS.23 30 281/- ATTRIBU TED TO UNACCOUNTED EXPENSES THE LD. CIT(A) AFTER HAVING A REMAND REPORT FROM T HE AO OBSERVED THAT ONLY AN AMOUNT OF RS.8 70 128/- WAS DISPUTED AND THE BALAN CE RS.14 60 153/- WAS ADMITTED AS INCORRECT ADDITION BY THE AO HIMSELF. T HEREFORE THE AMOUNT OF ITA NO.51/AHD/2007 FOR AY 2002-03 M/S SATADHAR ENTERPRISES 9 RS.14 60 153/- WAS DELETED. OUT OF THE DISPUTED AM OUNT THE ADDITION OF RS.6 647/- WAS NOT PRESSED BY THE ASSESSEE AND ACC ORDINGLY WAS CONFIRMED. 7.11 REGARDING THE AMOUNT OF RS.1 20 000/- THE AO IN HIS REMAND REPORT DATED 1-8-2006 RECORDED A FINDING THAT THE BILLS OF M/S GUJARAT AMBUJA CEMENT ALONG WITH TRANSPORT DETAILS OF M/S GANESH CARRIERS WERE PRODUCED BEFORE HIM. THE VEHICLE NUMBER AND THE NUMBER OF BAGS OF CEMENT TALLIED WITH THE PURCHASE BILLS WHICH STOOD DULY RECORDED ON PAGE 16 OF IMPOU NDED BOOK BF-L WHICH WAS THE STOCK REGISTER. THE PAYMENT FOR THIS WAS MADE O N THE RUNNING ACCOUNT BASIS BY DEMAND DRAFT OF RS.2 50 000/- DRAWN ON STATE BAN K OF INDORE. THUS THE SOURCE OF PAYMENT WAS DULY ACCOUNTED FOR THE LD. C IT(A) OBSERVED . ACCORDINGLY THIS AMOUNT WAS DELETED. 7.12 AS REGARDS AMOUNT OF RS.4 181/- MENTIONED ON PAGE 18 OF BF-1 THE LD. CIT(A) FOUND THAT THIS WAS DUPLICATION OF PAGE 63 & 64 OF BF-2. THE BF-1 WAS STOCK REGISTER AND BF-2 WAS THE BILL FOR THAT MATER IAL. SINCE THIS ENTRY IN BF-2 WAS DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNTS MAIN TAINED BY THE ASSESSEE THE LD. CIT(A) DELETED THE AMOUNT. LIKEWISE AN AMOUNT O F RS.4 000/- MENTIONED ON PAGE- 36 OF BF-1 AND ALSO ON PAGE 1 TO 6 OF BF-5 W AS FOUND TO BE RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND WAS THEREFORE DEL ETED. 7.13 WHILE UPHOLDING THE ADDITION OF RS.2 84 66 8/- THE LD. CIT(A) FOUND THAT AN AMOUNT OF RS.45 050/- WAS ALREADY INCLUDED IN THE AFORESAID AMOUNT OF RS.2 84;668/- AND THEREFORE NO SEPARATE ADDITION WAS CALLED FOR. 7.14 AS REGARDS ESTIMATED ADDITION OF RS.4 05 58 2/- CALCULATED BY THE AO BY ESTIMATING THE EXCAVATION OF LAND DONE TILL 27-3-2 002 BY THE ASSESEE THE LD. CIT(A) DELETED THE SAME IN THE FOLLOWING TERMS : I HAVE CONSIDERED THE RIVAL SUBMISSION AND I AGREE WITH THE LD AR THAT THERE IS NO LAW WHICH ALLOWS THE AO TO ESTIMATE EXP ENSES CONTRARY TO THOSE RECORDED AS FACTS IN THE BOOKS OF ACCOUNTS. I N THE ENTIRE ORDER THE AO TOOK THE AMOUNTS OF ACTUAL EXPENSES FROM THE IMP OUNDED BOOKS AND HAS MADE ADDITIONS. HOWEVER IN THIS CASE HE HAS GO NE BEYOND THE MATERIAL ON RECORD AND WITHOUT THERE BEING ANY EVID ENCE OF ANY EXPENSES ITA NO.51/AHD/2007 FOR AY 2002-03 M/S SATADHAR ENTERPRISES 10 INCURRED TILL 27/3/2002 ESTIMATED EXPENSES CONTRARY TO SUBSEQUENT YEARS BOOKS WHEREIN THE ACTUAL PAYMENT FOR LAND EXCAVATIO N IS RECORDED. THIS KIND OF ADDITIONS ON THE BASIS OF CONJECTURES AND S URMISES IS NOT SUSTAINABLE AND IS DIRECTED TO BE DELETED. 8. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID ADDITION DELETED BY THE LD. CIT(A). THE LEARNED DR SUPPORTED THE ORDER OF THE AO WHILE THE LEARNED AR ON BEHALF OF T HE ASSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. AS IS APPARENT FROM THE AFORESAID FINDIN GS IN THE IMPUGNED ORDER THE LD. CIT(A) DELETED THE AFORESA ID ADDITIONS AFTER HAVING A REMAND REPORT FROM THE AO AND THE AMOUNT HAVING BEEN FOUND DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT S OF THE ASSESSEE. SINCE THE SOURCE OF THE VARIOUS AMOUNTS I NCURRED BY THE ASSESSEE WAS FOUND TO BE EXPLAINED WHILE THERE WAS NO BASIS FOR ADDING THE ESTIMATED AMOUNT OF RS.4 05 582/- THE L D. CIT(A) DELETED THESE ADDITIONS. THE LD. DR APPEARING BEFORE US DID NOT R EFER US TO ANY MATERIAL CONTROVERTING THE AFORESAID FINDINGS OF FACTS RECO RDED BY THE LD. CIT(A). IN THE ABSENCE OF ANY BASIS WE ARE NOT INCLINED TO INTERF ERE. THEREFORE GROUND NO.2 IN THE APPEAL IS ALSO DISMISSED. 10 IN THE RESULT APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 31 -05 -2010 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 31 -05-2010 COPY OF THE ORDER FORWARDED TO : ITA NO.51/AHD/2007 FOR AY 2002-03 M/S SATADHAR ENTERPRISES 11 1. M/S SATADHAR ENTERPRISES S NO. 276 NEAR CINE P ARK SILVASSA ROAD CHANOD VAPI 2. THE ACIT CENTRAL CIRCLE-2 SURAT 3. CIT CONCERNED 4. CIT(A)-III SURAT 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD