Shri Jainarayan Ambalal Bhaiya, v. The ACIT, Cent.Circle-3,,

ITSSA 427/AHD/2003 | misc
Pronouncement Date: 05-02-2010 | Result: Dismissed

Appeal Details

RSA Number 42720516 RSA 2003
Assessee PAN AAMPB8860H
Bench Ahmedabad
Appeal Number ITSSA 427/AHD/2003
Duration Of Justice 6 year(s) 1 month(s) 14 day(s)
Appellant Shri Jainarayan Ambalal Bhaiya,
Respondent The ACIT, Cent.Circle-3,,
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 05-02-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 05-02-2010
Date Of Final Hearing 02-02-2010
Next Hearing Date 02-02-2010
Assessment Year misc
Appeal Filed On 22-12-2003
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI N.S.SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER IT(SS)A NO.427/AHD/2003 & IT(SS)A NO.37/AHD/2004 BLOCK PERIOD FROM 1-4-1995 TO 6-9-2001 DATE OF HEARING:2.2.10 DRAFTED:2.2.10 SHRI JAINARAYAN AMBALAL BHAIYA 3-A RATNNA NABH APARTMENT RAVI DHAM COMPLEX NR. PANJARAPOLE GHOD DOD ROAD SURAT PAN NO.AAMPB8860H ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-3 ROOM NO.507 AAYAKAR BHAVAN MAJURA GATE SURAT V/S . V/S . ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE- 3 ROOM NO.507 AAYAKAR BHAVAN MAJURA GATE SURAT SHRI JAINARAYAN AMBALAL BHAIYA 3-A RATNA NABH APARTMENT RAVI DHAM COMPLEX NR. PANJRAPORE GHOD DOD ROAD SURAT (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI SAURABH N SOPARKAR AR REVENUE BY:- SHRI RAJEEV AGARWAL CIT-DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THESE CROSS APPEALS ONE BY THE ASSESSEE AND ANOT HER BY THE REVENUE ARE ARISING OUT OF THE ORDER OF CIT(A) II/CC.3/11/03-0 4 DATED 03-12-2003. THE BLOCK ASSESSMENT WAS FRAMED BY THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-3 SURAT U/S.158BC[C] OF THE INCOME-TAX ACT 1961 (HER EINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 30-09-2003 FOR THE BLOCK PERIO D FROM 01-04-1995 TO 06-09-2001. IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 2 2. THE FIRST COMMON ISSUE IN THESE CROSS APPEALS IS AS REGARDS TO THE APPLICATION OF NET PROFIT RATIO. FOR THIS THE ASSESSEE HAS RAI SED THE FOLLOWING GROUND NO.2 AND 4 :- IT(SS)A NO.427/AHD/2003 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE ALSO IN LAW THE LD. CIT (APPEALS)-II HAS ERRED BY APPLYING NET PROFIT RATIO OF 3.25% ON UNACCOUNTED TURNOVER OF RS.4.50 CRORE. 4. YOUR HONOUR IS ALSO REQUESTED TO CALCULATE NET P ROFIT RATIO OF 9.3% ON UNACCOUNTED TURNOVER OF RS.4.50 CRORES WHICH IS TH E AVERAGE RATIO OF NET PROFIT EARNED BY THE APPELLANT IN HIS REGULAR ACCOU NTED BUSINESS CONCERN M/S. KRISHNA SILK INDUSTRIES DURING THE LAST THREE CONSE CUTIVE ASSESSMENT YEARS I.E. TO CALCULATE NET PROFIT FROM UNACCOUNTED TURNO VER AT RS.1 2 000/- IN PLACE OF RS.14 2 500/- WORKED OUT BY THE LD. CIT (APPEALS )-II AHMEDABAD. THE REVENUE HAS RAISED THE FOLLOWING GROUND NO.2 :- IT(SS)A NO.37/AHD/2004 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN RES TRICTING THE ADDITION OF RS.63 87 151/- MADE ON ACCOUNT OF UNACCOUNTED INCOM E FROM UNACCOUNTED TEXTILE BUSINESS ACTIVITY TO RS.14 62 500/-. 3. THE BRIEF FACTS LEADING TO THE ABOVE COMMON ISSU E ARE THAT A SEARCH AND SEIZURE U/S.132 OF THE ACT WAS CARRIED OUT ON THE B USINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE ON 06-09-2001. SUBSEQUENTLY NOTICE U/S.158BC WAS ISSUED AND THE ASSESSEE FILED BLOCK RETURNS ON 21-02-2002 OF UNDIS CLOSED INCOME AT RS.18 LAKHS. THE BUSINESS OF THE ASSESSEE IS THAT OF PURCHASE OF GRAY CLOTHS AND SALE OF THE SAME AFTER DYEING AND PRINTING ON JOB-WORK BASIS. THE F AMILY OF SHRI JAI NARAYANA BHAIYA THE ASSESSEE CONSISTS OF HIMSELF HIS WIFE SMT. SAR OJDEVI BHAIYA AND HIS SON SHRI SHYAM BHAIYA. THE ASSESSEE FILED LETTER DATED 28-08 -2003 OWNED UP ALL THE UNACCOUNTED INCOME AND INVESTMENT IN HIS NAME AND ACCORDINGLY THE ASSESSING OFFICER MADE ASSESSMENT IN HIS HAND ONLY AND THIS F ACT IS UNDISPUTED. DURING THE COURSE OF SEARCH VARIOUS BOOKS OF ACCOUNT AND PAPER S WERE FOUND AND SEIZED. ON SCRUTINY OF THE SAME IT WAS FOUND THAT THE PAPER R ELATES TO UNACCOUNTED TURNOVER CARRIED OUT BY THE ASSESSEE DURING THE BLOCK PERIOD . THE ASSESSING OFFICER AFTER GOING THROUGH THE LOOSE PAPER ANNEXURE-BS/1 CONSIDE RED THE UNACCOUNTED TURNOVER AT RS.1 50 050/-. FURTHER CONSIDERING PAGE NO 38-39 OF ANNEXURE-BS/1 WHICH CONTAINS A DETAIL OF UNACCOUNTED PURCHASES AMOUNTIN G TO RS.53 50 120/- AND RS.14 02 418/-. THE AO AFTER PROVIDING OPPORTUNITIE S TO THE ASSESSEE CONSIDERED THE IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 3 TURNOVER AS UNACCOUNTED AMOUNTING TO RS.67 52 538/- . SUBSEQUENTLY THE AO ALSO GONE THROUGH PAGE NO.40 OF ANNEXURE-BS/1 AND THE S AME CONTAINS THE DETAILS OF PAYMENT DUE FROM LOKPRIYA AMOUNTING TO RS.3 45 764/ .-. THE ASSESSEE WAS GIVEN SHOW CAUSE NOTICE AND TREATED THE TURNOVER OF RS.3 45 764/- AS UNACCOUNTED FOR THE BLOCK PERIOD. 4. SUBSEQUENTLY THE AO NOTICED FROM ANNEXURE-BS/1 PAGE NO.1-25 AND DETERMINED THE TURNOVER AS UNDER:- 9. PAGE NO.2 OF THIS ANNEXURE CONTAINS DETAILS OF TRANSACTIONS CARRIED OUT IN FEB. 2001 IT CONTAINS THE DETAILS OF INCOME AND EX PENDITURE TOTAL AMOUNT OF WHICH IS OF RS.11 29 592/-. THE ASSESSEE WAS GIVEN SHOW CAUSE DATED 17.6.03 & 2.9.03 TO FURNISH EXPLANATION WHY IT SHOU LD NOT BE TREATED UNACCOUNTED TURNOVER AND PROFIT SHOULD NOT BE TAXED . THE ASSESSEE HAS ACCEPTED VIDE YOUR LETTER DATED 7.7.03 & 10.9.03 TH AT IT IS UNACCOUNTED TURNOVER & THE INCOME IS INCLUDED IN THE DISCLOSURE OF RS.18.00 LAC. IN VIEW OF THIS FACT THE UNACCOUNTED TURNOVER IS DETERMINED A T RS.11 29 592/- OF THIS PAGE. 9.1 PAGE NO. 4 OF THIS ANNEXURE CONTAINS THE DETAIL S OF VARIOUS TRANSACTIONS OF KRISHNA TRADING ETC. THE TOTAL TURNOVER ON THIS PAG E IS RS.28 02 941/-. ON BACK SIDE OF THIS PAPER THERE IS FURTHER TRANSACTIO N OF RS.26 05 087/-. THUS THE TOTAL TRANSACTION OF THIS PAPER IS OF RS.54 88 028/ -. THE ASSESSEE WAS GIVEN SHOW CAUSE DATED 17.6.03 & 2.9.03 TO FURNISH EXPLAN ATION WHY IT SHOULD NOT BE TREATED UNACCOUNTED TURNOVER AND PROFIT SHOULD NOT BE TAXED. THE ASSESSEE HAS FURNISHED REPLY DATED 7.7.00 & 10.9.03 AND STAT ED THAT IT IS UNACCOUNTED TURNOVER RECEIPT & PAYMENT OF UNACCOUNTED BUSINESS OF A PARTICULAR DATE. IT IS SEEN THAT TURNOVER OF RS.28 02 941/- WHICH IS ON ON E SIDE OF THE PAPER IS CONSIDERED BY ASSESSEE ON BACK SIDE OF THE PAPER TH E TURNOVER OF RS.12 21 943/- & RS.14 63 144/- TOTALING RS.26 85 0 87/- HAVE NOT BEEN CONSIDERED BY ASSESSEE WHICH REQUIRES TO BE ADDED A S TOTAL UNACCOUNTED TURNOVER. THUS THE TOTAL TURNOVER OF THIS PAGE WIL L BE OF RS.54 88 028/-. 9.2 PAGE NO. 5 CONTAINS THE DETAILS OF RS.1.00 LAC IS AS UNDER:- RACHNA JAIPUR BILL 1.12 208 38800 20.4 10 000 BILL 209 39093 4.5 40 000 BILL 232 10188 27.6 25 000 BILL 237 24875 25 000 238 63920 TOT AL 17687 1 00 000 FROM THE ABOVE IT CAN BE SEEN THAT TOTAL GOODS OF RS.1 7 87/- WAS SOLD AS PER THE BILLS MENTIONED ABOVE AGAINST WHICH PAYMENT OF RS.1.00 LAC WAS RECEIVED. ON BACK SIDE OF THIS PAPER THERE IS DETAILS OF RS. 23 660/- THUS THE TOTAL IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 4 TURNOVER OF THIS PAPER RS.2 00 536/-. THE ASSESSEE WAS GIVEN SHOW CAUSE DATED 17.6.03 TO FURNISH THE EXPLANATION WHY THIS S HOULD NOT BE TREATED AND PROFIT SHOULD NOT BE ADDED AS UNACCOUNTED INCOME. T HE ASSESSEE HAS SUBMITTED THAT THIS IS UNACCOUNTED TURNOVER INCLUDE S IN TOTAL TURNOVER AND INCOME IS INCLUDED IN THE DISCLOSURE OF RS.18.00 LA CS. IN VIEW OF THIS THE TOTAL TURNOVER OF THIS PAPER DETERMINED AT RS.2 00 536/-. 9.3 PAGE NO. 6 CONTAINS THE DETAILS OF TRANSACTION AS ON 31.3.00. THE TOTAL TRANSACTIONS NOTED ON THIS PAPER AMOUNTS TO RS.11 3 4 355/-. THE ASSESSEE WAS GIVEN SHOW CAUSE DATED 17.6.03 TO FURNISH THE E XPLANATION WHY THIS SHOULD NOT BE TREATED AND PROFIT SHOULD NOT BE ADDE D AS UNACCOUNTED INCOME. THE ASSESSEE HAS ADMITTED RS.11 34 355/- AS UNACCOU NTED TURNOVER VIDE REPLY DATED 10.9.03 WHICH IS INCLUDED IN THE DISCLO SURE OF RS.18.00 LAC. IN VIEW OF THIS THE TOTAL TURNOVER OF THIS PAGE DETERMINED AT RS.11 34 355/-. 9.5 PAGE NO. 8 CONTAINS THE TRANSACTION FOR THE PER IOD 1.4.95 TO 31.3.96. THE PAPER SHOWS THE OPENING BALANCE OF RS..9 43 246/- & FURTHER CREDITS OF RS.6 28 036/-. THEREFORE THE TOTAL UNACCOUNTED TUR NOVER AS PER THIS PAPER COMES TO RS.14 71 282/-. THE ASSESSEE WAS GIVEN SHO W CAUSE DATED 17.6.03 TO FURNISH THE EXPLANATION WHY THIS SHOULD NOT BE T REATED AND PROFIT SHOULD NOT BE ADDED AS UNACCOUNTED INCOME FOR THE BLOCK PERIOD . THE ASSESSEE HAS SUBMITTED REPLY DATED 7.7.03 IT IS PART OF THE UNAC COUNTED TURNOVER. IN VIEW OF THIS RS.14 71 282/- IS CONSIDERED AS UNACCOUNTED TU RNOVER OF THE BLOCK PERIOD. 9.6 PAGE NO. 13 TO 22 ARE THE DETAILS OF DEMAND DRA FTS RECEIVED FROM R.P. TRADERS 36 GODOWN STREET CHHENAI. THE TOTAL OF THIS DRAFT COMES TO RS.50 000/-. THE ASSESSEE WAS REQUESTED TO FURNISH THE EXPLANATION WHY THIS SHOULD NOT BE TREATED AS UNACCOUNTED TURNOVER AND P ROFIT THEREON ON THIS SHOULD NOT BE ADDED UNACCOUNTED INCOME FOR THE BLOC K PERIOD. THE ASSESSEE VIDE HIS REPLY DATED 7.7.03 & 10.9.03 HAS STATED TH AT SOME DDS WERE DEPOSITED IN THE BANK ACCOUNTS. THE TOTAL OF THESE DRAFTS IS UNACCOUNTED TURNOVER AND DISCLOSED IN THE TOTAL UNACCOUNTED TUR NOVER AND PROFIT ON THIS TURNOVER IS INCLUDED IN THE DISCLOSURE OF RS.13.00 LAC. THE ASSESSEE HAS CLAIMED RS.15 45 350/- AS DEDUCTION AS TO THIS EXTE NT THE DRAFTS DEPOSITED IN VARIOUS UNACCOUNTED BANK ACCOUNTS ARE DUPLICATE AS TOTAL UNACCOUNTED TURNOVER ON THE BASIS OF BANK HAS BEEN SEPARATELY C OMPUTED TWICE WHILE CALCULATING THE TURNOVER. IN VIEW OF THIS THE TOTA L TURNOVER OF THIS PAGE IS COMPUTED AT RS.34 54 650/-. 9.8 PAGE NO. 25 THIS PAPER CONTAINS VARIOUS TRANSA CTIONS CARRIED OUT. MOST OF THE TRANSACTIONS ARE RELATED TO GOODS & SHOWS THE D ETAILS OF PAYMENT MADE ETC. ON FRONT SIDE OF THIS PAGE THERE IS TOTAL TUR NOVER OF RS.23 17 613/- AND ON BACK SIDE OF THIS PAPER THERE IS TURNOVER OF RS.29 37 282/-. THE ASSESSEE WAS GIVEN SHOW CAUSE DATED 17.6.03 TO FURNISH THE EXPLA NATION WHY THIS SHOULD NOT BE TREATED AND PROFIT SHOULD NOT BE ADDED AS UNACCO UNTED INCOME. THE ASSESSEE HAS SUBMITTED THAT THIS IS UNACCOUNTED TUR NOVER. IN VIEW OF THIS TOTAL TURNOVER OF THIS PAGE COMES TO RS.29 37 282/-. IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 5 9.9 DURING THE COURSE OF SEARCH PROCEEDINGS. ANNEXU RE BS-2/29 WAS FOUND AND SEIZED FROM KRISHNA SILK INDUSTRIES. PAGE NO. 1 6 OF THE ANNEXURE SHOWS THE SALES OF SAREE TO RAJUL TEXTILES AS UNDER:- RAJUL TEXTILES SAREES 20054/- -DO- 22 PCS @ 250/- 55500/- -DO- 74 PCS @ 250/- 18500/- -DO- 77 PCS @250/- 19250/- TOTAL 113507/- IN THIS CONNECTION THE ASSESSEE WAS REQUESTED TO E XPLAIN THE PURCHASED HOW IT IS SHOWN IN THE BOOKS OF ACCOUNT. THE ASSESSEE V IDE REPLY DATED 27.6.03 YOU HAVE STATED THAT THE GOODS WERE SOLD TO RAJUL T EXTILE ON JANGAD BASIS AND LATER ON THE GOODS WERE RETURNED BACK WERE SOLD IN CASH WHICH IS UNACCOUNTED. IN VIEW OF THIS TURNOVER OF THIS PAGE IS DETERMINED AT RS.1 13 507/-. IN VIEW OF THIS THE TOTAL UNACCOUN TED TURNOVER IS DETERMINED AT RS.1 13 507/-. 9.10 ANNEXURE BS-7 PG. 1 TO 81 : THIS LOOSE PAPER F ILE CONTAINS THE DETAILS OF RETURNED CHEQUES PRESENTED BEFORE THE BANK IT WAS STATED THAT THESE CHEQUES WERE DRAWN & ISSUED BY VARIOUS CUSTOMER IN CONSIDER ATION OF UNACCOUNTED SALES OF GOODS. THE CHEQUES WERE EITHER DEPOSITED I N UNACCOUNTED BANK ACCOUNTS AND ENDORSED TO THE THEIR PARTY WHICH WER E RETURNED LATER ON. HOWEVER THE FOLLOWING CHEQUES NOT IN THE NAME OF U NACCOUNTED CONCERNS BUT THE SAME WERE PRESENTED BEFORE BANK THE SAME ARE TR EATED AS UNACCOUNTED TURNOVER. THE DETAILS OF THE SAME IS AS UNDER:- CHEQUE RECEIVED IN THE NAME OF DATE AMT. (RS) NAME OF PARTY FROM WHOM CHEQUES RECEIVED NAME OF BANK R.K.JAIN 25.05.00 25 000 LAXMI FASHIONS THE TEX CO. OP BANK LTD. RACHNA SALES AGENCY 23.05.00 25 000 -DO- -DO- SUPER INV. CORP. 24.05.00 25 000 -DO- - DO- RAMLAL 01.06.00 27 000 AMARNATH SYNTHETIC SURAT NAT IONAL CO OP. BANK LTD. RAMTI ENTERPRISE 29.06.00 15 480 NAVIN SILK MILLS V YASA BANK LTD. TOTAL 163 040 THE ASSESSEE WAS REQUESTED TO EXPLAIN VIDE THIS OFF ICE LETTER DATED 4.9.03 WHY THE AMOUNT OF RS.1 68 040/- SHOULD NOT BE TREATED A S UNACCOUNTED TURNOVER. THE ASSESSEE HAS STATED THAT IT REPRESENTED UNACCOU NTED TURNOVER AND THEREFORE THE SAME IS COMPUTED AS UNACCOUNTED TURNO VER FOR OUT THE UNACCOUNTED PROFIT. 9.11 DURING THE COURSE OF SEARCH PROCEEDINGS SURVEY ACTION WAS CONDUCTED AT 526 ASHOKA TOWER RING ROAD SURAT IN THE CASE OF KRISHNA SILK INDUSTRIES. DURING THE SURVEY PROCEEDINGS THE BOOKS OF ACCOUNT FOUND WERE INVENTORIED IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 6 AS PER ANNEXURE-B DATED 6.9.01. THIS BOOKS WERE SUB SEQUENT IMPOUNDED U/S 131[3] OF THE I.T. ACT ON 22.9.03. THE BOOKS WERE S CRUTINIZED AND IT WAS FOUND THAT IT CONTAINS THE FOLLOWING TURNOVER:- B-1 CASH MEMO. KRISHNA SILK INDUSTRIES RS. 3 4 750/- B-2 DELIVERY CHALLAN OF KRISHNA SILK IND. RS. 18 00 183/- B-3 ORDER BOOK OF KRISHNA SAREES RS. 2 51 839/- B-5 ORDER BOOK OF KRISHNA SAREES RS. 2 18 295/- TOTAL RS.23 05 067/- 9.12 ON VERIFICATION IT WAS FOUND THAT ANNEXURE B-2 CONTAINS DELIVERY CHALLAN OF KRISHNA SAREES AS WELL AS SHIV SHAKTI TEXTILES. EXCEPT FIRST TWO AND LAST PAGE THE REMAINING CHALLANS WERE OF M/S SHIV SHAKTI TEXTILES. THE ASSESSEES CONCERN M/S. SHIV SHAKTI TEXTILE IS UNACCOUNTED AS ADMITTED. THE ASSESSEE WAS THEREFORE GIVEN SHOW CAUSE DATED 23.9.03 ASKIN G HOW THE TURNOVER OF RS.23 05 067/- AS MENTIONED ABOVE HAVE BEEN REFLECT ED IN THE BOOKS OF ACCOUNT AND WHY THE PROFIT SHOULD NOT BE ADDED AS U NACCOUNTED INCOME OF THE BLOCK PERIOD. 9.13 THE ASSESSEE HAS SUBMITTED REPLY DATED 29.9.03 IT IS STATED THAT THE TRANSACTION OF KRISHNA SILK INDS ARE RECORDED IN RE GULAR BOOKS OF ACCOUNT FOR WHICH NECESSARY EVIDENCE HAVE BEEN FURNISHED. AS RE GARDS THE REMAINING TRANSACTIONS THE ASSESSEE HAS STATED THAT SOME OF T HE TRANSACTIONS OF M/S./ SHIV SHAKTI TEXTILES FOUND OUT FROM THIS IMPOUNDED BOOKS ARE ALREADY SHOWN AND DECLARED IN THE CASE OF SHIV SHAKTI TEXTILES W HICH IS UNACCOUNTED CONCERN. THE ASSESSEE HAS STATED THAT THE SALE PROC EEDS OF THIS BILLS ARE CREDITED IN THE UNACCOUNTED BANK ACCOUNT OF SHIV SH AKTI TEXTILES THE TURNOVER OF WHICH IS ALREADY BEEN TAXED AS DISCUSSED ABOVE. THE ASSESSEE HAS RECONCILED THE SALE STOCK OF RS.15 90 270/- WITH TH E BANK STATEMENT. THEREFORE TO THIS EXTENT THE TURNOVER WILL BE OVER LAPPING IF CONSIDERED AGAIN. THEREFORE FROM TOTAL UNACCOUNTED TURNOVER OF RS.23 05 067/- THE TURNOVER OF RS.15 90 270/- RECONCILED BY THE ASSESSEE IS DEDUCT ED AND NET TURNOVER OF RS.7 14 797/- IS CONSIDERED AS UNACCOUNTED TURNOVER OF THE BLOCK PERIOD. 10. UNACCOUNTED TURNOVER OF THE BANK:- 10. DURING THE COURSE OF SEARCH PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE HAS BEEN CARRYING OUT UNACCOUNTED TRADING OF SAREES AND DRESS MATERIALS THROUGH VARIOUS UNACCOUNTED BANK ACCOUNTS OPERATED IN BENAMI NAMES. THE ASSESSEE HAS ACCEPTED THAT THIS BANK ACCOUNTS THOUG H OPERATED IN VARIOUS BENAMI NAMES BELONGS TO ASSESSEE HIMSELF. THE ASSES SEE HAS FURTHER ACCEPTED THAT ALL THESE BANK ACCOUNTS ARE USED FOR TRADING OF UNACCOUNTED SAREES AND DRESS MATERIALS. DURING THE ASSESSMENT P ROCEEDINGS ALL THESE BANK ACCOUNTS WERE CALLED FOR AND THE TOTAL TURNOVE R AND THE PEAK BALANCE HAS BEEN WORKED OUT. THE SUM OF TOTAL PEAK CASH BAL ANCE IS FOUND TO BE HIGHEST AS ON 28.10.98 THEREFORE THE PEAK BALANCE HAS BEEN COMPUTED ONLY ON 28.10.98 WHICH IS AS UNDER:- IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 7 SR NO. A/C. NO. NAME OF BANK NAME OF CONCERN PERIOD TOTAL TURNOVER (RS.) PEAK BAL. AS ON 28.10.98 TURNOVER AFTER 28.10.98 1 7326 DIAMOND JUB. CO.OP. BANK LTD. RING RD SURAT SHIVALIK TEXTILE 1.10.98 TO 6.9.01 1979862 -- 1797576 2 7391 -DO- SHIV SHAKTI TEXTILE 1.11.98 TO 6.6.01 8721877 - - 7890602 3 8232 -DO- GANESH FASHIONS 1.7.99 TO 6.9.01 2197126 - - 2060402 4 6960 -DO- BASURI TEXTILE 10.7.98 TO 6.9.01 3640936 - - 2401127 5 3438 BANK OF MAHARASTRA RING RD SURAT -DO- 13.10.98 TO 16.8.01 1085636 1085636 6292309 6 3384 KAYUR VYASA BANK RING RD SURAT JAGDAMBA SILK MILLS 29.3.96 TO 30.7.01 2622722 2161 1 582928 TOTAL 27492941 1086897 22024944 THE ASSESSEE HAS ACCEPTED THE WORKING AND HAS IN FA CT HIMSELF HAS GIVEN THE PEAK CASH & TURNOVER WORKED OUT VIDE LETTER DATED 2 3.7.03. THEREFORE THE TOTAL INCOME ON THE TURNOVER THROUGH THIS BANK ACCO UNTS IS THE SUM OF PEAK CASH BALANCE AND THE INCOME FROM TURNOVER AFTER 28. 10.98. 10.1 THUS THE TOTAL UNACCOUNTED TURNOVER OF THE CO NCERNS AS PER THE TOTAL ACCOUNTS AFTER PEAK BALANCE DATE IS DETERMINED AT R S.2 20 24 944/-. TOTAL INCOME ON UNACCOUNTED TURNOVER THROUGH BANK & SEIZED MATERIAL:- 1] TURNOVER OF SEIZED MATERIALS BS-1 PAGE NO.27 151050/- BS-1 PAGE NO.38 TO 39 8752538/ - BS-1 PAGE NO. 40 345764/- BS-8 PAGE NO. 2 1129 592/- BS-8 PAGE NO. 4 5488 028/- BS-8 PAGE NO.5 200536/- BS-8 PAGE NO.6 1134355/- BS-8 PAGE NO.8 14712 82/- BS-8 PAGE NO. 13 TO 22 3454650/- BS-8 PAGE NO. 25 2937282/- BS-2729 (RSI) 118307/- BS-7 PAGE NO. 1 TO 81 168040/- IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 8 B-1 IMPOUNDED ON 22.9.03 OF KRISHNA SILK INDUSTRIES 714797/- UNACCOUNTED TURNOVER OF THE SEIZED PAPERS 24064225/- 2] BANK ACCOUNTS PEAK OF BANK A/C AS ON 28.10.98 1086897/- TURNOVER OF BANK A/C AS DISCUSSED ABOVE PARA 22024944/- TOTAL 4 60 89 170/- THUS THE TOTAL UNACCOUNTED TURNOVER OF THE ASSESSEE IS WORKED OUT AT RS.4 60 89 170/- AS ADMITTED BY THE ASSESSEE AND AS PER THE DETAILED WORKING AS MENTIONED ABOVE. THE TOTAL UNDISCLOSED INCOME HA S TO BE COMPETED ON THE UNACCOUNTED TURNOVER MY ADOPTING THE GP TAKE TH ROUGH THE SEIZED MATERIAL AND PAID INVESTMENT IN THE BANK AS ON 29.1 0.98 BY APPLYING THE GP RATE IN THE BANK TURNOVER AFTER 28.10.98. THE OVER LAPPING TURNOVER ON THE SEIZED MATERIAL AS WELL AS BANK TURNOVER HAS AFTER THOUGHT AND BASED ON THE SEIZED PAPER AND ACCORDINGLY THE ASSESSEE HAS BEEN ALLOWED THE BENEFIT OF THE SAME. ON THIS UNACCOUNTED TURNOVER OF RS.4 60 8 9 170/- UNACCOUNTED PROFIT IS TO BE WORKED BY APPLYING THE GP RATE. 11. REASON FOR TOTAL GP RATE INSTEAD OF GP RATE ON UNACCOUNTED TURNOVER:- 11. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ART SILK CLOTH THE TOTAL UNACCOUNTED TURNOVER HAS BEEN COMPUTED IN THE EARLI ER PARAGRAPHS. DURING THE ASSESSMENT PROCEEDINGS IN THE BLOCK RETURN THE ASSESSEE HAS COMPUTED THE UNACCOUNTED PROFIT BY APPLYING NET PROFIT RATIO ON UNACCOUNTED TURNOVER:- 11.1 DURING THE ASSESSMENT PROCEEDINGS THE DETAILS OF CONCERNS WISE G.P. WORKING AND NET PROFIT WORKING WAS CALLED FOR AND S UBMITTED BY THE ASSESSEE WHICH IS AS UNDER:- DETAILS OF GROSS PROFIT DURING LAST THREE YEARS: - 1] SATYANARAYAN RATHI (VISHAL FABRICS) 2001-02 2000-01 1999-00 GROSS PROFIT 1 180 891 1 064 060 1 238 146 NET PROFIT 134 519 162 952 160 006 TURNOVER 10 316 252 8 780 435 10 164 4 95 G.P. RATIO 11.45% 12.12% 12.18% N.P. RATIO 1.30% 1.85% 1.57% 2] SAROJDEVI BHAIYA (KRISHNA SAREES) GROSS PROFIT 797.383 830.016 862.71 7 NET PROFIT 158 184 187 584 186 344 TURNOVER 10 908 339 6 252 286 7 397.594 G.P. RATIO 7.31% 13.27% 1 1.66% IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 9 N.P. RATIO 1.45% 3.00% 2.52% 3] KRISHNA SILK INDUSTRIES GROSS PROFIT 3 078 597 2 177.710 2 2 89 843 NET PROFIT 98 435 74 740 78 800 TURNOVER 30 734 054 19 060 013 21 408 737 G.P. RATIO 10.02% 11.42% 10.70% N.P. RATIO 0.32% 0.39% 0.37% 11.2 HOWEVER DURING THE COURSE OF SEARCH PROCEEDIN GS SHRI SHYAM BHAIYA IN HIS STATEMENT RECORDED U/S.132[4] THAT THE AVERAGE GP HE EARNS IS ABOUT 11.50% AND HE HAS CLAIMED DEDUCTION ON THIS ACCOUNT WHILE COMPUTING STOCK AS ON THE DATE OF SEARCH WHICH WAS INVENTORIED AND VALUED AT SALE PRICE. THEREFORE THE ASSESSEE WAS SHOW CAUSED TO TAKE THE GP AS UNACCOUNTED TURNOVER AT THE RATE OF 11.50% WHICH IS IN THE RANG E OF BOOK RESULT VIDE LETTER DATED 2.9.03 THE PORTION OF SHOW CAUSE IS REPRODUCE D AS UNDER:- NORMALLY APART FROM TRADING EXPENSES THE EXPENSES ARE ALSO DEBITED LIKE INTEREST ON WORKING CAPITAL SALARY ESTABLISH MENT EXPENSE MISC. EXPENSES ETC. IN THE PROFIT & LOSS ACCOUNT. DURING THE SEARCH PROCEEDINGS NO SEPARATE ESTABLISHMENT OR UNACCOUNT ED ACTIVITY WAS FOUND THEREFORE THE ABOVE TYPE OF EXPENDITURE HAS N OT BEEN INCURRED SEPARATELY FOR UNACCOUNTED TURNOVER. ALL SUCH EXPEN SES OF PROFIT & LOSS A/C. HAVE ALREADY BEEN DEBITED IN YOUR REGULAR BOOK S OF ACCOUNT WHILE ARRIVING AT NET PROFIT IN BOOKS OF ACCOUNT AS PROFI T & LOSS A/C. FOR THE SAKE OF FAIRNESS ON UNACCOUNTED TURNOVER THE EXPENS ES OF TRADING ACCOUNT I.E. EXPENSES FOR PURCHASE OF GOODS EXPENS ES ARE ALLOWED EVEN WITHOUT CORRESPONDING BILLS & VOUCHERS AND ONL Y GP IS TAXED AS UNACCOUNTED INCOME. HOWEVER THE NET PROFIT RATIO C ANNOT BE TREATED AS REALISTIC FOR COMPUTING INCOME AS EXPENSES DEBITED IN PROFIT & LOSS ACCOUNT OTHER THAN THE TRADING ACCOUNT HAS ALREADY BEEN DEBITED IN YOUR REGULAR BOOKS OF ACCOUNT. THERE IS NO DOUBT TH AT YOU HAVE CARRIED OUT UNACCOUNTED TURNOVER AS TRADING THEREFORE YOU ARE BOUND TO HAVE INCURRED EXPENDITURE OF PURCHASES JOB CHARGES ETC. FOR THE SAID TURNOVER. HENCE FOR THE SAKE OF FAIRNESS THE AVERA GE G.P AS WORKED OUT ABOVE COMES TO 11.12%. THE AVERAGE GP RATIO AS PER STATEMENT RECORDED U/S.132[4] ON 6.9.01 OF SHRI SHYAM BHAIYA DECLARED IN YOUR GROUP CONCERNS IS 11.5% THEREFORE YOU ARE REQUESTED TO EXPLAIN AS TO WHY THE UNDISCLOSED INCOME NOT BE COMPUTED @ GP RAT IO ON UNACCOUNTED TURNOVER. 11.3 THE ASSESSEE HAS SUBMITTED REPLY DATED 10.9.03 AND STATED THAT THE UNACCOUNTED BUSINESS ACTIVITY WAS CARRIED OUT FROM DIFFERENT PREMISES WITH NO LINK OR CORRELATION WITH OUR OFFICIAL PREMISES. THE UNOFFICIAL OR UNACCOUNTED BUSINESS WAS CONDUCTED IN THE BLOCK PERIOD FROM SHO P NO.1- RATAN CHAMBERS SALABATPURA SURAT AND SHOP NO. 518 & 526 ./ ASHOKA TOWER RING ROAD SURAT. THE UNACCOUNTED BUSINESS TURNOVER WAS CONDUCTED UNDER BENAMI NAMES BUT WITH THE REAL ADDRESS. IN THE BANK ACCOUNT ALSO ADDRESS OF RATAN CHAMBERS & ASHOKA TOWERS WERE GIVEN ALL THESE PROPERTIES WERE RENTED PROPERTY FOR WHICH RENT IS PAID. IN ANNEXURE BS-8 PAGE NO. 2 & 25 IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 10 VARIOUS ENTRIES RELEVANT TO RENT PAID IS REFLECTED TO ASHOKA TOWER SURAT AND AT THE TIME OF SURVEY SHOP NO. 526 AT ASHOKA TOWER WAS ALSO COVERED U/S.133A. IN VIEW OF THIS IT CANNOT BE SAID THAT N O SEPARATE ESTABLISHMENT WAS FOUND. THE DEPARTMENT HAS FOUND OUT THE UNACCOUNTED ESTABLISHMENT AND UNACCOUNTED STOCK WHICH WAS LYING AT THIS PREMISES. THUS THE UNACCOUNTED BUSINESS ACTIVITIES WERE CARRIED OUT EXCLUSIVELY FR OM TOTALLY SEPARATE PREMISES FROM WHERE UNACCOUNTED STOCK WAS ALSO FOUND. 5. ACCORDINGLY THE ASSESSING OFFICER MADE WORKING OF UNACCOUNTED TURNOVER AS UNDER:- PAGE-24 6. AGGRIEVED AGAINST APPLYING GROSS PROFIT AT 11.5% THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) REDUCED THE GP BY TURNING THE SAME INTO NET PROFIT AND APPLIED NET PROFIT RATE AT 3.2% BY GIVING FOLLO WING FINDINGS IN HIS APPELLATE ORDER:- LOOKING TO THE AFORESAID FACTS AND CIRCUMSTANCES I FEEL THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN APPLYING GROSS PROFIT RATE ON THE BUSINESS TURNOVER. THE APPELLANTS EXPLANATION IS FOUND TO BE LOGICAL IN THAT WITHOUT LOCATING THE INVESTMENTS THE ASSESSING OFFICER CAN NOT ARRIVE AT AN UNREASONABLE FIGURE OF INCOME. THE ASSESSING OFFICER HIMSELF HAS WORKED OU T THE GROSS PROFIT AS WELL AS NET PROFIT OF THE LAST THREE YEARS. THE APPELLAN T HAS SURRENDERED UNDISCLOSED INCOME ON THE BASIS OF AVERAGE NET PROF IT RATE OF 0.36% ON THE TOTAL TURNOVER. THE APPELLANTS DISCLOSURE OF INCO ME IS INVESTMENT BASED. DECLARATION OF UNDISCLOSED INCOME AT RS.18 LAKH HAS TAKEN CARE OF INVESTMENTS IN STOCKS SHARES TRADING ETC. IN VIEW OF THESE FACTS GROSS PROFIT RATE OF 11.5% APPLIED BY THE ASSESSING OFFICER TO T HE TURNOVER IS NOT REASONABLE. THE ASSESSING OFFICER CAN NOT OVERLOOK THE CLAIM OF THE APPELLANT REGARDING SET OFF OF UNACCOUNTED EXPENSES AGAINST U NACCOUNTED BUSINESS INCOME. WHILE ESTIMATING THE GROSS PROFIT RATE OR N ET PROFIT RATE THE ASSESSING OFFICER HAS TO BE REASONABLE AND AWARE OF THE FACTS STATED BY THE APPELLANT IN SUPPORT OF DISCLOSURE MADE DURING THE COURSE OF SEA RCH PROCEEDINGS. CONTENTION OF THE APPELLANT REGARDING TURNOVER OF R S.4.50 CRORE IS ACCEPTED IN VIEW OF THE FACTS NARRATED ABOVE. IN VIEW OF THESE FACTS NET PROFIT RATE OF 3.25% IS APPLIED AGAINST TURNOVER OF RS.4.50 CRORES WHICH COMES TO RS.14 62 500/- IS SUSTAINED OUT OF TOTAL ADDITION OF RS.63 87 1512/-A ND THE BALANCE ADDITION IS DELETED. AS A RESULT OF ABOVE DISCUSSION THE FIGUR E REGARDING UNACCOUNTED INCOME WILL EMERGE AS UNDER:- ITEM NO.3 : RS. 3 48 352/- ITEM NO.4 : RS. 41 298/- ITEM NO.6 : RS. 2 67 792/- ITEM NO.7 : RS. 8 201/- ITEM NO.8 : RS. 22 000/- ITEM NO.9 : RS.14 62 500/- TOTAL : RS.21 50 143/- IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 11 THE ASSESSING OFFICER IS DIRECTED TO ADOPTED THE SA ME AS UNDISCLOSED INCOME OF THE BLOCK PERIOD. AGGRIEVED AGAINST THE ORDER OF CIT(A) BOTH THE AS SESSEE AND REVENUE CAME IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF THIS ISSU E AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE HAS AD MITTED THE BUSINESS TURNOVER AS ESTIMATED BY THE CIT(A) AT RS.4.50 CRORES BUT TH E ONLY ARGUMENT OF THE ASSESSEE IS THAT THE CIT(A) HAS APPLIED NET PROFIT AT 3.25% WHICH IS VERY HIGH IN THE BUSINESS LINE OF THE ASSESSEE AND HE STATED THAT THE REASONA BLE NET PROFIT RATE IS AT 036%. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT IN THE LIN E OF ASSESSEES BUSINESS THE NET PROFIT IS AT 0.36% AS DECLARED BY THE ASSESSEE IN E ARLIER YEAR. THE LD. CIT-DR CONTESTED THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE AND STATED THAT THE ASSESSING OFFICER HAS RIGHTLY APPLIED THE GP RATE A T 11.5%. WE FIND THAT THE CIT(A) HAS APPLIED THE NET PROFIT RATE ON THE BASIS OF AVE RAGE NET PROFIT RATE AS DISCLOSED BY THE ASSESSEE ON THE UNDISCLOSED INCOME SURRENDERED DURING THE SEARCH. WE ALSO FIND THAT THE ASSESSEE DISCLOSED THE INCOME IS INVE STMENT BASED AND THE UNDISCLOSED INCOME OF RS.18 LAKHS HAS TAKEN CARE OF INVESTMENTS IN STOCK AND ONLY THE NET PROFIT IS TO BE CONSIDERED FOR COMPUTING TH E FURTHER UNDISCLOSED INCOME IF ANYTHING REMAINS THERE. ACCORDINGLY WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY APPLIED NET PROFIT AT 3.25% AND WE UPHOLD THE SAME. THIS COMMON ISSUE OF THE CROSS APPEALS IS DISMISSED. 8. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS.3 48 352/- AND RS.41 298/- BEING UNEXPLAINED DEPOSITED REFLECTED IN SAVING BANK A/C NO.332 AND 4 46. FOR THIS THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.1 & 3 :- IT(SS)A NO.427/AHD/2003 1 ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE IN LAW THE LD. CIT(APPEALS)-II ERRED IN CONFIRMING THE ADDITION OF INCOME OF RS.348352/ AND RS.41298/- ON ACCOUNT OF SO-CALLED UNEXPLAINED DEPO SITS REFLECTING INTO SAVINGS BANK A/C NO.332 & 446. 3 YOUR HONOUR IS HUMBLY REQUESTED TO DELETE THE ADD ITIONS OF INCOME AMOUNTING TO RS.348352= AND RS.41298/= ON ACCOUNT O F UNEXPLAINED CASH CREDIT APPEARING INTO BANK A/C.NO.332 & 446. IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 12 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF THIS ISSU E AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AS SESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT DURING THE COU RSE OF SEARCH SHARES WERE FOUND AMOUNTING TO RS.3.25 LAKHS. THE ASSESSEE OFF ERED THESE SEIZED SHARES AS UNACCOUNTED INVESTMENT. THE ASSESSEE CLAIMED THAT THE SHARES WERE ACQUIRED OUT OF SHARES PROFIT AND ALSO CLAIMED THAT THE SOURCE OF ACQUISITION OF SHARES MADE OUT OF UNACCOUNTED TEXTILE TRANSACTIONS. THE ASSESSING OF FICER MADE ADDITION OF THIS UNACCOUNTED INVESTMENT AT RS.3.25 LAKHS AS DECLARED BY THE ASSESSEE. THE AO AFTER GOING THROUGH ANNEXURE-BS/1 PAGE NO.14 WHICH RECORDS THE DETAILS OF SHARE TRANSACTIONS MADE IN VARIOUS NAMES. THE AO ALSO NOT ED THAT THE ASSESSEE HAS CARRIED OUT THIS TRANSACTION THROUGH BANK A/C. MAIN TAINED IN BENAMI NAMES WITH THE FOLLOWING BANKS:- BANK A/C.NO. NAME OF THE BANK A/C. HOLDER NAME CRE DIT AMT. (RS) A/C. NO.10990 TAMILNADU BANK MURLIDHAR JOSHI 30 40 809.55 A/C. NO.332 SBI-PRAKASN SOC. TANSUKH UPADHYA 3 48 352.00 A/C. NO.446 -DO- VARUN MAHESHWARI 41 298.00 ACCORDINGLY THE ASSESSING OFFICER ALSO TREATED THE INVESTMENT IN BANK A/C. NO.332 AND 446 WITH SBI PRAKASH SOCIETY SURAT IN THE NAME OF TANSUKH UPADHYA AND VARUN MAHESHWARI AS UNACCOUNTED ACCEPTED BY THE ASS ESSEE AND MADE FURTHER ADDITION OF RS.3 48 352/- AND RS.41 298/-. AGGRIEVE D THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY GIVING FOLLOWING FINDINGS:- 06. FIRST THREE ITEMS OF THE CONCLUDING PARA 16 OF THE ASSESSMENT ORDER ARE REGARDING INVESTMENTS ONLY. UNACCOUNTED CASH OF RS .3 88 991/- JEWELLERY OF RS.95 000/- AND INVESTMENTS IN SHARES AT RS.3.25 00 0/- RESPECTIVELY HAVE BEEN SHOWN BY THE APPELLANT IN THE BLOCK RETURN. TH US THERE IS NO CONTROVERSY ABOUT THEM. NO COMMENTS ON INDIVIDUAL ITEMS ARE REQ UIRED TO BE OFFERED. ITEM NO.3 REGARDING UNACCOUNTED SHARES AT RS.3 48 352/- AGAINST BANK ACCOUNT NO.332 IS OBJECTED TO BY THE APPELLANT. HOWEVER PE RUSAL OF THE FACTS REVEALS THAT THE APPELLANT HAS SURRENDERED INVESTMENT WHICH IN THE NATURAL COURSE WOULD RESULT IN TO INCOME. THE APPELLANTS GROUND R EGARDING THIS IS DISMISSED AND THE ADDITION MADE BY THE ASSESSING OFFICER IS S USTAINED. ITEM NO.4 IS REGARDING ACCOUNT NO.446 AT RS.41 398/-. THE APPELL ANTS STAND IS IDENTICAL AS ABOVE. FACTS BEING THE SAME GROUND OF THE APPELLAN T IS DISMISSED AND ADDITION OF RS.41 298/- IS SUSTAINED. THE LD. COUNSEL FOR THE ASSESSEE CONCEDED THE POSIT ION BUT STATED THAT THE CIT(A) HAS NOT CONSIDERED THE TELESCOPING OF THESE AMOUNTS WITH THE DISCLOSED AMOUNT OF IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 13 RS.3.25 LAKHS WHICH IS PART OF THE DEPOSITS IN THE BANK A/C. WE FIND THAT THE CIT(A) HAS RIGHTLY SUSTAINED THE ADDITION AS THE ASSESSEE COULD NOT PROVE THE TELESCOPING OF THESE AMOUNTS ADDED BY THE ASSESSING OFFICER WITH T HE DISCLOSURE OF INVESTMENT IN SHARES AT RS.3.25 LAKHS. ACCORDINGLY WE FIND NO F AULT IN THE ORDER OF CIT(A). THIS ISSUE OF THE ASSESSEES APPEAL IS DISMISSED. 10. THE NEXT ISSUE IN THE REVENUES APPEAL IS AS RE GARDS TO THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INCOME FROM SHARE-TRADING REFLECTED IN THE BANK A/C . NO.10990. FOR THIS THE REVENUE HAS RAISED THE FOLLOWING GROUND NO.1 :- IT(SS)A NO.37/AHD/2004 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO DELETE THE ADDITION OF RS.8 45 345/- MADE ON ACCOUNT OF UNACCOUNTED INC OME FROM SHARE TRADING REFLECTED IN BANK A/C.NO.10990. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSING OFFICER D URING THE COURSE OF ASSESSMENT PROCEEDINGS MADE THE PROFIT RATIO AT 51.55% AND 4.0 6%. THE AO AFTER APPLYING MATHEMATICAL OF THIS RATIO TO THE DEPOSIT OF THE BA NK A/C. NO.10990 WITH TAMIL NADU MERCANTILE BANK LTD. IN THE NAME OF SHIR MURLIDHAR JOSHI AND ACCORDING TO THE ASSESSING OFFICER THIS PROFIT RATIO COMES TO 27.8% AND ACCORDINGLY HE ESTIMATED THE UNDISCLOSED INCOME FROM THIS BANK A/C. AT RS.8 45 3 45/-. AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) DELETED THE ADDITION BY GIVING FOLLOWING FINDING:- 07 ITEM NO.5 IS ADDITION OF RS.8 45 345/- 12. WE FIND FROM THE ABOVE FACTS THAT THE CIT(A) HA S RIGHTLY TREATED THE TURNOVER OF SHARE TRADING AND TREATING IN TEXTILE BUSINESS AMOU NTING TO RS.30 40 809/-. THIS TURNOVER INCLUDES A SIMULTANEOUSLY ADDITION MADE AT RS.2 67 792/-. WE FIND THAT THE CIT(A) HAS RIGHTLY HELD THAT THIS ADDITION HAS ALRE ADY BEEN MADE WHILE TREATING THE UNACCOUNTED TURNOVER OF RS.30 40 809/- AS WELL AS T HE SIMULTANEOUSLY ADDITION OF RS.2 67 792/-. ACCORDINGLY WE FIND NO FAULT IN TH E ORDER OF CIT(A) AND THIS ISSUE OF REVENUES APPEAL IS DISMISSED. IT(SS)A NO 427/AHD/2003 & 37/AHD/2004 B.P. 1-4-95 T O 6-9-01 JAINARAYAN A BHAIYA V. ACIT CC-3. SIRAT . PAGE 14 13. THE NEXT ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE CIT(A) IN DELETING THE SURCHARGE LEVIED BY THE ASSESSING OFFICER U/S.113 O F THE ACT IN THE BLOCK ASSESSMENT. AT THE OUTSET LD. COUNSEL FOR THE ASS ESSEE AS WELL AS LD. DR FAIRLY CONCEDED THAT THIS ISSUE IS SQUARELY COVERED IN FAV OUR OF REVENUE AND AGAINST THE ASSESSEE BY THE DECISION OF HONBLE APEX COURT IN T HE CASE OF CIT V.SURESH N GUPTA (2008) 297 ITR 322 (SC). IN VIEW OF THE ABOVE POSIT ION WE ALLOW THIS ISSUE OF THE REVENUES APPEAL AND DIRECT THE ASSESSING OFFICER T O SURCHARGE. THIS ISSUE OF THE REVENUES APPEAL IS ALLOWED. 14. IN THE RESULT ASSESSEES APPEAL IS DISMISSED AND T HAT OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 05/ 02/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD DATED :05/02/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-II AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD